Mona Computer Systems (S) Pte Ltd v Singaravelu Murugan

Choo Han Teck J:

[1] The matter in dispute between the parties concerned a breach of fiduciary duty. The plaintiff was incorporated in Singapore on 13 May 1997, and was in the business of software and Information Technology (“IT”) consultancy and development. The defendant was the sole full time employee of the plaintiff, charged with the day-to-day business operations. His role was that of “Systems Manager”. There was no written employment contract between the defendant and the plaintiff.

[2] On 22 November 2007, the defendant formed a new company, MN Computer Systems (S) Pte Ltd (“MN Computer”). The defendant was a 50% shareholder, and director, of MN Computer. The principal business of MN Computer was the same as the plaintiff’s. While still under the plaintiff’s employment, the defendant secured certain contracts for MN Computer. The defendant resigned from the plaintiff on 20 February 2009. Subsequently, the plaintiff commenced Suit No 265 of 2009 against the defendant essentially for breach of his duties in relation to diverting business away from the plaintiff to MN Computer. The defendant counterclaimed in respect of commission from the plaintiff allegedly due to him up to his resignation.

[3] Between 2009 and 2014, this case had been heard in several proceedings on different issues. The parties appeared before two high court judges, two assistant registrars, and the Court of Appeal in Mona Computer Systems (S) Pte Ltd v Singaravelu Murugan [2014] 1 SLR 847 (“CA decision”). For convenience, I set out their legal history in chronological order:

(a) trial before Belinda Ang J in 2010;

(b) assessment of damages before assistant registrar Elaine Chew (“AR Chew”) in 2011;

(c) registrar’s appeal hearing before Woo Bih Li J in 2012;

(d) appeal to the Court of Appeal in 2013; and

(e) assessment of damages before assistant registrar Ruth Yeo (“AR Yeo”) in 2013.

[4] During the first assessment, AR Chew ordered the defendant to account to the plaintiff in the sum of S$482,374.52. This figure was made up of two parts. First, half of the net profits earned by MN Computer from seven contracts that it had entered into with various entities, which comprise the Housing Development Board (“HDB”) and Central Provident Fund (“CPF”) Board, which amounted to S$166,309.15. Second, the commissions received by the defendant pursuant to these contracts, amounting to S$316,065.37. Although AR Chew held that, in principle, the plaintiff may have been entitled to profits arising from the contract between MN Computer and the CPF Board, she made no award for them because she found that the plaintiff failed to discharge its burden of proof in respect of quantum. After appealing against the decision of AR Chew and subsequently proceeding to the Court of Appeal, the parties appeared before AR Yeo seeking a further assessment regarding director’s fees received by the defendant from MN Computer and further profits from the CPF and HDB contracts.

[6] The case came before me as an appeal from the assessment of damages by AR Yeo. Both parties have appealed, and the issues before me were:

(a) whether the defendant is liable to pay his director’s fees, from MN Computer, to the plaintiff;

(b) whether the defendant is liable to pay interest on the whole sum that he has been ordered to pay to the plaintiff; and

(c) whether the account of profits should include the commissions the defendant earned on the HDB and CPF Board contracts with MN Computer, as well as the S$2,600 in alleged advertisement costs.

While I accept that it is within the court’s discretion to award interest of this nature, the plaintiff has raised no argument in its favour, beyond pointing out that AR Chew ordered that “[t]he usual interest runs from the date of writ until the date of judgment”. By the plaintiff’s own characterisation, this appeal had arisen from a second – and separate – round of assessment of damages before AR Yeo. The relevance of AR Chew’s order on interest is hence unclear. AR Yeo made no order as to interest and neither did she record submissions by either party on whether interest should be awarded. I do not see any reason to invoke the court’s discretion to award interest of the first sort. The latter form of interest, as noted by the defendant, is covered by O 42 r 12 barring any agreement to the contrary between parties, as is the case at present. My order on interest is hence as follows:

(a) before judgment debt (from 22 November 2007 to date of judgment): No interest; and

(b) after judgment debt (date of judgment to date of satisfaction of judgment debt): 6% per annum.

[9] The third issue was from the appeal brought by the defendant. AR Yeo awarded the plaintiff the defendant’s commissions earned, as director of MN Computer, on the HDB and CPF contracts which amounted to S$153,985.64. The thrust of the defendant’s appeal was that he should not be made to pay to the plaintiff:

(a) the sum which amounted to his commissions earned, as director of MN Computer, on the HDB and CPF contracts;

(b) MN Computer’s CPF contribution for the commissions awarded, in the sum of S$23,759.85; and

(c) the advertising costs in the sum of S$2,600.

I have dismissed all three aspects of the defendant’s appeal. The defendant’s arguments regarding commissions, couched in [9(a)] and [9(b)] are unclear for two reasons. First, in [9(a)], it is unclear if the defendant was arguing that he should not have to account for his commissions earned on the HDB and CPF contracts as they were not commissions received by him, or if he was arguing that the commissions, though commissions received by him, should not have been included on the basis of equitable allowance. Second, in [9(b)], this was the first time, across his appearances before the two high court judges, two assistant registrars, and court of appeal, that the defendant raised such an argument. The argument in [9(b)] was presumably raised as an alternative to [9(a)], that is, in the event this court decides not to disturb AR Yeo’s findings on whether the defendant should pay his commissions on the HDB and CPF contracts to the plaintiff. Dealing with the argument in [9(b)] in this manner, it remains unclear if the CPF contributions paid by MN Computer came from the profits or the employees’ salary. On the evidence before AR Yeo, she found that the CPF contributions were in fact paid out of the employees’ salary. She also found that the defendant had failed to provide documentation to substantiate its claim of having incurred S$2,600 in advertising costs, couched in [9(c)]. I should note that the defendant has not applied to adduce any new evidence before me to convince me otherwise on any of these issues.

[10] I thus hold that:

(a) the defendant is not liable to pay his director’s fees, from MN Computer, to the plaintiff;

(b) the defendant is liable to pay interest on the judgment debt at a rate of 6% per annum from the date of judgment until the judgment is satisfied; and

(c) the account of profits should include the commissions the defendant earned on the HDB and CPF Board contracts with MN Computer, and there should be no subtraction of the S$2,600 in alleged advertisement costs.