XFactor Consolidated (M) Sdn Bhd v IT21 (Singapore) Pte Ltd and Others

Choo Han Teck J:

[1] The plaintiff is a Malaysian company carrying on the business of a business consultant in information technology. It was at all material times owned by the first and second plaintiffs’ witnesses, Ian Anderson and his wife Wendy Anderson. The first defendant is a Singapore company that was at all material times carrying on the business of designing and developing multimedia software. It has a paid up capital of $4.25m. The second defendant is a sister company of the first defendant and was also carrying on the same business as the first defendant. It has a paid up capital of $2.00. The third defendant is a director and major shareholder of the first and second defendants. He was also the managing director of the first defendant. The first and second defendants have related companies. They are iT21 (International) Pte Ltd and EdiT21 (Malaysia) Sdn Bhd. The third defendant appears to have a financial interest in these two companies. The first defendant owned educational software which included “Tamil titles” and “Chaos and Order titles”. These were specific course materials in CD-rom format and were part of the subject matter of the plaintiff’s claim. The plaintiff’s present action was based on the claim that it would receive payment if it was able to get the Malaysian Ministry of Education (“MMOE”) to purchase the first defendant’s educational material. The plaintiff’s claim as pleaded and the evidence adduced were not clear and in parts, incomprehensible. Mr Foo Say Tun, counsel for the defendants, was right in saying that the plaintiff’s claim was based on two grounds, first, a Distribution Agreement (“DA”) dated 3 September 2002, and secondly, an alleged joint venture between the plaintiff, a company called Langkah Harapan Sdn Bhd (“Langkah Harapan”), and the first defendant.

[2] The DA was executed between Ian Anderson on behalf of the plaintiff and the third defendant on behalf of the second defendant. The DA was executed on 3 September 2002 before an advocate & solicitor, Tan Chye Kwee. The subject matter of the agreement was educational software titles set out in Annex A of the DA. The list in Annex A does not include the “Tamil titles” or the “Chaos and Order titles” that the plaintiff alleged were part of the agreement. In this respect, the plaintiff’s claim in respect of those titles must fail. It also follows that it would have made no difference whether the DA should have been signed by the first defendant instead of the second defendant. The plaintiff pleaded in paragraph 9 (b) of its Statement of Claim (amended several times over) that “although the 2 Defendant is apparently the party to the [DA], the Plaintiff was dealing with the 1 Defendant at all material times, and as such, it is the 1 Defendant who is/ought to be the actual party to the Agreement”. The plaintiff and the first defendant are bodies corporate and cannot be “dealing” with each other unless the plaintiff was referring to specific exchanges of correspondence on this point, but it was not. The evidence showed that for all the dealings and agreements there might have been, the negotiations were carried out among the Andersons and the third defendant. Indeed, that was why the plaintiff pleaded as its “Second Alternative” (paragraph 9 (d)) that there was an “oral agreement between the Plaintiff and the 1 Defendant”. Similarly, if there was an oral agreement, it cannot have been made by the plaintiff or the first defendant as a body corporate. Who made that oral agreement on their behalf? Furthermore, if there was an oral agreement, what exactly were the terms of that agreement? The only clear evidence was that the DA was executed in a solicitor’s office and there was no dispute that the DA was an agreement between the plaintiff and the second defendant. The critical terms of the DA provided in cl 1.1 stated as follows:

In any event, as I mentioned, even if the DA was supposed to be or in fact, an agreement between the plaintiff and the first defendant (a finding which I am not prepared to make), it would not have assisted the plaintiff because the subject matter of its claim was clearly not set out in the Annex. In this regard, I accept the evidence of Prabha Dube and Ang Siew Ing that no representation was made to the plaintiff’s representative at the execution of the DA that the second defendant was executing it on behalf of the first defendant.

[3] The plaintiff made an alternative claim in that it had a “joint-venture/ partnership” agreement with the first defendant/third defendant and Langkah Harapan, which the plaintiff says was its agent. This was the point where the plaintiff’s claim and its evidence were so muddled that it was impossible to make any sense of it. The plaintiff also pleaded as an alternative claim that the DA was an oral agreement (paragraph 24 of the Statement of Claim). It is permissible in law to plead alternative rights arising from a set of facts, but one cannot plead alternative facts. The plaintiff was entitled to claim for loss of profits by reason of breach of contract, but to do so it must first identify the contract. The plaintiff, however, was unable to state whether the contract that was breached was the DA (which the first and third defendants were not privy to) or a contract which was made between the plaintiff and the second defendant, or the third defendant. It was also unclear whether that contract was a partnership contract or a joint-venture. It may be said, loosely, that every partnership is a kind of joint-venture; but not every joint-venture is a partnership. In either case, details of the contract must be pleaded as well as the precise nature of the breach. None of this was done. It was not possible to understand what the precise nature of the contractual relationship was. Neither was it clear who the contracting parties were. The plaintiff was simply unable to set out its case. On the pleadings and the evidence adduced there was nothing for the defendants to answer.

[4] The plaintiff alluded vaguely that the joint-venture/partnership was formed to obtain a distributorship contract with the MMOE. In the event, MMOE awarded a contract to Langkah Harapan solely. Neither Langkah Harapan’s representatives nor the MMOE officers were called to corroborate its claims. The plaintiff’s only witness on this point was one Ahmad Faudzi whose allegiance swung between the plaintiff and the defendants. He testified on the plaintiff’s behalf at trial, as the plaintiff’s re-employed employee. He was previously working for Langkah Harapan (but paid by the plaintiff), and in connected, if not the same, legal proceedings in Malaysia (“the Malaysian suits”) Ahmad Faudzi was a co-plaintiff of the defendants who were plaintiffs in the Malaysian suits. The roles of the parties were reversed in the Malaysian suits. There the plaintiff was a defendant with a counter claim. I do not find Ahmad Faudzi to be a reliable witness. It was hard to tell when he was the hunter and when the hunted. The fact that MMOE appointed Langkah Harapan had no implications on any of the defendants, except to note that the plaintiff subsequently made separate arrangements with Langkah Harapan (to the exclusion of the second defendant) in respect of the revenues from the MMOE contract. I find that no right accrued to the plaintiff in respect of the inadequately pleaded “joint-venture/partnership”. Furthermore, the documentary papers including the Malaysian cause papers indicate that the MMOE contract was a major issue for trial there. Ahmad Faudzi admitted that on the third defendant’s instructions, he instigated MMOE to terminate the Malaysian contract.

[6] I now address the second defendant’s counter-claim for $899,990.00 under cl 6.1 of the DA. There was no evidence that the plaintiff had placed any order, nor was there any evidence that the second defendant had delivered any product or goods to the plaintiff to the value of $1,000,000 as specified. That did not mean that the second defendant had succeeded in its claim. All that cl 6.1 of the DA provided was that the plaintiff would be given the right of exclusive distributorship if it met the minimum orders. Since the plaintiff did not meet the minimum order it was not entitled to an exclusive right of distributorship. I set out cl 6.1 below for the sake of clarity: