Case Summaries

Tuitiongenius Pte Ltd v Toh Yew Keat and another

SUPREME COURT OF SINGAPORE

19 October 2020

Case summary

Tuitiongenius Pte Ltd v Toh Yew Keat and another
[2020] SGCA 103
Civil Appeal No 218 of 2019

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Decision of the Court of Appeal (delivered by Chief Justice Sundaresh Menon):

Outcome: CoA dismisses the appeal.

Pertinent and significant points of the judgment

  • The Judge’s finding as to the existence of the parties’ oral agreements was one that an appellate court should not and would not easily overturn: at [19].
  • The contextual approach to contractual interpretation is statutorily embedded in s 94(f) of the Evidence Act (Cap 97, 1997 Rev Ed). The goal of construing a contract is to ascertain from an objective viewpoint what the parties agreed upon, and extrinsic evidence is admissible under proviso (f) to aid in the interpretation of the written words of the contract: at [43].

Background facts

1 The appeal arose out of a breakdown of relationship between two parties who entered into a joint venture in the tuition business. The first respondent, Mr Toh Yew Keat (“Mr Toh”), started providing private tuition classes in economics in 2007 and later offered these classes in a room at  his parents’ HDB flat in Choa Chu Kang (“HDB Flat”). The appellant, Tuitiongenius Pte Ltd, is a joint venture incorporated in April 2009 by Mr Toh and one Mr Keng Yew Huat (“Mr Keng”) as directors and equal shareholders. The second respondent, Economics at Tuitiongenius Pte Ltd (“ETGPL”), is a company incorporated by Mr Toh. The appellant and ETGPL are both in the business of providing private tuition services. The facts pertaining to the incorporation of the appellant formed the central dispute in the appeal.

2 According to Mr Keng, Mr Toh had insufficient space to hold group tuition classes in the room at his parents’ HDB Flat. As such, the parties entered into an agreement, referred to as the “CCK Joint Venture”, whereby Mr Keng claimed that he had invested a sum of between $20,000 and $30,000 to renovate that room . In return for his investment, Mr Keng was to receive half of the monthly tuition revenue after Mr Toh was paid a fixed monthly salary of $2,000. However, Mr Keng alleged that Mr Toh never paid him his share of the revenue that was his due under the CCK Joint Venture. Despite the absence of payment, Mr Keng agreed to enter into a “fresh joint venture” with Mr Toh, pursuant to which the appellant was incorporated. Mr Keng claimed that the parties agreed that Mr Toh would continue to teach and retain the fees from the group of students that he was tutoring at that time until they had graduated from junior college (“JC”). Significantly, Mr Keng’s understanding of the “fresh joint venture” was that the entirety of Mr Toh’s tuition business would be transferred to and be carried out through the appellant.

3 Mr Toh’s account was almost entirely different. Mr Toh claimed that between 2007 and 2009, he had established himself as a popular economics tuition teacher for JC students and had marketed his services under the name “TuitionGenius”. Mr Toh denied Mr Keng’s account of the CCK Joint Venture entirely. Instead, he claimed that Mr Keng had approached him and had suggested that they take advantage of the reputation of “TuitionGenius” by establishing the appellant to operate as their joint venture. Mr Toh was hesitant because he lacked the means to invest any capital in a joint venture, had no experience in running one and wanted financial security as he hoped in time to start a family. To allay these concerns, the parties concluded an oral agreement to enter into a joint venture, on terms that: (a) Mr Toh would be free to continue to run his private tuition business and retain the revenue that it generated; and (b) Mr Toh would apply the expertise that he had acquired in building up a successful private tuition business to grow the appellant’s business and would participate in joint marketing activities with the appellant. The Court of Appeal (“the Court”) referred to this oral agreement as the “Joint Venture Agreement”.

4 In August 2009, Mr Toh entered into a written employment agreement with the appellant (“the Employment Agreement”) by which he agreed to serve as a director of the appellant for a period of five years. In September 2009, the appellant registered a business under the name REAL Education Centre (“REC”) which operated from premises at Clementi (the “Clementi Centre”), and in June 2011, it opened a second branch at Bedok (the “Bedok Centre”). Mr Toh taught economics classes at the Clementi and Bedok Centres, but continued to conduct classes at other locations as well, including at the HDB Flat.

5 The appellant ceased its operations at the Bedok Centre sometime in or around May 2014 as it was not profitable. In September 2012, Thinktank Learning Centre Pte Ltd (“ThinkTank”) was incorporated with Mr Toh, Mr Keng, and Mr Xavier Tong (“Mr Tong”) as its directors, and Mr Toh and Mr Tong as its shareholders. Sometime in April 2014, ThinkTank took over the Bedok Centre premises and the Bedok Centre’s students from the appellant.

6 In November 2010, Mr Toh registered a sole proprietorship, Economics at Tuitiongenius (“ETG”). Subsequently, Mr Toh incorporated ETGPL in April 2014 to replace ETG and corporatise his private tuition business. The Court referred to ETG and ETGPL as the “ETG Entities”. Mr Toh claimed that he had informed Mr Keng of this move, and had even been encouraged by Mr Keng to develop and grow his own business and, in that context, establish the ETG Entities. In line with this, the appellant and the ETG Entities conducted joint marketing activities.

7 In contrast, Mr Keng denied that he had agreed that Mr Toh could set up the ETG Entities. He claimed that in 2013, he began to suspect that Mr Toh was misappropriating money from the appellant. He procured the appellant’s employment of his son, Jun Hao, in 2014, a move which was partly motivated by his wish to gather information about how the appellant’s business was in fact doing. In October 2015, Mr Toh resigned as a director of the appellant and transferred his shareholding to Mr Keng, who in turn transferred his entire shareholding to Jun Hao in November 2015. While Mr Keng claimed that Mr Toh left because of Mr Keng’s growing suspicions that he had misappropriated money from the appellant, Mr Toh’s version was that their relationship began to deteriorate in late 2014 due to rumours that Mr Keng was having an extramarital affair with Mr Toh’s mother, and he resigned to avoid a further escalation of tensions between the two families.

8 In the High Court, the appellant alleged that by conducting his private tuition business under the ETG Entities, Mr Toh had breached the best efforts and exclusive employment clauses of the Employment Agreement as well as his fiduciary duties as a director of the appellant. Further, the appellant alleged that Mr Toh’s acts of training the appellant’s staff specifically to promote his economic classes and using ThinkTank to take over the Bedok Centre premises and the appellant’s Bedok Centre students constituted further breaches of his fiduciary duties. Lastly, the appellant claimed that the respondents, by marketing their services under “Economics @ TuitionGenius” (“ETG Mark”), were passing off their business as the appellant’s, which was marketed under “TuitionGenius” (“TG Mark”).

9 The appellant’s claims in breach of contract and fiduciary duties were largely dismissed by the High Court judge (“the Judge”) on the foundational finding that there were two oral agreements between Mr Toh and Mr Keng (the “Oral Agreements”) as follows: (a) the Joint Venture Agreement, under which Mr Toh could continue to run his private tuition business, retain the revenue that it generated and participate in joint marketing activities with the appellant; and (b) a subsequent oral agreement, under which Mr Toh was allowed to set up ETG in 2010, incorporate ETGPL in 2014, and carry on teaching economics under his private tuition business through the ETG Entities as well as retain the revenue generated thereby (“the Second Oral Agreement”). The Judge dismissed the appellant’s claim under the tort of passing off on the basis that that there was no evidence that the appellant had any goodwill in the TG Mark. The appellant appealed against the Judge’s dismissal of its claims.

The Court’s decision

10 The Judge’s finding as to the existence of the Oral Agreements was one that an appellate court should not and would not easily overturn. The Judge’s rejection of Mr Keng’s claims as to the CCK Joint Venture was unimpeachable. The absence of any evidence of Mr Keng having made the alleged investment of between $20,000 and $30,000, and of any renovations having been carried out at the room in the HDB Flat where Mr Toh conducted his classes was compelling when weighed against Mr Keng’s assertions to the contrary, and this severely undermined his claims as regards the CCK Joint Venture.: at [19][22].

11 As to the Joint Venture Agreement, the evidence established that Mr Keng knew all along that Mr Toh would continue to operate his own private tuition business and retain the revenue it generated. Counsel for the appellant accepted that Mr Keng could not meaningfully challenge the existence of the Joint Venture Agreement: at [19], [23] and [26].

12 The Judge’s finding as to the existence of the Second Oral Agreement was unimpeachable. The Judge was satisfied that Mr Keng knew about the ETG Entities because Mr Toh had set them up in a completely transparent manner. Further, Mr Keng’s knowledge of the ETG Entities was borne out by the following (at [28][41]):

(a) Mr Keng had meticulously scrutinised, approved and then signed cheques in favour of Mr Toh personally for the economics classes that he had taught at the Clementi and Bedok Centres.

(b) A document titled “Admin’s Guide for Dummies” set out the various partners and the different branches they were associated with. It also demarcated the mode and method of payment in relation to fees collected: (i) at the Clementi Centre; (ii) at the Bedok Centre; (iii) by ThinkTank; and (iv) for classes conducted by ETGPL.

(c) Separate student registration forms were used for Mr Toh’s classes, and these forms stated that the cheques for Mr Toh’s classes should be made payable to ETGPL.

(d) Jun Hao knew that the ETG Entities were separate and distinct businesses that belonged to Mr Toh, and had also been trained by the appellant’s former employees to separate the revenues received from Mr Toh’s classes and from the appellant’s revenues. Given Mr Keng’s claim that he had tasked Jun Hao to investigate and find out about the appellant’s affairs, there was no doubt that Jun Hao’s knowledge in this regard should be attributed to Mr Keng.

(e) Mr Toh had printed and issued three separate name cards for the tuition businesses conducted by the appellant, ThinkTank and the ETG Entities. These name cards were passed to Mr Keng and placed at the front desk of the Clementi Centre. The ETG Entities’ name card referred to Mr Toh as the “Principal Tutor & Director” of the ETG Entities, and included the HDB Flat among its places of business.

13 It was a matter of importance that the parties had entered into the Joint Venture Agreement. This was a fact known to both parties at the time the Employment Agreement was entered into and formed part of its factual matrix. The Joint Venture Agreement assisted the Court in interpreting the Employment Agreement by helping the Court to ascertain what the parties had in mind, at the time they entered into the Employment Agreement, as to the meaning and scope of the terms of the Employment Agreement. The latter therefore inevitably fell to be construed in that light, and the Joint Venture Agreement was admissible under s 94(f) of the Evidence Act (Cap 97, 1997 Rev Ed): at [48][49].

14 The Court cautioned against relying on declarations of subjective intent, which remained inadmissible except for the purpose of giving means to terms which were latently ambiguous. Mr Toh was a layperson, and his admission in cross-examination as to what he might subjectively have thought could be the meaning of the relevant clauses in the Employment Agreement was not helpful in interpreting the objective intention of the parties at the time they entered into the Employment Agreement. The Court adopted a “common sense approach” to ascertain the reasonable and probable expectations that the parties would have had, rather than analysing the Employment Agreement in an unduly technical and legalistic manner: at [51] and [53].

15 Clause 5 of the Employment Agreement recognised that notwithstanding the obligation on Mr Toh’s part to expend best efforts and devote most of his time to the appellant’s business, there was an express understanding that Mr Toh could not only keep alive, but continue to grow his private tuition business as a “personal or outside business” distinct from the appellant’s. There was hence no breach of this clause: at [55].

16 The key question under cl 11 of the Employment Agreement was the scope of the appellant’s present or contemplated business. Given the parties’ agreement that Mr Toh could continue teaching economics as part of his own private tuition business, the appellant’s contemplated business did not envisage cutting into Mr Toh’s business, and vice versa. Further, Mr Toh’s business complemented rather than competed with the appellant’s business. There was hence no breach of this clause: at [56].

17 Mr Toh could not be said to have breached his fiduciary duties as a director of the appellant by running his private tuition business through the ETG Entities. Given the agreement between Mr Keng and Mr Toh as to the basis on which the appellant’s business and Mr Toh’s personal business would co-exist under the Oral Agreements, there could not be any question of Mr Toh acting in breach of his fiduciary duties in running his private tuition business through the ETG Entities: at [60].

18 Mr Toh’s instructions to the appellant’s staff to promote his own economics classes did not constitute a breach of his fiduciary duties. Once it became evident that the parties were proceeding on the basis of the Oral Agreements, it was untenable for the appellant to contend that Mr Toh was doing anything impermissible in growing his own business. This was especially so because the appellant’s own success as a tuition centre was heavily tied to the growth of Mr Toh’s own business: at [62][63].

19 The appellant’s claim that Mr Toh had breached his fiduciary duties by causing ThinkTank to take over the Bedok Centre premises at no cost and procuring the transfer of the Bedok Centre’s students to ThinkTank had not been sufficiently pleaded in its Statement of Claim. Even if the Court were to consider the merits of this particular claim by the appellant, Mr Toh had not breached his fiduciary duties in this regard. Mr Keng’s case was that he did not know of ThinkTank’s existence and so could not have agreed to allow ThinkTank to take over the Bedok Centre premises and the appellant’s Bedok Centre students at no cost. The Court rejected this. It found that Mr Toh had kept Mr Keng informed about the development of his businesses, and that pursuant to the Oral Agreements, Mr Keng knew about ThinkTank’s operations and affairs. Mr Keng had thus agreed to or at least acquiesced in ThinkTank’s takeover of the Bedok Centre premises and the appellant’s Bedok Centre students, given that the appellant was not able to run the Bedok Centre profitably: at [66][70] and [76][77].

20 There was sufficient evidence of goodwill in the appellant’s business. It was not disputed that the appellant had had a business presence in Singapore since April 2009, had generated substantial revenue from 2010 to 2014, and had also spent a significant sum on marketing and advertising its tuition business during the same period: at [86].

21 The TG Mark was not distinctive of the appellant’s tuition business because the appellant had made a deliberate choice to market its tuition business predominantly under the “REAL Education Centre” mark (the “REC Mark”). Although there were instances where the TG Mark and the REC Mark were featured alongside one another, these alone were insufficient to show that the appellant’s current and/or prospective students and/or their parents had identified the TG Mark as distinctive of the appellant’s business. This must also be viewed in the light of the Judge’s finding that Mr Toh had used the TG Mark to promote his tuition business even before the appellant was incorporated: at [89][97].

22 There was no misrepresentation because the appellant had consented to the respondents’ use of the ETG Mark to market their business. Pursuant to the Oral Agreements, the parties had agreed to allow Mr Toh to continue conducting his private tuition business through the ETG Entities and to participate in joint marketing activities with the appellant: at [99][100].

 

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.

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