HIGH COURT OF SINGAPORE
http://www.ipsofactoj.com/highcourt/2007/Part02/hct2007(02)-002.htm
Coram
David Wong
- vs -
Man Financial (S) Pte Ltd
B.L. WOO J
18 JANUARY 2007
--------------------------------------------------------------------------
Judgment[a]
BL Woo J
1.0 INTRODUCTION
The plaintiff, Wong Bark Chuan, David (“Mr. Wong”) was the managing director and chief executive officer (“CEO”) of the defendant Man Financial (S) Pte Ltd (“MF”) which provided brokerage services. On 13 June 2005, he was asked to resign and placed on garden leave for three months from 13 June 2005 to 13 September 2005 while he served out a 3-month notice period. Mr. Wong and MF then entered into an agreement regarding the termination of his employment. The terms therefore were contained in a termination agreement (in the form of a letter) dated 13 June 2005 (“the TA”) which he accepted on 23 June 2005. The TA contained provisions on non-solicitation and non-competition for a period of 7 months up to 13 January 2006. Under the TA, Mr. Wong was to receive certain benefits on 13 September 2005 provided he was not in breach of any of the terms of the TA. The benefits were:
13,014 shares in Man Group plc and
US$263,000.
I will refer to them collectively as “the Compensation”.
MF alleged that Mr. Wong had breached paragraphs C.1 and C.3 of the TA by soliciting the employment of employees or former employees of MF and by participating or rendering advice to a competitor, Refco (S) Pte Ltd (“Refco”). Therefore, MF declined to pay the Compensation.
Consequently, Mr. Wong commenced this action to claim the Compensation. Although MF relied only on breaches of paragraphs C.1 and C.3 of the TA to defend its position, I set out below paragraphs B.1 and B.2, C.1 to C.4 and D.1 as they have some bearing on the issues or arguments:
B.
Payment on Termination
B.1
In consideration of you:-
(a)
serving out your Notice Period on leave from the office, and
(b)
agreeing to the terms and conditions set forth herein, apart from paying you your full salary and allowances during the Notice Period the Company agrees to pay you:
(i)
13,014 shares in Man Group plc granted to you under the terms of the Man Group plc 2002, 2003 and 2004 co-investment schemes (as at close of business 10 June 2005 valued at approximately US$330,000); and
(ii)
a goodwill payment of US$263,000.
B.2
Save in the event that you breach any of the terms of this Termination Agreement, the sums set out in B.1(b) above will be paid to you in full and without deduction at the end of the Notice Period, on 13 September 2005.
C.
Non-Solicitation and Non-Competition
C.1
In further consideration of the foregoing, you agree that for a period of seven (7) months from the Termination Date, that is, up to 13 January 2006 you shall not directly or indirectly employ or solicit the employment of (whether as an employee, officer, director, agent or consultant) any person who is or was at any time during the period 13 June 2004 to 13 June 2005 an officer, director, representative or employee of the Company. For avoidance of doubt, you shall not be deemed to employ any person unless you are involved or have otherwise provided input into the decision to hire such individual.
C.2
In further consideration of the foregoing, you agree that for a period of seven (7) months from the Termination Date, that is, up to 13 January 2006, you shall not directly or indirectly either for yourself or for any other business in person, solicit, call upon, attempt to solicit or attempt to call upon any party who is or was at any time during the period 13 June 2004 to 13 June 2005 a client of the Company and you will not accept any business from such clients of the Company for yourself or for any employer during such period. The said restriction shall apply anywhere in the world, and for products and services in direct competition with products and services offered by the Company.
C.3
In further consideration of the foregoing, you agree that you will not either directly or indirectly for a period of seven (7) months from the Termination Date, that is up to 13 January 2006, anywhere in the world, organize, own, manage, operate, participate in, render advice to, control, or have an investment or ownership interest in any business that engages in the marketing and/or sale of products, services and/or systems which are in competition with those provided by the Company.
C.4
You agree that this Paragraph C is reasonable and necessary for the protection of the Company’s interests, and that you have agreed to these clauses in consideration of the amounts to be paid to you as set out in Paragraph B above.
D.
Release and Discharge
In further consideration of the foregoing, you hereby unconditionally and irrevocably discharge and release the Company, its parent, officers and directors, and their successors and assigns from any and all claims, demands, causes of action, suits, charges, violation and/or liability whatsoever, known or unknown involving any matter arising out of or in any way related, directly or indirectly, to your employment with the Company or the termination thereof other than your entitlements and benefits under this Termination Agreement.
2.0 THE ISSUES
The issues are:
whether Mr. Wong had solicited the employment of various employees or former employees of MF to work in Refco,
whether Mr. Wong had participated in or rendered advice to Refco,
if A and/or B applies, whether Mr. Wong was prima facie in breach of paragraphs C.1 and/or C.3,
if so, whether paragraphs C.1 and/or C.3 was invalid for being in unreasonable restraint of trade,
if paragraphs C.1 and/or C.3 was invalid, whether Mr. Wong would still be entitled to the Compensation, and whether the allegation giving rise to this issue must first be pleaded,
whether the requirement in paragraph B.2 that Mr. Wong must not be in breach of any of the terms in the TA to be entitled to the Compensation was an unenforceable penalty.
2.1 Whether Mr. Wong had solicited the employment etc [Issue A]
MF asserted that Mr. Wong had solicited the employment of Tricia Ng Geok Tin and Tan Siang Hwee who were MF’s employees during the prohibited period of 13 June 2005 to 13 January 2006, as well as the employment of 11 others who had left MF before or during the prohibited period.
From the affidavit of evidence-in-chief (“AEIC”) of Mr. Lai Eng Keat, as clarified and amended by his oral evidence, I set out below the names of those other 11 persons and particulars of the dates of their resignations from MF, the dates of letters of offer to each of them from Refco, their last dates with MF and the dates they commenced employment with Refco:
Date of resignation
Date of letters of offers from Refco
Date left Man Financial
Date commenced
employment at
Refco
Fennie Lim (“Fennie”)
Left before
13 June 2005
04 Aug 2005
30 Jun 2005
16 Aug 2005
Woon Keng Hua a.k.a Dickson Woon (“Dickson”)
20 Jun 2005
30 Jun 2005
08 Jul 2005
11 Jul 2005
Joey Sim (“Joey”)
20 Jun 2005
30 Jun 2005
31 Jul 2005
16 Aug 2005
Diana Sim (“Diana”)
20 Jun 2005
01 Jul 2005
06 Aug 2005
16 Aug 2005
David Tan
21 Jun 2005
12 Jul 2005
20 Sep 2005
21 Sep 2005
Malcolm Yeo (“Malcolm”)
22 Jun 2005
16 Jun 2005
21 Jul 2005
25 Jul 2005
June Lim (“June”)
23 Jun 2005
05 Aug 2005
28 Jun 2005
16 Aug 2005
Voo Tung Heng (“Voo”)
27 Jun 2005
05 Jul 2005
26 Jul 2005
27 Jul 2005
Seet Choon Seng a.k.a Dennis Seet (“Dennis”)
01 Jul 2005
28 Jun 2005
15 Aug 2005
16 Aug 2005
Jacob Djaja (“Jacob”)
23 Aug 2005
18 Jul 2005
02 Sep 2005
05 Sep 2005
Vincent Quah (“Vincent”)
24 Aug 2005
22 Aug 2005
24 Sep 2005
26 Sep 2005
I also set out the names of the witnesses for Mr. Wong and for MF:
PW1 Mr. Wong, the plaintiff.
PW2 Dickson. He was a vice president and chief dealer of MF’s Foreign Exchange desk before he moved to Refco. At the time of the trial he was no longer with Refco but was a senior dealer at Philip Futures Pte Ltd.
PW3 Voo. He was vice president responsible for the development of the foreign exchange business of MF before he moved to Refco. At the time of the trial he was no longer with Refco but was an associate at DBS Vickers Securities Online (S) Pte Ltd.
PW4 June. She had held various positions in MF before she joined Refco. At the time of the trial she was a homemaker.
PW5 Jacob. He was an independent account executive at MF and then at Refco meaning that he was servicing his own clients. At the time of the trial he was an independent account executive with OCBC Securities Private Limited.
PW6 Dennis. He was at one time the chief operating officer (“COO”) and the de facto deputy CEO of MF. In early 2004, he moved out of the COO role to assume direct responsibility for business units including general brokerage, equities and Taiwan. However, he continued to assist Mr. Wong with management on an ad hoc basis. He left MF for Refco but at the time of the trial he was unemployed.
DW1 Lai Eng Keat (“Eng Keat”). He was working with Mr. Wong at MF and at the time of the trial he was the Deputy CEO and COO of MF.
DW2 Seow Hock Hin (“Hock Hin”). He was at all material times a senior vice president at Refco.
DW3 Tricia Ng Geok Tin (“Tricia”). She was at all material times working at MF. At the time of the trial she was a vice president of MF.
DW4 Tan Siang Hwee (“Siang Hwee”). She was also at all material times working at MF. At the time of the trial she was also a vice president of MF.
DW5 Daniel Yeo Chin Tuan (“Daniel”). He was working in MF and took over as CEO of MF from Mr. Wong. He was still holding that position at the time of trial.
Christopher John Robert Smith who was the Chairman and COO of Man Financial Ltd at all material times also executed an AEIC. His attendance for cross-examination was not required and his AEIC was admitted with the leave of the court. The lead counsel for Mr. Wong was Mr. Chia Ho Choon. The lead counsel for MF was Mr. Andre Maniam.
Mr. Wong’s evidence was that although he had had discussions with Tan Hup Thye (“Hup Thye”) who was the Managing Director and CEO of Refco about the possibility of his joining Refco before the TA was entered into, Mr. Wong had no further intention of joining Refco after the TA was entered into even though he was entitled to join them after the period of restraint. It was also Mr. Wong’s evidence that after the TA was signed, he did not explore further with Hup Thye about the idea of his joining Refco. Neither did Mr. Wong discuss with Hup Thye, or Dennis, about the eventual employment of the 11 people mentioned above or of Tricia and Siang Hwee.
MF’s position was that after Mr. Wong entered into the TA, Mr. Wong had had a consensus with Hup Thye that he (Mr. Wong) and various persons employed by MF would join Refco. Mr. Wong would be joining Refco after the period of restraint but the others would join first. To this end, Mr. Wong had, during the period of restraint, solicited directly or indirectly the employment of the 11 people, or some of them, as well as that of Tricia and Siang Hwee. I should also mention that it was common ground that none of the 11 people was under any restraint not to join a competitor or not to solicit the employment of employees or former employees of MF for a competitor. Accordingly, for example, Dennis himself was not prohibited from soliciting the employment of such employees or former employees. However, MF’s position was that where Dennis did solicit the employment of such persons, this was pursuant to the consensus which Mr. Wong had had with Hup Thye.
I would add that, ironically perhaps, Refco was acquired by MF in December 2005. Therefore, even if Mr. Wong was to join Refco after the period of restraint, he did not do so eventually. At the time of the trial he remained unemployed. As for Hup Thye, he left Refco after it was acquired by MF. Neither side called him to give evidence. I will deal first with the allegations about Mr. Wong’s solicitation directly or indirectly of Tricia, Siang Hwee and then the 11 people.
It is useful to understand the relationship between Mr. Wong and some of the people mentioned. Some of MF’s witnesses referred to Mr. Wong’s “team” at MF whereas Mr. Wong’s position was that as the CEO, everyone of the staff was working under him and he had no “team” as such. Siang Hwee’s evidence was that by Mr. Wong’s “team” she meant those who were close to him socially i.e. those who attended dinners and lunches with him socially and/or who went on tours with him (NE 921). Siang Hwee also listed those who were close to Mr. Wong in the following order with those who were closer to him nearer the top end of the list (NE 929):
Joey
Diana
Dennis
Jacob
Dickson
David Tan/Siang Hwee
Voo
Malcolm
June
Vincent
Fennie
Joey, Diana and Dennis were closest to Mr. Wong. I should mention that although Joey and Diana share the same surname, they are not related to each other. Siang Hwee considered herself to be quite close to Mr. Wong but this was disputed. She said Tricia was closer to Mr. Wong than she was (NE 931). It was not disputed that Tricia was close to Mr. Wong.
It was evident to me that there were some employees of MF who were closer to Mr. Wong than others. I should mention that although Mr. Wong had said that he was not close to Dickson, Voo, Malcolm and June, he also said he considered them as friends. I accept Siang Hwee’s list as set out above which was not really in dispute except for herself.
2.1.1 Tricia
As I have mentioned, Tricia was close to Mr. Wong.
She said that on the night of 12 June 2005 i.e. just before Mr. Wong was put on garden leave on 13 June 2005, Mr. Wong had sent her a short text message (“SMS”) saying that there would be a new boss the next day. She called him to find out what he meant and he said she would find out who the new boss was the next day and that he had already made plans. He also said he would tell her more about his plans later. Mr. Wong did not deny that he had sent such an SMS nor the fact of a telephone conversation with her thereafter. However, he denied the substance of the telephone conversation as alleged by her.
Tricia said that the next day she learned that Daniel had taken over Mr. Wong as managing director of MF. Several colleagues whom she perceived to be close to Mr. Wong resigned in the next few months.
On 21 June 2005, Tricia had dinner with Mr. Wong, Joey and Diana at Corduroy & Finch. The day before, on 20 June 2005, both Joey and Diana had tendered their resignations from MF but were still in the employ of MF until 31 July and 6 August 2005 respectively. Tricia said that at the dinner, Mr. Wong said something about if he were to go somewhere and he punched a figure of 5,000 in his handphone to indicate a proposal of a $5,000 salary to her and asked her if it was okay with her. She smiled back at him but did not reply. Mr. Wong did not deny the occasion of the dinner but denied that he had mentioned if he were to go somewhere or punched in the figure of 5,000 or asked her if it was okay with her.
On 21 July 2005, Tricia met with Dennis at Starbucks at Philip Street. Dennis had tendered his resignation from MF on 1 July 2005 and was serving his notice until 15 August 2005. He commenced employment with Refco on 16 August 2005. According to Tricia, Dennis asked her to meet him on 21 July 2005. He told her he would be joining Refco, offered her a job there with a salary of $5,000 per month and asked her to prepare her resume and hand it to him before he went on leave. She simply replied, “Okay”.
Dennis’s version was different. He alleged that it was Tricia who had asked him to meet her on 21 July 2005. She had been reporting directly to him for the securities business in a dealing and administrative capacity. At the meeting, she asked him about his plans and asked if he was joining Refco. As he had been working with her for many years and after she promised to keep the conversation confidential, he told her he was joining Refco. Dennis alleged that Tricia indicated she was not sure where she stood with the new CEO of MF and asked if he thought that Refco would be a better place to work in. He jokingly asked her if she would prefer to stay put at MF so that if MF closed its securities business she might get retrenchment benefits. This was his way of hinting that he did not want her at Refco. Dennis also said that he knew about Tricia’s inability to work with June and Joey. Joey had already received a job offer from Refco then and June was likely to join Refco. Dennis said that June and Joey, being graduates with marketing experience, were suitable for the task of developing and managing the securities and contract for difference businesses at Refco whereas Tricia was basically a dealer servicing house clients without marketing experience or clients of her own other than relatives and friends. He did tell Tricia that she could send her resume directly to Refco if she wished but clarified that it would not be to work with his team.
According to Tricia, Dennis then sent her an SMS on 25 July 2005 to ask her for her resume again. Dennis, however, said he could not recall having done so.
According to Tricia, there was another telephone discussion with Mr. Wong which she thought had occurred in early August 2005. He had called her, but his phone number was not displayed on her mobile phone, to say that Refco had a full dealing licence and could deal with retail clients. Mr. Wong had also said he was with Hup Thye. Mr. Wong said if she was interested in knowing more he could clarify with Hup Thye there and then. Tricia said she told him she was busy and would call him back but did not do so. She said she did not know how to give him a negative response to his approaches. On the other hand, Mr. Wong denied such a conversation.
Tricia said that in August 2005, she bumped into David Tan and joined him for coffee at Starbucks at Philip Street. David Tan had mentioned to her that Mr. Wong was “cracking his head” to see how to get his team at MF over to Refco. David Tan was not called by Mr. Wong to give evidence on this allegation but Mr. Chia criticized the reliability of Tricia’s evidence on this point as I shall elaborate later.
Tricia asserted that on or about 23 August 2005, she met up with Dennis, again at his request, this time for lunch at Tea Spa at Caltex House. During lunch, Dennis again tried to persuade her to join Refco. As she was not keen to leave MF she told him she would consider moving some time next year. She did not hear from Dennis again. Dennis disagreed that he had initiated the lunch meeting. He said Tricia was still his broker and as they were talking they agreed to have lunch that day. Paragraphs 40 and 41 of his AEIC stated.
MY LUNCH MEETING WITH TRICIA NG ON 23 AUGUST 2005
40.
.... On account of our earlier meeting in July 2005, I personally met with Tricia Ng to explain why it was not feasible for her to join me at REFCO and, quite importantly, why I preferred to talk about it only now and not earlier (when we met in July 2005).
41.
We met for lunch on 23 August 2005. During the course of lunch, I told Tricia Ng that I did not feel it appropriate for me to talk about my plans at REFCO when we met earlier in July 2005 as I had not joined REFCO then. I told Tricia Ng that REFCO had offered employment to June Lim and Joey Sim as they were no longer in MAN’s employment and were looking for jobs. I further told her that there was nothing personal about my decision as it was based solely on June Lim and Joey Sim being available and also capable of developing and managing both the securities and the CFD business. As I was aware of ill-feelings between Tricia Ng and June Lim, I apologised to her if I had disappointed her in any way. As I anticipated that June Lim and Joey Sim would be approaching certain securities clients of MAN whom they were also servicing at MAN, I took the opportunity to ask Tricia Ng not to take it personally if June Lim or Joey Sim should approach any of such clients as such was the nature of the business. She said that she understood the situation.
I come now to events between 31 August and 16 September 2005. Tricia asserted that on 31 August 2005, she had received a call from Mr. Wong at night. After asking her if she was alone, he informed her that he understood she was not joining the team at Refco yet. After she confirmed that, he told her that if she did not join the team at Refco, they would start competing for her clients and would charge as low as 25 basis points, meaning 0.25%, as commission. He told her this would cause her sales volume to be lowered by half. Tricia was very upset. She thought it was unfair for her former colleagues to try and poach her clients. She informed Mr. Wong that she would like another week to consider as her daughter was sick and she herself was not feeling well. He agreed. However, on or about 1 September 2005, Tricia received calls from some of her clients asking her about a letter they had received from Refco which was signed by Joey. She was shocked and upset as she had informed Mr. Wong that she would get back to him in a week’s time. She called some other clients who also said they had received similar letters. She complained to Eng Keat about the attempts to poach her clients. On or about 6 September 2005, she had lunch with Daniel. She was still upset. She told Daniel what had transpired and that Mr. Wong and Dennis had approached her on several occasions to join Refco.
On 7 September 2005, MF’s solicitors, Wong Partnership, sent a letter to Mr. Wong alleging that he had breached various provisions in the TA by soliciting or attempting to solicit the employment of several of MF’s employees on behalf of a competitor.
Tricia alleged that on the night of 7 September 2005, Mr. Wong had called her to ask whether she had told anyone that he had called her. She told him “No” as she did not want to upset him.
On 9 September 2005, Mr. Wong replied to Wong Partnership to dispute that he had breached the TA.
According to Tricia, Eng Keat approached her on or about 9 September 2005 to ask her about her conversation with Mr. Wong (which she had allegedly already informed Daniel about). He asked her to put her version in black and white which she did. Her undated letter addressed to Daniel, was Exhibit D1.
On 13 September 2005, Wong Partnership wrote again to Mr. Wong. This time their letter mentioned specifically the conversation he had allegedly had with Tricia on or about 31 August 2005.
Tricia alleged that on the same day, i.e. 13 September 2005, Mr. Wong called her from a number that was not his usual number and was unfamiliar to her. He asked her whether her phone was tapped. She was surprised and said “No”. He asked her why she said “those things” and said he had treated her as a friend and only wanted to retire. He asked whether MF had coerced her into saying he tried to solicit her employment and she denied this. After a while, Mr. Wong said he would hang up since she did not want to say anything to him but suggested that she call him if she wanted to tell him anything.
On 16 September 2005, Mr. Wong replied to Wong Partnership to deny that he had solicited Tricia’s employment. He also said in that letter that he would respond more fully after he heard directly from Tricia.
Mr. Wong did not deny the fact that he had had a telephone discussion with Tricia in the night of 31 August 2005. However, he denied her version of the substance of the conversation saying that it was friendly banter on various topics including topics which he had exchanged emails with her earlier on the same day. Mr. Wong also did not deny the telephone conversation with Tricia on 7 September 2005 but again he disagreed with her version of the substance of the conversation. Mr. Wong asserted that he had asked Tricia whether she was aware of any employee of MF alleging that he had approached that person to join a competitor. She said she had no such knowledge. As for the alleged telephone discussion with Tricia on 13 September 2005, Mr. Wong denied that he had spoken to her then.
Mr. Wong’s position was that there was no reason why he should approach Tricia and that Dennis did not even want her. In addition to Dennis’ reasons, see [19] above, Mr. Wong said that the key businesses of MF then were businesses other than securities business which was a barely profitable and marginal business contributing about 2% only to MF’s operating profit. Mr. Wong said there were more capable producers in MF whom he knew well but did not attempt to persuade to join Refco. On the other hand, I note that there was also evidence as to why he and/or Dennis might have wanted her to join Refco. First, Tricia was handling the accounts of Mr. Wong and of Dennis at MF. They must have been happy for her to do so. Secondly, she was the most senior person in MF manning MF’s securities desk. Indeed, at the time when Dennis left MF, she was the only one manning that desk. If she went over to Refco, that would have been a loss to MF although Dennis sought to deny this. Thirdly, although Dennis said he was already getting Joey and June for his team, June did not have a licence to deal in securities at the time and it was not suggested that her role would be confined to marketing. June only obtained her licence on 4 November 2005. It would have made sense for Dennis to get Tricia provided she would agree to join Refco. Furthermore, it was June’s evidence that after she tendered her resignation on 23 June 2005 from MF, she made a courtesy telephone call on Dennis in early July 2005. When she asked, Dennis informed her he was joining Refco and he told her that if she was interested, she could apply to join Refco which she eventually did. From June’s evidence on this point, it was not Dennis who had sought her out to join Refco. True, Dennis and June suggested that Tricia could not work with Joey and June herself had difficulties working with Tricia. However, neither Mr. Wong nor Dennis suggested that that was the primary reason why Tricia would not have been welcome to join Refco.
http://www.ipsofactoj.com/highcourt/2007/Part02/hct2007(02)-002.htm
Coram
David Wong
- vs -
Man Financial (S) Pte Ltd
B.L. WOO J
18 JANUARY 2007
--------------------------------------------------------------------------
Judgment[a]
BL Woo J
1.0 INTRODUCTION
The plaintiff, Wong Bark Chuan, David (“Mr. Wong”) was the managing director and chief executive officer (“CEO”) of the defendant Man Financial (S) Pte Ltd (“MF”) which provided brokerage services. On 13 June 2005, he was asked to resign and placed on garden leave for three months from 13 June 2005 to 13 September 2005 while he served out a 3-month notice period. Mr. Wong and MF then entered into an agreement regarding the termination of his employment. The terms therefore were contained in a termination agreement (in the form of a letter) dated 13 June 2005 (“the TA”) which he accepted on 23 June 2005. The TA contained provisions on non-solicitation and non-competition for a period of 7 months up to 13 January 2006. Under the TA, Mr. Wong was to receive certain benefits on 13 September 2005 provided he was not in breach of any of the terms of the TA. The benefits were:
13,014 shares in Man Group plc and
US$263,000.
I will refer to them collectively as “the Compensation”.
MF alleged that Mr. Wong had breached paragraphs C.1 and C.3 of the TA by soliciting the employment of employees or former employees of MF and by participating or rendering advice to a competitor, Refco (S) Pte Ltd (“Refco”). Therefore, MF declined to pay the Compensation.
Consequently, Mr. Wong commenced this action to claim the Compensation. Although MF relied only on breaches of paragraphs C.1 and C.3 of the TA to defend its position, I set out below paragraphs B.1 and B.2, C.1 to C.4 and D.1 as they have some bearing on the issues or arguments:
B.
Payment on Termination
B.1
In consideration of you:-
(a)
serving out your Notice Period on leave from the office, and
(b)
agreeing to the terms and conditions set forth herein, apart from paying you your full salary and allowances during the Notice Period the Company agrees to pay you:
(i)
13,014 shares in Man Group plc granted to you under the terms of the Man Group plc 2002, 2003 and 2004 co-investment schemes (as at close of business 10 June 2005 valued at approximately US$330,000); and
(ii)
a goodwill payment of US$263,000.
B.2
Save in the event that you breach any of the terms of this Termination Agreement, the sums set out in B.1(b) above will be paid to you in full and without deduction at the end of the Notice Period, on 13 September 2005.
C.
Non-Solicitation and Non-Competition
C.1
In further consideration of the foregoing, you agree that for a period of seven (7) months from the Termination Date, that is, up to 13 January 2006 you shall not directly or indirectly employ or solicit the employment of (whether as an employee, officer, director, agent or consultant) any person who is or was at any time during the period 13 June 2004 to 13 June 2005 an officer, director, representative or employee of the Company. For avoidance of doubt, you shall not be deemed to employ any person unless you are involved or have otherwise provided input into the decision to hire such individual.
C.2
In further consideration of the foregoing, you agree that for a period of seven (7) months from the Termination Date, that is, up to 13 January 2006, you shall not directly or indirectly either for yourself or for any other business in person, solicit, call upon, attempt to solicit or attempt to call upon any party who is or was at any time during the period 13 June 2004 to 13 June 2005 a client of the Company and you will not accept any business from such clients of the Company for yourself or for any employer during such period. The said restriction shall apply anywhere in the world, and for products and services in direct competition with products and services offered by the Company.
C.3
In further consideration of the foregoing, you agree that you will not either directly or indirectly for a period of seven (7) months from the Termination Date, that is up to 13 January 2006, anywhere in the world, organize, own, manage, operate, participate in, render advice to, control, or have an investment or ownership interest in any business that engages in the marketing and/or sale of products, services and/or systems which are in competition with those provided by the Company.
C.4
You agree that this Paragraph C is reasonable and necessary for the protection of the Company’s interests, and that you have agreed to these clauses in consideration of the amounts to be paid to you as set out in Paragraph B above.
D.
Release and Discharge
In further consideration of the foregoing, you hereby unconditionally and irrevocably discharge and release the Company, its parent, officers and directors, and their successors and assigns from any and all claims, demands, causes of action, suits, charges, violation and/or liability whatsoever, known or unknown involving any matter arising out of or in any way related, directly or indirectly, to your employment with the Company or the termination thereof other than your entitlements and benefits under this Termination Agreement.
2.0 THE ISSUES
The issues are:
whether Mr. Wong had solicited the employment of various employees or former employees of MF to work in Refco,
whether Mr. Wong had participated in or rendered advice to Refco,
if A and/or B applies, whether Mr. Wong was prima facie in breach of paragraphs C.1 and/or C.3,
if so, whether paragraphs C.1 and/or C.3 was invalid for being in unreasonable restraint of trade,
if paragraphs C.1 and/or C.3 was invalid, whether Mr. Wong would still be entitled to the Compensation, and whether the allegation giving rise to this issue must first be pleaded,
whether the requirement in paragraph B.2 that Mr. Wong must not be in breach of any of the terms in the TA to be entitled to the Compensation was an unenforceable penalty.
2.1 Whether Mr. Wong had solicited the employment etc [Issue A]
MF asserted that Mr. Wong had solicited the employment of Tricia Ng Geok Tin and Tan Siang Hwee who were MF’s employees during the prohibited period of 13 June 2005 to 13 January 2006, as well as the employment of 11 others who had left MF before or during the prohibited period.
From the affidavit of evidence-in-chief (“AEIC”) of Mr. Lai Eng Keat, as clarified and amended by his oral evidence, I set out below the names of those other 11 persons and particulars of the dates of their resignations from MF, the dates of letters of offer to each of them from Refco, their last dates with MF and the dates they commenced employment with Refco:
Date of resignation
Date of letters of offers from Refco
Date left Man Financial
Date commenced
employment at
Refco
Fennie Lim (“Fennie”)
Left before
13 June 2005
04 Aug 2005
30 Jun 2005
16 Aug 2005
Woon Keng Hua a.k.a Dickson Woon (“Dickson”)
20 Jun 2005
30 Jun 2005
08 Jul 2005
11 Jul 2005
Joey Sim (“Joey”)
20 Jun 2005
30 Jun 2005
31 Jul 2005
16 Aug 2005
Diana Sim (“Diana”)
20 Jun 2005
01 Jul 2005
06 Aug 2005
16 Aug 2005
David Tan
21 Jun 2005
12 Jul 2005
20 Sep 2005
21 Sep 2005
Malcolm Yeo (“Malcolm”)
22 Jun 2005
16 Jun 2005
21 Jul 2005
25 Jul 2005
June Lim (“June”)
23 Jun 2005
05 Aug 2005
28 Jun 2005
16 Aug 2005
Voo Tung Heng (“Voo”)
27 Jun 2005
05 Jul 2005
26 Jul 2005
27 Jul 2005
Seet Choon Seng a.k.a Dennis Seet (“Dennis”)
01 Jul 2005
28 Jun 2005
15 Aug 2005
16 Aug 2005
Jacob Djaja (“Jacob”)
23 Aug 2005
18 Jul 2005
02 Sep 2005
05 Sep 2005
Vincent Quah (“Vincent”)
24 Aug 2005
22 Aug 2005
24 Sep 2005
26 Sep 2005
I also set out the names of the witnesses for Mr. Wong and for MF:
PW1 Mr. Wong, the plaintiff.
PW2 Dickson. He was a vice president and chief dealer of MF’s Foreign Exchange desk before he moved to Refco. At the time of the trial he was no longer with Refco but was a senior dealer at Philip Futures Pte Ltd.
PW3 Voo. He was vice president responsible for the development of the foreign exchange business of MF before he moved to Refco. At the time of the trial he was no longer with Refco but was an associate at DBS Vickers Securities Online (S) Pte Ltd.
PW4 June. She had held various positions in MF before she joined Refco. At the time of the trial she was a homemaker.
PW5 Jacob. He was an independent account executive at MF and then at Refco meaning that he was servicing his own clients. At the time of the trial he was an independent account executive with OCBC Securities Private Limited.
PW6 Dennis. He was at one time the chief operating officer (“COO”) and the de facto deputy CEO of MF. In early 2004, he moved out of the COO role to assume direct responsibility for business units including general brokerage, equities and Taiwan. However, he continued to assist Mr. Wong with management on an ad hoc basis. He left MF for Refco but at the time of the trial he was unemployed.
DW1 Lai Eng Keat (“Eng Keat”). He was working with Mr. Wong at MF and at the time of the trial he was the Deputy CEO and COO of MF.
DW2 Seow Hock Hin (“Hock Hin”). He was at all material times a senior vice president at Refco.
DW3 Tricia Ng Geok Tin (“Tricia”). She was at all material times working at MF. At the time of the trial she was a vice president of MF.
DW4 Tan Siang Hwee (“Siang Hwee”). She was also at all material times working at MF. At the time of the trial she was also a vice president of MF.
DW5 Daniel Yeo Chin Tuan (“Daniel”). He was working in MF and took over as CEO of MF from Mr. Wong. He was still holding that position at the time of trial.
Christopher John Robert Smith who was the Chairman and COO of Man Financial Ltd at all material times also executed an AEIC. His attendance for cross-examination was not required and his AEIC was admitted with the leave of the court. The lead counsel for Mr. Wong was Mr. Chia Ho Choon. The lead counsel for MF was Mr. Andre Maniam.
Mr. Wong’s evidence was that although he had had discussions with Tan Hup Thye (“Hup Thye”) who was the Managing Director and CEO of Refco about the possibility of his joining Refco before the TA was entered into, Mr. Wong had no further intention of joining Refco after the TA was entered into even though he was entitled to join them after the period of restraint. It was also Mr. Wong’s evidence that after the TA was signed, he did not explore further with Hup Thye about the idea of his joining Refco. Neither did Mr. Wong discuss with Hup Thye, or Dennis, about the eventual employment of the 11 people mentioned above or of Tricia and Siang Hwee.
MF’s position was that after Mr. Wong entered into the TA, Mr. Wong had had a consensus with Hup Thye that he (Mr. Wong) and various persons employed by MF would join Refco. Mr. Wong would be joining Refco after the period of restraint but the others would join first. To this end, Mr. Wong had, during the period of restraint, solicited directly or indirectly the employment of the 11 people, or some of them, as well as that of Tricia and Siang Hwee. I should also mention that it was common ground that none of the 11 people was under any restraint not to join a competitor or not to solicit the employment of employees or former employees of MF for a competitor. Accordingly, for example, Dennis himself was not prohibited from soliciting the employment of such employees or former employees. However, MF’s position was that where Dennis did solicit the employment of such persons, this was pursuant to the consensus which Mr. Wong had had with Hup Thye.
I would add that, ironically perhaps, Refco was acquired by MF in December 2005. Therefore, even if Mr. Wong was to join Refco after the period of restraint, he did not do so eventually. At the time of the trial he remained unemployed. As for Hup Thye, he left Refco after it was acquired by MF. Neither side called him to give evidence. I will deal first with the allegations about Mr. Wong’s solicitation directly or indirectly of Tricia, Siang Hwee and then the 11 people.
It is useful to understand the relationship between Mr. Wong and some of the people mentioned. Some of MF’s witnesses referred to Mr. Wong’s “team” at MF whereas Mr. Wong’s position was that as the CEO, everyone of the staff was working under him and he had no “team” as such. Siang Hwee’s evidence was that by Mr. Wong’s “team” she meant those who were close to him socially i.e. those who attended dinners and lunches with him socially and/or who went on tours with him (NE 921). Siang Hwee also listed those who were close to Mr. Wong in the following order with those who were closer to him nearer the top end of the list (NE 929):
Joey
Diana
Dennis
Jacob
Dickson
David Tan/Siang Hwee
Voo
Malcolm
June
Vincent
Fennie
Joey, Diana and Dennis were closest to Mr. Wong. I should mention that although Joey and Diana share the same surname, they are not related to each other. Siang Hwee considered herself to be quite close to Mr. Wong but this was disputed. She said Tricia was closer to Mr. Wong than she was (NE 931). It was not disputed that Tricia was close to Mr. Wong.
It was evident to me that there were some employees of MF who were closer to Mr. Wong than others. I should mention that although Mr. Wong had said that he was not close to Dickson, Voo, Malcolm and June, he also said he considered them as friends. I accept Siang Hwee’s list as set out above which was not really in dispute except for herself.
2.1.1 Tricia
As I have mentioned, Tricia was close to Mr. Wong.
She said that on the night of 12 June 2005 i.e. just before Mr. Wong was put on garden leave on 13 June 2005, Mr. Wong had sent her a short text message (“SMS”) saying that there would be a new boss the next day. She called him to find out what he meant and he said she would find out who the new boss was the next day and that he had already made plans. He also said he would tell her more about his plans later. Mr. Wong did not deny that he had sent such an SMS nor the fact of a telephone conversation with her thereafter. However, he denied the substance of the telephone conversation as alleged by her.
Tricia said that the next day she learned that Daniel had taken over Mr. Wong as managing director of MF. Several colleagues whom she perceived to be close to Mr. Wong resigned in the next few months.
On 21 June 2005, Tricia had dinner with Mr. Wong, Joey and Diana at Corduroy & Finch. The day before, on 20 June 2005, both Joey and Diana had tendered their resignations from MF but were still in the employ of MF until 31 July and 6 August 2005 respectively. Tricia said that at the dinner, Mr. Wong said something about if he were to go somewhere and he punched a figure of 5,000 in his handphone to indicate a proposal of a $5,000 salary to her and asked her if it was okay with her. She smiled back at him but did not reply. Mr. Wong did not deny the occasion of the dinner but denied that he had mentioned if he were to go somewhere or punched in the figure of 5,000 or asked her if it was okay with her.
On 21 July 2005, Tricia met with Dennis at Starbucks at Philip Street. Dennis had tendered his resignation from MF on 1 July 2005 and was serving his notice until 15 August 2005. He commenced employment with Refco on 16 August 2005. According to Tricia, Dennis asked her to meet him on 21 July 2005. He told her he would be joining Refco, offered her a job there with a salary of $5,000 per month and asked her to prepare her resume and hand it to him before he went on leave. She simply replied, “Okay”.
Dennis’s version was different. He alleged that it was Tricia who had asked him to meet her on 21 July 2005. She had been reporting directly to him for the securities business in a dealing and administrative capacity. At the meeting, she asked him about his plans and asked if he was joining Refco. As he had been working with her for many years and after she promised to keep the conversation confidential, he told her he was joining Refco. Dennis alleged that Tricia indicated she was not sure where she stood with the new CEO of MF and asked if he thought that Refco would be a better place to work in. He jokingly asked her if she would prefer to stay put at MF so that if MF closed its securities business she might get retrenchment benefits. This was his way of hinting that he did not want her at Refco. Dennis also said that he knew about Tricia’s inability to work with June and Joey. Joey had already received a job offer from Refco then and June was likely to join Refco. Dennis said that June and Joey, being graduates with marketing experience, were suitable for the task of developing and managing the securities and contract for difference businesses at Refco whereas Tricia was basically a dealer servicing house clients without marketing experience or clients of her own other than relatives and friends. He did tell Tricia that she could send her resume directly to Refco if she wished but clarified that it would not be to work with his team.
According to Tricia, Dennis then sent her an SMS on 25 July 2005 to ask her for her resume again. Dennis, however, said he could not recall having done so.
According to Tricia, there was another telephone discussion with Mr. Wong which she thought had occurred in early August 2005. He had called her, but his phone number was not displayed on her mobile phone, to say that Refco had a full dealing licence and could deal with retail clients. Mr. Wong had also said he was with Hup Thye. Mr. Wong said if she was interested in knowing more he could clarify with Hup Thye there and then. Tricia said she told him she was busy and would call him back but did not do so. She said she did not know how to give him a negative response to his approaches. On the other hand, Mr. Wong denied such a conversation.
Tricia said that in August 2005, she bumped into David Tan and joined him for coffee at Starbucks at Philip Street. David Tan had mentioned to her that Mr. Wong was “cracking his head” to see how to get his team at MF over to Refco. David Tan was not called by Mr. Wong to give evidence on this allegation but Mr. Chia criticized the reliability of Tricia’s evidence on this point as I shall elaborate later.
Tricia asserted that on or about 23 August 2005, she met up with Dennis, again at his request, this time for lunch at Tea Spa at Caltex House. During lunch, Dennis again tried to persuade her to join Refco. As she was not keen to leave MF she told him she would consider moving some time next year. She did not hear from Dennis again. Dennis disagreed that he had initiated the lunch meeting. He said Tricia was still his broker and as they were talking they agreed to have lunch that day. Paragraphs 40 and 41 of his AEIC stated.
MY LUNCH MEETING WITH TRICIA NG ON 23 AUGUST 2005
40.
.... On account of our earlier meeting in July 2005, I personally met with Tricia Ng to explain why it was not feasible for her to join me at REFCO and, quite importantly, why I preferred to talk about it only now and not earlier (when we met in July 2005).
41.
We met for lunch on 23 August 2005. During the course of lunch, I told Tricia Ng that I did not feel it appropriate for me to talk about my plans at REFCO when we met earlier in July 2005 as I had not joined REFCO then. I told Tricia Ng that REFCO had offered employment to June Lim and Joey Sim as they were no longer in MAN’s employment and were looking for jobs. I further told her that there was nothing personal about my decision as it was based solely on June Lim and Joey Sim being available and also capable of developing and managing both the securities and the CFD business. As I was aware of ill-feelings between Tricia Ng and June Lim, I apologised to her if I had disappointed her in any way. As I anticipated that June Lim and Joey Sim would be approaching certain securities clients of MAN whom they were also servicing at MAN, I took the opportunity to ask Tricia Ng not to take it personally if June Lim or Joey Sim should approach any of such clients as such was the nature of the business. She said that she understood the situation.
I come now to events between 31 August and 16 September 2005. Tricia asserted that on 31 August 2005, she had received a call from Mr. Wong at night. After asking her if she was alone, he informed her that he understood she was not joining the team at Refco yet. After she confirmed that, he told her that if she did not join the team at Refco, they would start competing for her clients and would charge as low as 25 basis points, meaning 0.25%, as commission. He told her this would cause her sales volume to be lowered by half. Tricia was very upset. She thought it was unfair for her former colleagues to try and poach her clients. She informed Mr. Wong that she would like another week to consider as her daughter was sick and she herself was not feeling well. He agreed. However, on or about 1 September 2005, Tricia received calls from some of her clients asking her about a letter they had received from Refco which was signed by Joey. She was shocked and upset as she had informed Mr. Wong that she would get back to him in a week’s time. She called some other clients who also said they had received similar letters. She complained to Eng Keat about the attempts to poach her clients. On or about 6 September 2005, she had lunch with Daniel. She was still upset. She told Daniel what had transpired and that Mr. Wong and Dennis had approached her on several occasions to join Refco.
On 7 September 2005, MF’s solicitors, Wong Partnership, sent a letter to Mr. Wong alleging that he had breached various provisions in the TA by soliciting or attempting to solicit the employment of several of MF’s employees on behalf of a competitor.
Tricia alleged that on the night of 7 September 2005, Mr. Wong had called her to ask whether she had told anyone that he had called her. She told him “No” as she did not want to upset him.
On 9 September 2005, Mr. Wong replied to Wong Partnership to dispute that he had breached the TA.
According to Tricia, Eng Keat approached her on or about 9 September 2005 to ask her about her conversation with Mr. Wong (which she had allegedly already informed Daniel about). He asked her to put her version in black and white which she did. Her undated letter addressed to Daniel, was Exhibit D1.
On 13 September 2005, Wong Partnership wrote again to Mr. Wong. This time their letter mentioned specifically the conversation he had allegedly had with Tricia on or about 31 August 2005.
Tricia alleged that on the same day, i.e. 13 September 2005, Mr. Wong called her from a number that was not his usual number and was unfamiliar to her. He asked her whether her phone was tapped. She was surprised and said “No”. He asked her why she said “those things” and said he had treated her as a friend and only wanted to retire. He asked whether MF had coerced her into saying he tried to solicit her employment and she denied this. After a while, Mr. Wong said he would hang up since she did not want to say anything to him but suggested that she call him if she wanted to tell him anything.
On 16 September 2005, Mr. Wong replied to Wong Partnership to deny that he had solicited Tricia’s employment. He also said in that letter that he would respond more fully after he heard directly from Tricia.
Mr. Wong did not deny the fact that he had had a telephone discussion with Tricia in the night of 31 August 2005. However, he denied her version of the substance of the conversation saying that it was friendly banter on various topics including topics which he had exchanged emails with her earlier on the same day. Mr. Wong also did not deny the telephone conversation with Tricia on 7 September 2005 but again he disagreed with her version of the substance of the conversation. Mr. Wong asserted that he had asked Tricia whether she was aware of any employee of MF alleging that he had approached that person to join a competitor. She said she had no such knowledge. As for the alleged telephone discussion with Tricia on 13 September 2005, Mr. Wong denied that he had spoken to her then.
Mr. Wong’s position was that there was no reason why he should approach Tricia and that Dennis did not even want her. In addition to Dennis’ reasons, see [19] above, Mr. Wong said that the key businesses of MF then were businesses other than securities business which was a barely profitable and marginal business contributing about 2% only to MF’s operating profit. Mr. Wong said there were more capable producers in MF whom he knew well but did not attempt to persuade to join Refco. On the other hand, I note that there was also evidence as to why he and/or Dennis might have wanted her to join Refco. First, Tricia was handling the accounts of Mr. Wong and of Dennis at MF. They must have been happy for her to do so. Secondly, she was the most senior person in MF manning MF’s securities desk. Indeed, at the time when Dennis left MF, she was the only one manning that desk. If she went over to Refco, that would have been a loss to MF although Dennis sought to deny this. Thirdly, although Dennis said he was already getting Joey and June for his team, June did not have a licence to deal in securities at the time and it was not suggested that her role would be confined to marketing. June only obtained her licence on 4 November 2005. It would have made sense for Dennis to get Tricia provided she would agree to join Refco. Furthermore, it was June’s evidence that after she tendered her resignation on 23 June 2005 from MF, she made a courtesy telephone call on Dennis in early July 2005. When she asked, Dennis informed her he was joining Refco and he told her that if she was interested, she could apply to join Refco which she eventually did. From June’s evidence on this point, it was not Dennis who had sought her out to join Refco. True, Dennis and June suggested that Tricia could not work with Joey and June herself had difficulties working with Tricia. However, neither Mr. Wong nor Dennis suggested that that was the primary reason why Tricia would not have been welcome to join Refco.
