KA SHIN TECHNOLOGIES (S) PTE LTD v TAN KIAT LIAN & 2 Ors

Facts

Ka Shin Technologies (S) Pte Ltd (KST), a precision engineering company, sued its former Marketing Manager, Tan Kiat Lan (Doreen), in Suit No 737 of 2019, alleging that she siphoned money out of KST through a scheme with a supplier, Integrated Power Solutions Pte Ltd (IPS). Doreen died a few days after being served, and her estate was substituted. KST discontinued against another company and settled with IPS. The estate brought third party claims for contribution against IPS, its manager Kok Wai Ling, and Chua Kwee Choo (Sheena), a sales coordinator in Doreen's team.

KST alleged that Doreen caused 236 fraudulent KST purchase orders to be tagged to customer orders, so that KST paid IPS for work it never did, with IPS passing 90% to Doreen; it claimed $874,179.42. Ms Kok confessed to the scheme, and the estate accepted that it occurred. It was undisputed that in 27 of the orders KST had been double-billed, paying both IPS and its subsidiary KSI, which did the work. The estate argued that in the rest nothing was supplied at all, so the customers, not KST, bore the cost, and that KST's management had known of and acquiesced in the scheme.

Issues

1. Whether KST proved that it suffered loss on each of the 236 purchase orders, or only on those involving genuine supply by another supplier.
2. Whether KST's management acquiesced in the scheme so that illegality barred the claim.
3. Whether Doreen was liable for breach of employment duties, unlawful means conspiracy, breach of confidence, unjust enrichment and conversion.
4. Whether KST could recover from the estate after settling with IPS.

Holding

Chan Seng Onn SJ dismissed KST's claim against the estate and, as a result, the estate's claims against the three third parties. KST proved loss only on the 27 double-billed transactions, $27,955.00, and had already received $60,000.00 from IPS under its settlement, so further recovery would be double recovery.

Reasoning

The court found that the scheme was carried out by Doreen and IPS, and that Sheena was not complicit. KST suffered loss only where a genuine supplier also supplied the work, because only then did KST pay twice. Where nothing was supplied, the customer paid for goods never delivered, and the money passed through KST from its customers. Despite sampling of its SAP records and further chances, including five exemplars, KST could not identify a genuine supplier for the other 209 transactions, and the court found on balance that there was none. The court had a strong suspicion that kickbacks went to customer representatives but made no finding.

The court rejected the claim that management acquiesced. Using IPS as an extra layer made sense only for concealment from KST, Doreen personally handled the fictitious collections, and the managing director ordered a real investigation. Red Star Marine Consultants Pte Ltd v Personal Representatives of Satwant Kaur d/o Sardara Singh, deceased and another [2020] 1 SLR 115 was distinguishable.

Doreen breached her employment duties across the scheme, and conspiracy and unjust enrichment were made out for the 27 transactions only. Breach of confidence failed for lack of particulars, and conversion does not lie for money received as currency. Under the full satisfaction principle, the IPS settlement covered the same injury. The judge also criticised KST for pursuing what were in substance ill-gotten sums taken from its customers.

From the judgment