[EN-SEA] Singapore High Court Reject "Zim" Suit Against ex-Executive

SINGAPORE High Court Judge Lai Sui Chiu rejected all eight counts against a former Zim Asia president for allegedly siphoning off Malaysian port rebate money and being in breach of contract by working for rival firm.

Repeatedly she told the plaintiffs Zim, its "Gold Star Line" and "Seth Shipping" units and its partly owned "Star Shipping Agencies (Singapore) Pte" that they had failed to produce enough evidence to prove that Dafni Igal, or his associates, were involved in a breach of contract or had committed other offences alleged.

Being a Jewish Israeli company, Zim is unable to service Muslim Malaysia directly, so its unit Gold Star Line, incorporated in Hong Kong, does so, and Capt Dafni was in charge of such operations.

Capt Dafni started as a humble Zim seaman in 1966, but rose to become the managing director of Gold Star Line, Zim Asia president and a director of Star Shipping Agencies

Capt Dafni claimed that he was working for another company with the permission of his old Zim boss so to acquire Singapore citizenship so he could visit Muslim countries which he could not do as an Israeli.

As director of Star Shipping Agencies, a joint venture between Zim and other interests, he had handled Zim and Gold Star shipments in and out of Malaysia.

The plaintiffs charged Capt Dnafni and his associates Ng Koo Kay Benedict and Rajathurai Suppiah of being guilty of putting Capt Dafni into breach of contract, after he left Zim in May 2006.

Capt Dafni started work with Cheng Lie Navigation Co, but he said in non-container areas where Zim had no plans to enter.

Mr Benedict and Mr Suppiah set up Starship Agencies, not to be confused with the one of the plaintiffs, Star Shipping Agencies, and formed another company with Capt Dafni, Maxwin International Development Ltd, and transferred US$80,000 into it. Capt Dafni held 60 per cent of Maxwin.

The plaintiffs alleged that this action was broke terms of the contract by Capt Dafni who was not supposed to engage in such activities during the period after his departure. The plaintiffs further alleged that Mr Benedict and Mr Suppiah shared culpability in this and should be found liable too.

But the judge said: "The plaintiffs plainly had no evidence to show how this transfer of US$80,000 caused Capt Dafni to be in breach of the Employment Agreement of his fiduciary duties."

She said there was not sufficient evidence to show that Capt Dafni was guilty of breach of contract or that Mr Benedict and Mr Suppiah were aware of what they might be doing even if such a thing were taking place.

The plaintiff got no further with its charge that the trio had retained rebates and waiver fees that they felt belonged to the carrier.

The plaintiffs said Starship Agencies had breached its duty as agent in failing to account for the money it received from Westports belonging to Seth Shipping. According to the plaintiffs out bound rates totalled MYR1,477,474 (US$442,622) transshipment rebates of MYR2,921,935 with charge waivers of MYR1,231,239. This money was received by Starship Agencies but not passed on to Gold Star or Zim, it was alleged.

But again the judge found insufficient evidence to make the charge stick, there being no proof that the money was paid or owing to any particular party.

Capt Dafni should have also fired the agency for failing to get competitive rates for trucking and storage, said the plaintiffs, who produced evidence of what was paid for the same services by rival CMA CGM. While French container line paid MYR35, Zim paid MYR80. On another run, CMA CGM paid 70 while Zim paid MYR160 and it was much the same for storage rates.

But the judge said that the difference might well have resulted from CMA CGM being the world third biggest container shipping line, which entitled it to a competitive rate advantage against Zim and other smaller players who had to pay more.

There was also a charge of "passing off" that of making one's firm sound like another's as plaintiffs contended had happened in the case of the creation of Starship Agencies and Starship Carriers, whose names were much like that of one of one of the plaintiffs, Star Shipping Agencies (Singapore) Pte.

Plaintiffs alleged that Starship was often mistaken for Star Shipping and had even misstated its corporate commencement on its website as 1997 to match that of the start-up of plaintiff Star Shipping. Another offshoot created was called Star Carriers, which competed directly in exporting used cars from Singapore.

But as the suggestion that there was confusion in the market came from "salesmen" who did not testify, the evidence upon which the allegation was based was "hearsay", thus inadmissible.

"As such I would dismiss the plaintiffs' claims for passing off. I also reject the plaintiff's claim that Captain Dafni was in breach of his fiduciary duties in allowing Starship Carriers to be incorporated to compete with the business of the principal's [plaintiff's] carriers," said Judge Chiu.

Source : HKSG, 20.01.10.