Shanghai Afute v. Tan Swee Meng: Franchise Agreement Dispute, Breach of Confidence, and Conspiracy

In Shanghai Afute Food and Beverage Management Co Ltd v Tan Swee Meng and others, the General Division of the High Court of Singapore addressed a dispute arising from a franchise agreement between Shanghai Afute, the plaintiff, and Tan Swee Meng and his associated companies, the defendants. The plaintiff alleged breach of contract, breach of confidence, passing off, and unlawful means conspiracy. The court found in favor of the plaintiff on the claims of breach of contract, breach of confidence, and unlawful means conspiracy, granting inquiries into damages and an injunction against the defendant's use of the plaintiff's recipes.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Shanghai Afute sued Tan Swee Meng for breach of contract, confidence, and conspiracy over a franchise agreement. The court found in favor of Shanghai Afute.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Shanghai Afute Food and Beverage Management Co LtdPlaintiffCorporationJudgment for PlaintiffWon
Tan Swee MengDefendant, Plaintiff in CounterclaimIndividualInquiry as to damages for breach of contractLost
Stay Victory Industries Pte LtdDefendantCorporationInquiry as to damages for breach of contractLost
Famous 5 Holdings Pte LtdDefendantCorporationNo injunction grantedNeutral
Lee Eng TatDefendants in CounterclaimIndividualCounterclaim DismissedDismissed
Ho Pei Jia AnnaDefendants in CounterclaimIndividualCounterclaim DismissedDismissed

3. Judges

Judge NameTitleDelivered Judgment
Dedar Singh GillJudgeYes

4. Counsels

Counsel NameOrganization
Chia Jin Chong DanielColeman Street Chambers LLC
Tan Ei LeenColeman Street Chambers LLC
Nicole Thong Wen TengColeman Street Chambers LLC

4. Facts

  1. Shanghai Afute claimed to be the sole proprietor of the “After Coffee” trade mark.
  2. Mr. Tan and Mr. Lee executed a master franchise agreement for Singapore titled the “After Coffee Agent Cooperation Agreement”.
  3. Stay Victory commenced the Alleged Competing Business with the “Beyond Coffee” mark, beverages and store design and layout which were similar to that of the Intended Business.
  4. The “entire business” of Stay Victory was transferred to Umbrella Ventures for a nominal sum of $1.
  5. The recipes of the beverages sold by the Alleged Competing Business were substantially similar, if not identical, to the recipes of the Beverages that were developed and curated for the Intended Business.
  6. Mr. Tan allegedly represented that he would be willing to lend RMB5m to the Holding Company, the plaintiff or both the Holding Company and the plaintiff.

5. Formal Citations

  1. Shanghai Afute Food and Beverage Management Co Ltd v Tan Swee Meng and others, Suit No 854 of 2020 (consolidated with Suit No 771 of 2020), [2023] SGHC 34
  2. Shanghai Afute Food and Beverage Management Co Ltd v Mr Tan Swee Meng and another, , [2021] SGHC 149

6. Timeline

DateEvent
Ms. Anna Ho informed Mr. Tan that Mr. Lee was looking for franchisees for his coffee-beverage business.
Mr. Tan met Mr. Lee.
Mr. Tan met with Ms. Anna Ho and expressed interest in the opportunity.
Mr. Tan issued a cheque to Mr. Lee for the sum of $5,000 as a deposit for the Intended Business.
Mr. Tan and his wife travelled to Shanghai to meet with Mr. Lee, Ms. Anna Ho, Mr. Gu Tianchi, Mr. Ma Wenguo and Mr. Xu Rong.
Mr. Lee, on behalf of the plaintiff, executed with the first defendant a master franchise agreement for Singapore.
Stay Victory Industries Pte Ltd incorporated.
Mr. Tan informed Ms. Anna Ho that he no longer wished to proceed with the Master Franchise Agreement.
Mr. Tan allegedly expressed his intention to terminate the Master Franchise Agreement and proceed with the Intended Business as a joint venture instead.
Mr. Lee, Ms. Anna Ho, Mr. Pong and Mr. Tan met at Ristorante Da Valentino.
Parties met at HeyTea Clarke Quay.
Mr Tan became a shareholder of the plaintiff.
Mr. Tan signed a letter of offer to take a lease at Vivocity.
Coffee Cupital is incorporated.
Umbrella Ventures incorporated.
Mr. Tan was in discussion with Mr. Lee about a shareholders’ agreement.
Planned opening of the outlet at Vivocity.
Mr. Tan called for a meeting with Mr. Lee, Ms. Anna Ho and Mr. Pong.
Stay Victory commenced operations with a beverage business under the “Beyond Coffee” mark.
The “entire business” of Stay Victory was transferred to Umbrella Ventures.
The suit commenced.
The plaintiff obtained an interlocutory injunction.
The defendants commenced the operation of a second store as part of the Alleged Competing Business at Bukit Batok.
The High Court found that Mr. Tan and Stay Victory had disobeyed the Injunctions and were in contempt of court.
Mr. Tan and Ms. Anna Tay were the directors of Umbrella Ventures.
Mr. Tan and Ms. Anna Tay were the directors of Umbrella Ventures.
Umbrella Ventures went into liquidation.
Trial began.
Trial.
The defendants withdrew the appeal on 17 January 2022.
Trial.
Trial.
Trial.
Trial.
Trial.
Judgment reserved.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the defendant breached clause 6(5) of the Master Franchise Agreement.
    • Category: Substantive
  2. Breach of Confidence
    • Outcome: The court granted an injunction against the defendant to restrain him from using the plaintiff’s recipes and the ingredient lists for any purpose until such a time when the information loses its confidential nature, currency or value.
    • Category: Substantive
  3. Passing Off
    • Outcome: The court found that the plaintiff has not proven that the Intended Business attracted goodwill of the nature and significance required to fulfil the requirement in an action of passing off.
    • Category: Substantive
  4. Unlawful Means Conspiracy
    • Outcome: The court found the defendant liable for the tort of unlawful conspiracy.
    • Category: Substantive
  5. Fraudulent Misrepresentation
    • Outcome: The court found that Mr. Tan has not discharged his burden of proof to show that the RMB3m Representation was false.
    • Category: Substantive
  6. Unjust Enrichment
    • Outcome: The court concluded that the unjust enrichment claim fails.
    • Category: Substantive

8. Remedies Sought

  1. Injunction
  2. Damages
  3. Account of Profits
  4. Costs
  5. Interest

9. Cause of Actions

  • Breach of Contract
  • Breach of Confidence
  • Passing Off
  • Unlawful Means Conspiracy
  • Fraudulent Misrepresentation
  • Unjust Enrichment

10. Practice Areas

  • Commercial Litigation
  • Intellectual Property Litigation

11. Industries

  • Food and Beverage

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
No cited cases

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Master Franchise Agreement
  • After Coffee
  • Beyond Coffee
  • Alleged Confidential Information
  • Intended Business
  • Alleged Competing Business
  • RMB3m Representation
  • Vivocity Store

15.2 Keywords

  • franchise agreement
  • breach of contract
  • breach of confidence
  • passing off
  • unlawful means conspiracy
  • misrepresentation
  • Shanghai Afute
  • Tan Swee Meng
  • After Coffee
  • Beyond Coffee

17. Areas of Law

Area NameRelevance Score
Breach of Confidence80
Contract Law75
Conspiracy by Unlawful Means70
Misrepresentation65
Franchise Law60
Fraud and Deceit60
Trademarks50
Unfair Competition45
Company Law30

16. Subjects

  • Contract Dispute
  • Franchise Agreement
  • Breach of Confidence
  • Passing Off
  • Unlawful Means Conspiracy
  • Misrepresentation