In brief
In 2016, an influential Agency Manager of Prudential Assurance Company Singapore (“Prudential“) orchestrated a mass exodus of over 200 agents to a competitor, Aviva Financial Advisors Pte Ltd (“Aviva“). Prudential, in turn, sued the Agency Manager for up to S$2.5 billion in damages, in a high-profile case which attracted significant media attention in Singapore.
In Prudential Assurance Co Singapore (Pte) Ltd v Tan Shou Yi Peter and another [2021] SGHC 109, the Singapore High Court (SGHC) rendered its decision on the dispute, providing important guidance on issues of, among other matters, breaches of contract and fiduciary duties.
In this case note, we briefly examine the SGHC’s decision and offer some key takeaways from the case.
Contents
- Parties to an agency agreement or employment contract may be subject to a duty of non-solicitation even if those express words are not used in a contract. Such a duty may arguably be imported by the use of more general wording, such as was used in this case (e.g., to conduct business with “integrity and honesty”).
- If employers impose certain restrictive covenants on employees via their employment contracts and not others (e.g., a non-compete clause but not a non-solicitation clause), they may find it difficult to argue that the excluded covenant is, in any event, an implied term. In this case, the SGHC held that the fact that parties included non-compete obligations but not non-solicitation obligations showed that they clearly applied their minds to which restrictive covenants should apply.
- While unilateral variation clauses (i.e., clauses permitting one party to amend a contract without first obtaining the consent of the other party) are not unlawful per se, a party seeking to unilaterally vary the terms of a contract post-formation should ensure that such a right is clearly provided for in the contract. In the present case, while Prudential had expressly reserved the unilateral right to amend certain rules, regulations and instructions, the SGHC found that it could not unilaterally amend the contract itself by imposing a non-solicitation clause.
- Parties should not assume that all non-disclosure agreements (NDAs) will be upheld by default. NDAs purporting to conceal breaches of contract or fiduciary obligations will be struck down as being void and/or unenforceable.
The first defendant, Peter Tan Shou Yi (“Peter“) was a successful Master Group Agency Manager (“Master GAM“) of the plaintiff, Prudential. As Master GAM, he ran Peter Tan Organization (PTO), which was the most successful group of agents selling Prudential’s insurance products. As of 2016, there were about 500 agents in PTO, contributing…
Read More: Singapore: Integrity, honesty, and non-solicitation obligations in agency