Case Details
- Citation: [2022] SGHC(A) 39
- Title: AQUARIUS CORPORATION v HARIBO ASIA PACIFIC PTE. LTD.
- Court: Appellate Division of the High Court of the Republic of Singapore
- Date of Decision: 28 November 2022
- Judges: Quentin Loh JAD (delivering the judgment of the court), Woo Bih Li JAD, Hoo Sheau Peng J
- Procedural Context: Civil Appeals Nos 1 and 2 of 2022 arising from Suit No 331 of 2018
- Appellant/Respondent (CA 1): Aquarius Corporation (Appellant) v Haribo Asia Pacific Pte Ltd (Respondent)
- Appellant/Respondent (CA 2): Haribo Asia Pacific Pte Ltd (Appellant) v Aquarius Corporation (Respondent)
- Plaintiff in Suit 331/2018: Haribo Asia Pacific Pte Ltd (“HAP”)
- Defendant in Suit 331/2018: Aquarius Corporation (“Aquarius”)
- Legal Area: Contract; Breach; Damages; Evidence (admissibility of evidence/hearsay)
- Contract(s) at Issue: 2016 Distributorship Agreement (“2016 DA”) dated 23 May 2016
- Governing Law: German law (Bürgerliches Gesetzbuch (“BGB”))
- Key Contract Clause(s): cl 7.2 (termination with six months’ notice to end of calendar month); cl 7.3 and cl 7.5 (termination rights following cure/response); cl 9.3 (delivery obligation to deliver orders)
- Key Termination Notices: HAP’s First Termination Notice dated 25 October 2016; Aquarius’ Cure Notice dated 1 December 2016; Aquarius’ Termination Notice dated 3 February 2017; HAP’s second termination notice dated 9 February 2017
- Orders/Deliveries: Seven orders placed between July and December 2016; “Undelivered Portions”
- Damages Component: Lost profits claimed by Aquarius for HAP’s failure to deliver
- Judgment Length: 33 pages, 9,686 words
- Related/Referenced Case: [2021] SGCA 37
Summary
This decision of the Appellate Division of the High Court concerns cross-appeals arising from a distributorship dispute governed by German law. Haribo Asia Pacific Pte Ltd (“HAP”) sued Aquarius Corporation (“Aquarius”) for outstanding invoices for products delivered. Aquarius counterclaimed for breach of the 2016 Distributorship Agreement (“2016 DA”), alleging that HAP improperly halted deliveries and thereby caused Aquarius to suffer lost profits.
The High Court Judge held that HAP was contractually obliged under cl 9.3 of the 2016 DA to deliver seven orders placed by Aquarius between July and December 2016, and that none of HAP’s defences applied. The Judge found HAP liable for lost profits until 30 April 2017, but not thereafter. Both parties appealed only against the counterclaim aspects: Aquarius challenged the cut-off date (CA 1), while HAP challenged the finding of liability for lost profits (CA 2).
On appeal, the Appellate Division dismissed CA 1, holding that the Judge’s findings on the validity of HAP’s first termination notice and the evidential basis for the cut-off date were not plainly wrong. However, the court allowed CA 2. The court held that the Judge erred in concluding that Aquarius had proved the quantum of its alleged lost profits until 30 April 2017, because Aquarius’ computations were not established by admissible evidence. In particular, the court accepted HAP’s objection that the lost-profit calculations were not supported by evidence meeting admissibility requirements.
What Were the Facts of This Case?
HAP is a Singapore-incorporated company within the Haribo Group, which manufactures and sells confectionery products. HAP is responsible for sales and distribution of Haribo Group products across Southeast, West and East Asian markets. Aquarius is a company incorporated in South Korea and operates as a distributor of food and beverage products in South Korea. The 2016 DA was entered into on 23 May 2016 to govern the supply of Haribo products by HAP and the distribution by Aquarius in South Korea.
Two disputes emerged during the performance of the 2016 DA. First, Aquarius alleged that it discovered in August 2016 that HAP’s Haribo Group associate, Haribo GmbH & Co KG (“Haribo GmbH”), had been positively supporting and supplying parallel importers since as early as 2012 (the “Parallel Imports Issue”). Aquarius sought assistance in investigating this issue. Second, Aquarius alleged that HAP responded by deliberately halting product deliveries and cancelling production of goods Aquarius had ordered (the “Product Delivery Issue”). As a result, Aquarius claimed that the seven orders placed between July and December 2016 were either entirely unfulfilled or partially fulfilled but delayed (the “Undelivered Portions”).
In response to these tensions, HAP took the first step to end the contractual relationship by invoking cl 7.2 of the 2016 DA. Clause 7.2 provided that parties could terminate the contract “with six (6) months’ notice to the end of a calendar month”. HAP issued its first termination notice on 25 October 2016 (the “HAP’s First Termination Notice”). Given the contractual notice mechanics, the last day of the contract would have been 30 April 2017. Aquarius disputed the validity of this termination notice.
Aquarius then issued a cure notice on 1 December 2016 pursuant to cl 7.5, requesting that HAP remedy alleged fundamental breaches. HAP, through its lawyers, refuted the allegations on 2 February 2017. Aquarius then exercised its rights under cl 7.3 and cl 7.5 to terminate the 2016 DA with immediate effect on 3 February 2017 (Aquarius’ Termination Notice). Subsequently, on 9 February 2017, HAP issued a second termination notice, primarily on the basis that Aquarius’ Termination Notice was itself a repudiatory breach. Thereafter, HAP demanded payment for outstanding invoices totalling €1,526,224.76 for products delivered, but Aquarius did not pay. HAP commenced Suit 331 on 2 April 2018 to recover the outstanding sum with interest.
What Were the Key Legal Issues?
The appeal turned on two principal issues, corresponding to the parties’ cross-appeals. First (CA 1), Aquarius argued that HAP’s First Termination Notice should have been ruled invalid. Aquarius contended that the termination was exercised in breach of HAP’s duty of good faith under s 242 of the BGB, and that the termination violated German statutory restrictions on the exercise of contractual rights. Aquarius relied on provisions of the BGB including ss 138, 226 and 242, which relate respectively to contravention of good morals, unlawful chicanery (exercise for no reason other than to cause damage), and standards of good faith and fair dealing.
Second (CA 2), HAP challenged the Judge’s finding that it was liable to Aquarius for lost profits until 30 April 2017. While the Judge had found that HAP breached cl 9.3 by failing to deliver the Undelivered Portions, the Appellate Division had to consider whether Aquarius proved the quantum of its alleged lost profits by admissible evidence. This issue required the court to examine the evidential foundation for the lost-profit computations, including whether the computations were supported by evidence that met admissibility requirements.
Thus, the case required the court to address both substantive contract questions under German law (including the validity of termination) and procedural/evidential questions under Singapore law (including admissibility and sufficiency of proof for damages quantification).
How Did the Court Analyse the Issues?
On CA 1, the Appellate Division focused on whether the High Court Judge’s findings were plainly wrong or against the weight of the evidence. Aquarius’ central argument was that HAP’s termination conduct offended the BGB’s restrictions on the exercise of contractual rights. The court accepted that German law governed the 2016 DA and that the relevant BGB provisions were engaged. However, the appellate court did not treat the existence of alleged parallel imports or delivery disputes as automatically rendering termination invalid. Instead, it examined whether the Judge’s conclusions on good faith and related German law concepts could be disturbed on appeal.
The Appellate Division upheld the Judge’s view that HAP’s First Termination Notice was legally valid. In doing so, the court emphasised the appellate restraint appropriate where the trial judge has made factual findings based on the evidence. Aquarius’ arguments were essentially directed at re-characterising the factual narrative and asserting that HAP’s termination was motivated by improper purposes. The Appellate Division concluded that the Judge’s findings could not be said to be plainly wrong. Accordingly, Aquarius’ attempt to extend damages beyond 30 April 2017 failed because the contractual end date remained anchored to the validity of HAP’s termination notice.
On CA 2, the court’s analysis turned to damages and evidence. The Judge had relied on Ms Teo’s calculations to derive HAP’s liability for lost profits until 30 April 2017. The Appellate Division accepted that HAP had breached cl 9.3 and that liability for breach was established. The critical question was not whether breach occurred, but whether Aquarius proved the quantum of lost profits with admissible evidence.
The Appellate Division held that the Judge erred by failing to consider HAP’s valid objection that Aquarius’ computations were not established by admissible evidence. This is a significant point: in damages claims, particularly for lost profits, the claimant must prove both causation and quantification. Even where a breach is established, the court cannot award damages based on calculations that are not properly supported by evidence that is admissible under the applicable rules. The appellate court found that Aquarius had therefore failed to prove the quantum of its alleged lost profits until 30 April 2017.
Although the judgment excerpt provided is truncated, the appellate reasoning clearly identifies an evidential deficiency: the computations were not supported by admissible evidence, and the Judge did not adequately address the objection. The court’s approach reflects a disciplined application of the evidence framework in Singapore litigation. Where an objection is raised to the admissibility of the materials underpinning a damages computation, the trial court must engage with that objection and determine whether the evidence can properly be relied upon. Failure to do so constitutes an error affecting the damages assessment.
In allowing CA 2, the Appellate Division therefore corrected the damages outcome by focusing on proof. The court did not revisit the contractual breach finding; rather, it removed the evidential basis for the lost-profit quantification. This demonstrates the separation between liability and quantification: a party may succeed on breach but still fail on damages if the evidential requirements for quantification are not met.
What Was the Outcome?
The Appellate Division dismissed Aquarius’ appeal in CA 1. It upheld the High Court Judge’s conclusion that HAP’s First Termination Notice was legally valid and that Aquarius was not entitled to claim lost profits after 30 April 2017. The court found no basis to disturb the Judge’s findings, which were not plainly wrong or against the weight of the evidence.
However, the Appellate Division allowed HAP’s appeal in CA 2. It held that Aquarius had failed to prove the quantum of its alleged lost profits until 30 April 2017 because the lost-profit computations were not established by admissible evidence. The practical effect is that the damages awarded for lost profits (at least for the relevant period) could not stand, notwithstanding the established contractual breach.
Why Does This Case Matter?
This case is important for practitioners because it illustrates two recurring themes in cross-border commercial disputes: (1) the careful application of foreign-law concepts governing termination, including good faith constraints, and (2) the strict evidential discipline required to prove damages, especially lost profits.
From a termination perspective, the decision confirms that even where a party alleges improper motives or bad faith in exercising contractual rights, appellate courts will not readily overturn trial findings absent clear error. Where the contract is governed by German law, parties must marshal evidence that directly engages the BGB standards relied upon (including s 242). Allegations about underlying disputes (such as parallel imports) do not automatically invalidate termination; the court will examine whether the termination conduct meets the legal thresholds under the governing law.
From a damages perspective, the decision is a cautionary tale for claimants. Lost profits are inherently speculative unless supported by robust, admissible evidence. The Appellate Division’s willingness to allow CA 2 on the basis of inadmissibility underscores that damages quantification must be grounded in evidence that the court can lawfully rely on. For litigators, this means that expert computations and underlying assumptions must be supported by materials that satisfy admissibility requirements, and objections to admissibility must be addressed substantively at trial.
Legislation Referenced
- Bürgerliches Gesetzbuch (BGB) (German Civil Code): ss 138, 226, 242
Cases Cited
- [2021] SGCA 37
Source Documents
This article analyses [2022] SGHCA 39 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.