High Court's $683k award to sacked MD overturned

Apex court finds he had breached his contract, justifying his sacking

The apex court quashed a High Court judgment that had awarded a managing director some $683,000 in compensation after it found his misconduct was sufficiently serious for the company to sack him.

The three-judge court found that Mr Iouri Piattchanine had held a position of trust and had breached the conditions of his employment contract to justify the summary dismissal.

" With such trust being reposed in (Mr Piattchanine), one would expect the (relevant) clause which places the obligation on (him) to 'well and faithfully serve the (company) in all respects and use his best endeavours to promote the interest of the (company)' would have been intended by the parties to be of utmost importance," wrote Judge of Appeal Andrew Phang in judgment grounds released on Monday.

The court, which also included Judges of Appeal Judith Prakash and Tay Yong Kwang, made it clear "serious misconduct" must be read as well as applied in the context of the contract as a whole and the breach was of important terms.

Mr Piattchanine, a Russian national, had sued Singapore-incorporated Phosagro Asia last year over his termination in 2014 and sought $1,236,900 in salaries and bonuses.

The High Court ruled the misconduct was not sufficiently serious to justify the dismissal.

At issue was his expense accounting practice, which the firm claimed breached his contract.

Mr Piattchanine, represented by lawyers Eugene Thuraisingam and Jerrie Tan, had argued the practice entitled him to recoup all his expenses from the company first and then rely on the auditor to tell him which expenses were proper or not at the end of the year.

When the company discovered this, it sought to summarily terminate his services.

The High Court held he was not guilty of serious misconduct because he genuinely believed he was not doing wrong, among other things.

Phosagro Asia is a subsidiary of the multinational Phosagro group - one of the world's largest phosphate-producing and distribution companies - listed in London and Moscow. The case was unusual as it involved Russian parties litigating in the Singapore courts.

Rajah & Tann lawyers Paul Tan and Arthi Anbalagan argued on appeal that Phosagro was entitled to terminate his employment as he had been claiming expenses that were personal costs.

The Court of Appeal held that the claims practice by Mr Piattchanine amounted to serious misconduct and his job contract included a condition against this.

The condition meant the nature of the breach shown did not matter as the director was in a position of trust and the company was entitled to the highest standards of conduct from him. It was thus entitled to terminate his services summarily.

Separately, the court made it clear that Mr Piattchanine was justified in certain claims, such as some hotel and food and beverage expenses, and dismissed Phosagro's appeal that they were personal and should not be allowed.

"The fact that the expense accounting practice was improper in that it amounted to a breach of (his) contractual duties to act in the best interest of the (company) does not - in and of itself - suffice to establish a prima facie case that all of the expenses in the counter-claim were personal in nature.

"This cannot be correct," wrote Judge of Appeal Phang.

A version of this article appeared in the print edition of The Straits Times on November 04, 2016, with the headline 'High Court's $683k award to sacked MD overturned'. Print Edition | Subscribe