Celebrity hairstylist Addy Lee wins claims against franchisee over coffee business

A company owned by hairstylist Addy Lee, who has trimmed the locks of local celebrities like Michelle Chia and Quan Yifeng, has sued and won claims against a businessman he had dealings with.

Mr Lee had signed a deal with businessman Tan Swee Meng to start a beverage business in Singapore. He also promoted the upcoming opening of the VivoCity store in an interview with a magazine.

But the intended shop, After Coffee, never opened.

Instead, a business named Beyond Coffee started operations at the shop space in July 2020. It sold similar beverages – coffee infused with fruits and vegetables. 

The entire business of Stay Victory – the corporate vehicle set up to run After Coffee as a franchise – was also sold by Mr Tan for a nominal sum of $1 to Umbrella Ventures, a company indirectly owned by Mr Tan, who is also known as Bill.

Mr Lee’s company, Shanghai Afute Food and Beverage Management Co, sued Mr Tan and Stay Victory, and has largely succeeded in its claims.

Shanghai Afute contended that Mr Tan and Stay Victory had misused its confidential Information and trade secrets as a “springboard” to unlawfully gain a head start in establishing the competing business.

In a judgment on Feb 15, the High Court found that the defendants had breached the master franchise agreement and that they were in breach of confidence by selling the plaintiff’s recipes and ingredient lists to Umbrella Ventures.

Justice Dedar Singh Gill also accepted that the defendants had unlawfully conspired to cause the plaintiff to suffer losses, as it was deprived of profits from the After Coffee store that would have opened in place of the Beyond Coffee store.

However, the judge dismissed the claim that the defendants had tried to pass off Beyond Coffee as being the same as After Coffee, or that it was associated with Mr Lee.

Shanghai Afute had relied on various pre-business publicity efforts to support its case that sufficient goodwill, or reputation, had been established for the After Coffee brand.

These include Mr Lee’s interview with 8 Days magazine, social media posts by Mr Lee and news anchor Glenda Chong, and articles on the Eatbook and Mothership websites as well as in the Chinese-language paper Shin Min Daily News.

But Justice Gill was not persuaded that the marketing efforts had generated sufficient goodwill.

A separate hearing will be held to determine the amount of damages the defendants have to pay.

Mr Lee told The Straits Times through his lawyer, Mr Daniel Chia of Coleman Street Chambers: “We intend to seek our remedies to the maximum afforded by the law.”

Mr Lee also noted that the court decision has “unequivocally vindicated my business partner, Ms Anna Ho, and I of the various false allegations made against us”.

On Oct 2, 2019, Ms Ho met Mr Tan and told him that Mr Lee was looking for franchisees for his beverage business.

After Mr Lee explained the concept of infused coffee and provided an outline of the master franchisee proposal, Mr Tan expressed interest and paid a $5,000 deposit.

Mr Tan and his wife then travelled to Shanghai to meet Mr Lee, Ms Ho and award-winning mixologist Gu Tianchi, on Nov 6, 2019.

On the same day, Mr Lee and Mr Tan signed a master franchise agreement.

However, each side gave differing accounts of the details surrounding the signing of the contract and the events that followed.

Mr Lee’s version is that the contract was for Mr Tan to incorporate a company to operate the intended business in Singapore.

He said Mr Tan paid $303,500 to Shanghai Afute as fees under the franchise agreement.

But Mr Tan said there was an agreement between him and Mr Lee that Mr Tan could be substituted and replaced by a new company as party to the franchise agreement.

He claimed that two weeks after the franchise agreement was signed, he suggested that it be terminated and replaced with a joint venture, and that this proposal was accepted by Mr Lee and Ms Ho.

He characterised the payments he made to Shanghai Afute as part of a “loan”.

Mr Tan counterclaimed against Mr Lee and Ms Ho, alleging that they had made false misrepresentations and that they had been unjustly enriched by the sum of more than $520,000 he had paid them.

The counterclaims were dismissed by the judge.

A second Beyond Coffee store opened in Bukit Batok in February 2021. Both stores have since closed and Umbrella Ventures has gone into liquidation.