Adinop Co Ltd v Rovithai Ltd and another

• Jurisdiction: Singapore
• Judge: George Wei J
• Judgment Date: 30 May 2018
• Neutral Citation: [2018] SGHC 129
• Court: High Court (Singapore)
• Hearing Date: 21 September 2017,22 September 2017,18 September 2017,06 November 2017,20 September 2017,19 September 2017
• Docket Number: Suit No 1267 of 2015
• Plaintiff Counsel: Lin Weiqi Wendy, Liu Zhao Xiang and Mehaerun Simaa (WongPartnership LLP)
• Defendant Counsel: Ramesh Kumar s/o Ramasamy and Tseng Zhi Cheng, Sean Douglas (Allen & Gledhill LLP)
• Subject Matter: Contract,Breach,Confidentiality agreement,Equity,Obligation of confidentiality
• Published date: 21 November 2019

George Wei J: Introduction

This is an action brought by the plaintiff, Adinop Co Ltd (“the Plaintiff”), for breach of confidence by the defendants, Rovithai Limited (“the 1st Defendant”) and DSM Singapore Industrial Pte Ltd (“the 2nd Defendant”) (collectively, “the Defendants”).

For more than 20 years, the Plaintiff was the distributor of ingredient products manufactured by the 1st Defendant.¹ During this time, the parties exchanged a substantial amount of information regarding customers who purchased the Defendants’ ingredient products through the Plaintiff.² Following the termination of the distributorship arrangement in 2014, the 1st Defendant issued a notice (“the Notice”) to a number of key customers to inform them of the change in distributorship, setting out its own contact details as well as those of its new distributor.³

The Plaintiff essentially contends that the post-termination conduct of the Defendants amounted to a misuse of confidential information that the Plaintiff had given to the Defendants during the course of their business relationship.⁴ The Defendants deny that the customer information was confidential, and further argue that their post-termination conduct did not amount to unauthorised use of such information.⁵ Having considered the parties’ evidence and submissions, I now deliver my judgment.

Background The parties

The Plaintiff is a company incorporated in Thailand. It is in the business of importing, distributing and manufacturing food, cosmetic and pharmaceutical ingredients.⁶

The 1st Defendant is also a company incorporated in Thailand, and is in the business of importing and selling ingredients for food products, cosmetics and the manufacturing of animal feed ingredients.⁷

The 2nd Defendant is a company incorporated in Singapore and is in the business of, inter alia, wholesale supply of chemical products, savoury ingredients and polyethylene materials.⁸

The Defendants are part of the DSM Group of companies, a multi-national group active in research, development, manufacture and sale of ingredients for feed, food, pharmaceutics and cosmetics.⁹

Events leading up to the present action

The Plaintiff and the Defendants (in particular, the 1st Defendant) had a business relationship going back over 20 years to the 1990s, where the Plaintiff acted as a distributor of certain DSM ingredient products in Thailand.¹⁰ These DSM ingredient products were acquired by the Plaintiff through periodic bulk purchase orders placed with the 1st Defendant, and were in turn sourced from the 2nd Defendant. The Plaintiff then sold these products onwards to food, beverage and nutritional product (“FB&N”) manufacturers in Thailand for use in production of a variety of products such as sauces, health drinks and noodles,¹¹ at a mark-up determined by the Plaintiff.¹² The Defendants set annual sales targets premised on the total value and quantity of purchase orders placed with the 1st Defendant, the total number of the Plaintiff’s customers, and the number of planned projects.¹³

The DSM ingredient products distributed by the Plaintiff were often in the form of standard single-component ingredients (for example, vitamins, food colouring and functional ingredients such as fish oils)¹⁴ and premixes often used in the manufacture of a wide variety of FB&N products.¹⁵ Many Thai FB&N customers were only interested in using standard DSM ingredients (whether single ingredient products or standard premixes), whilst others required the production and supply of bespoke or customised premixed ingredients for their products. In some cases, the development of bespoke premixes required the assistance and help of “experts” or food technologists.¹⁶ Whilst the Plaintiff claimed to have a research and development (“R&D”) department,¹⁷ the evidence on the scale of these activities is rather thin. On the whole, it appears more likely that the development of bespoke premixes for Thai FB&N customers frequently involved the help of the 2nd Defendant.¹⁸ This is an area of evidence that I shall return to later.

The FB&N products/ingredients market in Thailand appears to be highly competitive. In particular, there are many Thai FB&N suppliers of FB&N ingredients (such as the Plaintiff) to Thai FB&N customers. In addition, there are different producers, developers and manufacturers of FB&N ingredients such as the Defendants and the DSM Group.¹⁹

It is clear that the Plaintiff and Defendants had a joint interest to facilitate the penetration of the Thai market by DSM ingredients. The Plaintiff, as a Thai company, was directly concerned with finding, maintaining and developing relationships with Thai FB&N customers. The Defendants, on the other hand, were naturally concerned and interested in the development of the Plaintiff’s customer base for DSM ingredients. The Defendants participated at FB&N ingredient exhibitions in Thailand together with the Plaintiff as part of efforts to attract customers for DSM ingredients.²⁰ The Defendants also required the Plaintiff to produce regular quarterly reports on the sales performance of DSM ingredients, problems or difficulties that had been encountered, and efforts made to expand the customer base for DSM ingredients.²¹

On 22 October 2013, more than a decade after the commencement of the business relationship, the parties entered into a confidentiality agreement (“the Confidentiality Agreement”).²² I will describe the relevant provisions of the Confidentiality Agreement in greater detail later.

On 10 June 2014, the 1st Defendant notified the Plaintiff of its intention to terminate the distribution arrangement.²³ Thereafter, the Defendants made alternative arrangements to supply DSM ingredients to Thai FB&N manufacturers using DSM ingredients in their products.

The present action and the parties’ cases

The Plaintiff brought this action against the Defendants for misuse of confidential information provided by or obtained from the Plaintiff under or in connection with the distributorship arrangement between the parties. To this end, the Plaintiff relies on the Confidentiality Agreement.²⁴ It also asserts and relies on confidentiality obligations arising in common law or equity.²⁵

The information said to be confidential and to have been misused by the Defendants includes: (a) the list of the Plaintiff’s key Thai FB&N customers for DSM ingredients (“the Key Customers List”) that was provided to the 1st Defendant on 9 May 2014, shortly before the termination of the distributorship arrangement; and (b) a list of ongoing projects for the Defendants, which was provided to the 1st Defendant on 4 April 2014 (“the Ongoing Projects List”).²⁶ I will generally refer to the customer information shared by the Plaintiff with the Defendants as “the Customer Information”. The Plaintiff essentially alleges that the Defendants used the Customer Information to contact Thai FB&N customers to purchase DSM FB&N ingredients, thereby causing loss to the Plaintiff.²⁷ The Defendants deny any misuse or breach of any confidentiality obligation.²⁸

Shortly before the trial commenced, the Plaintiff applied to amend their statement of claim, inter alia, to make clear that the claim against the Defendants was for breach of the contractual obligations of confidentiality set out in the Confidentiality Agreement, as well as for breach of obligations of confidence arising outside of the Confidentiality Agreement under common law and/or equity. The key amendment was to add the phrase “and/or their duty of confidence” each time the Defendants’ breach of the Confidentiality Agreement was pleaded. These amendments essentially concerned the prayers for relief at the end of the original statement of claim.²⁹

The Defendants objected to the proposed amendment on the basis that a new cause of action (breach of an equitable obligation of confidence) was being added shortly before trial, and also because the proper forum for the action for misuse of confidential information outside of the Confidentiality Agreement (for example, in equity) had not been established to be that of Singapore law. The Defendants contended it had not been established that Singapore was the proper forum for a claim based in tort or equity as opposed to the Confidentiality Agreement. After hearing counsel, this Court allowed the proposed amendments to the statement of claim.³⁰ Given that the existing statement of claim had already pleaded breach of confidence at common law and in equity³¹ and the fact that the Defendants had never objected to the action for breach of confidence being heard in Singapore, this Court allowed the proposed amendments. Whether or not the Court would need to apply or consider Thai law when determining liability outside of the Confidentiality Agreement was something to be addressed at the trial itself. That said, for reasons which will become clear, nothing turns on the amendment. Indeed, no issue arose at trial on Thai law and breach of confidence outside of the Confidentiality Agreement.

Under the amended statement of claim dated 31 August 2017 (“SOC 2”), the Plaintiff, after setting out the obligations of confidentiality under the Confidentiality Agreement and/or common law and equity, as well as the nature of the confidential information disclosed to the Defendants, pleads the specific breach alleged against the Defendants in SOC 2. The core complaint set out in SOC 2 was that on 1 July 2014, despite the Plaintiff’s contention that the termination of the distributorship arrangement had not yet been resolved, the 1st Defendant issued the Notice to the Plaintiff’s customers informing them of the change of distributorship and providing its contact details. The Plaintiff asserts that the Defendants were only able to contact the Plaintiff’s customers as quickly and easily as they do because of the confidential Customer Information that had been disclosed to them.³²

The...