America Ii Asia Pte Ltd v Kee Foong Meng, Laurel & Ors

• Jurisdiction: Singapore
• Judge: Loo Ngan Chor
• Judgment Date: 18 November 2011
• Neutral Citation: [2012] SGDC 197
• Hearing Date: 27 May 2011,29 April 2011,26 May 2011,18 November 2011,06 June 2012,24 May 2011,06 May 2011
• Citation: [2012] SGDC 197
• Year: 2011
• Court: District Court (Singapore)
• Docket Number: District Court No. 3833 of 2009 F
• Plaintiff Counsel: Mr Lim Ying Sin Daniel / Mr Mervyn Cheong (M/s Stamford Law Corporation.)
• Published date: 28 November 2012

District Judge Loo Ngan Chor:

I have closely studied the parties’ closing submissions which totalled more than 470 pages, the main authorities to which they have referred and checked these against the evidence. Without intending any disrespect to counsel, whose industry I acknowledge, let me say that the length of the submissions seems altogether disproportionate to the complexity of the case or the amount prospectively or potentially at stake, which I consider to be likely very small. The upshot has been that it has taken me a considerable interval of time to go through and to review them against the authorities and evidence, using the interstices of time available to me for this purpose. The documents for this case have occupied my table in chambers for no less than the past six weeks.

Permit me to give you only very briefly my findings today. I shall give my full findings and reasons should the need arise.

The plaintiff says that it is in the business involving the purchase and sale of electronic components in Asia including Singapore and that they are part of the America II group of companies with their HQ in Florida. They claim to be “one of the largest independent distributors of electronic components in the world particularly in the integrated circuit market.”

The 1st defendant was employed by the plaintiff over two years until 2nd October 2009 in a job designated as inside sales executive. She was all of 21 years old when she joined the plaintiff. She tendered her resignation on 16th September 2009 but, on the plaintiff’s request, did not serve out her resignation window. As an inside sales executive, she did not meet with the plaintiff’s customers. That was the job of the external sales staff to whom she also provided office support. She provided sales services from the office which included making quotations for sales of electronic parts to customers or making cold calls to businesses who could become the plaintiff’s customers. She was assigned a portfolio of several clients including, in her own words, “Flextronics SEA (sites mainly at Kallang, Changi, Johor Bahru, Penang and India, JDS Uniphase Pte Ltd, and Jabil Guangzhou (a US company) and some smaller companies such as Precico, IMI, and etc.”

The 2nd defendant is the 1st defendant’s current employer whom she joined after she departed the plaintiff. They too broker electronic parts, having started with contract manufacturers in Singapore and Malaysia, and now with footholds in China, Thailand, the Philippines, Europe and USA. Since 2007, they have taken on a couple of franchised distribution lines for electronic parts as well. The 1st defendant’s letter of appointment with the 2nd defendant is dated 15th September 2009 and she was to have commenced work with the 2nd defendant on 16th October 2009, the day after she was to have ceased her employment with the plaintiff. In the event, because her cesser with the plaintiff was brought forward, she joined the 2nd defendant sooner. Although designated an accounts executive, her role in the 2nd defendant was also to make sales from within the office.

The 3rd defendant is the 2nd defendant’s sole shareholder and director.

The plaintiff accused the 1st defendant of wrongfully joining the 2nd defendant - who, they say, is a competitor – and of soliciting two named customers of the plaintiff and of breaching confidentiality obligations owed to the plaintiff.

They accuse the 2nd and 3rd defendants of inducing the 1st defendant to breach her contract with the plaintiff.

A few points may be made of the broad canvas of the area of the laws which this dispute involves. There is no general doctrine of unfair competition in English common law, which is unlike the position in the US. (See Phillips and Firth, Introduction to Intellectual Property Law, 3rd edition at para 19.13.) Absent contractual or any statutory rights such as patents or copyright, between commercial strangers, the tort of passing off serves the function of protecting business goodwill. In contract, the restraint of trade doctrine is applied rather more strictly in employment, as opposed to business, situations. This is done by a stricter delineation of the nature of the interest that is sought to be protected. Covenants against non-competition or non-solicitation by a former employee have to be measured against the interest that the former employer is hoping to protect. (See Treitel on The Law of Contract by Edwin Peel, 12th edition.)

The nature of the market for electronic components also engendered much debate before me. There are thousands, perhaps countless, electronic components in the market. It is thought impossible for anyone to deal in all of the components in the market all of the time. The prices of electronic components are volatile. Indeed, it is a well-known fact too that the shelf-life of electronic components tend to be rather short, constantly being replaced by newer and technically better components. A second factor has impacted the issues of who a customer is and who a competitor. This factor is the conjoined ones of the America II group of companies being a big player in the market of electronic components distribution and of some of the names said to be customers, for example Flextronics, being big buyers in the market. The first of the conjoined facts spawned the question whether the 2nd defendant, although no push-over, really was a competitor. Would such an equation liken a huge supermarket chain to the neighbourhood provision shop or a fast-food chain to the hawker’s stall? When a potential buyer is so big that it is a household name, or at any rate, a well-known name to practically anyone looking to sell a product, is that customer closed to a former employee? If one were looking to sell a product, the buyer is so big and obvious that one cannot miss knocking on its doors. Moreover, given the multiplex articles which could be described as electronic components, of which integrated circuits are but an example, and the practical impossibility of any distributor dealing in all of them all at one time, wherefore competition? The clauses do not assist in these definitional problems. But these issues of definition are useful as part of the context within which the agreement in question was entered into and may be interpreted. As the Court of Appeal said at [131] in Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] SGCA 27, citing from McMeel:

The contextual dimension

Fourthly, the exercise in construction is informed by the surrounding circumstances or external context. Modern judges are prepared to look beyond the four corners of a document, or the bare words of an utterance. It is permissible to have regard to the legal, regulatory, and factual matrix which constitutes the background in...