Anewtech Systems Pte Ltd and Others v Yeo Boon Hwa and Others

• Jurisdiction: Singapore
• Judge: Wong Peck
• Judgment Date: 12 November 2008
• Neutral Citation: [2008] SGDC 335
• Published date: 06 January 2009
• Court: District Court (Singapore)
• Plaintiff Counsel: Lee Cheong Hoh (Ching & Company)
• Defendant Counsel: Adrian Wee (Characterist LLC),Lim Tiang Yao (Asia Law Corporation)

12 November 2008

District Judge Wong Peck:

Introduction

1. This is an appeal against my decision to discharge an Anton Pillar Order made on 27 June 2008 by the learned District Judge and executed on 3 July 2008 at the office of the 2nd Defendants located at 30 Kallang Pudding Road #03-04 Valiant Industrial Building Singapore 349312. The application for the discharge of the Anton Pillar Order in Summons No. 10210 of 2008C was by the 2^nd and 4^th Defendants.

2. According to the Plaintiffs, the 1^st Plaintiffs are in the business of manufacturing of computing and data processing equipment and accessories. On 21 January 2008, the 2^nd Defendants were incorporated as a company involved in the same kind of business as the 1^st Plaintiffs. The 4^th Defendant was employed by the 1^st Plaintiff as senior support consultant prior to his resignation on 28 February 2008. On 3 March 2008, the 4^th Defendant joined the 2^nd Defendants as its sales and technical support manager.

3. Although the application for discharge of the Anton Pillar Order was made by the 2^nd and 4^th Defendants, for completeness, I will also cover the roles of the 1^st and 3 rd Defendants. The 1^st Defendant was the former general manager of the 1^st Plaintiffs and upon his resignation, he incorporated the 2^nd Defendant company as its sole director and shareholder. The 3^rd Defendant was a former business associate of the 1^st Plaintiffs tasked with setting up a new venture in China in return for shares in the 1^st Plaintiffs’ company. As for the 2^nd and 3^rd Plaintiffs, they are the founding members, shareholders and directors of the 1^st Plaintiffs.

Application for the Anton Pillar Order

4. On 27 June 2008, the Plaintiffs’ counsel appeared the learned District Judge to make his submissions on the ex parte application for the Anton Pillar Order in Summons No. 2903 of 2008 . Two supporting affidavits were filed in support of this application. One was filed by the 3^rd Defendant and the second one was filed by a Mr Leong Chee Wing (”Mr Leong”), the Consultant of SMS Investigation and Security Pte Ltd who was hired by the 3^rd Defendant to investigate the activities of the 1^st Defendant.

5. At this stage of the application for the Anton Pillar Order, the Plaintiffs made a number of allegations against the Defendants. These allegations which are found in the Statement of Claim can be summarised in the following paragraphs.

6. According to the Plaintiffs, the 2^nd Defendants had been sending sales and marketing brochures of the 2^nd Defendants’ services and products to 1^st Plaintiffs’ suppliers and customers in order to induce them to deal with the 2^nd Defendants. The Plaintiffs believed that the Defendants used the 1^st Plaintiffs’ confidential customer database in this mass marketing exercise. Further the materials were produced by the 2nd Defendants in the same format using Microsoft Outlook as that of the 1st Plaintiffs. Customer feedback form used by the 2^nd Defendants was also part of the 1^st Plaintiffs’ ISO documentation. The ISO documents of the 1^st Plaintiffs are the 1^st Plaintiffs’ intellectual property. The Plaintiffs claimed that this would breach terms of the employment agreement signed by the 1^st and 2^nd Defendants. I reproduce the salient part of the employment agreement below :

“Disclosure of Confidential Information

You shall not disclose or divulge at any time any secret, transaction or information in relation to our Company which may come within us and should not be disclosed, divulged or made public, except in the course of your duty. This shall also be applied when you leave the Company.”

7. The Plaintiffs’ position is that the Defendants’ actions had also violated the terms of the Shareholder’s agreement signed by the 1^st Defendant. I reproduce the relevant clauses below:

“5.4.1 Shareholders Diligence

(a) In the event that shareholders leave the company operation and ceases employment with the company, he is not allowed to be involved in any business transaction or deals with the company supplier including their subsidiary company. He is also not allowed to trade or by any means carry out business transactions with our suppliers for a period of 3 years. If this is violated, the company will be in a position to pursue this by legal actions and proceed to gain injunction to stop such activities.

(b) All shareholders who are no longer employed with the company are not allowed to carry any business transactions with out existing customers and all their associate and subsidiary companies that are distinctly Anewtech Systems related. This condition will be effective for a period of 3 years after his last serving day with the company. If this is violated, the company will be allowed to carry out legal actions to pursue for injunctions and compensations.

6.5 Confidentiality

No party shall divulge or communicate to any person (other than those whose province it is to know the same or with proper authority) to use or exploit for any purpose whatever any of the trade secrets of the Company or any of the other parties which the first mentioned party may receive or obtain as a result, directly or indirectly, of entering into this agreement, and each party shall use its best endeavours to prevent its employees or agents if any from so doing. This restriction shall continue to apply without limit in point in time but shall cease to apply to information or knowledge which may properly come into public domain through no fault, act or omission of the relevant party.”

8. There is one final category of claim by the Plaintiffs against the Defendants. In the Statement of Claim, the Plaintiffs claimed that there is alleged conspiracy by all the Defendants to injure the Plaintiffs.

9. In the supporting affidavit made by the 3^rd Plaintiff, he narrated the alleged misdeeds of the 1^st Defendant including how 1^st Defendant had contacted some customers and suppliers of the 1^st Plaintiffs. He also referred to 3 private investigation reports, report of trap purchase of a product which the 1^st Plaintiffs were also selling and the transcript of conversation between 3^rd and 4^th Defendants with Mr Leong on 18 March 2008 leading to the trap purchase. In paragraph 35 of this affidavit, 3^rd Plaintiff asserted that “ if the 1^st and 4^th Defendants are aware that the Plaintiffs knew all these, they will in all likelihood conceal or destroy their evidences of communications with the 1^st Plaintiffs’ customers to avoid any liability”. In paragraph 52 of this affidavit, the 3^rd Plaintiff asserted that the Defendants “ will certainly conceal or destroy all such information that they are using if they become aware of an action taken by the Plaintiffs.” However, it is pertinent to note to the basis of such beliefs had not stated in the affidavit.

10. As for the other supporting affidavit filed by Mr Leong, he affirmed that he gave the 3^rd Plaintiff 3 investigation reports on the activities of the 1^st Defendant, he also did the trap purchase from 3^rd and 4^th Defendants of a product which the Plaintiffs were also selling and also produced a transcript of a conversation he had with 3rd and 4^th Defendants.

11. In Mr Leong’s investigation reports, he reported having seen the 3^rd and 4^th Defendants working alongside an “unknown man” whom the 3^rd Plaintiff identified as the 1^st Defendant. As for the transcript of the conversation which Mr Leong had with the 3^rd and 4^th Defendants, it was for the trap purchase of one eBOX 611 Antivibration Mobile DVR System with 4 Channel which 1^st Plaintiffs were also selling.

Terms of the Order

12. The Anton Pillar Order granted by the learned District Judge was in very wide terms. It allowed the Plaintiffs to enter and search not only the 2^nd Defendants’ premises but also the residences of the 1^st Defendant, 3^rd Defendant and 4^th Defendant as well as 2 vehicles bearing registration numbers SGE 8467A and SFL 3477 D registered in the names of the 1^st Defendant and 4^th Defendant respectively. The search and seizure was for a long list of items couched in very general description in Schedule 2 of the order which is reproduced below:

“ (i) the 1^st Plaintiffs’ customers’ database containing more than 4,000 records as at March 2008;

The 1^st Plaintiffs’ customers’ listings

The 1^st Plaintiffs’ suppliers’ listings

Price lists from the 1^st Plaintiffs’ suppliers

Any presentation materials related to the 1^st Plaintiffs’ sales forecast, sales strategy and project forecast

Any documents and email correspondences that is commercially related to the 1^st Plaintiffs operations, strategies and business directions, trade secret, non disclosure agreements and distributor agreements.

(ii) the 2^nd Defendants’ quotations to the 1^st Plaintiffs’ customers;

The 2^nd Defendants’ invoices and delivery orders to the 1^st Plaintiffs’ customers

The 2^nd Defendants’ purchase orders to the 1^st Plaintiffs’ suppliers

The 2^nd Defendants’ shipping documents from the 1^st Plaintiffs’ suppliers

Correspondences between the 2^nd Defendants and the 1^st Plaintiffs’ suppliers/vendors

(iii) the 1^st Plaintiffs’ ISO quality documents, ISO management manuals, information of the 1^st Plaintiffs’ daily project and manufacturing and internal documentation system.

(iv) the 1^st Plaintiff’s product database, product information, design concept and systems platform built procedures, checklists, design files and research and systems configurations files.”

13. The order also compelled the Defendants to provide within 7 days of being served with the order by way of an affidavit confirming information of :

“ Disclosure of information by the Defendants

5. (1) Each of the Defendants must immediately inform the Plaintiffs’ solicitors:-

(a) where all the listed items are; and

(b) so far as they are aware;

(i) the name and address of everyone who has supplied them or offered to supply to them listed items.

(ii) the name and address of everyone to whom he has supplied or offered to supply listed items; and

(iii) the...