Asia Polyurethane Mfg Pte Ltd v Woon Sow Liong

• Jurisdiction: Singapore
• Judgment Date: 31 March 1990
• Date: 31 March 1990
• Docket Number: Suit No 2340 of 1989
• Court: High Court (Singapore)

Asia Polyurethane Mfg Pte Ltd

Plaintiff

and

Woon Sow Liong

Defendant

[1990] SGHC 25

Chan Sek Keong J

Suit No 2340 of 1989

High Court

Civil Procedure–Injunctions–Employer obtaining interim injunction against employee under restraint of trade covenant–Whether employer's failure to make full and frank disclosure ground for discharging injunction–Whether court had discretion to maintain or discharge injunction–Contract–Illegality and public policy–Restraint of trade–Employee signing covenant in restraint of trade–Whether covenant void in law–Whether any interest of employer requiring protection–Whether period of restraint reasonable

The plaintiff, Asia Polyurethane Mfg Pte Ltd (“APM”) carried on the business of manufacturing polyurethane products and systems. They employed the defendant (“Woon”) as a laboratory technician. While employed with APM, Woon signed two secrecy deeds covenanting not to be involved in any business of a similar nature to APM and against soliciting business from any of APM's customers.

Woon subsequently left APM and joined a competitor company, Olin Pte Ltd (“Olin”). APM obtained an ex parte injunction in terms of Woon's covenant restraining Woon for five years from being employed or advising any company or any business of a similar nature to the business carried on by APM or canvassing any customer of APM. APM argued that Woon would in all likelihood divulge its manufacturing processes and secret formulae to its detriment.

Woon, in applying to discharge the injunction, contended that the manufacturing processes of APM and Olin were different. He also stated that the original covenant was only for two years and that its duration was extended to five by a second covenant given by Woon after he had completed two years of employment with APM. Olin's managing director also filed an affidavit stating that APM's claim to protection was based on its secret Polyol Blend which could easily be discoverable by Olin's chemists or any other competent chemist through analysis in a properly equipped laboratory.

Held, allowing the defendant's application:

(1) APM's admission that its Polyol Blend could be broken down by any competent chemist negated its claim to any secret process in the blending of its Polyol Blend. It also negated APM's claim to “local expertise” in mixing specifications to take into account climatic conditions: at [9].

(2) In the absence of any interest of the employer that required protection, which might be trade secrets or confidential information relating to customers etc,it was contrary to public policy to restrain competition. On the evidence, the court was not satisfied that APM had any secret process or formula to protect: at [11].

(3) It was also significant to note that while Woon had inadvertently contacted one of APM's customers while conducting a market survey for Olin's products, there was no specific allegation that Woon solicited business from that customer: at [12].

(4) Even though APM failed to disclose that the original covenant was only for two years and that its duration was extended to five under the second covenant, it was not a strict rule that an interim injunction had to be discharged on the ground that the plaintiff had failed to make full and frank disclosure of all material facts. The court had a discretion to maintain the injunction if the defendant had not been prejudiced. In the present case, as the restraint period commenced from the date Woon ceased employment with APM and that period had not expired at the date of commencement of this action, Woon was not prejudiced on that ground: at [13].

(5) Woon was, however, prejudiced on the ground that if the disclosure of the original covenant for two years were made, it might have led the judge to find that the further period of three years was unreasonable since APM had, by stipulating a shorter period of restraint in the first deed, provided the necessary evidence that that period was sufficient to...