Asian Corporate Services (SEA) Pte Ltd v Impact Pacific Consultants Pte Ltd and Others

• Jurisdiction: Singapore
• Judge: V K Rajah J
• Judgment Date: 04 August 2005
• Neutral Citation: [2005] SGHC 138
• Docket Number: Suit No 834 of 2004 (Summons in
• Date: 04 August 2005
• Published date: 05 August 2005
• Year: 2005
• Plaintiff Counsel: Koh Kok Wah, Andy Leck and Dinesh Dhillion (Wong and Leow LLC)
• Citation: [2005] SGHC 138
• Defendant Counsel: Jimmy Yim SC and Kelvin Tan (Drew and Napier LLC),Salem Ibrahim and Shankar Kumar (Salem Ibrahim and Partners)
• Court: High Court (Singapore)
• Subject Matter: Anton piller orders,Application to set aside order granted on allegation of conspiracy to injure applicant's business,Whether prima facie case of conspiracy established,Whether real risk of destruction of evidence existing,Whether effect of order excessive or disproportionate to its legitimate goal,Whether applicant making proper enquiries before making application for order,Civil Procedure,Whether very serious damage sustained in absence of grant of order

4 August 2005

V K Rajah J:

1 Steven Gee in Commercial Injunctions (Sweet & Maxwell, 5th Ed, 2004) at para 17.020, p 495 states:

Search orders unleash consequences which are irreversible and of great importance to everyone involved. It may at a stroke destroy the defendant’s business and replace it with a hope of compensation available only at the end of protracted litigation.

Search orders in civil proceedings, commonly known as Anton Piller orders, must be sought only after much deliberation and with the exercise of great circumspection. They will normally only be granted in extreme cases where a grave danger of property being smuggled away or an imminent risk of vital evidence being destroyed prevails: see Lord Denning MR in Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55 at 61. The modern search order was first employed by the sound recording industry in England to combat clandestine counterfeit and bootleg practices. When the usage of these search orders became widespread in other matters in the 1980s, the courts in several jurisdictions took great pains to proscribe the cavalier approach to them as weapons of first resort. Parties and their advisers have been repeatedly admonished for attempting to deploy this unique and potentially devastating remedy without adequate justification. The present application is in some respects illustrative of a somewhat careless and unrestrained approach in employing the search mechanism, given that it has been invoked here as a powerful primary investigatory tool rather than as a safeguard of last resort.

The factual matrix

2 The plaintiff is a private limited company incorporated in Singapore, its principal activity being the provision of business management and consultancy services for companies in Singapore and Southeast Asia. These services include the incorporation of Singapore and offshore companies, opening of bank accounts, provision of nominee directorships, appointment of local agents for foreign branches of companies, nominee shareholder appointments, company secretarial and administration services, preparation of monthly management accounts and general accounting services. The plaintiff enjoys an annual turnover of approximately $800,000 to $900,000 and has a current staff strength of about six persons.

3 The fifth defendant was the major shareholder and the managing director of the plaintiff until European Trust Company Ltd (“ETC”), a New Zealand company, purchased his shares. The acquisition by ETC was effected progressively over a three-year period from 2000 to 2002. In the meantime, the fifth defendant continued to be employed as the managing director of the plaintiff and he had de facto control of all business operations. He remained the managing director of the plaintiff until 30 June 2004. The sixth defendant is the wife of the fifth defendant and was employed by the plaintiff as a marketing coordinator from 10 August 1994 to 31 October 2003. The seventh defendant, a permanent resident, is a director of the first and second defendants and a shareholder of the second defendant. From May to July 2002, the plaintiff employed him on a part-time basis.

4 On 30 June 2003, the fifth defendant informed the plaintiff that he intended to leave the plaintiff’s employment permanently. The fifth defendant was then asked if he was leaving to join a competitor, as this would naturally affect the plaintiff’s decision concerning whether or not to retain him as a director pending the arrival of his replacement. His response was negative.

5 Some of the plaintiff’s new management nonetheless entertained suspicions that the fifth, sixth and seventh defendants were siphoning away business from the plaintiff and that they were in effect engaged in directly competing businesses. They came to the conclusion that the fifth defendant was selective with whatever information he chose to provide them with. Acting on this, they began a review of the plaintiff’s billings for the preceding three years to identify “lost clients”. While a private investigator was employed by the plaintiff to gather evidence against the fifth and sixth defendants in particular, the fifth defendant’s electronic mail was also covertly analysed by computer forensic experts. The plaintiff claims that various electronic mail messages and documents it has managed to retrieve prove that the fifth and sixth defendants, while still in the plaintiff’s employ, had been actively involved in setting up the first, second, third and fourth defendants as competing entities, thereby diverting business and customers away from the plaintiff. The plaintiff asserts that since January 2003, several of the plaintiff’s former customers had transferred their business relationships to one or more of the first, second, third and fourth defendants.

6 The plaintiff’s investigations allegedly also reveal the following facts. The first defendant is a limited exempt private company incorporated in Singapore, with its principal activity being business management and consultancy services. The second defendant is a private limited company incorporated in Singapore, its principal declared activity being the development of software and multimedia works (including software maintenance). Both companies share the same registered office. The third defendant is the Singapore branch of a company incorporated in England on 29 May 2003 and registered in Singapore on 22 July 2003. It declares itself a general commercial company offering, inter alia, business and management consultancy services. The fourth defendant is a limited private company incorporated in Singapore, its principal activity being that of a business and corporate advisor. Both the third and fourth defendants also share the same registered office that adjoins the office of the first and second defendants. The fifth and sixth defendants have been directors of the third defendants since 26 June 2003. The fifth and sixth defendants have also been directors and shareholders of the fourth defendant since 14 June 2003. The investigations purportedly further reflect that the first defendant and/or the third defendant had, through the fifth defendant, established a business relationship with a corporate service provider in Dubai.

7 The plaintiff contends that the first, second, third and fourth defendants have in their possession and custody documents shedding light on all seven defendants’ conspiracy to injure the plaintiff, on the fifth and sixth defendants’ breach of contract and finally on the fifth defendant’s breach(es) of fiduciary duty to the plaintiff. Given that the first, second, third and fourth defendants appear to be under the control of the fifth defendant, who assumes a central role in the factual matrix, the plaintiff expresses deep consternation over his conduct. It has voiced what it claims are real and justifiable concerns that upon litigation commencing in Singapore against the defendants for their various breaches of duty, the defendants may very well destroy, conceal or misplace relevant and/or incriminating documents.

8 The plaintiff finally asserts that the actual and continuing damage to its business is extremely serious. The plaintiff’s customer base, which the defendants have deliberately combined and conspired to divert to one or more of the first to fourth defendants, constitutes a significant source of the plaintiff’s business. This in turn has seriously impacted the plaintiff’s business and revenue.

The search order application

9 On 15 October 2004, the plaintiff’s solicitors applied ex parte for search orders against all the defendants. The alleged causes of action were breaches of directors’ fiduciary duties and a “conspiracy” to injure the plaintiff’s business. Plaintiff’s counsel alleged at the initial hearing that the case was primarily against the fifth, sixth and seventh defendants and that the fifth defendant was the key person in the whole matter. The third defendant was perceived merely as the Singapore branch of a foreign company in which the fifth and sixth defendants are directors. The plaintiff claimed that the fifth defendant worked for the third defendant while still in the plaintiff’s employ. This was done without disclosure to or consent from the plaintiff”.

10 The plaintiff insisted that there was an imminent risk of destruction of the documents, as the fifth defendant had already erased material information from his personal computer before returning it to the plaintiff. The application was adjourned to 18 October 2004 to allow the plaintiff to provide further and more precise information of the alleged breaches. This was duly supplied and search orders against all the defendants were granted on 18 October 2004. In so far as the plaintiff’s allegations against the third defendant are concerned, the plaintiff alleged in its “summary of key evidence” that there were two documents suggesting the deliberate transfer of its business to the third defendant. First of all, a BizNet Instant Information search showed that the fifth and sixth defendants were the third defendant’s Singapore directors as from 26 June 2003, while still in the plaintiff’s employ. Secondly, in an electronic mail dated 3 September 2003, the fifth defendant identified himself as “m-director” of the third defendant. This presumably meant that the fifth defendant was holding himself out as its “managing director”.

11 The execution of the search orders was uneventful. The supervising solicitors confirmed that the defendants had co-operated with them. The seized documents and computer records were thereupon retained by the supervising solicitors as directed.

12 The defendants subsequently appointed solicitors. Except for the third defendant who was separately represented, the other defendants collectively employed a single solicitor. Counsel for the third defendant, Mr Jimmy Yim SC, emphasised that the fifth and sixth defendants neither owned nor...