Australian Wine Index (Singapore) Pte Ltd v Universal Assets Group Pte Ltd and Others

• Jurisdiction: Singapore
• Judge: Earnest Lau Chee Chong
• Judgment Date: 13 April 2006
• Neutral Citation: [2006] SGDC 102
• Court: District Court (Singapore)
• Published date: 14 June 2006
• Year: 2006
• Plaintiff Counsel: Ong Toon Howe Daryl (Gateway Law Corporation)
• Defendant Counsel: Cheryl Monteiro with Dason L (Monteiro & Co)
• Subject Matter: Civil Procedure,Injunctions,Interlocutory injunctions,Plaintiff and first defendant operating rival wine brokerage businesses,Second to fourth defendants leaving employ of plaintiff to work for first defendant,Plaintiff applying for interlocutory injunction against first defendant in action for breach of confidence, and against second to fourth defendants in actions for breach of restraint of trade, non-disclosure and confidentiality clauses in employment contracts,All parties focusing mainly on plaintiff's ultimate chances of success at trial,Whether appropriate for parties to do so under principles in American Cyanamid Co v Ethicon [1975] AC 396,Whether serious issues to be tried in case,Whether balance of convenience with plaintiff or defendants,Whether interlocutory injunction should be granted to plaintiff
• Citation: [2006] SGDC 102

13 April 2006

Earnest Lau, DJ:

Introduction

1. The Plaintiff and 1^st Defendant are rival companies in the business of wine brokerage. Wine brokerage involves the buying and selling of wines for investment purposes. A fuller description is found in the 3^rd Defendant’s (Tan) affidavit dated 10/4/06 at paragraphs 7, 8 and 23. Basically, these companies employ wine brokers to prospect for customers. When a company sells wine through the broker, the broker earns a commission. If a customer wishes to sell wine, the broker may contact the company for the customer but he earns no commission from the customer or company. It is the company who earns the commission from the customer on a successful sale.

2. The 2^nd, 3^rd and 4^th Defendants were previously employed by the Plaintiff as wine brokers. Shortly after leaving the Plaintiff, they joined the 1^st Defendant.

3. The Plaintiff has applied for an interlocutory injunction against the Defendants. Both sides accept that the governing principles are those set out in American Cyanamid Co v. Ethicon [1975] AC 396.

The facts

Plaintiff’s case against the 1^st Defendant

4. The Plaintiff’s action against the 1^st Defendant lies in tort for breach of confidence. As against the 2^nd to 4^th Defendants, the Plaintiff is suing for breach of employment contract.

5. The Plaintiff claims to own contact information regarding their customers, and wishes to prevent the 1^st Defendant from using the same. Since 2003, they allegedly spent considerable time, effort and resources developing their clientele using a special process. This involved wine brokers seeking out customers by randomly contacting professionals and executives using over the telephone or email to generate interest in the wines sold by the Plaintiff. The estimated expenditure on advertising and marketing since August 2003 is $338,313. To date, the Plaintiff has a stable of around 920 clients. Where customers are secured, the Plaintiff would possess their contact particulars and information on the wines sourced, brokered and cellared for them.

6. The Plaintiff says the 1^st Defendant has access to this information without labouring through random leads. In particular, the Plaintiff alleges the 1^st Defendant knows if a certain person is an existing customer of the Plaintiff, and also the email address, hand phone numbers and wine portfolio information.

7. The Plaintiff however has no direct evidence to prove the 1^st Defendant has this information. Mr Ong, counsel for the Plaintiff, can only base his arguments on inferences drawn from the following facts:

(a) The 1st Defendant is a relatively new company operating for less than 5 months.

(b) The 1st Defendant has contacted 6 persons who are existing customers of the Plaintiffs.

(i) Dr. Goh E-Shawn was contacted on his mobile phone by Yvonne Teo from the 1^st Defendant. Dr. Goh claimed he never disclosed his handphone number to anyone else apart from the Plaintiff.

(ii) Paul Graham was contacted on his office phone by Steve Yeoh from the 1^st Defendant. Mr. Graham claimed he never disclosed his interest in wine collecting and investment to anyone else apart from the Plaintiff.

(iii) Jonas Sorensen was contacted on his office phone by the 2^nd Defendant (Allan Thong). Mr. Sorensen also claimed he never disclosed his interest in wine collecting and investment to anyone else apart from the Plaintiff.

(c) Several of the 6 persons are based overseas.

(d) The 2^nd to 4^th Defendants who used to work for the Plaintiff now work for the Plaintiff.

(e) Justin Alexander in his affidavit dated 13/0/06 also stated that the 2^nd Defendant (Allan Thong) had sent emails to the Plaintiff’s customers, namely Alfred Yip (pages 74-75), Sorensen (pages 80-89) and Eric Wong (pages 98 – 100).

(f) At pages 102 to 107, Justin Alexander says that the 4^th Defendant (Jeremy Yu) sent a computer file to himself 3 days before he resigned. This file contains the portfolio information of a client and varieties of wine Plaintiff offers. I should point out here that it is unclear if the document shown in pages 106 and 107 actually belonged to the Plaintiff. In any event, the 4^th Defendant has explained he was permitted to send the file to himself as he was undergoing reservist training and wanted to work on his clients during his free time.

(g) Jamie Lim from Cougar Express (who stores wine for the Plaintiff’s customers) filed an affidavit dated 21/3/06 deposing that the 3^rd Defendant (Lorenzo Tan) called him on 20/2/05 (which was after he had left the Plaintiff’s employ) claiming that a client, one Winston Jong wanted a wine list. In paragraph 6, Jamie said the 3^rd Defendant gave a client code with the Plaintiffs. The fax number provided was the 1^st Defendant’s fax number. Winston Jong has filed an affidavit stating that he did not authorize Tan to contact Cougar Express. In defence, the 3^rd Defendant claims he never spoke to Jamie Lim at all. In fact, the 4^th Defendant says Jamie Lim probably mistook the 3^rd Defendant for him as he once asked Jamie to fax Jong’s particulars to him at a time when he was still working for the Plaintiff.

8. From this, counsel submits that there are serious issues to be tried with regard to the breach of confidence action against the 1^st Defendant. He relies on the case of Coco v. AN Clarke (Engineers) Ltd [1969] RPC 41 for the following elements of the tort of breach of confidence.

(a) First, the information to be protected must have the necessary quality of confidence about it.

(b) Next, that information must have been imparted in circumstances importing an obligation of confidence.

(c) Lastly, there must be an unauthorized use of information to the detriment of the party who originally communicated it.

The claim against the 2^nd to 4^th Defendants

9. The action against the 2^nd to 4^th Defendants is for breach of contract. They each have separate employment contracts with the Plaintiff with identical terms and conditions. They allegedly infringed clauses 9.3.1, 9.3.3 and 11.1 of the Letters of Appointment (restraint of trade), and clause 4.2 of the Non-Disclosure and Confidentiality Agreement (confidentiality) by working for the 1^st Defendant before the expiry of 12 months from their respective dates of termination, and also disclosing the Plaintiff’s customer information to the 1^st Defendant.

10. Counsel submitted that the Non-Disclosure and Confidentiality Agreement defines customer lists as confidential proprietary information. By inference, the Plaintiff says the 2^nd to 4^th Defendants have breached of the confidentiality agreement because the 1^st Defendant managed to contact 6 of the Plaintiff’s customers. This suggests the 2^nd to 4^th Defendants have transmitted the Plaintiff’s customer information to the 1^st Defendant.

11. As for the restraint of trade clause, counsel submitted on the law stipulated in Heller Factoring (Singapore) Ltd v Ng Tong Yang [1998] 3 SLR 299. Briefly, an enforceable clause must satisfy the test of reasonableness and protect some legitimate interest of the employer such as trade secrets, confidential information and goodwill having regard to all relevant facts and circumstances considered. Counsel submits the present clause is reasonable as to purpose, territory and duration, and that its primary objective was to protect the Plaintiff’s legitimate business interest in preventing ex-workers from disclosing confidential information to business rivals. Unless these ex-workers are enjoined from working for the 1^st Defendant, the Plaintiff’s legitimate interests cannot be protected from harm.

The Defendants’ case

12. Ms Monteiro for the 1^st Defendant accepts the test for breach of confidence set out in Coco v. AN Clarke (Engineers) Ltd. She submitted the application should be dismissed as the Plaintiff has a weak prima facie case on affidavit evidence. In summary, she said:

(a) First, the fact that the Plaintiff omitted to furnish sufficient particulars of confidential information is fatal to their claim.

(b) Second, contact information per se does not qualify as confidential information. The 1^st Defendant claims there exists a limited pool of persons who would be interested in fine wines. It is thus not uncommon for rival companies to market wines to the same persons. In this case, the 1^st Defendant did not source any information on Plaintiff’s clients from the 2^nd to 4^th Defendants. Instead, the data was gathered from the public domain or voluntarily disclosed to the 1^st Defendants by the customers when the 1^st Defendant’s wine brokers contacted them.

13. Similarly, Mr Dason for the 2^nd to 4^th Defendants contended that the restraint clause against his clients is unenforceable.

(a) First, it is unclear what legitimate interest the clause is protecting. Client information, whether in the form of customer lists or contact particulars does not qualify as a protectable interest if it is not a trade secret. As the information in this case are not trade secrets, the restraint clause must be deemed to inhibit competition, and therefore unreasonable.

(b) Second, the Plaintiff cannot claim proprietary rights over the contact particulars because the information was mined from public sources,.

14. In the circumstances, the defence counsels sought to dismiss the application on grounds that Plaintiff failed to show a strong prima facie case. According to Ms Monteiro, the American Cyanamid balance of convenience test compels the court to look at the relative strengths of the case. She says the court must assess whether the Plaintiff will succeed at trial for a permanent injunction and rule accordingly. Mr Dason in paragraph 2 of his written submissions maintained that the strength of the Plaintiff’s case is highly relevant in determining the balance of convenience. He tendered the High Court decisions of Medivac International Management Pte Ltd v. Moore [1987] SLR 415 and Buckman Laboratories (Asia) Pte Ltd v. Lee Wei Hoong [1999] 3 SLR 333 for the proposition...