Clearlab SG Pte Ltd v Ting Chong Chai and others

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 03 November 2014
• Neutral Citation: [2014] SGHC 221
• Docket Number: Suit No 691 of 2011
• Date: 03 November 2014
• Published date: 22 January 2016
• Plaintiff Counsel: Lok Vi Ming SC, Joseph Lee, Tang Jinsheng, Nadia Yeo and Crystal Goh (Rodyk & Davidson LLP)
• Hearing Date: 28 February 2014,06 March 2014,11 March 2013,25 March 2014,27 March 2013,03 March 2014,14 August 2013,07 August 2013,21 March 2014,27 February 2014,21 February 2014,13 March 2013,29 August 2013,21 August 2013,20 February 2014,02 August 2013,25 March 2013,06 August 2013,20 August 2013,24 February 2014,28 August 2013,15 August 2013,07 March 2014,05 September 2013,27 August 2013,19 March 2014,14 March 2013,10 March 2014,17 March 2014,31 July 2013,01 August 2013,25 February 2014,09 May 2014,03 April 2014,18 February 2014,16 August 2013,03 September 2013,19 February 2014,17 February 2014,04 March 2014,21 March 2013,06 September 2013,18 March 2014,20 March 2014,15 March 2013,28 March 2013,24 March 2014,18 March 2013,05 March 2014,04 September 2013
• Defendant Counsel: Christopher Woo and Douglas Wong (Quahe Woo & Palmer LLC),Jason Chan and Melvin Pang (Amica Law LLC)
• Court: High Court (Singapore)
• Subject Matter: Confidence,Dishonest assistance,Equity,Tort,Fiduciary relationships,Contract,Breach,Recipient liability,Trusts,Inducement of breach of contract,Conspiracy,Knowing receipt,Conversion,Accessory liability

Lee Seiu Kin J: Introduction

The plaintiff’s primary claims in this suit are that its four ex-employees (“the ex-employees”) had taken its confidential information and used it for the benefit of a rival company, which they subsequently joined. The plaintiff also had ancillary claims against the rival company and its owner as well as against an ex-contractor of the plaintiff. The plaintiff’s claims are for breach of confidence, conspiracy, breach of employment contract, breach of fiduciary duty, inducing breach of contract, dishonest assistance, knowing receipt, conversion and breach of supply agreement.

The trial lasted 49 days. For the reasons given in this judgment, I allow, in part, the claims for breach of confidence, conspiracy, breach of employment contract, breach of fiduciary duty and conversion against the four ex-employees and the rival company and its owner. I dismiss the rest of the claims. The detailed orders are set out in [330]–[333] and [344]–[345] below.

The facts The parties

The plaintiff is Clearlab SG Pte Ltd (“Clearlab”). It is a company engaged in the manufacture and sale of contact lens.

The first four defendants are the ex-employees. The first defendant is Ting Chong Chai (“Ting”), the former Head of Engineering and Technology Development at Clearlab. Whilst working at Clearlab, Ting oversaw the manufacturing process and the research and development (“R&D”) projects related to the manufacturing process. The second defendant is Rathinaraj David (“David”), previously an R&D engineer in Clearlab’s engineering department. David’s work at Clearlab included preparing lens formulations and developing new lens material. The third defendant is Goh Wee Hong (“Goh”). He was an assistant manager of the R&D department charged with designing inserts and directing the cutting of those inserts. Additionally, he is Ting’s nephew. The fourth defendant is Ng Chee Han (“Ng”), a former senior optical tooling technician in the Insert Manufacturing department. His work at Clearlab mainly comprised the cutting of inserts using a computer numerical control machine known as Optoform 80. In this capacity, he worked with Goh to produce the inserts designed by Goh. David, Goh and Ng were Ting’s subordinates in Clearlab and they reported to him.

The fifth defendant, Aquilus Lens International Pte Ltd (“Aquilus”), is the company that the ex-employees joined after they left Clearlab. It was incorporated on 7 July 2010 by the ninth defendant, Ho Kar Kit (“Ho”).

Ho is also the owner of the sixth defendant, Central Global Pte Ltd (formerly known as Cencorp Engineering Pte Ltd) (“Central Global”). Central Global’s main business is in fitting out factories. It had undertaken 49 remodelling and repair projects for Clearlab.

The seventh and eighth defendants are a married couple, Ma Zhi (“Ma”) and Li Yuexin (“Li”). They have a partnership called OSC Automation Engineering (“OSC”), through which they undertake engineering projects. Ma is in charge of the technical aspect of the partnership whereas Li is in charge of the business aspect. From 2009 to 2010, OSC serviced Clearlab for various engineering matters. In 2011, Li registered a sole proprietorship, Optic Automation Engineering (“Optic”). Ma and Li undertook work for Aquilus through Optic instead of OSC.

For the purposes of this suit, there are essentially two groups of defendants. The first is directly associated with Aquilus, ie, the first six defendants and the ninth defendant. In parts of this judgment, I have referred to them as “the defendants”. The second comprises Ma and Li, and reference to “the defendants” would not include them.

Key events leading up to the dispute

As this dispute revolves around very extensive and detailed facts, it is useful to first set out the key events in a chronological order. Thereafter, as I analyse each cause of action, the relevant facts which bear on the issues will be repeated for convenience.

The background facts are as follows.

Clearlab was incorporated on 24 May 2007 as a wholly-owned subsidiary of Mi Gwang Contact Lens Co Ltd (“Mi Gwang”). Dr Park Jong-Gu (“Dr Park”) was appointed as its chairman, and his wife, Park Hae Kyeung (“Mrs Park”), was appointed as its managing director. Both Dr Park and Mrs Park are undisputedly the movers and shakers in Clearlab. On 25 May 2007, a sale and purchase agreement (“S&P Agreement”) was entered into by Clearlab, Mi Gwang, 1-800 Contacts Inc and Clearlab International Pte Ltd in respect of the “Acquired Assets”. Briefly, the “Acquired Assets” are a manufacturing facility in Singapore, all the tangible property, fixed assets and inventory at the manufacturing facility, intellectual property relating to the products produced at the manufacturing facility, existing rights relating to supply and distribution, know-how related to the manufacturing process, capital stock of Clearlab Europe Ltd and capital stock of Shayna Ltd. Importantly, one of the intended outcomes of the S&P Agreement was to obtain for Clearlab the right to use a spincast manufacturing technology to manufacture contact lens.

In the second half of 2008, the ex-employees joined Clearlab one after another. Ting joined first, on 1 July 2008. His nephew, Goh, joined Clearlab next on 4 August 2008. Then Ng joined on 28 October 2008, and David joined on 3 December 2008. Prior to joining Clearlab, Ting, Goh and David had been working at another contact lens manufacturer, CIBA Vision.

In 2010, three major events unfolded which set the stage for the ex-employees to leave Clearlab and join Aquilus. First, Aquilus came into existence. It was incorporated by Ho on 7 July 2010 with $200,000 as its start-up capital. Two weeks after its incorporation, on 28 July 2010, Ho made enquires with Clearlab about the possibility of Aquilus becoming a distributor of Clearlab’s products. This resulted in a meeting on 26 August 2010 between Ho and Mrs Park at Clearlab’s office on the very matter of distributorship, but the matter was not taken any further.

Second, seeds of friction were sown by the various emails that Ting sent. His July 2010 emails claimed that Sim Kok Seng (“Simon”), who is the Head of Regulatory Affairs and Compliance, was hoarding Clearlab’s confidential documents, displayed “strange” behaviour, was “not a good team player”, and was perpetually late for work. Ting then insinuated that Simon “might be looking around for another job”.¹ On 23 July 2010, Ting complained to Dr Park and Mrs Park that “[t]oday’s Clearlab is becoming too bureaucratic and inefficient” and that other people in Clearlab “really insulting my presence [sic]” by instructing his engineers to do work without his knowledge. Ting gave an ultimatum to Dr Park and Mrs Park to “[pay] attention before myself and my team decide for another career [sic]”.² The unhappy emails continued all the way to March 2011, but it was clear by June 2010 that Ting’s relationship with his other colleagues was increasingly deteriorating.

Third, Ho claimed to have steered Aquilus in a new business direction in October 2010:³ he decided that Aquilus would undertake the manufacturing of contacts lens instead of distribution. Consistent with this decision, he took the following preparatory steps. In February 2011, Ho engaged Tay Ah Teck John from Synergy Solutions Associates to provide consultancy services on the ISO certifications that Aquilus would require. In March 2011, Ho started on the construction of a clean room, increased Aquilus’ capital to $700,000 and got Ting to attend meetings at Aquilus. On 31 March 2011, Ho met Toh Boon Hou William (“Toh”) from TRAXonline Solutions LLP to discuss Aquilus’ mould base design.

By the end of 2011, all the ex-employees had left Clearlab and joined Aquilus. It began with Ting, who was abruptly dismissed from Clearlab on 26 April 2011. Upon dismissal, Ting left Clearlab’s premises with his personal laptop which he was using for his work at Clearlab. Ting also attempted to leave with bags of documents and boxes but was stopped from doing so.

On 3 May 2011, Ting commenced full-time work in Aquilus. He was the only technical personnel at Aquilus at that time; David, Goh and Ng were still employed at Clearlab, but this was soon to change. Ting approached David, Goh and Ng individually to offer them employment at Aquilus. All of them accepted the offer. David signed his letter of offer on 9 May 2011, and Goh and Ng signed theirs on 10 May 2011. Within the same month, David, Ng and Goh tendered their resignations to Clearlab. Ng resigned on 25 May 2011 and left on 24 July 2011, David resigned on 26 May 2011 and left on 25 July 2011 and, lastly, Goh resigned on 30 May 2011 and left on 29 July 2011. They did not disclose to Clearlab that they were leaving to join Aquilus. David said that he was going back to India to teach, whereas Goh and Ng said that they were joining an engineering company.

Also in May 2011, certain steps were taken which would pave the way for Aquilus to obtain certifications. On 18 May 2011, Ting got himself engaged by TQCS International Pty Ltd (“TQCSI”), an audit firm. He signed a document entitled “Auditors & Technical Specialists Confidentiality Agreement” (“TQCSI Confidentiality Agreement”), which provided undertakings of confidentiality from Ting with regard to any audit work that he may partake in. Shortly afterwards, on 26 May 2011, Looi Peck Eng (“Nancy Looi”), who was Aquilus’ manager, enquired TQCSI about the certification of Aquilus for four standards: ISO 13485:2003, ISO 14001:2004, ISO 9001:2008 and OHSAS 18001:2007.

Aquilus formally applied to TQCSI for the certification of the aforementioned standards on 1 June 2011.

The workforce in Aquilus expanded when David, Goh and Ng started work at Aquilus on 1 August 2011. The capital of Aquilus was also expanded when Ho increased it to $1.8m. At the same time, Ho issued 360,000 shares (ie, 20% of...