Confidential Information and Data Protection

Citation(2020) 21 SAL Ann Rev 291
Published date01 December 2020
Date01 December 2020
I. Introduction to the chapter

11.1 This chapter on the law of confidential information and data protection is a new addition to the Ann Rev. Part II1 of the chapter reviews selected cases on the law of confidential information, while Part III2 of the chapter reviews selected cases on data protection law. Within each part, the cases are reviewed in chronological order, according to the dates on which they were decided.

II. Confidential information

11.2 Four cases from the Supreme Court have been selected for review in this part.

A. LVM Law Chambers LLC v Wan Hoe KeetSolicitor's duty of confidence to counterparty

11.3 When a law firm has acted against a counterparty in previous proceedings, under what circumstances will the law firm be restrained from acting against the same counterparty in subsequent proceedings? The Court of Appeal had the opportunity to address this question in its decision in LVM Law Chambers LLC v Wan Hoe Keet3 (“LVM Law Chambers”).

11.4 The facts of LVM Law Chambers are as follows. In Suit 315 of 2016 (“Suit 315”), the plaintiff (“Lee”) had sued the defendants (“Wan” and “Ho”), claiming that Wan and Ho had made misrepresentations about a scheme known as “SureWin4U”. Suit 315 was settled by a settlement

agreement (“the Settlement Agreement”) reached through settlement negotiations that were conducted by the parties' solicitors. The Settlement Agreement included a confidentiality clause, obliging the parties to keep confidential certain stipulated information relating to Suit 315. However, Lee's solicitors (“LVM”) were not party to the Settlement Agreement, and they were therefore not contractually bound by the confidentiality clause. Subsequently, in Suit 806 of 2018 (“Suit 806”), a different plaintiff (“Chan”) similarly sued Wan and Ho, claiming that she was induced to invest in SureWin4U by misrepresentations from Wan and Ho. Notably, Chan was also represented by LVM. This meant that LVM was again acting against Wan and Ho.

11.5 Wan and Ho applied for an injunction to, inter alia, restrain LVM from acting for Chan in Suit 806. First, Wan and Ho argued that LVM owed them obligations of confidence arising from its participation in the settlement negotiations in Suit 315. Second, they argued that there was a risk that LVM would, when acting in Suit 806, misuse the confidential information that it had previously learned from the settlement negotiations in Suit 315.

11.6 At first instance, the High Court allowed the application and granted the injunction sought.

11.7 On the issue of LVM's duty of confidence, the court acknowledged that LVM was not bound by the contractual confidentiality clause in the Settlement Agreement.4 Nevertheless, an equitable duty of confidence could be imposed if a “reasonable solicitor” in the position of LVM “should have known that the information was given in confidence”, and on the facts, LVM did know that its client in Suit 315 (Lee) had promised Wan and Ho to not use or disclose the information stipulated in the Settlement Agreement.5 Therefore, the court held that LVM owed an equitable duty of confidence to Wan and Ho.

11.8 On the issue of threatened misuse of the confidential information, LVM submitted that it would not disclose the settlement sum in Suit 315 to Chan, nor would it even think about the settlement sum. However, the court took the view that the confidential information could nonetheless subconsciously influence LVM's conduct in Suit 806,6 and if the parties in Suit 806 decided to settle, the confidential information could afford Chan an advantage against Wan and Ho in the settlement negotiations.7

Therefore, there was a threat of misuse that was sufficient to justify granting the injunction.

11.9 LVM appealed against the High Court's decision. The Court of Appeal allowed the appeal, permitting LVM to act for Chan in Suit 806, albeit on the condition that LVM would not disclose the terms of the Settlement Agreement from Suit 315.8

11.10 In its decision, the Court of Appeal recognised that a law firm can indeed owe an equitable duty of confidence to a counterparty in relation to information obtained from previous proceedings, such that it can be inappropriate for that law firm to act against the same counterparty in subsequent proceedings.9 To restrain the law firm from acting in the subsequent proceedings, the counterparty must establish that: (a) the information concerned has the “necessary quality of confidence about it”; (b) the information was “received by the lawyer (or law firm) concerned in circumstances importing an obligation of confidence”; and (c) there is a “real and sensible possibility of the information being misused”.10 These elements were derived from the traditional test for breach of confidence as set out in Coco v AN Clark (Engineers) Ltd,11 and modified for the particular issue at hand.

11.11 In the instant case, the Court of Appeal agreed that LVM was obliged to keep confidential the terms of the Settlement Agreement, and ordered LVM not to disclose the terms of the Settlement Agreement.12 As for the other details about the settlement negotiations, however, the court found that these were not sufficiently proved to be confidential. Therefore, a general restraint on LVM from acting in Suit 806 could not be justified on the basis that LVM might misuse its knowledge of those other details.13 The court stressed that “mere assertions or vague generalisations will not pass legal muster” and a “granular approach” was demanded,14 but here Wan and Ho had only made “vague references” to the negotiation process.15

11.12 Three points of practical interest from the Court of Appeal's decision in LVM Law Chambers should, in particular, be highlighted.

11.13 First, if a counterparty wishes to restrain its opponent's chosen lawyer from acting for the opponent, the counterparty bears the burden of proving that the lawyer should be so restrained. The counterparty's burden of proof is weighty, given the importance of the right of a litigant to choose his own counsel.16 As a consequence, the counterparty may face evidential difficulties in proving the three elements set out in LVM Law Chambers (as the outcome of LVM Law Chambers illustrates). Such evidential difficulties can be avoided by the counterparty if it can rely on a contractual duty of confidence. It may therefore be useful for counterparties to bind both their opponents and their opponents' lawyers to express undertakings of confidence, as these undertakings can then be relied upon in subsequent proceedings.17

11.14 Second, the Court of Appeal appeared to have accepted that, in principle, a law firm may be restrained from acting against a counterparty in subsequent proceedings on the basis of potential “unconscious” or “subconscious” misuse of confidential information obtained from previous proceedings.18 Therefore, the counterparty need not prove that there is a risk that the law firm would actually consciously misuse the confidential information. That said, it bears remembering that the counterparty must still prove that there is a “real and sensible possibility” of unconscious or subconscious misuse: in this regard, two relevant factors are (i) the extent of similarity between the previous proceedings and the subsequent proceedings; and (ii) whether the law firm was “deliberately retained” because of its participation in the previous proceedings.19

11.15 Third, and more incidentally, it is interesting to note the Court of Appeal's discussion of the requirement of confidentiality (that is, the requirement that the information concerned has the “necessary quality of confidence”). The court stated in obiter dicta that no duty of confidence, “equitable or otherwise” [emphasis added], can possibly arise if the information concerned is “common or public knowledge”.20 This statement could be taken as suggesting that the requirement of confidentiality applies even to contractual duties of confidence, perhaps as an implied limit to such contractual duties.

B. I-Admin (Singapore) Pte Ltd v Hong Ying TingModified test for breach of confidence

11.16 Just three days after its decision in LVM Law Chambers, the Court of Appeal issued its decision in I-Admin (Singapore) Pte Ltd v Hong Ying Ting21 (“I-Admin”). In this decision, the court fundamentally reshaped the law of confidence in Singapore, by modifying the test for breach of confidence.22

11.17 In this case, the appellant (“I-Admin”) was a company in the business of providing payroll services and human resource services, and it used certain software systems to provide these services. The first respondent (“Hong”) and second respondent (“Liu”), were employees of I-Admin and of I-Admin's subsidiary, respectively. In 2009, Hong and Liu began to work on their own payroll software. They eventually incorporated the third respondent (“Nice Payroll”) and left their employers to work for Nice Payroll. In 2013, I-Admin discovered Nice Payroll's website, and found out that Nice Payroll was providing payroll and human resource services. I-Admin also found out that Hong and Liu were directors of Nice Payroll. I-Admin commenced proceedings against the respondents, claiming for breaches of copyright, confidence and contract, as well as for conspiracy and inducing breach of contract.

11.18 At first instance, I-Admin was generally unsuccessful in its claims before the High Court.23 Most of its claims were dismissed, including its claim for breach of confidence. In its assessment of the claim for breach of confidence, the court applied the traditional test for breach of confidence: (a) the information must “possess the necessary quality of confidentiality”; (b) the information must have been “imparted in circumstances importing an obligation of confidence”; and (c) there must have been an “unauthorised use of that information to the detriment of the party communicating it”.24 The main difficulty with...

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