Dirak Asia Pte Ltd and another v Chew Hua Kok and another

• Jurisdiction: Singapore
• Judge: Shaun Leong Li Shiong AR
• Judgment Date: 09 January 2013
• Neutral Citation: [2013] SGHCR 1
• Court: High Court (Singapore)
• Docket Number: Suit No 109 of 2010 (Summons No 4323 of 2012)
• Year: 2013
• Published date: 25 January 2013
• Hearing Date: 20 November 2012,19 December 2012
• Plaintiff Counsel: Mr Johnson Loo and Mr Gary Low Wee Chong (Drew & Napier LLC)
• Defendant Counsel: Mr Jimmy Yap (Jimmy Yap & Co)
• Subject Matter: Civil Procedure,Discovery of documents,Contextual approach in understanding "power" in Order 24, Rules of Court (Cap 322, R 5, 2006 Rev Ed),Electronic Discovery,Discovery of emails in email accounts,Whether the email user has possession and custody of the emails in the email accounts,Whether the emails in the possession of the email service provider are in the power of the email user
• Citation: [2013] SGHCR 1

Shaun Leong Li Shiong AR: Introduction

With the institutionalised use of emails and email attachments in the modern working environment, the inevitability of electronic discovery, in one form or another, would become increasingly evident when commercial disputes arise. At the same time, the proliferation of cloud computing brings about unique challenges to the practice of electronic discovery. The resolution of these challenges calls for a nuanced consideration of seemingly preconceived notions of possession, custody and power over documents found in “the cloud”. The present decision examines the extent in which an email user can be said to have power over emails in the possession and custody of the email service provider, a task which mandates a contextual understanding of “power” in Order 24 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (see [34] – [37] below).

Factual Background

This matter involves an application for the discovery of emails, in a dispute between ex-employers and ex-employees over alleged breaches of fiduciary duties and contractual clauses under their employment contracts.

The 1st plaintiff (“Dirak Asia”), is a Singapore incorporated company, and the 2nd plaintiff (“Suzhou Dirak”) is a company incorporated in the People’s Republic of China. Both are in the business of designing, manufacturing and distributing locking and hinging systems. The 1st defendant (“Chew”) was employed by Dirak Asia as its regional sales and operations manager from 23 August 2004, under an employment agreement dated 26 July 2004. He was also appointed a director and legal representative of Suzhou Dirak on 20 November 2006. The 2nd defendant, (“Soo”) was employed by Dirak Asia from 12 April 2004 as a sales engineer under an employment agreement dated 19 April 2004.

According to the plaintiffs, the defendants had, in the course of their employment, made unauthorised disclosure of the plaintiffs’ confidential information to various third-party competitors, including Suzhou Euro-Locks, which is a wholly owned subsidiary of U.K. based Euro-Locks & Lowe & Fletcher Ltd. It was alleged that the plaintiffs have suffered loss as a result. It was further alleged that Soo had, on behalf of Suzhou Euro-Locks, accepted orders from the plaintiffs’ customers, and diverted orders for the plaintiffs’ goods from an existing customers to Suzhou Euro-Locks, whilst in the course of the plaintiffs’ employment.

After Chew’s employment with Dirak Asia ended on 8 May 2009, he was employed by Suzhou Euro-Locks as its general manager in June 2009. In addition, Soo joined Suzhou Euro-Locks after his employment with Dirak Asia ended on 21 July 2009. The defendants had allegedly continued to misuse and disclose confidential information of the plaintiffs’ without authorisation. It was further alleged that the defendants had, in breach of the non-solicitation and non-compete clauses in their respective employment agreement with Dirak Asia, facilitated the solicitation of the plaintiffs’ customers.

The plaintiffs obtained an order for discovery on 7 April 2011 against the defendants for documents relating to, inter alia, the defendants’ employment agreement with Suzhou Euro-Locks; invoices and purchase orders that would disclose the revenue earned by Suzhou Euro-Locks from sales of competing products made from the use of the plaintiffs’ designs; as well as relevant communications between the defendants and the plaintiffs’ customers relating to the sales of competing products made from the use of the plaintiffs’ designs.

Subsequent to the order for discovery made on 7 April 2011, the plaintiffs filed the present application to extend the terms of the 7 April 2011 order, to include discovery of the same documents found in the defendants’ respective Euro-Locks email accounts. In opposing the present application, counsel for the defendants argued in para [10] of its written submissions of 29 October 2012 that the defendants do not have possession or custody of the emails sought to be discovered as these emails are stored in the server of Euro-Locks & Lowe & Fletcher Ltd, and neither of the defendants have power to allow the server to be searched. This position is reiterated in Chew’s affidavit dated 7 September 2012, where he deposed (at paras [4] and [5]):

This email account is assigned to me solely for the purpose of my employment with my present employer, Euro-Locks & Lowe & Fletcher Ltd, a company incorporated in the United Kingdom. The server in which all emails emanating from or delivered to this email account is not owned by me. …

As I am not the owner of the server, the server is not in my custody or control. As a mere employee of the owner of the server, I have no power to allow the server to be accessed by people who are not authorised by my employer.

The same position is echoed in para [25] of Soo’s affidavit dated 14 September 2012.

Counsel for the plaintiffs, on the other hand, contend that the defendants have power and control over the emails, given that they have the practical ability to access the emails in their Euro-Locks emails accounts (see plaintiffs’ written submissions dated 20 November 2012).

Issue

In the above circumstances, the issue before this court was whether the defendants have possession, custody and power over the emails in their email accounts with Euro-Locks & Lowe & Fletcher Ltd.

The question of possession and custody of the emails

The issue at hand is deceptively simple. One may assume as a matter of course that the defendants have possession and custody over the emails that they access in the course of their employment with Euro-Locks. Complications, however, arise upon further examination. The plaintiffs are not seeking discovery of physical printouts of emails kept by the defendants, neither are they seeking discovery of soft copies of emails saved in the defendants’ computers, smart phones or other compound documents¹ (storage devices or database). If this was the case, the defendants can be found to be in possession and custody of these physical printouts, or the saved softcopies kept in their computers. Instead, the plaintiffs are seeking discovery of the emails in the defendants’ email accounts. When one asks the defendants, “where are the emails?”, the defendants would necessarily have to reply that “they are in my email accounts.” What happens then, when one asks, “where are the email accounts?”

The answer to this question may lie in “the cloud”. This is because, in so far as emails accessed using web browsers are concerned (such as Gmail, Yahoo, Hotmail, and web-based/off-site corporate email accounts), the email user does not technically have possession and custody over the emails, as the emails are stored on mail servers and data centres sited in remote locations. In this case, the user may still download and save a copy of the emails in his computer, hard disk, smart phone, tablet device, or some other compound document. However, unless the user has saved his emails in his computer or in similar devices, what the user has in his possession is not the email itself, but the username and password to access the emails in the possession of the email provider. To this end, the email provider is in effect a custodian of the electronically stored information in the user’s email account.

Where the emails are accessed using an email program installed on the user’s computer (such as proprietary email systems in Microsoft Office Outlook and Microsoft Exchange), the emails are stored in remote servers until the email user activates his email client to send a request for these emails to be sent through (several) routers and be downloaded from the server to the user’s computer. Nevertheless, even in such cases, the email program may be configured to store a copy of each email in a "virtual mailbox" located in the remote mail server, or to store all emails in the server instead of the user’s computer (see Fermin Aldabe v. Standard Chartered Bank [2009] SGHC 194 at [15] – [16]). Depending on the terms of service, the email provider may also keep a copy of each email in the server for a specified period as a default position to act as a back-up repository for the user.

In the present case, the plaintiffs did not assert on affidavit, nor did they submit that the defendants have saved any of the emails in their personal or work computers, smart phones or any other compound documents in the defendant’s possession and custody. Neither are they seeking discovery of such compound documents. Rather, the plaintiffs are seeking discovery of the emails in the email account itself. The plaintiffs also did not dispute that the emails are indeed stored in the servers of a third party, Euro-Locks & Lowe & Fletcher Ltd, as is the position asserted by the defendants. What the plaintiffs argued, was the fact that the emails are stored in the servers of a third party is no bar to the granting of a discovery order, given that the defendants have the practical ability to access the emails in their email accounts. In this regard, the real question before this court is whether emails in the possession and custody of Euro-Locks & Lowe & Fletcher Ltd is in the defendants’ “power”. To the extent where “cloud computing” refers to the access and use of software, platforms and infrastructure over the internet to do one’s computing,² the answer to this question has implications on the interesting and more general inquiry on the extent in which a cloud user can be said to have "power" over the electronically stored information in the possession and custody of a cloud provider.

The question of power over the emails

The question of whether the defendants have power over the documents found in the possession and custody of a third party, illustrates the unique challenges to the practice of electronic discovery brought about by the increasing use of cloud computing. The...