Heller Factoring (Singapore) Ltd v Ng Tong Yang

• Jurisdiction: Singapore
• Judge: G P Selvam JC
• Judgment Date: 26 March 1993
• Neutral Citation: [1993] SGHC 68
• Citation: [1993] SGHC 68
• Date: 26 March 1993
• Year: 1993
• Plaintiff Counsel: Mahendra Segaram (Lim & Lim)
• Docket Number: Suit No 1899 of 1992
• Defendant Counsel: Dedar Singh Gill (Drew & Napier)
• Court: High Court (Singapore)
• Published date: 19 September 2003

Judgment:

1.GP SELVAM J

The action

The principal purpose of this action is to restrain the defendant from entering into or remaining in the employment of Overseas Union Trust Ltd (Factoring Department) or OUB Factors Pte Ltd until June 1994.

2.The defendant was employed by the plaintiffs under a letter of appointment dated 6 July 1987 to serve them as their credit and marketing executive from 8 July 1987 for a minimum probationary period of 12 months. After the twelve months, subject to his services being found satisfactory his appointment was to be confirmed. `Following confirmation of your appointment` the letter provided `your contract of service may be terminated at any time by either party giving to the other one month`s notice in writing or the equivalent of one month`s salary in lieu of notice or, if notice given is short of the one month`s period, the total amount of salary equivalent to that period by which the notice given falls short of the one month.`

3.The plaintiffs being satisfied with the defendant`s service confirmed his appointment on 18 April 1988. Then he was promoted to serve as senior credit and marketing executive with effect from 1 January 1991.

4.With the promotion the plaintiffs hoped that the defendant would `gear yourself up to accomplish your goals for the year and participate more actively in the development of our business`. And they gave this advice to him: `You should strive to capitalise on your own potential`. The defendant, however, decided to cease his employment with the plaintiffs. And on 8 June 1992 he tendered his resignation to the plaintiffs by giving one month`s notice. The termination was lawful. The plaintiffs, however, were not pleased with what the defendant did subsequently.

5.The plaintiffs found out by appointing private investigators that the defendant had commenced employment with either Overseas Union Trust Ltd or OUB Factors Pte Ltd (the competitors). The plaintiffs were troubled because both Overseas Union Trust Ltd or OUB Factors Pte Ltd, they said, were their competitors.

6.`The defendant` said the plaintiffs `had no experience and was not familiar with the factoring industry in Singapore at the time when he joined the plaintiffs. The plaintiffs provided the defendant with the required training in the various aspects of the factoring industry. Further, the defendant was also sent for attachment with the plaintiffs` Los Angeles office. The defendant was trained to use and access the plaintiffs` computer system known as Heller Factoring Information System (HFIS). The said HFIS system was developed in-house by the plaintiffs over a period of two years and a great deal of time and effort was spent in developing the system. The system is a custom made programme and incorporates all the plaintiffs` experience and knowledge of factoring operations accumulated over a 16-year period. The said HFIS system utilises state of the art technology and is programmed to provide detailed and up-to-date information in relation to the plaintiffs` clients and also allows the operator using it to analyse and make decisions on a daily basis on each of the plaintiffs` clients in relation to that clients` account with the plaintiffs. Further, the historical and comparative trend information of each of the plaintiffs` individual clients accounts is captured and is able to be displayed allowing the operator to evaluate the relative performance and pricing of each and every individual customer`s account with the plaintiffs. A summary of the information provided by the HFIS system is: (i) details of factoring contracts including the rates charted; (ii) information about the plaintiffs` clients; (iii) financial statements of the plaintiffs` clients; (iv) clients` payment history; and (v) details of credit limits of each of the plaintiffs` clients. The defendant had daily access to the use of the plaintiffs` HFIS system. As the defendant was involved in credit and marketing, the defendant had access to the plaintiffs` rates, the plaintiffs` clients list, plaintiffs` clients` financial standing and other confidential information relating to the plaintiffs` clients. As the factoring industry in Singapore is highly competitive, it is therefore essential that such information is not disseminated to the plaintiffs` competitors as it would cause irreparable damage to the plaintiffs.`

7.Much of the information which the plaintiffs claimed the defendant had acquired was of confidential character as regards the plaintiffs and their customers. The plaintiffs had a proprietary interest in some of them in the form of goodwill.

8. Interlocutory injunction

The plaintiffs felt aggrieved that the defendant should assist their competitors to their detriment. They did not want their competitors - that is Overseas Union Trust Ltd or OUB Factors Pte Ltd to have have access to and the benefit of the knowledge of the plaintiffs` operations, clients` list and the rates the plaintiffs` charged to their customers. What is the same thing the plaintiffs did not want their competitors to poach on their customers through the medium of the defendant by an undercutting device. It would be a difficult exercise for the plaintiffs to shape a case against the competitors and the defendant under general law. In their thinking they had an easier option of achieving the same result by proceeding against the defendant under a restrictive covenant in the contract of employment between the plaintiffs and the defendant which provided as follows:

You shall upon termination of your services with Heller, undertake not to seek employment with a company in Singapore which is also in the business of offering factoring services for a period of two years from date of termination.

9.If the plaintiffs had to wait until trial to obtain the injunction their objective would be defeated. So the plaintiffs applied for an interlocutory injunction until trial of the action. I heard the application and granted the injunction because it was clear to me that the restrictive covenant was plainly valid and reasonable. The plaintiffs cannot be adequately and properly be compensated in damages. It would not be possible nor would it be fair to expect the plaintiffs to expend money and time to police the defendant`s activities which would result in damage to the plaintiffs. As the defendant has appealed against the decision I shall now set out in detail the grounds of my decision.

10. Applicable principles

The modern principles upon which an interlocutory injunction is granted were first stated by Lord Diplock in American Cyanamid Co Ltd v Ethicon Ltd [1975] AC 396. They were restated by Lord Diplock in a succinct form in Eng Mee Yong v Letchuman [1980] AC 331 at p 337:

The court`s power to grant an interlocutory injunction is discretionary. It may be granted in all cases in which it appears to the court to be just and convenient to do so. The guiding principle in granting an interlocutory injunction is the balance of convenience; there is no requirement that before an interlocutory injunction is granted the plaintiff should satisfy the court that there is a `probability`, a `prima facie case` or a `strong prima facie case` that if the action goes to trial he will succeed; but before any question of balance of convenience can arise the party seeking the injunction must satisfy the court that his claim is neither frivolous nor vexatious; in other words that the evidence before the court discloses that there is a serious question to be tried: American Cyanamid Co Ltd v Ethicon Ltd [1975] AC 396.

The above statements were in relation to cases where the plaintiff applied for an injunction...