HT SRL v Wee Shuo Woon

• Judge: Hoo Sheau Peng J
• Judgment Date: 18 April 2019
• Neutral Citation: [2019] SGHC 96
• Citation: [2019] SGHC 96
• Court: High Court (Singapore)
• Published date: 03 July 2019
• Docket Number: Suit No 489 of 2015
• Plaintiff Counsel: Tan Gim Hai Adrian, Ong Pei Ching and Veluri Hari (TSMP Law Corporation)
• Defendant Counsel: Choo Zheng Xi, Priscilla Chia Wen Qi and Wong Thai Yong (Peter Low & Choo LLC)
• Subject Matter: Contract,Breach,Illegality and public policy,Restraint of trade,Remedies,Damages,Employment law,Employees' duties,Duty of good faith and fidelity
• Hearing Date: 14 August 2018,16 August 2018,21 August 2018,10 August 2018,23 August 2018,27 September 2018,07 August 2018,15 August 2018,13 March 2019

Hoo Sheau Peng J: Introduction

In this suit, the plaintiff, HT SRL (“HT”), claims against the defendant, Wee Shuo Woon (“Woon”), a former employee, for breaching obligations in his employment agreement, as well as his duty of good faith and fidelity owed while an employee. Woon denies the allegations, and counterclaims for unpaid salary and expenses. Having heard the trial of the action, this is my decision.

Background The parties and their software products

HT was incorporated in Italy in 2003. Since 2004, it has been providing “offensive” security technology to law enforcement and intelligence agencies worldwide.¹ David Vincenzetti (“Vincenzetti”) is a co-founder of HT, and is its Chief Executive Officer.²

“Offensive” technology (as opposed to “defensive” technology) refers to software designed to enable its user to access, use and/or alter data on a target device. In essence, it is malware. An application of such technology is in law enforcement, where such software can be used to surreptitiously monitor terrorist and/or criminal communications by hacking into the mobile phones or laptops of persons of interest.³ On the other hand, “defensive” technology is software designed to detect and neutralise malware installed on a user’s device.⁴

HT’s principal software is the Remote Control System (“RCS”), which allows users to bypass encryption, collect data from various components of the target device (eg, the camera, microphone, Global Positioning System) and transfer it to an RCS server. Evidently, it is important that all of this can be done surreptitiously.⁵ Should the target be alerted to the fact that he is being monitored, he might cease using that device, or worse, might modify his behaviour on that device so as to feed false intelligence.

According to Vincenzetti, on occasions, the RCS would be detected by an anti-malware software (ie, a “defensive” software). In response, HT’s engineers would quickly modify the RCS code so as to update the software and make it invisible again. Such ad hoc detections would usually be resolved within three days.⁶ At the material time, the version of RCS available was the ninth version which was named “Galileo”.

Woon, also known as “Serge”, was HT’s former employee. While employed by HT, he performed the role of “Security Specialist”.⁷ Subsequently, Woon left HT and joined ReaQta Ltd (“ReaQta”) as its Business Development Director and “Co-Founder”.⁸ ReaQta is a company incorporated in Malta in May 2014, and was co-founded by another former software engineer of HT, Alberto Pelliccione (“Pelliccione”).⁹

ReaQta develops and sells defensive software. Its flagship product is ReaQta-Core, a defensive software which users can install on their devices to detect, track and protect themselves against a wide range of threats, including malware.¹⁰

Events prior to Woon’s employment with HT

From 2008 to 2011, Woon was employed by PCS Security Pte Ltd. His work involved advising clients on cybersecurity solutions on the market which were appropriate for their needs.¹¹ During this time, Woon got to know several of HT’s personnel, including Vincenzetti and Marco Bettini (“Bettini”), the sales manager.

Sometime in December 2011, Woon joined British Telecom Global Services (“BT”), taking on a pre-sales role which involved assisting with the technical integration of BT’s defensive security products with its clients’ existing systems.¹² While employed with BT, Woon also engaged in some “freelance work” for a company called Xsecpro Pte Ltd (“Xsecpro”). Xsecpro was owned by Woon’s friend, and Woon provided advice in respect of the technical integration of certain defensive security products distributed by Xsecpro.¹³

By 2012, HT was keen to expand its business in the Asia-Pacific region, and was looking to employ someone in Singapore to do so. On 12 March 2012, Bettini asked Woon if he would be interested in joining HT. On 23 May 2012, Woon met Vincenzetti and HT’s Chief Financial Officer, Giancarlo Russo (“Russo”), in Singapore to discuss the prospect of joining HT. According to Woon, at this meeting, he informed Vincenzetti and Russo that he was doing “freelance work for defensive security solutions” which were “not … in conflict with HT’s solutions”. Both men had said that they had no objections.¹⁴ This version of events was denied by HT.

Events during Woon’s employment with HT

Woon agreed to join HT. The terms of Woon’s employment were finalised in a Letter of Appointment dated 14 August 2012 (“Employment Agreement”), and Woon commenced work on 1 October 2012.¹⁵

By Annex A of the Employment Agreement, as HT’s Security Specialist, Woon’s duties included, inter alia, gathering information on the markets and opportunities for sale and/or distribution of HT’s products, conducting research on the demand or potential demand for HT’s products and cultivating business contacts for HT.¹⁶ He was to perform such duties in the “Territory”, which was defined to mean the Asia-Pacific region. I shall return to the other terms of the Employment Agreement in due course.

I should add that the other HT employee based in the Singapore office at the time was Daniel Maglietta (“Maglietta”), a sales manager, who was primarily in charge of the sales for the Singapore office.

Involvement with ReaQta

According to Woon, sometime in 2014, Pelliccione informed Woon that he would soon be leaving HT to develop a defensive security solution.¹⁷ After Pelliccione left HT in March 2014, he would occasionally approach Woon to discuss ideas as to “how he could turn his idea into a workable and marketable product”. Sometime in the last quarter of 2014, Pelliccione asked Woon if he would be interested in leaving HT for ReaQta. While the latter declined the offer, he “did not want to close the door on this opportunity” and asked Pelliccione to allow him to continue to “observe and experience the market response to ReaQta-Core before deciding to take the plunge”.¹⁸ An email account with a ReaQta.com domain was created for Woon in November 2014. Woon said that this was so that he could be kept in the loop regarding the market response to ReaQta-Core in order to see if he was interested in joining ReaQta in the future.¹⁹ Unsurprisingly, in these proceedings, HT took a different view of Woon’s involvement with ReaQta during this period.

The Kroll Demonstration

Sometime in August 2014, HT hired Kroll Associates, Inc (“Kroll”), an investigative agency, to investigate the actions of a HT contractor, one Luis Alejandro Velasco (“Velasco”), whom HT suspected of working for its competitors. The brief was for Kroll to approach Velasco, posing as a potential client of HT to see if Velasco would attempt to market the products of HT’s competitors to Kroll.²⁰

On 6 February 2015, Velasco hosted a demonstration of ReaQta’s software for the Kroll representatives. According to Robert Addona (“Addona”), the managing director of Kroll, Woon participated in the demonstration via a conference call. Woon was introduced by Velasco as ReaQta’s “Asia Pacific Representative”.²¹ The details of what transpired during the product demonstration were recorded in Kroll’s investigation report dated 24 February 2015 (“the Kroll Report”).²²

The termination of Woon’s employment

On 20 January 2015, Woon tendered his resignation to HT.²³ By the terms of the Employment Agreement, he was required to give two months’ notice in writing, and the last day of his employment was to be 20 March 2015.²⁴ However, Russo and Woon agreed to an “early termination” such that the latter’s last day would be 13 February 2015. This agreement was recorded in an email dated 12 February 2015.²⁵ On 13 and 14 February 2015, Woon asked Russo for his Letter of Termination, but received no reply.²⁶

Events after Woon’s employment with HT

From 11 to 30 March 2015, Woon requested an update on the Letter of Termination, as well as payment of the unpaid salary allegedly owing to him. He was informed that the payment was being withheld.²⁷

On 1 April 2015, Woon was extended a consulting agreement by ReaQta. However, Woon claimed that he only formally agreed to and signed the agreement on 6 October 2015. Meanwhile, Woon claimed he “informally started working for ReaQta in [his] private capacity” from 1 April to 6 October 2015.²⁸

On 13 April 2015, HT sent a letter of demand to Woon demanding: (i) a written undertaking that Woon would terminate his involvement with ReaQta; (ii) a written undertaking that Woon would comply with his duties and obligations under the Employment Agreement; and (iii) a proposal as to the quantum of damages and costs payable to HT for Woon’s breaches of the Employment Agreement and duties owed to HT.²⁹ On 27 April 2015, Woon responded, refusing to accede to HT’s demands.³⁰ On 20 May 2015, the present suit was commenced.

The pleadings Statement of claim

HT’s claim is in respect of two broad categories of breaches. First, HT alleges that Woon breached cll 10(a) and 10(b) of the Employment Agreement by engaging in the business of ReaQta without HT’s prior written consent before the termination of his employment with HT on 20 March 2015.³¹ By these acts, he had also breached the duty of good faith and fidelity owed as an employee of HT.³² I refer to these breaches collectively as the “pre-termination breaches”.

In essence, cl 10(a) obliges the employee to devote the whole of his time, knowledge, skills and attention to the performance of his duties, and cl 10(b) specifies that the employee may not engage or interest himself in any unrelated business (including business in competition with the employer) without the employer’s prior written consent.

According to HT, Woon had engaged or interested himself in the business of ReaQta by (i) holding himself out as ReaQta’s “Asia Pacific representative” and a “co-founder”;³³ and (ii) marketing, selling and/or developing ReaQta-Core. In doing...