I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others and another suit

• Jurisdiction: Singapore
• Judge: Aedit Abdullah J
• Judgment Date: 14 May 2019
• Neutral Citation: [2019] SGHC 127
• Plaintiff Counsel: Tan I Kwok Lionel, Tng Sheng Rong (Tang Shengrong) and Debbie Tang (Rajah & Tann Singapore LLP)
• Docket Number: Suit Nos 585 of 2013 and 965 of 2015
• Date: 14 May 2019
• Hearing Date: 09 May 2018,23 June 2017,10 May 2018,29 March 2018,30 June 2017,08 May 2018,04 July 2017,28 March 2018,22 June 2017,29 June 2017,06 July 2017,27 June 2017,28 June 2017,24 August 2018,07 July 2017,11 September 2018,10 July 2017,03 July 2017,11 May 2018,27 March 2018,26 March 2018,05 July 2017
• Subject Matter: Tort,Conspiracy,Inducement of breach of contract,Contract,Breach,Infringement,Confidence,Copyright
• Published date: 23 April 2020
• Citation: [2019] SGHC 127
• Defendant Counsel: The defendant in Suit 965/2015 in person.,Dr Lai Tze Chang Stanley SC, Goh En-Ci Gloria, Clara Tung Yi-Lin and Leong Yi-Ming (Allen & Gledhill LLP)
• Court: High Court (Singapore)
• Year: 2019

Aedit Abdullah J: Introduction

The plaintiff’s claims in Suit Nos 585 of 2013 and 965 of 2015 (respectively “Suit 585/2013” and “Suit 965/2015”, and collectively “the Suits”) were that three of the defendants in the Suits, being ex-employees of the plaintiff and its subsidiaries, conspired to infringe its copyright by taking and using its confidential information to set up a competitor firm in the business of payroll processing. The plaintiff’s claims were for copyright infringement, breach of confidence, breach of contract, conspiracy and inducing breach of contract.

For the reasons given in these grounds of decision, I dismissed the plaintiff’s claims in the Suits, save an award for nominal damages for breach of contract against Mr Hong Ying Ting (“Mr Hong”) in Suit 585/2013. The plaintiff has since appealed against my decision.

Facts The parties

The plaintiff in the Suits is i-Admin (Singapore) Pte Ltd. It is a Singapore-incorporated company in the business of providing outsourcing services and systems software, primarily in the areas of payroll and human resource (“HR”) management. It began developing the “payAdmin” system comprising its core payroll engine from 2000 onwards.¹

The defendants in Suit 585/2013 are Mr Hong, an ex-employee of the plaintiff;² Mr Liu Jia Wei (“Mr Liu”), an ex-employee of i-Admin (Shanghai) Ltd (“i-Admin (Shanghai)”), the plaintiff’s wholly owned Chinese subsidiary;³ Nice Payroll Pte Ltd (“Nice Payroll”), a Singapore-incorporated company in the business of providing payroll outsourcing services and HR management functions;⁴ and Mr Li Yong (“Mr Li”), a Chinese national and Singapore permanent resident who invested in Nice Payroll.⁵

Mr Hong, Mr Liu and Mr Li are Nice Payroll’s directors. Unless otherwise specified, references to “the defendants” and their submissions should generally be taken to refer to the defendants in Suit 585/2013.

The defendant in Suit 965/2015 is Mr Tan Kim Liat Errol (“Mr Tan”). He was employed by the plaintiff from November 2002 to December 2006. He became acquainted with Mr Hong during this period. He was later employed by Olabo Pte Ltd (“Olabo”), one of the plaintiff’s subsidiary companies, from February to June 2011, and worked for Nice Payroll from June 2011 to October 2012.⁶

Background to the dispute Mr Hong, Mr Liu and Mr Tan’s employment from 2010 to 2011

Mr Hong, Mr Liu and Mr Tan were each employed by the plaintiff or its subsidiaries during the period from 2010 to 2011 in the following capacities.

Mr Hong was a general manager in the plaintiff’s systems department.⁷ By his account, Mr Liu was an operations manager in i-Admin (Shanghai)’s operations department from May 2009 to April 2010. He was moved to i-Admin (Shanghai)’s business development department from May to June 2010, and then to its implementation department from July to November 2010. He managed i-Admin (Shanghai)’s applications department from 1 December 2010 to April 2011.⁸

Mr Tan began working for Olabo in 2011 upon Mr Hong’s recommendation, and worked on network and server maintenance.⁹

The Kikocci Project and setting up Nice Payroll

In 2009, Mr Hong and Mr Liu shared their frustrations about the plaintiff’s payroll engine, which they both had experience using. They discussed creating a better payroll software and named their proposed project the “Kikocci Project”. During this period, Mr Liu began coding for the Kikocci Project using an online web-based application development tool, Oracle Application Express (“APEX”). The Kikocci Project was designed to be a portal that stored and displayed employee records in different APEX pages.¹⁰ In December 2009, Mr Hong and Mr Liu incorporated the Kikocci Corporation in the British Virgin Islands, and Mr Liu bought the domain name “www.kikocci.com”. Mr Hong and Mr Liu designed the Kikocci website as a mock-up of their intended payroll service.¹¹ They continued to discuss the Kikocci Project over Skype on various occasions from 2010 to 2011.¹² Mr Liu stopped coding on the Kikocci Project in November 2010.¹³

It would appear that from August 2010 to March 2011, Mr Hong shared with Mr Li that he and Mr Liu were keen on starting a payroll business and were looking for an investor. Mr Hong suggested that Mr Li could invest in the Kikocci Corporation, but Mr Li preferred to invest in a new company instead.¹⁴ On 18 March 2011, Mr Li and Mr Hong incorporated Nice Payroll, with Mr Li as the only director and 100% shareholder. Mr Li invested $100,000 in paid-up capital and provided a loan of $900,000 pursuant to a Cooperation Agreement dated December 2011. Mr Hong and Mr Liu agreed to develop Nice Payroll’s business and its payroll software, and they would in return receive ⅓ ownership each by June 2013. Mr Hong and Mr Liu also agreed to close the Kikocci Corporation and its website.¹⁵ This Cooperation Agreement was based on verbal discussions from March 2011.¹⁶

Resignations from the plaintiff and its subsidiaries

On 30 April 2011, Mr Liu resigned from i-Admin Shanghai. Mr Hong left the plaintiff’s employment on 30 June 2011. Mr Tan also left the plaintiff’s employment in June 2011. They began working for Nice Payroll thereafter.¹⁷ Ms Zaza Shen (“Ms Shen”), a software engineer employed by i-Admin (Shanghai), also resigned on 30 June 2011. She began working for Nice Payroll from 5 August 2011 onwards.¹⁸

The plaintiff’s discovery of Nice Payroll and subsequent events

In 2013, the plaintiff came across Nice Payroll’s website while conducting market research. The plaintiff noted that Nice Payroll advertised itself as providing services and systems similar to the plaintiff’s, and that Mr Hong and Mr Liu were its directors. The plaintiff was suspicious of Nice Payroll’s activities and conducted forensic investigations into the defendants’ affairs.¹⁹

The plaintiff commenced Suit 585/2013 on 2 July 2013 and applied for an Anton Piller order as against the defendants in Suit 585/2013. The Anton Piller order was granted on 9 July 2013 and was executed at Nice Payroll’s premises on 17 July 2013. It was not disputed that some materials related to the plaintiff were found in Nice Payroll’s possession on its office server (the “Dell Server”) and on Mr Hong’s Lenovo ThinkPad laptop (the “ThinkPad laptop”), and that Mr Hong and Mr Liu deleted files related to “i-Admin” prior to the execution of the order.²⁰ It was also not disputed that Mr Hong accessed the plaintiff’s demonstration platform in April 2013 after he left the plaintiff’s employment.²¹

In June 2014, the plaintiff obtained a discovery order against the defendants in Suit 585/2013. In order to comply with the discovery order, Nice Payroll engaged forensic experts to extract files from the Dell Server. On 15 July 2014, Mr Hong and Mr Liu reviewed files that Nice Payroll’s forensic experts had extracted. They came across personal data files of the plaintiff’s clients, including HSBC Bank (Singapore) Limited (“HSBC”). Mr Hong recognised the list of clients (apart from HSBC) to be clients that the plaintiff had been contracted by ADP International Services BV (“ADP”) to service. On 4 September 2014, Mr Hong informed HSBC and ADP that their data had been placed in Nice Payroll’s possession.²²

The parties’ cases in Suit 585/2013 The plaintiff’s case

The plaintiff’s case was that Mr Hong and Mr Liu had, since 2009, schemed to set up a competing company. To this end, they set up the Kikocci Corporation and worked on the Kikocci Project during their working hours while still employed by the plaintiff, using the plaintiff’s resources. They eventually decided to incorporate Nice Payroll with Mr Li, and used the plaintiff’s copyrighted and/or confidential materials to develop Nice Payroll’s business and software codes. Five claims were made against the defendants.

First, Mr Hong and Mr Liu’s reproduction of the plaintiff’s copyrighted material amounted to copyright infringement. Nice Payroll’s products and/or services also infringed the plaintiff’s copyright.²³

Second, the defendants acted in breach of their duties of confidence to the plaintiff by reproducing its confidential material, by using its source codes and databases to generate Nice Payroll’s payroll reports, and by reporting data breaches to HSBC and ADP. Mr Hong also breached his duty of confidence by accessing the plaintiff’s demonstration platform without its authorisation.²⁴

Third, Mr Hong acted in breach of contract. He breached his non-disclosure agreement (“NDA”) by retaining the plaintiff’s confidential information and using it for Nice Payroll’s business purposes; breached its Information Technology (“IT”) security policy; and breached his implied duty of good faith by working on the Kikocci Corporation and/or Nice Payroll during the plaintiff’s working hours and by taking its confidential information.²⁵

Fourth, Mr Hong and Mr Liu engaged in the tort of conspiracy to set up a competitor firm in breach of the plaintiff’s confidence. Mr Li was involved in their conspiracy to infringe the plaintiff’s copyright and breach its confidence.²⁶

Fifth, Mr Li induced Mr Hong and Mr Liu to breach their respective NDAs with the plaintiff.²⁷

The defendants’ case

The defendants denied any infringement of copyright. Copyright did not subsist in the plaintiff’s software as it was insufficiently original, and the plaintiff did not own copyright in the Kikocci files. In any case, Nice Payroll’s software products and services did not constitute a substantial reproduction of the plaintiff’s software products, source codes and database structures: its software had been independently developed using programming language that differed from the plaintiff’s.²⁸

The breach of confidence claim was denied. The plaintiff was estopped from invoking its NDAs as it had not strictly enforced its security policies. The defendants had not used the plaintiff’s source codes, systems and...