I-Admin (Singapore) Pte Ltd v Hong Ying Ting

• Judge: Sundaresh Menon CJ,Andrew Phang Boon Leong JA,Quentin Loh J
• Judgment Date: 06 April 2020
• Neutral Citation: [2020] SGCA 32
• Citation: [2020] SGCA 32
• Defendant Counsel: and Lai Tze Chang Stanley SC and Leong Yi-Ming (Allen & Gledhill LLP)
• Docket Number: Civil Appeal No 5 of 2019
• Hearing Date: 30 January 2020
• Plaintiff Counsel: Lee Eng Beng SC, Tng Sheng Rong and Leow Jiamin (Rajah & Tann Singapore LLP)
• Published date: 09 April 2020
• Court: Court of Appeal (Singapore)
• Date: 06 April 2020
• Subject Matter: Breach of confidence,Copyright,Infringement,Confidence

Sundaresh Menon CJ (delivering the judgment of the court): Introduction

This appeal arises out of a dispute between the appellant, I-Admin (Singapore) Pte Ltd, its former employees and some related parties. The dispute concerned certain acts that pertained to the appellant’s payroll processing software and business materials. The appellant commenced Suit 585 of 2013 (“Suit 585/2013”) in the High Court, contending, among other things, that the respondents had infringed its copyright and acted in breach of confidence.

The High Court judge (“the Judge”) found in favour of the respondents and held there was no copyright infringement. Neither were the respondents in breach of their obligations of confidence: I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others and another suit [2019] SGHC 127 (“GD”).

The appellant’s predicament is an example of an increasingly common issue faced by owners of copyrighted and confidential information, particularly in the context of disputes arising out of erstwhile employer-employee relationships. Against the backdrop of a digitised society, it is now significantly more challenging to guard against the wrongful copying, abuse and exploitation of protected information. This appeal provides us with a timely opportunity to review the scope of the law of confidence in particular. We state at the outset that, in our judgment, the legal framework that has hitherto prevailed does not adequately safeguard the interests of those who own confidential information.

The facts The parties

The appellant is a Singapore-incorporated company in the business of outsourcing services and systems software, specifically payroll administrative data processing services (“Payroll Systems”) and human resource (“HR”) information systems (“HRIS”) (GD at [3]). The appellant’s Payroll Systems are used by more than 800 clients in 15 countries across Asia and it operates a number of wholly owned subsidiaries including I-Admin (Shanghai) Ltd (“I-Admin (Shanghai)”).

The appellant’s Payroll Systems come in two forms: the “payAdmin” and “ePayroll” software systems. The “payAdmin” system is the appellant’s core payroll calculation engine designed for large corporations. The “ePayroll” system is a streamlined version of the “payAdmin” system and caters to small and medium-sized clients. The appellant’s HRIS is a collective term to describe the various HR systems it has developed. A number of other materials surround and underlie these software systems, making up the infrastructure through which the appellant operates its business and provides its services.

There are four respondents (GD at [4]): The first respondent is Mr Hong Ying Ting, a former employee of the appellant. The second respondent is Mr Liu Jia Wei, a former employee of I-Admin (Shanghai). The third respondent is Nice Payroll Pte Ltd, a Singapore-incorporated company that provides payroll outsourcing services and HR management functions. The fourth respondent is Mr Li Yong, a national of the People’s Republic of China and Singapore permanent resident who invested in the third respondent. The appellant is not pursuing its claims against the fourth respondent. Unless otherwise specified, references to “the respondents” shall relate to the first, second and third respondents only.

Background

The first respondent joined the appellant in 2001. He found the appellant’s software, in particular its payroll calculation engine, flawed and inadequate for the tasks it had to perform. The appellant’s calculation engine computes the components of its clients’ monthly employee remuneration such as basic salary, overtime pay, bonuses, Central Provident Fund (“CPF”) payments and so on. Sometime in 2009, the first respondent expressed his frustrations to the second respondent, who shared his desire to design a better payroll software. To that end, they embarked on a personal venture called the “Kikocci Project” and incorporated “Kikocci Corporation” in the British Virgin Islands. The second respondent also wrote some code for the Kikocci Project.

In March 2011, the fourth respondent agreed to invest in the first and second respondents’ efforts to develop a payroll software but was not keen on running the business under the umbrella of Kikocci Corporation. The first and second respondents duly dissolved Kikocci Corporation and on 18 March 2011, incorporated the third respondent with the fourth respondent as its sole director and shareholder. The pair also resigned from the appellant and I-Admin (Shanghai) to work for the third respondent. The third respondent purchased two storage spaces, a cloud storage space from Amazon Web Services (the “Amazon Server”) and a Buffalo Model HD-LBU3 external storage device (the “Buffalo Drive”). The Amazon Server fulfilled a number of purposes including the storage of client data. The Buffalo Drive was used to backup the third respondent’s live server code. The company also obtained a Dell Server Edge T110 II server (the “Dell Server”) for application development and programming. The payroll calculation engine they were developing was completed sometime in March 2012. On 19 September 2012, the first and second respondents were appointed as the third respondent’s directors and allotted shares.

In February 2013, the appellant came across the third respondent’s website, which was advertising payroll and HR systems in a number of countries that substantially overlapped with the geographical scope of the appellant’s services. A search at the Accounting and Corporate Regulatory Authority revealed that the first and second respondents were directors of the third respondent. This prompted the appellant to instruct Nexia TS Technology Pte Ltd (“Nexia”) to conduct some forensic investigations into the activities of the respondents.

On 2 July 2013, after reviewing the results of these investigations, the appellant commenced Suit 585/2013 and applied for an Anton Pillar order (“APO”) against the first to fourth respondents. The APO was granted on 9 July 2013 and executed on 17 July 2013 at the third respondent’s premises. It is undisputed that on this latter date, the first and second respondents deleted files from the first respondent’s Lenovo Thinkpad laptop (the “Thinkpad”) and the Dell Server (see GD at [14]) The Nexia forensics team recovered these files during its review of the devices. Prior to the APO’s execution, the following materials were stored on the Dell Server: Three folders titled “From Zaza”, “Zaza_dev” and “Zaza/Testing”. These contained, among other things, the appellant’s source codes (these being files written in Java programming language which underlie the operation of the appellant’s software systems) as well as its client materials. A Microsoft Excel (“Excel”) document titled “cpf.xls”. This contained the substance of the appellant’s CPF database, which documented relevant information pertaining to CPF statutory rules.

The following materials were stored on the Thinkpad: An Excel document titled “payitem setup_iAdmin.xls”. This was one of the appellant’s databases, containing a list of payitems. An Excel document titled “Copy of ePayroll eHR Pricing for all regions (04 Jan 2011).xls”. This contained the appellant’s pricing information and other business strategy material, including fees quoted for services rendered. A compressed folder titled “RR to Li Lian.zip”. This contained documents critical to the appellant’s operations, including its software and hardware technical platform, data security and security design architecture. A compressed folder titled “Standard Imp Template.zip”. This contained the appellant’s implementation templates for six jurisdictions. It included the file “SG Client_Imp Template.xls”, which was used by the appellant’s Singapore clients to input data to be processed.

It also came to the appellant’s attention that the first and second respondents had circulated some of its materials in a number of emails: An email was sent from the second respondent to the first respondent dated 18 July 2011, entitled “Imp Template”, attaching a copy of “Standard Imp Template.zip” (see [11(d)] above). An email was sent from the second respondent to the third respondent’s employee Ms Zaza Shen (“Ms Shen”) on 15 August 2011, entitled “ePayroll from Zaza”, attaching a compressed folder titled “epayroll.zip”. This contained the appellant’s entire “ePayroll” source code, including its payroll calculation engine. An email was sent by the second respondent to the first respondent on 15 August 2011, entitled “Standard Payitem (SG) & Lenovo Payitem”, attaching two Excel documents titled, “Payitem_Singapore.xls” and “LenovoSG.xls” (the “Payitem Bibles”). “Payitem_Singapore.xls” was the appellant’s database of all possible payitems that could be included in client payslips for its Singapore customers. This excluded Lenovo Singapore for which the appellant created “LenovoSG.xls” as a specific database. An email was sent by the first respondent to the third respondent’s employee Ms Vercilia Lim (“Ms Lim”) on 16 August 2011, attaching copies of the Payitem Bibles (“LenovoSG.xls” had been renamed as “SG payitem (2).xls”). An email was sent by the second respondent to Ms Shen on 20 August 2011, attaching two files. These were “GIRO format.pdf”, which contained coding specifications from the appellant’s client Oversea-Chinese Banking Corporation Bank (“OCBC”) and “BankDiskOCBCSGONI.java”, which was a source code created by the appellant to generate a “bankdisk” file for OCBC. An email was sent from the second respondent to the third respondent’s employee, Mr Errol Tan (“Mr Tan”), on 29 September 2011, attaching a copy of “cpf.xls” (see [10(b)] above). An email was sent from the first respondent to Mr Tan, on 10 May 2012, attaching a copy of “RR to Li Lian.zip” (see [11(c)] above).

In June 2014, the appellant obtained a discovery order...