IWA Design Pte Ltd v Spirit of Design Analogy Pte Ltd, Tung Ching Yew, Lee Chia Hwa

• Jurisdiction: Singapore
• Judge: Loo Ngan Chor
• Judgment Date: 13 August 2014
• Neutral Citation: [2014] SGDC 318
• Court: District Court (Singapore)
• Docket Number: District Court Suit No. 2951 of 2012, District Court Appeal No. 37 of 2014
• Published date: 08 October 2014
• Year: 2014
• Hearing Date: 19 May 2014,21 December 2013,13 August 2014,20 December 2013,03 February 2014,04 February 2014
• Plaintiff Counsel: Mr Harbajan Singh (M/s Daisy Yeo & Co)
• Subject Matter: Restraint of trade,non-competition,non-solicitation,tort of conspiracy
• Citation: [2014] SGDC 318

District Judge Loo Ngan Chor : Introduction:

In these grounds of decision, I set out the reasons for my dismissing the plaintiff’s claim against the three defendants for the purpose of the plaintiff’s appeal against my decision.

I had dismissed the plaintiff’s claim and ordered the plaintiff to pay the defendants $30,000 by way of fixed costs and disbursements.¹

Background:

The plaintiff was incorporated on 3rd December 1986. It was in the business of graphic and interior designing.

The second and third defendants were its former employees. The first defendant is essentially in the same business as the plaintiff although the defendants maintain that the first defendant only does design consultancy and does not undertake any construction activity which the plaintiff is said to do as part of its designing business.

The second defendant was employed by the plaintiff on 29th August 2005 as a senior interior designer. Between around May 2007 and June 2008, the second defendant studied for a degree programme at the Nanyang Academy of Fine Arts (“NAFA”). The plaintiff gave him a study loan and kept him in part-time employment so that the plaintiff could support his young family. On 13th June 2008, he resumed full-time employment with the plaintiff after completion of his studies. The study loan was repaid after the plaintiff granted him an extended period for repayment so that the payment instalments would be lower. On 31st March 2010, the second defendant was promoted to design manager. He tendered his resignation on 2nd November 2010, giving two months’ notice which was to expire on 31st December 2010. He was told to leave on 28th December 2010 (for reasons set out at [15] below). In 2011, the second defendant was a part-time lecturer at NAFA.² On 1st January 2012, he joined the first defendant as a director.

The third defendant held a relatively junior position in the plaintiff and was designated a project executive (interior designer). He commenced employment on 23rd June 2008. He tendered his resignation on 15th April 2010, effective 1st June 2010. The third defendant incorporated the first defendant after taking holidays in Taiwan and Shanghai in June, July and September 2010.

In brief, the pleaded positions:

The plaintiff’s pleaded case was that it had trade secrets and confidential information in the form of its designs (undertaken for its customers), a Customer List and a Price List. It alleged that the second and third defendants had access to, stolen and misused these trade secrets and benefitted the first defendant.³ The second and third defendants were said to have “approached the plaintiff’s customers and induced the plaintiff’s customers to transfer their business to the first defendant.”⁴ Two customers, Perlini & Mel and Slumberland were identified as having been taken over and several others were named as having been approached or being on the defendant’s list of customers when they were previously the plaintiff’s customers. The plaintiff also alleged that the second defendant had defamed the plaintiff since February 2010 and that the second and third defendants had conspired to discredit the plaintiff.⁵ (It was made clear at trial that the plaintiff was not in fact pursuing any distinct defamation claim.)

The second and third defendants maintained in their Defence that the plaintiff had no Customer List or Price List and that they were not privy to things financial. In respect of designs, they had each created designs and made reference to specific designs of the plaintiff when instructed to do so. On termination, they “did not take, copy, remove or use any of the plaintiff’s confidential information or trade secrets” and “all designs currently created for the first defendant’s customers [were] through their intellectual efforts and [were] different from any of the plaintiff’s designs.” They denied any further duties to the plaintiff post-termination save for a duty of confidentiality.⁶ In respect of Perllini and Mel and Slumberland, the second and third defendants pleaded that they had not approached or induced their transfer of custom to the first defendant and that these said customers “had, of their own volition, contacted the third defendant and asked him to work for them.”⁷

In the plaintiff’s Reply, amongst other points, it was pleaded that in respect of Slumberland, “the Defendants had copied totally the designs which are the plaintiff’s property and which copyright is retained by the plaintiff.⁸

The employment documents and the handbook:

The second defendant’s employment letter dated 27th July 2005⁹ contained at clause 6 prohibitions against moon-lighting or the divulging, during his employment or after it ended, of the plaintiffs “secrets, transaction or information” and his undertaking give his entire attention to the plaintiff’s business. In confirming the second defendant’s appointment, the plaintiff’s letter dated 28th November 2005 contained the same provisions at clause 8.¹⁰ Similarly, the plaintiff’s letter offering the second defendant part-time employment during his NAFA course, which the second defendant dated 13th July 2007¹¹ by hand, had these provisions. When the second defendant resumed full-time employment after his NAFA course, he was given yet another letter dated 13th June 2008, containing similar and additional good-faith obligations.¹² The second defendant signed each of these letters.

The third defendant’s letter of employment, dated 10th June 2008, which he signed, contained materially the same terms as set out above in the second defendant’s first letter of employment. In addition, it contained prohibitions against owning a competing business and unauthorised downloading from the internet and of software.¹³

The plaintiff held two workshops as part of its “re-branding” exercise for its employees. A handbook¹⁴ of the company, prepared by a company styled A.S. Louken Branding Private Limited, was launched at these workshops. The handbook contained the following clauses: Clause 6.2(1) read with clause 6.1 provided that managers of M2 grade (which applied to the second defendant) were to give two months’ notice of resignation. Clause 6.2(1) (c) read: Design concepts, drawings, files or any other documents created by employees of the Company belong to the company. These documentations are all protected by copyright. Employees that leave the company shall not make duplications or retain any copies (including electronic/soft copies or hard copies) without the Company’s prior consent. Under “points to note for resignation” in clause 6.2(1), it was stated, inter alia, that: Employees also shall not solicit for business or seek gainful employment from the Company’s customers or clientele including suppliers and direct competitors for one (1) year from the date of your termination of employment with the Company.

Summary of the main testimony:

The plaintiff called Mdm Lim Joo Gek as its main witness. It also called Mr Edmund Sim Min, its project manager, and Mdm Lee Yew Poh who worked for AS Louken when in March 2010 the plaintiff asked her to help with its re-branding exercise.

The second and third defendants testified for the defence. In addition, the defendants called Mr Ling Huat Sing, the General Manager of Slumberland (Singapore) Pte Ltd to testify for the defence. A Mdm Cindy Goh, a director of a company that was said to own the Perllini & Mel brand, provided an affidavit of evidence-in-chief and was to have given evidence for the defence. However, I was informed by the defendants’ counsel that Mdm Goh had had a change of heart and she did not in the event testify.

Mdm Lim’s affidavit of evidence-in-chief spanned a cross-section of the plaintiff’s case which included the second and third defendants’ terms of employment. It was her evidence that the plaintiff “had developed various designs … as well as a Customer List and Price List” and that the second and third defendants “had access to” these trade secrets and/or confidential information.¹⁵ She stated that the second defendant did acknowledge receipt of the handbook and that the third defendant did not. She referred to how in December 2010 the plaintiff discovered that the second defendant had made remarks in his facebook pages since February 2010 “about the company or about members of the company’s staff and management” - these were the words used by the plaintiff in their letter dated 28th December 2010 to the second defendant; these remarks were the occasion for the plaintiff to march the second defendant out of the office several days short of his notice period. This incident was not a subject of the action before me but provided a plank for the plaintiff’s complaint that the second defendant had an axe to grind with the plaintiff. The plaintiff’s complaint was that the second defendant wrote these remarks (grammatical warts and all) in his facebook pages: On 22nd December 2010: “I have met the worst bimbo of the bimbos… yet she has no looks, no boobs, no butt, no complexion…more importantly has shit for brains and anus for mouth. I thank my gods that I am leaving here soon.” On 23rd December 2010: “... I think there are bigger things for me to worry about then to be concern with shall shallow character… yes I am leaving the current co. my last day is 31 dec…”¹⁶

Mdm Lim also pointed to a news article in Star Online dated 16th June 2012¹⁷ in which the first and third defendants were featured and reference was made to the second defendant. She also pointed to a 2013 publication of NAFA called “Simple Pleasures”.¹⁸ It was said in these publications that the first defendant was conceived by the second and third defendants and another person in 2010. Mdm Lim also pointed to the Star Online article as an attempt to bad-mouth the plaintiff.

Mdm Lim’s point was that from the facebook pages and the two publications one could infer that...