Mech-Power Generator Pte Ltd v Kang Beng Chiang and Others

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang JC
• Judgment Date: 08 May 1996
• Neutral Citation: [1996] SGHC 99
• Published date: 20 April 2005
• Year: 1996
• Citation: [1996] SGHC 99
• Court: High Court (Singapore)

Between

MECH-POWER GENERATOR PTE LTD
(RC NO. 198305394M) ...Plaintiff

And

1) KANG BENG CHIANG (NRIC NO. S 0089377C)
3) VIBROPOWER PTE LTD ...Defendants

Citation:	Suit No 2439 of 1996
Jurisdiction:	Singapore
Date:	1998:05:08
	1998:01:12 - 1998:01:16
Court:	High Court
Coram:	Tay Yong Kwang JC
Counsel:	Colin Caines (Khosa & Caines) for Defendants
	Chia Foon Yeow (Tan Peng Chin & Partners) for Plaintiff

Judgment:

GROUNDS OF DECISION

The Statement of Claim

1 The Plaintiff is a company that carries on the business of manufacturing generator sets including special generators that are mounted on Rubber Tyred Gantry Cranes ("RTGC generators"). The First Defendant was the general manager of the Plaintiff between 10 February 1992 and 31 July 1995. He was also appointed a director of the Plaintiff in that period. The Second Defendant was employed as the assistant general manager of the Plaintiff between 28 February 1995 and the end of June 1995.

2 The terms of the First Defendant’s employment were contained in a letter dated 10 February 1992 and included the following two clauses:

"12. Conflicting Activities.

You shall not during the term of your employment directly or indirectly engage in any other employment occupation, consulting or other business activity competing with the business of the Company.

13. Confidentiality.

You shall not during or after employment disclose to any person or company confidential information which you may learn during the course of employment, whether such information is produced by your efforts or other employee."

3 The Plaintiff also claimed that the First Defendant, as a director, owed the following fiduciary duties to the Plaintiff:

"(1) a duty of good faith and fidelity;

(2) a duty that during the subsistence of the directorship not to misuse any information confidential to the Plaintiff or to disclose such information to any third party; and

(3) a duty that following the resignation of directorship not to use or disclose any trade secrets or other confidential information of the Plaintiff."

4 One of the Second Defendant’s terms of employment as contained in a letter dated 28 February 1995 stated:

"13. Confidentiality.

You shall not during or after employment disclose to any person or company confidential information which you acquire during the course of employment, whether such information is produced by your efforts or other employees. You shall not disclose any transaction or information relating to the Company’s business or take any technical information/data out of the Company’s premises or transferred to any third party."

5 The Plaintiff alleged that in the course of their employment and the First Defendant’s directorship, both the First and Second Defendants gained access to and acquired the Plaintiff’s confidential information relating to the RTGC generator business including know-how, technical knowledge, suppliers’ list, costings, customers’ list and price list.

6 The First Defendant, by himself or in conjunction with the Second Defendant and/or other persons incorporated the Third Defendant on 21 July 1995. This fact was deliberately concealed from the Plaintiff. The Third Defendant’s principal activities included manufacturing and repairing generators. Further, the First Defendant, besides being a shareholder of the Third Defendant, was appointed director of the Third Defendant on the date of its incorporation.

7 The Plaintiff claimed that the First Defendant had therefore breached Clause 12 of his terms of employment and/or his fiduciary duties to the Plaintiff.

8 It was also averred that the Third Defendant had made forays into the RTGC generator business and had manufactured RTGC generator sets which were identical or highly similar to the Plaintiff’s and that the Third Defendant could not have developed, manufactured, launched or marketed its RTGC generator sets without the disclosure by the First and Second Defendants of the Plaintiff’s confidential information. In having made such disclosures, the First and Second Defendants breached clause 13 of their respective terms of employment. In addition, the First Defendant was in breach of his fiduciary duties to the Plaintiff.

9 Insofar as the Third Defendant was concerned, it was alleged that owing to the complexity of the RTGC generator technology and the Plaintiff’s near-exclusive possession of that technology, the Third Defendant was well aware or ought to have known that the information supplied by the First and the Second Defendants was confidential to the Plaintiff. The Third Defendant was therefore under a duty of confidence to the Plaintiff in respect of all the confidential information supplied and was not entitled to use or disclose it. The Third Defendant had made use of such information unlawfully and had made profits for itself to the Plaintiff’s detriment.

10 Accordingly, the Plaintiff claimed the following relief:

(1) an injunction to restrain the First and Second Defendants, whether by themselves or acting by their servants, agents or otherwise, from disclosing to any third party confidential information of the Plaintiff relating to its RTGC generator business;

(2) an injunction to restrain the Third Defendant, whether acting by its directors, officers, servants, agents or otherwise, from using or disclosing any confidential information of the Plaintiff relating to its RTGC business;

(3) delivery up of all documents and materials which were in possession, power, custody or control of the Defendants the use or disclosure of which would offend against the above injunctions;

(4) an inquiry as to damages for breach of confidence or an account of the profits made by the Defendants by reason of their breaches of confidence.

(5) damages for the First Defendant’s breach of his term of employment prohibiting involvement in conflicting activities.

The Defence

11 In their joint Defence, all three Defendants denied having breached any duty owing to the Plaintiff. The First Defendant averred that his last day of employment was 7 July 1995 and not 31 July 1995. He was therefore no longer employed by the Plaintiff when he became a director of the Third Defendant.

12 The Defendants claimed that the RTGC generator sets sold by the Third Defendant were manufactured in accordance with drawings and designs supplied to them by the purchasers and the subcontractors and that all technical and other information necessary for the manufacture of the sets was readily available in the open market and did not contain any information confidential to the Plaintiff. The Third Defendant also averred that the company entered the business using information gathered by the Defendants’ own efforts.

The Reply

13 The Plaintiff pleaded that it could not have been the usual practice of purchasers and of contractors to supply the Third Defendant with drawings and designs and that even if such were supplied, they were meant for reference only and were not intended for the Third Defendant to use in toto without due regard to the confidentiality of the information contained therein. The Plaintiff also disputed the claim that technical and other information on RTGC generator sets was readily available in the open market. Even if technical information was readily available, matters like price list, suppliers list and customers list were not.

The Plaintiff’s Case

PW1 (Cliff Loke Choon Hoe)

14 Cliff Loke Choon Hoe, the Managing Director of the Plaintiff, stated in his affidavit of evidence-in-chief that the Plaintiff had been carrying on the business of manufacturing generator sets since its incorporation in 1983. The Plaintiff was generally recognized as one of the market-leaders, if not the market-leader, in Singapore and the region in respect of the generator business.

15 The RTGC generator, unlike ordinary generators, was one mounted on rubber tyred gantry cranes and could be operated as a mobile generator unit. The Plaintiff was an established leader in the RTGC generator business. For the last four years, it was the only company in Singapore which manufactured RTGC generator sets. According to a study by Andersen Consulting, commissioned by the Plaintiff in 1995/1996, the Plaintiff had at least a 50% share of the worldwide RTGC generator business.

16 The Plaintiff started its RTGC generator business in 1992. Two very qualified persons were instrumental in building up this business. They were Steven Won, a mechanical designer, and Marc Soon, the electrical design manager. The Plaintiff also had the services of a mechanical consultant, one Bob Rawley. The first major RTGC job came in August 1992 when Keppel Engineering ordered 26 units of RTGC generator sets.

17 The First Defendant was involved in all aspects of the Plaintiff’s operations and administration while he was the Plaintiff’s general manager. He was involved in the day-to-day running of the business, including sourcing for key equipment, negotiating with suppliers, liaising with customers, supervising production and dealing with the bankers. In 1993, he was made a director.

18 On Friday 16 June 1995, the First Defendant suddenly informed Cliff Loke that he was resigning from the Plaintiff. They talked about the matter but Cliff Loke could not persuade the First Defendant to change his mind. On 19 June 1995, the First Defendant tendered two resignation letters - one for his directorship in Mech-Power Holding Ltd and all its subsidiary companies and the other for his position as general manager of the Plaintiff. Pursuant to the contract of employment, three months’ notice was required. Accordingly, the First Defendant stated in his resignation letter that his last day of service would be 18 September 1995. He thanked Cliff Loke and his wife for the support given to him in the Plaintiff and had some kind words about Cliff Loke’s abilities.

19 Cliff Loke asked the First...