S K Luxe Pte. Ltd. v Loo Zihong

• Jurisdiction: Singapore
• Judge: Jasmin Kaur
• Judgment Date: 28 July 2023
• Neutral Citation: [2023] SGMC 58
• Court: Magistrates' Court (Singapore)
• Docket Number: Magistrate Court Suit No 848 of 2022
• Hearing Date: 16 February 2023,25 May 2023
• Citation: [2023] SGMC 58
• Year: 2023
• Plaintiff Counsel: Lee Ming Hui Kelvin & Ong Xin Ying Samantha (WNLEX LLC)
• Defendant Counsel: Peter Ong Lip Cheng (Peter Ong Law Corporation)
• Subject Matter: Employment Law,Contract of service,Termination without notice,Breach of contractual duties,Employee's duties,Breach of fiduciary duties,Constructive dismissal,Personal property,Ownership,Social media account created by employee on employer's instructions,Whether account belonged to employee or employer after the termination of employment
• Published date: 18 August 2023

District Judge Jasmin Kaur:

This case arises from an employment dispute between the plaintiff, S K Luxe Pte Ltd, and their former employee, the defendant Loo Zihong. The plaintiff summarily dismissed the defendant after finding out that the latter had solicited the plaintiff’s customers during her employment and misused confidential information belonging to the plaintiff, and later commenced this claim for damages. The defendant counterclaimed on the grounds that she was constructively dismissed and was not paid her salary in lieu of notice and commission.

The central issues in this judgment relate to the defendant’s alleged breaches of duty of fidelity to the plaintiff, constructive dismissal and due inquiry. A peripheral issue concerns the ownership of an Instagram account which was hotly contested between parties. When an employer asks an employee to create a social media account to promote the employer’s business, and the employee creates this account with her personal email address and password, who “owns” the account at the termination of employment?

After considering the evidence and the submissions of the respective parties, I allow the plaintiff’s claim in the sum of $396 and I dismiss the defendant’s counterclaim entirely. These are the reasons for my decision.

Facts The parties

The plaintiff is a company incorporated in Singapore and is in the business of beauty salons and spas. The plaintiff operates a salon at The Central, known as Grace Nail.

The defendant was an employee of the plaintiff from 2 January 2019 to 15 October 2019 as a manicurist and nail technician.

Background to the dispute

On 13 December 2018, the plaintiff and the defendant entered into an employment agreement (the “Agreement”) for the defendant to work as a nail technician and manicurist for Grace Nail. The terms of the Agreement relevant to this dispute are as follows: 11 Confidentiality

Employees, while employed by the Company and after termination of the employment, may not disclose, use for any other purpose or leak Company or Company director, employees, customers include SNS information such as Facebook, Line, Whatsapp, Instagram or other confidential or personal information such as Contract, sales figure, customer’s carte, ratio of chemicals, rules of the Company, obtained during the Employee’s work without a valid reason.

12 Prohibition of Side-job

The Employee shall not work, directly or indirectly, for any other company, without written consent with the Company. And the Employee shall not be a director, an agent, a worker of any other company without written consent with the Company.

13 Termination of Employment

Either the Company or the Employee may terminate the Contract by giving at least one month’s prior written notice of termination to the other party or payment to the other party if a sum equivalent to one month’s basic salary in lieu of such notice or shortfall in notice. This provision does not apply to an employee who is on probation, or an employee who misconduct herself. An employee who is summarily dismissed on the grounds of misconduct shall not be entitled to any benefits of the Company other than his basic salary. The Company’s right to terminate without prior notice is without prejudice to any other rights or claims which the Company may have against the employee under laws, including but not limited to any rights of summary dismissal and civil claim to sue for damages.

At the commencement of her employment, the defendant was instructed by her manager Lock Wai Ling (“Angie”) to create an Instagram account to showcase photographs of nail art done by the defendant. The defendant complied and created an Instagram account (the “Instagram Account”) using her personal email address. The password for the Instagram Account was also set by the defendant and never revealed to the plaintiff. On the instructions of Angie, the username of the Instagram Account (otherwise known as the account handle) was set at ‘elise_gracenail’. The defendant was required to upload pictures of nail art on a weekly basis, after these photographs had been approved by Angie, and each photograph bore the Grace Nail watermark.

According to the defendant, she grew increasingly unhappy under her employment with the plaintiff and decided to start her own home-based nail business so that she no longer had to work for the plaintiff. To this end, she registered a sole proprietorship, Luvnail, in the business of manicure and pedicure services, on 19 September 2021. This was a few weeks before she tendered her resignation with the plaintiff on 13 October 2021.

The plaintiff claims that after the defendant tendered her resignation, they discovered that she had deleted all the posts in the Instagram Account, blocked all the plaintiff’s employees and changed the account handle to ‘luvnailsg’. Masahiro Nakamura (“Masa”), another manager of the plaintiff, and Angie then confronted the defendant on 15 October 2021 (“the 15 October Meeting”) and demanded to check her phone, where they found a list of customers’ names and phone numbers. They also found that she had been using the chat function on the Instagram Account to communicate with some of the plaintiff’s customers to inform them that she was leaving the employ of the plaintiff soon, and would be starting up a new home-based business which would provide cheaper services than the plaintiff. The defendant also told these customers that she would continue to use the Instagram Account. The defendant was then summarily dismissed.

The parties’ cases

The plaintiff’s case is that they were entitled to summarily dismiss the defendant on grounds of misconduct, stemming from her breaches of the Agreement as well as her common law duty of fidelity. In particular, she had solicited the plaintiff’s customers, stolen the Instagram Account, incorporated her sole-proprietorship before she tendered her resignation, and stolen some nail art pieces from the plaintiff’s salon.

The defendant’s case is that the plaintiff’s dismissal of her employment was wrongful, and instead she had tendered her resignation owing to the plaintiff’s constructive dismissal. The defendant also states that the 15 October Meeting was held by wrongfully restraining her from leaving the salon and forcing her to hand over her mobile phone against her will. Finally, she denies stealing any nail art pieces from the salon.

The defendant has counterclaimed against the plaintiff for damages arising from her constructive dismissal as well as salary in lieu of notice, unconsumed annual leave and unpaid commission. The plaintiff states that the defendant, having been summarily dismissed without notice, is not entitled to these sums pursuant to clause 13 of the Agreement and section 14 of the Employment Act 1968 (“EA”).

The defendant’s breaches

The plaintiff alleges that the defendant had breached her duty of fidelity to the plaintiff and breached various terms in the Agreement, for which the plaintiff seeks damages. In particular, the plaintiff alleges the following breaches: registering her own competing business, Luvnail, while she was still employed with the plaintiff; retaining the Instagram Account and changing the account handle to reflect her own home-based business; improperly keeping a list of the plaintiff’s customer information; poaching or soliciting the plaintiff’s customers; and stealing the plaintiff’s materials and items.

It is trite that an employee owes a duty of fidelity to her employer. As set out by the Court of Appeal in Man Financial (S) Pte Ltd v Wong Bark Chuan David [2008] 1 SLR(R) 663 at [193]:

… there is an implied term in the employer’s favour that the employee will serve the employer with good faith and fidelity, and that he or she (the employee) will also use reasonable care and skill in the performance of his or her duties pursuant to the employment contract.

The registration of Luvnail

The defendant registered Luvnail, a sole proprietorship, on 19 September 2021, and tendered her resignation on 13 October 2021. The plaintiff states that the defendant’s acts of registration as well as preparatory steps for her new business while she was still in the employment of the plaintiff was a breach of her duty of fidelity to the plaintiff. At the trial, the evidence from Angie was that these preparatory steps included the setting up of a Facebook page, coming up with a price list, and informing the plaintiff’s customers about her new business.

The Court of Appeal’s decision in Smile Inc Dental Surgeons Pte Ltd v Lui Andrew Stewart [2012] 4 SLR 308 (“Smile Inc”) is instructive in this respect. It was held at [67]:

… If mere preparatory steps had been taken, there would have been no breach of the Respondent’s implied duty of good faith and fidelity; on the contrary, if more than mere preparatory steps had been taken, then there would have been a breach of this duty.

The Court of Appeal then went on to provide illustrations of acts which constitute mere preparatory steps, and which are not considered a breach of the employee’s duties of good faith and fidelity, at [71]: Employees writing to some of their employer’s suppliers to inform them that they intended to start business on their own; An employee forming an intention to start a competing business, approaching a bank for financing, and agreeing to a lease of premises; and An employee conceiving an idea for a new product in the same business as his employer, applying for a government grant for his business, but not entering into any agreements with competitors or potential competitors.

On the evidence, all that the defendant did while she was in the employ of the plaintiff was to register the sole proprietorship and inform the plaintiff’s customers that she was starting her own business. There was no evidence adduced of any...