Tang Siew Choy and Others v Certact Pte Ltd

JudgeGoh Joon Seng J
Judgment Date12 May 1993
Neutral Citation[1993] SGCA 35
Citation[1993] SGCA 35
Defendant CounselTan Lay Seng (Lee & Lee)
Published date22 December 2003
Plaintiff CounselLee Tau Chye (Lee Brothers)
Date12 May 1993
Docket NumberCivil Appeal No 86 of 1991
CourtCourt of Appeal (Singapore)
Subject MatterInterlocutory injunction,Employee's duty of confidentiality during and after employment,Duty on recipient of confidential information,Employer should define and particularize confidential information,Balancing employer's interest against competition and employee's right to advancement,Appeals,Contract of service,Employees' duties,Employment Law,Civil Procedure,Implied term of duty of good faith and fidelity on the part of the employee,Role of appellate court in hearing appeal against granting of interlocutory injunctions

This was an appeal against an order dated 15 April 1991 continuing the interlocutory injunctions granted on 6 March 1991 on the respondents` ex parte application. We dismissed the appeal for the reasons that follow.

The context of the appeal was the familiar one of an employer seeking to restrain former employees from using allegedly confidential information acquired during their employment in competition with the company.
It was pertinent in such a context to bear in mind the observations which Hoffman J (as he then was) made in Lock International plc v Beswick & Ors. Although the observations were made in the context of Anton Piller relief, they are, in our view, of a wider importance. The learned judge said (at p 383):

Anton Piller orders are frequently sought in actions against former employees who have joined competitors or started competing businesses of their own. I have learnt to approach such applications with a certain initial scepticism. There is a strong incentive for employers to launch a pre-emptive strike to crush the unhatched competition in the egg by causing severe strains on the financial and management resources of the defendants or even a withdrawal of their financial support. Whether the plaintiff has a good case or not, the execution of the Anton Piller order may leave the defendants without the will or the money to pursue the action to trial in order to enforce the cross-undertaking in damages.



Some employers seem to regard competition from former employees as presumptive evidence of dishonesty.
Many have great difficulty in understanding the distinction between genuine trade secrets and knowledge which the employee may take away with him. In cases in which the plaintiff alleges misuse of trade secrets or confidential information concerning a manufacturing process, a lack of particularity about the precise nature of the trade secrets is usually a symptom of an attempt to prevent the employee from making legitimate use of the knowledge and skills gained in the plaintiff`s service. That symptom is particularly evident in this case. Judges dealing with ex parte application are usually also at a disadvantage in dealing with alleged confidential knowledge of technical processes described in technical language, such as the electric circuitry in this case. It may look like magic but turn out merely to embody a principle discovered by Faraday or Ampere.

Even in cases in which the plaintiff has strong evidence that an employee has taken what is undoubtedly specific confidential information, such as a list of customers, the court must employ a graduated response.
To borrow a useful concept from the jurisprudence of the European Community, there must be proportionality between the perceived threat to the plaintiff`s rights and the remedy granted. The fact that there is overwhelming evidence that the defendant has behaved wrongfully in his commercial relationships does not necessarily justify an Anton Piller order. People whose commercial morality allows them to take a list of the customers with whom they were in contact while employed will not necessarily disobey an order of the court requiring them to deliver it up. Not everyone who is misusing confidential information will destroy documents in the face of a court order requiring him to preserve them.

In many cases it will therefore be sufficient to make an order for delivery up of the plaintiff`s documents to his solicitor or, in cases in which the documents belong to the defendant but may provide evidence against him, an order that he preserve the documents pending further order, or allow the plaintiff`s solicitor to make copies.
The more intrusive orders allowing searches of premises or vehicles require a careful balancing of, on the one hand, the plaintiff`s right to recover his property or to preserve important evidence against, on the other hand, violation of the privacy of a defendant who has had no opportunity to put his side of the case. It is not merely that the defendant may be innocent. The making of an intrusive order ex parte even against a guilty defendant is contrary to normal principles of justice and can only be done when there is a paramount need to prevent a denial of justice to the plaintiff. The absolute extremity of the court`s powers is to permit a search of a defendant`s dwelling house, with the humiliation and family distress which that frequently involves.

The facts

We now give our reasons for dismissing the appeal despite having approached it with some scepticism and being conscious of the need for proportionality between the perceived threat to the employer`s rights and the remedy granted. The facts of the appeal did not differ much from the usual scenario in this sort of case. The first and second appellants (`Tang` and `Chua` respectively) were former employees of the respondents (`Certact`) who now work for the third appellant, Axiom. Tang is also a director and shareholder of Axiom.

Certact was incorporated in Singapore on 4 December 1968 and imports various industrial equipment into Singapore for use here as well as for export to countries in the region.
In the affidavit filed 6 March 1991 in support of the ex parte application, Max Lauchli, a director of Certact, stated that the business experience of Certact in Singapore was as follows.

Certact deals with various types of industrial equipment and carries on the business of importing various goods from overseas and re-selling them to its customers in Singapore as well as to foreign companies.
In this regard, over a period of at least ten years, it built up an extensive business and was the exclusive and non-exclusive importers/distributors for highly specialized products including machine tools, diamond tools, coolants, abrasives and other components and equipment for the metal works industry in Singapore, and for various companies in the region including Malaysia, Indonesia and Thailand. Over these ten years, Certact together with its directors worked hard to establish a lucrative and profitable business with an extensive clientele for these products in Singapore and in the region.

Tang had joined Certact on 3 October 1981 as a technical sales executive in the Industrial Machine Tools and Chemical Department (`IMTC`).
He was then a diploma holder in mechanical engineering with several years` experience in related industries. Clause 10 of his contract of employment provided that:

Outside activities: It is understood that whilst in this company, you will dedicate your time fully to the company and will not engage in any outside activities contrary to the company`s interest. It is also understood that you are not permitted to divulge to those not employed by the company any relevant or confidential information or matters which concern the company`s affairs. If you do engage, you will be subject to termination.



The IMTC was then a relatively new department which had been set up in late 1980 or early 1981.
There was some dispute in the affidavits over the growth of the business of the department and the role played by Tang in it. It was not, however, denied that on or about April 1986, Tang was made sales manager and head of IMTC at Certact. His powers, duties and responsibilities in that capacity were described by Max Lauchli in his affidavit of 6 March 1991 as follows:

(a) He was in charge of the entire operations and the day-to-day running of IMTC. In this regard, he was entrusted with the entire management of IMTC and was responsible for the profitability of this department.

(b) He was to promote and enhance the relations and rapport which Certact maintained with its suppliers. In this regard, he was authorized to travel abroad on Certact`s behalf and at Certact`s expense to maintain, procure and expand Certact`s contacts. He was also sent on various training trips to the United States of America and various parts of Europe to upgrade his knowledge and skills for the benefit of Certact.

(c) He was required to monitor constantly the stock and inventory level of the aforesaid various products handled by Certact and to place all necessary and proper orders with the suppliers when the supplies were low. In this regard, he had virtually unrestricted discretion with the placing of orders and the purchases of supplies and was fully authorized to enter into such contracts for the purchase of supplies on behalf of Certact.

(d) He was entrusted with the sale and distribution of the aforesaid various products handled by Certact to established clientele in Singapore and foreign companies in the region. In this regard, he was wholly responsible for the direction and planning of IMTC for the promotion of the volume of sales and distribution.

(e) He was required to monitor constantly and maintain a close contact and relationship with the clientele in order to meet and understand their specific or special needs and requirements.

(f) He was required to provide and maintain constant monitoring, support and motivation to the sales staff under his control, direction and supervision.

(g) He was one of the two joint signatories empowered to operate Certact`s bank account.



In 1988, Tang became entitled to join an executive compensation plan and in 1990, he was considered for a proposed scheme whereby key managers of Certact would take an equity interest in the company.


Chua joined Certact on or about 9 February 1987 as a sales engineer in IMTC and his contract of employment contained a clause in the same terms as cl 10 of Tang`s contract with Certact.
His duties were described in the affidavit of Max Lauchli filed 6 March 1991 as follows.

At all material times, Chua was under the immediate control, direction and supervision of Tang and worked closely with him in several aspects at IMTC. In the capacity of a sales engineer, his duties and responsibilities included, inter alia, the following:

(a) He was entrusted with...

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5 books & journal articles
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