Tempcool Engineering (S) Pte Ltd v Chong Vincent and others

• Jurisdiction: Singapore
• Judge: Edmund Leow JC
• Judgment Date: 09 April 2015
• Neutral Citation: [2015] SGHC 100
• Court: High Court (Singapore)
• Docket Number: Suit No 437 of 2013
• Year: 2015
• Published date: 20 April 2015
• Hearing Date: 02 September 2014,11 June 2014,13 June 2014,04 September 2014,05 June 2014,03 June 2014,03 September 2014,12 June 2014,04 June 2014
• Plaintiff Counsel: Ronnie Tan and Beitris Yong (Central Chambers Law Corporation)
• Defendant Counsel: Eddie Koh (S H Koh & Co)
• Subject Matter: Employment Law,Employees' duties,Tort,Confidence,Conspiracy,Unlawful means conspiracy,Conversion,Inducement of breach of contract
• Citation: [2015] SGHC 100

Edmund Leow JC: Introduction

This case arose from an action that the Plaintiff took against two former employees and the competing business that they were working for, alleging that they had acted together to “steal” its confidential information and trade secrets. Having discovered the alleged wrongdoings on 2 May 2013, the Plaintiff obtained an interim injunction on 30 May 2013. This restrained the Defendants from using the Plaintiff’s drawings and other documents that had been taken pending the main action, which I heard over 8 ½ days. Prior to trial, I granted a bifurcation order, which meant that the trial was limited to the issue of liability, with damages to be assessed later. I delivered my oral judgment to the parties on 8 January 2015. The Defendants were dissatisfied with my decision and filed an appeal.

Facts Background of the parties

The Plaintiff, Tempcool Engineering (S) Pte Ltd (“Tempcool”), is a company in the engineering, supply and design of refrigeration and air-conditioning systems. It has operated since 1973 and is led by its managing director, Mr Tan Gek Suan (“GS Tan”) and executive director, Mr Tan Kok Tong. The 2nd Defendant, Mr Woon Wee Seng (“Woon”), joined Tempcool in 1983 as an assistant engineer and rose through the ranks to become the manager of its commercial refrigeration division. Woon said that he was the main person developing refrigeration solutions for the Plaintiff’s customers. However, he resigned in February 2013 after almost three decades of service to join the 3rd Defendant, a company called U.B. Zanotti System Pte Ltd (“UBZ”). He was a director who held half its shares. Woon said that he started UBZ’s refrigeration division after he left Tempcool.

The first defendant, Mr Vincent Chong (“Vincent”), joined Tempcool in June 2012 after receiving his polytechnic diploma. He was an assistant engineer in the commercial refrigeration division. This means that Vincent and Woon were colleagues for about eight to nine months. But I found that their superior-subordinate relationship continued even after Woon left Tempcool.

Background to the dispute

On 2 May 2013, a Tempcool employee made a startling discovery. Ms Teng Lee Hoon Catherine (“Catherine”), the personal assistant to the Tempcool directors, received a message from Vincent. He had left his iPad unattended on his desk and wanted her to put it in his drawer. Catherine said that the iPad’s screen was unlocked when she saw the device. Hence, she saw messages that had been sent from Woon’s mobile number, which she instantly recognised. Her suspicions were sufficiently aroused for her to scroll through the messages and alert her directors,¹ who eventually took action against Vincent, Woon and UBZ (“the Defendants”). Besides text messages, the iPad also had various emails exchanged between Vincent and Woon in April 2013, copies of drawings and other documents. Much of the dispute at trial centred around the drawings for three projects (“the Disputed Drawings”): Two drawings showing proposed changes to a food factory² for Ken Ken Food Manufacturing Pte Ltd (“the Ken Ken Drawings”). A proposed refrigerated merchandiser layout plan³ for Toko Warisan Trading (“the Toko Warisan Drawing”); and A proposed supermarket refrigerated merchandiser layout⁴ for Shop & Save Sdn Bhd in Sandakan, Malaysia (“the Sandakan Drawing”).

The Disputed Drawings’ title blocks (the area in technical drawings that conveys information such as titles, projects and dates) carried UBZ’s name. However, Tempcool’s draughtsperson, Loke Yuet Chan Anna (“Anna”), reviewed them and said that the drawings were copied from Tempcool’s drawings that she had plotted for the three projects.

Tempcool also alleged that the Defendants had taken its pricing information (“the Pricing Information”). Based on the text messages in the iPad, this included a quotation that Tempcool had obtained from Arneg, a manufacturer of supermarket showcases (“the Arneg Quotation”). The Pricing Information also included a pricing summary that revealed, inter alia, the price mark-ups for the components of a showcase and cold-room system (“the Pricing Summary”).⁵ The Pricing Summary was in the iPad.

Finally, Vincent’s iPad contained a document that comprised filing labels for project-related files (“the Filing Labels”). These labels carried the UBZ name. Tempcool alleged that the document was adapted from its own document, which comprised filing labels that carried Tempcool’s name.

The parties’ positions

To Tempcool, the Disputed Drawings, Pricing Information and Filing Labels were confidential information and/or trade secrets. After leaving Tempcool, Woon entered into an agreement with Vincent, pursuant to which Vincent took Tempcool’s confidential information for the use of Woon and/or UBZ. It asserted that Vincent and Woon had breached their employment agreements, the duty of good faith and fidelity and the duty of confidence. Tempcool also alleged that there was an unlawful conspiracy among the Defendants. Four witnesses gave evidence for Tempcool – its two directors, Anna (the draughtsperson) and Catherine (the personal assistant).

The Defendants sought to show that there was no misuse of confidential information. None of the disputed information was even confidential. There was no unlawful conspiracy among the Defendants and no loss or damage. Hence, they urged me to set aside the interim injunction (see [1] above) and dismiss Tempcool’s claim with costs. Vincent, Woon and Mr Tan Peng Koon, a former employee of the Plaintiff, testified for the Defendants.

The issues

The central issue was whether Vincent misused Tempcool’s confidential information by sending Woon the Disputed Drawings. I answered this in the affirmative. I also found that Woon had knowingly procured Vincent’s breaches of confidence; he was also liable for misusing confidential information. UBZ was also liable as Woon’s knowledge was imputed to it.

Having found for Tempcool on the Disputed Drawings, I distilled the following issues for determination: Whether the Defendants were liable for misusing Tempcool’s Pricing Information and Filing Labels; Whether Vincent and Woon had breached their duty of good faith and fidelity; and Whether the Defendants were liable for unlawful conspiracy.

I should emphasise that my findings of fact were reached on a balance of probabilities, given the absence of conclusive evidence on most issues.

Whether Vincent’s sending of the Disputed Drawings to Woon amounted to the misuse of confidential information The applicable legal principles

The elements for an action in breach of confidence are as follows (see Coco v A N Clark (Engineers) Ltd [1969] RPC 41 (“Coco”) and Invenpro (M) Sdn Bhd v JCS Automation Pte Ltd [2014] 2 SLR 1045 (“Invenpro”) at [129]): First, the information must possess the necessary quality of confidentiality. Second, the information must have been imparted (or received) in circumstances such as to import an obligation of confidentiality. Third, there must be unauthorised use of the information and detriment.

After the trial, I found that Vincent had copied the Disputed Drawings from Tempcool and sent them to Woon on his instructions. All this was done in circumstances that amounted to a misuse of the Disputed Drawings. This was established from, inter alia, the messages in Vincent’s iPad. But the Defendants also made a number of arguments, based on whether the information was confidential, and whether the Defendants owed an obligation of confidentiality. I dealt with these arguments in turn.

The Disputed Drawings possessed the necessary quality of confidentiality

Tempcool asserted that the Disputed Drawings belonged to its repository of past drawings, details and specifications. Drawings generated in recent years were stored in Anna’s computer. They essentially showed the configuration of cooling systems in projects that Tempcool had implemented for its customers over the years. When a new project came in, Tempcool’s engineers would refer to drawings from previous projects to assist them in coming up with the optimal solution for the new project.⁶

Tempcool said its drawings were products of labour and effort.⁷ To plot her drawings for supermarkets and cold rooms more efficiently, Anna tapped a “library” of project designs that she had created and accumulated over time. She called these “smart templates”. The Disputed Drawings comprised these templates, which allowed her to work faster to implement the “various revisions, layers and requirements in each drawing and plan”.⁸ The templates included modifiable representations of equipment and structures that went into Tempcool’s drawings, such as showcases and gondolas. Anna explained that the templates allowed her to create the “several available permutations of designs at one click of the mouse”.⁹ However, the Defendants contended that the Disputed Drawings were not confidential and were of little or no value as they could easily be reproduced. Anna’s library of project designs were not “solutions” but simple templates where “changing the size of the items or equipment within a drawing can be easily done”.¹⁰

I disagreed with the Defendants. There was no denying that without the benefit of past drawings and “smart templates”, engineers could still come up with solutions to meet their clients’ commercial refrigeration needs. But it would be a cumbersome process as they would have to start from scratch. The previous drawings therefore gave them a head start, and that was their value. If they were of no value, then there would be no reason for Woon to ask Vincent to send them to him (a finding that I had made and explain below).

In finding that the Disputed Drawings were sufficiently valuable to be confidential, I noted that there is no necessity for confidential information to be patentable or inventive to have a quality of...