VSL Prestressing (Australia) Pty Ltd v Mulholland

• Jurisdiction: Singapore
• Judge: Choor Singh J
• Judgment Date: 29 July 1971
• Neutral Citation: [1971] SGHC 11
• Docket Number: Suit No 903 of 1971
• Date: 29 July 1971
• Year: 1971
• Published date: 19 September 2003
• Plaintiff Counsel: M Karthigesu (Allen & Gledhill)
• Citation: [1971] SGHC 11
• Defendant Counsel: CH Smith and Lim Teck Hui (Laycok & Ong)
• Court: High Court (Singapore)
• Subject Matter: Restraint of trade,Contract,Illegality and public policy,Whether any justification for injunction against employee from competing with employer,Whether knowledge acquired by employee constituting trade secrets,Employee resigned and set up business in competition with employers

The plaintiffs are specialist subcontractors in civil engineering and are incorporated in Australia. They specialise in the prestressing and rock anchoring of building structures. The plaintiffs have an office in Singapore. On 24 July 1970 they appointed the defendant as their manager for South-East Asia. On 12 June 1971 the defendant resigned from the service of the plaintiffs. On 16 June 1971 the plaintiffs by an ex parte application obtained an interim injunction against the defendant restraining him from doing any of the following acts until the hearing of a motion for an order that the said injunction do continue until the trial of this action:

(1) utilizing or in any way profiting from the information or knowledge which has been communicated to the defendant by the plaintiffs or obtained by the defendant in the course of his employment with the plaintiffs as the plaintiffs` South-East Asia manager stationed in Singapore;

(2) interfering and intermeddling with the plaintiffs` business or its servants or workmen or agents;

(3) directly or indirectly engaging or concerning himself in and business of the kind carried on by the plaintiffs, within Singapore for a period of one year from date hereof; and

(4) divulging to any person, firm or company or body or persons whomsoever any information concerning the business or the finance of the plaintiffs.

At the hearing of the motion, the court ordered an early trial of the action under O 29 r 5; that the trial be without pleadings and that the interiminjunction do continue until the trial.

Counsel for the plaintiffs has now applied to vary the third part of the injunction to read as follows:

(3) directly or indirectly engaging or concerning himself in any business and employing therein such design or techniques and other processes whatsoever similar to those used by the plaintiffs within Singapore for the period of one year from 16 June 1971.

The evidence shows that the plaintiff company has been in existence in Australia for six years. The plaintiffs are, what may be called specialist sub- contractors who work in conjunction with building and civil engineering contractors on projects which include buildings, bridges, dams, walls and foundations. They contract to supply the necessary materials and equipment for the prestressing of structures and also for the execution of their prestressing designs. They also provide some design assistance or aid to consulting engineers and government bodies who do not have detailed knowledge of prestressing design and or knowledge to incorporate the plaintiffs` materials and techniques into their structures. The plaintiffs have a licence from Losinger of Berne, Switzerland for the use of the VSL system for prestressing cables and rock and soil anchors for Australia and South-East Asia. It is said that Losinger has developed and are continually developing prestressing and rock anchoring techniques since 1955 and are considered a world leader in this field. The plaintiffs claim that the multi-strand system is patented and that although certain other aspects of the system are not covered by patent, these materials, techniques and procedures are held in security by them to prevent any competitor gaining this information without having to incur significant development expenses. The plaintiffs admit that the multi-strand system is not registered for South- East Asia.

The defendant who is a professional civil engineer was working in America with TY Lin & Co and he left them to join the plaintiffs. The plaintiffs admit that the work of TY Lin & Co is very similar to the design assistance the plaintiffs give to other consulting engineers and authorities but it is said that TY Lin & Co do not contract to carry out their design. The plaintiffs claim that the defendant was given instruction and access to manufacturing drawings of all their component parts, that he inspected a wide variety of the plaintiffs` job sites and was given detailed working procedures relating to these work sites, and that he was trained in the preparation of tenders and contract bids. The nature of the confidential information which the plaintiffs allege has come into the possession of the defendant is the following:

(1) manufacturing drawings and specifications for a wide range of typical prestressing components;

(2) manufacturing and operational drawings and specifications of a wide range of typical prestressing equipment;

(3) operational and installation instructions on the construction and use of these materials and equipment;

(4) precise cost data for use in tender preparation involving components, equipment utilisation, man hour records;

(5) confidential information on acceptable tendering margins;

(6) details of the precise financial operations of VSL;

(7) market survey information prepared by VSL on prospective jobs, contacts and areas for future exploitation in South-East Asia; and

(8) the defendant has had direct access without restriction to the VSL licensor in Switzerland and other VSL licensees in other countries to receive information on future and current procedure and developments.

The defendant`s case is that he had already acquired some prestressing experience before be joined the plaintiffs and he has given details of that experience. He has named the various prestressing systems he had become familiar with before he joined the plaintiffs. He stated that his experience with many of these systems involved details of component manufacture and installations in site works and in the utilisation of the necessary equipment for stressing or grouting the prestressing cables. He admitted that prior to joining the plaintiffs he was never in the employ of any prestressing contracting company but claimed that in America he did carry out assignments which involved alternative design of building structures with the aid of the Atlas system being employed as specialist sub-contractors in those building projects. He also visited job sites where the Atlas system had been incorporated in such projects designed by him for the purpose of ensuring that the design was being properly executed. He also gave details of his experience of the VSL system which he gained in California and in Switzerland before joining the plaintiff company. He admitted that in his position as Singapore manager of the plaintiff company he did have access to drawings and specifications. This, he stated, was necessary to enable him to secure manufacture of certain of the components in Singapore. The defendant claimed that he was never told by the plaintiffs that their processes were secret or confidential. He stated that he was not going to use the plaintiffs` designs as he believed that he could make his own designs. The defendant stated that the plaintiffs did not have any secret process and that he did not know of any secret process of theirs apart from the patented multi-strand system. He stated that if and when he started his own prestressing business he was not going to use the plaintiffs` process and that he hoped to acquire an interest in another prestressing company which already possessed most of the b asic know-how of this industry. The defendant admitted that any knowledge he obtained in the course of his duty with the plaintiffs obviously had added to his skill, experience and know-how. The defendant maintained that design know-how did not belong exclusively to the plaintiffs nor did the prestressing system; that there were several prestressing systems; that every such system had its know-how; that the success of the VSL system in Singapore was not due to the superiority of their components; that the components used by the plaintiffs thus far and proposed to be used in the future were substantially similar to those of their competitors and that the success of the VSL system in Singapore was attributable primarily to the effective marketing and selling expertise of himself and his friend Paul Lim.

In his evidence, the defendant commented upon all the eight items which Mr Pash, the managing director of the plaintiff company, claimed were items of confidential information which had come into the possession of the defendant as a result of his...