Judgment

[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

                                                                                                                                                              Judgment reserved.

Lai Kew Chai J (delivering the grounds of judgment of the court):

1           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.

2           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 crossundertaking 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

3           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.

4           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.

5           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.

6           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.

7           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.

8           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.

9           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 the sale and distribution of the aforesaid various products handled by Certact to established clientele in Singapore and foreign companies in the region;

(b)    He was to promote and enhance the relations and rapport which Certact maintained with its extensive clientele in Singapore and in the region;

(c)    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;

(d)    He was sent on training trips to Japan and the United States of America to upgrade his knowledge and skills for the benefit of Certact.

10       In August 1990, Tang indicated to Certact that he was unhappy over the way he was being treated by the company. He subsequently resigned from the company with effect from 28 February 1991. Chua resigned from Certact with effect from 27 February 1991.

11       By a writ dated 6 March 1991, Certact sued Tang and Chua for damages for breach of contractual and/or fiduciary and/or statutory obligations and for injunctions restraining them from disclosing, divulging and/or making use of any of the confidential information or trade secrets which they had acquired during their employment with Certact. As against Axiom, Certact sought an injunction restraining it from disclosing, divulging or making unlawful use of the confidential information or trade secrets of Certact which Tang and/or Chua had obtained. Certact also sought an injunction restraining all the appellants from conspiring to injure its business interest, for delivery up of all documents and materials the disclosure or use of which would offend the injunctions sought, an inquiry as to damages, an account and consequential relief.

12       By an order dated 7 March 1991 made on Certact’s ex parte application, Certact obtained interlocutory forms of the injunctions sought in the writ as well as Anton Piller relief and orders for discovery. The appellants applied to discharge the injunctions but did not challenge the grant of the Anton Piller relief. The interlocutory injunctions against the appellants were continued by the order dated 15 April 1991 against which the appeal was brought.

The interlocutory injunctions

13       The injunctions restrained the appellants from disclosing, divulging and/or making use of the information in two categories of documents. In the first category were lists of prices negotiated with and quoted to or by Certact’s suppliers and ‘various confidential correspondence, including (but not limited to) purchase orders, invoices etc’ between Certact and the suppliers. The second category consisted of the following documents:

(i)     list of names and addresses of suppliers and their individual contacts;

(ii)         various distributorship agreements and/or contracts with the suppliers;

(iii)  list of names and addresses of customers and their individual contacts;

(iv)   list of prices negotiated with and quoted to various customers of Certact in Singapore and in the region;

(v)    copies of stock cards;

(vi)   copies of invoices;

(vii)         confidential information relating to the quantity and type of goods ordered and the special requirements of the customers; and,

(viii)          various confidential correspondence.

14       We shall refer to these two categories of documents collectively as ‘the subject material’.

15       The injunctions also restrained the appellants, whether acting individually or in combination, from the following acts:

(a)   Approaching the suppliers of the plaintiffs with a view to inducing them to appoint the first and/or second and/or third defendants or otherwise whosoever as the distributor of their products in place of the plaintiffs.

(b)    Placing or soliciting orders for the supply of goods from or otherwise dealing with any of the plaintiffs’ suppliers for whom the plaintiffs are that suppliers’ exclusive agent/ distributor.

(c)    Soliciting orders from or otherwise dealing with any customer of the plaintiffs with whom the plaintiffs have a contractual arrangement/agreement for the supply of the goods by the plaintiffs to that customer which would interfere with or otherwise affect the rights and obligations of the plaintiffs and/or that customer arising out of the said contractual arrangement/agreement.

The duty of confidentiality

16       The principles of law applicable to the appeal were those set out in the leading authority of Faccenda Chicken Ltd v Fowler. Neill LJ, in a passage worthy of extensive quotation, stated the principles as follows (at pp 625 to 627):

(1)          Where the parties are, or have been, linked by a contract of employment, the obligations of the employee are to be determined by the contract between him and his employer: cf Vokes Ltd v Heather (1945) 62 RPC 135 at 141. (2) In the absence of any express term, the obligations of the employee in respect of the use and disclosure of information are the subject of implied terms. (3) While the employee remains in the employment of the employer the obligations are included in the implied term which imposes a duty of good faith or fidelity on the employee. For the purpose of the present appeal it is not necessary to consider the precise limits of this implied term, but it may be noted: (a) that the extent of the duty of good faith will vary according to the nature of the contract (see Vokes Ltd v Heather); (b) that the duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorizes such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer (see Robb v Green [1895] 2 QB 315, [1895-9] All ER Rep 1053 and Wessex Dairies Ltd v Smith [1935] 2 KB 80, [1935] All ER Rep 75). (4) The implied term which imposes an obligation on the employee as to his conduct after the determination of the employment is more restricted in its scope than that which imposes a general duty of good faith. It is clear that the obligation not to use or disclose information may cover secret processes of manufacture such as chemical formulae (see Amber Size and Chemical Co Ltd v Menzel [1913] 2 Ch 239), or designs or special methods of construction (see Reid Sigrist Ltd v Moss Mechanism Ltd (1932) 49 RPC 461), and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret.

         The obligation does not extend, however, to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is only ‘confidential’ in the sense that an unauthorized disclosure of such information to a third party while the employment subsisted would be a clear breach of the duty of good faith.

         This distinction is clearly set out in the judgment of Cross J in Printers and Finishers Ltd v Holloway [1964] 3 All ER 731, [1965] 1 WLR 1, where he had to consider whether an ex-employee should be restrained by injunction from making use of his recollection of the contents of certain written printing instructions which had been made available to him when he was working in his former employers’ flock printing factory. In his judgment, delivered on 29 April 1964 (not reported on this point in the Weekly Law Reports), Cross J said ([1964] 3 All ER 731 at 738n):

‘In this connexion one must bear in mind that not all information which is given to a servant in confidence and which it would be a breach of his duty for him to disclose to another person during his employment is a trade secret which he can be prevented from using for his own advantage after the employment is over, even though he has entered into no express covenant with regard to the matter in hand. For example, the printing instructions were handed to [the first defendant] to be used by him during his employment exclusively for the plaintiffs’ benefit. It would have been a breach of duty on his part to divulge any of the contents to a stranger while he was employed, but many of these instructions are not really ‘trade secrets’ at all. [The first defendant] was not, indeed, entitled to take a copy of the instructions away with him; but insofar as the instructions cannot be called ‘trade secrets’ and he carried them in his head, he is entitled to use them for his own benefit or the benefit of any future employer.’

The same distinction is to be found in E Worsley & Co Ltd v Cooper [1939] 1 All ER 290, where it was held that the defendant was entitled, after he had ceased to be employed, to make use of his knowledge of the source of the paper supplied to his previous employer. In our view it is quite plain that this knowledge was nevertheless ‘confidential’ in the sense that it would have been a breach of the duty of good faith for the employee, while the employment subsisted, to have used it for his own purposes or to have disclosed it to a competitor of his employer. (5) In order to determine whether any particular item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment has ceased, it is necessary to consider all the circumstances of the case. We are satisfied that the following matters are among those to which attention must be paid. (a) The nature of the employment. Thus employment in a capacity where confidential material is habitually handled may impose a high obligation of confidentiality because the employee can be expected to realize its sensitive nature to a greater extent than if he were employed in a capacity where such material reaches him only occasionally or incidentally. (b) The nature of the information itself. In our judgment the information will only be protected if it can properly be classed as a trade secret or as material which, while not properly to be described as a trade secret, is in all circumstances of such a highly confidential nature as to require the same protection as a trade secret eo nomine. The restrictive covenant cases demonstrate that a covenant will not be upheld on the basis of the status of the information which might be disclosed by the former employee if he is not restrained unless it can be regarded as a trade secret or the equivalent of a trade secret: see for example Herbert Morris Ltd v Saxelby [1916] 1 AC 688 at 710, [1916-17] All ER Rep 305 at 317 per Lord Parker and Littlewoods Organisation Ltd v Harris [1978] 1 All ER 1026 at 1037, [1977] 1 WLR 1472 at 1484 per Megaw LJ. …

         It is clearly impossible to provide a list of matters which will qualify as trade secrets or their equivalent. Secret processes of manufacture provide obvious examples, but innumerable other pieces of information are capable of being trade secrets, though the secrecy of some information may be only short-lived. In addition, the fact that the circulation of certain information is restricted to a limited number of individuals may throw light on the status of the information and its degree of confidentiality. (c)Whether the employer impressed on the employee the confidentiality of the information. Thus, though an employee cannot prevent the use or disclosure merely by telling the employee that certain information is confidential, the attitude of the employer towards the information provides evidence which may assist in determining whether or not the information can properly be regarded as a trade secret. It is to be observed that in EWorsley & Co Ltd v Cooper [1939] 1 All ER 290 at 307, Morton J attached significance to the fact that no warning had been given to the defendant that ‘the source from which the paper came was to be treated as confidential’. (d) Whether the relevant information can be easily isolated from other information which the employee is free to use or disclose. In Printers and Finishers Ltd v Holloway [1964] 3 All ER 731, [1965] 1 WLR 1 at 6, Cross J considered the protection which might be afforded to information which had been memorized by an ex-employee. He put on one side the memorizing of a formula or a list of customers or what had been said (obviously in confidence) at a particular meeting, and continued:

‘The employee might well not realize that the feature or expedient in question was in fact peculiar to his late employer’s process and factory; but even if he did such knowledge is not readily separable from his general knowledge of the flock printing process and his acquired skill in manipulating a flock printing plant, and I do not think that any man of average intelligence and honesty would think that there was anything improper in his putting his memory of particular features of his late employer’s plant at the disposal of his new employer.’

         For our part, we would not regard the separability of the information in question as being conclusive, but the fact that the alleged ‘confidential’ information is part of a package and that the remainder of the package is not confidential is likely to throw light on whether the information in question is really a trade secret.

         These then are the principles of law which we consider to be applicable to a case such as the present one. We would wish to leave open, however, for further examination on some other occasion the question whether additional protection should be afforded to an employer where the former employee is not seeking to earn his living by making use of the body skill, knowledge and experience which he has acquired in the course of his career, but is merely selling to a third party information which he acquired in confidence in the course of his former employment.

17       The principles were subsequently followed by the English Court of Appeal in Lansing Linde Ltd v Kerr and have been applied in this jurisdiction in the High Court in Medivac International Management Pte Ltd v John Walter Moore.

18       The analysis of the obligation of confidence in Faccenda Chicken as one that arises from the contract of employment was appropriate to the consideration of the obligations of Tang and Chua but it did not sufficiently explain the obligation upon Axiom. That obligation is one that is imposed by equity. In Potters-Ballotini Ltd v Weston-Baker, a case set in a similar context as the present, Lord Denning MR applied the statement of principle made in Seager v Copydex Ltd where it was said (at p 417):

The law on this subject does not depend on any implied contract. It depends on the broad principle of equity that he who has received information in confidence shall not take unfair advantage of it. He must not make use of it to the prejudice of him who gave it without obtaining his consent.

Identifying the confidential information

19         The central problem in the present appeal was thus one of definition (pace Staughton LJ at p 425 in Lansing Linde Ltd v Kerr) of the quality of the information in the subject material.

20       There were three passages which were relevant for the determination of whether the subject material had that quality of confidentiality required to merit the protection of the law. The first was that in Faccenda Chicken starting from the paragraph numbered (5) in the passage quoted above. Then there was the following description by Megarry VC in Thomas Marshall (Exports) Ltd v Guinle (at p209):

It is far from easy to state in general terms what is confidential information or a trade secret. Certain authorities were cited, but they did not carry matters very far. Plainly something which is public property and public knowledge is not confidential: see Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1963] 3 All ER 413 per Lord Greene MR. On the other hand, it has been said:

‘Something that has been constructed solely from materials in the public domain may possess the necessary quality of confidentiality: for something new and confidential may have been brought into being by the application of the skill and ingenuity of the human brain. Novelty depends on the thing itself, and not upon the quality of its constituent parts.’

See Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 47, a case that was not cited, but in part draws on the Saltman case, which was. Costs and prices which are not generally known may well constitute trade secrets or confidential information: see Herbert Morris Ltd v Saxelby [1916] 1 AC 688 referring to prices.

         If one turns from the authorities and looks at the matter as a question of principle, I think (and I say this very tentatively, because the principle has not been argued out) that four elements may be discerned which may be of some assistance in identifying confidential information or trade secrets which the court will protect. I speak of such information or secrets only in an industrial or trade setting. First, I think that the information must be information the release of which the owner believes would be injurious to him or of advantage to his rivals or others. Second, I think the owner must believe that the information is confidential or secret, ie that it is not already in the public domain. It may be that some or all of his rivals already have the information: but as long as the owner believes it to be confidential I think he is entitled to try and protect it. Third, I think that the owner’s belief under the two previous heads must be reasonable. Fourth, I think that the information must be judged in the light of the usage and practices of the particular industry or trade concerned. It may be that information which does not satisfy all these requirements may be entitled to protection as confidential information or trade secrets: but I think that any information which does satisfy them must be of a type which is entitled to protection.

21       Finally, there was Staughton LJ’s statement in Lansing Linde Ltd v Kerr (at p425):

… Mr Poulton suggested that a trade secret is information which, if disclosed to a competitor would be liable to cause real (or significant) harm to the owner of the secret. I would add first, that it must be information used in a trade or business, and secondly, that the owner must limit dissemination of it or at least not encourage or permit widespread publication.

22       It should also be remembered that a certain delicacy exists in this area of the law and this was expressed by Cumming Bruce LJ in GD Searle & Co Ltd v Celltech Ltd in the following words (at p 99):

The court seeks to uphold the obligation of the free contracting parties to a contract of service to honour their contractual obligations. On the other hand, the court seeks to respect the rights of servants to advance in their chosen trade and profession, and in this connection to promote their own private interest by changing employment, and also to promote the public interest by better use of the servants’ personal aptitudes, experience and skill.

23       It follows from the foregoing that an employer must particularize the confidential information which he seeks to protect. It is oppressive for him to rely on a general statement that the information is confidential or to delay the giving of particulars until after discovery. This was expressed by Graham J in Diamond Stylus Co Ltd v Bauden Precision Diamonds Ltd & Ors as follows (at p 676):

If a plaintiff is alleging that he is in possession of a secret process or possesses confidential information and that the defendant has wronged him by using or disclosing that secret process or confidential information, he is necessarily in any trial in a difficult position unless he is prepared to state clearly what is the nature of the process or information in which he claims proprietary rights and which he claims has been used by the defendant. His difficulty is that if he does disclose in detail what his process is, he thereby gives away secrets, which is the one thing he does not want to do, though he may in such a case be able to make out his prima facie case by showing that the defendant has used part or the whole of that process. If, on the other hand, he is not prepared to disclose his secret then he is in an obvious difficulty in showing that what the defendant has done is take that secret, because there is not ex hypothesi sufficient identification of the latter to enable a satisfactory conclusion to be drawn.

         Here in the present case the plaintiffs, the Diamond Stylus Co Ltd, are unwilling to disclose and have not in fact disclosed what their process is in detail at all. They say that their process involves the use of tumbling apparatus and a tumbling process which they obtained the right to use under licence from a Swiss company, Raymond & Cie. They go on to say that the evidence shows, or at any rate that the proper inference from the evidence is that the defendants are using this process and that they could only have got the idea of using it from the plaintiffs.

         Although Mr Stanley put the matter as forcibly and clearly as it could be put on behalf of his clients, I am not satisfied that the plaintiffs have here made out a prima facie case which is sufficiently strong or clear on this branch of the case to justify the grant of an interlocutory injunction. No details of the Raymond & Cie process are specified by the plaintiffs, that is to say, they do not specify whether they use any particular grinding material, lubricant, nor what other details are involved in the process, and also it is not clear whether the defendants are in fact using the same apparatus as that used by the plaintiffs, nor as already stated, if they are, what are the details of the process involved in such use.

24       The same point was rather more forcefully made by Templeman J in John Zink Co Ltd v Lloyd’s Bank Ltd and Airoil Burner Co (GB) Ltd where he was dealing with an application, in an action for breach of confidence, to strike out a statement of claim for lack of particularity. The learned judge said (at p 392):

It is a longish statement of claim. It pleads in the widest terms — so wide that the Court of Appeal decided that there ought to be particulars — trade secrets belonging to the plaintiffs and it does not make one specific complaint against Mr Wilkinson. It says that Mr Wilkinson breached the relationship of confidence and the defendants, well knowing, procured the breach, over the whole field of the trade secrets. That looks wholly fishing and speculative, because, if the plaintiffs had any information at all about a breach, if they had any grounds other than speculative grounds, one would have thought they would have pleaded ‘In the erection or construction of a particular flare stack, you did this, that or the other’. They might have had to make a few intelligent guesses, I do not know; but at least one would have thought that they would have put something down. If it is permissible for a plaintiff to put in this form of statement of claim, then life for an ex-employee becomes intolerable. All an employer has to do is to allege, and perhaps he ought to do so once a year, that he has trade secrets of the broadest character, to allege that the employee learned them, that he joined a competitor and that he has broken the trade secrets. That seems to me to be speculative and would lead in this case to oppression and in any case would lead to oppression.

The instant appeal

25       In the appeal that was before us, the particulars of the confidential information given in the statement of claim were a list of the subject material. The only elaboration in the affidavits filed emerged obliquely from the affidavit of Max Lauchli filed on 6 March 1991. After describing Tang’s duties, Lauchli stated:

By reason of the matters stated in para 8 herein, Tang was in a position to acquire and did acquire a wealth of invaluable experience, specialized skill and an intimate knowledge of the overall policies, planning and workings of IMTC. In the circumstances, in the course of his employment with Certact, Tang was exposed to, if not received, or had access to a great deal of highly confidential information and/or trade secrets of Certact which are plainly secret and sensitive.

26       He further stated the same of Chua because of the nature of Chua’s duties and his close association with Tang.

27       The respondents also relied on the fact the equipment sold by them is of a specialized nature. The respondents further stressed the fact that the statement of claim contained allegations that Tang and Chua had committed breaches of the obligations of loyalty and confidentiality contained in their contracts of employment. Some of the alleged breaches were as follows:

(1)    In August 1990, while on a trip to the United States of America on Certact’s behalf and at its expense, Tang approached Milacron Marketing Co (‘Milacron’), a company which had appointed Certact as its non-exclusive distributor for Singapore and countries in the region, to persuade it to appoint Tang and/or Axiom as distributors in place of Certact. Milacron had, by letters dated 28 January and 31 January 1991, subsequently terminated the above-mentioned distributorship agreement with Certact and, by a letter dated 25 February 1991, Milacron appointed Axiom as their authorized distributor.

(2)    In late 1990 or early 1991, Tang and/or Chua approached Cogsdill Tool Products Inc (‘Cogsdill’), an American company for which Certact was its exclusive distributor for the region, with a view to inducing them to appoint Tang and/or Chua and/or Axiom as their distributor. Cogsdill gave notice of their termination of the distribution agreement on 30 January 1991.

(4)    In late 1990 or early 1991, Tang and/or Chua approached an English company, Shefcut Tool & Engineering Ltd (‘Shefcut’), for which Certact was exclusive distributor for the region, with a view to inducing them to appoint Tang and/ or Chua and/or Axiom as their distributor. It was further alleged that Tang and Chua had told Shefcut that Certact intended to discontinue the engineering side of its business.

(5)    Sometime before February 1991, Tang and/or Chua had approached Kyoto Diamond Industrial Co Ltd (‘Kyoto’) and/or Filtration Systems Products Ltd (‘Filtration Systems’) to appoint Tang and/or Chua and/or Axiom as their distributors. Both companies were at the material time suppliers to Certact.

(6)    In mid-February 1991, Tang and/or Chua received a shipment of coolants from Milacron which they had ordered on behalf of Axiom and delivered the shipment to Matsushita Refrigeration Industries (S) Pte Ltd (‘Matsushita’) on behalf of Axiom. At the material time, Matsushita was a customer of Certact.

(7)    By a letter dated 25 February 1991, Tang offered to purchase all of Certact’s existing stock of a particular brand of coolant on behalf of Axiom.

(8)    On 27 February 1991, Tang and Chua, while still in the employ of Certact, went about the business of Axiom during office hours.

(9)    By a letter dated 17 October 1990, Tang approached Schaublin Ltd (‘Schaublin’), a Swiss company, with a view to inducing it to switch its distributorship from Certact to him or Axiom. 

(10) Tang allowed the stock levels of supplies from Milacron to fall to levels in January/February 1991 that required Certact to order urgent supplies from Milacron in order to meet its obligations to customers.

(11) Tang and/or Chua and/or Axiom had used confidential information obtained by Tang and/or Chua in the course of their employment with Certact to contact various companies with a view to inducing them to appoint Tang and/or Chua and/or Axiom as their distributors.

28       The appellants, on the other hand, contended that the subject material was public knowledge and could be obtained from suppliers’ catalogues and trade directories. They also said that the suppliers and customers had formed a working personal relationship with Tang and Chua and that any termination of Certact’s employment as distributors was not induced by the two of them but by the suppliers coming to the conclusion that it was in their companies’ interest to continue working with Tang and Chua rather than Certact. The appellants further alleged that Certact never told Tang and/or Chua that the subject material was confidential and that the information in them were available to anyone who worked in IMTC.

29       The contention as to the reasons for Certact’s suppliers leaving them was supported by Milacron’s letter of 28 January 1991 to Certact. It was also supported by letters dated 5 April 1991 and 9 May 1991 from Shefcut and Kyoto respectively. The latter two letters were admitted as further evidence at the hearing before us on the appellants’ motion which the respondents opposed. As the letters were written after the hearing below, we decided to exercise our discretion in favour of the appellants. The costs of the motion were ordered to be in the cause.

30       We did not find any of the above arguments of much assistance to us. What was crucial to this case was that the execution of the Anton Piller relief revealed the presence of much of the subject material in the possession of the appellants. The seized documents were before the learned judge below who came to the conclusion that they contained confidential information for the following reasons:

To my mind it was clear that a list containing the names of suppliers and customers of Certact and the individual contacts thereof could be trade secrets or confidential information. So too could be a list of prices negotiated with and quoted to various customers of Certact; the contents of the various agreements entered into by Certact with their suppliers; and the records relating to the quantity and types of goods ordered and the special requirements of the customers. Trade secrets are not limited to manufacturing processes only. See Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617 at 628; Thomas Marshall v Guinle [1978] 3 All ER 193 at 209 and 210; and Lansing Linde Ltd v Kerr [1991] 1 All ER 418 at 425–426. While it might well be that all these were in fact compiled or recorded by Tang and/or Chua when they were in the employment of Certact, but they are no less the property of the employer. And an employee is not at liberty when he leaves that employment to take those things away in order to harm his employer or to help him establish his own business in competition with his former employer. This the employee is not entitled to do and will be restrained from so doing: see Robb v Green [1895] 2 QB 315. I accepted the argument that an employee is entitled to set up business in competition with his former employer after leaving his employment and to use all the skills and knowledge which he has honestly acquired during his employment. But here what Tang and Chua had done was not only that; there was clear evidence before me that Tang and/or Chua took with them the plaintiffs’ price list, customers’ list and their contacts, a copy of the export sales distribution agreement dated 15 November 1983 with Cogsdill and correspondence of used trade secrets and/or confidential information of Certact for their own personal interest. Even while they were in the employment of Certact they had used such information; all the more so they would continue to do that after their employment ceased unless restrained. Thus the justification for an interim injunction.

         In Thomas Marshall v Guinle (supra), Megarry VC suggested that there were four elements in the identifying of confidential information or trade secrets which the courts would protect. These were (i) the owner’s belief that the release of the information would be injurious to him or advantageous to his rivals; (ii) the owner’s belief in the confidentiality of the information; (iii) the reasonableness of these beliefs; and (iv) the assessment of the information in the light of the usage and practices of the particular industry or trade. In Lansing Linde Ltd (supra) Staughton LJ identified (at p 425) three tests in determining what were trade secrets. One, the information must be used in a trade or business. Two, the information if disclosed to a competitor would be liable to cause real or significant harm to the owner of that information. Three, the owner must limit the dissemination of the information or at least not encourage or permit widespread publication. In relation to the facts of the present case, the criteria expounded in both these cases seemed to me to have been satisfied.

31       While we had some doubts, which we set out below, with the learned judge’s apparent interpretation of the decision in Robb v Green, it was clear that he had considered the seized documents and come to the view that they were confidential information. In Hadmor Productions Ltd & Ors v Hamilton & Anor, Lord Diplock set out the role of an appellate court hearing an appeal involving the grant of an interlocutory injunction in the following terms (at p 325):

Before adverting to the evidence that was before the learned judge and the additional evidence that was before the Court of Appeal, it is I think appropriate to remind your Lordships of the limited function of an appellate court in an appeal of this kind. An interlocutory injunction is a discretionary relief and the discretion whether or not to grant it is vested in the High Court judge by whom the application for it is heard. Upon an appeal from the judge’s grant or refusal of an interlocutory injunction the function of an appellate court, whether it be the Court of Appeal or your Lordships’ House, is not to exercise an independent discretion of its own. It must defer to the judge’s exercise of his discretion and must not interfere with it merely upon the ground that the members of the appellate court would have exercised the discretion differently. The function of the appellate court is initially one of review only. It may set aside the judge’s exercise of his discretion on the ground that it was based upon a misunderstanding of the law or of the evidence before him or upon an inference that particular facts existed or did not exist, which, although it was one that might legitimately have been drawn upon the evidence that was before the judge, can be demonstrated to be wrong by further evidence that has become available by the time of the appeal; or upon the ground that there has been a change of circumstances after the judge made his order that would have justified his acceding to an application to vary it. Since reasons given by judges for granting or refusing interlocutory injunctions may sometimes be sketchy, there may also be occasional cases where even though no erroneous assumption of law or fact can be identified the judge’s decision to grant or refuse the injunction is so aberrant that it must be set aside upon the ground that no reasonable judge regardful of his duty to act judicially could have reached it. It is only if and after the appellate court has reached the conclusion that the judge’s exercise of his discretion must be set aside for one or other of these reasons, that it becomes entitled to exercise an original discretion of its own.

32       This view was accepted by this court in Federal Computer Services Sdn Bhd v Ang Jee Hai Eric. The learned judge here clearly applied the correct principles in determining whether the subject material could be said to contain confidential information. We accordingly saw no ground to intervene with his decision to grant the injunctions.

The ‘Springboard’ doctrine

33       It was also urged upon us by counsel for the appellants that even if the learned judge was right to continue the interlocutory injunctions, he was wrong to order that they continue until trial. Counsel for the respondents contended that there was no clear error in law or fact that would justify our intervention with the learned judge’s exercise of discretion to continue the injunctions until trial.

34       It is a recognized consideration that the protection of an employer’s interest in confidential information has to be balanced against the public policy in favour of competition. This consideration is an aspect of the need for proportionality which we stressed at the beginning of this judgment. Hence, injunctions against the use of confidential information should be limited in duration to such period as necessary to protect the employer’s interest by preventing the former employee from getting a headstart (or ‘springboard’) by using his former employer’s property. The purpose of an injunction is not to punish the former employee as the authorities of Roger Bullivant Ltd v Ellis, Fisher-Karpark Industries Ltd v Nichols and Medivac International Management Pte Ltd v John Walter Moore show. Hence, the period normally ordered for the injunction to continue is ‘… the period for which the unfair advantage may reasonably be expected to continue’: see the Roger Bullivant case14 at p 184 per Nourse LJ. The length of time needed to protect the employer’s interest is manifestly a question of discretion for the first instance judge granting the injunction.

35       In the appeal before us, there was no indication in the contracts of employment of Tang and Chua as to the period of time during which the obligation of confidence should continue. Thus the length of time would have to be gathered mainly from the complexity of the information protected. The seized material was shown to the learned judge who came to the view that the injunction should continue until trial. Counsel for the appellants was unable to convince us that the learned judge’s exercise of his discretion was based on a misunderstanding of the law or the facts and we therefore saw no ground to vary the duration of the injunctions ordered.

Other matters

36       Counsel for the appellants also sought to criticize the injunctions as being in restraint of trade. There was clearly no merit in the argument as the restraints on the appellants’ solicitation of Certact’s suppliers or customers were clearly consequential upon the orders restraining them from using the confidential information relating to Certact’s dealings with those parties.

37       We now turn to deal with the learned judge’s treatment of the decision in Robb v Green. The judgment below may on one reading be treated as negating the need for a plaintiff to prove the confidential nature of the information sought to be protected if his property is found in the defendant’s possession. This, in our view, would be a mistaken view of the decision in that case. It was never in dispute there that the information taken by the defendant was confidential. It is clearly of the essence of an action for breach of confidence that the information that is said to be misused is confidential. We did not, however, take the view that the learned judge interpreted Robb v Green11 in that manner. In our view, the learned judge was fully cognisant of the need to have sufficient particulars before him to say that there was a serious issue to be tried on the question of confidentiality.

38       It was for all of the above reasons that we dismissed the appeal. We were, however, of the view that the costs of the appeal should be left to the trial judge hearing the main action and we therefore ordered that the costs of the appeal be in the cause.

Appeal dismissed.

Reported by Toh Han Li