In more detail

The case involved 3D Infosystems Pte Ltd, a company engaged in the supply, installation and implementation of information technology systems, as the plaintiff.

The first defendant, Voon South Shiong, was employed as the country manager, Singapore, and head of Global Accounts Management before leaving the company in April 2018.

The second defendant, Sunway Digital Pte Ltd, was involved in the provision of digital transformation systems.

In a previous decision delivered on 18 July 2022, the court found the defendants liable for various causes of action, including a combination of the following: breach of contract, breach of implied duties of good faith and fidelity, fraudulent misrepresentation, breach of confidence, inducing breach of contractual obligations of confidence, and conspiracy (both unlawful and lawful means).

In particular, the court found the first defendant liable for, among others, breach of confidence in respect of business plans he prepared for the second defendant, and his disclosure of confidential information in internal manuals belonging to the plaintiff ("Internal Manuals"). He was also found liable for breach of contract (among others) due to these same acts.

The court also found that the second defendant was not liable for breach of confidence as this was not sufficiently articulated in the pleadings. However, the second defendant was jointly liable with the first defendant in lawful and unlawful means conspiracy for the first defendant's breaches of contract.

Whether equitable damages are available where no breach of confidence claim has been established

Specific to the issue of damages to be awarded in respect of the successful breach of confidence claim, the plaintiff relied on the Singapore Court of Appeal case I-Admin (Singapore) Pte Ltd v. Hong Ying Ting [2020] 1 SLR 1130 ("I-Admin"). In I-Admin, the plaintiff was found entitled to equitable damages arising from a breach of confidence claim, even where it may have been too speculative or difficult to determine the exact loss it suffered.

The court in 3D Infosystems noted that it had only found the first defendant, and not the second defendant, liable for breach of confidence in equity. However, the plaintiff had framed its claim for equitable damages against both defendants.

As the second defendant pointed out, its liability with respect to the Internal Manuals only rested in lawful and unlawful means conspiracy in relation to the first defendant's breaches of contract. This was a tortious claim founded on breach of contract, and not breach of confidence in equity.

Since a claim for breach of a contractual confidentiality obligation and a breach of confidence are distinct causes of action, with the former being based on common law and the latter being equitable in nature, the court had to consider whether it could award equitable damages against the second defendant, when no breach of confidence claim had been established.

The court declined to do so based on the fact that historically, equitable damages had always been ordered for purely equitable rights.

While the Singapore courts had the jurisdiction to award equitable damages, the court still had to consider if equitable damages would be an appropriate remedy for a particular cause of action. In this case, the court observed that equitable damages, with its flexibility in quantifying damages, appeared to be a departure from orthodox compensatory remedies available for breaches of contract.

Accordingly, the court considered it unsafe to decide the issue and make such an order for equitable damages in the absence of an established breach of confidence claim against the second defendant.

Quantification of equitable damages payable by first defendant where there is no evidence of use of the Internal Manuals

Separately, the court considered the quantum of equitable damages payable by the first defendant for disclosure of the Internal Manuals.

The plaintiff relied on I-Admin to argue that it did not have to prove the use of the Internal Manuals to establish damages for a breach of confidence claim.

However, the court found that the Court of Appeal's method of quantification in I-Admin was inextricably tied to the finding that the defendants in I-Admin had relied on and referred to the confidential information in the development of their own materials. This formed the basis of the court's consideration of the defendants' overall resulting cost savings, as a proxy, to determine the value of the confidential information and the appropriate measure of equitable damages.

In contrast, in the present case, the plaintiff was essentially demanding equitable damages by arguing that the second defendant saved costs by merely possessing the confidential material, without proving that the second defendant had relied on or referred to the confidential material to develop its own materials. This could not be the case.

In any case, the court found that the plaintiff's reliance on the I-Admin cost savings approach to quantify equitable damages was misguided. The plaintiff wrongly relied on the time spent by its employees in compiling the Internal Manuals multiplied by the employees' daily salary, arguing that since the second defendant would require a similar amount of time to draft such Internal Manuals, this would roughly approximate the second defendant's cost savings. Instead, it should have relied on the additional costs that would have been incurred by the second defendant to develop its own equivalent manuals without reference to the Internal Manuals.

The court ultimately found the first defendant liable for SGD 1,000 in damages arising from this head of claim, based on the fact that the plaintiff had managed to establish two instances where the second defendant had referred to one of the Internal Manuals. The court said that this fairly reflected the value of the confidential information.

Key takeaways

Since I-Admin was issued in 2020, there have been a number of decisions handed down by the Singapore Court of Appeal discussing the principles applicable to quantifying damages in a breach of confidence claim. These cover a number of issues, including the following:

• The modified test for breach of confidence and the availability of equitable damages where wrongful loss interest is at stake and where the situation involves the unauthorized acquisition of confidential information (see, for example, the discussion in I-Admin itself)
• The applicability of the traditional test for breach of confidence where wrongful gain interest is at stake (see, for example, Lim Oon Kuin and others v. Rajah & Tann Singapore LLP [2022] 2 SLR 280)
• How a plaintiff in a breach of confidence claim can plead wrongful gain and wrongful loss in the alternative, but not in respect of the same set of documents; further, wrongful loss can be pleaded as an alternative to wrongful gain, but the converse is not true (see, for example, Lim Suk Ling Priscilla and another v. Amber Compounding Pharmacy Pte Ltd [2024] 1 SLR 741)

These decisions clarify the applicable legal tests and requirements for bringing and proving damages in breach of confidence claims, based on the relevant factual matrix at hand. They also emphasize the importance of pleading with specificity whether a claimant is proceeding on the basis of wrongful gain interest or wrongful loss interest, since this will inform the applicable legal test for breach of confidence.

The decision in 3D Infosystems Pte Ltd v. Voon South Shiong [2024] SGHC 237 builds on such discourse and highlights the importance of the following:

• Framing a claim for equitable damages in respect of the proper defendants based on the underlying causes of action against each of them. In 3D Infosystems, the court declined to make an order for equitable damages against the second defendant, since its only liability in respect of the Internal Manuals related to a tortious claim founded on breach of contract.
• Pleading, with precision and specificity, the relevant quantification method for equitable damages where a breach of confidence claim is made out. In 3D Infosystems, the plaintiff wrongly relied on the time spent by its own employees in drafting its Internal Manuals as the basis for such quantification, when it should have relied instead on the additional costs that would have been incurred by the second defendant to develop its own equivalent manuals without reference to the Internal Manuals.

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