I-Admin: a new approach to breach of confidence claims in Singapore

The digital transformation of the workplace has been hastened in no small part by the ongoing COVID-19 pandemic. While technological advancements have enabled many employers to adopt remote working arrangements and shift to a paperless environment, those advancements represent a double-edged sword as they have also made it more challenging for employers to safeguard confidential and proprietary information. While confidentiality clauses are a useful contractual restriction on employees, the rapidly changing digital landscape has made it increasingly difficult for employers to enforce these rights.

In a welcome development for employers, the Singapore Court of Appeal ("SGCA") has, in its recent decision in I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others [2020] 1 SLR 1130 ("I-Admin"), marked a significant development in the law by departing from the common law position on breach of confidence. This article discusses the decision in I-Admin and its ramifications for employers in Singapore. We also comment on the differences in the positions in Singapore and Hong Kong.

The common law approach

Prior to I-Admin, the leading case on breach of confidence in Singapore was Clearlab SG Pte Ltd v Ting Chong Chai [2015] 1 SLR 163, which followed the common law approached outlined by the English High Court in Coco v AN Clark (Engineers) Ltd [1969] RPC 41 ("Coco"). In order to establish a breach of confidence, a plaintiff must show that:

1) the information is of a confidential nature;

2) the information was imparted in circumstances importing an obligation of confidence; and

3) there had been unauthorised use of the information to the detriment of the party from whom the information originated. 

It is the third limb that traditionally presented the greatest difficulty to employers. In the present case, the company (I-Admin) failed at first instance before the High Court precisely because it had failed to show that the defendant ex-employees had made unauthorised use of its confidential information to create their own payroll and HR systems.

The decision in I-Admin

On appeal, the SGCA observed that in an action for breach of confidence, an owner of confidential information had two interests to protect:

1) the prevention of wrongful gain or profit from the confidential information; and

2) the avoidance of wrongful loss to himself or herself caused by the loss or threatened loss of the confidential information's confidential character.  

The existing law did not adequately protect the latter interest. After all, why should the owner of confidential information be left with no recourse when the confidential information was accessed or acquired wrongfully, but where there was not (or the owner was unable to show) unauthorised use or disclosure of such information?

With that in mind, the SGCA reformulated the test as follows: upon proof by the plaintiff that the information (which is the subject matter of the claim) was of a confidential nature and had either been imparted in circumstances importing an obligation of confidence or had been accessed or acquired without the plaintiff's knowledge or consent, a rebuttable presumption of breach of confidence arises. 

The onus then falls to the defendant to rebut the presumption of breach of confidence by showing how the receipt of the confidential information in the circumstances did not undermine the plaintiff's interest in avoiding the wrongful loss caused by the loss of the information's confidential character (e.g. by showing that the defendant had chanced upon the confidential information by accident or was unaware of its confidential nature or believed there to be a strong public interest in disclosure).

The position in Hong Kong

The Hong Kong courts continue to follow the common law approach in Coco. That being said, as there have been recent English and Australian developments indicating that the third limb of Coco (i.e. the requirement for there to have been unauthorised use) is perhaps slowly being relaxed, there have been some Court of First Instance cases which have placed less weight on this requirement. It remains to be seen if the Hong Kong Court of Final Appeal will take a similarly bold step to do away with that requirement entirely, as the SGCA has done in I-Admin.

Implications for employers

Employers in Singapore should note the following points:

• Even with the changes to the law, employers must still be able to show that their information is confidential in nature and was communicated in circumstances importing an obligation of confidence. To that end, employers should adopt measures such as providing confidential information solely on a need-to-know basis and marking documents (and covering emails/letters) as "confidential" or "private" for the avoidance of doubt.

• With the current proliferation of remote working and BYOD arrangements, appropriate practical measures should be implemented to restrict and/or monitor who accesses, copies, downloads or prints confidential information stored on the employer's servers and databases.

• Finally, but perhaps most importantly, employers should not neglect the terms of their employment contracts (or confidentiality agreements). A well-drafted and robust confidentiality clause, deployed in conjunction with a return of property clause, will often still provide the best form of legal protection from wrongful retention, use or disclosure of confidential information.

The above suggestions apply equally to employers in Hong Kong and elsewhere.