The notable change in this landmark decision takes into account the risks that owners suffer on losing confidential information with the current and constantly evolving modern technology.
(A) Who are the parties involved in this case?
I-Admin (Singapore) Pte Ltd (“Appellant”).
The Appellant owns a business of payroll administrative data processing services and human resource information systems.
Hong Ying Ting and Others (“Respondents”).
The first and second respondents in this case were former employees of the Appellant. After working with the Appellant, the Respondents proceeded to set up their own company, who is the third respondent in this case that also predominantly outsourced payroll services and also had HR management functions.
(B) What actually happened?
This appeal is on the action for copyright infringement and breach of confidence is commenced by the Appellant against the Respondents. At the High Court, the Judge held that the Respondents were not in breach of their obligations of confidence as the Appellants had failed to satisfy the third element of the English case Coco v AN Clark (Engineers) Ltd  RPC 41 (“Coco”).
The High Court found that the Appellants had failed to show that there was unauthorised use of its confidential information to their detriment. The High Court judge did not find on the evidence that the Respondents use of the Appellant’s materials ‘had resulted in the creation or development of the respondents’ own materials’.
(C) What are the issue(s) in dispute?
The Appellant submitted to the Court of Appeal that the Respondents possession of, and their act of referring to the confidential materials was sufficient to complete the cause of action for breach of confidence.
The Court of Appeal dismissed the Appellant’s claim for copyright infringement but allowed the Appellant’s claim for breach of confidence.
(E) Rationale for holding
In making its decision, the Court first observed the two key interests that guided breach of confidence claim brought by plaintiffs for the same cause of action:
The Court revisited the Coco case and its following three elements in establishing a claim in breach of confidence:
The Court found that the last element explicitly protected a plaintiff’s interests to prevent the wrongful gain or profit from its confidential information but not necessarily the interest to avoid wrong loss of the confidential information.
The court noted that protecting wrongful loss is especially important in todays’ day and age given that access to confidential information is now significantly easier to access, copy and disseminate. Applying this to present facts, the Court also opined that this also applies to employees who will more often than not have access to large volumes of confidential business materials for purposes of their employment. Therefore, stronger measures need to be implemented to protect owners from loss.
In light of the concerns above, the Court set out a modified approach in assessing breach of confidence claims. An action for breach of confidence is presumed when:
the information possesses the necessary quality of confidentiality; and
the information has been imparted in circumstances importing an obligation of confidence. There is no longer a need for a plaintiff to establish unauthorised use of the confidential information to its detriment.
Upon satisfaction of these prerequisites, action for breach of confidence would be presumed and this presumption would be displaced on proof by the defendant that its conscience was not affected in which the plaintiff suffered wrongful loss.
The defendant may displace this presumption by proving that he/she has come across the information by accident, was unaware of the nature of the information or that there is a strong public interest in disclosing the information.
This change in the burden of proof addresses the difficulties that owners experience in bringing a claim in breach of confidence as such breaches could be discovered years after which puts the owners the losing point on the evidential stand point for bringing a claim for breach of confidence.
Applying this new approach to the present facts, it was found that the Appellant’s materials were of confidential nature and that the Respondents had the obligation to respect and preserve their confidentiality. The Respondents in this case had breached this obligation by using and circulating and referencing the Appellant’s materials without permission.
The Respondents had also failed to displace the presumption that their conscience was negatively affected.
The Court found that the Respondents had acted in breach of confidence.
(F) Points of interest
This decision would make owners of confidential information happy as it is now easier to establish a case under breach of confidence however, this should also serve as reminder to owners of confidential information that it is important to be careful in how they handle the confidential information.