Singapore: Ex-Employees liable for breach of confidence, conspiracy

In brief

In Centricore (S) Pte Ltd v. ATT Systems (S’pore) Pte Ltd [2025] SGHC(A) 17, the Appellate Division of the Singapore High Court (AD) largely dismissed an appeal against a trial judge’s decision, holding the defendants liable for breach of confidence, breach of employment contract, inducement of breach and unlawful means conspiracy. The decision reinforces the strength of Singapore law protections for employers’ confidential information. It also underscores the availability of unlawful means conspiracy as a cause of action that employers may pursue against networks of ex-employees and competing entities who, together, conspire to misuse the employer’s information for their own competing ventures.

The respondents, which include ATT Systems (S’pore) Pte Ltd, were represented at first instance before the General Division of the Singapore High Court (GD) and on appeal before the AD by Ms. Celeste Ang, Mr. Pradeep Nair, Mr. Spencer Lee and Mr. Yiu Kai Tai of Wong & Leow LLC.

Key takeaways

• This case reinforces the need for employers to have robust continuity plans in place, given the AD’s findings that several of the employer’s losses were not actually caused by the defendants’ breaches of employment contracts, and that the defendants were contractually entitled to leave by giving notice of termination.
• In a breach of confidence claim, the claimant must clearly plead either the “wrongful gain” or “wrongful loss” interest. If the claimant pleads the latter, the claimant needs to show that the information was confidential and imparted in circumstances imposing a confidentiality obligation, after which the defendant bears the burden of showing that their conscience was nonetheless unaffected. However, when choosing between these interests, it is important to consider the consequences for assessment of damages.
• In cases where there is a scheme or conspiracy to set up a competing business, it does not matter that not all of the defendants were involved in all parts of the conspiracy. Rather, it is sufficient that all of the defendants acted in combination to further the conspiracy, and that some of those acts were unlawful and undertaken with intention to harm the defendant.

In depth

Factual and legal background

• The respondents, ATT Systems (S’pore) Pte Ltd and its subsidiary, ATT Infosoft Pte Ltd (collectively, “ATT”), were in the business of providing various electronic systems, among other things. The second to seventh appellants, including “Mr. Faruk” and “Mr. Toh”, were former employees of ATT (“Ex-Employees”) who had left to join either the first appellant, the newly incorporated Centricore (S) Pte Ltd (“Centricore”), or the eighth appellant, IdGates Pte Ltd (“IdGates”), both of which were engaged in activities that competed with ATT (collectively, the “Defendants”).
• In March 2019, Mr. Faruk and Mr. Toh began planning to leave ATT to start their own business. Beginning with Mr. Faruk’s resignation in July 2019, the Ex-Employees started resigning from ATT and serving out their contractual notice periods. During their notice periods, and unbeknownst to ATT, the Ex-Employees were incorporating and applying for work passes through Centricore, or joining IdGates.
• Once ATT became aware of the Ex-Employees’ competing activities, ATT terminated the employment of those Ex-Employees who were still employed or serving out their notice period and commenced investigations. ATT subsequently discovered that Mr. Faruk (and other Ex-Employees) had stored ATT’s confidential information (CI) in a personal Dropbox folder and several external storage devices, and they had also mass-deleted unknown information from a company-issued laptop.
• Accordingly, ATT commenced action against the Defendants for breach of confidence, inducement of breach and breach of employment agreements, and unlawful means conspiracy. Several of the Ex-Employees made counterclaims for breach of the employment agreements by ATT. The action before the GD was bifurcated with the issues of liability to be determined first. Following the trial on liability, ATT largely prevailed in their claims and the Ex-Employees’ counterclaims were dismissed. The Defendants appealed the GD’s decision.

Grounds of appeal

The Defendants argued the following:

• Breach of confidence: The GD had incorrectly allowed both ATT’s wrongful loss claim and wrongful gain claim in relation to the same CI; ATT’s 1.5-year delay in commencing proceedings indicated an ulterior motive; and their conscience had not been affected.
• Breach of employment agreement: The noncompete obligation was an unreasonable restraint of trade, did not bar mere preparatory steps and did not, in any case, extend to companies that were not listed in the employment agreement.
• Inducement of breach: Mr. Faruk had not induced the other Defendants’ contract breaches and, in any case, the three heads of loss claimed were not caused by the inducement of contract breaches.
• Unlawful means conspiracy: The GD erroneously found that there had been two separate conspiracies, one to misuse the CI and another to resign en masse, because the latter was lawful and was not intended to injure ATT.

Legal principles

• Breach of confidence: A claimant can only succeed in a claim for either wrongful loss or wrongful gain in relation to the same CI, but not both. Details are as follows:
  • In the case of the “wrongful loss” interest — which protects the loss suffered by the claimant due to the information losing the quality of confidence — the claimant must establish that: (i) the information in question was CI; and (ii) the information had been imparted in circumstances importing a confidentiality obligation, whereupon the burden shifts to the defendant to show that his conscience remained unaffected.
  • In the case of the “wrongful gain” interest — which prevents the wrongful gain or profit earned by defendant due to misuse of the CI — the claimant must establish that: (i) the information was CI; (ii) the information had been imparted in circumstances importing a confidentiality obligation; and (iii) there was unauthorized use of the information to the detriment of the claimant.
• Unlawful means conspiracy: The claimant must show the following:
  1. There was a combination of persons to do certain acts.
  2. The alleged conspirators had the intention of causing damage or injury to the plaintiff through those acts.
  3. The acts were unlawful.
  4. The acts were performed in furtherance of the agreement.
  5. The plaintiff suffered loss as a result of the conspiracy.

AD’s findings

• Breach of confidence: Where the burden shifts to the defendant to show that their conscience was unaffected (in a “wrongful loss” claim), the defendant cannot rely on insufficient evidence of unauthorized use of the information. Rather, the defendant must adduce evidence to positively show that their conscience remained unaffected. Specific details are as follows:
  • In the circumstances of this case, the absence of misuse was not sufficient to show the Defendants’ conscience remained unaffected because the Defendants had accessed the CI without ATT’s knowledge and approval, breaching the terms of their employment agreements.
• Breach of noncompete obligation: Interpreting the contract purposively, the court held that the noncompete obligation extended to companies that were not expressly listed in the contract. Details are as follows:
  • The court found that this interpretation was supported by the commercial purpose of the noncompete clause, which would include preventing former employees from joining an emerging competitor.
  • The Defendants’ argument that the noncompete obligation was an unreasonable restraint of trade was an impermissible new argument on appeal, as it would have required further evidence to establish the reasonableness of the noncompete obligation.
• Breach of loyalty obligation: The court dismissed the Defendants’ arguments vis-à-vis the loyalty obligation, upholding that it had been breached. Details are as follows:
  • The “preparatory steps” taken by the Ex-Employees breached the facets of the loyalty obligation that prohibited engaging in or having an interest in activities that produced a conflict of interest with the employer.
  • It would be commercially sensible for the loyalty obligation to be wider in scope than the noncompete obligation, as the former regulates the conduct of current employees while the latter regulates former employees.
• Inducement of breach of contract: The court held that several of the injuries/losses suffered by ATT — namely, increased labor costs, increased software costs and liquidated damages paid to a project developer — were not caused by the Defendants’ breaches of their employment contracts. Rather, the losses were caused by the Ex-Employees terminating their contracts by notice, as entitled. Therefore, even if the Ex-Employees had not breached their contracts (but had simply tendered their resignations), the losses would have occurred anyway.
• Unlawful means conspiracy: The AD held that, on a proper interpretation of the GD’s decision, the GD had found one conspiracy arising from two separate sets of acts, which was permissible in an action for unlawful means conspiracy.
  • The AD clarified that an unlawful means conspiracy:

… “can be established by the commission of different unlawful acts by different persons as long as all of these acts were in furtherance of a common agreement with the intention to cause injury.”

This is the case even if each conspirator joined in executing the agreement at different times.

• An unlawful means conspiracy does not require all of the acts undertaken by the conspirators (which may give rise to an inference of a combination) to be unlawful. Therefore, while the mass resignations were not themselves unlawful, an inference could be drawn from them (and the other facts) that the Defendants had combined to set up competing businesses to exploit the claimant’s CI.
• An unlawful means conspiracy does not require that all of the acts were intended to injure the claimant, but only that the unlawful acts were intended to injure the claimant. It was sufficient that the breach of confidence was committed by some of the Defendants to establish a competing business, which would involve diverting business away from ATT.

For further queries on the decision, please feel free to contact our team at the details provided.

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Spencer Lee and Kai Tai Yiu, both Senior Associates, have contributed to this legal update.