The Springboard Injunction and its Future Potential in Singapore

The injunction is a remedy which is constantly evolving in its flexibility to effectuate rights and redress wrongs in various situations. It is a well-meaning hydra that applies its multiple “heads” (including the multiple forms of the prohibitory injunction, mandatory commands, the Mareva injunction and the Search order) to meet the specific needs of litigants. One such “head”, which emerged in the last century in its raw form, is the “Springboard injunction”. In Singapore, the case law concerning the “Springboard injunction” raises questions concerning its availability and scope in this country. Prior to considering these authorities, it is apposite to trace the development of this remedy.

… the essence of this branch of the law, whatever the origin of it may be, is that a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, and springboard it remains even when all the features have been published, or can be ascertained by actual inspection by any member of the public … It is, in my view, inherent in the principle upon which [Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203] rests that the possessor of such information must be placed under a special disability in the field of competition in order to ensure that he does not get an unfair start.

Putting these observations in perspective, one may say that the Springboard injunction is an interim relief the purpose of which is to remove or control the competitive advantage which may have been obtained by defendant (through his improper use of confidential information) as a consequence of his head start (“unfair start”). Using the allegory of a swimming competition, the remedy seeks to eliminate the unfair advantage of several metres in distance gained by a swimmer who improperly dives off a springboard rather than from the side of a pool. The Springboard injunction differs from the injunction granted to prohibit the defendant from engaging in activities in breach of confidence. The remedy’s distinctiveness lies in its concern with restoring the status quo between the parties (through the removal of the advantage gained by the “unfair start”). Unlike the injunction for breach of confidentiality, which does not operate if the information has become generally available to the public,³ the Springboard injunction may be available even though the information, that was confidential at the time of its unlawful use by the defendant, is now accessible (subject to the satisfaction of the prerequisites of the remedy).⁴ Although an employer may rely on contractual terms such as restrictive covenants to prohibit the employee’s improper use of the employer’s confidential information and other compromising commercial activities, such terms may not be sufficiently precise to cover all potential improprieties, or may be for a limited duration, or may be too widely drafted to have legal validity. As the injunction is an equitable remedy, the court would only grant it if it is just to do so.

In the aftermath of Terrapin (which involved a patent dispute),⁵ the Springboard injunction was often sought in employment situations involving the misuse of confidential information for the purpose of gaining an unfair advantage. A classic example is provided by Roger Bullivant Ltd v Ellis,⁶ in which a Springboard injunction was granted to prevent a former manager of a company from relying on the confidential information consisting of the details of clients in a card index. The court stated that the purpose of the relief is to “prevent the defendants from taking unfair advantage of the springboard which [the judge] considered that they must have built up by their misuse of the [confidential] information”.⁷

For a time in the UK, the Springboard injunction was regarded as being limited to circumstances involving the misuse of confidential information.⁸ Eventually the remedy was extended to other instances of unlawfulness in UBS Wealth Management (UK) Ltd v Vestra Wealth LLP⁹ (“UBS Wealth”). In UBS Wealth, a certain individual (“X”) had been employed by a company (“the company”) to take charge of its stockbroking operations in a city. While still an employee, X set up a competitor business (“the competitor”). He then resigned together with more than 50 employees of the company. Subsequently, more than 20 other employees resigned. All these employees were recruited by the competitor. The evidence showed that X, in breach of his fiduciary duty of fidelity (which arose by virtue of his senior position), intended to compromise the company with a view to acquiring it at relatively low price. The court granted an injunction preventing the defendants (the competitor and the former employees of the company) from engaging in conduct for the purpose of taking over clients who had not terminated their relationships with the company, and prohibited the defendants from enticing current employees of the company from leaving it for the competitor. Openshaw J observed that:¹⁰

… springboard relief is not confined to cases where former employees threaten to abuse confidential information acquired during the currency of their employment. It is available to prevent any future or further serious economic loss to a previous employer caused by former staff members taking an unfair advantage, an “unfair start”, of any serious breaches of their contract of employment (or if they are acting in concert with others, of any breach by any of those others). …

The significance of Openshaw J’s observations in the above passage is that, apart from the misuse of confidential information, the injunction is available in respect of past breaches of contract either by the defendant or, if he is acting together with others, the latter as well. The extension of the Springboard injunction was favoured in subsequent cases including, in particular, QBE Management Services (UK) Ltd v Dymoke¹¹ (“QBE”). In QBE, senior employees had used their position in the company to cause other employees to resign for the purpose of a new competing business set up by the former. The wrongdoings involved the use of the company’s confidential information (to gain clients and knowledge for the new business) and breaches of contract (including the failure of the employees to act faithfully towards the company). Springboard relief was granted in circumstances.¹²

Although Springboard injunction has been part of Singapore law for more than two decades,¹³ the scope of application of this remedy (ie, whether it applies beyond the use of confidential information) was not articulated until the 2015 decision of the High Court in Jardine Lloyd Thompson Pte Ltd v Howden Insurance Brokers (S) Pte Ltd and others¹⁴ (“Jardine”). In Jardine, seventeen employees resigned from a company (“the plaintiff”). Four of these employees were the second to fifth defendants. The first defendant was a company which competed with the plaintiff in the broking business. The sixth defendant was an employment agency which was alleged to have assisted the first defendant in engaging the employee defendants. The plaintiff, who alleged that these “defections” resulted from “a calculated and coordinated conspiracy that was hatched by all the defendants”,¹⁵ claimed injunctions and damages on the basis of the tort of conspiracy to injure, breach of contract and fiduciary duty.¹⁶ The plaintiff sought four interim injunctions against the first to fifth defendants until trial. The court granted two of the injunctions: to prevent the employee defendants from disclosing confidential information belonging to the plaintiff; and “to restrain them from soliciting or inducing other employees from the plaintiff to leave the plaintiff”.¹⁷ These were conventional prohibitory injunctions, which are not the concern of this article. The other two injunctions sought by the plaintiff were Springboard injunctions: “to prevent the Employee Defendants from joining the first defendant for any business relating to the insurance broking business until trial” and “to prevent the first defendant from employing the Employee Defendants” (“the Springboard injunctions”).¹⁸

Choo J declined to grant the Springboard injunctions in the absence of “clear evidence” that the employee defendants had misused confidential information or that there was a “real risk” of such misuse.¹⁹ It appears that the learned Judge did not regard the fact that the employee defendants had circulated a “Top Clients List” among themselves and might possibly have shared this with the first defendant to be a “real risk”. In the learned Judge’s view, the imposition of a Springboard injunction (even if granted until an expedited trial) would be too “extreme” a measure given the rights of the employee defendants to seek employment elsewhere and the absence of any express restrictive covenants in the employment contracts.²⁰ Choo J further observed that even if he applied Openshaw J’s broader test in UBS Wealth, the plaintiff’s case would not have been strong enough (in the sense of showing that the defendants had acted unlawfully) to justify the Springboard injunction.²¹

Choo J disagreed with Openshaw J’s approach in UBS Wealth, preferring the more conservative judicial attitude in Australia (see ICAP Australia Pty Ltd v BGC Partners (Australia) Pty Ltd²² (“ICAP Australia”)) and Hong Kong (see ICAP (Hong Kong) Ltd v BGC Securities (Hong Kong) LLC²³ (“ICAP HK”)). In both these jurisdictions, the courts have declined to grant the Springboard injunction beyond circumstances involving the misuse of confidential information. In the course of justifying his view that the Springboard injunction should be limited to circumstances concerning the improper use of confidential information, and that group departures are part of “commercial reality,”²⁴ Choo J referred²⁵ to Stone J’s and Cumming-Bruce LJ’s observations in in ICAP HK²⁶ and GD Searle & Co Ltd v Celltech Ltd²⁷ (“GD Searle”) respectively for the uncontroversial point that employees have the right to advance themselves economically by leaving a company for a competitor (even en masse), provided there is no breach of confidentiality or a restrictive covenant, and that a competitor is entitled to draw employees away from their current company as long as he does not procure the employee’s breach of contract.

However, while these observations are morally and legally justifiable, they should not be regarded as setting a limit on the availability of Springboard relief which a claimant is justly entitled to in exceptional circumstances. The court’s discretion should not be so constrained. The facts of UBS Wealth and other subsequent cases²⁸ show that in particular circumstances (which would include the clear inadequacy of damages as a remedy), equity would not achieve its fundamental purpose by refusing Springboard relief even if the misuse of confidential information is not in issue. In Jardine, Choo J accepted the submission that senior employees “owe fiduciary duties of loyalty” to their company to inform the latter of “any impending mass defections”.²⁹ If unlawfulness is proved, and the “springboard” is clearly established (ie, the unfair advantage), so that the court is satisfied (after “assessing the relative strengths of the rival arguments at the interlocutory stage” and applying the American Cyanamid principles),³⁰ that it would be just to grant an injunction to neutralise the advantage improperly gained, the remedy should follow for a limited period, if not until a trial (which may be expedited in appropriate circumstances). In a world of ever-increasing commercial greed, it is vital that the law meets this concern and responds appropriately lest the impression is given that business entities can be intentionally ruined beyond monetary compensation by those who do not have to worry that the unfair advantage gained by their avarice would be neutralised by the court.

This year, in Goh Seng Heng v RSP Investments and others and another matter³¹ (“Goh Seng Heng”), which was decided two years after Jardine, a Springboard injunction was granted in the uncontroversial context of misuse of confidential information. According to the court, the facts indicated that the plaintiffs (a group of companies) had more than made out a prima facie case that confidential information had been misused by the first and second defendants (formerly employees and/or directors of the plaintiffs) to give an unfair advantage to the third defendant (another company sought to be engaged by the first and second defendants to compete against the plaintiffs). The third defendant continued to enjoy the unfair advantage which it had obtained as a result of these alleged wrongs. Lai Siu Chiu J applied the American Cyanamid principles³² and summarised (in the context of the case before her) the criteria for the Springboard injunction set out in QBE:³³

The learned Judge concluded that, unless restrained, the plaintiffs’ business operations would be severely compromised. Damages in lieu of an injunction would not have been an adequate remedy in the circumstances. Furthermore, according to the court, there was little doubt that the balance of convenience favoured the plaintiffs.³⁴ Therefore, the injunction was granted to prevent the first and second defendants from joining the third defendant and in engaging in the same or similar businesses of the plaintiffs. The injunction against the third defendant was to prevent it from employing the first two defendants and engaging their services.³⁵ An apparent difference of approach between Choo J in Jardine and Lai J in Goh Seng Hang is that Choo J “assess[ed] the relative strengths of the rival arguments” of the parties in addition to applying the American Cyanamid principles,³⁶ while Lai J just applied the American Cyanamid principles.³⁷ This issue is analysed below under “Judicial guidelines and issues” (para (3)).

1. The current position in Singapore (according to Jardine) is that the court would only consider granting a Springboard injunction where confidential information is misused. In Goh Seng Heng, Lai J did not address the scope of the Springboard injunction presumably because the case before her concerned the traditional situation in which a Springboard injunction is granted in respect of misuse of confidential information. The submission made in this article is that courts should be open to granting Springboard relief in exceptional circumstances where the unfair advantage stems from unlawfulness beyond the misuse of confidential information.³⁸

2. Where the application arises in respect of alleged misuse of confidential information, the remedy may be available if the information has “a limited degree of confidentiality even though it can be ascertained from public sources ... by reverse engineering or by a process of compilation from public domain sources ...”.³⁹ In these circumstances, the injunction would be granted for a period limited “to the time it would take someone starting from public domain sources to reverse engineer or compile the information”.⁴⁰ If the confidentiality of information is governed by a term of the service contract which has expired so that the information is no longer protected, the Springboard doctrine would not be available.⁴¹

3. There is some uncertainty in Singapore regarding the exact principles that govern the Springboard injunction. In Jardine, Choo J (applying ICAP HK and CEF)⁴² considered that it was necessary to assess “the relative strengths of the rival arguments at the interlocutory stage” in addition to applying the American Cyanamid principles.⁴³ However, in Goh Seng Heng, Lai J simply applied the American Cyanamid principles.⁴⁴ As these principles assume that there will be a trial at which it will be determined whether the injunction was properly granted, and the Springboard injunction is intended to endure “for such time as it would take the wrongdoer to achieve lawfully what he was hoping to achieve unlawfully”,⁴⁵ there is a real possibility that the period of the injunction will expire before trial (even if the trial is expedited).⁴⁶ Therefore, it is necessary for the court to consider the strength of the plaintiff’s case.

4. As to the sufficiency of the plaintiff’s case, Choo J suggested in Jardine that even if he applied the broader approach of UBS Wealth (which the learned Judge did not accept), the claimant would have to put forward a “formidable case” in order for the court to grant the remedy.⁴⁷ It seems that Choo J’s view was based on Openshaw J’s finding in UBS Wealth that the plaintiff had put forward a “formidable case that there was an unlawful plan to poach both staff and clients”. However, Openshaw J was merely referring to the state of the evidence presented to him in the case; he was not formulating a general standard for the Springboard injunction. It should be sufficient if the plaintiff can satisfy the court to a sufficient degree of probability that he would succeed at trial.⁴⁸

5. The unfair advantage must raise a risk of serious economic loss to the plaintiff-employer. The purpose of the injunction is to “protect against and to prevent future and further losses and must not be used merely to punish past breaches of contract”.⁴⁹ The priority of the injunction is to address the effect of the unfair advantage on the plaintiff rather than the gravity of the breach or the defendant’s improper conduct.⁵⁰ In any event, if the plaintiff can be compensated in damages, an injunction will not be granted. In Jardine, Choo J admonished that litigants must distinguish between the difficulty in quantifying damages and the adequacy of damages as a remedy.⁵¹

6. The unfair advantage (the springboard) must exist at the time of the application for the injunction and would continue to operate unless the injunction is granted.⁵² This is because the purpose of the injunction is to restore the parties to the situation which would have existed if there had been no wrongdoing (ie, the status quo).⁵³ Consequently, if the plaintiff has managed to remove the competitive advantage on his own, the remedy would not be available to him.⁵⁴ A court is very unlikely to grant a Springboard injunction if the advantage is “short-term” or “ephemeral”.⁵⁵ The unfair advantage must be measured relatively vis-a-vis the nature of the harm suffered by the plaintiff and the benefit gained by the defendant as a result of the latter’s wrongdoing.⁵⁶ Although the period of time during which the wrongdoing occurred may be relevant to assessing the position, it is not by any means conclusive. This is because the Springboard remedy is not “linear” but “kinetic” in nature.⁵⁷

7. The nature and length of the Springboard injunction must be fair and just in the circumstances of the case. In Jardine, Choo J (citing QBE)⁵⁸ stated that the Springboard injunction “is not meant to be maintained indefinitely”; “[i]t is meant only to be in place for such time as it would take the wrongdoer to achieve lawfully what he was hoping to achieve unlawfully, relative to the plaintiff”.⁵⁹ The injunction should only operate for a period that represents the likely continuance of the unfair advantage.⁶⁰ This may be for an interim period before trial or until trial. In exceptional circumstances, it may be appropriate to extend the Springboard injunction beyond the trial. In QBE, the Springboard injunction was ordered to continue for an additional 3 months after judgment (the entire period of the injunction being 12 months from the time that the defendants resigned from the company).⁶¹

8. The application for a Springboard injunction must comply with the case law requirements including (but not limited to) a description of the circumstances of the unfair competitive advantage, an account of the likely duration of the advantage and the period during which the defendants would have lawfully gained what they are alleged to have improperly obtained. The court requires this information for the purpose of determining the period of operation of the Springboard injunction.⁶²

13 In Tang Siew Choi and others v Certact Pte Ltd [1993] 3 SLR 44, at [33]-[34], the Court of Appeal confirmed the decision of the High Court to grant a Springboard injunction regarding the use of confidential information. The authorities which have referred to the Springboard doctrine include: Stratech Systems Limited v Guthrie Properties (S) Pte Ltd and another [2001] SGHC 77, at [40]; Diversey (Far East) Pte Ltd v Chai Chung Ching Chester and others [1992] 3 SLR(R) 420, at [17] and [38]; VSL Prestressing (Australia) Pty Ltd v Mulholland [1971-1973] SLR(R) 159, at [24]; and PH Hydraulics & Engineering Pte Ltd v Intrepid Offshore Construction Pte Ltd and another [2012] SGHC 133, at [57]-[59]. The most recent authority, Goh Seng Heng v RSP Investments and others and another matter [2017] 3 SLR 657 (which also concerned confidential information), will be considered later in this article.

39 See Kerry Ingredients (UK) Ltd v Bakkavor Group Ltd and others [2016] EWHC 2448 (Ch) at [77]-[78] (citing Vestergaard Frandsen A/S and others v Bestnet Europe Limited and others [2009] EWHC 1456 (Ch), at [78]). The doctrine and scope of confidentiality is discussed generally in Wee Shuo Woon v HT SRL [2017] SGCA 23, at [31]; Dorsey James Michael v World Sport Group Pte Ltd [2014] 2 SLR 208.

41 See PH Hydraulics & Engineering Pte Ltd v Intrepid Offshore Construction Pte Ltd and another [2012] SGHC 133, at [59]. This is presumably the reason why the Court of Appeal discharged the Springboard injunction granted by the High Court (in Goh Seng Heng v RSP Investments and others and another matter [2017] 3 SLR 657) on the date of the expiry of the terms of restraint (unreported decision of Court of Appeal in CA 116/2016).