High Court · Decided 5 October 2011

Surface Stone Pte Ltd v Tay Seng Leon and another

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[2011] SGHC 223Case no. Suit No 33 of 2011 (Summons No 3725 of 2011)

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Grounds of decision

Official text from eLitigation

Shaun Leong Li Shiong AR:
Introduction
[1] The advent of new technology has brought about challenges to litigation that (arguably) only technology can resolve. In the midst of considering applications for specific discovery under the “train of inquiry” limb, it should be borne in mind that the genesis of the Peruvian Guano doctrine lies in a simpler time, when photocopiers were not yet invented and computers were not even imagined (and thus a time long before the proliferation of emails and email attachments). The need to ensure that the discovery and inspection process remains proportionate is especially compelling where compound documents (which are electronic storage media such as computer databases and hard disks) are sought to be discovered and inspected under the “train of inquiry” limb; the danger of recovering voluminous electronic documents that are of marginal or no relevance is particularly acute if the Peruvian Guano doctrine is applied bluntly without safeguards (see [60] – [61] below), and without due consideration to cautions on the huge corpus of electronic documents potentially discoverable, such as the one aptly made by Senior Master Whitaker in the recent decision of Goodale v Ministry of Justice (Opiate Dependent Prisoners Group Litigation) (2009) EWHC 3834 (QB) at [1] – [2]:
Factual background of application
[2] This case concerns the plaintiff’s application, made under O 24 r 5(3)(c) and r 11(2) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed), for specific discovery and inspection of the first defendant’s documents (hereinafter referred to interchangeably as “devices”) which are: (i) a Toshiba laptop used during the first defendant’s employment with the plaintiff (“Toshiba laptop”); (ii) a white Western Digital 250GB hard disk used during the first defendant’s employment with the plaintiff (“hard disk” or “Western Digital hard disk”); and (iii) the first defendant’s iPhone used during his employment with the plaintiff (“iPhone”). It is common ground between parties that these devices are discoverable “documents” under O 24 r 5. There is no dispute on possession, custody or power, with regard to the Toshiba laptop, and the hard disk; but the first defendant claims that the iPhone is no longer in his possession, custody or power (and hence not subject to inspection).
[3] The plaintiff is a private limited company incorporated in Singapore, and carries on the business of procuring and supplying stones and tiles for building and construction. The first defendant was appointed a sales director of the plaintiff, and was also made a minority shareholder of the plaintiff (with 10% shareholding). His duties included procuring supplies of stones and tiles on behalf of the plaintiff, and carrying out sales and marketing of the plaintiff’s products and services. The second defendant (not directly involved in the present application), was employed by the plaintiff as a sales executive pursuant to an employment agreement dated 25 August 2009.
[4] According to the first defendant, the plaintiff had, through a representative, written a letter on or about 18 January 2011 to several of the plaintiff’s customers, informing them that the plaintiff had suspended the first defendant’s duties as a director, and alleging that he had breached several duties owed to the plaintiff by making improper use of information acquired in order to obtain personal gain (the letter of 18 January 2011). On the same day, the plaintiff had allegedly prevented the first defendant from returning to the plaintiff’s office premises, and had confiscated the Western Digital hard disk.
[5] On 19 January 2011, the plaintiff commenced Suit No 33 of 2011/M against the first and second defendants on the following pleaded claims:
(a) wrongfully disclosing and misusing the plaintiff’s confidential information;
(b) misusing the plaintiff’s resources and the corporate opportunities obtained by them in their capacity as director and employee of the plaintiff;
(c) acting with the collateral purpose of setting up a new competing business against the plaintiff’s interest;
(d) favouring Xiamen Ouming (one of the plaintiff’s suppliers located in China) and causing the plaintiff to purchase from Xiamen Ouming to the plaintiff’s detriment;
(e) conspiring to defraud, injure and/or cause loss to the plaintiff by unlawful means, and to conceal such fraud from the plaintiff;
(f) unlawful interference with the plaintiff’s trade and business; and
(g) as against the first defendant, inducing and unlawfully procuring the second defendant to breach her employment contract with the plaintiff.
[6] The plaintiff also obtained an interim injunction on 20 January 2011 (the Order of Court dated 20 January 2011 was varied on 4 March 2011), to prohibit the defendants from; carrying on a business which competes with the plaintiff, soliciting the plaintiff’s suppliers, customers and employees, and disclosing certain information concerning certain projects undertaken by the plaintiff. Pursuant to the interim injunction Order, the first defendant was also directed to deliver up items including all laptop computers, desktop computers, hard drives, electronic and other storage materials containing information concerning the various projects undertaken by the plaintiff. The first defendant brought a counterclaim against the plaintiff for the alleged defamatory comments stated in the letter of 18 January 2011.
[7] In the course of submissions, counsel for the first defendant disputed upon the relevancy of the devices sought to be discovered and inspected. It was also asserted, without any elaboration, that the discovery and inspection of the devices was not necessary (see first defendant’s written submissions at [28]). Nevertheless, I have set out (at [16] - [27] below) how the train of inquiry is one that will result in the obtaining of evidence that is necessary for the resolution of the pleaded issues. Before I proceed to deal with the question of whether the devices sought are relevant, I will first set out the analytical framework for determining the relevancy of documents sought to be discovered under O 24 r 5 (3)(c).
Analytical framework for determining the relevancy of documents sought to be discovered under O 24 r 5(3)(c) (the “train of inquiry” limb)
[9] It bears noting that the Peruvian Guano doctrine was set at a time when computers were unheard of; a blunt application of this doctrine would at times result in the discovery of voluminous documents, not all of which are relevant or material to the issues at trial. It may also be that the time and expense involved in the pursuit of all evidence that may lead to a train of inquiry would outweigh the likely benefits of obtaining evidence that may only be marginally relevant, or evidence that is relevant but immaterial (these scenarios would arguably be caught by the rule of necessity). By the very nature of the “train of inquiry” doctrine, the line between a fishing expedition and a legitimate discovery application, would arguably be the finest in an application made under O 24 r 5(3)(c), amongst the applications available in O 24 r 5. It would therefore be beneficial to set out an analytical framework for determining the relevancy of documents sought to be discovered under O 24 r 5(3)(c).
[10] The document sought to be discovered in O 24 r 5(3)(c) is, in the words of that rule, “a document which may lead the party seeking discovery of it to a train of inquiry resulting in his obtaining information which may - adversely affect his own case; adversely affect another party’s case; or support another party’s case”. The Court of Appeal in Tan Chin Seng and others v Raffles Town Club Pte Ltd [2002] 2 SLR(R) 465 at [35] (“Tan Chin Seng”) held that it was “necessary for the applicant party to show in what way the requested document may lead to a relevant document”. To this end, an applicant can discharge this burden by showing:
(a) First, that the train of inquiry is one that would result in obtaining directly relevant evidence (directly relevant evidence is information that may - adversely affect his own case; adversely affect another party’s case; or support another party’s case) (“ascertaining the train of inquiry” limb); and
(b) Second, the document sought to be discovered is one that may lead the party to that train of inquiry in (a) above.
[11] With regard to the first aspect, that is, to ascertain the train of inquiry to be undertaken, the Court in Dante Yap Go v Bank Austria Creditanstalt AG [2007] SGHC 69 observed the following (at [30] – [31]):
[12] In other words, the train of inquiry must be one that would result in the discovery of documents (or information) that is directly relevant and necessary for the resolution of the pleaded issues. Although what is directly relevant would very much depend on the factual matrix and pleaded issues of the precise case at hand, it should be borne in mind that the Rules itself has provided guidance on what is directly relevant. In this regard, the concept of direct relevancy, for the purposes of 24 r 5(3)(c), refers to documents or information which may adversely affect the applicant’s own case; adversely affect another party’s case, or support another party’s case.
[13] With regard to the second aspect, the applicant must show that the document sought to be discovered under O 24 r 5(3)(c) is one that may lead to that train of inquiry that has been ascertained above. It is not necessary to show that the document sought to be discovered under O 24 r 5(3)(c) must, or will, lead to that relevant train of inquiry. As emphasized by the Court in Thyssen Hunnebeck Singapore Pte Ltd v TTJ Civil Engineering Pte Ltd [2003] 1 SLR(R) 75 at (5):
[14] The words set out in O 24 r 5(3)(c) provide that the document sought to be recovered is one which may lead to a train of inquiry. Indeed, the Court of Appeal in Tan Chin Seng (at [14]) referred to such indirectly relevant evidence as having the “potential to set off ‘a train of inquiry’ resulting in the discovery of evidence of direct relevance”. In this regard, a fundamental difference between a fishing expedition and a legitimate application for discovery under O 24 r 5(3)(c) would be whether there are reasonable grounds to find that the document sought to be recovered is one that has the potential to set off this train of inquiry. What constitute reasonable grounds, and whether there are reasonable grounds to find that the document sought to be discovered has the potential to set off the train of inquiry, would be questions of fact to be decided within the precise factual matrix of the specific case at hand.
[15] Having set out the analytical framework for determining the relevancy (albeit indirect relevancy) of documents sought to be discovered under O 24 r 5(3)(c), I will proceed to deal with the merits of the plaintiff’s application.
Ascertaining the train of inquiry
[16] I am convinced that the train of inquiry is one that will result in the obtaining of evidence directly relevant and necessary for the resolution of the pleaded issues. The plaintiff’s solicitors drew the Court’s attention to a few emails that allegedly showed the defendants’ breaches of duties. There is no doubt that this is not the proper forum to determine whether the defendants were indeed in breach of their duties owed to the plaintiff, but the pertinent point to take away from these emails is that they reveal that there are many specific undisclosed documentation that would be material for the disposal of the issues at trial. In this regard, a detailed review of these emails would illustrate how this is so.
[17] The second defendant forwarded a list of projects (“the Projects Follow up List”) which the plaintiff was involved in to the first defendant by way of an email dated 20 November 2010 (see exhibit “TEKJ-4” in Tay Eng Kiat Jackson’s (“Tay”) affidavit dated 18 January 2011). The Projects Follow up List contains a list of projects that the plaintiff had tendered for and submitted quotations for. About a month later, on 14 December 2011, the first defendant forwarded the second defendant’s email together with the Projects Follow up List to one “Zhiqiang”, the General Manager of Xiamen J.M. Stone CO. Ltd and Xiamen Ouming Imp & Ex Co. Pte (collectively known as “Xiamen Ouming”). Xiamen Ouming is an existing supplier of the plaintiff. This email dated 14 December 2011 shall hereinafter be referred to as “the first email of 14 December 2011” (see exhibit “TEKJ-4”). The second defendant’s email to the first defendant dated 20 November 2010 presupposes that there have been instructions given by the latter to the former for the specifications required to compile the Projects Follow up List; yet these instructions remain undisclosed to date. Likewise, the first defendant would not have simply sent the 1 email of 14 December 2011 to Xiamen Ouming out of the blue; there necessarily must have been some communication between Zhiqiang and the first defendant regarding the price quotations, the quantity required and the type of materials or finishes required, for the purposes of compiling the Projects Follow up List. These are undisclosed. It is evident that the above mentioned undisclosed documentation would be pertinent in resolving the pleaded issues of whether the defendants did, unlawfully interfered with the plaintiff’s trade and business; misused corporate information and opportunities obtained in their capacity as the plaintiff’s director and employee; misused and disclosed without authorisation the plaintiff’s confidential information; and if so, whether such misuse and disclosure was indeed made for the purposes of setting up a competing business.
[18] I move on to another set of emails which would be vital in showing whether the defendants did in fact planned and worked together to set up a competing business. The second defendant sent an email dated 30 November 2010 to the first defendant, proposing several names, allegedly for the purpose of naming the new competing business (see exhibit “TEKJ-6” in Tay’s affidavit dated 18 January 2011):
[19] As with the above, this email presupposes that there were instructions given by the first defendant to the second defendant. The documentation containing such instructions are undisclosed. The first defendant forwarded the email of 30 November 2010 to Zhiqiang in an email dated 14 December 2010 (hereinafter referred to as “the second email of 14 December 2011”) (see “TEKJ-6”), inviting Zhiqiang’s views on the proposed names:
[20] As can be seen, there would necessarily be further communication between Zhiqiang and the first defendant, in particular, on Zhiqiang’s views on whether the proposed company name is “alright”, as well as the first defendant’s check(s) on whether the name “is still available”. Such further communication goes to the heart of resolving the pleaded issues of whether the defendants had planned to set up a competing business, and whether they have approached the plaintiff’s existing suppliers in furtherance of their plans to set up the new competing business.
[22] This clearly presupposes that there was prior communication between the first and second defendant, including the instructions given by the former to the latter to prepare and send the proposed budget list. It is beyond question that such communication, as yet undisclosed, is pertinent is resolving the pleaded issues of whether the first defendant had unlawfully procured the services of the second defendant to breach the latter’s obligations owed under his employment contract with the plaintiff; whether the defendants have misused the plaintiff’s resources and corporate opportunities obtained by them in their capacity as the plaintiff’s director and employee; misused and disclosed without authorisation the plaintiff’s confidential information; and importantly, whether the defendants had acted together to set up a competing business against the plaintiff’s interest.
[23] In addition to the above, there are two emails which reveal that there are undisclosed documents which are material in proving that the defendants have approached the plaintiff’s suppliers in furtherance of their plans to set up a competing business. The first defendant arranged for a business trip to Turkey to meet ADK Marble in January 2011, one of the plaintiff’s suppliers. The plaintiff alleges that the ulterior motive or the true purpose of the trip was for the defendants to meet up with the ADK Marble for the purposes of discussing the defendants’ new competing business venture. The first defendant sent an email dated 3 January 2011 to one Ms Duygu from ADK Marble to enlist the latter’s assistance to book air tickets for both defendants (see exhibit “TEKJ-8” at page 54 of Tay’s affidavit dated 18 January 2011):
[24] As can be seen from the above, for some important reason(s), the first defendant does not want the plaintiff’s directors (Leslie and Jackson) to know that he is bringing the second defendant along for the trip. He enlisted the assistance of the representative from ADK Marble to conceal this information from the plaintiff, and at the same time, reveals that there are “other stuff” to be discussed with ADK Marble. In view of this reference, it goes without saying that there is subsequent communication between the first defendant and ADK Marble’s representative. Such communication, as well as any documentation prepared in support of this communication (such as the proposed budget expenses or supply agreements) goes to the very heart of resolving the pleaded issues of whether the defendants have approached the plaintiff’s suppliers in furtherance of their plans to set up a competing business; and whether the defendants have worked together to set up a competing business.
[25] In addition, it is notable that the first defendant sent an email dated 4 January 2011 to one Yiannis Chatziioannidis of Marble Market from Greece, one of the plaintiff’s suppliers, to ask for assistance in making arrangements for hotel accommodation for two persons, and to ask the latter not to let the plaintiff’s directors know that he is bringing the second defendant along for the business trip to Greece (see exhibit “TEKJ-8” at page 51 of Tay’s affidavit dated 18 January 2011):
[26] The first defendant’s attempt to conceal the fact that he is bringing the second defendant to these overseas trips to meet up with the plaintiff’s suppliers, would necessarily bring the true purpose of such trips into question. As such, the business documentation that the first defendant brought along for these trips, would be material in proving whether such trips were made for the purpose of approaching the plaintiff’s existing suppliers (such as ADK Marble and Marble Market) in furtherance of the collateral purpose of planning and setting up a competing business against the plaintiff’s interest.
Specific documents
[27] From the above, it is clear that the train of inquiry is one that will result in the obtaining of evidence that is directly relevant and necessary for the resolution of the pleaded issues, in particular, evidence that include:
(a) Instructions given by the first defendant to the second defendant relating to specifications required to compile the Projects Follow Up List;
(b) Communication between Zhiqiang and the first defendant regarding the compilation (including the price quotations, quantity required, and type of materials or finishes required) and the sending of the Projects Follow Up List;
(c) Instructions given by the first defendant to the second defendant regarding the proposal of names for a new business, prior to the email of 30 November 2010 sent by the latter to the former;
(d) Communication between Zhiqiang and the first defendant on the proposed names for a new business, following the second email of 14 December 2011;
(e) Communication between the first and second defendant on the compilation of, and instructions given on, the proposed budget list of costs and expenses of the new business, prior to the email dated 13 December 2010 sent by the second defendant to the first defendant;
(f) Business documentation that the first defendant brought along for his overseas trip to Turkey to meet ADK Marble in January 2011;
(g) Subsequent communication (including documents prepared in support of this subsequent communication) between the first defendant and any representative from ADK Marble on the “other stuff” to discuss, as referenced in the first defendant’s email dated 3 January 2011 to Ms Duygu from ADK Marble; and
(h) Business documentation that the first defendant brought along for his overseas trip to Greece to meet Marble Market in January 2011.
Whether the documents sought to be discovered have the potential to set off the train of inquiry
[28] The first defendant argued in his written submissions (at [31]) that the plaintiff is merely relying on the fact that the first defendant had owned the documents while he was in the plaintiff’s employment to show the relevance of the documents. On the contrary, it should be clear that there are compelling grounds to find that the documents have the potential to set off the train of inquiry.
[29] I will start off with a point concerning the first defendant’s emails to the plaintiff’s suppliers in Turkey and Greece, dated 3 and 4 January 2011 respectively. In my view, given that the first defendant had enlisted the assistance of the plaintiff’s suppliers to conceal the fact that he brought the second defendant to Turkey and Greece in January 2011 to meet the plaintiff’s suppliers, the true purpose of these overseas trips are called into question. It follows that the business documentation that the first defendant brought along for these trips would be pertinent in revealing the true purpose and nature of the trips; in particular, whether these trips were made for legitimate purposes in furtherance of the plaintiff’s business, or whether, as pleaded by the plaintiff, the trips were made in furtherance of the defendants’ plans to set up the competing business. In this regard, it is significant that by the first defendant’s own admission, he had used both the NEC laptop and the Toshiba laptop (it is undisputed that the documents in the NEC laptop was backed-up and transferred to the Toshiba laptop) to reply to work emails when he was away from office (see first defendant’s written submissions at [42]). The necessary inference of this admission is that the first defendant has access to his NEC laptop and Toshiba laptop when he is away from office, including his overseas trips to meet the plaintiff’s suppliers, such as the trips made to Greece and Turkey in January 2011. At this juncture, I should also add that the plaintiff’s solicitors’ submission in the hearing before me that the two laptops were used by the first defendant in his overseas travels were not disputed by the first defendant’s solicitors, and the first defendant had specifically admitted in his own affidavit dated 15 September 2011 (at p 6) that he used the Toshiba laptop during travel. It necessarily follows that there are reasonable grounds to believe that these laptops would contain the business documentation that the first defendant brought along for these trips, which, as highlighted above, are pertinent for resolving the pleaded issue of whether the first defendant had approached the plaintiff’s overseas suppliers in furtherance of the defendants’ plans to set up a competing business.
[30] In addition, it would not be unreasonable to assume that an employee who wishes to misuse an employer’s confidential information, and to set up a competing business against his employer’s interest would, more probable than not, keep the relevant documentation in his personal devices (in the present case, the first defendant’s personal Toshiba laptop, the Western Digital Hard disk, and iPhone), so as to avoid detection, or so that if subsequently detected, the employer would not have direct access to the incriminating evidence (“the assumption”). However, I must place significant caveats in this regard. A discovery order can never be made on the basis of this sole assumption alone; this assumption cannot in and of itself be determinative of whether the employee’s personal devices would lead to a train of inquiry of directly relevant evidence, for the assumption is premised upon the presupposition that the employee is indeed liable of setting up a competing business or of misusing the employer’s confidential information; a conclusion which the Court hearing the discovery application has no jurisdiction to make in the first place. As such, this assumption can at most be used only as a supporting factor contextually – ultimately, whether the documents sought to be discovered can lead to the discovery of directly relevant documents would turn upon the precise facts of the case. On the particular facts of the present case, the assumption is reinforced by the fact that there is undisputed evidence that the first defendant had the intention to conceal information from the plaintiff’s directors, Leslie and Jackson. This is evident from the first defendant’s emails to representatives of ADK Marble dated 3 January 2011, and of Marble Market dated 4 January 2011 (see above at [23] – [26]).
[31] Furthermore, there is undisputed evidence that the first defendant has access to work emails from his iPhone, and that he forwards the emails from his iPhone to his personal email account. For example, the email sent by the second defendant to the first defendant dated 13 December 2010 was forwarded by the first defendant to his personal yahoo email accounts using his iPhone (see exhibit “TEKJ-7” at p 48 of Tay’s affidavit dated 18 January 2011). The first defendant even used his iPhone to forward the email dated 4 January 2011 (sent by the first defendant to Yannis Chatzlioannidis, the representative from Marble Market) to Yannis Chatzlioannidis on the same date (see exhibit “TEKJ-8” at p 48 of Tay’s affidavit dated 18 January 2011). Apart from the fact that such evidence shows that the iPhone would lead to the discovery of directly relevant documents; an inference is also drawn, in that, by sending emails and directly relevant evidence (such as the proposed budget list annexed to the email of 13 December 2010) to his personal email accounts, the first defendant would access such directly relevant evidence through his personal devices, such as the Toshiba laptop.
[32] Moreover, it is noted that the first defendant’s office email account is accessible through the webmail interface http://webmail.surfacestone.com.sg (see affidavit of Lew Tze Yong dated 15 September 2011 at [6]). As the office email account is accessible from any computer with internet access, this would mean that the first defendant can access the work email from non-work computer sources, including his personal laptops. In fact, given that the office email can be accessed from any computer with internet access, the fact that the first defendant chose to use his Toshiba laptop and NEC laptop to reply to office emails when he is away from office (as admitted at [42] of the first defendant’s written submissions) would go some way in showing a reasonably credible nexus between work related materials and these two laptops.
[33] It is also significant that the first defendant failed to dispute on affidavit (and in the hearing before me), the plaintiff’s assertion that the first defendant had used his personal laptop in discharge of his duties as director and Sales Director of the plaintiff, (stated in Tay’s affidavit dated 18 January 2011 at [45]-[48]):
[34] The plaintiff has also asserted (in the supporting affidavit by Tay dated 22 August 2011 at [23] and [27], the written submissions at [22(b)], as well as in the oral submissions in the hearing before me), that the Toshiba laptop, Western Digital Hard disk, and iPhone were used by the first defendant in the course of his employment. The first defendant has to date, not disputed this on affidavit. This was also not disputed by the first defendant’s solicitors in the hearing before me. Indeed, the first defendant even went as far as to confirm in his own affidavit dated 9 September 2011 at [13] that he did not deny that both the NEC laptop and the Toshiba laptop were used in the course of his employment with the plaintiff. He also admitted that he owned both laptops during the time when he was employed with the plaintiff (at [14]).
[35] The first defendant, in his affidavit dated 9 September 2011 (at [8] – [11] and [14]), denied that the NEC laptop, Toshiba laptop, Western Digital Hard disk, and iPhone contains any “Information” (with a capital “I”). In particular, the first defendant also asserted that (at 14(b) and [15]):
[36] Notwithstanding the above, the first defendant has to realise that just because the said devices (allegedly) do not contain the “Information” falling within the scope of the injunction, it does not mean that the devices do not contain the undisclosed documents (referred to above in [27] above) that are directly relevant to the pleaded issues. As admitted and emphasized by the first defendant’s solicitor himself in the hearing before me, “Information” has been given a specific and narrow definition in the Order of interim injunction dated 4 March 2011 as (“the Order”):
[37] In the same Order, the “Information” is limited only to “Projects” listed in page 42 of Tay’s affidavit dated 18 January 2011, and exhibit TEKJ-11 of Tay’s affidavit dated 3 March 2011.
[38] As it stands, the first defendant has at most denied that the devices contain the Information falling within the scope of the Order, in his affidavit dated 9 September 2011 (I add here parenthetically that even such denial has been, in my view, countered by the reasons stated (see above at [29] – [34], and below at [41] – [44]). The first defendant has not denied, on affidavit, that the devices sought to be recovered contains directly relevant evidence that goes towards resolving the pleaded issues. The first defendant’s failure to deny is even more significant in view of the fact that the first defendant had the chance to, in his affidavit dated 9 September 2011, deny the plaintiff’s clear assertion in Tay’s affidavit of 22 August 2011 at [27] that:
[39] The first defendant failed to deny the above assertion. Subsequently, there was another clear reminder of the plaintiff’s assertion that the documents sought to be recovered would lead to the discovery of evidence relevant to resolving the pleaded issues, and not just to Information falling within the scope of the Order (Tay’s affidavit of 15 September 2011 at [7] and [8]):
[40] Despite the clear statements above, the first defendant has to date failed to deny on affidavit that the documents sought to be discovered would lead to the discovery of evidence relevant for resolving the pleaded issues. This was so even though the first defendant had the chance to state this denial as it filed a subsequent affidavit dated 16 September 2011, but still there was no such denial in that affidavit. Further, the first defendant’s solicitors could have but did not seek leave in the hearing before me for time to file any supplemental affidavit to state the necessary denial. In totality, the first defendant had three chances to state this denial on affidavit (in the affidavit dated 9 September 11, the affidavit dated 16 September 2011, and the chance to request to file a supplemental affidavit before me during the hearing on 20 September 2011), but had failed to do so.
[41] On the contrary, the first defendant had shown by its conduct, with especial regard to the Western Digital Hard disk, that it may contain information relevant for the purposes of the trial. While the plaintiff’s solicitors had only asked the first defendant to deliver up electronic devices to comply with the Order, in a letter dated 1 February 2011, where no mention was made on discovery or the trial, the first defendant’s solicitors had actually made an offer for a joint inspection of the Western Digital Hard disk in a letter dated 8 February 2011. However, the first defendant’s solicitors went a step further to state in the same letter that the contents of the Hard disk can be listed in an inventory pending trial:
[42] In response to the above, the plaintiff’s solicitors stated in its letter dated 15 February 2011 that:
[43] It is obvious that the plaintiff’s solicitors were only asking the first defendant to confirm whether the Hard disk contains the Information falling under the scope of the Order, and nothing was said about discovery or trial. However, not only was it that the first defendant could not give this confirmation, the first defendant had went further (through his solicitors) to re-affirm its offer for a joint inspection, in a letter written by the first defendant’s solicitors dated 18 February. This time round, the first defendant’s solicitors again took the further step of offering to list the contents of the Hard disk can be in an inventory pending trial:
[44] In the course of submissions before me, the first defendant’s solicitors argued that the offer to have a joint inspection should not be taken as an admission to relevancy. No submissions were made with regard to the further offer to list the contents of the Hard disk in an inventory pending trial. In addition, no issues of “without prejudice” were raised in the hearing before me. These letters were also annexed in Tay’s supporting affidavit dated 22 August 2011, and no objections were raised with regard to these letters in the first defendant’s affidavits or in the first defendant’s written submissions. In my view, the statements made by the first defendant (through his solicitors) in the letters dated 8 and 18 February 2011 shows that the first defendant himself cannot be sure whether the Hard disk contains the said Information (which are information relevant for the trial, amongst other pleaded issues). Furthermore, by offering to inspect the Hard disk jointly, and by making the further offer to list the contents of the Hard disk in an inventory pending trial (not only once, but twice), the first defendant had represented, by his conduct, that the Hard disk has the potential of containing documents that are relevant for the trial. This representation is reinforced by the fact that the plaintiff had not even made any mention about discovery or trial in its letters; the fact that the first defendant had come up with an offer to list the contents in an inventory pending trial, when the plaintiff itself has said nothing about the trial, shows that it was within the first defendant’s contemplation that the Hard disk may contain relevant documentation. Further, this representation is even more compelling given that the first defendant had the prerogative of simply asserting that the plaintiff has no entitlement to the Hard disk because it contains no relevant evidence at all, either for the Information falling with the scope of the Order, or for the purposes of trial. As the Hard disk is the first defendant’s personal item, he was in the best position to make this assertion, and had no excuse of not knowing what was inside the Hard disk. Having elected not to make this assertion, but to make an offer for inspection and a further offer of listing the contents in an inventory pending trial, it does not lie in the plaintiff’s mouth to subsequently state that the Hard disk contains no relevant information (which even if accepted, will be given very little weight, if at all).
[45] For the reasons above, I find that there are compelling grounds to believe that the documents sought to be discovered has the potential to set off the train of inquiry. I therefore order the discovery and inspection of the first defendant’s Toshiba laptop and Western Digital 250GB hard disk.
[46] I will not order the discovery and inspection of the first defendant’s iPhone used during his employment with the plaintiff, as there is sufficient evidence to show that the iPhone is no longer in the first defendant’s possession, custody or power. The first defendant’s assertion that he lost his iPhone in sometime around June 2010 while on a business trip to Greece, is corroborated by an exhibit of his passport (see TSL-7 at pp 5-6 of the first defendant’s affidavit dated 16 September 2011). His assertion that he bought a replacement iPhone soon thereafter is supported by the Change of Equipment/Handset Upgrade Service application form (which shows the iPhone number), at pp 8-10 of exhibit TSL-7 of the first defendant’s affidavit dated 16 September 2011. This replacement iPhone was subsequently lost on or about 21 January 2011 while he was in Malaysia with some friends. His version is corroborated by a statutory declaration from one of his friends, one Yeo Boon Seng, that the first defendant had indeed lost his iPhone whilst they were in Malaysia, as well as the relevant pages of his passport showing that he was in Malaysia at that time (see pp 11-15 and p 7 respectively, in exhibit TSL-7 of the first defendant’s affidavit dated 16 September 2011). Viewing the evidence in totality, there are sufficient grounds to find that the iPhone that the plaintiff sought to discover and inspect is no longer in the first defendant’s possession, custody or power.
Discovery of discrete documents within compound documents
[47] In the course of submissions, counsel for the first defendant argued that the discovery application was a fishing expedition, as it did not identify the class of documents within the devices in which the plaintiff believes that there will be discoverable information (see also the first defendant’s written submissions at [29]). Counsel referred to the Court of Appeal decision of Wright Norman and another v Oversea-Chinese Banking Corp Ltd and another appeal [1992] 2 SLR(R) 452 (“Wright Norman”) as authority for the position that an applicant’s failure to identify the classes of documents sought would be a fishing expedition. When I sought clarification from counsel on whether he was thus submitting that, as a general rule, all applications for specific discovery under O 24 r 5 must identify the classes of documents sought for, the want of which would automatically render the application a fishing expedition, counsel had confirmed that the answer is in the positive (“the rule”).
[48] As a preliminary point, the decision of Wright Norman is not evidently relevant to the present case, as the Court of Appeal had expressly stated in its decision (at [19]) that the application in question before the Court in Wright Norman was (apart from the interrogatories) not for discovery of any particular class of documents, but was an application for a further and better list of documents. More significant is the fact that there is nothing in Wright Norman that supports the rule, neither is there anything in the decision that states that an applicant’s failure to identify the classes of documents sought would necessarily mean that he is engaging in a fishing expedition. Indeed, the application in Wright Norman was dismissed, not because of any omission to classify or categorise the documents sought, but because the Court of Appeal was of the view that the categories of documents sought were too wide and that almost none of the categories had any relevance to the pleaded issues (see Wright Norman at [20]):
[49] The Court of Appeal in Wright Norman also found that the applicant had attempted to interrogate upon particulars that were not pleaded; while Norman Wright had set out in his pleadings the 22 steps which a reputable executive search firm (such as the plaintiff in that case) would take to ensure confidentiality; he did not identify in his pleadings which of the 22 steps the plaintiff had failed to take; and had merely alleged that the plaintiff had failed to take one of the 22 steps. That was found to be inadequate as many of the steps had no relevance to the pleadings. I should add, at this juncture, that, unlike the case in Wright Norman, it was not submitted before me that the plaintiff’s pleadings are deficient for lack of particulars; there is also no dispute or argument raised by the first defendant that the plaintiff is seeking discovery of facts that have not been particularised. In addition, it has already been shown above at [16] – [27] how the train of inquiry would result in the discovery of documents directly relevant to the pleaded issues.
[50] Notwithstanding the first defendant’s flawed reliance on the decision of Wright Norman, the submissions made by counsel for the first defendant highlighted the need to differentiate between compound documents and discrete documents (“discrete” documents are distinct and individual documents). A compound document is a storage medium that contains several discrete documents; it provides the user with a consolidated point where electronically stored data and information of various formats (such as text, graphics, video and audio files), can be conveniently stored, organised, accessed and modified. Examples of compound documents include a computer hard disk, databases, the internal flash memory of tablet computers (such as iPads) and smart phones (such as iPhones), and recording media like external hard drives, USB flash drives and memory cards. There is no question that compound documents are discoverable “documents” that can be inspected, within the discovery and inspection regime set out in O 24. This was clearly set out by the Court in Alliance Management SA v Pendleton Lane P and another suit [2007] 4 SLR(R) 343 (“Alliance Management”), where it was observed that (at [10]):
[51] In a situation where an applicant seeks specific discovery of a compound document, such as the Toshiba laptop or the Western Digital Hard disk in the present case, the essential document(s) sought to be discovered is not the compound document itself (as it serves only as a storage medium), but the discrete documents found within the compound document. However, the Rules of Court as they stand do not make any express distinction between a compound document and discrete documents. O 24 r 5 provides:
[54] It should be evident from the discussion above that there is no fixed method to ensure that the description of discrete documents (within the compound document) is made with sufficient specificity, in an application for compound documents. Indeed, just because an application for specific discovery is made with a classification of the documents sought for, it does not mean that that application will not be a fishing expedition. As in the decision of Wright Norman, the application for a further and better list of documents was dismissed as the classification of documents was too wide. In this regard, whether the description of discrete documents within a compound document is made with sufficient specificity depends on the merits of each case. In the present case, I have already set out at [27] above the specific discrete documents that the plaintiff is seeking for from the devices and I am convinced that the plaintiff’s application is made with sufficient specificity. I should add that there can be no excuse from the first defendant that it was unclear what were the discrete documents sought for, given that the plaintiff’s position with regard to the specific discrete documents at [27] above has been set out in the course of submissions before me, as well as at paras [17] – [40] of Tay’s affidavit dated 18 January 2011, read with paras [21]-[22] of the plaintiff’s written submissions and para [27] of Tay’s affidavit dated 22 August 2011.
[55] It is convenient to add at this juncture an observation. The lack of a distinction between compound documents and discrete documents in the present Rules of Court, correspond with the lack of an express requirement that an applicant must seek discovery of the discrete documents inside the compound documents, either before or at the same time when the applicant seeks specific discovery of the compound document. As a matter of practical necessity, I am of the view that this should be the practice notwithstanding the present lack of such an express requirement. After all, as stated above (at [51]), the essential “document” sought to be discovered is not the compound document itself, but the discrete documents within the compound document. (I add here parenthetically, that this is not an issue in the present case as both sides have proceeded on the basis that the devices are sought to be discovered for the purposes of inspecting and searching for relevant discrete files within the devices).
[56] The first defendant’s counsel, had, in addition, submitted that (at [29] of the written submissions) the plaintiff cannot be allowed to trawl through the entire devices to fish for evidence. This contention properly belongs to the question of whether an inspection protocol should be implemented, which is dealt with in the succeeding section.
The implementation of an inspection protocol for inspection of compound documents (including computer databases, electronic media and recording devices)
[57] Although the plaintiff acknowledges that an application for inspection of computer databases, electronic media and recording devices should generally include an inspection protocol (see plaintiff’s written submissions at [35]), the plaintiff submits that it should be allowed to inspect the devices in their entirety, as keyword searches are unlikely to effectively capture relevant information, such as drawings (see p 90 – 91 of Tay’s affidavit dated 22 August 2011) and image files (see p 95 of Tay’s affidavit dated 22 August 2011). Plaintiff’s counsel reiterated the same in the course of submissions before me.
[58] The analysis of whether a protocol is required for the inspection of compound documents (including computer databases, electronic media and recording devices) would be slightly different, depending on whether parties have agreed to “opt-in” to Part IVA of the Supreme Court Electronic Practice Directions, also known as the Practice Direction No 3 of 2009 (“PD 3/2009”). Where parties have agreed, either expressly or tacitly by conduct, to apply PD 3/2009 to their discovery and inspection proceedings, the requirement for an inspection protocol is mandatory for all applications for inspection under O 24 r 11(2). This is provided in paragraph 43F of PD 3/2009 which states:
[59] Where parties have agreed not to (or not agreed to, depending on the situation) apply PD 3/2009, then, in the situation where general discovery is concerned, it has already been clarified by the Court in Deutsche Bank AG v Chang Tse Wen and others [2010] SGHC 125 at [15] – [16] (“Deutsche Bank”), that the Court’s powers to order compliance with a discovery protocol is not fettered by the parties’ decision not to opt in to PD 3/2009:
The Rebuttable Presumption that an Inspection Protocol is necessary for inspection of compound documents
[60] Following from the holding in Deutsche Bank, it is evident that, as the Court’s powers to order compliance with a protocol is not derived from PD 3/2009, but is independent of it, it follows that the parties’ agreement not to adopt PD 3/2009 poses no fetter on this power to order a protocol. The power to order a protocol would come to the fore in situations when compound documents are sought to be inspected. As compound documents would, by their nature as storage media, contain voluminous documents, it is likely that a significant amount of irrelevant documents may be inspected in order to obtain a relatively smaller amount of relevant documents. Further, a review of the compound document in its entirety would, more often than not, be intrusive and prejudicial to the interest of the party giving discovery in protecting his confidential and privileged information. Sufficient safeguards have to be implemented to prevent the requesting party from abusing the discovery and inspection regime to gain collateral advantages that are extraneous to the purposes of the litigation at hand (for example, to obtain commercially valuable and sensitive documents in the compound document, where the requesting party and the producing party are business competitors). In essence, where a compound document is found to be indirectly relevant and hence discoverable, that does not entitle the applicant to an ipso facto right to inspect the whole of the compound document. Barring an exceptional case, it cannot be said that all the discrete documents within the compound document are relevant and necessary to resolve the pleaded issues. As such, it would ordinarily be necessary for the Court to set parameters for the inspection and review of compound documents. To that end, in so far as inspection of compound documents is concerned, there is a rebuttable presumption that an inspection protocol is necessary to govern the process in which the inspection and searches will be carried out. The effect of this presumption is two-fold; first, the practical application of such a presumption would mean that an inspection protocol in the form of Appendix E, Part 2 of PD 3/2009 will be implemented for all inspection of compound documents unless otherwise ordered by the Court (this necessarily includes the processes following from inspection, such as forensic examination of the compound document); second, the burden is on the party seeking inspection of the compound document to convince the Court why an inspection protocol in the form of Appendix E, Part 2 of PD 3/2009, should not be ordered.
[62] Although the holding in Alliance Management that a protocol should be implemented was made on the facts of that case, the basis on which the Court came to that decision, which is that of ensuring that the inspection is proportionate, would arguably apply to the general situation whenever inspection is sought of a compound document. At this juncture, it is profitable to explore the position taken in other jurisdictions concerning the extent to which inspection of compound documents are allowed.
A survey across different jurisdictions
The USA
[63] The need to impose safeguards to limit the scope of inspection of compound documents, in maintaining proportionate discovery, is evident in other jurisdictions. The judicial attitude in Alliance Management is aligned with that expressed in the US decisions, where a consistent approach has been adopted in implementing some protocols and limitations when compound documents are sought to be inspected. This is seen in the case of In Re Ford Motor Company, 345 F. 3d 1315 (11 Cir. 2003), where the US Court of Appeals (Eleventh Circuit) set aside the inspection order granted by the District Court for the Northern District of Alabama (the inspection order was granted to the plaintiff to inspect Ford Motor’s databases to search for technical information of seatbelt buckles in vehicles manufactured by Ford Motor) on, inter alia, the ground that there were no (as there should have been) protocols imposed to restrict the scope of inspection. Having accepted Ford Motor’s argument that the plaintiff should not be granted “free access to the databases regardless of relevance, privilege or confidentiality”, the Court of Appeals held, in setting aside the inspection order (at [10]):
[64] In the recent decision of Lorentz v Sunshine Health Products., Inc., 2010 WL 1856265 (S.D. Fla. May 10, 2010), the Court found that a request to inspect a computer hard drive and a database in their entirety was “per se overboard and unduly burdensome when balanced against the need [for inspection]”. The Court emphasized upon the need to implement a protocol to obtain data in a measured manner (at [2]):
[65] In the case of Proctor & Gamble Co. v Haugen, 179 F.R.D. 622, D Utah, 1998, where Proctor & Gamble (“P&G”) sued its competitors for spreading defamatory rumours about its products and obtained an order to inspect one of the defendant’s computer databases for documents that would contain potentially defamatory information; the Court decided (at Part D) that limitations would have to be placed on the scope of inspection, to prevent P&G from obtaining “general commercial or competitive information”, or a volume of documentation that “would be so extensive as to render the search unwieldy for any purpose legitimately within the current framework of the litigation”.
[67] The decisions of the US courts to impose limitations on the scope of inspection manifest the application of the principle of proportionality set out in Rule 26(b)(2)(C) of the US Federal Rules of Civil Procedure, a rule which vests the Courts with the power to limit the extent of discovery, when the burden and expense of discovery outweigh the likely benefits; see Bayer AG v Betachem, Inc., 173 F.3d 188, 191 (3 Cir. 1999). Rule 26(b)(2)(C) provides:
[68] Describing Rule 26(b)(2)(C) as a “rule of proportionality”, the Court in Bowers v National Collegiate Athletic Association No. 97-2600 (D.N.J. Feb. 27, 2008) at 14 (quoting Leksi, Inc. v Fed. Ins. Co., 129 F.R.D. 99, 105 (D.N.J. 1989)) held that the purpose of this rule is to “guard against redundant or disproportionate discovery by giving the court authority to reduce the amount of discovery that may be directed to matters that are otherwise proper subjects of inquiry” [emphasis added]. In addition, Rule 26(c) of the US Federal Rules of Civil Procedure provides the a second tier of safeguards, where, if sufficient cause is shown that there is a need to protect the producing party from “undue burden or expense”, or to protect the disclosure of confidential information and commercial and trade secrets, the Court can grant a protective order to reduce the scope of discovery and inspection; see Robotic Parking Systems, Inc. v City of Hoboken, 2010 WL 324524 (D.N.J., Jan 19, 2010).
England
[69] Although the statutory framework in England is different from that in the US, the common feature remains the principle of proportionality. Indeed, this principle is now entrenched as the overriding principle in England’s disclosure regime, and applies not only to inspection, but also to “standard disclosure”, which is the English modified version of our general discovery rule in O 24 r 1. Paragraph 2 of Practice Direction Part 31A of the Civil Procedure Rules (“CPR Pt 31A”) provides:
[70] In England, the duty of a party giving standard disclosure is not make a search of documents in their entirety; the duty is limited only to making a reasonable search, as provided in Rule 31.7 of the Civil Procedure Rules (“CPR”). Parties are expressly required to bear in mind the overriding objective to achieve proportionate discovery in determining extent of search of electronic documents; where paragraphs 20 to 24 of Practice Direction Part 31B of the Civil Procedure Rules provide:
[71] Once the documents are disclosed by way of standard disclosure, the applicant has the right to inspect the documents unless they are no longer in the control of the producing party, or if the producing party has the right or duty to withhold inspection (Rule 31.3, CPR). Where the applicant is of the view that the standard disclosure is inadequate, an application for specific disclosure and specific inspection can be made, including that under the “train of inquiry” limb (see Rule 31.13, CPR, and paragraph 5.1 to 5.5, PD Pt 31A). The producing party can state its objection to the inspection on the ground that to do so would be disproportionate to the issues in the case (Rule 31.3(2), CPR):
[72] In perhaps one of the most well-known judicial observations made on the principle of proportionality, it was said in Digicel (St Lucia) Ltd v Cable and Wireless plc [2008] EWHC 2522 (ch), [2008] All ER (D) 226 (Ch) (“Digicel”) that (per Justice Morgan at [46]):
[73] The Courts have taken a robust attitude in ensuring that the scope of the search remains reasonable and proportionate. In clarifying that the task of ensuring the scope of the search is reasonable remains within the province of the Court, notwithstanding a solicitor’s informed decision that the search was indeed so, it was observed that (Digicel at [51]):
[74] The well-known “smoking gun” reference made in Digicel (at [46]), is to some extent inspired by (as credited by Justice Morgan himself at [46] of Digicel) the illuminating but not wholly uncontroversial observations made by Lord Justice Jacob in Nichia Corporation v Argos Limited [2007] EWCA Civ 741 at [50] – [51] (“Nichia Corporation”):
[76] In Albert John Martin Abela and others v Hammonds Suddards and others HC 07C00250 (ChD, 2008), where the plaintiff applied to inspect and search the fifth defendant’s personal computer, as well as the first defendant’s computer database, servers, and archived tapes to obtain relevant emails and email attachments, the Court (at [122]) imposed a set of protocols to limit the extent of search and inspection; such as, reducing the period (date range of documents) covered by the search, limiting the search only to files that have a direct bearing on the material issues in dispute, allowing searches of backup tapes from particular points in time only, and disallowing the application to restore the first defendant’s entire email database.
[77] In one of earlier decisions before the standard disclosure regime was introduced into the CPR, and when the principle of proportionality was not expressly stated in the Rules, Vinelott J was already acutely aware of the need to limit inspection of compound documents to the extent where it is necessary to do so, in Derby & Co Ltd v Weldon (No 9) [1991] 1 W.L.R. 652, when, in considering the extent of inspection allowed of a computer database, it was observed that (at p 652, 659 – 659):
Canada
[78] The Sedona Canada Principles (the Sedona Principles), which consolidates a number of principles and best practices on electronic discovery, was released in January 2008 amidst a “growing recognition throughout Canada that electronically stored information poses new problems and complications for litigants, their counsel, and the judiciary” (see Foreword of the Sedona Principles). As with the US and England, there is an overriding emphasis on the principle of proportionality, which applies to “any proceedings” undertaken in the whole discovery process. As Principle 2 provides (arguably the first principle of the Sedona Principles given that Principle 1 relates to the technical aspects of what is discoverable):
[79] Describing this Principle as a “rule of proportionality”, the commentary to this Principle (see p 11 of the Sedona Principles) makes the following caution:
[81] The Sedona Principles have greatly influenced the rules of electronic discovery across the provinces in Canada. For example, an independent set of rules dedicated to e-discovery based on the Sedona Principles were created in the Nova Scotia jurisdiction, under Rule 16 of the Nova Scotia Annotated Civil Procedure Rules. The principle of proportionality advocated in the Sedona Principles is aligned with the Ontario E-Discovery Guidelines released by the Ontario Bar Association’s Discovery Task Force in 2005, a document that aims to be a “best practices” manual to address the discovery of electronic documents. The Guidelines provides that the scope of search must be reasonable, at at p 10:
[83] In line with such best practices and procedural regime to keep discovery and inspection proportionate, the Canadian Courts have shown a consistently reserved approach towards allowing the inspection of compound documents in their entirety. In Ontario, in the case of Dulong v Consumer Packaging Inc., (2000) O.J. 161 (Q.L.), (January 21, 2000, Ontario Master), an application to inspect the defendant’s entire computer database to search for relevant emails was dismissed by the Court on the ground that “having regard to the extent of the defendant’s business operations, [the inspection and search would] be such a massive undertaking as to be oppressive”.

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Surface Stone Pte Ltd v Tay Seng Leon and another

Grounds of decision

Introduction

Factual background of application

Ascertaining the train of inquiry

Specific documents

Whether the documents sought to be discovered have the potential to set off the train of inquiry

Discovery of discrete documents within compound documents

The Rebuttable Presumption that an Inspection Protocol is necessary for inspection of compound documents

A survey across different jurisdictions

The USA

England

Canada