Confidential Documents in the Employment Context – Court Sets Out Relationship between Contractual and Equitable Confidentiality Obligations

Introduction

Confidential information is a key issue in the context of employment. While confidentiality obligations are often included in the employment contract, equitable confidentiality obligations may also be imposed under common law.

In Hayate Partners Pte Ltd v Rajan Sunil Kumar [2025] SGHC 41 (“Hayate Partners“), the Singapore High Court considered whether a former employee had breached his contractual and/or equitable obligations of confidentiality by retaining confidential documents after the termination of his employment. It also commented on the interplay between the two obligations, specifically whether and to what extent a court can impose additional or more extensive obligations of confidentiality in equity beyond those provided in the employment agreement.

Brief Facts

In Hayate Partners, the claimant financial institution had employed the defendant as its Head of Investor Relations pursuant to an employment agreement that included a “Clause 6”. Clause 6 required the defendant to deliver all documents and information to the claimant upon termination of his appointment, and prohibited the use and revelation of the claimant’s confidential information. The claimant alleged that, at or around the time the claimant tendered his resignation, the defendant had accessed and downloaded a large number of its files, and had retained them after the termination of his employment. The documents included investment strategies, business development and client material, material relating to operations, and legal advice. The claimant thus brought the present claim against the defendant for breach of contractual confidentiality obligations and the equitable duty of confidence.

The defendant argued that the confidentiality clauses in the employment agreement only prohibited the misuse, disclosure and retention of information, and did not expressly prohibit the access and download of information for non-work-related purposes. In respect of the breach of confidence claim against him in equity, the defendant argued that such a claim did not even arise because of the presence of express contractual obligations of confidentiality.

For completeness, the defendant also argued that the breach of confidence claim in equity should fail because: (i) he did not “take” the information in that he was authorised to access the confidential information; (ii) the claimant had failed to make out that the information taken was confidential; and (iii) there was “no sinister reason” for his downloads. The defendant claimed that he had downloaded the documents to search for his payslips, to “ensure a smooth transition upon the termination of his employment” and to retain evidence to make complaints to regulatory authorities in respect of the claimant’s behaviour.

Holding of the High Court

The Court held mostly in favour of the claimant, finding that: (i) the defendant had breached his contractual obligations of confidentiality by retaining confidential documents after the termination of his employment in breach of Clause 6; and (ii) the defendant had also breached his equitable obligations of confidence by accessing and downloading the files and retaining them beyond the termination of his employment.

General Principles

On the interplay between contractual and equitable duties of confidence, the Court provided the following guidance:

1. Equity can intervene to impose a duty of confidence even if there is already an express duty of confidentiality in the contract between the parties.
   
   
2. The question of whether additional or more extensive obligations of confidentiality in equity should be imposed can be ascertained by a two-step inquiry.

• Does the contract specify the information to be treated as confidential and/or the extent and/or duration of the obligations in respect of the information? If so, then the starting pointis that equity will not ordinarily impose additional obligations. 
• Even if the answer to the first question is yes, the starting point may still be departed from and equity may step in to impose additional or more extensive obligations if it can be said that a reasonable person’s conscience would be offended if those additional or more extensive obligations were not so imposed.

The Court also provided the following guidance regarding an equitable claim for breach of confidence:

1. First, the Court will determine which interest the action for breach of confidence seeks to protect: (i) wrongful gain interest, where the defendant has made unauthorised use or disclosure of confidential information; or (ii) wrongful loss interest, where the claimant is seeking protection for the confidentiality of the information per se.
   
   
2. If the wrongful gain interest is at stake, the claimant must prove that: (i) the information in question has the necessary quality of confidence about it; (ii) the information was imparted in circumstances importing an obligation of confidence; and (iii) there was unauthorised use of the information.
   
   
3. If the wrongful loss interest applies, and the claimant proves that the relevant information had the necessary quality of confidence and it was imparted in circumstances importing an obligation of confidence, it is presumed that the conscience of the defendant has been impinged. The presumption may be rebutted if the defendant adduces proof that his conscience was not affected in the circumstances.

Application

Applying these principles, the Court was of the view that Clause 6 did not expressly prevent the accessing and downloading of information for non-work-related purposes. Nonetheless, the Court found that such obligations were imposed in equity as it would plainly offend a reasonable man’s conscience if these obligations were not imposed by equity on the defendant.

On the facts, the equitable claim for breach of confidence sought to protect wrongful loss interest. The Court found that the claimant had shown that the information which the defendant had accessed and downloaded possessed the necessary quality of confidence, and that it was communicated in circumstances importing an obligation of confidence.

With the burden having shifted to the defendant, the Court held that the defendant had failed to show that his conscience was not affected when he accessed and downloaded the confidential information. Specifically, the Court gave short shrift to the defendant’s explanations for his downloads of the claimant’s confidential information, stating amongst other things that “it beggar[ed] belief” that the defendant thought that his payslips could be found in the claimant’s Google Drive and that the defendant “could not have seriously believed that his payslips, which were personal to him, were contained in these folders”. Further, “there was absolutely no reason for him to download and retain the entirety of the information contained in the claimant’s Google Drive, lock, stock and barrel, if all he wanted to find was his payslips.”

Concluding Words

A key takeaway for employers from this case is that despite the Court applying equitable principles in favour of the employer company this time round, the Court has nonetheless stated that “an overarching guiding principle is that the more definite the contractual obligations of confidentiality are, the more likely that equity will not impose additional or more extensive obligations.“

This means that employers should not leave it to the Court to “save the day” and should as a first measure, always seek to comprehensively articulate and set out the employee’s contractual duties of confidence owed to the company to prevent any future dispute.

We stand ready to assist you to review and strengthen your current documentation, as well as implementing measures to better protect your organisation’s confidential and proprietary information.