LYC & Ors v OTL Asia Sdn Bhd (previously known as CKE Transport Agency Sdn Bhd) [2025] MLJU 3553

Court Of Appeal (PUTRAJAYA)

Confidential information — Post-employment duty — Common law and contractual obligation — Continuing fidelity after termination

1. The Respondent was a company providing cross-border transportation and warehousing services. The 1st and 2nd Appellants were its former employees, holding senior management positions as Marketing Manager and General Manager respectively. Both were contractually bound by express confidentiality clauses in their employment contracts and by the Company Handbook, which imposed duties of confidentiality, fidelity and loyalty.
2. Shortly before and after their resignations, the 1st and 2nd Appellants extracted, downloaded, and retained extensive confidential information belonging to the Respondent, including pricing structures, customer lists, routes, business strategies and operational data. The 1st Appellant copied such information onto an external hard drive shortly before leaving employment, while the 2nd Appellant forwarded confidential materials to his personal email accounts after his resignation.
3. The Appellants subsequently incorporated the 3rd Appellant, a company operating in the same cross-border logistics business as the Respondent. Soon after its incorporation, the Appellants approached several of the Respondent’s existing customers to promote the 3rd Appellant’s services. Evidence also showed that the 3rd Appellant’s company profile and promotional materials closely mirrored the Respondent’s proprietary materials.
4. The Respondent commenced proceedings for breach of confidence and conspiracy to injure. After a full trial, the High Court allowed the Respondent’s claim. The Appellants appealed.

1. Whether the Respondent had established the element of unauthorised use to its detriment for the tort of breach of confidence?
2. Whether the learned Judicial Commissioner had wrongly shifted the burden of proof to the Appellants in determining breach of confidence?
3. Whether the Respondent had proven the tort of conspiracy to injure?

(1)  Whether the Respondent had established the element of unauthorised use to its detriment for the tort of breach of confidence?

(a)  The Court of Appeal answered this issue in the affirmative.

(b)  The Court reaffirmed that a claim for breach of confidence is assessed by reference to the three-fold test in Coco v AN Clark (Engineers) Ltd [1969] RPC 41, as applied in Dynacast (Melaka) Sdn Bhd & Ors v Vision Cast Sdn Bhd & Anor [2016] 6 CLJ 176, namely whether the information was of confidential nature, whether it was communicated in circumstances importing an obligation of confidence and whether there was an unauthorised use of the information to the detriment of the party communicating it (paras [59]–[60]).

(c)  The Court observed that the Appellants did not dispute that the information in question was confidential in nature or that it was subject to contractual and fiduciary obligations of confidence. The dispute therefore centred on whether the Appellants had made unauthorised use of the information to the Respondent’s detriment (para [61]).

(d)  In examining unauthorised use, the Court considered that direct evidence of misuse is not invariably required and that such use may be inferred from circumstantial evidence. The Court placed emphasis on the timing and manner in which the confidential information was extracted and retained, the proximity of those acts to the Appellants’ resignations, the incorporation of a competing business, and the similarities between the Respondent’s proprietary materials and those utilised by the third appellant. Viewed cumulatively, these matters supported the inference that the information had been taken and used to establish and advance a competing enterprise (paras [69]–[72]).

(e)  The Court was not persuaded by the Appellants’ explanations for retaining the confidential information, noting that no authorisation had been given for such retention and that the conduct was inconsistent with the express contractual restrictions governing post-employment use of confidential materials (paras [73]–[74]).

(f)    On the issue of detriment, the Court considered that the Respondent was not required to demonstrate direct proof of customer diversion or specific acts of misuse. A contemporaneous decline in revenue following the Appellants’ departure and the commencement of the competing business was accepted as capable of supporting an inference of loss. The Respondent’s internal financial records constituted prima facie evidence of detriment, in the absence of any meaningful rebuttal by the Appellants (paras [76]–[79]).

(2)  Whether the Respondent had established the element of unauthorised use to its detriment for the tort of breach of confidence?

(a)  The Court of Appeal answered this issue in the negative.

(b)  The Court clarified that the legal burden of proof in a claim for breach of confidence remains with the Plaintiff pursuant to sections 101 to 103 of the Evidence Act 1950. The Court did not adopt the approach in I-Admin (Singapore) Pte Ltd v Hong Ying Ting and others [2020] 1 SLR 1130 as effecting any transfer of the legal burden to the Defendant (paras [63]–[65]).

(c)  At the same time, the Court recognised that where a Plaintiff establishes a prima facie case of breach, an evidential burden may arise on the Defendant, particularly where matters relating to the use of confidential information lie within the Defendant’s knowledge, consistent with section 106 of the Evidence Act 1950 (paras [65], [75]).

(3)  Whether the Respondent had proven the tort of conspiracy to injure?

(a)   The Court of Appeal answered this issue in the affirmative.

(b)  The Court reiterated that the tort of conspiracy to injure requires proof of a combination or agreement between two or more persons, an intention to injure, acts carried out pursuant to that agreement and resulting damage (paras [80]–[81]).

(c)  The Court accepted that an express agreement is not a prerequisite and that conspiracy may be inferred from conduct. The coordinated actions of the Appellants in extracting confidential information, incorporating a competing company and deploying the Respondent’s proprietary materials to solicit business were indicative of a concerted course of conduct directed at injuring the Respondent’s business interests.

1. The Court of Appeal dismissed the appeal in its entirety. The findings of breach of confidence and conspiracy to injure were upheld, and the orders granted by the High Court, including injunctive relief and assessment of damages, were affirmed.

1. Senior employees owe stringent duties of confidentiality and fidelity, reinforced by express contractual terms and company policies.
2. Unauthorised use of confidential information may be inferred from circumstantial evidence, including timing, conduct, and commercial context.
3. Detriment in breach of confidence claims may be established by inferential financial evidence, without direct proof of customer diversion.