Sbc Cpa Ltd v. Au Ka Man Silkie and Others

HCA 1502/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1502 OF 2014

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DECISION
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INTRODUCTION

1.I have before me two summonses:-

(1) a summons dated 4 November 2014 issued by the plaintiff (“the Injunction Summons”) seeking certain interlocutory injunctive relief against the 1^st, 2^nd and 3^rd defendants; and

(2) a summons dated 17 March 2015, as amended pursuant to a consent summons dated 27 July 2015, issued by the 1^st defendant (“the Discharge Summons”) seeking –

(a) the discharge of an earlier order of L Chan J made on 14 November 2014 (“the Chan Order”), including the undertakings given by the 1^st defendant as recorded in the Schedule to the Chan Order and as replaced by his undertakings recorded in Schedule A to the order of this court dated 25 March 2015 (“the Chow Order”) (hereinafter collectively referred to as “the Orders”), and

(b) an inquiry as to the damages sustained by the 1^st defendant by reason of the Orders.

2.The undertakings given by the defendants as recorded in the Schedule to the Chan Order shall hereinafter be referred to as “the Original Undertakings”, and the undertakings given by the defendants as recorded in Schedule A to the Chow Order shall hereinafter be referred to as “the New Undertakings”.

3.As will be seen below, the main issues for determination in this decision are:-

(1) whether (as contended by Mr Steven Kwan for the 1^st defendant) the plaintiff misused the Chan Order by indiscriminately publishing and distributing the same and making false and misleading statements in respect of the Chan Order while proceedings were on-going, and whether such conduct amounted to a mis-use of the court’s process or jurisdiction and/or a contempt of court; and

(2) if the answer to (1) is “yes”, whether the Orders should be discharged.

Background facts

4.The plaintiff, a limited company incorporated under the former Companies Ordinance, Cap 32, at all material times carried, and still carries, on the business of providing, inter alia, accounting, bookkeeping and auditing services to companies in Hong Kong and the People’s Republic of China. It is one of the entities in the SBC International Group (“the SBC Group”), a professional corporate consultant and company formation organisation in Hong Kong. The SBC Group is based in Hong Kong and deploys 5 entities, including the plaintiff and SBC Accounting and Taxation Limited (“SCBA&T”), to provide company and secretarial services, accounting and taxation, auditing, and corporate management services.

5.The 1^st, 2^nd and 3^rd defendants were all former employees of the plaintiff and/or SCBA&T.

6.The 1^st defendant was first employed by SCBA&T in June 2006 as an Assistant Accountant. By September 2012, she was promoted to the position of Senior Unit Manager of the plaintiff. On 26 September 2012, she was further appointed as a director of the plaintiff. On 19 February 2014, the 1^st defendant tendered her notice of resignation, and her employment by the plaintiff was terminated on 19 March 2014. The 1^st defendant also resigned as a director of the plaintiff on 11 March 2014.

7.The 2^nd defendant was first employed by SCBA&T in August 2011 as an Accountant 1. By September 2012, he was promoted to the position of Technical Manager of the plaintiff. On 10 February 2014, he tendered his letter of resignation. The plaintiff terminated the 2^nd defendant’s employment on the same day by payment of 1-month salary in lieu of notice.

8.The 3^rd defendant was first employed by the plaintiff in July 2011 as an Accountant 1. By May 2012, she was promoted to the position of Technical Manager of the plaintiff. On 21 October 2013, the 3^rd defendant tendered her letter of resignation, and her employment by the plaintiff was terminated on 20 November 2013.

9.In the statement of claim, the plaintiff alleges (inter alia) that:-

(1) each of the 1^st, 2^nd and 3^rd defendants, through corporate entities known as Proficient Merit Enterprise Services Limited (“PMESL”), PMC Corporate Services Limited (“PMSSCL”), and/or Proficient Merit CPA Limited (“PMCPA”), acted in breach of various restrictive covenants contained in their respective employment contracts by approaching and soliciting clients of the plaintiff and its associated companies;

(2) each of the 1^st, 2^nd and 3^rd defendants acted in breach of the duty of confidence owed to the plaintiff by disclosing and/or misusing trade secrets and confidential information belonging to the plaintiff; and

(3) the 1^st defendant infringed the plaintiff’s copyrights in various documents used in the everyday business of the plaintiff by stealing, downloading or copying them from the plaintiff’s computer system, and/or converted those documents to her own use, thereby acting in breach of undertakings given by her as a director of the plaintiff.

10.For the purpose of this decision, it is not necessary to set out in detail the allegations made by the plaintiff against the defendants in support of the various causes of action raised against them in the statement of claim. In the prayer for relief, the plaintiff claims against the defendants for various forms of injunction (including “springboard” injunction), damages or alternatively an account of profits, and other relief.

11.On 4 November 2014, the plaintiff took out the Injunction Summons seeking, inter alia, the following interlocutory relief against the defendants:-

(1) against the 1^st defendant only, an injunction to restrain her from using, copying, reproducing, etc, the documents as more particularly set out in Schedule A to the Injunction Summons (“the Server Documents”) or converting to her own use infringing copies of the Server Documents and other ancillary relief (paragraphs 1 to 3);

(2) against the 1^st, 2^nd and 3^rd defendants, an injunction to restrain them from disclosing, divulging or otherwise using or making use of the plaintiff’s trade secrets and confidential information as more particularly set out in Schedule B to the Injunction Summons (“the Trade Secrets and Confidential Information”) and other ancillary relief (paragraphs 4 to 6); and

(3) against the 1^st, 2^nd and 3^rd defendants, an injunction to restrain them from entering into any contract, transaction or business with any person or entity whose name appears in the plaintiff’s computer programme and database (“the Fox System”) and who had been approached by the defendants at a time when any of the Trade Secrets or Confidential Information was in the wrongful possession, custody, power or control of the defendants (paragraph 7); and

(4) against the 1^st, 2^nd and 3^rd defendants, a further injunction to restrain them from approaching, contacting, communicating with or soliciting clients of the plaintiff and four specified associated companies of the plaintiff for such period as the court might think fit (paragraph 8).

12.The Injunction Summons first came before L Chan J on 14 November 2014. On that occasion, the learned judge, upon the Original Undertakings given by the defendants, gave directions regarding the filing of evidence by the parties and adjourned the Injunction Summons to another date for argument.

13.The Original Undertakings comprised seven paragraphs. Paragraphs 1 to 6 of the undertakings essentially corresponded to the relief sought by the plaintiffs in paragraphs 1 to 6 of the Injunction Summons, while paragraph 7 of the undertakings somewhat narrowed down the scope of the injunctive relief sought by the plaintiff in paragraph 7 of the Injunction Summons.

14.In particular, by paragraph 7 of the undertakings, the 1^st, 2^nd and 3^rd defendants and each of them undertook not to enter into any contract, transaction or business with any person or entity whose name appeared in the Fox System and who had been approached by the defendants (whether by themselves or by their employee(s), agent(s), servants(s), contractor(s) or otherwise howsoever) “by use of the Plaintiff’s Trade Secrets and/or Confidential Information”, instead of “at a time when any of the Trade Secrets and/or Confidential Information was in the wrongful possession, custody, power or control of the Defendants” as stated in paragraph 7 of the Injunction Summons.

15.There are two other matters that I should mention at this stage:-

(1) Paragraph 7 of the Original Undertakings started off by providing that “[t]he Defendants and each of them be restrained …”. Notwithstanding such wording, it seems to me clear that the substance of the obligation referred to in that paragraph was something which the defendants agreed, by way of undertaking, not to do, and not what they were restrained by any order of the court from doing, even though a breach of an injunction order and a breach of an undertaking may carry the same legal or practical consequences.

(2) The defendants did not give any undertaking which corresponded to paragraph 8 of the Injunction Summons which, as earlier mentioned, sought to restrain them from approaching, contacting, communicating with or soliciting clients of the plaintiff and four specified associated companies.

16.The Chan Order was sealed on 20 November 2014.

17.What the plaintiff did after obtaining the sealed copy of the Chan Order on 20 November 2014 forms the crux of the 1^st defendant’s complaint under the Discharge Summons. The evidence shows that:-

(1) On 21 November 2014, the plaintiff issued an internal memo (“the Memo”), written in the Chinese language, to its staff members by posting it together with a copy of the Chan Order on a partition wall along a corridor in the plaintiff’s headquarters at 10/F, Billion Centre, 1 Wang Kwong Road, Kowloon Bay, Kowloon. The plaintiff removed the Memo from the partition wall on 1 December 2014 as a result of the complaint in respect of its contents raised by Messrs Mason Ching & Associates on behalf of the 1^st defendant, and removed the Chan Order from the partition wall on 26 March 2015 after the hearing before this court on 25 March 2015 (as to which see further below).

(2) On 24 November 2014, the plaintiff sent a notice (“the Notice”), written in the Chinese language, to clients of the SBC Group by email. It was stated in the Notice, as was the fact, that a copy of the Chan Order had been uploaded to the SBC Group’s website at www.sbcincorp.com. According to the plaintiff, the SBC Group had about 25,000 clients, of which the majority (about 70%) are Hong Kong companies owned by PRC citizens carrying on business in the PRC. It is not clear on the evidence as to how many of those clients were sent the Notice by the plaintiff. On 26 March 2015, the plaintiff removed the hyperlink to the Chan Order from its website.

(3) The plaintiff lodged a complaint about the defendants’ alleged wrongdoings to Hong Kong Institute of Certified Public Accountants (“HKICPA”) in or about July 2014, and later sent a copy of the Chan Order to HKICPA.

18.In passing, I should mention that it is also the 1^st defendant’s case that the plaintiff or a member of the SBC Group sent a copy of the Chan Order to the ICAC. The plaintiff denies that it ever did so (see paragraph 41 of the 4^th affirmation of Cheng Ka Fong filed on behalf of the plaintiff), but there is no evidence on whether any member of the SBC Group sent a copy of the Chan Order to the ICAC. It is not possible to resolve a dispute of fact of this nature in the present interlocutory applications. For the present purposes, I shall not have any regard to this allegation.

19.The Memo consisted of three substantive paragraphs and stated (inter alia) as follows:-

(1) On 4 November 2014, the plaintiff applied to the High Court for an injunction against three former employees, namely, the 1^st, 2^nd and 3^rd defendants, and the application was approved by L Chan J on 14 November 2014 (paragraph 1 of the Memo).

(2) The 1^st, 2^nd and 3^rd defendants (whether by themselves, their employees, agents or contractors) gave an undertaking to the court that they would not by any means communicate with or contact the plaintiff’s clients for entering into any transactions, signing any contracts or providing any business services. The defendants were also required to disclose to the plaintiff and to the court the plaintiff’s clients whom they had contacted and the details of any transactions that they had entered into with those clients (paragraph 2 of the Memo).

(3) In view of the fact that proceedings were currently in progress, it was not possible to set out every detail of the proceedings. However, the plaintiff would remind all staff again that having integrity is the minimum requirement for any person. The plaintiff further hoped that all staff would maintain a clear head, and would be not induced by bad friends to do any unlawful acts (paragraph 3 of the Memo).

20.At the bottom of the Memo, it was mentioned that a copy of the Chan Order was attached therewith (as earlier mentioned, the Chan Order was in fact posted up together with the Memo on a partition wall along a corridor in the plaintiff’s headquarters).

21.Paragraphs 1 and 2 of the Memo (with some slight changes) were reproduced in the Notice. Accordingly, the allegations mentioned in paragraph 19(1) and (2) above were also published to those clients of the SBC Group to whom the Notice had been sent.

22.In the relevant email sent by the plaintiff to the clients, it was alleged that the 1^st, 2^nd and 3^rd defendants had used improper means to steal information relating to the plaintiff’s clients, causing loss to the plaintiff and some of its clients. It was also stated that on 4 November 2014 the plaintiff applied to the court for an injunction against the 1^st, 2^nd and 3^rd defendants, and on 14 November 2014 the court approved the execution of a restraint against the three of them from in any way contacting the plaintiff’s clients concerning their business or affairs.

23.On 17 March 2015, the 1^st defendant took out the Discharge Summons.

24.The Injunction Summons and the Discharge Summons came before this court on 25 March 2015. The parties agreed that, by the time of that hearing, the effect of paragraphs 2, 3, 5 and 6 of the Original Undertakings given by the defendants had become spent. Further, in view of a concern raised by the court regarding the width of paragraph 7 of the Injunction Summons and the length of the prohibition under that paragraph, the plaintiff did not pursue the relief sought under that paragraph. Eventually, it was decided at the hearing on 25 March 2015 that, upon the New Undertakings (which replaced the Original Undertakings) given by the defendants, both the Injunction Summons and the Discharge Summons should be adjourned to another date for substantive argument. Directions were also given by the court for the filing of evidence in opposition and evidence in reply in respect of the Discharge Summons.

25.The New Undertakings, consisting of two paragraphs only, are materially the same as paragraphs 1 and 4 of the Original Undertakings. In summary, by the New Undertakings:-

(1) the 1^st defendant agrees not to use or distribute copies of the Server Documents, or convert them to her own use, and

(2) the 1^st, 2^nd and 3^rd defendants agree not to disclose, divulge or otherwise use the Trade Secrets and Confidential Information, or any documents or records containing such trade secrets and confidential information.

26.Both the Injunction Summons and the Discharge Summons came before this court again on 30 July 2015. At that hearing, Mr Kwan made it clear that if the application under the Discharge Summons was not successful, the 1^st defendant would be prepared to continue to abide by the New Undertakings until trial or further order of the court, and no further order was required to be made under the Injunction Summons. The 2^nd and 3^rd defendants (appearing in person) adopted the 1^st defendant’s position. On the other hand, Mr Jonathan Chang on behalf of the plaintiff indicated that the plaintiff would not pursue the relief sought under paragraphs 7 and 8 of the Injunction Summons, and would be content with the New Undertakings continuing until trial or further order of the court.

27.Accordingly, the focus of this decision is whether the Orders, or more relevantly the Original Undertakings and/or New Undertakings, ought to be discharged under the Discharge Summons.

Applicable principles

28.There are two principles which are relevant to Mr Kwan’s arguments under the Discharge Summons.

29.First, any act done or writing published, calculated to obstruct or interfere with the due course of justice or the lawful process of the court, without proper justification, is a contempt of court.

30.Second, within the broad principle mentioned in paragraph 29 above, it is a contempt of court for any party to a litigation to publish an untrue or unfair misrepresentation about the proceedings to the prejudice of the other party to the litigation.

31.The rationale and scope of the first principle was explained by Lord Diplock in his judgment in AG v Times Newspapers [1974] AC 273. In that judgment, Lord Diplock referred to three requirements for the due administration of justice and stated that conduct which is calculated to prejudice any of the three requirements or to undermine the public confidence that they will be observed is a contempt of court:-

“ The due administration of justice requires first that all citizens should have unhindered access to the constitutionally established courts of criminal or civil jurisdiction for the determination of disputes as to their legal rights and liabilities; secondly, that they should be able to rely upon obtaining in the courts the arbitrament of a tribunal which is free from bias against any party and whose decision will be based upon those facts only that have been proved in evidence adduced before it in accordance with the procedure adopted in courts of law; and thirdly that, once the dispute has been submitted to a court of law, they should be able to rely upon there being no usurpation by any other person of the function of that court to decide it according to law. Conduct which is calculated to prejudice any of these three requirements or to undermine the public confidence that they will be observed is contempt of court.” (309B-D)

32.As to what conduct may be held sufficient to constitute a contempt of court, Lord Diplock stated the following at 310F-H:-

“ … contempt of court in relation to a civil action is not restricted to conduct which is calculated (whether intentionally or not) to prejudice the fair trial of that action by influencing, in favour of one party or against him, either the tribunal by which the action may be tried or witnesses who may give evidence in it; it extends also to conduct that is calculated to inhibit suitors generally from availing themselves of their constitutional right to have their legal rights and obligations ascertained and enforced in courts of law, by holding up any suitor to public obloquy for doing so or by exposing him to public and prejudicial discussion of the merits or the facts of his ease before they have been determined by the court or the action has been otherwise disposed of in due course of law.”

33.There are many cases where the court found that unjustifiable publication of pending proceedings, or the allegations raised in pending proceedings, by a party to the litigation or by third parties (for example, newspapers) infringed the first principle mentioned in paragraph 29 above and amounted to a contempt of court. See, for example, Re Cheltenham and Swansea Railway Carriage and Wagon Company (1869) LR 8 Eq 580; Bowden v Russell (1877) 46 LJ Ch 414; Campbell v Kennedy (1884) 3 NZLR (SC) 8; J & P Coats v Chadwick [1894] 1 Ch 347; Ilkley Local Board v Oswald Lister (1895) 11 TLR 176.

34.In Re Liu Lee Yuk-ching [1982] HKLR 399, a husband (who was the petitioner in a divorce suit) obtained an ex parte injunction which contained a non-molestation clause and a restraint on the wife’s proprietary and business dealings. The husband’s solicitors then “served” copies of the ex parte order on BNP (mortgagees of a flat in the wife’s name which the husband alleged was a family asset), The Kowloon Stock Exchange (where the wife owned a seat, which the husband also alleged was a family asset), and the Registrar of Companies (apparently for filing against three limited companies in which the wife was a shareholder). At the inter parties hearing, the ex parte injunction was discharged upon undertakings given by both the wife and the husband. The husband’s solicitors then sent the inter partes order to BNP (who sought clarification of the effect of the order, which the husband’s solicitors declined to give) and The Kowloon Stock Exchange, and also sent both orders to Citibank with whom the wife had a mortgage and an overdraft. The husband’s solicitors declined to reveal to the wife’s solicitors to or upon which person or company either of the orders had been sent or served. The Court of Appeal found that the husband’s conduct amounted to an abuse of the lawful process of the court which must be treated as a contempt.

35.In relation to the restriction which the law imposes upon a party’s freedom to publish information relating to ongoing proceedings, the Court of Appeal stated following general principles at 408F-409F:-

“ (i) ‘Any act done or writing published, calculated to obstruct or interfere with the due course of justice or the lawful process of the courts is a contempt of court’ per Lord Russell of Killowen C.J. in Reg v. Gray 1900 2 Q.B. 36 at page 40.

(ii) ‘The jurisdiction (contempt) must surely be limited to wilful and malicious publications going beyond the necessity. .... When a court has to decide either that there shall be no justice available for people suffering under wrong, or that malicious publication should be prevented, I believe that the second is the right alternative’. Per Earl Loreburn in Scott v. Scott 1913 A.C. 417 at pages 448-9.

(iii) ‘One of the safeguard of legal procedure in this country, is the prescriptive authority of courts of record to visit with summary punishment persons who purposely obstruct or divert the cause of justice’: per Lord Merrivale P. in Apted v. Apted 1930 P.246 at p. 263.

(iv) ‘The jurisdiction sought to be invoked in this case is the jurisdiction which it is very necessary that the court should possess both for the vindication of its own authority and for the protection of the litigants who may come before it. On the other hand it is a jurisdiction the exercise of which may deprive the subject of his liberty without the intervention of a jury - it is therefore a jurisdiction to be used with circumspection and only to be invoked for grave and serious reasons and on real and substantial grounds. It certainly ought not to be invoked merely for the purpose of getting costs which I do not suggest is the purpose in this case. It ought not to be invoked merely for the purpose of satisfying a feeling of vengeance against the person who may have done something which the opposite side of the litigation does not like’: per Goddard J. (as he then was) in Gaskell v. Chambers Ltd. 1936 2 K.B. 595 at p. 603.

(v) The Court should consider whether powers are available to it other than to punish for contempt.

(vi) It is no defence, though it may be a factor in mitigation of penalty, that, as in the present case, the acts or omissions complained of resulted from advice given by counsel or solicitors: Re Mileage Conference Group 1966 1 W.L.R. 1137 at p. 1161-2.”

36.As to why the husband was considered to have abused the court’s process and acted in contempt of court, the Court of Appeal had this to say:-

“ It remains to determine the point at which bona fide pursuit of a claim ends and abuse begins. Mr. Payne for the husband suggested for example that bona fide belief in a claim was decisive and that nothing done in such belief could amount to abuse or contempt. We cannot accept this... Although no doubt the temptation is the greater in the case of a thin claim, there can we think be an abuse of the court's procedure by a party who bona fide believes that he has some claim. Only in the extreme case of no bona fide belief in any claim would this factor in our view be decisive.

Assuming such belief, the ultimate question for the court must be does the conduct complained of amount to deliberate misuse by the alleged contemnor of procedures designed to further the cause of justice. The court must not prevent or inhibit vigorous prosecution of claims or proper use of the advantages of the rules. Litigation it was once said is not a ‘vicarage tea party’. But bullying and harassment are a different matter, particularly when they take place not in or through the Court but by conduct and publicity outside the Court. Whilst not being over ready to find abuse, the Court we think must be prepared to condemn it when it occurs. The intention of the party whose conduct is in question may on occasions be decisive, as Lord Loreburn suggested. Sometimes his conduct may so obviously go beyond what could reasonably have been thought to be proper and be so obviously calculated to pressurize threaten, hurt or harass the other party that the abuse will be clear. Where however the conduct is more equivocal the court must look for the presence or absence of a positive intent such as we have just described.

No one other than the parties themselves had any possible legitimate interest in Part I and II of the learned judge's orders. Whatever may be said about Part III, it was not ‘reasonably necessary’ to serve those parts upon B.N.P., The Kowloon Stock Exchange, Citibank or the Registrar of Companies. Mr. Payne in argument did not attempt to advance one. Equally it must have been transparently obvious to the husband and his advisers that the publication of those parts of the orders to such parties would seriously hurt and embarrass the wife. She would be made to appear to them as a woman who had behaved so badly that the Court had seen fit to dub her as a molester and to restrain her. In the circumstances described this was a particularly unfair suggestion. To those who were aware of her connection with the company and the firm, the fact that the court had decided that she must not even enter their premises was calculated to be particularly damaging to her personal and to her commercial reputation. It must be doubted how many recipients of these orders realised that the wife had been so condemned unheard.

The story however does not end there. In our judgment the husband's conduct since last December is consistent and consistent only with a deliberate planned attempt to pressurize the wife into a speedy settlement to save herself further public embarrassment… In our judgment this conduct on behalf of the husband was an abuse of the ‘lawful process of the court’ in relation to which it has no alternative powers and which it must treat as a contempt.”

37.In the end, the Court of Appeal accepted an undertaking given by the husband to take all such steps as were necessary and possible to eradicate the effects of the conduct complained of and, taking into account the fact that the husband was throughout acting upon the advice of lawyers as well as his apologies tendered to the court, did not make any order for committal but ordered the husband to pay the wife’s costs on solicitors and own client basis.

38.In passing, I note that the Court of Appeal referred to with approval the judgment of Kerr LJ in Z Limited v A-Z [1982] 2 WLR 288 (which was a Mareva case) and relied on it to hold that applicants for an ex parte Mareva injunction or injunction in support of a proprietary claim are generally under a duty in their supporting evidence to say “on what third parties it is intended – and reasonably necessary – to serve a copy of the injunction”, and that “[t]he breadth of intended service should be known to and controlled by the court by undertakings in its order” (see Re Liu Lee Yuk-ching at 409F-410D).

39.As I remarked in the course of the hearing on 25 March 2015, so far as this court is aware, it does not appear to be the current, or usual, practice for applicants in such ex parte applications to provide a list of the persons on whom the injunction order is intended to be served. How far the abovementioned duty should be extended to applicants for other types of ex parte injunction, and whether the same duty should be imposed generally on applicants for inter partes injunction (as in the present case) are not questions which I need to answer in order to dispose of the Discharge Summons. I wish nevertheless to take this opportunity to remind practitioners, at least in relation to ex parte applications for a Mareva injunction or proprietary injunction, of the duty referred to by the Court of Appeal on the part of the applicants to identify or state, in the supporting evidence, the persons on whom it is intended to serve the injunction order.

40.Finally, I may add that whether publication of pending proceedings, or the allegations raised in pending proceedings, can be justified, and the extent of permissible publication, must depend on the facts and circumstances of the case and cannot be generalised. Limited publication of pending proceedings or the allegations raised in pending proceedings may be justified on the ground that it is necessary for protecting the legitimate interests of the party making the publication, or for the purpose of arousing public discussion or opinion on matters of general public interest. As observed by Lord Diplock in AG v Times Newspapers at 313A-B:-

“ I entirely agree that discussion, however strongly expressed, on matters of general public interest of this kind is not to be stifled merely because there is litigation pending arising out of particular facts to which general principles discussed would be applicable. If the arousing of public opinion by this kind of discussion has the indirect effect of bringing pressure to bear on a particular litigant to abandon or settle a pending action, this must be borne because of the greater public interest in upholding freedom of discussion on matters of general public concern.”

41.The second principle mentioned in paragraph 30 above is supported and well illustrated by the decision of Warrington J in Gillette Safety Razor Company v A W Gamage Ltd (1907) 25 RPC 1. In that case, the plaintiff, who was the owner of a patent for safety razors, sold them in boxes, to each of which was affixed a limited licence containing the restriction that the razor therein should not be resold by any retailer or advertised for sale at less than a certain stated sum. The plaintiff brought an action against the defendant from breaking this condition or from otherwise infringing the patent and moved for an interlocutory injunction. When the motion first came before the court, the defendant asked for time to file affidavits, but refused to give any undertaking. The court stood the motion over for a week, granting an interim injunction in the meantime. That order was then continued by consent, until the second motion day when Warrington J refused to grant the interlocutory injunction sought by the plaintiff, on the ground that the plaintiff had delayed in taking action.

42.The defendant, who previously to the refusal of the interlocutory injunction, had put in their window a solicitors’ letter informing it of the interim injunction, after such refusal exhibited a placard as follows:-

“ Why pay exorbitant prices ... In the High Court of Justice … Motion to restrain Gamages from selling the Gillette razors below 2ls. was refused. Buy to-day. Gamages’ price 18s. 6d. Advertised, 2ls.”

43.At page 6 of the report, Warrington J pointed out that:-

“ Everybody who is familiar with the proceedings in this Court knows perfectly well that an Order of that kind [ie the order declining to grant the interlocutory injunction] decides nothing, not even that the Defendants have a prima facie case for resisting the Plaintiffs’ claim, or that the Plaintiffs have not a prima facie case for enforcing their claim. It decides nothing except that the temporary relief which the Plaintiffs were asking for could not in the discretion of the Court be granted because they had waited so long before applying for it.”

44.The learned judge then considered the meaning of the placard and came to the view that it meant that:-

“ the Plaintiffs had failed in establishing a right to restrain Gamages from selling razors below 2ls. There is not a word to suggest that the refusal was merely on the ground that the Plaintiff had been guilty of some delay in commencing their proceedings. It seems to me that an ordinary customer reading that placard would come to the conclusion that the attempt of the Plaintiffs to stop Gamages from selling at 18s.6d. had failed, and that the they were therefore entitled for the future to sell at 18s. 6d.”

45.Warrington J held that the defendant’s conduct amounted to a contempt of court, on the following basis:-

“ It seems to me that the application is really founded on this – that it is a contempt of this Court to unfairly or untruly represent, to the prejudice of one of the parties to the cause, the proceedings that have taken place in the cause, and there is abundant authority for holding that this is contempt … that in order to make out a contempt of Court, if you get a misrepresentation, to the prejudice of one of the parties, of the result of the proceedings, it is not necessary to show further that it will tend to prejudice the future conduct of the proceedings, because such a contempt as that to which I have referred may well be committed in a case in which the proceedings have come to an end.”

46.In the result, Warrington J granted an injunction to restrain the defendant from misrepresenting the effect of the court’s order with costs to the plaintiff.

47.In Re The William Thomas Shipping Company, Limited [1930] 2 Ch 368, a director of a company authorised newspapers to publish interviews in which he adversely criticised the conduct of the plaintiff (a debenture holder) in having obtained the appointment of a receiver in a debenture holders’ action, without stating, as were the facts, that the appointment was on the ground of jeopardy and the company could not continue to carry on business unless money was immediately found. It was held that the director’s conduct amounted to a contempt of court. In Maugham J’s judgment, the following principles were stated:-

“ In other words, it is a contempt of Court … to abuse the parties concerned in a pending cause or matter by injurious misrepresentations which may tend to influence the conduct of the party aggrieved in the proceedings or which may tend to cause other parties who have a proper cause of action not to approach the Court …

I must express my opinion that the jurisdiction of the Court is not confined to cases where the order of the Court or the future orders of the Court are likely to be directly affected in some way. If it were so confined, I doubt whether there would be any limit to what a litigant, or some other person, might say pending the hearing of an action in the Chancery Division, unless, indeed, it could be shown that possible witnesses in the case are being interfered with. I think that to publish injurious misrepresentations directed against a party to the action, especially when they are holding up that party to hatred or contempt, is liable to affect the course of justice, because it may, in the case of a plaintiff, cause him to discontinue the action from fear of public dislike, or it may cause the defendant to come to a compromise which he otherwise would not come to, for a like reason … I am not saying that if Sir Robert Thomas had fairly stated the result of the evidence on which the Court made the order for the appointment of a receiver and manager, and had in a temperate manner expressed his opinion that another course ought to have been taken by the plaintiff, the Court would have thought fit to interfere or could properly have interfered. What I think is so regrettable here is that, without in the very least intimating the grounds upon which the application for the receiver was made, and, in fact, suggesting that there were no grounds worthy of consideration, he then proceeds to say that the Court granted the application, with the result that the goodwill of the business and the immense organization which had been built up on the continent was smashed up in a day. I think that that is a wholly incorrect statement of what took place before this Court, and when he adds the comment that ‘No one in shipping circles can understand this line of conduct’, I think that he is suggesting that the plaintiffs have acted with gross impropriety; and that suggestion would, or might, tend to dissuade them from continuing in the action properly to represent the rest of the debenture holders.” (374-377)

48.In the result, having regard to (inter alia) the apology given by the director, Maugham J ordered him to pay the costs of the proceedings without imposing any further sanction.

Plaintiff’s conduct amounted to mis-use of COURT’S process OR JURISDICTION

49.According to Mr Kwan, the plaintiff, by posting up the Memo in the plaintiff’s headquarters, misrepresented to its staff members working there that (i) the plaintiff’s application for an injunction against the defendants had been approved by the court, and (ii) the 1^st defendant had given an undertaking not to the contact the plaintiff’s clients for transacting business, and the same misrepresentations were made to the plaintiff’s clients to whom the Notice had been sent. Mr Kwan also complains that the Memo conveyed the false impression that the court had found, or confirmed, that the defendants had engaged in criminal activities.

50.In addition, Mr Kwan complains that the plaintiff indiscriminately published and distributed the Chan Order to persons (including HKICPA) who had no legitimate interest to receive it while proceedings were pending.

51.Mr Kwan argues that the 1^st defendant has suffered prejudice as a result of the plaintiff’s conduct complained of in, inter alia, the following aspects:-

(1) the Memo and the Notice would deter or tend to deter the plaintiff’s employees and clients from coming forward as witnesses for the 1^st defendant;

(2) the allegations contained therein would destroy or adversely affect her professional career and reputation; and

(3) she might be pressurised into settling the plaintiff’s claims against her.

52.Mr Kwan contends that such conduct on the part of the plaintiff was a mis-use of the court’s process or jurisdiction, and therefore a contempt of court, and the Orders (including the undertakings given by the defendants) ought to be discharged on this ground.

53.In my view, a fair reading of the Memo and Notice would clearly convey, inter alia, the following allegations to the recipients of the Memo or Notice:-

(1) the High Court had approved the plaintiff’s application for an interlocutory injunction against the 1^st, 2^nd and 3^rd defendants (this allegation was reinforced by the contents of the plaintiff’s email to its clients accompanying the Notice); and

(2) the 1^st, 2^nd and 3^rd defendants had given a general undertaking not to communicate with or contact any of the plaintiff’s clients to enter into transactions, sign contracts or provide business services.

54.The first allegation mentioned in paragraph 53(1) above plainly misrepresented the true nature or effect of the Chan Order. It seems to me clear that what L Chan J did was merely to accept certain undertakings offered by the 1^st, 2^nd and 3^rd defendants and adjourned the hearing of the Injunction Summons to another date for substantive argument on the basis that the plaintiff’s interests would be sufficiently protected by those undertakings in the meantime. In no way can it be supposed that the learned judge had approved the plaintiff’s application, or found that the plaintiff was entitled to any interlocutory injunction. As a matter of fact, at the hearing on 25 March 2015, this court raised a concern as regards the width of paragraph 7 of the Injunction Summons and the length of the prohibition under that paragraph, and the plaintiff did not pursue the relief sought under that paragraph. In my view, had the matter been fully argued before L Chan J on 14 November 2014, it was at the very least open to serious debate as to whether any relief in terms of paragraph 7 of the Injunction Summons ought to be granted, or whether paragraph 7 of the Original Undertakings should be required as a condition for adjourning the Injunction Summons.

55.The second allegation mentioned in paragraph 53(2) above also seems to me to go beyond the proper scope or effect of the Original Undertakings given by the 1^st, 2^nd and 3^rd defendants. It will be recalled that under paragraph 7 of the Original Undertakings, 1^st, 2^nd and 3^rd defendants undertook not to enter into any contract, transaction or business with any person or entity whose name appeared in the Fox System and who had been approached by them (whether directly or indirectly through others) “by use of the Plaintiff’s Trade Secrets and/or Confidential Information”. In other words, the element of having made use of the Plaintiff’s Trade Secrets and/or Confidential Information was an essential part of the undertaking which however was not mentioned in the Memo or Notice. The 1^st, 2^nd or 3^rd defendants could come into contact with the plaintiff’s clients without in any way having made use of the Plaintiff’s Trade Secrets and/or Confidential Information and enter into transactions or contracts or provide services with or to them without being in breach of paragraph 7 of the Original Undertakings.

56.In my view, the plaintiff did misrepresent the true nature, scope or effect of the Chan Order. I also accept Mr Kwan’s submission that the 1^st defendant has suffered prejudice as a result of such misrepresentation. The same considerations apply to the 2^nd and 3^rd defendants.

57.In the 3^rd affirmation of Cheng Ka Fong filed on behalf of the plaintiff, it is said that the Memo and the Notice were not drafted by a legally qualified professional. However, the plaintiff was represented by solicitors and counsel at the hearing before L Chan J on 14 November 2014. There is no suggestion that the plaintiff was not given a full or proper explanation of the nature, scope and effect of the Chan Order prior to issuing the Memo and Notice.

58.The plaintiff also relies upon the fact that a copy of the Chan Order was posted up alongside the Memo in the plaintiff’s headquarters, and that the Notice mentioned that a copy of the Chan Order had been uploaded to the SBC Group’s website. In my view, it cannot be fair or reasonable to assume that the plaintiff’s employees or clients would read not only the Memo or Notice (written in simple Chinese) but also read and understand the Chan Order (a fairly long document written in the English language). Also, as mentioned in the plaintiff’s evidence, the majority of the SBC Group’s clients (about 70%) are Hong Kong companies owned by PRC citizens carrying on business in the PRC.

59.In all, I am of the view that the plaintiff mis-used the court’s process or jurisdiction by publishing untrue or unfair misrepresentations about the Chan Order to its employees and clients to the prejudice of the 1^st, 2^nd and 3^rd defendants. Since the 1^st defendant is not seeking an order of committal against the plaintiff, it is not necessary for me to make a formal finding of contempt of court against the plaintiff. As I see it, the 1^st defendant is seeking a discharge of the Orders by reason of the conduct of the plaintiff which she complains of. Whether the Orders ought to be discharged depends, in my view, on the nature and substance of such conduct, and not whether it amounts to a contempt of court.

60.Having reached this conclusion, it is not necessary for me to consider whether the plaintiff also abused the court’s process or jurisdiction by indiscriminately publishing and distributing the Chan Order to persons who had no legitimate interest to receive it. It seems to me that while the plaintiff might have a legitimate interest to publish the Chan Order to its employees and clients, the same cannot be said of the publication to effectively the world at large (by uploading the Chan Order to the SBC Group’s website) or to HKICPA. Such wide publication of the Chan Order would naturally bring pressure to bear on the 1^st, 2^nd and 3^rd defendants, and had the tendency of forcing them to settle the plaintiff’s claims on terms which they might otherwise not be prepared to accept. I do not, however, need to reach a final view on this issue, and prefer to rest my decision on the basis mentioned in paragraph 59 above.

Orders should not be discharged

61.It is not Mr Kwan’s submissions, as I understand them, that the existing evidence and materials would not justify the court granting an interlocutory injunction in terms of paragraphs 1 and 4 of the Injunction Summons, absent some proper undertakings to be given by the defendants to the same effect. On the contrary, as mentioned above, Mr Kwan made it clear at the hearing on 30 July 2015 that if the application under the Discharge Summons was not successful, the 1^st defendant would be prepared to continue to abide by the New Undertakings until trial or further order of the court, and no further order was required to be made under the Injunction Summons. The 2^nd and 3^rd defendants (appearing in person) adopted the 1^st defendant’s position. I also consider, on the basis of the existing evidence and materials before the court, that the interlocutory injunction sought by the plaintiff in terms of paragraphs 1 and 4 of the Injunction Summons would be justified.

62.I take into account the fact that the plaintiff has already removed the Memo and the Chan Order from the plaintiff’s headquarters, and the hyperlink to the Chan Order from its website.

63.I accept that the prejudice already caused to the defendants as a result of the plaintiff’s conduct complained of cannot readily be eradicated or undone. I also bear in mind the fact that the plaintiff has not apologized for its conduct which I have found to amount to a mis-use of court’s process or jurisdiction. However, I consider that no order that can be made by the court can achieve perfect justice in the circumstances of this case.

64.On the totality of the evidence and materials before me, I do not consider that discharging the Orders would be a rational, proportional or appropriate response to the finding made in paragraph 59 above that the plaintiff’s conduct amounted to a mis-use of court’s process or jurisdiction. I would reach the same conclusion even if it were necessary for me to consider the question mentioned in paragraph 60 above (ie whether the plaintiff also abused the court’s process or jurisdiction by indiscriminately publishing and distributing the Chan Order to persons who had no legitimate interest to receive it) and I came to an affirmative answer to that question. I consider it sufficient to mark the court’s disapproval of the plaintiff’s conduct by ordering it to pay to the defendants their costs of and occasioned by the Injunction Summons and the Discharge Summons, to be taxed on an indemnity basis if not agreed

Disposition

65.Subject to the question of costs which I shall deal with below:-

(1) I make no order under the Discharge Summons; and

(2) subject to the defendants’ undertakings as recorded in Schedule A to the Chow Order which shall continue until trial or further order of the court, I also make no order under the Injunction Summons.

66.In relation to costs, I make an order nisi (which shall become absolute unless an application is made to vary it in accordance with Order 42, rule 5B(6) of the Rules of the High Court, Cap 4A) that the plaintiff shall pay to the defendants the costs of and occasioned by the Injunction Summons and the Discharge Summons, including all costs reserved, to be taxed on an indemnity basis if not agreed, with certificate for one counsel. Such costs are to be paid forthwith after agreement or taxation. For the avoidance of doubt, this order does not affect specific costs order(s) previously made by the court in favour of any party or parties to this action.

67.Lastly, it remains for me to thank counsel for the assistance that they have rendered to the court.

Mr Jonathan Chang and Ms Jacqueline Law, instructed by Lo & Lo, for the plaintiff

Mr Steven Kwan, instructed by Mason Ching & Associates, for the 1^st defendant

Wong Chun Yat, the 2^nd defendant acting in person

Chiu Cheuk Laam, the 3^rd defendant acting in person