Manulife Financial Asia Ltd v. Kenneth Joseph Rappold and Others

HCA 580/2024

[2024] HKCFI 989

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 580 OF 2024

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D E C I S I O N

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A.  INTRODUCTION

1.This is the call-over hearing (fixed for 30 minutes) of the Plaintiff’s inter partes Summons dated 26 March 2024 (“P’s Summons”) for interim injunctive relief against the 1^st Defendant pending the determination of this action.

2.On 28 March 2024, the Plaintiff applied ex parte on notice for an interim-interim injunction, which application was eventually resolved by the provision by the 1^st Defendant of an undertaking up to today’s hearing in the terms as set out in the Order of DHCJ Kent Yee dated 28 March 2024 (“D1’s Undertaking”).

3.At today’s hearing, the Plaintiff seeks from the Court interim-interim injunctive relief against the 1^st Defendant pending the substantive determination of P’s Summons, and expedited directions for the disposal of P’s Summons.

4.The Defendants have no objection to expedited directions being given, but are opposed to any interim-interim injunction being granted in the meantime against the 1^st Defendant on the basis that (i) the Plaintiff has not crossed the merits threshold for any injunctive relief, as the subject non-compete covenant which it intends to enforce has apparent problems (including as to its scope and duration); and (ii) the balance of convenience militates against the grant of any interim-interim injunction, and that refusing such relief would carry a lower risk of injustice.

5.In terms of evidence, P’s Summons is supported by the Affirmation of David Gordon McDonald dated 28 March 2024 and filed on 2 April 2024 (“McDonald 1^st”). The 1^st Defendant filed an affirmation of Chow Lok Kwan Emily on 3 April 2024, exhibiting a signed copy the Affidavit of the 1^st Defendant (“Rappold 1^st”) , but reserves the right to file further evidence to respond more fully to the Plaintiff’s case. The 2^nd and 3^rd Defendants have also filed the Affidavit of Mok Yee Wing on 3 April 2024, exhibiting an unsworn draft Affidavit of Mr. Piet Pascal L. Grillet, the 3^rd Defendant’s Group General Counsel (“Grillet 1^st”), the contents of which he has confirmed.

6.The main issue for this Court to decide today is whether interim-interim injunctive relief is justified.

B.  BRIEF BACKGROUND

7.The Plaintiff is an insurance company operating in the Asia Segment of Manulife.

8.In gist, the dispute between the parties concern the alleged threatened breach by the 1^st Defendant, who was the Chief Financial Officer, Asia (“CFO Asia”) of the Plaintiff until 31 October 2023, of a 12-month non-compete covenant (“NCC”) contained in his Employment Agreement with the Plaintiff dated January 2018 (“Employment Agreement”).

9.The NCC provides as follows:

“Non-Competition

You agree that you will not at any time during your employment with the Company and for a period of 12 months following a voluntary termination of your employment, be employed in a Similar Capacity by a Competitor, own more than 10% of the equity in a Competitor or act as a director of, or consultant or advisor to, any Competitor without the Company or Manulife’s prior written consent.

“Similar Capacity” means the same or similar position, or having the same or similar responsibilities, accountabilities and duties that you have or had in connection with your employment with the Company or Manulife.

A “Competitor” is any person or company engaged in or planning to engage in business that: (1) is the same or similar to the business of, in whole or in part, to those of the Company or Manulife and its affiliates and subsidiaries, including without limitation providing financial protection, wealth management, asset management and other financial products and services; or (2) involves the selling or offering of products, processes, programs, or services that are the same or similar, in whole or in part, to those of the Company or Manulife and its affiliates and subsidiaries or that were under active consideration by the Company or Manulife and its affiliates and subsidiaries during your employment with the Company and which have not been abandoned in writing by the Company or Manulife and its affiliates or subsidiaries.”

10.The Employment Agreement was voluntarily terminated by the 1^st Defendant on 31 October 2023.

11.During his employment with the Plaintiff, the 1^st Defendant was a Layer 3 Senior Executive with the Manulife group, and was responsible for (inter alia) providing financial leadership for business decisions of the Plaintiff’s Asia Division and its business units in the Asia Segment.

12.When the 1^st Defendant resigned, he informed the Plaintiff that he would be moving to Thailand and pursue a different career in executive coaching, so there was no issue with the NCC.

13.However, according to the 1^st Defendant’s evidence, in around December 2023, he learned from Prudential that there was an opportunity for him to take on a new group executive role as Chief Strategy and Transformation Officer (“CSTO”) (later changed to Chief Transformation Officer (“CTO”), to be responsible for implementing and executing Prudential’s existing strategies and plans. According to the 1^st Defendant, this was “a once in a blue moon opportunity”, especially in light of his career background and experience.

14.In around mid-January 2024, the 1^st Defendant informed the Plaintiff that he intended to join Prudential, which was later reconfirmed by a letter from the 1^st Defendant’s solicitors to the Plaintiff dated 26 January 2024 in which acknowledgement was sought from the Plaintiff that the 1^st Defendant could commence employment with the 2^nd Defendant on 1 March 2024 without being in breach of the NCC.

15.According to the Plaintiff’s evidence, Prudential is a key competitor of the Plaintiff.

16.The Plaintiff did not agree to release the 1^st Defendant from the NCC, which would not expire until 31 October 2024. The parties’ solicitors engaged in a chain of correspondence but failed to reach any consensus.

17.In particular, by a letter dated 22 February 2024 from the 1^st Defendant’s solicitors to the Plaintiff’s solicitors (“D1’s 22 Feb Letter”), the 1^st Defendant (inter alia) (i) stated that the purpose of the letter was a “final attempt” to reach an agreement without litigation; (ii) maintained his view that the NCC is unenforceable, (iii) stated that he had not retained property of the Plaintiff nor intended to utilize or disclose dated information that he may have in his head; and (iv) offered to provide an undertaking that he will not use or disclose any confidential information of the Plaintiff which he may have in his head in exchange for an agreement that he could start employment with the 2^nd Defendant without being considered to be in breach of the NCC; (v) requested confirmation from the Plaintiff no later than 27 February 2024 as to whether the proposal was acceptable.

18.On 29 February 2024, the Plaintiff’s solicitors responded to state (inter alia) that: (i) they “fully appreciated that it is difficult to uphold a 12-month non-competition restriction and that the burden will fall on [the Plaintiff] to justify why such a restriction is necessary to protect its legitimate business interests”; and (ii) they are confident that the Plaintiff would be able to show that the NCC is necessary, reasonable and enforceable.

19.On 19 March 2024, the 1^st Defendant’s solicitors informed the Plaintiff’s solicitors by letter (“D1’s 19 March Letter”) that the 1^st Defendant “will be joining Prudential PLC [i.e. the 2^nd Defendant herein] on 2 April 2024”. The 2^nd and 3^rd Defendants (the 3^rd Defendant being the parent company of the 2^nd Defendant) also confirmed by their solicitors’ letter dated 19 March 2024 that the 1^st Defendant’s employment with the 2^nd Defendant was due to commence on 2 April 2024.

20.On 26 March 2024, the Plaintiff commenced this action by Writ of Summons and filed P’s Summons for interim injunctive relief.

21.After attempts by the Plaintiff’s solicitors to procure suitable undertakings from the 1^st Defendant and to agree expedited directions for P’s Summons failed, the Plaintiff applied ex parte on notice for an interim-interim injunction on 28 March 2024 (“Ex Parte Hearing”).

22.Just before Ex Parte Hearing, the 1^st Defendant offered D1’s Undertaking but only up to today’s hearing. His solicitors also informed the Plaintiff’s solicitors that the 1^st Defendant would be travelling to the UK on holiday until 22 April 2024, and thus would not be starting his employment with the 2^nd Defendant on 2 April 2024 as previously indicated.

23.According to the 1^st Defendant’s evidence, by reason of the Plaintiff’s threat to apply for injunctive relief, he agreed with the 2^nd Defendant to defer his start date such that he would take a period of unpaid leave during which he would travel to UK and Europe and would not be onboarded or perform work for the 2^nd Defendant until 22 April 2024.

24.As confirmed by the Defendants’ counsel at today’s hearing, the 1^st Defendant formally commenced his employment with the 2^nd Defendant on 2 April 2024, albeit that he then went on unpaid leave and thus has not yet started the performance of his employment duties.

C.  APPLICABLE LEGAL PRINCIPLES

25.As stated by the Court of Appeal in the case of China Shanshui Cement Group Limited v Zhang Caikui [2018] HKCA 409 at §§13-19:

(1)  interim-interim relief is meant to be an urgent temporary stop-gap measure and the circumstances are such that the Court has to do practical justice on the balance of fairness even though it may not have sufficient time to consider the matter fully;

(2)  the extent to which a judge gives weight to the merit on an issue in a particular case depends very much on the context and they are obviously other factors at play including the effect of the grant or refusal of the relief and the subject matter at stake; and

(3)  the Court should take whichever course appears to carry the lower risk of injustice if it should turn out that it is wrong.

26.As the NCC will, on the Plaintiff’s case, expire on 31 October 2024 and it is most unlikely that the trial of the action can take place before that date, it is well-established that the American Cyanamid test has to be applied with a rider that the Court should have a greater regard to the Plaintiff’s prospect of success. In cases involving non-compete covenants, the plaintiff is commonly required demonstrate a “reasonably good prospect of success”, or that the plaintiff would be “likely to succeed at a trial”: see Midland Business Management Ltd v Lo Man Kui [2011] 1 HKLRD 470 at §§6-8; HSBC Bank Plc v Wallace [2008] 1 HKLRD 613 at §§38-39; WPP Marketing v Christopher O’Donnell (unrep., HCA 637/2013, 24.5.2013) at §§10-11.

27.However, at the present stage when the Court has to consider whether to grant an interim-interim injunction pending the determination of a full hearing of P’s Summons, I accept the submissions of Ms Frances Lok (counsel for the Plaintiff), that there is no strict merits threshold as such. The proper approach is for the Court to take whichever course appears to carry a lower risk of injustice if it should turn out that it is wrong.

28.Of course, if the Court is of the view that there is not even a serious issue to be tried on the Plaintiff’s claim, there must be a risk of injustice in granting an interim-interim injunction: see China Shanshui Cement Group Limited (supra) at §§18-19. Aside from that, the Court’s provisional views on the relative merits of the parties’ respective cases would be relevant for the purpose of deciding where the balance of convenience lies, and which course would carry the lower risk of injustice.

29.The applicable principles regarding enforceability of restrictive covenants in employment contracts are not in dispute:

(1)  It is well-established that covenants in employment contracts which seek to restrict an ex-employees’ ability to work for a competitor is unenforceable unless the employer seeking to enforce it can show that (i) it is reasonable in the interests of the parties and in the interests of justice, and (ii) it goes no wider than is reasonably necessary for the protection of the employer’s legitimate business interests: see HSBC Bank Plc v Wallace (supra) at §§62-63; WPP Marketing (supra) at §13.

(2)  The time for ascertaining the reasonableness of a non-compete covenant is the time of the making of the contract: see Commercial Plastics Ltd v Vincent [1965] 1 QB 623 at 644B.

(3)  The greater the duration of the covenant and the wider its geographical extent, the more difficult it will be to justify it as reasonable: Employee Competition: Covenants, Confidentiality, and Garden Leave (3^rd ed.) at §6.243.

D.  ENFORCEABILITY OF THE NCC

30.As this Court is not dealing with P’s Summons substantively today, and given that the parties have not yet filed full evidence to set out their respective positions, this Court’s views on the merits of the Plaintiff’s claim (as set out below) should necessarily be treated as provisional in nature, and open for further argument and revisiting in the future, including at the substantive hearing of P’s Summons: see China Shanshui Cement Group Limited (supra) at §16.

31.On a preliminary review of the matter, and on the basis of the current state of the evidence, and despite the able submissions of Ms Lok, I am of the view that the Plaintiff has not demonstrated that its claim to enforce the NCC has reasonably good prospect of success at trial or that the Plaintiff has demonstrated that it has better prospects of success than the Defendants on whether the NCC would be enforceable.

32.First, it is apparent that the NCC contains no geographical limitation, and is thus in substance a worldwide non-compete covenant that prohibits the 1^st Defendant from being employed by any person that falls within the definition of a “Competitor”.

33.As a matter of general legal principle:

(1)  The absence of any spatial limit in a non-compete clause is itself regarded as a “remarkable feature” which prima facie warrants justification: see Touch Up Production Ltd v Choi Wai Fan (unreported, HCA 1028/2004, 26 July 2005) at §§15(4), 20.

(2)  Absent any proper justification, worldwide restraints of such kind have been held to be “far too wide to be enforceable”: see CEF Holdings Ltd v Mundey [2012] EWHC 1524 at §65(ii).

34.In order to tackle this criticism, Ms Lok had, at the commencement of today’s hearing, provided to the Court a revised version of the NCC (“Revised NCC”), in effect deleting or “blue-pencilling” certain phrases in the NCC, in particular, the reference to “Manulife” in the definition of “Similar Capacity” and the reference to “Manulife and its affiliates and subsidiaries” from the definition of “Competitor”.

35.Ms Lok submits as follows:

(1)  There is no strict rule that there must always be an express geographical limitation in order for a non-compete covenant to be held by a court to be enforceable. Whether such express limitation is required depends on the facts.

(2)  In this particular case, and on the basis of the Revised NCC, there is no need to have any express geographical limitation, as the same reasonable limitation is achieved by defining what is the “Similar Capacity” and what is “Competitor”.

(3)  After the proposed “blue-pencilling”, Ms Lok submits that it is plain that “Similar Capacity” refers only to the Asia Segment (and not other parts of the world). There is no need, as Ms Lok submits, for the Court to imply any terms into the NCC to enable it to have such effect.

36.With respect, I am unable to see any merit in this contention:

(1)  The term “Similar Capacity” in the NCC (and the Revised NCC) is obviously concerned with the nature of the “position” or job duties of the 1^st Defendant, and does not contain any geographical limitation (implicit or otherwise). This is supported by paragraph 106 of McDonald 1^st where he gave evidence on whether the 1^st Defendant’s intended new role in the 2^nd Defendant falls within “Similar Capacity” in the NCC, and in that context described the 1^st Defendant’s job duties as CFO Asia as including accounting and audits and also the strategy and transition side of the business.

(2)  It will, in my view, be contrary to ordinary principles of contractual interpretation to read into the definition of “Similar Capacity” a geographical limitation which is plainly not there. As the court held in Midland Business Management Ltd (supra) at §42, it is not the function of the court to redraft restrictive covenants for the parties, nor would the court imply a term in order to save a covenant restraining an employees’ post-employment conduct. The Court of Appeal in Kao Lee & Yip v John Richard Edwards (unreported, CACV 97/1993, 5 October 1993) also stated that court should not “strain to give an artificial construction to a restrictive covenant in order to preserve its validity”.

(3)  Quite rightly, Ms Lok is not asking the Court to imply terms into the NCC, whether as a matter of obvious implication, business efficacy or otherwise. If the Plaintiff indeed intended for the NCC to contain a geographic restriction, this would no doubt have been expressly provided for, as commonly done in post-termination restrictive covenants. The Employment Contract is a detailed document between sophisticated parties.

(4)  In fact, even in paragraph 1 of P’s Summons, the interim injunction seeks to restrain the 1^st Defendant from being employed as, inter alia, “Chief Transformation Officer, or Chief Strategy and Transformation Officer, or Chief Financial Officer or any same or similar position”. Plainly, the restriction contains no geographical limit.

37.I am thus of the view that the Plaintiff does not have a reasonably good prospect of being able to show at trial that the NCC (or the Revised NCC), properly construed, is not a worldwide non-compete covenant.

38.In this regard, the Plaintiff has not shown why a worldwide restriction imposed by the NCC is reasonable or necessary to protect P’s alleged legitimate business interests.

39.The only justification put forward by the Plaintiff is that the 1^st Defendant was, during the course of his employment, in possession of alleged confidential information. However, even on the Plaintiff’s own evidence:

(1)  The 1^st Defendant, as the CFO Asia, was only responsible for its affairs in the countries and territories in the Asia region in which the Plaintiff operated or had active plans to operate. This is evident by the job description provided by the Plaintiff that the CFO Asia was accountable “for the financial management and control of Asia”. In McDonald 1^st, the Plaintiff also stated that the key responsibilities of CFO Asia was to provide financial leadership for business decisions of the Plaintiff’s Asia Division and its business units in the Asia Segment (which comprises 12 markets in Asia, as detailed in the Annual Report of Manulife Financial Corporation).

(2)  It follows that any alleged confidential information that the 1^st Defendant had access to could only be restricted to that of the countries and territories in the Asia region in which the Plaintiff operated or had active plans to operate.

(3)  In fact, the Plaintiff does not suggest that the 1^st Defendant is in possession of other confidential information relating to the Manulife group outside the Asia region, let alone other parts of the world where the Manulife group does not or did not have any active operation.

(4)  Accordingly, it is difficult to see how the purported need to preserve confidential information can justify a worldwide non-compete covenant prohibiting the 1^st Defendant from being employed in countries and territories in which the Plaintiff did not operate or have active plans to operate.

(5)  It therefore appears to this Court that the NCC goes further than necessary for the protection of the Plaintiff’s legitimate business interests.

40.Second, as the Plaintiff had itself acknowledged in correspondence, it is difficult to uphold a 12-month non-competition restriction and it is for the Plaintiff to justify why such a restriction is necessary to protect its legitimate business interests (see paragraph 18 above).

41.I am not satisfied on the present state of the evidence that the Plaintiff has a reasonably good prospect of being able to show at trial that the 12-month restriction is reasonable or justified.

42.In order to justify the 12-month restriction in the NCC, the Plaintiff has, in McDonald 1^st (inter alia) (i) summarized in broad terms examples of allegedly confidential information to which the 1^st Defendant had access during his employment, (ii) described the importance of such alleged confidential information to the Plaintiff in (inter alia) the development of its strategies and new products, (iii) emphasized the significance of the 1^st Defendant’s role as CFO Asia, that he was highly remunerated and expressly agreed to the terms in his Employment Contract including the NCC, and (iv) stated that as the allegedly confidential information is not in the public domain, if disclosed to a competitor, would cause great prejudice to the legitimate business interests of the Plaintiff.

43.However, the Plaintiff’s description in McDonald 1^st of examples of the allegedly confidential information to which the 1^st Defendant had access appears to this Court to be lacking in specificity, and are couched in rather broad terms which are of limited assistance to the Court in assessing their alleged confidential nature and potential consequences of misuse. Significantly, the Plaintiff has not adduced evidence to:

(1)  explain the shelf life of each specific category of allegedly confidential information (other than asserting that some of the stated categories of information has a cycle of 12 months);

(2)  explain how such a shelf life warrants a 12-month restraint;

(3)  articulate how any such confidential information could be used during the 12-month window to the material detriment of the Plaintiff’s business.

44.Such evidence is important for the Court to properly assess whether the 12-month duration of the NCC is reasonable and necessary for the protection of the Plaintiff’s legitimate business interests: see WPP Marketing (supra) at §25, where the Court (Mr. Recorder Paul Shieh SC as he then was) observed that in the business world of today, very often information would cease to be confidential within a very short period of time.

45.Ms Lok referred specifically to paragraphs 42 to 45 of McDonald 1^st which refers to the “5-year Plans” of the Plaintiff, that the current one spans through 2023 to 2027, and that the 1^st Defendant was involved in its discussions in September 2023, just before he left the Plaintiff’s employment. However, no specifics have been provided as to what kind of allegedly confidential information is contained in these “5-year Plans”, save for broad descriptions such as they “cover the life-blood” of the Plaintiff’s operation and profitability, and include for example “market strategies, agency compensation arrangements, information about products’ strengths and weaknesses, information about bank partnership (bancassurance) financial arrangements and commitments, mergers and acquisitions opportunities and evaluations of the same, cost efficiency targets, and investment prioritizations”.

46.But at least at this stage, there is in my view insufficient evidence to show what precise confidential information or knowledge is possessed by the 1^st Defendant that if disclosed to the 2^nd or 3^rd Defendants would cause material detriment to the Plaintiff’s business.

47.Further, as rightly pointed out by the Defendants, the need for a 12-month restraint is further diminished by the fact that the Employment Contract already contains an express confidentiality clause[1], by which the 1^st Defendant undertook and agreed not to disclose any Confidential Information (as defined therein) without the prior written consent of the Plaintiff or to comply with a court order (“Confidentiality Covenant”).

48.Ms Lok submits that the Confidentiality Covenant is not sufficient to protect the Plaintiff’s interests because it is difficult to police and that it may also be difficult to prove whether certain information may or may not be confidential. However, as the court held in WPP Marketing (supra) at §§34-35, it is incumbent on the plaintiff to identify with precision and clarity the items of protectable confidential information which it fears to be incapable of proper segregation from one’s stock in trade and which would require a restrictive covenant to assist. As with the case in WPP Marketing (supra), the Plaintiff here has not identified any succinct and precise items of confidential information which could not be properly monitored by an undertaking not to use them.

49.The 1^st Defendant confirmed at today’s hearing (through his counsel) that he is willing to provide an undertaking in similar terms to the Confidentiality Covenant for the interim period up to the final determination of P’s Summons or further order of the Court or until 31 October 2024, whichever is earlier, as per the draft provided to the Court (“D1’s Confidentiality Undertaking”).

50.Third, I also see some force in the submissions of Mr. Jose Maurellet SC (counsel for the 1^st Defendant)[2], that the NCC may also arguably be wider than necessarily by reason of the lack of a “temporal backstop” in that it applies to all work done by the 1^st Defendant throughout his 5-year employment with the Plaintiff (as opposed to work in which the 1^st Defendant carried out more recently). As stated by the learned author of Employee Competition: Covenants, Confidentiality, and Garden Leave, §6.241, restrictions in respect of activities in which an employee had no recent involvement “would often be regarded as unreasonable”. See also CEF Holdings Ltd v Mundey (supra) at §65(iii).

51.The above contention by the 1^st Defendant merits fuller consideration at the substantive hearing of P’s Summons after the parties have filed full evidence.

E.  BALANCE OF CONVENIENCE

52.On the balance of convenience, and taking into account the current state of the evidence, this Court is of the view that such balance lies against granting the interim-interim injunction sought by the Plaintiff for the following reasons.

53.First, in Rappold 1^st, the 1^st Defendant stated that granting the interim-interim injunction to restrain him from taking up employment with the 2^nd Defendant would cause him irreparable harm in that:

(1)  the opportunity for him to join the 2^nd Defendant in the role of CTO is a rare and attractive opportunity;

(2)  if the 1^st Defendant is restrained from commencing work with the 2^nd Defendant by 22 April 2024, it is “highly likely” that the 2^nd Defendant would terminate its engagement with him and look for other alternative candidates for the job, especially as the 2^nd Defendant had already agreed to defer his start date twice;

(3)  although the decision whether to keep the offer of CTO open to the 1^st Defendant after 22 April 2024 is a decision for the 2^nd Defendant to make, the 1^st Defendant believes that the 2^nd Defendant wishes to fill the role as soon as possible, as it is an important role and any late onboarding would disrupt the 2^nd Defendant’s current plans;

(4)  further, losing the CTO role goes beyond losing a job with the 2^nd Defendant, and would irretrievably affect his career as an insurance executive because:

(i)  he has already been out of the market since August 2023 when he relinquished his role as CFO Asia,

(ii)  in light of the competitiveness of the insurance industry, the longer he stays out of the market, the more difficult it would be for him to land a comparable job, and consequently there is the risk that he would become “unemployable”;

(iii)  such risk is fortified by the fact that he has just turned 54, which makes him even less likely to be an attractive candidate to employers as he would unlikely be considered a long-term employee.

54.Grillet 1^st paragraphs 11-12 also states the 2^nd and 3^rd Defendants’ position as follows:

“11. As noted above, the CTO role is strategically very important to Prudential and there is an urgent business need to recruit into that role. While the 1^st Defendant is Prudential’s preferred choice for the role, it is aware of other well qualified candidates.

12. If an interim interim injunction is granted, this will prevent the 1^st Defendant from performing his duties when his period of unpaid leave ends on 22 April 2024 based on Prudential’s understanding that the substantive hearing of the Summons is unlikely to take place for some time with a ruling possibly to follow sometime later. It is not considered tenable from a business perspective not to have anyone performing the CTO role for such a long time and potentially until 31 October 2024 when the post-termination restraint period in the NCC expires. It is therefore Prudential's view that, if the 1^st Defendant cannot start his duties on 22 April 2024, it will have little choice but to terminate his employment in order to clear the way for active recruitment of an alternative candidate for the CTO role.”

55.The 2^nd and 3^rd Defendant also confirmed (through their counsel) at today’s hearing that they are contractually entitled to terminate the 1^st Defendant’s employment without recourse.

56.On the evidence presently available, this Court cannot ignore the risk (which I do not consider to be fanciful) that imposing an interim-interim injunction prohibiting the 1^st Defendant from taking up the role of CTO with the 2^nd Defendant until the substantive determination of P’s Summons may cause him to lose the job opportunity. Whether the 2^nd Defendant will agree to keep the offer open to the 1^st Defendant in the meantime is not within his control. If the job is lost, this may well have more far-reaching ramifications on the 1^st Defendant’s career prospects which cannot be quantified in monetary terms.

57.Second, as regards prejudice to the Plaintiff if no interim-interim injunction is granted:

(1)  It appears that such prejudice lies in the potential damage to part of the Plaintiff’s business following any divulgence of allegedly confidential information to the 2^nd or 3^rd Defendants in the period before P’s Summons can be substantively determined, and that the Plaintiff may lose the protection of the NCC for a few months.

(2)  Any such potential damage is premised on the speculation that the 1^st Defendant retains in his mind allegedly confidential information belonging to the Plaintiff and will divulge the same to the 2^nd or 3^rd Defendants if permitted to take up the CTO role.

(3)  However, not only is there no indication from the evidence that the 1^st Defendant would do so, he has expressly acknowledged in his Affidavit that he continues to be bound by the Confidentiality Covenant, and has offered to provide D1’s Confidentiality Undertaking.

(4)  Given that a breach of D1’s Confidentiality Undertaking (having the force of a court order) carries with it potentially very serious consequences amounting to contempt of Court and possible committal proceedings (not only for the 1^st Defendant, but also the 2^nd Defendant and 3^rd Defendant who have notice of it), I consider it will provide the Plaintiff with reasonable protection in the interim peiod.

(5)  In the cirusmtances, this Court is of the view that the Plaintiff has not demonstrated an appreciable risk of irreparable damage to its business even if no interim-interim injunction is granted.

58.For completeness, I also agree with the 1^st Defendant’s submission that the Plaintiff could have applied for interim injunctive relief much earlier if it was indeed concerned with a breach of the NCC.

(1)  It was abundantly clear from D1’s 22 Feb Letter (see paragraph 17 above) that the parties’ negotiations on an amicable solution had broken down as neither side was willing to back down from their respective positions.

(2)  There was thus no reason for the Plaintiff to have waited until 26 March 2024 to issue P’s Summons.

(3)  The fact that the Plaintiff was only informed by D1’s 19 March Letter of the 1^st Defendant’s commencement date with the 2^nd Defendant (i.e. 2 April 2024) is neither here nor there, when the history of the parties’ correspondence indicates that by 22 February 2024, it must have been clear to the Plaintiff that no agreement could be reached (and that the 1^st Defendant was due to start his employment with the 2^nd Defendant on 1 March 2024).

(4)  What the Plaintiff should have done was to give the 1^st Defendant an ultimatum, and absent any satisfactory response, make an application for injunctive relief shortly thereafter.

(5)  This delay on the part of the Plaintiff in seeking interim injunctive relief has already caused disruption to the 1^st Defendant’s employment plans, with the deferral of his start date with the 2^nd Defendant from 2 April 2024 to 22 April 2024.

59.For the above reasons, and coupled with this Court’s views on the prospect of the Plaintiff succeeding at trial (see Section D above), I am of the view that the balance of convenience is against granting such interim-interim relief, which is the course that carries a lower risk of injustice if it should turn out that it is wrong.

F.  DISPOSITION AND DIRECTIONS

60.In the premises, and upon the 1^st Defendant providing D1’s Confidentiality Undertaking, the Plaintiff’s application for interim-interim injunctive relief is refused.

61.Given that the NCC is due to expire on 31 October 2024, P’s Summons should be dealt with as soon as possible.

62.The following expedited directions are given for the further conduct of P’s Summons:

(1)  Leave be granted to the 1^st, 2^nd and 3^rd Defendants to file and serve their affidavit in opposition within 14 days;

(2)  Leave be granted to the Plaintiff to file and serve its affidavit in reply, if any, within 7 days thereafter;

(3)  No further affirmation evidence to be filed without leave of the Court;

(4)  P’s Summons be fixed for substantive argument before the first available Judge, with 3 hours reserved;

(5)  Costs be reserved.

Ms Frances Lok, instructed by Hugill & Ip, for the Plaintiff

Mr Jose Maurellet SC leading Ms Clara Wong, instructed by Lewis Silkin, for the 1^st Defendant

Mr Jonathan Ng, instructed by Slaughter & May, for the 2^nd and 3^rd Defendants