Nam Tai Management Services Ltd and Another v. Ng Yiu Ming
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HCMP000673/1989 1989, No. MP673 ----------------------- H E A D N O T E ----------------------- Where an employee gave his employer's confidential documents to a third party, the Court could, under the Norwich Pharmacal principle, compel disclosure on oath by the third party of the identity of the disloyal employee. This was so even where the documents were discoverable in proceedings between the third party and the employer, since the employer should not, by the conduct of an employee converting its documents in breach of a duty of confidence, be deprived by the protection which the rules relating to discovery give to a party making discovery. 1989, No. MP673 IN THE SUPREME COURT OF HONG KONG HIGH COURT ------------------ BETWEEN
------------------ Coram: Bokhary, J. in Chambers Date of hearing: October 2, 1989 Date of delivery of judgment: October 2, 1989 ----------------------- J U D G M E N T ----------------------- 1. As I see it, the point involved in this case is a fairly important one; but as I have come to a clear conclusion as to the course which I ought to take in this matter, I do not think that any useful propose would be served by reserving my judgment. 2. The 1st and 2nd plaintiffs are companies in the same group. It would appear that the 1st plaintiff, as its name tends to imply, engages staff which it then seconds to other companies within the group, including the 2nd plaintiff, which, as its name tends in turn to imply, is engaged in the supply of electronic products. 3. Turning to the defendant, he used to serve the 2nd plaintiff as its sales manager - having been seconded to it, it would seem, after having been engaged by the 1st plaintiff. In proceedings which he commenced in the Labour Tribunal, and which have since been transferred to the District Court, the defendant claims, in those proceedings, against the two plaintiffs for moneys which he says is due to him by way of commission for the period November 23 to December 8, 1988. It seems to be common ground that the defendant did not attend the 2nd plaintiff's offices during that period. But, according to him, he remained in their service, was on stand-by to them on the telephone, and was entitled to commission earned during that period. This is disputed. The dispute is not one for me to resolve. 4. It is in the following manner that the proceedings for commission gave rise to the present proceedings : At the stage of the proceedings in the Labour Tribunal referred to as the 'call-over', it became apparent that the defendant was in possession of certain documents which constitute the 2nd plaintiff's daily sales record for the period November 23 to December 8, 1988. The plaintiffs became very concerned over how these documents came into the possession of the defendant. They suspected, and it turns out that their suspicion is well-founded, that the defendant had got those documents from an erstwhile colleague who is, or may be, still employed within the group. The plaintiffs recognize that the information in those documents may be relevant to the claim for commission. Indeed, Mr Graham, who appears on behalf of the plaintiffs, accepts that those documents might have been obtained upon discovery. What concerns the plaintiffs, as I have indicated, is the fact that they have, or may have, an employee whose loyalty they suspect but whose identity they do not know. I refer, of course, to the employee who took the documents and gave them to the defendant. It would appear from the evidence before me that what that employee did was to take the actual documents and supply them to the defendant, rather than merely make a copy of the same and supply the copy to him. I am not to be taken as suggesting that the latter course would have been free from objection. I merely note the fact, and make the observation that, as a matter of common sense, the plaintiffs would naturally be even more concerned where, as in the present case, the employee in question showed so little respect for the integrity of records that he or she was prepared to abstract the actual documents themselves. 5. After the revelations in the course of the proceedings for commission, the plaintiffs started the present proceedings by way of originating summons. They sought disclosure by the defendant on affidavit or affirmation of the name of the person or persons who supplied the documents in question and of the circumstances as to how such a thing came to pass. 6. Since the time when the originating summons was taken out, the defendant has made an affirmation in which he says that a colleague of his sent him the documents. That having been said, Mr Graham now presses for no more than disclosure on affidavit or affirmation of the name of that colleague. The application for disclosure is based on the principle revived by the House of Lords in Norwich Pharmacal Co. v. Commissioners of Customs and Excise [1974] A.C. 133. The principle is simply that where a person, albeit innocently and without incurring any personal liability, became involved in the tortious acts of others he came under a duty to assist one injured by those acts by giving him full information by way of discovery and disclosing the identity of the wrongdoers. 7. It is said that the employee who sent the defendant the documents had converted the plaintiff's property and had, in relation to the plaintiffs, been guilty of a breach of confidence. On the material placed before me, those allegation appear to me to be well-founded. 8. This matter comes before me on appeal from a Master, who refused disclosure. It is not entirely clear why the learned Master refused the application. Mr Graham's appreciation of what the learned Master said is that she was doubtful that any legal right to disclosure had been made out. 9. Here, the application of the Norwich Pharmacal principle does not involve - as it sometimes does - considerations such as the rule against self-incrimination or the importance to journalists that the confidentiality of their sources be preserved. What is involved here seems to be very close to the sort of thing that Vice-Chancellor Hall had in mind when he made the following observation in Orr v. Diaper (1876) 4 Ch.D. 92 at p. 96 : 'In this case the plaintiffs did not know, and cannot discover, who the persons are who have invaded their rights and who may be said to have abstracted their property.' The principle invoked by the plaintiffs is an old one, as can be seen from the case to which I have just made reference. That is why I spoke of the principle 'revived' in Norwich Pharmacal rather than the principle 'laid down' in that case. 10. It is clear from the material placed before me that the matters contained in the documents supplied to the defendant by his former colleague are highly confidential. Of course, highly confidential matters are very often revealed in the course of discovery. But that does not provide a charter for conversion or the disclosure of confidential information in breach of a duty of confidence. I would have thought that the proposition which I have just stated is self-evident. If it needed to be fortified, I would fortify it by this consideration : Discovery is made only when necessary; and the rules relating to the making of discovery and the uses to which discovered material may properly be put are designed to protect a party having to make discovery. Here, the plaintiffs are, in my jugdment, legitmately concerned that they have, or may have, in their employ an employee whose loyalty and sense of values is seriously open to question. 11. Very properly, Mr Graham has told me that his clients are not determined to bring proceedings against their errant employee. They may do so if necessary. But if merely 'having a quiet word with' - to put the matter that way - the employee would suffice, then perhaps the matter could rest there. It would seem that the motives of the employee making the disclosure to the defendant were at least in part morally defensible. Nevertheless, I do not see how commercial organisations can operate if their employees were free to arrogate to themselves the decision when and how it would be appropriate to reveal the secrets of their employers. 12. In my judgment, there is power in the courts to make the disclosure sought. And when it comes to whether it is appropriate to make the disclosure sought in this case, I have no doubt that I ought to exercise my discretion so as to order disclosure. Accordingly, I make an order to the effect that the defendant do disclose to the plaintiffs, on affidavit or affirmation, the name of the person who supplied him with the documents referred to in the originating summons - in other words, the name of the colleague to whom he made reference in paragraphs 13 and 15 of his affirmation dated April 22, 1989, and filed in these proceedings on April 24, 1989. I do not see any useful purpose being served by delaying the matter. But as the defendant is in person, I will not order such disclosure forthwith. Instead I order that it be made at the latest by half past four in the afternoon on the day after tomorrow. 13. If the defendant feels that disclosure would involve any disloyalty on his part to the person giving him the documents, then he ought not to feel too bad because he is naming that person under the compulsion of a Court Order which he has done his best to resist. I do not propose in any way to curtail the plaintiffs' right. But I am sure that the plaintiffs - in any event and particularly because they are advised by sensible counsel and solicitors - would not react more strongly than they feel absolutely necessary when it comes to dealing with the employee in question. 14. The only thing that remains is the question of costs; and I will hear the parties on that now. [Submission on costs] 15. Mr Graham's suggestion is that I reverse the Master's order as to costs, which was that the plaintiffs bear the costs of the proceedings before her, and that I make no order as to costs in relation to this matter either before the Master or before me. When invited to address me on the question of costs, the defendant declined to do so. On the whole, I think that the course suggested by Mr Graham is the fairest one. So what I do is that I allow the appeal from the Master; order disclosure as I have already indicated; reverse the Master's order as to costs with the result that there will be no order as to costs in respect of the hearing before the Master; and make no order as to costs in respect of the hearing before me.
Representation: Mr P. Graham (instructed by Wilkinson & Grist) for the Plaintiffs. Defendant in person. |