Best Buy Electric Company Ltd v. Built-in Pro Ltd
Read the full judgment text of HCA 1002/2024 on BabelCite. This High Court CFI judgment was delivered on 9 May 2025.
1. By summons dated 28 May 2024 (“ the Summons ”), Best Buy Electric Company Limited (“ P ”) asks for interlocutory reliefs against Built-In Pro Limited (“ D ”) which is its business competitor concerning its trade information.
Cited by 2 cases · Cites 6 cases
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HCA 1002/2024 [2025] HKCFI 1929 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1002 OF 2024 ____________________
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________________________ DECISION _______________________ Introduction 1.By summons dated 28 May 2024 (“the Summons”), Best Buy Electric Company Limited (“P”) asks for interlocutory reliefs against Built-In Pro Limited (“D”) which is its business competitor concerning its trade information. 2.At the substantive hearing of the Summons, Mr Tsui appears for P and Ms Leung together with Ms Lau appear for D. Whilst the Summons is opposed, D’s application for leave to adduce the 5th Affirmation of Lee Hui Kiu is granted in the absence of P’s objection. 3.For the purpose of the Summons, P relies on the affirmations of Leung Tung Chiu, Ma Chi Wo and Pong Pui Yee. Mr Leung is the sole shareholder and director of P. He also assumes the position of General Manager. Mr Ma is a freelance website developer engaged by P. Madam Pong has been P’s Market Executive since July 2021. 4.Mr Lee, who is D’s Marketing Manager, alone has filed several affirmations in these proceedings on behalf of D. Background facts and procedural history 5.The following narrative of the background facts is largely taken from the affirmation of Mr Leung. 6.P operates its business in the provision of kitchen solutions and home appliances of high-end brands or rare models. It has 4 showrooms in various locations for presentation of kitchen/home renovation concepts to its clients. The core clientele of P consists of end-users and renovation contractors. 7.Since its incorporation in 2018, D has been a keen competitor of P. Both of P and D share the same market and are key market players in the same field. 8.It has a sales team headed by a sales manager with 13 sales consultants. The sales team would find out the particular needs of P’s potential clients by either seeing them in person in the showrooms or communicating with them online. Then, the sales team would provide its potential clients with customised quotations. 9.Each of such customised quotations (the “Quotations”) contains the following information (“the Confidential Information”):
10.Since April 2017, all the Quotations produced by P would be electronically and digitally stored in P’s digital quotation system (“DQS”) via the computing platform Amazon Web Services (“AWS”). AWS is a server which hosts the e-commerce webpage (commonly known as the website) and provides the online cloud storage that serves as P’s quotation database (the “AWS Cloud Database”). 11.In or about early 2017, Mr Ma was commissioned to create the DQS for P. Only Mr Leung, two accounting staff members, 14 sales team members and Mr Ma himself had access to the AWS Cloud Database including the Quotations. 12.On 8 May 2024, a report was made to Mr Leung that a regular client of P was approached by one Ashley Li (“Ashley”) who identified herself as a staff of D. P issued a quotation to the client at around noon (“the Material Quotation”) on that day and the client was approached by Ashley in the evening and was offered a refrigerator identical to the one offered by P in the Material Quotation at a lower price. The client confirmed that the offer of Ashely was unsolicited. 13.P was then prompted to carry out an IT investigation with testing quotations (“the IT Investigation”). The following findings are taken from Mr Tsui’s summary of the evidence of Mr Leung (to which D has adduced no contrary evidence):
14.The testing quotations created by P attracted the following actions of Ashley:
15.Shortly afterwards, P commenced this action by a writ dated 28 May 2024. The Summons was taken out on the same day. 16.By the Summons, P, among other matters, seeks:
17.At the first hearing of the Summons, DHCJ KC Chan made an interim order in terms similar to the delivery up orders and the injunction sought in the Summons (“the Interim Order”). The learned deputy judge further ordered as an exception to the interim injunction order that if any of P’s clients relating to the Confidential Information comes to D for business without solicitation whatsoever from D, D may conduct and conclude business with that client if and only if D informs P in writing of its intention to do so 24 hours prior to the conclusion of such business and specifying the products that client would purchase. 18.The learned deputy judge did not grant the disclosure order sought by P, however. 19.The Interim Order would be effective until the determination of the Summons. By the 2nd Affirmation of Lee, D purportedly discharged its delivery-up obligations in the Interim Order. 20.At this hearing, P seeks the continuation of the injunction and the grant of the disclosure order in terms of the Summons. D’s purported explanation 21.The allegation of P is indeed serious. Basically, it accuses D of hacking of the DQS by D to gain unauthorised access to AWS Cloud Database and hence the Quotations and the Confidential Information for its commercial purpose. I am sure that D’s legal advisors have explained to D that this accusation can possibly amount to a criminal offence under section 161 of the Crimes Ordinance, Cap. 200. 22.Mr Lee tries to give an innocuous explanation for their access to the DQS in his affirmation. In summary, Mr Lee alleges that:
23.Mr Ma using his expertise explains the falsity of the purported explanation of Mr Lee. First, the wishlist button in the Page and the Hyperlink function are independent to one another and there was no algorithm or programming or any pathway in the wishlist button for users to be directed to the DQS. The wishlist button is intended to be used by P’s customers whereas the DQS is strictly to be used by P’s authorised staff exclusively. Thus, he concludes that the alleged use of the Hyperlink of Mr Lee is technically impossible. 24.Further, Mr Ma points out that D’s downloading of the Quotations was done via its web hosting server with D’s IP Address as shown by the access log of P’s website and not an internet browser. The use of its web hosting server was to facilitate its automated cyberattack at 5-minute intervals, which could be launched 24 hours a day. 25.On the other hand, by the 3rd Affirmation of Lee, D asks for its 393 clients and 209 products to be excluded from any injunction order and in any event, any injunction should not be effective for more than 6 months. Relevant legal principles 26.The general principles relating to the grant of interlocutory injunctions are well settled. There is no dispute about these principles. 27.The starting point should be the American Cyanamid principles, which are not infrequently applied by the courts in this jurisdiction. Ribeiro JA (as he then was) in Wah Nam Holdings Co Ltd v Excel Noble Development Ltd [2000] 3 HKC 118 at §§28 to 32 explained the American Cyanamid principles in the following terms:
28.I note that if this court grants the interim relief that P is asking for in this application, the grant will effectively dispose finally of P’s claim for injunctive relief and other ancillary relief in the present action. In Sim Kon Fah v JBPB & Co [2011] 4 HKLRD 45, Recorder Anderson Chow (as he then was) observed in a similar situation that in such circumstances, the application of the American Cyanamid principles calls for modification. The Court should approach the matter on the broad principle that it should endeavour to do what will avoid injustice so far as possible, and the plaintiff has to show at least that he is likely to succeed at trial and this requires a stronger evidential case than is required in an ordinary application for interlocutory injunction. 29.Furthermore, since the disclosure order sought by P is a mandatory injunction in nature, Mr Tsui fairly reminds this court that P is required to show “a strong prima facie case” and that the court must feel a “high degree of assurance” that at trial it will appear the injunction was rightly granted: see Hong Kong Civil Procedure 2025, §§29/1/29. Discussion 30.Mr Tsui explains that P relies on two causes of action, viz, (1) breach of confidence and (2) unlawful interference with business. 31.I first consider P’s claim of breach of confidence. 32.Mr Tsui refers this court to Devere Group Hong Kong Limited & Anor. v Nicholas Edward John Smith [2014] HKCFI 615 in which DHCJ Wilson Chan (as he then was) set out the following four elements of a claim of breach of confidence at §19:
33.Ms Leung does not disagree to these four elements. She submits that P discloses no cause of action in its claim of breach of confidence. First, whilst she accepts that there is no pre-existing relationship between P and D to give rise to a duty of confidence, such a duty can only be attached to D as a stranger if the information comes to its knowledge “in circumstances where it has notice … that the information is confidential, with the effect that he should be precluded from disclosing the information to others”. She submits that D has no knowledge that the Quotations are confidential. 34.Second, Ms Leung submits that even if the Confidential Information is secret and confidential, it has been blurted out in public and openly accessible by the general public including Mr Lee because of a security loophole of the DQS accepted by Mr Ma. She argues that as a result, no binding obligation of confidence can be found. In this regard, she relies on Coco at p.420. 35.Third, Ms Leung further submits that the Confidential Information cannot be confidential information per se according to the known usage and practice of the trade and industry. She goes on to say that it is doubtful if the Confidential Information bears the quality of trade secrets “which, if disclosed to a competitor, would be liable to cause real or significant harm to the owner”. 36.Lastly, Ms Leung points out that there is no evidence that P’s business has been adversely affected by D’s use of the Confidential Information. 37.I am unable to accept her submissions. On the evidence, I am convinced that P has a strong claim of breach of confidence. 38.Most of the objections raised by Ms Leung can be disposed of with reference to the developments in the law of confidence identified by Lord Hoffmann in his speech in Campbell v MGN Ltd [2004] 2 AC 457 and the English Court of Appeal decision in Imerman v Tchenguiz [2011] 2 FLR 592, both of which were cited extensively in Sim Kon Fah. 39.In Campbell, Lord Hoffmann identified as a new development the artificiality of distinguishing between confidential information obtained through the violation of a confidential relationship and similar information obtained in some other way. In this regard, Lord Hoffmann referred to the following formulation of the relevant principles by Lord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109:
40.It is, thus, clear that a prior confidential relationship is no longer necessary before a duty of confidence can arise. 41.The following passages in the speech of Lord Neuberger of Abbotsbury MR in Imerman cited with approval in Sim Kon Fah (§44& 46)are apposite,
42.On the application of these principles to the undisputed or indisputable evidence in the present case, the strength of P’s case of breach of confidence is evident. 43.To begin with, P found it necessary to commission Mr Ma to create the DQS to store the Quotations and only the staff members of P could gain access to the AWS Cloud Database and the DQS. It shows that P treats the Quotations as private and confidential documents. P undoubtedly has a “reasonable expectation of privacy” in respect of the Confidential Information contained in the Quotations. 44.This is perfectly understandable. The Quotations would reveal the needs of its customers and the prices of the products offered to such customers. If P’s competitors can have immediate access to the Quotations, they would gain an unfair advantage at the expense of P. They would be informed of the identity of potential customers and their contact information. With the knowledge of P’s offers given to them, D may entice these clients by undercutting. In fact, this is exactly what Ashley was found to have done. 45.On this basis, there is no question that P cannot expect the Quotations to be made publicly accessible to its trade competitors including D. The necessary quality of confidence is likely to be found in the Confidential Information. 46.In my view, the evidence of D’s hacking activities is overwhelming in light of Mr Ma’s elaboration. Mr Lee’s alleged use of the Hyperlink makes a mockery of the secured system created by Mr Ma. Mr Ma convincingly explains the impossibility of his alleged use of the Hyperlink. The systematic downloading of the Quotations by D via its web hosting server shows that it is prepared to contravene the law so as to obtain the Confidential Information in the Quotations. It shows how low D’s commercial morality is and how much D covets the Confidential Information for its business purposes. 47.D must be aware that P reasonably expects privacy in the Confidential Information in the Quotations; otherwise, such information should be openly available in the Page and D would not have resorted to underhanded tactics to gain access to AWS Cloud Database and the DQS for such information. 48.The submission that the Confidential Information has already been made available in the public domain because of the security loophole in the DQS and hence the Confidential Information has been blurted out in public is baffling. Seemingly D is placing the blame on the victim and its commercial morality cannot be lower. 49.Ms Leung highlights the finding of the IT Investigation that the identity of the unauthorised downloading of 445 of Quotations remains unknown. I believe that the fact that there might be other hackers should not prevent P from enforcing the confidence in the Quotations against D. 50.P has adduced compelling evidence that D has intentionally and without authorisation taken steps to obtain the Confidential Information in the Quotations by its hacking activities carried out secretly. With the knowledge that P regards the Quotations as its private documents and expects them to be securely stored in the DQS, D’s breach of confidence is likely to be established. 51.I do not find any validity of Ms Leung’s challenge to the confidentiality of the Confidential Information on the authorities. Nor is it necessary for P to establish that the Confidential Information amounts to trade secrets for the purpose of its claim of breach of confidence. 52.Lastly, I reject Ms Leung’s submission that there is no evidence of D’s unauthorised use of the Confidential Information to the detriment of P. D has yet to give any explanation for the dubious and unsolicited approaches made by Ashley to the prospective clients of P to whom P has just issued quotations. Without the sight of the relevant Quotations in the DQS, D could not have offered its own quotations for similar products at lower prices shortly after the relevant Quotations came into existence. 53.I find no substance in the submission that P has failed to show that its business was adversely affected by D’s alleged use of the Confidential Information. 54.In any event, as noted by Lord Neuberger of Abbotsbury MR in Imerman (§72) cited above, P must be entitled to an injunction restraining D from looking at the Confidential Information again even if D does not intend to reveal the contents to any third party. 55.As to adequacy of damages, I opine that monetary compensation would not be a sufficient remedy for P. First and foremost, the quantum of P’s loss is very difficult to be computed. As a result of D’s misuse of the Confidential Information in the Quotations, both the prospective and the current clients of P may be persuaded to switch to D for its supply of the same or similar products. Apart from such loss of business resulting from D’s breach of confidence, P may loss such clients to D in the long run and it is difficult to quantify the loss resulting from the deflection of such clients. 56.On the other hand, I am unable to see how D can suffer any significant loss if it is enjoined from using the Confidential Information in the Quotations. It should not have sight of such Quotations to start with. 57.In the premises, the balance of convenience clearly tilts in favour of the grant of an interlocutory injunction to maintain the status quo. I am convinced that P should be afforded interlocutory relief. 58.Ms Leung asks this court to exclude from the injunction certain matters. First, she asks for the exclusion of those 393 existing clients of D who are already registered members of D and/or have purchased from D and/or a member of the WhatsApp chat groups of D. Second, she asks for the exclusion of 209 categories of products consisting of 5585 items exclusively offered by D. 59.I do not find these exclusions to be necessary. The injunction against D should be source-specific. D should only be forbidden from any misuse of the Confidential Information contained in the Quotations. The effect of the injunction is not to restrain D from contacting its existing clients or dealing with them completely. D should be free to do so by the use of its own information obtaining or deriving from legitimate sources other than the Quotations or anything relating thereto. By the same token, D should be allowed to deal with/in its exclusive products so long as it does not use the Confidential Information in the Quotations. 60.Lastly, Ms Leung submits that the injunction should only be valid for a period of 6 months in total. 61.I am unable to accept this submission. P is not seeking to enforce a restraint of trade clause. P is protecting its right to privacy and confidence in the Confidential Information in the Quotations. There is no basis for this court to impose an expiry date for the Confidential Information to cease to be private and confidential to P. 62.Now I turn to the disclosure order sought in paragraph 4 of the draft order annexed to the Summons. P demands D to swear an affidavit to:
63.As I understand from Ms Leung, D has already made the First and Second Disclosures. For the Third and Fourth Disclosures, Ms Leung submits that it is inappropriate to grant orders equivalent to final relief at the present stage. 64.Mr Tsui submits that the purported disclosure by the 5th Affirmation of Lee is not adequate. 65.I agree that the Third Disclosure is necessary to enable P to take preventive action against further misuse of the Confidential Information by other recipients of the Quotations and Confidential Information. On the application of the Norwich Pharmacal principle, D has a duty to assist P by disclosing other wrongdoers and potential wrongdoers: AXA China Region Insurance Co Ltd v Pacific Century Insurance Co Ltd [2003] 3 HKC 1 per DHCJ To (as he then was) at §243. I have little doubt that an order for the Third Disclosure should be granted to P. 66.For the Fourth Disclosure, I accept that P is entitled to mitigate its loss and protect its business interest by enforcing the injunction against D. P should have the full information as to whom D has approached by using the Confidential Information and whether any business has been transacted between such persons and D. With the Fourth Disclosure, P could obtain such information and can take steps to explain to such clients that D is now injuncted from further dealing with them so as to ensure the effectiveness of the injunction and to mitigate its loss. 67.Thus, I conclude that P is entitled to the Third and Fourth Disclosures. Unlawful interference with P’s business 68.The other cause of action is the economic tort of unlawful interference with P’s business. 69.P’s claim based on this cause of action is not as straightforward as its breach of confidence claim and I do not think that it can add anything to the latter. In light of my conclusion on the merit of the present application based on P’s breach of confidence claim, I do not find it necessary to render my assessment of the merit of this claim here. Conclusion and orders 70.For the reasons given, I conclude that P has met the higher evidential threshold and shown a strong case of breach of confidence against D. P should be given interlocutory relief to avoid irreparable loss not compensable by an award of damages. 71.On the Summons, I grant an injunction in the following term:
72.I further grant a disclosure order in terms of the Third and Fourth Disclosures. The Fourth Disclosure should be modified and appear as follows:
73.Mr Tsui asks for costs on the basis that D has done the illicit act of hacking. However strong the supporting evidence is, P should prove this allegation in its forthcoming summary judgment application and/or at trial. I make an order nisi that costs of and occasioned by the Summons including any costs reserved be P’s costs in the cause. 74.It remains for me to thank Ms Leung, Ms Lau and Mr Tsui for their helpful assistance in this matter.
Mr Brian Tsui, instructed by Chak & Associates LLP, for the plaintiff Ms Pauline Leung and Ms Chelsea Lau, instructed by KWC & Associates, for the defendant |
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