Swedish Motors Ltd v. Orilvy & Mather (Hong Kong) and Another

HCA002506/1981

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ACTION NO. 2506 OF 1981

-----------------

Coram: Hon. Mr. Commissioner Jones in Chambers

Date of Judgment: 4th May 1981

-----------------

DECISION

-----------------

1. This is an application by the plaintiff against the first defendant for the order of Barker J. made exparte on the 21st April 1981 granting injunctions be continued until the trial.

2. Apart from the injunctions prayed for in the writ the plaintiff claims damages for breach of contract and for breach of confidence.

3. During the latter part of 1980 Mr. Agell the managing director of the plaintiff company prepared a market survey for the marketing of Saab and Scania motor vehicles in Hong Kong. Mr. Agell approached the first defendant in about October 1980 as to whether they would be prepared to conduct the advertising programme. A presentation was prepared by the first defendant with recommendations and details of the estimated cost of advertising for the first twelve months.

4. In order that the presentation could be prepared Mr. Agell supplied the first defendant with advertising and sales promotion material used by Saab in Sweden and the U.S.A. which the plaintiff contends is highly confidential. Other information was given by Mr. Agell during discussions between the parties.

5. The plaintiff alleges that the first defendant was appointed to be their exclusive advertising agent for Saab and Scania vehicles by an oral agreement made on the 26th February 1981. This is denied by the first defendant. In a letter dated the 7th April 1981 the first defendant informed the plaintiff that they would be unable to act for the Saab account. The first defendant had in fact been appointed by the second defendant on the 4th March 1981 to be their advertising agent for Ford and BMW motor cars. Alternative proposals suggested by the first defendant for other agencies in their group to act were not acceptable to the plaintiff.

6. The first defendant has returned to the plaintiff most of the documents supplied to them and has given an undertaking to return the remainder. The first defendant has also undertaken not to part with possession of any of the material to a third party or to disclose any information with regard to the Saab.

7. The plaintiff seeks an injunction to restrain the first defendant from acting further for the second defendant in respect of the Ford and BMW automotive accounts on the grounds that there is an irrevocable conflict of interest.

8. On the assumption that there was a binding oral agreement between the plaintiff and the first defendant it is clear that no terms were agreed. In particular there is no provision in restraint of trade. However, there is no doubt that upon the evidence contained in the affidavits there are serious questions of fact and law to be tried.

9. It is clear that a breach of confidence may arise even if there is no contractual relationship between the parties. Saltman Engineering Co. Ltd. v. Campbell Engineering Co. Ltd⁽¹⁾.

10. In Coco v. A. N. Clark (Engineers) Ltd.⁽²⁾ at page 47 Megarry J. listed three elements that are required before a case of breach of confidence could succeed. First the information must have the necessary quality of confidence about it. Secondly that information must have been imparted in circumstances importing an obligation of confidence. Thirdly there must be an unauthorised use of that information to the detriment of the party communicating it.

11. Can the information supplied by the plaintiff to the first defendant be described as confidential? It is certainly not confidential merely by assertions made by the parties. There is no patent or copyright in this case. Whether the matters mentioned by Mr. Chang are confidential cannot be resolved without a full investigation into the evidence at the trial. Nevertheless upon examining the evidence at present before me some of the information at least would be public knowledge. If the information is held to be confidential the other two elements are still in issue.

12. One of the main points argued by Mr. Chang was the spring-board doctrine. Salmon L.J. in Seager v. Copydex Ltd.⁽³⁾ at 933 said:

"The law does not allow the use of such information even as a spring-board for activities detrimental to the plaintiff."

It has been submitted on behalf of the plaintiff that the knowledge acquired by the first defendant about the proposed Saab campaign can be put to their advantage for Ford and BMW. As an illustration it is alleged that an advertisement for the Ford Laser closely resembles proposals put forward by the first defendant in their recommendations to the plaintiff for the Saab. This is denied, but in any event it appears that the Ford Laser model is not a competitor.

13. Although the BMW 528 I is a competitor the first defendant claims that no creative work is involved as BMW do their own advertising which is followed by their advertising agents throughout the world. However, it is agreed that the Ford Granada is a competitor. The evidence so far advanced on this issue is tenuous.

14. An important factor to be taken into consideration if an injunction is granted is that it would of necessity interfere with the contractual relationship between the first and second defendants. There is a live issue to be determined whether there is a binding contract between the plaintiff and the first defendant, and there is no covenant in restraint of trade.

15. In American Cyanamid Co. v. Ethicon Ltd.⁽⁴⁾ Lord Diplock at page 509 said:

"The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff's need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff's undertaking in damages if the uncertainty were resolved in the defendant's favour at the trial. The Court must weigh one need against another and determine where 'the balance of convenience' lies."

16. In considering the balance of convenience I have no hesitation in saying that it lies with the first defendant. I am of the opinion that should the plaintiff be successful at the trial adequate compensation can be made by an award of damages which the first defendant is in a financial position to pay.

17. Subject to the undertakings given by the first defendant to which I have referred the application for the injunction to be continued until the trial is refused.

18. Costs to first defendant certified fit for two Counsel, and costs to second defendant.

19. Order for speedy trial.

20. Leave to plaintiff to appeal on short notice.

Representation:

(1) [1948] 65 R.P.C. 203

(2) [1968] 2 Ch. D 41

(3) [1967] 1 W.L.R. 923

(4) [1975] 1 ALL E.R. 504