Axa China Region Insurance Co. Ltd. and Another v. Pacific Century Insurance Co. Ltd. and Others

HCA009093/2000

HCA 9093/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9093 OF 2000

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Coram: Deputy High Court Judge To in Chambers

Dates of Hearing: 28 February, 1-22 March and 2-10 April 2001

Date of Decision: 24 July 2001

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D E C I S I O N

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INTRODUCTION:

Background:

1.This is an application by the plaintiffs for interlocutory injunction, delivery up order and disclosure order against the 1st to 10th defendants in respect of the plaintiffs' confidential information collectively called "Client Data" (see paragraph 9 below). Since the hearing, 18 others have been joined as co-defendants. This decision only applies to the first ten defendants and the word "defendant" in this decision shall, unless the context otherwise requires, be construed to mean the first ten defendants or any of them.

2.The plaintiffs are both members of the AXA group of companies (hereinafter called "AXA") carrying on the business of insurance underwriting, including the underwriting of life insurance policies which the present case is involved. The 1st defendant is an insurance company (hereinafter called "PCI") carrying on a similar business. The other defendants (hereinafter collectively called "the Individual Defendants") were insurance agents appointed by AXA under contracts called "Agent's Contract" to market AXA's insurance policies.

3.In March 2000, PCI launched a policy matching scheme (hereinafter called "PMS") targeted at policyholders of AXA so that they may surrender their AXA policies and switch to PCI policies. PCI offered a hefty welcoming bonus to AXA agents who were willing to join PCI. A large number of AXA agents, including the 2nd to 10th defendants, terminated their Agent's Contracts or have their contracts terminated by AXA and joined PCI. Many of AXA's policyholders who were serviced by these agents surrendered their AXA policies and switched to PCI policies. At about the same time, AXA noticed what they considered as an unusually large amount of printouts of their client information from their computer system called Sales and Marketing System (hereinafter called "SAMS") had been effected under the passwords assigned to the 2nd to 10th defendants prior to the termination of their agency with AXA.

4.On 21 September 2000 AXA instituted the present proceedings. Upon receipt of the writ, PCI voluntarily delivered up a number of SAMS documents in their possession and undertook to deliver up further SAMS documents if discovered and not to process any applications for switching to PCI policies which are accompanied by SAMS documents. The other defendants filed affirmations pursuant to the order of Madam Justice Beeson. All denied that they are still having any SAMS documents.

5.AXA's cause of action against the Individual Defendants is based on breach of implied duty of fidelity by the Individual Defendants in wrongfully removing confidential information belonging to AXA during the currency of their agency with AXA for use after the termination of their agency and to AXA's detriment. As against PCI, AXA's causes of action are, firstly, breach of confidence in that PCI having received the confidential information from the Individual Defendants with knowledge of their breach of duty of fidelity intends to use or disclose the information without AXA's permission and, secondly, interference of AXA's business by unlawful means through the wrongful use of confidential information and misrepresentation made by PCI's own agents in marketing the PMS targeted at AXA's policyholders.

The relief sought:

6.By their summons dated 21 September 2000, AXA seek an interlocutory injunction until trial or further order (1) restraining PCI from disclosing, divulging or otherwise using any of AXA's Client Data, restraining it from accepting any application for a life insurance policy by person whose name appears in AXA's Client Data and who has been approached by any agent of PCI at a time when any of the Client Data was in the possession or under the control of PCI, restraining it from soliciting any business by representing that certain specified life insurance products of PCI match or are comparable with the corresponding AXA product and restraining it from accepting any application for certain specified life insurance product from any person holding a life insurance product issued by AXA and (2) restraining the Individual Defendants from disclosing, divulging or otherwise making use of any of AXA's Client Data.

7.Secondly, AXA seek an order for delivery up to AXA of all documents containing Client Data, including copies, in the possession, custody, power or control of the defendants.

8.Thirdly, AXA seek an order that each of the defendants swear an affidavit:

(a) verifying compliance with the delivery up order;

(b) disclosing all documents containing information relating AXA's policyholders which came into its or his possession, custody, power or control since 1 November 1999 stating, with reference to each such document, the date when and the name and address of the person from whom it came:

(c) disclosing all documents containing information relating to AXA's policyholders which it or he has given or divulged to another person since 1 November 1999 stating, with reference to each such document, the date when and the particulars of the person to whom it or he gave or divulged the documents;

(d) disclosing the name and address of every AXA's policyholder whose name appears in any of the Client Data who has been approached by any agent of the 1st defendant since 1 November 1999, identifying the agent, the nature of the solicitation and stating what if any such business came to the 1st defendant as a result;

(e) disclosing the name and address of all AXA's policyholders to whom any agent of the 1st defendant represented that any of the specified PCI's life insurance products match or are comparable with the corresponding AXA products, and stating what if any business came to the 1st defendant as a result.

9."Client Data" referred to above means any information obtained or derived by an agent in the course of his agency with AXA, not being information known to the agent prior to such obtaining or derivation, and contained in SAMS, and any documents whether in hard copy or electronic form containing such information and any of the documents listed in Schedule C to the Statement of Claim, whether in hard copy or electronic form, and any information contained therein obtained or derived by an agent in the course of his agency with the plaintiffs not being information known to the agent prior to such obtaining or derivation.

The Agency system:

10.AXA's insurance business, as is customary in the insurance industry, is conducted mainly through insurance agents appointed under agency contracts. These agents are organized into separate groups called agencies headed by a director of agency or senior director of agency with a regional director of agency at the top. Within each agency is a pyramidal structure of senior managers and managers in charge of the various units into which the agents are grouped.

11.Agents including directors of agencies of various levels are not employees of AXA. Clause 1.3 of AXA's Agent's Contract with the 2nd to 10th defendants provides expressly that "it is understood and agreed that there is no employer-employee relationship either expressed or implied between AXA and the agents." They are not entitled to benefits under the Employment Ordinance.

12.The office of the agency is rented by the agency with subsidy from AXA in both rental and remuneration of administrative personnel. These personnel are employees of the agency and not of AXA.

13.Agents are independent and free agents. They are free to move from projects to projects, insurance company to other insurance companies. They are free to choose their principals as they wish, subject to giving one month notice required under the terms of the Agent's Contract. But so long as the Agent's Contract subsists, the contract imposes on the Individual Defendants the obligations of exclusive service to AXA (Clause 1.4), promoting AXA's business faithfully and diligently (Clause 1.5), secrecy (Clause 2.3(b)) and the obligation to return all AXA properties on termination.

14.Agents are sole proprietors operating on their own account. They work from their own agency offices run separately from AXA's office. They receive no wages or salaries from AXA but commission in respect of policies purchased by clients they introduce. They pay their own operational expenses and file their own tax returns as sole proprietors. Their Agent's Contracts require them to keep books and records (Clause 10) and have them available for inspection by AXA during normal business hours and upon termination of the agency to supply such copies of these books and records as AXA may reasonably require (Clause 11.3(a)).

15.Policyholders are usually the agent's friends and relatives or people introduced by them or by his clients. The defendants say that policyholders enjoy a closer relationship with their agent than with the insurance company and wish to be serviced by the same agent irrespective whether the agent stays with the original insurance company or moves to a new one. This view is supported by AXA's former managing director, Mr Terry Jenkins and confirmed in AXA's own training material in 1993 that when an agent moves to service a new insurance company the likelihood of retaining the custom of his policyholders is extremely low, no more than 30%. Thus it is the industry expectation that policyholders have greater affinity to their agents than to the insurance company and the agent's client base represents his inherent commercial value or stock of trade.

16.When an agent leaves an agency, those of his policyholders who do not follow him are left behind. These are called "orphan clients". The director of agency is then at liberty to allocate these orphan clients to agents in his agency. AXA have no right to allocate these orphan clients to other agencies and in fact do not interfere with the allocation within the agency by the director of agency. This suggests that the business relations with policyholders are more the property of the agency than of AXA.

17.The way in which the agents operate within the industry as a whole and the way in which the Individual Defendants operated within AXA are not in dispute.

SAMS:

18.Agents contact clients in the course of marketing AXA's policies. Where policies have been purchased by these clients, their personal particulars, telephone numbers and addresses etc obtained by the agent (hereinafter called "Policyholder's Particulars") and details of the policies, such as policy number, expiry date, currency of account, sum insured, amount of premium, cash value, dividend, loan balance and interest thereon, payment mode and the riders (if any), etc (hereinafter called "Policy Details") are fed into AXA's computer system and stored in a central database, i.e. SAMS. The data stored can be processed and printed out in a number of formats for different purposes.

19.Access to SAMS is restricted. Only senior branch managers, directors of agency, senior directors of agency and regional directors of agency are given access. Each of them is given a unique password to facilitate access. A password holder is obliged to keep the password secret but has authority to authorize a nominated assistant to access SAMS. Access to SAMS could only be made through a dedicated personal computer at each agency office. Each password holder can only access information of policyholders within his responsibility. Thus a senior branch manager may have access to information of policyholders serviced by agents in his units but not those of policyholders serviced by agents in other units. Similarly, a director of agency may access client information in respect of policyholders serviced by agents in his agency but not those serviced by agents in other agencies. All the Individual Defendants were password holders.

20.Password holders are required to sign an agreement called "Hardware Rental Agreement and Software Licence" (hereinafter called "the Licence"). Save and except the 5th and 9th defendant, all Individual Defendants had signed the Licence which provided that all software and data installed on the equipment is or is deemed to be the property of AXA (Clause 4(b)), that the licensee shall treat any data contained in the software as confidential information (Clause 5) and that the licensee will not permit duplication of the program provided.

21.An agent may also access SAMS through his hand-held computer or digital diary but only in respect of information relating to policyholders he services.

22.SAMS data are updated regularly, both on the central database and on the hand-held computers or digital diaries. There are some discrepancies between the plaintiffs' evidence and the defendants' evidence as to the interval between each updating, but there is no dispute that it is a regular updating and that the data in the agent's hand-held computers or digital diaries are replaced every three months and would be erased automatically three months after an agent's termination. The entire SAMS indexation system is also replaced every year in February.

THE PRINCIPLES APPLICABLE TO INTERLOCUTORY INJUNCTION: THE AMERICAN CYANAMID PRINCIPLE:

23.The principles applicable to the grant of interlocutory injunction has been well settled since the House of Lord's decision in American Cyanamid Co v. Ethicon Ltd, [1975] AC 396 per Lord Diplock at 407-409 and as further refined in a number of subsequent leading cases. These principles are as follows.

24.The plaintiff's first hurdle is to satisfy the court that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried. It is no part of the court's function at the interlocutory stage to try to resolve conflicts of evidence on affidavits as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at trial (American Cyanamid at 407). In this context, it is irrelevant whether the court thinks that the plaintiff's chances of success in establishing liability are 90 percent or 20 percent: Alfred Dunhill Ltd v. Sunoptic SA, [1979] FSR 337 per Megaw LJ at 373.

25.Second, if satisfied that there is a serious question to be tried, the court shall go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought. In the balancing exercise, the court shall consider whether damages would be an adequate remedy and whether the unsuccessful party would be in a financial position to pay them. This balancing exercise operates as follows, per Lord Diplock at 408:

"As to that, the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant's continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff's claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff's undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction."

26.Third, where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, then the question of balance of convenience arises.

27.Fourth, where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo.

28.In Centalic Technology Development Ltd v. Worldwide Industrial Ltd [1996] 3 HKC 498, strength of the applicant's case is added by Godfrey JA as a further gloss to the American Cyanamid principles. He held at 510:

"When a judge is called on to exercise his discretion whether to grant or refuse an interlocutory injunction, he has to decide which course is the more just and convenient; and the interests of justice require him to have regard, among other things, to the strength of the applicant's case. If in a case like the present, the judge forms the view that if the action were to go to trial the applicant would succeed, that is a powerful consideration in favour of granting the interlocutory relief sought. If the judge forms the view that the applicant would not succeed, or would probably not succeed, in obtaining a permanent injunction at the trial, that is a powerful consideration against granting such relief."

29.An injunction is an equitable relief. In the exercise of its discretion to grant or to refuse an interlocutory injunction, the court has to take into account all the circumstances of the case as known to the court at that stage. The guiding principle is what the interests of justice require. There are no fixed rules as to when an injunction should be granted or refused. Even Lord Diplock has qualified his general rule that injunction should be refused if damages are adequate and available by the word "normally". At p 409, he also reminds us of the importance that there may be many other special factors to be taken into consideration in the particular circumstances of individual cases.

DUTY OF FIDELITY, DUTY OF CONFIDENCE AND RESTRAINT OF TRADE:

30.AXA's case against the Individual Defendants is based on their duty of fidelity in respect of secret and confidential information owned by AXA, namely Client Data while their case against PCI is based on the duty of confidence. AXA claim that the Individual Defendants removed Client Data in breach of their duty of fidelity during the currency of their agency with AXA for use in competition with AXA after termination of their agency and PCI is in breach of the duty of confidence in using the information. Mr Kotewall SC, on behalf of AXA, relies on a line of authorities starting from Lamb v. Evans [1893] 1 Ch 218, to Faccenda Chicken Ltd v. Fowler [1987] Ch 117, and Lansing Linde Ltd v. Kerr [1991] 1 WLR 251, etc. in support of AXA's case.

31.On the other hand, Mr Fung SC, on behalf of PCI, submits that issues of competition and restraint of trade lie at the heart of this case. Any attempt by an employer or ex-employer to impose a restraint of trade regime on an employee or ex-employee would be regarded in the eyes of the law as anti-competitive and contrary to public policy and must be struck down, as void and of no effect and that the common law has resolutely refused to embrace a tort of "unfair competition", even where one person intends harm to his rival's economic interests. He submits that the employee's duty of fidelity applies during the period of employment only but not afterwards, that in the absence of an express term, AXA can only succeed on the basis of an implied term if they can show improper use of trade secret or confidential information amounting to a trade secret and that the Client Data are neither trade secret nor confidential information equivalent to trade secret. He cites a line of authority starting from Nordenfelt v. Maxim Nordenfelt [1894] AC 535, and Petrofina v. Martin [1966] Ch 146 and Esso Petroleum v. Harper's Garage [1968] AC 269 in support of his proposition. Mr Ho SC, on behalf of the Individual Defendants, echoes Mr Fung SC's opinion.

32.In my judgment, an agent's duty of fidelity, the general duty of confidence and restraint of trade are separate but not mutually exclusive principles. It is for AXA as the plaintiffs to determine what causes of action to found its case. AXA are not relying on restraint of trade and indeed there are no restrictive covenants here against competition or against activities which would be considered legitimate commercial activities. AXA are not seeking to be protected from competition or even from unfair competition. They are seeking protection under the general law of confidence and the duty of fidelity. The line of authorities as referred to me by Mr Kotewall SC is relevant. I do not consider the authorities on restraint of trade helpful to the defendants, save in so far as they may cast light on the extent of an agent's duty of fidelity.

33.The legal issues are (1) what is the nature of the Client Data? Are they protectable information, i.e. whether the Client Data are trade secrets or information of a sufficiently high degree of confidentiality as to amount to trade secrets? (2) whether the Individual Defendants owed the duty of fidelity in respect of the Client Data to AXA while their Agent's Contracts are still extant; and (3) whether PCI owes the duty of confidence in respect of the Client Data coming into its possession towards AXA as owner of the Client Data. It would be convenient to consider these issues in the above order.

NATURE OF CLIENT DATA:

34."Client Data" for the purpose of this application has the meaning given by AXA in paragraph 9 above. Essentially they are AXA's Policyholder's Particulars, i.e. personal particulars of AXA's policyholders, their telephone numbers, addresses and other contact particulars; and Policy Details, such as policy number, expiry date, currency of account, sum insured, amount of premium, payment mode, cash value, dividend, loan balance and interest thereon and the riders, etc. The information is either obtained by the agent in the course of his agency with AXA or produced by AXA in relation to the policies. They are contained in SAMS or printouts from SAMS, the Schedule C documents and books and records kept by the agents. They are all information used in the trade or business of AXA.

35.Are Client Data trade secrets or confidential information equivalent to trade secrets? In Lansing Linde Ltd v. Kerr [1991] 1 WLR 251, Staughton LJ considered a trade secret as information used in a trade or business which if disclosed to a competitor would be liable to cause real or significant harm to the owner of the secret and that the owner must limit its dissemination or at least not encourage or permit its widespread publication. In this context, trade secret includes secret formulae for manufacture of products (trade secret properly or compendiously so called) and names of customers and goods they buy (equivalents of trade secret or information of a sufficiently high degree of confidentiality as to require the same protection as a trade secret). He set out the three classes of information in Faccenda Chicken and held at 259-260:

"In Faccenda Chicken Ltd. v. Fowler [1984] I.C.R. 589 Goulding J. at first instance had defined three classes of information: (i) information which, because of its trivial character or its easy accessibility from public sources of information, cannot be regarded by reasonable persons or by the law as confidential at all; (ii) information which the servant must treat as confidential ... but which once learned necessarily remains in the servant's head and becomes part of his skill and knowledge; (iii) specific trade secrets so confidential that, even though they may necessarily have been learned by heart and even though the servant may have left the service, they cannot lawfully be used for anyone's benefit but the master's. There the dispute was as to the second class so defined. Goulding J. expressed the view that it could be protected by an express covenant; this court [1987] Ch. 117 was of the contrary opinion. Subsequently other judges have touched on the topic in Balston Ltd. v. Headline Filters Ltd. [1987] F.S.R. 330 and Lock International Plc. v. Beswick [1989] 1 W.L.R. 1268.

It appears to me that the problem is one of definition: what are trade secrets, and how do they differ (if at all) from confidential information? Mr. Poulton suggested that a trade secret is information which, if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret. I would add first, that it must be information used in a trade or business, and secondly that the owner must limit the dissemination of it or at least not encourage or permit widespread publication.

That is my preferred view of the meaning of trade secret in this context. It can thus include not only secret formulae for the manufacture of products but also, in an appropriate case, the names of customers and the goods which they buy. But some may say that not all such information is a trade secret in ordinary parlance. If that view be adopted, the class of information which can justify a restriction is wider, and extends to some confidential information which would not ordinarily be called a trade secret."

36.Staughton LJ's tests are similar to the ones formulated by Sir Robert Megary V-C in an earlier decision in Thomas Marshall (Exports) Ltd v. Guinle [1979] Ch 227, although expressed in a slightly different language. In Thomas Marshall (Exports) Ltd v. Guinle, the factors taken into consideration by the Vice-Chancellor were the owner's subjective belief that the information is not already in the public domain and that its disclosure would be injurious to the owner's interest. Thus the test according to Sir Robert Megary V-C is subjective, though of course, the owner's belief must be reasonable and the information must be adjudged in the light of trade and industry usage. He held at 248:

"If one turns from the authorities and looks at the matter as a question of principle, I think (and I say this very tentatively, because the principle has not been argued out) that four elements may be discerned which may be of some assistance in identifying confidential information or trade secrets which the court will protect. I speak of such information or secrets only in an industrial or trade setting. First, I think that the information must be information the release of which the owner believes would be injurious to him or of advantage to his rivals or others. Second, I think the owner must believe that the information is confidential or secret, i.e., that it is not already in the public domain. It may be that some or all of his rivals already have the information: but as long as the owner believes it to be confidential I think he is entitled to try and protect it. Third, I think that the owner's belief under the two previous heads must be reasonable. Fourth, I think that the information must be judged in the light of the usage and practices of the particular industry or trade concerned. It may be that information which does not satisfy all these requirements may be entitled to protection as confidential information or trade secrets: but I think that any information which does satisfy them must be of a type which is entitled to protection."

37.In Facenda Chicken, Neill LJ set out the considerations which should be taken into account in deciding whether a particular item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment has ceased. These are (a) the nature of the employment, (b) the nature of the information itself, (c) whether the employer impressed on the employee the confidentiality of the information, and (d) whether the information can be easily isolated from other information which the employee is free to use or disclose. He said at 137:

"(5) In order to determine whether any particular item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment has ceased, it is necessary to consider all the circumstances of the case. We are satisfied that the following matters are among those to which attention must be paid:

(a) The nature of the employment. Thus employment in a capacity where 'confidential' material is habitually handled may impose a high obligation of confidentiality because the employee can be expected to realise its sensitive nature to a greater extent than if he were employed in a capacity where such material reaches him only occasionally or incidentally.

(b) The nature of the information itself. In our judgment the information will only be protected if it can properly be classed as a trade secret or as material which, while not properly to be described as a trade secret, is in all the circumstances of such a highly confidential nature as to require the same protection as a trade secret eo nomine....

It is clearly impossible to provide a list of matters which will qualify as trade secrets or their equivalent. Secret processes of manufacture provide obvious examples, but innumerable other pieces of information are capable of being trade secrets, though the secrecy of some information may be only short-lived. In addition, the fact that the circulation of certain information is restricted to a limited number of individuals may throw light on the status of the information and its degree of confidentiality.

(c) Whether the employer impressed on the employee the confidentiality of the information. Thus, though an employer cannot prevent the use or disclosure merely by telling the employee that certain information is confidential, the attitude of the employer towards the information provides evidence which may assist in determining whether or not the information can properly be regarded as a trade secret. It is to be observed that in E. Worsley & Co. Ltd. v. Cooper [1939] 1 All E.R. 290, 307D, Morton J. attached significance to the fact that no warning had been given to the defendant that 'the source from which the paper came was to be treated as confidential.'

(d) Whether the relevant information can be easily isolated from other information which the employee is free to use or disclose. In Printers & Finishers Ltd. v. Holloway [1965] R.P.C. 239, Cross J. considered the protection which might be afforded to information which had been memorised by an ex-employee. He put on one side the memorising of a formula or a list of customers or what had been said (obviously in confidence) at a particular meeting, and continued, at p. 256:

'The employee might well not realise that the feature or expedient in question was in fact peculiar to his late employer's process and factory; but even if he did, such knowledge is not readily separable from his general knowledge of the flock printing process and his acquired skill in manipulating a flock printing plant, and I do not think that any man of average intelligence and honesty would think that there was anything improper in his putting his memory of particular features of his late employer's plant at the disposal of his new employer.'

For our part we would not regard the separability of the information in question as being conclusive, but the fact that the alleged 'confidential' information is part of a package and that the remainder of the package is not confidential is likely to throw light on whether the information in question is really a trade secret."

38.The principle to be distilled from all these well considered authorities is that a trade secret or its equivalent must be information:

(1) used in a trade or business (Lansing Linde and Faccenda Chicken 5(b));

(2) is confidential, i.e. not already in the public domain (Thomas Marshall v. Guinle and Faccenda Chicken);

(3) can be easily isolated from other information which the employee is free to use so that any man of average intelligence and honesty would think it is improper to use the information at the disposal of his new employer (Faccenda Chicken 5(d) and Printers & Finishers)

(4) which, if disclosed to a competitor, would be liable to cause real or significant harm to the owner, (Lansing Linde and Thomas Marshall v. Guinle); and

(5) which the owner of the information must limit its dissemination or at least not encourage or permit its widespread publication or otherwise impress upon the employee the confidentiality of the information (Lansing Linde and Faccenda Chicken 5(c)).

The test to be applied for items (2) and (4) is that of the owner's subjective belief in the light of the usage and practices of the trade and industry. All circumstances must be taken into account, including the nature of the employment, for example whether the employment is in a capacity where confidential material is habitually handled by the employee or agent (Faccenda Chicken 5(a) and Printers & Finishers).

39.For the purpose of the present application, I do not find it necessary to distinguish between trade secret and confidential information equivalent to trade secret, which in ordinary parlance is not a trade secret. Secret formulae for manufacture is an example of the former, while customer's names is an example of the latter. But according to Staughton LJ, both information are protectable as trade secret. The test I set out above applies to information of both categories.

Nature of the agency:

40.I have referred earlier on to the Agent's Contract which imposes on the Individual Defendants an obligation of secrecy in relation to the business of AXA. That seven of nine of the Individual Defendants signed the Licence respecting the data contained in SAMS as confidential, the use of the password system in controlling access to SAMS and that the Client Data in the agent's hand held computer will be erased three months after an agent leaves AXA indicate that their agency is one in which it is likely that the agent would handle secret or confidential information of his principal. These all show that AXA have impressed upon their agents, including the Individual Defendants, the secrecy and confidentiality of the information contained in SAMS.

Nature of the information:

41.It is hardly in dispute that the Client Data are information used in the trade or business of AXA. They are stored in SAMS. AXA have a password system which limits accessibility to SAMS to senior managers and above and even in respect of password holders they could only access information relating to the policyholders serviced by the agents for whom those password holders are responsible. A senior manager may not access information relating to policyholders serviced by other units for which he is not responsible. Similarly, a director of agency may not access information relating to policyholders serviced by other agencies. It is clear that AXA limit the dissemination of the information and does not encourage or permit its widespread publication.

42.The Client Data contain contact details of AXA's policyholders. The information is not available from any public source, except for the policyholder's telephone number but provided that an agent has the full name and address of the policyholder and more importantly that the telephone is listed and registered under his name and not that of any other member of his household. There are no policyholders registers of any kind, whether of AXA or other insurance companies, open to the public. AXA's policyholders are a particular section of the public in that they have purchased insurance policies and are people who are more likely to purchase other or additional insurance products. Not only that these policyholders constitute a fertile target for selling policies and in the present case for selling "matching PCI policies" targeted at AXA's policyholders. The difference between searching a telephone directory, the information therein is within the public domain, and searching AXA's Client Data is like fishing in the open sea and fishing in AXA's own fish farm. In the latter situation, a successful and fuller catch is more likely and AXA would suffer in respect of each catch. If PCI and their agents have access to AXA's Client Data, they would be able to contact AXA's policyholders and market their matching policies specially tailor-made for and targeted at them. I have no difficulty in finding that the Client Data are information used in the trade or business of AXA, the disclosure of which would be liable to cause real or significant harm to AXA and that it is reasonable for AXA to hold such belief.

43.PCI also operates a similar database and enters into similar agency contracts with their own agents containing similar provision as to secrecy. In their solicitors' letter to AXA's solicitors they also impressed upon AXA the importance of confidentiality in respect of their own client information contained in the CDs which they handed over to AXA's solicitors pursuant to their undertaking. This is self-evident that client information is treated as secret or confidential by PCI and the insurance industry as a whole. This reinforces AXA's belief that the Client Data are trade secrets or confidential information equivalent to trade secrets which if disclosed to a competitor would cause serious or substantial harm as being reasonable. AXA's belief is also in line with trade and industry practices. It also shows that the steps taken by AXA in preventing dissemination or publication of their Client Data are entirely reasonable.

44.Mr Fung SC and Mr Ho SC both submit that in Facenda Chicken itself it was held on the facts that customer information did not amount to trade secrets. However, that is a finding of fact only. In my view, that case itself did not lay down any principle that customer lists or customer information cannot amount to trade secret or equivalent to a trade secret. The facts in Facenda Chicken is clearly distinguishable from the present case. In that case, the customer information related to a relatively small number of customers which the employee contacted on his daily round so that the information must have been learnt and become part of the employee's stock of knowledge. In the present case, each agent maintains about 300 policyholders. I am far from being convinced that an agent would be able to recall all these policyholders' contact details without deliberately committing to memory these particulars or without reference to some sort of record which they kept or take away. Further, I do not believe the Individual Defendants would be able to recall all the policyholder's contact details which AXA allege have been removed by them.

45.I do not think the fact that the information could be innocently carried away in the head of an agent by itself is definitive as to whether the information is protectable. In SBJ Stephenson, Bell J held at 298:

"I do not accept that SBJ was being overambitious or unreasonable in protecting information after termination, and I cannot accept that it was unreasonable because it could cover client information which Mr Mandy could use with the client's consent once he had approached the client, simply remembering who he was, after termination of his contract with SBJ. SBJ would still have its own interest in such information as was protectable, whatever view the client took, and I do not see Facenda Chicken as authority for the proposition that information learned without deliberate intent to misuse it is not capable of legitimate protection, even though parts of Neill LJ's judgment at page 146A and H may appear to suggest that, at least in respect of the identity of clients of the employer. In my view, the distinction between information deliberately learned and that which is innocently carried in the employee's head, cannot be definitive as a matter of principle of what information can be legitimately protected and what cannot, after the termination of employment, and I do not believe that what Neill LJ said in the particular circumstances of that case was meant to define such a principle ..."

46.He continued at 300-301:

"In my judgment, the names of SBJ's clients, the details of renewal dates, the cover provided and claims made, premiums charged, fee rates or rates of brokerage earned, construction of insurance programmes, markets used and the manner in which policies were arranged or formulated, was all information which was protected by the terms of Clause 12(A) of Mr Mandy's employment agreement and by his implied terms of fidelity, while he was still employed by SBJ, and (subject to the argument on repudiatory breach by SBJ) by clause 12(A) after the termination of his employment."

47.Though the information in SBJ Stephenson is protected by Clause 12(A) of the employment contract, it appears from the above dicta that Bell J considered the protection equally available under the implied terms of fidelity. I think it could also be so argued in the present case.

48.Thus client's contact details in SBJ Stephenson are protectable even if carried away in the head of the employee. I think the finding in Faccenda Chicken that customer's name list is not trade secret or its equivalent should be limited to its facts. Whether those details are protectable trade secrets or equivalents to trade secrets depends on whether the information meets the test as I set out in paragraph 38 above. In respect of client's particulars, I prefer to follow SBJ Stephenson and Lansing Linde. Further the information which AXA seek protection is not just in respect of client's contact details, but also Policy Details and other SAMS and Schedule C documents. Those information are clearly trade secrets or their equivalents.

49.Mr Fung SC draws a distinction between trade secrets stricto sensu and other forms of confidential information. He submits that an agent's duty of fidelity ceases upon termination of agency and that client's particulars are not trade secrets capable of protection by an implied covenant in restraint of trade but could only be protected by express covenant and only if reasonable. He cited the following dicta from Leggatt LJ from Wallace Bogan v. Cove [1997] IRLR 453 at Paragraph 14:

"The term that is to be implied not to canvass the employer's customers during employment is part of the duty of good faith and fidelity. But when the employment ceases so does that duty. The implied duty not to misuse confidential information endures after the employment has ended, but only if it amounts to a trade secret. Otherwise to govern what is to happen after termination of a contract an employer is dependent on express terms. In default, terms could only be implied in the traditional way, that is, by applying the test of the officious bystander or of business efficacy; and neither test, nor any other such as is contemplated by the Liverpool City Council case, would bind any employee when the employment was over. It is axiomatic that the general law affords no protection to an employer against an ex-employee soliciting the employer's customers."

50.The fact that an agent's duty of fidelity ceases upon termination of his agency is no answer to AXA's claim that the Individual Defendants were in breach of their duty of fidelity by making copies of AXA's Client Data during the subsistence of their agency for use in competition with AXA after their agency has terminated.

51.I do not think the distinction between trade secrets stricto sensu and other forms of confidential information material. It is abundantly clear in Lansing Linde that "trade secret in this context" as used by Staughton LJ includes both trade secret strictly so called and information of a sufficiently high degree of confidentiality as to amount to trade secret, but which in ordinary parlance would not be so described. The test that I have formulated above applies to information of both categories. In this context, I think Mr Fung SC's distinction is semantic. If trade secret is protected, there is no reason why what in substance is trade secret, though not so called in ordinary parlance, is not. In my judgment, by whatever name the information is called, if it is material which in all the circumstances of the case is of such a highly confidential nature as to require the same protection as a trade secret eo nomine, then the law gives it the same protection as a trade secret. It is all a matter of fair and honourable dealing which a person in a fiduciary position must maintain in respect of the information he received in the course of his agency or employment.

52.I also draw support for this proposition from Nourse LJ's dicta in Roger Bullivant Ltd v. Ellis [1987] FSR 172 at 180 where he treated what the court compendiously described as trade secrets on the same footing as materials which while not properly described as trade secrets, are in all the circumstances of such a highly confidential nature as to require the same protection as a trade secret eo nomine. Both trade secrets or their equivalents may not in any circumstances be used by the employee or agent, either during or after the employment, except for the benefit of the employer or principal.

Ownership of the information and source irrelevant:

53.Mr Fung SC and Mr Ho SC submit that another distinguishing feature in the Individual Defendants' relation with AXA is that the policyholders are clients of the agents and not of AXA and the information obtained by the agents belong to the agents. They argue that agents have their own client base which represents part of their inherent commercial value or stock-in-trade. Mr Ho SC submits that the insurance business is operated on a pyramid system in which each agent recruits his own agents and his own clients. Usually an agent recruits his client from among his friends and relatives or people introduced by them. He keeps the name and contact details of these clients in his books and records which he is obliged to keep under the terms of his Agent's Contract with AXA. When a policy is taken out, the agent provides the information to AXA who input the same into SAMS. But the books and records and of course the information contained therein are respected as the agent's property. AXA only has a contractual right to inspect these books and records during normal business hours and as may reasonably require. These books and records are the properties of the agents and do not have to be surrendered to AXA upon termination of their agency. Upon termination, AXA may only request for copies of such parts of the books and records relating to the business of AXA and as AXA may reasonably require. AXA's right to inspect during the currency of the agency and their right to have copies of part of the books and records relating to AXA's business are all subject to the requirement of reasonableness. Thus they submit that the agents are at liberty to use Policyholder's Particulars contained in the agent's books and records which the agent is free to take away and keep after the agency has terminated.

54.Policyholders maintain a closer relationship with the agent than with the insurance company and often follow the agent when he leaves for another insurance company. Even AXA's own training material recognised that 70% of the policyholders would follow their agents. When an agent leaves AXA, those of his policyholders who do not follow him (called "orphan clients") would be reallocated by the agency where the departing agent worked and not by AXA. As policyholders are approached and cultivated by agents, Mr Ho SC argues therefore that the client information in the form of Policyholder's Particulars belong to the agent and not to AXA, especially as the agent is not employed and paid by AXA but is remunerated only on the basis of policy sold.

55.The fact that an agent is not employed by AXA and is not paid monthly wages weighs in favour of the suggestion that whatever the agent obtains in the course of his agency remains the property the agent. However, the cases suggest ownership is not the single or most definitive factor. As Lindley and Bowen LJJ held in Lamb v. Evans, the issue is not to whom the property in the information belongs, but whether the employer or the principal has a sufficient interest or special property in the information to entitle him to restrain the use of the information by the agent against the principal: see dicta cited below in paragraphs 75 and 76.

56.In my view, confidentiality is attached to the protectable subject matter. In Lamb v. Evans, Bowen LJ referred to this protectable characteristic as "special property." In my view, whether the information could be carried away in the head of the agent or in some other records kept by him cannot be definitive as a matter of principle of what information can be legitimately protected and what cannot. The following dicta of Parker LJ in Johnson & Bloy (Holdings) Ltd v. Wolstenholme Rink [1989] 1 FSR 135 at 142 are pertinent:

"If and in so far as it is suggested that the decision of Scott J in Balston Limited v. Headline Filters Ltd [1987] FSR 330 lays down as a proposition of law that anything which is inevitable in somebody's head when they leave the employment is something which they are free to use, I must respectfully say that I do not regard it as laying down any such proposition - and if it does, it is wrong.

The matter may be tested very simply. Somebody may hit upon the combination of two ingredients after many years of research, which produce an immensely valuable result wholly unknown to anybody else. An employee would have no difficulty in holding that knowledge in his head and inevitably carrying it away with him. But it cannot, as I see it (and certainly arguably cannot) be regarded as part of the ordinary skill and experience of the particular employee. It is a secret, whether or not it is carried away in his head, or if that is not so, it is arguably a secret, and that is all that is required for present purposes."

57.In Printers & Finishers, Cross J said at 5:

"The mere fact that the confidential information is not embodied in a document but is carried away by the employee in his head is not of course, of itself a reason against the granting of an injunction to prevent its use or disclosure by him. If the information in question can fairly be regarded as a separate part of the employee's stock of knowledge which a man of ordinary honesty and intelligence would recognise to be the property of his old employer and not his own to do as he likes with, then the court, if it thinks that there is a danger of the information being used or disclosed by the ex-employee to the detriment of the old employer, will do what it can to prevent that result by granting an injunction."

58.The test for trade secrets or their equivalents is as clearly set out by Sir Robert Megarry V-C in Thomas Marshall (Exports) Ltd v. Guinle (see paragraph 36 above) and Lansing Linde Ltd v. Kerr (see paragraph 35 above).

59.On the fact, an AXA agent is employed as an exclusive agent and paid very generous commission upon successful introduction of a sale and thereafter paid continuing commission upon each annual renewal. The policies are issued by AXA and not by the agent. The insured, even if he was a client of the agent, becomes a policyholder of AXA and not of the agent. The policy is renewable annually and usually for substantial durations. Both AXA and the policyholder expect a long and lasting relationship. These support the inference that once a policy is concluded, AXA has an interest in renewing the policy annually with that policyholder and an interest in his Client Data to protect. If so, it matters not who was instrumental in obtaining the information and that the same information could be found in other private books and records kept by the agent, not in the public domain. Accordingly, AXA have an interest in the information relating to this client and policyholder to protect and to restrain its agent from copying or removing Client Data relating to this policyholder during the currency of his agency. It should be noted that the defendants' own "note-books" used to note down clients' information in Lamb v. Evans [1893] 1 Ch 218, and the defendants' own diaries in Peninsular Real Estate Ltd v. Harris [1992] 2 NZLR 216, all formed part of the subject matter falling within the scope of delivery up and injunctive orders.

Information kept in alternative source: Agent's books and records:

60.Mr Ho SC submits that any injunction, if granted, should be "source-specific", i.e. it should only be directed against the misuse of documents or material wrongfully taken away from AXA and should not be wide as to prevent the Individual Defendants from contacting the policyholders by using or resorting to lawful source. He argues that the primary information was collected by the agent first-hand from the client and then compiled into the agent's own record which existed independently of SAMS. They were compiled for the Individual Defendants' own purpose to facilitate their servicing of their clients. He therefore distinguishes between information kept in the agent's record from that contained in SAMS and submits that information from the former source were the Individual Defendants' own property and is not subject to injunction.

61.Both Mr Fung SC and Mr Ho SC refer to clause 10.1 and 11.3(a) of the Agent's Contract. Under the former provision, an agent is obliged to keep books and accounts. Clause 11.3(a) provides:

"The agent shall return to the Company all moneys, policies, receipts, rate books, manuals, literature, all forms and documents held by it bearing the name of the Company, and shall return or supply copies of such parts of the Agent's books and records relating to the business of the Company as the Company may reasonably require."

They submit that this clause envisages that agents would be entitled to keep the originals of their books and records and are required only to deliver copies if reasonably required by AXA.

62.Mr Kotewall SC ingeniously argues that properly read, the word "copies" only apply to "supply" and not to "return", so that agents have a duty to "return such parts of the Agent's books ..." and "supply copies of such parts of the Agent's books ..." He further submits that as a matter of plain English and read in its proper context, "return" which has been used twice in the clause must refer to documents already in existence whether as originals or copies, while "supply" means the making of copies upon request. I think Mr Kotewall SC's point is, at the lowest, arguable.

63.In my view, this clause is not of great assistance to the defendants. AXA are not relying on this clause but rather on the general law of confidence and agent's duty of fidelity. It is at least arguable that confidentiality is attached to the information and it does not matter where the information is kept, be it carried away in the agent's head or written in his books. It should be noted that in Lamb v. Evans and Peninsular Real Estate, the agents' own notebooks were ordered to be delivered up.

Separability of Client Data from unclassified information:

64.On the evidence, it is clear that the Client Data can be easily distinguished from other information which the Individual Defendants are free to use because SAMS is the repository of all the confidential client information owned by AXA to which access is controlled by the password system and to which an individual agent only has limited access. The password system, the Licence and the nature of the information indicate that the confidentiality of the Client Data is so respected that applying the test of the man of average intelligence and honesty, the agent must realise the confidential nature of the information contained in SAMS, so that he is not at liberty to use the information even if carried away in his head or in some books and records kept by him.

Conclusion:

65.To conclude this part of my analysis, I am satisfied that AXA have established a serious legal issue to be tried as to whether the Client Data which they seek to protect are trade secrets or confidential information of a sufficiently high degree of confidentiality as to amount to trade secrets as set out in Faccenda Chicken, Thomas Marshall (Exports) Ltd v. Guinle and Lansing Linde Ltd v. Kerr.

DUTY OF FIDELITY DURING THE SUBSISTENCE OF THE AGENT'S CONTRACT:

66.Duty of fidelity may be created by express terms in a contract or by necessary implication so as to give to a transaction the effect which must have been in contemplation of the parties when they entered into the contract. The duty is readily implied to parties in a fiduciary relation, such as trustee and beneficiary, principal and agent, master and servant and solicitor and client. The nature and extent of the duty of course varies depending on the nature of the fiduciary relation and all the circumstances.

The principle in Faccenda Chicken:

67.For the purpose of this interlocutory application, I do not think it necessary to go into detailed argument about this well established principle of an agent's duty of fidelity towards his principal. The law has been usefully summarised by Neill LJ in Facenda Chicken Ltd v. Fowler [1987] Ch 117 at 135-137, where he said,

"It is sufficient to set out what we understand to be the relevant principles of law. Having considered the cases to which we were referred, we would venture to state these principles:

(1) Where the parties are, or have been, linked by a contract of employment, the obligations of the employee are to be determined by the contract between him and his employer: cf. Vokes Ltd. v. Heather(1945) 62 R.P.C. 135, 141.

(2) In the absence of any express term, the obligations of the employee in respect of the use and disclosure of information are the subject of implied terms.

(3) While the employee remains in the employment of the employer the obligations are included in the implied term which imposes a duty of good faith or fidelity on the employee. For the purposes of the present appeal it is not necessary to consider the precise limits of this implied term, but it may be noted: (a) that the extent of the duty of good faith will vary according to the nature of the contract (see Vokes Ltd. v. Heather, 62 R.P.C. 135); (b) that the duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorises such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer: see Robb v. Green [1895] 2 Q.B. 315 and Wessex Dairies Ltd. v. Smith [1935] 2 K.B. 80.

(4) The implied term which imposes an obligation on the employee as to his conduct after the determination of the employment is more restricted in its scope than that which imposes a general duty of good faith. It is clear that the obligation not to use or disclose information may cover secret processes of manufacture such as chemical formulae (Amber Size and Chemical Co. Ltd. v. Menzel [1913] 2 Ch. 239), or designs or special methods of construction (Reid & Sigrist Ltd. v. Moss and Mechanism Ltd. (1932) 49 R.P.C. 461), and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret. The obligation does not extend, however, to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is only "confidential" in the sense that an unauthorised disclosure of such information to a third party while the employment subsisted would be a clear breach of the duty of good faith. This distinction is clearly set out in the judgment of Cross J. in Printers & Finishers Ltd. v. Holloway [1965] 1 W.L.R. 1; [1965] R.P.C. 239 where he had to consider whether an ex-employee should be restrained by injunction from making use of his recollection of the contents of certain written printing instructions which had been made available to him when he was working in his former employers' flock printing factory. In his judgment, delivered on 29 April 1964 (not reported on this point in [1965] 1 W.L.R. 1), he said [1965] R.P.C. 239, 253:

'In this connection one must bear in mind that not all information which is given to a servant in confidence and which it would be a breach of his duty for him to disclose to another person during his employment is a trade secret which he can be prevented from using for his own advantage after the employment is over, even though he has entered into no express covenant with regard to the matter in hand. For example, the printing instructions were handed to Holloway to be used by him during his employment exclusively for the plaintiffs' benefit. It would have been a breach of duty on his part to divulge any of the contents to a stranger while he was employed, but many of these instructions are not really 'trade secrets' at all. Holloway was not, indeed, entitled to take a copy of the instructions away with him; but in so far as the instructions cannot be called 'trade secrets' and he carried them in his head, he is entitled to use them for his own benefit or the benefit of any future employer.'

The same distinction is to be found in E. Worsley & Co. Ltd. v. Cooper [1939] 1 All E.R. 290 where it was held that the defendant was entitled, after he had ceased to be employed, to make use of his knowledge of the source of the paper supplied to his previous employer. In our view it is quite plain that this knowledge was nevertheless "confidential" in the sense that it would have been a breach of the duty of good faith for the employee, while the employment subsisted, to have used it for his own purposes or to have disclosed it to a competitor of his employer."

68.The Individual Defendants' Agent's Contracts do not contain any express term providing for the duty of good faith or fidelity whether during or after termination of the agency. The agent's obligations are therefore the subject of implied terms (the second and fourth principles referred to in Facenda Chicken).

69.Clause 2.3(b) of the Agent's Contract provides that the Individual Defendants must, as long as the contract is in force, "observe the strictest secrecy concerning the business of AXA or of persons or companies from time to time dealing with [AXA] or the Agent or which come to the knowledge of the Agent." Under Clause 1.5, they are also required to promote the business of AXA faithfully and diligently. While these provisions do not expressly impose an obligation of good faith or fidelity on the Individual Defendants, the existence of these contractual duties, particularly the duty of secrecy, points strongly to an implied duty of good faith or fidelity on the agents while their agency is still extant. The existence of such an implied duty of fidelity during the currency of the agency is thus hardly disputable.

70.This duty of good faith or fidelity is broken if an employee makes or copies a list of customers of the employer for use after his employment ends or deliberately memorises such a list, even though there is no restriction on the ex-employee canvassing or doing business with customers of his former employer (item (b) of the third principle in Facenda Chicken).

Whether commission agents owe similar duty of fidelity to principal:

71.Mr Fung SC and Mr Ho SC submit that this principle is applicable only as between employee and employer as in the case of Facenda Chicken and all the other authorities on this point cited by AXA and not applicable as between agent and principal. The agents are not employees of AXA but are sole proprietors operating on their own account. They file their own tax returns as sole proprietors. They work from their own agency offices run separately from AXA and pay their own expenses and outgoings. They earn commission from AXA in respect of policies sold. They may recruit agents to work for them. Counsel submit that these features in the Individual Defendants' relationship with AXA distinguish them from the relationship between an employer and employee.

72.Mr Fung SC refers me to Marshall v. N.M. Financial Management Ltd [1995] WLR 1461. In that case, the plaintiff was an exclusive agent employed by the defendant to market its life insurance and pension policies. The contract provided that the plaintiff should be an independent contractor remunerated by commission on business introduced and his relationship with the defendant should be one of agent and principal. In declaring a term of his contract void as being in restraint of trade, Jonathan Sumption QC held at 1465:

"The defendant is seeking to apply a restriction on competition by a self-employed agent. The plaintiff's business as an agent, including the goodwill arising from his reputation and connections, was his own property and not the defendant's. The only interest which the defendant itself could have to protect is its interest in the goodwill attaching to its own business as a seller of investment agreements which is largely if not entirely an interest in the protection of its existing clients with whom it already had contracts."

73.Mr Fung SC submits that the Individual Defendants are in the same position as the plaintiff in Marshall v. N M Financial Management and are in a much stronger position than employees in respect of the liberty in using information obtained while in the course of their agency. Mr Kotewall SC argues that in law their positions are the same.

74.Marshall v. N M Financial Management, however, was concerned with restriction on competition and with balancing a self employed agent's interest in the goodwill arising from his reputation and connection and the principal's interest in the goodwill attaching to its own business as a seller of investment agreements. The case was not about breach of duty of fidelity or about confidential information. It lays down no general principle which allows an agent to use confidential information to the detriment of his employer. The decision certainly does not affect the existence or otherwise of the agent's duty of fidelity.

75.Though the cases cited by Mr Kotewall SC are employment cases, it is obvious from the dicta of those cases that the employee's well established duty of fidelity is just one aspect of his duty as a fiduciary agent of his employer. The following dicta of Kay LJ in Lamb v. Evans [1893] 1 Ch 218 at 235 is illuminating:

"All these materials were obtained while you, the Defendants, were acting as the Plaintiff's agents, while you were in that confidential relation to him and for the purpose for which he employed and paid you, viz., of compiling this book of the Plaintiff's, and therefore to allow you to use any of those materials for your own purposes would be allowing you to use them for a purpose for which they were not compiled - you, while you compiled them, being in the position of the Plaintiff's agent, and there being a confidential relation between you and the Plaintiff."

76.Also in the same case, Lindley LJ held at 226:

"What right has any agent to use materials obtained by him in the course of his employment and for his employer against the interest of that employer? I am not aware that he has any such right. Such a use is contrary to the relation which exists between principal and agent. It is contrary to the good faith of the employment, and good faith underlies the whole of an agent's obligations to his principal. No case, unless it be the one which I will notice presently, can I believe be found which is contrary to the general principle upon which this injunction is framed, viz., that an agent has no right to employ as against his principal materials which that agent has obtained only for his principal and in the course of his agency. They are property of the principal. The principal has, in my judgment, such an interest in them as entitles him to restrain the agent from the use of them except for the purpose for which they were got."

77.In the same case, in relation to whether an employee may use materials obtained by him in the course of his employment and for his employer against the interest of that employer, Bowen LJ held at 229-230:

"Ought not the Plaintiff to be able to restrain them from afterwards using those materials and those documents in competition with the Plaintiff himself? It is not a question of copyright - that must be kept out of sight altogether - nor is it, on the other hand, a simple question of the absolute property at law in the documents themselves or in the blocks themselves. It is a question of whether the Plaintiff, whatever the property in the documents may be, or whatever the property in the materials may be, has not sufficient special property in them to entitle him to restrain the use of them against him when they had been obtained for his use by his agents in the course of their employment. That depends entirely, I think, upon the terms upon which the employment was constituted through which the fiduciary relation of principal and agent came into existence. I think my Brothers have already during the course of the argument expressed what I fully believe, that there is no distinction between law and equity as regards the law of principal and agent. The common law, it is true, treats the matter from the point of view of an implied contract, and assumes that there is a promise to do that which is part of the bargain, or which can be fairly implied as part of the good faith which is necessary to make the bargain effectual. What is an implied contract or an implied promise in law? It is that promise which the law implies and authorizes us to infer in order to give the transaction that effect which the parties must have intended it to have and without which it would be futile."

Thus the English Court of Appeal saw no distinction in the nature of the duty of fidelity imposed on an agent and that imposed on an employee.

78.AXA agents are placed in such a position by AXA, but for which they would not have been able to contact clients and obtain information from them. Similarly, policyholders would not have supplied the information if not for the purpose of purchasing AXA's insurance policies. Agents are remunerated commission for their services in selling policies which included an element of reward for the Policyholder's Particulars so obtained. Under such fiduciary relationship the Individual Defendants must owe a duty of fidelity towards AXA. I cannot see any real distinction between the fiduciary relationship created by a contract of agency and that by a contract of employment. An agent owes the same duty of fidelity to his principal in respect of information obtained by him for his principal in the course of his agency as that owed by an employee to his employer in respect of information obtained by him in the course of employment.

79.In Roger Bullivan Ltd v. Ellis [1987] FSR 498, Nourse LJ, referring to Robb v Green [1895] 2 QB 315 said the principle is "one of no more than fair and honourable dealing [which] should be steadfastly maintained." I am not aware of any authority which decrees that the duty of fidelity is lower in the case of principal and agent than that in the case of employer and employee. This does not accord with the notion of fair and honourable dealing which must exist in any fiduciary relation whether of principal and agent or of employer and employee. In my view, the duty exists as long as the fiduciary relation subsists and it makes no difference whether the fiduciary relation is one between employer and employee or principal and agent.The Individual Defendants were employed as exclusive agents of AXA. During the currency of the agency they may not work for any other insurance company. It must be an implied term of their Agent's Contract that they were to serve their principal, AXA, with good faith and undivided interest and should not do anything which may harm AXA, not at least during the currency of the agency. It goes without saying that they were not to make copies of AXA's confidential information or trade secrets for their use after their agency ends. In my opinion the third principle in Facenda Chicken is applicable to the relation between the Individual Defendants and AXA as if they were employees of AXA.

80.Mr Ho SC submits that Roger v. Bullivant is concerned with an employer and employee relationship in which there was a restrictive covenant and that the customer index removed by the employee was compiled by the employer. It is clear that the above dicta was given by Nourse LJ when considering the question of confidential information by reference to general principles of law and not based on the restrictive covenant. As for the other two points of difference raised by Mr Ho SC, I do not think they amount to material distinction.

81.Mr Ho SC draws a distinction between the primary information and the compilation of such information. He submits whether the product of compilation attracts confidentiality, the primary information, if it can be obtained from other open sources, remains open for use. Attractive as his submission may be, however, from the above analysis, there is really no such open source in respect of any primary information (see paragraph 42 above). AXA's policyholders are not listed in any policyholder register open to the public. Even if an agent knows the name of a policyholder, telephone directories are not useful unless the policyholder is a registered user of a telephone line.

82.Mr Fung SC and Mr Ho SC submit that in the absence of express terms, this protection would not avail AXA in respect of client information, especially client contact details, which an agent could carry away in his head without consciously committing the information to memory. The authorities are clear. In respect of trade secret or its equivalent, an agent may not use it except for his principal's business, even if it may be carried away in his head (see paragraphs 60 to 64 above). It is only in respect of confidential information not amounting to trade secret and which have formed part of the agent's stock of knowledge in his head that he may use it after his agency expires for his own purpose and even in competition with his former principal.

83.Many of the policyholders are personally known to the agents. In respect of those policyholders, an agent would not have difficulties in recalling their contact details. However, the Individual Defendants were senior managers whose function was to recruit and train agents. The substantial part of their income was derived from overriding commission. They did not contact clients save those who are their personal friends and relatives. I do not think the nine Individual Defendants together can recall more than a minute fraction of the client contact particulars among the Client Data which have allegedly been removed by them.

84.In any event, if a policyholder's name is a trade secret or its equivalent which an agent is enjoined from using, then he may not recall that name from his memory and look up the telephone directory for his contact details. Such an exercise may not be fruitful as the policyholder may not be the registered user of a telephone line (see paragraph 42 above). AXA are not trying to restrain any agent from competing with AXA upon termination of his agency. AXA only seek to restrain him from using the confidential information. The agent is at liberty to deal with a policyholder if the policyholder contacts the agent. If the policyholder shows him SAMS documents, the agent is also at liberty to use them or the information contained therein.

Conclusion:

85.I am satisfied that AXA have raised a serious legal issue to be tried as to whether the Individual Defendants would be in breach of their duty of fidelity to AXA by copying and removing Client Data during the currency of their agency for the purpose of using them to AXA's detriment after the termination of their agency.

WHETHER THERE WAS BREACH OF FIDUCIARY DUTY BY THE INDIVIDUAL DEFENDANTS

86.In essence, AXA's case is based on the unusually large volume of SAMS printouts made under the passwords of the Individual Defendants at about the time they left AXA and that some of these printouts or copies thereof were surrendered by PCI. AXA's case is not based on direct evidence but mainly on inferences to be drawn. Some of the Individual Defendants admit authorising some of the printouts and offer a legitimate explanation while the others allege that the printouts were made by somebody else without their knowledge. However, Mr Kotewall SC submits that when these allegations are tested against the evidence from the other agents, the defendants' account or explanation do not ring true in view of the timing and the volume of the printouts.

87.The general thrust of the Individual Defendants' case is that they were senior managers mainly responsible for recruiting and training agents under them. They did not operate SAMS, which operation was invariably delegated to their secretarial staff. Individual agents were entitled to request for printouts in the ordinary course of business and no specific approval is required from the Individual Defendants. Further, as managers, the Individual Defendants do not contact clients. In any event, their evidence is that cold calling policyholders serviced by another agent is seldom successful. Hence they have little or no use of the SAMS printouts.

88.The argument based on the Individual Defendant's senior position cuts both ways. There is no dispute that like clients, agents usually follow their managers or directors of agency. Hence it is useful to have client information of all agents under a manager or a director when he leaves. Possession of an agent's client information also gives the agent pressure to follow his manager or director. As to cold calling, AXA's evidence is that statistically existing policyholders are more likely to take out further policies and agents do service orphan clients which is similar to cold calling. Hence the SAMS printouts are useful.

89.For the purpose of these proceedings the burden AXA need to achieve is to raise a serious question to be tried. AXA do not have to satisfy me that their case is more likely than the defendants'. It would be sufficient if AXA could adduce such evidence as would enable the inference that the Individual Defendants had removed SAMS printouts to be drawn and that the Individual Defendants' explanations are inherently improbable. The specific cases of the Individual Defendants are analysed below.

The case against the 2nd defendant:

90.The 2nd defendant was a regional director of agency to whom password access to SAMS was given. As at 31 March 2000, he had 182 in force agents within his agency of 20 in force units. He resigned on 10 April 2000 and requested leave of absence from the same date. He was registered as a PCI agent on 21 July 2000. Pursuant to its undertaking, PCI delivered five client lists of the 2nd defendant's own direct clients to AXA. These client lists were all printed on 8 April 2000, two days before his resignation took effect.

91.AXA's case against him is as follows. Towards the end of 1999 he had intimated to another agent, Eric Tsoi, that he would leave AXA if he could persuade a sufficient number of AXA agents to leave with him. AXA say that this explains the unusually high incidence of printouts of 34 Audit Reports and 44 Audit Reports from SAMS in December 1999 and April 2000 respectively, but these printouts were not recovered upon a search of the 2nd defendant's office after he left. Inference that he handed over his own client lists to PCI could also be drawn from the delivery up of five client lists by PCI.

92.The 2nd defendant says that the Client Data are compiled using information supplied by agents, they are not confidential information and are available from books and records kept by the agents. These arguments have been considered in some detail above.

93.He also says that he did not personally operate SAMS and did not even know the password even though he was the password holder. Daily operation of SAMS was delegated to his secretarial staff, Ms Catherine Cheung Kin Sheung and Lee Ching Yan to whom agents may request for printouts. He says the high incident of printout in December 1999 is not unusual as Christmas would be a good time for contacting clients to get more business and in any event the Audit Reports are in respect of clients serviced by agents who have not joined PCI. He denies that the printouts in April 2000 were made at his instruction and says he has no idea why his client lists came into possession of PCI. His personal assistant, Ms Phyllis Leung says that she made copies of her own as well as that of the 2nd defendant's client lists without the 2nd defendant's knowledge. When the 2nd defendant's clients asked to switch to PCI upon learning of the 2nd defendant's departure from AXA she gave the client lists to PCI for convenience in order to apply for policies on behalf of those clients. The 2nd defendant says that cold calling other agent's client is unprofessional and seldom fruitful.

94.The 2nd defendant's defence is to a certain degree discredited by Ms Cheung who says that while it is usual to have a lot of printouts of client labels in December for sending out Christmas cards to clients, the high incident of printouts of Audit Reports in December 1999 and April 2000 is unusual and have not been adequately explained. The high incidences of printouts at the same time or within a short period of time when read with the statistical data are unusual and cannot be attributed to individual requests.

95.Audit Reports are used for allocating orphan clients. As Audit Reports are related to orphan clients whose agents have left AXA, they are all the more valuable for marketing PCI matching policies. There is no reason why such a high incident of printing is required all at the same time. Also individual agents have no authority to request for Audit Reports. The fact that the agents who formerly serviced these orphan clients have not joined PCI all the more shows the usefulness of the information in marketing the PMS targeted at these AXA's policyholders.

96.It is well established under the American Cyanamide principle that it is not for the court in an interlocutory application to resolve complicated issues of law or of fact. The explanation given by Ms Leung as to why the 2nd defendant's client lists were delivered up by PCI is far too convenient and coincidental. While part of the 2nd defendant's explanation is credible, for example, the way SAMS was operated in his agency and that he did not personally operate SAMS, the balance of the evidence, in particular, the timing and volume of the printouts and the surrounding circumstances, points strongly to an inference that the 2nd defendant has caused Client Data to be printed out for illegitimate purpose. I am satisfied that AXA have established a serious issue of fact to be tried as against him.

The case against the 3rd defendant:

97.The 3rd defendant was AXA's senior director of agency. He tendered resignation on 10 May 2000 but was terminated by AXA on 18 May 2000. He was registered as a PCI agent on 21 July 2000.

98.AXA's case against the 3rd defendant is that there was an unusually high incidence of printouts of Client Data in April and May 2000 just prior to his resignation, that he imaged a large amount of AXA documents since 16 February 2000 and that some Audit Reports of his agency printed on 5 May 2000 were delivered up by PCI.

99.Upon discovery of the large volume of printouts made in April 2000, Mr Wilson confronted the 3rd defendant on 2 May 2000. The 3rd defendant explained that the printouts were given to the relevant agents and managers. According to Mr Wilson, the agents whom Mr Wilson spoke to denied ever requesting or receiving the printouts.

100.Mr Wilson interviewed the 3rd defendant again on 3 May 2000 and gave him a copy of a note of the meeting of 2 May 2000. After making a few amendments, the 3rd defendant agreed with the contents of the note.

101.On 5 May 2000, Mr Wilson wrote to the 3rd defendant demanding return of all "client files" and enclosing a copy of the note of the 2nd May 2000 meeting as amended by the 3rd defendant which referred to the fact that the 3rd defendant had printed out client data relating to 271 agents. There were no such thing as "client files". The 3rd defendant must have understood that to mean "client lists" or SAMS printouts.

102.On 9 May 2000, the 3rd defendant responded saying that he only had 100 agents and could only have client lists relating to those 100 agents. He said he had authority to keep those client lists. In fact the number of active agents reporting to him were 113, but in addition to printing Client Data relating to those 113 active agents, he had also printed Client Data in relation to 158 terminated agents. The total amount of Client Data he printed out related to 271 agents, but only a portion of the printouts had been returned. Mr Kotewall SC also refers me to various inconsistent allegations made by the then solicitors acting for the 3rd defendant. I do not think it necessary to refer to those inconsistencies here.

103.The 3rd defendant's case is that operation of SAMS was delegated and entrusted to the agency secretary, Ms Fanny Chow, to whom requests for printouts could be made. She was responsible for printing and distributing the printouts to managers and agents concerned through their honeycombs in the office. Ms Chow confirms that client lists printed out in April and not returned were printed out at the request of specific managers without the 3rd defendant's knowledge. This is inconsistent with the 3rd defendant's admission that he printed out or caused to be printed out client lists in April 2000. According to the SAMS log, the printouts were in respect of the same seven units and for exactly the time span for the documents listed in Schedule A. If the 3rd defendant and Ms Chow are referring to the printing of the same documents, then either of them or both of them are not telling the truth.

104.Ms Chow also confirms that client lists printed out in May 2000 and not returned were printed out at the request of specific managers without the 3rd defendant's knowledge. Her allegation is contradicted by three of the managers inquired into by AXA. Her explanation on behalf of the 3rd defendant is all too convenient and coincidental as to be inherently probable.

105.Mr Ho SC submits that it is contrary to common sense for the 3rd defendant to continue printing after he had been confronted by Mr Wilson on 2 May 2000. Mr Kotewall SC replies that it was perfectly in keeping with his wrongful removal of documents to use the time available to print out as much as possible and to engineer a situation whereby it appears that the printouts were being made by others. That was at about the same time when he started asking agents to sign on a document containing just a list of the names of agents, who were given to understand that that would assist him on the question of printouts.

106.While there is no direct evidence that the printouts were authorised or made by the 3rd defendant, the circumstances, including the timing of the printouts and his resignation, the volume of the printouts and that copies are being used for the purpose of enticing serving AXA agents to leave and join PCI, are such that his explanations as well as that of Ms Chow's which are inconsistent with one another and with the other managers of his agency are not to be believed. AXA have therefore established a serious issue on the facts to be tried against the 3rd defendant.

The case against the 4th defendant:

107.The 4th defendant was a sales manager and SAMS password holder. He tendered resignation on 20 June 2000 but was terminated by AXA on 29 June 2000.

108.AXA's case is that client lists of all the in force agents of four units under him, client lists of all terminated agents in his unit and client lists of all agents in Ms Wendy Pan's units were printed out under his password in May and June 2000.

109.His explanation is that the client lists printed in May 2000 were for use by the agents so that they could go through their respective client lists for potential new business because of poor results in competition in March and April 2000. However, his subordinate manager, Ms Wendy Pan, could not recall the 4th defendant having discussed with her about poor results in the competition and the need to seek new business with the use of client lists. As for the client lists of terminated agents, he says they were printed for reallocation of orphan clients. This is not credible as the proper format to be printed for that purpose in the format of Audit Reports.

110.As for the printouts on 20 June 2000, Ms Flora Ng, the 4th defendant's secretary, says that they were printed at her initiative as she was leaving. The explanation as it stands is unconvincing. It offers no reason why the client lists have to be printed indiscriminately merely because she was leaving. That was also the time when the 4th defendant was leaving. The timing could hardly be a coincidence.

111.In the light of the timing and the inherently incredible explanation, the inference is that the 4th defendant caused the printouts to be made for improper motive. AXA therefore have established a serious issue of facts to be tried.

The case against the 5th defendant:

112.The 5th defendant was a senior branch manager of AXA and SAMS password holder. He tendered resignation on 25 July 2000 but was terminated by AXA on 17 August 2000. He was registered as a PCI agent on 28 August 2000. AXA's complaint is that he caused to be printed client lists of all in force and terminated agents in all units in his agency on 9 May 2000.

113.His explanation is that the printouts were made because of poor performance in the competition in March and April 2000 to boost "Smart Medical" and after consultation with Ms Jennifer Wong and Jenny Cheng. Ms Cheng confirmed that while the reason for the printouts had been discussed, no printout had in fact been given to her. His other reasons are that since not all agents had hand held personal computers or digital diary, it is more convenient to issue them hard copies to work with and the printouts would also serve as a reminder to his agents.

114.He gave various reasons for leaving AXA, such as the shrinking in his agency force, the change in AXA's policy requiring a higher threshold to qualify for year-end bonus and in requiring a higher persistence rate, and the decreasing competitiveness of AXA's products. Hence, he says if he was minded to get client lists he would have done so nearer to the time of his departure. However, according to PCI, the offices in Room 701 in Miramar Tower which was rented by PCI's subsidiary, was allocated to the 5th defendant on 24 July 2000, the very day when he tendered his resignation to AXA. Thus the inference is that there were on going negotiations well before July 2000 for his defection. Printing out client lists in April and May would be most timely; in fact printing anytime after February when the indexation has been updated would be timely.

115.The evidence against him for having removed Client Data is so strong that I have no difficulty in finding that AXA have established a serious issue of fact to be tried as against the 5th defendant.

The case against the 6th defendant:

116.The 6th defendant is the wife of the 2nd defendant. She was a sales manager of AXA and SAMS password holder. She resigned on 15 May 2000 and was registered as a PCI agent on 21 July 2000.

117.AXA's case against her is that printouts of client lists of all in force agents in all in force units in her agency were made under her password between 10 and 14 April 2000 and there were other printouts of SAMS documents in April and May 2000. She returned some of the printouts but not all. Subsequently, two of her client lists in respect of Mr Wong Min Kok and Mr Tang Kwok Hung were delivered up by PCI.

118.The 6th defendant's explanation is, like that of the other managers', that she did not concern herself with the operation of SAMS which she entrusted to her secretary, Ms Annie Wong. In brief, Ms Wong would of her own initiative print and distribute all client lists for use by agents in competition and in marketing Smart Medical. Unlike the case of the other defendants, the majority of client lists so distributed were retrieved from the agents and returned to AXA by Ms Wong upon AXA's demand. This made her explanation more credible than those of the other defendants. As for printouts of birthday lists and labels which were not returned, her explanation is that AXA had not made a timely request for their return and had AXA done so, those printouts could have been accounted for.

119.In respect of photocopies of Wong's and Tang's client lists, the 6th defendant's explanation is that Wong is her close friend and in order to provide personal service to Wong, she kept a copy of Wong's client list in her own file, while Tang is her nephew who had defaulted on two instalments of the premium which she paid on his behalf and she kept a copy of Tang's client list for the purpose of obtaining reimbursement from him. After she joined PCI, they requested to follow her and out of convenience, she sent the client lists to PCI.

120.Much of her explanation is credible. The Policyholder's Particulars in respect of Wong and Tang could be outside the terms of Client Data but not the Policy Details. On her own admission she has misused AXA's Client Data in relation to Wong's and Tang's Policy Details. In respect of the birthday lists and labels not returned, she has not offered any credible explanation for printing them in the first place and in accounting for their whereabouts. In respect of those printouts and Wong's and Tang's Policy Details, AXA have established a serious issue of fact to be tried as to whether they have been removed by the 6th defendant for use in competition with AXA.

The case against the 7th defendant:

121.The 7th defendant was AXA's sales manager and SAMS password holder. He resigned on 19 June 2000 and was registered as a PCI agent on 3 August 2000. AXA's complaint is against the unusually high volume of printouts made under his password in December 1999. The printouts were of client lists and client list labels of all in force agents in each of his 12 in force units and of all the terminated agents in 11 of those units and printouts of client list labels in respect of all terminated agents in two other units. In addition, AXA say that he was dissatisfied with Chow Tai Lin's promotion which provided the motive for his leaving AXA and making the printouts.

122.The 7th defendant's explanation is that his motive for leaving AXA had nothing to do with Chow's promotion but was because of changes in AXA's policy, including the introduction of Company Direct, and the declining competitiveness of AXA's products etc. As against that explanation, there are conflicting evidence from AXA that he had intimidated to others his displeasure about Chow's promotion. These disputes are only of marginal utility only.

123.His other explanations are that he did not concern himself with the operation of SAMS which was left to his secretary, Ms Crystal Lam, who would make printouts and distribute the client lists and client lists labels to agents and that the printouts in December was not unusual. He also instructed printouts in respect of his own unit as it was not performing well and he wanted to give the printouts to his agents to push for more business. He kept his own client lists and the client lists of terminated agents and did not take them away upon leaving AXA.

124.At least in respect of the printouts of his own unit and those of the terminated agents there is no dispute he had kept them in April or May 2000. He resigned on 19 June 2000 but was unable to account for them. They could not be found despite a search of his office. A person in his position must recognise the importance of those client lists and the confidentiality attached to them. It is incredible that he would have totally disregarded the safe-keeping of those printouts and is unable to account for them. The inference is that he had taken them away. That also casts doubts on the credibility of his other explanation. This must mean AXA have satisfied me that there is a serious factual issue to be tried.

The case against the 8th defendant:

125.The 8th defendant is AXA's director of agency and SAMS password holder. He tendered resignation on 30 May 2000 but was informed that he was no longer required to report for duty since 7 June 2000. He was registered as a PCI agent on 25 July 2000.

126.AXA complain that large volume of printouts were made under his password between 22 and 27 June 2000. His explanations are that he did not concern himself with the operation of SAMS which was delegated to his office manager, Ms Ivy Lai, and that he was relieved from duty since 7 June and seldom returned to his office after 11 June 2000 while the printouts were made between 22 and 27 June 2000. Ms Lai corroborates his evidence and says that two copies of the 8th defendant's client lists were printed between 22 and 27 June 2000 at the request of Ms Connie Ng because one copy was required for allocating the policyholders of the 8th defendant who have become orphan clients upon his departure and another copy was required by AXA's regional director, Mr Y.K. Chan. In respect of the five incidents of printouts of the 8th defendant's own client list, she explains that they were printed on two occasions on 22 and 26 June 2000 when the 8th defendant was required to answer clients' inquiries. She says that the printing time was only 5 minutes which indicates that the printouts were of a small quantity and could not have related to printouts of all of the 8th defendant's client lists.

127.AXA offer no affirmation by Mr Y.K. Chan or Ms Connie Ng in rebuttal. This together with the timing of the printouts and the 8th defendant's resignation and Ms Lai's affirmation would have been most beneficial to the case of the 8th defendant. However, Ms Lai's answer in relation to the printouts of the 8th defendant's own client lists is obviously not credible. According to Mr Wilson, the 5 minutes referred to in the SAMS log indicates the formatting time and not printing time, which means a lot of data was being formatted for printing. I have no reason to disbelieve this. This casts serious doubts on whether Ms Lai was attempting to conceal the truth. Secondly, her evidence also discredits the 8th defendant in that it becomes obvious that even well after 11 June 2000, the 8th defendant was very active in his agency office. It could well be that he was engaged in removing Client Data after his resignation. I am satisfied that as against him, AXA have raised a serious issue of fact to be tried.

Case against the 9th defendant:

128.The 9th defendant was a sales manager of AXA and SAMS password holder. He resigned on 15 May 2000 and registered as a PCI agent on 21 July 2000. AXA's case is that shortly before he tendered his resignation, printouts were made under his password of client lists of his own unit on 12 April 2000, client lists of Mr Andrew Ng's unit on 12, 13 and 19 April 2000 and client lists of Ms Becky Cheung's unit on 14 and 19 April 2000.

129.The 9th defendant's explanation is that the printouts were made at his instruction because of the competition in March and April 2000, for marketing Smart Medical and because of poor performance in March 2000 or at the request of Mr Andrew Ng and Ms Becky Cheung. His explanation is contradicted by Mr Ng who says that he never requested for printouts on 12 and 13 April 2000 nor has he been consulted about the need for the printouts and he has never been given any printouts. He did request for printouts for his unit and Ms Cheung's unit, but that was on 19 April 2000; and if he had been supplied printouts on 12 and 13 April 2000, he would not have made the request on 19 April 2000. As the evidence stands, an unusually large volume of printouts have been made under his password and his account is inherently improbable. That must mean AXA have raised a serious issue of fact to be tried as to whether he has removed those printouts.

Case against the 10th defendant:

130.The 10th defendant was AXA's sales manager. He tendered resignation on 1 August 2000 but was terminated by AXA on 30 August 2000. Printouts of client lists for all agents in his 14 units were made in November 1999 and for all agents in four units were made in December 1999. AXA's case is that he was unhappy with AXA and was intending to leave in December 1999 which supplied the motive for making the printouts, which coincidentally were made in November and December.

131.The 10th defendant denies harbouring any intention to leave AXA in December 1999 and says it would be more natural to make the printouts in June or July 2000 if he was minded to leave with the printouts. His reason for leaving AXA was because of reduction in the number of agents in his unit and the possibility of a demotion. He says that the printouts were required to promote business around Christmas. Ms Amy Mok corroborates his evidence that printouts of client lists and client list labels were made each year in November and December for the whole agency for sending Christmas cards to policyholders. However, AXA argue that Christmas is not a good time for promoting business as many people are away or have seasonal expenses to incur. In any event, he could not explain why client lists and not just client list labels were printed.

132.In view of the unexplained and extremely high incidence of printouts of client lists and particularly of client list labels, and all the surrounding circumstances, I am satisfied that AXA have raised a serious issue of fact to be tried.

Conclusion:

133.In conclusion, I am satisfied that as against all the Individual Defendants, AXA have raised a serious issue of fact to be tried as to whether they had removed Client Data during the currency of their agency for use in competition with AXA after termination of their agency.

BREACH OF CONFIDENCE BY PCI:

134.There being no fiduciary relation between AXA and PCI, AXA's claim against PCI has to be based on breach of confidence: see Coco v. A. N. Clark (Engineers) Ltd [1969] RPC 41. In accordance with the principle in Coco v. Clark, in order to succeed AXA have to prove:

(1) the Client Data which AXA seek to protect have the necessary quality of confidence about them;

(2) PCI must know that the information is confidential;

(3) it must have been imparted in circumstances importing an obligation of confidence;

(4) there must have been an unauthorised use of the information to the detriment of AXA; and

(5) PCI must have been dishonest in using the information.

135.AXA have already established there is a serious issue to be tried as to whether the Client Data which AXA seek to protect are trade secrets or equivalents to trade secrets. Trade secrets or their equivalents must have the necessary quality of confidence about them. There is no doubt that PCI's use of the Client Data in effecting the PMS targeted at AXA's policyholders is unauthorised and detrimental to AXA. The outstanding issues are therefore whether PCI know that the Client Data are confidential, whether the Client Data have been imparted in circumstances importing an obligation of confidence on PCI and whether PCI has been dishonest in using the information.

PCI's knowledge of confidential nature of Client Data:

136.Like AXA, PCI itself is in the insurance business. It has a well established and sizable operation. Its agency contracts with its own agents contain similar provisions on confidentiality as in AXA's Agent's Contracts. In its letter to AXA's solicitors, it stressed the confidential nature of its own client data delivered over to AXA in accordance with its own undertaking. Such information is the life blood of an insurance company. Therefore PCI itself must appreciate the confidential nature of the Client Data in the eyes of an insurance company.

Whether information imparted in circumstances importing an obligation of confidence:

137.Mr Fung SC submits that PCI is a third party and has no knowledge that AXA's Client Data were being used. He draws a distinction between SAMS printouts and SAMS data and argues that SAMS data are also found legitimately elsewhere, for example, from the policyholders or from the ex-AXA (now PCI) agents' books and records. He further argues that even in respect of the SAMS printouts, PCI could not have known of its confidential nature as the PMS applications, with or without SAMS documents are processed mechanically by clerical staff of PCI.

138.I can well recognize the force of these arguments from the stand point of PCI as a third party recipient of the information as distinct from the case against the Individual Defendants who were in direct fiduciary relationship with AXA. However, PCI is not an ordinary third party. Being in the insurance business itself, PCI must know these information, particularly the Policy Details, wherever they came from, must be trade secrets or confidential information. They could originate from the policyholders as Mr Fung SC suggests. This is a possibility but is hardly supported by any evidence. Quite on the contrary, there is evidence from affirmations filed on behalf of the Individual Defendants explaining how some of these documents have found their way from AXA, not from the policyholders, through the Individual Defendants and their staff to PCI. The inference is that these documents surrendered by PCI and possibly other Client Data used in the PMS applications had been removed by the Individual Defendants in breach of their duty of fidelity owed to AXA.

139.As for whether PCI or its PMS processing staff knew whether the information were supplied in circumstances involving breach of duty of fidelity by the Individual Defendants or ex-AXA agents, Mr Kotewall SC submits that Victor Ko who heads the various departments of PCI processing documentation for PMS applications had been an ex-AXA employee actively involved in launching SAMS and would have no difficulties in recognizing SAMS document, even though he had left AXA before SAMS was fully implemented.

140.In my view, it matters not whether PCI or its clerical staff processing the PMS applications knew the information was supplied under circumstances involving breach of duty. The Individual Defendants' (now PCI agents') knowledge of their own breach of duty to AXA could be readily imputed to PCI. If so, PCI would become bound by the obligation of confidence as well: AG v Guardian Newspaper, [1990] 1 AC 109 at 261 and 281.

141.In my view, AXA have demonstrated a strong arguable case that PCI has knowledge that the information supplied by the Individual Defendants or other ex-AXA agents have the necessary quality of confidence in them and were imparted in circumstances importing an obligation of confidence to PCI.

Dishonesty:

142.Mr Fung SC submits that in order to succeed, the plaintiff must prove dishonesty on the part of PCI in using the information and negligence is not enough. He refers to Royal Brunei v. Tan [1995] 2 AC 378. Mr Kotewall SC does not dispute the correctness of the above proposition of law. However, the test of dishonesty in this context is objective. At p 395, Lord Nicholls held:

"Before considering this issue further it will be helpful to define the terms being used by looking more closely at what dishonesty means in this context. Whatever may be the position in some criminal or other contexts (see, for instance, Reg v. Ghosh [1982] Q B 1053), in the context of the accessory liability principle acting dishonestly, or with a lack of probity, which is synonymous, means simply not acting as an honest person would in the circumstances. This is an objective standard."

143.PCI is in the insurance business. It must have known that the Client Data are confidential information. It planned the PMS specifically targeted at AXA's policyholders. As its annual reports show, PCI recruited on a mass scale teams of ex-AXA agents into their agency force and paid them such hefty welcoming bonus that it declared a profits warning. Between 15 May 2000 and 7 December 2000, 327 AXA agents resigned with 259 joining PCI. The Individual Defendants, in particular, all joined PCI in July or August 2000 when the modified PMS was implemented. All these could not have been coincidental. The inference is that these ex-AXA agents were lured to join PCI to market the PMS targeted at AXA's policyholders formerly serviced by them.

144.It is all too obvious that any of these agents cannot remember the Policyholder's Particulars and Policy Details of the 330 policyholders they serviced. In the circumstances PCI must appreciate there is a real likelihood that the SAMS documents, the Schedule C documents, Policy Details and Policyholder's Particulars, which PCI also recognizes as confidential, filed by these ex-AXA (now PCI) agents in connection with the application for PMS may have been supplied by these agents in circumstances involving breach of their duty of fidelity owed to AXA. If in the circumstances PCI used the information without making any inquiry lest it found out anything it did not wish to know, then such reckless use of the information must be dishonest.

145.Further, from all the circumstances, including the timing of the PMS and the departure of the Individual Defendants, the indiscriminate printout of SAMS data by them, the actual use of SAMS documents in a number of policy applications, the very hefty welcoming bonus paid to the ex-AXA agents, the inference that PCI intended that these ex-AXA agents to bring along AXA's policyholders and if necessary Client Data from AXA to enable these policyholders to switch to PCI's PMS could be drawn. PCI's use of AXA's Client Data under the circumstances must, on an objective standard be dishonest and not merely negligent.

146.Mr Fung SC submits that he knows of no case where an injunction was issued against a third party competitor in receipt of confidential information. I think every case depends on its own facts. The case as presented by AXA is that PCI is not a bona fide recipient of the information. For the purpose of the present application, it is sufficient for AXA to establish a serious issue to be tried as to whether PCI is under an obligation of confidence in respect of the information it received and has been in breach of that duty. I am satisfied that they have so established.

UNLAWFUL INTERFERENCE:

The ingredients of the tort:

147.AXA's second cause of action against PCI is the economic tort of unlawful interference. The basic ingredients of this tort as set out by Henry J in Barretts & Baird v. Institution of Professional Civil Servants, [1987] IRLR 3 are:

(1) there should be interference with the plaintiff's trade or business;

(2) by unlawful means;

(3) with the intention to injure the plaintiff; and,

(4) the plaintiff in fact suffered injury as a result.

148.AXA rely on the PMS as the unlawful interference. The scheme is targeted at AXA's policyholders and induces them to surrender their policies for PCI policies. There can be no doubt that if the scheme is successfully implemented, AXA will suffer injury by way of loss of profits to be derived from premium income in respect of each policy surrendered because of the scheme. The outstanding issues are whether there is intention on the part of PCI to injure AXA with the scheme and whether the interference is by unlawful means.

Intention to injure AXA's interest:

149.Mr Fung SC concedes on the authority of Lonroho plc v. Fayed, [1990] 2 QB 479, that the intention to injure AXA need not be the predominant purpose. It is sufficient so long as the unlawful act is in some sense directed against the plaintiff or is intended to harm the plaintiff. The August 2000 PMS was targeted at AXA's policyholders and was so described in the PMS documents, it must be directed against AXA. Prior to launching the scheme, as disclosed in their annual reports, PCI had planned the mass recruitment of AXA agents and paid them hefty welcoming bonus. Of the 327 AXA agents who resigned by 7 December 2000, 259 joined PCI. A training session was arranged for ex-AXA and intending PCI agents in August 2000, and the client lists of some of the AXA agents were available to the PCI agents recruiting them. It is well known among the industry that policyholders would follow the agent. PCI must know that by planning and implementing the PMS targeted at AXA's policyholders and mass recruitment of their agents would result in injury to AXA. All these surrounding circumstances support the inference that the August PMS was more than a mere competition but an interference directed at AXA with the purpose of inducing AXA's policyholders to surrender their policies thereby occasioning harm to AXA. While this is not conclusive evidence that the PMS was set up with the predominant motive of causing harm to AXA, I am satisfied that AXA have raised a triable issue that the intention of PCI must have gone beyond fair and honourable competition and that PCI intended at least to cause some harm to AXA.

Breach of confidence as the unlawful interference :

150.AXA rely on breach of confidence, representations made by way of deceit and representations made in breach of the Insurance Companies Ordinance, Cap 41 and the Code of Practice for Administration of Insurance as the unlawful means.

151.Mr Kotewall SC refers to Indata Equipment Supplies ltd v ACL Ltd, [1998] FSR 248, as authority that breach of confidence could constitute the unlawful means for this tort. In that case, the defendant finance house disclosed the plaintiff's confidential information to the plaintiff's client with the result of cutting the plaintiff out of the financial deal. Otton and Owen LJJ said obiter that such breach of confidence coupled with the ruthless conduct of the defendant amounted to unlawful means for the tort of unlawful interference with contract. Mr Fung SC argues that Indata concerned a simple bipartite situation involving the original confidee and confidant of the information whereas the present case is concerned with a third party recipient of confidential information. He also submits that the observations of Otton and Owen LJJ are in any event obiter.

152.Mr Kotewall SC refers to the following dicta of Lord Keith of Kinkel in AG v Observer Ltd at 261:

"The third party to whom the information has been wrongfully revealed himself comes under a duty of confidence to the original confider."

He submits that where the conditions required for imposing a duty of confidence on a third party are satisfied, the third party itself comes under its own duty of confidence. I agree. A third party receiving confidential information knowing the information to be confidential and supplied under circumstances involving breach of trust or duty of fidelity is bound in his conscience and is under a duty of confidence himself to the owner of the information. The law imposes on him the same obligation as that obliging the confidant. Similarly, if he receives the information suspecting it to be confidential or supplied to him under circumstances involving breach of trust or duty of fidelity, he is under a duty to enquire. If he uses the information, he may not escape liability by turning a blind eye just in case his inquiry would reveal to him anything that he did not wish to know. In my view, there should not be any distinction between the original confidant and a third party recipient of confidential information with knowledge that the information was supplied to him in circumstances involving breach of duty of fidelity by the original confidant. The dicta of Otton and Owen LJJ are clearly sufficient to raise at least a serious question to be tried as to whether PCI's breach of confidence constitutes the unlawful means for this tort. This is a question of law calling for detailed argument and mature consideration.

Misrepresentation as the unlawful interference:

153.Secondly AXA allege that the deceit practised by PCI on AXA's policyholders through their representation that PCI policies under the PMS match with AXA policies is an unlawful means constituting the tort of unlawful interference. While AXA's expert actuary, Mr Austin, cannot come to the conclusion that the PMS in its entirety is misleading, he is able to reach the conclusion that the scheme in so far as it provides for the making of statements or representations to policyholders that a corresponding policy of PCI "matches" the policy of AXA, is wrong in relation to nine types of policies as listed in their Statement of Claim. In assessing whether a PCI policy could be described as "matching" a corresponding AXA policy, his test is essentially whether there are material differences between the two policies.

154.There is no expert evidence from PCI to contradict the evidence of AXA's expert. Mr Fung SC submits that "matching" is not a term of art that calls for explanation by an expert. PCI's case is that "matching" does not mean identical or that there are no material differences between the matching policy and the policy to be matched. PCI therefore accepts that there may have been material differences between their policies and AXA's. The question is one of degree. Thus any statement by PCI or their agents about "matching" must arguably be false and dishonest. In my opinion, for the purpose of the present proceedings, Mr Austin's expert evidence is sufficient to raise a serious question to be tried.

155.Mr Fung SC submits that the issue is not whether a particular PCI product can be described as "matching" a corresponding AXA product but rather whether PCI has through its agents made false and dishonest representations. He argues that such evidence is lacking and that AXA's case is based on nothing but surmise and speculation. AXA's application is essentially a quia timet application. For the purpose of the present proceedings, AXA need not prove actual instances of the making of misrepresentation, or damages in order to succeed. In my judgment it would be sufficient if AXA can prove a real likelihood of future unlawful interference.

156.While direct evidence of representation to AXA's policyholders is missing, a large number of AXA's policyholders have surrendered their policies and switched to PCI policies following their agents' transfer to PCI. In all but a few cases, the PCI policies were arranged by an ex-AXA agent. There is also evidence from AXA's agents who attended PCI's training courses that agents were asked to approach AXA's policyholders and seek to persuade them to surrender their policies with AXA and replace them with policies issued by PCI on the basis that the PCI policies would match the AXA policies to be surrendered.

157.There is conflicting evidence from AXA and PCI as to what happened during the training courses. In brief, AXA say the agents were trained and told to sell policies on the basis that the basic plans matched or were identical to the AXA products as set out in the handouts. No differences between the policies have been identified or explained to the agents. The agents were not provided with handbooks to enable them to understand the differences. These allegations are denied by PCI.

158.I do not think it necessary for me to compare the AXA policies against PCI policies or AXA's allegations against PCI's, or Mr Austin's report against PCI's criticisms. At this stage of the proceedings, it is not necessary for the court to make any findings as to proof of fraud or deceit, nor do AXA have any burden to adduce such proof save to raise a serious question to be tried. PCI does not dispute there are material differences between the policies, however, they marketed them as matching policies. To describe them or to cause their agents to describe them as matching policies to AXA's policyholders must be a false representation. PCI must know it was false as it recognised there are material differences between its policies and AXA's, or had no belief in its truth or was reckless as to whether it is true. There is evidence that their agents were trained to market them as identical or matching policies with no explanation having been given as to the differences and with no handbook to assist them in understanding the differences between the polices. One of AXA's policyholders recalls that she was approached by a PCI agent and told that the PCI replacement policy would be exactly the same as AXA's; while another AXA's policyholder says that the differences were not explained to her. I am satisfied that AXA has sufficiently raised a serious question to be tried based on misrepresentation on the part of PCI's agents.

Breach of statute as the unlawful interference:

159.Thirdly, AXA rely on breaches of Insurance Companies Ordinance and the Code made thereunder by PCI agents as the unlawful means. Section 56 of the Insurance Companies Ordinance makes it a criminal offence for any person to make any misrepresentation which he knows to be false, misleading or deceptive, or to recklessly make any misrepresentation which is false in order to induce or to attempt to induce another person to enter into any contract of insurance. Article 62 of the Code requires inter alia the agent to explain the differences when making comparisons with other types of polices and not to make any inaccurate or misleading statements about any policies or make inaccurate or misleading statements or comparisons to induce an insured to replace existing long term insurance with other long term insurance to the insured's disadvantage.

160.Even assuming there is evidence of breach of section 56 and the Code, Mr Fung SC argues that AXA's claim under this third limb must fail in limine because as a matter of law breaches of a penal statute cannot constitute the "unlawful means" for the purpose of this tort, unless the enactment in question, on a proper construction, confers a private right of action on the plaintiff. He refers to Lonrho v. Shell Petroleum Co Ltd (No2) [1982] AC 173 at 185 and Mohammed Yaqub Khan v. AG [1987] 1 HKLR 145 in support of his proposition. He also submits that even in Associated British Ports v Transport and General Workers Union [1989] 1 WLR 939 which is relied upon by AXA, Stuart-Smith LJ made a "U-turn" in his view in Associated British Ports.

161.In Associated British Ports, a statutory scheme was set up to regulate the supply of dock labour in ports registered under the scheme. Following a breakdown in negotiation between the union and the employer, the union balloted its members to take industrial action. The employers issued a writ claiming an injunction restraining the union from instructing or inducing its members to act in breach of their contract of employment or in breach of provisions of the scheme (the first tort); and damages for unlawful interference with the employer's business (the second tort).

162.After referring to Lonrho v. Fayed and Lonrho v. Shell, Neill LJ held there was an issue to be tried as to whether the unlawful means can include inducement of breaches of duty which are not actionable. He said at 955:

"Nevertheless, I must proceed to consider the case on the basis that it is arguable that the second species of tort relied on it is not necessary to show that the breach of statutory duty is actionable at the suit of the plaintiff. Accordingly, there is a serious issue to be tried within the American Cyanamid test....

Let me pause to explain the stage which I have now reached. I need make no further reference to the equitable claim. (a) I consider that for the purpose of the first tort it would be necessary for the employers to show that the breach of duty was actionable by them. (b) I consider that in relation to the second tort there is an issue to be tried as to whether unlawful means can include inducement of breaches of duty which are not actionable. (c) Without expressing a final view, I am at present of the opinion that a breach of the obligation imposed in clause 8(5)(b) is not actionable at the suit of the employers.

It follows, therefore that I am expressing no final view whatever as to whether a strike would be lawful or unlawful. At this stage all that can be said is that it is arguable that the employers have a claim in tort which would not require them to prove that a breach of the clause 8(5)(b) obligation was actionable."

163.Butler-Sloss LJ also reached the same conclusion. In fact, she dealt with similar arguments now raised by Mr Fung SC in relation to Lonhro v Shell. She said at 960:

"It is argued for the union that whatever may be the earlier position, since Lonhro v Shell an action under this head, where the unlawful means consists of a breach of statutory obligation, can only succeed if the breach of statutory obligation itself is capable of a right of action between the obligee and obligor. In other words, the same requirement as under the first tort of inducing a breach of statutory obligation. The basis for this submission is the rejection by Lord Diplock, with whom the other members of the House of Lords agreed, of the wide proposition advanced by Lord Denning MR in Ex parte Island Records Ltd [1978] Ch 122. In his formulation Lord Denning MR undoubtedly gathered up and placed in the same bracket both intention to interfere with business by unlawful means and cases where such intention was not required. It was expressed by Lord Deiplock in Lonrho Ltd v Shell Petroleum Co Ltd (No2) [1982] AC 173, 187:

'that whenever a lawful business carried on by one individual in fact suffers damage as the consequence of a contravention by another individual of any statutory prohibition the former has a civil right of action against the latter for such damage.'"

164.She continued at 961:

"If it is necessary for the unlawful means to constitute a cause of action available to the plaintiff where it is a breach of statutory obligation, it would seem to place this member of the group of these torts in an oddly anomalous position. It adds nothing and is virtually indistinguishable from the first tort which we have considered. Further, it is the only member of the group which requires a cause of action by the plaintiff in respect of the unlawful means. There is no logical distinction easily to be drawn between the various members of this group. It is strongly arguable that where the unlawful act relied upon is a breach of statutory duty it is not necessary to be actionable in tort at the instance of the plaintiff."

165.Thus Butler-Sloss LJ drew a distinction between the two torts, namely inducing breach of contract or of statutory duty and unlawful interference with business where the unlawful means relied upon is breach of statutory duty. It is well settled in respect of the first tort, the plaintiff has to prove that the breach of statutory duty is actionable by the plaintiff. It is equally well established that in respect of the second tort, an element of the tort which has to be proved is an intention on the part of the defendant to injure the plaintiff. That element is missing in the first tort. In my view, these are different torts comprising of different elements. The requirement that the breach of statutory duty must be actionable under the second tort would render that tort meaningless and proof of intention to injure superfluous. As Mr Kotewall SC submits, while the question whether a breach of statute gives rise to a civil cause of action by the victim is a question of legislative intention, the tort of unlawful interference is a tort at common law, any reference to legislative intent is, in my view, likely to cloud the issue than resolve it.

166.In the light of the above distinctions, the case of Lonrho v Shell and Mohammed Yaqub Khancan be readily explained as decisions on breach of statutory duty and not on interference of business by unlawful means.

167.Mr Fung SC submits that Stuart-Smith LJ made a "U-turn" in Credit Lyonnais v. ECGD [1999] 1 All ER 929 on his views in Associated British Ports as commented on in a footnote by the editors of Clerk & Lindsell. I do not consider the comments by the learned editors fair. Firstly, Associated British Ports was not referred to or considered or discussed in Credit Lyonnais. Secondly, Credit Lyonnais is a case about conspiracy and not unlawful interference. Thirdly, that the unlawful means, for the purposes of the unlawful act conspiracy, must be actionable at the suit of the plaintiff was a concession by counsel in that case and not a holding by Stuart-Smith LJ.

168.Mr Fung SC refers to paragraphs 24-106 and 24-107 of Clerk & Lindsell and suggests that the editors have castigated Associated British Ports as wrong. The editors write:

"It remains to be seen whether the House of Lords (which expressed no opinion on these matters in [Associated British Ports] will accept this rationalization of the previous precedents, which may be thought rather strained, effected as it was in interlocutory proceedings where views about the law could not be final."

169.Though the Court of Appeal decision in Associated British Ports has been overturned by the House of Lords on different grounds, I do not think this issue is now beyond dispute.

170.It is not appropriate in an interlocutory application to express a concluded opinion as to the law unless it is reasonably clear. The volume of arguments raised by counsel for the parties clearly demonstrates that this matter falls within Lord Diplock's category of difficult questions of law which requires mature consideration. In my opinion, AXA have, at the very least, raised a serious question to be tried as to whether in a case of unlawful interference where the unlawful act relied upon is breach of statutory duty its breach has to be actionable at the instance of the plaintiff. In conclusion, I am satisfied that AXA have raised a serious question to be tried in respect of both causes of action against PCI.

BALANCE OF CONVENIENCE:

171.In this part of my deliberation, I shall direct my attention to the possible result of a postulated trial, first one way and then the other. If in both eventualities, damages after trial are thought to be inadequate, then I shall consider what is commonly described as the 'balance of convenience' or 'balance of the risk of injustice' as more aptly described by May LJ in Cayne v Global Natural Resources [1984] 1 All ER 225 at 237.

Adequacy of damages:

172.AXA place a price tag of $500 million as their potential loss. According to AXA's appointed actuary, Mr Ross, based on the most recent appraisal of the value of AXA policies in force and assuming that the portfolio of policies held by policyholders of the 153 agents who had already left AXA and registered as agents of PCI as at 5 September 2000 exhibits the same characteristics as AXA's whole portfolio of policies, the value to AXA of the policies serviced by those 153 agents is in excess of $300 million. As at 7 December 2000, 259 departed agents have been registered as agents of PCI, thus the value of the policies to AXA which might be lost would be over $500 million. On Mr Ross' valuation, the loss to AXA as a result of each agent joining PCI would be $2 million or $6,000 per policyholder as each agent services on the average 330 policyholders. Though I am not shown Mr Ross' valuation, it does not appear unrealistic had the policies run their full course and provided all the agent's policyholders follow the agent and switch to PCI policies.

173.Mr Fung SC submits that the evidence shows that the damages payable for using SAMS documents would be negligible or of a low order. He is referring to AXA's analysis that 29 out of 297 PMS applications were accompanied by SAMS documents. I think that is a mis-understanding of AXA's case. What AXA say is that they were able to confirm that 29 of the 297 PMS applications were accompanied by SAMS documents, but their claim is not limited to misuse of SAMS documents, but all data contained therein and derived therefrom, as well as Schedule C documents. Further, it is not invariably the case that a PMS application will be accompanied by SAMS documents. Agents may have misused Client Data in identifying those policyholders, obtaining their contact details, their Policy Details and then approach them for the purpose of marketing the PMS.

174.In all fairness to PCI, AXA's estimate of loss is based on the assumption that all policyholders serviced by a departing agent joining PCI will switch to PCI policies. However, as AXA are not seeking to prevent an ex-AXA agent from using any information known to him before the information was obtained or derived by him in the course of his agency with the plaintiff, AXA's loss as a result of the ex-agent's use of such information not covered by the injunction should not be attributed to the defendants. Though there was a general belief among AXA's own agents that 70% of the policyholders would follow the agents, as a matter of fact not all of them do and AXA are able to produce affirmations from policyholders who for good reasons chose not to follow their agents. While I cannot assess what percentage of the policyholders would follow the agents, I do not think AXA's loss would be in the region of $500 million, nor do I think it would be negligible or of a low order. Even if it is half of AXA's estimated loss, it is very substantial.

175.Mr Fung SC submits that both AXA and PCI are very substantial companies. Each is owned by a parent publicly listed company, in the case of AXA on the Australian Stock Exchange and in the case of PCI on the Hong Kong Stock Exchange. PCI has considerable assets and a free surplus of $238 million for the year ended 31 December 1999. Both PCI and its parent company were given an "A" rating by A.M. Best which according to A.M. Best describes companies having "a strong ability to meet their obligations" and maintaining "a level of financial strength that can withstand unfavourable changes in the business, economic or regulatory environment".

176.On the other hand, AXA criticise A.M. Best's lack of credibility in their rating as they are commissioned and paid by the companies they rate and are less independent. A.M. Best's rating was made without taking into account the large amount of welcoming bonus offered to agents as a result of which a profit warning was issued by PCI on 4 September 2000. AXA refer to Standard and Poor's rating in which PCI was given a "B" rating whereas AXA was given an "A" rating.

177.While I am prepared to find that the loss to AXA would be substantial and of the order of millions of dollars, I am far from being convinced that AXA has discharged the burden of proving that PCI is unlikely to be able to pay. In view of PCI's free surplus and the satisfactory rating by both A.M. Best and Standard and Poor, I am satisfied that PCI has the financial resources to meet the damages if awarded.

178.In respect of difficulties in quantification, Mr Fung SC submits that damages for breach of confidence involving commercial information, as opposed to claims for misuse of information relating to the affairs of private individuals are capable of assessment and that difficulties in calculating damages should not inhibit the Court from making a calculation. AXA have an advanced computer system, SAMS, which is capable of identifying which policyholders have switched to PCI and from which an actuary can calculate the loss to AXA. On the other hand, he submits, business foregone by PCI if injunction is granted, would be difficult or impossible to assess.

179.Difficulties of quantification is not just limited to mathematical difficulties, but also applies to difficulties of proof. Damages would hardly be an adequate remedy because of difficulties of proof. The burden for AXA is not just identifying which policyholders have switched and then applying actuary formula. Now that litigation has started, agents who are minded to misuse the information would not do the obviously undesirable thing of annexing SAMS documents to the policy applications. Thus even if AXA can identify the policyholders who have switched, which they would have no difficulties, AXA may not know from their computer system if SAMS documents have been used. Further AXA's claim is not limited to misuse of SAMS documents, but all data contained and derived therefrom as well as the Schedule C documents. AXA have no means of knowing whether an agent has misused Client Data by merely checking SAMS. Without an injunction AXA would be faced with an almost impossible and mammoth task of investigation, let alone the uncertainty of cooperation from the defecting policyholders. In the event that AXA succeed in their claim, it would be wrong for PCI to say at the interlocutory stage that they should not be enjoined from doing what they should not have done if they are in the position to pay damages; and when they are asked to pay, it would be wrong for them to say "sorry, it is too bad that you do not have the means to prove the loss that you have suffered in my hands." This would make a ridicule of our law. To allow PCI to persist in conduct which is prohibited at the price of paying damages, provided AXA could overcome the very onerous burden of proof set up the agents who are in breach of their duty of fidelity, is not anything that I would countenance.

180.Mr Ho SC submits that the Individual Defendants could be asked to give an account. The fact that the Individual Defendants may keep records of their business does not assist. The records will, at the most, relate to businesses obtained by the individuals, but not how the businesses have been obtained and are unlikely to show what information or documents have been used to make the initial contacts with AXA's policyholders, or to assist in the PMS applications or their processing. The account may not provide information relating to business made by agents who are not parties to these proceedings but to whom the Individual Defendants have disclosed Client Data. None of the Individual Defendants has exhibited any of their books and records to satisfy me of the adequacy of those books and records for the purpose of giving account.

181.If an interlocutory injunction is granted, and if PCI is to succeed at trial, they will be free to implement the PMS. The number of policies it obtains thereafter will be a reliable guide to the extent of its damages. The question of SAMS documents is irrelevant because it will then be PCI's case that, even with no injunction, there will not be any use thereof. Their position if an interlocutory injunction is granted would be much better than AXA's if an interlocutory injunction is refused. AXA's position is almost one of impossibility.

182.In the case of the Individual Defendants, Mr Ho SC refers me to the following dicta of Sir Donald Nicholls V-C in Universal Thermosensors Ltd v. Hibben at 855:

"In these circumstances the substance of the matter is that, by misappropriating and misusing the confidential information, the defendants sought to save themselves the trouble and expense of making a tedious trawl through directories and having to spend hours on the telephone. In respect of misuse of confidential information which had occurred by July 1990, the commensurate remedy is that the defendants should pay the plaintiff for that which they wrongly took. They should pay compensation for their use of the plaintiff's property, for the benefit they received. But as to such past misuse, an injunction aimed at preventing the defendants from deriving any future benefit therefrom after July 1990 would not be an appropriate remedy. Such an injunction would unjustly benefit the plaintiff by putting it into a better position as against T.P.L. [the rival business formed by the Individual Defendants] than if there had been no breach of confidence, and it would drive T.P.L. out of business, in circumstances where a monetary award would provide an adequate remedy to the plaintiff for the wrong done to it."

183.Mr Ho SC submits that applying this principle to the present case, since all the SAMS documents have been delivered up, the appropriate remedy should be an award for damages at trial, rather than an interlocutory injunction at this stage which would unjustly benefit the plaintiff. On the basis that all the SAMS documents have been delivered up, Mr Ho SC is probably right. However, the preponderance of evidence suggests this is an incorrect basis. A large quantity of SAMS printouts have been removed unlawfully and unaccounted for. AXA's legitimate business interest is being threatened. In respect of past breach, damages are appropriate; but AXA are not seeking an interlocutory injunction to protect them in relation to past misuse. In respect of future breach, an innocent party is entitled to the protection of his legitimate business interest by an interlocutory injunction, provided the test in American Cyanamide is satisfied. I do not think the Vice-Chancellor in Universal Thermosensors was saying anything more than that an interlocutory injunction was inappropriate "in circumstances where a monetary award would provide an adequate remedy to the plaintiff for the wrong done to it."

184.Mr Ho SC submits that an interlocutory injunction will have disastrous impact on the livelihood of the Individual Defendants. It is obvious that a trial will not take place before a substantial period of time. Clients are the key asset and life blood of every insurance agent. They will be lost to the Individual Defendants if the injunction is granted and it will be difficult to win them back.

185.However, it is PCI's case that their interest in recruiting the 2nd defendant and to a lesser extent the 3rd, 6th and 9th defendants is not for their or their agencies' existing client base, but their ability to generate new business. As for the Individual Defendants, they are senior managers with few direct clients of their own. Their main job was recruiting, training and developing an agency force. On the strength of what PCI and the Individual Defendants say, I cannot see how their livelihood would be adversely affected by the injunction if granted. As senior managers, they earn overriding commission from agents working underneath them and by recruiting new agents and developing the agency force.

186.Mr Ho SC also argues that the loss to the Individual Defendants will be wholly beyond quantification. If they are enjoined from using the Client Data to contact their clients, it is impossible to tell which of them will follow the Individual Defendants and hence assess their loss. Further they will also be deprived of commission earned from business introduced by those clients. I think the case of the Individual Defendants has been grossly exaggerated. They are senior managers. Contacting clients is not their main function and commission from direct business introduced by them is not a significant part of their income.

187.I have already mentioned the difficulties in quantification of AXA's claim. In addition, there is no evidence as to the means of the Individual Defendants and they do not appear to be well placed to compensate AXA for their loss even if apportioned. Without an interlocutory injunction, the reality is that once an AXA's policyholder switches over to PCI, there is no prospect of his return. The injury to AXA may be unprovable, uncompensatable and irreversible. On the other hand, if an injunction is granted and AXA are unsuccessful at trial, AXA are in a very good position to compensate the defendants for their loss.

188.In conclusion, I am satisfied that if the injunction is refused and in the event that AXA are successful at trial, an award of damages against PCI or the Individual Defendants may be inadequate or illusory. On the other hand, if the injunction is granted and AXA are unsuccessful at trial, AXA would be good for the damages likely to be awarded against them. The balance is in favour of granting the injunction than refusing it.

Balance of risk of injustice:

189.Having come to the above conclusion, it would be unnecessary to consider the 'balance of convenience' or 'balance of the risk of injustice' as more aptly described by May LJ in Cayne v Global Natural Resources [1984] 1 All ER 22. Mr Fung SC, however, argues that in deciding whether to grant the injunction, the court should take into account whether the harm resulting from an injunction will outweigh the benefit. Both Mr Fung SC and Mr Kotewall SC rely on the broad principle expressed by Eveleigh LJ in Cayne v Global Natural Resources that the court should do its best endeavour to avoid injustice.

190.Mr Fung SC submits that I should follow that decision and refuse the interlocutory injunction. That was a case involving minority shareholders' action in which the grant of interlocutory injunction has the effect of depriving Global the right of trial merely on the basis of affidavit evidence. I think each case has to be decided on its facts. AXA's case is the reverse of Global's. If no interlocutory injunction is granted to AXA, it may be difficult for them to ask for an injunction at trial because those policyholders who have already switched are unlikely to switch back and the Court has no jurisdiction to compel their return to AXA. On the other hand, if the policyholders are likely to switch, the effect of the interlocutory injunction, if wrongly granted, would merely be to delay the switching and the number of policyholders switching after trial will be a guide to the loss suffered by PCI. I agree with Mr Kotewall SC that the harm to PCI by the grant of an interlocutory injunction does not outweigh or even match the benefit of any interlocutory injunction at this stage. This argument applies with equal force against the Individual Defendants.

191.As for the merits of the parties' case, I think this is a case in which the applicable legal principles involved require mature consideration while the factual disputes could not be resolved on affidavit evidence. I refrain from passing any view on the merits of the case.

Appropriateness of injunction against PCI as a third party:

192.Mr Fung SC submits that the Court should be chary about granting relief that affects third parties like PCI and fourth parties such as policyholders intending to switch to PCI. I do not think PCI can be described as a third party or a bona fide recipient of the information without notice. AXA's case is that PCI is a recipient and user of the secret and confidential information with the requisite knowledge against whom allegations of unlawful interference is made. There is ample evidence on which inference that PCI has knowledge of the agents' breach of duty of fidelity and that PCI dishonestly used the Client Data could be drawn and AXA have successfully raised serious questions to be tried on those issues. If such inference is drawn, PCI is in the same position as an original confidant.

193.In PSM International Ltd v. Whitehouse [1992] FSR 489, Lloyd LJ held at 498:

"I agree that the courts should be chary of granting an equitable remedy which would have the effect of interfering with the contractual rights of innocent third parties. But that equity has power to do so in an appropriate case. I do not doubt....

The present would seem an appropriate case in which to exercise the wider jurisdiction until trial, for two reasons. In the first place all the contracts made with Willenhall were made at a time when Mr Whitehouse was still employed by the plaintiffs, and therefore (it seems) in breach of his duty of fidelity owed to the plaintiffs, as well as clauses 3(1) and 4 of his contract of service.

Secondly it is open to the plaintiffs to argue on the facts that Mr Ryder, of Caradon Rolinx, must at least have been on notice that Mr Whitehouse was acting in breach of contract, even if he was not actively co-operating. That will be an important issue to be resolved at the trial."

If PCI had knowledge of the Individual Defendants' breach of duty and dishonestly used the Client Data they provided, it would be appropriate for the injunction to be granted against PCI, even though it is not the original confidant.

194.As for the policyholders' freedom of choice of insurers, I do not think it is affected by the injunction sought. Provided no unlawful means are used, AXA do not object to lawful competition. What AXA object is the Individual Defendants making copies of Client Data during their agency for the purpose of using the information therein to the prejudice of AXA after termination of their agency. If by proper marketing campaign, such as advertisement on television or newspaper, AXA's policyholders contact PCI's agents and enquire about PCI's PMS and apply for switching, AXA have no complaint. I do not think the injunction has the effect of affecting the rights of any fourth party.

Delay:

195.Mr Fung SC argues that there had been substantial delay in instituting proceedings by AXA and this delay should weigh against grant of interlocutory injunction in favour of AXA. He refers to the following chronology of events:

Date	Event
1994	PCI introduced Policy Protection Plan
1998	AIA introduced Plan Matching
3/2000	PCI started PMS with AXA policies
4/2000	2nd to 10th defendants started leaving AXA
2/5/2000	3rd defendant confronted by Mr Wilson
12/5/2000	3rd defendant's printouts checked by AXA
30/5/2000	AXA's solicitors commenced injunction preparation against 3rd defendant.
7/2000	2nd to 10th defendants registered as PCI agents
8/2000	Revised PMS began operation
21/9/2000	Writ and present summons issued and served

196.AXA do not complain about competition or policy matching as such. What they complain is about breach of duty of fidelity and duty of confidence. They have no knowledge of the March 2000 PMS, presumably because the March scheme was not accompanied by contemporaneous mass departure of AXA agents. Even according to the above chronology, the alarm bells rang in May 2000 when AXA's suspicion was aroused and confirmed in July 2000 with nine of their top directors or senior managers and two hundred of their agents of various grades resigning and joining PCI. Eventually they came to know about the August 2000 PMS only on about 4 August 2000. For AXA, I think time does not start to run until 4 August 2000 when they have knowledge of the August 2000 PMS or at the earliest July 2000 when they have confirmation that the Individual Defendants have joined PCI. Having regard to the volume of documents, the affirmations now before the Court and the complexity of the issues and evidence, I do not think AXA have taken beyond what I consider as a reasonable time in mounting a case of this nature. I do not think AXA is guilty of such delay as to suggest that they are not entertaining any bona fide fear that they will suffer irreparable damage and hence to disqualify them of the injunction sought.

Status quo:

197.In conjunction with delay, Mr Fung SC refers to the House of Lords decision in Garden Cottage v Milk Marketing Board [1984] AC 130 and argues that the status quo to be preserved is that prevailing immediately prior to the issue or, as refined by Dillon LJ in Graham v Delderfield [1992] FSR 313, service of the writ claiming permanent injunction, i.e. the status quo including the implementation of the various PMS. In Garden Cottage, Lord Diplock held at 140:

"The status quo is the existing state of affairs; but since states of affairs do not remain static this raises the query: existing when? In my opinion, the relevant status quo to which reference was made in American Cyanamid is the state of affairs existing during the period immediately preceding the issue of the writ claiming the permanent injunction or, if there be unreasonable delay between the issue of the writ and the motion for an interlocutory injunction, the period immediately preceding the motion. The duration of that period since the state of affairs last changed must be more than minimal, having regard to the total length of the relationship between the parties in respect of which the injunction is granted; otherwise the state of affairs before the last change would be the relevant status quo."

198.Mr Kotewall SC submits that the above dicta is not inconsistent with AXA's position. He argues that according to the above dicta the status quo to be preserved is that state of affairs existing in the period before the issue of the writ on 21 September 2000. Despite the earlier versions of PMS, the PMS now complained of was revised and implemented in August 2000 and hence, Mr Kotewall SC submits, the status quo must be the state of affairs just before the August 2000 PMS was implemented. He draws support for his proposition by relying on the dicta of Megary V-C in Metric Resources Corporation v Leasemetrix Ltd & Another [1979] FSR 571 at 581 where the Vice-Chancellor says:

"As for preserving the status quo, there is the familiar difficulty of saying what that phrase means. Mr Aldous says it must mean the state of affairs existing at the time the court is hearing the case, so that the status quo that ought to be preserved was that of the defendant company carrying on its business under the name "Leasemetrix," and of the plaintiff company having a mere intention to begin a business in this country under the name "Leasametric." On that footing, it was desirable to keep the first defendant in business under its present name. One problem in this approach is that the status quo may materially change between the hearing at the first instance and a hearing on appeal. The term "status quo" is plainly incomplete on the face of it; and as I suggested in Robbie v Fulham Football Club Ltd., unreported, 26 March 1979, I think the full term is "status quo ante bellum." If the issue of the writ is the notional equivalent of the outbreak of war, that would require matters to be tested when the writ was issued, which sometimes would be capricious or unfair. If the metaphor is pursued, then it may well be that the true status quo ante bellum is the state of affairs which existed immediately before the act which constitutes the casus belli, unless hostilities are delayed so long that the act becomes part of the status quo."

199.Metric Resources Corporation is the earliest of the three decisions but has not been referred to in either Graham v Delderfield or Garden Cottage v Milk Marketing Board. In my opinion, Leasemetrix is not inconsistent with either of these two authorities. In fact it defines with sensible precision the meaning of the term "the period immediately before issue or service" of the writ. Megary V-C identified the proper term to be "status quo ante bellum" and the act complained of as the "causus belli". I do not think the gloss put onto Lord Diplock's dicta by Dillon LJ anything necessarily creating a principle of law. It is no more than a specific application of Lord Diplock's dicta to the facts of that particular case involving undue delay, which in the words of Megary VC, has become part of the status quo. Graham v Delderfield is clearly distinguishable as there was clear delay both in issuing the writ and serving the same.

200.Mr Ho SC submits that upon the resignation of the 2nd defendant on 10 April 2000, Mr Wilson immediately suspected that the 6th defendant who is the wife of the 2nd defendant, the 3rd and 9th defendants were planning to leave AXA. Mr Wilson also became aware of the 3rd defendant printing out large amounts of Client Data and had threaten to apply injunctive relief since 19 May 2000. Yet despite this, no application for injunction was made until 21 September 2000. Hence Mr Ho SC submits the relevant status quo should be the state of affairs existing as at the date of service of the writ. He also added that as there are other competitors in the industry, to allow the Individual Defendants to continue their contact with their clients will not significantly affect the status quo or AXA.

201.AXA are not complaining about their agents leaving and joining their competitors. AXA have no knowledge of the March 2000 PMS and they only came to know about the revised PMS on 4 August 2000. Thus back in April or May 2000, AXA could not be blamed for not taking action when its agents started leaving. In any event it is not the Individual Defendants joining PCI or the PMS as such that AXA are complaining but the Individual Defendants' breach of duty of fidelity and/or making of misrepresentation in implementing the August 2000 PMS, which they do not have knowledge of until early August 2000. It is also not until July or August 2000 that AXA have knowledge that the Individual Defendants have joined PCI when the pieces of jigsaw fell into place. Having regard to the difficulties and complexities in mounting a case of this nature, I consider the amount of time taken by AXA and their legal advisers to prepare the matter properly before issuing the writ and summons is by no means excessive. Accordingly, I find that there is no delay by AXA and hence the status quo to be preserved by the injunction should be, in the words of Lord Diplock "that before the last change" or in the words of Megary V-C, that "which existed immediately before the act which constitutes the casus belli", i.e. the status quo before the August 2000 PMS was implemented.

Utility of Client Data:

202.Mr Fung SC submits that the value of the information in SAMS allegedly in the possession of the defendants decline with time and is stale or of little use as a reason for exercise of discretion against the grant of injunction. The SAMS printouts were allegedly removed by the Individual Defendants in April or May 2000 or earlier. The SAMS data are regularly updated, probably on a weekly basis while the indexation increase endorsement is replaced every February. Hence by now, a year later, Mr Fung SC submits, the information has lost it usefulness. Mr Kotewall SC replies that personal and contact details do not change much over time while most policies are renewed essentially on similar terms. The indexation increase endorsement which is replaced annually only marginally affects the sum insured. I agree. Client's contact details seldom change. Hence, despite passage of time, SAMS data retain much of their usefulness. Of course once an agent managed to contact a policyholder, he is able to obtain all the other information from the policyholder.

203.Mr Fung SC also makes the point that all details of policies needed for the PMS are obtainable from policyholders or by the policyholders making telephone inquiries with AXA. The fact that SAMS documents had found their way into PCI's record is evidence that they are useful and have in fact been used. This confirms the usefulness of the information. PCI's argument failed to address the fact that AXA's injunction is not directed at SAMS documents as such, but also at the information contained therein, including contact details whether contained in SAMS documents or not.

Clean hands:

204.Mr. Fung SC submits that AXA's conduct in this dispute disentitles them from invoking the court's equitable jurisdiction. He is referring to some defamatory statements published in the Asian Wall Street Journal on 20 December 2000 by AXA's Chief Executive and their Senior Manager, Agency Resources. The article is titled "Insurer Accuses Rival of Document Theft" and makes reference to documents delivered up by PCI in this action in conjunction with a suggestion that PCI is guilty of a criminal offence of data theft. The part of the article complained of by PCI reads as follows:

"AXA has filed a formal complaint with the police arguing that the alleged data theft is a criminal offence. The police are investigating, but have declined to comment ... PCI late last month returned some 80 pages of documentation to AXA - client lists with full policy details - that were marked with stamps and other notations from PCI's new-business department, AXA says."

205.AXA's Chief Executive is also quoted in the article as saying:

"The issue here is putting together a scheme that is founded on replacing policies to the detriment of consumers and using data that has been appropriated from us."

206.While Mr Fung SC accepts that AXA is not responsible for the title used in the article, PCI accuses AXA of adopting the article by sending copies of the article or its Chinese translation to policyholders.

207.At the time, the interlocutory injunction application had already been heard by the Hon Madam Justice Beeson and the substantive hearing was scheduled to take place on 3 January 2001 before Deputy High Court Judge Longley. The matters referred to in the article are clearly sub judice. Hence, Mr Fung SC submits the timing of the publication cannot have been coincidental and the irresistible inference is that the article was calculated to influence the minds of its readers, which include, inter alia, the Court, current and former AXA agents and policyholders. The allegedly defamatory statements now form the subject matter of another action by PCI.

208.Mr Kotewall SC replies, citing Lord Parker CJ's dicta in R v. Duffy, ex parte Nash [1960] 2 QB 188 that there is no question of any contempt of court as this is a civil matter and juries are not and will not be involved, while the likelihood of professional judges being influenced at all is extremely remote. As held by Lord Parker CJ in that case, the question is "was there a real risk, as opposed to a remote possibility, that the article was calculated to prejudice a fair hearing." As the matter is to be heard by professional judges who are best trained to put out of their mind matters which are not in evidence in the case, I do not think there is any risk of prejudice. Further, to prove contempt, PCI has to establish beyond reasonable doubt an intention by AXA to impede or prejudice the administration of justice, in the sense that the effect will have to be foreseen at the time as being almost inevitable as a result of the publication. For the above reasons, I do not think there is any real risk of prejudice to a fair hearing.

209.As for PCI's complaint about AXA circulating the article or its translation among their policyholders, AXA's reply is that they were not responsible for the circulation, the act complained of was done by AXA's agents on whom they have no control. Policyholders may be influenced in their decision whether to switch their insurers; but as far as the present proceedings are concerned, whether policyholders are prejudiced is irrelevant.

210.PCI also complains that AXA have singled out those of their own clients who intended to switch to PCI for unfavourable treatment. PCI has filed affirmations from AXA's "defecting" policyholders alleging that AXA have gone to the extent of requiring them to attend videotaped interviews, interrogating them as to their reasons for wishing to surrender their policies, delaying the sending out of surrender cheques and so on. In reply, AXA say that on average AXA issue the cheque for the cash value of the surrendered policy 25 days from the date of receipt of the first documentary request for policy surrender or 27 days where the original producing agent or servicing agent is an agent of PCI. They explain that there were incidents involving fraudulent signatures and forged identity cards which delayed the processing. For reasons as stated below, I do not think it necessary to consider the veracity of PCI's accusation and AXA's reply. The present proceeding is not a trial by affidavit. At the highest, PCI may have this issue resolved at trial.

211.The conduct now complained of by PCI, whether as regards the articles published in Asian Wall Street Journal or AXA's handling of their "defecting" policyholders, do not arise out of the transaction, the subject matter of the present proceedings. In Sang Lee Investment Co Ltd v. Wing Kwai Investment Co Ltd, Lord Brightman held at 208:

"One of the more helpful statements to which their Lordships were referred is to be found in the American case of Weegham v. Killefer [1914] 215 Federal Reporter 168, 171, quoting from an earlier authority: 'A court of equity will leave to his remedy at law - will refuse to interfere to grant relief to - one who, in the matter or transaction concerning which he seeks its aid, has been wanting in good faith, honesty or righteous dealing. While in a proper case it acts upon the conscience of a defendant, to compel him to do that which is just and right, it repels from its precincts remediless the complainant who has been guilty of bad faith fraud or any unconscionable act in the transaction which forms the basis of his suit'. Two conditions are therefore to be satisfied by the litigant who seeks to resist equitable relief on the ground of the misconduct of his opponent. First, such conduct must be wanting in good faith. Secondly, it must be 'in the transaction' which is the basis of the suit."

212.AXA's conduct now complained of, assuming it to be wrongful and wanting in good faith, arose out of a wholly separate event, distinct from the matter now before me. On the authority of Sang Lee Investment Co Ltd v. Wing Kwai Investment Co Ltd, this must be fatal to PCI's plea of AXA's want of good faith and clean hands.

213.In view of the impending action relating to the article itself, I do not think it appropriate for me to consider if the content of the article is defamatory of PCI, if I can at all avoid that issue.

THE INJUNCTION ORDER:

214.I am satisfied that AXA have raised serious issues to be tried and that the balance of convenience lies in favour of granting than refusing the injunction. AXA have not been guilty of delay or such unconscionable conduct as would disqualify them from this equitable remedy. The status quo to be preserved by the injunction order is that before PCI's launching of the August 2000 PMS.

Term of injunction:

215.Both Mr Fung SC and Mr Ho SC refer to Roger Bullivant v Ellis [1987] FSR 172 and Sun Valley v Vincent [2000] FSR 825 and submit that where documents have been wrongfully removed the appropriate form of relief is a "springboard injunction". The purpose of the injunction is to prevent the employee from gaining an unfair head start in his competing business by misuse of information. Its purpose is not to punish the employee and should go no further in its scope and last no longer than is necessary to cancel out the unfair advantage. They take the view that by the time of hearing nine months have lapsed and that would have already been a restraint longer than necessary. They submit that an injunction until trial would have the effect of driving the Individual Defendants out of business.

216.On the other hand, Mr Kotewall SC argues that this is not a springboard situation. Both Roger Bullivant v. Ellis and Sun Valley v. Vincent are springboard cases. Indeed in Sun Valley, Parker J distinguished Universal Thermosensors expressly on the basis that it was not a springboard case and in which interlocutory injunction until trial or further order was properly granted.

217.Inherent in the idea of a springboard is that the information is otherwise in the public domain available to anyone who is minded to spend the time and effort to search or compile the information. The springboard injunction prevents an employee from stealing his employer's confidential information entrusted to him and thereby gaining an unfair head start. In Terrapin Ltd v. Builders' Supply Co (Hayes) Ltd [1960] RPC 135 the following dicta of Roxburgh J was cited with approval by May LJ in Roger Bullivant:

"As I understand it, the essence of this branch of the law, whatever the origin of it, is that a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication and springboard it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public ... The possessor of the confidential information still has a long start over any member of the public ... It is, in my view, inherent in the principle upon which the Saltman case rests that the possessor of such information must be placed under a special disability in the field of competition to ensure that he does not get an unfair start."

218.In the instant case, the information concerned are trade secrets or their equivalents which are not legitimately available elsewhere, except from AXA or AXA's policyholders. On the evidence, the defendants would not be able to compile the Policyholder's Particulars and their Policy Details from any public source. The consideration of unfair head start is irrelevant in the instant case. I agree with Mr Kotewall SC that this is not a springboard situation. Any interlocutory injunction to be granted must be for such period as would last until trial or further order. If AXA fail to establish their claim at the conclusion of the trial, the defendants may look to AXA's undertaking and I am sure AXA would be good for their undertaking.

Scope of relief:

219.Mr Fung SC and Mr Ho SC criticise the relief sought by AXA as being exceptionally and unacceptably wide as to be incapable of complying. Mr Ho SC submits that the injunction should be "source-specific", i.e. it should only be directed against the misuse of AXA's materials wrongfully taken away and should not be so wide as to prevent the Individual Defendants from using or resorting to lawful sources.

220.The injunction proposed in the summons has been narrowed down by the revised definition of "Client Data". In order to be caught within the scope of "Client Data" and hence trigger the injunction, the information must have been, firstly, obtained or derived by an agent in the course of his agency with AXA, not being information known to the agent prior to such obtaining or derivation and secondly, it must be contained in SAMS. Thus the information would only be protected if it is traceable back to the obtaining or derivation. If the information or Schedule C documents are obtained from the policyholder himself, the information or documents would not have been derived by an agent in the course of agency, whether the information happens to be contained in SAMS or not. The present formulation of "Client Data" is already "source-specific", deriving only from policyholders qua policyholders, or from agents qua agents, or from AXA. I am satisfied that the present formulation has addressed the defendants' concern that they be allowed to use information or documents which are legitimately available. I agree with Mr Kotewall SC's submission that it is this misinterpretation of the scope of "Client Data" which undermines the argument of PCI and the Individual Defendants concerning the scope of the relief sought. I do not agree with Mr Fung SC and Mr Ho SC that the relief sought is too wide, oppressive and unworkable.

221.As for PCI's worry that it has no way of knowing if the information provided to it is coincidentally contained in SAMS, I think the difficulties have been exaggerated. The PMS is set up with AXA's policyholders in mind. PCI has set up a special task force staffed by ex-AXA agents to screen the applications for the PMS. PCI only need to ascertain from its agents the source of the information. It must be incumbent upon PCI to ensure that in seeking business on their behalf and for their benefit their agents do not breach the law. PCI is in the position to require full and proper disclosure by its agents of their source of information, specifically whether any has been derived from SAMS. A proper screening process with cross-checking should ensure compliance.

222.In view of the reformulation of the definition of "Client Data", I do not think the Individual Defendants have any difficulties in complying with the terms of the injunction being sought. The present formulation of "Client Data" has sufficiently addressed the Individual Defendants' concern where a policyholder approaches an agent about switching and the process of switching is completed without the use of any documents or information obtained by the agent in the course of his agency with AXA.

223.Mr Ho SC complains that despite the reformulation of the scope of "Client Data", the injunction sought is objectionable. Firstly, he refers to Peninsular Real Estate Ltd v. Harris [1992] 2 NZLR 216, Universal Thermosensors Ltd v. Hibben [1992] 1 WLR 840 and Roberts v. Northwest Fixing [1993] FSR 281 and submits that it is well established that in the absence of a valid restraint of trade clause, an ex-employee may legitimately contact his ex-employer's customers if he happens to recall their contact details. He suggests including a proviso to the effect that the Individual Defendants "shall not be enjoined from calling upon customers remembered by them or customers whose names are acquired from other sources." However, the truth is as Mr Kotewall SC points out, in Roberts v. Northwest Fixing the point about information in the employee's memory was a concession by counsel; while the decision in the latter two cases did not lay down any general rule but were the result of the facts of the cases. The general rule as pointed out in the earlier part of this judgment is that laid down in Johnson & Bloy, Printers & Finishers and SBJ Stephenson. Customer's list and Policy Details are trade secrets or their equivalents. They may not be used by the agent except for the principal's purpose, not even if the information could be carried away in his head. The proviso suggested by Mr Ho SC is based on the terms of the injunction granted in Roberts v. Northwest Fixing, which is the result of concession by counsel. Mr Kotewall SC does not agree to make the concession. In view of the authorities, I think he is right.

224.Secondly, Mr Ho SC raises a number of scenarios as illustrations of how the injunction could operate unfairly to the agent's friends and relatives and a friend who later becomes the agent's spouse. Mr Kotewall SC has replied to these scenarios with admirable clarity showing neither difficulty nor inequity in enforcement. I do not feel it necessary to recite these extreme examples and justify how the injunction works. What is important is that the plaintiff should be in a position to identify with sufficient clarity what information is protected and the defendant be in a position to know what he is being enjoined from doing. It may not be possible to have a formula which will work in all factual situations. I am satisfied that AXA have defined the scope of the injunction they seek with sufficient clarity.

225.Thirdly, Mr Ho SC argues that the injunction has the effect of restraining the Individual Defendants from providing policy details to the Inland Revenue Department. This is a novel argument but is wholly misconceived and unsupported by evidence. Since the Individual Defendants are exclusive agents of AXA, a statement of income from AXA must be sufficient evidence of their total business receipts. As for their expenditure, I fail to see how Client Data would assist the Individual Defendants in proving to the Commissioner of Inland Revenue their meal and travelling expenses, telephone bills, motor car expenses and other outgoings. There is no evidence produced as to what their books and records are, how they would assist the Individual Defendants with their tax returns and what Client Data information has been demanded by the Commissioner.

226.Fourthly, Mr Ho SC complains that the injunction seeks to restrain not only the Individual Defendants but also the agents who work for them. This is the standard formulation of any injunction granted by the court to ensure that the persons enjoined do not escape liabilities simply by asking another to do the prohibited act instead of doing it personally. Insurance agents are agents of the insurance company and not of the managers or senior managers who supervise them. They receive commission from the insurance company and not from the senior managers. Thus an agent's act will not be attributed to an individual defendant unless the individual defendant authorises the agent to perform a prohibited act. Likewise, an act of the agent in the ordinary course of business as an agent would be attributed to the principal, i.e. PCI; and the Individual Defendants do not have anything to worry about.

Conclusion:

227.In conclusion, I am satisfied that the injunction in the terms sought by AXA is appropriate. I grant the injunction accordingly.

DELIVERY UP ORDER:

228.AXA also seek an interlocutory order for the delivery up of documents containing Client Data in the possession, power, custody or control of the defendants. While some of the defendants have made delivery up in respect of SAMS documents pursuant to their undertaking to the Hon Madam Justice Beeson, the delivery up now being sought is not just limited to SAMS documents, but covers any documents containing Client Data, including the Schedule C documents.

The applicable principle: Nottingham Building Society v Eurodynamics Systems Plc:

229.It is well settled that a successful plaintiff is entitled to the delivery up of all materials containing confidential information: Robb v Green. At the interlocutory stage, the principles governing the grant of interlocutory mandatory injunctions as summarized by Chadwick J in Nottingham Building Society v Eurodynamics Systems Plc [1993] FSR 468 at 474 are as follows:

(1) the overriding consideration is which course is likely to involve the least injustice if it turns out to be wrong;

(2) an interlocutory injunction which is mandatory carries a greater risk of injustice than a prohibitory one;

(3) it is legitimate, where a mandatory injunction is sought, to consider whether the court does feel a high degree of assurance that the plaintiff will be able to establish his right at the trial;

(4) even if the court is unable to be so satisfied, there may still be circumstances where the injunction should be granted, where the risk of injustice in refusing to grant the injunction outweighs the risk of injustice in granting it.

Essentially, the court has to balance the risk of injustice and the likelihood of the plaintiff's success at trial.

The case of PCI:

230.PCI's case is that insofar as SAMS documents are concerned, all SAMS documents have already been returned and there is no evidence whatever that PCI has any further documents. Hence Mr Fung SC submits it is futile to order further delivery.

231.While PCI has made some deliveries, the vast majority of the SAMS documents delivered up are copies and not originals. Some of the SAMS documents or copies delivered up are extracts from a larger document. The immediate questions are where are the originals and where are the rest of the documents. There is at least a strong suspicion that not all documents containing Client Data have been delivered up by PCI or some of the Individual Defendants or all of them.

232.There cannot be any genuine dispute as to the confidential nature of the Client Data, the defendants' obligations in relation thereto, and AXA's entitlement to the delivery up of the same, if they are in the possession, power, custody or control of the defendants. There is no risk of injustice that could be caused to the defendants by the delivery up order, as it is limited to the Client Data owned by AXA. If the defendants do not have the data, they will not be prejudiced by the delivery up order at all; if they have, it is only right that they should deliver them now, rather than to hang onto them until conclusion of the trial. There can be no injustice to the defendants if they are ordered to deliver up immediately what they are not entitled to possess, and to which AXA have an undoubted right.

233.On the other hand, the risk of injustice to AXA if no delivery up order is made is obvious. Possession of the Client Data by the defendants would enable them to use the same unlawfully and to the detriment of AXA, whether by way of implementing the PMS or otherwise. As held above AXA would not be adequately compensated by an award of damages at trial. If AXA's policyholders switch to the PMS, it is unlikely that they would return and also AXA would face enormous difficulties in proving and quantifying their damages.

234.I would refrain from giving my opinion whether AXA are likely to succeed at trial. But having regard to the principles in Nottingham Building Society v Eurodynamics Systems Plc, I am satisfied on balance that the risk of injustice to AXA in refusing to grant the delivery up order outweighs the risk of injustice to the defendants in granting it. I dismiss Mr Fung SC's submission that the order would be unworkable as that submission is based on a misinterpretation of "Client Data" as now reformulated by AXA.

235.I do not think PCI's confirmation that they do not have any more SAMS documents would render the delivery up order futile. The delivery up order is an ancillary order to ensure compliance with the interlocutory injunction. For the above reasons I grant AXA the delivery up order against PCI in the terms sought.

The case of the Individual Defendants:

236.All Individual Defendants denied having removed or retained any document containing Client Data and do not have anything to deliver up. There is evidence that an unusually large volume of printouts of Client Data from SAMS had been made under the passwords assigned to them. Except in the case of the 6th defendant, those printouts have neither been delivered up nor accounted for. A small fraction has been delivered up by PCI. I do not think the Individual Defendants' affirmations that they have no documents containing Client Data to deliver up can be taken at face value. The explanations of the 2nd, 3rd and 6th defendants as to why SAMS printouts of their clients are found in the files of PCI are inherently incredible. All these evidence taken together suggest that it is likely that some Client Data are still in the possession of some or all of these Individual Defendants.

237.In the case of the 6th defendant, though the majority of client lists printouts have been returned to AXA, all birthday lists and labels printed have not been returned. They contain Policyholder's Particulars and would enable those policyholders to be contacted for the purpose of marketing the PMS. Her explanation for not being able to return those lists and labels is that AXA had not made timely demand for their return. This is a plausible explanation. But on the other hand, why were they printed in the first place if she had no intention to use them; if she has used them, legitimately or otherwise, why is she unable to account for them; and if she has not used them where are they now? These lists and labels are just as useful and important as the client lists themselves. There is therefore a real likelihood that she is still in possession of those lists and labels which contain Client Data.

238.In addition, as against the 2nd defendant, in his affirmation he said that he checked the agent codes to which the Audit Reports printed out under his password related and found that those agents are not with PCI. Had delivery up been complete, he could not have any more SAMS documents to check with. The inference is that he still has some SAMS documents and has used them for his checking exercise.

239.On the authorities of Lonrho v. Fayed (No 3), The Times, June 24, 1993 and Pacific Link Communications Ltd v. Wong Man Him Melvyn [1996] 1 HKC 474, Mr Ho SC submits that the Individual Defendants' affirmations that they do not have any SAMS documents is final and conclusive and a second delivery up order should not be issued. The authorities referred to by Mr Ho SC are in relation to discovery procedure under Order 24 of the Rules of High Court. That procedure is to ensure all relevant documents in the possession, custody or power of a party are produced and made available for the purpose of determination of the issues at trial. Mr Kotewall SC submits that the delivery up order sought in these proceedings is for a wholly different purpose and if granted, is a recognition of the proprietary right of AXA to the documents which the defendants have undertaken to deliver up. I agree and have this to add. One of the purposes for ordering delivery up is to enjoin a defendant from possibly continuing with a wrongful act and to protect the plaintiff from the likelihood of suffering further loss for which an award of damages is inadequate. The considerations are wholly different from those applicable to discovery under Order 24. In my view, the authorities cited by Mr Ho SC are clearly inappropriate for the instant case.

240.For reasons as explained above, there is a strong prima facie case that delivery up was incomplete and hence the Individual Defendants are in breach of their undertaking to court. Such failure is a contempt of court. Further, the defendants' undertakings are limited to SAMS documents and do not cover fully the subject matter of the delivery up order being sought, i.e. any documents containing Client Data. It would be convenient and indeed appropriate to make a second order to purge the defendants' contempt as well as to encompass all documents containing Client Data. Applying the principles in Nottingham Building Society v Eurodynamics Systems Plc and for similar considerations as in the case against PCI, I think the balance is in favour of granting the delivery up order. Accordingly, I grant the order against each of the Individual Defendants.

DISCLOSURE ORDER:

241.In addition, AXA seek disclosure orders which in summary are as follow. Firstly, it seeks affidavits verifying compliance with the delivery up order. Mr Fung SC submits that all SAMS documents have already been returned and there is no evidence whatever that PCI has any further documents. However, on a proper analysis of the documents and CDs surrendered and in the light of the volume of documents removed by the Individual Defendants (see above), there is a real likelihood that full delivery up has not been made by PCI or some or all of the Individual Defendants. If the defendants have made full delivery up, there is no burden for them to confirm the same by affidavit. If they have not and do not make frank and full disclosure, then they would expose themselves to the possibility of an action in contempt of court. A disclosure order is therefore appropriate to enforce compliance with the delivery up order. In the circumstances, the disclosure must follow as a matter of course.

242.Secondly, AXA seek affidavits disclosing information about documents containing Client Data given to or by any of the Individual Defendants, and the identity of the person giving or receiving the same since 1 November 1999, the date of the first printouts complained of by AXA.

243.In granting the interlocutory injunction against the defendants, I am satisfied that AXA have shown that there is a serious issue to be tried as to whether the defendants were in breach of their duty of fidelity or of confidence to AXA and that an award of damages is inadequate. The evidence shows that large volumes of Client Data had been printed out by the Individual Defendants, but only a small amount has been delivered up or accounted for. It is likely that the defendants have used or will use the Client Data to AXA's detriment. Not only that should be stopped, but those who have been parties or who would be likely parties to the wrongful act must be identified so that AXA could bring them to justice and have their loss compensated for. Under the principle in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133, the defendants, being prima facie wrongdoers themselves, must assist AXA by disclosing the identity of other wrongdoers or potential wrongdoers as well as full information to AXA. Each such person who supplied such documents to any of the defendants would potentially be a wrongdoer because of the unauthorised disclosure of the confidential information. The same applies to recipients of the confidential information who, by reason of the nature of the data, must have known that the information is confidential and supplied in circumstances involving breach of the duty of fidelity or duty of confidence.

244.At this stage, there is no need for AXA to establish that these other persons had definitely committed wrongful acts against them: P v T Ltd [1997] 1 WLR 1309, nor do they need to make out a strong case: Wellcome Foundation Ltd v Attorney General [1992] 1 HKC 171 at 188. Only the defendants are in the best position to supply the information and the plaintiff should not be put to further expenses in identifying those other wrongdoers.

245.Mr Fung SC argues that the information may have found its way into a document without any misuse of confidential information on the part of PCI or any of its agents. He submits that since no wrong has been committed the Norwich Pharmacal principle does not apply. I cannot agree as the preponderance of the evidence suggests otherwise.

246.Next, Mr Fung SC submits that even if some of PCI's documents contains "stolen" AXA information, it would be highly oppressive and totally disproportionate to require PCI to turn over all its documents whether "clean" or "tainted", on the off chance that they might contain some misappropriated data. He also refers to the practical difficulties for PCI to determine which of its policyholders are or were at some time in the past AXA's policyholders without checking all its documents against SAMS records. For similar reasons as explained above, the difficulties envisaged by Mr Fung SC are being exaggerated. In any event, as Mr Kotewall SC submits, if necessary more time can be allowed for PCI to comply. Further, the fact that some of the documents may contain information "innocently" acquired does not mean that the Norwich Pharmacal principle ceases to apply: see P v T Ltd [1997] 1 WLR 1309.

247.I do not share Mr Ho SC's view that disclosure up to 1 November 1999 too extensive. The disclosure is essentially of the nature of discovery. At this stage there is no burden on AXA to justify a particular cut off date, so long as it is reasonable and not unjust in all the circumstances. A disclosure order is intended to be a powerful weapon to enable a plaintiff to put right the wrong done to him, to prevent further loss and to identify all those who are parties to the wrongful act. For a disclosure order to be effective, it must cover a realistic period of time before the wrong complained of. The evidence shows that at least three of the Individual Defendants were contemplating leaving AXA at that time and Client Data were being printed out from SAMS since that time. It is probable that unlawful use and unauthorised disclosure of Client Data would have started since. In the circumstances, I think AXA are entitled to all information which will assist them to discover if further causes of action exists. Disclosure for a six months period before the Individual Defendants left AXA is not unreasonable or unjust. Accordingly, I grant the disclosure order against all the defendants in the terms sought by AXA.

248.Thirdly AXA seek affidavits giving information as to which AXA's policyholders have been approached and to whom representations as to matching have been made. Mr Fung SC submits that the application for this relief is misconceived as there is nothing wrong with representing to policyholders that PCI's policies "match" or are "comparable" with AXA's policies provided that the relevant differences are explained. There is evidence from some of AXA's agents who attended the training session that they were trained to market PCI's policies as identical or matching policies. There is also evidence from one of AXA's policyholders that he has been approached by a PCI agent and told that the PCI replacement policy would be exactly the same as AXA's.

249.There is at least a serious question to be tried as to whether any "relevant differences" have been explained to AXA's policyholders. AXA's economic interests are being jeopardised. If in fact such material differences have not been explained, it is just and fair that AXA should be informed which of their policyholders have been approached and to whom the representation as to matching have been made so that AXA can take steps to protect their interests and prevent, mitigate or quantify their loss. PCI and the Individual Defendants are in the best position to provide the information. It would be wrong to leave it to AXA to make enquiries from each of their policyholders, which would only have the effect of providing free publicity to PCI's PMS. For the purpose of these interlocutory proceedings, and having balanced the risk of injustice, I consider the evidence sufficient to invoke the grant of disclosure orders against all the defendants.

250.I dismiss counsel's submission that the disclosure order is onerous and impossible to comply in that there is no way for PCI to find out if a policyholder is on AXA's Client Data or not, that PCI itself does not know which of its agents have approached any current or former AXA's policyholders and that the agent may not remember the name of every person they have approached since 1 November 1999. These difficulties are unreal and being exaggerated. PCI is a company of substantial means and with a sophisticated computerised system. It should be able to locate all relevant documents without undue difficulties. This is particularly so as the PMS is targeted at AXA's policyholders. It would not be difficult to identify these policyholders without reference to any SAMS records. It would have no difficulties in identifying the agent responsible for processing the PMS application. Certainly, the Individual Defendants themselves should have no difficulties in recalling details of successful transactions and would have personal records of AXA's policyholders approached. PCI is surely in the position to compel its agents to furnish the information. The difficulties envisaged by Mr Fung SC are being exaggerated.

251.None of the difficulties raised by Mr Fung SC in respect of PCI is applicable to any of the Individual Defendants. According to the Individual Defendants, they maintained books and records which contain Client Data for the purpose of filing tax returns. If so, they would have no difficulties supplying the information required.

252.Mr Ho SC submits that the Individual Defendants are unable to provide the name and address of every AXA's policyholder who has been approached by PCI's agents and to whom it has been represented that the PCI insurance products are matching. There is no reason why the Individual Defendants could not rely on PCI to produce the information. In addition, they can speak for themselves and such other agents in PCI working for them if they have the knowledge. If they honestly do not have the information to disclose, they could so confirm in their affidavit, subject of course to the risk of being cited for contempt if it is shown that they are not telling the truth.

253.Lastly, Mr Fung SC submits that the Insurance Companies Ordinance and the Code of Practice provide a regulatory and supervisory framework in which reprehensible tactics such as twisting or fraudulent misrepresentations are controlled and that it is surprising that neither AXA nor their policyholders have availed themselves of the alternative avenue of redress, namely through the machinery set up under the Code of Practice. I agree with Mr Kotewall SC that there is no rule of law that a party against whom a civil wrong has been committed cannot seek redress in a Court. As Mr Kotewall SC submits, even if the authorities are going to investigate into the alleged misconduct, the likely consequence is the de-registration of the agents concerned. Such a complaint to the authorities is unlikely to put an immediate stop to the acts complained of and, at least, the remedy of delivery up and disclosure are not available to AXA. I do not think the availability of alternative remedy is a bar to AXA's access to the court.

254.The most important purpose of the injunctive relief is to prevent further loss for which an award of damages is inadequate. The interlocutory injunction order granted would be inadequate if not reinforced by the ancillary orders now sought by AXA, including the disclosure order. Having regard to all the circumstances and for similar reasons as given in relation to the other orders, I think it appropriate to grant AXA the disclosure order now sought.

CONCLUSION:

255.Accordingly, I grant the plaintiffs all the orders sought in their summons dated 21 September 2000 subject to the amendment in respect of the meaning of "Client Data". I also make a cost order nisi that the defendants shall pay the plaintiffs' cost with certificate for three counsel, to be taxed, if not agreed.

256.I am grateful to leading counsel and their juniors for their full and fair exposition of the law. The case has been extremely well and ingeniously argued on all sides, leaving no stone unturned and no issue unexplored. The very considerable depth which counsel have taken in the legal arguments is both remarkable and admirable for an interlocutory application of this kind.

Representation:

Mr Robert Kotewall, SC leading Mr Stewart Wong and Mr Sanjay Sakhrani, instructed by Messrs Herbert Smith, for the Plaintiffs

Mr Daniel Fung, SC leading Mr David Stokes and Mr Ling Chun Wai, instructed by Messrs Richards Butler, for the 1st Defendant

Mr Ambrose Ho, SC leading Mr Rimsky Yuen and Mr C M Law, instructed by Messrs Hoosenally & Neo, for the 2nd to 10th Defendants