Staff Service (HK) Co Ltd. v. Koo Man Sang Andrew and Others
Read the full judgment text of HCA 12928/1997 on BabelCite. This High Court CFI judgment was delivered on 21 September 1998.
1. The Plaintiff carries on business as a professional personnel recruitment service in Hong Kong with its office in Times Square, Causeway Bay. Between July 1995 and 31st October 1997, the 1st Defendant was employed by the Plaintiff as an Assistant Sales Manager. The 2nd Defendant, from September 1996, and the 3rd Defendant from March 1993 were both employed by the Plaintiff as personnel consultants until their dismissal on 12th November 1997 for cause. The Plaintiff brings this action against
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HCA012928/1997 No. A12928 of 1997 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE _________
__________ Coram : Suffiad, J. in Court Hearing dates : 21 to 24 and 27 July 1998 Judgment date : 21 September 1998 _____________ JUDGMENT _____________ 1. The Plaintiff carries on business as a professional personnel recruitment service in Hong Kong with its office in Times Square, Causeway Bay. Between July 1995 and 31st October 1997, the 1st Defendant was employed by the Plaintiff as an Assistant Sales Manager. The 2nd Defendant, from September 1996, and the 3rd Defendant from March 1993 were both employed by the Plaintiff as personnel consultants until their dismissal on 12th November 1997 for cause. The Plaintiff brings this action against the defendants claiming injunctions against them and damages from them on the basis that all three of them have conspired with each other and with others to unlawfully usurp confidential information from the Plaintiff for the benefit of a rival company which was set up in around August of 1997 and are therefore in breach of each of their contracts of employment. There is a further claim against the 1st Defendant for inducing the other two defendants to be in breach of their contract of employment with the Plaintiff. The Plaintiff's Case 2. It is not disputed that the Plaintiff's business, being a recruitment service, on the one hand has as its clients potential employers which are mainly companies, business concerns or commercial institutions with vacancies and who require the Plaintiff to assist them in recruiting staff to these vacancies. These potential employers I shall refer to as the Plaintiff's clients. On the other hand there are also many job seekers registered with the Plaintiff who are seeking jobs or positions through the Plaintiff and who I shall refer to as applicants. It is by finding the suitable applicant to the appropriate vacancy such that agreement is reached between the applicant and the client that the Plaintiff earns its profit in its business. It is also not in dispute that the Plaintiff stores away all the details and other information of its clients as well as its applicants in its computer system. 3. It is common grounds that in the capacity in which the 1st Defendant was employed by the Plaintiff, during the time that he was so employed, the 1st Defendant was involved in and responsible for providing the Plaintiff's clients with staff recruitment services including the identification of suitable applicants, submission of their particulars, conduct of interviews with applicants and reporting to the Plaintiff's clients on the above matters. It is also common grounds between the parties that in performing his work with the Plaintiff, the 1st Defendant gained a detailed knowledge of the clients' recruiting requirements and policies as well as the qualifications and characteristics of a large number of applicants and also that the 1st Defendant was familiar with and had full access to the Plaintiff's database and other records stored both in computer and hard copy files. 4. In the case of the 2nd and 3rd Defendants it is common grounds between the parties that in their capacities as personnel consultants with the Plaintiff, they were responsible for and engaged in the same matters as the 1st Defendant and had similar duties as the 1st Defendant save and except that they were concerned with servicing different clients and applicants to those dealt with by the 1st Defendant and by each other. 5. The Plaintiff adduced evidence from its General Manager, Masahiro Nishimura, that some time before the 1st Defendant resigned from the Plaintiff's employ at the end of October 1997, he had already began to suspect these three defendants from his observation of their behaviour in the office. As a result of that suspicion, he decided to install a monitoring system to eavesdrop into and record the telephone conversations of the Plaintiff's employees in the office. By the time he had obtained the approval from head office in Japan to do so in early November 1997, the 1st Defendant had already left the employ of the Plaintiff. The monitoring system was therefore used to monitor the internal and external calls in respect of all the Plaintiff's employees including the 2nd and 3rd Defendants' telephones in the Plaintiff's office. Indeed much of the Plaintiff's case relies on certain recorded phone conversations of the 2nd and 3rd Defendant made from their phones in the office of the Plaintiff on 7th and 10th November 1997. These recorded phone conversations were produced into evidence by the Plaintiff. The taped telephone conversations 6. Two tape recordings of telephone conversations were produced into evidence by the Plaintiff. In the first tape recording (Exhibit P1c) which was recorded on 7th November 1997, one telephone conversation was recorded. In the second tape recording (Exhibit P2c and P2d) recorded on 10th November, four separate phone conversations were recorded. Transcripts of all the phone conversations in both tapes were also produced accompanied by translations which, although not certified, were agreed between the parties to be accurate translations. 7. In the first tape recording of the 7th November, it is not disputed that the female voice was that of the 2nd Defendant and she was speaking to a man whom Mr. Nishimura thought to be the 2nd Defendant's husband, but could not be sure. In that conversation, there was mention of a "BR" which was applied for one or two months ago as well as mention of a "licence" which had been applied for. No further details were mentioned. The Plaintiff says that the "BR" and the "licence" mentioned in this phone conversation refer to the application for a business registration a couple of months ago in respect of Keno Personnel Consultants Limited ("Keno"), the rival business complained of by the Plaintiff in these proceedings set up by the defendants and other persons. 8. In the second tape, the voice in the first phone conversation is identified by Mr. Nishimura to be that of the 3rd Defendant leaving a message for someone by the name of 'Kwong' (according to the transcript) in a voice mail. The message left is a short message telling the recipient that she was too busy to type today but she did do some homework and had copied a few and not to tell her off. 9. In the second phone conversation which is a monologue, there is no dispute that it was the voice of the 2nd Defendant recording into a voice mail answering machine the details of one of the applicants registered with the Plaintiff. Those details include the date of the applicant's registration, the registration number, the applicant's name, address, telephone and pager numbers, the nature of the position the applicant is aiming to secure through the Plaintiff as well as the applicant's expected salary. 10. In the third phone conversation on the tape it is again undisputed that it was the voice of the 2nd Defendant. There she was speaking to a man whom Mr. Nishimura thought was the boyfriend of the 2nd Defendant but could not be sure. The conversation starts with the man acknowledging that the 2nd Defendant 'had got a lot of information today' and the 2nd Defendant saying to him that it was very dangerous as it was easy to be heard even when she was very soft. Therefore, the 2nd Defendant says, she wrote out a format and simply had to fill in the format after making copies of it. The 2nd Defendant then tells the man that Joann (i.e. the 3rd Defendant) could not speak at all and that when she (the 2nd Defendant) spoke, even very softly, Joann said she could hear her talking. The man then suggests that she should have stopped and further suggests that he has a micro camera but the 2nd Defendant says to him that suggestion is crazy and useless because it would be so small that it can't be seen even after its developed. The man then says it's up to her which way she prefers and the 2nd Defendant says it does not take her more than 2 minutes to write it all down. The 2nd Defendant then asks him about a word in English and the conversation ends. 11. In the fourth phone conversation on this tape, again there is no dispute that the conversation was, by and large, one between the 1st and the 2nd Defendant save that the phone call was initially made to the Plaintiff's office by the girlfriend of the 1st Defendant and after the call was taken by the 2nd Defendant, the 1st Defendant's girlfriend then hands the phone over to the 1st Defendant. 12. In the ensuing conversation between the 1st and the 2nd Defendant, the 1st Defendant starts off by asking the 2nd Defendant whether it is convenient to talk, whether her boss is in and whether he has been in all day. He then says that he had asked Joann (i.e. the 3rd Defendant) to get something and asks whether it is ready. She tells him that she had already passed the paper over to Joann to let her arrange it. He then says he would like to get it tomorrow and adds that he had thought of sending Hidi (i.e. the 1st Defendant's girlfriend) to come up pretending to have an interview with the 2nd Defendant and for the 2nd Defendant to then give it all to Hidi. He then elaborates that what he wanted was to get some formats and report-related stuffs because he had to give him/her lots of information such as combination letter and such things. He then tells her to write down about the clients for each page and the job entry and to write down what she sees from the computer screen and fax it to him that night. Then he says she could have printed out the screener but she could not do it since her boss was in. He then goes on to say that although he had one page of client the day before it was just the editing. He needs the pre-job and needs to produce letters. He needs to give them what he can. That's what they need to negotiate the price. He then asks her about a resume, whether she still has it and she replies that she had given them all to Joann. He says Joann could not find it the night before. He then goes on to say that with "our new set of computer we do not have to print it out we can fax it directly to the clients." Later on he says "they print them out, while we have the computer to print it out. We'll be like that too. So we are trying to give more information to others, that make it easier. Tell Joann to find it. I can come to Causeway Bay to pick it up or whatever." 13. Then she tells him that today Joann could not even speak and she herself just managed to. He tells her to take it slowly and no need to do it deliberately. She then says she now have a very good way of doing it and writing it down is much better. To that he replies "I am worried that writing it down can be dangerous for you guys." She then reassures him that there is no problem, that she has everything written down on a few pieces of paper and he/she would not check. She also says that this time she has written her own format in detail and she only needs to make copies of it and fill them in. That in the course of the day she had already written out six. Immediately following that the conversation continues in this way:-
Then there was a discussion as to how the 2nd Defendant should pass over the things to the 1st Defendant. Then the conversation continues as follows:-
Then he asks her if she still have the training material which she was given by her boss and she answers saying she had to look for it but thinks that it is still there. Then she says she still has it and he says he wants to have it the next day and that he will send someone over pretending to be an applicant having an interview with her at about lunch time, that it is better if the boss is not there. Before the conversation ends he reminds her to have it prepared tomorrow. These are the taped phone conversations relied upon by the Plaintiff, in particular the last one between the 1st and the 2nd Defendant. 14. It is hardly surprising therefore that on the following day, 11th November1997, Mr. Nishimura instructed a firm of private investigators, David Cheung Professional Detective, to keep the 2nd and 3rd Defendants under surveillance at lunch time. Mr. Cheung Wai Shing, one of the investigators gave evidence that the surveillance during lunch time on 11th November ended up in a restaurant in Hysan Avenue where the 2nd and 3rd Defendant met with the 1st Defendant and where the investigators had arranged to occupy the table next to them. When it was observed by the investigators that documents were passed over to the 1st Defendant by the other two defendants, after consulting with Mr. Nishimura (who did not enter the restaurant at that stage) the police were summoned. 15. When the police arrived at the restaurant, Mr Nishimura then entered the restaurant with the police and Mr. Cheung and pointed out the defendants to the police. A search of the 1st Defendant's briefcase at the restaurant revealed certain documents which were, there and then, identified by Mr. Nishimura as documents belonging to the Plaintiff. The defendants were arrested and taken back to the police station and statements taken from them under caution while witness statements were taken from the others. 16. The documents said to be recovered from the briefcase of the 1st Defendant were the subject of a Notice to Admit Facts by the Plaintiff to the Defendants long before the trial started with copies of those documents appended to the Notice. Pursuant thereto, it was admitted by all the defendants through their legal representatives that all the documents appended to the said Notice to Admit Facts belonged to the Plaintiff at all material times and were retrieved from the 1st Defendant's bag. However, it was not admitted by the defendants that those documents were provided to the 1st Defendant by the 2nd and 3rd Defendants at the restaurant at about 12.30 p.m. on 11th November 1997. It was also not admitted that the documents, the subject of the Notice to Admit Facts, consist of documentation which is confidential to the Plaintiff in its business. 17. Detracting slightly from the Plaintiff's case at this point I should mention one matter here. After the close of the Plaintiff's case during the trial, an application was made by Mr. Chan on behalf of all the defendants for leave to withdraw or amend one of the admission made to the Notice to Admit Facts where it was admitted that all the documents were retrieved from the 1st Defendant's bag. Mr. Chan applied for leave to substitute that admission with an admission that only some, but not all, of those documents were found in the 1st Defendant's bag at the restaurant. This application was objected to by Mr. Burns for the Plaintiff. 18. After I made my ruling on this application to the effect that I should hold a voir dire as I needed to have evidence before me of the mistake, if such were the case, upon which the admission now sought to be withdrawn was made, before I can determine whether or not to grant leave to the defendants to withdraw that earlier admission, Mr. Chan withdrew his application for leave to withdraw or amend that admission. The trial thus continued. 19. The originals of the documents that were found from the 1st Defendant bag in the restaurant was produced in evidence by the Plaintiff. Eight pages of those documents were hand-written on the letterheads of the Plaintiff. There is no dispute that the handwriting on those eight pages were the handwriting of the 2nd Defendant. Four of the eight pages were headed <Client Information> under which were a hand-copied computer format for storing information but with no specific information copied down. Three other pages of those eight pages were headed <Job Order Information> containing a hand-copied computer format for storing information but again with no specific information copied down. The last of those eight pages was headed "Category" with a list of job categories underneath. 20. Other pages contain printouts of actual information relating to a number of applicants giving their names, the post applied for, their registration numbers and the expected salary of each applicant. Still other pages contain printouts of actual information and other details pertaining to a particular client of the Plaintiff, namely, Alpine Electronics Asia Pte Ltd. Another page is a printout titled <<<Applicant information>>> and gives a number of details and other information relating to a particular applicant Ms. Wai Yin, Ng as well as her activity record. 21. One sheet contains a printed form with the heading "Client Detail" while another sheet contains a printed form with the heading "Applicant Details". On both these sheets it can be seen that some of the details filled into the form had been removed by correctional fluid. By and large these two forms do not contain any specific information of either client or applicant. 22. Another sheet has the Plaintiff's name at the very top followed by seven tables of job categories categorising different jobs under seven different categories. These are the documents which all the defendants have admitted under the Notice to Admit Facts to have been retrieved from the 1st Defendant's bag at the restaurant on 11th November 1997. 23. The Plaintiff also relied on a further piece of evidence, namely, that when the 1st Defendant's bag was searched by police at the police station in the afternoon of 11th November 1997, a letter bearing the letterhead of Keno as well as a chop of that company was also found. A company search in relation to Keno shows that that company was originally incorporated in June 1997 under the name of Fortune Loyal Consultants Limited but changed its name to Keno Personnel Consultants Limited on 24th September 1997, and that one of the directors is by the name of Wat Kam Keung who became a director on 2nd August 1997. In the Notice to Admit Facts it is also admitted by all defendants that Mr. Wat Kam Keung is the boyfriend of the 3rd Defendant and that he is a director of Keno. 24. The Business Registration Application of Fortune Loyal Consultants Limited was also produced. That application was made on 5th August 1997 and was signed by Wat Kam Keung in his capacity as a director. The description and nature of the business was given as 'Employment Agency'. 25. The Plaintiff also rely as part of its case, the answer given by the 1st Defendant in his statement taken from him by the police under caution on 11th November 1997 when he was asked the question why were documents belonging to Staff Service (i.e. the Plaintiff) found in his briefcase. To that question the 1st Defendant answered saying that 4 of those documents were left behind when he was working for Staff Service and the other 3 documents were put in his briefcase by Chow Fung Ying (i.e. the 3rd Defendant) and Chu Kar Hei (i.e. the 2nd Defendant). The 1st Defendant also said in that statement that the purpose of the lunch meeting on that day was so that he could follow up on the old cases that he used to work on and to collect his commission. 26. On the other hand, in her statement to the police under caution, the 2nd Defendant said that the purpose of the lunch meeting was because she had to obtain advice from the 1st Defendant as to the computer format since she took over the work from the 1st Defendant after he left the company. It was also because of this reason that she had brought along to this lunch meeting hand copied documents which she had copied from the computer screen in her office and which she had put on the table to discuss with the 1st Defendant. After discussing, she had put those documents back into her plastic bag but the 3rd Defendant had suggested her to put them into the 3rd Defendant's plastic bag. 27. As for the 3rd Defendant, she had said in her statement to the police under caution that the reason why she had brought along documents belonging to the Plaintiff to the lunch meeting because she needed to discuss with her colleague the information contained in those documents - information concerning the company's computerised format. 28. Ultimately because of what happened, the 2nd and 3rd Defendants were summarily dismissed by the Plaintiff the following day when they turned up at the office. The Defence Case 29. The 1st Defendant gave evidence. The effect of his evidence was firstly to explain the purpose of the meeting with the 2nd and 3rd Defendants at the restaurant during lunch time on 11th November 1997; secondly to explain why documents of the Plaintiff were found in his bag in the restaurant and why he had in his possession a letter with the letterhead of Keno and a chop of Keno, and thirdly to explain the taped conversation he had with the second Defendant. 30. His explanation for the meeting at the restaurant was that he met the 2nd and 3rd Defendants there for two purposes, to advise her of the computer system which she was encountering in the Plaintiff's office and also to follow up with her the old orders which she had taken over from him after he had left the Plaintiff. Linked to his advising the 2nd Defendant of the computer system in the Plaintiff's office, he explained that he had brought along from his home some of the documents found in his bag. According to him these documents had been taken home by him previously when he was working at the Plaintiff's company but had not been returned to the Plaintiff after he had ceased working there. On 11th November 1997 he brought along these documents for the purpose of advising the 2nd Defendant about the computer system at her request. 31. The 1st Defendant also explained that the rest of the documents found in his bag were put there by the 2nd and 3rd Defendants while at the restaurant. He said that those documents put in his bag by the 2nd and 3rd Defendants were not because they were giving or providing those documents to him, but because there was not enough space at the table and they feared that those documents may get dirty therefore they had put those documents into his bag temporarily and that when the police came up to their table, as they had not finished lunch, so those documents were found in his bag. The 1st Defendant further added that when those documents were put into his bag at the restaurant by the 2nd and 3rd Defendants he was not even aware of that and that it was only back at the police station that he came to know about it. 32. As to the presence of the letter and chop of Keno found in his bag, he explained that after leaving the Plaintiff's employment at the end of October 1997, he was doing some work as a personnel consultant for Wat Kam Keung, a friend of his and before he came to the lunch meeting he had met Wat Kam Keung in the street who wanted advice from him concerning market prices and therefore had given him that letter for that purpose. At the same time Wat Kam Keung also gave him the chop which was newly made which he was supposed to return to Wat at a later time. 33. Insofar as the taped phone conversation with the 2nd Defendant was concerned, the 1st Defendant explained that the first part of that telephone conversation he was asking the 2nd Defendant about whether Joann (i.e. the 3rd Defendant) had obtained some items which he had asked her to get for him for the purpose of giving to his girlfriend. Thereafter the rest of the telephone conversation related to discussing with the 2nd Defendant how to hand over certain computer materials to him so that he could use them to consult his friends in order to advise the 2nd Defendant as to the new computer system installed in the Plaintiff's office. This was purely as a favour to the 2nd Defendant as she was not familiar with computer system. He also felt obligated to her in his way since she used to work under him in the Plaintiff's office. 34. The 1st Defendant concluded his evidence denying that he had conspired with the 2nd and 3rd Defendants or anyone else to obtain confidential information from the Plaintiff for use on his own or in conjunction with others and in particular in relation to the business of Keno. 35. The 2nd Defendant also gave evidence. In like manner, the effect of her evidence was to explain the contents of the various taped phone conversations in which she was a party as well as to explain why she and the 3rd Defendant were having lunch with the 1st Defendant on 11th November 1997. 36. In respect of the first tape recording, the 2nd Defendant said she was talking to a friend of hers by the name of John Yeung and that the telephone conversation related to this friend of hers wanting to set up a business dealing in mobile telephones and for that he required licence franchise. It was in that context that the mention of BR was made - because he needed a business registration for such mobile telephone business. She also said in her evidence that the person referred to as "Ah Keung" in that conversation is another friend by the name of Poon Wai Keung. She further explained that at the time of that phone conversation she had never heard of Keno which she only came to learn of after she was taken back to the police station on 11th November 1997. 37. The 2nd Defendant explained that in the second tape, the second phone conversation was where she was recording from her office phone into her own answering machine at her home the details and particulars of applicants which were needed by her to perform her work for the Plaintiff. She further explained that that was necessary because there were times when she could only contact these applicants after office hours or at night and so she needed to have the details of the applicants available for herself to work when she had to work from her home at night. She further said that those information of the applicants recorded by her in her answering machine at home was safe because it needed a password known only to her in order that such information be retrieved from the answering machine. 38. As for the third conversation on the second tape, she said that was a conversation between herself and the same friend as in the first tape, i.e.John Yeung. This conversation, she explained, related to her wanting to borrow money from finance companies and she was discussing with her friend how best to go about it. She said that the use of the word "dangerous" in that conversation was because when she was calling these finance companies from her office telephone, she was liable to be overheard by other staffs and since it was a personal matter of her borrowing money she considered that it was dangerous for other staff to overhear her calling the finance companies. 39. She further explained that when she said she had "written down the format" there it meant that she had written out her own personal details after making enquiries from these finance companies in order to make the application to these finance companies for the loan - details such as her own identity card number and her own financial situation. 40. Furthermore, she explained that the suggestion by her friend to use a micro camera was a suggestion to photograph her personal financial situation as well as the bank passbook of her husband for use in her application to the finance companies for a loan. 41. Coming to the fourth conversation, the 2nd Defendant accepts that it was a conversation with the 1st Defendant after the initial call was made to her in the office by the 1st Defendant's girlfriend. She explained that at the outset of the conversation the 1st Defendant was concerned that her boss was in the office because there is a company policy by which the Plaintiff company did not like its present employees to keep in contact with its former employees and this was only too well known to the 1st Defendant who did not want to inconvenience her, thus his concern whether her boss was in the office or not. 42. She went on to explain that in the first part of the conversation between them, the 1st Defendant was asking her whether Joann (the 3rd Defendant) had obtained the cosmetics which the 1st Defendant had, through her, asked the 3rd Defendant to get for him and that pursuant to such request of the 1st Defendant, she had written on a piece of paper what the 1st Defendant had wanted and had passed that piece of paper to the 3rd Defendant. After that the conversation switched over to the topic of getting some computer format for the 1st Defendant as she had asked for advice from the 1st Defendant about the company's computer system which had been recently installed. She further explained that the urgency shown by the 1st Defendant related to getting hold of the cosmetics which he had asked the 3rd Defendant to get for him and that urgency was not related to getting the computer format from her. As to the discussion between them about the pretence of sending someone up to the Plaintiff's office for an interview in order to collect the things, the 2nd Defendant explained that it was because people in the office knew the 1st Defendant and therefore it was not convenient for him to come up to collect the cosmetics himself without getting her into trouble. 43. As for the lunch meeting on 11th November 1997, she said that ultimately it was decided not to go through with all the trouble of sending someone up to the Plaintiff's office pretending to have an interview and therefore the lunch meeting was arranged instead. She had therefore brought along her hand-written computer format which she wanted to ask the 1st Defendant for advice but they were stopped half way through their lunch with the coming of the police and Mr. Nishimura. 44. She denied having conspired with the other defendants or with anyone else to obtain confidential information of the Plaintiff for use by others and she said she had nothing to do with Keno. Findings of Facts 45. Having considered all the evidence adduced by both the Plaintiff and the Defendants I find that Mr. Nishimura is a truthful and reliable witness. I also find that the other witnesses called by the Plaintiff to be truthful and reliable witnesses although David Cheung was at times inarticulate and therefore gave the impression of being clumsy in giving parts of his evidence. I accept that he saw the 2nd and 3rd Defendants pass over documents to the 1st Defendant at the restaurant which the 1st Defendant put into his bag. 46. From all the evidence adduced I am left in no uncertainty that all three defendants shared a much closer relationship than mere colleagues working in the same office. From the evidence of the 2nd Defendant all three of them are working together in the same company at the time of the trial. Also from the evidence of the 2nd Defendant, although she did not want people to know about her borrowing money from finance company, this was not kept from the 1st and the 3rd Defendant by her and she admitted that they both knew about it. 47. I find from the evidence before me that Wat Kam Keung, the boyfriend of the 3rd Defendant, had, at least in name, acquired or set up a company, Fortune Loyal Consultants Ltd., (which later changed its name to Keno) and became its director in around August 1997 at the same time taking out a Business Registration for the company to be used as an employment agency. At some stage between then and November 1997, I find that the 1st Defendant had become involved in running, operating or managing this company together with Wat and possibly others as well. I make this finding based on the fact that a letter on the letterhead of Keno and a chop of Keno was found in the 1st Defendant's briefcase on 11th November 1997. As to exactly when it was that the 1st Defendant got involved with Keno I am unable to say with any precision but on balance I find that he became involved with Keno at a time well before he left the Plaintiff at the end of October 1997. I make this finding on the basis firstly that it was mainly because of his involvement with Keno that he left the Plaintiff and secondly from the tone and the contents of his conversation with the 2nd Defendant in the fourth conversation on the second tape recording, he sounded to be directing the operations of Keno. It may well have been the case that the 1st Defendant was the mastermind behind this whole scheme and that Wat Kam Keung was merely put there as a director in name only as it would have been most inconvenient for the 1st Defendant to be named as a director of such a company before he had left the Plaintiff. Moreover, the 1st Defendant most certainly had the experience and the knowledge to have been able to direct the whole operations of Keno before and after it had started its business which was intended to be similar to that of the Plaintiff but as a rival or competitor to it. 48. I also find that at some time between August and November of that year, a plan was hatched between all the three defendants, possibly including Wat Kam Keung and others as well, that the defendants would systematically, bit by bit, obtain not only the details of the Plaintiff's clients and applicants but also the format used by the Plaintiff in its computer system for the storing and processing of such information, to be used in due course by Keno when it starts operation as a rival or competitor to the Plaintiff's business. Once again I find that this plan was hatched at a time well before the 1st Defendant left the Plaintiff at the end of October 1997. After the 1st Defendant left the Plaintiff this task was left to the 2nd and 3rd Defendant to carry through. Initially they had tried to record down these information from their office telephones into answering machines elsewhere for other parties in this conspiracy to pick up. However, when they realised that they could easily be overheard in the office doing it, they resorted to printing or hand-copying the information that they required. These were those very documents which the 2nd and 3rd Defendants handed over to the 1st Defendant at the restaurant during their lunch meeting on 11th November 1997. 49. I also find that the 1st Defendant was actively involved with Keno after he had left the Plaintiff at the end of October and probably the main reason why he left the Plaintiff was because the business of Keno was just about to take off. This is supported by the fact that in his briefcase was found a newly made chop of Keno, a fact admitted by the 1st Defendant. 50. As for the recorded phone conversations, I have no doubt that these conversations all related to these goings on in one way or another. I find that the phone conversation in the first tape to be one between the 2nd Defendant and another person discussing about the registration and licensing of Keno as an employment agency. I make no findings on the identity of the person with whom the 2nd Defendant was speaking to because it is not necessary to do so suffice it to say that this person is probably someone involved in the conspiracy with the defendants and/or involved with Keno. 51. I also find that in the first phone conversation on the second tape the 3rd Defendant was leaving a message on an answering machine. According to the 1st Defendant when he was cross-examined, the 3rd Defendant had addressed the person to whom she was leaving the message as "Kwai Kor Chai" instead of the name "Kwong" as stated in the agreed translation. The 1st Defendant further said in cross-examination that this term of "Kwai Kor Chai" is a Chinese colloquial term commonly used to address someone with whom one is intimate. Having heard the tape myself when it was played in Court, I accept that evidence of the 1st Defendant as opposed to the agreed translation. It is also common ground that Wat Kam Keung is at the material time the boyfriend of the 3rd Defendant. I find, on balance of probabilities, that more likely than not the 3rd Defendant was leaving that message for her boyfriend. I further find that the reference to "homework" by the 3rd Defendant in that message left to her boyfriend is a reference to her performance, probably daily, of the task entrusted to her of obtaining and passing the information of the Plaintiff's clients or applicants over to her boyfriend for ultimate use by Keno. 52. As for the second phone conversation on that second tape, I have no hesitation in coming to the finding that in this monologue the 2nd Defendant was recording the details of the applicants for the use in future by Keno and not, as suggested by her in her evidence, namely, to facilitate her work for the Plaintiff which she had to do at home in the night time on occasions. 53. In making these findings as I did, quite obviously I have disbelieved the 1st and 2nd Defendants in their explanations given to the Court as to the purpose for the lunch meeting at the restaurant on 11th November 1997 as well as their explanations for the various tape recorded telephone conversations. For the explanations given by the defendants to be true it would entail too many coincidences taking place all at about the same time. As for instance, in two different phone conversations with two different persons the 2nd Defendant mentions to both of them that it is dangerous to be overheard on the phone (referring to her attempts at borrowing from finance companies) and coincidentally enough, one friend of hers suggests in one of those conversation to her to use a micro camera which he has while in another conversation, the 1st Defendant suggests an intricate plan of pretence to send someone up to her office pretending to have an interview but in fact to collect some cosmetics. Yet both these suggestions made to the 2nd Defendant relates to unconnected matters. 54. Then again in the restaurant where the documents belonging to the Plaintiff were found by the police to be in the briefcase of the 1st Defendant, coincidentally the 1st Defendant also has in his bag a letter on the letterhead of Keno as well as its company chop. Furthermore, the 3rd Defendant who was present in the restaurant and was seen to hand documents to the 1st Defendant was coincidentally the girlfriend of Wat Kam Keung, a director of Keno who the 1st Defendant was helping just at that time and coincidentally he was in the employment agency business. 55. I disbelieve the 2nd Defendant's evidence that she did not even know of Keno until she was at the police station when she had such a close friendship with the 1st and 3rd Defendants who were both directly involved with Wat Kam Keung. 56. Furthermore, I disbelieve the 2nd Defendant's explanation that she did not wish to be overheard when speaking on her office phone to finance companies. The use of the word "dangerous", not just by her but also by the 1st Defendant, does not fit that picture. If she was really speaking to finance companies asking for loan, it may be "embarrassing" for her to be heard by others in the office, but certainly not "dangerous". On the other hand, "dangerous" would be an appropriate description if she were doing what the Plaintiff was alleging. 57. In her evidence in chief, the 2nd Defendant said that in the office she had always made photocopies of applicants' details to bring home to work with at night and that nobody in the office has ever mentioned to her that she should not make photocopies of applicants details to bring home. But under cross examination when asked why she had to record applicants details on the phone answering machine for use at home instead of simply making a photocopy of it, she replied that by then she had learned that the company did not allow staff to make photocopies of applicants' information. When reminded by Mr. Burns what she had said in chief, she replied that she had learnt it afterwards. I find these answers of hers wholly inconsistent and caused me to seriously doubt her credibility as a witness. 58. Another reason why I disbelieve the explanation given by the 2nd Defendant is that when one considers the recorded phone conversation between the 1st and the 2nd Defendant, it is unmistakable that the conversation is a flowing and smooth one throughout relating to one topic only, with no breakage in between and not, as the 2nd Defendant would have one believe, switching from one topic (of the cosmetics) to another (of the computer formats) and then to a third ( of her personal problems relating to loans from finance companies). 59. In disbelieving the defendants' explanations of these events, I have also taken into consideration the different versions given by them in their statements made to the police as to the purpose of the lunch meeting and the reason why each of them had brought along to the lunch meeting documents which they have now admitted belonged to the Plaintiff. Confidentiality 60. In the case of all the defendants it is admitted by them that in each of their contracts of employment with the Plaintiff there is a 'Devotion clause' as well as a 'Confidentiality clause' which are as follows:-
61. In the case of all three defendants, there can be little doubt that at the material time when they were in the Plaintiff's employment, they were under an obligation not to use confidential information or materials acquired in their capacities as an employee, save and except for the purposes of their employment and not to disclose or divulge such confidential information to any person outside the company. 62. Various attempts have been made by the courts to define what are the elements of confidentiality. Going through the cases, it seems that the elements which assist in identifying confidential information in a trade setting are as follows:-
63. In the present case Mr. Nishimura claims and the 1st Defendant accepts that information relating to the Plaintiff's clients and applicants are confidential information. Mr. Nishimura gave evidence that such information stored in the Plaintiff's computer cannot be deleted from the computer nor copied onto a computer disc unless one is in possession of a secret password. This evidence has not been challenged in any way by the defendants and I accept that evidence of Mr. Nishimura. This evidence clearly shows that the Plaintiff considers those information to be valuable assets of the Plaintiff, the loss of which would be either injurious to the Plaintiff or of advantage to its rivals or competitors. 64. Moreover, from the facts as I have found them, the surreptitious manner in which the 1st and 2nd Defendant discussed how to send someone posing as an applicant to the Plaintiff's office pretending for interview but in effect to obtain the confidential information from the 2nd Defendant further underlines the fact that in the minds of the Defendants they knew only too well not only what they were doing was wrong but also the way in which the Plaintiff regarded such information. 65. I also accept the evidence of Mr. Nishimura that the computer formats used by the Plaintiff for the storage of these information relating to its clients and the applicants were designed by him for the exclusive use of the Plaintiff. In that sense it was not in the public domain as it was not available in the public market. These computer formats were undoubtedly protected in the same way as the information contained in them since they were very much a part of the computer system of the Plaintiff and so intricately linked with the information which these formats were used to store. Nor has it been challenged by the defendants that the computer formats used by the Plaintiff were confidential information. 66. In all the circumstances of this case, I find that not only were the information relating to the Plaintiff's clients and applicants confidential information but also the computer formats used by the Plaintiff for the storage of such information. Conspiracy 67. The conspiracy pleaded by the Plaintiff is that the defendants and each of them have in breach of their contracts of employment embarked upon a course of conduct with the purpose, through unlawful means of taking, usurping and obtaining for their own benefit and/or for the benefit of others the business of the Plaintiff in the form of information and details relating to the Plaintiff's clients and applicants. In order to establish such a conspiracy as a tortious wrong, the Plaintiff must necessarily prove firstly the agreement or the conspiracy itself; secondly the unlawful purpose of such agreement; thirdly the intention to injure and lastly damages. 68. In the light of my findings on facts above, I am satisfied that the Plaintiff has proved that there was an agreement between the defendants and others to take, obtain or usurp confidential information from the Plaintiff. Likewise, from the facts as found above, the surreptitious manner and the pretence with which the defendants went about obtaining and passing on the confidential information coupled with their knowledge that such information was confidential to the Plaintiff satisfy me that not only was the purpose unlawful but that the defendants well knew it to be so and did it with the intention to injure the Plaintiff in the sense that such confidential information were intended to be used by Keno in a rival business to that of the Plaintiff thereby diminishing, reducing or usurping ultimately the Plaintiff's business or part of it. 69. Insofar as damages is concerned, during the trial of this action, upon the application of the Plaintiff, I gave leave to the Plaintiff to amend the Statement of Claim by adding particulars of loss and damage to paragraph 12 of the Statement of Claim, to the effect that such loss and damage includes, but is not limited to :-
70. The evidence given by Mr. Nishimura was that he had to get approval from his head office in Japan before spending $130,000.00 for the installation of a telephone monitoring system in the Plaintiff's office because he had suspected the defendants from what he observed of their behaviour in the office. It was suggested to him in cross-examination that this monitoring system installed in November 1997 was really intended to replace an earlier telephone system used partly for staff training. 71. That suggestion was denied by Mr. Nishimura. That there was an elaborate monitoring system installed in the Plaintiff's office cannot be denied as the tapes produced into evidence of the recorded telephone conversations had to be played by some special machine, rather than the normal tape recorders. I accept Mr. Nishimura's evidence on this aspect. 72. As for the fees paid to David Cheung Professional Detective, Mr. Nishimura's evidence was that $30,000.00 was paid for their services for that one day i.e. 11th November 1997, not $32,000.00 as pleaded in the amendments. I accept his evidence in this regard as well. In the premises I find that all the elements of the pleaded conspiracy have been made out by the Plaintiff against the defendants. Breaches of Contract 73. By reason of the above findings, it must follow that the 2nd and 3rd Defendants were quite clearly in breach of their contract of employment with the Plaintiff. 74. In the case of the 1st Defendant, by reason of my findings above to the effect that it was before his leaving the Plaintiff that he became involved with Keno as well as conspiring with the 2nd and 3rd Defendants to usurp from the Plaintiff its confidential information, it follows also that the 2nd Defendant too was in breach of his employment contract with the Plaintiff. 75. From the contents of the fourth phone conversation in the second tape recording (i.e. between the 1st and 2nd Defendants) there can be little doubt that the 1st Defendant had induced the 2nd and 3rd Defendants to be in breach of their contracts of employment with the Plaintiff by inducing them to obtain and pass over to him confidential information belonging to the Plaintiff. Reliefs 76. In his opening, Mr. Burns indicated that paragraphs 2 and 3 of the Plaintiff's prayer for relief will not be pursued any longer. Moreover, in his closing address, Mr. Burns further indicated that if the actual percuniary loss of the Plaintiff is awarded by the Court with an inquiry as to the further loss suffered by the Plaintiff, the Plaintiff will not seek an account as to profit claimed in paragraph 7 of the prayer for relief. 77. Accordingly, there will be ordered an injunction to restrain all three defendants and each of them by themselves, their servants or agents or otherwise howsoever from using the confidential information or any part thereof. 78. There will also be judgment for the Plaintiff in the sum of HK$160,000.00 against all three defendants in respect of the conspiracy to obtain from the Plaintiff confidential information belonging to the Plaintiff. 79. I will further order an inquiry as to damages as prayed for under paragraph 4 of the prayer for relief. Costs 80. There will be a costs order nisi to the Plaintiff for the costs of this action against all three defendants.
Representation: Mr. Ashley Burns inst by M/S Robertson Double & Lee for Plaintiff Mr. Petrus Chan inst by M/S Raymond T.L. Tse & Co. for Defendants |