Orient Elite Development Ltd v. Ho Yan Ling Beven and Others

HCA970/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO. 970 OF 2005

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BETWEEN

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Before:  Deputy High Court Judge Muttrie in Chambers

Date of Hearing:  3 June 2005

Date of Decision:  3 June 2005

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D E C I S I O N

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1.The Plaintiff provides specialist hair treatment and operates two salons, one in Central and one in Tsim Sha Tsui. 

2.The Defendants were formerly employed at the Central salon.  Their employment ceased, in the case of the 1st and 2nd Defendants, in January 2005, and in the case of the 3rd Defendant, in March 2005.  Since then, all the Defendants have gone to work for a competitor hair treatment salon in Central.  Now the Plaintiff seeks injunctions to restrain the 1st and 2nd Defendants from competing with it in Central, Causeway Bay or Tsim Sha Tsui for one year after the cessation of employment, to restrain all the Defendants from soliciting or procuring its customers, soliciting or procuring its employees, and using or disclosing its confidential information.  The Plaintiff relies on restraint of trade clauses in the Defendants’ contracts of employment as well as terms which it says are implied. 

3.This is the first hearing of an application for interim injunction.  The Defendants have filed affirmations in response to the application.  It is agreed that the summons be adjourned for the Plaintiff to file affirmation evidence in reply and for full argument. 

4.Pending the further hearing, the Plaintiff seeks interim orders to restrain the Defendants from soliciting or procuring its customers and staff.  There is no objection to the latter restraint.  It now seeks an order, after argument, in the following terms:  not to use or disclose, including soliciting or contacting customers, information which is confidential to the Plaintiff contained in the computer database and the card index as detailed in Exhibit CSL7A.  The exhibit concerned is a list of customers who were assigned to the 1st and 2nd Defendants.  The 3rd Defendant was a trainee and had no customer base. 

5.The Plaintiff relies on evidence that some of its customers have been approached by or on behalf of the Defendants to come and have treatment at the Defendants’ place of employment.  Eight such customers are identified.  One particular person has told the Plaintiff that he was approached.  He was a customer at Tsim Sha Tsui so, on the face of it, could not be known to the Defendants unless they got his name from the database or card index.  However, the 2nd Defendant, who is said to have approached this person, denies it and there are some difficulties with his evidence anyway. He says he was called on a mobile telephone but the only number in the database is an office number. 

6.However, the real basis on which counsel seeks to rely for this interim order is said to be the protection of the confidential information contained in the computer database and the card index which the Plaintiff maintains.  It is said that the Defendants could only have got the information enabling them to approach the customers from that source.  The Defendants deny it.

7.I do not have any difficulty with the argument that the computer database and the card index contain confidential information on the principles enumerated by To DJ in the Axa China Region Insurance Company Limited [2000] at paragraph 38 relying on the well-known cases of Lansing Linde Ltd v Kerr [1991] and Faccenda Chicken Ltd v Fowler [1987]. 

8.But there remains the problem that not all that information is necessarily confidential.  For instance, information concerning persons known to the Defendants whether as customers solicited from a former employer, relatives, or friends would, I think, not be confidential.  It would already be in the public domain.  Further, there seem to me to be strong arguments that the anti-competition and anti-soliciting contractual provisions and, indeed, the non-disclosure provisions are so wide as to be unenforceable.

9.Here, the Plaintiff is trying to get an interim injunction against soliciting by the back door.  I do not see that that can be appropriate.  There is no property in a customer per se - see Robb v Green.  The Plaintiff can only succeed if it can rely on its contractual provisions.  That is a question for the full hearing.

10.I have considered whether the Plaintiff should have an order in terms of that sort but, without the words “(including soliciting or contacting customers)”, I do not see that that is appropriate because, as I have said, not all of the information in the name list is necessarily confidential.  Also, the question of enforceability remains a matter for the full hearing. 

11.Accordingly, the application for interim injunction pending the full hearing is refused. 

12.The Plaintiff will have 14 days to file affidavit evidence in reply.  There will be no further evidence filed without leave.  The summons will be adjourned to a date to be fixed for hearing with one day reserved. 

13.Costs reserved.

Miss Eva Sit, instructed by Messrs Benjamin Au & Co. for the Plaintiff

Mr Ling Chun-wai instructed by Messrs Kong & Chang, for the 1st, 2nd and 3rd Defendants