Midland Business Management Ltd v. Ng Pe Lok

DCCJ6120/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6120 OF 2005

____________

BETWEEN

____________

DCCJ6121/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6121 OF 2005

____________

BETWEEN

____________

DCCJ6122/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6122 OF 2005

____________

BETWEEN

____________

DCCJ6123/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 6123 OF 2005

____________

BETWEEN

____________

Before: Her Honour District Judge Marlene Ng in Chambers (Open to Public)

Dates of Hearing: 27^th and 28^th February, 2006

Date of Decision: 2^nd March, 2006

Date of Handing Down Reasons for Decision: 14^th March, 2006

___________________________

REASONS FOR DECISION

____________________________

Introduction

1.The Defendants in all 4 actions were ex-employees and estate agents of the Plaintiff estate agency company although their positions were described variously as senior property consultant, property consultant and account manager. The Plaintiff employed the Defendants pursuant to 4 agreements dated between 12^th June 2003 and 9^th May 2005 (the “Agreements”), each of which contains the same restraint of trade covenant, namely, clause 8.4 (“Clause 8.4”). The Defendants served notices of termination of their employment on the Plaintiff in September/October 2005 (the “Notices”) and their employment was terminated with immediate effect (the “Terminations”).

2.In the 6 months immediately prior to the Terminations (the “Preceding 6 Months”), the Defendants were assigned by the Plaintiff to work in the Yuen Long, Tuen Mun, Tsing Yi, Tsuen Wan, Kwai Chung, Tai Kok Tsui and Cheung Sha Wan districts (the “Restricted Districts”) where they participated in the sale and purchase or leasing of those industrial and commercial properties located within the Restricted Districts as listed in the schedule attached to the writs of summons (the “Properties”).

3.The Plaintiff claims that on a date unknown but within the 6 months immediately after the Terminations (the “Following 6 Months”), the Defendants without the Plaintiff’s prior knowledge and consent accepted employment and/or engagement by Centaline (CIS) Property Agency Limited (“Centaline”) as estate agents “in real estate agency business as located within [the Restricted Districts] and carried out activities of [estate agents] in respect of the sale and purchase or leasing of the [Properties] within the [Restricted Districts]”.

4.The Plaintiff discovered this in November 2005 with the help of private investigators (the “Investigators”). According to the Plaintiff’s affirmation evidence, its staff heard that the Defendants turned up at Centaline’s Cheung Sha Wan district (ie a Restricted District) sales office and accompanied potential buyers to view properties in such district. The Defendants gave their Centaline name cards to the Investigators who posed as potential tenants/buyers and took them to view units in the Properties in the Cheung Sha Wan and Kwai Chung districts (ie within the Restricted Districts). The Defendants explained the property details/advantages to the Investigators and also gave out pamphlets/printouts of the property details. The pamphlets asked the readers to contact the Defendants “for details/inspection” or “for details”. The Defendants’ name cards described them variously as account managers or licensed salespersons of Centaline’s Industrial/Office Department and their address was stated to be Centaline’s sales office at Chong Yip Street in Kwun Tong (ie outside the Restricted Districts).

5.Centaline maintains 3 branches in the Cheung Sha Wan district and 1 branch in the Kwai Chung district (ie in the Restricted Districts). Centaline’s webpage shows that these 4 branches serve 6 Restricted Districts but not the Tai Kok Tsui district, so the units viewed by the Investigators posing as potential tenants/buyers are within the serving districts of these 4 Centaline branches. However, there is no evidence that Centaline has a physical presence in the form of any sales office, branch or other “establishment” in the Yuen Long, Tuen Mun, Tsing Yi, Tsuen Wan and Tai Kok Tsui districts (ie the other Restricted Districts).

6.The Plaintiff claims that the Defendants are in wrongful breach of Clause 8.4. The Plaintiff commenced the present 4 proceedings against the Defendants and applied by amended summons in each proceedings for interlocutory injunctions to restrain the Defendants from :

(a)   directly or indirectly being engaged as director, partner, person-in-charge, manager, management personnel, agent or consultant in Centaline or such other estate agency business located in the Restricted Districts to carry on any activities of real estate agency business in respect of the sale and purchase or leasing of the Properties; and

(b)   accepting employment from, participating in the business of and/or being interested in the business of Centaline or such other estate agency business located in the Restricted Districts the business of which involves the sale and purchase or leasing of the Properties.

According to Mr Pow SC, leading counsel for the Plaintiff,  (a) and (b) above follow precisely the wording/meaning of the restraints in the 1^st and 2^nd Prohibitions (see below) of Clause 8.4 respectively, and the amendments to the Plaintiff’s Statements of Claim and to the Plaintiff’s summonses which I allowed at the commencement of the hearing are specifically for the purpose of bringing the wording of the reliefs sought in line with Clause 8.4.

7.The Defendants in their affirmations have not traversed the Plaintiff’s allegations in paragraphs 4 and 5 above, but they deny any breach of the Agreements. They argue that Clause 8.4 is ambiguous and wider than is reasonably necessary for the protection of the Plaintiff’s interests, and is therefore invalid and unenforceable. They also claim that upon reading Sub-clause (a) (see below), they do not understand its meaning.

8.The Defendants claim that during their employment with the Plaintiff, they were assigned to deal with industrial properties as well as some office properties in the Restricted Districts, but they did not handle transactions of office properties outside the industrial area of Yuen Long. Further, they were not assigned to handle transactions relating to retail shops in the Restricted Districts. The Defendants accept that during the Preceding 6 Months they handled sale and purchase or leasing transactions in the Restricted Districts. Ng Pe Lok and Tse Kai Wing Alex procured transactions in the Kwai Chung, Tsuen Wan and Cheung Sha Wan districts whilst Hui Tsun Yin and To Yuen Shan Vivian procured transactions in the Cheung Sha Wan and Kwai Chung districts. The Plaintiff has not expressly traversed these assertions by the Defendants.

Issues

9.An express restrictive covenant is void or unenforceable if it seeks to restrain an ex-employee’s freedom to compete after the termination of employment unless it protects the employer’s legitimate business interests and does not go beyond what is reasonably necessary to protect such interests.

10.The 4 main issues are as follows :

(a) whether Clause 8.4 is so ambiguous as to render it unenforceable (and this turns on the construction/interpretation of Clause 8.4);

(b) whether Clause 8.4 amounts to unreasonable restraint of trade so as to render it unenforceable;

(c) whether the Plaintiff has sufficiently proved any legitimate interest; and

(d) whether the court has to consider the balance of convenience and if so, where the balance of convenience lies.

Mr Pow SC treats issue (c) as part and parcel of issue (b) whilst Ms Tam, counsel for the Defendants, treats it as a separate issue. However, nothing turns on this.

11.Mr Pow SC fairly accepts that if I should find against his construction/ interpretation of Clause 8.4 under issue (a), the Plaintiff will not be able to maintain its applications for the interlocutory injunctive reliefs since it has no alternative or fall-back proposition that Clause 8.4 still amounts to reasonable restraint of trade. On the other hand, Ms Tam submits that even if I am against her contentions on the construction/interpretation of Clause 8.4 under issue (a), the Defendant still maintains that Clause 8.4 under the Plaintiff’s construction/interpretation remains an unreasonable and therefore unenforceable restraint of trade.

Decision

12.I delivered my decision at the hearing on 2^nd March 2006. I did not accept the Plaintiff’s construction/interpretation of Clause 8.4, which I believe adds a gloss to the wording of the provision. In the absence of any alternative or fall-back proposition by the Plaintiff, it is sufficient to dismiss (and I did dismiss) the Plaintiff’s amended summonses against the Defendants for the interlocutory injunctive reliefs. I also informed the parties that, where appropriate, I would deal with other grounds/ arguments in my reasons for decision, which will be handed down in due course. This I now do.

Theburden of proof

13.Clause 8.4 only has life for the Following 6 Months. Since the Terminations became effective in September/October 2005, any restraint covenant under Clause 8.4 (even if valid and enforceable) will at best only have effect until late-March or mid-April 2006. It will not be possible to hold a trial before such period, so any granting of the interlocutory injunctive reliefs sought by the Plaintiff is likely to effectively decide the dispute finally.

14.In the circumstances, Mr Pow SC and Ms Tam agree that justice requires there be some consideration as to whether the Plaintiff will likely succeed at the trial. It is not enough to decide merely there is a serious question to be tried. I can do no better than to refer to the judgment of Chu J in Fortune Realty Company Ltd v Chan Hiu Yeung Dick HCA1582/2001 (unreported, 21^st and 24^th May 2001), which dealt with inter alia an application for interlocutory injunction to enforce the terms of a 6-months’ restraint covenant under an employment contract between an estate agent and an estate agency company as follows :

“I accept that, generally speaking, the principles of the American Cyanamid case are applicable to cases of interlocutory injunctions in restraint of trade in as much as they apply to other cases of interlocutory injunction : Lawrence David Ltd v. Ashton [1991] 1 All ER 385. In the present case, however, it is plain that the six months period of restraint will have expired before the action is tried. This being the case, the granting or refusal of the interlocutory injunction will effectively dispose of the action in that it is very probable that the parties may not proceed further with the case after the interlocutory stage. In such circumstances, it is proper that the court should have regard to the prospects of the plaintiff succeeding in the action : NWL Ltd v. Woods [1979] 1 WLR 1294, Lansing Linde Ltd v. Kerr [1991] 1 All ER 418. But it is to be noted that the court is not to embark upon a mini-trial on the affidavits. All that is required is “some assessment” of the plaintiff’s prospects of success and it is for the judge to control the extent of such assessment : Lansing Lind Ltd v Kerr at p.258c. ……”

15.Chu J also said that at the interlocutory stage the court should only form a tentative view on the evidence and legal arguments. “Indeed I ought to be extremely slow to come to any firm conclusion on the merits of the case. It is therefore sufficient for me to sum up by saying that [in the case before Chu J] not only has the plaintiff shown that there is a serious question to be tried, but it has also demonstrated that there is a reasonably good prospect of its succeeding at the trial.”

Construction of Clause 8.4

16.Clause 8.4  Clause 8.4 provides as follows :

“在因任何原因終止後的六個月內，僱員在事先未得僱主的書面同意下，不得直接或間接於指定地區擔任任何地產代理的董事、合夥人、負責人、經理、管理人、代理人或顧問，並從事僱員於此服務合約終止前六個月內之相同或類似工作，或者接受上述業務的聘用、或者参與上述業務或與上述業務有利益關係，或者 [the “Preamble”]:

(a)          在指定地區所涵蓋的任何部份的物業銷售或租賃交易方面，在香港招攬、交易或從事任何地產代理業務 [“Sub-clause (a)”]﹔和/或 ……”

17.Principles of construction  The legitimacy of a restraint of trade covenant falls to be determined as at the date it is entered into and not by reference to the circumstances in which the employment eventually terminates (Rock Refrigeration Ltd v Jones & anor [1997] 1 All ER 1, 8). So it does not matter to what districts the Plaintiff assigned the Defendants to work and/or what activities the Defendants were engaged in during the course of their employment. Moreover, all parties clearly knew at the time of entering into the Agreements that the Plaintiff could assign the Defendants to work in different Designated Districts (see below) and to carry out different activities (see clauses 5.1(a), 5.1(i), 5.2 and 14 of the Agreements). The enforceability of Clause 8.4 at the time of the Terminations must be judged in light of the above circumstances.

18.There is no dispute that to be upheld a restraint of trade covenant should be clear and definite. The purpose of clarity is so that an employee may know where he stands (Cantor Fitzgerald (UK) Ltd v Wallace & ors [1992] IRLR 215, 218). In that case, it was held obiter that the drafting of the restraint of trade clause was cumbersome and did not read easily, and the expressions adopted were not clear and definite. Since the meaning of the clause was imprecise, it was held to be unenforceable. Mr Pow SC submits the fact that a restraint of trade clause is prolix or “user-unfriendly” should not bar any serious attempt to construe its meaning. With that I agree, but the resulting effort in construction/interpretation may not necessarily lead to a clear and definite meaning.

19.In my view, Clause 8.4 should be construed according to the ordinary rules of construction using the Chinese language (ie the language in which it was drafted) as to what is the fair and natural meaning of the parties in all the circumstances without bias either one way or the other. The clause should be construed with reference to the object sought. In a restraint of trade covenant, the object is the protection of the employer against rivalry in business. The court is not bound to look for improbable/ extravagant contingencies, but it will not interpret the provision restrictively so as to save it from invalidity if upon a natural reading of the language it appears that the restraint covenant is unreasonably wide. The court will not construct a contract for the parties. Mr Pow SC accepts that if there is any ambiguity in respect of a restraint covenant, the contra proferentum rule applies as a means of last resort. But, in my view, if after construing the covenant according to the aforesaid principles the restraint is still too vague and unclear, it will not be enforced.

20.Overview of the parties’ stance  Mr Pow SC submits that Clause 8.4 (inclusive of Sub-clause (a)) is straightforward and there is no ambiguity at all. The Plaintiff is entitled to rely on the 1^st and 2^nd Prohibitions (see below) in the Preamble, the enforceability of which is not affected by the reasonableness or otherwise of the 3^rd Prohibition (see below) in Sub-clause (a) which the Plaintiff does not rely and which Mr Pow SC argues can be properly severed under the blue-pencil test and/or under Clause 8.6 of the Agreements (“Clause 8.6”). Mr Pow SC claims there is nothing ambiguous in the scope and effect of the restraints in the 1^st and 2^nd Prohibitions (see below), which are qualified by an overall time limit of the Following 6 Months, so that they are enforceable against the Defendants.

21.On the other hand, Ms Tam submits the Defendants’ primary stance is that Clause 8.4 including Sub-clause (a) should be considered as a whole. She argues that it is cumbersome and hard to understand and that its interpretation is not helped by the use of the connecting phrase “，或者” 3 times. Ms Tam further submits that the expressions in Clause 8.4 do not read easily and are not clear and definite. Further, even if Sub-clause (a) can be severed (which Ms Tam disagrees), the Preamble is still ambiguous and uncertain, so Clause 8.4 is void and unenforceable.

22.Construing Clause 8.4  Mr Pow SC submits that bearing in mind the proper syntax and punctuations in the Chinese language, Clause 8.4 can be notionally broken down into various parts/segments to assist in construing the clause. He argues that any reader will conceptually do so in order to make sense of the lengthy clause, but such exercise will not give a different colour or add magic to the clause.

23.There is no dispute that Clause 8.4 is subject to an overall time qualification of the Following 6 Months as evident from the characters “此服務合約 …… 終止後的六個月內”.

24.Mr Pow SC submits that the operative characters “不得” in Clause 8.4 govern the following distinct prohibitions separated by the use of a comma and disjunctive characters (“，或者”) between them :

(a)   “直接或間接於指定地區擔任任何地產代理的董事、合夥人、負責人、經理、管理人、代理人或顧問 [the “1^st Element”]，並從事僱員於此服務合約終止前六個月內之相同或類似工作[the “2^nd Element”]” (the “1^st Prohibition”);

(b)   “接受上述業務的聘用 [the “1^st Part”]、或者参與上述業務或與上述業務有利益關係 [the “2^nd Part”]” (the “2^nd Prohibition”);

(c)   “在指定地區所涵蓋的任何部份的物業銷售或租賃交易方面，在香港招攬、交易或從事任何地產代理業務” (the “3^rd Prohibition”).

25.Ms Tam criticises Mr Pow SC’s approach as an attempt to remove the vagueness and ambiguity inherent in Clause 8.4 by reconstructing it, ie by moving the sub-numbering around to where they are in order to create the 1^st to 3^rd Prohibitions and thereby giving no effect to the existing difference between the presence and absence of the sub-numbering. Ms Tam further argues that the positioning of the sub-numbering appears to be deliberate to give meaning to the structure of the clause, but the ambiguities in the clause cannot be removed by ignoring them. Ms Tam reminds that the Plaintiff did not give the Defendants such re-written or sub-numbered Clause 8.4 when they signed the Agreements.

26.Without deciding the matter, I propose to consider the construction/ interpretation of Clause 8.4 in accordance with Mr Pow SC’s sub-numbering.

27.1^st Prohibition : introduction  The 1^st Prohibition comprises 2 parts, namely, the 1^st and 2^nd Elements connected by a comma and the conjunctive character “並”. Mr Pow SC submits that consequently the 1^st and 2^nd Elements should be read together so that the 1^st Prohibition will be triggered only if both elements (ie the engagement (擔任) and the participation in activities (從事工作)) are satisfied.

28.1^st Prohibition : 1^st Element  Mr Pow SC claims that the 1^st Element set out the particular positions (the “Positions”, namely, 董事、合夥人、負責人、經理、管理人、代理人或顧問) within any estate agency “establishment” (任何地產代理) located within certain geographical areas (指定地區 (the “Designated Districts”)) that the Defendants should not directly or indirectly (直接或間接) be engaged in (擔任).

29.I agree with Mr Pow SC that the operative verb for the 1^st Element is “engaged in” (擔任) and that such engagement can be direct or indirect (直接或間接). I further agree that the Positions are set out ejusdem generis and linked by the Chinese punctuation “頓號”.

30.The Designated Districts are defined in clause 1.1 of the Agreements (“Clause 1.1”) as “僱主不時及任何時間指派或編配予僱員為其從[事]物業代理業務之區域”. Mr Pow SC accepts that such definition covers all districts to which the Defendants were assigned by the Plaintiff to work throughout their periods of employment for carrying out “estate agency business”, so the Designated Districts can be more extensive than the districts to which the Plaintiff assigned the Defendants to work in during the Preceding 6 Months (ie the Restricted Districts).

31.The debated issue between the parties arises from the phrase in the 1^st Element of being engaged in the Positions of “any estate agency” (任何地產代理) within (於) the Designated Districts (指定地區). Mr Pow SC submits that since the Designated Districts (指定地區) is a geographical limitation, it must refer to the physical locations of “any estate agency” (任何地產代理). Mr Pow SC further submits that such physical presence of a rival estate agency (the “Rival”) may be in any form, eg a sales office, a branch or even its central headquarters. Such construction/interpretation can be illustrated by the following 3 scenarios :

(a)   If a Rival has a branch in the Taipo district and property listings (but no branch) in the Cheung Sha Wan district (ie a Designated/Restricted District), and the Plaintiff’s ex-employee carries on estate agency activities for the Rival in the Cheung Sha Wan district, the 1^st Element is not satisfied because the Rival has no physical presence in the Cheung Sha Wan district even though the ex-employee carried out estate agency activities for the Plaintiff in such district during the Preceding 6 Months.

(b)   If the Rival has a branch in the Cheung Sha Wan district (ie a Designated/Restricted District) but the Plaintiff’s ex-employee employed/ engaged by the Rival only carries out estate agency activities in the Taipo district, the 1^st Element bites even though the ex-employee’s activities are outside the Designated/Restricted District. Such activities fall outside the 1^st Prohibition only because the 2^nd Element (see discussion below) is not satisfied.

(c)   If the Rival has property listings in Kowloon and New Territories under the supervision of the Plaintiff’s ex-employee who is appointed as the Rival’s district manager for such areas, but the Rival has no branch in any of the Designated/Restricted Districts, the 1^st Element is not satisfied due to the absence of the Rival’s physical “establishment” in the Designated/ Restricted Districts.

In short, Mr Pow SC asks me to read the 1^st Element to mean that it will not be satisfied if the Rival does not have any physical “establishment” (but only has property listings and estate agency activities) in any of the Designated Districts (指定地區). He acknowledges that this may well be an unintended loophole in the drafting of Clause 8.4, but it does not mean the 1^st Element should not be read in such manner.

32.However, although Mr Pow SC suggests that the geographical qualification of the Designated Districts (指定地區) necessarily correlates to the physical locations of the Rival’s “establishments”, the definition of Designated Districts in Clause 1.1 (see paragraph 30 above) refers to districts (區域) to which (之) the Plaintiff from time to time or at any time assigned its employees (僱主不時及任何時間指派或編配予僱員) to carry out the Plaintiff’s “estate agency business” (為其從[事]物業代理業務). So the focus of the Designated Districts (指定地區) appears to be in respect of the Plaintiff’s estate agency “business” (業務) instead of the physical locations of the “establishments”.

33.I also bear in mind that the object or mischief that is being targeted by the restraint in the 1^st Prohibition is not the Rival’s physical “establishments” but the estate agency business that is being conducted in the Designated Districts. This is reflected in para.28 of the judgment of H H Judge H C Wong in Midland Realty (Strategic) Limited v Tang Man Tuen & ors DCCJ4474/2003 (unreported, 10^th September 2003) (see paragraph 43 below).

34.Further, even if the matter is considered on Mr Pow SC’s emphasis on the Rival’s physical “establishment” within a district in contra-distinction to the Rival’s property listings or estate agency business within such district, it is interesting to note that the Plaintiff in its amended summonses seeks to enjoin the Defendants from inter alia being engaged in the Positions in Centaline or “such other agency business” located in all 7 of the Restricted Districts. Yet there is no evidence that Centaline has any physical “establishment” in the Yuen Long, Tuen Mun, Tsing Yi, Tsuen Wan and/or Tai Kok Tsui districts. Centaline’s webpage only shows it has 4 branches in the Kwai Chung and Cheung Sha Wan districts. Even though Centaline’s webpage further suggests that such 4 branches serve 6 Restricted Districts (but not the Tai Kok Tsui district), this at best only shows that Centaline has branches located geographically outside the Yuen Long, Tuen Mun, Tsing Yi and Tsuen Wan districts that handle property listings and engage in estate agency activities within such districts (which Mr Pow SC says is insufficient for establishing the 1^st Element). It does not alter the fact there is no evidence that Centaline has any branch or “establishment” physically located within each of these 4 districts. This is not dissimilar to the scenario in paragraph 31(a) above. This is more starkly highlighted when one considers the Tai Kok Tsui district. Centaline does not have any physical “establishment” situated within such district and none of its 4 branches serves such district. In the circumstances, it is difficult to appreciate how the 1^st Element as construed/interpreted by Mr Pow SC can bite in terms of the scope of the interlocutory injunctive reliefs as sought in paragraph 6(a) above.

35.Still further, Ms Tam argues (and I agree) that on Mr Pow SC’s construction/interpretation of Clause 8.4, the 1^st Element enjoins the Defendants from becoming inter alia directors (董事), partners (合夥人) or perhaps even consultants (顧問) of a Rival’s physical “establishment” such as a branch or sales office. But logically speaking directors (董事) or partners (合夥人) refer to positions in the corporate or partnership business rather than any individual branch or sales office. This has not been satisfactorily explained.

36.To give sense to the 1^st Element, it is necessary to look for a fair reading of the 1^st Prohibition in the context of the whole clause with reference to the object sought. In my view, it is at best ambiguous or doubtful whether the characters “於指定地區……任何地產代理” necessarily refer to the Rival’s physical “establishments”. It is unnecessary for me to come to a definite view on the meaning of the 1^st Element. But as a result of the aforesaid analysis, I strongly incline to the view that it refers to “estate agency business” within the Designated Districts. In any event, I am satisfied at the very least that the Plaintiff has not established reasonably good prospects of succeeding with its construction/interpretation at the trial.

37.1^st Prohibition : 2^nd Element  The 2^nd Element defines the work/activities (僱員於此服務合約終止前六個月內之相同或類似工作) that the Defendants should not participate in (從事). Mr Pow SC submits that the characters “participate in” (從事) are for narrowing down the scope of the 1^st Prohibition. He cites the extreme example of the Defendants being assigned to carry out toilet-cleaning activities for the Plaintiff in the Preceding 6 Months, in which case the Defendants will only be restrained from participating in toilet-cleaning but not estate agency activities of a Rival during the Following 6 Months. To use a less extreme example, on Mr Pow SC’s construction/ interpretation, since the Defendants were not assigned to handle and/or did not engage in estate agency activities in respect of residential properties in the Preceding 6 Months, such activities by the Defendants for a Rival will not be caught by the restraint in the 2^nd Element or consequently by the 1^st Prohibition.

38.Mr Pow SC submits that since the Defendants were assigned in the Preceding 6 Months to carry out estate agency activities in respect of (i) industrial and commercial properties (ii) in the Restricted Districts, the phrase “the same and similar work” (相同或類似工作) in the 2^nd Element means the activities that satisfy both (i) and (ii), and not just activities of the same or similar nature. Such construction/ interpretation by Mr Pow SC can be illustrated by the following scenarios :

(a)   If the Plaintiff’s ex-employee is engaged by a Rival (with branches in both the Cheung Sha Wan district (ie a Designated/Restricted District) and the Taipo district) to work at its Taipo branch to solicit customers for industrial properties in the Taipo district, the 2^nd Element does not bite since he is not undertaking estate agency activities which he formerly carried out during the Preceding 6 Months in the Cheung Sha Wan district.

(b)   In the above scenario but with the Plaintiff’s ex-employee introducing an industrial property within the Cheung Sha Wan district (ie a Designated/Restricted District) to a customer and persuading such customer to buy the property, the 1^st Prohibition bites because (i) the Rival has a branch in the Cheung Sha Wan district and (ii) although the ex-employee is attached to the Rival’s Taipo branch, he is indirectly carrying out prohibited estate agency activities within the Cheung Sha Wan district.

(c)   In the scenario in (a) above but with the Plaintiff’s ex-employee not carrying out any estate agency activities except to introduce a customer to a fellow agent of the Rival’s Cheung Sha Wan branch and the fellow agent succeeds in concluding a transaction for such customer in respect of a Cheung Sha Wan industrial property, the 1^st Prohibition bites because the ex-employee is indirectly helping the Rival’s Cheung Sha Wan branch to carry out prohibited estate agency activities under the 2^nd Element. The conclusion is the same whether the ex-employee receives any commission or not.

(d)   If the Plaintiff’s ex-employee accepts engagement by a Rival as a training officer to train estate agents all over Kowloon and the New Territories in relation to industrial property transactions without being attached to any particular branch, then even if the Rival has a branch in a Restricted District, the 2^nd Element or the 1^st Prohibition does not bite because the activity carried out by the ex-employee for the Rival is not prohibited activity.

39.Mr Pow SC premises his construction/interpretation on (a) his reading of the wording of the 2^nd Element and (b) his suggestion that estate agency activities in 1 district is very different from those in another district. However, there is no evidence in relation to (b). Indeed, the Investigators’ reports adduced by the Plaintiff show that the estate agency activities carried out by the Defendants in the Cheung Sha Wan and Kwai Chung districts respectively in introducing property details/advantages to potential tenants/buyers and in bringing them to view the properties are similar if not the same.

40.On the other hand, Ms Tam submits that a literal and natural reading of the 2^nd Element leads to the construction that the time limit of the Preceding 6 Months qualifies the activities identified in the 2^nd Element but not the geographical locations identified in the 1^st Element (ie the Designated Districts). Ms Tam further submits that the plain and natural meaning of the characters “the same or similar” (相同或類似) in respect of the work/activities (工作) is that the 2^nd Element refers to the nature of the work/activities (eg estate agency, clerk, receptionist, data input or, to cite again Mr Pow SC’s extreme example, toilet-cleaning activities) and not the locations where the work/activities are carried out. Here, there is no dispute that the nature of the activities the Defendants engaged in during the Preceding 6 Months is estate agency activities relating to industrial and commercial properties. Ms Tam therefore submits that the time limitation of the Preceding 6 Months in the 2^nd Element does not restrict (or at least it is unclear, doubtful and/or uncertain whether it so restricts) the Designated Districts (指定地區) set out in the 1^st and not the 2^nd Element.

41.Ms Tam says an absurdity will arise if the court arbitrarily narrows down Clause 8.4 by adding the qualification of the Preceding 6 Months to the geographical limitation. First, to do so is to redraft or reconstruct Clause 8.4 that is not permissible (see Marshall v N M Financial Management Ltd [1995] ICR 1042 (on appeal [1997] ICR 1065) and Kao Lee & Yip v John Richard Edwards [1994] HKLR 232, 242). Secondly, there is no justification for choosing 6 and not, say, 8 months, which is unfair to the Plaintiff’s ex-employees including the Defendants.

42.I agree with Ms Tam’s construction/interpretation in paragraph 40 above, which reflects the plain, natural and fair meaning of the 2^nd Element. This is made clear by the direct/specific application of the phrase “僱員於此服務合約終止前六個月內” to “相同或類似工作” by the use of the character “之”. Had the parties intended the time qualification of the Preceding 6 Months in the 2^nd Element to limit not only the nature of the relevant activities but also the geographical locations where such activities were carried out (ie the Restricted Districts), the 2^nd Element would have provided for the same expressly, say, by stating “僱員於此服務合約終止前六個月內在指定地區之相同或類似工作” (my emphasis).

43.This is amply illustrated by the Tang Man Tuen case (supra) and Midland Realty (Strategic) Limited v Ma Yin Kwan DCCJ1175/2005, Deputy District Judge Tracy Chan (unreported, 18^th May 2005) where the plaintiff in both cases relied on the following English restrictive covenant :

“(a)         For a period of [6 months] after the termination of this Agreement for whatever direct or indirect reason be engaged as director, partner, principal, agent, servant or consultant or accept employment or otherwise, carry on or be concerned or interested in any business concern of real estate agency in any part of the area covered by the zone or zones which are divided for the sake of convenience and for the Employer’s administration to which the Employee had been assigned to work within the period of six (6) months immediately preceding the date of such termination ……” (my emphasis)

In the former case, the defendants tried to argue that the core issue was whether the business concern that employed or engaged them was situated in the prohibited zones (see para.27). Such argument was rejected by H H Judge H C Wong who held as follows at para.28 :

“Clearly, the spirit and sole purpose of Clause 7.5(a) was to prohibit the Defendants from engaging in activities in competition with the Plaintiff in the same areas and zones they were assigned to in the last 6 months of their employment. It does not matter that the office of the real estate agency they are at present employed is physically located in Central or elsewhere, so long as the business activities are conducted in the same areas or zones as the restricted zones the Plaintiff’s prior consent must be obtained. On my construction of Clause 7.5(a), the central issue is the area where the Defendant’s activities are to be conducted within 6 months of their resignations.” (my emphasis)

44.Mr Pow SC in paragraph 20 of his written submissions refers inter alia to the above 2 cases and states that “[in] addition, clauses with similar scope and application have been upheld repeatedly. There is nothing distinguishable or peculiar about the present case.” On the other hand, Ms Tam submits that the English clause 7.5(a) adopted by the Midland group in the above 2 cases is very different from Clause 8.4. Ms Tam argues that the time qualification of the Preceding 6 Months in the English clause 7.5(a) was applied directly/specifically to the zone(s) to which the ex-employees were assigned to, but such time limitation in Clause 8.4 only applies to the nature of the activities in the 2^nd Element.

45.In my view, the wording of the English clause 7.5(a) in these 2 cases is plainly different from that of Clause 8.4. Clause 7.5(a) not only restricts its application to the zone(s) to which the Plaintiff’s employees were assigned to during the Preceding 6 Months, it also has no bearing on the physical presence of a Rival’s “establishment” in such zones.

46.The Plaintiff also suggests that a restraint of trade clause identical to Clause 8.4 in an employment agreement of another ex-employee of the Plaintiff was held to be enforceable by H H Judge C B Chan in DCCJ4137/2005. However, there is no suggestion that the learned judge in granting the interlocutory injunction in that case had the benefit of the submissions/arguments raised by Mr Pow SC and Ms Tam before me. Whilst any decision of the learned judge deserves the greatest respect, as pointed out by Ms Tam, her decision is not binding on me.

47.1^st Prohibition : summary  In my view, when the 1^st Prohibition is read as a whole (ie reading the 1^st and 2^nd Elements together) in the context of the whole clause and in all the circumstances, it is strongly arguable that the Defendants are restrained from being directly or indirectly (直接或間接) engaged (擔任) as director, partner, person-in-charge, manager, management personnel, agent or consultant (董事、合夥人、負責人、經理、管理人、代理人或顧問) in any other estate agency business (任何地產代理) in (於) the Designated Districts (指定地區) to carry on (從事) the same or similar activities (相同或類似工作) in (於) the Preceding 6 Months (此服務合約終止前六個月內), namely, the estate agency activities in respect of the sale and purchase or leasing of industrial or commercial properties.

48.On such reading, the scope of Clause 8.4 is wider than as suggested by Mr Pow SC since it covers the Designated Districts and not just the Restricted Districts. I am inclined to the above view although it is unnecessary for me to come to a definitive conclusion at the present interlocutory stage. It is sufficient and I so find that the Plaintiff is unable to establish reasonably good prospects of succeeding on its construction/interpretation of the 1^st Prohibition at the trial and it is highly arguable that its interpretation puts an unwarranted gloss on the wording of the 1^st Prohibition that is contrary to a natural and fair reading of the provision.

49.2^nd Prohibition  The 2^nd Prohibition in Clause 8.4 as governed by the characters “不得” is directed at “接受上述業務的聘用、或者参與上述業務或與上述業務有利益關係”. There are 2 parts to the 2^nd Prohibition with “accept” (接受) being the operative characters for the 1^st Part, and “participate in” (参與) and “have a relationship” (與……有……關係) being the operative characters for the 2^nd Part. The 1^st and 2^nd Parts are grouped under the 2^nd Prohibition by the use of the Chinese punctuation “頓號” (instead of a comma) before the disjunctive characters “或者” in contra-distinction to the phrase “，或者” between the 1^st and 2^nd Prohibitions and between the 2^nd and 3^rd Prohibitions.

50.Mr Pow SC submits that the phrase “the above business” (上述業務) is unambiguous. In using the characters “業務” and not “公司” or “任何地產代理”, such phrase refers to the “activities” (工作) undertaken by the Plaintiff’s ex-employees in the course of the “engagements” (擔任) under the 1^st Prohibition. On such construction/interpretation, the 2^nd Prohibition will not bite in the scenarios set out in paragraphs 31(b), 38(a) and 38(d) above.

51.In my view, there is no doubt the use of the characters “上述” purportedly refers to “業務” in the 1^st Prohibition. But, as Ms Tam argues, what is not clear and definite is the meaning of “business” (業務) in the context of the 1^st Part that allegedly restrains the Defendants from being employed by “the above business” (上述業務) under the 1^st Prohibition. I am not persuaded that “the above business” (上述業務) refers to “activities” (工作) undertaken by the Plaintiff’s ex-employees in the course of the “engagements” (擔任) under the 1^st Prohibition. On a fair reading, “業務” refers to “business” and on Mr Pow SC’s construction/interpretation of “the above business” (上述業務) it is difficult to understand how a Plaintiff’s ex-employee can accept (接受) employment (聘用) from certain “activities”. This also adds weight to the above analysis that the 1^st Element of the 1^st Prohibition refers to “estate agency business” and not geographical locations of the Rival’s physical “establishments”.

52.Turning to the 2^nd Part, Ms Tam submits there is ambiguity in the phrase “参與上述業務或與上述業務有利益關係” which allegedly restricts the Defendants inter alia from being involved or interested in “the above business” (上述業務). Again, although broadly speaking one may be able to become involved in (参與) certain “activities” under Mr Pow SC’s construction/interpretation, it is difficult to envisage how one can have “interest relationships” (利益關係) with “activities”.

53.In my view, the meaning of “the above business” (上述業務) is not clear and definite. In light of my views on the 1^st Prohibition (see paragraphs 47 and 48 above), it is highly arguable that “the above business” (上述業務) in the 2^nd Prohibition refers to any estate agency business (任何地產代理) within (於) the Designated Districts (指定地區) that carries on (從事) the same or similar work/activities (相同或類似工作) as those carried on by the Defendants within (於) the Preceding 6 Months (此服務合約終止前六個月內), namely, the estate agency activities in respect of the sale and purchase or leasing of industrial or commercial properties. Here, the plain and natural reading of the 2^nd Prohibition shows that the focus of the provision is on the business that carries on such activities and not on the activities. In such circumstances, I find the Plaintiff has not been able to establish reasonably good prospects of succeeding with its construction/interpretation of the 2^nd Prohibition at the trial.

54.Ms Tam further submits that even if “the above business” (上述業務) in the 2^nd Prohibition is to be construed in the manner suggested by Mr Pow SC, in light of Mr Pow SC’s suggestion that the 2^nd Prohibition is a separate/discrete restraint, the 1^st Part (接受上述業務的聘用) may arguably limit the relevant business (業務) but it does not expressly qualify the capacity of the employment by such business. Will the 1^st Part and hence the 2^nd Prohibition bite if a Rival employs the Defendants as supporting accountants, clerks or data input officers in relation to the relevant estate agency business? Ms Tam also argues that the 2^nd Part (参與上述業務或與上述業務有利益關係) does not expressly limit the role of “being involved in” (参與) or the type of “interest relationships” (利益關係) in relation to the relevant estate agent business (業務). It is therefore suggested that the 2^nd Prohibition is extravagant. Mr Pow SC’s answer is to limit the scope of the 2^nd Prohibition by limiting the meaning of “business” (業務) to “activities”, but in my view this is an unwarranted gloss on the plain wording of the provision. In the circumstances, it is difficult to construe the wide characters adopted in the 2^nd Prohibition with certainty, nor can the broad/general restraint be safely read down to give a reasonable construction to meet the necessary requirements for protecting the Plaintiff’s business interests.

55.3^rd Prohibition The operative characters “不得” in relation to the 3^rd Prohibition in Sub-clause (a) are directed at “在指定地區所涵蓋的任何部份的物業銷售或租賃交易方面，在香港招攬、交易或從事任何地產代理業務”, which prima facie prevents participation by the Plaintiff’s ex-employees in inter alia real estate agency activities or business in relation to any property (任何部份的物業) so long as they are within the Designated Districts (在指定地區所涵蓋). In the circumstances, the 3^rd Prohibition can even cover estate agency activities or business in relation to residential properties within the Designated Districts (which districts can be more extensive than the Restricted Districts). But the Defendants were never assigned to handle estate agency activities in respect of residential properties during their employment with the Plaintiff. The 3^rd Prohibition may therefore bear no relationship to those business activities previously undertaken by the Defendants during their employment with the Plaintiff or during the Preceding 6 Months. So Mr Pow SC confirms that for the purpose of the applications before me, the Plaintiff is prepared to abandon reliance on the 3^rd Prohibition lest the restraint covenant be criticised for being too wide. He submits that Sub-clause (a) can be properly blue-pencilled and severed leaving the restraints in the 1^st and 2^nd Prohibitions intact and enforceable.

56.However, given my view that the Plaintiff does not have reasonably good prospects of establishing at the trial its construction/interpretation of the restraints in the 1^st and/or 2^nd Prohibitions are clear and definite, and further given that the Plaintiff does not rely on Sub-clause (a), so even if it can be severed from the Preamble, such severance cannot aid the Plaintiff. However, in deference to counsel’s submissions, I will consider this issue briefly.

57.Blue-pencil test  The blue-pencil test is succinctly stated by P J Crawford QC in Sadler v Imperial Life Assurance Co of Canada [1988] IRLR 388, 391-392 as follows :

“In my judgment, the combined effect of those authorities is that a contract which contains an unenforceable provision nevertheless remains effective after the removal or severance of that provision if the following conditions are satisfied :

1.   The unenforceable provision is capable of being removed without the necessity of adding to or modifying the wording of what remains.

2.    The remaining terms continue to be supported by adequate consideration.

3.   The removal of the unenforceable provision does not so change the character of the contract that it becomes ‘not the sort of contract that the parties entered into at all.’”

58.When severance is applied, the purpose and effect is to remove the offending part of the restraint covenant (which makes the covenant too wide) and to leave the remaining part to be enforced. But the court will not rewrite a restraint covenant to enable the parties, as Ms Tam puts it, to lick it into shape nor to alter the nature and sense of the agreement.

59.Ms Tam points out that in Mason v Provident Clothing and Supply Company, Limited [1913] AC 724, 745, Lord Moulton said as follows :

“…… I do not doubt that the Court may, and in some cases will, enforce a part of a covenant in restraint of trade, even though taken as a whole the covenant exceeds what is reasonable. But, in my opinion, that ought only to be done in cases where the part so enforceable is clearly severable, and even so only in cases where the excess is of trivial importance, or merely technical, and not part of the main purport and substance of the clause. It would in my opinion be pessimi exempli if, when an employer had extracted a covenant deliberately framed in unreasonably wide terms, the Courts were to come to his assistance and, by applying their ingenuity and knowledge of the law, carve out of this void covenant the maximum of what he might validly have required. It must be remembered that the real sanction at the back of these covenants is the terror and expense of litigation, in which the servant is usually at a great disadvantage, in view of the longer purse of his master ……”

60.Similar sentiments were expressed by Dillon LJ in Provident Financial Group plc & anor v Hayward [1989] 3 All ER 298, 303 :

“…… But counsel for the defendant persists that …… it is not possible to have a wide term in the agreement which the court will whittle down so as to enforce as much of it as the court thinks right. Of course that is correct where you have in the service agreement a contract restraining the employee after termination of his agreement from operating in a particular line of activity within a specified geographical area or over a prohibited period of restriction. If it is held that the area that has been chosen by the employer or the period of restriction are too wide or too long, the court will reject the whole clause as void and will not enforce whatever maximum shorter or smaller field of restriction the court thinks would have been permissible if the parties had made such an agreement.”

61.Severance?  Mr Pow SC submits that the 3^rd Prohibition or Sub-clause (a) is a self-contained alternative restraint covenant preceded by a comma and disjunctive characters (“，或者”) that makes it inherently severable/discrete from the 1^st and 2^nd Prohibitions under the blue-pencil test. Upon severance of Sub-clause (a), the Preamble still makes sense and its validity is not affected by the 3^rd Prohibition.

62.Mr Pow SC accepts that under the aforesaid principles the court will not read down a restraint covenant or give it a narrow interpretation if it is inherently unreasonable or too wide, but he says that is not the purpose of the blue-pencil test. He argues that Clause 8.4 (in particular the Preamble) is clear and unambiguous (which argument I have concluded does not have reasonable prospects of success at the trial), so it is not a question of reconstructing the clause by the removal of Sub-clause (a), but of applying the blue-pencil test to make the restraint reasonable and enforceable where on a literal and fair interpretation of Clause 8.4 in its own language the court concludes that the inherently severable Sub-clause (a) is too wide or unreasonable.

63.On the other hand, Ms Tam submits that Clause 8.4 should be considered as a whole and it is inappropriate to sever Sub-clause (a) from the Preamble. Ms Tam submits that the criteria for axing the 3^rd Prohibition from Clause 8.4 should not turn on whether such clause uses a comma and disjunctive characters (“，或者”) in between the 1^st and 2^nd Prohibitions and the 2^nd and 3^rd Prohibitions. The relevant consideration is whether by such severance it alters the sense of balance or construction of the restraint covenant that is remaining.

64.Ms Tam submits that this is illustrated by the Marshall case (supra) where the contractual provision for payment of post-termination commission was stated to be conditional on (a) the plaintiff not within 1 year of such termination becoming an independent intermediary or being employed by any organisation which was in competition with the defendant or (b) the plaintiff having attained 65 years of age. Jonathan Sumption QC (whose judgment was upheld on appeal) at p.1048 accepted that the 2 provisos are alternative conditions but he held that proviso (b) could never have been intended to operate independently of proviso (a) for the intention was not to restrict the right to commission after termination to retired agents over 65 years but to do so only if the agent had competed with the defendant in the first year after termination. When the clause was read as a whole, the effect of the 2 provisos was that the agent must not compete with the defendant unless he is 65 years old or older. Proviso (b) is in reality a proviso to proviso (a). The learned judge said as follows :

“…… Whether a contractual provision is a restraint of trade depends on its substance and practical effect, not on its form …… Whether [proviso (b)] is part of a covenant in restraint of trade must equally, as it seems to me, depend on its substance or practical effect, not on its form. As Stephenson L.J. observed in United City Merchants (Investments) Ltd. v Royal Bank of Canada [1982] Q.B. 208, 230:

“any alteration of a contract for the purposes of enforcement of less than all of it involves making a new contract or rewriting the old and the justice of enforcing part ought not depend on the precise form in which the parts of the whole are originally put together.”

It would be wrong for me to strike out [proviso (a)] alone, for that would radically distort the effect of clause 10(g). It is, however, open to me to strike out both provisos on the ground that they are inseparable parts of a provision directed to the restraint of trade.”

65.Ms Tam submits that if the Preamble and Sub-clause (a) are to be read in accordance with Mr Pow SC’s construction/interpretation (which argument in relation to the Preamble I have concluded does not have reasonable prospects of success at the trial), the 1^st and 2^nd Prohibitions (when looking at Clause 8.4 as a whole) are essentially redundant since the scope of Sub-clause (a) more than sufficiently encompasses the restraints in the 1^st and 2^nd Prohibitions. Ms Tam argues this has 2 consequences : (a) it immediately raises a query as to true meaning and purport of the 1^st and 2^nd Prohibitions if they are (under Mr Pow SC’s construction/interpretation) redundant, and (b) the severance/removal of Sub-clause (a) (ie the widest chunk of the restraint covenant) will alter the nature and sense of the restraint. Ms Tam reminds that Lord Moulton in the Mason case (supra, p.745) said that only “the excess [that] is of trivial importance, or merely technical, and not part of the main purport and substance of the clause” should be severed.

66.Ms Tam further submits that even if Sub-clause (a) can be severed, the remaining Preamble is still ambiguous and uncertain. The blue-pencil test cannot salvage any inherent uncertainty in the remaining clause, which remains ambiguous and too wide and hence void for being uncertain and unreasonable. She argues that it is not possible for the court to narrow down a wide term in the agreement that restricts post-employment activities so as to enforce as much of it as the court thinks right. The reason is that if otherwise employers will have no incentive to draft covenants restrictively and employees will be left uncertain as to the legitimate ambit of the clause until a decision by the court (see the Kao, Lee & Yip case (supra)).

67.In my view, there is no doubt that in an appropriate case the court will apply severance to restrictive covenant(s) in an employment contract. I agree that blue-pencilling Sub-clause (a) will leave the Preamble grammatically unaffected. It has been suggested that on the basis of Lord Moulton’s classic statement in Mason’s case (supra) the harshness of the blue-pencil test must be tempered by the requirement that it must be of only trivial or technical importance and not the main purport and substance of the clause. Neither Mr Pow SC nor Ms Tam refers to the case of T Lucas & Co Ltd v Mitchell [1974] Ch 129, 135-137 (see Jefferson, Restraint of Trade, p.145) which appears to qualify the force of Lord Moulton’s reasoning and to suggest that severance is possible in employee cases even though the excess is more than merely trivial. However, in the absence of argument, I do not wish to say anything further since it is unnecessary for my conclusions.

68.The matter can be considered in a different way : the severance must not “alter entirely the scope and intention of the agreement” (Attwood v Lamont [1920] 3 KB 571, 580, per Lord Sterndale MR (see Jefferson, Restraint of Trade, p.145)). This is reflected in the 3^rd requirement in the Sadler case (supra) cited by Mr Pow SC and in the judgment of Deputy High Court Judge Saunders delivered on 22^nd February 2006 in Fimat Hong Kong Limited v Tubiana Frederic Antoine & ors HCA268/2006 (unreported, para.42) : “[it] is open to the court where a discreet phrase within a particular covenant is held to be unreasonable, individual words or phrases may be severed provided that what is left makes independent sense without the need to modify the wording and the sense of the contract is not changed”.

69.Mr Pow SC accepts that the scope of Sub-clause (a) (or the 3^rd Prohibition) is wider than those of the 1^st and 2^nd Prohibitions, but even on his construction/ interpretation of Clause 8.4, the 1^st, 2^nd and 3^rd Prohibitions are all targeted at certain of the Plaintiff’s estate agency activities, so it is quite reasonably arguable that (a) there is in effect 1 restrictive covenant for the protection of the Plaintiff’s estate agency business (which is 1 business and not several businesses) from competition and (b) severance of the widest restraint in Sub-clause (a) alters the balance and sense of the clause. In the circumstances, I am not satisfied that the Plaintiff has established reasonably good prospects of succeeding in blue-pencilling Sub-clause (a) at the trial. But even if the Plaintiff is entitled to excise Sub-clause (a), the remaining Preamble still suffers from the problems in its construction/interpretation as outlined above.

70.Clause 8.6  Clause 8.6 provides inter alia as follows :

“…… 在此服務合約雙方均認為本條款所載明的限制在任何情況下均合理時，雙方同意並聲明: 如果為了保護僱主的合法權益，上述限制因超出在所有情況下均合理的範圍而被令致無效，但是如果部份措辭被刪除或期限(如果有)被縮短或者相關活動範圍或地區範圍被縮小而使之有效，上述限制應與使之有效的修訂一起使用。每項限制應分別對待，而且互相獨立。”

71.Mr Pow SC submits that the process of severance may be assisted by a clause that allows deletions where the covenant is too wide (Hinton & Higgs (UK) Ltd v Murphy & anor [1989] IRLR 519). In that case, clause 15 of the employees’ contract provided that “[the] restrictions contained in clause 14 are considered reasonable by the parties, but in any event that any such restriction shall be found to be void would be valid if some part thereof were deleted or the period of application reduced, such restrictions shall apply with such modifications as may be necessary to make them valid or effective”. Lord Dervaird in the Outer House of the Court of Session held as follows at p.520 :

“The second part, however, contemplates that the parties will abide by a result which may be effected by the deletion of some unreasonable part of the contract, rendering the contract as a whole reasonable. It has often been said that the courts will not make contracts for the parties. Here, however, …… the parties have agreed in advance they will accept as continuing to bind them such part of the arrangements which they have made as the court finds by deletion only to be alterations which permit the restriction to be regarded as reasonable …… I do not see why the court should refuse to perform that role …… of selecting that version of [the contract] which the parties have made inter alia with each other and enabling the bargain so modified to stand. ……”

72.Jefferson, Restraint of Trade, p.148 stated that if read literally the words in the clause in the Hinton & Higgs (UK) Ltd case (supra) could go very far, so it must be construed in the context in which they were issued. In that case the court severed the words “previous or” to limit the clause to present clients. The severance clause permitted the court to modify the clause by deletion, but did not permit the court to modify the area, time or scope of the business to be protected. The learned author was of the view that Lord Dervaird’s statement in the Hinton & Higgs (UK) Ltd case (supra) must be read in this context. Lord Dervaird himself also said he did not reach a concluded decision on this matter. The learned author went on to say that “[in] England the law is not yet laid down. It is suggested that since at the commencement of employment (or at any other time when the clause was inserted) the employee does not know the time or the area or both, the covenant is void for uncertainty.” 

73.But despite the uncertainty of the law on the validity of a severance clause, Mr Pow SC submits that Clause 8.6 does not take the matter outside the confines of the Hinton & Higgs (UK) Ltd case (supra) or the blue-pencil test. He argues that Clause 8.6 anticipates the possible need to preserve the 1^st and 2^nd Prohibitions by removing Sub-clause (a). Clause 8.6 prima facie allows 3 steps (ie “部份措辭被刪除”, “期限(如果有)被縮短” or “相關活動範圍或地區範圍被縮小”) to be taken to make the restraint in Clause 8.4 effective, but since the Plaintiff presently only seeks to delete Sub-clause (a), only the step of “部份措辭被刪除” is relevant. Mr Pow SC therefore suggests that the effect of Clause 8.6 in the present circumstances is similar to running a blue pencil through Sub-clause (a) under the common law. However, in light of my conclusions on the applicability of the blue-pencil test, Clause 8.6 does not take the matter any further for the Plaintiff.

74.Conclusion  In my view, the Plaintiff has failed to establish it has reasonably good prospects in succeeding with its construction/interpretation of Clause 8.4 or in showing that the meaning of such clause is clear and definite.

Reasonableness and legitimate interests

75.Given my conclusions on the above matters and the fact that the Plaintiff does not have any alternative or fall-back proposition once I reject its construction/ interpretation of Clause 8.4, it is unnecessary for me to deal with these remaining 2 issues.

Conclusion

76.In the circumstances, I dismissed the Plaintiff’s amended summons for interlocutory injunctive reliefs in each of the 4 actions. As regards costs, the Defendants have succeeded in resisting the applications for the interlocutory injunctions. I bear in mind that the life of Clause 8.4 is limited even though the applications are interlocutory in nature. I therefore make a costs order nisi that the Plaintiff do pay the Defendants’ costs in respect of the applications (including all costs reserved, if any) in any event with certificate for counsel. Although I am grateful to Mr Pow SC and Ms Tam for their helpful assistance, I do not consider that the issues raised are of such complexity as to justify 2 counsel. 

Mr Jason Pow SC leading Mr Victor Dawes instructed by Messrs Tony Kan & Co for the Plaintiff.

Ms Winnie Tam leading Ms Shannon Leung instructed by Messrs Cheung & Choy for the Defendants.