Axa China Region Insurance Co Ltd and Another v. Pacific Century Insurance Co Ltd and Others
Read the full judgment text of HCA 9093/2000 on BabelCite. This High Court CFI judgment was delivered on 29 June 2006 before Deputy High Court Judge Poon.
Civil procedure – setting aside default judgment – regular default judgment – test for setting aside – whether defendant has good defence on merits with real prospect of success – application of Premier Fashion Wears Ltd v. Chow Cheuk Man and O Mark Ployethene Products Fty Ltd v. Reap Star Ltd. Insurance – former insurance agent – alleged breach of confidence and conversion of Client Data (White Card and Underwriting Notification) – ownership of Client Data as confidential information/trade secrets – whether agent free to use documents supplied by policyholder – reliance on AXA China Region Insurance Co. Ltd v. Pacific Century Insurance Co. Ltd and AXA China Region Insurance Co. Ltd v. Pacific Century Insurance Co. Ltd (No.2). Evidence – credibility of defendant's explanation and corroborating affirmation of policyholder – inherent implausibility of handing over White Card containing commission rate and pre-policy Underwriting Notification as 'reference'. Outcome – application to set aside default judgment dismissed; costs to plaintiffs to be taxed if not agreed.
Legal issues: Whether default judgment should be set aside for want of a defence with real prospect of success
Outcome: The 40th defendant's application to set aside the default judgment is dismissed.
Cited by 11 cases · Cites 3 cases
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HCA9093/2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO.9093 OF 2000 --------------------- BETWEEN
----------------------- Before : Deputy High Court Judge Poon in Chambers Date of Hearing : 2 June 2006 Date of Handing Down Decision : 29 June 2006 ---------------------- D E C I S I O N ---------------------- Introduction 1.This is the 40th defendant's application to set aside the default judgment entered against her on 25 October 2005. The background leading to this application may be summarized as follows. 2.The plaintiffs are members of the AXA group of companies carrying on the business of insurance underwriting, including the underwriting of life insurance policies. The 1st defendant is an insurance company carrying on a similar business. The 40th defendant was one of the plaintiffs' former insurance agents. 3.In 2000, the plaintiff commenced the present action against the 1st to 10th defendants in tort for breach of confidence and unlawful interference of business. On 24 July 2001, the plaintiffs obtained various interlocutory injunctive relief and delivery up orders against the 1st to 10th defendants. See AXA China Region Insurance Co. Ltd v. Pacific Century Insurance Co. Ltd and Others [2003] 3 HKC 1. That order was subsequently varied on 16 November 2001 and 10 January 2002. Various documents were then delivered to the plaintiffs pursuant to the order on different occasions. After reviewing the documents, the plaintiffs applied to join 32 additional defendants, including the 40th defendant at the end of 2004. 4.As noted, the plaintiffs obtained a default judgment against the 40th defendant on 25 October 2005 for, inter alia, injunctive relief, damages and consequential discovery orders. 5.By summons dated 23 January 2006, the 40th defendant applied to set aside the default judgment. Initially, she alleged that the default judgment was irregular but she no longer maintains this ground. This application therefore proceeded on the basis that the default judgment is a regular one. The plaintiff's case 6.The plaintiffs' case against the 40th defendant, in gist, is this. 7.The plaintiffs pleaded that they are the owners of “Client Data”, namely, information relating to their policyholders and their policies obtained or derived by an agent in the course of his agency with the plaintiffs, and any documents containing such information, save where the information was known to the agent prior to such obtaining or derivation. The 40th defendant, as the plaintiffs' insurance agent, had a duty to keep Client Data secret and confidential and must not take away or use or disclose them save for the plaintiffs' business. However, she acted in breach of such duty. In particular, she had taken away a White Card and an Underwriting Notification in connection with the policy of a client, Mr Lau Po Kan (“Mr Lau”) and used the same in applying for a policy with the 1st defendant on his behalf. Further, by taking away the White Card and the Underwriting Notification, which are documents of the plaintiffs, the 40th defendant had converted the same to her own use. Defence 8.It is not in dispute that the White Card contained details of the policy number, effective date, modal premium, mode of payment, name, address, date of birth, age, sex and telephone numbers of the insured, the insurance amount, the premium (annual); the agency, the agent concerned and the commission rate. The Underwriting Notification contained details of the application (policy) number, the amount, the name of the (proposed) insured, the agency and the agent concerned and pending requirements for the issue of a policy. All these details and information plainly falls within the meaning of Client Data, over which the plaintiffs assert ownership. 9.Initially, the 40th defendant took issue on whether the Client Data were confidential information/trade secrets and asserted co-ownership of such data. However, for the purpose of this application, she is now content to assume that the Client Data were confidential information/trade secrets as alleged by the plaintiffs and that there was no joint ownership of the Client Data as contended by the plaintiffs. Her only defence is that the White Card and the Underwriting Notification were supplied to her by Mr Lau. Her evidence is summarized in paragraphs 10 and 11 below. 10.In late 1994, while still with the plaintiffs' agent, she gave Mr Lau a pile of documents relating to his life insurance policy including the White Card and Underwriting Notification for his reference. In July 2000, she tendered her termination of agency, which was accepted by the plaintiffs. In August 2000, she returned to the 1st plaintiff's office to pack away her personal belongings in the presence of her supervisor and another colleague. She had not taken away or retained any documents or printouts of the plaintiffs. On 23 August 2000, she became the 1st defendant's insurance agent. 11.In August 2000, Mr Lau received a letter from the 1st plaintiff informing him that the 40th defendant had left and another agent would be assigned to follow up with his policies. Mr Lau therefore rang up and approached the 40th defendant to enquire about the situation. They met and discussed about his policy with the plaintiffs. Mr Lau decided to “follow” the 40th defendant and terminate his policy with the plaintiffs. He wanted to purchase from the 40th defendant insurance policies of the 1st defendant. The 40th defendant explained to him in detail the differences between the policies of the plaintiffs and those of the 1st defendant. Mr Lau understood and voluntarily decided to buy the 1st defendant's policies. The 40th defendant said that it was necessary to have data relating to Mr Lau's policies with the plaintiffs. After the meeting, Mr Lau handed to her a pile of documents including the policy, the White Card and Underwriting Notification, which she gave to him in about the end of 1994 for his reference. 12.Mr Lau has filed two affirmations and made two statements to corroborate the 40th defendant's case. 13.Mr Law, appearing for the 40th defendant, submitted that what the 40th defendant has advanced above amounts to a complete defence. He relies on AXA China Region Insurance Co. Ltd v. Pacific Century Insurance Co. Ltd, supra, where Deputy High Court Judge To held at para.84 at p.33G that the agent is at liberty to deal with a policyholder if the policyholder contacts the agent and if the policyholder shows him the documents in question, the agent is at liberty to use them or the information contained therein. See also a similar remark by Chu J in AXA China Region Insurance Co. Ltd v. Pacific Century Insurance Co. Ltd (No.2) [2005] 3 HKC 359 at para.66 at p.380G-H. Merits of the defence 14.It is trite that where the default judgment is regular, the defendant must show a good defence on merits with a real prospect of success and not just merely arguable. The evidence of the defendant must carry some degree of conviction, and must be potentially credible affidavit evidence from the defendant which demonstrated a real likelihood that he will succeed on fact. The court has to form a provisional view of the probable outcome of the action. See Premier Fashion Wears Ltd v. Chow Cheuk Man [1994] 1 HKLR 377. 15.Where, however, the outcome of the action very much depends on whose evidence is likely to be accepted and it is not possible to sensibly form a provisional view of the probable outcome of the action, the appropriate test then is to ask whether the defence could well be established at trial and if the defendant's version could well be believed at trial, it follows that the defence has a “real prospect of success”. See O Mark Ployethene Products Fty Ltd v. Reap Star Ltd [2003] 3 HKLRD 114, L & M Specialist Construction Ltd v. Wo Hing Construction Co. Ltd [2000] 3 HKLRD 262, El Vince Ltd v. Wu Wen Sheng [2001] 3 HKLRD 445. 16.On the evidence before me, I have no difficulty in forming a provisional view of the probable outcome of the action. I do not think the 40th defendant's case has a real prospect of success. It is incredible for the 40th defendant to give the original of the White Card and a copy of the Underwriting Notification to Mr Lau for reference or as a summary or handy reminder. If she indeed intended to provide such assistance or service, I see no reason why she did not prepare a proper summary and give it to Mr Lau. Further, as noted, the White Card contained her commission rate. It is inconceivable that she would choose to reveal such information to Mr Lau by providing him the White Card. For the Underwriting Notification, it came into existence before the issue of the policy. It was sent to the agent to clarify certain information with the prospective client before a policy was issued. The information contained therein could not possibly amount to any reference, summary or reminder of the policy later issued. The 40th defendant alleged that it was stated on the Underwriting Notification that Mr Lau's disability in his right hand would be excluded from the waived premium protection under the policy. “It was probably because of that particular reason I gave the copy [Underwriting Notification] to [Mr Lau] in 1994,” she said. Her explanation, in my view, does not make sense. She needed not give him the copy Underwriting Notification to inform him of the waiver. 17.Mr Law sought to place reliance on the evidence of Mr Lau. But as I have demonstrated above, the 40th defendant's case is incredible. I am not going to attach weight to Mr Lau's evidence. 18.Mr Law also drew my attention to the fact that there was no contemporaneous evidence to suggest that the 40th defendant had wrongfully taken away or retained the White Card or the Underwriting Notification at the time. But it only suggests that the plaintiffs were then not aware of the 40th defendant's wrongful conduct. No reliance can be placed on it. Conclusion 19.For the above reasons, the 40th defendant's application must fail. I will dismiss it accordingly and make an order nisi that the plaintiffs shall have the costs, to be taxed if not agreed.
Mr Stewart K.M. Wong, instructed by Messrs Herbert Smith, for the 1st and 2nd Plaintiffs Mr Law Man Chung, instructed by Messrs Sit, Fung, Kwong & Shum, for the 40th Defendant |
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