Kon Dai (Far East) Packaging Co Ltd v. Tang Chun Kit and Others

HCA 603/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 603 OF 2009

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Before: Hon Saunders J in Chambers

Date of Hearing: 28 August 2009

Date of Decision: 28 August 2009

Date of Reasons for Decision: 3 September 2009

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REASONS  FOR  DECISION

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1.The 5^th Defendant has taken out two interlocutory summonses:

(a) for an order pursuant to O 18 r 19 that the statement of claim to be struck out on the ground that it discloses no reasonable cause of action, r 19(1)(a), or alternatively on the grounds that it is scandalous frivolous or vexatious, r 19(1)(b); it may prejudice embarrass or delay the fair trial of the action, r 19(1)(c); or it is otherwise an abuse of the process of the court, r 19(1)(d); and

(b)    for an order pursuant to O 29 r 1 that an order allowing entry and search of the 5^th Defendant’s premises, and a disclosure order made against the 5^th Defendant on 3 March 2009, be discharged.

2.At the hearing, Mr Yip confirmed that the Plaintiff no longer required the entry and search, and disclosure order against the 5^th Defendant, and I made an order discharging that order.

3.I heard argument from counsel on the striking out summons, and dismissed the application, with reasons to follow.  These I now give.

4.An application under O 18 r 19(1)(a) is an application that requires to be considered with reference only to the statement of claim itself, and no evidence is admissible in that respect: s r 19(2).

5.The claim essentially falls into two parts.  First, there is a claim against the 1^st and 2^nd Defendants, former employees of the Plaintiff, alleging breach of confidence.  Mr Chu argues that there could not be a breach of confidence claim against the 5^th Defendant who was merely an independent printer, and who consequently owed no duty of confidence to the Plaintiff.

6.The submission fails to recognise that there are occasions on which the recipient of information may have imposed upon him and equitable obligation of confidence: see generally the discussion in Commercial Secrecy: Law and Practice, John Hull, Sweet & Maxwell, 1998, at para 4.47-48. 

7.All that Mr Yip need show at this stage is that the case is arguable.  In paragraph 16 of the statement of claim it is alleged that the 4^th Defendant, a company which is plainly the alter ego of the 2^nd Defendant, and the 5^th Defendant, could not have developed produced and marketed the products complained of without the disclosure by the 1^st and 2^nd Defendants to the 5^th Defendant of design specifications, design templates and photographic images associated with the products, or design methods and processes associated with the products, all of which were the property of the Plaintiff.

8.In paragraph 22 the allegation is made that when the 5^th Defendant received that information it did so knowing that the information was given in breach of confidence.  No particulars are given at this stage, but the allegation is clear.

9.If the 5^th Defendant received the information in those circumstances, and used the information, it is arguable that it did so in breach of confidence.

10.Although the statement of claim might not be pleaded as tightly as it ought, and it may at this stage be deficient in particulars, there is plainly an arguable cause of action for breach of confidence.

11.The second part of the claim is a claim for unlawful interference of the plaintiff's economic interests and business.

12.There is a general allegation that all defendants knew or ought to have known that trade secrets and/or confidential information belonging to the Plaintiff were disclosed in breach of confidence.  There is a further allegation that the defendants had, deliberately, by unlawful means, intended to induce and/or procure the customers of the Plaintiff to withdraw or cancel existing valid orders.

13.Earlier paragraphs of the statement of claim are repeated by way of particulars.

14.Again it is clear that the statement of claim needs certainly expanding to plead relevant facts, (not the evidence supporting those facts), and particulars.

15.But I am satisfied that there are sufficient appropriate allegations to substantiate an argument that there has been an unlawful interference as alleged.

16.I accordingly dismissed the application to strike out under r 19(1)(a).  Mr Yip is well aware that he will face, if he does not supply them, an application for particulars.

17.Mr Chu sensibly did not seriously pursue striking out on the other bases contained in the summons.  While the statement of claim will require amendment it is not so bad as to fall within any of the grounds in r 19(1)(b), (c), or (d).  I accordingly dismissed the application to strike out entirely.

18.Mr Yip says he should have his costs on striking out application, because he succeeded in resisting it, and in any event the proper application should have been for particulars.  That is right.  On the application to strike out there will be an order nisi for costs to the plaintiff, to be taxed on a party and party basis, one and a half hours allowed for the hearing.

19.In respect of the discharge of the entry and search, and disclosure order, I am satisfied that the proper order is no order for costs.  There will be in order nisi accordingly.

Mr Simon S M Yip, instructed by Messrs Patrick K H Lam & Co, for the Plaintiff

Mr George Chu, instructed by Messrs Huen & Partners, for the 5^th Defendant