Dunamis International Co Ltd v. Chan Hong Kit and Others

DCCJ 1178/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1178 OF 2009

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BETWEEN

Before: Deputy District Judge H. Au-Yeung

Dates of Hearing: 30 – 31 August, 1, 2, 6 September 2010

Date of Judgment: 20 October 2010

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JUDGMENT

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INDEX

BACKGROUND

1.The plaintiff was at all material times a company carrying on business in the marketing of mobile phones and mobile phones related accessories. 

2.The 1^st defendant was employed by the plaintiff as a Sales Person on around 25^th April 2005.  His employment was terminated by the plaintiff on 8^th April 2008 when the plaintiff paid him one month's salary in lieu of notice.

3.The 2^nd defendant was employed by the plaintiff as a Sales Coordinator on 24^th April 2007.  He was summarily dismissed by the plaintiff on 15^th June 2008.

4.The 3^rd defendant was an ex-employee of the plaintiff who worked for the plaintiff as an IT Technician from 25^th June 2007.  He also assumed the post of Sales Coordinator after the 1^st defendant had left the plaintiff.  He was summarily dismissed by the plaintiff together with the 2^nd defendant on 15^th June 2008.

5.It is admitted by the defendants in their respective Re-Amended Defence that their employment relationships with the plaintiff were governed by their respective employment agreements (“the Employment Agreements”) and the plaintiff's Internal Rules and Regulations (“IRR”) and/or the revised version of the IRR dated 18^th April 2008 (“the Revised IRR”).  The relevant clauses in the said documents provided that:

(a)	“本公司在以下情況下會解僱員工，而沒有任何賠償: “員工行為不當” (Clause 2, second sub-clause (2) of the Employment Agreements) “員工有欺騙或不忠誠行為” (Clause 2, second sub-clause (3) of the Employment Agreements).
(b)	“如沒有公司同意，員工辭職後六個月內不得受僱於同類型公司工作，否則本公司有權追究所有損失” (Clause 1(7) of the IRR or Revised IRR) (“the Restraint of Trade Clause”)

THE PLAINTIFF'S CLAIM

6.The plaintiff's pleaded case may be summarized as follows:

(a)	The defendants were bound by the clauses set out in paragraph 5 above and they, as employees of the plaintiff, also owed various duties (including duty of fidelity and duty of confidence) to the plaintiff.
(b)	During the employment of the defendants, they had access to the plaintiff's Customer Database (“the Customer Database”) and Price List (“the Price List”).  The Customer Database and the Price List were confidential information and/or trade secrets which belonged to the plaintiff.
(c)	Between the termination of their respective employment with the plaintiff and 3rd July 2008, the 1st and 2nd defendants had disclosed information contained in the Customer Database including the particulars of a customer of the plaintiff known as GSM Depot Inc. (“GSM Depot”) to a company called Madina Communication (“Madina”) which carried on the trade and business of supply of mobile phones.  It was said that this had the effect of diverting the plaintiff's business away from the plaintiff.
(d)	On around 3rd June 2008, upon the request of the 1st defendant via MSN Messenger (“MSN”), the 2nd defendant sent the Price List to the 1st defendant even though by then the 1st defendant was no longer the plaintiff's employee.
(e)	Between March and June 2008, the 2nd and 3rd defendants had deleted some entries in the Customer Database.
(f)	Further, the 3rd defendant had offered to sell products to a Mr. Simon Jabbour (“Mr. Jabbour”) who was a new customer of the plaintiff and asked Mr. Jabbour to pay him directly instead of to the plaintiff.
(g)	Moreover, the defendants had set up, owned and/or controlled directly or indirectly and worked or acted for a company that engaged in the same trade or business as the plaintiff known as Masterfone International Company Limited (“Masterfone”) which was incorporated on around 11th June 2008.  In particular, the defendants had represented Masterfone since 11th June 2008 in buying and selling goods from or to the plaintiff's suppliers or customers.

7.On the basis of the above, the plaintiff claims for an injunction to restrain the defendants from relying on and/or making use of the Customer Database and from disclosing the Customer Database to any third party.  Mr. Wong, counsel for the plaintiff, informed me at the beginning of the trial that the plaintiff would not seek injunction in respect of the Price List anymore because that is now an outdated document.

8.The plaintiff also claims against the defendants for an order for delivery up of the Customer Database and the Price List and damages (or account of profits).

THE DEFENDANTS' CASE

9.Each of the defendants has filed his own Re-Amended Defence.  Although they have filed separate pleadings, in relation to those allegations which were made against all of them, their lines of defence are more or less the same.

10.The defendants' pleaded case may be summarized as follows:

(a)	While it was admitted that the clauses referred to in paragraph 5 above were contained in the Employment Agreements and the IRR respectively, it was said that the Restraint of Trade Clause was invalid and unenforceable because it covered an unlimited geographical area.  Further, the wordings “同類型公司” of the said Clause were ambiguous and too wide in scope and nature.
(b)	Although it was admitted that they had access to the Customer Database and the Price List in the course of discharging their respective job duties to the plaintiff, the defendants denied that the Customer Database or the Price List amounted to confidential information or trade secret.
(c)	While it was admitted that Masterfone was incorporated in Hong Kong on 11th June 2008, it was denied that the defendants had set up, owned and/or controlled directly or indirectly any company that engaged in the same trade or business as the plaintiff.
(d)	Generally, the defendants denied that they had breached any duties owed to the plaintiff at all.

THE ISSUES

11.It has been confirmed by Mr. Shum, Counsel for the defendants, that there is no dispute that each of the defendants owed to the plaintiff the following duties which arose out of their respective employment relationship with the plaintiff:

(a)	a duty to serve the plaintiff with fidelity and good faith;
(b)	a duty not to compete with the plaintiff;
(c)	a duty not to place himself in a position where his interests conflicted with his duty to the plaintiff;
(d)	a duty not to take advantage of his position to obtain a benefit for himself;
(e)	a duty not to use, copy or disclose any information and/or trade secret which were obtained in confidence as a consequence of and in the course of employment except for the purposes of his employment with the plaintiff; and
(f)	a duty not to use or disclose any trade secrets or other confidential information of the plaintiff following the termination of the contract of employment.

12.In the premises, the issues of the present case are:

(a)	Whether the Customer Database and the Price List are confidential information and/or trade secret (see paragraphs 150 – 160 below);
(b)	Whether the 1st and 2nd defendants had breached their duties owed to the plaintiff and/or their respective Employment Agreements in providing information of the plaintiff's customer, namely, GSM Depot, to Madina (see paragraphs 161 – 174 below);
(c)	Whether the 2nd defendant had breached his duties owed to the plaintiff and/or his Employment Agreement in providing the Price List to the 1st defendant on around 3rd June 2008 (see paragraphs 175 – 187 below);
(d)	Whether the 1st defendant had procured the 2nd defendant to breach the latter's duties owed to the plaintiff and/or his Employment Agreement by asking the 2nd defendant to provide him with the Price List (see paragraph 188 below);
(e)	Whether the 2nd and 3rd defendants had breached their duties owed to the plaintiff and/or their respective Employment Agreements in deleting certain entries in the Customer Database (see paragraphs 189 – 193 below);
(f)	Whether the 3rd defendant had breached his duties owed to the plaintiff and/or his Employment Agreement in diverting or attempting to divert the business opportunity with Mr. Jabbour to himself (see paragraphs 194 – 203 below);
(g)	Whether the 2nd and 3rd defendants had breached their duties owed to the plaintiff and/or their respective Employment Agreements in working for Masterfone while they were still being employed by the plaintiff (see paragraphs 204 – 208 below);
(h)	Whether the Restraint of Trade Clause is valid and enforceable (see paragraphs 209 – 223 below);
(i)	If so, whether the defendants had breached such a clause (see paragraphs 224 – 231 below); and
(j)	Whether the defendants had breached their duties of confidence to the plaintiff in providing the Customer Database and the Price List to Masterfone (see paragraphs 232 – 240 below).

THE APPLICABLE LEGAL PRINCIPLES

13.Before I go into the evidence, I propose to state the relevant legal principles which are applicable in the present case.

14.In relation to “breach of confidence”, the following principles are applicable:

(1)	While an employee remains in the employment of his employer, his obligations are included in the implied term which imposes a duty of good faith or fidelity on the employee. The duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorizes such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer. (Faccenda Chicken Ltd. v Fowler [1986] 1 All ER 617 at 625e – 625g)
(2)	The implied term which imposes an obligation on the employee as to his conduct after the determination of the employment is more restricted in its scope than that which imposes a general duty of good faith.  It is clear that the obligation not to use or disclose information may cover secret processes of manufacture, and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret.  However, this obligation does not extend to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is “confidential” only in the sense that an unauthorized disclosure of such information to a third party while the employment subsisted would be a breach of the duty of good faith.  An employee is entitled to use information which cannot be called “trade secrets” for his own benefit or the benefit of any future employer.  (Faccenda Chicken Ltd. v Fowler [1986] 1 All ER 617 at 625g – 625j and 626c)
(3)	A trade secret is information which, if disclosed to a competitor, would be liable to cause real (or significant) harm to the owner of the secret.  It must be information used in a trade of business, and the owner must limit the dissemination of it or at least not encourage or permit widespread publication.   It can thus include not only secret formulae for the manufacture of products but also, in an appropriate case, the names of customers and the goods which they buy. (Lansing Linde Ltd. v Kerr [1991] 1 WLR 251 at 260)
(4)	In order to determine whether any particular item of information is a trade secret or equivalent to a trade secret it is necessary to have regard to (a) the nature of the employment, for example, whether the status of the employee was such that he regularly handled confidential information and recognized it as such or whether the information was only handled by a restricted number of employees; (b) the nature of the information itself; (c) whether the employer had stressed the confidentiality of the information to the employee; and (d) whether the information could easily be isolated from other non-confidential information which was part of the same package of information – while the separability of the information in question is not conclusive, the fact that the alleged “confidential information” is part of a package and that the remainder of the package is not confidential is likely to throw light on whether the information in question is really a trade secret. (Faccenda Chicken Ltd. v Fowler [1986] 1 All ER 617 at 626e – 627g)
(5)	An action for breach of confidence will only arise if the information in question has the necessary quality of confidence about it.  The information must not be “public property and public knowledge”.  However confidential the circumstances of communication, there can be no breach of confidence in revealing to others something which is already common knowledge.  But that does not mean that all matters which the public could find out about if they made the effort, or did the necessary work, will be regarded as being in the public domain and therefore incapable of being protected.  Something that has been constructed solely from materials in the public domain may possess the necessary quality of confidentiality.  Certain information may be regarded as confidential if the maker of the document has used his brain and then produced a result which can only be produced by someone who goes through the same process. (Clerk & Lindsell on Torts (19th edition (2006)), paragraph 28-07)
(6)	The general law relating to breach of confidence prohibits ex-employees from using information which can fairly be regarded as a separate part of the employee's stock of knowledge which a man of ordinary honesty and intelligence would recognize to be the property of his old employer and not his own to do as he likes with.  It is also impermissible for any employee to copy customer lists or deliberately memorize such information even though it may be in the public domain as he would be saved the expense and effort of bringing the information together. (Printers & Finishers Ltd. v Holloway [1965] 1 WLR 1 at 5 and Chitty on Contracts, Vol.1 (30th edition (2008)), paragraph 16 -107)
(7)	Very often, part of the confidential information is in the public domain and part is not; or the complete package of confidential information, as such, is not in the public domain but could be arrived at by diligent enquiry or routine research.  Where the owner of the confidential information has himself made it public, for instance by publishing it in a patent specification, no difficulty arises: relief will be refused.  But where a material amount of work would have to be done to arrive at it, the position is different.  It is here that the springboard doctrine arises: the courts will not permit someone who has come into possession of such information to take a short cut and make use of it in order to steal a march on his competitors or to compete with the person from whom he obtained it in confidence.  Thus, one who has obtained possession of such a package will not be permitted to make use of it unless he obtains it independently from a legitimate source.  But such a disability will not be continued indefinitely; an injunction will only be granted over the period during which the unfair advantage continues. (Clerk & Lindsell on Torts (19th edition (2006)), paragraph 28-40)

15.In relation to the validity of the Restraint of Trade Clause, I shall respectfully adopt Mr. Recorder Shieh's summary of the law in his Judgment in Degreeasia Limited t/a Hong Kong Institute of Continuing Education v. Paules Lee Siu Yuk and Others (HCA 1686/2006, unreported, 25^th June 2010) at paragraphs 32 to 33 thereof:

“32. The basic rule is that covenants in restraint of trade are unenforceable unless they can be shown to be reasonable in the interests of the parties and in the public interest (see Bridge v Deacons [1984] 1 AC 705 at 713A–B per Lord Fraser of Tullybelton). It is trite that the burden of demonstrating the reasonableness of a covenant is on the party seeking to enforce it, in this case Degreeasia.

33. The law on enforceability of restrictive covenants in an employment contract is later conveniently summarized in Office Angels Ltd v Rainer‑Thomas and O'Connor [1991] IRLR 214. They are as follows :

(1)	If the court is to uphold the validity of any covenant in restraint of trade, the covenantee must show that the covenant is both reasonable in the interests of the contracting parties and reasonable in the interests of the public; (see for example Herbert Morris Ltd v Saxelby [1916] AC 688 at p.707 per Lord Parker of Waddington).
(2)	A distinction is, however, to be drawn between (a) a covenant against competition entered into by a vendor with the purchaser of the goodwill of a business, which will be upheld as necessary to protect the subject‑matter of the sale, provided that it is confined to the area within which competition on the part of the vendor would be likely to injure the purchaser in the enjoyment of the goodwill he has brought, and (b) a covenant between master and servant designed to prevent competition by the servant with the master after the termination of his contract of service : (see for example Kores Manufacturing Co Ltd v Kolok Manufacturing Ltd [1959] Ch 109 at p.118 per Jenkins LJ).
(3)	In the case of contracts between master and servant, covenants against competition are never as such upheld by the court. As Lord Parker put it in Herbert Morris Ltd v Saxelby (supra) at p.709 : “I cannot find any case in which a covenant against competition by a servant or apprentice has, as such, ever been upheld by the Court.  Wherever such covenants have been upheld it has been on the ground, not that the servant or apprentice would, by reason of his employment or training, obtain the skill and knowledge necessary to equip him as a possible competitor in the trade, but that he might obtain such personal knowledge of and influence over the customers of his employer, or such an acquaintance with his employer's trade secrets as would enable him, if competition were allowed, to take advantage of his employers' trade connection or utilize information confidentially obtained.”
(4)	The subject‑matter in respect of which an employer may legitimately claim protection from an employee by a covenant in restraint of trade was further identified by Lord Wilberforce in Stenhouse Ltd v Phillips [1974] AC 391 (at p.400) as follows :
(5)	If the court is to uphold restrictions which a covenant imposes upon the freedom of action of the servant after he had left the service of the master, the master must satisfy the court that the restrictions are no greater than are reasonably necessary for the protection of the master in his business: (see Mason v Provident Clothing & Supply Co Ltd [1913] AC 724 at p.742 per Lord Moulton).  As Lord Parker stressed in Herbert Morris Ltd v Saxelby (supra) at p.707, for any covenant in restraint of trade to be treated as reasonable in the interests of the parties ‘it must afford no more than adequate protection to the benefit of the party in whose favour it is imposed' [Lord Parker's emphasis].” “The employers' claim for protection must be based upon the identification of some advantage or asset inherent in the business which can properly be regarded as, in a general sense, his property, and which it would be unjust to allow the employee to appropriate for his own purposes, even though he, the employee, may have contributed to its creation.”

THE EVIDENCE

16.The plaintiff has called 2 witnesses, namely, Mr. Lee Hang Leung (“Mr. Lee”) and Mr. Fung Ka Wah (“Mr. Fung”).  All the defendants had also given evidence before me.

17.I shall set out a summary of the evidence given by the witnesses below.  However, I must emphasize that this summary is not meant to be an exhaustive account of the evidence given.

Mr. Lee's evidence

18.Mr. Lee is a director of the plaintiff.  He was also one of the founders who established the plaintiff back in 1998. 

19.Mr. Lee stated that the plaintiff is a wholesaler of mobile phones and mobile phone accessories.  It has customers all over the world.  The competition in the mobile phone business was all along keen in Hong Kong as there were a lot of similar companies in the market. 

20.The Customer Database is a database of the customer information collected or compiled by the plaintiff.  Mr. Lee stated that the plaintiff could survive despite the keen competition because it has accumulated a lot of customer information in its Customer Database. 

21.The Customer Database includes the names of the plaintiff's customers, their addresses, email addresses, contact numbers, names of the contact persons (for those customers which were companies), the passwords assigned to the customers for their access to the plaintiff's website for price quotation, the models which the customers had previously ordered and the special pricing codes which represent the difference between the price of products and the plaintiff's costs of such products.

22.Mr. Lee said that the information contained in the Customer Database is sensitive in nature.  As a result, it was only accessible by authorized sales and IT employees of the plaintiff.

23.Mr. Lee admitted that not all the “customers” whose particulars were contained in the Customer Database had done business with the plaintiff.  Some of them might only have asked the plaintiff for quotations but had never placed any orders with the plaintiff. Some of them might not have asked for quotations from the plaintiff at all. Some of the particulars in relation to certain “customers” contained in the Customer Database were obtained by him in social occasions.  Out of the 8,000 to 9,000 entries in the Customer Database, around 60 to 70 customers were trading with the plaintiff actively in the period between April and June 2008, and around 1,000 of them had communications with the plaintiff from January to June 2008.

24.On the other hand, the Price List contains particulars and descriptions of the plaintiff's products, costs of the mobile phones which the plaintiff bought from its suppliers and the prices which the plaintiff offered to different customers. It was updated on a daily basis.  Mr. Lee explained that the information contained in the Price List is also highly sensitive, and therefore, like the Customer Database, only certain authorized persons in the plaintiff were allowed to have access to this document. 

25.If the plaintiff's competitors knew what price the plaintiff had offered to its customers, those competitors would be able to fix a lower price so as to tempt such customers away.

26.Mr. Lee stated that the plaintiff has spent enormous amount of time and effort in compiling the Customer Database and the Price List.

27.While they were employed by the plaintiff, the 1^st to 3^rd defendants worked as a Sales Person, a Sales Coordinator and an IT Technician respectively.  Because of their respective job nature, they were authorized to have free access to the Customer Database and the Price List before their respective employments with the plaintiff were terminated.

28.To facilitate communication between its staff and its customers, the plaintiff provided each of its employee with a company email account (“the Dunamis Email Account”). Further, to enable its staff to communicate with customers by MSN, each of its employees was also given a hotmail email account (“the Hotmail Account”) so that a MSN account may be opened.  The passwords for the aforesaid email accounts were set by the plaintiff.

29.Mr. Lee had often stressed to the plaintiff's employees that they should use their Dunamis Email Accounts when they took customers' orders and that the Hotmail Accounts were not their official work email account as such.  According to Mr. Lee, this is important because even if an email was only sent to the Dunamis Email Account of a particular staff member of the Sales Department, the other members of that Department and he himself would also be notified about the arrival of such an email and they would be able to open and read that email themselves (without inputting any password).  That means even if the recipient of that email could not reply immediately, Mr. Lee or other members in the Sales Department could assist and follow-up on the matter.  This could not be achieved if the email was sent to the Hotmail Account.   While the plaintiff had the passwords of the Hotmail Accounts of all staff, Mr. Lee had to deliberately log-in to a staff member's Hotmail Account if he would like to check that employee's emails in that account.

30.On 7^th April 2008, Mr. Lee decided to terminate the 1^st defendant's employment because of his unsatisfactory working performance.  He said he had chosen to pay the 1^st defendant one month's salary in lieu of notice despite his belief that he was entitled to dismiss the 1^st defendant summarily because the 1^st defendant had served the plaintiff company since 2005.

31.However, before he did so, he had asked Mr. Fung to check the 1^st defendant's Hotmail Account and MSN conversation record because he felt suspicious as to the 1^st defendant's behaviour. 

32.At first, Mr. Lee was informed by Mr. Fung that the 1^st defendant's Hotmail Account could not be accessed to because the 1^st defendant had changed his password thereto. 

33.Messrs. Lee and Fung were able to check the 1^st defendant's Hotmail Account afterwards because the 1^st defendant eventually agreed to disclose his new password upon his termination of employment on 8^th April 2008.  When they checked the 1^st defendant's Hotmail Account and MSN record, it was found that the 1^st defendant had deleted most of his emails and all his MSN record.

34.As Mr. Lee knew that the 2^nd and 3^rd defendants were good friends of the 1^st defendant, he had specifically reminded them that they should not pass or share any information of the plaintiff with the 1^st defendant since the latter was no longer an employee of the plaintiff.

35.On around 3^rd or 4^th June 2008, Mr. Lee was told by Mr. Fung that the latter had logged onto the 2^nd defendant's MSN and checked his conversation record.  It was discovered that the 2^nd defendant had been in contact with a “Peter (UK)”.  Mr. Fung had shown Mr. Lee the printed MSN record which showed that “Peter (UK)” had requested the 2^nd defendant to give him a price list.  Mr. Fung also told Mr. Lee that he had found “Peter (UK)”'s email address and he had written that down on the printed MSN record.  The MSN record together with the handwritten email address was disclosed by the plaintiff in these proceedings and included in the trial bundle.  The email address which was written down is “[email protected]”. 

36.According to the 1^st defendant's resume which was provided to the plaintiff when he applied for the post in the plaintiff, his email address was “[email protected]”.

37.Mr. Fung also told Mr. Lee it was found that the 2^nd defendant had forwarded the Price List from the 2^nd defendant's Dunamis Email Account to his Hotmail Account.  On that basis, Mr. Lee said he believed that the 2^nd defendant had sent the Price List to the 1^st defendant via his Hotmail Account or the 2^nd defendant had provided his Hotmail Account password to the 1^st defendant so that the latter could open the Price List himself.

38.On 15^th June 2008, the plaintiff summarily dismissed the 2^nd and 3^rd defendants.  Subsequently, Mr. Lee discovered that all the emails in the 2^nd and 3^rd defendants' Hotmail Accounts and MSN conversation records had been deleted.

39.To protect the plaintiff's interest, Mr. Lee informed all the plaintiff's customers that the 2^nd and 3^rd defendants were no longer the plaintiff's employees.  After that, Mr. Jabbour informed Mr. Jason Kwok of the plaintiff on 29^th June 2008 by email that he (Mr. Jabbour) had contacted the 3^rd defendant previously.  The 3^rd defendant told Mr. Jabbour that the plaintiff would not accept orders of less than 20 mobile phones but the 3^rd defendant could do so “behind his boss' back” if the sale price was transferred to his account.  Mr. Lee said in fact, the plaintiff would have accepted Mr. Jabbour's purchase order of less than 20 mobile phones as a “trial order”.

40.Mr. Lee also stated in his evidence that the 1^st and 2^nd defendants were seen by one of the plaintiff's drivers to collect goods in around July 2008 from Daily Glory Telecommunication Trading Limited and Computech Overseas Limited which were the plaintiff's local mobile phone suppliers.  These 2 companies had subsequently confirmed with him and Mr. Fung that the 1^st and 2^nd defendants had been ordering from them on behalf of Masterfone.

41.Upon company search, it was discovered that Masterfone was incorporated on 11^th June 2008 and that three of its shareholders shared the same addresses as the 1^st, 2^nd and 3^rd defendants respectively.

42.Upon enquiry, some of the plaintiff's customers confirmed that they had done business with Masterfone.  Mr. Lee had named five such customers in his evidence and told the Court that the 1^st and 2^nd defendants were the Salesmen responsible and the contact persons with those customers when they were still employed by the plaintiff.  Two of those five customers had further confirmed with Mr. Lee that they had dealt with the 1^st defendant as representative of Masterfone. 

43.However, apart from one of those five customers who stated that it was buying from Masterfone since June 2008, Mr. Lee did not tell the Court when the rest of the customers had done business with Masterfone. 

44.Mr. Lee said in his evidence that since the said customers were unwilling to be involved in the present action, he could not obtain further information from them.  Since they were not based in Hong Kong, they were unwilling to give evidence in the Hong Kong Court.

45.Mr. Lee also stated that it is impossible for a new company like Masterfone to do business with all those customers because they could not be found within a short period of time.

46.In around July 2008, Mr. Lee found that some of the entries in the plaintiff's Customer Database were missing.  He recalled that when he checked the Customer Database in May 2008, it had more than 10,000 entries, but when he did the checking again after the dismissal of the 2^nd and 3^rd defendants, the number of entries had dropped to below 10,000.  He stated that because of the coincidence of timing, he believed that it was the 2^nd and 3^rd defendants who deliberately deleted those entries before they left the plaintiff's employment.

47.According to him, the entries in the plaintiff's Customer Database were shown on the computer screen one after another.  If any of them had to be deleted, such deletion could only be done record by record.  The entries could not be deleted at one go.  It is therefore impossible for a large number of records to be deleted inadvertently. 

48.He further stated that because of the respective breach of contract on the part of the defendants, the plaintiff's profits had reduced significantly.

Mr. Fung's evidence

49.Mr. Fung, who was employed by the plaintiff as a Sales Person in May 2004 and promoted to the post of Sales Manager in January 2006, had also made a witness statement and given evidence in Court.

50.Generally speaking, what he had stated in his witness statement was consistent with the evidence of Mr. Lee.

51.He told the Court in his evidence that each of the employees of the plaintiff (apart from the warehouse staff) would be given a Dunamis Email Account and a Hotmail Account. All the passwords of the said email accounts were set by the plaintiff.

52.The Customer Database and the Price List were not accessible by every employee of the plaintiff. Only those who were working in the Sales Department and those who were responsible for information technology matters in the plaintiff were authorized to have access to the Customer Database and the Price List.

53.On around 7^th April 2008, Mr. Lee informed Mr. Fung that he (Mr. Lee) had decided to terminate the 1^st defendant's employment.  Mr. Fung was instructed by Mr. Lee to log into the 1^st defendant's Hotmail Account and check his MSN records before the 1^st defendant was notified about the plaintiff's decision.  However, Mr. Fung could not do so successfully because the 1^st defendant's password had been changed. 

54.In that night, Mr. Fung found that the 1^st defendant was online on MSN.  He therefore asked the 1^st defendant to provide him with the new password via MSN.  However, the 1^st defendant refused to do so.  The 1^st defendant only agreed to disclose his new password on the next day.

55.On 8^th April 2008, right after the 1^st defendant returned to the plaintiff's office, he was asked to see Mr. Lee and he was notified about the plaintiff's decision in terminating his employment.  The 1^st defendant had disclosed his new password upon request.

56.When Mr. Fung and Mr. Lee logged into the 1^st defendant's Hotmail Account, they found that most of the 1^st defendant's emails and all his MSN records had already been deleted.

57.After the 1^st defendant had left the plaintiff, the 3^rd defendant was asked to work as a Sale Coordinator in the plaintiff's Sales Department as well as working as the plaintiff's IT Technician. 

58.Afterwards, Mr. Fung found that the 2^nd and 3^rd defendants had communicated with their customers by their Hotmail Account since around May 2008.  Mr. Fung also discovered that they had been using their Hotmail Accounts and MSN to contact their customers at night.  He found this unusual.  As a result, he became suspicious as to whether the 2^nd and 3^rd defendants were doing anything behind his back which was detrimental to the interest of the plaintiff.

59.On around 2^nd June 2008, Mr. Fung logged into the 2^nd defendant's MSN and discovered that he had been in contact with a person who was identified in the 2^nd defendant's MSN contact list as “Peter (UK)”.  Mr. Fung found that this “Peter (UK)”'s email address was shown as “[email protected]”.  He then printed a MSN record of conversation between “Peter (UK)” and the 2^nd defendant and wrote the said email address thereon.  However, as he was in a hurry, he inadvertently omitted “.hk” when he wrote down the email address on the said MSN printed record.

60.He admitted that he had not printed the contact list of the 2^nd defendant's MSN Account as documentary evidence in the present action.

61.He had also logged into the 2^nd defendant's Hotmail Account and found that the 2^nd defendant had forwarded the plaintiff's Price List from his Dunamis Email Account to his Hotmail Account.  However, Mr. Fung did not print the relevant email in support of this allegation.

62.Because of the 3^rd defendant's close friendship with the 1^st and 2^nd defendants, Mr. Fung was also suspicious that he might also be connected with or engaged in some dealings with the 1^st defendant.

63.On 15^th June 2008, the plaintiff dismissed the 2^nd and 3^rd defendants summarily. 

64.After the said dismissal, Mr. Fung and Mr. Lee logged into the 2^nd and 3^rd defendants' Hotmail Accounts and MSN and found that all emails (except some junk mails) and MSN records had been deleted. 

65.In order to protect the plaintiff's interest, Mr. Fung and Mr. Lee informed the plaintiff's customers that the 2^nd and 3^rd defendants were no longer employees of the plaintiff.  In reply, Mr. Jabbour told Mr. Jason Kwok of the plaintiff by email on 29^th June 2008 that he (Mr. Jabbour) had contacted the 3^rd defendant previously and that the 3^rd defendant told Mr. Jabbour that the plaintiff would not accept orders of less than 20 mobile phones but the 3^rd defendant could do so “behind his boss' back” if the sale price was transferred to his account.  According to Mr. Fung, the plaintiff would have accepted Mr. Jabbour's purchase order of less than 20 mobile phones as a “trial order”, even though under cross-examination, it was accepted by Mr. Fung that he had instructed the 3^rd defendant and the other Salesmen of the plaintiff that the plaintiff would not accept purchase orders of less than 20 mobile phones for “wholesale” purpose. 

66.Under cross-examination, Mr. Fung admitted that the plaintiff did not follow-up on Mr. Jabbour's email further.  As a result, for example, it was not known what the account number of the “account” referred to by Mr. Jabbour was.  However, in re-examination, he clarified that he had misunderstood the question of the defendants' counsel.  He thought he was asked whether there was any follow-up after the receipt of Mr. Jabbour's email by replying to the said email.  This he admitted he had not done so.  However, he further explained that he had actually communicated with Mr. Jabbour further and discussed on this matter by MSN.  The conversation record between Mr. Fung and Mr. Jabbour had been produced by the plaintiff.

67.Further, Mr. Fung was informed by a Canadian customer of the plaintiff known as GSM Depot that the latter had received an email from Madina in which it was stated that the 1^st and 2^nd defendants had disclosed GSM Depot's contact information to Madina.

68.Mr. Fung also gave evidence on the circumstances under which the plaintiff found that Masterfone was doing business with some of the customers of the plaintiff.  His evidence was more or less the same as that given by Mr. Lee in this regard. 

69.Like Mr. Lee, Mr. Fung had named five customers of the plaintiff who had done business with Masterfone.  He stated that while these five customers are still currently the plaintiff's customers, they have not placed purchase orders with the plaintiff as frequently as before.

70.Those five customers include a medium-size company based in Florida, a small-size company based in New York, a medium-size company based in Poland, a small-size company based in Canada and a medium-size company in Slovakia.  He stated that there are a lot of mobile phone companies in the above-mentioned places (apart from Poland in relation to which he had no idea).  He also said that it was impossible for Masterfone to have done business with these companies because they are based in different parts of the world.  He also quoted the said Canadian company as an example and explained that since this company did not have any website, it is difficult to find out about this company from the internet.

The 1^st defendant's evidence

71.The 1^st defendant was a Sales Person of the plaintiff since 25^th April 2005.  He confirmed that his English name is “Robbie” and that he did not have any other English name.

72.While he agreed that he had signed the IRR issued by the plaintiff, he stated in his witness statement that he actually was not sure about the effect of the Restraint of Trade Clause.  He stated therein that he first came to realize the effect of the said clause when that clause was explained to him by his solicitors sometime after 16^th December 2008. 

73.He accepted that in the course of his performance of his various job responsibilities, he had had access to the Customer Database and the Price List.  He said he needed both the Customer Database and the Price List when he was working for the plaintiff so that he could contact the plaintiff's overseas buyers and supply them with the relevant information on prices offered by the plaintiff. 

74.He stated that he together with some other staff of the plaintiff were responsible for updating the Customer Database and the Price List on a daily basis.  However, he did not keep any copy or back-up of the Customer Database and the Price List.

75.He further stated in his witness statement that he resigned of his own accord in around March 2008 and left the plaintiff's employment from 9^th April 2008. 

76.In his witness statement, he maintained that he had never committed or got involved directly or indirectly in any of the wrongful acts as alleged by the plaintiff.  In particular, he denied that he had set up or owned or controlled Masterfone. 

77.When he was giving evidence in the witness box, he also denied that he had ever requested the 2^nd defendant to send him the Price List.  In addition, he disagreed that he was “Peter (UK)” who was on the contact list of the 2^nd defendant.

78.Under cross-examination, he admitted that he was working for Masterfone at the time of the trial.  He was responsible for handling customers, doing marketing research and discharging other miscellaneous duties at Masterfone.  His post at Masterfone was “Sales”.  He first acted as Masterfone's Sales in November 2008.  He said he did not have any fixed salary at Masterfone, but he would be paid if any business was done by him. 

79.As he knew that he could not do any trading job for any other mobile phone companies for 6 months, he had waited until November 2008 when he first acted for Masterfone as a Salesperson. 

80.When he left the plaintiff in April 2008, he did not have any plan as to what he should do.  In around late May 2008, the idea of setting up a new company was formed.  At that time, he only had a general plan that Masterfone should engage in business relating to software application.  He had discussed the plan with the 2^nd and 3^rd defendants when they were still the plaintiff's employees and they thought this plan should be feasible.  However, that was not a confirmed plan because he had to conduct marketing research and find out whether this business plan was really feasible.  Masterfone was nonetheless incorporated in June 2008.  The name “Masterfone” was chosen by all three of them. 

81.Since the defendants did not have much money at the time, they had asked their respective parents to invest in this new company.   Adopting his wordings, he said the defendants' parents had “打本俾被告人做生意”.

82.Although no business could be done yet because the marketing research was yet to be completed, Masterfone had obtained a business registration certificate sometime after 10^th June 2008.  The 1^st defendant was the person responsible for applying for the BR certificate for Masterfone.  According to the 1^st defendant, the nature of business was stated to be “trading and entertainment production” on Masterfone's BR certificate.  The addition of “entertainment production” was suggested by Mr. Fu Fong Ngai (“Mr. Fu”) (one of the four shareholders of Masterfone) who told the 1^st defendant that Masterfone could not be involved in any entertainment business unless this area was specifically mentioned in the said certificate.  The 1^st defendant agreed that the main purpose of the business (namely, software application) was not stated in the BR, but he explained that since it was still not known whether Masterfone would really be engaged in software application business, he thought it should not be mentioned.

83.Masterfone had also opened an account with a bank.  The 1^st and 2^nd defendants were the authorized signatories of that account.  It had also rented an office and the rental payable was around HK$7,000 to HK$8,000 per month.

84.He said that after the marketing research was done, it was decided in around October 2008 that Masterfone could not stick to the original plan because it seemed that it would not be feasible to engage in “software application business”.  It was then decided that Masterfone should trade in electronic products and cameras.  Under cross-examination, the 1^st defendant initially said that the aforesaid decisions were made by the 1^st, 2^nd and 3^rd defendants and the 2^nd defendant's brother; and the 1^st defendant's father also knew about it.  However, he added in the latter part of the cross-examination that he, his father, the 2^nd defendant's brother, 2^nd defendant's mother and the 2^nd and 3^rd defendants had voting rights on Masterfone's matters.

85.At that time, the defendants' friends had also asked them why they did not engage in mobile phone business.  However, the 1^st defendant explained in Court that as the defendants knew that they were not allowed to do that by the plaintiff, they decided to trade mainly in cameras.  He admitted that he had also traded in mobile phones, but he had done that normally because the plaintiff's clients (whom he knew when he was working for the plaintiff) had approached him first. He did not take the initiative to do mobile phones business because he knew it was not easy. He further admitted that he got his mobile phones from a local supplier known as Daily Glory Telecommunication Trading Limited, which was also a supplier of the plaintiff.

86.To boost Masterfone's business, the 1^st defendant had engaged a company to design a website for Masterfone in around November to December 2008.  He was the person who was responsible for liaising with that website design company. The website was launched subsequently.  In mid-2009, he discovered that the website had incorrectly described Masterfone as a company established since 2001.  However, he did not instruct the website design company to have it corrected all along even though it could be done with no extra cost.

87.He also revealed that there were 4 shareholders in Masterfone.  They were his father, the 2^nd defendant's mother, the 3^rd defendant's mother and Mr. Fu who was a common friend of the defendants.  They had invested around HK$400,000 odd in Masterfone altogether.

88.The 1^st defendant stated in his evidence that Masterfone had not done any business before November 2008.

89.When he was asked what the four shareholders had done for Masterfone, the 1^st defendant only stated that his father had helped out in the renovation of Masterfone's office and matters relating to the bank.

90.He said that the 2^nd defendant was his very good friend.  The 2^nd defendant had helped Masterfone all along.  For example, he was involved in the renovation of Masterfone's office and the purchase of furniture.  The 1^st defendant also agreed that the 2^nd defendant had helped set up Masterfone.

91.The 1^st defendant also stated that the 3^rd defendant was his good friend.  The latter had assisted Masterfone in meeting with various computer programmers and in conducting market research.  He agreed that it could be said that the 3^rd defendant had helped set up Masterfone.

92.The 1^st defendant agreed that for Masterfone to succeed, customer networking is one of the important factors, and he himself would not give away Masterfone's list of customers to Masterfone's competitors. He also admitted that if such a list was so disclosed, Masterfone's business might well be adversely affected.

The 2^nd defendant's evidence

93.The 2^nd defendant was employed by the plaintiff on around 24^th April 2007.

94.In his witness statement, the 2^nd defendant stated that when he signed the IRR issued by the plaintiff, he was not quite sure about the effect of the Restraint of Trade Clause.  He only realized the effect of it when that was explained to him by his solicitors in about February/March 2009.

95.The 2^nd defendant accepted that while he was discharging his job duties in the plaintiff, he had chances to have access to the Customer Database and the Price List and he required to have both the Customer Database and the Price List in order to discharge his duties as the plaintiff's Sales Coordinator properly.

96.He stated that throughout the whole period of employment with the plaintiff, he did not keep any copy of the Customer Database or the Price List or back-up of any of them. He also denied in his witness statement that he had ever committed any wrongs to the plaintiff as alleged, neither did he set up nor owned nor controlled Masterfone directly or indirectly.

97.On 15^th June 2008, he was summarily dismissed by the plaintiff.  According to him, he was asked to go into Mr. Lee's room together with the 3^rd defendant upon his arrival at the plaintiff's office on that day.  Mr. Lee showed him a piece of paper and said he (the 2^nd defendant) must be familiar with “Peter”.  He said he did not know who this “Peter” was, but he was asked by Mr. Lee to pack up and leave.  He said in his evidence that although he felt a bit aggrieved, he was not bothered by the termination of employment because he was planning to quit the plaintiff anyway as his child had just been born and he wanted to accede to his wife's request in spending more time with her.

98.He told the Court further that at that time, he did not know that he was dismissed summarily.  It was only at a subsequent stage did he find out that the plaintiff did not pay him payment in lieu of notice.  However, since he wanted to keep a harmonious relationship with the plaintiff (“好來好去, 費事搞咁多野”), he did not take the matter further. 

99.At the time of the trial, the 2^nd defendant said he could not recognize the piece of paper (allegedly a MSN conversation record between the 1^st and 2^nd defendants (“the MSN Record”)) which was said to have been shown to him by Mr. Lee on the day when he was dismissed by the plaintiff. 

100.When the 2^nd defendant was shown the MSN Record in the course of cross-examination, he confirmed that “Peter (UK)” (the person with whom he had the subject MSN conversation) was definitely not the 1^st defendant, although he could not tell who it was. 

101.He admitted that while there were more than 200 names on his MSN contact list, only 30 to 40 of those were his friends in the sense that he would contact those people after work.  “Peter (UK)” was one of them.

102.Moreover, he accepted that if one pointed the computer curser to a particular name on his MSN contact list, the email address of that particular person would be shown.  He could not change that email address himself. 

103.Since he said he had forgotten who “Peter (UK)” was, he was asked by the plaintiff's counsel whether he would like to see a document which showed what would pop up if the computer curser was pointed at “Peter (UK)”.  The 2^nd defendant said he did not want to see such a document even though the identity of “Peter (UK)” would be revealed.  He said this case had been troubling him for a long time and he did not want to have it further prolonged.

104.After he was dismissed by the plaintiff, the 2^nd defendant had worked for Masterfone.  According to him, he had helped out in choosing furniture, giving opinion on renovation matters, applying for broadband service, buying stationery, going to the bank, etc.

The 3^rd defendant's evidence

105.The 3^rd defendant was employed by the plaintiff since 25^th June 2007.  Like the other two defendants, he agreed that he had chances to have access to the Customer Database and the Price List.

106.In his witness statement, he also denied that he had committed any wrongs as alleged by the plaintiff. 

107.On 15^th June 2008, he was summarily dismissed by the plaintiff together with the 2^nd defendant. He recalled that on that day, he was asked to meet Mr. Lee in his room, during which Mr. Lee showed him a piece of paper which looked like a MSN conversation record.  He could not tell at the time of the trial whether that was the MSN Record which was shown to him in Court. 

108.After his dismissal, he felt a little bit of grievance.  He said he did not talk to the 2^nd defendant about the matter after leaving Mr. Lee's room.  He just went back home himself. Although he subsequently found out that the plaintiff did not pay him any payment in lieu of notice, he did not take any further action because he did not want to cause any trouble despite the fact that the payment in lieu in the amount of HK$10,000 was not a small sum to him. 

109.Further, even though he had kept contact with some of his ex-colleagues after his dismissal, he did not ask them why he was fired by the plaintiff because he was still studying at the time, and he would rather stay at home and complete his homework.

110.As far as Masterfone was concerned, the 3^rd defendant said the idea of engaging in software business was first formed before April 2008.  The defendants together with the 2^nd defendant's brother had talked about it and they all thought that it might be profitable.  However, as he was yet to fully repay a Government loan, he did not have money to invest in it. 

111.He said he had told his brother about the idea of forming a company.  He guessed that his mother (who all along was a housewife) might have overheard their conversation.  Subsequently, his mother asked him whether profit would be made by this new company.  Although he had made it clear to his mother that there was no guarantee that there would be any profit, she decided to invest in this new company.

112.The total amount of capital of Masterfone was subsequently known to be in the sum of HK$400,000 in around April 2008.

113.However, at the trial, the 3^rd defendant could not tell how much exactly his mother had invested in Masterfone.  He said it was probably in the region of HK$40,000 to HK$50,000.  He said his mother had probably talked directly to the 1^st defendant's father as to the amount of investment.  He also stated that he did not even know when and by what means his mother paid the capital.

114.Although he did not know much about his mother's investment in Masterfone, he had accompanied his mother when she went to sign the Memorandum of Association of Masterfone.  He said he had to do so as he was her son.  He also admitted that his mother had invested in Masterfone because of him.

115.Although he had no money to invest in Masterfone, he had never thought about getting a loan from his mother for the purpose of investing in Masterfone because he worried that he might not be able to repay her.

116.In relation to Mr. Jabbour, the 3^rd defendant accepted that while he was not sure whether he knew Mr. Jabbour, he might have told him that the plaintiff did not accept orders of less than 20 mobile phones, but he denied that he had ever suggested to Mr. Jabbour that he could sell mobile phones to Mr. Jabbour himself.  He could not understand why Mr. Jabbour had accused him of trying to divert the plaintiff's business.

CREDIBILITY OF THE WITNESSES

117.Both Mr. Lee and Mr. Fung have impressed me as credible and reliable witnesses.  They had given evidence in a straight forward way and did not seek to avoid questions.  I accept their evidence.

118.The defendants are in my view generally unreliable and incredible.  From time to time, they did not answer simple questions with straightforward answers.  Sometimes they were evasive in answering questions under cross-examination.  I do not accept that they were trying to tell the truth when they gave evidence in the witness box (apart from making certain admissions). 

119.Therefore, I would prefer the evidence of Messrs. Lee and Fung whenever their evidence was in conflict with that given by the defendants.

120.In the latter part of this Judgment, I will demonstrate why I find the defendants to be incredible and unreliable witnesses by reference to some of the evidence which the defendants gave. However, at this point, perhaps I should deal with one of the matters which relates to all three defendants, namely, the manner which the defendants adopted in dealing with this action.

121.In their Re-Amended Defence and witness statements, they did not give away too much information.  They had basically adopted a bare denial defence.  However, upon cross-examination, they had given a lot of relevant evidence for the first time at the witness box and all those evidence, if they were the truth, should clearly have been included in their witness statements.

122.One of the more apparent examples concerns the way by which the defendants dealt with the issue relating to Masterfone.  It cannot be denied that the establishment and operation of Masterfone must be one of the main issues.  However, in the defendants' witness statements, they have all tried to give the Court an impression that they had absolutely nothing to do with Masterfone at all.  They simply denied the plaintiff's allegations.  They chose not to disclose their relationships with Masterfone (even though they maintained in Court that there was nothing wrong for them to work for Masterfone as they did not compete with the plaintiff at all). However, it was subsequently revealed in cross-examination that they in fact had different degrees of involvement in Masterfone.  If they were truthful witnesses, they would have revealed such relationships (including the fact that their parents were shareholders of Masterfone) themselves.

123.I will now refer to other matters which show that the defendants were not reliable witnesses.

The 1^st defendant

124.In his witness statement, while he agreed that he had signed the IRR, he said he was not given a copy of the document, and he only understood subsequently that there was a Restraint of Trade Clause to the effect that without the consent of the plaintiff, he was not allowed to be employed by the same type of company as the plaintiff within a period of six months of the termination of his employment with the plaintiff. He further said that it was only when he came to be advised by his solicitors after receiving the plaintiff's solicitors' letter dated 16^th December 2008 that he first realized the effect of the said clause.  This assertion in his witness statement no doubt gives readers of his statement an impression that until he was advised by his solicitors, he all along did not know about what he could not do after he had left the plaintiff's employment.  However, upon cross-examination in Court, he accepted that he in fact knew well about the effect of the said clause as early as when he was still employed by the plaintiff and that was the reason why he chose to wait for six months before he started to work as a Salesperson of Masterfone in November 2008.  He also accepted that in fact there was not much difference between his understanding and what his solicitors had advised him as to the meaning of the said clause.

125.Further, in his witness statement, the 1^st defendant asserted that he had never set up Masterfone after he had left the plaintiff.  However, under cross-examination, he admitted that in fact he had set up Masterfone by doing various things.  This is another example where his evidence given in Court was inconsistent with that contained in his witness statement.  What was even more surprising is that despite his said admission in Court, he still maintained boldly that what he stated in his witness statement was correct.

126.In his witness statement, the 1^st defendant also stated that he “verbally resigned on [his] own accord”.  However, when being cross-examined, he admitted that in fact, he was given a choice by Mr. Lee of the plaintiff on 8^th April 2008: he could either resign himself or he would be fired by the plaintiff.  He also said that but for this event, he would not have resigned at all.

127.Despite the fact that Masterfone was only incorporated in 2008, it was stated on its website that it was established in 2001.  While the 1^st defendant admitted that he had discovered this error in mid-2009, he did not take any steps to have this error rectified even up to now.  As admitted by him, such rectification could be done without any extra costs since the webpage design company could do that for Masterfone for free up to late 2009.  In my view[1], the 1^st defendant had decided not to have the webpage revised because he wanted to give the readers of the website (who might well be Masterfone's potential customers) a wrong impression that Masterfone was not a newly established company so that they would have more confidence on Masterfone.

128.The website also stated that Masterfone “is a leading global Import & Export company” (emphasis added).  The 1^st defendant must be lying either when he was giving evidence in Court (when he said in his evidence that the business of Masterfone was not good at all) or when he gave instructions to the website designer.  It should be remembered that when the website was designed in November to December 2008, according to the 1^st defendant, Masterfone had just started its business (the 1^st defendant said Masterfone had just done its first transaction in November 2008).  In fact, looking at the quoted statement together with the “mistaken year of establishment” together, I tend to think that the year “2001” was not put down in the website by mistake but a deliberate act on the part of the 1^st defendant in impressing website readers that Masterfone was a well-established as oppose to a newly set-up company.

129.Some of the evidence given by the 1^st defendant were also difficult to understand.  For example, while he maintained that he had never been instructed by the plaintiff that he should only use the Dunamis Email Account in contacting the plaintiff's customers, he told the Court that he had gone to ask Mr. Fung what he should do on one occasion when the plaintiff's server was down such that he could not have access to his Dunamis Email Account.  He said it was only after Mr. Fung had told him that he could use his Hotmail Account for the time being that he used this email account in contacting his customers.  I wonder why it was necessary for him to seek Mr. Fung's permission before using his Hotmail Account if he was telling the truth in that the plaintiff had never told him in the past that he should only use his Dunamis Email Account in contacting the plaintiff's customers.  After all, this Hotmail Account was also provided by the plaintiff.

130.The 1^st defendant had also attempted to anticipate questions at times.  For example, when he was asked whether the fact that the plaintiff was situated in Hong Kong Island or Kowloon or the New Territories would affect its business, he, apparently anticipating that this question was relevant in relation to the issue of reasonableness of the Restraint of Trade Clause, immediately answered positively.  However, having been reminded that the plaintiff was actually engaging in wholesale rather than retail business, he admitted that in fact the exact location of the plaintiff's office did not have bearing on its business.

The 2^nd defendant

131.The most alarming part of the 2^nd defendant's evidence related to his testimony on the MSN Record.  To recap, it was the plaintiff's case that on around 2^nd June 2008, Mr. Fung retrieved the MSN Record (from the 2^nd defendant's computer) so as to see whether he had done anything harmful to the plaintiff.  It was then discovered that a person known as “Peter (UK)” who was on the 2^nd defendant's MSN contact list had requested the 2^nd defendant to send him a price list.  By reference to one of the email addresses as shown in the 2^nd defendant's MSN contact list, Mr. Fung confirmed that “Peter (UK)” actually had the same email address as the 1^st defendant, and Mr. Fung therefore concluded that “Peter (UK)” in fact was the 1^st defendant.

132.From the MSN Record, it appeared (and the 2^nd defendant also agreed in his evidence) that he was actually quite familiar with “Peter (UK)” because he had told “Peter (UK)” that he would “go to find [him] after word (sic)” and “Peter (UK)” had also asked the 2^nd defendant to call him after work.

133.However, when he was cross-examined on the MSN Record, the 2^nd defendant alleged that while he could not recall who “Peter (UK)” was, he was sure that it was not the 1^st defendant.

134.At one stage, the 2^nd defendant tried to explain why he had forgotten who this “Peter (UK)” was by saying that he had more than 200 names on his MSN contact list.  However, according to his evidence, out of those 200 odd names, there were only 30 – 40 people with whom he was familiar and “Peter (UK)” was one of them.  It is thus incredible for the 2^nd defendant to allege that he had no recollection as to who this “Peter (UK)” was.  In my judgment, he was only trying to cover up the 1^st defendant by saying so.

135.Another part of the MSN Record shows that at the beginning of the dialogue, “Peter (UK)” had asked the 2^nd defendant whether the latter could see “Peter (UK)”'s name on MSN.  The 2^nd defendant replied that “no i change to peter”.  It seems that “Peter (UK)” was satisfied with this as he answered “good”.

136.It was suggested by Mr. Wong to the 2^nd defendant during cross-examination that he had deliberately used “Peter (UK)” as the 1^st defendant's name on his MSN contact list because he did not want others to see that the 1^st defendant was still on his list.  The 2^nd defendant denied.  In answer to my further enquiries on this, the 2^nd defendant explained that the word “no” in the dialogue actually means that the word “Peter” was not shown initially.  He stated that it might be that before the change, the name of “Peter (UK)” was very long because his company name was included as part of his name, as a result, he changed it to a shorter name.  I find this explanation wholly incredible.  The dialogue was simple.  He was apparently telling “Peter (UK)” that the latter's name was not shown on MSN anymore because it had been changed to “Peter”.   His explanation in Court simply could not be reconciled with what he stated in the MSN dialogue.  He told the Court that the confusion might have been caused by his poor expression in English on MSN.  I do not accept this explanation given the fact that he was a university graduate and that the meaning of the simple English used was plain.

137.What was even more strange was his refusal to take a look at the computer printout of his MSN contact list. According to his own evidence, if one points the computer curser to a particular name on his MSN contact list, the email address of that person would appear.  There is no doubt that if what was shown on the computer screen while the computer curser was pointing to “Peter (UK)” was printed and produced, any dispute as to the identity of “Peter (UK)” could be resolved immediately. However, the 2^nd defendant rejected the chance of looking at such a computer printout.  His reason was that he did not want to have the matter further dragged on.  In my view, if he was really so sure that “Peter (UK)” was not the 1^st defendant, he would have been eager to have such a computer printout shown in Court so as to prove that the plaintiff had made a false accusation against him.  When he said that he did not want to have the matter further prolonged, in fact he had not been told how long he had to wait for such a document to be produced.   In my judgment, the 2^nd defendant's unwillingness to look at such a printout demonstrates that he was not truthful at all when he said he did not remember who “Peter (UK)” was.  I find as a fact that it is more probable than not that “Peter (UK)” was the 1^st defendant.

138.The 2^nd defendant also stated that although his employment was terminated by the plaintiff for an unknown reason, he did not mind at all as he was planning to quit the job anyway.  It appeared that he did not even bother to find out the reason why he was fired all of a sudden.  Even if he really was not under any financial pressure at the time, I find it difficult to accept the 2^nd defendant's explanation of his “couldn't care less” attitude.  In my view, his reaction on 15^th June 2008 shows that he knew well why he was fired when the MSN Record was shown to him by Mr. Lee on that day.

139.Further, the 2^nd defendant's explanation of his “couldn't care less” attitude (that he was planning to quit the job anyway so as to spend more time with his wife) cannot be reconciled with the fact that he had spent time in setting up Masterfone and that he agreed to be named as one of the bank signatories of Masterfone.

140.I also agree with Mr. Wong's observation that the 2^nd defendant had always required repetition of questions when he was cross-examined even if the questions were simple and straight-forward.  Apparently, he was only buying time to think of answers which would support the defendants' case.

The 3^rd defendant

141.The 3^rd defendant had tried hard to paint a picture as if he did not have much to do with Masterfone.  For example, he stated that although his mother was one of the shareholders, he did not know much about her investment in Masterfone.  He claimed to have no idea as to the exact amount which his mother had invested in Masterfone.  He also said he was ignorant as to by what means and when his mother paid the 1^st defendant's father. 

142.In my view, his alleged ignorance simply could not sit well with his admission that his mother's willingness to invest in Masterfone was because of him.  It must be borne in mind that the 3^rd defendant's mother was all along a housewife, and she did not know any of the other shareholders of Masterfone beforehand.  She did not even know the 1^st and 2^nd defendants well.  Under these circumstances, it would only be natural for the 3^rd defendant, as her son, to liaise with the other shareholders for her.  I do not believe that the 3^rd defendant had really left his mother alone to discuss with the other shareholders in relation to her investment in Masterfone and it is incredible for the 3^rd defendant to allege that his mother had discussed with the 1^st defendant's father herself as to the amount to be invested.  Even if that was indeed what happened, the 3^rd defendant would have asked his mother about the details of her investment.

143.The company record also shows that the 3^rd defendant's mother was allocated 500 out of a total of 10,000 shares in Masterfone.  If the 3^rd defendant was right in that his mother had invested HK$40,000 to HK$50,000 in Masterfone, then his mother should have been allotted at least 1,000 shares in Masterfone.  Again, the 3^rd defendant said he did not know why his mother was not allotted more shares.  He said it might be because his mother was not required to work for Masterfone.  I also find this explanation incredible.  I do not believe that the 3^rd defendant did not even try to find out why the shares in Masterfone had been allotted in such a way.  As I have mentioned above, as he alleged that his mother was willing to invest in Masterfone only because of him, it is incredible for him to say that he did not do anything to protect his mother's interest.  In my view, the 3^rd defendant was only trying to give the Court an impression that he was not involved much in the whole matter. 

144.The 3^rd defendant had also been cross-examined as to whether he had thought about borrowing money from his mother so that he could invest in Masterfone himself.  He answered that he had not thought about it.  He further answered this question by asking “What if I cannot repay her”.  In my view, the question which the 3^rd defendant asked does not make any sense at all.  If he could not repay his mother, that means Masterfone's business was a failure.  If that is the case, his mother could not recover her money in any event, no matter whether the money was given to the 3^rd defendant as a loan or to Masterfone as an investment. 

145.Another matter which I have taken into account when I considered the 3^rd defendant's credibility is his alleged reaction after he was summarily dismissed by Mr. Lee of the plaintiff.

146.According to the 3^rd defendant's evidence in Court, he said that he and the 2^nd defendant were asked to see Mr. Lee in his room on 15^th June 2008.  Mr. Lee showed them a piece of paper.  The 3^rd defendant said he could only see that it was a MSN conversation record, but he was not sure what it was about.  The 3^rd defendant said he was puzzled as to what Mr. Lee was talking about in that meeting when he mentioned about a “Peter”.  The 3^rd defendant further gave evidence that he had asked Mr. Lee who that “Peter” was, but he did not make it clear in Court whether Mr. Lee had answered him that question.  The next thing he knew was that he together with the 2^nd defendant were dismissed.   He said he did not discuss the matter with the 2^nd defendant at all after leaving Mr. Lee's room.  He left the plaintiff's office afterwards and went back home.  He said he was a little bit aggrieved by the plaintiff's decision, but not too aggrieved.  He also alleged that since he did not want to cause too much trouble, he did not voice his objections to his summary dismissal.

147.In my view, it is wholly incredible for the 3^rd defendant to say that he did not know what Mr. Lee was talking about.  This was his very first job.  If the 3^rd defendant was really at a loss as to why his employment was all of a sudden terminated, he would have asked for the reason.  A point to note is that the MSN Record which was allegedly shown by Mr. Lee at the said meeting was only a record of conversation between the 1^st and 2^nd defendants only. The 3^rd defendant was not even mentioned in that MSN Record.  I find it difficult to understand how come the 3^rd defendant did not even try to find out the real reason of dismissal if he was as innocent as he wanted this Court to believe him to be.  On the other hand, if he was that innocent, it is difficult to explain why he was only a little bit aggrieved.  It is also incredible that the 3^rd defendant did not discuss the matter with the 2^nd defendant after they had left the plaintiff's office.

148.He said he found out sometime after 15^th June 2008 that the plaintiff did not pay him payment in lieu of notice.   He did not try to find out the reason why that was so himself.  He only asked the 2^nd defendant to ask the plaintiff.  The 2^nd defendant subsequently told him that no such payment would be made, without giving him any reason.  The 3^rd defendant said he did not follow up on this because he did not want to cause any trouble.  I find this incredible.  According to the 3^rd defendant, he still owed the Government a loan and he was not in a position to pay even a few thousand dollars.  It is wholly incredible that the 3^rd defendant would simply let it be if he was as innocent as he claimed to be.  As aforementioned, he had admitted in Court that to him, HK$10,000 was not a small sum at all.

DISCUSSION OF THE ISSUES

149.I shall now turn to the issues one after another.

Whether the Customer Database and the Price List are confidential information and/or trade secret

150.The Customer Database is a database of all the information and particulars compiled and collected from the plaintiff's customers and potential customers.

151.At the trial, it was confirmed by Mr. Shum, Counsel for the defendants, that there is no dispute that the Customer Database included the customers' names of the plaintiff, addresses, emails, telephone numbers and fax numbers, the contact persons, the passwords assigned to such customers for access to the plaintiff's website for price quotations, the models that the customers have previously ordered, and special pricing codes representing the difference between the price of products and the plaintiff's costs.  Different customers would have different pricing code assigned by the plaintiff, and the price offered would be calculated on the basis of the plaintiff's pricing strategy and profit margin calculation particularly made for the respective customers.

152.The Price List contained particulars and descriptions of the plaintiff's products, costs and the price offered to different customers.

153.I have no doubt that the Customer Database and the Price List are not only confidential information but also trade secrets of the plaintiff.  I have taken into account the following matters:

(a)	The information contained in the Customer Database and the Price List was used in the plaintiff's business. (see paragraph 14(3) above)
(b)	According to the evidence of Mr. Lee, only a limited number of employees who had been designated as “authorized persons” could have access to the Customer Database and the Price List. (see paragraphs 14(3) and (4) above)
(c)	If the information contained in the Customer Database and the Price List was disclosed to the plaintiff's competitor, real or significant harm would be caused to the plaintiff. List of customers, their contact information, their record of past purchase and the price offered are no doubt valuable items of information which, if disclosed to competitors, would enable those competitors to lure the plaintiff's customers away. (see paragraph 14(3) above)
(d)	As the 1st defendant had admitted during cross-examination, he himself would not give away Masterfone's list of customers to Masterfone's competitors because if that was done, Masterfone's business might well be adversely affected.  Indeed, the 1st defendant even admitted under cross-examination that the information contained in the Customer Database is sensitive information. (see paragraph 14(3) above)
(e)	It was not disputed that there are many companies trading in mobile phones in the world. According to Mr. Fung, some of these companies do not have their own website and therefore it would be very difficult to find out information about them. Even for those companies which have their own website (and therefore arguably their contact information would be in the public domain[2]), it cannot be denied that the plaintiff's staff had spent much effort in compiling the Customer Database because even after the alleged deletion of part of the Customer Database, there were still 8,000 to 9,000 entries left therein.  The “springboard doctrine” clearly applies. (see paragraphs 14(5), (6) and (7) above)

154.It was argued by Mr. Shum that there was no evidence that the plaintiff had impressed on the defendants on the confidential nature of the Customer Database and the Price List.  It was said that since all staff of the Sales Team and the IT Team could have access to the Customer Database and the Price List, the information contained could not be highly restrictive.

155.I do not accept this argument.  As aforesaid, only those authorized staff members were allowed to have access to the Customer Database and the Price List.  By the nature of their job responsibilities, employees who were responsible for Sales and IT matters were understandably among those who were so authorized.   It cannot be said that because all members of the said teams were authorized, the information in question should not be regarded as confidential.  I should perhaps also add that it is not totally accurate to say that there was an “IT Team” in the plaintiff because this “team” only had one member at the material time, namely, the 3^rd defendant.

156.Further, even if the plaintiff had not mentioned specifically to the defendants about the confidential nature of the relevant information, given the nature of the information involved, I do not think there could be any doubt in the mind of the defendants that the information in question was confidential information.  It should also be borne in mind that the authorized staff members were required to input a password so as to have access to the information.  In my view, a man of ordinary honesty and intelligence would recognize such information to be the property of the plaintiff and not his own to do as he likes with (see paragraph 14(6) above).  Indeed, it was not the defendants' evidence that they did not know the confidential nature of the information involved. 

157.In fact, even the 1^st defendant accepted in cross-examination that the price offered by sellers like Masterfone is important information in the business of Masterfone and that the list of customers of Masterfone is sensitive information which should not be disclosed to its competitors.  This demonstrates that the plaintiff's staff members should be able to tell that the information in the Customer Database and the Price List is confidential information even if the plaintiff had not told them explicitly.

158.It should also be noted that Masterfone's database only contained limited information like names of customers and email addresses, etc.  Be that as it may, the 1^st defendant still regarded it as an important asset of Masterfone.  As more items of information were contained in the plaintiff's Customer Database, it is only logical that the Customer Database should be regarded as confidential as well.

159.Mr. Shum also submitted that even if one gets hold of the Customer Database and the Price List, he still cannot find out the updated quotation of prices offered by the plaintiff.  I do not agree. As Mr. Lee explained in Court, not all items in the Price List would be updated everyday.  Moreover, I do not think any change in the price would be so drastic so as to render the “out-dated” price totally useless to the plaintiff's competitors.  In any event, this argument should not be applicable to the Customer Database at all.

160.Mr. Shum further submitted that if one pretends to be a potential customer (without being discovered by the plaintiff), he would be able to get a price quotation from the plaintiff easily.  Mr. Shum might want to say that as a result, information in the Price List is not confidential as such.  I do not accept this argument either.  Firstly, according to Mr. Lee, if a new customer asks for a quotation, the plaintiff would have to consider a number of factors before deciding on the price. Apparently, the quotation which this new customer would be given would most probably be different from what the other customers would get.  Secondly, in any event, even if one pretends to be a customer, this “customer” can only get a limited amount of quotation but not a full list which is contained in the Price List.

Whether the 1^st and 2^nd defendants had breached their duties owed to the plaintiff and/or their respective Employment Agreements in providing information of the plaintiff's customer, namely, GSM Depot, to Madina

161.The plaintiff relied on an email sent by a person known as “Saqi Khan” of Madina to GSM Depot on 3^rd July 2008 and complained that the 1^st and 2^nd defendants had disclosed the information of the plaintiff's customer to Madina.

162.In the light of the heavy reliance placed by the plaintiff on this email, I will set it out in full:

“Hi my name is Saqi,

I v got your contact from Robbie and Steven who use (sic) to work for Raymond for Dunamis International. I understood that you are a customer doing wholesale for North Amercian market.

Please find in attached file our price list FOB HONG KONG.

If you are interested to place an order feel free to contact me on my personal email address that I can send you the paiement (sic) terms and proforma invoice with our bank details. I can discuss with my Boss to give you cheap prices and good products.

Our companys (sic) are in mobile business for more than 10 years now in Hong Kong. By (sic) boss also supplys (sic) mobile phones to Dunamis and other companys (sic) in Hong Kong, local market such as China, Singapor (sic) and Taiwan. You can come and visit our offices in Hong Kong any time (sic), we will provide you a very good service and fast delivery.

You can contact me for any question on my mobile phone[…]or leave me a message that I can call you back.

All our mobile phones are Original Brand New Phones Unlocked with French and English language.

Waiting for your reply and hope I can ask my Boss to give you a discound (sic).”

163.There is no dispute that “Robbie” and “Steven” are the English names of the 1^st and 2^nd defendants respectively whereas “Raymond” is the English name of Mr. Fung.

164.In his evidence, Mr. Lee told this Court that GSM Depot was a supplier of the plaintiff.  The defendants did not suggest otherwise.

165.Mr. Shum argued that Saqi's email is a hearsay document which should not be admissible as evidence of this trial. It was said that the contents of this email are highly prejudicial and controversial.  Saqi was not made available for cross-examination and therefore this Court was deprived of an opportunity to assess Saqi's credibility and demeanour in the witness box.  It was also submitted that there was no explanation as to why Saqi was not made available for cross-examination and it is highly undesirable and unfair to the defendants if the plaintiff could rely on this email.

166.In this regard, reference should be made to sections 47, 47A and 49 of the Evidence Ordinance (Cap.8, Laws of Hong Kong).  To summarize, the effect of these statutory provisions is that hearsay evidence should not be excluded in civil proceedings unless the party against whom such evidence is adduced objects and the exclusion of such evidence is not prejudicial to the interests of justice.  The factors set out in section 49 of the Evidence Ordinance (albeit in the context of weighing hearsay evidence) are also relevant in this regard (see High Fashion Garments Co. Ltd. v Ng Siu Tong & Others [2004] 1 HKLRD 928 at paragraph 12).

167.When deciding on the weight of such evidence, the Court should also have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence and for this purpose, the Court may have regard to a number of factors referred to in section 49(2) of the said Ordinance.  While the practice of giving hearsay notices is preserved, the failure of issuing such notices is not fatal in terms of the admissibility of the evidence, although such a failure should be taken into account when the Court decides on, among other things, the weight to be given to the hearsay evidence. 

168.Having considered all the relevant matters including the factors under section 49 of the Evidence Ordinance, I take the view that Saqi's email should not be excluded on the ground that it is hearsay.  In my view, it would be prejudicial to the interests of justice if it is so excluded.

169.I do not consider it right for the defendants to complain at the trial that Saqi was not made available for cross-examination.  While I agree with Mr. Shum's observation that there was no evidence produced to explain why Saqi Khan of Madina had not come forward to give evidence, it must be remembered that Madina is in fact the plaintiff's competitor.  I doubt very much whether Saqi would have agreed to be cooperative even if requested.  In any event, the plaintiff had by way of a hearsay notice filed on 9 December 2009 made it clear to the defendants that it intended to rely on Saqi's email at the trial without calling Saqi as a witness.  However, upon receipt of the hearsay notice, the defendants did not take any action, in particular, the defendants did not make known their objection nor insist that the plaintiff should call Saqi to give evidence at the trial.  As they had remained silent all along, it would not be right for them to object to the admissibility of the email at the trial.

170.I would therefore hold that Saqi's email is admissible as evidence in this case.

171.Having considered carefully the factors under the said section 49, I would also give full weight to Saqi's email.

172.Mr. Shum suggested while he was examining Mr. Lee that if the 1^st and 2^nd defendants were to divert the plaintiff's business away, they would have diverted such business to Masterfone but not Madina and this shows that they did not give GSM Depot's particulars to Madina.  Having taken this line of argument into account, I still hold the view that the plaintiff has proved on the balance of probabilities that the 1^st and 2^nd defendants had disclosed the particulars of GSM Depot to Madina before 3^rd July 2008, and hence they had breached their duties of fidelity and good faith owed to the plaintiff and the clauses in their Employment Agreements as quoted in paragraph 5(a) herein. 

173.The email clearly shows that the 1^st and 2^nd defendants were the source of information.  While the 1^st and 2^nd defendants denied in Court that they knew Saqi, I do not accept their evidence.  I wonder why Saqi would have written this email in such a way if that was not the truth.

174.Counsel for the plaintiff urged me to find that the 1^st and 2^nd defendants had wrongfully disclosed such information to Madina while they were still in the employment of the plaintiff. With respect, I do not think that is a finding which I am entitled to make. Firstly, this was not the plaintiff's pleaded case (see paragraph 15 of the Re-Amended Statement of Claim in which it was alleged that the 1^st and 2^nd defendants disclosed such information to Madina “between the termination of their Employment Contracts with the plaintiff and 3^rd July 2008”).  Secondly, a closer look at the email in fact shows that it is more probable than not that the information was disclosed to Saqi after the 1^st and 2^nd defendants had left the plaintiff as Saqi described the 1^st and 2^nd defendants as people “who use (sic) to work for Raymond for Dunamis International”.  In any event, given my finding about the nature of the information contained in the Customer Database, I do not consider it material as to whether such disclosure was made before or after their termination of employment.  In either case they were not allowed to disclose the information anyway.

Whether the 2^nd defendant had breached his duties owed to the plaintiff and/or his Employment Agreement in providing the Price List to the 1^st defendant on around 3^rd June 2008

175.The plaintiff relied on the MSN Record in establishing this claim.

176.To recap, according to the MSN Record, a person called “Peter (UK)” asked the 2^nd defendant to send the former “the price list”.

177.While the 2^nd defendant maintained in Court that he could not recall the conversation in the MSN Record, he did not go so far as to deny that there was indeed such a conversation between him and “Peter (UK)”.  What he did dispute was the identity of “Peter (UK)”: he said it was not the 1^st defendant as alleged by the plaintiff. This denial was also shared by the 1^st defendant.

178.During cross-examination, Mr. Shum criticized that the plaintiff had failed to produce the MSN contact list of the 2^nd defendant.  Although it is true that I did not have sight of any document which showed that the 1^st defendant's email address would appear when pointing a curser at “Peter (UK)”, I accept Mr. Fung's evidence that that was the case.  It should also be remembered that the 2^nd defendant had refused to look at that piece of paper even if that were made available in Court.

179.As I have analyzed in paragraphs 131 – 137 above, I do not accept the 2^nd defendant's evidence that “Peter (UK)” was somebody other than the 1^st defendant.  I have found as a fact that it is more probable than not that “Peter (UK)” was the 1^st defendant.

180.Mr. Shum also suggested to Mr. Fung during cross-examination that “Peter (UK)” might probably be asking the 2^nd defendant for a quotation only.  That was denied by Mr. Fung.  I also find that this is quite improbable.  If “Peter (UK)” was really asking for a quotation, he would have specified the model(s) in respect of which such a request was made.  However, it is apparent that “Peter (UK)” was only asking for “the price list” without further specification, and the 2^nd defendant knew immediately what “Peter (UK)” was talking about because the 2^nd defendant stated “ok wait” nearly immediately thereafter.

181.When deciding on whether the 1^st defendant had sent the Price List to the 1^st defendant, the following dialogue in the MSN Record was the most relevant:

Date and time	Sender	Receiver	Message
3.6.2008 19:22:31	Peter (UK)	2nd defendant	send me the price list for me
3.6.2008 19:22:39	2nd defendant	Peter (UK)	ok wait
3.6.2008 19:22:41	2nd defendant	Peter (UK)	bye
3.6.2008 19:22:49	Peter (UK)	2nd defendant	in hotmail right?

182.In his witness statement, Mr. Fung said Mr. Lee and he “suspected that the 2^nd defendant has sent the [Price List] to the 1^st defendant via his Hotmail account or he had provided his Hotmail password to the 1^st defendant, so that he could access the 2^nd defendant's Hotmail to obtain a copy of the Price List of the plaintiff”.

183.Mr. Lee, in his statement, also said he believed that was what happened.

184.Mr. Shum argued against this allegation on 2 grounds in his closing submissions.  Firstly, he said the MSN Record was a hearsay document and therefore should not be admissible as evidence, or, if admitted, only limited weight should be given.  Secondly, he argued that the plaintiff's allegation was only based on “belief” or “suspicion” and not supported by evidence.  He said the plaintiff had failed in proving such an allegation on the balance of probabilities.

185.I have no hesitation in rejecting Mr. Shum's first argument as I do not agree that the MSN Record was a hearsay document.  This MSN Record was a computer printout printed by Mr. Fung who had given evidence in Court and confirmed that the MSN Record was what he found when he logged into the 2^nd defendant's MSN account.  This MSN Record must therefore be real evidence. (see Phipson on Evidence, 17^th edition (2010), paragraph 28-29)

186.However, I agree that while it is quite suspicious that the 2^nd defendant had sent the Price List to the 1^st defendant, I do not think there is adequate evidence for me to draw this inference.  It is true that I have decided not to accept the 1^st and 2^nd defendants' evidence, but that does not mean that I should automatically accept the plaintiff's allegation as being proved.  I notice that apart from “ok wait”, there is nothing in the MSN Record which shows that the 2^nd defendant had sent the Price List over to the 1^st defendant.  In fact, he did not make further reply to the 1^st defendant apart from saying “bye” shortly afterwards.

187.According to Mr. Fung's evidence, the 2^nd defendant had forwarded the Price List from his Dunamis Email Account to his Hotmail Account.  However, there is no evidence that the 2^nd defendant had further forwarded the Price List from his Hotmail Account to any other email accounts.  Neither was there any evidence showing that the 1^st defendant knew the password of the 2^nd defendant's Hotmail Account. 

Whether the 1^st defendant had procured the 2^nd defendant to breach the latter's duties owed to the plaintiff and/or his Employment Agreement by asking the 2^nd defendant to provide him with the Price List

188.In the light of my finding that the plaintiff had failed to prove that the 2^nd defendant had provided the 1^st defendant with the Price List on around 3^rd June 2008, the plaintiff's claim against the 1^st defendant that he had procured the 2^nd defendant's breach of the Employment Agreement should also fail because one of the essential matters which must be established in the cause of action of procurement of breach of contract is that there was a breach of contract, in this case a breach of the Employment Agreement on the part of the 2^nd defendant.

Whether the 2^nd and 3^rd defendants had breached their duties owed to the plaintiff and/or their respective Employment Agreements in deleting certain entries in the Customer Database

189.The plaintiff's allegation is that the number of entries in the Customer Database had dropped from over 10,000 in May 2008 to less than 10,000 in July 2008.  He said such entries could not have been deleted inadvertently because information contained in the Customer Database could only be deleted entry by entry and two or more entries could not be deleted at one go.  It was thus said that the entries must have been deleted deliberately by somebody.

190.Due to the coincidence of the missing entries found shortly after the dismissal of the 2^nd and 3^rd defendants, Mr. Lee believed that it was the 2^nd and 3^rd defendants who deliberately deleted the records.

191.Mr. Shum challenged this allegation by submitting that it was based on the “belief” on the part of Mr. Fung only instead of any substantive evidence.

192.I agree with Mr. Shum's submissions in this regard because of the following reasons:

(a)	The 2nd and 3rd defendants were not the only staff members who had access to the Customer Database.
(b)	After the dismissal of the 2nd and 3rd defendants, 2 other staff members in the Sales Department had also left the plaintiff but Mr. Fung could not recall when exactly they ceased to be the employees of the plaintiff.
(c)	Mr. Lee's evidence was that he found that there were missing entries in July 2008 but he did not specify whether it was early or late July 2008.  If the entries were found to be missing in late July 2008, it would be one and a half month after the departure of the 2nd and 3rd defendants.  In such a case it could not be said that the timing of the discovery of the missing entries was so near to the 2nd and 3rd defendants' summary dismissal that an inference can be drawn.
(d)	According to Mr. Lee, the 2nd and 3rd defendants were asked to pack up and leave the plaintiff immediately after their meeting with Mr. Lee on 15th June 2008.  Given the fact that two or more entries in the Customer Database could not be deleted at one go, the 2nd and 3rd defendants could not have enough time to delete the entries on 15th June 2008.

193.By reasons of the aforesaid, I am not satisfied that the plaintiff has proved this allegation against the 2^nd and 3^rd defendants.

Whether the 3^rd defendant had breached his duties owed to the plaintiff and/or his Employment Agreement in diverting or attempting to divert the business opportunity with Mr. Jabbour to himself

194.The plaintiff's case is that the 3^rd defendant had diverted or attempted to divert the business opportunity with Mr. Jabbour, who was a new customer of the plaintiff, to himself.

195.In this regard, the plaintiff relied on 2 pieces of evidence, namely, an email dated 29^th June 2008 sent by Mr. Jabbour to Mr. Jason Kwok (“Mr. Jabbour's Email”) and another MSN conversation record between Mr. Jabbour and Mr. Fung (“the Mr. Jabbour MSN Record”).

196.On behalf of the defendants, Mr. Shum challenged the admissibility of the said documents.  He said that the defendants were not given any opportunity to cross-examine the documents maker and therefore the plaintiff should not be allowed to make use of these documents.

197.In relation to the Mr. Jabbour MSN Record, it had been included in the plaintiff's hearsay notice filed on 9^th December 2009.  However, the defendants had not made known their objections to the plaintiff as to the admissibility of such a record.

198.In respect of Mr. Jabbour's Email, it was a hearsay document.  However, this email was not included in either of the hearsay notices issued by the plaintiff.  Nevertheless, pursuant to section 47A(4) of the Evidence Ordinance, a failure to give notice to the other parties of one's intention to rely on a hearsay document shall not affect the admissibility of the evidence in question although this may be taken into account by this Court in considering the exercise of its power with respect to the course of proceedings and costs and as a matter adversely affecting the weight to be given to the evidence.

199.Having considered the relevant statutory provisions and case authority which I have set out in paragraphs 166 – 167 above, I am of the view that both documents should be admissible as evidence, and full weight should be given thereto.

200.According to Mr. Jabbour, a person called “Kam” had given him a hotmail account.  Kam told Mr. Jabbour that while the plaintiff did not accept any order of less than 20 mobile phones, he (Kam) could supply behind his boss' back if money were transferred to his account. Mr. Jabbour was able to provide the email account used by Kam ([email protected]) and there is no dispute that this email account was allocated to the 3^rd defendant for his use.

201.In his evidence, Mr. Fung told the Court that all the employees in the plaintiff addressed the 3^rd defendant as “Ah Kam”.

202.There is no suggestion whatsoever that the said hearsay documents were anything other than genuine documents.  Neither was it suggested that Mr. Jabbour had for some reasons made up a false accusation against the 3^rd defendant.

203.By the above reasons, I am satisfied that it was more probable than not that the 3^rd defendant had attempted to divert the business opportunity with Mr. Jabbour away from the plaintiff during his employment with the plaintiff and as a result the 3^rd defendant had breached his duty of fidelity and good faith owed to the plaintiff.  He was also in breach of the clauses in the Employment Agreement as quoted in paragraph 5(a) herein.

Whether the 2^nd and 3^rd defendants had breached their duties owed to the plaintiff and/or their respective Employment Agreements in working for Masterfone while they were still being employed by the plaintiff

204.This allegation may be dealt with quickly.

205.Masterfone was established on 11^th June 2008.

206.To establish this claim, the plaintiff has to prove that the 2^nd and 3^rd defendants had conducted business for Masterfone before they were summarily dismissed by the plaintiff on 15^th June 2008.

207.There is absolutely no evidence from the plaintiff in this regard.

208.I would therefore dismiss this claim.

Whether the Restraint of Trade Clause is valid and enforceable

209.Before I discuss the main attacks which Mr. Shum relied on, I should deal briefly with his argument that the IRR (where the Restraint of Trade Clause was found) should not be applicable to the 1^st defendant because the IRR was imposed on the 1^st defendant after he had joined the plaintiff and this new agreement term was not supported by consideration.

210.I do not accept this argument.

211.The defence of “lack of consideration” is a point which must be specifically pleaded by way of Defence.  This was not done.  This argument was only raised for the first time when Mr. Shum made his final submissions.  The plaintiff was simply unable to deal with this argument with evidence.

212.Not only was this point not raised in the Re-Amended Defence of the 1^st defendant, in fact, it was even pleaded by the 1^st defendant that he admitted a paragraph in the Re-Amended Statement of Claim which reads:

“…The 1^st Defendant's employment before termination was governed by or made pursuant to or as evidenced in a written agreement dated 1^st January 2008 between the Plaintiff and 1^st Defendant and the Plaintiff's Internal Rules and Regulations accepted and acknowledged by the 1^st Defendant in writing.”

213.Having admitted that his employment with the plaintiff was governed by, among other things, the IRR, the 1^st defendant is not permitted to re-open the issue and argue that in fact the IRR should not be binding on him.

214.I now turn to the main attacks of the defendants on the Restraint of Trade Clause.

215.The Restraint of Trade Clause reads:

“如沒有公司同意，員工辭職後六個月內不得受僱於同類型公司工作，否則本公司有權追究所有損失”

216.While the defendants agreed that the 6-month limitation was reasonable, they argued that the Restraint of Trade Clause was unenforceable because:

(a)	There was no geographical limit in the clause;
(b)	The term “同類型公司” was too ambiguous; and/or
(c)	It was too wide because it completely banned the defendants from working in any firm that dealt with mobile phones and mobile phone related products.  This might affect their livelihood.

217.In relation to the first ground of attack, Mr. Wong relied on the cases of Home Counties Dairies Ltd. v Skilton [1970] 1 WLR 526 and Littlewoods Organization v Harris [1977] 1 WLR 1472 and argued that while the literal meaning of the Restraint of Trade Clause might restrain the defendants from working in other countries, such circumstances are so “extravagant”, “fantastical”, “unlikely or improbable” that they must have been entirely outside the contemplation of the parties and that it is clear that the clause was only intended to restrict the defendants' activities in Hong Kong.  He was effectively asking this Court to cut down the scope (geographical limit) of the said Clause so as to render it reasonable and hence enforceable.

218.A similar argument had actually been made but rejected in the case of Kao, Lee & Yip (a firm) v John Richard Edwards [1994] 1 HKLR 232.  In the judgment of the Hong Kong Court of Appeal, it was stated that:

“[Counsel for the plaintiff], in putting the plaintiffs' case, urged upon us this approach: in construing [the restrictive covenant], the court should reject extravagant possibilities and look to what, within the reasonable contemplation of the parties, would be realistic; thus, to construe [the restrictive covenant] as if it might apply to prevent the defendant from doing any work normally done by solicitors in Peru or Chile would be absurd. The parties could never have so intended. Mr. Li relied on Haynes v. Doman [1899] 2 Ch. 13, Home Counties Dairies v. Skilton [1970] 1 WLR 526 and Littlewords (sic) Organization v. Harris [1977]1 WLR 1472 in support of his proposition. By implication, he argues, the scope of [the restrictive covenant] should be construed as limited to England and Hong Kong: this is because, known to the parties at the time of the agreement, both Mr. Kao and the defendant were admitted to practice in those two jurisdictions, and nowhere else. We cannot accept this submission. At the end of the day, it is purely a matter of the proper construction of [the restrictive covenant]. We find it difficult to draw out of the wording of [the restrictive covenant] this restricted meaning. We readily accept that in construing a restrictive covenant, the court must put it in its factual matrix. Accordingly, where, as in Home Counties Dairies v. Skilton, the words “dairy produce” in the covenant cannot possibly have meant “butter and cheese sold by a grocer”, because the contractual nexus did not accommodate this, the court must give a restricted meaning to the clause. But, as Simon Brown LJ explained in J.A. Mont (UK) Ltd v. Mills [1993] IRLR 172 at 176, if wide covenants were to be construed in this way, so that they would always be cut down to the extent necessary to protect the employer's legitimate interests as found by the court, what incentive would there be for employers to draft their covenants restrictively? And how is the employee, faced with a covenant in wide terms, to know that the courts would ultimately trim the covenant down? The burden is upon the plaintiff to satisfy the court that, by the words used by him the covenantee (who proffered the contract for the employee's signature), the covenant is no wider than necessary to protect his interests. The court should not strain to give an artificial construction to the clause in order to preserve its validity.” (at 242 lines 8 – 33)

219.I am bound by the Court of Appeal's judgment in Kao, Lee & Yip (a firm).  As a result, I cannot adopt the approach as suggested by Mr. Wong.  I should only construe the Restraint of Trade Clause as it is without artificially cutting it down so as to save it from being unnecessarily too wide geographically.  Given Mr. Lee's evidence that he never regarded overseas companies as the plaintiff's direct competitors, I do not think there is any interest over which the plaintiff may claim protection out of Hong Kong.  I therefore hold that the Restraint of Trade Clause is unreasonably wide by reason of its having no geographical limit.

220.Just in case I am wrong on my decision above, I proceed to consider the other attacks of the defendants on the Restraint of Trade Clause.

221.Despite the fact that the said clause did not expressly refer to “firms that traded in mobile phones and mobile phone related products”, I am not persuaded that the clause was ambiguous.  In fact, the drafting of the defendants' third objection shows that the defendants knew exactly what the clause meant.

222.Neither do I hold the view that the Restraint of Trade Clause was too wide in terms of its scope.  Indeed, even the 1^st and 2^nd defendants accepted that if they switched to work for another mobile phone company after their employment with the plaintiff, the plaintiff's interest would be prejudiced because they had had access to the sensitive information possessed by the plaintiff.  That actually highlights the plaintiff's case that there was interest on the part of the plaintiff which had to be protected.

223.In my judgment, the plaintiff's claim for protection was based on the identification of some advantage and asset inherent in its mobile phone business (the Customer Database and the Price List) which could properly be regarded as the plaintiff's property.  It would be unjust to allow the plaintiff's ex-employees to appropriate such asset for their own purposes (see paragraph 15 above).  Therefore, but for the fact that the Restraint of Trade Clause has imposed no geographical limit, I would have held that it is valid and enforceable.

Whether the defendants had breached the Restraint of Trade Clause

224.By reason of my decision that the Restraint of Trade Clause is invalid and unenforceable, this issue has become academic.  However, in deference to counsel's thorough arguments, I shall deal with this issue as follows.

225.It is the plaintiff's allegation that the defendants had set up and worked for Masterfone in the trading of mobile phones within 6 months after their respective employment with the plaintiff.

226.I have no hesitation in finding that the defendants did set up and work for Masterfone as alleged by the plaintiff and that Masterfone was engaged in the trading of mobile phones since its incorporation.  I have taken the following matters into account:

(a)	The 1st defendant admitted that it was the defendants' collective idea to set up Masterfone and that the name of this new company was given by all three defendants.  He stated that since they did not have any money to invest in Masterfone, it was their parents who contributed to the capital so that the defendants could set up their own business.
(b)	The 3rd defendant also admitted that the defendants had discussed before April 2008 about setting up a company.
(c)	The 1st defendant had by MSN asked the 2nd defendant to give him the Price List on around 3rd June 2008.  This was very near to the date of incorporation of Masterfone (11th June 2008).  It is more probable than not that the 1st defendant was doing preparation work for Masterfone so that it could start trading in mobile phones upon or soon after its incorporation.
(d)	One of the plaintiff's drivers had seen the 1st and 2nd defendants collecting goods from Daily Glory Telecommunication Trading Limited (“Daily Glory”) and Computech Overseas Limited in about July 2008.  The 1st defendant admitted that he had traded in mobile phones for Masterfone and his mobile phones were supplied by Daily Glory.  It was not disputed by the defendants that Daily Glory and Computech had confirmed with Mr. Lee and Mr. Fung that the 1st and 2nd defendants had been ordering from them under the name of Masterfone.
(e)	It was not challenged that Wireless Import had informed Mr. Lee that it was buying from Masterfone since June 2008 as Masterfone had offered a better price than the plaintiff.
(f)	The website of Masterfone presented Masterfone's company name in this way: “Master Distributor in Mobile Fone”.  The words “Master” and “Fone” were highlighted in red.  It is very obvious that the company name actually means “Master Distributor in mobile phone”.  Despite the 1st defendant's denial and his allegation that the company was not set up for the purpose of trading in mobile phones, it is my finding of fact that that was not the case.  In fact, the said website showed a lot of pictures of mobile phones.  A column on one side of the webpage also gave details of the stock of mobile phones (but not cameras) which Masterfone had.  Trading in mobile phones must at least be one of the main businesses which the defendants had in mind when this company was established.
(g)	The 1st and 2nd defendants were the authorized signatories of Masterfone.  If the 3rd defendant was right in saying that the 1st defendant's father was the person who was always working at Masterfone, I wonder why he did not act as one of the signatories, especially when he was the shareholder with most shares in Masterfone.  Further, according to the 1st defendant, his father was also responsible for going to the bank on behalf of Masterfone.  If that was so, it is even more difficult to explain why he was not named as a signatory.  The only explanation is that while he was named as a shareholder and director, he was not regarded as the boss of Masterfone.  Instead, the 1st and 2nd defendants were so regarded.
(h)	Despite the defendants' attempt (especially on the part of the 2nd and 3rd defendants) to give this Court an impression that they had nothing much to do with Masterfone, it was the 1st defendant's evidence that all of them had voting rights in respect of Masterfone's matters.
(i)	If the 1st defendant was telling the truth in that Masterfone did not start doing business despite its incorporation in June 2008 because the defendants had to do marketing research, it is difficult to understand why it had to obtain a business registration in June 2008.  It is even more difficult to understand why it had to rent a place as office in June 2008.
(j)	Even if they thought it was necessary for Masterfone to obtain a BR certificate, I do not understand why they did not put down anything to indicate that Masterfone was going to engage in business relating to software applications as this was intended to be the development direction of the company.  It should be borne in mind that 1st defendant even felt fit to include “entertainment production” (apart from “trading”) as one of the businesses of Masterfone in the BR Certificate although there was no concrete plan at all that Masterfone would be engaged in any entertainment production.  In my view, the inclusion of “trading” shows that it was the plan of the defendants that Masterfone would be engaged in trading business, and as analyzed above, the commodities to be traded were mobile phones.  The reference of the defendants to software applications in their evidence at the trial was only made up by them in support of their case that Masterfone was not established for trading in mobile phones.
(k)	It is also unbelievable for the 1st defendant to allege that Masterfone did not intend to do any business right after it was incorporated.  If that was so, there was no need for the shareholders to contribute to the capital in the total sum of HK$400,000 that soon.
(l)	Taking the matters referred to in paragraphs 141 – 144 above into account, it is my finding that even though the 3rd defendant was not named as a shareholder in the company record, he, together with the other two defendants, were actually regarded as the bosses of Masterfone.  The 3rd defendant wanted to hide behind his mother who was named as a shareholder and pretend that he knew nothing about her investment in Masterfone at all.  In my judgment, what he told the Court simply did not make any sense.  It is more probable than not that her mother had contributed to the capital of Masterfone because the 3rd defendant could not afford it financially, but that does not change the fact that Masterfone was regarded as the 3rd defendant's company.
(m)	As the 1st defendant pointed out, all the defendants knew that they were not allowed to engage in mobile phone business for a period of 6 months.  As a result, none of them was named as a shareholder of Masterfone.  Instead, their parents were so named so that it was more difficult for the plaintiff to discover the defendants' relationship with Masterfone.

227.I should specifically mention that the plaintiff had relied on hearsay evidence in establishing its claim here (for example, in relation to what its driver had seen and the business dealing between Wireless Import and Masterfone).  However, having considered all the circumstances and sections 47A and 49 of the Evidence Ordinance, I am satisfied that full weight should be attached to such evidence.

228.Mr. Shum submitted that the Restraint of Trade Clause only prohibited the defendants from being employed (“受僱”) by Masterfone.  He said since the Employment Agreements were drafted by the plaintiff, the operation of the Contra Proferentum Rule would give a narrower meaning to the said clause.  He also argued that there was no evidence that the defendants were employed by Masterfone at the material time.

229.I am unable to accept this argument. The meaning of the Chinese words “受僱於同類型公司工作” must be determined by the context in which these words were used.  While words of a contract should normally be interpreted in their ordinary sense, a different meaning may be adopted if the ordinary meaning would lead to some absurdity (see Lewison, The Interpretation of Contracts, 4^th edition (2007), at paras.5.01 and 5.12).  In my view, it is absurd to suggest that while the defendants were prohibited to be employed by Masterfone, they were allowed to set it up and operate it or work for it.  Indeed, even the 1^st defendant admitted that the defendants all understood the said clause to mean that they were not allowed to work for another mobile phone company for a period of 6 months. 

230.In any event, I am satisfied that the defendants were all employed by Masterfone within 6 months after their employment with the plaintiff had been terminated.

231.I should also add here that while the plaintiff's case is that the 1^st defendant's employment was terminated on 8^th April 2008 (this was not disputed by the 1^st defendant), in my view, his employment relationship with the plaintiff did not come to an end in law until 7^th May 2008 because the one month's notice (though payment in lieu was made) should be taken into account when the date of termination is arrived at.  Having said that, this should not affect my finding of his breach of the Restraint of Trade Clause (if it is valid and enforceable) because no matter whether the 6-month period ended in October or November 2008, my finding is that he had already breached the said clause in June 2008 (when Masterfone conducted business with Wireless Import).

Whether the defendants had breached their duties of confidence to the plaintiff in providing the Customer Database and the Price List to Masterfone

232.It was submitted by Mr. Wong that it is always a matter of inference as to whether a company had made use of the confidential information of a plaintiff because the plaintiff will seldom be able to have direct evidence of a defendant using such confidential information. I agree with this submission.

233.However, in my view, an inference that Masterfone had made use of the Customer Database of the plaintiff can easily be drawn in the present case.

234.The plaintiff's case that Masterfone had done business with companies such as Cellular Concepts from Florida, USA, Abitel Adrian Bukowski from Poland and C&C from Canada is supported by various MSN records.  I am aware of the fact that the said records are all hearsay documents in the sense that it was Mr. Fung's evidence that he had been told by representatives of those companies via MSN that certain events had taken place.  Of course I have not forgotten that Mr. Shum had objected to the admission of these MSN records.  He also submitted that no weight should be given to such evidence.  However, having considered the relevant statutory provisions and case authority which I have set out earlier in this Judgment, the fact that these records were all included in hearsay notices filed by the plaintiff, the fact that the defendants had failed to voice out their objections earlier, and Mr. Fung's explanation that the plaintiff's clients were unwilling to give evidence in Court as they were based in overseas countries, in my view those records should be admitted as evidence and full weight should be given thereto.

235.It was Mr. Fung's evidence that he had been told by Wireless Import that they had also been buying from Masterfone since June 2008 as Masterfone had offered a better price than the plaintiff. This part of the evidence of Mr. Fung was not challenged by the defendants. There is no reason why I should not accept Mr. Fung's evidence that he had been so told by Wireless Import.  Neither is there any evidence suggesting that the representative of Wireless Import whom Mr. Fung talked to had any reason to tell a lie in front of him.  I would therefore accept that Wireless Import did buy mobile phones from Masterfone since June 2008.  As a matter of fact, as confirmed by Mr. Shum in his closing submissions, the defendant had never denied in their evidence the allegation that they knew Wireless Import.

236.There was also an Air Way bill which showed that Masterfone had conducted business with a company known as “Multi Media Market”.  According to Mr. Fung's evidence, which I accept, this is a medium size mobile phone company based in Slovakia.  While it was stated in the said bill that the subject matters which were transported were described as “Electrical goods (incl. charge and cable)”, I accept that given it is a mobile phone company (and it was not suggested that this company also traded in any other goods), it is more likely than not that the subject matters which were transported were in fact mobile phones or mobile phones related products.

237.I note that the clients named above came from different parts of the world.  Given the fact that there is no dispute that there are many mobile phone companies in the world, in my view these companies could not be doing business with Masterfone merely by coincidence. It can be readily inferred that Masterfone must have used the plaintiff's Customer Database and the Price List.  I should add that while the burden of proof is always on the plaintiff to prove its case, the defendants had not offered any explanation as to how come Masterfone could do business with all those clients of the plaintiff.

238.It was not denied that the 1^st and 2^nd defendants were the salesmen and the contact persons on behalf of the plaintiff with the abovementioned companies while they were still employed by the plaintiff.  Further, all the defendants had access to the plaintiff's Customer Database and the Price List while they were employed by the plaintiff.  I also note that it was stated by Cellular Concepts' representative that the 1^st defendant had made a better offer than the plaintiff.

239.Moreover, Masterfone was indeed set up by the defendants (as admitted by the 1^st defendant).

240.In the circumstances, it can be inferred, and I so find, that it was the defendants who provided the Customer Database and the Price List to Masterfone and as a result, Masterfone was able to do business with the aforementioned companies.  In passing such confidential information, the defendants had breached their duties of confidence to the plaintiff.

CONCLUSION AND COSTS

241.To summarize, it is my finding that:

(a)	the 1st and 2nd defendants had disclosed the particulars of GSM Depot to Madina before 3rd July 2008 and hence they had breached their duties owed to the plaintiff and their Employment Agreements;
(b)	the 3rd defendant had attempted to divert the business opportunity with Mr. Jabbour away from the plaintiff during his employment with the plaintiff and as a result the 3rd defendant had breached his duties owed to the plaintiff and his Employment Agreement;
(c)	the defendants had breached their duties of confidence to the plaintiff in providing the Customer Database and the Price List to Masterfone.

242.During closing submissions, it was suggested to me that I may make all the necessary findings and then leave the parties' legal advisors to work out the precise form of the order including orders for discovery.  I therefore direct that the parties are to submit an agreed form of order within 14 days for my approval.  If they cannot agree on the precise terms of the order, they should come back to court for argument. Should such a hearing is necessary, half a day should be reserved, and the parties are required to file their respective draft orders together with skeleton argument at least 3 clear days before such a hearing.

243.Notwithstanding my directions above, I think it would only be fair to the plaintiff if an injunction is made against defendants from the date of judgment because it would probably take some time before the parties may come up with an agreed form of orders.  I therefore order that the defendants and each of them, whether acting by themselves or by their agents or otherwise, be restrained from relying on and/or making use of the Customer Database (or any part thereof) and from disclosing the Customer Database (or any part thereof) to any third party until further order. 

244.In considering the issue of costs, I have taken into account the fact that the plaintiff has succeeded in only some of its claims against the defendants.  Having said that, I do not think it is appropriate to apply simple arithmetic in deciding the percentage of costs which the plaintiff should recover because some of the issues are apparently more complicated than others and as a result much more time and costs would have been spent thereon.

245.Doing the best I can, I make a costs order nisi that the plaintiff is to have 50% of its costs (including all costs reserved), such costs to be taxed if not agreed.  I also certify the engagement of counsel.  The 3^rd defendant's own costs shall be taxed according to Legal Aid Regulations.  In the absence of application in 14 days to vary, the costs order shall become absolute.

246.It remains for me to thank counsel for their assistance.

Mr. Philips B. F. WONG, instructed by Messrs. William W. L. Fan &Co., for the Plaintiff

Mr. Timon SHUM, instructed by Messrs. C. Y. Chan & Co., for the 1^st, 2^nd & 3^rd Defendants