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

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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...