Fong"s National Engineering Co Ltd And Others v Wong Wai Yuk And Another

Judgment Date04 August 2003
Subject MatterCivil Action
Judgement NumberHCA573/2003
CourtHigh Court (Hong Kong)
HCA000573/2003 FONG'S NATIONAL ENGINEERING CO LTD AND OTHERS v. WONG WAI YUK AND ANOTHER

HCA000573/2003

HCA573/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.573 OF 2003

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BETWEEN
FONG'S NATIONAL ENGINEERING COMPANY LIMITED 1st Plaintiff
TYCON ALLOY INDUSTRIES (HONG KONG) COMPANY LIMITED 2nd Plaintiff
TYCON ALLOY INDUSTRIES (SHENZHEN) COMPANY LIMITED 3rd Plaintiff
AND
WONG WAI YUK 1st Defendant
KEEN TECH ENTERPRISES LIMITED 2nd Defendant

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Coram: Deputy High Court Judge Wong Yan Lung, SC in Chambers

Date of Hearing: 3 July 2003

Date of Judgment: 4 August 2003

Date of handing down Judgment: 4 August 2003

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J U D G M E N T

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The application

1. By summons dated 17 February 2003 as amended at the hearing before me, the plaintiffs sought the following orders :

(1) That the 1st and 2nd defendants, whether acting by themselves, their directors, officers, agents or servants, or any of them or otherwise howsoever, be restrained until after judgment or further order from causing, soliciting or negotiating any business or business order with the customers of the 1st, 2nd and 3rd plaintiffs;

(2) That the 1st and/or 2nd defendants, whether acting by themselves, their directors, officers, agents or servants, or any of them or otherwise howsoever, be restrained until after judgment or further order from dealing with or divulging confidential quoted pricing of the products of the 1st, 2nd and 3rd plaintiffs to their customers;

(3) That the 1st defendant, whether acting by himself, his agents or servants, or otherwise howsoever, be restrained until after judgment or further order or until 14 January 2004 whichever is the earlier from enticing away the employees of the 1st, 2nd and 3rd plaintiffs.

Background

2. The three plaintiffs are subsidiaries of Fong's Industries Company Limited (Incorporated in Bermuda), a company listed on the Stock Exchange of Hong Kong carrying on the business of, inter alia, producing precision machines for textile manufacturing, stainless steel and alloy casting products. This group of companies, including many more subsidiaries other than the three plaintiffs, will collectively be called "the Fong's Group".

3. The 1st plaintiff, Fong's National Engineering Co. Ltd, and the 2nd plaintiff, Tycon Alloy Industries (Hong Kong) Co. Ltd, are both companies incorporated in Hong Kong. The 3rd plaintiff, Tycon Alloy Industries (Shenzhen) Co. Ltd, is a foreign investment enterprise established in the People's Republic of China ("PRC"). Before changing its name in June 1996, the 3rd plaintiff was known as Fong's Special Metal (Shenzhen) Company Limited. The 2nd and 3rd plaintiffs specialise in alloy metal casting production. The 2nd plaintiff is responsible for signing contracts and the 3rd plaintiff for the manufacturing work.

4. By an Appointment Confirmation dated 2 June 1987, the 1st plaintiff employed the 1st defendant Wong Wai Yuk ("Wong") as an engineer of its production department. The Appointment Confirmation contained terms that Wong was prohibited from disclosing confidential information during and after employment.

5. The parties later entered into a more formal contract in the form of a letter of appointment dated 6 December 1989 ("the Letter of Appointment"). Under the Letter of Appointment, Wong was employed as an executive in the Production Planning Section.

6. The following are the material terms of the Letter of Appointment :

"8. You Shall Devote Full Time to the Company

a. The whole of your time attention and abilities shall be devoted to the business of the Company.

b. You shall not during your employment with the Company directly or indirectly enter into or be concerned or interested in any other business or service whether paid or unpaid (save and except with the consent of the Company).

9. Confidentiality

a. In order to protect the confidentiality of the affairs of the Company, you are required not to disclose any of the confidential information of the Company to any unauthorized person or organization or take along any confidential documents, whether the original or their copies outside the Company without prior approval during and after the employment with the Company.

.....................

11. Covenants after Termination

a. As you will have dealings with the customers of and the suppliers to the Company in the course of your employment and in order to protect the goodwill of the Company, you agrees (sic) without prejudice to any other duty implied by law and equity and whether or not the Company shall have been in breach of this Agreement to observe the obligation set out in this Clause.

b. You shall not for a period of one year from the termination of your employment directly or indirectly engage or be concerned in the business in direct or indirect competition with the sale of the products of the Company.

c. You shall not for a period of one year from the termination of your employment solicit orders or customers from any individual or firm or company who within a period of one year before the termination of your employment bought agreed to buy hired on hire purchase or otherwise acquired goods or services from the Company or otherwise dealt with the Company.

d. Each sub-clause of this Clause shall be separate distinct and severable from each other sub-clauses."

7. By the end of 1992, Wong had been promoted to the position of assistant manager of the Sales and Marketing Department.

8. Between January 1993 and late 1995, Wong and his family were in Australia for the purpose of acquiring citizenship. During this period, Wong received periodic payments from the 1st plaintiff paid through a relative. Whether Wong's employment with the 1st plaintiff continued during this period is a major issue in this case, which I shall deal with below.

9. Wong returned to Hong Kong at the end of 1995 and resumed employment with the Fong's Group.

10. In about January 1996, Wong was appointed a director of the 3rd plaintiff. In May 1997, Wong was further appointed a director of the 2nd plaintiff. Concurrently, Wong was also appointed the Assistant General Manager of both the 2nd and 3rd plaintiffs.

11. One of the overseas customers of the 2nd plaintiff was Edelstahl Technik Ulm GmbH ("ETU") from Germany. In about November 2002, in the course of the 2nd plaintiff's negotiation with ETU on the pricing of certain goods undertaken by another director in Germany, Wong came into possession of certain price information of the 2nd plaintiff in the ETU deal. In short, ETU was not satisfied with the 2nd plaintiff's initial offer prices and sought reduction. By virtue of his familiarity with the 2nd plaintiff's pricing structure and production costs, Wong was consulted by telephone as to what reduction should be offered. By a quotation headed "New Offering Price" sent by the 2nd plaintiff to ETU by fax dated 20 November 2002, the 2nd plaintiff offered ETU new unit prices (with a reduction of about 7%) for the range of goods sought by ETU.

12. In the course of December 2002 and January 2003, the following matters came to the plaintiffs' knowledge :

(1) In mid November 2001, Wong incorporated a company in Hong Kong called Keen Tech Enterprises Limited ("Keen Tech"), i.e. the 2nd defendant herein. The only shareholders and directors of Keen Tech were Wong and his wife Yip Siu Yin, who was herself an ex-employee of the 1st plaintiff.

(2) In about July 2002, a factory was set up in Hui Yang City PRC whose business was also in the manufacture of precision castings in metals. The factory, by the name of Chun Tak Precision Factory or Hui Yang City Keen Tech Precision Metal Factory ("the Hui Yang Factory"), was a joint venture enterprise with Keen Tech as the foreign signing party.

(3) In about September 2002, there was a discussion between Wong and one Colin Wong, the Sales Manager of the 2nd plaintiff, on the possibility of Colin Wong joining Wong's business of Keen Tech or the Hui Yang Factory. The plaintiffs' case is that Wong was attempting to entice Colin Wong to work for him. Wong's case is that the approach came from Colin Wong himself.

(4) On or about 3 January 2003, in the course of pressing ETU for a response to its quotation of 20 November 2002, the 2nd plaintiff received a fax document from ETU which was a quotation sent some time in November 2002 (the exact date cannot be seen from the fax copy) to one Kurt Bydlowski, the sales agent of the plaintiffs in Germany, by a Hong Kong company called Grace Force Holdings Limited ("Grace Force"). The following matters about the Grace Force quotation are significant.

(a) It was headed "Product List for ETU". ETU of course was the 2nd plaintiff's German customer, with whom negotiation on the sale of the same goods had been on going for some time.

(b) It set out in a separate column the "old" unit prices offered by the 2nd plaintiff to ETU. With the exception of two items, the remaining seven out of nine items accurately recorded the 2nd plaintiff's old unit prices as recorded in the 2nd plaintiff's quotation dated 20 November 2002.

(c) It offered as its own prices under the column of "KTE Unit Price" which, with the exception of two items, were all lower than not just the "old" but also the "new" unit prices set out in the 2nd plaintiff's quotation dated 20 November 2002. There can be no doubt that "KTE" stood for Keen Tech Enterprise Limited, i.e. the 2nd defendant.

13. I should pause to say that, in my view, based on the level of the prices pitched by Grace Force, the author of the Grace Force quotation must have known the "new" unit prices...

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