DCCJ 6571/2004 &
DCCJ 1284/2005 (Consolidated)
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 6571 OF 2004 & 1284 of 2005 (Consolidated)
||GREENWIN INTERNATIONAL GROUP LIMITED
JIM YEUK CHAU also known as
JIM YEUK CHAU, MARIANA
Coram: Her Honour Judge C.B. Chan in Court
Dates of Trial: 13th, 14th, 19th, 20th & 22nd December 2006
Date of Handing down of Judgment: 1st March 2007
1. In this action the Plaintiff, a trader of garment incorporated in Hong Kong claims against the Defendant its former employee for damages for loss suffered as a result of the Defendant’s breach of the employment contract and fiduciary duties as a senior officer of the Plaintiff.
2. By a written agreement dated 1 March 2002 (“the written agreement”) made between the Greenwin Garment Manufacturing Groups Ltd. (“GGMG”) and the Defendant, GGMG agreed to employ the Defendant who agreed to serve GGMG as its General Manager from 8 April 2002. In or about August 2002, due to changes of shareholding in GGMG, the Defendant’s employment with GGMG was terminated on 7 September 2002 owing to the discontinuance of the business of GGMG and its subsequent winding-up. Two of the partners of GGMG namely Mandy Chan Ching Man (“Mandy Chan”) and Leung Wan Keung Jackson (“Jackson Leung”) decided to form a new business incorporated as the Plaintiff.
3. The Plaintiff’s case show that in or about August 2002, by an oral agreement (“the Employment Contract”) between Mandy Chan acting on behalf of the Plaintiff and the Defendant, the Plaintiff agreed to employ the Defendant who agreed to serve the Plaintiff as its General Manager on the same full terms and conditions of the written agreement from 8 September 2002.
4. The express terms of the Employment Contract between the Plaintiff and the Defendant include, inter alia, the following:
“Clause 5: Without written consent from the company, you are prohibited from engaging in the same industries or contact with the company’s client directly or directly within HALF year after the date of termination or expiry of this contract. The company is entitled to claim for any loss, damages or compensation arising therefrom.”
“Clause 10: No member of the staff should make personal use of any confidential information obtained by reason of his being engaged on an negotiation or other assignment of the client’s business, or use any such confidential information to his own advantage, or for the advantage of any of his friends and relatives.”
5. It is the pleaded case of the Plaintiff and it is not disputed by the Defendant that the Employment Contract contained, inter alia, the following implied terms. Throughout the Employment Contract, the Defendant would,
(1) serve the Plaintiff with good faith and fidelity;
(2) protect the interest of the Plaintiff and not to divert business opportunities to herself or other parties;
(3) not use the Plaintiff’s time or in the Defendant’s spare time to compete with the Plaintiff;
(4) not solicit the Plaintiff’s custom of the Plaintiff’s customer;
(5) not make or attempt to make secret profit for herself or her agents or associates from the use or access of the Plaintiff’s information, opportunities and assets.
6. It is not in dispute and is agreed that a further implied term of the Employment Contract is that the Defendant would not make use of, divulge or communicate to any person (save in proper performance of her duties under the Employment Contract) any of the trade secrets or other confidential information of the Plaintiff which she received as a result of or in any way in connection with her employment by the Plaintiff.
7. It is the Plaintiff’s case and it is not in dispute that since August 2003, Li & Fung (Trading) Ltd. (“L&F”) and Sonal Sportswear Inc. (“Sonal”) had been doing business with the Plaintiff for manufacturing of garments. The Defendant was responsible for negotiation and liaison on behalf of the Plaintiff with the representatives of L&F and Sonal.
8. From February to April 2004, as part of her duties with the Plaintiff, the Defendant entered into negotiation with L&F to supply four lots of Cape Union branded garments for L&F’s overseas buyer. The Defendant had passed to L&F the Plaintiff’s garments samples for its approval.
9. In late March and early April 2004, Dominic Wong and Sandy Yiu, two employees of the Plaintiff who assisted the Defendant in dealing with the Plaintiff’s business with L&F, resigned.
10. On or about 24 April 2004, the Defendant also tendered her resignation to the Plaintiff and represented to Jackson Leung of the Plaintiff that she was leaving for America to take a break.
11. The Plaintiff pleads and it is agreed by the Defendant that by operation of law, as a senior executive, the Defendant owe a fiduciary duty to the Plaintiff.
12. It is the Plaintiff’s case that the Defendant breached the above express and implied terms of the contract of employment and also her fiduciary duties as a senior officer of the Plaintiff.
13. The Plaintiff pleads in paragraph 12 of the Amended Statement of Claim that in breach of the above Clause 10 of the Employment Contract, the Defendant made use of the Plaintiff’s confidential information including the Plaintiff’s garment samples and quotations in relation to the particularized therein four lots of garments to her own advantage by presenting the confidential information to L&F, a customer of the Plaintiff, and then soliciting L&F to place its purchase orders for the garments, with another company that later was found to be related to the Defendant.
14. It is also the pleaded case of the Plaintiff that the Defendant was found to have the Plaintiff’s product files on her when she was summarily dismissed including the file which contained documents about the brand Cape Union.
15. The Plaintiff pleaded in the Amended Statement of Claim that in or about June 2004 upon investigations the Plaintiff discovered that L&F had awarded the four lots of garment orders referred to aforesaid or part thereof, to a company known as An-Gelo Company Limited (hereafter referred to as “An-Gelo”).
16. It is agreed by the Defendant that An-Gelo is a company incorporated in Hong Kong on 6 May 2004 carrying on the business of garment trading. An-Gelo’s directors include one Lee Yan Yi, Angel who is also a Director and shareholder of the company. The said Lee Yan Yi Angel is the daughter of the Defendant.
17. The Plaintiff pleads that the Defendant also breached Clause 5 of the Employment Contract, for within a half year of the termination of the Employment Contract she engaged in the same industry as the Plaintiff and had contacts directly or indirectly with the Plaintiff’s clients.
Agreed Facts and Law
18. At the trial, the parties agreed the following facts and law:
(1) The facts pleaded in paragraphs 6,7,8, 9(a), 10, 11(a) and 11(b) of the Amended Statement of Claim
(2) The Defendant was employed by the Plaintiff for the period between 8 September 2002 and 8 May 2004.
(3) $56,612.90 is the outstanding salary due to the Defendant for the period from 1 April 2004 to 8 May 2004 and owing by the Plaintiff. Such sum has been paid into the Labour Tribunal on 15 March 2005.
(4) The Defendant does not dispute that Clause 5 of the written agreement which is a term in restraint of trading is reasonable. The Defendant however disputes that the written agreement was agreed by her to be incorporated into her Employment Contract with the Plaintiff by oral agreement.
(5) The Defendant agrees that the e-mails exhibited in Exh. CCM-3 (pages 52 to 55 of the Bundle of Document-B (“BD-B”)) and in CCM-4 (pages 57 – 60 BD-B) were recovered from the computer of the Defendant and that the name “Marianna” used in those e-mails refers to the Defendant.
(6) As for CCM-3, the Defendant agreed that An-Gelo Co. Ltd. had supplied garments for Li & Fung for onward sale to Cape Union, and that the e-mails in CCM-3 reflected that a quality control process took place for such agreements.
(7) As for CCM-7 (pages 65 – 67 of BD-B) the e-mail dated 8 September 2004 from Kittyhello1818@hotmail.com to email@example.com was agreed by the Defendant to be retrieved from her computer and that it was an e-mail between a Mr. Subash and the Defendant.
(8) As for CCM-7 (pages 68 – P. 74 of BD-B) it was agreed that the documents were retrieved from the Defendant’s computer.
(9) As for CCM-7 (pages 68 to P. 74 of BD-B) the style numbers appearing therein which replicated from the Fall 2004 Cutting Ticket at page 62 are identical to those with the same style numbers in page 62 of BD-B.
(10) It was agreed by the Defendant that in about June 2004 a Mr. Domanic Wong and a Ms. Sandy Yiu were working for An-Gelo. The said Mr. Domanic Wong and Ms. Sandy Yiu were ex-employees of the Plaintiff.
(11) It was agreed that CCM-10 (page 80 of BD-B) was signed by the Defendant.
(12) The Defendant agrees that the Fall 2004 Cutting Ticket at page 62 of BD-B (CCM-5) was handed over to Mandy Chan (PW1) by the Defendant on about April 2004.
The Defendant’s Case
19. The Defendant denies that the written agreement formed the terms of the Employment Contract. She also denies that she made use of the Plaintiff’s confidential information including the Plaintiff’s garment sample and quotations in relation to the four lots of Cape Union garments referred to in the Plaintiff’s pleaded case for her own advantage by presenting the confidential information to L&F and then soliciting L&F to place its purchase orders for...