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HCA 514/2019
[2019] HKCFI 1550
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 514 OF 2019
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| BETWEEN |
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MCLARENS HONG KONG LIMITED |
Plaintiff |
and |
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POON CHI FAI, COREY |
1st Defendant |
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WONG KIT LING, MAY |
2nd Defendant |
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JAMES ALEXANDER, GRIMA |
3rd Defendant |
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CHIE KUWABARA |
4th Defendant |
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CHAN KA LEUNG, REMUS |
5th Defendant |
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TSUN WAI YIN, CONNIE |
6th Defendant |
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ALAN STEWART MCCONKEY |
7th Defendant |
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CHING KAM FAI, FRANCIS |
8th Defendant |
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LI CHI KONG, IVAN |
9th Defendant |
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CHARLES TAYLOR HOLDINGS B.V. |
10th Defendant |
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Before: Deputy High Court Judge William Wong SC in Chambers
Date of Hearing: 3 June 2019
Date of Decision: 14 June 2019
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DECISION
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APPLICATION
1. This is the plaintiff’s application, by summons dated 26 March 2019 (the “Summons”) for interlocutory injunctions against the 1st to 9th defendants for breach of their contractual duties of confidentiality and in the case of the 1st defendant, for his breach of fiduciary and director’s duties to the plaintiff. The plaintiff also claims against the 10th defendant, the 1st to 9th defendants’ new employer, for conspiracy to injure and vicarious liabilities for the 1st to 9th defendants’ breach of various pleaded duties vis‑à‑vis the plaintiff.
2. The Summons was taken out on 26 March 2019 and first heard by Deputy High Court Judge Keith Yeung SC on 29 March 2019. The defendants gave a set of undertakings to the court (the “Undertakings”)and the matter was adjourned for substantive hearing before this Court.
MATERIAL FACTS
3. The plaintiff filed its Statement of Claim on 24 May 2019. From the Statement of Claim, it can be seen that:
(1) The Plaintiff is and was a company incorporated in Hong Kong carrying on the business of insurance claims management, loss adjusting and pre-risk and damage surveying for companies. It is part of the McLarens group of companies and a wholly owned subsidiary of McLarens Global Limited, a company registered in England and Wales.
(2) The 1st to 9th defendants were part of the 42 full-time employees employed by the plaintiff in its Hong Kong office and other than the 6th defendant, who was the general office manager of the plaintiff, they made up the majority of the plaintiff’s team for conducting business in its Construction and Engineering Division.
4. There is no dispute that there are no restrictive covenants in all of the 1st to 9th defendants’ employment contracts with the plaintiff.
5. The 10th defendant is part of the group of Charles Taylor PLC which provides insurance loss adjusting services in sectors similar to the plaintiff and its group globally and is a competitor of the plaintiff.
6. In or around February 2019, each of the 1st to 9th defendants accepted an offer of employment from the 10th defendant.
7. On 3 March 2019 (a Sunday), each of the 1st to 9th defendants attended the plaintiff’s office.
8. At about 5:02 pm of the same day, Mr Russell Henderson (“Mr Henderson”), the plaintiff’s Regional Managing Director – Asia, received a resignation email entitled “Resignation Letters – Corey Poon Alan McConkey James Grima Francis Ching Ivan Li Remus Chan Connie Tsun May Wong Chie Kuwabara” enclosing the resignation letters of the 1st to 9th defendants, all of which:
(1) were addressed to the 1st defendant except that of the 1st defendant which was addressed to Mr Henderson;
(2) stated that the letter was a “formal notice of the termination of my employment with immediate effect, with payment in lieu of notice”;
(3) stated that the last day of employment with the plaintiff was 3 March 2019; and
(4) stated that “My desk has been cleared and all Company property returned”.
9. Accordingly, the 1st to 9th defendants terminated their employment with the plaintiff on 3 March 2019 by undertaking to make payment in lieu of their notice period to the plaintiff. The 1st to 9th defendants duly paid their respective payment in lieu prior to this hearing.
10. The plaintiff’s case is that not only was there a pre-planned en masse exodus from the plaintiff, the 1st to 9th defendants have wrongfully obtained vast amount of confidential information and/or trade secrets from the plaintiff and the 10th defendant is a party to the conspiracy to injure the plaintiff.
11. The pleaded breach of duties by the 1st to 10th defendants are set out in paragraphs 56 to 74 of the Statement of Claim which I should not repeat herein save that it is relevant to note the plaintiff’s pleaded loss and damage claims are as follows:
“ 64. As a result of the matters referred to in paragraphs 60 to 64 above,the Plaintiff has suffered loss and damage.
Particulars
(i) The loss of profit on revenues which have been lost to the Plaintiff in whole or part, by the 2nd to 9th Defendants’ breaches of contract and/or duties, in using confidential information constituting and/or including trade secrets of the Plaintiff, and generally for the purpose of assisting in the performance of their duties for a competitor of the Plaintiff and/or in diverting such business to such competitor, including but not limited to loss of profit on revenue lost to the Plaintiff in relation to its business with Wills Towers Watson, JLT, Marsh, AWAC, QBE, Generali and China Taiping Macau.
(ii) Full particulars of loss and damage will be served when the full loss is known to the Plaintiff including and with respect to the loss of clients including Willis Towers Watson, JLT, Marsh, AWAC, QBE, Generali and China Taiping Macau.
73. As a result of the matters pleaded in paragraphs 70 to 72 above the Plaintiff has suffered loss and damage.
Particulars
(i) Costs and expenses incurred in mitigating and/or attempting to mitigate the damage or potential damage so caused, include the following costs and expenses:
(a) time costs and opportunity costs arising from the disruptions to the Plaintiff’s business caused by the Team Move En Masse;
(b) operational costs to hire or transfer employees to C&E Division;
(c) fee of the digital forensic expert; and
(d) legal costs.
(ii) The Plaintiff is continuing to incur costs in mitigating and/or attempting to mitigate the damage caused by the matters referred to in paragraphs 70 to 72 above. Full particulars of the Plaintiff’s loss and damage will be provided in due course.
(iii) The loss of profit on revenues which have been lost to the Plaintiff in whole or part, as a result of the Conspiracy to Injure, including but not limited to loss of profit on revenue lost to the Plaintiff in relation to its business with client companies including Willis Towers Watson, JLT, Marsh, AWAC, QBE, Generali and China Taiping Macau.
(iv) Full particulars of loss and damage will be served when the full loss is known to the Plaintiff including and with respect to the loss of clients including Willis Towers Watson, JLT, Marsh, AWAC, QBE, Generali and China Taiping Macau.
(v) Basing on the following trend of the Plaintiff’s business since the Team Move En Masse that:
(a) since Team Move En Masse, the Plaintiff has been instructed by its clients to transfer a total of 190 individual claim assignments to the 10th Defendant;
(b) the business received by the C&E Division also reduced significantly from about 25 to 30 case on average per month before the Team Move En Masse to about an average of 6 cases per month afterwards until recently;
(c) to date, the Plaintiff continues to receive instructions from its clients to transfer its files to the 10th Defendant;
the Plaintiff estimates that it could lose up to 50% of its business the coming financial year which is about HK$10 to 15 million in a normal year without major catastrophe.
(vi) Further or in the alternative the revenues and profits which have flowed and continue to flow to each of any of the Defendants, do so in whole or part by reason of the 1st to 9th Defendants’ wrongful removal of the confidential information constituting and/or including trade secrets of the Plaintiff during their employment with the Plaintiff. The Defendants are therefore liable to account to the Plaintiff such profits arising out of business opportunities that arose by reason of the 1st to 9th Defendants’ conduct.” (emphasis added)
THE UNDERTAKINGS
12. The Undertakings dealt with three broad issues:
(1) First, not to use confidential information relating to the plaintiff’s business or to any of the plaintiff’s customers, as were copied on or before 3 March 2019 from records maintained by the plaintiff in whatever form;
(2) Secondly, to (i) inform the plaintiff of documents in their possession copied from the plaintiff’s records on or before 3 March 2019; (ii) deliver up hard copies of such documents to the Supervising Solicitor; (iii) clone computers, external hard drives and other equipment in which digital copies of such documents were held; (iv) deliver up digital copies of such clones to the Supervising Solicitor; (iv) delete all such digital copies from those computers, external hard drives and other equipment.
(3) Thirdly, to confirm, by affirmation, compliance with the Undertakings.
13. By consent, the Undertakings were slightly adjusted on 26 April 2019. Mr Lee for the 1st to 9th defendants submitted that:
(1) All nine defendants have filed affirmation to confirm that they have duly complied with the Undertakings as adjusted.
(2) Their compliance with the Undertakings has been aided by a third party expert, FTI, who confirmed that each of the defendants has complied with the Undertakings as adjusted.
14. Mr Wright for the plaintiff submitted that the compliance...
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