SLIK HONG KONG CO LTD v. GERALD MERLYN RHOSLYN EVANS AND OTHERS

HCA 1424/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1424 OF 2005

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REASONS  FOR  DECISION

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1.  I had an ex parte application before me in the late afternoon of 22 July 2005 seeking injunctive relief against the defendants.  The Plaintiff has tried to give notice to the Defendants but without success.  Based on what I was told by Mr Coleman, on 22 July 2005 the Plaintiff has yet to exhaust all reasonable means of contacting the Defendants.

2.  Ex parte applications should be regarded as exceptional and the court should not entertain the same unless there are cogent justifications usually in terms of either extreme urgency or secrecy.  See Bates v. Lord Hailsham of St. Marylebone & others [1972] 1 WLR 1373.

3.  In Brand, Farrar Buxbaum v Samuel-Rozenbaum Diamond, HCA 5191 of 1998, 8 May 2002, Ma J (as he then was) said at Para.24,

“One of the facets of equality before the law (a fundamental right guaranteed under Article 25 of the Basic Law) is that no order ought to be made by a court against anyone without his first being given a reasonable opportunity of being heard.  An exception to this fundamental rule is where ex parte orders are made by the court.  At the risk of repeating the obvious, ex parte orders are only made “where the situation is of such extreme urgency that there is literally no time to warn the defendant of what is proposed or where the purpose of the injunction will or may be frustrated if the defendant is informed of what is proposed or where the defendant simply cannot be found”: see TRP Limited v. Thorley, unreported, 13 July 1993, English Court of Appeal, per Bingham LJ.  I should perhaps out of completeness add that this salutary rule does not apply where express provisions are made in the Rules for the ex parte procedure to be used: see Hong Kong Civil Procedure at paragraph 32/6/5.”

4.  It follows that the first thing the court should ask when it is faced with an ex parte application is whether the applicant can show such exceptional circumstances which justify him proceeding on ex parte basis.  If he could not cross that hurdle, the court should not be concerned about the substantive merits of his application.

5.  In the context of urgency, it has to be borne in mind that nowadays it does not need to wait very long to list a matter for an inter parte hearing.  Hence, Ma J said in Para.28 of his judgment in Brand, Farrar Buxbaum v Samuel-Rozenbaum Diamond,

“Even if there was genuine urgency (and I do not accept that there was), the proper course was for the claimant to take out an inter parte application, if necessary with time abridged, or if that was somehow not possible, to make an ex parte application on notice to the plaintiff.”

In Seapower Resources International Ltd v Lau Pak Shing HCA No. A10715 of 1993, 15 December 1993, Rogers J (as he then was) said the following with regard to the degree of urgency that could justify ex parte application,

“For an ex parte application for an injunction to be [justified] on the grounds of urgency it must be so urgent [that] you cannot give even five minutes warning to the other side.  Here, solicitors were instructed for the Defendants … the Plaintiffs’ solicitors well knew it.  …  There was no justification for not even making a telephone call or sending a fax …”

See also the recent judgment of the Court of Appeal in L v C, CACV 333 of 2003, 27 April 2004.

6.  The fact that if notice is given, the defendant might ask for time to response is not a justification for proceeding ex parte.  The court can exercise its discretion in deciding whether any interim relief should be granted in the meantime after hearing submissions from the defendant.  Thus, Rogers J said in Seapower Resources International,

“Lastly, it was suggested that if the Defendants were given notice they would have sought an adjournment which would have delayed matters and then the Plaintiffs might not have got their injunction.  That is an argument which I find so reprehensible that will not dignify it by dealing with it.”

7.  In the present case, there is no question of secrecy.  As mentioned, the Plaintiff has attempted to give notice to the Defendants of the ex parte application.  The question is whether there is an urgency to justify the matter to be entertained on ex parte basis.  Mr Coleman submitted that the Plaintiff should be entitled to nip the wrongdoing in the bud and the sooner the injunction is obtained, the more effective it would be.  Counsel referred to the springboard principle and argued that the Defendants should be deprived of any benefit of having a head start in the competition with the Plaintiff.

8.  Upon the termination of the employment of the employee defendants, the Plaintiff’s cause of action, as put forward by Mr Coleman during the ex parte hearing, is primarily focused on the protection of confidential information.  The confidential information identified by Mr Coleman are customers lists and data base and product lists kept by the Plaintiff.

9.  Mr Coleman also took me to evidence suggesting the Defendants had been bad-mouthing the Plaintiff in their attempts to solicit the Plaintiff’s customers.

10.  I have reviewed the evidence again after hearing Mr Coleman’s submissions.  I am however not persuaded that the points taken by Mr Coleman justify this court entertaining the application on an ex parte basis.  Whether the Plaintiff has a strong case or not, the usual rule is that the Defendants are entitled to be heard.  As mentioned above, an inter parte hearing can be arranged within a relatively short time and even if the Defendants might ask for more time to respond, the court will then be in a position to assess whether any interim relief should be granted after hearing the Defendants on a preliminary basis.  Hence, the bud nipping argument cannot provide a good reason for proceeding ex parte.

11.  Regarding the protection of confidential information, I do not see any reason why the Plaintiff could not counter the alleged misuse of its confidential information by explaining the position to its customers.  The same applies to the apparent misinformation as to the winding up of the Plaintiff’s operation.  I do not see anything drastic happening between the ex parte hearing and the inter parte hearing which warrants this court to grant ex parte protective relief.

12.  For these reasons, I dismissed the ex parte application on 22 July 2005 without prejudice to the Plaintiff issuing an inter parte application and if the Plaintiff is so advised, with an application for abridgment of time for service of the inter parte summons.

13.  By way of postscript, the Plaintiff issued an inter parte summons returnable before me on 23 July 2005, seeking similar relief with abridgment of time.  Further evidence was filed to explain why it is critical to have injunctive relief in place.  Having been satisfied that the Plaintiff has given adequate notice of the inter parte hearing to the Defendants, I considered that in the circumstances, a reasonable opportunity has been afforded to the Defendants to appear although they chose not to do so.  I proceeded to deal with the application on 23 July and heard submissions from Mr Coleman.  Since the Defendants did not appear and the Second affidavit of Mr Glass has yet to be served on the Defendants, instead of dealing with it as an inter parte hearing with abridgment of time, I entertained the application as an ex parte application on notice.

14.  On the materials before me, I am satisfied that there is a serious question to be tried.  There is strong evidence suggesting that the Defendants are attempting a wholesale poaching of the Plaintiff’s operation in Hong Kong by misusing confidential information belonging to the Plaintiff.  Unless immediate relief is granted to the Plaintiff, there is a serious risk that the Plaintiff could not resuscitate the operation.  In the circumstances, I am of the view that the Plaintiff should be protected by injunctive relief in terms of the order I made in the afternoon of 23 July 2005.  To safeguard the interest of the Defendants, I have added a proviso to the Schedule of Confidential Information in the order to enable the ex-employees of the Plaintiff to use their general stock in trade insofar as they could do so without reference to materials belonging to the Plaintiff.

15.  I have also provided in the order that the Defendants be at liberty to apply for setting aside the order at any time prior to the return date of 29 July 2005.