MOXIE COMMUNICATIONS LTD v. LAI CHEUK LOK (aka CHARLOTTE LAI)

DCCJ 4624/2021

[2024] HKDC 1323

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4624 OF 2021

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JUDGMENT

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Introduction

1.  The Plaintiff is a public relations agency in Hong Kong. The Defendant was a former employee of the Plaintiff. In this action, the Plaintiff claims that the Defendant has acted in breach of confidence and her employment agreement with the Plaintiff.

2.  During the trial, the Plaintiff called Ms Mona Wong (one of the two directors and a majority shareholder of the Plaintiff, holding more than 90% of the Plaintiff’s shareholding), Ms Hilda Lam (an administrative and personal assistant employed by the Plaintiff), and Ms Cher Chui (a former employee of a client of the Plaintiff) to testify, whereas the Defendant herself gave evidence and called no other witness.

3.  At the end of the trial I reserved judgment, which I now hand down.

Background

4.  The Plaintiff is a company incorporated in Hong Kong. Since 2003, the Plaintiff has been engaged in the communications industry, offering public relations services to clients, most of which are from the fashion industry.

5.  The Defendant graduated from university in 2013. After briefly working in an event management company from September 2013 to January 2014, she obtained employment from the Plaintiff.

6.  On 29 January 2014, the Plaintiff and the Defendant signed a document titled “Confirmation of Employment”, which set out the terms and conditions of the Defendant’s employment (“Employment Agreement”). The following terms are of relevance:-

(1)  The title of the Defendant’s position was PR assistant.

(2)  The basic monthly salary of the Defendant was HK$10,000.

(3)  After probation, either the Plaintiff or the Defendant could terminate the employment by giving the other side a one-month notice.

7.  On the same day, the Plaintiff and the Defendant also signed a document titled “Re: Protection of Company Information and Materials” (“Conditions”), which is the key document in this dispute. Given the importance of the Conditions, I will reproduce its contents in full:-

“With reference to your employment with Moxie Communications Ltd. as PR Assistant, we take this opportunity of reminding you of your obligations as such employee, which obligations take effect throughout the tenure of your employment and shall also survive termination of your service with us.

In the course of your employment with this Company, you have or have had access to company papers and materials and thereby acquired knowledge of our products, pricing structure, trading methods, manufacturing source, production base identity of product suppliers, contractors or sub-contractors, customers lists, and other commercial data, information or trade secrets pertaining to our operations (correctively referred to as our “BUSINESS INFORMATION”).

You are kindly requested to note that such Business Information are the properties of our Company over which we have at all times proprietary rights and it has always been our policy to protect such rights with all means of legal enforcement at our disposal.

Please, therefore, note that such Business Information must not be copied or removed from our office and if any such are in our (sic) possession they must only be used in connection with your employment and the work you perform on behalf of the Company and the same must be returned to the Company after use.

In the case of termination of your employment, such Business Information must be handed over before you leave. You can’t join the other agency (sic) for 2 years and are also requested to ensure that if you become engaged in any new employment or business you will not, without our consent in writing, disclose any such Business Information whatsoever, directly or indirectly, to any third party, or in any way utilize the same for any purpose, whether for the benefit of yourself or other firms or companies. Without prejudice to the generality of the foregoing, you are particularly requested not to contact, liaise with or solicit business from our existing customers or suppliers, or, in any way interfere in any contractual or business relationship without Company (sic) has established with our suppliers, customers and other parties with whom we have dealings.

Please be assured that by writing you this reminder, we meant no reflection upon you loyalty (sic) to the Company but merely we think it is right that we should acquaint you of your responsibility as a member of our staff. We have no doubt you will appreciate that protection of the Company’s proprietary rights in its business operations is in the best interest of the Company as a whole.

Kindly acknowledge your acceptance, agreement and understanding of the above by signing the duplicate of this letter.”

8.  It can be seen from the above that the Conditions contain two separate covenants:-

(1)  The Defendant cannot join another public relations agency for two years after termination of her employment with the Plaintiff (“Restrictive Covenant”).

(2)  The Defendant cannot contact, liaise or solicit business from the Plaintiff’s existing customers or suppliers, or interfere in any contractual or business relationship which the Plaintiff has established with its suppliers or customers (“Non-Solicitation Covenant”).

9.  The Defendant began working for the Plaintiff on 3 March 2014. She was promoted to the post of Account Executive with effect from 3 March 2015 onwards, and was promoted to the post of Senior Account Executive with effect from 3 March 2016 onwards.

10.  On 19 December 2017, the Defendant tendered her resignation with effect from 18 January 2018. While the parties differed on the reason behind, it is common ground that eventually the last working day of the Defendant with the Plaintiff was 12 January 2018. The Defendant alleges that the Plaintiff unilaterally asked her not to go back to work for the period from 15 to 18 January 2018 without giving her salary for those four days. This led the Defendant to commence proceedings in the Labour Tribunal, which she ultimately did not pursue.

11.  On 22 January 2018, the Defendant began her employment with a company called Karla Otto Asia Ltd trading in the name of Karla Otto HK, which is the Hong Kong branch of Karla Otto, an international public relations agency focusing on the fashion industry. Other than Hong Kong, Karla Otto has offices in Milan, Paris, London, Munich, New York, Los Angeles, Tokyo, Seoul and Dubai.

Issues in Dispute

12.  The Plaintiff claims that it is the owner of the following trade secrets and confidential information relating to its public relations agency business (“Confidential Information”), and that the Defendant acquired access to such Confidential Information during her employment with the Plaintiff:-

(1)  Proprietary know-how in the public relations industry in Hong Kong including structuring of its products offered to customers, pricing structure of its products, customer lists and other commercial data, information or trade secrets.

(2)  Tactical media and marketing plans designed for each customer.

(3)  Research and work products in the Plaintiff’s strategic public relations planning and advice rendered to its customers.

(4)  Media list containing the Plaintiff’s key contacts and detailed information of various media and publications, including newspapers, fashion magazines, radios, television programmes and financial magazines.

13.  The Plaintiff claims that in breach of the Restrictive Covenant, the Defendant joined Karla Otto HK, which is a public relations agency, on 22 January 2018.

14.  Further, the Plaintiff claims that the Defendant has acted in breach of confidence and the Non-Solicitation Covenant in the following manner:-

(1)  On or around 20 February 2018, the Defendant in her capacity as the account manager of Karla Otto HK contacted a significant customer of the Plaintiff, namely H&M Hennes & Mauritz Limited (“H&M”) and attempted to solicit business from H&M in favour of Karla Otto HK.

(2)  H&M had engaged the Plaintiff as its public relations agent for the Hong Kong market since 2006, and such engagement was continued in every subsequent year until the Defendant’s wrongful acts.

(3)  Having utilized the Confidential Information in the Defendant’s possession including the Plaintiff’s pricing structure in its contracts with H&M, Karla Otto HK was able to secure a public relations deal with H&M with effect from February 2018 to the exclusion of the Plaintiff.

(4)  Prior to the joining of the Defendant, Karla Otto HK was unable to procure sufficient media coverage in Hong Kong of an H&M event to be held during the Paris Fashion Week in February 2018 (“Paris Event”). Upon joining Karla Otto HK, the Defendant became responsible for the Paris Event. By misappropriating and misusing the confidential media lists compiled by the Plaintiff, the Defendant successfully engaged a number of bloggers and KOLs (key opinion leaders), which were the usual contacts of the Plaintiff, to cover the Paris Event.

15.  In its Amended Statement of Claim, the Plaintiff also claimed that because of the Defendant’s breaches, Karla Otto HK was able to beat the Plaintiff in securing a public relations services contract with another significant customer of the Plaintiff, namely American Beauty Ltd trading as Victoria’s Secret. During the trial, Ms Mona Wong (as noted above, a majority shareholder and a director of the Plaintiff) confirmed that the Plaintiff would not pursue this claim.

16.  While admitting that she signed both the Employment Agreement and Conditions on 29 January 2014, the Defendant contends that the Conditions did not form part of the Employment Agreement. The Conditions, as a separate agreement subsequent to the Employment Agreement, are not supported by consideration and are therefore unenforceable.

17.  Even if the Conditions were supported by consideration, the Defendant contends that both the Restrictive Covenant and the Non-Solicitation Covenant are unenforceable for being in restraint of trade for the following reasons:-

(1)  Regarding the Restrictive Covenant:-

(i)  The Defendant was merely a junior employee of the Plaintiff dealing with entry-level administrative work with a starting monthly salary of HK$10,000. The Plaintiff could terminate her employment with one-month notice.

(ii)  There is no geographical limitation to the application of the Restrictive Covenant.

(iii)  There is a blanket ban on joining any public relations agency for two years irrespective of whether that agency is engaged in any business in competition with the Plaintiff.

(iv)  The period of two years is more than necessary for the protection of any alleged interests of the Plaintiff.

(2)  As to the Non-Solicitation Covenant:-

(i)  The Defendant again contends that she was a mere entry-level employee of the Plaintiff.

(ii)  The application of the Non-Solicitation Covenant is of unlimited duration.

18.  In any event, the Defendant’s case is that as a matter of fact, she did not contact H&M in an attempt to solicit business from H&M in favour of Karla Otto HK. H&M did not employ Karla Otto HK as its public relations agent, whether with effect from February 2018 or otherwise, and the Defendant did not misuse any confidential information of the Plaintiff.

19.  As for the Paris Event, Karla Otto HK was instructed by its Paris branch office, ie Karla Otto Paris, to secure press attendance at the Paris Event instead of obtaining media coverage for it. The Defendant was able to assist Karla Otto HK without misappropriating or misusing any confidential information of the Plaintiff and without breaching any obligations owed to the Plaintiff.

20.  In light of the parties’ contentions, I consider that there are the following issues which I need to resolve:-

(1)  Are the Conditions supported by consideration?

(2)  Are the Restrictive Covenant and Non-Solicitation Covenant in restraint of trade and therefore unenforceable?

(3)  Has the Defendant breached the Restrictive Covenant by virtue of her joining Karla Otto HK?

(4)  Has the Defendant breached the Non-Solicitation Covenant and/or her duty of confidence by virtue of her dealing with H&M?

(5)  What remedies, if any, are the Plaintiff entitled to?

21.  There are other miscellaneous allegations raised by the Plaintiff by way of evidence. For instance, it alleges that the Defendant has wrongfully disclosed in her LinkedIn page her experience in working with the fashion brand COS. It also alleges that the Defendant helped Karla Otto HK to secure a contract with the brand Stuart Weitzman using the Plaintiff’s Confidential Information. Further, the Defendant is alleged to have attempted to poach an employee of the Plaintiff in Mainland China and a photographer who exclusively works with the Plaintiff. There is also a complaint from the Plaintiff that the Defendant disclosed the “feng shui” setting of its office premises to Karla Otto HK. These are not the pleaded complaints of the Plaintiff and I will not deal with them in this judgment.

Issue (1) – Whether Conditions Supported by Consideration

22.  The Defendant argues that the Conditions are separate from the Employment Agreement and constitute a post-contractual document. No consideration has been advanced in support of the Conditions and the Restrictive Covenant and the Non-Solicitation Covent therein, so they are unenforceable for lack of consideration.

23.  It is trite that past consideration is no consideration. A contracting party cannot use his promise to perform or his actual performance of a pre-existing contractual obligation as consideration for a new promise in his favour: Chong Cheng Lin Courtney v Cathay Pacific Airways Ltd [2011] 1 HKLRD 10 at §49.

24.  However, I am not persuaded by the Defendant’s argument. There is no dispute that on 29 January 2014, when the Defendant went up to the Plaintiff’s office to sign her employment agreement with the Plaintiff, the Employment Agreement and the Conditions were presented to the Defendant at the same time and the Defendant was asked to sign them both. Considering the factual circumstances as a whole, it is clear to me that the Conditions, albeit a document separate from the Employment Agreement itself, were part and parcel of the terms and conditions of the employment agreement between the Plaintiff and the Defendant.

25.  In other words, the Employment Agreement did not represent all the terms and conditions of the employment relationship between the Plaintiff and the Defendant. The Conditions were not imposed on the Defendant only after the parties agreed on their terms and conditions. Rather, in consideration of offering employment to the Defendant, the Plaintiff requested and the Defendant agreed to the Conditions.

26.  The Defendant testified that after signing the Employment Agreement, she asked Ms Hilda Lam about the Conditions in particular the Restrictive Covenant, and Ms Lam said that if she left the Plaintiff normally, “it should be ok”. Ms Lam could not recall if she met the Defendant on 29 January 2014, but she said she would not have advised the Defendant on the Conditions as she was not even responsible for employment matters. Given the positive evidence of the Defendant, I am inclined to believe that the alleged conversation between her and Ms Lam did take place. Nevertheless, whether Ms Lam said those words is neither here nor there; even according to the Defendant, Ms Lam did not in any way suggest that the Conditions would not bind on the Defendant. Mr Justin Lam, Counsel for the Defendant appearing with Mr Alex Yeung, fairly accepted that the representation of Ms Lam had no legal implication, other than having bearing on the credibility of the witnesses.

27.  The Defendant also contends that the Conditions contain phrases such as “with reference to your employment” and “reminding you of your obligations”, which suggest that the Defendant had already entered into an employment relationship with the Plaintiff by the time the Defendant signed the Conditions. I am unable to agree with the Defendant. Considering that the Defendant was asked to sign both documents at the same time, it is plain that the said phrases refer to the Defendant’s obligations if she were to take up employment with the Plaintiff. My view is reinforced by the phrase “which obligations take effect throughout the tenure of your employment” in the Conditions, which signifies that the obligations are to take effect only if the Defendant were to choose to take up employment with the Plaintiff.

28.  I therefore hold that the Conditions are supported by consideration.

Issue (2) – Whether Covenants in Restraint of Trade

29.  Even though the Conditions are supported by consideration, it does not necessarily mean the covenants therein are enforceable. The Defendants argue that they are not enforceable as they are in restraint of trade.

30.  If a covenant restricts the liberty of the covenantor to carry on trade with other persons not parties to the contract in such manner as he chooses, then the covenant is one in restraint of trade: Petrofina (Great Britain) Ltd v Martin [1966] Ch 146 at 180.

31.  As the learned authors stated at §§10.7 & 10.8 of Bloch and Brearley: Employment Covenants and Confidential Information (4^th Ed):-

(1)  The starting point is that covenants restricting the freedom of the ex-employee to compete with his ex-employer are unenforceable, unless the employer can show that the covenants are designed to protect his legitimate interests and extend no further than is reasonably necessary to protect those interests.

(2)  The reasonableness of the restriction is to be judged at the date the contract was made.

(3)  The employer is not entitled to protect himself against competition in itself but only against unfair exploitation of the ex-employer’s trade secrets or trade connections, and also to protect the stability of its workforce.

32.  As to what constitutes “legitimate interests”, the observation of HHJ Winnie Tsui (as she then was) in Winta Investment (Hong Kong) Ltd v Ng Kam Chit [2018] HKDC 342 at §73 is most pertinent:-

“73. It is generally recognised that the only legitimate interests which, as against a former employee, an employer is entitled to protect are his trade secrets and customer connections to the extent that the employee may have gained influence over the customers so they would be likely to follow the employee to his new employment: Steiner (UK) Ltd v Spray (1 December 1993, unreported); cited in Degreeasia at para 35. The rationale is that trade secrets and customer connections may properly be regarded as, in a general sense, assets of the business and hence form part of the employer’s property. It would therefore be unjust to allow the employee to appropriate these assets for his own purposes, even though he might have contributed to its creation. It is in this sense that trade secrets and customer connections are considered to be “protectable” by way of restraint of trade clauses: Stenhouse Australia Ltd v Phillips [1974] WLR 391 at 400E-F.”

33.  In other words, “legitimate interests” do not mean an interest in avoiding competition. They mean some interests of a proprietary nature which are usually in the form of trade secrets and customer connections belonging to the employer.

34.  As summarized by DHCJ To (as he then was) in AXA China Region Insurance Co Ltd v Pacific Century Insurance Co Ltd [2003] 3 HKC 1 at §38, information must possess the following characteristics to qualify as “trade secrets” for the purpose of enforcing a covenant in restraint of trade:-

(1)  The information must be used in a trade or business.

(2)  It is confidential, meaning it is not already in the public domain.

(3)  It can be easily isolated from other information which the employee is free to use so that any man of average intelligence and honesty would think it is improper to use the information at the disposal of his new employer.

(4)  The information, if disclosed to a competitor, would be liable to cause real or significant harm to the owner.

(5)  The owner of the information must limit its dissemination or at least not encourage or permit its widespread publication or otherwise impress upon the employee the confidentiality of the information.

35.  It is also instructive to have regard to Ribeiro PJ’s reminder in PCCW-HKT Telephone Ltd v Aitken (2009) 12 HKCFAR 114 at §§23-25 that “trade secrets” must be identified with precision and that information of lesser significance will not be afforded post-termination protection.

36.  As to what amounts to “reasonable necessity”, Mr Justin Lam and Mr Alex Yeung have helpfully summarized in their submissions various criteria which the court may adopt in assessing the reasonableness of the restrictions:-

(1)  Seniority of the employee - Where the employee is junior and/or employed at a low wage, the court may be unwilling to enforce the covenant. Often a senior employee will have more opportunity to learn the trade secrets and confidential information of the employer or to gain influence over customers. The seniority of the employee may also have bearing on whether there was inequality of bargaining power: Bloch and Brearley: Employment Covenants and Confidential Information at §11.8.

(2)  Duration of the restriction – The greater the duration of the restriction, the more difficult it will be to justify it as reasonable: Manulife Financial Asia Ltd v Kenneth Joseph Rappold [2024] HKCFI 989 at §29(3).

(3)  Period of notice for termination – If an employee’s employment can be terminated on short notice, it will be unreasonable to impose a long post-employment restriction: Gledhow Autoparts Ltd v Delaney [1965] 1 WLR 1366 at 1377E-G.

(4)  Geographic scope – The wider its geographical extent, the more difficult it will be to justify the restriction as reasonable. The absence of any spatial limit in a non-compete clause is itself regarded as a remarkable feature which prima facie warrants justification: Manulife Financial Asia Ltd (supra) at §§29(3) & 33.

(5)  Nature of activity restricted – Where the covenant restricts the undertaking of work which is beyond the kind of work undertaken by the employee for the ex-employer, the court will likely find it unreasonable: Wincanton Ltd v Cranny [2000] IRLR 716 at §11.

(6)  Nature of further contract restricted – If a non-solicitation covenant prevents the employee from approaching or dealing with all former customers of the ex-employer and not just those with whom the employee had direct contact during his employment with the ex-employer, the restriction will unlikely be considered reasonable: Austin Knight (UK) Ltd v Hinds [1994] FSR 52 at 58.

37.  Turning to the facts of this case, the Plaintiff contends that the Restrictive Covenant and the Non-Solicitation Covenant are no wider than necessary in protecting its legitimate interests, considering the nature of its business and its dependence on the Confidential Information to maintain its competitiveness in the Hong Kong market, and the fact that in assuming her position and in discharging her duties, the Defendant had acquired access to the Confidential Information.

38.  In her evidence, Ms Mona Wong said that confidentiality is required because even relatively junior staff would be able to access the confidential information of the Plaintiff’s customers, who would have no hesitation to terminate the engagement of a public relations agent if their communications strategies are leaked. The Conditions are thus necessary in order that the Plaintiff would not violate any confidentiality clause or non-disclosure clause in its own agreements with clients.

39.  While this may justify the imposition of a duty of confidence on its employees, I do not see how it may justify the two post-employment covenants. Ms Wong’s emphasis is on the confidential information of the Plaintiff’s clients, but a restrictive covenant can only be justified in protecting an employer’s legitimate interests in the form of the employer’s own proprietary confidential information. It is understandable that fashion brands or celebrities may want to jealously protect their business strategies or privacies, such that the public relations agent may want to ensure that their employees do not disclose the customers’ confidential information. Nevertheless, this is not a justification to restrict the employees from working with other public relations agencies or competing with their ex-employer.

40.  In its Amended Statement of Claim, the Plaintiff pleaded that the Defendant had access to such Confidential Information as the pricing structure of the Plaintiff’s products. This, however, is not substantiated by Ms Wong’s evidence and is positively denied by the Defendant. In fact, when the Defendant was cross examined in relation to a Victoria’s Secret event she helped organize for the Plaintiff, she firmly said Ms Wong told her that the Plaintiff and the client had budget concerns, but she was not told the details let alone the Plaintiff’s pricing structure. While the Defendant admitted that she would help obtain quotations from service providers, the fact remains that she did not know the pricing structure of the Plaintiff’s services. The Defendant’s answers were not seriously challenged, and I find that the Defendant did not have access to the Plaintiff’s pricing information.

41.  The only “confidential information” belonging to the Plaintiff which Ms Wong could identify as accessible to the Defendant is a “main press list”, which contains the contact information of various media including monthlies, websites and bloggers. The list also contains the Plaintiff’s remarks and comments on those media or their personnel. The Defendant admitted that during her employment with the Plaintiff, she could access that “main press list”. Nevertheless, I agree with the Defendant that the contacts of media are public information and different agencies would maintain their own press list; there is in fact an online service called Telum Media which provides access to a database of contacts of journalists and media. And having perused the comments and remarks made by the Plaintiff on its “main press list”, I think they are far from being able to qualify as trade secrets that would warrant the protection by way of post-employment restrictions.

42.  On the other hand, the Plaintiff has not suggested that the Defendant would have influence over its customers or trade connections. On the contrary, Ms Wong frankly deposed that whether the Defendant “had or would have influence over our customers was not our consideration when we offered the term of employment to her on 29 January 2014”, and the Defendant positively said she did not have influence over the Plaintiff’s customers.

43.  It is also important to bear in mind that when she obtained employment from the Plaintiff, the Defendant was very much a fresh university graduate and her job was a mere entry-level job. As a matter of common sense, it is unlikely that she would have access to the Plaintiff’s trade secrets or would have influence over the Plaintiff’s customers that could justify the two restrictive covenants. This is similar to the scenario in Degreeasia Limited t/a Hong Kong Institute of Continuing Education v Paules Lee Siu Yuk HCA 1686/2006 (unrep, 25 June 2010), where Recorder Shieh SC said at §49 that it would be stretching the point too much to say an administrative staff “would command the sort of influence and customer loyalty which could amount to [the employer’s] asset … which was protectable by a restrictive covenant in the eyes of the law”.

44.  One may also note that the Restrictive Covenant has a two-year duration, which is lengthy compared to the one-month notice period required for the Plaintiff to terminate the Defendant’s employment (in fact, during the first month of probation, only a one-day notice is required). It is thus possible that the Defendant could have worked for the Plaintiff for a short period of time, but would then be subject to a two-year restrictive covenant, which would be wholly unreasonable.

45.  While Ms Wong said the Restrictive Covenant was not meant to be a world-wide restriction, the fact remains that the Restrictive Covenant does not have a spatial limitation, which adds to its unreasonableness. This Court cannot apply a “blue pencil” to insert a spatial limitation to the covenant so as to render it more reasonable: see Tillman v Egon Zehnder [2020] AC 154 at §85; Midland Business Management Ltd v Lo Man Kui [2011] 1 HKLRD 470 at §§40-42.

46.  Finally, on the Plaintiff’s own evidence, its clients are mostly from the fashion sector. However, the Restrictive Covenant restricts the Defendant from joining any other public relations agencies, not only those specializing in the fashion industry. The Non-Solicitation Covenant also restricts the Defendant from contacting all customers and suppliers of the Plaintiff, as opposed to those with whom the Defendant had direct contact during her employment with the Plaintiff.

47.  The Plaintiff did make a point that when the Defendant tendered her resignation, she lied about her career plan, which is suggestive that the Defendant knew she could not join another public relations agency. According to Ms Wong, the Defendant did not disclose to the Plaintiff that she would take up employment with Karla Otto HK; rather, the Defendant told Ms Wong that she would go back to Australia to pursue academic studies. The Defendant denied having said anything about studying in Australia. While I am inclined to believe that Ms Wong was telling the truth in this respect (having regard to a message sent by Ms Wong to the Defendant on 15 January 2018 where Ms Wong encouraged the Defendant to experience her taste in life and “enjoy the ride”), one way or another the subjective mind of the Defendant does not affect the unenforceability of the two covenants.

48.  Having considered the above matters, I have come to the view that the Plaintiff has failed to show there is any legitimate interest that would justify imposing the two covenants on the Defendant. In any event, the two covenants are not reasonably necessary for the protection of the interest as identified by the Plaintiff. I therefore hold that the Restrictive Covenant and the Non-Solicitation Covenant, being covenants in restraint of trade with no proper justification, are not enforceable.

Issue (3) – Whether the Defendant in breach of Restrictive Covenant

49.  Since I have ruled that the Restrictive Covenant is unenforceable, issue (3) must be answered in the negative.

50.  In any event, the Plaintiff has not been able to say what damages it has suffered by virtue of the fact that the Defendant took up employment with Karla Otto HK within the two-year restricted period. The Plaintiff has not sought any interlocutory relief, and by now the two-year period has long lapsed and I would not grant any injunctive relief even if I ruled in favour of the Plaintiff on this issue.

Issue (4) – Whether the Defendant in breach of Confidence and/or Non-Solicitation Covenant

51.  The Plaintiff’s pleaded case is that on or around 20 February 2018, the Defendant whilst working for Karla Otto HK attempted to solicit business from H&M, which was then a customer of the Plaintiff. The Defendant utilized the Confidential Information to secure a deal for Karla Otto HK with H&M, and misused the Confidential Information to assist Karla Otto HK to organize the Paris Event.

52.  In addition to my ruling that the Non-Solicitation Clause is unenforceable, I would find that as a matter of fact the Defendant did not contact H&M to solicit business from H&M for Karla Otto HK:-

(1)  It is common ground that Karla Otto is a well-established international public relations agency operating from various cities worldwide.

(2)  According to the Defendant, H&M has been a client of Karla Otto Paris since about 2015. On the other hand, H&M has never been a client of Karla Otto HK. The only role which Karla Otto HK played in relation to H&M was to support Karla Otto Paris in inviting the Hong Kong and Taiwan press to H&M’s media events during the Paris Event.

(3)  The Defendant’s account is corroborated by various emails, which all suggest that H&M had been in liaison with Karla Otto Paris and Karla Otto HK before the Defendant joined Karla Otto HK:-

(i)  On 13 and 14 December 2016, there were email exchanges between a Mr Arne Eggers from Karla Otto HK and an employee from H&M named Ms Lisa Chai regarding the Paris Event.

(ii)  On 27 January 2017, a Ms Florent Farinelli from Karla Otto Paris sent a mass email to numerous employees from H&M (including Ms Cher Chui from Hong Kong), stating that Karla Otto Paris was in charge of the Paris Event and asking the addressees to refer to their local Karla Otto contact.

(iii)  On 2 February 2017, there were email exchanges between Mr Arne Eggers from Karla Otto HK and Ms Florent Farinelli from Karla Otto Paris regarding the Paris Event.

(iv)  On 20 February 2018, the Defendant in her capacity as the account manager of Karla Otto HK sent an email to Ms Suki Cheung of H&M. In that email, it is clear that she was merely following up on a job already being performed by her colleague who was on leave; she was not soliciting business from H&M.

(4)  The Plaintiff has called Ms Cher Chui as a witness. Ms Chui was the communications manager of H&M in the region of Hong Kong and Macau from September 2007 to September 2018. Ms Chui’s evidence is that in January 2018, she was working with Karla Otto HK on the Paris Event, and in her own words, the assignment “was given to us by the global H&M group”. During cross examination, Ms Chui also clarified that she did not engage Karla Otto HK for H&M, and she had not told Ms Wong that H&M appointed Karla Otto HK to replace the Plaintiff. Ms Chui’s evidence does not advance the Plaintiff’s case; quite the contrary it supports the Defendant’s case about Karla Otto HK’s limited involvement with H&M and that it was not the Defendant who solicited business from H&M.

(5)  In re-examination, Ms Chui did say that she did not necessarily have to follow the instructions from the H&M headquarters in engaging Karla Otto HK to assist with the Paris Event, which I understand to mean that she could still have engaged the Plaintiff for the Paris Event. Be that as it may, it does not detract from the Defendant’s saying that she did not solicit business from H&M for Karla Otto HK.

53.  I also find that as a matter of fact the Defendant did not use any Confidential Information in assisting Karla Otto HK in organizing the Paris Event:-

(1)  According to Ms Wong, for the Paris Event, Karla Otto HK arranged among others two bloggers named Ms Tina Leung and Ms Pamela Cheung to cover the show. The Plaintiff used to engage the same bloggers for H&M events in the past, and no other public relations agencies engaged these bloggers for overseas events before. Ms Wong therefore alleged that the Defendant made use of the Plaintiff’s “main press list” to contact the bloggers.

(2)  Ms Chui, who at that time was working in H&M, also said that she appreciated the Defendant’s success in engaging the two said bloggers to cover the Paris Event. She opined that without the assistance of the Defendant using the Plaintiff’s resources and connections, Karla Otto HK would not have been able to procure the involvement of the two bloggers.

(3)  The Defendant’s evidence is that the contact details of the two bloggers are available on their own Instagram pages, and they do not have an exclusive relationship with the Plaintiff. She understands that the two bloggers would actually regularly reach out to Karla Otto HK for tickets to the Paris Fashion Week. In fact, Ms Tina Leung is a close friend of Mr Arne Eggers, the Defendant’s supervisor at Karla Otto HK. And it was the Defendant who included Ms Pamela Cheung in the Plaintiff’s press list in the first place.

(4)  It is not disputed by the Plaintiff that the contacts of the two bloggers are publicly available, and that the Plaintiff does not have any exclusive working relationship with them. There is no basis for the Plaintiff to allege that the Defendant could procure the involvement of the two bloggers only by misusing the Plaintiff’s Confidential Information. It is only a matter of common sense that given the nature of their jobs, bloggers would welcome being approached by different agencies and would make themselves as easily accessible as possible.

(5)  Even if it may be said that the Defendant had learnt from the Plaintiff the proper way to cater for H&M’s needs (ie arranging the participation of suitable bloggers), such know-how cannot be said to be trade secrets belonging to the Plaintiff. As Ribeiro PJ noted in PCCW-HKT Telephone Ltd (supra) at §24, the law acknowledges that an employee brings to a job his own stock of skill, knowledge and experience, and the employee necessarily carries away with him his own skill and knowledge when changing jobs. An employer “is not entitled to restrain the former employee from deploying his own skill and knowledge for the benefit of himself and his new employer”. Similarly, in SNE Engineering Co Ltd v Hsin Chong Construction Co Ltd [2015] 4 HKLRD 517, Lam VP (as he then was) said at §141 that “[there] is no proposition of law that everything learnt or observed by an operator of machinery during the course of works at a construction site should be regarded as confidential … in general an employee is free to use his skill and knowledge acquired in the course of his employment (as part of his stock in trade) for other purposes after the end of the employment…”.

54.  All in all, I find that the Defendant has not acted in breach of confidence or any other duties or the Non-Solicitation Clause (which is unenforceable) in relation to Karla Otto HK’s involvement with H&M for the Paris Event. The Plaintiff has also not been able to show that the Defendant is in possession of any of the Plaintiff’s Confidential Information which the Defendant is liable to deliver up.

Issue (5) – Remedies

55.  Given my rulings above, the Plaintiff is not entitled to any of the remedies sought.

56.  For the sake of completeness, I would record that during the trial, Ms Wong confirmed that the Plaintiff would not seek damages from the Defendant even if it were to succeed on any of its claims. I would also observe that in any event the Plaintiff has not adduced evidence to substantiate its alleged loss and damage.

57.  As noted above, the Restrictive Covenant has lapsed for a long time, so I would not have granted any injunctive or declaratory relief even if I had found that the Restrictive Covenant was enforceable and the Defendant had acted in breach of it.

58.  The Plaintiff also seeks an injunction to effectively restrain the Defendant from using the Confidential Information. The definition of “Confidential Information” in this judgment is taken from the Plaintiff’s own definition in its Amended Statement of Claim, and with respect, it is extremely vague. Even if I had found that the Defendant had misused some confidential information belonging to the Plaintiff, I would not have granted the injunction in the terms couched by the Plaintiff. In this regard, it is instructive to note the following observations of Coleman J in Face It Limited v Luk Mei Ling [2019] HKCFI 1416 at §16:

“… the courts have repeatedly stressed the importance of proper particulars being given in a claim for misuse of confidential information or trade secret. Not only must the injunction be couched in specific terms, the particulars for confidential information are an essential part of the claim and they must be pleaded as material facts and essential particulars. A pleading lacking those particulars is liable to be struck out as embarrassing or failing to disclose the relevant reasonable cause of action. Vague and general particulars will not suffice.”

Conclusion and Costs

59.  For the above reasons, I hereby dismiss the Plaintiff’s claims in their entirety.

60.  Costs should follow the event. Mr Lam for the Defendant seeks indemnity costs. I agree that this case warrants costs to be taxed on an indemnity basis:-

(1)  While I accept that there is room for legal argument as to the enforceability of the two covenants, the Plaintiff should have known from the outset that there is no sufficient factual basis for it to allege that the Defendant has misused its confidential information or poached away its clients.

(2)  In particular, the Plaintiff should have always known that its complaint about the Defendant soliciting business from Victoria’s Secret is baseless. For H&M, it is clear from the Plaintiff’s own witness Ms Chui and the documentary evidence that the Defendant did not solicit business from H&M in favour of Karla Otto HK.

(3)  Worse still, while the Plaintiff has not particularized its loss and it expressly acknowledges that it cannot quantify its loss, it sees fit to suggest a figure in the tune of HK$10,000,000 in evidence and it commenced this action in the High Court.

(4)  It is apparent that the Plaintiff has been trying to unduly exert pressure on the Defendant. Such oppressive and high-handed manner in conducting litigation should be discouraged with indemnity costs.

61.  The Defendant was previously on legal aid and the Legal Aid Certificate was revoked on 27 July 2022. This case was transferred to the District Court by virtue of the order dated 24 September 2021 of the Temporary Registrar of the High Court. Taking into account these matters, I make the following costs order nisi:-

(1)  The Plaintiff is to pay the Defendant’s costs of the action (including all costs reserved), to be taxed if not agreed on indemnity basis at High Court scale before 24 September 2021 and at District Court scale thereafter, with certificate for one counsel; and

(2)  The Defendant’s own costs prior to 27 July 2022 be taxed in accordance with the Legal Aid Regulations.