CHINA INNOVATION INVESTMENT LTD v. TANG XIAOSHUANG

DCCJ 6683/2019

[2021] HKDC 420

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 6683 OF 2019

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D E C I S I O N

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1.  This is an application by the plaintiff for summary judgment against its former administrative director. The question that I have to decide is whether the defendant has raised any defence to the plaintiff’s claims for breach of contract and breach of confidence that should be allowed to go to trial.

BACKGROUND

2.  The plaintiff is a Cayman Islands company carrying on the business of innovation investment in Hong Kong.

3.  The defendant is a former administrative director of the plaintiff. There is no dispute that the contract of employment dated 1 November 2019 between the plaintiff and the defendant included the following terms which are relevant for the present purposes:

(1)  If the contract of employment is terminated, the defendant must return to the plaintiff all documents, records, materials and information relating to the plaintiff or its clients, and must not retain any copy of the same, including any electronic copy (Clause 8.5).

(2)  The defendant must not, at any time, disclose to any third party any confidential information of the plaintiff obtained by the defendant during the term of the employment without the plaintiff’s prior authorisation (Clause 9.1).

(3)  For the purposes of the contract of employment, confidential information includes but is not limited to clients’ information, transaction secrets, business plans, development strategies and any other information which the plaintiff considers confidential (Clause 9.2).

(4)  The defendant must, at any time (including any time after the termination of the contract of employment), keep any confidential information of the plaintiff confidential until the plaintiff no longer considers the same confidential (Clause 9.3).

(5)  The defendant must not make any copy or create any record in whatever manner of any confidential information of the plaintiff for any other use without the plaintiff’s prior permission (Clause 9.4).

4.  On 5 December 2019, the plaintiff terminated the defendant’s employment with immediate effect.  According to the plaintiff, the defendant forwarded 5 emails containing confidential information of the plaintiff’s business (“Information”), as particularised in §10(a)-(e) of the Statement of Claim, from his work email address to his personal email address between 10:48 am and 11:40 am on 5 December 2019, viz. shortly after learning that he would be dismissed by the plaintiff.

THE PARTIES’ RESPECTIVE CASES

5.  On 11 December 2019, the plaintiff commenced these proceedings against the defendant for breach of the contract of employment and breach of confidence.  The principal reliefs sought are as follows: (i) an injunction against disclosure of confidential information, including but not limited to the Information; (ii) an order for delivery up of the same; and (iii) damages.

6.  In his Defence dated 13 March 2020 (“Defence”), the defendant admits to have sent the Information to his personal email address, albeit for the alleged purpose of facilitating his work outside normal office hours.  The defendant also claims that he has no intention to keep, use or disclose any part of the Information upon the termination of his employment with the plaintiff.  His only pleaded defence is that an injunction is not necessary because he was and is prepared to make a statutory declaration confirming his lack of intention to keep, use or disclose any part of the Information.

THE ORDER 14 APPLICATION

7.  By summons filed on 26 August 2020, the plaintiff applies for summary judgment under Order 14 of the Rules of the District Court (Cap  336H) (“RDC”) against the defendant.  The summons is supported by an affirmation made by Li Wancheng, the plaintiff’s company secretary, which, I note, complies with the requirements in RDC Order 14, rule 2(1) (viz. verifying the facts on which the claim is based and stating that in the deponent’s belief there is no defence except as to the amount of damages claimed).

8.  The defendant did not file any affidavit in opposition to the plaintiff’s application for summary judgment, and was absent at this hearing.

9.  I am satisfied that the defendant was duly served with the summons and the notice of this hearing in accordance with §1 of the Order of Master Maurice Lam dated 28 December 2020.  I therefore proceeded with this hearing in the defendant’s absence.

10.  RDC Order 14, rule 4(1) provides that a defendant may show cause against an application for summary judgment “by affidavit or otherwise” to the satisfaction of the court.  I note that the defendant did not show cause against the present application in the ordinary way by affidavit: see Hong Kong Civil Procedure 2021, Volume 1, §14/4/3.  Nevertheless, in view of the fact that the defendant has filed the Defence which was verified by his statement of truth, I would proceed to consider whether the defendant has raised any triable issue in the Defence.

Any triable issue raised by the defendant

11.  As stated above, the defendant’s only pleaded defence is that an injunction is not necessary because he was and is prepared to make a statutory declaration confirming his lack of intention to keep, use or disclose any part of the Information.  In my view, this does not give rise to any triable issue for the following reasons.

12.  First, it is well established that a final injunction may be granted as relief in an action for breach of confidence: The University of Hong Kong v Hong Kong Commercial Broadcasting Co Ltd and Anor [2016] 4 HKLRD 113, §50; Snell’s Equity (34^th ed), §9-019.

13.  Secondly, a statutory declaration, even if made by the defendant, is self-serving and provides no substitute for the injunction sought, which I consider to be necessary for the protection of the plaintiff’s right to confidentiality over the Information.

14.  Thirdly, the defendant’s claim is tantamount to acknowledging that he is not entitled to retain, make use of or divulge any part of the Information. It follows that he should be ordered to deliver up and return the same to the plaintiff.

15.  In the premises, I am of the view that the defendant has not raised any triable issue in the Defence.

Scope of the injunction and delivery up order

16.  Turning to the scope of the injunction and delivery up order sought, the plaintiff initially claimed that it would seek an order covering “all the information obtained by the Defendant, his representatives, servants and/or agents from the Plaintiff and kept by him/them without the Plaintiff’s prior consent during the term of employment and/or after the termination of the Employment Agreement, including but not limited to [the Information]”.

17.  At the hearing, I expressed concern about the width of the injunction and delivery up order sought by the plaintiff.  Confidential information said to be in the defendant’s possession has to be clearly defined.  This is of cardinal importance in the present case where an injunction is sought, because the defendant should be enabled to know, with some certainty and clarity, what it is that he must or must not do under the injunction.  He should not be put at risk of being in contempt of court by an ambiguous prohibition, or a prohibition the scope of which is obviously open to dispute: Total Lubricants Hong Kong Limited and Others v Christophe de la Cropte de Chanterac and Others, HCA 1694 of 2008 (15 December 2009), §30, per Poon J (as Poon CJHC then was); Sim Kon Fah v JBPB and Co. (a firm) and Others [2011] 4 HKLRD 45, §§50-51 and 53, per Recorder A Chow, SC (as he then was); Cheng Hung Kit v Jim Yiu Ming, HCA 2037 of 2011 (1 June 2016), §§33-34, per G Lam J.

18.  Mr Mok, appearing for the plaintiff, offered to limit the scope of the injunction and delivery up order sought to only cover the Information specified in §10(a)-(e) of the Statement of Claim.  I consider the revised scope to be proportionate to the plaintiff’s right to confidentiality, and sufficiently clear to enable the defendant to know exactly what information he shall deliver up and is not free to retain, use or divulge.

DISPOSITION

19.  In view of my decision above, I would grant summary judgment in terms of §1 of the plaintiff’s summons (as amended) as follows:

(1)  The defendant, his representatives, servants and/or agents shall:

(a)  within 7 days of the date of service of the Order, deliver up and hand over to the plaintiff’s solicitors all information specified in §10(a)-(e) of the Statement of Claim and/or any documents containing such information (whether in electronic form or in hard copy or otherwise) which are in the possession, custody or power of the defendant, his representatives, servants and/or agents (collectively, the “Confidential Information”);

(b)  within 14 days of the date of service of the Order, file and serve an affidavit or affirmation:-

(i)  verifying compliance with §(1)(a) above;

(ii)  identifying the names and addresses of all persons, firms and companies (if any) to whom the defendant, his representatives, servants and/or agents has or have supplied any of the Confidential Information and the date(s) on which such Confidential Information was supplied;

(2)  The defendant, his representatives, servants and/or agents be restrained from keeping, using or disclosing to any third party any of the Confidential Information;

(3)  Judgment on liability be entered against the defendant with damages and interest thereon to be assessed; and

(4)  This Order shall be served by the plaintiff on the defendant forthwith in accordance with the mode of service provided for in §1 of Master Maurice Lam’s Order dated 28 December 2020.

20.  I also make an order nisi that the defendant do pay the plaintiff’s costs of this application, to be taxed if not agreed.  The costs order nisi shall become absolute upon the expiry of 14 days after the date of this judgment if there is no application to vary the same within the 14-day period.  The costs of the action, save for those of this application, be reserved.