EURO EVENTS MANAGEMENT CO LTD v. ALEX YUEN CHEUK YIU AND ANOTHER

HCMP2473/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2473 OF 2009

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REASONS  FOR  JUDGMENT

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Background

1. The plaintiff in these proceedings is a company incorporated and registered in Hong Kong.  The plaintiff is beneficially owned by Neo Que Yau.  According to the Affirmation of Neo Que Yau filed under HCA1672/2009, the plaintiff specializes in providing events management for banks and software companies which provide banking software to major banks.  It was said that many of the Plaintiff’s businesses came from the connection of Neo Que Yau.

2. Both parties agreed that the 1^st defendant was employed by Euro Search (Hong Kong) Limited from about September 2006 to November 2006.  In November 2006 he was transferred to the plaintiff.  On 1 December, the 1^st defendant tendered his resignation and he was given Garden Leave on about 3 December 2008.  His last working day was 31 December 2008.

3. The plaintiff alleges that the 2^nd defendant is the alter ego of the 1^st defendant while the 1^st defendant states that he is the Senior Conference Manager of the 2^nd defendant.

4. The plaintiff brought the action HCA1672/2009 for, inter alia, breach of contract of employment.  The plaintiff alleged that the 1^st defendant had dishonestly taken away clients from the plaintiff and forwarded confidential information of the plaintiff to the 2^nd defendant.

The current proceedings

5. The current proceedings HCMP2473/2009 are contempt proceedings arising out of the Order made by Deputy High Court Judge Line (as he then was) on 31 July 2009 (“the Order”) under the aforesaid High Court Action.  Paragraph 6(c) of the Order states that :

“The 1^st and 2^nd Defendants whether acting by themselves, their directors, officers, agents or servants, or any of them or otherwise howsoever be restrained until after Judgment in this action or until further Order from causing, soliciting or negotiating any business or business order with the customers of the Intended Plaintiff.”

6. Application for leave to issue contempt proceedings was made on 5 November 2009.  There were two affirmations in support of the leave application.  At para. 5 of the Affirmation of Pang Yiu Kwong, who is a solicitor acting for the plaintiff, it was said that “[o]n various places of the Affirmation of Neo, it was made known to D1 and D2 that SWIFT has been the client of Plaintiff.”  At para. 3 of the 2^nd Affirmation of Neo Que Yau, it was also said that “SWIFT has been a customer of the plaintiff ever since 2002”.  

7. The words “has been” in the present perfect tense meant that the company Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) was still a customer of the plaintiff on the date the application for leave was made.  But, as appeared herein below, the affirmation of one Jaime Lee for SWIFT clearly pointed out that this could not be the case as they ceased to be a customer of the plaintiff latest by 14 May 2009.  During the hearing, I offered to lend a grammar textbook for secondary school students to those representing the plaintiff, and I asked Mr Chu if he would agree with me that the appropriate words to be used in the affirmations should be “had been” instead of “has been”.  Mr Chu replied that he also agreed that the words “had been” should be used in the affirmations.

The issue

8. The crux of the matter is whether the defendants had breached the Order by taking part in organising one Mumbai conference for and on behalf of SWIFT in November 2009 (“the Complained Event”).

9. Both parties agree that SWIFT had been a client to the plaintiff before but there was dispute as to when SWIFT ceased to be a client of the plaintiff.  The plaintiff alleged that the last day was 9 May 2009 while the 1^st defendant alleged that the period should be around February or March 2009.  Jaime Lee, Events Manager of Asia Pacific of SWIFT appears to support the 1^st defendant’s version by stating that no contract or event was agreed between the plaintiff and SWIFT after 18 November 2008 and that the event held between 5 and 8 May 2009 in SWIFT’s name was without financial dealings between the plaintiff and SWIFT. 

10. From the affidavit of Jaime Lee, there were two “streams” of events between the two companies.  The first stream is the management by the plaintiff in organising “SWIFT Business Forum-Mumbai” and this stream had ceased on 18 November 2008.  She did not explain the exact nature of the second stream business, but she said that it ended with the organisation and hosting of Funds & Securities Automation summit (“FSAS”) 2009 by the plaintiff.  Ms Lee emphasised that in FSAS 2009 “SWIFT was not a client of the plaintiff; and neither was the plaintiff a client of SWIFT”.  The relationship between them is that SWIFT would allow its name to be leveraged by the plaintiff in hosting events to attract the plaintiff’s own clients.  More importantly, it was said that “[t]here were no financial dealings between SWIFT and the plaintiff except that SWIFT would defray disbursements incurred by the plaintiff such as fees for photographer”.

11. In relation to the second stream of business, it appears that there were some disputes between SWIFT and the plaintiff.  According to her, attendees of FSAS 2009 would not have to pay any fee but SWIFT received many complaints from the attendees that the plaintiff attempted to charge them.  She stated that on or about 15 April 2009, she gave Neo Que Yau a first time warning on the phone complaining the misuse of the SWIFT brand as “they were not supposed to use our [SWIFT’s] brand to send out invitations without the consent of SWIFT, but they [the plaintiff] did”.  She also visited the plaintiff’s office and met Neo Que Yau and his team to complain against their actions on 14 May 2009.  According to her, she made a “verbal statement at that meeting to terminate business relationship with the plaintiff”.  She also sent an email on 15 May 2009 to the plaintiff “for the sake of formality”.

12. The email on 15 May 2009 threatens litigation for “breach of governance with regards to the SWIFT brand” for the promotions of the event held between 5 and 8 May 2009 where the “SWIFT brand was intentionally misrepresented by Euro Events without SWIFT consent and against SWIFT’s repeated verbal and written advice”.

13. It appears from the evidence before me that all the business dealings between SWIFT and the plaintiff had ended by mid-May 2009 the latest. 

Submissions

14. Mr George Chu, counsel for the plaintiff did not explain in his skeleton how the defendants could be in breach of para. 6(c) of the Order by organising the Complained Event.  The bulk of his submission was only about why the defendants do not have a defence for breaching the Order.

15. During the hearing I asked Mr Chu whether the defendants were in breach of the Order at the moment they consented to it, since they were already in a business relationship with SWIFT at that moment.  Mr Chu replied in the affirmative.  Near the end of his submission I also asked Mr Chu whether he could find any authority where a person was held to be in breach of a court order for things done before the court order was granted.  Mr Chu said he could not find any.  I find it most surprising, to say the least, that the plaintiff is alleging that the defendants are guilty of contempt for an act they had done before and were continuously doing at the moment the Order was made.

16. Mr Erik Shum, counsel for the defendants, rightly in my view, submitted that the wording of the Order does not suggest retrospective operation and since SWIFT was an ex-customer (not a current customer) of the plaintiff on the date the Order was made (31 July 2009), the Order does not affect the dealing between the defendants and SWIFT thereafter.

Ruling

17. In my judgment, the wording of para. 6(c) is clear : the defendants were restrained from causing, soliciting or negotiating any business or business orders from the then customers of the plaintiff.  I do not think that the word “customer” in para. 6(c) can include ex-customers of the plaintiff.  If that were the intended effect the learned Judge would have used the word past customers or ex-customers in the Order.  His Lordship might also specify that only the customers who continued to have business with the plaintiff after September 2006 (i.e., when the 1^st defendant first joined the plaintiff) would be covered.

18. Mr Chu also relied on the English Court of Appeal case G.W. Plowman & Son, Ltd v Ash [1964] 2 All E.R. for the proposition that “customers were further refined as customers dealing with the plaintiff within the employee’s time”.  However, the clause in dispute in that case was drafted as follows :

“[the employee] will not canvass or solicit for himself or any other person or persons any farmer or market gardener who shall at any time during the employment of the employee hereunder have been a customer of the employers.” (Emphasis supplied)

19. The situation in that case is wholly different from that in the current case, where the italicized words above are missing.  I do not think that that case can assist in the interpretation of the Order.  All that the case decided was whether a restraint of trade clause was too wide to be effective, which is not in dispute here.

Conclusion

20. For the reasons set out above, on the true interpretation of the Order of 31 July 2009, the defendants were only restrained from causing, soliciting or negotiating business or business orders from any legal entities who were still customers of the plaintiff on 31 July 2009.  As SWIFT had ceased dealing with the plaintiff by the end of May 2009 the latest, SWIFT did not fall within the definition of customer as used in the Order.  The defendants did not commit contempt and the plaintiff failed in these proceedings.

Costs

21. As to costs, Mr Chu submitted that there should be no order as to costs.  He relied on my judgment in Roger Paul German Yves Fromentin v Kim’s Yacht Company Limited and John Alan Brodie (unreported, HCA1226/2004) for this proposition.  However, as I have made clear in para. 14 of that judgment, I made no order as to costs because “the 2^nd defendant has just fall short of committing contempt beyond reasonable doubt”.

22. The same cannot be said about the present proceedings, which were wholly occasioned by the plaintiff’s misapprehension of the Order.  Accordingly I do not consider that the Brodie case is applicable and the defendants shall have their costs in these proceedings to be taxed, if not agreed.