AUSTRALIA AND NEW ZEALAND BANKING GROUP LTD v. CHEN, KUEI MEI

HCA 1674/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1674 OF 2014

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HCA 2212/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 2212 OF 2014

(TRANSFERRED FROM LABOUR TRIBUNAL
CLAIM NO LBTC 2807 OF 2014)

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________________________

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JUDGMENT

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I. INTRODUCTION

1. The plaintiff (“P”) employed the defendant (“D”) as relationship manager (“RM”) from 20 March 2010 to 24 July 2014 pursuant to an employment letter dated 2 December 2009 (“Contract”).

2. On 26 August 2014, P commenced HCA1674/2014 against D, and filed the affidavit of Benjamin Hamilton Payne (P’s Head of Legal Asia, “Payne”) (“Payne 1^st Aff”). On 29 August 2014, Mimmie Chan J granted an interim injunction (“Interim Injunction”) to restrain D from inter alia using/disclosing (other than for personal purposes) any confidential information she acquired in the course of her employment with P (“Employment”), ie (a) the identity of P’s customers, (b) the contact names, identity card numbers, passport details, addresses, telephone numbers and/or account details of such customers (including such information regarding 428 of P’s customers in attachments and excel spreadsheets (collectively, “Customer List”) and filled remittance application form with customer/ personal information (collectively, “Remittance Information”)) D sent by 2 emails and 7 emails from her office email address (“Office E-Address”) to her personal email address (“Personal E-Address”) on 5 and 6 June 2014 respectively (collectively, “Emails”), and (c) account balances of the accounts/investments by such customers set out therein.

3. On 15 September 2014, D filed an affirmation to discharge the Interim Injunction (“Chen 1^st Aff”). On 22 September 2014, P filed Payne’s 2^nd affidavit in reply (“Payne 2^nd Aff”). On 25 September 2014, DHCJ Seagroatt continued the Interim Injunction with reference to 425 instead of 428 customers (“Inter Partes Injunction”). In paragraph 2 of his Reasons for Decision dated 3 October 2014 (“Seagroatt Reasons”), the learned judge said he gave such reasons “…… to lend some aid to a swift termination of this litigation in the interests of [D] who has in my view, …… no defence to [P’s] claim on her own evidence, and is in need of firm, realistic advice”.

4. The information in paragraph 2(a)-(c) above (with reference to 425 instead of 428 of P’s customers as explained in paragraph 3 above (“425 Customers”)) is referred to as “Confidential Information” below. D also sent the following by the Emails: P’s blank account closure and fund transfer forms (“Bank Forms”), some internal information/message (“Internal Information”), some information on an investment product (“Investment Information”). The Confidential Information (including the Customer List and Remittance Information), Bank Forms, Internal Information and Investment Information are referred to as “Attachments” below. D’s act in sending the Emails/Attachments from the Office E-Address to the Personal E-Address on 5-6 June 2014 is referred to as “Email Act” below.

5. D commenced LBTC2807/2014 against P on 15 September 2014. It was transferred to the Court of First Instance on 17 October 2014 to become HCA2212/2014. On 3 December 2014, the 2 actions were consolidated. On 11 December 2014, P filed her Amended Statement of Claim for inter alia the following reliefs:

(a)	a permanent injunction (“Injunction Order”)to restrain D from: (i)  using or disclosing any confidential information D acquired in the course of the Employment, ie the Confidential Information; (ii)  otherwise acting in further breach of the Contract; (iii)   otherwise misusing the Confidential Information or any of it;
(b)	delivery up of all documents being the property of P and all copies thereof, and in particular the Emails/Attachments including the Customer List (“Delivery Up Order”);
(c)	an order that D do make/serve within 3 days after compliance with the Delivery Up Order an affirmation (“Affirmation Order”): (i)  verifying that D has fully complied with the Delivery Up Order or that all such documents had been destroyed/deleted in electronic form; (ii) making full disclosure of all materials/information (in physical or electronic form) copied, downloaded, transferred or removed from P’s computer system or premises; (iii) providing P with full particulars of what D had done with all such materials and information;
(d)	an enquiry into damages or at P’s discretion an account of profits, and an order for payment of all sums found due to P upon the taking of such inquiry or account with interest.

6. On 13 January 2015, D filed her Amended Defence and Counterclaim (“ADC”) counterclaiming for inter alia the following reliefs:

(a)	a declaration that P’s summary dismissal of D on 24 July 2014 (“Summary Dismissal”) was wrongful and without just cause;
(b)	damages for libel;
(c)	payment of employer’s contribution to D’s mandatory provident fund (“MPF”) in the total sum of about $398,771.90;
(d)	damages for future income loss caused by the wrongful dismissal to be assessed;
(e)	an injunction to restrain P from further publishing or causing to be published defamatory words of and concerning D.

On 9 February 2015, P filed the Amended Reply and Defence to Counterclaim.

7. On 3 March 2015, P issued a summons to seek inter alia the following reliefs (“Summons”):

(a)	final judgment under Order 14 rule 1 of the Rules of the High Court (“RHC”) for the Injunction, Delivery Up and Affirmation Orders (collectively, “P’s Reliefs”);
(b)	alternatively to (a) above, similar final judgment under Order 27 rule 3 of the RHC based on admissions contained or referred to in: (i) paragraphs 7.1-7.3 of the ADC; (ii) paragraph 25 of the Chen 1st Aff; (iii) statutory declaration (“SD”) dated 22 August 2014 signed by D (“Signed SD”); (iv) email dated 28 July 2014 containing a Chinese statement dated 24 July 2014(“24/7/14 Statement”); and/or (v) paragraphs 7, 8 and 12 of the Seagroatt Reasons (and also paragraphs 14-16 thereof that notedagreement by D’s counsel that P’s chronology as set out was “an accurate statement ……”) (collectively, “Admissions”);
(c)	an order that paragraphs 32e(b)-(c) and32f as well as paragraph 2(b) of the prayer of the ADC be struck out on the ground they disclosed no reasonable cause of action;
(d)	alternatively to (c) above, determination of the following questions of law, ie (i) whether D had any legal right to seek “loss of future income” as damages for wrongful dismissal as pleaded in paragraphs 32e and 32f of the ADC, and (ii) whether such wrongful dismissal amounted to “defamation” as pleaded in paragraph 32e(c) of the ADC;
(e)	paragraphs 20.1 and 21.6 of the ADC be struck out on the grounds that they referred to the contents of without prejudice and privileged meetings between the parties, and that they (i) were scandalous, (ii) might prejudice, embarrass or delay fair trial of the action and/or (iii) were abuse of the process of the court;
(f)	paragraphs 4, 5.6, 6, 10.5, 11.2, 14.3, 17.1, 19.2, 21.2, 21.7, 22.2 and 38 of the ADC be struck out on the grounds that they might prejudice, embarrass or delay the fair trial of the action.

8. Mr Carolan, counsel for P, confirmed there was no need to give separate consideration to paragraph 7(b) above as P relied on the Admissions to establish the relief in paragraph 7(a) above. Mr Yip, counsel for D, in addressing the relief sought in paragraph 7(a) above advised that D was prepared to give an undertaking to the court in the same terms as the Signed SD.

9. Mr Carolan reminded that irrespective of the result of P’s application for summary judgment, this court should determine the applications in paragraph 7(c)/(d) and paragraph 7(f) (insofar as it concerned paragraph 38 of the ADC) above in respect of D’s counterclaim. But if P succeeded on the Summons, the remaining matters for trial would be D’s counterclaim in paragraphs 6(a), 6(b)/(e) (for defamation premised on certain words in P’s letters dated 22 August 2014 to affected customers notifying them of the data breach (“Customer Letters”)) and 6(c) above since P would not seek the reliefs in paragraph 5(d) above.

10. On 3 March and 13 July 2015, P filed Payne’s 3^rd and 4^th affidavits (“Payne 3^rd and 4^th Affs”). On 5 June 2015, D filed her 2^nd affirmation (“Chen 2^nd Aff”). The Payne 3^rd and 4^th Affs adopted the Payne 1^st and 2^nd Affs and the exhibits thereto.

II.  LEGAL PRINCIPLES: SUMMARY JUDGMENT

11. A plaintiff may invoke the procedure under Order 14 of the RHC where there is no valid defence to his claim or otherwise a triable issue.  The rationale is set out in Hong Kong Civil Procedure 2016:[1]

“ …… The underlying policy of the summary procedure is to prevent a defendant from delaying the plaintiff from obtaining judgment in a case in which the defendant clearly has no defence to the plaintiff's claim …… When applied for, it is for the defendant to show that there is a triable issue or an arguable defence if he is to be allowed his day in court. ……”

In Ng Shou Chun v Hung Chun San,[2] Godfrey J noted it was not appropriate to embark on a mini‑trial on affidavit evidence. The court should ask itself the question whether what the defendant says is credible or believable.  If so, he must have leave to defend; if not, the plaintiff is entitled to summary judgment. Hong Kong Civil Procedure 2016 went on to say that:[3]

‘ “In considering whether there are triable issues the Court will, of course, not take the alleged defence on its face value but test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier. The Court will also consider the inherent probability of the defence. But what the Court should not do is to conduct a mini‑trial on complicated factual issues.” …….’

III.  LEGAL PRINCIPLES: STRIKING OUT

12. Hong Kong Civil Procedure 2016 said as follows:[4]

“…... It is only in plain and obvious cases that the court should exercise its summary powers to strike out …… any pleading under this rule. …… Disputed facts were to be taken in favour of the party sought to be struck out. Nor should the court decide difficult points of law in striking out proceedings. The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out. ……if on a careful reading of the Statement of Claim however complicated, it can be seen that there is no cause of action, a court can, and probably will, order it to be struck out ……”

13. The fact that the question of law appears difficult/obscure does not preclude the court from striking out pleadings if it is satisfied it has all the necessary information to decide the question, and has come to the conclusion after full argument in the face of all relevant information that the case is plainly and obviously one for striking out. In such circumstances, the court “should not decline to do so on the ground that the issues are difficult or complicated”.[5]

IV.  P’s AND D’s RESPECTIVE CASE

14. Background  D worked in banking in Taiwan for 13 years before she joined ABN AMRO Bank NV (“ABN AMRO”) in 2007. Royal Bank of Scotland (“RBS”) took over ABN AMRO, and in March 2010 P acquired RBS’ retail/commercial business and customer base. Upon joining P, D worked at P’s Retail Banking Unit (“RBU”) under Connie Lo (“Lo”), and D’s team headed by Chen Yi-An (“Chen”) comprised RMs who mainly served the Taiwanese market. D claimed she had exemplary work record.

15. D’s portfolio/list of customers  D claimed she relied on her personal/social networks to develop a (mostly Taiwanese) customer portfolio (being her personal career assets) and to acquire new customers for marketing bank products/services and fulfilling her monthly revenue goal. But Payne said D’s portfolio included (a) the customer base assigned to her when she joined ABN AMRO, (b) new customers she introduced during the Employment and/or assigned to her by P’s direct sales team, and (c) existing customers assigned to her when other RMs resigned or when business underwent restructuring.

16. D claimed she compiled/kept an excel list (which eventually became the Customer List) of information[6] about her personal/ social friends some of whom became customers of the banks she worked for, downloaded it to the computers of P and its predecessors, and from time to time updated/ edited it for inter alia work purpose (eg as quick reference tool when she was on business trip).[7] D further claimed only some of the 425 Customers were P’s customers (most of whom were introduced by her).

17. Payne said this did not mean the Confidential Information belonged to D. The 425 Customers with account/customer numbers were P’s proprietary customers,[8] so D must have prepared the Customer List during her Employment with P (and/or its predecessors) for servicing such customers their behalf. Payne claimed it was irrelevant that the Customer List was originally made for work purpose since the unanswered question was why D sent it to the Personal E-Address when she clearly contemplated leaving P by signing the Consent Form referred to in paragraph 27 below 2-3 days before the Email Act.

18. Clause 9 of Contract  D agreed she had to keep customer information in confidence. Clause 9 of the Contract (“Clause 9”) provided:

“9. Confidential Information

……

Confidential information is any information about ANZ Group, its customers or its affairs which you obtain during your employment, unless the information is already available to the public other than as a result of breach of this clause. Some specific examples of confidential information include information about:

• Customers, including, their names, contact details, financial information and the dealings they have with ANZ Group or the products and services we have supplied to them,

• Our processes, procedures and systems,

• Working documents such as research, strategies, papers, proposals, presentations and financial information.

You must keep secure, and must not disclose or use confidential information except where required as part of your role, or with your line manager’s written agreement.

These obligations continue after your employment with ANZ ends.”

D also owed P (a) a duty of good faith and fidelity, (b) a duty not to misuse information confidential to P or to disclose such information (eg customer information) to any third party, and (c) a duty after termination of the Contract not to use/disclose any trade secrets or other confidential information (eg customer information) of P (collectively, “Implied Duties”).

19. Clause 4 of Contract  P claimed it had clear guidelines in policies, procedures, rules and codes (“P’s Policies”) for handling/use of confidential information, eg policies HAN-080[9] and HAN-090[10] in sections 4.1-4.2  of the Information Security Standard – Information Handling Policy (“Information Policy”) available on P’s intranet to all staff (including D)[11] that prohibited sending confidential information (eg customer information) to employees’ personal email accounts (“Prohibition”), and P’s staff (including D) was frequently reminded not to send sensitive information about P’s business/customers to their personal email accounts:

(a)  P’s CEO sent email reminders to P’s staff (including D) on 30 June 2011[12] and 3 September 2013,[13] and RBU sent email reminders to staff in the unit (including D) on 30 January 2014[14]

and 20 March 2014[15] (collectively, “Email Reminders”);

(b)  in 2013-2014 D completed annual mandatory e-learning on “Living the Code”[16] which included a section on information security that made reference to the “Use of Systems, Equipment and Information Policy” that in turn referred to the Information Policy (“Policy Training”), and  “Living the Code” stated that:

“…… ANZ Information refers to all information that is owned or entrusted to ANZ which is not widely available” and “…… When using ANZ information you must handle and protect it in line with the standards published on MAX and updated form time to time. ……review the Guidelines for Handling Confidential or Restricted Information on Max.” (pp 79-80)

“You must: …… for information that is classified as Internal, Confidential or Restricted: …… use only ANZ supplied or approved devices ……” (p 82)

20. Payne claimed D had to comply with P’s Policies (including the Information Policy) under clause 4 of the Contract (“Clause 4”):

“4. Policies, Procedures, Rules and Codes

Information about the way we work at ANZ is contained in our policies, procedures, rules and codes. You are required to comply with these policies, procedures, rules and codes and it is important that you read and familarise yourself with them. These policies, procedures, rules and codes do not form part of your employment agreement and may be varied by ANZ from time to time at ANZ’s discretion. In any event, a reference to a policy, procedure, rule or code in this agreement includes any variation to that policy, procedure, rule or code.”

21. But D said her duty under Clause 4 only applied to P’s Policies specifically brought to her attention and acknowledged by her, but did not prohibit her from undertaking acts bona fide and reasonably necessary for fulfilment of her work duties and/or were authorised by her direct superior or management. She further said there was no policy that prevented her from using the Personal E-Address for work purpose as she was not specifically referred to, had no knowledge of and hence was not under any strict duty to comply with the Information Policy.

22. D claimed P’s RMs (including D) were only provided with the “Do’s and Don’ts” that prohibited unauthorised disclosure of customers’/P’s confidential information to third parties, but Payne said D’s copy appeared to be RBS’ old template that reflected some but not all of P’s data protection and information security policies.

23. Alleged practice  The ADC averred (a) P condoned the practice amongst P’s staff of using personal emails, mobile phone applications and/or other informal means (“Informal Means”) to perform work duties (“Alleged Practice”), (b) the Email Act done for D’s work duties was authorised by her direct superior and/or P’s management, and (c) by reason of the Alleged Practice and P’s knowledge/inaction, P was estopped from relying on the Prohibition in P’s Policies due to waiver/acquiescence.

24. D claimed it was widely known by P’s management/staff that P’s supervisors, investment consultants and RMs commonly used the Informal Means for work-related communications[17] to handle customer requests and to fulfil revenue targets. D claimed her supervisors knew she (like others in the Taiwan team) did not use the Blackberry work telephone P provided (“Phone”) as it could not read Chinese. When D was away from the office/workstation for a few days several times a year, she would email the customer list to the Personal E-Address for work purpose, ie to serve her portfolio of customers. D used double encryption with 2 passwords to ensure the information could not be accessed/seen by any third party.

25. Payne denied P condoned any Alleged Practice, which practice was refuted by the Email Reminders in 2011-2014. Despite invitation by P’s solicitors, D failed to provide more specific information on the Alleged Practice for investigation. Payne spoke with Lo who denied knowing any member of her teams (particularly the Taiwan team) used personal email accounts for work purpose. Even if some employees did breach P’s Policies (which P denied), Payne said it did not justify the Email Act that forwarded personal details of the 425 Customers to the Personal E-Address, which data breach put P’s reputation and customers’ data at risk.

26. D claimed P’s data loss protection system[18] should have been able to detect she had previously emailed the customer list to the Personal E-Address, but she did not receive any warning not to continue with such practice. D suggested there should be full discovery of P’s past inspection of emails from the Office E-Address to the Personal E-Address with explanation why no warning was given. But Payne disagreed as (a) warning

was actually given by the Email Reminders and induction/continuous trainings (eg the Policy Training), and (b) P’s data loss protection system was put in place in September 2013 so previous uploading of D’s customer list to the Personal E-Address was likely to have been made before then, which would explain why previous data breaches were not detected.

27. Resignation  D claimed P’s internal restructuring in/ about October 2013 resulted in disintegration of the Taiwan market team. By January 2014, 5 RMs of the Taiwan team resigned, and D started to worry about her career at P. In/about May 2014, D was told she would be re-assigned to another team with effect from July 2014, which meant she would no longer be able to serve her portfolio of customers, and which prompted her to think of resigning. D searched for potential employment options, and on 3 June 2014 signed a form (“Consent Form”) authorising First Advantage Limited (employment agent of P’s competitor and D’s eventual new employer Royal Bank of Canada (“RBC”), “Agent”) to contact P to obtain information about her, but told the Agent not to submit the form to P until she actually resigned.[19]

28. Payne agreed there was a restructuring in October 2013 that merged the Taiwan and China teams, but D was assigned to a subdivision that focused on Taiwanese customers so she serviced the same portfolio of customers before/after the restructuring. Historically the turnover rate was high, but resignations reduced after the restructuring.

29. The undisputed chronology was: (a) in/about May 2014 D was

notified of team re-assignment in July 2014, (b) on 3 June 2014 D signed the Consent Form for the Agent, (c) on 5-6 June 2014 D did the Email Act, (d) on 7 June 2014 D went on block leave until 23 June 2014, and (e) on 25 June 2014 D tendered her resignation with her last day on 24 July 2014.

30. In mid-June 2014 whilst D was on block leave, P’s staff gave investment advice to a customer customarily served by D. D claimed she found out about this on 23 June 2014, and tried to stop the transaction that would have generated revenue for P but would not have been in the customer’s interest. On the following day, Lo berated D in front of subordinate colleagues and forced her to execute such transaction (“Lo Incident”), which prompted D to resign on 25 June 2014.

31. Payne claimed the transaction in fact generated a profit for the customer, and doubted whether the alleged Lo Incident precipitated D’s resignation as she had signed the Consent Form on 3 June 2014 which showed she had planned to leave P’s Employment (and which D’s then counsel was unable to explain to DHCJ Seagroatt). In any event, these matters were irrelevant for the Summons since the Email Act was well in advance of the events in mid-June 2014.

32. From 27 June 2014 onwards, D was put on garden leave after she signed 2 letters dated 26 June 2014 (“Resign Letters”) to confirm her understanding of her continuing duties, the first one inter alia required her to be available during the notice period to, say, answer questions from time to

time,[20] and the second one inter alia reminded her of continuing obligations as to inter alia “confidential information” in Clause 9.

33. Email Act  P’s data loss protection system detected the Email Act on 5-6 June 2014. Payne claimed that in the absence of P’s approval, knowledge and/or consent, it was in breach of Clause 9, Clause 4 and P’s Policies. But D claimed she did the Email Act in good faith just before she went on leave on 7 June 2016 (ie before the Lo Incident precipitated her resignation):

(a)   On 4 June 2014, 2 customers Mr Ou and his wife Madam Wong (“Ous”) gave instructions to D and insisted on her personal service despite her upcoming vacation. D sent the Ous’ filled remittance form(s) with their personal information (ie the Remittance Information) to the Personal E-Address to process the transaction when she was out of the office.

(b)  D and her husband had accounts with P, so she obtained the Bank Forms either as customer or for work purpose.

(c)   The Investment Information was general information widely available on the internet.

(d)  The Email Act of sending inter alia the Customer List to the Personal E-Address was reasonably required to facilitate D’s work duties whilst on leave (which was normal amongst RMs), so the Emails/Attachments could not give rise to any reasonable suspicion that D would be in breach of the Contract, especially given D’s exemplary work record and absence of misuse/ disclosure of the Confidential Information.

34. Payne doubted such explanation. First, D could have sent her work emails to/from her Phone when she was away from her workstation. Secondly, D did not explain why she did not seek prior consent/approval under policies HAN-080 and HAN-090 referred to above.[21] Thirdly, D was not supposed to work under P’s block leave policy issued pursuant to the guidelines of the Hong Kong Monetary Authority (“HKMA”), and P’s general practice (as well as the market practice) was for back-up personnel to cover for RMs on block leave. Fourthly, the Ous’ request for transaction- specific assistance did not justify sending the 425 Customers’ confidential information to the Personal E-Address. Fifthly, the Bank Forms sent together with the Customer List to the Personal E-Address right after D signed the Consent Form raised suspicion that she intended to persuade customers to transfer out funds and close accounts in breach of her non-solicition obligation shortly before her resignation. Sixthly, as discussed below, D knowingly breached P’s Policies and failed to remedy/mitigate such breach when given opportunities to provide a SD that would give acceptable assurances to protect P and its customers.

35. 22 July 2014  On 22 July 2014, P’s Judy Tong (“Tong”) called to tell D about P’s discovery of the Email Act. D questioned the delay which she claimed left her no time to deal with the matter, but Payne explained the detection of the Email Act was not actioned until early July 2014 due to technical issue in relation to the data loss protection system and need for manual verification. Payne said P’s human resources team was then notified, RBU was notified on 10 July 2014, and various departments were involved before it was possible/appropriate to approach D.

36. Tong asked D who was then holidaying with her family in Brunei to be back in Hong Kong as soon as possible, but D said she could not secure an immediate return flight. D claimed she was ready/willing to cooperate with P’s investigation, and on the same day emailed Tong to say she could be in Singapore on 28 July 2014 and to provide 3 contact numbers to deal with any enquiries by P in the meantime.

37. 22-24 July 2014  Payne said D should have made herself available prior to 24 July 2014 to meet and explain the Emails/Attachments, but she could not meet before 1 August 2014 as she was in Brunei and had other travel plans. During 22-24 July 2014, P (by Tong and sometimes by Tong with Shirley Wong (“Wong”), Joyce Cheng (“Cheng”), Eva Iu (“Iu”) and Payne) and D had various telephone conversations/emails[22] in which (a) D was given details about the Email Act and opportunities to explain herself and to sign a SD that would give assurances to P that the data breach was contained, and (b) D was asked to consider the implications of not signing on her career, but P could not secure a meeting with D before the end of her Employment. P claimed D did not satisfactorily explain her position and even maintained the Customer List was hers. On the other hand, D claimed that on 23 July 2014 P’s staff telephoned to threaten her that the Email Act might have serious legal consequences, but refused to explain over the telephone.

38. 24 July 2014  In a telephone conversation with Tong, Wong, Cheng, Iu and Payne (“24/7/14 Tel Call”), D stated (a) she was the only person who had access to the Personal E-Address, (b) she had not downloaded, uploaded, transferred or saved any Confidential Information to any destination other than the Personal E-Address, (c) she had not created, copied or duplicated any Confidential Information, and (d) she had not used or disclosed any Confidential Information to any third party, but she was summarily dismissed (which Payne said was a disciplinary measure in the absence of satisfactory explanation of her breaches of confidence, Contract and P’s Policies) for the Email Act.

39. Payne said D should have returned the Customer List and other confidential information when she resigned or was placed on garden leave, but D said electronic information could not be “returned” and anyway she deleted the Emails/Attachments from the Personal E-Address immediately after the 24/7/14 Tel Call. The Chen 2^nd Aff asserted D (a) was no longer in possession, control or custody of the Confidential Information whether in electronic form or otherwise, (b) had not used the Confidential Information to advance her own personal interest, and (c) had not disclosed/disseminated the Confidential Information to any third party.

40. D said the 24/7/14 Tel Call was made hastily without fair/ impartial investigation by P. She could not fully absorb/comprehend what Payne said in English, was not given sufficient chance to explain/answer the serious allegations against her, and was shocked by the Summary Dismissal. D said the Email Act did not cause P any loss/damage or justify the Summary Dismissal, but would jeopardise or even destroy her future career in banking, so P should at least have given (but it did not give) proper warning prior to 22 July 2014. Payne claimed the circumstances of the Summary Dismissal were irrelevant for the Summons as the Email Act occurred well before that event, and P did not seek to strike out D’s counterclaim for wrongful dismissal.

41. 24/7/14 Statement  D stated in the 24/7/14 Statement inter alia that she transmitted customer information to the Personal E-Address in inadvertent violation of P’s data protection policies:

“[D]過去服務[P]之業務運作中曾取得之客戶資料,首先[D]為求服務客戶聯繫及查詞之方便,將有客戶資訊之資料傳至[D’s][Personal E-Address], 已不慎抵觸[P’s]資料保護政策。希望[P]了解事實真相後感同身受經營業務之艱辛,並非要謀取不法之利益,也在此坦承[D]未經至深思熟慮之行為實屬不當!

為盡力減少可能危害之影響在此聲明:

已於2014年7月24日刪除所有於[Personal E-Address]內有關[P]的相關資訊,並保證未曾有用於任何不法用途。

沒有傳送任何有關[P’s]機密資料至第三方分享。

沒有保存[P]的機密資料,亦沒有其他人接觸過有關[P’s]資料。

沒有將[P’s]客戶資料移轉或下載至其他設備。

亦不會使用或洩漏有關之[P’s]客戶資料。

此舉造成[P]困擾,為此,[D]深感悔意並向[P]至最深的歉意!”

(my emphasis)

42. D claimed she made the 24/7/14 Statement in great haste, without legal advice and based on Wong’s suggestion during the 24/7/14 Tel Call (that D should make such statement or her position/interest would be jeopardised), and she emailed it to Tong on 28 July 2014 to assure P she did not knowingly breach P’s internal policies and the information in the Emails was secure. D was later advised the 24/7/14 Statement (which did not amount to any admission of fault/liability) contained inaccuracies, but Payne said the 24/7/14 Statement was evidence that D did not dispute her wrongdoing.

43. Report to Regulators  Payne said on 25 July 2014 P as compliant bank reported to HKMA and Office of the Privacy Commissioner for Personal Data (“OPCPD”) (collectively, “Regulators”) and thereafter communicated with them on investigation and remedial action. On 8 August 2014, HKMA indicated concern that customer data might be at risk, and recommended affected customers be notified to reduce/mitigate the potential harm/damage to them. But D claimed the Regulators did not contact her for information/investigation, so she was not given a chance to explain/defend herself.

44. 29 July 2014  On 27 July 2014, D returned to Hong Kong. On 29 July 2014, Payne, Wong, Tong, Cheng and Sandra Leung of P met with D and her solicitor at P’s office (“29/7/14 Meeting”). P gave D a letter confirming the Summary Dismissal. Payne claimed the purpose of such meeting was to secure D’s agreement to sign a SD (“1^st Draft SD”) to confirm, in essence, she had returned/destroyed the Emails/Attachments (including the Confidential Information) and not copied/transmitted it to any third party (as consistent with what she stated during the 24/7/14 Tell Call and in the 24/7/14 Statement) to ensure the data breach was contained and to address customer/Regulator concerns, but D refused unless the Summary Dismissal was withdrawn. Payne said P was unable to withdraw the Summary Dismissal given the magnitude of the Email Act, and D’s refusal to provide the requested SD cast doubt as to whether she had already misused the Confidential Information despite earlier assurances.

45. D claimed that at the 29/7/14 Meeting P disclosed inter alia it had made a report to HKMA, but suggested it would confirm to the Regulators that the Confidential Information was contained if she would sign the 1^st Draft SD. D could not sign (and it was reasonable for her not to sign) the 1^st Draft SD as it falsely attributed/implied fault or wrongdoing on her part for the Email Act, and the unfair/wrongful Summary Dismissal would destroy her career and employment prospect in banking.[23] D’s solicitor suggested allowing time for both parties to discuss the terms of the proposed SD and for P to consider withdrawal of the Summary Dismissal.

46. D said there was no good reason to support P’s unfounded worry that she might interfere with the 425 Customers apart from the Email Act which was for work purpose and hence did not amount to any data breach. D suggested P’s main motive was to protect its commercial interest by preventing her from working for another bank,[24] so P exaggerated the matter and used its financial power to cause her illegitimate harm/prejudice. D claimed P should discover management level communications on internal policy for dealing with departure of RMs from December 2013 to 24 July 2014. Payne disagreed, and claimed such alleged motive was in any event irrelevant since the non-solicitation restriction had expired. He further disagreed P delayed discovery since determination of the Summons would better elicit the scope of the disputed issues.

47. Payne said in taking the relevant actions[25] P was concerned to protect its customers’ interest, its own business interest and its reputation with the Regulators, and to comply with statutory obligations over customers’ data. But P did not immediately report to the Regulators upon discovery of the Email Act as it wanted to investigate/understand the extent of the data breach, and to seek D’s cooperation in containing it if possible. In various telephone calls during 22-24 July 2014, P reminded D of the need to report to the Regulators unless it could be assured the data breach was contained. P reported to the Regulators on 25 July 2014 after D failed to give P the assurances it required, and thereafter P still gave D opportunities to provide assurances (at the 29/7/14 Meeting and solicitors’ correspondence in August 2014 referred to below) that would have enabled P to tell the Regulators the data breach was contained and to tell RBC the matter had been satisfactorily resolved, but D refused.

48. At the 29/7/14 Meeting, D invited P’s staff (who declined) to access the Personal E-Address through P’s laptop computer to confirm the Emails/Attachments had been deleted. But Payne noted D did not sign the 1^st Draft SD that contained her consent for such inspection, and in the absence of such signed SD the proposed inspection would merely show the Emails/Attachments were no longer at the Personal E-Address but would not show whether D had saved the information elsewhere (eg in her laptop computer, USB device or hard copy) if traces of such activity had been deleted.

49. RBC  D joined RBC on/about 4 August 2013, which fact came to P’s attention on/about 13 August 2014. D claimed on/about 20 August 2014 Payne with intent to disturb D’s new employment telephoned to tell RBC she had been summarily dismissed. Payne agreed he notified RBC of P’s concerns and believed RBC would not knowingly use the Confidential Information but he did not have the same confidence in D. D claimed RBC suggested she should resign given the unresolved issue of the Summary Dismissal, which she was forced to do and as a result could not secure alternative employment (but the Chen 2^nd Aff confirmed D eventually found work at a financial institution earning about $30,000/month (“New Job”)).  But Payne said proper warning had been given to P, eg the Email Reminder dated 30 January 2014 attached a message from P’s Chief Information Security Officer advising that breaches of information security policy might result in disciplinary action ranging from warning to summary dismissal.

50. 8 August 2014  P’s solicitors wrote to D’s solicitors on 8 August 2014 seeking confirmation inter alia that D had irrevocably destroyed/deleted all copies of Emails/Attachments in her possession and she would cease and desist from any use/disclosure of the Confidential Information by signing and returning to P a SD in the form appended to the letter (“2^nd Draft SD”). D claimed (but P denied) P’s true purpose was to enable P to represent to HKMA it had actively taken action to address the data breach and to avoid potential investigation/sanction by the Regulators.

51. 14 August 2014  D claimed her solicitors attempted to discuss with P’s solicitors about withdrawal of the Summary Dismissal and signing of the SD, but P did not agree to the former. On 14 August 2014, D and her solicitor met P’s management and its solicitor at P’s office (“14/8/14 Meeting”): (a) P was satisfied D had deleted the Emails and did not request inspection of the Personal E-Address, (b) the parties agreed on the revised form of the SD to be signed, and (c) P’s staff prepared draft letters to the Regulators (marked up by D’s solicitors) enclosing the SD to be signed and confirming the data breach had been contained. Ultimately D did not sign the SD due to P’s refusal to withdraw the Summary Dismissal. But P claimed D should not have referred to the 14/8/14 Meeting and accompanying drafts in her pleadings/affirmations as they were expressly without prejudice.

52. 18 August 2014  D by her solicitors’ letter dated 18 August 2014 (“18/8/14 Letter”) gave certain assurances, including:

(a)	D had deleted all P’s “Confidential and Proprietary Information”, if any, from the Personal E-Address;
(b)	D had never disclosed or caused to disclose, and would not disclose any of P’s “Confidential and Proprietary information” to any third party;
(c)	D had never used any of P’s “Confidential and Proprietary Information” for her own benefit, nor for the benefit of any third party, outside the proper discharge of her duties for P;
(d)	D had never transferred, transmitted, sent or forwarded any of P’s “Confidential and Proprietary Information” to any other non-P email address;
(e)	no other person has ever had access to or control of the Personal E-Address;
(f)	D did not and would not misuse any of P’s “Confidential and Propriatry Information” in any way;
(g)	all P’s “Confidential and Propriary Information” obtained in the course of D’s previous Employment with P were for D’s own use and for work purpose only; and
(h)	D consented to P’s personnel checking her non-P Personal E-Address upon reasonable prior notice.

But the 18/8/14 Letter also asserted (i) using the Informal Means to transmit customer information for work purpose was part of the daily work practice of RBU’s staff with “other open and usual daily work mal-practices” frequently carried out within the office of P’s International Affluent Banking, (ii) when regulatory concerns arose P tried to shift the problem to D and to seek more protection than it was entitled, (iii) P notified RBC of the wrongful Summary Dismissal that adversely affected D’s interest, right and reputation so P should withdraw the Summary Dismissal and notify RBC, and (iv) D would lodge claim with the Labour Tribunal if this could not be resolved.

53. Payne said D did not show any basis for her assertions, and the limited assurances as offered were inadequate to allay P’s concerns, eg they did not define the information to which reference was made and/or confirm copies had been destroyed, and even stated the information was for D’s own use, which explained why P insisted on receiving a SD in the form requested.

54. 20 August 2014  On 20 August 2014, P’s solicitors wrote to (a) indicate that if D made the SD in the requested form (see full version in the annexure to this Judgment (“Comparite”), “3^rd Draft SD”) on/before 22 August 2014 P would refrain from seeking injunctive relief, (b) deny D’s allegations as regards “open and usual daily work mal-practices” but indicate P would investigate if D provided more specific information, and (c) confirm P would not withdraw the notification to RBC since D was in fact summarily dismissed by P.

55. D’s solicitors replied on the same day to reiterate D’s assurances in the 18/8/14 Letter, and to question why D was obliged to give any SD when (a) the Email Act was for work purpose only (which resulted in remittance done for the Ous on 23 June 2014), (b) the Customer List contained inter alia “contacts of [D’s] own friends and only some of them are customers introduced by [D] to [P]” which D used for marketing bank products and following up customers’ enquiries, and (c) the Bank Forms and Investment Information were comparatively trivial. P was urged to withdraw the Summary Dismissal as P did not suffer any loss over the Email Act but D would lose registration with HKMA and future career in banking.

56. Communications with customers  P claimed that on 20 August 2014 it started to call/notify the 425 Customers of the data breach in line with HKMA’s recommendations and in view of D’s refusal to give clear assurances concerning the Confidential Information. On 22 August 2014, P issued the Customer Letters to advise affected customers to examine their account statements as a recommended standard practice. But D said P did so maliciously with intent to defame her, and the Customer Letters contained words defamatory of her, ie “…… this incident was caused by a fundamental breach of trust by Ms Chen, we are deeply sorry that this incident had happened” (“Words”), which were untrue, misleading and disparaging. Payne denied any defamation as P only made factual statements about the situation.

57. 21 August 2014  On 21 August 2014, P’s solicitors wrote to say P’s reputation was at stake due to the data breach, and to explain again why P required a SD (which carried more weight than written assurances) from D. D did not give any valid explanation why she sent the Emails/Attachments to her Personal E-Address shortly before she resigned, and it was not credible to say such information was needed for follow up and marketing given the timing, nature and breadth of the information taken, hence the Summary Dismissal was justified and would not be withdrawn. P’s solicitors repeated the proposal for D to execute the 3^rd Draft SD, and suggested D’s reluctance only served to fuel concerns the Attachments had been or would be misused.

58. D’s solicitors replied on the same day to reiterate D’s “undertakings” in solicitors’ correspondence were sufficient as D would similarly face civil action for breach of undertaking or breach of SD, and injunctive relief was unnecessary in the absence of risk of disclosure or breach of law/regulation by D. D claimed P’s notification to its customers that she took information from P and P’s report to HKMA were made maliciously with intent to defame her.

59. 22 August 2014  On 22 August 2014, P’s solicitors wrote to reiterate why D’s assurances should be made by SD, and to add that (a) D could resile from the unilateral statements (not undertakings) in the 18/8/14 Letter which failed to give necessary comfort that the data breach had been contained, (b) a SD carried more weight as it carried civil/criminal sanctions for breach, and (c) D’s continued reluctance fuelled P’s concern as to her veracity. P further said it was obliged to report any breach of customers’ data to the Regulators and to take all reasonable steps to contain the data breach, but without the requested SD P was unable to satisfy itself the breach had been contained and (as the Regulators requested) it had to notify (which notification was factual and not defamatory) the affected customers to reduce potential harm/damage to them. D was again invited to execute the 3^rd Draft SD to obviate legal proceedings.

60. On the same day D’s solicitors supplied the Signed SD (see marked up version in the Comparite) to P as a gesture of good faith and in order to allay P’s concerns but without admitting any wrongdoing, and D explained in respect of the Signed SD as follows:

(a)   in clause 1 she did not admit she had “taken” the Emails/ Attachments or the taking was unauthorised as it was untrue (but Payne found it puzzling P claimed she only “handled” and not taken such information when she brought the Confidential Information outside P’s control and into her private control);

(b)  in clause 2 she stated she had destroyed all Emails/Attachments (but Payne said D merely stated she had destroyed/deleted the Email/Attachments “if any” from the Personal E-Address and expressly deleted “and/or all copies thereof whether in physical, electronic or other form” from the 3^rd Draft SD);

(c)   in clauses 3 and 4 she confirmed she had not disclosed or transferred the Emails/Attachments (but Payne noted D did not state she had not used the Emails/Attachments for her own benefit or for the benefit of any third party at any stage irrespective whether she deleted the Emails on 24 July 2014);

(d)  in clause 5 she confirmed no other person had access to any device on which the Emails/Attachments were stored (but Payne said this clause did not take into account other devices such as laptop computer or USB device in which the Emails/Attachments might be stored since D specifically deleted “to which the [Emails/Attachments] was sent nor to any device on which the [Emails/Attachments] was stored”).  

The letter went on to say there was no basis for P to insist on the excessive assurances in the 3^rd Draft SD based on P’s unfounded worry of misuse of information, and P made defamatory statements about D in telephone calls to RBC.

61. P claimed the changes made by D to the 3^rd Draft SD heightened P’s concerns as they indicated D (a) might have kept copies (either hard copies or in a device) of the Emails/Attachments, (b) intended to use or insisted on retaining an ability to use the Emails/Attachments, and (c) might have taken other confidential information. So P considered the Signed SD gave P insufficient protection/comfort, and did not obviate the need to seek relief by the present action.

62. By clause 7 of the Signed SD, D reiterated the invitation for P’s personnel to check the Personal E-Address by prior appointment. D claimed P’s failure to respond to such invitation cast doubt as to whether P was really concerned with the Email Act or whether it had other motives to allege her misconduct. Payne disagreed and noted D was still unwilling to confirm in the Signed SD there were no copies of the Emails/Attachments as evident from the deletions in clauses 2 and 5 in the Comparite.

63. D’s report to Regulators  On 14 March 2015, D wrote to the Regulators reporting inter alia that on a number of occasions during her Employment she sent computer files containing customer information from the Office E-Address to the Personal E-Address for work purpose as P had not implemented any policy regulating the use of personal email accounts. On 1 April 2015, the OPCPD replied by letter (“OPCPD Reply”) that it observed no breach of the Personal Data (Privacy) Ordinance Cap 486 (“PDPO”):

“You had stated in your submission that the files (containing customers’ personal data) were sent to your personal email account for work. ……

Given the above, Incident 1 does not appear to involve ‘unauthorised or accident access, proceeding, erasure, loss or use’ of personal data, as long as you were authorised to handle the personal data concerned at the material time.” (my emphasis)

On 7 May 2015, HKMA gave a holding reply.

64. Payne said the OPCPD Reply was self-serving as it was based on D’s misrepresentation that “ANZ had not got any policy nor  implemented  any policy,  to  prohibit  staff  from  using personal  email account for work purposes” when the Information Policy was in place, hence the assumption in such reply that sending information to the Personal E-Address was authorised “for work” purpose was erroneous.

65. Summary of P’s position  Payne claimed the Attachments were P’s proprietary/confidential information that contained customers’ personal data and P’s proprietary material. Since D refused to give a SD with sufficient assurances and even claimed the 425 Customers were her personal friends/customers so she had a right to the Customer List and to contact the people listed therein, P was concerned any retention/misuse of the Confidential Information would cause irreparable damage to P’s reputation with its customers (with risk of losing existing/future business) and the Regulators (who would doubt P’s security system and staff integrity) that could not be adequately compensated by damages,[26] which concern was heightened by D sending the Bank Forms along with the Emails and joining P’s competitor RBC. P was therefore obliged to take all reasonable steps to protect the Confidential Information.

66. Summary of D’s position D claimed she compiled the Customer List to serve P’s customers, and the Email Act was RBU’s daily practice also adopted by P’s other staff. After D learnt of P’s concerns, she immediately deleted the Emails/Attachments in the Personal E-Address. Her conduct in responding to P’s queries/demands would not support the alleged concerns, but the wrongful Summary Dismissal caused her serious damage (and practically destroyed her career) because she could not seek alternative employment until it was resolved (but it appeared she subsequently found the New Job). Given D’s provision of the Signed SD that addressed all of P’s concerns, P’s Reliefs (including the Injunction Order) were unnecessary and oppressive.

67. Counterclaim  D claimed the Summary Dismissal was malicious and without just cause, and it amounted to wrongful repudiation of the Contract which D accepted by the D 1^st Aff. As a result, D suffered loss of employer’s voluntary MPF contribution of about $398,771.90 that was wrongfully forfeited, loss of future income arising from unemployment consequent upon disreputable employment record,[27] and damages for defamation as the wrongful Summary Dismissal amounted to defamation as to D’s work record that would adversely affect her future career in the financial sector. D also counterclaimed for damages for defamation in respect of the Words of and concerning her in the Customer Letters. But P claimed D’s extravagant counterclaim was grossly inflated.

V.  ORDER 14

68. The claim for P’s Reliefs arose from the Email Act and P’s concern over the Attachments sent via the Emails from the Office E-Address to the Personal E-Address. The Injunction Order sought concerned the Confidential Information but not the Bank Forms, Internal Information and Investment Information. I will deal with the Confidential Information first as it was the main contention between the parties. P’s claim for summary judgment in respect of the Confidential Information was essentially premised on breaches of Clause 9, Clause 4 (and P’s Policies) and D’s duty of confidence. But Mr Yip argued “summary judgment …… ought not be granted on the ground that P’s case [on breach of confidence] is defective in its pleading”.

(a)  Legal principles

69. Mr Yip relied on Total Lubricants Hong Kong Limited v Christophe De La Cropte De Chanterac & anor[28] to suggest that a claimant must establish the following for a claim on breach of confidence:

(a)	identify clearly the information alleged to be confidential;
(b)	show the information itself must have the necessary quality of confidence about it;
(c)	show the information itself must have been imparted in circumstances importing an obligation of confidence; and
(d)	show there must have been an unauthorised use of that information to the detriment of the party communicating it.

70. Mr Yip focused on (d) above, ie unauthorised use of the information, and complained there was no plea/evidence D actually “misused” the Confidential Information “to the detriment of the party communicating it”, so there was no justification for P’s Reliefs (including the Injunction Order). He referred to Deutsche Bank AG (Hong Kong Branch) v Daniel Mamadou- Blanco[29] in support. In that case, the defendant employee emailed to his personal account details of remuneration packages of various colleagues, and a number of them (including him) eventually left to join the plaintiff’s competitor. The plaintiff believed the defendant tried to assist its competitor by recruiting his colleagues to form a new team, so the plaintiff sued the defendant for damages and a declaration he was still bound by the non-competition and non-solicition clause. The defendant argued “belief”/“inference” of disclosure of information were insufficient, and DHCJ Lok (as he then was) observed the plaintiff had to expressly plead the defendant had passed the information to the plaintiff’s competitor “to establish the necessary element of his cause of action”.

71. But Deutsche Bank AG (Hong Kong Branch) concerned a claim for damages so actual “misuse” was a necessary averment for seeking substantial damages. Mr Carolan submitted actual “misuse” was not a necessary criterion for quia timet injunctive relief where (as here) D took the Confidential Information into her private control (ie the Personal E-Address) and failed to give adequate assurances by SD (despite the Signed SD) to safeguard such information. Snell’s Equity explained that in a suitable case an injunction may be granted to prevent a threatened breach of confidence: [30]

“In the specific context of breach of confidence, it should be noted that, if B can show that a threatened act by A would amount to a breach of confidence, the prima facie position is that an injunction will be granted. It remains however a discretionary remedy and there may be “special or exceptional factors: which justify the refusal to grant an injunction”.

This can also be seen in the formulation by DHCJ Yvonne Cheng in SK Hynix Inc v Vannex International Limited & anor:[31]

“25. For a plaintiff to succeed in a breach of confidence action, he must address four matters:

……

(4)show that it was used without his licence or there must be a threat to so use it.

See Cmi-Centres for Medical Innovation GmBH and anor v Phytopharm plc and anor (1998) IP & T Digest 6; Clerk & Lindsell on Torts, 21^st edn, para 27-06.

……

43. The final element of the cause of action for breach of confidence is the actual or threatened, unauthorised use or disclosure of the confidential information: Cmi-centres, supra at [25].” (my emphasis)

Further, Clerk & Lindsell on Torts states that: [32]

“…… Lord Neuberger MR in Tchenguiz v Imerman said that it is a breach of confidence for a defendant without authority “to examine, or to make, retain or supply copies to a third party of a document, whose contents are, and were (or ought to have been) appreciated by the defendant to be, confidential to the claimant.” Though this was a case involving personal information, this might also apply to commercial information, given that it was stressed that such unauthorised acts might jeopardise the confidentiality of the information.” (my emphasis)

Hence, unauthorised retention of confidential information with threatened breach of confidence may be sufficient to support a claim for quia timet relief. As explained in Snell’s Equity, “[where] A is under a contractual duty to B, the contract itself will generally govern the question of misuse. …… Misuse need not involve communication of the information ……”[33]

72. On the question of “the detriment of the party communicating it”, Snell’s Equity states that:[34]

“…… Some authorities suggest that A’s use of the information must be such as to cause B to suffer a detriment, but this position has been doubted …… The essential question is whether A’s actual or planned use of the information would be unconscionable, and it be possible, in a suitable case, to establish such unconscionability without proof of detriment. ……” (my emphasis)

(b) Confidential information sufficiently particularised?

73. I do not see any real difficulty here since P clearly identified the

Confidential Information (ie personal data and customer information of the 425 Customers in the Customer List, and the Remittance Information) to be the subject matter for the Injunction Order.

(c) Whether information confidential in nature?

74. Mr Yip accepted the Confidential Information might arguably contain some confidential information, but D’s pleadings/affirmations did not identify which part was disputed as to confidentiality. I disagree a triable issue would arise merely because D failed to condescend upon particulars to elicit her case. D claimed she deleted the Emails on 24 July 2014, but she did not seek inspection or specific discovery of the Emails/Attachments to resist the Summons. In my view, the Confidential Information was to D’s knowledge confidential in nature, and there is no arguable defence in this respect.

75. First, P plainly owed its customers an implied contractual duty of confidence,[35] and D knew it was necessary to keep P’s customer information in strict confidence (see paragraph 18 above). Clause 9 expressly made clear information about P’s customers that D acquired during her Employment with P was “confidential information”.

76. Secondly, the Confidential Information contained personal/ customer information of the 425 Customers and the Ous. Although D introduced the Ous to P, the Ous were plainly P’s customers in view of the Remittance Information and D’s explanation in paragraph 33(a) above.

Although D’s pleadings/affirmations hinted (a) the names in the Customer List were her personal/social friends/contacts some of whom became customers of the banks she worked for, (b) her strong (and mainly Taiwanese) customer portfolio developed from her personal/social networks was her personal career asset, and (c) only some of the 425 Customers were P’s customers (most of whom were introduced by her), there could not be any real challenge the 425 Customers were P’s customers as they had account/customer numbers with P.

77. Mr Yip suggested P’s change of  stance in the Payne 1^st and 2^nd Affs ought to be investigated at trial:

Payne 1st Aff paragraph 10

Payne 2nd Aff para 8

“…… There were 428 customers on the Customer List. 90% of the customers on the Customer List were serviced by [D] and were acquired by [P] as customers when [P] acquired [RBS] (which had previously acquired [ABN AMRO]) on 20 March 2010. Of the 428 customers listed, 242 clients were existing clients of RBS. 20 of the customers on the Customer List were not serviced by [D] and 22 of the customers had already closed their accounts. ……” (my emphasis)

“…… Part of the business [of RBS] acquired by [P] was the customer base. At the time of the completion of the acquisition on 20 March 2010, 242 of the 425 customers on the Customer List were already customers of RBS and were transferred to [P]. At this point, I wish to correct my statement at paragraph 10 of [the Payne 1st Aff] saying that [sentence in italics in the box to the left column]. Upon further detailed review of the customers on the Customer List on 19 September 2014, there were 425 customers of [P] on the Customer List. The sentence should be revised as: “there were 425 customers on the Customer List. About 95% of the customers (namely, 408) on the Customer List were serviced by [D] and around 55% of them (namely, 242) were acquired by [P] when it acquired the retail and commercial business of RBS on 20 March 2010.”

I am unable to discern any change of stance except frank clarification based on P’s further review of the Customer List as early in September 2014. There

is no triable basis to suggest only some of the 425 Customers were not P’s proprietary customers.

78. D’s suggestion that it was commonly known that customers established through a RM’s personal/social network were his/her personal career asset insinuated challenge to the Confidential Information by suggesting it might not belong to P (although the ADC did not go so far as to aver the customers D introduced to the banks she worked for were hers (and hence not P’s)). Since there was no suggestion D was ever self-employed, and D’s work duties included finding new customers for the banks that employed her (see paragraph 15 above), I cannot see how the customers she introduced to P (and/or its predecessors) in the course of her employment would not be their proprietary customers even though she might as employee service such customers and/or she might after cessation of her employment and expiry of any non-solicition restriction approach such customers for business. The reference to D’s portfolio of customers as her personal career asset did not amount to any triable issue or arguable defence, especially when D was free to compete after expiry of the non-solicition restriction in the Contract by January 2015.

79. Thirdly, D also hinted the Customer List belonged to her since she compiled such list (ie such list did not originate from P’s system), uploaded it to the computers of P (and/or its predecessors), and from time to time updated/edited such that it which eventually became the Customer List. But this would not alter the reality that the personal/customer information of the 425 Customers (who were sourced by P, acquired from P’s predecessors or introduced by D as employee) in the Customer List were P’s confidential customer information, especially when D admitted the customer list she compiled/updated was a convenient reference tool for work purpose (see footnote 7 above). Indeed, Payne accepted D must have prepared such list during her Employment with P (and/or its predecessors) for servicing the customers listed therein on behalf of P (and/or its predecessors) (see paragraph 17 above).

80. In all the circumstances, there was no triable issue that the Confidential Information was to D’s knowledge confidential in nature.

(d)   Whether information communicated in circumstances importing obligation of confidence

81. Clause 9 made clear the Confidential Information to which D had access was communicated to her in circumstances importing an obligation of confidence. D admitted she owed to P the Implied Duties in paragraph 18 above.

(e)  Whether unauthorised use or disclosure of information

82. As for the element of actual or threatened unauthorised use, I start with the Contract. Clause 9 provided the Confidential Information to which D had access in the course of her Employment with P must not be disclosed or used “except where required as part of [D’s] role, or with [her] line manager’s written agreement”. The Implied Duties prohibited misuse or disclosure of confidential customer information. Mr Carolan accepted there was no hard evidence of disclosure of the Confidential Information to any third party or use of the same for the benefit of D or others, so the question turned on whether the Email Act and D’s continued retention of the Confidential Information thereafter were authorised for work purpose as D alleged, or whether D was not permitted to take such information outside P’s control into her private control (ie the Personal E-Address).

83. Mr Yip submitted D’s stance was bolstered the OPCPD Reply that the Email Act did not appear to involve “unauthorized or accidental access, processing, erasure, loss or use” of personal data so long as D was authorised to handle the personal data concerned, which arguably suggested the Email Act was part of D’s role and permitted under Clause 9. I find myself unable to place much weight on the OPCPD Reply as (a) the OPCPD was only concerned with breach of the PDPO and not contractual/tortious breach of confidence, and (b) such reply assumed the Email Act was for work purpose and D was authorised to handle the Confidential Information in such manner, but D, who must have known P disputed those assumptions, did not draw the OPCPD’s attention to P’s contrary position/stance. Mr Carolan criticised the OPCPD Reply as self-serving, and I find it necessary to turn to the Email Act to ascertain whether it was authorised or prohibited.

84. In my view, the Information Policy, Email Reminders and Policy Training clearly demonstrated the existence of the Prohibition, and warned that breach thereof could result in disciplinary action including dismissal (see paragraph 89 below). Under Clause 4, even though P’s Policies did not form part of the Contract (as P might vary them from time to time), D was contractually obliged to comply with P’s Policies and variations thereof. P has established a prima facie case that the Email Act was unauthorised/prohibited.

85. I find D’s claim that P had no policy for the Prohibition was a bare denial that was especially hollow when she did not assert she had not received the Email Reminders (despite Payne’s evidence that she was on the relevant circulation lists), had not had access to the Information Policy (despite Payne’s evidence that it was on the intranet accessible to all staff), and had not participated in the Policy Training (despite Payne’s evidence that she completed such annual training in 2013-2014). D merely suggested Clause 4 was only applicable to P’s Policies specifically brought to her attention and acknowledged by her, but I am unable to read such caveat into Clause 4 that provided “[information] about the way we work at ANZ is contained in our policies, procedures, rules and codes” and “it is important that you read and familarise with them”. The Email Reminders and Policy Training also reinforced the need to familarise with P’s Policies. So even if D just read the “Do’s and Don’ts” and not familarised herself with other P’s Policies (including the Information Policy), it was neither here nor there. Further, Clause 4 and/or P’s Policies did not permit breach of the Prohibition for performance of work duties. Indeed, the measures set out the paragraph below, and the admonition in the Email Reminders against employees sending work information to their personal email accounts (see also paragraph 89 below) spoke against D’s contention.

86. In view of the Prohibition, the Email Act could not be “required as part of your role” under Clause 9, and written agreement by D’s line manager was required. P’s Policies also indicated D should have obtained an encrypted ANZ laptop to connect to the ANZ network via ANZ connect card or an encrypted USB (available through P’s Technology Centre) (see footnotes 11 and 13-14 above) or D should have obtained approval as provided in policy HAN-080 in the Information Policy (see footnote 9 above). But D did not take such steps. In my view, there was no triable basis to suggest Clause 4 and P’s Policies did not prohibit D from sending confidential information to the Personal E-Address for work purpose, or D was unaware or did not have to be aware of the Prohibition and her relevant duties prior to the Email Act.

87. But D claimed (a) P condoned the Alleged Practice of supervisors, investment consultants and RMs using the Informal Means for work-related communications which was said to be common knowledge amongst P’s staff for years, so P waived/acquiesced the Email Act of sending the Confidential Information to the Personal E-Address for work purpose (ie to enable D to serve the customers whilst on vacation), and (b) P failed to give her any warning to desist from the Alleged Practice. On the other hand, Mr Carolan submitted such contention was inherently not credible/believable as observed in the Seagroatt Reasons, but even if D’s colleagues used the Informal Means for work-related communications, this was merely evidence of breach of the Prohibition rather than evidence that P’s management waived such breach and condoned the Alleged Practice, and indeed the fact D (and possibly others) so breach the Prohibition on earlier occasions explained the steps P took to educate/warn its employees.

88. First, D claimed she (and other RMs of P’s Taiwan team) preferred to access customer data by the Alleged Practice rather than via the Phone when away from the office. Mr Yip submitted this was a matter for trial, but even if using the Phone was inconvenient, D did not offer any explanation why the measures in paragraph 86 above were not adopted. Further, given that P set up such measures for its staff to access work information when away from his/her workstation, I find it unbelievable P’s management would have condoned the Alleged Practice.

89. Secondly, the Alleged Practice was contrary to the Email Reminders (which D did not specifically dispute were sent to her) and annual Policy Training (which D did complete) in 2011-2014.  In fact, the Email Reminder dated 30 January 2014 from Wong (Head of Retail Banking) to all staff of RBU (including D) actually noted “[there] are reported cases on policy breach regarding sending confidential information to personal emails”, but warned against such practice by stating “Pls be reminded on below message, and note that there is a tool implemented to monitor such closely. Pls ensure our responsibility on data protection”. The attachment also alerted that “[the data loss protection tool] has detected an increasing number of breaches of ANZ’s Information security policy – mainly due to staff (employees and non-employees) sending work home to personal accounts”, and warned against such practice saying “Group Investigations or Human Resources will investigate breaches and may take disciplinary action for serious or repeat breaches. This could range from a warning to summary dismissal, depending on the circumstances”. This plainly showed P’s management disapproved of sending work-related information to personal email accounts, which was completely opposite to any condoning of the Alleged Practice. This reminder was circulated to all RBU staff (including D) was just a few months before the Email Act, and in my view D’s assertion that P condoned the Alleged Practice had no credible basis, especially when D failed to respond to the request by P’s solicitors in their letter dated 20 August 2014 to provide more specific information about the Alleged Practice for investigation.

90. Thirdly, Lo via Payne denied any knowledge of the Alleged Practice. This was bolstered by (a) the 24/7/14 Statement in which D admitted she inadvertently violated P’s Policies when she forwarded customer information to the Personal E-Address,[36] and (b) the transcript of the 24/7/14 Tel Call that noted whilst D did not give a clear answer when she was confronted as to whether she knew sending the Confidential Information to the Personal E-Address amounted to breach of P’s Policies, she later acknowledged there had been announcements (even though she also claimed she was under business pressure and did not use the Confidential Information unlawfully).

91. Fourthly, D claimed she sent the Confidential Information to the Personal E-Address for work purpose during block leave, but she was not supposed to work under P’s block leave policy issued pursuant to HKMA guidelines. Even if the Ous asked her to handle their remittance transaction, there was no arguably convincing reason why she could not have asked for approval/permission or obtained suitable encrypted device from P for such purpose, or any arguably satisfactory explanation for the wholesale transfer of customers’ data of the 425 Customers to the Personal E-Address. D did not in the Chen 1^st and 2^nd Affs identify any query/transaction she anticipated she might have to deal with for which customer and/or any contact, transaction or marketing done for any customer during her block leave. It was even more telling that D did not (a) remove, delete or destroy the Confidential Information in the Personal E-Address even after she returned to her workstation on 23 June 2014, resigned on 25 June 2014, signed the Resign Letters on 26 June 2014, went on garden leave on 27 June 2014 and was told of the data breach on 22 July 2014 and/or (b) offer any explanation for failure to do so until after the Summary Dismissal on 24 July 2014.

92. As DHCJ Seagroatt said, it is useful to focus on the undisputed chronology of events. P’s restructuring in October 2013, the departure of 5 RMs in January 2014 and the notification to D of her re-assignment in May 2014 culminated in D’s plan to leave P by exploring other employment options, and on 3 June 2014 she signed the Consent Form for the Agent (being RBC’s employment agent) with instructions not to submit the form to P until she actually resigned. It transpired her team head Chen also joined RBC. Despite D’s assertion that she had not yet made up her mind, I agree with DHCJ Seagroatt D had clearly planned to leave P.

93. The Email Act (in breach of the Prohibition and hence the Contract) took place just 2-3 days after D took a step in relation to her new job. D sent the Customer List containing customers’ data of the 425 Customers and the Bank Forms to the Personal E-Address. In my view, this rightly raised concern that D (who had planned to leave P) might persuade customers to transfer out funds and close their accounts with P, especially when she viewed the customers she developed from her own networks as her personal career asset. I find the suggestion she was entitled to send the Bank Forms to the Personal E-Address for work purpose or because she and her husband were customers of P to be wholly unconvincing. D did not say she and/or her husband wished to close their accounts with P during her block leave or at all, or any of the 425 Customers had such intention. Further, D did not explain why the Bank Forms were not removed/deleted/destroyed after her return from block leave when she could have handled such matters at her workstation. As said in paragraph 15(2) of the Seagroatt Reasons, there could be no reasonable justification for emailing the Confidential Information to the Personal E-Address when D planned to leave P, and the only reasonable inference was that D intended to have this information available for her personal use after her Employment ended.

94. Mr Carolan submitted D’s resignation a few days after her return from block leave must have been pre-determined given the timing of the signing of the Consent Form, the block leave and the resignation. In my view, irrespective whether the Lo Incident finally precipitated D’s resignation on 25 June 2014, D clearly planned to leave P before going on block leave, and even after resignation she did not remove/delete/destroy the Emails/Attachments in the Personal E-Address (eg the Remittance Information was retained even though the Ous’ transaction was said to be effected on 23 June 2014). And even between 22 and 24 July 2014 when D was asked to explain herself and to sign a SD, D did not give any explanation for retaining the Confidential Information. It was only after the Summary Dismissal on 24 July 2014 that D said she deleted the Emails/Attachments.  

95. In my view, quite irrespective of D’s allegations as to Alleged Practice and her complaint about the lack of warning about the Prohibition (which I will return to below), her retention of the Emails/Attachments in the Personal E-Address after her resignation could not have been for any work purpose (as she was then on garden leave and about to leave P), and she did not give any reason why she did not remove/delete/destroy such information when she had been so reminded in the Resign Letters which she had signed to acknowledge. So even if the Email Act was initially authorised/condoned (which P disagreed and which I do not consider to be triable or arguable), D’s continued retention of the Confidential Information after completion of the transaction for the Ous and after her return from block leave was wholly unnecessary for work purpose and plainly not authorised (especially after her resignation). This echoed D’s acknowledgment in the 24/7/14 Statement that she had breached P’s Policies.

96. I find myself in agreement with DHCJ Seagroatt’s then robust view that D’s contentions were unsupportable. The Email Act was unauthorised, and D’s contentions could not excuse the breach of confidence or deprive P of Order 14 relief. Even if I am wrong, D’s continued retention of the Confidential Information after her resignation was plainly unauthorised, and amounted to breach of her duty under the Contract and the terms of her garden leave. As Mr Carolan said, D’s subjective view that the Email Act was not egregious could not justify leave to defend against P’s Reliefs.

97. Further, whether D’s conduct justified the Summary Dismissal was a matter for D’s counterclaim and could not afford arguable basis for resisting summary judgment. D’s assertion as regards P’s motive in taking action against her (ie to restrict competition for P’s Taiwanese customers for which D claimed she needed discovery on documents as to departures of RMs between December 2013 and 24 January 2014 to support) was irrelevant to the question whether the Email Act and/or continued retention of the Confidential Information was unauthorised and in breach of the Prohibition/Contract. In any event, the non-solicitation restriction was spent, and since January 2015 D was free to compete against P.

98. D also complained P did not give any warning to her even though the data loss protection tool should have detected she had previously emailed the customer list to the Personal E-Address, and requested full discovery of P’s past inspection of emails from the Office E-Address to the Personal E-Address. But Payne already said D must have uploaded the customer list prior to September 2013 when the data loss protection system was put in place, and D did not condescend precisely as to when she last uploaded the customer list to the Personal E-Address before June 2014. Further, as explained in paragraph 89 above, the data loss protection tool did detect breaches of the Prohibition, and P did give warning against such breaches to RBU’s staff (including D). There is no merit to this argument.

99. In my view, D had not shown any arguable defence or triable issue deserving further investigation at trial in respect of P’s claim for breach of confidence.

(f)  P’s Reliefs

100. Mr Carolan agreed that had D made a sufficient SD to satisfy P and/or the Regulators the present action would have been obviated, but since D did not provide adequate assurances P was entitled to P’s reliefs. Mr Yip argued P was not so entitled (a) in the absence of actual “misuse” of the confidential Information or “disclosure” to any third party and (b) given the sufficiency of the Signed SD (and D was willing to give an undertaking to the court on the same terms) and D’s written assurances that addressed P’s concerns.

101. As explained above, the lack of clear evidence of further misuse of the Confidential Information would not necessarily have precluded quia timet protection when D took the Confidential Information outside P’s control into her private control (ie the Personal E-Address), especially when up till the Summons D maintained her defence that denied any breach of the Contract/confidence. Mr Carolan referred to Frey Wille GmbH & Co KG v Complex Industrial Co Ltd[37] in which the defendant fell silent when the plaintiffs sent a cease and desist letter for copyright infringement, but eventually filed a defence that the goods were independently designed. The plaintiffs sought summary judgment for final injunction and abandoned the claim for damages. The grant of final injunction was upheld as the cease and desist letter affixed the defendant with knowledge of the plaintiffs’ copyright, and the defendant’s failure to acknowledge such copyright and its defence demonstrated an intention to continue to deal in infringing goods. Fok JA (as he then was) said as follows:

“33. As Millett LJ said in Linpac Mouldings Ltd v Eagleton Direct Export Ltd (at p.552):

Had the plaintiffs sought summary judgment for injunctive relief alone at the outset they were, in my view, plainly entitled to it. An innocent infringer must make up his mind whether to claim the right to continue the act of infringement or to offer an undertaking not to do so. ……

He continued (at p.553):

The defendants had served a defence in which they denied the plaintiffs’ claim, offered no undertakings, and denied that they had infringed the plaintiffs’ copyright or that they knew or had any reason to believe that the articles in question were infringing copies of the plaintiffs’ work. In those circumstances it seems plain to me that they were claiming the right to continue the acts of infringement of which they were charged.”

102. Mr Yip argued that even if P was entitled to summary judgment, the Inter Partes Injunction was sufficient and final permanent injunction was not required. Such submission is not understood. If P was entitled to quia timet protection, I cannot see how expiry of the Inter Partes Injunction on granting summary judgment would have assisted P.

103. In my view, since D took P’s Confidential Information outside P’s control into her private control (ie the Personal E-Address), bearing in mind P’s obligations of confidentiality to its customers and its duty to the Regulators, I agree with Mr Carolan this was a classic case for quia timet protection. This nicely brings me to the question whether the Signed SD and D’s written assurances in the 24/7/14 Statement and (via D’s solicitors) the 18/8/14 Letter were sufficient to obviate the need for the Injunction Order.

104. I start with a short point. D’s claim that she sent the Emails/ Attachments with encryption was no answer since encryption offered protection against interception but had no bearing on protection against what D could personally do with the Confidential Information. Next, although it is unnecessary to revisit the 1^st and 2^nd Draft SD, Mr Yip suggested the 3^rd Draft SD was too onerous as D would not be able to contact her friends who had become P’s customers even on personal matters. This is a misreading of the 3^rd Draft SD that required D not to contact P’s customers “in an attempt to solicit, interfere with or attempt to entice them away from [P] including through use of the ANZ Information”, which would not have prevented D from contacting the 425 Customers as personal friends on personal matters. In any event, any non-solicition restriction was spent by January 2015.

105. In my view, P adequately explained why the written assurances were not good enough. They were not “undertakings” to the court so D could easily resile from such assurances, and unlike a SD they did not carry criminal/civil sanctions. The magnitude of the data breach that involved confidential information of the 425 Customers required commensurate protective measure for P and its customers, and P’s insistence on a SD was reasonable and appropriate.

106. I respectfully agree with DHCJ Seagroatt that the assurances D offered in Signed SD were limited/inadequate. The shortcomings were shown in the Comparite and explained by Payne in paragraphs 60-61 above. A significant lacuna was the absence of assurance as to whether D had kept copies (either a hard copy in print form or electronic copy in a device) of the Emails/Attachments (by limiting her assurance to deletion/destruction of the information in the Personal E-Address and non-transfer of the information any other email address), and whether she had used the Emails/Attachments for her own benefit or for the benefit of others (by limiting her assurances to non-disclosure of the information to third parties and non-solicitation of custom from P’s customers).

107. I also respectfully agree with the observations in paragraph 8 of the Seagroatt Reasons that the 3^rd Draft SD premised on D’s assurances made during the 24/7/14 Tel Call, in the 24/7/14 Statement and in the 18/8/14 Letter “was  entirely reasonable and indeed a prudent course to take so that [P] could fully protect itself in respect of its customers whose confidential data had been compromised, and its regulatory body which would require to be assured that [P] had taken all proper and necessary steps to prevent or limit any consequential damage, ……”

108. In my view, the inadequacy of the Signed SD, D’s refusal to sign the 3^rd Draft SD unless P withdrew the Summary Dismissal (the propriety of which was the subject matter of D’s counterclaim), D’s maintenance that there was no breach of confidence and no need for any SD in the absence of any “misuse”/“disclosure” of the Confidential Information by her, and D casting extravagant doubts as to P’s motive  (see paragraphs 46-47 and 50 above) all add to the concern that the Signed SD and D’s written assurances were insufficient to protect P given its duty to its customers and the risk to its commercial reputation and interest.

109. I note P did give time for D to consider signing an appropriate SD before reporting to the Regulators and approaching affected customers and RBC. Even after termination of the Employment, P still allowed time for D to provide a suitable SD. D rebuffed these overtures by insisting on withdrawal of the Summary Dismissal. Absent sufficient assurances that were capable of sanction on breach, I find there was no arguable defence to P’s Reliefs for the Confidential Information, which accords with the views expressed in paragraph 17 of the Seagroatt Reasons.

(g)  Bank Forms, Internal Information and Investment Information

110. The claims for the Delivery Up and Affirmation Orders extended to the Bank Forms, Internal Information and Investment Information on the basis they were P’s property. The Bank Forms were undoubtedly P’s property, and whilst D and her husband might be entitled to collect the forms from P’s office, there was no justifiable basis for D as P’s employee to download/copy the Bank Forms (being P’s proprietary materials) from P’s system into her own personal email account with P’s consent. The Internal Information (ie “Taiwan ANZ staff contact details” and “FACTA TO GO LIFE Briefing Pack”) and Investment Information (ie “Blackrock Emerging market Bond fund information”) were also P’s property. Indeed, Clause 9 defined “confidential information” to include “any information about ANZ Group …… or its affairs which [D obtains] during [her Employment] unless the information is already available to the public other than as a result of breach of this clause”, and gave examples that included “[our] processes, procedures and systems” and “working documents such as research, strategies, papers, proposals, presentations and financial information”. D’s only answer was a bare assertion that the Investment Information was widely available on the internet, but she did not produce any publicly accessible information downloaded from the internet to support her contention. In my view, there is no arguable defence to P’s claim for the Delivery Up and Affirmation Orders for the Bank Forms, Internal Information and Investment Information.

(h)  Summary

111. In the circumstances, P was entitled to quia timet protection, and there is no arguable/triable defence. I grant summary judgment in terms of paragraph 7(a) above, so I need not consider paragraph 7(b) above.

VI.  STRIKING OUT: DAMAGES FOR WRONGFUL DISMISSAL

112. P only sought to strike out the claim for damages for loss of future income for wrongful dismissal on the basis it disclosed no reasonable cause of action. Pursuant to Order 18 rule 19(2) of the RHC, no affirmation evidence would be admissible.

113. Mr Carolan submitted on the basis of the Addis rule that came from Addis v Gramophone Co Ltd[38] that D’s claim for damages for wrongful dismissal was limited to wages or other benefits (if any) D would have received under the Contract[39] had it not been terminated by the Summary Dismissal, and she could not recover damages for injured feelings, mental distress or damage to her reputation arising out of the manner of the dismissal, or for loss she might sustain from the fact that the dismissal of itself made it more difficult for her to obtain fresh employment. So D had no legal basis to claim for loss of future earnings through inability to work/earn at the same level as a result of the manner of the Summary Dismissal, and paragraphs 32e(b) and 32f and paragraph 2(b) of the prayer of the ADC ought to be struck out.

114. The Addis rule was reiterated in Johnson v Unisys Ltd[40] where the House of Lords (Lord Steyn dissenting) held that although it was possible to conceive of a reasonable cause of action based on a breach of the implied obligation of trust and confidence to allow an employee to recover damages for loss arising from the manner of his dismissal, it would be an improper exercise of judicial function to take such step in light of the English statutory unfair dismissal regime. Lord Hoffmann explained as follows:

“44. …… if wrongful dismissal is the only cause of action, nothing can be recovered for mental distress or damage to reputation. On the other hand, if such damage is loss flowing from a breach of another implied term of the contract, Addis’s case does not stand in the way. That is why, in [Mahmud v Bank of Credit and Commerce International SA] itself, damages were recoverable for financial loss flowing from damage to reputation caused by a breach of the implied term of trust and confidence.”[41]

115. 2 years earlier, Ribeiro JA (as he then was) in Semana Bachicha v Poon Shiu Man[42] also drew the same distinction between a cause of action based on wrongful dismissal simpliciter and one based on breach of the implied term of trust and confidence:

“…… Addis v Gramophone Co was decided solely on the basis of a wrongful dismissal, the implied trust and confidence term not having then been adumbrated. It was therefore what I have referred to as a “wrongful dismissal case simpliciter”.

……

Accordingly, it is necessary in the employment context first to identify the specific obligation breached and the extent of loss caused by the breach before considering what damages are recoverable under the measure of damages rules.

……

In my view, it follows from the foregoing analysis that a given set of facts may constitute both kinds of breaches giving rise simultaneously to seperate entitlements to damages, each independently computed, but subject obviously to the avoidance of any double recovery. The employer’s wrongful conduct might constitute a wrongful dismissal (particularly in the form of a constructive dismissal) and at the same time, a breach of the implied trust and confidence term, the latter causing continuing financial loss not confined by the usual wrongful dismissal measure. This was recognised in Malik v Bank of Credit and Commerce International SA (in liquidation) [1998] AC 20 (at p.36) ……”

The Court of Appeal held the plaintiff was entitled to damages for wrongful dismissal and also “damages to the extent that she suffered any additional pecuniary loss which is not too remote as a result of the defendant’s breach of the implied trust and confidence term by driving her out of her employment in the circumstances discussed”.[43] Further, the Court of Appeal in dealing with a striking out application in Tadjudin v Bank of America, National Association[44]also drew such distinction, and held that a claim premised on an anti-avoidance term[45] (and not wrongful dismissal simpliciter) ought not to be struck out, and the case should proceed to trial given the fact-sensitive issues.

116. Mr Yip therefore submitted D was entitled to claim and plead a claim for loss of future earnings for wrongful dismissal or alternatively leave should be given for D to amend the ADC to effectively plead such claim. But here D did not rely on any anti-avoidance term as properly pleaded in Tadjudin. Rather, Mr Yip said D relied on P’s “breach of the implied trust and confidence term by driving her out of her employment” as explained in Semana Bachicha.

117. Neither counsel referred me to To J’s judgment after trial in Tadjudin[46]which gave useful insight on this issue. In Tadjudin, although the plaintiff pleaded the anti-avoidance term, he did not plead the implied term of mutual trust and confidence. To J agreed it would be unnecessary to plead such implied term if the plaintiff merely wanted to rely on such implied term to advance his pleaded case on the anti-avoidance term. But in fact the plaintiff wanted to introduce a new/different case based on an unpleaded but free-standing implied term of trust and confidence in order to argue inter alia that an employer must not exercise a power to dismiss unconscionably and without reasonable cause and contrary to the legitimate expectations of the employee (ie a sub-category implied term). To J concluded that the principles in Kwok Chin Wing v 21 Holdings Limited & anor[47] on proper pleadings to define the issues both before and at trial applied to contractual terms to be implied from legal duties as matter of law, and held that a party may not, on the pretext of legal argument, be allowed to wander into un-pleaded arena, leaving his opponent pondering what case he has to meet and catching him unprepared. The learned judge went on to say that:

“[while] the existence of the duty or implied term of mutual trust and confidence is trite law which need not be pleaded, the issue raised by such legal principle must be pleaded. The existence of the two ‘sub-category’ implied terms allegedly included under its umbrella is not established legal principle. They are facts which must be pleaded. They are wider in scope than that which was pleaded. Had they been pleaded, the Bank would have marshalled a separate set of legal arguments, adduced other evidence and cross-examined on a different basis and presented its case differently. It would be grossly unfair and prejudicial to the Bank to allow the two ‘sub-category’ implied terms to be raised at this stage. The Plaintiff deliberately chose not to amend her statement of claim to properly raise and plead the two ‘sub-category’ implied terms. It is only appropriate that she should not be allowed to rely on them. ……”[48]

118. Here, the ADC merely pleaded a case of wrongful dismissal simpliciter without any plea of the implied term of mutual trust and confidence, in particular the legal issue raised by such implied term, and the material facts for breach of such implied term. As was made clear in To J’s judgment, D would not be allowed to run a free-standing but unpleaded case premised on the implied term of mutual trust and confidence that would entitle D to claim for loss of future earnings. Whether or not the Summary Dismissal on the last day of D’s employment with P (which P said was a disciplinary measure in the absence of satisfactory explanation/assurances in respect of the Email Act) was wrongful would be matter for trial, but there was no pleaded basis to support a claim for loss of future earnings for breach of the implied term of mutual trust and confidence, and such claim in paragraphs 32e(b) and 32f as well as paragraph 2(b) of the prayer in the ADC ought to be struck out as showing no reasonable cause of action.

119. Mr Yip submitted D should be given an opportunity to amend her claim. In Total Lubricants Hong Kong Limited & ors, Poon J said as follows:

“14. First, if a pleading is capable of being cured by amendments, it should not be struck out. An opportunity to amend should be given instead. However, if the pleading is so defective that no amendment can cure it or if the proposed amendment is incapable of improving the defects, the pleading is liable to be struck out and the proposed amendment should be refused.

15. Second, when a party seeking to amend his pleadings in order to save it from being struck out, the proposed amendment should be properly and exactly formulated, includes all necessary averments or mandatory particulars and constitutes a full and complete plea of a reasonable cause of action.”

No draft of the proposed amendments was placed before me. Further, a claim based on breach of mutual trust and confidence was distinctly different from a cause of action premised quite possibly on differently marshalled material facts. In the absence of a proper formulation of such cause of action, it is inappropriate to grant general leave to amend. Given such conclusion, it is unnecessary for me to determine the point of law in paragraph 7(d)(i) above.

VII.  STRIKING OUT: WRONGFUL DISMISSAL AS DEFAMATION

120. Mr Carolan submitted that to sue on defamation it must be shown that words defamatory of the claimant was published to third party(ies), but the fact of summary dismissal is no such publication nor is any entry in this regard in D’s work record. In Gatley on Libel and Slander, it was said “[a] person wrongfully dismissed cannot rely on the dismissal itself as conveying a defamatory imputation, ……”[49] After all, publication (an essential ingredient for a claim on defamation) is a bilateral act, and material is “published” and damage occurs where the publication is comprehended by the reader. Mr Yip’s suggestion that it would be an issue at trial whether the Summary Dismissal was just/reasonable or wrongful was no answer to the above point, and after all P did not seek to strike out D’s claim for wrongful dismissal. In the circumstances, the claim in paragraph 32e(c) of the ADC should be struck out as disclosing no reasonable cause of action, and it is unnecessary for me to address the point of law paragraph 7(d)(ii) above.

VIII. STRIKING OUT: WITHOUT PREJUDICE PRIVILEGE

121. Mr Carolan submitted D made improper references to the without prejudice 14/8/14 Meeting (which were inadmissible) in paragraphs 20.1 and 20.6 of the ADC, and hence D’s pleadings on such matters were scandalous, might prejudice, embarrass or delay fair trial of the action and/or were abuse of the process of the court.

122. According to Hong Kong Civil Procedure 2016, the “without prejudice” rule is founded upon the public policy of encouraging litigants to settle their differences rather than litigate them to a finish:[50]

“This rule excludes all negotiations genuinely aimed at settlement, whether oral or in writing, from being given in evidence. The purpose of the rule is to protect a litigant from being embarrassed by any admission made purely in an attempt to achieve a settlement. …… Any discussions between the parties for the purpose of resolving the dispute between them are not admissible, even if the words “without prejudice” or their equivalent are not expressly used ……

……

  If one party to negotiations on a without prejudice basis wishes to change the basis thenceforth to an open one, the burden is on that party to bring the change to the attention of the other party and to establish that on an objective basis that the recipient would have realised that a change in the basis of negotiation was being made ……”

Unless there is a bona fide attempt to resolve a dispute, “without prejudice” privilege is not engaged. However, if the words “without prejudice” are not used, but it is clear from the surrounding circumstances that the parties were seeking to compromise the action, the evidence of the contents of those negotiations will, as a general rule, not be admissible. If those words were used, and it is clear that there are genuine negotiations, it would be a very unusual case for the court to hold the privilege does not apply.[51] Since without prejudice privilege belongs to both parties,[52] if one party deploys without prejudice material before the court, then the other party can object and seek to prevent the material from being so deployed.[53]

123. Mr Yip argued otherwise by referring to Phipson on Evidence 13^th ed (1982) (but the current version is 18^th ed):

“Whereas all that passes between a lawyer and his lay client is privileged if it does so in the course of a professional relationship, where either the lawyer or the client has communicated to a third party about a matter relevant to the litigation in hand, that communication will be privileged only if it is made in contemplation of the litigation. ……

Communications between the parties cannot be privileged, …… apparently because that which is communicated to the other party cannot be privileged, and that which was communicated by the other party is not so communicated for the benefit of the recipient’s solicitor. (Communications between the parties may however be “without prejudice: see post §§17-10 to 17-11).” (my emphasis)

The above passage that rested on legal professional and/or litigation privilege was irrelevant, but I note even the then editors contemplated communications between parties when litigation was contemplated could be without prejudice. This was confirmed in the current edition of Phipson on Evidence:[54]

“It does not matter that litigation has not begun. In Framlington Group Ltd v Axa Framlington Group Ltd the Court of Appeal held that the relevant question was whether the parties contemplated or might reasonably have contemplated that litigation would follow if they could not agree. And even when a letter is sent as the “opening shot” in negotiations, and is not preceded by any previous correspondence, it may be without prejudice. There are authorities in both directions on this latter point and it will depend on the facts. …… There is no reason why every letter for which without prejudice is claimed should contain an offer or consideration of an offer, so long as without prejudice correspondence is part of a body of negotiation correspondence.”

124. The question whether a particular communication is without prejudice must be assessed objectively having regard to the relevant factual circumstances.[55] So I turn to the contemporaneous correspondence for the 14/8/14 Meeting:

(a)    By a without prejudice save as to costs letter dated 8 August 2014 to D’s solicitors, P’s solicitors proposed a meeting for the purpose of settlement:

“[P] remains of the view that it is in neither parties’ best interests to proceed to litigation. Given the current profound differences between the parties’ proposed terms of settlement and in order to resolve the matter efficiently, [P] suggests holding a meeting with [D] on 14 August 2014 …… at [P’s] office ……”;

(b)    By a further without prejudice save as to costs letter dated 12 August 2014 to D’s solicitors, P’s solicitors referred to a without prejudice telephone conversation and confirmed the meeting between their clients on 14 August 2014 at P’s office.

(c)    By a without prejudice save as to costs letter dated 12 August 2014 to D’s solicitors, P’s solicitors referred to their letter dated 12 August 2014 and a telephone conversation on 13 August 2014, and enclosed a draft SD for discussion at the meeting.

(d)    By a confidential and without prejudice letter dated 18 August 2014 to P’s solicitors, D’s solicitors stated “[we] see that the meeting on the last Thursday evening was a constructive one although not yet successful”, and “[for] amicable settlement, [they] have instructions to propose the following terms in settlement of the matter” that included signing the enclosed “proposed settlement agreement” marked up by D’s solicitors.

125. Mr Yip referred to the open letter by P’s solicitors dated 8 August 2014 that enclosed the 2^nd Draft SD (see paragraph 50 above) being P’s letter before action that set out its demands which elicited the response by D at the 14/8/14 Meeting and later by the open 18/8/14 Letter, and argued the 14/8/14 Meeting was not without prejudice. But such submissions ignored the fact that P’s solicitors sent 2 letters both dated 8 August 2014 to D’s solicitors: one was an open letter and the other one was without prejudice save as to costs, and it was the latter letter that proposed the 14/8/14 Meeting to resolve the “profound differences between the parties’ proposed terms of settlement”. Plainly, P was keenly alive to the distinction between open and without prejudice communications, and consciously made the 14/8/14 Meeting without prejudice. The subsequent without prejudice correspondence that referred to such meeting confirmed both parties regarded such meeting as without prejudice.  There was plainly a dispute between the parties,[56] and the 14/8/14 Meeting was designed towards resolving such dispute before legal proceedings were brought, and hence was without prejudice in anticipation of litigation. In the circumstances, paragraphs 20.1 and 21.6 of the ADC ought to be struck out on the bases set out in paragraph 7(e) above.

XI.  STRIKING OUT: PREJUDICE, EMBARRASS OR DELAY FAIR TRIAL

126. Given the above conclusions, Mr Carolan submitted I need only be concerned with paragraph 38 of the ADC which he submitted ought to be struck out on the basis that it was embarrassing, prejudicial and might delay the fair trial of the action. Paragraph 38 of the ADC pleaded that as a result of the Words D’s future career prospects and licence had been seriously hampered: (a) D was forced to resign from her employment by RBC which took effect on 22 September 2014, (b) D had been unable to secure any alternative employment since then,[57] and (c) prospective employers were deterred and would be deterred from employing D and/or applying to the HKMA for transfer of D’s banking licence given her current record that indicated she was summarily dismissed by P and was under investigation for the same.

127. Such plea plainly went to the issue of damages caused by the Words. Payne said such plea was embarrassing as it did not explain how or why the Words published to the P’s customers (not to the Regulators or to P’s prospective employers) would cause the consequences alleged. He suggested that (a) above was nonsensical and not understood, and (c) above had nothing to do with the Words. Mr Yip’s brief but inadequate answer was that paragraph 38 of the ADC could be perfected by amendment to give particulars. But no formulation of the proposed amendment was placed before me, and it was unclear what particulars could be given to “perfect” the plea. I agree with Mr Carolan such plea reflected confusion between possible impact of the Words and potential impact of the fact of Summary Dismissal on D’s prospects of future employment and record as a licensed person with HKMA. In her defamation claim, D might only recover damages (if successful) for reputational loss caused by the publication of the defamatory Words (pleaded as published to P’s Customers and not to RBC, HKMA or P’s prospective employers) and not harm to future career prospects caused by the fact of dismissal. I agree paragraph 38 of the ADC ought to be struck out.

X.  CONCLUSION

128. I grant an order in terms of paragraphs 1, 3, 4 and 5 (only in respect of paragraph 38 of the ADC) of the Summons. There is no reason why costs should not follow event. I grant a costs order nisi that D do pay P costs of (a) the Summons and (b) this action (but excluding D’s counterclaim) including all costs reserved, if any, to be taxed if not agreed.

Annexure

1.  Before the cessation of my employment with the Hong Kong branch of Australia and NewZealand Banking Group Corporation Limited (“ “ANZ” ”), I took, without ANZ’s authorization, approval or consent, ANZ’s customer and other did handle, information (“ANZ Information”) including “the information”) as set out in the Annex to this statutory declaration by sending the ANZ Information from my ANZ email address (address: [Office E-Address]) to a non-ANZ email account (address: [Personal E-Address]).

2.  I have irrevocably destroyed and deleted all ANZ Information, including ANZ Information sent to the non-ANZ the information and other relevant information, if any, in my personal email account (address: [Personal E-Address]) and/or all copies thereof (whether in physical, electronic or other form).

3.  I have not provided, nor cause to be provided, nor disclosed nor divulged any ANZ Information of the information (whether in physical, electronic or other form) to any third party.

4.  I have not used any ANZ Information (whether in physical, electronic or other form) for my own benefit, nor for the benefit of any third party, outside the proper discharge of my duties for ANZ.

4.5.   I have not transferred, transmitted, sent or forwarded any of the ANZ Information information to any other non-ANZ email address.

5.6.   No other person has (or has at any time had) access to or control of the email address (address: [Personal E-Address]) to which ANZ Information was sent nor to any device on which the ANZ Information was stored.

6.7.   I have not contacted, and undertake not to contact, any ANZ’s proprietary customers in an attempt or attempted to solicit, interfere with or attempt to entice them any ANZ’s proprietary customers away from ANZ including through use of the ANZ Information.

7.8.   I hereby consent to ANZ personnel checking my non-ANZ email account (address: [Personal E-Address] at ANZ’s office, [address] on a date to be specified on a date upon prior appointment by ANZ.

And I make this solemn declaration conscientiously believing the same to be true and by virture of the Oaths and Declarations Ordinance.