TOTAL LUBRICANTS HONG KONG LTD AND OTHERS v. CHRISTOPHE DE LA CROPTE DE CHANTERAC AND OTHERS

HCA1694/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1694 OF 2008

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DECISION

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A.  Applications

1.  The defendants applied to strike out the plaintiffs’ statement of claim (“SOC”) and to stay the proceedings on the principal grounds that it does not disclose any reasonable cause of action and that it is an abuse of process[1].  In order to meet the defendants’ objections and to fortify the pleas, the plaintiffs applied to amend the SOC by a proposed amended statement of claim[2] (“ASOC”).  The parties agreed that I should first deal with the striking out and amendment applications and then depending on the outcome, give directions for the disposal of the stay application.

2.  The background is summarized as follows.

B.  Background

3.  The plaintiffs are companies within the French based Total Oil group.  The 1^st plaintiff is a Hong Kong subsidiary distributing marine lubricants in Hong Kong for international customers of the 3^rd plaintiff who call at the Hong Kong harbour from overseas.  The 2^nd plaintiff is a Singapore subsidiary carrying on the same kind of business as the 1^st plaintiff does in Singapore.  The 3^rd plaintiff is a French subsidiary.  It is the parent company of the 1^st plaintiff, selling and distributing marine lubricants to international customers not based in Hong Kong.

4.  The 1^st and 2^nd defendants were ex-employees of the 1^st plaintiff.  Their employments were terminated on 25 June 2008.  The 1^st defendant was then Asia-Pacific Marketing and Business Development Senior Manager and the 2^nd defendant, SAP Sales Administration and Information Systems Manager.

5.  The 3^rd defendant was employed by Total Raffinage (then known as Elf Antar France), another French subsidiary of the Total Oil group.  The plaintiffs pleaded that on 18 July 2002, she agreed to be assigned to the 1^st plaintiff for an initial period of two years which was subsequently extended.  The 1^st plaintiff entered into an implied employment contract with her at the same time as she continued to be employed by Total Raffinage.  She was Managing Director between 18 July 2002 and 16 May 2008.  Thereafter, she continued to be employed the Total Raffinage and the 1^st plaintiff until 16 June 2008 when her employment was terminated.  The 3^rd defendant accepted that she was seconded to work in Hong Kong but denied that she was the 1^st plaintiff’s employee.

6.  The 4^th defendant was formerly SEA Business Support Senior Manager and Asia Credit Manager of the 2^nd plaintiff until she resigned on 2 July 2008.

7.  The 5^th and 6^th defendants are companies within a group entitled to use the name Gulf Oil.  The 5^th defendant, a Hong Kong company, was dormant since incorporated on 4 May 1993 until 10 June 2008.  It is the current employer of the 1^st to 4^th defendants.  The 6^th defendant is a UK company, trading in oil and greases.

8.  On 9 September 2008, the plaintiffs commenced the present action.

C.  An overview of the SOC

9.  The plaintiffs’ case is summarized in §1 of the SOC : they “seek damages and injunctions against their former officers and employees (the first four defendants) in relation to breaches of contract, fiduciary and/or equitable duties and conspiracy between the defendants to commit breaches of their duties owed to the plaintiffs (in contract, in tort and in equity), to remove confidential information belonging to the plaintiffs and to defect and attempt to persuade other employees in a concerted move to launch the 5^th defendant, which was dormant until 10 June 2008, as a competitor.”

10.  The SOC pleaded the parties’ background and relationship (§§2 to 10).  It then set out in relation to each of the 1^st and 4^th defendants the contractual duties and fiduciary duties owed to their employer and equitable duties owed to all the plaintiffs (§§11 to 30).  The duties are couched in similar terms.  The contractual duties include a duty to act in good faith and in the best interest of the employer.  The fiduciary duties include a duty to have no conflicts between his/her personal interests and contractual duties to the employer and in the 3^rd defendant’s case, a duty not to assist or participate in the launch of a competing business.  The equitable duty to the plaintiffs is to keep the plaintiffs’ confidential information, which they had access to or were provided with during the course of employment, confidential.

11.  The SOC next pleaded the involvement of the 1^st and 4^th defendants in the development of the 5^th defendant as a competing business, how they breached the duties owed to the plaintiffs and the conspiracy (§§31 to 59); how they induced the 1^st and 2^nd plaintiffs’ staff to breach their contracts of employment (§§60 to 62); how they wrongfully used confidential information of the plaintiffs (§§63 to 65); how the 2^nd defendant destroyed the evidence of the conspiracy by disposing of six laptop computers (§66).  It then pleaded the launch of the 5^th defendant and its Singapore branch resulting in pecuniary benefits to the defendants (§§67 to 68).  These paragraphs provided the factual matrix from which various causes of action are raised :

(1) As against the 1^st to 4^th defendants, they were in breach of their employment contract and fiduciary obligation towards their employer, the 1^st and 2^nd plaintiff, as the case may be (§§69 to 75).

(2) As against all the defendants except the 4^th, they were in breach of equitable obligations and confidentiality towards the 1^st and 3^rd plaintiffs (§§63 to 65).

(3) As against all the defendants, they committed inducement of breach of contract as against the 1^st and 2^nd plaintiffs (§§76 to 77), as the case may be.  They had infringed the 1^st plaintiff’s copyright (§§78 to 82) and are also guilty of unlawful means conspiracy against all the plaintiffs (§§83 to 87).

12.  In the next section headed “Remedies” (§§88 to 97), the plaintiffs pleaded, among other things, that the whole of the 5^th defendant’s business belongs in equity to them (§88); that they are entitled to account of profits as set out in the paragraphs below, alternatively damages (§89).  Finally, various relief are prayed for, including injunctions and declarations, account for profits and damages.

D.  Applicable principles

13.  The applicable principles are well established.  A useful summary can be found in Hong Kong Civil Procedure 2009, Vol.1, §18/19/4 at pp.350-351 (for striking out) and §20/8/6 at pp.382-383 and §20/8/24 at p.393 (for amendment).  I do not propose to repeat them here except to mention two points.

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.

16.  With these principles in mind, I now turn to examine the SOC and ASOC in greater detail.

E.  The pleas of inference

17.  It is useful to dispose of a general point at the outset, which is this.

18.  The SOC and ASOC are littered with pleas of inferences : §35 (the 2^nd and last sentence); §40 (the last sentence); §49A (the entire paragraph); §51(the 2^nd sentence); §59 (the 1^st sentence); §60 (the 2^nd sentence); §64 (the 2^nd and 3^rd sentence); §65A (the entire paragraph); §65B (the 2^nd sentence); §65D (the entire paragraph); and §72 (the 3^rd sentence).  Ms Ismail submitted that these pleas of inferences provided the sources of the material facts, that is, how the plaintiffs are going to prove their case.  She readily conceded that they are evidence.  As such, they offend the elementary rule that every pleading must contain only a statement of the material facts on which the party pleading relies, and not the evidence by which they are to be proved : see Order 18, rule 7(1) of the Rules of the High Court, Hong Kong Civil Procedure 2009, Vol.1, §18/7/5 at p.321.  On this ground alone, they are all liable to be struck out.

19.  In any event, the bases upon which those inferences were drawn are speculative.  Such conjectures are impermissible in a proper pleading.

20.  Accordingly, for those pleas of inferences identified above which are contained in the SOC, they are all struck out.  For those which are sought to be introduced by way of the ASOC, the application for amendment is refused.  I will disregard all those pleas of inferences in the discussion below.

F.   Employment relationship between the 1^st plaintiff and the 3^rd defendant

21.  I next turn to the dispute between the 1^st plaintiff and the 3^rd defendant on her employee status.  If that dispute is resolved in her favour at this stage by striking out, most of the plaintiffs’ complaints against her will fall away.

22.  The 1^st plaintiff pleaded that after she had been assigned to work in Hong Kong, the parties entered into an implied employment contract at the same time as she continued to be employed also by Total Raffinage; that the 1^st plaintiff completed an Inland Revenue Department Employer’s Return of Remuneration and Pensions for the year 1 April 2006 and 31 March 2007 in which she was described as employed as a director; and that her employment with the 1^st plaintiff was terminated on 16 June 2008.

23.  The 3^rd defendant, in her affidavit filed for the present applications, maintained that she was only an employee of Total Raffinage under a written employment contract dated 16 January 1995.  Her monthly salary was paid by Total Raffinage into a French bank account and was at all material times subject to tax equalization treatment so that her own salary would be the same net of tax as an equal level seniority employee based on France.  Her performance assessments and annual reviews were conducted through senior management in France.

24.  Mr Coleman, SC, for the 1^st to 4^th defendants, submitted that as a matter of law, there could be no implied contract of employment as such.

25.  I disagree.  As a matter of law, a contract of employment can be implied : see the definition of “contract of employment” in section 2 of the Employment Ordinance (Cap.57), which expressly provides for an implied contract.  And it is trite that when considering if a person was employed by another, the court will examine all the features of the parties’ relationship against the background of the indicia of employment with a view to deciding whether, as a matter of overall impression, the relationship was one of employment : see Poon Chau Nam v Yim Siu Cheung (2007) 10 HKCFAR 156.

26.  The matters relied on the 3^rd defendant are capable of showing that she was at the material times an employee of Total Raffinage.  But it does not necessarily exclude the possibility that she was simultaneously employed by the 1^st plaintiff as well.  This is a matter for trial.  The application to strike out §§19 to 27 of the SOC is refused.  The amendment by way of §28A of the ASOC and the opening words “Further or alternatively,” in §29 of the SOC is allowed.

27.  I will now proceed to deal with each of the causes of action more specifically.  Although the main thrust of the plaintiffs’ case is one of conspiracy, it is more convenient to first deal with the individual causes of action upon which the claim of conspiracy is based.

G.  Breach of confidence

28.  I will begin with breach of confidence.

29.  A right of action will lie where the defendant is proved to have used confidential information, directly or indirectly obtained from the plaintiff, without the latter’s consent, express or implied.  Four requirements are essential :

(1) the plaintiff must identify clearly the information which is alleged to be confidential;

(2) the information itself must have the necessary quality of confidence about it;

(3) that information must have been imparted in circumstances importing an obligation of confidence; and

(4) there must have been an unauthorized use of that information to the detriment to the party communicating it.

See Bullen & Leake Jacob’s Precedents of Pleadings, (2008 Edn), §66-01 at p.1051.

30.  The statement of claim must define with some precision the information or communication which is alleged to be confidential.  Particulars must also be given to show that the information is confidential in character.  The relevant circumstance giving rise to the obligation of confidence and the unauthorized use must be pleaded as well.

31.  The 1^st and 3^rd plaintiffs’ case on breach of confidence is set out in various parts of the SOC and arranged in a rather confusing manner.  Doing the best that I can, I first look at the case against the 5^th and 6^th defendants in §§63 to 65 of SOC.  The ASOC proposed to expand the claim by §§65C and 65E.  (§§65A, 65B and 65D have been disallowed already.)

32.  §63 referred to an email forwarded by the 1^st defendant to the 3^rd defendant on 23 June 2008.  It is per se not objectionable but is of little significance because the case on breach of confidence is not based on the email at all.

33.  §64, in its original form (without the pleas based on inferences which have been struck out), referred to a computer forensic analysis on the computer equipment operated by the 1^st to 3^rd defendants and, Ms Miranda Lo and Ms Ivy Chan (“Ms Lo” and “Ms Chan”), two of the Departing Staff[3], established that a total of 20 data storage devices were attached to their computers in the days leading up to the time they each left the 1^st plaintiff.  Each of those 20 devices is currently missing from the 1^st plaintiff’s office.  §65 then pleaded that :

“…it is likely that some or all of these persons used the missing storage devices to store and remove confidential information belonging to [the 1^st and 3^rd plaintiffs] from [the 1^st plaintiff’s] possession and/or control and currently retain such confidential information on the storage devices.”

34.  There are considerable difficulties with §§64 and 65.

35.  The alleged confidential information has not been identified.  No particulars have been provided to show that the information was confidential in character.  Ms Ismail relied on the contractual provisions in the employment contract that any information the employee obtained from the 1^st and 3^rd plaintiffs shall be maintained in confidence.  For my part, I do not think that clause detracts from the obligation on the part of the 1^st and 3^rd plaintiffs to plead their case on breach of confidence sufficiently and properly.  The plea in §65 quoted above is no more than speculation.  It cannot found a case of wrongful use of the alleged confidential information.

36.  §§64 and 65 are struck out.

37.  §65C of the ASOC pleaded :

“65C.   In all the circumstances, Gulf Oil International and GOML were well aware, alternatively ought to have known, that the information included, on a non-exhaustive basis pending disclosure, the following :

(a)   USB / storage devices (see paragraphs 63 to 65 above)

(b)   The Vietnam contract (see paragraph 52 above)

(c)  Identification of the name and role of Total Lubricants HK and/or Total Singapore staff for recruitment (see paragraphs 60 to 62 above)

(d) The user guides to the BOS system (see paragraph 35 above)

supplied to them by the Plaintiffs’ former employees, including but not limited to, Messrs de Chanterac and Lambert, Ms Huot, Ms Lo and Ms Chan, was confidential and was confidential to the Plaintiffs.”

38.  §65E went on to allege :

“65E.   In the premises and at all material times, Gulf Oil International and GOML were under a duty of confidence to the Plaintiffs in respect of all the confidential information of the Plaintiffs supplied by the Plaintiffs’ former employees and were not and are not entitled to use or disclose such information or any part thereof.”

39.  §65C sought to include other alleged confidential information not properly identified by adopting the phrase “the information included on a non-exhaustive basis pending disclosure…”.  That is impermissible.

40.  §65C(a) cannot stand in light of my ruling on §§64 and 65.

41.  §65C(b) referred to the Vietnam contract pleaded in §52 of SOC.  But in §52, the only information said to have been sent by the 1^st defendant to the 3^rd defendant on 17 June 2008 was the first available date on which that contract could be terminated.  It is incapable of supporting the much wider plea in §65C(b) that the alleged confidential information included the contract as a whole.

42.  The identification of the name and role of the staff in the 1^st and 3^rd plaintiffs in §65C(c) is said to be confidential.  But there is no plea to show how the information was confidential in character.  The plea is insufficient.

43.  §65C(d) related to the user guides to the BOS system referred to in §35 of the SOC.  §35 in its original form with the minor amendment “the BOS system” added to the 3^rd sentence (which I allow) is a sufficient plea on the identification of the confidential information and its confidential character.

44.  In short, the only piece of confidential information that is allowable for amendment is the BOS user guides identified in §65C(d).  That, however, does not necessarily follow that the amendment by §65C as trimmed down is permissible.  The problem lies with the plea for breach of confidence.  The plea for breach is first found in §65, which has already been struck out.  The plea for breach is next contained in §65B of the ASOC.  It is a plea based on inference.  The application to add it to the SOC has been refused.  Absent any proper plea for breach, no reasonable cause of action based on breach of confidence can be raised against the 5^th and 6^th defendants by §65C (even if trimmed down) and §65E.  The proposed amendment by the two paragraphs is refused.

45.  The 1^st and 3^rd plaintiffs’ case on breach of confidence against the 1^st to 3^rd defendants are couched in similar terms : see §69(5), §70(5) and §71(7).  With respect to the 1^st and 3^rd defendants, the information alleged to be confidential is (a) the USB storage devices, (b) the Vietnam contract and (c) the identification of the staff for recruitment by the 5^th and 6^th defendants.  The proposed amendment by the ASOC sought to include in item (c) the name and role of the staff of the 1^st and 2^nd plaintiffs for the recruitment.  With respect to the 2^nd defendant, the information did not include item (b) but included by way of the ASOC the BOS user guides.

46.  I have already dealt with the sufficiency of the pleas on the above items as confidential information in §§40 to 43 above.  For those reasons, the case based on the USB storage devices, the Vietnam contract and the identification of the name and role of the staff for recruitment by the 5^th and 6^th defendants cannot stand.  In any event, the 1^st and 3^rd plaintiffs have been unable to properly plead breach of confidence.  They relied on the pleas of inferences in §64 (the 2^nd and 3^rd sentences), which has been struck out, and §§65A and 65B, which application for amendment has been refused.

47.  In the circumstances, no reasonable cause of action for breach of confidence has been pleaded against the 1^st to 3^rd defendants.  The original pleas in §§69(5), 70(5) and 71(7) are struck out.  The proposed amendments by way of the ASOC on those paragraphs are refused.

48.  The 1^st and 3^rd plaintiffs’ claims for breach of confidence against the 1^st to 3^rd, the 5^th and 6^th defendants are dismissed.

H.  Inducement of breach of contract

49.  The essential elements for the tort of inducing breach of contract are :

(1) knowledge by the defendant that he is inducing a breach of contract;

(2) intention to procure a breach of contract;

(3) breach of contract; and

(4) damage.

See Bullen & Leake, para.52-02 at p.865.

50.  The 1^st and 2^nd plaintiffs’ pleaded case is contained in §§76 and 77 of the SOC, which they sought to amend by the ASOC thus :

“76.  At all material times, the First to Fourth and the Sixth Defendants knew that the First to Fourth Defendants and the Departing Staff referred to in paragraph 60 above were employees of Total Lubricants HK and/or Total Singapore who owned contractual, fiduciary and equitable duties to the Plaintiffs.

77.    Nonetheless, the First to Fourth and the Sixth Defendants knowingly and intentionally :

(a)    solicited, induced or procured employees the Departing Staff of Total Lubricants HK and/or Total Singapore to breach their contracts of employment with Total Lubricants HK and/or Total Singapore as pleaded above including at paragraphs 52, 60 to 65B and 66 to 68.[4]”

The Departing Staff were the 1^st to 4^th defendants and seven other employees including Ms Lo and Ms Chan (§60 of the SOC).

51.  It is necessary to include in the pleadings the plea that each of the Departing Staff had committed a breach of their employment contract as induced by the defendants.

52.  Ms Ismail conceded that there was no plea of breach of contract with regard to the Departing Staff except the 1^st to 4^th defendants, Ms Lo and Ms Chan.

53.  For Ms Lo and Ms Chan, §§60A and 60B of the ASOC pleaded the duties owed by them to their respective employer.  They were alleged to have breached the duty of confidence by storing the alleged confidential information by the USB devices : see §64 (as amended by the ASOC) and §65 of the SOC.  I have already struck out §64 in its original form and §65 and disallowed the proposed amendment to §64.  There can be no proper plea for breach of confidence by Ms Lo and Ms Chan.

54.  That leaves us with the 1^st to 4^th defendants.  The SOC or ASOC have failed to identify precisely who was the inducer and who was being induced in respect of a particular breach of contract.  The only way to proceed is to look at the breaches complained of to see if there is any clue.  The breaches are three-fold : (a) recruiting the Departing Staff to join the 5^th defendant and its Singapore branch; (b) breach of confidence; and (c) assisting in the launch of the 5^th defendant.

55.  On recruitment, §60 of the SOC pleaded that the defendants and in particular the 3^rd and/or the 2^nd defendant had identified the Departing Staff that they wanted to recruit.  There is no plea as to who induced the breach by the 3^rd and/or 2^nd defendant.  §61 of the SOC (with some slight amendment by the ASOC) pleaded that on 23 June 2008 (that is, after she left the 1^st plaintiff) the 3^rd defendant received the employment contracts of some of the Departing Staff from the 2^nd defendant via email.  §62 of the SOC pleaded that the defendants in particular the 3^rd defendant were responsible for attracting the Departing Staff to join the 5^th defendant and its branch in Singapore.  However, none of the Departing Staff including the 1^st to 4^th defendants was subject to any restraint of trade clauses preventing them from joining the 5^th defendant or its Singapore branch.  What then is the breach complained of in §§61 and 62?  And who made the inducement?  One simply does not know.

56.  On breach of confidence, §52 of the SOC dealt with an email that the 1^st defendant sent to the 3^rd defendant on 17 June 2008, giving the first available date on which the Vietnam contract could terminate.  Assuming that it constituted a breach of his employment contract by the 1^st defendant, the plaintiffs have not pleaded who induced him to do so.  The next batch of pleas on breach of confidence relating to the 1^st to 4^th defendants is in §63, §64 (as amended by the ASOC) and §65 of the SOC and §§65A and 65B of the ASOC.  I have already disposed of them by either striking out or disallowing the amendment and dismissed the claim for breach of confidence based on them.  That being the case, no plea of breach of contract based on breach of confidence with respect to each of the 1^st to 4^th defendants can be properly raised.

57.  §66 of the SOC pleaded that the 2^nd defendant had disposed of six laptops thereby destroying the evidence of conspiracy.  That is hardly a breach of his contract.  Anyway, there is no plea as to who induced him to dispose of the laptops.

58.  On assisting the launch of the 5^th defendant and its Singapore branch, §§67 and 68 dealt with the monetary advantage that the defendants obtained by the launch.  Assuming that it is a breach of their employment on the part of the 1^st to 4^th defendants in assisting in the launch, there is no plea as to who induced each of them in committing the breach.

59.  Finally, Ms Ismail submitted that the breaches the plaintiffs relied on are not confined to §77(a) of the SOC (as amended).  They included all the matters raised in §31 of the SOC onwards.  This I reject because it offends the elementary rule that one can never plead a case by way of submission.

60.  In my view, §§76 and 77 of the SOC are a classic case of roll-up pleas.  It is defective, confusing and cannot be allowed.  They are struck out and the proposed amendment by way of ASOC is refused.  The 1^st and 2^nd plaintiffs’ claim for inducement of breach of contract based on the two paragraphs is dismissed.

61.  That is, however, not the end of the matter.  In §§ 73 and 74 of the SOC, the plaintiffs pleaded that the 3^rd defendant had induced breaches of contract and obligations by the 1^st to 3^rd defendants.  Although there is room for improvement, the pleas are sufficient enough to survive a striking out application.

I.   Breach of contract and obligations by the 1^st to 4^th defendants

62.  The thrust of the 1^st and 2^nd plaintiffs’ case is that the 1^st to 4^th defendants, while still employed, actively participated in the launch of the 5^th defendant, a business rival.  That constituted a breach of their employment contract and obligations, fiduciary and equitable.  The pleas concerned are §69(1) to (4) of the SOC and §69(6) of the ASOC for the 1^st defendant; §70(1) to (4) of the SOC and §71(7) of the ASOC for the 2^nd defendant; §71(1) to (6) of the SOC, §71(8) of the ASOC, §72 (without the 3^rd sentence which has been struck out of the SOC) for the 3^rd defendant; and §75(1) to (3) of the SOC for the 4^th defendant.  They are all proper pleas and cannot be struck out.  The proposed amendments to these paragraphs are also allowed.

J.   Infringement of copyright

63.  The law of copyright is largely governed by the Copyright Ordinance (Cap.528).  For present purposes, a very brief outline is sufficient.

64.  Types of copyright are defined in section 2(1), which stipulates that copyright is a property right which subsists in accordance with Part II in, among other things, original literary works.

65.  Section 2(3) deals with subsistence of copyright.  It provides that copyright does not subsist in a work unless the requirements with respect to qualifications for copyright protection are met (see section 177 and the provisions referred to there).  Briefly, the requirements in section 177 are two fold :

(a)  the author satisfies the qualifications requirements in section 178, that is, if the author is an individual author, he was at the material time an individual domiciled or resident or having a right of abode in Hong Kong or elsewhere; or if the author was a body corporate, it was incorporated under the law of any country, territory or area; and

(b) the work was published in Hong Kong or elsewhere.

66.  As to ownership of copyright, the author of a work is generally the first owner : section 13.  However, where a work is made by an employee in the ordinary course of his employment, his employer is the first owner subject to any agreement to the contrary : section 14(1).

67.  Copyright in a work is infringed by a person who without the licence of the copyright owner does, or authorizes another to do, any of the acts restricted by the copyright as defined in section 22(1) : section 22(2).  They are usually referred to as primary infringements.  Infringements include secondary infringements, which cover, among other things, possessing for the purpose or in the course of any trade or business a copy of a work which is, and which the person in possession knows or has reason to believe to be, an infringing copy of the work : section 31(1).

68.  To mount a cause of action for copyright infringement, the pleadings must contain the following ingredients :

(1) the title of the plaintiff to sue, that is, as owner or exclusive licensee;

(2) the subsistence of copyright in the work, which must be identified with precision;

(3) the infringement by the defendant; and

(4) the relief claimed.

See Bullen & Leake, §67-08, at p.1067.

69.  With the applicable law and the above requisite ingredients in mind, I now look at the 1^st plaintiff’s claim for copyright infringement more closely.

70.  The principal complaints are pleaded in §§78 and 79 of SOC (as amended) :

“78.  The Defendants have infringed Total Lubricants HK’s copyright.

  PARTICULARS

(1)   By copying or removing information which is the property of Total Lubricants HK and Total Lubrifiants to the USB devices identified in Appendix 3 without licence from Total Lubricants HK.

(2)   By copying the copyright works identified in Appendix 4 without licence from Total Lubricants HK by sending copies to their personal email address on various dates between 12 and 19 June 2008.

(3)   By copying or removing the copyright works identified in Appendix 1 without licence from Total Lubricants HK.

Total Lubricants HK is unable to give further particulars of the full extent of the Defendants’ infringement of copyright until after disclosure.”

79. The Defendants have in their possession, power, custody or control infringing copies of the Total Lubricants HK’s copyright works and the Defendants know or have reason to believe that they are infringing copies of Total Lubricants HK’s copyright works.”

71.  The copyright works are identified in Appendixes 3, 4 and 1.

72.  Appendix 3 is a table of USB devices connected to the 1^st plaintiff’s computers.  But it is not clear what exactly the devices contained.  Ms Ismail frankly conceded that the 1^st plaintiff does not know.  Given the concession, the 1^st plaintiff cannot possibly plead and prove the type of work contained in Appendix 3, whether it was original work and who the author was.  In short, they cannot plead and prove subsistence of copyright.  On this point alone, any copyright claim based on Appendix 3 simply cannot get off the ground.  §78(1) is struck out.

73.  Contained in Appendix 4 is a list of emails with attachments.  Ms Ismail said they are literal works.  But there is no plea as to who the author was and whether they were original works.  The 1^st plaintiff has therefore failed to plead and prove subsistence of copyright.  Further, absent any plea of who the author was, the allegation that the 1^st plaintiff owned the copyright cannot stand.  §78(2) is struck out.

74.  An additional difficulty relates to infringement arose in §78(2).  It is alleged that all the defendants had infringed the copyright by copying the works without licence by sending copies to their personal email address.  This contradicts Appendix 4 in which only the 1^st to 4^th defendants were alleged to have committed the acts complained of.  Further, as rightly pointed out by Mr Barlow, the 5^th and 6^th defendants, as corporate entities, did not have any personal email accounts.  So even if the copyright claim can be maintained against the 1^st to 4^th defendants, no possible claim can be pleaded against the 5^th and 6^th defendants.  §78(2) must be struck out against the 5^th and 6^th defendants in any event.

75.  Appendix 1 contains a list of user guides to the BOS system.  They are literary works.  §35 of the ASOC alleged that “during the course of his employment by [the 1^st plaintiff], [the 2^nd defendant] and/or various other employees of [the 1^st plaintiff] wrote the original literary works identified in Appendix 1”.  The reference to other employees is objectionable.  They have to be identified.  Further, the proposed amendment in §78(3) of the ASOC has failed to plead the qualification requirement for the 2^nd defendant and the other employees in section 178 of the Copyright Ordinance.  In other words, it has failed to plead sufficiently for the subsistence of copyright in the literary works identified in Appendix 1.  Lastly, removal of copyright works per se did not constitute an infringement.  Because of these deficiencies, the proposed amendment is not properly and exactly formulated and does not constitute a full and complete plea of a reasonable cause of action for copyright infringement.  The proposed amendment in terms of §78(3) is refused.

76.  §79 of the SOC dealt with secondary infringement.  That paragraph in its original form stopped short of pleading knowledge, an essential element of secondary infringement.  It also failed to include another essential element, which is the plea that the defendants possess the infringing copies for the purpose of and in the course of trade or business.  As such, it is liable to be struck out.  Knowledge is now supplied by the proposed amendment.  But the second essential element is still lacking.  The proposed amendment does not cure the defect.  §79 in its amended form remains to be objectionable.  The proposed amendment cannot be allowed.

77.  For these reasons, §§78 and 79 of the SOC fail to disclose any reasonable cause of action for copyright infringement.  They are struck out.  The proposed amendment is disallowed.  §§80 to 82 are consequential pleadings.  They are also struck out.  The claim for copyright infringement is dismissed.

K.  Conspiracy

78.  Finally, I come to conspiracy.

79.  Conspiracy is the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means.  There are two kinds of conspiracy :

(1) an “unlawful means” conspiracy in which the participants combine together to perform acts which are themselves unlawful; and

(2) a combination to perform acts which, although not themselves per se unlawful, are done with the sole or predominant purpose of injuring the plaintiff.

See Bullen & Leake, §51-01 at p.855.

80.  Here the plaintiffs only relied on the unlawful means conspiracy.

81.  The plaintiffs must plead and prove the following necessary elements :

(1) a combination or agreement between two or more individuals;

(2) an intent to injure;

(3) pursuant to which combination or agreement and with that intention certain acts were carried out; and

(4) resulting loss and damage.

See Bullen & Leake, §51-02, supra.

82.  The plaintiffs pleaded in §§83 to 87 (as amended by the ASOC) thus :

“83.  In the premises, from early 2008, Ms Huot conspired with Mr Dujean, Ms Nehme, Dr Rao and Mr Ramesh on behalf of Gulf Oil International to set up GOML to compete with the Plaintiffs, and take their customers, staff and confidential information, and keep these actions secret from the Plaintiffs.

84.    The conspiracy involved the use of unlawful means, including but not limited to namely the breaches of contractual, fiduciary and equitable duties as owed to Total Lubricants HK and/or Total Singapore set out above (at paragraphs 69 to 82 above) and/or the solicitation, inducement and procurement of the Departing Staff to breach such contractual fiduciary and equitable duties.

85.    From March 2008, Mr de Chanterac joined the conspiracy.

86.    The Plaintiffs fFurther believe that:

(1) from in or about April 2008 Mr Lambert joined the conspiracy;

(2) from in or about June 2008 Ms Joniaux joined the conspiracy; and

(3) From the time it ceased to be dormant, namely 10 June 2008, GOML joined the conspiracy.

87. As the Defendants appreciated that it would do, the conspiracy has harmed the Plaintiffs and caused them loss and damage.”

83.  In §84, the unlawful means included some other matters not particularized.  That is objectionable.  For the breaches of duties identified, no reliance can now be placed on those which have been dismissed above.

84.  More importantly, whether it is in the SOC or in the ASOC, the plaintiffs have failed to plead the intent to injure and that the acts complained of were carried out with that intent.  On this ground alone, no reasonable cause of action is disclosed. 

85.  §§83 to 87 of the SOC are struck out.  The proposed amendment by way of the ASOC is refused.  The claim for conspiracy is dismissed.

L.  Abuse of process

86.  This ground can be disposed of very briefly.

87.  On the evidence before me, I am not satisfied that the 1^st and 2^nd plaintiff’s claims against the 1^st to 3^rd defendants and the 4^th defendant, which survive the striking our application, are an abuse of process.  The claims cannot be struck out on this ground.

88.  As against the 5^th to 6^th defendants, all the claims against them have been struck out.  It is not strictly necessary to deal with their complaints on abuse of process.  Just for completeness, I will say that the evidence before the court is not sufficient.

M. Orders and further directions

89.  In light of my rulings on the striking out and amendment applications, the only causes of action that remain are breach of employment contract and fiduciary obligations as against the 1^st to 4^th defendants (§62 above) and inducement of breach of contract as against the 3^rd defendant (§61 above).  The paragraphs on remedies and relief in the SOC that concern them should be re-visited.  Those parts which are not related to the above causes of action are struck out.  All the claims against the 5^th to 6^th defendants having been dismissed, all the paragraphs on remedies and relief in the SOC which concern them are struck out.  The 3^rd plaintiff ceased to be a proper party to these proceedings.  I order the 3^rd plaintiff to cease to be a party pursuant to Order 15, rule 2(a) of the Rules of the High Court and all its references in the SOC be struck out.

90.  The order on the striking out and amendment applications needs to be carefully drafted to fully and accurately incorporate all my rulings.  I will direct the 5^th and 6^th defendants, in consultation with the 1^st to 4^th defendants, to prepare a draft order and serve it on the plaintiffs for their comment within 21 days from the date of this Decision, the plaintiffs to give their comment within 14 days thereafter, and the 5^th and 6^th defendants to submit the draft order to court (together with the plaintiffs’ comment, if any) for approval within 14 days thereafter.

91.  The defendants have substantially succeeded in the striking out and amendment applications.  I will make an order nisi that they shall have the costs of those applications, to be taxed if not agreed.

92.  Finally, I will direct the parties to submit to court within 21 days from today a set of proposed directions as agreed, or failing which their respective proposal, for the future conduct of the stay application.  The costs of the stay application are reserved for the time being.

[1] The defendants also relied on the ground that the SOC is scandalous, frivolous and vexatious.  The 5^th and 6^th defendants relied on the additional ground that it may prejudice, embarrass and delay the fair trial.  But these grounds do not really add any substance to the two principal grounds.

[2]   A proposed amended statement of claim was attached to the plaintiffs’ summons dated 17 September 2009.  However, at the hearing, the plaintiffs relied on another version.  In this Decision, ASOC refers to the latter version.

[3] See §50 below.

[4] §77 originally contained a sub-paragraph (b) alleging inducement of breach of contract by unlawful means.  It has now been abandoned.