HSBC BANK PLC AND ANOTHER v. STEVEN ANDREW WALLACE

HCA 2422/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2422 OF 2007

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J U D G M E N T

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1.  This is an action brought by the Bank against a former employee of senior rank who tendered his resignation and then breached his employment contract in two material ways; the first, because he began working for another bank whilst still employed by the Bank, the second because this other bank is a competitor, and his joining it was conduct contrary to a “non-compete” clause of his contract.

2.  The matter before me is an interlocutory application for an interim injunction in two parts; the first, that he be restrained from continuing his existing employment and otherwise from taking up employment until his contract with the Bank is at an end; the second, that he cease being employed by his present employer or any other competitor of the Bank until the non-compete period of restriction comes to an end.

3.  The application is opposed in respect of both parts.  The first is because he is prepared to pay for and has already tendered the price of buying himself out of his contract with the Bank, so that he was no longer employed by it when he became re-employed.  The second, because the non-compete clause of his former contract is unenforceable in the circumstances of his case.

History

4.  The employee is the abovenamed defendant, Steven Wallace.  Formerly living in Putney, London with his family and working in a senior position with Goldman Sachs, he came to be recruited by HSBC, the Bank as I have called it, to take up the post of head of the Asian Advisory Group in Hong Kong.

5.  The recruiting and posting was undertaken in a particular way.  HSBC is my shorthand for the HSBC Group of Companies, whose members located in UK, Hong Kong and other parts of the world it is said comprise in total the world’s largest financial group based on market capitalization.  The parent is HSBC Holdings plc.  It was incorporated and is based in the UK.  HSBC Bank plc is a wholly owned subsidiary also incorporated and based in the UK, and is one of the country’s major clearing banks.  HSBC Markets (Asia) Limited is incorporated and based in Hong Kong.  Its business comprises providing tailored financial products and services to major government corporate and institutional clients in the Asia-Pacific region.  This business is undertaken within the division known as the Corporate Investment Banking and Markets (CIBM) division of the Bank.

6.  For convenience I shall call the HSBC overall, in general terms, the Bank, HSBC Bank plc, HSBC Bank, and HSBC Markets (Asia) Limited, HSBC Markets.

7.  It is accepted that Mr Wallace was offered and agreed to take up the post as head of the Asian Advisory Group of the CIBM division through HSBC Markets.  The terms of employment required him to relocate his family to Hong Kong and to be paid a fixed salary with additional remuneration, including a sum to compensate for the upheaval of relocation, housing and education allowances, a discretionary annual bonus and other remuneration consistent with the employment of an expatriate into a senior rank.

8.  The contract agreed was in the form of a letter of offer from HSBC Bank to Mr Wallace dated 16 April 2004 in which HSBC Bank was stated to be the employer, and Mr Wallace the employee in the position of Managing Director, Corporate Finance and Advisory in the CIBM Division.  Contemporaneous with this offer was another letter offering secondment from HSBC Bank to HSBC Markets.  The secondment letter set out the details of remuneration that Mr Wallace was to receive; the expatriate package I have already alluded to.  The term of secondment was said to be for up to four years.  Mr Wallace signed both letters on 19 April 2004 and thus accepted employment with HSBC Bank and the secondment to HSBC Markets.  The family forthwith relocated to Hong Kong and Mr Wallace took up his duties.

The Contractual Terms

9.  In an affidavit filed in support of this application the head of Human Resources in HSBC Markets, Michael Webb, explained the reason for the employment contract incorporating a secondment letter:

“	36.	As discussed above, Mr Wallace was employed in the United Kingdom with HSBC Bank in April 2004 and was immediately seconded to work in Hong Kong with HSBC Markets.
	37.	It is a requirement of the HSBC Group that international secondees from London be employed by HSBC Bank.  For HSBC to place an individual on expatriate terms, they need to have been employed by an overseas (i.e. non-Hong Kong entity) to be eligible for those benefits.
	38.	Mr Wallace was employed by HSBC Bank on the understanding that he was to be immediately seconded to HSBC Markets and based in Hong Kong.”

He did not condescend to detail, but that explanation is not challenged.

10.  Pertinent terms of the employment contract are at clauses 11, 17 and 21 and I repeat them:

“	11.	Notice period
		11.1	You may terminate your employment with the Company by giving six months’ written notice.  The Company may terminate your employment by giving written notice in accordance with current legislation, subject to a minimum period of six months.
		11.2	The Company reserves the right in its absolute discretion to terminate your employment with immediate effect by making a payment in lieu in accordance with paragraph 2.15.2 of the Employee Handbook and any payments that may be due in accordance with clauses 3, 4, 5 and 6 of this letter (if any).
		11.3	The Company also reserves the right to take certain action or limit your activities during any period of notice as set out in paragraph 2.15.7 of the Employee Handbook.
		11.4	…
	17.	Protective Covenants
		17.1	You acknowledge that your position with the Company and any HSBC Group Company gives you access to and the benefit of confidential information vital to the continuing business of the Company and any HSBC Group Company and influence over and connection with the Company’s clients, employees, workers, consultants and directors and those of any HSBC Group Company in or with which you are engaged or in contact and you acknowledge and agree that the provisions of this clause are reasonable in their application to you and necessary but no more than sufficient to protect the interests of the Company and any HSBC Group Company.
		17.2	In this clause:
			(a)	“Relevant Period” means the period of 12 months ending on the Termination Date;
			(b)	“Relevant Area” means any part of the HSBC Group in which you were actively involved at any time during the Relevant Period;
			(c)	“Termination Date” means the date on which your employment terminates; and
			(d)	references to the Company or another HSBC Group Company include its successors in business if the succession occurs after the Termination Date.
		17.3	You covenant with the Company that you will not for a period of six months after the Termination Date be concerned in any business which is carried on in the Relevant Area and which is competitive or likely to be competitive with any business in which you were actively involved during the course of your employment during the Relevant Period and which is carried on by the Company or another HSBC Group Company at the Termination Date.  For this purpose, you are concerned in a business if:
			(a)	you carry it on as principal or agent; or
			(b)	you are a partner, director, employee, secondee, consultant or agent in, of or to any person who carries on the business; or
			(c)	…
			(d)	…

(For convenience I shall refer to this as the non-compete clause.)

	17.4	You covenant with the Company that you will not directly or indirectly on your own account or on behalf of or in conjunction with any person for a period of six months after the Termination Date (except on behalf of the Company or any HSBC Group Company): canvass or solicit business or custom for services similar to those being provided by the Company or any HSBC Group company at the Termination Date, and with which you were actively involved in the course of your employment during the Relevant Period, from any person who has been at any time during the Relevant Period a client of the Company or any HSBC Group Company with whom you were actively involved in the course of your employment during the Relevant Period.
	17.5	You covenant with the Company that you will not for a period of six months from the Termination Date either on your own account or as a representative, employee, partner, director, financier, shareholder or agent of any other person, firm, company or organisation directly or indirectly:
		·	employ, engage or encourage the employment of or engagement of in any capacity; or
		·	solicit, induce or entice away from the Company (or endeavour to do the same);
		any employee at grade 4 or above (or equivalent levels) or any employee on a Graduate Programme from the HSBC Group with whom you had personal dealings in the Relevant Period.
These restrictions are in addition to any other restrictions stated in your individual terms.  If there is any conflict or overlap between them then the restrictions specified in your individual terms take precedence.”

(These clauses I shall refer to as respectively the non-solicit and non-poaching clauses.)

		17.6	If the Company exercises its right to suspend your duties and powers for a period under paragraph 2.15.7 of the Employee Handbook during any period after notice of termination of your employment has been given by the Company or you or requires you to work your notice, the period after the Termination Date for which the covenant in clause 17.3 applies will be reduced accordingly by the period of time that you spend on garden leave or working your notice.
		17.7	…
		17.8	Each of the restrictions in each clause or subclauses above are enforceable independently of each of the others and their validity is not affected if any of the others is invalid.  If any of those restrictions is void but would be valid if some part of the restriction (including part of any of the definitions in subclause 17.2 were deleted, the restriction in question applies with such modification as may be necessary to make it valid.
		17.9	…
	21.	Governing Law
		This agreement is governed by and construed in accordance with English law.”

The Employee Handbook referred to in clauses 11 and 17 is a manual which establishes terms and conditions of contract of a general nature by which employees are bound.  Clause 19 of Mr Wallace’s contract stated that if there is any conflict the letter (this contract) shall prevail.

Clause 2.15.7 of the Employee Handbook (referred to in clause 17.6 of the contract) states:

“	2.15.7	Garden Leave
		If notice of termination has been given or received by you or if you have expressed an intention to resign or if you have been notified in writing that your position may be at risk of redundancy, then provided you continue to be paid and enjoy your full contractual benefits until your employment terminates, the Company may at its absolute discretion:
		·	exclude you from the premises of the Company and/or any Group Company;
		·	require you to carry out specified duties for the Company and/or any Group Company at premises other than your normal place of work;
		·	require you to perform different duties to those normally performed by you, or not give you any duties to perform at all;
		·	if you are a director of the Company or any Group Company, require you to resign your directorships;    if you are a director of the Company or any Group Company, rbsp;       instruct you not to communicate with clients, employees, agents or representatives of the Company or any Group Company.
		All such steps taken by the Company pursuant to this discretion shall in no way terminate your employment by the Company which shall remain in full force and effect until the expiry of your notice period.  Whilst you are on garden leave pursuant to this paragraph, you remain bound by the implied duties of honesty, loyalty and fidelity owed by you as an employee.  You shall not therefore act in a manner which may prejudice the Company’s business or that of any Group Company.  In particular, you shall not make or publish any statement to any person, firm, company or organisation (including, but not limited to, clients, suppliers or employees of the Company or the HSBC Group or the Press or other media) concerning your employment with the Company or the reasons for your exclusion.  Nor will you make or publish any statement or do anything in relation to the Company or the HSBC Group or their respective officers or employees which is intended to or might be expected to damage or lower their respective reputations.”

11.  The secondment contract recorded that the secondment was based in Hong Kong for the duration (up to four years) with all employment costs (salary allowances and so on) to be met by HSBC Markets.  It also stated that at the end of the secondment subject to satisfactory completion every attempt would be made to find a suitable post elsewhere in the Bank.  Under the heading UK contract was this term:

“	UK Contract
	The terms and conditions of your UK contract of employment not varied by this secondment letter will be deemed to be continuous and as such will continue to apply during the period of this secondment.  The terms and conditions of your secondment to the Company in Hong Kong, as contained in this letter, become effective on the date you take up your duties in Hong Kong.”

The Secondment is Extended

12.  Mr Wallace’s career in Hong Kong was advanced when in August 2005 he was promoted to head of Investment Banking, Asia-Pacific. 

13.  In May 2007 by letter on HSBC Bank letterhead, which referred to Mr Wallace’s employment with HSBC Bank, his secondment was extended to 1 July 2009.

The Resignation and Aftermath

14.  On Mr Wallace’s account, a combination of his loss of confidence in the Bank’s ongoing investment banking strategy coupled with frequent changes of the management structure and an offer he received from Citigroup to take a regional position in their Mergers and Acquisitions department caused him to tender his resignation.  He did this by telephoning one Robin Phillips of HSBC Bank in London on Friday 29 June 2007 and sending to him a formal letter of resignation of that date, copying it to Mr Webb in Hong Kong.

15.  On the same day he accepted the position of Managing Director and head of Mergers and Acquisitions in Asia with Citigroup.

16.  Two days later, on Sunday 1 July, in the presence of Mr Webb and at his direction, he cleared his desk, surrendered his access pass, laptop and blackberry and left the premises.

17.  On Tuesday 3 July Mr Wallace was directed that he was to take garden leave, pursuant to clause 17.6 of his employment contract and clause 2.15.7 of the Employee Handbook.

18.  By letter of 13 July 2007 he received notice from HSBC Bank that he was on garden leave, with his employment contract to terminate on 28 December 2007, that being six months after the date of his notice to resign.  He was reminded of his obligations and restraints to be exercised during that period and post-termination.

19.  Mr Wallace came to a unilateral decision to limit his garden leave to three months and foreshorten his date of termination to three months from notice by making payment in lieu for the balance of three months.  He did so on advice that this course was open to him under the Employment Ordinance, Cap.57, Laws of Hong Kong.  He vacated his HSBC accommodation in September and by letter of 28 September 2007 wrote to HSBC Bank and HSBC Markets that he had decided to buy out his notice to the extent of three months, thus to bring forward his termination of employment date to 28 September.  He tendered a cheque for $950,000 in accordance with section 7(1A) and (2) of the Employment Ordinance (the EO).  He gave an assurance that he was aware of his obligations to the Bank following termination and that he intended to comply with all enforceable obligations, including as to confidentiality and non-solicitation of clients and employees.

20.  Meanwhile, one Terry Endsor of Citigroup had been in correspondence to negotiate terms to reduce the length of the notice period.  His proposals were rejected by HSBC Bank.

21.  By letter of 4 October 2007, the HR Manager of HSBC Bank wrote to Mr Wallace reiterating his employment was ongoing until 28 December 2007; that the EO had no application as the contract was governed by English law.  And there was no equivalent right to buy out one’s notice in the manner proposed.  His cheque for $950,000 was returned.

22.  On 24 October Mr Wallace was credited with his usual monthly salary cheque of $316,667. 

23.  By letter of 26 October, Mr Wallace re-tendered the cheque for $950,000 and sent another for $316,667 being reimbursement of a payment “made in error”.

24.  These cheques have been retained but unbanked.

25.  Meanwhile, Mr Wallace began working for Citigroup on 9 October 2007.

26.  It is his case that he made no secret of this, communicating informally with colleagues still with the Bank, and with his secretary at HSBC Markets.  He did not however tell Mr Webb, or anyone else with whom there had been correspondence or other communication concerning his duties and entitlements post notice of resignation.

27.  Mr Webb deposed that there were concerns that Mr Wallace might have joined Citigroup prior to formal departure from the Bank and his movements were monitored.  On 1 November Mr Webb telephoned Citigroup and asked to speak to Mr Wallace.  When he was put through he recognised the voice of Steven Wallace and then hung up.  The Bank engaged a private investigator.  He reported that Mr Wallace was seen entering Citigroup’s premises at 8:20 a.m. on 8 November.

28.  There was thereafter correspondence between solicitors engaged by both parties but without resolution.

29.  Johnson Stokes & Master representing HSBC Bank and HSBC Markets filed this writ on 15 November.  On the same date, they made application for the interim orders that is now before me.

The Application for Injunctions

30.  The first is that Mr Wallace be restrained from working for Citigroup until after 28 December 2007.

31.  The second is that he be restrained from being concerned in the business of Citigroup in the Asia-Pacific region which is likely to be competitive with the investment banking business of HSBC Markets CIBM division including employment in the Mergers and Acquisitions department of Citigroup until after six months after 28 December 2007 less the period spent on “garden leave”.

32.  As an alternative to the first and second applications, upon the basis of a finding that Mr Wallace was entitled to buy out his notice and join Citigroup after 28 September 2007, was a repeat of the second application save that the six months was to run from 28 September 2007.

33.  So, enforcement of the non-compete clause at 17.3. 

34.  A further claim for disclosure of competing business undertaken was not pursued at the hearing.

35.  Also not pursued was a summons lately filed for enforcement by injunction of the non-solicit and non-poaching clauses; this because Mr Wallace agreed to give undertakings to comply therewith and has done so.

The Legal Principles for Interim Injunctions

36.  This is an application for interlocutory injunctive relief, bringing thus into play the principles set out in the leading case of American Cyanamid Co.v Ethicon Ltd [1975] AC 396.  In the first place, the plaintiff’s claim must not be frivolous or vexatious and there must be a serious question to be tried.  Then the court has to consider whether if the plaintiff succeeds at trial it would be adequately compensated by damages for any loss caused by the refusal to grant an interlocutory injunction.  If damages would be an adequate remedy, and the defendants would be in a position to pay them, no injunction should be granted. If damages would not be an adequate remedy, the court should consider whether, if the injunction were granted, the defendants would be adequately compensated by the plaintiff’s undertaking as to damages.  If so, and the plaintiff would be in a position to pay them, there would be no ground to refuse the injunction.  Where there is doubt as to the adequacy of the respective remedies in damages the question of balance of convenience arises.

37.  In the normal course this requires in the first instance a positive response to the first question:  “Is there a serious question to be tried?”

38.  But in this case, there being a real prospect that the period that the injunction will run will have expired prior to trial, I am obliged to pay particular regard to the prospects of success at trial; see Lansing Linde Ltd v Kerr [1991] 1 All ER 418. 

39.  But as Chu J warned on the point in Fortune Realty Company Ltd v Chan Hui Yeung Dick (unreported), HCA 1582/2001, 24 May 2001 at para. 9:

“	But it is to be noted that the court is not to embark upon a mini-trial on the affidavits.  All that is required is ‘some assessment’ of the plaintiff’s prospects of success and it is for the judge to control the extent of such assessment.”

On the facts of her case she concluded:

“

21.

At this interlocutory stage, I need only form a tentative view on the evidence and the legal arguments.  Indeed I ought to be extremely slow to come to any firm conclusion on the merits of the case.  It is therefore sufficient for me to sum up by saying that not only has the plaintiff shown that there is a serious question to be tried, but it has also demonstrated that there is a reasonably good prospect of its succeeding at the trial.  In the circumstances, the injunction sought should be granted …”

40.  A restrictive covenant in a contract of employment which restrains the employee from undertaking certain activity post-contract is prima facie unenforceable. It becomes enforceable only if it is reasonable having regard to the interests of the parties concerned and of the general public.  It is said of the doctrine of restraint in trade that it:

“	is one to be applied to factual situations with a broad and flexible rule of reason;”

per Lord Wilberforce in Esso Petroleum Co. Ltd v Harper’s Garage (Stowaport) Ltd [1968] AC 269 at p. 331.

Is the Employment Ordinance Applicable?

41.  This question arises because Mr Wallace invoked its terms, specifically section 7(2), to buy out his notice period thus to accelerate the date of termination to 28 September 2007.  The section reads:

“	7.	Termination of contract by payment in lieu of notice
		(1)	… either party to a contract of employment may at any time terminate the contract without notice by agreeing to pay to the other party a sum equal to the amount of wages which would have accrued to the employee during the period of notice required by section 6.
		(2)	Either party to a contract of employment, having given proper notice in accordance with section 6, may at any time thereafter terminate the contract by agreeing to pay to the other party such proportion of the sum referred to in subsection (1) as is proportionate to the period between the termination of the contract and the time when the notice given would have expired.
		…”

42.  Mr Smith SC representing Mr Wallace submits the EO does apply, given the terms of section 4, and given that Mr Wallace was employed to work in Hong Kong and did work here, thus there being no basis for contending that it does not.  In the circumstances, thus, the contract of employment has its closest and most real connection with Hong Kong.

43.  Section 4 reads:

“	4.	Application of Ordinance
		(1)	Subject to subsection (2) and section 69, this Ordinance applies to every employee engaged under a contract of employment, to an employer of such employee and to a contract of employment between such employer and employee.”

44.  He says further, that an express choice of a law other than that of Hong Kong cannot be used to exclude an employee’s right to invoke section 7, by virtue of section 70, which reads:

“	70.	Contracting out
		Any term of a contract of employment which purports to extinguish or reduce any right, benefit or protection conferred upon the employee by this Ordinance shall be void.”

Analysis

45.  In my view the question is answered by establishing what is the contract’s proper law: see Dicey, Morris and Collins on The Conflict of Laws, 14^th edition at 33-059:

“

… At common law a contract of employment was, in general, governed by its proper law, that law being determined by reference to the general rules for its identification applied to the specific matter of the contract of employment.  So identified, the proper law governed such questions as the terms to be implied into the contract, the circumstances in which the employee was entitled to remain on the employer’s premises and to receive wages or other forms of compensation; whether notice of termination was effective, whether an exemption clause in the contract was valid.

…”

(The past tense is used because in the UK the law has now changed as a result of the UK becoming a signatory to the Rome Convention, which has no application to Hong Kong.)

46.  There are statutory exceptions as I am about to come to, but subject to these, parties to contracts including employment contracts are entitled to choose the governing law; in this case English law.  Thus there is a presumption that English and not Hong Kong laws are to be applied in establishing the parties’ rights.

47.  This presumption is capable of being overridden if the statutory law of the land says so; in other words that the statute is an overriding statute.  This is so in England in respect of employment contracts.

48.  I quote from Dicey at 1-057:

“

Section 204(1) of the Employment Rights Act 1996 provides that ‘for the purposes of this Act it is immaterial whether the law which (apart from this Act) governs any person’s employment is the law of the United Kingdom, or of a part of the United Kingdom, or not.’  Of course this does not mean that the Act applies to all contracts of employment in the world, regardless of their connection with the United Kingdom.  But it does mean that the draftsman, instead of enacting (or leaving it to be assumed) that the Act applies only when the applicable law of the contract of employment is the law of some part of the United Kingdom, has cut across the normal rules of the conflict of laws and laid down his own rules for the application of the Act.  His method has two advantages.  If prevents the parties evading the Act by choosing foreign law as the governing law of the contract of employment.  It also secures the benefits of the Act to employees who work here for foreign employers and whose contracts of employment might well be governed by foreign law. …”

The EO has no similar provision; thus, the EO is not, as I find, an overriding statute; this statutory exception does not arise.

49.  The presumption may have been capable of being rebutted if Mr Wallace could have established that the parties had no connection with England, and that the invoking of English law was a device artificially introduced to exclude EO protection.

50.  But in the circumstances of this case that cannot be so.  The employer is a UK incorporated and based company.  It is the parent company with whom Mr Wallace, also British, contracted.  And for good reason as I have stated, common to all recruits sent overseas on expatriate terms.  His connection with the Hong Kong company is by secondment; again, for good reason.

51.  And it seems to me to make good sense that a group of companies spread all over the world would want to employ its senior executives under one umbrella and one governing law.

52.  I conclude that there is a strong likelihood that Mr Wallace will be found not to be able to invoke the provisions of sections 70, 4 and 7 of the EO because this is a law of Hong Kong and not England.  This would mean that he remains an employee of HSBC Bank; that HSBC Markets was entitled to return his buy-out cheque of $950,000 and was not in error when it paid him his October salary.

Is the Non-Compete Clause Enforceable?

53.  I shall begin by considering how, in practice, it could affect Mr Wallace’s current employment.

54.  On the basis that he will be employed by HSBC Bank until effectively the end of the year, the covenant will prevent his working, at least in a competitive field, for the competitor Citigroup, for six months thereafter, less the period of garden leave, so for three months already taken and prospectively one more month, which would permit him to begin again by 1 March 2008.

55.  Whether the non-compete clause is reasonable and enforceable is a matter for trial.  The parties clash on various aspects of Mr Wallace’s areas of responsibility at HSBC Markets, and I cannot and will not second guess findings of fact.  But as it will not be possible or practical for the matter to be tried by then, I have to pay particular regard to the prospects of success.

56.  What is apparent and not in dispute is that Mr Wallace was employed to head a division in the Bank whose primary function is to provide advisory services which include mergers and acquisitions, leveraged and acquisition finance, and strategic finance for major commercial corporate and institutional clients including governments.  Mr Wallace was required to have a knowledge of the identity of these clients and their areas of growth actual and potential, and an intimate knowledge of the financial products developed and made available by the Bank for the purpose.  

57.  Whilst the degree of direct client contact Mr Wallace was engaged in is disputed, it cannot be gainsaid that he would have been privy to highly sensitive information.  If there is any doubt about that one only has to look at the overall remuneration including discretionary bonuses that Mr Wallace was paid during his period of active employment with the Bank.  Mr Wallace himself deposed:

“	I worked for HSBC in Hong Kong for almost three years and estimate that the revenue that derived from the Investment Banking Division during my tenure was several hundred million US dollars.  Accordingly, I believe that HSBC’s investment in me was fully repaid as of the date I resigned.”

On any view, he was, and is, no journeyman.  And although, as I have said, the role he played will require to be determined after trial, there is no serious challenge to the proposition that what he came to be told and to learn was information equivalent to the Bank’s trade secrets.

58.  It is in the context of that that I have to decide whether the non-compete clause post termination (less the period of garden leave) is likely to be found to be no more than is reasonably necessary for the protection of the Bank.

59.  Mr Smith sought to distinguish the circumstances of this case with those in which a non-compete contractual restraint was habitually found to be reasonable.  These are cases where the nature of the duties of the ex-employee invites a particularly close relationship between himself and a customer or client of the employer to develop, so that upon his departure to a competing undertaking situated not too far away, the client or customer would be bound to follow.  These cases include senior hairdressers (I believe these days they are called artistic directors); see Rever v Kung [2003] 2 HKC 268, a real estate agent working alone in a small, developing country town; see Scorer v Seymour Jones [1966] 1 WLR 1419, and an insurance broker in a niche market; see Thomas v Farr [2007] IRLR 419.

60.  Mr Wallace’s role in the Bank gave only limited opportunity for interaction with clients, and did not provide for a close personal relationship to develop.  After all, the deals negotiated and struck were not the work of one man; rather it was a team effort, incorporating a number of bank officers and invariably accountants and lawyers as well.

61.  Representing the interests of HSBC Bank and HSBC Markets before me was Mr Burns SC.  It was his contention and primary position that it was because Mr Wallace by virtue of his seniority in the Bank had knowledge of confidential information of a sort that elevated it to a trade secret that warranted protection.  This was not a senior hairdresser, real estate agent or specialist insurance broker situation, but one no less warranting non-compete protection for a period of time in the theatre of operations.

62.  He quoted at length from the case TFS Derivatives v Morgan [2005] IRLR 246, in which the court was asked to grant injunctive relief to enforce a non-compete clause in a contract of employment, post termination of the contract.  As the title suggests, the ex-employee’s field was in equity derivatives.  Mrs Cox J stated at paragraph 37:

“

Firstly, the court must decide what the covenant means when properly construed.  Secondly, the court will consider whether the former employers have shown on the evidence that they have legitimate business interests requiring protection in relation to the employee’s employment.  In this case, as will be seen later on, the defendant concedes that TFS have demonstrated on the evidence legitimate business interests to protect in respect of customer connection, confidential information and the integrity or stability of the workforce, although the extent of the confidential information is in dispute in relation to its shelf life and/or the extent to which it is either memorable or portable.”

And at paragraph 75:

“	The third and final question to be answered in the process is, therefore, whether the covenants in clauses 12.1(a) to (c), are no wider than is reasonably necessary for the protection of those interests.  In the case of Littlewoods Organisation v Harris [1977] 1 WLR 1472 CA, Lord Denning, with whom Megaw LJ agreed, stated at paragraph 1479A-E as follows:
	‘	It is thus established that an employer can stipulate for protection against having his confidential information passed on to a rival in trade.  But experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information.  The reason is because it is so difficult to draw the line between information which is confidential and information which is not: and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head.  The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade.  Such a covenant may well be held to be reasonable if limited to a short period.  That appears from the judgment of Cross J in Printers & Finishers Ltd v Holloway [1965] 1 WLR 1, 6:
		‘	Although the law will not enforce a covenant directed against competition by an ex-employee it will enforce a covenant reasonably necessary to protect trade secrets … If the managing director is right in thinking that there are features in the plaintiffs’ process which can fairly be regarded as trade secrets and which their employees will inevitably carry away with them in their heads, then the proper way for the plaintiffs to protect themselves would be by exacting covenants from their employees restricting their field of activity after they have left their employment, not by asking the court to extend the general equitable doctrine to prevent breaking confidence beyond all reasonable bounds.’”

Analysis

63.  It seems to me having regard to the principles enunciated in the case TFS Derivatives that HSBC Bank and HSBC Markets representing the Bank should be entitled to the protection they ask for.  The duration of six months (less gardening leave) is not unreasonably long and the territory (the Asia-Pacific region) not unreasonably wide.

Conclusion

64.  There has been demonstrated a serious question to be tried with high prospects of success after trial.  Damages prospectively would not be an adequate remedy.  But if Mr Wallace were to succeed following the granting of these injunctions he would be adequately compensated in the undertaking in damages put up by HSBC Bank and HSBC Markets.

65.  I grant the applications at 1 and 2 of the summons of 15 November.  There shall be no order in respect of the summons of 20 November.

66.  Costs are nisi.  Those of the HSBC Bank and HSBC Markets are in the cause.