DEACONS (a firm) v. WHITE & CASE LTD LIABILITY PARTNERSHIP

HCA2433/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2433 OF 2002

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J U D G M E N T

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1. There are two applications now before me made by the plaintiff, one by notice of motion, the other by summons. I shall deal with the notice of motion first.

2. This application follows the judgment handed down on 24 October 2003 but prior to the sealing of orders deriving therefrom. There are, in the judgment, findings that the 1st and 2nd defendants acted for their own benefit upon confidential information of the plaintiff given them by the 3rd and 4th defendants, being thus in breach of duties of confidentiality owed to the plaintiff once they received it. As a consequence of that, I found them liable for damages to be assessed as prayed for.

3. The application now before me is to amend the judgment by giving the plaintiff the option of electing, as an alternative to damages, an accounting of profits and/or equitable compensation because, as it is now claimed, this is alternative relief arising directly and inevitably from my finding. Alternatively, I am invited to make a supplemental order having the same effect and for the same reasons.

4. As originally pleaded, this action set out to recover in damages loss occasioned by the breach by the 1st and 2nd defendants of a contract of non-solicitation between the parties. What emerged, after several expansive amendments to the statement of claim and relief, was the joinder of the 3rd and 4th defendants, claims in tort, breaches of equitable and contractual obligations by the 3rd and 4th defendants, and procurement thereof by the 1st and 2nd defendants. The relief sought was similarly expanded to include injunctive relief, exemplary damages and, as against the 3rd and 4th defendants, the right to elect, as an alternative to damages, an account of profits or equitable compensation.

5. Having found, as I did, the 3rd and 4th defendants liable for being in breach of core duties of loyalty, good faith and fidelity, I gave the plaintiff the right to elect the alternative equitable relief as prayed for. Having found, as I did, the 1st and 2nd defendants liable for being in breach of confidentiality owed the plaintiff, I gave no such right of election. My not having done so has given rise to this application. It is made, as it discloses, under Order 20 r. 11, Rules of High Court, and the court's inherent jurisdiction. Order 20 r. 11 states:

"Clerical mistakes in judgments or orders or errors arising therein from any accidental slip or omission may at any time be corrected by the court on motion or summons without an appeal."

It is apparent thus that any amendment under this head must be because of a clerical mistake in the judgment itself. In this case, my omitting to provide the plaintiff with the alternative remedy was not because I forgot about it but because it was not asked for. The omission was not an accident; thus Order 20 r. 11 has no application.

6. There is the alternative proposition that I make a supplemental order to provide the additional relief. As to jurisdiction, I believe I have the right to do so under the inherent power of the court before entry of judgment and the drawing up of the orders; see the White Book at 20/11/8, page 349. But that power should be exercised only if justice demands that course. Order 18 r.15(1) states that the relief or remedy a plaintiff claims must be specifically set out. This is for obvious reasons. A defendant is entitled to know what he is up for. But the court does have power to grant any further relief it thinks is appropriate on the facts as proved if justice requires it; again see the White Book at 18/15/4, page 299.

7. Mr Chow for the plaintiff submits that justice does require it. He argues that the breach of confidence claimed was pleaded and successfully so, giving rise to a finding of liability. It was a breach which, in the normal course, would give rise to the alternative equitable relief now sought. It was not prayed for in the alternative because it was overlooked. That it was an oversight is made apparent by the fact that it was relief argued extensively for and against by counsel in their closing submissions. Though now sought late in the day, it could not be said to have caught the defence by surprise.

8. Mr Burns for the defendants, in opposition to the application, urges that I should not accept that the omission to pray for this remedy was overlooked. He argues that the claim of breach of confidence standing alone was not pleaded. That which the plaintiff relies upon as giving rise to its right to this remedy was pleaded under the head of common design, a tort which does not give rise to this type of relief. In any event I found the tort not made out. There is thus no entitlement to the alternative remedy now asked for.

9. I come now to my ruling. I find that the plaintiff did plead breach of confidence as a specific ground. Although it comes within a section of the statement of claim subheaded "Interference by the 1st to 4th defendants with the plaintiff's business by unlawful means," it is not, by its wording, deprived of being a separate plea and, in my judgment, I did find the 1st and 2nd defendants liable under this head. I accept that the prayer for alternative relief was left out by mistake. It was, as I accept, argued as alternative relief. There is no injustice by its late entry. Having given the plaintiff the right to elect equitable relief as against the 3rd and 4th defendants for breaches committed under the same overall factual matrix, it would be illogical not to give it the same opportunity as against the 1st and 2nd defendants.

10. In the circumstances, I give the plaintiff leave to add to the prayer as an alternative remedy an account of profits and/or equitable compensation for breach of equitable obligations and order in its favour accordingly.

11. I come now to the application on summons. The trial being a split trial with liability to be dealt with first followed by assessment of damages or other quantifiable relief, this application is for discovery of such documents the defendants have or have had in their possession, custody or power relevant to the plaintiff's right to relief by damages or equitable remedy.

12. Mr Burns's opposition to this application, pared back now, given my findings on the notice of motion, is that it is premature. It is wide and general, serving not to determine the limit and extent of documents by class or other particular as may be pertinent to the relief the plaintiff has been found to be entitled to. There should be, as a prelude, an application for directions and a court ruling to this effect, otherwise the defendants are in the dark as to what should be disclosed.

13. Whilst there is practical force in this submission, I think the court would be in no position to give a direction on the extent to which the defendants should comply with disclosure obligations without knowing what has happened since breach of the various obligations giving rise to the plaintiff's right to relief. The plaintiffs would be in similar difficulty in a request for directions. This seems to me to be a case of the egg and the chicken; the cart and the horse. I think it appropriate for the defendants to compile a list of documents they believe fall under the head of relevance to the plaintiff's claims under both alternative heads. Thereafter, if necessary, more particularised discovery can be pursued as may be necessary.

14. I propose to find in favour of the applicant save that the time shall be eight weeks and not four. I order accordingly.

(Submissions re. costs)

15. I note the split order for costs made by Yam J in the case referred to me by Mr Chow. This is, however, an application by way of an indulgence to deal with a conceded omission. I think the appropriate order in this case, and I so direct, is that on the notice of motion, costs are to the defendants in any event. On the summons, they are in the cause.