SIM KON FAH v. JBPB and CO (A firm) AND OTHERS

HCA 49/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 49 OF 2011

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BETWEEN

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J U D G M E N T

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Introduction

1.  The Plaintiff in this action is a certified public accountant.  He is currently a partner of Grant Thornton Jingdu Tianhua, and was formerly a partner of Moores Rowland, an accounting firm in Hong Kong. That firm was known as Moores Rowland between 1997 and 2003, changed its name to Moores Rowland Mazars between 2003 to 2007, and changed its name back to Moores Rowland from 1 June 2007 to 31 December 2009.  For the sake of convenience, Moores Rowland in its various names will be referred to as “MR” in this Judgment.

2.  At the hearing of the present application, I was told by Mr Richard Khaw acting for the Plaintiff that MR was still in existence as a partnership, albeit that it no longer carried on business as an accounting firm, and the Plaintiff was currently still a partner of MR.  However, this was not accepted by Mr Robert Whitehead SC acting for the Defendants (other than the 5^th Defendant).  For the purpose of this judgment, I shall proceed on the basis that the Plaintiff was a partner of MR up to at least 31 December 2009.

3.  The 1^st Defendant, formerly known as Grant Thornton until 10 December 2010, is an accounting firm in Hong Kong.  The 2^nd to 4^th, 6^th to 11^th, and 13^th to 14^th Defendants were at all material times, and are, equity partners of the 1^st Defendant. The 5^th Defendant was, until November 2010, also an equity partner of the 1^st Defendant.  In the Defence filed on behalf of the Defendants other than the 5^th Defendant on 23 March 2011, it is stated that the 12^th Defendant is not an equity partner of the 1^st Defendant.

4.  The subject matter of this action relates to various documents or classes of documents stored in or retrievable from a laptop computer (the “Laptop”) that was provided by the 1^st Defendant to the Plaintiff in or about 2009 at the time when he was working for or with the 1^st Defendant.  The precise relationship between the 1^st Defendant and the Plaintiff is a matter in dispute.  It is clear, however, that the relationship came to an end in or about the end of July 2010.

5.  On 11 January 2011, the Plaintiff commenced the present action against the Defendants, seeking injunctive and other relief in respect of what was described as “Confidential Documents” stored in or retrievable from the Laptop and/or information contained in those documents.

6.  On the same date, the Plaintiff took out a summons seeking interim relief of essentially the same nature and extent as the relief sought in paragraphs 1 and 2 of the Endorsement of Claim.

7.  The Plaintiff’s application first came before Mr Justice To on 14 January 2011.  On that occasion, certain undertaking was given by the 1^st to 4^th and 6^th to 14^th Defendants as recorded in the Order of Mr Justice To dated 14 January 2011, and directions for the filing of evidence were given.

8.  For the sake of convenience, the 1^st to 4^th and 6^th to 14^th Defendants will hereafter collectively be referred to as the “Defendants”, unless the context otherwise indicates.

9.  The Plaintiff has since filed a Statement of Claim on 23 February 2011, and the Defendants a Defence on 23 March 2011.

10.  For the purpose of the present application, the following affidavits/affirmations have been filed by the Plaintiff:

(1)  the 1^st and 2^nd Affidavits of the Plaintiff;

(2)  an Affirmation of Man Mo Leung, a director of Mazars CPA Limited, an accounting firm in Hong Kong;

(3)  an Affidavit of Ieong Sze Chung Ricci, a director and founder of eWalker Consulting Limited, an independent expert on IT security, IT audit and computer forensic matters.

11.  The following affirmations have been filed by the Defendants:

(1)  an Affirmation of Alan Chung Wah Tang (3^rd Defendant);

(2)  an Affirmation of Wong Kwok Man, a salaried partner of the 1^st Defendant who was in charge of its Forensic and Investigation Services Team;

(3)  an Affirmation of Chu Hin Fong, the Computer Forensic Senior Manager of the 1st Defendant and a member of its Forensic and Investigation Services Team;

(4)  an Affirmation of Lam Shiu Kei, a senior accountant of the 1^st Defendant and a member of its Forensic and Investigation Services Team.

Background

12.  According to the Plaintiff:

(1)  Between December 2006 and April 2007, he together with 3 other equity partners of MR (collectively the “MR Partners”) were engaged in discussion with the equity partners, or former equity partners, of the 1^st Defendant, then known as Grant Thornton, including Gabriel Azedo and Jonathan Leong (2^nd Defendant), for a proposed combination of the practices of MR, United Secretaries Limited (“USL”) (a corporate secretarial services company owned by MR) and the 1^st Defendant, leading to an alleged “Merger Agreement”.

(2)  Pursuant to the Merger Agreement, on 1 June 2007 the MR Partners commenced to work for the 1^st Defendant in the belief that they had been admitted as equity partners of the 1^st Defendant.

(3)  However, in or about April 2008, the MR Partners discovered, from certain tax returns prepared by the 1^st Defendant, that they had in fact been treated as employees of the 1^st Defendant instead of as equity partners and had been paid salaries instead of partnership drawings, whereupon the MR Partners treated the Merger Agreement as having been rescinded on the ground of misrepresentation and/or terminated by repudiation.

(4)  The MR Partners then entered into negotiation with the partners of the 1^st Defendant for a new agreement to govern the combination of the practices of MR, USL and the 1^st Defendant, but no agreement was eventually reached.

(5)  In the meantime, during the period from April 2008 to 27 July 2010, the Plaintiff was employed on an ad-hoc basis as a salaried partner of the 1^st Defendant.

13.  On the other hand, according to the Defendants, the MR partners together with two other salaried partners of MR (the “MR Salaried Partners”) joined the 1^st Defendant as salaried partners only on 1 July 2007.  The MR Partners and MR Salaried Partners will hereinafter collectively be referred to as the “MR Joining Partners”.

14.  On 20 May 2010, the 1^st Defendant commenced an action (HCA 735/2010) against USL seeking to recover a sum of about HK$5m being the balance of expenses which the 1^st Defendant had allegedly paid on behalf of USL during the period from February 2008 to April 2010.

15.  On 26 July 2010, MR commenced an action (HCA 1126/2010) against the 1^st Defendant and a number of partners of the 1^st Defendant claiming rescission of the Merger Agreement on the ground of misrepresentation and damages for misrepresentation and/or negligent misstatement.  HCA 735/2010 and HCA 1126/2010 have since been consolidated (“the Consolidated Action”) pursuant to the Order of Master Ko dated 7 September 2010.

16.  The 1^st Defendant says that, as a result of the commencement of HCA 1126/2010, it formed the view that the Plaintiff had placed himself in a position of clear conflict of interest against the 1^st Defendant, and had been in breach of the fiduciary duties and/or duty of fidelity owed by him to the 1^st Defendant as the latter’s salaried partner, and suspended the Plaintiff from duty on 27 July 2010 with immediate effect.  On the other hand, the Plaintiff treated the 1^st Defendant’s suspension of his duty as a constructive dismissal.

17.  On 22 December 2010, the 1^st Defendant commenced an action (HCA 1873/2010) against the MR Joining Partners for, inter alia, damages for breach of fiduciary duties and/or duty of fidelity, and conspiracy.

The Laptop

18.  The disputes in the various legal actions mentioned above, i.e. HCA 735/2010, HCA 1126/2010 and HCA 1873/2010, fall outside the scope of the present proceedings, and I shall refrain, so far as possible, from commenting on the allegations and counter allegations raised in those actions.

19.  What is not in dispute is that, while the Plaintiff was working with or for the 1^st Defendant, he was given a laptop computer for his use.  Apparently, he was first given one in 2007, which was later replaced by another in 2009, i.e. the Laptop in question.

20.  According to the Plaintiff, at the time when he joined the 1^st Defendant in 2007, the IT personnel of the 1^st Defendant transferred and copied confidential documents from his old Moores Rowland laptop to the new laptop given to him by the 1^st Defendant, and thus the IT personnel of the 1^st Defendant were fully aware that the information and documents being transferred related to MR’s business and clients and to his private and personal matters.  They also knew that all the information from his old Moores Rowland laptop did not belong to the 1^st Defendant. Later, when the Plaintiff was given a new laptop in 2009, all the confidential documents in the 2007 laptop were transferred and copied over, including newer documents that were personal and private to him.

21.  The Plaintiff says that the following broad classes of documents were stored in or retrievable from the Laptop:

(1)  those relating to the 1^st Defendant and its clients (there is no dispute that these documents, and the information contained therein, belong to the 1^st Defendant and they are not relevant for the purpose of the present application);

(2)  those relating to MR’s business or clients which were brought over to the 1^st Defendant, some of which pre-dated the Plaintiff’s association with the 1^st Defendant;

(3)  those relating to MR’s business and clients which were not brought over to the 1^st Defendant; and

(4)  those relating to the Plaintiff’s personal and private affairs.

22.  It is the Plaintiff’s position that the documents comprised in category (2), in so far as they were created before the date of his association with the 1^st Defendant, and those in categories (3) and (4), are private and confidential in nature, and the Plaintiff is entitled to protection in respect of information contained in those documents.

23.  Included within category (4) are documents which the Plaintiff says contain personal data and private information, such as:

(1)  bank accounts information and bank statements;

(2)  credit card statements;

(3)  tax matters;

(4)  email communications with friends and family members;

(5)  information and copies of documents of the Plaintiff and his family members such as Hong Kong Identity Cards, Passports; and

(6)  documents relating to personal matters such as selling a piece of land in Malaysia.

24.  Also included within category (4) are documents which the Plaintiff says contain information protected by legal professional privilege or litigation privilege.  According to the Plaintiff:

(1)  Shortly after the 1^st Defendant commenced HCA 735/2010 on 20 May 2010 against USL, the MR Partners retained Messrs Chui & Lau to advise on how to deal with the action.

(2)  Between 20 May 2010 and 27 July 2010, the Plaintiff communicated with his legal advisers through the Plaintiff’s web-based email account in respect of the legal action HCA 735/2010 as well as matters relating to HCA 1126/2010.

(3)  The Plaintiff used the Laptop to gain access to privileged correspondence and communication, including legal advice, through his web-based email account.

25.  The Defendants say that the Laptop was provided to the Plaintiff to be used only for the business purpose of the 1^st Defendant and subject to the conditions contained in the 1^st Defendant’s Office Procedures Manual (“OPM”).  On the other hand, the Plaintiff says that, consistently with the way in which almost every other member or staff of the 1^st Defendant (including partners) used his or her computer provided by the 1^st Defendant and to the knowledge of the 1^st Defendant, he used the Laptop for private and personal affairs as well as for the business affairs of the 1^st Defendant.

26.  On 27 July 2010, the same date that the Plaintiff was suspended from duty (on the Defendants’ version) or constructively dismissed (on the Plaintiff’s version), the 3^rd Defendant, in the presence of the 13^th and 14^th Defendants, seized the Laptop from the Plaintiff’s desk at the 1^st Defendant’s office, and handed it over to Wong Kwok Man on the same day.

27.  According to the Defendants, following the departure of the Plaintiff from the employ of the 1^st Defendant, it had reasons to believe that the Plaintiff (as well as other MR Joining Partners) had acted in breach of fiduciary duties and duty of fidelity owed to the 1^st Defendant and also conspired with others to injure the interests of the 1^st Defendant. Accordingly, it was decided that Wong Kwok Man would be tasked to carry out a review of the documents stored in the Laptop to locate and retrieve the following documents or classes of documents:

(1)  documents that touched upon the matters in issues between the MR Joining Partners and the Defendants in HCA 1126 of 2010 and HCA 735 of 210, particularly the circumstances leading to the MR Joining Partners joining the 1^st Defendant, including an alleged “Ocean Grand” audit scandal;

(2)  documents relating to the negotiations between the MR Joining Partners and Gabriel Azedo who was then the Managing Partner of the 1^st Defendant as to the terms of admission of the MR Joining Partners into salaried partnership of the 1^st Defendant;

(3)  documents relating to the Plaintiff’s breach of fiduciary duties/duty of fidelity and conspiracy, which subsequently became the subject matters of HCA 1873 of 2010 brought by the 1^st Defendant against the MR Joining Partners.

28.  After Wong Kwok Man had received the Laptop from the 3^rd Defendant, he immediately instructed Chu Hin Fong to keep safe custody of the Laptop.  Later, Chu Hin Fong and his forensic team retrieved the hard disk drive of the Laptop and acquired a forensic image copy of the hard drive with the use of a specialist software known as “Encase”.

29.  Wong Kwok Man then used a computer forensic software known as “Intella” to search the image copy of the hard drive.  Apparently, the “Intella” software is capable of conducting an electronic search of the whole image copy of the hard drive and identify documents containing key words inputted by the operator.  Wong Kowk Man has set out in an exhibit to his affirmation a list of the key words which he had inputted when conducting the “Intella” search of the image copy of the hard drive of the Laptop.

30.  The Defendants say that the documents which they have searched for concern matters in issue between the parties in various court proceedings and would be discoverable in any event in those proceedings.

31.  Wong Kwok Man has also confirmed that no search was conducted on the personal data of the Plaintiff such as those relating to his bank account, credit card or passport. He says that the Defendants have not made, and do not intend to make, use of any documents which are protected by legal professional privilege in any of the proceedings between the MR Joining Partners and the Defendants or otherwise.

The Application

32.  According to the Plaintiff, prior to the 1^st Defendant’s filing of the Consolidated Defence and Counterclaim in the Consolidated Action on 29 November 2010, he was not sure whether the 1^st Defendant had accessed the Laptop and the private and confidential information contained in it.  However, after he had read the Consolidated Defence and Counterclaim, he strongly believed that the 1^st Defendant had in fact accessed the Laptop and had unlawfully infringed his rights to privacy and confidence because various confidential documents stored in the Laptop and/or their contents were pleaded in the Consolidated Defence and Counterclaim.

33.  As earlier mentioned, the Writ herein was filed on 11 January 2011, and a summons seeking interim relief against the Defendants and the 5^th Defendant was taken out by the Plaintiff on the same date.

34.  By the summons, the Plaintiff seeks, inter alia:

(1)  an interlocutory injunction to restrain the Defendants from –

(a)  disclosing or publishing any document or correspondence, or any copy of such document or correspondence which is “private and confidential” to the Plaintiff (“the Confidential Documents”) contained in or stored upon the Laptop and/or any clone(s) or copy of the hard disk of the Laptop or part thereof (“Clone(s)”),

(b)  making any or any further copies of the Confidential Documents,

(c)  using or relying on or making use of the Confidential Documents for any purpose, including litigation in other proceedings, in particular, HCA 735/2010, HCA 1126/2010 and HCA 1873/2010;

(d)  assisting, causing, counselling, procuring, instigating, inciting, aiding, abetting or authorizing others to commit any of the aforesaid acts or participate in any of the aforesaid acts;

(2)  an order that the Defendants shall take all steps as may be necessary to withdraw from the public any documents or statements or materials which have been published by the Defendants which disclose, cite and/or refer to the Confidential Documents;

(3)  an order for delivery up or destruction of all Confidential Documents and copies thereof;

(4)  an order that the Defendants shall deliver up the Laptop and the Clone(s) to an independent solicitor to be appointed by the Court so that the Confidential Documents contained therein could first be identified, copied and returned to the Plaintiff, and then be permanently removed from the Laptop or the Clone(s).  Afterwards, the Laptop and the Clone(s) would be returned to the Defendants.

Principles relating to breach of confidence

35.  In his skeleton submissions, Mr Khaw referred to three bases of the Plaintiff’s claim against the Defendants, namely, breach of confidence, right to privacy and breach of privilege (legal professional privilege and litigation privilege).  However, at the hearing, Mr Khaw made it clear that he is relying on breach of confidence as the relevant cause of action in this application.

36.  In so far as the right to privacy in the sphere of wrongful disclosure of private information is concerned, Mr Khaw accepts that under English law it is treated as part of, or subsumed in, the law relating to breach of confidence.  As observed by Lord Nicholls of Birkenhead in Campbell v MGN [2004] 2 AC 547 at paragraph 11, in the United Kingdom, unlike the United States of America, there was no over-arching, all embracing cause of action for “invasion of privacy”.  Reference was made to Wainwright v Home Office [2004] 2 AC 406, where the House of Lords held that there was no general tort of invasion of privacy.  However, as will be seen below, the recent development in English law on breach of confidence has substantially arrived at a position of protection from publicity of private information.

37.  In so far as privilege is concerned, Mr Khaw’s argument is that the fact that the information contained in Laptop is protected by privilege would be supportive of the Plaintiff’s case that such information has the necessary quality to support an action for breach of confidence.

38.  In respect of the cause of action based on breach of confidence, as earlier noted, the law has recently undergone substantial development.  Traditionally, courts of equity have long afforded protection against the wrongful use of private information by means of the cause of action which became known as breach of confidence.  A breach of confidence was restrained as a form of unconscionable conduct, based on information of confidential nature disclosed by one person to another in circumstances “importing an obligation of confidence”: Coco v A N Clark (Engineers) Ltd [1969] RPC 41 at 47-47 per Megarry J.

39.  As observed by Lord Hoffmann in Campbell v MGN, paragraph 44, although the action for breach of confidence could be used to protect privacy in the sense of preserving the confidentiality of personal information, it was not founded on the notion that such information was in itself entitled to protection.  Breach of confidence was an equitable remedy and equity traditionally fastened on the conscience of one party to enforce equitable duties which arose out of his relationship with the other.  So the action did not depend upon the personal nature of the information or extent of publication but upon whether a confidential relationship existed between the person who imparted the information and the person who received it.

40.  Lord Hoffmann then identified two recent developments in the law of confidence in paragraphs 47 to 51 of his speech in Campbell v MGN.  The first development acknowledged the artificiality of distinguishing between confidential information obtained through the violation of a confidential relationship and similar information obtained in some other way.  Reference was made to the examples given by Lord Goff of Chieveley in Attorney General v Guardian Newspapers Ltd (No 2) [1990] 1 AC 109 at 281 of an “obviously confidential document ... wafted by an electric fan out of a window into a crowded street” and a “private diary ... dropped in a public place”.  In that case, Lord Goff of Chieveley formulated the relevant principle as being that:

“a duty of confidence arises when confidential information comes to the knowledge of a person ... in circumstances where he has notice, or is held to have agreed, that the information is confidential, with the effect that it would be just in all the circumstances that he should be precluded from disclosing the information to others.”

41.  That it is no longer necessary to identify a prior confidential relationship before a duty of confidence can arise is now well established: see Douglas v Hello! Ltd [2006] QB 125, paragraphs 58 to 62 and 83; A v B plc [2003] QB 195, 207; Imerman v Tchenguiz and Others [2010] 2 FLR 814, paragraphs 64 to 69.  I shall come back to the decision of the English Court of Appeal in Imerman v Tchenguiz, an authority strongly relied upon by Mr Khaw, later.

42.  The second development in the law of breach of confidence identified and discussed by Lord Hoffmann relates to the impact brought upon this branch of the law by article 8 (right to respect for private and family life) and article 10 (right to freedom of expression) of the European Convention and section 6 of the Human Rights Act 1998.  The legal development in this regard, including the emergence of what has been described as a tort of “misuse of private information” (per Lord Nicholls of Birkenhead in Campbell v MGN, paragraph 14) which has been “shoehorned” into the law of confidence (per Lord Philips of Worth Matravers MR in Douglas v Hello! Ltd [2006] QB 125), whilst interesting, has no application to the matter before me and thus it is not necessary for me to trace the development in English law or consider how such development may impact upon Hong Kong law.

43.  I shall now consider in greater depth the important decision of the English Court of Appeal in Imerman v Tchenguiz. In that case, the husband shared office premises and computer facilities with the wife’s brothers. Shortly after the wife presented a divorce petition against the husband, one of her brothers downloaded the equivalence of thousands of documents from the husband’s computer system and looked for documents of relevance to likely issues in the divorce proceedings, in particular, information regarding the husband’s financial status and the whereabouts of the husband’s money, because of an expectation that the husband would seek to hide assets from the wife.  In the Queen’s Bench Division, the husband obtained summary relief in the form of injunctions against the brother preventing further communication or disclosure of the information obtained to any third party, including the wife and her solicitors, and the copying or use in any other way of the information obtained, other than in the ancillary relief proceedings.  In the wife’s ancillary relief proceedings, the husband also obtained relief in the Family Division against the wife, including the return to the husband of seven files of documents for the purpose of enabling him to remove any material for which he claimed privilege, but it was held that the remainder of the files should then be returned to the wife for use by her in connection with the ancillary relief proceedings.

44.  Both matters went before the Court of Appeal, which upheld the order made in the Queen’s Bench Division and varied the order made in the Family Division by ordering the wife to hand over all documents and copies to the husband’s solicitors, who were not to part with them without the court’s permission, and restraining the wife from making any use of the information obtained.  Lord Neuberger of Abbotssbury MR, delivering the judgment of the Court of Appeal, stated as follows:

“[66] As Lord Phillips's observation suggests, there are dangers in conflating the developing law of privacy under art 8 and the traditional law of confidence. However, the touchstone suggested by Lord Nicholls of Birkenhead and Lord Hope of Craighead in Campbell, paras 21, 85, namely whether the Claimant had a "reasonable expectation of privacy" in respect of the information in issue, is, as it seems to us, a good test to apply when considering whether a claim for confidence is well founded. (It chimes well with the test suggested in classic commercial confidence cases by Megarry J in Coco v A N Clark (Engineers) Ltd [1969] RPC 41, p 47, [1968] FSR 415, namely whether the information had the "necessary quality of confidence" and had been "imparted in circumstances importing an obligation of confidence".)

[68] If confidence applies to a Defendant who adventitiously, but without authorisation, obtains information in respect of which he must have appreciated that the Claimant had an expectation of privacy, it must, a fortiori , extend to a Defendant who intentionally, and without authorisation, takes steps to obtain such information. It would seem to us to follow that intentionally obtaining such information, secretly and knowing that the Claimant reasonably expects it to be private, is itself a breach of confidence. The notion that looking at documents which one knows to be confidential is itself capable of constituting an actionable wrong (albeit perhaps only in equity) is also consistent with the decision of the Strasbourg court that monitoring private telephone calls can infringe the art 8 rights of the caller: see Copland v United Kingdom [2007] IP & T 600, (2007) 25 BHRC 216.

[69] In our view, it would be a breach of confidence for a Defendant, without the authority of the Claimant, 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. It is of the essence of the Claimant's right to confidentiality that he can choose whether, and, if so, to whom and in what circumstances and on what terms, to reveal the information which has the protection of the confidence. It seems to us, as a matter of principle, that, again in the absence of any defence on the particular facts, a Claimant who establishes a right of confidence in certain information contained in a document should be able to restrain any threat by an unauthorised Defendant to look at, copy, distribute any copies of, or to communicate, or utilise the contents of the document (or any copy), and also be able to enforce the return (or destruction) of any such document or copy. Without the court having the power to grant such relief, the information will, through the unauthorised act of the Defendant, either lose its confidential character, or will at least be at risk of doing so. The Claimant should not be at risk, through the unauthorised act of the Defendant, of having the confidentiality of the information lost, or even potentially lost.”

45.  These are the principles which I shall apply in determining whether the Plaintiff has made out his case of breach of confidence to the requisite standard for the purpose of the present application (a matter which I shall further discuss below).

46.  In respect of the question of relief where there is established a breach of confidence, the following was stated by Lord Neuberger of Abbotssbury MR:-

“[72] If a Defendant looks at a document to which he has no right of access and which contains information which is confidential to the Claimant, it would be surprising if the Claimant could not obtain an injunction to stop the Defendant repeating his action, if he threatened to do so. The fact that the Defendant did not intend to reveal the contents to any third party would not meet the Claimant's concern: first, given that the information is confidential, the Defendant should not be seeing it; secondly, whatever the Defendant's intentions, there would be a risk of the information getting out, for the Defendant may change his mind or may inadvertently reveal the information.

[73] An injunction to restrain passing on, or using, the information, would seem to be self-evidently appropriate – always subject to any good reason to the contrary on the facts of the case. If the Defendant has taken the documents, there can almost always be no question but that he must return them: they are the Claimant's property. If the Defendant makes paper or electronic copies, the copies should be ordered to be returned or destroyed (again in the absence of good reason otherwise). Without such an order, the information would still be "out there" in the possession of someone who should not have it. The value of the actual paper on which any copying has been made will be tiny, and, where the copy is electronic, the value of the device on which the material is stored will often also be tiny, or, where it is not, the information (and any associated metadata) can be deleted and the device returned.

[74] A claim based on confidentiality is an equitable claim. Accordingly, the normal equitable rules apply. Thus, while one would normally expect a court to grant the types of relief we have been discussing, it would have a discretion whether to refuse some or all such relief on familiar equitable principles. Equally, the precise nature of the relief which would be granted must depend on all aspects of the particular case: equity fashions the appropriate relief to fit the rights of the parties, the facts of the case, and, at least sometimes, the wider merits. But, as we have noted, where the confidential information has been passed by the Defendant to a third party, the Claimant's rights will prevail as against the third party, unless he was a bona fide purchaser of the information without notice of its confidential nature.”

Proper approach to the granting of interim relief in this case

47.  It is apparent from the nature and extent of the interim relief sought by the Plaintiff in this application that the grant of the relief will effectively dispose finally of the claim for injunction and other ancillary relief in the present action.  Accordingly, the application of the American Cyanamid principles has to be modified.  The Court should approach the matter on the broad principle that it should endeavour to do what will avoid injustice so far as possible, and the Plaintiff has to show at least that he is likely to succeed at trial and this requires a stronger evidential case than is required in an ordinary application for interlocutory injunction: see Sunlink International Holdings Ltd v Wong Shu Wing [2010] 5 HKLRD 653, paragraph 10 per Harris J.

48.  In his skeleton submissions, Mr Richard Khaw argued that the subject matter of this action was only part of the dispute between the partners of MR (including the Plaintiff) and the Defendants, it was likely that this action and the Consolidated Action would be tried either together or one after the other, and thus the grant of an interlocutory injunction would not effectively dispose of the whole dispute between two accounting firms.  Hence, the present application should continue to be governed by the normal American Cyanamid principles.  I am unable to accept this argument.  First, I do not see why it is likely that this action and the Consolidated Action will be tried either together or one after the other.  The subject matters of the two actions are separate and distinct. Second and more importantly, if the interlocutory relief sought by the Plaintiff is granted, what is left of this action will only be the Plaintiff’s claim for damages.  It is not clear to me at this stage what damages may be recoverable by the Plaintiff if he is successful in this application for interlocutory relief, and it is by no means certain that he will pursue the claim for damages against the Defendants.

49.  Accordingly, in determining whether to grant the interim injunction:

(1)  I shall first consider whether the Plaintiff has shown that he is likely to succeed at the trial on the claim for breach of confidence against the Defendants.

(2)  If the answer is “yes”, I shall next consider whether damages would be a sufficient remedy for either party and the balance of convenience.  However, in relation to these matters, I shall bear in mind the principles stated by the English Court of Appeal in Imerman v Tchenguiz mentioned in paragraph 46 above.

(3)  Lastly, if I should come to the conclusion that it is appropriate to grant interlocutory relief, I shall consider the precise relief that ought to be granted.

The need for specificity

50.  Mr Whitehead submitted that, in cases of alleged breach of confidence, the Court would generally require full details of the alleged confidential information.  This was particularly important if an injunction was sought, when the Court would require the plaintiff to identify with precision on affidavit the information in respect of which relief was sought.  Mr Whitehead further submitted that if an injunction to restrain the defendant from disclosing confidential information was not fully particularised, it would be difficult for anyone to know what was prohibited and what was not.

51.  In support of the above submissions, Mr Whitehead referred me to the judgment of Deputy High Court Judge Au (as he then was) in PCCW-HKT Telephone Limited and Another v David Matthew MaDonald Aitken and Another, HCA 1089/2008.  At paragraphs 51 to 53, the learned Judge stated as follows:-

“51. It is well established that in seeking injunction in a claim for misuse of confidential information or trade secrets, it is of utmost importance and necessary to provide proper and sufficient particulars of the relevant confidential information. This is so because the defendant employee must know clearly what he could and could not do in relation to certain information. Thus, in Lock v Beswick [1989] 1 WLR 1268 Hoffmann J (as he then was) said at 1274B-C:

“It is therefore of the essence of a claim against an employee for misuse of confidential information that the employer should be able to identify with particularity the trade secret or similar confidential information  to which he lays claim.  The terms of any injunction must also be capable of being framed in sufficient detail to enable the defendant to know exactly what information he is not free to use on behalf of his new employer.”

52. Thus, it is undesirable and inappropriate to have an injunction order expressed to restrain the use or disclosure of simply “confidential information”, since it is too vague and difficult to police. Moreover, an interlocutory injunction should only be in such terms to provide what is of minimum necessity for the protection to the claimant until trial against any misuse of the information alleged to be confidential. See: AG v Punch [2003] 1 AC 1046 at paras 34 and 35 per Lord Nicholls, and para 111 per Lord Hope:

“34. This situation gives rise to a practical difficulty in the formulation of an interlocutory injunction. It is a difficulty of a type familiar enough in the drafting of many forms of interlocutory injunctions. What is needed, so far as this can be achieved, is a form of words which is apt to keep confidential until the trial the information whose disclosure arguable poses a risk of damaging national security but which is not wider in its scope. In principle, an order having a wider scope is not sustainable as a necessary restriction…

35.    Here arises the practical difficulty of devising a suitable form of words.  An interlocutory injunction, like any other injunction, must be expressed in terms which are clear and certain.  The injunction must define precisely what acts are prohibited.  The court must ensure that the language of its order makes plain what is permitted and what is prohibited.  This is a well established, soundly based principle.  A person should not be put at risk of being in contempt of court by an ambiguous prohibition, or a prohibition the scope of which is obviously open to dispute. An order expressed to restrain publication of ‘confidential information’ or ‘information whose disclosure risks damaging national security’ would be undesirable for this reason.”

“111 I take as my starting point for an examination of this issue the principle that an injunction must always be expressed with precision and with clarity. As Lord Deas put in a Scottish case, if an injunction is to be granted at all, it must be in terms so plain that he who runs may read: Kelso School Board v Hunter (1874) 2 R 228, 230. This is because of the penal consequences that will follow if it is breached. Then there is another important principle. The prohibition must extend no further than is necessary to serve the purpose for which the order is to be made.”

53.    In Gilman Engineering v Simon Ho (1986) 8 IPR 313, Liu J also said at p 324:

“There seems to be all the more reason, therefore, for an injunction order to be couched in specific and precise terms as to what must not be disclosed or used. In para. (2) as amended, the plaintiff merely refers to ‘confidential information’. Unless these matters are sufficiently identified and particularized, an ex-employee would be placed in a most embarrassing if not altogether a hopeless situation, particularly in the narrower meaning of confidentiality as given in the Faccenda Chicken case. Any injunction order granted in broad general terms would be impractical in the extreme.” ”

52.  In response, Mr Khaw referred to the judgment of the English Court of Appeal in Imerman v Tchenguiz where it was held, on the facts of that case, that any requirement that the claimant should identify specific documents containing confidential information would be unnecessary, disproportionate, oppressive and “verging on the absurd”.  Particular reliance was place on paragraph 78 of judgment, where it was stated as follows:

“However, at least in the written submissions made on behalf of the Defendants in the Queen's Bench Division appeal, it was contended that, until Mr Imermanhad specifically identified the documents which contained confidential information, and the grounds for claiming confidentiality, his claim in confidence should be rejected. No authority has been cited to support the proposition that, in every case where it is said that breach of confidence has occurred, or is threatened, in relation to a number of documents, the Claimant must, as a matter of law, identify each and every document for which he claims confidence, and why. In some cases, that may be an appropriate requirement, for instance where a Claimant is seeking to enjoin a former employee from using some, but not all, of the information the latter obtained when in the Claimant's employment, as in Lock International plc v Beswick [1989] 3 All ER 373, [1989] IRLR 481, [1989] 1 WLR 1268, p 1274B. However, in the present case, the imposition of such a requirement is unnecessary (as it is obvious that many, probably most, of the documents are confidential or contain confidential information), disproportionate (because of the sheer quantity of documents copied), and unfair on Mr Imerman(in the light of the number of documents copied, and the fact that the copying was done without his knowledge, let alone his consent). It is oppressive and verging on the absurd to suggest that, before he can obtain any equitable relief, Mr Imerman must identify which out of 250,000 (let alone which out of 2.5 million) documents is or is not confidential or does or does not contain confidential information.”

53.  I consider the principles stated by Deputy High Court Judge Au in PCCW-HKT Telephone Limited and Another v David Matthew MaDonald Aitken and Another to be of general application.  However, in the application of those principles to any particular case, one also needs to apply a degree of practical common sense.  Thus, I consider that it is too vague and general for the Plaintiff to seek to restrain, as he has done in his summons, the Defendants from disclosing or using documents which are “private or confidential to the Plaintiff” (generally described as “Confidential Documents”) without any further specifications or particulars of the documents in question.

54.  On the other hand, I am here dealing with a laptop computer which was used by the Plaintiff for about a year for both business and personal purposes.  Moreover, documents from previous computers used by the Plaintiff were copied into the laptop computer in question. Currently, the Plaintiff has no access to the laptop computer.  It would be asking the impossible to require the Plaintiff to identify by dates, senders/receivers or subject matters all the documents which the Plaintiff seeks protection in the present application.

55.  At the hearing, Mr Khaw sought to give further particulars of 5 classes of the “Confidential Documents” (“Class 1” to “Class 5” respectively) in a Schedule (the “Schedule”) attached to a draft order, as follows:

“1. Emails and correspondence as between partners and/or as between partners and staff of Moores Rowland, which were confidential between such persons.

2. Documents and information relating to Moores Rowland’s business and clients, which pre-date the association between the 1st Defendant and the Plaintiff including:-

(1) audited accounts and financial statements of Moores Rowland’s clients;

(2) external communications between Moores Rowland and its clients; and

(3) documents provided by Moores Rowland’s clients.

3. Documents and information relating to Moores Rowland’s business and clients, which did not cross over to the 1^st Defendant including:-

(1) audited accounts and financial statements of Moores Rowland’s clients;

(2) external communications between Moores Rowland and its clients; and

(3) documents provided by Moores Rowland’s clients.

4. Documents and information which are purely personal and private to the Plaintiff, namely:-

(1) Bank accounts information and bank statements;

(2) Credit card statements;

(3) Tax matters;

(4) Email communications with friends and family members;

(5) Information and copies of documents of Mr. Sim and his family members such as Hong Kong Identity Cards, Passports; and

5. Communications between Moores Rowland partners (including the Plaintiff) and other parties made after the litigation in HCA 735/2010 & HCA 1126/2010 (as ordered to be consolidated) and HCA 1873/2010 is commenced or contemplated and between Moores Rowland partners (including the Plaintiff) and their legal advisers (including both solicitors and counsel) in connection with and for the purpose of such litigation.”

56.  For my part, I consider that, in the circumstances of the present case, the particulars of the documents given in the Schedule mentioned above to be sufficient for the purpose of identification of the documents in respect of which relief is sought by the Plaintiff in this application.  In this regard, I have not overlooked Mr Whitehead’s submission that in respect of Class 5, i.e. documents which the Plaintiff says are protected by legal professional or litigation privilege, the Plaintiff ought to be able to identify with precision the relevant documents.  This is a point that I shall deal with below.

Two miscellaneous matters

57.  Before I turn to consider whether the Plaintiff has shown that he is likely to succeed at the trial on the claim for breach of confidence in respect of each of the 5 Classes of documents set out in the Schedule, I shall dispose of 2 general points raised by Mr Whitehead against the Plaintiff’s application.

58.  First, Mr Whitehead submitted that in respect of the documents comprised in Classes 1, 2 and 3 in the Schedule, the proper plaintiff should be MR because the information contained in those documents belonged to MR, and the Plaintiff had no standing to apply for interim relief against the Defendants.  Reliance was placed on Fraser v Evans [1969] 1 QB 349.  In that case, the plaintiff, a public relations consultant to the Greek Government under a contract expressly imposing on him a duty not to reveal any information about his work for them during or after the contract, produced a report for the Greek Government.  A version of the report was surreptitiously obtained, and came into the hands of a national Sunday newspaper.  Journalists from the newspaper interviewed the plaintiff and proposed to publish an article based on the version of the report in their hands.  The plaintiff sought and obtained an interlocutory injunction to restrain the publication on the grounds of, inter alia, breach of confidence. On appeal, the injunction was discharged, on the ground that the Greek Government did not itself complain or seek the protection of the court and the plaintiff had no standing to obtain interim relief on his own behalf, since no duty of confidence was owed to the plaintiff.

59.  It is not necessary for me to decide whether Fraser v Evans would now be determined in the same way in light of the development in the law of breach of confidence since 1969.  There is no doubt that the Plaintiff was a partner of MR up to at least 31 December 2009.  Thus, the Plaintiff would, in my view, has sufficient standing to complain of breach of confidence in respect of documents and information belonging to MR where such documents and information came into existence on or before 31 December 2009. Moreover, the documents and information that I am here dealing with are stored in the Plaintiff’s laptop computer.  Prima facie, the Plaintiff should be entitled to seek protection in respect of those documents and information stored in his laptop computer.

60.  Second, Mr Whitehead made the point that the Laptop belonged to the 1^st Defendant and was provided to the Plaintiff for business purpose only.  Reliance was placed on paragraph 2.8 of the OPM, which stated as follows:

“Grant Thornton respects the personal privacy of its employee. As such, under normal circumstances, employees will not be subject to workplace surveillance, phone call monitoring, e-mail review or Web site tracking. The cameras at the main entrances are to provide security against external risks. Nevertheless, it should be recognised that each employee’s work output, whether it be paperwork, computer files, products, customer calls or customer interaction, belongs to the Firm. Such work output may be subject to review by the Firm, whether it is stored electronically, on paper or in any other form. In addition, business equipment, including computers, desks and lockers belonging to the Firm may be subject to search or investigation. We reserve the right to enter, search and monitor the computer files or e-mail of any employee, without advance notice, should that be necessary for business purpose.”

61.  In my view, the mere fact that documents, which the Plaintiff can otherwise seek protection by an action for breach of confidence, are stored in a computer owned by the 1^st Defendant who is entitled to search it for documents or information belonging to it, cannot deprive the Plaintiff of the reasonable expectation of privacy in respect of his own documents, and the consequent right to maintain a claim for breach of confidence against the Defendants should such right be infringed.  In Imerman v Tchenguiz, paragraph 79, it was remarked that: “The fact that a Defendant has a means of access to get into a Claimant's room or even into his desk does not by any means necessarily lead to the conclusion that he has the right to look at, let alone to copy, or even disseminate, the contents of the Claimant's private or confidential documents contained therein.”

62.  I consider that Clause 2.8 of the OPM only permits the 1^st Defendant to search, inter alia, the computer of its staff (or former staff) for files or documents properly belonging to the 1^st Defendant for its business purpose, but does not entitle the 1^st Defendant to search for, look at, copy or disseminate the contents of the Plaintiff’s private or confidential documents contained therein.

Consideration of the 5 Classes of documents

63.  I shall first deal with Classes 2 and 3 in the Schedule before dealing with Classes 1, 4 and 5.

64.  Class 2 in the Schedule relates to “Documents and information relating to Moores Rowland’s business and clients, which pre-date the association between the 1^st Defendant and the Plaintiff including:

(1)  audited accounts and financial statements of Moores Rowland’s clients;

(2)  external communications between Moores Rowland and its clients; and

(3)  documents provided by Moores Rowland’s clients”.

65.  Implicit in the formulation of Class 2 and Class 3 in the Schedule is a recognition that (i) Class 2 relates to documents and information of MR’s business and clients which have “crossed over” to the 1^st Defendant, and (ii) the Plaintiff is not entitled to, or at least is not seeking, protection in respect of documents and information comprised in this class which post-date the association between the Plaintiff and the 1^st Defendant.  However, if the relevant clients or businesses of MR have crossed over to the 1^st Defendant, I do not consider that a distinction can necessarily or generally be drawn between documents and information which (i) pre-date and (ii) post-date the association between the Plaintiff and the 1^st Defendant.  For example, the circumstances in which a client moved from MR to the 1^st Defendant may have a bearing on whether documents and information relating to that client which pre-date the association should be regarded as now belonging to the 1^st Defendant.  I do not consider that the Plaintiff has shown that he is likely to succeed at the trial on the claim for breach of confidence in respect of Class 2.

66.  Class 3 in the Schedule relates to “Documents and information relating to Moores Rowland’s business and clients, which did not cross over to the 1^st Defendant including:

(1)  audited accounts and financial statements of Moores Rowland’s clients;

(2)  external communications between Moores Rowland and its clients; and

(3)  documents provided by Moores Rowland’s clients”.

67.  On the face of it, the Plaintiff would have a reasonable expectation of privacy in respect of such documents and information.  There does not seem to me to be any basis for the Defendants to contend that such documents or information should be regarded as belonging to the 1^st Defendant.  It would, in my view, be a breach of confidence for the Defendants, without the authority of the Plaintiff, to examine, or to make, retain, or supply copies to a third party of, these documents or information whose contents are, or ought to have been appreciated by the Defendants to be, confidential to the Plaintiff.  I consider that the Plaintiff has shown that he is likely to succeed at the trial on the claim for breach of confidence in respect of Class 3.

68.  Class 1 in the Schedule relates to “Emails and correspondence as between partners and/or as between partners and staff of Moores Rowland, which were confidential between such persons”.  These documents relate to internal communications amongst the partners and staff of MR.  If the emails and correspondence comprised in this class relate to MR’s business and clients which have crossed over to the 1^st Defendant, it may have a legitimate claim in respect of such emails and correspondence.  However, for emails and correspondence which do not relate to MR’s business and clients which have crossed over to the 1^st Defendant, I consider that the Plaintiff is likely to succeed at the trial on the claim for breach of confidence.

69.  Class 4 relates to “Documents and information which are purely personal and private to the Plaintiff” such as bank accounts information and bank statements, etc.”  The parties have, I understand from letters sent to the Court after the hearing, been able to reach agreement on an appropriate form of undertaking to be given by the Defendants in respect of the documents and information comprised in Class 4, and I shall leave it to the parties to agree the appropriate order to give effect to their agreement, with liberty to the parties to apply for further directions where necessary.

70.  Class 5 relates to documents which the Plaintiff claims are protected by legal professional or litigation privilege.  At the hearing, Mr Khaw accepted that on the evidence, Class 5 should relate to communications between the Plaintiff and his legal advisers (i.e. Messrs Chui & Lau and counsel) only but not between the MR Partners or other parties. Mr Whitehead did not dispute that, in principle, the Plaintiff should be entitled to claim protection in respect of documents which attracted legal professional or litigation privilege, but contended that the Plaintiff had failed to particularise the documents which the Plaintiff ought to be able to do.  In particular, Mr Whitehead submitted that it would be a simple matter for the Plaintiff to ask his solicitors to provide a list of the relevant emails that were exchanged between them (setting out in each instance the date, time and subject matter of the email) which contained information protected by legal professional or litigation privilege, and the Defendants would have been willing to provide suitable undertakings to the Court to meet the Plaintiff’s application.

71.  I accept that the Plaintiff could have provided further particulars of the communications passing between the Plaintiff and his legal advisers which he says are protected by legal professional or litigation privilege.  However, one is here talking about communications for a short period of time, from 20 May 2010 to 27 July 2010, being the period of time that the Plaintiff says he used the Laptop for communicating with his legal advisers.  Also, the parties to the relevant communications would be between the Plaintiff and his legal advisers.  There should not be any genuine difficulty in identifying the relevant communications for the purpose of compliance by the Defendants of the interim relief sought by the Plaintiff.  On the other hand, the protection of legal professional or litigation privilege is generally regarded as a matter of fundamental importance by the courts in Hong Kong.  On balance, I consider that the Plaintiff should not be denied relief merely because he could have further particularised the communications passing between himself and his legal advisers stored in or retrievable from the Laptop.

Whether damages would be sufficient remedy and balance of convenience

72.  It seems to me obvious that damages would not be a sufficient remedy for the Plaintiff in the present situation if the interim relief sought is refused.  On the other hand, it does not appear that the Defendants would suffer any harm which cannot be compensated for by damages if the injunction is wrongly granted.  In particular, if any documents stored in the Laptop are relevant to the issues in the other proceedings between the parties, there is no reason to believe that those documents would be withheld from discovery.

73.  To the extent that the balance of convenience is relevant, I consider that it would also favour the granting of interim relief sought by the Plaintiff.

74.  In coming to this conclusion, I have borne in mind the principles stated in paragraphs 72 to 74 of the judgment of the English Court of Appeal in the Imerman case that it would generally be appropriate to grant an interim injunction to restrain a breach of confidence, subject nevertheless to any good reason to the contrary on the facts of the case.

Conclusion

75.  For the above reasons, I would make an order in terms of the draft handed up by Mr Khaw at the hearing but only in respect of Classes 1, 3 and 5 of the Schedule thereto.  In respect of Class 1, it is qualified to exclude emails and correspondence relating to MR’s business and clients which have crossed over to the 1^st Defendant.  In respect of Class 5, it is restricted to communications between the Plaintiff and his legal advisers.  This order is made against all the defendants in this action other than the 12^th Defendant.

76.  In respect of Class 4, I repeat my observations in paragraph 69 above.

77.  On the question of costs, I take into account the fact that the Plaintiff has only been partially successful in this application, and also the fact that it was only at the hearing that the Plaintiff put forward the Schedule to the draft order which gave further particulars of the “Confidential Documents” referred to in his summons.  As earlier mentioned, I also consider that the Plaintiff could have further particularised the documents comprised in Class 5.  In all the circumstances, I would make a costs order nisi that there be no order as to the costs of and occasioned by the present application, including the costs of the hearing on 12 April 2011, save that the costs of carrying out the order mentioned in paragraph 75 above be in the cause.

78.  Lastly, I wish to thank counsel for their considerable assistance in this matter.