CROWN TIMES INTERNATIONAL LTD v. CHAN YIM PING AND OTHERS

HCA 1313/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

 ACTION NO. 1313 OF 2006

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D E C I S I O N

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Background

1.  This is the Plaintiff’s application for an order of committal against the 1^st, 3^rd and 4^th Defendants for contempt of court for failing to comply with the terms of an Anton Pillar Order.

2.  Both the Plaintiff and the 3^rd Defendant are companies incorporated in Hong Kong engaged in agency business of selling and trading in time-shares of holiday properties.  The 3^rd Defendant has branch offices in Hong Kong, Singapore and Thailand. 

3.  The 4^th Defendant is the sole director and person in charge of the 3^rd Defendant.  He owns all the issued shares in the 3^rd Defendant.  He is a Singaporean.  He spent most of his time in Singapore and Thailand.  He had worked in two companies known as “Queensway” and “J&K” where he came to know the 1^st Defendant.  Queensway and J&K went into liquidation in 2003.

4.  The 1^st and 2^nd Defendants were members, respectively, of the Plaintiff’s sales staff and administrative staff.  Apart from the Plaintiff’s business development manager, the 2^nd Defendant was the only person who had access to the Plaintiff’s client information stored in the Plaintiff’s computer system, the access to which was protected by a password.  After collecting their salary from the Plaintiff on 1 June 2006, both the 1^st and 2^nd Defendants absented themselves from the Plaintiff’s office and joined the 3^rd Defendant.  The 1^st Defendant took up the position as the manageress and the 2^nd Defendant as her assistant.  The 1^st Defendant took away her notebook and some documents from the Plaintiff, which contained the Plaintiff’s client information and other business information.  The 2^nd Defendant downloaded the Plaintiff’s client information from the Plaintiff’s computer into a compact disc and copied it into two laptop computers of the 3^rd Defendant.  Since the defection of the 1^st and 2^nd Defendants, the Plaintiff received complaints from its clients that the 1^st and 2^nd Defendants contacted them to seek custom from them for the 3^rd Defendant. 

5.  On 19 June 2006, the Plaintiff obtained an Anton Pillar Order against the Defendants, which was amended on 24 and 26 June 2006 (the “Order”).  The Order was served on the 3^rd Defendant on 20 June 2006 and on the 1^st and 4^th Defendants on 27 June 2006.  On both occasions, searches were conducted on the Defendant’s premises.  The searches were conducted mainly in a room which, according to the 3^rd Defendant’s staff, was designated to be used by the 1^st, 2^nd and 4^th Defendants.  Various items belonging to the Plaintiff, including its client lists were found and seized.  Subsequently, the Order was dispensed with as against the 2^nd Defendant on 30 June 2006.

6.  On 19 July 2006, the Plaintiff received a complaint letter (the “Letter”) from two of its clients, Mr Tommy Leung (“Mr Leung”) and his wife, Ms Tsang Kwok Ping (“Mrs Leung”).  That Letter formed the basis of the Plaintiff’s ex parte application for leave to apply for order of committal against the Defendants for breaches paragraphs 4, 5 and 6(3) of the Order.  I granted leave to the Plaintiff on 22 August 2006 to make application for an order of committal against the Defendants.  Since the issue of motion for order of committal, the 4^th Defendant was joined as a party to the main action.

7.  Paragraph 4 of the Order requires the Defendants to deliver up the Plaintiff’s client lists, client information, other documents containing details or information concerning the Plaintiff, its clients and references to the products and/or services offered by the Plaintiff to its clients, the employment agreement between the Plaintiff and the 1^st and/or the 2^nd Defendants and other documents or assets of the Plaintiff (collectively called the “Listed Items”).  Paragraph 5 of the Order requires the Defendants to provide certain information on affirmation, in particular, details of any persons contacted by the Defendants, whose names appear in the Listed Items.  Paragraph 6(3) of the Order prohibits the Defendants from making use of the information contained in the Listed Items or accepts custom from persons whose names appear in the Listed Items and who have been approached by the Defendants.

The law

8.  The following principles of the law on contempt of court are indisputable.  To succeed in an application in civil contempt as in criminal contempt, the applicant has to prove to the criminal standard, i.e. beyond reasonable doubt, both the act complained of which constituted the contempt and the necessary state of mind of the alleged contemnor: see Secretary for Justice and Choy Bing Wing, unreported CACV No 11 of 2004, December 3, 2004 at paras 57-59.  On the actus reus, it is open to the court to dismiss a motion for committal if there has been substantial compliance with the order and any non-compliance is merely trivial: see Kao, Lee & Yip (a firm) and Donald Koo Hoi-yan & Others [2005] HKEC 2153 per Reyes J.  As to the state of mind, it is not necessary to prove that the alleged contemnor’s conduct was contumacious, i.e. that the alleged contemnor directly intended to disobey the order: it is sufficient to prove (a) that he knew the facts which are said to make his act or omission a contempt and (b) that such act or omission was not accidental: see Re Supply of Ready Mixed Concrete (No 2), Director General of Fair Trading v Pioneer Concrete (UK) Ltd and Another [1995] 1 All ER per Lord Nolan; Citybase  Property  Management  Limited  and  Kam  Kyun  Tak  &  Others (No 1) [2002] HKEC 436 per Ma J.  In that regard, it is necessary to prove not merely that the alleged contemnor knew that an order had been made but also that he knew of the material terms of the order: see In re L (A Ward) (Publication of Information) [1988] 1 FLR 255 at 259 per Booth J; In re W (Wards) (Publication of Information) [1989] 1 FLR 246.  If the terms of the order is ambiguous, such ambiguity will be resolved in favour of the alleged contemnor: see Haddonstone Ltd and Another v Sharp [1996] FSR 767, CA; Shell Electric Mfg (Holdings) Co Ltd v Liu Chi Kuen, Tony, [2003] 3 HKEC 848; Sino Wood Investment Ltd v Wong Kam Yin [2005] 8 HKCFAR 715, CFA.

9.  An employer’s liability for the contempt of his servant or agent is based on the principle of vicarious liability.  In Hone v Page [1980] FSR 500, Slade J held in the absence of authority that an employer is guilty of contempt if (a) the person who did the acts which constituted contempt was his servant or agents; (b) the acts were done in the course of that person’s employment or agency and (c) he either authorised the act or could reasonably have foreseen the possibility of such act and failed to take all reasonable steps to prevent the acts.  I agree with the above statement.  This statement is consistent with the general principles of law on vicarious liability and the House of Lords’ later decision in Re Supply of Ready Mixed Concrete (No 2).  In that case, Lord Nolan said at 142 that an employee who acts for the company within the scope of his employment is the company.  The above principles are applicable to an employer, whether he is an individual or a company.  Thus, if the 1^st Defendant is found guilty of contempt, the liability of the 3^rd Defendant falls to be decided in accordance with the above principles.

10.  Even if a company is vicariously liable for the contempt of its employee, it does not necessarily follow that its directors and officers are likewise guilty of contempt. In an application for committal against a director or officer of a company who has not actually committed the act complained of, different considerations apply.  A company is a legal entity which is only capable of acting by its agents.  The board of directors is the agent and directing mind of the company.  A director is guilty of contempt if he caused the act or omission which constituted contempt to be committed.  The situation is more complicated where a director expressly prohibits the act or omission but nevertheless does nothing except by words to prevent the act or omission from being done or relies on some other directors or officers to take those steps. 

11.  One of the pillars of our legal system is that the court’s orders must be complied.  The legal system could only function if its orders are strictly complied.  The respect for the law could only be maintained, if the sanctions to ensure such compliance are enforced.  The legal system will be ridiculed and broken down, if compliance with the court’s order could be ignored and the sanction for non-compliance could be avoided by those who are ultimately responsible for the compliance hiding behind the corporate veil.  Directors are the directing mind of a company, which could only act through the board of directors.  In my view, if a director has knowledge of the court’s order, he is under a duty to take reasonable steps to ensure its compliance.  If he wilfully fails to take those steps and the order is breached, he can be punished for contempt.  In Attorney General for Tuvalu and Another v Philatelic Distribution Corp Ltd and Others [1990] 2 All ER 216, Woolf LJ held at 222:

“In our view where a company is ordered not to do certain acts or gives an undertaking to like effect and a director of that company is aware of the order or undertaking he is under a duty to take reasonable steps to ensure that the order or undertaking is obeyed, and if he wilfully fails to take those steps and the order or undertaking is breached he can be punished for contempt.  We use the word ‘wilful’ to distinguish the situation where the director can reasonably believe some other director or officer is taking those steps.

…

There must, however, be some culpable conduct on the part of the director before he will be liable to be subject to an order of committal under Ord 45, r 5; mere inactivity is not sufficient.  …

…  If there has been a failure to supervise or investigate or wilful blindness on the part of a director of a company his conduct can be regarded as being wilful and Ord 45, r 5 can apply.  Re Galvanized Tank Manufacturers’ Association’s Agreement [1965] 2 All ER 1003 at 1009, LR 5 RP 315 at 348 makes clear the importance of this.  Megaw J said:

 ‘We would, however, emphasize that a company which has given an undertaking to the court must be treated as having failed lamentably and inexcusably in its elementary duty if it fails to take adequate and continuing steps to ensure, through its responsible officers, that those officers themselves, and anyone to whom they may delegate the handling of matters which fall within the scope of the undertaking, do not forget or misunderstand or overlook the obligations imposed by such undertakings.’ (Our emphasis.)”

12.  Thus, a director or officer of a company would be guilty of contempt if (a) the director or officer has knowledge of the court’s order; (b) the director or officer wilfully fails to take such reasonable steps to ensure compliance of the court’s order and (c) the order is breached by the company.  ‘Wilful’ denotes some culpable conduct on the part of the director or officer.  Mere inactivity is not sufficient.  If a director on reasonable grounds believes some other director or officer is taking steps to ensure compliance, he is absolved from liability.

13.  Another legal issue raised in this application is the admissibility of the Letter.   Mr Pun, counsel for the Defendants, submits that contempt proceedings are criminal in nature which require the plaintiff to prove the contemnor’s guilt beyond reasonable doubt.  He therefore submits that as the evidence contained in the Letter is hearsay, no weight should be attached to that Letter.  I have considered a similar submission in Tang Ping Kwan & Tang Ping Cheong and Excel Sky Management Limited, unreported, HCA 7281 of 2000, December 7, 2000.  I reached the following conclusion at paragraph 12 of the decision:

“12.   The present committal proceedings are civil proceedings instituted under Order 52 of the Rules of High Court.  On matters of evidence and procedure, section 47 of the Evidence Ordinance relating to evidence in civil proceedings and the Rules of the High Court are clearly applicable.  These proceedings are brought to enforce an order, ancillary to the main proceedings, seeking to preserve the status quo pending final determination, or to regulate the conduct of litigation, or to regulate the conduct of the parties pending trial, lest a party would suffer irreparable damage.  Breach of such an order may create extreme urgencies, for example, the need to promptly restore the status quo, which if upset would cause irreparable damage to a party; the need to preserve evidence, which if destroyed would result in prejudice to a party; the need to preserve assets, which if dissipated would render any future judgment nugatory. As these are civil proceedings, such an order has to be enforced by the parties themselves, who are civilians with limited resources and means and power of investigation.  This limitation militates strongly against indiscriminate exclusion of all hearsay evidence from all committal proceedings where time is of the essence, if compliance with the court’s order and sanctions to support such compliance are to be achieved.  In the light of the above, I think justice would be better served by admitting hearsay evidence, if such evidence is relevant and is of probative value.  As for the party against whom such hearsay evidence is admitted, his safeguard lies in the good sense of justice of the court in exercising its discretion to exclude the evidence if it is prejudicial to the interest of justice and ultimately in the very high standard of proof beyond reasonable doubt which the other party has to discharge.”

14.  Mr Pun is unable to refer me to any authorities which suggest that the above principle is incorrect.  I adhere to my views as expressed in Excel Sky Management Limited.  The evidence contained in the Letter is supported even by the evidence of the 1^st Defendant.  I see no reason to exclude the Letter from the evidence.  The only question is as to the weight to be attached to it.

The facts

15.  The Plaintiff’s application is supported by the affirmations of the Plaintiff’s business development manager, Miss Caroline Teo and its operation manager, Mr Wong Pui Man.  The Plaintiff’s case against the Defendants is built on the Letter signed by Mr and Mrs Leung.  The Letter was dated 19 July 2006 but bore a fax machine date of 14 July 2006.  Those dates had some bearing.  In the Letter, Mr and Mrs Leung wrote:

“For our Timeshare membership reselling, we assigned your company to resell membership on 25 Feb 2006 and paid the registration fee HK$5,000.00 on 27 Feb 2006.  Nevertheless, on 11 Jul 2006 a phone from another timeshare resell agent approach me to introduce their services, the contact person (Ms Lam) said that they are able to pay 80% of the original price to buy our membership and without any surcharges and request for a meeting in their office (address as below) to discuss the details.  And on the following day my wife attempted to call Ms Lam for further information but she is not in office and a lady named Ms June Chan request my wife send her the relevant documents for her information.  My wife has asked her is a same person of our previous Sales Manageress of Crown Times International Ltd and she said that she did not know Crown Times International Ltd and that Ms June Chan so far.”

According to the affirmation of Mr Wong, he telephoned the office of the 3^rd Defendant on 31 August 2006 and spoke to someone who identified herself as ‘Ms Lam’.  Mr Wong recognised her voice to be that of the 1^st Defendant’s.  The Plaintiff’s case is that inference of breaches of paragraphs 4, 5 and 6(3) of the Order could be drawn from this Letter.

16.  The Defendants relied on the affirmations of the 1^st and 4^th Defendants who gave evidence pursuant to the Plaintiff’s application for cross-examination under Order 38 rule 2 of the Rules of the High Court.  Their case is as follows.  The Defendants had complied with the Order.  They disputed the evidence of Mr Wong.  They denied that there was anyone employed in the 3^rd Defendant by the name of ‘Ms Lam’.  The 1^st Defendant denied that she had contacted Mr and Mrs Leung by claiming herself to be ‘Ms Lam’.  The 4^th Defendant had given stern warning to his staff not to contact the Plaintiff’s clients.

17.  Five factual issues arose out of the Letter.  These are: (1) whether someone who claimed herself to be ‘Ms Lam’ approached Mr Leung and offered him services of the 3^rd Defendant; (2) when did the 1^st Defendant have the telephone conversations with Mr and Mrs Leung; (3) did the 1^st Defendant deny her identity as ‘Ms June Chan’ who was formerly a sales manageress of the Plaintiff when confronted by Mrs Leung; (4) did the 1^st Defendant have knowledge that Mr and Mrs Leung are the Plaintiff’s clients and (5) did the 1^st Defendant contact Mr and Mrs Leung by using the Plaintiff’s client information contained in the Listed Items. 

18.  It will be convenient to deal with Mr Wong’s evidence about his conversation with ‘Ms Lam’ first.  The Defendants disputed that evidence, but they did not apply to have Mr Wong cross-examined.  It is a question of fact for me to decide on the totality of evidence whom to believe.  While one may have doubts on the reliability of Mr Wong’s voice identification, the real issue is not whether Mr Wong’s voice identification is reliable, but whether someone in the 3^rd Defendant claimed herself, truly or falsely, to be ‘Ms Lam’.  Though Mr Wong’s evidence has not been tested by cross-examination, on the totality of the evidence, I am satisfied beyond reasonable doubt that he is credible.  I accept his evidence that he did speak to someone in the 3^rd Defendant who claimed that herself to be ‘Ms Lam’, but I leave it open whether it was the 1^st Defendant whom he spoke to.  That would be sufficient for the purpose of this proceeding.  This evidence supports Mr and Mrs Leung’s allegation in the Letter that someone claiming herself to be ‘Ms Lam’ approached and offered them services of the 3^rd Defendant.  I find that this allegation of Mr and Mrs Leung was true.

19.  The 1^st Defendant admitted that she had contacted Mr and Mrs Leung.  She said that she obtained their contact particulars from another list obtained from Queensway.  She denied knowledge that Mr and Mrs Leung were the Plaintiff’s clients.  She could not recall when she contacted Mr and Mrs Leung.  She referred to a fax copy of a vacation ownership scheme membership agreement from Mr Leung or Mrs Leung addressed to her (“Leungs’ Fax”), which bore a fax machine date of 6 July 2006.  She said that she had the conversation with Mr Leung before they sent her the fax. 

20.  In my view, it makes no difference whether the 1^st Defendant contacted Mr Leung on 6 July 2006 or 11 July 2006, if I am satisfied that the contact took place after the service on her of the Order.  The fax machine date on the Letter is significant.  Mr Pun submits that that date, i.e. 14 July 2006, was the true date when the Letter purportedly dated 19 July 2006 was sent.  On the other hand, Ms Ip, counsel for the Plaintiff, submits that the true date of the Letter was 19 July 2006 and the date device of the fax machine had been mis-set for some unknown reason or accidentally.  On that hypothesis, the fax machine date was five days behind.  Thus, the true date of Leungs’ Fax to the 1^st Defendant was 11 July 2006, which was also the date on which Mr Leung alleged he had a conversation with someone in the 3^rd Defendant who claimed herself to be ‘Ms Lam’.  When someone puts a date on a letter, he would usually put down the current date or sometimes back dating the letter.  Unless one has a particular reason or motive, he would not put down a future date, especially one which is five days ahead because that date would not have been reached by the time the letter reaches the recipient.  This is particularly the case when the letter is sent by fax, which will be instantly received, as in the present case.  There is no reason why Mr and Mrs Leung would wish to post-date their Letter.  The date could not have been a mistype, as the figures ‘4’ and ‘9’ have to be keyed in by a finger from a different hand.  I am satisfied beyond reasonable doubt that the Letter was truly dated 19 July 2006.  Adopting that the date of Mr Leung’s fax machine was five days behind, the evidence falls neatly into place.  I therefore find that Leungs’ Fax was sent to the 1^st Defendant on 11 July 2006, the very day when Mr Leung had the conversation with the 1^st Defendant.  Mr Pun submits that there was no mention by Mr Leung or Mrs Leung in their Letter about Leungs’ Fax.  I think that is neither here nor there. 

21.  The next factual issue in dispute is whether the 1^st Defendant denied her identity as Ms June Chan who was formerly a sales manageress of the Plaintiff when confronted by Mrs Leung.  According to the Letter, Mrs Leung attempted to contact ‘Ms Lam’ on 12 July 2006 and spoke to someone who claimed herself to be ‘Ms June Chan’.  When Mrs Leung asked that ‘Ms June Chan’ if she was the 1^st Defendant from the Plaintiff, that person denied knowledge of the Plaintiff or the 1^st Defendant.  The 1^st Defendant denied that she had such a conversation with Mrs Leung.

22.  There are many coincidences between what Mr and Mrs Leung alleged in their Letter, what Mr Wong said in his affirmation and the 1^st Defendant’s evidence: the conversation between Mr Leung and the 1^st Defendant; the conversation between Mrs Leung and the 1^st Defendant; a person in the 3^rd Defendant claiming herself to be ‘Ms Lam’; the true date of Leungs’ Fax and the date of the conversation between ‘Ms Lam’ and Mr Leung.  All these point to the truth of the allegations contained in the Letter and the falsity of the evidence of the 1^st Defendant.  Despite that Mrs Leung was not called to give evidence, I am satisfied beyond reasonable doubt that what she said in the Letter was true.  I find on the totality of the evidence that the person whom Mrs Leung spoke to could not be anyone else other than the 1^st Defendant.  Thus the 1^st Defendant lied to Mrs Leung on 12 July 2006 when Mrs Leung confronted her as to her identity and her former employment with the Plaintiff.

23.  Why did the 1^st Defendant lie?  If her dealing with Mrs Leung was honest and fair dealing, there was no reason why she withheld her identity as a former sales manageress of the Plaintiff with whom Mrs Leung had previous dealing.  This must reflect guilty knowledge on her part.  This further supports my finding that the date of that conversation was 12 July 2006, the true date of the Letter was 19 July 2006 and the true date of Leungs’ Fax was 11 July 2006.  At the time of the conversation on 12 July 2006, the 1^st Defendant had been served with the Order.  She knew that she has been restrained from contacting the Plaintiff’s clients.  I have no difficulties in finding that the 1^st Defendant knew that Mr and Mrs Leung are the Plaintiff’s clients, at least and at the latest, when she was confronted by Mrs Leung.  But, did she have such knowledge before 12 July 2006?

24.  The 1^st Defendant denied knowledge that Mr and Mrs Leung are the Plaintiff’s clients.  She also denied that she had contacted Mr and Mrs Leung by using the Plaintiff’s client information contained in the Listed Items.  She said in evidence that she contacted Mr and Mrs Leung by using their contact particulars found in the Queensway list.  Ms Ip submitted that this is a first time allegation as the 1^st Defendant had never said so in her two affirmations.  In her second affirmation, the 1^st Defendant did mention that the 3^rd Defendant’s client information came from the lists obtained from Queensway and J&K and referred to the particulars of Mr and Mrs Leung on the Queensway list.  The thrust of the 1^st Defendant’s case as disclosed in her second affirmation is that the facts in the Letter were wrong as Mr Leung had already sent her Leungs’ Fax on 6 July 2006 and there was no need for her to approach Mr and Mrs Leung by using a false name. Though she did not say that she used the information in the Queensway list to contact Mr and Mrs Leung, I would not draw any adverse inference from that omission to discredit her.  But on my eventual analysis, I reject her evidence that she received Leungs’ Fax on 6 July 2006.

25.  However, the fact remains that the 1^st Defendant was the manageress in charge of the 3^rd Defendant.  She had been served with the Order containing a penal notice on 27 June 2006.  She contacted Mr and Mrs Leung on 11 July 2006, about two weeks after the service on her of the Order.  She had knowledge at least on 12 July 2006 that Mr and Mrs Leung are the Plaintiff’s clients.  She had in place a system whereby someone contacted potential clients using a false name.  That system could be set up as a safety net in case of unintended breaches or could be set up for the purpose of evading liability for deliberate breaches of the Order.  What conclusion should I draw?  The 1^st Defendant gave evidence.  She has been discredited on all the factual issues I analysed so far.  She denied there was anyone by the name of ‘Ms Lam’ in the 3^rd Defendant and she also denied using that false name.  I find her incredible.  Having warned myself that a person may lie for reasons other than that he is guilty, on the totality of the evidence, I am satisfied beyond reasonable doubt that the system was installed not as a safety net for unintended breaches but for deliberate breaches of the Order.  In the circumstances, I draw as the only and irresistible inference that before the 1^st Defendant contacted Mr and Mrs Leung, she had knowledge that they are the Plaintiff’s clients.  Having made this finding, it must necessarily follow that I should reject her evidence that she obtained the contact particulars of Mr and Mrs Leung from the Queensway list.  But this last finding is not strictly necessary for the purpose of this application: see paragraphs 39 and 40 below.

26.  In conclusion, I resolve all the five factual issues against the 1^st Defendant.  I find that the allegations contained in the Letter were true.  I find that the 1^st Defendant had set up a system of calling potential clients by using a false name; that someone who claimed herself to be ‘Ms Lam’ approached Mr Leung and offered him services of the 3^rd Defendant; that the 1^st Defendant had the telephone conversations with Mr and Mrs Leung on 11 and 12 July 2006; that the 1^st Defendant denied her identity as ‘Ms June Chan’ who was formerly a sales manageress of the Plaintiff when confronted by Mrs Leung; that the 1^st Defendant had knowledge that Mr and Mrs Leung are the Plaintiff’s clients and that she contacted Mr and Mrs Leung by using the Plaintiff’s client information contained in the Listed Items. 

27.  The 4^th Defendant’s case is that he was seldom in Hong Kong and that during the three months from June to August 2006 he was only in Hong Kong for less than seven days.  He knew the 1^st Defendant for some time and employed her as the manageress of the 3^rd Defendant at a salary of $30,000 per month which was three times her salary from the Plaintiff.  He admitted that one of his reasons for employing the 1^st Defendant was that he knew she had access to the Plaintiff’s clients’ information but he had no knowledge that the 1^st and 2^nd Defendants had taken away clients’ list of the Plaintiff.  He was happy to let the 1^st Defendant run the business so long as it was legal.  When he learned about the first search, he was upset.  He was not in Hong Kong but in Xiamen then.  He was co-operative with the Plaintiff’s solicitors during the second search which was conducted in his presence.  He dismissed the 2^nd Defendant for installing a password to protect the information copied into his laptop computer.  After the second search on 27 June 2006, he gave his staff a stern warning that no one was supposed to call the clients of the Plaintiff and anyone who did so would be dismissed.  His evidence is not seriously disputed by the Plaintiff. 

Breach of paragraph 4 of the Order as against the 1^st and 3^rd Defendants

28.  Paragraph 4(1) of the Order provides as follow:

“4.     Delivery of listed items and computer print-outs

(1) The Defendant must immediately hand over to the Plaintiff’s solicitors any of the listed items which are in his possession or under his control …”

29.  Mr and Mrs Leung’s names and contact particulars are within the Listed Items.  The Plaintiff relies on the 1^st Defendant’s contact with Mr and Mrs Leung on or about 11 July 2006 as evidence on which the inference could be drawn that the Defendants were still in possession of some of the Listed Items, at least those in respect of Mr and Mrs Leung and with which information she used to contact them.  On the above finding of fact, this inference could be readily drawn.  Mr and Mrs Leung are not personal friends of the 1^st Defendant.  The 1^st Defendant could not have remembered their contact particulars unless by referring to some record.  The information had been deleted from the 3^rd Defendant’s laptop computer retained by the 3^rd Defendant, while the only other laptop computer into which the information had been copied was delivered to the Plaintiff.  I have also rejected the 1^st Defendant’s evidence that she used the information in the Queensway list to contact Mr and Mrs Leung.  In the circumstances, the only inference is that the 1^st Defendant had not delivered up all Listed Items.  The 1^st Defendant is in breach of paragraph 4 of the Order.  Likewise, the 3^rd Defendant as her employer is also vicariously liable in contempt.

Breach of paragraph 5 of the Order as against the 1^st and 3^rd Defendants

30.  I think I only need to refer to paragraph 5(1)(b)(iv) of the Order which provides as follow:

“5.     Disclosure of information by the Defendant:                       

(1)  The Defendant must immediately inform the Plaintiff’s solicitors:

(a)     …

(b)     so far as is not apparent on the items themselves and so far as he is aware

(i)     …

(ii)    …

(iii)    …

(iv)   full details of any persons contacted whose name appears in the listed items and who has been approached, in the case of the 1^st and 2^nd Defendants, by the 1^st and 2^nd Defendant since their respective employment with the Plaintiff other than for and on behalf of the Plaintiff and full details of any offers made to persons so contacted, and any custom accepted from such persons, and in the case of the 3^rd Defendant, by the 3^rd Defendant’s agents since the listed items have been in its possession or control, and full details of any offers made to persons so contacted, and any custom accepted from such persons.”

31.  The Defendants argued that they have complied with paragraph 5(1)(b)(iv) of the Order.  The 1^st Defendant relied on paragraph 15(b) of her second affirmation as evidence of her compliance with the Order.  In her affirmation, she said:

“15(b)    With regard to paragraph 5(1)(b) and 5(2) of the Amended Order, I aver as follows:-

(i) The information required under paragraph 5(1)(b)(i) is apparent on the Listed Items.  As explained in Paragraphs 3-4 above, the Listed Items found on SMC’s premises were all obtained by the 2^nd Defendant and me during our employment with the Plaintiff, which we took to SMC without Lee’s knowledge when we joined the company.  The fact that these Listed Items were from the Plaintiff is apparent on the Listed Items themselves (which is the reason why the Plaintiff’s solicitors were able to readily recognise them during the two searches of SMC’s premises).  I have already confirmed this fact in paragraph 3 of my 1^st Affirmation dated 14 July 2006.

(ii) It is SMC’s policy that its staff are not allowed to supply any customer information to anyone outside the company.  Accordingly, as far as I am aware, there is no information to be supplied under paragraphs 5(1)(b)(ii) and (iii).

(iii) As explained in Paragraph 5 above, all the details as to whether any persons in our customer lists have been contacted and any offers made to such persons are marked on the staff’s own note books or the company records.  All the note books and company records relating to the Plaintiff’s customers had been delivered to the Plaintiff’s solicitors as part of the Listed Items during the two searches.  Without these note books and company records, neither I nor any SMC staff will be able to supply any information under paragraph 5(1)(b)(iv).

(iv) Given that the relevant note books and company records have all been delivered to the Plaintiff’s solicitors, I have already confirmed all that I can confirm to the best of my knowledge.  In the circumstances, I do not accept that I am in breach of paragraph 5 of the Amended order.”

32.  In paragraph 11(b) of his second affirmation, the 4^th Defendant said as follows:

“11(b)    With regard to paragraph 5(1)(b) and 5(2) of the Amended Order, I aver as follows:-

(i) The information required under paragraph 5(1)(b)(i) is apparent on the Listed Items.  As stated in the 2^nd Affirmation of the 1^st Defendant, the Listed Items found on SMC’s premises were all obtained by her and the 2^nd Defendant during their employment with the Plaintiff, which they brought to SMC without my knowledge when they joined the company.  The fact that these Listed Items were from the Plaintiff is apparent on the Listed Items themselves (which is the reason why the Plaintiff’s solicitors were able to readily recognise them during the two searches of SMC’s premises).  I have already confirmed this fact in paragraph 3 of my 1^st Affirmation dated 18 July 2006.

(ii) It is SMC’s policy that its staff are not allowed to supply any customer information to anyone outside the company.  Thus, as far as I am aware, there is no information to be supplied under paragraphs 5(1)(b)(ii) and (iii).

(iii) As explained in Paragraph 3 above, all the details as to  whether any persons in our customer lists have been contacted and any offers made to such persons are marked on the staff’s own note books or the company records.  All the note books and company records relating to the Plaintiff’s customers have been delivered to the Plaintiff’s solicitors as part of the Listed Items during the two searches.  Without these note books and company records, neither I nor any SMC staff will be able to supply any information under paragraph 5(1)(b)(iv).

(iv)  Given that the relevant note books and company records have all been delivered to the Plaintiff’s solicitors, I have already confirmed all that I can confirm to the best of my knowledge.  In the circumstances, I do not see why I am in breach of paragraph 5 of the Amended Order.”

33.  In short, the Defendants were ordered to give full details of any person contacted whose name appears in the Listed Items and who has been approached by the Defendants.  The 1^st and 4^th Defendants’ answer is that since the 1^st Defendant’s note book and the 3^rd Defendant’s company records had been seized by the Plaintiff, they could not provide the information required.  The Listed Items only contained the names and contact particulars of the Plaintiff’s clients.  It is not apparent on those particulars or other information therein whether any of those clients had been contacted or offered custom by the Defendants or in respect of whom the 3^rd Defendant had accepted custom. 

34.  Mr Pun’s submission is as follows.  The terms of paragraph 5(1)(b)(iv) of the Order is very wide and ambiguous.  If given a broad interpretation, it may be interpreted to cover any person whose name appears on the Listed Items, whether his name also appears on any other lists, for example, the Queensway list or the J&K list.  The law is very jealous of monopoly and protection from competition.  The Order would be very oppressive if given such a wide meaning.  Any ambiguity in the Order should be resolved in favour of the Defendants.  Hence, he submits that the Order does not restrain the Defendants from using information in their own lists and does not require the Defendants to provide information in respect of the Plaintiff’s clients whose name also appear on some other lists and that Mr and Mrs Leung’s names appeared on the Queensway list.

35.  With respect, Mr Pun’s submission is very strained and contrary to the applicable principles on interlocutory injunctions.  If an order is too wide or oppressive, this should be argued on return day when the plaintiff seeks to have the ex parte order continued or subsequently on the application of the party subject to the order to have the order set aside or varied.  If the order was obtained after a contested hearing, the proper course for the party subject to the order is to apply for a stay of the order and to appeal.  If the order was obtained by consent, the proper course is for the party to apply for variation or setting aside.  An Anton Pillar order is an interlocutory order.  If it was obtained after a contested hearing, the court must have assessed the balance of convenience and the risk of injustice to the parties according to the American Cyanamid principle.  If it was obtained by consent, the parties must have also balanced the convenience and risks themselves.  In either event, the party subject to the order is adequately protected in the circumstances of the particular case by the plaintiff’s undertaking.  In the absence of a successful challenge to the validity of an order, the party subject to the order has but to comply.

36.  In the present case, the Defendants, through their solicitors, consented to have the ex parte Order continued on return day.  Mr Pun’s interpretation of the Order requires reading far too many words into the Order which are not there.  The words of the Order are simple and straight- forward.  The Order catches “any person whose name appears on the Listed Items.”  There is no ambiguity.  It requires disclosure of “full details of any person contacted whose name appears in the Listed Items”.  The Order may be wide in the sense that the prohibition is not source specific.  It bites as long as the name of the person contacted happens to be within the Listed Items, even though the contact particulars of the person contacted are available on the public domain.  But the Order is not equivocal.  Nothing should be read in and nothing should be read out.  It is not up to the person subject to the Order to give to the Order the meaning he desires which is contrary to the clear and unequivocal words of the Order.  In my view, the terms of paragraph 5(1)(b)(iv) are unequivocal.  There could be no doubt that paragraph 5 of the Order has not been complied with.

37.  The next question is whether by reason of the seizure of the notebook and records, the Defendants were absolved form complying with the Order.  Mr Pun submits that the Defendants had a complete answer to the breach as the notebooks and records of the 3^rd Defendant had been delivered up to the Plaintiff.  With respect, the Defendants were under an obligation to comply with the Order.  They should do everything within their power to comply.  If the information necessary to enable their compliance has been seized by the Plaintiff’s solicitors, they should have approached the Plaintiff’s solicitors for inspection of the relevant documents.  In the present case, the Plaintiff’s solicitors had by their letter dated 19 July 2006 invited the Defendants, through their solicitors, to request for access to the documents to enable the Defendants to comply with the Order.  The 4^th Defendant admitted that he had knowledge of the offer but did not see it necessary to respond.  The 1^st Defendant said that she had not seen that letter.  If the Defendants’ solicitors have failed to properly advise the Defendants of their obligation or to inform the 1^st Defendant of the invitation by the Plaintiff’s solicitors, that is something they may wish to follow up with the Law Society, but that does not alter the fact that the Defendants had not taken reasonable steps to comply with the Order.

38.  Mr Pun argues that the Order did not require the Defendants to confirm any negative information.  I can see no merit in that argument.  On the facts of this case, there is clear evidence that the Defendants had at least contacted Mr and Mrs Leung.  Hence, they should have furnished such information as required by paragraph 5(1)(b)(iv) at least in respect of Mr and Mrs Leung.  But they did not.  I am satisfied beyond reasonable doubt that the 1^st Defendant and the 3^rd Defendant, as her employer, were in breach of this paragraph 5(1)(b)(iv) of the Order.

Breach of paragraph 6(3) of the Order as against the 1^st and 3^rd Defendants

39.  Paragraph 6(3) of the Order provides as follows:

“6.  Prohibited acts

(3)   The Defendant must not whether by himself or its agents, servants or otherwise howsoever:

(a)    disclose, divulge or otherwise make use of the information contained in any of the listed items, and/or any other information relating to the Plaintiff’s customers obtained through the use of such information; or

(b)    accept any custom from any person whose name appears in the aforesaid information, and who has been approached by any or all of the Defendants, directly or indirectly.”

40.  On my finding of fact, the 1^st Defendant had used information contained in the Listed Items to contact Mr and Mrs Leung and was therefore in breach of paragraph 6(3)(a) of the Order.  But even if I were wrong in that finding of fact and that the 1^st Defendant contacted Mr and Mrs Leung by using the information in the Queensway list, she would still be caught under paragraph 6(3)(b) of the Order as the prohibition under that paragraph is not source specific.  Accordingly, the 1^st and 3^rd Defendants were in breach of paragraph 6(3) of the Order.

Liability of the 4th Defendant for breaches of the Order

41.  The 4^th Defendant is the sole shareholder and director of the 3^rd Defendant.  There is no dispute that he had knowledge of service of the Order on the 3^rd Defendant on 20 June 2006.  On my finding, the Order was breached by the 1^st and 3^rd Defendant.  The outstanding issue in respect of the 4^th Defendant’s liability is whether he had wilfully failed to take such reasonable steps to ensure compliance of the Order.  His case is that he is for most of the time not in Hong Kong, that he had given a stern warning to his staff to comply with the Order with a sanction of dismissal in case of non-compliance and that he had entrusted the 1^st Defendant with the duty of ensuring compliance.

42.  The 4^th Defendant denied he had knowledge that the 1^st and 2^nd Defendants had appropriated the Plaintiff’s clients’ information for use by the 3^rd Defendant.  His evidence in this respect is supported by the 1^st Defendant’s.  However, he admitted under cross-examination that one of the reasons for employing the 1^st Defendant was because he knew that the 1^st Defendant had access to the Plaintiff’s clients’ list, though he did not expect she would have existing clients to bring to the 3^rd Defendant.  That is self-contradicting.  But even on that evidence, he must entertain a belief that it was likely that the 1^st Defendant would bring along clients, the Plaintiff’s clients list and the Plaintiff’s client information to the 3^rd Defendant.  He said that his work was simple, he did business and just left it to the 1^st Defendant to run the business.  He said it was fine if it was legal.  The impression I have of him is that he just did not wish to know how the business was being carried out.  In other words, he deliberately turned a blind eye.  That was the state of affairs before the service of the Order.

43.  After the service of the Order, the 4^th Defendant knew that the 1^st and 2^nd Defendant had taken away client information from the Plaintiff.  He said he had dismissed the 2^nd Defendant because she installed a password in the Acer laptop to protect the information taken away from the Plaintiff.  Yet, he did not dismiss the 1^st Defendant for being a party with the 2^nd Defendant in appropriating clients’ information from the Plaintiff and knowingly allowing the information to be used for the purposes of the 3^rd Defendant.  On the contrary, he entrusted the 1^st Defendant with the duty of ensuring compliance with the Order.  He explained that he, being an expatriate, had no one else to trust in Hong Kong, apart from the 1^st Defendant.  However, given the proven propensity of the 1^st Defendant in misusing the Plaintiff’s client information, she was not a person to be entrusted with ensuring compliance of the Order. 

44.  The 4^th Defendant gave no instruction on how to ensure compliance of the Order.  In view of his attitude, I am satisfied that his instruction was just meant to be lip service.  He is the sole director of the 3^rd Defendant.  The 1^st Defendant was only a manageress.  There were much more that the 4^th Defendant could have done to ensure compliance.  He knew there were overlaps between the Plaintiff’s clients’ list, the Queensway list and the J&K list.  The prohibition under the Order is not source specific.  He must know that by allowing his staff to contact potential customers on the Queensway list and the J&K list, there was a real likelihood that they might get in touch with the Plaintiff’s clients and unwittingly breached the Order.   Breaches of the Order are reasonably foreseeable.  Yet, he did nothing to prevent that possibility.  Even assuming for his benefit that the Plaintiff’s clients’ information had been merged with those of his own and without the notebook and records which had been seized by the Plaintiff, he or his staff could not ascertain if any a person contacted is a client of the Plaintiff, the 4^th Defendant could have instructed his staff to ask that person if indeed he was.  He did not. 

45.  Furthermore, a person’s conduct has to be adjudged by his conduct and not by his words.  When he was shown the Plaintiff’s solicitors’ letter of 19 July 2006, alleging non-compliance with the Order and inviting him to request for assistance from the Plaintiff’s solicitors if necessary, he took no action.  His attitude was contumacious.

46.  I am satisfied beyond reasonable doubt that the 4^th Defendant did not take the Order seriously, adopted a carefree attitude and deliberately turned a blind eye to what his staff did.  I find that he has wilfully failed to take such reasonable steps to ensure compliance of the Order.  That, I find, was sufficient culpable conduct to support a committal for contempt, jointly with the 1^st and 3^rd Defendants.

Conclusion

47.  In conclusion, I am satisfied beyond reasonable doubt that the 1^st Defendant knowingly breached paragraphs 4, 5 and 6(3) of the Order; that the 3^rd Defendant was also in breach vicariously and that the 4^th Defendant as director was also in breach of the Order for wilfully failing to take reasonable steps to ensure compliance of the Order by the 1^st and 3^rd Defendants.

48.  I shall now adjourn to hear submissions on mitigation and costs.