MIDLAND REALTY (STRATEGIC) LTD. v. CHOI LING LEE

DCCJ 7336/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 7336 OF 2002

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REASONS FOR DECISION

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1. The plaintiff carries on the business of real estate agency. Pursuant to a contract of employment dated 15th November 2001 made between the Plaintiff and the Defendant, the Defendant worked for the Plaintiff as a property consultant posted in Tseung Kwan O until August 2002 when she gave notice of termination with immediate effect.

2. Sometime in October 2002, the Plaintiff discovered that the Defendant was working as a property consultant with Centaline Property Agency Ltd in Tseung Kwan O.

3. In this action, the Plaintiff seeks an injunction against the Defendant restraining her from working with Centaline Property Agency Ltd in Tseung Kwan O pursuant to Clause 7.5(a) of the contract of employment.

4. 7.5 (a) of the contract of employment states:

"The employee shall not without the prior written consent of the Employer (such consent to be withheld only so far as may be reasonably necessary to protect the legitimate interests of the Employer or its subsidiary companies)-

(a) For a period of [6 months] after the termination of this Agreement for whatever directly or indirectly reason be engaged as debtor [sic], partner, principal, agent, servant or consultant or accept employment or otherwise, carry on or be concerned interested in any business concern of real estate agency in any part of the area covered by the zone or zones which are divided or the sake of convenience and for the Employer's administration to which the Employee had been assigned to work within the period of six (6) months immediately preceding the date of such termination ("the zone")."

5. On 28 November 2002 the Plaintiff commenced this action and issued this Inter Parte Summons seeking an interim injunction against the Defendant pursuant to Clause 7.5(a) of the contract of employment.

6. The interim injunction sought by the Plaintiff was set out in the Summons in these terms:

"The Defendant, whether by herself, her servant or agents or otherwise howsoever, be restrained until 28th March 2003 or until trial or further order from directly or indirectly acting or being engaged as partner, principal, agent, servant, consultant or employee of Centaline Property Agent Limited or any other real estate agency business to provide services in the nature of a property consultant or a real estate agent in the Tseung Kwan O district, Hong Kong and without prejudice to the generality of the foregoing, in particular for properties situated in the developments set out in the Schedule hereto."

7. The Schedule annexed to the Summons was a list of residential properties in Tseung Kwan O.

8. On 11 December 2002 the Plaintiff was acting in person before the Court. She consented to an interim injunction in the following terms:

"The Defendant, whether by herself, her servant or agents or otherwise howsoever, be restrained until 17th January 2003 or until further order from directly or indirectly acting or being engaged as partner, principal, agent, servant, consultant or employee of Centaline Property Agent Limited or any other real estate agency business to provide services in the nature of a property consultant or a real estate agent in the Tseung Kwan O district, Hong Kong and without prejudice to the generality of the foregoing, in particular for properties situated in the developments set out in the Schedule to the Summons taken out by the Plaintiff in this action on 28th November 2002."

9. At the hearing on 17 January 2003, the Plaintiff sought an order for the continuation of the injunction.

10. On the first day of hearing, the Plaintiff relied on the Affirmation of Lee Chi Shing filed on 28 November 2002 and the Defendant relied on her Affirmation filed on 17 December 2002. Counsel for the Plaintiff objected to the use of the Defendant's Affirmation as it contained a number of defects. I allowed the Defendant to file a proper Affirmation to contest this application on the same day. On the second day of this hearing, I allowed the Plaintiff to file an Affirmation in reply to the Defendant's Affirmation filed on the first day of this hearing.

11. The Defendant's case is that she was assigned to work in the first hand property market and had never been trained to deal with property transactions in Tseung Kwan O and that almost all the time she worked outside the Tseung Kwan O area.

12. Clause 1.1 of the contract of employment which states:

"The Employer shall employ the Employee, and the Employee will serve the Employer, from November 14, 2001 as a Property Consultant (Staff GradeS7) at our Tseung Kwan O - Metro City Phase 1 Branch in the Employer's real estate agency business of the sale and purchase, leasing and/or investment of land, properties, and/or other assets in any part of Hong Kong Island, Kowloon, the New Territories and overseas."

13. The defence to this action appears to be that Clause 7.5 of the contract of employment does not apply as the Defendant had never been assigned to work in Tseung Kwan O within the period of 6 months immediately preceding the date of termination.

14. There is no dispute that the Defendant was working for Centaline Property Agency Ltd in Tseung Kwan O in October 2002. As the Plaintiff is entitled to see to the Defendant not working with another property agency within Tseung Kwan O district under Clause 7.5(a) of the contract of employment I was satisfied that there is a serious question to be tried.

15. The Plaintiff was only able to retrieve a very brief computer record of training and one transaction of a second hand market property situated in Tseung Kwan O handled by the Defendant on 10 September 2002. These documents alone can hardly prove that the Defendant had been working in Tseung Kwan O within 6 months immediately prior to termination of her employment. While it is reasonably clear that the Plaintiff a cause of action against the Defendant the question of proof remains wide open.

16. The Plaintiff says that in the course of employment the Defendant had access to a lot of confidential business information and that there is a real risk that the Defendant would use such information when working with other property agencies although there is not yet any proof that she has actually used such confidential information when working with Centaline Property Agency Ltd within "the zone" which on the evidence covered Tseung Kwan O district. Counsel for the Plaintiff argued that the remedy of damages is unlikely to be sufficient to protect the Plaintiff's interests.

17. The Defendant will be free to work for any real estate agency in Tseung Kwan O from 29 March 2003, which is only about 9 weeks away from now. The Plaintiff is free to work elsewhere at any time. Counsel for the Plaintiff said his client is not seeking a wider injunction and contended that this injunction was for protecting the Plaintiff's interests, but only for about 9 weeks up to 28 March 2003. I do not see any reason why the remedy of damages will not be adequate for the Plaintiff. However, the Defendant did not put in any evidence of her financial ability to compensate the Plaintiff in the event the action is resolved against her. It is clear that the remedy of damages will be adequate for the Defendant if she succeeds at the end of the day. The Plaintiff is a large real estate agency company listed in the Hong Kong Stock Exchange. There is unlikely to be any question of financial ability. I resolved the question of recovery of damages in favour of the Plaintiff.

18. The continuation of the interim injunction would mean that the Defendant has effectively lost her right to work in Tseung Kwan O for about 9 weeks. Likewise, the Plaintiff has effectively lost the right to enforce the restraint of employment Clause 7.5(a) of the contract of employment for the remaining period of about 9 weeks if the injunction is lifted. The present interim injunction was ordered by consent of the parties on 11 December 2002. I considered this a factor in favour of the Plaintiff.

19. In the exercise of my discretion, I allowed the continuation of the interim injunction granted by the Court on 11 December 2002 upon the undertaking of the Plaintiff to pay damages in the event the Defendant succeeds at trial.

20. Under Clause 7.5(a) of the contract of employment, the Plaintiff is only entitled to a restraint of employment against the Defendant with other property agencies in a specific area. The Schedule of a list of residential properties should not form part of the subject matter of the injunction.

21. Accordingly, I ordered the continuation of interim injunction in the terms as modified below:

"The Defendant, whether by herself, her servant or agents or otherwise howsoever, be restrained until 28th March 2003 or until further order from directly or indirectly acting or being engaged as partner, principal, agent, servant, consultant or employee of Centaline Property Agent Limited or any other real estate agency business to provide services in the nature of a property consultant or a real estate agent in the Tseung Kwan O district, Hong Kong"

22. I also ordered that the costs of this Inter Parte Summons including costs of the hearing on 11 December 2002 and of this hearing be costs in the cause with a certificate for counsel.