SLIK HONG KONG CO LTD v. GERALD MERLYN RHOSLYN EVANS AND OTHERS

HCA 1424/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1424 OF 2005

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J U D G M E N T

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1.  Monday and Tuesday, the 18th and 19th of July 2005, were black days for Martin Glass.  On the Monday the Managing Director of his Hong Kong subsidiary emailed his resignation, effective forthwith. On the Tuesday he came to learn, via a customer, that the entire Hong Kong workforce had left without warning to join a competitor, taking with them material confidential to his company.  Mr Glass claims the competitor has gained an unfair competitive advantage because of the misuse of his confidential information.  By this action, he sues for relief.

Background

2.  Mr Glass runs a business based in England which deals in zip fasteners and the like under the brand name Slik.  Some years ago he incorporated in Hong Kong a wholly owned subsidiary to take advantage of favourable manufacturing and marketing conditions in Hong Kong, Mainland China and elsewhere in South East Asia.  That is the plaintiff, whom I shall call Slik HK.

3.  In 1999 Merlyn Davies joined the UK Company, learnt the ropes and the following year was sent out to Hong Kong to become the Managing Director of Slik HK.  He employed his wife Liisa Evans to be in charge of accounts and administration.  Effectively she was his second in command.  The remaining staff comprised a sales team headed by Casey Ng and various clerks who were recruited locally.

4.  Mr Glass comes regularly to Hong Kong.  One such visit was of four days between 20 and 24 June 2005.  Nothing untoward happened or was said to him, save that the Sales Manager Casey Ng was unavailable, apparently through ill-health.

5.  Back in England a regular board meeting was scheduled for 18 July.  Mr Evans was due to attend it.  But on 16 July he emailed:

“Casey has resigned.  I have problems.  Therefore under these circumstances I have to stay in Hong Kong and cannot travel to the UK.  You should have the board meeting without me and just let me have copies of the minutes.”

Casey is Casey Ng, the Sales Manager.

6.  Then two days later, on the 18^th, came the first bombshell.  Mr Evans emailed:-

“There have been gross violations against my interests ……  Therefore I resign my position as Managing Director of Slik Hong Kong Limited with immediate effect ……”

There had been no notice, or other forewarning, of this.

7.  On the following day, the 19^th, came the second bombshell.  A major, perhaps the largest customer, called Americana International, sent him an announcement it had received that day.  It read:

“            IMPORTANT AND URGENT ANNOUNCEMENT

Dear Valued Customer,

We are delighted to advise you that your Sales and customer services team has now joined SALMI INTERNATIONAL LTD AS FROM 19.07.05.  We offer you the exactly the same products, quality, prices, service, same team and delivery, from the “Salmi-i compact zip collection”.  Also accredited laboratory and research and technical facilities.

The Team

Liisa Evans – HR/Accounts Manager	liisa.evans@salmi-i.com
Casey Ng – Sales Manager	casey.ng@salmi-i.com

Cherry Suen – Sales Office Supervisor	cherry.suen@salmi-i.com
Don Chim – Management Support Services	don.chim@salmi-i.com
Alex Lee – Sampling and Customer Services	alex.lee@salmi-i.com
Johnny Lee – Accounts and Receivables	johnny.lee@salmi-i.com
Frankie – Invoicing and Shipments	frankie.bin@salmi-i.com

Kaho – Admin Support

Hannah – Telephone welcome and information services.

Please see above e-mail details and below telephone contact details;

Telephone: +852 2427 9898

Fax: +852 2427 9828

Kindest Regards,

Casey Ng                      Liisa Evans

Sales Manager             HR/Accounts Manager”

8.  Those listed comprised the entire workforce of Slik HK save for its Managing Director.  Mr Glass recognized Salmi as a competitor of Slik, based in Scandinavia, with a presence in Hong Kong, though in the name of Salmi-Zip Far East Limited, not Salmi International Limited.  As far as Mr Glass was aware, neither company had engaged in the business of making or trading in zips in Hong Kong before.

9.  The impression given Americana, as disclosed by the sender of the email, was that there had been a takeover or merger.  There had been no such thing.

10.  A day or two later Mr Glass was informed by a representative of Americana that for some time he had been negotiating with Slik HK for a discount without success.  Yet now the same staff, but now staff of Salmi International, were offering a discount of 5%.  This was damning news, given the value of business that would be lost if Americana were to change allegiance.

11.  Other customers and agents of Slik received the same announcement.  They were similarly misled or confused.

12.  Over the next few days many of those with orders outstanding demanded immediate assurance their orders would be met.  Some threatened cancellation without that.

13.  So, in a blink of an eye, the workforce had left, joined a competitor, and were enjoining customers and agents to do the same.

14.  Mr Glass came straight out to Hong Kong.  He arrived on 20 July.  The office of Slik HK was empty.  Within a cabinet he found resignation letters from the staff save for the three junior members and Mr Evans, dated between 20 and 25 June 2005 which, if authentic, gave notice to take effect about a month later.  Those dates coincided with his most recent time in Hong Kong, though nothing had been said.

15.  Mr Glass took immediate action.  By their conduct he feared his former staff had conspired with Salmi to take from Slik HK confidential information and unlawfully use it to poach customers and business opportunities from Slik HK.  He filed a writ for injunctive relief suing the former workforce, save for the two junior clerks, joining also the Salmi company in Hong Kong the workforce had decamped to.  He also filed an application for interlocutory injunctions ex parte.

16.  Before the matter came to Court a day or two later, Mr Glass was approached by one of the defecting staff, a shipping clerk called Frankie Bin, who was named as D8 in the action.  He told him that he and his former Slik HK colleagues had signed up with Salmi International on Monday 18 July, and that Evans was involved in a consultant’s capacity.  He also told him that he was thinking of leaving, and agreed to think about filing an affidavit recounting what had happened.

The ex parte Order

17.  On 23 July Lam J made certain orders applied for ex parte.  By these, the individual defendants were restrained from dealing with Slik HK’s confidential information as more particularly defined in a schedule, and the company Salmi International Limited was restrained from making use of that information.  The Judge left to be dealt with inter partes an application to restrain Mr Evans from breaking the restrictive covenants that were contained in his contract of employment which I shall come to.

Subsequent Developments

18.  Following that order there were two significant events.

19.  The first was that Frankie Bin did leave the employ of Salmi International and returned to Slik HK.  The action was thus discontinued against Frankie.  The second was that by consent the injunctions against the remaining defendants were discharged and replaced by undertakings having the same effect and with orders for delivery up of material containing confidential information of Slik HK.  Directions were given for the filing of evidence and for restoration of the applications for relief.

20.  This is now the restored hearing.

Contractual Obligations

21.  I shall start by identifying the parties’ contractual obligations owed Slik HK in their employment contracts.

22.  Mr Evans’ was the most comprehensive.  By it he was enjoined to devote his time and energy to the company, promoting its interests and disclosing such information as might adversely affect it, including the plans of an employee to leave, to join a competitor or to misuse confidential information.

23.  There were also restraints from being engaged in any activity in conflict with his duties owed Slik HK, and from disclosing whether during his employment or thereafter private, confidential or secret information of the company.  The contract was scheduled to run until 3 months’ notice from either side.  Upon termination, Mr Evans was restrained from engaging in the business of zip fasteners for a period of 6 months in the United Kingdom or South East Asia.  There were also non-solicitation clauses for the same period of time.

24.  What was immediately apparent was that by failing to give any notice at all Mr Evans was in breach.  Whether there was the more serious non-compliance of orchestrating a mass exodus by the staff, with confidential information, to a competitor, required further investigation.

25.  The contracts entered into by Mrs Evans, Casey Ng and the remainder of the workforce now being sued were briefer and in similar format the one with the other.

26.  Mrs Evans was required to give 3 months notice; the others were required to give 1 month.

27.  The written notices to resign I have referred to were purportedly handed in on various dates of June.  It is not material to set out the particular dates when that notice fell due; suffice to say that on 19 July on which date they announced their commitment to Salmi International their employment with Slik HK was still current in every case.

28.  The 5^th, 6^th and 7^th defendants Alex Lee, Johnny Lee and Don Chim were restrained by a non-disclosure of confidential information during the currency of their employment.

29.  Beyond these contractual obligations, I do not overlook the implied duties of fidelity owed by an employee to his or her employer.

The Defendants’ Responses

30.  Following service of the orders and supporting evidence, the immediate response was to protest innocence.

31.  Mr Evans disclosed a former history with Salmi.  He and his wife had worked for Salmi’s UK operation in the 80’s and up to 1993.  When they joined Slik HK he and, as they joined, the other staff members, worked well as a tightly knit team and business was profitable.  He complained that Mr Glass and those in the UK did not appreciate or understand the way business was done here and relationships were strained.  Moreover, the UK division was continuously “milking” their profits and other cash resources, which hampered the cash flow.  By this means £450,000 was transferred, of which £50,000 was paid in January, April and May 2005.

32.  He said these matters financial and other issues had led to major differences between the UK and HK factions.  Things came to a head during Mr Glass’ June visit, when a bitter dispute erupted at the office in front of the staff.

33.  He said he came to learn of Casey Ng’s decision to leave when told by his wife around 20 June that Casey had been approached by Turo Stenhall.  Stenhall is the owner of Salmi.  He had invited Casey to join his new operation in Hong Kong called Salmi International Limited.  His wife Liisa two days later announced that she and the remaining senior employees had decided to follow suit and had put in for jobs with Salmi.  They handed in their notices; presumably those found by Mr Glass.  He did not tell Mr Glass of this development, notwithstanding that this meant that all but the most junior members of the company were leaving in a month’s time.  He noted in his affidavit that he should have done so.

34.  He took issue with the allegations that confidential information belonging to Slik HK had been taken and misused to the detriment of Slik HK.  He said that product information including the catalogue of products traded in by Slik HK were readily available on its website.  Further, there are no secrets amongst those who trade in zippers, with market information such as prices freely available in the market place.

35.  He deposed that when he left Slik HK he took with him no customer lists or product lists or other so-called confidential information having no need for it, even had he joined a competitor (which he had not).  He stated that in particular he had not joined Salmi or any related company, that he had offered since the departure from Slik HK only “some informal advice” to the other defendants.

36.  He took issue with the need for the orders of restraint sought by Slik HK.  Hong Kong is not part of South East Asia.  In any event, the restraints sought were far too wide and unenforceable.

37.  He denied that he had played any part in enticing away from Slik HK any of its customers or suppliers, or otherwise that he had interfered with any such relationships.

38.  Finally, he denied having removed from Slik HK any of the so-called confidential information referred to in the schedule of Lam J’s order.

39.  I come now to Mrs Evans’ evidence.  She said she spoke to Mr Stenhall after she came to learn of Casey Ng’s pending departure.  He told her he was setting up in Hong Kong and offered her a position.  The upshot was that Casey, she and the remaining members of the workforce, all of whom were also offered jobs, gave their notice to resign.

40.  She left on 18 July.  Before doing so, she copied and took with her Slik HK’s accounting records for the period 1 January to 30 June 2005.  She gave as her reason a concern that given the circumstances prior to their departure, “the plaintiff may seek to criticize our management of the plaintiff’s finances, or and seek to impose liability upon us.”  She said they were of little or no value to Salmi and had never been taken to Salmi or otherwise utilized.  She had on commencement of the action handed them over to their solicitors Deacons.

41.  She said there was no need to take any lists of customers.  All their names and details were known or readily available.  She went on to say that her husband Mr Evans had nothing to do with the movement of herself and the other former Slik HK employees to Salmi with whom he has no employment or other connection.  Furthermore, there was no “orchestrated campaign” to transfer Slik HK’s business to Salmi.

42.  Exhibited to the affidavit were over 500 pages of accounts, handwritten and computer generated.  These included a register of invoices.  It is worthy of mention that this revealed the company’s income for the period in question at $15.775 million; a significant amount on any account.

43.  Casey Ng came next.  She, too, denied taking anything that was confidential.  There are no such things as customer lists or price lists.  All of the plaintiff’s customers were known to the staff; and prices were freely and readily negotiable, so that knowledge of previous prices charged was of little or no value.  And reference to product codes, in the announcement of 19 July, was to the codes freely accessible in the catalogue.

44.  The remaining former members of staff of Slik HK gave similar versions.

Emerging Evidence ……

from the plaintiff, put a different slant on the defendants’ protestations of innocence.

45.  On the issue of Mr Evans’ involvement in the affairs of Salmi post-Slik, there was an affidavit filed by one Roman Yaworsky, the Sales Manager of Deacon and Co Limited, a customer of Slik HK of two years’ standing.  He attended a meeting convened by Merlyn Evans and a Salmi representative who turned out to be Casey Ng.  The meeting was on 20 July.  Mr Yaworsky knew Evans from his dealings with Slik HK.  He had received the announcement I have already reproduced, and, like others, took it that there was a merger or takeover as between the companies.  Evans told him however that they were two separate companies, in competition.  His wife Liisa Evans was now Managing Director of Salmi.  His role was to act “purely in an advisory capacity.”

46.  Mr Glass went into print to say that he came to learn that Mrs Evans also visited Wilmore, Slik HK’s supplier, to introduce Salmi as a new customer.  On this occasion she, too, was accompanied by Mr Evans.

47.  He went on to state that given the mass departure and what he regarded as a defection to a competitor, he caused to have undertaken a forensic examination of Slik HK’s computer hard drives.  This threw up a series of emails which revealed that Mr and Mrs Evans were discussing business opportunities with Stenhall, Salmi’s head man, from January 2005.  One, of 9 June, from Evans to Stenhall, made reference to budgeting for renting of offices, and another, Stenhall to Evans of 18 July, seemed to Mr Glass to be advice on how to set up a breach of contract claim against Slik HK.  Other emails were unearthed implicating others of Slik HK’s staff.  Examples of these include setting up a rental agreement and purchase enquiries for computers, and Don Chim (D7) writing to IBM as “a new trading company writing to set up a server.”  These are all dated June 2005.

48.  Frankie Bin followed up his intention to leave Salmi by doing so, having lasted there for a week.  He agreed to file evidence.  That dealt with events surrounding the pending and then actual departure of the staff on 18 July.  Subsequently he was reappointed to Slik HK.

49.  He deposed at the outset that it was not a condition of his reappointment that he go into print, nor was he under any pressure to do so.

50.  He stated that on Monday 18 July he and the two most junior clerks were invited by Mrs Evans to join a new company with a good future, on the same terms as with Slik HK.  The company was Salmi International.  They agreed, and signed contracts then and there.  They were told to report to the new office the next day.

51.  Although that was the first official indication of a move, Frankie noted there had been out of the ordinary goings on during the week earlier.  A lot of photocopying of documents was carried out.  Cherry Suen ordered one of the juniors to copy all the purchase orders and confirmation orders.  Frankie was asked to help her pack a box with purchase orders and invoices.

52.  On 19 July at new offices in Kwai Chung, the former staff of Slik HK, all of whom were present, were called to a meeting; it was chaired by Mr Evans.  He explained the move to Salmi; Slik HK was suffering from financial problems and it was: “better for us to find another good boss to follow.  Salmi Group was a professional zipper company and was better than Slik.”

53.  He said that for the duration of his time at Salmi, four days, Mr Evans was present most of the time.  On 19 July he showed him his business card, which represented that he, Merlyn Evans, was “Consultant” for Salmi International.

54.  On 19 July he kept under his desk on request of Cherry the box of documents he believed he had helped her pack.  He noted it seemed to contain copies of Slik HK’s purchase orders to Wilmore, and order confirmations of certain customers.

55.  During the same day Alex Lee (D6) handed to him Slik HK’s original shipment book and a floppy disk upon which were stored the Wilmore production schedules for Slik HK’s orders.  He was told to follow up the orders.

56.  On the next day Mrs Evans told him that she wanted him to transfer from a floppy disk all customer email addresses into the computers of Mr Evans and herself.  In the event, that was not followed up.

57.  It was on the evening of this day, Thursday, that he met Mr Glass and told him what had happened.

58.  On the next day, which was Friday 22 July, he told Mrs Evans he wanted to leave Salmi.  She called a meeting which was joined by Casey and Mr Evans.  He, Evans, tried hard to get him to stay.  When it was apparent that he was not going to change his mind, Evans tried to get from him a commitment that he would not return to work for Slik HK for 3 months.  He refused to sign.  He left, after an hour, taking with him Slik HK’s shipment book.  He rejoined Slik HK on the following Monday, 25 July.

The Application for Relief

59.  This came to be amended because of the emerging information.

60.  It had started out as an application for the extension of the ex parte order, for an order identifying the use of Slik HK’s confidential information and its customers contacted or dealt with and details, and orders restraining Mr Evans from breaching the restraint in trade conditions contracted for.

61.  Now it has been expanded to incorporate an application for orders preventing all defendants from undertaking any dealing with any of Slik HK’s customers until 6 months after 18 July 2005, being an injunction commonly known as springboard relief, and delivery up of all documents of the plaintiff containing confidential information of the plaintiff.

The Issues

62.  Is Slik HK entitled to injunctive relief on the basis that there are serious matters to try and that remedies such as damages or an accounting for profits may not be adequate?  If so, what should be the extent of that relief?

The Legal Principles

63.  Central to this application as now amended is the allegation of misuse by Salmi International of confidential material belonging to Slik HK that was “stolen” by its departing staff.

64.  A leading authority on the issue of confidential information and misuse thereof is the Court of Appeal’s case Faccenda Chicken Limited v Fowler [1985] 1 Ch.117.  The Court at first instance had defined into 3 categories information that an employee might acquire in his services to an employer; namely, information that is freely available, information that is confidential to his employer, and information which could be described as a trade secret.  The Court of Appeal held that that which falls within the second and third categories may not, in the absence of express terms, be used or disclosed during the term of the employee’s employment.  In respect of trade secrets, that is the third category, that restriction survives for the period post-employment.

Springboard Relief

65.  From the case Terrapin Limited v Builders Supply Company (Hayes) Limited and others [1967] RPC 375 emerged the principle that came to be known as springboard relief.  The foreman of the plaintiff having joined a competitor, embarked on a new improved design for his new employer.  He came to that position with information that was confidential to his former employer.  It was held that “he could not have avoided starting his dive into the future from the springboard of confidential information acquired by the defendant.”

66.  The plaintiff was granted an interlocutory injunction restraining use of that information to erase the unfair advantage.  The aim was to level up the playing field.

The Limit in Time of Springboard Relief

67.  Unlike other forms of injunction, which are geared to maintain the status quo pending trial of the issues where on balance it is held that damages would or might be an inadequate remedy, this relief is invariably limited in time. 

68.  In Roger Bullivant Limited v Ellis [1987] 1CR 464 the Court of Appeal ruled that where a defendant is to be restricted from entering into contracts in order to prevent him from acquiring an unfair advantage, the Court should consider how long that unfair advantage might otherwise have lasted.  On the facts of that case, it drew assistance from the employment contract of the former Managing Director of the plaintiff whose employment with a competitor gave rise to the need for a springboard injunction.  The parties having contracted that he be restricted from making use of the plaintiff’s confidential information for 12 months, that was found to be the proper period for the relief granted.

More Evidence

69.  Before the matter came on for hearing the defendants were given leave to answer the latest allegations and for the plaintiff to respond.

70.  Mr Evans stated that on advice he believed his restrictive covenants were unenforceable as being too wide, but in any event that he has not been in breach.  He also denied that he had taken or retained any confidential information of Slik HK.

71.  He went to Deacon and Co. on 20 July to let a representative of Deacon know that he was no longing working for Slik HK.  He denied informing Mr Yaworsky that he was by then a consultant of Salmi or otherwise an advisor.

72.  He denied that he told Frankie that he was a consultant of Salmi International and that he could not otherwise be involved for 6 months.  He denied that he had shown him a business card or that there was such a card.  However, he did state that a set of business cards was printed “for future use in the event that I were to represent [Salmi International] when visiting Pekame Oy’s (his present employer) suppliers in South Korea”, which seemed to contradict his denial of the card’s existence. He went on to state there was no business title on the cards, and that they have never left the office.

73.  As for the emails said to have been retrieved, he was not prepared to concede that they were emails, or in any way indicated disclosure of confidential information.  Further, that he and his wife had known Mr Stenhall for many years and were in regular touch by email.  But this was in essence social chitchat and casual discussions.  There was no invitation to join Salmi, at least not until that made to Mrs Evans in June 2005.

74.  Mrs Evans stated that apart from taking the accounts for reasons already given she had taken nothing belonging to Slik HK.  The so-called customer lists that Mr Glass accused them of taking did not exist. In order to notify contacts at Slik HK’s customers of the move to Salmi none would have been required.  She and those others of the staff who dealt with customers had no difficulty to recall details from memory; that included most email addresses.  Others were got from telephone calls.  In this way some 15 customers were notified, in about 60 emails, on or about 19 July, by herself, Casey, Cherry and Alex.  She had not asked Frankie to make any copies.

75.  She stated that she, Casey, Cherry and Alex have since drawn up a list of those customers contacted at this time. (I mention here that this list has since been disclosed to the Court and, subject to their undertaking not to reveal it to their clients, to Slik HK’s solicitors and counsel.  There are 63 contacts of which two are duplicated; some 27 customers would seem to have been contacted, assuming of course that the list is complete and accurate.)

76.  There was no mass photocopying of any confidential information.  The accounts were photocopied for routine reasons.  Likewise the copies of purchase and confirmation orders were also undertaken routinely.

77.  She agreed with Frankie’s account that he was asked to follow through outstanding orders of Slik HK.  But this was for the benefit of Slik HK; although they as staff had left and joined Salmi, they felt that they should ensure the orders were complete “since there was no longer any other staff at [Slik HK’s] office to handle them”.  It was for this reason that Alex retained the shipment book.  Salmi International received no benefit from their fulfilling these outstanding orders.

78.  She also stated that the plaintiff’s codes were not confidential and are freely accessible through Slik HK’s marketing materials.

79.  Neither she nor any other staff member have ever made copies of Slik HK’s lab dip record, another item said to be confidential to Slik HK; the lab dip book remains in the possession of Slik HK.

80.  Neither she nor any other staff member retained any price lists of Slik HK.  There was no reason to do so.  If as they were entitled to do they wanted to match or better Slik HK’s charges, all they needed to do was to ask the customer what he was paying.

81.  There was further evidence from Casey, Cherry, and Alex, all of whom confirmed, where they had the requisite knowledge, the evidence of Mr & Mrs Evans.  All claimed the so-called suspicious activity Frankie said was taking place was routine and was not for the benefit of Salmi International or to the detriment of Slik HK.

And Finally, from the Plaintiff ……

came the response; by Mr Glass in his 6^th affidavit.  More forensic material had been unearthed from the computer hard drives.  Email traffic revealed, in his eyes, that Salmi was developing a commercial position in Hong  Kong with assistance from the defendants, including Merlyn Davies, well before 20 June 2005.

82.  He noted, even on the defence’s account, that Evans and Stenhall were in communication about Slik’s financial affairs; further, even as the Administrations Officer of Slik HK, Liisa Evans was recruiting for Salmi International.

83.  He took issue with the general denial that confidential information had been copied and taken, or the alternative suggestion that what was copied and taken was not confidential.

84.  Another deponant entered the fray; called Paul Hilton.  He now holds the position of Senior Manager of Slik HK.  Using different software he had in the meantime been delving into the hard drives of his employer’s computers.  What he found was that a great deal of spreadsheets had been created or modified in June and July 2005 by Casey Ng or someone using her password.  They appeared to contain customer and pricing information copied from Slik HK’s Navision database.

85.  Mr Glass stated that this database is used to record customer order details and for calculating the pricing for each item being traded.  Access to it is restricted to selected staff.  This information, self-evidently confidential to Slik HK, was copied shortly before Casey Ng made an unannounced, unscheduled trip to Europe, when she was absent on “sick leave”.

Back to the Defendants

86.  There having been adduced for the plaintiffs fresh evidence that the defence wanted to address, with leave there was more from the defendants.

87.  Mrs Evans, supported by Casey Ng, adduced that the spreadsheets Mr Hilton had unearthed were used to edit by updating the information stored on the Navision database.  Further, they would be used as working papers for internal management.  Once they had served their purpose, they were deleted.  Casey Ng produced her passport, to show that between 24 June and 4 July 2005 she had been in Taiwan.  But interestingly there was no denial that she had travelled to Europe.

An Overview of the Evidence

88.  The foregoing is but a brief summary of that which has been filed.  Over the intervening passage of time between the first ex parte order and the last day of the inter partes hearing before me (whose 6 days was spread over the months of September and October 2005) has emerged a great deal of evidence.  As information came to light, forensically and otherwise, that was deposed to, and the defence had to be entitled to answer the allegations.  I have not counted the number of affidavits filed, but Mr Glass was the author of nine of them.

89.  What is central to the issue I have to decide is the extent to which Slik HK’s coding system, pricing, customer information and historical data is confidential to the Slik organization.  I have of necessity glossed over the competing accounts as to how the coding system, pricing and so on works.

90.  Counsel for both sides Mr Burns and Mr Scott SC spent a great amount of time arguing in turn that this was not confidential, or was.  Little has been conceded or otherwise agreed.  Mr Scott argued that this is not the time for fact finding with neither of the competing accounts tested from the witness box; Mr Burns on the other hand submitted that I could and should take an overall view and draw inferences where I could that warranted the interlocutory remedies sought; principally the springboard relief.  This because, by virtue of the finite period it is scheduled to run for to recover the unfair advantage achieved by misuse of confidential information, it is in fact final relief.

Issues of Fact

91.  I do not propose to make complete findings of fact; that is a matter for the trial judge, whose function I do not usurp.  But what has emerged in the evidence allows me to draw certain conclusions in the face of denials, or evidence to the contrary, in respect of those matters which I am satisfied are incontrovertible; this because the explanations are in turn disingenuous, far-fetched, unsustainable, or are clearly nonsense.

92.  Matters I am satisfied about include the following:-

(a)	there was communication, in particular email traffic, between Mr Evans and other key personnel of Slik HK with a potential and then actual competitor of Slik HK, for some 6 months prior to 18 July 2005;
(b)	the break out of 18 July had been secretly planned and orchestrated many weeks prior to the event.  Mr Evans knew of it, because he was a part of it;
(c)	even if the staff had given valid notices of their resignations, they had all spent some of that time working for Salmi.  This included, in a list not exhaustive:-
	(i)    the setting up of a website;
	(ii)   the renting of premises, and fitting out of those premises;
	(iii)  the copying of accounts;
	(iv)  the copying of material from the Navision database that is confidential to Slik HK;
	(v)   the copying of customer details;
	(vi)  the commencement of employment with Salmi International;
	(vii) the forwarding of the “important announcement” to Slik HK’s customers and agents;
(d)	information classified as confidential to Slik HK was taken for improper use by a competitor.  This included, in a list not exhaustive:-
	(i)    the accounts;
	(ii)    the spreadsheets deriving from the Navision data base;
	(iii)   customer details;
	(iv)   Slik HK’s codes and production orders and pricing;
	(v)    the shipment book;
(e)	Mr Evans having kept his silence as the plans for the transfer of allegiance of his staff  to a competitor firmed into reality, himself was doing the same as evidenced by his hands-on involvement throughout the relevant period.  I do not accept, because it is patently not so, that his participation was limited to an informal advisory role;
(f)	on the issue of Mr Evans’ restraints he contracted for and, in particular, the territory covered: the accepted view is that South East Asia does not include Hong Kong.  But the test being what from the surrounding circumstances was the intent of the parties objectively viewed it beggars belief that the territory where Slik HK is based and carries on business was to be excluded, whilst countries in the vicinity of Hong Kong were not.  What adds weight to this proposition is the geographical distance and comparative isolation of the Hong Kong branch of the Slik undertaking from head office.  In all the circumstances I find there is a strong prospect that Hong Kong was to be included.

The Springboard Relief

93.  What has emerged as irrefutable is that the workforce of Slik HK from Managing Director down were in breach of their contractual and or Common Law duties of fidelity owed Slik HK as the case may have been, up to the date their notices of termination expired.  That included their first days at Salmi International.  In respect of Mr Evans, that breach persists.  The plan was carefully thought out and put in place methodically.  It had a twofold effect; the first was, by the announcement sent out on Salmi International’s first day, carefully worded (“exactly the same products …..”) to achieve a seamless transfer of customer loyalty from Slik HK to Salmi International; the second, by virtue of the 100% walk-out secretly undertaken, to render Slik HK particularly vulnerable in preventing that from happening.

94.  This was achievable by the unlawful taking of and then misuse of confidential information by Slik HK’s former workforce for the benefit of Salmi International.  Only some has been acknowledged and given up.  Much of the remainder remains withheld.

95.  I am not prepared to rule on the extent to which that information falls into category two or category three as defined in  Faccenda.  I believe it matters not, for the misuse of it preceded the termination of the contracts of employment of the defendants in every case; hence that it was unlawful use.

96.  I conclude that misuse gave Salmi a headstart which is unfair given that it was unlawfully achieved, warranting springboard relief as applied for.

97.  I come now to the extent of that relief.

98.  The “confidential information” referred to in the order of Lam J was originally defined in the ex parte application before him and was fine-tuned before the order was made.  There was no equivalent definition when the order was replaced by undertakings.  By letter of 5 October 2005 Slik HK’s solicitors have proposed an amended definition, in the light as they put it of the plaintiff’s case as it has developed over the intervening weeks, and to simplify the same.  There is also submitted a simplified version of the actual proposed order.

99.  There is no proposed change to the duration of the springboard relief.  As dictated in Roger Bullivant that must be for a finite period; that being the prospective longevity of the advantage unlawfully obtained.

100.  I take a leaf out of Roger Bullivant to establish that.  Mr Evans contracted not to develop or otherwise make use of Slik HK’s confidential information for a period of 6 months; Mr Burns seeks an order for a period to expire on a date 6 months after Salmi International began trading.  That is based on the Roger Bullivant proposition that the parties as far as Mr Evans was concerned had contracted for protection to that extent.  I find that to be the appropriate time frame.  I find the proposed simplified form of relief also to be appropriate.

The Express Covenants in the Evans Contract

101.  There is as I have found ample evidence to support the proposition that Mr Evans was in breach of his contractual and fiduciary obligations prior to his departure from Slik HK and that has persisted thereafter.  I have stated that I do not find unreasonable the extent of the restrictions contracted for in the context of these proceedings as to time or location.  I find it appropriate for Mr Evans to be restricted as applied for.

Disclosure

102.  The defendants have continued to withhold Slik HK’s confidential information as now defined.  The orders asked for under this head are justified.

Orders

103.  There will be orders as applied for as amended in the following manner:-

“Confidential information” shall be as defined in the letter of Tanner de Witt to Deacons of 5 October 2005;

the relief sought at paragraph 3 be granted in terms of the proposed amendment attached to the letter of Tanner de Witt to Deacons of 5 October 2005.

Costs

104.  These are nisi.  Costs in any event are to the plaintiff.