INTERGROUP SHIPPING (ASIA) LTD v. YEUNG YU MING

HCA 1680 /2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1680 OF 2005

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J U D G M E N T

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1.  The plaintiff, Intergroup, is a freight forwarder which specialises in shipping goods manufactured in China to Australia for a retailer, Bunnings, who are the largest DIY retailers in Australia.  The defendant, Mr Yeung is a computer specialist and programmer who was employed by the defendant.

2.  Pursuant to a contract of employment Mr Yeung has prepared certain computer programs which deal with the documentation required for the shipping of goods from China to Australia.  They are programs that are essential to Intergroup’s business, and to Bunnings’ business.  There is no doubt that the proprietary rights in the computer programs belong to Intergroup.

3.  For reasons which are irrelevant to the present issues, but which may be explored should this matter ultimately proceed to trial, there was a breakdown in the trust and confidence that had formerly existed between the management of Intergroup and Mr Yeung.  In late August 2005, Mr Yeung was suspended from duty with Intergroup.  At that time difficulties had been encountered with the computer programs, and the management of Intergroup considered the assistance of Mr Yeung to be essential to resolve those difficulties.  At the time of Mr Yeung’s suspension those difficulties had not been resolved.

4.  On 30 August 2005, Intergroup obtained an interlocutory injunction, which required Mr Yeung in to deliver to Intergroup complete, accurate, and up-to-date versions of the programs, together with their source codes and user instructions.  On 1 September 2005, Intergroup, taking the view that Mr Yeung had not complied with the injunction, obtained an order for leave to apply the committal for breach of the injunction.  An order for committal was made on 2 September 2005, and consequent upon that order Mr Yeung was committed to jail.

5.  He has subsequently been released, but Intergroup still complain that he has not met the terms of the order.  Intergroup accept that certain source codes have been supplied to them, but they say that those source codes do not properly work, and they believe that Mr Yeung still holds the genuine source codes.  Mr Yeung has apparently supplied a document, comprising some two or three pages, which he says is the user manual for the programs.

6.  Intergroup now come before me seeking further orders for the production of the source codes, and requiring Mr Yeung to prepare and deliver to them user manuals in relation to the programs.

7.  When the matter first came before me I expressed the view that there appeared to be little doubt that in terms of the contract of employment between Intergroup and Mr Yeung, Mr Yeung would be obliged to supply the source codes and to supply a user manual for the programs that he had written.  Mr Yeung was not present at that hearing.  He has apparently had a form of nervous breakdown following the disintegration of relationships between the parties.  Although he had been released from hospital, it was plain that his solicitors were having difficulty in obtaining clear instructions from him.

8.  I accordingly adjourned the matter to allow his solicitors to convey to Mr Yeung the views that I had expressed, in the hope that he would see his way clear to agreeing to meet what appeared to be plain obligations under his contract of employment.  I invited the solicitors to remind Mr Yeung that if he did not meet those obligations, and he were later found liable for breach of his contract of employment, the damages that might follow could well be substantial.  Mr Yeung was in a position to greatly reduce those damages by supplying the source code and preparing the appropriate user manuals.

9.  When the matter came back before me I was informed that Mr Yeung was not willing to take any further steps.  The position that he took was that he had supplied the source codes, and if there were any difficulty in operating the program from those source codes, it was not his responsibility but that of Intergroup.  As to the user manual, he said the programs were simple and straightforward, and the user manual that he had supplied was all that was required to meet the situation.  In those circumstances Mr Li for Intergroup sought orders varying the interlocutory injunction that had been issued on 30 August 2005, to require the delivery of the source codes and the user manual.

10.  At the hearing I raised with Mr Li the question of whether or not the Court should issue an interlocutory injunction to enforce a contract of employment.  Mr Li accepted that ordinarily contracts of employment or contracts involving special personal relationships would not be enforced by injunction.  His submission was that this situation was not one which sought to enforce a contract of employment, but one which sought restoration of a situation and was different.

11.  As to the supply of the source codes, Mr Li accepts that a data compact disc has been supplied by Mr Yeung, which purports to contain the source code.  He says however that because the programs do not operate properly, the injunction ought to issue.  Mr Yeung says that if the programs do not operate properly, Intergroup are at fault in the way in which they are doing it, or alternatively have themselves corrupted the data.  Who is right in that situation is plainly a matter for trial.  To impose further obligations on Mr Yeung now, is to reject his contention, a conclusion that I am unable to reach in interlocutory proceedings.  I note here that Mr Yeung’s affidavit in relation to these matters is 67 pages long, and that of the managing director of Intergroup, in reply, is 89 pages.  There are substantial factual differences between the parties which plainly cannot be resolved in an interlocutory hearing.

12.  The preparation of a user manual is an exercise that requires the performance of services pursuant to the contract of employment by Mr Yeung.  The order sought by Mr Li seeks to give Mr Yeung, in relation to three different programs, respectively, 30 days, seven days, and one day from the date of the order to complete the documentation.

13.  In cases where the contract to be enforced involves such matters as the performance of work resulting in a particular result it is necessary to consider the nature of the result before issuing the injunction.  It is more likely that the court will exercise its discretion in favour of the plaintiff if it will be relatively easy for the defendant to take sufficient steps to bring the wrongful state of affairs to an end and where it will be clear that the wrongful state of affairs has been brought to an end.  If for example, a plaintiff seeks the removal of an unlawful signboard from a building, the matter is clear, straightforward, and it is plain whether or not the signboard has been removed.  Whether such an injunction has been complied with is a straightforward matter.

14.  The production of something in the nature of a user manual however, is quite different.  In the course of argument I asked Mr Li what would happen if the user manual produced were, say, 50 pages long, but that Intergroup considered that it was not sufficient.  Mr Li said that that was a matter that would have to be dealt with at the time.  An interlocutory injunction cannot be issued on such a basis.  An injunction, if it is to be issued, must be clear and precise, not only so that the subject of the injunction may know precisely what he is obliged to do, but also that in the event of enforcement proceedings, the Court may be able to say with clarity whether or not the injunction has been met, or breached.

15.  Mr Yeung says that he has already completed a sufficient user manual.  Mr Li says that it is not enough, but is unable to say in clear terms what would be sufficient.  Again, whether or not what has been produced is sufficient as a matter for trial.  To require the completion of further manuals now is to reject Mr Yeung’s contention now.  Again, that is not a conclusion that I can properly reach in interlocutory proceedings.

16.  I am not satisfied that injunction in terms sought would be sufficiently clear to be enforceable that it ought to issue.  I am not satisfied that there has been such a breach of the orders made on 30 August 2005, that any further orders ought to issue.

17.  I should make it clear that I do not accept the contention of Mr Chong at any issue of hardship arises, on the part of Mr Yeung, on the evidence as it is presently before me.  Mr Yeung has been able to instruct solicitors and counsel, and has prepared an affidavit that runs to some 67 pages and contains in 11 different exhibits.  He is plainly perfectly capable of undertaking appropriate work.

18.  For the foregoing reasons the summons dated 30 August 2005, as filed in an amended form on 18 October 2005, is dismissed.

19.  I would caution Mr Yeung against seeing this decision as a victory.  All he has succeeded in doing is closing the door to an opportunity he had to resolve this matter speedily and at as little cost as possible to him.  At the same time he has opened the door to a very substantial damages claim against himself.  Intergroup are now left with no option but to employ outside consultants to achieve the proper operation of the computer programs.  If it should ultimately be found that Mr Yeung was in breach of his contractual terms of employment, it may well be that he will have to meet the cost of those outside consultants together with any other damages which might arise from the consequences of his actions.  Mr Yeung needs to remember that it is Intergroup’s contention that if the programs are not made to operate properly, there is a risk that they could lose Bunnings as a client.  In such circumstances, the damages may be enormous.

20.  There are many issues still to be resolved between the parties, and all questions of costs must await the resolution of those issues.  For those reasons all questions of costs are reserved.