GFI GROUP PRIVATE LTD v. DANIEL CHRISTOPHER JOHN PRINCE

HCA 170/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 170 OF 2008

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J U D G M E N T

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Introduction

1.   This is a summons by the Defendant, Mr Prince to stay this action against him by the Plaintiff, on the basis that Hong Kong is forum non conveniens, in favour of the High Court of Singapore.  On 1 October 2005, the Defendant became employed by the Plaintiff as a currency broker at its Singapore office to work as a member of its Emerging Markets FX Options Desk.  The Plaintiff is an inter-bank money broking firm dealing with equity, bond and foreign exchange related products.  It is a member of the substantial GFI group and is a subsidiary of GFI Inc. which is listed on the NASDAQ at New York.

2.   A description of the Plaintiff’s business appears in Paragraphs 10 and 11 of the first affidavit of Mr Russell Bennett, who is the Director of Legal Operations for GFI Asia Pacific, which includes the Plaintiff.  It will be helpful if I set out these two paragraphs here:

“	10.	The business of GFI and the GFI group is conducted by electronic trading systems and by telephone, and operates on an almost constant basis around the world as the various markets and exchanges on which products are traded, are open.  This includes via offices in the world’s leading financial markets including Hong Kong, Singapore, Tokyo, London, Paris and New York.  The vast majority of such transactions are between major international banks with both their own funds and on behalf of their clients.  In Asia Pacific GFI Group operates through several separate legal entities and in several countries/locations, but operates as a single regional business.  These include:-
		Hong Kong – GFI (HK) Securities LLC and GFI (HK) Brokers Limited
		Singapore – the Plaintiff GFI Group Pte Limited
	11.	There is frequent interaction between the regional offices and several ‘desks’ (which operate as business units specialising on a particular financial product or area — such as Emerging Markets Foreign Exchange) have clients throughout the region which whom they deal by phone and electronic communications.  Indeed desks can often be geographically split and operate as a single operation including by having dedicated open phone lines and speaker boxes.  As such the geographical location of brokers in a particular products is mostly relevant to marketing activity.  Travel between the various financial centres around the region is frequent and very common.”

3.   For present purposes, the salient features of the Defendant’s contract of employment are that he was employed to work for the Plaintiff at its Singapore office and that this was a fixed term contract for a minimum term of four years, which is due to terminate at the end of September 2009.  It is a contract which is to be governed and construed according to the laws of Singapore.  The contract incorporates the Defendant’s staff Handbook, Clause 4.2 of Part 2 which is in these terms:

“	Should your employment be terminated on notice, given by either party, the Company reserves the right to require you not to work at the Company’s premises during all or any part of the notice period, although during such period both you and the Company shall continue to comply with the mutual obligations under this agreement to include payment to you of your basic salary and consideration of which you undertake during the said period not to be employed by, or carry out any work for any other person, firm or company without the Company’s prior written consent.
	For the avoidance of doubt, you will not during your notice period contact or deal with clients or employees of the Company or enter onto the premises of the Company without the prior written consent of the Company.
	During any period of notice to terminate your employment you will not set up, carry on, be employed in, provide services to, be associated with, or be engaged in or interested in any other business and in particular but not by way of limitation any other business which is or is intended to be similar to or competitive with the business of the Company and with which you were concerned at any time during the 12 months immediately preceding the date of the notice to terminate your employment …”

4.   What has brought about this action is that on19 November last year the Defendant handed in a letter of resignation to a Mr Davidge, who is a senior member of the Defendant’s foreign exchange division.  It is in bland terms — it says:

“	This letter is formal notice of my resignation with immediate effect.  I believe this is in the best interest of both the Company and myself …”

5.   This resignation came as a surprise to the Defendant’s superiors.  According to the Plaintiff, the defendant at that stage did not provide much by way of his reasons for wanting to leave, merely referring to his general dissatisfaction with the Emerging Markets Foreign Exchange Desk.  Some effort was made to retain his services and as he was due to shortly go on holiday, he was asked to start his holiday early and reconsider his position.  On 23 November, the Plaintiff’s solicitors in Singapore sent the Defendant a letter telling him that his resignation was in breach of his contract of employment and that the Plaintiff did not accept this as a valid termination of his employment and that it considered that all its terms remained effective and enforceable.  In that letter he was given the option to say whether he was willing to continue in his employment with it or, provide an undertaking that, amongst other things, for a period of 9 months from 19 November he agreed to be placed on “garden leave” as an employee of the Plaintiff and to receive his salary and other contractual benefits and also, I need only summarise the following, not to contact or deal with any of the Plaintiff’s clients, not to work for any competitor of the Plaintiff including, amongst other named competitors, the BGC group and finally not to take up any other form of employment without prior written approval of the Plaintiff.

6.   On 17 December, the Defendant replied to say that he no longer considered himself an employee of the Plaintiff, that he had no intention of disclosing any confidential information to any third party and that at some point in the future he planned to resume his career in the same industry as this is all he knew and all that he could do.

7.   For present purposes, the next thing that happened is that on 7 January this year it came to the Plaintiff’s notice that the Defendant had started work for BGC in Hong Kong, they being direct competitors of the Plaintiff in this field.  Accordingly, the Plaintiff has brought this action to restrain the Defendant from continuing in that employment until August this year taking him to the end of the 9-month period of “gardening leave” required by the Plaintiff, and for damages for breach of contract and other ancillary relief.  Against that background, I now turn to the application for the stay.

The Approach

8.   The principles are so well known that they hardly require repetition.  Stated briefly, the burden lies on the applicant for the stay to show that the court should exercise its discretion to grant the order sought and in doing so must show not merely that Hong Kong is not the natural or appropriate forum for the trial but that there is another forum which is clearly and distinctly more appropriate than Hong Kong.  See The Spiliada [1986] AC 460.  In carrying that burden the applicant also needs to show that it would be right to deprive the Plaintiff of the right to sue in Hong Kong.  See The White Book 2008, 11/1/10 page 105 et seq.  What is involved is a three-stage process.  Firstly, is it shown by the Defendant that Hong Kong is not only not the natural and appropriate forum for the trial, but that there is another suitable forum which is clearly and distinctly more appropriate than Hong Kong?  If the answer to that question is yes, will a trial at that other forum deprive the Plaintiff of any legitimate personal or juridical advantages.  Then if the answer to that is yes, the court has to balance the advantages of 1, against the disadvantages of 2.  Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant, provided the court is satisfied that notwithstanding such loss, substantial justice will be done in the available appropriate forum — proof of this vesting on the party applying for the stay.  See again The White Book, 11/1/10 page 107.

9.   I will traverse these stages in turn, insofar as that may be necessary on the facts of this matter.

Is Hong Kong Not Only Not the Natural and Appropriate Forum, But Singapore Is Clearly and Distinctly More So

10.   This aspect is so often conclusive of the application.  I have had the advantage, as one might expect, of very helpful and persuasive submissions from Mr Jin Pao for the Defendant in support of the stay and, from Mr Burns SC, for the Plaintiff.  And, as so often happens, this is a well balanced matter with much to be said on both sides. 

11.   The first thing that needs to be remembered is that the Plaintiff comes to this court as of right by triggering the court’s jurisdiction by virtue of having personally served the Defendant in Hong Kong.  The Defendant therefore needs to positively displace this jurisdiction by force of cogent argument in favour of the High Court of Singapore.

12.   I propose to set out the various points made by Mr Jin Pao and Mr Burns’ response which, as will be seen, amount to why this court should retain its jurisdiction.  In embarking on an exercise such as this, it is always helpful to remember the advice of Mr Recorder Ma, SC, as the Chief Judge then was, in Rambas Marketing Co. LLC v David Chow Kam Fai [2001] 3 HKC 250 where at page 255B-C, he had this to say:

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The approach in forum non conveniens applications is not just an exercise in loading up with factors which point to any particular jurisdiction.  The court is required to focus on the appropriateness of a forum from the point of view of the trial of the action.  This could in part explain the need to identify the particular court in favour of which the action is to be stayed, for it is to the appropriateness of that court for the trial that the court’s attention is directed.”

13.   Mr Pao, I think, places at the forefront of his submissions that this is an essentially a Singapore employment dispute involving a Singapore-based employer and an employee, employed in Singapore to perform his duties in Singapore, under a contract governed by Singapore law.  I will need to develop this a little further in a moment, but what Mr Pao gets from this is that the High Court at Singapore will therefore be far better placed to construe this contract than a judge sitting in the Court of First Instance in Hong Kong.  And so, apart from this dispute’s physical connection with Singapore there is the very real added feature that the parties have agreed to resolve their disputes in accordance with the law of Singapore.

14.   It strikes me that this group of features are what really favour the application for a stay.

15.   Mr Pao has also advanced some other, in my judgment less weighty, features.  He says the Defendant and his family continue to reside at Singapore.  This being said, the Defendant is now physically spending his working week in Hong Kong and only returning to Singapore to be with his wife and children there at the weekend.  I therefore attach very little to this feature.  He has also suggested that Singapore would be more appropriate for the convenience of the witnesses.  As matters presently stand, the Plaintiff proposes calling three Singapore-based employees who can very conveniently fly to Hong Kong for the trial and the Plaintiff is content for that to happen and to bear the expense of that.  Two other witnesses have now transferred to London and New York respectively and so it matters not whether they go to Singapore or come here to give evidence.  A subsidiary point made by Mr Pao in this regard is that apart from witness convenience the presence of the three Singapore-based witnesses serves to underline this case’s connection with Singapore.

16.   In terms of the Defendant’s convenience, as distinct from that of the Plaintiff, Mr Pao has submitted that it would be more easy for him to litigate in Singapore.  Nevertheless, it strikes that, if anything, his convenience is best served by litigating here where he spends his working week and where he has already instructed international solicitors well capable of dealing with these issues and where he can more conveniently give instructions during the working week.  Although, it also has to be said that, just as the Plaintiff’s do not mind bringing their Singapore witnesses to Hong Kong, it should not be held against the Defendant that he prefers conducting litigation in Singapore and instructing lawyers there for that purpose although he spends his working week in Hong Kong.  I attach very little weight to these features.

17.   Mr Pao has drawn attention to the fact that where the Plaintiff is suing for damages as part of the remedies that he is asking for and the Defendant has no assets in Hong Kong, but he may well have in Singapore, that this factor should also sound in his favour.  Mr Burns’ response to this, which is to be preferred, is that the Plaintiff’s principally sought remedy is an injunction prohibiting him from working until August this year.  That remedy is particularly effective in a situation where the Defendant is working here in Hong Kong and that as to any monetary award that it receives, it is prepared to seek enforcement elsewhere where that might be most appropriate including Singapore.  It strikes me that all of the features which I have just discussed in this and the previous paragraph, whilst relevant, are readily answerable and will ultimately have very little part to play in the outcome of this application.

18.   I now return to what I judge is the most important consideration for the Defendant which is that this is a Singapore employment contract, performed in Singapore and falling to be construed in accordance with Singapore law.  Mr Pao has made a number of points about this.  Firstly, that the High Court of Singapore is best placed to resolve such a dispute, which is undoubtedly right, although not of itself decisive.  Added to this is the fact that if the matter proceeds in Singapore there will be no need to call Singaporean legal experts to prove Singapore law, which would be the case for a Hong Kong trial.  Added to this is the fact that if the trial proceeds in Hong Kong, the foreign law will need to be proved and the trial judge will have to make findings about what the relevant law is.  On appeal from his decision, the Court of Appeal will be required to treat those findings as findings of fact which, as such, are more difficult to overturn than a mistake of law.  The correctness of this particular analysis of the situation by Mr Pao is reflected in the judgment of Mustill LJ, as he then was, in Muduroglu Ltd v T.C. Ziraat Bankasi [1986] 1 QB 1225 at 1246E: Mustill LJ observed that:

“

Moreover, although it does not follow that the judge at first instance here is more likely to misunderstand or mis-apply the law than his counterpart abroad, the fact that any appeal is treated as a question of fact rather than law does make it more uncertain whether any mistake that may be made is going to be put right.”

19.   Whilst this may be so, Mr Burns counters by saying that Hong Kong courts are very frequently called upon to decide what foreign law is in resolving disputes.  The task in this case is made easier by virtue of the fact that the applicable law of Singapore governing this dispute is virtually identical to that of Hong Kong, which is not surprising given their common heritage.  This therefore makes it more likely that a Hong Kong judge will get Singapore law right on this issue and if he gets it horribly wrong, it is open to the Court of Appeal to correct him provided it can be shown that his interpretation of the law is one that no reasonable court could have arrived at.  In this regard, see generally the remarks of Mustill LJ in Muduroglu supra at page 1246B-E, as to the factors which bear on the trial in England (and for these purposes, Hong Kong) of a case where the judge will have to apply foreign law.

20.   Most importantly in this case, Mr Pao has referred to and relied heavily on the fact that there are public policy considerations which the Singapore courts pay very careful attention to in deciding whether to enforce restraint of trade clauses of the type relied on by the Plaintiff in this case.  Both parties experts are agreed that the court in Singapore will wish to consider whether there are any public policy considerations involved in the case before it.  At page 189 of the bundle, the Defendant’s expert, echoing the same point made by the Plaintiff’s expert, refers to the case in Singapore of Buckman Laboratories v Lee Wei Hoong [1999] 3 SLR 333 where an injunction was refused because the judge considered that the employer was not seeking to protect its legitimate interest but was in fact trying to inhibit competition by enforcing a restraint of trade clause by injunction.  See also para.37 [page 71] of the Plaintiff’s expert’s report.

21.   Because public policy considerations come into play, Mr Pao submits that such matters should fall to be decided by the courts of the law of the contract which are far better placed to decide such matters.  For this he relies on the English Court of Appeal’s decision in Du Pont v Agnew [1987] 2 Lloyds Law Reports 585 more particularly on the judgment of Bingham LJ, as he then was, at page 594.  This was an application to set aside service of a writ out of the jurisdiction, with one party arguing in favour of the Commercial Court in London and the other for the courts of Illinois.  I propose to set out here what Bingham LJ said about the effect of public policy in relation to where a case should be litigated.  The facts of that case do not matter and so, unavoidably, in citing this passage reference will have been made to the facts of that case which will not be readily intelligible without reading the report as a whole nevertheless, the citation will make clear the principle that public policy considerations should be adjudicated on by the courts of the jurisdiction where they apply.  This is the passage:

“	Issue (3) would, I think, arise somewhat differently in the Illinois action as compared with the present action.  In the Illinois action, the primary issue would concern a corporation’s right to indemnity against punitive damages.  Where the acts giving rise to the award of punitive damages are those of very senior management, it seems that there can under the law of Illinois be no right to indemnity.  But it is said that acts may be done by less senior management which will found an award of punitive damages but not deprive the corporation of a right to indemnity.  This question of law would have to be resolved and the appropriate findings of fact, if any, made.  Then, if the Illinois Court held English law to be the proper law of the contract, it would be appropriate for that Court to consider as a matter of comity what, if any, effect should be given to the English law on this subject.
	Here, the first question would be whether there is any rule of English public policy which precludes Du Pont and Endo from recovering an indemnity.  The insurers argue that there is, Du Pont and Endo that there is not.  There is no decided case at all close to the present.  The question is open.  If the English Court answered this question in favour of Du Pont and Endo, it might then be appropriate to consider as a matter of comity what, if any, effect should be given to the Illinois law on this subject.
	In either forum some factual enquiry could arise.  For reasons already given I think this would be very largely documentary and manageable in either forum.
	There is, however, one factor which arises at this point and which is in my judgment heavily in favour of the English forum.  Du Pont and Endo’s policies were, as I have held, governed by English law.  They are accordingly entitled to such indemnity as on a proper construction of the policies English law affords then; no more of course, but certainly no less.
	This Court is necessarily better placed than any other to rule on that question.  Du Pont and Endo have been convicted of no crime, and charged with none.  There is no decided authority in English law which denies them an indemnity.  If English public policy is to be held to deny the right to indemnity in these circumstances, then this Court and no other must so hold.  I do not regard this as a question capable of fair resolution in any foreign Court, however distinguished and well instructed.  It might, I accept, be necessary for this Court to consider materials showing the Illinois law on this subject, but that law is well (if not finally) developed and I do not think this Court would be called on to make any fine rulings on legal principle.  It might well be that no determination would be called for at all, since the conclusion that an insured’s right to indemnity depended on the chance where the claim against him happened to be brought might well be thought to introduce an unacceptably random element into a very important contractual undertaking.
	In the Illinois action attention would, I think, necessarily be directed to ascertaining not what cover the policies according to their proper law afford, but what cover the law of Illinois permits.  In the interests of justice to all parties, this should not in my judgment be so. It may not be as relevant, but it is at best a subsidiary, question.  The primary question, as I regard it, is the effect of this contract as a matter of English public policy, and that is a question which I do not think any foreign Judge could conscientiously resolve with any confidence that he was reaching a correct answer.”

This being said, Mr Pao has not surprisingly placed great reliance on this aspect of the matter.

22.   In reply Mr Burns submits that no public policy considerations arise.  The issue is the relatively simple one of whether the Defendant is in breach of his fixed term contract, which a court in Hong Kong, applying Singapore law, will have no difficulty in deciding one way or the other.

23.   Whilst that is undoubtedly the case, it seems to me that when it comes to remedies, assuming for the moment that the defendant is held to be in breach of his contract by purporting to terminate it in the way and for the reasons that he has done, the court will have to be cognisant of public policy in Singapore and to apply such policy as is applicable in cases such as this in deciding whether to grant an injunction rather than just damages.  I do not think that Mr Burns can avoid this aspect and applying what Bingham LJ has said, it strikes me that Singapore is the correct jurisdiction to apply its public policy considerations on this aspect of the law rather than a “foreign” Hong Kong judge.

Conclusions

24.   Ultimately, in a well balanced matter such as this, it strikes me that Mr Pao has been able to show, having regard to the issue of public policy considerations arising on the law of the contract, that Hong Kong is not only not the natural and appropriate forum, but that Singapore is clearly and distinctly more suitable.  When viewed overall, where so much of this dispute is clearly connected with Singapore, which finds its expression in that first group of considerations that Mr Pao has relied on, added to the public policy aspect which I have just referred to, the balance must very clearly tip in favour of the High Court of Singapore.  In coming to this conclusion, I have not lost sight of the fact that the Defendant is properly amenable to the jurisdiction of this court, as Mr Pao rightly accepts, and that the Plaintiff must now be forced to start again in Singapore, although I should observe that the action here has barely started and the Defendant has indicated through Mr Pao that he will provide lawyers is that jurisdiction where he can be served with a writ.  The truth of the matter is that when one stands back and looks at this case, the only feature about it favouring the Plaintiff is that the Defendant is in Hong Kong, properly served and where he works by virtue of which he is said to be in breach of his contract of employment with it.  Everything else is either neutral or clearly favours the Singapore connection where I have no doubt justice can and will be done between the parties.  Accordingly, this action must be stayed in favour of the High Court of Singapore.

25.   Mr Burns has submitted that if I order a stay I should put the Defendant on terms in the nature of a temporary injunction of the type sought by the Plaintiff’s summons, until such time as the Singapore court becomes seized of this same application.  I do not consider that I can logically make such an order.  This application can be made, as a matter of urgency, to the judge at Singapore where factually the Plaintiff is now ready to mount such an application.

26.   I propose to therefore make no order on the Plaintiff’s summons for the injunction although I suspect that the order staying the action as a whole is sufficient to dispose of that as well.  I will now hear the parties as to costs.

Costs

27.   Having heard counsel for both parties, I direct that the costs of the action and of the application for a stay should be to the Defendant.