TOTAL LUBRICANTS HONG KONG AND ANOTHER v. CHRISTOPHE DE LA CROPTE DE CHANTERAC AND OTHERS

HCA 1694/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1694 OF 2008

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BETWEEN

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DECISION (NO. 3)

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Introduction

1.  This Decision should be read together with the two Decisions that I handed down on 15 December 2009 and 24 February 2010.  The background circumstances had been sufficiently set out in the first Decision.  I will not repeat there here.

2.  By summons dated 3 June 2010, the plaintiffs applied to re‑amend its amended statement of claim.  It was opposed by the 1^st to 4^th defendants and the intended 5^th and 6^th defendants.  The substantive hearing took place on 11 January 2011 but went part-heard because of the gross underestimate of time by the parties.

3.  While the matter was pending, the plaintiffs and the 3^rd defendant agreed to stay all proceedings against her : see the consent order dated 4 July 2011.  Separately, the plaintiffs took out a summons dated 11 November 2011, seeking to replace the draft re‑amended statement of claim attached to the June 2010 summons.  By another summons dated 25 November 2011, the plaintiffs sought to replace the draft pleadings by the one attached thereto and applied for leave to withdraw the earlier summons dated 11^th. By letter dated 8 December 2011, the 1^st, 2^nd and 4^th defendants indicated that they no longer opposed the plaintiffs’ application for amendment.

4.  At the resumed hearing on 13 December 2011, the 1^st, 2^nd and 4^th defendants did not appear.  The intended 5^th and 6^th defendants maintained their objection.  I allowed the summons of 25 November 2011, tying the plaintiffs down to their proposed amendments in its final form as per the draft attached thereto.

Discussion

5.  Mr Bleach, SC, for the plaintiffs, submitted that it is the second attempt by the plaintiffs to get their pleadings in proper order.  They took into account my rulings in the two Decisions and tackled the deficiencies as identified accordingly.  Essentially, the proposed amendments fall into the following categories:

(1)     a properly pleaded claim of breach of confidence in respect of the confidential information of the 3^rd plaintiff in that the personal defendants, having such confidential information by virtue of their employment with the 1^st and 2^nd plaintiffs, disclosed such confidential information without authority to the 5^th and 6^th defendants;

(2)     a properly pleaded claim of conspiracy against all the defendants;

(3)     further particulars concerning the nature of the plaintiffs’ businesses and their inter-relationship;

(4)     further particulars of the breaches of duties by the personal defendants.

6.  Given the latest position of the personal defendants, I need not discuss the proposed amendments that concern them anymore.  They will all be allowed in full.

7.  Mr Bleach submitted that the 5^th and 6^th defendants are necessary and proper parties to the plaintiffs’ new currently proposed plea of conspiracy.  The essence of the plea of conspiracy is summarized in paragraph 1 of the re-amended statement of claim : “to commit breaches of the duties owed by D1-D4 to [the plaintiffs] (in contract, in tort and in equity) and to unlawfully make use of confidential information belonging to [the 3^rd plaintiff] in a concerted move to launch the [5^th defendant], which was dormant until 10 June 2008, as a competitor.”  It is an “unlawful means” conspiracy.

8.  The substantive plea is formulated thus :

“75F. In the premises, as pleaded at paragraphs 31 to 38 and 41 to 59, from early 2008, Ms Huot conspired with Mr Dujean, Ms Nehme, Dr Rao and Mr Ramesh on behalf of Gulf Oil International to set up and/or operate GOML to compete with the Plaintiffs, and take their actual or potential customers, suppliers, partners, staff and/or business opportunities, and keep these actions secret from the Plaintiffs.

75G. From at least early April 2008, Mr de Chanterac joined the conspiracy.

75H. Further:

(1) from in or about April 2008 Mr Lambert joined the conspiracy;

(2) from in or about June 2008 Ms Joniaux joined the conspiracy; and

(3) from the time it ceased to be dormant, namely 10 June 2008, GOML joined the conspiracy.

75I. The conspiracy involved the use of unlawful means, namely breaches of contractual, fiduciary and equitable duties as owed to Total Lubricants HK and/or Total Singapore as pleaded at paragraphs 69 to 75 above, and/or breach of Total Lubrifiants’ confidence as pleased at paragraphs 75A to 75E above.

75J. Each of the Defendants (or any two or more together) wrongfully and with intent to injure the Plaintiffs by the said unlawful means conspired and combined together to set up and/or operate GOML to compete with the Plaintiffs and take their actual or potential customers, suppliers, partners, staff and business opportunities.

75K. Pursuant to and in furtherance of the conspiracy pleaded above, the First to Fourth Defendants carried out the unlawful acts and means pleaded at paragraphs 69 to 75E above by which the Plaintiffs were injured.

75L. As result of the matters set out at paragraphs 75J and 75K above, the conspiracy has harmed the Plaintiffs and caused them loss and damage as pleaded at paragraph 80 below.

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80. As a result, the Plaintiffs have suffered (and will continue to suffer) loss and damage. Such loss will be particularised in full in due course, but as a consequence of the matters set out above, the Plaintiffs have faced the following effects on their businesses:

(1) the need to incur significant expenses to restore business continuity;

(2) the expense and loss of opportunity arising from the diversion of staff time from revenue-generating activity into responding to, and seeking to mitigate, the effects of the acts committed by the Defendants;

(3) the loss of customers to GOML, which would not have been lost if GOML had not been launched, or had been launched and become substantially operational over an extended period of time without the competitive advantage to itself (and competitive disadvantage to the Plaintiffs) of the actions of the Defendants as set out above and of the mass, unheralded recruitment of the Departing Staff. The best particulars which the Plaintiffs are currently above to provide of such loss of customers to GOML are set out in Appendix 3;

(4) reductions in revenue from seeking to retain clients.

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84. All the Defendants are liable to compensate the Plaintiffs for the loss and damage set out above.”

9.  In assessing the adequacy of the plea, I bear in mind the general principles as set out in Bullen & Leake & Jacob’s Precedents of Pleadings, 2008 Edn, Vol 2, at paras 51-01 to 51-02 at p 855.  Briefly stated, conspiracy is the agreement of two or more to do an unlawful act, or to do a lawful act by unlawful means.  An “unlawful means” conspiracy in which the participants combine together to perform acts which are themselves unlawful.  The claimant must plead the following necessary elements :

(1)   a combination or agreement between two or more individuals;

(2)   an intent to injure;

(3)   pursuant to which combination or agreement and with that intention certain acts were carried out;

(4)   resulting loss and damage to the claimant.

10.  Here, the plaintiffs have satisfied the four pleading requirements.

11.  First, the plea of agreement and the time when the defendants joined the conspiracy can be found in paragraphs 75F to 75H.  Paragraph 75F refers to paragraphs 31 to 38 and 41 to 59, which set out the steps that the personal defendants and the various representatives of the 6^th defendant had taken in setting up the 5^th defendant as a competing business.  Paragraph 75I refers to paragraphs 69 to 75 and paragraphs 75A to 75E respectively.  Paragraphs 69 to 75 detail the breaches of contractual, fiduciary and equitable duties owed by the four personal defendants.  Paragraphs 75A to 75E particularize the claim for breach of confidence.

12.  Mr Barlow, SC, for the intended 5^th and 6^th defendants, submitted that 5^th defendant, the very competing business set up by the alleged conspiracy, cannot possibly be a party to it.  The basis of his submission, it would appear, is that the 5^th defendant had not committed any of the acts complained of which constituted the conspiracy.  Mr Bleach relied on Revenue and Customs Commissioners v Total Network SL [2008] 1 AC 1174.  There, the House of Lords held that criminal conduct at common law or by statute, engaged in by conspirators as a means of inflicting harm on the claimant, could constitute unlawful means and was actionable as the tort of conspiracy whether or not the conduct of a single individual conspirator would be actionable at the suit of the claimant as some other torts.  The conspiracy was not some form of secondary liability. Mr Bleach submitted that the 5^th defendant is therefore liable as a conspirator even if it had not otherwise committed any independent wrong.  I agree with Mr Bleach. I rule that the 5^th defendant is plainly a necessary and proper party to the plaintiffs’ claim based on the unlawful means conspiracy.

13.  Second, the plea of intent to injure is met by paragraph 75J.

14.  Third, the plea of carrying out the acts with the intention to injure is set out in paragraph 75K.

15.  Fourth, the plea of the resultant loss and damages is satisfied by paragraph 80.  I fully accept that further and better particulars of the loss and damage should be provided.  But it is trite that lack of further and better particulars is not a ground for striking out.  Mr Barlow submitted that some of the alleged items of loss and damage were in fact costs and management expenses incurred by the plaintiffs.  They do not constitute loss and damage as such.  For some of the items, that may well be the case.  But it does not mean that all the particulars are not proper items for the resultant loss and damage arising from the conspiracy.  Mr Barlow’s complaint is not a sufficient ground for striking out. 

16.  Mr Barlow took the following additional points in opposing the amendments.

17.  He submitted that the plaintiffs’ present application is an abuse of process.  He argued that the court had already struck out and dismissed the plaintiffs’ claim of conspiracy against the 5^th and 6^th defendants.  It would be an abuse of process if they are now allowed to resurrect the claim.  He referred to the well known cases such as Yat Tung Investment Co Ltd v Dao Heng Bank Ltd & Ors [1975] AC 581 and Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 in support.  I need not go into the cases in detail.  Plainly, what the plaintiffs have done here is not an abuse of process.  I previously struck out and dismissed their claim against the 5^th and 6^th defendants purely on a pleading point.  That is to say, their cause of action as then pleaded was deficient.  What they do now is to formulate their claim properly.  They are not trying to resurrect the exact plea, which had been struck out, without improvement.  If that is what they are doing, then the principle of res judicata or abuse of process would apply.  I reject Mr Barlow’s submission.

18.  Mr Barlow then submitted that the present application offends the CJR imperatives enshrined in Order 1A and 1B of the Rules of the High Court.  I note that the plaintiffs have taken almost 3 years to properly formulate their claims against the 5^th and 6^th defendants.  The delay on any view is highly unsatisfactory.  But I do not think the court should penalize the plaintiffs by striking out.  It is too drastic a step to take.  Any prejudice caused to the 5^th and 6^th defendants can be properly compensated by costs and if necessary, an appropriate adjustment on interest on any judgment sum that may be awarded against them after trial.

19.  Mr Barlow finally submitted that by choosing not to appeal the two Decisions, the plaintiffs had deprived the 5^th and 6^th defendants the right to cross appeal against my ruling of not striking out their claim on the ground of abuse of process.  This submission is irrelevant to the question whether I should allow the proposed amendments now presented before me.

Conclusion

20.  For the above reasons, I allow the plaintiffs’ application.

21.  The parties are directed to lodge with the court their written submissions on costs within the next 21 days.  I will then dispose of it on paper.