N.P. KING (HONG KONG) LTD AND ANOTHER v. LAM WING LAM AND ANOTHER

HCA 1364/2022

[2026] HKCFI 5167

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1364 OF 2022

(Transferred from DCCJ 554 of 2022)

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J U D G M E N T

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I.  INTRODUCTION

1.  This is the trial of an employment dispute.

II.  PARTIES

2.  The 2^nd Plaintiff (“Purdon King”) is the wholly-owned subsidiary of the 1^st Plaintiff (“NP King”) (collectively, the “Plaintiffs”). One of their directors is Ms Sim Su San (“Ms Sim” or “Susan Sim”). Another director is her husband Andrew Lee (“Andrew”). Purdon King is a corporate vehicle to run the main business of NP King, namely, an agency business representing industrial brands in Europe, Australia and the USA, and engaging in services of sourcing for western companies goods, products, tools and machinery parts from China. NP King is also a corporate vehicle to hold assets generated from their businesses and to employ employees to work for the business run by Purdon King.

3.  A major customer of the Plaintiffs was ATA Group.

(1)  ATA Group is a manufacturer of precision engineering products.

(2)  On or around 29 February 2012, Purdon King and ATA Group entered into a Sourcing Management Service Contract, subsequently supplemented by two agreements dated 30 August 2013 and 22 January 2021 (collectively, “Ps’ ATA Agreement”).

(3)  In September 2021, the 1^st Defendant (“Wilson Lam”) and the ATA Group entered into a Management Contract (“D1’s ATA Agreement”), which Wilson Lam signed on 9 September 2021 but wrote below his signature the date of “11 October 2021”.

(4)  On or around 4 October 2021, ATA Group issued to the Plaintiffs a 6-month notice to terminate Ps’ ATA Agreement. In other words, 3 April 2022 was the last day of Ps’ ATA Agreement.

4.  For sourcing goods from China, the Plaintiffs had, among others, the following suppliers (the “PRC Suppliers”) for ATA Group:- 

(1)  Dongguan Ming Yi Mold Parts Co., Ltd. (“Mingyi”); 

(2)  Chengdu Tianhe Tungsten Carbide Tools Co. Ltd. (“Tianhe”);

(3)  Wenzhou Hongfeng Alloy Co. Ltd. (“Hongfeng”); and

(4)  Nanjing Panqi Precision Machinery Co Ltd. (“Panqi”).

The PRC Suppliers mainly were to supply goods to ATA Group.

5.  Wilson Lam is an ex-employee of NP King.

(1)  Wilson Lam entered into an employment contract dated 23 February 2006 (“D1’s Employment Contract”) to work for the Plaintiffs. The job title was “Sourcing Engineer”.

(2)  In the course of employment, the Plaintiffs gave a computer (“D1’s Computer”) and an email address (“D1’s Email Address”) for carrying out Wilson Lam’s duties.

(3)  As early as 2012, Wilson Lam had been assigned to take charge of all works and services rendered by the Plaintiffs in respect of all transactions (the “ATA Transactions”) between ATA Group and the PRC Suppliers pursuant to Ps’ ATA Agreement and the Plaintiffs’ agreements with the PRC Suppliers: see Re-Amended Statement of Claim §15.

(4)  On 10 September 2021, Wilson Lam issued to the Plaintiffs a one-month notice of resignation, and on 10 October 2021 (the one-month notice having expired), he ceased to be the Plaintiffs’ employee.

6.  The 2^nd Defendant (“Wilson Link Ltd”) was incorporated by Wilson Lam on 16 June 2021. Its company secretary, appointed the next day (17 June 2021), is Wilson Lam’s wife.

7.  Wilson Lam and Wilson Link Ltd shall collectively be referred to as the “Defendants”.

III.  D1’S EMPLOYMENT CONTRACT

8.  D1’s Employment Contract contained the following terms:-

“We are pleased to offer you the position of Sourcing Engineer.

…

G. Job Responsibilities

1. Technical assessment of vendor capability;

2. Technical assessment of product quality;

3. Implementing and ensuring compliance of quality procedures at supplier;

4. Stock check and product quality inspection;

5. Liaison between our Principals and Suppliers;

6. Following up with customers and suppliers on any technical issues.

The points highlighted above should only serve as a guideline. As we are a small and growing company, new job functions may be assigned as the need arises pursuant to your willingness and ability to handle them.

…

H. Confidentiality Agreement

[(1)] For so long as Employee shall remain employed by Employer and for a period of two years after termination of employment with Employer for any reason, employee shall not disclose or communicate any ‘Confidential Information’ to any person or entity other than the benefit of Employer.

[(2)]…‘Confidential Information’ means any information regarding Employer’s business methods, business policies, procedures, techniques, research or development projects or results, sales information of any kind, financial information of any kind, trade secrets or other knowledge procedures and proprietary information by Employer which is not generally known by individuals outside of the Employer (including Employer’s employees, consultants and advisors). ‘Confidential Information’ shall include, but not be limited to, the following information of Employer:

1. Price lists or other pricing information;

2. Customer lists or other customer information;

3. Internal company reports of any kind;

4. Drawings or technical specifications.

…

I. Non-Compete Agreement

For so long as Employee shall remain employed by Employer and for a period of twelve (12) months after termination of employment with Employer for any reason (to be known as ‘Non-compete Period’), Employee shall not directly or indirectly solicit business from customers or clients of Employer nor engage in (as a principal, shareholder, partner, consultant employee or any other capacity) any enterprise conducting business activities that are the same or similar to those of Employer (Described below) within the ‘the Non-compete Geographic Area’ (defined below)…

1. Employee’s far from soliciting business from ‘Customers or Clients’ of Employer applies to all individuals or entities who were or are ‘Customers or Clients’ of Employer or at any time during the Non-compete Period.

2. The Employer is engaged in the sales & marketing and sourcing of plastic raw materials and engineering thermoplastics, non-ferrous metals (such as brass and copper), plumbing tubes, fittings and components and engineering cutting tools. This brief description shall not be considered an exclusive and exhaustive list of the business activities of Employer.

3. The term ‘Non-Compete Geographic Area’, for purpose of this agreement shall be defined as Hong Kong & Southern Mainland China.”

9.  For convenience and the sake of consistency with the abbreviations and definitions used by the parties during the trial, I shall refer to:-

(1)  Clause H above as the “Non-Disclosure Clause”;

(2)  The part in relation to prohibition of solicitation of business from customers or clients of the Plaintiffs as the “Non-Solicitation Clause”; and

(3)  The part in relation to prohibition of engaging in enterprise conducting business activities that are the same or similar to those of the Plaintiffs as the “Non-Competition Clause”.

10.  I shall refer to the three Clauses above collectively as the “Trade Restraint Clauses”.

IV.  SOURCING MANAGEMENT SERVICE CONTRACT BETEEN PURDON KING AND ATA GROUP

11.  As mentioned above, ATA Group was a major customer of the Plaintiffs. By Ps’ ATA Agreement entered into between Purdon King and ATA Group in late February or early March 2012:-

“3.0 SCOPE OF SERVICES

3.01 PDK [that is, Purdon King] to pay physical visits to ATA appointed suppliers in China whenever required to ensure maintenance of quality and to sort out any arising matters whether technical or general in nature and at the same time to double-check on general delivery status towards achieving on-time deliveries to ATA at all times; and

3.02 PDK [that is, Purdon King] to provide ATA with assistance with sourcing and development of new suppliers needed towards achieving full consistent and parallel supplies for all of ATA’s China sourcing; and

3.03 In addition to physical visits, PDK [that is, Purdon King] to maintain full voice and electronic communication at all times with ATA and all ATA’s suppliers towards the objectives of on-time and quality deliveries per mentioned earlier this includes ensuring products are lab tested independently; and

3.04 PDK [that is, Purdon King] to accompany ATA staff for all visitations to ATA’s suppliers’ factories for meetings; including for PDK [that is, Purdon King] to assume the role of interpreters; and

3.05 PDK [that is, Purdon King] to provide full administrative and clerical support relating to orders and shipments. Invoicing through us, if necessary.

4.0 FEE STRUCTURE AND REIMBURSEMENTS TO PDK

Sourcing, Inspection, Audit & Administrative Services

4.01 Fixed monthly retainer fee of GBP1,000.00 per month; and

4.02 A service fee of GBP380.00 per day for services rendered in excess of 2 days per month; and

4.03 All PDK [that is, Purdon King]’s direct expenses… incurred while carrying out the stipulated services herein shall also be fully reimbursed by ATA.”

12.  The monthly retainer fee, set out in Clause 4.01 above, was subsequently increased to GBP2,500 effective from January 2022.

V.  BACKGROUND NOT IN DISPUTE

13.  On 8 June 2021, Brian Keegan (“ATA’s Brian”) of ATA Group emailed Wilson Lam at D1’s Email Address a draft contract under the filename “Wilson Contract, revised June 1st 2021”. The draft already contained the term:-

“There is no clause in Wilson [Lam] current contract to stop him working with ATA.”

I shall refer to this term as the “No Tied-up Clause”.

14.  In reply, Wilson Lam used his yahoo email address (“D1’s Ymail Address”) to email ATA’s Brian and ATA Group’s another representative John Hetherton (“ATA’s John”), stating:-

“Regarding the contract, should it sign between ata and ABC (HK) company to be a formal one? If so, I need to register a company asap…

…

Considering the above issues, I proposed to use 48% (ata) / 52% (Wilson) split % to split whatever amount of commission will be received…

…

P.S. Again, pls check email account before sending as nowadays computer and mobile are too smart to be a trouble! Many thanks!”

15.  On 9 June 2021, ATA’s Brian replied:-

“Apologies for the risky email – difficult to always remember to send to your gmail account!!”

16.  On 16 June 2021, Wilson Lam incorporated Wilson Link Ltd.

17.  On 25 June 2021, Wilson Lam emailed ATA’s Brian and ATA’s John:-

“Considering above situation [about opening a bank account for Wilson Link Ltd], I think it may take longer time to get a company account ready (probably more than 4~5 weeks); and just wonder the final ‘switching’ is deferred to end of Aug or early SEP. Will keep you updated!”

18.  On 8 July 2021, Wilson Lam emailed ATA’s Brian and ATA’s John to update the latter about the progress of account opening.

19.  On 14 July 2021, ATA’s Brian emailed Wilson Lam saying that they would sign the contract for engaging Wilson Lam when Wilson Lam would be “ready to discuss with NP King”.

20.  On 17 July 2021, Wilson Lam suggested some amendment to the draft contract, and wrote:-

“Before signing it, two factors will affect actual date and switching schedule – the 1st key factor is when Susan [Sim] will be able to return to HK office; the 2nd one is when company bank account is set up and ready for use. And the 1st one is unstable factor to estimate; due to Delta [COVID] virus, her family member conditions and flight allowed into HK…

Considering the 2nd factor, I have to apply it from another bank as Plan B…”

21.  On 9 August 2021, Wilson Lam emailed ATA’s Brian and ATA’s John:-

“As mentioned before, probably is better to postpone [meeting] to late or end of August as it seems nothing to update & discuss at this stage actually…

By the way, Pls don’t attach the draft agreement in the invitation or email until it goes to stage in prior to finalize & sign. Because it is very sensitive and can be a big trouble to me and ‘smooth switching’ to ata later if wrongly sent to my company email address again; as we are not sure whether it can be noticed and opened by Andrew…”

22.  On 30 August 2021, ATA’s Brian emailed Wilson Lam, asking whether he had discussed his position with Susan Sim and Andrew. In reply on the same day, Wilson Lam emailed:-

“No, Susan is going through quarantine periods in HK when she returned from UK trip. She should [be] back to office next Wed? Only if she is in office and at ‘suitable timing’, I will give her resignation letter; as she had difficult time in past months. It is not good to be so selfish if just sending notice by email or talking on phone!

Secondly, it is no point to talk to them anything about coming change, before I prepare something basically for my leave…”

23.  On 1 September 2021, Wilson Lam emailed ATA’s Brian and ATA’s John:-

“Later I should register a www domain under WilsonLink, so will have company email address like xxxx@Wilsonlink.com; and this Ymail private email not be used again for business.”

24.  On 2 September 2021, Wilson Lam emailed ATA’s Brian and ATA’s John:-

“It depends on the coming discussion with NPK director, and time to handle over other jobs on hands… Only one concern is whether there is a clause to tie staff up – resigned employee cannot work for NPK customers for 6 months ~ 1 year after resignation. As far as I can remember, it seems No the clause for NPK HK office. But it was 15.5 years ago, cannot remember exactly and whether they revised some conditions or not? Anyway, will have to figure it out if any; and let you know later.”

25.  Between 16 June and 7 September 2021, Wilson Lam designed a logo for Wilson Link Ltd, applied for a domain name for Wilson Link Ltd, and applied for bank accounts in the name of Wilson Link Ltd.

26.  On 9 September 2021, Wilson Lam emailed ATA’s Brian and ATA’s John, attaching a signed copy of D1’s ATA Agreement:-

“Susan returned to office already; I will talk to her about the leave and hand in notice tomorrow when she shows up. And will inform you about the discussion later!

I attached the agreement with signature and stamp…”

Although Wilson Lam signed it on 9 September 2021, he wrote below his signature the date of “11 October 2021”.

27.  D1’s ATA Agreement set out the scope of the agency services and provided that:-

“Sourcing Provider: WILSON LINK LTD

…

Scope Of Services

The development of new suppliers, maintaining and building the relationship with existing suppliers and growing our overall footprint in China and the surrounding regions. It will involve, procurement, engineering and general business tasks on a day to day basis…

Primary Accountabilities:

[1] Manage all open orders for Bur Business (current day to day activities).

[2] Asian… Supplier Relationship and performance manager including regular reviews.

[3] ATA Link in dealing with all suppliers…

[4] Monitor APT / cobalt / currency and work with supplier to drive prices down.

[5] Cost reduction programs – consolidating shipments, bulk buys.

[6] Assist with contract negotiations

[7] Assist with identifying and on boarding new suppliers for all divisions of ATA in the region.

[8] Working closely with Engineering / Quality to ensure compliance with the relevant standards, regulations and customer requirements.

[9] Potentially manage a HUB / office for ATA in HK or China.

[10] Part of extended NPD, Engineering and procurement teams

[11] Assist with Logistics management projects.

[12] Assist with Environmental and sustainability projects.

[13] Assist with investigation into a possible Tax rebate project / incentives.

[14] Travel to trade shows and ATA sites as necessary.

[15] Coordinate all travel for ATA personnel in the region [Grand China] and act as translator for ATA team in the region [Grand China] when required.

…

Fee Structure

[1]…A fixed monthly retainer of HKD56,000 will be paid each month

…

[3] All travel expenses on behalf of ATA are paid by ATA.

Management of Commission from Supplier – Split of commission will be as follows

…

48% ATA and 52% Wilson Link [Ltd] of actual amount received…

…

Other

…

There is no clause in Wilson [Lam] current contract to stop him working with ATA.”

28.  Subsequently, ATA’s John signed it and wrote below his signature the date of “9 September 2021” and ATA’s Brian signed it and wrote below his signature the date of “13 September 2021”.

29.  On 20 September 2021, Wilson Lam emailed ATA’s Brian and ATA’s John:-

“Not sure you have sent email to Susan to inform her about termination of contract with [NP King], starting from next Month. For your info, she is pretty calm now (not surprised she should still be unhappy somehow but I believe she turned to another new chapter), as we had several frank discussions regarding my resignation and job handover. As talked before, it happened due to mixed factors from different aspects…Both of us realized that indeed and regret about this…

So probably it is better to send notice to her to express high appreciation to [NP King] for support in the past; and regret o have such change…And pls inform her within the next six months notice periods, [NP King] will be paid as clauses on the contract; and she will get commission of the 3rd quarter of 2021…”

30.  Afterwards, Wilson Lam approached Winly Trading Company Limited (“Winly”), Tecware Trading & Engineering Ltd. (“Tecware”) and Sing Lee Metal Trading Co Ltd. (“Sing Lee”), and provided them with price lists of industrial products bearing the letterhead, heading and logo of Wilson Link Ltd in respect of the following products:-

(1)  Pegler Valves Model No. SG Valves (with prices updated up to 20 August 2021);

(2)  R Brand Drills (with prices updated up to 4 January 2021); and

(3)  Sealing tapes (with prices updated up to 1 September 2021).

31.  On 13 and 17 January 2022, the Plaintiffs’ solicitors issued pre-action letters to Wilson Lam.

32.  On 11 February 2022, the Plaintiffs issued the Writ of Summons against the Defendants in these proceedings.

33.  On 1 March 2022, the Plaintiffs filed an inter-partes Summons seeking interlocutory injunction and disclosure order against the Defendants.

34.  On 4 March 2022, the Court granted by consent an interlocutory injunction (the “Interlocutory Injunction”) and a disclosure order (the “Disclosure Order”).

35.  On 9 March 2022, Wilson Lam sent a letter to Susan Sim (“Wilson Lam’s 9.3.2022 Letter”), saying:-

“在此本人(林榮臨)真心誠意向 [NP King] [Susan Sim], [Andrew] 及各董事們道歉，請求您們的原諒！

本人在職期間確實於2021年6月15日註冊了一所公司 ([Wilson Link Ltd] 德宏環球有限公司)，但直至離職那天即2021年10月10日，並沒有任何生意業務；雖然如此，就註冊公司一事，本人沒有坦白告訴 [Susan Sim]，有隱瞞欺騙之過，非常對不起，請求原諒！

另外，本人與ATA傾談合同細節時，自己不熟悉商業的規則，也沒有坦白告訴 [Susan Sim]，聽取她的意見，是有隱瞞欺騙之過，非常對不起，請求原諒！

在上帝面前，本人深深懺悔，沒有做好見證，傷害了[SusanSim] 和 [Andrew] 的心，她(他)們一直都如此信任本人。

請接受本人至真誠的道歉，對不起！”

VI.  THE PLAINTIFFS’ CASE

36.  The Plaintiffs’ case is that under the D1’s Employment Contract, he owed obligations to NP King:-

(1)  Not to misuse Confidential Information under the Non-Disclosure Clause;

(2)  Not to solicit the Plaintiffs’ customers and clients under the Non-Solicitation Clause; and

(3)  Not to engage in business activities similar to or the same as those of the Plaintiffs under the Non-Competition Clause.

37.  Further, as an employee, Wilson Lam owed an implied duty of fidelity including a duty to act faithfully in the best interests of the Plaintiffs.

38.  Also, as Sourcing Engineer being “the highest-ranked officer employed to deal with” ATA Group, upon whom NP King placed “tremendous trust”: see Re-amended Statement of Claim §§17 and 19, Wilson Lam owed fiduciary duties to the Plaintiffs.

39.  While the pleadings may appear a bit convoluted, Mr Frederick Fong, counsel for the Plaintiffs, summarises the Plaintiffs’ claim in §§41 and 42 of his Written Opening Submissions. In essence, in respect of Wilson Lam, in breach of his aforesaid duties:-

(1)  Wilson Lam (through Wilson Link Ltd) solicited business from the Plaintiffs’ clients including ATA Group, PRC Suppliers, Winly, Tecware and Sing Lee;

(2)  Wilson Lam (through Wilson Link Ltd) had used the Confidential Information to conduct a business similar to the Plaintiffs, in particular, by distributing price lists and quotes of goods regarding Pegler Valves Model No. SG Valves, R Brand Drills and sealing tapes;

(3)  Wilson Lam deleted or removed a significant amount of invoices issued by the PRC Suppliers to ATA Group for periods from 2018 to 2021 in electronic format and hardcopy and also a significant number of digital files of the Plaintiffs’ documents, in particular the digital copy and physical original of the agreement between the Plaintiffs and Panqi.

40.  For these breaches, the Re-Amended Statement of Claim tends to lump the duties and the acts together without separation. In the analysis below, I shall segregate them and analyse them one by one with reference to the pleadings and Mr Fong’s Closing Submissions.

41.  In respect of Wilson Link Ltd:-

(1)  Wilson Link Ltd knowingly and dishonestly assisted Wilson Lam in breach of his contractual and/or fiduciary duties owed by him to the Plaintiffs;

(2)  Wilson Link Ltd was in breach of confidence by making use of the Confidential Information of the Plaintiffs; and

(3)  Wilson Lam is the operating mind of Wilson Link Ltd and thus his knowledge should be imputed into Wilson Link Ltd.

42.  Caused by the breaches, the Plaintiffs have suffered the following losses arising from:-

(1)  Wilson Lam’s failure to collect receivables from the PRC Suppliers;

(2)  Loss of overdue commission payable by the PRC Suppliers on those payments already made by ATA Group to the PRC Suppliers for the period from 1 October 2021 to 31 December 2021 and 1 January 2022 to 28 February 2022;

(3)  Loss of known commissions payable by the PRC Suppliers on the unsettled invoices issued by the PRC Suppliers to ATA Group for the period from 1 October 2021 to 31 December 2021 and 1 January 2022 to 28 February 2022;

(4)  Loss of management service fees otherwise payable by ATA Group; and

(5)  Loss of commission otherwise payable by the PRC Suppliers.

43.  During closing submissions, the Plaintiffs elected to claim damages rather than account of profit.

44.  During trial, by the time when the Plaintiffs closed their case, Mr Fong, sensibly dropped the first three heads of damages (§§(1) – (3) above). I say “sensibly” because those fees and commissions were payable by ATA Group and the PRC Suppliers on the Plaintiffs’ own case, and so the Plaintiffs should claim against ATA Group and the PRC Suppliers, but not the Defendants, against whom there is no evidence to sustain any cause of action of unjust enrichment.

VII.  THE DEFENDANTS’ DEFENCE

45.  Mr Brian Chok, counsel for the Defendants, summarises the Defendants’ defence in §7 of his Opening Submissions:-

(1)  Around April 2021, ATA Group approached Wilson Lam on its own accord and proposed to him that he should consider leaving the Plaintiffs and provide full service to them. Wilson Lam had tried to report this matter to the Plaintiffs on several occasions but failed.

(2)  Wilson Link Ltd did not carry out any business activity between its incorporation on 16 June 2021 and 7 September 2021. On or around 9 September 2021, Wilson Link Ltd had signed D1’s ATA Agreement.

(3)  Wilson Lam clearly informed ATA Group that the Plaintiffs’ agreement for him to leave the Plaintiffs and provide services to ATA Group directly would be needed before D1’s ATA Agreement would come into effect.

(4)  On 10 September 2021, Wilson Lam and Susan Sim met in a conference room of the Plaintiffs’ office. Wilson Lam expressed his intention to resign from the Plaintiffs and to provide services to ATA Group directly. Susan Sim did not object to the resignation and to the intention to provide full services to ATA Group.

(5)  On 14 September 2021, Wilson Lam and Ms Susan Sim met again in the conference room. Ms Susan Sim accepted the resignation, and made the representation (the “Purported Oral Representation”) to Wilson Lam, “你好好地做ATA這個客人，其他的不要去搶[NP King]的客戶”. In reply, Wilson Lam said, “多謝您！一定不會這樣做的”. The Purported Oral Representation constituted (a) an oral discharge, waiver and release of all of Wilson Lam’s obligations and restrictions contained in the D1’s Employment Contract, or alternatively (b) an oral variation of the D1’s Employment Contract. In the Written Closing Submissions, Mr Chok, rightly does not pursue (b) anymore, “rightly” because there was no valid consideration to support any variation of the D1’s Employment Contract.

(6)  ATA Group’s termination of Ps’ ATA Agreement with the Plaintiffs by ATA Group’s notice of termination issued on or around 4 October 2021 was not caused by Wilson Lam’s any breach of duties.

(7)  Having had the understanding that any restrictive covenants and/or obligations to the similar effect were waived by Susan Sim on behalf of the Plaintiffs, Wilson Lam decided to run the business of Wilson Link Ltd and entered into agreements with various companies.

VIII.  THE DEFENDANTS’ COUNTERCLAIM

46.  The Defendants raise a counterclaim against the Plaintiffs. The Defendants’ counterclaim is that in commencing the present action, the Plaintiffs breached the D1’s Employment Contract as varied by the Purported Oral Representation. Since the Defendants do not pursue the variation of contract point anymore in the Closing Submissions, they also do not pursue the Counterclaim anymore.

IX.  ISSUES

47.  The issues are:-

(1)  Whether Wilson Lam owed fiduciaries duties to the Plaintiffs, and if so, what were the nature and scope;

(2)  Whether there were any implied terms of D1’s Employment Agreement to the Plaintiffs;

(3)  Whether the information as contained in the Confidential Information is and has the quality of confidence;

(4)  Whether Wilson Lam breached the Non-Disclosure Clause, Non-Solicitation Clause and/or the Non-Competition Clause, fiduciary duties and/or implied terms, including:-

(a)  whether Susan Sim made the Purported Oral Representation, and if so, what was the legal effect;

(b)  whether the Defendants used the Confidential Information to conduct the same or similar business as the Plaintiffs’ by making, publishing, and/or distributing its own price lists and/or quotes to his/its customers and/or potential customers in public., i.e. price lists of goods regarding Pegler Valves Model No. SG Valves and R Brand Drills[1] and sealing tapes;

(c)  whether Wilson Lam solicited the Plaintiffs’ clients and customers (namely, Winly, Tecware and Sing Lee) for other business other than ATA Group; and

(d)  whether Wilson Lam had deleted and removed the Missing Invoices;

(5)  Whether the breaches caused:-

(a)  ATA Group’s termination of agreements with the Plaintiffs in early October 2021; and

(b)  the PRC Suppliers’ termination of their respective agreements with the Plaintiffs;

(6)  Whether Wilson Link Ltd:-

(a)  knowingly and dishonestly assisted Wilson Lam in breach of his fiduciary duties owed to the Plaintiffs; and

(b)  was liable for breach of confidence by using the Confidential Information; and

(7)  Quantum of the damages.

X.  WITNESSES

48.  Each side has one factual witness: Susan Sim for the Plaintiffs, and Wilson Lam for the Defendants.

XI.  DIFFERENTIATION BETWEEN PURDON KING AND NP KING

49.  For the present purposes, there is no practical significance in differentiating between Purdon King and NP King at least in terms of duties owed by Wilson Lam, if any. There may be practical significance in terms of loss because the general rule is that NP King, being the holding company, is not permitted to recover reflective loss, and the actual loss suffered as a result of any breaches of duties presumably have been suffered by Purdon King.

50.  Therefore, unless necessary, I shall analyse the matter without differentiating between the two Plaintiffs unless necessary.

XII.  WHETHER WILSON LAM OWED FIDUCIARY DUTIES TO THE PLAINTIFFS

51.  The legal principles in relation to fiduciary duties in the context of employment have been set out in see Eventmaster Limited v Chen Hiu Kwan and Others [2026] HKCFI 3380 at §§59-61 per Recorder Suen SC. I only need to highlight the following:-

(1)  The essence of a fiduciary relationship is one of trust and confidence between the fiduciary and the beneficiary.

(2)  “The critical feature of fiduciary relationships is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical way” (emphasis added). In this sense, the beneficiary is said to be placed “in a position of ‘vulnerability’”. The “power or discretion” is a critical feature because, in my view, with such “power or discretion”, the fiduciary would have room to make decision for the beneficiary, and it is important to impose some restriction on such “room” or else it would be easily abused to the benefit of the fiduciary at the expense of the beneficiaries without any redress.

(3)  In determining whether a non-director employee owes fiduciary duties to the employer, the Court has to consider all the circumstances including specific contractual obligations to determine whether the employee has undertaken to act solely in the employer’s interests and whether the employer is in a position of “vulnerability”. In general, senior employees are more likely to owe fiduciary duties, but a junior employee like a salesperson may still owe fiduciary duty in relation to his sales responsibilities:

52.  In the present case, Wilson Lam, though an employee, was assigned to be in charge of all the matters in relation to the ATA Transactions. I also accept the Plaintiffs’ position that Wilson Lam was the second highest-ranked employee in relation to ATA Transactions. In fact, even on Wilson Lam’s evidence which I accept in this respect, he represented the Plaintiffs in dealing with ATA Transactions and the PRC Suppliers.

53.  However, neither in the pleadings nor in the evidence have the Plaintiffs explained or attempted to explain what power or discretion Wilson Lam had in relation to the ATA Transactions. In the evidence (not in the pleadings), there is some suggestion that Wilson Lam negotiated or dealt with on behalf of the Plaintiffs with ATA Group and the PRC Suppliers, but there is also suggestion from Susan Sim herself that she would be concerning the financial parts of the transactions, and in any event, there is no suggestion how much “power or discretion” was given to Wilson Lam in respect of such negotiations or dealings.

54.  The burden lies on the Plaintiffs to establish fiduciary duties. Having considered the above, in particular the lack of plea and evidence of “power and discretion”, I am not satisfied that Wilson Lam owed fiduciary duties to the Plaintiffs. Thus, the answer to the question whether Wilson Lam owed fiduciary duties to the Plaintiffs is in the negative.

XIII.  WHETHER THERE WERE ANY IMPLIED TERMS OF D1’S EMPLOYMENT AGREEMENT TO THE PLAINTIFFS

55.  It is well established that an employee owes an implied duty of good faith and fidelity to his employer during the subsistence of the employment: see Eventmaster Limited v Chen Hiu Kwan and Others, supra, at §56. The contents of this duty, as set out by the learned Judge at §58 of that case, include:-

(1)  The employee should not persuade the employer’s customers to move away from the employer;

(2)  The employee should not take part in a business in competition with the employer or otherwise work for another employer in a role inconsistent with the current employment;

(3)  The employee should not disclose any confidential information that came to his knowledge as a result of his employment, and must not use to the employer’s detriment any information obtained in confidence during the employment; and

(4)  The employee has a duty to disclose to the employer information useful to the employer obtained during the course of employment.

56.  Wilson Lam was the Plaintiffs’ employee. Therefore, he owed such duties. The answer to the question whether Wilson Lam owed the implied duties is in the affirmative.

XIV.  WHETHER THE INFORMATION AS CONTAINED IN THE CONFIDENTIAL INFORMATION IS AND HAS THE QUALITY OF CONFIDENCE

57.  For breach of confidence, the following elements must be established:-

(1)  The information identified has the necessary quality of confidence about it;

(2)  The information identified has been imparted in circumstances importing an obligation of confidence; and

(3)  There has been unauthorized use of the information to the detriment of the party imparting it.

See Smart Trike MNF. PTE. Ltd and Others v Chiu Sui Chun and Others [2024] HKCFI 1562 at §248 per Lok J.

58.  Further, as Poon J (as he then was) made it clear at Total Lubricants Hong Kong Limited and Others v Christophe De La Cropte De Chanterac and Others, HCA 1694/2008, 15 December 2009 at §30:-

“The statement of claim must define with some precision the information or communication which is alleged to be confidential. Particulars must also be given to show that the information is confidential in character. The relevant circumstance giving rise to the obligation of confidence and the unauthorized use must be pleaded as well.” (emphasis added)

59.  In the present case, the pleadings are not clear about what information the Plaintiffs would say was confidential. At §10(b) of the Re-Amended Statement of Claim, they refer to the four classes of information in definition of “Confidential Information” in the D1’s Employment Contract (see §8 above), but only during the cross-examination of Susan Sim did Mr Fong confirm that the Plaintiffs were only after two of the four classes, namely, (1) the “Plaintiffs’ price lists and/or other pricing information” and (2) the “Plaintiffs’ customer lists and/or information”. This is unsatisfactory.

60.  Further, no plea has been made as to why these two categories of information were confidential. For example, were the prices and the customers’ names and contacts readily available in the public? Mere reliance on some previous decided cases to say that pricing lists or customer lists are confidential is not helpful, given that the question of whether information is confidential is fact-specific.

61.  The only evidence, not plea, that may be said to justify the confidentiality character is §§37-38 of Susan Sim’s Supplemental Witness Statement, which is not challenged:-

“37. Such post-termination ‘trade restraint’ covenants [that is, the Trade Restraint Clauses] are necessary for departing employees like D1 who had full access to Ps’ trade secret/confidential informant for two reasons. First, they deter departing employees like D1 from obtaining an unfair advantage by the misuse of Ps’ trade secret/confidential information in particular the price information as charged by suppliers. Usually, the pricelists of suppliers are updated every 6 months to 12 months depending on nature of products. For example, in respect of products that consist of metals like copper where the price of copper may fluctuate, pricelist of such products may be updated every 6 months. It is evidence that, without the post-termination ‘trade restraint’ covenants, employees like D1 could take an unfair advantage of Ps’ trade secret/confidential information in particular the price information and compete with Ps’ business after departure from Ps in this industry with small gross profit margin which Ds eventually did.

38. Second, they deter departing employees like D1 from having a ‘head start’ over Ps. It would usually take one to two years and a lot of resources to train someone up to the position of D1 in Ps. For instance, when D1 first joined Ps, D1 had a 3-month in-house training course and had to attend courses/workshops provided by Hong Kong Trade Development Council. Further, D1 received product training courses organized by various suppliers including at least two to three overseas trips to countries like UK, Ireland, Taiwan, Singapore and Indonesia a year (not to mention frequent trips to Mainland China) with training costs borne by Ps. Without the post-termination ‘trade restrain’ covenants, employees like D1 in which Ps invested a lot of time and resources could immediately make a ‘head start’ in a rivalry business whilst disadvantaging Ps which needed time to train someone up and may have to recover the lost market ground.”

62.  However, reading these two paragraphs closely, they do not explain the confidentiality character of the information, but explain why the Trade Restraint Clauses were necessary.

63.  Therefore, my answer to the question whether the information as contained in the Confidential Information had the quality of confidence is in the negative.

XV.  WHETHER WILSON LAM BREACHED THE NON-DISCLOSURE CLAUSE, NON-SOLICITATION CLAUSE AND/OR THE NON-COMPETITION CLAUSE AND/OR IMPLIED TERMS

64.  The Re-Amended Statement of Claim tends to lump all the duties together. For a clear and better analysis, I find it necessary to discuss each clause with the alleged breaches one by one. This broad question should also include a discussion of the Defendants’ case that Susan Sim made the Purported Oral Representation, which I shall discuss first.

A.  Purported Oral Representation

65.  For the following reasons, I find that Wilson Lam did inform Susan Sim that he was to work with ATA Group after he left the Plaintiffs:-

(1)  The draft D1’s ATA Agreement, at latest by June 2021 as revealed in the draft attached to ATA’s John’s email of 8 June 2021, the No-Tied-up Clause (that “There is no clause in Wilson [Lam] current contract to stop him working with ATA”) had already been inserted. In the email correspondence, Wilson Lam never disputed this term. Therefore, Wilson Lam must have by that time been aware of the importance that the D1’s Employment Contract did not contain any trade restraint clauses.

(2)  By 2 September 2021, as shown in his email to ATA’s Brian and ATA’s John, Wilson Lam had been aware that there might be some contractual clause in the D1’s Employment Contract that restricted him from working for NP King’s customers for 6 months to 1 year, and he was aware that he had to check. Therefore, by that time at latest, Wilson Lam should have been concerned about whether there were any restrictive covenants in the D1’s Employment Contract, and if so, whether he would be able to somehow get released from such trade restraint clauses.

(3)  Given the importance, Wilson Lam must have checked, shortly after 8 June 2021 or at latest shortly after 2 September 2021, whether the D1’s Employment Contract contained any restrictive covenant. In the cross-examination, Wilson Lam said that he had lost his copy of the D1’s Employment Contract, and he was not sure about whether there were any such trade restraint clauses. I do not accept his evidence and do find that he had a copy with him already for him to check: first, it was an important document and he would have kept it well; and second, if he really lost it, he would have asked the Plaintiffs for a copy and I do not see why he would not do so. In any event, he must have been concerned that there might be such trade restraint clause and thus he must have by then been concerned and eager to make sure that he would be released from any prohibition from working for ATA Group.

(4)  Given the importance, I find that Wilson Lam did inform Susan Sim that he would work with ATA Group or something along that line. This finding is consistent with Susan Sim’s Supplemental Witness Statement §29 “When D1 tendered his resignation on 10^th September 2021, D1 merely told me that he would have business cooperation with the ATA Group after D1’s departure from Ps”.

(5)  However, Wilson Lam stopped short of asking specifically whether he could work with ATA Group. I note that even Wilson Lam himself did not say that he asked such a specific question. He may have wished that simply by explaining to Susan Sim that he would work with ATA Group upon resignation, he would regard this as a release from the Trade Restraint Clauses. Or he may have felt committed to working with ATA Group in any event given that by 13 September 2021, he had taken so many steps including setting up the Wilson Link Ltd, designing the logo, obtaining the domain name and the ATA Employment Contract had already been executed, and so he should better be vague. I do not need to guess what was the motive for him not asking the specific question. The evidence is such that I do not find that Wilson Lam asked such a specific question.

66.  Although I have found that Wilson Lam did inform Susan Sim that he was to work with ATA Group after he left the Plaintiffs, for the following reasons, I do not accept the Defendant’s case that Susan Sim made the Purported Oral Representation:-

(1)  Wilson Lam, as I found above, did not ask the specific question of whether he could be released from the Trade Restraint Clauses.

(2)  As explained above, Wilson Lam was concerned about, and aware of the importance of, obtaining release from the Trade Restraint Clauses from the Plaintiffs. Wilson Lam had worked for the Plaintiffs for 15 years or so at such a high-ranked position. He also suggested amendments to the draft D1 Agreement with ATA (as mentioned in §20 above). I have no doubt about his awareness of reducing oral agreements into writing or at least creating some documentary evidence to record oral agreements. All the more so for such an important release, without which ATA Group would not be willing to work with him under D1’s ATA Agreement.

(3)  However, in the text messages between Wilson Lam and Susan Sim from 10 September to 24 December 2021 (the only text messages produced as evidence before me), no such Purported Oral Representation was ever mentioned.

(4)  Wilson Lam explained that at that time, having worked with Susan Sim for 15 years, he had trust in her and so did not find the need to record what she said in writing. However, given the importance of the Purported Oral Representation, not only in relation to whether he could work for ATA Group but also in relation to whether he would breach the No-Tied- up Clause, and given that he broke the relationship with the Plaintiffs, it is inherently improbable that had there been the Purported Oral Representation, he would not have recorded the same in writing.

(5)  Further, even assuming that Wilson Lam had such trust that he did not find the need to record the Purported Oral Representation in writing, such trust would have been significantly undermined, if not totally lost, after the pre-action letters, the commencement of the present action and then the grant of the Interlocutory Injunction and the Disclosure Order. As Wilson Lam’s counterclaim shows, all these would not only be contrary to the Purported Oral Representation, but would also be breach of the same.  Despite such significant undermining or total loss of trust, in Wilson Lam’s 9.3.2022 Letter issued thereafter, he did not mention anything about having been released and/or did not make any enquiry why the action had been commenced and injunction had been sought. His faint suggestion that Wilson Lam’s 9.3.2022 Letter was prepared by his wife takes him nowhere, because as he had to accept in the cross-examination, he signed the letter and so he agreed to the contents of the letter. In my view, even assuming that Wilson Lam had such trust in Susan Sim before, it is inherently improbable that Wilson Lam would not mention anything about the Purported Oral Representation or would not make any such enquiry in Wilson Lam’s 9.3.2022 Letter like “why did you breach your promise?” or “why did you set up a trap for me by making the promise?”, had Susan Sim made the Purported Oral Representation.

(6)  From the Plaintiffs’ perspective, business with ATA Group had been a significant part of the Plaintiffs’ business, starting since 2012. Susan Sim was just one of the directors. Even assuming that she was the one usually calling the shot or at least had apparent authority, to make the Purported Oral Representation would be such an important decision for the Plaintiffs which it is inherently improbable for her to make (a) alone; (b) within a short time; and (c) without consulting any other directors including her husband, Andrew.

(7)  The contents of the Purported Oral Representation are self-contradictory and incoherent. As Wilson Lam himself admitted during cross-examination, the PRC Suppliers for ATA would have to pay commissions to the Plaintiffs as well, and at least two of the PRC Suppliers were introduced by the Plaintiffs to ATA, while the other two, though suggested by ATA, were still included into the agency services provided by the Plaintiffs. So, the PRC Suppliers, or at least the two introduced by the Plaintiffs even according to Wilson Lam’s own evidence, were the Plaintiffs’ customers or clients. Even according to Wilson Lam’s own evidence, ATA did not need the Plaintiffs because ATA Group had already established stable relationships with the PRC Suppliers, and this means that for Wilson Lam to work with ATA Group, the same PRC Suppliers, being or including the Plaintiffs’ customers or clients, would have to be engaged for ATA Group. However, even according to Wilson Lam’s own evidence on the contents of the Purported Oral Representation, Susan Sim allowed him to work with ATA Group and asked him not to steal or touch the Plaintiffs’ other customers or clients. But this would not make any sense at all because it would either (a) effectively mean that Wilson Lam would be allowed to work with ATA Group, but he would not be allowed to work with PRC Suppliers which would be necessary for working with ATA Group, or (b) that Susan Sim simply did not make such inherently contradictory and incoherent Purported Oral Representation at all.

(8)  Mr Chok, submits that for the possibility in §(7)(a) above, I should find that there would be no inherent contradiction in the Purported Oral Representation because when allowing Wilson Lam to work with ATA Group, Susan Sim would also mean that she also allowed Wilson Lam to work with the PRC Suppliers, because working with the PRC Suppliers were part and parcel of working with ATA Group even according to Susan Sim’s own evidence. With respect, I disagree. That they were part and parcel cannot in any sense ascribe to “to work with ATA Group but not other Plaintiffs’ customers or clients” a meaning “to work with ATA Group and the PRC Suppliers but not other Plaintiffs’ customers or clients than the PRC Suppliers”. At best, in my view, this would only be Wilson Lam’s subjective wishful thinking. Further, had such prima facie self-contradictory Purported Oral Representation been made, Wilson Lam would have sought clarification like “What about the PRC Suppliers? They are part and parcel and so when you are saying ‘not other Plaintiffs’ customer or clients’, I take you mean ‘other Plaintiffs’ customers or clients than the PRC Suppliers?”  However, there is no evidence of such clarification. Instead, Wilson Lam, according to his own evidence, took such self-contradictory Purported Oral Representation to mean what he subjectively wished.

(9)  I accept Mr Chok’s submissions that Susan Sim’s evidence in this regard is unsatisfactory. In her two Witness Statements, she has not said much about what happened after Wilson Lam informed her that he was to work with ATA Group. The WhatsApp conversation, where Wilson Lam thanked Susan Sim for her advice, also suggests that Susan Sim gave some advice to Wilson Lam during the 13 September 2021 meeting, but Susan Sim mentioned nothing of that sort in her Witness Statement. In the cross-examination, Susan Sim, for the first time, said that she advised Wilson Lam to be careful in doing business with foreigners. It seems that Susan Sim did give some advice, but what were the contents of the advice is not clear from the evidence. However, clearly, even according to Wilson Lam, it was some advice, not promise. Had there been the Purported Oral Representation which Wilson Lam understood to mean that he could work with ATA Group and its PRC Suppliers, he would likely have also thanked Susan Sim for the release.

(10)  For the first time, Susan Sim also explained that she consulted a family friend about the matter and the family friend advised her to be careful, and this was one of the reasons why she started investigation and did not wish to alert Wilson Lam, as explained in §§30-31 of her Witness Statement. Mr Chok submits that this first time allegation dampens Susan Sum’s credibility. In my view, the gist has been set out in §§30-31 of her Witness Statement, although nothing was mentioned why she took such steps, as now she alleged in the cross-examination about consultation with a family friend. The explanation for taking such steps is, in my view, a peripheral issue that has little effect on Susan Sim’s credibility, and I can understand why Susan Sim had shied away from giving the explanation – according to her, the family friend whom she consulted was a person who advised her according to Yijin (易經) Oracle, and such an explanation may not appear attractive to be put in writing in a witness statement to be filed with the Court.

(11)  In my view, upon Wilson Lam telling her that he would work with ATA Group, there must have been some response rather than little or nil response as Susan Sim’s evidence suggests. Nevertheless, the evidence is not sufficient for me to make any finding what exactly she said. This may lend force to Mr Chok’s submissions that Wilson Lam’s version should be preferred.

(12)  Having considered all the above, however, I find that Wilson Lam has not discharged the burden of proof that Susan Sim made the Purported Oral Representation.

67.  Even if Susan Sim did make the Purported Oral Representation, for the reason explained in §§66(7) and (8) above, it would not constitute a clear and unequivocal statement of waiver or promissory estoppel: see Cheung Kong Property (Business Development) Ltd v Gold Brilliant Investment Ltd [2026] 1 HKLRD 1135 at §§45 and 46 per DHCJ Anthony Chan SC.

B.  Entering into D1’s ATA Agreement and breach of fiduciary duties (and implied duty)

68.  In §§26 and 26B of the Re-Amended Statement of Claim, it is pleaded, in essence, that the entering into D1’s ATA Agreement constituted breach of fiduciary duties. However, as I found above, there were no fiduciary duties. So, there was no breach of fiduciary duties.

69.  That, to be fair to the Plaintiffs, should not be the end of it. In §19 of the Re-Amended Statement of Claim, the plea of fiduciary duties is lumped together with the implied duties including the implied duty of fidelity. The Defendants have also fairly all along engaged with the Plaintiffs on the breach of the implied duty of fidelity. The substance is, in my view at least in the present context, the same. Therefore, I should also consider whether the entering into D1’s ATA Agreement constituted breach of the duty of fidelity.

70.  The duty of fidelity engaged here is the employee’s duty not to take part in a business in competition with the employer or otherwise work for another employer in a role inconsistent with the current employment: see §55(2) above. The issue in dispute is whether the entering into D1’s ATA Agreement was merely a preparatory step permissible by the law, or a substantive step that “misappropriated” the Plaintiffs’ business with the ATA Group and the Plaintiffs’ business with the PRC Suppliers (see Re-Amended Statement of Claim §26).

71.  This issue is a question of fact. I consider the following evidence:-

(1)  Prima facie, by signing D1’s ATA Agreement stated to be effective on 11 October 2021, both Wilson Lam (via Wilson Link Ltd) and ATA Group were contractually bound to perform it on 11 October 2021.   

(2)  I do not accept Wilson Lam’s evidence that he intended D1’s ATA Agreement to be effective only upon Susan Sim’s consent to him working with ATA Group for the following reasons:-

(a)  There was no such condition, whether expressly or impliedly, in D1’s ATA Agreement.

(b)  Never was it mentioned in the email correspondence between Wilson Lam and ATA Group that this would be a condition. The correspondence, instead, only related to when Wilson Lam should submit the resignation letter and when ATA Group should terminate its relationship with the Plaintiffs. In Wilson Lam’s email sent to ATA Group on 9 September 2021, to which he attached D1’s ATA Agreement signed by him on behalf of Wilson Link Ltd, he expressly explained that he “put effective date of the change as 2021/10/11”, without any reservation or condition. Clearly, he had in mind the clause of D1’s ATA Agreement stating the “Term” to be “4 year agreement from Date of signature”. ATA Group then signed it on 9 and 13 September 2021. Objectively read, the correspondence about Wilson Lam talking with Susan Sim was about his resignation rather than obtaining consent for him to work for ATA Group.

(c)  There was no reason why Wilson Lam could not wait for a day or two more before talking to Susan Sim (10 September 2026) prior to signing D1’s ATA Agreement on 9 September 2021, had Susan Sim’s consent been a condition. Instead, as shown in his email sent to ATA Group on 9 September 2021, he signed D1’s ATA Agreement on 9 September 2021, knowing that he would hand in the resignation notice the next day. If Wilson Lam did think Susan Sim’s consent to be a condition, he could wait for the next day before he signed D1’s ATA Agreement. There was no reason why he had to rush. Wilson Lam seems to say that he rushed because ATA Group rushed him. If there was, as suggested by Wilson Lam, understanding between ATA Group and Wilson Lam that Susan Sim’s consent was a condition, ATA Group would not have rushed him but rather would wait for Susan Sim’s consent first before asking Wilson Lam to sign D1’s ATA Agreement.

(d)  Wilson Lam had also actively prepared Wilson Link Ltd to be ready for operation. By 9 September 2021, he had acquired Wilson Link Ltd, designed the logo for Wilson Link Ltd, applied for and obtained a domain name for Wilson Link Ltd, and took some significant steps for application for opening accounts, including sending applications to different banks and the banks some “dummy” quotations, although in the cross-examination, after being reminded of his right to silence, he chose not to explain what he meant by “dummy” quotations. I do not have to find what exactly “dummy” quotations he meant, but what I would like to say is that he went to some lengths for acquisition and preparation of Wilson Link Ltd. In my view, he must have, by 9 September 2021 having taken all these significant steps, intended to operation his own business through Wilson Link Ltd, before he was to meet Susan Sim to hand in his resignation notice.

(e)  Having considered the above, in terms of when D1’s ATA Agreement would become effective, objectively, D1’s ATA Agreement stated what were intended and did not state what were not intended. It did not state any condition, and it stated the “Term” to be “4 year agreement from Date of signature”, and both parties expressly intended it to be effective on 11 October 2021 by Wilson Lam putting it to be the date and thereafter ATA Group signing the agreement.

(3)  Therefore, there is no accepted evidence to suggest that D1’s ATA Agreement was intended otherwise than expressly stated, namely, to be effective from 11 October 2021.

(4)  As a result, ATA Group would have to terminate its contract with the Plaintiffs in order for ATA Group to perform D1’s ATA Agreement effective from 11 October 2021.

(5)  In other words, during the employment (to terminate on 10 October 2021), by 9 September 2021, Wilson Lam had already caused ATA Group’s business to move away in a month’s time.

(6)  Having considered the above, I find that entering into D1’s ATA Agreement constituted a substantive step (rather than a mere preparator step) that would be bound to result in the appropriation of the Plaintiffs’ business with ATA Group.

(7)  In his evidence, Wilson Lam explains that the scope of services under D1’s ATA Agreement and that under Ps’ ATA Agreement were so different that there was no competition between the two at all. However, comparing the “Scope of Services” under D1’s ATA Agreement (see §27 above) and “Scope of Services” under Ps’ ATA Agreement (see §11 above), there is a substantial overlap of the scope. Wilson Lam and Wilson Link Ltd may have to provide more services under D1’s ATA Agreement, but this does not detract from the fact that the scopes were substantially overlapped, and thus there was substantial, direct competition with the Plaintiffs’ business.

72.  It follows that entering into D1’s ATA Agreement constituted breach of the duty of fidelity owed by Wilson Lam to the Plaintiffs. It is, in my view, irrelevant as to who started the negotiation that led to D1’s ATA Agreement. Even if it was initiated by ATA Group as repeatedly stressed by Wilson Lam, the duty of fidelity did not permit him to respond to ATA Group’s initiation that would lead to him taking part in a business in competition with the Plaintiffs. The essence of the duty of fidelity is not about who initiates or solicits, but about a current employee not permitted to enter into competition with the employer.

73.  I note that in the pleadings, the entering into D1’s ATA Agreement is pleaded as breach of fiduciary duties only, and for reasons explained above, I also considered breach of implied duty of fidelity. However, for D1’s ATA Agreement, no breach of the Non-Solicitation Clause or the Non-Competition Clause is pleaded. Therefore, I should not consider the same because to do so would be unfair to the Defendants, who may have raised defence like unenforceability due to public policy had such breached been pleaded.

74.  It remains for me to say that the PRC Suppliers were mainly to supply goods to ATA Group. Therefore, the competition for ATA Group’s business would also mean the competition for the PRC Suppliers’ business.

75.  It follows that entering into D1’s ATA Agreement constituted breach of duty of fidelity.

C.  Circulation of price lists of products

76.  The next head of conduct is, as pleaded in §27 of the Re-Amended Statement of Claim, the Defendants’ circulation of price lists of, among others, the following products:-

(1)  Model No. SG Valves, in competition with Aalberts Integrated Piping Systems valves, of which NP King was appointed the exclusive distributor of the brand Pegler Valves at similar prices; and

(2)  R Brand Drills, which were sold by the Plaintiffs at similar prices.

77.  The Re-Amended Statement of Claim pleads that the distribution of the price lists constituted breach of Non-Disclosure Clause, Non-Competition Clause, fiduciary duties and/or Implied Terms. However, it does not plead when the price lists were distributed. Nor does it plead whether it was during his employment with the Plaintiffs, or after the employment. The evidence is also not clear – the Plaintiffs mainly rely on some emails issued by their customers in 2022 complaining that the products on the price lists were similar to their products. Wilson Lam’s evidence is that he distributed the lists after the employment, and such evidence is not challenged. I find that the lists were distributed after the termination of Wilson Lam’s employment with the Plaintiffs.

78.  Insofar as there is any suggestion that the price lists and the customer lists are confidential because they fall within the contractual definition of “Confidential Information” in the Non-Disclosure Clause, such suggestion would be valid only during the subsistence of the employment. However, upon the termination of the employment contract, such restraint of trade clause as the Non-Disclosure Clause would not be enforced “unless the protection sought is reasonably necessary to protect a trade secret or to prevent some personal influence over customers being abused in order to entice them away”: see Oriental Machinery Ltd v Choi Kin On, HCA 1719/2000, 21 November 2001 at §25 per DHCJ Johnson Lam (as he then was).

79.  In the present case, upon my finding that the price lists and the customer lists lacks the quality of confidence, for the Non-Disclosure Clause, I am not satisfied that use of the lists (if there were such use) would constitute misuse of trade secret (there being no trade secret in the first place due to lack of the quality of confidence) or abuse of influence over customers.

80.  Although the relief sought by the Plaintiffs in relation to the distribution of the lists, set out in §89.2.1 of Mr Fong’s Written Closing Submissions, is “nominal damages…in respect of using pricing information of products involving ‘Pegler Valves’ and R Brand Drills in issuing D2’s price lists”, in my view, the use of pricing information, or the distribution of the price lists (whether the lists were from the Plaintiffs or from third parties), in respect of similar products could also be understood as an act of competition, and in this way, the Non-Solicitation Clause and the Non-Competition Clause would be engaged.

81.  For ‘Pegler Valves’ and R Brand Drills, according to Wilson Lam’s evidence, the products on his price lists were for lower market niches, and so cannot be said to be competitive. In my view, given the similarity of the products, they were still competitive against the Plaintiffs. It is not an answer to say that the market niches are different – given the similarity of the products, there is a prima facie case that the Plaintiffs’ customers may go to the market niches of the products on the price lists circulated by Wilson Lam, but Wilson Lam has not given any evidence to detail how separate the market niches were such that there would not be any competition in any sense. Given the prima facie case, it is for Wilson Lam to explain otherwise, but he fails.

82.  In the circumstances, I am satisfied that there was breach of the Non-Solicitation Clause and the Non-Competition Clause.

D.  Use of the Plaintiffs’ contact list to solicit business from Tecware, Sing Lee and Winly after termination of employment

83.  In §29 of the Re-Amended Statement of Claim, only breach of Non-Solicitation Clause, fiduciary duties and/or Implied terms is pleaded for the conduct of Wilson Lam “as evidenced in the email[s]” sent by the Plaintiffs’ customers referred to as “Tecware”, “Sing Lee” and “Winly” to the Plaintiffs in February 2022. In brief:-

(1)  According to Winly’s email sent to the Plaintiffs on 11 February 2022, Wilson Lam approached them in October 2021 (after the termination of the employment according to Wilson Lam’s evidence), gave them his name car bearing Wilson Link Ltd’s name and raising “看看日後敝司產品他的客人有否合適”. In the cross-examination, Wilson Lam said that he just passed by and as a matter of courtesy, gave his name card. He denies having said “看看日後敝司產品他的客人有否合適”. However, in the cross-examination, when asked, Wilson Lam could not explain why Winly would make false allegation. I find it natural, and more likely than not, that when giving the name card, Wilson Lam also said something along that line. This, in my view, was solicitation of business.

(2)  According to Sing Lee’s email sent to the Plaintiffs on 16 February 2022, Wilson Lam “approached [them] twice and provided the following catalogue to [them] in [November] 2021” “hoping to collaborate with [them]”. In the cross-examination, Wilson Lam said that he approached Sing Lee only once, admitted that he did provide the catalogue but denied asking for “collaboration”. Again, in the cross-examination, when asked, Wilson Lam could not explain why Sing Lee would make false allegation, and I find what was stated in Sing Lee’s email to be true. In any event, giving catalogue itself was, in my view, solicitation of business.

(3)  According to Tecware’s email sent to the Plaintiffs on 16 February 2022, forwarding the email sent by Wilson Lam to Tecware on 5 October 2021 (shortly before Wilson Lam’s employment terminated on 10 October 2021) which stated that he would leave the Plaintiffs soon and that he could be contacted by phone or by an email address of Wilson Link Ltd’s domain name. Tecware said that Wilson Lam “contacted [them] via phone to see how [they] can collaborate in future”. Again, in the cross-examination, when asked, Wilson Lam could not explain why Tecware would make false allegation. I accept what was stated in Tecware’s email to be true. Telephoning Tecware for possible collaboration, in my view, was solicitation.

84.  For the Non-Solicitation Clause, Mr Chok does not dispute the validity of this Clause in the light of the evidence in §§37-38 of Susan Sim’s Supplemental Witness Statement as quoted in §62 above. In the circumstances, I find that Wilson Lam breached the Non-Solicitation Clause, which covered the period of the subsistence of the employment and 12 months after the termination of the employment.

85.  The fiduciary duties and implied terms ceased upon the termination of the employment. Wilson Lam’s solicitation in respect of Winly and Sing Lee took place after the termination of Wilson Lam’s employment and so there cannot be any breach of fiduciary duties and implied terms.

86.  For the solicitation in respect of Tecware, it is not clear when the telephone call was made. There is no plea and no evidence about the time. Given that the burden lies upon the Plaintiffs, I am not satisfied that the telephone call was made before the termination of the employment. So, there was no breach of fiduciary duties and implied terms.

E.  Deletion and removal of the Plaintiffs’ documents in D1’s Computer

87.  In §31 of the Re-Amended Statement of Claim, it is pleaded that Wilson Lam deleted or removed the following documents:-

(1)  “A significant number of the invoices respectively issued by the PRC Suppliers to the ATA Group for periods in 2018-2021 in electronic form and hardcopy was found missing (the “Missing Invoices”)”; and

(2)  “A significant number of digital files of the ATA Transactions were found by a data recovery expert to have been deleted in the D1 Computer (which were mostly unrecoverable due to ‘technical’ deletion performed by the 1^st Defendant), including “both digital copy and physical original of the Panqi Agreement (whereby it was agreed that 7% commission was payable by Panqi to the Plaintiffs).”

88.  For the Missing Invoices, the evidence is solely in relation to the deleted electronic copies in D1’s Computer (see Susan Sim’s Witness Statement §§33-37), and there is only one liner in §35 alleging that Wilson Lam had taken away the Missing Invoices, and even this is not clear whether it is referring to electronic copies only or also hardcopies, although in context including §36, it seems to be referring to electronic copies only. However, from the filenames of the deleted files, it is not clear whether those were really the Missing Invoices.

89.  In respect of the hardcopies, there is no evidence of what the Plaintiffs had done to search for the hardcopies of the invoices. Wilson Lam’s evidence is that there should be hardcopies kept in the Plaintiffs’ office and Leary Wu (“Leary”) would be able to locate them. For electronic copes, it is common ground that D1’s Computer had limited storage and known to the Plaintiffs, Wilson Lam had to clear the storage from time to time for new files. Further, there is no suggestion on what motive Wilson Lam had in destroying the Missing Invoices.

90.  On balance, I am not satisfied that Wilson Lam removed, destroyed and/or took away the Missing Invoices (electronic copies or hardcopies) without the Plaintiffs’ consent.

91.  For the other documents, except for the Panqi Agreement which I shall deal with below separately, it is not clear from the evidence what the other documents are. Even though Mr Fong tries to rely on the filenames or the folder names, I am unable to make any finding of what those documents are. Again, there is no suggestion on what motive Wilson Lam had in destroying the other documents in D1’s Computer. Again, it is common ground that D1’s Computer had limited storage and known to the Plaintiffs, Wilson Lam had to clear the storage from time to time for new files. Having considered the above in the round, on balance, I am not satisfied that Wilson Lam removed, destroyed and/or took away the other documents without the Plaintiffs’ consent.

92.  For the Panqi Agreement, in D1’s Computer, according to the Data-Recovery Report, there was a file named “Nanjing PangQi – NPKing佣金協議 [Signed 150226].pdf”. According to the Data-Recovery Report, the file had been corrupted and so could not be reopened despite the data recovery. According to the information recovered, the file was created and last modified on 12 November 2018 at 11:19am. While the date of creation and modification suggests the file was created on 12 November 2018, the file name “[Signed 150226]” suggests that that document was signed on 26 February 2015 (rather than 15 February 2026 because the data recovery was conducted in 2023 and 2024). On the Plaintiffs’ own case (see Re-Amended Reply and Defence to Counterclaim of 1^st and 2^nd Plaintiffs at §7(d)), the Plaintiffs and Panqi had entered into an agreement on 26 February 2015 (the “Panqi 2015 Fullex Agreement”) that Panqi agreed to pay the Plaintiffs commission at rate of USD 0.38/set in respect of the locks and tools supplied to Fullex Locks Limited (“Fullex”) in the UK. The Plaintiffs have not been able to explain what “[Signed 150226]” means, while Wilson Lam explains that it indeed was the Panqi 2015 Fullex Agreement. Having considered the above, I am not satisfied that there was a softcopy of the Panqi Agreement.

93.  Was there any hardcopy of the Panqi Agreement? In the email issued by Wilson Lam to Leary on 27 December 2018 at 11:36am, Wilson Lam wrote in relation to ATA order to Panqi #24659:-

“Leary,

此前提過， ATA 已要求Jason [of Panqi] 提供PanQi 的資料，登入他們的採購系統；而訂單將直接發予PQ 的，直接付款予PQ 的.

附件是最近的＃24659 PO, 因ATA 晚發出的原故（上周），要1月底才做完； 2月3rd 周才出貨. 到時Jason 收到貨款後，照此前的協議 － Amount 的7% ；轉為人民幣予NPKing. 2月底/3月初相互提醒一下，發張invoice給Jason! 請留意，謝！” (emphasis added)

94.  On 7 March 2019, Wilson Lam emailed Leary:-

“Leary,

Jason 很快將＃24659的貨發往上海. 等他收到錢後，我們出張invoice給他，收7-8％佣金，基於invoice上的金額；再化為人民幣（整數，齊頭數！）．到時我通知你，謝！”

95.  Wilson Lam this time mentioned “7-8%” commission instead of “7% commission”. In my view, this was because Wilson Lam would round up the sum, as indicated by the next sentence “再化為人民幣（整數，齊頭數！）”. In my view, in the overall scheme of things, this does not detract or subtract from the agreement of 7%.

96.  Wilson Lam’s evidence is that it would be discretionary. For some small amounts of supplies or sampling, the Plaintiffs had the discretion not to charge. Susan Sim’s evidence is not entirely inconsistent. She said that for initial sampling orders, the Plaintiffs may waive charging commission. In my view, it is not unusual that businesses would waive service charges if they were in small amounts as a means to show good gesture and in the hope of maintaining a good business relationship.

97.  Having considered the above, I find that:-

(1)  The Plaintiffs and Panqi agreed to 7% commission.

(2)  That said, the Plaintiffs had in the past waived charging any commission for small amounts of supplies.

98.  However, existence of an agreement between the Plaintiffs and Panqi to 7% commission is a separate matter as to whether there was any hardcopy of a Panqi Agreement, and more fundamentally, in the first place, whether there existed a written Panqi Agreement.

99.  Wilson Lam explains that Panqi was different from other PRC Suppliers. It was a relatively small supplier. It was introduced by ATA to the Plaintiffs. According to Wilson Lam, because of this, there was no written agreement between the Plaintiffs and Panqi in relation to ATA’s orders. However, it is common ground that there was the Panqi 2015 Fullex Agreement back in 2015. Therefore, it seems that the size of Panqi would not necessarily mean that there was no written agreement. Further, in my view, even if Panqi were small, in all probabilities, the businesses would like to have some written record to avoid dispute and to report to the superiors of the businesses to say the least. It is inherently improbable that Panqi and Wilson Lam would just rely on some oral agreement of 7%. Having considered the above, I am satisfied that there should be a hardcopy of the Panqi Agreement. It means that I reject Wilson Lam’s evidence that there was no hardcopy of the Panqi Agreement.

100.  Nevertheless, it does not follow that Wilson Lam destroyed or removed the hardcopy of the Panqi Agreement. One factor I should consider is my rejection of his evidence, which could only suggest that he is dishonest in this respect. His dishonesty may mean that he would like to conceal his destruction or removal of the hardcopy, or simply that he would like to defend the claim in toto, or simply that he did not know that there was the hardcopy. It is, however, quite impossible that he did not know that there was the hardcopy, given that he was in charge of the ATA Transactions. If he would like to defend the claim in toto, he could simply suggest that there was the hardcopy but it was just that the Plaintiffs could not find it out. Instead, he alleged, falsely, that there was no such agreement at all. I am, nevertheless, aware that there is little evidence that the Plaintiffs tried to search for the hardcopy and how the search was conducted. This would militate against a finding against Wilson Lam. Further, again, there is no suggestion of any motive on why Wilson Lam would destroy the hardcopy. Considering all these, I think it is a 50-50 case. Bearing in mind that cogent evidence is necessary to sustain such a serious allegation, I am not satisfied on balance that there existed a written Panqi Agreement, and it follows that I am not satisfied that Wilson Lam destroyed and/or removed any written Panqi Agreement.

XVI.  WHETHER THE BREACHES CAUSED ATA GROUP’S TERMINATION AND PRC SUPPLIERS’ TERMINATION

101.  As found in §§72-75 above, I found that in breach of his duty of fidelity, he entered into D1’s ATA Agreement with ATA such that ATA Group would be bound to work with Wilson Lam in replacement of the Plaintiffs, and the PRC Suppliers would have to follow as well.

102.  In other words, the breach of fidelity duty did cause ATA Group’s termination of the business relationship with the Plaintiffs as well as PRC Suppliers’ termination of the business relationship with the Plaintiffs.

XVII.  WILSON LINK LTD’S DISHONEST ASSISTANCE AND/OR BREACH OF CONFIDENCE?

103.  Given that I have found no breach of fiduciary duties, there cannot be any dishonest assistance, since breach of fiduciary duties is a prerequisite element of dishonest assistance: See Hui Cheung Fai and Another v Daiwa Development Limited and Others, HCA 1734/2009, 8 April 2014 at §§130-131 per DHCJ Eugene Fung SC (as he then was).

104.  Similarly, given that I have found no confidence in the information in question, there cannot be any breach of confidence on the part of Wilson Link Ltd.

XVIII.  QUANTUM OF LOSS

A.  Loss of retainer fee arising from ATA Group’s Termination

105.  The Defendants raise a point that even though the breach caused the termination of the business between ATA Group and the Plaintiffs, there was no loss caused because ATA Group would in any event terminate the business, ATA Group having had established stable relationship direct with PRC Suppliers, and ATA Group needing no longer any services of the Plaintiffs.

106.  The Defendants, however, miss the point that if ATA Group terminated the relationship with the Plaintiffs not for Wilson Lam’s services but some others’, ATA Group may have to stay longer with the Plaintiffs because other persons would not have the familiarity and experience with the ATA Transactions (for example, pricing and sources) and hence the readiness as Wilson Lam had. On the unchallenged evidence in §§37-38 of Susan Sim’s Supplemental Witness Statement quoted in §62 above, I find that the ATA Group would have to stay with the Plaintiffs for 12 months upon the date of Wilson Lam’s termination of the employment with the Plaintiffs, that is, until 9 October 2022, given that some other persons would need about 6 – 12 months to collate updated pricing information and 3 months for in-house training and months for getting sufficient experience. I, however, do not accept Mr Fong’s submissions that the two-year period of the Non-Disclosure Clause should be adopted because (1) even Susan Sim’s evidence does not explain any justification for the two years; (2) on the contrary, her evidence explains that 6 – 12 months would be needed to collate the updated pricing information; and (3) the Non-Disclosure Clause is not even engaged in the first place in the light of my finding that there was no confidence in the information in question.

107.  As to the multiplicand, the Plaintiffs’ primary case is the monthly management fee of GBP2,500 as at the date of the termination of the ATA Agreement. Alternatively, it should be the monthly management fee payable to Defendants under D1’s ATA Agreement because ATA Group would be willing to continue the relationship with the Plaintiffs on such management fee. In my view, on the premises that ATA Group would not have terminated its business relationship with the Plaintiffs at least until 12 months upon Wilson Lam’s termination of employment, that is, until 9 October 2022, rather than the premises that the Plaintiffs would otherwise have continued the business relationship with ATA Group on the monthly management fee agree under D1’s ATA Agreement, the starting point for the multiplicand should be GBP2,500 per month.

108.  Insofar as there is any suggestion that there was any business opportunity for the Plaintiffs towards 9 October 2022 such that the Plaintiffs were also deprived of such business opportunity by Wilson Lam’s entering into D1’s ATA Agreement, there is no evidence to satisfy me that there would be such business opportunity. The fact is that upon the commencement of the present action, ATA Group terminated its business relationship with Wilson Lam and Wilson Link Ltd, but ATA Group did not come back to the Plaintiffs for any business any more. Considering these, I do not find any business opportunity of which the Plaintiffs have been deprived of.

109.  GBP2,500 per month is the “starting point” because it would be the revenue. What the Plaintiffs are entitled to claim is profit, that is, after costs is deducted. There is no evidence on costs. The main costs seem to be the monthly salary of Wilson Lam, who was the main person in charge of ATA Transaction. Put another way, but for his breach of duty, he would have stayed with the Plaintiffs, and the Plaintiffs would still have to pay him the salary. His monthly salary was HK$48,700 per month when he left the Plaintiffs. However, in my view, it is wrong to simply deduct this HK$48,700 from GBP2,500 because commissions would also be generated from the dealings with the PRC Suppliers for the ATA Group.

B.  Commissions otherwise received from the PRC Suppliers

110.  As an overview of the amounts of commissions of the PRC Suppliers:-

(1)  On 30 November 2012, the Plaintiffs and Mingyi entered into a written agreement (the “Mingyi Agreement”). By the Mingyi Agreement, Mingyi agreed to pay the Plaintiffs commissions at 4% of the purchase amounts of all the goods supplied to and paid by ATA Group.

(2)  On 1 May 2017, the Plaintiffs and Tianhe entered into a written agreement (the “Tianhe Agreement”). By the Tianhe Agreement, Tianhe agreed to pay the Plaintiffs commission at 1.5% of the purchase amounts of all the goods supplied to and paid by the ATA Group.

(3)  On 10 April 2018, the Plaintiffs and Hongfeng entered into a written agreement (the “Hongfeng Agreement”). By the Honfeng Agreement, Hongfeng agreed to pay the Plaintiffs commissions at 2% of the purchase amounts of all the goods supplied to and paid by ATA Group.

(4)  As found above, the Plaintiffs and Panqi agreed to commissions at 7% of the purchase amounts of all the goods supplied and paid. That said, given the small amounts received from Panqi, in his closing submissions, Mr Fong helpfully simplifies the matter by not taking into account commissions from Panqi.

111.  The average amounts of commissions worked out by Mr Fong based largely on the debit notes, and helpfully agreed by Mr Chok for the Defendants, are:-

(1)  Between 2019 and 2021: HK$54,033 per month;

(2)  For 2022: estimated to be HK$58,896 per month; and

(3)  For 2023: estimated to be HK$64,197 per month.

C.  Quantum

112.  ATA Group’s termination of the relationship with the Plaintiffs became effective on 3 April 2022. In other words, the management fee otherwise payable by ATA Group to the Plaintiffs would be from 3 April 2022 to 9 October 2022 (see §107 above). It is 6 months and 7 days. The management fee for this period would be GBP2,500 per month, approximately HK$26,250 per month (at GBP1 = HKD10.5).

113.  Therefore, for this period, the management fee otherwise payable by ATA Group should be HK$26,250 x (6 + 7/30) = HK$163,625.

114.  For the commissions, in my view, the period should be the same as that for the management fee otherwise payable by ATA Group, because the PRC Suppliers, being suppliers mostly, if not only, to the ATA Group, would come and go together with ATA Group. Thus, the period should also be from 3 April 2022 to 9 October 2022 only. For this period, I accept the estimate of the monthly commissions to be the quantum, that is, HK$58,896 per month, and the total for the period is HK$58,896 x (6 + 7/30) = HK$367,118.40.

115.  As mentioned above, there is no evidence on costs. Doing the best I can adopting a broadbrush approach: see Man’s (Asia) Development Limited v Fung Chi Kin, HCA 1279/2013, 24 March 2017 at §49 per Anthony Chan J (as he then was), I think the costs would be best represented by the salary of Wilson Lam, who was the person in charge of the ATA Transactions. The salaries otherwise payable to him would be HK$48,700 per month (see §109 above). For this period, it would be HK$48,700 x (6 + 7/30) = HK$303,563.33.

116.  The profit suffered by the Plaintiffs would be HK$163,625 + HK$367,118.40 - HK$303,563.33 = HK$227,180.10.

D.  Nominal damages for breach of the Non-Solicitation Clause and the Non-Competition Clause in relation to ‘Pegler Valves’ and R Brand Drills

117.  I have found in §§81-82 above that there was breach of the Non-Solicitation Clause and the Non-Competition Clause in relation to ‘Pegler Valves’ and R Brand Drills, and in §84 above that there was breach of the Non-Solicitation Clause in relation to Wilson Lam’s approach to Winly, Sing Lee and Tecware. There is no evidence of any actual loss or any loss of chance. The Plaintiffs only seek nominal damages for these breaches. I award HK$5,000 for this head of damages.

E.  Total

118.  In total, the damages should be HK$227,180.10 + HK$5,000 = HK$232,180.10.

XIX.  NO COMMISSIONS FOR THIRD QUARTER OF 2021?

119.  Before I conclude, I should also mention that Wilson Lam gives evidence to the effect that no fee and commissions would be payable in October, November and December 2021 because no services were rendered by the Plaintiffs. This issue is academic as a result of the Plaintiffs’ abandonment of the claim for damages (1), (2) and (3) (see §44 above). However, since quite some pleadings, evidence and cross-examination were spent on this issue before the Plaintiffs’ abandonment of the claim for damages (1), (2) and (3), I find it appropriate to express my view on this issue.

120.  According to Wilson Lam, the Plaintiffs and each of the PRC Suppliers shared the following common understanding (the “Purported Common Understanding on Commission”)”, as pleaded in §9 of the Re-Amended Defence and Counterclaim:-

(1)  An invoice would be issued by the respective PRC Supplier for goods products, tools and/or machinery parts purchased by the ATA Group;

(2)  The issuance of such invoices or complete delivery was not actual receipt of full payment by the PRC Suppliers from ATA Group; and

(3)  No commission would be payable to the Plaintiffs unless the Plaintiffs have procured, within a particular quarter of a year:-

(a)  the successful and complete delivery of the goods to ATA Group; and

(b)  the receipt of full payment by the PRC Suppliers from ATA Group.

121.  According to Wilson Lam, by the Purported Common Understanding on Commission, the PRC Suppliers would not have to pay any commission to the Plaintiffs if, for example:-

(1)  ATA Group placed the purchase orders with the PRC Suppliers in Quarter 1;

(2)  The Plaintiffs processed the purchase orders, say, by checking the quality and arranging the shipment in Quarter 1;

(3)  No services were provided in Quarter 2; and

(4)  The actual delivery and the actual receipt of payment by the PRC suppliers only took place in Quarter 2.

122.  In the Re-Amended Defence and Counterclaim, at §18(26), it is pleaded that:-

“Accordingly, save as to the commission and/or other payments accrued before the Q4 of 2021 which may, which is not admitted, be payable to the Plaintiffs by virtue of the agreements made between the ATA Group and/or the PRC Suppliers referred to in the Re-Amended Statement of Claim, the Plaintiffs were entitled to no commission at all beginning on the first day of Q4 of 2021, that is, 1^st October 2021.”

123.  I reject Wilson Lam’s evidence in this respect, for the following reasons:-

(1)  According to Wilson Lam’s logic, as explained by him during the cross-examination, even though the Plaintiffs did all the liaison and arrangement in Q3 and the only outstanding matter would be delivery and actual payment, the PRC Suppliers would not have to pay commission to the Plaintiffs if the delivery and actual payment only took place in Q4. This does not make any commercial sense at all. This would mean that the Plaintiffs would be arbitrarily deprived of the fees of the services they had actually rendered just by the luck of whether the actual delivery and the actual payments would fall within the same quarter.

(2)  When asked for further explanation, Wilson Lam said that it was like that because the PRC Suppliers were worried that it would have to pay despite lack of services in the quarter. I cannot see what they had to worry when in the previous quarter, services had been rendered.

(3)  Wilson Lam went further to say, following his logic, that for a purchase order, if the Plaintiffs were not required to do anything because, say, the purchaser order went smoothly without any input from the Plaintiffs, neither ATA Group nor the PRC Supplied would have to pay any commissions. However, the Plaintiffs’ services were never valued on a piece-by-piece basis like, arrangement for shipment would be worth HK$X and quality checking would be worth HK$Y. In fact, such position runs contrary to the ATA Agreement and all the PRC Suppliers Agreements.

(4)  All the PRC Suppliers agreements provided expressly in writing (except for the Panqi Agreement) that ATA or the PRC Suppliers as the case may be agree to pay commission on the purchase prices or the receipts of the payment prices. Nothing was mentioned that the commission would be payable only if within the same quarter of the purchase order, the goods were delivered and the payments were made. Nothing was mentioned that the commission would be payable only if services would be provided. The nearest would be the Tianyuan Supplier Contract which said that “该佣金是NPK 向成都天恆公司介绍ATA 和其他客户以购买钨鋼产品零件以及NPK 在此过程中向客户和天恆公司公司提供服务而达成的。”  However, it is clear that the commission was not meant for the services only, but also for the introduction of Tianyuan to ATA Group and other purchasers, and the commission agreed was a commission by percentage on the purchase prices. That was the parties’ bargain to reflect the introduction and the services lumped together, and nothing in the Contract suggested that the two would be severable.

124.  Therefore, the PRC Suppliers would still have to pay commissions to the Plaintiffs in the third quarter in 2021.

XX.  CONCLUSION

125.  Based on the above analysis, I make the following order:-

(1)  Wilson Lam do pay damages of HK$232,180.10 to Purdon King.

(2)  The pre-judgment interest thereon shall accrue from the date of the Writ of Summons at the rate of 1% pa above HSBC prime rate until today.

(3)  The post-judgment interest shall accrue on the sum of (1) and (2) above at judgment rate from today until payment.

(4)  The Plaintiffs’ claim against Wilson Link Ltd shall be dismissed.

(5)  The Defendants’ counterclaim shall be dismissed.

126.  For costs, I make a costs order nisi that:-

(1)  Wilson Lam shall pay the Plaintiffs costs of their claim against him (except for those for the claim for Damages (1), (2) and (3) under §§33-49 of the Re-Amended Statement of Claim) and the costs of his Counterclaim, to be taxed on District Court scale, if not agreed. District Court scale is the scale because the damages awarded to the Plaintiff fall within the District Court jurisdiction.

(2)  The Plaintiffs shall pay Wilson Lam costs of the claim for Damages (1), (2) and (3) under §§33-49 of the Re-Amended Statement of Claim, to be taxed on High Court scale, if not agreed. High Court scale is the scale because the Defendants were forced to defend the claim in High Court as a result of the Plaintiffs’ pleaded claim for more than HK$3,000,000.

(3)  There shall be no order as to costs as between the Plaintiffs and Wilson Link Ltd. The reason is that the Plaintiffs’ claim against Wilson Link Ltd has failed, while Wilson Link Ltd’s counterclaim against the Plaintiffs has been effectively withdrawn.

127.  Lastly, I thank Mr Fong and Mr Chok for their assistance.