SOUTH CHINA MEDIA LTD AND OTHERS v. KWOK, YEE NING AND OTHERS

DCCJ 1751/2015
[2018] HKDC 194

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1751 OF 2015

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JUDGMENT

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INTRODUCTION

1.  This is the plaintiffs’ claims against the defendants which principally arose out of the 1^st defendant’s (“Kwok”) alleged breaches of contractual and fiduciary duties against the plaintiffs.

2.  The plaintiff further claims that the 2^nd to 4^th defendants (“Greens PR”, “Marcois Group” and “Shen” respectively) procured and were accessories to Kwok’s misconduct.  Shen is Kwok’s husband and appears to have control over both Greens PR and Marcois Group.

3.  The 1^st to 3^rd plaintiffs (“SCM”, “SCM Management” and “Whiz Kids” respectively) form a group of companies known as the South China Media Group (“the Group”) which main business is the publication of various magazines in Hong Kong.  Their structure can be briefly stated as follows:-

(1) SCM is a holding company holding inter alia SCM Management and Whiz Kids;

(2) SCM Management is a management service company which employs staff under the SCM Group, including staff who work for Whiz Kids. It does not have any trading business of its own;

(3) Whiz Kids publishes the magazine “Whiz-Kids Express Weekly” (“the Magazine”) which targets kindergarten and primary school children and their parents and provides event planning services for educational and extra-curricular activities.

4.  Kwok was employed by SCM Management on 1 February 2014 as its “advertising director” in the advertising department, primarily responsible for the Magazine.  She also entered into a letter of undertaking and a confidentiality undertaking (addressed to inter alia SCM and SCM Management) on 6 January 2010.

The Plaintiffs’ case

5.  The plaintiffs allege the following principal misconducts committed by Kwok[1]:-

(1)   Allowing unauthorized use of the Magazine’s logo and name: Kwok allowed the Magazine’s logo and name to be used in various promotional materials free of charge:-

	Time	Event	Loss	ASOC
(a)	Aug 2014	Oxford Path Campaign	$109,400	§§27-28
(b)	Nov 2014	Oxford Book Ordering Campaign	$45,000	§§29-31
(c)	Jan 2015	Kids Focus Campaign	$180,000	§24A-26
		Total loss:	$334,400

(2)   Diversion of business opportunities: Kwok diverted away maturing business opportunities of Whiz Kids to Greens PR:-

	Time	Business Opportunity	Loss	ASOC
(a)	Aug 2013	1st Dr-Max Contract	$156,100	§§32-36
(b)	May 2014	2nd Dr-Max Contract	$123,000	§37
(c)	Aug 2014	3rd Dr-Max Contract	$180,000	§37A
		Total loss:	$459,100

(3)   Solicitation of the business of Mongson Trading Co Ltd (“Mongson”) to Greens PR and Marcois Group after the termination of her employment with the plaintiffs: (ASOC §§41-45).

6.  The plaintiffs allege that Greens PR, Marcois Group and Shen’s liabilities arise from:-

(1)   Their unlawful procurement of Kwok’s breaches of contract: (ASOC §49);

(2)   In the case of Greens PR and Shen, their dishonest assistance in Kwok’s breaches of fiduciary duties (ASOC §56); and

(3)   In the case of Greens PR, its knowing receipt of funds which were caused by Kwok to be paid to Greens PR in breach of her fiduciary duties.

7.  The Plaintiffs have filed one witness statement of Mr Lee Tsang Tung (“Lee”) dated 3 February 2017 and called him as their only witness at trial.  Lee was SCM Management’s general manager from 2014 to July 2016.  He was Kwok’s superior and supervisor and has intimate knowledge of the business and affairs of SCM Management and Whiz Kids.

8.  Kwok, Greens PR and Shen have all filed defences in this action.  They were legally represented until 10 July 2017 but have been acting in person since that date. Marcois Group has not acknowledged service of the writ.

9.  Kwok, Greens PR and Shen have not filed any witness statements and have been debarred from doing so by reason of the unless order made by Master SP Yip on 28 September 2016.

10.  Kwok has been convicted of fraud and at the time of the trial was serving a 12-month sentence in prison.  The charge sheet can be found in the trial bundles in this case[2]. The particulars of offence overlap with the subject matters in this action. The plaintiffs, however, are not relying upon Kwok’s criminal conviction to establish her civil liabilities in this case.

11.  At the trial, Kwok was not represented and appeared in person.  Greens PR and Marcois Group were not represented and were absent. Shen was represented by Mr Duncan Ma of counsel and solicitors.

The defendants’ case

12.  Kwok’s defence is mainly consisted of denials and non-admissions.

13.  She alleges that the terms of her contract and the letter of undertaking, particularly in relation to the non-solicitation, non-competition and restrictive covenants clauses, are “too unreasonable, too wide and too restrictive, and/or are being unenforceable in law, and should be struck down.”: (see §§12-15; §§18-20 and 25-27 of D1’s defence and counterclaim).  She also denies that she was a de facto director but was a relatively junior member of staff within the plaintiffs’ group of companies, despite the title of “advertising director” given to her.  She also denies that she was in breach of any confidentiality. 

14.  In each of the dealings in respect of the Kids Focus Campaign, OUP, Dr-Max and Mongson, Kwok denies any wrongdoings.  She also makes a counterclaim against the plaintiffs for alleged transportation costs in hiring trucks/vans and promotion worker wages she had paid on behalf of the plaintiffs for which she was never reimbursed in the sum of $28,000.

15.  Greens PR and Shen’s defence are identical and contained in the same document.  They both deny of any wrongdoings. 

16.  They admit that Shen was the manager of Greens PR which mainly provides logistic services to customers, like vehicle services, to distribute their products to different locations in Hong Kong.  It has been alleged that it is the “usual and common practice that although Greens PR helped customers to handle their intended advertisements to be placed in the relevant magazines, all the relevant design(s), materials and use of logo(s) would be provided by customers, which is simply not its responsibility or duty.”: (see §12 of D2 & D4’s defence). 

17.  Greens PR and Shen further allege that Marcosis Group was registered in the name of one Chow Siu Lan Ian and was and is not under the control of Shen at all.  They further claim that they were not aware of the terms of Kwok’s employment contract with the plaintiffs due to the martial status between Kwok and Shen.

18.  In relation to the Kids Focus Campaign, OUP, Dr-Max and Mongson’s contracts, they claim that they are all ordinary business contracts and their customers only exercised their own commercial decisions and freedom to use their services.  They deny that they had convinced, persuaded or pressured Kwok to divert any business from the plaintiffs’ companies.

DISCUSSION

Issues in Dispute

19.  The following are the issues in dispute listed out by the plaintiffs prior to the trial:-

In relation to Kwok’s employment

(1) Whether Kwok owed the fiduciary duties to Whiz Kids as defined in §14 of the ASOC;

(2) Whether Kwok owed SCM Management a duty of confidence and a duty of fidelity;

(3) Whether Greens PR, Marcois Group and Shen were aware of Kwok’s terms of employment.

In relation to the unauthorised use of Magazine’s logo and name

(4) Whether Kwok had committed the breaches as described in §§24A to 26 of the ASOC in respect of the Kids Focus Campaign;

(5) Whether Kwok had committed the breaches as described in §§27-28 of the ASOC in respect of the Oxford Path Campaign;

(6) Whether Kwok had committed the braches as described in §§29-31 of the ASOC in respect of the Oxford Book Ordering Campaign.

In relation to the diversion of business

(7) Whether Kwok had committed the breaches as described in §§32-38 of the ASOC in respect of the 1^st, 2^nd and 3^rd Dr-Ma Contracts.

In relation to the receipt of funds by Greens PR

(8) Whether Greens PR had received the funds totalling $684,829.00 from the ‘1^st, 2^nd and 3^rd Dr-Ma Contracts’ and whether any of those funds were held as constructive tryst for the plaintiffs.

In relation to the solicitation of Mongson  

(9) Whether Kwok had committed the breaches as described in §§41-45 of the ASOC in respect of Mongson.

In relation to the procurement of Kwok’s breaches

(10) Whether Greens PR, Marcois Group and Shen had procured Kwok to commit all or any part of the above breaches.

In relation to damages, equitable compensation and constructive trust

(11) Whether the plaintiffs have suffered any loss as a result of each of Kwok’s braches.  If so, the amount;

(12) Whether Greens PR is liable to repay or transfer any funds or assets held on trust to SCM;

(13) Whether Greens PR and Shen have assisted Kwok in her breaches and/or liable in equitable damages for knowing receipt.  If so, the amount.   

20.  The defendants have not filed or responded to the above list of issues prepared by the plaintiffs.

21.  I shall deal with the above issues broadly under the following headings in this judgment:-

(A) Breach of fiduciary duties of kwok; including:-

(i) whether she owed such fiduciary duties;

(ii) diversion of business opportunities; and

(iii) unauthorized use of the Magazine’s logo and name;

(B) Breach of restrictive covenants of kwok, in particular, the breach of the non-solicitation clause; and

(C) Claims against Greens PR, Marcois Group and Shen, including

(i) dishonest assistance by Greens and Shen; and

(ii) procuring breach of contract by Greens PR, Marcois Group and Shen.

Relevant Legal Principles

22.  I am grateful to Mr David Chen, counsel for the plaintiffs, for very succinctly and ably summarized the relevant legal principles involved in this case. Both Kwok and Mr Ma for Shen do not take issue with those principles.  I shall respectfully adopt them hereinbelow.

23.  In respect of Kwok’s capacity as the “advertising director” of SCM management, I accept the proposition that, as a matter of law, those who assume to act as directors and who thereby exercise the powers and discharge the functions of a director, whether validly appointed or not, must accept the responsibilities of the office. One must look at what the person actually did to see whether he assumed those responsibilities in relation to the subject company (Karla Otto Ltd v. Bulent Eren Bayram [2017] 2 HKLRD 124 at §§31-32 per DHCJ Huntsworth). The question whether or not the person acted as a director is to be determined objectively and irrespective of the person’s motivation or belief (Smithton Ltd v. Naggar [2015] 1 WLR 189 at 198 §39 per Arden LJ). The relevance of these principles is that Kwok was not formally appointed as a director of Whiz Kids but the Plaintiffs’ case, of which I accept, is that she was a de facto director (ASOC §5(3)).

24.  De facto directors owe fiduciary duties to the company which they purport to act for: (see Snell’s Equity (33^rd ed.) at §§7-001 to 7-006).

25.  A fiduciary lies under a duty not to usurp or divert to another person or company with whom or with which he is associated a maturing business opportunity which his company is actively pursuing (Snell’s Equity at §7-049; Canadian Aero Service Ltd v. O’Malley (1973) 40 DLR (3d) 371 at 382; Kao Lee & Yip v. Koo Hoi Yan [2003] 3 HKLRD 296 at 321 at §72 per Ma J (as the Chief Justice then was)).

26.  The elements of the tort of procuring a breach of contract have been summarized by Morgan J in Aerostar Maintenance International Ltd v. Wilson [2010] EWHC 2032 (Ch) at [163] as follows:

“… first, there must be a contract, second, there must be a breach of that contract, thirdly, the conduct of the relevant Defendant must have been such as to procure or induce that breach, fourthly, the relevant Defendant must have known of the existence of the relevant term in the contract or turned a blind eye to the existence of such a term and, fifthly, the relevant Defendant must have actually realised that the conduct, which was being induced or procured, would result in a breach of the term.”

27.  Actionable interference with contractual rights is not confined to direct procurement, inducement or persuasion. It could be actionable where the contract breaker is a willing party. If a third party, with knowledge of a contract between the contract breaker and another, has dealings with the contract breaker which the third party knows to be inconsistent with the contract, he has committed an actionable interference (Natuzzi SpA v. De Coro Ltd [2007] 3 HKC 74 at 83 at §39 per Lam J (as he then was)).

28.  Directors are trustees in respect of a company’s assets. A director who acts in breach of his fiduciary duties is liable to the company in equitable compensation. Equitable compensation is assessed at the time of judgment with the benefit of hindsight. The common law rules of foreseeability and remoteness do not apply, though causation is required (Libertarian Investments Ltd v. Hall (2013) 16 HKCFAR 681 at 707-714 per Ribeiro PJ).

Relief Claimed

29.  Some of the reliefs claimed in the prayer of the ASOC have already lapsed. Thus, the plaintiffs no longer pursue the injunctive reliefs claimed in the ASOC, viz., §§1, 2 and 6 of the prayer. The Plaintiffs only pursue the damages claims against the defendants at this trial.

The Evidence

30.  Only the plaintiffs have filed a witness statement in this case.  The statement comes from Lee.  The defendants were debarred from doing so due to the repeated failures in filing theirs, despite ample of opportunities given by the court to do so.  This was during the time when they were still being represented by solicitors and counsel.  

31.  In assessing witness credibility, generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events. In determining a witness’ credibility, the court may also attach importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence (see Hui Cheung Fai v. Daiwa Development Ltd (unreported, HCA 1734/2009, 8 April 2014) at §§76-83 per DHCJ Eugene Fung SC).

32.  I find Lee to be a credible and reliable witness. His evidence is derived mainly from undisputed or indisputable contemporaneous written documents (e.g. email correspondence, contracts, etc.) which came into existence before these proceedings were commenced.  Further, in my view, Lee’s evidence was not in any way undermined by Kwok or Shen’s counsel during cross-examination. He gave concrete answers with full explanations to the questions put to him.  Lee also has no personal interest in this matter as he is no longer employed within the Group. In the circumstances, I have no hesitation to accept Lee’s evidence in its entirety, both contained in his witness statement and related by him in his oral evidence.

33.  As the defendants, including Kwok and Shen, have consciously chosen not to produce any witness statements and hence voluntarily gave up their rights to call any witnesses to give oral evidence at trial, I am entitled to draw any adverse inference against them and, correspondingly, any favourable inferences to the plaintiffs can be drawn more confidently as well: (see Polaroid Far East Ltd v Bel Trade Co Ltd & Others [1990] 2 HKLR 447 at 454; Jones v Dunkel (1958—1959) 101 CLR 298; and Kao Lee & Yip v Koo Hoi Yan & Others, supra at 310 §34).   

Claims against Kwok

(A)   Breaches of Fiduciary Duties

(i)   Kwok owed Fiduciary Duties to Whiz Kids

34.  I accept that Kwok was not a de jure director of Whiz Kids. However, by reason of her role in and the functions she performed for Whiz Kids, I find that Kwok was a de facto director of Whiz Kids at all material times prior to her resignation in December 2014.

35.  The law on de facto directorship was recently summarised by DHCJ Huntsworth in Karla Otto, supra.  In my judgment, Kwok was a de facto director of Whiz Kids by reason of the following evidence which has been succinctly summarised by Mr Chen, counsel for the plaintiffs:-

(1) She had the title “advertising director” (see Contract dated 1 February 2014[3] and Organization Chart[4]), and was held out to clients as Whiz Kids’ “advertising director” (see sample contracts prepared and sent out by Kwok[5]);

(2) Kwok had authority (a) to negotiate with clients on the terms of Whiz Kids’ contracts, and (b) to enter into such contracts for and on behalf of Whiz Kids (see sample contracts referred to above). Kwok therefore exercised the powers and discharged the functions of a director.

36.  A de facto director owed fiduciary duties to the company (Karla Otto at §37; Snell’s Equity at §§7-001 to 7-006).

37.  In my view, even if Kwok was not a de facto director of Whiz Kids, she had undertaken to act in the interests of Whiz Kids which would give rise to a relationship of trust and confidence: (Bristol & West Building Society v. Mothew [1998] Ch 1 at 18 per Millett LJ). Kwok was therefore a fiduciary of Whiz Kids and as such owed fiduciary duties to Whiz Kids.

38.  Kwok in her closing submissions, the contents of which incidentally are not supported by any evidence called at trial by virtue of the fact she was debarred from doing so, states that her relatively lowly positon of “advertising director” would not have given her authority to do a lot of things that the plaintiffs alleged in the trial, including for example allowing her customers to make use of the Whiz Kids logo. 

39.  I reject her submissions on this as this is not supported by any evidence produced by her, including oral evidence at the trial.  To the contrary, in my view, the evidence produced by the plaintiffs has amply demonstrated that Kwok was acting in the capacity of a de facto director, having full responsibilities and authorities of that of a director acting on behalf of Whiz Kids.   

(ii)   Diversion of Business Opportunities

40.  In my opinion, it is clear from the following evidence cited and relied on by Mr Chen for the plaintiffs that Kwok had diverted to Greens PR maturing business opportunities of Whiz Kids:-

(1) On 27 August 2013, Kwok sent a quotation to Kit Lo of Dr-Max for his comment[6]. The quotation of $400,000 was dated 28 August 2012[7].

(2) On 28 August 2013, Connie Hung of Dr-Max informed Kwok that the quotation of $400,000 was “far away from our target” and asked Whiz Kids to lower the quotation to $256,100[8]. Connie Hung also requested Kwok to add to the draft contract the term that “Whiz Kids Express will be responsible for transportation”.

(3) On 2 September 2013, Kwok suggested to Dr-Max the fee of $328,400[9].

(4) On 5 September 2013:-

i. At 10:33 am, Connie Hung suggested to Kwok the fee of $300,000 (being $150,000 for the “957 x Kindergarten” item and $150,000 for all other items)”[10].

ii. At 2:18 pm, Shen emailed Kit Lo and Connie Hung saying “Regarding to the school program, we will arrange the logistic for kindergarten and primary school on end of Sept. Please see the contract for your sign and chop.”[11].

(5) On 6 September 2013:-

i. At 6:19 pm, Connie Hung emailed Shen, Kit Lo and Kwok asking Shen to amend the draft contract he sent on 5 September 2013, in particular to add the term “We, [Greens PR] hereby appoint Whiz-Kids Express Weekly (WKE) as our representative in this event”[12].

ii. At 6:59 pm, Shen sent to Connie Hung (copying Kit Lo and Kwok) the revised contract[13].

(6) On 7 September 2013, Connie Hung emailed Shen, Kit Lo and Kwok asking Shen to add to the contract the term that “Greens PR will be responsible for transportation”[14].

(7) On 9 September 2013:-

i. At 3:49 pm, Shen sent the revised contract to Connie Hung and Kit Lo[15].

ii. At 4:13 pm, Kwok sent an email to Connie Hung and Kit Lo asking them to “arrange 400,000 copies coloring form and delivery on or before 23^rd October, 2013”[16].

(8) On 23 September 2013, Shen sent an email to Connie Hung, copying Kwok, asking her to arrange payment of the 50% deposit[17] .

41.  In my judgment, it is clear that the draft and finalized contracts circulated by Shen[18] were based upon the template circulated by Kwok[19].  The principal difference is that some of the obligations of Whiz Kids became obligations of Greens PR, e.g. the obligation relating to delivery.  Even on the Greens PR contracts circulated by Shen, however, Whiz Kids remained under various obligations, e.g. to distribute materials to 500 local primary schools and 800 kindergartens, and to run advertisements in the Magazine. The contract was also signed by Kwok on behalf of Whiz Kids[20]. 

42.  I agree with Mr Chen that the reason for Whiz Kids’ involvement in the 1^st Dr-Max Contract[21] was clear: it was critical for the colouring competition to be advertised in the Magazine given its wide circulation and recognition among kindergartens and primary schools.  Greens PR did not publish any magazine and did not have access to another magazine which could provide the same level of circulation as the Magazine.

43.  Whiz Kids did not, however, receive a single dollar for its services and the performance of its obligations under the 1^st Dr-Max Contract.  The 50% deposit was paid to Greens PR on 23 September 2013[22]. The irresistible inference to make out of this, particularly in the absence of any positive evidence from the defendants, is that the remaining 50% balance was also paid to Greens PR.

44.  Further, I agree with Mr Chen that, judging from the email correspondence set out above, this was a case of diversion of corporate opportunity by Kwok to Greens PR, not a case where Greens PR secured the 1^st Dr-Max Contract on its own merit:-

(1) First, Shen was able to offer Dr-Max a price of $306,100[23] which fell between the price offered by Whiz Kids at $328,400 and that acceptable to Dr-Max at $300,000.  The inference I can draw in favour of the plaintiffs and the adverse inference I can draw against the defendants correspondingly must be that Kwok had told her husband, Shen, the details of the negotiations between Whiz Kids and Dr-Max, and sent to him a soft copy of the draft 1^st Dr-Max Contract (on Whiz Kids’ template) so that Shen could make a similar offer to Dr-Max for and on behalf of Greens PR.

(2) Second, Greens PR and Whiz Kids are competitors, at least insofar as the event planning business was concerned. In her email sent on 6 September 2013 at 6:19 pm[24], Connie Hung copied in Kwok, even though the email to which she replied did not include Kwok. This shows that Dr-Max did not regard Greens PR and Whiz Kids as competitors for the 1^st Dr-Max Contract, but rather as collaborators, so that both of them should be included in the same email.

(3) Third, Dr-Max considered Whiz Kids’ involvement in the contract to be indispensable, hence requiring the term providing that Greens PR appointed Whiz Kids as their representative in the event.

(4) Fourth, the fact that Kwok allowed Whiz Kids to be appointed as Greens PR’s representative in the event without insisting that Whiz Kids also becoming the event planner / organizer in place of Greens PR shows that Kwok deliberately allowed Greens PR to usurp Whiz Kids’ position.

(5) Fifth, Greens PR was incorporated in or about April 2013[25] with no track record in the industry.  It is simply unimaginable that Dr-Max would engage Greens PR as its event organizer and promotor in August 2013 without Kwok’s unauthorised endorsement.

45.  In my judgement, in diverting the 1^st Dr-Max Contract to Greens PR, Kwok acted in breach of her fiduciary duties owed to Whiz Kids in that she:-

(1) failed to act with single-minded loyalty to Whiz Kids, and failed to act in good faith: (Bristol & West Building Society, supra at 18 per Millett LJ);

(2) acted for the benefit of a third person without the informed consent of her principal, Whiz Kids: (Bristol & West Building Society, supra at 18 per Millett LJ); and

(3) placed herself in a position of conflict, since her duty to act in the best interest of Whiz Kids conflicted with her interest in Shen and Greens PR securing the 1^st Dr-Max Contract.

46.  I agree with the plaintiffs’ submissions that Kwok’s aforesaid breaches of fiduciary duties involved an element of infidelity and disloyalty.  In such cases, once the plaintiff has shown a loss arising out of a transaction to which the breach was material, the plaintiff is entitled to recover unless the defendant fiduciary, upon whom is the onus, shows that the loss or damage would have occurred in any event, ie without any breach on the fiduciary’s part. Questions of foreseeability and remoteness do not arise in this kind of case either: (see Libertarian Investments Ltd (2013) 16 HKCFAR 681 at §§75, 82.

47.  Further, Whiz Kids’ loss may arise from the loss of a chance of profiting from contracts to be entered into with Dr-Max. This requires not merely an assessment of the chance but also an assessment of the profit which Whiz Kids would have made, had the chance materialized: (see BSM Marketing Ltd v. Take Ltd [2009] EWCA Civ 45 at §4 per Keene LJ).

48.  Having regard to the manner in which the 1^st Dr-Max Contract was diverted to Greens PR, I agree with the plaintiffs that it was a matter of certainty that Whiz Kids would have secured the 1^st Dr-Max Contract but for Kwok’s unlawful diversion of the same to Greens PR. This is fortified by the fact that Dr-Max required Whiz Kids’ participation in the transaction and Whiz Kids’ signature on the 1^st Dr-Max Contract, even though Greens PR was officially the event organizer.

49.  Lee explained in his witness statement that if Whiz Kids entered into the 1^st Dr-Max Contract, Whiz Kids would have incurred direct costs of about $150,000, so the profits would amount to $156,100 (being the contract price of $306,100 less the direct costs of $150,000).  This is consistent with Lee’s oral evidence, when he explained that normally Whiz Kids’ gross profit margin was about 50% to 60%, and ensured that the direct cost did not exceed 40% to 50% of the contract price. In the circumstances, I accept and find that Whiz Kids has suffered a loss of $156,100 from Kwok’s diversion of the 1^st Dr-Max Contract to Greens PR.

50.  The same analysis applies to the 2^nd Dr-Max Contract[26] and the 3^rd Dr-Max Contract[27].  Kwok signed on the 2^nd Dr-Max Contract and was involved in the negotiations relating to the 3^rd Dr-Max Contract. Rather than requesting Dr-Max to enter into contracts with Whiz Kids, Kwok facilitated the discussions between Dr-Max and Greens PR, and allowed Whiz Kids to be appointed as Greens PR’s representative for all event liaisons and communications with primary schools without receiving any fees in return. In so doing, I find Kwok acted in breach of her fiduciary duties.

51.  By applying the same logic above, I find Whiz Kids’ loss of profits was $123,000 from the 2^nd Dr-Max Contract and $180,000 from the 3^rd Dr-Max Contract.

52.  Kwok in her closing submissions suggests that the customers of the plaintiffs could easily able to find the contacting details of Greens PR on the internet, therefore implying that it was not through her that the customers came into contact with Greens PR.  She denies that she had ever talked to Shen about the plaintiffs’ customers.  She further states that the plaintiffs had previously allowed the use of Whiz Kids logo to other charitable organizations and non-charitable organisations for free.  She further submits that she had no authority to make any decision or authority to make such decision in regard to which event Whiz Kids could or could not participate.  Kwok submits that she could not stop the plaintiff’s company form using Greens PR and she also had no knowledge of such.

53.  The trouble with Kwok’s allegations above is that they are not supported by an iota of evidence.  Conversely, in the light of the overwhelming evidence against her and the other defendants as summed up by Mr Chen above, I have no hesitation in drawing adverse inferences against Kwok and find that she was in beach of her fiduciary duties owed to the plaintiffs in this case.  

(iii)   Unauthorized Use of the Magazine’s Logo and Name

54.  In Lee’s oral evidence, he explained that:-

(1) Whiz Kids allowed advertisements to be placed in the Magazine if the price was right and the client’s profile was suitable or in line with the Magazine. If advertisements fulfilled these criteria, Whiz Kids’ advertising director (i.e. Kwok at the material time) had authority to approve the publication of the advertisements. Lee and Whiz Kids’ senior management (i.e. the CEO and COO) would be specifically notified when advertisements did not fulfil the abovementioned criteria, for instance when charitable organizations wished to place advertisements or when substantial clients sought discounts.  In such cases, the senior management would exercise their discretion to allow or disallow the placement of these advertisements.

(2) If Whiz Kids were engaged as an event organizer or co-organizer, Whiz Kids might allow the client to use Whiz Kids’ logo and name to advertise the event, but Whiz Kids’ prior authorization must be obtained. There was no fixed price for a client to use Whiz Kids’ logo and name.  For instance, if a charity asked Whiz Kids to be its media partner, the senior management might approve of the collaboration and allow the charity to use Whiz Kids’ logo and name free of charge.

55.  Normally, Lee being Whiz Kids’ general manager would be required to endorse and sign off projects in which Whiz Kids participated as an organizer or co-organizer: (see Lee’s witness statement at §21[28]).

56.  As regards the Kids Focus Campaign (see Lee’s witness statement at §§20-31[29]): Lee did not endorse the Kids Focus Campaign, in which Whiz Kids was named as the co-organizer and an adjudicator. This was made clear in Whiz Kids’ letter dated 26 January 2015[30] in which Lee demanded Greens PR to cease and desist from using Whiz Kids’ logo and name in relation to the Kids Focus Campaign. Shen, telephoned Lee on 27 January 2015 to explain that Greens PR’s use of Whiz Kids’ logo and name was confirmed by Kwok (see Lee’s witness statement at §25), which shows Kwok’s involvement.

57.  By allowing Greens PR to use Whiz Kids’ logo and name for the Kids Focus Campaign free of charge, I agree with Mr Chen’s that Kwok had acted in breach of her fiduciary duties owed to Whiz Kids in that she:-

(1) acted for the benefit of a third person without the informed consent of her principal, Whiz Kids (see Bristol & West Building Society, supra at 18 per Millett LJ); and

(2) placed herself in a position of conflict, since her duty to act in the best interest of Whiz Kids conflicted with her interest in Michael Shen and Greens PR being able to use Whiz Kids’ logo and name for the Kids Focus Campaign.

58.  I further agree with Mr Chen that Whiz Kids’ loss is the profits that Whiz Kids would have made had Greens PR or Dr-Max formally retained Whiz Kids as the co-organizer of the Kids Focus Campaign, thereby being able to use Whiz Kids’ logo and name in the relevant promotion materials.  Lee explained in his oral evidence, which I accept, that Whiz Kids’ fee for the event would be around $330,000, being $1 per primary school student in Hong Kong (there are 526 primary schools and a total of about 330,000 students).  The estimated direct cost would be about 40%, so Whiz Kids’ net profits and therefore its loss would be about $180,000.  In the absence of any contrary evidence from the defendants, I accept the plaintiffs’ estimation of loss as a result of Kwok’s breach of fiduciary duty in this transaction.  

59.  Kwok’s submission on this issue, which again is unsupported by any evidence produced or witness called, is equally unconvincing.  She claims that in the Kids Focus Campaign, Lee’s evidence is incomplete and untrue (「不盡不實」).  However, she has failed to produce any evidence to substantiate her claim as to why it is the case.  Her claim that she could not hide her deeds because the result from the competition / campaign will be published in Issue no. 1056 is in my view not here nor there.  Nor the fact that she has to report to the senior management of the advertising customers and income derived each week means that she was not acting against the interests of the plaintiffs by passing vital business information to Greens PR, a company in the control and management of her husband Shen.  The fact remains that Kwok, as well as her husband Shen, chose not to give any explanations under oath to answer the serious allegations and overwhelming evidence against them.  I therefore have no problem in rejecting Kwok’s submission whatsoever.  

60.  As regards the Oxford Path Campaign, Whiz Kids was named as one of the lead organizers and its logo was used on the Campaign’s circular, but Whiz Kids never agreed to be the organizer or authorised Greens PR or OUP to use the Magazine’s logo or name in relation to the Campaign’s promotion materials: (see Lee’s witness statement at §§32-33[31]).

61.  Further, Kwok’s involvement in the Oxford Path Campaign is evident from the email correspondence between OUP, Shen and Kwok[32].

62.  I accept the plaintiffs’ case that Kwok’s breach of fiduciary duties has led to Whiz Kids’ loss of profits in the amount of $109,400. In his oral evidence, Lee further explained that the direct cost of $80,000 could be broken down into man-hour cost of $50,000, transportation cost of $20,000, and advertisement cost of $10,000.  I consider them as perfectly reasonable if not rather conservative estimates. 

63.  Kwok in her closing submissions disputes the plaintiffs’ figures but without providing any supporting evidence.  She raised a number of questions of why she thinks the plaintiffs’ case is defective, for example, that the plaintiffs’ group of companies were never OUP’s supplier as they had never filled in any vendor form and provided and business registration documents.  In my view, this is not only a wild speculation on the part of Kwok which is unsupported by any evidence, to suggest that OUP had no business association or transaction with the plaintiffs’ companies before is a totally preposterous claim which just shows how desperate this convicted dishonest individual is.  In my view, the simple truth is that, without her privilege position as the “advertising director” of SMC Management and hence the Magazine, Greens PR and Shen would never have been able to obtain the contract for this campaign. 

64.  As regards the Oxford Book Ordering Campaign, Whiz Kids was named as a contact for enquiry, even though Whiz Kids had never agreed to provide direct mailing services to OUP in relation to the campaign.

65.  During cross-examination, Kwok suggested to Lee that the letter at [B2/279] was only a draft letter, and there is no evidence that it was in fact sent to the schools.  In my judgment, the relevant email correspondence, however, shows that the letter and the ordering forms were indeed sent to the schools. In her email sent on 17 November 2014[33], for example, Colly Ho of OUP said that there were 66,000 copies of forms “all packed in 100 copies/set”.

66.  Further, Kwok’s involvement in the Campaign is evident from the same chain of email correspondence, which also involved her husband Shen.

67.  Kwok’s breach of fiduciary duties led to Whiz Kids’ loss of profits in the amount of $45,000. Lee readily accepted that a book ordering campaign would require less work than a colouring competition, so Whiz Kids would charge a lower fee: (see Lee’s witness statement at §39; also his oral evidence when he said that there was not as much logistics involved in a book ordering campaign). 

68.  I accept Lee’s evidence in this regard and find the plaintiffs’ loss of profits in the book ordering campaign was at $45,000.

69.  Kwok in her closing submissions says that she had never participated in this particular campaign.  However, this was not only contrary to the evidence produced by the plaintiffs during the trial, it is not supported by any evidence called by the defendants.  Under such circumstances, I have no hesitation to draw any inferences in favour of the plaintiffs and adverse inferences against Kwok.  

(B)   Breach of Restrictive Covenant

70.  By the Letter of Undertaking dated 6 January 2010[34], Kwok agreed at clause 3 that she would not: ─

“... during a period of 12 months from the Termination Date, solicit any customer or client whether on my own account or on behalf of any other person, firm or corporation who or which was a customer or client of any one of the member companies of SC Media at any time during the period when I was employed by one of the member companies of SC Media”.

   (the “Non-Solicitation Clause”)

71.  Covenants in restraint of trade are unenforceable unless they can be shown to be reasonable in the interests of the parties and in the public interest. The burden of demonstrating the reasonableness of a covenant is on the party seeking to enforce it. That party must satisfy the court that the restrictions are no greater than are reasonably necessary for the protection of its business.  It is legitimate for an employer to protect his customer connections to the extent that the employee may have gained influence over the customer so they would be likely to follow the employee to his or her new employment: (see East Asiatic Shipping Ltd v. Wong Wing Cheung Basil (unreported, HCA 1502/2010; 7 December 2010) at §§72 to 77 per DHCJ Coleman SC).

72.  I agree with the plaintiff’s submissions that the Non-Solicitation Clause is reasonable and enforceable for the following reasons:-

(1) The clause protects the Group’s legitimate interest in its trade connections, restraining Kwok from soliciting customers belonging to Whiz Kids.

(2) In particular, Whiz Kids has acquired substantial goodwill in the children event planning business because it is able to promote the events through the Magazine, which reaches a broad spectrum of target audience.  Whiz Kids’ relationships with its customers are maintained by senior personnel such as Kwok, who by reason of their dealings with the customers have acquired a deep understanding of their respective needs and preferences for events. Accordingly, the customers are likely to “follow” Kwok if she were to join another event planning company: (see Lee’s witness statement §§12-13[35]).

(3) Accordingly, restrictive covenants are necessary to protect Whiz Kids’ trade connections and goodwill once a senior personnel like Kwok leaves the Group.

(4) The restriction is no greater than are reasonably necessary as the effective time period is only 12 months.

73.  In August 2014, Mongson engaged Whiz Kids’ services to plan a colouring competition, which took place successfully in September 2014: (see Lee’s witness statement at §61[36]). Mongson was therefore a customer or client belonging to Whiz Kids during Kwok’s employment with SCM Management as Kwok’s employment with it only ended on 16 December 2014.

74.  Judging from the contemporaneous documentary evidence, it can hardly be disputed that Kwok had solicited Mongson to Greens PR and Marcois Group:-

(1) In December 2014, Mongson approached Whiz Kids again to organize another colouring competition (the “Mongson Colouring Competition”). Since Kwok had already submitted her letter of resignation, the project was handled by another staff member, Helen Chan.

(2) On 23 December 2014, Helen Chan sent a proposal to Mongson[37] for their consideration.  About a week later, however, Helen Chan was informed by Mongson that they had decided to engage another public relations/event planning firm for the Mongson Colouring Competition.

(3) On 29 January 2015, Mongson sent an email[38] to Kwok’s email address with Whiz Kids by mistake. The email shows that Kwok has an email address with Greens PR and had been dealing with Mongson on behalf of Greens PR.

(4) In April 2015, Lee visited Mongson and saw a poster for the Mongson Colouring Competition which listed “Classmate Magazine” as the media partner.  Lee was also informed by Mongson that they might place advertisements for the Mongson Colouring Competition in Classmate Magazine.

(5) Classmate Magazine is likely published by Marcois Group, which was established by Shen.

(6) Having regard to (a) the fact that Classmate Magazine was a relatively new magazine in April 2015 (its first issue was published in March 2015); (b) the rather low likelihood of Mongson engaging the services of a new magazine with no track record for the promotion of the Mongson Colouring Competition; and (c) the relationship between Kwok, Shen, Greens PR and Marcois Group, the irresistible inference must be that Kwok solicited Mongson’s business to Greens PR (as regards the event planning and organization) and Marcois Group (as regards the promotion through Classmate Magazine).

75.  In the aforesaid circumstances, I agree with Mr Chen that the evidence has clearly shown that Kwok had been in breach of the Non-Solicitation Clause.  Whiz Kids’ loss is its loss of profits from the Mongson Colouring Competition, namely, $53,000: (see Lee’s witness statement at §68).

76.  Kwok in her closing submissions made no mention of why the Non-Solicitation Clause should not have any effect or application at all in this case.  More importantly, she has failed to produce any evidence to rebut the above almost indisputable evidence summarised by the plaintiffs’ counsel revealing her rather damming role in the above transactions.  Perhaps she has none.  I find that she has none. 

(C)   Claims against Greens PR, Marcois Group and Shen

(i)   Dishonest Assistance (Greens PR & Shen)

77.  I agree with the plaintiff’s submissions that there are 4 requirements for the imposition of liability for dishonest assistance: (1) breach of trust or fiduciary duty by someone other than the defendant; (2) the defendants’ assistance; (3) dishonesty; and (4) resulting loss: (see Hui Cheung Fai, supra at §130 per DHCJ Eugene Fung SC).

78.  Mr Ma for Shen in his closing submissions while agreeing to the legal principles and authorities on dishonest assistance and procurement of breach of contract cited by Mr Chen for the plaintiffs, has the following to add.

79.  Dishonesty is one of the elements of dishonest assistance. When deciding whether the defendant is dishonest, the court has to take into account the circumstances known to him at the time he acted, personal attributes such as his experience and intelligence, and the reason why he acted as he did (Hui Cheung Fai & Anor v Daiwa Development Ltd & Ors, supra at [132] per DHCJ Eugene Fung SC).

80.  When the test of dishonesty is applied, the defendant is judged according to the standards of an ordinary honest person, who would have the same knowledge of the circumstances as he does, and sharing some of his personal characteristics, such as his age and experience: (Snell’s Equity at 30-079).

81.  A finding that the defendant was dishonest only involves an assessment of his participation in the impugned transaction, judged in the light of his motives and his knowledge of the facts. The finding of dishonesty depends on how precisely he knew the facts which amounted to the breach of trust. A negligent or incompetent failure to realize that the transaction was unlawful is not enough (Snell’s Equity at 30-079).

82.  Dishonesty must not be equated with a failure to exercise reasonable skill and care. The test is one of honest but not reasonable conduct. An allegation of dishonest must be established with cogent and compelling evidence (Hui Cheung Fai, supra at [134] and [137] per DHCJ Eugene Fung SC).

83.  The gist of Mr Ma’s submission is that, as Lee has confirmed under cross-examination, while Kwok had the responsibility to actively declare any interest which Kwok or Kwok’s family members may have in any business which competes with the Plaintiffs, Kwok was not required by the Plaintiffs to tell anyone about the terms or duties of her Contract with SCM Management.  He further submits that it was a matter of common sense that anyone, other than the employees of the plaintiffs, was not required to know the contractual terms of any contracts signed between the plaintiffs’ employees and the plaintiffs.  While Kwok should have known about her own misconduct, Lee was not sure whether Shen knew about Kwok’s misconduct.  In any event, it is submitted that Shen ceased to be the Marcois Group’s shareholder or director from 28^th January 2015 onwards.

84.  Based on the above, Mr Ma submits there is no direct evidence to show the followings:-

(a) Shen had knowledge of Kwok’s contractual terms of Kwok’s Contract with SCM Management;

(b) Shen was able to realize that his conduct would result in a breach of Kwok’s contractual terms or her fiduciary duties;

(c) Shen, being a third-party to the Contract in question, was of knowledge that the dealings with Kwok would be inconsistent with Kwok’s Contract;

(d) how much experience Shen had in the business of providing event planning services for and promotion of educational and extra-curricular activities;

(e) Shen was dishonest; and

(f) Shen was involved in the Mongson Colouring Competition.

85.  Mr Ma however accepts that owing to the lack of direct evidence, this court has to draw inferences from the available facts of the case.

86.  With due respect to Mr Ma, it is not difficult for the court to draw adverse inferences against his client in this case, given: (i) the husband and wife relationship between him and Kwok; (ii) the nature and the timing of the business set up by him; and (iii) the contemporaneous evidence showing the transactions between Greens PR / Marcois Group with business clients or potential clients of the plaintiffs.  

87.  I agree with Mr Chen’s analysis that the evidence in this case support the plaintiffs’ proposition that all the 4 following requirements for dishonest assistance against Greens MR and Shen have been met.

88.  Breach of fiduciary duty: by reason of the matters stated in Section (A) above, I find Kwok acted in breach of fiduciary duties by (1) diverting to Greens PR maturing corporate opportunities; and (2) allowing Greens PR and other clients to use Whiz Kids’ and the Magazine’s logo and name for free.

89.  Assistance: it is a question of fact whether there has been assistance by the defendants. For the requirement of assistance what is required is conduct which in fact assists the commission of the act which is a breach of fiduciary duty. The assistance must be more than of minimal importance, and must enable the breach of fiduciary to be committed, but there is no requirement that what is done by the defendant inevitably has the consequence that a loss is suffered: (see Lewin on Trusts (19^th ed.) at §40-032).

90.  In my judgment, the following evidence allow the court to draw the irresistible inference that both Greens PR and Shen assisted in Kwok’s breaches of fiduciary duties:

(1) Greens PR was the recipient of each of the diverted contracts, namely, the 1^st, 2^nd and 3^rd Dr-Max Contracts. Shen was involved in the negotiations leading up to the execution of each of the aforesaid contracts. Greens PR and Shen therefore assisted Kwok in her diversion of corporate opportunities.

(2) As regards the unauthorised use of Whiz Kids and the Magazine’s logo and name, Greens PR was the relevant event planning agency, and Shen participated in the relevant negotiations concerning the events.

91.  Dishonesty: dishonesty is an objective standard. The courts apply the normally acceptable standards of honest conduct in determining whether the accessory is dishonest. There is no requirement of conscious dishonesty. The test for dishonesty does not require that the accessory considers that he is acting dishonestly: (see Hui Cheung Fai, supra at §131 per DHCJ Eugene Fung SC).

92.  Further, unless there is a very good and compelling reason, an honest person does not participate in a transaction if he knows it involves a misapplication of trust assets to the detriment of the beneficiaries. Nor does an honest person in such a case deliberately close his eyes and ears, or deliberately not ask questions, lest he learn something he would rather not know, and then proceed regardless (see Lewin on Trusts, op.cit. at §40-035). I accept the plaintiffs’ submissions that the above principle applies equally to transactions that involve breaches of fiduciary duties (as opposed to a misapplication of trust assets).

93.  I also find that Shen acted dishonestly in assisting Kwok in her breaches of fiduciary duties.  He was fully aware of Kwok’s position and responsibilities as the advertising director of Whiz Kids, with the principal responsibility of overlooking the Magazine’s advertising business.  While there is no direct evidence to show that Shen knew of the precise terms of Kwok’s contract with SCM Management, I agree with Mr Chen’s submission that anyone with common sense and reasonable commercial acumen would know that it is unlawful for a high-level employee to divert business opportunities to a competitor without the company’s prior consent or authorization.  At the very least, I find that Shen had deliberately closed his eyes and ears; and deliberately refrained from asking questions about Kwok’s misconduct.  I entirely agree with Mr Chen that this makes him dishonest. 

94.  The fact that Shen has avoided giving evidence at the trial in order to defend himself (when he and other defendants had been given ample opportunities by the court to do so) allowed me to draw adverse inferences against him (as well as other defendants).  I so draw such inferences and find him to be a dishonest individual who had acted in collusion with his wife Kwok to cheat her former employer and the associated companies, ie the plaintiffs.  

95.  Greens PR being a corporate entity acts through human agents.  In the present case, Shen’s knowledge and dishonesty are imputed to Greens PR.  First, Shen was Greens PR’s agent in Greens PR’s participation in the Dr-Max contracts and the events for which Whiz Kids and the Magazine’s logo and name were used without authorization. His knowledge is therefore treated as Greens PR’s knowledge. Second, Shen was Greens PR’s directing mind and will in relation to the transactions in question. His mind was therefore Greens PR’s mind, and his knowledge Greens PR’s knowledge: (see El Ajou v. Dollar Holdings plc [1994] 2 All ER 685 at 695g per Nourse LJ, 706d-e per Hoffmann LJ). Greens PR was therefore also dishonest.

96.  Resulting loss: Greens PR and Shen’s assistance in Kwok’s breaches of fiduciary duties caused loss to Whiz Kids in the form of lost corporate opportunities and loss of profits. The quantum is the same as I have found against Kwok above. 

97.  In the aforestated circumstances, I find Greens PR and Shen liable to Whiz Kids in equitable compensation for their dishonest assistance in Kwok’s breaches of fiduciary duties: (Lewin on Trusts, op.cit. at §40-015; Libertarian Investments Ltd, supra at §§166-170).

(ii)   Procuring Breach of Contract

98.  The relevant principles for this topic can be found in Aerostar Maintenance International Ltd v Wilson [2010] EWHC 2032 (Ch) and Natuzzi SpA v De Coro Ltd [2007] 3 HKC 74. In this case, the elements to the tort are satisfied in the following manner.

99.  Existence of a contract: there is no dispute that Kwok entered into the contract dated 1 February 2014[39]and the Letter of Undertaking dated 6 January 2010[40].

100.  Breach of the contract: Kwok acted in breach of the Non-Solicitation Clause by soliciting Mongson to Greens PR and Marcois Group. See [§§ 70 - 76 above].

101.  Conduct of the relevant defendant was such as to procure or induce that breach: Greens PR and Marcois Group were willing parties to Kwok’s solicitation of Mongson.  Greens PR acted as the event planner for the Mongson Colouring Competition and Marcois Group was involved in the Mongson Colouring Competition via its Classmate Magazine which was the media partner.  I agree with Mr Chen that, without Greens PR and Macrois Group’s agreement to provide services in relation to the Mongson Colouring Competition, Kwok would not have been able to solicit Mongson thereby acting in breach of the Non-Solicitation Clause.

102.  Knowledge of the existence of the relevant term in the contract, or turning a blind eye to the existence of such a term: common sense would have informed Greens PR and Marcois Group that Kwok might have been subject to non-solicitation clauses in her contract with the plaintiffs.  In my judgment. it is beyond any shadow of doubt that Greens PR and Marcois Group turned a blind eye to the existence of such a term in their dealings with Mongson.

103.  Defendant realized that the conduct, which was being induced or procured, would result in a breach of the term: Greens PR and Marcois Group were relatively new entities and the Classmate Magazine had no track record at the time of the Mongson Colouring Competition. Without Kwok’s solicitation, I have scant doubt that Mongson would not have agreed to retain Greens PR and Marcois Group for their services. Greens PR and Marcois Group therefore knew that their agreement with Mongson would put Kwok in breach of the Non-Solicitation Clause.

104.  Mr Ma for Shen submits that while there is no direct evidence that Shen was in any way involved in the Mongson Colouring Competition, yet the plaintiffs concluded in §55 of their closing submissions that “… it is reasonable to infer that he was responsible for directing Marcois Group’s participation in the Colouring Competition, so that should be liable as a joint tortfeasor with Marcois Group.”

105.  He submits that such conclusion and inference have been unreasonably drawn.  Shen ceased to be the director of Marcois Group from 28 January 2015.  The first issue of Classmate Magazine was published in March 2015 and the date which Ms. Fanny Chong expressed that there was a possibility that Mongson would place advertisements in Classmate Magazine was on 9^th April 2015.  Hence, any agreement to place advertisements in Classmate Magazine should therefore be reached only after 9^th April 2015.  It is therefore not reasonable to infer that such agreement was arrived at before 28^th January 2015.

106.  With respect, I cannot agree with Mr Ma’s submissions. 

107.  Shen was a director of Marcois Group prior to 28 January 2015[41]. While there is no direct evidence of Shen’s involvement in the Mongson Colouring Competition, I agree it is reasonable to infer from the evidence produced by the plaintiffs that he was responsible for directing Marcois Group’s participation in the Colouring Competition, so that he should be liable as a joint tortfeasor with Marcois Group: (see MCA Records Inv v. Charly Records Ltd [2003] 1 BCLC 93 at 116-117 per Chadwick LJ).

108.  For the reasons stated above and in the absence of any positive evidence, whether oral or documentary, coming from Shen, to explain himself as to the exact role he played in those transactions, it allows me to confidently draw such adverse inferences against him.  Given the suspicious circumstances where the transactions were concluded, I find him liable for procuring breach of contract also.  

109.  I find Whiz Kids’ loss arising from Greens PR and Marcois Group’s tort is $53,000, being the loss of profits from the Mongson Colouring Competition.

CONCLUSION

110.  By reason of the aforesaid, I order that judgment be entered against all 4 defendants in the following terms:

(1) Kwok do pay Whiz Kids equitable compensation in the amount of $793,500 together with interest:

i. on the sum of $459,100 at the commercial rate (of prime rate plus 1%) from 1 September 2014 to the date of judgment, and thereafter at judgment rate until payment;

ii. on the sum of $334,400 at the commercial rate (of prime rate plus 1%) from 1 February 2015 to the date of judgment, and thereafter at judgment rate until payment.

(2) Kwok do pay SCM damages in the amount of $53,000 together with interest at the commercial rate (of prime rate plus 1%) from 1 February 2015 to the date of judgment, and thereafter at judgment rate until payment.

(3) Greens PR and Shen do pay Whiz Kids equitable compensation in the amount of $793,500 together with interest:

i. on the sum of $459,100 at the commercial rate (of prime rate plus 1%) from 1 September 2014 to the date of judgment, and thereafter at judgment rate until payment; and

ii. on the sum of $334,400 at the commercial rate (of prime rate plus 1%) from 1 February 2015 to the date of judgment, and thereafter at judgment rate until payment.

(4) Greens PR, Marcois Group and Shen do pay SCM damages in the amount of $53,000 together with interest at the commercial rate (of prime rate plus 1%) from 1 February 2015 to the date of judgment, and thereafter at judgment rate until payment.

111.  Since Kwok has not produced any evidence to support her counterclaim, I will dismiss her counterclaim with costs in favour of the plaintiffs.

112.  I also make an order nisi that the defendants do pay the costs of the action, including all costs reserved, to the plaintiffs, such costs to be taxed if not agreed, with certificate for counsel. The order will become absolute after 14 days in the absence of any application to vary the same by the parties.