HONG KONG HOUSING AUTHORITY v. SUI CHONG CONSTRUCTION & ENGINEERING CO LTD AND ANOTHER

HCCT 47/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 47 OF 2007

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J U D G M E N T

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1.  The 1^st Defendant in this action, Sui Chong Construction & Engineering Company Ltd. (“Sui Chong”) was a party to a contract (“the Contract”) dated 30^th November 1993 for the Redevelopment of Lok Fu Estate Phase 6.  The Plaintiff (“the HA”) was the other party to the Contract. 

2.  The Contract incorporated an arbitration clause in the form of clause 86 of the General Conditions of Contract as amended by clause 14 of the Special Conditions of Contract.

3.  Clause 8 of the Contract reads as follows:-

“	(1)	The Contractor shall not use or divulge, except for the purpose of the Contract, any information provided by the Employer or the Architect in the Contract or in any subsequent correspondence or documentation.
	(2)	The Employer and the Architect and the Surveyor may use any information provided by the Contractor in accordance with the Contract but shall not divulge such information except for the purpose of the Contract or for the purpose of carrying out any repair, amendment, extension or other work connected with the Works.”

4.  The last section of the works under the Contract was certified completed on 14^th June 1996, but the final account was never agreed between the parties.

5.  Disputes arose between the parties and an arbitration (“the Arbitration”) was commenced in 2002, with Sui Chong as the claimant and HA as the respondent.   The Arbitration was conducted pursuant to the HKIAC Domestic Arbitration Rules (“the arbitration rules”), rule 26 of which provided as follows:-

“	No information relating to the arbitration shall be disclosed by any person without the written consent of each and every party to the arbitration.”

6.  By an agreement dated 30^th September 1999 (“the SPA”) between two private individuals namely Mr. Ng Sui Keung and Madam Lo Mei Chun (“the Purchasers”) and the 2^nd Defendant herein (“Winfoong”), all the shares in Sui Chong were sold to the Purchasers.  As of the date of the SPA the shares in Sui Chong were owned by four subsidiaries of Winfoong (“the Shareholders”) and, by the SPA, Winfoong as vendor undertook to procure the transfer of those shares to the purchasers.

7.  In the course of the Arbitration, certain procedural steps were taken which resulted in the disclosure of the SPA, together with a Deed of Indemnity (“the DOI”), to the HA.  The procedural steps were summarized in paragraphs 8-26 of the 1^st affirmation of Daniel Lee (filed on behalf of the HA) and in paragraphs 5-11 of the HA’s skeleton arguments.     

8.  I should add, for the sake of completeness, that in the Arbitration the HA has raised an issue as to title to sue (namely that Sui Chong had assigned to Winfoong its right to sue, and hence has no title to claim; it is also alleged that such assignment was in breach of a non-assignment clause in the Contract).  That issue is not before me for determination.  However, in the course of this judgment there may have to be occasions when I have to make remarks to explain my reasoning which may be regarded as impacting on this issue.  I shall try to keep such occasions to a minimum.

9.  The SPA contained the following material provisions: -

“	5.1	After Completion [Winfoong] shall assume and be solely responsible for the conduct of the Schedule 5 Litigations and any residual matters relating to the Building Contracts and the Purchaser shall let [Winfoong] and/or the Shareholders to use the name of [Sui Chong] to conduct the cases and to collect and recover any outstanding receivables in respect thereof and [Winfoong] shall keep [Sui Chong] fully indemnified against all the costs, expenses and compensation payable by [Sui Chong] under the Schedule 5 Litigations and the Building Contracts.
		…
	5.8	[Winfoong] shall be entitled to all payments receivable in connection with matters set out in Schedule 2 and Schedule 5 and the Purchaser undertakes with [Winfoong] to cause all monies received by [Sui Chong] in connection with matters set out in Schedule 2 and Schedule 5, including but not limited to the Tin Chung Court Decoration Works as set out in Part II of Schedule 2 (“Tin Chung Works”), which come to their hands to be paid to the Bank Account forthwith upon receipt.  [Winfoong] shall procure that any amount paid into the Bank Account shall be transferred out to another account of [Winfoong] or Winfoong Investment Limited within 14 days from the date of payment into the Bank Account.”

The definition of the “Schedule 5 Litigations” did not cover the Arbitration (it not being a piece of litigation in any event).  But the definition of “the Building Contracts” included the Contract. 

10.  The DOI (which is a document among Winfoong, Sui Chong and the Purchasers) contained the following material provisions:-

“	1.	[Winfoong] hereby covenants and agrees with each of the Purchaser and [Sui Chong], that they will fully and effectually indemnify and at all times keep fully and effectually indemnified each of the Purchaser and [Sui Chong] from and against:-
		(a)	all liability of and all the costs, expenses and compensation payable by the Company under the High Court Action PI276 of 1998; and
		(b)	all liability of the Company of under and arising from the building contracts as set out in the schedule annexed hereto;
		provided that other than liabilities arising where [Winfoong] shall have committed fraud to the Purchaser, the total aggregate liability of [Winfoong] under this Clause 1 and all other liabilities of [Winfoong] under the [SPA] and the indemnities given pursuant thereto (including but not limited to the indemnity given under Clause 5.10 of the [SPA]) shall not exceed [redacted].”

The schedule to the DOI (referred to in clause 1(b) of the DOI) included the Contract.

11.  By summons dated 3^rd August 2007 the HA sought interlocutory injunctions to the following effect namely:- 

“	1.	An order that [Sui Chong], whether by itself, its servants, agents or otherwise howsoever, be restrained from causing or permitting the passage and/or the use by others of confidential information and material or otherwise breaching the obligation of confidentiality owed to the [HA] under the terms of [the Contract] and the rules governing [the Arbitration];
	2.	An order that Winfoong, whether by itself, its servants, agents (including but not limited to Lee & Associates Construction Arbitration & Litigation Consultants Limited) or otherwise howsoever, be restrained from receiving and/or using confidential information and material for otherwise breaching the obligation of confidentiality owed to the [HA] under the terms of the Contract and the rules governing the Arbitrations”

According to Mr. Patrick Cheong, a director and deponent for Winfoong, the Arbitration had been adjourned pending the outcome of this summons.  

12.  The ground of such application is set out in paragraphs 24 to 27 of the HA’s skeleton arguments and amplified orally by Mr. Coleman SC, leading counsel for the HA.  In brief, it is contended that:

(1)	Winfoong was neither a party to the Contract nor a party to the Arbitration.
(2)	Sui Chong was not conducting the Arbitration, but allowing Winfoong to use its name to do so, and the Arbitration was in reality being conducted entirely under the instructions of and at the expense of and for the benefit of Winfoong.
(3)	There was no agency relationship between Winfoong and Sui Chong.
(4)	Winfoong and its agents (Rees Taylor and Lee & Associates, both of whom were claims consultants) had been in receipt of confidential information and was conducting the Arbitration in reality as claimant.

13.  The HA submits that in cases of a negative covenant (as in the present case), an interlocutory injunction would normally be granted once a serious issue to be tried is established, and questions as to balance of convenience do not come into the picture.  Sui Chong and Winfoong tackled the issue head-on by seeking to demonstrate, by their skeleton arguments and by their oral submissions (Mr. John Scott SC for Sui Chong and Mr. Denis Chang SC for Winfoong) that there is no serious issue to be tried on the issue of breach of confidence.  Mr. Scott SC also submitted that the HA had failed to show prejudice of any kind, and that this would be relevant to the question of balance of convenience.  

14.  The starting point is that the restriction imposed by clause 8(1) of the Contract is subject to the exception, “except for the purpose of the [Contract]”.   

15.  In my view this exception not only covers matters relating to the performance of the Contract (such as the carrying out of the building works), but also to steps that are reasonably necessary for the enforcement of a party’s rights under the contract such as litigation or arbitration.     

16.  Therefore clause 8(1) cannot prohibit a party from “divulging” information gathered by the contractor from the employer to its (i.e. the contractor’s) lawyers for the purpose of obtaining legal advice or for the purpose of preparing evidence.  And it cannot prohibit a party from passing such information to, say, claims consultants.

17.  Likewise it cannot prohibit a party from divulging information to a third party (say, sending relevant files and papers to a potential witness such as a former employee or officer) for the purpose of obtaining his evidence.

18.  In the context of confidentiality within the arbitration rules, the duty of confidentiality is subject to the exception (among other things) that disclosure is permitted when, and to the extent to which it is reasonably necessary for the protection of the legitimate interest of an arbitrating party, and that means reasonably necessary for the establishment or protection of an arbitrating party’s legal rights vis-à-vis a third party in order to found a cause of action against that third party or to defend a claim (or counterclaim) brought by the third party (see Ali Shipping v Shipyard Trogir [1998] 1 Lloyd’s Rep 643 at 651 col.2 per Potter LJ). 

19.  In the present case, the HA does not dispute that Sui Chong would be entitled to speak to (and communicate with) Mr. Andrew Tsui and Mr. Patrick Cheong (both of whom were previously involved with the management and handling of the Contract, though both of them are now with Winfoong and not with Sui Chong) for the purpose of collecting evidence from them.  In the course of doing so, Sui Chong may have to provide information or documents to these two persons to refresh their memory and to put any inquiries (to be made with them) in context.  The HA does not have any problem with this; rightly so, in my view.  Any contrary position would be untenable.

20.  What had happened in this case is that instead of Sui Chong’s board or staff sending documents/information to Patrick Cheong and Andrew Tsui with a view to obtaining their input in terms of evidence, the conduct of the Arbitration (including the engagement of claims consultants) was carried out by Winfoong, specifically by Andrew Tsui and Patrick Cheong. 

21.  In fact all the papers about the Contract were, by reason of clause 4.1(b)(viii) of the SPA, not handed over by Winfoong to the Purchasers.  They had presumably been kept by Winfoong.  Any recovery from the Arbitration would eventually be channelled to Winfoong.

22.  Sui Chong and Winfoong contend that Andrew Tsui, Patrick Cheong and Winfoong had been conducting the Arbitration (including matters such as retaining claims consultants) as agent for Sui Chong, that they were duly authorized by Sui Chong to do so, and that insofar as they (i.e. Winfoong, Andrew Tsui and Patrick Cheong) had received any confidential information they (as Sui Chong’s agents) would also be subject to the same duty of confidentiality which would apply to Sui Chong.  

23.  The HA disputes this, and contends that the relationship between Sui Chong on the one hand and Winfoong/Andrew Tsui/Patrick Cheong on the other was not one of agency, whether in law or on the evidence.

24.  I reject the HA’s arguments.

25.  The whole scheme of the SPA contemplates that the right to claim under the Contract was to continue to be vested in the name of Sui Chong.   That was the whole point why permission was given (in clause 5.1 of the SPA) to use Sui Chong’s name for the purpose of conducting litigation and collecting receivables under the Contract.

26.  Sui Chong is the claimant in the Arbitration.  If the HA loses the Arbitration, the HA will have to pay money to Sui Chong.  How Sui Chong then channels or applies the money so recovered is a matter entirely for Sui Chong.  If Sui Chong loses the Arbitration, it is Sui Chong who has to pay the HA’s costs.  The HA will chase after Sui Chong, not Winfoong.  That is the whole point why clause 1(b) of the DOI is needed.  

27.  Though the SPA does not say so in terms, an agreement by the Purchasers to allow Winfoong to use Sui Chong’s name to recover receivables under the Contract must necessarily mean that the Purchasers would procure Sui Chong not to raise any objection to Winfoong (or its representatives) giving instructions in the name of Sui Chong to lawyers or claims consultants. 

28.  It must also necessarily carry with it the obvious and necessary obligation on their part to procure Sui Chong to all things as are necessary to enable such instructions to be given.  I cannot see how else the SPA could work if it were otherwise.

29.  The Purchasers can procure Sui Chong to provide instructions to lawyers or claims consultants by Sui Chong’s own staff or officers, or they can procure or permit Sui Chong to do so through an agent.  Indeed, claims consultants are a form of agent regularly used by a litigant for the purpose of channelling instructions to lawyers.  There can be no objection in principle why a further layer of agency cannot be interposed between a litigant/claimant and a claims consultant.

30.  Viewed in light of the above, in my judgment it is plain as a pikestaff that in retaining claims consultants (and indeed other professionals) for the purpose of pursuing the Arbitration, Andrew Tsui, Patrick Cheong and Winfoong (and indeed anyone from Winfoong performing such task) were acting as Sui Chong’s agent.  As I shall be explaining below, there really can be no other way in which the objective facts can be rationalized.

31.  I should add here that there has been no attempt (as one might expect if there were genuine doubts as to the authority of the other side’s lawyers/claims consultants to act) to apply to strike out or dismiss the Arbitration on the ground of lack of authority on the part of the lawyers/claims consultants to represent Sui Chong (on the issue of challenging the authority of legal representatives, see Hong Kong Civil Procedure (2008) 18/19/24 – the points in that passage are in the context of court procedure but I see no reason why the position is any different in the context of arbitration).

32.  In this case, a resolution on the part of Sui Chong was prepared (dated 7th September 2007) to purportedly ratify and confirm that Winfoong, Andrew Tsui and Patrick Cheong were authorized to conduct the Arbitration for Sui Chong and to instruct lawyers and claims consultants to advise and represent Sui Chong in the Arbitration.  The HA poured scorn on this document, contending that this was a document obviously produced for the purpose of these proceedings.  

33.  It is of course correct (as the HA submitted) that the parties cannot by their subjective labelling of their relationship confer a particular legal character on a relationship with it does not possess.  However, it must also be correct that if the objective facts do point to a particular conclusion or a status, the fact that the parties had not sought to formalize such a status or conclusion by a contemporaneous document/resolution is neither here nor there.  And if the objective facts do lead to the conclusion of an agency, the fact that the agent had not faithfully uttered the magical incantation “I am now doing this act in my capacity as an agent for my principal pursuant to an authority conferred upon me by my principal in this manner” is neither here nor there.  

34.  Let us, for the time being, disregard the September 2007 resolution and see what we have by way of objective facts.  On the record, Sui Chong was the claimant in the Arbitration. In fact only Sui Chong can be the claimant because Sui Chong, and not Winfoong, is a party to the Contract.  

35.  Any instructions to lawyers or claims consultants to commence or pursue the Arbitration in the name of Sui Chong must have been given purportedly on behalf of Sui Chong.  Obviously that was how the claims consultants and the lawyers had understood to be the effect of their instructions (subject to one point about a letter written by Rees Taylor which I shall deal with below): otherwise they would not have commenced Arbitration in the name of Sui Chong.

36.  Sui Chong had not objected to such instructions being given.  The reason can only be because Sui Chong was aware that such instructions were being given and was content that such instructions be given on its behalf.  This in my view is a sufficient conferral of authority.  If there is any residual doubt, the September 2007 resolution removes it.  I note that the HA says that this is a late document created for this litigation.  Let us suppose that the document was indeed prepared for this litigation.  In fact there is every likelihood that the document was prepared in light of the challenge made by the HA.  In light of my earlier decision that absent such a document there was still sufficient evidence of agency, this letter simply confirms what I have found to be the case absent this letter.

37.  But let us assume for the sake of argument that there was no sufficient evidence of conferral of authority, one asks rhetorically why this resolution cannot effectively ratify the purported act of the agent in retaining claims consultants/lawyers and pursuing the Arbitration. 

38.  I cannot see any reason. 

39.  The only argument put by the HA in its skeleton is at paragraph 42 where the points are made that (i) ratification must be made within a reasonable time and (ii) ratification is not effective unless it precedes the occurrence of circumstances that would cause the ratification to have adverse and inequitable consequences on the right of third parties.  Bowstead and Reynolds on Agency (18th ed) §2-087 and 2-090 are cited. 

40.  But a closer look at the text of Bowstead and Reynolds cited suggests that point (i) about “reasonable time” does not exist independently, but is best viewed as being based on the wider principle in point (ii) namely that ratification is not effective unless it precedes the occurrence of circumstances that would cause the ratification to have adverse and inequitable consequences on the right of third parties.  In this case, whether one regards the relevant “third party” as being the lawyers/claims consultants (who were retained by Winfoong purportedly on behalf of Sui Chong), or as being the HA (who faces a claim by Sui Chong), I can see no inequity or adverse consequences.

41.  In this connection I would like to deal with a point raised by the HA as to who the claims consultants regarded their “client” to be.  It is said that, from time to time, Winfoong had been treated by the claims consultants as their “clients”.  For example, there was an incident when Rees Taylor (claims consultants) wrote a letter to the HKIAC dated 28^th November 2003 stating that they acted for Winfoong, “formally (this must mean “formerly”) known as Sui Chong”, the claimant in the Arbitration.  That letter was also copied to Winfoong.  That letter was subsequently corrected by another letter from Rees Taylor dated 4^th December 2003 where it was stated that the previous letter was a clerical error and the claimant should be Sui Chong. 

42.  I do not read into this correspondence anything remarkable or significant at all.  It is obvious that the earlier letter was a mistake.  In fact the mistake is so glaring and obvious that it cannot be regarded or insinuated as anything but a mistake.  First, Winfoong simply cannot be the claimant because it is not a party to the Contract.  Second, Winfoong was not formerly known as Sui Chong (as that letter appeared to suggest). 

43.  The wording of this letter may be a matter of embarrassment (and one must try not to be too harsh after the event) for those responsible for its contents but such embarrassment does not assist the HA.  The most that one can make out of this correspondence is that it showed that the actual entity providing instructions to Rees Taylor was Winfoong and not Sui Chong, and therefore Rees Taylor regarded Winfoong as the client and the claimant.  But it is not disputed by both Winfoong and Sui Chong that Winfoong had – as a matter of fact – been providing instructions to Rees Taylor.  That is not the question.  The question is the capacity in which Winfoong purportedly provided those instructions.  There can only be two candidates: either it was doing so in its own right as claimant or it was doing so as agent.  It cannot be doing as claimant because it has no standing and no right to make a claim against the HA.  By a process of deduction the only remaining candidate is that it was doing so as agent for Sui Chong.

44.  I do not read anything significant into the fact that from time to time correspondence was copied to Winfoong.  If instructions in fact came directly from Winfoong (as is the case here) there is nothing remarkable or exceptional about copying correspondence to Winfoong, or even regarding Winfoong as “the client”.  But that again misses the point of what capacity Winfoong was providing instructions.  After all, “client” is not a legal term of art and from time to time lawyers copy documents to “client” in the sense of the person who physically provide instructions, irrespective of whether that entity or person was the entity on whose behalf the lawyer is retained to act or to make a claim.  

45.  The HA contends that this cannot be an agency relationship because the “principal” has no control over the “agent” and the “agent” was really conducting the Arbitration for its own interest as opposed to for the interest of the principal.  I do not think that these points detract from the nature of the relationship between the parties.  There is nothing in law which prevents or precludes an agency relationship from subsisting where the agent was permitted to reap the benefit of the task which he has been entrusted to do. 

46.  The HA stressed the point that because of the contractual arrangements in this case, Sui Chong had no interest of its own to pursue and that the Arbitration was being pursued for the benefit of Winfoong and not for the benefit of Sui Chong.  That being so, the HA contends, Winfoong‘s pursuit of the Arbitration using Sui Chong’s name cannot be “for the purpose of the Contract” (within the meaning of clause 8(1) of the Contract) because the exception cannot apply where the use of the information is for the interests of someone who is not a party to the Contract and who has acquired an interest in the Contract in breach of the non-assignment clause in the Contract (and this is assuming that there has been an equitable assignment).  Likewise Winfoong’s receipt and use of confidential information cannot be “for the protection of the legitimate interests” of Sui Chong within the meaning of the exception recognized by Ali Shipping. 

47.  In my judgment, the fact that Sui Chong will or may not ultimately enjoy the proceeds of the Arbitration is neither here nor there.  The Arbitration is still being pursued for Sui Chong’s interest in the sense that it is being pursued to vindicate a contractual right (namely a right to payment under the Contract as between the HA and Sui Chong) which belongs to it.  I do not think that the exception in clause 8(1) and the “protection of legitimate interest” exception in Ali Shipping are intended to lead to the sort of inquiries which the HA now invites me to make as to what would happen to the fruits of recovery if an arbitrating party succeeds in enforcing its rights against the HA in the arbitration.

48.  In the course of argument I posed the question to Mr. Coleman SC as to the difference between this case and a case where a claim against the HA (say, for an indemnity for certain liability incurred by Sui Chong towards a third party in the course of performing the Contract but in respect of which Sui Chong had insurance cover and received payment from the insurer) is made in the name of Sui Chong but on the instructions of insurers pursuant to rights of subrogation.  In such cases it would be the insurer who would be providing instructions to lawyers, and the insured would necessarily have to supply a whole host of documents to the insurer which would otherwise be subject to confidentiality obligations. 

49.  Mr. Coleman SC submitted (on instructions) that because of the particular factual configuration of the insurance arrangements in this case, such a scenario is unlikely to arise.  But he in any event submitted (obviously recognizing the force of the point as a general point) that the insurer scenario is probably covered by another exception of “implied consent” as recognized by Ali Shipping at 651 (supra). 

50.  The problem with this response is that if the notion of “implied consent” is recognized to be applicable to the scenario of an insurer bringing a subrogated claim in the name of an insured, there is no reason in principle to preclude its application to the case of disclosure to someone who is not an insurer, but who had the right to pursue a claim in the name of a party who is subject to the confidentiality obligation.  In both cases information and documents are being supplied to (and used by) a party who is not a party to the underlying contract or any arbitration; in both cases the “true party” can be said to have no “interest” in the underlying claim because in both cases any recovery would enure to the benefit of someone else.  I can see no material distinction.  The insurer analogy is not a self-standing ground for holding against the HA, but it provides some comfort as to the correctness of my holding.

51.  If the fear is that documents or information so disclosed may be misused by the party to whom they were divulged, then the answer is that such a fear alone cannot be the ground of an injunction application.  Take the case of the implied undertaking in the context of discovery under Order 24 by way of analogy, many litigants will fear that disclosed documents would be misused by the opponent, especially where that opponent happened to be a competitor in the same field.  But this kind of generalised fear does not provide grounds for injunctive relief in the absence of evidence of actual or threatened misuse, and one has to proceed on the basis that the recipient of documents will comply with the implied undertaking unless contrary evidence is forthcoming.  In my view a same approach applies here.

52.  This brings me to Mr. Coleman SC’s answer to a point made by Mr. Scott SC and Mr. Chang SC, namely that the HA has not identified any actual or threatened misuse of any confidential information or formulated the items of confidential information that are said to have been divulged or at risk of being divulged.  To this, Mr. Coleman SC argued:

(1)

There should be no difficulty for Sui Chong and Winfoong to identify and work out the items of confidential information which are subject to protection, since such information is clearly defined by clause 8(1) of the Contract and by rule 26 of the arbitration rules.  This is not a Faccenda Chicken type of case where one has to identify concrete pieces of confidential information/trade secret and adduce any evidence to prove why they were confidential or amounted to trade secrets.

(2)

There is in any event the risk that Winfoong (a non-party to the Contract and the Arbitration) would use the information for purposes other than the Contract or the Arbitration, and there was already traces of this possibility because in Winfoong’s accounts for the years 1999 to 2001 and also 2006, there was a reference to an amount of receivables of HK$74,738,000 which covered the amount of the claim which is the subject of the Arbitration.  Incidentally Mr. Coleman made the point that the fact that Winfoong included this amount in its own accounts as an item of receivable shows that Winfoong regarded it (as opposed to Sui Chong) as being entitled to receive this amount from the employer.

53.  The argument “this is not a Faccenda Chicken type of case” is superficially attractive but is, in the final analysis, flawed.  The shape of the present argument is of course different from a Faccenda Chicken type of case (which is a reference to the type of case where a post-employment confidentiality obligation is sought to be imposed on certain items of information received by an employee in the course of his employment).  In those types of cases it would be incumbent on the employer to adduce evidence to show that the item or items of information sought to be protected has attained the status of “trade secrets” and there is a good deal of learning on what separates “mere” confidential information (protected during employment but unprotected post-employment) from “trade secrets” (protected even post-employment).  But we are not dealing with that sort of argument here.  We are dealing with the procedural requirement, applicable to all forms of application for injunctive relief about confidential information, that there must be sufficient particularization of any items of information the use or divulging of which is sought to be restrained.  This requirement stems not from the underlying juridical basis of the confidential obligation (and hence it does not matter that in this case the basis of the obligation is not “employment based” as in Faccenda but based on the Contract and on the arbitration rules) but from the need to fairly inform the recipient of the injunction clearly what it cannot do.

54.  It is likewise not an answer that Sui Chong and Winfoong could work out what it is that they are restrained from using.  This argument is tantamount to obtaining an injunction simply requiring them to “obey the contract”.  The normal approach is not for the court to presume breach on the part of Defendants; it is for a Plaintiff to identify and establish (up to the requisite threshold, depending on whether it is a final injunction or an interlocutory injunction) with particularity the specific acts and information concerned (which were the subject of actual or threatened breaches) and then an injunction will issue only against those acts and information and no more.     

55.  Mr. Coleman SC did try to re-formulate paragraph 1 of the summons by replacing “others” after “and/or the use by” with the words “the 2^nd Defendant”, and also paragraph 2 by replacing the words “or otherwise breaching” by “disclosed to it in breach of”.  In my view these proposed amendments do not address the problem identified.

56.  Turning to the complaint about the entry in Winfoong’s accounts.  There is no evidence as to what instructions or information has been given to the auditors which resulted in that entry being made.  The 2006 entry, for example, is worded on the basis that there was a direct contractual claim by Winfoong against employers, supplier and other parties.  On the face of what I have seen by way of evidence in this case, this entry is erroneous in the eyes of the law.  It has no bearing on the issues in this application.

57.  More importantly, as Mr. Coleman SC recognized in the course of argument, the entry in the accounts (and the figure attached to the entry) may or may not have been inserted there as a result of any breach of the duty of confidentiality.  The item of information is just a figure.  The figure appeared in the accounts before the commencement of the Arbitration.  Information about the figure may not even have anything to do with any documents supplied by the HA or the Architect (as envisaged by clause 8(1) of the Contract).  The information could just as well have been based on Sui Chong’s own documents or information as to how it regarded its work to be worth.  There is therefore insufficient evidence to show (even on a “serious issue to be tried” basis) that confidential information (whether in the clause 8(1) sense or rule 26 sense) has been misused or divulged.

58.  Mr. Coleman SC posed some examples of what might happen in the future which might involve potential breaches of the confidentiality obligation (e.g. any disclosure requirement in the books and annual reports of Winfoong).  Suffice it to say that as things now stand there is no evidence as to what items of confidential information might be involved and how those items might be divulged unlawfully.  The Court cannot legislate in advance and in the abstract as to how the parties are to conduct themselves in this manner.  I repeat that ungrounded suspicion or fear as to what might happen is not sufficient. 

59.  The mere fact that documents had been retained by Winfoong and the existence of the name-borrowing mechanism in the SPA is not enough to show a risk of unlawful divulging.  In any event I note that Winfoong’s solicitors have written a letter dated 27^th September 2007 (on behalf of Winfoong as well as Andrew Tsui and Patrick Cheong) setting out internal safeguards which would be adopted to ensure that there would be no unlawful divulging of information.  I have taken that into account.

60.  There are miscellaneous complaints about the manner in which Sui Chong and Winfoong have been supplying information and explanations, and they were criticized as not being frank at times.  The HA also criticized the manner in which a draft affirmation had been previously put forward on the erroneous basis that Patrick Cheong was at the material time a director of Sui Chong (when he was no longer a director at the material time).  I place little weight on such considerations.  This is not a case where there is a dispute of evidence on primary facts, where “coyness” or lack of frankness can be said to be relevant to credibility.  The material objective facts have been outlined above.  How the parties had gone about explaining or putting forward those facts in a forensic setting is neither here nor there.  Even if there had been lack of frankness on the part of Sui Chong or Winfoong (on which I make no observation) the reason could range from (i) a perception (rightly or wrongly) that to reveal the information might harm one’s case to (ii) a belief that the opponent is seeking to create something out of nothing, and therefore the less said the better.  References to “lack of frankness” have their sensational or prejudicial value, but I regard them as no more than that on the facts of this case.

61.  Likewise I attach little weight to Sui Chong and Winfoong’s criticism that the application is motivated by strategic or ulterior motives.  The Court is not so detached from reality as to believe that interlocutory applications are not at least influenced to some extent by strategic considerations.  But then either the HA has a case on the evidence and as a matter of law, or it does not.  If the HA has a case and it succeeds in its application, the fact that the consequence of the application brings about strategic advantages to the HA (say, it creates inconvenience or even extreme difficulties in the pursuit of the Arbitration) is neither here nor there.  There are of course issues as to the wording and width of any order sought but those are separate points and they have been dealt with above.

62.  To recap, having considered all the evidence and reviewed the skeleton arguments and oral submissions put before me by the parties and in the exercise of my discretion, the HA’s application is refused and the summons is dismissed.  The HA has not made out a serious issue to be tried on the merits; there was inadequate particularization of the relevant items of information to be restrained; and there was insufficient evidence (on a “serious issue to be tried” basis) as to the nature and extent of any actual or threatened breach of the relevant confidentiality obligations. 

63.  I make an order nisi that Sui Chong and Winfoong are to have their costs of and occasioned by the HA’s summons to be taxed if not agreed with certificate for two counsel for each of Sui Chong and Winfoong.  This includes all costs previously reserved.