KUONI TRAVEL (CHINA) LTD v. KELLY FRANCES RICHARDS AND OTHERS

HCA 1265/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1265 OF 2006

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D E C I S I O N

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Background

1.  This is an application by the Plaintiff seeking an interlocutory injunction restraining each of the Defendants until trial or further order from making use of or disclosing to any person the Plaintiff’s pier destination information and Client Data.  In the course of the hearing, the Plaintiff reduced the scope of Client Data to mean:

“Any information pertaining to the Plaintiff’s clients obtained or derived by an employee in the course of his employment with the Plaintiff (not being information known to the employee prior to such obtaining or derivation) and contained in the Plaintiff’s computer database, and any documents whether in hard copy or electronic form containing such information and including [but not limited to the following]:

(i) the identity of the Plaintiff’s customers and any information concerning the Plaintiff’s customers including [but not limited to] the Plaintiff’s customer lists, customer contact details, customer requirements and booking information (including prices at which they purchased products), confirmation summaries, booking confirmations, and invoices issued by the Plaintiff.

(Words in square brackets [ ] have been expunged by the Court in the order subsequently granted.)

2.  The Plaintiff is formerly known as P & O Travel Limited which was incorporated in 1978 with an authorised capital of $4,800,000.  Since 1973, it has become a wholly owned subsidiary of the Kuoni Group, publicly listed in Switzerland.  The Plaintiff has been carrying on business in the travel industry and trades under the name of “S.K.Y. Travel”.  It operates numerous branch offices in Hong Kong and is, inter alia, the sole agent in Hong Kong for the American Princess Cruises and the English P & O Cruises.  The four Defendants were former employees of the Plaintiff.  Prior to their resignation in mid June 2006, the 1^st Defendant was a Senior Supervisor, the 2^nd Defendant was a Supervisor, while the 3^rd and 4^th Defendants were Assistant Supervisors at various branches of the Plaintiff’s operation.

3.  Subsequent to the termination of their employment with the Plaintiff, the Defendants joined a competitor, Plan-Travel Limited (“Plan-Travel”).  Then on 8 June 2006, the Plaintiff discovered alleged breaches of duty involving misuse of Client Data on the part of the Defendants which resulted in diverting business and clients from the Plaintiff.  On the same day, the Plaintiff’s managing director, Mr Kondic and the Plaintiff’s general manager, Mr Mahbob met with the directors of Plan-Travel, Mr Ip and Mr Leung for the purpose of securing Plan-Travel’s confirmation that they would not condone such conduct of the Defendants.  They were allegedly told that all four of the Defendants were coming as a package deal on their promise to bring business to Plan-Travel.  That meeting did not bear any fruit.

4.  The Plaintiff issued a Writ of Summons against the four Defendants on 13 June 2006 and took out the present Summons on 4 July 2006.  At the hearing of this Summons on 7 July 2006, the Defendants gave undertakings (1) not to induce breach of contract between the Plaintiff’s customers and the Plaintiff; (2) not to make use of or disclose to any person the Plaintiff’s confidential information comprising of the customers booking information; (3) not to induce the Plaintiff’s employees to breach their employment contracts or duties of confidentiality concerning the Plaintiff’s Client Data; (4) to deliver up property of the Plaintiff; and (5) to file affirmations of verification.  But they refused to give undertaking not to use or disclose the Client Data.  Hence, the hearing of the Summons for interlocutory injunction became necessary.

The law

5.  The principles applicable to the grant of interlocutory injunction are well settled.  The classic statement is to be found in Lord Diplock’s speech in American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 407-409.  These principles are as follows.  An applicant for interlocutory injunction must first show a serious question to be tried, i.e. the claim is not frivolous or vexatious.  Once satisfied that there is a serious question to be tried, the court proceeds to consider whether the balance of convenience lies in favour of granting or refusing the relief sought.  If damages at common law would be adequate and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted.  If damages at common law would not be adequate or if the defendant would not be in a financial position to pay them, the court considers the contrary hypothesis whether the plaintiff’s undertaking for damages would be adequate if the defendant were successful in establishing his right to do that which he is being restrained from doing.  Where the competing factors are evenly balanced, the court should bend in favour of the status quo.  As the relief is an equitable relief, in the exercise of its discretion the court will in the interests of justice consider all relevant circumstances including, where appropriate, the strength of the applicant’s case.

6.  The Plaintiff’s case against the Defendants is not based on restrictive covenants but on the Defendants’ breach of common law duty of fidelity and good faith as employees and their breach of contractual obligations of confidentiality by misusing and conspiring to misuse the Plaintiff’s Client Data.  The claim is also for diversion or attempted diversion of the Plaintiff’s business and for tortuous interference inducing breaches of a like nature by employees.  The Plaintiff is seeking protection under the general law of confidence and the duty of fidelity.  The central issue is whether the Client Data are trade secrets or information of a sufficiently high degree of confidentiality as to amount to trade secrets which the Plaintiff has a legitimate interest to protect.

Nature of Client Data

7.  The present case is a mini replica of AXA China Region Insurance Co Ltd & Anor v Pacific Century Insurance Co Ltd & Ors [2003] 3 HKC 1.  The definition ‘Client Data’ is also modified from a similar definition used in the AXA Case.   Many legal principles applicable to the present case were fully argued by leading counsel in the AXA Case, such as those relating to confidential information and trade secret.

8.  In the AXA Case, I held that the client data in that case was confidential information.  But that does not relieve me of the burden of investigating the true nature of the Client Data in the present case as each case depends on its own facts.  In the AXA Case, the client data was stored in a much more sophisticated computer system and protected by more sophisticated security measures than that in the present case.  Access to the client data was more restrictive.  Apart from client’s name and contact particulars, the client data in the AXA Case included particulars of the client’s existing insurance policies in respect of which the insured was under both a current and continuing liability to pay premium to AXA.  The Client Data in the present case is essentially the client’s name, contact particulars and information of the travel product which the client has purchased, which does not involve any continuing liability to the Plaintiff.   This is an important feature which distinguishes the Client Data in the present case from the client data in the AXA Case, though the definition of Client Data is drafted in almost identical terms. 

9.  In the AXA Case, I have reviewed a number of leading authorities on trade secrets or their equivalents at pages 15 to 19 (paragraphs 35 to 38).  On those authorities, I found that a trade secret or equivalent of a trade secret must be information:

(1) used in a trade or business (Lansing Linde Ltd v Kerr [1991] 1 WLR 251 and Faccenda Chicken Ltd v Fowler And Others [1987] 1 Ch 117);

(2) is confidential, i.e. not already in the public domain(Thomas Marshall (Exports) Ltd v. Guinle [1979] Ch 227 andFaccenda Chicken);

(3) can be easily isolated from other information which the employee is free to use so that any man of average intelligence and honesty would think it is improper to use the information at the disposal of his new employer (Faccenda Chicken and Printers & Finishers Ltd. v. Holloway [1965] R.P.C. 239);

(4) which, if disclosed to a competitor, would be liable to cause real or significant harm to the owner (Lansing Linde and Thomas Marshall v. Guinle); and

(5) which the owner of the information must limit its dissemination or at least not encourage or permit its widespread publication or otherwise impress upon the employee the confidentiality of the information (Lansing Linde and Faccenda Chicken).

10.  The test to be applied for items (2) and (4) is that of the owner’s subjective belief in the light of the usage and practices of the trade and industry.  All circumstances must be taken into account, including the nature of the employment, for example, whether the employment is in a capacity where confidential material is habitually handled by the employee or agent (Faccenda Chicken and Printers & Finishers).

There is no dispute that the Client Data in the present case meet the requirement in (1) as being used in the Plaintiff’s trade or business.  Also, it can hardly be argued that if the Client Data are disclosed to a competitor, it would not be liable to cause any real or significant harm to the Plaintiff.  The requirement in (4) is, therefore, also satisfied.   Mr Wong, counsel for the Defendants, disputes that the requirements in (2), (3) and (5) are met.

11.  Mr Wong argues that an employer may be able to restrain misuse of information by a former employee only if the information is sufficiently confidential to amount to a trade secret or its equivalent, but not if it is confidential only in the sense that unauthorised disclosure of it to a third party during employment would have been a breach of the duty of good faith.  He cites Faccenda Chicken.  In that case, driver-salesmen were employed by the plaintiff to deliver chicken to various geographical sectors under their responsibilities.  After a few weeks, the names, addresses of the customers in their sectors; the detailed routes taken for supplying the customers; the customers’ requirements; the times of deliveries and the prices paid became known to the driver-salesmen.  The plaintiff’s manager resigned and started a similar business in the same area employing eight of the plaintiff’s driver-salesmen.  Goulding J held that the information gained by an employee in the course of his employment fell into three classes: (1) information which was so easily accessible to the public that an employee was at liberty to impart it to anyone during his employment or afterwards; (2) confidential information which he could not use or disclose during his employment without breaching his duty of fidelity to his employer, but which, in the absence of an express restrictive covenant, he was at liberty to use thereafter; and (3) specific trade secrets which he was not entitled to use either during or after his employment.  Goulding J held that the information gained by the driver-salesmen fell into the second class which the driver-salesmen, in the absence of express terms in the contracts of employment restraining its use, were at liberty to use and disclose in competition with the plaintiff once they had left their employment.  The plaintiff’s appeal was dismissed by the Court of Appeal.  Mr Wong argues that the Client Data in the present case is similar to the customer’s information in Faccenda Chicken and is unprotected. 

12.  What is binding in a precedent is the legal principles decided in the authority rather than its factual conclusions.  The Court of Appeal in Faccenda Chicken approved Goulding J’s three categories of information.  Neill LJ held at 137 that the protection given to the second class of information, i.e. confidential information, was based on an implied term which prevents its use or disclosure by an employee after his employment has ceased and in determining whether a particular item of information falls within the implied term attention has to be given to the following matters: (a) the nature of the employment; (b) the nature of the information itself; (c) whether the employer impressed on the employee the confidentiality of the information; and (d) whether the information can be easily isolated from other information which the employee is free to use or disclose.  This is the legal principle decided by the Court of Appeal in Faccenda Chicken.

13.  As to (a), I do not think the Defendants were employed in a capacity where confidential material was being habitually handled by them as to impose on them a high obligation of confidentiality.  However, consideration of the other three matters points to the conclusion that the Client Data are confidential information. 

14.  In the nature of the Plaintiff’s business, the names of customers, their contact information and the travel products they purchased are important information, which if disclosed to a competitor would be liable to cause real harm to the Plaintiff.  In the present case, if the Plaintiff’s evidence is believed, actual loss of business has resulted.  In Lansing Linde Ltd v Kerr, Staughton LJ expressed at 260 his view that in an appropriate case, such information may be a trade secret.  In Faccenda Chicken, the contrary conclusion was reached.  But it must always be remembered that the conclusion in each case is a factual one reached on the factual circumstances of the case.

15.  As for the third matter, the Plaintiff issued a Personnel Manual to each of the Defendants, the receipt of which was acknowledged by all the Defendants.  The Personnel Manual contains clauses relating to confidential information, data, data security and disciplinary action for breach of related duties.  The followings are some of the pertinent provisions:

“Part One - Administration Policy

Clause 9:  Confidential Information 

Disclosure of Information and Non-Solicitation

It is a condition of your employment that you shall not, either during your employment or thereafter, use to the detriment or prejudice of the Company … divulge to any person any trade secret or any confidential information concerning the business or affairs of the Company … which you may have come to your knowledge during your employment.

Part Two - Code of Conduct

Clause 3:  Handling Confidential Information/Company Property

3.1 All directors and staff members are prohibited from disclosing any information classified by the Company to anybody without authorization.  Those who have access to or are in control of such information should at all times ensure its security and prevent any abuse or misuse of the information.  Examples of misuse include disclosure of information in return for monetary rewards, or use of information for personal gain.

Clause 4:  Compliance with the Code

4.2  Anyone who is in breach of the Code will be subject to disciplinary action, including termination of  employment.  …

  Part Three – I T Policy

  Clause 3:  Computer Network, Application and Data Security

3.1  Purpose

Wide network accessibility and ease of use has enhanced  the company’s ability to provide significant inter and intra-company communications and data processing capabilities.  However, it has also increased the risk of unauthorized access to the company’s computer systems.  The policies contained in this document have been established to minimize the risks and exposures inherent in allowing access to computer systems’ application and data.

3.3  Computer Network Policy

3.3.6  Information related to the use of network, and  access to applications, shall be considered company confidential and protected as such.  All persons having access to the network shall be binded under the corporate confidentiality undertaking and guidelines shall be held responsible for adhering to them.

3.4  Computer Application And Data Policy

3.4.1  Access to all systems shall be passwords, or equivalently, protected.  A time-out period shall be defined for important systems.

3.4.2    Access to any system shall require the approval of the Head (or designee) of the requesting department and the Head (or designee) of the department which owns the data being accessed.

3.4.4    … The intent of this policy is to require an individual to be responsible for the use of a computer system.  …

3.4.5    All users shall be classified in a manner which allows them to be segregated by general need.  Only applications and data required by category of user shall be supplied to that category of user.

3.4.6    All applications shall be classified in a manner which allows them to be segregated from other applications.  Only applications required by a specific user shall be made available to that user.

3.4.7    All data shall be classified and stored in a manner which allows its segregation from other data.  Only that data required by a user shall be made available to that user.  Only that data required by a given application shall be made available to that application.

3.4.9     Information related to the use of computer systems shall be considered company confidential and protected as such.  All persons having access to computer systems shall be binded under the corporate confidentiality undertaking and guidelines and shall be held responsible for adhering to them.

  Clause 8:  Corporate Data Usage And Access

8.3  Policy

Data is critical to the smooth and profitable operation of the company.  Data is a Corporate asset and should be treated as such.  Data should be used solely to the benefit of Corporate objectives, and should be maintained in an accessible but secure environment.

8.4  Procedures

8.4.2  <Use of Data>

All data in the company, regardless of system platform or storage media, may not be used for personal gain or in any way that violates existing business ethics.  This is particularly important in the areas of confidential data and “insider information”.

8.4.5  <Confidential Data>

…  All data will be considered confidential unless otherwise stated.”

16.  There is no dispute that the Client Data are stored in the Plaintiff’s computer network which may be accessed by the Defendants with the use of a password.  Under Clause 8.4.5 of Part Three, all data are considered confidential unless otherwise stated and there is nothing to suggest the Client Data are otherwise.  Part Two of the Personnel Manual sets out a code of conduct regarding access to the computer network and use of the data stored therein.  This code of conduct is therefore applicable to the Client Data.  This Part emphasises the importance of security, confidentiality, that the data may only be used for the Plaintiff’s purpose and may not be used for the employee’s personal gain.  Clause 4.2 of Part Two provides that breach of the Code may result in disciplinary action including dismissal.  Clause 9 of Part One makes it a condition of employment that an employee shall not, either during his employment or thereafter, use or divulge to any person any trade secret or any confidential information concerning the business or affairs of the Plaintiff.  I think these provisions of the Personnel Manual amply demonstrate that the Plaintiff has impressed on the Defendants the confidential nature of the Client Data which they had access for the purpose of the Plaintiff’s business and the very serious attitude which the Plaintiff attach to preserving their confidentiality.

17.  As for the fourth matter, the Client Data are clearly and readily separable from the employee’s general knowledge or information acquired in the course of his employment which he is free to use or disclose after the employment ceases.  The Client Data are stored in the Plaintiff’s computer network which the Defendants accessed occasionally for the purpose of their work.  Unless a Defendant deliberately memorised the Client Data relating to some particular clients or downloaded the data from the computer network, she would easily have forgotten about the information.  Clearly, the information is separable from the bulk of information or experience which the Defendants are free to use after the termination of their employment with the Plaintiff.

18.  The present case is clearly distinguishable from Faccenda Chicken.  In that case, the driver-salesman conducted his daily round visiting the same customers for weeks.  Those customers were well-known butchers, supermarkets and stores.  He must have developed some personal relation with the customers and in the matter of a few weeks, the customers’ names, contact particulars, preference for products and price must have easily been incorporated into his memory as to become part of his personal knowledge.  This information was inseparable from the rest of the non-confidential information.  In the present case, the Defendants only accessed the Client Data occasionally and not daily in respect of the same client and the clients are individuals and not well-known commercial customers.  In view of the diversity and number of clients they handled, it is impossible for them to have recollection of all the Client Data.  Furthermore, in Faccenda Chicken, the employer conceded that some of the sales information, looked at in isolation, did not constitute confidential information.  The employer also conceded that the names and addresses of the customers and the most convenient route were not confidential.  The case was argued mainly on the confidentiality attached to the price of the chicken.

19.  In Faccenda Chicken, the Court of Appeal reached the factual conclusion that the sales information and price information were not confidential because (1) it was conceded that the sales information was not confidential if looked at in isolation; (2) the information about the prices was not clearly severable from the rest of the sales information; (3) the sales information and the price information could not reasonably be regarded as plainly secret or sensitive; (4) the sales information including the price information was necessarily acquired by the employees in order that they could do their work; (5) the sales information was generally known among the driver-salesmen as were employees at a junior level; and (6) there was no evidence that the employers had given express instructions that the sales information or price information was to be treated as confidential. 

20.  None of the above considerations has been featured in the present case.  Applying the Faccenda Chicken principle, I have no difficulties to conclude that the Client Data are confidential.  The Plaintiff has clearly impressed upon its employees the confidential nature of the information through the Personnel Manual and the security system of the computer network in which the Client Data were kept.  Clause 9 of Part One expressly prohibits an employee, whether during her employment or thereafter, from divulging or using any trade secret or confidential information acquired by her in the course of her employment to the detriment of the Plaintiff.  The Client Data stored in the computer network accessible only through the use of a password are clearly separable from non-confidential information.  The Client Data meet the requirement of confidentiality in (2). 

21.  Furthermore, the information in the Client Data could not have been necessarily acquired by the Defendants in order that they could do their work, but could only have been obtained by deliberate conduct which constitutes breaches of the provisions of the Personnel Manual.  In the light of the security system used by the Plaintiff to protect its data and the provisions in the Personnel Manual, a man of average intelligence and honesty would think it improper to use the Client Data at the disposal of his new employer.  On the above analysis, it is clear that the Plaintiff has limited the dissemination of the Client Data and has impressed upon its employees the confidentiality of the Client Data.  Requirements in (3) and (4) are also satisfied.

22.  Thus I am satisfied that the Client Data are trade secrets or equivalents of trade secrets, in respect of which the Plaintiff is entitled to protection.  Mr Wong argues that the definition of Client Data is too wide and too vague to qualify for protection as a trade secret.  Though cast in wide terms, I do not think the defect is incurable.  I shall deal with that should an injunction order be made.

Serious question to be tried

23.  The Plaintiff’s first hurdle is to prove there is a serious question to be tried in the sense that the claim is not frivolous or vexatious.  In this regard, it must be remembered that it is not the function of this Court to make finding of facts or resolve conflicts of evidence on affidavits as to facts on which the claims of either party may ultimately depend.  In this context, it is irrelevant whether the Court thinks that the Plaintiff’s chances of success in establishing liability at trial are 90% or 20%: see Alfred Dunhill Ltd v Sunoptic SA [1979] FSR 337 per Megaw LJ at 373.

24.  Upon the termination of their employment between 26 May and 8 June 2006, all of the Defendants joined a competitor, Plan-Travel.  Mr Bartlett, counsel for the Plaintiff, argues that the Defendants’ departures were co-ordinated and they were joining a competitor allegedly on a package deal on their promise to bring business to Plan-Travel.  This may cast some light on the Defendants’ conduct.

The Plaintiff’s case against the 1^st Defendant  

25.  The 1^st Defendant joined the Plaintiff as a Supervisor on 1 July 1993 and worked until 3 June 1999.   She rejoined the Plaintiff on 15 June 2000 as a Senior Supervisor of the Central Branch.  She tendered resignation on 29 April 2006 to take effect on 26 May 2006.

26.  On 5 June 2006, the Plaintiff received from Plan-Travel an Exchange Order in respect of a cruise booking of the Plaintiff’s customers, Dr and Mrs Shroff, for a Mediterranean Explorer Cruise.  According to the Plaintiff’s record, Dr and Mrs Shroff had already made this booking directly with the Plaintiff through the 1^st Defendant and paid a deposit on or about 6 April 2006.  The record also shows that the booking was initially handled by the 1^st Defendant and thereafter followed up by her as well.  According to the Plaintiff’s trade practice with other travel agents, if a customer books a tour of which the Plaintiff is the sole agent through another travel agent, that other travel agent would issue an Exchange Order to the Plaintiff and the Plaintiff would provide the tour service to the customer and pay that other travel agent a commission.  Thus, by issuing the Exchange Order on 5 June 2006, Plan-Travel was claiming that the booking for Dr and Mrs Shroff was introduced to the Plaintiff by Plan-Travel.  But, in truth and in fact the customers had already had a booking with the Plaintiff handled by the 1^st Defendant before she left the Plaintiff’s employment.  This is strong prima facie evidence that the 1^st Defendant has acted in breach of the confidentiality undertaking under the Personnel Manual and her implied duty of good faith by making use of Client Data of the Plaintiff for the benefit of the Plaintiff’s competitor.  The Plaintiff suffered loss by having to pay Plan-Travel commission for the booking of Dr and Mrs Shroff who had already booked their tours direct with the Plaintiff.

27.  The 1^st Defendant’s answer to the above allegation is that she never canvassed Dr Shroff and it was Dr Shroff who gave her the booking information and instructed her to handle his booking after she had started working for Plan-Travel.  Then the 1^st Defendant telephoned Mr Patrick Yip of the Plaintiff to confirm the remaining details of the booking.  However, the 1^st Defendant was required to handover to her colleagues to follow up on all outstanding bookings done by her for the Plaintiff’s customers.  The bookings of Dr and Mrs Shroff and three other customers, Mr and Mrs Ernest Wong and Ms Chung Po Kam were all missing from her handover list. From her conduct, an inference could be drawn that when the Defendant left the Plaintiff’s employ, she had already planned to take these bookings with her to Plan-Travel.  Her argument would have carried more weight had Plan-Travel not claimed commission from the Plaintiff.

28.  On 7 June 2006, the Plaintiff received a further Exchange Order from Plan-Travel in respect of the booking of Mr and Mrs Ernest Wong, sailing on three consecutive cruises.  The Plaintiff’s record shows that such bookings had already been made by Mr and Mrs Wong through the 1^st Defendant whilst she was still employed by the Plaintiff.  At around the same time, the Plaintiff also found out from the 1^st Defendant’s subordinate, Ms Tracy Fung, that during a social occasion on 5 June 2006, the 1^st Defendant instructed her not to follow up on two further consecutive cruise bookings for Mr and Mrs Ernest Wong, sailing on 23 December 2006.

29.  The 1^st Defendant’s answer to this allegation is that the booking information of Mr and Mrs Ernest Wong were provided to her by Mrs Wong via e-mail on 16 June 2006.  Mrs Wong wrote in that e-mail that after receiving the 1^st Defendant’s telephone call from Plan-Travel, her husband contacted the Plaintiff but received unsatisfactory and discourteous services.  As a result, they requested the 1^st Defendant to follow up with their booking.  While this e-mail explained why Mr and Mrs Wong sought her help, it failed to explain why the 1^st Defendant had the contact details of Mr and Mrs Wong in the first place and with which she contacted them which resulted in Mrs Wong’s e-mail dated 16 June 2006.  There was another e-mail dated 3 June 2006 from Mrs Wong suggesting that the 1^st Defendant had on an earlier occasion made an appointment to meet her at Plan-Travel that day.  The 1^st Defendant must therefore have appropriated Client Data in respect of Mr and Mrs Wong belonging to the Plaintiff before she left the Plaintiff’s employment and retained and used them after she had left.  Assuming that Mr and Mrs Wong received unsatisfactory and discourteous services from the Plaintiff, the underlying cause was the 1^st Defendant’s failure to include Mr and Mrs Wong’s booking in her handover lists.  She also knew who would be following up their bookings and yet she withheld that information from them.  She also deliberately told her subordinate, Ms Tracy Fung, not to follow up on Mr and Mrs Wong’s bookings.  All these weigh against her explanation and suggest she was creating circumstances as to make it easy for her to entice the Plaintiff’s clients.

30.  On 27 June 2006, the Plaintiff received a booking confirmation from Plan-Travel for Ms Chung Po Kam’s travel on a Princess Cruise, sailing on 24 September 2006 and claimed commission.  Ms Chung had in fact made her booking for the cruise direct with the shipping company while she was travelling on a Princess Cruise in January 2006 booked through the Plaintiff.  Accordingly, the shipping company referred the booking to the Plaintiff’s Cruise Operation Department for follow up and no commission would have been payable by the Plaintiff to any agent.  According to Ms June Cheng of the Cruise Operation Department, she e-mailed a copy of the booking confirmation from the shipping company to the 1^st Defendant for follow up while she was still in the Plaintiff’s employ. 

31.  The 1^st Defendant’s answer to the above allegation is that Ms Chung was very dis-satisfied with the Plaintiff’s services and gave her the booking confirmation for her to follow up on her booking.  She denied ever receiving a copy of the booking confirmation from the shipping company through Ms June Cheng and insisted that the copy of the booking confirmation sent by Plan-Travel was provided to her by Ms Chung.  However, according to Ms June Cheng, no passenger copy of booking confirmation would be issued by the shipping company to the passengers.  The copy of booking confirmation from Plan-Travel is similar to the copy of confirmation issued by the shipping company to the Plaintiff, except in respect of the following two aspects.  Firstly, the name and telephone number of the agency contact on Plan-Travel’s copy was blank, presumably tip-pexed off, but the 1^st Defendant’s name is shown on the Plaintiff’s copy.  Secondly and very significantly, the date of the booking as shown in the Plaintiff’s copy was 28 April 2006 whereas that as shown in Plan-Travel’s copy was 27 June 2006.  The date shown in the Plaintiff’s copy of booking confirmation is consistent with the Plaintiff’s claim that the booking was made directly by Ms Chung on board the Princess Cruise.  On the other hand, there is no evidence from the 1^st Defendant or Ms Chung that she made the booking on 27 June 2006.  The copy of booking confirmation issued by the shipping company could not have been forged.  This suggests that the date of 27 June 2006 as shown in Plan-Travel’s booking confirmation could have been forged for a purpose.  Furthermore, the 1^st Defendant included in her handover list a 15 days cruise booking made by Ms Chung for which full payment had been made but excluded the 20 days cruise booking departing on 24 September 2006 for which full payment fell due on 11 July 2006 when the 1^st Defendant was the agency contact as stated in the booking confirmation.  There is every reason to believe that Plan-Travel’s booking confirmation has been forged to conceal the 1^st Defendant’s prior handling of the booking while she was in the Plaintiff’s employ.

32.  Putting all these allegations together, I am satisfied that the Plaintiff has made out a very strong case of misuse of Client Data against the 1^st Defendant.  The claim against the 1^st Defendant is not frivolous and vexatious.  As against her, there is a serious question to be tried.

The Plaintiff’s case against the 2^nd Defendant  

33.  The 2^nd Defendant joined the Plaintiff on 11 September 1995 as a Supervisor of the Causeway Bay Branch.  She tendered resignation on 29 April 2006 together with the 1^st Defendant and her resignation also took effect on 26 May 2006. 

34.  It was discovered by the Plaintiff that on 2 June 2006, the 2^nd Defendant sent an e-mail from Plan-Travel to the 4^th Defendant who was still serving the last few days of her notice period with the Plaintiff.  In that e-mail, she asked the 4^th Defendant for the telephone numbers for “Troms bkg ref: CT3006C - Cruise pax - Mr Lee Tak Yip.”  That the 2^nd Defendant was able to quote the booking reference number of Mr Lee Tak Yip suggests that she had somehow misappropriated or retained such information or Client Data without the Plaintiff’s knowledge or consent before she left the Plaintiff’s employ and was trying to misappropriate more information after she had left by inducing the 4^th Defendant to breach her duty of confidentiality to the Plaintiff.

35.  The Plaintiff’s record shows that that booking confirmation was handled by the 4^th Defendant in the Central Branch when she was relieving the 1^st Defendant who was on leave.  It was not processed in the Causeway Bay Branch where the 2^nd Defendant used to work.  There was no reason why the 2^nd Defendant would be in possession of the booking information and full name of the customer which was not handled by her or her branch, but by the 4^th Defendant in a different branch.  The only reasonable inference is that the information had been supplied to the 2^nd Defendant either by the 4^th Defendant while she was still in the Plaintiff’s employ or by the 1^st Defendant before or after she left the Plaintiff.

36.  Lastly, the cruise departed on 13 May 2006 and concluded on 22 May 2006 and there was nothing for any of the Defendants to follow up with the customer.  The inference is that the 2^nd and 4^th Defendants and possibly the 1^st Defendant as well, were acting in concert to misappropriate Client Data belonging to the Plaintiff for the benefit of their new employer.

37.  The 2^nd Defendant’s answer to the above allegation is that the booking information was not memorised but acquired as part of her general knowledge.  She denied that the information was supplied to her by the 4^th Defendant.  She said Mr Lee had asked her to contact him upon his return and so she wanted to contact Mr Lee not for the purpose of follow up but that she was worried as a personal friend if Mr Lee had any problem with his US visa.   If that explanation was true, the 2^nd Defendant should have included the need to call Mr Lee in her handover list for the Plaintiff’s staff to follow up, but she did not.  Her explanation that she assumed the Plaintiff’s obligation to call Mr Lee as a personal one is not credible.

38.  There is prima facie evidence of misappropriate of Client data by the 2^nd Defendant, which is not frivolous and vexatious.  There is also an explanation for the 2^nd Defendant.  This factual dispute is one which has to be resolved at trial.  There is a serious question to be tried in respect of this claim against the 2^nd Defendant.

The Plaintiff’s case against the 3^rd Defendant

39.  The 3^rd Defendant joined the Plaintiff on 1 September 1999 as an Assistant Supervisor.  Her resignation took effect on 6 June 2006. 

40.  The Plaintiff discovered that on 5 June 2006 the 3^rd Defendant wrote to the 1^st Defendant at her e-mail address at Plan-Travel to inform her that the Plaintiff was moving the files of pier destinations information and asked if she would need such information.  The 1^st Defendant instructed the 3^rd Defendant to take a copy of all the pier destination information she could find, so that they could have a hard copy for themselves.  The e-mails were not discovered until close to the end of the day when it was not possible for the Plaintiff to have done anything to stop the 3^rd Defendant from downloading the information.  She was told on the following day that she need not work out the end of her notice period.  The incident suggests that the 1^st and 3^rd Defendant were acting pursuant to their joint enterprise to misappropriate the Plaintiff’s pier destinations information without the Plaintiff’s prior knowledge and consent.

41.  The 3^rd Defendant’s answer to this allegation is that she did not have in her possession any copy of the pier information and that such information is in the public domain as being available on Princess Cruises’ website.  She took the initiative to offer to obtain the information for the 1^st Defendant.  In the natural course of events, she must have, pursuant to the 1^st Defendant’s instruction, obtained a copy.  It is not for me to make any finding of fact on disputed issue.  It is a matter for trial.  The pier destination information is not the same as the information available on Princess Cruises’ website, which was primarily the introduction of the places of interest visited by the cruise lines. Apart from the contact details of the port agents at the ports of call, the pier destination information contains updated information on the exact terminal or pier where different cruise lines would dock, the travelling time from airport to pier, the means of transport from airport to pier and the costs and the telephone and fax numbers of the relevant ship.  These information are not available from the Princess Cruises’ website but were compiled by the Plaintiff’s Cruise Operation Department through laborious efforts.  Such information would only be provided to customers upon issue of the cruise ticket to them.  Though the pier destination information is not confidential information, it is arguable that the Plaintiff has a proprietary interest or copyright in the pier destination information, which the Defendants may not appropriate without the Plaintiff’s consent.

42.  The Plaintiff also discovered that on 1 June 2006, the 3^rd Defendant created a cruise booking for Mr Chan Chung Kit and Ms Fung Yuk Lan, departing on 8 July 2006.  Contrary to the Plaintiff’s policy and working practice, she did not enter the booking in the Plaintiff’s record or hand over to her colleagues to follow up after her departure.  The booking was cancelled by the shipping company on 7 June 2006 for non-payment.   However, before the booking was due to lapse, the 2^nd Defendant, who had already left and joined Plan-Travel, secured a similar booking for the customers by telephoning Ms June Cheng of the Plaintiff’s Tour Operating Department on 5 June 2006.  On 9 June 2006, Plan-Travel issued an Exchange Order for the booking.  On 16 June 2006, the 3^rd Defendant who had moved to Plan-Travel began to follow up on this booking.

43.  After the conclusion of the cruise, Miss Winnie Chan of the Plaintiff’s Tour Operating Division telephoned Ms Fung.  Ms Fung informed Miss Winnie Chan that the 3^rd Defendant represented to her that if she booked her cruise through the Plaintiff, she had to make full payment before her request for reservation would be processed; but if she were to make her reservation through her new employer, she would not need to make any payment until the air and cruise tickets had been confirmed.  The 3^rd Defendant suggested Ms Fung to follow her to her new employer and submit her reservation from there.  On such evidence, it is a clear case of diverting the Plaintiff’s business in breach of fiduciary duty and misappropriation of the Plaintiff’s Client Data for the benefit of her new employer.

44.  The 3^rd Defendant denied the above allegation.  She obtained a letter from Ms Fung denying that there was such a telephone conversation with Miss Winnie Chan.  The Plaintiff denied the authenticity of that letter.  Clearly, this is not a matter I could or need to resolve in this proceeding.

45.  I am satisfied that there is prima facie evidence that the 3^rd Defendant had conspired with the 1^st Defendant to misappropriate the Plaintiff’s pier destination information and that the 2^nd and 3^rd Defendants had conspired together to misappropriate the Plaintiff’s Client Data for the benefit of Plan-Travel to the detriment of the Plaintiff.  There are disputes whether the 3^rd Defendant had in fact obtained any copy of the Plaintiff’s pier destination information and about Ms Fung’s telephone conversation. These are matters to be resolved at trial.  The Plaintiff’s claim is not frivolous and vexatious.  I am satisfied that there is a serious question to be tried against the 3^rd Defendant.

The Plaintiff’s case against the 4^th Defendant  

46.  The 4^th Defendant joined the Plaintiff on 1 December 1998 as an Assistant Supervisor in the Tsim Sha Tsui Branch.  She tendered resignation on 29 April 2006 which would take effect on 9 June 2006.  But she was summarily dismissed on 8 June 2006 because of an incident on 6 June 2006.

47.  It should be recalled that the Plaintiff alleged that on 2 June 2006, the 2^nd Defendant sent an e-mail to the 4^th Defendant requesting for contact information of Mr Lee Tak Yip.  The 4^th Defendant denied having replied to this request.  The Plaintiff did not produce any e-mail reply from the 4^th Defendant.  Again it is not for me to resolve such conflict of evidence in this proceeding.

48.  Then, on 6 June 2006, while still in the course of her employment, the 4^th Defendant sent an e-mail to Singapore Airlines informing them to transfer the booking of Ms Anna Chi and fifteen other passengers made by her and confirmed by the Singapore Airlines to Plan-Travel.  Singapore Airlines replied that all she needed to do was to allow the booking to lapse by not paying the deposit and then re-submit the new booking under the name of Plan-Travel.  Further investigation also showed that contrary to the Plaintiff’s policy and working practice, the booking of these sixteen passengers had never been entered in the Plaintiff’s computer and other records.  The booking of those sixteen passengers was indeed cancelled due to non-payment of deposit. Upon discovery of this incident on 7 June 2006, the 4^th Defendant was dismissed on the morning of 8 June 2006.  This is a blatant case of diverting the Plaintiff’s business to a competitor which involved breach of fiduciary duty and misuse of the Client Data. 

49.  The 4^th Defendant’s answer to this allegation is that towards the end of May 2006, she informed Ms Anna Chi that she would be leaving the Plaintiff’s employment and would refer another colleague to follow up with her booking.  Then Ms Anna Chi suggested to follow her to her new employer and make her booking through Plan-Travel.  She also produced a letter from Ms Anna Chi saying that she was a diver and personal friend of the 4^th Defendant who is also an experienced and qualified diver and that it was she who asked the 4^th Defendant to cancel the booking with the Plaintiff and to make the booking through Plan-Travel.  This appears to be a very strong case.  However, as against that, the 4^th Defendant’s conduct in not entering the booking into the Plaintiff’s computer and record casts serious doubts on the veracity of her explanation.  Again, this is again a matter to be resolved at trial.

50.  Though on the totality of the evidence, this is not a very strong case, the claim against the 4^th Defendant is nevertheless not frivolous and vexatious.  The outcome, of course, is a question of assessment of the credibility of the witnesses which has to be resolved at trial.  I am satisfied that there is a serious question to be tried against the 4^th Defendant.

Conclusion

51.  I have summarised the Plaintiff’s allegations against each of the Defendants.  On the Plaintiff’s allegation, there is a strong prima facie case of misuse of the Client Data and breach of fiduciary duty against each of the Defendants.  I have also summarised the Defendants’ answers to the respective allegations.  The Defendants’ answers are supported to a certain extent by letters from some of the customers.  When considered in the light of the totality of the evidence, some of the answers are not really credible.  However, it is not the function of the Court at the interlocutory stage to try to resolve conflicts of evidence on affidavits as to facts on which the claims of either party may ultimately depend.  But I am well satisfied, even after taking into account the Defendants’ answers, that the Plaintiff’s claim is not frivolous and vexatious.  There is a serious question to be tried in respect of the Plaintiff’s claims against each of the Defendants.

balance of convenience

52.  On the question of balance of convenience, Mr Wong submits that the Court should first consider whether, if the Plaintiff succeeds at trial, it would be adequately compensated by damages for any loss caused by the refusal to grant the interlocutory injunction.  If damages would be an adequate remedy and the Defendants are in a financial position to pay them, no interlocutory injunction should normally be granted.  At this stage of the balancing exercise, the burden is on the Plaintiff to show that damages are inadequate and/or that the Defendants are not in a financial position to pay them.

53.  The Plaintiff’s claim is for loss of business and there is no claim for damage to goodwill.  The Plaintiff cannot demonstrate it is entitled to any remedy other than damages.  The Plaintiff’s argument is that the Plaintiff only had twelve sales staff including the Defendants and the Defendants were the most senior, experienced and longest serving sales staff with seven to eleven years’ service whilst the remaining staff have only one to two years’ experience.  Therefore, the Plaintiff argues that there is a potential for irreparable harm from the Defendants’ use of the Plaintiff’s Client Data.  I am not convinced that the ability of the Defendants as salespersons is anything to be weighed against them.  Perhaps the more valid argument is that the Plaintiff may be faced with what appears to be a near impossible task of quantifying its damages and collecting evidence of its damage, if the interlocutory injunction is refused. 

54.  Mr Wong argues that the Plaintiff is the sole agent of the American Princess Cruises and the English P & O Cruises in Hong Kong and through the Exchange Order system, the Plaintiff can ascertain how much business has been diverted to Plan-Travel through the Defendants.  In respect of customers who had paid deposits to the Plaintiff, with some diligence the Plaintiff may be able to ascertain the number of such customers diverted to Plan-Travel.  But there is no way for the Plaintiff to find out how many of its existing customers whose contact particulars are known to the Defendants will be contacted by the Defendants and diverted to Plan-Travel.  It would also be very costly if not impossible for the Plaintiff to monitor all the Exchange Orders issued by Plan-Travel to find out if any of the tourists had been the Plaintiff’s customers.  Moreover, it is also probable that the customers would be induced to join Plan-Travel because of discounts offered by the Defendants as may be inferred from Mrs Wong’s e-mail to the 1^st Defendant.  In that event, it is practically impossible for the Plaintiff to obtain the assistance of any of its customers.  Furthermore, the loss of sales of air tickets or other travel products of which the Plaintiff is not the sole agent is impossible to monitor or assess.  It is impossible for the Plaintiff to quantify its loss if an interlocutory injunction is refused.  Furthermore, the Defendants’ application for legal aid is some evidence of their likely inability to pay an award of substantial damages.  I am satisfied that in the event that the Plaintiff is successful at trial, the Plaintiff would not be adequately compensated by an award of damages if the interlocutory injunction is refused.

55.  On the contrary, the Defendants argue that if restrained they would be effectively prevented from competing with the Plaintiff and from continuing to work in the travel industry which will have dire consequences for their livelihood.  I think such arguments are fanciful.  Though drafted in wide terms, it is not the intention of the Plaintiff to restrain the Defendants from working in the travel industry or from competing with the Plaintiff. The injunction sort by the Plaintiff is source specific.  The Plaintiff is not even seeking to prevent the Defendants from doing business with the Plaintiff’s customers who voluntarily approach the Defendants, provided that it does not involve the use by the Defendants of the Plaintiff’s Client Data.  Any claim which the Defendants may have against the Plaintiff would be for damages.  The Plaintiff is a substantial company with long history in the travel industry and strong background.  If the Defendants are wrongly restrained from doing what they are entitled to do, there is nothing to suggest an award of damages would not be adequate or that the Plaintiff would not be good for its undertaking for damages.  There is also nothing to suggest that such damages are impossible of quantification.  Indeed the Defendants’ income from the Plaintiff readily provides a convenient starting point for assessment.  Accordingly, I am satisfied that if the interlocutory injunction is granted and the Defendants are successful at trial, they would be adequately compensated by an award of damages.  The balance, therefore, lies in favour of grant of the injunction.

56.  I have expressed my view that the definition of “Client Data” in its present form may be ambiguous as would render an injunction granted in those terms impossible of compliance.  This defect could be easily rectified by removing the words “including but not limited to” from the definition of Client Data where they first appear and the words “but not limited to” when they next appear in the definition.  Those are the words which cause ambiguity.  An injunction granted in the amended form would not be objectionable.

Conclusion

57.  Accordingly, I grant an interlocutory injunction against each of the Defendant in the amended form.  Though the Plaintiff has made a number of amendments on the order they are seeking in the course of the hearing and that I have also further reduced the limit of the injunction order sought, I consider the Plaintiff as substantially successful.  I therefore make an order that the costs of this hearing and those reserved at the hearings on 7 July and 18 August 2006 be to the Plaintiff, to be taxed if not agreed.