TEAM BRIGHT CORPORATION LTD v. ANDIAPPAN YOGANANTH

HCA 1743/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1743 OF 2004

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J U D G M E N T

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1. I decline to grant the interlocutory injunction sought. Briefly, my reasons are as set out below.

2. As a matter of initial impression, I have serious doubts as to whether there is an arguable case that the restraint is reasonable to protect the Plaintiff's legitimate interest. Mr. Shieh SC bases his argument of a legitimate interest on the need to safeguard the Plaintiff's goodwill against loss of customers by reason of the influence exerted by a yoga master. I am not satisfied on the evidence that a yoga master exerts such influence over his students in Hong Kong. Lord Hoffmann in Dawney, Day & Co. Ltd. v. D'Alphen has said that it is "common knowledge" that hairdressers command loyalty from an employer's clients by reason of their skill in cutting and setting hair. I do not believe that there is any such "common knowledge" in relation to Indian yoga masters in Hong Kong. In my view, prima facie, the position of a yoga master cannot be equated to that of a hairdresser.

3. Second, it seems to me that the restrictive clause is greater than is necessary for protecting the interest alleged. I do not think the possibility of the Plaintiff opening more yoga centres during the employment term stipulated in the contract was a fanciful possibility at the time of contracting. But if more centres were opened, the geographical restriction in cl.5(a) could be extensive in its coverage.

4. Nor do I consider that the possibility of the defendant owning shares in a company (public or private) which directly or indirectly operates a yoga centre is fanciful. But I do not see how the proscription against such ownership would protect the Plaintiff's asserted legitimate interest.

5. I see no relationship between the 3 mile radius and the legitimate interest claimed by the Plaintiff. It seems to me that the radius is far too extensive and arbitrary.

6. I also accept Mr Kat's argument that the 1 year restriction in relation to the total period of the employment term (24 months) seems excessive.

7. I do not think that any of the difficulties with the restrictive covenant which I have just highlighted can be dealt with by merely excising particular terms from cl.5(a).

8. Accordingly, I dismiss the Plaintiff's application for an interim injunction.

9. I am conscious that the injunction application before me is an interlocutory hearing. I do not think that it is appropriate for me therefore to deal further with the merits of the case. I should not, however, be taken by my decision today to have conclusively determined the issue of whether a final injunction should or should not be granted at the end of the trial of this action.

10. I shall now hear the parties on costs and consequential orders.

Representation:

Mr Paul Shieh, SC, instructed by Messrs Minter Ellison, for the Plaintiff

Mr Nigel Kat and Miss Phyllis Loh, instructed by Messrs Herbert Smith, for the Defendant