Info Salons Technology Services (HK) Limited v Feng Wenguo & Ors [2025] HKCFI 1769 (25 April 2025)
Parkside Chambers’ Ernest Ng and Calvin Ng acted for the Plaintiff in this recent case where the Hong Kong High Court granted an interlocutory injunction enforcing 12-month post-employment restraints against a former senior employee, preventing him and a company established by him from dealing with the company’s largest client.
Background: The 2nd Defendant, formerly Deputy General Manager of the Plaintiff, resigned from his position in June 2024. Shortly after the 2nd Defendant’s departure, the 3rd Defendant, a company newly set up by the 2nd Defendant, intended to enter into a commercial agreement with one of the Plaintiff’s most significant clients (the “Client”), for an upcoming project scheduled for June 2025. The Plaintiff sought to enforce non-solicitation, non-compete, and non-enticement clauses contained in the 2nd Defendant’s employment contract, which were due to expire in early June 2025.
Initial Hearing: The case proceeded through two hearings with markedly different outcomes. At the initial hearing on 11 April 2025 for interim-interim relief, the Court declined to grant an injunction. The Court expressed concern that restraining the 2nd Defendant at that stage could cause irreparable reputational harm and disrupt preparations for the imminent event, particularly as the evidence adduced by the 2nd and 3rd Defendants suggested that the Client had already selected the 3rd Defendant as its service provider.
Substantive Hearing: However, at the substantive hearing on 25 April 2025 (which was heard on an expedited basis), Deputy High Court Judge Alan Kwong reversed course after considering fuller evidence:
1. The Court found that there was a serious issue to be tried and noted that the 2nd and 3rd Defendants’ evidence might be misleading and incomplete.
2. The learned Deputy Judge accepted the Plaintiff’s submissions that despite repeated opportunities after the initial hearing, the 2nd and 3rd Defendants failed to produce any binding agreement demonstrating that the Client had contracted with the 3rd Defendant.
3. The Court concluded that the balance of convenience favoured maintaining the status quo, particularly given that the restraint period was due to expire within weeks.
In a notable development for Hong Kong law, the Court held at paragraphs 25-26 of the judgment that it was not necessary for an ex-employee to initiate contact for a non-solicitation clause to be breached. The Court adopted the English Court’s reasoning in Croesus Financial Services Ltd v Bradshaw [2013] EWHC 3685 (QB), holding that it was not necessary for an ex-employee to initiate contact for a non-solicitation clause to be breached. If the ex-employee’s subsequent conduct amounts to active engagement, this can constitute a breach regardless of who made the initial approach. This marks the first time this principle has been applied in Hong Kong.
The Court ultimately granted the injunction until early June 2025, expressly clarifying that the order included dealings with the Client. The decision reinforces the enforceability of post-termination restrictive covenants and underscores the importance of commercial fairness in upholding contractual bargains voluntarily entered into by senior employees.
Significance: The decision confirms that the Hong Kong courts are prepared to enforce post-employment restrictions, especially where there’s evidence of coordinated moves to divert business, even if contact is not initiated by the departed employee.
Practical Implications: The decision reinforces that the Hong Kong courts are prepared to uphold well-drafted post-employment restraints, especially where there’s evidence of coordinated moves to divert business.
It is a timely reminder for employers to:
This case will be of particular interest to in-house counsel, HR professionals, and employment law practitioners advising on staff transitions, team moves, and client protections.
