ADVANCED CONNECTION LTD v. ABLE TECHNOLOGY (HONG KONG) LTD AND OTHERS

CAMP 11/2019

[2019] HKCA 1092

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 11OF 2019

(ON AN INTENDED APPEAL FROM HCA NO 2594 of 2013)

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JUDGMENT

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Hon Chu JA (giving the Judgment of the Court of Appeal):

1.  This is the 2^nd defendant’s renewed application for leave to appeal against the Judgment of P Ng J (“the Judge”) given on 9 November 2018 dismissing her appeal against the decision of Master KW Wong joining her and the 3^rd defendant to the action below.

2.  Having considered the papers filed in this application and the 2^nd defendant’s written statement and the plaintiff’s written submission, we consider it is appropriate to determine the application on paper without an oral hearing pursuant to Order 59 rule 2A(5)(a) of the Rules of the High Court, Cap. 4A.

Background

3.  The plaintiff is a company incorporated in Hong Kong in 1999 specializing in the business of telecommunication services by reference to the mark “Accessyou”.  It is the registrant of the internet domain name “accessyou.com”.

4.  The 1^st defendant is a company incorporated in Hong Kong in 2008 and carries on business, inter alia, as a telecommunication operator providing messaging service in Hong Kong.  It is the registrant of the internet domain name “ablesms.com”.

5.  The 3^rd defendant was and is the sole director and shareholder of the 1^st defendant, as well as its managing director.  It is the plaintiff’s case that he is involved in managing the business and operation of the 1^st defendant.

6.  The 2^nd defendant is the wife of the 3^rd defendant and the sole director of a company called Commerce One Limited, the registered address of which was next door to that of the 1^st defendant. 

7.  The plaintiff commenced the action below against the 1^st defendant claiming damages and other relief for infringement of trademark and passing off.  The infringing acts complained of include: (1) on 12 August 2011, the 1^st defendant registered the internet domain name of “accessyou.co”, which was automatically linked to its website “www.ablesms.com”; and (2) on 29 October 2012, the 1^st defendant registered the trademark “ABLESMS” in Hong Kong in Classes 38 and 42 in respect of, inter alia, telecommunication services relating to the provision of access to a platform for customers to deliver SMS online.

The plaintiff’s application

8.  By summons filed on 10 October 2017 (as amended on 7 February 2018), the plaintiff applied under Order 15 rule 6(2)(b) of the Rules of the High Court to add the 2^nd and 3^rd defendants. 

9.  The plaintiff’s case for joinder of the 2^nd defendant is that: (1) the 2^nd defendant, either on her own volition or at the direction of the 1^st and/or 3^rd defendants, purchased the domain name “ablesms.com” and the tradenames of “ABLESMS” and “AbleSMS” for and on behalf of the 1^st defendant from GoDaddy.com LLC; and (2) the 2^nd defendant has acted in concert with the other defendants to further the common design in relation to the infringing acts complained of by the plaintiff in the action.

10.  The relief sought by the plaintiff in the action includes: (1) a declaration that the 1^st defendant’s trade mark registration is invalid and shall be removed from the Trade Marks Registry; (2) an injunction restraining the defendants from: (a) passing off the plaintiff’s telecommunication business by reference to domain which is not the domain of, or associated with, the plaintiff, and (b) using and/or dealing in or with any domain names and/or websites “accessyou.co” and “www.accessyou.co”; and (c) damages or an account of profits.

11.  The 2^nd and 3^rd defendants deny any involvement in the infringing acts of the 1^st defendant complained of.  The 2^nd defendant’s case is that she has never been involved in the management and operation of the 1^st defendant, and she merely let the 1^st defendant use her credit card to purchase the “ablesms.com” domain name because neither the 1^st nor the 3^rd defendant had a credit card.

12.  On 28 February 2018, Master KW Wong granted the application.  The 1^st to 3^rd defendants appealed the decision. 

The Judge’s decision

13.  By his judgment handed down on 9 November 2018[1], the Judge dismissed the 1^st to 3^rd defendants’ appeal.       

14.  The Judge’s deliberation is set out in [16] to [27] of the judgment.  After referring to Order 15 rule 6(2)(b), the Judge discussed the relevant test and approach to a joinder of party application at [17] to [22] as follows:

“17. Prima facie, a Plaintiff is entitled to choose the person against whom it wishes to proceed: Hong Kong Civil Procedure 2018 Vol 1 para 15/6/6.

18. The purpose of joinder is to bring all parties to disputes relating to one subject‑matter before the Court at the same time so that the disputes may be determined without the delay, inconvenience and expense of separate actions and trials: Byrne v Brown (1889) 22 QBD 657. The rule should be construed liberally so as to ensure that, as far as possible, all matters in dispute between the parties are completely and finally determined, and all multiplicity of legal proceedings with respect to any of those matters is avoided: Lin Man Yuan v Kin Ming Holdings International Ltd [2012] 3 HKLRD 550.

19. The test to apply in a joinder application is whether there is a bona fide claim and a proper question to be tried as between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between the plaintiff and the defendant in the proceedings. At this stage, there is no requirement for an applicant to show merits of his case under this rule: Wong Shan Shan v The Incorporated Owners of Yue Wah Mansion unrep, HCA 1086 of 2013, 28 January 2015, DHCJ Kent Yee; Wong To Yick Wood Lock Ointment Ltd v Merika Medicine Factory Ltd & Anr unrep, HCA 562 of 2014, 10 March 2017, DHCJ A Lee.

20. In Pang Kwok Lam v Schneider Electric Asia Pacific Ltd unrep, HCPI 90 of 2010, 5 January 2011, at [72] and [73] Master Marlene Ng (as she then was) commented:

“72. In my view, given the objectives of Order 15 rule 6(2)(b) of the RHC outlined above, the court’s power to join parties is a generous one, and the court’s attitude is permissive although it must still ensure that the joinder is necessary and/or just having regard to the statutory criteria. According to Hong Kong Civil Procedure 2011 Vol 1 para 15/6/1 at pp 285‑286, ‘[the] power given by the rule is, however, widely exercised … though the addition of new parties may cause new expense and necessitate new evidence … But, generally speaking, the court will make all such changes in respect of parties as may be necessary to enable an effectual adjudication to be made concerning all matters in dispute … The court will not, however, decide questions of right on applications under the rule …’

73.  I am persuaded that the relevant approach to be adopted is whether there is a bona fide claim and a proper question to be tried as between the Plaintiff and Law/BLC that is necessary or just and convenient for resolution between them as well as between the Plaintiff and the Defendant in the present proceedings.”

21.  On the question of whether the Plaintiff has a bona fide claim and a proper question to be tried as between the plaintiff and the intended defendant, this court has been supplied with the Court of Appeal’s decision in Yeung Pui Ying Anna v Day & Chan (a firm) & Ors unrep, CACV 67 of 2010, 20 July 2010, Ma CJHC (as he then was) & Roger VP.  In that case, DHCJ Burrell ordered that the 2nd Defendant to be joined upon the Plaintiff’s application. The 2nd Defendant appealed to the Court of Appeal.  The issue was whether the joinder of the 2nd Defendant ought to have been disallowed by reason of the relevant limitation period having already expired at the time of the application to join.  DHCJ Burrell was of the view that it had not; at least arguably not.  At [11], Ma CJHC made the following observation:

‘11. I have approached this matter as though it had been an application to strike out. In other words, the burden was on the 2nd Defendant to show that it was plain and obvious that the limitation period had expired.’

22.  Mr Clark, for the Plaintiff, submits that on a joinder application, the burden is therefore on the parties opposing to establish that it is plain and obvious that the Plaintiff has no case against the proposed Defendants.  This court agrees.”

15.  The Judge went on to deal specifically with the 2^nd defendant’s arguments at [23] to [26] and [27] as follows:

“23.  Mr Hughes, on behalf of the Defendants, submits that the Plaintiff has manifestly failed to establish a bona fide claim and a proper question to be tried against [the 2^nd and 3^rd Defendants]. In essence, his argument is that there is no evidence to suggest that [the 2^nd and 3^rd Defendants] had any involvement whatsoever in the decision by the 1st Defendant in August 2011 to register the domain name “accessyou.co” and resolve it ie automatically link it to the 1st Defendant’s website.

24.  Given the issues are one of fact, it is difficult to see how the court can resolve such factual issues on a joinder application.  Adopting the same approach as in an application to strike out, the court will not conduct a trial on affidavit evidence, and disputed facts were to be taken in favour of the party sought to be struck out: Hong Kong Civil Procedure 2019 Vol 1 para 18/19/4.

25.  Furthermore, [the 2^nd Defendant’s] explanation that at the time of purchase of the “ablesms.com” domain name, neither the 1st Defendant nor [the 3^rd Defendant] owned a credit card so she was asked to provide her credit card information for payment somewhat beggars belief, to say the least.  As Mr Clark submits, [the 3^rd Defendant] has not confirmed in his own affirmation that he did not possess a credit card at the time of purchase. Similar comments can be made in relation to [the 3^rd Defendant’s] denial of having any involvement in the day-to-day management of the 1^st Defendant and he just left it to a team working within the company.  But, for the present purpose, it is not necessary for this court to come to any view on the veracity of such explanation and denial.”

“27.  To conclude, without discovery, detailed witness statements and cross examination at trial, this court is simply unable to conclude that the Plaintiff has no case against either [the 2^nd or 3^rd Defendant].”

16.  The 2^nd defendant’s application for leave to appeal was dismissed by the Judge on 9 January 2019.  By summons filed on 23 January 2019, the 2^nd defendant made the present renewed application for leave to appeal to this Court.

The 2^nd defendant’s proposed grounds of appeal

17.  The 2^nd draft notice of appeal, read together with the 2^nd defendant’s written statement, set out five principal proposed grounds of appeal as follows:

(1)  The Judge erred in [22] of his judgment in adopting the plaintiff’s counsel’s submission that the burden is on the party opposing the joinder application to establish it is plain and obvious that the plaintiff has no case against him; he should have held that the burden is on the plaintiff to establish a bona fide claim and a proper question to be tried between the plaintiff and the 2^nd defendant.

(2)  The Judge erred in adopting the test of whether it was plain and obvious that the plaintiff has no case against the proposed defendants, instead of the test of bona fide claim and proper question to be tried.

(3)  The Judge erred in [24] of the judgment in adopting the approach of a striking out application, and taking disputed facts in favour of the plaintiff.

(4)  For the same reason, the Judge erred in the finding made at [27] of the judgment.  The Judge also took into account irrelevant matter at [25] of the judgment, namely, the 2^nd defendant allowed the 1^st defendant to use her credit card to purchase the “ablesms.com” domain name when: (a) the 1^st defendant had been operating its business and website under the trade mark “ABLESMS” since April 2008; (b) the 1^st defendant had registered the domain name “able-sms.com” in August 2008 and is automatically linked to its “ABLESMS” website; and (c) the 1^st defendant’s registration and use of the “ablesms.com” domain name is irrelevant to the plaintiff’s pleaded tortious act, which involved the 1^st defendant and the use of the “accessyou.co” domain name.

(5)  The Judge wrongly exercised his discretion in taking into account the facts surrounding the purchase of the “ablesms.com” domain name as they were irrelevant to the pleaded tortious act, which involved the 1^st defendant and use of the “accessyou.co” domain name.  The Judge erred in not taking into account the fact that the 2^nd defendant had never been a director, shareholder or employee of the 1^st defendant.

Discussion

18.  The proposed grounds of appeal evolve around two questions:

(1) Did the Judge adopt the correct test for an Order 15 rule 6(2)(b) joinder application?

(2) Is there proper ground to interfere with the Judge’s exercise of discretion? 

19.  Order 15 rule 6(2)(b) provides:

“Subject to the provision of this rule, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application –

(a) …

(b) order any of the following persons to be added as a party, namely –

(i)   any person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii)  any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.”

20.  We are of the view that the Judge had correctly identified the objective, approach and test to be adopted for an Order 15 rule 6(2)(b) joinder application.  He rightly pointed out that the test is whether there is a bona fide claim and a proper question to be tried between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between the plaintiff and the defendant in the proceedings.  At the joinder stage, the court will not engage itself in a scrutiny of the applicant’s case, or an adjudication of disputed facts. 

21.  It is clear from the judgment, notably [17] to [20], that the Judge had correctly focused his attention on whether a bona fide claim and a proper question to be tried between the plaintiff and the intended defendants had been shown.  We do not read [22] of the judgment as the Judge reversing the burden of proof.  Reading the judgment in context, it would appear the Judge considered that, on the materials before him, a prima facie case for joinder was made out, and went on to see whether the defendants were able to show that the plaintiff had no case against either or both of the 2^nd and 3^rd defendants. 

22.  We also do not accept the criticisms levelled against the Judge’s consideration of the parties’ case and his exercise of discretion.  He was fully aware of the 2^nd and 3^rd defendants’ case on the joinder application, which he accurately summarised in [14] and [15] of the judgment.  He correctly identified the disputes between the parties to be factual in nature, and rightly observed that a joinder application was not the appropriate occasion to resolve the disputes.  What the Judge said in [24] of the judgment should be read and understood in this light. 

23.  We do not agree the Judge had taken into account irrelevant matters.  Contrary to what the 2^nd defendant seems to suggest, the domain name “ablesms.com” is not entirely irrelevant to the plaintiff’s claim.  It is to be noted that, apart from infringement of trade mark, the plaintiff is also claiming relief for passing off, and among the facts underlying the plaintiff’s claim is the fact that the internet domain name of “accessyou.co”, registered by the 1^st defendant, is automatically linked to the website under the domain name of “ablesms.com”.  Further, the 2^nd defendant’s involvement in the purchase of the “ablesms.com” domain name and the 3^rd defendant’s role in the management of the 1^st defendant are matters that the Judge was entitled to have regard to in assessing the propriety of the joinder application.   While he had regard to these matters, the Judge rightly recognized that he needed not come to any view on the veracity of the defendants’ explanation and denial of them: see the last sentence of [25].  We do not see any proper basis to interfere with the Judge’s analysis of the application and his exercise of discretion.

24.  For the above reasons, we are of the view that the intended appeal does not enjoy reasonable prospect of success.  Nor is there any matter which in the interests of justice requires the Court to hear the intended appeal.  Accordingly, we refuse the 2^nd defendant’s application for leave to appeal, and dismiss the summons.

Costs

25.  Applying the normal rule of costs follow event, we order that the 2^nd defendant pay the plaintiff’s costs of this application to be summarily assessed.  We have considered the plaintiff’s statement of costs.  A substantial amount of D1 should be taken out because the costs for preparation of statement of costs (item 1) is generally not allowed.[2]  D2 and D3 also have to be taken out as there is no call-over hearing.  The time spent on attendance on client and on counsel should also be reduced as this is not a complex application both in terms of the volume of papers and the issues involved. Taking a broad brush approach, we summarily assess the plaintiff’s costs at $65,000.  

26.  As the application is totally without merit, we further make an order under Order 59 rule 2A(8) of the Rules of the High Court that no party may pursuant to Order 59 rule 2A(7) request our determination to be reconsidered at an oral hearing inter partes.