BORRI S.p.A v. TRALCO TECHNOLOGY LTD AND OTHERS

CACV 207/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 207 OF 2009

(ON APPEAL FROM HCA 1170/2007 AND HCMP 1352/2007)

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(Consolidated by the Order of the Honourable Mr Justice Sakhrani dated 20 August 2007)

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J U D G M E N T

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Hon Rogers VP:

1.  This is an appeal from a judgment of Deputy High Court Judge Chan given on 19 August 2009.  The matters before him were applications for security for costs, which he dismissed, and an application for summary judgment against all the defendants.

2.  The judge gave judgment in favour of the plaintiff.  The order that was drawn up was very simple:

“(1)  there be summary judgment to the Plaintiff;

  (2)  the Defendants be restrained from perpetrating their acts of passing-off in Hong Kong;

  (3)  the Defendants do assign and procure the assignments by the 3rd Defendant of the Hong Kong registrations to the Plaintiff;

  (4)  the Defendants do assign and procure the assignment of the website under the Objected Domain Name to the Plaintiff;

  (5)  the Defendants do assign and procure the assignment to the 3rd Defendant the Mainland Registrations; and

  (6)  the Plaintiff to apply to fix a further hearing at 9.30 am for refining the reliefs.”

3.  What can happen on that further hearing is not a matter which can be discussed in this court at this time: whether the judge is functus or not is not a matter which concerns this court at this stage.  It is an unusual form of order but it arises in this way: the plaintiff is an Italian company.  It is called Borri S.p.A, and it or its predecessors, the companies which have been eventually taken over, have been selling what are called uninterruptible power supply systems, or UPS for short, in Hong Kong.  These are obviously very specialised pieces of equipment and the statement of claim sets out a large number of entities in Hong Kong to whom they have been sold.

4.  Now, it is quite clear that the plaintiff, or its predecessors, used to sell its goods to, amongst other people, the first defendant and its predecessor or its associated companies and in short what has happened is that the second, third and fourth defendants have come into being.  They have registered the trade mark “Borri” both here and in the Mainland and it has been admitted by counsel, that, their line of business is, again, in UPS products.  So quite simply, this is a passing-off case.

5.  On this appeal, the defendants have sought to take essentially four points: the first is that they say that this Order 14 application should not have been heard in the first place because of the provisions of Order 14, Rule 1(2)(b), which precludes the court from hearing applications for summary judgment that include a claim by the plaintiff based on an allegation of fraud.  What is said is that what the plaintiff is alleging is that the defendants, individually and collectively, have been using instruments of fraud.  The simple answer to that is that those are “instruments of fraud” which are being used on the public, not against the plaintiff.

6.  But then relying on what was said by this court, in Pacific Electric Wire & Cable Company Limited v Harmutty Ltd[2009]3 HKLRD 94, the argument has been put forward that the provisions of Order 14, Rule 1(2)(b) would preclude this case.  What was said by this court in that case was that those provisions of Order 14 preclude both actions for fraud in the Derry v Peek sense and claims which are based upon allegations of fraud in the Derry v Peek sense.  They do not preclude claims which are based on passing-off by the defendants.  In that respect, I would refer to the decision of Walton J in Sony Corporation & Another v Anand & Anor [1982] FSR 200, in which the judge makes that perfectly clear.  I do not propose to go into that any further.  That was the first point.

7.  The second point was that it was said that in about 1994 the plaintiff, or its predecessor, had abandoned any goodwill in the name “Borri” and in the trade marks in Hong Kong.  Whatever the plaintiff said in 1994, it seems to me two points are quite clear:

(1) Even though an entity stops using a name, it does not mean to say that the goodwill in that immediately evaporates; and

(2) this court’s attention has been drawn by counsel for the defendants to a number of documents emanating from the plaintiff which make quite clear that it was continuing to use the name “Borri” and the various logos and trade marks which are referred, to well after 1994.

So, really, that point is, again, simply and clearly wrong.

8.  Then it is said that the goodwill did not belong to the plaintiff, and what is relied on are stray references to the plaintiff having manufactured equipment on an OEM basis.  Well, the fact that a company manufactures on an OEM basis may, in some instances, indicate that any trade mark on the goods belongs to the person ordering the goods, but in this case, it clearly does not because, again, the documents which have been referred to demonstrate that.

9.  The other point is this: that a trade mark is there to indicate origin.  It may indicate the manufacturer, i.e. the ultimate source, or it may be a trade mark which belongs to a trader, i.e. who purchases goods and sells them on as his goods.  In this case it is quite clear that these are trade marks which belong to the manufacturer.  So again, a suggestion that the goodwill in those marks did not belong to the plaintiff is simply unsustainable.

10.  Lastly, it was sought to be suggested that there are questions arising as to whether there is, in fact, passing-off.  Again, I cannot see how that argument can possibly get off the ground.  So it remains that what the judge said, at page 26 of the judgment, paragraphs 84 to 86, where he set out the reliefs sought, is correct and the plaintiff is certainly entitled to that.

11.  I would conclude that I consider it most undesirable that this matter should have been brought to this court before the order in the court below was perfected.  Clearly the order that was drawn up and entered was not a fully perfected order because it directs the parties to go back at 9.30 and sort it out.  If the plaintiff does not fully perfect the order, then it is up to the defendant, particularly if he wants to bring a case to this court, to make sure that the order is in its final form so this court can deal with it.

12.  In this very undesirable situation which has now been arrived at, I regret that I can see no basis for allowing this appeal and I consider it should therefore be dismissed.

Hon Stone J:

13.  I respectfully agree with the judgment of the Vice-President.  After a good deal of unhelpful stopping and starting this morning, Mr Chan, for the appellant, ultimately has run two lines of argument: first, that this is a case that involves fraud and is not properly subject to Order 14 within the meaning of Order 14, Rule 1(2)(b); and secondly, that this is a case replete with triable issues which should go to trial.

14.  As to the issue of fraud, this plainly is not Derry v Peek fraud.  This is a ‘passing-off’ claim and in this connection I agree with and adopt the Vice-President’s reservation about the element of fraud necessary to invoke Order 14, Rule 1(2)(b).

15.  As to the existence of triable issues, despite the various iterations put forward by Mr Chan, on analysis it all came to whether the plaintiff could be seen to have abandoned the goodwill in the mark.  I do not wish to be unfair or unkind, but I am afraid that Mr Chan came nowhere near establishing that proposition as a triable issue.

16.  If I may, I would like to echo the observations of Rogers VP about the undesirability of coming to court with an order which, in fact, is but partially made, but wherein the full extent of the relief has not yet been decided by the learned judge below.  Accordingly, the order that we have and which is the subject of this appeal is in the most general terms, the 9.30 appointment before the learned judge not having been taken out so that the appropriate and full extent of the relief can be refined.  It seems to me obvious that before any appeal is to be brought in an appellate court, the full ambit of the order under appeal properly should be spelled out.

17.  For the reasons given, I, too, would dismiss this appeal.