SNE ENGINEERING CO. LTD. v. HSIN CHONG CONSTRUCTION COMPANY LTD AND ANOTHER

HCA 1466/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1466 of 2012

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DECISION ON COSTS

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1.  The plaintiff applies to vary the costs order nisi made by me after the trial of this action.

2.  In the course of the argument, Mr Clark, counsel for the plaintiff, makes a serious allegation against Mr Pao, counsel for the 1^st defendant at the trial, in respect of certain statements made by him before I allowed the 1^st defendant to amend its pleadings at the trial.  As such allegation involves the professional integrity of a member of the Bar, I take the view that a proper opportunity should be given to Mr Pao to answer the allegation against him.  I therefore adjourn the hearing relating to the costs of the whole action.

3.  I then make use of the hearing to deal with the reserved costs relating to certain summonses taken out by the parties shortly before the trial:

(i) the 1^st defendant’s summons dated 4 June 2013 for the plaintiff to provide answers to the 1^st defendant’s request for further and better particulars (“the F & B Summons”); and

(ii) the plaintiff’s summons dated 7 June 2013 for discovery of the Main Contract and the Supplemental Agreement between MTRC and the 1^st defendant (“the Discovery Summons”).

The F & B Summons

4.  I start with the F & B Summons.

5.  The present action involves a claim for patent infringement.  The background of this case has been fully set out in my judgment handed down on 26 March 2014, and I do not want to repeat the same here.  For easy reference, I would adopt the same abbreviations that I have used in the said judgment.

6.  One of the issues in this case is whether the Patent is invalid by reason of the disclosure of the rotator and wedge method by the plaintiff to the defendants and the other relevant personnel involved in the Project prior to the date of the application for the Patent.  It is common ground that the plaintiff did disclose the alleged method to the relevant persons, however the plaintiff claims that such disclosure would not invalidate the Patent because the method was disclosed in the nature of confidential information.

7.  The 1^st defendant therefore asked the plaintiff to identify the proprietary interest associated with the confidential information and the basis upon which it was alleged that the plaintiff could impose a duty of confidence on another party including the 1^st defendant.

8.  The F & B Summons came before me on 2 August 2013.  There was insufficient time for me to deal with all the summonses returnable before me on that day.  In respect of the F & B Summons, the plaintiff agreed to dispose of such summons by providing the answers on a without prejudice basis with costs of the summons be reserved.   The plaintiff subsequently provided the answers in the letter dated 13 August 2013.

9.  It has all along been the plaintiff’s case that the 1^st defendant’s request is misconceived.  It is not necessary for the plaintiff to show proprietary interest in the alleged confidential information.  All it needs to show is that they have an interest in the alleged confidential information.

10.  I must confess that I have all along had some difficulty with the proprietary interest argument advanced by the 1^st defendant.  Despite that, there were some occasions on which the plaintiff’s shareholders did discuss the alleged rotator and wedge method with the 1^st defendant prior to the incorporation of the plaintiff, and so I consider it a legitimate inquiry for the 1^st defendant to request the plaintiff to clarify its case about the ownership or the plaintiff’s interest in the alleged confidential information, in particular about the information disclosed to the 1^st defendant and other persons involved in the Project prior to the incorporation of the plaintiff.  Those matters would also be relevant as to the basis upon which the plaintiff could impose the duty of confidence on the recipients of the information.

11.  In such circumstances, the costs of the F & B Summons should form part of the costs of the whole action and so I order that the costs of this summons be costs in the cause.

The Discovery Summons

12.  I then turn to the Discovery Summons.

13.  The plaintiff made an application for discovery of the Main Contract and Supplemental Agreement between MTRC and the 1^st defendant because the 1^st defendant had pleaded a defence that it was contractually entitled to take over the works which are the subjects of the dispute.

14.  The 1^st defendant supplied a copy of the Main Contract before the commencement of the present proceedings.  As to Supplemental Agreement, the 1^st defendant claims that it was not relevant.  There was no mention of it in the 1^st defendant’s pleading, and such agreement only concerns the extension of time for completion of the works and extra payment between MTRC and the 1^st defendant.

15.  The 1^st defendant indicated that it would not rely on the contractual defence in the letter dated 2 September 2013 (2 days before the trial).  In view of the abandonment of such defence, the plaintiff replied in the letter dated 3 September 2013 that it would not pursue the Discovery Summons.  The parties agreed for the costs of the summons be reserved.

16.  Despite the submission of the 1^st defendant, I take the view that, by pleading that it was contractually entitled to take over the works which are the subjects of the dispute, the 1^st defendant had put it in issue the whole contractual arrangement between MTRC and the 1^st defendant.  In such circumstances, the plaintiff, in the normal course of event, should entitle to look at all the written contractual documents between MTRC and the 1^st defendant in order to determine whether the 1^st defendant’s contractual defence is a valid one.  Had the 1^st defendant not abandoned the contractual defence, the court would have ordered the discovery.  Hence, I order the 1^st defendant to pay the plaintiff the costs of the Discovery Summons.