XCHRX EPRC LTD. AND ANOTHER v. CENTURY CITY DEVELOPMENTS LTD. AND OTHERS

HCA 6692/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 6692 OF 2000

____________

____________

__________________________________

REASONS FOR DECISION

__________________________________

Introduction

1. The Plaintiffs commenced this action on 4 July 2000 against the 3 Defendants alleging that :

(a) the 1st Defendant and 2nd Defendant breached the respective subscription agreements with the Plaintiffs by passing information belonging to the Plaintiffs to the 3rd Defendant for the 3rd Defendant's use without the Plaintiffs' acknowledge or consent;

(b) the 3rd Defendant infringed the Plaintiffs' copyright in the said information by obtaining the same from the 1st Defendant and 2nd Defendant and using it in the 3rd Defendant's business.

2. On 4 July 2000, the Plaintiffs took out an inter partes summons against the 3rd Defendant asking an interlocutory injunction order to restrain it from using the Plaintiffs' said information until judgment in this action. It is undisputed that the summons and the supporting affirmation were served on the 3rd Defendant's registered office in the afternoon of 5 July 2000. The 3rd Defendant did not turn up in court at the hearing of that summons on 7 July 2000. After hearing the Plaintiffs, Waung J granted an order substantially in terms of that sought in the summons.

3. On 8 March 2001 (about 8 months after the order of 7 July 2000), the 3rd Defendant took out the present application asking for the discharge of that order. The grounds of the 3rd Defendant's application are essentially:

(1) the Plaintiffs' evidence has not raised a serious question to be tried;

(2) the balance of convenience is in favour of the discharge of the order;

(3) the Plaintiffs are guilty of material non-disclosure.

At the end of the hearing, I refused the 3rd Defendant's application. The reasons are as follows.

Time of the 3rd Defendant's Application

4. Before turning to the issues set out above, I shall deal with the parties' arguments regarding:

(a) whether the hearing on 7 July 2000 before Waung J was inter partes;

(b) if the answer to (a) above is in the affirmative, whether the 3rd Defendant should be permitted to proceed with the present application to discharge the 7 July 2000 order.

5. These arguments were raised as a result of the 8-month or so time lapse between the date of the order and the date of the 3rd Defendant's summons.

6. In view of the observations in cases such as:

(1) New Brunswick Railway Company v British & French Trust Corporation Limited [1939] 1 AC 1, 20;

(2) Pocklington Foods Inc v The Queen in Right of Alberta [1995] 123 DLR(4th) 141, 144;

(3) Chu Hung Ching v Chan Kam Ming & Ors [2001] 1 HKC 396, 401D-402D,

ultimately, whether the same or similar issues can be "relitigated" in interlocutory proceedings is a matter of discretion. The factors relevant to the exercise of that discretion include whether:

(a) the ruling on the first application was not based on the merits of the issue but on a technical objection;

(b) upon the first application, the applicant has failed to prove essential facts from mistake or inadvertence;

(c) there is new evidence that seriously justifies reconsideration of the issue;

(d) there is a material change of circumstances of a non-evidentiary nature.

(see also the New Brunswick case at page 20 quoted in the Chu Hung Ching case at pages 401I - 402D).

7. Plaintiffs' counsel (who appeared before Waung J on 7 July 2000) informed me that Waung J specifically enquired about the time when the summons was served on the 3rd Defendant. It can be inferred that Waung J must have proceeded on 7 July 2000 on the basis that it was an inter partes hearing.

8. As stated above, the 3rd Defendant admitted that the court documents used at the 7 July 2000 hearing were served on its registered office on 5 July 2000. There are 2 explanations given by the 3rd Defendant for its absence on that occasion. The first explanation can be found at para. 41 of the affirmation of Wong Yin On dated 8 March 2001 which reads:

"The Interlocutory Injunction Order was granted on 7 July 2000 and the 3rd Defendant did not retain legal advisers to represent it in the said hearing due to the reason that the 3rd Defendant was a limited company of small scale and in fact it was a quasi partnership with limited resources. ....."

The second explanation is set out at para. 4 to 6 of the 2nd affirmation of Wong Yin On dated 14 May 2001. In short, the 3rd Defendant claims that it only obtained the court documents on 6 July 2000 and only became aware of the court hearing after attending a meeting with its lawyers in the afternoon of 7 July 2000.

9. The 2 explanations are inconsistent. The first explanation was in effect an admission of the 3rd Defendant's conscious decision not to attend because of the lack of finance. I find that to be the true reason for the 3rd Defendant's absence. I also conclude that the second explanation is an attempt to retract from that position and therefore reject it as being untrue.

10. Furthermore, I understand that Mr Wong was educated in Hong Kong and should have a sufficient degree of understanding of English to enable him to know from the Plaintiffs' summons that a hearing was scheduled in the morning on 7 July 2000. His assertion that the 3rd Defendant only became aware of the 7 July 2000 hearing afterwards is incredible for that additional reason.

11. Taking into account the true reason for the 3rd Defendant's absence on 7 July 2000 and the substantial delay on its part to take out the present application, my discretion should be exercised to refuse the 3rd Defendant's application. There is accordingly no need to consider the other issues raised by the 3rd Defendant. I shall nevertheless do so for the sake of completeness. I also conclude that the 3rd Defendant's application should be refused after having taken those issues into account.

Serious question to be Tried/Material Non-Disclosure

12. The Plaintiffs claim that their business is in essence the same as the 3rd Defendant's. It is the business of providing on-line information and data relating to conveyancing offers and transactions in Hong Kong to subscribers through the internet. The gist of the Plaintiffs' case is as follows. The 1st Defendant and 2nd Defendant are estate agents and were subscribers to the Plaintiffs' on-line service. In breach of the subscription agreements, the 1st Defendant and 2nd Defendant passed the information supplied by the Plaintiffs to them to the 3rd Defendant. The 3rd Defendant wrongfully obtained and used them as its own when the 3rd Defendant provided similar on-line service to the 3rd Defendant's subscribers.

13. The Plaintiffs sought to establish their case against the 3rd Defendant (as well as the 1st Defendant and 2nd Defendant) by relying on the following matters:

(a) one kind of data supplied by the Plaintiffs was the so-called Asking Price Analysis. As the name implies, these data show the prices asked for by owners who offer their properties for sale on the market. Related data such as the date of sale, location and other particulars of the properties offered are also supplied;

(b) another kind of data supplied by the Plaintiffs was the so-called Transacted Price Analysis. This is similar to the Asking Price Analysis except that the data are related to the prices of completed conveyancing transactions in Hong Kong;

(c) the Plaintiffs adduced evidence which they claim shows that the Asking Price Analysis data of no less than 56 properties were copied by the 3rd Defendant. The Plaintiffs alleged that they have included "incorrect" data in the Asking Price Analysis supplied to the 1st Defendant and 2nd Defendant and these "incorrect" data were also found in the computers of the estate agents who subscribed to the 3rd Defendant's services;

(d) the Plaintiffs further allege that data regarding 2 properties which were only known to them were included in the Asking Price Analysis supplied to the 1st Defendant and 2nd Defendant. The 2 properties belonged to a staff of the Plaintiffs and that staff's relative respectively. These data were also allegedly found by the Plaintiffs to have been supplied by the 3rd Defendant to some of its subscribing estate agents;

(e) the Plaintiffs have given the details as to how the Plaintiffs' data were collected and compiled;

(f) the 3rd Defendant was unable to produce documents to substantiate its claim that the 3rd Defendant's data were collected from the Land Registry, for example, a subscription agreement with the Land Registry regarding access to the memorial day book system.

14. The 3rd Defendant has made a number of criticisms of the Plaintiffs' affirmation evidence. There is no need to go into the details save to outline the following:

(1) the Plaintiffs have not adduced any evidence of alleged infringement of their Transacted Price Analysis at the 7 July 2000 hearing;

(2) the 3rd Defendant's data were released to its customers much earlier than they were released by the Plaintiffs;

(3) the data allegedly emanating from the 3rd Defendant were not obtained by the Plaintiffs from an independent source but only by the Plaintiffs' staff and therefore unreliable;

(4) some of the data found by the Plaintiffs could only be found in the computers of the estate agents but not in the 3rd Defendant's database. Those data were added to the estate agents' computers and unknown to the 3rd Defendant;

(5) the Plaintiffs did not show Waung J what the Transacted Price Analysis data look like;

(6) the Plaintiffs' data were openly available to the public and hence are not properly data over which copyright can be claimed；

(7) there are differences between the 3rd Defendant's data and those of the Plaintiffs regarding the data over which the Plaintiffs claim they have included "incorrect" data.

15. The dispute between the Plaintiffs and the 3rd Defendant arising from these cross-allegations cannot properly be resolved without a detailed examination of the evidence adduced by the parties. Such an examination should more appropriately be done at the time of the trial of this action rather than an interlocutory hearing like this one.

16. Because the 7 July 2000 hearing was an inter partes hearing, it is doubtful whether the Plaintiffs were strictly obliged to make full and frank disclosure. Even if they were, for the reason given in para. 15 above, the dispute as to whether there was material non-disclosure should also be dealt with at trial.

17. Further, having taken into account the 3rd Defendant's criticisms, I find that the Plaintiffs have established a serious question to be tried regarding the 3rd Defendant's alleged infringement of the Plaintiffs' copyright work.

18. As stated above (see para. 14(1) above), the 3rd Defendant further submitted that the Plaintiffs had not adduced any evidence of the 3rd Defendant's alleged infringement of the data relating to the Transacted Price Analysis at the 7 July 2000 hearing. There may be some strength in this argument. However, as stated above, that hearing was in the nature of an inter partes hearing and Waung J was satisfied that the order sought should cover the Plaintiffs' Transacted Price Analysis data. By the time of the hearing before me, the Plaintiffs have adduced evidence regarding such alleged infringement on the 3rd Defendant's part. Any lack of evidence regarding the 3rd Defendant's acts of infringement has by now been mended.

Balance of Convenience

19. The 3rd Defendant argued that the balance of convenience is in favour of the discharge of the 7 July 2000 order because:

(1) the Plaintiffs' paid up capital is relatively small;

(2) the 3rd Defendant has been forced to close down its business because of the grant of the order.

20. The Plaintiffs have adduced evidence that the 1st Plaintiff's business was commenced about 10 years ago. They employ about 60 staff. It can be inferred from these matters that their businesses must have been sizeable and there is no reason to believe that they will be unable to pay damages which may be suffered by the 3rd Defendant (if any) by reason of the grant of the order (if it should be discharged later).

21. I do not see why the grant of the order should lead to the closure of the 3rd Defendant's business because the order only prohibits the 3rd Defendant from infringing the Plaintiffs' copyright work. It was not an order which prohibits the 3rd Defendant from continuing its legitimate business.

22. Further, the order has been in place for about 8 months before the 3rd Defendant decided to take out the present application. In view of the above matters (as well as the overall circumstances of this case), I consider the balance of convenience is in favour of the continuance of the order.