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HCA 1274/2007
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 1274 OF 2007
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BETWEEN
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WINDIX INDUSTRIES LIMITED |
Plaintiff |
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輝年實業有限公司 |
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and |
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TELESONIC ENTERPRISES LIMITED |
1st Defendant |
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星陶企業(香港)有限公司 |
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SHINFUKU ELECTRONICS (HONG KONG) LIMITED |
2nd Defendant |
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天王星電子(香港)有限公司 |
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Before: Hon Suffiad J in Chambers
Date of Hearing: 21 November 2008
Date of Ruling: 28 November 2008
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R U L I N G
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1. This is an application by the 1st and 2nd defendants for an order that the plaintiff’s Bill of Costs filed on 4 July 2008 be taxed on the District Court scale.
2. That Bill of Costs relates to a costs order made by me on 10 October 2007.
Background
3. The plaintiff issued the Writ in this matter on 4 June 2007 claiming against both defendants for infringement of the plaintiff’s copyright. It was alleged that the defendants have offered for sale one model of an electric clock which were copied from the plaintiff’s drawings, the copyright of which belonged to the plaintiff.
4. The Statement of Claim was filed on 3 July 2007.
5. On 20 July 2007, after the defendants have made certain disclosure on affidavit, the plaintiff by letter offered to settle the claim against the defendants at $100,000.
6. On 10 October 2007, the parties came before me when injunction and damages orders were made against the defendants. It was also ordered that “the defendants do pay to the plaintiff the costs of and incidental to this Action, including the costs of and incidental to this application, such costs to be taxed, if not agreed.” That is the costs order, the subject of this application.
7. After three earlier payment-ins to court made by the defendants, on 19 December 2007, the defendants made a fourth payment-in to court bringing the total amount paid into court to $100,000.
8. On 4 July 2008, the plaintiff applied for leave to accept the total amount paid into court by the defendants in settlement of the order for damages against the defendants.
9. On 11 July 2008, leave was granted to the plaintiff by the Master to accept the total amount paid into court. The Master also ordered the costs incurred after 19 December 2007 (being the date of the last payment-in) to be paid by the plaintiff to the defendants.
The defendants’ application
10. In this application the defendants submit that since the plaintiff offered in its letter of 20 July 2007 to settle at $100,000 and have now accepted the amount of $100,000 paid into court by the defendants in full settlement of the order for damages made against the defendants, the costs order made against the defendants on 10 October 2007 should be on the District Court scale. If the plaintiff seek for that costs order to be taxed on the High Court scale, it is for the plaintiff to justify why at the time the Writ was issued, the plaintiff was entitled to start these proceedings in the High Court.
11. Relying on the principle laid down in the case of Lai Ki v. B & B Construction Co. Ltd [2003] 3 HKLRD 192, the defendants further submit that there is nothing which can justify the plaintiff having a reasonable belief that when it commenced the action, the plaintiff would recover an amount in excess of the District Court jurisdiction.
The plaintiff’s stance
12. The plaintiff opposes the application by the defendants and takes a number of points in opposition.
13. Firstly, the plaintiff submits that when the subject costs order was made on 10 October 2007, that order was made in the presence of the solicitor for the defendants but no application was advanced by him at the time to suggest that the costs should be taxed on the District Court scale. It was only on 18 July 2007 at the taxation proceedings that this was first suggested.
14. Secondly, when the Writ was issued it was not possible for the plaintiff to ascertain the extent of the infringing activities and therefore not unreasonable for the plaintiff to have commenced the action in the High Court. In this respect, the plaintiff seek reliance on the following three cases :
(1) Eastward Enterprises Ltd v. A.S. Watson Group (HK) Ltd (HCA 331 of 2003);
(2) Premium Collection Industries Ltd v. Jaguar Pen (HK) Ltd and others (HCA 1029 of 2005); and
(3) Cathay Plastic Factory Ltd v. Golden Rich Industrial Ltd (HCA 756 of 2005).
15. In this context, it was suggested that the principle laid down in Lai Ki’s case may not be applicable to an intellectual property claim since in intellectual property cases very often the claim is a split one, the first part dealing with liability and then moving on to deal with damages or an enquiry as to damages.
16. It was also submitted that it was not until late October that the defendants had completed their disclosure by which time most of the costs had already been incurred.
17. Thirdly, it was submitted by the plaintiff that the defendants could at any time have applied or intimate to the plaintiff to transfer this matter to the District Court. That should have been done by the defendants but was not.
18. Lastly, reliance was placed by the plaintiff on section 44A of the High Court Ordinance to the effect that in the High Court where section 44A applies, a defendant will not be able to rely on the rule against self-incrimination when disclosure is ordered against him, but that there is no corresponding statutory provision in the District Court.
Decision
19. As for the first point submitted by the plaintiff, while it is true that when the subject costs order was made on 10 October 2007, the solicitor for the defendants was present and did not ask for the costs order to be taxed on District Court scale, there was, at that time, no basis for him to ask for the District Court scale of costs.
20. The basis for asking for taxation to be on the District Court scale of costs only came about when the plaintiff sought and was given leave to accept the total amount of payment in (i.e. $100,000) made by the defendants. Such leave was granted to the plaintiff by the Master on 11 July 2008. The present summons was taken out by the defendants on 8 August 2008. I therefore do not see that this point assists the plaintiff at all.
21. As for the second point taken by the plaintiff, I am of the view that although the case of Lai Ki was a personal injury case, the principle enunciated in Lai Ki’s case is of general application and I do not accept that intellectual property cases should be differently treated.
22. Indeed Barma J in the case of OWT Asia Ltd v. CPCNET Hong Kong Ltd [2007] 2 HKLRD 224, a breach of contract case, applied the principle in Lai Ki’s case and had this to say at page 228 :
“In my view, it is appropriate that in general, where a plaintiff brings proceedings in the High Court, but succeeds only in obtaining an amount by way of damages or award that falls within the District Court jurisdiction, it will be for the plaintiff to justify having commenced proceedings in the High Court, rather than in the District Court where the matter could have been tried at less expense.”
23. The plaintiff also seeks reliance on the words of Sakhrani J., in particular paragraph 10 of his judgment, in Eastward Enterprises Ltd which the plaintiff says support its contention.
24. However, in that case the plaintiff’s covering letter dated 18 August 2003 enclosing the consent summons which contained the costs order, the subject matter of the dispute in that case, specifically made reference to and pointed out to the defendants’ solicitors that the costs order was to be taxed on the High Court scale. No amendment was made by the defendants’ solicitors to the order for costs contained in the consent summons which was then signed by the defendants’ solicitors.
25. Sakhran J specifically pointed out in paragraph 11 of his judgment in that case that given those circumstances, it would be unfair for the defendant to be able to raise the objection as to the scale of costs.
26. The words of Sakhrani J in Eastward Enterprises Ltd sought to be relied on by the plaintiff in the present case has to be read in that context.
27. Moreover, it does not appear from the judgment of Sakhrani J that the case of Lai Ki had been referred to him in argument.
28. Given that the plaintiff now says that they had no way of knowing the extent of the infringing activities of the defendants when the Writ was taken out, I would have thought that the proper course would be for the plaintiff to have started the proceedings in the District Court and when it became reasonably apparent that the damages may exceed the District Court jurisdiction to then apply for a transfer to the High Court, and not the other way round. This would be consistent with the principles laid down in Lai Ki’s case where the onus is on the plaintiff to justify bringing the proceedings in the High Court in the first place.
29. I am not persuaded that there is merit in this second point submitted by the plaintiff.
30. As for the third point relied on by the plaintiff, I have no hesitation in rejecting it as being wholly inconsistent with the principle laid down in the case of Lai Ki where it is for the plaintiff to justify bringing the proceedings in the High Court. It is quite wrong for the plaintiff to throw the onus onto the defendants by saying that the defendants could and should have applied to transfer the case down to the District Court.
31. Turning now to deal with the last point submitted by the plaintiff, namely section 44A of the High Court Ordinance, accepting that there is no equivalent or even similar section to it in the District Court, I am still unable to accept that the existence of section 44A would be such that it would provide a carte blanche to every plaintiff bringing an intellectual property action to commence it in the High Court simply because there is no equivalent of section 44A in the District Court.
32. Surely if an intellectual property action is brought in the District Court and a defendant tried to seek umbrage behind the rule against self-incrimination by refusing make the necessary and proper disclosure, that would be good justification for a plaintiff to seek to transfer the case to the High Court and thereafter to seek for the High Court scale of costs. In those circumstances it would not even be open to the defendant to object to such a course.
33. For the reasons given, I am unable to accept any of the submissions by the plaintiff as being justification for commencing the present proceedings in the High Court.
34. Accordingly, there will be order in terms of paragraph 1 of the defendants’ summons.
Costs
35. Both counsel are agreed that in relation to this application, costs should follow the event.
36. On the basis that if the defendants are successful in this application, Counsel for the defendants has also asked for the costs of this application to be taxed on District Court scale.
37. Accordingly, there will be a costs order that the costs of and incidental to this application as well as the hearing of it be paid by the plaintiff to the 1st and 2nd defendants to be taxed on the District Court scale if not agreed.
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(A.R. Suffiad) |
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Judge of the Court of First Instance |
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High Court |
Mr Philips B.F. Wong, instructed by Messrs Benny Kong & Yeung, for the Plaintiff
Mr Wilson Leung, instructed by Messrs Danny Lau & Lam, for the 1st and 2nd Defendants
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