PFIZER INC. v. ULTRASOUND HOLDINGS LTD.

HCA2712/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2712 OF 1999

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J U D G M E N T

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1. This is an application by the plaintiff by motion for an order of committal against Li Kin Man ("Li") pursuant to leave granted by me on 21 June 1999. The grounds of the plaintiff's application are fully set out in the Notice of Motion.

Background

2. The defendant was the publisher of a pornographic magazine using the name "偉哥夜生活" (Waico Crazy Nights). The Chinese characters "偉哥" (Wai Kor) has been popularly adopted in Hong Kong as being the common name in Chinese for the drug VIAGRA which is manufactured by the plaintiff. The plaintiff applied by Summons dated 12 February 1999 to restrain the defendant from, inter alia, publishing, printing, distributing and/or selling any magazine or other publication which contained the "偉哥" (Wai Kor) mark in its name or title. That application was heard by me on 19 and 22 March 1999 and I delivered a written judgment on 31 March 1999 granting the interlocutory injunction sought by the plaintiff.

The plaintiff's case

3. The interlocutory injunction granted by me on 31 March 1999 was in the following terms :

"There will be an order to restrain the Defendant, whether acting by itself, its directors, officers, servants or agents or otherwise howsoever until judgment in this action or until further order from publishing, printing, distributing and/or selling any magazine or other publication which contains the 'Wai Kor'（偉哥）mark in its name or title."

4. My order of 31 March 1999 was drawn up and sealed by the court on 23 April 1999. Li was at all material times a director of the defendant company, and the order, endorsed with penal notice, was alleged by the plaintiff to have been duly served personally on Li at the defendant's place of business at Room 504, Kimberley Centre, Kimberley Road, Kowloon, Hong Kong on 29 April 1999.

5. After the order was made on 31 March 1999 but before it was drawn up and served on Li, on or about 16 April 1999, Waico Group Limited published, or caused to be published, a magazine using the mark "偉哥" (Wai Kor) in its name or title. A further issue of that magazine was published on 5 May 1999, again using the mark "偉哥" (Wai Kor) in its name or title. Li is one of the two directors of Waico Group Limited and holds the majority of its issued shares. On this basis, the plaintiff says that Li has knowingly interfered with the administration of justice by causing the order to be thwarted by procuring Waico Group Limited to publish the said magazine or by aiding and abetting Waico Group Limited to do so, and has thereby impeded or prejudiced the administration of justice by the court in the action between the plaintiff and the defendant.

The issues

6. There is little dispute of facts between the plaintiff and Li. The one matter in issue between them is that Li disputes having been personally served with the order on 29 April 1999 at the defendant's place of business as alleged by the plaintiff.

The plaintiff's evidence

7. In respect of the issue of service of the order personally on Li, the plaintiff called Cheng Chi Shun as a witness. He was a clerk in the employ of the plaintiff's solicitors, Messrs Baker & McKenzie, on 29 April 1999 and who was given the task of personally serving Li with the order on the afternoon of 29 April 1999 at about 3:30 p.m. in the defendant's office. It became clear from his evidence and from cross-examination that the person on whom he served this order was pointed out to him by the receptionist at the defendant's office as being Li Kin Man when he attended there at about 3:30 p.m. on 29 April 1999. He then approached this person who acknowledged himself to be Li Kin Man whereupon he served this person with the order. He did not ask this person for any name card or identity card to verify his identity, nor did he ask him to sign anywhere to acknowledge receipt of the order served. It was also clear from the cross-examination of Cheng that when in court he could no longer recognize the person who was pointed out to him as being Li Kin Man and on whom he served the order.

8. Although the rest of the plaintiff's factual evidence is not in dispute between the plaintiff and Li, some of that evidence merits mentioning here.

9. Firstly, search records from the Companies Registry showed that Waico Group Limited was incorporated on 1 March 1999. The directors of Waico Group Limited are Li and another person named Leung Suk Yin. Moreover, Li holds 79 out of the 98 issued shares in Waico Group Limited.

10. Secondly, the offending magazine published by Waico Group Limited on 16 April 1999 and 5 May 1999, being the subject matter leading to these contempt proceedings against Li, has its official name "Nan Seirei". However, on the front cover of the magazine in bold Chinese characters (even bolder in size than the name Nan Seirei) are the two Chinese characters "偉哥" (Wai Kor), then followed immediately below those two bold characters, but in very much smaller script, the further Chinese words translated to mean "Group Limited". That edition of this magazine which was put on sale on 16 April 1999 has a volume no.8 given to it.

11. Thirdly, Waico Group Limited has the same GPO box number, address and telephone number as the defendant. Both Li Kin Man and Leung Suk Yin are directors, not only of Waico Group Limited but also of the defendant. A number of features of the magazine published by Waico Group Limited bears a close resemblance to the magazine published by the defendant and which was the subject matter of the interlocutory injunction. Both magazines are of a pornographic nature. The magazine published by the defendant ended with volume no.7 and the magazine published by Waico Group Limited starts off with volume no.8. In both magazines, Princess Sauna Limited was the principal advertiser. In both magazines, a section devoted to comments from the editor, the editor signs his name as "Li Wai" (Li in his affirmation dated 12 March 1999 attested to his alias being "Li Wai").

Evidence of Li

12. In his second affirmation dated 14 October 1999, Li disputes that he was personally served with the order dated 31 March 1999. However, he admitted that on or about 31 March 1999, a certain staff, Ivan Ng from Messrs Lui & Carey, "my former solicitors, informed me that I lost the law suit and I was not allowed to use 'Wai Kor' as the name or title of any magazine and publication" (Messrs Lui & Carey were the solicitors acting for the defendant in the interlocutory injunction).

13. Li further went on to state in that affirmation that because he wanted to continue his business in publishing adult magazine, both Leung Suk Yin and himself had set up Waico Group Limited to continue publishing adult magazine. He also admitted that to a large extent, the magazine published by Waico Group Limited was a continuation of the magazine published by the defendant and that the contents were quite similar. However, the name of the magazine had been changed to Nan Seirei. He further admitted that the name of the company "Wai Kor" in Chinese was printed on the front cover of this magazine because he thought "it would be better for our business", but further stated that he had no intention to breach the court order granting the interlocutory injunction to the plaintiff. He stated that at the time he honestly thought that he was entitled to do so. However, after publishing two editions of the offending magazine, he was advised by a friend otherwise and reconsidered the matter. After two editions of the new magazine was printed, Waico Group Limited had, on or about 20 June 1999, informed the Companies Registry that it would cease business.

14. Finally, in that affirmation, Li agreed that the use of Waico Group Limited on the cover of the new magazine may have breached the injunction order and promised that in future he shall not use "偉哥" (Wai Kor) as a name or title or as anything which may be taken to be a name or title on any magazine or publication.

15. When Li took to the witness box and was cross-examined by counsel for the plaintiff, a slightly different picture than what was painted in his affirmation emerged. Under cross-examination, he said that there was a big boss by the name of Cheng Pui Kuen who financed the operations of both the defendant company, as well as Waico Group Limited. However, the name of Cheng does not appear on any of the documents filed with the Companies Registry. According to Li, it was Cheng who made all the important decisions concerning both companies, as well as both publications. He (i.e. Li) was only the editor responsible for the contents of the magazine but it was Cheng who decided to use the name Waico Group Limited and to have it printed on the front cover of the magazine. When he was asked why the new magazine started with issue no.8 and not issue no.1, his answer was as follows :

"What happened is this, our company had previously published seven issues, so that was the eighth issue and we had to use another name, so we called the eighth issue."

Findings of facts

16. As for the main issue in dispute between the parties, namely, whether Li had been personally served with the order of 31 March 1999 endorsed with penal notice, the onus is upon the plaintiff to satisfy me beyond reasonable doubt, these being contempt proceedings. The evidence of Cheng Chi Shun is so poor that I am unable to be satisfied beyond reasonable doubt that the person he served the order on was in fact Li. He could not recognize Li in court when he gave evidence, and he did nothing at the time of the service to confirm the identity of the person he served the order on, apart from being told by the receptionist that that person was Li Kin Man. At best, it is hearsay.

17. However, that is not the end of the matter since Li admits in his affirmation that on or about 31 March 1999, he was told by one Ivan Ng from Messrs Lui & Carey of the order of the court which prevented him from using "偉哥" (Wai Kor) as the name or title of any magazine or publication (see O.45, r.7(6)(b), RHC).

18. From all the evidence before me in this case, I make the following findings of facts which has been proved to my satisfaction beyond reasonable doubt :

(1) Li was the principal director and main shareholder in both the defendant company, as well as Waico Group Limited. I do not accept his evidence given in cross-examination that there was a big boss who was responsible for making all the major decisions in both companies. That evidence given by him under cross-examination has a very different tone from what is contained in his two earlier affirmations and is not supported by any documents filed in the Companies Registry.

(2) Waico Group Limited was incorporated by Li on 1 March 1999, after the plaintiff's application for an interlocutory injunction but before the hearing of it. I am satisfied beyond reasonable doubt that the words "Waico" in Chinese (being the same as the Chinese characters "偉哥" (Wai Kor)) was deliberately chosen as the name of this company with the aim or purpose to defeat any order which this court may make if the plaintiff were to be successful in their application for an interlocutory injunction.

(3) Li, on his own admission, was told by a staff of the defendant's solicitor on or about 31 March 1999 that the court had made an order restraining the defendant from using the mark "偉哥" (Wai Kor) in Chinese in the name or title of any magazine or publication by the defendant.

(4) In a deliberate attempt to defeat this order of the court, a magazine by the name of 'Nan Seirei' was published by Waico Group Limited but which, for all intents and purposes, was a continuation of that magazine published by the defendant (the subject matter of the interlocutory injunction ordered by the court). The Chinese characters "偉哥" (Wai Kor) were printed in bold script on the front cover of the magazine with very much smaller script in Chinese below meaning "Group Limited". This, while purporting to be the name of the publishing company, gave to all the impression that it was part of the name or title of the magazine. In this way, Li had hoped to defeat the order of this court. Two editions of this magazine were put on sale on 16 April 1999 and 5 May 1999.

The law

19. The plaintiff has chosen to argue this case on the basis of a criminal contempt having been committed by Li based on the decision of the House of Lords in The Attorney General v. Times Newspapers Limited [1992] 1 AC 191. However, it was also decided by the House of Lords in that case that one essential ingredient for criminal contempt was the need to impede or interfere with the administration of justice. In that case, a consequence of the publication by the appellant (who was not a party to the original action for breach of confidence) was to nullify, at least in part, the purpose of that trial of the original action because it placed in the public domain material which was claimed by the Attorney General in those actions should remain confidential. Lord Brandon of Oakbrook said at page 206 :

" It seems to me, as a matter of principle that, if C's conduct, in knowingly doing acts which would, if done by B, be a breach of the injunction against him, results in impedance to or interference with the administration of justice by the court in the action between A and B, then, so far as the question of C's conduct being a contempt of court is concerned, it cannot make any difference whether such conduct takes the form of aiding and abetting B on the one hand or acting solely of his own volition on the other."

Decision

20. In the present case, what was done by Li did not result in impedance to or interference with the administration of justice by the court in the action between the plaintiff and the defendant (indeed it should be noted that final judgment was entered against the defendant in this case on 8 July 1999). Mr Shipp, who appeared for the plaintiff, argued that the conduct of Li being in breach of the injunction order, is per se, sufficient to constitute an impedance or interference with the administration of justice by the court in the action between the plaintiff and the defendant. I do not agree with that. Such conduct, apart from being a breach of the injunction order, if committed by the party against whom that order was directed, must also entail the kind of consequences envisaged by the court in The Attorney General v. Times Newspapers Limited. Such a consequence is not evident in the present case.

21. I take the view that there is here in the present case a simple and clear breach of the injunction order by Li and from my findings of fact above, that conduct of Li clearly takes the form of aiding and abetting the defendant to be in breach of the injunction order, albeit that the defendant did not take any active part in it.

22. Accordingly, I have come to the conclusion that the conduct of Li in the present case amounts to a breach of the injunction order against the defendant and therefore a civil contempt but not a criminal contempt. I therefore find Li guilty of a civil contempt in this case. I shall now hear mitigation on his behalf.