RHT LTD v. HOUSELY INDUSTRIES LTD

HCA982/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 982 OF 2006

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J U D G M E N T

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1.  In this matter, which is undefended, the plaintiff, which is a trader in patents, is suing the defendant, which amongst other things, is a producer of household electrical goods under an agreement in writing dated 3 September 2004, which can be found at bundle C1 from pages 5.1 to 5.8.  This is a co-operation agreement.

2.  What had happened was that the plaintiff, having acquired the rights to use what is described as a Nano-Confined Catalytic Oxidation system, NCCO from the holder of the patent, a company called Acron, entered into the agreement to which I have just referred with the defendant, whereby the defendant was required to produce air purifiers and vacuum cleaners under the agreement, making use of this system.

3.  Unfortunately, what has happened is that despite the defendant’s obligation to produce a certain number of these products, and there would be a sharing of profits as appears in the agreement and payment of a royalty fee from the defendant to the plaintiff, the defendant has lost interest in this matter, despite the fact the plaintiff, as it was expected to has provided all the required technical assistance.

4.  There have been a number of interlocutory orders made relating to the filing of witness statements and so forth, followed by an unless order made by the Registrar on 16 May 2007.  That has not complied with.  The order required the defendants to file a witness statement and an expert’s report. The consequences of failure were that they would not be entitled to call the witnesses. A month later, their solicitors applied to the Registrar for an order that they be at liberty to cease to act, presumably on the basis that they had no further instructions. The Registrar has consented to that course.

5.  The matter has now been set down for trial.  An order has been made for a split trial, and although Mr Ng has invited me to assess damages myself, the fact is that the defendants have not been informed of that and so I suppose it is only right that they should be able to make an application if they wish to appear at the assessment, and so I am only going to deal with the question of liability today and adjourn the assessment of damages to the Master to be heard in the usual way.

6.  So far as liability is concerned, based on the agreement of 3 September 2004, I have absolutely no doubt that the plaintiff has complied with everything that it was required to do in the performance of this - I suppose one might describe it as a joint venture - and the defendant has done nothing to comply with it, notwithstanding the fact that, amongst other things, the plaintiff has had to pay $464,500 to Acron in respect of the use of the patent.  All of that can be revisited on the assessment for damages.

7.  So in the circumstances, it seems to me there has been a clear breach of the agreement by the defendants.

8.  There will be judgment to the plaintiff with damages to be assessed by the Master.

9.  I direct that the plaintiff will serve the defendant and file with the court a statement of damages and a witness statement in support of that statement within 14 days and that the defendants should file their answer and witness statements in reply within 14 days after that.

10.  The plaintiff is to obtain a date before the Master for any further directions for the setting down of the assessment after the expiry of time for the filing of the witness statements.  That is to be done after 28 days from today’s order.

11.  The last matter I need to deal with is the question of costs, and it must follow that the costs of the action will be to the plaintiff.