JET TONE FILMS LTD v. LAU YUEN CHUI LILLIAN t/a LAMBIANCE DESIGN AND MULTIMEDIA

HCA742/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 742 OF 2005

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J U D G M E N T

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1.  I have today ordered that the Defendant deliver up to the Plaintiff certain files, documents and materials necessary for the hosting and maintenance of the Plaintiff’s website.  I have also ordered that the Defendant make discovery of the names and identifications of visitors to the website.

2.   I have further ordered that there be an inquiry into damages  resulting from the Defendant’s previous failure to provide the relevant files, documents and materials for the hosting and maintenance of the Plaintiff’s website and to provide information on visitors to the website.  The Defendant has failed to do these things since at least 31 May 2005. 

3.   I wish to set out, briefly, my reasons for making such orders. 

4.   The Plaintiff and the Defendant entered into an agreement for the design of the website.  Unfortunately, the Plaintiff and the Defendant did not agree a specific price.  Therefore, as a matter of law, the agreement should be treated as an agreement by the Plaintiff to pay a reasonable price or quantum meruit for the design of the website. 

5.   There was a dispute as to whether a balance of $62,500 was owed by the Plaintiff to the Defendant.  The Defendant initially asked for $50,000 as a first instalment payment.  The Plaintiff paid that.  The Defendant then asked for $62,500 as a final instalment.  The Plaintiff said that was too much; the dispute eventually ended up in the District Court when the Defendant sued the Plaintiff for the alleged outstanding balance of $62,500.

6.  Meanwhile, on 31 May 2005, pursuant to an order by Yam J, the Plaintiff paid $62,500 into court, pending the outcome of this litigation and the litigation in the District Court.  Under Yam J’s court order, as affirmed by the Court of Appeal on appeal by the Defendant, the Defendant was, at the same time, to provide the Plaintiff with relevant files, documents and materials for the hosting and maintenance of the website and with information on visitors to the website.  The Defendant provided some material for running a static version of the website on the Plaintiff’s server, but failed to provide sufficient material to enable the Plaintiff to host and maintain the website.  The Defendant also failed to provide information on visitors to the website.  Thus, the Defendant failed to comply with the order of Yam J.

7.  Therefore, the Defendant, at least from 31 May 2005, was in breach of the terms of the exclusive licence granted to the Plaintiff under section 15 of the Copyright Ordinance (Cap. 528).  I say this because section 15 provides that the person who commissions the work (the Plaintiff) has an exclusive licence to exploit the commissioned work (the website) for all purposes that could reasonably have been contemplated by the Defendant and the Plaintiff at the time the work was commissioned.

8.  I accept the Plaintiff’s evidence that such purposes which could have reasonably been contemplated at the time of contracting between the Plaintiff and the Defendant would have included the provision of materials for the hosting and maintenance of the website and the provision of information on visitors to the website.  I accept the Plaintiff’s evidence that the Plaintiff made it clear that such were the Plaintiff’s requirements, at the time when the contract for design of the website was orally discussed between the Plaintiff’s representative and the Defendant’s representative.

9.  Given that when the Plaintiff paid the disputed amount of $62,500 into Court, the Defendant would have been adequately protected in terms of her rights for producing the website, the Defendant should by 31 May 2005 have provided the material files, documents and materials necessary for the hosting and maintenance of the website as well as information on visitors to the website.  Because she did not do so, she was in breach.

10.  It is possible that the Defendant has, by failing to provide such materials or information, caused damage to the Plaintiff from 31 May 2005.  The Plaintiff says that, because the Defendant denied material for the hosting and maintenance of the website by the Plaintiff and denied information on visitors to the website, the Plaintiff has suffered damages.

11.  I am unable to say at this time whether the damages are substantial or not.  It seems to me that evidence of actual damages is likely to be problematic on the part of the Plaintiff.  But it also seems to me that the Plaintiff is entitled to an inquiry, if the Plaintiff wishes to carry out one, into what damages, if any, it has suffered. 

12.  I should not be taken to have made a finding that a claim by the Plaintiff in relation to the Defendant’s breaches has led to any actual damage.  I am simply ordering an inquiry as to damages suffered by the Plaintiff as from 31 May 2005.

13.  I should also make clear that, in making my orders, I have not made any finding as to the ownership of the copyright in the source code underlying the files, documents and materials being provided by the Defendant in relation to the website.  That has not been an issue before me. 

14.  The question before me has merely been what the Plaintiff is entitled to get under the exclusive licence granted by section 15 of the Copyright Ordinance.  Once the Plaintiff paid money into court, it was entitled to receive the commissioned work from the Defendant.  It did not receive everything that was reasonably contemplated it should have received.  As a result, from 31 May 2005, the Defendant was in breach with the consequence that it is right and appropriate to make the orders for discovery, delivery up of files and an inquiry of damages that I have made today.

15.  In relation to costs, the Plaintiff is to have the costs of this action, to be taxed if not agreed.