LEUNG WING SZE WINS AND ANOTHER v. OI LAM otherwise known as SARA LI AND ANOTHER

DCCJ 2022/2014

[2019] HKDC 1609

IN THE DSTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2022 OF 2014

________________

BETWEEN:

________________

___________________

J U D G M E N T

___________________

1.  This is the trial of the Plaintiffs’ claims founded on 3 causes of action, namely, inducing breach of contract, defamation and malicious falsehood. The Defendants counterclaim on grounds of conversion and infringement of copyright.

Background

2.  There is serious dispute of facts. In this judgment, the 1^st and 2^nd Plaintiffs were referred to as P1 and P2 respectively, and as Ps jointly. The 1^st and 2^nd Defendants are respectively referred to as D1 and D2, and Ds jointly.

3.  Put briefly, P1 and D1 were friends, though when they became friends was also in dispute. At all the material times, D2 was a company of which D1 was the sole shareholder and director. It was incorporated in April 2010. It carried on business of, inter alia, an events and functions organizer organizing for example, wedding banquets, bridal and baby showers, birthday parties, etc. D2 also carried on other related business such as selling of chocolates, handcrafts, etc. One of such business was renting out of tailor-made decorated photo booths for events. Guests could pose before the booth (camera, computer and printer housed in a decorated wooden case) taking instant photos. The printouts can be a collage of small photos in different layout in a designed photo frame and/or background. Some specifically designed “props” were provided and pre-designed backdrops set up to add funs to the whole thing. This photo booth business of D2 was marketed under the brand name of “FotoWe”. It was Ds’ case that D2 was among the first few in Hong Kong deploying photo machines in wedding banquets and events[1]. The dispute arose out of D2’s photo booth business.

Ps’ Case

4.  P1 considered the photo booth business a potentially thriving one but said D1 did not have sufficient manpower to operate it. She helped out and eventually they became business partners. It was P1’s case that they formed a partnership and came up with 2 successive co-operation agreements. She produced 2 written proposals sent by her to D1 to evidence their agreements, though she admitted D1 had never signed them. The 1^st co-operation proposal was sent on 28 January 2013[2] while the 2^nd co-operation proposal on 27 May 2013[3]. She said they even incorporated a company, i.e. P2, on 23 May 2013 pursuant to 2^nd co-operation proposal[4]. It was Ps’ principal case, as pleaded[5], that between October 2012 and June 2013, P1 and D2 were business partners. Ps relied on the WhatsApp exchanges and emails, and thus the aforesaid co-operation proposals in support[6].

5.  Particulars of P1’s involvement in D2’s business were pleaded in support. The pleadings suggested P1 was D1’s business partner. In P1’s witness statement she said P2 was used for taking up business (including photo booths services) procured by her from the Hong Kong Jockey Club (“HKJC”)[7]. However, since D1 was simply too busy and they had difference over profit sharing over 2 events organized in June 2013[8] (“the two June events”), P1 said they agreed to end their co-operation on 18 June 2013[9]. On 28 June 2013, D1 signed the necessary papers resigning as P2’s director and disposing of P2’s share. The transfer of D1’s share in P2 formally took effect on 22 July 2013[10]. One Mr Yeung Tak Ming (“Mr Yeung”), P1’s boyfriend, took up the share.

6.  There is no dispute that apart from the two June events in which she was paid, P1 received no remuneration for her work during the currency of the alleged partnership.

7.  Meantime, HKJC sent an email of 3 June 2013 to P1 expressing it was “interested in your products and/or services”[11]. HKJC asked for completion of a form. P1 submitted a duly completed form in the name of P2 dated 5 June 2013 and emailed it back on the same date[12]. It was posted on 6 June 2013. HKJC confirmed on 9 July 2013 receipt of company information, presumably referring to the said duly completed form[13]. By then D1 had already left P2. It is common ground that without prior registration with the HKJC, it would be difficult, if not impossible, for a company to be allowed to provide services to it or its members at HKJC’s venues. Ps claimed P2 had been successfully registered as HKJC’s supplier as from 9 July 2013. More importantly, it is their case that P2 had by then entered into a contractual relationship[14] with HKJC.

8.  On 26 July 2013, D1 received at her Jaffe Road office a letter post-chopped 24 July 2013[15] from HKJC addressed to P2 (“Jaffe Road letter” and the address “Jaffe Road address”). For reasons unknown, this Jaffe Road letter was not before the Court. Neither Ps nor Ds were able to locate it at trial for the Court’s reference. It was agreed, however, that by the said letter, HKJC confirmed P2 had successfully been registered as HKJC’s photo booth contractor. It was inadvertently opened by D2’s staff. This surprised D1 who considered, without any track record in photo booth, P2 could not have been able to obtain HKJC’s approval as its contractor. This generated a total of 3 letters, two undated ones signed by D1 on behalf of D2 to the HKJC[16] (copied to other departments within the Club) and the last one dated 24 September 2013 from D2’s lawyer to the Ps copied to HKJC[17] complaining, inter alia, Ps having used D2’s confidential information without its consent to promote P2’s business. D1 also reported the matter to the Police and sued both Ps in the Small Claims Tribunal (“SCT”).

9.  Ps’ reply was this. The use of D2’s information and address by P2 was with D1’s express consent and approval[18]. Further, they were intangible properties and thus not actionable[19]. Moreover, the information was earned by them jointly during the course of their partnership or co-operation. Neither was the information confidential[20]. Ps countered by issuing the present proceedings claiming compensatory and exemplary damages based on:

(i) the aforesaid 3 letters being defamatory of P1 and P2 in that, by their natural and ordinary meaning, the Ps were accused of being dishonest in having stolen or wrongfully used Ps’ Jaffe Road address and confidential information/design belonging to D1 and D2[21]. The contents contained in the 2 undated letters were referred to as “the 1^st Words” and those in the solicitors’ letter “the 2^nd Words” in Ps’ pleadings[22]. It appears it is Ps’ case that each of the 1^st Words and the 2^nd Words are defamatory of the Ps. Thus the 2 undated letters had to be read together[23];

(ii) Ds procured/induced breach of contract between the P2 and HKJC in that there was already in existence a standing contractual relationship[24] between them; and

(iii) malicious/injurious falsehood in that the publications to the third party, namely HKJC, were false and made maliciously.

10.  Although it is not apparent in Ps’ Amended statement of Claim that the libellous and malicious/injurious falsehood claims are in the alternative, Mr Chong, counsel for the Ps, clarified in his opening submission that they are claimed in the alternative[25].

11.  By a statement of damages[26], Mr Chong pitched on Ps’ behalf the general damages in the region of $500,000 and exemplary damage in the like sum of $500,000. It is submitted that if the Court found the total damages to exceed $1 million, the Ps would waive claim on any excess.

12.  Ps also asked for a permanent injunction to restrain Ds from publishing further statements defamatory of or causing injury to Ps and inducing breach of contracts made between Ps and any third party.

13.  The aforesaid 1^st and 2^nd undated letters were referred to as “1^st Letter”[27] and “2^nd Letter”[28] respectively. They were undated and written in Chinese. It is understood that the Ps only alleged that the 1^st part of the 1^st Letter defamatory as only this part was annexed to the pleading. The parties came to an agreed translation of the relevant parts of the 2 letters. They were submitted to the Court at trial and were annexed to this judgment as 1^st and 2^nd Schedule respectively. As regards the letter issued by Ds’ solicitors (“3^rd Letter”), it was written in English. Apparently, Ds case is that all except the last paragraph are defamatory. The relevant part of the 3^rd Letter is at the 3^rd Schedule of this judgment.

Ds’ Case

14.  The Ds’ case, in a nutshell, is this. P1 was only a seller of organic food at the club house of the housing estate where D1 and her mother resided. P1 became acquainted with D1’s mother. P1 was invited by her mother to attend D1’s wedding in July 2012. It was only then they began to know each other. Photo booths operated by D2 were set up at D1’s wedding. P1 appeared very interested in such service.

15.  Some time before D1’s wedding, P1’s organic food shop closed down. P1 had nothing to do and very often went to see D1’s mother at the Jaffe Road address where Ds and her family carried on business. After the wedding, she continued to visit the Jaffe Road address. D1 said P1 volunteered to help as friend to run errands and promote D2’s business. She also helped out a few times in FotoWe’s events between late 2012 and mid-2013.

16.  In January 2013, P1 proposed to D1 that she could help Ds on a job-by-job basis at HK$2,000 per project (excluding disbursements) (“1^st Proposal”). This was not accepted by D1. Apparently, this 1^st Proposal was basically what was referred to as the 1^st co-operation proposal under Ps’ case: see [4] above.

17.  In or about April 2013, P1 told D1 that she knew someone from HKJC and could refer photo booth business to D2. Though D1 proposed to pay P1 a referral fee, P1 was not interested. She wanted a partnership with D1. It was D1’s case she had strong reservation to such proposal. It was because, said D1, D2 had provided services to HKJC in the past and had already been a HKJC’s registered contractor[29]. Further, by then D2 had started to build up better connections with media and a goodwill. D2 also had other side businesses. D1 considered P1’s co-operation proposal in the form of a partnership with FotoWe or D2 totally unattractive. P1 then proposed to her to set up a new company exploring photo booth business together, leaving all details for discussion later (“2^nd Proposal”)[30].

18.  It is pursuant to this 2^nd Proposal that P2 was set up. On 27 May 2013, P1 sent her a Memorandum of Partnership Agreement, i.e. the 2^nd co-operation proposal. She said this proposal was not acceptable because D2 and FotoWe had to surrender all technical knowhow to P2 according to the proposal. D1 told P2 that she would not sign it and the matter required further discussion.

19.  The relationship between D1 and P1 soured over profit sharing in the two June events. As a result, D1 executed documents resigning as director and transferring away her shareholding in P2. There was dispute on how the profits of the two June events should be shared. D1 said the business belonged to D2 as the client of the first event was referred to her through her usual contact; and the second bumped into D2 while providing service to the first client. P1 took a different view. She said they belonged to P2 though business taken on in D2’s name. It is because D2 was not free to take up the first client and P2 took it up for D2. The second client, though bumped into D2 while providing service to the 1^st client, was in fact her former boss, i.e. P1’s personal friend.

20.  It was Ds’ case that she only became aware of P2 having been successfully registered as HKJC’s contractor in late July 2013 after opening the Jaffe Road letter. D1 said all along P1 had said P2 had made application to HKJC, but no reply had been received[31].

21.  D1 became suspicious, and from what had happened, including the below, considered P1 had unauthorized use of D2’s confidential information with a view to registering P2 as HKJC’s contractor:

i) on or some time before 13 June 2013, P1 was found taking measurements of the photo booth and checking computer model numbers without her knowledge and consent;

ii) on 19 June 2013, D1 found a folder belonging to D2 containing clients’ profile, past job records, rate cards, confidential information and designs missing (referred to as the “green file” in Ps’ pleadings[32] and will be so referred here). After being told of (i) above, D1 called P1 who confirmed she had taken the green file. P1 was reminded the information was D2’s confidential information and should not be used without her consent. P1 assured D1 she had not used any of D2’s information[33]. P1 was asked to send over photos to her via WhatsApp;

iii) on or about 28 June 2013, the green file was returned by P1 to D1 when documents relating to D1 leaving P2 were signed. P1 had once confirmed she had not used the information for application to HKJC. However, P1 now admitted she had shown it to HKJC, and it was with D1’s consent, which D1 categorically denied[34];

iv) on 14 July 2013, a photo booth event was organized by P2 for HKJC; and

v) on or about 25 July 2013, a friend of D1, one Cindy Ng (“Cindy”) received P2’s promotion information relating to photo booth service. The size, fonts, layout and price list, i.e. the rate card (“promotion kit”) resembled that of D2. Further, former employee of D2 Emily was pictured help operating a photo booth resembled that of D2’s. Emily later said she thought it was a function organized by D2;

22.  D1 reported the matter to the Police after opening of the Jaffe Road letter.

23.  Subsequently,

i) on 3 August 2013, D1 found out D2’s Eprint account was logged in on 20 and 22 June 2013 without Ds’ consent and knowledge. P2’s company card with P1’s name could be seen. D2’s former staff, one Miss Pun Chung Wai Flora (“Flora”), had the password to such account. D1 said Flora admitted to her that having divulged D2’s information such as clients’ fees, pricing and operations to P1; and

ii) on or about 8 August 2013, D1 found out 2 USBs memory devices (“USBs”) of D2 containing confidential information such as clients’ information, price quotation, designs and copyrights of D2’s products had gone missing. D1 said Flora had confirmed she had got them but refused to have them returned;

iii) P2 continued to promote its service using or basing on confidential information from D2.

24.  The 3 letters in question were issued against the aforesaid background. The Ds did not deny the letters were written by them or by their solicitors upon their instructions. They contended these letters were not defamatory of Ps. Alternatively, if they were defamatory as alleged, they relied on the defences of justification, i.e. they were true in substance and in fact, and qualified privilege in that D2 was HKJC’s registered contractor at the material time; its properties had been misappropriated; it had a legitimate duty and interest to protect; and HKJC had a corresponding duty to receive the communication. Ds said the letters were only referable to P2. There was no reference to P1.

25.  Ds counterclaimed by alleging Ps ought to have known the information contained in the green file and the 2 USBs confidential and belonged to D2; and they used such information without Ds’ consent. They asked for damages for conversion and breach of copyright. At trial, Ds limited their claims to:

i) nominal damages of $5,000, comprising[35]

a) nominal damages of $2,500 founded on conversion of the green file;

b) nominal damages of $2,500 for breach of copyright in the databases, templates and rate card based on the Copyright Ordinance, Cap 528 (“CO”); and

ii) injunctive reliefs that Ps do deliver up or destroy upon oath all D2’s properties as well as the USBs information without retention, use or otherwise.

26.  What the Ps said in the Re-amended Reply and Defence to Counterclaim was that:

i) between October 2012 to June 2013, P1 and D1 entered into a partnership business “for the purpose of providing service as functions and events contractor on a trial basis”[36];

ii) the 2^nd co-operation proposal, though unsigned, was the result (presumably to mean agreed terms) of the oral negotiation between P1 and D1 between 28 April to 7 May 2013[37];

iii) in relation to the information contained in the green file, the Ps had possession of such information through their partnership with the Ds, and thus was earned by them jointly in the course of the said partnership, and was therefore neither confidential nor belonging to D2. The Ps were entitled to the use of it;

iv) the measurement of the photo booth done on 11 June 2013 was for first of the two June events to be held on 16 June 2013 (“Miss T’s function”); and

v) the promotion kit was prepared by Flora, a freelance designer who had previously engaged by D1 to carry out design for D2. All the rights in the promotion kit belonged to Flora, not D2. Alternatively, they denied having infringed any copyrights of D2.

27.  It is also the Ps’ case that the defence of qualified privilege unavailable as neither had D2 got any interest in P2’s application to HKJC nor had HKJC had any corresponding interest in D2 who was never its contractor. Further it was Ps’ case that the publication of the 1^st and 2^nd Words was actuated by malice in that:

i) P2 and D2 are business competitor;

ii) Ds were unhappy with Flora choosing to work for its competitor P2; and

iii) Ds were jealous of P2 being able to successfully registering itself as HKJC’s contractor.

28.  Further, as the alleged confidential information belonged to the parties jointly, the claim based on conversion, said the Ps, could not succeed. Alternatively, it was the Ps’ position since the properties were intangible, neither D1 nor D2 could found any claim based on conversion as a matter of law.

The Causes of Action

29.  Five causes of action are being sued upon by the parties. The Ps founded their claims on (i) defamation, (ii) malicious falsehood; and (iii) inducing breach of contract while the Ds based their counterclaim on (iv) conversion; and (v) breach of copyright. This Court will be guided by the principles of law set out below.

(i) Defamation

30.  In [12] of the Amended Statement of Claim, Ps pleaded in their natural and ordinary meanings, the 1^st and 2^nd Words[38] meant and were understood to mean[39]:

i) that the Ps had been guilty of dishonesty in that they had stolen and/or misappropriated:

(a) D2’s address;

(b) information belonging to D2;

(c) confidential data and information designed by and belonged to D1 and D2;

ii) that the above information was wrongfully used by Ps in their negotiation for entering into contractual relationship with HKJC;

iii) that the above information was wrongfully used by Ps into misleading HKJC to entering with it contractual relationship; and

iv) that by reasons of (i) to (iii) above, the Ps had been guilty of theft for which a complaint had been reported to the Police.

31.  So far as can be discerned from Ds’ pleadings, the Ds did not plead clearly what did the 1^st and 2^nd Words mean. It, however, admitted the meaning pleaded in [12(b) & (c)] of the Amended Statement of Claim, i.e. those set out in (ii) & (iii) of the preceding paragraph[40].  As regards meaning of (i) & (iv) of the preceding paragraph, the Ds denied they carried the meaning as pleaded but referred to the circumstances under which the matters occurred as alleged by Ds, see: [16] and [18] of the Re-Amended Defence and Counterclaim[41]. Ds further pleaded the defence of justification if the words bear the meaning of [30(i) & (iv)] above. It is this Court’s view that Ds’ case is that the 2 sets of Words suggest neither dishonesty nor guilt of theft despite the facts they have written to HKJC and made a report to the Police. So one crucial issue is whether the 1^st and 2^nd Words (or essentially the 3 letters) carry the imputation asserted by Ps.

32.  A 2-stage process is normally applied to assess whether a statement is defamatory. First, it is necessary for the Court to arrive at what the statement in question means. Second, this Court has to decide whether the meaning is defamatory.

33.  For the 1^st stage, it is essential for the Court to find out a “single” “right” meaning of the words in question. It is “the natural and ordinary meaning” of the relevant words as understood by reasonable men. The principles applicable for arriving at such meaning have been summarized by me in Wong Ching Yee v Wai Shuk Yin[42]. They are repeated as follows:

“i) the “natural and ordinary meaning” to be ascribed to the words of an allegedly defamatory publication

(a) is the meaning which the words would convey to the mind of the ordinary, reasonable, fair-minded reader;

(b) means ones in which reasonable people of ordinary intelligence, with ordinary person’s general knowledge and experience of worldly affairs, would likely understand them;

(c) may be either the literal meaning or the implied, inferred, or indirect meaning; or any meaning that do not require the support of extrinsic facts passing beyond the general knowledge; and

(d) includes meanings capable of being detected in the language used. They therefore include any implication or inference which a reasonable reader, guided not by any special but only general knowledge and unfettered by any strict legal rules of construction, would draw from words;

iii)(sic) it is necessary to take into consideration, not only the actual words used, but also the context in which the words were used and the persons to whom the communications were made;

iv)(sic) although a combination of words may in fact convey different meanings to minds of different readers, the Court is required to determine the single meaning which the publication conveyed to    the notional reasonable reader; and to base any award of damages on the assumption that this was the one sense in which all readers would have understood it.

(Next Magazine Publishing Ltd & Others v Oriental Daily Publisher Ltd[43] and Lo Sam Shing v Li Fong[44])”

34.  As regards whether the meaning is defamatory, the authoritative text of Gatley on Libel and Slander, 12^th Ed, 2013 (“Gatley”) has the following to say:

i) “… An imputation may be defamatory if it would tend to lower the claimant in the estimation of right-thinking members of society generally or would be likely to affect a person adversely in the estimation of reasonable people generally provided that it meets the necessary ‘threshold of seriousness’”:             [2.16] of Gatley; and

ii) “… The imputation of a criminal offence or conviction, or attempt to commit such offence, would usually be defamatory … It may be defamatory to say that someone is suspected of an   offence even where that does not imply guilt; or that he has been charged with an offence…[45]”     (Emphasis added)

[2.28] of Gatley;

iii) “[142] … A statement that the claimant is under suspicion or investigation cannot reasonably be understood as stating that he is guilty, for if the ordinary sensible person was ‘capable of thinking that wherever there was a police inquiry there was guilt, it would be almost impossible to give accurate information about anything….

… [144] It is usually said that there are two levels    of imputation below that of guilt (“Level 1”) which are possible in such situation, both of which are defamatory, though in different degrees: that there are reasonable grounds to suspect that the claimant is involved (“Level 2”) or that there are grounds to investigate what the claimant has done (“Level 3”).

[145] …. Suspicion of guilt is not a separate or distinct charge when guilt has been directly imputed.”

[3.28] of Gatley;

35.  For the defence of justification, the defendant has to establish that the imputation in respect of which he or she is sued is essentially or substantially true. A plea of justification must relate to the words which are complained of. In advancing a plea of justification, the defendant necessarily takes a view as to the meaning of the words complained of. His case is that the words so understood are true, see: Mak Shiu Tong v Yue Kwok Ying[46].

36.  Privilege is another often-pleaded defence to an action in defamation. The law recognises a need for frank and uninhibited communication which outweighs the need to protect reputation. Sometimes there may be a need for protection of a higher order and absolute privilege may be warranted. More usually the privilege is qualified, and such defence can be defeated by malice, which has its special meaning in the context of privilege.

37.  Lord Reed NPJ had in the Court of Final Appeal (“CFA”) decision of Johnathan Lu & Others v Paul Chan & Anor[47] summarized authoritatively the applicable principles laid down in many leading English decisions such as Reynolds v Times Newspapers Ltd[48] and Horrocks v Lowe[49] concerning qualified privilege and malice. The principles applicable to the present case can be distilled as follows:

i) a qualified privileged occasion arises where a person who makes the communication has an interest, or a duty, legal, social or moral, to make it to the person to whom it is made; and the person to whom it is made has a corresponding interest or duty to receive it;

ii) if the one who makes the communication uses the occasion for some other reason, he loses the protection of the privilege. It is what “malice” actually means in the context of qualified privilege;

iii) in determining whether an occasion is privileged, the court has regard to all the circumstances; and that the   circumstances must be viewed with today’s eyes, i.e. it depends on current social conditions;

iv) in order to decide whether a communication is published maliciously for the purpose of rebutting a defence of qualified privilege, it is necessary to decide 2 questions sequentially:

a) was the occasion privileged, and if so;

b) was that the defendant’s purpose when he published the communication in question

v) the 1^st question is a question of law and the 2^nd a question of fact;

vi) The motive with which the defendant made the communication in question is of crucial importance. The defendant is entitled to be protected by privilege unless some other dominant and improper motive on his part is proved. The crucial question is whether the   dominant purpose for which he made the communication was one other than the purpose for which the occasion was privileged. A desire to injure must be the dominant motive for proof of malice. Knowledge that it will bring about the effect is not enough. The protection will not be lost even if the defendant disliked the person whom he defamed or was indignant at what he believed to be that person’s conduct and welcomed the opportunity of exposing it;

vii) the court or the jury (if trial with a jury) has to draw inference from what the defendant did or said or knew and from all the surrounding circumstances in order to find out the dominant purpose when making the communication. The critical question is always whether the dominant purpose for which the communication was made was the same as the purpose for which the privilege was accorded;

viii) in relation to “malice”, it is a subjective test entirely dependent on the defendant’s state of mind and intention. The critical issue is the defendant’s motive in making the communication in question; and motive with which a person made a defamatory communication can only be ascertained from an examination of the state of mind. The communication has to be understood in this context as the defendant meant it to be understood. Guidelines include:

a) even those who act carelessly, impulsively or irrationally are afforded immunity from suit if they acted in good faith in compliance with a legal or moral duty or in protection of a legitimate interest;

b) tribunals of fact should be slow to draw the inference that a defendant was so far actuated by improper motives as to deprive him of protection of privilege unless they are satisfied that he did not believe that what he said or wrote was true or that he was indifferent to its truth or falsity;

c) where communication includes defamatory material going beyond what was necessary for the purpose for which the privilege was accorded, that material should not be treated as ipso facto falling outside the scope of the protection. Rather, the question remains whether the defendant misused the privileged occasion for an improper purpose. The answer to that question depends on the defendant’s           state of mind, not on the objective relevance of the material.

(ii) Malicious Falsehood

38.  It is Ps’ pleaded case that Ds published the 1^st and 2^nd Words bearing the defamatory meaning as set out in [30] above, and that these statements were issued with a view to, inter alia, injuring Ps’ business as a service provider of functions and events and in P1’s person[50]. Except the Ps generally pleaded that Ds “… well knew the 1^st and 2^nd Words were false and untrue or were reckless as to their truth or falsity having calculated that the monetary gain to be obtained by them would exceed any damages that may be awarded against them”[51], they identified no particular part(s) of the 1^st and/or 2^nd Words to be untrue. Neither had they set out particulars of facts or matters relied on by them to support the allegation of malice, except, perhaps by saying that they were trade competitors. Presumably they are saying the defamatory statements are false.

39.  At common law a claimant can maintain an action for the tort of malicious falsehood if he can show that:

“(1) the defendant published to third parties words which are false;

(2) that they refer to the claimant or his property or his business;

(3) that they were published maliciously; and

(4) that special damage has followed as a direct and natural result of their publication.”

Gatley [21.1]

40.  Chu J (as Hon Chu JA then was) set out in Hong Kong Wing On Travel Service Ltd v Hong Thai Citizens Travel Services Ltd[52] the essential elements for the tort of malicious falsehood which are often quoted, e.g. in Guangzhou Green-enhan Bio-engineering Co. Ltd & Anor v Green Power Health Products International Co Limited[53], Oriental Machinery Limited v Choi Kin On[54]. These elements are[55]:

“i) the defendant has published about the plaintiff words which are false;

ii) the defendant did so maliciously in that either:

(a) he knew when he published the words that they were false or he was reckless as to whether they were true or not; or

(b) he did so for the purpose not of advancing his own interest but of injuring the plaintiff.

iii) special damage has followed as the direct and natural result of the publication. But special damage need not be alleged or proved where the words were published in writing and were calculated to cause pecuniary damage to the plaintiff: s24 Defamation Ordinance (Cap 21): Kaye v Roberson [1991] FSR 62 at p.67 per Glidewell LJ.”

41.  As set out in sub-paragraph (ii) of the preceding paragraph, there are 2 alternative ways by which malice can be proved.

42.  In order to determine whether certain communication is false, it is necessary to determine the meanings conveyed by it. In this regard, it is the ordinary meaning as understood by an ordinary reader that matters, see: Hong Kong Wing On (supra) at p.494A. The single meaning rule which applies in defamation is, however, not applicable to malicious falsehood[56], see: [21.3] & [21.5] of Gatley. However, in the present case it is noted the Ps did not advance a meaning different from the asserted defamatory meaning in order to found a case in malicious falsehood. The same defamatory meaning will be adopted.

43.  Since the Ps pleaded no special damages, section 24(1) of the Defamation Ordinance, Cap.21 (“DO”) which provides as follows may be relevant:

“In an action for slander of title, slander of goods or other malicious falsehood, it shall not be necessary to allege or prove special damage –

(a) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or other permanent form; or

(b) if the said words are calculated to cause pecuniary damage to the plaintiff in respect of any office, profession, calling, trade or business held or carried on by him at the time of the publication.”

44.  In Chan Yau v Chan Calvin & Others[57], Hon G Lam J considered the words “calculated to” in section 24 of DO mean likely or probable in an objective sense relying on IBM v Web-Sphere Ltd [2004] FSR 39 which this Court will respectfully adopt.

45.  The following principles in Gatley are also useful and applicable:

i) there must be some reference, direct or indirect, in the words complained of to the claimant or to his business, property or other economic interests, see: [21.4] of Gatley;

ii) the burden of pleading and proving falsity is on the claimant see: [21.7] of Gatley; and

iii) if a statement is published in good faith, there is no liability. Mere negligence is not malice. Malice in its proper and accurate sense is a question of motive, intention, or state of mind. Where there may be more than one meaning of the words complained of, or the defendant did not convey a meaning which the court later found to mean, it is the defendant’s subjective understanding which is the relevant one in determining whether he knew the words to be false see: [21.8] of Gatley.

(iii) Procuring/Inducing Breach of Contract

46.  It is one of economic torts. The learned authors of Clerk & Lindsell on Torts (22^nd Ed) state at [24.14] the following proposition of law for this tort:

“Knowingly to procure or, as it is often put, to induce a third party to break his contract to the damage of the other contracting party without reasonable justification or excuse is a tort.”

47.  In Hong Kong, the Court of Appeal has in Xiamen Xinjingdi Group v Eton Properties Ltd[58] set out similarly the essential elements of the tort of inducing breach of contract which were distilled from the House of Lords decision of OBG Ltd v Allan[59] as follows:

“(1) there is a contract between A and B;

(2) there is a third party C who has knowledge of that contract;

(3) C does an act which induces or persuades A to breach the breach;

(4) when C did that act, he did it with intent to cause A to breach the contract, the breach of that contract being an end in itself, or a means to an end, and not merely the foreseeable consequence of C’s act;

(5) as a result, B suffered pecuniary loss.”

48.  Accordingly, the Ps have to show (i) the existence of the contract between Ps or any of them with the HKJC; (ii) Ds’ knowledge of the contract, if there was really one; (iii) acts or inference amounting to an intentional invasion of the alleged contract without good cause; and (iv) eventual breach of the alleged contract[60] in order to succeed a claim under this tort. It is insufficient to show that breach of contract was the natural consequence of the defendant’s conduct, see: [21-15], [24-20] of Clerk & Lindsell.

49.  Thus, intent (to invade one’s contractual right) and knowledge (of the contract) are crucial. It has been held proof of recklessness or turning a blind eye to facts of the contract is sufficient for knowledge of the relevant contract. Further, if the defendant intends the party procured to bring the contract to an end by breach of it if there is no way of bringing it to an end lawfully, the element of intent can be established, see: [21-18] of Clerk & Lindsell.

50.  Obviously, no tort is committed if the contract has not been formed - the “picking up” or election of the seamen for engagement with a steamship company was merely preliminary to a contract and did not itself amount to a contract: Mckernan v Fraser[61]. It has been held that a company who has been a listed contractor of the HKSAR Government had no contractual relationship with the Government: Pioneer Catering Equipment & Engineering Limited v Secretary for Justice[62].

(iv) Conversion

51.  Conversion is a tort. It is one way of wrongful interference with one’s goods. The essence of conversion lies in the unlawful appropriation of another’s chattel. It covers the deliberate taking, receipt, purchase, sale, disposal or consumption of another’s property[63]. The learned author of Clerk & Lindsell has set out in Chapter 17 several ways in which conversion may take place. One way where a person is guilty of conversion is when the person, without authority, receives or takes possession of another’s goods with the intention of asserting some right or dominion over them, or deals with them in a manner inconsistent with the right of the true owner. The taking must be accompanied by an intention to exercise permanent or temporary dominion[64]. A mere transitory exercise of dominion, such as unlawful “borrowing” or using of  goods, may still amount to conversion[65]. Thus, the taking away of a horse and riding on it and then redelivering it back to the owner; and the unlawful taking away of a car for joy-ride have been held to be conversion, see: [17-11] Clerk & Lindsell [66]. The essence of conversion lies in the exercise of dominion contrary to the owner’s interest, and the fact that the defendant does not use what he keeps should be irrelevant.

52.  The learned authors of Clerk & Lindsell stated the following statements of law, which this Court respectfully agrees and adopts:

“At common law, a conversion lies in respect of dealings with any corporeal personal property (including tickets, papers and title-deeds) [17-35];

… in OBG Ltd v Allan[67] a majority of the House of Lords settled the matter definitely, holding that there could as a matter of law no conversion of incorporeal assets …. Similar reasoning has been applied … to deny the convertibility of other intangible assets, such as copyright and documents stored electronically on a computer’s hard disk drive….” [17-36]

(v) Copyright Infringement

53.  Copyright is an intangible right. Owners of these rights can sue for infringement, which is generally recognized to be tortious in nature, though it very often involves the breach of statutory rights. In the present case, as can be seen in the later part of the judgment, what has been said to have been infringed, at the very least, appears to be a rate card. The witness Flora has confirmed the rate card of P2 was the same as that of D2 except the logo is different. Photo frames were also copied by Flora from D2 for use of P2 with knowledge of its director, P1.

54.  As regards typographical arrangement, the author is the publisher, see: section 11(2)(e) of CO. Further, as a matter of principle, the intellectual properties of any product designed by an employee in the course of his/her employment belong to his/her employer for the simple reason it is the employer who pays for their creation. Section 14 of the CO provides the same[68].

55.  The infringement of a party’s right entitled the party infringed to maintain an action against the infringing party for damages.

56.  For the claim under the CO, question arises as to whether this Court has jurisdiction in light of Cheung Chi Wai v Chi Fung Engineering Limited[69]. After hearing submission and reading the said decision, this Court is without doubt that the District Court (“DC”) has jurisdiction to hear claims for allegedly breach of the CO. Cheung Chi Wai (supra) is readily distinguishable in that it dealt with trademarks under the Trade Marks Ordinance, Cap 559 (“TMO”), not copyrights. Further the court is defined in the TMO to mean the Court of First Instance (“CFI”), and thus any such claims must be lodged with the CFI.

57.  On the other hand, there is no such restriction on court’s definition is in CO. Further, as correctly pointed out by Mr Ho, section 134 of the CO specifically identified the non-exclusive jurisdictions of the DC to deal with certain proceedings relating to copyright infringement. As discussed, breach of copyright is an action on tort. Ds’ claim thus falls within the jurisdiction of this Court unless the claim exceeds the prescribed monetary limit. In his closing submission, Mr Chong referred this Court to a Copyright Tribunal established under section 173 of the CO. It suffices for this Court to state that that Tribunal deals with matters totally different from the present dispute.

Issues to be Resolved

58.  From the above, at least the following issues need be resolved by this trial:

i) whether there was any partnership and/or co-operation agreement between P1 and D1 as alleged by Ps, and if so, when and for how long the partnership and/or co-operation lasted, and the terms thereof;

ii) the purpose for which P2 was formed;

iii) D1’s knowledge regarding P2’s application to HKJC;

iv) whether P2’s use of the Jaffe Road address was with D1’s consent;

v) what information was contained in the “green file” and whether it was jointly earned information as contended by P1 or it belonged solely to D1/D2;

vi) if the “green file” was found belonging to D1 and/or D2, whether permission was given to P1 to use the same as alleged;

vii) whether P1 had told D1 about her interview with or application to HKJC before D1 agreed to end relationship with P2;

viii) whether the taking away of the green file amounted to conversion;

ix) whether P1 took measurement of the photo booth without Ds’ consent or for the purpose of the two June events;

x) whether P1 had misappropriated the USBs of D2 or its confidential information as alleged;

xi) whether Ps had infringed copyrights of designs owned by D2;

xii) whether P2 entered into a contractual relationship with HKJC on 9 July 2013[70] as pleaded by Ps or otherwise they were in any contractual relationship;

xiii) whether D1 and/or D2 was/were under a duty to communicate with HKJC and HKJC had a    corresponding duty to receive the communication;

xiv) what are the respective meanings of the 1^st and 2^nd Words;

xv) whether the words complained of defamatory of P1 and/or P2;

xvi) whether the 1st and 2^nd Words are substantially true;

xvii) what was the motive of the Ds’ communication and whether the dominant motive was to injure the Ps;

xviii) if any or all of the causes action can be established, what are the damages; and

xix) whether injunctions should be granted.

The Witnesses and Evidence

59.  Apparently, quite a number of disputed issues are factual. Accordingly, credibility of witnesses is of utmost important. Four witnesses, namely, P1, D1, one Miss Theresia Loo (“Theresia”) of HKJC and Pun Chung Wai Flora (“Flora”) attended Court to give evidence[71]. All except Theresia had provided prior written statements. Theresia was the Catering and Event Manager of HKJC and was subpoenaed by P1 to give evidence for Ps. Those already with the following written statements adopted them (save with minor amendments) as their evidence.

P1:

i) witness statement dated 17 June 2016 (“P1-1”);

ii) supplemental witness statement dated 14 February 2017 (“P1-2”);

Flora:

iii) witness statement dated 17 June 2016 (“Flora-1”);

iv) supplemental witness statement dated 14 February 2017 (“Flora-2”);

D1:

v) witness statement dated 16 June 2016 (“D1-1”);

vi) supplemental witness statement dated 12 December 2016 (“D1-2”); and

Credibility of Witnesses

60.  This Court will assess the witnesses’ evidence against contemporaneous documents and/or undisputed and/or indisputable and/or independent evidence. The WhatsApp messages exchanged between P1 and D1 are contemporaneous evidence of what had actually been done and said at the material times. They are useful in assessing whether the parties were telling the truth, particularly for assessing their intention behind a certain move. They also provide the background circumstances against which certain assertions can be tested or assessed. Whether a witness’ evidence is to be believed will also be assessed by reference to its inherent plausibility or implausibility taking into account the circumstances of this particular case. If that is still impossible and the truthfulness of the witness’s evidence depends entirely on one’s credibility, the evidence will be assessed by reference to the consistency of one’s testimony with one’s prior answers/statements given orally or in writing. When a witness is discredited on an issue, particularly a material one, it sheds light on her overall credibility.

61.  I would like to first of all comment generally on the credibility of the 4 witnesses.

Theresia

62.  Theresia gave no prior written witness statement. She worked for HKJC. On the face of it she had no direct interest in the dispute. She was expected to be more independent compared with other witnesses. From observation of her evidence in Court, on matters relating to HKJC’s general policy and operation, she was straight forward and clear. However, a difference could be observed when she answered questions relating to her dealings and contacts with P1, and why P1 was recommended to the HKJC’s Procurement Department.  On those questions, she was observed to be hesitant, less straight forward and sometimes non-committal. It may perhaps be because she did not want HKJC or herself to be involved in the parties’ disputes. She thus would like to distance herself/HKJC from the dispute. She became cautious, or even over-cautious in response to such questions. Further, her evidence also showed that she was in rather good relationship with P1. Very often she took the initiative to call P1 on the application process once problems popped up in such process. She even told P1 HKJC’s reasons behind its decision[72]. She also appeared hesitant in her answers on what she had been shown that impressed her inviting P1 to apply as HKJC’s contractors. Some of her answers apparently did not sit well with P1’s answers and the findings of this Court. Below is one example.

63.  On the question of whether Theresia had ever been shown the green file or some of its contents by P1, her evidence was that she was shown 2 to 3 photos of size 4R produced by the booths and of the booth itself. She was asked by Mr Ho, counsel for the Ds, to go through the documents contained in the green file (Exhibit D-1)[73]. Despite repeated questioning she said the photos shown her not being there, though she recalled photos bearing words and close-up portrait(s). She also confirmed she was shown collage of small photos similar to some of them in the green file. She eventually identified another 4R photo (Exhibit P-1) referred to by Mr Chong of counsel a photo shown to her.

64.  In the Court’s judgment, this part of her evidence is in itself unreliable. In [25] of P1-1[74], P1 said she took the green file home with D1’s express consent (which was disputed) for showing to HKJC. P1’s overall evidence was unclear as to whether she had actually shown the file to HKJC or Theresia. Further, this factual issue was not clearly dealt with by Ps’ pleadings.

65.  The green file issue was first raised by Ds in their counterclaim, though the information said to have been taken away was then not specifically and collectively referred to as the green file. The relevant part was set out in [10.3] and [10.4] of the Re-Amended Defence and Counterclaim[75]. Ps dealt with them specifically in [5] to [9] and [14] of the Re-Amended Reply and Defence to Counterclaim, and generally in [15] thereof [76]. Ps had neither admitted nor denied in their pleadings P1 had shown it to HKJC.

66.  Further, P1 stressed in [12] of P1-2 that D1 all along knew the file was to be shown to HKJC[77]. Further, P1 had never denied having shown the file or any part thereof to HKJC in her statements. In [14] of P1-2, when responding to D1’s allegation that she had given an assurance of not having used the green file, P1 only denied having given such assurance. She did not make use of the opportunity to clarify. This Court believes had she not done so, she would have said so. Implicit in her evidence is that the said file (or part thereof) had been shown to HKJC.

67.  In fact, P1 was cross-examined on this question specifically at trial. She said Exhibit P-1 was one of the photos shown to Theresia. However, P1 also said Theresia was also shown demo photos printed by FotoWe with FotoWe’s logo printed during events she had participated. One Miss Maggie Chow (see [70] below) was present when the photos were shown[78]. P1 did not say these photos came from the green file. Her evidence suggested she had taken away the green file on more than one incident, though she could not recall details of those incidents[79].

68.  The overall assessment of this Court is that, on a balance, P1 did show the contents of the green file, or at least some of its contents to Theresia. All pages bore FotoWe’s logo. At least one of such showing took place in May/June 2013[80]. More likely than not, there might be other occasions. Theresia might not know that the photos came from the green file. In the Court’s judgement, equally, it would not have been possible for her to be so firm to say that none of them came from it, unless she had a special reason, but none was mentioned. This Court believes Theresia was either too cautious to tell the true, or she simply denied everything put to her by counsel from what she considered to be representing the “opposite party”. On a balance, this Court accepted Theresia’s evidence on HKJC’s general operation and policy on appointment of contractors and related matters. However, as regards her other evidence, particularly her interaction with P1 leading to P2’s registration with HKJC, this Court will look at it with scepticism.

P1

69.  After hearing her evidence and reading the WhatsApp exchanges, P1 impressed me as a mature, careful, skilful in expression and sophisticated lady with rich life experience and good inter-personal skills. Her evidence, as said above, will be tested against, inter alia, contemporaneous documents such as the said WhatsApp messages and her prior written statements. My conclusion is that she is not a truthful and credible witness as she tried to portray herself to be. There are many examples. Four are set out below.

70.  First, in [10] of P1-1, P1 said she first met Theresia when she attended functions at HKJC in or about Christmas in 2012. She said she made use of the opportunity to represent D2 introducing the photo booth business to HKJC[81]. There was no mention of any HKJC’s staff by the name of Miss Maggie Chow (“Maggie”) in P1-1. Neither was Maggie mentioned in P1-2. However, it is Theresia’s evidence (given prior to hers) that P1 was introduced to her by Maggie, her supervisor which took place only in or about May to June 2013, not Christmas of 2012 as alleged. It was Theresia’s evidence that when Maggie introduced P1 to her, P1 had already said to be able to provide a free trial on 14 July 2013. On a balance, this Court believed Theresia evidence on this issue. Her evidence in this respect was straight forward. There was no reason why Theresia would like to lie about their meeting time.

71.  P1 was particularly cross-examined on this discrepancy. She insisted on her own version. She said when she met Theresia in April 2013, Theresia invited her to join HKJC’s event on 14 July 2013. She did not advance any explanation on why a different account was given by Theresia. There was also no explanation as to why she did not mention Maggie at all in any of her written statements. It will be difficult to understand why Maggie, through whom Theresia was introduced to her (this Court so believes), was totally out of the picture in P1’s prior written statements. Apparently, Maggie was the first person who P1 met in HKJC but Theresia was a staff with whom P1 was more friendly. P1 wanted Theresia’s help in these proceedings. When P1 and Theresia met is a substantial discrepancy. It is more likely than not P1 was not telling the whole truth.

72.  Second, P1 was ambiguous on the question of whether she had showed photos contained in the green files to Theresia. This is one of Ds’ main contentions. The facts that she had D1/D2’s consent and the information was jointly earned are one matter. Whether the contents of the file had actually been shown to HKJC is quite another matter. As discussed above, she was ambiguous on this crucial issue in her evidence and pleadings. Had she not disclosed any of the green file photos to Theresia and/or HKJC, this Court believes she would have made it crystal clear in her statements or evidence at trial. Nothing of this sort is forthcoming in her evidence.

73.  Third, it is P1’s own evidence that on or about 28 April 2013, HKJC invited her and her company to provide photo booth business to the Club[82]. No doubt she herself was invited. However, question arises as to what company she was then referring to. P2 had not yet been incorporated by then. P1 said since D1 was also interested, she went to the Jaffe Road office to discuss with D1 on how to co-operate so as to become HKJC’s service provider. During cross-examination by Mr Ho, P1 insisted she would not allow D2 to be involved in this business because it was an opportunity procured by her[83]. P1 refused to admit the “company” referred in her statement was a reference to D2. She insisted the invitation was extended to her only.

74.  However, the contemporaneous WhatsApp on that date showed a text which, in the Court’s judgment, makes the matter clear. The message from P1 to D1 on 28 April 2013 reads as follows[84]:

“靚女，馬會對 我地 個三種服務都好有興趣，可以做哂馬會四個點，你諗下我地可以點合作？明天上完堂過嚟揾你傾好嗎？

English translation: “Pretty girl, Jockey Club shows great interest in our three services, [and we can] operate in all 4 locations of the Jockey Club. You to think how we can co-operate? Can [I] come over to talk to you tomorrow for a discussion after lesson?”

(Emphasis added)

75.  D1 responded with a thumb-up emoji. It was obvious from P1’s own message that the HKJC was interested in their, not her own, services. In my view, reading the entire WhatsApp messages as a whole, it did not suggest a subsisting partnership between them otherwise P1 needed not ask D1 to consider how they could co-operate. P1 had no other business then. P2 was non-existent. The WhatsApp exchanges since end of May 2013 suggested that they were planning to do business through P2. However, it was for taking up future business opportunities from HKJC, not existing ones (see below). This reference to their services then is, in my judgment, a reference to D2’s services. It is because P1 was then helping D1. So the opportunity was not hers, or at the very least, regarded by her then to belong to both P1 and D1/D2 jointly. P1 is twisting her evidence at trial. Her case is misleading.

76.  Fourth, in [6] of P1-1, she alleged she was trusted by D1. The “co-operation” relationship with D1 started in October 2012. In purported support of the alleged trust and business relationship, she said she was given a smart card to enable her free access to the Central and Jaffe Road offices. This happened even before transfer to her of D2’s share[85]. However, during cross-examination, she admitted the access to the Jaffe Road office was in fact not round the clock. She only had access during office hour. It was inconsistent with that expected of a business partner who might need to access the office any time. Further, P1 confirmed at trial the alleged co-operation started in November, not October 2012 as stated in the said paragraph.

77.  This Court considers P1 not a truthful witness. Her evidence is untruth and misleading.

D1

78.  D1 impressed me as a simple and straight-forward witness. Compared with P1, she was obviously less-experienced in life and not sophisticated. My overall assessment of her evidence as a whole is that it is consistent, or at least not inconsistent, with the WhatsApp’s exchanges and her prior written statements on all material respects. Her evidence is more believable and reliable than that of P1 on a balance.

79.  One example is this. It is D1’s case that she and P1 did not enter into any partnership or agreement to do any business, contrary to P1’s contentions. D1 said P1 only helped the photo booth business on a friendly basis. One of the main reasons is that D2 had already branched out into many side-line businesses, e.g. sole agent of Chocolatier, Wonderkids Crafts, Claudia De, etc. Further, D2’s goodwill had developed through her efforts, e.g. interview by social media and magazines. On the other hand, P1 apparently could only help in logistic arrangement but not the more technical aspects such as design or software. The lack of design and computer skill is admitted by P1. D1 said she would not simply allow P1 to join D2 to reap her hard earned effort.

80.  P1 insisted they were in partnership business and came to 2 successive co-operation as evidenced by the 1^st co-operation proposal and 2^nd co-operation proposal.

81.  D1’s case has the support of the WhatsApp exchanges. From a perusal of these messages[86], their relationship is more akin to a matured and motherly friend (P1) offering help, support and advice to a busy, always-tied-up and hiccupped young friend (D1) than one of business. D1 was always in a rush and very often out of Hong Kong. P1 was always willing to help. From a reading of the WhatsApp messages, P1’s expressions were always in a personal and caring manner. I have not lost sight that some exchanges may on their face consistent with a business relationship or suggesting they might be in some form of co-operation relationship[87]. However, I also have to bear in mind P1’s character and that they were then in very good relationship. It is therefore likely that both parties would be describing the photo booth business in which P1 was helping as “we” or “our business”. Such use is not inconsistent with the D1’s case that P1 was only helping out on a voluntary basis. On the other hand, had they been business partners between October (or November as P1 said at trial) 2012 and June 2013 as P1 had contended[88], either with same or different sphere of responsibilities, the parties’ ways of expression would have been very different[89]. The ways in which P1 talked in these latter examples were inconsistent with her assertion she was already a business partner. Had they been in a business relationship, P1 would have assumed those works as her own work rather than as if offering a helping hand, and D1 expressing gratitude in return.

82.  Further, the 1^st co-operation proposal was sent out on 28 January 2013. Two days later, D1 replied their difference did not just concern terms but the “whole stuff”. P1 expressed she fully appreciated the problem and agreed to discuss later[90]. So it did not suggest any agreement between them. For about 2 months since then, there appeared not many exchanges on business until end of March 2013.

83.  In addition, it would be difficult to imagine P1 receiving no remuneration (which is not disputed) for the work she had allegedly participated if they were really business partners, bearing in mind they fell apart on the question of remuneration in the two June events.

84.  It is not until P1’s WhatsApp messages sent on 3 June 2013[91] that suggested they might be in some form of co-operation (to be discussed below). D1 did not dispute they were then contemplating some sort of co-operation and in fact P2 had been incorporated by then for that purpose. However, D1 said there was no agreement at all on any partnership. Everything, according to D1, had yet to be agreed. P1’s own response on 11 June 2013 is telling and in fact is consistent with D1’s case. P1 wrote:

“… If our company take (sic) XY[92] job, I will organize it. Or I can phone her directly if you need”[93] (Emphasis added)

85.  D1 was then busy and doubted whether D2 could take up the job. P1 offered help by “our company”, i.e. P2. It suggested even if there were co-operation or agreement, it did not cover existing business. It has to be remembered that P1 said their partnership business was evidenced by, inter alia, the 2^nd co-operation proposal which was sent out on 27 May 2017[94]. Had there already been a subsisting business relationship between them then covering Ds’ existing business or any part of it, it would not had been necessary for P1 to suggest P2 taking up the job. It is only natural for P1 to step in because it was already their business. This Court also believes the dispute on profit sharing could not have arisen, or if arisen, would have been dealt with according to their agreed terms. In my judgment, at least as at 11 June 2013 when P1 offered help, there was then no existing agreement between them relating to any business of D2 or FotoWe or any of the photo booth business then undertaken by D2.

86.  According to P1’s statement provided to the police dated 17 October 2013, she admitted D1 was not interested to allow her joining D2, she gave up the idea of becoming D2’s shareholder[95]. She also said P2 was incorporated to take up business of HKJC[96]. Implicit in her statement is that there was no cooperation as a business partner in any business then undertaken by D2 and/or D1.

87.  In addition, P1’s case makes no commercial sense at all. P1 said D1 agreed to transfer 40% of D2 to her on payment of $100,000, which according to P1, was the value of the photo booth machines[97]. It is D1’s unchallenged evidence that D2’s business comprises other side-businesses. It therefore offended common sense if D1 did not take into account the value of the side businesses and company’s goodwill. Taking the evidence as a whole, although I consider D1 ungrateful and not thankful to P1 as the latter was always there when she needed help most, my conclusion remains P1 was helping D1 on a friendly and voluntary basis. P1’s allegation as being D1’s “co-operation partner” should be understood in this sense. P1 was and had never been D1’s business partner as contended.

88.  D1’s case is consistent with contemporaneous evidence. In case of discrepancy between the evidence of P1 and D1, unless otherwise stated, this Court will prefer that of D1 to P1.

Flora

89.  Flora’s evidence basically covered 2 major areas. The first is to corroborate P1’s evidence that only “company profile” was given to P1 by her with D1’s consent[98]. The second relates to D2’s intellectual properties.

90.  As regards the first issue, at trial, she was asked by Mr Chong to identify whether the so-called “company profile” referred to in her evidence was in fact the green file. She confirmed it was “very similar” to the green file. When cross-examined by Mr Ho, she said it was D2 who asked her to grab the green file which was then sitting on one of the booths and passed it to P1. This was difficult to accept. P1’s case was that in June, she wanted to get the green file and she got it from the Jaffe Road office place on a canvas bag with express consent of D1[99]. Flora, however, said she gave the file to P1 upon D1’s direction. It is noted that Flora left D2’s employ after 31 May 2013[100]. It would be impossible for her to hand the file to P1 upon D1’s instruction.

91.  It is noted in [2] of Flora-2[101], Flora said the file only contained company profile information. It was open information and thus not confidential. However, when the green file i.e. Exhibit D-1 is examined, what are contained in it are obviously not open company profile information. Apart from 2 pages respectively entitled “Brand Philosophy” and “Contact”[102], almost all are sample photos (11 pages) showing pictures of customers taken in evets organized by D2. Faces can clearly be recognized. These pictures were printed in designed frames and mounted on backing paper with FotoWe logo. Only 2 pages are blank with FotoWe logo. According to Flora’s description of the file which she had handed to P1, that file is unlikely to be the green file. Yet she suggested it was the green file and was handed to P1 upon D1’s instruction. Either she had a wrong re-collection, or she was deliberately not telling the truth.

92.  Flora was accused by D1 of stealing D2’s intellectual properties and 2 USBs after she had left D2’s employ. She also had quarrel with D1 who had reported the matter to the Police. On the other hand, she was on good terms with P1. She worked freelance for P1/P2 after she left D2. As can be seen in the preceding 2 paragraphs, her evidence is unreliable.

93.  Flora was on bad term with D1. Given it has been demonstrated she had given unreliable evidence, this Court will approach her evidence with scepticism. Unless her evidence is supported by contemporaneous or indisputable evidence, her evidence, even on the second aspect, will not be accepted.

Discussion

(i) Whether P1 and D1 were business partners between October 2012 and June 2013 as contended by Ps

94.  Ps pleaded in [3] of the Amended Statement of Claim that between October 2012 and June 2013, P1 and D1 co-operated in the provision of photographic service under the name of D2[103]. It is this part of the Ps’ case that troubled Ds most. As discussed in [79] to [87] above, this Court does not believe P1 and D1 had entered into any partnership or business relationship or agreement of any kind in any business then undertaken by Ds between October (or November as said by P1 at trial) 2012 and June 2013 as alleged by P1 or at all. Further, this Court has the following observations.

95.  First, the Ps’ pleaded case about P1’s business relationship with D1 is ambiguous. They are set out here for easy comparison:

[3] of Ps’ Amended Statement of Claim:

“Between October 2012 and June 2013, the 1^st Plaintiff and the 1^st Defendant co-operated in the provision of photographic service under the name of the 2^nd Defendant.”[104];

[4] of Re-Amended Reply and Defence to Counter-claim:

“Between in or about October 2012 and June 2013, the 1^st Plaintiff and the 1^st Defendant had entered into a partnership business (‘the said partnership’) for the purpose of providing service as functions and events contractors on a trial basis and the existence of the said partnership was evidence in writing and conduct of the parties. [particulars]”[105]

(Emphasis Added)

96.  The pleaded scope of the alleged agreed business co-operation/partnership was enlarged from photo booth business as set out in the Statement of Claim filed in May 2014 to that of event and functions organizer in October 2014 when it came to the Reply and Defence to Counterclaim. The particulars relied on for the enlarged scope apparently included the unsigned 1^st co-operation proposal (by WhatsApp) and 2^nd co-operation proposal (by email) as well as the events the P1 had helped out and/or participated which this Court has rejected.

97.  Looking at P1’s overall evidence, it appeared to the Court that she only helped out sometimes in operating the photo booths. She was not involved in planning and organizing such events. This is consistent with Ds’ case.

98.  In fact, according to [19] to [26] of P1-1[106] and [12] of P1-2[107], it is P1’s own evidence that P2 was incorporated to provide photo booth service to HKJC, but not for “functions and events contractors” as pleaded.

99.  Second, P1 said D1 proposed printing name cards for her so that she could help promote FotoWe’s business and do networking for D2. She even suggested in her witness statements that D1 printed name cards of D2 for her[108]. During cross-examination, P1 agreed that at the end of the day no cards with her name had ever been printed. In spite of this clarification, she insisted on a co-operation relationship which was not only limited to FotoWe but covered other areas such as baby showers, wedding and even insurance. She said she was promised a commission would be payable for insurance referred by her[109].

100.  P1’s aforesaid answer at trial is inconsistent with her own evidence in her written statements but consistent with that of D1[110]. Further, during cross-examination[111], P1 changed the time when she started co-operation with D1 to November from October 2012, contrary to what had been stated in witness statement[112]. She also said she was happy to accept 40% shareholding in D2 (not only FotoWe) despite D1’s willingness to give her 50%[113]. However, she said she had dropped the idea of becoming a shareholder of D2 by February 2013 because D1 showed no response[114]. P1’s evidence in Court is vague, shifting, exaggerating and misleading. This Court does not believe she had any sort of co-operation with D1 and/or D2 as alleged save and except an intended co-operation, through the vehicle of P2.

ii) The purpose for which P2 was formed and terms of cooperation, if any

101.  As stated above, P1’s evidence is that P2 was incorporated for providing photo booth services to HKJC. The 2^nd co-operation proposal contained, inter alia:

i) D1 was to provide 2 sets of photo booths and technical supports;

ii) P1 was responsible to contribute funds equivalent to the value of equipment injected by D1 upon production of receipts;

iii) P1 was mainly responsible for liaison with clients and operating the machines while D1 was to provide technical support and design of props and photo frames;

iv) P1 was responsible to incorporate the company; and

v) P1 was to make application for the purpose of registering with HKJC.

102.  The gist of D1’s case is this. P1 said to her she had contacts in HKJC interested to use FotoWe in its functions. P1 wanted a co-operation more than on a referral fee basis[115]. However, D1 did not want to share FotoWe’s intellectual properties, goodwill, clientele, etc. with P1. Upon persuasion, D1 was agreeable to form a company first, leaving all terms of their co-operation to be agreed later. P2 was eventually formed. The 2^nd co-operation proposal was sent to her on 27 May 2013 without addressing her concern. She had expressed to P1 she would not sign the proposal. P1 acknowledged her concern[116]. Accordingly, apart from agreeing to form P2 to explore the HKJC opportunity, they had no other agreement.

103.  In [22] of P1-1[117], P1 had the following to say regarding D1’s position on the so-called agreed terms before the 2^nd co-operation proposal was sent out. Logically it took place before 27 May 2013, i.e. the date on which the said proposal was sent by email[118]:

“…故此本人建議由第一被告人提供2套原屬第一被告人的Photo Booth舊電腦設備予新公司，而本人則會向新公司注入相等於該2套Photo Booth舊電腦設備的現金金額為新公司的營運資金，當時第一被告人没有異議。”

“(English translation) … therefore I proposed to D1 that she was to provide 2 old computer sets originally belonging to D1 to the new company. On the other hand, I would inject into the new company cash equivalent to those 2 old computer sets as operating funds. At that time D1 did not said otherwise.”

(Emphasis added)

104.  It was further said after the sending over of the 2^nd co-operation proposal, D1 still showed no response[119]. It is a settled principle that silence is no consent. From P1’s own evidence, she did not appear to state positively or anything with particularity on how and when the 2^nd co-operation proposal, being agreed terms of their co-operation and for which P2 was incorporated, was accepted by D1. In fact, when reviewing P1’s statement filed with the SCT, she also said D1 did not acknowledge the 2^nd co-operation proposal which purported to contain details of what had been their prior oral agreement[120].  

105.  D1’s “no agreement” stance case is consistent with contemporaneous WhatsApp exchanges and D1’s own evidence. When P1 asked on 3 June 2013 for invoices for calculating of funds to be injected, D1 showed no response. The next message from D1 was sent on 11 June 2013 concerning a D2’s event[121]. It is not until 18 June 2013 when they had dispute on sharing of the two June 2013 events that D1 said she was too busy to retrieve the invoices[122]. To this extent, this Court accepts that they had agreed on how capitals were to be contributed by each parties for P2. However, there is no evidence showing other terms of the 2^nd co-operation proposal being agreed between the parties.

106.  This Court believed the only terms agreed between P1 and D1 in respect of P2 are:

i) it was set up to explore the photo booth business opportunity from HKJC; and

ii) they were to contribute equally to P2 with D1 contributing in kinds and P1 in cash.

Apart from these 2 terms, the parties reached no agreement on any other terms. In any event, it is neither intended to cover nor taking over any of the businesses then undertaken by D1 and/or D2.

iii) D1’s knowledge regarding P2’s application to HKJC and other related matters

107.  On a balance, this Court accepts D1’s evidence and has the following findings:

i) despite what was proposed in the 2^nd co-operation proposal that P1 was to register with HKJC as a   contractor, it was the parties’ consensus that D1 was to meet with HKJC’s officers to introduce the photo booth business and to register it as HKJC’s contractor. This Court believes it was because D1 knew the technical aspects and what sample photos could be shown to the Club and what not. P1 did not tell D1 when such interview was to be held. D1 was awaiting    P1’s notice. D1 did not follow up such interview because she was always busy and fully occupied;

ii) when asked by D1 between 25 to 30 June 2013, P1 said that there was no reply from HKJC yet[123]. Before that, P1 had never taken any initiative to tell D1 any matters about the registration with HKJC;

iii) all along Theresia and Maggie was interested in the service of FotoWe which they thought relating to P1;

iv) P1 had never told D1 that HKJC had invited them to provide a free trial on 14 July 2013 when HKJC showed interest in FotoWe and invited them to register as its contractor. In fact, according to P1’s own evidence, even before P2 was formed, HKJC had already invited P1 and D1 to attend a free trial in a function called “Food Wine and Fund Carnival 2013”[124]. D1 had never been told by P1 of such. Neither had D1 been ever informed by P1 that HKJC sent her an email on 3 June 2013[125], and that she had accordingly submitted a form dated 5 June 2013[126] in P2’s name on 6 June 2013[127]. Even according to P1’s evidence, she said she could not recall whether she had ever told D1 when she received HKJC’s email[128]. This Count accepts she did not. This Court believes had D1 been told of all these before P1 proposed to end their co-operation, D1 would not have just resigned and signed transfer documents of P2 without making sure who or whether FotoWe was to take up the 14 July 2013 event;

v) P1 did take away the green file and had shown the contents to Maggie and Theresia without knowledge and consent of D1 and D2;

vi) The use of the Jaffe Road address as P2’s registered address when it was first incorporated was with D1’s consent. This Court, however, also accepts that D1 had made it clear to P1 that it needed be changed as soon as another place could be found by P1 because D1 did not want the 2 businesses to be messed up by outsiders. This was agreed to by P1 at trial. In fact, during cross-examination, P1 agreed that D1 had made the aforesaid to her clear. P1 even filled up an Aberdeen address as the postal address in the application form dated 5 June 2013 to HKJC[129]. P1 said it was her friend’s address for use as correspondence and storage of photo booths. P1 and P2 therefore had no further D1’s consent using the Jaffe Road address after 18 June 2013[130] when D1 withdrew from P2, or 28 June 2013 the latest, when P1 signed the requisite documents. In fact, according to the “Notification of Change of Address of Registered Office” filed by P1 on behalf of P2 with the Companies Registry on 1 August 2013, P1 filled up an address in Shipyard Lane P2’s registered office effective on 28 June 2013[131]. P1 therefore knew perfectly well that the Jaffe Road address should be changed as soon as possible. The HKJC’s email of 9 July 2013 also required that if there was any change of company information, P2 should inform the Club[132]. P2 failed to do so after 18 June or at the latest, 28 June 2013; and

vii) D1 only found out P2 had become a HKJC registered contractor in or about late July 2013 when the Jaffe Road letter was inadvertently opened.

108.  P1 said she would not allow D2 to be involved in HKJC’s photo booth business as it is a business procured by her[133]. This Court believes P1 regarded HKJC a big single client that could bring potentially lucrative business. However, she had no track record and therefore she showed FotoWe’s information to HKJC. As said, this Court believed HKJC thought P1 and FotoWe were related[134]. On the other hand, P1 believed somehow there would be co-operation between P1 and D1, given their very good relationship then.

109.  At trial, P1 agreed to the suggestion to the effect that in or about May 2013, Theresia had told P1 that HKJC was interested in FotoWe. P1 therefore approached D1[135]. P1 was well aware a photo booth free trial would be provided to HKJC on 14 July 2013[136]. She therefore acted fast but D1 was slow, hesitant and always busy. In light of D1’s poor and slow response, this Court believes P1 planned for both eventualities, i.e. including the eventuality of going ahead without D1[137]. That might perhaps explain why many of her dealings with HKJC was withheld.

iv) Matters relating to the “green file”

110.  A perusal of the documents in the green file, i.e. Exhibit D-1 shows that it contains photos taken of events organized by D2 with designed photo frames mounted on backing paper bearing FotoWe’s logo. They are D2’s past job records. They are confidential information because they are subject to confidential agreement between D2 and its clients. Mr Chong did not seek to argue otherwise at trial. Contacts and brand philosophy of FotoWe were also printed. The file is obviously intended for promotion of FotoWe’s business.

111.  It is this Court’s finding that P1 and D1 had never entered into any business relationship. P2 was only a company incorporated for exploring future opportunity with HKJC. P1’s gratuitous help in D2’s business will not, per se, make P1 joint owner of any intellectual properties and confidential information of D2. The green file and any intellectually properties of its contents belong absolutely to D2. It is not and could not be properties jointly earned by the parties as contended.

112.  According to Theresia, when P1 agreed to stage a free service to the HKJC’s function on 14 July 2013 in or about May/early June 2013, she had already been shown photos. Theresia’s evidence in this respect is accepted. As said, this Court believed some of them came from the green file. This Court believes the taking away of the green file and showing of its photos to HKJC happened more than once. At least one of such incidents which took place on or before 3 June 2013[138] can be clearly demonstrated.

113.  This Court did not believe permission had ever been given to P1 when she took away the green file for showing to HKJC. It is also this Court’s finding that D1 had never given any instruction to Flora to hand over the green file to P1.

v) Whether P1 taking measurement of the photo booth for own purpose

114.  P1 admitted having taken measurement of the photo booth on 11[139] or 13 June 2013[140] (not 3 June as asserted by D1[141]) at the Jaffe Road address. She said it was for the purpose of the event on 16 June 2013. She added it might be Jadee (Mira’s staff) who had requested her to do it. She denied it was done for P2. 

115.  D1’s version was different, and is this. She agreed to terminate the co-operation on 18 June 2013. On the next day, i.e. 19 June 2013, some customers requested provision of information about FotoWe. She found out the green folder missing. Her mother and colleague Bethany Choi said P1 had surreptitiously taken measurement of the size of the photo booth cases, jotted down computer and printer model numbers some time ago.

116.  As to the date, D1 also apparently advanced 2 versions. In D1-1, D1 said it took place on 13 June 2013[142]. However, in [24] of D1-2, she said it was 3 June 2013. It is noted D1 was told it happened a few days before the matters referred to in [23] of D1-2, i.e. 19 June 2013[143]. Ds also pleaded the matter took place on 13 June 2013[144].

117.  This Court believes the matter took place on 13 June 2013 instead of on 3 June 2013 which might be a typo-error. The question is what for.

118.  D1’s evidence is hearsay. It is a matter of weight. P1’s evidence, though not hearsay, was coming from a witness shown to be unreliable. It is noted P1 did mention in WhatsApp something relating to photo booth case decoration, and it related to Jadee[145]. It is also noted that P1 could set up photo booths for its first HKJC function on 14 July 2013, which was less than a month after D1 had withdrawn from P2. It is D1’s evidence (which this Court accepts) that it would take at least 2 weeks to make the wooden casing of a photo booth, not to mention extra time was required for acquiring the computer, accessories and software and setting them up. Taking also Flora’s evidence together[146], on a balance, this Court accepts the taking of measurement was with a view to start P2’s photo booth business without D1. Coupled with what this Court come to in [108] and [109] above, it was something pre-planned and not asked for by Jadee as alleged by P1.

vi) Whether P1 had infringed/misappropriated properties, intellectual (such as designs, etc.) or otherwise belonging to D2

119.  D1’s case was that:

i) on 25 July 2013 her friend Cindy received from P1 via email P2’s promotion kit with layout, font type and size, arrangement and visual effect resembled that of   FotoWe[147]. D2’s part-time staff Emily was also seen operating the photo booth. After enquiry, D1 learned from Emily that the latter thought she was helping out in a D2’s event [148];

ii) Flora admitted having disclosed D2’s said information to P1 over WhatsApp as well as that contained in 2 USBs (see (iii) below)[149];

iii) 2 USBs containing the aforesaid and clients’ information were found lost[150];

iv) Flora helped login the E-print account of D2 for printing of P2’s name cards for P1[151]; and

v) she paid for use of software downloaded from specific web-site for the photo frames.

120.  Flora’s evidence, including answers during cross-examination, in this respect can be summarized as follows:

i) after she left D2 by end of May 2013[152], P1 approached her asking her to design the photo booth external case and frames of photo printouts on a per job basis. She agreed and helped design name card, documents, etc., for P2. She also attended one event for P2 at HKJC but she could not recall the exact date;

ii) she denied having stolen any of the alleged 2 USBs. She explained D2 had not provided any USB for her work. She therefore used her own USBs for D2’s purpose. During cross-examination, she admitted when she left D2, she brought with her the USBs which contained the photo frames and documents she designed for D2 while under its employ;

iii) As regards the E-print account opened while working for D2, she said such account was her own personal account, though the contact address was that of D2, namely, info@fotowe.com[153]. She had the login code. Her argument was this: she was required to pay first and then sought reimbursement from D2. She admitted that on 22 June 2013 she used this account to order P1’s name card for the company of P2. She denied having infringed any design she had made while under D2’s employ. However, she admitted her design for P2 might be similar in style to those she had done for D2 because they were all done by her;

iv) As regards the photo frames she worked on for D2[154], she agreed they were downloaded from software provided by D2. She would then do the design of the blank space of the frame using her own source materials. She also designed according to the theme of the event. She did the same for P2 based on those she designed for D2 but considered the designs hers because they were from her own sources or previous designs. During cross-examination, she confirmed quite a number of photo frames as well as the company profile in the green file were designed by her;

v) She was asked to go through the photos of the green folders. She could identify there were 10 odd photo frames designed by her for D2. All were with FotoWe logo. The frame of exhibit P-1 was also designed by her; and

vi) She agreed that the design of P1’s rate card is exactly the same as D1 in every respect save and except the logo of the 2 companies.

121.  P1’s evidence, as extracted under cross-examination[155], is this:

i) in or about mid-June 2013, Flora started help her designed name card, photo frames etc., for the HKJC event held on 14 July 2013; and

ii) she started to purchase computers and order the wooden booth cases after 18 June 2013.

122.  As set out above, the intellectual properties of any products such as photo frame, rate card designed by Flora while employed by D2 belong to D2. It is therefore wrong for Flora to say that the intellectual properties of photo frames designed by her while under D2’s employ hers. The USBs, though corporeally belonged to her as this Court has accepted, contains designed materials the intellectual properties belonging to D2.

123.  During cross-examination, Flora had confirmed she copied from D2 information including photo frames which were subsequently used by P2. As regards other documents, Flora also confirmed P2’s rate card[156] was exactly the same as that of D2 save and except the logo. Even P1 considered the promotion products of P2 and D2 very similar, though she considered not surprising as they came from the same designer[157]. This is not a case in which Ps pleaded innocence about Flora’s design offending intellectual properties of others. Flora was engaged by P1 to work for P2 exactly because she knew everything about D2 in respect of the software/design requirement and operation of the photo booth and which can be used by P2. The designed products were for P2’s benefit.

124.  Taking the evidence as a whole, this Court accepts that:

i) Flora had, upon the invitation of P1 and P2 on a paid basis, helped design P2’s stuffs in the promotion kit such as rate cards, company information, photo frames based on confidential information obtained from D2. The photo frame layouts were copied from D2. P2 had no consent of D2 when Flora used all the aforesaid confidential information. P2 therefore breached the intellectual properties rights of D2 upon instruction of P1, and for which P1 and P2 are both liable;

ii) P2 copied the design, layout and arrangement of D2’s rate card upon P1’s instruction;

iii) P1 and P2 made use of D2’s confidential information contained in the green file for the benefit of P2 without consent and knowledge of D2;

iv) P1 copied the design and dimension of the photo booth casing for P2’s benefit without knowledge and consent of D2; and

v) P2 used the Jaffe Road address after 18 June 2013 without D2’s consent and failed to take proper step to notify HKJC after ceasing having any rights to continue using it.

vii) Whether taking away of the green file conversion, etc

125.  The green file belonged to D2. The corporeal and intellectual properties of all stuffs including all photos contained in it belong to D2 absolutely. Neither of these properties are jointly owned nor earned as alleged.

126.  The subject matters of conversion pleaded by the Ds are the 2 USBs and the green file. This Court accepts the corporeal USBs belonged to Flora and there is therefore no conversion of the 2 corporeal USBs. However, Flora had wrongfully taken away D2’s intellectual properties for use of P2. As regards the green file, it is understood from Mr Chong’s submission that if the substance of the subject matter is intangible property, according to the House of Lords’ decision of OBG Ltd v Allan (supra), there should be no conversion of incorporeal assets. Mr Ho, on the other hand, relied on paragraph 17-35 of Clerk & Lindell in that the taking away of a horse and riding on it and then re-delivering it back to the rightful owner amounts to conversion, see: [51] to [52] above.

127.  I think Mr Chong’s reliance on OBG Ltd v Allan (supra) is misplaced. No doubt according to OBG Ltd v Allan (supra), the intellectual properties contained in the USBs are not caught as a matter of conversion. However, the green file comprises corporeal properties such as papers and photos. It is the finding of this Court that P1 showed the photos in the green file to HKJC with a view to impressing upon it and becoming its contractor as if P1 and/or P2 owned them. P1 kept the whole file without knowledge and consent of D1 and D2 and for the benefit of P2. For that purpose, P1 exercised temporary dominion over the file inconsistent with and offending D2’s rights of ownership. Such dealing amounts to conversion, and this Court so rules[158].

viii) Whether P2 has entered into a contractual relationship with HKJC on 9 July 2013 as pleaded or on any other date or at all

128.  The contract in question pleaded by the Ps was a contract between P2 and HKJC and was set out in [6] of Ps’ Amended Statement of Claim[159]:

“As a result of the [P1’s] application, [HKJC] and [P2] entered into a contractual relationship in that, [P2] would become a registered contractor of [HKJC] since 9^th July 2013 to provide functions and events service inclusive of photographic service whenever called upon to do so to serve [HKJC] and its members” (Emphasis added)

129.  It appears the contract was one for service when called upon to do so. The Ps identified no written contract in support. Neither were essential terms pleaded. The circumstances under which the alleged contract was formed was important. It is a question of fact and law. Theresia’s evidence in this respect is crucial.

130.  Theresia’s evidence, in gist, is this. The HKJC has its own system of procuring service and supply of goods. Whenever supply of service or goods is required, either by the Club or its members, the service provider or goods supplier would be selected from among the contractors which have already been registered with it. Before a contractor is put on the list, it is required to fill up a form providing its company particulars and make a number of declarations including whether they are related to the Club or any of the Club’s employees. The form and declarations are then vetted by their Procurement & Administration Department (“P & A Department”). Theresia said that it was an integrity check for protection of the Club. The registration system also facilitated settlement of payment. It was because, according to her, unless the service charge was small and thus could be settled by petty cash, all payment would be settled by the Club’s cheques. The registered contractors were normally recommended by their staffs who either had experience dealing with them before or knew the responsible persons of the company. The quality of good or service is therefore expected to be of acceptable level.

131.  Theresia confirmed that unless a contractor was on the HKJC’s list of registered contractors, the Club would not procure service or supply of goods from it. However, she added that being on the list of registered contractors did not, however, mean that the HKJC was obliged to offer jobs to or make purchase from them.

132.  Despite repeated questions by Mr Ho as to whether HKJC registered P2 because of its experience, Theresia repeated she considered the photos shown by P1 sufficient or that it might not be material. A host of criteria, such as whether the booths were set up in time, quality of delivery would be taken into account when deciding whether to engage P2 in future. Further, 2 events, one in July and the other in September 2013 were offered for free. HKJC could do its own assessment. Theresia agreed that unless the parties’ present dispute could be settled, HKJC would not engage P2 for service for the simple reason HKJC did not want to be involved in the parties’ dispute. The fact the dispute was referred to the Police also mattered.

133.  From Theresia’s aforesaid evidence which this Court accepts, the registration system basically serves the purposes of (i) accounting convenience; (ii) integrity checking; and (iii) quality assurance. The form sent to HKJC by P1 on P2’s behalf is exactly what was required by HKJC for these purposes. P2 made the necessary declaration of interest in the completed form[160]. This Court considers HKJC should have been satisfied with the quality of the photo booth’s service upon production of FotoWe’s sample photos.

134.  The asserted contractual relationship between P2 and HKJC existed as from 9 July 2013.[161] As a matter of fact, it is the date of HKJC’s email acknowledging, understandably, the information provided by P2. Properly construed, the said email did not commit the Club in any way to any project or agreement. It is not the sort of a standing contract similar to annual/standing maintenance contract, as suggested by Ps’ pleadings, that HKJC is contractually bound to call upon P2 to provide service and the latter is obliged to provide such service once registered. A tender process is still required, and P2 is free to tender or not to do so. There is no evidence to suggest it is a standing contract which afforded P2 a contractual right to tender as contended by Mr Chong in his closing submission. One really has no basis to say the HKJC and P2 had already entered into any contractual relationship. P2 is only put on a list of qualified contractors. In substance, it is akin to the situation of the Government compiling a list of contractors which are qualified to tender. The Government had no contractual relationship with each of them unless and until a contractor submits a tender which is eventually accepted[162].

135.  By reasons set out in the preceding paragraphs, the claim of any contractual relationship between P2 and HKJC as pleaded must fail.

ix) Meaning of the 3 Letters and whether defamatory of P2

136.  The relevant parts of the 3 Letters are at the 1^st, 2^nd and 3^rd Schedule to this judgment. Ps referred the relevant contents of the 1^st and 2^nd Letters as “the 1^st Words” and the 3^rd Letter as “the 2^nd Words” in the Amended Statement of Claims. This Court will approach them on letter basis.

137.  Ps pleaded the 2 sets of words bore and were understood to bear the following defamatory meaning[163]:

“(a) That the 1^st and 2^nd Plaintiffs had been guilty of dishonesty in that they had stolen and/or misappropriated:

(i) the address of the 2^nd Defendant;

(ii) the information belonging to the 2^nd Defendant; and

(iii) confidential data and information designed by and belonged to the 1^st and 2^nd Defendants.

(b) that the properties set out in sub-paragraph (a) above had been wrongfully used and/or misused by the 1^st and 2^nd Plaintiffs in their negotiation for entering into contractual relationship with the Hong Kong Jockey Club.

(c) That the properties set out in sub-paragraph (a) above had been used to mislead, inter alia, The Hong Kong Jockey Club into accepting the 1^st and 2^nd Plaintiffs as contractors for the Hong Kong Jockey Club Procurement Department to host events for the latter’s members.

(d) That, by reason of the facts and matters referred to in sub-paragraphs (a) – (c) above, the 1^st and 2^nd Plaintiff’s had been guilty of theft for which a complaint of theft had been made by the 1^st and 2^nd Defendants to the Police and that there were justifications for their complaint.”

1^st Letter

138.  The 1^st Letter is in the 1^st Schedule. It was issued to HKJC and copied to its 7 departments relating to P2, not P1. Question arises as to who issued the 1^st Letter.

139.  The bottom of the 1^st Letter bore D2’s name affixed by a chop with a space for signature. Above D2’s name the words “For and on behalf of” were printed. Beneath the signing space are the words “Authorized Signature(s)”. It was signed, and is common ground, by D1. D1’s full name was printed. In the Court’s judgment, people with ordinary intelligence and experience of worldly affair would have no doubt the 1^st Letter was issued by D2, not D1 personally.

140.  The 1^st letter bears a simple meaning that a letter addressed to P2 was received by D2 at the Jaffe Road address. It stated although the names of P2 and D2 were similar, they were not connected. The Jaffe Road address was also unconnected with P2. It carried an implied meaning that something, which D2 had no knowledge for the time being, might had happened. D2 considered it necessary to “file a report” with the Police to put on record in case of anything. In the Court’s judgment, the words “備案” (Punti pronunciation: bei⁵ on³) should better be translated to “put on record or on file”. Ordinary, reasonable and fair-minded people may consider that those matters unknown to D2 might potentially be improper but D2 knows nothing thus she could only file a report with the Police, who is vested the duty of investigating crime, for record only. The last paragraph of the 1^st Letter is an introduction of D2’s business with particulars and is uncontroversial.

141.  In the Court’s judgment, there is neither suggestion of guilt nor suspicious of guilt on the part of P2. There was also no suggestion that P2 was being or should be investigated. It does not convey any meaning there being any reasonable ground to suspect any misconduct on the part of P2 for the time being but there might be something wrong. That is why it only said it had filed a report for the record only. It does not even fall within level 3 of the classification mentioned in [3.28] of Gatley[164]. Neither was the letter understood to refer to P1. This Court does not consider the 1^st Letter defamatory.

142.  Even if for the purpose of discussion this Court were wrong and the 1^st Letter being is defamatory, the defences discussed in relation to the 2^nd and 3^rd Letters below are applicable.

2^nd Letter

143.  It is set out in full in the 2^nd Schedule. It is a complaint letter addressed to HKJC against P2. The contents did not concern P1. The same question as to who issued it arises.

144.  It bears the same D2’s company chop as the 1^st Letter and signed by D1. D1’s name was printed in full with a description “Director”. It was obviously a letter issued by D2 and had nothing to do with D1 personally as contended.

145.  This letter carries the meaning that P2 was suspected of theft of D2’s confidential information and unauthorized use of D2’s address. Such wrongful use led to a co-operation agreement and relationship between P2 and HKJC. It is not so worded to give the reader to think P2 might be suspicious only. The matter was said to have been referred to the Police for investigation, and the “criminal” aspect was high-lighted. The letter was strongly-worded and gave ordinary sensible person an impression that D2 had strong conviction that P2 had committed such offence. It was so strong that D2 saw fit to “strongly demand” HKJC stopping all co-operation with P2. Further it requested HKJC to disclose information relating to any co-operation between the Club and P2 so as to enable Police investigation and facilitate D2’s civil actions through lawyers. Obviously by expressing lawyers were to be engaged, the reader could sense D2 was serious in the matter. Even a 1-week time limit was imposed. It has to be born in mind that HKJC is regarded a very huge and powerful organization in Hong Kong, yet D2 saw fit to use an aggressive and assertive language when talking to it. Ordinary, reasonable and fair-minded reader would think D2 had strong evidence of P2 having committed theft otherwise it would not have issued such strongly-worded letter.

146.  Mr Chong for the Ps submitted that this letter is understood to also refer to P1. In my judgment, a reasonable and fair-minder reader would not have any clue to understand the said letter referable to P1. Such imputation, in the Court’s judgment, is only defamatory of P2. The question is whether D2 can established the pleaded grounds of defence.

3^rd Letter

147.  The relevant part of the 3^rd Letter was in the 3^rd Schedule. It was issued by a firm of solicitors expressly stated to P2 upon instruction of D1 and D2. It was copied to HKJC’s Legal Department. In the Court’s judgment, ordinary, reasonable and fair-minded reader can no doubt understand the letter to be issued by D1 and D2 and to mean that:

i) P2 was guilty of theft by wrongfully and without Ds’ consent misappropriating the contents of (a) the green file; (b) the USBs, the contents of which belonged to Ds;

ii) P2 had wrongfully used such information to promote P2’s own business; and

iii) P2 had wrongfully misled HKJC that it did possess the relevant experience, expertise and technology by using the misappropriated information and became its registered contractor, but in fact P2 did not.

148.  The aforesaid allegations were specific. The letter asserted the matter was reported to the Police “allegedly for theft”.  Ordinary, reasonable and fair-minded reader will come to a rather firm view that P2 was guilty of theft, dishonest and deceit, or at the very least, very likely to have committed all these.

149.  Again, such imputations are defamatory of P2.

150.  Mr Chong argued that the letter would lead the reader to refer to P1 as the 3^rd Letter is expressly addressed to P2 marked for the attention of P1. It was not mentioned, however, the role played by P1 in the alleged theft in the 3^rd Letter. The position of P1 in P2 was also not mentioned. In my judgment, a reasonable and fair-minded reader would not, in the manner in which P1’s name was mentioned, consider the defamatory statement to be also referable to her. The only question is whether D2 can established the pleaded grounds of defence.

x) Whether the 1^st and 2^nd Words (or the 2^nd and 3^rd Letters) are substantially true

2^nd Letter (and perhaps the 1^st Letter)

151.  The defamatory imputation of the 2^nd Letter is that P2 had committed theft of information relating to photo booth, leading P2 entering into a co-operation agreement and relationship with HKJC.

152.  As analysed above, this Court has the following finding of facts:

i) the green file belonged to D2 absolutely. It is not properties jointly earned by P1 and D1 as contended;

ii) P1 had without D2’s knowledge and consent taken the away the green folder and showed the contents or part thereof to Maggie and Theresia with a view to creating an impression that P1 had the experience in such business. HKJC thought P1 was related to    FotoWe, and invited P1 to register her company as HKJC’s contractor. A new company, P2, was eventually registered for that purpose. This surprised Theresia. It showed that it was not something    expected by HKJC when P1 was invited. What HKJC was interested in was FotoWe, not P2, and FotoWe belonged to D2;

iii) P2 was registered as HKJC’s contractor without knowledge of D1 and/or D2. When D1 left P2, P1 did not tell D1 that in fact she had already registered P2 with the HKJC and that HKJC had been offered a free trial on 14 July 2013;

iv) P1 engaged Flora to design all stuffs in the   promotion kit of P2 using information obtained from D2 and stored in the USBs without the latter’s consent and approval as analysed above;

v) the measurement of the photo booth case by P1 was for the purpose P2 and it was without consent and approval of Ds; and

vi) P1 knew P2 was required to change its registered   office once an address was found. HKJC also requested notification of change once it happened[165]. There was no consent at least as from 28 June 2013 the latest for P2 to use the Jaffe Road address.

153.  By reasons of the above Court’s finding, what was said in the 2^nd Letter is substantially true. D2’s defence of justification can be justified.

154.  Further the same defence of justification is also available to the 1^st Letter if this Court were wrong and the 1^st Letter defamatory.

3^rd Letter

155.  Although the 3^rd Letter stated the way of appropriation of the confidential information included “copying” the same. It is, however, not Ps’ pleaded defamatory sting. By reason of what has been set out in [152] above, what has been stated in the 3^rd Letter is, in the Court’s judgment, substantially true. Ds’ defence of justification can be established.

xi) Whether D1 and/or D2 was/were under a duty to communicate with HKJC and HKJC had a corresponding duty to receive the communication, Motive, etc

156.  In the Court’s judgment, once the defence of justification can be successfully set up, it will sufficiently dispose of Ps’ defamatory claim and therefore be unnecessary for this Court to deal with further the defence of qualified privilege. However, the parties have made a lot of submission on this head. For completeness sake and if this Court were wrong on the defence of justification, this Court will deal with such defence briefly here.

157.  The relevant principles are set out in [36] and [37] above. The first question is whether Ds have an interest, or duty, legal, social or moral, to make the communication to HKJC. In the Court’s judgement, there is.

158.  D2’s confidential information was being misappropriated without its knowledge and consent. Such information includes designs and its confidential information. Further, designs originated from D2’s photo frames, photo frame layout and rate cards were used at HKJC’s events held at the Club’s venue and for its members. It is therefore natural for D2 (and D1 as D2’s sole director) to notify and warn HKJC of possible further mis-use of such confidential information and infringing documents wrongfully obtained by P2 that might fall into HKJC’s possession. It was particularly so when there had already been free trial provided by P2. D2 obviously had a legitimate interest to protect and notified HKJC that it took the mis-appropriation seriously. They were considering suing Ps. There is also a moral duty to warn HKJC that it might have been misled in accepting P2 as its qualified contractor.

159.  There is dispute as to whether D2 was already HKJC’s registered contractor. Ps disputed but Ds said yes. After hearing evidence and reading evidence exhibited[166], this Court accepts Ds’ evidence that D2 was registered as HKJC’s event organizer contractor otherwise it would not had been allowed to participate in the Club’s functions. Accordingly, the unauthorized use of D2’s information would affect D2’s legitimate interest as HKJC’s contractor as event organizer. D2’s confidential information and properties were used by a third party (P2) leading to successful registration in direct competition with it. It is unfair to D2. It is also unreasonable and unethical. D1 and D2 obviously had a legitimate interest to protect.

160.  The next question is whether HKJC has a corresponding interest or duty to receive it. For the reasons discussed in the following paragraphs, this Court’s conclusion is also in the affirmative.

161.  First, if D2 had a legitimate interest to protect when communicating with HKJC, logically and naturally HKJC would have a corresponding interest to receive such communication. It is not the sort of gossips that HKJC might or might not wish to know. HKJC was induced to engage a contractor (i.e. P2) using confidential and infringing materials derived from D2 without the latter’s consent. As said above, such information might be used at the Club’s venue for its functions or even for use of its members. It is a serious matter which may attract serious legal consequences on the part of HKJC or its members. HKJC did realize the problem and thus it withheld further co-operation with P2.

162.  Second, HKJC had all along thought P1 being connected with FotoWe. They in fact did not expect P1 would register with it a new company. At trial, Theresia testified to the effect that it was not until some time after receipt of the 1^st Letter that she realized P2 a brand new company. This surprised her and she also thought that a problem.

163.  Third, this Court does not find D1 and D2 having abused the situation for its own benefit. What Ds did was for the sole and dominant purpose (and this Court so finds) of protecting D2’s own interest. The fact that D2 stated in the 1^st Letter some particulars about D2’s FotoWe business did not add anything in support of malice[167]. In the Court’s view, it is for the purpose of clarifying misunderstanding, if any, that HKJC might have. It is not for enticing away business but for clarification. Obviously D1 was angry. However, she wanted to stop Ps from further hurting D2’s interest. This Count finds there being no intention on the part of D1 and/or D2 to injure P1 and/or P2. The letters were issued out of good faith for protection of D2’s legitimate interest. D2 was not jealous of Ps’ succeeding in becoming a HKJC’s registered contractor as alleged. This Court did not see there is any malice as contended by Ps.

Conclusion on Ps’ Claim

164.  By reasons of the above, Ps’ claim on the 3 causes of action must fail. Of the 3 letters issued, only the 2^nd and 3^rd Letter are defamatory. However, the Ds can successfully establish the defences of justification and qualified privilege. The statements in question were not false. They are as a matter of fact substantially true. Neither were they published maliciously. There is no intention to injure anyone or any business. The alternative claim of malicious falsehood must also fail. There is simply no subsisting valid contract between P2 and HKJC. Ps’ claim of inducing breach of contract must fail.

Ds’ Claims of $5,000 for conversion & infringement of copyright

165.  As discussed above[168], the Ps are liable to D2 for conversion of the green file and breach of copyright. In fact, Ps are also liable to D2 for use of its confidential information. Ds admitted that they had suffered no financial losses but are not sure whether Ps had any financial gain[169]. As set out in [25] above, Ds’ claim nominal damages of $2,500 for each of Ps’ breach under the heads of (i) using the green file and (ii) breach of CO by, inter alia, dealing with, copying and using the photo frames, frame layout and the rate card the copyright of which belongs to D2, though Mr Ho made it clear Ds would not quarrel even if the nominal damage is fixed at $1 for each.

166.  The nominal damage for conversion of the green file is pitched on behalf of Ds at $2,500. The rationale, according to Mr Ho’s closing submission, is this[170]. Based on Ps’ evidence P2’s gross profit was HK$5,000 for its last order. Further, based on P1’s 1^st co-operation proposal, the costs of operating a photo booth was HK$2,000 and that for referral HK$2,000. Based on these figures the Ds came a nominal figure of HK$2,500.

167.  The submission is difficult to understand. This Court has 2 observations. First, there is no submission by Mr Ho as to the proper measure of damage for conversion in situation like the present one. Second, the proposed figures HK$2,500 or HK$1,000 are arbitrary, and is not supported by Wrotham Park Estate Co Ltd v Parkside Homes[171] referred to by Mr Ho. That case gives no guidance as to how HK$2,500 is to be arrived.

168.  As discussed above, P1 and P2 copied the photo frame, frame layout and particularly rate card and had caused the infringing copies to be sent to Cindy, D2’s friend, in or around 25 July 2013[172]. In respect of the rate card, Flora had admitted P2’s was identical to that of D2 except the logo. There is no doubt that such card was designed by her as D2’s employee. The author of the typographical arrangement of the rate card is D2. The copyright in it is owned by D2. Further the photo frame layout was admittedly copied from D2 who said it obtained them by paying a fee. The designed frame was copied and modified from those obtained from D2. There is obvious breach of copyright.

169.  The alleged basis of D2’s copyright damage being HK$2,500 is similar to that for conversion and is not understood. Only nominal damage can be established. In the circumstances, this Court will only award nominal damages of HK$1 against each of P1 and P2 in favour of D2 for both the conversion and copyright claim.

Ps’ claim for damages

170.  Although it will be unnecessary for this Court to deal with the damages claimed by Ps, this Court would like to comment briefly on the quantum claimed, in order to high-light how unreasonable and arbitrary it is pitched.

171.  The factual basis relied on by the Ps to justify the damage claimed was set out in [55] to [58] of P1-1[173]. The gross loss, as alleged, was said to be in the range of HK$2,475,000 between October 2013 and June 2016. P1 said the gross profit was estimated to be HK$75,000 a month. However, how this figure of HK$75,000 was arrived at was not explained. It was only stated to be based on the gross profit of Ps’ last and the only order which had a gross profit of HK$5,000. It is also said the business registration, the office rental and depreciation for the period were respectively HK$5,200, HK$210,823 and HK$24,750. Mr Chong then, in the statement of damages dated 31 August 2017[174], relying on a number of cases, pitched the general damage and exemplary damage in the region of HK$500,000 for each head.

172.  The above is totally unhelpful if not useless. There is no clue and no basis on how the gross profit of HK$5,000 was arrived at. Neither was there explanation on how the HK$500,000 under each head was arrived at. Further, there is also no reason why the Ps did not take any steps to mitigate its loss but simply sitting on the matter doing absolutely nothing to salvage P2’s business even if Ds were wrong.

173.  In the circumstances, even if this Court were wrong on the liability issue, there is no evidence before this Court to support Ps’ claim of loss.

Injunction

174.  There is no evidence that Ps had made copies of the green file. However, it is a finding of this Court the P1 and P2 possess and use softcopies of photo frames layout, photo frame design, rate card the design and properties of which belonged to D2, and infringing copies the design of which are based on the aforesaid obtained from D2 without its consent. Unless restrained, it is likely Ps would use them for their benefit again. An injunction and a mandatory order for them to be delivered up or destroyed as sought are appropriate.

Disposition

175.  By reasons of the above, Ps’ claim is hereby dismissed. This Court hereby makes the following orders:

i) judgment be entered against each of P1 and P2 for D2 on the counterclaim, and a nominal damage of HK$1 is awarded against each of them jointly and severally;

ii) each of the Plaintiffs be restrained, whether acting by itself, employees, servants, agents, directors or otherwise howsoever from using and dealing with the intellectual properties belonging to D2, including but not limited to the photo frame layout, photo frame design and rate card in any way as well as infringing copies based on the aforesaid; and

iii) the P1 do by herself and the P2 do by its director do deliver up or destroy upon oath all intellectual properties belonging to D2, including but not limited to the photo frame layout, photo frame design and rate card, as well as infringing copies based on the aforesaid for the time being in the respective possession of P1 and P2 without further retention, use or otherwise dealing with them.

176.  There is no reason why the usual rule of costs to follow the event inapplicable. This Court now makes an order nisi that Ps do pay the Ds’ costs of the claim and counterclaim, together with certificate for counsel, to be taxed if not agreed, such costs order nisi to become absolute in 14 days if no application is made to vary the same.

177.  Lastly, I would like to apologize to the parties for the time taken by me to finish the judgment

1^ST SCHEDULE

1^st Letter – 1^st Part

“本公司Love Forever Media. Kingdom Ltd; 地址 G/F 217-219 Jaffe Road Wan Chai，HK， 於 2013 July 26, 收到 貴公司的一封信件，收件人（公司）與本公司名字相似，但本公司與該公司并沒有任何關連，本地址亦與該公司沒有任何關連。就此，本公司已到灣仔警局備案，號碼爲WCH RN13035773。”

Agreed English Translation

“Our Company Love Forever Media Kingdom Ltd; address G/F 217-219 Jaffe Road Wan Chai, HK, on 26 July 2013, received a letter from your Company, the name of the addressee (Company) is similar to our Company's, but our Company has no connection whatsoever with that Company. In this respect, our Company file a report to the Wan Chai Police Station, (Report) number is WCH RN 13035773.”

2^nd SCHEDULE

2^nd Letter (except the last sentence)

“現正式致函投訴一間公司JOY FOREVER MEDIA COMPANY LTD 於早前懷疑利用本公司之地址及盜竊本公司 Photobooth 資料，從而與 貴公司達成合作關係和協議，案件亦已交由香港警方作刑事案件處理，現强烈要求 貴公司停止一切與該公司之合作。并請 貴公司於書面一星期内回覆 貴公司與JOY FOREVER MEDIA COMPANY LTD 過往及將會舉行之活動，以助警方及律師處理，並留作追究JOY FOREVER MEDIA COMPANY LTD 一切之用。”

Agreed English Translation

(We) hereby formally write to lodge a complaint against one Company called Joy Forever Media Company Ltd (which Company) had been suspected to have used our Company's address and stolen our Company's Photobooth materials, reached agreement and entered into contractual relationship with your Company, the case is now being handled by the Hong Kong Police Force for criminal investigation. (We) now strongly demand that your Company should stop all sorts of co-operation with that Company. (We) further ask your Company to reply in writing within one week with the activities that had taken place or will take place as between your Company and Joy Forever Media Company Ltd., in order to assist the Police and lawyer to deal with (the matter), and (such information) shall be reserved for all purposes of claiming Joy Forever Media Company Ltd.

3^rd SCHEDULE

3^rd Letter: Letter to P2 copied to HKJC (Legal Department) (except the last paragraph)

"We act for Ms. Sara Li Oi Lam (in her personal capacity and also acting on behalf of Love Forever (Media) Kingdom Limited) and are instructed that you have, in about late June 2013, without the consent or authorization of our Client, wrongfully misappropriated the contents of (a) a green file belonging to our Client by photocopying the same; and (b) 2 USB Memory Sticks by copying the same; both of which contain photographs, past job record, rate cards, client-details and other confidential data and information designed by and belonging to our Client.

We are further instructed that you have, without the permission or knowledge of our Client, wrongfully utilized the said contents to advertise/promote your business by misleading your potential business partners that you have the relevant experience, expertise and software which you have unlawfully taken away from our Client. In fact, it was by such misrepresentation that you have, inter alia, become a contractor of The Hong Kong Jockey Club Procurement Department to host events for its members. Our Client has already made a report to the Police allegedly for theft.