HCA946/2003
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 946 OF 2003
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BETWEEN
PEI ZHENG MIDDLE SCHOOL
1st Plaintiff
THE BAPTIST CONVENTION OF HONG KONG
2nd Plaintiff
and
CHINA PUI CHING EDUCATIONAL
1st Defendant
LIANG SHANGLI (梁尚立)
2nd Defendant
CPZ EDUCATION NET LIMITED
3rd Defendant
CHINA PEI ZHENG COMMERCIAL
4th Defendant
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Before : Hon Poon J in Court
Date of Hearing : 22 March 2010
Date of Judgment : 30 April 2010
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J U D G M E N T
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A. The parties
1. The培正schools are held in high esteem in the Mainland, Hong Kong and Macau. First established in the late Qing Dynasty, the schools have in the course of its long history produced a host of famous graduates, including Nobel Laureate Professor Daniel Chee Tsui, and world-class mathematician Professor Yau Shing Tung. To the public at large in the Mainland, Hong Kong and Macau, the培正name and its red and blue insignia bearing the name in both Chinese and English and the school motto “至善至正” (“the Insignia”)[1] , are synonymous with educational institutions that provide high quality education.
2. 廣州市培正中學, the 1st plaintiff herein, is a government school. It operates at No. 2 Pei Zheng Road, Dongshan District, Guangzhou (“the Dongshan Premises”). The 2nd plaintiff owns and administers香港培正中學 (Hong Kong Pui Ching Middle School) and 澳門培正中學 (Macau Pui Ching Middle School). The plaintiffs claim to be owners of the goodwill in the培正name and Insignia. They seek redress for the defendants’ wrongful acts of passing off.
3. The 2nd defendant is the main protagonist of the matters complained of. An alumnus of培正, he was the vice-mayor of Guangzhou in the 1980s. He served in the 1st plaintiff’s school board since 1988 and was the chairman since 1996 until late 2001. The plaintiffs’ case is that as a member and chairman of its school board, he at all material times owed a duty of good faith and fidelity to the 1st plaintiff.
4. The 1st defendant was incorporated in Hong Kong on 21 June 2000, the 4th defendant, 2 August 2002. The 2nd defendant is their subscriber and director. The 1st defendant’s case is that it was set up for the purpose of soliciting donations to support all educational institutions within and without China. The plaintiffs’ case is that the 2nd defendant personally directed the 1st defendant’s activities. The 4th defendant’s case is that it was incorporated for the purpose of soliciting donations to support solely the College referred to in Part C below.
5. The 3rd defendant was incorporated in Hong Kong on 26 April 2000. After the commencement of the present action, it changed its name to中國培正教育網有限公司in Chinese and China Pei Zheng Education Net Limited in English, which was further changed to CPZ Education Net Limited subsequently. Ho Hau Wong (“Ho”), also an alumnus of培正, claimed to be its beneficial owners[2] .
6. Most of the background facts are not in dispute. They are summarized in Parts B to E below.
B. The 培正 schools
7. The培正schools had a long and well-documented history[3] .
B.1. Between 1889 and 1949
8. In 1889, several Chinese members of廣州浸信會[4] established培正書院at廣州市德政街. In about 1908, the school was relocated to the Dongshan Premises. Since then, it had been operated by兩廣浸信會總會.
9. In 1912, the Republic of China was formally established. The school changed its name to培正學校. It was then a primary school. In 1916, it began to provide secondary education. In 1928, its name was changed again to私立廣州培正中學校.
10. The period between 1923 and 1938 saw the expansion of the 培正family of schools. 兩廣浸信會總會founded the following schools and operated the same concurrently with私立廣州培正中學校 :
(1) 東山培正小學, a primary school at the Dongshan Premises;
(2) 廣州西關培正小學, a primary school in Xiguan, Guangzhou;
(3) 私立廣州培正中學香港分校, a branch school of私立廣州培正中學校in Hong Kong;
(4) 私立廣州培正中學澳門分校, a branch school of私立廣州培正中學校in Macau.
11. The培正schools suffered setbacks during WWII. But they soon revived after the War.
B.2. Between 1949 and 1984
12. On 1 October 1949, the People’s Republic of China was founded. The fate of the培正schools in Hong Kong and Macau on the one hand and those in the Mainland on the other took different turns.
13. In 1950, 私立廣州培正中學香港分校and私立廣州培正中學澳門分校changed their name to香港培正中學and澳門培正中學respectively.
14. In 1951, the 2nd plaintiff was incorporated under the name United Hong Kong Christian Baptist Churches Association. In 1958, it accepted the transfer of the administration of香港培正中學and澳門培正中學from the respective school boards[5] . It has since operated and administered them to date.
15. In the Mainland, in about 1953, the Central Government promulgated《關於接辦私立中等學校和小學的計劃》. Pursuant to the new policy enshrined in the《計劃》, all private schools were nationalized and turned into public schools to be run by local governments. All the schools owned and administered by兩廣浸信會總會in the Mainland, including the培正schools, were thus nationalized. 私立廣州培正中學校at the Dongshan Premises became a public school and had its name changed to廣州市第七中學.
16. In 1958, 廣州市第七中學moved out of the Dongshan Premises. 廣州師範學院 took up the Premises until 1962 when廣州僑光中學started to operate there. In 1968, 廣州僑光中學changed its name to廣州市人民一中. In 1969, pursuant to the authority’s direction, the name was changed to廣州市第五十七中學, which remained the same until 1984.
B.3. The resumption of the name培正in 1984
17. Within the培正community, the school situated at the Dongshan Premises is regarded as the alma mater , where the glorious history of the培正schools originated.
18. In late 1970s and early 1980s, the培正alumni began to campaign for the resumption of the培正name (復名) for廣州市第五十七中學. The first application for the resumption launched in 1981 was unsuccessful. The alumni persisted. Finally, on 22 December 1984, 廣州市人民政府 (the People’s Government of Guangzhou Municipality) approved their application whereby廣州市第五十七中學officially resumed the name (復名) 廣州市培正中學.
19. The 2nd defendant, then vice-mayor of Guangzhou, was instrumental to the successful resumption of the培正name.
B.4. Since 1984 up to now
20. Since 1984, the 1st plaintiff has earned remarkable achievements[6] . As a testimony to its quality education services, the 1st plaintiff was named by廣東省教育廳 (the Department of Education of Guangdong Province) as “廣東省一級學校” in 1994. The 1st plaintiff and its students have received numerous awards both on the municipal and national level since 1998.
21. Here in Hong Kong, 香港培正中學continue to thrive and is now renowned for providing high quality education to the community.
22. Today, the培正schools in the Mainland, Hong Kong and Macau, as educational institutions, are highly reputable and successful.
C. The College
23. Establishing a non-profit tertiary educational institution within the培正family is the dying wish of the late Mr Wong Kai Ming (“Mr Wong”), principal of培正書院in the 1920s. It earned unanimous support within the培正community.
24. The idea of fulfilling Mr Wong’s dying wish had been floating among the alumni after the resumption of the培正name in 1984. But no concrete proposal was raised until the meeting of the 1st plaintiff’s school board held on 27 July 1992[7] . At the next meeting held on 13 December 1992, the board formally decided to launch the project. Among other things, the board decided that the tertiary institute should be called “培正商學院”[8] . The name eventually adopted was “私立培正商學院”[9] .
25. The project then made good progress. Plans were prepared and tabled for discussions at the school board of the 1st plaintiff and the board of directors of the College. Funds were raised from the alumni[10] . In 1993, the College obtained approval from the authority to recruit students. Classes were conducted at the Dongshan Premises. In the same year, the College signed an agreement with花都市人民政府for building the College campus on a piece of land of some 500 acres situated at花都市. Progress reports were also submitted to the authority for review. The endeavours bore fruit in April 1996 when the Department of Education of Guangdong Province formally approved and registered the College as a tertiary educational institute[11] .
26. The 1st plaintiff had provided great support for the setting up of the College. Its case is that such support was given upon the 2nd defendant’s representation that the College was to be a non-profit making tertiary education institution established to realize the dying wish of Mr Wong. The plaintiffs discovered the falsity of such representation in late 2001 when they learnt that unknown to them, the 2nd defendant had in November 1999 caused the registration of an offending trademark which bore the培正name and resembled the Insignia (“the Mark”)[12] with商標局 (the Trade Mark Bureau) in Beijing. The 1st plaintiff then withdrew its support for the College.
27. To the registration of the Mark and the trademark proceedings ensued I next turn.
D. Registration of the Mark and the trademark proceedings
28. In December 1998, 吳琦, principal of the 1st plaintiff, approached the 2nd defendant, who was then chairman of the 1st plaintiff’s school board, seeking his support for the 1st plaintiff to apply for registration of the培正name and Insignia as trademark. The 2nd defendant refused. In December 1999, 吳琦made the request again but was likewise turned down by the 2nd defendant.
29. Unknown to the 1st plaintiff, the 2nd defendant had in fact earlier caused the College to apply to the Trade Mark Bureau for registration of the Mark. The application was granted on 14 November 1999.
30. On 14 May 2001, the College assigned the Mark to the 1st defendant with the approval of the Bureau.
31. When the plaintiffs found out the registration of the Mark, the培正community was outraged. Representatives of the plaintiffs and some of the alumni tried to sort out the matter with the 2nd defendant amicably but to no avail. In June 2002, the 1st plaintiff applied to the Trade Mark Bureau to cancel the registration.
32. On 14 January 2004, while the 1st plaintiff’s application was still pending, the 1st defendant re-assigned the Mark to the College.
33. In August 2007, the Trade Mark Bureau allowed the 1st plaintiff’s application and cancelled the registration of the Mark. In September 2007, the College applied to北京市第一中級人民法院 (the Beijing 1st Intermediary People’s Court) against the Bureau’s decision. On 20 March 2008, the Intermediary Peoples’ Court dismissed the application. Upon further appeal by the College, 北京市高級人民法院 (the Beijing Higher People’s Court) confirmed the Intermediary Peoples’ Court’s decision on 20 March 2009. It is the plaintiffs’ case that the decision of the Higher People’s Court is final[13] .
34. At the trial, Mr Pao, counsel for the plaintiffs, updated the court on the latest development of the trademark proceedings. He told me that the College has recently applied to the Beijing Higher People’s Court for再審 (retrial) of the case but the result is yet unknown. It, however, remains the plaintiffs’ case that the decision of the Higher People’s Court is final. The chance of the Higher People’s Court ordering a retrial is practically nil because its decision is final and the College has in any event failed to demonstrate that it has any meritorious ground for doing so[14] .
E. the licence
35. The 1st defendant had used the培正name shortly before the College assigned the Mark to it.
36. On 25 April 2001, it granted a licence (“the Licence”) to廣州捷駿房地產開發有限公司 (Guangzhou Jiejun Real Estate Development Company Limited), a subsidiary of Henderson China Holdings Limited, to use the培正name as part of the name of寶華培正小學 (“the Primary School”), a public primary school located in the housing estate恆寶華庭developed by Guangzhou Jiejun in荔灣of Guangzhou (“the Housing Estate”).
37. This completes the narrative of the background circumstances.
F. A synopsis of the parties’ pleaded case
38. Before the commencement of the action, the plaintiffs did try to resolve the matter with the defendant and Ho. But neither the 2nd defendant nor Ho gave any positive response to the plaintiffs’ requests.
39. The plaintiffs then commenced the present action in March 2003.
F.1. The plaintiffs’ complaints
40. The plaintiffs complained that the defendants had prior to the issue of the writ committed various wrongful acts :
(1) The 1st and 2nd defendants had misappropriated the English and Chinese name培正and the Insignia for the exclusive use of the 1st defendant as a registered trademark in the form of the Mark in the Mainland.
(2) The defendants had passed off 1st , 3rd and 4th defendants as establishments associated or in some way connected with the plaintiffs.
(3) The 1st and 2nd defendants had, through the supply of instruments of deception, passed off and/or attempted to pass off and/or procuring the passing off of schools in the Mainland not being schools or educational institutions established by the plaintiffs as those of the plaintiffs or in some way approved or endorsed by the plaintiffs, including the College and the Primary School.
(4) The 1st defendant had on or about 21 December 2001 published an untrue statement in the Sing Pao, a widely circulated Chinese newspaper (“the Statement”) that it had provided services and support to the 1st plaintiff and香港培正中學administered by the 2nd plaintiff thereby misleading the public into believing that the 1st defendant was associated or in some way connected with the plaintiffs.
These wrongful acts were calculated by the defendants to deceive and cause confusion to lead members of the public in the Mainland and Hong Kong into the mistaken belief that schools educational institutions or other educational providers bearing the name培正and the Insignia established by or the establishment of which was procured by the defendants are those of the plaintiffs or in some way approved or endorsed by the plaintiffs.
41. The plaintiffs further pleaded that they have suffered loss and damage including the degradation of the培正name and the Insignia and the unjustifiable restraint or hindrance placed upon any future use by them of the培正name and the Insignia in relation to new schools and colleges in the Mainland as a consequence of the wrongful monopoly obtained by the 1st plaintiff, presumably because of the Mark.
42. As against the 2nd defendant, the plaintiffs pleaded that he is also liable for breaching his duty of good faith and fidelity to the 1st plaintiff by committing the wrongful acts complained of.
F.2. Defence raised by the 1st , 2nd and 4th defendants
43. The 3rd defendant had not filed any defence[15] .
44. The 1st , 2nd and 4th defendants raised a number of points in their joint defence.
45. They first disputed the plaintiffs as owners of the goodwill. They further alleged that the College had since 1993 acquired a reputation and goodwill in it own right with the support of the 1st plaintiff.
46. They alleged that as the owner of the Mark, the College could assign the Mark to the 1st defendant. And as assignee, the 1st defendant was entitled to grant the licence, which is gratuitous to the Primary School to use the培正name.
47. Further, they pleaded that the plaintiffs were estopped from preventing the 1st , 2nd and 4th defendants from using the name培正, the Mark and the insignia used by the College[16] . Since 1985, the defendants started campaigns in Hong Kong and elsewhere for raising funds under the name培正for the plaintiffs and they accepted the same. The plaintiffs had not raised any objection to the defendants’ use of the培正name for the purpose of soliciting donations. The defendants had by the campaigns acquired a reputation and known to the public in Hong Kong and overseas as the channels through which donations might be made to the plaintiffs and the College.
48. They also pleaded that the 2nd defendant did not owe any duty of good faith and fidelity to the 1st plaintiff.
49. Finally, the acts complained of were not actionable under the PRC law. They were hence not actionable in Hong Kong either.
G. the trial
50. The defendants were all absent at the trial. The plaintiffs proceeded to prove their claims[17] .
G.1. Factual witnesses
51. The plaintiffs called 15 factual witnesses :
(1) 李旭, the official representative of廣州市智成迅達知識產權代理有限公司, a commercial investigations company.
(2) 朱素蘭, formerly the 1st plaintiff’s deputy principal and member and secretary of its school board.
(3) 吳琦, former principal of the 1st plaintiff.
(4) 陳榮炎, an alumnus of the 1st plaintiff.
(5) Koo Ming Kown, the former vice chairman of The Hong Kong Pui Ching Alumni.
(6) 雷禮和, an alumnus of 香港培正中學.
(7) 曾家石, an executive officer of the 2nd plaintiff.
(8) Clement Young Kwok Hung, 校監 (supervisor) of香港培正中學and香港培正小學, and a former member of the school board of the College.
(9) 陸志中, an alumnus of香港培正中學.
(10) 謝順佳, also an alumnus of香港培正中學.
(11) Lee See Yuen, the principal of香港培正小學and a former member of the school board of the College.
(12) Johnny Law Chi Keung, 校董 (school manager) of香港培正中學and香港培正小學.
(13) Yip Wai Hong, an alumnus of the 1st plaintiff and澳門培正小學.
(14) 麥思明, an alumnus of the 1st plaintiff.
(15) 陳之望, a member of the 2nd plaintiff’s中小學及持續教育部校董會.
52. The plaintiffs further relied on the affidavits of陳衡鍔, 黃汝光and Maurice J Anderson dated 16 August 2005, 13 May 2007 and 15 May 2007 respectively. 陳衡鍔was an alumnus, a former teacher and secretary and member of the 1st plaintiff’s school board and a member of the board of directors of the College. 黃汝光was Mr Wong’s nephew. Maurice J Anderson was a former council member of the 2nd plaintiff. These gentlemen had all passed away recently.
G.2. Expert on the PRC law
53. The plaintiffs called Dr Lin Feng as their PRC law expert. Dr Lin is a barrister and an associate professor of the Law School, City University and the course leader of the University’s中國法與比較法研究中心and Doctor of Juridical Science (JSD) Programme.
G.3. Accepting their evidence
54. Having examined the evidence adduced by the plaintiffs carefully, I find them consistent, truthful and reliable. I accept them in full.
H. BASIC PRINCIPLES
55. I next consider if the plaintiffs have made out their claims. I preface the discussions with a summary of the basic principles.
56. A plaintiff has to prove three essential elements for passing off : goodwill, misrepresentation and damages. In Reckitt & Colman Products Ltd v Borden Inc & Ors [1990] RPC 341[18] , Lord Oliver expounded the law at p. 406 :
“… The law of passing off can be summarised in one short general proposition — no man may pass off his goods as those of another. More specifically, it may be expressed in terms of the elements which the plaintiff in such an action has to prove in order to succeed. These are three in number. First, he must establish a goodwill or reputation attached to the goods or services which he supplies in the mind of the purchasing public by association with the identifying ‘get-up’ (whether it consists simply of a brand name or a trade description, or the individual features of labelling or packaging) under which his particular goods or services are offered to the public, such that the get-up is recognised by the public as distinctive specifically of the plaintiff’s goods or services. Secondly, he must demonstrate a misrepresentation by the defendant to the public (whether or not intentional) leading or likely to lead the public to believe that goods or services offered by him are the goods or services of the plaintiff. Whether the public is aware of the plaintiff’s identity as the manufacturer or supplier of the goods or services is immaterial, as long as they are identified with a particular source which is in fact the plaintiff. For example, if the public is accustomed to rely upon a particular brand name in purchasing goods of a particular description, it matters not at all that there is little or no public awareness of the identity of the proprietor of the brand name. Thirdly, he must demonstrate that he suffers or, in a quiatimet action that he is likely to suffer, damage by reason of the erroneous belief engendered by the defendant’s misrepresentation that the source of the defendant’s goods or services is the same as the source of those offered by the plaintiff.”
57. Some of the wrongful acts complained of took place in the Mainland. To make good their claims based on those tortious acts, the plaintiffs need to satisfy the double actionability rule. In Shanghai Reeferco Container Co. Ltd v Waggonbau Elze GmbH & Co. Besitz KG [2005] 2 HKLRD 711, I stated the rule at p. 721A-D thus :
“(4) The double actionability rule
27. In my view, the principle derived from the Egg Fillers & Containers (Aust) Pty Ltd v Holed-Tite Packing Corp & Another (1933) 51 RPC 9 case, amplified by the Norbert Steinhardt & Son Ltd v Meth & Another (1961) 105 CLR 440 case and approved in the two subsequent English cases[19] is in substance the application or extension of the double actionability rule on tort to cases involving intellectual property rights.
28. The double actionability rule states, as a general rule, that an act done in Country A is a tort and actionable as such in Country B (lex fori ), only if it is both : (a) actionable as a tort according to the law of Country B, or in other words is an act which, if done in Country B, would be a tort; and (b) actionable according to the law of Country A where it was done (lex loci delicti ). See generally Boys v Chaplin [1971] AC 356 at p. 374. …”
58. With these basic principles in mind, I now look at each of the three essential elements in greater detail.
I. the 1st element – Goodwill
59. Goodwill is a legal right of property associated with every business. It is “the attractive force which brings in custom” : Inland Revenue Commissioners v Muller & Co’s Margarine Ltd [1901] AC 217, per Lord Macnaghten at p. 224.
60. In order to succeed in an action for passing off in Hong Kong, a plaintiff must show that he has a goodwill here : See Wadlow, The Law of Passing-Off , 3rd Edn., para. 3-68 at p. 155; Halsbury’s Laws of Hong Kong , 2005 Edn., Vol. 15(2), para. 225.037 at p. 50. This requirement is of particular significance to the 1st plaintiff, a school operating at Guangzhou.
61. A full description of the factual circumstances giving rise to the plaintiffs’ goodwill in the培正name and Insignia can be found in the evidence of朱素蘭and陳衡鍔 (relating to the 1st plaintiff) and曾家石, Johnny Law Chi Keung, 陳之望, 黃汝光 and Maurice J Anderson (relating to the 2nd plaintiff). For present purposes, the summary of the major events as set out in Part B above is sufficient.
62. As regards the 2nd plaintiff, a local claimant, the position is straightforward. Historically, the goodwill in the培正name and Insignia was first created in the Mainland when培正書院was set up in 1889. When私立廣州培正中學香港分校was established in Hong Kong 1933, the goodwill in the培正name and Insignia extended to Hong Kong. Since 1951, the 2nd plaintiff, as the owner and administrator of培正schools in Hong Kong, has been responsible for the quality of the educational services provided through the schools. By providing such services, the 2nd plaintiff has continued to build up the goodwill in the培正name and Insignia in Hong Kong, which enures for its benefit. Plainly, the 2nd plaintiff has the requisites goodwill in Hong Kong to sue the defendants for passing off.
63. As regards the 1st plaintiff, a foreign claimant, strictly the question is whether it has goodwill in the培正name and Insignia in Hong Kong. To answer that question, it is however necessary to first consider its legal position in the Mainland. Dr Lin dealt with that aspect in his 1st opinion dated 16 November 2007 thus.
64. Dr Lin first pointed out that there existed no specific law to protect the goodwill in a business in the Mainland under the reign of the Qing Dynasty, the Republic of China and the People’s Republic of China until 1986. In 1986,《中華人民共和國民法通則》was promulgated. Under《民法通則》, 「名譽權」is protected. And as an important component of a legal person’s「法人名譽權」, 商譽 (goodwill) in a business is also protected. By virtue of the最高人民法院關於貫徹執行《中華人民共和國民法通則》若干問題的意見(試行)第 196 條, 《民法通則》applied to civil acts committed before 1 January 1987. Thus although no law specifically existed before 1986 to protect goodwill, a plaintiff can still resort to《民法通則》if necessary.
65. Dr Lin then said that factually, the goodwill in the培正name and Insignia had come into existence since 1889. When廣州培正中學was nationalised in 1953, the goodwill was not extinguished. It survived. But there was no載體 (carrier) to continue with and develop the goodwill. Given its historical and sentimental value, the Dongshan Premises was widely recognised as the carrier for the name培正. That was the reason why廣州市人民政府decided to allow廣州市第五十七中學situated at the Dongshan Premises to resume the培正name in 1984. 廣州市人民政府officially recognised that廣州市培正中學as the continuation of the original培正school at the Dongshan Premises. 廣州市培正中學has since become the carrier to continue with and develop in the Mainland the original goodwill in the培正name and Insignia, together with the goodwill developed by the 2nd plaintiff in Hong Kong and Macau. In short, the residual goodwill in the培正name and Insignia in the Mainland has since 1984 been revived and re-vested with the 1st plaintiff. The 1st plaintiff is the owner of the goodwill. By virtue of《民法通則》, the 1st plaintiff’s goodwill is and was at all material times protected by the law in the Mainland.
66. Now the 2nd plaintiff has all along regarded the alma mater at the Dongshan Premises as the very source of the goodwill in the培正name and Insignia in Hong Kong. The goodwill here, as extension of the goodwill originated in the Mainland, cannot be separated from the goodwill enjoyed by the alma mater there. The alma mater owns and shares with the 2nd plaintiff its goodwill in Hong Kong. So after the resumption of the培正name in 1984, the 1st plaintiff as the official continuation of the alma mater , has the same goodwill as the 2nd plaintiff does in Hong Kong. The 1st plaintiff can also sue the defendants for passing off here.
J. THE 2nd ELEMENT – MISREPRESENTATIONS
J.1. In Hong Kong
67. The matters complained of that took place in Hong Kong are the incorporation of the corporate defendants and the publication of the Statement.
68. The incorporation of the 1st , 3rd and 4th defendants with names bearing the reference “培正” and “教育” in Chinese and “Pui Ching”, “Pei Zheng” and “Education” in English plainly constitutes a misrepresentation to the public that they are associated or connected with the plaintiffs for the purpose of providing education services. In fact, 陸志中and謝順佳said that they were so misled. The corporate defendants are liable for passing off : see Wadlow , supra , para. 7-13 at pp. 434 and 435.
69. Koo Ming Kwon dealt with the circumstances leading to the publication of the Statement by the 1st defendant on 21 December 2001 in his witness statement thus. The Hong Kong Pui Ching Alumni reported in Issue 162 of its Newsletter (a) the unauthorised registration of the Mark by the College and (b) the incorporation of the 1st and 3rd defendants which had no connections with the培正schools. On 21 December 2001, the 1st defendant published the Statement in Sing Pao, which read :
“ 熱烈歡迎
香港特別行政區全國政協委員
視察私立培正商學院
培正教育基金有限公司致敬
培正教育基金有限公司是世界各地熱心培正
教育事業之校友及社會賢達所創立，專門服務及支持
培正教育事業之各項活動。曾服務及支持過：
花都培正商學院、香港培正中學、廣州培正中學。”
70. What Koo then went on to say can perhaps best sum up the responses that the Statement had provoked :
“35. I was totally baffled by the 1st Defendant’s publication of the Notice. The HK Pui Ching Alumni has tried to clarify the confusion caused by the 1st Defendant and the College through the Newsletter. However, shortly after the issue of the Newsletter and within such a short span of time, the 1st Defendant published the Notice giving the public a false impression that it had supported the operation of Pui Ching Group of Schools. I was unable to fathom the intention of the 1st Defendant other than to confuse the public into believing that the 1st Defendant has some sort of connection with the Pui Ching Group of Schools or that any donation made to the 1st Defendant will be passed to the Pui Ching Group of Schools despite the Hong Kong Alumni’s attempt to clarify that the 1st Defendant was not part of the Pui Ching family. Further, by making reference to the College in the Notice, the 1st Defendant also gave the wrong impression to the public that the College was connected with Hong Kong Pui Ching and the 1st Plaintiff. It is my understanding that none of the Pui Ching Group of Schools has been financially supported by the 1st Defendant or the College.
36. I was also infuriated by the 1st Defendant’s action in publishing the Notice because for those members of the public who were not privy to the background of the matter, namely that the 1st Defendant and the College were not related to the Pui Ching Group of Schools, it was highly likely that they would falsely associate the 1st Defendant and the College as belonging to the Pui Ching Groups of Schools/family.”
71. Obviously, the Statement falsely misled the public into believing that the 1st defendant was associated or connected with the plaintiffs. The 1st defendant is liable.
J.2. In the Mainland
72. The wrongful acts that took place in the Mainland are the continuous operation of the College after the 1st plaintiff withdrew the support in late 2001, the registration of the Mark and the granting of the Licence. For these matters, the double actionability rule applies.
73. It is not disputed that the College was initially set up with the support of the 1st plaintiff. In paras. 18-27 of his affirmation, 陳衡鍔detailed the circumstances leading to the setting up of the College. 陳榮炎also gave evidence on the same subject matter. Two major points arose from their evidence. First, all those involved in the setting up of the College, including the 2nd defendant and other members of the 1st plaintiff’s school board and the培正alumni, understood and agreed that the College would be a non-profit making tertiary education institution to realize the dying wish of Mr Wong. Second, the 2nd defendant had at all material times purportedly acted upon that agreement and understanding. He had by his conduct represented to the 1st plaintiff that the College, when formed, would be such an educational institution.
74. 陳衡鍔, 陳榮炎, Lee See Yuen and Clement Young Kwok Hung had at all material times served on the College’s board of directors but had already resigned. They described how the College was run in reality. In gist, contrary to the initial understanding and agreement supporting the setting up of the College, the 2nd defendant, together with his son梁普建, treated and ran the College as his own business. The 2nd defendant also used the apparent association of the College with the培正family of schools to solicit support from the alumni and others, including donations. He had caused the incorporation of the 1st and 4th defendants for the purpose of soliciting financial support for the College. When the 1st plaintiff found out the falsity of the 2nd defendant’s representation in late 2001, it immediately withdrew its support. The College had since been “disowned” by the 1st plaintiff and excluded from the培正family of schools. The 2nd defendant had also caused the College to distance itself from the培正family of schools. In the past, the College used to describe in its school brochures its association with the 1st plaintiff and the培正alumni. Such description was removed in 2002. But in its 《隆重紀念培正商學院建校11 周年暨培正創建115 周年》特刊published in 2005, the College again reasserted its relationship with the 1st plaintiff and the培正alumni.
75. Yip Wai Hong referred to an interview that the 2nd defendant gave on ATV in 2002 to show that he had regarded the College as his own business. In that interview, the 2nd defendant was described as the one who initiated the idea of setting up the College and that the College was formed through his endeavours. Towards the end of the program, the interviewer said, presumably with the 2nd defendant’s endorsement, that he would leave the management of the College to his son after his retirement when he reached 84.
76. Dr Lin said that under the PRC law (lex loci delicti ), the College is not in the circumstances described above entitled to use the培正name and its insignia. Such conduct has caused damage to the 1st plaintiff’s goodwill in the培正name and Insignia in the Mainland. Under Hong Kong law (lex fori ), the position may be analysed thus. The 1st plaintiff granted the College was a licence to use the培正name when it was first set up. The College was then treated as a member of the培正family. As a member of the培正family, the College would not generate any independent goodwill. In 2001, the licence was terminated and the College had since ceased to be a member of the培正family. After cessation of its membership, the College does not have any right to use the培正name. See Wadlow , ibid , Dawnay Day & Co. Ltd v Cantor Fitzgerald International [2000] RPC 669. The double actionability rule is therefore satisfied.
77. Plainly, the continuous operation of the College with its name bearing the reference培正and its insignia since late 2001 constitutes a misrepresentation that it is associated or connected with the 1st plaintiff. In fact, as evident from the《特刊》published in 2005, the College continued to mislead the public that it was associated or connected with the 1st plaintiff. The 2nd defendant, who is and was at all material times in charge of and responsible for the College’s operation with full knowledge that it is wrongful to do so, is liable. So are the 1st and 4th defendants, which were formed and are being run by the 2nd defendant with the main purpose of supporting the College.
78. Inferentially, it is beyond doubt that the intention of registering the Mark by the College in November 1999 was to monopolize the培正name for the field of education services in the Mainland. Understandably, many in the培正family were infuriated. At the 1st plaintiff’s school board meeting held on 8 December 2001, members of the board including雷禮和, 吳琦and 陳榮炎confronted the 2nd defendant. After the meeting, further discussions were made with the 2nd defendant to see if the matter could be resolved amicably. These efforts had unfortunately failed.
79. According to Dr Lin, under the PRC law (lex loci delicti ), the registration of the Mark was wrongful. Had it been committed in Hong Kong (lex fori ), it was also unlawful. The double actionability rule is satisfied. I note that the registration of the Mark had already been cancelled after the commencement of the proceedings. But it does not detract from the fact that at the time of the writ it constituted an actionable misrepresentation in passing off. (And it would appear from the recent development in the trademark proceedings, the College still wishes to assert, though wrongfully, that it is the owner of the Mark.) The 1st defendant who was the owner of the Mark at the time of the writ is liable. The 2nd defendant who had caused the registration of the Mark by the College is also liable.
80. The 1st defendant also purported to use the培正name as if it was the owner by granting the Licence. The plaintiffs carried out investigations, through廣州市智成迅達知識產權代理有限公司, as to how the培正name was used in connection with the Housing Estate and the Primary School. 李旭’s evidence is this.
81. The investigations were carried out by張勇, who had left employment in 2005. On 13 February 2003, the investigator went to the sales office of the Housing Estate. A sales representative gave him floor plans of the Housing Estate. At the back of the floor plans, the words “創建中之寶華培正小學” and a red and blue insignia resembling the Insignia with the motto “至善至正” appeared. The representative told the investigator that the Primary School is the “配套小學” of the Housing Estate. Children of the Housing Estate’s residents have priority to enrol as students. The investigator then went to the construction site. There, another sales representative told him that the Primary School was set up with the developer’s financial assistance. The Primary School helped promote the sale of units in the Housing Estate. Children of the residents, if enrolled with the School, were entitled to subsidy. On 17 February 2003, the investigator visited the Primary School. At its entrance is the name of the School and its red and blue insignia with the motto “至善可正”. The investigator was received by the deputy principal. The vice principal told him that the Primary School was directly authorized to be set up by an entity in Hong Kong, whose name she refused to disclose. She was said that the Primary School and the primary school at the Dongshan Premises were平級學校. She further said that what the sales representatives told the investigator concerning the Primary School was mere promotional tactics by the developer. Children of the residents of the Housing Estate did not enjoy priority for enrolment or subsidy. Subsequently, the investigator went to the sales office of the Housing Estate again. Another representative told him that the 1st defendant invested in both the Primary School and the College. In short, the investigations showed that Primary School with the培正name and logo resembling the Insignia had been used to promote the Housing Estate.
82. What revealed in the investigations showed that the Licence had enabled the Primary School to misrepresent to the public that it is connected or associated with the 1st plaintiff. The Primary School, which was being misrepresented in such a way, was used as a selling point to promote the Housing Estate. Dr Lin opined that it is wrongful under the PRC law (lex loci delicti ). It would likewise be wrongful under Hong Kong Law (lex fori ). In particular, the Licence would constitute a supply of an instrument of deception to enable the Primary School to wrongfully use the培正name to mislead the public that it is connected or associated with the 1st plaintiff. The double actionability rule is satisfied. The 1st defendant is liable.
K. the 3rd element – Damage
83. It is well settled that the claimant in a passing off action does not have to prove that he has actually suffered damage by loss of business or in any other way. A probability of damage is enough, but the actual or probable damage to him in his trade or business, that is to say, damage to the goodwill in respect of that trade or business. See Wadlow , supra , paras. 4-11 at pp. 246-247. The defendants’ wrongful conducts had obviously caused damage to the plaintiffs’ goodwill in the培正name and Insignia.
84. All the three essential elements are satisfied. I find that the defendants are all liable for passing off.
L. THE 2nd DEFENDANT’S LIABILITY AS MEMBER OF THE SCHOOL BOARD
85. I now come to the 1st plaintiff’s claim against the 2nd defendant for breach of his duty of fidelity as member and chairman of its school board. Here the double actionability rule applies.
86. 朱素蘭and陳衡鍔described how the school board was set up thus. After the resumption of the培正name, a group of alumni including the 2nd defendant set up the school board in February 1988 for the purpose of promoting the development of the 1st plaintiff to become a school of the highest calibre by soliciting and engaging the support of培正alumni everywhere. According to 朱素蘭, 吳琦 and 陳衡鍔, although the school board was an advisory body, members have always been held in high esteem. The majority of their advice has invariably been followed by the 1st plaintiff. Dr Lin said that under the PRC law (lex loci delicti ), the 2nd defendant as member and chairman of the school board owed a duty of integrity to the 1st plaintiff. He had acted in breach of such duty by committing the various acts complained of. Under Hong Kong law (lex fori ), he would have owed a duty of fidelity to act in the best interest of the 1st plaintiff and had breached in breach of such duty by reason of the wrongful acts in question.
87. I find that the 2nd defendant is liable to the 1st plaintiff for breach of his duty of fidelity as member and chairman of its school board by committing the wrongful acts complained of.
M. Estoppel
88. For completeness, I would deal with the defence of estoppel very briefly. The burden rests on the 1st , 2nd and 4th defendants to make good the defence on estoppel. As they were absent at the trial, they have adduced no evidence in support. I will dismiss that plea on this ground alone.
89. In any event, I do not think the evidence before me is capable of supporting any estoppel as alleged. Central to the conduct giving rise to the alleged estoppel is the acceptance of donations by way of two cheques dated 24 April 2001 for HK$161,000 and HK$16,100 by the Hong Kong 培正schools. The two cheques were drawn by the 1st defendant and were accompanied by a cover letter with the 1st defendant’s letterhead signed by the 2nd defendant, stating that “該款是何金容女士慈善金指示本基金會損贈給貴校”. The donations did not come from the 1st defendant. It came from何金容女士慈善金, a trust fund managed by Ho, who, according to Lee See Yuen, Clement Young Kwok Hung and Johnny Law Chi Keung, had in the past made similar donations to the培正schools using his personal cheques or cheques of his various companies. The plaintiffs treated the donations by way of the two cheques as Ho’s. See the letter of thanks issued by Pui Ching Primary School to Ho dated 27 July 2001. Further, the plaintiffs learnt of the 1st defendant’s existence only because of the two cheques. Almost immediately thereafter, they had demanded the 2nd defendant to change the 1st defendant’s name. No estoppel could have arisen as alleged.
N. ORDERS
90. For the above reasons, I will enter judgment for the plaintiffs for :
(1) An injunction to restrain the defendants and each of them, in the case of the 1st , 3rd and 4th defendants whether acting by themselves, their respective directors, officers, servants or agents or any of them or otherwise howsoever, and in the case of the 2nd defendant, whether acting by himself, his servants or agents or any of them or otherwise howsoever from doing the following acts or any of them :-
(a) passing off any service, company, school and/or educational institution in the Mainland, Hong Kong or elsewhere not those of, or associated or connected with the plaintiffs as and for the service, company, school and/or educational institution of the plaintiffs or associated or in some way connected with the plaintiffs by the use in relation therewith the name“培正”and/or the Insignia;
(b) attempting to commit the acts in (a) above or any of them; and
(c) authorizing, approving, directing, causing, enabling, assisting or procuring others to commit the acts in (a) above or any of them.
(2) An Order that the defendants do within 21 days from the date of judgment cause or procure the change of the 1st , 3rd and 4th defendants’ name registered at the Hong Kong Companies Registry to comply with the above injunction.
(3) An Order that the defendants do within 21 days from the date of judgment deliver up all items in the possession, power, custody or control of the defendants or any of them, the use of which by the defendants or any of them would offend against the above injunction.
(4) An enquiry as to damages, or alternatively damages or at the plaintiffs’ option an account of profits in respect of the wrongful acts of the defendants or each of them.
(5) An Order for payment of all sums found due with interest thereon.
(6) The defendants do within 21 days from the date of judgment provide discovery upon oath of all matters relating to the foregoing.
91. Costs should follow the event. The plaintiffs shall have costs against the defendants jointly and severally for the costs of the action, including all costs reserved, to be taxed if not agreed.
(J. Poon)
Judge of the Court of First Instance
Mr Felix H. Pao, instructed by Messrs JSM, for the Plaintiffs
The 1st Defendant, in person, absent
The 2nd Defendant, in person, absent
The 3rd Defendant, in person, absent
The 4th Defendant, in person, absent
[1] As appeared at Annex 1.
[2] See his affirmation filed on 11 December 2005.
[3] See, for example, 《香港培正中學創校70周年紀念特刊》, 《培正中學百周年紀念特刊》, 《培正中學建校百週年紀念專刊》and《培正一百一十周年紀念特刊》.
[4] They included馮景謙, 余德寬, 廖德山, 歐陽康 and李濟良.
[5] See the minutes of the 8th to 10th meeting of香港浸聯會理事會dated 8 October, 5 November and 3 December 1957 respectively.
[6] For details, see paras.11 to 13 of the witness statement of 朱素蘭, deputy principal of the 1st plaintiff, dated 19 November 2005.
[7] See item 2 of the minutes of that meeting.
[8] See para.3 of the minutes of that meeting.
[9] It further changed its name to “廣東培正學校” in or about 2005.
[10] The target was HK$30 million according to para.1 of the minutes of the College’s board meeting dated 4 October 1993.
[11] See《關於成立私立培正商學院的通知》dated 15 April 1996 issued by the Department.
[12] As appeared at Annex 2.
[13] See the 2nd opinion of their expert on PRC law, Dr Lin Feng, dated 28 October 2009.
[14] See the 3rd opinion of Dr Lin Feng dated 3 March 2010.
[15] By order dated 3 October 2003, the plaintiffs’ application for default judgment against the 3rd defendant was adjourned until trial.
[16] The insignia used by the College can be found at Annex 3.
[17] See Order 35, rule 1 of the Rules of the High Court and Hong Kong Civil Procedure 2010 , Vol.1 at para.35/1/1 at p.704.
[18] Commonly referred to as the Jif Lemon case.
[19] They are Tyburn Productions Ltd v Conan Doyle [1991] Ch 75 and Pearce v Ove Arup Partnership Ltd & Others [2000] Ch D 403.