ARTCHEER LTD. v. TSUI LING MUI and Another

IN THE COURT OF APPEAL

1995, No. 128
(Civil)

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J U D G M E N T

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Bokhary, J.A. (giving the judgment of the Court):

1. For various reasons, people send flowers to other people. And they use flower shops to do that for them.

2. There seems to be at least two types of flower shop.

3. One is the traditional type such as the shop which the defendants, who are husband and wife, used to run in Wyndham Street: at first under the name of "Ming Kee Flower Shop" and later under the name of "Paris Florist (Ming Kee)". They had been at the same address for many years. And over the years, they had managed to accumulate quite a large number of loyal customers.

4. Nevertheless, there came a time when they could not make any money or very much money. They were hit by rising rent. And acquiring new customers was difficult if not impossible.

5. That difficulty or impossibility was due, it seems, to stiff competition from a newcomer upon the scene, the modern type of flower shop.

6. Each shop of the modern type has a number of outlets, all backed-up by a centralized workshop. These outlets do not only provide flowers. They also provide gifts. While they charge more, they manage to justify their charges in the minds of the public.

7. Under the trade name "Cheers", the plaintiff company operates a chain of such outlets throughout Hong Kong and in certain other parts of the region. It has been doing so since mid-1991.

8. In the past, there had been dealings between the parties in that some of the orders placed with the plaintiff for things like funeral wreaths had been sub-contracted by it to the defendants.

9. Then there came a time when the parties entered into negotiations with a view to the defendants selling their business to the plaintiff. The plaintiff was interested in acquiring the defendants' customer base, which it considered worthwhile to acquire and develop. For their part, it would seem that the defendants wanted out because their rental bill was leaving them with little or no profit.

10. By a deed dated September 19, 1994, the defendants sold their business to the plaintiff for $200,000 with a provision for possible further payments depending on how well the taken-over business did in future.

11. The deed included two-year covenants by the defendants against competition, the solicitation of customers and the enticement of customers.

12. Separately, the plaintiff employed the defendants - the husband as shop manager and the wife as shop assistant - in the taken-over shop. Their employment was to be for two years terminable on three months' notice.

13. For some reason, things did not work out. The defendants soon gave notice; and their employment with the plaintiff ceased on March 18 this year.

14. Since then the defendants have opened a new flower shop of their own. It is in Staunton Street, which is quite close to the old one in Wyndham Street. Its name is Cherrys Flower Gallery (H.K.) The word "Cherrys" is the one given prominence. And it is too much like "Cheers" for the plaintiff's liking.

15. Passing-off is not all that the plaintiff alleges. It also sues on the basis of breach of the covenants mentioned earlier, breach of confidence and conversion.

16. The plaintiff issued its writ on May 5 this year, and at once sought and obtained an Anton Piller Order from Mr Justice Cheung.

17. That Order was directed to searching the Staunton Street premises for certain documents and articles and getting them into the custody of the plaintiff's solicitors. Those documents and articles were ones which the plaintiff said were its but had been taken away by the defendants from Wyndham Street to Staunton Street. As specified in the Anton Piller Order, they are:-

"1. Plaintiff's customer list and records, labels, invoices, order forms and all correspondence between the plaintiff and its customers whether in the name of Cheers or Ming Kee Flower Shop or Paris Florist (Ming Kee).

2. Plaintiff's correspondence with suppliers and related records

3. Plaintiff's correspondence with credit card companies, credit card receipts and related records.

4. Promotional materials of Plaintiff including displays, posters, pictures and transparencies of Plaintiff's products.

5. Interflora certificate in the name of Ming Kee Flower Shop and directory.

6. Various documents including tax file, employees records and approval from Immigration Department for overseas workers in the name of Ming Kee Flower Shop."

18. On the following day, May 6, which was the grand opening of the Staunton Street shop, the Anton Piller Order was executed there.

19. After it had been executed and as the plaintiff's representatives were about to leave the Staunton Street shop, the police arrived: having been summoned by one of the defendants or someone on their side.

20. When they arrived, the police asked questions and got answers.

21. When the search was made, it was largely successful in relation to the things specified in the Anton Piller Order. And not only were those things found but so were other items which the plaintiff says belongs to it. These, as later scheduled to a summons, were as follows:

"1. Message cards in the name of Ming Kee Flower Shop/Paris Florist (Ming Kee).

2. Booklets of delivery notes in the name of Ming Kee Flower Shop/Paris Florist (Ming Kee).

3. Booklets of invoices in the name of Ming Kee Flower Shop/Paris Florist (Ming Kee).

4. Envelopes in the name of Ming Kee Flower Shop/Paris Florist (Ming Kee).

5. Catalogues in the name of Ming Kee Flower Shop/Paris Florist (Ming Kee).

6. Framed pictures of the Plaintiff's production.

7. Credit card slot machines in the name of Ming Kee Flower Shop/Paris Florist (Ming Kee).

8. Chops and stamps of Ming Kee Flower Shop/Paris Florist (Ming Kee).

9. Wooden boxes and acrylic gift boxes of the Plaintiff."

22. When the police asked questions, one of the answers which they got from the plaintiff's representatives took the form of a report that the defendant had stolen the plaintiff's property including those items which we have just mentioned.

23. Eventually, the police left. But they came back four days later. On May 10, they returned to the Staunton Street shop with a search warrant. And after completing their search, they arrested the defendants for theft of the plaintiff's property. The defendants were later that day released on police bail.

24. Two days later, on May 12, the parties were before Mr Justice Rogers on an inter partes basis.

25. Essentially, the plaintiff sought injunctive relief against competition, solicitation and enticement; while the defendants sought the setting aside of the Anton Piller Order seeking that on the basis that it should never have been granted.

26. By his Order made that day, May 12, Mr Justice Rogers granted the injunctive relief; ordered an early trial; made directions to that end; made certain orders in relation to preservation; set aside the Anton Piller Order; ordered an enquiry as to damages but postponed it until after trial; and gave the defendants the costs of the application to set aside the Anton Piller Order.

27. What is now before us is the plaintiff's appeal against so much of Mr Justice Rogers's Order as set aside the Anton Piller Order, ordered an enquiry as to damages and awarded the defendants costs. None of the rest of what Mr Justice Rogers did is challenged on appeal. And as to the rest of what he did - which constituted the bulk of what he had on his hands that day - we commend the way in which, typically of him, he got hold of the case by the scruff of the neck and set it well on its way to an early resolution.

28. Now, in coming to his conclusion that the Anton Piller Order ought never to have been granted, Mr Justice Rogers acted on the proposition which he formulated in this way after referring to section 33 of the Theft Ordinance, Cap. 210:

" Nevertheless, in my view, there are strong grounds for suspecting that in the circumstances an offence may have been committed, it would be appropriate that the various criminal investigations should take place first before any order of an Anton Piller type which by its nature allows access to the defendant's premises is obtained."

29. For the defendants, Mr Shipp first argues that that proposition is correct. Next, he seeks to support the Judge's decision on two additional grounds.

30. The additional grounds are:

(1) The risk of self-incrimination had not been sufficiently emphasised to Mr Justice Cheung who granted the Anton PiIller Order ex parte.

(2) The plaintiff had misused the Anton PiIller Order by making two reports to the police.

31. As to the first additional ground, the short answer is that we see no basis for suggesting that Mr Justice Cheung had to be told more than he was told. After all, the implications of the Order sought would have been inherent and obvious.

32. As to the second additional ground, there is some confusion as to whether one report or two reports had been made. Mr Shipp, reading the plaintiff's evidence - or perhaps reading between the lines of the plaintiff's evidence - suggests that it had made a second report by going to a police station.

33. He gets that from an affirmation in which a representative of the plaintiff says that he made the report "after" the execution of the Anton Piller Order. It is not at all clear from that that there was a second report. The Anton Piller search had been concluded and the plaintiff's representatives were leaving the premises when the police arrived. Any report would therefore be after the execution of the Order.

34. We are not inclined to read a second report at a police station into the evidence before us. Anyway, it does not matter whether or not there was a second report. The plaintiff acted in good faith in seeking an order. And when the police came upon the scene (summoned by the defendants) the plaintiff's representatives acted naturally in telling the police what they knew.

35. Therefore if Mr Justice Rogers's decision cannot be supported on the ground upon which he relied, then it cannot be supported on any other ground. That brings us back to the ground on which he decided the case.

36. It seems to us that the proposition on which Mr Justice Rogers acted goes too far. It troubles us because his experience in this field is unrivalled. But we are driven to the conclusion that on this occasion at least and to that extent he has gone wrong. A plaintiff is not debarred from Anton Piller relief just because the defendant may well have committed a crime as well as a civil wrong against him. The police cannot be expected to do for people what they can do for themselves under an Anton Piller Order.

37. In the course of the argument before us, Mr Justice Ching JA asked Mr Shipp whether or not Mr Justice Rogers's proposition necessarily meant that the greater the wrong done by a defendant to a plaintiff, the less the court's power to intervene on behalf of the plaintiff. Mr Shipp, arguing his case with commendable realism, found it very difficult to get away from the plain fact that that was indeed the consequence of the proposition. Asked further by Mr Justice Ching JA whether that consequence can be supported, Mr Shipp conceded that it could not.

38. We do not say that Mr Shipp abandoned his attempt to support Mr Justice Rogers's approach. He says that perhaps the judge was doing no more than emphasising, in context, how careful one has to be in deciding whether to grant an Anton Piller Order and, if so, on what terms. But that is not what Mr Justice Rogers said. And, in any case, that would not have justified the setting aside of Mr Justice Cheung's Order since there is nothing to suggest any want of due care on his part.

39. That being so, we are of the view that this appeal must be allowed so that the Order setting aside the Anton Piller Order is itself set aside. With it must go the order for an enquiry as to damages and the order for costs in the defendants' favour. The defendants' appeal is allowed accordingly. It remains only to thank counsel on both sides for their assistance and to hear what they have to say on the question of the costs of the appeal itself.