EISEKI INTERNATIONAL CO., LTD v. TAO-TI INTERNATIONAL CO., LTD

HCMP3825/2003 and HCA3656/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.3825 OF 2003

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And

ACTION NO.3656 OF 2003

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BETWEEN

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(HEARD TOGETHER)

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J U D G M E N T

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1. I have before me two actions.  The first action is HCMP3825/2003 where the plaintiff is Eiseki International Co. Ltd (“Eiseki”), a Taiwanese corporation, and the action was started on 1 September 2003.  In this action, which I will for convenience call “the Eiseki action”, Eiseki sought to invalidate 10 Hong Kong trademark registrations in the name of “Tao-Ti” because Eiseki says the trademarks belong to Eiseki.  

2. The second action is HCA3656/2003 where the plaintiffs are Eiseki and Rosa Foods Co. Ltd (“Rosa”).  I will call this action, for convenience, as “the Rosa action”.  This action was brought on 30 September 2003 against Tao-Ti International Co. Ltd and Telford International Co. Ltd for alleged act of passing off and infringement of the 10 registered trademarks. 

3. In both actions the plaintiffs were represented by Messrs S.H. Chan & Co. until October 2004.  The dispute between the parties now before me is on the authority of the solicitors, Messrs S.H. Chan & Co., to commence these two actions.  The case of the applicants defendants is that there was no such authority by the solicitors either on behalf of Eiseki or on behalf of Rosa. 

4. What lies behind the present dispute is a longstanding war between two camps.  For the sake of convenience, I will describe the two camps as the applicant’s camp — the applicant being of course the party, the people who are trying to stop the present action, and the respondent’s camp — the respondent being those who wanted the present action to continue in Hong Kong. 

5. Amongst the applicant’s camp, there are people we have come across again and again in the papers, being Lin Chun Ching, Lin Mao Sheng, Lam Lai Lin, Hung Siu Lung, Tse Joi Lam and others.  These are names set out both in English and Chinese in a very helpful Dramatis Personae given to me by Mr Ling for the defendants.

6. In the respondent’s camp, again, according to the Dramatis Personae given, there are Lin Jung Pin, Hui Tang Hung, Siu Kwai Wong, Wong Kin Tong, Lee Feng Yu and others.  

7. The matter is complicated because of the expensive litigations that had been waged between the two camps in Taiwan.  In an extremely helpful Revised Table of Taiwanese Decisions, consisting of three pages, given by Mr Ling to the court, it identifies no less than at least six sets of important major pieces of litigation in Taiwan.  In the course of the judgment, I will have to refer to these proceedings because they will have important impact on what is the proper course that the court should take in relation to the present application. 

8. At the hearing, it would seem that the case of the applicant really boils down to two primary submissions.  Firstly, that the two actions by Eiseki should be struck out on the basis that there was no proper authority given by Eiseki & Rosa to commence these two actions.  That would depend largely on whether certain board decisions were valid.  The second case of the applicant is that in any event, as a result of the total control of Eiseki by the applicant, there is now new solicitors appointed who have asked the court for permission to withdraw the actions. 

9. I will deal first with the strike-out application against Eiseki.

10. The strike-out application largely turns on the question of whether in September 2003 the valid board of directors of Eiseki had authorised the commencement of these actions, and that in turn depends on two important board decisions of Eiseki: one was the decision of the board on 9 May 2002, the other was the board decision on 7 April 2003.

9 May 2002 board decision

11. This was a board meeting purportedly on 9 May 2002 where the persons from the applicant’s camp were elected directors.  The respondent started a litigation under Criminal Complaint No.2565 of 1992 in the form of Lin Jung Pin v. Lin Mao Sheng and Four Others (page E732) complaining about falsifying minutes of the meeting on 9 May 2002.  The complaint resulted in the Pan Kiu District Court on 31 July 2004 dismissing that criminal complaint.  That was on review upheld.  This is what the parties had been calling “the third set of proceedings” under page 2 of the Revised Table of the Taiwanese Decisions.  

12. The importance of this decision is that there was held to be valid election of the applicant’s directors on the board of Eiseki. 

7 April 2003 board decision

13. The next important board meeting was on 7 April 2003 at which it was alleged by the respondent that their people were elected directors.  This is the subject matter of the fourth piece of litigation under Civil Suit No.2084 of 1992 where the Pan Kiu District Court on 26 October 2004 (page E541) held that the respondent’s camp, Lin Jung Pin, Hui Tang Hung and Lin Jung Chi were not appointed directors at that meeting.  Appeal was brought by the respondent against that decision and was dismissed both by the High Court of Taiwan on 11 November 2005 as well as by the Supreme Court of Taiwan on 6 February 2006.

14. In fact, the Criminal Court, in the sixth set of proceedings under Criminal Proceedings No.227 of 1992 convicted Lin Jung Pin and others of falsifying that directors’ meeting of 7 April 2003.

15. Further, in what I have been calling the fifth set of proceedings, the Supreme Administrative Court of Taiwan, on 7 July 2005, held that the Ministry of Economy (“MOE”) was wrong in accepting the filing by Lin Jung Pin without a formal examination of the purported minutes of 7 April 2003.

16. There was therefore overwhelming material put before the court that the board of directors of Eiseki was not in the control of the respondent’s camp in September 2003.  I hold, therefore, as a fact that the proceedings commenced in both the Eiseki action as well as the Rosa action by Eiseki was without proper authority.  It seems to me very clear that paragraph 1 of the summons of the applicant in both actions must succeed against Eiseki. 

17. I go further to consider the second ground on which this action must be stopped against Eiseki.  I have no doubt that the control of the company Eiseki as well as the board of Eiseki is and has for a long time been in the hands of the applicant.  Eiseki has now authorised new solicitors who have issued summons to discontinue the action, and this is agreeable to the defendants.  Mr Wong, on behalf of Eiseki, has made submissions to me that the application should be granted, that is to say, for the discontinuance of the two actions by Eiseki.  I agree with his submission.  In fact, the abandoning of the two actions by Eiseki is a natural event of what had been indicated in the affidavit on behalf of the respondent when it was said that if three things happened Eiseki would give up the two actions in Hong Kong (page 236 of the Bundle) :

“…. To simplify the situation, perhaps I can petition to the Honourable Court that in the events that

1.      I lost the Retrial of Case #126 and

2.      Wong Tsarn Kong and Siu Kwai Wong lost Criminal Case  #7538 and

3.      I lost Criminal Case #2565

I would recommend to the October 2 Board to have Eiseki withdrawing from this Invalidation of Trade Mark Registration Case #3825 as there would be no ground for I JP Lin to represent Eiseki in making claims against Respondent Tao-Ti International … for the Invalidation …..”

18. Now, all three events have taken place as can be seen clearly in the Revised Table of Taiwanese Decisions.  The first event is in the Civil Suit No.126 of 2002 under the first set of proceedings in relation to 6,000 shares; the second event is the Criminal Complaint No.7583 of 1992, that is, in relation to the second set of proceedings regarding the transfer of 3,000 shares; and the third set of proceedings is the losing of the Criminal Complaint No.2565 of 1992 relating to the forging of the minutes of the 9 May 2002 meeting.  So all three events have taken place against the respondent, and the respondent therefore ought to gracefully give up.  I conclude therefore on this aspect of the case that whether they gracefully bow out or not, they should be compelled to stop.  I make the order as I have indicated earlier. 

19. I now turn to the Rosa litigation, that is, in relation to the claim by Rosa. 

20. The application by the defendants to stop the Rosa claim in the Rosa action is not so straightforward.  The reason is because of the validity of the Rosa board decision is capable of being a matter of some argument.  Although I am strongly persuaded that the valid Rosa board most likely did not make any valid decision to start the Hong Kong proceedings, it might be arguable that such view of the board decision meeting on 1 September could be the subject of challenge. 

21. It seems to me that in the circumstances, specially as both sides concur in the proposed course to be taken, the proper order should be to grant a stay of the Hong Kong proceedings by Rosa, pending the final resolution of the present litigation that is ongoing in Taiwan under Civil Suit No.989 of 2004.  Mr Lee, speaking as representative of Rosa, concurs in that approach and therefore I am happy to make an order in terms of paragraph 3 of the summons at pages 48 and 49 as amended, namely to order the proceedings in the name of Rosa Foods Co. Ltd be stayed on the ground that they are pending proceedings in Taiwan.  That is the order I make. 

22. I will hear the parties as to the matter of costs.

                   [Submissions on Costs]