LAND POWER INTERNATIONAL HOLDINGS LTD. and Others v. INTER-LAND PROPERTIES (H.K.) LTD.

IN THE COURT OF APPEAL

1994 No. 155
(Civil)

HEADNOTE

In an application for an interlocutory injunction it was held that plaintiff, who was endeavouring to restrain the defendant from using description words in common use in its title the same as words in its own title, had not established that there was a serious issue to be tried.

IN THE COURT OF APPEAL

1994 No. 155
(Civil)

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J U D G M E N T

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Power, V.-P.:

1. The plaintiffs, a group of real estate companies, sought an interim injunction restraining the defendant company, also a real estate company, from using the name Chi Yip Da Charn on the ground that such use would be likely to confuse the public and would be likely to lead members of the public to the belief that the defendant company was connected with the plaintiff group of companies. Liu J. (as he then was) dismissed that application holding that there was no serious question to be tried. This is an appeal from that decision.

2. The seven plaintiff companies are members of a real estate group. We have been told it is one of the major real estate agencies in Hong Kong and that it operates both in Hong Kong and in China. The parent company from which the group arose was incorporated in 1986 under the name "Chi Yip Gu Mun Hong Company Ltd." Those characters literally translate into the words "Acquire Property Consultant Company". It is pertinent to observe that we are not here concerned with the English names of any of the parties.

3. In June 1993 the parent company of the plaintiff group changed its name to Chi Yip Kwok Chai Tsap Tuen. Those characters translate to the English words "Acquire Property International Group". Since 1993, the names of four of the other companies in the group also commence with the characters "Chi Yip". Those four also have the character "International" following "Chi Yip" so that all four commence with the words "Acquire Property International". One other member of the group commences with the characters which translate "Guangzhou Acquire Property International". The holding company commences with the characters "Chi Yip". It alone and does not have the word "International" in its title.

4. Although Liu J. did not expressly so state, it seems clear from his judgment that he was satisfied that the words "Chi Yip" (Acquire Property) were words which could properly be used by a real estate agent to describe its business activities.

5. The defendant company was incorporated in 1992 under the Chinese name "Chi Yip Da Charn (Acquire Property Real Property) Hong Kong Ltd." The complaint of the plaintiffs is the use by the defendant of the characters "Chi Yip". The plaintiffs do not claim any monopoly in those characters and there seems to be no issue that they are, as I have indicated, a proper way of describing a real estate business. What the plaintiffs say, however, is that the defendant company, by placing the characters "Chi Yip" first and by adding characters which, in their argument, do no more than underline and emphasize the meaning of the first two characters, have used the characters "Chi Yip" in a way which is likely to cause confusion and to deceive the trade and the public into the belief that the defendant company is a member of the plaintiff group.

6. Mr. Chang Q.C., with him Mr. Martin Liao, for the plaintiffs submits that the trial judge was wrong to hold that there was no serious question to be tried. He submits that the way in which the defendant company has used the characters must, at least, arguably be a use such as would confuse and mislead the public.

7. I do not consider that any purpose would be served by traversing the extensive evidence as to the prominence of the plaintiff group and its operations in realty both in Hong Kong and China and as to the relative lack of activity of the defendant company. The issue is, in my view, a simple one. Did the plaintiff's assertion that there was a likelihood of confusion and deception arising from the use of the characters "Chi Yip" by the defendant company as the first two characters in its name raise a serious issue for trial ?

8. Liu J. observed that there was no evidence to establish a deliberate intention to take advantage of the plaintiff group's reputation. He went on, correctly, to say that the plaintiffs could succeed without proof of any such intention referring to Onrah Ceylon Estate v. Ura Ceylon Rubber Estates (1910) 27 R.P.C. 750. The judge was, however, in the words of Megarry V-C at p.474 in Mothercare Ltd. v. Robson Books (1979) F.S.R. 466, satisfied that the plaintiffs could point to no question to be tried which could be called serious and no prospect of success which can be called real. Liu J. dealt with the core issue in this matter as follows:

"Whether or not 'Chi Yip' in the plaintiffs' names are or are capable of being descriptive of their activities, these two Chinese characters are in themselves descriptive words in common use. It is settled law that where words in common use are adopted in a trade name, small differences would be more readily regarded as sufficient to avert confusion. Office Cleaning Services Ltd. v. Westminster Window and General Cleaners Ltd. (1946) 53 RPC 39."

The judge was clearly satisfied that, given that the two characters are descriptive words in common use, the difference generated by the use of the further two characters "De Charn" was, when the full name of the defendant company was compared to the full name of the plaintiff group which gives the same prominence to the character "International" as it does to the characters for "Acquire Property", a difference which could be so readily regarded as sufficient to avoid confusion that the contrary proposition did not raise a serious issue. I am not persuaded that the judge fell into any error when coming to that conclusion and I am satisfied that the appeal must, therefore, be dismissed.

Mortimer, J.A.:

9. This is an appeal against the decision of Liu J (as he then was) refusing the plaintiffs an interlocutory injunction to restrain the defendant from carrying on its business under a style or title which includes the Chinese characters "Chi Yip" on the basis that the defendant company was passing itself off as being connected with, or associated with, the plaintiffs.

10. These proceedings began with the issue of the writ on 27th July 1994. On 28th July an application was made ex parte but on notice before Keith J for an interim injunction. This was refused and there was an hearing inter partes which came before Liu J on the 9th, 10th and 11th August 1994. He dismissed the application on that last date on the ground that there was no serious issue to be tried. There is still no statement of claim in the case.

11. The Vice-President has set out the history of the incorporation of the plaintiffs and their names and of the defendant. I do not repeat that background.

12. The judge found that by 1993 the plaintiff group was the market leader in Hong Kong for the sale of real estate in the People's Republic of China with considerable goodwill in their names. Mr Chang Q.C., for the appellant plaintiffs, submits that this had been achieved slightly earlier - in November 1992 - at the time of the defendant's incorporation. For my part, I am prepared to assume that this was so but it is not of any real significance in the case.

13. Before Liu J, it was alleged by the plaintiffs that the defendant had deliberately passed itself off as their associate. But this was rejected and that point has not been revived or pursued before this Court.

14. By mid-1994, the defendant was interested to act as marketing agent for certain PRC properties in Hong Kong. It is then that the plaintiffs complained of the passing-off with an increasing use by the defendant of the Chinese character "Chi Yip" as part of its name, giving also increasing prominence to those characters in advertisements, on the name-cards of the directors, and in newspaper reports. In fact, however, by trial, the defendant had very limited success in its PRC activities.

15. The plaintiffs do not claim any exclusive or special right to the use of the Chinese characters "Chi Yip". In other words, they contend that they claim no monopoly to the use of those words. But in substance, their contentions come near to such a claim. Mr Chang Q.C. submits that any use of the characters at the beginning of any name in a company in this field is objectionable, whereas later use of those characters in the name would not be so.

16. The issue, both before the judge and before this Court, is whether the plaintiffs have established that there is a serious issue to be tried whether the defendant company, either deliberately or innocently, misrepresented itself as an associate of the plaintiffs or connected with them. This can, of course, arise if there is a real risk of confusion.

17. The matters which the plaintiffs have to establish in order to make out their case on passing-off are succinctly dealt with in Warnink v Townend & Sons [1979] AC 731. At p.742, Lord Diplock said:

"... it is possible to identify five characteristics which must be present in order to create a valid cause of action for passing off: (1) a misrepresentation, (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so."

The facts which the judge considered and which are before us show that the words "Chi Yip" are ordinary words in common use. As the judge said at p.7 of his judgment:

"Whether or not 'Chi Yip' in the plaintiffs' names are or are capable of being descriptive of their activities, these two Chinese characters are in themselves descriptive words in common use."

Those who choose common descriptive names under which to trade do risk a possibility of confusion which relatively small differences in the names will avert. See Office Cleaning Services Ltd v Westminster Window and General Cleaners Ltd (1946) 53 RPC 39. In that case Lord Simonds observed at p.42 L27:

"... So it is that, just as in the case of a trade mark the use of descriptive words is jealously safeguarded, so in the case of trade names, the Courts will not readily assume that the use by a trader as part of his trade name of descriptive words already used by another trader as part of his trade name is likely to cause confusion and will easily accept small differences adequate to avoid it. It is otherwise where a fancy word has been chosen as part of the name."

Such small differences are of particular significance when there is no evidence of intentional deception and no evidence of actual confusion as in this case.

18. Here, it is clear that common descriptive words were used in the names of the plaintiffs. The characters "Chi Yip" were used in association with characters "Kwok Chai" meaning international in all of their names except for one. The defendant used the characters "Chi Yip" in association with "Da Charn" meaning real property. On that the judge concluded:

"Given the prominence of 'Chi Yip', the dissimilarity in arrangement, use of 'Kwok Chai' as opposed to 'Da Charn', the number of characters and phonetics has given rise to a sufficient difference to avert any likely confusion."

For my part, I can find no grounds upon which to fault the judge's conclusion in this case. There is no serious issue to be tried between the parties. I accordingly agree and would dismiss this appeal.

Godfrey, J.A. :

19. Each of the plaintiffs is active in property management and estate agency business, and has chosen to trade under a style or trade name which begins with the words "Chi Yip", two Chinese words in common use meaning, roughly, "acquisition of property". None of them has any right to claim a monopoly in those words for the purposes of its business. Each of them is, however, entitled to protection against anyone who tries to filch its business by passing off his own business as the business of that plaintiff. If any of the plaintiffs had adduced any evidence, on this interlocutory application, to support its contention that the defendant here (which is in the same line of business) had misrepresented its own business as the business of that plaintiff, I would have been prepared to examine that evidence, and, if satisfied that it raised a serious question as to whether the defendant had in fact been guilty of such misrepresentation as alleged, to grant that plaintiff the appropriate relief.

20. But none of the plaintiffs has adduced any such evidence. The plaintiffs point out, correctly, that the defendant, like each of the plaintiffs, has started to use a trade name which begins with the words "Chi Yip". The plaintiffs claim, and I am prepared for present purposes to accept, that each of them has built up a business reputation using a trade name which begins with the words "Chi Yip". Each of them claims that these words have become distinctive of its own business and of the business of each of the other plaintiffs and I am prepared for present purposes to accept that this is arguable.

21. But, in my judgment, it does not at all follow that any person in the property management and estate agency business who uses the words "Chi Yip" at the beginning of its own style or trade name must, ipso facto, be guilty or even arguably guilty of misrepresenting his business as that of one or more of the plaintiffs, which is what the plaintiffs now submit. No doubt, if such a person chose to use a name identical with that of one of the plaintiffs, that plaintiff would have to prove little (or maybe nothing) more to establish an arguable case of misrepresentation. But here each of the plaintiffs, in so far as it trades as a property management or estate agency, uses the word "International" as well as the word "Chi Yip" as part of its trade name; the defendant does not. None of the plaintiffs uses the words "Da Charn" as part of its trade name; the defendant does. These distinguishing features make it impossible, in my judgment, to hold that the defendant, merely by using the ordinary words "Chi Yip" at the beginning of its trade name, is passing off its business as that of any of the plaintiffs.

22. Whether, on further evidence, the plaintiffs or any of them may be able to establish a case of misrepresentation at the trial of the action, I do not know. But I am satisfied that, at this stage, they have failed to establish even an arguable case of misrepresentation. I do accept that some members of the public may be confused into believing the defendant to be associated with the plaintiffs' group of companies; but if this confusion is caused not by any misrepresentation on the part of the defendant but merely because each of the plaintiffs has chosen to use at the beginning of its own trade name two ordinary words in common use in the Chinese language, then the plaintiffs, having no monopoly in those words will not be entitled to complain of it.

23. For these reasons, I agree with my Lords that this appeal must be dismissed.