RE WINNER FOOD PRODUCTS LIMITED

1988 M.P. No. 1814

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. This is an application by  Winner Food Products Limited ("the applicant") to commit Chung Yat Ming ("the respondent") for his contempt of the Court in disobeying, as the applicant alleges, an Order of 26th January 1988 made by Mr. Justice Duffy in HCA No. 5199 of 1987 (an action against Kai Kee Frozen Food Trading Company Limited, a company of which the respondent is a director) and in failing, as the applicant alleges, to comply with undertakings given to the Court by the respondent personally and recorded in an Order of 15th July 1988 made by Mr. Justice Duffy in proceedings (for the committal of the respondent for contempt of the earlier order) MP No. 900 of 1988.

2. The applicant carries on a substantial business as a manufacturer of frozen dim sum which is sold to consumers who purchase it at supermarkets and similar retail outlets.

3. The respondent is the prime mover behind Kai Kee Frozen Food Trading Company Limited which seeks to compete with the applicant in this business. The applicant, considering that it had cause to complain about the activity of the respondent's company in putting its products on the market in packages which infringed (so the applicant alleged) the copyright of the applicant in its own packages, and in passing off those products as the products of the applicant, instituted proceedings against the respondent's company, HCA No. 5199 of 1987. Those proceedings led to the making of an Order in default of defence. This was the Order of 26th January 1988.   It operated to restrain the respondnet's company from infringing the applicant's copyright in respect of the descriptions of storage and serving instructions and ingredients relating to the applicant's frozen and other food products including but not limited to Chinese dim sum; From infringing the applicant's copyright in respect of its packagings and food trays used in connection with those food products; and from passing-off packagings and food trays not of the applicant's manufacture as and for packaging and food trays of the applicant. In addition, the respondent's company was ordered to deliver up infringing articles including all plates, prints and so on used in the making of such articles.

4. The Order of 26th January 1988 was made, as I have said, against the respondent's company and was served upon the respondent personally. However, the applicant had cause to believe that the terms of the Order of 26th January 1988 were not being observed and so the applicant launched a motion for the committal of the respondent, which came on for hearing before Mr. Justice Duffy on 15th July 1988.

5. The Judge, by consent, called on the action No. 5199 of 1987 together with the motion for committal. He made no order, but by consent he accepted a number of undertakings from the respondent, which I summarise as follows:

On the basis of those undertakings, the Judge gave leave for the motion for committal to be withdrawn :

"Subject to and conditional upon the compliance by the respondent of the undertakings and terms of this Order."

The Judge also ordered the respondent to pay to the applicant's solicitors agreed costs of $50,000.00 within 7 days of the date of the Order; and to pay to the applicant the sum of $130,000.00 as damages to be paid by instalments as set out in his Order. I understand that in fact the respondent, finding it difficult to make the payments provided for by the Order, sought an indulgence from the applicant to re-schedule these payments, which the applicant has afforded him.

6. The terms of the undertakings must have been known to the respondent and I am sure were carefully explained to him by his legal advisers. He does not suggest otherwise. Nevertheless, since the making of the Order of 15th July 1988, there have been continued breaches of the undertakings given by the respondent which are the subject of this present application. As the rules require, a statement in relation to the relief claimed by the applicant was placed before a Judge (Mr. Justice Macdougall). The statement stated that the relief sought was an Order for committal for contempt of Court against the respondent. The statment set out the grounds upon which the application was made, that is to say, the disobedience on the part of the respondent of the terms of the Order made on 26th January 1988 and his failure to comply with the undertakings recorded in the Order of 15th July 1988.

7. In particular the statement said :

                "The applicant will reply upon the facts that :

(This last, it will be recalled, was the order for disclosure in relation to the suppliers and customers of the respondent's company.)

8. The applicant asserted that the respondent had full knowledge of the terms of the original order and the subsequent undertakings, and in particular relied on the facts that

Mr. Justice Macdougall gave leave to the applicant to move for the committal of the respondent for his alleged contempts of the Court, and, in the Notice of Motion, the applicant set out again its grounds of complaint again the respondent, in the same terms as it had set them out in the statement to which I have referred.

9. When the application came on for hearing before me an 17th October 1988, a preliminary point was taken as to service of the order containing the undertakings, with which I dealt in a judgment I delivered on 21st October 1988. At that hearing, it became apparent that there would or might be disputes of fact between the applicant and the respondent concerning the applicant's complaints; and I gave certain directions intended to afford the respondent an opportunity of giving oral evidence and of subjecting himself to cross-examination so that that evidence could be properly tested. At the resumed hearing before me I heard submissions from counsel and also the oral evidence of the respondent. By then, the parties had by agreement considerably narrowed down the issues of fact upon which they were in dispute, Broadly speaking, the respondent admitted all the reaches of which he had been accused, save that the respondent did not accept the allegation that he had failed to comply with his undertaking to cause the plates for the printing or production of the infringing packagings to be delivered up to the applicant or alternatively to cause the same to be destroyed.

10. The applicant upon this point understandably protested there was no evidence (or no evidence which had been afforded to the applicant) that the respondent had in fact done anything in this connection; but at the hearing the solicitors for the respondent produced copies of letters which they had written on 15th July 1988 to the two firms who had been concerned with the manufacture and printing of the infringing package, referring to the undertaking, and asking to have the printing plates returned to them within 7 days. Counsel for the applicant felt himself constrained to accept the authenticity of these letters and did not, I think, in the end, press the point about the printing plates. He relied on the admitted breaches of which the applicant complained, claiming that these breaches were serious and contumacious. The respondent's case was that the breaches were trivial and inadvertent. As I have said, I have heard the oral evidence of the respondent in this connection for the purpose of coming to a conclusion which side was right upon this aspect of the matter.

11. I should briefly describe the nature of the applicant's complaint as to the failure on the part of the respondent to make full and frank disclosure. These are concerned with the following points. In making disclosure, the respondent disclosed only matters relating to Hargow and not to Shao Mai; he failed to deal with sales before July 1987; and he failed to make full disclosure in relation to sales to outlets of the China Rsources Supermarket chain (some nine stores being omitted from the respondent's account of events).

12. It was submitted to me on behalf of the applicant that I should not accept the version of the facts relating to these matters given in evidence by the respondent. I was invited to disregard his evidence as untruthful. It was said that his story was an odd one and indeed there are many curious features about it. But I do not intend to deal with those matters in detail; I am satisfied they are not enough to justify me in treating the respondent as someone who has set out deliberately to mislead the Court. I am of the opinion that he has behaved irresponsibly but not contumaciously in failing to comply strictly with the terms of his undertakings. I am of opinion that he was unwise in giving these undertakings in terms which obliged him to do what was required within a short period of time, notwithstanding that he had to assist him only a very small staff.

13. Nevertheless, there is no question but that undertakings given to the Court must be strictly obeyed and I cannot altogether disregard the failure of the respondent so to obey them. Furthermore, I am satisfied that he did not try as hard as he should have done to have carried these undertakings out. He procured his solicitors to write the letters of 15th July 1988 relating to the printing plates. The same sort of step ought to have been taken in relation to the infringing packages left outstanding all over Hong Kong. In fact, the steps taken by the respondent, by telephone only, and by getting his own staff to go out buying up infringing packages in some (but not all) supermarkets and to destroy them rather than to deliver them up (as the undertakings required) were less than enough. I do not think the failures were trivial but, having said that, I do not regard the as of the most serious character which a contempt of the Court can assume. However, it is important in the public interest that undertakings should be strictly obeyed; and it is important for commerce that someone who gives an undertaking to the Court at the suit of a plaintiff should obey that undertaking in the interests of the plaintiff, who has been dissuaded from following up his initiative in instituting his action by the giving of the undertakings. Furthermore, cannot overlook the fact that in the present case these undertakings were given, not at the first stage of an application for relief, but on an application to commit the respondent; so that this is a second application for his committal. In all these circumstances, I have carefully to consider whether this is not a proper case for some real punishment to be inflicted by the Court upon the respondent.

14. I have come to the conclusion that the case is not so serious as to justify the Court in imposing a sentence of imprisonment upon the respondent. As to a fine, it is plain from the course these proceedings have taken, and from the evidence, that the rsspondent is in no position to pay a substantial fine and I have come to the conclusion that it would not be sensible to impose a substantial fine upon him. To impose a trivial fine would be to trivialize this contempt; and so I do not intend to impose either a substantial or a small fine upon the respondent.

15. The correct course, as it seems to me, is to make an Order which will bring the seriousness of this matter home to the respondent by making him pay the costs of the applicant, brought to the Court as it has been by the respondent's irresponsibility, on the nearest basis one can get to an idemnity. That Order would be an Order for the costs of the applicant to be taxed as between solicitor and own client and paid by the respondent to the applicant. It is that Order, and only that Order, which I propose to make by way of disposing of this present application. I hope the respondent's advisers will carefully explain to him the burden of this judgment, and will take every possible step to ensure (so far as they can) that no further breaches will be committed by the respondent so as to bring him (if the applicant chooses to do so) before the Court again. If that becomes necessary, and the respondent is found to have committed further breaches after today, there can I think be little doubt that the court will be constrained to take a much more serious view about the whole matter.