XCHRX LAU TAK WAH ANDY v. HANG SENG BANK LTD.

HCA3968/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.3968 OF 1999

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J U D G M E N T

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The appeal

1. This is an appeal against the Master's decision who ordered that part of the interrogatories served by the plaintiff be withdrawn.

The plaintiff's claim

2. The plaintiff is a famous entertainer. He complained that the defendant has used his image on their credit cards and phone cards without his consent or licence. By so doing, the plaintiff contended that the defendant has passed off those items as items "promoted and/or endorsed by the plaintiff and/or as being marketed and promoted under commercial arrangement with the plaintiff."

Passing off

3. The three elements of passing off as stated in the traditional case of Reckitt & Colman Products Ltd v. Borden Inc. [1990] RPC 341 are of relevance :

1) Goodwill or reputation;

2) Misrepresentation; and

3) Damage or likelihood of damage.

4. There is some dispute between the parties as to the exact ambit of the law of passing off in relation to this particular case, particularly on the question of misrepresentation. This is, however, not the place to go into an examination of the law. It is sufficient to state that the plaintiff relies on the Australian approach of "character merchandising" in the protection of images of famous characters in cases such as Pacific Dunlop v. Hogan, 14 IPR 398.

Interrogatories

5. Order 26, rule 1 of the Rules of the High Court provides that interrogatories may be served on matters in question between the parties which are necessary, either :

(a) for disposing fairly of the cause or matter; or

(b) for saving costs.

6. Recently, the English Court of Appeal in Hall v. Sevalco Ltd [1996] PIQR 344 had reaffirmed that :

".... Necessity is a stringent test. .... The interrogator must be able to show that his interrogatories, if answered when served, will serve a clear litigious purpose by saving costs or promoting the fair and efficient conduct of the action."

Items 1, 2, 4 and 5

7. The first group of interrogatories that had been ordered to be withdrawn are items 1, 2, 4 and 5. Items 1 and 2 relate to credit cards, items 4 and 5 relate to phone cards. They are as follows :

"1. What is the total number of applications for credit cards under the 'Hang Seng StarSelect' programme?

2. What is the total number of the applicants who have selected a photograph, image or likeness of the Plaintiff in their applications for Hang Seng credit cards?

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4. How many Hang Seng credit cardholders were qualified to apply for the 'Megastar Collectible Phonecards' featuring a photograph, image or likeness of the Plaintiff?

5. How many applications were received for the 'Megastar Collectible Phonecards' featuring a photograph, image or likeness of the Plaintiff?"

8. The plaintiff stated that these questions are relevant to the issue of goodwill and reputation of the plaintiff and also on misrepresentation.

Goodwill

9. On the question of goodwill, the plaintiff complained that the defendant had not fully admitted the plaintiff's reputation as an entertainer, a singer and an actor, and also as an advertiser, promoter and endorser of goods and services in Hong Kong and Asia. The defendant admitted that the plaintiff has a reputation as an entertainer, a singer and an actor but did not admit the particulars of his many achievements. In respect of his other reputation, the response by the defendant was that it admitted that the plaintiff has appeared in some advertisements for products and services. However, it did not admit the other parts of the claim which pleaded that the plaintiff had regular engagements in widely publicized advertisements and promotions in Hong Kong and Asia and that such engagements are well-known and publicized in Hong Kong.

10. On the issue of the plaintiff's reputation as an entertainer, the plaintiff contended that there are degrees of reputation and the defendant's admission had not gone far enough on the very high degree of fame of the plaintiff which the plaintiff has to prove on the issue of goodwill and reputation.

11. In my view, even if the defendant had admitted the plaintiff's reputation as an entertainer, the questions now asked by the plaintiff are clearly relevant to the issue on goodwill and reputation of the plaintiff. A comparison of the total number of applications for the defendant's credit cards and phone cards with the number of cards which have the image of the plaintiff is a tell-tale sign of the plaintiff's reputation among the cardholders. It is also a necessity in terms of disposing fairly of the cause or matter and for saving costs. Afterall, "the right to interrogate is not confined to the facts directly in issue, but extends to any facts the existence or non-existence of which is relevant to the existence or non-existence of the facts directly in issue.", per Lord Esher, M.R. in Marriott v. Chamberlain [1886] 17 QBD 154. They also have some bearing on the question and they might form a step in establishing liability : Blair v. Haycock Cadle Co. (1917) 34 TLR 39. The interrogatories are not concerned merely with figures which have no bearing on the issue. The intention of the customers on whether they are deceived or not is only one aspect of this case.

12. As to the reputation of the plaintiff as an advertiser of products, although in the written submission, the defendant contended that the questions asked are irrelevant because if people apply for cards with the plaintiff's image, they do so because they want to have that image on their cards "by reason of the popularity of the plaintiff, and not because he is a famous advertiser", Mr Garland, SC, counsel for the defendant, accepted that it is difficult to dissect the reputation into different components. Having decided that the first four interrogatories are relevant and necessary in respect of the plaintiff's reputation as an entertainer, I do not need to deal further with this point.

Misrepresentation

13. The plaintiff also contended that the first four questions are relevant to the question of misrepresentation. The defendant contended that the number of applications are not relevant to the issue of misrepresentation : the issue is really on the minds of the public who are deceived.

14. I take a different view from that of the defendant. The number of applicants who choose the plaintiff's image has a bearing on the issue in this case. Deception is one aspect of the matter but it is also relevant in deciding whether a significant section of the public is misled into believing that the plaintiff had endorsed the defendant's products and there was a commercial arrangements between the parties on this issue.

Item 6

"6. How many cardholders issued with the 'Megastar Collectible Phonecards' featuring a photograph, image or likeness of the Plaintiff have discontinued use of the Hang Seng credit cards?"

15. The plaintiff contended that the customers may initially have been misled into thinking that the plaintiff had indorsed the products, but upon realizing that this was not the case, they may decide to cease using the credit cards.

16. I think the customers may discontinue the use of a credit card for many reasons. The numbers that the plaintiff may obtain from the answers given to item 6 is simply irrelevant to the issue of this case. This item is, in my view, rightly ordered to be withdrawn.

Item 7

"7. What is the amount of the revenue generated from the Hang Seng credit cards featuring a photograph, image or likeness of the Plaintiff?"

17. In Auto-Treasure Ltd v. Noble Diamond Ltd [1992] 1 HKC 117, the Hong Kong Court of Appeal, in a copyright case, followed the English Chancery court practice and held that discovery relating to damages should be deferred after the issue of liability had been decided. Despite the lack of division of courts in Hong Kong, this being an application for interrogatory and not discovery, and this being a passing off case and not a copyright case, I think the approach in Auto-Treasure should be followed. The true rationale is that confidential information should not be disclosed until the issue of liability has been established. Moreover, turnover figures are not relevant to this case because the revenue generated depends on how much each cardholder decides to spend on his card.

Items 12 and 13

"12. Have you ever, apart from the Hang Seng StarSelect programme and Megastar Collectible Phonecards, use the name, photograph, image or likeness of an entertainer, actor or singer in any advertisement and/or promotion for or in connection with, or the preparation therefor of Hang Seng credit card services or banking services? If the answer is yes, please identify each of such entertainers, actors or singers, the dates and periods over which their names, photographs, images or likeness or any of them were used.

13. Did you ever make arrangement, whether by way of sponsorship or otherwise, with an entertainer, actor or singer, or with persons or companies which managed their services, for the use of their names, photographs, images or likeness in preparation, advertisement and/or promotion for or in connection with Hang Seng credit card service or banking services? If the answer is yes, please identify each of such entertainers, actors or singers."

18. The plaintiff is not alleging fraud but submitted that if the defendant knew that consent from other personalities are required, it would have something to answer for its failure to approach the plaintiff for his consent. This has a bearing on the question of misrepresentation.

19. In this case, the defendant relies on an agreement between the plaintiff and HKTVB on the use of the plaintiff's image. The validity of such an agreement needs to be determined at the trial. However, in my view, these two interrogatories are relevant and necessary. Afterall, deception is the gist of the tort of passing off. The knowledge and state of mind of the defendant is a relevant matter. In Harrods Ltd v. Harrodian School Ltd [1996] RPC 697, Millett LJ held that :

"..... it is not necessary for a plaintiff to establish that the defendant consciously intended to deceive the public if that is the probable result of his conduct. Nevertheless, the question why the defendant chose to adopt a particular name or get up is always highly relevant. It is 'a question which falls to be asked and answered' : see Sodastream Ltd. v. Thorn Cascade Co. Ltd. [1982] R.P.C. 459 at page 466 per Kerr L.J. If it is shown that the defendant deliberately sought to take the benefit of the plaintiff's goodwill for himself, the court will not 'be astute to say that he cannot succeed in doing that which he is straining every nerve to do' : see Slazenger & Sons v. Feltham & Co. (1889) 6 R.P.C. 531 at page 538 per Lindley L.J."

Conclusion

20. Accordingly, the appeal is allowed as indicated.