WORLD CHINESE BUSINESS INVESTMENT FOUNDATION LTD v. WORLD OUTSTANDING CHINESE INVESTMENT HOLDING LTD

HCA535/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 535 OF 2010

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BETWEEN

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REASONS FOR RULING

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1.  The defendant applies by summons dated 8 October 2010 to set aside my Order dated 3 August 2010 granting default judgment to the plaintiff.

2.  After hearing the parties, I dismissed the application by the defendant to set aside the default judgment and indicated that I will give reasons for my ruling in writing at a later date, which I do now.

Background

3.  The Writ of Summons herein (with Endorsement of Claim) was issued on 16 April 2010.

4.  The Writ was served on the defendant on 19 May 2010 at its registered office (at Room 2303, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong) together with an inter partes summons seeking leave to amend the Writ.

5.  Pursuant to that inter partes summons, leave was granted to the plaintiff to amend the Writ on 4 June 2010. An Amended Writ was filed on 7 June 2010.  The order granting leave to amend further dispensed with service of the Amended Writ.

6.  A Statement of Claim was filed by the plaintiff on 10 June 2010 and served on the defendant at its registered office on the same day.

7.  As per the plaintiff’s pleaded case contained in its Statement of Claim, the plaintiff’s claim against the defendant was for infringement of copyright in respect of Mark A being a drawing which is an original artistic work and for which the plaintiff is the owner of the copyright in the Copyright Works.  The plaintiff also claimed against the defendant for passing off in respect of both Mark A and Mark B, as particularised in the Statement of Claim.  Mark B comprised of six Chinese characters which denoted an Award for which the plaintiff was the organiser and who has continuously applied that Award in its business since 2003.  The plaintiff’s business by using Mark A and Mark B has become successful in Hong Kong with substantial and extensive sales and marketing by the use of Mark A and Mark B which have become well known in the trade and to the public in Hong Kong.

8.  It is the plaintiff’s case that the defendant has used the infringing Mark A thereby infringing the copyright of the plaintiff in the Copyright Works in respect of Mark A and that the defendant has also used both the infringing Mark A and the infringing Mark B to pass off services not associated with the plaintiff as being that of the plaintiff.

9.  No Defence having been filed by the defendant after the time for doing so prescribed by the rules of practice, the plaintiff issued a summons dated 22 July 2010 seeking default judgment against the defendant.  The summons was served on the defendant at its registered office on 26 July 2010.

10.  That summons was heard on 3 August, and the defendant being absent, default judgment was entered in favour of the plaintiff.

11.  By its summons dated 8 October 2010, the defendant now seeks to set aside the default judgment.

Defendant’s application to set aside default judgment

12.  The defendant’s application to set aside is supported by two affirmations, one being an affirmation of Sze Wing Chung and the other, an affirmation of Hui Cho Chak.

13.  The substance in respect of both affirmations are identical, the only difference being that Sze Wing Chung was formerly a director of the defendant while Hui Cho Chak is the present sole director of the defendant.

14.  In so far as the substance of the two affirmations go, it is stated by both affirmants that the defendant had its registered office at Room 2303, Office Tower, Convention Plaza, 1 Harbour Road, Hong Kong as from December 2005.

15.  However, the defendant had moved to a new business address at Room 3208, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong as from December 2008 supported by a Business Registration Certificate showing the commencement being 30 December 2008.

16.  It further stated that with effect from 14 September 2010, the new place of business and registered office of the defendant to be at Room 2301, 42 Hung To Road, Kwun Tong, Kowloon.

17.  Both affidavits go on to say that the defendant had never received the Writ of Summons herein or the Summons returnable on 3 August 2010 and that the defendant only came to know of this matter when the Order dated 3 August 2010 was inserted under the main door of the residence of Sze Wing Chung and which he found on 1 September 2010.

18.  It is also stated in both affirmations that the defendant has effectively registered the infringing Mark A and Mark B under Trade Mark No. 300651591 on 3 June 2006 under the Trade Mark Ordinance Cap. 559 and exhibiting thereto a copy of the Certificate of Registration dated 15 March 2010.

19.  Both affirmants go on to say that the defendant is the true registered owner of the said Mark A and Mark B whereby both deponents believe that the defendant do have merits in its defence to the plaintiff’s claim.

Regular or irregular judgment

20.  In any application to set aside a default judgment, the court has to make a distinction as to whether the judgment entered was a regular or irregular judgment, since different considerations would apply depending on whether the judgment entered was regular or irregular.

21.  It would be normal practice for the court to set aside an irregular judgment ex debito justitiate i.e. without regard to the merits of the proposed defence.

22.  In the case of setting aside a regular judgment, however, the power of the court is discretionary so as to avoid injustice.  It follows therefore that the major consideration, where a regular judgment is involved, is whether the defendant has shown a defence on merits to which the court should pay heed.

23.  In the present case, the summons issued by the defendant does not specify whether the default judgment which defendant seeks to set aside is a regular or irregular judgment.

24.  When this was posed to Miss Ling, counsel appearing for the defendant, at the hearing, she was slow to committing herself one way or the other.  She would only say that the defendant was seeking to set aside the judgment on the basis that the defendant had not been effectively served with the Writ.

25.  However, under our rules of practice, service upon a body corporate is governed by Order 65 rule 3.  The combined effect of Order 65 rule 3(2) and Order 10 rule 1(2) is such that service of the Writ on the registered office of that body corporate would be good service.

26.  Applying that to the present case, the two affirmations filed by the defendant admitted that the registered office of the defendant to be at Room 2303, Office Tower, Convention Plaza, 1 Harbour Road, Hong Kong.

27.  Albeit that it was stated that the defendant had changed its business address in December 2008 to Room 3208, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong, no mention was made in the affirmations as to any change to its registered office in December 2008.

28.  Indeed, the company search carried out by the plaintiff on 22 July 2010 showed the defendant’s registered office to be still at Room 2303, Office Tower, Convention Plaza, 1 Harbour Road, Hong Kong.

29.  At the same time, Miss Ling was unable to explain how it came about that there was no change to the registered office of the defendant in the Companies Registry when its business address had changed.

30.  The long and short of the matter was that when the defendant was served with the Writ herein as well as Statement of Claim and the plaintiff’s summons returnable on 3 August asking for default judgment, those documents were properly served upon the defendant at its registered office.

31.  It was only on 14 September 2010 that the defendant’s registered office and place of business changed to Room 2301, 42 Hung To Road, Kwun Tong. Even then there was no documentary evidence exhibited by the defendant to support that statement in the affirmations.

32.  Given therefore that the Writ herein, the Statement of Claim and also the plaintiff’s summons seeking default judgment were all served on the registered office of the defendant, it follows that the default judgment entered against the defendant herein must be a regular judgment notwithstanding that the defendant had already moved its business address to somewhere else at the time of service.

33.  Accordingly, for the defendant to succeed in setting aside a regular default judgment, it behoves the defendant to show a defence on merits.

Showing merits of defence

34.  In both affirmations filed by the defendant, the only matter relating to merits of a defence is that the defendant is the registered owner of the infringing Mark A and Mark B under Trade Mark No. 300651591 registered by the defendant on 3 June 2006 and exhibiting the Certificate of Registration dated 15 May 2010.

35.  The fact that the defendant is the registered owner of Mark A and Mark B under Trade Mark No. 300651591, is not, per se, a defence to the plaintiff’s claim which is for infringement of copyright in respect of Mark A and passing of in respect of both Mark A and Mark B.  Indeed, in the Statement of Claim, it had already been pleaded by the plaintiff that the defendant had taken steps to register the infringing Mark A with the Trade Marks Registry on 3 June 2006.

36.  Nowhere in the two affirmations filed on behalf of the defendants has there been any challenge to the plaintiff’s allegation in its Statement of Claim that copyright subsists in the original Art work drawing of Mark A, or that the plaintiff is the owner of such copyright.  Neither has the defendant disputed the allegation by the plaintiff that the defendant has used the infringing Mark A thereby infringing the copyright of the plaintiff to Mark A.

37.  In the same manner, nowhere in the two affirmations has there been any challenge to the plaintiff’s allegation that the plaintiff has built up a reputation by the use of Mark A and Mark B and which has become synonymous with the plaintiff’s business well known to the general public.  Nor has the defendant disputed the use by it of Mark A and Mark B which would give rise to confusion with the plaintiff’s business and/or service.

38.  Given therefore that the onus (on an application to set aside a default judgment) is upon the defendant to show merits of a defence, the defendant has simply failed to reach that threshold given the contents of the two affirmations relied on by it.

39.  Accordingly, and for the reasons given, I declined to exercise my discretion to set aside the default judgment obtained by the plaintiff in this matter.

Costs

40.  Having dismissed the defendant’s application to set aside the default judgment, I can see no good reason why costs should not follow the event and accordingly ordered costs against the defendant to be taxed if not agreed.