XCHRX HUGO BOSS A.G. and Another v. SUN CHEUNG TAK MANUFACTORY LTD. and Others

1996 No. A174

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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INTRODUCTION

1. This is an application for leave to add various persons, firms and companies as additional Defendants to existing proceedings. I fear that this application has got a little out of hand, because I have been confronted by a pleadings bundle which runs to 63 pages, an affirmations bundle which runs to 123 pages, an exhibits bundle which runs to 823 pages, and a correspondence bundle which runs to 28 pages. The bundles have been immaculately prepared and indexed, but they were for the most part unnecessary.

2. The Plaintiffs are Hugo Boss A.G. and Hugo Boss Hong Kong Limited. Hugo Boss A.G. claims to be the proprietor of various trademarks incorporating the mark "Boss" for use on quality garments which it designs and manufactures. Hugo Boss Hong Kong Limited is its wholly-owned subsidiary in Hong Kong, responsible for the promotion, marketing and sale of Hugo Boss A.G.'s products in Asia (apart from Japan). The Plaintiffs originally alleged that Hugo Boss A.G.'s trademarks had been infringed in Hong Kong by various persons, firms and companies, who had passed off their products for those of the Plaintiffs. Accordingly, the Plaintiffs issued the current proceedings against the four Defendants, a limited company and three firms ("the original Defendants").

3. The Plaintiffs now wish to add a number of other persons, firms and companies as additional Defendants :

(i) By a summons filed on 19th January 1996, the Plaintiffs sought leave to add Dodge International Trading Limited, Dodge Knitting Company Limited and Dodge Trading Limited as the 5th, 6th and 7th Defendants ("the Dodge Companies").

(ii) By a summons filed on 9th May 1996, the Plaintiffs sought leave to add (a) five people who formerly traded as Wah Kei Garment Co., and (b) two people who now trade as Wah Kei Garment Co., as the 8th and 9th Defendants. However, the amendments to the Statement of Claim which are proposed to give effect to the addition of these new Defendants to the action name both proposed new Defendants as Wah Kei Garment Co. (a firm), the 8th Defendant being the partnership formerly trading under that style, and the 9th Defendant being the partnership now trading under that style ("the Wah Kei Defendants").

THE RELEVANT RULE

4. The rule on which the Plaintiffs rely is Ord. 15 r. 6(2)(b)(ii) which provides that the Court may order to be added as a party

"any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter."

THE ISSUES TO BE TRIED

5. The Plaintiffs' claim against the original Defendants is not far advanced. Only the 2nd Defendant has filed a Defence, and no steps have been taken to enter judgment in default of defence against the other original Defendants. All of them acknowledged service of the writ and have given notice of an intention to defend. As it is, the 2nd Defendant's Defence is singularly unhelpful. Apart from admitting the nature and place of its own business, it either denies the allegations in the Statement of Claim or puts the Plaintiffs to proof. The fact is that at the moment no-one has any idea what issues, if any, are going to be tried on the Plaintiffs' current claim against the 1st, 3rd and 4th Defendants.

6. However, I have a clear picture of a significant issue which is going to arise in any claim which the Plaintiffs bring against the Dodge Companies. The Dodge Companies' case is that they are the non-exclusive authorised agents of I.C. Isaacs & Co. L.P. ("Isaacs"), a company incorporated in the U.S. They claim that Isaacs is licensed to use the "Boss" trademarks pursuant to a licence agreement with Brookhurst Inc., another company incorporated in the U.S., which is alleged to hold certain intellectual property rights relating to the use of the "Boss" trademarks. The Dodge Companies assert that they were engaged by Isaacs to arrange for the production and shipment to the U.S. of garments bearing assorted labels, including the "Boss" label. Accordingly, they assert that no question of infringement of Hugo Boss A.G.'s trademarks or of passing off arises by them, because the use by them of those trademarks for the export of garments to the U.S. as agents for Isaacs is sanctioned by licence.

7. These assertions raise a substantial issue on which a considerable amount of evidence will have to be considered. The issue is already being litigated in the U.S. For convenience, I shall call the issue "the Isaacs issue". The question which the summonses before me really raise is not whether the Isaacs issue should be litigated in Hong Kong as well. The question is whether the Isaacs issue should be litigated in the present proceedings, or whether it should be litigated in Hong Kong in separate proceedings which the Plaintiffs will have to bring against the Dodge Companies.

8. In my judgment, the answer to that question depends on what are going to be the issues in the action against the original Defendants. If they are going to include the Isaacs issue, it would obviously be sensible to add the Dodge Companies as Defendants so that all claims which raise the Isaacs issue can be tried together. Subject to two points, Mr. David Fitzpatrick for the Dodge Companies agrees. On the other hand, if the issues in the Plaintiffs' action against the original Defendants are not going to include the Isaacs issue, there is no justification for adding the Dodge Companies as Defendants, because to do so would unnecessarily add enormous complications to the proceedings against the original Defendants. For his part, Mr. Peter Garland Q.C. for the Plaintiffs did not argue against that.

9. I turn, therefore, to what the issues are going to be in the Plaintiffs' claim against the original Defendants. If the Plaintiffs' claim against the original Defendants was limited to the claim which is currently pleaded against them, it is common ground between Mr. Garland and Mr. Fitzpatrick that the Isaacs issue would not be available to them by way of defence. However, the Plaintiffs propose to amend their claim against the original Defendants to allege, against the 1st and 4th Defendants, that the infringement of Hugo Boss A.G.'s trademarks included the export of shirts and blouses to Isaacs in the U.S. It is common ground between Mr. Garland and Mr. Fitzpatrick that, on such an amended claim, the Isaacs issue would be available to the 1st and 4th Defendants by way of defence. Indeed, even if the 1st and 4th Defendants did not plead the Isaacs issue by way of defence, but if the defence based on the Isaacs issue was established by the Dodge Companies, the establishment of that defence would defeat any new claim brought by the Plaintiffs against the 1st and 4th Defendants based on the infringements of Hugo Boss A.G.'s trademarks in relation to the export of shirts and blouses to Isaacs in the U.S.

THE ARGUMENTS AGAINST JOINDER

10. Against that background, I turn to the two points taken by Mr. Fitzpatrick. He claims that the joinder of the Dodge Companies would be premature now, because the joinder could only be justified on the basis of a case against the 1st and 4th Defendants which has not yet been pleaded. I see the force of that argument (technical though it is), but I do not think that the fact that the Isaacs issue would arise in the proceedings against the 1st and 4th Defendants only on the proposed amendments to the Statement of Claim, and not on the Statement of Claim as it now stands, should make any difference. If the Statement of Claim is amended to allege against the 1st and 4th Defendants that the trademark infringements include the export of shirts and blouses to Isaacs in the U.S., there will exist, to adapt the language of Ord. 15 r. 6(2)(b)(ii) to the facts of this case, between the Plaintiffs and the Dodge Companies an issue connected with the Plaintiffs' allegation of trademark infringement against the 1st and 4th Defendants arising out of the alleged export of shirts and blouses to Isaacs in the U.S. Accordingly, the possibility of such a connection currently exists. That, in my view, is a sufficient basis on which to give the Court jurisdiction to join the Dodge Companies if such a course would be appropriate.

11. Mr. Fitzpatrick's second point questions whether such a course would be appropriate. He contends that no order should be made to join the Dodge Companies as Defendants in the current proceedings as such an order would inevitably lead to an application by the Dodge Companies under Ord. 15 r. 5(1) for separate trials. The basis of that application would be that at present the Plaintiffs' claim against the original Defendants is a minor claim for trademark infringement in Hong Kong, and the proposed amended claim against the 1st and 4th Defendants would escalate the issues to such an extent as to justify hiving off the minor claim for trademark infringement in Hong Kong to a separate trial. If, therefore, there are to be separate trials in relation to the different acts of infringement alleged, it would not be appropriate for the Dodge Companies to be joined in the first place.

12. Again, I see the force of Mr. Fitzpatrick's point, and the variations on that theme which Mr. Fitzpatrick skillfully deployed, but I cannot go along with the argument. If allegations of trademark infringement are made against the 1st and 4th Defendants both in Hong Kong and by exports to the U.S., it makes sense for all the allegations against the 1st and 4th Defendants to be included in one set of proceedings, to avoid the 1st and 4th Defendants being subjected to a multiplicity of different proceedings. And if all the allegations of trademark infringement against the 1st and 4th Defendants should be tried together, it makes sense for the Plaintiffs' claim against the Dodge Companies to be tried at the same time, since the Isaacs issue is common to both the Plaintiffs' claim against the Dodge Companies and the Plaintiffs' claim against the 1st and 4th Defendants relating to the export of garments to the U.S.

13. Slightly different considerations apply, I think, to the Wah Kei Defendants. Apart from one issue to which I shall return in a moment, the Wah Kei Defendants have not identified what their defences, if any, would be to any action brought against them by the Plaintiffs. My inclination would therefore be to permit the Plaintiffs to sue the Wah Kei Defendants in any action in which the 1st Defendant is a defendant in view of the close connection between the 1st Defendant and the Wah Kei Defendants, and in view of the fact that the Wah Kei Defendants do not suggest that their defences, if any, would be any different from those of the 1st Defendant. Putting it in another way, if the Isaacs issue is available to the 1st Defendant by way of defence, it is likely to be available to the Wah Kei Defendants by way of defence. I am therefore satisfied that the issues between the Plaintiffs and the Wah Kei Defendants are connected with the Plaintiffs' claim against the 1st Defendant which it would be just and convenient to determine as between the Plaintiffs and the Wah Kei Defendants as well as between the Plaintiffs and the 1st Defendant.

THE POSITION OF MR. YUEN

14. The only issue which is raised on behalf of either of the Wah Kei Defendants is an issue raised by Yuen Shu Fan Nelson, one of the five people who were alleged in the summons filed on 9th May 1996 to have been the partners in the partnership which formerly traded under the style of Wah Kei Garment Co. Mr. Yuen claims that he had never been a partner in Wah Kei Garment Co., but that even if he had been, he had retired from the partnership by the time when the acts of infringement and passing off are alleged to have been committed. As I have already said, the Plaintiffs are no longer seeking to join Mr. Yuen as a defendant: they only seek to join as the 8th Defendant the former firm which he is alleged to have been a partner of. The matters which he wishes to allege do not relate to the liability of the partnership which formerly traded as Wah Kei Garment Co. to the Plaintiffs at all. They go only to whether Mr. Yuen is liable for the debts of that partnership. It is true that Ord. 81 r. 3(3) requires the writ to be served on Mr. Yuen if the Plaintiffs claim that he is liable for the debts of the partnership which formerly traded as Wah Kei Garment Co., but whether service of the writ on Mr. Yuen is appropriate has nothing to do with whether the partnership should today be joined as a defendant to these proceedings.

THE ORDERS TO BE MADE

15. Accordingly, the order I make on the Plaintiffs' summonses is that the Dodge Companies and the Wah Kei Defendants be added as Defendants to these proceedings. I make that order on the Plaintiffs' undertaking, which Mr. Garland told me the Plaintiffs are prepared to give, to apply for leave to amend the Statement of Claim, on the assumption that such leave is necessary, so as to add against the 1st and 4th Defendants the allegation of trademark infringement by exporting shirts and blouses to Isaacs in the U.S. If such leave, assuming it to be necessary, is not granted, the order which I make today adding the Dodge Companies and the Wah Kei Defendants to the proceedings as Defendants will lapse. Although I have decided in principle that the Dodge Companies and the Wah Kei Defendants should be added to these proceedings as Defendants, the Plaintiffs still need leave to amend the Statement of Claim to give effect to their joinder by pleading their case against them.

THE DOCUMENTATION

16. Finally, I return to the enormous number of documents in the bundles, as well as to the length and contents of the various affidavits and affirmations. I think that things may have got out of hand because those advising the Plaintiffs and the Dodge Companies might have lost sight of the fact that it was the existence of the Isaacs issue which was relevant for the purposes of these summonses, not its merits. The last thing I wish to be is judgmental, because I know how easy it is to be wise after the event, but I do not think that there was any need, for the purpose of enabling the Court properly to determine the issues raised by these summonses, for evidence to be filed relating to what the chances were of the defence raised by the Isaacs issue succeeding at trial. If I may say so, the same point applies to the argument relating to Mr. Yuen's liability for the debts of the partnership formerly trading as Wah Kei Garment Co. It was the existence of that argument which would have been relevant for the purpose of today (if the Plaintiffs had still wished to join Mr. Yuen as a Defendant), not whether in due course that argument would have been likely to succeed.