WONG TO YICK WOOD LOCK OINTMENT LTD v. BENSUNVILLE LTD t/a NANYANG (SINGAPORE) MEDICINE CO

HCA 595/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 595 OF 2014

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AND

HCA 600/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 600 OF 2014

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BETWEEN

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D E C I S I O N

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The applications

1. The plaintiff (“P”) in each of the actions of HCA 595/2014 and HCA 600/2014 respectively took out a summons for, inter alia:

(a) To add Kou Wai Peng (“Kou”) and Law Ka Ki (“Ka Ki”) trading as Nanyang (Singapore) Trading Co. as defendants in the respective actions; and

(b) To consolidate the respective actions as one under a new title.

2. The defendants (“Ds”) have no objection to consolidation of the two actions as proposed.

3. The argument will be only on the joining of the parties in the respective actions.

4. The parties are legally represented.[1]

Factual background

5. In the respective actions, P claims against the defendants for trade mark infringement and passing off by dealing in or with medicated balm under the sign “黄道老人” and their respective packaging.[2]

6. The reasons for adding Kou and Ka Ki are that in the investigation in September 2015, four samples were bought from Ka Ki, two of which were manufactured by Nanyang (Singapore) Trading Co. and the packaging was bearing the sign of “黄道老人”, identical to the infringing packaging in HCA 595/2014 action.  Also, according to P, Ka Ki told the investigator that they had set up different companies to deal with the various brands of the medicated oil they sold and Kou told the investigator that she was responsible for overseeing the production of the medicated oil and Ka Ki was responsible for the sales.[3]

Discussion

7. P relies upon Order 15 rule 6(2)(b) of the Rules of the High Court which provides that, at any stage of the proceedings in any cause or matter the Court may on such terms as it thinks just and either of its own motion or on application—

“(b) order any of the following persons to be added as a party, namely—

(i) any person … whose presence before the Court is necessary to ensure that all matters in dispute in the cause or matter may be effectually and completely determined and adjudicated upon, or

(ii)  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.”

8. Ds oppose the joining of the parties and amendment of the writs on the following grounds:

(a)  The applications come far too late when one case is effectively ready for trial and the other requires only the filing of witness statements. The joinder, if allowed, will set the cases back to square one with new pleadings, new discovery and new witness statements;

(b)  The joinder will require amendments to the pleadings to require the pleading of causes of action that arose after the issue of the writ. This is impermissible without the consent of the defendants; and

(c)  Kou and Ka Ki are not necessary parties to the action nor is it just or convenient to join them. [4]

9. In conclusion, Ds submit:

(a)  The joinder is unnecessary for the effective adjudication of the case. The result of the case would not be affected in any manner by their joinder;

(b)  If Ps prevail in this action they will be granted injunctions and awarded damages. If the current Defendants are injuncted, there is no suggestion that Kou or Ka Ki would breach these injunctions. The companies would cease production of the alleged infringing products: Kou would no longer supervise the production; and, Ka Ki would not have a supplier; and

(c)  Kou and Ka Ki are not necessary parties to the action nor is it just or convenient to join them.[5]

10. As the actions have not been set down for trial, the ground of late application does not have much merit in it.

11. The second ground is supported by the decisions of the Court of Appeal in Wing Siu Co Ltd v Goldquest International Ltd [2003] 2 HKC 64 (per Rogers VP at para 21), that a Statement of Claim, whether endorsed on the writ or not, cannot be amended, without the defendants’ consent, whether with the leave of the court or not, where the effect of the amendment is to add a cause of action which accrued since the issue of the writ.  P, in its late submissions this morning shortly before the hearing, submits that the amendment is not a new cause of action which arose after the date of the writ, but rather, it is the same cause of action against the joined parties for their tortious acts committed before the date of the writ.  The amendment will therefore be, in effect, the joining of the parties to make them liable for the tortious acts committed by all the defendants.

12. Ds submit that there is no evidence or allegation that Kou and Ka Ki were engaged in any allegedly infringing activities prior to the issue of the writ in April 2014.[6]  P refutes this allegation by relying upon the date of the incorporation of Nangyang (Singapore) Trading Co. by Ka Ki since 23 April 2012, coupled with the admission made to the investigator that the parties were involved in the overseeing of the manufacturing of the products and the sale of them.

13. For these applications, it is only necessary to consider whether there is any evidence in support of P’s applications for joinder by showing, on affidavit, that the causes of action against the respective joinders are post-writ.  Ds submit that there were the evidence revealed in the investigation by P in 2015.  P submits that the solicitor’s affidavit in support should be read not in the narrow sense as proposed by Ds.  The investigator was making the investigation in 2015.  Madam Kou answered the questions put to her. She related the act of overseeing the manufacturing of the infringing product in the past tense, so were the conducts of Ka Ki.  Therefore, the Court should take the evidence that P will rely upon the incidents prior to 2015 in support of its claims against the joinders as infringement is a continuous action in this sort of claims.  I agree.

14. In the circumstances, there is evidence, prima facie, that the causes of action are not post-writ.

15. Ds then rely upon that joining the joinders will not be necessary for the just resolution between the parties.  The main issues of dispute between P and Ds, without the joinders, are infringement of P’s trade marks and passing off of P’s products.  Joining the joinders will complicate the evidence and the joining of them will not expedite the proceedings, quite the contrary.  If P is minded to sue the joinders, it can take out a separate action against them.  It may apply for consolidation of the actions, which may be opposed by Ds.  The Court may stay this action pending the resolution of the main action between the parties.

16. P submits that it wants to join them as parties as they are members of the same family.  The effect of the injunction will bind the joinders personally.  Ds submit that Madam Kou will be bound under the original injunctions as she is the secretary of the companies.  But Ka Ki may not be bound without a separate injunction.

17. When faced with doubt, the Court should adopt a liberal approach in the assessment of the situations before exercising its discretion one way or the other.

18. The balancing exercise will be to consider whether adding the joinders into the action will cause any prejudice to Ds or wasting costs or causing any delay.

19. The actions will be consolidated by agreement by new set of pleadings. The joining of the joinders will no doubt cause issues of dispute by Kou and Ka Ki.  However, it seems that there was not much dispute over the admissions made by Kou to the investigator.  The fact remains that Ds have been selling the products under dispute throughout the period of thirteen years.  As Ds submit, the main issue is whether there had been an infringement of P’s trade marks and passing off of P’s products by packaging, which Ds deny having committed any of them.

20. I therefore find that the joining of Kou and Ka Ki should not complicate the issues of disputes.  There may be issues of assessment of damages against them, which should not bother this Court in light of the scale of damages against Ds if P succeeds in the consolidated action.

21. If P’s applications are refused, it can be envisaged that P may take out separate actions against them and there will be other satellite litigation over the dealing of the action with this consolidated action.

22. I therefore decide to exercise my discretion in favour of P for its applications for the joinders.

Costs and order

23. As to the costs of these applications, Ds ask this Court to take into consideration that the costs of and occasioned by the amendments to the writ and the fact that counsel’s written submissions are late this morning.

24. I shall make an order in terms as follows:

(a) By consent, HCA 595/2014 and HCA 600/2014 be consolidated as per paragraph 5 of the respective summonses for HCA 595/2014 and HCA 600/2014 both dated 1 February 2016;

(b) Paragraphs 1-4 of the respective summonses for the respective actions be allowed;

(c) Paragraphs 6-8 in HCA 595/2014 and HCA 600/2014;

(d) Costs of the applications and for the hearing today are as follows:

(i) The costs of the consolidation be in the cause;

(ii) The costs of and occasioned by the amendments to the writs be to Ds;

(iii) The costs of today’s hearing (with counsel’s certificate) be to P, as to which 15% be reduced for the late written submissions in reply;

(iv) The above costs are to be taxed if not agreed in any event.

(e) For case management directions, the parties agree:

(i) The parties shall exchange the lists of documents within 28 days from the close of the consolidated pleadings, followed by inspection within 7 days thereafter;

(ii) The parties shall exchange the witness statements within 56 days after inspection of documents;

(iii) The parties shall obtain Counsel's advice within 28 days thereafter;

(iv) All interlocutory applications as may be advised shall be taken out within 14 days thereafter; such application, if contested, shall be fixed before the Registrar for argument;

(v) Time shall run during the Long Vacation;

(vi) Liberty to apply;

(vii) The parties shall apply for a Case Management Conference within 14 days after obtaining Counsel's advice.