WINFA ENTERTAINMENT (HOLDING) LTD AND ANOTHER v. LIFESTAR PHARMACEUTICAL LTD AND ANOTHER

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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JUDGMENT

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1. This action concerns what has been described as a health product called LifeStar Natural Health Revitalizer. On the 14th November 1995, the 1st Plaintiff and 1st Defendant entered into a shareholders agreement which provided that they should be the shareholders of the 2nd Plaintiff, LifeStar Health Care Products Limited. And that the 1st Plaintiff should be a 70% shareholder in the 2nd Plaintiff and the 1st Defendant 30%. The purpose of that agreement was so that the 2nd Defendant would be given a licence by the 1st Defendant to use its name of LifeStar and other related names, labels and logos for the marketing promotion and sale of the Revitalizer. It was provided that the licence to the 2nd Plaintiff should forthwith cease and determine upon the termination of the Agreement for any reason whatsoever. The Agreement also provided that the main business of the 2nd Plaintiff should be as the sole and exclusive sales agent of the 1st Defendant, of the health product, namely Lifestar Natural Health Revitalizer.

2. The Plaintiff now complains in the Statement of Claim of a breach of this Agreement, as well as certain advertisements which the 1st and/or 2nd Defendant caused to be published in the Oriental Daily. The advertisements, I believe, appeared on the 18th July 1997. The first consisted of an advertisement in Chinese which according to the Statement of Claim, claim that "a) the 1st Defendant was the manufacturer of the Product; b) the agency agreement between the 2nd Plaintiff, a subsidiary of the 1st Plaintiff had become ineffective since the 15th May 1997." It is also said that the advertisement also warned readers to be aware of imitation/fake products.

3. The second advertisement is in the form of a "Solemn Announcement" which has been reproduced in the Statement of Claim, basically it stated that the 1st Defendant "is the sole legal manufacturer and global sole agent" of the Revitalizer, that since the 15th May 1997, the 1st Defendant had terminated the Agreement with the 1st Plaintiff. And most importantly,

4. The Statement of Claim complained that the announcements were untrue and defamatory of the Plaintiff. The Plaintiffs are represented by Mr. Ludwig Ng and the Defendants by Mr. Colin Shipp. No affidavit has yet been filed on behalf of Defendants, but the Plaintiffs are now seeking an injunction pending a substantive hearing of the inter parte summons. It is not expected that the inter parte summons can be heard for at least a few weeks yet because affidavits would have to be filed on behalf of the Defendants and then responded to by the Plaintiff.

5. In the meantime, the Plaintiffs wish to have an injunction to restrain the 2nd Defendant from publishing similar announcements. This application is opposed by Mr. Shipp on behalf of the Defendant. It is said that insofar as the claim is based on defamation the defence will be justification and I was reminded that normally an injunction restraining publication will not be granted when the defence is justification.

6. So far as the claim based on breach of the Agreement is concerned, it is not clear from the Statement of Claim exactly what it is that is being complained of. It seems clear, however, that the Plaintiffs have alleged in the Statement of Claim, that the 1st Defendant was guilty of misrepresentation and that apart for the misrepresentation, the 1st Plaintiff would not have entered into the Agreement with the 1st Defendant. Be that as it may, it is complained that since April of this year, the 1st Defendant has been launching its own marketing compaign for the product in breach of the Agreement.

7. So far as the claim based on contract is concerned, although Mr. Ng reminds me of it, I do not believe that it really affects or supports directly, the injunction which the Plaintiffs are now seeking against the Defendants.

8. Mr. Shipp also make the point that although there is an assertion of irreparable damage, there is no evidence on balance of convenience nor is there any evidence that the Plaintiffs would be able to pay damages on their undertaking. Bearing in mind that the Defendants will be seeking to justify the advertisements and what Mr. Shipp has said about the Defendants' belief that some of the products which the 1st and/or 2nd Plaintiff are selling in Hong Kong may be injuries to health and that it is in the public interest that they should let it be known, in all the circumstances, I do not believe a case has been made out for an injunction pending a substantive hearing of this summons. That being the case, I will not make an order restraining the Defendants in the meantime.