ZIDA TECHNOLOGIES LTD. v. TIGA TECHNOLOGIES LTD. AND OTHERS

HCA 5617/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 5617 OF 2000

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D E C I S I O N

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Background:

1. The 2nd to 5th defendants were former employees of the plaintiff. The plaintiff alleged that while in the employment of the plaintiff, they set up the 1st defendant company and infringed the plaintiff's copyright relating to the plaintiff's computer motherboard. On 23 October 2000, I made an order by consent to vacate the hearing of the plaintiff's application for interlocutory injunction upon the defendants' undertaking. One of the undertaking is in the following terms:

"within 14 days of service upon them of this Order, in the case of the 1st Defendant by a director and in the case of the 2nd, 3rd, 4th and 5th Defendants by themselves, to make and file an Affidavit or Affirmation (and serve a copy thereof on the Plaintiff's solicitors) setting forth the names and addresses of all persons, firms and companies

(a) to whom the Defendants or any of them have supplied, and

(b) from whom the Defendants or any of them have obtained supplies of motherboards or PCBs of the type referred to in Undertaking (1)(a) together with the dates and quantities of each such supply, and do exhibit to such Affidavit or Affirmation copies of all documents in the possession, power, custody or control of the Defendants or any of them relating thereto."

2. In his second affirmation, the 5th defendant averred that the 1st defendant sent computer parts to Gilide Electronic Science & Technology (Shenzhen) Company Limited in the PRC (hereinafter called "Gilide") for assembly into motherboards of the types referred to in the undertaking which were then sent to the 1st defendant. The defendants refused the plaintiff's request for disclosure of the dates and quantities of the parts, i.e. PCBs supplied by the 1st defendant to Gilide and motherboards supplied by Gilide to the 1st defendant. The plaintiff then issued the present summons under Order 45 rule 6 of the Rules of High Court requesting the defendants to comply with their undertaking.

3. The defendants contested the application, firstly, on a procedural point that the summons had not been served personally on the defendants and, secondly as a matter of substance, that my Order of 23 October 2000 had been complied with.

Whether personal service of summons required:

4. Mr Tay on behalf of the defendants argued that Orders 45 to 52 are enforcement orders and should be read together as they deal with ways in which a successful party may invoke the machinery of the court towards obtaining satisfaction of his judgment debt or enforcing compliance of the order. He submitted that Order 46 rule 6(3), under which this application is made, makes it mandatory that the summons must be effected by personal service as it provides that the summons "must ... be served on the person required to do the act in question". He referred to rule 7(2)(a) which provides that "an order shall not be enforced under rule 5 unless a copy of the order has been served personally on the person required to do or abstain from doing the act in question". As the summons had not been served on the defendants personally but on their solicitors, Mr Tay submitted that the plaintiff's application must be dismissed because of these procedural irregularities.

5. I do not think the words "served on the person required to do the act in question" in Order 45 rule 6(3) mean personal service. Service could not be effected in vacuo. A document, or order, or as in the present case, a summons, must be served on someone who is required to respond to it. On the other hand, the words "personal service" or "served personally" describe the mode of service. Thus in my view, the phrase "served on the person" is not to be equated with "personal service" or "served personally".

6. While Orders 45 to 52 are enforcement orders and Order 45 is titled "Enforcement of Judgments and Orders", Order 45 provides for various modes of enforcement, e.g. for payment of money, for possession of land, for delivery of goods, etc. Rule 5 provides for the more draconian form of enforcement such as sequestration and committal, for which Orders 46 and 52 give further provisions. Rule 6 provides for procedures requiring certain acts to be done and fixing the time for the doing of such act. This rule does not provide for sequestration or committal, though failure to do the act within the time extended under rule 6 may invoke the measures provided for under rule 5.

7. The fact that rule 6 forms part of the enforcement provisions does not necessary mean documents to be served under rule 6 must be served personally. Different rules provide for different modes of service of documents and orders. In general, unless specifically required by the rule itself, a document need not be served personally. Order 65, rule 1 provides:

"(1) Any document which by virtue of these rules is required to be served on any person need not be served personally unless the document is one which by an express provision of these rules or by order the Court is required to be so served.

(2) Paragraph (1) shall not affect the power of the Court under any provision of these rules to dispense with the requirement for personal service."

8. While rule 7(2)(a) requires personal service, there is no such express requirement under rule 6. I think it is wrong to import the requirement for personal service under rule 7(2)(a) into rule 6. It should also be noted that rule 7(2)(a) provides for service of a copy of the Court order, i.e. in this case, my Order of 23 October 2000, if it is intended to enforce my Order by committal. But this is not what the plaintiff intends by the present summons. Furthermore, the plaintiff is not seeking by this summons to invoke the Court's jurisdiction under rule 5, for which personal service of a copy of my Order is a pre-requisite.

9. The learned authors of Hong Kong Civil Procedure 2001 have usefully listed under para 65/2/2 the documents for which personal service is required. The list includes among other things, order to do an act if it is intended to enforce it by committal, i.e. service of the order under Order 45 rule 7 discussed above, and notice of motion for committal to which Order 52 applies. The list does not include the summons under Order 45 rule 6. It must therefore be the view of the learned authors that personal service is not required for summonses issued under this rule. I endorse that view and find that personal service is not required for the summons issued under Order 45 rule 6(3).

10. I have briefly touched on Mr Tay's other argument about the plaintiff's failure to serve my Order with a penal endorsement. That is only required under rule 7, if the plaintiff intends subsequently to enforce my Order by means of sequestration or committal. It is never the intention of the plaintiff to do so.

11. I therefore conclude that there is no procedural irregularity.

12. Meaning of the word "supply":

13. The bone of contention here is what is the meaning of the word "supply" in paragraph 2 of the undertaking, i.e. whether delivery of PCBs belonging to the 1st defendant to Gilide for the purpose of assembly into motherboards and/or delivery of such finished product to the 1st defendant constitute "supply".

14. Though the word "supply" in the undertaking was drafted and agreed to by the parties' solicitors, I must attribute to that word its natural and ordinary meaning. In Regina v. Maginnis, [1987] 2 WLR 765, in interpreting the word "supply" in the Misuse of Drugs Act 1971, Lord Keith in the House of Lords held at p 767:

"The word "supply," in its ordinary natural meaning, conveys the idea of furnishing or providing to another something which is wanted or required in order to meet the wants or requirements of that other. It connotes more than the mere transfer of physical control of some chattel or object from one person to another. No one would ordinarily say that to hand over something to a mere custodier was to supply him with it. The additional concept is that of enabling the recipient to apply the thing handed over to purposes for which he desires or has a duty to apply it. In my opinion it is not a necessary element in the conception of supply that the provision should be made out of the personal resources of the person who does the supplying. Thus if an employee draws from his employer's store materials or equipment which he requires for purposes of his work, it involves no straining of language to say that the storekeeper supplies him with those materials or that equipment, notwithstanding that they do not form part of the storekeeper's own resources and that he is merely the custodier of them. I think the same is true if it is the owner of the business who is drawing from his own storekeeper tools or materials which form part of his own resources. The storekeeper can be said to be supplying him with what he needs."

15. Thus in his Lordship's opinion, while "supply" connotes more than a mere transfer of physical control, ownership either by the transferor or transferee of the things transferred, is immaterial.

16. Mr Tay sought to rely on the following dissenting opinion of Lord Goff at 772:

"The primary rule of construction is that we should attribute to words their natural and ordinary meaning, unless the context otherwise requires. So what is the natural and ordinary meaning of the word "supply"? I hesitate to attempt a definition, especially as the word under consideration is not always very precisely used; but to me the word, as used in relation to goods, connotes the idea of making goods available to another from resources other than those of the recipient. This approach is, I consider, consistent with some of the dictionary meanings in the Shorter Oxford English Dictionary, for example, "the act of making up a deficiency, or of fulfilling a want or demand," and "the act of supplying something needed." It is also, I believe, consistent with the ordinary use of the word in everyday speech. So to deliver goods to a buyer or his agent under a contract of sale would obviously be to supply goods to that person, and indeed would perhaps provide the typical example of a supply of goods; though I can see no reason why the delivery of goods by way of gift should not also amount to a supply of goods.

But we are concerned in the present case with a deposit of goods; and I do not feel able to say either the delivery of goods by a depositor to a depositee, or the redelivery of goods by a depositee to a depositor, can sensibly be described as an act of supplying goods to another."

17. He submitted that Lord Keith and the other three Law Lords who formed the majority opinion are criminal lawyers while Lord Goff is more of an expert in civil law and his opinion should be preferred. With respect, I do not think it right to put such a constraint on their Lordships' opinion. Lord Keith's opinion is a well considered and strong majority opinion of the House of Lords and must be treated with the respect it deserves.

18. Mr Tay next submitted that Lord Keith's interpretation was in the context of the word "supply" in the Misuse of Drugs Act 1971 and is therefore not its ordinary natural meaning. Again, I respectfully disagree. The examples of the storekeeper, the employee and the employer referred to by Lord Keith, which I took pain in citing, make it plain that Lord Keith was talking in terms of ordinary and natural meaning of the language in our daily life and not just in the context of the Misuse of Drugs Act. Thus, when the storekeeper gives to a colleague tools which belong to the owner, the storekeeper supplies tools which he does not own. When the same storekeeper gives to his employer tools which belong to the employer, he supplies his employer with tools. It is in this latter example that Lord Goff differed, i.e. a bailee does not supply goods when he returns goods to the bailor.

19. I think the word "supply" is widely but not very precisely used. What it means depends very much on its context. In its wide sense, it has the meaning attributed to it by Lord Keith, i.e. ownership in the goods supplied is wholly irrelevant. In its narrow sense, it has the meaning attributed to it by Lord Goff, i.e. a bailor cannot be supplied by the bailee goods belonging to the bailor. In my view, if the employer in Lord Keith's example, has a relatively large business and the storekeeper determines the type and quality of tools and materials, purchases them for him and perhaps services or maintains the tools, then when the employer draws from the store those tools and materials, the storekeeper in every sense of the word supplies his employer with those tools and materials. On the other hand, if the employer operates a small business and purchases or decides what tools and materials to purchase, and the storekeeper merely keeps and stores those tools and materials no more than a bailee keeps the goods of his bailor, then I would prefer Lord Goff's interpretation. In my view, the meaning depends on its context. But in the context of Misuse of Drugs Act 1971, the House of Lords gave the word its wide meaning.

20. What about the present case? The 1st defendant supplied PCBs to Gilide, with or without other computer parts for Gilide to assemble them into motherboards. Gilide was paid for their services over and above that of an ordinary bailor or keeper of the goods. The PCBs were provided to Gilide for Gilide's assembly purpose and to earn their assembly charges and not just for safe keeping the PCBs. In this context, I find that when the 1st defendant provided Gilide with the PCBs, it supplied Gilide with PCBs within the meaning of the undertaking. It is even more so, if the parts and chips were provided by Gilide.

21. After the assembly, the PCBs have become motherboards, a goods of a different character altogether. They have value added to them and have the capability of processing data, which the PCBs previously had not. It is just like flour and butter which after processing have been turned into cookies. In this context, I find that when Gilide delivered the motherboards, which never existed before, to the 1st defendant, it supplied the 1st defendant with motherboards within the meaning of the undertaking.

22. This is a case of alleged infringement of copyright in the motherboard. The parties are not mere laymen. They are men of the trade. The undertaking would be meaningless if the defendants were not required to provide this information.

23. Mr Tay argued that the plaintiff should have issued a summons seeking the Court's clarification on the meaning of the word "supply" rather than instituting action under Order 45 rule 6 or should have sought to invoke the "liberty to apply" provision in my Order of 23 October 2000. The plaintiff's solicitors had communicated with the defendants' solicitors and were aware of where their differences lie. They formed the view that the defendants might honestly be mistaken about the extent of their obligation under the undertaking and it would be inappropriate to institute sequestration or committal proceedings and preferred to give them more time to comply with my Order before taking more draconian steps. That there might be other alternatives does not render their application inappropriate.

Conclusion:

24. Mr Tay asked for 14 days for the defendants to file affirmation or affidavits, if I am to grant the application. He also asked for the affirmations to be sealed and not to be opened or sent to the plaintiff pending the defendants' decision to appeal. While I respect the defendants' right to appeal against my decision, the procedure suggested by Mr Tay would incur unnecessary costs whether the decision was taken to appeal or not. I think it would be more convenient to grant the defendants 15 days to file and serve affirmations or affidavits. If they decide to appeal, they may lodge their appeal together with an application for stay of execution of my order, which Mr Burney has reasonably undertaken not to contest. If they decide not to appeal, they may file and serve their affirmations or affidavit anytime or on the 15th day after the period for appeal has lapsed.

25. For the above reasons, I grant the plaintiff's application but allow the defendants 15 days to comply. I order that the defendants shall jointly and severally pay the plaintiff's costs forthwith; such costs are to be taxed if not agreed.