HITACHI, LTD v. HTICAHI WEI CHU (HONG KONG) LTD

HCA2520/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2520 OF 2006

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REASONS FOR DECISION

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1. This is an appeal by the plaintiff against the decision of Master A. Ho dated 7 August 2007 whereby the Master refused to order the plaintiff’s solicitors, Messrs Yu & Partners to be empowered to sign and file all such documents and forms on the defendant’s behalf to change or facilitate the change of the defendant’s Chinese name “日立衞廚香港有限公司” to a name which does not include the Chinese characters “日立”.

2. The defendant was neither represented nor present at the hearing.

3. After hearing counsel for the plaintiff I dismissed the plaintiff’s appeal and indicated that I will give my reasons in writing, which I now do.

Background

4. By its Statement of Claim dated 15  November 2006, the plaintiff’s claim against the defendant, a company incorporated in Hong Kong, was for trade mark infringement and passing off in that the company name of the defendant in Chinese containing the words “日立” was calculated to confuse the public into the mistaken belief that the defendant’s business or product was connected to that of the plaintiff.

5. The plaintiff claimed, inter alia, various injunctive reliefs to prevent the defendant from using the Chinese words “日立” as part of its company name as well the change of the defendant’s existing Chinese name to some other name which does not include the Chinese characters “日立”.

6. Default judgment was entered against the defendant by Deputy High Court Judge Carlson on 11 January 2007 and all the reliefs claimed by the plaintiff in its Statement of Claim was ordered by the deputy judge.

7. Specifically, paragraph 2 of the Order of the deputy judge states :

“

the Defendant do within 14 days from service of this Order procure the removal of the registration of the Chinese corporate or trade name “日立衞廚香港有限公司” from the Register of Companies Registry, the Business Registration Office of the Inland Revenue Department and all other government agencies in Hong Kong and that the Defendant do within 14 days from service of this Order take all such steps as lie within its powers to change or facilitate the change of the Defendant’s said name to some other name which does not include the Chinese characters “日立” or any of the Plaintiff’s business or trade names or any colourable imitations thereof or which is not likely to mislead or deceive the public into the belief that such company is the same as or is in any way connected with the Plaintiff, its subsidiaries, affiliated or associated companies;”

8. The Order of Deputy  Judge  Carlson was served on the defendant’s registered office in Hong Kong on 25 January 2007.

9. Nothing was done by the defendant to effect a change of its name as ordered by Deputy Judge Carlson.

10. There was some suggestion that the defendant is a “shadow company” in Hong Kong where it is incorporated and registered, but carries on its business in Mainland China thereby misleading the public there with its Chinese name.

11. The company search relating to the defendant company shows it to have been incorporated only in October 2006 and that it has only one director, a Mr Jin Bo, who holds a Chinese passport.  It has a registered office in Wanchai and its affairs taken care of in Hong Kong by a corporate secretary.

12. An ex-parte application was brought before Master A. Ho by the plaintiff for an order that the defendant having failed to comply with the Order of Deputy Judge Carlson, the plaintiff’s solicitors, Messrs Yu & Partners, be empowered to sign and file all such documents and forms on the defendant’s behalf to change or facilitate the change of the defendant’s Chinese company name “日立衞廚香港有限公司” to some other name which does not include the Chinese characters “日立” in order to comply with the Injunction Order.

13. That application was refused by Master Ho on 6 August 2007 for two reasons :

(a)	that the court could not allow the plaintiff to choose a new name for the defendant; and
(b)	the application had not been made inter partes.

14. The plaintiff appealed against that decision of Master Ho.

Plaintiff’s appeal

15. Although the initial application before the Master was made ex-parte by the plaintiff, in so far as the appeal from the Master’s decision is concerned, the Notice of Appeal was duly served on the defendant at its registered office in Hong Kong.

16. To that extent, the initial failure of the plaintiff to make an inter partes application has been remedied.

17. In appealing Master Ho’s decision, the plaintiff seeks to rely upon Order 45 rule 8 of the Rules of the High Court, and also section 25A of the High Court Ordinance, Cap. 4.

18. Order 45 rule 8 states :

“

If an order of mandamus, a mandatory order, an injunction or a judgment or order for the specific performance of a contract is not complied with, then, without prejudice to its powers to punish the disobedient party for contempt, the Court may direct that the act required to be done may, so far as practicable, be done by the party by whom the order or judgment was obtained or some other person appointed by the Court, at the cost of the disobedient party, and upon the act being done the expenses incurred may be ascertained in such manner as the Court may direct and execution may issue against the disobedient party for the amount so ascertained and for costs.”

19. Section 25A of the High Court Ordinance states :

“	(1)	Where the Court of First Instance has given or made a judgment or order directing a person to execute any conveyance, contract or other document, or to endorse any negotiable instrument, then, if that person—
		(a)	neglects or refuses to comply with the judgment or order; or
		(b)	cannot after reasonable inquiry be found,
		the Court of First Instance may, on such terms and conditions, if any, as may be just, order that the conveyance, contract or other document shall be executed, or that the negotiable instrument shall be endorsed, by such person as the Court may nominate for that purpose.
	(2)	A conveyance, contract, document or instrument executed or endorsed in accordance with subsection (1) shall have the same effect as if it had been executed or endorsed by the person originally directed to execute or endorse it.”

20. Based on the above provisions, it was submitted by the plaintiff that the court had both the authority and the jurisdiction to grant the order applied for and that Order 45 rule 8 as well as section 25A were intended to assist successful parties in litigation to enforce the kind of orders stated therein when the disobedient party attempted to avoid compliance.

Decision

21. In so far as Order 45 rule 8 is concerned, an almost identical situation as in our present case occurred in England in the case of Halifax plc & Ors v. Halifax Repossessions Ltd & Ors [2004] BCC 281.

22. In that case the claimant/respondent “Halifax” brought proceedings against Gopee and three other companies for trademark infringement and passing off by reason of the inclusion of the word “Halifax” in the companies’ names or any word confusingly similar to “Halifax”.  Judgment was given against Gopee in February 2002.  In May 2002, Patten J ordered that as soon as practicable the registrar of companies change the names of the three defendant companies in each case to names not including the word “Halifax” or any word confusingly similar to “Halifax”.  The names of the companies were not changed.

23. On appeal by Gopee and the three defendant companies, it was held by the Court of Appeal in England that Order 45 rule 8 did not enable the court to give authority to a person to change the name of the company in a manner which did not comply with section 28 of the Companies Act 1985.  The court could not vary the requirement in section 28 for a special resolution to effect a change of name of a company.  On that basis the order of Patten J could not stand.

24. Paragraph  13 of the judgment of Arden  LJ, at page  285 states :

“

I turn to the question of the issue of law raised by this appeal.  In my judgment, Order 45, r.8 does not enable the court to give authority to a person to change the name of the company in a manner which does not comply with s.28 of the Companies Act 1985.  A registered company, such as these three defendant companies are, is a creature of statute.  A registered company can only act in accordance with the statutory scheme in the Companies Acts and likewise its members can only act in accordance with that statutory scheme.  In my judgment, the court cannot vary the requirement in s.28(1) for a special resolution to effect a change of name.  Moreover, if Mr Hacon’s submissions were correct, there would be some very surprising results.  There is no provision in Order 45 r.8 for the court’s order to be filed at the Companies Registry, and there is no provision in the Companies Act 1985 for the registrar to act upon an order of the court so filed.  Accordingly, there would be no issue of a certificate upon incorporation on change of name.  Moreover, there is no provision stating when a change of name pursuant to an order of the court would take effect.  Furthermore, Mr. Hacon’s submission involves the proposition that there can be a change of name by a method for which no express statutory provision is made.  In my judgment, for the reasons already given, that proposition cannot be correct.”

25. In Hong Kong, our Order 45 rule 8 is almost identical in wording to the English Order 45 rule 8.  The difference in wording is quite immaterial to this decision.

26. Likewise, section 22(1) of the Companies Ordinance in Hong Kong, like section 28(1) of the 1985 Companies Act in England, also provides that a company may by special resolution change its name, albeit that the wording of the two subsections are not identical.

27. Furthermore, section 22(7) of the Companies Ordinance in Hong Kong, makes provision that where a company gives notice of a change of name under sub-section (1A) the Registrar shall enter the new name on the register in place of the former name and issue a certificate of the change of name.  That is strikingly similar when compared to the provisions in section 28(6) of the 1985 Companies Act in England.

28. Lastly section 116 of the Companies Ordinance in Hong Kong provides for special resolutions and is also strikingly similar to the English provision as contained in section 378 of the 1985 Companies Act.

29. With the above similarities in the statutory provisions relating to change of name for a company, there can be no doubt, in my view, that the reasons given by the English Court of Appeal in the Halifax case equally apply to Hong Kong such that Order 45 rule 8 does not enable a court to give authority to a person to change the name of a company in a manner which does not comply with section 22 of the Companies Ordinance, Cap. 32 and that the court could not vary the requirement in section 22 of the Companies Ordinance for a special resolution to effect a change of name.

30. The plaintiff attempted to distinguish the Halifax case from the present case submitting that in the Halifax case, the registrar of companies was ordered by Patten J to change the name of the three defendant companies whereas in the present case, the plaintiff was applying for an order that the plaintiff’s solicitors be empowered to do so.

31. However, it is clear from the underlying rationale of the judgment in the Halifax case that Order 45 rule 8 did not enable the court to give authority to any person (not just the registrar of companies) to change the name of the company since it was not possible to vary the statutory requirement for a special resolution to effect such a change of name.

32. Moreover, the plaintiff in the present case, by putting forward their own solicitors to be so appointed meet up with a further difficulty in that there must be a conflict of interest for the plaintiff’s own solicitors to be acting on behalf of the defendant in having to choose a new name for the defendant company.

33. Therefore for the reasons given, it is not open to the plaintiff to rely on Order 45 rule 8 of the Rules of the High Court in seeking the order applied for by them and Master Ho was entirely correct to have refused their application.

34. As for section 25A of the High Court Ordinance, that section cannot assist the plaintiff since it is only applicable where there is “a judgment or order directing a person to execute any conveyance, contract or other document, or to endorse any negotiable instrument”.  There is no such judgment or order in the present case.

35. It would appear that section 25A was relied upon by the plaintiff because the form of the plaintiff’s initial application to the Master was for an order that the plaintiff’s solicitors, Messrs Yu & Partners be empowered to sign and file all such documents and forms on the defendant’s behalf to change or facilitate the change of the defendant’s Chinese company name.  [My emphasis]

36. In so doing the plaintiff was labouring under the mistaken belief or misapprehension that all that was required was to sign and file certain documents to effect the change of the company name, without fully appreciating the statutory provisions of section 22 of the Companies Ordinance whereby the change of name for a company has to be by special resolution of the company.

37. For these reasons therefore, the appeal by the plaintiff was dismissed.

Postscript

38. Having said what has been stated above leading to the dismissal of the appeal by the plaintiff, it would be necessary for me to further state the following by way of a postscript lest it be thought that in dismissing the plaintiff’s appeal, the court was giving its blessing to the defendant in its non-compliance with the default judgment given by Deputy Judge Carlson.

39. The appeal was dismissed because the plaintiff adopted the wrong approach in its attempt to obtain an order from the court to effect the change of the Chinese name of the defendant’s company, without the involvement of the defendant company.

40. There were other avenues open to the plaintiff even leaving aside contempt proceedings.

41. One such avenue may be for the plaintiff, armed with the judgment of Deputy Judge Carlson, to approach the Registrar of Companies and seek his assistance in the exercise of his power under section 22A of the Companies Ordinance to direct the defendant company to change its Chinese name.

42. If, notwithstanding such direction by the Registrar to change its name, the defendant company makes default with such direction, the Registrar has power to impose a daily fine of $700 upon the company (see section 351 and Twelfth Schedule, Companies Ordinance).

43. If notwithstanding such daily fine, the defendant company still continues the default, the daily fine for such default, over a period of some 15 days, will have accumulated to over $10,000 whereby the Registrar of Companies will be in position to issue a statutory demand upon the defendant company.  If such statutory demand is unmet, the Registrar will have power to cause the defendant company to be wound up (see sections 177and 178, Companies Ordinance).  

44. I say this only by way of illustration that there are sufficient and adequate sanctions provided for in our laws which will ensure that defendants such as the present one will not easily escape or evade proper compliance with orders of the court simply by their inaction or by their absence.