WONG TO YICK WOOD LOCK OINTMENT LTD v. BENNY KONG & TSAI LLP formerly known as BENNY KONG & TSAI (A FIRM)

HCMP 362/2022

[2026] HKCFI 2519

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 362 OF 2022

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BETWEEN

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DECISION

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1.  By summons dated 19 December 2025, the Applicant seeks leave from the Court to make use of three affirmations made by Mr Tsai Yung Chieh David (“Mr Tsai”) in these proceedings for the purpose of lodging a complaint to the Law Society against the Respondent (“Firm”). Mr Tsai is a partner of the Firm.

2.  The Firm does not contest the application, but contends that there should be no order as to costs. At the hearing on 10 February 2026, I granted leave sought by the Applicant and, having heard arguments on costs from Mr John Yan SC (leading Mr Zenith Chan) for the Applicant and Mr Douglas Clark, solicitor advocate, for the Firm, I reserved my Decision on costs, which I now deliver.

3.  To give context to my Decision, it is necessary to set out some background facts leading to the application.

4.  The Applicant is the manufacturer and distributor of a medicated balm known as “黃道益活絡油”.

5.  In around mid-2017, the Applicant discovered that infringing medicated balms with the name “黃道盟活絡油” have been marketed and distributed to pharmacies in Tsim Sha Tsui by, inter alia, Nippon Taisun (HK) Limited (“Nippon Taisun”) which was the registered proprietor of the trademark “黃道盟” under Hong Kong trademark registration no. 303689821 (“Infringing Mark”).

6.  In 2018, the Applicant commenced HCA 2909/2018 (which later became HKIP 8/2021) (“Infringement Action”) against Nippon Taisun and other defendants for passing off and trademark infringement, and HCMP 48/2018 (“Invalidation Action”) against Nippon Taisun to invalidate the registration of the Infringing Mark. The Firm represented Nippon Taisun in both actions. Mr Tsai was the handling partner. He made and signed the Statement of Truth verifying the Defence of Nippon Taisun in the Infringement Action.

7.  By Judgment dated 27 May 2019 in the Invalidation Action, Wilson Chan J declared the registration of the Infringing Mark invalid.

8.  By Judgment dated 11 May 2021 in the Infringement Action (“Infringement Judgment”), Lok J entered final judgment against Nippon Taisun for passing off and trademark infringement in respect of its dealing with the Infringing Mark.

9.  The Applicant has limited information about Nippon Taisun save that it is a company incorporated in the Republic of Vanuatu. It therefore commenced the present proceedings in April 2022 to seek a Norwich Pharmacal order against the Firm for disclosure of the identity, contact details and addresses of (1) the director(s) and company secretary of Nippon Taisun, and (2) the person(s) acting for and on behalf of Nippon Taisun who instructed the Firm in relation to the registration of the Infringing Mark. This is to enable the Applicant to effect proper service of the court order on Nippon Taisun and to enforce the Infringement Judgment against it. On 16 May 2022, Lok J granted the disclosure order sought by the Applicant against the Firm (“Disclosure Order”).

10.  In compliance with the Disclosure Order, Mr Tsai filed the three affirmations which form the subject matter of this application.

11.  In his first affirmation filed on 6 June 2022, Mr Tsai deposed, inter alia, that:

(1) The identity, contact details and addresses of the director(s) and company secretary of Nippon Taisun were not provided to, and are unknown to, the Firm;

(2) The identity, contact details and addresses of the only person acting for and on behalf of Nippon Taisun who instructed the Firm in relation to the registration of the Infringing Mark is one “KW Cheung”. An email address and an address in the Republic of Vanuatu were disclosed; and

(3) A trademark clerk of the Firm first met “KW Cheung” at the Firm’s office in February 2016. Subsequently, “KW Cheung” confirmed instructions to the Firm to proceed with the registration of the Infringing Mark.

12.  In his second affirmation filed on 22 July 2022, Mr Tsai deposed, inter alia, that:

(1) He was unable to find out the full name of “KW Cheung” (which he identified as a “Mr”) from the Firm’s trademark files. After reviewing the Firm’s other files, he concluded that Mr KW Cheung was likely to be the 4^th Defendant in the Infringement Action with the full name “Cheung Ka Wah”;

(2) The Firm was unable to confirm, and there was no document in its possession which could verify, the telephone number of Mr KW Cheung which the Firm had separately provided to the Applicant by letter. Nor was the Firm able to locate any copy of identification card or identification document of Mr KW Cheung in its files;

(3) Mr KW Cheung first approached the Firm in mid-2015 in relation to the application to register two trademarks. Mr Tsai had met Mr KW Cheung personally in June 2015, and it is reasonable to assume (although Mr Tsai had no recollection) that Mr KW Cheung may have disclosed his full name at the time. Mr Tsai also vaguely recalled that the English name of Mr KW Cheung is “Eric” but he was not entirely sure. Mr Tsai simply addressed Mr KW Cheung as “Mr Cheung”. Mr KW Cheung might also have provided his business card to Mr Tsai, but none could be located in the Firm’s files. There is no document in the Firm’s files showing the full name of Mr KW Cheung; and

(4) The Firm does not and did not know the identity of the director or company secretary of Nippon Taisun.

13.  In his third affirmation filed on 2 June 2025, Mr Tsai deposed, inter alia, that:

(1) The Firm does not have additional identification documents or information of Nippon Taisun and its representatives; and

(2) The Firm has not prepared a CDD (client due diligence) form for the registration of the Infringing Mark.

14.  It is the Applicant’s case that on the face of the three affirmations of Mr Tsai, the Firm has breached its obligations under Practice Direction P issued by the Law Society, requiring law firms to verify the identity of their clients and their effective controllers and beneficial owners and keep records of their efforts. Failure to do so constitutes professional misconduct, which the Firm is under a duty to report to the Law Society.

15.  The Applicant contended that it was restrained from referring the three affirmations in its complaint against the Firm to the Law Society by operation of the implied undertaking pursuant to Order 24, rule 14A of the Rules of the High Court, which prohibits the use a document for any purposes other than those of the proceedings in which it is disclosed. It therefore brought the present application for leave of the Court to release it from the implied undertaking.

16.  On 2 February 2026, the Firm indicated that it consented to the Applicant’s use of Mr Tsai’s affirmations for the purpose of lodging a complaint to the Law Society, but contended that the Applicant’s summons should be withdrawn with no order as to costs.

17.  On 4 February 2026, the Firm: (1) complained that the Applicant’s summons was issued without first filing a Notice of Intention to Proceed as required by Order 3, rule 6; (2) did not consider that a court order was necessary if the Firm consents; and (3) will agree to an order in terms of the Applicant’s summons if the Applicant insists, but maintained that there should be no order as to costs.

18.  The complaint that no Notice of Intention to Proceed was filed was no longer maintained by Mr Clark. In any event, I agree with Mr Yan that the argument is misconceived. Such a notice is only required where a year or more has elapsed since the last proceeding in a cause or matter. This was not the case here. On 2 June 2025, the Firm’s present solicitors filed a Notice to Act and Notice of Change of Solicitors, and served the third affirmation of Mr Tsai on the Applicant. The present application was taken out on 19 December 2025, slightly more than 6 months afterwards.

19.  At the hearing, Mr Clark argued that despite consenting to the application fairly late in the day, the Firm should not be ordered to bear costs and there should be no order as to costs in this application. He made two points in support.

20.  First, Mr Clark contended that no court order is necessary. The Firm can release the Applicant from its implied undertaking. He relied on the following extract from Matthew & Malek on Disclosure (6^th ed) at para 19-08:

“The undertaking is imposed for the benefit of the party providing discovery and it is recognised that he can release his opponent from the undertaking by giving his consent to collateral use.”

21.  Reference was also made to EMI Records Ltd v Spillane [1986] 1 WLR 967 at 976E-F (per Sir Nicolas Browne-Wilkinson VC):

“In my judgment, the implied undertaking is only an undertaking not to use for any collateral purpose without the consent of the party who gave discovery. In the leading case, Home Office v. Harman [1981] Q.B. 534, C.A.; and [1983] 1 A.C. 280, H.L.(E.), there are many passages in which the undertaking is referred to as being one not without consent of the owner to use for a collateral purpose: see per Lord Denning M.R. [1981] Q.B. 534, 557; the formulation of the undertaking by counsel for the Home Office in the House of Lords [1983] 1 A.C. 280, 294; per Lord Scarman, dissenting, at pp. 310, 313 and 319; and per Lord Roskill, at pp. 322 and 326.”

22.  In response, Mr Yan made the point that Matthew & Malek on Disclosure and EMI Records both made reference to the House of Lords decision in Home Office v Harman [1983] 1 AC 280. Lord Scarman (dissenting) held that the implied duty was imposed by the Court but the contempt aspect of the obligation could be waived by the party giving discovery (at 313G). This was apparently contradicted by Lord Keith who stated (at 308G) that the implied obligation not to make collateral use of discovered documents is owed not to the owner of the documents but to the Court. I agree with Mr Yan that the correct position on whether a court release is necessary is open to argument. In circumstances where any breach of the implied undertaking may expose the Applicant to the risk of contempt, the Applicant was entitled to put the matter beyond doubt by seeking a court order.

23.  In any event, Mr Clark’s contention is somewhat divorced from reality, when prior to eventually consenting to the application, the Firm repeatedly alluded to in correspondence to the use of material disclosed in breach of the implied undertaking as being in contempt of court.

24.  Second, Mr Clark contended that the Applicant never asked for consent from the Firm to use the affirmations prior to taking out the present application.

25.  The short answer is that it is wholly unrealistic for the Applicant to expect consent from the Firm to be forthcoming, when the Firm in correspondence repeatedly denied any breach of Practice Direction P, and threatened to take legal action against the Applicant and its solicitors if any information disclosed was used for any other purpose.

26.  In such circumstances, it was not unreasonable for the Applicant to take out the present application, as necessitated by the stance of the Firm in correspondence prior to the summons. The Firm should therefore bear the Applicant’s costs of the application, having consented to the application only one week prior to the hearing.

27.  At the hearing I indicated to parties that I shall summarily assess costs. Parties have lodged their respective statement of costs and list of objections, which I have considered.

28.  The Applicant does not ask for certificate for two counsel but invites the Court to allow costs of leading counsel, who was instructed since June 2025 to advise on matters arising from the Firm’s disclosure under the Disclosure Order. Whilst I appreciate the assistance from Mr Yan, I do not believe this application is of such complexity that warrants the engagement of leading counsel. I will only allow the fees of a hypothetical reasonably competent junior for the work done by counsel. Taking a broad-brush approach, I allow counsel’s fees at HK$150,000 (including advice, drafting and court attendance on 10 February 2026). In this regard, I reject the Firm’s contention that no counsel’s fees should be allowed for the hearing which was fixed as a 30-minute “call-over” hearing. Given the Firm’s consent to the application came late, the Applicant was entitled to engage counsel for the preparation of and attendance at the hearing, even if the argument eventually only turned on costs.

29.  I disallow the fees of the senior assistant solicitor as the application does not warrant the engagement of three fee earners. I also discount part of the costs incurred for advising the Applicant on possible breaches of Practice Direction P and client due diligence (under section C1) and perusal of documents (under section D2) which are partially attributable to the Applicant’s intended complaint to the Law Society against the Firm rather than the taking out of the present application. Taking a broad-brush approach, I assess solicitors’ fees at HK$150,000.

30.  Accordingly, costs payable by the Firm to the Applicant is assessed at HK$300,000, to be paid forthwith.

31.  It remains for me to thank Mr Yan, Mr Chan and Mr Clark for their helpful assistance rendered to the Court.