KABUSHIKI KAISHA YAKULT HONSHA AND OTHERS v. YAKUDO GROUP HOLDINGS LTD AND ANOTHER

HCA 2409/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2409 OF 2002

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D E C I S I O N

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1. I have set out the history of this application in my Ruling of 12 June 2003. Pursuant to the directions contained in my Ruling, Mr Ho filed further submissions on 19 June 2003 and Mr Kwan replied on 26 June 2003.

2. There is no dispute as to the correct approach that the court should adopt in an application for inspection of documents. The application is made under Order 24 Rule 11. Rule 11(1) expressly directed the court to have regard to Rule 13 in the exercise of its discretion. Rule 13 stipulates that the court could only order production of documents for inspection if it is of the opinion that the order is necessary either for disposing fairly of the cause or matter or for saving costs.

3. Mr Kwan cited a number of cases. I have duly considered the same. In my judgment, the following principles extracted from the cases are particularly pertinent. The purpose of inspection is to ensure that one party does not enjoy an unfair advantage or suffer an unfair disadvantages in the litigation as the result of a document not being produced for inspection: per Sir Thomas Bingham MR in Taylor v Anderton [1995] 1 WLR 447 at 462. The court should examine the facts of the individual case and exercise its discretion having regard to the issues in the case, the nature of the documents and the information which the documents are likely to contain (see Neill LJ in Wallace Smith Trust v Deloitte [1997] 1 WLR 257 at 267G to H).

4. In Wallace Smith Trust v Deloitte [1997] 1 WLR 257 at 272 D to E, Simon Brown LJ said disclosure will be necessary if,

(a) it will give "litigious advantage" to the party seeking inspection, and

(b) the information sought is not otherwise available to that party by, for example, admissions, interrogatories or from some other source, and

(c) such order for disclosure would not be oppressive, perhaps because of their sheer volume.

5. Mr Kwan also urged this court to bear in mind that on the question of oppression, Mayo VP had said the following in Yau Chin Kwan v Tin Shui Wai Development Ltd CACV 247 of 2001, 4 July 2001, at p. 4 of the judgment,

"It can reasonably be assumed that the defendant and those advising him should have a sophistical system for the retention and retrieval of documents and there should be no undue difficulty in compliance with the order which is being sought by the plaintiffs."

One should note that the scope of discovery sought in that case was limited by reference to specific subject matters and duration.

6. I now turn to the requests of the Plaintiffs. The Schedule in the summons for inspection listed out the documents the Plaintiffs sought. There are eight items:

(1) The agenda of the 1st Defendant's press conference and other relevant documents by the 1st Defendant relating to its press conference held on 27 September 2002;

(2) The business plan for and documents relating to the formation and organization of the 1st Defendant and its subsidiaries and factories;

(3) The minutes of the subscribers of the 1st Defendant;

(4) The minutes of the board and shareholders' meeting of the 1st Defendant;

(5) Documents relating to the 1st Defendant's attempts or plan to raise capital in Hong Kong under its present name;

(6) Documents relating to the design, manufacture and use of the bottle(s) of the 1st Defendant's products, including the one shown in exhibit "JKA-8" to the 2nd Affidavit of James Kennoway Allan;

(7) Documents that are or were distributed to the 1st Defendant's shareholders or potential investors under and by reference to the 1st Defendant's present name in Hong Kong; and

(8) Documents relating to the creation and selection of the various marks which the 1st Defendant or its related companies have applied to register, including without limitation "養樂多" "雅樂多" and "益樂多".

7. The primary submission of Mr Kwan as to the purpose for inspection of items (1) to (5) is to show the role of the 2nd Defendant in the affairs of the 1st Defendant in order to establish the Plaintiffs' case that the 1st Defendant was the alter ego of the 2nd Defendant. In the Agreed Facts set out in the Agreed List of Issues dated 30 September 2002, the Defendants agreed the following in Paragraph 48,

"D2 is and was at all material times a director, the Managing Director and/or General Manager of D1. He was a subscriber of D1 owning 20% of its shares. He is and was at all material times an authorized signatory of the majority shareholder of D1, namely Dong Long Group Limited which owns 51% shares of D1."

8. What the Plaintiffs interested in is to establish the personal liability of the 2nd Defendant in respect of the wrongful acts of the 1st Defendant. Although proving the company to be the alter ego of the 2nd Defendant could be one way to establish this, it is by no means the only way. The personal liability of a director for tortious acts committed by his company is discussed in Paras. 4-86 to 4-89 of Clerk & Lindsell on Torts, 18th Edn. Mr Kwan also referred me to Green Cartridge v Canon [1996] 2 HKC 180. That was an unusual case in which legal advice had been sought by the board before the defendant company started the manufacturing of cartridges and such legal advice was obtained through a director other than the one who was being sued. The full board consisting of several directors decided to go ahead on the basis of such advice. The second defendant in that case did nothing more than any other director and shareholder would have done in his position. The Court of Appeal held that in those circumstances, the second defendant should not be personally liable. For present purposes, I think it is sufficient to adopt the statement of principles set out recently by the English Court of Appeal in the judgment of Chadwick LJ in MCA Records v Charly Records [2003] 1 BCLC 93 at Paras. 49 to 53 and the test set out by His Lordship in Para. 53,

"But, in my view, the test can, perhaps, be expressed more accurately in these terms: in order to hold Mr Young liable as a joint tortfeasor for acts of copying, and of issuing to the public, in respect of which CRL was the primary infringer and in circumstances in which he was not himself a person who committed or participated directly in those acts, it was necessary and sufficient to find that he procured or induced those acts to be done by CRL or that, in some other way, he and CRL joined together in concerted action to secure that those acts were done."

9. With these in mind, I shall first deal with the application in relation to items (2) to (5) and (7). It is necessary to recap several features of the present case. Firstly, it has been accepted that the present action should focus on activities in Hong Kong although this court will have to take into account of activities elsewhere, e.g. in mainland China and Taiwan, insofar as they impinges upon the activities undertaken by the Defendants in Hong Kong. Hence, although the Re-Amended Statement of Claim made reference to events in Taiwan, the emphasis is on the effects of those in Hong Kong rather than Taiwan (see also Paragraphs 8, 15, 18 to 20 of my Reasons for Ruling of 6 September 2002).

10. Secondly, in the Re-amended Statement of Claim, the Plaintiffs asserted the name Yakult, "養樂多" and the Yakult Bottle as the badges of Plaintiffs' reputation. Although there was reference to the Yakult Ladies, I understand that to be more by way of background since unlike the allegations of passing off by the Defendants in the use of the name Yakudo "養樂多" and the Yakult Bottle, there is no specific plea of passing off or infringement based on Yakult Ladies. There is nothing to suggest that the Defendants had introduced a system similar to Yakult Ladies in Hong Kong to market their products.

11. Thirdly, the evidence showed that the Defendants had not yet commenced with the sale or marketing of their products in Hong Kong. Of course this should not prevent the Plaintiffs from applying for relief on quia timet basis. But this is a matter I should take into account in considering what documents are likely to be in the possession, custody or power of the Defendants and whether inspection of the same should be ordered.

12. Fourthly, the evidence showed that the 1st Defendant had 876 shareholders (see "LTK-8"). In view of that, as presently advised, it seems unlikely to me that the Plaintiffs could rely on the alter ego argument to establish the personal liability of the 2nd Defendant. It may be more realistic to see whether the 2nd Defendant participated directly in the acts complained of or whether he procured or induced those acts to be done by the 1st Defendant or that, in some other way, he and the 1st Defendant joined together in concerted action to secure that those acts were done.

13. Fifthly, the 2nd Defendant had deposed to his personal involvement in some of the activities complained of by the Plaintiffs. In particular, concerning the use of Yakudo and "養樂多" as the name of the 1st Defendant, relevant admissions could be found in Paragraphs 41 and 71 of his First Affirmation. Concerning the article of 12 September 2001, the 1st Defendant admitted that he was interviewed by reporters in Paragraph 56 of that Affirmation. In fact, the Defence case as to the choice of "養樂多" as the name of the 1st Defendant and its right to use that name for its business depends very much on the 2nd Defendant's alleged linkage with the 2nd Plaintiff.

14. On the other hand, the 2nd Defendant said in Paragraph 21 of his Third Affirmation that the press conference of 27 September 2002 was held at the advice of a financial adviser. Nor did he reveal much about the use of Yakult Bottle by the 1st Defendants. Although the Defendants have admitted in the List of Issues that such bottles were used and intended to be used in respect of the products of the 1st Defendant (and this was reinforced by concession to this effect by Mr Ho at the hearing of 15 May 2003), there is no concession as to the 2nd Defendant's involvement regarding such decision.

15. In the course of arguments on 15 May 2003, this court expressed concern as to the width and scope of certain items asked for by the Plaintiffs. In his Supplemental Submissions filed on 26 May 2003, Mr Kwan attempted to narrow items (3) and (4) in Paragraph 6 thereof,

" (3) The minutes of the subscribers of D1 relating to the formation, development plan, target group of investors, promotional activities, and selection and use of the company name and trade mark of D1, and those minutes containing references to any of the Plaintiffs or any other members of the Yakult Group.

(4) The minutes of the board and shareholders' meetings of D1 relating to development plan, target group of investors, promotional activities, and selection and use of the company name and trade mark of D1, and those minutes containing references to any of the Plaintiffs or any other members of the Yakult Group."

16. As I have said, the 2nd Defendant had already admitted his role in the choice of names for the 1st Defendant. I do not think the production of these documents are necessary within the meaning of Rule 13 for the purpose of proving the personal liability of the 2nd Defendant in that regard. However, in view of what I said in Paragraph 14 above, I am of the view that the Plaintiffs should be entitled to inspect these minutes insofar as they recorded discussions in meetings concerning the use of the bottles and the press conference of 27 September 2002.

17. Mr Kwan argued in his supplemental submissions that apart from the personal liability of the 2nd Defendant, these documents are necessary as they may shed light on whether the Defendants set out to misappropriate the goodwill and reputation of the Plaintiffs. I accept that contention insofar as the scope of the inspection is confined to discussion pertaining to the selection and use of the company name and trade mark of D1 and the bottles and the target group of investors. The last part will be relevant to the issue as to who are the relevant public regarding the passing off claims. On the material before me, I am not satisfied that this argument justifies inspection beyond that.

18. As to items (2), (5) and (7), Mr Kwan submitted that the Plaintiffs are entitled to claim against the Defendants in respect of all forms of misrepresentations and for that purpose, inspection of those documents are necessary. Items (2) and (5) seems to be internal documents and whatever misrepresentations containing therein would not support any claims for passing off. Bearing in mind the inspection of other documents permitted by me, I am not satisfy that these two items are necessary for the fair disposal of the issues in this action or for saving costs. However, documents relating to the organization of the 1st Defendant might shed light on the personal liability of the 2nd Defendant. I will allow inspection in respect of that specific class of documents. Save as to that, I will dismiss the application as to items (2) and (5).

19. Item (7) is different. As stated in Paragraphs 19 and 20 of my Ruling dated 6 September 2002, the damage the Plaintiffs relied upon to support the passing off claims is the damage to their reputations in the mind of investors. I think the Plaintiffs are entitled to inspection of these documents to ascertain the extent of misrepresentations (if any) contained in those documents.

20. I then turn to item (1). Paragraph 22A of the Re-amended Statement of Claim referred to the press conference of 27 September 2002 to support a claim for aggravated or exemplary damages. I have dealt with the minutes of board or shareholders' meetings relating to that in Paragraph 16 above. But there should be other documents which might be relevant and necessary. In view of the defence case as to the role played by a financial advisor, the correspondence between the Defendants and such advisor would be highly relevant. Likewise, the minutes of meetings between the Defendants and such advisors concerning the aftermath of my Ruling on 28 August 2002 and the press conference should be produced. The agenda would shed light on what exactly happened at the press conference. I will therefore order inspection in term of item (1).

21. As to item (6), Mr Kwan submitted that there is an issue whether the bottles of the 1st Defendant were copied from the Plaintiffs. To support that submission, he referred to Paragraph 17(b) of the Amended Statement of Claim. I do not read Paragraph 17(b) as raising such an issue. As mentioned, the use and intended use of Yakult bottles was admitted by the Defendants through Mr Ho. If the purpose of inspection were to establish likelihood of confusion and deception, I would have held that to be unnecessary. However, in his supplemental submissions, Mr Kwan argued that inspection of item (6) is necessary for the resolution of the issue of dishonesty on the part of the Defendants. In my view, that could justify the inspection of documents to a limited extent, viz. those relating to the design of the bottles. There is no justification for extending inspection for documents relating to manufacture and use of the bottles. I will therefore only order inspection of documents relating to the design of the bottles of the 1st Defendant which is in the same or similar shape as the Yakult Bottle.

22. As to item (8), inspection is sought on the basis that those documents would be relevant to the issue of the Defendants' knowledge and honesty. Mr Kwan accepted that the Plaintiffs are not suing the Defendants regarding the marks "雅樂多" and "益樂多". He however argued that these marks were confusingly similar to the Plaintiffs' marks. In so submitting, Mr Kwan apparently failed to bear in mind that there is no allegation on the part of the Plaintiffs that such marks had been used by the Defendants in Hong Kong. As it stands, item (8) is couched in terms which could encompass whatever marks the 1st Defendant or its related companies might have applied for registration. Mr Kwan has not explained what the Plaintiffs meant by "various marks" and "related companies" in the summons.

23. As I said in the course of hearing, it behoves an applicant for specific discovery and inspection of documents to identify such document or class of documents precisely. This is very important because an opponent must be able to tell if an order were made whether a particular document comes within the scope of the order. When a party describes a class of documents in vague and general terms, not only would it cause great difficulties to his opponent in deciding what exactly he needs to do to comply with the order, it would also cause difficulties to the court in testing whether the documents are relevant to the issues in dispute and whether the test of necessity under Rule 13 can be satisfied. Very often, imprecise description of documents in this kind of applications is a sign of fishing on the part of an applicant.

24. Coming back to item (8), there is no suggestion that the Defendants carried out any activities in Hong Kong using the "雅樂多" and "益樂多" marks. Those marks were registered in mainland China and in view of the parameters of this action, in particular Paragraph 9 above, I do not accept that it is necessary to have the documents relating to creation and selection of these marks. I think there has to be a limit on discovery relating to the issue of dishonesty and given that I have allowed inspection of other documents more closely related to the material issues in this case which might shed light on the issue, I am not minded to extend it to these documents.

25. Regarding "養樂多", I have already allowed inspection of minutes concerning the choice of the name and mark for the 1st Defendant. I fail to see the need to order further inspection. As I said, the 2nd Defendant had already set out his case as to the adoption of that name. Mr Kwan did not identify clearly to me what other specific documents relating to the creation of the marks he had in mind.

26. In the circumstances, I will order the Defendants to produce to the Plaintiffs for inspection the following documents,

(a) The agenda of the 1st Defendant's press conference and other relevant documents by the 1st Defendant relating to its press conference held on 27 September 2002;

(b) Documents relating to the organization of the 1st Defendant;

(c) The minutes of the subscribers' meeting of the 1st Defendant insofar as they recorded discussions concerning the selection and use of the company name and trade mark of D1 and the bottles and the target group of investors;

(d) The minutes of the board and shareholders' meetings of the 1st Defendant insofar as they recorded discussions concerning the selection and use of the company name and trade mark of D1 and the bottles, the target group of investors and the press conference of 27 September 2002;

(e) Documents relating to the design of the bottle(s) of the 1st Defendant's products as shown in exhibit "JKA-8" to the 2nd Affidavit of James Kennoway Allan;

(f) Documents that are or were distributed to the 1st Defendant's shareholders or potential investors under and by reference to the 1st Defendant's present name in Hong Kong.

27. The other requests of the Plaintiffs are refused.

28. Since the Plaintiffs are only partly successful and bearing in mind that most of the arguments which persuaded me to grant inspection to the Plaintiffs were only advanced in the supplemental submissions, I make a costs order nisi that each party shall bear his own costs for this application.

Representation:

Mr Gary Kwan, instructed by Deacons, for the 1st, 2nd and 3rd Plaintiffs

Mr B K Ho, instructed by Laurence Pang & Co., for the 1st and 2nd Defendants (on 6 March 2003)

Mr B K Ho, instructed by Hon & Co., for the 1st and 2nd Defendants (on 15 May 2003)

HCA 2409/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2409 OF 2002

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R U L I N G

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1. By a summons dated 4 March 2003, the Plaintiffs asked for inspection of certain documents. Before the substantive hearing of that application, the Plaintiffs also took out a summons on 9 May 2003 for re-amendments of the Statement of Claim. The hearing took place on 15 May 2003 and the summons for re-amendments could not be dealt with due to counsel's need to conduct further research into the question whether amendments could incorporate causes of action accrued after the issue of the Writ. The summons for re-amendment was therefore adjourned.

2. I heard submissions on the application for inspection. However, in his reply, Mr Kwan wished to refer this court to an authority he did not have at the hearing. Moreover, it seems to me that the re-amendment might be relevant to one item in the Schedule of documents attached to the summons for inspection. In the circumstances, I gave the following directions on 15 May 2003,

(a) the summons for inspection was adjourned part-heard with liberty to restore (if necessary) after the question of re-amendments is resolved;

(b) within 5 days after the resolution of the application for re-amendments, parties to inform the court by letter whether further hearing is necessary for the summons for inspection or alternatively, the matter can be disposed of by further written submissions.

3. The application for re-amendments was resolved by a consent summons dated 3 June 2003. Parties did not ask for a further hearing and filed supplemental submissions instead. In his supplemental submissions, Mr Kwan, counsel for the Plaintiffs went beyond the two outstanding matters mentioned in Paragraph 2 above. This triggered an objection raised by Mr Ho, counsel for the Defendants, in his written submissions that the Plaintiffs should be confined to the two matters. Mr Ho submitted that it was irregular and he did not respond to the submissions of the Plaintiffs outside that scope.

4. Subsequently, Mr Kwan and Mr Ho wrote to each other on the proper scope of the supplemental submissions. Mr Kwan deemed fit to copy his letter to this Court. Mr Ho did the same in retort. In my judgment, it is not appropriate for counsel to copy to this court correspondence between them. If counsel wish to make further submissions in view of the other side's submissions, application can be made to the court through solicitors for either a hearing to be fixed or directions from the court for filing of further written submissions.

5. In the present case, it seems that both parties wish to save costs in terms of a further hearing. However, the Defendants might be prejudiced if I do not agree with Mr Ho as to the scope of supplemental submissions as he felt that he was constrained from dealing with some of the points made by the Plaintiffs. Fairness required me to rule on the proper scope of the supplemental submissions and to give an opportunity to Mr Ho to file further submissions if I were to rule against him as to the scope of supplemental submissions.

6. To resolve the matter, I listened to the digital recording of the hearing of 19 May 2003. Whilst I can understand why Mr Ho laboured under the belief that supplemental submissions should be confined to the two outstanding matters, I did ask Mr Kwan to consider other matters over the adjournment. In the course of his reply, I observed that certain paragraphs in the schedule appeared to be too widely worded and I invited Mr Kwan to reflect on the same. In so doing, it could be said that I implicitly indicated to Mr Kwan that he could make submissions beyond those two matters. Also, I did not confine the parties to the two outstanding matters in my directions set out in Paragraph 2 above.

7. I therefore rule that Mr Kwan was entitled to make those further submissions. Although Mr Ho said he had no general right of reply on facts, if justice required, this court will give him leave to do so. Mr Kwan proposed in his supplemental submissions to narrow the scope of documents which he would ask for inspection and he indicated he had no objection to a general right of reply to be given to Mr Ho. In the circumstances, I will give Mr Ho leave to file further reply submissions (if the Defendants so wish) within 7 days from this Ruling. As the Plaintiffs should have the last words, Mr Kwan can file final reply within 7 days after the service of Mr Ho's submissions.

Representation:

Mr Gary Kwan, instructed by Messrs Deacons for 1st, 2nd and 3rd Plaintiffs

Mr B K Ho, instructed by Messrs Laurence Pang & Co., for the 1st and 2nd Defendants

HCA 2409/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2409 OF 2002

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D E C I S I O N

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1. On 6 September 2002, I handed down my Reasons for Ruling made on 28 August 2002 in the Plaintiffs' application for interlocutory injunction. On 18 September 2002, in accordance with Practice Direction 25.1, parties were consulted about the publication of the same. The Plaintiffs had no objection. However, the Defendants through their solicitors responded as follows in a letter dated 26 September 2002,

"As our client have been advised that the above action may be more appropriate to be tried by jury due to its issues on facts, the publication of the reasons for ruling ... may affect the decision of the jurors at the trial. In the premises, our clients are of the view that it is more appropriate to release the reasons after the trial of the above action."

2. In view of that, direction was given by this court on 27 September 2002 that the reasons for ruling were not to be published pending decision on mode of trial. Eventually, after hearing arguments from the parties, this court ruled that the trial would be before a single judge without a jury and leave for publication was granted on 20 November 2002.

3. In the meantime, the Defendants held a press conference in Taiwan on 27 September 2002 to disseminate information about this action and the ruling of 28 August 2002. The notice of that press conference contained statements which can only be described as gross distortion of my ruling. It claimed that the court in Hong Kong ruled on 28 August 2002 that the claims of the Plaintiffs were invalid and the 1st Defendant held valid legal documents and had the right to use the name 養樂多. Press release to the same effect was distributed at the conference. Mr Ho, counsel for the Defendants, suggested that those statements were only made by reference to the use of that name in mainland China. Even so, those statements were still distortion of my reason for ruling. I have already explained in paragraph 8 of my reasons for ruling as to why it was not necessary for me to deal with the use of that name in mainland China in the context of the summons of 21 June 2002. It should have been obvious to any readers that I did not rule on the validity of the Plaintiffs' claims in respect of the Defendants' activities in mainland China. Nor did I rule on the Defendants' right to use that name in mainland China.

4. Further, the heading of the press release suggested that the Defendants won a total victory in this action and the case of the Plaintiffs crumpled and failed ("香港養樂多香江大獲全勝 一舉板倒台港日三巨擘"). I really cannot see how the Defendants could have arrived at this conclusion. Since they have been represented by a very responsible and experienced Leading Counsel at the hearing of August 2002, they must have been fully and adequately advised as to the results of that hearing. Such representation as to the results of the August 2002 heading is nothing other than a complete misrepresentation of the results.

5. Worse still, the Defendants insinuated in the press release that the present action was a means adopted by the Plaintiffs to strike at their competitors and to delay the competitors' business development and to increase the Plaintiffs' market share in the meantime. It was suggested that this was a tactic adopted by the Plaintiffs to diminish their competitors' room of survival in the market.

6. The press release was distributed by the Defendants in Taiwan. However, it was also downloaded onto the website of Yahoo Hong Kong.

7. Upon notice of such conducts of the Defendants, the Plaintiffs through their solicitors wrote to the Defendants' solicitors on 4 October 2002 demanding an undertaking from the Defendants to publish a correction statement and not to repeat such misrepresentations. The letter also asked for disclosure under oath as to the scope of distribution of the press release.

8. By a letter dated 17 October 2002, the Defendants through their solicitors said that their actions were in response to some malicious publications in Taiwan alleging the 1st Defendant of fraud and dishonesty in soliciting investment in its shares. References were made to certain newspaper articles published in Hong Kong concerning the case and it was alleged that these articles and the article published in Taiwan had deterred potential investors to subscribe for the shares of the 1st Defendant. It was also suggested that the press conference was held at the recommendation of an investment consultant firm engaged by the 1st Defendant. The demands of the Plaintiffs were said to be misconceived and the Defendants said they would strenuously resist any application for such relief.

9. I have read the newspaper articles published in Hong Kong and I do not find any misrepresentations as to my reason for ruling in those articles. Nor could I discern any misrepresentation in that respect in the article published in Taiwan referred to by the Defendants. Of course, that article touched on matters apart from my reason for ruling and I am not in any position to comment on those matters. In any event, there is no concrete evidence that the Plaintiffs played any part in those publications apart from outlining the terms of the order of 28 August 2002 and confirming that the 2nd Defendant was a son of an officer of the 2nd Plaintiff to a reporter.

10. On 29 October 2002, the Plaintiffs took out the present summons asking for injunctive and ancillary relief as outlined in the letter of 4 October 2002. Due to the time constraint, the submissions of counsel could not be completed on 20 November 2002 when the matter was first heard by me. However, I was able to reach a decision on paragraph 4 of the summons and for reasons set out in my Reasons for Decision handed down on 28 November 2002, I granted leave for the general publication of my previous Reasons for Ruling. Parties came back on 2 January 2003 to complete their submissions regarding the other paragraphs of the summons.

11. In his Third Affirmation filed herein, the 2nd Defendant attempted to give some explanations for the conducts of the Defendants. On the whole, I find those explanations to be tenuous and incredible. As I said, the Defendants were advised by a team of very able and competent lawyers. There could not be any mistake in their understanding as to the outcome of the hearing in August and my Reasons for Ruling.

12. On the material before me, I do not see any acceptable justification for the acts of the Defendants in this episode. Be that as it may, I must still consider whether the injunctive and ancillary relief sought by the Plaintiffs are proper remedies regarding such conducts of the Defendants. At this juncture, in order to have proper understanding as to the nature of the application of the Plaintiffs, I need to set out the relevant relief sought in the summons,

"1. An injunction to restrain the Defendants ... from doing the following acts or any of them whether in Hong Kong or elsewhere, that is to say:-

(a) misrepresenting the content or effect of the Reasons for Ruling ...handed down on 28 August 2002 or the Order made on 28 August 2002 in this action;

(b) discussing in public the prospects, merits or demerits of this action which may prejudice or affect the outcome of this action; and

(c) authorizing, assisting, counseling, procuring, instigating, inciting, aiding and abetting, directing, causing or enabling others to commit any of the aforesaid acts or acting in concert with others in furtherance of a common design.

2. An order that the Defendants and each of them do within 14 days from the making of this order publish a correction of the misrepresentations made by or on behalf of the Defendants or either of them of the content and effect of the Reasons for Ruling and Order in major newspapers in Taiwan and Hong Kong to be determined by the Plaintiffs, and the wordings of which shall be prior approved by the Plaintiffs.

3. An order that the Defendants ... do within 14 days ... make and file an affidavit or affirmation ... disclosing the extent of distribution and, as far as they know, the names and addresses of the recipients, of the Defendants' press conference notice relating to the Defendants' press conference held on 27 September 2002 and the press release distributed in the press conference, and that the Correction Statement shall be distributed to the same recipients in addition to the publication in the newspapers."

13. Mr Liao SC, leading counsel for the Plaintiffs, has not been able to cite to me any direct authority where such relief has been granted outside the context of a motion for committal for contempt of court. Instead, he sought to support the application by reference to the court's general jurisdiction in granting injunctions and cases decided in the context of committal for contempt of court. He relied heavily on R v Evening Standard [1954] 1 QB 578. That was a case where a London evening newspaper inaccurately reported certain evidence given by a witness in a murder trial which was pending. The Attorney General applied for leave to issue a writ of attachment against the newspaper on the basis that such conducts constituted serious interference with the due course of justice, as such amounted to contempt of court. At p.583-4, Lord Goddard CJ said,

"...the essence of the jurisdiction is that reports, if they contain comments on cases before they are tried ... and all misreports are matters which tend to interfere with the due course of justice. The foundation of the jurisdiction is that such reports are an interference with the due course of justice."

His Lordship then went on to cite certain dicta from Lord Hardwicke LC in The St. James' Evening Post (1742) 2 Atk 469 at 469 and 471,

"Nothing is more incumbent upon courts of justice, than to preserve their proceedings from being misrepresented; nor is there any thing of more pernicious consequence, than to prejudice the minds of the public against persons concerned as parties in causes, before the cause is finally heard."

"There may be also a contempt of this court, in prejudicing mankind against persons before the cause is head. There cannot be any thing of greater consequence, than to keep the streams of justice clear and pure, that parties may proceed with safety both to themselves and their characters."

Lord Goddard CJ continued,

"That is the foundation of the jurisdiction which this court has exercised for more than 200 years, and is the reason why the court will intervene to prevent and punish the publication of improper information before a case is heard or the dissemination of improper information about a case which is to be heard or is not fully heard or of false reports or misrepresentation of the proceedings in a court."

14. In the present case, the Plaintiffs did not make any application for committal or attachment on the basis of contempt of court. Mr Liao submitted that the Plaintiffs needed not resort to the more draconian remedy of moving for contempt when injunctive relief could satisfy their purposes. He referred to Para 52/1/8 of Hong Kong Civil Procedures 2002 which emphasized that contempt proceedings should be a last resort. As to the court's power to grant injunctive relief of this nature, Mr Liao relied on Section 21L(1) of the High Court Ordinance. That is the general provision setting out the power of the Court of First Instance to grant an injunction in cases in which it appears to be just or convenient.

15. In South Carolina Insurance v Assurantie Maatschappij "De Zeven Provincien" NV [1987] AC 24, Lord Brandon said this with regard to the English equivalent of Section 21L(1) at p.40A to E,

"... although the terms of [the section] are very wide, the power conferred by them has been circumscribed by judicial authority dating back many years. [Reference was then made to The Siskina [1979] AC 210; Castanho v Brown & Root [1981] AC 557 and British Airways Board v Laker Airways [1985] AC 58.] The effect of these authorities, so far as material to the present case, can be summarized by saying that the power of the High Court to grant injunctions is, subject to two exceptions ... limited to two situations. Situation (1) is when one party to an action can show that the other party has either invaded, or threatens to invade, a legal or equitable right of the former for the enforcement of which the latter is amenable to the jurisdiction of the court. Situation (2) is where one party to an action has behaved, or threatens to behave, in a manner which is unconscionable."

The two exceptions referred to by Lord Brandon are anti-suit injunctions and Mareva injunctions. With regard to situation (2), on which Mr Liao prayed in aid, Lord Brandon said at p.41D,

"It is difficult, and would probably be unwise, to seek to define the expression 'unconscionable conduct' in anything like an exhaustive manner. In my opinion, however, it includes, at any rate, conduct which is oppressive or vexatious or which interferes with the due process of the court."

Mr Liao submitted what the Defendants did constituted interference with due process of the court. In this connection, he relied on the dicta of Lord Goddard CJ cited in Paragraph 13 above.

16. Mr Liao also referred to the speech of Lord Goff in South Carolina Insurance at p.44G. His Lordship had reservation as to the restriction of the power of the court to grant injunctions. That reservation was shared by Lord Mackay. In this connection, I think this court is bound by the views of the majority in the Privy Council in Mercedes Benz AG v Leiduck [1996] 1 AC 284. Lord Mustill (who delivered the majority judgment) seemed to prefer the view of Lord Brandon at p.298D to G although the observations by Lord Nicholls at p.308C to F are more liberal in this regard.

17. Hence I have to ask whether the Plaintiffs are correct in asserting that the misrepresentation of the Reasons for Ruling in the press conference held at Taiwan coupled with the press release published in Taiwan and Hong Kong affected the due process of the court.

18. Mr Liao accepted that not every misrepresentation of the Reason for Ruling would inevitably have such effect. For instance, he accepted that if the misrepresentation was made in a remote part of the world to person who had no connection with this action, this could not possibly cause any prejudice to the fair trial of this action. However, he submitted that an important issue in the present action is whether the Plaintiffs' reputation in the name 養樂多 has spilt from Taiwan to Hong Kong. The Plaintiffs intended to call some witnesses from Taiwan to establish this and Mr Liao said that the perspectives of such potential Taiwanese witnesses could have been coloured by the misrepresentations disseminated by the Defendants as to the Reason for Ruling.

19. Mr Liao further submitted that the misrepresentations published by the Defendants had damaged the reputation of the Plaintiffs in Taiwan, particularly in view of the remarks insinuating ulterior motives on the part of the Plaintiffs in prosecuting the present action in the press release. He submitted that the Plaintiffs might have a cause of action in trade libel based on these acts of the Defendants. I do not think it is appropriate for me to accept this as a ground for granting the injunction in the present application. If the Plaintiffs intend to make an application for injunction based on a new cause of action, the proper course is to start a new action and apply for interlocutory injunction in the context of that new action. If the Plaintiffs did not deem it appropriate to pursue this as a new claim, I do not think it right to allow this to be slipped in by the backdoor in the context of the present application.

20. Coming back to interference with due process of the court, Mr Ho accepted that the court does have jurisdiction to grant injunction to prevent such interference. However, he submitted it is too far-fetched to suggest that the press conference in Taiwan could have any prejudicial effect on the trial of this case in Hong Kong. He reminded the court it has been decided that the trial would be conducted before a single judge, hence there is no question of potential jurors being affected by the publications and misrepresentations. As regards potential witnesses, Mr Ho said in accordance with the timetable laid down in my directions of 28 August 2002, parties should at least have been ready with the exchange of their witness statements. The Plaintiffs were not able to put forward specific evidence as to witnesses being prejudicially affected by the press releases and press conference organized by the Defendants. He said it is na?ve to assume that a witness called by the Plaintiffs would be tainted by those press releases and the press conference.

21. Given the stance adopted by Mr Ho, I shall assume that the court does have the power to grant injunctive and ancillary relief to a party to counter any steps taken by the other litigant to prejudice the due administration of justice even if there were no application to move for contempt of court. Such power must, however, have a close affinity with the other powers of the court to deal with contempt of court in the publication of material which prejudiced the fair trial of a pending action or was likely to cause public prejudgment of the issue. These could be conducts which interfere with the administration of justice, as such constituted contempt of court (see AG v Times Newspaper [1974] AC 273; AG v Cheung Kim Hung [1997] HKLRD 472).

22. A balance has to be struck between freedom of expression and the law of contempt in this regard (see AG v Cheung Kim Hung [1997] HKLRD 472 at p.478C). The crucial consideration is whether there is a real risk that due administration of justice would be prejudiced (see AG v Cheung Kim Hung [1997] HKLRD 472 at p.480D; Wong Yeung Ng v Secretary for Justice [1999] 2 HKLRD 293 at p.314 D to E). In the present context, although the Plaintiffs are not moving for contempt of court, I am of view that this court should apply the same test in deciding whether to grant the injunctive relief sought. The observations of Lord Goddard CJ have to be read against the facts of that case. That was a murder trial which was pending. The trial was by jury. The newspaper report was a local one, published at the place where the trial took place. The misrepresentation was in respect of the evidence of a witness. In those circumstances, real risk of prejudiced could be readily established (as in the case of AG v Cheung Kim Hung [1997] HKLRD 472). The Chief Justice described the misreporting at p.583 as "a most prejudicial statement" and further said at p.584 that the case might have been a disastrous interference with justice.

23. In applying that test, I bear in mind what was said by Lord Diplock in AG v Times Newspaper [1974] AC 273 at 310 F to G,

"...contempt of court in relation to a civil action is not restricted to conduct which is calculated (whether intentionally or not) to prejudice the fair trial of that action by influencing, in favour of one party or against him, either the tribunal by which the action may be tried or witnesses who may give evidence in it; it extends also to conduct that is calculated to inhibit suitors generally from availing themselves of their constitutional right to have their legal rights and obligations ascertained and enforced in courts of law, by holding up any suitor to public obloquy for doing so or by exposing him to public and prejudicial discussion of the merits of the facts of his case before they have been determined by the court or the action has been otherwise disposed of in due course of law."

24. On the facts of the instant case, there is no question of the tribunal being affected by these conducts of the Defendants since there would not be any trial by jury. As Rogers J (as he then was) observed in AG v Cheung Kim Hung [1997] HKLRD 472 at p.477J,

"Lawyers are trained to disregard facts which are not relevant or inadmissible. Often Judges are told of facts which then have to be ignored for the purposes of the proceedings before them. The exclusion of those facts from their consideration in the decision making process is one of the functions which they must accomplish and have been trained to do so. In large part whether such facts have been excluded can be tested by the reasons which accompany Judges' decisions."

25. Mr Liao's principal ground of attack was based on the effect of those publications on potential witnesses. I accept that the Plaintiffs might deem it necessary to call some members of public from Taiwan as witnesses at the trial. However, given the need to exchange witness statements beforehand, whoever comes to give evidence would to a certain extent be apprised of the development of the disputes between the parties. As mentioned, I have given leave for general publication of my Reasons for Ruling. Hence, by the time when such a witness testifies in the witness box, he should not be under any misapprehension as to the effect of my Reasons for Ruling. The witness would be giving evidence under oath to tell the truth as to his personal knowledge, not what he was told or the impression he gathered from other sources. Although Mr Liao did make some passing reference to prejudice in terms of securing the necessary witnesses, in the absence of any evidence to substantiate the same, I am not prepared to assume that there was any real prejudice in that regard.

26. Further, Mr Ho informed this court that the Defendants would not be calling any members of public from Taiwan to give evidence at the trial. Apart from the 2nd Defendant, the defence intends only to call a Taiwanese lawyer to give evidence. Hence, there is no question of the Defendants obtaining unfair advantage by these publications in terms of securing more sympathetic witnesses to give evidence for them.

27. As to the effect of these publications on the Plaintiffs, whilst I can see their concern about the adverse impact of the same on their reputation in Taiwan, there is nothing to suggest that they felt pressurized by such publications with regard to the continuation of the present action. Regarding the protection of their reputation, if they consider that the damage is substantial, the proper course as I said in Paragraph 19 above is to start a fresh action in whatever jurisdiction as they might be advised. It is not appropriate for them to get relief for that in the context of this action.

28. Hence, the Plaintiffs have not satisfied me that there is a real risk that the due administration of justice has been affected by the conducts of the Defendants.

29. Moreover, even if I were wrong in that conclusion, I do not think it is appropriate to grant the injunction sought by the Plaintiffs on the facts of the present case. It seems to me the proper remedy is to give leave for the general publication of my Reasons for Ruling and this Decision. The injunction sought by the Plaintiffs was drafted in very wide terms and the Defendants would be caught by a slight misinterpretation of my Reasons for Ruling even if it were made innocuously and internally. That plainly goes beyond the proper scope of preventing wrongful interference with due administration of justice.

30. For these reasons, I am not minded to grant any further relief to the Plaintiffs apart from the order I made on 20 November 2002. I would however grant leave for the general publication of this Decision. I have consulted the parties on this at the hearing of 2 January 2003 and they have no objection. Further, this should avoid a repetition of what had happened in respect of my Reasons for Ruling.

31. Although I do not consider it appropriate to grant further relief to the Plaintiffs, the Defendants should not be under the misapprehension that they have emerged as the victors in this summons. It should be clear from I have said in the beginning of this Decision that I absolutely disapprove what they have done. If what they did were done pursuant to the advice of an investment consultant, they have been badly advised. If the 1st Defendant were a listed company in Hong Kong, I would have seriously considered referring this Decision to the relevant regulatory authorities for further investigation. As it is, the 1st Defendant has not yet secured any listing in Hong Kong and its directors, including the 2nd Defendant, should study this Decision carefully with the assistance of their lawyers and reflect on their mistakes in the episode if they wish to hold themselves out as fit and proper persons to act as directors of a listed company.

32. It follows from what I said that I would depart from the usual order in terms of costs. The Plaintiffs are not entirely successful in their applications. In fact, they only manage to obtain the relief in one paragraph of the summons. Substantial time and costs were incurred in respect of the other paragraphs. On the other hand, to mark my disapproval as to the conducts of the Defendants, I do not think they should get any costs in respect of this summons. Further, the position might be very different if there would be a trial by jury. The Defendants had been contending for trial by jury and it was only at the end of the hearing of 20 November 2002 that I ruled that the trial would be before a judge alone. The order nisi on costs I will make is that the Defendants do bear 1/2 of the costs of the summons of 29 October 2002, with certificate for two counsel.

Representation:

Mr Andrew Liao, SC & Mr Gary Kwan, instructed by Messrs Deacons,for the Plaintiffs

Mr B K Ho, instructed by Messrs Laurence Pang & Co., for the Defendants

HCA 2409/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2409 OF 2002

________

________

___________________________________

REASONS FOR DECISION

___________________________________

1. At the hearing of 20 November 2002, after hearing submissions from counsel, I directed that the present action shall be tried before a judge alone. I further ordered that the leave be given for the publication of my Ruling handed down on 6 September 2002. I now give reasons for those decisions.

2. Regarding the mode of trial, Mr Ho applied on behalf of the Defendants for trial before jury. He submitted that in view of the factual issues in the present action, it would be more just to have the matters decided by a jury than by a single judge. The factual issues identified by him are as follows:

(a) whether there is any goodwill in the name "Yakult";

(b) whether the word "Yakudo" is confusingly similar to "Yakult";

(c) whether there is any spilt of goodwill from Taiwan.

He submitted that the jurors would represent the perspective of the local population regarding those matters and they are more reliable than whatever survey evidence that might be produced by the parties.

3. The law on the subject can be found in Section 33A of the High Court Ordinance. The relevant parts read:

"(1) Where, on the application of any party to an action the Court of First Instance is satisfied that there is in issue-

(a) a claim in respect of libel, slander, malicious prosecution, false imprisonment or seduction; or

(b) any question or issue of a kind prescribed for the purposes of this paragraph by rules of court,

the action shall be tried with a jury, unless the Court is of the opinion that the trial requires any prolonged examination of documents or accounts or any scientific or local investigation which cannot conveniently be made with a jury.

(2) An application under subsection (1) must be made not later than such time before the trial as may be prescribed by rules of court.

(3) An action to be tried in the Court of First Instance which does not by virtue of subsection (1) fall to be tried with a jury shall be tried without a jury unless the Court in its discretion orders it to be tried with a jury."

4. Mr Ho submitted that the present case falls within Section 33A(1)(a) because the claim in issue, passing off, is akin to slander which, he said, included slander of title. He cited no authority for this proposition. Even assuming he were right that slander in this context includes slander of title (which I have some doubts), it is clear to me that passing off is a completely different cause of action from slander of title. According to Bullen & Leake & Jacob's Precedents of Pleadings, Vol. 1, Para. 29-04:

"At common law an action for slander of title lies against the publisher of an oral or written statement which disparages the claimant's title to any property, real or personal, and causes special damages."

Plainly, a claim in passing off does not fall within Section 33A(1)(a).

5. The rules of court do not prescribe any kind of issue or question to be tried in accordance with Section 33A(1). Hence, Mr Ho cannot pray in aid of Section 33A(1)(b).

6. Hence, the application has to be considered by reference to Section 33A(3). Under that sub-section, the normal mode of trial is trial by a judge alone. In A B Volvo v Tanfory Co. Ltd [1990] 2 HKLR 203 at p. 205E to G, Sir Derek Cons VP said:

"I take s.33A, from the words which therein appear, to be a clear directive by the legislature that as from their enactment, and setting aside the five excepted cases, the normal mode of trial should be by judge alone. ... There is still a discretion left to the judge but, like all judicial discretions, it is not one that is to be exercised merely at his whim. It is to be exercised judicially. In this instance, bearing in mind the basic directive that I have just mentioned, that means it should be exercised only for good reason. In the present circumstances I would take good reason to be something which shows that trial by jury would overall be likely to produce a more just result than would trial by judge alone. The onus to persuade the judge to that end rests fairly and squarely upon the party which is asking for trial by a jury."

7. In that case, the Court of Appeal overturned the decision of the judge who directed an action of passing-off and infringement of trade mark to be tried by jury. At p. 206C to E, the learned Vice President highlighted the matters that a judge should bear in mind in the exercise of such discretion. They included whether the issues in the dispute are equally well within the grasp of a single judge as compared with a jury. If not, the judge still have to ask whether the difference in grasp was sufficient to outweigh the other party's legitimate interest in having his case tried by a method unattended by the disadvantages which are normally consequent upon a trial by jury. The court must also consider the public interest that judges and court facilities should not be tied up unnecessarily by one case to the detriment of others.

8. Applying these guidelines, I am of the view that Mr Ho has failed to persuade me that a trial by jury would achieve a fairer result as compared with trial by a judge alone. The issues he referred to, as Mr Liao SC quite rightly pointed out, are secondary facts which the court has to decide by reference to primary facts to be proved by evidence. I am told that most, if not all, of the primary facts are unlikely to be disputed. Judges hearing civil cases have to make finding of facts day in and day out. I do not see anything special about these matters which warrants a conclusion that it would be more just to ask a jury to decide on the same instead of a judge. Similar issues, at least in respect of the first two issues identified by Mr Ho, arise in almost all passing off cases. Mr Liao, who is of course very experienced in this type of cases, cannot recall a single case of passing off or infringement of registered trade mark that was tried by a jury in this jurisdiction after the enactment of Section 33A. Nor do I see why a jury could be in a better position to deal with the third issue.

9. Further, as submitted by Mr Liao, there are quite difficult mixed questions of facts and laws being involved in this action. Some of them have been highlighted by me in my Ruling in September and it is not necessary for me to repeat the same here. It would be a very complicated matter and to expect a jury to understand directions of such complexity may prove to be unsatisfactory. Hence, I am satisfied that not only a trial by jury could not achieve a more just result, it would probably cause unnecessary confusion to and prolongation of the trial. It is not in any party's interest to have a trial by jury in the present circumstances.

10. I therefore held against Mr Ho's application. The only reason why I withheld the publication of my Ruling was the Defendants' intimation that they wish to have a trial by jury. Once such an application has been disposed of, Mr Ho is in fact neutral as to whether the Ruling should be published.

11. Given the developments since my Ruling in September, the details of which I would not go into at this stage due to the fact that the other paragraphs in the summons of 30 October 2002 are still pending, it seems to me that it is in the interest of all parties concerned that I should give leave for the publication of my Ruling. That would enable parties to take whatever steps they deem fit to clarify the position with persons affected.

12. I have consulted parties at the hearing of 20 November 2002 and they have no objection for these Reasons for Decision to be published. I grant leave accordingly.

Representation:

Mr Andrew Liao, SC & Mr Gary Kwan, instructed by Messrs Deacons, for the Plaintiffs

Mr B K Ho, instructed by Messrs Laurence Pang & Co., for the Defendants

HCA 2409/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2409 OF 2002

____________

____________

_____________________________

REASONS FOR RULING

_____________________________

1. Yakult is a famous brand name originated from Japan. Its products include health beverages and as their leading counsel put it, their flagship product is a live lactobacillus drink marketed in a distinctive plastic bottle. In Hong Kong, the products are sold in such bottles bearing the names "Yakult" and "益力多". They were introduced into Hong Kong in the late 1960's. According to the evidence filed by the Plaintiffs, the sale in Hong Kong in 2001 was 439,000 bottles per day. Yakult products are marketed all over the world and different Yakult companies have been set up in different parts of the world. According to the Plaintiffs, the 1st Plaintiff is the Japanese company which owns the beneficial interest in all the trade names and trademarks relating to Yakult products all over the world. The 2nd Plaintiff is the company which manufactured and marketed Yakult products in Taiwan using the trademark "養樂多" instead of "益力多". Although it is not a subsidiary of the 1st Plaintiff, the two companies have some common shareholders and directors. The largest shareholder of both companies is a Japanese company called Matsusho Kabushiki Kaisha. Further, the relationship between the two companies is governed by several agreements. Those agreements provided for transfer of technology from the 1st to 2nd Plaintiffs. The 1st Plaintiff granted licence to the 2nd Plaintiff regarding the use of its intellectual properties in Taiwan. The 2nd Plaintiff acknowledged that the 1st Plaintiff was the beneficial owner of the trademarks used and registered by the 2nd Plaintiff in Taiwan. Further, all flavourings for Yakult products in Taiwan were manufactured and supplied to the 2nd Plaintiff by a subsidiary of the 1st Plaintiff. The evidence clearly shows that a substantial goodwill has been built up in Taiwan by reference to the mark "養樂多". The name "Yakult" also appeared on the products sold in Taiwan. The 3rd Plaintiff is the Hong Kong subsidiary of the 1st Plaintiff. The promotional material of the 1st Plaintiff put forward an image that Yakult is a multinational group spreading throughout the world. Both the 2nd and 3rd Plaintiffs are introduced as members of this worldwide group. They are linked together by the distinctive Yakult bottles containing the live lactobacillus drink developed from the distinctive lactobacillus casei strain Shirota, a strain of human intestinal lactobacilli cultured by Dr Shirota, the founder of the 1st Plaintiff. The word "Yakult" is derived from the concept of yogurt and is pronounced by Japanese as "yakudo" (according to the Plaintiffs) or "yoguruto" (according to the Defendants).

2. The 1st Defendant is a company incorporated in Hong Kong on 16 May 2001. The 2nd Defendant is one of its shareholders and directors. The Plaintiffs alleged that the 2nd Defendant controlled and managed the 1st Defendant. The 2nd Defendant is the son of Lee Tuan Ju, a former president of the 2nd Plaintiff and Lee Lai Chin-Chao, a current director of the 2nd Plaintiff. The Defendants said that the Lee family had developed their own strain of human intestinal lactobacilli and the 2nd Defendant intended to market this product in mainland China. Companies and factories were set up in mainland China for that purpose. The names "Yakudo" and "養樂多" were adopted and attempts were made to register such trademarks in mainland China and in Hong Kong. Those are being opposed by the 1st Plaintiff. Up to now, production has not been started although the Defendants have solicited for investors. There is evidence that the parents of the 2nd Defendant disapproved such actions on the part of the 2nd Defendant although he said otherwise. In a newspaper announcement dated 20 September 2001, the parents stated that they had no knowledge nor involvement with regard to the businesses of the Defendants.

3. Not surprisingly, the Plaintiffs objected to such activities of the Defendants when they came to know about the same. The first move was, however, made by the Defendants rather than the Plaintiffs. The 1st Plaintiff had registered marks embodying the words "養樂多" in mainland China since 1981 under Registration Nos. 147692 and 147697. Those registrations were renewed on 21 June 2001. A company set up in mainland China by the 2nd Defendant called Daoguang (Hengyang) Industrial Development Company Limited applied to cancel these registrations by reason of non-use. On 12 April 2002, the mainland Trademark Office cancelled the registration regarding No. 147697. The 1st Plaintiff is appealing to the Trademark Review and Adjudication Board ("TRAB") against that order. The application regarding Registration No. 147692 is pending.

4. Since the cancellation proceedings in mainland China was brought in the name of Daoguang (Hengyang) Industrial Development Company Limited, the Plaintiffs were not aware of the activities of the Defendants initially. Although there was a search report in respect of that company dated 25 December 2000 revealing the relationship between the 2nd Defendant and that company, it was clarified at the hearing before me that the report was wrongly dated. I am satisfied on the material presented to me that the correct date should be 25 December 2001.

5. The Plaintiffs first learnt about the Defendants in September 2001. In an article dated 12 September 2001 published in a newspaper called 時事速報, the 2nd Defendant gave an interview to a reporter in that he announced the setting up of the 1st Defendant to launch "養樂多" into mainland China. The Plaintiffs alleged that the 2nd Defendant misrepresented the 1st Defendant to be connected with the Plaintiffs in that article and was thereby guilty of passing off. The Defendants denied that the Defendants had made such misrepresentation.

6. Given the relationship between the 2nd Defendant and the director and past president of the 2nd Plaintiff, the Plaintiffs initially tried to resolve the matter without resorting to litigation. However, it must have been clear to the Defendants that the Plaintiffs would not tolerate the use of the word "養樂多" as the trade name or in the trademarks of the Defendants. Even before the Plaintiffs learnt of the 2nd Defendant's involvement in the matter, in a letter dated 29 August 2001 from the patent agent of the 1st Plaintiff in mainland China to Daoguang (Hengyang) Industrial Development Company Limited, the 1st Plaintiff clearly intimated that they would not give up their interest in the mark "養樂多". The parents of the 2nd Defendant were asked by the 2nd Plaintiff to demand the Defendants to stop the use of "養樂多" in Hong Kong and mainland China. In a letter dated 12 December 2001, the parents reported to the 2nd Plaintiff that their efforts were unsuccessful.

7. After several months' preparation, the Plaintiffs' solicitors issued a cease and desist letter to the 1st Defendant on 16 May 2002. The response from the 1st Defendant's solicitors on 5 June 2002 indicated that the matter could not be settled. Writ was therefore issued on 21 June 2002 together with a summons for interlocutory injunction.

8. When the application for interlocutory injunction was opened before me, Mr Liao SC (who appeared with Mr Kwan for the Plaintiffs) informed the court that the Plaintiffs agreed that the order that I am going to make herein shall not have any extra-territorial effect. In other words, the Plaintiffs accepted that in respect of activities carried out by the Defendants in mainland China, they should be dealt with by the courts in mainland China.

9. At the same time, Mr Wong SC (who appeared with Mr Ho for the Defendants) informed the court that the Defendants did not intend to manufacture or sell their products in Hong Kong in the near future. In the light of that, Mr Wong indicated that the Defendants could give certain undertakings to the court pending trial. On the second day of the hearing, after Mr Liao have opened for the Plaintiffs, Mr Wong put forward the following undertakings on behalf of the Defendants,

"1. The undertakings given on behalf of the Defendants set out hereunder are given against the cross undertakings given on behalf of the Plaintiffs to abide by any order the Court may make as to damages, in case the Court shall hereafter be of opinion that the Defendants or any them shall have sustained any by reason of any of the undertakings which any of the Plaintiffs ought to pay.

2. The Defendants and each of them undertakes in the case of the 1st Defendant whether acting by itself, its directors, officers, servants, agents, nominees or any of them or otherwise howsoever, and in the case of the 2nd Defendant whether acting by himself, his servants, agents, nominees or any of them or otherwise howsoever, until after adjugment in this action or further order from doing the following acts or any of them in Hong Kong, that is to say:-

(a) Manufacturing, ordering, importing or exporting, offering or exposing for sale or supply, selling, supplying, promoting, advertising, possessing, exhibiting in public or distributing for the purpose of trade or business, disposing or parting with possession, custody, power or control of, any products, particularly fermented milk drinks, milk, fruit juices, soft drinks and/or other non-alcoholic beverages not the goods of or in any way connected or otherwise associated with the Plaintiffs or any of them, under or by reference to the trade names and/or trade marks "YAKULT", "YAKUDO" and/or "養樂多"for any other names or marks that are confusingly similar thereto. For the avoidance of doubt, this undertaking does not extend to communication between any of the Defendands and Yakudo Foodstuff (Zhongguo) Co. Ltd ["YFZ"] and Daoguang (Hengyang) Industrial Development Co. Ltd ["DHI"] pertaining to YFZ and DHI's commission of any of the aforesaid acts in China.

(b) Forming, operating, participating in and/or carrying on any business in respect of or in connection with the said products as referred to in (a) above, not the business of or in any way connected or otherwise associated with the Plaintiffs or any of them under or by reference to the trade names and/or trade marks "YAKULT", "YAKUDO" and/or "養樂多"or any other names or marks that are confusingly similar thereto. For the avoidance of doubt, this undertaking does not extend to all relationships between any of the Defendants and YFZ and DHI nor to the securing of the listing of the 1st Defendant in the Stock Exchange of Hong Kong ["the Stock Exchange"] referred to in paragraph 3 below.

(c) Making and/or publishing any representation, whether orally or in writing, to the effect that the 1st Defendant, YFZ and DHI or any of them is the business of any of the Plaintiff and that the products of YFZ and DHI are the products of the Plaintiffs. For the avoidance of doubt, this undertaking does not extend to the use by the 1st Defendant of its name Yakudo Group Holdings Limited and "養樂多集團控股有限公司"for the purpose set out in paragraph 3 below.

3. An undertaking on the part of the 1st Defendant that until after judgment in this action or further order that it will only use the names "YAKDUO GROUP HOLDINGS LIMITED and (養樂多集團控股有限公司)" for the purpose of securing a listing in the Stock Exchange. The 1st Defendant further undertakes that in any application to the Stock Exchange or in any public statement pertaining to such listing, it will state that the 1st Defendant and (in so far as they are relevant), YFZ and DHI are not the business of or connected in any way with any of the Plaintiffs.

4. The Defendants do undertake to file within 14 days from these undertakings an affidavit confirming that save for distribution of the brochure exhibited and marked "KS-21" to the Affidavit of Kosei Sakai filed in these proceedings, they had not, prior to the date of these undertakings, commit in Hong Kong any of the following acts, that is to say, manufacturing, ordering, importing or exporting, offering or exposing for sale of supply, selling, supplying, promoting, advertising, possessing, exhibiting in public or distributing for the purpose of trade or business, disposing or parting with possession, custody, power or control of, any products, particularly fermented milk drinks, milk, fruit juices, soft drinks and/or other non-alcoholic beverages not the goods of or in any way connected or otherwise associated with the Plaintiffs or any of them, under or by reference to the trade names and/or trade marks "YAKULT", "YAKUDO" and/or "養樂多"."

10. After taking instructions, Mr Liao informed the court that apart from the proviso and the exception in respect of listing in the Stock Exchange, the Plaintiffs were prepared in principle to accept the undertakings subject to some clarifications in some respects. The issue with regard to listing became the only substantive dispute between the parties in this application. The matter was argued before me. The position of the Defendants was that the undertakings offered by the Defendants were sufficient protection to the Plaintiffs and the Defendants should be allowed to proceed with an application for listing to obtain finance for their businesses in mainland China. On the other hand, the Plaintiffs' stance was that to allow such application would cause irreparable damages to the Plaintiffs in term of the dilution of and potential damage to the good-will pertaining to the names and marks in question. Mr Liao also submitted that the balance of convenience was in favour of prohibiting such application to be made.

11. After hearing submissions, I ruled on 28 August 2002 that there are serious questions to be tried and on the balance of convenience, until trial, the Defendants should not be permitted to apply for listing in Hong Kong by using the name "Yakudo" or "養樂多". In the light of my ruling, the terms of the undertakings were agreed between the parties and I also give directions for speedy trial. According to those directions, the parties are to attend court on 2 January 2003 to apply for setting down for trial. I now give reasons for the said ruling.

Serious questions to be tried

12. Mr Wong did not argue that there is no serious question to be tried. Rather he argued that in the context of balance of convenience, I should not regard the Plaintiffs to have a cast iron case. Be that as it may, for reasons given below, I am satisfied that there are serious questions to be tried. In Reckitt & Colman Products v Borden Inc. [1990] RPC 341 at p.406, Lord Oliver identified the essential elements constituting the tort of passing off as goodwill, misrepresentation and damage. In respect of goodwill, Mr Wong submitted that each Plaintiff has to be considered separately and there is no concept of group or international goodwill. He invited me to consider each market in turn and ask whether any one of the Plaintiffs has any goodwill in that market. Mr Wong submitted that the Plaintiffs have deliberately adopted a policy of segregating the markets and there is no spill over of goodwill from one territory to another.

13. For present purposes, I shall focus on the goodwill in Hong Kong. Mr Wong did not dispute that the 3rd Plaintiff has a goodwill in Hong Kong. He however submitted that the goodwill was in the name "益力多" alone. I cannot accept that submission. As stated in Paragraph 1 above, the products are marketed in Hong Kong in bottles bearing the name "Yakult" together with "益力多". Whether the name "Yakult" is a badge of the goodwill in Hong Kong must be a triable issue. Further, given the fact that the trademarks were registered in the name of the 1st Plaintiff and the 3rd Plaintiff was a registered user of the marks, and given the relationship between the two of them, it is arguable that the goodwill in Hong Kong is owned by the 1st Plaintiff or shared between the 1st and 3rd Plaintiffs.

14. In view of the evidence as to the Japanese pronunciation of the word "Yakult", it is arguable that word "Yakudo" is deceptively similar to "Yakult". In coming to this conclusion, I bear in mind that Hong Kong is a cosmopolitan society and the evidence indicated that there is a considerable number of Japanese visitors to Hong Kong every year. Further, Hong Kong also has a significant Japanese speaking population residing here. In addition, by reason of the imperfect recollection of the consumers, it is arguable that the two words might cause confusion to English speaking members of the public. I also take into account of the evidence which shows at least an arguable case that the Defendants adopted various means to confuse others into believing that their businesses were connected with the Plaintiffs. I would not go into the details of such evidence. That includes evidence about the representations made in the brochures of the 1st Defendant, the statements made by the staff of the Kunshan factory during the course of the visit by private investigator, the get-up of the products intended to be manufactured by that factory. The Defendants might have innocent explanations as to these but that is a matter for trial. As matter stands, there is evidence on which inference could be drawn that the Defendants deliberately chose the words "Yakudo" and "養樂多" as the name of the 1st Defendant with a view to pass off. At the interlocutory stage, it is inappropriate for me to decide whether such inference should be drawn. However, if such inference is drawn at the trial, the principle extracted by Mr Liao from Slazenger & Sons v Feltham (No.2) (1889) 6 RPC 531 at p.538 is applicable. Cotton LJ said,

"One must exercise one's common sense, and, if you are driven to the conclusion that what is intended to be done is to deceive if possible, I do not think it is stretching the imagination very much to credit the man with occasional success or possible success."

15. Mr Wong argued that the 2nd Plaintiff does not have any goodwill in Hong Kong because it has neither business nor customer here. He cited passages from a textbook Bently & Sherman, Intellectual Property Law to advance a proposition that to sustain a claim in passing off, the plaintiff must have either business or customer in Hong Kong. At p.686, the learned authors did express some tentative views to that effect by reference to Anheuser-Busch v Budejovicky Budvar Narodni Podnik [1984] FSR 413 and Pete Waterman v CBS United Kingdom (1990) 20 IPR 185. However, as pointed out by the authors, there are other approaches adopted in other common law jurisdictions. The leading cases in that approach are ConAgra v McCain Foods (1992) 23 IPR 193, Orkin v Pestco [1985] 19 DLR (4th) 90, Dominion Rent a Car v Budget Rent a Car [1987] 2 NZLR 395. I have been referred by Mr Liao to three Hong Kong cases which followed the alternative approaches: Hong Kong Caterers v Maxim's Ltd [1983] HKLR 287, Ten-Ichi v Jancar [1990] FSR 151, Harbour Fit Industrial Limited v Tan Kwai Garden Seafood Restaurant, HCA 4535 of 2001, 22.5.2002. It seems that other textbook writers also regarded the law in this respect as developing (see Kerly's Law of Trade Marks and Trade Names, 13th Edn, Paras 14-55, 14-56, 14-60; Drysdale & Silverleaf, Passing Off, 2nd Edn, para 3.12; McKeough & Stewart, Intellectual Property in Australia, 2nd Edn, Paras 17.13 and 17.14). In the light of these authorities, irrespective of the question whether the 2nd Plaintiff could establish a separate goodwill here, I am of the view that it must be arguable that the law should recognize the concept of an international goodwill and it is a pure question of fact whether the goodwill of the Yakult Group in Hong Kong manifests not only in the words "Yakult" and "益力多", but also the word "養樂多" by way of spill over from Taiwan due to the close proximity and substantial commercial connection between Hong Kong and Taiwan (see also C & A Modes v C & A (Waterford) Ltd [1978] FSR 126), and the linkage of the products in Hong Kong and Taiwan in terms of the get-up and the name "Yakult". In Dominion Rent A Car v Budget Rent A Car (1987) 9 IPR 367 at 379, Cooke P said,

"The weight of judicial opinion appears to recognize the possibility that an international business may have one individual goodwill, the reputation of any local branch or agency being that of association with the international organization."

16. I emphasize that I have not come to any concluded view on the law in this respect. I only hold that the point is arguable. As Mr Liao pointed out, parties have not fully deployed their arguments on the point. Given the respective position taken by the parties and the narrow scope of the dispute at the hearing before me, this is understandable.

17. Notwithstanding the persuasion of Mr Wong, I think there is a triable issue on the facts of this case whether the Plaintiffs enjoyed a group reputation. The evidence before me did not lead to the inevitable conclusion that the Plaintiffs have conducted their businesses in a manner which prevented the establishment of a group reputation.

18. Thus, I hold that there is a triable issue whether the use of the names "Yakudo" or "養樂多" would constitute misrepresentation by the Defendants to members of the public in Hong Kong leading them to believe that the businesses of the Defendants were those of the Plaintiffs.

19. The third element is damage. Since the Defendants have offered the undertakings set out in Paragraph 9 above, I only need to consider this in the context of application by the 1st Defendant for listing by using a name containing the words "Yakudo" and "養樂多". Mr Wong did not make any submission in this regard. I have however brought up the issue in the course of the opening by Mr Liao. Mr Liao submitted that although there would not be any damage in terms of loss of sale or profit, the reputation of the Plaintiffs in Hong Kong could be tarnished by activities of the Defendants if they could apply for listing in the Stock Exchange. One of the reasons why the Plaintiffs sought an interlocutory injunction is to protect the goodwill of the Plaintiffs in its trade names. Taiwanese investors and Hong Kong investors who knew that Yakult was known as "養樂多" in Taiwan might be misled into subscribing for the shares of 1st Defendant in case of listing. Mr Liao submitted that in that event, irreparable damages would be caused to the Plaintiffs.

20. Although I have some doubts initially, I come to the conclusion it is arguable that the law of passing off does protect a plaintiff against this kind of damages. Mr Liao referred to the passing off cases regarding non-commercial entities and charitable organizations. The case of British Legion v British Legion Club (1931) 48 RPC 555 is relevant. More recently, in Harrods v Harrodian School [1996] RPC 697, Millett LJ (as he then was) said at p.715,

"In the classic case of passing off, where the defendant represents his goods or business as the goods or business of the plaintiff, there is an obvious risk by substitution. Customers and potential customers will be lost to the plaintiff if they transfer their custom to the defendant in the belief that they are dealing with the plaintiff. But this is not the only kind of damage which may be caused to the plaintiff's goodwill by the deception of the public. Where the parties are not in competition with each other, the plaintiff's reputation and goodwill may be damaged without any corresponding gain to the defendant. In the Lego case, for example, a customer who was dissatisfied with the defendant's plastic irrigation equipment might be dissuaded from buying one of the plaintiff's plastic toy construction kits for his children if he believed that it was made by the defendant. The danger in such a case is that the plaintiff loses control over his own reputation."

See also the recent English Court of Appeal decision in Burge v Haycock, 31 May 2001, unreported.

21. The evidence also indicates that the 2nd Defendant was personally involved in the setting up and the activities of the 1st Defendant. I am satisfied that the Plaintiffs have shown serious question to be tried regarding the personal liability of 2nd Defendant.

Balance of convenience

22. Again I will focus on whether the Defendants should be allowed to apply for listing by using names containing the words "Yakudo" or "養樂多". Since the damage sought to be prevented is damage flowing from potential damage to their goodwill in the manner explained in Paragraph 18 above, it would be difficult to quantify in monetary term. Further, there is no evidence from the Defendants as to their financial ability to pay damages. An award of damages is not an adequate remedy to the Plaintiffs.

23. On the other hand, Mr Wong submitted that the Defendants would also suffer unquantifiable damages if they were not allowed to apply for listing using these names. Mr Wong argued that frustration of the Defendants in term of financing would frustrate the Defendants' effort in procuring market share in mainland China.

24. The evidence shows that Defendants have not started production or marketing in mainland China. Factories are still under construction and the product samples are being tested internally. The Defendants did not suggest that huge sum has been invested in advertising the names "Yakudo" or "養樂多" in mainland China. In any event, it has been agreed by the Plaintiffs that the orders made herein would not have any extraterritorial effect. Unless restrained by an order from a court in Mainland China, the Defendants are free to continue with their activities in mainland China.

25. With regard to financing, the Defendants did not produce any evidence as to their financial positions. There is not an iota of information as to the extent to which the Defendants are ready in terms of preparation for listing in Hong Kong. The court was not told about the exact timetable as to the intended listing application. I do not know whether financial advisers and underwriters have been engaged, whether documents have been submitted to the Stock Exchange. In fact, I was not even told whether the Defendants intended to apply for listing in the main board or the GEM board. Pending the final resolution of this piece of litigation, it is extremely unlikely that the Stock Exchange would approve an application for listing using these names. In the first place, I doubt very much whether the Defendants could secure the support of an underwriter for such an exercise. Moreover, given the fact that the Defendants' factories are still under construction, it would be quite some time before the Defendants could produce the necessary track records as to trading to support their application for listing. With directions for speedy trial, the action could probably come on for trial some time next year. I am not satisfied on the evidence available that the Defendants would be in a position to apply for listing before the end of the trial. I do not see any real prejudice to the Defendants in term of delay in application for listing.

26. Moreover, even if I were wrong in that regard, I also do not see why the Defendants could not proceed with a listing exercise in the name of a company not bearing the names "Yakudo" or "養樂多". Since the only professed objective of the Defendants in listing is to secure financing, and there is no suggestion that the names "Yakudo" or "養樂多" are material in that regard, I really do not understand why the Defendants must insist on having these two names in the company making the application for listing. Mr Wong submitted that alteration of the corporate structure could affect the Defendants' business in mainland China. I cannot find any evidence to support that submission. In fact, there may not be any need to disturb the existing corporate structure. According to the Memorandum of Association of the 1st Defendant, the largest shareholder is a BVI company called Dong Long Group Limited which holds more than 50% of the shares of the 1st Defendant. There is no explanation as to why it is not possible for application for listing to be made in the name of Dong Long Group Limited instead of the 1st Defendant.

27. I am therefore not satisfied that the Defendants would suffer any irreparable damages if they are not allowed to make any application for listing by using the names "Yakudo" or "養樂多" in the meantime.

28. Mr Wong submitted that the court should not intervene because of the lack of interest on the part of the Plaintiffs in these names. He submitted that the present application was in substance an exercise by the Plaintiffs to curtail the business plan of the Defendants. Mr Liao said there was no evidence to support such allegation and disavowed on behalf of the Plaintiffs that there was any intention on their part to hamper fair competition from the Defendants. Mr Liao also emphasized that there had been continuous and substantial sale of Yakult products in mainland China since 1997 and the letter dated 29August 2001 from the Chinese patent agent demonstrated the Plaintiffs' determination to protect their interest in the names.

29. Taking into account of all the evidence, I agree with Mr Liao that there is insufficient material to attribute to the Plaintiffs an ulterior motive in making the present application as alleged by Mr Wong. In any event, the lack of extraterritorial effect of the orders to be made herein substantially reduce the force of Mr Wong's submission. Such orders would not affect the Defendants' activities in mainland China. Faced with such difficulty, Mr Wong was driven back to the argument on the frustration of the Defendants' plan in term of financing. I have already dealt with that in Paragraphs 24 and 25 above.

30. If one were to consider the status quo, it is obvious that the Defendants have not yet made any application for listing. I see no reason why this state of affairs should not be preserved.

31. The last point on which Mr Wong placed considerable reliance is delay. He submitted that there was a substantial delay on the part of the Plaintiffs in taking legal actions against the Defendants and the Defendants have been lulled into a false sense of security. With respect, I disagree. I have recited the history of the matter. Since the discovery of the activities of the Defendants by reading the article in September 2001, the Plaintiffs have tried to resolve the matter through the parents of the 2nd Defendant. Given the relationship between the parties, that is understandable and I do not think Mr Wong levelled any criticism against the Plaintiffs in so doing. After the letter of 12 December 2001, the Plaintiffs took up quite some time in preparation for legal action. There was a lapse of 6 months before the letter to cease and desist was issued. The Plaintiffs offered some explanations for this lapse of time. Whilst I am of the view that the Plaintiffs could have proceeded more promptly than they did, I bear in mind that this action is more complicated than an ordinary passing off action and evidence have to be collected and collated from different jurisdictions.

32. The more crucial issue is whether the Defendants have been lulled into a false sense of security and thereby acted to their detriments. Mr Wong referred to three matters in this regard: the making of fresh applications for registration of trade marks in mainland China in January 2002, the continuous construction of the factories in mainland and the opening of Shanghai office in June 2002. I note that none of these related to the application for listing. Further, I do not perceive these as evidence of the Defendants labouring under a misconception that the Plaintiffs would not take action against them. The Plaintiffs have already passed on a clear message that they would take action to protect their interests in the names in the letter of 29 August 2001. Objections to the use of the names were put forward by the parents on behalf of the Plaintiffs. The Defendants are not total strangers. They carried on their activities with their eyes open to the risk of litigation in mainland China and Hong Kong.

33. The opening of the Shanghai office took place after the letter of cease and desist. Instead of showing the Defendants acted under a false sense of security, such conduct on the part of the Defendants showed that they were prepared to carry on with their activities notwithstanding threat of legal proceedings. View thus, I am not convinced that the Defendants carried on with the construction of the factories and applied for the registrations of various trademarks because they thought the Plaintiffs would not sue them. The Defendants probably had already committed to the construction of the factories in any event. There is no evidence that the construction works have ever been suspended after the Defendants learnt of the objection from the Plaintiffs and construction works restarted again after December 2001. In fact, the 2nd Defendant did not say in his affirmation that he had been lulled in a false sense of security. Paragraph 60 of his affirmation is not a statement to that effect.

34. Further, all these acts of the Defendants were only preparatory steps for their businesses in mainland China. They can still reap the benefit of the same since the Plaintiffs have made it clear that the orders herein would not have extraterritorial effect. Moreover, the Defendants could always continue with their activities in mainland China by using other names. In the applications for registration of trademarks made in January 2002, the marks consisted of names like "雅樂多" and "益樂多" instead of "養樂多". It is not suggested that due to the inaction of the Plaintiffs, the Defendants have advertised the names "養樂多" or "Yakudo" in mainland China and built up certain goodwill thereunder.

35. Mr Wong also suggested that the true reason for the delay was to enable the Plaintiffs to set themselves up in the market in mainland China in order to tilt the balance in their favour for the present application. With respect, this submission is unsupported by evidence. As Mr Liao pointed out, the Plaintiffs have been selling and advertising in mainland China since 1997.

36. In the circumstances, although Mr Wong has said everything he could for the Defendants, I do not think the lapse of time is fatal to the Plaintiffs' application.

37. For these reasons, I made the ruling stated in Paragraph 11 above.

Representation:

Mr Andrew Liao, SC and Mr Gary Kwan, instructed by Deacons, for the Plaintiffs

Mr Ronny Wong, SC and Mr B K Ho, instructed by Lawrence Pang & Co., for the Defendants