RTX PRODUCTS HONG KONG LTD v. LI YIU FAI

HCA 1777/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1777 OF 2009

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BETWEEN
	RTX PRODUCTS HONG KONG LIMITED (愛創域香港有限公司)	Plaintiff
	and
	LI YIU FAI (李耀輝)	Defendant

________________________

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 28 October 2014

Date of Decision: 12 November 2014

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D E C I S I O N

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1. There is before this court a Summons dated 1 August 2014 (“Summons”) issued by the defendant to vary a costs order nisi made after the trial of this action on 6 September 2011. 

2. This application is hopelessly unmeritorious. This action concerned a breach of copyright claim of the defendant’s ex-employer (the plaintiff).  By a judgment dated 6 September 2011, the plaintiff’s claim was upheld after trial and an injunction was granted against the defendant to prevent further infringement of its copyright.  In addition, an order nisi (“ON”) was made for the costs of the action to be borne by the defendant. 

3. Pursuant to O 42, r 5B(6), the ON became absolute on 20 September 2011 (14 days after it was made) since there was no application made to vary it.  However, the judgment in this case (“Judgment”) was not sealed until the 18 October 2011. Although the ON had become absolute at the time when the Judgment was sealed, it was still referred to in the Judgment as an order nisi.  

4. Meanwhile, on 23 September 2011, a Notice of Appeal (“Notice”) was filed by the defendant in respect of the Judgment.  There was no indication in the Notice that the defendant sought to argue that he ought not be liable for the costs of the action despite being the losing party.  At the hearing of this application, the defendant confirmed that no such argument was advanced at the appeal.  The appeal was dismissed on 8 July 2013 with costs to the plaintiff. 

5. In these circumstances, it is extraordinary for the defendant to come to the court almost 3 years later to seek to vary the ON.  The only explanation for the delay which can be discerned from the supporting affirmation filed by the defendant on 1 August 2014 is that he had recently received pro bono legal advice concerning a sanctioned offer (“SO”) made by his solicitors prior to the trial on 11 and 23 September 2009 (the two letters in question appear to be identical). 

6. On behalf of the plaintiff, Ms Tang has advanced 3 arguments. 

7. Firstly, it is submitted that this court has become functus officio such that it has no further jurisdiction over this case upon the perfection of the Judgment on 18 October 2011 : see Andayani v Chan Oi Ling, CA, [2000] 4 HKC 233.  I agree.  Further, I do not believe that the fact that the Judgment referred to the costs order as an order nisi makes any difference.  Such order had become absolute pursuant to O 42, r 5B(6) at the time when the Judgment was perfected. 

8. It should be noted that the rule is expressed in imperative terms : “… that [order nisi] shall become absolute 14 days after the decision is pronounced” [emphasis added] .

9. The situation may be different if a judgment is perfected before the order nisi becomes absolute.  It may be said that in such a case it is inherent in the judgment that the costs order has yet to become absolute and the door remains open to an affected party to make an application to have it varied, including an application for an extension of time to make the variation application. However, once the order has become absolute, I am inclined to the view that any disagreement will then have to be pursued on appeal.  This is of course not the situation before this court. 

10. Secondly, Ms Tang submits that even if this court retains jurisdiction over the ON, no extension of time should be granted to allow the defendant to apply now to vary the same.  I also agree. 

11. To allow an application to vary the ON after a lapse of almost 3 years is, prima facie, a serious erosion of the principle that there should be finality to litigation.  This is all the more so when the defendant had unsuccessfully appealed against the Judgment.  The potential injustice to the plaintiff is obvious.  

12. I do not believe that the delay in question has been properly explained.  In particular, there is no explanation as to why it had taken the defendant so long to obtain advice in respect of the SO.  The defendant is not an unsophisticated person.  He was employed by the plaintiff as a Senior Product Engineer and he can read English.

13. Ms Tang’s third argument goes hand in hand with her second.  It is submitted that there is no merit in the SO because after it was made the defendant then withdrew the admission of liability (“Admission”) which he had made by way of a Form 16C filed on 4 September 2009. The order granting leave to withdraw the Admission was dated 11 November 2009.  I also agree with Ms Tang.

14. Whilst the SO indicated the defendant’s willingness to, inter alia, submit to the injunction sought by the plaintiff, it is clear from the terms of the SO that it was made on the basis of the Admission.  After the withdrawal of the Admission, a Defence was then filed on behalf of the defendant on 17 November 2009 by his solicitors which disputed the plaintiff’s entitlement to any of the relief claimed by it.

15. I do not accept the serious allegation made by the defendant that the withdrawal of the Admission was made by his solicitors without his instructions.  The allegation is inherently improbable and unsupported by any credible evidence.

16. In the premises, I see no justification for a variation of the ON and no reason at all to allow an extension of time to enable the defendant to apply to do so (assuming that the court retains jurisdiction over the matter). 

17. By reason of the aforesaid, the Summons is dismissed and I make an order nisi that the costs of and occasioned by the Summons be paid by the defendant.

	(Anthony Chan)
	Judge of the Court of First Instance
	High Court

Ms Candy Tang, instructed by Chak & Associates, for the plaintiff

The defendant appeared in person

HCA1777/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1777 OF 2009

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BETWEEN

	RTX PRODUCTS HONG KONG LIMITED	Plaintiff
	(愛創域香港有限公司)
and
	LI YIU FAI (李耀輝)	Defendant

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Before : Mr Recorder A. Chan, SC in Court

Dates of Hearing : 24 and 26 August 2011

Date of Judgment : 6 September 2011

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JUDGMENT

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1.  In this action the plaintiff sues the defendant for infringement of its copyright. The plaintiff was and is a subsidiary of RTX Telecom A/S, which is an international company founded in 1993 and headquartered in Denmark. At all material times, the plaintiff carried on the business of developing and producing innovative wireless products, including wireless telephones, and selling the same to wholesalers.

2.  One of the plaintiff’s products was a wireless telephone model RTX 8050.  In the course of developing that product, various design drawings were created (“the Copyright Works”).  There is no dispute that the plaintiff owned and continues to own the copyright subsisting in the Copyright Works[1].  Those drawings can be found at C/3142–83.

3.  At all material times, the defendant was employed by the plaintiff as a Senior Product Engineer (Mechanical) of its Research and Development Department, and he had participated in the development of RTX 8050.  It appears to this court that, given the position of the defendant and his obvious knowledge over the plaintiff’s business, he must have appreciated that :

(1)  the plaintiff owned the copyright in the Copyright Works; and

(2)  he had a duty not to infringe such right by copying the Copyright Works save as authorized by the plaintiff.

Further, Clause 15.1 of the defendant’s employment agreement with the plaintiff provided as follows :

“Employees are not allowed, either during employment wit [sic] the Company or at any time after termination thereof, for whatever reason without limit in time, use of [sic] divulge any commercial information of the Company either verbally, in writing or using any means of electronic transmission to any third party. The Company reserves the right to seek for further legal proceedings for the damage.”

4.  It is not disputed that in the course of his employment with the plaintiff, the defendant was provided by the plaintiff with a laptop computer for his use.  The plaintiff’s case is that the provision of laptops to those employees who worked on design drawings was to protect its copyright in the same.  In cases where such employees were required to work outside the plaintiff’s premises, they were able to take the laptops with them.  These employees were not allowed to copy the design drawings from the laptops or the computer at the plaintiff’s office to any other computers (“the Policy”).  The Policy was, according to the plaintiff, explained to the defendant.

5.  The defendant disputes that the Policy was ever explained to him.  His evidence is that there were occasions when he had to work outside the plaintiff’s premises, and having left the laptop at home, he had to copy, inter alia, design drawings using other computers.  He maintains that it was done solely for the purpose of his employment. 

6.  Notwithstanding the fact that the plaintiff’s witness has no firsthand knowledge as to whether the Policy was explained to the plaintiff, I am inclined to accept the plaintiff’s case.  There must have been a reason for providing the relevant employees with costly laptops.  More likely than not, the purpose for so doing would have been explained to them. 

7.  Unfortunately, the relationship between the plaintiff and defendant did not end amicably.  By a one month notice issued on 26 February 2009, the defendant’s employment was terminated on 25 March 2009.  There were arguments between the parties over the defendant’s performance during his employment and the defendant’s various entitlements upon termination of his employment.  The merits of those disputes are not relevant to the resolution of these proceedings.

8.  However, there was a letter written by the defendant to the plaintiff and dated 7 April 2009 (“the Letter”).  It was part of the exchange between the parties concerning the disagreements over the termination of employment and the defendant’s post-termination entitlements.  A set of the Copyright Works, which was produced from the memory of the defendant’s personal computer, was attached to the Letter.  Regrettably, the Letter was copied to the Labour Department from whom the defendant had sought assistance on the dispute concerning his entitlements. 

9.  The plaintiff complains that the copying of the Copyright Works by the defendant onto his personal computer and the reproduction of the same as an attachment to the Letter, which had been copied to the Labour Department, were not authorised by it and constituted infringements of its copyright.  Save for the argument based on fair dealing (see below), the defendant can provide no real answer to these complaints.

10.  For completeness, I should mention that the Letter was also, on its face, copied to the Labour Tribunal[2].  However, I accept the defendant’s evidence that the Letter was actually not sent to the Labour Tribunal until after he had initiated his proceedings there.

11.  The defendant’s evidence is that in May 2009 his computer broke down and ever since then he was unable to retrieve any information therefrom, including those belonging to the plaintiff.  Further, on 7 December 2009, the defendant, through his solicitors, had delivered to the plaintiff’s solicitors all drawings and related materials which belonged to the plaintiff and were in his possession, custody, power or control.  Since then, the defendant no longer possesses any such materials.  Such evidence was not challenged in cross-examination.

12.  I now come to the only defence raised by the defendant, namely, fair dealing.  I accept the submission of Mr Lam, who appears for the plaintiff, that fair dealing is a statutory defence and is exhaustively defined in sections 38 to 88 of the Copyright Ordinance, Cap. 528.  It has not been made clear by the defendant which of those provisions are being relied upon.  However, I agree with Mr Lam that the only relevant provision is section 54(1) which provides :

“Copyright is not infringed by anything done for the propose of judicial proceedings.”

13.  Under section 198, “judicial proceedings” have been defined to include “proceedings before any court, tribunal or person having authority to decide any matter affecting a person’s legal rights or liabilities”.

14.  First of all, insofar as the copying of the Copyright Works onto the defendant’s personal computer is concerned, this defence is of no assistance to the defendant. 

15.  Secondly, it is clear from the evidence that the defendant’s proceedings in the Labour Tribunal were commenced on 10 July 2009[3].  At the time of the Letter, there was, at most, an anticipation that a conciliation exercise would be held between the parties with the assistance of the Labour Department.  Plainly, the requirements of section 54(1) cannot be met.  Further, I do not believe it can be maintained that the Letter (or the copying of it to the Labour Department) was in preparation for the Labour Tribunal proceedings which were instituted later.  The reasons being :

(1)  the conciliation suggests that proceedings might not be necessary; and

(2)  the Copyright Works were quite irrelevant to the disputes between the parties.  In the premises, this defence must fail.

16.  By reason of the foregoing, the plaintiff has succeeded in this action.  As regards the appropriate relief, it is perfectly plain that this is not the usual breach of copyright case where the wrongdoer had a commercial purpose in the infringement.  This court believes that the defendant acted in a very foolish way, not motivated by any financial gain, but a strong feeling that he had been wronged by the plaintiff.  However, Mr Lam has persuaded me, notwithstanding the evidence that the defendant no longer possesses any of the copyright materials, that the plaintiff should be protected with an injunction order against the defendant to prevent any infringement in the future, given the strong feeling the defendant has against the plaintiff.  I therefore make an order in terms of para. 1 of Mr Lam’s draft order.

17.  In respect of the delivery up of copyright materials and verification sought in para. 2 of the draft order.  Quite fairly, Mr Lam does not press for them strongly and I am unable to see any good reason why such relief is called for in light of the evidence before this court.

18.  I am not persuaded, despite Mr Lam’s attractive submissions, that there is any justification for ordering an inquiry as to damages.  It is accepted by Mr Lam that such relief should not be granted as a matter of course, but ought to be grounded upon evidence showing that damage has been caused to the plaintiff.  As pointed out above, there was no commercial element in the infringement but acts of foolishness on the part of the defendant.

19.  Modern judicial ethos, reflected by the Civil Justice Reform, is to minimise unnecessary proceedings and the wastage of resources.  It would be consonant with such ethos that proceedings should be concluded unless there is any real issue remaining.  I cannot therefore accept Mr Lam’s submission that it would be for the plaintiff to consider whether to pursue the inquiry after the order has been granted.  I am unable to see any real loss suffered by the plaintiff or any justification for the inquiry order.

20.  The plaintiff should have the costs of this action and I make an order nisi accordingly.

21.  Finally, I wish to say that I fully accept the defendant’s submission that this action has been a great strain on him emotionally and financially.  I very much hope that he can put this episode behind him and go forward with his life.  He is young and qualified.  His future is in his own hands.

(Anthony K.K. Chan, SC) Recorder of the Court of First Instance High Court

Mr Lam Chin Ching Gary, instructed by Messrs Chak & Associates, for the Plaintiff

The Defendant, in person

Please refer to CACV186/2011 for the relevant appeal(s) to the Court of Appeal.