Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Harbour Fit Industrial Ltd. v Leon Kotan Kwai Garden Seafood Restaurant Ltd.

Judgment Cited authorities 8 Cited in Precedent Map Related
Vincent
Judgment Date22 May 2002
Year2002
Judgement NumberHCA4535/2001
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA004535/2001 Harbour Fit Industrial Ltd. v. LEON KOTan Kwai Garden Seafood Restaurant Ltd.

HCA004535/2001

HCA 4535/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4535 OF 2001

____________

BETWEEN
Harbour Fit Industrial Limited Plaintiff
AND
Tan Kwai Garden Seafood Restaurant Limited
Trading as "丹桂軒海鮮酒家"		 Defendant

____________

Coram: Deputy High Court Judge Saunders in Chambers

Date of Hearing: 16 & 17 May 2002

Date of Judgment: 22 May 2002

_______________

J U D G M E N T

_______________

1. This is a summons for an interlocutory injunction in a passing off action. The plaintiff seeks a mandatory order requiring the defendant to cease using the name "Tan Gwai Hin" ("丹桂軒") and to take all necessary steps to remove the name from use by the defendant.

History

2. The plaintiff is incorporated in Hong Kong and has since 1994, operated restaurants in Lo Wu in Shenzhen. It now operates three restaurants, all under the name "Tan Gwai Hin". The first restaurant was opened in 1995, the second in March 1999, and the third on 21 May 2001. The restaurants have been very successful and are advertised in Hong Kong and are patronised by Hong Kong citizens who visit Shenzhen. With the flow of people going from Hong Kong to Shenzhen these days the restaurants look to both Shenzhen and Hong Kong for their trade.

3. The defendant was incorporated in Hong Kong on 16 May 2001, and on that same day registered a restaurant business at Whampoa Garden in Kowloon. The first three characters of the defendant's name, and the name under which it primarily styles itself as a restaurant are exactly identical to that of the plaintiff's three restaurants. The only difference is that the defendant adds to the first three characters, characters meaning "Seafood Restaurant" ("海鮮酒家"). The defendant's restaurant opened for business on 11 June 2001.

4. The existence of the defendant's restaurant and its use of the identical name came to the notice of the plaintiff soon after 11 June 2001 when friends and customers of the plaintiff sent congratulations to it's director, Alex Leung, mistakenly believing the Whampoa Gardens restaurant was a venture by the plaintiff. While the plaintiff has plans to extend into Hong Kong no steps have yet been taken in the fulfilment of those plans, other than a general decision that at some time in the future such a move will be made.

The law:

5. An interlocutory injunction falls to be determined applying the well-know principles in American Cyanamid v Ethicon [1975] AC 396. A plaintiff seeking an interlocutory injunction must establish first, a serious question to be tried, and second, if damages awarded at trial would not adequately compensate applicant, that the balance of convenience is in favour of the issue of an injunction.

6. In this case the defendant, while maintaining that there is no actionable passing off, accepts, for the present application only, that there is a serious issue to be tried. That was, on the evidence, a sensible concession. I am therefore primarily concerned with the balance of convenience.

The proceedings:

7. It is necessary to set out the course of the proceedings in some detail as the defendant contends that the plaintiff has been dilatory in the conduct of the action to the extent that the injunction sought ought to be denied.

8. The plaintiff became aware of the alleged passing off soon after 11 June 2001. On 30 June 2001 the plaintiff issued a letter before action, which was delivered by hand to the defendant. It required the defendant to cease using the name "Tan Gwai Hin" and make appropriate changes to its get-up within 7 days. The evidence of Yeung Wai-sing, the defendant's director, was that he sought advice on the matter from his accountant and was assured that there was no problem in the use of the name and so did not bother to respond to any of the letters. He sets out in his affidavit a laborious explanation as to how the name was chosen, but that is largely irrelevant as the innocence or otherwise of the use of a name is not a relevant factor in a passing off action.

9. On 24 July 2001 a second letter was issued repeating the demand and demanding that the alleged passing off be purged with in 7 days. There is no evidence that that letter was received by the defendant. On 6 August 2001 a third letter was sent, repeating the demand and this time giving the defendant 3 days to remedy the situation. Although Mr Yeung says that nothing further was heard from the plaintiff after the first letter, Ms Tam was obliged to accept that the third letter had been received by the defendant, for the plaintiff produced a copy, duly chopped and initialled by the same person who had received the first letter.

10. The writ, with statement of claim endorsed, was not issued until 18 October 2001, over 3 months after the expiry of the deadline imposed in the first letter before action. The interlocutory summons was issued on 22 October 2001, with a return day of 2 November 2001. On that day Suffiad J made the usual timetable order for the filing of affidavits, but the plaintiff did not then seek a hearing date for the summons.

11. No explanation was proffered by the plaintiff as to why it was felt necessary to issue three letters before filing the writ, neither was there any explanation for the delay in the issue of the writ.

12. Both parties sought extensions of time for the filing of affidavits, and it took until 8 February 2002 for the affidavits to be filed, with the plaintiff's final affidavit being filed 18 days after the time limit for its filing had expired, without consent, but also without opposition. There was then correspondence as to an issue over a reply to that affidavit and it was not until 4 March 2002 that the plaintiff sought a hearing of the summons.

13. In summary therefore, there was a delay of approximately 4 months from the time the plaintiff became aware of the situation until the writ was issued, and a further delay of 4 months from the return day of the summons for interlocutory injunction before a hearing date for the summons was sought.

14. The defendant, having opened its restaurant on 11 June 2001, and ignoring the three letters before action, proceeded to establish and develop its business without any change of name or get-up. The business has thrived and in November 2001 the restaurant was awarded the Gold Award in the seafood category in the "2001 Best of the Culinary Awards" by the Hong Kong Tourism Board. In the 5 month period to November 2001 the average monthly turnover was in excess of $1,680,000.

15. It is the plaintiff's contention that the success of the defendant's venture is, in part, a result of the use of the name established by the plaintiff and that the defendant has been riding on the back of the plaintiff's well deserved reputation in Hong Kong.

The issue of territoriality:

16. Ms. Tam faintly argued that, the plaintiff's restaurants being in Shenzhen, an action for passing off would not lie in Hong Kong. It is right that in Star Industrial Co. Ltd. V Yap Kwee Kor [1976] FSR 256 (PC, Singapore) it was held that the nature of goodwill as legal property with no physical existence meant that where a business is carried on in more than one country or jurisdiction there must be a separate goodwill in each. But it is clear that a business need not be physically carried on in a country for that business to have a goodwill in that country. That is clear from cases such as C & A Modes v C & A (Waterford) [1978] FSR 126 (Irish SC), Nishika Corp v Goodchild [1990] FSR 371, and, despite the academic criticisms, in Hong Kong, the decision of Sears J in Ten-Ichi v Jancar [1990] FSR 151.

17. The situation of the relationship between Australia and New Zealand is particularly instructive in this respect. There, like the relationship between the Hong Kong Special Administrative Region and Shenzhen there is a ready, easy and regular flow of people between the two jurisdictions, albeit requiring air travel, rather than the Kowloon Canton Railway. The courts of both countries have been ready and willing to protect the goodwill in...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT