Castlemil Infant (HK) Supplies Co Ltd v. Care N Love Development Ltd

DCCJ 5061/2018

[2018] HKDC 1419

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 5061 OF 2018

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Before: His Honour Judge MK Liu in Chambers (Open to Public)

Date of Hearing: 16 November 2018

Date of Decision: 16 November 2018

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DECISION

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Introduction

1.By an inter-parte summons dated 8 November 2018 (“the summons”), the plaintiff seeks the following interlocutory injunctive relief against the defendant:-

(1) an order requiring the defendant to deliver up and/or disclose within 24 hours to the plaintiff the valid password for access, as the capacity of an administrator, to the plaintiff’s facebook account named “Kendamil Hong Kong” (“the FB Account”); and

(2) an order restraining the defendant from further tempering with the contents of the FB Account.

2.Based upon the evidence produced by the plaintiff, I am satisfied that all the documents concerning this application have been duly served on the defendant.

Background

3.As per the evidence put forward by the plaintiff, the background of this case is as follows.

4.The plaintiff is a limited company incorporated in Hong Kong trading in the milk products industry.  On 28 August 2017, the plaintiff became the sole distributor to distribute, inter alia, milk products of “Kendamil” manufactured by a UK company namely Kendal Nutricare Ltd.

5.On 1 November 2017, for the purpose of promoting the milk brand of Kendamil and other new brands, the plaintiff entered into a Marketing & Sales Agency Agreement with the defendant (“the agreement”).  Under the agreement, the defendant was engaged as the plaintiff’s marketing consultant or sales agent.

6.Shortly after entering into the agreement, the plaintiff intended to set up a Facebook account to be monitored by the defendant for marketing and promoting Kendamil products on the internet as part and parcel of the defendant’s service to the plaintiff under the agreement.  The plaintiff, under the defendant’s request, handed its business registration to the defendant for the purpose of setting up the FB Account. The FB Account was then set up with the name “Kendamil Hong Kong”.

7.The FB Account is of paramount importance in promoting the plaintiff’s products.  All along, the plaintiff has not been owning any physical salesroom or retail shop in promoting the milk brand of Kendamil.  The FB Account has been the only platform where the plaintiff’s clients and potential clients can access to information about the plaintiff’s events, promotion and sales.  The FB Account is vital to the plaintiff in operating its business.  It equates to a virtual salesroom or retail shop.

8.In or around August 2018, the relationship between the plaintiff and the defendant broke down.  The plaintiff formally issued a letter on 31 August 2018 (“the termination notice”) to the defendant terminating the agreement.

9.In around early September 2018, one Alex of the defendant, in the course of negotiation with the plaintiff in relation of, inter alia, the return of the control of the FB Account to the plaintiff, requested HK$200,000 from the plaintiff in exchange for returning the control of the account.  No agreement was reached.

10.The plaintiff’s solicitors issued a letter on 18 October 2018 and another letter on 23 October 2018 requesting the defendant to, inter alia, return the control of the FB Account to the plaintiff.

11.After issuing the letter dated 23 October 2018, the plaintiff found out that many posts and marketing materials in the FB Account had been deleted.  On the same date (ie 23 October 2018), the defendant demanded HK$50,000 from the plaintiff in exchange for returning the control of the FB Account to the plaintiff.

12.On 30 October 2018, the plaintiff’s solicitors received a letter from the defendant’s solicitors, in which the defendant’s solicitors claimed that the agreed costs for setting up the FB Account was HK$50,000, and the plaintiff had not yet paid this sum to the defendant.

13.The deleted contents of the FB Account have not been reinstated or restored.  The deletion has caused severe harm to the plaintiff’s business.

14.The defendant has not put in any evidence to dispute the plaintiff’s case as set out above.

The principles

15.The general principles concerning interlocutory injunctions have been summarized by Ribeiro J (as he then was) in Wah Nam Holdings Co Ltd v Excel Noble Development Ltd^[1], which are as follows:-

(1) whether there is a serious question to be tried;

(2) if so, whether, if the plaintiff were to succeed in obtaining a permanent injunction at trial, it could adequately be compensated by an award of damages in respect of any loss which it might suffer by reason of the defendant continuing to act unrestrained pending the trial;

(3) if not, whether the defendant would be adequately protected by the plaintiff’s cross-undertaking in damages should it be later found that the plaintiff should not have been granted an interlocutory injunction; and

(4) if there is doubt as to the adequacy of the respective remedies of damages, where the balance of convenience lies.

16.In respect of an interlocutory mandatory injunction, the party seeking the injunction has to demonstrate a high degree of assurance that it will succeed at trial^[2].  However, “this is only generally the court's approach.  Where it is shown, as an exception to this general approach, that the case is one in which the withholding of an interlocutory mandatory injunction would in fact carry a greater risk of injustice than granting it even though the court does not feel the “high degree of assurance” as aforesaid, it would be right to grant an interlocutory mandatory injunction.”^[3]

Analysis

17.The agreement contains the following terms:-

(1) “The Agreement may be terminated by either party for any reason with 30 (thirty) days advance written notice of intent to cancel ……”

(2) “Any dispute, controversy or claim arising out of or relating to this Agreement, including its interpretation, performance, breach, termination or invalidity shall be construed in accordance with the laws of Singapore and shall be submitted to a binding arbitration in accordance with the rules of the International Chamber of Commerce then in effect.  The place of arbitration shall be Hong Kong, Special Administrative Region and the language of the arbitration shall be in English.  The decision of the arbitral tribunal shall be final and binding upon the Parties.”

18.Notwithstanding the arbitration clause in the agreement, I am of the view that the plaintiff may succeed in its claim against the defendant in these proceedings.  It is arguable that:-

(1) As a result of the termination notice, the agreement has come to an end in late September 2018.  After that, there is no agreement governing the relationship between the plaintiff and the defendant.

(2) The owner of the FB Account is the plaintiff.  After September 2018, the defendant repeatedly refused to allow the plaintiff to have control of the FB Account.  Further, the defendant has also deleted the contents of the FB Account without the plaintiff’s consent.  The defendant may have committed the tort of conversion and wrongful interference with goods^[4].

(3) The plaintiff’s claim in tort is not affected by the arbitration clause in the agreement.

19.In my view, there is a serious question to be tried.

20.I am satisfied that if there is no injunction and the plaintiff succeeds at trial, the damage caused to the plaintiff is not something which can be adequately compensated by damages.  As shown in the plaintiff’s evidence, the FB Account is the only platform where the plaintiff’s clients and potential clients can access to information concerning the plaintiff’s events, promotion and sales. 

21.The FB Account is vital to the plaintiff in operating its business.  It equates to a virtual salesroom or retail shop.  After the defendant’s deletion of the contents in the FB Account, communications between the plaintiff’s agents and the plaintiff’s customers have been cut out.  The plaintiff would lose and continue to lose business, customers and potential customers as a result of all these.  I am of the view that these losses are something which cannot be adequately compensated by damages.

22.I am also satisfied that if the injunction sought is granted but the defendant succeeds at trial, the loss suffered by the defendant as a result of the injunction can be adequately compensated by damages.  Initially, the defendant demanded for HK$200,000 in exchange for returning the password of the FB Account to the plaintiff.  Later, the defendant reduced the figure to HK$50,000.  Clearly, the defendant is only seeking monetary compensation in respect of returning the control of the FB Account to the plaintiff.  The plaintiff has offered an undertaking as to damages in support of its application for the injunction.  The plaintiff has also produced evidence to show that it is financially capable in honouring the said undertaking if being required by the court to do so in future.

23.I am aware of the fact that the 1^st limb of the injunction sought is a mandatory injunction.  I am satisfied that the plaintiff has demonstrated that it has a high degree of assurance in getting a final relief in same or similar terms at trial.  Based upon the evidence before the court, I do not see any plausible defence which may be advanced by the defendant to resist the plaintiff’s claim.  Further, even if I am wrong and the plaintiff has not met the threshold of “high degree of assurance”, by reason of the matters set out in paragraphs 20 to 22 above, I am of the view that it would still be right to grant the injunction, including the 1^st limb, to the plaintiff.

24.In my judgment, the plaintiff is entitled to have the injunction sought.

Disposition

25.I grant the injunction sought by the plaintiff, with an amendment that the time in the 1^st limb should be “within 24 hours after the service of this order”.

26.Costs of the summons should be the plaintiff’s costs in the cause, with a certificate for counsel, to be taxed if not agreed.  If the plaintiff eventually succeeds in these proceedings, the plaintiff would get the costs of this application.

27.I make an order in terms of the draft annexed to the skeleton submissions of Mr Chau dated 13 November 2018, with the amendments set out above.

28.Lastly, it remains for me to thank Mr Chau for the assistance provided to the court.

Mr Eric Chau Hin Chung, instructed by Ng, Au Yeung & Partners, for the plaintiff

The defendant was not represented and did not appear