Duty Free Shoppers Ltd v. Hong Kong Tax Free Co Ltd

HCA002850/1971

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 2850 OF 1971

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Coram: Li, J. in Chambers

Date of Judgment : 5th January, 1973

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DECISION

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1. This is an application on the part of the plaintiff for an amendment of the Writ of Summons so as to join three persons, namely, CHING HON KUEN, CHING HON CHIU and CHING HON KI, who are at all material times directors of the Defendant Company as co-defendants. The Writ of Summons was originally issued against the Defendant Company alone for a passing-off action. An interim injunction was obtained against the Defendant Company on the 22nd February, 1972. In granting the Order for an interim injunction my brother Leonard gave as one of his reasons as follows:

"I regret that I fail to see how the subsequent behaviour of the defendant in suggesting, as it undoubtedly does suggest that it has acquired some such concession while knowing that the plaintiff obtained on onerous terms that very concession, can be regarded as other than entirely dishonest."

Mr. Mills-Owens for the plaintiffs maintains that in view of the fact that the three gentlemen, Messrs. Ching, are the only three directors of the Defendant Company and the only shareholders of the Defendant Company, an injunction or relief obtained by the plaintiff against the ...(illegible) Defendant Company alone might well turn out to be an empty judgment and ...(illegible) is not sufficient relief asked for by the plaintiff. That, I lieve, is the sole proposition for this application.

2. Mr. Swaine for the Defendant Company objects to this application on the ground that the defendants are separate individuals and as such they have distinct entities from that of the Defendant Company which is a limited company. He cites the Salomons case of 1897 Appeal Cases, page 22, in support of that proposition. Without a doubt that is a correct proposition. As directors or even shareholders they have all distinct personalities from that of a limited company and whatever is done by a limited company is not really the act of persons in their personal capacity or individual capacity. But the main ground of his objection, citing the case of Raleign v. Goschen in 1898 I Chancery, 73, is that the present move by the plaintiffs amounts to a change of the character of the action against the Defendant Company for acts done by the Defendant Company into an action against the directors (or rather other persons having distinct entity), in respect of acts which they may or may not do. As such the plaintiffs have disclosed no cause of action against the directors individually. I only have to observe that in the Raleign's case it was originally an action against the Lords Commissioners of the Admiralty in their official capacity. As such they were really servants of the Crown being responsible to the Crown and nobody else. When the plaintiff in that action found that there might possibly be a good defence on that ground, the plaintiff sought leave to sue the Lords Commissioners in their personal capacity and also to add three more government officials as dependants in their personal capacity. The act complained of was the same. It was found that the plaintiff had not disclosed any cause of action against any of the people he sought leave to add as defendants in their personal capacity. As such leave was refused to add them. This is clearly distinguishable from the present case.

3. In the present case I have no intention to pre-judge the issue but I have to take into consideration what my brother Leonard has said in his judgment and what is said in Kerly's Law of Trade Marks and Trade Names viz:

"Directors of a limited company which infringes are not liable merely because they are directors, but only for infringing acts that they personally have committed or directed."

Here are three persons who are the only directors of a company which has performed an act of dishonesty, or prima facie act of dishonesty. As I have said, I have no intention to pre-judge the issue. They are the governing body of this company and they are the only shareholders of this company. But that is not all. Mr. Mills-Owens directs my attention to the case of La Societe Anonyme des Anciens Etablisements Panhard et Levassor v. Panhard Levassor Motor Company, Limited or Panhard's case in 1901 2 Chancery, 513, in which the learned judge said:

"The only part of the case which has caused me a little difficulty is the claim against the seven signatories to the memorandum, who are the directors and sole shareholders of the company. The allegation is that they have fraudulently and wrongfully, and with intent to injure the plaintiff's in their said business, conspired together to form, and have formed, and procured the defendant company to be registered. Now, as I hold that the defendant company has the fraudulent intention of annexing the benefit of the plaintiff's name, it follows that the persons who have formed that company and caused it to be registered are guilty in the eye of this Court of a fraudulent conspiracy to carry into effect that which the company, an entity without body or soul, has attempted to do, and are liable in damages accordingly."

In the present case the Defendant Company has, prima facie, infringed the plaintiffs' right. It is true that up to this moment no particular cause of action has been disclosed because the particulars of claim have not been filed. There may or may not be a cause of action against the individuals after the particulars of claim have been filed. I do not want to pre-judge the issue. If there is no cause of action against the individuals when the particulars of claim are filed, the defendants can certainly apply to have the action struck out. As I am not in a position now to say whether there is any cause of action against anyone but prima facie the three potential defendants, if I may refer to them as such, are the sole directors of a company which has committed an apparent act, or rather prima facie act of infringement of the plaintiffs' rights and they are also the sole shareholders. I will in the circumstances, following the Panhard case, grant leave to add them as defendants and allow the amendment of the Writ of Summons.

4. It is the duty of the plaintiff's to see to that all the proper persons should be included as defendants in the first instance. Thus when they first applied before the Registrar to add further defendants they would have to be liable for costs. However, the defence sought to object to this application. Full argument had been made before me and I have ruled in favour of the plaintiff's. There is also the other principle to be followed in that costs should follow in the event. In this instance, both parties were responsible for this hearing. The defendant is entitled to resist any application but since they have lost it I would in this case just make the following Order:

5. Leave to amend in terms.

6. Cost of the application is to be costs in the cause.

Representation:

Mills-Owens (J.S.M.) for plaintiff

Swaine (C.Y. Kwan & Co.) for defendant

Oral decision reduced into writing.