Rich Deal Enterprises Ltd v. Saleslink Group Ltd

HCA2429/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2429 OF 2006

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BETWEEN

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Coram: Deputy High Court Judge Carlson in Chambers (Open to public)

Date of Hearing : 10 November 2006

Date of Ruling : 10 November 2006

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R U L I N G

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1.This is an application to prevent further allegedly false or misleading advertising by the defendant relating to premises at B1 and B3, Hong Kong International Trade and Exhibition Centre, Kowloon Bay. 

2.Since 1996, the defendant has leased these floors at this exhibition building from which it has operated a business called Kowloon Bay Car City.  It has done this by letting spaces to car dealers who sell vehicles to members of the public.  There are a number of such places operating in Hong Kong.  The defendant’s lease there will expire on 30 November this year, thereafter the premises will be taken over by another company called Prime Capital Enterprise Limited.  The defendant has already moved its business to other premises at Cheung Sha Wan which it calls the West Kowloon Auto Forum.  Unsurprisingly, it has advertised this new operation in the popular press and on radio.  It is the nature and content of these advertisements which is the subject matter of this application.

3.The plaintiff is a car dealer which occupies space at the Kowloon Bay premises licensed from the defendant.  The nature of the plaintiff’s complaint is that the published advertisements are to the effect that these premises have closed down completely which, according to them, is simply not the case.  The advertisements are in these terms:-

“	The Kowloon Bay Car City at Hong Kong International Trade and Exhibition Centre will be closed down permanently by the end of November this year and car fans should visit the West Kowloon Auto Forum in Cheung Sha Wan instead.”

4.This has gone on in newspapers as well as in magazines and on the radio.  Mr Chan, for the defendant, says that this is not the correct inference to be drawn from this form of words.  The advertisements are true because they merely indicate that this business, that is to say the defendant’s business, has closed down and been transferred elsewhere.

5.Of course today the matter is at its very early stages and Mr Chan applies for leave to file evidence in reply, which he must be allowed to do.  He is content to do so very quickly so that a further inter partes hearing can be held before the summons judge next Friday.

6.Mr Leung for the plaintiff, is agreeable to this course but wishes me to make an interim injunction until then.  These advertisements are coming thick and fast.  Mr Chan accepts this.  There is to be a round this coming weekend and perhaps more in the course of next week.   Mr Leung says that his client’s business is suffering as a result, as are the businesses of others who have filed evidence in support of this order.  Their evidence in this regard, I am bound to say, is compelling at this stage.  Mr Leung says that he is not seeking to prevent the defendant from promoting its business at Cheung Sha Wan; this can be done very effectively by a form of words that does not carry the clear message that these premises at Kowloon Bay, as a place for car sales, has closed down, as opposed to a business which is being operated from there by the defendant. 

7.It seems to me that today, this matter is rather delicately balanced.  On the one hand, the plaintiff has let this go on since early September, although I am told by Mr Leung that the advertising stopped for a period of at least a month after an initial round of advertising and, the plaintiff did not issue its writ until the 3rd of this month.  In the meantime, it only complained orally to the defendant, how many times and in what form is not clear at present.  Yet, if unrestrained, the defendant is intending to continue with these same advertisements.  Mr Chan has, as one might expect, been frank enough to say so.

8.I have decided that an injunction should go now to prevent further advertising which carries the very clear message, to my way of thinking, that the activity of selling cars at Kowloon Bay is over and done with.  That is simply not true.  Mr Chan says that it is too late to do anything about this weekend’s advertising and this is something that I can understand given the fact that today is Friday and that there has been an element of delay in bringing these proceedings by the plaintiff, nevertheless, I am going to restrain advertising in respect of words which are to this effect as from midnight on Sunday 12 November, that is to say this Sunday, until the hearing of the inter partes summons on 17 November before the summons judge or further order.

9.This form of injunction does not prevent the legitimate promotion of the defendant’s new business at Cheung Sha Wan but what it does is to prevent the defendant from actively damaging the business of wholly innocent car traders like the plaintiff who operate from there as the defendant’s licensees.  That would be quite unconscionable and should be stopped even before the defendant has had an opportunity to go on affidavit to justify itself. 

10.The order will be that from the moment that I have just referred to, that is to say from midnight on 12 November, the defendant will be restrained from publishing statements as set out in the plaintiff’s draft order or any other statements which carry the implication that the commercial activity and/or business of selling cars at this establishment in Kowloon Bay has ceased completely or otherwise.  I will hear counsel further as to the form of the order if they wish to address me on it in a moment.

11.There will also be orders that the defendant do have leave to file its evidence in reply by 4 pm on 14 November 2006.  The plaintiff can reply to that, if so advised, by 4 pm on 16 November.  The summons will then be adjourned on these terms to the summons judge on 17 November at half past 9, and I would have thought, subject to what anyone wants to say, the costs of today will be reserved.

Richard Leung, instructed by Edwin Yun & Co., for the Plaintiff

Alfred Chan, instructed by Messrs A.M. Mui & Kwan, for the Defendant