The Walt Disney Co and Others v. D Land Travel Ltd and Another

HCA3864/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3864 OF 2001

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BETWEEN

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Before : Hon Poon J in Chambers

Date of Hearing : 18 June 2008

Date of Decision on Costs : 18 June 2008

Date of Handing down Reasons for Decision on Costs : 20 June 2008

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REASONS  FOR  DECISION  ON  COSTS

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Introduction

1.By the judgment handed down on 5 December 2007, I entered judgment for the plaintiffs against the defendants for, among other things, various negative and mandatory injunctions.  I also made an order nisi that the defendants do jointly and severally pay the plaintiffs’ costs of the action including all costs reserved, to be taxed if not agreed.  The 2^nd defendant applied to vary the costs order nisi to the effect that there shall be no order as to costs as far as he is concerned.

2.On 18 June 2008, after hearing the parties, I dismissed the 2^nd defendant’s application with costs and made the costs order nisi absolute.

3.These are my reasons.

The Calderbank offer

4.Mr Cheng, counsel for the 2^nd defendant, argued that the 2^nd defendant had all along by correspondence been prepared to and did offer to accede to or submit to all reasonable reliefs asked for by the plaintiffs against him and had even agreed to costs to be taxed if not agreed.  He had effectively made a Calderbank offer.  Had that been accepted, the trial would have become unnecessary.  So he should not be penalised for the costs of the trial.

5.The proper approach to a Calderbank offer, when it is taken into account on an argument as to costs, is to ask whether the party to whom the offer was made ought reasonably to have accepted the proposal in the letter.  Whether or not it is reasonable for the offeree to refuse to accept an offer depends on the facts of the case.  See Butcher v. Wolfe & Wolfe [1999] 1 FLR 334 at p.340.

6.In a passing off action, as is in any action concerning infringements of intellectual property, the most significant relief to the plaintiff is injunction, be it negative or mandatory.  It is particularly so in the present case.  For in light of the wrongful conduct by the defendants, the injunctive relies would be the only means to ensure that they would not commit any further act of passing off.  Any offer by the 2^nd defendant falling short of acceding to an appropriate injunction or undertaking would be unreasonable and unacceptable, which the plaintiffs were quite entitled to reject.

7.The correspondence between the parties revealed this.  Up to August 2007, the 2^nd defendant was unwilling to accede to any injunction.  He took the view that the negative injunctions sought were superfluous.  Nothing was mentioned about the mandatory injunctions sought either.  Then by letter dated 30 August 2007, the 2^nd defendant, through his former solicitors, appeared to be agreeable to the negative injunctions sought “insofar as such is within his control” but again nothing was said about the mandatory injunctions.  The plaintiffs’ solicitors sought clarification but to no avail.  The 2^nd defendant then acted in person.  By letter dated 10 September 2007, he asked the plaintiffs’ solicitors to provide draft provisions of settlement for his consideration, which they did on 3 October 2007.  But the 2^nd defendant did not accept the terms.

8.In my view, what the 2^nd defendant offered fell far short of what the plaintiffs would reasonably expect or accept.  First, he did not explain what he meant when he said he would agreed to the negative injunctions sought “insofar as such is within his control”, when it was incumbent upon him to make clear what he was actually offering : see C & H Engineering v. F Klucznik & Son Ltd [1992] FSR 667 at p.671.  Second, he did not accede to any mandatory injunctions sought, which as observed above, would be necessary to ensure that he would not commit any further act of passing off.  Finally, when the plaintiffs’ solicitors did put forward the draft terms of settlement, which, if accepted, would have rendered the trial unnecessary, he failed to accept it.

9.In the circumstances, the plaintiffs had acted reasonably in refusing to accept the 2^nd defendant’s offers or to settle the action in the way as he had suggested.  Indeed, as his offers came nowhere near the reliefs that the plaintiffs finally obtained after trial, any reliance on them is doomed to failure.

The payment into court

10.In his written submissions, Mr Cheng also relied on the 2^nd defendant’s payment into court of HK$10,000.  The notice of payment into court said that the payment was for satisfying all the plaintiffs’ causes of action.  The reliance on the 2^nd defendant’s payment into court is misplaced.  For payment into court only applies to an action for debt or damages : see Order 22, rule 1 of the Rules of the High Court.  In any event, it did not address the injunctive reliefs.  The plaintiffs were entitled to disregard it.

Conclusion

11.For the above reasons, I dismissed the application with costs and made the costs order nisi absolute.

Mr John M.Y. Yan, SC, instructed by Messrs Baker & McKenzie, for the 1^st to 3^rd Plaintiffs

The 1^st Defendant, in person, absent

Mr James C.C. Cheng, instructed by Messrs Johnnie Yam, Jacky Lee & Co., for the 2^nd Defendant