Yau Ngai and Others v. Yau Tak and Others

HCA 1309/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1309 OF 2007

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Before: Deputy High Court Judge L. Chan in Chambers

Dates of Hearing: 12–13 August 2008

Date of Decision: 5 September 2008

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D E C I S I O N

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1.This is an application by the 1st to 5th defendants to set aside my order of 2 May 2008.  The order gave leave to the plaintiffs to issue contempt proceedings against these defendants.  The proceedings are for alleged breaches of undertakings they gave to the court.  The main grounds of the application to set aside are alleged non-disclosure by the plaintiffs of various material facts in the ex parte application.  At the start of the hearing, triviality of the alleged breaches of undertakings was also a ground.

BACKGROUND

2.The 1st and 2nd plaintiffs and the 1st to 5th defendants are six brothers and one sister.  They used to operate a substantial business in the manufacture and sale of imitation jewellery.  They sold their jewellery in the name/mark of “Italina” and/or the Chinese name/mark of “伊泰蓮娜”.  They established a large number of corporate vehicles to carry on their business.  Unfortunately, the 1st and 2nd plaintiffs fell out with the 1st to 5th defendants.  Litigation ensued.  The 3rd plaintiff is a company controlled by the 1st and 2nd plaintiffs and the 6th defendant is a company controlled by the 1st to 5th defendants. 

3.There is a related action, HCA 1255/2007, where Yau Tak (the 1st defendant herein) is suing his brothers Yau Ngai (the 1st plaintiff herein) and Yau Siu Chan (the 2nd plaintiff herein).  I shall address the 1st to 5th defendants collectively as the defendants.  The other defendants are not involved in these proceedings.

4.After the brothers and sister had fallen out and became two camps, the defendants continued to make and sell imitation jewellery but under a different name/mark called “Italena”.  They could not use the name/mark “Italina” as that was registered in the name of the 3rd plaintiff.  However, the plaintiffs did not think it right for them to use the name/mark “Italena” because it amounted to passing off of “Italina”.  They issued a summons on 21 June 2007 seeking to enjoin the defendants from so doing.  The summons was scheduled to be heard on 7 and 8 January 2008.  On 7 January 2008, the parties had a lengthy negotiation from the morning till about 7:00 p.m.  They eventually came to terms on the summons and the terms were then made a consent order.

THE UNDERTAKINGS

5.Part of the terms were some undertakings given by the defendants.  Paragraphs 10 (1) to (5) and 11 of the undertakings are relevant to these proceedings.  Paragraphs 10(1) and (2) of the undertakings say:

“10. Not to carry out the following acts, whether by themselves, their employees, agents or nominees or, in the case of a company, also its directors or officers, whether in Hong Kong or elsewhere: -

(1)   Selling, advertising, publishing, displaying, manufacturing or otherwise dealing with, or causing, enabling, assisting, procuring or authorizing others so to do, goods bearing and/or under and/or by reference to the name or mark of “ITALENA” or any other name or mark confusingly similar thereto;

(2)   Using or carrying on business under the name, style and title of ‘ITALENA’ or any other name, style or title confusingly similar thereto;”

6.Paragraphs 10(3) and (4) of the undertakings are in the same terms except that they prohibit the use of the name/mark “Italena” together with the Chinese name/mark “伊泰蓮娜”.  Hence if “Italena” is used for the purpose of trade by the defendants, that would amount to breach of undertakings 10(1) and (2).  If the name/mark “伊泰蓮娜” is used at the same time, then undertakings 10(3) and (4) would also be breached.

7.Though the defendants are prevented by undertakings 10(1) to (4) to trade in the name/mark of “Italena” either singly or in conjunction with “伊泰蓮娜”, they are permitted to trade in the name/mark of “Italina” and/or “伊泰蓮娜” through some specific corporate vehicles.  This is provided for in undertaking 10(5) which prevents them from:

“(5) Using or carrying on business under the name, style and title of ‘ITALINA’, ‘ITL’, ‘伊泰蓮娜’ and/or any of the marks and logos set out in Schedule 3 to this Order, otherwise than by or through the Schedule 2 Companies.”

8.The Schedule 2 Companies are those enumerated in Schedule 2 of the consent order.  The 6th defendant however is not one of them.  The 6th Defendant has therefore been barred from trading in the name of “Italena” under undertakings 10(1) to (4) or in the name of “Italina” under undertaking 10(5) since the making of the consent order on 7 January 2008.

9.However, it is not the intent or purpose of the consent order that the defendants should stop trading immediately and could only resume trading through the specific trading vehicles after the name/mark  “Italena” has been replaced with the name/mark “Italina” for these vehicles.  The scheme allowed them to continue trading through the permitted vehicles pending the replacement of name/mark.  But they had to exercise best endeavours to effect the change from “Italena” to “Italina”.  For companies including the 6th defendant that could not trade either in the name of “Italena” or “Italina”, the defendants had to exercise best endeavours to put an end to their activities in terms of undertakings 10(1) to (5).  In any case and despite their best endeavours, all changes of name/mark or cessation of business should be accomplished within four months from 7 January 2008.  This is provided in undertaking 11 which says:

“11. To use their best endeavours to make all changes necessitated by the undertakings as set out in paragraph 10 herein as soon as practicable within four months from the date of this Order.”

INTERPRETATION OF THE UNDERTAKINGS

10.I note here that the defendants preferred to interpret undertaking 11 to mean that they had four months to comply with undertakings 10(1) to (5).  I do not agree with such interpretation as it ignores in total the words “to use their best endeavours” and the words “as soon as practicable”.  I agree that this undertaking can be better expressed if it is worded for example like “as soon as practicable and in any event within four months from the date of this order”.  But the meaning is sufficiently expressed even in the existing wording. 

11.There is a further point of interpretation in relation to undertaking 10(2).  The defendants argued that this undertaking only refers to using or carrying on business in the name of “Italena” but would not cover the procuring or causing the use or carrying on of such activity.  I do not think this a sound argument.  I think the prohibition against the using or carrying on of business in the name of “Italena” would include the procuring or causing the use or the carrying on of such activity.

APPLICATION FOR LEAVE TO COMMENCE COMMITTAL PROCEEDINGS

12.On 18 April 2008, the plaintiffs applied ex parte for leave to commence committal proceedings against the defendants for contempt of court.  The grounds are that the defendants have breached undertakings 10(1) to (4) and 11.

Alleged breaches by D1 and D5 through D6

13.The Order 52 statement of the plaintiffs said that the 6th defendant had maintained and operated websites under domain names www.italina.com.cn, www.italena.com, www.italena.com.cn and www.italena.cn (hereinafter called “the Four Websites”) until late March or early April 2008.  It further stated that the 6th defendant had advertised goods under or by reference to the name/mark “Italena” and the name/mark “伊泰蓮娜” through the Four Websites.  It had thereby breached undertakings 10(1) to 10(4).

14.The statement also said that the 6th defendant had sold goods on or through two on-line shopping websites, namely www.Taobao.com (淘寶網) and www.paipai.com (拍拍網).  The goods were also sold under or by reference to the name/mark “Italena” and the name/mark “伊泰蓮娜” until late March or April 2008.  The 6th defendant had thereby breached undertakings 10(1) to (4) again.

15.As a further or alternative charge to the above, the statement said that the 6th defendant had breached undertaking 11.  The reason being that it had failed to exercise best endeavours to put an end to its trading activities referred to above as soon as practicable and within four months from the date of the order.  These are the charges in relation to the Four Websites and the two on-line shops.

16.In addition, the statement alleged that the 6th defendant had committed some other breaches of undertakings 10(1) and (2).  It alleged that the 6th defendant had maintained a website in the domain name of “www.italenahk.com” and advertised goods thereat under the name/mark “Italena”.  Furthermore, it also maintained or caused to be maintained pages in the websites of the Hong Kong Trade Development Council (“HKTDC”) and an on-line trading platform “HKPRODUCTS.NET” and advertised on these pages goods under the name/mark “Italena”.

17.Again as a further or alternative charge, the statement said that the 6th defendant had also breached undertaking 11 in failing to stop these other breaches in terms of this undertaking.

18.Though all the above charges are directed at the 6th defendant, they are cited as grounds for committing the 1st and 5th defendants who are and were at all material times the directors of the 6th defendant and were aware of the terms of the undertaking.

Alleged breaches by D1 to D5 through D6 and/or Italina Zhongshan and/or East Asia

19.The Order 52 statement then alleged that the breaches in the Four Websites were in fact the acts of the 6th defendant and/or Italina Jewellery Ornaments (Zhongshan) Company Limited (“Italina Zhongshan”).  The statement further said that the breaches in the on-line shops of taobao.com and paipai.com were carried out by the 6th defendant and/or East Asia Industrial Company (“East Asia”).  Since the 6th defendant, Italina Zhongshan and East Asia were corporate vehicles managed and controlled by the 1st to 5th defendants, the plaintiffs therefore alleged that these defendants had breached undertakings 10(1) to 10(4). 

20.There is likewise a further or alternative charge against the 1st to 5th defendants for having breached undertaking 11 because of their failure to stop the alleged acts of the 6th defendant and/or Italina Zhongshan and/or East Asia in terms of this undertaking.

21.The statement further alleged that the 6th defendant is and was a corporate vehicle managed and controlled by the 1st to 5th defendants.  It thus said that these defendants were also responsible for the other breaches by the 6th defendant of undertakings 10(1) and (2).  These are the alleged breaches in maintaining the website of the name “www.italenahk.com” and in the websites of HKTDC and HKPRODUCTS.NET as referred to above. 

22.Finally, the 1st to 5th defendants are said to have breached undertaking 11 in failing to stop these other breaches in terms of this undertaking.

THE DEFENDANTS’ GROUNDS TO SET ASIDE THE LEAVE

23.The defendants initially argued that the plaintiffs in making the ex parte application should have made full and frank disclosure of all that they knew about what the defendants had done in complying with their undertakings.  That was to show the court whether, on an overall basis, the defendants had failed to use their best endeavours or to act as soon as possible to comply with their undertakings.  Such disclosure would also let the court know if the breaches were only trivial in nature.  If there should be material non-disclosure of the tasks undertaken by the defendants so that the court was deprived of the opportunity to consider whether the defendants had exercised best endeavours, acted as soon as possible or the breaches were trivial, then the leave should be set aside.

24.Alternative to the ground of material non-disclosure the defendants also argued that if they had indeed breached their undertakings, the breach(es) on an overall basis was so trivial that no leave should have been granted and the leave should be set aside. 

25.At the end of the arguments, leading counsel for the defendants seemed to have revised his grounds.  Counsel did not advance the alternative ground of triviality as a ground by itself.  Counsel just argued that there should be full and frank disclosure so that the ex parte judge could tell whether the charges were trivial. 

26.In addition, there were other grounds which I will deal with below.

MATERIAL NON-DISCLOSURE

27.If there were matters which would have been weighed in the scales by the ex parte judge in exercising his discretion on whether to grant leave, then such matters were material and should have been disclosed.  The defendants need not demonstrate that these matters, if disclosed, would have resulted in the refusal of leave (see Hong Kong Civil Procedure 2008, para. 29/1/39, Citibak N. A. v Express Ship Management Services Limited [1987] HKLR 1184 at 1190C-E, Standard Chartered Securities Ltd v Lai Arthur [1993] 1 HKC 575).  The defendants alleged that there were a number of material facts that had not been disclosed by the plaintiffs at the ex parte application.

28.I adopt the approach of Mr Recorder Ma (as he then was) in Yau Chi Wah v Gold Chief Investment Ltd & Anor, HCA 807/2001.  I approach the alleged non-disclosures by considering the following questions:

“1.   Were the facts alleged not to be disclosed, material?

2.    Was there non-disclosure?

3.    If there was non-disclosure, was it innocent?

4.    If there was material non-disclosure, should the court nevertheless exercise its discretion not to discharge the injunction or grant a new one?”

Non-disclosure of the defendants’ efforts in replacing the name/mark at the consignment counters

29.The defendants have more than 100 consignment counters in various department stores in the Mainland.  They said that the real retail sales business was conducted at these counters.  The turnover at the counters was more than RMB3 million per month.  Between January and March 2008, the turnover was more than RMB10 million.  For on-line sales, the turnover for the same period was only at RMB24,997 or less than 0.25% of counter-sales.  On 7 January when the two camps negotiated for the consent order and the undertakings, their attention was focused on the replacement of the Italena name/mark at the consignment counters, they did not pay attention or even discussed about the changes that had to be made on the internet.

30.The defendants said that after the consent order was made on 7 January 2008, they started to comply with their undertakings on 9 January.  They issued an urgent notice to all persons in charge of the counters directing them to effect the change of the Italena name/mark at the counters.  The notice also required the changes to be completed by 30 April 2008 at the latest, failing which penalties would be imposed.  Upon receiving information from the counters, the defendants placed orders for the production of the replacement decorative parts.  Some of them were new display units, advertising units, furniture and equipment.  A total of RMB260,000 was spent on making and delivering these materials and parts to the various counters.  Further expenses were incurred for the actual replacement work.  In carrying out these works, the defendants had to overcome various difficulties in terms of time.  There were the Chinese New Year holidays and the unprecedented snowstorm round about that time.  After exercising tremendous efforts, all changes were effected at the counters pursuant to the undertakings.

31.The defendants said that the plaintiffs should have known of the defendants’ efforts on these counters, but the plaintiffs had not said a word about them in the ex parte application.  If they should have told the court about the works on the counters, the court would have known that the defendants had done a lot of work in complying with their undertakings.  That would have revealed that the defendants had on the whole used their best endeavours or acted as soon as possible to comply with their undertakings.  Since the plaintiffs had made no disclosure on the defendants’ works at the counters, they were guilty of material non-disclosure.

32.The plaintiffs’ reply was a short one.  They were not saying at the ex parte application that the defendants had wholly neglected the undertakings and had done nothing.  They were also not complaining about the counters either.  Their complaints were on the specific breaches on the internet.  The defendants’ works on the counters were thus irrelevant and were immaterial for the court’s consideration on whether to grant leave.

33.From the defendants’ evidence, it appears that despite their diligent efforts, some of the breaches pointed out by the plaintiffs in the Order 52 statement were committed out of oversight.  These breaches were rectified soon after they were pointed out.

34.After considering the arguments of both sides, I take the view that there was no material non-disclosure by the plaintiffs in relation to the works at the counters.  The plaintiffs were referring to specific breaches of undertakings.  It is not the defendants’ case that these breaches were committed despite their best endeavours and their acting as soon as possible.  They are not saying that their best endeavours or acting as soon as possible could not have prevented these breaches.  They are not saying that they did not have enough time or manpower to rectify all things including those on the internet.  Some of these breaches happened or continued simply because they had given higher priority to the counters.  In other words, if they should have devoted as much as attention and priority to the internet and the on-line shops, they would not have committed these breaches.  The alleged non-disclosure is therefore immaterial on how or why the defendants had committed all these breaches.

Non-disclosure of the plaintiff’s failure to co-operate with the defendants

35.The defendants alleged that the plaintiffs have been uncooperative with the replacement of the name/mark of Italena.  They said that the plaintiffs had unreasonably withheld leave for their use of the Italina name/mark when the shopping arcades requested for such leave.  The plaintiffs had also failed to disclosed such uncooperative behaviour.  There is also a mild suggestion that the plaintiffs did not come with clean hands in making the ex parte application.  

36.These allegations of the defendants, even if true, are irrelevant to these proceedings.  The reason being that the leave as sought by the arcades only related to counter-sales.  They had nothing to do with on-line sales.  If the plaintiffs had withheld leave unreasonably, the defendants could have applied for the appropriate order or appropriate variation of undertakings from the court.  I do not think it necessary for this matter to be addressed to in the ex parte application.  The issue of clean hands was not adequately discussed and I do not propose to go into it. 

Non-disclosure of the defendants’ efforts to rectify matters on the internet and the on-line shops

37.The defendants said that despite concentrating their efforts on the consignment counters, they had also effected a lot of changes on the internet and the on-line shopsto comply with their undertakings.  There is however a huge dispute between the parties on whether the changes alleged by the defendants were indeed changes.  The parties also dispute on whether the alleged changes had or had not been effected on the dates as asserted by the defendants. 

38.The defendants also said that they had effected changes to the Taobao and Paipai websites in February 2008 which the plaintiffs should have disclosed.  These alleged changes are again disputed by the plaintiffs.

39.The plaintiffs also alleged that some of the use of the name/mark Italena by the defendants on the internet were made after the consent order.  This is again hotly disputed and the evidence relied on by the plaintiffs does not appear to be conclusive.

40.Regarding how the Italena name/mark continued to appear in the websites of HKTDC and HKPRODUCTS.NET, the plaintiffs also referred to documents produced by the defendants to dispute their explanation of innocent breaches.

41.In the light of these disputes, I do not think the defendants have proved at this stage that the plaintiffs had knowledge of the works allegedly done by the defendants on the internet and had failed to disclose the same.  I also note that the defendants’ solicitors did say in the correspondence that their clients had made all changes to the websites, but they gave no particular of what change was made and in which website.

D3 and D4 were not involved in internet-sales and the websites were not owned by D6 but by Italina Zhongshan and East Asia

42.The defendants said that there was division of labour amongst the 1st to 5th defendants.  The 3rd and 4th defendants were not involved with Italina Zhongshan or East Asia.  Only Italina Zhongshan and East Asia were involved with websites and on-line sales.  Hence, the 3rd and 4th defendants had nothing to do with the activities on the internet or the on-line sales.  The defendants further said that the plaintiffs knew that the 3rd and 4th defendants had nothing to do with websites and on-line sales and they had no proper evidence to support a case of contempt by the 3rd and 4th defendants in relation to the internet.  The defendants thus said that the plaintiffs were guilty of material non-disclosure in failing to reveal the lack of involvement of the 3rd and 4th defendants on the internet.

43.The defendants further argued that it would have been easy for the plaintiffs to find out that the Four Websites were owned by Italina Zhongshan and East Asia and not the 6th defendant.  Such searches were also reasonable efforts that the plaintiffs should have exercised in preparing for the ex parte application.  The plaintiffs also knew that the 3rd and 4th defendants were not directors of Italina Zhongshan and East Asia.  The defendants therefore concluded that the plaintiffs had failed to do what was reasonably required of them that led to their non-disclosure of the lack of involvement of the 3rd, 4th and 6th defendants on the internet.

44.The plaintiffs referred to the pleadings and affirmations filed by the defendants in this action.  There was never any attempt by the defendants to distinguish the different roles of different defendants.  Though the plaintiffs knew the different roles assumed by the defendants, that did not include any work on the websites or on-line sales.  The defendants only made use of websites and on-line sales after the parties had fallen out.  Hence, the plaintiffs said they had no knowledge that the 3rd and 4th defendants were not involved with the internet.  They could only assume that all defendants were involved as the defendants never made any attempt to distinguish their different roles. 

45.Furthermore, the plaintiffs pointed out that regardless of the ownership of these websites, the 6th defendant was portrayed by the defendants as part of a group which comprised Italina Zhongshan and East Asia.  Italina Zhonshan was said to be the factory of the 6th defendant in a brochure of the 6th defendant.  The brochure also featured the domain name www.Italena.com which was owned by Italina Zhongshan.  The name cards of some employees of the 6th defendant also had the names of Italina Zhonghsan and East Asia printed on them.

46.In the delivery notes that accompanied the goods sold on-line, both the names of the 6th defendant and East Asia were printed there.  The domain names registered in the names of Italina Zhongshan and East Asia were also there.  The Taobao and Paipai websites which were said to be the selling points maintained by East Asia also featured the name of the 6th defendant.  The Four Websites registered in the names of Zhongshan and East Asia also displayed the name of the 6th defendant.  The plaintiff thus submitted that the 6th defendant was a user of these websites and the identity of the user of these sites was more important than the identity of the registrant. 

47.I would also mention here that the name of the 6th defendant as featured in these websites is not its full name because of the word “Jewellery” is missing.  However, the defendants do not operate any Italena Holding Limited.  This name should be that of the 6th defendant. 

48.Having considered the evidence adduced by both sides, I conclude that there is no evidence showing the plaintiffs’ knowledge of the lack of involvement of the 3rd and 4th defendants on the internet.  Therefore it cannot be said that they are guilty of not disclosing the same. 

49.Regarding the 6th defendant, there is evidence showing its use of the websites and its participation in on-line sales.  It is also part of a group of companies including Italina Zhongshan and East Asia which function together.  Therefore it is not open to the defendants to argue that the plaintiffs are guilty of not disclosing the lack of involvement of the 6th defendant in the activities on the internet.

Non-disclosure that Goods Sold on the internet did not bear the Italena Name/Mark

50.The defendants also said that the goods sold through the internet were accompanied by warrant cards bearing the Italina name/logo, but the plaintiffs did not disclose that.  I do not think there is any material non-disclosure on this ground.  The plaintiffs’ complaints were on the breaches in the internet shops and in the documents that accompanied the goods sold on the internet.  I do not think it necessary for them to relate the other aspects of the goods or their packaging if they were not involved with breaches of the undertakings. 

51.Furthermore, the breaches in the documents accompanying the goods were not the only breaches, the defendants could not even argue that such breaches were too trivial to warrant a complaint.  The breaches on the documents also appeared to be the result of oversight.  That was not something inevitable despite best endeavours.

Non-disclosure of triviality

52.On triviality, leading counsel for the defendants referred me to para.52/2/12 of Hong Kong Civil Procedure 2008:

“Contempts which are technical or not serious — Where the alleged contempt is merely technical or not particularly serious, the court may refuse leave (see the cases on technical contempts in relation to costs at para.52/1/11 — while they are cases on the substantive hearing, the position is a fortiori).  See also Century Equipment Co. Ltd v. Excellent Co. Ltd, unreported, HCA No. 2542 of 1998, June 3, 1999 Yeung J.  (failure by defendant to produce documents and to answer interrogatories as ordered; default judgment obtained by plaintiff; procedural orders no longer served any purpose and no point in enforcing them; leave refused), and Malgar Ltd v. R. E. Leach (Engineering) Ltd [2000] F. S. R. 393 (alleged conduct not of sufficient seriousness to warrant committal proceedings; contempt proceedings would be undesirable and unnecessary interference with pending civil proceedings; leave refused).”

53.In Malgar Ltd v R E Leach (Engineering) Ltd [2000] FSR 393, the claimant brought proceedings against the defendant for infringement of copyright in some price list and a photograph.  There were also some other claims.  The defendant filed a defence denying the claims.  The defence asserted independent creation for the price lists copyright claim.  It referred to a witness statement by its manager on how the price lists had been produced.  The defence was verified by a statement of truth made by a director of the defendant.

54.The claimant applied for summary judgment for all its claims.  The defendant then submitted to judgment on the copyright claims over the price lists and the photograph.  For the remaining claims, the claimant’s application was dismissed and they had to be tried.  The claimant then alleged that the statements in the manager’s witness statement and in the defence were false and made without an honest belief in their truth.  It sought leave to bring committal proceedings against the director and the manager.  Scott VC noted that the defendant did not resist the application for summary judgment by relying on those statements.  The conduct thus fell short of an attempt to interfere with the course of justice of a sufficient seriousness to warrant proceedings. 

55.The learned judge had an additional reason for not granting leave.  He said there were still substantial proceedings between the parties.  It was undesirable that there should be outstanding contempt proceedings against the two persons who were likely to be leading witnesses for the defendant.  Given the tenuous nature of the application against them, a committal application against them would constitute an undesirable and an unnecessary interference with the main proceedings and would obstruct the sensible disposal of the remaining issue.

56.The facts in Century Equipment and Malgar are very different from the facts of this case.  I also note the following in para. 52/1/11 of Hong Kong Civil Procedure 2008:

“Where a contempt has been committed but it is only technical in the sense that it has done no harm to the parties or the public, the court may in its discretion dismiss the motion and order costs against the applicant (see Att.-Gen. v. Times Newspapers Ltd [1974] A.C. 273, HL, at 312A-C per Lord Diplock; Adam Phones Ltd v. Gideon Goldschmidt [1999] 4 All E.R. 486; see also R. v. South China Morning Post Ltd & Others (1955) 39 H.K.L.R. 120 (no order as to costs in a case of technical contempt which the Full Bench felt was not sufficiently grave and serious as to warrant invoking the jurisdiction of the court)).

In cases where the contempt is not particularly serious, the court may consider that an order of costs against the respondent is sufficient punishment (see e.g. Juan Ysmael & Co. Inc. v. SS Tasikmalaja (1952) 36 H.K.L.R. 223; Re Wong Shun and Sun Ching-yee, above; Re an application by Liu Lee Yuk-ching (above)), although the court cannot order a payment of costs other than those of the contempt proceedings themselves as a punishment (Weston v. Central Criminal Court Courts Administrator [1977] Q.B. 32, CA).”

57.I have already referred to the abandonment by the defendants of triviality as an independent ground.  It is still a ground within the umbrella of material non-disclosure.  I think the abandonment is a proper move as the huge dispute over the work done by the defendants on the internet and on-line shops will make the argument of triviality futile.  However, triviality as a ground under material non-disclosure still does not help the defendants.  Given the facts now disclosed by both sides and their disputes relating to the internet and the on-line shops as outlined above, I do not think I can say at this stage that the alleged breaches by the defendants are trivial.  This is so even if all that they have done at the consignment counters are taken into account.  If the breaches cannot be said to be trivial, I do not think I can hold the defendants’ guilty of material non-disclosure on this ground.

OTHER GROUNDS OF THE DEFENDANTS

58.Leading counsel for the defendants in his closing submissions set forth 11 grounds.  I have dealt with the major ones above.  One other ground is the lack of particularity of the charges made against the defendants.  The defendants argued that the charges were made in a broad-brush fashion with no particulars on which defendant committed which of the breaches.  In the light of the discussions above, I think there are enough particulars for each of the defendants to know what is alleged against him or her.  There is thus no merit on this ground too. 

59.There are a few other grounds that I have not analysed here.  These grounds are even weaker and I do not propose to deal with them.

Decision

60.In the light of my analyses above, I dismiss the defendants’ application to set aside my leave for the plaintiffs to issue contempt proceedings against them.  I also make an order nisi that the defendants do pay the plaintiffs the costs of this application.

Further Observation

61.I have come to my decision after going through the papers and hearing counsel’s submissions for two days.  After this process of familiarization, I have also come to a provisional view that the breaches of undertakings, if proved, are not of a very serious nature when viewed against all that the defendants have done for compliance. 

62.Despite the alleged breaches, the evidence as a whole also does not suggest a contumacious or contumely attitude on the part of the defendants.  I am of course open to be persuaded otherwise by the plaintiffs.  I would however ask the parties to consider para. 52/1/8 of Hong Kong Civil Procedures 2008.  The particularly disquieting feature in these proceedings is that the plaintiffs and the defendants are brothers and sister. 

Mr John Yan, SC and Ms Sara Tong, instructed by Messrs Jimmie K S Wong & Partners, for the 1st, 2nd and 3rd Plaintiffs

Mr Jason Pow, SC and Mr Sean Fang, instructed by Messrs Wilkinson & Grist, for the 1st, 2nd, 3rd, 4th and 5th Defendants