Guy Neale and others v Ku De Ta SG Pte Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 26 May 2015
• Neutral Citation: [2015] SGCA 28
• Plaintiff Counsel: Ang Cheng Hock SC, William Ong, Kristy Tan and Clara Tung (Allen & Gledhill LLP)
• Docket Number: Civil Appeal No 171 of 2013
• Date: 26 May 2015
• Hearing Date: 26 May 2014,11 March 2015
• Subject Matter: Licensing,Trade Marks and Trade Names
• Published date: 29 May 2015
• Citation: [2015] SGCA 28
• Defendant Counsel: Low Chai Chong, Gilbert Leong, Foo Maw Jiun and Vernon Chua (Rodyk & Davidson LLP)
• Court: Court of Appeal (Singapore)
• Year: 2015

Sundaresh Menon CJ (delivering the judgment of the court): Introduction

The parties in this appeal are operators of popular dining and nightlife establishments. Their dispute concerns the use of the name “Ku De Ta”. The parties on both sides use this name for their respective businesses. All of the appellants are current members of a partnership (“the Partnership”) that owns and operates a restaurant, bar and club in Bali, Indonesia. The Partnership is also the beneficial owner of two registered trade marks in Singapore relating to the “Ku De Ta” name (“the Singapore Marks”). The registrations for the Singapore Marks were until recently held by Nine Squares Pty Ltd (“Nine Squares”) on trust for the Partnership. The respondent is Ku De Ta SG Pte Ltd (“the Respondent”), a company that operates the restaurant, bar, lounge and club which bear the “Ku De Ta” name at the Skypark at the Marina Bay Sands development (“MBS”) in Singapore. For convenience, we will refer to the Partnership’s business as “Ku De Ta Bali” and the Respondent’s business as “Ku De Ta Singapore”.

The Appellants (a term which we shall henceforth use to refer to all of the appellants except the fifth appellant, Arthur Chondros (“Chondros”), who is a dissenting partner in this appeal) seek, among other things, to restrain the Respondent from continuing to use the “Ku De Ta” name in Singapore. In resisting the Appellants’ claim, the Respondent relies primarily on the fact that it is the assignee of an exclusive licence to use one of the Singapore Marks. The exclusive licence was granted pursuant to a licence agreement dated 29 June 2009 (“the Licence Agreement”).

The Respondent argues that the exclusive licence confers upon it a proprietary interest in the “Ku De Ta” name and that, as it acquired this interest bona fide, for value and without notice of the Partnership’s rights, its interest takes priority over that of the Partnership, notwithstanding that the latter is (and was at the material time) the beneficial owner of the Singapore Marks. The Appellants on the other hand say that the exclusive licence only confers on the Respondent contractual rights and that, in any event, even assuming the doctrine that protects what is referred to as “equity’s darling” were applicable, the Respondent would not be able to bring itself within its scope.

The central issue before us is whether the Respondent can show that it has a right to use the “Ku De Ta” mark that is effective against the Partnership. The legal question is whether and if so, in what circumstances, an exclusive licence to use a registered trade mark granted by the legal owner of that mark in breach of trust can prevail against the rights and interests of the beneficial owners of that mark. Depending on the answer to the legal question, what may then follow is the factual question of whether the Respondent’s rights do in fact prevail over the Partnership’s interest in this case.

The background Procedural history

As the procedural background to this appeal is somewhat involved, we think it would be helpful for us to first sketch out the contours of the litigation before we delve into the relevant facts.

The Appellants were the plaintiffs and the Respondent the defendant in Suit No 955 of 2010 (“Suit 955”) from which this appeal is brought. The Appellants pleaded two causes of action against the Respondent: first, under s 55 of the Trade Marks Act (Cap 332, 2005 Rev Ed) (“TMA”) for the infringement of a well-known trade mark and, secondly, in passing off. The Appellants sought the following relief: Orders enjoining the Respondent from using the name and/or the mark “Ku De Ta”; Damages, to be assessed; and Further and/or in the alternative, an account of profits.

Suit 955 is closely linked to Suit No 314 of 2011 (“Suit 314”), which was an action brought by the Appellants against Nine Squares. There were two issues raised in Suit 314. The first was whether Nine Squares was holding the Singapore Marks on trust for the Partnership. If it was not, the second issue was whether the registration of the Singapore Marks by Nine Squares should be invalidated.

Suit 314 and Suit 955 were heard by the same judge (“the Judge”). The Judge dismissed Suit 314 in Guy Neale and others v Nine Squares Pty Ltd [2013] SGHC 249 (“the Suit 314 Judgment”). The Appellants had accepted that they would have no basis to proceed in Suit 955 if Suit 314 was dismissed. Accordingly, the Judge dismissed Suit 955 in Guy Neale and others v Ku de Ta SG Pte Ltd [2013] SGHC 250 without considering the substantive issues in this appeal.

The Appellants appealed against both decisions. As already mentioned, this appeal arises from Suit 955. Civil Appeal 172 of 2013 (“CA 172”) is the corresponding appeal arising from Suit 314. Nine Squares was the respondent in that appeal.

Both appeals were originally heard by this court at the same time. However, as we recognised that the Respondent’s rights in this appeal could be affected by our determination in CA 172, we decided to deal with CA 172 first.

On 22 December 2014, we allowed the Appellants’ appeal in CA 172 and declared that Nine Squares was indeed holding the Singapore Marks on trust for the Partnership since the respective dates of registration of those two marks. We thus ordered Nine Squares to effect a transfer of the registration of the Singapore Marks to the Partnership, as well as to account for the profits derived from the exploitation of the Singapore Marks, including what had already accrued or may yet accrue from the Licence Agreement. Given these findings, we did not need to consider the Appellants’ arguments in relation to the invalidation of the registration of the Singapore Marks under the TMA. Our decision in CA 172 is reported in Guy Neale and others v Nine Squares Pty Ltd [2015] 1 SLR 1097 (“the CA 172 Judgment”).

On 11 March 2015, after hearing the further submissions of the parties in this appeal, we reserved judgment.

The relevant facts

The CA 172 Judgment, which sets out the material facts for that case, contains useful background information for the present appeal, and reference may be had to that judgment for more details. For brevity, we minimise the reproduction of that background in this judgment as far as we are able to.

Events prior to the Licence Agreement

Ku De Ta Bali was originally established by Chondros and the first to third appellants, namely, Guy Neale (“Neale”), Aki Kotzamichalis and Made Wiranatha (“Kadek”). The four of them entered into an agreement in February 2000, referred to as the Heads of Agreement (“the 2000 HOA”). Under the terms of the 2000 HOA, Chondros was to manage the daily operations of Ku De Ta Bali. In late 2002, Chondros enlisted one Daniel Ellaway (“Ellaway”) to assist him in this regard.

On 20 March 2001, a trade mark for the “Ku De Ta” name was registered in Indonesia in Class 42 (restaurants, etc) as Indonesian TM No 469240. Kadek was named as the registered proprietor.

In October 2002, Chondros asked Ellaway to register the “Ku De Ta” name as a trade mark in Australia (“the Australian Mark”). This was done on 17 October 2002 in both their names.

In January 2003, Chondros incorporated Nine Squares as a public company in Victoria, Australia (Nine Squares was later converted into a private company). Nine Squares was involved in the management of Ku De Ta Bali. At the material time, Nine Squares had two equal shareholders and directors, namely, Chondros and Ellaway. This remained so until 16 February 2010 when Ellaway resigned as director and, by the time of the trial in Suit 314, he was no longer a shareholder. As we have mentioned, Nine Squares was the defendant in Suit 314 and the respondent in CA 172.

On 29 January 2004, Chondros and Ellaway assigned the Australian Mark to Nine Squares. Other trade marks, including the Singapore Marks, were registered overseas from 2004 onwards in the name of Nine Squares (collectively referred to as “the Overseas Marks”).

On 16 February 2004, on the basis of the Australian Mark, Nine Squares applied for an international registration of the “Ku De Ta” name as a trade mark. Singapore was designated as one of the countries for registration. Nine Squares thus obtained the registration here for the “Ku De Ta” name in Class 43 for restaurants, provision of food and drink, temporary accommodation, and hotels with effect from 16 February 2004. This registration, Singapore TM No T0405181Z, is referred to here as “the 1st Singapore Mark”.

We found in CA 172 that in causing Nine Squares to register the Overseas Marks in its name, Chondros had intended Nine Squares to hold (at least) the Singapore Marks on trust for the Partnership as a whole (see the CA 172 Judgment at [120]). While it is not necessary to explore in detail the internal workings of the Partnership that led to our decision in CA 172, we note that the original members of the Partnership did not appear to have even known about the steps taken to register the Overseas Marks until mid-2007. Instead, the issue of the beneficial ownership of the Overseas Marks (which include the Singapore Marks) had only come to the fore, as far as the other original members of the Partnership were concerned, at a partnership meeting held on 29 June 2007 at which Chondros was not present, but the minutes of which meeting he did subsequently receive without demur.

The Licence Agreement

Sometime in early 2009, a Hong Kong businessman named Chris Au (“Au”) learnt from another businessman, Karl Patel (“Patel”), that Nine Squares was in discussions to open an outlet under the “Ku De Ta” brand name at MBS. Au expressed his interest in participating in such a venture and asked Patel to introduce him to the relevant parties.¹ Au learnt from Patel that Chondros and Ellaway were the directors and equal owners of Nine Squares.² Further, he also knew that there were other...