Haw Par Brothers International Ltd and Another v Chiarapurk Jack and Others

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 01 March 1991
• Neutral Citation: [1991] SGHC 35
• Docket Number: Suit No 1060 of 1990
• Date: 01 March 1991
• Year: 1991
• Published date: 19 September 2003
• Plaintiff Counsel: Michael Burton QC and Koh Juay Kherng (Lee & Lee)
• Citation: [1991] SGHC 35
• Defendant Counsel: Michael Fyeh QC and Tan Tee Jim (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Companies,Duties,Passing off,Injunctions,Companies Act (Cap 50, 1990 Ed),Revelation of trade secrets,Directors,Principles,s 157 Breach of duties,s 409A Companies Act (Cap 50, 1990 Ed),Misrepresentation or confusion,Whether should be varied or discharged,Civil Procedure,Whether would lead to confusion and deception,Similarity of get-up,Members,Right to restrain illegal acts,Tort,Rights,Balance of convenience test

The first plaintiff was and is the owner of the Tiger Brand trade marks and their business includes, inter alia, the manufacture, sale and distribution of the tiger balm products in various parts of the world.

On 22 October 1971 a joint venture agreement (JVA) was entered into between the first plaintiff, Chia Holdings (HK) Ltd, and the first defendant with a view to reorganizing and expanding the Tiger Brand trade marks business of the first plaintiff. Pursuant to the JVA, two companies were incorporated, one in Singapore, Haw Par Eng Aun Tong Pte Ltd (HPEAT) and the other in Hong Kong, Haw Par Tiger Balm International Ltd (HPTBI) (hereinafter collectively called the `joint companies`). The first plaintiff and Chia Holdings (HK) Ltd held equal shares in the joint companies. In accordance with the JVA, the first defendant was appointed the managing director and chief executive of the joint companies and is still holding that appointment.

The first plaintiff subsequently transferred its shares in the joint companies to the second plaintiff. Chia Holdings (HK) Ltd similarly transferred its shares in the joint companies, HPEAT and HPTBI, to the second and third defendants respectively. All the transferees (ie second plaintiff, second and third defendants) have agreed to be bound by the JVA as if they were original parties thereto. The first defendant has substantial shareholding in the second defendant. The third defendant is a subsidiary of the second defendant.

Under the JVA, the first plaintiff agreed to grant licences to the joint companies for four consecutive periods of five years each, commencing 1 January 1972, to use the Tiger Brand trade marks and to manufacture, market and distribute the Tiger Brand products in the ASEAN countries, Hong Kong, Macau, Burma, Japan, Korea, the Pacific islands and all countries in the Middle East. Accordingly licence agreements were concluded between the first plaintiff and the joint companies. Pursuant to the JVA certain companies controlled by the first defendant were also engaged to manufacture the Tiger Brand products for the joint companies at costs plus 15%. There is no provision in the JVA for its renewal beyond December 1991.

By separate letters dated 7 November 1989, the second plaintiff drew the attention of the first, second and third defendants to the fact that the JVA would expire on 31 December 1991 and also gave notice to them that the JVA would not be renewed or extended beyond 31 December 1991. The plaintiffs also said that months prior to that letter, oral indications were given to the said defendants that the JVA would not be extended. Though there were some discussions to extend the JVA, including one involving the chairman of the first plaintiff and the first defendant personally, they were not fruitful.

The plaintiffs alleged that in February 1990, they heard from market sources that the first defendant and the companies which he controlled would be launching a new balm product in Singapore and Malaysia. In early March 1990, one Mr Donald Chia, who is the general manager of the joint companies (and who is also a son of the first defendant) informed the president and chief executive officer of the first and second plaintiffs, one Dr Hong Hai, that the first defendant and his companies would be launching a new balm product. However, the plaintiffs were not told that this balm would be in direct competition with the Tiger Balm products and would have a similar get-up.

On 5 March 1990 it would appear that the fifth defendant, a wholly-owned subsidiary of the second defendant, issued a price list for the new balm, known as the Golden Lion Shield Balm (hereinafter called the Lion Balm). The Lion Balm products were being manufactured by the fourth defendant, a company controlled by the first defendant`s group of companies, and were being distributed in West Malaysia by the sixth defendant, a company similarly controlled. In Singapore, the Lion Balm products were, prior to the interim injunctions obtained by the plaintiffs in these proceedings, being imported and distributed by the fifth defendant.

The plaintiffs say that as a consequence of this new product, the sales of the Tiger Balm products carried out by the joint companies were and are going to be adversely affected. Not only has the first defendant raised the prices of the Tiger Balm products in January 1989 and also in February/March 1990 and made them less competitive vis-a-vis the Lion Balm products, the first defendant has also failed in his duty to promote the sales of the Tiger Balm products.

The plaintiffs allege that the Lion Balm products adapt, imitate and copy the get-up of the Tiger Balm products. The plaintiffs further contend that the Mandarin pronunciations of the Lion Balm and the Tiger Balm are phonetically very similar and are likely to cause confusion in the market especially when both products are manufactured, distributed and sold by the first defendant`s group of companies. Tiger Balm in Mandarin is called `Wan Jin You` and Lion Balm `Wan Yin You`. The plaintiffs also complain that the ingredients used in the manufacture of the Lion Balm products are substantially the same as those used for the manufacture of Tiger Balm products.

The plaintiffs aver that the launching of the Lion Balm is intended to compete unfairly with the Tiger Balm products, contrary to the spirit and intent of the JVA where the joint venture partners are expected to use their best endeavours to maximize the profits of the joint companies. Of relevance in this regard is the document entitled `Heads of Agreement` dated 1 November 1977 (HA) which was executed by the parties in order to overcome certain disputes which arose between the parties in the implementation of the JVA, in particular, para 6 thereof.

By a letter dated 15 May 1990 from the plaintiffs` solicitors to the first defendant, and copied to, inter alia, the second and the third defendants, the said defendants were asked to stop all infringing acts and were warned that unless the demand was complied with within 14 days, legal action would be taken. The first defendant and his companies replied through their solicitors in a letter dated 29 May 1990. In it the defendants, while admitting that they were manufacturing and selling Lion Balm products, denied that they were guilty of any infringing act and made the following points:

(i) The get-up features of the Tiger Balm products were not unique but were common to the trade in such products. Reference was made to other balm products which bore common get-up features, eg `Pahking Balm`, `Star Lion Head`, `Pochun Balm`.

(ii) The profits of HPEAT had not slipped; indeed for the first four months of 1990, it went up by eleven-fold when compared with the corresponding period of 1989. Similarly for HPTBI, the profits there for the same period went up by almost three-fold.

(iii) In 1989, the plaintiffs made direct contacts with the sub-distributors of the joint venture companies, causing confusion.

(iv) The increase in prices for the Tiger Balm products in early 1989 was made with the concurrence of the plaintiffs` nominee who served as the chairman of the board of the joint companies. There was no sinister motive in price increase.

(v) At the meeting between Mr Donald Chia and Dr Hong Hai in March 1990, the question of further co-operation between the two groups was explored.

(vi) The first defendant`s companies had not used any confidential information of the plaintiffs in the manufacture of the Lion Balm products.

In a reply dated 13 June 1990, the solicitors for the plaintiffs refuted the allegations of the defendants. They said that based on published accounts there was a significant drop in the sales and profits of the two joint companies. They also said that the contacts made by the plaintiffs with the sub-distributors were intended to assure them that the Tiger Balm products would continue to be supplied to them after the JVA had expired. Such contacts would not have caused confusion and whatever confusion, if it existed at all, was caused by the emergence of the Lion Balm products in competition with the Tiger Balm products especially when both products involved the same manufacturers, distributors and sales personnel. As Dr Hong Hai had then just joined the Haw Par group, his meeting with Mr Donald Chia was to enable him to meet the partners in the joint venture and also to create better rapport and to smoothen the takeover when the JVA expires in December 1991. The plaintiffs` solicitors reiterated that the first defendant has acted against the letter and spirit of the JVA and has breached his duty as managing director and chief executive of the joint companies in launching the Lion Balm products. The letter noted that while it was true that the plaintiffs agreed to the increase in price of the Tiger Balm products, that was in ignorance of the fact that the defendants would be undercutting those prices with competitive products of their own. The letter ended with an intimation that the plaintiffs intended to proceed to institute legal proceedings against all the defendants and that the plaintiffs would also be seeking interlocutory relief unless the defendants gave an undertaking to cease, pending trial, the manufacture and sale of the Lion Balm products.

There was a further reply on 20 June 1990 by the defendants` solicitors to the letter of 13 June 1990 disputing some of the matters stated therein. I do not think I need touch on those points as they are not relevant to the present stage of the proceedings. If at all they show disputes on fact.

On 19 June 1990 the plaintiffs issued the present writ against the defendants, claiming for injunctions and damages. On 22 June 1990, on an ex parte application, the court granted interim injunctions against the defendants. I do not think I need to set out the entire order. Suffice it if I should just set out that portion...