PHILIP YUNG-TAK LAM v. POLYCHANCE LTD

HCA001085/1990

IN THE HIGH COURT OF JUSTICE

HONG KONG

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A1084/90 – A1091/90

Philip Yung-Tak Lam Plaintiff

AND

Old Hand Ltd. (A1084/90) Defendants
Polychance Ltd. (A1085/90)
Remy Electronics Ltd. (A1086/90)
J Watch Creations (A1087/90)
Right Success Ltd. (A1088/90)
Peace Mask Ltd. (A1089/90) 1st Defendant
Dynamic Supply International Ltd. 2nd Defendant
Cecil Corporation (A1090/90)
Penta Star Manufacturers & Traders Ltd. (A1091/90)

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Coram: The Hon. Mr. Justice Sears in Chambers

Date of Hearing: 28 February 1990

Date of Delivery of Judgment: 5 March 1990

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JUDGMENT IN COURT

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1. Mr. Lam is an experienced Hong Kong businessman. He appears in person, as he has done in these courts on a number of occasions. Thereis of course no objection to someone acting in person.

2. Mr. Lam is obviously a clever man in that he invented some years ago a watch, where there are two watch faces, and in between thewatch faces is some fluid which moves about, and causes changes of colour; it is a novelty and a watch some people might think hassome fashionable attraction. This invention was filed in August 1982 in England and 1985 in Hong Kong. He says that since September1988, he planned to start to produce and assemble these watches and had a project budget for some HK$7 1/2m and that he has granteda licence from October 88 to December 1989 to a company called Promelec for the licence fee of some $150,000.

3. From about October last year, Mr. Lam has appeared before a number of my brother judges and persuaded them that they should grantorders, called Anton Pillar Orders, which are in the form of search warrants enabling two bailiffs of the High Court together withhim to go in and search a number of watch companies in Hong Kong to discover whether or not his patent is being infringed. Mr. Lambelieves that there are a number of his watches circulating in Hong Kong which infringe his patent and as any patent holder is entitledto, he wishes to protect, as he says, the property in those rights he has. As I said a number of judges, including myself, have hadoccasion to grant ex-‘parte’ these orders, because no doubt we were all of theopinion that what appeared to be breaches had beendemonstrated and that all matters were being conducted in a proper manner.

4. I have now got nine applications on return dates to continue the injunctions that have been given, and it is clear to me now that,generally speaking, none of these matters are ever litigated, because Mr. Lam obtains large sums of money, generally from peoplein person, amounting to at least $30,000 a time for the purpose of settling these action.

5. On further investigation, however, it appears to me that the process of the court has been grossly abused by Mr. Lam. He has nevermanufactured any of these watches. I can see no real intention of him ever so to do. But what he has done instead is to devise amethod of giving himself large sums of money by using the court as a means of extracting money from those that either run or engagein watch manufacturing in Hong Kong. What has been disclosed, and he has given evidence on oath in front of me as have many of theDefendants, is this – Mr. Lam believes that he is entitled to go about his business in this way. There was held in Hong Kong a watchfair, and this took place, I think, approximately September to October of last year. Mr. Lam caused to be sent out a fax to a largenumber of persons engaged in the watch business. He obtained their names either from the Yellow Pages, or from the list of participantsat this watch fair. He has an employee called Christine Chan who says she is employed by one of his companies called A & W DistributorAsia Ltd. That company, as far as I can see, has never traded. It is questionable indeed who really employs her, but she was instructedby Mr. Lam, as she says, to locate companies that were supplying these watches in breach of this patent. There was then sent outa fax which is in identical form to everybody, which says that it appears to come from a company called A & W Distributor AsiaLtd. – London, Paris, Amsterdam, Zurich, New York, Tokyo, Singapore and Hong Kong. It says that their clients Mr. Aarons and Mr.Spelt went to this particular company at the clock and watch fair, and this company wants to order approximately a thousand piecesof a model and it is described as a double layer glass with sealed colour liquid and movable object. This was the watch that Mr.Lam held the patent in, and it said that the fax in answer should be sent to a company called Goods Exchange Company in Holland.What I find is that this is a deliberate false document, designed to attract orders from genuine watch companies to make them thinkthat there was a company and, in particular this Dutch company, that was willing to buy these watches. It was Mr. Lam himself whodrafted this fax. Mr. Aprons and Mr. Spelt are apparently friends of his. Mr. Lam said that Mr. Aarons was in Hong Kong; I doubtit. But whether he was or whether he was not, there is no doubt, in my judgment, that the matters set out in this fax are completelyfalse. The company in Holland are also apparently some friends of his. He has not told the watch people in Hong Kong that he is thepatent holder, and I confess I do not know how many there are but apparently well over 30 occasions that Mr. Lam had started theseactions.

6. The watch company, when it gets his orders, thinks it is genuine; it gets a sample manufactured, sends it to Mr. Lam or Mr. Lam’smanager, and he immediately launches into litigation by issuing a writ and claiming an Anton Pillar Order against these people. Thisis as clear a case of entrapment as one could come across. He then approaches the persons, generally in person as I can see in courttoday from the many many people attending in person, goes to a High Court Judge with this long affidavit setting out all particularsof his patent and appearing, on the face of it, to be genuine, persuades the judge to give him an order, marches into these premiseswith this search warrant and two High Court bailiffs, which must causes fear and distress to these people, and ultimately managesto extract from them a settlement of some $30,000. There have been many instances when people have no doubt willingly paid Mr. Lamthese large sums of money to stop what they thought was going to be serious, protracted and expensive litigation being conductedagainst them, as can be seen from these documents in front of me and copies of the watches. What Mr. Lam has really done is to utilizethe court for the purpose of extracting these large sums of money; in one sense, it really amounts to extortion. It is, as I said,a gross abuse of the process of the court. Mr. Lam is not permitted to induce people to break the patent that he has in this way.The court should not be utilized in this way in order to make orders which no doubt frighten people in Hong Kong into thinking thatthey have got to give him these large sums of money in order to stop the action. He is perfectly entitled to protect his property;if, for example, these watches are being sold or advertised for sale in breach of his patent, he is permitted to protect himself,and if he suffers damages to obtain damages in the lawful way. What he is not permitted to do is to force people to break this patentso that he can, obtain money. What has been done really is to mount a business by using the courts to obtain these large sums ofmoney in this unlawful manner and a stop should be put to it.

7. I have carefully considered on the facts of this case whether or not I should send these papers to the Attorney General to see whetheror not any offence known to Hong Kong law has been committed, such as extortion. I do not do this, because it may well be that Mr.Lam is under the mistaken belief that the obtaining of what he calls “information”, is a legitimate way of pursuing his ends. A businessmanhe may be but he is not permitted to run a business in Hong Kong whereby he utilizes Hign Court Judges which ultimately give himthese large sums of money. I am not sure how much money he has been able to obtain from people, but it may amount to millions ofdollars.

8. I consider the Anton Pillar Orders, search warrants, were unlawfully obtained, and I discharge the injunctions that were grantedby my brother judges. Insofar as these summonses for the continuation of the injunctions, which are of course equitable remedies,I dismiss them and no injunctions will be given. Further, any information which Mr. Lam has received insofar as the execution ofthese Anton Pillars are concerned should be returned to their rightful owners. I do not know what has happened to all this money.I direct that the attention of the Commissioner of Inland Revenue be drawn to the activities of Mr. Lam, to investigate what hashappened to these moneys and as to whether or not he should pay tax on the moneys. Insofar as any persons in Hong Kong has givensums of money, I advise that they should be brought back to court so that the orders are quashed, and they can be given back themoney which Mr. Lam has unlawfully extracted from them. Insofar as these summonses are concerned, therefore, I direct that they bedismissed. It Mr. Lam wishes to continue with the action, then it is obviously a matter for him to go forward in the normal way.

(R. A. W. Sears)
Judge of the Hire Court

Representation:

Plaintiff in person.

A1084/90 – represented by Tien Wen Chung, president of the Defendant’s company.

A1085/90 – represented by Lam Tak Yuk, director of the Defendant’s company.

A1086/90 – represented by Wah Wing Chu, sales manager of the Defendant’s company.

A1087/90 – represented by Cheung Koon Wah, sales manager of the Defendant’s company.

A1088/90 – Mr. Y. S. Lau of M/s Chan, Lau & Wai for Defendant.

A1089/90 – Mr. John M. Y. Yan instructed by M/s King & Co. for Defendant.

A1090/90 – M/s J. S. M. (absent) for Defendant.

A1091/90 – represented by Tony Yeung, sales manager of the Defendant’s company.