Judgment

 [Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

                                                                                                                                                             Judgment reserved.

Chao Hick Tin JA (delivering the judgment of the court):

1       This is an appeal against a decision of Lim Teong Qwee JC who set aside the service of the writ on the third defendant, Colt Group Limited, on the ground that it was not a proper party to the action.

The facts

2       The first and second appellants (hereinafter referred to as “Bradley Lomas” and “Simpkin Machin” respectively), are companies incorporated in the United Kingdom. Simpkin Machin is the wholly owned subsidiary of Bradley Lomas. The appellants were at all material times the proprietors of Singapore Patent No 8890803 (“the patent”), which was based on UK Patent GB 2 108 839 B, and which relates to smoke and fire screens and curtains. Simpkin Machin purchased the patent from the original patentee, Mckechnie Consumer Products Ltd, by an assignment dated 8 December 1993. Following the appellants’ corporate restructure, the patent was assigned from Simpkin Machin to Bradley Lomas by an instrument dated 29 December 1994.

3       The respondents, Colt Ventilation East Asia Pte Ltd (“Colt VEA”), Colt International Limited (“Colt Intl”) and Colt Group Limited (“CG Ltd”) are companies within the Colt group of companies. Colt VEA is incorporated in Singapore, while Colt Intl and CG Ltd are incorporated in the UK.

4       On 5 August 1997, the appellants commenced this action by writ against Colt VEA for infringement of the patent. The alleged infringement related to a certain Colt product (“the product”), which was being sold in Singapore by Colt VEA. The appellants sought, inter alia, an injunction to restrain Colt VEA from infringing the patent and an inquiry as to damages.

5       Following service of the writ and statement of claim, a defence and counterclaim was filed by Colt VEA on 29 September 1997, denying any infringement and alleging that the patent was at all material times invalid. Colt VEA also allege that the appellants had made groundless threats to its customers by saying that infringement proceedings would be brought against these customers. Colt VEA therefore seeks a declaration that such threats are unjustified and an injunction restraining the appellants from making any further threats. Colt VEA further seeks the revocation of the patent. On 1 November 1997 the appellants filed a reply and defence to the counterclaim.

6       On 7 August 1998 the appellants applied for an order to add Colt Intl and CG Ltd as defendants to the action and for certain consequential orders. On 3 September 1998 the appellants obtained an order of court from the Assistant Registrar permitting the appellants to add Colt Intl and CG Ltd as defendants, to amend the amended statement of claim and to serve the writ out of jurisdiction on the two new defendants.

7       On 16 November 1998, after Colt Intl and CG Ltd were duly served with the proceedings, they applied to set aside the order made on 3 September 1998 on the ground that they should not be made parties to the action. This application was dismissed by the Senior Assistant Registrar. They took it up on appeal to the judge-in Chambers who, after hearing further arguments, held that Colt Intl was properly made a defendant, but not CG Ltd. The present appeal to us concerns only that part of the learned judge’s decision holding that CG Ltd should not be made a defendant.

Nature of claim against the defendants

8       We will at this juncture quote the relevant parts of the re-amended statement of claim where the basis of the defendant’s liability is set out:

Paragraph 8 of the re-amended statement of claim

The defendants have, infringed, and unless restrained by this honourable court, threaten and intend to continue to infringe the patent in the manner appearing in the particulars of infringement served herewith

Paragraphs 3 and 4 of particulars of infringement

3         The first defendants have, without the consent of the first or second plaintiffs, infringed the patent by the disposing, offering to dispose of, importing and keeping of fire screens or curtains (hereinafter ‘the Colt Product’) made in accordance with the fire screens of curtains described in the said specification and claimed in Claims 1, 2, 4, 6, 7, 9, 14, 16 and 17 (hereinafter ‘the patented product).

4         The second and third defendants are liable together with the first defendants as joint tortfeasors with the first defendants, for the said acts of disposing, offering to dispose of, importing and keeping referred to in para 3 above, in that the second and third defendants have/had the common intention and common design with the first plaintiffs to carry out the said acts.

Particulars

4.1    at all material times, the second and third defendants have/had control and/or influence over the first defendants in the conduct of the first defendants’ business.

4.1.   1the first defendants were wholly owned by the second and third defendants, with the second defendants holding 1, and the third defendants holding 299,999 of the 300,000 shares of the first defendants;

4.1.2   the first defendants shared directors and representatives with the second and third defendants, namely, Paul Jerome O’Hea, David Earp and Keith Rickinson.

4.2    at all material times, the second and third defendants participated in, the marketing, supply and installation of the Colt Product in Singapore which infringed the patent. The plaintiffs will refer, inter alia, to the following documents as evidence of the second and third defendants’ participation:

(11 listed documents).

The decision below

9       As the appellants’ claim against Colt Intl and CG Ltd is on the basis that the latter are joint tortfeasors with Colt VEA, the judge held that the application for service out of the jurisdiction fell to be considered under O 11 r 1(f)(i) of the Rules of Court, which reads:

1         … service of an originating process out of Singapore is permissible with the leave of the Court if in the action —

(f)(i)the claim is founded on a tort, wherever committed, which is constituted, at least in part, by an act or omission occurring in Singapore;

10         Another provision referred to by the judge as pertinent is O 15 r 6(2)(b)(ii):

(2)         Subject to the provisions of this Rule, at any stage of the proceedings in any cause or matter, the Court may, on such terms as it thinks just…

(b)   order any or the following persons to be added as a party, namely:

(iii) any person between whom and any party to the cause or matter there may exist a question or issue arising out of or relating to or connected with any relief or remedy claimed in the cause or matter which in the opinion of the Court it would be just and convenient to determine as between him and that party as well as between the parties to the cause or matter.

11     The learned judge held that if the plaintiffs satisfied the requirements of O 11 r 1 for service out of jurisdiction they would have satisfied the requirements under O 15 r 6(2)(b). Relying upon CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013, he held that for two or more persons to be joint infringers of a patent, they must act in concert with one another pursuant to a common design. In the present case, the infringing product was manufactured by Colt Intl, not CG Ltd, and exported to Singapore. CG Ltd was in no way involved in the marketing of the product here. The mere fact that a company is the holding company of a subsidiary (actual tortfeasor) or that there are common management executives in the two companies, is not sufficient to constitute a “good arguable case” that the holding company was acting in concert with the tortfeasor company. In this instance, there was no evidence to show a common design between Colt VEA and CG Ltd. The judge, therefore, allowed the appeal of CG Ltd and set aside the writ as regards that party.

Issues in this appeal

12     Before us two main issues were raised by the appellants. First, what is the required standard of proof which a plaintiff must meet before the court would exercise its discretion under O 11 to permit service out of jurisdiction. Counsel for the appellants submitted that the judge was wrong to have applied the standard of a “good arguable case” when it should have been the standard of “a serious question to be tried”. Second, whether the appellants tendered sufficient evidence, up to the requisite standard, to enable the court to infer that there was a common design among Colt VEA, Colt Intl and CG Ltd, as joint tortfeasors.

The appropriate standard of proof

13     In determining that the test or standard to be applied is that of a “good arguable case”, the judge had relied upon Unilever plc v Gillette (UK) Ltd [1989] RPC 583 where the plaintiffs sought to add the United States parent company of the tortfeasor as a joint tortfeasor. At first instance, Falconer J held that the matter involved a two-step exercise. First, the plaintiffs must show a good arguable case on the merits, “something better than a mere prima facie case.” Second, having overcome that hurdle, the court would then have to exercise its discretion whether to grant leave. In that case, having examined the evidence, Falconer J held that the plaintiffs had failed to overcome the first hurdle. Although the Court of Appeal affirmed the test adopted by Falconer J, it came to the conclusion that, on the facts as pleaded, there was a fair possibility that the parent company was a joint tortfeasor and granted leave to serve the writ out of jurisdiction.

14     Counsel for the appellants submitted to us that the test laid down in Unilever plc v Gillette (UK) Ltd no longer holds good in the light of the decision of the House of Lords in Seaconsar Far East Ltd v Bank Markazi Jomhouri Islami Iran [1994] 1 AC 438; [1993] 4 All ER 456, where the House had to consider the test to be applied in granting leave to serve a writ on a party out of the jurisdiction in relation to an action founded on breach of contract, namely, failure to pay on a letter of credit. Seaconsar sought to serve the writ on Bank Markazi under O 11 r 1(1)(d)(i) and (ii) and (e) of the Rules of Supreme Court (UK). Bank Markazi did not dispute that the case fell under either limb (d) or (e). Its sole contention was that Seaconsar had not established a sufficiently strong case on the merits of its claim for service out of jurisdiction. Lord Goff, who delivered the only substantive judgment of the court, first traced the development of O 11 r 1 and the relevant case law on it, and then said that there were two separate issues to the point. First, it must be shown in accordance with the test of a good arguable case that the case falls within one of the circumstances mentioned in r 1(1). This is the jurisdiction issue. Second, assuming the jurisdiction issue is satisfied, the court must consider the merits of the claim and on this no more is required than that the evidence should disclose that there is a serious issue to be tried.

15     What would amount to a “good arguable case” is put as follows in the Supreme Court Practice 1999 (Vol 1, 1998) para 11/1/11, citing from The Brabo; Tyne Improvement Commissioners v Armement Anversois S/A [1949] AC 326 and Vitkovice Horni a Hutni Tezirstvo v Korner [1951] AC 869:

It indicates that though the court will not at this stage require proof to its satisfaction, it will require something better than a mere prima facie case. The practice, where questions of fact are concerned, is to look primarily at the plaintiff’s case and not to attempt to try disputes of fact on affidavit; it is of course open to the defendant to show that the evidence of the plaintiff is incomplete or plainly wrong. On questions of law, however, the court may go fully into the issues and will refuse leave if it considers that the plaintiff’s case is bound to fail.

16     As pointed out by Lord Goff in Seaconsar ([1994] 1 AC 438 at 454; [1993] 4 All ER 456 at 465) in relation to r 1(1)(e), all three elements of the existence of the contract, breach and place of breach must be established, to the level of a good arguable case before the plaintiff could successfully invoke the jurisdiction of the court under that limb. A mere statement by a deponent that he believes there is a good cause of action is insufficient.

17     On the other hand, a court on such an application for leave, is not called upon to try the action or express a premature opinion on its merits. In the words of Lord Davey in Chemische Fabrik Vormals Sandez v Badische Anilin und Soda Fabriks (1904) 90 LT 733 at 735:

… the application should be supported by an affidavit stating facts which, if proved, would be a sufficient foundation for the alleged cause of action and, as a rule, the affidavit should be by some person acquainted with the facts, or, at any rate, should specify the sources or persons from whom the deponent derives his information. A more difficult question is where it is in dispute whether the alleged or admitted facts will, as a matter of law, entitle the plaintiff to the relief which he seeks. If the court is judicially satisfied that the alleged facts, if proved, will not support the action, I think the court ought to say so, and dismiss the application or discharge the order. But where there is a substantial legal question arising on the facts disclosed by the affidavits which the plaintiff bona fide desires to try, I think that the court should, as a rule, allow the service of the writ.

18     We note that Seaconsar was concerned in particular with limbs (d) and (e) of O 11 r 1 of the Rules of the Supreme Court (UK) and not the limb concerned with torts. As mentioned above, Lord Goff said that to satisfy limb (e), all three elements of contract, breach and place of breach must be established to the level of a good arguable case. Of course, in Seaconsar, the parties were not in dispute that limb (e) applied. The case proceeded solely on the question whether a serious question to be tried on the merits had been established. But if there had been no agreement in Seaconsar as to the applicability of limb (e) and the plaintiffs there had to satisfy the court up to the level of a good arguable case then there would really have been no need to go into the issue of the merits of the claim because if the plaintiffs had satisfied the higher standard of proof required to establish jurisdiction he would also have satisfied the lower standard of proof required on the merits.

19     Turning now to limb (f)(i) of our Rules of Court, the same position prevails here. In order to establish jurisdiction under this limb, a plaintiff must satisfy the court to the standard of a “good arguable case” of (a) the existence of his cause of action in tort and (b) of the commission of a constituent act or omission in Singapore by the intended defendant who is outside Singapore. Having satisfied that burden, it would be quite unnecessary to go into the question of a “serious question to be tried” on the merits. This probably explains why in a number of English cases dealing with infringement of patents decided after Seaconsar, and cited to us by the respondents’ counsel, the court simply applied the test of a good arguable case enunciated in Unilever plc v Gillette (UK) Ltd [1989] RPC without reference to Seaconsar (see Mead Corp v Riverwood Multiple Packaging Division of Riverwood International Corp (1997) 24 FSR 484, Coin Controls Ltd v Suzo International (UK) Ltd [1999] Ch 33, Aubrey Max Sandman v Panasonic UK Limited (1998) 25 FSR 651 and Napp Pharmaceutical Group Ltd v Asta Medica Ltd (1999) 26 FSR 370.

20     We would hasten to add that in respect of some limbs in r 1, the evidence which is needed to establish jurisdiction may not touch on the merits of the claim, eg limbs (a) or (r). In such a situation there will be a need for the plaintiff to establish as regards the merits of his claim that there is a “serious question to be tried.”

Evidence does not amount to a good arguable case

21     In the instant case, to invoke the jurisdiction under r 1(f)(i), the appellants must show participation by CG Ltd in the tort by way of common design. There must be facts upon which it could be reasonably argued that there was such participation by CG Ltd. From the relevant portion of the re-amended statement of claim quoted above, the appellants seek to show such participation of CG Ltd by way of:

(i)     the fact that Colt VEA was almost 100% owned by CG Ltd and there were common directors (we would hasten to add that there has been a change on these matters after the writ had been issued but the change does not affect the merits of this action);

(ii)   the 11 documents relating to the marketing efforts of Colt VEA.

22     The appellants argued that from the marketing documents one could see that Colt VEA was virtually indistinguishable from Colt Intl and CG Ltd, in that:

(a)    CG Ltd, Colt VEA and Colt Intl identified themselves with the same logo and under the same name ‘COLT’. Furthermore, prior to the incorporation of Colt VEA in Singapore, CG Ltd had a representative office in Singapore;

(b)    The Reports and Accounts of Colt Group Ltd for the year 1995 stated that:

The Group has continued (its) previous policy of … expansion into new geographical and product areas … The Directors believe that … new geographical markets will form a solid basis for future profitable growth.

In addition, by virtue of its shareholding in Colt VEA, CG Ltd would have consolidated the accounts of Colt VEA.

(c)    Colt VEA had, in the Company Profile extended to their customers, held themselves out as one of the “Colt Group Offices & Agents Worldwide”.

(d)    In the Annexure marked “Certificate” which formed part of the Colt VEA Company Profile, Colt VEA had annexed the BSI Quality Assurance ISO 9001 Certificate which was issued to CG Ltd, not to Colt VEA.

(e)    In Colt VEA’s submissions for various projects in Singapore, eg for Tan Tock Seng hospital, the ISO 9001 Certification mark was prominently featured. In the first affidavit of Robert M Wilson sworn on behalf of the appellants, he stated that “the … use of the ISO 9001 certification mark by [Colt VEA] implies either that [Colt VEA] are treated by the Group as one and the same with CG Ltd/Colt Intl, or that [Colt VEA] have wilfully misrepresented their ISO status in all their said reports and marketing literature.”

23     It is clearly not enough to merely point to the fact that Colt VEA and CG Ltd were closely related to one another either by shareholding or otherwise. Some other evidence of CG Ltd’s actual involvement in furthering the common design of infringement must be shown: Unilever plc v Chefaro Proprietaries (1994) 21 FSR 135 and Mead Corp v Riverwood Multiple Packaging Division of Riverwood International Corp (1997) 24 FSR 484. There is none of that.

24     There is also really nothing in the 11 documents to link CG Ltd to the manufacture of the allegedly infringing product or the sales or import by Colt VEA of the product. Of course Colt VEA, being in the same group as CG Ltd, would in its sales and marketing material show links with the other companies in the group and of their world wide network. But that cannot ipso facto suggest that CG Ltd was thus involved in the infringing act. Furthermore, it must be borne in mind that Colt VEA’s activities were not confined to the supply of smoke curtains only.

25     Even as regards the fact that the BSI Quality Assurance ISO 9001 Certificate, was issued to CG Ltd, and not to Colt VEA and which certificate was annexed to the Colt VEA Company Profile, we think the judge below was correct to view that fact in this way:

As the certificate says Colt Group is granted the right to be listed in the British Standards Institution Register of Firms of Assessed Capability in respect of ISO 9001 (and others) and the Scope of Registration described in the Appendix. There are three Appendices and two of these state that the scope of registration applies to activities at Colt International only. The third one states that it applies to activities at Colt International Licensing Ltd another subsidiary of Colt Group. I would not have thought that a reference to an ISO 9001 certificate in a submission prepared by Colt VEA carried any weight in support of the plaintiffs’ case for leave under O 11 but in this case the registration covered by the certificate does not even apply to Colt Group.

26     So taking the factors identified by the appellants in their totality, namely, the fact that CG Ltd owned almost 100% of Colt VEA, there was common management, the companies used the same logo and that the accounts of Colt VEA would be consolidated with CG Ltd, they are not indicative of participation or involvement of CG Ltd in the tort. Evidence of involvement of each company within a group is necessary (without considering the question of veracity of that evidence) before that company may be joined in the proceedings as a joint tortfeasor. Otherwise, it would mean that a holding company would always be dragged into proceedings involving its subsidiaries.

27     At the hearing before us, counsel for the appellants drew our attention to a particular document which was apparently contained in Colt VEA’s submission to Tan Tock Seng Hospital. This appeared to be a cardboard label attached to a fabric sample of a smoke curtain which was proposed to be used. The label contained several boxes which contained information relating to the fabric sample. The relevance of the document pressed by counsel was that in one of the boxes, CG Ltd was listed as the manufacturer of the fabric in question. However, the meaning and origin of this document was not explained in the accompanying affidavit made on behalf of the appellants, and no argument was made in relation to it in the court below. We are therefore unable, on the mere presence of such a document, to draw an inference that CG Ltd was involved in the manufacture of the product in question.

28     In our opinion, the appellants have failed to show a good arguable case that limb (f)(i) of r 1 applies. This is an instance where the evidence required to satisfy the jurisdictional issue overlaps with that required on the merits of the claim. While the learned judge in his grounds of judgment did not draw a distinction between the jurisdictional issue and the question of the merits of the claim when he said that a plaintiff “who seeks leave for service out of jurisdiction must show that he has a good arguable case on the merits,” his decision is nevertheless affirmed for the reasons given above.

Judgment

29     In the result this appeal is dismissed with costs. The security for costs shall be paid out to the third respondent’s solicitors to account of its costs.

Appeal dismissed.

Reported by Tai Wei Shyong