The Appellants and the Respondent were companies involved in real estate business. In the first suit, the Respondent claimed that APM and JLLP committed tort of passing off by representing their real estate services as those of the Respondent’s, under the names of “Jones Lang LaSalle” and/or “JLL”, while JLLP counterclaimed against the Respondent based on the tort of passing off, namely the Respondent had passed off its real estate services as being associated with the services offered by Jones Lang LaSalle group of companies (JLL Group).
In the second suit, JLWL applied to the High Court under Section 45(1)(a) of the Trade Marks Act 1976 (hereinafter referred to as “TMA”) to remove Jones Lang Wootton registered trademarks from the Register (which is used and registered by the Respondent), as it was alleged to be wrongfully registered by Respondent contrary to the terms of a Deed of Sub-Licence of Name and a Deed of Covenant.
The High Court found in favour of the Respondent, dismissing JLLP’s counterclaim and the second suit. Aggrieved by the decision, the Appellants appealed to the Court of Appeal (hereinafter referred to as “the CoA”).
The CoA allowed the appeal and found that the High Court had misled itself by focusing on irrelevant considerations. The CoA, ordered a retrial without addressing the issues relating to trademark, as it found the High Court’s undue focus on collateral issues prejudiced a fair and proper consideration of principal issues in the case.
Relevance of breach of Valuers, Appraisers and Estate Agents Act 1981 (hereinafter referred to as “the VAEA 1981”)
The High Court found that APM and JLLP, breached Section 23 of the VAEA 1981, which requires the majority shareholding and operation of a company which offers services of a valuers, appraiser and estate agent, to be owned and controlled by valuers, estate agents and property managers, who are registered with the Board of Valuers, Appraisers, Estate Agents and Property Managers. The High Court applied its finding on the alleged illegality towards various aspects of the case.
The alleged illegality related to breach of Section 23 of the VAEA 1981 where else the cause of action was based on tort of passing-off and trademark. The alleged illegality was irrelevant in determining a person’s right in tort of passing off or trademark. The CoA, referring to the Federal Court in in Asia Television Ltd & Anor v Viwa Video Sdn Bhd & Connected Cases [1984] 2 MLJ 304, held that in absence of nexus between the alleged illegality and the cause of action, the rights in the tort of passing off of the Appellants would not be defeated. In other words, breach of a non-related statutory provision would not deprive a person from asserting their intellectual property rights, i.e. over the marks in this case, unless there was a nexus between the rights asserted and the alleged breach or illegality.
Further, VAEA 1981, provides for its own penalties for any breach of its provision. If an Act of Parliament provides for its own penalties; it is improper for a Court to impose an ‘additional penalty’ not stated in the Act, by imposing a disqualification on an alleged defaulter of the Act, from defending his/her intellectual property rights.
The issue on illegality was only raised during cross examination of Appellants’ witness and after close of the Respondent’s case. The issue was never pleaded. It is trite law that the parties are bound by their own pleading and the CoA is not empowered to stray away from the pleading in coming to its decision. Therefore, the High Court, erred in law by going on lengthy discussion to address the issue of illegality which was not pleaded.
Application of Section 165 of the EA
It was also the finding of the CoA that the High Court had usurped its power under Section 165 of the EA 1950, in ordering JLLP to produce documents to proof the illegality.
Section 165 of the EA 1950, refers to the power of Courts to put questions or order production of documents from the parties or witnesses. Section 165 of the EA 1950, should be invoked only with the objective of discovering relevant facts or obtaining proper proof of such facts, as explicitly spelled out in the Section as well as the first proviso of the Section.
Owing to the lack of pleading and absence of nexus between the illegality and the claim, illegality was an irrelevant point and the CoA ought not invoke Section 165 of the EA 1950 to prove it without having due regard to the fundamental question of relevance.
Lifting the corporate veil
The Respondent in its’ pleading, averred that the corporate veil should be pierced in order to meet the Appellants’ case that the JLW Marks are not distinctive of the plaintiff or that the Appellants had otherwise implicitly recognized that the JLW Marks belong to the JLL Group.
The High Court, instead of adhering to the pleaded basis, lifted the corporate veil to decide on the alleged breach of VAEA.
It is settled law that the pleadings on piercing the corporate veil must be precise, namely on the ground on which it is sought. Courts are not allowed to pierce the veil for any non-pleaded, ancillary purpose.
Further, Courts are not allowed to disregard the corporate veil purely on ground of interest of justice. In special circumstances where there is either actual fraud, fraud at common law or equitable fraud the corporate veil may be pierced. In absence of that Courts are not empowered to life the corporate veil.
The CoA decision, reiterated the importance of Courts to not get carried away by ancillary matters and focus on relevant issues within the parameters of the pleadings. It also reinforces that the intellectual property rights accorded to one, cannot be denied on basis of non-adherence or breach of an unrelated statutory provision. Any illegality or breach of an Act of Parliament cannot deny a person of his intellectual property rights in absence of any nexus between the breach and the rights asserted.[:]