La Kaffa International Co. Ltd. (W-02(IM)(IPCV)-1261-07/2017)

23.1 immediately result in the ceasing of the operations of the 'Tealive' business currently being operated by 179 outlets spread nationwide including 22 outlets at the petrol stations; and

23.2 result in the eventual closure of all 179 'Tealive' outlets as all these outlets exclusively sell and market 'Tealive' products.” [5] In response to Loob’s plea, the learned counsel for La Kaffa inter alia submits as follows: “8. We submit that the Court of Appeal had rightly and duly taken into consideration the factual circumstances of Loob's overnight wholesale duplication of the "CHATIME" system, with outlets merely being renamed practically overnight. This Honourable Court has taken this into account at Paragraph 40 of the Written Grounds of Judgment - and conversely that the High Court had materially failed to consider the same. This position has been amply supported, and this can be seen in among others:

(a) Numerous media statements made by Loob on the rebrand confirming the intent for TEALIVE to adopt the same business and concept;

(b) Replication of vast majority of items between the TEALIVE menu and CHATIME menu; and 4

(c) Same outlets, team and layout.

As explained in La Kaffa's Affidavit in Reply, the TEALIVE duplication even goes so far as retaining the purple background for signage at the outlets - see Paragraph 33 of La Kaffa's Affidavit in Reply.” [6] I have read the application as well as the affidavits and the submissions of the learned counsel. After much consideration to the submission of the learned counsel from Loob, I take the view that the application must be dismissed. My reasons inter alia are as follows:

(a) It is trite that an order for stay is discretionary in nature and the court ought not lean in favour of a person who by conduct is perceived to have breached the contractual obligation as well as statutory obligation with knowledge that he is likely to cause loss to the other person. [Emphasis added]. [See s.418, Penal Code].

(b) A stay application before the Court of Appeal against its own decision is not purely granted on a nugatory principle. In addition the threshold for stay is high in contrast to a stay under section 44 of the Courts of Judicature Act 1964.

(c) Further, I take the view that the appellant’s submission that La Kaffa can be compensated with an order for damages to be contemptuous in nature when a statute strictly prohibits them from operating business in that manner and there is a criminal element to it as well as attracts sections in the Penal Code related 5 to cheats. The said section 27 of the Franchise Act 1998 reads as follows: “Prohibition against similar business

(1) A franchisee shall give a written guarantee to a franchisor that the franchisee, including its directors, the spouses and immediate family of the directors, and his employees shall not carry on any other business similar to the franchised business operated by the franchisee during the franchise term and for two years after the expiration or earlier termination of the franchise agreement [Emphasis added].

(d) The judge had taken an oath to preserve, protect and defend the Constitution. In consequence, it will be against the rule of law to disregard a statutory protection in favour of La Kaffa. The cases that Loob was relying did not deal with instances where there was a perceived breach of a statute. The cases relied on by Loob are as follows:

(i) Chen Hing v Export-Import Bank of Malaysia Bhd [2016] 7 CLJ 475; 6

(v) Lai Soon Onn v Chew Fei Meng and other appeals [2018] MLJU 627;

(e) Learned counsel of Loob says that La Kaffa will not suffer any prejudice. In my view, there is actual prejudice as La Kaffa based on the contract as well as a statute is entitled to sustain the rule of law in uncompromising terms. The position may be different if there was no statutory support in favour of La Kaffa. The distinction in jurisprudence is not one of an apple and orange but a marble and pumpkin.

(f) As I said earlier, the granting of an order for stay is discretionary in nature and the Court of Appeal must be slow in granting a stay when:

(i) Loob by their own act was purportedly in breach of contract as well as statute and have expanded the business or continuing the business. It is a case of self-induced misconduct. Special circumstances jurisprudence relied by Loob will not be applicable in a 7 case of self-induced misconduct. In Ming Ann Holdings Sdn Bhd v Danaharta Urus Sdn Bhd [2002] 3 CLJ 380, the Court of Appeal on the facts of the case held that, fear of losing business, fear of losing customers, fear of losing suppliers, fear of losing goodwill, etc. will not fall under the special circumstances rule.

In essence, Loob set out on a mission to create, as far as possible, their own purported special circumstances - clearly attempting to present the Court with a presupposed 'fait accompli' with regard alleged effects that would be occasioned to 3rd parties as a result of the prohibitory interim injunction orders. 8 This, all despite knowing it faced opposition from La Kaffa, as clearly stated in its solicitor's letter dated 26.01.2017 and with the filing of the OS on 17.02.2017 - all ahead of Loob's launch of TEALIVE on 18.02.2017.

Loob's excuse is essentially this: Loob set out to gobble as much as possible with a 'rebrand', and in doing so subsumed a vast majority of the CHATIME outlets. However, because Loob set out to be the biggest there is - Loob attests that it has impact on a large number of 3rd parties, and presupposes that having set out to be the biggest there is, that it is too big to close. This is so manifestly flawed and unjust, when by every account, it all leads back to the same consideration. Firstly, Loob is surely large and able enough to manage; and secondly, that they cannot take benefit of their own choices in the operation of a business so similar that they knew or ought to have known could be subject of an injunction.

The contemptibleness of this situation is expressed in Jian Tools for Sales Inc. v Roderick Manhattan Grp Ltd [1995] FSR 924 by Knox J (in respect of an interim injunction application) in the following terms: "An important feature of, if not a better name for, What the Court is called upon to do at this stage is to strike the appropriate balance between the injustice involved in denying the plaintiffs an injunction at this stage, should they turn out at trial to be entitled to a permanent injunction, and the injustice involved in granting an injunction against the defendants at this stage should they succeed in showing at trial that no injunction should be granted. The conception of justice should, in my view, include considerations outside those which can be measured in 9 economic terms. Walton J. took a similar factor specifically into consideration in granting an interlocutory injunction in Hymac Ltd v Priest man Brothers Ltd [1978] RPC 495, a case where the name in dispute was 580 in relation to excavators. He said at page 500: I think that there is special reason connected with convenience which it is necessary I ought to take into account and that is this. I cannot believe that this is a case where the defendants have not acted with their eyes fully open throughout. I cannot think that with an organisation of their size and reputation somebody on their side must not have said when names for this new machines were being discussed 'If we use 580, will not the plaintiffs object? He went on to give reasons why this should have been so and continued: If that question was asked, as I think it must have been, the defendants must thereafter have gone on knowing the risks involved. They therefore in my view cannot complain if they play with fire in that way and get burned. Similarly, I consider here that the defendants took the calculated risk in adopting "BusinessPlan Builder" in the same typographical format as Jian's mark."

In a similar vein, in Minnesota Mining [1992] RPC 331, Aldous J held: "I accept Mr Ren nicks' evidence that if an injunction is granted, it is likely that Ren nicks (UK) will cease to trade. However, that will be the decision of Rennicks Manufacturing. They have at all 10 times financed Rennicks (UK) and could provide further finance if they thought it right. If Rennicks (UK) did cease to trade, then 13 employees would probably be made redundant. However, all but two of them were employed after Rennicks (UK) knew of the patent and the stated intention of the plaintiffs to litigate, and therefore they must have known of the possibility of an injunction being granted. In effect, Rennicks (UK) have expanded their business from two employees operating from private premises, aware of the risks that they took."

The observations by Minnesota Mining above, came in respect of a stay application pending appeal of a permanent injunction. It is submitted that those same considerations can be applied here, but are amplified given that this relates to an interim injunction where a necessity of immediate restraint has already been made out.”

(a) Courts should not lend its hand to persons who on the face of record are seen to be cheats.

(b) In India, such category of persons are called 420’s. The terminology originates from the Indian Penal Code section 418, 420 and many other sections. Our provisions are similar. For example, our section 418 states: “418. Whoever cheats with the knowledge that he is likely thereby to cause wrongful loss to a person whose interest in the transaction to which the cheating relates, he was bound either by law, or by a legal contract, to protect, shall be punished with imprisonment for a term which may extend to seven years or with fine or with both.”

(c) 420’s flourish well in compromised governments with assistance of compromised Judiciary. The 420’s existence in actual fact will compromise the rule of law as well as the concept of accountability, transparency and good governance. The lack of these virtues promote corrupt practices which ultimately affects the nation and its wealth. A judge by His Oath of Office ought to take cognizance of 420’s at limine. 12

(d) Perceived 420’s in all sectors inclusive of the Government as well as the judiciary, has brought supreme shame to the rule of law in many countries.

(e) In this time and era, the court must arise to ensure perceived 420’s are not provided with discretionary order even in civil cases of this nature, that too at the Court of Appeal stage. I hereby order so, with a note that my learned sister Justice Badariah binti Sahamid JCA supports my decision and my learned sister Justice Rhodzariah binti Bujang JCA dissents. By agreement of parties, we ordered costs of RM15,000.00 against Loob. Dated: 05 July 2018 sgd (DATUK DR. HAJI HAMID SULTAN BIN ABU BACKER) Judge Court of Appeal Malaysia. Note: Grounds of judgment subject to correction of error and editorial adjustment etc. 13 Counsel for Appellant: Mr. Khoo Guan Huat [with Kwan Will Sen, Melissa Long and Alyshea Low] Messrs. Skrine Advocates & Solicitors Tingkat 8, Wisma UOA Damansara 50, Jalan Dungun, Damansara Heights 50490 KUALA LUMPUR. [Ref: KGH/KPY/LLP/2142729.6] Counsel for Respondent: Dato’ Loh Siew Cheang [with Cindy Goh Joo Seong, Yap Mong Jay, Keong Ming Wai and Lim Kuan] Messrs Cheang & Ariff Advocates & Solicitors 39 Court@Loke Mansion 273A Jalan Medan Tuanku 50300 KUALA LUMPUR. [Ref: YMJ.201600445]