1998/257 - Veka v T.A.Picot (CI) Ltd [1998] UR 257 (30 December 1998)

Application by the defendants for an Order that the plaintiff cannot receive the benefit/burden of a consent order agreed between the defendants and the previous plaintiff in 1986 (determined to be a contract on appeal from the Judicial Greffier to the Royal Court in 1989), as the defendants received no notification of the transfer of that benefit/burden to the present plaintiff, and further, as a right of action cannot be transferred under the Code of 1771.

Application refused, the present plaintiff is successor in title to the previous plaintiff, and had, therefore, acquired the benefit/burden without the need for the previous consent of the defendants.

THE COMMISSIONER: This is an action brought by the present plaintiffs in the form of a passing off action. That means it is a common law action which has been in this Court for some time; in fact it started some years ago.

In 1986 there was a judgment which, to some extent, might be described as a consent order in respect of paragraphs one and two of the judgment, but that is not the issue today. What the Court has to decide today is whether there has been a passing off by the defendants of the goods of the plaintiff. That is not dependent upon any contract. Mr Picot, who is representing himself and the other defendants, has argued that the order of 1986, because it was a consent order, was in fact a contract, and that view was confirmed by the Royal Court on appeal from the order itself which was made by the Judicial Greffier. In that appeal in 1989 the Royal Court held that the consent order was a form of a contract. Mr Picot comes before us today to state that in his view the present plaintiff cannot receive the benefit of that order because it was a consent order, it was a contract and he had not given notice of the transfer to it for the benefit of that contract. He also informed us that under the Code of 1771 you cannot transfer a right of action.

In reply Mr Thacker has pointed out that this is a passing off action dependent on the common law and not on contract because the action is a tortious one although of course the contract that was made between the parties is irrelevant as to the issue between them.

I am not satisfied that this is the kind of assignment of a contract which would require the consent of the other parties that Mr Picot has urged; it is rather, as Mr Thacker has said, successorial inasmuch as the present plaintiff is a successor in title to the previous plaintiffs and its right to be in that position has been confirmed by two opinions of German lawyers which are not challenged as to the effect of the law in Germany. I can see no reason for saying that the arguments advanced by Mr Picot prevent the plaintiff from continuing today.

The application, Mr Picot, that the successorial rights of the plaintiff cannot be recognised by the Jersey Courts is rejected.

This is a passing off action brought against the defendants the position of which is that T. A. Picot (C.I.) Ltd. is owned by a Guernsey company the second defendant Vekaplast Windows (C.I.) Ltd., which in turn is owned as to fifty per cent by Mr Picot, the fourth defendant and fifty percent by a third party. As regards the third defendant Vekaplast Windows Export Ltd., its name has been changed to Fogs Exports Limited but should the Court decide in favour of the plaintiff any order should, nevertheless, bind that company in Jersey.

The plaintiff is the successor in title to Veka GmBH which itself is the successor in title to Vekaplast Heinrich Laumann. At the commencement of the hearing the defendants challenged the plaintiff’s right to bring the action in its present name claiming that the transfer to it of the rights and contractual obligations of its two predecessors were defective and contrary to Jersey law. That claim stood or fell depending on the nature of the transfer. It might have succeeded had the transfer been an assignment rather than a matter of straight succession. The defendants did not challenge the German law but submitted that before the transfer could be given effect by a Jersey court it had to satisfy certain requirements regarding novation in Jersey. For the reasons given earlier in our judgment on this matter we rejected the defendants’ submissions and we do not think it is necessary to repeat them.

As may be inferred the effective founder of the plaintiff company is a Herr Laumann. He gave evidence about its business but for convenience the product may be described in more detail in Mr Picots own brochure in use in September 1987 and headed ‘Why so many architects specify Vekaplast Windows’. The relevant passages are as follows:-

"Vekaplast is made from an intensively developed grade of unplasticised polyvinyl chloride.

Trosiplast SW 1056 - a product of Dynamit Nobel AG

A thermoplastic material specially formulated to withstand the rigorous demands of the building industry.

For the past 15 years it has weathered the harsh winters and scorching summers of Europe without any deterioration or visible colour change."

"Vekaplast windows have been extensively treated by independent European authorities and these results have shown they are capable of meeting the rigid requirements of British Standard DD4 severe grade (b)."

In a recent marketing publication from "Veka" its regions and its work are described thus:

We were told that although the name Vekaplast is still used the company prefers to market its products under the name Veka as this has less of a connotation with what Herr Hecker a Director called "nasty plastic".

At first the original German company manufactured the finished products but then decided to licence what it calls "fabricators" to which it sells its profiles. The fabricators then uses the profile to make windows doors and other items. It may sell these to merchants and shops which, in selling them, may use the name Veka. Both Herr Laumann and Herr Hecker stressed that the law of the European Union prevented any attempt to limit the use of the name when the finished products are sold by retailers.

The fourth defendant has had a long involvement with the building trade starting at Normans. Whilst there he met builders as well as general customers of the firm. He later ran a quarry and, again through this work, built up business and personal contacts. He then joined another builders merchant which made windows. He finished as that firms Managing Director and in 1978 he started his own company, the first defendant. Through this company he began to sell PVC windows obtained from Sovereign Windows UK (a licensed Veka fabricator) and from another manufacturer, Lytham Windows. T A Picot (C.I.) Ltd. sold these windows under the name of Sovereign Veka. (Unless the context requires otherwise, it will be convenient hereafter to refer to the 1st and 4th defendants, simply as "Mr Picot", the third defendant no longer being under the fourth defendants control. Likewise the plaintiffs name may be shortened to "Veka".

By 1973 Vekas business was growing and it was supplying its extruded PVC profiles to companies in the UK using two Trade Marks: firstly the words "Vekaplast" and secondly the word "Veka" set in a logo of two diamond devices. These were clearly distinctive of Veka’s product. Although as we have noted Mr. Picot was selling completed windows obtained from the UK through Sovereign he decided in 1980 to manufacture the windows and other completed artifacts, such as PVC doors locally. As his link, at that time with Veka was through a Mr John Beswick, (who died some time ago) and who was the Managing Director of Sovereign he notified Mr Beswick on the 2 May, 1980 of his intention to set up a factory in Guernsey or Jersey. In the end he set it up in Guernsey. Whilst the distinction between the two Bailiwicks is clear to any Channel Islander, the relationship of them to each other and to the United Kingdom is not so apparent to others. Accordingly, for the purposes of Herr Lauman and Herr Hecker they lumped the Islands together as part of the UK. At any rate it is clear that Veka and Mr Picot hoped to come to an arrangement whereby Veka would supply its extruded profiles from its factory in Germany via St. Malo, and Mr Picot, through the second defendant once incorporated, would manufacture the finished product which as we have said would not be confined solely to windows and that is what happened. The negotiations to formalise the arrangements dragged on for nearly four years but, in spite of what can only be described as almost unlimited patience and forbearance by Veka no formal agreement was reached although profiles were sold on an ad hoc invoice basis. Anticipating a growth in his business by the end of the failed negotiations, Mr Picot had something like £125,000 of profiles in stock which were stored in Guernsey. The reasons for the failure to conclude a formal agreement are not relevant but we may say that Mr Picots two main requirements were rejected repeatedly by Veka. These were first that in effect the agreement should be open ended and, secondly, that he should have the exclusive right to use the names Veka and Vekaplast in the Channel Islands. In the end Mr Picots account with Veka was closed in June 1984. Within a short time he has made arrangements to be supplied with similar PVC profiles from another German firm called Kumerling. Both Herr Laumann and Herr Hecker accepted that the products of what they said was Vekas main rival in the business were of comparable quality to Vekas.

In addition to incorporating the Guernsey company in 1980 Mr Picot registered the names of Vekaplast Windows and Veka Windows in the (Jersey) Register of Business Names on the 10th October, 1982. At a meeting with Veka shortly afterwards he did not disclose this. That provoked an immediate protest from Veka whose lawyers wrote to Mr Picot on the 8 December 1982 putting him on notice about Vekas intention to register their Trade Marks in the United Kingdom and then Jersey. Accordingly, losing no time, he applied to register the names on the English Register on the 21 January 1983. Veka (in the names of Herr Laumann and Sovereign Frames Ltd.) did the same shortly afterwards so that there were two applications for the same registration. Due to financial constraints, he told us, he did not pursue the matter and in October 1985 the applications were deemed to have lapsed. Vekas applications were granted and it is the registered proprietor of Trade Marks numbers 1-192-423 and 1-192-424 on the English Registers; Number 1-192-42 that of the word Vekaplast and number 1-192-424 that of Vekas diamond device. Both trade marks have been registered in Jersey under Article 3 of the Trade Marks (Jersey) Law, 1958. Mr Picot does not seem to understand the difference between the ownership of a trade mark and a claim to its exclusive use. Nor that it is possible to sell brand names without being the sole agent for that purpose or having the sole franchise for such goods. The correspondence shows that as late as 1982, two years after the negotiations had started, he was claiming the sole franchise (a belief at total variance with the evidence of Herr Laumann and Herr Hecker). He instructed his then lawyers to write a letter to another company importing and selling Veka Windows. That letter is dated the 19 November 1982 and claims that Veka had allowed Mr Picot the sole use in the Channel Islands of the names Veka and Vekaplast, a claim refuted firmly by the evidence of Herr Laumann and Herr Hecker and the correspondence and telex between Veka and Mr Picot who did not appear, also, to understand that according to the law of the then EEC, which in this context, applies to Jersey, parallel imports of similar goods cannot be prevented.

After Mr Picots account had been closed relations between the parties were such that Mr Picot successfully obtained two orders from the Royal Court of Guernsey. The first required Veka to change the name of a Guernsey company Veka (Guernsey) Ltd. it had incorporated without opposition. When it sought to change the name to Sovereign Veka Ltd. again it was blocked. Although these matters are not germane to the present dispute they may have to be considered if we come to the question of "unfairness" between the parties.

After the cancellation of Mr Picots account attempts to stop him using the names Veka and Vekaplast failed and an action was launched by Veka (in the name of Herr Laumann) against the present first and fourth defendants. The following orders were sought:-

"(a)To acknowledge that the right of ownership of the trade marks and names "Vekaplast" and "Veka" and "Vekaplast Windows" is vested in the plaintiff;

(b)to effect within such delay as the Court might direct, the removal of the word "Vekaplast" from the name of the second defendant;

(c)to abide by an injunction that neither the first nor the second defendant should claim or procure that the other should claim that either of them is (i) the sole authorised supplier of Veka products or (ii) the sole licensed manufacturers of ultra-high performance German Veka rigid PVC windows, residential doors, patio doors and roller shutters;"

On the 21 August 1986, after hearing witnesses the Court made a consent order (although the Act of the Court does not record this). Veka withdrew its claim to an order under paragraph (b) but the rest of the relief was granted. That should have been the end of the matter but it was not. The two defendants seemed to go on as before. Mr Picot claiming, as he did before us, that it was the excellent work of his companies coupled with his personal contacts, rather than the two names that attracted business. On the 29 August the position as seen from Vekas point of view was spelt out to him very clearly in a letter from Advocate Thacker who wrote as follows:-

"Dear Sirs,

R: Vekaplast Heinrich Laumann

As you know we act on behalf of Vekaplast Heinrich Laumann.

We refer to the Order of the Royal Court of Jersey (Samedi Division) made on the 21 Augus, 1986 which required, inter alia, you to acknowledge that the absolute right of ownership of the trade marks and trade names "Vekaplast", "Veka" and "Vekaplast Windows" is vested in our clients.

We have been instructed by our clients to write to you formally to confirm that any authority that may have been given to you at any time in the past to carry on business or trade, or to manufacture, fabricate, import, distribute, sell, supply, offer for sale or supply, exhibit in public, advertise, promote or market windows, doors, roller shutters or any other building materials under or by reference to the names or trade marks "Veka" or "Vekaplast" or the Veka diamond device logo, is revoked absolutely.

We are also instructed to remind you that our clients own the copyright in the Veka diamond device logo and in the distinctive Vekaplast and Veka script style ("the Copyrights") and our clients are the registered proprietor of the U.K. Trade Mark Vekaplast registered with No.1,192,423 and UK Trade mark Veka and diamond device registered with No.1,192,424 ("the Registered Trade Marks").

We are instructed to make it clear that any importation, distribution, sale, supply, offer for sale or supply, exhibition in public, advertisement, promotion, marketing or otherwise dealing in or disposing of any of the goods referred to above by you or by your directors, servants, agents officers or otherwise howsoever under or by reference to the names Vekaplast and Veka will be taken to be an act of passing off, an infringement of the Registered Trade Marks of the Copyrights, as the case may be, may result in our clients taking proceedings against you and your directors for passing off, infringement of registered trademarks and infringement of copyright.

Please acknowledge receipt of this notice.

Yours faithfully,

ADVOCATE CMB THACKER

TA Picot (CI) Ltd.,

Bechet Lane,

Trinity,

Jersey"

"Viberts,

23 Pier Road,

Jersey.

RE: THE NAME "VEKA".

Dear Sir,

I am in receipt of your letter dated 29 August 1986 and wish to make the following comment.

Whatever your client wishes to do with his trade names in Jersey or the UK is a matter for him. What he cannot do is prevent me from manufacturing Veka profile, selling such windows as Veka Windows or using my Guernsey name in Jersey.

My Companies will respect the clearly stated terms of the judgement, dated 21 August 1986, with regard to the sole use of names in Jersey.

I have considerable respect for your client and this remains unchanged despite the Courts judgement.

If he wishes a solution to the disagreement we have, he will I regret, have to act in a commercial way and purchase those parts of my operation he appears to require.

I am prepared to negotiate a deal to end this whole affair, however, should this not materialise I will exercise my right to do what I wish with my Companies and product in the future.

I trust you will convey this to your client.

Yours faithfully,

TA Picot

Managing Director"

The claim to be able to use Vekaprofiles in Guernsey, make windows and other products and sell them in Jersey is not denied by Veka. Nevertheless the profiles having been in stock since 1984 may not be in pristine condition. Mr Picot said that he had been able to buy up to date profiles elsewhere; a practice not condoned by Veka.

The present action was started on the 11th August, 1988. After many vicissitudes and delays it was set down for hearing on the 9th September, 1997. It is an action in passing off, a tort accepted as applicable to Jersey by the Royal Court, although the principles governing how the courts have approached it are to be found in the decisions of the English courts. We shall look at these principles later on.

We must now retrace our steps a little to the point when Mr Picot decided to commence manufacture using Veka profiles, rather than buy in from other manufacturers. At the beginning of the tortuous negotiations Mr Picot incorporated the 2 defendant in Guernsey. He had chosen the name, he told us, to protect the use of the names Veka and Vekaplast in the Channel Islands so that firms that otherwise might take over his business would be deterred. It is difficult to conclude other than that by doing so he effectively linked the names of Veka and Vekaplast in Jersey and Guernsey with the plaintiffs predecessor in title. On 26 August, 1980 he wrote to Mr Beswick at Vekaplast UK which later became a wholly owned subsidiary of Veka. The relevant part of this letter is as follows:-

"We are shortly to sign a lease on a building for 21 years and both Barry and I are totally confident that Vekaplast will continue to grow to a point when they could become world leaders in this field. We expect to be working with Veka over this period and therefore must have a full franchise agreement with them.

For the purpose of window fabrication, we are shortly to form a new Company in Guernsey. The Company we think should be called Vekaplast Windows (CI) Limited and this new Company will be a wholly owned subsidiary of T A Picot (CI) Limited. It will therefore be necessary for our franchise agreement to be between the new Company and Vekaplast Germany. I will forward the registered address of this new Company as soon as it is available."

It was not the practice of Veka to allow those companies to which it supplied profiles to use the two names but it did not object because the Guernsey company was to be formed to deal exclusively in Vekaplast and Veka products subject to Veka’s quality controls and guarantees.

On the 11 August 1988 the present action was started. After many viccissitudes which we shall refer to later it was set down for hearing on the 9 September 1997. In the meantime Mr Picot, in April 1997 had launched an action against a company in Jersey called Creative Windows and Conservatory Co Ltd. which was part of the Veka Network that had been established some years previously and used the Veka device. In his evidence to which we shall turn shortly Mr Picot claimed that it was due to his hard work and personal introductions from satisfied customers, including architects and builders, that had built up his business and not the use of the words Veka and Vekaplast. If that was so it is hard to see that he should object to the use of the word Veka by a rival company. Its use, as Herr Laumann and Herr Hecker, stressed repeatedly, could not be limited if the merchant was selling completed windows.

Although we have referred to all the defendants as "Mr Picot", we must now examine the pleadings in a little more detail. Paras 15, 16 and 17 of the Order of Justice are as follows:

"15.THAT the First and Second Defendants have since the Judgement of this honourable Court, and since receipt of the said letters, represented, and the Third Defendant has since formation represented, by use of the words "Vekaplast" in their advertising and company names that their business and/or their goods are those of or are associated or connected with or derived from the Plaintiff thereby inducing purchasers to believe that the goods offered for sale are manufactured and approved by the Plaintiff as "Veka" or "Vekaplast" windows or that the businesses of the First, Second and Third Defendants are approved by or associated with the Plaintiff or that the First, Second and Third Defendants are authorised by the Plaintiff to use the names "Veka" or "Vekaplast". The said representation is a deception.

16.THAT the First, Second and Third Defendants in the course of their trade as suppliers of uPVC windows and doors and associated items which have not been approved or authorised by the Plaintiff have by continued use of the Plaintiffs trade marks and names "Veka" and "Vekplast" in connection with the said goods or trade represented to customers that the goods supplied or intended to be supplied are those of or are associated or connected with the Plaintiff or that the trade of the First, Second and Third Defendants is connected with or authorised by the Plaintiff, thereby injuring the business and/or goodwill of the Plaintiff.

17.THAT the Fourth Defendant has control over the activities of the First, Second and Third Defendants and has by his actions encouraged and incited the First, Second and Third Defendants to act in the manner set out in paragraphs 14 and 15 above".

We have already mentioned that the third defendant is no longer under the control of Mr Picot personally. The Order of Justice claims that the actions of the first, second and third defendants (referred to in Viberts letter already cited of the 29 August 1998) constitute the wrong of passing off and that the fourth defendant has incited the other defendants to commit the wrong.

The relief claim requires the first defendant to remove the registered business names, "Veka Windows" and "Vekaplast Windows" from the register of business names. Secondly that the second and third defendant remove the word "Vekaplast" from their names, advertisements, brochures and promotional material in Jersey. Alternatively the first defendant should direct a change of names of the second and third defendants by removing the name "Vekaplast" from their names. Thirdly that all four defendants should stop using the names Veka, Vekaplast, or Vekaplast Windows to describe their products. The fourth relief sought is framed so as to prevent an infringement of the plaintiffs registered trade marks. Then follows the usual claim for general damages, interest and, unusually, full indemnity costs.

The main thrust of the defence is that the order of the Royal Court of the 21 August 1988 was in effect a contract between the then parties and that by abandoning its claim to prevent the use by the defendants in that action of the disputed names it had conceded that the first and second defendants could continue to trade in their incorporated and registered business names in Jersey. What became clear in the course of the hearing was that there was also a fundamental disagreement about the intention of the parties when trading ceased between them. Was there an implied term of such arrangements as had been made that when they ceased Mr Picot would cease using the names Veka and Vekaplast? Even if there was, and we are not called upon to decide this, we have already noted that Veka allowed the use of the names by merchants selling completed products supplied by an authorised fabricator. Herr Laumann and Herr Hecker even went as far as to admit that if the first defendant bought finished products from the third defendant it could market them under the two names. There seems to us, however, one important difference. Not only does the first defendant continue to have printed on its business letterheads the name of the second defendant as its parent company but at the bottom appear the inscription: "Trading as Veka and Vekaplast Windows". In addition Mr Picots business, save for a very small part, uses the products of one of the main rivals of Veka, Kummerling and sells them as PVC products. Not surprisingly Veka objects to this activity.

In the main the evidence we heard did not take us very far when examining it against the requirements that have to be satisfied before an action of passing off can succeed.

Mr Eric Walton who had been a director of Sovereign Frames Ltd. until he retired in 1996 had had no dealings with Mr Picot after the second defendant started making windows from the profiles. Most of his evidence was directed to negotiations up to that time.

Mr P W Hardy was of somewhat greater assistance. He is an architect, having practiced in Jersey for some ten years. He is a council member of the Jersey Association of Architects. He had known of Vekas products when he first began to practice in the U.K. in 1979. They were of good design and quality with good back up arrangements. If there was faulty material or installation Veka would rectify it. Architects rely on a manual called the RIBA product selector which featured Veka. He would use Veka for its quality and not its local connection. He had heard of the first defendant as being associated with Veka but had not come across the word Vekaplast.

Mr S J Le Couillard is a director of Creative Windows Ltd. The business has been running since 1995. Before that he had had seven years in the trade of installing PVC windows. He had come across the names "Veka" and "Vekaplast" at Trade Exhibitions. He had also seen the names in trade magazines. The design was special in that the profiles were slim. He would recommend the Veka products to those customers who had no preference. he company was a part of the Veka network that can offer more security for its customers. His business increased and had no connection with the first defendant. He had been shocked to receive a letter from Mr Picot in February 1997 claiming the goodwill in the names Veka and Vekaplast. As far as he knew Mr Picot was not using the profiles at that time.

Mr Mark Bowen is also a director of Creative Windows. He thought that the Veka product was a big asset to deal in as the company would have the support and guarantee of the German company. He liked to think that the company was the sole representative of the Veka network. Vekaplast did not mean the profile system; that was Veka. He had learnt that the second defendant was manufacturing windows from Kummerling profiles. His company had never presented its windows as Vekaplast windows.

Herr Hecker made it plain that Mr Picot was never Veka’s agent. On several occasions he had spelt out to Mr Picot the difference between a fabricator and one who sells completed windows. Mr Picot believed that by purchasing goods (as he did) from Germany that made him an agent. There was no practical difference between Veka and Vekaplast except that the German company decided to use the name Veka alone. He had carried out no examinations of installations in Jersey. The percentage of a Veka product in a finished window was small. If Mr Picot wanted to use the Veka name to trade (apart from selling completed windows, etc.) he had to use Vekas product.

Mr Picot called no witnesses apart from himself. Thus we were left with little but his assertions that the customers who dealt with the first defendant as set out in the extensive lists he provided, did so because of his and the first defendant’s expertise. Mr Picot submitted two affidavits which in giving evidence he supported orally. One affidavit deals with the setting up of the third defendant and asks that it be dismissed from the action with costs. This was to have been a preliminary matter which in the event was not proceeded with since as we have said the control as well as the name of the company have changed so that Mr Picot is the holder of only one third of the shares.

In his second affidavit Mr Picot submitted that it was not part of this Courts business to correct a commercial mistake by Veka in not objecting to the second defendants name when it was incorporated in 1980. Since Veka has not traded in Jersey continuously as his firm has under the registered business names and only from 1996 with network Veka how was it possible to say that the defendants had been guilty of passing off? Veka was intent on the destruction of the defendants. Moreover the third defendant had never traded in Jersey. What Veka was trying to do was to recover the sole use of the names it had lost in 1980. Kummerling was now the profile used in 95% of the cases unless customers asked specifically for Veka. There had been no deception and his customers were aware that the profiles used were those of Kummerling. The position since 1987 was and is that T A Picot had no bank account. The second defendant advertised in the telephone directory. Previously all calls had been transferred to Guernsey. T A Picot was the agent of the Guernsey company (its parent). That company used its own vehicles to deliver the manufactured items to Jersey. As regards the registration of the business names he had been advised to register them by his lawyers.

It would serve little purpose to dissect the evidence in greater detail. The position is as follows:-

1.Veka allows the use of its name by traders selling products made with its profiles.

2.Veka cannot give such a trader the exclusive right to do so; that would be contrary to EU regulations.

3.The second defendant continues to make PVC products from both Kummerling and Veka profiles although only 5% of its business is derived from the latter.

4.The second defendant trades in Jersey selling its manufactured products from the two profiles through the first defendant.

5.The question before us is whether, taking into account its advertising on its letterheads and the other documents produced, the activities of the first and second defendants amount to passing off. Even if they do, two further questions have to be answered. The first is what form of relief should be granted and would it be just to give it? The second is similar. Even if we felt that the plaintiff should, in law, succeed, has it been so dilatory in prosecuting its claim that relief ought not to be granted?

6.Whether there was an implied undertaking to stop using the Veka and Vekaplast names when trading ceased between the parties, or whether the true position was that there was a revocable licence granted to Mr Picot and/or T A Picot (CI) Ltd. the result is the same. The use of the names was permitted for the Channel Islands. If that use is withdrawn or lapses under an implied agreement it cannot be right that it can be continued in Jersey by an agent of a Guernsey company.

7.That part of a finished item made from a Veka profile attributable to the profile itself is about 30%.

THE LAW

The principles governing the tort of passing off have been set out in two judgments of the court. The first is that of Sayers v Briggs (1950-1966) JJ 423 to 428. There the Court said this:

The case was followed in Irvine Sellars Limited v The Melrose Company Limited (1977-78) JJ 9 where the court upheld the principles set out above in Sayers v Briggs.

In Briggs v Sayers the Court said also that the principles tend to conflict and that the one that will tend to prevail will differ from case to case.

Since the Court of Appeals interlocutory judgment in Picot v Crills (1995) JLR 33 CofA we may take note of developments in English case law of passing off since the two Jersey cases and where there are decisions of the House of Lords we should normally follow them. We have accordingly done so.

The elements that have to be established in a passing off action are set out 4 Halsbury 48 at paragraph 166. They have been restated in the House of Lords’ decision of Reckitt and Coleman Products Ltd. v Borden Inc. (1990) 1 All ER 880 as follows:

(a)Before Mr Picots involvement with Veka it had acquired a substantial reputation through Sovereign Frames Ltd. selling it products under its name "Veka". The volume of orders made it plain that that reputation was acquired before Mr Picot began fabrication through the Guernsey company.

That reputation did not change merely because Mr Picot manufactured the products from the profiles and sold them under the name of the first defendant. In our view it was the names that produced the success of the business rather more than the good standard of production and service by Mr Picot If it were otherwise then why was it so important to him to use the names Veka and Vekaplast for the name of the Guernsey company? Moreover it may be said that in choosing these names he played upon the ignorance of Veka about the law in the Channel Islands. In short Mr Picot established his business by promoting Veka as a world wide leader in the field of PVC windows. The continued use of the two names today indicates that that is still the position although the sales of Veka products are only a very small part of Mr Picots business. Mr Picot asserts that the success of his business came about through his own efforts and diligence and it is difficult therefore to see why he wishes to retain the names under such circumstances.

Mr Picot relied on the case of the Athletes Foot Marketing Associates Inc. v Cobra Sports Ltd & Anor (1980) R.P.C. 343 where the conclusion of Walton J was that the decided cases supported the view that no trader can complain of passing off as against him in any territory in which he had no customers or nobody who is in a trade relation with him. In that case, however, as Walton J said at page 347, the activities of the plaintiff (in the United Kingdom) had been simply those of an intending franchiser seeking out a person to accept a franchise from him. "No more no less". That clearly is not the position here. As regards damage the learned judge dealt succinctly with this at page 350 where he says:

"Passing off is a tort and the gist of the action is damage. If there is no damage, therefore, there can be no action. This would, therefore, be a complete answer to any claim by the well known London store if a Bedouin trader were to set himself up in the middle of the desert as "Harrods". He would neither be diverting custom which should go to the real Harrods into his own shop, nor would there be any possibility of any confusion which could harm the real Harrods.

Generalising this obvious example, it would appear to me that, as a matter of principle, no trader can complain of passing off as against him in any territory - and it will usually be defined by national boundaries, although it is well conceivable in the modern world that it will not - in which he has no customers, nobody who is in trade relation with him. This will normally shortly be expressed by saying that he does not carry on any trade in that particular country (obviously, for present purposes, England and Wales) but the inwardness of it will be that he has no customers in that country: no people who buy his goods or make use of his services (as the case may be) there."

There are two cases cited in the judgment which are apposite to the instant one. The first is La Société Anonyme des Anciens Etablissements Panhard et Levassor v Panhard Levassor Motor Company Limited [1901] 2 Ch 513. Walton J refers to the headnote which reads:

"The argument for the defendants was that the plaintiffs had no market in England, and Farwell J dealt with that argument by a finding of fact as follows:

‘Although prior to this action they had no agency and did not sell directly in England, they sold indirectly in the sense that their cars were bought and imported into England, both by the British Motor Company Limited and by private individuals, so that England was one of their markets.’

The very fact that the defendants chose the names "Panhard" and "Levassor" - neither of which are common words, or even common names in England, and the more so that they selected them in the same order of combination as in the name of the French Company showed clearly that they thought that by so doing they were gaining some kind of commercial advantage. In other words, they themselves by their very actions acknowledged that they were seeking to take advantage of the attractive force of the plaintiffs’ custom."

The second case is that of Star Industrial Company Limited v Yap Kwee Kor (1976) FSR 256. That was Privy Council case and Walton J comments as follows:

Mr Picot claims first use of the disputed names but set about using them because of the proposed agreement with Veka. Moreover Frank v Chappell & Anor (1887) TLR 254 shows that there "must be a very strong case made out to sustain a claim to the exclusive use of another mans name as a Trade name." One should remember that it was Herr Laumanns name that started the business in Germany.

The Panhard case was followed in The Roberts Numbering Machine Company v Davis (Patent Design, Trade Mark) and other cases Vol. LIII 1936 p 79. The name Veka is distinctive of the plaintiffs business but, as Luxmoore J said in that case it is not essential that the plaintiff should be carrying on his business within the jurisdiction; it is enough if his goods are imported to an extent sufficient to establish a reputation for them (in the English market). The evidence we have already mentioned has we think established just that.

One of the more recent cases has been of assistance to us.

It is Dawnay Day & Ors -v- Cantor Fitzgerald International (19 December 1997) Unreported Judgment of the Chancery Division of the High Court of England. That judgment may be cited as an authority for saying that in a passing off action the allegation may be (merely) that there is a business connection between the defendant and the plaintiff. There was, and is, a clear business connection implied by the use of the two names in Mr Picots brochure which we have mentioned earlier.

(b)Being satisfied that Veka has a reputation, then trading in products bearing its name must, inevitably, lead the customer to connect Veka with them. It is true that the name Kummerling appears on the current brochure in what may be said to be unobtrusively, but we heard no evidence from any of Mr Picot’s customers that they bought his products because of the Kummerling connection rather than that of Veka. To use the words of the court in the Irvine Sellars case the "get up" of the Veka had become distinctive even if the volume of trade in products made from its profiles (whether from old stock or acquired subsequent to 1984 from other sources) is now small.

(c)As regards the amount of damages these can only be assessed after an enquiry bearing in mind that the squeezing out of Veka products by Kummerling in Mr Picots business over some fourteen years.

ACQUIESCENCE

However even if we were minded to do so, ought we to make any orders as sought by Veka either because it would be unjust or unfair to do so or because Veka has acquiesced in the position or delayed too long in bringing the action and been dilatory in prosecuting it? There is also the point made by Mr Picot that Veka is a successful large company seeking to destroy the business built up by his hard work. Sympathetic to this view as we might be it would not, by itself suffice to prevent us granting some relief to Veka. In fact there was no evidence to support this claim. We have already mentioned the patience and forbearance shown by Veka to Mr Picot

To establish acquiescence there must be more than just delay. The authorities were canvassed in great detail and precision in Habib Bank Ltd. v Habib Bank AG [1981] 1 WLR CA where at page 1285 Oliver LJ cited his earlier judgment of Tayors Fashions Ltd v Liverpool Victoria Trustees Co Ltd (1981) 2 WLR. He said in that judgment at page 593 -

"Furthermore the more recent cases indicate, in my judgment, that the application of the Ramsden v Dyson, L.R. 1 H.L. 129 principle - whether you call it proprietary estoppel, estoppel by acquiescence or estoppel by encouragement is really immaterial - requires a very much broader approach which is directed rather at ascertaining whether, 8n particular individual circumstances, it would be unconscionable for a party to be permitted to deny that which, knowingly, or unknowingly, he has allowed or encouraged another to assume to his detriment than to inquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour."

It cannot be said in the instant case, to use the words of Oliver LJ, that Veka "allowed or encouraged" Mr Picot to assume the two names to its detriment. Accordingly to allow Veka to succeed would not be unconscionable. Mere delay does not amount to acquiescence (see Halsbury op.cit.vol 53 at para 91 and the Electrolux case in a footnote where a delay of ten years in starting a case did not amount to acquiescence).

Even if we were to find that Veka had been guilty of unreasonable delay we would have to go on to consider whether that delay would render it unjust in all the circumstances to grant relief (see Spry Principles of Equitable Remedies 3rd.ed. page 415).

Looking at the chronology of the pleadings and the various interlocutory actions the numerous delays that occurred cannot all be laid at the door of Veka although greater precision in its pleadings might have obviated some of the need to amend at an earlier stage. Nevertheless Mr. Picot conducted what may be described as a dogged and pertinacious defence all along the line. In our opinion Veka was not guilty of unreasonable delay and, therefore, the second question of unjustness does not arise.

In all the circumstances we find that the plaintiff has succeeded against the fourth defendant in (1) establishing a case of passing off against the first and second defendant and (2) a case of inciting the first and second defendant to commit such passing off. As regards the second defendant even though it is a Guernsey company and not amenable to this jurisdiction the fact that it brings the manufactured goods into Jersey in its own vehicles means that the disputed name "Vekaplast" continues to be used by this means in Jersey through its agent the first defendant. The third defendant has, as we have noted, changed its name and we are not prepared to make any order against it. Should it change it again so as to include either the name Veka or Vekaplast and were to use those names in Jersey we would consider a further application from the plaintiff to prevent it from using those names in Jersey.

1.The first defendant shall within eight weeks remove the names "Veka Windows" and "Vekaplast Windows" from the Business Names Registry in the Commercial Relations Department. The second defendant will not within the Island of Jersey continue to use the word Vekaplast in its advertisments, brochures and promotional material.

2.The first, second and fourth defendants and each of them (whether acting by its directors, officers, servants, agents or otherwise howsoever) shall cease to use the names "Veka", "Vekaplast" or "Vekaplast Windows" to describe their products and refrain from further publication in any form of the names "Veka" and "Vekaplast" and "Vekaplast Windows" in the Island of Jersey or from passing off their goods as those of the plaintiff or from doing anything calculated or intended to lead to the passing off as and for the products of the plaintiff or products connected in the course of trade with the plaintiffs.

3.There will be the usual enquiry as to damages.

The Birmingham Vinegar Brewery Co -v- The Liverpool Vinegar Co & Anor (1884) 4 TLR pp.613-614

The Roberts Numbering Machine Co -v- Davis. Reports of Patent, Design, Trade Mark & Other Cases, Vol: LIII Digest of Cases Reported in 1936 pp.79-88

Adrema Ltd -v- Adrema-Werke GMBH & Ors. Reports of Patent, Design, Trade Mark & Other Cases [1958] pp.323-334

La Société Anonyme des Anciens Etablissements Panhard et Levassor -v- Panhard Levassor Motor Co Ltd (1901) 2 Ch 513

Dawnay Day & Ors -v- Cantor Fitzgerald International (19 December 1997) Unreported Judgment of the Chancery Division of the High Court of England

The Athletes Foot Marketing Associates Inc -v- Cobra Sports Ltd & Anor (1980) RPC 343-358

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	Jersey Unreported Judgments
You are here: BAILII >> Databases >> Jersey Unreported Judgments >> 1998/257 - Veka v T.A.Picot (CI) Ltd [1998] UR 257 (30 December 1998) URL: http://www.bailii.org/je/cases/UR/1998/257.html Cite as: [1998] UR 257

Jersey Unreported Judgments