Organisation CC
Cases
O’Shea v Mallow UDC and Ors
[1993] ILRM 884
Morris J.
his is an application brought by the plaintiff seeking an order that the hearing of this action be remitted to the Circuit Court in the County of Cork. The application is based on the affidavit of the solicitor for the plaintiff who says that the action arises out of an accident that occurred in Main Street, Mallow when the plaintiff stepped off the roadway and fell heavily on a defective or damaged path and suffered personal injuries. He says that at the time when the proceedings were instituted it was thought that the plaintiff’s injuries were serious and it was thought that the plaintiff’s damages might exceed the jurisdiction of the Circuit Court. He says that, accordingly, the proceedings were instituted in the High Court. However, it now appears that the plaintiff’s injuries, while severe, would not exceed the jurisdiction of the Circuit Court and he says that it would be appropriate in the circumstances to remit the matter for hearing in the Circuit Court in Cork.
Counsel for the defendants opposed this application. He does not dispute any of the facts contained in the affidavit of Mr Carey, upon which the application is based, but he makes the submission that the power of the High Court to remit an action to the Circuit Court is a limited power and he says that this power is contained in s. 25 of the Courts of Justice Act 1924 but that the power is to be exercised only in the circumstances provided by s. 11 of the Courts of Justice Act 1936. The relevant part of that section is as follows:
11
(2)(a) An action shall not be remitted or transferred under the said section if the High Court is satisfied that, having regard to all the circumstances, and notwithstanding that such action could have been commenced in the Circuit Court, it was reasonable that such action should have been commenced in the High Court.
Counsel submits that on the correct interpretation and construction of this subsection, it would follow that the court may only transfer and remit an action in circumstances where it was not reasonable that the action should have been commenced in the High Court and, he submits, that it would follow that any order remitting an action to the Circuit Court must contain an express finding that it was not reasonable to commence the action in the High Court and, he argues, that it would follow that in these circumstances no award in excess of the Circuit Court jurisdiction can be made.
In my view, this construction of the subsection is incorrect.
The provisions of s. 11(2)(a) of the Courts of Justice Act 1936 were enacted so as to provide for the circumstance where an action involves issues which were capable of being resolved in the Circuit Court and fell within the jurisdiction of that court but, for valid reason, should properly be dealt with in the High Court. The subsection removes from the High Court the obligation to transfer an action simply because the subject matter of the action fell within the Circuit Court jurisdiction. The subsection provided for a circumstance where, notwithstanding the fact that the subject matter of the action fell within the jurisdiction of the Circuit Court, it was nevertheless reasonable and proper to retain the action in the High Court. If such circumstances existed then the High Court had the power to retain the action and not transmit it to the Circuit Court. It does not logically follow that, simply because the court makes an order transmitting the action for hearing to the Circuit Court, it must follow that it was unreasonable to commence the proceedings in the High Court.
I am confirmed in my view by the provisions of s. 20 of the Courts of Justice Act 1936 which provides that in actions remitted to the Circuit Court there may be an award in excess of the normal Circuit Court jurisdiction.
Accordingly, I make the order transmitting the action to the Circuit Court for the County of Cork for hearing.
MW v. DW [2000] 1 I.L.R.M. 416MW v. DW [2000] 1 I.L.R.M. 416
Denham J
This is an appeal from an order of the High Court made on 30 April 1999 refusing to remit the action to the Circuit Court. The applicant/respondent (hereinafter referred to as the ‘applicant’) in these family proceedings is a housewife and homemaker who has issued proceedings seeking a decree of judicial separation and ancillary orders. Owing to the ages of the children custody and access are not serious matters in contention and the case will focus on financial issues. The respondent/appellant (hereinafter referred to as ‘the respondent’) is the husband and sole financial provider for the family.
The applicant brought these family law proceedings in the High Court. By notice of motion the respondent sought an order remitting this action to the Circuit Court in Cork. In the affidavit grounding this application the solicitor for the respondent deposed that the respondent had a quintuple heart by-pass in or around 1984 and had further serious heart trouble in 1997 and that he would find it most stressful to travel backwards and forwards to Dublin; that both the parties reside in Cork, all the witnesses which may be called reside in Cork, the respondent’s accountants are situated in Cork, the family home is situate in Cork, the solicitors for the applicant and the respondent are all situated in Cork; that the respondent will be retiring in September 1999 and his earning capacity will be totally diminished and that the costs incurred in mounting a High Court action would eat up the family assets at a time when the respondent’s employment life is at an end, all of which would have the effect of diminishing the applicant’s, the respondent’s and the children’s quality of life; that the appli cant instituted proceedings in the Circuit Court in Cork in or around 1997, in a previous family law action which proceedings were withdrawn from court when the parties entered an agreement; and further, that the rateable valuation of the family home of the parties is less than £200.00.
The applicant’s solicitor deposed that the special summons was issued on 14 October 1998, an appearance was entered, an affidavit of means was filed by the respondent, a notice of change of solicitors was served by the respondent’s present solicitors, a replying affidavit, defence and counterclaim were filed on behalf of the respondent wherein the applicant’s claim was denied and the respondent sought the making of seventeen orders against the applicant; that at no time did the respondent seek remission to the Circuit Court. It was further deposed:
… in the course of these proceedings and in general the [respondent] has been covert in relation to his financial affairs and dilatory in making full and proper disclosure and discovery to the [applicant] and I say and believe that an order for discovery had to be obtained on 28 April 1999 in respect of the documents which the applicant has been seeking since May of 1998 ….
It was also deposed that the respondent was a man of considerable means being the proprietor of an insurance brokerage in the City of Cork. It was deposed that in relation to travel the respondent had recently returned from a golfing holiday in South Africa and would shortly be travelling to Royal Ascot to attend a race meeting.
The final grounds deposed were:
… the High Court is the appropriate venue for this case to be pursued having regard to the wealth of the respondent and his reluctance to make full disclosure of his assets and means to the applicant.
… that the respondent has used every device to delay the trial of these proceedings and I believe that the bringing of this application at this late stage is merely another such device.
Law
The relevant rule is to be found in O. 70A, Rules of the Superior Courts which was set out in Rules of the Superior Courts (No. 3) of 1997 (SI No. 343 of 1997). These Rules came into operation on 1 September 1997 and they make provision for family law proceedings. R. 15 states:
(1) Where any action or proceeding is pending in the High Court which might have been commenced in the Circuit Court or the District Court any party to such action or proceeding may apply to the High Court that the action be remitted or transferred to the Circuit Court or the District Court (as the case may be) and if the High Court should, in exercise of its discretion, consider such an order to be in the interests of justice it shall remit or transfer such action or proceeding to the Circuit Court or the District Court (as the case may be) to be prosecuted before the judge assigned to such circuit or (as the case may require) the judge assigned to such district as may appear to the court suitable and convenient, upon such terms and subject to such conditions as to costs or otherwise as may appear just.
(2) An application under this rule to remit or transfer an action or proceeding may be made at any time after an appearance has been entered.
High Court
There was an ex tempore judgment of the High Court. Counsel prepared notes of the judgment, however they were unable to furnish an agreed note. The learned trial judge indicated that the note of counsel for the applicant accorded with his note. In the ex tempore judgment reference was made to issues of confidentiality, to a previous judgment of Budd J, M.K. v. P.K., High Court, January 1996; (see Shatter, A.J., Shatter’s Family Law (4th ed., Butterworths, Ireland, 1997), p. 107, note 50), to the figure of £1.8m, to the complexity of the case, to the fact that in certain circuits over 20 such cases would be listed in a day. The learned trial judge held that in the circumstances he was not satisfied that the case be remitted, that Dublin was an appropriate place for the case to be heard.
Appeal
On this appeal no issue as to confidentiality was argued. Also, it became clear that the figure of £1.8m related to the turnover of the company of the respondent — which business, we were informed, is now sold and a pension is in place.
The onus is on the person seeking to have the case remitted. Thus, the onus rests on the respondent in this case.
The court has a discretion. The judge has to balance the relevant matters raised. The test to be applied is that an order to remit should be in the interests of justice.
The High Court and Circuit Court have a concurrent jurisdiction. No issue on this aspect of the case arose.
Delay is not a bar to seeking to remit an action in view of the r.15(2) which states that an application to remit may be made at any time after an appearance has been entered. However, if an application is not made at an early date and the proceedings are joined and advanced a delay in seeking to remit may in all the circumstances of the particular case be a factor for consideration by the High Court judge in the exercise of his discretion in considering the interests of justice. In this case the delay in seeking the order to remit was not such as to weigh against the respondent. However, the issue of delay in general in the case was an important factor in considering the interests of justice.
It was stated that the issues in this action will be financial only. The respondent is the sole earner. The assets include the family home (with a rateable valuation of less than £200.00), the proceeds of the sale of the respondent’s business, and other assets abroad which are suspected by the applicant.
The applicant submitted that the waiting list of Cork Circuit Court is longer than that of the Family High Court in Dublin, the case could get an earlier date in Dublin. Further, the applicant submitted, if the matter was ultimately heard in Cork and there was an appeal, there is a waiting list of some years for High Court appeals in Cork, making the overall litigating period even longer.
There has been a general lack of co-operation by the respondent not unusual in family law cases. The matters in issue are not too complex — being largely financial. The parties take dramatically opposed views on the issue of assets and consequently there appears to be a full fight on this aspect of the case.
This is a dysfunctional family, of parents and children, living under one roof, pending the court decision on the action. In light of the circumstances time is an important aspect of this case. Also important is access to court on interim and interlocutory applications to process the case. The probability is that proceedings in Cork would take longer and whilst the financial affairs on the surface appear not too complex the intricacy arises in the applicant’s suspicion as to other assets and intention to try and prove their existence. The court has a discretion. The discretion should be exercised to remit if that be in the interests of justice. In the circumstances of the case the refusal to exercise the discretion to remit was just. Further delay should be avoided. The case should be decided as soon as is reasonably possible. Such procedure would be for the benefit of all the family. I would uphold the decision of the High Court and refuse to remit the case.
However, a cautionary note should be raised. These proceedings in the High Court may be costly. The only source of family funds is the respondent. If monies are spent on lengthy litigation it will be to the detriment of both parties and the children. Further, the fact of the expense involved may be a factor in any determination of a judge in the action on the division of the property between the parties or on the issue of costs.
BARRON J
(Barrington J concurring): I agree with the judgment of Denham J but would like to deal with the question of the need for applications for discovery in matrimonial proceedings in general and in this case in particular.
In general, where the issues are financial, there are two basic ones. First, what assets do the parties own; and, secondly, what provision should be made for the parties and their children, if any.
Discovery of documents is not the most efficient way of dealing with the first issue, while the second issue cannot be resolved until the court is satisfied that all relevant financial details have been disclosed.
Too often in matrimonial cases where these are the issues there are lengthy interlocutory proceedings whereby each party seeks discovery of documents from the other. In the course of such applications, there are as a general rule allegations that assets are being hidden by one or other party. This results in applications for further and better discovery. Too often, the financial situation of the parties is never totally clarified. In matrimonial proceedings time is really of the essence and after months, if not years, of wrangling in this fashion the party still dissatisfied as to the information supplied is nevertheless anxious to get on with the matter and too often the hearing is held before there has been total clarification of the appropriate assets.
The Rules of the Superior Courts have recently been amended to avoid for the future the worst excesses of the past and with other aspects of case management should eliminate the delays associated with that remedy. What is now required is that the party seeking discovery should indicate the documents or class of documents which are required. It is only in the event of allegations of refusal to furnish information that motions need be brought to the court.
When the failure to make proper discovery is deliberate, this is perjury. The courts have the remedy to strike out the pleading of the perjuring party. Unfortunately, this remedy is seldom granted because, in my view, too great a leniency is given to persons in default. It is one thing to indulge in a bona fide legal dispute as to whether or not any particular document is relevant and should therefore be discovered. It is a totally different thing to delay deliberately in furnishing discovery or in concealing deliberately documents which are known to be relevant. It is this latter behaviour for which there should be an adequate sanction.
In ordinary proceedings it is necessary to take the step of seeking discovery since the sanction of striking out the pleading is not available otherwise. This is not the situation in matrimonial cases. In proceedings in personam the remedy of striking out a party’s pleading should be a sufficient sanction against recalcitrant behaviour or worse. But this is not really a remedy available in proceedings in rem. The information which is being hidden is necessary for the court before it can make a proper order.
When a party to matrimonial proceedings seeks an order for discovery, two signals will have been passed at red. The first is the requirement that each party should swear an affidavit of means. If this has been done openly and candidly, there may not even be a need for the other side to see the relevant documents. However, as with documents referred to in a pleading, the other side should have the automatic right to production of the relevant documents of title.
If this would not be sufficient, then the party requiring further documents should specify the precise categories of documents which are required and the reasons for requiring them: see O. 31, r.12(4) of the Rules of the Superior Courts as provided by Rules of the Superior Courts (No. 2) (Discovery) 1999. Only if this request is denied, may the application for discovery be brought.
Where a request for specified categories of documents is not answered, it is not really a remedy to go down the path of motions for discovery, motions for further and better discovery etc., since too often it does not produce worth-while results. At the same time, there is the delay involved; and the difficulty the court has in determining where the truth lies when the whole case is not before it.
In any event, it is not documents which the other party really wants, it is facts. These are much more easily obtainable by cross-examination.
However, what tends to happen is that an order for discovery is sought and obtained. This seldom satisfies the requesting side and leads to applications for further and better discovery, which too often produces nothing further.
Whether the party against whom the orders are sought denies the existence of any further relevant documents or appears to co-operate, the absence of candour makes the procedure valueless.
That is the scenario against which the sanctions are required. It is usually the male spouse that behaves in this way. However, the sanction is equally applicable when it is the female spouse who so behaves.
In the situation at present by the time the matter comes to a hearing, the judge is unlikely to have an easy task to unravel the causes of the excessive procedures and where the causes lie. The hearing itself is likely to produce ill-feeling and it is not improbable that the same ill-feeling would be attributed to the difficulties in obtaining the disclosures.
In my view, two matters are particularly important in relation to matrimonial disputes:
(1) That the hearing should be held as soon as possible and not delayed by interminable interlocutory applications; and
(2) that the final decision should be based upon a full disclosure of all the relevant facts.
In my view, if one party believes that the other party is deliberately delaying or refusing to disclose information, there is no real purpose to be obtained in pursuing the matter by way of interlocutory motions. The party in default should be informed by letter that it is not accepted that full disclosure of assets has been made; and that, if it is not made before the hearing and in time to enable the other party to prepare his or her case properly, an application will be made at the hearing for the full consideration of the issues to be adjourned until full disclosure has been made and can be considered. It should also be indicated that if the party alleged to be in default fails to give evidence, an applica *424 tion will also be made that he or she be produced for cross-examination. Usually, of course, cross-examination will normally be assured by a notice to cross-examine, but here again the sanction of striking out the affidavit for non-attendance may be inadequate.
This should enable the matter to be resolved by correspondence. If it is not, then resolution of the dispute should take place in the course of the hearing. If this resolution affects adversely either party, then the matter should be adjourned so the prejudice can be eliminated.
Cost wasted by unnecessary correspondence or because of the need for further proceedings whether by way of a further hearing or otherwise should be awarded against the party responsible.
Proceeding in this way would have a number of benefits:
(1) The issue as to whether all assets had been disclosed could be decided in the course of the hearing;
(2) The hearing would not be delayed;
(3) The court at the hearing would be in a better position than on a motion to determine whether there had been deliberate non-disclosure;
(4) The party alleged to be in default should be available for cross-examination;
(5) The parties seeking the relief would know that if the court had not been given the full information, the hearing would be adjourned until it was made available or, if made available at the hearing, until it could be considered.
(6) It would prevent applications for discovery being brought unnecessarily, since to bring any such applications would suggest lack of bona fides. It should also prevent unreasonable requests for information.
(7) In effect, the party allegedly in default would be given a firm date by which he or she would have to comply or risk a sanction. The main sanction would relate to costs thrown away, because, if by the date of the hearing there had not been complete disclosure in time for the other side to prepare its case in response, making it appropriate for the court to adjourn the matter, any additional costs would be imposed upon the party in default.
The real sanction as to costs is where the liability to pay the costs eats into the benefits which the party would otherwise have obtained from the court. Generally in cases where the sole issue is how the finances are to be divided both as to capital and income the costs wasted by recalcitrant behaviour should be the responsibility of the party responsible out of his or her share. The money spent on such costs should remain notionally available when the court comes to deal with the financial provisions. The court should make its order on the basis that such money still exists for division between the parties, and the share of the party responsible for the costs unnecessarily incurred shall be deemed to include such sum. In some cases there may be a smaller income. The same notional division can be applied.
*425
Solicitors should advise their clients as to their obligations in relation to making full disclosure and, if necessary, the court should not be slow to make a solicitor personally liable for costs thrown away by unnecessary and unreasonable recalcitrant behaviour apparently on behalf of their clients. This applies equally to the solicitor whose client is seeking the information as to the solicitor whose client is refusing it.
Accordingly, I take the view that instead of bringing a motion for discovery when such a motion would otherwise be appropriate, the party should instead press on with the hearing and at the same time warn the other party of the possible consequences of the failure to make full disclosure in time.
Obviously, neither party can be prevented from making interlocutory applications. However, if they do and the trial judge whether on the application or the ultimate hearing regards such application as unnecessary, unreasonable or worse, the suggested sanction can be applied to the cost involved.
Once it is appreciated:
(1) that the party seeking information must be reasonable in what is being sought from the other side; and
(2) that failure to make full disclosure will have adverse financial consequences, pressing on to a hearing should have a better chance than applications for discovery to obtain the required information and should ultimately provide significant savings in costs.
To revert to the facts of the present case the main complaint by the wife against her husband is that he has failed to furnish her with proper information in relation to the sale of his business and in relation to the purchase of the annuity presumably with the proceeds of sale. In addition she also asserts that there are other assets. The process which I deplore has already completed its first stage and the wife is no further on in obtaining the information she requires. It has been indicated on her behalf that it will be necessary to apply for further and better discovery and no doubt this will not be the last application in the discovery procedure.
In my view, it would be far more satisfactory for the wife to have the matter set down for hearing and instead of making such applications to notify the husband by letter that unless full disclosure has been made in the sense indicated in this judgment before the hearing in time to enable her to prepare her case properly an application will be made for an adjournment to enable full disclosure to be obtained and considered. The letter should also indicate that in such circumstances if he does not give evidence so as to avoid cross-examination, an order will be sought that he attend for cross-examination.
If such or a similar approach had been adopted then this Court might have taken the view that the matter should have been remitted to the Cork Circuit Court for hearing. Certainly, the husband can only blame his own failure to make these disclosures up to now for the matter remaining in this Court.
*426
The procedure which I suggest is dependent for its efficacy mainly upon the sanction proposed being used. While it does not require any alterations to existing rules of court, if the appropriate rules making authority saw fit to sanction such proposed procedure by an alteration in the rules, it is likely to operate more effectively.
Parkborough Ltd v Kelly [2008] I.E.H.C. 401
Neutral Citation Number: [2008] IEHC 401
THE HIGH COURT
2006 2233 P
BETWEEN
PARKBOROUGH LIMITED T/A THE MORTGAGE ADVICE SHOP
PLAINTIFF
AND
MARIA KELLY
AND
REA MORTGAGE SERVICES LIMITED T/A REA MORTGAGE CHOICE
DEFENDANTS
Judgment of Miss Justice Laffoy delivered on the 26th day of November, 2008
The application before the Court is on foot of a notice of motion in which the plaintiff seeks the following reliefs:-
(1) an order that it was reasonable that the plaintiff’s action be brought in the High Court notwithstanding the fact that ascertainable damages fall within the jurisdiction of the Circuit Court;
(2) such further or consequential order in relation to costs as may be appropriate; and
(3) if necessary and without prejudice to the reliefs sought above, an order remitting the matter to the Circuit Court.
The unusual nature of the application is revealed when the sequence of events which preceded it is outlined.
When these proceedings commenced the plaintiff and the second defendant were competitors for mortgage broking business in Waterford. The first defendant was an employee of the plaintiff for a period during 2003 and from July 2004 to 22nd March, 2006 when she handed in her notice because she had been “headhunted” by the second defendant.
Prior to the initiation of these proceedings the plaintiff’s solicitors by letters dated the 4th May, 2006 wrote to both defendants alleging wrongdoing on the part of both in exploiting the plaintiff’s client base and seeking undertakings to:-
(1) return all of the plaintiff’s property (whether in hard copy or computer format) taken by the first defendant on or since her departure from the plaintiff, including the list of persons canvassed, solicited or approached for the purposes of obtaining mortgages for them,
(2) furnish the plaintiff with a list of all information and/or documentation concerning the plaintiff’s business, finances, dealings, transactions or other affairs disclosed and/or divulged since or on the first defendant’s departure from the plaintiff,
(3) cease and desist from utilising or exploiting in any manner whatsoever the plaintiff’s confidential information,
(4) observe all common law duties of confidentiality to the plaintiff, and
(5) furnish a list of all the plaintiff’s customers whom the defendants or their servants or agents or anyone acting in concert with them had contacted with a view to providing mortgage brokerage services and provide the plaintiff with copies of all such correspondence.
By letter dated 9th May, 2006, Messrs. O’Mara Geraghty McCourt (the defendants’ solicitors) responded on behalf of the defendants denying the alleged wrongdoing and stating that the question of giving undertakings did not arise.
The proceedings were commenced by plenary summons which issued on 24th May, 2006. The primary relief claimed by the plaintiff was injunctive relief framed in such a way as to give effect to the substance of the undertakings which had been sought. Damages were also claimed. In the statement of claim, which was delivered on 25th July, 2006, special damages were itemised at €5,125. A defence was delivered on behalf of both defendants on 23rd January, 2006 following a motion for judgment in default. The substance of the defence amounted to a traverse of all of the plaintiff’s allegations of wrongdoing. Discovery was exchanged between the parties.
Subsequently, by letter dated 30th April, 2008, the defendants’ solicitors wrote to the plaintiff’s solicitors giving an undertaking on behalf of the defendants and each of them. The undertaking was expressed to be given “without any admission of liability or wrongdoing whatsoever”. The terms of the undertaking mirrored four of the paragraphs in the endorsement of claim on the plenary summons in which the plaintiff had sought injunctive relief. In relation to the fifth paragraph, which sought a mandatory order requiring the defendants to yield up records in relation to the plaintiff’s business, it was stated that the materials sought had already been dealt with by way of discovery. The defendants’ solicitors emphasised that, notwithstanding the undertakings given, the defendants reserved the right to deal with, trade or enter into business relations with any persons or corporation who approached them. The penultimate paragraph of the letter was in the following terms:-
“It is our view that the proceedings are now moot in the light of the undertaking proffered above. Our clients do not believe that the plaintiff has suffered damages at all. The damages, which are denied by the defendants, never warranted proceedings being instituted in the High Court. If warranted at all, which is not accepted, proceedings should have been instituted in the Circuit Court. If necessary we shall pursue our costs on this basis”.
That letter triggered this application. In the affidavit grounding the application, the deponent, the managing director of the plaintiff, averred that as a result of the defendants’ recent agreement to provide the undertakings, the plaintiff’s ascertainable damages fell below the jurisdiction of the High Court. In the replying affidavit filed on behalf of both defendants, it was asserted by the deponent, a director of the second defendant, that the plaintiff never had a basis for damages at all, let alone damages within the High Court jurisdiction and that no evidence at all of any damage had been laid out by the plaintiff. The defendants sought the remittal of the matter to the Circuit Court but on the basis that the defendants be awarded the cost of the High Court proceedings to date or, alternatively, that the issue of costs of the proceedings in their entirety be left to the Circuit Court Judge following remittal.
Before the plaintiff’s application came on for hearing, on 15th October, 2008, the second defendant went into voluntary liquidation. As a result, the defendants’ solicitors brought a motion seeking liberty to come off record in the proceedings. In the affidavit grounding that application it was averred that the defendants’ solicitors had agreed to act for both defendants on the basis that the second defendant would pay the costs for both defendants. By order made on 28th October, 2008, the defendants’ solicitors were allowed to come off record. The plaintiff’s application was adjourned to enable both defendants to consider their position. Subsequently the Court was informed on behalf of Mr. Ken Fennell, the liquidator of the second defendant, that he did not intend taking part in the application. On the hearing of the application the first defendant was represented by counsel.
At the hearing, the plaintiff persisted in the contention that an order should be made by the Court at this juncture awarding the costs of the proceedings to date as High Court costs to the plaintiff against the defendants, if the Court was satisfied that it was reasonable for the plaintiff to have taken the steps it had taken in prosecuting the proceedings in this Court to date.
The jurisdiction of this Court to remit or transfer an action is to be found in s. 25 of the Courts of Justice Act 1924. That section provides, inter alia, that when any action shall be pending in this Court which might have been commenced in the Circuit Court, any party to such action may apply to this Court that the action be remitted or transferred to the Circuit Court. If the Court considers that the action is fit to be prosecuted in the High Court, it may retain such action, or, if it does not consider that the action is fit to be prosecuted in the High Court, it may remit or transfer it to the Circuit Court. The remittal or transfer is “subject to such conditions as to costs or otherwise as may appear to be just”. Section 25 was amended by section 11(2) of the Courts of Justice Act 1936 which provided:-
“Notwithstanding anything contained in section 25 of the Principal Act the following provisions shall have effect in relation to the remittal or transfer of actions under that section, that is to say:—
(a) an action shall not be remitted or transferred under the said section if the High Court is satisfied that, having regard to all the circumstances, and notwithstanding that such action could have been commenced in the Circuit Court, it was reasonable that such action should have been commenced in the High Court”.
Order 49, Rule 7 of the Rules of the Superior Courts 1986 in essence repeats the provisions of section 25 which I have outlined above, including that the remittal or transfer shall be “subject so such conditions as to costs or otherwise as may appear just”. The fundamental rule as to who is to bear the cost of proceedings in this Court is Order 99, Rule 1(4), which provides that the costs of every issue of fact or law raised upon a claim or counter-claim shall, unless otherwise ordered, follow the event.
It would appear that throughout the history of the State, the statutory provisions in relation to costs on remittal have given rise to very little contention. At any rate, the only authority to which the Court has been referred is a decision of the High Court in McEvoy v. Fitzpatrick [1931] I.R. 212. In that case, the plaintiff had brought an action in the High Court, which was within the jurisdiction of the Circuit Court – for £25 for goods sold and delivered. The defendant applied to have the matter transferred to the Circuit Court. The application was acceded to. The order of the High Court made by Hanna J. provided “that the defendant’s costs of the proceedings in this Court, including the costs of this hearing, be costs in the action”. The plaintiff was successful in the Circuit Court and got a decree for the amount claimed. The costs were referred to the County Registrar, who taxed the costs incurred prior to the action being transferred to the Circuit Court (i.e. the costs in the High Court) at £17 18s 6d. On the case coming again to the Circuit Court, the Circuit Court Judge awarded that amount as costs. The defendant appealed from so much of the decree as related to costs. The head note in the report, in my view, summarises the effect of the judgments in the High Court (Meredith J. and Johnston J.) accurately in stating that it was held that, having regard to the jurisdiction conferred by section 25 as to costs when transferring an action, Hanna J. must be regarded as having fully exercised the powers given him by the section and, as he did not allow the plaintiff any costs in the High Court, the Circuit Court Judge had no power to allow the plaintiff any such costs, only having jurisdiction to deal with the costs incurred in his own Court. In other words, while recognising that section 25 gives full power to the High Court when transferring an action to deal with the question of costs, as a matter of interpretation of the order in that case, Hanna J. had only addressed the eventuality that the defendant would succeed and had not addressed the eventuality which, in fact, happened, that the plaintiff succeeded.
It is true, as is pointed out in Delany and McGrath on Civil Procedure in the Superior Courts, 2nd Ed. at para. 8.12, that the decision is McEvoy v. Fitzpatrick lays down that the question of the costs accrued in the High Court should be dealt with in the High Court and that the Court has a wide discretion in that regard. In a foot note it is stated:-
“The practice is that if the costs of the proceedings in the High Court are reserved, a successful party who is awarded reserved costs will be entitled to the costs of the proceedings in the High Court up to the date of remittal at the High Court scale.”
What was urged by counsel for the plaintiff was that the statement by Johnston J. in McEvoy v. Fitzpatrick (at p. 214) that the effect of section 25 is to give full power to the High Court, when transferring an action, to deal with the question of costs “in whatever manner it thinks right” was authority for the proposition that in this case, at this juncture, the Court is entitled to, and should, make an order awarding the full costs of the High Court proceedings to date to the plaintiff against the defendants. In my view, that proposition is not correct, no more than the proposition advanced in the defendants’ replying affidavit that the defendants should be awarded costs at this juncture is correct. The plaintiff initiated a plenary action in this Court. The defendants defended it. The outcome of a defended plenary action is determined by a plenary hearing on oral evidence. There has been no such hearing in this case. If the order to remit is acceded to, and I have already indicated to the parties that I intend acceding to it, the plenary hearing will take place in the Circuit Court. The outcome will identify “the event” by reference to which the fundamental rule in relation to where liability for costs should lie will be determined, although, of course, it will be at the discretion of the Circuit Court Judge whether the fundamental rule is applied. Until then, the Court has no jurisdiction to make an order as to who is to be liable for the costs. In this case, the contest between the parties is still alive. While the defendants proffered the undertakings sought, they did so without admission of liability and in the context that they were contesting allegations of wrongdoing on their part.
It was submitted on behalf of the first defendant that the Court has no jurisdiction to declare that it was reasonable that this action be brought in this Court. It was pointed out that under s. 11(2)(a) of the Act of 1936 the question of reasonableness only comes into play in the context of an action not being remitted or transferred. I do not accept that that argument is correct. The breath of the discretion which is given to the Court under s. 25 must encompass consideration of whether the plaintiff acted reasonably in initiating the proceedings in the High Court or not. If the Judge of the High Court, when dealing with the application to remit, could conclude that it was not reasonable to commence the proceedings in the High Court, no doubt it would be open to him or her to provide for displacing the normal practice by ordering that the reserved costs should be at the lower Court scale, if the plaintiff was ultimately awarded costs. In this case, I propose following the normal practice. While I do not propose to make a formal declaration to this effect, I am of the view that it was reasonable for the plaintiff to initiate these proceedings in the High Court because the primary relief sought was injunctive relief and the quantification of special damages had to await discovery. I reject the argument made on behalf of the first defendant that the fact that the plaintiff did not seek interlocutory injunctive relief is relevant to the costs issue which has to be addressed at this juncture.
There will be an order remitting the proceedings to the Dublin Circuit Court. The order will follow the usual template and provide that “the question of the costs of the proceedings in this Court on both sides including the costs of this hearing be reserved”.
Tommy Hilfiger Europe v McGarry [2008] I.E.S.C. 36; [2009] 2 I.L.R.M. 161
Judgment of Mr Justice Finnegan delivered on the 29th day of May 2008
“Tommy Hilfiger” is a well-known brand of casual clothing. The first named respondent is the owner of a number of registered Trade Marks in the State in respect of a device or mark associated with the brand being in the form of a flag in the colours red, white and blue and also of the words “Tommy Hilfiger” “Tommy Jeans” and “Tommy Girl”. In addition it is the holder of a number of Community Trade Marks.
The second named respondent holds the exclusive licence for Europe for the promotion, distribution, sale and supply of garments, clothing and clothing accessories manufactured by or with the licence of the first named respondent and promotes, sells and supplies Tommy Hilfiger products in the Irish market. The first named appellant is involved in the supply by wholesale of clothing and clothing accessories and has been so involved for many years acting either personally or through the vehicle of limited companies: the second and third named appellants are two of such companies. In the early part of 1999 the respondents became aware of the sale in the State by the appellants of garments in circumstances where they believed that their Trade Marks were being infringed and which amounted to passing-off. They issued a plenary summons on the 3rd March 1999 having on the 1st March 1999 obtained ex parte an order pursuant to the Trade Marks Act 1996 section 20 and certain injunctive reliefs in relation to passing off. On the 25th March 1999 they obtained interlocutory injunctive relief restraining the first named appellant his servants or agents until the hearing of the action from infringing the respondents’ Trade Marks and from selling or supplying garments identified in the second schedule to the order but granting liberty to the first named appellant to sell and supply garments identified in the first schedule to the order on terms that an account be kept of such sale and supply. The garments in Schedule 2 clearly infringed the respondents’ Trade Marks. The garments in Schedule 1 less clearly so but bore a label “Tommy Sport” or the word “Tommy”. Shortly after the institution of the proceedings the first named appellant applied for the registration of a Trade Mark “Tommy Sport”.
At the hearing in the High Court which took place over five days the appellants conceded infringement of the respondents’ Trade Marks in relation to the goods in schedule 2. In respect of these goods the learned trial judge assessed damages for infringement and for passing off at €5,000. In relation to the goods in schedule 1 the learned trial judge had regard to the pending application for registration of the Trade Mark Tommy Sport. She found that the use of the words “Tommy” and “Tommy Sport” were sufficient to constitute passing off. However as the first named appellant had applied to register the Trade Mark “Tommy Sport” if such registration should be granted the appellants could not be accused of passing off after the date of his application: if on the other hand should the respondents objection to registration be upheld there would then have been passing off. Accordingly the learned trial judge ordered that should the first named appellant not succeed in having the Trade Mark registered the appellants would be liable in damages and she measured damages post 5th March 1999 at €10,000. On the 13th March 2006 the Controller of Patents refused the first named appellant’s application to register the Trade Mark Tommy Sports. Accordingly the amount of damages awarded to the respondents was €15,000 being €5,000 in respect of infringement and passing off up the 5th March 1999 and €10,000 in respect of passing off by use of the name Tommy Sport. The learned trial judge granted to the respondents the injunctive relief which they sought and other ancillary reliefs together with the costs of the proceedings to include reserved costs.
The appeal and cross-appeal
The appellants appeal so much of the judgment and order of the High Court as awarded the costs of the proceedings and reserved costs to the respondent. The respondents’ cross-appeal seeking to set aside the award of damages and the substitution therefor of an award of appropriate damages or in the alternative the taking of an account in respect of the profits earned by the appellants.
The appeal
The Courts Act 1981 section 17 as substituted by the Courts Act 1991 section 14 imposed a limitation on the costs recoverable by a plaintiff where the action or application is not brought in the lowest court having jurisdiction to make the order granting relief. Subsection (3) provides as follows:-
“In any action commenced and determined in the High Court, being an action where the amount of the damages recovered by the plaintiff exceeds £5,000 but does not exceed £15,000 the plaintiff shall not be entitled to recover more costs than whichever of the following amounts is the lesser, that is to say, the amount of such damages or the amount of costs which he would have been entitled to recover if the action had been commenced and determined in the Circuit Court.”
The damages awarded to the respondent did not exceed £15,000. Accordingly it is submitted by the appellants that subsection (3) applies and that the consequences provided therein should follow. However subsection (3) must be construed in the light of section 17 as a whole. Subsection (1) makes the policy of the section clear – proceedings should be commenced in the lowest court having jurisdiction to grant the relief sought: O’Connor v Bus Átha Cliath [2003] 4 IR 459. Subsection (3) only applies where the Circuit Court has jurisdiction to grant the relief sought.
The Circuit Court is a creation of statute and enjoys only that jurisdiction conferred upon it by statute. The court was established by the Courts (Supplemental Provisions) Act 1961 and its jurisdiction is set out in the Third and Fourth Schedules thereto. For present purposes the Fourth Schedule is irrelevant. The Third Schedule at reference no 6 confers upon the Circuit Court jurisdiction in actions founded on tort subject to a limitation on the amount of damages which may be awarded. The respondents’ action founded on passing off is an action founded in tort and accordingly the Circuit Court has jurisdiction.
The respondents claim in relation to infringement of its Trade Mark requires to be considered and in this respect the historical development of protection of Trade Marks must be considered. While Trade Marks existed from earliest times they were not as Trade Marks protected by the courts. Thus in 1742 an injunction to restrain a trader from imitating another’s Mark was refused: Blanchard v Hill [1742] 2 A.T. K. 484. In 1789 it was held that fraudulent misrepresentation causing loss to a trader gave a cause of action upon the case similar to an action for deceit: Pasley v Freeman [1789] 3 T.E.R.M Rep. 51. Diplock L.J. in General Electric Company v General Electric Company Limited [1972] 2 All E.R. 507 at 518-520 reviewed the history of the development of relief for infringement of Trade Marks and described the interest of a user of a Trade Mark at common law as a proprietary interest: however the basis of the action at common law had its origin in the law of deceit similar to misrepresentation or passing off. There was a difference between the common law courts and the courts of equity with respect to infringement. The common law required an intention to deceive while equity did not. In Singer Manufacturing Company v Wilson [1876] 2 Ch. D. 434 at 454 Mellish L.J. said:-
“To give a right of action at common law the thing must have been done fraudulently, it must have been intended to deceive. But the Courts of Equity said, if you purchase goods with another man’s Trade Mark upon them, although you may have done it perfectly honestly not knowing that it was another man’s Trade Mark, …yet, nevertheless, you cannot be allowed to put the goods into the market with that Trade Mark upon them because the effect of it will be that the goods will pass from hand to hand as being goods manufactured by the person whose Trade Mark it is; and therefore you shall be restrained from doing that.”
The right of a user of a Trade Mark to an injunction at equity was established in Millington v Fox [1838] 3 My. & Cr. 338 where it was decided that it was not necessary at equity to establish any intention to deceive on the part of an infringer. Prior to Lord Cairn’s Act (Chancery Amendment Act 1858) Courts of Equity did not in general award damages and accordingly if seeking an injunction to restrain infringement the plaintiff brought his action in the Court of Chancery and if seeking damages at common law: very often two actions would be brought. After Lord Cairn’s Act the Court of Chancery could make an award of damages in addition to or in substitution for an injunction. After the Judicature (Ireland) Act 1877 actions in relation to infringement were taken in the Chancery Division. The Judicature Act in section 28(11) provided that where there was a conflict or variance between the rules of equity and the rules of the common law with reference to the same matter the rules of equity should prevail. Equity exercised its jurisdiction in cases of infringement upon the basis that the user of the Trade Mark had a proprietary interest not in the Trade Mark as such but in the goodwill of his business of which the Trade Mark formed part and that the court would exercise its jurisdiction to prevent by injunction infringement of that proprietary interest. It follows from this that an action for infringement of a Trade Mark after the Judicature (Ireland) Act 1877 is not a tort but an action based on interference with a proprietary interest: General Electric Company v General Electric Company Limited. Since the Judicature Act in order to recover damages it is unnecessary that the infringement should have occurred fraudulently.
There is a long legislative history in relation to Trade Marks commencing with the Merchandise Marks Act 1862 repealed and replaced by the Merchandise Marks Act 1887. These Acts, however, did not give a right of action to a trader damaged by a breach of any of its provisions. The Trade Marks Registration Act 1875 provided for registration of Trade Marks and provided for the evidential effect of registration and also provided that no proceedings for infringement of a Trade Mark could be brought unless and until the Mark had been registered. Registration conferred on the registered owner the exclusive right to the use of a Registered Trade Mark but the remedies remained those provided by the courts. Thus the basis of a right of action for infringement remained the same as in the Court of Chancery prior to the Judicature Act. The basis of the right of action now appears from the Trade Marks Act 1996. The Trade Marks Act 1996 is not an amending Act but a code and under the same a registered Trade Mark is a property right. Section 7 of that Act provides as follows:-
“(i) A registered Trade Mark is a property right obtained by the registration of the Trade Mark under this Act and a proprietor of a registered Trade Mark shall have the rights and remedies provided by this Act.”
The remedies for infringement are dealt with in section 18 of the Act: the remedies remain those which were available at law and having regard to the terms of section 7 the action for those remedies is based on a property right. The Courts (Supplemental Provisions) Act 1961, third schedule, reference 28 has reference to property rights and gives the Circuit Court jurisdiction in the following terms:-
“Proceedings in relation to property not hereinbefore specified in this schedule and which immediately before the commencement of Part I of the Courts of Justice Act 1924 (No. 10) of 1924, were assigned to the Chancery Division of the former High Court of Justice in Southern Ireland, other than proceedings in relation to companies.”
The third column of the schedule limits that jurisdiction in relation to personalty to personalty having a value of £2,000. Whether the Circuit Court has jurisdiction in any particular case is a matter of fact to be established in evidence. There is no evidence that the value of the property here, the registered Trade Mark, does not exceed £2,000 and indeed it is most unlikely that there could be. On this basis the Circuit Court had no jurisdiction under reference 28 in the third schedule to entertain the respondents claim and section 17 of the Courts Act 1981 has no application.
The respondent further argued that the scheme of the Trade Marks Act 1996 excludes the jurisdiction of the Circuit Court. It is unnecessary to consider this submission in order to determine the issues which arise in this case and I would leave this issue over for consideration in a case where it will be determinative of the issues between the parties. The issue involves detailed consideration of a number of provisions of the Judicature (Ireland) Act 1877 and the Courts of Justice Act 1924. A similar issue arose in Bowe v Harte [1905] 1 K.B. 592 in relation to the Patents, Designs and Trade Marks Act 1883 which similarly defined “the court” as the High Court and, while the issue was not decided, Vaughan Williams L.J. remarked that the Act was not conclusive in excluding jurisdiction in the County Court and he decided the matter on another basis. I would dismiss the appeal on the first ground relied upon.
The second ground of appeal relates to reserved costs awarded to the respondents and arises in the following circumstances. The respondent applied for an order under section 20 of the Trade Marks Act 1996. The appellants contend that the respondents’ grounding affidavit for the same conflicts with the oral evidence given at the hearing and accordingly there was material non-disclosure on the application. Further the respondent was aware of the appellants’ identity and a cease and desist letter would have been adequate. In these circumstances it is submitted that the costs reserved in respect of this application ought not to have been awarded to the respondents.
Insofar as differences exist between the grounding affidavit and the oral evidence at the hearing as identified by the appellant I am satisfied that the same were not material. There was no material non disclosure. The value of an application under section 20 would be lost if a plaintiff in every case was required to give advance notice of its intention to apply or before proceeding under section 20 to serve a cease and desist letter. The learned trial judge acted within her discretion in awarding the reserved costs to the respondents. Accordingly I would dismiss the appeal on this ground also.
The learned trial judge rejected the appellants second ground of appeal on the basis that the correct course to pursue was to appeal the order of the 1st March 1999 and that it was not appropriate to raise the matter on the hearing of the action. I would note that a contrary view was taken in Dormeuil Freres v Nicolian International (Textiles) Limited [1988] 3 All E.R. 197. In that case it was held that the appropriate time for the court to hear and determine an application by the defendant to discharge an Anton Piller Order on the ground that it was obtained as a result of material non-disclosure by the plaintiff is at the trial rather than at an interlocutory stage of the proceedings as, the order having been executed, the only relevance of the non-disclosure is in relation to costs and the undertaking as to damages.
The cross appeal
The respondent in its statement of claim listed sixteen separate reliefs. So far as damages are concerned damages were sought for the infringement of the respondents Trade Marks, for infringement of copyright, for passing off and for unfair competition. Copyright and unfair competition were not pursued at the hearing. In the alternative an account was sought in the following terms:-
“In the alternative and at the option of the plaintiffs an account of the defendants’ profits”.
Having carefully considered the transcript of the five days of the hearing I am satisfied that that option was never exercised. The learned trial judge was not asked to direct an account and it is clear from the entire tenor of the case that what the respondents were seeking was an assessment of damages on the basis of the evidence which they presented through their own witnesses and elicited from the appellants’ witnesses. This being so I am satisfied that on this appeal the respondents being dissatisfied with the quantum of damages awarded should not be permitted now to seek an account.
It is, however, quite clear that in her judgment the learned trial judge was inaccurate in her recital of the evidence available to her. In the course of her judgment she found as follows:-
“Before the Futura Fair the defendants sold 2,500 garments which were a mixture of Tommy Hilfiger, Tommy Sports and others. After the Fair and after an interval of one to one and a half years Mr McGarry commenced manufacturing under the label Tommy Sports. He sold 1,400/1,500 garments being a mixture of branded goods including Tommy Sports.
The profit in Tommy Sports Clothing Limited was:
To November ’01 gross profit €400,000 and net profit 30%
To November ’02 gross profit €700,000 and net profit 30%.”
The parties are agreed that the correct figures on the evidence are as follows:-
1. Instead of 1,400/1,500 – 20,000.
2. For each of the years ’01 and ’02 the figures for gross profit are in fact the figures for turnover and the figures for net profit are in fact those for gross profit.
Before considering what effect, if any, the correction of these errors may have I propose considering the basis upon which damages should be awarded for infringement of a registered Trade Mark and passing off. The position is the same in respect of each of the causes of action. The object of an award of damages is to give to the plaintiff compensation for the damage or loss which he has suffered. Damage is divisible into pecuniary and non-pecuniary loss. The former comprises all financial loss such as loss of business profits or expenses incurred in a case such as the present. The latter in a case such as the present would include damage to reputation or goodwill and can be described as monetary compensation or reparation and takes the form of general as opposed to special damages as they do not admit of mathematical calculation. The assessment of damages for infringement and passing off follow the same lines and both claims are frequently taken together with a single award being made: Dormeuil Freres S.A. v Feraglow Limited [1990] R.P.C. 449. The plaintiff need not show damage and the law presumes that any interference with goodwill by infringement or passing off will result in damage. However unlike other causes of action which are actionable per se the plaintiff is not restricted to purely nominal damages. In Irvine & Ors v Talksport Limited [2002] E.W.H.C. 539 the racing driver Eddie Irvine was awarded £2,000 damages. See also Alan Clark v Associated Newspapers [1998] R.P.C. 261. In Antiebolaget Manus v Fullwood [1954] 71 R.P.C. 243 the defendant had a substantial turnover in infringing goods in the period 1947 to 1950 the total exceeding £1.5 million. The plaintiff sought general damages based on the profits which the defendant had made on the basis of 10% of its turnover. The award for damages was £10,000 for infringement of Trade Marks and passing off. In this jurisdiction in Falcon Travel Limited v Owners Abroad Group [1991] I.R. 175, a passing off action based exclusively on presumed damage, the court refused an injunction and proposed to award damages in lieu and put the matter back for further evidence on the issue of damages. The court indicated that the award envisaged was a sum which would enable the plaintiff to advertise and re-establish its identity with the public and the trade.
As on the issue of damages the respondent relies on a number of copyright cases I should say now that I do not consider these relevant as the basic measure of damages in such cases is the loss of profits caused by the diversion of customers to the defendant. There was no evidence of diversion given in this case and indeed the evidence was that no damage had been sustained by the respondents: in the absence of evidence it will not be assumed that the sales achieved by the defendant would necessarily have been obtained by the plaintiff: Ledger Sons & Co. v J. Munro & Son Limited [1916] 33 R.P.C. 53 and P.C. Products Limited v Dalton [1957] R.P.C. 199.
Bearing the foregoing in mind I turn to the evidence on the issue of damages at the hearing. Mr Shah gave evidence for the respondents. In his direct evidence no mention was made as to specific damage. On becoming aware of the appellants conduct he did not apprehend any loss of business. He was unable to say if any one had purchased the appellants garments under a misapprehension. His main concern was that it might be thought that there had been a change in the respondents’ policy of dealing with a small number of high end retailers only.
Mr Thomas Hanley gave evidence. He is the proprietor of two retail outlets in Galway in one of which he sold Tommy Hilfiger products: the other outlet dealt at the lower end of the market. The buyer in the latter outlet had purchased some of the appellants’ products. He had understood that his higher end outlet and Brown Thomas would be the only two outlets supplied with Tommy Hilfiger products in Galway and he was concerned that this arrangement was being breached. He thought “Tommy Sport” was a “Tommy Hilfiger” product and the issue he had was with Tommy Hilfiger.
Finally Mr Sean Bagnall gave evidence for the respondent. He is a chartered accountant and prepared a report which was handed into court. The report was not made available on the appeal. For the purposes of the report he had two sets of accounts for Lifejacket Limited covering the period March 1996 to January 1999 when it ceased trading. This company did not trade in the infringing goods. In relation to Goodstock Limited he had three sets of accounts covering the period from December 1998 to December 2002. It ceased trading in 2002 with an accumulated deficit as of the end of 2002 of €144,922. Some part of its trading related to the infringing goods. In comparing the accounts of these two companies there was a very substantial increase in the gross profit margin in Goodstock Limited over Lifejacket Limited and he attributed this to Goodstock Limited trading in branded products such as those of Tommy Hilfiger. The gross profit margin for Lifejacket Limited varied throughout its trading from 12.62% to 15.14% whereas in Goodstock Limited the gross profit was approximately twice this. The turnover for the year ended 31st December 2002 was negligible at just €25,000. Throughout its trading history overhead always exceeded the gross profit earned. In relation to Tommy Sports Clothing Limited he had seen only the balance sheet for the year 2002 and it had traded profitably in that year with a small improvement in the reserves. Mr Bagnall was cross-examined. He used branded product to distinguish products such as the respondents from generic product. In relation to Goodstock Limited he accepted that there could be another reason for the difference in its gross profit margin and that in Lifejacket Limited. In a brief re-examination he said that if the entire benefit of the increase in gross profit margin in Goodstock Limited were attributed to the sale of infringing goods the increase in gross profit attributable to the appellants wrongful conduct was €83,520.
For the appellants Mr Derek McGarry, the first named appellant, and Mr Kilbride a chartered accountant gave evidence. The direct evidence of Mr McGarry was as follows. Lifejacket Limited was a wholesaler and sold a number of brands to the retail trade of which he named five. Following the order of the 25th March 1999 he sold a small number of the items listed in Schedule 1 of the order and did not trade in the items in Schedule 2 of the order. He had, however, marketed other goods under the name Tommy Sports. There followed a lengthy and unstructured cross-examination. In doing the best I can I have abstracted the following as the evidence relevant on the issue of damages. Goodstock Limited started trading in late January or early February 1999 and not November 1998. He did not agree that a better gross profit margin was available in respect of branded goods as generic goods could be purchased cheaper and sold at a higher gross profit margin. After the incorporation of Tommy Sports Clothing Limited he acquired product from an English wholesaler bearing that label. In November 2001 arranged to have product manufactured bearing that label. He accepted that Goodstock Limited had sold some 2,500 garments coming within Schedule 1 and Schedule 2 of the order of 28th March 1999 but this figure also included other garments bearing the Tommy Sport label. At that time Goodstock Limited was selling some eight ranges of branded goods and it was difficult to distinguish from sales invoices which goods were involved.
While not given in evidence in reply to particulars the appellants admitted that in the period after February 1999 some 10,000 infringing garments were sold. In re-examination Mr McGarry said that none of these garments bore the Tommy Hilfiger registered Trade Marks.
Mr Kilbride gave evidence that he is a chartered accountant and acted as accountant to Lifejacket Limited, Woodstock Limited and Tommy Sports Clothing Limited. Following the institution of these proceedings 1,045 infringing garments were handed over to the respondents solicitors. Goodstock Limited started to trade around January 1999 in a whole range of products. A very small amount of goods was sold in Goodstock Limited subsequent to March 1999. The company ceased trading with substantial losses and substantial debts the latter being taken over by Mr McGarry in a personal capacity. The witness was cross-examined. Tommy Sports Clothing Limited commenced trading in November 2001. The accounts for 2002 had not yet been prepared and were not due until September 2003 for submission to the Company’s Registration Office. The company was trading quite well. In round figures the turnover of the company for the year 2002 was between €300,000 and €400,000, for the year 2003 €700,000 and its gross margin was between 25% and 30% which would be normal for that type of business. His understanding was that Lifejacket Limited traded in different types of branded products from Goodstock Limited its products being aimed at the lower end of the market.
From the foregoing it will appear that the information available to the learned trial judge was as follows:-
1. Prior to March 1999 Goodstock Limited sold approximately 2,500 infringing garments. The gross profit of Goodstock Limited on its overall trade was 30%. Its overall net results were a loss.
2. After March 1999 the appellants sold 10,000 garments which by reason of their get-up, in the event which happened that the first named appellant was unsuccessful in registering the Trade Mark Tommy Sport, constituted passing off.
3. For the year 1992 the turnover of Tommy Sport Clothing Limited was between €300,000 and €400,000 and for the year 1993 €700,000. The gross profit margin achieved was between 25% and 30%. A small net profit was achieved.
The errors were to a large extent compensating errors. The number of garments was understated by the learned trial judge. The gross profit was treated as net profit and on the evidence in the case of Goodstock Limited the gross profit was entirely consumed by overheads. In the case of Tommy Sports Clothing Company Limited the only evidence was that a small but unquantified profit was made for one year and that this was reflected in a transfer to reserves. There was no evidence which could form the basis of an award of damages based on profits made by the respondent on the sale of infringing goods. With regard to the quantum of damages awarded in respect of the period prior to March 1999 I am satisfied that the same is not out of line with awards of damages in similar cases nor does the award depart in principle from the authorities, some of which I mention above, including cases where infringement of a registered Trade Mark and passing off are combined. As to the claim for passing off following March 1999 I note that factors present in many other cases are absent here. Thus here there is no question of permanent and continuing damage to goodwill as in Unik Time Company v Unik Time Limited [1983] F.S.R. 121. The respondents do not allege any diminution in their trade. They do not allege that they had to offer its products at a lower price to compete with the appellants. There was no evidence that their reputation in terms of their products was affected. They did not have to engage in a remedial advertising campaign nor indeed would one be appropriate. There is not in this case any basis upon which it could be inferred that the products sold by the appellants would otherwise have been sold by the respondents.
The award of damages in these cases is intended to be compensatory, that is to give the plaintiff compensation for the damage, loss or injury which he has suffered. Thus in General Tire and Rubber Company v Firestone Tyre and Rubber Company [1975] 1 W.L.R. 819, a patent case, Lord Wilberforce stated that as in any other tort the general rule in relation to economic torts is that the measure of damages is to be, so far as possible, that sum of money which will put the injured party in the same position as he would have been if he had not sustained the wrong. In that case the plaintiff had the option of an account of profits under the Patents Act 1949 section 60 but claimed damages only. That being the case he continued:-
“There are two essential principles in valuing that claim: first, that the plaintiffs had the burden of proving their loss; second, that, the defendants being wrongdoers damages should be liberally assessed but that the object is to compensate the plaintiffs and not to punish the defendants (Pneumatic Tyre Company Limited v Puncture Proof Pneumatic Tyre Company Limited [1899] 16 R.P.C. 209 at 215).”
Adopting that as a correct statement of law it is difficult to see how it can be said that the award of €10,000 in respect of post March 1999 trading is inadequate on the facts of this case. In these circumstances I would dismiss the cross appeal.
I would dismiss both appeal and cross appeal.