KNOX J.:
This is an appeal from the decision of Deputy Master Burton on March
15, 1996 when he set aside the service of a writ in this matter with the
consequential order as to costs. The plaintiff is M. V. Limited, the first
defendant is The B. P. S. Company Limited and the second defendant is
a Dr Alan G. who is an officer of the first defendant. The plaintiff appeals
against Deputy Master Burton's decision. In my judgment this is an
appeal which should be:dismissed and my reasons are as follows.
The writ was issued on August 31, 1996. The statement of claim includes
the following:
Until 13th January 1994 the plaintiff carried on business producing and
marketing smokers accessories including butane gas refills and lighter
fuel.
[Then there are details about the defendants' business.]
2. The first defendant carries on business manufacturing and marketing
aerosol package products.
3. The second defendant is and was at all material times the managing
director of the first defendant.
There is then a claim that the plaintiff's butane gas refills had been on
the market by reference to a distinctive get-up and were so produced and
marketed between 1985 and January 13, 1994. Details were given of its
extensive export trade in such refills, in particular to Hong Kong and The
People's Republic of China. Then details are given of the sales levels which
are very substantial.
The conclusion that is drawn from that in the statement of claim is:
By reason of the aforesaid marketing and by reason of the advertising and
promotion of the plaintiff's butane gas refills in Hong Kong and PRC the
plaintiff has established a substantial reputation in the Ronson Get-up in
Hong Kong and PRC.
I need not state the rest of that allegation. It leads of course to a claim
that there was a substantial reputation and goodwill under and by
reference to what is described as the Ronson get-up. Then there was a
dealing with the goodwill to another company which I need not deal with.
We then get the allegations that start the complaint against the
defendants:
Since before the issue of the writ . . . butane gas refills called . . . P. were
offered for sale, sold and otherwise dealt with in Hong Kong and the PRC.
10. The said P. butane gas refills were produced in the United Kingdom
by the defendant and subsequently exported by the first defendant. The
first defendant knew the said goods were intended for the PRC and Hong
Kong.
Then details are given of the figures of that operation. It is pleaded that
they have a get-up that in Hong Kong and PRC is colourably similar to
the Ronson get-up and that the aforesaid acts of the first defendant were
calculated to lead and did lead the public and the trade in Hong Kong and
the PRC to confuse the P. butane gas refills as butane gas refills of the
plaintiffs, or as associated in the course of trade with the plaintiff.
The deduction is drawn from that that there has been passing off by the
first defendants of its P. butane gas refills as and for those of the plaintiff.
There are the usual allegations as to damages and relief is sought on the
basis of that passing off.
So far as the factual allegations are concerned I need not read them in
any great detail. Dr G., who it will be recalled is the second defendant,
puts his side of what happened in his affidavit. He states:
In or about January 1989 I believe that the first defendant was contacted
by a Mr Ph. who was a director of F. International an export business
based in Leeds. Mr Ph. indicated that he was interested in the first
defendant's products and at some time after the initial contact I recall
meeting Mr Ph. outside Leeds to discuss the first defendant's business
together with the first defendant's former sales director, Mr McN., who has
unfortunately since died. Mr Ph. wanted details of the first defendant's
products and prices. It was agreed that he would circulate his customers
with the first defendant's information and he would receive a commission
on sales. I seem to recall that a number of orders were received from Mr
Ph., mainly being exported to Hong Kong and possibly the Middle East.
There then is an account given of the further negotiations between on
the one hand Mr Ph. who was in the middle between the first defendant,
and Mr S. who the parties before me are at one in identifying as a man
of some considerable dishonesty who was a director of Pol., a company
trading in Hong Kong and who wished to negotiate the possibility of
placing an order for these butane gas refills. There are negotiations
described by Dr G. and he says in relation to Mr S.:
I am sure that someone from the first defendant would have shown Mr
S. a sample of this product. In order to produce a gas lighter refill the
first defendant would purchase cans from a can manufacturer and then
arrange to fill the products at Ru.. Ru. being the premises from which the
first defendant operates in Scotland.
At that time the first defendant was using two can manufacturers, L. P.
and C. C. and their price lists would have been available. I believe that
Mr S. produced his design for the artwork for the gas lighter refills at the
meeting and, therefore, either at the meeting or very soon thereafter the
first defendant would have been able to provide a quotation per dozen gas
lighter refills based on the can manufacturer's prices, costs of butane gas,
costs of filling the cans and costs of packaging.
He then says, putting it rather shortly, that the price was acceptable in
the end to Mr S. who placed a very substantial order. In fact the design
for P. was provided by Mr S., passed to L. P. and L. P. were responsible
for the manufacture. Once the cans were manufactured, says Dr G., they
were delivered to Ru. where the first defendant filled them with butane
gas. Once the cans were filled approximately 80,000 to 90,000 lighters
per shipment were shipped c.i.f. Mr G. states:
The first defendant has never had one exclusive shipping agent but has
always used several shipping agents. The shipping agents would arrange
for containers to be uplifted from Ru. prior to being shipped. The gas
lighter refills were delivered to Hong Kong but neither I nor the first
defendant had any knowledge of Mr S.'s marketing strategy as to whether
he intended to offer the gas lighter refills for sale in Hong Kong or to ship
them from there to some other country for sale.
On the other side there is an affidavit from Mr Richmond on behalf of the
plaintiff in which he comments on Dr G.'s affidavit. It will, I think for my
purposes, suffice if I read one paragraph from Mr Richmond's affidavit.
It is paragraph No. 19:
An order was placed by Mr S.. This order was fulfilled by the following
sequence of events. The artwork for P. was passed to L. P. and reproduced
by L. P. on the requisite number of cans. L. P. are an English based
company whose address is and then he gives an address in Reading . . .
and that work took place in England. The cans with the offending get-
up were then conveyed to Scotland where they were filled with butane
gas. The cans were then removed from the first defendant's premises at
Ru.. I believe that they would have been transported back out of Scotland
and into England and then shipped to Hong Kong from an English port.
The deponent makes no mention of the location of the port of shipment.
This is to my view highly relevant. I have been involved in the export of
commodities such as those with which this case is concerned to Hong
Kong for a considerable number of years and never in my experience has
any shipment left other than from England. Scottish ports are simply in
the wrong geographical location to ship to that part of the world. I am
informed by Dennis W. former export manager of Ron. Plc whose day to
day work was the arrangement of shipping for such consignments and in
particular for an extensive export trade to Hong Kong, that it is very likely
indeed that an English port would be used for export to Hong Kong.
The claim therefore is that by producing and exporting to Hong Kong
and China articles sold there in the plaintiff's distinctive get-up the first
defendant passed off its goods as and for the plaintiff's goods which has a
substantial reputation in Hong Kong and The People's Republic of China in
respect of that get-up. The only knowledge pleaded in relation to the first
defendant is knowledge where the goods were intended for the People's
Republic of China and Hong Kong.
The first issue, which was the only one dealt with by the master, was
whether there was jurisdiction in England to determine the plaintiff's
claim. It is common ground that the plaintiff and both defendants
were domiciled in the United Kingdom: the plaintiff in England and
the defendants in Scotland. It is also common ground that the Civil
Jurisdiction and Judgments Act 1982, which gives statutory force to the
Brussels Convention of 1968. applies.
Part 1 of the Act implements the Convention and makes it part of English
law. Thus section 2 says:
The Brussels Conventions (which include one which I am for brevity
calling the Brussels Convention, its official title is Convention on
jurisdiction and the enforcement of judgments in civil and commercial
matters signed at Brussels on 27th September 1968) . . . shall have the
force of law in the United Kingdom, and judicial notice shall be taken of
them . . .
3(1) Any question as to the meaning or effect of any provision of the
Brussels Convention shall, if not referred to the European Court in
accordance with the 1971 Protocol, be determined in accordance with the
principles laid down by and any relevant decision of the European Court.
(2) Judicial notice shall be taken of any decision of, or expression of
opinion by, the European court on any such question.
Further documentary material is provided to be available to be taken into
consideration and I need not deal with subsection (3).
Part 1 of the Civil Jurisdiction and Judgments Act 1982 deals with the
allocation of jurisdiction as between the states that were parties to or
subsequently acceded to the Brussels Convention. Of course the United
Kingdom is one of those states.
Part 2 of the 1982 Act deals with the allocation inside the United Kingdom
of jurisdiction within the different jurisdictions that exist within this realm.
The operative section is section 16 which, so far as relevant, reads as
follows:
(1) The provisions set out in Schedule 4 (which contains a modified
version of Title II of the 1968 Convention) shall have effect for
determining, for each part of the United Kingdom, whether the courts of
law of that part, or any particular court of law in that part, have or has
jurisdiction in proceedings where:
(a) the subject-matter in the proceedings is within the scope of the 1968
Convention as determined by Article 1 (whether or not the Convention has
effect in relation to the proceedings); and
(b) the defendant or defender is domiciled in the United Kingdom or the
proceedings are of a kind mentioned in Article 16 (exclusive jurisdiction
regardless of domicile).
Schedule 4, which is the modified version of the Brussels Convention, has
two significant articles. Article 2 reads:
Subject to the provisions of this Title, persons domiciled in a part of the
United Kingdom shall . . . be sued in the courts of that part . . .
5. A person domiciled in a part of the United Kingdom may, in another
part of the United Kingdom, be sued:
(3) in matters relating to tort, delict or quasi-delict, in the courts for the
place where the harmful event occurred or in the case of a threatened
wrong is likely to occur.
The relation between Articles 2 and 5 is that Article 2 provides the
fundamental rule and 5, among others, provides for a derogation from it.
Thus, in Anthanasios Kalfelis v. Banque Schröder, Munchmeyer, Hengst &
Co. and Others (Case 189/87) [1988] E.C.R. 5565 the European Court of
Justice in the course of its decision said this:
With respect to the second part of the question it must be observed,
as already indicated above, that the "special jurisdictions" enumerated
in Articles 5 and 6 of the Convention constitute derogations from the
principle that jurisdiction is vested in the courts of the State where the
defendant is domiciled and as such must be interpreted restrictively. It
must therefore be recognised that a court which has jurisdiction under
Article 5(3) over an action in so far as it is based on tort or delict does not
have jurisdiction over that action in so far as it is not so based.
There are in connection with Article 5(3) four other relevant decisions
of the European Court of Justice. The first, both in point of time and
importance in setting the scene generally for the construction of Article
5(3), is Bier, BV and Another v. Mines de potasse d'Alsace SA (Case
21/76) [1976] E.C.R. 1735, [1978] 1 Q.B. 708. The headnote reads:
The first plaintiff carried on the business of nursery gardening in the
Netherlands and the water it used for the irrigation of its seed beds
came mainly from the Rhine. The second plaintiff, registered in the
Netherlands, promoted improvements in the quality of the water in
the Rhine basin. The defendant, who was engaged in mining in France,
allegedly discharged such large quantities of residuary salts into the Rhine
that the increased salt content of the water caused damage to the first
plaintiff's seed beds. The plaintiffs brought an action before the district
court in the Netherlands claiming that the discharge of the industrial
waste by the defendant was illegal and they sought damages.
An issue arose as to the court that had jurisdiction to determine that
issue. The European Court of Justice in the course of its decision, having
set out Article 5(3) said this:
8. That provision must be interpreted in the context of the scheme of
conferment of jurisdiction which forms the subject matter of Title II of the
Convention.
9. That scheme is based on a general rule, laid down by Article 2, that
the courts of the state in which the defendant is domiciled shall have
jurisdiction.
10. However, Article 5 makes provision in a number of cases for a special
jurisdiction, which the plaintiff may opt to choose.
11. This freedom of choice was introduced having regard to the existence,
in certain clearly defined situations, of a particularly close connecting
factor between a dispute and the court which may be called upon to hear
it, with a view to the efficacious conduct of the proceedings.
12. Thus in matters of tort, delict or quasi-delict Article 5(3) allows the
plaintiff to bring his case before the courts for "the place where the
harmful event occurred".
13. In the context of the Convention, the meaning of that expression is
unclear when the place of the event which is at the origin of the damage
is situated in a state other than the one in which the place where the
damage occurred is situated, as is the case, inter alia, with atmospheric
or water pollution beyond the frontiers of a state.
14. The form of words "place where the harmful event occurred," used
in all the language versions of the Convention, leaves open the question
whether, in the situation described, it is necessary in determining
jurisdiction, to choose as the connecting factor the place of the event
giving rise to the damage, or the place where the damage occurred, or to
accept that the plaintiff has an option between the one and the other of
those two connecting factors.
15. As regards this, it is well to point out that the place of the event
giving rise to the damage no less than the place where the damage
occurred can, depending on the case, constitute a significant connecting
factor from the point of view of jurisdiction.
16. Liability in tort, delict or quasi-delict can only arise provided that a
causal connection can be established between the damage and the event
in which that damage originates.
17. Taking into account the close connection between the component
parts of every sort of liability, it does not appear appropriate to opt for
one of the two connecting factors mentioned to the exclusion of the other,
since each of them can, depending on the circumstances, be particularly
helpful from the point of view of the evidence and of the conduct of the
proceedings.
18. To exclude one option appears all the more undesirable in that, by
its comprehensive form of words. Article 5(3) of the Convention covers a
wide diversity of kinds of liability.
19. Thus the meaning of the expression "place where the harmful
event occurred" in Article 5(3) must be established in such a way as to
acknowledge that the plaintiff has an option to commence proceedings
either at the place where the damage occurred or the place of the event
giving rise to it.
20. This conclusion is supported by the consideration, first, that to decide
in favour only of the place of the event giving rise to the damage would,
in an appreciable number of cases, cause confusion between the heads of
jurisdiction laid down by Articles 2 and 5(3) of the Convention, so that the
latter provision would, to that extent, lose its effectiveness.
21. Secondly, a decision in favour only of the place where the damage
occurred would, in cases where the place of the event giving rise to the
damage does not coincide with the domicile of the person liable, have the
effect of excluding a helpful connecting factor with the jurisdiction of a
court particularly near to the cause of the damage.
There are three later authorities that have indicated limits to the width
of the principle thus laid down. The first, Dumez France and Tracoba v.
Hessische Landesbank (Case 220/88) [1990] 1 E.C.R. 49 is authority
for the proposition that the damage in question constituting a harmful
event must be direct and not indirect so that the damage caused to a
holding company through damage to its subsidiary's business is excluded
as indirect.
In the Dumez France case the facts are succinctly stated in paragraph 3 of
the European Court of Justice's judgment:
Dumez and Oth seek compensation for the damage which they claim to
have suffered owing to the insolvency of their subsidiaries established
in the Federal Republic of Germany, which was brought about by the
suspension of a property-development project in the Federal Republic
of Germany for a German prime contractor, allegedly because of the
cancellation by the German banks of the loans granted to the prime
contractor.
The reasoning of the decision is to be found at paragraphs 18 and
onwards where the European Court of Justice said:
. . . it is necessary to avoid the multiplication of courts of competent
jurisdiction which would heighten the risk of irreconcilable decisions, this
being the reason for which recognition of an order for enforcement is
withheld by virtue of Article 27(3) of the Convention.
19. Furthermore, that objective militates against any interpretation of
the Convention which, otherwise than in the cases expressly provided for,
might lead to recognition of the jurisdiction of the courts of the plaintiffs'
domicile and would enable a plaintiff to determine the competent court by
his choice of domicile.
20. It follows from the foregoing considerations that although, by virtue
of a previous judgment of the Court (in Mines de potasse d'Alsace
cited above), the expression "place where the harmful event occurred"
contained in Article 5(3) of the Convention may refer to the place where
the damage occurred, the latter concept can be understood only as
indicating the place where the event giving rise to the damage, and
entailing tortious, delictual or quasi-delictual liability, directly produced
its harmful effects upon the person who is the immediate victim of that
event . . .
22. It must therefore be stated in reply to the question submitted by the
national court that the rule on jurisdiction laid down in Article 5(3) of
the Convention cannot be interpreted as permitting a plaintiff pleading
damage which he claims to be the consequence of the harm suffered
by other persons who were direct victims of the harmful act to bring
proceedings against the perpetrator of that act in the courts of the place
in which he himself ascertained the damage to his assets.
Secondly, the place where the harmful event occurred is not so widely
phrased as to cover the place where financial loss is felt, consequent on
actual damage elsewhere. That is established in the decision Marinari v.
Lloyds Bank Plc [1996] 2 W.L.R. 159. The facts, as stated in the headnote,
are as follows:
After the plaintiff, who was domiciled in Italy, had lodged promissory
notes with the Manchester branch of a bank whose registered office
was in London, the bank staff, taking the view that the notes were of
dubious origin, contacted the police and the plaintiff was arrested and the
notes sequestrated. After his release, the plaintiff brought an action in
Italy seeking payment by the bank of a sum representing the exchange
value of the promissory notes and also compensation for the damage he
claimed to have suffered as a result of his arrest, including damage to his
reputation.
There was an issue as the jurisdiction of the Italian courts to hear those
proceedings. Advocate-General Darmon said this at page 164 concerning
the Mines de potasse case:
26. That case concerned a complex situation in which the causal event
and the harmful consequences occurred, from the outset, in two different
contracting states. Here, by contrast, as is rightly pointed out by the
United Kingdom Government, both the causal event (namely the conduct
imputed to the employees of Lloyds Bank) and the initial damage
(sequestration of the promissory notes and imprisonment) occurred in the
United Kingdom. Only the alleged consequential damage (financial losses)
could have been suffered in Italy.
The European Court of Justice at page 169 said this:
6. It observes [the court] that, in Handelswekerij G.J. Bier B.V. v. Mines
de potasse d'Alsace SA. . . The court considered that the term "place
where the harmful event occurred" was to be understood as intended to
cover both the place where the damage occurred and the place of the
event giving rise to it, and that Mr Marinari contends that the expression
damage occurred relates not only to the physical result but also to
damage in the legal sense, such as a decrease in a person's assets.
7. It also notes that in Dumez France v. Hessische Landesbank
(Helaba) . . . the court held that account should not be taken, for
the purpose of determining jurisdiction under Article 5(3) of the
Convention, of indirect financial damage. The national court asks, in
those circumstances, whether that also applies where the harmful effects
alleged by the plaintiff are direct, not indirect.
8. In those circumstances, it decided to stay the proceedings pending a
preliminary ruling on the following question . . .
Effectively it is contained in these words:
. . . is the expression "place where the harmful event occurred" to be
taken to mean only the place in which physical harm was caused to
persons or things, or also the place in which the damage to the plaintiff's
assets occurred?
The European Court of Justice then goes on to point out that fact that
Article 5(3) is in derogation of Article 2 and describes what was decided in
the Mines de potasse case and goes on, in paragraph 12, as follows:
In those two judgments [Mines de Potasse and a case I am coming to
in a moment called Shevill] the court considered that the place of the
event giving rise to the damage no less than the place where the damage
occurred could constitute a significant connecting factor from the point
of view of jurisdiction. It added that to decide in favour only of the place
of the event giving rise to the damage would, in an appreciable number
of cases, cause confusion between the heads of jurisdiction laid down by
Articles 2 and 5(3) of the Convention, so that the latter provision would,
to that extent, lose its effectiveness.
13. The choice thus available to the plaintiff cannot however be extended
beyond the particular circumstances which justify it: Such an extension
would negate the general principle laid down in the first paragraph
of Article 2 of the Convention that the courts of the contracting state
where the defendant is domiciled are to have jurisdiction and would
lead to recognition, in cases other than those expressly indicated, of the
jurisdiction of the courts for the plaintiff's domicile, which the Convention
militates against by excluding, in the second paragraph of Article 3,
the application of national provisions which make such jurisdiction
available for proceedings against defendants domiciled in the territory of a
contracting state.
14. Whilst it is thus recognised that the term "place where the harmful
event occurred" within the meaning of Article 5(3) of the Convention
may cover both the place where the damage occurred and the place of
the event giving rise to it, that term cannot, however, be construed so
extensively as to encompass any place where the adverse consequences
of an event that has already caused actual damage elsewhere can be felt.
15. Consequently, that term cannot be construed as including the place
where, as in the present case, the victim claims to have suffered financial
damage consequential on initial damage arising and suffered by him in
another contracting state.
That type of case involves the identification of an event that has already
caused actual damage elsewhere before adverse consequences in a
geographically separate place fall out of view for the purposes of Article
5(3).
The third and, for my purposes, most important authority dealing with
the limits of the principle stated in the Mines de potasse decision is
Shevill and Others v. Presse Alliance S.A. (Case C68/93) [1995] 2 A.C.
18. This was a libel action brought in England by an English resident
woman and three companies incorporated in France or Belgium against a
French domiciled company which published in France-Soir, a well-known
newspaper published in France, an article claimed to be defamatory of the
plaintiffs.
Originally in an English action damages were claimed in respect of
distribution not only in England and Wales but also in France and other
European countries but by amendment all references to copies sold
outside England and Wales were deleted. It was not surprisingly common
ground that France-Soir was mainly distributed in France but that there
was a small circulation in England and Wales and indeed elsewhere in
Europe. The defendant French company objected to the English court's
jurisdiction and the House of Lords submitted to the European Court of
Justice questions which included the following:
In a case of libel by a newspaper article, do the words "the place where
the harmful event occurred" in Article 5(3) of the Convention mean: (a)
the place where the newspaper was printed and put into circulation:
or (b) the place or places where the newspaper was read by particular
individuals: or (c) the place or places where the plaintiff has a significant
reputation?
Pausing there for a moment it will be seen that there are three categories
of place listed. As Article 5(3) was interpreted by the European Court
of Justice those categories correspond to (1) the place where the event
giving rise to the damage occurred, i.e. in a libel context, the place of
publication. (2) the place where the damage occurred in the sense that
it was the place where the event giving rise to the damage produced
its harmful effects to the victim, i.e. the place of distribution, (3) the
place where the victim suffered loss, i.e. any place where the plaintiffs
had a reputation which was harmed. Obviously there could be a very
considerable overlap between the three categories but they are all at
least potentially separate. There were allied questions, Numbers 2, 3 and
6, but although the answers to them were given by the European Court
of Justice at the same time as question (1) and by the same passage in
its judgment, the terms of those particular additional questions are not
material for my purpose.
An important aspect of the Shevill case, which is not material to my
decision, is the possible multiplicity of available jurisdictions in newspaper
or other media libel. The European Court of Justice, having set out Article
5(3), said at paragraph 19 of its decision:
19. It is settled case law [they refer to Mines de potasse and Dumez
France] that that rule of special jurisdiction [referring of course to Article
5(3)] the choice of which is a matter for the plaintiff, is based on the
existence of a particularly close connecting factor between the dispute
and courts other than those of the State of the defendant's domicile
which justifies the attribution of jurisdiction to those courts for reasons
relating to the sound administration of justice and the efficacious conduct
of proceedings.
A little further, having stated the basic principle decided in the Mines de
potasse case which I have already sufficiently quoted, the European Court
went on as follows:
22. The court added . . . that to decide in favour only of the place of
the event giving rise to the damage would, in an appreciable number of
cases, cause confusion between the heads of jurisdiction laid down by
Articles 2 and 5(3) of the Convention, so that the latter provision would,
to that extent, lose its effectiveness.
23. Those observations, made in relation to physical or pecuniary loss
or damage, must equally apply, for the same reasons, in the case of
loss or damage other than physical or pecuniary, in particular injury
to the reputation and good name of a natural or legal person due to a
defamatory publication.
24. In the case of a libel by a newspaper article distributed in several
Contracting States the place of the event giving rise to the damage,
within the meaning of those judgments, can only be the place where the
publisher of the newspaper in question is established, since that is the
place where the harmful event originated and from which the libel was
issued and put into circulation.
25. The court of the place where the publisher of the defamatory
publication is established must therefore have jurisdiction to hear the
action for damages for all the harm caused by the unlawful act.
26. However, that forum will generally coincide with the head of
jurisdiction set out in the first paragraph of Article 2 of the Convention.
27. As the Court held in Mines de potasse d'Alsace, the plaintiff must
consequently have the option to bring proceedings also in the place where
the damage occurred, since otherwise Article 5(3) of the Convention
would be rendered meaningless.
28. The place where the damage occurred is the place where the event
giving rise to the damage, entailing tortious, delictual or quasi- delictual
liability, produced its harmful effects on the victim.
29. In the case of an international libel through the press, the injury
caused by a defamatory publication to the honour, reputation and
good name of a natural or legal person occurs in the places where the
publication is distributed, when the victim is known in those places.
30. It follows that the courts of each contracting state in which the
defamatory publication was distributed and in which the victim claims
to have suffered injury to his reputation have jurisdiction to rule on the
injury caused in that state to the victim's reputation.
The opinions of the Advocates-General, and in particular the second, for
there were two given, make explicit what only appears by implication
in the judgment of the European Court of Justice and in particular by
question (c) which sought the European Court of Justice's ruling, namely
that any place where the reputation of the plaintiff was damaged by the
libel but in which there was neither publication nor distribution is not a
place where the harmful event occurred within the meaning of Article
5(3). In other words the place where the damage is suffered is not of
itself the place where the harmful event occurred. Advocate-General
Leger at paragraph 38, said this:
38. In matters relating to tort, delict or quasi-delict, can the words "place
where the harmful event occurred" be construed as meaning the place
where the damage is suffered, given that such an interpretation would
effectively enshrine the concept of the forum actoris since the damage is
generally suffered by the victim at his domicile.
39. The Convention is based on the general jurisdictional rule actor
sequitur forum rei, laid down in Article 2. Only in the exceptional cases
restrictively enumerated in Articles 5(2), 8 and 14 does the Convention
confer jurisdiction on the forum actoris, a forum not contemplated by the
ordinarily applicable rules of law.
. . . save in cases for which express provision is made, the Convention
appears to be clearly hostile to the attribution of jurisdiction to the courts
of the plaintiff's domicile: judgment in Shearson Lehmann Huttonn Inc.
v. TVB Treithandgesellschaft für Vermögensverwaltung und Beteiligungen
m.b.H. (Case C-89/91) [1993] E.C.R. I-139, 187, para. 17.
40. Furthermore, it seems to me particularly difficult to bring the forum
actoris within the framework of the special jurisdiction established by
Article 5(3), which makes no express provision for it. That jurisdiction
constitutes a derogation from the principle that jurisdiction is vested in
the courts of the State of the defendant's domicile, and as such must be
interpreted restrictively.
41. In matters relating to liability in tort or delict, the Court has never
attributed jurisdiction to the courts of the place where the damage is
suffered. It has even formally excluded such jurisdiction in the case of an
indirect victim. . . .
Advocate General Darmon has shown, in paragraph 16 of his Opinion,
in the Marinari case, that the rationale of Article 5(3) is based not on
any compelling need to protect the victim but on . . . "the existence of a
particularly close connecting factor between the dispute and courts other
than those of the State of the defendant's domicile" (paragraph 17 of the
judgment in Dumez, at pp. 79-80) and that the courts of the place where
the damage was suffered do not meet that requirement.
The problem before me is to transpose these principles into a passing off
claim where there is a geographical separation between the place of the
action of the defendant giving rise to and at the origin of the damage--in
the present case somewhere in the United Kingdom, whether Scotland or
England is disputed-- and the place where the misrepresentation involved
in the passing off took effect--in the present case Hong Kong and the
People's Republic of China --and the place where economic loss was
suffered by the plaintiff, a drop in sales by the plaintiff.
It was pointed out to me that there are two distinct categories of activities
by way of passing off. First, there is passing off by the defendant of
inferior goods as the goods of the plaintiff. That harms the local goodwill
of the plaintiff for fairly obvious reasons. Secondly, there is passing
off intrinsically just as good wares of the plaintiffs as the goods of the
plaintiff, although they are in fact the defendants. That does the goodwill
no intrinsic harm--it may even improve it--but it does harm the plaintiff
through the loss of sales which it must be assumed would otherwise have
yielded a profit.
Mr Speck submitted that at least in the second category the only place
where the harmful event occurred, in the sense of the place where the
damage occurred, is the place where the sales are lost. I do not accept
that. In my view in both categories mentioned above, that is to say
both where there is passing off by the defendant of inferior goods as the
plaintiffs and where there is passing off by the defendant of goods of at
least as good quality of the plaintiff's goods, the place where the damage
occurred is the place where the passing off was effected.
I see no good reason for attributing a different place for the two
categories which I have mentioned since they both equally constitute
the tort of passing off. The place where loss is suffered is, I accept,
where sales fall but that is not in my view anything more than where
the damage is suffered which, consistently with what is said explicitly by
Advocate-General Leger in the Shevill case and implicitly by the European
Court of Justice in the same case is not of itself enough to constitute
the place where the damage occurred. I see no inconsistency in this
solution, with the yardstick by which the European Court of Justice has
approached these problems, that is to say by seeking to identify the
places with a particularly close connecting factor between the dispute and
the court other than that of the defendant's domicile in order to justify the
attribution of jurisdiction to that other court.
If one supposes that the passing off in the present case was effected in a
Convention country, say, for example, France, rather than in distant Hong
Kong or the People's Republic of China, there would in my view be seen
to be close connecting factors with France where, to put it neutrally, the
illicit incursion into the plaintiff's goodwill, whether by way of impairment
through the sale of shoddy goods or of misappropriation through the
misrepresentation that perfectly adequate goods were those of the
plaintiff rather than those of the defendant, occurred.
I have therefore reached the conclusion that England, for all that it was
apparently where the plaintiff claims to have suffered loss, is not the
place within the meaning of Article 5(3) where the harmful event occurred
as the place where the damage occurred.
I can deal more shortly with the question whether England was the
place where the event giving rise to and at the origin of the damage
occurred. This of course turns upon the geographical location of what
the defendant company did. So far as its own manufacturing can filling
process is concerned there is no doubt that that occurred in Scotland.
The plaintiff relies on the fact, which it claims is at least arguably shown,
that the transaction whereby the cans were exported in the plaintiff's
livery were set up by a Mr Ph., an English resident, whom the plaintiffs
allege to have acted as the defendants' agent. This is disputed by the first
defendant which claims that Mr Ph. was acting for the dishonest Chinese-
based buyer.
Secondly, the plaintiff relies on the fact that the offending cans were
printed on the first defendant's order by an English resident company and
the cans, with the infringing material upon it, were then sent to Scotland
where they were filled by the defendant and exported, it is claimed, via
England. The point of export is not established firmly probably largely
because the first defendant's records have, as the evidence has shown,
been damaged by a flood in December 1994. I assume, for present
purposes, that the goods did travel through England on their way to
Hong Kong. They were sent c.i.f. but that is about all that is known
about the terms on which the carriers operated by whom the goods were
transported.
Whether one looks at it narrowly or, as I would prefer to do, broadly, it
seems to me that the event which gave rise to the damage relied upon
should be placed in Scotland. A broad approach is in my view to be
preferred because I respectfully agree with what Steyn J. said in Minister
Investments Ltd v. Hyundai Precision and Industry Co. Ltd [1988] 2
Lloyd's Rep. 621 at 624 after the Mines de potasse case which was quoted
by him but obviously before the Dumez, Marinari and Shevillcases which
had not yet been decided. He said this at page 624:
In my judgment, common sense and policy considerations require one to
ask where in substance the cause of action in tort arises, or what the tort
is most closely connected with.
That is how I intend to approach the question before me. I do not read
that as justifying the elimination of the plaintiff's choice of forum in a
case where it can affirmatively be shown that there are two places in
different jurisdictions where the damage occurred and where the event
giving rise to the damage occurred as in the Mines de potasse and Shevill
cases. It does in my view indicate that it is not appropriate to dissect
the events relied upon and if one can find an element in those events as
occurring within one jurisdiction to regard that as a sufficient justification
for treating that jurisdiction as within the range of permissible options
open to the plaintiff under Article 5(3). The English elements via the
intervention of Mr Ph., the residence of the can manufacturers and; the
possible point of transhipment from road or rail to sea, all seem to me
to be subsidiary to the fact that the defendant did what it did in Scotland
and it was the defendants' actions that are principally relied upon.
The cause of action if there is one is in my view substantially one which
arose in Scotland. The accident of transport through England is in my
view or relatively trivial importance. That is the broad view.
On the narrow view which is, where did the first defendant dispose of
the goods, it seems to me that the answer is still Scotland because that
is on the evidence where the goods were delivered to the carrier for
the purpose of transmission to the buyer. However, I base my decision
primarily on the broader view.
For those reasons I have come to the conclusion that the master reached
the right conclusion. There were several other points ventilated before
me but since they are not necessary to my decision and are, in at least
two cases, quite complex and difficult I do not propose to lengthen this
judgment by obiter dicta on those subjects. The appeal will therefore be
dismissed.