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Chung Exports Ltd v Food Processors (Fiji) Ltd [2003] FJHC 271; HBC0204d.2001s (31 March 2003)

IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION

CIVIL ACTION NO. HBC0204 OF 2001

Between:

CHUNG EXPORTS LIMITED
JOHN CHUNG
Plaintiffs

and

FOOD PROCESSORS (FIJI) LIMITED
Defendant

Mr. R.K. Naidu for the Plaintiff
Mr. N. Shivam for the Defendant

DECISION

This is an application by the plaintiffs for an injunction in a passing off action by Notice of Motion made inter partes seeking the following orders:

that the Defendant be restrained by itself and/or by its servants and/or agents or howsoever from packaging, selling, marketing and exporting its frozen cassava in packaging similar to that of the Plaintiffs and/or in such a manner as to deceive purchasers into the belief that they are purchasing the Plaintiffs’ frozen cassava and from passing off its frozen cassava as that of the Plaintiffs and for a further order that the Defendant forthwith remove its frozen cassava from all supermarkets, shops and other outlets (unless they are packaged in plastic bags which are not similar to that of the Plaintiffs) upon the grounds contained in the Affidavit of Lynette Seeto sworn and filed in support herein.

A Writ of Summons dated 16 May 2001 has been filed by the plaintiffs (the ‘applicants’) against the defendant.

There are five affidavits filed in this application for Court’s consideration.

The plaintiff’s submission

The arguments put forward by the plaintiffs are clearly stated in their written submission. They are as follows (as stated therein):

That since the Second Plaintiff started exporting frozen cassava to Australia and New Zealand in 1989, he has been using the same type of Plastic Bags for packaging of the frozen cassava with the same design, writing and colour. This plastic bag is transparent and has a red frame with blue writings and designs. (paragraph 4)

That since 1998 the 1^st Plaintiff Company has been using the same type of Plastic Bag with the same design, writing and colour for packaging of its frozen cassava. (paragraph 5)

That the frozen cassava exported to Australia and New Zealand previously under the heading of “Chung Exports” and presently under the heading of “Chung Exports Limited” is very highly regarded in Australia and New Zealand for its good quality and is well-known and has acquired a very high reputation. (paragraph 6)

That the Defendant recently started exporting frozen cassava to Australia and New Zealand. It also started using Plastic Bags which are very much similar to that of the Plaintiffs for packaging its frozen cassava. (paragraph 7)

That the Plastic Bags used by the defendant for packing its frozen cassava is very similar to that used by the Plaintiffs in that:

(a) the colour of the Plastic Bags are both transparent.

(b) that in the centre of the Defendants bag the word “Frozen Cassava” is written in blue which is same as that of the Plaintiffs.

(c) that there is a frame in the shape of a rectangle on the plastic bags used by the Defendant which is similar to that of the Plaintiffs.

(d) that the layout and colour combination of the plastic bags are similar in the front and at the back.

(e) that the colours and artwork are designed in such a manner that it could be easily confused with that of the Plaintiffs i.e. blue, red, and transparent. (paragraph 8)

That the Defendant by such packaging has endeavoured to pass off its frozen cassava as that of the Plaintiffs and its packaging is calculated to deceive and will deceive the Purchasers of the Plaintiffs frozen cassava into the belief that the cassava sold by the Defendant are that of the Plaintiffs (paragraph 9)

The Plaintiffs say that the Defendant recently (sometimes in late 2000) started exporting frozen cassava to Australia and New Zealand and in bags which are very much similar to that of the Plaintiffs (see paragraph 8 (iii) of Lynette Seeto’s Affidavit of 12^th June, 2001). This fact is undisputed.

The Plaintiffs say that the defendant by such packaging has endeavoured to pass off its frozen cassava as that of the Plaintiffs and its packaging is calculated to deceive and will deceive the Purchasers of the Plaintiffs frozen cassava into the belief that the cassava sold by the defendant are that of the Plaintiffs.

The Plaintiffs further say that the defendant and/or its agents are also falsely telling the retailers in Australia and New Zealand that the Plaintiffs are packing its cassava which it sells as “Pacific King” and “cassava king” and therefore it is passing off its products as those exported by the 1^st Plaintiff. The Plaintiffs say that as a result of the passing off by the defendant, irreparable damage is being caused to them, their business and trading reputation and this may not be able to be quantified because there will be confusion amongst the general public and because of the defendants poor quality frozen cassava, the Plaintiffs will suffer irreparable damage to their market.

The defendant’s submission

The defendant submits that the plaintiffs’ allegations about ‘passing off’ have no basis, and states further as follows (as in its written submission):

The plaintiffs in their submissions have implied that it is irrelevant that NMA had been using the original plastic bag since it is not NMA but Food Processors Limited, which is the defendant in this action. The defendant refutes the plaintiffs submission. It is submitted that the defendant is a subsidiary company of NATCO, which had been established under the authority of the National Marketing Authority(Dissolution and Transfer of Assets etc) Decree in 1992.

NATCO not being a party to this action does not give less weight to the fact that the defendant is in fact a subsidiary of NATCO and thus justified in using the original plastic bags as they had first been NMA’s design which the plaintiffs had copied.

In short, defendant’s counsel’s submission is as follows (as stated in his submission):

It is respectfully submitted that the plaintiffs do not have a claim against the defendant for a claim in passing off. The National Marketing Authority had originally used the design of the plastic bag being the subject of this action. The rights and obligations of this organization were passed on to the National Trading Corporation by virtue of the National Marketing Authority Decree of 1992 and subsequently the defendant is continuing the objectives of the National Trading Corporation as a subsidiary company. These objectives are protected by the National Marketing Authority decree of 1992.

The reputation and goodwill that the National Marketing Authority gained as an exporter of frozen cassava did not cease during the period when the plastic bags were not used. Instead the reputation survived which is the basis on which the defendant is presently trading. It would be unfair to grant an injunction against the defendant as prayed for in the plaintiff’s prayer for relief since the defendants may have a counter-claim against the plaintiff for passing off the defendant’s product.

Consideration of application

The plaintiffs have moved for an injunction and seek orders as stated hereabove

The issue before the Court is whether to grant an interim injunction or not, or whether the plaintiffs should be left to pursue their remedy under the writ in damages.

Both counsel argued the matter having regard to the principles enunciated in the leading case of American Cyanamid Co. v Ethicon Ltd [1975] UKHL 1; (1975) A.C. 396 H.L. The House of Lords there decided that in all cases, the Court must determine the matter on a balance of convenience, there being no rule that an applicant must establish a prima facie case. The extent of the court’s duty in considering an interlocutory injunction is to be satisfied that the claim is “not frivolous or vexatious;” in other words, “that there is a serious question to be tried”.

In Cyanamid (supra) at page 406 Lord Diplock stated the object of the interlocutory injunction as follows:

“.........to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial. The court must weigh one need against another and determine where “the balance of convenience” lies.

A similar view was expressed by McCarthy P. while delivering the judgment of the Court of Appeal in Northern Drivers Union v Kawau Island Ferries Ltd [(1974) 2 NZLR 61] when he said:

“The purpose of an interim injunction is to preserve the status quo until the dispute has been disposed of on a full hearing. That being the position, it is not necessary that the Court should have to find a case which entitle the applicant to relief in all events: it is quite sufficient if it finds one which shows that there is a substantial question to be investigated and that matters ought to be preserved in status quo until the essential dispute can be finally resolved..........” (Ibid, 620).

“It is always a matter of discretion, and ......the Court will take into consideration the balance of convenience to the parties and the nature of the injury which the defendant, on the one hand, would suffer if the injunction was granted........and that which the plaintiff, on the other hand, might sustain if the injunction was refused.....” (Ibid, 621).

In considering whether to grant an interim injunction the factors which ought to be considered are:

(a) is there a serious question to be tried,
(b) is damages an adequate remedy, and
(c) where does the balance of convenience lie.

This is a “passing off” action and an interim injunction is sought. What is “passing off”? It is an actionable wrong for a trader so to conduct his business as to lead to the belief that his goods or business are the goods or business of another. This wrong is known as “passing-off”. It is immaterial whether the fatal representation, as to goods or business, involved in passing-off, is made expressly by words, or impliedly, by the use or imitation of a mark, trade name or get-up with which the goods of another are associated in the minds of the public. (Clerk & Lindsell on Torts, 11^th Ed. p.990 para. 1698).

The plaintiffs’ contention is that the defendant’s package that is, its ‘get-up’ is so similar to theirs that it causes confusion in the minds of the consuming public. The defendant on the other hand, inter alia, denies that assertion. It further stated it has been using the ‘get-up’ long before the plaintiffs.

In a passing-off action when one is considering an application for interlocutory injunction, the plaintiffs must show more than that there is an arguable case, because the defendant will often adopt a different ‘get-up’ or name in order to continue in business once the injunction is granted and the injunction will be final in effect if not in name (Parnass/Pelly Limited v Hodges [1982] F.S.R. 329 per Whitford J). At this stage the Court is not required to go into the merits of the case. On the facts and circumstances of this case I am persuaded to consider seriously the following passage from the judgment of Hoffman J in Films Rover International Ltd & Ors v Connon Film Sales Ltd [1987] 1 W.L.R. 670 (Ch.D) at 680:

“The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the “wrong” decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively, in failing to grant an injunction to a party who succeeds (or would succeed) at trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been “wrong” in the sense I have described. The guidelines for the grant of both kinds of interlocutory injunctions are derived from this principle.” (emphasis added).

The question of whether there is similarity in the package and the ‘get-up’ and that there is confusion in the minds of the consumers cannot in this case be decided on affidavit evidence alone. The facts as presented do not enable the Court to grant an interim injunction and make the orders sought. The issue has to be decided in the substantive action. Although decided cases can afford valuable guidelines to which the Court has to pay due weight in ‘approaching’ the evidence, the ultimate issue is always one of fact.

The plaintiffs’ complaint has already been set out hereabove and I have before me the plastic bags used by both parties for packaging. Bearing in mind the affidavit evidence before me, I have reached the conclusion that this motion ought to be dismissed. I am not convinced as evidence stand, trusting my own eyes so to say, looking at the packaging produced as exhibits of likelihood of confusion. Although there may be some similarities, it may be that the plaintiffs had directed their minds in their affidavits to similarities in packaging and neglecting all dis-similarities. Hence as evidence stands I am not fully convinced that any buyer with the remotest conception of what he is purchasing could be misled.

I find that there is no serious issue to be tried. Balance of convenience will lie in maintaining the status quo. Both parties have been running their respective businesses for some considerable time and to grant an injunction could be that the defendant would suffer greater harm and loss than the plaintiffs. It would be safer to err on the side of refusal than run the risk of causing grave injustice to the defendant if the plaintiffs do not succeed in the trial of the action.

For these reasons, the circumstances do not warrant the grant of an interlocutory injunction to avoid injury to the plaintiffs during the interlocutory period. The better course would be for the plaintiffs to complete the pleadings and apply for entry of action for trial as early as possible.

In the outcome, for the reasons given hereabove the application for interlocutory injunction is refused. The application is dismissed with costs to be taxed if not agreed.

[ D. Pathik ]
JUDGE

At Suva
31 March 2003