American-Cigarette Company (Overseas) Ltd v G & P Trading Company Ltd [2005] TOSC 30; CV 707 2004 (21 April 2005)

IN THE SUPREME- COURT OF TONGA
CIVIL JURISDICTION
NUKU'ALOFA REGISTRY

NO CV 707/2004

BETWEEN:

AMERICAN-CIGARETTE COMPANY (OVERSEAS) LTD
Plaintiff

AND:

G & P TRADING COMPANY LTD
Defendant

BEFORE THE HON MR JUSTICE THOMAS

Counsel: Mr Niu for Plaintiff and Mr Kaufusi for Defendant

Dates of hearing: 20 and 21 April 2005
Date of judgment: 21 April 2005

JUDGMENT

On or about the first day of October 2004 a container filled with cartons of allegedly Winfield cigarettes arrived at Queen Salote wharf, Nuku'alofa. The consignee in the bill of lading is the defendant company which acknowledged responsibility and liability for the container in a letter dated the seventh of October 2004 attached as exhibit number SDM 14 to the affidavit of Mr Scott McIlvride, the duly authorised attorney and agent of the plaintiff company.

The difficulty for the defendant company is that it is not an authorised importer of Winfield cigarettes. The local trading company of the plaintiff was alerted to the arrival of these cigarettes. Mr McIlvride came to Tonga from Fiji where he is based, his suspicions were aroused that the cigarettes were not genuine Winfield cigarettes and as disclosed in his affidavit and that of Miss Fonua a subsequent inspection confirmed the suspicion and a successful application was made for an interim injunction to prevent the release from bond of the container of cigarettes on the basis that it should not be delivered to the domestic market pending analysis and assessment of the genuineness of the cigarettes. In addition the unchallenged view of Mr McIlvride was that the release of the cigarettes would cause real harm to the Plaintiff. That is clearly the case and almost speaks for itself.

No resolution could be reached with the defendant company and indeed they appeared to be somewhat obstructive. On two occasions the container was broken into despite double locks and more than half of the 600 sleeves of cigarettes were stolen. The court must have suspicions about who was involved in those thefts because it resulted in the release of the counterfeit cigarettes into the local market which must have already caused the plaintiff company some damage.

As a result of further applications to the court cigarettes were released and distributed for testing by the employees of the plaintiff company. I am satisfied that the chain of uplifting and delivery was properly proven. I am satisfied that the analysts both in New Zealand and in Australia who came to the view that these cigarettes were not and never had been manufactured by Winfield are entirely accurate in their view. The cigarettes in the container are counterfeit and whoever manufactured or produced the cigarettes has breached the trade mark rights of the plaintiff company considerably. In shipping those cigarettes to the defendant company they have effectively committed the tort of passing off, although one must have some doubt about the genuineness of the defendant and its actions. Given the value of the goods involved one can only wonder at their alleged lack of suspicion and claim of innocence.

Following the thefts referred to above and as a result of further applications to the court the cigarettes were secured in the store of the local Company of the plaintiff. That is effectively the unchallenged factual matrix and within which these proceedings fall to be determined.

I interpose here to confirm that at the commencement of the proceedings I granted leave to Counsel for the Customs Department and the Ports Authority for each of their clients to be discharged from the proceedings on the basis of an undertaking to abide by any order of this court. In addition I confirm a direction made that all of the affidavits prepared and filed in these proceedings could form the basis of the evidence for each of the plaintiff and the defendant subject to their confirmation as to accuracy and also of course subject to their being cross-examined. The only other witness for the defendant was a Mrs Gloria Maka who I am bound to say did not impress me as a witness being evasive to say the least.

The plaintiff seeks a mandatory injunction for this court to order the destruction of the cigarettes and for an order for costs. The plaintiff submits that there is a real threat of danger to the reputation of the plaintiff and a serious breach of its trademark rights should the cigarettes be released to the market here or in fact anywhere should they be for example re-exported. The application is on the basis that there is a fear that the tort of passing off would be committed. In brief passing off requires proof of an appropriate reputation, that there is a misrepresentation concerning the goods, and that the plaintiff is likely to suffer damage. Here the court is asked to issue an injunction quia timet because the plaintiff seeks to restrain conduct which if allowed to go forward would almost certainly lead to substantial damage. It follows from my assessment of the facts that they support entirely the submissions of the plaintiff and its application for such orders.

The defendant in its pleadings essentially put the plaintiff to proof of all matters save its own incorporation. I am satisfied that the technical aspects of that defence were not effectively challenged in cross-examination or by other evidence and material annexed to the affidavit of Mr Mcllvride certainly establishes the existence of the plaintiff company its entitlement to the trademark and protection of its trademark and the ability of its local companies to trade and be protected by the trademark. The plaintiff accepts that the defendant company has not committed the tort of passing off so that that is not an issue but it is certainly concerned about any future actions.

Mr Kaufusi submitted on behalf of the defendant that there was no proof of imminent danger or that the defendant would commit the civil wrong alleged. He submitted that there was no proof that any damage would occur. He also submitted the defendants were innocent, that they were unlikely to repeat such conduct, and that because of their early offers to re-export the cigarettes they should not be the subject of any orders of this court. He also made a submission that the court required proof of fraud on the part of the defendant but that is not a correct statement of the law.

In response Mr Niu simply submitted that the defendant company had been obstructive and unco-operative and were not innocent. Any re-export back to Singapore would carry on infringing the trademark of the plaintiff. In the circumstances he submitted there was a very real fear of imminent danger and damage to the reputation of the plaintiff company should the cigarettes not be destroyed here and now.

In my view those submissions must be upheld. These cigarettes are counterfeit. Any release of those cigarettes to any market will cause damage to the plaintiff and would be a serious breach of their trademark rights. On that basis I am satisfied that grave damage could accrue and that possibility of damage is very high. In the circumstances a mandatory injunction will issue. There will be an order that the remaining shippers of cigarettes will be destroyed forthwith. Any additional terms of that order will be discussed with counsel.

The second defendant and the third defendant are dismissed from the proceedings with no order for costs and subject to any involvement required in the destruction of the cigarettes.

As to costs there is an order in favour of the plaintiff. The full travel and accommodation costs of the witnesses of the plaintiff from overseas are to be paid by the defendant. There was never any challenge to the analysis by the plaintiff’s witnesses confirming the counterfeit nature of the cigarettes. The cross-examination was of no effect. There was no need for these witnesses to come to this country. So far as legal costs are concerned the plaintiff is entitled to the payment of his full solicitor and client costs subject to the normal practices of the Supreme Court in Tonga, and that is to say to be taxed if not agreed.

There is therefore judgment for the plaintiff on these terms.

NUKU'ALOFA: 21 APRIL 2005

Ian Thomas
JUDGE