Fomento (Sterling Area) Ltd v Selsdon Fountain Pen Company Ltd

JurisdictionEngland & Wales
JudgeViscount Simonds,Lord Morton of Henryton,Lord Tucker,Lord Keith of Avonholm,Lord Denning
Judgment Date04 December 1957
Judgment citation (vLex)[1957] UKHL J1204-1
Date04 December 1957
CourtHouse of Lords

[1957] UKHL J1204-1

House of Lords

Viscount Simonds

Lord Morton of Henryton

Lord Tucker

Lord Keith of Avonholm

Lord Denning

Fomento (Sterling Area) Limited
and
Selsdon Fountain Pen Company Limited and Others

After hearing Counsel, as well on Tuesday the 22d, as on Wednesday the 23d and Thursday the 24th, days of October last, upon the Petition and Appeal of Fomento (Sterling Area) Limited, whose registered office is situate at 178-202 Great Portland Street, London, W.1, praying, That the Matter of the Order set forth in the Schedule thereto, namely, an Order of Her Majesty's Court of Appeal of the 8th of November 1956, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioners might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of the Selsdon Fountain Pen Company Limited, Ralph Selsdon and Rebecca Selsdon. lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:

It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 8th day of November 1956, so far as regards the words "this Court doth order that the said judgment dated 30th July 1956 be discharged", and also so far as regards the words "and this Court doth order that this action do stand dismissed out of this Court", and also so far as regards the words "and this Court doth order that the Plaintiffs do pay (A) to the Defendants Ralph Selsdon and Rebecca Selsdon their costs of this action and occasioned by this Appeal", be, and the same is hereby, Reversed, and that the judgment of the Honourable Mr. Justice Harman, of the 30th day of July 1956, thereby discharged, be, and the same is hereby, Restored except as to Costs: And it is further Ordered, That, except so far as aforesaid, and except as regards the Costs of the Respondent Company of the Action, and of the appeal in respect thereof to the Court of Appeal, the said Order of the Court of Appeal be, and the same is hereby, Affirmed: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the action in the Courts below, and also the Costs incurred by them in the said action in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is further Ordered, That the Appellants do pay, or cause to be paid, to the said Respondents the Costs incurred by them on the counter-claim in the Courts below, and also the Costs incurred by them on the said counterclaim in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the Chancery Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.

Viscount Simonds

My Lords,

1

In the action and counterclaim out of which this appeal arises the Appellants claimed that the Respondents had committed a breach of an agreement to which I shall refer and that they had accordingly rightfully determined it. The Respondents, denying the breach and rightful determination, alleged that the Appellants had themselves broken a term of the agreement relating to the grant of a licence at a lower royalty and claimed the appropriate relief. On both points Mr. Justice Harman gave judgment in favour of the Appellants but on both points was reversed by the Court of Appeal.

2

I have referred to an agreement between the parties, but in fact there were two documents which must be read together. The first was a deed, referred to as a "Deed of Terms" dated the 17th May, 1950, the second a formal sub-licence of the same date. A complicated history of dispute lies behind the execution of these documents. I think it necessary only to say that they were originally entered into in settlement of litigation between a company called the Miles Martin Pen Company Ltd. and the Respondents. That company changed its name first to Biro Pens Ltd. and then to Biro Swan Ltd.; the head licence, under which the sub-licence to the Respondents was granted, was at a later date surrendered by Biro Swan Ltd. with the benefit of the sub-licence which had been granted to the Respondents, while at the same time a head licence was granted to the Appellants for the area within which the sub-licence to the Respondents was operative. In settlement of further disputes the Appellants and Respondents and other parties in 1954 executed another deed of which I need only say that its practical effect was that for the purposes of that appeal the relevant clauses of the Deed of Terms and sub-licence can be read as if the name of the Appellants were substituted for that of the Miles Martin Pen Company Ltd. I am not in a position, nor is it necessary, to explain the purpose or effect of these moves and counter moves in the history of the relations between the parties. Nor need I refer to the terms of the formal sub-licence. It is sufficient to refer to the Deed of Terms and that I must do in some detail.

3

The Deed of Terms (to which a Uruguayan company whom I need not further mention was also a party) first recited that the Miles Martin Pen Company Ltd. (in whose shoes the Appellants now stand) owned a sole and exclusive licence for twenty years from the 9th December, 1945, to manufacture, distribute, market, service and exploit ball pointed pens, refills and ink or writing paste, such licence being granted as therein mentioned, and had agreed to grant to the Respondent Company a sub-licence upon the terms thereinafter appearing. It then, so far as material, proceeded as follows, the Respondent Company being referred to as "the Selsdon Company".

"2. Miles Martin hereby agrees to grant and the Uruguayan Company and Martin hereby agree to confirm to the Selsdon Company full but non-exclusive sub-licence to manufacture use and sell writing instruments spare parts therefor refills ink and writing paste which or any part of which is protected by the patents which are granted or which shall proceed to grant (hereinafter called 'the patented articles') in the countries and territories listed in the Schedule hereto (hereinafter called 'the Licensed Territory') upon and subject to the terms herein and in the said sub-licence contained for a term of twenty years from the ninth day of December One thousand nine hundred and forty-five.

3. During the continuance of the said sub-licence and of any further sub-licence which may hereafter be granted by Miles Martin in pursuance of these presents and provided that all or any of the patents which are granted or which shall proceed to grant remain subsisting in the United Kingdom and have not all been declared invalid by a Court of competent jurisdiction therein the Selsdon Company shall pay to Miles Martin as and by way of royalty the following sums subject to the deduction of United Kingdom taxes required by law, that is to say:�

"( a) Six per cent. on the full selling price to the public (excluding purchase tax) if such price is one pound or less of all or any complete writing instruments sold by it which or any part of which is protected by the Patents.

( b) Four per cent. on the full selling price to the public (excluding purchase tax) if such price is two pounds or less but not more than one pound of all or any such writing instruments as aforesaid.

( c) Three per cent. on the full selling price to the public (excluding purchase tax) if such price exceeds two pounds of all or any such writing instruments as aforesaid.

( d) Six per cent. on the full selling price to the public (excluding purchase tax) of all or any parts for writing instruments refills ink and writing paste sold by it which or any part of which is protected by the Patents. The 'full selling price to the public' shall mean the full price at which the article is normally offered for sale to the public (i.e. the price commonly known as the full list price) at the time and place of the sale in question irrespective of the price actually paid or received and in the case of writing instruments shall mean the price of the complete fully assembled writing instrument or if the writing instrument is sold in disassembled parts shall mean the aggregate price of all the parts PROVIDED that nothing in this clause shall make subject to royalties any articles which are returned otherwise than for re-sale to the Selsdon Company for full credit."

7. The Selsdon Company shall keep or cause to be kept at its principal place of business for the time being all necessary books of account relating to the sale or distribution by it of the patented articles and containing such true and complete entries as may be necessary or appropriate for computing royalties hereby reserved and showing all relevant sale prices and shall at all reasonable times if and when required by Miles Martin produce the said books of account to its auditors for the time being and permit them to inspect the same and take copies of extracts therefrom and shall give to the said auditors all such other information as may be necessary or appropriate to enable the amount of the royalties payable hereunder to be ascertained as aforesaid provided that such auditors shall if so required by the Selsdon Company give an undertaking to treat all such information obtained as confidential information disclosed only for the purpose of verifying the amount of royalties which have become payable provided further that the Selsdon Company will supply when called upon so to do by Miles...

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