Porzelack K.G. v Porzelack (U.K.) Ltd

JurisdictionEngland & Wales
Judgment Date1987
Date1987
Year1987
CourtChancery Division
[CHANCERY DIVISION] PORZELACK K.G. v. PORZELACK (UK) LTD. [1986 P. No. 5906] 1987 Jan. 19, 20 Sir Nicolas Browne-Wilkinson V.-C.

Costs - Security for costs - Foreign plaintiff - Plaintiff resident in E.E.C. - Defendant's application for security for costs - Enforceability of UK judgments in E.E.C. - Whether factor to be taken into account in exercise of discretion to order security for costs - Civil Jurisdiction and Judgments Act 1982 (c. 27), s. 2(1) - R.S.C., Ord. 23, r. 1(1)(a)

The plaintiff, a West German organisation, started an action claiming an injunction against the defendant company to restrain it from passing off car care products as its own. The defendant applied for an order for security for costs against the plaintiff on the basis that the plaintiff was resident outside the jurisdiction. The plaintiff resisted the making of the order, inter alia, on the grounds that since the coming into force of the Civil Jurisdiction and Judgments Act 1982, which provided for the enforceability of judgments given in the United Kingdom in other E.E.C. member states, the defendant had no need for an order for security for costs:—

Held, dismissing the application, that the purpose of ordering security for costs against a foreign plaintiff was not to provide security for a defendant against a plaintiff who lacked funds but to bring funds within the jurisdiction against which the defendant could enforce the order; that, under the Act of 1982, a defendant with an order for costs against a resident of an E.E.C. country now had a realistic alternative to enforcing the order within the jurisdiction which was an important factor in the exercise of the court's discretion; but that, since a party had a limited right to challenge the enforceability of an English judgment in another E.E.C. country and since such enforcement necessarily entailed the difficulties inherent in using a different language and a different system of law, it was not a decisive factor; but that, taking also into account the other relevant factors, namely, the defendant's conduct and the plaintiff's limited means, the court would not grant an order for security for costs (post, pp. 422H, 426A–B, C–G).

Raeburn v. Andrews (1874) L.R. 9 Q.B. 118 considered.

Per curiam. On an application for security for costs parties should not seek to investigate in detail the likelihood of success in the action. That decision is necessarily made at an interlocutory stage on inadequate material and without any hearing of the evidence. A detailed examination of the merits which is both time consuming and expensive is not the right course to adopt unless it can clearly be demonstrated one way or the other that there is a high probability of success or failure (post, p. 423D–F).

The following cases are referred to in the judgment:

Compagnie Francaise de Television v. Thorn Consumer Electronics Ltd. [1981] F.S.R. 306

D.S.Q. Property Co. Ltd. v. Lotus Cars Ltd. [1987] 1 W.L.R. 127

Kohn v. Rinson & Stafford (Brod.) Ltd. [1948] 1 K.B. 327

Landi Den. Hartog B.V. v. Stopps [1976] F.S.R. 497

Meijer v. John H. Taylor Ltd. [1981] F.S.R. 279

Raeburn v. Andrews (1874) L.R. 9 Q.B. 118

The following additional case was cited in argument:

Aeronave S.P.A. v. Westland Charters Ltd. [1971] 1 W.L.R. 1445; [1971] 3 All E.R. 531, C.A.

MOTION

By a notice of motion dated 19 November 1986 the defendant, Porzelack (U.K.) Ltd., sought an order that the plaintiff, Porzelack K.G., do forthwith give security for costs in the sum of £15,000 and that in the meantime all further proceedings in the passing-off action between them be stayed on the ground that Porzelack K.G. was a foreign corporation with no assets within the jurisdiction.

The facts are stated in the judgment.

Michael Silverleaf for the applicant on the motion, the defendant.

Kynric Lewis Q.C. and George Hamer for the respondent to the motion, the plaintiff.

SIR NICOLAS BROWNE-WILKINSON V.-C. I have before me a motion by the defendant, Porzelack (U.K.) Ltd., asking for security for costs to be given by the plaintiff, a German organisation called Porzelack K.G. The background to this application is shortly as follows. The moving spirit behind the plaintiff German organisation is a Mr. Bendel, himself a West German now resident in West Germany, as is the plaintiff organisation. Mr. Bendel, through a number of companies, has over a long period of years carried on business in the manufacture and supply of car polishes, car paints and other car care products.

The plaintiff organisation is, as I have said, resident in West Germany. There is no expert evidence as to its legal status and I am far from clear as to what it is. In the statement of claim it is alleged that Mr. Bendel is the sole promoter and director of the plaintiff and that he has unlimited liability for its debts; but on the information before me it is quite impossible to form any clear view as to what is its position under the law of West Germany.

Mr. Bendel at one stage had an Irish company also carrying the name “Porzelack,” which traded until 1979. In this country Mr. Bendel has had no less than three limited companies. The first, which started trading in 1964, was called Porzelack Ltd. It went into receivership in 1970 and ceased trading, and was struck off the register in 1983. Almost simultaneously with it going into receivership, Mr. Bendel formed a new company in this country called Continental Chemicals Ltd., which started trading on 1 June 1970. It went into receivership in November 1983 and a winding-up order was made in December 1983. Not a whit abashed, Mr. Bendel then started trading under the guise of a new limited company, Porzelack International Ltd. (which I will call “P.I.L.”). That started trading in June 1983, ceased trading in January 1985 and was wound up on 3 February 1986. Each of those companies was apparently controlled by Mr. Bendel, not by the plaintiff organisation. They traded in this country in car care products under the name attached to the products, “Porzelack.”

The defendant company, despite its name, has no connection with Mr. Bendel or the plaintiff. Following the final demise of P.I.L., the defendant company was set up in 1986 apparently by former distributors of P.I.L.'s products, with the help of a former executive of P.I.L. The defendant company is selling car care products of the same kind...

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