Warnink (Erven) Besloten Vennootschap v J Townend & Sons (Hull) Ltd

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Diplock,Viscount Dilhorne,Lord Salmon,Lord Fraser of Tullybelton,Lord Scarman
Judgment Date21 Jun 1979
Judgment citation (vLex)[1979] UKHL J0621-2

[1979] UKHL J0621-2

House of Lords

Lord Diplock

Viscount Dilhorne

Lord Salmon

Lord Fraser of Tullybelton

Lord Scarman

Erven Warnink Besloten Vennootschap and Others
(Appellants)
and
J. Townend & Sons (Hull) Limited and Others
(Respondents)

Upon Report from the Appellate Committee to whom was referred the Cause Erven Warnink Besloten Vennootschap and others against J.Townend & Sons (Hull) Limited and others, That the Committee had heard Counsel as well on Tuesday the 24th as on Wednesday the 25th and Thursday the 26th days of April last upon the Petition and Appeal of Erven Warnink Besloten Vennootschap of 31 Bury Street, St. James's London S.W.1 and of Victoria Wine Co. Limited whose registered office is situate at Brook House, Chertsey Road, Woking, Surrey 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 19th day of April 1978 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 Case of J. Townend & Sons (Hull) Limited and H. Keeling & Co. (a firm) 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 19th day of April 1978 complained of in the said Appeal be, and the same is hereby, Reversed and that the Order of Mr. Justice Goulding of the 29th day of July 1977 be, and the same is hereby, Restored: 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 Courts below and also the Costs incurred by them in respect of the said Appeal to this House, such last mentioned costs to exclude the costs of reproducing four volumes of the transcripts of evidence in the High Court as part of the Appendix, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments if not agreed between the parties: 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.

Lord Diplock

My Lords,

1

This is an action for "passing off", not in its classic form of a trader representing his own goods as the goods of somebody else, but in an extended form first recognised and applied by Danckwerts J. in the Champagne case ( Bollinger v. Costa Brava Wine Co. Ltd. [1960] R.P.C. 16). The ratio decidendi of that case was subsequently adopted as correct by Cross J. in the Sherry case ( Vine Products Ltd. v. Mackenzie & Co. Ltd. [1969] R.P.C. 1) and by Foster J. in the Scotch Whisky case ( John Walker & Sons Ltd. v. Henry Ost & Co. Ltd. [1970] R.P.C. 489).

2

The facts of the instant case as found by Goulding J. after a protracted trial make it, in my view, impossible to draw a rational distinction between the instant case and the Champagne case which could reconcile acceptance of the reasoning in the Champagne case with dismissal of the plaintiff's action in the instant case. This was also the view of Goulding J.; but his judgment in the plaintiffs' favour was reversed by the Court of Appeal (Buckley and Goff L.JJ. and Sir David Cairns) who, while expressing approval of the Champagne and Sherry cases, though with reservations on the Scotch Whisky case, nevertheless felt able to discern a relevant distinction between those cases and the instant case. Not quite the same distinction was drawn by Buckley L.J. and Goff L.J. but, with respect, I think that both were mistaken; and if this be so, the question of law for your Lordships is whether this House should give the seal of its approval to the extended concept of the cause of action for passing off that was applied in the Champagne, Sherry and Scotch Whisky cases. This question is essentially one of legal policy.

3

The first plaintiff ("Warnink") is a manufacturer in Holland of an alcoholic drink known in England as well as in Holland as "Advocaat". Its principal ingredients are eggs and spirits without any admixture of wine. The second plaintiffs are the distributors in England of Advocaat manufactured by Warnink. Warnink's Advocaat and advocaat made in Holland by a small number of other Dutch manufacturers had been marketed in England for many years prior to the events which gave rise to this action; but the lion's share of the market, some 75%, was held by Warnink. In recent years as a result of heavy advertising, principally by Warnink which has become a subsidiary of Allied Breweries Ltd., advocaat has become a popular drink among a large class of people in England. In the words of Goulding J.

"A substantial reputation and goodwill have, over half a century or more, been acquired by the name 'Advocaat' as that of a drink with recognisable qualities of appearance, taste, strength and satisfaction."

4

The character of the drink by which the goodwill attaching to the name "Advocaat" had been earned was that of the spirit-based Dutch advocaat which had been imported into the United Kingdom over a long period and in large quantities; and the evidence accepted by the learned judge showed that notwithstanding minor differences between competing brands of advocaat it was a distinct and recognisable species of beverage.

5

There has also been another alcoholic egg drink on the English market known to the public as Egg Flip and sold under that name. Its principal ingredients are eggs and a fortified wine. Its alcoholic strength, about 14% by volume or 30° proof, does not differ greatly from that of advocaat; but by one of the vagaries of British excise law, because the ingredient which provides the alcohol is classified as fortified wine and not as spirits, egg flip attracts excise duty in England at a rate of some fifty pence a bottle lower than that charged on advocaat. As was found by the learned judge:

"the public knows of Egg Flip as an alcoholic egg drink, sold as something different from Advocaat and at a lower price".

6

He also found that an expert could well distinguish a wine-based egg drink from advocaat and that a regular drinker of either type could do the same, but he said "there is no such gross difference of taste, colour or other qualities as would lead the inexperienced or casual customer to regard them as different species of drink".

7

The defendants ("Keeling") are an English company and a partnership firm who, acting in association, manufactured an egg flip and prior to 1974 sold it under that description on the English market. In that year, however, as the judge found "they conceived a plan to profit from the popularity of Advocaat". They produced an alcoholic egg drink from a mixture of dried eggs and a Cyprus sherry. This they put on the market as "Keeling's Old English Advocaat". Attracting as it did the lower rate of excise duty appropriate to fortified wine in place of spirits, Keeling were able to undersell Warnink and other makers of the spirit-based egg drink of the composition that had acquired for the drink sold in England under the name Advocaat the substantial reputation and goodwill which the judge found attached to it. "Keeling's Old English Advocaat" captured an appreciable share of the English market for advocaat and, as the judge found, damage had been thereby caused to Warnink and other traders in Dutch advocaat and "such damage would not have occurred or would have occurred to a much smaller extent had the defendants not used the word 'Advocaat' as part of the description of their product".

8

True it is that it could not be shown that any purchaser of Keeling's Old English Advocaat supposed or would be likely to suppose it to be goods supplied by Warnink or to be Dutch advocaat of any make. So Warnink had no cause of action for passing off in its classic form. Nevertheless, the learned judge was satisfied: (1) that the name "Advocaat" was understood by the public in England to denote a distinct and recognisable species of beverage; ( 2) that Warnink's product is genuinely indicated by that name and has gained reputation and goodwill under it: (3) that Keeling's product has no natural association with the word "Advocaat"; it is an egg and wine drink properly described as an "Egg Flip", whereas Advocaat is an egg and spirit drink; these are different beverages and known as different to the public; (4) that members of the public believe and have been deliberately induced by Keeling to believe in buying their "Old English Advocaat" they are in fact buying advocaat; (5) that Keeling's deception of the public has caused and, unless prevented, will continue to cause, damage to Warnink in the trade and the goodwill of their business both directly in the loss of sales and indirectly in the debasement of the reputation attaching to the name "Advocaat" if it is permitted to be used of alcoholic egg drinks generally and not confined to those that are spirit based.

9

These findings, he considered, brought the case within the principle of law laid down in the Champagne case by Danckwerts J. and applied in the Sherry and Scotch Whisky cases. He granted Warnink an injunction restraining Keeling from selling or distributing under the name or description "Advocaat" any product which does not basically consist of eggs and spirit without any admixture of wine.

10

My Lords, these findings of fact were accepted by the Court of Appeal and have not been challenged in your Lordships' House. They seem to me to disclose a case of unfair, not to say dishonest, trading of a kind for which a rational...

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