Passing off
Case Note: William Grant &
Sons Ltd. and others v Glen Catrine Bonded Warehouse Limited and Others
John Lambert
19 Feb 1998
This case note originally appeared on the Lancaster Buildings website
This was an action to restrain the defenders, who had previously carried
on a restaurant and food and wine delivery business in the name of John
Grant (Wine and Food) Limited for many years, from using the name
"Grant" in relation to spirits in the United Kingdom or abroad. It was
the latest of a string of proceedings that had been brought against the
defenders around the world. The transcript of the "opinion" or judgment
runs to 139 pages. The case turned largely on its facts but there was
one issue of law of general application.
The Facts
Between 1903 and 1991 the distillation and distribution of whisky and
other spirits had been carried on by another company by the same name as
the pursuer which the judge called "WGS". In 1991 WGS assigned its
industrial property, goodwill and claims to the first named pursuer.
Various subsidiaries of the pursuer took over the distillation and
distribution businesses. Because of those transactions the defenders
contended that the pursuers had no title the goodwill that had accrued
to WGS. The substance of their argument was that those transactions had
left the pursuer without a business, which in turn extinguished their
goodwill. He relied on the decision of the Privy Council delivered by
Lord Diplock in Star Industrial Co. Ltd. v Yap Kwee Kor [1976]
FSR 256, 269:
"Goodwill, as the subject of proprietary rights, is incapable of
subsisting by itself. It has no independent existence apart from the
business to which it is attached. It is local in character and
divisible; if the business is carried on in several countries a separate
goodwill attached to it in each. So when the business is abandoned in
one country in which it has acquired a goodwill the goodwill in that
country perishes with it although the business may continue to be
carried on in other countries."
In that case the Board found that the plaintiff company ceased to have
any title to sue for passing-off in Singapore when it stopped selling
its goods in that island. In further support of his argument, counsel
for the defenders also relied on such well-known authorities as Pink
v Sharwood & Co. Ltd. [1913] RPC 725 and Anheuser-Bush Inc. v
Budejovicky Budvar NP [1984] FSR 413.
The Decision
The learned judge held that those cases did not "deal with the situation
in which the business and property giving rise to the business activity
to which the goodwill attached, is for administrative reasons spread
throughout a number of companies all of whom are constituted within one
recognizable group all inter-related in structure and ownership." He
accepted the pursuer's submission that the defender's submission ignored
the realities of corporate reconstruction:
"The fact that a business activity was conducted by one company within a
group whose structure changed from time to time, does not, in my
opinion, constitute that abandonment of the business so that the
goodwill arising from that business activity perished. The business
activity becomes as it were divided amongst other companies within the
same group in a different way and nothing else."
In his lordship's view this was wholly removed from the situation in the
Star Industrial case. Although the judge was clearly right there is a
dearth of authority on the subject. The nearest English case cited on
this point was Norman Clark Publications Ltd. v Odhams Press Ltd. [1962]
RPC 163 which was essentially obiter. This case will be useful in
summary judgment applications where the subsistence of and title to
goodwill may be the only substantial issue.
The Appeal
Both sides appealed, the defenders raising a Euro-defence and the
pursuers on the extent of the remedy. The Inner House had no hesitation
in dismissing the appeal and granted an interdict in the terms sought
([2001] ScotCS 116 (16 May, 2001)).
