Mechanical Handling Engineering (S) Pte Ltd v Material Handling Engineering Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Michael Hwang JC
• Judgment Date: 02 November 1992
• Neutral Citation: [1992] SGHC 281
• Docket Number: Suit No 7812 of 1985
• Date: 02 November 1992
• Published date: 19 September 2003
• Year: 1992
• Plaintiff Counsel: Aloysius Leng (Abraham Low & Partners)
• Citation: [1992] SGHC 281
• Defendant Counsel: G Radakhrishan and Azmeen Moiz (Drew & Napier)
• Court: High Court (Singapore)
• Subject Matter: Whether reputation recognizable in initials 'MHE',Name of corporation,Parties in the material handling industry,Date when sufficient reputation was established,Evidence of confusion,Whether 'Mechanical Handling Engineering' distinctive,No evidence of deliberate passing off,Reputation,No evidence of specific damages,Whether doctrine of shared reputation relevant,Descriptive name,Corporations,Passing off,Trade Marks and Trade Names

Cur Adv Vult

Mr Peter Boo is an enterprising man. On 18 April 1975, at the age of 23, armed with a diploma in mechanical engineering from the Singapore Polytechnic and about $30,000 in working capital, he established a company called `Material Handling Engineering Pte Ltd` (the first defendant) with three or four employees and a paid-up capital of $200. From those humble beginnings, he developed the first defendant virtually single-handedly into a company that now has a paid-up capital of $5.5m and achieved a turnover of $26.5m in 1991. In 1989 its shares became quoted on the SESDAQ section of the Stock Exchange of Singapore Ltd, and it changed its name to `Material Handling Engineering Ltd`.

Unfortunately, the first defendant`s name resembles the name of the plaintiff, `Mechanical Handling Engineering (S) Pte Ltd`, a company which was established in 1972, three years earlier than the incorporation of the first defendant. The plaintiff is a member of the well known Jebsen and Jessen group of companies and has also, over the years, grown into a large conglomerate in its own right, with a paid-up capital of $10m and a turnover of $66m in 1991. Both the plaintiff and the first defendant are presently engaged in the business of designing, fabricating, installing and selling material handling equipment and systems, although within that broad field, the plaintiff`s activities differ somewhat from those of the first defendant. The plaintiff has, since its incorporation, made use of its initials `MHE` to identify itself and its products, and regards those initials as a distinctive logo.

The second defendant is called `MHE Industrial Products Pte Ltd`, and is a wholly-owned subsidiary of the first defendant. It was incorporated on 28 September 1978 under a different name, and adopted its present name on 9 January 1979, but did not commence business until 1981. It carries on the business of trading in conveyors manufactured by the first defendant and other material handling and engineering products manufactured by third parties. Obviously, it trades under its corporate name, which includes the initials of the plaintiff.

The similarities between the corporate names and initials of the plaintiff and the two defendants have led to differences between the parties over the years, in particular two contested trademark applications, which are not immediately relevant to this suit.

In these proceedings the plaintiff seeks:

(a) an injunction to restrain the two defendants from using the words `Material Handling Engineering` and the initials `MHE` for the purposes of or in connection with their respective businesses and from displaying these words and initials in their business documents;

(b) an inquiry as to damages or, alternatively, an account of the profits of the defendants` businesses;

(c) payment of all sums found due to the plaintiff upon taking such inquiry or account.

The claim is therefore based purely on passing-off.

The general law

It is common ground that the essential ingredients for a successful passing-off action are set out in the speech of Lord Diplock in Erven Warnink Besloten Vennootschap v J Townsend & Sons (Hull) Ltd [1979] AC 731 (the Advocaat case) at p 742 :

... (1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequences) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.

It is also common ground that the five essential ingredients are generally expressed by a three-fold test :

(a) whether a plaintiff can establish reputation in the goods or services provided by him;

(b) whether the actions of a defendant amount to a misrepresentation; and

(c) whether a plaintiff has or is likely to suffer damage to its business or goodwill as a result of the misrepresentation.

(See Tong Guan Food Products Pte Ltd v Hoe Huat Hng Foodstuff Pte Ltd [1991] 2 MLJ 361 at p 362).

I will therefore analyse the facts of the case under each of these three heads.

1 Reputation

The plaintiff was incorporated on 2 March 1972 as a wholly-owned subsidiary within the Jebsen and Jessen group of companies. It was established for the main purpose of acting as agent for and licensee of a German company called Demag, the world`s largest manufacturer of cranes and hoists. Demag was also one of the largest manufacturers of conveyors and warehousing systems, and franchises for all these items were granted to the plaintiff. However, the evidence is that the plaintiff`s main area of business in its earlier years was in cranes and hoists rather than in any other Demag products. Its gross sales figures from its date of incorporation until commencement of the writ were as follows :

Year (S$ million)

1972 0.4

1973 2.8

1974 8.8

1975 8.3

1976 7.1

1977 9.3

1978 8.6

1979 10.8

1980 23.8

1981 26.5

1982 36.4

1983 28.3

1984 23.9

1985 27.6

Its sales figures for conveyors were, however, as follows :

Year (S$ million)

1972 0.07

1980 8.27

No specific figures for sales of conveyors for the years after 1980 have been made available to me, but it is not disputed that the plaintiff made substantial sales of conveyors in the decade after 1980 and has continued to do so up to the present time.

From the beginning, the plaintiff made extensive use of the initials `MHE` as a supplement to (and, in some cases, a substitute for) its corporate name. Its brochures and stationery would, in addition to setting out its corporate name, also set out its initials in a stylish form thus making the initials a logo, and this logo was also extensively used on other objects bearing the plaintiff`s name (for example, the plaintiff`s factory and vehicles). The products of the plaintiff were mainly Demag cranes (manufactured under licence from Demag) and Demag hoists (purchased for resale). These products were sold bearing both the Demag name and the plaintiff`s logo. The plaintiff`s telephone operators and representatives referred to the plaintiff by its initials when communicating with customers and others.

There is evidence of substantial advertising and promotion by the plaintiff in its early years, with an annual advertising budget of between $50,000 to $60,000 in press, magazines and advertisements, product brochures and the yellow pages of the Singapore Telephone Directory. It is admitted, however, that these figures covered both Singapore and Malaysia, and therefore the amounts for Singapore are likely to have been substantially less than $50,000 per annum. Furthermore, although the plaintiff held the agency for Demag conveyors, it also concedes that sales of these conveyors were minimal in the 1970s, and the evidence indicates that the large sales figures for 1980 probably refer to a single sale, an air cargo handling system on behalf of Demag for Singapore Airport Terminal Services (Pte) Ltd.

The plaintiff also has three Singapore subsidiaries but:

(a) the first has always dealt in products which are outside the product lines of the plaintiff and the defendants;

(b) the second was incorporated long after both defendants were incorporated and has not traded actively; and

(c) the third was incorporated after the writ was issued, with the name of a division of the plaintiff that had only commenced business around the time that these proceedings commenced.

Accordingly, I can discount the contribution of these subsidiaries to the reputation of the plaintiff for the purposes of this action.

The plaintiff also incorporated several subsidiaries outside Singapore, but they did not carry on any or any significant business in Singapore, and were only known in Singapore (if at all) by the plaintiff`s advertisements and brochures referring incidentally to its foreign subsidiaries.

However, even discounting the contribution of the plaintiff`s subsidiaries to its reputation, the following matters are clear:

(a) Although no external evidence has been called to corroborate the plaintiff`s claim that it had a substantial reputation in its name and initials, the evidence adduced on behalf of the plaintiff is sufficient to establish that, by virtue of its sales, advertisements and other activities in the market, it had at the material time established a reputation for itself both under its full name as well as under its initials (bearing in mind that the target market was a relatively restricted and specialised one).

(b) The reputation it acquired would, however, have pre-dominantly, if not solely, been in connection with cranes and hoists, which were the plaintiff`s bread-and-butter business, and these products would be mainly associated with the licensors, namely, Demag.

I now discuss the significance of these findings of fact in the light of the authorities.

Both counsel agree that the relevant date for the establishment by the plaintiff of its reputation in the words `Mechanical Handling Engineering` and the initials `MHE` is the date the conduct complained of commenced (see Cadbury-Schweppes Pty Ltd v Pub Squash Co Ltd 3 at p 494). So the question is whether sufficient reputation had been established by the time the respective defendants commenced business, which, on the evidence, would be 1975 and 1981 respectively. Counsel for the plaintiff submits that the relevant date for the first defendant would be 1980, when the latter moved to Jurong, since it then started to diversify into other product lines which impinged on the plaintiff`s activities. I do not accept this argument. Paragraphs 2 and 9 of the statement of claim make it clear that the plaintiff complains of the conduct of the first defendant as from the date of its incorporation.

A convenient statement of the test for...