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Royal New Zealand Yacht Squadron v Daks Simpson Group PLC HC Wellington AP76/01 [2001] NZHC 891; [2002] NZAR 187 (21 September 2001)

Last Updated: 13 November 2013

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY AP76/01

UNDER The Trade Marks Act 1953
AND
IN THE MATTER of a decision of the Assistant Commissioner of Trade Marks dated 19 February 2001

BETWEEN ROYAL NEW ZEALAND YACHT SQUADRON
Appellant

AND DAKS SIMPSON GROUP PLC
Respondent

Hearing: 17 September 2001

Counsel: D L Marriott for Appellant
C Warburton and D Winfield for Respondent

Judgment: 21 September 2001

RESERVED JUDGMENT OF RONALD YOUNG J

Solicitors:
James & Wells, Auckland, for Appellant
Baldwin Shelton Waters, Wellington, for Respondent

Background

[1] The Appellant appeals and the Respondent cross-appeals from a determination of the Assistant Commissioner of Trade Marks to allow the trade mark “Squadron” to remain on the register in restricted form.

[2] The Respondent is the proprietor in New Zealand of the trade mark “Squadron” in relation to articles of outer clothing for men and women; boots, shoes and slippers registered on 13 April 1982.

[3] On 10 February 1998 the Appellant applied to remove the entry in the trade mark register alleging there had been no bona fide use of the trade mark in relation to the goods it covered for a period of 5 years (s 35 Trade Marks Act 1953).

[4] The opposed application was heard by the Assistant Commissioner of Trade Marks on 5 February 2001.

[5] The Commissioner decided:

(i) The applicant had established a prima facie case that there had been no use of trade mark during the relevant period.

(ii) The Respondent had failed to satisfy him there had been bona fide use of the squadron trade mark during the period.

(iii) The Applicant’s case was proved.

(iv) In the exercise of his discretion he allowed the Respondent’s trade mark to remain but with the statement of goods restricted to “mens dress jackets and blazers”.

[6] This is an appeal from a discretion. In such circumstances a Court will not interfere with the exercise of a discretion unless it is clear the Assistant Commissioner proceeded on a wrong principle, gave undue weight to some factor or insufficient weight to another or was plainly wrong (see Fuehrer v Thompson [1981] 1 NZLR 699 at 702-703).

The appeal and cross-appeal

[7] The Appellant complains that the Assistant Commissioner wrongly exercised his discretion to allow the registration of the trade mark (partially) to remain and wrongly refused costs. The Respondent cross-appeals alleging the Assistant Commissioner wrongly admitted or gave weight to certain evidence (the evidence of Mr Endean and Mr Adler). Without that evidence, the Respondent says, the Appellant’s case before the Assistant Commissioner could not have succeeded.

[8] Section 35(1) of the Trade Marks Act 1954 (“the Act”) reads as follows:

“35 Removal from register and imposition of limitations on ground of non-use

(1) Subject to the provisions of section 36 of this Act, a registered trade mark may be taken off the register in respect of any of the goods or services in respect of which it is registered on application by any person aggrieved to the Court or, at the option of the applicant and subject to the provisions of section 67 of this Act, to the Commissioner, on the ground that up to the date one month before the date of the application a continuous period of 5 years or longer elapsed during which the trade mark was a registered trade mark and during which there was no bona fide use thereof in relation to those goods or services by any proprietor thereof for the time being.

(1A) Except where the applicant has been permitted under section 17 of this Act to register an identical or similar trade mark in respect of the goods or services to which the application relates or where the Court or the Commissioner is of the opinion that the applicant might properly be permitted to register such a trade mark, the Court or the Commissioner, as the case may be, may refuse an application made under subsection (1) of this section in relation to any goods or services, if there has been, during the relevant period,-

(a) Where the application relates to goods, bona fide use of the trade mark by any proprietor thereof for the time being in relation to goods or services in respect of which the trade mark is registered, being goods of the same description as those goods or services that are similar to those goods:

(b) Where the application relates to services, bona fide use of the trade mark by any proprietor thereof for the time being in relation to goods or services in respect of which the trade mark is registered, being services of the same description as those services or goods that are similar to those services.”

[9] It is common ground that when considering an application under s 35 the proper course for the Assistant Commissioner is to (i) require the party seeking to establish the relief to make out a prima facie case. This prima facie case standard should not be too high a standard; (ii) if established to require the Respondent to show there was bona fide use of the trade mark in relation to the specified goods; (iii) if there is no bona fide use of the trade mark then the registered trade mark may be taken off the register.

[10] This form of hearing is based on the rationale that before the Respondent is called on to justify the continuing registration of the trade mark the applicant should be required to show there is a factual basis to doubt the bona fide use of the trade mark during a five year period. Once this is established then the Respondent is called on to show the bona fide use of the trade mark in relation to those goods. This reflects the fact that most of the facts about the trade mark use will be uniquely within the knowledge of the Respondent. The Respondent is protected against frivolous complaints because of the prima facie evidence rule but in turn cannot hide behind a paucity of facts able to be cured by its own knowledge of use.

[11] It is convenient to consider the cross-appeal first. This is an attack on the first finding of Assistant Commissioner that there was prima facie evidence of non use.

First ground of appeal; admissibility of evidence

[12] Under this ground the Respondent complains that Mr Endean’s evidence should have been given no weight because it was hearsay on the essential aspects.

[13] Mr Endean is the commodore of the Appellant. He is a solicitor. He proclaims no personal knowledge of the clothing or footwear industry of New Zealand. He was one of the two deponents of the Appellant. He says in his affidavit that he became aware that DAKS (the Respondent) manufactured and sold clothing with the squadron label. He said he spoke to the (unnamed) Auckland manager of the Suit Centre who claimed:

(i) the Suit Centre was the sole importer of DAKS clothing in New Zealand (clearly wrong if he was referring to 1996/1997 when Ballentynes imported DAKS clothing into New Zealand);

(ii) that squadron clothing had not been sold in New Zealand at any time in the last five years. (Again clearly wrong given the Ballentynes’ evidence); and

(iii) the Suit Centre no longer imported DAKS clothing into New Zealand.

[14] There was no identification of the person Mr Endean spoke to, nor any evidence of his qualifications to make the assertions he did.

[15] This evidence is hearsay and potentially “double” hearsay from an unidentified source. Mr Endean has no personal knowledge of the facts in paragraph 5 of his affidavit. The unidentified manager providing the information cannot from his own personal knowledge know whether DAKS have sold clothing elsewhere in New Zealand unless for example he had an exclusive arrangement with DAKS. None is mentioned. Nor can either Mr Endean or the manager say from their own personal knowledge whether Squadron clothing has or has not been sold in New Zealand in recent times. Nor do we know the source of the information of the unnamed manager recorded in Mr Endean’s affidavit. It may itself be hearsay.

[16] It is clear, therefore, that the essence of Mr Endean’s evidence is hearsay. But is hearsay evidence objectionable in a tribunal such as this?

[17] The Act gives no assistance. It is silent as to whether or not the rules of evidence strictly apply. In contrast see s 90(6) of the Accident Rehabilitation Compensation & Insurance Act, s 59(d) District Courts Act, and s 40 Disputes Tribunals Act.

[18] General principle favours the inapplicability of the ordinary rules of evidence in such circumstances given the desire of administrative tribunals to function informally. See R v Deputy Industrial Injuries Commissioner, Ex parte Moore [1965] 1 All ER 81 at 94 per Diplock LJ (from line (e)):

“The requirement that a person exercising quasi-judicial functions must base his decision on evidence means no more than that it must be based on material which tends logically to show the existence or non-existence of facts relevant to the issue to be determined, or to show the likelihood or unlikelihood of the occurrence of some future event the occurrence of which would be relevant. It means that he must not spin a coin or consult an astrologer; but he may take into account any material which, as a matter of reason, has some probative value in the sense mentioned above. If it is capable of having any probative value, the weight to be attached to it is a matter for the person to whom Parliament has entrusted the responsibility of deciding the issue. The supervisory jurisdiction of the High Court does not entitle it to usurp this responsibility and to substitute its own view for his.”

[19] And see T A Miller Ltd v Minister of Housing and Local Government & Anor [1969] RPC 91 at 93 per Lord Denning MR when considering a planning inquiry said:

“In my opinion this point is not well founded. A tribunal of this kind is master of its own procedure, provided that the rules of natural justice are applied. Most of the evidence here was on oath, but that is no reason why hearsay should not be admitted where it can fairly be regarded as reliable. Tribunals are entitled to act on any material which is logically probative, even though it is not evidence in a court of law”.

[20] It seems clear therefore that a tribunal such as the Assistant Commissioner of Trade Marks constituted here is a tribunal which would ordinarily be free to admit what evidence it considered proper, reliable, logically probative and given in accordance with the rules of natural justice.

[21] There is, however, one impediment to that course here. The Appellant sought an order pursuant to s 35 of the Act. A person “aggrieved” may apply either to the Court (defined by s 2 as the High Court) or the Commissioner for an order for removal of the trade mark. Section 67 further defines the options in this way:

“67 Procedure in cases of option to apply to Court or Commissioner

Where under any of the foregoing provisions of this Act an applicant has an option to make an application either to the Court or to the Commissioner-

(a) If an action concerning the trade mark in question is pending, the application must be made to the Court:

(b) If in any other case the application is made to the Commissioner, he may, at any stage of the proceedings, refer the application to the Court, or he may, after hearing the parties, determine the question between them, subject to appeal to the Court.”

[22] Thus other than where there is an action involving a trade mark pending the aggrieved person may apply to either the High Court or the Commissioner for a s 35 order. As would be expected there are regulations made under the Act. They provide (Trade Marks Regulations 1954) for an exchange of “evidence” between the parties in support and in opposition to the application.

[23] The High Court will be bound by the rules of evidence in any application under s 35 of the Act (subject only to the Trade Marks Regulations).

[24] Rules 503-524 of the High Court Rules govern the procedure when evidence is given by affidavit (as here). These rules will apply to trade mark proceedings before the High Court subject only to the express rules in the Trade Marks Regulations 1954. Rule 510 states; every affidavit,

“(d) Shall be confined-

(i) To such matters as would be admissible if given in evidence at trial by the deponent; and

(ii) If in reply, to matters strictly in reply.”

[25] Thus the High Court when hearing an application under s 35 of the Trade Marks Act will be obliged to conduct a hearing enforcing the rules as to the admissibility of evidence. In this case the particular rule of evidence of concern is the rule against hearsay evidence.

[26] Section 7 of the Evidence Amendment Act 1980 (No 2) deals with oral hearsay in civil proceedings. It states:

“7 Admissibility of oral hearsay evidence in civil proceedings

In any civil proceeding where direct oral evidence of a fact would be admissible, any oral statement made by a person and tending to establish that fact shall be admissible as evidence of that fact if the maker of the statement had personal knowledge of the matters dealt with in the statement, and is unavailable to give evidence.”

[27] Thus the High Court in proceedings under s 35 of the Trade Marks Act will expect to deal with questions of admissibility of hearsay evidence guided by s 7 of the Evidence Amendment Act 1980.

[28] To return to the impediment to the Assistant Commissioner being free to admit what evidence it considered proper, reliable, logically probative and given in accordance with natural justice. It would be wrong for there to be different rules of evidence applying to a s 35 application depending on whether the application was dealt with by the Court or by the Assistant Commissioner. The rules of evidence applicable to the High Court must therefore apply to both.

[29] I therefore conclude that the Assistant Commissioner in applications under s 35 of the Trade Marks Act is bound by the rules of evidence and in particular the rules of evidence as they relate to hearsay including the Evidence Amendment Act 1980 (No 2) (s 7 oral hearsay and s 3 documentary hearsay). In support see also St Trudo Trade Mark [1995] RPC 370.

[30] The Assistant Commissioner in relation to Mr Endean’s evidence said, after recording exactly what Mr Endean did say:

“This evidence is criticised on a number of fronts by the respondent. It is clearly hearsay evidence; there are significant gaps in the information provided in the evidence. No information is offered as to why direct evidence from the unnamed manager of the Suit Centre could not have been provided.”

And further:

“The evidence in my view is seriously flawed and by itself would not have satisfied me the applicant had reached the required standard to establish a prima facie case.

However, in the circumstances of this case it is my decision that all the evidence of the applicant should be considered in determining whether or not a prima facie case has been made out.”

[31] This was the wrong approach to Mr Endean’s evidence if in using the phrase “all the evidence of the applicant” the Commissioner included Mr Endean’s evidence. Mr Endean’s evidence should have been set to one side. It had no evidential value given the essential aspects were anonymous hearsay and clearly did not qualify for admission by virtue of s 7 Evidence Amendment Act 1980 (No 2). It is not entirely clear whether the Assistant Commissioner did in fact take into account Mr Endean’s evidence. After the Commissioner mentioned that “all of the evidence of the applicant” should be considered he went on to consider only the evidence of Mr Adler. However, “all” the evidence is mentioned. I conclude that the Assistant Commissioner proceeded on a wrong principle if indeed he did take into account as part of his decision the evidence of Mr Endean.

[32] The Respondent also attacks the evidence of Mr Adler. It says:

(i) The evidence of Mr Adler was in reply and cannot be used to bolster the applicant’s prima facie case;

(ii) Mr Adler was not properly qualified as an “expert” throughout New Zealand.

(iii) Mr Adler had not made any investigation, enquiries or research into the possible use of the trade mark by the Respondent.

Evidence in reply

[33] The Assistant Commissioner said (p 4):

“It is my view the evidence of Mr Adler is relevant and helpful and arguably could be considered as evidence in reply. In any event if the respondent considered it was disadvantaged the appropriate procedure would have been to file an application for leave to file additional evidence dealing with Mr Adler’s evidence”.

And further:

“. . .and I intend to consider the evidence of both deponents [Mr Adler and Mr Endean] when assessing whether or not the applicant has established a prima facie case.”

[34] While strictly speaking Mr Adler’s evidence was in reply to the Respondent’s evidence to refuse to consider it would be harsh indeed. I think it was perfectly proper and understandable for the Assistant Commissioner to take into account Mr Adler’s evidence when considering if there was a prima facie case whether, strictly speaking, it was intended to be in reply or not. It was available to be considered and understandably was used. I see no objection to this especially given his invitation to the Respondent to file further evidence if prejudiced.

Mr Adler’s qualifications and investigations

[35] I combine the Respondent’s second and third objections to Mr Adler’s evidence. Mr Adler was self described as a very experienced person in the clothing industry. He had been a partner in a business which had stores in shopping centres around New Zealand. He had 20 years in the clothing industry and owned and operated 16 retail stores. He believed, given his knowledge of the clothing industry, he would have been aware of other organisations marketing clothing under another squadron brand name. The Respondent says that Mr Adler’s evidence could not have been sufficient to satisfy the Assistant Commissioner that there was a prima facie case here.

[36] The Respondent quoted extensively from a number of previous decisions of Assistant Commissioners and Australian authorities which discussed what evidence is required to establish a prima facie case. These cases are not helpful here. Each case will depend on its facts. The applicant must provide prima facie evidence here that the trade mark squadron has not been used for articles of outer clothing for men and women, and boot, shoes and slippers. Whether the evidence of one or 100 witnesses is required to establish this on a prima facie basis will depend on the qualifications of the individuals and their (knowledge either personal or obtained from identified sources). In such circumstances there could be no objection to witnesses reporting what others in the trade can say if they can bring themselves within s 7 of the Evidence Amendment Act 1980. Neither an individual nor indeed many could, for example, know every mens and women’s retailers selling outer clothing or boots, shoes or slippers in New Zealand over a period of 5 years. As long as the witnesses identified to whom they spoke and their qualifications to provide the information and their lack of availability to give evidence then there could be no reasonable objection to this form of evidence especially where the deponent is highly experienced in the relevant area.

[37] To return to the proper approach of the Assistant Commissioner under s 35. The Assistant Commissioner had to be satisfied there was prima facie evidence that there had been no use of the squadron trade mark for “articles of outer clothing for men and women; boots shoes and slippers, around New Zealand within the 5 year period.

[38] To establish this each category of clothing and shoes would need to be covered, broadly throughout the geographical spread of New Zealand for the 5 year period. In such a case one might expect potentially three affidavits from those who could cover:

(i) mens outer clothing;

(ii) women’s outer clothing;

(iii) shoes boots and slippers.

[39] But as I have said one very knowledgeable person who had made inquiries of at least major clothing and shoe retailers around New Zealand during the relevant 5 year period might be able to establish a prima facie case. Again I stress it is not the numbers of deponents but their experience and the extent of their inquiries with others in the relevant trade. The Assistant Commissioner did not overtly go through this analysis. His failure to do so led him into error here.

[40] At its highest Mr Adler’s evidence related solely to mens wear. It did not relate to shoes purchased or slippers nor to women’s outer wear. For that reason alone it was insufficient to cover those parts of the trade mark. His evidence might also be objected to because he (i) failed to say why he knew about clothing stores other than “Politicks” and “Stanford” clothing; and (ii) failed to identify the extent of his geographical knowledge of mens wear around New Zealand.

[41] However, Mr Adler is no doubt exactly the sort of person who could be expected to be an important deponent who could detail from his own knowledge considerable parts of the mens clothing industry.

[42] In this case the Assistant Commissioner failed to identify the clear inadequacy of Mr Adler’s evidence. It fell well short of establishing a prima facie case even allowing that there should be a low threshold in such circumstances. It did not deal at all with most of the categories of goods covered trade mark (women’s outer clothing, shoes, boots and slippers) and in the one category it did deal with it was inadequate. I conclude the Assistant Commissioner proceeded on both a wrong principle and was plainly wrong in deciding that the Appellant had overcome the prima facie hurdle.

[43] Although not necessary for this decision I consider whether the Respondent’s reply was sufficient to establish bona fide use if the Appellant had established prima facie use. I agree with the view of the Assistant Commissioner the sale of 11 squadron jackets in five years is not at all bona fide use of a trade mark. Firstly, it had nothing to do with the trade mark for women’s outer clothing, boots shoes and slippers. Secondly, the use is too infrequent. Here there was one shop in one city of New Zealand selling 11 items of clothing in a period of five years. This is not a description of bona fide use of a trade mark.

[44] The Assistant Commissioner exercised his “discretion” under s 35 to allow the trade mark to stand for mens jackets and blazers only. The Appellant’s claim was while accepting there was a residual discretion in the hands of the Assistant Commissioner that it was exercised wrongly here. It is not necessary for me to express a view of this. I simply indicate that I am not all convinced that the use of the word “may” in s 35 does indicate a discretion in the Assistant Commissioner in such circumstances. See Estex Clothing Manufacturers v Ellis & Goldstein (1967) 116 CLR 254 at 270.

[45] I therefore conclude:

(1) In taking into account the evidence of Mr Endean the Assistant Commissioner proceeded on a wrong principle.

(2) In concluding that the Appellant had established a prima facie case of non use the Assistant Commissioner proceeded on a wrong principle and was plainly wrong.

(3) The cross-appeal of the Respondent is therefore allowed.

(4) Given the conclusion in (3) above the appeal by the Appellant must fail.

(5) Therefore the application by the Appellant pursuant to s 35 of the Trade Marks Act is refused.

[46] Counsel can provide memoranda as to costs within 21 days from this judgment.