Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
SIR ANDREW PARK
Between :
(1) HONDA MOTOR CO LTD (a company incorporated under the laws of Japan) (2) HONDA MOTOR EUROPE LIMITED | Claimants |
- and - | |
(1) DEREK JAMES NEESAM (2) KEVIN DAVID NEESAM (3) D&K MOTORCYCLES (a firm) (4) KJM SUPERBIKES LIMITED | Defendants |
(Transcript of the Handed Down Judgment of
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James Mellor QC and James Abrahams (instructed by DLA Piper) for the Claimants
Iain Purvis QC and Kathryn Pickard (instructed by Robinsons) for the Defendant
Hearing dates: 10-14 December 2007; 21, 22 and 24 January 2008
Judgment
Sir Andrew Park :
TABLE OF CONTENTS
Heading | Paragraphs |
Abbreviations, dramatis personae, glossary, etc | 1 |
Introduction and overview | 2 - 11 |
The law | 12 - 18 |
The principal facts | 19 - 35 |
Some particular features of the proceedings | 36(i)-(xvii) - 37 |
Is KJM liable for trade mark infringement in respect of the Honda Australia/Lime Exports bikes? Discussion and analysis. | 38 - 102 |
Factors which do not influence my conclusion | 39 - 49 |
The first contact issue | 40 - 44 |
The Snart conversations and letter issue | 45 - 47 |
Honda’s opposition to parallel imports | 48 - 49 |
Did Honda Australia consent to sales by KJM? | 50 - 102 |
Did Honda Australia impose a relevant restriction on resales by Lime Exports? If so, when? | 57 - 102 |
The evidential burden rests on Honda. | 57 |
A review of the evidence on whether there was consent from Honda Australia | 58 - 74 |
Two introductory comments | 59 - 60 |
Evidence in early witness statements of Honda’s witnesses | 61 - 63 |
Mr Beckert’s oral evidence | 64 - 68 |
Mr Juster’s oral evidence | 69 |
Mr Strickland’s witness statement | 70 - 72 |
Oral evidence of Mr Strickland and other witnesses | 73 - 74 |
Did Mr Strickland in 1992 impose a prohibition on sales to the United Kingdom? If so, was it in force at all relevant times after 1992? | 75 - 78 |
Termination of consent by Honda Australia | 79 - 102 |
Termination of consent. Some general observations. | 80 - 84 |
The timing issue: when did Honda Australia start asking for destination information? When (if at all) did it impose an omnibus prohibition on Lime Exports not to resell bikes to the United Kingdom? | 85 - 102 |
A review of the evidence relevant to the timing issue | 86 - 91 |
The timing issue: conclusions | 92 - 102 |
Conclusion on the Honda Australia/Lime Exports bikes | 103 |
KJM’s article 7 construction point | 104 - 110 |
KJM’s possible argument based on article 81 of the EC Treaty | 111 - 113 |
Honda’s application for summary judgment in respect of the Boon Siew bikes | 114 - 123 |
Conclusion | 124 |
Abbreviations, Dramatis Personae, Glossary, etc
These are as follows.
Act, the | |
Asian Honda | Company in the Honda group, established in Thailand; supplier of the ‘Boon Siew bikes’ (see below) to Boon Siew Singapore. |
Baynes, Mr | Graeme Baynes; employee of Honda Australia; a witness for the claimants. |
Beckert, Mr | Guntram (‘Guni’) Beckert; German citizen resident in Australia; shareholder and director of Jetcourt Pty Ltd, the Australian company which carries on the Lime Exports business; a witness on subpoena for KJM. |
Boogaerdt, Mr | Daan Boogaerdt; citizen of the Netherlands; formerly the sales manager of and a partner in Emile Gebben; a witness for KJM. |
Boon Siew bikes | The bikes the subject of Honda’s contested application for summary judgment dealt with in paragraphs 114 to 121 of this judgment. |
Boon Siew Singapore | Boon Siew Singapore Ptd Ltd; Singapore company which acquired the Boon Siew bikes from Asian Honda and resold them to intermediate purchasers from which they were, directly or indirectly, acquired by KJM. |
Davidoff | The ECJ case of Zino Davidoff SA v A&G Imports Ltd (and two other joined cases); joined cases C414 to C416/99; reported at (among other places) [2002] Ch 109. |
Davies, Mr | Mark John Davies; at times when this case arose the General Manager of Honda UK; now General Manager for Motorcycles at Honda Europe; a witness for the claimants. |
Directive, the | The Trade Marks Directive; see below |
ECJ, the | The Court of Justice of the European Communities. |
EEA, the | The European Economic Area (consisting of the Member States of the European Union and a small number of other European states). |
Emile Gebben | Emile Gebben BV, a Netherlands motorcycle business. |
Hinton, Mr | Senior employee of Honda Australia; a witness for the claimants. |
Honda | (1) A world famous brand of motorcycle. (2) Name commonly used in the judgment to cover the two claimants, namely ‘Honda Japan’ and ‘Honda Europe’. |
Honda Australia/Lime Exports bikes | Motorcycles supplied by Honda Australia to Lime Exports and sold on by Lime Exports to KJM; the subject matter of the principal issue decided in this judgment. |
Honda Australia | Honda Australia Motorcycle and Power Equipment Pty Ltd; principal Australian subsidiary of the Honda group; supplier to Lime Exports of motorcycles which Lime Exports sold on to KJM. |
Honda Europe | Honda Motor Europe Ltd; the second claimant; United Kingdom incorporated subsidiary of Honda Japan; authorised (through its division Honda UK – see below) by Honda Japan to import Honda motorcycles into the United Kingdom and to distribute them to authorised Honda dealers in the United Kingdom. |
Honda Japan | Honda Motor Co Ltd; a Japanese company; the principal company in the Honda group; the first claimant; proprietor of the Honda trade marks. |
Honda UK | A division (not a separately incorporated subsidiary) of Honda Europe. |
Juster, Mr | Ian Juster; Motorcycle Sales Manager of Honda Australia July 1996 to December 2000; General Manager of Honda Australia December 2000 to May 2003; left Honda Australia May 2003; now employed by a competitor of Honda Australia; a witness on subpoena for KJM. |
KJM | KJM Superbikes Ltd; the fourth defendant to the claim and the sole defendant to the issues dealt with in this judgment; United Kingdom company carrying on a business based in Wigan which includes parallel importing of various brands of motorcycles, including Hondas. |
Lewison J | Judge who heard and determined the claimants’ application for summary judgment in 2006; see [2006] EWHC 1051 (Ch). He granted summary judgment on some matters but not on those to which this judgment relates. |
Lime Exports | Trade name by which Jetcourt Pty Ltd carries on business in Australia; owned and managed by Mr Beckert; the supplier of Honda Australia/Lime Exports bikes to KJM, such bikes being the principal subject matter to which this judgment is directed. |
Mason, Keith | Managing director of KJM, the fourth defendant; a witness for KJM. |
Mason, Lee | Purchasing director of KJM, the fourth defendant; son of Keith Mason; a witness for KJM. |
Mastercigars | Mastercigars Direct Ltd v Hunters & Frankau Ltd [2007] EWCA Civ 176; [2007] RPC 565; a decision of the Court of Appeal. |
Reynolds, Mr | Phillip Reynolds; an employee of Honda Australia; a witness for the claimants. |
Snart, Mr | Greg Snart; National Motorcycle Service Manager at Honda Australia; a witness for the claimants. |
Strickland, Mr | Stuart Strickland; at all times from 1987 the senior non-Japanese employee or director of Honda Australia since 1987; a Senior Director from 1994; Managing Director since 2005; a witness for the claimants. |
Trade Marks Directive, The | The First Council Directive of 21 December 1988 to approximate the laws of the Member States relating to Trade Marks; Council Directive 89/104/EEC. |
Valler, Chris | Christine (Chris) Valler; at most times relevant to this case assistant to Mr Beckert at Lime Exports. |
Introduction and Overview
This case is about parallel importation of Honda motorcycles into the United Kingdom by KJM and their resale on the domestic market. The case is specifically about whether KJM’s resales of certain motorcycles have been in breach of provisions of the Trade Marks Act 1994.
The two claimants are both companies in the Honda group, and I will usually refer to them together as simply ‘Honda’. There are four defendants. The case will presumably be known as Honda v Neesam, since Mr Derek Neesam is the first named defendant. However, this judgment is solely about issues between the Honda claimants and the fourth defendant, KJM Superbikes Ltd (referred to in this judgment as KJM). The first three defendants are an unincorporated firm of parallel importers called DK Motorcycles (the third defendant) and the two individuals who are partners in that firm (the first and second defendants). The claim was originally commenced against all four defendants. Honda applied for summary judgment against all of them in respect of certain specific motorcycles which were in their respective showrooms, offered for sale to the public, on dates when investigators had gone to the premises. On 24 March 2006 Lewison J granted summary judgment against the first three defendants on all bikes in respect of which the claim was brought against them, and against KJM on some of the bikes in respect of which the claim was brought against it. However, he declined to grant summary judgment against KJM on bikes which had been obtained by KJM from one particular source. He considered that whether KJM was liable in respect of those bikes ought to be the subject matter of full pleadings and a contested trial. The trial took place before me in December 2007 and January 2008, and this is my judgment upon it. At the end of the judgment I also deal with a separate issue of whether Honda should be granted summary judgment on a claim in respect of some other bikes which KJM acquired from different sources. These are the ‘Boon Siew bikes’, and for the reasons which I will explain my judgment is that Honda should be granted summary judgment in respect of them.
The expression ‘parallel imports’ will be familiar to most readers of this judgment. A major manufacturer of goods based in a territory from which it makes substantial exports is likely to have recognised and authorised distributors of its products in overseas markets. Thus Honda manufactures motorcycles in Japan (and in some other countries as well, but not, as far as I know, anywhere in Europe) and exports them to non-Japanese markets where it has authorised distributors. A parallel importer is not an authorised distributor. It is a business which seeks to obtain supplies of genuine products from overseas sources which have not been authorised by the manufacturer to supply them to the parallel importer. The importer then markets them in its own territory in competition with authorised distributors. If the manufacturer had perfect control of the distribution and sub-distribution around the world of its products, and was prepared to make the effort to exercise that control, there would be no scope for parallel importing to take place. The reality in many situations, however, is that some genuine products by one means or another leak out of the approved distribution structures and find their way into a parallel exporting and importing market. KJM is a parallel importer of motorcycles. It sells bikes of many brands: not just Hondas, but this case is only about Hondas.
Major producers like Honda do not like the fact that parallel importers exist and that parallel importing goes on. That, at least, is what they say. Some parallel importers have been known to assert that, despite what producers say, many of them tolerate the existence of parallel importers and even find them useful on occasions. I stay completely out of that issue in this judgment. However, I proceed on the basis that Honda Europe and Honda Japan are strongly opposed to the parallel importing of Honda motorcycles into markets like the United Kingdom, and take steps from time to time to discourage it and to curtail its scope. Nevertheless, if a parallel importer like KJM can find an overseas supplier which is willing to sell to it stocks of genuine new Honda motorcycles, there is nothing unlawful in it buying them. But where a problem may arise is when it puts the products on the market in this country. Under provisions of the Trade Marks Act which I will describe later such marketing is likely to be a breach of Honda’s rights under the Act unless one or other of the two following circumstances exists: either that Honda, the proprietor of the trade mark, has consented to the parallel importer selling the bikes in the United Kingdom; or that the bikes (the specific bikes, not just other bikes of the same model) have already been placed on the market in the EEA by some other party with Honda’s consent.
I will say more later about the detailed facts of how KJM acquired the particular bikes which are the subject matter of this judgment, but it may be helpful for me at this stage to describe three different kinds of source from which KJM derived supplies.
Between 1999 and 2004 KJM purchased a substantial number of motorcycles (1195 is the latest information I have) from Lime Exports, the Australian company identified in the abbreviations, etc, at the beginning of this judgment, being motorcycles which Lime Exports had purchased from Honda Australia. From time to time I refer to these motorcycles as the Honda Australia/Lime Exports bikes.
Over the same period KJM purchased a smaller number of motorcycles (70 being the latest information) also from Lime Exports, but those motorcycles had not been purchased by Lime Exports from Honda Australia. Rather they had been purchased by Lime Exports on the worldwide parallel imports market. They are not included in the Honda Australia/Lime Exports bikes.
KJM purchased other Honda motorcycles, being bikes which had not yet been put on the market in the EEA, from other sellers (that is sellers other than Lime Exports) which were not themselves Honda entities and which had not been authorised by Honda to make the sales. I do not at present have a number readily available for the likely number of such purchases.
Taking the categories in reverse order, this judgment (except the last part of it, about the ‘Boon Siew bikes’) is not about (iii). That category covers motorcycles like those in respect of which Lewison J granted summary judgment, as mentioned in paragraph 3 above. Nor is this judgment about category (ii). Although motorcycles within that category were not specifically addressed by Lewison J, it is now accepted on behalf of KJM that they are in principle covered by his judgment, and that, as long as such bikes had not previously been placed on the market in the EEA with Honda’s consent, onward sales of them by KJM were infringements of Honda’s trade marks.
This judgment is about category (i): Honda Australia/Lime Exports bikes, that is motorcycles sold by Honda Australia to Lime Exports and sold on by Lime Exports to KJM. KJM defends Honda’s claim in respect of those bikes on the ground that Honda, through Honda Australia, consented to KJM putting them on the United Kingdom market and selling them. Honda denies that there was any consent to KJM (or anyone else for that matter) putting the bikes on the market in the United Kingdom or elsewhere in the EEA. Honda does, however, concede that, if Honda Australia gave such consent, that falls to be treated in the circumstances of this case as also being the consent of the proprietor of the trade marks, which is Honda Japan. So the basic issue is whether or not Honda Australia, by selling to Lime Exports motorcycles which Lime Exports sold on to KJM, consented to the bikes being placed on the market in the United Kingdom by KJM. For the reasons which I will explain as this judgment progresses, my conclusion is that, with two exceptions, Honda Australia did so consent. The exceptions apply to the last two consignments sold by Lime Exports to KJM: a consignment of 31 bikes sold by Lime Exports to KJM in August 2003, and a consignment of 32 bikes sold in June 2004.
The result of this judgment so far, therefore, will be that Honda’s claim for relief against KJM succeeds as respects the relatively small number of Honda Australia/Lime Exports bikes sold to KJM in August 2003 and June 2004, but fails as respects the significantly larger number of such bikes which KJM purchased from Lime Exports on previous occasions.
That is not quite the end of the matters I need to decide in relation to Honda Australia/Lime Exports bikes, because KJM has another argument, not resting on consent by Honda Australia, as respects the last two consignments. I will explain the argument later; see paragraphs 104 et seq below. I say now, however, that I do not agree with it. Further, in relation to the last two consignments KJM may pursue an application (which, if KJM does pursue it, Honda will oppose) for permission to amend its defence so as to raise a third argument. As to this, see paragraphs 111 et seq.
I should record that James Mellor QC and James Abrahams appeared for Honda, and Iain Purvis QC and Kathryn Pickard appeared for KJM.
The law
The provisions of United Kingdom law about trade marks are contained in the Trade Marks Act 1994. There is also a Trade Marks Directive of the European Community. In accordance with well-established principles about the relationship between national statutes and Community Directives the Act ought to comply with the requirements of the Directive, and its provisions should so far as possible be construed so as to accord with the meaning of the Directive. The Act and the Directive are not always expressed in identical words, but so far as this case is concerned no-one suggests that there is any material difference between their respective meanings. I will set out the relevant provisions from each enactment.
In the Trade Marks Act 1994:
Rights conferred by registered trade mark
9(1) The proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent.
The acts amounting to infringement, if done without the consent of the proprietor, are specified in section 10.
…
Infringement of registered trade mark
10(1) A person infringes a registered trade mark if he uses in the course of trade a sign which is identical with the trade mark in relation to goods or services which are identical with those for which it is registered.
…
Exhaustion of rights conferred by registered trade mark
12(1) A registered trade mark is not infringed by the use of the trade mark in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor or with his consent.
In the Trade Marks Directive:
Article 5.1
The registered trade mark shall confer on the proprietor exclusive rights therein. The proprietor shall be entitled to prevent all third parties not having his consent from using in the course of trade
(a) any sign which is identical with the trade mark in relation to goods and services which are identical with those for which the trade mark is registered.
…
Article 7.1
The trade mark shall not entitle the proprietor to prohibit its use in relation to goods or services which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
There are some general, and (I believe) non-controversial observations about the foregoing provisions which I can conveniently make at this stage.
It will be seen that sections 9(1) and 10(1) of the Act correspond to article 5.1 of the Directive, and that section 12(1) corresponds to article 7.1.
Sections 9(1) and 10(1) and article 5.1 identify the conditions which must exist before there is an infringement of a trade mark; section 12(1) and article 7.1 set out circumstances in which something which would be an infringement if the earlier provisions stood alone is excluded and is not an infringement after all. The expression commonly used to denote the concept embodied in section 12(1) and article 7.1 is ‘exhaustion’, a word which appears in the headings to the section 12 and the article. Honda Japan, the proprietor of the Honda marks, has trade mark rights in EEA countries (and in particular so far as this case is concerned in the United Kingdom) over a new motorcycle until it is put on the market in the EEA by Honda or with its consent. But, once that has happened, Honda Japan’s trade mark rights in that particular motorcycle are exhausted. An obvious application of this is in relation to second hand goods. Honda’s rights as proprietor of the marks enable it to prevent third parties like KJM from selling new Honda motorcycles in the United Kingdom (and, I believe, in other member states as well) unless they have Honda’s consent. (That was the basis on which Lewison J granted summary judgment in favour of Honda against the first three defendants to the claim and against KJM except as regards the Honda Australia/Lime Exports bikes.) But once a new motorcycle has been sold on the market in the EEA Honda’s trade mark rights are exhausted, and do not enable it to prevent or control sales in the second hand market. I should add that a bike does not have to be second hand in the sense of being used before there is a possibility of Honda’s trade mark rights being exhausted. If Honda sells a new bike to a dealer in the EEA, with consent for the dealer to resell it, and the dealer resells the bike (still new and unused) to another dealer in the EEA, the second dealer can resell the bike untrammelled by Honda’s trade mark rights: the sale by the first dealer exhausted those rights
Both sets of provisions (those which deal with infringements of rights which still exist, and those which specify the circumstances in which rights become exhausted so that they no longer exist) refer to the consent of the proprietor of the trade mark. Section 9(1) of the Act states that there is an infringement if the mark is used in the United Kingdom ‘without his [the proprietor’s] consent’. Section 12(1) provides, in effect, that the proprietor’s trade mark rights are exhausted in relation to goods which have been put on the market in the EEA by the proprietor ‘or with his consent’. The concept of consent is used in a similar way in the comparable provisions in the Directive. The essential issue in the hearing before me has been whether or not KJM had the consent of Honda Japan to sell the Honda Australia/Lime Exports bikes on the United Kingdom market.
The arguments explored in the hearing before me focused primarily on the use of the concept of consent in section 12 and article 7, the provisions about exhaustion. In the context of this case, where there is no suggestion that anyone other than KJM put the bikes on the market in the EEA before KJM did, it seems to me that the arguments could be equally relevant in the context of section 9(1) and article 5.1. KJM’s case is that it put the bikes on the market in the United Kingdom with the consent of Honda Australia, which consent (if it existed, which is denied by Honda) is conceded to have been equivalent to the consent of Honda Japan, the proprietor of the trade marks. (As to this important concession, see paragraph 36(xi) below.) If KJM is right that it put the bikes on the market with the consent of Honda Australia, it would seem to follow that KJM committed no infringement within section 9(1) (or article 5.1) and does not need to be saved from the consequences of those provisions by the exclusion from them of exhausted rights covered by section 12(1) (or article 7.1). However, I will not pursue this particular point further, since it is common ground that (subject to Mr Purvis’s two further arguments referred to in paragraphs 104 et seq and 114 et seq below) Honda’s claim succeeds as respects motorcycles in the case of which KJM did not have the required consent to put them on the market, and fails as respects motorcycles in the case of which KJM did have such consent. Whether those results flow from one set of provisions or from the other or from both of them does not matter to the outcome of the case.
I should say something about the meaning of the word ‘goods’ in the provisions which I have set out above. In the context of this case the word does not mean Honda motorcycles generally, but rather means the specific motorcycles as respects which it is claimed by Honda that KJM has infringed its trade mark rights. This point is confirmed by the decision of the ECJ in Sebago Inc v GB Unic SA, Case C-173/98, [2000] Ch 558. Assume that KJM purchased and put up for sale a specific Honda motorcycle without any consent, direct or indirect, of Honda Japan. (There certainly were many purchases of that nature, whatever the outcome of the hearing before me. All the purchases as respects which Lewison J granted summary judgment were of that nature.) It gets KJM nowhere to say that Honda motorcycles are ‘goods’, and that over the years large numbers of entirely similar Honda motorcycles have been placed on the market in the United Kingdom and elsewhere in the EEA with Honda Japan’s consent. The ‘goods’ in the assumed case is the specific bike as respects which Honda alleges trade mark infringement against KJM, and the question is not whether Honda has in the past consented to similar bikes being placed on the United Kingdom market: the question is whether it consented to the specific bike being put on the market.
A general, and (I think) non-controversial, observation about the legal background is that the particular use which Honda seeks to make of trade mark law in this case is familiar to specialists in this field, but is probably not the same as the general understanding by non-specialists of the function of trade marks. The non-specialist is likely to assume that the point of trade mark law is to enable a proprietor of a registered trade mark to stop someone putting a false mark on goods which are in truth not the genuine goods produced by the proprietor (or not genuine goods produced, not by the proprietor itself, but by another person with the proprietor’s consent). In this case, however, there is no doubt that the motorcycles put on the market by KJM as Hondas were genuine Hondas, and not bogus products to which a false label had been attached. Lewison J made this point in paragraph 4 of his judgment on the application for summary judgment:
“… the issue raised by parallel imports into the EEA has nothing to do with the essential function of a trade mark … . It is purely a matter of economic policy of the EU and the EEA. A trade mark proprietor is entitled to stop parallel imports even though the trade mark is applied to the genuine goods and the function of the trade mark as a guarantee of origin and quality is not impaired. Put bluntly, as the law has developed the trade mark proprietor is entitled to keep up prices in the EEA by use of his rights in the trade mark.”
Essentially the same point is made in trenchant terms by Jacob LJ in the Mastercigars case (see the Abbreviations, etc, at the beginning of this judgment). He comments in relation to article 7 of the Trade Marks Directive that ‘generally the rule is self-evidently rather anti-competitive and protectionist’.
There have been a number of decisions of the ECJ considering the impact of the Trade Marks Directive on aspects of the parallel importing business. The Sebago case, mentioned two paragraphs earlier, is one of them. Another, which is important in this case, is the Davidoff case, the full name and references of which are set out in the Table in paragraph 1 of this judgment. The case was about what might or might not constitute the consent of a trade mark proprietor for the purposes of article 7 of the Directive, the article about exhaustion of trade mark rights. The observations of the court undoubtedly are of equal relevance to the concept of consent in article 5 and in the corresponding section 9(1) of the United Kingdom Act. The court held that, if consent had not been expressly given, it could be implied, but the court also made observations which placed quite tight limits on the circumstances in which it would be implied. Further, consent, whether express or implied, has to be unequivocal.
I quote paragraphs 45 and 46 of the court’s judgment:
“45 In view of its serious effect in extinguishing the exclusive rights of the proprietors of the trade marks in issue in the main proceedings (rights which enable them to control the initial marketing in the EEA), consent must be so expressed that an intention to renounce those rights is unequivocally demonstrated.
46 Such intention will normally be gathered from an express statement of consent. Nevertheless, it is conceivable that consent may, in some cases, be inferred from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market outside the EEA which, in the view of the national court, unequivocally demonstrate that the proprietor has renounced his rights.”
In the dispositif at the end of the judgment the court reverses the order of the points made in those paragraphs. Paragraph 1 of the dispositif is as follows:
“1 On a proper construction of article 7(1) of [the Trade Marks Directive] the consent of a trade mark proprietor to the marketing within the EEA of products bearing that mark which have previously been placed on the market outside the EEA by that proprietor or with his consent may be implied, where it follows from facts and circumstances prior to, simultaneous with or subsequent to the placing of the goods on the market outside the EEA which, in the view of the national court, unequivocally demonstrate that the proprietor has renounced his right to oppose placing of the goods on the market within the EEA.”
The court also made it clear that, if the proprietor of the mark sells the goods to a purchaser and says nothing about whether the purchaser may or may not resell them within the EEA, the mere silence of the proprietor on that point is not by itself enough to establish implied consent to such a resale. See in particular paragraph 60 of the judgment and paragraph 2 of the dispositif.
There is one other case which I wish to mention here. It is the Mastercigars case, identified in the Abbreviations etc in paragraph 1 above. I have already mentioned the case in paragraph 14 above. The case turned on its own facts, but it is of some significance because the Court of Appeal found that, on those facts, there had been implied consent by the owner of the trade marks (a Cuban state-owned corporation) to the goods (hand-rolled cigars) being imported into the EEA by a parallel importer for resale. Counsel for the authorised United Kingdom distributor of Cuban cigars had pointed out to the court that, since Davidoff, ‘there have been a string of cases in our courts where defendants have failed to establish implied consent’ (words of Jacob LJ at paragraph 22 of his judgment). Nine cases in which the courts had declined to find implied consent were identified. In no case had implied consent been established. Nevertheless, the Court of Appeal, reversing the trial judge on this point, did find that there had been implied consent on the facts of the Mastercigars case. It is certainly not possible to say after Mastercigars, whether or not it might have been possible to say before it, that, although the ECJ in Davidoff acknowledged that consent could be implied and did not have to be express, that was almost entirely a theoretical point and in reality cases of implied consent were unlikely ever to arise.
The principal facts
Many facts bearing on the present case are disputed or unclear, but, as in all cases, there is a basic substratum of fact which is wholly or substantially undisputed. I will attempt to describe that basic substratum in this part of my judgment. Later, when I discuss and analyse the contested issues that need to be decided, I will identify and evaluate the disputed or unclear issues of fact which are, or could be, relevant to the outcome of the case.
I start with the three main businesses which were involved in the relevant events. They are the Honda group, KJM and Lime Exports.
The Honda group is well-known world-wide. It is a famous producer of automotive products, and in particular (so far as this case is concerned) of motorcycles. The parent company is Honda Japan (for the full name see the Table at the beginning of this judgment). It has subsidiaries in many other countries. Honda Europe and Honda Australia are among the subsidiaries. Honda Europe is an English company based in the United Kingdom. As its name implies, it is responsible for aspects of the group’s business in many European countries of which the United Kingdom is one. It has a division known as Honda UK which is specifically responsible for the United Kingdom. Honda Australia is the Australian subsidiary of Honda Japan. A major part of its business is to import into Australia Honda products manufactured in other parts of the world, and to resell them to independently owned Australian dealers which are authorised Honda distributors.
KJM is a family-owned and family-run United Kingdom company. The initials are those of Mr Keith Mason, who (I believe) founded the business some years ago. By the time of the events relevant to this case the business was incorporated. KJM is the company which has carried it on at all times material to the case. Keith Mason’s son, Lee, joined his father in the business in 1990 when he left school, aged 17. About a year after that he became responsible for purchases. When the business was incorporated the father and son were the directors and still are. The business is based in Wigan, and the core of it consists of dealing in motorcycles. The company is not an authorised distributor of Hondas or (as far as I know) of any other leading brand of bikes, but my impression is that it has carried on business on quite a substantial scale. To a large extent it is a parallel importer.
Lime Exports is the trading name under which an Australian company called Jetcourt Pty Ltd carries on business. It has always been referred to (not just in this case, but also in the course of its business) by its trading name. The company is owned by Mr Beckert, who is also the sole director. At some times relevant to this case Mr Beckert had an assistant, Christine (Chris) Valler. Mr Beckert is a German citizen, but he has lived in Australia for many years and, through companies, has carried on motorcycle-related businesses there. I may have the details of this wrong, but I think that at material times there have been two companies controlled by Mr Beckert. One imports bikes into Australia and resells them there. The other is Lime Exports, and the essence of its business is buying motorcycles and selling them to other motorcycle traders who are based outside Australia. In so far as the bikes which Lime Exports purchases are physically in Australia at the time of purchase, Lime Exports is an exporter from Australia.
In my opinion it is clear from Mr Beckert’s evidence that Lime Exports sold bikes, including ones which it purchased in Australia and exported, to numerous destinations in all parts of the world. The destination of the largest number of bikes was Japan. Initially this creates a surprising coals to Newcastle impression, but it was definitely the case. A large part of the explanation is that Japanese law imposes restrictions on the sale in the domestic market of higher powered bikes, but the restrictions do not apply to bikes which are imported into Japan, even if they had originally been manufactured in Japan and exported before being reimported.
I can now move on to identify certain events which are material to the case. KJM did not become involved until 1998 or 1999, but I need to begin in 1992. In April of that year Mr Beckert introduced himself, or was introduced to, Mr Strickland of Honda Australia. Mr Strickland was in a managerial role at Honda Australia at that time. I am not sure whether he was a director, but he was certainly in a senior position. He is now Managing Director of Honda Australia, a position which he took up in 2005. Mr Beckert managed to recover a copy of a fax from himself to Mr Strickland dated 3 April 1992. It is in the nature of a minute of a conversation of two days before. Among other things it said that Lime Exports was an exporter of motorcycles on an international scale. The contact led to a continuing trading relationship which lasted for some fourteen or fifteen years. Lime Exports became a regular purchaser from Honda Australia of consignments of motorcycles of all models.
The volume of trade between Honda Australia and Lime Exports progressively increased. By the early 2000s Lime Exports was responsible for something like 8 or 9 per cent of Honda Australia’s sales. Witnesses from Honda Australia accepted that around that time Lime Exports might have been their company’s largest single customer. Honda Australia ran down its trading relationship with Lime Exports from 2004. (Mr Strickland said in oral evidence that it was from 2002, but I believe that he is mistaken about that. Other Honda Australia witnesses, and in particular Mr Hinton, of whom I say more later, said it was from 2004, which is consistent with the statistics.) I do not think that I know when the last transaction between Honda Australia and Lime Exports took place, but I believe that all trading between them has ceased now.
The evidence suggested that most of Honda Australia’s sales to Lime Exports were of stock which Honda Australia already owned but which was in excess of what Honda Australia needed to supply the current requirements of the Australian market. Lime Exports performed a useful function for Honda Australia by enabling it to dispose of excess or slow-moving stock. But the evidence indicated, and I accept, that from time to time Lime Exports placed, and Honda Australia accepted and fulfilled, forward orders for motorcycles which Honda Australia had not yet received from Honda Japan. It cannot, I think, be disputed that, in this way, Honda Australia enabled Lime Exports to acquire stocks of new Honda bikes which it (Lime Exports) could not have obtained from Honda Japan.
There is a major issue about whether, and if so to what extent, Honda Australia imposed any restrictions on the destination markets to which Lime Exports could resell the bikes which it was purchasing. I will address that issue later in this judgment. Three things, however, are clear. First, one market in which Lime Exports definitely could not resell the bikes was Australia. The sales by Honda Australia to Lime Exports were for export only. Second, Lime Exports was selling bikes within the trade, that is to business customers which were dealers in motorcycles, not to individual customers who were buying bikes for their personal use. Third, Honda Australia knew that Lime Exports sold bikes within the trade.
It appears that at most times while the trading relationship between Honda Australia and Lime Exports was in existence one of the staff in Honda Australia’s sales department, designated as an Assistant Sales Manager, was the principal person to conduct business with Lime Exports. Contacts about possible sales to and purchases by Lime Exports took place between whoever the current Assistant Sales Manager was and Mr Beckert (or occasionally his assistant, Chris Valler). At Honda Australia, in addition to the Assistant Sales Manager responsible for the Lime Exports connection, there was a National Sales Manager for Motorcycles who had an overseeing role, particularly for so substantial a customer as Lime Exports. I heard evidence from some of the employees or former employees of Honda Australia who held these positions. The Assistant Sales Manager who was the regular contact with Lime Exports from a date in 2001 to the end of June 2003 was Mr Graeme Baynes, and his successor from July 2003 until trading with Lime Exports ceased was Mr Philip Reynolds. Both were witnesses for Honda. The National Sales Managers for Motorcycles were, in the earlier period, Mr Ian Juster, and, in the later period, Mr Tony Hinton. Mr Hinton was called as a witness by Honda. His evidence became quite a dramatic aspect of the case, and I explain why in the next section of this judgment. Mr Juster was not called as a witness by Honda, but, in a manner which I also describe in detail in the next section of this judgment he gave evidence as a witness called by KJM pursuant to letters of request and a subpoena.
I now go back in time to 1998, which is when KJM became involved in the events. Lee Mason gave evidence that up to that time KJM had been sourcing motorcycles for resale from the dealer network in the United Kingdom and later in Europe. I interpose the comment that for KJM to resell bikes which it had acquired from those sources would not have given rise to trade mark problems, because the bikes would already have been placed on the market in the EEA and presumably with the consent of Honda: see the explanation in paragraph 13(ii) and (iii) above. Lee Mason continued that in mid-1998 he and his father were looking for bigger margins, and considered that they needed to go further afield. By a process which is not clear (a matter which I will say more about later – see paragraphs 40 to 42 below) KJM, and principally Lee Mason, came into contact with Lime Exports, and a major trading connection developed. KJM’s first purchase from Lime Exports occurred in May 1999, and many other purchases followed over the next six or so years. The largest year for volume of business was 2002. In that year KJM purchased 22 consignments of Honda motorcycles from Lime Exports. The total number of bikes in the year was 481. The largest consignment consisted of 43 bikes, and the smallest was just one bike. Not every consignment (in 2002 and in other years) had been supplied to Lime Exports by Honda Australia (see paragraph 6(ii) above), but most of them had. Between 1999 and 2005 Lime Exports sold 1265 bikes to KJM; 1195 of those bikes had been purchased by Lime Exports from Honda Australia (and thus were bikes which I describe as Honda Australia/Lime Exports bikes), and 70 had been purchased by Lime Exports from other sources. All the bikes bore lettering or symbols as respects which Honda hold registered trade marks.
There are a few other factual features of the case which are not disputed and which it is convenient to mention here. Three of them arose in the United Kingdom and the other in Australia.
In 1998 Honda commenced proceedings in the United Kingdom against four businesses which were regarded by Honda as the major parallel importers of motorcycles into the country. KJM was not one of them: as I have explained in recent paragraphs KJM did not make its first purchase from Lime Exports until 1999. The 1998 proceedings were settled in the end, but they were highly publicised when they were brought. Reports of them appeared both in the specialist motorcycling press and also in national newspapers. Honda places some reliance on these proceedings as showing that Honda Japan and Honda Europe strongly disapproved of parallel importing.
At a date in 2002 which I think is not known precisely a Honda motorcycle – as it happens an off-road bike – which had originated in Australia was discovered in the United Kingdom. I should explain that every bike has a unique number stamped on it, its VIN number, and from the VIN number Honda Japan can find out where the bike was consigned to in the first instance. I should also explain that parallel importing was (and no doubt still is) decidedly unpopular with authorised dealers in the products (in this case Honda motorcycles), so if they come across a product which they suspect got into the country via a parallel importer they are likely to draw attention to it. In this instance what probably happened is that the off-road bike was taken for service to an authorised Honda dealer, who suspected it to be an unauthorised import and supplied information about it, including the VIN number, to Honda UK. The dealer’s suspicions having been confirmed, and Honda Japan having ascertained that the bike had originally been supplied to Honda Australia, a complaint was made to Honda Australia. The consequence may have been a letter from Honda Australia to authorised Honda dealers in Australia stressing to them that bikes are supplied to them for sale in Australia, and that they should not be exported. I say ‘may have been’ because, although there is clear evidence that in the latter part of 2002 a copy of a letter in draft form (‘Dear [blank]’) came into the possession Mr Davies, the managing director of Honda United Kingdom at the time, it is not clear whether the letter was ever sent to dealers in Australia, or whether it was a letter for sending to all dealers or only to whoever the Australian dealer was to whom the offending off-road bike had been originally supplied. The letter would not, of course, have been sent to Lime Exports in any case, since Honda Australia was supplying bikes to Lime Exports specifically for export from Australia. However, in the present case Honda says that the episode of the off road bike has some importance, so I have described it.
The third factual matter which arose in the United Kingdom was very similar to the second. At some time in the middle of 2003 three Honda motorcycles were found to be in the United Kingdom and were shown through their VIN numbers to have been supplied by Honda Australia to an Australian dealer called Rick Gill. Similar complaints were made, and Honda Australia wrote a stern letter to Rick Gill about it. As the case developed the ‘Rick Gill incident’ receded in importance. I shall not need to refer to it again. But it featured quite often in the evidence and in the arguments in the case, so I have briefly mentioned it here.
The factual matter which arose in Australia and which it is convenient to describe here concerns a Netherlands company called Emile Gebben which carried out a substantial parallel importing business in Holland. From March 2001 to April 2002 Honda Australia supplied 482 motorcycles in 11 consignments to Emile Gebben. It did so directly, not through an intermediary like Lime Exports. Mr Boogaerdt of Emile Gebben gave evidence. He used to handle about 90% of the buying and sourcing of new vehicles for the business. In 2001 he established contact with Mr Baynes of Honda Australia, who offered some bikes to him. Mr Baynes said to him that Emile Gebben should not advertise ‘high profile’; the bikes must not end up back in Australia; apart from that Emile Gebben could sell them anywhere. After a few months of the relationship he and Mr Gebben flew to Australia to meet some of the people at Honda Australia; they met Mr Juster (the most senior), Mr Hinton (number 2 to Mr Juster) and Mr Baynes. After a little more than a year of trading with Honda Australia his company received an email from Mr Hinton. It said that Honda Australia could not supply bikes to Emile Gebben any more, having been told not to by Honda Japan.
Some particular features of the proceedings
Before I address in detail the various questions which I have to decide it is desirable that I should identify and describe some relevant features of how this case has proceeded. In the sub-paragraphs which follow I deal only with the case between Honda and KJM (the fourth defendant), omitting the aspects of the case which concerned Honda’s claim against the first, second and third defendants.
On 28 August 2005 Honda commenced its claim against KJM. It did so by issuing a claim form and serving it on KJM together with particulars of claim. It sought the usual remedies for intellectual property cases: damages or an account of profits in respect of past infringements, and an injunction to restrain future infringements.
On a date which, as far as I can see, the documents before me do not record Honda issued and served an application for summary judgment against KJM under Part 24 of the Civil Procedure Rules. The Bundle of documents before me entitled ‘Pleadings, Applications and Orders’ seems not to contain the application notice. I can, however, see from the bundle of witness statements that the notice was supported by three witness statements. The one which matters for present purposes was a statement of Mr Tony Hinton dated 14 March 2006. Mr Hinton was the general manager for motorcycles at Honda Australia. His statement dealt with several issues. The one I need to mention now concerned Honda Australia’s dealings with Lime Exports. The statement said:
“From time to time, without having any continuous contact, Honda Australia deals with Lime Exports (‘Lime’). Lime fulfils a useful role in servicing the Pacific Islands (e.g. Fiji, New Caledonia and Vanuatu) which Honda Australia does not have the capacity or desire to service. This is the only reason Honda Australia deals with Lime. Honda Australia advises Lime verbally that it is only allowed to sell to the Pacific Islands. By so advising Lime Honda Australia tries to ensure that product supplied to Lime finishes in the Pacific Islands. … Honda Australia does not authorise those to whom it sells to export, except to the Pacific Islands.’
On 24 March 2006 Lewison J heard and determined the application for summary judgment. He granted summary judgment to Honda against KJM on several important issues, but did not grant it as respects motorcycles purchased by KJM from Lime Exports. It seems clear that the judge came close to deciding that Honda should have summary judgment on those motorcycles as well, but in the end he decided that there could be sufficient substance in some points raised by KJM by way of defence for it to be appropriate that the Lime Exports issue should be the subject of a full trial. Lewison J gave directions for pleadings to be exchanged in which Honda, the claimants, and KJM, the defendants, should set out their cases on the issue.
On 3 May 2006 Honda served its statement of case on the Lime Exports issue. There are two points to note about the statement.
It reflected Mr Hinton’s witness statement. Thus paragraph 4 of the pleading said:
“Lime Exports is an Australian company. Honda Australia has sold and sells Honda motorbikes to Lime Exports for export to the Pacific Islands.”
Read in conjunction with Honda’s original particulars of claim (see subparagraph (i) above) the statement of case claimed relief for infringement of trade marks in respect of all importations of motorcycles by KJM from Lime Exports, without limitation of time (that is to say, it claimed relief going back to the first such importation, which had taken place in 1999).
On 24 May 2006 KJM served its statement of case by way of defence. I need not go into the detailed contents of it here.
Disclosure procedures followed. Documents disclosed by Honda, many of which were emails to or from Mr Hinton personally, led to a letter of 22 November 2006 from KJM’s solicitor to Mr Hinton. The letter accurately said that it was clear that several things said by Mr Hinton in his witness statement, especially in the passage about the absence of continuous contact and about the Pacific Islands which I quoted in subparagraph (ii) above, were not true. The letter gave examples, saying that the emails showed several things, including the following:
“- an almost continuous contact between Lime and Honda Australia, with which it conducted a very substantial level of business – to the extent that Lime enjoyed a credit facility of $100,000.00 with Honda Australia;
-·no evidence of bikes being supplied by Lime going to the Pacific Islands – indeed on numerous occasions Lime informs Honda Australia that the bikes are going to various destinations around the world none of which include the Pacific Islands – for example : Japan; South Africa; Laos; Cambodia; Vietnam; China; Eastern Europe; China [sic]; Greece; Turkey; and Indonesia.”
The letter went on to inform Mr Hinton (correctly) that to make a false statement in a witness statement verified by a statement of truth without an honest belief in its truth was a contempt of court. It recommended Mr Hinton to seek his own independent legal advice.
On 15 December 2006, about four weeks after the letter, Mr Hinton made a second witness statement in which he admitted that several things said by him in his first witness statement were untrue, and that he had known that they were untrue at the time when he signed the statement of truth at the end of the statement. The best he could do by way of explanation was this:
“I included these words (knowing that they were not accurate) because I was trying to protect Honda Australia’s reputation within the Honda group from harm.”
(Chronologically this subparagraph comes later than what I describe in subparagraphs (ix) and (x) below, but in terms of its content it belongs with what I have just described, so I depart from strict chronological order in this respect.) On 17 March 2007 Honda amended its statement of case. The sentence which I quoted in subparagraph (iv)(a) above – ‘Honda Australia has sold and sells Honda motorbikes to Lime Exports for export to the Pacific Islands’ – was amended so as to read: ‘Honda Australia has sold and sells Honda motorbikes to Lime Exports for export from Australia.’ No material changes were made to the rest of the statement of case. Thus it continued to claim relief for all importations of Honda motorcycles by KJM from Lime Exports, without any time limitation (see subparagraph (iv)(b) above).
At the forthcoming trial (fixed to begin on 26 March 2007) Honda was proposing to call evidence from several witnesses who were resident in Australia. On 30 January 2007 Honda applied for an order that their evidence could be taken by videolink. On 13 February 2007 Kitchin J made such an order as respects most of the Australia-based witnesses, but declined to do so as respects Mr Hinton. If Honda wanted to adduce evidence from Mr Hinton he would have to come to this country, and be exposed to the greater rigours of being cross-examined in person, rather than by videolink, about the knowingly false statements which he had made in his first witness statement. I mention here that Kitchin J’s order was later extended to apply to two more overseas witnesses, but it was not changed as regards Mr Hinton.
KJM had its own concerns about two potential witnesses for itself who were resident in Australia. One was Mr Beckert, the shareholder and director of Lime Exports. The other was Mr Juster, who had been a senior employee in the motorcycles division of Honda Australia until May 2003, but who had left Honda then and was now employed by a competitor, Hyundai. Neither Mr Beckert nor Mr Juster was prepared to give evidence for KJM voluntarily, so on 23 February 2007 KJM applied for orders under rule 34.13 of the Civil Procedure Rules which would enable their evidence to be taken in Australia under the letters of request procedure. On 7 March 2007 the application was rejected in the High Court, but KJM appealed to the Court of Appeal, and on 21 March 2007 the court allowed the appeal and granted the letter of request. One consequence was that the trial had to be adjourned.
On 10 April 2007 KJM served on Honda’s solicitors a notice to admit certain facts concerning the relationship between Honda Japan and Honda Australia. On 30 May 2007 Honda responded as follows:
“Solely for the purposes of the Lime Proceedings, and in relation to the circumstances of Honda Australia’s supply of the motorcycles to Lime Exports which are the subject of these proceedings, the Claimants admit as follows.
Regardless of the nature of the relationship between Honda Australia and [Honda Japan], and regardless of what (if any) knowledge [Honda Japan] had of Honda Australia’s activities, [Honda Japan] does not consider it appropriate to take a point on consent between itself and Honda Australia in the particular circumstances of the sales by Honda Australia to Lime Exports. Accordingly, to the extent that [KJM] can prove that Honda Australia had consented to a motorcycle, which was initially sold by Honda Australia to Lime Exports, being put on the market in the European Economic Area, [Honda Japan] admits that it is bound by such consent in relation to that motorcycle.”
I touched on this important, but fair, admission in paragraph 13(iv) above.
On 9 and 10 July 2007 Mr Beckert’s and Mr Juster’s evidence was taken before a court-appointed examiner in Australia. A videolink was used, and the questions to the witnesses were put by Mr Purvis (for KJM) and Mr Mellor (for Honda) in this country. Transcripts of the evidence were of course taken. I have read the whole of them with care twice, and I have reread the more critical passages several more times. Mr Beckert and Mr Juster were witnesses called by KJM, but it is right to keep in mind that they had not given witness statements, and that, so far as I know, they had not discussed their evidence with solicitors for KJM (either solicitors in this country or solicitors in Australia). Usually an advocate will have a good idea of what his own witnesses are likely to say. Indeed, so far as their evidence in chief is concerned the advocate will almost certainly know exactly what the evidence will be, because the evidence in chief is likely to consist wholly or substantially of the witness confirming the truth of the written contents of his witness statement. In the instance of Mr Beckert and Mr Juster there were no witness statements. Their evidence in chief was taken orally in question and answer form. It seems fairly clear that in general Mr Purvis did not know what the answers to his questions were going to be. Indeed, several surprises arose in the course of this evidence, particularly in the case of Mr Beckert.
There was one other important event before the trial began. It links with the point I made in subparagraphs (iv)(b) and (viii) above that Honda’s statement of case on the Lime Exports issue claimed relief in respect of all KJM’s importations of bikes from Lime Exports, without any limit of time. That was changed by a reamendment to the statement of case made on 13 November 2007, about four weeks before the trial was to begin. The factual background is, and was known by Honda to be, that KJM had been purchasing bikes from Lime Exports from 1999 onwards. The reamendment restricts Honda’s claim to importations from 1 July 2002 onwards. Four new paragraphs, 4A to 4D are added to the statement of case. It is appropriate for me at this point to set out the new paragraph 4A:
“4A In the course of these proceedings the Claimants have received information which indicates that, in relation to motorbikes shipped prior to about June 2002, there was or may have been insufficient regulation by Honda Australia over where such motorbikes could be put on the market: specifically the Claimants have learnt that sales were made by Honda Australia to (i) Lime Exports in Australia and (ii) Emile Gebben in Holland. That being the case, the Claimants make no claim in relation to motorbikes sold by Honda Australia to Lime Exports and thence to the Fourth Defendant [KJM] prior to 1st July 2002, alternatively, prior to 30th November 2002. Those dates are derived as follows.”
I will consider the derivation of the dates (the ‘as follows’ which appears at the end of the quotation) later in this judgment. It is, however, convenient for me to record now that, in the hearing, Honda based itself on a starting point for infringements of 1 July 2002; it did not advance alternative arguments in support of a starting point of 30 November 2002.
There is, however, one other point which I should make now about the reamendment of the statement of case. The original statement of case had contained the following paragraph 5:
“The burden is on [KJM] to establish that Honda consented to the import into the EEA and the first marketing in the EEA of each of the LE motorbikes. [KJM] asserts that it had or may have had consent and this Honda denies.”
The reamendment made on 13 November 2007 changed the full stop at the end to a comma, and added the words ‘subject to the foregoing’. In my judgment this change may be considerably more important than initially appears. I will explain why later (see paragraph 77 below).
The trial began before me on 10 December 2007, with a timetable that anticipated it being completed in five days. Everything was proceeding smoothly within the timetable until there was a substantial loss of time (at least a day) associated with Mr Hinton’s evidence. (See further the next two subparagraphs.) I suspect that in any event the timetable had not allowed sufficient time for closing submissions. In the circumstances the case was adjourned and resumed on 21 January 2008. The hearing continued for a further three days.
There is one other matter which I should describe here. Although it occurred in the course of the trial, it was specifically connected with one of the procedural stages which I have outlined in the foregoing subparagraphs. It does not significantly affect my decision, but given what I have said earlier (especially in subparagraph (ix) above) this judgment would be incomplete if I did not mention it. Mr Hinton came to this country to give his evidence and to be cross-examined in person. Not surprisingly he was given a difficult time in cross-examination. For much of the time the cross-examination went to credit, but there came a point when Mr Purvis’s questioning was shifting towards exploring the gravity of Mr Hinton’s having lied in his first witness statement and the possible consequences for him personally. At that point I interrupted the cross-examination and urged Mr Hinton to consider taking his own legal advice and possibly instructing solicitors and counsel to represent him personally. Half a day was lost, and when Mr Hinton’s evidence resumed counsel was present in court on his behalf. Mr Hinton’s evidence was completed without any other major crisis.
Immediately afterwards Mr Purvis requested me to grant permission under the CPR rule 32.14 for contempt proceedings to be brought against Mr Hinton. This led to half a day’s submissions about whether permission should be granted or not. In the end I declined to give permission. I delivered a short extempore judgment, saying in essence that, while there was no doubt that what Mr Hinton did was a contempt within rule 32.14 and that it was a serious matter, it would be disproportionate (not, I think, a word which I used in the extempore judgment) for contempt proceedings to be brought and pursued. I did not give permission for an appeal against my decision, but I understand that KJM may pursue the matter further by applying to the Court of Appeal. KJM understandably feels incensed, particularly given that it came very close to having summary judgment given against it on the basis of a witness statement which the witness knew to be untrue and which KJM at that time was unable to dispute.
Mr Mellor submits that what I have described about Mr Hinton’s original evidence was a regrettable episode, but that it is over now, and that I should decide this case on the basis of the corrected evidence which Mr Hinton has now given. In essence Mr Mellor is right about that, and I do take account of Mr Hinton’s corrected evidence, the general thrust of which I see no reason to doubt. Nevertheless, this judgment would have been incomplete if I had not recorded this aspect of the history of the case. I shall also have an observation to make later about Mr Hinton’s explanation of why he lied (to protect Honda Australia’s reputation within the Honda group). See paragraph 49 below.
Is KJM liable for trade mark infringements in respect of the Honda Australia/Lime Exports bikes? Discussion and analysis
As I have indicated in the Introduction and Overview at the beginning of this judgment, I conclude that, except as respects the last two consignments of bikes supplied by Lime Exports to KJM, Honda’s claim that KJM’s sales of Honda Australia/Lime Exports bikes were infringements of the Trade Marks Act fails. In this part of my judgment I will explain the reasons which have led me to that conclusion. The explanation goes through a number of phases, and it may help a reader to follow the thread of it if I outline now the main points which I cover.
I identify three factors which were raised in the trial but which do not influence me in my conclusion. These are ‘the first contact issue’, ‘the Snart conversations and letter issue’, and ‘Honda’s opposition to parallel imports’.
I address the question of whether Honda Australia consented to Lime Exports selling bikes to non-Australian purchasers, and to such purchasers reselling bikes in their own national markets. My answer is that Honda Australia did impliedly so consent generally, but that such general consent would not have applied if and to the extent that Honda Australia expressly excluded from it any specific purchasers, or any specific kinds of purchaser, from Lime Exports.
I then move to the issue of whether there were any such express exclusions from the implied consent, and I review the evidence which might bear on that issue.
I evaluate a contention by Honda that, when in 1992 Honda Australia first began to supply bikes to Lime Exports, Mr Strickland (of Honda Australia) imposed an express exclusion to the effect that Lime Exports must not resell bikes to purchasers in countries (including the United Kingdom) in which there were Honda-authorised distributors, and that that express exclusion was in force at all relevant times from 1992 onwards. I conclude that there is insufficient evidence that Mr Strickland did impose such an exclusion in 1992, and that, even if he did, the exclusion was, by Honda’s own admission, no longer in force in 1999 when Lime Exports began to sell bikes to KJM. Therefore in 1999 there was implied consent from Honda Australia for Lime Exports to resell bikes to purchasers in the United Kingdom, like KJM, and for such purchasers to resell the bikes in the United Kingdom market.
I then discuss and evaluate whether such implied consent was withdrawn at any time after 1999. I conclude that it was, but I go on to say that the critical question is not whether that happened, but when it happened. Was it in mid-2002, as Honda contends, or was it in mid-2003, as KJM contends?
I make some general observations about the termination of consent in the circumstances of this case, and about how such termination may have happened.
I then consider in detail the evidence and other circumstances bearing on the timing issue of when it was that consent was withdrawn, and I conclude, in agreement with KJM’s submissions, that it was withdrawn in mid-2003, not in mid-2002.
Several of the foregoing issues blur into each other, but I will try to make the progress of my analysis and discussion clearer by inserting italicised sub-headings from time to time.
Factors which do not influence my conclusion
I begin by identifying three such factors. The first two (‘the first contact issue’ and ‘the Snart conversations and letter issue’) were reasons why Lewison J decided that there might be sufficient in points raised by KJM by way of opposition to Honda’s application for summary judgment to make it desirable that there should be a trial. The third factor (‘Honda’s opposition to parallel imports’) is one to which Honda seeks to attach much significance but which I consider to be immaterial to my conclusion.
The first contact issue
I touched briefly on this in paragraph 30 above. How did the trading connection between Lime Exports and KJM arise? Lee Mason’s evidence was that in 1998 he and his father were looking ‘further afield’ for supplies of Honda motorcycles. They were aware that a number of new bikes had come on to the market which had by some means derived from Australia. So he found out the telephone number of Honda Australia and called it. The switchboard put him on to a man whose name he could not remember, and to whom he spoke on more than one occasion explaining that KJM wanted to explore the possibility of obtaining Honda motorcycles from Honda Australia. He sent a fax, of which a copy had not survived, giving his contact details. As Lee Mason recalls, a few days later he was telephoned by Mr Beckert, and that was how the contact was first established. He assumed that Honda Australia had given his details to Lime Exports. If that is what happened it would be likely by itself to win the case for KJM. If Honda Australia, knowing that KJM wanted to buy supplies of new Honda bikes, and knowing that it (Honda Australia) regularly supplied such bikes to Lime Exports for onward sale by Lime Exports to purchasers outside Australia, put Lime Exports in contact with KJM, it is plain that Honda Australia was consenting directly to Lime Exports making sales to KJM and indirectly to KJM making onward sales of the bikes to customers in its own domestic market. Furthermore, Lee Mason was in my opinion a transparently honest witness. Indeed Mr Mellor did not seek to persuade me otherwise. He very fairly accepted that Lee Mason probably did make one or more telephone calls to Honda Australia, but he submitted that it was not established that it was those calls which led to him being contacted by Mr Beckert.
In my judgment I cannot safely base a decision on the first contact issue. Notwithstanding Lee Mason’s evidence and the evident sincerity of it, there remain doubts about whether the events really did happen as he believes. Mr Hinton, currently the head of the relevant section in Honda Australia, enquired of all the employees who are still there and who might have received a call from Lee Mason in 1998 whether they have any memory or note of speaking to him. No-one has. There is also a surprisingly long interval between the time when Lee Mason believes he made the call (the middle of 1998) and KJM’s first purchase of bikes from Lime Exports (late May 1999).
But the most important point arose in the evidence of Mr Beckert. Mr Purvis asked him whether he remembered how he first came to enter into a business dealing with KJM. Mr Beckert said that he did, but the account he gave did not include anything about him having been supplied with KJM’s contact details by Honda Australia. Mr Beckert said that he had received a fax from a United Kingdom based motorcycle dealing business called Planet Moto, the owner or director of which was called Nigel Usher, and that it was Nigel Usher who effectively introduced him to KJM. He produced a copy of a manuscript fax message dated 10 January 1999 to himself which included the following
“Please note that with reference to our order for 1999 models we have passed this requirement to one of our associated companies in England.
Keith Mason of KJM Superbike Ltd will be contacting you shortly to arrange transfer of funds.
Meanwhile when you have prepared an invoice and have a delivery date please forward direct to:
KJM Superbike[s] Ltd …”
KJM’s address, telephone number and fax number were then given.
This fax is a puzzle in itself. The Masons knew Nigel Usher of Planet Moto, but KJM was not an associated company of Planet Moto and neither of the Masons knew anything about the contents of the fax. Mr Beckert produced a few other documents which he had held on file together with the fax. They included a Lime Exports invoice for 31 bikes. The invoice was dated 12 January 1999, but it was addressed to Planet Moto, not to KJM. KJM’s disclosure of bikes acquired by it from Lime Exports, which I feel sure was conscientiously prepared, did not include the bikes specified in the invoice.
The upshot is that the question of how the first contact between Lime Exports and KJM was made is thoroughly confused. It might have happened as Lee Mason described, but equally it might not, however honestly Lee Mason believes that it did. Since, under the decision of the ECJ in Davidoff, the burden falls on KJM to prove that Honda (meaning in this case Honda Australia) consented to it selling the bikes supplied to it by Lime Exports, and does not fall on Honda to prove that Honda Australia did not consent, I cannot find in favour of KJM by reason of the first contact issue.
The Snart conversations and letter issue
Greg Snart is the National Motorcycle Service Manager at Honda Australia. As such he occupies a senior and important position within the company. He is not, however, involved in sales and in such matters as whether Honda Australia should or should not supply motorcycles to a company with a business like Lime Exports’ business, or, if so, whether any conditions should be attached to the supply. He is a highly skilled and impressive specialist in the technical aspects of motorcycles and of government regulation of them. He knew Mr Beckert, and I assume that he knew in a general way about the nature of Lime Exports’ business. On 21 August 2002, following a telephone conversation, he wrote a letter to Mr Beckert which contained detailed information about the kinds of certificates or other documents which governments require before bikes can be sold in their jurisdictions and ridden on their roads. The concluding paragraph of the letter read:
“I trust that this information is in sufficient detail for your needs and will enable you to obtain approval to export them to your customers. As always, if I can do anything else to assist you, at any time, please feel free to contact me.”
Before Lewison J two matters on which KJM relied in resisting Honda’s application for summary judgment were that letter and evidence from Keith Mason that he had spoken to Mr Snart a few times on the telephone.
Before me Mr Purvis did not seek to place any significant reliance on those matters. The conversations which Keith Mason said that he had had with Mr Snart (and which I am sure he did have – Keith Mason, like his son Lee, having been a manifestly honest witness) were about technical issues, and there cannot have been anything in them which impacted one way or the other on whether Honda Australia consented to KJM selling Honda bikes which Honda Australia had sold in the first instance to Lime Exports and which Lime Exports had sold on to KJM. I mention for completeness that Mr Snart does not remember receiving telephone calls from Keith Mason, but accepts that he may have done so. As regards Mr Snart’s letter, the main contents simply show that he, trying to be as helpful as he can, gave detailed technical information about government requirements; and the concluding paragraph is the sort of general signing off that would be likely to be included in a letter of that nature.
Therefore I do not base any part of my decision on the Snart conversations and letter issue, any more than I do on the first contact issue. One consequence is that neither of the two factors which led Lewison J to allow KJM the opportunity to have a full trial in which to oppose Honda’s claim feature in my reasons for deciding the claim mostly against Honda. However, in the particular circumstances of this case Honda cannot feel aggrieved about that, because the most important element in the evidence on the basis of which it sought summary judgment was Mr Hinton’s deliberately false evidence that the only consent which Lime Exports had to resell Honda motorcycles was consent for resales to the Pacific Islands.
Honda’s opposition to parallel imports
I mention here the third matter which featured quite prominently in the trial but which does not influence my conclusion. On behalf of the claimants Mr Mellor sought to make much of evidence that ‘Honda’ was strongly opposed to parallel imports. I have placed quotation marks around ‘Honda’, because, although that was the way in which Mr Mellor generally put the point, the evidence was that it was Honda Europe (including its division Honda UK) that was strongly opposed to parallel imports. Mr Davies, who is now the General Manager for Motorcycles at Honda Europe and was previously the General Manager for Motorcycles at Honda UK, gave evidence to that effect, and I entirely accept it.
I am quite prepared to accept that, if KJM had needed to ask Honda UK or Honda Europe for consent to import Honda motorcycles from Lime Exports and to sell them in the United Kingdom, the consent would have been refused. It is probable that the same would have happened if KJM had asked for consent from Honda Japan. But, given the important concession made by Honda which I described at paragraph 36(xi) above, the question for me is not whether Honda UK or Honda Japan gave consent. The question is whether Honda Australia gave consent. In view of Honda Australia’s own conduct it is not open to the Honda claimants in this case to argue that, because Honda Europe and Honda UK were opposed to parallel imports coming into Europe from overseas sources like Australia, Honda Australia must be assumed to have been equally opposed to parallel exports going out from Australia. Honda Australia’s own conduct refutes any such argument. Between 2001 and 2002 Honda Australia itself, without the interposition of Lime Exports or any similar company, made large exports directly to a parallel importer in Europe, Emile Gebben of Holland. I have described this in paragraph 35 above. I also mention in this connection the explanation which Mr Hinton gave for his false evidence in his first witness statement that Honda Australia had supplied bikes to Lime Exports for export only to the Pacific Islands:
“I was trying to protect Honda Australia’s reputation within the Honda group from harm.”
To my mind those words speak volumes. Mr Hinton, who was in a very senior position in Honda Australia, knew full well that Honda Australia ought not to have been doing what it did.
Did Honda Australia consent to sales by KJM?
More fully stated the question is: did Honda Australia consent to KJM selling on the market in the United Kingdom Honda Australia/Lime Exports bikes, that is Honda motorcycles which it had purchased from Lime Exports and which Lime Exports had previously purchased from Honda Australia? My answer is: except for the last two consignments of bikes, sold by Lime Exports to KJM in August 2003 and June 2004, Honda Australia did consent, not expressly but impliedly. I explain my reasons in the remainder of this section of my judgment.
My starting position rests on the following two propositions. First, Honda Australia sold many motorcycles to Lime Exports over the years, always for export from Australia. Second, Honda Australia knew that Lime Exports was a dealer within the trade, and that it would be reselling the bikes, not to individual customers for private use, but to non-Australian purchasers which would resell the bikes in the course of retail or wholesale businesses. Both propositions are, I believe, undisputed. Two things follow:
Unless and except to the extent that Honda Australia specified otherwise, either generally or at the time of any specific sale, Honda Australia consented to Lime Exports reselling the bikes to business customers outside Australia. If, for example, Honda Australia wanted to impose a condition that Lime Exports must not resell bikes to businesses in the United Kingdom or elsewhere in Europe, it needed to say so. If it said nothing but just sold the bikes to Lime Exports, the implied consent of Honda Australia for Lime Exports to resell to business customers outside Australia included implied consent for it to resell to business customers in the United Kingdom.
Again, unless and except to the extent that Honda Australia specified otherwise, either generally or at the time of any specific sale, Honda Australia also consented to purchasers from Lime Exports reselling the bikes in the course of their own businesses.
The foregoing propositions (i) and (ii) are, I believe, self-evident. At one point Mr Mellor, if I understood him correctly, submitted that, if there was to be consent from Honda Australia for Lime Exports to resell bikes to purchasers in the EEA (which of course includes purchasers in the United Kingdom) Honda Australia had to state expressly that the consent to resale which it was giving to Lime Exports extended to EEA purchasers: the implied consent that manifestly arises from the circumstance that Honda Australia sold motorcycles to Lime Exports only for export from Australia would not be enough. I cannot agree. This does not in any way conflict with any of the propositions laid down by the ECJ in Davidoff, such as that consent must be unequivocal, and that consent cannot be implied from mere silence.
As to the first Davidoff proposition (that consent must be unequivocal), the Mastercigars case confirms that a consent which is implied, not express, can still be unequivocal. To adapt slightly something which Jacob LJ said in Mastercigars (at paragraph 19 of his judgment) a proved act which is consistent with consent and inconsistent with the absence of consent establishes unequivocal consent. If and when Honda Australia sold large quantities of new motorcycles to Lime Exports without any conditions as to the identity or location of onward purchasers, what it (Honda Australia) did was consistent only with it consenting to the bikes being resold to any purchaser outside Australia; and there is absolutely no reason for distinguishing between onward purchasers based in the EEA and onward purchasers based anywhere else in the world.
As to the second Davidoff proposition (consent cannot be inferred from silence), there is far more than silence in this case. This is not a case where, because the original vendor has not said anything, it is not possible to tell whether that vendor consented to onward sales. (To anticipate something to which I turn much later in this judgment, the case about the Boon Siew bikes might be of that nature, but in my judgment the case about the Honda Australia/Lime Exports bikes is not.) When Honda Australia sells bikes to a business customer like Lime Exports it probably does not say anything to the effect that the customer can resell the bikes, but it does not need to. An expectation that the customer will resell the bikes and a permission to the customer to do so are inherent in the very nature of the transaction.
In this connection a submission put to me by Mr Mellor makes it necessary to refer to one aspect of the decision of the Court of Appeal authorising KJM to use the letters of request procedure for the evidence of Mr Beckert and Mr Juster to be taken in the State of Victoria. The order requested by KJM had included a draft letter of request to the Victoria court. The draft summarised the case and the issues in dispute in 13 paragraphs, and then in paragraph 14 it specified the matters on which each of the intended witnesses should be examined. As drafted paragraph 14 began ‘The witnesses should be examined regarding the following matters:’ There were then two subheadings: ‘In the case of Mr Guntram Beckert’, and ‘In the case of Mr Ian Juster’. Twelve matters were listed for Mr Beckert and eleven for Mr Juster. The Court of Appeal took the view that it was desirable to add some words after ‘the following matters’. The letter of request as addressed to the Victoria court read:
“… the following matters in so far as they relate to the question of consent, express or implied, of Honda Australia to the export of motorcycles supplied by Honda Australia by Lime Exports to countries within the European Economic Area in general and/or the United Kingdom in particular …”
Rix LJ suggested additional words along those lines in his judgment, and Lloyd LJ, in agreeing, added this (in paragraph 24 of the judgments of the Court of Appeal):
“It seems to me that it would be better that the consent should be expressed as being consent to exports to the EEA in general and/or to the United Kingdom in particular rather than to exports generally, since it is a consent to exports to the EEA in general or to the UK in particular that is required to make good the defence to the trade mark infringement claim.”
The reference of the Court of Appeal judgments is [2007] EWCA Civ 313. The judgments were delivered on 21 March 2007.
In my judgment what Lloyd LJ said does not support the proposition that, for a consent by Honda Australia for the bikes to be sold by KJM to have existed in this case and to suffice as consent within the relevant provisions of the Trade Marks Act and the Trade Marks Directive, the consent must be one expressed to be limited to the EEA or to the United Kingdom. The Court of Appeal and Lloyd LJ were merely addressing a small print point on the wording of the letter of request, and were not intending to do more than that. If Honda Australia gave consent for the bikes to be resold anywhere in the world except in Australia, that included consent to them being resold anywhere in the EEA, including in the United Kingdom. I do not believe for a moment that Lloyd LJ’s observations cast any doubt on that manifestly correct proposition.
Did Honda Australia impose a relevant restriction on resales by Lime Exports?
The evidential burden rests on Honda.
I move on. For the reasons which I have explained so far I consider that Honda Australia did give consent for Lime Exports to resell bikes unless, and then only to the extent that, it (Honda Australia) attached a condition that resales, or any particular kinds of resales, were not permitted. I also consider that the same consent, subject to the same qualification, extended to Lime Exports’ non-Australian trade customers like KJM. The critical questions in this case are whether Honda Australia ever attached any condition or conditions that resales to certain kinds of purchasers were not permitted, and, if so, when did it begin to attach them. These are largely questions to be answered in the light of the evidence. The burden of proof on these issues must rest on Honda. The burden of establishing that consent to resales by Lime Exports exists at all rests on KJM, but in my judgment that burden is easily discharged by reason of the matters which I described in paragraph 51 above. But the burden must shift to Honda when the arguments move on to examine whether, although Honda Australia plainly consented to Lime Exports making resales generally, nevertheless it excluded from that consent resales by Lime Exports to the EEA or to the United Kingdom, or whether Honda Australia excluded consent for onward resales in the EEA or the United Kingdom by the first person to market the bikes in those areas. It cannot be right that Honda can say something like this: ‘We may have to accept that Lime Exports had consent from Honda Australia to resell bikes generally, but Honda Australia might have excluded from that consent resales to the EEA and/or resales in the EEA by purchasers from Lime Exports. Now you, KJM, must prove that Honda Australia did not do that.’
A review of the evidence on whether there was consent from Honda Australia
Over the next several paragraphs I will review and outline the relevant evidence which was presented to me. I have two introductory comments to make about it.
Two introductory comments
First, all the relevant evidence on whether there was consent from Honda Australia for Honda Australia/Lime Exports bikes to be sold by KJM in the UK arose in Australia, not in the United Kingdom. The evidence, though having important consequences for KJM, was directed to the conditions on which Honda Australia sold bikes to Lime Exports. Honda Australia obviously consented to Lime Exports reselling bikes, but did it exclude from that consent resales to a purchaser, like KJM, which was based in the EEA (or in the United Kingdom) and which intended to resell the bikes in its own national market? The answer to that question is critical to whether KJM was in breach of Honda Japan’s trade marks when it resold the bikes, but in the nature of things KJM, in the persons of Keith and Lee Mason, could give no evidence about it. So the evidence was that of Mr Beckert and of several persons who were involved over the years in the conduct of the business of Honda Australia.
The second introductory comment is that the evidence came into the case in phases, and in general I will follow the phases in the account which follows. First there was Mr Hinton’s first witness statement made before the summary judgment hearing by Lewison J. Second there were some witness statements, including a second corrective statement of Mr Hinton, served on behalf of Honda at times after Lewison J’s decision. Third there was the oral evidence of Mr Beckert and Mr Juster, given in Australia on 9 and 10 July 2007. Fourth, Honda served a number of witness statements in response to the oral evidence of Mr Beckert. Finally there was the oral evidence given before me over several days in December 2007. In most cases that oral evidence was given by videolink, but, as I have already described, Mr Hinton’s evidence was given in person.
Evidence in early witness statements of Honda’s witnesses
Honda’s evidence on the question has developed and changed over the course of the case. The first evidence was Mr Hinton’s first witness statement, in which he said that bikes were supplied to Lime Exports for resale to the Pacific Islands only. That was a lie. Mr Hinton withdrew it in his second witness statement and did not say anything to suggest that there was any other restriction on how and where Lime Exports could resell bikes bought by it from Honda Australia. Mr Hinton made two more witness statements before he gave oral evidence, and they added nothing relevant to what I am considering now. He was the head of motorcycle sales at Honda Australia when he made his statements, and if there were any restrictions imposed by the company on what Lime Exports could do with bikes sold to it he might have been expected to know about them.
Honda also served witness statements of Mr Baynes and Mr Reynolds, the members of the staff who were the main contacts for business with Lime Exports from July 2001 to June 2003 and from July 2003 onwards. Mr Baynes said nothing in his first witness statement bearing on the present issue. He said a little more, but not much, in his second statement, which was made after Mr Beckert had given his oral evidence under the letter of request procedure. All of Mr Baynes’ emails had been deleted before the case arose. Mr Reynolds succeeded Mr Baynes. His emails have survived. They show that, when he was in contact with Lime Exports about a prospective order for bikes, he used to ask Lime Exports (in the person of Mr Beckert or Chris Valler) what the destination of the bikes was going to be. This was a significant development in the sales procedures, and an important issue in the case (to which I will come later) is going to be: when did it begin? Mr Reynolds was a particularly clear and helpful witness, but he was in no position to give evidence about whether Honda Australia had, before he became personally involved in the business relationship with Lime Exports, imposed any restrictions on the destinations to which Lime Exports could export bikes. Certainly he did not give evidence that there were any such restrictions.
Honda also served relevant evidence on the issue from Mr Strickland. But his witness statement was served after Mr Beckert and Mr Juster had given oral evidence under the letter of request procedure, and I think that I ought to say something about their evidence first.
Mr Beckert’s oral evidence
I begin with Mr Beckert. It will be recalled that he was a witness for KJM, but that he gave his evidence under compulsion pursuant to a subpoena. By that time KJM had served third party proceedings on his company, Lime Exports. (What will happen in connection with the third party proceedings will of course depend on the outcome of the present case.) Mr Mellor, in his submissions to me, mounted a vigorous attack on Mr Beckert as a witness. He submitted that I should only accept anything that Mr Beckert said if there was independent corroboration of it. I do approach the evidence of Mr Beckert with some caution. I accept that in some respects he was an unsatisfactory witness (or became one as his evidence proceeded well into a second evening – an evening for Mr Beckert rather than a day because of the time difference between the United Kingdom and Australia). He was particularly unsatisfactory towards the end of the second day when he was being asked about the supply of destination information to Mr Reynolds, who, it will be recalled, became Honda Australia’s main contact in July 2003. It is absolutely clear from many emails that destination information was regularly asked for and given. Mr Beckert insisted that it had happened on a very few occasions only, and always on the telephone. At one stage he made the ridiculous suggestion that someone must have hacked into his computer.
Nevertheless, despite Mr Beckert’s evidence being unsatisfactory in some respects, I am not prepared to disregard it. Particularly in the early stages he was clear and forthright on important matters. Mr Mellor would have me believe that throughout Mr Beckert’s evidence he was cunningly, deviously and dishonestly manipulating what he did say and what he did not say in order to help KJM and to defeat Honda. If that was what Mr Beckert wanted to do, and if he cared so little about the truth as Mr Mellor says, he could have helped KJM a great deal more than he did. For example he could have agreed with Lee Mason’s account of how the first contact between KJM and Lime Exports arose. But, as I have described in paragraph 41 above, he did not do that. He produced the Planet Moto fax, and effectively removed what would have been a particularly strong argument in favour of KJM – in my view an argument which would probably have been decisive by itself.
With those cautionary and preliminary observations I will try to summarise what Mr Beckert said about whether restrictions were placed on Lime Exports as to markets to which it could sell bikes supplied by Honda Australia. He said Honda Australia did sometimes inform him of restrictions. If it did he complied with them. He did not remember precisely, but he thought that there were two or three times when restrictions were mentioned. Around 1998 or 1999 there was a restriction on supplying bikes to South Korea. In 2001 or 2002 he was asked to try not to sell to certain European markets, which he thought were Germany and Italy; these were not really restrictions, but rather indications along the lines of ‘Look, try not to sell into these markets’. And at a later stage – he thought in late 2003 if not 2004 – there was an instruction not to sell to the United Kingdom. His recollection was that he was told of this by Mr Baynes. (This suggests that, if the restriction was imposed, Mr Beckert has got the time wrong, because Mr Baynes moved to entirely different work within Honda Australia in July 2003.) Mr Beckert was asked whether in mid-2002 Honda said anything to him about a necessity not to export bikes into the European Union. He answered that nothing of that kind was said.
A different, but related, aspect of Mr Beckert’s evidence which I should say something about concerns how much knowledge Honda Australia had about the destinations to which Lime Exports sold bikes before the time when Honda Australia started asking for it. Mr Beckert said that in general he did not disclose destinations, but he also said on several occasions that persons involved in the motorcycle trade knew about him and knew the sorts of things that he did. For example:
“If you talk in the motorcycle dealer world in Australia about Lime Exports, people know what I do and where the bikes come from and where they go. They are being exported. And I source them from dealers, from importers, from wholesalers. They don’t go to Australia. But anywhere else.”
I suspect that there is an element of hyperbole in that and in some other things said by Mr Beckert, building up an image of Lime Exports which he liked to present. Nevertheless it clearly is true that Lime Exports has sold many bikes over many years to trade purchasers in many countries. Honda Australia must have known, in a general way at least, that that was so. Apart from anything else it had been making increasingly large supplies of bikes to Lime Exports over the years. They were not for resale in Australia, and Honda Australia must have known that Lime Exports was exporting on a large scale, even if (as I think was likely) it knew very little in detail about the destinations until it started to ask about them.
I should mention that in the course of Mr Beckert’s evidence he produced a copy of a fax which he said he had extracted from an old computer. It was from himself and was addressed to Mr Strickland and Mr Sekiguchi at Honda Australia. There is a degree of uncertainty about the date of it. The computer had automatically substituted the current date when Mr Beckert printed it off, which was in 2007. The fax began by thanking Mr Strickland and Mr Sekiguchi for their fax of 8 April 1988, which Mr Beckert said must have been a typing mistake for 8 April 1998. So according to Mr Beckert his fax was sent at some time soon after 8 April 1998. It begins: ‘We appreciate your efforts and look forward to working with you together to further our mutual requirements/goals.’ Later it contains this short paragraph:
“We are happy to comply with your export destination requirement [probably a typing error for ‘requirements’]. We intend to ship to the following countries: Japan, Korea, Holland, Germany, Italy, UK. Please advise if there are any destination restrictions for any specific models among these countries.”
On the face of it this fax seems to confirm that Honda Australia was well aware that Lime Exports supplied bikes to the United Kingdom and to other European countries. However, Mr Mellor says that the fax is a forgery created by Mr Beckert. I doubt it, but I accept that there are some unresolved questions to which the fax gives rise. For example, why should Mr Beckert say in 1998 that he looked forward to working with Honda Australia when he had been buying substantial numbers of bikes from Honda Australia from 1992 onwards? Mr Strickland said that he did not remember the fax. He believes that, if he had received it, he would have remembered it because it would have required a reply. I have my doubts about what he said in that respect. It appeared to me that, as Mr Strickland became more and more senior in Honda Australia, several things went on which he might have been expected to know about but did not. A conspicuous example is the year or more of substantial trading with Emile Gebben of Holland. Overall, however, I have not taken the fax which Mr Beckert produced into account in reaching my conclusion in this case.
Mr Juster’s oral evidence
Mr Juster gave his oral evidence immediately after Mr Beckert. He had been Motorcycle Sales Manager at Honda Australia from 1996 to December 2000, and became General Manager of the company from then until he left at the end of May 2003. He is now employed by a competitor. He said that he first encountered Mr Beckert in late 1996 or early 1997. He used to meet him two or three times a year, and on those occasions Mr Beckert used to talk about his export markets and the state of them. To Mr Juster’s knowledge Mr Beckert exported bikes to many different places. Mr Beckert had mentioned the Middle East, Japan, and perhaps Europe. Mr Juster said nothing to the effect that Lime Exports had been subject to a long-standing restriction on destinations to which it could export bikes. But he did remember that, before he left Honda Australia, there had been a complaint that a Honda Australia bike had been discovered in the United Kingdom, and that it prompted him to direct that a message be communicated to Mr Beckert that Lime Exports should stop exporting motorcycles to the United Kingdom. He could not specifically recall whether Honda Australia was aware that, until then, motorcycles from Lime Exports were going into the United Kingdom, but it was right to say that he must have been ‘pretty sure’ that the United Kingdom was a likely destination for bikes sold by Lime Exports.
Mr Strickland’s witness statement
The next significant development in the evidence was Mr Strickland’s witness statement, which is dated 30 October 2007, and which was said (in paragraph 3 of the statement) to be in response to things said and documents disclosed by Mr Beckert in his oral evidence. I have already mentioned what Mr Strickland said about the fax, apparently from a date in 1998, which Mr Beckert had disclosed (see paragraph 68 above). As regards destinations to which Lime Exports could export motorcycles sold to it by Honda Australia, he introduced a new element not mentioned by any of the other Honda witnesses. He believed that Honda Australia had started selling bikes to Lime Exports in 1992, and with reference to that time he said:
“From the outset, when I met with Guntram Beckert, he was told that there would be problems if motorcycles were exported to countries where Honda had an appointed distributor. … The message to Beckert was clear: if we received complaints from Honda distributors that Lime had been selling into their territory, this would cause a problem, and we would have to stop supplying bikes to Lime Exports.”
Those sentences seem to me to stop short of saying that Honda Australia made it a condition of agreeing that it would supply bikes to Lime Exports that Lime Exports must not resell to countries where Honda had distributors.
In that connection, diverting briefly from Mr Strickland’s witness statement, it is interesting to note what was said by another witness, the highly impressive Mr Boogaerdt of Emile Gebben, in his witness statement. Emile Gebben’s purchases from Honda Australia in 2001 and 2002 had resulted from approaches by Mr Boogaerdt to Honda Australia, and in particular from telephone conversations he had with Mr Baynes. His witness statement includes this:
“After a short while my efforts paid off, and in one of my telephone conversations with Graeme Baynes he agreed to offer us some bikes, on the conditions that we should not advertise them high profile; and that they must not end up back in Australia. Other than this we could sell them however and wherever we wanted to. He said that this was the same arrangement as they had with their existing export agent.”
This evidence, which was not challenged and which I accept, shows that in 2001 Honda Australia was not prohibiting Emile Gebben from reselling bikes in any non-Australian market, but wanted Emile Gebben to do so discreetly (not ‘high profile’). I add that the ‘existing export agent’ must have been Lime Exports, and indeed Mr Boogaerdt makes this clear in a later paragraph of his witness statement. It appears that Mr Baynes’ understanding was that Lime Exports could sell bikes in markets outside Australia, but it (like Emile Gebben) should be discreet about it.
The point of my digressing at this stage into Mr Booghaerdt’s evidence is to demonstrate that, if Mr Strickland told Mr Beckert that there would be problems if Lime Exports sold bikes to markets where Honda had an authorised distributor, that did not necessarily mean that he was also saying that Lime Exports was prohibited from making sales to those markets. It could have meant that, if Lime Exports did make such sales it should do so discreetly because, if it did not and complaints from authorised distributors in other markets started to arise, Honda Australia might have to stop supplying bikes to Lime Exports. Mr Strickland returned to the topic at two other points in his witness statement, and seems at those points to have assumed that telling Mr Beckert that there could be problems if Lime Exports sold to markets where there were Honda-authorised distributors was the same thing as telling him that Lime Exports must not resell to such markets. The passage which I quoted in paragraph 70 above is taken from paragraph 6 of the witness statement. Mr Strickland began paragraph 7 as follows:
“The reason why we told Mr Beckert he could not sell into countries where Honda had a distribution network was….”
And paragraph 9 is as follows:
“I understand that in the course of his cross-examination … Mr Beckert stated that he had no recollection of my telling him that he was not entitled to sell motorbikes into countries where Honda had a distributor. I am absolutely certain that I did inform Beckert of this.”
So there was, as it seems to me, an ambivalence in Mr Strickland’s written evidence.
Oral evidence of Mr Strickland and other witnesses
I can now move to the oral evidence taken before me. The first witness was Mr Strickland. Mr Purvis asked him questions about the matter which I have discussed in the last few paragraphs. Was Mr Strickland saying (a) that, back in 1992 when Honda Australia started to supply motorcycles to Lime Exports, Mr Beckert was told that he was prohibited from reselling to markets where Honda had an authorised distributors? Or was he saying (b) that Mr Beckert was warned that, if he did make such sales, problems might arise, it being implicit in the warning that, if problems did arise, Honda Australia would have to stop supplying bikes to Lime Exports thereafter? I did not find Mr Strickland’s answers to be particularly clear or consistent. At one point he said that he did not understand the distinction. But on the whole I think that his evidence favoured (b) rather than (a). On the one hand he said:
“Well, he was told not to export into countries where Honda had distributors.”
And a little later:
“Lime Exports clearly knew that they were not to ship into areas where Honda had distributors.”
But on the other hand he had just said:
“My words were, if he exported to countries where Honda had an appointed distributor, there would be problems. …. I told him specifically that if, as I said, … motorcycles turned up in countries where Honda had official distributors, the dealers would complain; … the motorcycles would be checked, where they had come from, and we would be asked to stop the source of supply.”
And when asked whether what he said was what was in paragraph 6 of his witness statement (‘he was told there would be problems if motorcycles were exported to countries where Honda had an appointed distributor’) or what was in paragraph 7 (‘we told Mr Beckert he could not sell into countries where Honda had a distribution network’) he answered: ‘paragraph 6’. That was his last word on the subject.
There are two other points to make about the oral evidence in the present connection. One is that Mr Beckert, when asked about it by Mr Mellor, had specifically said that Mr Strickland did not say to him that he was not to sell into markets where Honda had distributors. The other is that none of the other witnesses from Honda Australia (Mr Juster, Mr Hinton, Mr Baynes and Mr Reynolds) said anything to support Mr Strickland’s evidence on this point. Two of them – Mr Hinton and Mr Reynolds – expressly confirmed that they had no knowledge of any restriction of the sort which Mr Strickland had referred to in his evidence.
Did Mr Strickland in 1992 impose a prohibition on sales to the United Kingdom? If so did it remain in force at all relevant times after 1992?
I have now reached a point where I can evaluate one of Mr Mellor’s submissions: the submission that one reason why Honda Australia did not consent to KJM selling the Honda Australia/Lime Exports bikes in the United Kingdom was that Lime Exports had supplied the bikes to KJM in breach of a prohibition imposed by Mr Strickland in 1992. I do not accept that submission. There are two reasons. The first is that in my opinion the evidence is not sufficient to establish on the balance of probabilities that Mr Strickland did impose any such prohibition. I have reviewed all the relevant evidence in the foregoing paragraphs, and for reasons which will, I believe, be apparent from those paragraphs and which I will not repeat here, it is insufficient to establish that there was any prohibition.
The second reason is that in any event it seems to me quite impossible for Honda to maintain this particular argument given the amendment to its statement of case which I described in paragraph 36(xiii) above. It will be recalled that it was in 1999 that KJM commenced to sell Honda bikes supplied to it by Lime Exports. Originally Honda claimed relief on all such sales by Lime Exports, but that was amended on 13 November 2007. Honda now ‘make no claim in relation to motorbikes sold by Honda Australia to Lime Exports and thence to the Fourth Defendant [KJM] prior to 1 July 2002, alternatively prior to 30 November 2002’. If at all times from 1992 onwards there had been in effect a continuing prohibition, imposed orally by Mr Strickland, barring Lime Exports from exporting bikes to overseas destinations which included the United Kingdom (where Honda certainly had an authorised distributor), the amendment would have made no sense. The amendment plainly accepts that, until 1 July 2002 or 30 November 2002, KJM did have consent to resell Honda Australia-sourced bikes supplied to it by Lime Exports. It (the amendment) necessarily imports an acknowledgment by Honda that, if Mr Strickland had imposed a prohibition in 1992, the prohibition had become spent or had been abandoned before 1999.
There is a further point arising from Honda’s amendments to its statement of case made on 13 November 2007. As I recorded in paragraph 36(xiv) above, the original statement of case contained a paragraph which denied KJM’s contention that it had Honda’s consent to importing the bikes. The paragraph ended ‘… and this Honda denies’. The amendment of 13 November 2007 added the words ‘subject to the foregoing’. So Honda’s denial that KJM had consent to sell the bikes supplied by Lime Exports was no longer an absolute denial; it was a qualified denial. ‘The foregoing’ was Honda’s amended pleading which excluded from Honda’s claim bikes supplied after 1 July or 30 November 2002 and explained why those dates were chosen. As it appears to me the superficially innocuous words ‘subject to the foregoing’ are a further acknowledgment that KJM did have consent to resell bikes supplied before those dates.
Accordingly I conclude that, when in 1999 KJM began purchasing bikes from Lime Exports, most of the bikes being Honda Australia/Lime Exports bikes, it did have consent to resell them. The next question is whether that consent was terminated at any time after 1999; and, if the answer is that it was, a consequential (and very important) question is: when did that happen?
Termination of consent by Honda Australia
The answer to the first of those two questions is that consent was withdrawn at some time. The parties agree about that. But they disagree about the answer to the second question. Honda says that consent was terminated at (or, perhaps, not later than) the end of June 2002. (The alternative of not later than 30 November 2002, which featured in Honda’s amended pleading, was not pursued before me.) KJM says that consent was terminated at some time in the middle of 2003, after a consignment of bikes sold by Lime Exports to KJM in May 2003 but before a consignment sold to it in August 2003 (as to which see paragraph 82 below). So the major question I have to decide is whether Honda Australia’s implied consent for Honda Australia/Lime Exports bikes to be resold by KJM, a purchaser from Lime Exports, was terminated some time around the middle of 2002 or some time around the middle of 2003. Quite a significant sum may turn on this. If I have calculated correctly, 492 bikes originating from Honda Australia were sold by Lime Exports to KJM between those two times. Quantum of liability has not been investigated in this case yet, but I was told that, in very round terms, Honda is likely to say that it is entitled to damages of around £1,000 for each bike as to which liability on the part of KJM is established.
Termination of consent; some general observations
I have a few general observations to make about the termination of consent before I turn to consider at what time the termination took place. The first point to note is that, just as consent for KJM to sell bikes originating from Honda Australia was not given directly by Honda Australia to KJM, but arose as a consequence of the transaction between Honda Australia and Lime Exports, so any termination of that consent can only have arisen from an exchange or exchanges between Honda Australia and Lime Exports. Any such termination would not be brought about by anything passing between Honda Australia and Lime Exports’ customers (like KJM), but rather by reason of a new element being introduced into Honda Australia’s dealings with Lime Exports. If Honda Australia notified Lime Exports that in future Honda Australia would only supply bikes to it subject to the condition that they must not be resold to trade purchasers in, for example, EEA countries, but Lime Exports nevertheless resold some bikes to KJM, KJM would not have an implied consent from Honda Australia to resell the bikes. It would make no difference if (as would probably have been the case) KJM knew nothing about the condition newly imposed on Lime Exports by Honda Australia.
The next general point which I wish to make is that the concept of a restriction or prohibition being imposed on Lime Exports as respects the destinations to which it could resell bikes initially brings to mind something in the nature of a formal communication instructing Lime Exports that all future supplies of bikes will be made on condition that no resales are to be made to certain identified destinations. No evidence of any real weight was placed before me of any such communication being made, and, although the parties seem to agree that in some manner and at some time Mr Beckert was given an instruction by Honda Australia one effect of which was that he was prohibited from reselling bikes to the United Kingdom, I confess to having my doubts about whether the matter was dealt with in that way. However, I accept that a similar result could have been, and was, brought about indirectly by a different procedure which certainly was adopted. That procedure was the adoption by Honda Australia of a consistent practice of asking for destination information in the course of exchanges between it and Lime Exports about a prospective contract for supply of bikes.
I can best explain this point by an illustration which takes the actual facts of the supply by Honda Australia to Lime Exports of 31 bikes in August 2003 and their resale to KJM. On 11 August emails and (I infer) telephone messages were passing backwards and forwards between Chris Valler at Lime Exports and Mr Reynolds at Honda Australia about an order for bikes which Lime Exports was in the process of arranging to buy from Honda Australia. Mr Reynolds asked about the destination of the bikes, and in an email of 12 August Ms Valler replied: ‘In reply to your recent enquiry regarding destination of product – it is Japan.’ In the end, however, the bikes did not go to Japan, but went to KJM in the United Kingdom. (Originally in Honda’s case as presented to me it was alleged that this showed that Lime Exports lied about destinations of bikes, but in my view Mr Purvis was able to show convincingly, by taking Mr Reynolds through a complex set of emails, that that was not the case. I am satisfied – and I think that in the end Mr Mellor was inclined to accept this – that Ms Valler was ordering the bikes for supply to a customer in Japan, but that, after she had given her answer about their destination and after Lime Exports’ order had taken contractual effect between itself and Honda Australia, something caused the sale to Japan to go off; and Lime Exports sold the bikes to KJM instead by a contract made on 20 August.)
There is no indication that Mr Reynolds, upon being informed that the destination of the bikes was Japan, made any comment upon that topic. In particular there is no email to the effect that, given that destination, Honda Australia was prepared to supply the bikes. It just supplied them and invoiced Lime Exports for them. Suppose that, contrary to what actually happened, the bikes had gone to Japan. Honda Australia would plainly have given implied consent, first to Lime Exports reselling them to a Japanese customer, and, second, to the Japanese customer (which would, I assume, have been a dealer in motorcycles) reselling them to purchasers in Japan. But, reverting to what actually happened, it seems clear to me that Honda Australia did not give implied consent to Lime Exports selling the bikes to a destination other than Japan. Still less did it give implied consent for a dealer in such a destination to resell the bikes to customers of its own.
As the example which I have just explained shows, the introduction by Honda Australia of a practice of asking for destination information introduced a new element into the issue of whether it (Honda Australia) did or did not give implied consent for the bikes to be resold by Lime Exports’ purchaser to its own customers. If the bikes were sent to the destination which Lime Exports had notified to Honda Australia, Honda Australia did give implied consent. If they were sent to a different destination, Honda Australia did not. Honda Australia may or may not in addition have notified Lime Exports of an omnibus prohibition against reselling bikes to, for example, the United Kingdom; but I believe that, even if it did not, the requests for destination information effectively achieved the same result.
The timing issue: when did Honda Australia start asking for destination information? When (if at all) did it impose an omnibus prohibition on Lime Exports not to resell bikes to the United Kingdom?
I can now turn to what I think are likely to be the critical questions: what was the time at which Honda Australia introduced its practice of asking for destination information? Additionally or alternatively: what was the time at which Honda Australia notified Lime Exports of an omnibus prohibition against reselling bikes to the United Kingdom (or to an area, such as the EEA, which included the United Kingdom)? If it is established that there was such an omnibus prohibition the critical question would indeed be: when was it introduced? But since there is no record or other specific evidence of such a prohibition, whereas there is evidence of Honda Australia asking for destination information, I think that the critical question is likely to be the one which I stated at the beginning of this paragraph: what was the time at which Honda Australia introduced its practice of asking for destination information? If Honda Australia did both things (imposed an omnibus prohibition and started asking for destination information), the strong probability in any case is that it did them both at the same time. The difference between the two questions (when did Honda Australia impose an omnibus prohibition, or when did Honda Australia start asking for destination information) is unlikely to matter, because on each question the submissions of the parties would be the same. On either basis Honda Australia introduced a change, and, whether it came from the introduction of requests for destination information or whether it came from the imposition of a blanket prohibition, or whether it came from both, Honda’s case is that the change happened in mid-2002, and KJM’s case is that it happened in mid-2003.
A review of the evidence relevant to the timing issue
In so far as it matters, in my judgment the burden of proof on this issue must rest on Honda. Honda is contending that Honda Australia introduced a change from what had gone before, and the burden of showing when that happened must fall upon it. I begin on the issue by reviewing the evidence, which in my view is, even without the impact of the burden of proof, markedly more supportive of KJM’s case than it is of Honda’s.
I have already referred to some parts of Mr Beckert’s evidence that bear on this timing issue. At paragraph 66 above I have recorded him as saying that restrictions relating to supplies to the United Kingdom were mentioned to him by Mr Baynes. Mr Beckert added that this happened simply in a telephone conversation. As to the time of the telephone conversation, Mr Beckert at that stage in his evidence placed it in late 2003 or even in 2004. However, as I said in paragraph 66, I do not think that that can be right, since Mr Baynes moved to a different job within Honda Australia at the beginning of July 2003. He said in oral evidence that he had no contact with Mr Beckert after then. (Mr Beckert said otherwise, but on this point I think that Mr Baynes is almost certainly right.) Later Mr Beckert said: ‘It was the second half of 2003. Two hundred per cent. But, you know, I can’t give a date.’ He had previously been asked whether at mid-2002 Honda Australia said anything to him about the necessity not to export motorcycles into the European Union, and answered: no. He also said that he remembered that, on occasions from around July/August 2003, Honda Australia started asking him where shipments were going. That was in evidence in chief. His evidence on the particular topic of requests for destination information degenerated in cross-examination because (as I have already described) he refused to accept the manifestly true fact that questions about destinations were asked regularly and by email, and he even said that someone must have hacked into his computer. Nevertheless, unsatisfactory though Mr Beckert’s evidence was in some respects, he said nothing on the timing issue that supports Honda’s case, and he said quite a lot that supports KJM’s case.
Mr Juster said that, when he was still General Manager of Honda Australia, he gave instructions that Mr Beckert should be told to stop exporting motorcycles to the United Kingdom. He did not recall when that had been said. He made the fair comment that he was giving evidence four and a half years after leaving Honda Australia, and he could not possibly give precise evidence about the times at which things happened. He was not prepared to take ‘a stab in the dark’, and when Mr Mellor asked him whether it could have been at some time in 2002 he answered: ‘I don’t know’. Mr Juster could not remember who spoke to Mr Beckert: whether it was he himself, or Mr Hinton, or Mr Baynes. I should record that he believed that what prompted him to cause the instruction to be given to Mr Beckert was a complaint that had come from the United Kingdom about an Australian-sourced Honda motorcycle being discovered in the United Kingdom. I shall return to this point later.
Mr Baynes’ evidence was vague and not particularly helpful on the timing issue. In his first witness statement, made in December 2006, the only thing that he said was that, when he was working in the Sales Department (for eighteen months from November 1996, and again from July 2001 until the end of June 2003 as Assistant Sales Manager), ‘I do not recall Lime ever telling us where the motorbikes they were buying were sold on to.’ His second witness statement was made after Mr Beckert had given his oral evidence. He had been referred to Mr Beckert’s having said that he (Mr Baynes) had said to him on one or two occasions ‘do not supply to the UK’. As to that he wrote:
“I do not recall giving Mr Beckert this instruction, although it is possible that I may have done. I think the instruction to Mr Beckert not to export to the United Kingdom would have been likely to have been given at a higher level than me.”
He added in a later paragraph:
“I believe I now recall (the evidence and documents which have been served since my first witness statement having triggered my memory) asking Chris Valler at Lime Exports for the destinations of motorbikes which Lime Exports were proposing to buy from Honda Australia.”
This was hardly convincing. No emails or other documents support it, and I did not find Mr Baynes’ oral evidence any more convincing. He vacillated between saying that he was basing himself on what Mr Beckert and Mr Juster had already said, and saying that he now remembered asking Mr Beckert (not Chris Valler, who is the person he had named in his second witness statement) for destination information. In any event, whether Mr Baynes was simply reconstructing in his mind something which he did not remember or whether some real fragmentary memory had returned to him, he said nothing about the time at which he now thinks that he started asking for destination information.
I move on to Mr Hinton. He says nothing in any of his four witness statements about an instruction to Lime Exports not to export bikes to Europe or the United Kingdom, or about the practice of asking for destination information. In oral evidence he said that, until Honda Australia started asking for destination information he and his colleagues (‘we’ was the word used) had no idea where the bikes were going. Mr Purvis said: ‘You started asking that, as far as the documents show, around July 2003?’ The answer was: ‘Correct’. I quote in full another extract from the cross-examination at a later stage:
“A. From when I joined Honda Australia, I wasn’t aware of any restriction until that was imposed some time in 2003.
Q. And does that restriction coincide with, beginning with the emails that we see from Mr Reynolds, starting to ask for the destination of the bikes?
A Correct.”
In re-examination he said that the date was based on the documents. He also said in re-examination that he thought that he was responsible for introducing the policy of asking for destination information, and that after May 2003 it would have been his responsibility to decide on that policy.
The last witness who gave evidence that could be relevant on the timing issue was Mr Reynolds. He does not say much that can bear on the issue. He sent the first email which is in evidence and which asks for destination information. It is dated 2 July 2003, and was a reply to an email of the previous day from Chris Valler to Mr Baynes which had enquired about availability of bikes of a particular model. Mr Reynolds began by saying that he would be taking over from Mr Baynes over the next few weeks. He said that supply of the bikes was tight, but he could supply twelve units immediately. He then wrote: ‘What is the final destination for these bikes?’ (This was the email I have referred to earlier: the one to which Ms Valler replied that the destination was Japan; but the bikes ended up being supplied to Lime Exports in the United Kingdom. See paragraph 82 above.) In his witness statement Mr Reynolds said, and he confirmed in oral evidence, that he had been asked by Mr Hinton to enquire as to the destination of the bikes which they were selling to Lime Exports, since Mr Hinton was concerned about the possibility of them ending up being sold in Europe.
The timing issue: conclusions
As I have said, Mr Reynolds’ email of 2 July 2003 is the earliest dated request for destination information which is in the evidence. It was followed by many others. The papers include a list of 57 such requests, of which the one of 2 July 2003 is the earliest and one of 24 May 2005 is the latest. Mr Mellor invites me to find that there were such requests made earlier than July 2003, and that the reason why they are not in evidence is because Mr Baynes deleted his emails when he moved to a different position in Honda Australia.
I will deal with that matter now. In the absence of any documentary records showing that there were earlier similar requests I cannot make a finding that any were made. If there had been any such requests they would have been made by Mr Baynes. His evidence was vague and, in my view, not such that I can place any substantial reliance on it. Fairly and realistically he acknowledged in oral evidence that his recollection of the time from 2001 to 2003, when he was the main contact between Honda Australia and Lime Exports, was not good. He said nothing to the effect that he had asked for information by email, still less that he had been doing so for some time. It is true that (as I have described in paragraph 89 above) at times he referred to speaking to Mr Beckert and asking him where the bikes were going to. At other times, however, he said that he could not remember whether he had asked such questions or not.
Mr Mellor submitted that Mr Reynolds’ email of 2 July 2003 did not look as if Mr Reynolds was introducing a new policy; rather like it looked like a routine question. In my judgment the appearance of the email is entirely neutral as between those two possibilities. But in my opinion another aspect of the evidence which Mr Reynolds gave is not neutral between the two possibilities. It is more consistent with requests for destination information requests being an innovation, made at the time when he took over from Mr Baynes. Mr Reynolds did not say in evidence that he asked the question because that was what his predecessor had done in the past. He said that he asked it because Mr Hinton had instructed him to ask it. In this connection I repeat that Mr Hinton had taken over from Mr Juster only a month earlier. The evidence strongly suggests that the policy of asking for destination information was not a long-standing one, but was introduced at the instruction of Mr Hinton at a time which happened to coincide with Mr Reynolds taking over from Mr Baynes as Honda Australia’s main day to day contact with Lime Exports. I add to that that Mr Hinton may well have introduced the policy because Mr Juster, shortly before he left Honda Australia, had instructed him to do something to stop Lime Exports exporting motorcycles to the United Kingdom.
On the basis of what I have described and said so far the most likely analysis of what happened is that any instruction or other system introduced by Honda Australia to prevent sales of bikes by Lime Exports to the United Kingdom occurred in the middle of 2003. There is no specific evidence of it having occurred a year earlier, which is what Honda invites me to find. However, Honda relies on two features of the case in support of its contention that the change took place in the middle of 2002. I consider these elements of Honda’s case in the next few paragraphs.
The first matter on which Honda relies is that it was at around or slightly before the middle of 2002 that Honda Australia stopped supplying bikes to Emile Gebben, thus terminating one method by which bikes supplied by Honda Australia were finding their way on to the European market. Mr Mellor says that it would have been consistent with that for Honda Australia at the same time also to have done something to stop bikes supplied by it finding their way to the same market by a different route, namely by onward sales by Lime Exports of bikes supplied to it by Honda Australia. I can see that for Honda Australia to have done that might have been consistent in some respects, but Honda Australia certainly did not do in relation to Lime Exports what it did in relation to Emile Gebben. Honda Australia stopped doing business with Emile Gebben altogether, but it continued doing business with Lime Exports, and still on a substantial scale. In any case, even if it might have been a natural corollary of what Honda Australia did as respects business with Emile Gebben for it, while not cutting off supplies to Lime Exports altogether, to prohibit Lime Exports from reselling bikes to Europe in future, there is no evidence that that is what Honda Australia did. It is not as if, given that Honda Australia had decided to stop supplying bikes to Emile Gebben, it was inconceivable that it would not have changed the terms on which it supplied bikes to Lime Exports. It had a long-standing business with Lime Exports. It did not terminate that business, but continued it. I do not accept that Honda Australia would only have been willing to continue that business if it had first introduced a prohibition, which had not been in place before, against reselling the bikes to Europe or to the United Kingdom. It could be that if, when the management of Honda Australia decided to stop supplying bikes to Emile Gebben, it had thought about its business with Lime Exports, it might, or perhaps would, have introduced new conditions restricting the markets to which Lime Exports could make resales. However, the management of Honda Australia has not exactly covered itself with glory in this case, and I am not prepared to assume that it did decide to change the terms of its business with Lime Exports at the same time as it stopped dealing with Emile Gebben.
The second feature of the case on which Mr Mellor relies in support of his argument that a prohibition against supplying bikes to Europe, or at least to the United Kingdom, was imposed on Lime Exports in 2002, not in 2003, is the incident of the off-road bike discovered in the United Kingdom which I outlined in paragraph 33 above. Honda’s case is that, when an off-road bike turned up in the United Kingdom at some time in 2002 and was found to have originated from Honda Australia, complaints were made to Honda Japan and thence to Honda Australia. This led to Honda Australia preparing a letter for sending to its dealers in Australia reminding them that they were not allowed to export bikes from Australia. Mr Mellor submits that this would have been a trigger which caused Honda Australia, while continuing to supply bikes to Lime Exports, to instruct Lime Exports that it must not export any of them to the United Kingdom. This aspect of Honda’s case received a boost from Mr Juster’s evidence. He said that he recalled restrictions being imposed on Lime Exports, and he linked them with a complaint that had come from Honda in the United Kingdom and that had involved Honda’s Japanese staff. Mr Mellor says that discovery of the off-road bike happened in 2002, that the complaint about it had been made to Honda Australia in 2002; therefore, he says, the inference must be that it was in 2002 that Honda Australia introduced a system designed to stop Mr Beckert and his company Lime Exports exporting bikes to the United Kingdom.
In my view this is Mr Mellor’s best point on the timing issue, but I do not think that it is strong enough to persuade me that Honda’s case has been made out that it was in the middle of 2002 that a change was made. Honda’s evidence on the point is lamentably thin. Neither Honda UK nor Honda Japan nor Honda Australia has managed to produce a single document confirming what it says happened about the off-road bike. The nearest Honda comes to a document is evidence from Mr Davies, at the time the General Manager for motorcycles at Honda UK, that he remembers receiving a copy of a draft letter from Honda Australia to Australian dealers and that he brandished it at a meeting of authorised Honda dealers in the United Kingdom. He cannot find it in his files. Nor, remarkably, can Honda Australia. Honda Japan has not been able to produce any documents about this episode either.
Nevertheless, I do accept that the off-road bike incident happened and that in some form it came to the notice of Honda Australia. Honda relies on it for a conclusion that it was in the middle of 2002 that a change of some sort was made to the conditions on which Honda Australia was willing to trade with Lime Exports, and that Lime Exports was no longer permitted to export bikes to the United Kingdom. I cannot and do not say that that is impossible. But there are major problems with it, particularly given that the evidential burden on the timing issue rests on Honda. The conclusion which Mr Mellor invites me to draw is purely an inference. There is no direct evidence of anything specific having been communicated by Honda Australia to Lime Exports to this effect in mid-2002. And there is a substantial body of direct evidence that the change happened in 2003.
At the risk of some repetition I draw a few threads together on the timing issue. Honda certainly introduced at some time a practice of asking for destination information when making contracts with Lime Exports for the supply of bikes. It may also have imposed a general prohibition to the effect that all bikes supplied in future were not to be exported to the United Kingdom or to a wider area, like the EEA, which included the United Kingdom. In relation to timing, the only evidence I have of requests for destination information is that they began in July 2003 when Mr Reynolds took over from Mr Baynes as the principal employee of Honda Australia for transacting business with Lime Exports. The burden of establishing that the requests started to be made earlier rests on Honda, and Honda has not come remotely near discharging it. Indeed, Honda’s own witness, Mr Hinton, the head of the Sales Department, said that he was not aware of any restriction until 2003, coinciding with the emails from Mr Reynolds. Mr Mellor reminds me that Mr Hinton said in re-examination that he based himself in that respect on the documents, the suggestion being that that somehow defused the damaging effect of what Mr Hinton had said. But from March 2001 onwards Mr Hinton was the National Motorcycle Sales Manager of Honda Australia. If there was an earlier pattern, no longer evidenced in any documents which have been retained, of Lime Exports being asked for destination information, Mr Hinton might have been expected to have known about it. Indeed, something else which he said in re-examination was that he believed that he was the person responsible for introducing the policy of asking for destination information, because after he took over from Mr Juster the responsibility became his. This dates the introduction of the policy to a time after May 2003, because it was only at the end of that month that Mr Juster left.
Turning to the possibility that, in addition to requests for destination information, Honda Australia at some stage imposed on Lime Exports a general prohibition against exporting to the United Kingdom (or to Europe, including the United Kingdom), there is very little concrete evidence that that was ever done, and no evidence that, if it was done, it happened in the middle of 2002. Such a prohibition would have constituted a significant change to the ambit of trading with a major customer with which Honda Australia had been doing increasing volumes of business for over ten years. One would have expected a prohibition of that nature to have been put in writing. No document containing or evidencing the prohibition has been produced. Nor is there any evidence of what the scope of the prohibition was. Was it a prohibition against supplying bikes to the United Kingdom only? Or to countries in the EEA? Or to countries in the European Union (which is not quite the same as the EEA)? Or to Europe generally? Or what?
Of course it would have been possible for the prohibition to have been imposed orally, but in that case I ask: who said what to whom, when and where? There is a total lack of evidence on those questions from Honda Australia witnesses. Mr Strickland does not say that he said anything of that nature in 2002 or 2003, and, given that he did not know that his company was selling large numbers of motorcycles to Emile Gebben in Holland for over a year, I would not have expected him to have been personally involved in the trading relationship with Lime Exports. He was too senior within the company, and, if I recall correctly, he had had no personal contact with Mr Beckert for several years. Mr Juster said that when he was in charge at Honda Australia he decided that Mr Beckert should be told to stop selling bikes to Europe. But he did not remember saying it himself to Mr Beckert, and there is no evidence that he did. Mr Hinton does not give any evidence that he spoke to Mr Beckert on the matter. Mr Beckert recalled Mr Baynes saying on the telephone something along the lines of ‘Please do not supply to the UK’, but Mr Baynes did not remember doing so, and he made the valid comment that he would have expected a communication of such importance to have been made by someone of more seniority than himself. Given that Mr Beckert placed his conversation with Mr Baynes in the second part of 2003 (perhaps a bit late, given Mr Baynes’ change of job at the end of June) it is apparent that, even if there was a general prohibition imposed, Honda has no evidence of its having been imposed on or before 30 June 2002, which is the date for which Honda contended before me. Finally, I repeat the point that, if Honda Australia both imposed a general prohibition and started to ask for destination information, the probability is that it did both at the same time. Since I cannot find that Honda Australia started asking for destination information before July 2003, I equally cannot find that, if it ever did impose a general prohibition, it did that at any time before July 2003.
Conclusion on the Honda Australia/Lime Exports bikes
For the reasons which I have explained at some length my conclusion is that, although (subject however to what I say under the next heading) Honda is entitled to relief against KJM for trade mark infringement as respects the last two consignments of bikes (those of August 2003 and June 2004), Honda’s claim for relief in connection with all the consignments between June 2002 and May 2003 fails.
KJM’s article 7 construction point
Mr Purvis presented an argument that, even as respects the last two consignments, KJM is not liable for infringement, being protected by the ‘exhaustion’ provision in article 7 of the Trade Marks Directive. A similar argument is available under s.12 of the Trade Marks Act 1994, the relevant part of which simply reproduces the words of the Directive. I do not agree with the argument. I explain the point and my reasoning upon it in the following paragraphs.
I have set out article 7.1 of the Directive earlier, but for convenience I will repeat it here.
7.1 The trade mark shall not entitle the proprietor to prohibit its use in relation to goods which have been put on the market in the Community under that trade mark by the proprietor or with his consent.
A trade mark to which the article applies is conventionally said to be exhausted. Two conditions have to be satisfied. First, the goods (for example a specific Honda motorcycle) must have been put on the market in the Community. Second, the putting of the goods on the market must have been done either by the proprietor of the mark or by someone else with the proprietor’s consent. It is the second of the alternatives in the second condition which is material here: since the goods were not put on the market in the Community by the proprietor of the mark, they needed to have been put on the market in the Community by some other person with the consent of the proprietor.
In the latest amendments made by Honda to its statement of case it pleads at two points that Honda Australia instructed Lime Exports that no exports were permitted to the United Kingdom. Paragraph 4B.3 includes: ‘… no exports were permitted to the United Kingdom.’ Paragraph 4C.2 includes: ‘… motorbikes were only sold to Lime Exports on condition that their destination was not the United Kingdom.’ KJM’s argument begins by interpreting those passages to mean that, although exports by Lime Exports to the United Kingdom were prohibited, exports to other countries in the European Union were permitted. I have my doubts about that, but I will assume that it is correct. The next step in the argument is that therefore the proprietor of the mark (Honda Japan, acting through Honda Australia) gave consent for the goods to be put on the market ‘in the Community’ – the words used in article 7.1. It is then said that that is sufficient to satisfy article 7.1: consent to the goods being put on the market anywhere in the Community will suffice, and if such consent existed the proprietor’s trade mark rights are exhausted.
In my judgment the argument is clearly wrong. It proceeds as if there was only one condition to be satisfied for article 7.1 to exhaust a proprietor’s rights, that condition being that there was consent of the proprietor for the goods to be put on the market anywhere in the Community. However, as I noted in paragraph 105 above, there are two conditions which have to be satisfied, not one, and KJM’s argument ignores the first condition. The first condition is that the goods must be put on the market somewhere in the Community. When they have been so put on the market it is then necessary to ask whether that was done with the consent of the proprietor of the mark.
In this case the motorbikes were put on the market in the United Kingdom by KJM. That putting of them on the market was (as respects the last two consignments of bikes received from Honda Australia) not with the consent of the proprietor of the mark. Therefore the first condition for article 7.1 to apply was not satisfied, and Mr Purvis’s submission that Honda Japan’s rights as proprietor of the marks were exhausted is incorrect.
It would (or at least might) have been different if Lime Exports had sold the bikes to a purchaser in a Community country other than the United Kingdom, and that purchaser had then resold them to KJM, which thereafter sold them through its normal marketing operations in this country. In that case the bikes would have been put on the market in the Community by the first purchaser, and that would, at least arguably, have been done with the consent of Honda Australia, representing the proprietor of the mark. By the time that the bikes came into the ownership of KJM the rights of the proprietor would have been exhausted.
That, however, is not what happened. What did happen was not sufficient to satisfy the conditions of article 7.1, or the identically expressed conditions of s.12. Accordingly I do not accept KJM’s argument in this respect.
KJM’s possible argument based on article 81 of the EC Treaty
After Lewison J refused to grant Honda summary judgment as respects bikes purchased by KJM from Lime Exports he gave directions for pleadings to be exchanged. I have made several references in the course of this judgment to Honda’s statement of case in its capacity as claimant. KJM served a statement of case in its capacity as defendant on 24 May 2006. On 29 November 2007, about two weeks before the trial began, KJM served an amended statement of case. Permission was needed for the amendments. At the beginning of the trial both counsel agreed (and so did I) that the question of whether permission should be given or not should be left over until the final stages of the trial. In the event there was no objection to most of the proposed amendments, and I gave permission for those of them. One amendment for which I gave permission raised the argument under article 7.1 which I considered and disagreed with in the preceding section of this judgment. But Mr Mellor and Mr Abrahams did object to another proposed amendment, by means of which Mr Purvis and Miss Pickard sought to raise an argument relying on article 81 of the EC Treaty. If the argument is sound it is said by Mr Purvis and Miss Pickard to provide another defence as respects the last two consignments.
I do not discuss or evaluate the amendment here, but, if permission is granted for it, it will read as follows:
“In any event Honda Australia had, from at least 1999, given a general consent to Lime Exports to export bikes into the EEA. The purported withdrawal of consent to the export of bikes to the UK is an agreement or concerted practice between Honda and Lime Exports having as its object and/or effect the prevention, distortion or restriction of competition within the common market, in particular by reason of the limiting of markets, contrary to the provisions of Article 81.”
There was discussion of this amendment between counsel, and between counsel and myself, at one stage in the last day available for the hearing to be completed. It became apparent that there was insufficient time for the matter to be dealt with consistently with all other aspects of the case being concluded on that day. I therefore ruled that I would give no decision then on whether to grant permission for the amendment or not, and that KJM must relist its application for permission if it wishes to pursue it. One consequence is that, although on the basis of the issues which I have decided Honda would be entitled to judgment as respects the last two consignments, no such judgment should be ordered unless and until KJM either discontinues its application for permission to amend in this respect or fails in the application. If permission is granted, judgment as respects the last two consignments will have to await the outcome of the further hearing which will, in that eventuality, have to follow.
Honda’s application for summary judgment in respect of the Boon Siew bikes
Although Lewison J declined to award summary judgment to Honda as regards bikes imported by KJM from Lime Exports, he did award summary judgment as respects some bikes imported by KJM (and others imported by the third defendant, D & K Motorcycles) from other suppliers. The circumstances as respects those bikes were, in essence, as follows.
A parallel importer in the United Kingdom, such as KJM or the third defendant, DK Motorcycles, imported Honda motorcycles from abroad and put them on the market in the United Kingdom.
The supplier of the bikes to the parallel importer was not itself a Honda company.
There was no indication from which it could be found or inferred that Honda had consented to the bikes being purchased by the United Kingdom-based parallel importer and put on the market in this country. In particular it could not be inferred that, because an overseas seller to the parallel importer was itself an approved Honda distributor, Honda had consented to the purchase by the importer.
There was no indication that the bikes had previously been put on the market in the EEA.
On the facts before Lewison J the overseas supplier to the United Kingdom importer (or possibly an earlier seller in a chain of suppliers and purchasers) appeared to have acted in breach of its contract with Honda by ignoring restrictions on resale. But the judge added that that circumstance was not essential for the importer to be acting in breach of the rights of the trade mark proprietor if it placed the bikes on the market in the United Kingdom. With reference to the ECJ in Davidoff he observed:
“They held that the trade mark proprietor was entitled to prevent import into the EEA even where the trade mark proprietor placed goods on the market without any restrictions on resale.”
The application by the defendants for permission to appeal from Lewison J’s decision was refused by the Court of Appeal.
Lewison J’s judgment related to a fairly small number of sample transactions. In an order which he made consequentially on the judgment he directed all the defendants to disclose information about all Honda motorcycles (subject to a few exceptions) purchased and/or offered for sale by them since 1 October 1999. KJM and (I believe) the other defendants have made the disclosures directed, and Honda has identified from them all the other importations in respect of which it says that it is entitled to summary judgment on the principles set out by the judge. In many cases the defendants have submitted to summary judgment. There are a few instances (some of which involve the first three defendants rather than KJM) in which it is not agreed (at least not yet) whether Honda is or is not entitled to summary judgment. In the event, so far as the hearing before me was concerned, I was asked to consider and give a decision on only one of those instances. The defendant is KJM, and the issue relates to ‘the Boon Siew bikes’.
There are at least two companies established in Asian countries which include Boon Siew in their names. One is a Malaysian company which has some sort of licence from Honda Japan to manufacture Honda motorcycles. That company does not enter into the issue which I am considering here. The other Boon Siew company is Boon Siew Singapore (for the full name see the table in paragraph 1 of this judgment), which does enter into the issue. Boon Siew Singapore is a Singapore-based distribution company. Information obtained by Honda’s solicitors from the internet says that Boon Siew Singapore has two activities, retail sale of motorcycles and scooters, and petrol service stations. It is the first of those activities which is relevant here. Honda motorcycles manufactured by Asian Honda in Thailand were supplied to Boon Siew Singapore, and in the course of 2005 about 375 of them ended up by being imported into this country by KJM and put on the market here. They were not sold directly from Boon Siew Singapore to KJM. KJM purchased the bikes in various quantities over the year from four overseas suppliers, two of which were based in Japan, one in Florida and one in Malaysia. It is not known, and does not matter, whether those four suppliers obtained the bikes directly from Boon Siew Singapore or whether other intermediate purchasers and resellers were involved.
Originally KJM’s solicitor, Mr Robinson, wrote to Honda’s solicitors indicating that KJM would concede that summary judgment should be given against it in respect of the Boon Siew bikes. However, on 17 January of this year he wrote withdrawing the concession. The suggestion which is now put forward is that the role of Boon Siew Singapore might have been similar to that of Honda Australia in connection with the supplies made to KJM through Lime Exports, and that Boon Siew Singapore may have given the consent of the proprietor of the trade marks for KJM to put the Boon Siew bikes on the market in the United Kingdom. I am requested by Mr Mellor on behalf of Honda to grant summary judgment nevertheless. For the reasons which I will briefly explain I will do so.
On the face of it the circumstances of the Boon Siew bikes are virtually identical to those as respects which Lewison J gave summary judgment. Neither Boon Siew Singapore nor any of the four companies which made the sales of the bikes to KJM is a Honda company. At least there is no evidence that any of them is. In a witness statement Mr Robinson says that he is instructed that Honda is a part owner of ‘Boon Siew’. He does not say by whom he is so instructed. He provides no further evidence in support of the proposition he advances, and the limited researches which, given the very late stage at which this about turn by KJM took place, are all that Honda’s solicitors have been able to undertake suggest that it is wrong. A company search shows that there are eight shareholders in Boon Siew Singapore: three estates of deceased persons, one individual, two Malaysian companies, and two British Virgin Islands companies. One of the estates is that of the man who, according to various internet-derived documents, was the original founder of the enterprise in Malaysia. I imagine that it was that enterprise which developed into the Malaysian company (Boon Siew being part of its name) which manufactures some Honda motorcycles in Malaysia. The original founder was Mr Loh Boon Siew, later Tan Sri Loh Boon Siew. The Loh family name features in the case of the other two estates, in the case of the individual shareholder, and in the case of two of the corporate shareholders. I cannot accept that there is a case to equate Boon Siew Singapore with Honda Australia which even remotely approaches a point where it becomes right for me to refuse to grant summary judgment in respect of the Boon Siew bikes.
A significant difference between the Boon Siew bikes and the Honda Australia/Lime Exports bikes is that Honda Australia was a wholly owned subsidiary of Honda. Given the closeness of the relationship, Honda Japan accepted that, if KJM could establish that Honda Australia consented to its marketing the bikes in the United Kingdom, Honda Japan would be bound by that consent. I can see no basis on which it could realistically be expected that Honda Japan would make a similar concession as respects Boon Siew Singapore. Without the concession, and taking account of the rigorous principles laid down by the ECJ in the Davidoff case, I consider that KJM has no real prospect of successfully defending Honda’s claim against it as respects the Boon Siew bikes, (As to the significance of ‘no real prospect’ see the Civil Procedure Rules, rule 24.2(a)(ii).)
It is true that a possible difference between the circumstances as respects which Lewison J granted summary judgment and the circumstances of the Boon Siew bikes is that Honda was able to show to Lewison J that the sales to KJM by overseas vendors (mainly companies in the United States) of the bikes as respects which summary judgment was granted had been in breach of conditions restricting resales. In connection with the Boon Siew bikes there was no such evidence before me. I do not consider that that is sufficient to justify me in refusing to award summary judgment. Honda had adequate time in advance of the hearing by Lewison J to assemble full evidence. In this case KJM’s belated change of mind about the Boon Siew bikes did not leave Honda with sufficient time to investigate and present the equivalent evidence. That was KJM’s fault, not Honda’s. And in any case, as I pointed out in paragraph 115 above, Lewison J noted that the existence of a condition restricting resale was not essential for a parallel importer to be liable for infringement of the proprietor’s trade marks. The ECJ had decided in Davidoff that the proprietor was entitled to prevent import into the EEA even where the proprietor had placed goods on the market outside the EEA without any restrictions on sale: the absence of such conditions was not sufficient by itself to establish consent for the goods to be placed on the market by a parallel importer in the EEA. The burden of establishing consent by Honda to KJM marketing the Boon Siew bikes in the United Kingdom rests on KJM, and consent is not to be inferred from the mere circumstance (if indeed it existed) that Honda imposed no conditions restricting resales by Boon Siew Singapore.
For the foregoing reasons I will grant summary judgment to Honda as respects the Boon Siew bikes.
Conclusion
At last I have reached the end of this regrettably long judgment. The result is that, as regards the matters covered by the trial of the Lime Exports issue, Honda’s claim fails in respect of bikes acquired by KJM from Lime Exports between 1 July 2002 and the end of June 2003. It succeeds in principle in respect of the last two consignments of Honda Australia/Lime Exports bikes (supplied to KJM in August 2003 and June 2004); but if KJM pursues its application for permission to amend its defence to raise its argument under article 81 of the EC Treaty and if permission is granted, the result as respects the last two consignments must await the outcome of the article 81 argument.
Honda’s application for summary judgment in respect of the Boon Siew bikes succeeds.
Finally I record my grateful thanks to counsel and their instructing solicitors for all the assistance and guidance which I have had in full measure in this demanding case.