[House of Lords (Lord Reid, Lord Hodson, Lord Guest, Lord Upjohn and Lord Wilberforce), December 1, 2, 6, 7, 8, 9, 13, 14, 15, 16, 1965; January 31, February 1, 2, 3, 7, 8, 9, 10, 14, 15, 16, May 18, 1966.]
Conflict of Laws—Foreign law—Recognition—Law as declared by courts of foreign country—Zonal government in Germany—German Democratic Republic not recognised by United Kingdom government as independent sovereign state, but U.S.S.R. recognised as having de jure sovereignty in Eastern Zone of Germany—Council of Gera, created by laws of German Democratic Republic, exercised authority in the district of the Eastern Zone that included Jena—Council entitled according to law of Eastern Zone to act as the special board (the governing authority) of Carl-Zeiss-Stiftung, a corporation domiciled at Jena in Eastern Zone—Council authorised the bringing of an action in England in the name of the foundation—Whether action brought without authority.
Estoppel—Estoppel by record—Issue estoppel—Foreign judgment—Issue of want of authority to institute action—Judgment in foreign proceedings that Council of Gera, the effective plaintiff, was not entitled to represent foreign corporation—Council of Gera authorised issue of writ to bring passing-off action in England in name of foreign corporation—Defendants in English action applied for stay of proceedings on ground of want of authority to issue writ—Whether defendants entitled to succeed on this application on ground that English solicitors estopped by foreign judgment from maintaining that they were duly authorised.
Solicitor—Costs—Payment by solicitor personally—Want of authority to institute action—Action in name of foreign corporation—Corporation domiciled in Eastern Zone of Germany—Law applicable to determine authority to sue.
In 1896 the Carl-Zeiss-Stiftung, a charitable foundation, was incorporated under articles of constitution at Jena, which was in the district of East Germany that was then the Grand Duchy of Saxe-Weimar. The foundation was administered by a "special board" and the two businesses which it owned—one an optical works (founded in 1846 by Carl Zeiss) and the other a glass works—were run each by a separate board of management. The rights and duties of the special board were (by r. 5 of the constitution) to pertain to "that department of the State Service of the Grand Duchy of Saxe-Weimar under which the affairs of the University of Jena were for the time being placed". Rule 113 of the constitution provided that if political changes were made the rule regarding representation of the foundation untenable, the rights and duties of the foundation were to be made over to that department of state which occupied with regard to the University of Jena the place of the state department of the Grand Duchy acting as the special board, provided it had its seat in Thüringia, otherwise to the "highest administrative authorities in Thüringia". In 1918 under the Weimar Republic, the Grand Duchy of Saxe-Weimar was abolished and a new state of Thüringia was set up under which the Minister of Education became the special board. After 1935 under the National Socialist regime, a Reich-Stathalter became the special board in place of the Minister of Education. In 1945 when Thüringia was occupied by American forces, a new provisional government of Thüringia was set up and its Minister of Education became the special board. In July, 1945, by agreement between the allied powers, East Germany, including Thüringia, was taken over by the Russians. When the Americans left in 1945 the members of the boards of management, and a number of scientists and executives went with them to West Germany, where they developed interests that the Stiftung and the firm of Carl Zeiss had there. In 1945, as a result of Russian confiscatory decrees, assets of the two firms were confiscated. In 1948 by further decrees of the Russian authorities both businesses became nationalised industries, referred to as V.e.Bs. In 1949 the U.S.S.R. set up the German Democratic Republic to govern that part of Germany occupied by Russia and purported to make it an independent sovereign state. The Minister of Education continued to be allowed to act as the special board. In 1952 the German Democratic Republic abolished the state of Thüringia and divided the territory of East Germany into districts. Jena was in the district of Gera and the Council of Gera assumed the position corresponding to the Minister and acted as the special board. In proceedings brought by the appellant in Eastern Germany to restrain the firm of Carl Zeiss of West Germany from using the name "Carl Zeiss" in Eastern Germany the Supreme Court in East Germany reached, in and before 1961, the conclusions that the Carl-Zeiss-Stiftung continued to exist as a legal entity and that the Council of Gera was its special board. The writ in the present action, dated Oct. 20, 1955, which was a passing-off action for an injunction to restrain the respondent from using the word "Zeiss" and from selling optical or glass instruments under that name unless the goods were those of the appellant, was issued in the name of Carl-Zeiss-Stiftung as plaintiff on instructions on behalf of the foundation (and the V.e.B.) given by a Dr. S. under his authority as mandatory derived from the Council of Gera. Thus the authority of the English solicitors to issue the writ in the name of the present appellant depended on the authority of the council to act as the special board of Carl-Zeiss-Stiftung, the appellant. On Nov. 15, 1960, the Federal High Court in West Germany upheld a preliminary objection that the foundation was not properly before the German court as the Council of Gera had no authority to represent the foundation. In those proceedings the effective plaintiff was the Council of Gera, and the third defendant in the present action (the West German firm of Carl Zeiss of Heidenheim) was defendant. In February, 1956, the respondents to this appeal applied in the English action that all further proceedings should be stayedon the ground that the action was brought and was being maintained without the authority of the foundation. On Nov. 6, 1964, Her Majesty's Secretary of State gave a certificate which certified, among other matters, "that Her Majesty's government has not recognised either de jure or de facto any other authority," viz., in the context any other authority than the government of the U.S.S.R., "purporting to exercise governing authority in or in respect of the [Eastern Zone of Germany]. Her Majesty's government, however, regards the aforementioned governments as retaining rights and responsibilities in respect of Germany as a whole". The governments last referred to were those of the French Republic, the United Kingdom, the United States of America and the Union of Soviet Socialist Republics.
Held: (i) as the Council of Gera had authorised this action being brought in the name of the appellant, the respondents had not established want of authority on the part of the appellant's solicitors to issue the writ, for the following reasons—
[As to the court's taking judicial notice of the status of a foreign state, see 7 Halsbury's Laws (3rd Edn.) 265, 266, para. 569, 15 Halsbury's Laws (3rd Edn.) 336, 337, para. 612; and for cases on the subject, see 22 Digest (Repl.) 142-144, 1290-1303.
As to the proper law for determining the powers of a foreign corporation, see 7 Halsbury's Laws (3rd Edn.) 12, para. 21.
As to the essentials of estoppel per rem judicatam, see 15 Halsbury's Laws (3rd Edn.) 185, para. 358; and p. 182, para. 355; and for cases on the need for identity of parties or privity, see 21 Digest (Repl.) 256-261, 367-409.
As to the liability of a plaintiff's solicitor for costs where he institutes an action without authority, see 36 Halsbury's Laws (3rd Edn.) 76, 77, para. 107; and for cases on the subject, see 43 Digest (Repl.) 370-372, 3924-3952, 374, 3971-3975.]
Cases referred to:
Appeal.
This was an appeal and a cross-appeal. The appeal was by the appellant, Carl-Zeiss-Stiftung, and the cross-appeal was by the respondents, the defendants hereinafter mentioned, from an order of the Court of Appeal (Harman, Danckwerts and Diplock, L.JJ.) dated Dec. 17, 1964, and reported [1965] 1 All E.R. 300, reversing so much of the order of Cross, J., dated Mar. 6, 1964, as dismissed the application of the respondents by summons dated Feb. 7, 1956. The summons was for an order that all further proceedings in the action by the appellant should be stayed and that the action should be dismissed on the ground that it was begun and maintained without the appellant's authority. The Court of Appeal ordered that the writ and all subsequent proceedings should be set aside, that the respondents should bear their own costs of the action and of applications to the Court of Appeal and that the solicitors for the appellant (Carl-Zeiss-Stiftung) should pay to the respondents the costs occasioned by the appeal, such costs to be taxed on the common fund basis. On Mar. 17, 1965, the respondents presented a petition of appeal to the House of Lords naming as sole respondents to the cross-appeal so instituted the partners in the firm of solicitors acting on behalf of Carl-Zeiss-Stiftung, the petition being for an order for the payment of costs of the action and other costs.
The action was commenced by writ dated Oct. 20, 1955. In it the appellant claimed an injunction to restrain the respondents and each of them from advertising, offering for sale or selling any optical instruments or any articles containing or consisting of glass under or by reference to the name "Carl-Zeiss" or any name containing "Zeiss", unless such goods should be those of the appellant or an organisation associated with the appellant, and generally from passing off any business or goods as and for those of the appellant or an organisation associated with the appellant. The appellant claimed also an injunction to restrain the third defendants from using the name "Carl-Zeiss-Stiftung" or "Carl-Zeiss" or any name containing "Zeiss" in relation to their business or goods. The plaintiff in the action, Carl-Zeiss-Stiftung, was a German foundation founded, so it was alleged, in 1889 and having its registered office at Jena in that part of Germany now constituting the German Democratic Republic. The defendants were Rayner and Keeler, Ltd., Degenhardt & Co., Ltd., and Carl-Zeiss-Stiftung. The first two defendants were retailers of optical instruments, who did not deal in the defendant's goods. The third defendant was, so it was alleged, a German organisation with its registered office at Heidenheim in the Western zone of Germany. Originally the third defendant's name on the record was "Carl-Zeiss". On service of notice of a concurrent writ on the third defendant at Heidenheim, the third defendant entered appearance as Carl-Zeiss-Stiftung trading as "Carl-Zeiss". Thereafter the writ was amended to describe the third defendant as "Carl-Zeiss-Stiftung". The appellant's statement of claim was amended and redelivered. By para. 3 of the amended statement of claim the appellant pleaded that in pursuance of r. 113 of certain articles of constitution drawn up by one Dr. Ernest Abbé in 1896, the administration of the appellant (viz., Carl-Zeiss-Stiftung domiciled at Jena) had been transferred to the Council of the District of Gora, in which district of the Eastern Zone Jena was then situated. It was alleged that the third respondents to the present appeal had used without the appellant's consent the names "Carl-Zeiss-Stiftung" and "Carl-Zeiss" in relation to their business and goods, such use being calculated to lead to their business and goods being thought to be the business and goods of the appellant. The appellant also alleged that for very many years and at all material times the name "Carl Zeiss" and any name including "Zeiss" had indicated, when used in relation to a business concerning glass or optical instruments the appellant's goods, and that for very many years the name "Carl-Zeiss-Stiftung" had indicated the appellant exclusively. The appellant then alleged that the respondents and each of them with full knowledge had passed off the third respondent's business and goods as and for the business and goods of the appellant or an organisation associated with the appellant, whereby the appellant had suffered damage.
On the application of the respondents[ed 3], the Court of Appeal (Lord Denning, M.R., Pearson and Salmon, L.JJ.) made an order dated July 27, 1964, that a letter be sent to the Secretary of State for a certificate relating to recognition by Her Majesty's government of the German Democratic Republic or its government. By certificate dated Sept. 16, 1964, the Secretary of State replied that Her Majesty's government had not granted any recognition de jure or de facto to the German Democratic Republic or its government. By supplemental notice of appeal dated Sept. 28, 1964, the respondents gave notice that they would rely, inter alia, on the following grounds of appeal—(i) that CrossCrossHarmanDanckwertsDiplock