Honda Giken Kogyo Kabushiki Kaisha & Anor v Neesam & Ors

A preliminary issue should be ordered only where it is likely to dispose of the proceedings or a substantial aspect of them, materially reduce costs or trial time, or otherwise provide a clear case-management benefit. The court must also consider the risk of delay, appeal and prejudice, together with the possibility that the issue will not resolve the dispute. A preliminary determination should not be used to obtain an advisory ruling on principles which may unfairly fetter the judge conducting the substantive inquiry. The prospect of encouraging mediation is relevant but cannot outweigh the practical disadvantages of a separate hearing.

The claimants sought a preliminary determination in an inquiry as to damages following trade mark infringement proceedings concerning parallel imports of motorcycles. They sought rulings on whether Honda was entitled to user damages for certain motorcycles and, if so, how those damages should be calculated in principle.

The defendants accepted that user damages were a legitimate issue for the inquiry but opposed separating it for determination before trial. The central question was whether the proposed preliminary issues would produce sufficient procedural and economic benefit to justify a separate hearing.

1. Application dismissed. The proposed preliminary issues would not dispose of the action. If Honda succeeded, the inquiry would continue under all four heads of damage; if it failed, substantial claims would remain.
2. The court applied the caution expressed in Tilling v Whiteman [1980] AC 1 that preliminary points may be treacherous shortcuts. The issue was not hopeless or suitable for summary exclusion. It concerned an unusual and uncertain area of trade mark damages, with no clear binding authority on user damages in this context.
3. The relevant case-management considerations included whether determination would dispose of the case or an aspect of it, significantly reduce preparation or trial time and costs, and assist settlement. The court also had to consider whether a separate hearing would delay mediation and whether an appeal was likely. The likely benefit was insufficient, while the risk of delay, further costs and appeal was substantial.
4. The court referred to the ten-question progression identified by Neuberger J in Steele v Steele CP Rep 106. The proposed ruling on the method of calculating damages was particularly inappropriate because it could unfairly fetter the judge conducting the inquiry.
5. The court also noted the uncertainty identified in Reed Executive Plc v Reed Business Information [2004] RPC 40 concerning automatic application of the user principle in trade mark or passing-off cases. The parties were directed to use their best endeavours to mediate before the end of the Trinity term and to report progress by 1 June 2009. Honda was ordered to pay £9,000 on account of the defendants’ costs. Permission to appeal was refused.