The scarlet letter: SPGA v Chen Eng Waye and others [2013] SGCA 18

Does the decision of Singapore’s Court of Appeal in SPGA v Chen Eng Waye and others [2013] SGCA 18 establish the tort of passing off as a weapon that organisations in the sporting world, even non-profit associations, can use to protect their brand?

Yes and no. It provides a useful summary of the key principles that would ground any such claim, but on close analysis there are several reasons why it would be difficult to roll out elsewhere: in particular, because the Court’s decision hung heavily on the Respondent organisation’s use of the letter ‘A’ in its name without being able to explain why.

The facts

The Singapore Professional Golfers’ Association (SPGA) brought proceedings against a former member (Chen Eng Waye), his son, and a limited liability partnership of which they were both members, Singapore Senior PGA LLP (“SSPGA”).

SPGA had been founded in 1973 and represented all professional golfers, including senior professionals (those aged over 50). It did not, however, run tests specifically for senior professionals. SSPGA was registered in late 2010, and in early 2011 announced a Senior Professional Qualifying Test exclusively for senior golfers. SPGA announced its own such test very shortly afterwards, and brought proceedings alleging passing off by SSPGA.

The High Court dismissed the claim, holding that although SPGA had goodwill in relation to professional golfing activities (not merely in respect of non-seniors), there was no misrepresentation by the Respondents because (1) SPGA’s name and initials were essentially descriptive and had not acquired a distinctive secondary meaning unique to SPGA, and (2) SSPGA’s name and initials were sufficiently different.

The Court of Appeal overturned that decision, finding that there had been a misrepresentation which was likely to cause confusion, and in any event the use of the name was “actuated by bad faith”.

Legal principles

The SPGA case is authority for a number of useful (albeit uncontroversial) propositions, including:

(1)   The normal requirements of a claim in passing off (i.e. that goodwill or reputation attaches to the claimant's goods or services by association with their identifying ‘get-up’, that the defendant misrepresented his goods intentionally or otherwise so as to lead the public to believe that they were the claimant’s, and that damage has resulted or will result) [19];

(2)   Non-commercial organisations also possess goodwill and are capable of benefitting from protection, since they depend on voluntary support [23];

(3)   A name which is primarily descriptive attracts less protection than one which is either meaningless or has no discernible correlation with the goods or services in question, even if it acquires a secondary meaning: [29-35].

But the case does not establish that any use of a similar name or initials to those of an existing organisation will be tortious. On the contrary, the Court’s decision depended heavily on the fact that SSPGA used the letter ‘A’ in its name despite not being an association.

It appears that the point was raised for the first time by the Court of Appeal itself. At [57-58], the judgment records that the Respondents’ counsel was asked what the ‘A’ stood for, and the answer was ‘accreditation’. As the Court pointed out, that would make no grammatical sense, and in any event the letters ‘PGA’ were widely understood to stand for “Professional Golfers’ Association”, so by using them the Respondents had “opened themselves to the inference [that] they intended to reap the benefit of the inevitable association”. That was also enough for the Court to decide – strikingly in an appellate case, given that no evidence had apparently been heard on the reason for using the letter ‘A’ – that the choice of name had been actuated by bad faith: [62].

It must be rare that a defendant to a passing-off claim will not even be able to put forward a plausible non-infringing reason for its choice of name. The value of the SPGA decision as precedent in this respect may therefore be limited.

Personal liability

The Court’s decision is, however, potentially significant in a different respect – namely, the basis for the finding at [71-80] that Mr Chen would be personally liable for the LLP’s tortious activity.

The Court began its analysis by identifying that, under s.8(2) Limited Liability Partnerships Act, a partner is not personally liable either directly or indirectly for the obligations (contractual, tortious or otherwise) of the LLP. It noted that s.8(3) specifies that the “personal liability of a partner in tort for his own wrongful act or omission” is unaffected by s.8(1) and 8(2). It concluded on that basis that Chen Jr was not personally liable because he had “merely lent his name to [Chen Sr] to assist the latter in setting up [SSPGA] so as to comply with the minimum requirement of having two partners for the establishment of a LLP.”

Its basis for saying that the same did not apply to Chen Sr was that he “was the moving force behind” SSPGA, and “directed [its] activities.”

But the same could surely be said of any partner or group of partners who, unlike Chen Jr, took an active role in the business of the LLP. S.8(2) would only protect absentee partners, and the concept of limited liability would be seriously undermined.

In circumstances where the doctrine of piercing the corporate veil narrowly escaped extinction at the hands of the UK Supreme Court in VTB Capital plc v Nutritek [2013] UKSC 5, and was recognised in Prest v Petrodel [2013] UKSC 34 only where a person used the corporate personality of a company to evade, deliberately, an existing legal obligation, it might be thought difficult to justify the imposition of personal liability on a partner in a LLP on only those grounds. We will have to wait and see whether the Court’s apparently lower test is taken up.