| IN THE FEDERAL COuriT OF AUSTRALIA | ) |
| QUEENSLAND DISTRICT REGISTRY | |
| GENERAL DIVISION | ) |
| BEIWEEN: | ALAN JONES PIT-STOP CORPORATION | PTY LTD |
Applicant
AND: HcMAHON McRAE FTY LTD
First Respondent
Second Respondent
| AND: | MAXWELL J O H N McMAHON |
Third Respondent
MINUTES OF ORDER
| JUDGE MAKING ORDER: | PINCUS J . |
| DATE OF ORDER: | 21 APRIL 1988 |
| WHERE MADE: | BRISBANE |
| THE COURT ORDERS | THAT: |
| 1. | the | application | for | interlocutory | ellef | be |
| m: | Settlement and entry of orders is dealt with in |
| Order 36 of the Federal Court Rules. | |
dismissed;
2. the costs of and incidental to the appllcatlon for interlocutory relief be the respondents' costs In the proceedings.
| IN THE FEDEW& COURT OF AUSTRALIA | ) |
| QUEENSLAND DISTRICT REGISTRY | |
| GENERAL DIVISION | ) |
| BETWEEN: | ALAN JONES PIT-STOP CORPORATION | P T Y | LTD |
Applicant
| AND: | M c W O N McFlAE PTY LTD |
First Respondent
| AND: | MARKET POWER PTY LTD |
Second Respondent
| AND: | HAXWELL J O H N McMAHON |
Third Respondent
| M TEMPORE REASONS | FOR JUDGMENT |
This is an application for an interlocutory in~unctlon
| in relation to the use of a | busmess | name. | The | applicant's |
| outline of submissions says, as does the appllcatlon Itself, that relief is sought in relation to misleading and deceptive conduct, | passing | off | and | Infringement | of | the appllcant's | right | as |
registered user of certain trade marks. The argument was, in
| substance, confined to the first two aspects | of the matter. |
| On 27 August | 1984, | the | applicant | and | the | first |
respondent entered into a franchise agreement which contemplated
| that the first respondent would carry on a business | of | selling |
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tyres and other such products at Cairns, with the assistance of
the applicant a5 franchisor. "hat occurred, but a dispute arose,
which resulted in other litigation in this Court which was tried
| in December 1987. | The | judgment in that | case has not yet been |
| delivered. |
During the currency of the franchise agreement, the
first respondent carried on its business as a tenant on premises
| at Hartyn Street, Cairns, under the name Alan Jones Pit-Stop. | At |
the time the case referred to was tried, and shortly afterwards,
| the | first | respondent | became | fearful | that | it would | lose | its |
| tenancy. For | that and perhaps other reasons, those in control |
decided to give up the franchise and move the business.
On 9 January 1988, the first respondent ceased to trade
| under the name Alan Jones | Pit-Stop and, | in the same premlses, the |
| second respondent began on | 11 January 1988 to trade under the name |
| "Cairns Pit Stop" | or "The Calrns Pit Stop". |
| On 12 | February 1988, a company associated with the |
| applicant, namely, Alan Jones Pit-Stop | (U.S.A.) | Inc. bought the |
| land on which the business was conducted at Martyn Street. |
Thereafter, there were communications between the parties about
the tenancy, the details of which do not seem to matter. On 4
April 1988, the business was relocated to a piece of land quite
| close to the original site, namely, | 32-36 Florence Street, Cairns. |
| It is there carried on under the name | of | Cairns Pit Stop; the |
second word is sometimes hyphenated, and sometimes split into two.
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| Hr Horrison | argued | his | case | substantially as | three |
contentions:
(1) there is a breach of the franchise agreement;
| ( 2 ) | the conduct | of the respondents relating to the transitlon |
from one location to the other was misleading; and
| ( 3 ) | the use of the name Cairns Pit Stop is itself misleading. |
As to the first point, clause 8 of the agreement provides for termination for breach and says that on termination the first respondent must, among other things, not use elther the name of the applicant or any part thereof, or any business name under which the first respondent carried on the franchise business for
| any purpose whatsoever, and must not in any way represent | itself |
| as having been associated | with the applicant i n any respect. |
| Mr Morrison argued that, although | the use of the name of |
| which | the | applicant | complained | was | not a use by the first |
| respondent, but by the second, | it should nevertheless be | treated |
| as a breach of the agreement. There is nothlng in the evidence to |
| suggest that the second respondent's ownership and conduct of | the |
business at Florence Street is a sham or that it conducts that business, in truth, on behalf of the first respondent. It is a possible inference, however, that perhaps those in control of the
| first respondent used the second respondent as | vehicle to escape |
from the obligation which would otherwise have been imposed by the
| franchise agreement as to the use | of the former name | of the |
| business. | As Mr Gibson pointed out, however, there | is nothing in |
| the agreement | t o bind the directors or shareholders of the first |
| respondent. The question might | be said to be whether there is any |
| likelihood of the Court's lifting the veil at the trial, to use | an |
| expression which is not quite apposite, | so as to treat the actions |
| of the second respondent | as being in substance actions of the |
| first. |
| That appears to me quite | an improbable result. The |
applicant's difficulty lies not in the area of implication of
| terms, but | has to do with a change of parties. |
| The second question raised by | Mr Morrison is based upon |
| complaints about what | I have called transitional advertislng. |
These advertisements need not be set out in full, but some
| examples need to be given. | An advertisement whlch was published |
on 19 December 1987, on behalf of the "Cairns Pit-Stop" buslness
| descrlbed it as | "formerly Allan Jones Plt-Stop." It prominently |
| said, "Only the name | has changed (to protect the innocent)". |
| Again, it appears that from | 1 | January to | 4 | February 1988 a |
| television advertisement, the details | of which are not proved, was |
| repeatedly shown conveying similar information; in particular, the |
| words, | "formerly | Alan | Jones | Pit-Stop," | were | used. | Also, | to |
indicate to customers what was happening, a sign appeared for some
time outside the old premises in Martyn Street giving the new
| location, and saying, "Cairns PitStop have moved." None | of the |
| advertisements to which | I have referred is very recent. |
| There is, | however, one recent advertisement of this |
| general description which | is exhibit "A2" to the affidavit of the |
| deponent, C.L. | Duncan. It informs or reminds the public that, "we |
| have moved around the corner to | 34 Florence Street," and thanks |
| them for their loyal support. It contains | an assurance: |
| "You will | continue to receive the same personal |
courtesy, service and detailed attention to your
| car that has | been our pleasure to provide in the |
| past. " |
This transitional advertising has two features which require
scrutiny. The first is the suggestion that the new business was
| formerly the | A l a n Jones Pit-Stop | business. It appears to me |
arguable that advertisements of that sort might mislead the public
as suggesting a possibility that although the name has changed,
| there is still | a connection wlth Mr Jones. |
| People having that notion, and holding | it only faintly, |
| might be reinforced by the advertisement mentioned above on | 19 |
| December 1987 | which had in prominent type, "Only the name has |
changed". In fact, there was another significant change, namely
| the loss of the franchise. It does not appear to | me, | however, |
| that there is any recent advertisement having this character of |
suggestlng a connection with the applicant directly.
The second feature of this transitional advertising
| needing discussion is that which suggests | that the people involved |
in the Florence Street business are the same as those who were
formerly involved in the Martyn Street business.
| In my opinion, the suggestion just mentioned, whilst | it |
is to be found in exhibit "A2" of the newspaper advertisement exhibited to Hr Duncan's affidavit is not misleading. It is true
| that | advertisements of the | same general | description | might |
| possibly, in the future, be framed so as to suggest a | continuing |
| connection with the franchise organization or with Mr Jones, | but |
| there appears to me to be no significant | risk | of that. | The |
| transitional period is over. |
| "he third issue is whether the current advertising signs used are misleading or constitute | passing off. The current |
| advertising signs say, "Cairns Pit | Stop." | It is true that | the |
words "Pit Stop" are common to both the applicant and second
respondent but there is no business in Cairns at present for which
| members of the public seeing these signs | or advertlsements might |
| mistake the second respondent's business. The | real complaint | is, |
| as paragraphs l(a) | and l(b) of the application imply, a suggestion |
of association with the applicant. It 1s my view that no such suggestion is conveyed by the use of the words "Cairns Pit Stop".
| Some might say, in | criticism of the respondents, they might have |
| been more careful to ensure that their unfranchised business | was |
| not seen as connected with the applicant or with Mr Jones. | I dld |
not, however, find it necessary to determine whether such a criticism would be valid as a matter of law, because, and thls 1s
| the critical point, there is | no evidence on which one could base a |
finding that there is a significant risk that the respondent will
| in the | future suggest | that the | Florence Street business | is |
| connected with the applicant | or with Hr Jones. |
| I should mention that there | was some brief discussion | of |
| the | balance of the convenience. | It | would, | of course, | be |
| inconvenient for the second respondent | to discontinue the use | of |
| its present name, because it is in the current yellow pages. | If I |
| thought | that | there | was | a substantial | risk | that | the | second |
| respondent might misrepresent the character or connections of | its |
| business, I would be inclined | to require some disclaimer to be |
| inserted in advertising, such as | "No | connection with Alan Jones |
| Pit-Stop". | But since the second respondent's current advertising |
is, in my view, quite unlikely to induce in the minds of the public the idea that the business is connected with Alan Jones, or
| with | the applicant, the | application | for | interlocutory | relief |
should be refused.
As to costs, in many of these cases it is appropriate to
| simply make the costs | of the lnterlocutory applicatlons costs | In |
| the proceedlngs. In | the circumstances of this case, however, | it |
| is my opinion that some | recognition | should | be given to the |
respondents' success today, but that they should not finally have their costs. The costs of and incidental to the application for interlocutory relief will, therefore, be the respondents' costs In
| (1) | application for interlocutory relief refused; |
| ( 2 ) costs of such application | and incidental thereto | to be | the |
respondents' costs in the proceedings.