Australian Bareboat Charters v Queensland Yacht Charters Pty Ltd

[1990] FCA 126

Limited Distribution

l26 y 9+

JUDGMENT NO ........ ........ ... ........ .. -

C A T C H W O R D S I

TRADE PRACTICES - comparative advertising of yacht charter costs

- whether misleading and deceptive conduct - assessment of
damages

PASSING OFF - whether use of name descriptive of vessel amounted to passing off of applicant's business as the respondent's.- whether use of name "Coral Lea" or "Coral Lea 36" breached agreement not to use name "Coral Seas 36".

Trade Practics Act 1974 ss. 52, 82, 87.

QLD. G169 of 1987

AUSTRALIAN BAREBOAT CHARTERS V. QUEENSLAND YACHT CHARTERS PTY.

LIMITED

IN THE FEDERAL COURT OF AUSTRALIA	)	l.,
I .
QUEENSLAND DISTRICT REGISTRY	QLD. G169 of 1987	I;:

1 i , ,

GENERAL DIVISION	1	l '
;-.

BETWEEN:

AUSTRALIAN BAREBOAT CHARTERS

Applicant

AND :

QUEENSLAND YACHT CHARTERS PTY LIMITED

Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER:  SPENDER J .

DATE OF ORDER:	16 MARCH 1990
WHERE MADE:	BR1 SBANE
THE COURT ORDERS THAT:

(1) the respondent by its conduct has breached S. 52 of the Trade Practices Act 1974;

(2) the respondent is to pay to the applicant

$20,000.00 as damages;

( 3 ) the cross-claim is to be dismissed;

(4) the respondent is to pay the applicant's costs, including reserve costs, to be taxed if not agreed.

NOTE:	Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA	)
1
QUEENSLAND DISTRICT REGISTRY	1  QLD. G169 of 1987
1
GENERAL DIVISION	)

BETWEEN:

AUSTRALIAN BAREBOAT CHARTERS

Applicant

AND :

QUEENSLAND YACHT CHARTERS PTY LIMITED

Respondent

SPENDER J .

BRISBANE

16 MARCH 1990.

REASONS FOR JUDGMENT

The applicant, Australian Bareboat Charters, ('A.B.C.'),

is a partnership which operates a yacht chartering business out of the Whitsundays in North Queensland. The respondent,

Queensland Yacht Charters Pty Limited ('Q.Y.C.'),	is one of its
competitors.

In May 1987, Q.Y.C. caused to be published and distributed a brochure bearing the heading "Don't settle for less than the best", which brochure was dated 1 May 1987, and which compared its services and their cost with those of, inter alia, A.B.C.. A.B.C. asserts that this brochure contained false

statements about it and, as a result of the disbribution, it has suffered damage. It seeks injunctive relief and damages pursuant to S. 87 of the Trade Practices Act 1974 for conduct in contravention of S. 52 of that Act. It claims similar relief in respect of a second brochure headed "Win a Barrier Reef cruise for two on the Pacific Challenge", which is alleged to contain the same misleading and deceptive representations as in the brochure "Don't settle for less than the best."

The respondent denies that it engaged in conduct which contravened S. 52 of the Trade Practices Act and cross-claimed against the applicant in respect of the applicant's use of the name 'Coral Lea' on a vessel advertised by the applicant for	::.:	h ,
charter. The respondent claimed that, in the course of its	0 1 . 1 .	( * , >

I business, it had, and has, distributed, hired and chartered

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vessels manufactured in Taiwan known as Chien Hwa 35 in Taiwan and Coral Sea 36 in Australia. It says that the name 'Coral Sea 36' or 'Coral Sear has long been associated with the business of the respondent and no other and that its business includes the chartering or hiring of vessels known and described as 'Coral Sea

members of the public in Queensland, New South Wales and	36' or 'Coral Sea' in Queensland waters to the tourist trade and
Victoria.
The respondent sold a vessel to a Mr. and Mrs., Major in May 1986 which had been manufactured in Taiwan of the'type known 8 ' 1 8 '
there as Chien Hwa 35' and known as 'Coral Sea 36' '"rnL~ustralia.

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A.B.C. was to charter the vessel. Subsequent to its acquisition, the applicant has advertised the vessel for hire, and in that

advertising has used the term 'Coral Lea1. ThB respondent says 1 that the v,essel has been renamed the 'Coral Lea 36' and by marketing the advertised charters of the vessel 'Coral Lear, the applicant has contravened ss. 52 and 53A of the Trade Practices Act, and has further passed off its goods as goods connected in the course of trade with the respondent, and passed off its business as the business of the respondent.

The brochure dated 1 May 1987, under a large headline "Don't settle for less than the best", has in type smaller than the headline but larger than the rest of the type on the brochure:

"Some uncomfortable facts about chartering'> whi'ch

our competitors preferred you didh't know." . .

Under the heading "First impressions", the brochure reads:

"Youfve just arrived at The Whitsundays, full of excitement, ready for the cruise of a lifetime. Disregarding provisions, this is what you'll find as standard on board your bare boat charter."

And then, under "Queensland Yacht Charters":

"Linen, garbage bags, freezer bags, aluminium foil,

Glad Wrap, washing detergent, serviettes, tissues, insect repellent, surface spray, Chux wipes, scourers, Ban 0 Dor, vinegar, toilet paper, rubber gloves, matches, pegs and champagne (a toast to your trip)."

' :I.

Other charterers are referred to and then under the words

"Australian Bareboat Charters" the following appears:

"Linen, garbage bags, toilet paper, matches."

After those comparisons, the following comment appears:

"Now you know why ours are called 'the anything but bareboat'. So what else isn't included in a

cheap charter' ?'l

Under the heading "Only Q.Y.C. includes fuel", this appears:

llWhatls a bit of fuel you ask? Plenty. On the most popular sized yachts (38' to 40') our competitors charge up to $12 per engine running hour. You'll need to run it at least 2 hours a day just to keep your beer cold. The average daily use is 3 hours. That's $36.00 extra per day or $252 extra for a 7-day charter. So much for the 'cheap1 rate."

Other matters are referred to and at the0'foot of that page of the brochure is the comment:

"FOR THE REAL COST OF A CHARTER, TURN THE PAGE."

The reverse page is headed "What a bareboat charter really costs" and continues:

"The following figures are for a 7-day charter.

Prices quoted are from charter companies' current published price lists and are for peak season. We chose 2 yachts, a mid size around 37' and the more spacious Lexcen/Whitsunday 42. These are the most popular sizes for bareboat chartering. Fuel costs are based on an average of 3 engine running hours per day."

And then a comparison schedule appears. Relevantly it provides:

Itcompany	Yacht	Day/Week	Fuel	Total
Q.Y.C.	Cavalier 37	$300/2,100	INCLUDED	$2,100

A.B.C. Parr 11.6 $305/2,135 $12 per hour $2,387

($252) II

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Comparisons are also made with other vessels of other charterers. A comparison is also published comparing Q.Y.C. rates in respect

of a Whitsunday/Lexcen 4 2 .	After the comparative schedule
appears:

"Now another uncomfortable fact you should know. One of our competitors suggests you cover yourself in hair shampoo and leap into the sea for a wash, simply because there is no hot water on board. We prefer a hot shower which is why our entire fleet has hot running water.

We'll leave you to decide your preference.''

A number of aspects of the advertising brochure was said

to be misleading or deceptive. The applicant no longer pressed at the conclusion of the trial the issues of the question of hot water on board the vessels of the respective fleets, or the question of whether the applicant had a yacht comparable to the

Whitsunday/Lexcen 4 2 .

The remaining allegations of misleading and deceptive
conduct concerned the comparison made in the brochure between the

applicant's Farr 11.6 and the respondent's Cavalier 37, the

description of items, other than provisions, supplied as standard	representation as to the cost of fuel for a Farr 11.6, and the
on the applicant's vessels. Further, notwithstanding the

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comparison was expressed to be with respect to peak season prices, it was said the advertisement was apt to mislead someone other than a diligent reader into believing that the comparison held true at all times of the year.

The second brochure headed "Win a Barrier Reef cruise for two on the 'Pacific Challenge'" contained the same representations as on the first page of the earlier brochure, but did not have the comparative schedules. It was distributed only to travel agents. The second brochure, it is admitted. was distributed in or about the months of June. July and August 1987. The second brochure offers to travel agents that for every five yacht or flybridge cruiser charters booked with Queensland Yacht Charters, until 31 December 1987, the travel agent would win two days and nights cruising on the 'Pacific Challenge' for two people and, with every five charters booked, the agent would win another two days' cruising for two. \

The earlier brochure had been distributed, amongst other places, at the Melbourne Boat Show in early July 1987. The respondent, in its defence admits that, as soon as it received a telephone call from the solicitor for the applicant, it ceased distributing the brochure at the Melbourne Boat Show.

Mr. David Gemmell, a director of the respondent, first brochure were printed and distributed to travel agencies	indicated that "in the vicinity of three to four thousand" of the
throughout Australia, but that "about 500 brochures would have been handed out at boat shows or sent out to people who enquired from us directly for literature".
As to whether the advertising constitutes misleading or deceptive conduct, Gibbs C.J. said in Parkdale Custom Built Furniture Pty Ltd v. Puxu Ptv Ltd (1981-82) 149 C.L.R. 191 at 199:

"It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must in my opinion be regarded as contemplating the effect of the conduct on reasonable members of the class."

And later:

"The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act, which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading. It is obvious that where the conduct complained of consists of words it would not be right to select some words only and to ignore others which provided the context which gave meaning to the particular words. The same is true of acts."

In the area of comparative advertising, there has been frequent reference to the care that a trader needs to take when he attempts to promote his goods or services at the expense of his competitors.

In Stuart Alexander & Co. (Interstate) Pty Ltd v.

Blenders Pty Ltd (1981) 53 F.L.R. 307, Lockhart J. atJ310: said: . 1

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'When a person produces a television commercial that, not only boosts his own product but, as in this case, compares it critically with the product of another so that the latter is shown up in an unfavourable light by the comparison, in my view he ought to take particular care to ensure that the statements are correct."

In State Government Insurance Commission v. J.M. I

Insurance P,ty Ltd (1984) A.T.P.R.	40-465, Fisher J., at 45,362
said:-

"In this sophisticated and highly technical area of motor vehicle insurance JM has decided to engage in comparative advertising. There is in my opinion a heavy responsibility on it to ensure that its comparisons are accurate, for inaccurate comparisons are inherently likely to mislead the

public. l'

whilst perhaps bare boat chartering may not be as sophisticated and technical as motor vehicle insurance, it is an area where, generally speaking, the persons to whom the advertisements are addressed lack familiarity and full understanding.

In Hospital Contribution Fund of Aust. Ltd v.

Switzerland Australia Health Fund Pty Ltd (1987) A.T.P.R.	40-830,
Wilcox J. at first instance said at 48,950-48,951:

"To discerning consumers comparative advertising may be the most persuasive of all advertising. Because a comparative advertisement purports to state precise facts regarding the qualities or prices of competing products, it is apt to be believed and directly to influence purchasing	decisions. It follows that errors .in such advertisements are especially significant. They have potential to mislead consumers, to the disadvantage both of the consumers themselves and of the competitor about whose product the misstatement is made. In the area of comparative advertising there is little scope for copywriter's
licence. I agree with the comments made by Lockhart J. in Stuart Alexander & CO (Interstate) Pty Ltd v. Blenders Pty Ltd (1981) A.T.P.R. 40-244 at p. 43,203; (1981) 37 A.L.R. 161 at p. 163 and by Fisher J. in State Government Insurance Commission v. J.M. Insurance Pty Ltd (1984) A.T.P.R. 40-465 at p. 45,362."

The Full Court allowed the appeal ((1988) A.T.P.R. 40-846) but I

did not exbress any disagreement with these observations. At
p. 49,110 Fox J. said:

"Statements have been made in this Court on a number of occasions to the effect that where comparative advertising i S concerned, representations coming under S. 52 of the Trade Practices Act 1974, which relates to conduct likely to mislead or deceive, will be examined more critically. This flows from the conclusion that, in general, where representations are made comparing one product with another, the ordinary person to whom they are addressed is less likely than otherwise to regard what is said or written as mere exaggeration, stated with an excess of enthusiasm. The language is more likely to be regarded as having been put forward deliberately and with some precision."

It was claimed by the applicant that the Farr 11.6 is not directly comparable with a Cavalier 37, in that the former is a 38' yacht and the latter a 37' yacht, and it was asserted that the comparison ought more properly to be drawn between the applicant's Farr 11.6 and the respondent's Chieftain 38 than to the respondent's Cavalier 37. Mr. Anthony Kelly, one of the partners in the applicant, said in evidence that it was wrong to	compare the Farr 11.6 and the Cavalier 37, because the Cavalier	37 "is a foot shorter. It has one bunk less".
It seems to me that the fact that the objects to be compared are not identical does not make the comparison misleading or deceptive by virtue only of that lack of identity. The brochure dated 1 May 1987 states "We chose 2 yachts, a mid size around 37' and the more spacious Lexcen/Whitsunday 42." It seems to me that there will be inevitably some differences

between any two of the objects, even if the bjects are quite d similar. The significance of the differences in the context of the comparison being made is what has to be assessed.

The Farr 11.6 is described in advertising material of the applicant in these terms:

"Farr 11.6 fast cruiser. The Farr 11.'6 was

designed by Bruce Farr as a spacious comfortable cruising yacht that would be easy to handle short crewed and is extremely fast for its size (11.6111 - 38').11

A yacht designer, Joseph Goddard, of Goddard Yacht

Design, said in a report in evidence:

"The Cavalier 37 and Farr 11.6 have been raced successfully in Australia and New Zealand. The Cavalier 37 and Farr 11.6 have been raced in the Sydney to Hobart race and the Sydney to Mooloolaba race. These races are the best known to the Australian public, and hence boats participating in these events are considered more for speed than luxury. The Farr and Cavalier finished in very similar places in the 1987 Sydney to Hobart race, towards the end of the fleet, typical of a racer/cruiser design.

To my knowledge a Chieftain 11.4 has not been used in these races.

The Farr 11.6 is generally considered to be a

Cavalier and Chieftain. The Cavalier normally	faster and more exciting vessel to sail than the
being considered a faster vessel than the Chieftain."

The Chieftain is much heavier than either of the other
two yachts, with a much smaller sail area and a much lower sail

area to displacement ratio, i.e. the power to weight ratio of the

j

I	vessel, but it has much more interior floor space than either of
I
the other two yachts.
Mr. Anthony Kelly agreed that the Chieftain was quite different in its configuration and design characteristics from a Farr 11.6. In my opinion, there iS nothing misleading or deceptive from the mere circumstance of the comparison being between the Cavalier 37 and the Farr 11.6. Each essentially is a racer/cruiser of similar size and configuration; the Chieftain 38 is built for more leisurely sailing and is dissimilar in style of vessel, and in its configuration, to either of the others. I
As to the complaint that the comparison between these two vessels is misleading, because a Cavalier 37 can accommodate seven people while a Farr 11.6 can accommodate eight, the factual position is that one of the two Cavalier 37s in the respondent's
fleet does accommodate eight while the other accommodates seven. Those numbers reflect the sleeping facilities available and are not the numbers which are recommended by the respective
charterers for the most comfortable and enjoyable sailing. , .

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Accepting the basic similarities, the comparative advertising is based on the respective costs of hiring, inter	, .
alia, the Farr 11.6 as compared with the Cavalier 37. In that	comparison, the difference in length, whatever it precisely be,
seems to me to be of little moment, but it is quite a different thing to omit from the comparison the circumstance that the Farr 11.6 is able to accommodate a maximum eight persons whereas the Cavalier 37 operated by Q.Y.C. has a maximum accommodation, depending on which Cavalier 37 is hired, of either seven or eight. It seems to me implicit in the advertisement that'each of the yachts which are compared are capable of carrying the same 1 2 . t :
number, and that is not the case. TV assert that it is cheaper to hire the Cavalier 37 in peak season than the Farr 11.6,
without noting that the Farr 11.6 is able to accommodate eight
people, whereas the Cavalier 37 might only be able to accommodate
seven, is a significant omission and is likely to mislead persons
as to the comparative cost per person in hiring a Cavalier 37
compared to the comparative cost per person of hiring a Farr 11.6.
Next, the applicant asserts that the Cavalier 37 costs $10.00 per day more to charter in the low season than a Farr 11.6. It was submitted on behalf of the applicant that, while accepting that the prices were stated to be for "peak season", the eyes of a reader are drawn to the heading and to the comparison and it is apt to mislead someone other than a diligent reader into believing that the comparison holds true at all times of the year, when this is not the case.
When a comparison says that it is comparing prices for peak season, it seems to me that no reasonable member : .;

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of a class

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to whom the advertising was directed would properly interpret the	1. ' I I
statement as conveying any representation as to what a comparison of prices other than at peak season would reveal. The statements, in my view, do not and can not convey the representation that the respondent's prices are cheaper than the applicant's in either the shoulder or the low season. This complaint proceeds upon an interpretation of the advertising brochure which is directly contrary to its express language. Section 52 is not meant to protect a fool in a hurry, to adapt a
phrase of Foster J. used in a different conte 4	t in Horning Star

Cooperative Society Ltd v. Express Newspapers Ltd [l9791 F.S.R.

113 at 117.

. I .

AS to the inventory on the applicant's ships, the applicant claims that, in addition to the matters referred to in the brochure, all of the applicant's vessels include galley equipment and requisites, navigation and safety equipment and general equipment. If the advertisement was meant to convey, as it probably was, that, in addition to the items of linen, garbage bags, toilet paper and matches which the Australian Bareboat Charters supplies, Queensland Yacht Charters would supply as standard on board its yachts the other items referred to in the list, including washing detergent, cleaning requisites etc., then it is not misleading or deceptive. On A.B.C. vessels, as the brochure contained in Exhibit 1 indicates, "Expendables Packs"

are available for purchase. The booking form states: i ,

"The Expendables Pack includes cleaning detergents, sponges, alfoil, glad-wrap, air freshener, heat beads and fire starters, personal insect repellant

and paper towels. '

This sentence succeeds the observation "All vessels are supplied

with matches, garbage bags and toilet paper ONLY".

If this was the comparison sought to be made and the point established that items in the "Expendables Packs", for which A.B.C. charterers have to pay, are supplied as standard on board a Q.Y.C. charter, then, subject to the point that pegs are	I J I . '	.
also supplied as standard on the A.B.C.,	the comparison would be	,. .
correct.

The complaint is to the effect'that, when the advertisement says "Disregarding provisions, this is what you'll

find as standard on board your bareboat charter", and then lists

only four items under Australian Bareboat Charters, that ignores

the large number of items included in the general inventory on

all A.B.C. vessels Bs set out in their brochure, which is part of

Exhibit 1. That general inventory includes a large amount of

galley and cleaning equipment, linen and general equipment of the

vessel, including fishing and snorkelling gear as well as a large

number of items of equipment for navigation and safety. While my

mind has waivered on this aspect of the matter, my conclusion is

that, when one reads what is said to be standard on board the

Q.Y.C. and compares it with what is said to be standard on the

Australian Bareboat Charter, in neither case is there any

.

intention of suggesting that galley and cleaning equipment, or

A , , ; . ' 8

linen or general equipment, or navigation or safety equipment was

, ' ,

not, included by either charterer. I am not satisfied that there is anything misleading or deceptive (save for the de minimis aspect of pegs) in this aspect of the comparative advertising.

would be likely to mislead or deceive a reader into believing neither the format nor content of this part of the advertisement I accept the submission on behalf of the respondent that that the applicant's vessels were equipped with the items listed
and no others.

As to the question of fuel, the representation in the

,

brochure that the fuel cost on the Farr 11.6 was $12.;00 per hour	,	i . ! l -
and, at a rate of 3 hours per day, $252.00 per week, is conceded	. ,	. ,

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to be erroneous.	At the relevant time, A . B . c . \ charged	$5.20 per	I
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day for fuel for the diesel engine of the yacht, and $2.50 per day for the outboard of the yacht dinghy, a total of $7.70 per day. The making of this representation, so crucial to the cost

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comparison which is the thrust of the advertisement, clearly	I : l
constitutes a breach of S. 52.	I i
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f '
j .]
The conduct of the defendant as a whole must be viewed. The advertisement is directed almost exclusively to the price	I , '

of	, .
S -
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the charter and fuel costs. The cost is the central thrust of	l
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!
the advertisement. In my view, the omission to mention that a	j-l
Farr 11.6 can accommodate eight people whereas one of the	S #
,
Cavalier 37s of the respondent can accommodate only seven, and
the admitted misrepresentation as to the fuel position on the
applicant's Farr 11.6, lead to the conclusion that, in
distributing the brochure of 1 May 1987, the respondent engaged	I
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in conduct which contravened S. 52 of the Trade Practices Act
l,

I am satisfied that the conduct of the respondent in producing and distributing the brochure, including the	.	-
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distribution at the Melbourne Boat Show and to travel agents,	i :
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caused loss and damage to the applicant.	The question of	1 .
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greatest difficulty in this case is the assessment of the real	I -
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extent of that loss and damage. It clearly is not susceptible of I__

precise calculation. The amount is very much a matter of doing

the best one can against the rather broad evidentiary variables	I .
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suggested.
The applicants submit that they have suffered loss or damage in the sum of $52,454.00. This figure is airived at by a chartered accountant, Mr. Norbert Calabro. From his examination of the books of the applicant, he concluded that since the issue of the brochure there was a downturn in the level of business of the applicant and, from his examination of the records, he has not been able to find any other explanation for such a reduction in turnover. The figure of $52,454.00 represents the loss of gross profit less an allowance for cost of sales and other variable overheads which would have been incurred in earning the turnover foregone. His calculation takes the actual 1986 figures for August, September, October and November. It applies an annual growth rate of 36% to those figures and deducts the actual monthly 1987 turnover figure from that adjusted growth figure to	\

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arrive at the reduction in gross turnover. He has then calculated on a percentage basis the loss of gross profit on that reduction in turnover, from which is deducted a saving in other variable overheads, to reach a loss of $52,454.00.

I can have no confidence that the business of the applicant would have had an annual growth rate of 36%, the figure	critical to the figures arrived at by Mr. Calabro. The
variability of performance appears from Exhibit 25, which is a schedule showing total monthly income from all sources from July 1984 to June 1988. A detailed consideration of those figures does not permit any consistent trend to be extracted., In annual terms, in the 1984-85 year it shows 50.30% growth; in the 1985/86 financial year 37.88%. Growth in the 1986-87 financial year was shown at only 3.39%, and Mr. Calabro in his report frankly
concedes that no explanation could be given l for the very	small
rate of growth in the 1986-87 financial year.	1;:
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The analysis is complicated by the circumstance that July 1987 was an extraordinary month in that, for the first time,
school holidays in Queensland, New South Wales and Victoria
coincided. This makes comparison of figures for that and	l:;, I
adjoining months with the corresponding figures for previous	!
years very difficult. It seems sanguine in the extreme for the applicant to say that, notwithstanding the growth of the
1.

applicant's business in the year ending June 1987 was 3.39%, it 1 ~ I

would in the months of August, September, October and November	O.
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have demonstrated a 36%	growth over the corresponding period	in	1.'
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the previous year.
I-.:

Mr. Kelly gave evidence that, in his experience, the time between an initial inquiry and the actual booking is	!
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somewhere between two to three months. On any view of the matter, the figures for October seem to indicate that the business was doing very well compared with its performance in the
previous year.

I have had regard to the detailed material from Mr. Calabro and Mr. Jones, a chartered accountant calle'd on behalf of the respondent in respect of this matter, and it seems to me that the most useful indication of the ambit of the loss or damage is

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in the August 1986 actual figures and the August 1987 figures.	8 !
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However, it has to be frankly a~cepted that the performance subsequent to the publication and distribution of the brochure of A.B.C. was the result of a complex interaction of a number of diverse factors, of which the advertisement was but one, though in my opinion, a significant one. Some of those factors are these. 1

In the 1985-1986 fir~ar~cial year, both the New South

Wales and Victorian school holidays included the last week of August. In 1987, for the first time the school holidays for New South Wales, Victoria and Queensland happened in July. This circumstance is reflected in the very high figures for July 1987, and was a circumstance which induced Mr. Calabro not to rely on the figures for July. Such a reliance, of course, would have reduced drastically any reduction in turnover, whether that turnover be adjusted for growth or otherwise. The consequence of that is that account has to be taken of the circumstance that in 1987 there was no holiday component as there had been in August 1986, and some part of the bumper July turnover would, but for the changed holiday arrangements, have occurred in August. So

would tend to show. Equally, it seems artificial to compare	the true reduction in turnover would be less than the figures
August 1987 to July 1986, as Mr. Jones did.
Another factor which urges caution against the acceptance of the approach of Mr. Calabro, is the consideration that if, as was the intention, the advertisement had the effect of persuading people not to hire yachts from A.B.C. but to hire them from Q.Y.C., one would expect a corresponding increase in

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the business of Q.Y.C.	during the period in which a decline in
turnover w?s experienced by A.B.C.	as a result of the pernicious

influence of the brochure, yet Q.Y.C. also experienced a downtown in its business. However, the respondent's performance for September and October in the 1987-88 financial year was considerably better than its historical performance in those months.

A further factor impacting on the performance of the

applicant in the relevant period was the change in the composition of the total Whitsunday charter yacht fleet over time. The number of yachts for charter in the Whitsundays increased significantly from 1985 to 1987, before tapering to a much smaller increase in 1988. The extent of competition in the market from other yachts is a relevant factor, and the relatively small growth in charter yacht numbers in 1988 is consistent with declining market conditions depressing entrants to that market.

There is also a question mark over the amount for repairs relied on by the accountant for the applicant.	It seems
properly to be classified as a fixed overhead but is a function	to me that a substantial portion of the amount for repairs is not
of the usage and age of the vessels in the fleet.
As against these factors, the applicant's monthly rate of growth improved in the latter half of the 1988 financial year. While there may in fact be other factors contributing to this performance, it is also consistent with the diminution in effect of the advertising complained of by the applicant.

I have no doubt that the advertising complained of was \

productive of significant loss to the applicant.

Doing the best I can with the various estimates, and with the mass of accounting information. I think that $20,000.00 for the loss or damage sustained by the applicant as a consequence of the conduct in contravention of S. 52 of the Act is a fair figure as between the parties, and is a genuine measure of the extent of that loss.

I am very conscious that a degree of speculation is

involved.

The Full Court in Enzed Holdinss Ltd v. Wvnthea Ptv Ltd

(1984) 57 A.L.R. 167, having reviewed a number of cases, said at

"The principle is clear. If the court finds damage has occurred it must do its best to quantify the loss even if a degree of speculation and guess work is involved. Furthermore, if actual damage is suffered, the award must be for more than nominal damages. Vie should add that we can see no

cases under the Trade Practices Act as well as in	reason why this principle should not apply in	cases at common law. We emphasize, however, that the principle applies only when the court finds
that loss or damage has occurred. It is not
enough for a plaintiff merely to show wrongful conduct by the defendant."

These remarks were referred to by Pincus J. in Atkinson

v. Hastinss Deerins Old. Ptv. Ltd. (1985) 8 F.C.R. 481, where his

Honour found difficulty in reconciling this approach with observations in cases he there cites, and in particular the

observations by members of the High Court in Ted Brown Quarries I

Pty. Ltd. v. General Quarries (Gilston) Pty. Ltd. (1977) 16
A.L.R. 23.

For my part, where conduct is calculated to cause loss or damage to the applicant, as this conduct was, it sits ill with common sense to be constrained to hold that it failed in its object, because one is not able to quantify precisely the loss caused by that conduct. Many judicial decisions involve subjective assessments and discretionary apportionments. Here, there is a basis shown for the loss claimed but, for the reasons

I have indicated, there are circumstances which call for that

figure to be substantially discounted.

The Schedule 3.2 to the affidavit of Mr. Calabro, which is a bar chart indicating charter revenue from all sources, gives a broad pictorial view of monthly performance. Making allowance for the various factors affecting performance, it seems to me to give some support to the figure at which I have arrived.

mandatory and prohibitory nature in respect of the advertisements	applicant sought interlocutory injunctive relief of both a In the application filed on 9 September 1987, the
complained of. On 2 October 1987, the respondent gave undertakings pending determination of the proceedings not to publish or distribute brochures in the form of the advertisements complained of and to deliver to the applicant all copies of such advertisements in its possession. Mr. Wilson gave evidence that these undertakings were honoured.
The material does not suggest th t there is any intention to republish or distribute that material or material substantially similar to it following the determination of these proceedings. No suggestion to that effect was put to any of the respondent's witnesses. In the circumstances, a grant of injunctive relief is not appropriate and the relief as to delivery up of the brochures and of the persons to whom the brochures had been supplied has been adequately addressed by the events of 2 October 1987 and subsequently. J
AS to the cross-claim, the respondent alleges that the name 'Coral Sea 36' or 'Coral Sea' has long been associated with its business and no other; that its business includes the chartering of vessels described as 'Coral Sea 36' or 'Coral Sear in Queensland and that the name 'Coral Sea 36' and 'Coral Sea'

, A 1 : a

has become distinctive of and associated with the respondent and its business and that it has acquired a substantial reputation in relation to the chartering of vessels by that name. The primary assertion in the cross-claim is that the applicant, by using the name 'Coral Lea 36' is engaging in conduct that is misleading and

deceptive and passes off its vessel as one connected with the cross-claimant and its business. In my opinion, the cross-claim fails at the first hurdle. It is essential in an action for passing off that the cross-claimant establish a reputation in the goods or business in question; that is to say, it has to be established that the goods in question are recognised as being distinctive of the

' . - I . ,

plaintiff's product or business. In my opinion, on the evidence,

I ,

the association the respondent has with 'Coral ea 36' vessels is L not such as to render that name distinctive of the .respondent's business as the cross-claimant asserts. The evidence shows that the respondent has, in the course of its business as a bare boat charterer, distributed and hired and chartered vessels manufactured in Taiwan known as 'Chien Hwa 35, in Taiwan and 'Coral Sea 36' in Australia. In my opinion, the evidence establishes that the name 'Coral Sea 36' is a well known name of a type of vessel. Exhibit 35 in these proceedings is but one instance of the popularly understood meaning of the term. The evidence shows that the vessels of the various charterers are described by names that give an indication of their origin or designer. I am satisfied that the term or name 'Coral Sea 36' d . , , , =

conveys that the vessel, of approximate length 36', was of a' - . , I .,

Taiwanese manufacture, and in Taiwan is known as 'Chien Hwa 35,.

% C > ! ,

In the same way, A.B.C1s Farr 11.6 refers to a vessel 11.6 metres in length, the design of the yacht designer, Bruce Farr.

Walter Brian Wilson, a director of the respondent, swore

an affidavit dated 10 June 1988 where he says that for the last

manufactured in Taiwan under the name 'Chien Hwa 35'. Further,	of a motor vessel known as the 'Coral Sea 36', which vessel is five years Q.Y.C. has been the exclusive distributor in Australia
he says "at least in the Whitsunday area, Q.Y.C. is the only
charter operator with - new 'Coral Sear vessels available for . I
charter" (my emphasis). While the restriction as to 'area is noted, the reference to new 'Coral Sea 36' vessels is'no'doubt a consequence of the circumstance that, on about May 5, 1986, Q.Y.C. sold a secondhand 'Coral Sea 36', and Mr. Wilson says that:

"Being aware that the purchaser intended making the I

vessel available for charter through the Applicant, Q.Y.C. obtained the Applicant's written agreement not to use the name 'Coral Sea 36' in association with its charter business. In fact, to my knowledge, within approximately one month of the contract, the applicant commenced promoting the vessel under the name 'Coral Lea 36' and subsequently through advertising brochures distributed to travel agents and elsewhere."

The agreement in May 1986 was between the respondents
and a Mr. and Mrs. Major. The vessel the subject of the

agreement was 'The Matthew Cox'. This name is the 'personalr

name of the vessel.	After purchase, this name was changed to
'Major Whitfield'.

In the contract the following appears as the :desc'ription

. ,

of that vessel:

ItDESCRIPTION: FIBREGLASS FLYBRIDGE CRUISER.

CORAL SEA 36 L 0 A 10.6

L U L 9.6 BEAM 3.66 DRAFT .99

DISPLACEMENT 8,165 kilograms
ENGINE 124 hp Volvo
MODEL T M D 40A

SERIAL N0.205451000289

Clause 4 of that agreement provides:

'The purchasers agree to make the vessel available to the vendors under the terms and conditions of the attached copy of contract agreement - Schedule A."

That Schedule provides in part:

'1. Australian Bareboat Charters agrees to allow

use of above vessel for charter on following
dates:

6/13 May - 21/31 July - 13/20 July - 15/25 I

August - 27/12/86-3/1/87 - 25 Aug/4 Sep -
22/28 Sep - 6/16 Oct. 1986. - 14/19 June 1986

2. In return, Queensland Yacht Charters will give the owner 65% of the charter fee less agents (sic) commission (if applicable). Payable direct to Australian Bareboat Charters."

Other paragraphs specify the respective liabilities of A.B.C. and
Q.Y.C..

The extensive 'back leasing' referred to takes into account the charters of the vessel to which Q.Y.C. was already committed. I find it impossible, in the light of this evidence, to accept that, even if there be passing off or S. 52 conduct (contrary to my view), the loss could be anything like that asserted by Mr. Jones on behalf of the respondent.

The methodology adopted by Mr. Jones was to compare the boat occupancy of 'Coral Sea 36s' to the boat occupancy of all other boats in the fleet, using 1985 as the base year. The major premise of the methodology of Mr. Jones is that each type of boat

alternatively, that any particular type of boat will perform, on

in the fleet will perform as well as every other type of boat or,

average, in the same way as the average of the total fleet. In my view, no basis has been shown for accepting either of these assumptions, and the exercise in analysis for the month of May, 1986, the 'Matthew Cox' having been sold about 5 May, shows a lost income of some $11,000.00 for that month, notwithstanding the schedule to the agreement shows a considerable part of that month pre-booked by Q.Y.C., and notwithstanding that it is unlikely that any description of that vessel is a 'Coral Lea' had been published so as to affect the bookings for that particular month. Similar criticisms can apply more generally.

Paragraph 7 of that schedule is in these terms:

"Australian Bareboat Charters agrees not to use the name Coral Seas 36 (the '36' being handwritten) or Mathew Cox."

Mr. Wilson says that within approximately one month of the contract the applicant commenced promoting the vessel under the name 'Coral Lea 36', yet it was not until the cross-claim which was filed on 4 November 1987, nearly eighteen months after the agreement, that it appears that any complaint was made of the use of the description 'Coral Lea' or 'Coral Lea 36'.

I do not accept Mr. Kelly's explanation for the choice of the name 'Coral Lea 36', namely that 'Lea' was Taiwanese. It seems to me that, having regard to paragraph 7 in the schedule to the agreement of May 1986, the name 'Coral Lea 36' was adopted.to

was successful in that aim: see the judgment of Connolly J. in	circumvent the restraint imposed by the agreement. It probably
Villaqe Motors Holdinqs Ltd Ptv Ltd v. O'Brien C19863 1 Qd.R. 497
at 498-499. I .
It was put on behalf of the cross-claimant that the substance of the cross-claimant's complaint is not that by referring to the vessel as a 'Coral Lea 36', the respondent was wrongfully representing that the brand of manufacture of the vessel was 'Coral Sea 3 6 ' . That, of course, ould not assist it, J because in fact the vessel was manufactured as a 'Coral Sea 36' vessel. Implicit in this concession is that 'Coral Sea' and 'Coral Sea 36' are generic names for a particular kind of vessel.
The submission on behalf of the cross-claimant was in substance that, by referring to the vessel as a 'Coral Lea 3 6 ' , the cross-respondent was holding out the vessel as being of the same standard and quality as the 'Coral Sea 36' vessels available for charter from the cross-claimant. That there was any such holding out, I just simply do not accept.
The submission was pressed that persons reading the advertising literature of the cross-respondent would be likely to be induced into thinking that the cross-respondent's 'Coral Lea
36' was the 'same boat' as the cross-claimant's 'Coral Sea 3 6 ' ,
whereas the 'Coral Sea 36' vessels of the cross-claimant, though they were of the same brand of manufacture, were of superior
quality and standard to the cross-respolldent's 'Coral Lea 3 6 ' .
I am not satisfied that the goods in question are recognised as being distinctive of the cross-claimant's product or business, and I am not satisfied that the conduct of the cross-respondent is such as is likely to cause the customers of the cross-claimant to believe that the cross-respondent's product or business is that of the cross-claimant. There is, in my opinion, no representation by the advertising and price list of the cross-respondent that the cross-respondent is holding the vessel out as being of the same standard and quality as the
'Coral Sea1 vessels available for charter from the I
cross-claimgint.
It also follows that I am not satisfied that the conduct of the cross-respondent amounted to conduct in contravention of S. 52. In particular, I am not satisfied that that conduct was
such as to be likely to mislead or deceive persons into thinking that the standard and quality of the vessel available for charter from the cross-respondent was identical to that which was available for charter from the cross-claimant. If there was any basis for concern by the cross-claimant at the conduct of the cross-respondent, one would have expected some complaint oral or in writing prior to the filing of the cross-claim in November 1987, some eighteen months after the conduct now complained of commenced, and during which it continued.
For the above reasons, I give judgment for the applicant against the respondent in the sum of $20,000.00.

The cross-claim is dismissed.

27 p:s~ocling

1 certify that this a d	\';Q
of the rcasons for
pages are a true

. -	iudgment herein of His !-ionour
Mr. Justice Spender Associate

*

Counsel for applicant:  Mr. G. c. M 1 rtin

I

1 instructed by: Messrs. Conwell Kirby & Lilley

Counsel for respondent:  Mr. G.J. Gibson

instructed by:  Messrs. McCullough & Robertson

1

Date of Hearing:	22-25 November 1988 inclusive
Date of Judgment:	16 March 1990 '