Cheinmora v Striker Resources NL & Ors; Dann v Western Australia
[1997] FCA 1147
•24 OCTOBER 1997
FEDERAL COURT OF AUSTRALIA
TRADE PRACTICES - Consumer Protection - Misleading and deceptive conduct - Passing Off - Necessity to establish reputation - Whether reputation in descriptive words - Evidence inadequate for purpose - Discretion to grant injunctive relief - Trade Practices Act 1974 ss52, 53(c), 53(d) and 80.
INTELLECTUAL PROPERTY - Trade Secrets - Necessity of a quality of confidence.
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 (applied)
Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437 (applied)
Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 (applied)
BURICA PTY LTD (Applicant) v TOPS TO BOTTOMS (AUSTRALIA) PTY LTD (First Respondent), BRENT MUNRO (Second Respondent)
VG211 of 1996
FINN J
MELBOURNE
24 OCTOBER 1997
IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIAN DISTRICT REGISTRY ) VG211 of 1996 ) GENERAL DIVISION )
BETWEEN: BURICA PTY LTD
ApplicantAND: TOPS TO BOTTOMS (AUSTRALIA) PTY LTD
First RespondentBRENT MUNRO
Second Respondent
JUDGE: FINN J PLACE: MELBOURNE DATED: 24 OCTOBER 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The cross-claim be dismissed.
3. Submissions are invited as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIAN DISTRICT REGISTRY ) VG211 of 1996 ) GENERAL DIVISION )
BETWEEN: BURICA PTY LTD
ApplicantAND: TOPS TO BOTTOMS (AUSTRALIA) PTY LTD
First RespondentBRENT MUNRO
Second Respondent
JUDGE: FINN J PLACE: MELBOURNE DATED: 24 OCTOBER 1997
REASONS FOR JUDGMENT
Both the applicant, Burica Pty Ltd (“Burica”) and the first respondent, Tops to Bottoms (Australia) Pty Ltd (“Tops to Bottoms”), provide the services of striptease performers in Victoria. The second respondent, Mr Munro, is a director of Tops to Bottoms. The first cross-respondent, Ms Leask, is a director of Burica. Put shortly, Burica alleges that, in making use of the words “Simply Irresistible” in its advertising, Tops to Bottoms has engaged in conduct in contravention of sections 52, 53(c) and 53(d) of the Trade Practices Act, 1974 (Cth) (the “TP Act”) and has been guilty of passing off in that Burica has in Victoria a substantial and valuable reputation and goodwill in the name “Simply Irresistible” (whether alone or in conjunction with other words). At the time of the conduct complained of, Burica was the proprietor of a, then, recently registered business name, “Simply Irresistible Promotions”. For its part Tops to Bottoms had also recently registered the business name, “Simply Irresistible Strippers”.
The cross-claim is based essentially on the allegations that Ms Leask, as a former employee of Tops to Bottoms, both misused information acquired in the course of her previous employment to establish a business in competition with Tops to Bottoms and induced a third party company, in breach of its alleged joint venture contract with Tops to Bottoms, to sell its business (including the “Simply Irresistible Promotions” name) to Burica.
I should state at the outset that this matter has been prosecuted by both parties with no little rancour and lack of cooperation. This has had deleterious effects on the orderly conduct of the trial - a matter of which account must be taken in the costs orders made. I should add that, to enable the hearing of the application to proceed, it was necessary to sever from it any consideration of damages - and this after I was obliged to adjourn the hearing of the application almost four months ago.
The TP Act/passing off claims
Factual Setting
(a) It is apparent from the documentary evidence that some number of companies in Victoria have recently had, or now have corporate names or registered business names incorporating the words “Simply Irresistible” with some other word or words. Some but by no means all of these relate to what I might call adult entertainment. It is appropriate to refer to four particular names.
1.Fantasy Girls - Simply Irresistible. This name was registered in July 1991 to a Mr Tenuta who, apparently, operates a strip club. There is no evidence at all that that name (in whole or in part) was used in and for the purposes of that business.
2.Simply Irresistible Promotions. This was registered on 15 February 1995 in circumstances I note below. Its owner from that date until 17 February 1995 was a Mr Prelac who, through a company Black Cat International Pty Ltd (“Black Cat”), conducted an agency providing striptease performers. On 17 February Mr Prelac transferred the name to ACN 065 117 213 Pty Ltd (“the ACN Co”), the ACN Co having contracted to purchase Black Cat’s agency. The ACN Co in turn transferred it to Burica on 5 October 1995 consequent on Burica’s purchase of the agency from ACN Co.
3.Simply Irresistible Strippers. This name was registered on 19 January 1996. Its proprietor is Tops to Bottoms, Mr Munro’s company.
4.Simply Irresistible Escorts and Fantasy Girls. This was registered on 7 August 1996 to a Ms Lisa Medici. I mention this name both because of the time of its registration and because Ms Medici was, apparently, associated in some way with the setting up of Burica.
(b) At some time, variously said to be between 1989 and 1992, Mr Prelac’s Black Cat company commenced its striptease agency business. The name under which it did so is contested in this proceeding. It is the applicant’s case that the business was known as “Simply Irresistible”; the respondents’, that it was “Simply Irresistible Promotions”. Such documentary evidence of Black Cat’s advertising of this business as has been put in evidence is consistent, at least partially, with the applicant’s contention. The most significant example of that advertising is a photographic reproduction of a large bill-board erected on a Melbourne street in 1993. It is said to have attracted significant media publicity.
(c) On 9 November 1994 Black Cat contracted to sell that agency business to Mr Kelvin Margetts “or his nominee” for $300,000.00. Of that sum, $255,000.00 was allocated to “goodwill”, the balance to plant and equipment. The name the contract ascribed to the business was “Simply Irresistible”. A condition of the contract was that -
“The Vendor shall transfer the business name of ‘Simply Irresistible’ to the Purchaser.”
There was not, and Black Cat did not own, such a registered business name at the time. As I have noted above, Mr Prelac registered the name “Simply Irresistible Promotions” on 15 February 1995. Mr Margetts nominated the ACN Co as his nominee under the contract. The registered name was transferred to the ACN Co on 17 February 1995 and the contract of sale was otherwise completed on 28 February.
(d) The striptease agency did not prosper in the ACN Co’s hands. Mr Margetts contracted to sell it on 4 May 1995 to Ms Leask and Mr Gary Glazner for $82,000.00. The contract price did not disaggregate goodwill from plant and equipment - though the latter in its entirety was onsold from the Black Cat-ACN Co contract. The 4 May contract was superceded by a contract of 11 May 1995. Both contracts described the business sold as “Simply Irresistible Promotions”. The circumstances leading to the sale to Ms Leask and Mr Glazner are of considerable importance in this matter. They will be outlined separately below. On completion of the 11 May contract the business name “Simply Irresistible Promotions” was transferred to Burica on 5 October 1995. Burica began life as a shelf company in March 1995. Ms Leask and Mr Glazner became its directors on 10 May 1995.
(e) Some time, probably in late March 1995, Mr Munro began negotiations with Mr Margetts and with a Mr Lambrinos (who according to Mr Munro acted for Mr Margetts’ agent) for what is said to be a joint venture under which Tops to Bottoms was to run the ACN Co’s business for a period of one year with an option to renew for a second year for a fixed monthly payment to the ACN Co ($250 for 1st year; $300 for second) at the end of which period Tops to Bottoms was to have the first right of refusal to its purchase. It is alleged by Mr Munro, but denied by Mr Margetts, that an agreement to this effect was reached on 26 April 1995. An unsigned copy of it has been put in evidence. It is this contract that is the subject of the inducement tort cross-claim.
(f) In late 1993 Ms Leask commenced work with Mr Munro as a topless waitress. He conducted a striptease agency trading at that time under the name “Almost Heaven”. From the beginning of 1994 she served as his office manager and was, apparently, responsible for dealings with his clients and for liaising with the women whose services the agency provided. In October 1994 the company that became Top to Bottoms was formed. Mr Munro was and remains one of its two directors and shareholders. I would note in passing that according to an Australian Securities Commission historical extract Ms Leask was a director of the company for one day in November of 1994. It is Mr Munro’s evidence that, from the incorporation of the company, his business (including “Almost Heaven”) was conducted by it and that Ms Leask was thereafter employed by the company. Ms Leask, in contrast, claims that she remained throughout in his personal employ.
On 14 March 1995 Mr Munro terminated the employment of Ms Leask as also that of a Mr Chris Shannon with whom Ms Leask was then in a de facto relationship. Mr Munro has asserted that the reason for this ‘sacking’ was that Ms Leask and Mr Shannon had:
“among other things, [been] referring business away from the first respondent to others without providing any recompense to the first respondent.”
I am not altogether certain what this purports to comprehend. There were dealings - and reasons for animosity - between Mr Munro and Mr Shannon that were not the subject of evidence. Be this as it may, at the time of her dismissal, Ms Leask was provided with a letter on Tops to Bottoms letterhead, in the following terms:
“Dear Madam,
Termination of Employment
I am in the process of reorganising my business operations. This reorganisation involves New Wave Management, Tops to Bottoms (Aust.) Pty Ltd and Almost Heaven.
As part of the reorganisation, there is a need to reassess the staff and resources which are necessary and desirable to meet the new operational requirements.
As a result, I regret to advise that your services are no longer required.
I advise that should you at any stage make use of, either for your own or for another’s commercial purposes any information acquired during your employment by my business or approach or contact either directly or indirectly, any employees customers or clients of my businesses I shall take the appropriate legal action against you.
I enclose a cheque which represents your wages up to and including today and two weeks pay in lieu of notice.”
By letter dated 21 March, 1995 a solicitor acting for Tops to Bottoms and Mr Munro wrote to Ms Leask in terms (inter alia) that:
“I am instructed that it has come to my client’s attention that you have been making contact with employees, customers and/or clients of my client’s businesses. Under no circumstances are you to approach either directly or indirectly, any employees, customers or clients of my client’s businesses or make use of any information acquired during your employment by Tops to Bottoms (Aust) Pty Ltd, either for your own benefit or another’s benefit.
In the event that you do not comply with this request, I am instructed to advise that legal proceedings will be instituted against you without further notice.”
(g) Though the subject of disagreement as to when this occurred (it seems more probable than not to have been in mid-to late - April 1995), Ms Leask, Mr Shannon, Mr Glazner and others established their own business providing agency and management services for striptease performers. Mr Glazner had for some years previously been operating a hotel at Kew Junction known as “the Clifton Hotel” and had made regular use of the services of topless waitresses and strippers. The new agency business was subsumed in the business of Burica on its acquisition of the ACN Co’s agency. Burica’s offices are situated in the Clifton Hotel. Though it has, and has had, entries in the White Pages of both the Melbourne and regional telephone books under the name “Simply Irresistible Promotions”, it advertises in the Yellow Pages and elsewhere with a two-level advertisement. The top level is in running script and contains the words “Simply Irresistible”. The second “r” of which taking the form of a capital letter in a diamond. The second level of the advertisement contains, in capital letters, the words “ADULT ENTERTAINMENT” against a black background. The following is an inexact reproduction of the advertisement.
Simply IrResistible
ADULT ENTERTAINMENT
(h) Having registered the name “Simply Irresistible Strippers” in January 1996, Mr Munro has thereafter had that name listed in the White Pages. The registration of this name subsequently came to the attention of Ms Leask. On 15 March 1996 solicitors acting for Burica couriered a letter of that date to Tops to Bottoms and Mr Munro containing the following:
“As you are well aware, Burica and its predecessors have since 1992 carried on business in Victoria providing stripping services under and by reference to the name ‘Simply Irresistible Promotions’. Burica and its predecessors have widely advertised the abovementioned business under and by reference to the name ‘Simply Irresistible Promotions’. As a result, that name has become very well and widely and favourable known and identified in the minds of both the general public and the trade in Victoria and elsewhere throughout Australia by reference to the name. ‘Simply Irresistible Promotions’ which name has become distinctive of and known to signify exclusively the business of our client. Our client’s business has therefore acquired a substantial, exclusive and valuable reputation and goodwill in Victoria and elsewhere throughout Australia in and by reference to that name. Members of the trade and general public who acquire or propose to acquire Burica’s services or otherwise transact business with any person carrying on the business of providing stripping services under and by reference to a name which includes the words ‘Simply Irresistible’ intend or expect to acquire those services or otherwise transact business with Burica, and in doing so, rely upon Burica’s extensive reputation. It has recently come to our client’s attention that your company has registered the business name ‘Simply Irresistible Strippers’. A search of the Register of Business Names has revealed that the nature of the business that you are conducting or propose to conduct is the supply of striptease artists.
We have sought the advice of Counsel and have advised our client that your company’s use of the name ‘Simply Irresistible Strippers’ conveys the false and misleading representation that your business and services are authorised, sponsored or in some way approved or otherwise connected in the course of trade with Burica. Your company’s use of the descriptive word ‘strippers’ does not serve to dispel the erroneous impression created by your unauthorised use of the words ‘Simply Irresistible’. Your company’s conduct constitutes a contravention of sections 52, 53(c) and 53(d) of the Trade Practices Act 1974 (Cth) and the tort of passing off. As directors you are also personally liable in that you have aided, abetted, counselled and procured the company to act in this unlawful manner.”
This proceeding was initiated shortly thereafter.
(i) On 16 May 1996 Heerey J granted the applicant interlocutory relief (later reaffirmed in subsequent orders of this court) that was tailored both to the TP Act and passing off claims. It, in effect, restrained Tops to Bottoms from providing stripping services under a name that included the words “Simply Irresistible”.
(j) The evidence relating both to the industry and to the place in it of Burica and Tops to Bottoms respectively is slight to the point of being uninformative. I have no idea whether in this industry they are gnats or mammoths. It is clear that (a) both companies provide the services of strippers on an agency basis to hotels and private functions; and (b) both advertise these services in the Yellow Pages and otherwise. There is no evidence as to (i) the number of businesses providing like services in Victoria; (ii) the relative size and standing of Burica and Tops to Bottoms in the industry; or (iii) the volume of business transacted by either company. There is conflicting evidence as to how performers in the industry have their services made available to customers. It seems the case, though, that the primary method used is for performers to use the services of agencies but on a non-exclusive basis.
The final matter to which I should refer concerning the factual setting is the lamentable absence of evidence that might illuminate matters about which I am required to make findings. The extent to which I have been asked to draw inferences where direct evidence could reasonably be expected to have been given, borders on the unacceptably high.
“Simply Irresistible”: a Matter of Reputation
Both the TP Act and passing off claims as put are premised albeit in differing ways upon Burica’s making out that it has in Victoria a substantial and valuable reputation and goodwill in the name “Simply Irresistible”: cf Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 at 227-228; Opals Australia Pty Ltd v Opal Australiana Pty Ltd (1993) 15 ATPR 41-264. It is this very premise of a reputation that the respondent attacks.
Apart from the evidence of Ms Leask and Mr Glazner asserting such a reputation, the evidence advanced to justify my concluding such is the case would seem to be limited to the following.
(1) It is asserted that Mr Prelac, through Black Cat, conducted a stripper agency using the “Simply Irresistible” name and that Burica is the successor to that business. Such evidence as I have of that business and its activities is as follows. It is not overly illuminating.
(a)A business purporting to use that name was purchased by the ACN Co from Black Cat in November 1994.
(b)Two advertisements from the period of Mr Prelac’s ownership of Black Cat - one in the form of a photocard of the 1993 billboard, the other of a pink A-4 sized poster of no discernible date - both advertised the services of strippers under or with the two level “Simply Irresistible/Adult Entertainment” name.
(c)Mr Munro - whose evidence in this, as in most other contentious matters, I find to be unconvincing - has claimed that Black Cat advertised its business as “Simply Irresistible Promotions”.
(2) Mr Margetts, through the ACN Co was prepared to pay $300,000 for Black Cat’s business of which $255,000.00 was contractually apportioned to goodwill.
(3) Mr Munro, through Tops to Bottoms, was prepared to enter into a joint venture agreement with Mr Margetts’ ACN Co to run the business for up to two years with a right, then, of first refusal.
(4) A facsimile from Yellow Pages Australia to Mr Glazner of 7 March 1996 indicated that sums ranging from $17,421 to $30,748 were expended for the Melbourne Directory from 1993 to 1995. I have no evidence of the form of the advertisements for those years and, in particular, of the word combinations incorporating (if at all) “Simply Irresistible” that they used.
(5) It is clear that after acquiring the business, Burica has used the two level “Simply Irresistible/Adult Entertainment” name of which, as I noted above, Black Cat made at least some use.
(6) Apart from the evidence of its own officers and employees asserting Burica’s reputation in the words “Simply Irresistible”, an exotic dancer, Ms Moulday, gave evidence that in her three and a half years in the industry she has always associated the name with the Black Cat and the Leask/Glazner businesses.
I have already noted the deficiencies generally in the evidence relating to Burica’s business. The poverty in the evidence provided as to the association of the name with the business of which Burica is successor, is stark. Before turning to the evidence advanced in opposition to Burica’s claim, I would note that there is no evidence at all that the words “Simply Irresistible” alone were used actually to advertise the services of strippers by any business in Victoria prior to the formation of Burica. Thereafter a Burica in-house magazine, produced apparently for four months in 1996, did employ that name alone. The 1997 Melbourne Yellow Pages entry retains the two level name.
Apart from drawing attention to the lack of evidence of any advertising of Burica’s, or of its predecessors’, business using the words “Simply Irresistible” alone, the respondents make the corresponding assertion that even Burica uses at least two word combinations - (i) its business name (eg in the White Pages); and (ii) the two level name (eg in the Yellow Pages). Additionally the following was relied upon.
(1) Mr Margetts in his affidavit described as “Simply Irresistible Promotions” the business he purchased and under which name the ACN Co carried on business. Nonetheless, in his oral evidence, he indicated that it was the words “Simply Irresistible” he wanted.
(2) The solicitor’s letter of 15 March 1996 (the relevant text of which is set out earlier) claims that the reputation was in the name “Simply Irresistible Promotions”. Mr Glazner gave evidence that he instructed his solicitor to write this letter; that it was read out to him; and that he approved it. Ms Leask gave like evidence as to her awareness of the contents of the letter. Both Mr Glazner and Ms Leask in oral evidence, nonetheless, asserted more generally that “Simply Irresistible” was the actual business name used.
(3) The words “Simply Irresistible” are part of the corporate or registered business names of a range of quite diverse businesses in Victoria. Searches of these were placed in evidence. It is clear that more than the two disputants in this proceeding use those words in association with the provision of adult entertainment/services. The parties apart, there is, though, no evidence to suggest that any other current user of the words is involved in Victoria in the provision of strippers.
Submissions and Conclusions
The applicant’s case is that the evidence establishes that (i) Burica and its predecessors had carried on a business supplying the services of strippers under the name “Simply Irresistible” since, it is said, 1990; (ii) that, by advertisement and promotion, it has enjoyed a considerable reputation in the relevant market; (iii) the words “Simply” and “Irresistible”, even if descriptive, have together formed the business and trading name of Burica “over a considerable number of years [and have] become distinctive of the applicant’s name and business”; (iv) the use by Tops to Bottoms of “Simply Irresistible Strippers” as part of its business name for a business in the same market was a deliberate misrepresentation calculated to injure Burica’s business and goodwill; and (v) Tops to Bottoms’ registration of its business name and its use of that name in the White Pages constituted conduct contravening the TP Act in that (to use the language of the Burica’s Contentions of Fact and Law):
“Hotelliers and/or members of the public were likely to be mislead into believing that the use by the first respondent of the name “Simply Irresistible Strippers” was a representation that it was the name and business of the applicant or that it was a business name that had the approval or endorsement or sponsorship of the applicant or that the first respondent may be a licensee or franchisee of the applicant.”
It is the respondents’ submission that the evidence does not support any of the above five contentions. Furthermore, it is claimed (a) that, whether as business names or otherwise, both the Burica and Tops to Bottoms use the words “Simply Irresistible” in conjunction with other words and that the resultant combinations so used by the parties are dissimilar; (b) that there is no adequate evidence either of a business reputation in the words “Simply Irresistible” or of the distinctive association of those words with the business now conducted by Burica.
I agree generally, though with some sense of frustration, with the respondents’ submissions. On the crucial question whether, whatever the precise word combination used by Burica, it has acquired a reputation in - its business has a “distinctive association with”: Telemak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437 - the words “Simply Irresistible”, the evidence is inadequate to the applicant’s purposes. I have been left with no reasonable basis from which I should properly infer that, prior to Burica’s purchase of the ACN Co’s business, such a reputation or distinctive association existed. And my reluctance to draw any such inference from the scant material put in evidence is made the greater by the applicant’s failure either to adopt apparently obvious expedients to support its case especially in relation to the period prior to Burica’s ownership of it (I instance a failure to provide adequate evidence of the advertisements used in that period and/or the testimony of Mr Prelac) or else to give some explanation of the shortcomings in its evidence in this regard. In fact the evidence is unacceptably contradictory on the names used that acquired the alleged reputation.
Given the central issue of reputation in a name, the case is one in which (having regard to the nature of the businesses concerned) some proof of actual deception and/or actual loss resulting from misrepresentation/contravening conduct could reasonably have been expected - notwithstanding that the issue of damages as such is to be tried separately. No acceptable evidence of either has been forthcoming. Indeed the applicant has been persistently recalcitrant in not providing as directed particulars of loss and damage. Evidence of some significant loss of business consequent upon the use by Tops to Bottoms of the “Simply Irresistible Strippers” name would, in my view, have served some positive function in confirming the reputation in the words claimed. It is not there. Lest it be thought it has been overlooked, I do not regard the “revenue statement” exhibited to Ms Leask’s affidavit of 9 May 1996 as having any probative value in this - the more so given Burica’s default in providing particulars of loss in an acceptable form.
The words “simply irresistible” while not describing a business as such can properly be said to be descriptive words in the sense of referring to a claimed attribute or quality of the service provided: cf Sitmar Cruises Ltd v Carnival Cruise Lines Inc (1986) 8 ATPR 40-728 at 47, 950. It is an attribute claimed by many businesses for their services/products in many fields of endeavour. The words, moreover, are ones that have an apparent fascination for proprietors of adult entertainment businesses in Victoria and elsewhere. And they enjoy a common currency. It is difficult in my view to resist the conclusion that Burica, though using the words in at least two different word combinations, is attempting in this proceeding to arrogate to itself their exclusive use (no matter the precise word combinations involved) in any business name (registered or otherwise) involving the provision of strippers.
It would take considerably more than the evidence here to satisfy me that Burica has acquired such an association with those words in this market as to give it the monopoly of them it effectively is claiming. They are words that cannot be so lightly won.
I should add that I do not regard the various considerations paid in the Black Cat-ACN Co and ACN Co-Burica contracts as illuminating any issue I have to determine. The major loss sustained by Mr Margetts may bespeak his own incompetence - or it may evidence the real value of the good will of the business acquired. I need not speculate on these matters.
So far then as the TP Act claims are concerned, I do not consider that the use by Tops to Bottoms of its business name “Simply Irresistible Strippers” in association with the provision of stripping services in Victoria, does or would involve it in conduct contravening s52, s53(c) or s53(d) of that Act. Burica has not established such an association between the words “Simply Irresistible” and the business it conducts as would make their use by another in the same type of business misleading or deceptive or likely to mislead or deceive. That more than one business may in consequence utilise the words in the same market may be productive of some confusion in the public mind. But that is, essentially, a problem of competition where competitors resort to like, time-worn words to make their appeal: on confusion see the Hornsby Building Information Centre case, above, at 230; see also Heydon, Trade Practices Law, Vol 2, 11.300ff. Likewise I cannot find the more particular claims based on s53(c) and s53(d) of the TP Act are made out. A consideration of the forms of association (if I can so describe them) envisaged by those provisions does not arise given the findings I have made.
As to the passing off claim, it suffices for present purposes for me to adopt without enumeration the elements of that action listed by Lockhart J in Opals Australia Pty Ltd v Opal Australiana Pty Ltd, above, at 41, 562. Having concluded that the applicant has not established a reputation in the words “Simply Irresistible”, this claim must fail as well.
I should add that even had I been prepared to infer that the words “Simply Irresistible” were so associated with Burica’s business as would cause Tops to Bottoms’ use of its business name to give rise to a contravention of s52 of the TP Act, the case is not one in which I would have granted injunctive relief under s80 of that Act for the following reasons. First, and I merely mention this as a cause of uncertainty in the award of appropriate relief, as I have indicated I have no evidence at all of the actual size, significance or turnover of either of the parties’ businesses in the relevant market. Secondly, though brought essentially as a s87 claim, the applicant has not provided any acceptable evidence of actual loss suffered by it - and has assiduously avoided doing so, my repeated directions to the contrary notwithstanding: cf Australian Competition and Consumer Commission v The Shell Company of Australia Ltd (1997) ATPR 41-556 at 43, 692-3. Finally, while it is unnecessary for me to express a view on the matter (though I mention it in more detail later in these reasons) there may well be ground for suspecting that the circumstances in which Burica acquired the business from the ACN Co may have been attended with such impropriety on the part of one of its officers as to call into question the appropriateness of an award of injunctive relief: cf Glev Pty Ltd v Kentucky Fried Chicken Pty Ltd (1994) ATPR 41-299.
The Cross Claims
These can be dealt with shortly. There is no substance in either of them. Both are made against Ms Leask and Burica. The first, which I will inexactly call “the employee infidelity/breach of confidence claim”, involves the alleged misuse of information derived by Ms Leask during her employment with Mr Munro, then Tops to Bottoms, that related to (a) particulars concerning Tops to Bottoms’ metropolitan customers; and (b) Tops to Bottoms’ negotiations with the ACN Co for the alleged joint venture agreement. The second claim, “the inducement claim”, is that after being dismissed by Tops to Bottoms, Ms Leask induced (a) the ACN Co to breach its joint venture contract with Tops to Bottoms; and (b) strippers engaged by Tops to Bottoms to breach their engagements with it. I should state at the outset that as with the application, the evidence simply does not support any of these claims.
It is unnecessary to deal at length with the factual setting of each claim. As I will indicate below, the employee infidelity/breach of confidence claim fails on the grounds that I am not satisfied that the information alleged to have been misused by Ms Leask (i) was confidential or else (in the case of the ACN Co joint venture negotiations) was actually possessed by her; or (ii) was, in any event, misused by her. The inducement claims likewise fail because I am not satisfied that she in any way procured or intentionally occasioned (a) the breach of the joint venture agreement which, I am prepared to infer, was made; or (b) the breach of the engagements with Tops to Bottoms of those strippers who “defected” to Burica.
Because there is contradictory evidence on matters of chronology, and because Mr Glazner’s evidence as to dates is inaccurate, it is appropriate that I first make findings as to when particular events most probably occurred.
Chronology Findings
(1) The ACN Co completed the Black Cat business purchase in late February 1995. From some period shortly thereafter both Mr Glazner and Mr Munro had dealings with its owner, Mr Margetts - in Mr Glazner’s case to provide some assistance in schooling Mr Margetts’ daughter in the running of the business; in Mr Munro’s, in some unspecified business proposal.
(2) While it is not possible on the evidence to indicate precisely when Mr Munro and Mr Margetts began discussions over the possible joint venture - and I disbelieve Mr Margetts’ evidence that he had no interest in the joint venture - this probably occurred at the end of March 1995 after Ms Leask’s employment with Munro/Tops to Bottoms had terminated. I note that it was at that time that Mr Margetts requested Mr Lambrinos of the firm Bryant and Bryant to relist his business for sale. I find that such a request was made and reject Mr Margetts’ later denial of it. I equally reject Mr Munro’s evidence that by mid-March his negotiations with Mr Margetts were “well advanced”.
(4) I am prepared to infer that a joint venture was agreed upon between the ACN Co and Mr Munro for Tops to Bottoms on 26 April 1996. While the documentary evidence does not itself necessitate this conclusion it is, nonetheless, consistent with it. In drawing the inference I have, I reject in its entirety Mr Margetts’ evidence on this. It was not compelling to say the least of it. I equally reject Mr Munro’s palpably false evidence that Mr Margetts was present at the meeting on that day at Bryant and Bryant’s offices when the agreement was made. Despite Mr Margetts’ testimony, the evidence suggests his business was so haemorrhaging that he was prepared to avail of the succour offered by Mr Munro’s proposal (inadequate though it may have been in his eyes) until a more appealing prospect emerged in the form of what ultimately became the sale to Burica. Finally on this, I would note that Mr Munro gave unequivocal evidence that he would not have gone ahead with the joint venture agreement even if, in fact, Mr Margetts had wanted to, and would not because he had been told by his solicitors that the business name “Simply Irresistible” had not been registered. The accuracy or otherwise of that reason does not require exploration.
(5) It is Mr Margetts’ evidence that in late April he was called by Mr Shannon (the person dismissed at the same time as Ms Leask) concerning the ACN Co business. It was the discussions that followed from this that led ultimately to the Burica sale. I return to this below.
(6) I accept Ms Leask’s evidence that for a short period after her dismissal she became a recluse but was, within two weeks, approached by Mr Glazner. This led to a proposal that Mr Shannon, Ms Leask, Mr Glazner and some others establish an agency for providing striptease services. That business appears to have been established in mid-April 1995.
(7) When Mr Shannon approached Mr Margetts he did so, I infer, on behalf of the members of the new agency. It seems probable that he, rather than Ms Leask, was the person whose participation in the business Mr Glazner most wanted - though for reasons not at all made apparent in evidence he desisted from being a party to the contracts of 4 May and 11 May 1995. I would note, though, that Mr Margetts’ evidence is that it was Mr Shannon who concluded the agreement. Ms Leask’s evidence is that she did not participate in the negotiations at all and was called in at the eleventh hour to be a signatory and party to the contracts. I accept this evidence. She appears to have been used as a “make weight” at the very end of the process. She neither negotiated, nor authored or procured the negotiations leading Mr Margetts to breach his agreement with Tops to Bottoms. I am unaware of, and make no findings as to, Mr Shannon’s knowledge of the character and consequences of Mr Munro’s dealings with Mr Margetts and the ACN Co.
(8) While Burica was formed as a shelf company on 14 March 1995 it probably was not actually acquired by Mr Glazner until early May 1996 though instructions by him to his accountant to acquire a company were probably given several weeks before this. This does not conform to the actual dates given by Mr Glazner. It does, though, seem to accord with the sequence of events he narrated in evidence as also with my findings in paras (6) and (7) above.
The final general factual matter to which I should refer relates to Ms Leask’s claim that she was not employed at any stage by Tops to Bottoms, but only by Mr Munro personally. Though the subject of heated contest, this is an issue without significance. If Ms Leask was in receipt of confidential information that was in fact Tops to Bottoms’, in consequence of her employment with either Tops to Bottoms or Mr Munro, she would owe an obligation of secrecy to Tops to Bottoms in respect of that information irrespective of the actual identity of her employer. For ease in exposition I will hereafter refer to Tops to Bottoms as her employer.
The employee infidelity/breach of confidence claims
Given the chronology findings I have made, there is no evidence to suggest that Ms Leask misused her position or information derived from it while she remained in Tops to Bottoms employ. Likewise there is no acceptable evidence - though there is unsubstantiated assertion - that she took some improper preliminary steps before or at the time of her dismissal to advance her position thereafter (eg memorised lists; took away a copy; etc). She denies having engaged in such conduct and I accept her evidence. In these circumstances the sole matter of real contention is whether, subsequent to her dismissal, she misused confidential information acquired in, or as a result of, her previous employment.
I can dismiss immediately the claim that she misused for her own benefit a body of confidential information made up of “documents pertaining to negotiations for the acquisition of the [ACN Co] business”. What those documents were (if there were any) is rather obscure. Be this as it may, on my chronology finding those negotiations commenced after her dismissal. Ms Leask has furthermore stated that prior to her dismissal she was unaware that negotiations were being engaged in concerning the ACN Co’s business (if such was the case). This breach of confidence claim is baseless.
The second claim made is that by virtue of her employment she had access to confidential information maintained by Tops to Bottoms. This was said to be contained in -
“a list of all of Tops to Bottoms’ customers in the metropolitan area and with respect to each and every customer, the following particulars -
(i)a past history of stripping services provided;
(ii)the preferences for stripping services provided to such customer;
(iii)the time at which stripping services were provided;
(iv)the particular girls preferred for stripping services provided to such customers.”
This material is referred to in the cross-claim as “metropolitan customers’ particulars”. I would note that if such a document exists it was not put in evidence.
Even if I were to accept that there was at the relevant time a body of information as claimed, there is no acceptable basis upon which I could conclude that, in the circumstances, it had “the necessary quality of confidence about it”: Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203 at 215; and see generally Dean, The Law of Trade Secrets, 107 ff, Law Book Co, Sydney, 1990. On the contrary.
Such evidence as I have of industry practice - and it is essentially that of Ms Leask, Mr Glazner and Ms Mitchell (a Burica employee) - suggests both that the industry is a relatively open one (attributable it may be surmised to the level of freelance and non-exclusive agency work engaged in by strippers) and that agencies routinely keep lists of information embodying varying information concerning strippers. Insofar as it goes, the impression created by the evidence is that this is a “talking industry”. I have been provided with no basis for inferring that the information claimed to be confidential is anything other than open and available in the industry: see O’Brien v Komesaroff (1982) 150 CLR 310.
That Mr Munro considered the information confidential and had solicitors’ letters written asserting the same in no way alters the character of the information. This breach of confidence claim as well must fail.
I would note additionally though without elaboration that I accept Ms Leask’s evidence that she did not solicit to Burica strippers who previously worked with Tops to Bottoms nor did she solicit the custom of Tops to Bottoms hotel clients. In saying this I am prepared to accept that there was some movement both of strippers and of customers to Burica on its formation. But I am also prepared to accept that for innocent reasons - loyalties, fashions, the relevant standing of Mr Glazner and Ms Leask, and otherwise - this occurred.
The inducement claim
The chronological findings I have made and my acceptance of Ms Leask’s evidence in relation both to her lack of knowledge of Mr Munro’s negotiations with Mr Margetts and her lack of participation in the events leading to the ACN Co-Burica contract are sufficient to require the dismissal of this claim.
Before leaving this aspect of this matter I merely mention that I have not at all had revealed to me the character of the relationships and antipathies that may have affected the actions and claims not only of parties and witnesses but also of persons named but not called. It is clear, for example, that Mr Munro’s object of ire is not so much Ms Leask as Mr Shannon. He has lurked as a presence in significant events giving rise to these proceedings. I am in no position to say - and do not say - that his was a malign presence. I merely observe that I have no confidence at all that the actual circumstances giving rise to the sale to Burica have been put in evidence.
Conclusions
I dismiss the application and the cross-claims. I will invite the parties to make submissions on costs.
I certify that this and the preceding 18 pages are a true copy of the Reasons of the Honourable Justice Finn.
Associate:
Dated: 22 October 1997
Counsel for the applicant : Mr M Pirrie
Solicitors for the applicant : Trueman Dawson
Counsel for the respondent : Mr M Clarke
Solicitors for the respondent : Lennon Settle
Date of hearing : 29 May, 29 September-3 October 1997
Date of judgment : 24 October 1997
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