Coles Myer Ltd v Telmak Teleproducts (Australia) Pty Ltd

[1989] HCATrans 304

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S89 of 1989

B e t w e e n -

COLES MYER LTD

Applicant

and

TELMAK TELEPRODUCTS (AUSTRALIA)

PTY LTD

Respondent

Application for special leave

to appeal

MASON CJ

Coles

BRENNAN J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 8 DECEMBER 1989, AT 10.25 AM

Copyright in the High Court of Australia

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MR D. SHAVIN:  May it please the Court, I appear for the

applicant in this matter.	(instructed by Freehill
Hollingdale	& Page.

MR B. WALKER:  If it please Your Honours, I appear for the

respondent. (instructed by Esplins)

MASON CJ:	Mr Shavin.
MR SHAVIN:	If the Court pleases. The issue that is raised

in this application goes to the heart of one of

the established principles or hitherto established

principles in the law of passing off and its application

under section 52 of the TRADE PRACTICES ACT.

It is our submission that hitherto it has been

well settled that the essential ingredient in the cause
of action of passing off is for the plaintiff to

establish that there has been a misrepresentation and

that together with that principle, it has been essential

for an applicant or plaintiff to establish that they

have a relevant reputation which is capable of being

appropriated or misappropriated by the defendant.

MASON CJ:	Now, is that denied by the majority in the Full Court?
MR SHAVIN:	That principle is not denied by the majority in its

reasoning but it is in its conclusion.

MASON CJ:  Now, can you point out to us in the judgment of

the majority where it is denied in the conclusion.

MR SHAVIN:  Yes. If I could take the Court to page 93, and

before taking the Court to that specific passage,
the Court will recall that in this case there was a

finding of fact by the trial judge that was accepted

by the majority, that in the relevant words and get-up

the applicant, Telmak, had not established a reputation.

MASON CJ: Now, did that finding relate to "get-up" as well

as words?

MR SHAVIN:  Yes. At first instance, there was no finding

as to "get-up".

MASON CJ: Well, no, that is the point I am raising.

MR SHAVIN:  Yes, but in the majority's decision, if I could

take the Court to the passage that appears at page 91,

the court assesses the get-up by references to the

television advertisement. Note:

that the Telmak television advertisements

provide only a fleeting glimpse of the

package -

and in the last paragraph on that page concludes:

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The matters just mentioned are finely

balanced. If they stood alone, we would have

hesitated to conclude that the similarity of

the lettering would have been likely to mislead

potential purchasers.

They then go on to consider two things, that:

description used by Telmak, and the

it is proper to take into account not only the

style of lettering in which that description

was conveyed, but also that, throughout the

litigation, the company has insisted in

maintaining its entitlement to continue to

use that lettering.

In other words, that Coles, having won at first intance,

was wrong in pursuing its defence of the appeal.	I
was asked at the appeal stage why do I not give an undertaking and I said, "But I won below" and the
court said, "Well, that doesn't matter."

And if I could take the Court now to page 93,

one can see in one paragraph where the majority, in

my respectful submission, have fallen into error.

They have said:

In the present case, the evidence

established -

first, I would interpose -

that a deliberate decision was made by two

senior marketing executives of Coles Myer

to adopt both the descriptive words used by

Telmak on its packaging and the style and

layout of lettering in which that description

was proclaimed.

And, secondly:

Their employer, Coles Myer, has endeavoured

to maintain that position throughout this

litigation.

The majority then, from those two circumstances,

seek to draw inferences that the applicant was unable

to establish at any stage during the course of the

trial and which they found could not have been established

as questions of fact.

McHUGH J: But that is what your whole case comes to, does it,

the inference to be drawn from those facts? Because

at line 12, by implication they do find that Telmak has

a reputation, do they not?

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MR SHAVIN:  But they have expressly concurred that it did not

earlier in their judgment, if Your Honour pleases.

McHUGH J: Where is that?

MR SHAVIN:  If I could take the Court first to page 83, at

the foot of the page:

As to the first, it is true that Telmak

used the description "dry-fry convection oven

pan with lid". But there is no evidence

that either members of the public or people

in the trade distinctively associated these

words with Telmak's product. On the contrary,

each reference to the pan disclosed by the

evidence, other than upon the packaging

itself, was by an abbreviated name which

omitted both the word "convection" and "oven"

and any reference to the lid.

McHUGH J: Yes, but that is a reputation in respect of the

words "dry-fry convection oven pan with lid". But at page 93 the conclusion which they draw that the:

packaging would be likely to assist sales

of the Coles Myer product ..... only if it

caused persons who saw the Coles Myer package

to relate that package to the product

advertised on television by Telmak -

impliedly holds that Telmak does have a reputation in

the product, does it not?

MR SHAVIN:  Yes, but in my submission, Your Honour, it is

there that they have fallen into error because, in my

submission, the cases clearly establish that evidence

of copying cannot establish the reputation. It can

only be of evidentiary assistance to the court in

establishing the proposition that the conduct was

calculated to deceive. But you do not get to that

question until you have established that there was

a representation or a goodwill that could be misappropriated.

If there is no goodwill that is capable of

misappropriation there cannot, by definition, be a
misrepresentation, and the Full Court accepted that.

McHUGH J: That is so but it does not mean that the contrary

is false. If you find that there is a deception you

may impliedly find that there was a reputation.

MR SHAVIN:  But, with respect, Your Honour, what the court is

doing there is putting the cart before the horse.

McHUGH J: Well, I know. That is why I said to you earlier,

that is the real point of the case, is it not?

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MR SHAVIN:  But it has had a point of general application here,

Your Honour, because the principle that is established

in page 93 is that all an applicant has to establish

now at passing off, notwithstanding the long line of

authority both in this Court and in the Privy Council,

is intentional copying and an unwillingness to concede

defeat the moment litigation is started because it is
from those two facts alone that the court has sought

to draw this inference.

MASON CJ:  But that is not right, Mr Shavin. If you look at

page 87, line 4, the court says there:

The Court is looking at a particular lay-out

of those words in a form created by or on

behalf of Telmak and applied to the promotion
of its product. Having regard to the number

of sales made by Telmak, of pans packaged in

boxes so printed, and to the extensive

advertising of those pans in those boxes, it

is reasonable to treat that lay-out as part

of Telmak's product goodwill.

Now, you did refer us to the later page, 91, where there

was a reference to a "fleeting glimpse of the package"

in the advertisement. But if you look at line 10 and

read the whole of the sentence, it states:

Of course, in evaluating that matter, it is

necessary to remember that the Telmak television

advertisements provide only a fleeting glimpse of the package, so that viewers might remember only similar aspects of the package and not

recall dissimilar features.

MR SHAVIN:  And so from that finding, Your Honour, the

court has no further evidence established other than
the finding simply of copying and of a desire by Coles
to sustain on appeal the judgment it succeeded in

obtaining at first instance from His Honour Mr Justice Gummow.

McHUGH J: It is more than just copying. It is copying by

senior marketing executives and the train of reasoning

is that by reason of their experience of the market and

their knowledge of Telmak's products the court thought

it was safe to draw the inference that Telmak did have

a reputation in the get-up.

MR SHAVIN:  However, in seeking to draw that inference,

Your Honour, the court having accepted that, that by

itself was not sufficient, took the impermissible
step of saying that what makes it sufficient is a desire

by Coles to pursue the litigation.

BRENNAN J: However they reached the point, the point was

reached, was it not, that there was some reputation?

MR SHAVIN:  But in my submission, Your Honour, the point

was reached by the court that that reputation was

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insufficient to sustain the cause of action and that

is why they reached the conclusion -

BRENNAN J: Where do we find that?

MR SHAVIN:- - - at page 91, because having assessed that

reputation and the conduct, they say:

The matters just mentioned are finally

balanced. If they stood alone, we would

have hesitated to conclude that the

similarity of the lettering would have

been likely to mislead potential purchasers.

And then they go on to say that there are two factors

that the court is entitled to look at.

McHUGH J:  I know but they use that conduct of your client

as an admission that Telmak does have a reputation.

That is why Coles have gone to the trouble and expense

of copying the get-up because it will benefit Coles

because they will be able to appropriate the goodwill

which has already been found. Now, the judgment does
not express its findings of fact in the traditional

way but do you not have to concede that there is an

implied finding of goodwill here?

MR SHAVIN:  In my submission, no, Your Honour, because what

the majority is doing is what they have in the

previous pages concede they cannot do and that is to

use the evidence of copying as a substantive matter

of reputation rather than simply as evidence that

if there was reputation the conduct is calculated to

mislead or deceive.	They are doing that which they
have already said they are not permitted to do.	They

are misusing the evidence of deliberate copying and

they have elevated the evidence of deliberate copying
to a point of substantive proof of the first hurdle
that the applicant in the case must overcome and it is

for that reason - and, in my submission, this is a

case of great importance because it elevates evidence

of copying to a point that no court has ever before

accepted. And it says that an applicant in a passing-off

action does not need to establish reputation and nowhere is there a finding anywhere at first instance that there

was this reputation.

McHUGH J:  But_ they have not said that, have they? They have

not said that the applicant need not establish

reputation. They do not mention it. But, surely,

it is implicit in their finding which appears in page 93.

MR SHAVIN:  But, in my submission, and I can put it no higher

than this, Your Honour, is that on page 93 what they

have done is not make an implicit finding based on

evidence of goodwill. The finding is based only on an

inference from the act of copying.

BRENNAN J: Well, what is the proposition? Is it that they

adopted a wrong principle, namely that you do not have

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to prove reputation, or is it that they erred in

coming to the finding of fact that there was reputation?

MR SHAVIN:  In my submission, it is the former, if Your Honour

pleases.

BRENNAN J:  Well, the judgment does not bear that out, does

it?

MR SHAVIN:  Well, in my submission, although in the reasoning

that	led up to the application, it appears not to bear
that	out, it is the only way that one can explain
what	happened between pages 91 and 93.

MASON CJ:  But if you look at the use that is going to be

made of this judgment in the future, no one is going

to be citing passages from this judgment in support

of the erroneous principle that you say is embedded in

it because the judgment explicitly denies that.

MR SHAVIN:  Save as to this, Your Honour, that the Full Court

in the majority, having conducted the analysis of law,

then points to everybody and says, "If you can establish

that there has been copying and if the person who is

engaged in the copying maintains their right during the

course of the litigation", those two facts entitle

the court to draw an inference and it is that

principle, in my submission, that may well be relied

upon because that is the ratio of the majority decision.

MASON CJ:  It may be relied upon but I cannot see it being

adopted and acted upon.

MR SHAVIN:  Your Honour, if that is so then the majority

decisions would simply fade into insignificance.

The danger and, in my submission, the reason that this

is a special leave case is that having a majority

decision in the Full Federal Court enunciate what has
been enunciated on page 93, that is a signpost for
persons following, for single judges,both in the

State supreme courts and in the Federal Court,

to follow and that it is appropriate that such a clear

error is clarified by this Court because it is a matter

that goes very much to the heart of the cause of

action in passing off.

MASON CJ: Well, you cannot take it any further, can you,

Mr Shavin?

MR SHAVIN:  I cannot take it higher than that,if the Court

pleases.

MASON CJ: Thank you. The Court need not trouble you, Mr Walker.

The Court is not persuaded that the decision of the

Full Court of the Federal Court reflects any error of

general principle. The application for special leave to

appeal is therefore refused.

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MR WALKER:	I ask for costs, please, Your Honour.
MASON CJ:	You cannot resist that, Mr Shavin?
MR SHAVIN:	I cannot resist that, no.

MASON CJ: The application is refused with costs.

AT 10.41 AM THE MATTER WAS ADJOURNED SINE DIE

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