Ferrari Furniture and Cabinet Makers Pty Ltd v Ferrari Furniture Pty Ltd
[2006] WASC 139
FERRARI FURNITURE & CABINET MAKERS PTY LTD -v- FERRARI FURNITURE PTY LTD [2006] WASC 139
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2006] WASC 139 | |
| Case No: | CIV:2483/2005 | 16 MAY 2006 | |
| Coram: | BLAXELL J | 20/07/06 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application for interlocutory injunction refused | ||
| B | |||
| PDF Version |
| Parties: | FERRARI FURNITURE & CABINET MAKERS PTY LTD (ACN 066 831 098) FERRARI FURNITURE PTY LTD (ACN 1160 094 403) |
Catchwords: | Injunction Interlocutory injunction Passing off Misleading and deceptive conduct Alleged passing off of defendant's business as that of the plaintiff Turns on own facts |
Legislation: | Trade Practices Act 1974 (Cth), s 52 |
Case References: | Bradmill Industries Ltd v B & S Products Pty Ltd (1980) 53 FLR 385 Fine Cotton Spinners and Doublers' Association Ltd v Harwood Cash & Co Ltd [1907] 2 Ch 184 FMC Engineering Pty Ltd v FMC (Australia) Ltd [1966] VR 529 Greg Cotton Motors Pty Ltd v Neil & Ross Neilson Pty Ltd (1984) IPR 214 Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216 Parkdale Custom-built Furniture Pty Ltd v Puxu Pty Ltd (1981-1982) 149 CLR 191 Parker Knoll Ltd v Knoll International Ltd [1962] PRC 265 Ronson Products Ltd v James Ronson Pty Ltd (No 2) [1957] VR 731 Wright, Layman & Umney Ltd v Wright (1949) 66 RPC 149 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 Burgess v Burgess (1853) 43 ER 351 Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 Cayne v Global Natural Resources PLC [1984] 1 All ER 225 Joseph Rodgers & Sons Ltd v W N Rodgers & Co (1924) 41 RPC 277 Prospero Publishing Pty Ltd v Rumcoast Holdings Pty Ltd [2000] WASCA 61 Puxu Pty Ltd v Park Dale Custom Built Furniture Pty Ltd (1980) 31 ALR 73 Reckitt & Coleman Products Ltd v Borden Inc [1990] 1 WLR 491 The Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39 Turton v Turton [1889] 42 Ch D 128 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
FERRARI FURNITURE PTY LTD (ACN 1160 094 403)
Defendant
Catchwords:
Injunction - Interlocutory injunction - Passing off - Misleading and deceptive conduct - Alleged passing off of defendant's business as that of the plaintiff - Turns on own facts
Legislation:
Trade Practices Act 1974 (Cth), s 52
Result:
Application for interlocutory injunction refused
(Page 2)
Category: B
Representation:
Counsel:
Plaintiff : Ms C W Bahemia
Defendant : Mr B W Ashdown
Solicitors:
Plaintiff : Carol Bahemia
Defendant : De Vita & Dixon
Case(s) referred to in judgment(s):
Bradmill Industries Ltd v B & S Products Pty Ltd (1980) 53 FLR 385
Fine Cotton Spinners and Doublers' Association Ltd v Harwood Cash & Co Ltd [1907] 2 Ch 184
FMC Engineering Pty Ltd v FMC (Australia) Ltd [1966] VR 529
Greg Cotton Motors Pty Ltd v Neil & Ross Neilson Pty Ltd (1984) IPR 214
Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216
Parkdale Custom-built Furniture Pty Ltd v Puxu Pty Ltd (1981-1982) 149 CLR 191
Parker Knoll Ltd v Knoll International Ltd [1962] PRC 265
Ronson Products Ltd v James Ronson Pty Ltd (No 2) [1957] VR 731
Wright, Layman & Umney Ltd v Wright (1949) 66 RPC 149
Case(s) also cited:
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Burgess v Burgess (1853) 43 ER 351
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Cayne v Global Natural Resources PLC [1984] 1 All ER 225
Joseph Rodgers & Sons Ltd v W N Rodgers & Co (1924) 41 RPC 277
Prospero Publishing Pty Ltd v Rumcoast Holdings Pty Ltd [2000] WASCA 61
Puxu Pty Ltd v Park Dale Custom Built Furniture Pty Ltd (1980) 31 ALR 73
Reckitt & Coleman Products Ltd v Borden Inc [1990] 1 WLR 491
(Page 3)
The Commonwealth of Australia v John Fairfax & Sons Ltd (1980) 147 CLR 39
Turton v Turton [1889] 42 Ch D 128
(Page 4)
1 BLAXELL J: The parties to these proceedings are both engaged in the furniture trade, and they operate their businesses from separate premises in adjoining suburbs in the south-east metropolitan area. However, despite the similarity in their names, they are totally unconnected to each other.
2 The claim in the present action is for a permanent injunction to restrain the defendant from:
"a) using the name 'Ferrari Furniture' or any other name containing the word 'Ferrari' for any purpose whatsoever
b) otherwise passing itself off as the Plaintiff
c) registering, selling or transferring to any person the name 'Ferarri Furniture'
d) enabling, assisting, causing, procuring or authorising any person other than the Plaintiff to do any of the acts referred to above."
3 The plaintiff also seeks an inquiry as to damages or an account of profits in respect of the alleged passing off. There is a further claim for an injunction and damages pursuant to s 80 and s 82 of the Trade Practices Act 1974 (Cth) for alleged breaches of s 52 and s 53(d) of that Act.
4 In the meantime, the plaintiff applies for an interlocutory injunction in the same terms as the proposed permanent injunction and these are my reasons for decision in respect of that application.
The factual background
5 The bulk of the relevant facts are not in issue. The plaintiff was registered on 17 October 1994 and it conducts its business from factory unit premises in Welshpool, where it manufactures furniture, cabinets and shelving. The plaintiff's main clientele are architects, builders, as well as individual clients, and it designs furniture and cabinets to order as required.
6 The principal director of the plaintiff, Mr Peter Ferrari, has been engaged in the furniture trade for all of his working life. For approximately two years prior to incorporating the plaintiff, he conducted business as "Ferrari Furniture and Cabinetmakers".
(Page 5)
7 Approximately 80 per cent of the value of the plaintiff's work is obtained by repeat business or by word of mouth referrals. Its only advertising is an entry in the Telstra Yellow Pages telephone directory under the classification of "Cabinet Makers".
8 Virtually all of the plaintiff's customers and suppliers refer to it as "Ferrari Furniture". Furthermore telephone calls to the plaintiff have always been answered with the greeting "Ferrari Furniture" because of the understandable desire to shorten the name "Ferrari Furniture and Cabinetmakers Pty Ltd".
9 The defendant was registered on 5 September 2005 and its principal director is Mr Gavin Ferrari. Up until 2000 he worked as a chef, but he then obtained employment in furniture retailing. After about four years experience selling furniture he decided to set up business on his own, and for that purpose incorporated the defendant. Gavin Ferrari has never been involved in the manufacture of furniture, and the defendant is engaged solely in retail sales dealing directly with members of the public.
10 The defendant conducts its business from a store in the Bentley shopping centre in Albany Highway, Bentley. It purchases all of the furniture that it sells from importers or manufacturers. The items sold include lounge suites, sofas, entertainment units, dining chairs and tables, recliner suites and coffee tables.
11 The defendant has advertised extensively on radio, in the West Australian Newspaper, in "The West Magazine", in the Sunday Times TV Guide, and in Community Newspapers. The defendant has not placed an entry in the Telstra Yellow Pages telephone directory, but if it did it would do so under the classification of "Furniture - Retail".
12 In his affidavit opposing the present application, Gavin Ferrari states that he was unaware of the plaintiff's business at the time of incorporating the defendant company. However, his accountant later informed him of the existence of the plaintiff. On 2 November 2005 he was visited at the defendant's business premises by Mr Peter Ferrari. Although the two men had not previously met, they discovered (as a result of discussing their family connections) that they were cousins. Peter Ferrari asked that the defendant cease trading under the name "Ferrari Furniture", but Gavin Ferrari declined this request.
13 According to the plaintiff, the similarity between the names of the parties has caused some customers and other people dealing with the plaintiff to become confused. The affidavits in support of the application
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- provide a number of instances of such confusion including telephone calls to the plaintiff that were meant for the defendant, and misdeliveries of items to the wrong premises. However, the defendant denies that it has experienced any similar instances of confusion amongst the customers and people that it deals with.
14 The signage on each of the premises is very similar, and involves the prominent use of the word "Ferrari" in red on a white background with virtually the same font. The style of the signage bears no relationship to the well known brand of the "Ferrari" motor car, and subject to the remote possibility of coincidence, it is hard to avoid the conclusion that one party must necessarily have copied the other's sign. Needless to say each party denies having done so.
The relevant law
15 In the present action it is not alleged that the defendant is passing off its goods (viz. the furniture that it sells) as those of the plaintiff. What is alleged is that the defendant is passing off its business as that of the plaintiff. This is an important distinction because the authorities suggest that the principles that apply to passing off of a business can differ from those applicable to a passing off of goods.
16 The foundation for actions such as the present is the damage done or threatened to be done to a plaintiff's proprietary interest in the goodwill acquired by the reputation of its business with the public. These proprietary rights are invaded if a defendant, by adopting a name similar to that of the plaintiff, causes the public to believe that by dealing with the defendant they are dealing with the plaintiff or with a business associated with the plaintiff, thus causing damage to the plaintiff. In FMC Engineering Pty Ltd v FMC (Australia) Ltd [1966] VR 529 the full Supreme Court of Victoria held (at 532) that:
" ... for success in such an action the plaintiff must establish that the reputation which it has acquired at the relevant time, which is its title to the property for which it alone is entitled to such protection, was such as to warrant the conclusion that what the defendant does amounts to an interference with the goodwill so acquired. The basis of the action is wrongful misappropriation of the plaintiff's property - nothing else. We see no reason to doubt that according to the circumstances of the particular case the reputation acquired by a plaintiff in its name may cover a field not limited to that in which its activities have been pursued, or it may be restricted to a narrow field
(Page 7)
- co-extensive with its operations. In the former case its business reputation may be invaded by another carrying on business in some different field into which the public might reasonably assume that the plaintiff or a company associated with it may have entered; in the latter case there is no invasion of the plaintiff's limited right of property conferred by its business reputation by another company under a similar name conducting its business in some other field.
... the ultimate question to be determined on all the evidence is whether the defendant has, to the injury of the plaintiff, invaded its property meaning thereby its business reputation acquired at the relevant time."
- The Court further held at 534 that:
"In an action of this kind actual or probable damage is an essential condition precedent to a plaintiff's entitlement to relief. In our opinion, the principle applicable is that such a plaintiff has the burden of proving that what the defendant has done or is threatening to do will probably cause him imminent and substantial damage."
18 The facts in FMC v FMC (supra) are pertinent to the present case. There the plaintiff had an established reputation associated with its name at the time that the defendant adopted a very similar name. Both parties were manufacturers of machinery but in widely differing fields. Despite the lapse of three and a half years up until trial, the plaintiff was unable to prove any actual damage. There was however evidence of considerable confusion amongst members of the public involving misdeliveries and misdirected telephone calls.
19 In all of these circumstances, the Full Court held (at 536) that the plaintiff's goodwill attached to its reputation in only the limited field in which it actually manufactured. Consequently, the defendant's adoption of a similar name in a very different field of activity did not invade the plaintiff's proprietary rights. This was so even though there was a
(Page 8)
- possibility that the defendant's adoption of a similar name would cause future damage to the plaintiff. (See 534.)
20 In the present instance both parties are engaged in the furniture trade, but the plaintiff is more involved in the cabinet making line of work, and the defendant is involved in retail showroom sales. The evidence suggests that to the extent there is any overlap in their respective fields of activity, it is only a minor proportion of each business. Nevertheless, there is also evidence of confusion amongst some members of the public and it does not help that the two businesses operate in reasonably close proximity to each other and have very similar signs. A critical issue at trial will be whether the plaintiff can establish that in these circumstances there is a probability of imminent and substantial damage to its goodwill.
21 For the claim under s 52 of the Trade Practices Act to succeed, it must be shown that the defendant's adoption of a name similar to that of the plaintiff is "conduct that is misleading or deceptive or is likely to mislead or deceive". This section is focused on protection of consumers rather than on protection of the plaintiff's proprietary interest in its goodwill. Accordingly it is not necessary for a plaintiff to establish that damage is likely in order to be entitled to an injunction. Nevertheless, the principles governing liability for passing off are relevant to a true understanding of the scope and operation of s 52 (Parkdale Custom-built Furniture Pty Ltd v Puxu Pty Ltd (1981-1982) 149 CLR 191, 219 and Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1977-1978) 140 CLR 216, 227).
22 In the present instance the defendant asserts a right to conduct business under its own name by reason of that name being based upon the surname of its principal director. There is ample authority to show that an individual may trade honestly in his or her own name regardless of the damage that that may cause to a competitor with a similar name. For example in Wright, Layman & Umney Ltd v Wright (1949) 66 RPC 149 at 151 - 152 it was held that:
"A man may sell goods under his own name as his own goods. If he does so, he is doing no more than telling the truth. If there happens to be already on the market another trader of that name, with a goodwill in a name known exclusively as referring to his goods, that is just his misfortune if somebody else having the right to trade in his own name cuts into his business. That is one of the cases where, so to speak, two conflicting rights have to co-exist together if justice is to be done; and it has been laid
(Page 9)
- down as clearly as can be that, provided that a man keeps within the limit of using his own name and does so honestly and does not go beyond that, nobody can stop him, even if the result of his doing so leads to confusion."
23 In instances such as the present where a company trades under a name based upon the name of a natural person who is its proprietor, the law would appear to be unsettled. In Bradmill Industries Ltd v B & S Products Pty Ltd (1980) 53 FLR 385, 392, Lockhart J held:
"A distinction must be drawn between the right of a man to carry on business under his own name and a company that seeks to carry on business under the name of its promoter. An individual company with a title of which the name of a natural person, who is its proprietor, forms part does not have the rights that the individual himself has."
- (See also Fine Cotton Spinners and Doublers' Association Ltd v Harwood Cash & Co Ltd [1907] 2 Ch 184 at 190.)
24 However, in Greg Cotton Motors Pty Ltd v Neil & Ross Neilson Pty Ltd (1984) IPR 214, where the plaintiff traded under the name of "Neilson Holden" and the respondent company's name consisted of the names of its proprietors with the addition of "Pty Ltd", Woodward J held (at 218):
"The respondent has continued to use a name which it has the best possible right to use. The law permits a man to carry on business in his own name, even if it gives rise to confusion with another, perhaps better known, enterprise, provided that he does so honestly and it does not result in deception as distinct from confusion. See Parker Knoll Ltd v Knoll International Ltd [1962] RPC 265."
25 The facts in the House of Lords decision in Parker Knoll Ltd v Knoll International Ltd [1962] PRC 265 were somewhat complex. In essence, the plaintiff was a long-established manufacturer of furniture of traditional design and in particular of a type of chair which was commonly known as a "Knoll" chair.
26 The proprietors of the defendant company Knoll International Ltd were descendants of the original Knoll family who had helped form the plaintiff. The defendant company had an established business in the United States but had recently commenced selling chairs in Britain under
(Page 10)
- the brand name "Knoll". The defendant's chairs were of modern design and distinctly different to those of the plaintiff.
27 The plaintiff commenced an action against the defendant for the passing off of its goods (as distinct from its business) and claimed an injunction restraining it from using the names "Knoll" or "Knoll International". By a majority of three to two, the House of Lords upheld an injunction which was in those terms but qualified by the words "without clearly distinguishing their goods from the goods of the plaintiffs". In other words, the defendant was free to sell its goods under the names of "Knoll" or "Knoll International" provided that it also indicated that those goods were not the goods of the plaintiff.
28 At 284 in the Parker Knoll decision, Lord Hodson (who was a member of the majority) rejected the argument that the honest user by the defendant of its own name was a complete answer in law to the plaintiff's claim. In this regard a distinction was to be drawn between "trading under a name and passing off of goods by the use of a name".
29 This passage in Parker Knoll does lend some support for the proposition stated by Woodward J in Greg Cotton Motors (supra). However, as already observed, there are other authorities to the contrary including Bradmill (supra) and Fine Cotton Spinners (supra). In the context of s 52 of the Trade Practices Act it is also relevant to note the following analogy drawn by Stephen J in Hornsby Building Information Centre (supra) at 227:
"To announce an opera as one in which a named and famous prima donna will appear and then to produce an unknown young lady bearing by chance that name will clearly be to mislead and deceive. The announcement would be literally true but none the less deceptive, and this because it conveyed to others something more than the literal meaning which the words spelled out. Thus, in passing off, a newly incorporated defendant company may not use, in its newly established business, its true corporate name if it be deceptively similar to that of a plaintiff with an established reputation."
Whether there is a serious issue to be tried
30 The evidence shows that prior to the incorporation of the defendant the plaintiff was known to its customers and by members of the public as "Ferrari Furniture". There is also evidence to show that the adoption by
(Page 11)
- the defendant of that same name has led to some instances of confusion amongst people accustomed to dealing with the plaintiff.
31 Although the parties are largely involved in separate areas of the furniture trade, there is some degree of overlap between their fields of activity. The possibilities of confusion amongst people wishing to deal with the plaintiff are enhanced by the fact that the two businesses operate in adjoining suburbs. It also does not help that the businesses each have almost identical signs which may well lead some members of the public to believe that the defendant's business is in some way associated with that of the plaintiff.
32 The evidence before me does not indicate how it is that the two businesses came to have very similar signs, and in my view this will be another critical issue at trial. If the plaintiff is able to prove that the defendant copied its sign then it will almost certainly succeed with its claim that there has been a passing off. If on the other hand the evidence shows that the reverse has occurred, then the plaintiff's claim is likely to fail.
33 In order to succeed with its claim to an injunction in respect of the alleged passing off, the plaintiff will also need to establish a probability of actual or imminent damage to its goodwill. The evidence to date suggests that there has been only confusion amongst members of the public as distinct from damage resulting from the defendant's use of the same name, and the plaintiff's claim may well fall short in that respect. However, in respect of the claim to an injunction under s 80 of the Trade Practices Act, there is no requirement for proof of damage.
34 In the end, it is clear that the plaintiff has an arguable basis for its claims, and in my view there is a serious issue to be tried.
The balance of convenience
35 As already noted, the evidence before me does not show that the plaintiff has to date suffered any actual damage as a result of the alleged passing off. The plaintiff has certainly experienced frustration and inconvenience as a result of the defendant's use of the name "Ferrari Furniture", but there is no evidence that there has been any consequent loss of business.
36 Of course, it is entirely possible that there has been some loss of business as a result of customers going to the defendant instead of the plaintiff, and that the plaintiff is unaware of this. But if this has occurred,
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- it is unlikely to have been a substantial loss given the largely separate areas of activity of the two companies. Certainly, there has been no attempt by the plaintiff to prove a drop in sales by reference to its own trading figures.
37 In these circumstances, the plaintiff has not persuaded me that it is suffering ongoing and substantial detriment to a degree which necessitates interim protection. On the other hand, if I was to grant an interlocutory injunction, this would cause immediate and substantial detriment to the defendant which has a highly geared advertising campaign based upon its own name. The defendant is very dependent upon its advertising for its business, and it would be severely compromised in its trading if it was to be restrained from using its own name.
38 In the event that an interlocutory injunction is not granted, the defendant is willing to consent to orders that it provide the plaintiff with its monthly profit and loss figures up until the date of trial. It is questionable whether or not such figures will assist the plaintiff in proving or limiting any damage that it may sustain. Nevertheless, it is a significant offer on the part of the defendant.
39 In my view when one has regard to the strength of the plaintiff's case and the potential for detriment to each of the parties, the balance of convenience clearly favours the defendant. Subject to the defendant entering into a satisfactory undertaking or consenting to the proposed orders (or some appropriate variation of the same) the application for the interlocutory injunction will be refused.
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