Graffiti-Off Pty Ltd v Acryline Australia Ltd

[1987] FCA 366

Re: GRAFFITI-OFF PTY. LTD.
And: ACRYLINE AUSTRALIA LIMITED
No. QLD G100 of 1987
Injunctions

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Pincus J.

CATCHWORDS

Injunctions - interlocutory injunction - application to discharge - material non-disclosure and positive misrepresentation by grantee - injunction discharged.

HEARING

BRISBANE

#DATE 9:7:1987

Counsel for the Applicant: Mr M. Bland

Solicitors for the Applicant: Messrs Donald McDonald & Co.

Solicitors for the Respondent: Mr R.R. Lindwall of Messrs Chambers McNab, Tully & Wilson

ORDER

The interlocutory injunction granted on 1 July 1987 be discharged.

The applicant in the principal proceedings, Graffiti-Off Pty. Ltd., pay the respondent's costs of and incidental to the application to discharge, including reserved costs, to be taxed.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

This is an application to discharge an injunction relating to the use of the business name which was granted ex parte on 1 July 1987 and varied by consent yesterday, on 8 July 1987.

1. On 1 July 1987, the applicant filed an application for an order that the respondent be restrained from using the name "Graffiti-Off". That was supported by an affidavit by the applicant's solicitor, saying in effect that he had asked the respondent to cease engaging in the conduct complained of, but had heard nothing from it in response. The affidavit exhibited a letter written by the solicitor to the respondent on 30 June describing the applicant as a "corporation registered in Queensland" and asserting that it had "been in this business for a long time" (emphasis added). The business referred to was identified in the letter as being that of marketing, in Queensland, products under the trade name "Graffiti-Off".

2. The application made on 1 July was also supported by an affidavit from Mr R.J. Crossley, a director of the applicant, who described himself in the affidavit as "also a Proprietor of the registered business name 'Graffiti-Off'". Mr Crossley's affidavit said the respondent had approached the applicant's customers marketing a product known as "Graffiti-Off" and produced samples of both the applicant's and the respondent's advertising material. It also exhibited a copy of a letter from the respondent to the Queensland Main Roads Department about "Graffiti-Off". The affidavit of Mr Crossley said: "The Main Roads Department is and has been for sometime a customer of the Applicant."

3. On 1 July 1987, on the material just mentioned, and on the applicant's giving the usual undertaking as to damages, the respondent was restrained until further order from using the term "Graffiti-Off" in any advertising or promotional material.

4. The respondent now applies, as I have mentioned, to set the injunction aside. During the course of the hearing yesterday it emerged that the applicant did not claim to have any goodwill beyond the State of Queensland and its counsel suggested that the injunction granted on 1 July be limited to activities of the respondent in Queensland. An appropriate amendment was therefore made, by consent.

5. The material filed on behalf of the respondent is to the effect that the Queensland manager of the respondent became aware of a product known as "Graffiti-Off" in June or July 1986. In February 1987 he began to "actively promote" on behalf of a company called Manfax Pty. Limited products of the respondent, and in particular "Graffiti-Off". What he did was to leave certain documents with, and have discussions with each of, the Brisbane City Council, the Gold Coast City Council, Queensland Railways Department and the Logan City Council. There is also an affidavit on behalf of the respondent made by Mr R. Brooks, a director of the respondent, who says that he invented a product known as "Graffiti-Off", in a number of forms, in 1979 or 1980 and used that name in relation to the product. About 1980 he sent to three paint distributors in Queensland documents relating to "Graffiti-Off". About 1984 he sent further such documents and he encouraged the distributors to market the product in Queensland, but they did not sell any. However, he says about $100,000 worth of the product "Graffiti-Off" has been sold in New South Wales and a lesser quantity in Victoria. At some unstated time, Mr Brooks says, it was decided by the respondent to float a company on the second board of the stock exchange to market, among other things, "Graffiti-Off". Mr Brooks says the respondent has spent about $80,000 in producing promotional literature and video film for the purpose of promoting the products Australia-wide.

6. In answer to the application to discharge the injunction, Mr Crossley has filed a further affidavit, saying that he invented the name "Graffiti-Off" in October 1986 and that in January 1987 (apparently before he had any relevant product to sell) he had brochures and stationery produced using the name. After making enquiries, he "accepted a franchise offered by Ecologel Pty. Ltd." in February 1987, presumably being one involving the selling of a graffiti-removal substance. Since February 1987 he has caused about 1,000 brochures to be mailed in about eight batches and has also employed a marketing agent to contact potential customers directly or by telephone. He had received orders amounting to about $65,000 in value, all but a small value of them last month.

7. The application to discharge the injunction was heard yesterday and today. During the hearing yesterday, evidence was given on behalf of the respondent that the applicant company was incorporated in 1982 and changed its name to Graffiti-Off Pty. Ltd. on the very day the ex parte injunction was granted, 1 July 1987. The applicant's counsel told me yesterday from the bar table that, on accounting advice, Mr Crossley had decided to become incorporated as from 1 July 1987. The question then arose as to how and whether the business had become vested in the applicant company, and an adjournment was requested to look into that point.

8. When the matter came on again today, evidence was adduced on behalf of the applicant by an affidavit from Mr Crossley that he had used the name "Graffiti-Off Pty. Ltd." from the outset, that he and his wife acquired the shares in that company (then called Bryton No. 2 Pty. Ltd.) on 12 March 1987 and that a notice of resolution to change the name was lodged on 10 April 1987 - the last piece of information being inconsistent with the records of the Commissioner for Corporate Affairs.

9. No explanation was advanced as to the reason for the variation between the account of these matters given today and that given yesterday. It is clear enough, however, that the impression created by the material on which the ex parte injunction was obtained was false. The learned judge who heard that matter had before him material suggesting that the applicant had a long-established business and had been subjected to an unjustifiable misappropriation of its name. One could not have any confidence that the present material gives an accurate account of the recent history of the applicant company. But, even accepting that account in full, it is clear that the learned judge should have been told that the applicant company had only recently begun to conduct business in that name, and that any business sought to be protected, by whomsoever conducted, had only come to be of any substance within the preceding month. It is unlikely that an ex parte injunction would have been granted if the truth had been disclosed, since an ex parte injunction to restrain use of a business name is an unusual form of relief. It was said from the bar table, in defence of the way the matter was put up to the learned judge who granted the ex parte injunction, that the matter was handled in rather a hurry, but that seems a poor excuse for leaving his Honour with the impression that he was dealing with a long-established business.

10. The first question, then, is whether the injunction should be discharged on the ground of material non-disclosure. There is authority for the view that, other than in exceptional cases, material non-disclosure requires that an injunction granted ex parte be dissolved: see for example Thomas A. Eddison v. Bullock (1913) 15 CLR 679 at 682 per Isaacs J. applied in Bentley v. Nelson (1963) WAR 89. This, it seems to me, is a little worse than a case of non-disclosure, because there is an element of positive misrepresentation.

11. One can understand persons against whom ex parte injunctions are granted harbouring feelings of resentment, especially where (as has sometimes happened) the ex parte injunction is then continued for some time because of unavailability of a judge to hear a contested application. For that reason and others, Courts are loath to grant such injunctions and tend to require the giving of at least some notice to the respondent, unless the giving of notice is itself likely to induce some action on the part of the respondent to defeat the applicant's purpose. In other cases, ex parte relief is ordinarily granted only where the case seems both urgent and clear.

12. It seems important faithfully to apply the general rule regarding non-disclosure laid down in such authorities as those just mentioned, rather than to strain to find a reason to treat the case as an exceptional one; otherwise, people will be tempted to apply on the sort of misleading material used here. There appear to be no exceptional circumstances in this case to justify departing from the general rule. The injunction granted on 1 July will therefore be discharged on the ground of non-disclosure and misrepresentation, and with costs.