Miki Shoko Co Ltd & Anor v Merv Brown Pty Ltd

[1988] HCATrans 45

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S8 of 1988

B e t w e e n -

MIKI SHOKO CO LIMITED and

DAVID JONES (AUSTRALIA) PTY LIMITED

Applicants

and

MERV BROWN PTY LIMITED

Respondent

Application for special

leave to appeal

MASON CJ

WILSON J

GAUDRON J

Shoko

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 18 MARCH 1988, AT	11.50AM
Copyright in the High Court of Australia

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}1R J.M. IRELAND: If the Court pleases, I appear for the

applicants in this matter. (instructed by Gadens)

}1R A.G. ARCHIBALD, QC: If the Court please, I appear with

my learned friend, }1R G. CLARKE, for the respondent.

(instructed by Freehill Hollingdale & Page)

MASON CJ:	Mr Ireland.
}1R IRELAND:	Your Honours, this is an application for special

leave to appeal from a decision of the Full Federal

Court given on 18 December 1987. That decision itself

granted leave to appeal for technical reasonsconcerning

the absence of final orders from a decision of

Mr Justice Northrop given on 22 May 1987.

Although the Full Court granted the necessary

leave,in substance the applicants' case was dismissed.

The only adjustment to the orders originally made was

an adjustment with respect to the terms of those

orders.

The subject-matter of the proceedings was a

claim on the part of the applicants here to use the

name"Miki House"as a trademark which had been employed
by the first applicant overseas - it was a Japanese

company - and which appeared on goods which the

second applicant, a retailer, had imported into

Australia from Japan for resale. Those goods were

launched into the Australian market on 20 August 1985

in the second applicant's department stores and it

was that launch which precipitated the dispute between

the parties.

The respondent here had never launched goods into

the Australian market. The respondent had purchased

the name"Miki House"from another clothing retail

business, the negotiations for that activity

connnencing right at the end of 1984. From the

end of 1984 until 20 August 1985 when the Japanese

goods reached the shops in Australia, it is the

decision of both of the courts below that the

respondent had generated what was characterized as

a goodwill in relation to the name by dint of its

preparations to sell goods in Australia under that

name so as to provide the foundation both for

an action in.passing off against the Japanese goods

and for an action based upon Part V of the TRADE

PRACTICES ACT.

Yours Honours, the foundation of activity

which the respondent undertook prior to 20 August 1985

unashamedly employed the very goods of the first

applicant marked with the name "Miki House". Those

behind the respondent, those individuals who had

management positions, had all seen the product

overseas. There had been an expedition to Japan

in April 1985 to acquire the Japanese goods as

samples. Those samples were then taken to stores.

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They were taken together with photographs of the

stores in Japan. The people that were targetted,

as it were, for this attention were the buyers of

the retail stores, including buyers employed by
the second applicant. In every case what was

presented to the stores were the genuine Japanese

good and as well as that there were presented certain

sketches which had originated in Australia after

consideration of the Japanese goods. So that was

the kit, as it were, that was used by this respondent

to generate the goodwill in relation to the name "Miki

House" which· was ultimately upheld by both courts

as the foundation of the necessary protection to

stop the Japanese goods being sold from 20 August 1985

when they first came to Australia.

MASON CJ:  What were the other materials shown to the buyers

of the retail stores apart from Miki Shoko's actual

goods?

MR IRELAND:  That is listed at page 61 in the appeal book

at about point 7. Your Honours appreciate the

reasons for judgment, which appear are those of

Mr Justice Lockhart and the other members of the

Court expressly agreed with those reasons. It is

in His Honour's judgment at about point 7 on page 61:

The promotion was made by reference to clothing

purchased in Japan from Miki Shoko, to

garments made up in Taiwan as samples at

the request of Merv Brown -

and could I come back to that -

from photographs of Miki Shoko garments and

from sketches prepared by Miss Julia Fawcett.

That formulation is adopted by Mr Justice Lockhart

exactly from what was said by the trial judge, and

that appears at page 24.	In the decision of
Mr Justice Lockhart at line 19 these words appear:

The promotion was made by reference to clothing

purchased in Japan from Miki Shoko, by garments

made up in Taiwan as samples at the request

of Merv Brown, from photographs of Miki Shoko

garments and from sketches prepared by Julia Fawcett,

a design artist employed by Update Imports to

work on the "Miki House" project for Merv Brown.

The only difference in the language there is the

substitution by Mr Justice Lockhart of the word "to",

when he refers to garments made up in Taiwan whereas

His Honour Mr Justice Northrop has referred in the

expression "by" garments made up in Taiwan. Now, Your Honours, the garments made up in Taiwan were
samples ordered by Merv Brown, that is the respondent

here,as samples of what they were going to sell,

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ultimately, to the Australian market-place beginning

in 1986, that is, in the following year. The

factual finding that garments made up in Taiwan

as samples at the request from Merv Brown was the
focus of some attention in the appeal and for
reasons that do not appear and are not exnlained

there is no treatment of that point in the Full Court's

judgment. His Honour Mr Justice Lockhart simply

adopts what was said below. Now, not only was

the evidence all one way but it was not even argued

before the Full Court that the Taiwanese samples

were ever used by Merv Brown before the critical day.

Now, that is simply a factual matter but it does

have some importance when I come to seek to emphasise

why it is a case where this Court might grant special

leave, and I point that out, if I may, for convenience

at this stage. The consequence was, in simple terms,

that a company which had bought a trademark which

had been put on the register in 1980 by another scout

from the industry in Australia, and having looked

overseas - - -

MASON CJ:	What do you mean by "scout"?
MR IRELAND:	That is to say someone who had gone overseas,

observed what was being sold there and picked up

ideas therefrom. Mr Brown - and it was recognized

throughout the trial that it was the habit of the

local industry to go overseas and purchase samples

which would be brought back to Australia from time

to time; that concepts, as they were called, that

names and all of these matters were regularly

the subject-matter of overseas investigation and

that very often they were adopted here if the view

were taken that no illegality would be occasioned

by that being done. So they genuinely were scouting

trips, some of these overseas visits by members of

the industry. It is only in that sense that I have

used the word, Your Honour.

MASON CJ: Yes, but I am still not clear. Are you focussing

attention on the fact that the purpose of the trip

was to get ideas from overseas in terms of design,
or are you attempting to suggest that the purpose

of all this is to appropriate somebody else's

trademark, trade name, or goodwill?

MR IRELAND:  May I say, Your Honour, I think probably the

answer, the real answer to the question, is both
things. Certainly it was put at the trial,although

not dealt with in the judgment at the trial, that

this was an unashamed attempt, originally by Mr Harbig,
and latter, in effect, adopted by the respondent to

employ and make use of an. overseas name for connnercial

advantage; because it existed, because it was known

and because the people that they would be selling

goods to here had experience of that name themselves

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overseas in connection with goods. So it is in that

sense that attention was focussed on those overseas

excursions.

WILSON J:  And the context has the added fact, does it, that

throughout these years from 1981 Miki Shoko took

no interest or steps in relation to the Australian

market?

MR IRELAND: That is not quite so. In 1983 they had been,

themselves, approached and refused to sell into

Australia. Before this respondent started its

plans to utilize the name, the order which represented

the goods that found their way into the market-place

in August of 1985 had been given after buyers from

David Jones had been over. That was part of the

argument, that before Merv Brown even entered the

picture there was the necessary connection in the

course of trade with Australia.	If that needed to
be added as a - - -

WILSON J; There was no overt connection, no goods were sold

by Miko Shoko or through an agent in Australia

before 20 August?

MR IRELAND:  There were no goods in the market-place until

20 August 1985 and all that I can point to is the

order of goods which ultimately came through the

distribution chain prior to the activities of

Merv Brown itself, and that took place in October 1984.

May I, Your Honours, try and concentrate on why we would respectfully submit that this is a case

for special leave - - -

MASON CJ:  Yes.

MR IRELAND: - - - having given perhaps, that over long explanation

of what the case is about. The question whether

it is permissible for a local trader to employ a name

successful overseas but not attached to goods in the

retail sense in the Australian market has been

treated as depending upon whether in addition to

goodwill or reputation, that is, knowledge in the

community of the existence of the overseas enterprise,

there is some trade connection in addition. Sometimes

that has been called the carrying on of business in

the jurisdiction in Australia. The law seems to be

that if both of those ingredients can be shown, th.ere can

be a foundation for a claim in passing off even though

the trade activity in Australia, which is coupled

with the goodwill by dint of reputation,is limited.

In 1929 in the TURNER case this Court was, to

some extent, divided upon the question whether both

elements need be present. Your Honours, may I

apologise for not having provided them earlier and

hand up photostats of that case.

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MASON CJ:  Was this case drawn to the attention of the Full

Court of the Federal Court?

MR IRELAND:  It was in the sense that it is picked up in a

second case, B.M. AUTO V BUDGET, which was cited

to that court, and it is those two cases only that

I want to refer this morning.

MASON CJ:  Yes. I just wondered to what extent this question

loomed large in the argument before the Full Court

of the Federal Court because that judgment seems to

depend very largely on findings of fact and there

is very little discussion of the principles of law.

MR IRELAND:  Your Honour is directing me to the TURNER case

in making that remark?

MASON CJ:  Yes. Well, the TURNER case, in a sense, is

indicative of what I have in mind. Not only is

there no discussion of the TURNER case in the
judgment but there does not seem to be the elaborate
discussion of what one would expect in the judgment
if the questions that you are now identifying were
at the forefront of the argument in the Full Court of

the Federal Court.

MR IRELAND:  No, let me be clear about that and hope make

the position completely clear. During the course

of the argument in the Full Court the question

arose and counsel then on the other side cited

the English cases which agitate this question - and

I refer to the ATHLETE'S FOOT case and the CRAZY HORSE

case. So there was some considerable attention given

to those cases. The BUDGET case which reflects
upon the division of this Court, His Honour the then

Chief Justice in the BUDGET case says this is not

the occasion to comment upon whether there is an

apparent inconsistency in approach because in this

case the BUDGET company has the necessary business

in the Northern Territory which makes good the second

limb on the - if I could use it - more conservative
view of what is required.	So that the reference

in the argument to those matters came up in the

context of whether it was, as a matter of law,

requiredthat both these ingredients should co-exist,

if an action was to be maintainable.

The present applicant submitted that on the facts

it was open to say that both elements existed, that

there was the necessary trade relation or trade

connection because of the ordering of goods, the

application in Australia by the applicant itself

in 1983 for a trademark and other matters. So the

case was not fought from our side on the basis that

the facts could not achieve a result where both

elements of these requirements existed. But certainly

there was discussion of this division of opinion,

of judicial opinion, in the course of the argument and

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His Honour Mr Justice Lockhart is that it has	what seems to have happened in the judgment of
simply been resolved by saying, in substance, there
is in point of fact no second ingredient in this
case sufficient to make good the action.

MASON CJ: 

You wanted to hand up TURNER?

MR IRELAND: 

May I hand up a copy of TURNER and also B.M.

Your Honour, the reference is TURNER V GENERAL MOTORS
(AUSTRALIA) PTY LIMITED, 42 CLR 352, and the other

case is B.M. AUTO SALES V BUDGET RENT-A-CAR, 51 ALJR 254.
Those are the only two authorities that I would
be seeking to refer to, Your Honour, and only to
draw attention to what I have already said in greater

detail.  If I may refer to TURNER V GENERAL MOTORS,

the first reference is to the judgment of the Chief Justice

and that is at page 360 at about a quarter of the
way down the page:

I agree with the learned trial Judge in thinking
that the use proved to have been made by

the defendants in connection with the business

carried on by them of the words "General Motor"

or "General Motors" was calculated and, indeed,
intended to lead to the belief that their
business was a part of or connected with the

business carried on by the plaintiff Company

and I think the facts referred to by my brother

Dixon in the reasons which he is about to

publish show that before the appellants began
to use the words in question in the manner

complained of the respondent Company had done sufficient in the direction" of establishing and

carrying on its business to entitle it to
maintain an action for passing off, independently

of any right of the American Corporation.

Could I then refer to page 368 in the judgment of

Mr Justice Dixon, as he then was, towards the foot

of the page:

It was then contended that the plaintiff,

when the acts complained of first commenced,

had not begun business, and had no goodwill and

no reputation for the appellant to appropriate,

and that if his use of the name "General Motors"

was no violation of the plaintiff's rights, when

he assumed it, nothing which occurred afterwards

could make it wrongful.

The plaintiff did not plead or prove that

General Motors Corporation of America had assigned

to it any goodwill which may have attached to that

body's operations in or in relation to Australia.

It would, therefore, not be enough for the plaintiff

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to show that the appellant attempted to purloin
some of that goodwill, and appropriate some of

the reputation which belonged to that corporation.

And then over the page, if Your Honours please:

But the plaintiff, from 24th May 1926 -

and that is the date when the Australian company was

registered as a foreign company, the company was

registered as a foreign company -

But the plaintiff, from 24th May 1926, was carrying

out business here,and its existence, objects
and relation to the American Corporation had been

widely advertised. The public had been told

that, in a reorganization of the Corporation's

business methods, the plaintiff had been

constituted to conduct its Australian operations.

When the appellant pretended that his business was part of, or connected with, "General Motors"

Australian undertaking, he necessarily represented

that his business was part of, or connected with,

that which in fact the plaintiff conducted.

And then in the judgment of Mr Justice Isaacs - and this

is at page 364, the second full paragraph:

It is,I think, and am willing to assume as, the

fact, that the appellants actually began their

business before the respondent opened its place

of business in Marrickville. On this fact

the appellants rest a contention that the

appellants between July and October had done

nothing legally wrong, at least as regards the

respondent Company, and as they did nothing

else afterwards, what they were doing in December

could not be wrong or give a cause of action.

Then His Honour refers to MONTREAL LITHOGRAPHING CO.

And then the next sentence:

In the first place, a man who digs a pit in a

path along which he has reason to believe

another man will shortly travel, does nothing

of which the man can legally complain before

he comes to it.	But if the latter happens to
fall into the hole and suffers injury,	does
the argument of origional freedom from

responsibility avail the man who digs the•pit?

What Ernest Samuel Turner for all the defendants

in the suit did was to dig a commercial pit

in advance. If there ensued injury, or a

probability of injury, there is surely a remedy.

But I do not for a moment concede that before

October 1926 the respondent would have been

helpless. Having the undoubted intention to

commence business, it could, in the circumstances,

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in my opinion, have obtained protection against

the injury that the appellants were preparing

in advance. Intention in such a case is an

important factor.

Now, Your Honours, the references to those judgments

were picked up in B.M. AUTO SALES V BUDGET RENT-A-CAR. judgment of Mr Justice Gibbs, as he then was. It is at page 258 of the report in the left-hand column.

appellants on this aspect of the case was that

it had not been established that the name

had become distinctive of the respondent's

business in the Northern Territory at any

material· time. It was submitted that it

was not enough that the name had become

distinctive of the respondent in (say) New
South Wales or that persons from New South Wales

who had dealt with the respondent there, and who wished to hire a car from the respondent in Darwin, were confused by the similarity

of names. It was said that it was not proved that

the respondent had at any material time acquired

a reputation under its business name in Darwin

and that the fact that it had acquired a

reputation elsewhere was not enough. Particular

reliance was placed on the decision in ALAIN

BERNADIN ET COMPAGNIE V PAVILIAN PROPERTIES.

In that case, and in the later case of AMWAY it was heldthat in order for a plaintiff to succeed

in maintaining in the English courts an action

for passing-off, the plaintiff must have acquired

a business reputation in the United Kingdom

which was entitled to be protected, that this

could only be acquired by some sort of user

in the United Kingdom, and that some knowledge of

the name of the plaintiff, without any business

activites of the plaintiff in the United Kingdom,

would not be sufficient. However, very slight

activities in England have been held to suffice;

for example, it was enough that the plaintiff

took bookings in England (SHERATON CORPORATION)

or carried out orders in England (POIRET V JULES

POIRET). The judgments of Knox C.J. and Dixon J

in TURNER V GENERAL MOTORS (AUSTRALIA) are

consistent with these authorites.

MASON CJ:  Now, stopping there. The instances given

in Mr Justice Gibb's judgment are instances of

carrying on business.

MR IRELAND:	Yes, they are.
MASON CJ:	Now, what instances do we have of Miko Shoko

carrying on business in Australia at the relevant time?

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MR IRELAND:  It depends what one means by that. The trial

judge did not use that phrase and the Full Court

adopted the trial judge's phrase as the second limb

requirement. The phrase used by the trial judge

which appears at page 29 of the book at line 13 was

trade relation in respect to articles:

The essential feature is the existence in

Australia of a trade relation with respect to

articles and that name.

That phrase is, again, adopted by Mr Justice Lockhart

without comment. The passage begins at page 76

towards the foot of the page.

His Honour approached the issues under the

TRADE PRACTICES ACT essentially on the basis

that Miki Shoko had not established any

relevant reputation iniAustralia in the name

"Miki House" with respect to garments; but in my

opinion, if the lower threshold contended

for by counsel for Miki Shoko is adopted
for the purpose of s.52, the answer would be

the same on the findings of fact made

by his Honour; and those findings have not

been shown to be in error.

The trial Judge based certain of his

findings upon the premise that, for Miki

Shoko to succeed in its claim to have

established a reputation in Australia in the

name "Miki House", there must be a business

in this country to which the name is attached.

His Honour cited with approval.- ... ANHEUSER -

and so on. I should draw attention to the next

paragraph which comes back to the question which

Your Honour the Chief Justice asked earlier:

Whether it is necessary, in order to establish

a reputation in Australia of a plaintiff's

product or name for the purposes of passing off

(or, indeed, s.52, to the extent that the

question of reputation is relevant under that

section), to prove that the plaintiff has or

is connected with a business in Australia to

which the reputation may attach is a question

which it is not necessary to decide in this

case. No party challenged before us the

accuracy of the premise -

and that is a reference at the top of the page -

on which the trial Judge based these findings;

and its correctness appears to have been assumed

at the trial. Nor was any argument advanced before

us concerning this question.

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And then it goes on:

In my opinion His Honour correctly

decided that this case turned on the question whether Merv Brown or Miki Shoko had acquired in Australia a reputation in the name

"Miki House" with respect to children's clothing

both for the purposes of passing off and the

TRADE PRACTICES ACT.

MASON CJ: What do you say about the last two sentences in

that complete paragraph on page 23 in the middle

of the page?

No party challenged before us the accuracy

of the premise on which the trial Judge based

these findings; and its correctness appears

to have been assumed at the trial. Nor was

any argument advanced before us concerning

this question.

MR IRELAND:  I had taken that, Your Honour, to be a reference

to what appears at the top of the page.

MASON CJ: If that is so the case before the Ful 1 Court seemed

to proceed on the footing that for your client
to succeed it had to establish that there was a
business income in this country to which the name

attached.

MR IRELAND:  But that is not what the trial judge said, as

I have sought to point out at page 24. When the

critical question was isolated - I am sorry, 29,

those last three lines of the first full paragraph:

The fac~ that some persons in Australia know

of the reputation or goodwill of the name

"Miki House" with respect to Miki Shoko does

not, of itself, prevent Merv Brown from

acquiring its reputation ..... The essential

feature is the existence in Australia of a	trade relation with respect to articles and
that name.

MASON CJ: But the question, though, what is meant by this

expression "trade relation"?

MR IRELAND:  Yes, Your Honour, that is the critical matter

in point of law, with respect.

MASON CJ:  I mean, there is no explanation by the trial judge

of what he meant by this expression. Then we find,

in the Full Court of the Federal Court, a series

of statements made which seem to give the expression

the meaning which perhaps is different from the

meaning that one might naturally attach to it.

And then, at the conclusion of the discussion,

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1n the Full Court of the Federal Court, it is said,

in effect, there is no challenge to the findings

made by the trial judge or the premise on which

they were based, in a context in which the Full

Court of the Federal Court is making it clear what

it itself understood.

MR IRELAND: Interprets by that, yes.

(Continued on page 13)

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MR IRELAND:  Your Honour, the matter was argued - I have

drawn attention to the fact that this whole issue

as to the necessity for these two elements was

agitated before the Full Court. Our argument was,

and the written submissions are here and they can be

handed up if necessary - there was a supplementary book,

I think, which Your Honours do not have.	I do not
know if Your Honours have it.

WILSON J:	Yes, we have it.
MASON CJ:	Yes, but the problem is, in determining whether or not special leave ought to be granted, as to whether the Court ought to grant special leave in a case which
the parties as to what actually was argued in the intermediate Court of Appeal and to what extent, if at all, findings made by the trial judge were accepted, or accepted against a background of mutual understanding. In other words, a case in which the
bears all the hallmarks of a contest and debate between kind generally is not a suitable vehicle for the grant
of special leave.
MR IRELAND:	I appreciate that, Your Honour, but what remains

in all of this is that obviously important and live

question, we would say, and secondly, another matter

which we would seek to fasten together with the

situation to persuade Your Honours, and that is the

perpetuation of this critical factual error.

All of that, in my respectful submission, leads to a

very disturbing view of what has happened in this case

because, as His Honour Mr Justice Lockhart said, as

the trial judge said, against all of the evidence and
despite the persistent, if I may say so, submission

on the point, that not only had they employed the

second applicant's samples to show to these stores,

but also some Taiwanese samples that they had themselves

obtained, when the evidence was simply all one way

that those samples were never used until later, until

after 20 August when the applicant's products were

launched into the Australian market.

So that one gets the picture from what has been

done in the Full Court that there is a wholesale

adoption of the factual finding completely against

the evidence. Now, normally one says, this Court

says, with respect, "That is a problem of fact. We

are not concerned only with a problem of fact", but

when a problem of fact heightens itself to an absurdity,

as it has in this case, then that creates a circumstance,

in my respectful submission, where the justice of the

situation itself arises as an element for special leave.

WILSON J:  Do you say it is undoubtedly wrong, the reference to Taiwanese documents - - -

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MR IRELAND:  Yes.

WILSON J:  Is as vital as that? It does not seem to bear

precisely on the sentences that we have been discussing

about premises and trade relation, and so on.

MR IRELAND:	No, it is - - -
WILSON J:	Miko Shoko, the applicants,certainly had done

nothing to establish a trade relation in Australia

if by that is meant some - I mean, there is a degree of

notoriety and reputation and goodwill, is not there,

and nothing was known of the arrangement between the

applicants prior to 20 August 1985 in Australia,

was it?

MR IRELAND:  No, Your Honour, but that is not what the

requirement of trade relation means, in my respectful

submission. It means some activity, even a private

activity, and a lot of cases deal with this in England

such as the - Your Honours might remember - - -

WILSON J:	The activity that you lay claim to is the laying of the order and receiving of goods.
MR IRELAND:	Yes, and the application for a trademark in this

country in the previous year which assumes an intention

to trade.

WILSON J:  Had the applicant taken any steps to challenge the

registered trademark in favour of - - -

MR IRELAND:  Yes, and that is why the case collapsed, in a sense,

because the trademark issues,which at one stage had been

part of the matrix of this case, were left to the

registrar initially.

WILSON J:	When was that challenge launched?
MR IRELAND:	July 1985.

WILSON J:  After that conference of 26 July, was it,

between the second applicant and the respondent?

MR IRELAND:  Yes, that is so, when they brought the goods and

said, "This is what we are selling."

WILSON J: It seems very late in the day to initiate a challenge

to a mark registered in the name of the respondent.

MR IRELAND:  The respondent, of course, had only had that mark

for three months at that stage, and it was not even

registered at that stage. It was an assignee of the

mark from the Harbig company which was not registered

until August that same year.	So I do not think
the - - -

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WILSON J:  But right from the beginning that your client -

the second applicant became interested in these

products the trade name was in fact registered in

somebody else, Harbi8, or -

MR IRELAND:  Yes, Harltdg, that is so, Your Honour. So that

I think that point arose when Your Honour said to me,

"What is the importance of this factual finding?"

It is important because it really provided the key

element in a conclusion that Merv Brown was doing

anything but showing the Japanese goods to the

customer as something which it would be offering for

sale. We put below - and it is not dealt with in the

judgment - this, that when one has the circumstance

that the goods that are being shown to the Australian

customers are the Japanese goods, there is only one of

two logical results:  either one is saying, "You

know these Japanese goods, you have seen them

overseas, you are buyers in the trade, we are not

connected with these people, of whom you know, but

we are going to do something called Miki House as well."

Now, if that approach were taken, then such goodwill

as is generated by the dealing with these retailers

is qualified by the acceptance of the other product.

Now, the alternative basis is simply to say to

the buyers, "Here are the Miki House goods", say nothing
more, and use that goodwill in a very real sense,

which is tortious really, as a foundation for an

action of one's own.

MASON CJ:  Mr Ireland, I think as a result of a series of

interventions from the bench you were interrupted in

your reading from the B.M. AUTO SALES case, and I
think the remainder of the passage that you wanted to

refer to dealt with the TURNER case and Mr Justice Gibbs

calling attention to the difference of opinion in

the TURNER case, specifically to Mr Justice Isaac's

view.

MR IRELAND:  Yes, Your Honour.

MASON CJ:  And saying in that case it was not necessary to consider the difference of opinion.

MR IRELAND:  As I think I put before. I just wanted to give

Your Honours the reference to the passage, and there

is nothing further in the case I need to refer to

specifically. So, Your Honour, in summary could I

say this. This is a case in which there has been a

serious misunderstanding of the fact~ completely against

the evidence,which has been perpetuated for some reason

that is not even discussed in the judgment. It is a

case where there is a very real question that this Court
has adverted to on previous occasions as to what one

needs to have to be in a position to launch goods from an overseas enterprise into this country where someone

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has coined the name locally and deliberately in

light of the overseas enterprise, what one needs to

stop that activity, whether it is simply goodwill, or

if there is something more, what is the degree in the

point of trade activity, trade relation or business

activity which constitutes that second element to make

good the cause of action.

MASON CJ:  Mr Ireland, could I ask you this. How voluminous

is the evidence in this case?

MR IRELAND:	Three books, Your Honour.
MASON CJ:	Three books?
MR IRELAND:	Three books.
MASON CJ:	How long iid it take at first instance and how long

in the Full Court of the Federal Court?

MR IRELAND:  It took ten days at trial and a day and a half

in the Full Federal Court.

MASON CJ:  Yes, thank you. Another question I would like to ask

you is this, what is the current state of play in the

trademark proceedings, the proceedings before the

Registrar of Trademarks?

MR	IRELAND:	I think it is right to say nothing has happened, pending what is going on here, that is to say there is
a claim for rectification of the register for non-use
which is an historical inquiry about what Harbig did,
and there it lies undetermined.

MASON CJ: 

What impact would the outcome of those proceedings

have in relation to the rights asserted in the present
litigation, either in the event that the application

for revocation failed, or on the basis that it

succeeded?

MR IRELAND: 

is to the other side's mark - - -

None at all because the challenge, Your Honour,

MASON CJ:	Yes.
MR IRELAND:	And if we fail here, then we are still in no

greater position.	If we fail in that challenge,
well, there it is ..	Those are my respectful

submissions, Your Honour.

MASON CJ:	Thank you. Yes, Mr Archibald.
MR ARCHIBALD:	If the Court pleases. In our submission, this is

not a case in which special leave should be granted.

We submit that no question of general importance

arises, there was no question of principle substantively

in issue either at trial or in the Full Court of the

Federal Court and the decision below turned on the

particular facts of the case.

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MASON CJ:  Now, why was there not a question of general

principle involved, ie,the question identified by

Mr Justice Gibbs in the B.M. AUTO SALES case in the

report at page 258?

MR ARCHIBALD:  Because, in our submission, the line of

authority which exemplifies the need for business

connection, which includes, perhaps, cases such as

TURNER and B.M. AUTO, were not in issue below, but

were accepted as, in our submission, the passage at

page 77 of Mr Justice Lockhart's reasons exemplifies.

Now, it may be that the reasons of Mr Justice Northrop,
in using the phrase "trade relation", do not themselves

articulate the precise denotation intended by

His Honour in resepct of that concept, but that

expression followed a reference to that line of cases

from which, in our submission, one can satisfactorily

distil the concept that is involved. Likewise, the

reference in the reasons of Mr Justice Lockhart at

page 77 of the application book demonstrate that there

was no controversy about that requirement before the

Full Court.

MASON CJ:  I do not understand how that could be. After all,

B.M. AUTO SALES was called to the attention of the

Full Court. It is specifically referred to on page 74

of Mr Justice Lockhart's judgment. If anyone read the
case they would immediately perceive there was

a question of fundamental principle involved.

MR ARCHIBALD:	Your Honour, as we understand it, and as the reference to that case at page 74 of the appeal book
shows,  the case seems to have been treated
as relevant, not so much on the need for the business
connection, but as to what factual components might
assist in disclosing the establishment of that
requirement.  Whatever room for controversy there
might be within that area, the matter is treated below
as turning entirely on the facts and whether one looks
for a low threshold or a higher threshold, Mr Justice Northrop held that the facts did not support
the contention and the Full Court reached the same
conclusion and emphasized, as is found at page 74, line 21, that there was ample evidence to support the
conclusions which the trial judge reached.

Now, I do not wish to take the Court to the outlines

of argument which have been provided to the Court in

this case but, in our submission, one does not discern

in referring to those outlines that there really was

any controversy on this point at all. The argument

was whether the facts which were established

objectively led to any reputation in fact being found

in this country. Had there been agitation on that

issue of a substantive kind, in our submission, it would

be quite remarkable that the issue was not addressed

specifically in the reasons of the members of the Full

Court.

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MASON CJ:	Yes.	I mentioned that to Mr Ireland during the

course of his argument.

MR ARCHIBALD:  And time and time again - I exaggerate to say

time and time again - but the reasons of

Mr Justice Lockhart do emphasize that on at least

two occasions that the case before the Court turned
essentially on the facts, nothing else.

His Honour Mr Justice Lockhart made those express references both at page 58, line 1, and page 72, lines 8 to 9. The issues in the case really are

confined to the particular facts of the case, as

demonstrated by the evidence before the trial judge,

and as to whether in those circumstances a reputation

had been established by the respondent by the relevant

date and as to whether by the relevant date there

had been a reputation established by the applicant,

and the learned trial judge found that the respondent

had established a reputation and that the applicants
had not and the Full Court endorsed those conclusions

of fact, stating that there was ample evidence to

support them.

It is our submission that whilst the question

as to the nature of business connection that may be

required is of interest, and no doubt there will be

circumstances in which the precise nature of that
connection will be critical to the case at hand,
that was not the circumstance in this case and the

case has proceeded to now on the basis that that issue

is in no way critical to the outcome of the decision.

In those circumstances it is our submission that there

is no question of principle which falls for

determination here. The draft notice of appeal which

is in the application papers emphasizes, in our

submission, when one looks at the grounds, that the

challenge really is to the findings of fact of the
trial judge, and nothing else, and that being so, in

our submission, the case is entirely inappropriate for

special leave.

As to the circumstance of factual error we would

wish to say this, if the Court please. We accept

that the Taiwanese samples had not been shown to buyers

in the retail stores prior to 20 August 1985. It is
clear on the evidence and clear from the reasons of

Mr Justice Northrop that samples had been ordered and

were obtained and were for use in part of the process

of promotion of the respondent's line of clothing,

but those samples had not been so deployed by

20 August 1985. However, there was a range of activities,

what were called by the trial judge frenzied activities,

on the part of the respondent to promote its line of
clothing and the name that it was using in relation
to them, and that range of activity included
presentation of the respondent's own initiated sketch

colour drawings in conjunction with the samples of

the Japanese clothing. There was activity which

MlT6/6/HS	18
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involved, on the part of the respondent, remodelling

of its show-room and extensive communication at the

show-room premises with customers in relation to its

Miki House concept and the detail of that is referred

to, not only at page 24 of the application book, as

our learned friend referred the Court to, but also in

some greater detail at pages 27 and 28 in the reasons

of Mr Justice Northrop.

So that when one looks at the detail of the

evidence as to the ways in which the respondent sought

to establsih its reputation, the question of the

Taiwanese samples is only one of a considerable number

of circumstances to which, in our submission, the Court

might properly refer in reaching its conclusion of

establishing the requisite reputation; and nowhere

in the reasons of Mr Justice Northrop and, in our

submission, ·nowhere in the reasons of Mr Justice Lockhart

is the use of the Taiwanese samples treated as a matter

of prime significance, merely one of the factors in

the overall steps which were taken. Indeed, in

Mr Justice Northrop's reasons on page 27, at line 27,

it is not at all clear that His Honour was proceeding

upon the footing that the Taiwanese samples had been

shown to the buyers. What His Honour said was:

It -

that is the respondent -

had obtained from Taiwan samples of

the proposed clothing for display and

promotional purposes.

His Honour did not actually say that they had been

dsplayed for promotional purposes. So we would submit

that it is not at all clear that Mr Justice Northrop

was in error on that item of fact and, to the extent

to which Mr Justice Lockhart misapprehended the evidence,

one could not conclude in these circumstances that that

factual error was in any w~y fundamental to His Honour's

conclusions.

So on the issue as to mistake of fact we submit

that that circumstance should not be viewed overall as

having any substantial import for the purposes of the

outcome of this case and should not itself be treated

as a matter which assists the applicant in relation to

the special leave application.	In our submission,
the application should be dismissed.	If the Court plese.

MASON CJ:  Thank you, Mr Archibald. Yes, Mr Ireland.

MR IRELAND:	Can I just refer in one connection to this question of the extent to which it was as it were common ground
that one had to show both these elements, and it is page 112 - I think Your Honours have the book - where
the submission was made:
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If reputation in Australia is of itself

not enough to constitute the necessary

goodwill, then the additional matters -

are here.

MASON CJ: Thank you, Mr Ireland. The Court will announce

its decision in this matter when the Court resumes

after lunch.

T7	AT 12.43 PM THE MATTER WAS ADJOURNED
UNTIL LATER THE SAME DAY
UPON RESUMING AT 2.30 PM:
MASON CJ:  The proposed appeal in this case seeks to raise

the important question identified by Mr Justice Gibbs

in B.M.AUTO SALES PTY LIMITED V BUDGET RENT-A-CAR

SYSTEM, 51 ALJR 254 at page 258, whether a foreign plaintiff who does not carry on a business or business

activities in Australia can protect its trade name

in a passing-off action in this country. It is

by no means clear to us that this question was

directly raised and argued in the Full Court of the

Federal Court. Quite apart from this aspect of the case the applicants, to succeed in their appeal,

need to overturn concurrent findings of fact made
in the courts below.

For these reasons the case is not a suitable vehicle for the grant of special leave and the

application is refused.

MR ARCHIBALD:	We would ask for costs.
MASON CJ: You cannot resist that, can you, Mr Ireland?
MR IRELAND:	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT 2.32 PM THE MATTER WAS ADJOURNED SINE DIE

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