Miller v Britt Allcroft (Thomas)

[2001] HCATrans 287

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A44 of 2000

B e t w e e n -

ROBYN LEANNE MILLER

Applicant

and

BRITT ALLCROFT (THOMAS) LLC

First Respondent

BRITT ALLCROFT (THOMAS) LTD

Second Respondent

Application for special leave to appeal

GLEESON CJ
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT ADELAIDE ON THURSDAY, 16 AUGUST 2001 AT 2.14 PM

Copyright in the High Court of Australia

MR N.W. MORCOMBE, QC:   May it please your Honours, I appear with my learned friend, MR B.F. BEAZLEY, for the applicant. (instructed by Andersons Solicitors)

MR R.J. WHITINGTON, QC:   May it please the Court, I appear for the respondents. (instructed by Mallesons Stephen Jaques)

GLEESON CJ:   Yes, Mr Morcombe.

MR MORCOMBE:   Your Honours, the decision of the Full Court of the Federal Court which we seek to challenge, in my submission, has undoubtedly extended the operation of section 52 of the Trade Practices Act and the Fair Trading Act equivalents in other States.  In my submission, it is the first case in which there has been a finding of misleading and deceptive conduct where the two combatants in the court are not competitors.  The facts in this case are set out in application book pages 35 and 36, but in summary they are these:  that the applicant set up a shop in Glenelg in which she stocked “Thomas the Tank Engine & Friends” merchandise.

McHUGH J:   What about Taco Bell?  They were not competitors there, were they?

MR MORCOMBE:   Well, they would have been, your Honour, if they had eventually operated side by side.

McHUGH J:   Well, except Taco Bell used to issue franchises, did they not, so it is very much the same situation as here, is it not?

MR MORCOMBE:   Well I seek to distinguish it, your Honour, because in fact we were selling the product manufactured by the respondent in this application.

GLEESON CJ:   Your submission is interesting; it means we have come 180 degrees since when the Trade Practices Act was enacted.  There used to be an argument around that it was not available to competitors; it was only available to consumers to complain of a breach of section 52.

MR MORCOMBE:   Well, clearly, if the decision of the Full Court stands then it encompasses both, competitors and non-competitors and that may be so.  But what I am putting to your Honours is that in a situation where a secondary meaning has been found in the representation of the applicant in this case, the Court should look closely at whatever evidence is there to establish that secondary meaning.

GLEESON CJ:   That sounds like a question of fact.

MR MORCOMBE:    In my submission, it is not.  There is no contest in this case on the facts.

GLEESON CJ:   On the primary facts.  But the question at issue was whether or not your client was engaging in misleading or deceptive conduct.

MR MORCOMBE:   Yes.

GLEESON CJ:   That sounds like a question of fact.

MR MORCOMBE:   Well, with respect, I suggest not.  The facts are not in dispute at all.  It is a question of the consequences that arise from those facts and the meaning given to those facts.  The primary judge, and indeed the Full Court, found that the actions of the applicant, that is, in trading under the name “The Thomas Shop” and in the “get up” of the shop, amounted to a representation that she was selling licensed “Thomas the Tank Engine & Friends” merchandise and, in fact, she was.  That was the primary meaning given to her representation to the public at large.  Can I say that section 52 then contained within a section of consumer protection legislation that primary meaning was informative.

GLEESON CJ:   On page 39 at line 17 there is a statement of what the Full Court regarded as the question in the case.  Would you disagree with that?

MR MORCOMBE:   As to both dot points, your Honour?

GLEESON CJ:   Line 17, page 39 of the application book:

In our opinion, the question for his Honour was essentially one of fact:  was the appellant’s conduct, considered in the context of all the surrounding circumstances, likely to mislead or deceive by representing to consumers that her business was somehow connected with the respondents or carried on with their licence or approval?

Was that the question?

MR MORCOMBE:   I do disagree with that, your Honour.  I say it was not essentially one of fact.  The facts, as in what happened in the store and what representations were made, in my submission, were the questions of fact; they were determined by the judge and they have never been challenged, not in the Full Court and not here.  What we are challenging is the interpretation put on those facts and, in my submission, that is at least a question of mixed fact and law.

GLEESON CJ:   What is the question of law?

MR MORCOMBE:   The question of law, your Honour, is the extent of operation of section 52 of the Trade Practices Act, and could I perhaps jump ahead and tell your Honours the position we would like to be in after being granted leave and after hearing the case and I would suggest that the ratio we are seeking is this:  in cases relying on a secondary meaning evidence will normally be required to show that the alleged secondary meaning exists and contravenes section 52.  Now, to that might be added, particularly where the primary meaning is informative/beneficial for the consumer.  In this case there was no evidence before his Honour as to anyone having been deceived.  I am aware ‑ ‑ ‑

McHUGH J:   But there does not have to be.

MR MORCOMBE:   No, I agree with that, your Honour, I agree with that.

McHUGH J:   If this had been a jury trial, this issue could have been left to the jury as a question of fact to determine.  True it is, they may have had to draw an inference, but it was a factual inference.

MR MORCOMBE:   And they would have had to have directions on law and applied that law.

McHUGH J:   And what would be the direction on law that they would get?

MR MORCOMBE:   The direction would be to find whether there was a primary meaning to the conduct and also to find whether there was a secondary meaning to the conduct and ‑ ‑ ‑

McHUGH J:   Well, that seems to me legal analysis gone mad.  The question simply was, it could be to a jury, whether or not this was a false or misleading statement in trade or commerce?  The question is whether it was likely to lead an ordinary person going past the shop and seeing this sign.  You have got “The Thomas Shop” that is painted in blue, it has got the “O” highlighted, has it not, and the only merchandise in the shop are Thomas the Tank Engine merchandise; it is just a question of fact.

MR MORCOMBE:   Your Honour, the ordinary person walking past the shop would see through the window of the shop floor to ceiling Thomas the Tank Engine packaging, logos and merchandise all licensed.

GLEESON CJ:   And was there any connection between the logo and the sign on the shop?  Just remind me about that.

MR MORCOMBE:   Yes, it was reflective of the logo, your Honour.

GLEESON CJ:   Well now let us suppose that a shop sold only Adidas footwear or sportswear.  It was called “The Adidas Shop” and it had the tick and the Adidas logo on the front.  Would it not be open to a court to conclude that that carried a representation that the business was in some way connected with Adidas, the organisation?

MR MORCOMBE:   Well the tick would confuse it somewhat, because that would normally be applied ‑ ‑ ‑

McHUGH J:   What, because that is Nike.

GLEESON CJ:   Suppose it was the Nike shop?

MR MORCOMBE:   Your Honour, so long as they are selling genuine Nike product, it is informative to the consumer to know that there is a shop which sells Nike merchandise.  If one goes back to your Honour’s situation of a person walking past the street, presumably with child or grandchild in hand, if one looks at the category of persons to whom section 52 is directed - and that is the first step in this exercise, the previous cases have told us - the child or grandchild is not going to say, “Gee Dad, I wonder if this comes from Britt Allcroft (Thomas) LLC ‑ ‑ ‑”

McHUGH J:   They do not have to, but if I walked past a shop and it has got the Christian Dior Shop, what do I think?  One view, I would probably conclude, that it had something to do with Christian Dior.  Now my brother Kirby or my brother Gummow, who devote all their lives to the law, they may not draw the same inference.

MR MORCOMBE:   And those of us with wives would keep her away from there, but that is the primary meaning; it is something associated with, and that is reflected, in my submission, in the primary judge in the Full Court’s decision, where they have used loose language like that.  That is, there is some connection between this shop and that entity which holds intellectual property.

GLEESON CJ:   I can understand a factual argument you would have, Mr Morcombe, to the following effect, and may be it is an argument you ran in the courts below, that is to say, if you have got a shop that is selling “Thomas” products, who would care whether it was associated with the “Thomas” organisation or not?  But that sounds to me like a factual argument.

McHUGH J:   And, I mean, when you criticise what the Full Court said, then you are impliedly criticising what we said, because in the Campomar Sociedad Limitada v Nike International Ltd Case we said that it was sufficient that members of the public might think that the product was in some way promoted by Nike.  So we were guilty of using loose language on that argument when we used the phrase “in some way”.

MR MORCOMBE:   Well, your Honour, if one uses, can I borrow your term, “loose language”, then it is a question of whether there is, in fact, a breach following from that, because there is, in fact, some connection between this applicant and these respondents, and the connection is, she sells their products.  Now, how many consumers are going to go further than that; how many could care less whether she is licensed to do so ‑ ‑ ‑

GLEESON CJ:   Well, I can think of a reason why it might matter to somebody.  If there were questions of defective quality of products or questions of repair, or something like that, you might get better service from a shop that was licensed by the manufacturer.  That is not a fanciful possibility, is it?

MR MORCOMBE:   It is not fanciful, your Honour, but if you are buying licensed product you are probably going to get that anyway.  I mean, normally the manufacturer is obliged to stand by the product.  It is not just a question of only looking after those consumers who buy from an outlet owned or controlled by the owner.

GLEESON CJ:   When you were formulating the proposition, the position you would ultimately hope to be in if you won this case, as I recollect it you said, you wanted to be in the position where the Court would hold that where you rely on a secondary meaning like this, you ordinarily require evidence to show that somebody took the meaning.

MR MORCOMBE:   Yes.

GLEESON CJ:   Why?

MR MORCOMBE:   Because, your Honour, there are gradations of representations.  If I offer to the public a black shoe; I say, “I am selling black shoes”, the representation is very, very clear, and if I send someone in the mail a pair of pink shoes, then I have misrepresented, and clearly misrepresented, unquestionably misrepresented the position, guilty of section 52 or 56.  But where one has something so subtle as an alleged representation as to a loose association between the retailer and the ultimate owner of the brand, then, in my submission, one needs to be very careful about reaching those conclusions.

GLEESON CJ:   Well let us move a little up-market from sportswear.  Suppose you have a Louis Vuitton shop.  It specialises in selling Louis Vuitton products and has a logo on the window which is the Louis Vuitton logo, whatever that might be.  Is that not capable of carrying the representation that the people who are running the shop have some kind of business association with Louis Vuitton, apart from simply being retailers of their products?

MR MORCOMBE:   Well I would suggest not; I would say that certainly the primary meaning is there, “We do have some association with them in that we sell their product”, but, in my submission, it would not also carry, necessarily, the representation that that shop was associated with in the sense of being licensed to operate the business.

McHUGH J:   This shows how minds can differ.  The very example the Chief Justice has given, I walked past that shop several times a month in Sydney and until this moment I have always thought they had a connection with Louis Vuitton.  Now maybe I have been deceived.

GLEESON CJ:   No.  I do not know they do have a connection with Louis Vuitton.

MR MORCOMBE:   Your Honour, I cannot put it any higher than I have.

GLEESON CJ:   Tell me, Mr Morcombe, looking back at page 39, lines 19 and 20, did anybody argue at any stage in this case that a representation of the kind there described was too vague in its meaning to constitute misleading or deceptive conduct?

MR MORCOMBE:   I did not do the trial, but I am instructed that was put to his Honour Justice Mansfield and also in the Full Court, your Honour.

GLEESON CJ:   Where does the Full Court deal with it?

MR MORCOMBE:   I do not think they dealt with the question of vagueness, your Honour; is my memory.  It is only eight pages to dismiss the appeals, it was not very exhaustive, but I think they did not deal with that issue.  If the Court pleases.

GLEESON CJ:   We do not need to hear you, Mr Whitington. 

In the course of the judgment of the Full Court in this case the court said this:

In our opinion, the question for his Honour was essentially one of fact:  was the appellant’s conduct, considered in the context of all the surrounding circumstances, likely to mislead or deceive by representing to consumers that her business was somehow connected with the respondents or carried on with their licence or approval?

That appears to be an accurate, although general, formulation of the question that arose and arises for decision in the case.  It is, as their Honours said, essentially a question of fact, and the case does not give rise to an issue suitable for a grant of special leave to appeal.  The application is refused with costs.

AT 2.30 PM THE MATTER WAS CONCLUDED