Pacific Hotels Pty Ltd v Asian Pacific International Ltd

Re: PACIFIC HOTELS PTY. LTD.
And: ASIAN FACIFIC INTERNATIONAL LIMITED
No. QLD G93 of 1986
Trade Practices and Injunctions

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Spender J.

CATCHWORDS

Trade Practices - Misleading or deceptive conduct - False claim to affiliation - Applicant operates hotel called "Pacific International" - Applicant seeks to restrain respondent from describing a recently-opened hotel as a member of the "Rodeway Pacific International Group of Hotels".

Injunctions - Interlocutory - Relevant principles in passing off claim - Balance of Convenience - Effect of delay by applicant in commencing proceedings after respondent advised of its intention to continue impugned conduct - Whether respondent entitled to rely on expenditure incurred and goodwill created by it after being put on notice by applicant.

Trade Practices Act 1974

Epitoma Pty. Ltd. v. Australasian Meat Industry Employees' Union and Others (No.2) (1984) 54 ALR 730.

Office Cleaning Services, Ltd. v. Westminster Window and Geneeral Cleaners, Ltd. (1946) 63 RPC 39.

Park Court Hotel Ltd. v. Trans-World Hotels Limited (1972) RPC 27.

Hornsby Building Information Centre v. Sydney Building Information Centre Ltd. (1979) 140 CLR 216.

Hymac Ltd. v. Priestman Bros. Limited (1978) RPC 495.

HEARING

BRISBANE

#DATE 5:9:1986

Applicant: Mr. Byrne Q.C. and Mr. McMurdo, instructed by Hendeerson Lahey Trout Bernays

Respondents: Mr. Morris instructed by Clarke & Kann

ORDER

THE COURT ORDERS:

(i) Interlocutory relief refused.

(ii) Costs reserved.

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

JUDGE1

This is an application for interlocutory relief.

Since late 1982, the applicant has operated an hotel at Cairns called the "Pacific International Hotel". The respondent also carries on business as an hotelier. One of the establishments which it conducts is an hotel in Cairns called the "Rodeway Granada International Hotel". That hotel has been operating for some three weeks and the official opening ceremony was to be at 5 p.m. on Friday, 29 August 1986. In the promotion of the Rodeway Granada International Hotel, the respondent has described and proposes to continue to describe the hotel as a member of the "Rodeway Pacific International Group of Hotels". The applicant claims that this description of the respondent's hotel is a representation that the hotel;

(a) is the applicant's hotel;

(b) is part of a group of which the applicant's "Pacific International Hotel" is a member;

(c) is associated with or connected with the applicant or its hotel; or

(d) has an affiliation with the applicant or its hotel or any group of which the applicant is a member.

This description is alleged to be in contravention of ss.52 and 53(d) of the Trade Practices Act 1974, and to constitute passing off.

The applicant seeks to restrain the respondent from using the description "member of the Rodeway Pacific International Group of Hotels" or any similar expression in connection with its Cairns hotel; from using any expression containing the words "Pacific International" in connection with its hotel in Cairns; or otherwise representing that the respondent or its hotel is in any way associated or connected with the applicant, or the applicant's hotel, or any group of which the applicant is a member.
In its Amended Defence, the respondent admitted that, unless restrained by the Court, it intended to describe its hotel in Cairns as "a member of the Rodeway Pacific International Group of Hotels", but says that it does not intend to do so and undertook not to do so, without distinguishing that hotel from the applicant's hotel by also using the name "Rodeway Granada International Hotel".
The primary issue between the parties is therefore whether the conduct admitted by the respondent is misleading or deceptive contrary to s.52, or represents that it has a sponsorship, approval or affiliation it does not have, contrary to s.53(d) of the Trade Practices Act 1974, or constitutes passing off.
A further issue is whether the applicant inordinately delayed in not commencing its action before 23 July 1986. The Statement of Claim particularises an advertisement in December 1985 in which the respondent had described its hotel as a member of the "Rodeway Pacific International Group of Hotels". On 7 March 1986, the applicant's solicitors made demand upon the respondent for an undertaking in relation to the matters which are the subject of this action. On 27 March 1986, the respondent's solicitors advised that no such undertaking would be given. The Amended Defence alleges that, by reason of the applicant's delay in commencing these proceedings, the respondent has incurred expenditure in advertising and promoting the Rodeway Granada International Hotel as "a member of the Rodeway Pacific International Group of Hotels", and has lost the opportunity which it otherwise would have had to advertise and promote itself in some other manner. The Amended Defence claims that the Court, in the exercise of its discretion, ought not to grant the applicant injunctive relief.
An application seeking an injunction and other relief, and a statement of claim, were filed on 23 July 1986. At the first directions hearing on 12 August 1986, the applicant indicated that it sought interlocutory injunctive relief in terms of the principal injunctive relief in the application. A Notice of Motion seeking that interlocutory relief was filed on 18 August 1986. The application for interlocutory relief was heard on 29 August 1986. I refused the interlocutory relief sought for the reasons which I now publish.
The applicant submitted that the affidavit material filed on its behalf showed that there was, at the least, a serious question to be tried about whether the respondent's description of its hotel at Cairns constituted conduct in contravention of s.52, s.53(d) of the Trade Practices Act 1974, or passing off. It submitted that a consideration of the balance of convenience favoured the granting of interlocutory injunctive relief.
The respondent did not dispute that on the material there were serious questions to be tried. However, it did not concede that its conduct in any way contravened the Trade Practices Act 1974, or constituted passing off.
The respondent asserted that the balance of convenience was not such as to lead to the grant of interlocutory relief. In this regard, it relied in some measure on the delay in bringing the application for interlocutory relief, but it also relied on that delay as an independent basis on which the discretionary relief sought should be denied.
In Epitoma Pty.Ltd. v. Australasian Meat Industry Employees' Union and Others (No.2),(1984) 54 ALR 730, the Full Court of the Federal Court (Sheppard, Morling and Beaumont JJ.) held, at 734:-

"In an application for an interlocutory injunction, the court must inquire first whether there is a serious question to be tried (see Australian Coarse Grain Pool Pty.Ld. v. Barley Marketing Board of Queensland (1982) 46 ALR 398; 57 ALJR 425; Tableland Penuts Pty.Ltd. v. Peanut Marketing Board (1984) 52 ALR 651; 58 ALJR 283, per Brennan J. at 284)."

If there is, then the court considers the balance of convenience.

The extent to which these principles admit of exceptions is a controversial issue. (See C. Gray, "Interlocutory Injunctions since Cyanamid", 40 CLJ 307, especially at 316-325.) One suggested exception is where the facts of a case are clear, and where "the prospect of success is a matter within the competence of the judge who hears the interlocutory application" (Fellowes & Son v. Fisher (1976) 1 QB 122 at 141 per Sir John Pennycuick). This suggested exception has been applied in a number of English cases, including passing off cases (Newsweek Inc. v. B.B.C. (1979) RPC 441; The Athletes Foot Marketing Associates Inc. v. Cobra Sports Ltd. (1980) RPC 343 at 349). Assuming such an exception exists, the question is whether the facts of the present case can be said to be ascertained, so as to permit an inquiry into the merits of the applicant's case. In the present case, extensive affidavit material has been filed, including much uncontradicted evidence. However, certain factual issues remain to be resolved. These include whether the goodwill of the applicant's business attaches to the name "Pacific International" or to the name "the Pacific", whether injury has in fact been or might be sustained to the applicant's goodwill and the prominence given to the words "Pacific International" in the respondent's promotional material.
Certain dicta in English cases suggests that the principles discussed in American Cyanamid v. Ethicon Ltd. (1975) AC 396 have no application to passing off actions, since the decision on the interlocutory application is said to prove decisive in a practical sense. (Fellowes & Son v. Fisher (1976) 1 QB 122 at 134; Newsweek Inc. v. B.B.C. (1979) RPC 441 at 448; B.B.C. v. Talbot Motor Company Ltd. (1981) FSR 228 at 233; Parnass/Pelly Ltd. v. Hodges (1982) FSR 329). While it may be that an exception exists to the American Cyanamid principles where the grant or refusal of an interlocutory injunction will have the practical effect of putting an end to the action, (Cayne v. Global Natural Resources P.L.C. (1984) 1 A11 ER 225), I do not accept that such an exception means that in all passing off cases interlocutory applications fall to be decided by an inquiry into the merits. Because there is nothing to suggest that the decision on this interlocutory application, in a practical sense, will prove decisive in the action, the appropriate principles to be applied are those in Epitoma Pty.Ltd. (supra).
The applicant's hotel was constructed on the site of the former "Hotel Pacific". The opening date appears to have been 8 October 1982. The choice of name of the new hotel is said to be derived from the old Hotel Pacific and because the new hotel was to be an international five-star hotel.
The applicant company is 49% owned by Ansett Transport Industries Ltd. and the remaining 51% is owned by the Kamsler family.
Affidavits filed on behalf of the applicant state that the Pacific International Hotel is a five-star or premier class hotel, located on the waterfront at Cairns, whereas the respondent's hotel is not of the same high standard, charges lower rates, and is not located on the waterfront.
Several affidavits have been filed by the applicant, instancing incidents in which tourists, travel agents, suppliers and taxi drivers have confused the applicant's and respondent's hotels, especially during the last few weeks. I need not refer to these in detail. These instances include cases of misdirected telephone inquiries, persons attending the applicant's hotel when, in fact, they had registered at the respondent's hotel, and persons being booked into the respondent's hotel when they were under the impression that they were being booked into the applicant's hotel with its waterfront location. Other evidence was given of misdirected deliveries and mistakes being made in the ordering of limousine services.
John Francis Martin, the Travel Centre Reservations Supervisor for Ansett Airlines in Cairns, deposes to confusion which has arisen in the past in the Cairns area when two resorts both used the word "Castaway" in their name. He states that in his experience such confusion continues and becomes worse. Price differentials between two such hotels is said to exacerbate the problem with certain customers becoming extremely dissatisfied when they pay for a particular standard of accommodation but receive a lower standard. Because the confusion over these two "Castaway" resorts, Ansett is said to have taken the more expensive resort out of their package deals.
In the light of this experience and the experience of the applicant itself in recent weeks, the applicant's case is that the confusion deposed to is likely to continue or increase to its detriment.
An affidavit of the Marketing Sales Director of the applicant, Paul Henry Kamsler (Junior), exhibited extensive material, including promotional brochures produced by the applicant, articles and advertisements concerning its hotel and other materials distributed by it to promote its reputation as a premier international hotel. Mr. Kamsler (Jnr.) and other deponents assert that the hotel is known throughout Australia and internationally as the "Pacific International Hotel".
An affidavit of Frederick James Mellick, filed by the respondent, states that, whilst the applicant's hotel bears signs which read "Pacific International", in Mr. Mellick's experience the hotel is known and referred to locally as "the Pacific". Further, Mr. Mellick states that some of the signs at the applicant's hotel feature the name "Pacific" with a stylised "P", and the word "International" does not appear.
The respondent's Assistant Manager at the Rodeway Granada International Hotel, Diana Mary Palmer, whose primary function is the administration of the hotel's reception area, states that, having read the affidavits filed by the applicant, she made inquiries of the seven office employees under her control. These inquiries were said to show that no guest or customer of the respondent's hotel had complained of any confusion between it and the applicant's hotel, no guest or customer of the applicant's hotel had complained that a reservation with the respondent's hotel had been mistakenly made, when their intention was to book with the applicant, and that no complaint had been received of any such confusion on the part of any company or firm dealing with the respondent's hotel.
The respondent has been in the business of operating hotels and motels, restaurants, bar and travel services since its incorporation in 1975. On 24 May 1985, the respondent applied for registration of the trademark "Rodeway Pacific International" and is presently awaiting registration of this trademark.
Since about the middle of 1985, the respondent company has registered in all states of Australia except Tasmania the business name "Rodeway Pacific International". On 16 June 1986 it registered the business name "Rodeway Granada International" in Queensland. The business name "Rodeway Motor Inns" had been in the proprietorship of Mr. Douglas McCarron, the Managing Director of the respondent for approximately the last 15 years, and he consented to the registration of the business names "Rodeway Granada International" and "Rodeway Pacific International". The term "Rodeway" is used in the United States of America by an American company, Rodeway Inns International, and there is an informal connection between the group of companies with which Mr. McCarron is associated and the American company.
Mr. McCarron deposed to the identity of some thirteen hotels which are associated with the Rodeway Pacific International Group. The respondent is said to operate four of these and to have marketing agreements with the operators/proprietors of the others, which authorise those operators/proprietors to use the word "Rodeway" in promoting their hotels and to promote their hotels as members of the "Rodeway Pacific International Group of Hotels".
Because the respondent's group of hotels is situated in Australia, New Zealand and Fiji, the directors of the respondent resolved to include the word "Pacific" in the group name. Mr. McCarron states that this decision was not intended or calculated to lead any person into confusing the respondent's business and its proposed hotel at Cairns with the applicant's hotel.
In relation to the respondent's hotel at Cairns, the name "Granada" was said to have been chosen from a similar name of a hotel in Phoenix, Arizona U.S.A.. In accordance with the respondent's usual policy, the word "Rodeway" was placed first in the name of the hotel, "Rodeway Granada International Hotel". The respondent's promotional material, certain items of which were exhibited to Mr. McCarron's affidavit, displays the words "Rodeway Pacific International" in a stylised logo with the word "Rodeway" receiving the greatest prominence, the word "Pacific" slightly less prominence, and the word "International" less prominence still.
An issue for determination at trial is the extent to which any confusion about the respective hotels has been caused by the respondent's description of its hotel as being a member of the "Rodeway Pacific International Group of Hotels", rather than being caused by other factors such as the proximity between the two hotels or any unreasonable conduct on the part of tourists, travel agents and others. To use the phrase of Foster J. in Morning Star Co-operative Society Ltd. v. Express Newspapers Ltd. (1979) FSR 113 at 117, an applicant cannot succeed where "only a moron in a hurry would be misled".
A second question is the extent to which the confusion, if any, attributed to this description, has caused injury to the applicant's goodwill. Confusion, of itself, is not enough to entitle the applicant to relief (see Hornsby Building Information Centre Pty.Ltd. v. Sydney Building Information Centre Ltd. (1978) 140 CLR 216; McWilliam's Wines Pty.Ltd. v. McDonald's System of Australia Pty.Ltd. (1980) 33 ALR 394; Parkdale Custom Built Pty.Ltd. v. Puxu Pty.Ltd. (1982) 149 CLR 191; Taco Company of Australia Inc. v. Taco Bell Pty.Ltd. (1982) 42 ALR 177 at 202).
Some of the instances of confusion referred to in the affidavits appear to have been rectified without injury to the applicant's goodwill. However, further evidence may emerge at trial concerning the likelihood of injury to the reputation and goodwill of the applicant's hotel.
A third question is whether the goodwill of the applicant's hotel resides in the name "Pacific International" or "the Pacific".
Fourthly, a key issue at trial will be whether the applicants can base a Trade Practices Act or passing off claim on the use by the respondent of the words "Pacific International".
On this issue, an important observation appears in the judgment of Lord Simonds in Office Cleaning Services, Ltd. v. Westminster Window and General Cleaners, Ltd. (1946) 63 RPC 39 at 43:-

"So long as descriptive words are used by two traders as part of their respective trade names, it is possible that some members of the public will be confused whatever the differentiating words may be. ... It comes in the end, I think, to no more than this, that where a trader adopts words in common use for his trade name, some risk of confusion is inevitable. But that risk must be run unless the first user is allowed unfairly to monopolise the words. The Court will accept comparatively small differences as sufficient to avert confusion. A greater degree of discrimination may fairly be expected from the public where a trade name consists wholly or in part of words descriptive of the articles to be sold or the services to be rendered."

A case bearing a similarity to the facts of the present case, and in which the observations of Lord Simonds were applied is Park Court Hotel Ltd. v. Trans-World Hotels Limited (1972) RPC 27. That case involved an unsuccessful attempt by the owner of the "Hotel International" to restrain the use of the name "London International Hotel" in respect of a recently constructed, large, modern hotel; c.f. Bach & Jackson Ltd. v. Cowan (1969) RPC 156.
The observations of Lord Simonds in Office Cleaning Services Ltd. (supra) were also cited with approval by Stephen J. in Hornsby Building Information Centre v. Sydney Building Information Centre Ltd. (1979) 140 CLR 216 at pp 229-230.

A further consideration is that the respondent has not adopted the words "Pacific International" as its name, or even as part of its name, but has included those words as part of the name of the group of which it is a member. The prominent appearance of the word "Rodeway" in the name of that group might be thought to lessen the likelihood that tourists, travel agents and others will be misled or deceived by the description complained of. (See Communication Credit Union Ltd. v. National Westminster Finance Australia Ltd. (1983) 51 ALR 375 at 384.)
This is a case in which the material filed by the applicant, in my view, does not establish that it has a prima facie case, in the sense that, if the evidence remains the same up to the date of trial, there is a probability that the applicant will be entitled to relief. However, the evidence is sufficient to raise serious questions to be tried.
Accepting that the applicant has established that there are serious questions to be tried, the adequacy of damages as a remedy needs to be considered. In this case, the alleged damage to be suffered by the applicant in the event of an interlocutory injunction not being granted, is damage to its goodwill. This is notoriously difficult to assess by way of damages. However, should the defendant be enjoined at this stage, but nevertheless succeed at trial and seek to rely upon an undertaking as to damages, then such damages also will be difficult to quantify. In these circumstances, there are real difficulties as to the adequacy of damages in respect of either party.
The losses to be suffered by the applicant if an injunction is not granted at this stage would involve inconvenience to it in attempting to rectify any confusion caused to potential customers, travel agents and others by the respondent's continued promotion of its membership of the "Rodeway Pacific International Group of Hotels". A further area of loss would be damage to its goodwill and reputation.
In the case of the respondent, Mr. McCarron deposes to the likely costs to it should an interlocutory injunction be granted. The respondent, in its hotel at Cairns, stocks all of its rooms with a supply of certain items labelled "Rodeway Pacific International" which are used throughout its chain of hotels. The costs of certain of these items are referred to and the respondent contends that, in the event that an injunction is granted, it would suffer inconvenience, loss and damage in that it would be unable to immediately replace its stocks of these items. Certain other items are said to have been produced exclusively for its hotel at Cairns and these items are costed at $13,500.00.
The respondent is also in the process of producing a large book promoting all of its hotels, which book will contain the words "Rodeway Pacific International" in respect of its hotels throughout the book. The cost of this book is said to be $35,000.00.
Apart from these and other items having a direct cost to the respondent, the respondent contends that, if an injunction is granted pending trial, it will suffer substantial damage to its goodwill and reputation in having thrown away costs incurred in advertising and promoting itself as the "Rodeway Granada International Hotel" and as "a member of the Rodeway Pacific International Group of Hotels".
The cost of promotion functions associated with the official opening of the respondent's Cairns hotel on 29 August 1986, it is said, also would effectively be lost to the respondent if an interlocutory injunction is ordered.
I have made no attempt to quantify the direct costs which will be suffered by the respondent should an injunction be granted. Some of the items referred to in the affidavit of Mr. McCarron involve substantial figures in the order of $100,000 in respect of the promotion of the Rodeway Group as a whole by its group name, "Rodeway Pacific International". The relevance of these costs is that, should an interlocutory injunction be granted, the Cairns hotel will have lost the opportunity to benefit from an association with a group which has recently been heavily promoted.
The applicant contends that a number of the costs referred to in the respondent's material will not be thrown away. For example, certain of the items labelled with the group name may be able to be used at other hotels in the group. I accept that this is so.
However, the main submission of the applicant on the question of the balance of convenience relies upon the following passage from Young Passing Off (Oyez Longman) 1985 p.120:-

"Generally in passing off cases the balance of convenience will lie in favour of the plaintiff, for if the action is properly brought he will ex hypothesi have an established goodwill, while if the interlocutory proceedings are brought swiftly then the defendant will not. Thus harm to the defendant if an injunction is granted may simply be confined to the reprinting of, say, labels or stationery, and therefore be quantifiable."

This statement of principle is in accord with observations of the High Court in Beecham Group Ltd. v. Bristol Laboratories Pty.Ltd. (1968) 118 CLR 618 at 625-6 to the effect that, whereas an injunction against an established trader may cause severe hardship, an injunction against a party about to embark upon a trade is less likely to produce irreparable harm to him, since it merely delays his entry into the market.

This submission is coupled with the argument that, in any event, any expenditure incurred or loss suffered by the respondent after 7 March 1986 (being the date upon which the applicant put the respondent on notice that it intended to protect its right to use the name "Pacific International") is immaterial. Reliance is placed by the applicant upon the decision in Hymac Ltd. v. Priestman Bros. Limited (1978) RPC 495. In that case, the plaintiffs manufactured excavators known as the "580" Series. The defendants began to market an excavator for which the numbers 580 were also used for identification. While the plaintiff's machine was designated 580 because of its bucket capacity, the defendant's designation "580" bore no relation to that feature. No satisfactory reason was advanced to the Court to show why the defendants had selected the designation "580".
On the question of the balance of convenience, Walton J. stated at p.499 that the loss of promotional material and the cost of repainting the machines by the defendant were readily quantifiable should that prove to be necessary. On the question of convenience, his Honour also noted that it was unlikely that the defendant would not have considered whether the plaintiffs would object to their marketing a machine called "the 580". In the circumstances, his Honour concluded that the defendants must have known of the risks involved and could not therefore complain.
In reference to the general principle from Young cited above, the respondents argue that this is not a case of a new enterprise. It referred to Prestige Sunglasses Pty.Ltd. v. Bernhaut Nominees Pty.Ltd. (1985) ATPR 40-619 at 46,994, in which the first respondent had extensively publicised amongst retailers the proposed launching of its products and credit arrangements had been made for their distribution. Jenkinson J. stated that, if the first respondent was enjoined from fulfilling the expectations of the launching of its products, which it had "assiduously excited", its goodwill was likely to be seriously damaged. The calculation of that damage being very difficult, the balance of convenience was said to incline towards the refusal of interlocutory relief. To similar effect is the observation of Lord Diplock in American Cyanamid v. Ethicon Ltd. (1975) AC 396 at p 408:-

"If the defendant is enjoined temporarily from doing something that he has not done before, the only effect of the interlocutory injunction in the event of his succeeding at the trial, is to postpone the date at which he is able to embark upon a course of action which he has not previously found it necessary to undertake; whereas to interrupt him in the conduct of an established enterprise would cause much greater inconvenience to him since he would have to start again to establish it in the event of his succeeding at the trial."

The issue then arises whether, in assessing the balance of convenience, I am entitled to take into account the promotion and other expenditure incurred by the respondent in recent months, and the fact that, by its promotion, it has acquired the goodwill associated with its membership of the Rodeway Pacific International Group. This involves a consideration of the evidence of the applicant's alleged delay in commencing these proceedings.
The Statement of Claim, when referring to the past promotion of the respondent's hotel, particularised an advertisement which appeared in the December, 1985 edition of "The Convention" and a further advertisement which appeared in the January-June, 1986 edition of "Travel Week Hotel/Motel Index". Paul Kamsler (Jnr.) stated that he became aware of the construction of the respondent's hotel, which would be in competition with the Pacific International Hotel, and became aware that it would be using the words "Pacific International" when describing its hotel. He saw the two advertisements which are referred to in the Statement of Claim, and the material shows that, some time before 10 February, 1986, Messrs. Henderson, Lahey, Trout Bernays were consulted and a file opened in respect of this matter. On 7 March 1986, Messrs. Henderson & Lahey, Trout Bernays wrote to "The Manager, Rodeway Pacific International, 220 Pacific Highway, Crows Nest N.S.W.", in these terms:-

"Re: "Pacific International" - Wrongful Use

We act as Solicitors on behalf of Ansett Transport Industries and their subsidiary company, Pacific Hotels Pty.Ltd. who operate the Pacific International Hotel at Cairns, Queensland.

It has come to our client's attention that you proposed this year to open the "Rodeway Granada International" Hotel in Cairns and that you are advertising this hotel as being a member of the Rodeway Pacific International group of hotels.

Our client is concerned that your wrongful use of the words "Pacific International" in advertising your hotel is likely to mislead the public into believing that your company is in some way associated with and (sic) our clients and their operations. Our client is also concerned that you are making an attempt to take advantage of the goodwill and high reputation that surrounds our clients' operations.

Our client has instructed us to demand that you cease all further use by way of promotions, advertising, identification or any other means of the words "Pacific International".

We shall require your written undertaking within fourteen (14) days."

On 27 March, Messrs. Dunhill, Morgan, Walker Gibbs, the Sydney solicitors of the respondent, replied in the following terms:-

"Rodeway Pacific International Group

We act for the abovenamed who have handed us your letter of 7 March, 1986.

With the greatest respect, it is our client's view that the use of the words "Pacific International" either alone or in the context in which they are used by our client relating to the Rodeway Pacific International Group, is not wrongful nor likely to mislead the public. We are also instructed to advise that there is no attempt by our client to take advantage of the goodwill and high reputation which you state surrounds your client's operations.

Accordingly, no written undertaking as required in your letter will be forthcoming."

No proceedings were initiated by the applicant until the present application. The only material proffered by the applicant to explain this delay comes from Mr. Kamsler (Jnr.) He says in his affidavit:-

"Whilst I was informed by Ansett's Solicitors and verily believe that the Respondent would not give such an undertaking, no further instances of their use of the words "Pacific International" came to my notice. Further, construction at the site of the Hotel continued to proceed without use of the words "Pacific International" and no signs were erected bearing the words. Further, I saw no further advertisements or promotions bearing the words "Pacific International"."

He then deposes to seeing an advertisement in the last half of June 1986, including an advertisement seeking applicants for employment with "Rodeway Pacific International" at the "Rodeway Granada", and also an article in a local Cairns newspaper on 25 June 1986 in which reference was made to the Managing Director of "Rodeway Pacific International". Notwithstanding these events in the latter part of June 1986, it was not until 23 July that proceedings were instituted. As to what appears in his affidavit as information by Ansett's solicitors, application for leave to cross-examine him confined solely to the question of delay was made to me and granted and, in the course of cross-examination in respect of that topic, he said that his information that the respondent would not give the undertaking sought came, not from Ansett's solicitors, but from other directors of the applicant.

Mr. Michael Austin Klugg, a solicitor for the applicant having the carriage of the action, was also sought to be cross-examined in respect of the delay. He gave evidence that his file ws opened on 10 February 1986, but in respect of the contents of that file, claimed legal professional privilege.
As to what was alleged to be an hiatus, in the use of the words "Pacific International" in respect of the promotion of the respondent's hotel during the period after 27 March 1986, the applicant's Senior Duty Manager and its Front Office Manager, swore affidavits deposing to confusion and mistaken deliveries by contractors in respect of building materials during the construction period of the respondent's hotel. These affidavits were relied on to indicate that the use of the words "Pacific International" by the respondent caused confusion. While there may have been an absence of advertisements using those words, those words appear to have been used by the respondent during the construction of its hotel in Cairns.
The respondent argues that it is entitled to rely upon the expenditure which it has incurred since the receipt of the solicitor's letter of 7 March 1986, because it responded to that letter on 27 March 1986 stating that it was not prepared to offer any such undertaking. In these circumstances, the respondent contends that it was reasonable for it to assume that the applicant was not pursuing its rights.
Apart from the loss and damage to the respondent referred to earlier, Mr. McCarron, in his affidavit, states that the delay by the applicant since 27 March 1986 meant that the respondent's directors lost the opportunity to consider some variation of the name "Rodeway Pacific International".
I am unable to accept the applicant's submission that expenditure incurred by the respondent since 27 March 1986 is immaterial. This case is clearly distinguishable from that of Hymac Ltd. v. Priestman Bros. Ltd. (1978) RPC 495 or cases in which the receipt of a solicitor's letter threatening action places the defendant in a position of knowing that any further expenditure incurred may be lost. In this case, the respondent promptly responded to the letter of 7 March 1986 and stated that no written undertaking as requested would be forthcoming. The delay by the applicant between that date and the commencement of this action on 23 July 1986 has not been satisfactorily explained.
In these circumstances, I take into account the considerable expenditure undertaken by the respondent in promoting its Cairns hotel as part of the Rodeway Pacific International Group. Should an injunction issue, the respondent would lose much of the benefit of any such promotion and be put to the expense of promoting itself in a different form.
Nevertheless, I do not accept that this case is the same as one in which an interlocutory injunction is sought to prevent a business from commencing under a particular name. This case is to be contrasted with one in which a party is restrained from launching a product, or marketing an established product under a particular name, or from selling products in respect of which it has established a goodwill (c.f. Prestige Sunglasses Pty.Ltd. v. Bernhaut Nominees Pty.Ltd. (1985) ATPR 40-619 at p 46,994; John Walker & Sons Ltd. v. Rothmans International Ltd. (1978) 4 FSR 357 at p 362; Mutual Life and Citizens' Assurance Co.Ltd. v. Balfours Pty.Ltd. (1979) 23 SASR 82 at p 90). The interlocutory injunction sought in this case does not prevent the respondent's hotel in Cairns from operating or from being described as the "Rodeway Granada International Hotel", it merely seeks to prevent that hotel from being described as a member of the "Rodeway Pacific International Group of Hotels". Accordingly, this is not a case in which an established, or a soon to be established, hotel is effectively prevented from operating under the name which it intended to use. (c.f. Park Court Hotel Ltd. v. Trans-World Hotels Ltd. (1972) RPC 27).
In assessing where the balance of convenience lies, I must weigh against the possible injury to the goodwill of the applicant's hotel, which is not readily quantifiable, the costs incurred by the respondent which might now be thrown away, and possible damage to its goodwill in not being permitted to promote itself as a member of the "Rodeway Pacific International Group of Hotels", an association which it has been attempting to promote.
In my opinion, the balance of convenience favours refusing the injunction.
The delay of the applicants in commencing this action is, of course, a separate ground upon which injunctive relief may be refused. This delay, which has not been satisfactorily explained, in my opinion, is such as to make the grant of interlocutory relief unjustified. There is no doubt that after 27 March 1986 the applicant knew the respondent's attitude to the impugned conduct and its intention to describe its hotel as a member of the "Rodeway Pacific International Group of Hotels".
In Snell's Principles of Equity, 28th Edition (1982), the learned authors state at 644:-

"... a lesser degree of acquiescence or laches suffices to debar a plaintiff from interlocutory relief than from obtaining a perpetual injunction; the refusal of an interlocutory injunction is merely a temporary rebuff, whereas the refusal of a perpetual injunction at the trial of the action 'amounts to a decision that a right which has once existed is absolutely and for ever lost.' Johnson v. Wyatt (1863) 2 De G.J. & S. 18 at 25, per Turner L.J.. Moreover, interlocutory relief is granted only in matters of urgency, so that a plaintiff who delays thereby demonstrates the absence of any urgency requiring prompt relief."

(See also Spry, The Principles of Equitable Remedies, 3rd Edition (1984), p.470 et seq.)

In my opinion, to grant an interlocutory application in the circumstances of this case would be unjust.
I will hear the parties on costs.

[1986] FCA 425

05 SEPTEMBER 1986