T.J.M. Products Pty Ltd v A & P Tyres Pty Ltd

Re: T.J.M. PRODUCTS PTY. LTD. (trading as A.R.B. VEHICLE ACCESSORIES); A.R.B.
ENGINEERING PTY. LTD. and BRIGALOW PARK PTY. LTD. (trading as A.R.B. PRODUCTS)
(Cross Claimants)
And: A. & P. TYRES PTY. LTD. (trading as STEEL TYRE CO.); BRIGALOW PARK PTY.
LTD. (trading as A.R.B. EQUIPMENT S.A.); KENNETH JAMES PARKES; WILHELMINA
MARIA ELIZABETH PARKES; BRUCE SAMPSON; TERENCE JOHN GAVIN; MICHAEL GLADWICH
and T.J.M. PRODUCTS PTY. LTD. (trading as A.R.B. VEHICLE ACCESSORIES) (Cross
Respondent)
No. SA G24 of 1986
Trade Practices - Jurisdiction

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Fisher J.

CATCHWORDS

Trade Practices - misleading or deceptive conduct - passing off - competing retailers using same of similar logo, "get-up" and signs on premises - whether conduct sufficient to constitute misrepresentation - name descriptive of product - permanent signs distinguished from day to day advertising - local reputation of Australian-wide manufacturer and retailer considered. Need v. J.H. Cole Pty. Ltd. considered.

Jurisdiction - claim of breach of confidential information by former employees - whether "within the scope of one controversy and thus within the ambit of a matter" - not arising from "common substratum of facts". Fencott v. Muller applied.

HEARING

ADELAIDE

#DATE 27:3:1987

Counsel for Applicant & Cross Mr. J.R. Mansfield Q.C. Respondent with Mr. D. Greenwell

Solicitors for Applicant & Cross Norman Waterhouse & Mutton Respondent

Counsel for Respondents & Cross Mr. R. Robson with Claimants Mr. N. Luccarelli

Solicitors for Respondents & Cross MacMillan, Segal & Lenton Claimants By its agents Finlaysons.

ORDER

The application and cross-claim herein be dismissed.

There be no order as to costs.

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

JUDGE1

In these proceedings corporate rivals are once again using the consumer protection provisions of the Trade Practices Act 1976 ("the Act") in the furtherance of their rival businesses in the Adelaide market. The applicant T.J.M. Products Pty. Ltd. ("T.J.M.") commenced the proceedings on 2 June 1986 and its application for interlocutory relief was heard on 18 June 1986. At the end of that day I made no order for interlocutory relief except to direct the keeping of accounts by the parties, all of which requested an early hearing by the Court of the matters in issue between them. These matters included by that date proceedings which on 17 June 1986 had been instituted by the respondent Brigalow Park Pty. Ltd. ("Brigalow Park") and another company A.R.B. Engineering Pty. Ltd. ("A.R.B. Engineering") which latter company was not a party to T.J.M's application. T.J.M. was the respondent to this action. Ultimately at the request and with the consent of all parties the claim in the latter proceedings was consolidated with the earlier action. This action then proceeded on the basis of a claim by T.J.M. against the seven named respondents and a cross claim by A.R.B. Engineering and Brigalow Park against T.J.M. The hearing of the consolidated proceedings commenced in Brisbane on 21 July 1986, and concluded in Adelaide on 17 December 1986 after 21 days of hearing.

The relief sought by the various parties, as specified prior to commencement of addresses, can be shortly stated as follows: T.J.M. which allegedly was carrying on business under the name A.R.B. Vehicles Accessories sought orders against the respondents, and Brigalow Park in particular, restraining them from conducting a business in South Australia selling products under the name of A.R.B. Products or A.R.B. or using those letters other than in displaying a logo not greater than a specified size. It also sought a like order restraining them from orally representing that their business was known as A.R.B. Vehicle Accessories or A.R.B. generally. It did not seek any relief against A.R.B. Engineering. In the cross claim orders were sought restraining T.J.M. from carrying on business or selling its products by reference to the letters A.R.B. or the A.R.B. logo. An order was also sought restraining T.J.M. from selling A.R.B. products as T.J.M. products. Each claim was based on alleged contraventions of the Act and passing off.
These competing claims evidence the fact that the contest centred on the use by the parties of the letters A.R.B. and the A.R.B. logo. The historical background to the contest can, at least in the first instance, be briefly and generally stated.
The rivalry between T.J.M. on the one hand and A.R.B. Engineering and Brigalow Park on the other arises out of the fact that each is involved in the business of selling four wheel drive vehicle accessories. All compete generally in the same market throughout much of this country. Both T.J.M. and A.R.B. Engineering manufacture their own brand of certain accessories and A.R.B. Engineering supplies to distributors many additional products under licence from various manufacturers.
Prior to 1983 A.R.B. Engineering, which in effect commenced business in Melbourne as a partnership under the name A.R.B. Vehicle Accessories in 1975, was both itself and through various retail outlets selling vehicle accessories in South Australia under the latter business name. In January 1983 it arranged with a South Australian company M1 Pty. Ltd. ("M1") to distribute its products in this State. On 12 January 1983 M1 registered under the Business Names Act, 1963 (S.A.) the business name "A.R.B. Vehicle Accessories". The initial application for registration of the business name described the business being conducted in this State as distributors of off-road vehicle equipment. However T.J.M. when renewing the same registration in January 1986 described its business as motor vehicle accessory manufacture. This description was inaccurate as it did not manufacture in this State. M1 did not however extensively carry on business under that name until about June 1984. Prior to that time it identified itself as "M1 Off Road, a division of M1 Pty. Ltd. - Distributors of A.R.B. vehicle accessories" although until the end of 1984 it was invoicing its customers merely under the name "M1 Off Road". It appears that it only traded exclusively under the name "A.R.B. Vehicle Accessories" during the first 8 months of 1985. A.R.B. Engineering was not consulted and did not consent to the original registration, although it took no steps to prevent M1 conducting its operations under that name. M1 carried on business in January 1983 from 27 Sheldon Street, Norwood but in August 1984 it moved to 144 Magill Road, Norwood. It is on these premises that T.J.M. currently conducts its business in South Australia. It was not disputed that M.1. extensively promoted the name A.R.B. both by advertising and sales promotions and the layout and presentation of its business both at Sheldon Street and 144 Magill Road. In the financial year 1984/1985 M1 purchased 65% of the products which it sold from A.R.B. Engineering. In the previous year it had purchased some 90% of these products from that company.
In July 1985 A.R.B. Engineering terminated its distributorship arrangements in South Australia with M.1. and in August registered the business name "A.R.B. Products" in this State. By agreement dated 3 September 1985 M.1. sold to T.J.M. its business "conducted at 144 Magill Road. . . known as 'A.R.B. Vehicle Accessories' together with the goodwill of the business. . . and the business names referred to in Item C of the Schedule". These business names were stated as -

"A.R.B. Vehicle Accessories

T.J.M. Products

M1 Off Road

Ultimate Suspension

Alternative Suspension."

T.J.M. paid $73,000 for the business together with the sum of approximately $53,000 for the stock on hand. Approximately 80% of this stock had been acquired by M1 from A.R.B. Engineering.

At the time of the sale the "get-up" of the premises at 144 Magill Road was predominantly in red and white; the building being primarily white and striped horizontally in red. The A.R.B. logo being the letters "A.R.B." in black on a white background surrounded by a red rectangular ring, featured prominently on the building painted onto both the Magill Road and the side aspects thereof. Adjacent to the front door of the premises was the sign "A.R.B. Vehicle Accessories, Adelaide, Phone 426741, 4WD specialists". Also prominent was a large elevated neon sign at the very front of the premises painted in white and emblazoned with the A.R.B. logo and the words "Engineered Vehicle Equipment".
Upon taking possession of the premises T.J.M. repainted the exterior of the building by replacing the red stripes with broader yellow stripes, covering up the two A.R.B. logos with T.J.M. logos, and replacing the neon sign with one bearing the T.J.M. logo and the words "4 Wheel Drive & Commercial Vehicle Accessories". Also for a short time, approximately one day, the sign adjacent to the front door was painted over. It was restored however at the direction of the chief executive officer of T.J.M. primarily in order to comply with the Business Names Act. Generally the red, black and white colour scheme of the M1 business was replaced by a yellow, black and white colour scheme in line with the established colours of the T.J.M. logo.
The telephone on the premises was answered "T.J.M." or "T.J.M. Products", without reference to A.R.B. in any form, and the stationery and invoicing of the business was changed to feature only T.J.M. Instructions were given on or before 31 November 1985 to Telecom Directories department to delete the telephone entry for A.R.B. Vehicle Accessories. It can fairly be said that T.J.M. set about removing all references to A.R.B. in its business activities, seeking to substitute in the mind of the public its own name T.J.M. Furthermore T.J.M's branch manager at 144 Magill Road was instructed to sell off the A.R.B. stock of accessories which it had acquired on purchase of the business.
In March 1986 Mr. Roger Brown, one of the directors of A.R.B. Engineering, discussed with the respondent Keith James Parkes ("Mr. Parkes") a director of Brigalow Park the appointment of the latter company as its distributor in South Australia. Brigalow Park and its associate company the respondent A. & P. Tyres Pty. Ltd. ("A. & P. Tyres") had a number of business outlets, but its outlet at 114 Magill Road is relevant to these proceedings. During March 1986 the A.R.B. logo was painted onto the premises at 114 Magill Road and a neon sign installed. An A.R.B. banner was erected in May 1986 and a distribution agreement was signed on 7 May with A.R.B. Engineering.
In the ensuing months Brigalow Park placed several advertisements in the Advertiser Newspaper stating "A.R.B. are back in town" particularly in the motoring section on 26 May 1986 and in the classified advertisements on 21 June 1986. Certainly advertisements such as these would be likely to aggravate confusion as would the representation alleged to have been made by the respondent Gavin to Messrs Taylor and Harris that "A.R.B. has moved down the road or was starting business again at 114". I should add that I am not prepared to find that Gavin made representations in these terms. The evidence on this topic was equivocal.
T.J.M. reacted very promptly to these happenings. On 24 May 1986, seven months after the purchase of the business, a director, Mr. Taylor, gave instructions to the Adelaide manager by the following memorandum:

" 24 May, 1986.

MEMO: BOB HILTON, ADELAIDE

Due to the fact a decision has been made on a commercial basis to trade generally as TJM/ARB in South Australia, in order to maximize our sales penetration in that state, it will be necessary for you to make various minor changes effective Tuesday 27th May, 1986, these being:

(a) Re-display the 'ARB' signs under the metal 'TJM' signs on the building.

(b) Answer the phone 'TJM/ARB'.

(c) Make sure all invoices issued are stamped with the 'ARB' stamp as supplied with this memo.

(d) Would you please make Julie, Dave and Graham fully aware of how they are to handle this situation effective Tuesday A.M. If they are uncertain about any aspects of this, please get back to me personally and I can clarify the matter with them.

L. TAYLOR"

These instructions were carried out.

At this time T.J.M. had very few A.R.B. products on hand in the premises at 144 Magill Road. On 2 June 1986 T.J.M. commenced these proceedings claiming immediate relief by notice of motion supported by affidavits. The statement of claim was not filed until 27 June, after the hearing of its application for interlocutory restraining orders.
Subsequently during the hearing, on 31 July 1986 T.J.M. made further amendments to the "get-up" of its premises at 144 Magill Road. These amendments involved the repainting of the newly revealed A.R.B. logo from the red, white and black colour scheme to yellow, white and black in line with the colour scheme of the rest of the newly repainted premises. Later on the same day the logos were altered further by the addition of the words "Vehicle Accessories" in black on a yellow background adjacent to, so as to form a part of, the recoloured A.R.B. logos.
A number of procedural matters and matters not in issue should be mentioned. It was not disputed that all of the corporate parties were engaged in trade or commerce. Nor was there any dispute as to the relevant section of the public alleged to have been or likely to be misled or deceived by the conduct said to contravene the Act. Such class consisted of potential purchasers, for themselves or their clients, of 4WD accessories whether the members of that class were informed or uninformed purchasers. Furthermore during the proceedings each made an open offer to settle, neither of which offers was accepted.
T.J.M. named five natural persons as additional respondents to its proceedings. Mr. Parkes and his wife, the third and fourth respondents, were directors of Brigalow Park and alleged to be persons involved in that company's contravention of s.52 of the Act. The fifth, sixth and seventh respondents who had formally been employees of T.J.M. and now as employees of Brigalow Park were also alleged to be involved in that contravention. These five natural persons took little part in the proceedings. Their alleged conduct, with the exception of Gavin, was not relied on and the question of T.J.M's loss and damages under s.82 of the Act was by arrangement deferred until its entitlement to injunctions was determined. Thus no evidence directed to this issue was led.
A further cause of action was however propounded against the latter respondents, namely that as employees of Brigalow Park they had made use of confidential information in approaching customers of T.J.M's business. There was some evidence given concerning such approaches by Gavin. In respect of this cause of action counsel for the respondents contended that this Court had no jurisdiction, it being a common law action which did not arise out of a "common substratum of facts" (See Fencott v. Muller) (1983) 152 CLR 570 at p607 et seq.) I declined to rule on this contention at the time it was made, and at the end of the evidence counsel presented submissions as to the jurisdiction of the Court to determine this issue. I will deal with this aspect of the matter at the end of these reasons.
T.J.M. alleged in its pleadings that the respondent Brigalow Park contravened s.52 of the Act in that the conduct of its business at 114 Magill Road was misleading and deceptive. It was said that by the manner in which it advertised, promoted and conducted generally its business under the name A.R.B. Products or A.R.B., persons would be led to believe that the business at 114 Magill Road was the business of or was connected with the business of T.J.M. at 144 Magill Road. Furthermore it contended that Brigalow Park was passing off its business as the business of T.J.M.
A.R.B. Engineering and Brigalow Park cross-claimed that A.R.B. Engineering had by advertising and promoting A.R.B. products established a substantial reputation in the names of A.R.B. Vehicle Accessories and A.R.B. and the logo which had become distinctive of its A.R.B. products. The cross claimants alleged that from May 1986 T.J.M. had at its premises at 144 Magill Road, displayed the A.R.B. name and logo and answered the telephones "T.J.M. - A.R.B.". It had also from that date displayed for sale at these premises A.R.B. products with identifying A.R.B. labels removed and in some instances T.J.M. stickers attached. It contended that by this conduct T.J.M. had represented that the A.R.B. products it had for sale were T.J.M. products or products associated with A.R.B. or with the cross claimants. This conduct was alleged to contravene s.52 and s.53 of the Act and it was also alleged that by it T.J.M. had passed off and was continuing to pass off its business as the business of the cross claimants.
By the time counsel entered upon their addresses there had been much variation and modification of their earlier contentions. T.J.M. at this stage limited its objections to the get-up and signs on the premises at 114 Magill Road, contending that thereby Brigalow Park was leading the relevant class of consumers into the erroneous belief that that business was the business of or a business connected with its business at 144 Magill Road. Alternatively it said that by such conduct Brigalow Park was passing off its business as that of T.J.M.
For its part A.R.B. Engineering and Brigalow Park relied upon the conduct of T.J.M. in uncovering on 22 May 1986 the A.R.B. signs on the premises at 144 Magill Road, in circumstances where few or no A.R.B. products were available. This conduct was alleged to be misleading or deceptive. On the matter of passing off, the cross claimants relied primarily upon the conduct of T.J.M. in carrying on business under the name of A.R.B. Vehicle Accessories and the signs on the premises. It is pertinent to note that the particular significance it attached to T.J.M's use of the name "A.R.B. Vehicle Accessories" became apparent only towards the close of its counsel's address in reply.
None of the parties had much difficulty in establishing the essential facts upon which they were relying to constitute the alleged contravening conduct. There was little conflict on these facts. The difficult question was whether the conduct of each of the parties did in the circumstances amount to a contravention of the Act and in particular s.52.
Each party's claim for relief under the Act relies primarily upon the get-up of and signs upon the other's premises and the use of the letters A.R.B. thereon. They contended that by the use of these signs and letters and the A.R.B. logo members of the public would be misled or deceived or alternatively were likely to be misled or deceived. The nature of the deception in each case would be as to the ownership or business connection of the two premises. Members of the public, it was contended by counsel for T.J.M., would hold the erroneous belief that the business at 114 Magill Road was the business which it is conducting at 144 Magill Road, or was a business connected therewith. The respondents contended in corresponding fashion in respect of the get-up and signs at 144 Magill Road but placed particular emphasis on an erroneous belief that T.J.M. had on these premises a stock of A.R.B. products.
Such conduct must if a contravention is to be established amount to a misrepresentation. As Deane and Fitzgerald JJ. said in Taco Company of Australia Inc. v. Taco Bell Pty. Ltd. (1982) 42 ALR 177 at p202:

"Irrespective of whether conduct produces or is likely to produce confusion or misconception, it cannot, for the purposes of sec.52, be categorized as misleading or deceptive unless it contains or conveys, in all the circumstances of the case, a misrepresentation."

If the relevant erroneous belief was established, namely that there was a business connection between T.J.M. and the two corporate respondents or that they were one and the same business, it is usually necessary to enquire why the erroneous belief had arisen (Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre Ltd. (1978) 140 CLR 216 at p 228).
Furthermore the conduct may have merely led to confusion as opposed to an erroneous belief on the part of the public which is not sufficient to establish contravention (See McWilliam's Pty. Ltd. v. McDonald's System of Australia Ltd. (1980) 33 ALR 394 and Parkdale Custom Built Furniture Pty. Ltd. v. Puxu Pty. Ltd. (1982) 149 CLR 191 per Gibbs C.J. at p 198).
In the present matter the erroneous belief concerning a business connection will only arise if the business of T.J.M. or its predecessor M1 (trading as ARB or A.R.B. Vehicle Accessories) has or had acquired a significant local reputation at 144 Magill Road. It is in my view crucial to success on the part of T.J.M. that it establish that such reputation attaches to the name of business and not to the A.R.B. products which it or its predecessor was selling. Moreover T.J.M. must also establish that this reputation, be it of the name of the business or the products, was not, at least in part, lost by its conduct of the business between September 1985 and May 1986.
Above all it is particularly necessary, especially when rivalry between competing businesses is the essence of the conflict, to bear in mind that the establishment of misleading or deceptive representations to the public as consumers is of paramount importance. Any consequential damage to rival traders is of lesser significance and not crucial (Hornsby case supra Parkdale v. Puxu supra at p203 Sitmar Cruises Ltd. v. Carnival Cruise Lines Inc. (1986) ATPR 40-728 per Beaumont J. at p47,951).
Counsel for T.J.M. placed considerable reliance upon Bridges v. Bridge Stockbrokers Ltd. (1984) 4 FCR 21 and in particular at page 464 of the same volume on appeal where two members of the Full Court referred to and set out passages from the relevant authorities on the question whether in using a name a company is making a misrepresentation. A decision in this area of the law on a particular set of facts is however usually more instructive than conclusive when applied to another set of facts.
In addition to evidence of the historical background to the proceedings both sides tendered much evidence on the topic of reputation, the reputation of the business conducted by M1 and subsequently T.J.M. at 144 Magill Road, and the reputations joint or otherwise of A.R.B. Engineering, and A.R.B. Products and A.R.B. products and accessories. There was also evidence tending to indicate the manner in which members of the public and those engaged in trade were allegedly misled or alternatively confused by the happenings during the relevant time at the two premises. Although this evidence is of some assistance, the findings of fact are primarily a matter for objective determination by the Court.
In seeking to establish the reputation of "A.R.B." as the name attaching to M1's business at 144 Magill Road at the time it was acquired by T.J.M. that company tendered evidence from 15 witnesses. However almost all of these witnesses acknowledged that they were aware of the letters A.R.B. as applied to the brand on a product. These witnesses fell generally into the following categories, namely customers, salesmen, business proprietors and spare parts managers. The respondents led evidence from 7 witnesses to establish the reputation of the A.R.B. brand of products from persons in the same categories including two competitors. There was also much evidence from persons involved in the business activities of T.J.M., A.R.B. Engineering and Brigalow Park. I found the evidence of all of these witnesses, with the exception of Mr. Taylor, to be credible and acceptable. They differed only in matters of perception, emphasis and degree. I had reservations concerning the evidence of Mr. Taylor, primarily because he was too actively promoting his own cause. However these reservations generally arose in relation to peripheral matters and had little impact upon my resolution of the essential issues.
In addition to these witnesses a substantial amount of documentary, advertising and promotional material, including entries in the yellow and white pages of telephone directories, was tendered by both sides. Likewise much advertising material appeared in the magazines "Overlander", "Bush Driver" and "4 x 4" the monthly issues of which had varying but in the aggregate substantial circulation in South Australia.
I deal in the first instance with the relief sought by T.J.M. It is necessary for it, if it is to succeed, to establish that the business conducted by M1 and subsequently itself at 144 had acquired a significant local reputation as a four-wheel drive vehicle accessories outlet. Such a finding is essential if it is successfully to contend that the respondents are misrepresenting the business at 114 as the business previously conducted at 144 or as a business associated with it. On the evidence I find that the business at the time of its acquisition by T.J.M. had a sound reputation as such an outlet. However the business did not have such a reputation as a business trading under the name A.R.B. or A.R.B. Vehicle Accessories. M1, which conducted the business prior to September 1985 had only been trading extensively under the name A.R.B. Vehicle Accessories since mid 1984 and had only moved to 144 Magill Road some months later. Previously it had traded or been known as M1 or M1 Off Road and some witnesses continued to use that name in their evidence. The name, or letters, A.R.B., it would appear had acquired a very considerable and extensive reputation by September 1985 but as the brand name of a quality product manufactured or supplied by A.R.B. Engineering. This was an Australia wide reputation, which it enjoyed, in particular in South Australia, throughout the relevant time.
Thus the name under which M1 was trading at the time it sold in 1985 and under which T.J.M. contends it was trading and entitled to trade at the relevant time is a name which was primarily identified with a well known product. The sale of this product was the principal business of M1. The primary impact of all of the advertising material was, in my opinion, the nature and quality of the product and not the business outlet from which it could be obtained. It was therefore essentially a descriptive name whereby attention was directed to the product which the business was selling. Being a descriptive name it is accepted that it is more difficult for relief to be obtained. (Hornsby case supra at p.229). There was also no evidence that M1 was the sole distributor of these products in South Australia. In my opinion any outlet would be entitled to advertise the fact that it had such products for sale without contravening s.52.
In these circumstances it is not possible, in my opinion, for T.J.M. to establish that these names, A.R.B. and A.R.B. Vehicle Accessories, have acquired a reputation as the name of a particular business. In particular they have not acquired such a reputation as will prompt consumers to believe that any other business using these names or either of them is the business conducted by T.J.M. at 144 Magill Road or a business associated with T.J.M.'s business.
But even if M1 had acquired a local reputation for its business at 144 Magill Road conducted under either of these names, T.J.M.'s subsequent conduct of the business is fatal to its case. From September 1985 to May 1986 it took extensive measures to convert the business to an outlet or distributor for T.J.M.'s vehicle accessories. Such measures were not limited to internal activities such as selling off A.R.B. products without replacing them and in a few instances changing the labels. Steps were taken to present to the public in every way possible the image of a new business. With the exception of the relatively small notice "A.R.B. Vehicle Accessories" required by law to be displayed, all reference to A.R.B. whether in the form of painted signs or a neon sign was removed and replaced with T.J.M. signs. The telephone was answered "T.J.M." or "T.J.M. Products" and customers were advised that A.R.B. was no longer carrying on business at the premises. T.J.M. thereby actively encouraged the emergence of an impression that the business was no longer an A.R.B. outlet and continued to do so for some 7 months.
The inevitable consequence of these actions was at the most a degree of confusion in the minds of the relevant members of the public. Such confusion existed prior to March 1986 when Brigalow Park commenced to erect A.R.B. signs at 114 Magill Road. I have already found that the particular business names did not have such a reputation that Brigalow's conduct would lead the public to believe it was the business previously conducted at 144 Magill Road. But if, contrary to this finding, the public was lead into this false belief, it was certainly not solely or even primarily the conduct of Brigalow Park which produced this situation. T.J.M. by its conduct of the business at 144 Magill Road prior to May 1986 contributed substantially to the confusion. In particular its conduct at the end of May 1986 in taking down some of the T.J.M. signs, reinstating some of the A.R.B. signs and answering the telephone "T.J.M. - A.R.B." prompted further confusion.
In my opinion T.J.M. has failed to establish a contravention of s.52 of the Act by any of the respondents. It certainly has not established that Brigalow Park is misrepresenting itself as the business of T.J.M. or as a business associated with that company. The far more likely reaction of consumers is that another store is selling A.R.B. products. It is substantially a matter of judgment and impression which conclusion, if any, will be reached by consumers but on the evidence I am not prepared to accept the inference sought by the applicant. The names under which the applicant and corporate respondents respectively operate (i.e. A.R.B, A.R.B. Vehicle Accessories and A.R.B. Products) are in my opinion no more than merely descriptive and indicative of the nature of the businesses respectively carried on by them, namely retailers of A.R.B. vehicle accessories. At least this is the way the consuming public would interpret them (Hornsby case supra per Barwick C.J. at p. 221, Stephen J. at p.223). These are in my opinion descriptive names and not distinctive of any particular business. It follows that their application to another similar business is extremely unlikely to mislead.
T.J.M. also contended that the corporate respondents, and Brigalow Park in particular, had engaged in passing off their businesses as the business of T.J.M. In this instance T.J.M.'s failure to establish the crucial elements of a contravention of s.52 is fatal. Moreover it has failed to establish that its business, being primarily an outlet for T.J.M. products, has suffered sufficient detriment or is likely to suffer such a detriment as will enable it to succeed on a passing off claim. Primarily its detriment, I would have thought, would flow from its inability to provide to customers A.R.B. products which it purported to represent by its signs it held in stock. There is indeed no appreciable risk of detriment which was a prerequisite to relief in the Bridges case supra.
It follows that T.J.M.'s application and all claims discussed to date must be dismissed. I give consideration later to the claim of breach of confidentiality.
The cross claimants A.R.B. Engineering and Brigalow Park contended that T.J.M. had by its conduct on 26 May 1986 in changing the signs on the premises at 144 Magill Road contravened and was thereafter contravening s.52 and s.53 of the Act. The further alteration to these signs on 31 July 1986 was also said to contravene these provisions. Subsequent to 26 May 1986 the letters A.R.B. were prominently depicted on the walls of the premises, and prior to the alteration on 31 July 1986 the A.R.B. logo was painted on the walls. The case of the cross claimants was put in this way. They contended that by these signs T.J.M. was representing itself to the public as an A.R.B. outlet where a full or adequate range of A.R.B. products could be purchased. It was not disputed that virtually no A.R.B. products were held on the premises during this period and thus it was said that T.J.M. was misrepresenting the position and thereby misleading prospective purchasers. Moreover it was contended that the signs would induce members of the public to enter the premises seeking an A.R.B. product which was not available. Efforts would then be made to persuade the customer to buy an alternative product manufactured by T.J.M., the virtues of which would be extolled. In this manner T.J.M. would, it was alleged, be engaging in conduct described as "bait and switch" thereby contravening s.52 of the Act.
There are a number of grounds upon which I decide against the cross claimants upon this aspect of the case. I so decide primarily because I am not satisfied that a contravention has occurred or is likely to occur. In my opinion advertising by permanent signs on the exterior of a building does not necessarily convey to members of the public a representation that the product or product range advertised will at all times be available, or is currently in stock. Certainly that which it conveys is extremely unlikely to have a significant or decisive impact upon a viewer. Such advertising contrasts with that which I might call one-off day by day advertising in the press or advertising within premises at point of sale. This form of advertising can be removed or altered with ease. It would be and would be intended to be (if such intention is relevant in this area of the law) accepted at face value by the public. In fact s.56 of the Act makes certain forms of advertising in this manner of offence. Furthermore some weight must be attached to the evidence of T.J.M. that it would take steps to procure for a customer an A.R.B. product if such a product was sought.
I also am not satisfied that T.J.M.'s conduct or likely conduct amounts to the practice described as "bait and switch". The evidence of the present manager Mr Hilton which I have no difficulty in accepting encourages me to find that it is not likely to occur. He has honestly acknowledged that it could occur but I am satisfied that it has not occurred and will probably not occur in the future. If I were satisfied that it had occurred or was likely to occur I would have been more inclined to find a contravention of s.52 and to make an order restraining such conduct.
It follows that I am not prepared to find that the conduct of T.J.M. on 26 May 1986 in reinstating the A.R.B. signs on the premises amounted to a contravention of s.52 of the Act. The presence of these signs would not in my opinion have been likely to induce any person to make a commercial decision which he would not otherwise have made. In this regard I refer to and adopt the test applied by Woodward J. in Greg Cotton Motors Pty. Ltd. v. Neil & Ross Neilson Pty. Ltd. (1984) ATPR case 40-443 at p 45100. It is not for me to comment on the propriety or commercial wisdom of T.J.M. in continuing to use this name.
The cross claimants' case on passing off is in one aspect more difficult, notwithstanding their counsel's initial concession that if his clients failed to establish contravention of the Act they could not succeed on passing off. They did not seriously contend that T.J.M. was by its signs passing off or attempting to pass off its business as the business of Brigalow Park. In any event the fact that Brigalow Park had not at the relevant times established a sufficient reputation in this business activity is conclusive (Ricketson The Law of Intellectual Property p. 571). It had only recently entered into the market and cannot be said to have established any goodwill. Counsel for the cross claimants ultimately relied upon the conduct of T.J.M. in trading under the business name "A.R.B. Vehicle Accessories". They contend, correctly in my opinion, that the purported transfer by M1 of its interest in this registered name and the renewal of the registration did no more than ensure that T.J.M., if it traded under this name, complied with the provisions of the Business Names Act. A.R.B. Engineering contended that it was the owner of the name, in the use of which by M1 it only acquiesced whilst that company was the distributor for A.R.B. Engineering in South Australia. When ceasing to be such a distributor M1 had no right to continue to trade under that name or to pass the name to any other party. A.R.B. Engineering conceded that its own failure to obtain an enforceable agreement to this effect as a term of a distributorship arrangement with M1 was the source of its problems. However its contention was that its claim under passing off entitled it in the circumstances to an order restraining T.J.M. from carrying on business under this name.
During his final address counsel for the cross claimants conceded that T.J.M. was entitled to use the business name A.R.B. Vehicle Accessories whilst it was selling off the A.R.B. products purchased from M1 but not thereafter when it was only selling T.J.M. products. However he propounded a totally new submission on this aspect of the case when addressing in reply. This submission purported to be an extension of his address on the s.52 claim but I see it as more appropriately considered under the passing off cause of action. I gave the applicant (cross respondent) the right of further reply by memorandum in writing to this new argument.
A.R.B. Engineering founded this submission upon the reasoning and decision of Dixon J., as he then was, in Need v. J.H. Coles Pty. Ltd. (1931) 46 CLR 470 and a number of decisions of courts in England.
In that case Dixon J. was, with Starke J., in dissent but his judgment was upheld on appeal to the Privy Council ((1933) 49 CLR 499 at p.504 et seq). The facts bear some similarity to this present matter and can be stated shortly. J.H. Coles Pty. Ltd. ("Coles") and Need entered into an agreement whereby Need was to obtain the lease of a shop and conduct a business under the trade names of Coles, the business being similar to businesses conducted elsewhere by Coles. It was agreed Need should paint the trade names of Coles "J.H. Coles" and "J.H. Coles, 3d., 6d. and 1/- Store" on his shop. After acting in accordance with the agreement for nearly three years Coles, for reasons which are immaterial for present purposes, purported to terminate the agreement and sought to restrain Need from continuing to use its' name. Coles was at the time and had been for a number of years carrying on a similar business under these names in various other shops. The High Court by a majority (Starke & Dixon J.J. dissenting) allowed an appeal from the Full Court of the Supreme Court of Victoria which latter Court had upheld the injunction granted to Coles by the primary judge.
Counsel for A.R.B. Engineering relied upon the reasoning of Dixon J. In this passage of his reasons Need's shop was designated as "the shop at Northcote," Need as "the appellant" and Coles as "the company". Dixon J. said on page 484:

"The opening of the shop at Northcote was calculated to do two things - to create a local business having a goodwill of its own with which the trade names were connected and to enlarge the meaning of the trade names and widen the reputation attaching to them. But there can be no doubt that the appellant was and remains the proprietor of the actual business carried on at the shop at Northcote, and therefore of the goodwill which belongs to it. If the trade names had come to be a description of that business or of its proprietor and nothing more, it is manifest that, whether the parties intended such a consequence or not, the names would no longer form part of the business reputation of the Company and it would have nothing to protect by an injunction restraining their use. But while in the neighbourhood of the appellant's shop the names may in many minds, perhaps, almost exclusively be associated with the business there carried on, yet in the vicinity of each of the Company's own six shops, there will be many to whom the names serve to identify that shop, and among the wider public whose information does not depend upon observation confined to one locality, a class which probably includes the greater number of the appellant's customers, the trade descriptions adopted by the Company signify a system of stores organized or conducted under one ownership or control. Independently, therefore, of the Business Names Act 1928, the Company possesses a trade reputation to which its trade names attach, and prima facie it is entitled to the protection of an injunction restraining any unauthorized use of the names."

His Honour concluded on page 488:

"For these reasons I think the Company was entitled to an injunction restraining the appellant from using its trade names as the style of his business. The business is, however, his, and it does not follow that by the use of its trade names in Northcote the Company or its successor in title is at liberty to represent that it is carrying on the same business."

On the appeal to the Privy Council, Coles became and was designated "the appellant". Their Lordships said on page 503 in agreeing with the reasoning of the Courts in Victoria and of the dissenting Judges of the High Court:

"It may be noted that both the Chief Justice and the Full Court of Victoria proceeded on the basis that the appellant's trade names had not lost their distinctive character and this also was the conclusion of the dissentient Judges of the High Court. Their Lordships, after considering the evidence, agree with that opinion, and also with the further opinion of all these Judges that all the right that the respondent ever had in regard to the user of the appellant's trade names was a revocable licence to use these names so long as the business arrangement continued between the appellant and the respondent. From these conclusions it follows that prima facie the appellant is entitled on well recognized principles to an order restraining the respondent from the unauthorized use of the appellant's trade names after the licence was revoked, since the continuance thereafter of such user necessarily involves a passing off by the respondent of his business as being a business for the sale of the appellant's goods and as being a business in which the appellant has at least an interest, and in this way there would be practiced a deception of the public to the prejudice of the appellant's business reputation and goodwill."

Counsel for A.R.B. Engineering relied heavily on this dicta and he also referred to certain other cases which had, he said, adopted a like approach. Turner and Another v. General Motors (Australia) Proprietary Limited (1929) 42 CLR at p52, Budget Rent A Car case (1976) 12 ALR 363 at p369, Roberts Numbering Machine Company v. Davis (1936) 53 RPC 79, Habib Bank Ltd. v. Zurich (1982) 99 RPC 1, Enzed Holdings Ltd. v. Wynthea (1984) ATPR case 40-447). However in my opinion the facts in each of these cases differ markedly from those of the present matter and do not assist in its determination on this issue. The facts in Need's case are closest to those of this matter.
Nevertheless I am not prepared to accept the submissions of A.R.B. Engineering and restrain the applicant from using the name "A.R.B. Vehicle Accessories" primarily because of the particular facts of the present matter.
In Need's case supra the trial judge and Dixon J. found that Coles expressly granted Need the right to use its trade names but only so long as the agreement remained on foot. Upon the termination of the agreement Need's authority to use the names was impliedly revoked. Throughout the time that Need carried on business in Northcote under this trade name Coles conducted similar business in six shops in other suburbs of Melbourne.
The circumstances in this matter are very different. M1, over a number of years sold substantial quantities of stock supplied by A.R.B. Engineering. There was no formal agreement between A.R.B. Engineering and M1 such as in the Need's case and A.R.B. Engineering did not grant permission to M1 to use the alleged trade name "A.R.B. Vehicle Accessories". It merely refrained from taking any action to prevent M1 using that name. Likewise it took no action against the applicant which it cross claimed in these proceedings. A further and equally important distinction is that A.R.B. Engineering had not at least for a number of years itself conducted a business in Adelaide under the name A.R.B. Vehicle Accessories. It was not at the time of the proceedings conducting such a business and did not contemplate doing so. It had entered into a distributorship agreement with Brigalow Park. M1 was, and to a very limited extent the applicant was conducting a business similar to that carried on by Need. Need was under an agreement using a name which was also used by Coles and which "signified a system of stores organized or conducted under one ownership or control". Dixon J's decision was substantially based on the following reasoning which cannot be applied to the present matter, namely -

". . . in the vicinity of each of the Company's (Coles) own six shops, there will be many to whom the names serve to identify that shop, and among the wider public whose information does not depend upon observation confined to one locality, a class which probably includes the greater number of the appellant's customers, the trade descriptions adopted by the Company signify a system of stores organized or conducted under one ownership or control."

It is pertinent on this aspect of the case to refer to some of my earlier findings, namely that any reputation attaching to the use of the name A.R.B. Vehicle Accessories was a reputation attaching to goods and primarily goods which can be described as vehicle accessories. Up until 1983 there were three retail outlets in South Australia, only two being in Adelaide and one in Millicent. A.R.B. Engineering itself had secured some sales prior to this time to three large Toyota dealers in this State. From the beginning of 1983 however M1 sold these goods under the business name M1 Off Road. In the latter part of 1984 it commenced selling under the business name "A.R.B. Vehicle Accessories". A.R.B. Engineering was not carrying on business in this State under that name nor had it any significant reputation as the supplier of A.R.B. goods into the South Australian market. The only exposure it had itself had in South Australia was prior to 1983 and solely in the wholesale market. From September 1985 until May 1986 the applicant abandoned for all practical purposes the use of the business name A.R.B. Vehicle Accessories, the registration of which however it renewed in January 1986. In renewing the business name a change was made in the nature of the business allegedly conducted, namely to "motor vehicle accessory manufacturer".
In my opinion this aspect of the counter-claim must also be dismissed.
The final matter for consideration, apart from the question of costs, is the allegation by the applicant that the respondents Bruce Sampson, Terence John Gavin and Michael Gladwich as employees of Brigalow Park made use of confidential information received whilst in the employment of the applicant. This information was alleged to relate to the business of the applicant and in particular the names of trade customers of that business and their actual and potential requirements, the times when they were to be visited or contacted and the selling price of the applicant's products to these customers. It was said that they made use of this confidential information whilst employed by Brigalow Park in that they approached the distributors and customers of the applicant's business and supplied and sought to supply to them the products sold by Brigalow Park. There was only a little evidence of such approaches.
The respondents contended that the Court had no jurisdiction to determine this particular issue, the accrued jurisdiction not being attracted in the absence of a common substratum of facts. They applied by notice of motion for the particular paragraphs in the statement of claim to be struck out on this ground. On 30 July 1986 I stayed further proceedings in respect of these paragraphs until the time when final addresses were given. Counsel for the applicant conceded at the end of the hearing of evidence that although he had not tendered all of the evidence which he would have wished to produce on the breach of confidentiality issue the evidence before the Court established the necessary common substratum of facts. He sought a ruling on jurisdiction on that material. He said the Court had jurisdiction to deal with this issue as an "associated claim" (See Phillip Morris Inc v. Adam P. Brown Male Fashions Pty. Ltd. (1981) 148 CLR 457 and Fencott v. Muller (1983) 46 ALR 41)
Counsel for the respondents submitted that a claim based on an alleged breach of confidential information could never amount to an "associated claim" and he cited the Hospital Products case, (United States Surgical Corporation v. Habital Products International Pty. Ltd. (1981) 148 CLR 457) as authority for this proposition. I can not agree with this contention stated as a general proposition. The proper approach is to determine whether the federal claim and the allegedly associated claim are part of the one controversy. In Fencott v. Muller supra this passage appears in the majority judgment at p 68:

"What is and what is not part of the one controversy depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships. The scope of a controversy which constitutes a matter is not ascertained merely by reference to the proceedings which a party may institute but may be illuminated by the conduct of those proceedings and especially by the pleadings in which the issues in controversy are defined and the claims for relief are set out. But in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in the proceeding are within the scope of one controversy and thus within the ambit of a matter."

In my opinion there are a number of grounds upon which I decide that these two claims are not "within the scope of one controversy and thus within the ambit of a matter".
In the first instance it can not fairly be said that there is a common substratum of facts. The essential evidence upon which the applicant based its contention that the respondents contravened s.52 of Act did not rely to any significant extent, if at all, upon the evidence of the activities of any of the respondents Sampson, Gavin and Gladwich. Such evidence, if it had any relevance to the s.52 issues, was of peripheral significance. Much more evidence, quite irrelevant to the Trade Practices issues, would have been required to establish the confidential information claim. Mason J. acknowledged this difference in the Hospital Products case supra when he said at p.518:

"It does not appear from the statement of claim that the determination of the claims to relief, other than that based on s.52 of the Trade Practices Act and the copyright claim is essential or incidental to the determination of the cause of action based on s.52. . .

Indeed, in one instance at least, namely confidential information, it is quite plain that the basic transactions differ from those relied upon to support the claim based on section 52."

Using the terminology of members of the High Court in Fencott v. Muller supra at page 67, the evidence in this matter revealed the confidential information issue as "completely separate and distinct claim" without any significant "common transactions and facts".
In so far as the determination of the question is a matter of impression and practical judgment I have little hesitation in concluding that the confidential information claim is not a matter "associated with" the Federal claim and therefore this Court has no jurisdiction to decide the issue.
On the question of costs it seems to me appropriate in all the circumstances, particularly regarding the fact that none of the parties have succeeded on its or their principal claims, that there be no order as to costs of any party.
The application by T.J.M. and the cross claims of the respondents are all dismissed, with no order as to costs.

[1987] FCA 138

27 MARCH 1987