Tammett, A v Gucci Shops Inc.

No. ACT G 86 of 1986

GENERAL DIVISION

' 1

BETWEEN :

ANTHONY T A M " and JUNE

MARIA TA"E!IT

Applicants

AND :

. GUCCI SHOPS INC.

First Respondent

MARK SPENCER & CO. PTY.

LIMITED

Second Respondent

FRANK MARKOVIC

Third Respondent

MINUTE OF ORDER

JUDGE MAKING ORDER : Neaves J.

DATE OF ORDER	: 5 February 1987
WHERE MADE	: Canberra

THE COURT ORDEXS THAT:

1. The name of the first respondent be amended to Gucci America Inc.

2. The motion for leave to serve the application and

statement of

claim herein on the first respondent

outside the Commonwealth of Australia and in the

United States

of America is dismissed.

Note:

Settlement and entry of orders is dealt with in Order

of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	1
1
AUSTRALIAN CAPITAL TERRITORY	)

No. ACT G 86 of 1986

DISTRICT REGISTRY	)
1
GENERAL DIVISION	' j

BEZW3EN:

ANTHONY TAMMETT and JUNE

MARIA TA"EIT

Applicants

AND:	GUCCI SHOPS INC.

First Respondent

MARK SPENCER	& CO. PTY.
LIMITED

Second Respondent

FRANK MARKOVIC

Third Respondent

CORAM: Neaves J.

m: 5 February 1987

REASONS FOR JUDGMENT

Anthony

Tammett

and

June

Maria

Tammett

("the

applicants") commenced proceedings in this Court by filing

application on

30 December 1986 claiming damages and injunctive

relief against Gucci Shops Inc. ("the first respondent"), and

damages against Mark Spencer

& Co. Pty. Ltd.

("the second

respondent") and Frank Markovic

( "the third respondent"). The

application was accompanied by

a statement of claim.

The applicants have now applied to the Court by motion

for an order amending the name

of the first respondent o Gucci

America Inc. and for leave to serve the application and

statement

of claim on

the

first

respondent

outside

the

Commonwealth and in the United States of America.

The

application

amend

the

name

the

first

respondent is based on information given to the solicitor for

the

applicants by

a firm of New York attorneys, Messrs

O'Sullivan Graev

& Karabell, that Gucci Shops Inc. is

a New

York corporation initially registered in 1953 but which changed

its name, effective 30 April

1986, to Gucci America Inc.

On the basis of this Information

I order that the name

of the first respondent be amended to Gucci America Inc.

The other application, the application

for

leave to

serve the application and statement of claim on the first

respondent outside the Commonwealth is made pursuant to

0.8 of

the Federal Court Rules and may only be granted where the Court

I s satisfied of the following matters (see

0 . 8 ,

r.2(2)):

(a) that the proceeding is

proceeding in

which the Court has jurisdiction;

I .

(b) that the proceeding is

proceeding to

which 0.8, r.1 applies; and

prima facie

case for the relief

which they seek.

In addition to the application and statement of

claim, I have before me a number of affidavits including an

affidavit sworn by each of the applicants.

For the purpose

of considering the application for leave to serve the

application and statement of claim outside the Commonwealth,

I have accepted the truth of the statements	of fact deposed
to in those affidavits.

The applicants allege that on

4 December 1985 an

agreement, expressed to be

licence agreement, was made

between

themselves

and

the

second

respondent

which is

alleged to be

a trading corporation formed within the limits

of Australia. By the agreement, the second respondent, for

a consideration of

$10,000 (c1.5.01), purported to grant to

the applicants "the right to operate

a retail outlet being a

designated Gucci Shop together with the right to use the trade names, trademarks, insignias, logos, advertising and merchandising methods and other materials distinctive to the

sale of Gucci merchandise" (c1.2.01). The licence was for a

period of three years though no commencing date is specified

in the copy of the agreement in evidence (c1.2.02).

The

applicants undertook to conduct the business

from

such

premises,

presumably

within

the

Australian

Capital

Territory, as were chosen by the applicants and approved by

the

second

respondent

(c1.2.01).

The

second

respondent

undertook to cause and procure that neither it nor any other

person authorised by it would conduct any business under

what was called "Gucci Identity" within the Australian

Capital

Territory

during

the

currency

the

licence

(c1.2.03).

The applicants agreed to purchase from the second

respondent merchandise for sale at the licence premises

at a

minimum invoice cost during each licence year, the minimum the applicants within 28 days of order (c1.5.02).

cost during the first licence year being $50,000 (c1.5.02).

The agreement recited that the second respondent

"held the exclusive right pursuant to

an agreement made 1st

January 1984 with Gucci Shops, Inc., of

685

Fifth Avenue,

New York in the United States of America to operate retail

outlets designated 'Gucci Shops' throughout Australia" and

that, pursuant to such agreement, the second respondent had

the right to use solely in connection with the Gucci Shops

and the merchandise sold therein, Gucci's trade names,

trademarks, insignias, logos, advertising and merchandising

methods and other materials distinctive to Gucci. Clause

14.01 of the agreement provided:

"WARRANTY Mark Spencer

hereby unconditionally

warrants and represents

to the Licensee that Mark

Spencer

has

full

and

unfettered

power

and

authority to enter into this Agreement and to

grant the rights powers benefits and privileges

granted to the Licensee hereunder and that all

and

any

consents

approvals

permissions

required for the granting of such rights powers

benefits and privileges have been obtained."

The	applicants further allege that on the date

which the agreement bears

a statutory declaration made on

that date by the third respondent, who is and was

at the

material time

a director of the second respondent, was

handed to them by the solicitor for the second respondent.

The statutory declaration set out provisions said to be

contained in the agreement dated 1 January 1984 between the

first and second respondents and declared that there were no

other relevant clauses or provisions in that agreement

which

prohibited or prevented the second respondent "from entering

into a licence agreement permitting the nominated licensee

to operate a business conducted for the purpose of selling

merchandise under the Gucci label".

According to the statutory declaration, by the

agreement made

1 January 1984 the first respondent granted

to the second respondent

or its franchisees during the term

of the agreement the exclusive right to operate retail

outlets

designated "Gucci Shops"

certain

specified

locations in Sydney and Melbourne and provided further that

during the term of the agreement the first respondent would

not

unreasonably

withhold

permission

from

the

second

respondent to open other Gucci Shops either by them

or their

designated franchisees in Australia. The second respondent

was to have the right to use solely in connection with the

Gucci Shops and the merchandise sold therein Gucci trade

names,

trademarks,

insignias,

logos,

advertising

and

merchandising methods and other material distinctive to the

first respondent. The agreement also provided, according to

the statutory declaration, that the first respondent would

grant no other right

or franchise to operate

a Gucci Shop in

Australia during the term of the agreement. That term was for 5 years commencing on 1 January 1984 with the second respondent having an option to extend the agreement for a

further period of 5 years on certain terms and conditions	in
the agreement set forth.

The applicants further say that they subsequently

selected certain premises

as the "Gucci" store in Canberra

and

that the

third

respondent,

after

inspecting

those

premises, approved them on behalf

of the second respondent.

On 10 June 1986 the applicants entered into a lease

of the

premises for

a term of three years and the "Gucci" shop

opened on 27 June 1986.

The application claims damages against the

second

and third respondents under 5.82 of the Trade Practices

Act

1974

(Cth)

("the

Trade

Practices

Act")

and

against

the

second respondent under the general

law.

The claim against

the second respondent under the Trade Practices Act

is based

on an allegation that the second

respondent, in making

certain

representations

and

giving

certain

approvals,

engaged in conduct that was misleading or deceptive

likely to mislead or deceive and so in contravention of s.52

of that Act.

particulars are given of

the respects in

which the conduct is said to be misleading or deceptive or likely to mislead or deceive, a circumstance which may be

some

significance

view

of the element of futurity

involved in some of the representations relied upon.

The

representations are as

follows:

(a)

A representation made on 4 December 1985 that the second respondent would during the term of the agreement make available

sufficient

quantities

"Gucci"

merchandise

for

purchase

applicants

enable

them

fulfil

their

purchasing

obligations

under

c1.5.02 of the agreement and to conduct

a "Gucci

Shop"

the

manner

contemplated by the agreement (statement

of claim, par.5);

(b) A representation made on

4 December 1985

that the second respondent had the power

and

authority

enter

into

agreement

and

grant

the

rights,

powers, benefits and privileges granted

thereunder and that all or any consents,

approvals or permits required for such

grant had been obtained (statement	of
claim, par.6);

4 December 1985

that pursuant to an agreement between

the

first

respondent

and

the

second

respondent the second respondent had the agreements permitting the licensees to

right, with the consent of the first

respondent, to designate franchisees who

would have the right to operate "Gucci

operate

"Gucci

Shops"

(statement

claim, par.7);

(d)	A representation made on 5 May 1986 that

new "Gucci" merchandise was available

pu chase

for

applicants

the

(statement of claim, par.8);

(e)

Representations made between 1 June 1986

and early July 1986 that

new

summer

season "Gucci" merchandise would soon

become available (statement of claim,

par.13);

(f)

A representation made in approximately

mid-July 1986 that the

new summer season

"Gucci" merchandise would be available

for purchase in about three weeks upon

the return of the third respondent from

a purchasing trip to Italy (statement of

claim, par.14);

(g)

A representation in approximately the

second week of August 1986 that the

new

season

stock

had

arrived

and

was

available

for

purchase

(statement

claim, par.15).

The approvals relied upon are alleged to have been

given on 20 May 1986.

The first was

an approval by the

second respondent to the premises

selected by the applicants

for the purpose	of operating the "Gucci Shop" (statement of
claim, par.9).	The second was an approval to a proposed

television

commercial to be used by the

applicants to

promote their "Gucci Shop" (statement of claim, par.10).

The making

of the representation alleged in

par.6

of the statement of claim (see par.(b) above) is also relied upon as contravening par.53(d) of the Trade Practices Act in

that, so it is alleged,

by c1.14.01 of the agreement the

second respondent represented that it had an approval it did

not have.

I have set out the allegations made against the

second respondent in such detail as

they also form the basis

of the

claim for damages under 5 . 8 2

of the Trade Practices

Act against the first respondent. The essence of that claim is contained in par.19 of the statement of claim as follows:

"19.

The making

of the representations

referred to in paragraphs

5, 6, 7, 8, 13, 14 and

15 herein

and

the

giving

of the

approvals

referred to in paragraphs 9 and 10 herein was

conduct

engaged

behalf

of the

first

respondent by the second respondent

acting as

agent

the first respondent

and within the

scope of	its actual or alternatively ostensible
authority."

What I have so far recited draws upon the statement

of claim and the affidavits sworn by the applicants. So far

as the statement of claim is concerned, there is no other

factual material alleged therein relevant to the question

whether,

making

the

representations

and

giving

the

approvals

relied

upon

the

applicants,

the

second

respondent was acting on behalf of the first respondent so

as to make the first respondent, assuming all other elements

of the cause of action are established, responsible in

damages to the applicants.

For completeness, however,

should refer to certain other matters deposed to in the

affidavits which might be thought to bear upon the question

whether the applicants have a prima facie case for the

relief which they seek against the first respondent.

Those

additional

matters

may

summarised

follows

(a)

In May 1986 the third respondent said to

the male applicant:

"A representative

from

Gucci

Shops

Inc.

has visited

Australia and they are pressuring me to get the Canberra Store open".

(b)

On various occasions between 1 November

1985 and

15 December 1986 the applicants

observed that the office and show room

of the second respondent at Double Bay,

Sydney displayed the

name "Gucci" as

well as the

name

the

second

respondent and various items of Gucci

products with the Gucci

logo and name on

them.

The name "Gucci" also appeared on

the

directory

the

foyer

the

building.

(c)

Between the same dates the applicants

visited

the

shop

the

s cond

respondent

situate

King

Street,

Sydney and there saw Gucci merchandise. The name "Gucci" was also displayed in large print on the windows of the shop and on the sign outside.

10.

On 16 December 1985 the third respondent gave the applicants Gucci international catalogues outlining stock in the Gucci

ranges.

One of those

catalogues

indicated that Gucci had shops in Sydney

and

Melbourne.

The

applicants assert

that the only Gucci shops in Sydney and

Melbourne were operated	by the second
respondent.

The name "Gucci" and the Gucci logo appeared on samples of stationery given

applicants by the

third

respondent.

have taken all the above matters

into account

but, in my opinion,

the

evidence

falls

far

short

establishing, on

a prima facie basis, that, in making the

representations and giving the approvals relied upon

by the

applicants, the second respondent	was acting as the agent	of
the first respondent.

The case made by the applicants is

that agency

should be inferred from the circumstance that the second

respondent was exercising the power and authority conferred

upon it

by the agreement dated

1 January 1984 between the

first and second respondents.

It can be asserted with some

confidence

that, in entering into the agreement with the

applicants,

the

second

respondent

was

exercising

rights

which it

would not have had but for its agreement with the

first respondent but that circumstance,

of itself, does not

mean that

the conduct in which

it engaged and which is

relied upon as being misleading or deceptive or likely to mislead or deceive was the conduct of the first respondent. It is of some significance in this regard that, although one

of the representations relied on

is said

to have been made

11.

expressly in c1.14.01 of the agreement between the second

respondent and the applicants, it is not alleged that in

entering into that agreement the second respondent was

acting as the agent of the first respondent so

as to make

the agreement binding on that company.

On the contrary, the

case for the applicants recognises that the effectiveness of

the licence granted by the second respondent depended upon

the first respondent giving its permission thereto (albeit

permission that was not to be unreasonably

withheld) and it

is	alleged that such permission had not been given even

though the second respondent expressly warranted that it had

been obtained.

Except

far

the

representations

and

approvals are

be found in written form, the applicant

relies on

what was said and done by the third respondent

who,

mentioned above, is said to have been

all

material times

director of the second respondent.

facts are alleged

or deposed to which would support the

conclusion, in terms of sub-s.84(2) of the Trade Practices

Act, that the conduct engaged in by the third respondent was

engaged

behalf

the

first

respondent

the

direction or with the consent or agreement of a director, agent or servant of the first respondent.

In my opinion, the applicants have not established a prima facie case for damages under

5.82

of the Trade

Practices Act against the first respondent.

12.

already mentioned, the applicants also

claim

injunctive relief against the first respondent. The basis

that

claim

apprehension on the part of the

applicants that the first respondent "may seek to procure

wrongful

termination or other

breaches

the

current

licence agreement or alternatively seek to grant another licence agreement to a third party which would allow that third party to operate a 'Gucci' shop within the Australian

Capital Territory". That is a disparate claim based on the

general law and may be entertained by the Court only if it

falls within the Court's accrued jurisdiction. Its presence

in the statement of claim is of no assistance to the

applicants in their present application.

The motion

for leave to serve the application and

statement of claim herein

on the first respondent outside

the Commonwealth and in the United States of America is,

therefore, dismissed.

I	certify that this and

the preceding 11 pages are

a true copy of the Reasons

for Judgment herein

of the

Honourable	Mr Justice
Neaves .

Associate

Dated:

5 February 1987

[1987] FCA 33

5 Feb 1987