Welded Tube Mills of Australia Pty Ltd v Tubemakers of Australia Ltd

[1999] FCA 637

FEDERAL COURT OF AUSTRALIA

Welded Tube Mills of Australia Pty Ltd v Tubemakers of Australia Ltd
[1999] FCA 637

TRADE PRACTICES - misleading or deceptive conduct - whether arguable case that statement as to effect of orders of Federal Court was misleading or deceptive.

Trade Practices Act 1974 (Cth) ss 52, 80

WELDED TUBE MILLS OF AUSTRALIA PTY LTD v TUBEMAKERS OF AUSTRALIA LTD

N323 of 1999

KATZ J
SYDNEY
15 APRIL 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N323 of 1999

BETWEEN:	WELDED TUBE MILLS OF AUSTRALIA PTY LTD Applicant
AND:	TUBEMAKERS OF AUSTRALIA LTD Respondent
JUDGE:	KATZ J
DATE OF ORDER:	15 APRIL 1999
WHERE MADE:	SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.   The applicant bring in at 2.15 pm Friday 16 April 1999 short minutes of order to give effect to these reasons for judgment, which may include an order that the costs of the application for interlocutory relief be paid by the respondent.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N323 of 1999

BETWEEN:	WELDED TUBE MILLS OF AUSTRALIA PTY LTD Applicant
AND:	TUBEMAKERS OF AUSTRALIA LTD Respondent

JUDGE:	KATZ J
DATE:	15 APRIL 1999
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

1. I have before me an application for interlocutory relief.  The applicant in the proceeding is Welded Tube Mills of Australia Pty Ltd and the respondent is Tubemakers of Australia Ltd, trading as BHP Structural & Pipeline Products.

2. It may be easiest to introduce the present dispute between the parties by referring to the fact that they were both parties to an earlier proceeding in this Court, the present applicant being then the respondent and the present respondent being then the applicant.  The earlier proceeding was, as is the present proceeding, a proceeding under the Trade Practices Act 1974 (Cth) (“the Act”).

3. Interlocutory relief was sought in the earlier proceeding.  The matter came on before Hely J and, on 12 March 1999, his Honour delivered reasons for judgment, granting to the then applicant some interlocutory relief, but refusing to the then applicant other interlocutory relief which it had also sought. Orders giving effect to those reasons for judgment were made on 17 March 1999.

4. Among the issues in the interlocutory hearing before his Honour were:  first, whether or not the then respondent’s use of the word “galvanise” and its derivatives in connection with the sale of tubular steel which it manufactured was misleading; and, secondly, whether or not the then respondent’s similar use of the term “electrogalvanise” was misleading.

5. The conclusions which his Honour reached on those two questions were as follows.

6. First, his Honour was of the view that there was a serious issue to be tried as to whether the use by the then respondent of the term “galvanise” or its derivatives in relation to its zinc coated products where the zinc coating was produced by a process of electroplating involved a contravention of ss 52 or 55 or both of the Act.

7. Secondly, his Honour, when dealing with the question of the term “electrogalvanise”, reached a different conclusion, saying, in par 31 of his reasons for judgment, that he was not satisfied that the then applicant had made out a sufficiently arguable case to justify an interlocutory restraint on the then respondent against describing its range of products as being manufactured using electrogalvanising technology.

8. His Honour’s reasons, as I have already said, matured into orders, which, on an interlocutory basis, restrained the then respondent from the use of the term “galvanise” in connection with its products, but, in light of what his Honour had had to say about the use of the word “electrogalvanise”, did not restrain the then respondent from the use of the latter term.

9. A consequence of his Honour’s orders was that a letter was written on 1 April 1999 by Mr Hayden Dagg, the Technical Marketing Manager of the present respondent, to Mr G.L. McIntosh, the Project Manager of Committee MT/9 of Standards Australia.

10. The circumstances in which that letter was written were, I infer from its terms, as follows:  the Multitechnics Standards Policy Board of Standards Australia had, some time earlier, given a direction that there be inserted into the preface of two proposed new standards advice that the preparation of one or two standards relating to “electrogalvanising” was under consideration; further, the Board had decided to ask the relevant technical committee to consider the preparation of one or two standards specifically covering the topic of “electrogalvanising”.

11. It was in those circumstances that Mr Dagg wrote to Mr McIntosh, saying:

    “As you have sought the views of members of committee MT/9 and subcommittee MT/9/8 on

    ·the appropriateness of the titles to the proposed Interim Standards and

    ·further drafting of the proposed Interim Standards

    dealing with the zinc coating process used by Welded Tube Mills [that is, the present applicant], we feel that it is important to bring to the notice of the members our two concerns arising from

    ·the Board's direction that a statement be inserted in the Preface of AS/NZS 4791 and AS/NZ 4792 advising that the preparation of an ‘electrogalvanizing’ Standard/s was under consideration and

    ·the Board’s decision to ask the relevant technical committee to consider preparation of one or two Standards to cover ‘electrogalvanizing’.”

    Having introduced his remarks by saying that the present respondent felt it important to bring certain concerns to the notice of the members of the Committee and Subcommittee, Mr Dagg then continued,

    “Through Michell Sillar, solicitors acting on our behalf, we have informed Standards Australia that the question of whether or not Welded Tube Mills’ electroplating process should be called ‘electrogalvanizing’ is the subject of current litigation before the Federal Court, and an interim injunction had been granted against Welded Tube Mills.
    In fact, the Federal Court would be considering, and is expected to hand down its decision later this year on the specific questions of whether Welded Tube Mills’ electroplated products may be categorised as ‘galvanized’ or ‘electrogalvanized’.
    We believe that it would be unwise for Standards Australia or members of Committee MT/9 and subcommittee MT/9/8 to pre-empt the Federal Court’s decision, to adopt one of the terms in the Prefaces to AS/NZS 4791 or AS/NZS 4792, to incorporate such term in the titles of the Interim Standards, or so to refer to the process in any Interim Standard, until the Court has made its decision.”

12. As to the reference in Mr Dagg’s letter to an earlier communication from Michell Sillar, the present respondent’s solicitors, to Standards Australia,  I have in evidence before me two letters from Michell Sillar to Standards Australia, one apparently written and sent on 16 March 1999 and another dated and apparently sent on 26 March 1999. A question arises whether one or other of those two letters is the letter which was being referred to by Mr Dagg.

13. It appears to me to be plain that the letter being referred to was the letter of 26 March 1999.  Without reading the terms of that letter, I may say that a significant part of it seems to have found its way, without any substantial alteration whatever, into that part of Mr Dagg’s letter which I have quoted above which begins with his reference to Michell Sillar having given certain information to Standards Australia.

14. Following Mr Dagg’s letter of 1 April 1999, the next relevant event appears to me to be the sending of a letter dated 6 April 1999 by Mr Colin Blair, the Acting General Manager of the Standards Group of Standards Australia, to Michell Sillar, Mr Blair having been the addressee of the Michell Sillar letter of 26 March 1999.  In the course of Mr Blair’s letter, he made reference to the question which had been raised by Mr Dagg in his letter of 1 April 1999 of the preparation of one or two standards to cover “electrogalvanising”. Mr Blair said that the title of the proposed standard(s) would be a matter for the members of the technical committee to discuss and agree upon, but that he, “would not expect a decision which ignores the fact that the issue was the subject of litigation.  In fact, the litigation may be concluded before a decision on the final title of the new standard[(s)] needs to be made”.

15. The next relevant event appears to me to be a circular dated 8 April 1999 sent by Mr McIntosh, the recipient of Mr Dagg’s letter of 1 April 1999, to the members of Committee MT/9 and Subcommittee MT/9/8.  To that circular, Mr McIntosh attached a copy of Mr Dagg’s letter, which, as Mr McIntosh said, Mr Dagg had “asked to be circulated to members of MT/9 and MT/9/8 for their information and comments”.

16. It will be noticed that, whatever significance may be attached to the letter of 26 March 1999 from Michell Sillar to Standards Australia, there is no suggestion either that Mr Dagg requested that that letter be circulated to the members of the Committee and Subcommittee or that that occurred.

17. In addition to circulating to the members of the Committee and Subcommittee Mr Dagg’s letter of 1 April 1999, Mr McIntosh also gave the members of the Committee and Subcommittee advice with respect to the first of the two matters of concern to which Mr Dagg had referred in his letter, namely, “the Board’s direction that a statement be inserted in the Preface of AS/NZS 4791 and AS/NZ 4792 advising that the preparation of an ‘electrogalvanizing’ Standard/s was under consideration”. What Mr McIntosh had to say about that matter was that a paragraph to the following effect had been added to the Prefaces of the drafts which were to become those two standards: “Committee MT/9 is also considering the development of two additional Standards to cover electrodeposited zinc coatings on ferrous open sections and ferrous hollow sections”.

18. It appears plain from the paragraph which Mr McIntosh advised had been added to the Prefaces of the drafts that it was no longer intended (if, indeed, it ever had been) specifically to use the term “electrogalvanising” in the course of the Preface to the two Standards to which I have referred.

19. The final relevant matter appears to me to be a conversation which took place between Mr Raymond Jack, who is a director and the general manager of the present applicant, and Mr McIntosh, of Standards Australia.  In light of the speed with which this matter has been prepared and brought on, I mention that, although I have had an affidavit of Mr Jack’s read before me, I have had no cross-examination of him and no evidence from Mr McIntosh directly.  In any event, what Mr Jack has deposed to is the fact that he had a telephone conversation yesterday, 14 April 1999, with Mr McIntosh, in the course of which Mr McIntosh said to him:  “The standard won’t be called ‘electrogalvanising’ because I have been informed by BHP that the use of the term was subject to an interim injunction in the Federal Court”.  Mr Jack replied as follows:  “I have seen a copy of BHP’s letter to that effect.  They’ve got it wrong.  I see they also referred to a letter from Michell Sillar.  Could I have a copy of it?” Mr McIntosh replied:  “I don’t have a copy of Michell Sillar’s letter.  I don’t think I have seen it”.

20. Having now given a chronology of events sufficient to make explicable the detail of the complaint made by the present applicant, I turn to that complaint.  It is said that there is at least an arguable case that Mr Dagg’s letter to Mr McIntosh of 1 April 1999 was capable of leading Mr McIntosh into error and, it follows (although I do not think this was said expressly), was capable of leading into error as well the members of Committee MT/9 and Subcommittee MT/9/8, they being persons to whom Mr Dagg intended his letter to be sent by Mr McIntosh, as indeed it was.  It is said that the letter erroneously states impliedly, although it does not say so in terms, that Hely J had granted against the present applicant an interim injunction prohibiting the use by it of the term “electrogalvanizing” in connection with the sale of its products.

21. Support for the argument that there is at least an arguable case of the letter’s capacity to lead into error is sought to be derived from what Mr McIntosh told Mr Jack yesterday.  Accepting the accuracy of the account by Mr Jack of what Mr McIntosh said, as I do in the present circumstances, it would appear that at least one of the recipients of the letter of 1 April 1999 did understand it to be asserting that the use by the present applicant of the term “electrogalvanizing” had been prohibited by an interim injunction granted by this Court.

22. In my view, there is, to say the least of it, an arguable case that the letter was misleading in the respect submitted by the present applicant.

23. I am also satisfied that the letter was one which was sent in commerce.  The statement was made, I infer, to a relatively small group of people and yet, those people appear to have an important role to play commercially so far as the present applicant is concerned.  Mr Jack gave evidence of the significance to his company of there being a standard which would relate specifically to the notion of “electrogalvanising” and it would appear that the letter sent by Mr Dagg on 1 April 1999 has had some adverse effect upon the likelihood of Standards Australia, or at least its relevant committees, producing a standard which will refer in terms to the matter of “electrogalvanising”.  Certainly, Mr McIntosh was expressing yesterday in a dogmatic way the view that the standard would not use the term “electrogalvanising” because of the statement which, as he understood it, had been made to him by BHP that the use of that term had been prohibited, at least on an interlocutory basis, by an injunction granted by this Court.

24. It was submitted by the present respondent that I would not conclude that there was an arguable case that, on its proper construction, the letter of 1 April 1999 did have the capacity to mislead.   It was said that I would conclude that there was no such arguable case: first, by looking at the content of the entire letter; and, secondly, by looking at earlier letters from Michell Sillar.

25. I have already said that, of the two earlier letters from Michell Sillar which I have before me, it is only the second of them which appears to me to be relevant and I must say that, reading the second of those letters, it would appear to me, if it were to matter (and I do not think that it does in the circumstances), that that letter is capable of leading people into error as well, at least those people to whose attention it might come, by its reference in a non-specific way to the existence of a grant of an interim injunction against Welded Tube Mills.

26. It was said by the present respondent that the letter from Standards Australia of 6 April 1999 demonstrated that at least the sender of that letter had not been misled by Mr Dagg’s letter of 1 April 1999. It is not immediately clear to me that that is a matter of much moment, given that the sender of that letter was certainly not the addressee of Mr Dagg’s letter and, for all I know, has no association whatever with Committee MT/9 or Subcommittee MT/9/8. In any event, however, certainly at least on an interlocutory basis, the contents of that letter do not persuade me that what I would otherwise consider to have the capacity to mislead did not have such capacity.

27. On the question of remedies, what has been sought on an interlocutory basis is: first, an order restraining the present respondent from representing in commerce that this Court has made an order restraining the present applicant from using the term “electrogalvanising” in relation to the present applicant’s products; secondly, an order restraining the present respondent from making any representation in commerce concerning the orders made earlier, which representation is likely to mislead or deceive any person as to the nature or effect of the Court’s orders and the significance that may be attributed to the fact that the Court may have made any such order; and, thirdly, an order that the present respondent write to Standards Australia a letter in terms of a draft which was attached to the application, or in such other terms as the Court considers appropriate within such time as the Court may allow. I should say that counsel for the present applicant did offer an undertaking as to damages as the price of the relief which was sought.

28. It was submitted by the present respondent as to the orders which were sought that, even if I were of the view that there was an arguable case that Mr Dagg’s letter of 1 April 1999 was capable of leading people into error, nonetheless, I should not make the orders for a number of reasons.

29. The first reason given was that the conversation which occurred yesterday between Mr Jack on behalf of the present applicant and Mr McIntosh for Standards Australia had disabused Mr McIntosh of any misconception as to what had earlier been ordered by this Court. Reliance was expressly placed on the fact that Mr Jack has deposed to having told Mr McIntosh:  “I have seen a copy of BHP’s letter to that effect.  They’ve got it wrong”.

30. It may be, although I have serious doubts about the matter to which I will refer in another connection in a moment, that the effect of that statement by Mr Jack was to disabuse Mr McIntosh of any possible misconception in the matter, but, of course, as was intended by the present respondent, its assertions in its letter of 1 April 1999 were not limited to Mr McIntosh, but were sent to other persons as well by means of the circular of 8 April 1999.  Even if it were the case that, in some way, this statement by Mr Jack permitted me to draw a line through Mr McIntosh's name, it hardly does the same with respect to the other intended and actual recipients of BHP’s letter and so I put that matter to one side.

31. Another submission which was made was that it was inappropriate to grant the interlocutory relief being sought because it was open to the present applicant itself to correct any false impression which may have been gained as a result of the conduct of the present respondent.

32. I do not accept that it is incumbent on an applicant in these circumstances itself to attempt to correct any assumed misconception by taking the steps suggested.

33. Certainly, a bald assertion by the present applicant that the present respondent got it wrong is not immediately persuasive to those people who receive it.  All that happens is that there is now doubt in the mind of the recipient of the communication as to which one of the two is correct and, no doubt, a recipient may think that each, for its own reasons, is seeking to mislead.

34. The submission apparently went so far as to say that, not only would it be appropriate to leave the present applicant to deny the accuracy of what had been said, but, further, that it would be appropriate to leave the present applicant merely to send to Standards Australia a copy of Hely J’s reasons for judgment.  I must say that I simply cannot regard that as a realistic option to be taken by an applicant who, on the hypothesis which I am now discussing, has been the victim of a statement which is likely to lead its recipients into error.  To send to persons who themselves are not lawyers copies of reasons for judgment and expect them to read them and to draw inferences from them simply does not seem to me to be a step which should be required to be taken, rather than granting to a person relief to which that person would otherwise be entitled.

35. I am therefore prepared to make the first of the three orders sought.

36. Having made the first of the three orders sought, I am unable to see any necessity for the making of the second order sought.  There is only one respect in which it is suggested that there has been any misleading statement on the part of the present respondent and that is in connection with the use of the term “electrogalvanising”. In those circumstances I consider it inappropriate to grant the second order sought.

1. As to the third of the orders, a draft letter has been put before me and, indeed, is referred to in the prayer for relief in the application itself.  As I made plain during the course of the argument, I would not, all other things apart, require the present respondent to send a letter in those terms.  I can quite understand why the present applicant has drafted the letter in the way in which it has, but I have heard no suggestion and there seems to be nothing in the evidence which would lead to a conclusion that any misleading conduct on the part of the present respondent was engaged in knowingly misleadingly and, certainly, the draft letter which is attached to the application would, I think, to the minds of those to whom it is intended to be sent, convey some suggestion that the present respondent had been “caught” trying to cheat in some way.  For that reason I am simply not prepared to require a letter to be drawn in those terms and sent to those to whom the original communication found its way.

2. It has been said to me on behalf of the present applicant that it may be possible for the parties to agree on a form of letter which would be sent.  I would be content to give the parties some time to see if they can agree on such a form.  What I have in mind, instead of the present draft, is the sort of thing which one sees, for instance, in newspapers in which there has been a statement which is alleged afterwards to have been defamatory, something along the following lines:

   “You may have construed what we said in our letter of 1 April 1999 as meaning that the Court had granted an interlocutory injunction preventing Welded Tube Mills from using the word ‘electrogalvanising’ to describe its products.  If that was the conclusion which you reached, we apologise for that. We did not intend to convey that. The fact is that the Court did not grant an interlocutory injunction against the use by Welded Tube Mills of the term ‘electrogalvanising’. We would be grateful if you would send this letter to those persons who received our earlier letter.”

3. Something along those lines would certainly be more acceptable to me than the draft which has been proposed.

4. I direct the applicant to bring in short minutes of order to give effect to these reasons for judgment, which may include an order that the costs of the application for interlocutory relief be paid by the respondent. That is to be done at 2.15 pm tomorrow, Friday, 16 April 1999, at which time, if there has been no agreement as to the form of letter to be sent, I will make orders as to its form.

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz.

Associate:

Dated:             13 May 1999

Counsel for the Applicant:	Mr J. Nicholas
Solicitor for the Applicant:	Phillips Fox
Solicitor for the Respondent:	Mr S. Thompson Michell Sillar
Date of Hearing:	15 April 1999
Date of Judgment:	15 April 1999