Winning Appliances Pty Ltd v Dean Appliances Pty Ltd
[1995] FCA 473
•6 JULY 1995
CATCHWORDS
TRADE PRACTICES - s52 - whether use of trading name similar to trading name of company that has been wound up is misleading or deceptive conduct - whether assignment of name by liquidator transferred goodwill - whether assignee of name can maintain action in passing off when use of name by assignee is limited.
Trade Practices Act 1974, ss 52, 80, 82, 75B
Bridge Stockbrokers Ltd v Bridge (1984) 4 FLR 460
Elders IXL Ltd v Australian Estates Pty Ltd (1979) 78 ALR 171
ACI Australia Ltd v Glamour Glaze Pty Ltd (1988) 11 IPR 269
TJM Products Pty Ltd v A & P Tyres Pty Ltd (1987) 14 FCR 33
Thai World Imports & Export Co Limited v Shuey Shing Pty Ltd
(1990) ATPR 40-988
Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR 40-940
Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981]
1 NSWLR 196
Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156
CLR 414
Cantanae Pty Ltd & ors v Shoshana Pty Ltd & anor (1988) ATPR
40-833
Heller Financial Services Ltd v John Brice (1987) 9 IPR 469
No. NG 974 of 1993
WINNING APPLIANCES PTY LIMITED v DEAN APPLIANCES PTY LIMITED & others
MOORE J
SYDNEY
6 JULY 1995
IN THE FEDERAL COURT OF AUSTRALIA )
)
NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 974 of 1993
)
GENERAL DIVISION )
BETWEEN: WINNING APPLIANCES PTY LIMITED
Applicant
AND: DEAN APPLIANCES PTY LIMITED
First Respondent
GARRY KEITH LEASK
Second Respondent
MARY CHRISTINE LEASK
Third Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 6 July 1995
ORDER OF THE COURT
THE COURT ORDERS THAT:
The matter be adjourned to enable short minutes to be prepared to give effect to the judgment as it concerns injunctive relief.
Written submissions on the questions of damages be filed and served by 13 July 1995 and in reply by 20 July 1995.
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 ) No. NG 974 of 1993
)
GENERAL DIVISION )
BETWEEN: WINNING APPLIANCES PTY LIMITED
First Applicant
AND: DEAN APPLIANCES PTY LIMITED
First Respondent
GARRY KEITH LEASK
Second Respondent
MARY CHRISTINE LEASK
Third Respondent
JUDGE: Moore J
PLACE: Sydney
DATE: 6 July 1995
REASONS FOR JUDGMENT
INTRODUCTION
This is an application by Winning Appliances Pty Ltd ("Winning Appliances") under the Trade Practices Act 1974 ("the Act") alleging Dean Appliances Pty Ltd has engaged in conduct in contravention of ss52, 53(c) and 53(d) of the Act, claiming injunctive relief under s80 and damages under s82. The application also includes a common law claim based on the tort of passing off. The proceedings against the second respondent, Mr Garry Leask and the third respondent, Mrs Mary Leask, are brought on the basis that they have been knowingly concerned in or party to the conduct of the company: see s75B of the Act.
BACKGROUND IN SUMMARY
The events leading to the application arose from the liquidation of Knowles Enterprises Pty Ltd ("Knowles") in 1992. In summary they are that Knowles traded as "Dean Distributing" selling electrical appliances both over the phone and from a showroom. Dean Distributing was a name that had been used for at least twenty years either as a trading name or a diminutive of a company's name to describe a business engaged in that trading activity. The liquidator of Knowles sold the business name to Winning Appliances in early 1993 though that company has not traded under that name in any substantial way. The principal of a rival trader registered both a company entitled Dean Appliances Pty Ltd and the trading name "Deans Appliances" and proceeded to trade under that name. In doing so it used the name "Dean" or "Deans" in a way that had characterised the way Knowles promoted the business of Dean Distributing when trading under that name.
THE EVIDENCE
The following is a more detailed account of events both preceding and following Knowles' liquidation which is, in many respects, uncontentious and it represents findings of fact I have made. Events or facts in issue I identify and deal with on that basis. There are numerous references to the words "Deans" or "Dean" alone or as part of a composite expression. I have endeavoured to repeat the words in the form used in the events I describe notwithstanding that in some instances it might appear that the word used is not correct.
An historical company extract of the Australian Securities Commission records that in June 1958 Dean Distributing Co Pty Ltd was registered. There is no reliable evidence of whether, before then, any business was conducted using the names Deans or Dean Distributing. The activities of the company between 1958 and the 1970's does not clearly emerge from the evidence. There is evidence given by Mr Leask, based on knowledge and belief, that a company known as Dean Distributing Co Ltd traded from an address in Lane Cove until approximately 1982. Lane Cove is a suburb on the lower North Shore of Sydney. However nothing of import, in my opinion, turns on this early history. I am satisfied that by at least 1975 the company was engaged in retailing electrical appliances in competition with Discount Inn Pty Ltd ("Discount Inn"), a director of which, Mr Robert Sharkie, gave evidence. Dean Distributing Co Pty Ltd was selling to customers both on the lower North Shore of Sydney and elsewhere. According to evidence given by two witnesses, Mrs Chapman and Mrs Anderson, which I accept, the company was trading in the 1970's and an aspect of its business was providing quotations on the price of electrical appliances by phone and, if accepted, concluding the sale by phone and later delivering the goods to the purchaser. It is apparent from Mrs Chapman's evidence that she used the word "Deans" in conversation to describe that business.
The company went into voluntary liquidation in 1982 and Discount Inn acquired from the liquidator the business name "Dean Distributing", the company's customer and contact names and the telephone service it had been using in conducting its business. It paid approximately $5,000 for them. That business name was registered in the name of Discount Inn in early 1982. Between 1982 and 1990 Discount Inn traded under the name "Dean Distributing" and the average annual turnover of the business was one million dollars. The customer list that had been acquired in 1982 included individuals and institutions such as the Bank of New South Wales whose employees had been offered a discount service by Dean Distributing Co Pty Ltd. Discount Inn spent an average of $5,000 per year in advertising the business of Dean Distributing and between 1982 and 1990 an advertisement appeared in the Sydney metropolitan commercial telephone directory, the pink pages, as well as the white pages directory. In the 1989 white pages directory there was an entry for "Dean Distributing" and "Deans". Each entry had the same address though different phone numbers. The evidence of Mr Sharkie, which I accept, was that during the period Discount Inn traded under the name Dean Distributing the customer list did not expand significantly.
In 1990 Discount Inn entered into a franchise agreement with Knowles as a result of which Knowles traded under the name Dean Distributing which it acquired unconditionally in February 1991. Mr Sharkie gave evidence that Discount Inn sold six businesses at that time, including the business trading under the name Dean Distributing, for between $20,000 and $200,000. The price paid by Knowles for the business was in that range. The sale to Knowles was of the trading name and the list of customers.
Knowles promoted the business through advertising in the press, on the radio, at the cinema and in the yellow and white pages telephone directories. Evidence was given by Mr Thomas Gibbons who was a credit manager of the Cumberland Newspaper Group ("Cumberland"), which publishes the North Shore Times ("the Times"). The Times is a suburban paper distributed in the upper and lower North Shore. It had a circulation in 1991 and 1992 of a little less than 100,000. Knowles had an account with Cumberland in at least 1992 and 1993. In evidence is an invoice from Cumberland to Knowles dated March 1990 for advertising in the Times. Under a column in the invoice headed "Description" there is a reference to "Deans". In evidence are copies of the first page of the Times of 3-4 January, 8 April, 27 May 1992, one other in 1992 where the date is obscured, and of 14 October 1992. Also in evidence is a bundle of copies of the front page and other pages of the Times tendered in reply by the applicant through a solicitor, Ms Vanessa Hutley. Of those that are the first page there is a block advertisement for "Deans Distributing" and in the later ones the word "Deans" is materially more prominent than the word "Distributing". Also included are larger advertisements placed later in the paper and taking up, I would estimate, a quarter of the page. Again the advertisements are for "Deans Distributing" where the word "Deans" is materially more prominent than the word "Distributing".
I infer from this material that at least for the years 1990, 1991, 1992 and 1993, Knowles regularly advertised its business as "Deans Distributing", giving prominence to the words "Deans", in a suburban newspaper with a large circulation on the North Shore of Sydney. The business was promoted as a retailer of electrical appliances at low prices. There are invoices from Cumberland from which I infer that Knowles also advertised "Deans Distributing" in other suburban newspapers published both for distribution in the northern suburbs of Sydney and elsewhere.
There are financial records and a facsimile letter from radio station 2DayFM from which I infer that Knowles advertised its business of Dean Distributing on that station in both 1990 and 1991 for periods in excess of a week. In evidence is a tape recording and transcript of advertisements which were broadcast. They were written by an employee of Knowles, Mr Mark Bluett, who gave evidence. The radio advertisements refer to the business as "Deans" or "Dean Distributing" and promoted it as a retailer of domestic electrical appliances sold at low prices as well as some other household goods such as sinks and taps. Bluett says, and I accept, that the radio advertising was for periods of about a week two to three times a year.
There are accounts and letters in evidence from which I infer that from mid 1990 to early 1991 advertisements were broadcast in cinemas relating to the business of Dean Distributing and having regard to the nature of the print and radio advertising, I infer that it was of the same character, namely promoting "Deans" and "Dean Distributing" as a retailer of domestic electrical appliances sold at low prices.
Of some significance in these proceedings are advertisements and listings in the yellow, and before that pink, and white pages Sydney telephone directories. While the evidence is not entirely clear I conclude that at least from 1982 in relation to the white pages and from 1987 in relation to the yellow pages, though probably earlier, entries appeared for "Dean Distributing". In the white pages there was one entry for "Dean Distributing" in the alphabetical listing and, since at least 1989 another for "Deans", a text in an abbreviated form suggesting its business as a retailer of appliances, its address and phone numbers. In the yellow pages there was a similar one line entry for "Dean Distributing" and in later years a similar entry for "Deans" as well as a block advertisement which, in 1991, 1992 and 1993, took a distinctive form which is of some significance in these proceedings. The block advertisement was within a rectangular border and within that border was an inner jagged border surrounding a heading in prominent text referring to "Deans", a phone number, 439 7667, and text summarising its business as well as pictures of a number of domestic electrical appliances.
Knowles conducted the business at 109 Alexander Street, Crows Nest though in 1991 moved to larger premises at 113 Alexander Street, Crows Nest. The premises at 109 Alexander Street included a ground floor showroom and one on the first floor. Stock was on display in both showrooms and sales were made to customers who attended the showroom or rang one of the numbers for the business. There was an issue about the size of the premises. Mr Leask gave evidence that he would estimate that the showroom was 400 square feet while Mr Andrew Murrell, who worked at the premises from February 1990 until the move to 113 Alexander Street, estimated the total showroom floor space at 800 square feet. I accept Murrell's estimate as more reliable given that he worked in the premises for over a year. However, it was not in issue that the premises at 113 Alexander Street were much larger. It was suggested by Mr Leask that this signified a change in direction of the business but Murrell said, and I accept, that the floor stock did not increase and, in any event, the majority of the business continued to be transacted by phone. Murrell's business card, in use when employed by Knowles, referred to "Deans Distributing" with the word "Deans" being in significantly larger, bolder and thus more prominent text. The business was referred to in the same way in a flyer distributed to established customers of the business sometime in mid-1992.
At the premises at 109 Alexander Street there was a shop front sign saying "Dean Distributing Discount Wholesalers" and at the premises at 113 Alexander Street an illuminated sign saying "Dean Distributing".
Knowles' conduct of the business was not a success and in November 1992 a creditors' meeting resolved to wind up Knowles and later that month Mr Peter Rodgers of Love and Rodgers was appointed liquidator. At this time several events occurred concerning the dispersal of the remnants of the business of "Dean Distributing".
On 23 November 1992 the liquidator wrote to Telecom indicating he had no further use for a series of telephone numbers that had been used by Knowles. Mr Leask had made enquires of Telecom about the availability of the numbers, probably on 22 November 1992, and had been prompted to do so because he had heard of other traders acquiring the telephone numbers of traders who had ceased to trade. He was told the numbers were available if the outstanding account was paid. It was. On 25 November 1992 Mr Leask wrote to Telecom confirming that the payment of $3,400 for an outstanding account had resulted, in effect, in the transfer of twelve telephone numbers (437 4703, 439 8310, 436 2914, 436 4242, 436 4747, 438 5378, 439 7667, 437 4867, 437 5704, 437 5793, 438 5942 and 906 1053) to Woodwards Pty Ltd ("Woodwards"). The numbers included all phone numbers that had been used by Knowles though one number used by Knowles, 439 7667, was actually transferred to another electrical retailer, described as Harvey Norman, Chatswood. This was the number appearing in the 1991, 1992 and 1993 block advertisements placed by Knowles in the yellow pages telephone directory and which appears to have first been used in a 1990 advertisement. One of the numbers acquired by Woodwards had been a facsimile number. The first five numbers appeared in the white pages directory since at least 1987 against either the entry for "Deans" or "Dean Distributing". Woodwards is a company operating an electrical retailing business at two stores, one being at 460 Sydney Road, Balgowlah. Mr and Mrs Leask are directors and shareholders of Woodwards.
On 4 December 1992, Mr Leask executed an application for the registration of a business name, "Deans Appliances". It identified the applicant as "Dean Appliances Pty Ltd", Mr Leask as a director, the nature of the business as retailing electrical appliances and the address of the applicant as 460 Sydney Road, Balgowlah. The application identified 25 November 1992 as the date of proposed commencement of the business, being the date the transfer of the phone numbers was effected. This application was not lodged until 18 January 1993. On 27 November 1992, Mr Leask's solicitors, J.R. Gibbs & Co, undertook a search at the Department of Consumer Affairs of the business name "Dean Distributing". This search was requested by an employed solicitor, Ms Helen Kanios. At about that time, Mr Leask gave his solicitors instructions to register the business name "Dean Distribution" which they attempted to do but without success. This led to the application concerning "Deans Appliances". On 18 December 1992 an application was made to reserve the company name "Dean Appliances Pty Ltd", and within days, a company in that name was registered. This had been done by Mr Leask's accountants, E.P. Groombridge & Co, and Mr and Mrs Leask became that company's directors. The name "Deans Appliances" was registered in the name of that company on 18 January 1993.
On 21 December 1992, Mr John Winning wrote to the liquidator of Knowles, on behalf of Winning Appliances, confirming an interest that had been expressed orally a few weeks earlier about acquiring "Dean Distributing Pty Ltd". Winning is the Managing Director of Winning Appliances. In January 1993 Winning Appliances commenced to occupy the premises at 113 Alexander Street that had been used by Knowles to carry on business as "Dean Distributing" until it ceased trading several months before. Also in that month, Winning was negotiating with the liquidator to purchase what was then being described as "the name Dean Distributing". On 29 January 1993, Winning wrote to the liquidator making an offer in the following terms:
"I refer to our previous letter of 21 December 1993 (sic) regarding the acquisition of the trading name Dean Distibuting (sic). Our offer for the name is $5500-00 (five thousand five hundred dollars). We would also be interested to know what has happened to the phone numbers and mailing lists."
Winning was not alone in his interest in the name. On 5 January 1993, E.P. Groombridge & Co, the Leask's accountants, wrote to the liquidator in the following terms:
"Knowles Enterprises Pty Limited
Dean Distributing & Co Pty Limited
Deans Distributors
Deans
Dean
..etc
__________________________________
We confirm that a client of this firm is interested in acquiring the trading business names used by Knowles Enterprises Pty Limited (In Liquidation) and its associated companies and businesses.
Prior to our client making an offer in a public tender, we request that you advise of all the group's trading entities and business names used by the group together with their trading addresses and confirmation that each of the same is free of any financial or legal encumbrances.
Your early advices would be appreciated."
After some discussions between the Leasks' accountants and the liquidator, the liquidator wrote to them on 21 January 1993 confirming that the accountants would get instructions on whether they would make an offer for the business name, "Dean Distributing" and requesting that any offer be made no later than 29 January 1993. E.P. Groombridge & Co had been informed on 5 January 1995 that three parties were interested in acquiring the business name. This fact was known to Mr Leask by approximately 21 January 1993. No offer was made by or on behalf of the Leasks and at some stage their accountants informed the liquidator that no offer would be made. On 10
February 1993 a further search was undertaken by J.R. Gibb & Co, of the business name "Dean Distributing" though at the instances of Mr Gibb and not Kanios. It is plain, in my opinion, that Mr Leask was then interested in knowing who had acquired the name and he essentially conceded as much in cross-examination.
On 29 March 1993, $5,500 was paid to the liquidator by Winning Appliances. There is no correspondence in evidence, and none is likely to exist, which records the payment or receipt of this sum nor correspondence accepting the written offer made on 29 January 1993 by Winning. However on 16 April 1993, Mr Mitchell Ball of Love & Rodgers sent to Winning a facsimile memorandum requesting that a form be completed notifying the Department of Business and Consumer Affairs that a person had ceased, and another had commenced, using a business name. A partly completed form was also sent identifying the name as "Deans Distributing", and recording the substitution of Winning Appliances for Knowles. It was signed by the liquidator. On 11 May 1993 a completed form, executed by Winning, was faxed back to Ball. Ball gave evidence that he took steps to have the executed document lodged. It was not, and this became apparent to Ball in January 1994 when Winning called Love & Rodgers and said the registration had not gone through. This was confirmed by a search undertaken by Ball on 6 January 1994 and the recording of the transfer of the name was effected on 27 January 1994 by solicitors acting for Winning Appliances. The name recorded as having been acquired was "Dean Distributing".
I return to the events of early 1993. By April 1993, the Leasks were poised to commence trading using the "Deans" name or variants of it and Winning Appliances had purchased the name "Dean Distributing". What then occurred can conveniently be approached as the pre-notice and post-notice trading of the Leasks, being the time before and after the Leasks had notice of the concerns of Winning and Winning Appliances of the use they were making of the "Deans" name. Those concerns were made known in a letter of 17 June 1993 from Harris and Company, solicitors, addressed to the Directors of Woodwards demanding they not use the name "Deans" or names that were substantially the same. At this point it is necessary to move from what is essentially a chronological account of the facts to consider in more detail the evidence of the witnesses about what was done by the protagonists and why.
Prior to 17 June 1993, Mr Leask obtained printed letterhead and invoices with the name "Deans Appliances" at the top with the words "Deans" in significantly larger, bolder and thus more prominent print. He secured a listing in the name "Dean Appliances" in the white pages directory though with the number 907 0377 and a new address. He also procured an entry into the 1994 yellow pages of a block advertisement with the same number, 907 0377. The advertisement was in substantially the same form, and the same size, as that which had appeared in the 1991, 1992 and 1993 yellow pages directory which I described earlier in relation to the trading by Knowles under the name "Dean Distributing". There were some changes to the text and, in particular, the word "Appliances" appeared under the name "Deans". "Deans" was in the same bold type and the largest word in the advertisement. In the 1994 advertisement the word "Appliances" appeared where formerly the words "Direct to the Public" appeared. Both were in smaller type below the word "Deans". The advertisement retained the same format with pictures of the same appliances and a jagged inner border. It bore a close resemblance to the advertisement Knowles had used. A similar advertisement is repeated in the 1995 yellow pages.
From 1 April 1993 to June 1993 five of the ten telephone numbers that Woodwards had acquired were answered, according to Mr Leask, "Deans", "Deans Appliances" or "Discounts" but that following the letter of 17 June 1993 the use of the name "Deans" in isolation ceased. It also appears that the five numbers formerly used by Knowles trading as "Dean Distributing" were answered primarily by Mr Leask or Ms Kathleen McGufficke, employed as an office assistant by Woodwards, at the Balgowlah store. It appears the other five numbers acquired in late 1992 were directed to another location. However what occurred from that point, in terms of telephone responses, is the subject of evidence from a number of witnesses.
Early in this judgment I referred to two witnesses, Anderson and Chapman. Chapman had purchased major electrical appliances from "Dean Distributing" over a twenty year period. In January 1994 she needed a new washing machine. She obtained a number from directory assistance and rang it. In her affidavit she said she asked "is that Deans?" which was answered affirmatively. She proceeded to ask for a quotation, was rung back with the person proffering the quote saying "this is Deans". The sale was effected by phone. There was delay in delivery and, in due course, she again rang and the phone was answered "Deans". In cross examination she conceded that the words "Deans Appliances" may have been used, though she remained inclined to think that it was just "Deans". Chapman was the only witness giving evidence about phone responses who was not, in some way, connected with the parties to these proceedings. I should observe that the invoice she was sent in January 1994 was in the same form that Mr Leask had had printed in early 1993, that is, with the word "Deans" the most prominent text on the invoice.
Mr Hansen, a solicitor in the employ of Harris & Company, rang the 907 0377 number in September 1993 which was answered "Deans Appliances". This is consistent with the evidence of Mr Leask. Calls were also made on that number by Ms Suzanne Solomon, (and another number 439 1177) who is Winning's personal assistant. The phone was answered "Dean Appliances". However Ms Josephine Mancusco, who is a sales person employed by Winning Appliances, gave evidence of making calls in January and February 1994 to both 439 1177 and 907 0377 and that in four of eight calls the phone was answered "Deans" and in the other four "Deans Appliances". I should indicate that 439 1177 was a number for a telephone sales business selling electrical appliances which had, until 1993, been conducted by the Leasks under the name "Club Discounts" from premises at Clarke Lane, Crows Nest to which 907 0377 was also connected. However the incoming calls at these premises are channelled through a rotary system so that the person who answers does not know which number has been used to make the call. Calls made on the "Club Discounts" number would have been answered in the latter part of 1993 and subsequently, according to Mr Leask, "Deans Appliances".
Mancusco was cross examined about her evidence as to how the phone was answered. I found her evidence on this issue difficult to accept though allowance must be made for the fact that, at the time she gave evidence, she had just returned by plane from Malaysia. She painted what was a not entirely credible picture of making calls on a mobile phone in the street while taking notes of what was said. While she said she had kept the notes they were never produced.
On the other hand the evidence of those called by the respondents on what was said when phones were answered was to the effect that the phone was, from June 1993 onwards answered "Deans Appliances". Mr Leask, McGufficke, Mr Trevor Cupitt, salesman employed by Woodwards and Mr Christopher Tracey, sales assistant employed by Woodwards all said they answered calls on Deans Appliances number as "good morning (or good afternoon) Deans Appliances" though each accepted that if someone said in response "is that Deans?" they would be likely to say "yes, this is Deans Appliances" and proceed to try and effect a sale. I am satisfied that after June 1993 phones relating to the Deans Appliances business were answered "Deans Appliances" and not "Deans" simpliciter but that nothing was done to disabuse a customer who then enquired whether it was "Deans".
Viewing the conduct of the Leasks and companies with which they are associated from a broader perspective, it is clear from the evidence as a whole that trading has taken place since April 1993 exploiting the name "Deans" or variants of it. This has been done to derive benefit from the goodwill attaching to the name resulting from the trading activities of Knowles and its predecessors. The company Dean Appliances Pty Ltd was incorporated for that purpose and the trading name "Deans Appliances" was registered and has been used for the same purpose. I reject the evidence of Mr Leask when he said that one reason he selected the name was that, having often observed the name "Deans Juices" at Warringah Mall, he admired the name "Deans" because it was so easy to say.
I turn now to consider the conduct of Winning Appliances since early 1993 as it relates to trading under the "Deans" name. It appears the premises at 113 Alexander Street were empty for the period November 1992 to January 1993 when Winning Appliances commenced to occupy them. The signage on the outside of the building concerning "Dean Distributing" was covered by signage referring to "Winning Appliances". No trading was undertaken in the "Dean Distributing" name until November 1993.
The letter of 17 June 1993 I earlier referred to from Harris & Company, solicitors, was written after Winning became aware that a business was operating which was using a name including the word "Deans". This came about because as a customer of Winning Appliances had, about that time, referred to a lower price offered by "Deans" in the context of a discussion with a salesman employed by Winning Appliances.
In early July 1993 a document entitled "Memorandum of Assignment" was prepared by Hansen and, in due course, executed by the liquidator and Winning Appliances. The document recites that an agreement had been reached on "21 (sic) March 1993 to assign the trade name" and the operative provisions purport to be an assignment of "the trade name with goodwill" including collateral rights. One right is identified as the right to restrain the use of the trade name. Evidence was given by Hansen and Winning as to the circumstances in which this agreement came into existence. However it is clear, and essentially conceded, that it was intended only to reflect the transaction that occurred in March 1993. The true character of the transaction is to be gleaned from the events in March 1993 and not the existence or contents of the document executed in July 1993.
In November 1993 steps were taken by Winning to use the name "Dean Distributing" in trading. That business was given a separate phone number, 437 5042, which, in due course, was entered into the 1994 white pages directory. A very small sign was placed in the window of the showroom at 113 Alexander Street referring to Dean Distributing and though the sign has several obvious errors, I do not view them as material. In any event the overwhelming impression from photographs in evidence gained from other signage on the building is that the showroom is a "Winnings" establishment. Even from November 1993 the employees of Winning Appliances who sold in the showroom did not wear badges or uniforms to indicate a connection with "Dean Distributing" nor was there any internal signage to indicate that business was operating. However at this time staff were asked to enter some sales in the name of "Dean Distributing" and business cards were printed in that name. All this was on the advice of solicitors. The practice of assigning sales to "Dean Distributing" stopped in July or August 1994. I deal later in this judgment with a submission of the respondents that Winning Appliances never intended to trade in the name of Dean Distributing and that the name was acquired to effectively bring to an end the use that might be made of it in competition with that company. These proceedings were commenced in December 1993.
The respondents submitted the applicant has no standing to bring these proceedings. This is plainly wrong and denies the width of the words "any other person" in s80: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre (1978) 140 CLR 216 at 226 and 234.
HAS THERE BEEN CONTRAVENTION OF S52
The first issue of substance is whether Dean Appliances Pty Ltd engaged in conduct that was misleading or deceptive or likely to mislead or deceive, that is, conduct proscribed by s52. Section 52 should be applied in terms: see Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1981) 149 CLR 191 at 198 per Gibbs CJ. As has recently been said by Gummow J in Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31 at 40:
"It is true, as was pointed out by French J in State Government Insurance Corporation v Government Insurance Office of New South Wales (1991) 28 FCR 511 at 561-562, that the large number of cases brought under the Act in respect of conduct analogous to passing-off has encouraged the notion that some representation must be demonstrated as an element of conduct in contravention of s52. But, consistently with regard to the natural meaning of the terms of s52, the question is whether in the light of all relevant circumstances constituted by acts, omissions, statements or silence, there has been conduct which is or is likely to be misleading or deceptive. Conduct answering that description may not always involve misrepresentation: see Henjo (supra) at 93, per Lockhart J, and see Mr Justice R S French's paper "Law of Torts and Part V of the Trade Practices Act" in P D Finn (ed), Essays on Torts (1989), pp 186-188."
Before considering the conduct of Dean Appliances Pty Ltd I should refer to a matter raised by counsel for the applicant in another context. The principal business with which Mr and Mrs Leask are associated is carried on by Woodwards. Dean Appliances Pty Ltd does not appear to carry on business in a manner that might be expected of a retailer of electrical goods. Those who act on its behalf are employees of Woodwards, it has no bank accounts nor cheque books and has lodged no tax returns since its incorporation nor annual returns with the Australian Securities Commission. There is no documentation in relation to the purchase of goods from suppliers. It does issue invoices to purchasers. This I infer from the invoice issued to Mrs Chapman. It also provides written quotations.
The respondents did not raise an issue about whether any relevant conduct was the conduct of Woodwards rather than of Dean Appliances Pty Ltd. The conduct that might contravene s52 includes the placing of the advertisement in the 1994 and 1995 yellow pages and 1994 white pages directories, the use of letterhead and invoices containing a reference to "Deans" in a form that highlights it and the use that is made of the words "Deans" in the name "Deans Appliances" during telephone conversations to sell goods and the adoption of the word "Deans" in such conversations. In each instance there is a use of the business name registered in the name of "Dean Appliances Pty Ltd" or a truncated version of the company's name itself. In the absence of a contention by the respondents that this conduct is not the conduct of Dean Appliances Pty Ltd but the conduct of Woodwards, I can more comfortably infer from the evidence that the latter company is, to the extent that its employees are engaged in trading under the name "Deans Appliances" and using telephone lines acquired by it, doing so as agent for the former. By operation of s84(2) of the Act this conduct is to be treated as conduct of Dean Appliances Pty Ltd.
I am satisfied on the evidence that Dean Appliances Pty Ltd has engaged in conduct in contravention of s52. At the time Knowles went into liquidation it had been trading under a distinctive name, "Dean Distributing", rendered distinctive by the words "Dean" or "Deans" depending upon which variant was used. That name and those words had been used for at least twenty years to signify a business operating principally on the North Shore of Sydney selling electrical goods at what were promoted as competitive prices. While the word "Deans" has, on the evidence, been used in promotional material including telephone directories, only since 1989, it is a word that, having regard to evidence of Winning and Mrs Leask, was a diminutive of "Dean Distributing" in use for some years before that. The widespread use of the name in advertising both by Knowles and before that Discount Inn, is sufficient to found an inference that it was a name well known in the community from which the business principally drew its customers, namely the North Shore of Sydney. Evidence given by Mr Leask, Mrs Leask, Sharkie, Winning, Chapman and Anderson, which is unnecessary to detail, also point to the name being well known in that community.
In adopting the distinctive element of the name of the business that Knowles had traded under, Dean Appliances Pty Ltd was falsely representing to customers who had dealt with that business either when owned by Knowles, Discount Inn or Dean Distributing Pty Ltd, that it was the business they had, at the relevant time, dealt with or a successor to that business. It would have the same effect on potential customers who knew of the name through the promotional material that had been used and/or through contact with customers who had dealt with the business.
The goods that were sold by the business trading under that name were electrical appliances. As apparent from the evidence of Chapman they include items of significance that are likely to be purchased infrequently. A purchaser who had dealt with the business some time before would be likely to believe that the business referred to in the 1994 and 1995 yellow pages block advertisement placed by Mr Leask and in the 1994 white pages, was the business with which they had dealt in the past. The manner in which the phone was answered would not, in my opinion, disabuse them of that belief. Had a purchase been made, the invoice would have confirmed that belief and if a written quotation had been given, it would have been given using letterhead of the type I earlier described with the words "Deans" dominating the heading. As to the use of a name containing a significant element of another name see generally Bridge Stockbrokers Ltd v Bridge (1984) 4 FLR 460 especially 466-468 per Smithers and Woodward JJ and 474-475 per Lockhart J and the more recent case of B.R. Garner Investments Pty Ltd v Garner (1993) ATPR 41-200. The fact that Knowles ceased trading under the name "Dean Distributing" in November 1992 and the name was not thereafter used, in any substantial way, by Winning Appliances does not alter the likelihood that the conduct of Dean Appliances Pty Ltd was misleading and deceptive. I was referred to several authorities where a name or get up had not been used by the applicant or interests associated with the applicant for some time before the alleged contravening conduct occurred: see the judgments of Pincus J in Elders IXL Ltd v Australian Estates Pty Ltd (1979) 78 ALR 171 and Lockhart J in ACI Australia Ltd v Glamour Glaze Pty Ltd (1988) 11 IPR 269, relied on by the applicant and Fisher J in TJM Products Pty Ltd v A & P Tyres Pty Ltd (1987) 14 FCR 33 and Gummow J in Thai World Imports & Export Co Limited v Shuey Shing Pty Ltd (1990) ATPR 40-988 relied upon by the respondents. Ultimately cases such as these turn on their own facts though they collectively provide a useful discourse on the relevant principles.
Returning to this matter, the relevant time to assess whether the conduct of the respondents contravenes s52 would ordinarily be the date Deans Appliances Pty Ltd commenced trading under the name "Deans Appliances", that is April 1993, see Thai World Imports, supra, at 50-849 per Gummow J, though the fact that Winning Appliances was not using the name "Dean Distributing" and did not do so for some months thereafter may be relevant. If so, it is, as Gummow J points out, "a question of fact and degree".
I will deal shortly with a submission of the respondent, which I reject, that the name "Dean Distributing" was acquired by Winning Appliances to bring to an end its use. The name or variants of it was associated with the sale of electrical appliances which are not likely to be bought frequently and it is a name that had been used for at least twenty years. It was a name the notoriety of which would, in my opinion, be likely to have endured the interregnum between the time Knowles ceased using it in November 1992 and the time Winning Appliances started using it in a limited way in November 1993 and indeed to the present. However, on one view of the approach I have taken to the conduct of Deans Appliances Pty Ltd, the failure of Winning Appliances to use the name "Dean Distributing" is irrelevant. If the contravening conduct is misleading and deceptive because it portrays the business of Dean Appliances Pty Ltd as that of Knowles or its predecessors, then all that is relevant is that there persists in the relevant section of the community a belief that Knowles continues to trade.
The respondents submitted that the impugned conduct was not misleading and deceptive and was at most, merely confusing. That distinction is drawn in a number of authorities: see Hornsby Building Information Centre Pty Ltd, supra, at 229, McWilliam Wines Pty Ltd v McDonalds System of Australia Pty Ltd (1980) 33 ALR 394 at 398, Taco Company of Australia Inc v Taco Bell Pty Ltd & ors (1982) 42 ALR at 201, Bridge Stockbrokers Ltd, supra, Barry v Lake Jindabyne Reservation Centre Pty Ltd (1985) 8 FCR 279 at 285 and TJM Products Pty Ltd, supra, at 39. In my opinion the manner in which the respondents have used the words "Deans" in the yellow pages advertisements and also the white pages, its invoices and letterhead used for quotations and to a lesser extent the way it is used as part of the name when the phone is answered would not have simply led to confusion. The words "Dean" or "Deans" is distinctive and formed a prominent part of the promotional material used by Knowles. Its continued use by Dean Appliances Pty Ltd in a way that continued to give it prominence would do more than confuse those that had dealt with or were aware of the businesses conducted by Knowles and Discount Inn before that. It would have led them to believe it was the same business. That prominence and the meaning the word "Deans" would convey is not lost, in my opinion, by the use, in some instances though not all, of the word "Appliances" with it. I do not view as significant a range of factors referred to by the respondents said to distinguish the business conducted by Knowles from that conducted by them such as the fact that Dean Appliances Pty Ltd has no showroom, does not advertise in the Times, can only be contacted by phone, does not offer credit nor accepts credit cards. As I have already said, when considering evidence given by Murrell, the majority of the business of Knowles was transacted by phone. The only qualification I make to these last remarks is that the class that will be misled or deceived in any material way are those former customers or people who were aware of the business formerly conducted by Knowles and its predecessors, who might avail themselves of the facility of purchasing electrical appliances by phone. However this was the major part of Knowles business. In view of the conclusion I have reached about s52 it is unnecessary to give detailed consideration to the alleged contravention of s53(c) and (d).
The next issue is whether the conduct of Dean Appliances Pty Ltd contravening s52 has caused Winning Appliances to suffer loss or damage recoverable under s82 and whether injunctive relief should issue under s80. There was no submission made that the grant of one remedy should preclude the grant of the other.
WHETHER AND IN WHAT FORM INJUNCTIVE RELIEF SHOULD ISSUE UNDER S80
I first consider whether injunctive relief should issue. Winning Appliances has acquired for valuable consideration the business name "Dean Distributing". Whether it acquired any goodwill upon acquiring the name is to be determined by reference to the transaction effected in March 1993 and not the contents of the document executed in July 1993. While the respondents submitted that the document was a sham, it is only of that character if it falsely represents what occurred in March 1993: see Re State Public Services Federation; Ex parte Attorney-General (WA) (1993) 113 ALR 385 at 405 in which Toohey J said:
"The term 'sham' has been considered by Australian and English
courts on a number of occasions since Evatt J wrote. The consideration has generally arisen in the context of a commercial transaction, very often for the purposes of the Income Tax Assessment Act 1936 (Cth). As a result of those decisions the term has come to be applied where persons have entered into an ostensible transaction as a disguise to conceal their real transaction. In Sharrment Pty Ltd v Official Trustee in Bankruptcy Lockhart J concluded, after a review of the authorities:
'A "sham" is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive.'"
As to what constitutes goodwill, that matter was considered by Lockhart J in ACI Australia Ltd, supra, at 279:
"Goodwill is itself a somewhat ephemeral notion. The classic definition of goodwill is that of Lord Linley in Commissioners of Inland Revenue v Muller & Co's Margarine Ltd [1901] AC 217 at 235 as:
'Goodwill regarded as property has no meaning except in connection with some trade, business or calling. In that connection I understand the word to include whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers and agreed absence from competition, or any of these things, and there may be others which do not occur to me. In this wide sense, goodwill is inseparable from the business to which it adds value, and, in my opinion, exists where the business is carried on.'"
In the present case, as I have already discussed in the context of considering s52, the name "Dean Distributing" or variants of it had a significance on the North Shore of Sydney and was of value. The acquisition of the name did not result in the acquisition of the goodwill of the business of Knowles in the broadest sense as would have occurred if, for example, the leasehold of the premises it used had been assigned, customer names had been made available and telephone numbers transferred. However in acquiring the name, Winning Appliances acquired the benefits that would flow from its use which would include its notoriety amongst former customers or those who otherwise knew the business and had some favourable view of it. To this extent Winning Appliances acquired goodwill. It is thus not correct to say, as the respondents submitted, that the document executed in July 1993 was a sham. In so far as it refers to the acquisition of goodwill in the way I have just discussed, it reflects the effect of the transaction that occurred in March 1993. However, plainly, in my opinion, the reference in the July 1993 document to the acquisition of the right to restrain the use of the trade name was a lawyer's embellishment made with the possibility of proceedings of this type in mind. Indeed the entire document was created for that purpose. So much was essentially conceded by Winning and Hansen in evidence.
Again for reasons which I have explained, the name "Dean Distributing" is likely not to have lost its value notwithstanding the fact that Winning Appliances has not, in any material way, traded under that name since its acquisition. Not only did Winning Appliances acquire the name for valuable consideration, it did so in circumstances where Mr Leask was aware that it might be acquired, was aware that it was of value and had goodwill attaching to it, as he conceded in evidence, though he was only prepared to concede "a small amount" of goodwill. Further Mr Leask had declined to make an offer to acquire it notwithstanding the opportunity he had to do so.
The respondents submitted that the name "Dean Distributing" was acquired by Winning Appliances for the purpose, not of trading under it, but to prevent the use of the name by a trading competitor. That this was his intention was put to Winning in cross examination and denied. The respondents rely on the chronology of events in 1993 and 1994 as indicating that this was the real purpose of the acquisition of the name.
From January 1993 Winning Appliances occupied the premises at 113 Alexander Street formerly occupied by Knowles. In doing so it did not overtly assume the mantle of Dean Distributing. However it is to be remembered that the purchase price for the name was not paid until late March 1993 and it was in mid April 1993 that the liquidator took steps to have the name transferred. Winning took several weeks to execute and return the transfer. However that does not appear to be of any real significance given the explanation of Winning, which I accept, that the matter was not seen as a high priority during a period when he was busy as a result of the opening of the premises at 113 Alexander Street. Winning said, and I accept, that he believed he could not trade under the name prior to its registration. Thus it was not until mid May 1993 at the earliest that it could reasonably be expected that Winning Appliances would commence trading under that name.
However it was shortly after in June 1993 that Winning became aware that someone was still using the "Deans" name in trading. As earlier mentioned, Winning's solicitor wrote on 17 June 1993 to Woodwards demanding that the use of the name "Deans" or variants of it not be used and seeking an undertaking to that effect. The response was a letter dated 29 June 1993 in which no undertaking was proffered and, in substance, an assertion made that Woodwards would continue to use the name "Deans Appliances". Winning explained that his failure to use the name in the period after June 1993 was based on a desire to ensure that the use of the name by Woodwards had ceased. This initially appears a curious response given the assertion by Woodwards of a right to continue to use the name in the letter of 29 June. However Winning's explanation, which I accept, was that he then believed that use of the name had ceased and the letter was framed as it was because Woodwards did not wish to make any admissions. This explanation is consistent with a letter sent by Winning's solicitors on 16 September 1993 noting that "inquiries indicate(d) (Woodwards) has ceased to use 'Dean' in any connection" and indicating that no further action would be taken while that situation continued.
In late October 1993 Winning again became aware, through comments made by a customer to a salesperson of Winning Appliances, that the name "Deans" was still being used. Winning said, which I accept, that this led to the comparatively nominal efforts, upon advice, to use the "Dean Distributing" name in trading. Winning also said, which I accept, that when he became aware in June 1993 that the name "Deans" was being used by a competitor he was reluctant to commit funds to promoting the name for his company's benefit. I also accept that in September 1993, before the revelation of continued use in October 1993, he was giving consideration to the use that might be made of "Dean Distributing".
Counsel for the respondents sought to impugn Winning's credit. Winning appeared a confident and self-assured witness. He did not, contrary to the suggestion made by counsel for the respondents, appear to be giving a false account of his beliefs and intentions at the relevant times. What are said to be inconsistencies between an affidavit sworn by Winning on 18 February 1994 and a one sworn on 13 October 1994 are reconcilable. The first suggests that after September 1993 he was giving consideration as to how best use the name, while the second refers to a positive intention since January 1993 to use the name for a telephone ordering business. When those paragraphs were put to Winning he explained that the consideration of how to use the name concerned matters such as whether one salesperson would be given the task of answering phones and where he would be located. I found this explanation plausible and I accept Winning as a witness of truth. I am satisfied the name "Dean Distributing" was acquired by Winning Appliances for the purpose of actively using it in a telephone sales business and not as a means of preventing its use by competitors.
Injunctive relief is sought against not only Dean Appliances Pty Ltd but also Mr and Mrs Leask on the basis that they have been knowingly concerned in or party to the contravention of s52 by the company: see s75B of the Act. I am satisfied that Mr Leask was knowingly involved in the contravention and was aware of the circumstances that gave the company's conduct a misleading or deceptive character: see Yorke v Lucas (1985) ATPR 40-666 and Wheeler Grace & Pierucci Pty Ltd v Wright (1989) ATPR 40-940. Counsel for the respondents did not submit otherwise. However there was an issue about Mrs Leask's involvement. It is clear from the evidence that Mrs Leask was aware of the name "Deans" as a trade name for most of the time she had been in the electrical appliance retailing business which was seventeen years. She was aware of the inquiries her husband made about the availability of the telephone numbers at the time they were acquired in November 1992 and the interest in them related to business that may attach to them. She was also aware that in November 1992 Knowles went into liquidation and I infer that she was aware that Knowles was, at the time, trading under the name "Dean Distributing". During cross examination she made the point that the telephone numbers that were acquired were not all advertised and that they were not answered "Deans Appliances" initially though were after April 1993. She was aware that the invoicing had been done in the name of "Deans Appliances Pty Ltd" and she would, I infer, have been aware of the prominent use of the word "Deans" on the form of the invoice used.
Generally I gained the impression that Mrs Leask endeavoured to answer questions directly and honestly. She indicated in her evidence that by saying on the phone "Deans Appliances" she believed that a distinction was being drawn between that business and the business trading under the name "Dean Distributing" and this was done to ensure that the former would not be mistaken for the latter. However I find this evidence difficult to accept given that she had earlier candidly admitted that during the seventeen years or so she knew of "Deans Distributing", when anyone said "Dean" or "Deans Distributing" she knew it as "Deans" and when anyone said "Deans" she knew it as "Deans Distributing" or "Deans", and that she later said in evidence that "Dean Distributing" was, in her mind, no different from "Deans". While Mrs Leask's knowledge, as established in the evidence, was less than that of Mr Leask I am satisfied she was aware both of the steps taken to adopt the name "Deans Appliances" and that in so doing, "Dean Appliances Pty Ltd" would benefit from the value the name "Deans" and "Dean Distributing" had acquired when used by Knowles and its predecessors. The benefit would derive from the belief former customers or those otherwise aware of the business conducted by Knowles and its predecessors would have that they were dealing with the same business.
The injunctive relief sought in the application was:
An order that the First, Second and third Respondents by themselves, their servants and
agents be restrained from carrying on the business of retailing, wholesaling, acting as an agent in the purchase of electrical appliances under any or all of the following trade names or any other name substantially identical or deceptively similar thereto:
(a)Dean Appliances;
(b)Deans Appliances;
(c)Deans;
(d)Dean Distributing;
(e)Dean.
An order that the First, Second and Third Respondents by themselves, their servants and agents be restrained from using in advertising any of the trade names referred to in order 1.
....
An order that the First, Second and Third Respondents by themselves, their servants or agents be restrained from in trade or commerce representing that they are in any way associated with the business carried out under the name 'Deans' or ' Dean Distributing'.
An order that the First, Second and Third Respondents by themselves, their servants or agents do all things necessary or appropriate to be done so as to change the name of the First Respondent to exclude and replace the words 'Dean Appliances' from the name of the First Respondent.
An order that the First, Second and Third Respondents by themselves, their servants or agents do all things necessary or appropriate to be done so to transfer the Sydney telephone number '907.0377' and Sydney facsimile or telephone number '949.3595' to the applicant.
An order that the First, Second and Third Respondents by themselves, their servants or agents, do all things necessary or appropriate to be done so to transfer the New South Wales registered business name 'Deans Appliances' to the applicant."
I propose to issue orders restraining Deans Appliances Pty Ltd and Mr and Mrs Leask from using the name "Deans Appliances" and accordingly would issue orders dealing with the matters comprehended by orders 2, 4 and 5.
Order 6 concerns a telephone number. There was an issue about whether I should require the respondents to take steps to effect a transfer to the applicant of the telephone numbers acquired by Woodwards in November 1992. I understood the submission to relate to numbers in addition to the numbers referred to in order 6 in the application. While the discretionary power in s80 to grant injunctive relief is wide: see generally ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248, it is to be exercised to address the conduct that has or is likely to contravene, relevantly, s52: see Mikasa (NSW) Pty Ltd v Festival Stores (1972) 127 CLR at 651 per Gibbs J and should not prohibit conduct falling outside the boundaries drawn by s80: see ICI Operations, supra, at 267 per Gummow J and Thomson Australia Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150 at 161. As counsel for the respondents pointed out, those numbers were acquired for valuable consideration, namely the payment of $3,400 in settlement of outstanding accounts. They were acquired in circumstances where the liquidator of Knowles had made clear to Telecom that he had no further use for them. In the absence of the adoption and use of the name "Deans Appliances", the acquisition of the numbers and their use to effect sales of appliances by phone would not, in my opinion, have been conduct caught by the provisions of s52.
However it may be accepted that the numbers now appear in the white pages and yellow pages directories in association with the name "Deans" or "Deans Appliances" in entries placed there by the respondents and that their placement constitutes part of the conduct contravening s52. No order can be made that would have the effect of removing the existing entries in the current directories. An injunction requiring the transfer of the numbers to Winning Appliances would, in my opinion, be going beyond what is necessary to restrain the contravening conduct. At most all that could be required of the respondents is that they take steps to terminate the telephone service represented by each of the numbers for which an entry is found in the white pages or yellow pages directories in the name "Deans", "Deans Appliances" or "Deans Appliances Pty Ltd". I will grant an injunction requiring that step to be taken.
DAMAGES UNDER S82
I turn now to consider the question of damages. Whether damage has been caused by the proscribed conduct is to be determined by reference to principles recently discussed by the High Court in Wardley Australia Ltd v State of Western Australia (1992) 175 CLR 514, where the majority comprising Mason CJ and Dawson, Gaudron and McHugh JJ, made clear at 525 that the word "by" expresses the notion of causation and s82(1) "should be understood as taking up the common law practical or common‑sense concept of causation recently discussed by this Court in March v Shamare (E & M.H.) Pty Ltd (1991) 171 CLR 506, except in so far as that concept is modified or supplemented expressly or impliedly by the provisions of the Act": see also Janssen-Cilag Pty Ltd v Pfizer (1992) 109 ALR 638 in which Lockhart J said:
"The use of the preposition 'by' in s82(1) is important, it indicates the requirement that there be a sufficient cause or link between the respondent's conduct and the recoverable loss or damage: Brown v Jam Factory Pty Ltd (1981) 35 ALR 79 at 88; Elna Australia Pty Ltd v International Computers (Aust) Pty Ltd (No 2) (1987) 16 FCR 410 at 418; 75 ALR 271. 'By' is used in s52(1) in the sense of 'by reason of' or 'as a result of': Munchies Management Pty Ltd v Belperio (1989) 84 ALR 700; (1989) ATPR 40-926 at 50,037. Loss or damage must directly result from or be caused by the respondent's conduct. The respondent's conduct must be the real or direct or effective cause of the applicant's loss, it must have been 'brought about by virtue of' the conduct which is in contravention of s52: Elders Trustee & Executor Co Ltd v EG Reeves Pty Ltd (1988) 20 FCR 164; 84 ALR 734."
Further, as Deane J said in March, supra at 524:
"None the less, the question of whether conduct is a 'cause' or injury remains to be determined by a value judgment involving ordinary notions of language and common sense."
In its written submissions the applicant indicated it still sought the relief set out in the application filed on 10 December 1993. Putting to one side orders directed to restraining use of the name "Deans Appliances", the relief sought was:
An order that the First, Second and Third Respondents within 7 days deliver up to the solicitors for the applicant all purchases orders, invoices and sales documentation, correspondence and file notes and other documents relating to the business carried out under the name "Deans", "Dean Appliances" and "Deans Appliances" in their power, possession or control.
Account of profits.
Damages including damages under section 82 of the Trade Practices Act 1974.
Such further or other orders as the Court thinks fit."
The claim for an account of profits I treat as arising in the claim based on the tort of passing off. The availability of that remedy when a contravention of s52 is established is doubtful: see Telmak Teleproducts (Australia) Pty Ltd v Coles Myer Ltd (1988) 84 ALR 437 at 455 per Gummow J; Munchies Management Pty Ltd v Belperio (1989) ATPR 40-926 at 50,038.
This case is somewhat unusual. Even assuming a relevant causal nexus, the evidence does not establish that the conduct of Dean Appliances Pty Ltd has damaged or diminished the value of the name "Dean Distributing" and I do not accept the submission of the applicant, faintly put, that it has. It is not readily apparent that the evidence discloses the extent to which, if at all, Winning Appliances has lost business that it otherwise would have obtained trading under the name "Dean Distributing", that is, loss of sales by diversion. Any damages recoverable on this basis are not likely to be significant given that Winning Appliances has not traded under the name save in the most limited way. It may be that goods have been purchased from Dean Appliances Pty Ltd that, in the absence of that company trading as "Deans Appliances", would have been purchased from Winning Appliances trading under its own name. There is no evidence that would obviously support such a finding and, in any event, any loss that may thereby have been suffered, may lack a sufficient degree of connection with the contravening conduct of Dean Appliances Pty Ltd. I have accepted that Winning Appliances intended to trade under the name "Dean Distributing" and there have been delays in doing so because of the conduct of the respondents. However it is not immediately apparent what, if any, loss has been suffered as a consequence. Nonetheless the Court is obliged to assess damages which are not capable of precise proof: see Prince Manufacturing Inc v ABAC Corporation Australia Pty Ltd (1985) 4 FLR 288 and Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 164. However the submissions of both parties on damages were limited and I assume that the principal focus of each was on whether injunctive relief should be granted. Indeed their submissions were little more than the assertion of right to damages on the one hand and a denial on the other. I have decided in those circumstances, I should give the parties an opportunity to make further brief written submissions on the question of damages before finally determining that issue if it is a matter the applicant intends to pursue further.
THE ACTION IN TORT - PASSING OFF
I turn to consider the claim brought by the applicant based on the tort of passing off. The essence of the tort of passing off was summarised by Powell J in Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd [1981] 1 NSWLR 196 at 204:
"While in the early stages of the development of the tort of 'passing-off' the subject matter thought to require the protection of the law appears to have been regarded as the plaintiff's goods, it is, I think made clear by the later cases (see Erven Warnink BV v J Townend (Hull) Ltd [1979] AC 731; Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216; Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd [1980] 2 NSWLR 851) that the object of the law's intervention into the arena of trade or business is the preservation of a trader's or businessman's, goodwill from appropriation by another trader or businessman.
This being so, it seems to me (as, indeed, it seemed to me at first instance in Cadbury Schweppes Pty Ltd v Pub Squash Co Pty Ltd (Powell J [1980] 2 NSWLR 864(n) - the test I then applied appears to have been approved by the Privy Council (see [1980] 2 NSWLR 851, at p 859)) that if he is to succeed in an action for passing-off, a plaintiff must establish: (a) that his goods have, or his business has, acquired a certain goodwill or reputation; (b) that the actions of the defendant have caused, or in all probability will cause, the ordinary purchasers of the plaintiff's goods, or the ordinary customers of the plaintiff's business, to believe that the defendant's goods are those, or that the defendant's business is that, of the plaintiff; (c) that, in consequence, the plaintiff has suffered, or is likely to suffer, injury in his trade or business."
It may be accepted that the type of conduct that might constitute the tort of passing off is not fixed: see Moorgate Tobacco Co Ltd v Philip Morris Ltd [No 2] (1984) 156 CLR 414 at 445 per Deane J:
"The rejection of a general action for 'unfair competition' or 'unfair trading' does not involve a denial of the desirability of adopting a flexible approach to traditional forms of action when such an approach is necessary to adapt them to meet new situations and circumstances. It has not, for example, prevented the adaption of the traditional doctrine of passing off to meet new circumstances involving the deceptive or confusing use of names, descriptive terms or other indicia to persuade purchasers or customers to believe that goods or services have an association, quality or endorsement which belongs or would belong to goods or services of, or associated with, another or others: see, eg, Warnink v Townend & Sons; Henderson v Radio Corporation Pty Ltd. The rejection of a general action for 'unfair competition' involves no more than a recognition of the fact that the existence of such an action is inconsistent with the established limits of the traditional and statutory causes of action which are available to a trader in respect of damage caused or threatened by a competitor."
However I am not aware of any instance where the assignee of a trading name has successfully maintained an action based on the tort of passing off in circumstances where the assignee has not used the name in a way that has created a material or substantial association between the name and the assignee's business. Moreover there is dicta suggesting that an element of the tort of passing off requires, relevantly, that the action of the respondent involves a representation that its goods or services are those of the applicant: see Cantanae Pty Ltd & ors v Shoshana Pty Ltd & anor (1988) ATPR 40-833 at 48,987 per Pincus J, see also Thai World Imports, supra, at 50,844. Indeed Elders IXL Ltd, supra, provides an example of where an action in passing off failed because the assignee of a name, so described in a practical though not legal sense, had not traded under that name. Briefly stated the facts were that a company by the name of Polecta Ltd ("Polecta") acquired the goodwill in the name "Australian Estates" as a result of the sale to it of the business of Australian Estates Co Ltd. Upon the acquisition of the business, Polecta changed its name to "Australian Estates Ltd" and the company whose business had been sold, changed its name to "Austest Co Ltd". However Australian Estates Ltd did not trade or engage in any business activity and, as Pincus J found at 177: "It has no public presence and it would seem to me clear enough that the law of passing off cannot assist it." Australian Estates Ltd was one of two applicants seeking to restrain another company, Australian Estates Pty Ltd, from continuing to trade under that name. They successfully did so under the Act but not at common law. Of more assistance to the respondents is ACI, supra where the assignee of a business name made out a case in passing off where the assignee had not used the name save in limited respects. However Lockhart J, at 280, made a finding that it was well known in the trade and amongst certain members of the public that the assignee had acquired the name. Thus there had been established in that case, unlike the present, an association between the name and the assignee's business.
In this general context, counsel for the applicant referred to Heller Financial Services Ltd v John Brice (1987) 9 IPR 469. A company held a debenture over the property of a company conducting a take away food outlet selling cooked chickens. It traded under the name "Dial-a-chicken". The property included the retailing company's goodwill and trademarks and trade names. Notwithstanding the existence of the charge and the appointment of a receiver at the instance of the debenture holder, the retailing company sold its business and the purchaser traded under the name "Dial-a-chicken". The debenture holder obtained an injunction restraining the purchaser from using the name. Ambrose J was not being asked to consider the matter as involving an action in passing off though his Honour referred to English authorities that did. It is reasonably clear that his Honour treated the assignment of the name by the retailer to the purchaser as ineffective, at least as against the debenture holder, and it was on that basis that the debenture holder obtained relief. It is not a case where the mere assignment of a name entitled the assignee to restrain its use in an action based on the tort of passing off.
In my opinion Winning Appliances has failed to demonstrate that the conduct of any of the respondents involves a representation that the business conducted by or on behalf of Dean Appliances Pty Ltd is that of Winning Appliances trading under the name "Dean Distributing" and in so doing has failed to establish an element of the tort of passing off as it might apply in the present circumstances.
I will adjourn the matter to enable short minutes to be prepared to give effect to the judgment concerning injunctive relief. Any further submissions the parties may wish to make on the question of damages should be filed and served within seven days of the date of this judgment and any submissions in reply within a further seven days. They should include submissions on the question of quantum.
I certify that this and the preceding forty-four (44) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Moore.
Associate:
Date:6 July 1995
Counsel for the Applicant: Mr D. Pritchard
Solicitor for the Applicant: Harris & Company
Counsel for the Respondents: Mr R. Vincent
Solicitor for the Respondents: J.R. Gibb & Co
Dates of hearing: 17-19, 24 October 1994
and 16 February 1995
Date of judgment: 6 July 1995
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