CATCHWORDS Trade Practices - furniture manufactured closely resembling items already on market and extensively advertised - defendant's label on items - misleading conduct by retailers - no intention by manufacturer to mislead - whether manufacturer's conduct misleading or deceptive or likely to mislead or deceive - Trade Practices Act 1974 ss.52 and 80. Puxu Pty Limited v. Parkdale Custom Built Furniture Pty Ltd VG No. 27 of 1978 Coram: Keely J. — Date: 28 November 1979 Place: Melbourne. wee ® a IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) VG No. ) ) GENERAL DIVISION BETWEEN : PUXU PTY LIMITED - and - PARKDALE CUSTOM BUILT FURNITURE PTY LTD REASONS FOR JUDGMENT 28 November 1979 27 of 1978 Plaintiff Defendant RKEELY J. The plaintiff Puxu Pty Ltd, a company incorporated pursuant to the provisions of the New South Wales Companies Act, claims an "injunction to restrain the Defendant, its servants or agents from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive and in particular to restrain it from displaying, selling, offering for sale or disposing of any furniture which imitates or copies the Plaintiff's 'Contour' range of furniture so as to be misleading or deceptive" and an "injunction to restrain the Defendant its servants and/or agents from reproducing or authorising the reproduction of chairs and lounges in accordance with the Plaintiff's design". The plaintiff also claims damages but the parties agreed that that claim should not be dealt with in the present hearing. ers Se we eer mee oe On 18 August 1978 the Court granted injunctions under s.80 of the Trade Practices Act (the Act) in the following terms: "Upon the Plaintiff undertaking to pay to any party adversely affected by this order such compensation (if any) as the Court thinks just, in such manner as the Court directs the Defendant its servants and agents are hereby until the determination of these proceedings or further order restrained from selling or offering for sale or dealing with or displaying any furniture made in the distinctive shape adopted by the Plaintiff, namely, its 'Contour' furniture of exposed wood with contoured seats upholstered in patchwork leather consisting of three distinctive colours without:- (a) in the case of purchasers, not being retailers or dealers, demonstrating to them by reasonable means that the furniture was manufactured by Parkdale Custom Built Furniture Pty Ltd, and (b) in the case of dealers or retailers conveying to them that the furniture is to be marketed and sold as furniture manufactured by Parkdale Custom Built Furniture Pty. Ltd." The plaintiff at aii material times since shortly after its incorporation on 8 May 1978 has manufactured and sold furniture under the name "Post & Rail". The Post & Rail range included various lounge suites and chairs sold as "the Investment", "the 0.K. Corral", "the Hippodrome", "the Low Profile" and "the Acquisition". The "Post & Rail" item of particular significance for the present proceedings is called the "Contour" range. It included lounge chairs (the plaintiff's "Contour" lounge chairs) which, together with either 2-seater or 3-seater lounges, semen ee eee oe, Se mts emer epeerrentennees Se Med dene TRI ee) er peers ere te constituted the plaintiff's "Contour" lounge suite. Other items in the plaintiff's "Contour" range included a dining room suite, a buffet, a coffee table, a corner table, a bar, a bar stool and other items. However, even if I were prepared to uphold the claim for an injunction against the defendant in respect of "any furniture which imitates or copies the Plaintiff's "Contour'™ lounge suite or chairs, I would be quite unable to find on the evidence before the Court that any case has been made out in respect of any of those other items of the Post & Rail range. Post & Rail furniture was first designed, made and sold in 1973 by Bruce Dowse, a furniture designer. He gave evidence that he took the name "from the traditional Australian fence, the post and rail fence" because the furniture was "very Australian, very bold, very rustic and very simple". He also described it as being "very straight up and down, basic, back to earth, fairly indestructible furniture made of solid pine". He made and sold the furniture initially on his own and later in partnership, and over a period of time during which he began employing labour and increased the number of employees, there were various changes in the place of manufacture and sale. Mr Dowse experimented with alterations to the design of the chairs and in early or mid 1976 designed a chair "using steel as a medium to give a contour that could possibly resemble somebody's body as far as shape". The physical consLruction of that chair was "almost identical" to the plaintiff's present "Contour" chair but there were problems as to the upholstery and arm covers and it "took a while to perfect it", The Post & Rail "Contour" chair in the form manufactured and sold both at the date of the institution of these proceedings (18 August 1978) and at the date of this hearing (October 1979) was first manufactured and sold in that form in late 1976 or early 1977. Post & Rail furniture was manufactured by Post and Rail Furniture Company Pty Limited until November 1976 when the undertaking was sold to Seegil No. 96 Pty Limited (the directors of which company included Mr Dowse and another witness Mr Delaney) which changed its name to Dowse Co. Australia Pty Limited which in turn sold its undertakings to the plaintiff on 3 June 1978. The plaintiff has sold the "Contour" lounge suites and chairs and other items of furniture under the name Post & Rail under which name it has carried on business since shortly after its incorporation. The overall appearance of the plaintiff's "Contour" lounge suite and chairs is unusual. The suite and chairs have a pine wood frame, contoured seating resulting from curved steel bars and most of the items sold are upholstered in patchwork leather with three different colours, although they are also available in four or five plain leathers, in plain fabrics, in velvets and in pure wool. " m7 | ceetataenieaianaiintadiceena ig ¥' rN t The defendant is a company incorporated under the provisions of the Victorian Companies Act. There is no evidence as to the date of its incorporation. Since at least June 1978 it has manufactured and sold furniture as Parkdale Custom Built Furniture and as Custom Built Furniture. The defendant has manufactured and sold furniture including a "Canada" dining suite in solid pine with leather backs and seats in the chairs, an "Espana" pine veneer wall unit, a "Marika" teak veneer wall unit, a "Bianca" bedroom suite, various buffets and dressers, bars and bar stools, and a number of different types of tables together with padded back leather chairs and leather carvers. In addition, for an unknown period of time since before 16 August 1978 the defendant was making and selling a "Rawhide" range, called the "Rawhide range in solid timber and leather" in an advertising brochure under the defendant's name given to Mr Delaney on that date. It included a dining suite, a Rawhide cocktail bookshelf and unit and other Rawhide wall units and buffet. The "Rawhide" items of particular significance for the present proceedings are the lounge suite and chairs (the defendant's "Rawhide" lounge suite and chairs) which " lounge suites and closely resembled the plaintiff's "Contour chairs. The defendant did not call evidence in the case. There is no direct evidence as to the date when the defendant began manufacturing or marketing the "Rawhide" lounge suites and chairs which are claimed by the plaintiff to have been copied from the plaintiff's "Contour" lounge suites and chairs - although it was common ground that the defendant's manufacture of such furniture began no later than June 1978. aa Mr Downes in a written submission in reply on behalf of the plaintiff said that: -"It is further submitted that the date on which the defendant commenced to manufacture its furniture is irrelevant. By reason of the fact that its furniture is a copy of the plaintiff's furniture it must have commenced manufacturing the furniture after the plaintiff's furniture." I am unable to accept that submission which appears to beg the question and I also reject his written submission suggesting that on this aspect the plaintiff was assisted by the fact that the defendant had objected to answer an interrogatory by the plaintiff. The objection was upheld by the Court and the plaintiff did not seek leave to administer further interrogatories. h However, on all the evidence I am prepared to infer that the defendant began manufacturing and selling its "Rawhide" suite and chairs after the time when the Post & Rail "Contour" lounge suite and chairs were first made and marketed in late 1976 or early 1977. In so deciding I have taken into account the evidence of Mr Dowse that in 1976: "We... just generally perfected it, the technique of doing the patchwork leather. It was something that nobody had really done, nobody was doing at that time, and it took a while to perfect the best way to do it." Under cross examination Mr Dowse said: ' " ... we created a demand for a random, free-form patchwork that was fairly unique at the time, yes. es. L think the patchwork we produced was quite unique, yes. ... I personally have not seen an example of patchwork that resembles the patchwork that we were producing in that period." tere one As already pointed out, no evidence was called for the fee rer eee defendant. I have also considered Mr Dawse's detailed evidence (to some of which I referred earlier) as to his design, his experimentation and other steps taken to develop the design. He was cross examined by Dr Emmerson on behalf of the defendant in some detail as to his design and it was suggested to him, for example, (i) that none of the materials used (wood, metal, canvas and leather) was new to the design of lounge suites and chairs, (ii) that there have been chairs for many years with two metal members - one on each side of the chair (referring to "ordinary tubular steel chairs"); and (iii) that one Post & Rail item called "Hippodrome" was a reproduction of a well known Italian design. However, it was not suggested in cross examination that the plaintiff's "Contour" lounge suite and chairs had been copied from the defendant's suite and chairs; nor was it suggested that it had been designed or first sold after the "Rawhide" suite and chairs were designed or sol? In this connection Mr Downes also relied on the fact that the reply by the defendant's solicitor to the letter of demand of 5 July 1978, stated that "we have now received full instructions from our client company" and "we deny that our client is in breach of any Act", but did not suggest that it had been manufacturing or selling the furniture before the plaintiff commenced manufacturing and selling the "Contour" lounge suites and chairs. eessn oe ee eo eee) + ee ere pe pene severe Mr Dowse gave evidence as to the similarities and differences between the plaintiff's "Contour" lounge chair and the defendant's "Rawhide" lounge chair and demonstrated those similarities and differences by comparing a "Contour" chair and a "Rawhide" chair made by the plaintiff and the defendant respectively which were exhibits before the Court. Mr Delaney, a solicitor who as a director of the plaintiff took an active interest in the affairs of the plaintiff not confined to his role as a solicitor, also gave evidence by way of comparing the two chairs. Referring to the exhibit which was the chair made by the plaintiff he said: " .. more than 50 per cent would tend to be in the getup of that exhibit. Actual patterns, cutting and shaping of the material is fairly standardised and unless somebody was very specific about it they would get that pattern in those colours or colours of their choice, but it would be very similar to that pattern." Mr Delaney also gave evidence that the "Contour" 2-seaters have exactly the same configurations as the chair except that they have two of the contoured leather slings and have four iron bars at the back and the 3-seaters also have the same configuration. . In appearance the defendant's chair closely resembles that of the plaintiff. There are various aspects in which the two chairs are either identical or closely resemble each other. It is not necessary to set out in detail every point of similarity or difference. Im addition to the overall appearance the particular matters in which the two chairs were identical or closely resembled each other included the following: ao tee ~epe os apemrenn ce ~9- l. The use of heavy exposed wood for the frame and the dimensions of the wood - although subject to cerLain differences in the dimensions to which I shall later refer. 2. The use of patchwork leather with three colours - although, as I shall point out later, there are differences. 3. The use of curved metal bars running from a wooden cross ~ piece in front of the chair at floor level back and upwards to another wooden cross piece at the back of the chair at approximately head level. 4. The appearance of a curved bar underneath the seat - although I shall later refer to a difference as to this bar. 3. The adjustable canvas sling running across the chair as the back support - although, as I shall point out later, not identical. 6. The use of metal bars running across the chairs in two places beneath the upholstery at approximately foot level and head level. 7. The system of securing the cushion to the suspended canvas frame (except that the defendant's "Rawhide" chairs have in addition four small eyelets at the back). In a number of aspects there are differences between the "Contour" and "Rawhide" lounge chairs made by the plaintiff and the defendant respectively. Some of these differences in my - on - --w- epee ee were - oe ae ere ere - 10 - view would be likely to be observed by an ordinary member of the public who had previously looked at the Post & Rail "Contour" chair as a potential purchaser. These would include the following differences: (a) The patchwork leather cover on the plaintiff's chair was top stitched and the stitching was plainly visible, whereas the leather on the defendant's chair was stitched underneath and the stitching was not visible. (b) Also plainly visible were 16 wooden bolt covers on the plaintiff's chair (4 visible from each side, 4 visible from the front and 4 visible from the back) whereas on the defendant's chair the 16 metal bolt heads were not covered. The 16 metal heads.were plainly visible and-were muah smaller - being approximately %~inch in diameter compared with the bolt covers which were approximately 1% inches in diameter. (c) On both the plaintiff's chair and the defendant's chair there are eight pla.cs at which one piece of wood is bolted (by two bolts) to another piece of wood. At each of those eight places the combined thickness of the two pieces of wood on the plaintiff's chair is greater than that on the defendant's chair - by approximately %-inch. As a result the plaintiff's "Contour" chair gives an impression of greater sturdiness and of having more "chunky timber™ - to use the words of one of the plaintiff's advertisements in July/August 1978. sare i ed -ill- The overall appearance of the leather patchwork on the defendant's "Rawhide"™ chair is different from that on the plaintiff's "Contour" chair. Although they both use leather "patches" of three different colours there are differences in a number of respects. I do not consider that an ordinary member of the public who had previously looked at a Post & Rail "Contour" chair as a potential purchaser would be likely to observe each and every one of the differences Listed below, but in my view such a person would be likely to observe one or more of the differences and to see that the overall appearance of the leather patchwork on the "Rawhide" chair is different from that of the "Contour" chair. - As to the likelihood of such persons observing that the overall appearance is different, the following evidence by Mr Dowse is relevant. Referring to his decision at an earlier time to change from random patchwork leather to standardised patchwork leather, Mr Dowse said: ",... beforehand, it was a fairly random patchwork; each one resembled one another but they were different. Consequently you had people ringing up saying: That was not the one I ordered". The differences in the appearance of the leather patchwork are as follows: FRR ERIE ET CET ORPE SO fe erie -12- (i) the number of the patches; (ii) the size of the patches; (iii) the shape of the patches; (iv) as Mr Delaney expressed it, in explaining how he was able to distinguish one from the other: "In particular, also, although not in every single case, but it was a very predominant feature with Post and Rail patterning, there is an elliptical circle that includes, generally, one of the buttons and most Post and Rail suites are done in that particular pattern and the pattern is almost standardized, you have a circular piece enclosing one button."; (v) the arrangement of the patches - which was described by Messrs Dowse and Delaney as tending to be "vertical" on the plaintiff's chair and ~"horizontal" on the defendant's chair. It was explained that this statement meant that the lines where the different coloured materials joined tended to run upwards although sometimes on an angle on the plaintiff's "Contour" chair rather than across on the horizontal as tended to be the case on the defendant's "Rawhide" chair; (vi) the shade of the colours of the patches. On both the plaintiff's "Contour" chair and the defendant's "Rawhide" chair the patchwork leather makes use of leather of three different colours which might appear at a casual glance to be the same colours, to which I shall refer as "dark brown", "tan" and -13- "beige" respectively. The "dark brown" colour on the defendant's "Rawhide" chair is a darker colour than that on the plaintiff's "Contour" chair. The "tan" colour on the defendant's chair is also a darker colour than that on the plaintiff's chair - although the difference in colour is less marked. The "beige™ colour on the two chairs although not identical is very close to being identical in colour. Differences which might not have been detected except by a careful buyer who had a particularly clear picture in his mind of the plaintiff's chair as a result of an examination of it on a prior occasion were that: (e) Both the dacron layer and the foam contained inside the leather patchwork cover on the plaintiff's chair are of better quality and the foam is more resilient. (£) The finish on the woodwork on the defendant's chair jis rougher than that on the plaintiff's chair which Mr Dowse said had been "sanded to a much higher degree and using a finer paper" and the defendant's chair has "little smears and sanding marks along the arms". (g) Upon pulling back the upholstery it was clear that the defendant's chair had canvas material stretched between the two contoured bars to form a support for the seat, whereas on the plaintiff's chair the ne to - 14- seat was supported by a different and stronger material. Mr Dowse described it as a non-stretch material consisting of polyurethane fibre-glass matted trampoline fabric and gave a demonstration in Court of the strength of the fabric. Although no similar demonstration was performed on the material in the defendant's chair on the evidence I accept that the material used in the defendant's chair was not as strong and was less likely to resist any tendency to sag as a result of use. Other differences demonstrated to the Court which in my view even a careful buyer with a clear recollection of the plaintiff's chair would not be likely to see were as follows: -- -. Ch) ( ) On the plaintiff's chair the contoured metal bars fitted into four nylon sleeves in the two wooden cross pieces. On the evidence of Mr Dowse the sleeves had the intended effect of preventing the ends of the contoured metal bars from being drawn inwards from their original position as a result of the weight of a person sitting on the chair causing the ends to press into the fibre of the wood. The defendant's chair had no such sleeves. The curved bar beneath the seat on the plaintiff's chair was made of spring steel whereas the somewhat thicker and more rigid bar used on the defendant's chair was not made of spring steel. ee Ce ed car te -15- (i) The heavy screws (sometimes called coach bolts by Mr Dowse in his evidence) used to hold the wooden pieces together were different. As the defendant is a corporation and is engaged in trade or commerce the substantial question to be decided is whether the defendant has engaged "in conduct that is misleading or deceptive or is likely to mislead or deceive" within the meaning of s.52 of the Act. There was no evidence to suggest that the retailers who purchase lounge suites or chairs from the defendant are likely to be misled or deceived. There was no evidence to suggest that persons likely to purchase or to consider purchasing the plaintiff's "Contour" lounge suite or chair £rom a retailer form a particular class in the community. Accordingly, it is necessary to consider whether the conduct of the defendant was misleading or deceptive or likely to mislead or deceive ordinary members of the public likely to be considering purchasing such an item from a retailer. The words "ordinary members of the public", used here and elsewhere in these reasons, include "the shrewd and the ingenuous, the educated and uneducated and the experienced and inexperienced in commercial transactions" per Sheldon and Sheppard JJ. in C.R.W. Pty Ltd v. Sneddon (1972) 72 A.R. (N.S.W.) 17 at p.28. I adopt the dictionary meanings applied by Franki J. in Weitmann v. Katies Ltd (1977) 29 F.L.R. 336 at p.343: weep tae ee oe - 16 - "The most appropriate meaning for the word 'deceive' in the Oxford Dictionary is: 'To cause to believe what is false; to mislead as to a matter of fact, to lead into error, to impose upon, delude, take in'., The most appropriate definition in that dictionary for the word 'mislead' is: 'To lead astray in action or conduct; to lead into error; ] i ' to cause to err'." It was contended by Mr Downes that the defendant has | contravened s.52 by manufacturing for the purpose of ultimate | retail sale furniture which he described as "nearly identical" to the plaintiff's furniture and which I have found closely | i resembles the plaintiff's "Contour" lounge suite and chairs. } His principal submission was that the manufacture by the i 4 defendant of the "Rawhide" suites and chairs was misleading t , and deceptive and was likely to mislead or deceive potential | purchasers who saw the defendant's "Rawhide" suites and chairs into believing that they were the Post & Rail "Contour" furniture made and extensively advertised by the plaintiff. { | Alternatively, Mr Downes argued that potential | purchasers were likely to be misled into believing that the | defendant's lounge suite or chair was "a product of Post and & Rail quality". I accept the criticism by Dr Emmerson of this alternative proposition and agree that there is no evidence before the Court upon which it could be upheld. Before returning to Mr Downes' principal submission I shall deal with a number of particular submissions. I accept his submission that where a manufacturer has engaged in conduct that is misleading or deceptive, it "cannot expect pane line nk I ot, ee ee Q - 17 - the retailer to redress the misleading nature of the product". I also accept that it is not necessary for the plaintiff to prove that members of the public actually bought the defendant's products in the belief that they emanated from the plaintiff. I also accept his submissions that it is not necessary for the plaintiff to prove (1) that members of the public were in fact misled by any conduct of the defendant; or (2) that the defendant conspired with the retailers to deceive or mislead third persons; the question is whether the defendant's conduct contravened s.52 of the Act; or (3) that purchasers of the defendant's products have suffered any damage. _ Dr Emmerson submitted in his final address that for conduct to fall within the prohibition in s.52 it is necessary for the plaintifé to show three things. Firstly, that the defendant has made a representation. Secondly, that that representation is of a fact which is untrue, and thirdly, that that representation is likely to be accepted as true by the person to whom it is made. He submitted that such a construction of the section was required both by the language of the section and by the necessity to avoid certain consequences which he submitted could not have been intended. Mr Downes submitted that s.52 is to be given a wide construction and relied upon what was said by Stephen J. in Hornsby Building Information Centre Pty. Limited v. Sydney Building Information Gentre Limited (1978) 18 A.L.R. 639 at Me te AF et ke eee Be ene eR ee 8 ' ee S| asia ae - 18 - p.642: "Section 52(1) of the Act is expressed in wide terms and its generality is expressly preserved by sub-section (2)." ... (at p.645) "To subject the clear and quite general words of s.52 to some limitation derived from the heading to Pt.V is, I think, especially inappropriate in the case of this particular legislation. The Act is intricately drafted, some of its provisions being expressed in terms of broad generalities, as is s.52, others in elaborate detail. Each may be seen to take the precise form it does because of the particular work intended for it. That s.52(1) is intended to be a provision having a broad reach is made clear by the express provision in s.52(2) preserving its 'generality' from any limitation which might be thought to arise from the more specific provisions of succeeding sections." I accept Mr Downes' submission that, although the basis for a claim under s.52 may often be found in a representation, it is not correct to say that s.52 does not apply unless there is a representation; conduct which causes people to be misled or deceived and conduct likely to mislead or deceive is a contravention of the section whether or not that conduct amounts to a representation. Dr Emmerson also submitted that: "... the Designs Act and the Copyright Act and the Patents Act together deal exhaustively with any proprietary rights that the plaintiff could obtain either in the appearance or in the functions of the chairs in question. I say that it follows from that that this is subject matter which has been dealt with exhaustively and in detail by three Acts, and that no intention should be presumed to take away from what is said in those Acts merely because a later section dealing with trade practices in very general terms is ... to be thought to impinge upon this subject matter." em tee a 4 oe ~ 19 - In my view those Acts, dealing exhaustively with certain proprietary rights which the plaintiff might have, do not operate to exclude or modify the duty which s.52 of the Act casts upon the defendant to refrain from engaging "in conduct that is misleading or deceptive or is likely to mislead or deceive". As Stephen J. said in the Hornsby Building Information Case (supra at p.645): "It is, no doubt, somewhat of a novelty that a quite extensive jurisdiction in passing off actions, traditionally the concern of the Supreme Courts of the States, should be conferred upon the Industrial Court and that this should be done by an Act described as one 'relating to certain Trade Practices' and by sections not very explicitly directed to such a subject-matter. However, this is, I think, but a consequence of the very direct relationship which necessarily exists between the deception of consumers in the course of trade and the injury caused by the unfair practices of a trade rival. ... it then becomes possible for a trader, injured by the competition of his trade rival, to gain a remedy under the Act instead of having recourse to civil action by way of proceedings for passing off. The remedy in such a case will not, as in passing off, be founded upon any protection of the trader's goodwill but, being directed to preventing that very deception of the public which is injuring his goodwill, it will nevertheless be an effeccive remedy for that of which he complains." I accept Mr Downes' submission that it is not necessary for the plaintiff to prove that the defendant intended its conduct to mislead or deceive (Hornsby Building Information Case (supra) per Stephen J. at p.647) but that if such an intention to mislead or deceive were established the Court should not "be astute to say that (the defendant) cannot succeed in doing that which he is straining every nerve to do" per Lindley L.J. in Slazenger & Sons v. Feltham & Co. (1889) 6 R.P.C. 531 at p.538. - -- — eg eee ee a nn pe! 2 AT er ee ae ee es ts - 20 - Mr Downes contended that such an intention existed and sought a finding that: "the defendant copied the plaintiff's product for the purpose of selling it as the plaintiff's goods", However, on the evidence I am not prepared to infer that the defendant intended to mislead or deceive any potential purchaser of furniture - either as a retailer or an ordinary member of the public - into believing that the defendant's "Rawhide" lounge suite or chairs were the Post & Rail "Contour" lounge suite or chairs made by the plaintiff. There was evidence from Messrs Delaney, Stekerhofs and Toomey that each visited a number of retailers' stores on three separate occasions and examined lounge suites and individual chairs made by the defendant. The retailers' premises visited (most of which were visited on two or three occasions) included the Furniture Factory at South Melbourne, the Furniture Factory at Cheltenham, John Darcy Discounts at Frankston, Maples' store at Ferntree Gully, John Allen at Boronia and Bayswater Bulk Store at Bayswater. At the Furniture Factory at South Melbourne on one occasion one suite did not have the defendant's label sewn on it but it had some "ragged strands" which Mr Delaney "took to be all that was left of the label". On all of the other occasions the defendant's label was sewn on to one part of the upholstery of each lounge suite or of each individual chair made by the defendant and "displayed by the retailer as an item for sale. ae ee OOO Pe a a eT OO - 21 - On the evidence the place at which the label was sewn was the same place as that at which the plaintiff's label was sewn on the "Contour" chair which was an exhibit and accords with the practice in the industry. That place is at the front of the chair at the bottom of the upholstery. The extent to which it is readily observable depends upon whether it has been left hanging down (as on the "Contour" exhibit) or has been physically pushed up behind the upholstery. In the latter case a person desiring to read it would have to feel for it and pull it out below the upholstery. There was evidence from Mrs Hogg and Mr Klug, who purchased lounge suites which were made by the defendant, that they did not have the defendant's label on them at the time of sale. I shall deal later in more detail with their evidence which has led me to infer that an employee of the retailer removed the defendant's label in each case. In answer to a question during final address Mr Downes did not suggest that there was any evidence that any of the defendant's furniture left its factory without a label identifying the defendant as being the manufacturer. He did suggest that an inference that some items do not have labels might be drawn from the evidence of Mr Delaney as to his visit to the defendant's factory on 16 August 1978. In answer to a question by Mr Downes as to "whether any of the furniture there had labels on it" Mr Delaney said "To the best of my recollection, they did not have labels on them". There was nt Ste oe a ere ne et ee Fe ee Pn tn hr ee ee = ye- at - 22 - no cross examination on this aspect and I accept Mr Delaney as a truthful witness. However, Mr Delaney's evidence as to that visit referred both to "furniture standing around in various stages of completion or perhaps awaiting collection" and to "furniture in various stages of manufacture in (the factory) and furniture waiting for collection for delivery, furniture of the type presently in court". Having considered his evidence as a whole and having regard to the words of the particular answer relied upon by Mr Downes, I am not prepared ' to infer that any of the defendant's furniture was without a label at the time it left the factory. On all the evidence I infer that it was the defendant's practice to have one of its labels sewn on to each item - whether lounge suite or lounge chair - before it left its factory for delivery to a retailer. A copy of the defendant's label was tendered in evidence by the plaintiff. The following words appeared on it -*set out in nine lines of print using capital leters: "Parkdale Custom Built Furniture Rawhide Range in Solid Timber and Leather All New Materials 40A Levanswell Road, Moorabbin, Vic. 3189" The label itself is a piece of material approximately 2% inches square which is slightly larger than the plaintiff's label sewn to the upholstery on the plaintiff's "Contour" chair which was an exhibit in these proceedings. In cross examination Mr Dowse agreed that both in August 1978 and at the time of the hearing the plaintiff's Post & Rail furniture, after arriving at a retailer's establishment, would have removed from it certain wrapping materials which identified the manufacturer. As a result it "would be left with the manufacturer's label" and that it was his understanding "that other manufacturers would identify their furniture when it left the factory in the same way that Post and Rail did". It should be added that he also said that the plaintiff's Post & Rail furniture "has a punched Post & Rail indent on it. That one (i.e. the exhibit) has not got one but now they have one", I have also referred earlier to the various differences between the "Rawhide" lounge suite and chairs made by the defendant and the "Contour" suite and chairs made by the plaintiff - some of the differences being likely to be observed by an ordinary member of the public who had previously looked at the plaintiff's "Contour" item as a potential purchaser. Having drawn an inference that it was the defendant's practice to have one of its labels sewn on to each item before it left its factory for delivery to a retailer and having regard to the evidence as to the differences between the defendant's "Rawhide" furniture and the plaintiff's "Contour" furniture, I am not prepared to infer that there was any intention by the defendant to mislead or to deceive any potential purchaser into believing that the "Rawhide" lounge suite and chairs were the "Contour" lounge suite and chairs. --- a - ete wes es Sle : - - ooo eee ae ee - 24 - I infer that the defendant intended to lead people who saw the "Rawhide" lounge suites or chairs made by it advertised by retailers or who saw the actual furniture in retailers' shop windows to - (1) see that the "Rawhide" products closely resembled the "Contour" suite and chairs manufactured by the plaintiff; and (2) enter the retailer's shop so as to look at the "Rawhide" lounge suite or chairs and consider purchasing them. I return to Mr Downes' principal submission that the manufacture by the defendant of the "Rawhide" lounge suites and chairs which closely resembled the "Contour" suites and chairs was a contravention of s.52 of the Act in that it was conduct that was misleading and deceptive and was likely to mislead or deceive potential purchasers who saw the "Rawhide" suites and chairs into pelieving that they were the "Contour" furniture made by the plaintiff. He invited the Court to reach that conclusion partly by reason of the appearance of the two chairs in evidence in the proceedings. He also submitted that the Court should come to the conclusion that persons were likely to be misled or deceived by the appearance of the defendant's "Rawhide" lounge suite and chairs because two purchasers of the defendant's lounge suites, Mrs Hogg and Mr Klug, had in fact been deceived and it had not been suggested in cross eee eee w+ oo ee ae ae ee eee Oe ee - 25 - . examination that they were not fairly representative of those members of the public likely to be considering purchasing such a lounge suite or chair. In submitting that the conduct of the defendant was likely to deceive potential purchasers he also relied upon a volume of evidence as to extensive advertising by the plaintiff of the "Contour" lounge suites and chairs as being Post & Rail products. Mrs Hogg and her husband had seen the plaintiff's Post & Rail "Contour" lounge suite at the 1977 Melbourne Home Show and she had also seen advertisements for it in several magazines. One night in July 1978 she saw at a retailer's shop which was closed at the time a lounge suite, manufactured by the defendant, which she "thought" to be the plaintiff's Post & Rail "Contour" lounge suite. It did not have the defendant's label on it but she was unaware of that when she bought it. There was no evidence that, when she went te the shop with her husband on a Saturday morning and bought the suite, she looked for any label or sat on the suite or examined it in any way to compare it with her recollection of the Post & Rail "Contour" suite. However, she had a sufficient doubt to cause her to ask the salesman whether the suite was a Post & Rail suite and "specifically told the salesman that (she) wanted Post & Rail". On her evidence the salesman's reply did not in fact answer her question but was one from which she "assumed from his manner that he was saying, yes, it was Post & Rail". Accepting that evidence as wreves at - 26 - being correct for the purpose of these proceedings, Mrs Hogg was misled into believing that the lounge suite was-a Post & Rail suite as a direct result of the salesman's apparent response to her question whether the suite was a Post & Rail suite. That finding is of course based upon the evidence in these proceedings in which neither the salesman nor the retailer which employed him has had an opportunity to test Mrs Hogg's evidence by cross examination or to call evidence to contradict it. Mrs Hogg also gave evidence that the receipt given to her did not give the name of the manufacturer. Mr Klug had seen the plaintiff's Post & Rail lounge suite in magazines. In July 1978 he saw at a retail store a three piece "Rawhide" lounge suite manufactured by the defendant, which he "thought was a Post & Rail lounge suite". It did not have the defendant's label on it but he was unaware of that fact at the time. Mr Klug agreed in cross examination that he had the suite in front of him, looked at i. and liked it before buying it. The cross examination then proceeded: "Q. You did not say, 'This looks like the photograph and I like the appearance of the photograph, therefore I like this suite'? A. No. Q. You looked at the suite and you said, 'I like that'? A. Yes. Q. That is correct? A. Yes." He also gave evidence that he did not ask who made the suite ween een er ~ 27 - as he assumed that the one he was looking at was a Post & Rail suite, of which suite he had seen a photograph in a magazine. He had previously seen a Post & Rail "Contour" suite only through the door of a shop that was closed and there was no evidence that he sat on or examined in any way the suite which he purchased. There was no evidence that he looked for any label on the suite and the receipt given to him did not give the name of any manufacturer. I infer that immediately before purchasing the lounge suite Mr Klug had some doubts in the matter because the Post & Rail "Contour" suite (which he had seen earlier that day through the door of a closed shop) was almost 40% ($440) dearer than the retailer's price for the "Rawhide" lounge suite, As Mr Klug said in evidence: "T asked him how come that the price was cheaper because it was just $1590 at Scott Berkowitz and that was the price we were expecting to pay for it and he said because of bulk buying, that they bought in such large numbers, for quantity they get them down to cheaper prices." He also said that the salesman told him that it had to come from Sydney whereas in fact it was manufactured in Melbourne. Accepting Mr Klug's unchallenged evidence as to the salesman's statement as being correct for the purpose of these areeye proceedings, Mr Klug was misled by the salesman into believing that the suite he bought normally cost $1590 - the price he was "expecting to pay" for a Post & Rail lounge suite. As in the case of Mrs Hogg, that finding is based QQ ; wage nemens - - 28 - upon the evidence in these proceedings in which neither the salesman nor the retailer which employed him has had an opportunity to test Mr Klug's evidence in cross examination or to contradict it. As to the fact that neither the suite sold to Mrs Hogg nor the suite sold toMr Klug had the defendants label on it, having regard to the evidence as to the misleading conduct of the two salesmen and to the inference which I have drawn that it was the practice of the defendant to have one of its labels sewn on to each lounge suite before it left the factory for delivery to a retailer, I infer on the evidence in these proceedings (which neither retailer and neither salesman has had an opportunity to test by cross exanination or contradict by evidence) that an employee of the retailer in each case had removed the defendant's label from the lounge suite. Had the one retailer's salesman truthfully answered Mrs Hogg's question by saying that the lounge suite was not a Post & Rail suite and haa the other retailer's salesman told Mr Klug that the normal price of the "Rawhide" suite which he was considering purchasing was not $1590 and that he was confusing - or even that he might be confusing - the defendant's "Rawhide" suite in front of him with a Post & Rail "Contour" suite which was similar, in my view neither Mrs Hogg nor Mr Klug would have been misled into believing that the "Rawhide" suite being considered for purchase was a Post & Rail "Contour" suite. Again, had the defendant's label not been removed from the suites and had the label been seen by ~ 29 - Mrs Hogg and Mr Klug, neither purchaser would have been led to believe that the suite was a Post & Rail suite - wmless she or he had been wrongly told that the defendant, whose name appeared on the label, was the manufacturer of the Post & Rail "Contour" suite. In my view both Mrs Hogg and Mr Klug were led to believe that the "Rawhide" lounge suite purchased was a Post & Rail "Contour" suite. However, on the evidence I do not consider that any action of the defendant led either purchaser to so believe. It has not been suggested on behalf of the plaintiff that the defendant at any time conspired with either of the two retailers or with the salesmen to remove the defendant's label or to give any misleading answers to either Mrs Hogg or Mr Klug. Both Mrs Hogg and Mr Klug were misled by a statement by a salesman. Further, the defendant's label had been removed by an employee of the retciler in each case. Before his purchase Mr Klug had seen the Post & Rail "Contour" suite only once and that was in a shop that was closed. In this connection it is to be noted that on two occasions after his purchase Mr Klug was able to see the difference between the "Contour" and the "Rawhide" suites. About a week after the defendant's "Rawhide" suite was delivered, Mr Klug saw a Post & Rail lounge suite in Geelong and in his words: "I looked at that and looked at mine. That is how I could tell the difference." aseethenenmmenllii as meade epee a y - 30 - Further, about one month after his purchase Mr Klug "went to the Homes Exhibition and saw Post and Rail which again I checked and you can see the difference ...". These two occasions may be compared with the day of his purchase when Mr Klug 'assumed' that he was getting the Post & Rail suite of which he had seen a photograph in a magazine. In my view an ordinary member of the public (in the sense defined earlier) would not have "assumed" that it was a Post & Rail suite but would have acted as Mrs Hogg did, i.e. asked whether it was a Post & Rail suite or specifically told the salesman that she wanted Post & Rail. In final address Mr Downes contended that Mr Layton, who was marketing manager with John Bruce Home World Pty Limited in July 1978, was misled by the appearance of a lounge suite manufactured by the defendant. Mr Layton's evidence showed that he was asked to prepare for the "Age" newspaper an advertising supplement which was to include the "Rawhide" suite made by the defendant. In my view his evidence goes no further than to show that he wrongly assumed that a bromide photograph, which he had "inherited" when he began his employment there only three months before, i was a photograph of the "Rawhide" suite whereas in fact it was a photograph of the plaintiff's "Contour" suite. His evidence showed that he was "not concerned to determine who was the manufacturer of the" Rawhide suite. It only creer sere ons shows that the Witness assumed that the bromide photograph -~ 31 - was a suite the same as the defendant's "Rawhide" suite - and apparently assumed it without bothering to do any checking at all as to the manufacturer. I have already found that the "Rawhide" suite closely resembles the Post & Rail "Contour" suite (but with observable differences) and I do not consider that Mr Layton's evidence assists the plaintiff. Nor do I consider that Mr Stanton's evidence advances the plaintiff's case any further on this aspect. What I have written in reaching the opinion that the conduct .- of the defendant did not mislead or deceive either Mrs Hogg or Mr Klug is also relevant to the more general questions of whether the defendant's conduct has been misleading or deceptive or likely to mislead or deceive within the meaning of s.52 of the Act. Mr Downes sought to rely upon the decision of the House of Lords in William Edge & Sons Ld. v. William Niccolls & Sons Ld. (1911) 28 R.P.C, 582. However, in my view that decision does not assist the plaintiff because of the absence in that case of any label on the plaintiff's goods, the nature and cost.of the goods there under consideration and the admission made in that case by the defendant's managing director. Although the "Rawhide" suite closely resembles the "Contour" suite, I am unable to conclude that the defendant's conduct in making the "Rawhide" suite has led or is likely to lead an ordinary member of the public who was or is considering purchasing a lounge suite into believing that the "Rawhide" suite is the Post & Rail "Contour" suite. In my view this is so even if, contrary to the opinion I have expressed, none of - 32 - the differences between the "Contour" suite and the "Rawhide" suite would be likely to be observed by an ordinary member ' of -the public who had previously looked at the Post & Rail "Contour" suite as a potential purchaser. I have reached that conclusion because in my view such a purchaser or a potential purchaser will not be led to believe that the "Rawhide" suite is the "Contour" suite unless, in respect of an item costing a substantial amount (up to $1590 for a three piece lounge suite), the potential purchaser - (1) assumes that there is no other suite on the market which resembles the "Contour" suite to the extent that the "Rawhide" suite resembles it; and (2) either does not ask the salesman for the name of - . the manufacturer (or whether it is a Post & Rail "Contour" suite) or, upon asking, is given by the salesman an answer which is untruthful or which fails to answer the question and is effective to distract the potential purchaser from noticing his failure to answer the question (cp. Mrs Hogg); and (3) does not take the trouble to look at the defendant's _ label attached to the chair. Where the defendant's label has been previously removed from the "Rawhide" suite then the person who is considering purchasing the suite will not be led into believing that it is eo - 33 - the plaintiff's Post & Rail "Contour" suite unless Lhe potential purchaser - -(1) assumes that there is no other suite on the market which resembles the "Contour™ suite to the extent that the "Rawhide™ suite resembles it; and (2) either does not ask the salesman for the name of the manufacturer (or whether it is a Post & Rail "Contour™ suite) or, upon asking, is given by the salesman an answer which is untruthful or which fails to answer the question and is effective to distract the potential purchaser from noticing his failure to answer the question (cp. Mrs Hogg); and (3) does not take the trouble to look for the manufacturer's label on the item, or, on noticing either that there is no label or that a label appears to have been removed, does not ask the salesman for an explanation of the absence or apparent removal of the label as the case may be. On the evidence I do not consider that the conduct of the defendant has been shown to be misleading or deceptive or likely to mislead or deceive within the meaning of s.52(1) of the Act. Accordingly the claim is dismissed and the injunctions granted by the Court on 18 October 1978 are rescinded. ea vow ove The plaintiff has submitted that in any event it should have an order for costs of the day, including counsel's fees, in respect of the adjournment of the case from 15 October 1979 to the following day by reason of the unavailability of the defendant's counsel, Dr Emmerson. The defendant has opposed the granting of any costs to the plaintiff in respect of that day because of the terms upon which the defendant's solicitors in July 1979 agreed to the date of hearing, which had been fixed for 17 September 1979 being changed to 15 October 1979. That change was at the request of the plaintiff by reason of the unavailability of its counsel. A note taken by the plaintiff's solicitor on 26 July 1979 recorded that the defendant "agrees to the 15th October but may have to be adjourned for one day because their counsel may be" unavailable. . . The plaintiff's solicitors were not told until the afternoon of Thursday, 11 October 1979, that an adjournment of one day was in fact required by the defendant on Monday, 15 OctvuLler 1979. I accept the plaintiff's contention that such notice was | inadequate, although it would not have been possible in the | circumstances to have given a long period of notice. However, | the adjournment did not result in the loss of a full day as there was a hearing on 15 October 1979 lasting almost one hour during which the plaintiff had some sixteen witnesses called on subpoena to produce documents. The plaintiff also submitted that it was entitled to the costs of that portion of the hearing on 16 October 1979 = 35 - (more than half of the day) which related to an application by the plaintiff for am order that the defendant be directed to give-further and better answers to interrogatories delivered by the plaintiff. In ruling upon that application the Court ordered the defendant to answer four interrogatories but declined to make such an order as to a further ten interrogatories in respect of which an order was also sought by the plaintiff. The argument put by both parties related to all fourteen interrogatories. In all the circumstances I have come to the conclusion that, taking both these matters into account, the justice of the case will be best met by ordering that the defendant pay to the plaintiff the costs of the day of 15 October 1979. The plaintiff is ordered to pay to the defendant all other - costs of the action including reserved costs. Costs to be taxed if not agreed. I cetify that this and thetlnk, -Qie BVPGIng pores ace a true enre of the '2 Juagment ner G4N OF B45 Oud. se. duousce scoucaaly Associate PERO DE KEW : Seat tinaneeteaes