CATCHWORDS Trade Practices —- motion for contempt for breach of undertakings - breach of undertaking - order for costs. PERLCOTE SURFACES LIMITED ~ Applicant NEVILLE THOMAS STEBER & ORS. Respondents NO. G 153 OF 1978 LOCKHART J. AT SYDNEY 14 MARCH 1980 — IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G 153 of 1978 GENERAL DIVISION IN THE MATTER OF The Trade Practices Act 1974 PERLCOTE SURFACES LIMITED Applicant NEVILLE THOMAS STEBIR First Respondent DAVID NEVILLE STEBER Second Respondent JOHN ALEXANDA STEBER Third Respondent MARK ANDREW STEBER Fourth Respondent ORDER JUDGE MAKING ORDER: LOCKHART J. WHERE MADE: SYDNEY DATE OF ORDER: 14 MARCH 1980 THE COURT ORDERS THAT: The second respondent pay two-thards of the applicant's costs of this application including reserved costs. Otherwise, no order as to costs. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NO. G 153 OF 1978 ee ee GENERAL DIVISION IN THE MATTER OF The Trade Practices Act 1974 PERLCOTE SURFACES LIMITED Applicant NEVILLE THOMAS STEBER First Respondent DAVID NEVILLE STEBER Second Respondent JOHN ALEXANDA STEBER Third Respondent MARK ANDREW STEBER Fourth Respondent REASONS FOR JUDGMENT LE J atek 1980 LOCKHART J. These are contempt proceedings for alleged breaches of undertakings to the court. It is agreed by the parties un that the relevant rules of court as to the bringing and prosecution of this application have been complied with. Application was made in December 1978 by Perlcote Surfaces Limited ("the applicant") for injunctions under s. 80 (1) of the Trade Practices Act 1974 ("the Act") to restrain the respondents from contravening s. 52. The applicant manufactures and distributes a product called "Coralcote" which is sprayed on walls and ceilings of homes and commercial buildings giving the ceilings a textured finish. In September 1977 there was registered with the Corporate Affairs Commission of New South Wales the business name "Texturecote Surfaces", the four respondents being named as the proprietors of that business. In October 1977 the first respondent registered the business name ""Coralcote Texture Ceilings" with the New South Wales Corporate Affairs Commission and carried on business under that name until at least July or August 1978. The applicant alleged in the proceedings that the registration of this business name was without the authority, knowledge or coer ae consent of the applicant. The applicant complained that the respondents were advertising the product "Texturecote" in the Yellow Pages of the telephone directory for the Sydney Metropolitan area with a telephone number 997-5725. There was a much smaller reference to "Coralcote Texture Ceilings" with the same telephone number and an address of 39 Minkara Road, Bayview Heights. The applicant complained that it was misleading and deceptive for there to be an advertisements in the Yellow Pages saying that "Coralcote Texture Ceilings" operates at 39 Minkara Road, Bayview Heights on telephone number 997-5725 as "Coralcote" being a product of the applicant, has a trading address in Greystanes, New South Wales with a different telephone number. The address, 39 Minkara Road, Bayview Heights, is the address of the first, second and third respondents. The respondents contended that registration of the business name "Coralcote Texture Ceilings" was made with the authority of the applicant. The respondents denied that the advertisement in the Yellow Pages was misleading or deceptive. Before the proceeding came on for hearing the parties settled the matter and on 14 December 1978, they handed up in court short minutes of order signed by counsel for the parties in the following terms:- "1. The respondents and each of them undertake to the Court: (a) that they will upon receiving any enquiry specifically for CORALCOTE OR CORALCOTE TEXTURE CEILINGS refer the enquirer to the Applicant Company or one of its directors, Mr. Graeme Howard Wattam, on telephone no. 6368393. (b) that they will cease to carry on any further business under the name "CORALCOTE TEXTURE CEILINGS' and cease to advertise under the name ''''Coralcote Texture Ceilings'. (c) that they will forthwith cease to use the advertising brochure for the product 'Texturcote'' marked Exhibit A. 2. The Applicant undertakes to the Court that it will upon receiving any enquiry specifically for Texturcote or Texturcote Surfaces refer the enquirer to any of the respondents on telephone no. 9975725. 3. By consent the matter be stood over generally with liberty for any party to restore on 7 days notice. 4. Costs Reserved." Upon counsel for the parties giving those undertakings to the court, the court made orders in accordance with paragraphs 3. and 4. On 31 August 1979 the applicant filed a notice of motion alleging that the respondents had been guilty of contempt of court in failing to comply with the undertakings. The applicant alleged breaches of undertakings 1 (a), (b) and (c) and gave particulars in the notice of motion of the specific instances of alleged breaches as follows:- "A. enquiries for 'CORALCOTE' have frequently not been referred to the Applicant company or its director. B. the cancellation of the business name was not lodged for registration until 12th March, 1979. Cc. the entries in the Sydney Telephone Directory, Yellow pages and White pages business section were not removed by the Respondents without significant activity on the part of the Applicant, and D. the advertising brochure marked Exhibit A was still freely available from the Hornsby Building Centre on 20th January, 1979. E. More specific details have been set out in the Affidavits of Graeme Howard Wattam sworn 28th June, 1979, Norman Richard Adrian Barrett sworn 26th June, 1979, and Mary Adori Ross sworn 25th June, 1979 and filed herein." I was informed by counsel for the applicant that the alleged breaches of the undertakings had now been remedied. The respondents deny that there was any breach of any undertaking. It is convenient if I deal with each undertaking separately. Undertaking (a): that the respondents will, upon receiving any enquiry specifically for "Coralcote" or "Coralcote Texture Ceilings", refer the enguirer to the applicant or one of its directors, Mr. Graham Howard Wattam, on telephone number 636-8393. The applicant called four witnesses to establish the breach of this undertaking. Mary Adori Ross said that during May 1979 she telephoned 997-5725, being the number listed in the Sydney Telephone Directory for "Coralcote Texture Ceilings", spoke to a female and said: "I am trying to contact 'Coralcote'... The female replied: "Do you really want 'Coralcote'? Where do they come from?" Miss Ross said that during the conversation she was "quizzed about the display stand at the Royal Easter Show, its colour and lighting and offered a telephone number to ring at Bondi Junction, that at the conclusion of the conversation the female person said 'I think its really us you want'". She said that at no time during the conversation was she referred to the applicant, any of its directors, Mr. Wattam or given the telephone number 636-8393. She had seen an exhibition of ceilings at the Royal Easter Show in 1979 for "Coralcote", was impressed with it and later made the telephone call. She thought the conversation lasted about 20 minutes and described it as "a weird conversation" because she could not understand why she was being cross-examined for 20 minutes by the lady at the other end of the telephone. Nancy Joy Steber, the wife of the first respondent and the mother of the second, third and fourth respondents, gave evidence. She admitted that she was the female person who spoke to Miss Ross. She gave a somewhat different version of the conversation to Miss Ross. Miss Ross impressed me as a truthful and reliable witness and I prefer her evidence to that of Mrs. Steber where the two conflict. Margaret Ann Bevan said that during May 1979 she had been aware of the two names ""Coralcote" and "Texturecote" and noticed that both had the same listed number in the Sydney Telephone Directory, namely 997-5725. At that time she wished to contact "Coralcote", telephoned 997-5725 and spoke to a person with a male voice. She said: "I want to contact ''Coralcote'...Why do 'Coralcote' and 'Texturecote' have the same telephone number?". He replied: "Its the same company". She said that at no time during the telephone conversation was she referred to the applicant, any of its directors, or Mr. Wattam or given the telephone number 636-8393. Mrs. Bevan said that during May 1979, when she attended a "home show" at Yennora, she first became aware of the two names and products "Coralcote" and "Texturecote". She said that the voice at the other end of the telephone was a young male voice. Although she was cross-examined with some vigour she adhered to the evidence given in her affidavit that the male person said to her that "Coralcote" and "Texturecote" were the same company. The first and second respondents denied that any such conversation as Mrs. Bevan alleges took place with them. The second respondent said that he asked all the male members of his family and each of them had denied ever receiving any telephone enquiry of the type mentioned by Mrs. Bevan. Mrs. Bevan impressed me as a truthful and reliable witness. I accept her evidence. The third and fourth respondents swore affidavits denying that they had received any specific enquiry requesting "Coralcote"" or "Coralcote Texture Ceilings" since December 1978. Neither of them has been at any material time a director or shareholder of Texturecote Surfaces Pty. Limited or involved in the management of that business at any -10- relevant time. It is clear from the evidence that the first respondent, the second respondent and the first respondent's wife, Nancy Joy Steber, are the persons engaged un the conduct of the business of Texturecote Surfaces Pty. Limited. Norman Richard Adrian Barrett gave evidence by affidavit and orally. In his affidavit he swore that during May 1979, he telephoned 997-5725, being the number listed in the Sydney Telephone Directory for Coralcote Texture Ceilings, spoke to a person with a male voice and said that he wanted "a quote for a ceiling to be 'Coralcoted'". The male person replied: "We don't do that anymore...we are 'Texturecote''". Mr. Barrett asked him the difference and he replied: "One's local and the other is imported. I think they're still doing it". Mr. Barrett then asked: -11- "Who? And where?" To which the reply was: "IT think there is an advertisement in the Yellow Pages". Mr. Barrett said that at no time during the conversation was he referred to the applicant, any of its directors, or Mr. Wattam or given the telephone number 636-8393. The second respondent admitted that he spoke to Mr. Barrett, but he gave a somewhat different version of the telephone call. He said that at the time he received this telephone call he was "downstairs" and did not know the telephone number of "Coralcote"; so he simply directed Mr. Barrett to look at the Yellow Pages under the heading of "Ceilings". Mr. Barrett was cross-examined and it emerged from his cross-examination that, although he said his recollection of the telephone conversation was clear at the time he swore his affidavit, it was "very poor" when he gave evidence in the witness box on 13 December 1979. He said that he was v -12- asked to make the telephone call by Mr. Wattam who was a business associate of his and that he had no intention of having any ceiling of his "Coralcoted". I accept Mr. Barrett as a truthful witness but I do not propose to rely upon his evidence because of both his poor recollection of relevant events when he gave evidence and his association with Mr. Wattam. David Gerald Pye gave evidence that during October 1979, he telephone 997-5725 being the number listed in the Sydney Telephone Directory for "Coralcote Texture Ceilings" and spoke to a person with a male voice and asked him" "Do you put the spray stuff on ceilings?" To which he replied: "Ves a . Mr. Pye then asked: "Did you do the job for John Samios at Lloyd George Avenue, Concord?" To which the male person replied: -13- "Yes". Mr. Pye then said: "That's good because he's happy with it, could you come and give me a quote please?" The person replied: "Ves" Mr. Pye later had a conversation with Mr. Samios and then looked up the new telephone directory and found the number to be 636-8393 for "Coralcote". Subsequently a male representative from "Texturecote" came, gave him a quote and Mr. Pye said to him: "This is not as big as John Samios' job", to which the male person replied: "I looked in the file and could'nt find that one, but we do so many". Mr. Pye said that at no time during the telephone conversation, nor at any time during the visit from the -14- representative of "Texturecote", was he referred to the applicant, any of its directors or Mr. Wattam or given the telephone number 636-8393. Mr. Pye was cross-examined and conceded that it was possible the telephone conversation took place in early November rather than October. Counsel for the respondents tendered a telephone message book which establishes that the conversation took place between Mr. Pye and the _ second respondent on 7 November 1979. I have no reason to doubt the authenticity or accuracy of the book, nor was it challenged. It appears that the conversation therefore took place on 7 November. The fact that Mr. Pye swore in his affidavit that it occurred during October 1979 does not reflect adversely on his credibility or reliability. The second respondent gave a materially different version of the telephone conversation with Mr. Pye. I accept Mr. Pye as a truthful and reliable witness and prefer his evidence to that of the second respondent where the two conflict. I accept the evidence of the witnesses called on behalf of the applicant as both truthful and reliable save -15-+ the evidence of Mr. Barrett which, although truthful, is not reliable. The evidence in particular of the second respondent is in contrast, sometimes sharp contrast, with the evidence of the witnesses called by the applicant. I reject his evidence where it conflicts with the evidence of those witnesses. I am satisfied that it was the second respondent who represented to Mrs. Bevan that it was one and the same company that produced both "Coralcote" and "Texturecote". He represented to Mr. Pye that "Texturecote" and "Coralcote" were the same in the sense that he knew Mr. Pye wanted to get in touch with the producer of "Coralcote" because it was "Coralcote" that had been put on the ceiling for Mr. Samios; and he wanted Mr. Pye to believe that "Texturecote" was the same company. It was a somewhat similar representation to that made by him to Mrs. Bevan namely, seeking to lead people to believe that the applicant and Texturecote Surfaces Pty. Limited were really one and the same. In my opinion the applicant has established that the second respondent has breached undertaking (a). It has not established that the first respondent has breached this undertaking; and it is clear that the third and fourth respondents did not breach this or any other undertaking to the court. -16- Undertaking (b): that the respondents will cease to carry on any further business under the name "Coralcote Texture Ceilings" and cease to advertise under the name "Coralcote Texture Ceilings". The applicant's case is that Mr. Wattam lodged with the Corporate Affairs Commission the business name "Coralcote Ceiling Spray" on 25 January 1979, but was unable to obtain registration of the name because of the still current registration of the business name "Coralcote Texture Ceilings" of which the respondents were shown as proprietors. The applicant contends that, despite requests by it or on its behalf to the respondents for the cancellation of this business name, it was not until 9 March 1979 that the respondents lodged the appropriate document with the Corporate Affairs Commission to enable the name to be cancelled. The applicant says that this dilatory conduct indicates that the respondents were in truth carrying on business in the meantime under the name "Coralcote Texture Ceilings". The other aspect of the applicant's case relevant to this undertaking is that, shortly before the last date for -17- the closing of new entries in the Sydney White Pages telephone directory for 1979, it came to the attention of Mr. Wattam, through a representative of the Telecom Directories' branch, that the respondents had taken no steps to cancel the entry from either the White Pages or the Yellow Pages recording "Coralcote Texture Ceilings" at the address 39 Minkara Road, Bayview Heights and the telephone number 997-5725. "Texturecote" appears in the directory, including the Yellow Pages, with the same telephone number and address. it is obvious that any person reading the "Ceilings" section of the Yellow Pages, if he had seen the entry for both "Coralcote Texture Ceilings" and "Texturecote," would have assumed that they are one and the same. The applicant contends that this establishes the intention of the respondents not to alter the Sydney White Pages telephone directory for 1979 which would have been published in the normal course about October or November 1979, and supports its contention that the respondents were in fact conducting their business under the name of "Coralcote Texture Ceilings". I do not regard the fact that steps were not taken to cancel the registration of the business name "Coralcote Texture Ceilings" by or on behalf of the respondents until 9 -18- March 1979 as being in itself a breach of any undertaking to the court, nor do I regard it as supporting the contention er as indicating that the respondents were in truth still carrying on business under the name "Coralcote Texture Ceilings". Although there is some dispute in the evidence as to the steps taken by the respondents to have the entry in the Sydney White Pages telephone directory for 1979 changed, I am satisifed that probably the 1979 White Pages directory would have been published showing "Coralcote Texture Ceilings" with the telephone number 997-5725. I am satisfied that it was the efforts of Mr. Wattam that led to the change in the relevant entries. The respondents could do nothing, of course, about changing the entries in the 1978 directory because they had been published before the proceedings were settled. Having considered all the evidence, including the evidence of the first respondent, which I accept, that following the proceedings before me on 14 December 1978, the respondents ceased to carry on any further business under the name "Coralcote Texture Ceilings", it has not been established that there has been a breach of this undertaking. -1|9- The onus of proof in matters of contempt is high; but I do not think that, even if the standard were, (and it is not) proof on the balance of probabilities, the onus would have been discharged. I turn to undertaking (c): that the respondents will forthwith cease to use the advertising brochure exhibit "A". This brochure advertises "Texturecote", contains the name of the manufacturer "Texturecote Surfaces Pty. Limited" and the telephone number 997-5725. The evidence in support of the applicant's case consists primarily of that of Christine Anne Bradshaw, a clerk in the employ of the applicant's solicitors, who said that on either 10 or 17 February 1979, she went to the Hornsby Building Information Centre and collected from the brochure display box a brochure the same as exhibit "A", the offending brochure. Mr. Wattam gave evidence that on 20 January 1979 the brochures were being distributed by the respondents in display box No. 29 at the Hornsby Building Information Centre in relation to the product "Texturecote". It is not clear from the evidence whether the brochures which Mr. Wattam u -20- referred to are copies of the offending brochure or not. Probably they vere. The second respondent gave evidence that on or about 22 December 1978, he went to the Information Centre and inspected the respondents' display box 29 which was then completely empty and placed in the box about a dozen photostat copies of an advertisement that the respondents had previously published, not being the offending brochure. He said that about mid January 1979 he again attended the Information Centre and found a few copies of that advertisement still in the display box. He removed them and replaced them with a more detailed advertisement, again not being the offending brochure. He said that at no time since December 1978 has the respondents used the offending brochure. He denied that there was any possibility of the offending brochure having been in box No. 29 in January or February 1979. I accept the evidence of Miss Bradshaw. She impressed me as a truthful and reliable witness. However, in my opinion, it is not open to the court to conclude from the evidence that the second respondent -21- either allowed the offending brochure to remain in the box or put it or copies of it there himself after December 1978. It is not suggested that any of the other respondents committed a breach of this undertaking. In the result, the applicant has established a breach by the second respondent of undertaking (a) and has not established breaches by any respondent of undertakings (b) or (c). In my opinion the breach of undertaking (a) by the second respondent calls for an order of costs against him but no other orders. I order the second respondent to pay two-thirds of the applicant's costs of this application including reserved costs. Although the applicant has failed to establish any breaches of any of the undertakings by the first, third and fourth respondents, all respondents were represented by the same solicitor and counsel. I do not think it proper, in all the circumstances, to order the applicant to pay any of the costs of any of the respondents. I certify that this and the Yuen (2) preceding pages are a true copy cf the Reasons for Judgment herein of his Honour Mr. Justice Lockhart. Vda / Associat pated: / Ved aki