CATCHWORDS BANKRUPTCY - alleged settlement of property - moneys held in loan account of company - company acting as trustee under a family trust - whether direction by creditor to transfer part of the moneys in his loan account to the benefit of the trust constitutes a "settlement". Nature of transaction - assignment of part of a debt - whether unequivocal statement in writing manifesting intention to assign is sufficient - promissory estoppel. BANKRUPTCY ACT 1966 s.120 RE FRANCIS DENNIS WARD; OFFICIAL TRUSTEE IN BANKRUPTCY V DABNAS PTY LIMITED - W.390 OF 1983 WILCOX J 17 AUGUST 1984 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE No. W.390 of 1983 wweveervvn AUSTRALIAN CAPITAL TERRITORY RE: FRANCIS DENNIS WARD A Bankrupt EX PARTE: THE OFFICIAL TRUSTEE IN BANKRUPTCY Applicant DABNAS PTY LIMITED Respondent ORDERS CORAM: WILCOX J DATE: 17 AUGUST 1984 PLACE: SYDNEY 1. DECLARE that the transaction effected by the respondent on or about 30 June 1981 in compliance with a request by Francis Dennis Ward by letter dated 29 June 1981 and involving the gift by Francis Dennis Ward to the respondent, as trustee of the Beauty Point Trust, of the sum of $180,000, such aift to be satisifed by debiting the loan account of Francis Dennis Ward in the books of account of the respondent is void as against the applicant. 2. ORDER that the respondent do pay to the applicant the sum of $180,000. 3. ORDER that the respondent do pay to the applicant his costs of the application. 4. DIRECT that if no Notice of Appeal be filed in the meantime the exhibits be returned at the expiration of 21 days from this day. IN THE FEDERAL COURT OF AUSTRALIA BANKRUPTCY DISTRICT OF THE STATE No. W.390 of 1983 OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY RE: FRANCIS DENNIS WARD A Bankrupt EX PARTE: THE OFFICAL TRUSTEE IN BANKRUPTCY Applicant DABNAS PTY LIMITED Respondent REASONS FOR JUDGMENT CORAM: WILCOX J DATE: 17 AUGUST 1984 PLACE: SYDNEY This 13 an application. made pursuant to s.120 of the Bankruptcy Act 1966 to set aside an alleged settlement of property. On 9 May 1983 a Sequestration Order was made against the estate of Francis Dennis Ward. The petition was based upon an act of bankruptcy committed on 16 November 1981. 7 renews oe By a Deed of Settlement made on 29 May 1978 Anthony John Pierce settled upon Dabnas Pty Limited, the respondent to this application, the sum of $20 upon trust for certain beneficiaries including principally members of the family of Mr Ward. The trust was to be, and subsequently became, known as "The Beauty Point Trust". Shortly thereafter, the company as trustee purchased, apparently with borrowed moneys, a home at 9 Wharf Road, Vaucluse, in which Mr Ward resided with his family. The lenders included Mr Ward who, as a result of a number of unrelated transactions, was, at 29 June 1981, owed by the Trust an amount exceeding $180,000, apparently $229,787.62. On that day Mr Ward wrote to the directors of Dabnas Pty Limited, saying: "I write to you in your capacity as trustee of the Beauty Point Trust. It is noted that in your capacity as trustees of The Beauty Point Trust you owe me an amount in excess of $180,000.00. I hereby acknowledge that I have unconditionally gifted to you the sum of $180,000.00 which will be satisfied by you debiting my loan account in your books of account by an amount of $180,000.00." The Official Trustee in Bankruptcy has applied to the Court for a declaration that the forgiveness of the debt by Mr Ward, to the extent of $180,000, is void as against the applicant and for consequential relief. The Official Trustee relies upon s.120 of the Bankruptcy Act which relevantly provides: "120(1) A settlement of property, whether made before or after the commencement of this Act, not being - (a) a settlement made before and in consideration of marriage, or made in favour of a purchaser or encumbrancer in good faith and for valuable consideration; or (b) a settlement made on or for the spouse or children of the settlor of property that has accrued to the settlor after marriage in right of the spouse of the settlor, is, if the settlor becomes a bankrupt and the settlement came into operation after, or within 2 years before, the commencement of the bankruptcy, void as against the trustee in the bankruptcy... (8) In this section, 'settlement of property' includes any disposition of property." The respondent, Dabnas Pty Limited, relies on two grounds for contending that the transaction did not constitute a settlement within the meaning of 3.120: first, that the transaction involved the immediate consumption or alienation of the gifted $180,000, so that it lacked the ingredient of permanent benefit required, on the authorities, for a "settlement" within the meaning of a provision such as 3.120; and secondly, that the letter of 29 June was not effective to dispose of the debt of $180,000, so that no "settlement" has been effected. The primary contention of counsel for the respondent is that this transaction is not one capable of being a settlement within the meaning of 3.120 of the Bankruptcy Act. They say that a disposition of property for the purpose of an immediate consumption or disposal of the gift by the donee is not a settlement within Lhe meaning of that section. They submit that, in this case, there was an immediate application of the debt forgiven, namely to increase the equity of the beneficiaries. There 18 a long line of authority to support the proposition that not every gift will amount to a "settlement" within the meaning of a provision such as s.120. The foundation decision would appear to be that of a Divisional Court in Re Player; ex parte Harvey (1885) 15 QBD 682. In that case a father, the bankrupt, made within the statutory period, ten years, a gift of money to his son to enable him to purchase stock in trade and to commence carrying on a business. Section 47(3) of the Bankruptcy Act, 1883, which applied to the case, provided: "47(3) 'Settlement' shall for the purposes of this section include any conveyance or transfer of property." The trustee claimed to trace the funds provided by the father and to recover the whole of the assets of the business of the son, which were worth less than the amount of the original gift, but giving credit to the son for the value of his own initial contribution. Mathew J, rejected the claim, saying at p 684: ",.. the Act of Parliament never intended to give such a right as the trustee claims, because if transactions of this kind, which certainly are not morally wrong, are included in the operation of s.47, all gifts froma father to a son for his advancement in life could be recovered from the unfortunate son at any time within ten years if the father became bankrupt, unless the son could show that his father was able to pay all his debts without the aid of the gift at the time it was made. It was contended that this was a 'transfer of property' within sub-s.3 of 8.47, and by the interpretation clause in the Act 'property' includes money. I think the meaning of sub-s.3 1s that where property is settled as property 1t may be recovered by the trustee in the same way that property which 1s ordinarily the subject of settlement might be. It would be impossible to put on sub-s.3 the construction contended for on the trustees behalf without rendering void many transactions which, as matter of moral obligation, are perfectiy proper and right. It 1s also said that the money given to the son can be traced as forming part of the capital remaining in the business. I think 1t cannot be traced. What is left merely represents the profits on particular transactions in the business". Cave J, who agreed, said at p 687: "The transaction must be in the nature of a settlement, though it may be effected by a conveyance or transfer. The end and xurpose of the thing must be a settlement, that is, a disposition of property to be held for the enjoyment of some other person. Thus a purchase by the father of shares, which are registered in the son's name, and upon which the son receives the dividends, 1s within the statute. But where the gift is of money to be expended at once, the transaction is not, in my opinion, within s.47 of the Act of 1883". Player was followed at first instance in Re Vansittart £18933 1 QB 181 and in Re Tankard £1899] 2 QB 57. It was approved by the Court of Appeal in Re Plummer (1900) 2 QB 790, a case 1n which a trustee in bankruptcy sought to have the Court declare void under s.47 a transfer of a business from a company, originally funded by the bankrupt but now 1n voluntary liquidation, to the bankrupt's son. The son purchased the business from the company with funds substantially provided by the bankrupt. Lord Alverstone MR, at p 804 indicated a test of what constitutes a "settlement of property" for the purpose of 8.47: "If there is a gift by a father to a son of money or proceeds of property which can be traced, and the money or proceeds 1s or are intended to be retained or preserved as the property of the donee, that money or those proceeds would be property in 'settlement'. On the other hand, if there 1s a gift of money or proceeds, but it 18 not intended that the money or the proceeds shall be retained by the donee in the form of money, but shall be expended at once, that will not be a 'settlement'". At p 805 Lord Alverstone expressed his agreement with the statement by Wright J in Tankard at p 60: "that neither the original alienee, nor the transferee from him, could be required to restore money which he has spent or property which he has aliened before the bankruptcy, and without notice of any act of bankruptcy ... though the alienee probably is liable to account for any proceeds which remain in his hands at the time of the bankruptcy - at any rate, if the acquisition by him of those proceeds was an object of the gift to him so that the proceeds can properly be said to represent the gift". Rigby LJ, who concurred, referred to the relevant principle, at p 9808, as being: "... that a gift of money which is not hedged about with conditions that it shall be invested and kept in a certain way cannot he called a 'settlement' within the meaning of 5.47". These decisions have been applied in Australia. In Jack v_Smail (1905) 2 CLR 684 a trustee sought to recover, under 3.72 of the Insolvency Act, 1890 (Vic), moneys saved by the wife of a bankrupt out of a housekeeping allowance made to her over a number of years. The lligh Court of Australia held that the claim should be dismissed, Griffith CJ and Barton J both expressly relying upon the approach taken in Player and the succeeding English decisions. Barton J, at p 710, quoted with approval the test adopted by Wright J in Tankard at p 59: "The retention of the property in some sense must ... be contemplated, and not its immediate alienation or consumption", Williams v Lloyd (1933) 50 CLR 341 was a claim under s.94, the equivalent of the present s.120, in the Bankruptcy Act 1924, kRelevantly, that section provided: "(1). Any settlement of property ... shall, (1) if the settlor becomes bankrupt within two years after the date of the settlement - be void against the trustee in the bankruptcy; and (11) if the settlor becomes bankrupt at any subsequent time within five years after the date of the settlement - be void against the trustee in the bankruptcy, unless the parties claiming under the settlement can prove that the settlor was, at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement, and that the settlor's interest 1n the property passed to the trustee of the settlement or to the donee thereunder on its execution .. (5) 'settlement: for the purposes of this section includes any conveyance or transfer of property". In Williams v Lloyd the Official Receiver sought, inter alia, to avoid the transfer of the beneficial interest in a mortgage to the daughter of the bankrupt and the transfer of a sum of money to a Savings Bank Account held in the names of the bankrupt's wife and daughter. The members of the High Court applied to 3.94 the approach approved in Plummer. Starke J, quoting Wace on Bankruptcy (1904) said at p 364: "A settlement of property is a conveyance or transfer of property, and 'the voluntary settlements to which this section applies are only such conveyances or transfers of property as are in the nature of settlements in the sense of being dispositions of property to be held for the enjoyment of other persons, ie, where the donor contemplates the retention of the property by the donee, either in 1ts original form or in such a form that it can be traced'." Dixon J, at p 375, quoted with approval the test enunciated by Cave J in Player and added: "But it does not mean that there shall be any restriction on the donee's power of disposal, but merely that the retention of the property im some sense must be contemplated and not its immediate dissipation or consumption". In two reported décisisns, Re Pahoff; ex parte Ogilvie (1961) 20 ABC 17 (Clyne J) and Re Hyams (1970) 19 FLR 232 (Gibbs J), the Federal Court of Bankruptcy applied Williams v Lioyd in applications by a trustee to avoid a mortgaqe, alleded to constitute a "settlement" within s.94. However, Gibbs J pointed out in Hyams that not every mortgage will constitute a "settlement". It 1s necessary to consider the purpose of the mortgagor. In that case he held that there was a settlement, in circumstances where it was contemplated that the mortgage would, for an indefinite time, be retained by and for the benefit of the respondent. Re Barton (1983) 52 ALR 95 appears to be the only reported decision in relation to the meaning of "settlement" under 3.120 of the 1966 Act. In that case McGregor J had to determine whether the payment of $170,000 by the bankrupt to his uncle, for the purpose of enabling the latter to purchase a home, amounted to a settlement. At p 107 his Honour held that the 10. circumstances confirmed "that the bankrupt contemplated a 'permanency' of the subject matter of transfer to remain the property of the 'transferee'." He applied Williams v Lloyd and held that the payment constituted a "settlement" within the Meaning of s.120. With the exception of Barton, each of the reported cases has been concerned with a section which defined the word "settlement" as including a "conveyance or transfer of property". This circumstance 15 significant in two respects. First, several of the cases concern themselves with the technical question whether a particular transaction may aptly be described as a conveyance or transfer of property. Secondly, the particular forms of transaction mentioned in the definition are those appropriate for the disposition of real estate. Although the definition 1s stated in non-exhaustive terms 1t does suggest permanency of subject matter. This suggestion would appear to have influenced the approach of the courts to the question whether a disposition intended for immediate allenation or consumption may be a "settlement". The assignment or forgiveness of a debt 1s a "disposition of property". By such a transaction the donor divests himself of a right of property, namely his chose in action for recovery of the debt. The word "property" is defined in s.5 of the current Bankruptcy Act so as to include "personal property of every description" and thus money. Literally, > ene me 11. therefore, the present transaction - if successfully effected - falls within the definition in s.120(8). Does the Player principle apply to 8.120, with its enlarged definition of "settlement"? If so, does it operate to exclude the disposition in this case? Player was a "hard case" on its facts. Mathew J, at least, was much influenced by the length of the relation back period (10 years) and of the irrelevant question of whether the action of the bankrupt in benefitting his son was morally defensible. Cave J dwelt upon the form of earlier English legislation. Wills J simply concurred. No member of the Court dealt with the matter 1n terms of principle or as a matter of construction of the Act. In no subsequent case has any such attempt been made. Judges have been content simply to apply the decision. The word "settlement" denotes a financial benefit deliberately provided: no doubt it connotes a capital sum. It is not difficult to see why, in Jack v Smail, the High Court rejected the notion that a wife's savings from her housekeeping allowance constituted a settlement. But it is difficult to see the rationality of a distinction between the provision of a substantial capital sum to establish a son in business, held not to be a settlement in Player, and the transfer of a Savings Bank account to a wife and daughter, held in Williams v Lloyd to constitute a settlement. 12. The actual decisions in the two High Court cases are consistent with the adoption of a test more nearly related to the language used in the relevant sections: whether the benefit was a deliberate provision of a capital sum. The settlement alleged in Jack v Small failed to meet this test; the trustee's claim failed. The settlements alleged in Williams v Lloyd met this test; the claims succeeded. The problem, for Australian courts, is the uncritical acceptance in each case of the tests enunciated in the early English cases. The substitution in s.120(8) of a new and wider definition of "settlement" offers to Australian courts the opportunity to re-think the desirability of adhering to the traditional tests. No longer does the definition have the connotation of permanent benefit suggested by 'conveyance or transfer' of property. Rather it refers to 'disposition' of property. It ought to be enough that the relevant transaction is a deliberate disposition of a capital fund. It ought to be immaterial whether the settlor contemplates that the capital fund will be held indefinitely in specie, converted to some other form of capital or spent by the settlee. However this may be, it is not necessary to determine this case by reference to any wider interpretation of the word "settlement" than that indicated in the authorities to which I have referred. The forgiveness by Mr Ward of the obligation of 13. Dabnas to repay to him the sum of $180,000 is a transaction which meets the test of permanency specified by those authorities. The effect of that transaction was to increase the net assets of the Trust in exactly the same way as if he, or some other person, had paid to the respondent the sum of $180,000, or transferred property of that value, to be held upon the trusts of the Deed. The respondent was not only entitled to hold the additional equity on behalf of the beneficiaries under the Deed of Settlement; it was bound to do so. To use the words of Cave J in Player the transaction was "in the nature of a settlement". it complied with the tests adopted in Plummer: it was 'intended to be retained or preserved as the property of the donee' (Lord Alverstone MR); 1t was a gift of money "hedged about with conditions that 1t shall be invested". (Rigby LJ) It met the requirements of Williams v Lloyd: it was a disposition of property "to be held for the enjoyment of other persons" (Starke J); the donor intended the retention of the property, as a permanent addition to the assets of the Trust, not the "immediate dissipation or consumption" of the property. (Dixon J) Counsel for the respondent contend that the disposition by Mr Ward fails to comply with the traditional test because, in the end, there was not an identifiable corpus, representing the gift, but merely a reduction in the amount of a liability. They contend that the relevant criterion 18 whether the settlement has resulted in the vesting in the donee, for his continuing benefit, of an identifiable asset. It is not enough, they say, that there 14. has been an increase in the net assets of the donee because of the elimination or reduction of a liability. I find no warrant in the authorities for this further limitation upon the generality of the words used in s.120(8). The authorities are concerned with distinguishing between a case where a donee has received money for the purpose of immediate utilization or alienation, on the one hand, and the case where he has taken with the intention of thereby creating some capital fund for his continuing benefit. The latter situation was seen as being aptly described by the word "settlement" whereas the former was not. A transaction which takes the form of eliminating or reducing a liability, and thus increasing the net worth of the assets held by the donee, is a transaction which gives a continuing capital benefit and is proper to be included in the latter category. If 1t were not so it would be necessary to distinguish, by way of example in the present case, between the instant transaction and a transaction in which Mr Ward handed over a cheque to the respondent for $180,000 to be held upon the trusts of the Deed. The artificiality of such a distinction is illustrated by the accounts prepared by the respondent in relation to the Beauty Point Trust. The balance sheet as at 30 June 1981 shows certain assets, principally the home at Vaucluse, having a total worth of $1,514,215.59. After deduction of liabilities net assets are shown as $1,314,001.21. But for the forgiveness of 15. debt by Mr Ward the liabilities would have been increased by $180,000 with a consequent reduction in the value of the net assets to $1,134,001.21. Interestingly, the Capital Accounts, which show the breakup of the net assets of $1,314,001.21, have the following items: $ "Settlors funds 20.00 Asset revaluation reserve 1,216,599.00 Gifts 180,000.00 $1,396,619.00 Share of loss 82,617.79 §1,314,001.21" This analysis of the origin of the net assets rightly shows Mr Ward's gift by way of forgiveness of debt as being a positive item increasing the amount of the trust funds held by the respondent. The gift made by the letter of 29 June 1981 from Mr Ward was a transaction, if effected, answering the description of "settlement" within the meaning of s.120. The primary contention put on behalf of the respondent must be rejected. The second, and alternative, contention of the respondent 1s that there was no settlement because Mr Ward's letter, and the consequent action of the company, did not effect the desired transaction. Nothing occurred, it was said, to increase the assets of the Trust. The respondent as trustee 1s 16. still indebted to Mr Ward for the full amount of the loan account. Counsel accept that the consequences of this submission May well be that the relevant sum of $180,000 is recoverable by the Offical Trustee in an action at law. However, that consequence is irrelevant to the availability of the argument as an answer to the present proceedings. The argument is based upon the fact that as at 29 June the Trust was indebted to Mr Ward in an amount exceeding $180,000. Mr Ward was possessed of an interest in a debt. An interest in a debt is a form of leqal property, namely a chose in action (Brice v. Bannister (1878) 3Q0B 569 at 573); whether or not the debt is presently payable (Norman v Federal Commission of Taxation (1963) 109 CLR 9 at p 26.) By the letter of 29 June Mr Ward purported to alienate the indebtedness to the extent of $180,000 only, that 1s to alienate part only of the debt. Counsel for the respondent submit that this purported alienation was by way of assignment; so that the effectiveness of what was done must be determined in the light of the'rules governing the assiqnment of part of a legal interest. Their reason for characterizing the transaction as an assignment is the particular language used in his letter by Mr Ward: "I have unconditionally gifted" the sum of $180,000 "which will be satisfied by you debiting my loan account". This is the language of transfer of an interest rather than of release. It is usual for an assignment to take the form of a 17. transfer of an interest from one obligee, who is separate from the obligor, to another obligee, also separate, but this separation of identity is not an essential element in the concept. In Norman, at p 26, Windeyer J was content to define "assignment" to mean "the immediate transfer of an existing proprietary right, vested or contingent, from the assignor to the assignee". The assignee of the benefit of an obligation may be the obligor himself; as for example when a freeholder purchases from his lessee a leasehold interest in the property. Counsel for the applicant accepted this categorization of the transaction, arguing that there was here "the clearest intention to assign (and) the acting upon it" and I approach this second argument on that basis. At common law a debt or other legal chose in action was not assignable (Norman at p 26) but from earliest times a different rule obtained in equity: see Meagher Gummow and Lehane "Equity Doctrines and Remedies" 2nd edition para 632. In equity a debt was assignable , even without consideration, and the assignment was complete when the donor had done everything necessary to perfect the assignment: see Fortescue v Barnett (1834) 3 My & K 36; 40 BR 14; Re Patrick £18911 1 Ch. 83. By statute, in New South Wales, a debt - that is the whole of a debt - 1S now assignable at law: see s.12 of the Conveyancing Act, 1919. However, this provision does not apply to the assignment of part only of a debt: see Re Steel Wing Co 18. Limited £19211 1 Ch 349; Williams v Atlantic Assurance Company C1933] 1 KB 81. The reason for this qualification was explained by Windeyer J in Norman at pp 29-30: "Before the statute an assignee was permitted to bring his action at law in the name of the assignor when he was seeking to recover a whole debt assigned to him. If a debt had been broken into parts this procedure was not appropriate. A creditor cannot recover a debt piecemeal in a court of law. Therefore, when part of a debt was assigned, proceedings to enforce the assignment had to be brought 1n a court of equity. And the assignee, not the assignor, would be the plaintiff in the suit. The assignor (the creditor) as legal owner, the debtor and any assignees of other parts of the debt are all necessary parties, so that all the obligations of the debtor and the rights of all persons interested in the fund might be established by the decree. This was the rule of the Chancery Court. It is still the law... As an assignment of Part of the debt is still necessarily an equitable assignment, the question arises can it be made by way of gift; and if so0, how?" Windeyer J went on to hold that, in the case of an assignment which is equitable because the property assigned 15 a legal chose in action not assignable except by the aid of equity - such as part of a debt -, an assignment may be made by way of gift. At p 33 he said: "An agreement to assign will be effective as an equitable assignment if it be for value; for then equity looks on that as done which ought to be done. But this does not mean that there cannot be in equity an actual assignment of a chose in action as distinct from an agreement to assign. I think there can, and that it can be by way of gift. In such a case equity enforces the assignment, not by compelling the assignor to do ~ ee 19. something, but by refusing to allow him to act in a way inconsistent with what he has done, that is by restraining him from derogating from his gift. His conscience becomes bound, not by value received, but because, as between him and the assignee, his gift was complete". In Shepherd v Federal Commissioner of Taxation (1965) 113 CLR 385 a Full High Court affirmed the view of Windeyer J, holding effective in equity a purported assignment, by deed poll but without consideration, of part of a legal chose in action, namely a royalty payable under a manufacturing licence. In Norman, at p 34, Windeyer J pointed out the inconsistency of saying that a donor must do everything that, according to the nature of the property, is necessary to transfer when, 1n law, that property is not transferable; "for equity looks to the intent not the form". He held that an assignment by deed was effective in equity. This was for a special reason, pointed out earlier at p 32: "It seems to me that, in principle, so far as a deed has any efficacy in connection with equitable assignments, it 1s not that a deed takes the place of valuable consideration where that is needed to attract the aid of equity. Rather it is that, 1n cases where value is not so required but a clear expression of intention 13s, the delivery of a deed couched in terms of present gift manifests, in the best possible way, the intention of the assijnur Lo make an immediate and irrevocable transfer". 20. In Shepherd, at p 397, Kitto J expressed agreement with this view and adopted the test, in the case before him, whether the relevant deed "manifests unequivocably the intention to make an assignment". In the present case the so called assignment was effected by a letter, not a deed. However, that does not matter. As Windeyer J pointed out, there 1s no magic in a deed. The question must always be whether the relevant document contains a clear expression of intention to make an immediate and irrevocable transfer of the interest by way of gift. The letter of Mr Ward answers this test. It was so understood by the recipient, the respondent, who thereupon took ali action necessary to effect that transfer. Counsel for the respondent argue that the absence of consideration meant that the gift failed. They invoke the maxim that equity will not assist a volunteer and they cite a passaqe from the judgement of Kitto J in Olsson v Dyson (1969) 120 CLR 365 at p 375-376: "There was no valid assignment in equity either, for property which 13 assignable at law but is not assiqned in the manner which the law requires for a legal assignment of it cannot he held in equity to be assigned unless by reason of some fact or circumstance which a court of equity regards as binding the legal owner in conscience to hold the property upon trust for the assignee. A promise for valuable consideration to assign the property 1s enough for this purpose, for 21. equity, regarding that as done which ought to be done in return for the consideration given, holds the assignee to have an equitable interest commensurate with the legal interest which specific performance of the promise would give him. But there is no equity to perfect an imperfect gift: because of the absence of consideration a purported assignment, if incomplete as a legal assignment, effects nothing in equity." However, that decision, and the quoted passage in particular, are clearly distinguishable from the present case. In Qlsson v Dyson the deceased had purported orally to assign the whole of a debt to his wife. This was an interest assignable at law subject to compliance with statutory requirements. The Court said nothing about the very different situation of a purported assignment of an interest not capable of assignment at law. The reference by Kitto J to equity not perfecting an imperfect gift arises not because of any inflexible rule that equity will not assist a volunteer but because, in his view, 1t is not the function of equity to intervene to provide an alternative mechanism where there 1s a method of assignment available at law. The maxim has no application to assignments of property assignable only in equity. In such a case it is the function of equity to intervene to provide a method of assignment. This point was made by Windeyer J in Norman at p 35: "To speak of equity not perfecting an imperfect gift seems beside the point when no gift could be made except in equity." 22. He goes on, in the passage earlier quoted, to say that there can be a voluntary equitable assignment of part of a debt. The maxim that equity will not assist a volunteer is relevant only at a point of time when some act still needs to be performed by the donor to perfect his gift, at law or in equity as the case may be. It has no application to the facts of this case. Mr Ward has done everything necessary to be done to perfect the gift. The position is as stated by Windeyer J in Qlsson v Dyson at pp 386-387, illustrated by the facts of that case - a case falling within a different cateqory, namely a purported assignment in equity of an interest assignable at law: "There is no equity to perfect an imperfect gift. ... It would perhaps be better expressed by saying that an intending donor cannot be compelled to perfect his intended gift. To put it in those words rather than in the more brief form commonly used 13 desirable in the case of an assignment of a debt by way of gift. For if the assignor does all that the statute requires him to do on his part to effect the assignment it will be regarded ag effective in equity. .... the assignor is bound in equity, notwithstanding that the assignment is by way of gift, for he has done all that the law required of him to complete his gift. Equity interposes to prevent his retracting 1t." In short, if the donor has not done sufficient for equity to regard it as an assignment, he cannot be compelled to 23. perfect the assignment. But once the point has been reached where the donor has done what equity requires for him to effect an assignment "equity interposes to prevent his" (that is the donor) "retracting" the assignment. In my view, the letter, construed as an assignment of the debt, was effective to achieve its purpose. The settlement was effected. The conclusion I have expressed, on this second aspect of the case, 1s based upon the view, common to the parties, that it is correct to characterize the transaction as being an assignment by Mr Ward to Dabnas of part of nis chose in action against Dabnas. The alternative to that view is that the letter operated in law as a forgiveness, or release, pro tanto of that debt. The question whether a legal right may be voluntarily released in equity by writing not under seal is described by Meagher, Gummow and Lehane, op cit para 3502 as being "a matter on which the authorities are in some confusion". I do not find it necessary to attempt to unravel that confusion because it seems to me that, whether or not there is any such general rule, the facts of this case give rise to a promissory estoppel precluding the promisor, Mr Ward, from reneging on his promise and exercising his legal rights to sue for the $180,000. 24. The question whether the doctrine of promissory estoppel has a place in Australian law has heen set at rest by the recent decision in the High Court of Australia in Legione v Hateley (1983)57 ALJR 292. In their joint judgement in that case Mason and Deane JJ, at pp 303-304, referred to the elements necessary to support a promissory estoppel. They found it unnecessary to say whether a pre-existing contractual relationship was necessary. (cf. Meagher, Gummow and Lehane, op cit para 1706 where 1t 1s suggested that a subsisting legal relationship, whether under contract or arising from statute or a fiduciary obligation is necessary.) In the present case there was, at 29 June 1981, a pre-existing contractual relationship between Mr Ward and the respondent as trustee of the Beauty Point Trust so that this element, if 1t be necessary, 13 satisifed. Mason and Deane JJ held that a representation must be clear and unambiguous in order to find an ettcppel in pais, including a promissory estoppel. This requirement 1s satisfied in the present case, Finally, their Honours said that a person will not be estopped from departing from an assumption or a representation unless, as a result of adopting it as the basis of action or inaction, the other party will have placed himseif in a position of material disadvantage if departure from the assumption be permitted. In my view this element is satisfied in the present case. The respondent did act on the representation by the creditor that he had gifted to the trustee the sum of $180,000, to be satisfied by debiting his loan account; a representation, 25. in effect, that he would not seek to recover the $180,000. The action taken by the trustee was to apply this sum in its accounts g0 as to cause it to become an asset of the Trust and subject to the declaration of trust contained in clause 2 of the Deed whereby the Trust Fund is to be held upon the trusts of the Deed. The money was no longer available for payment to Mr Ward. Each of the elements of promissory estoppel is made out and this furnishes an alternative, or further, reason for the conclusion that the transaction was effective as against Mr Ward. Each of the defences argued by the respondent must fail. A declaration ought to be made that the transaction was void as against the applicant and an order should be made for the payment of the sum of $180,000 to the applicant trustee. I certify that this and theta for (a4) preceding pages are a true copy of the Reasons for Judgement herein of his Honour Mr Justice Wilcox. Associate: Kae There pate: August (7%, 1904 CATCHWORDS TRADE PRACTICES - application for interlocutory injunction by competitor - large scale advertising campaign for television and newspapers - consumer protection - Trade Pra W.T.H. PROPRIETARY LIMITED misleading and deceptive conduct - inducing a preach of contract between competitor and competitor's credit card holders. ctices Act 1974; s. 52 (trading as AVIS AUSTRALIA) v. BUDGET No. G211l LOCKHART SYDNEY 4 JULY 19 RENT-A-CAR SYSTEM PTY. LIMITED of 1984 J. B4 "a IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 211 of 1984 ) ) GENERAL DIVISION BETWEEN: W.T.H. PROPRIETARY LIMITED {trading as AVIS AUSTRALIA) Applicant AND: BUDGET RENT-A-CAR SYSTEM PTY. LIMITED Respondent JUDGE MAKING ORDER: LOCKHART J. WHERE MADE: SYDNEY DATE OF ORDER: 4 JULY 1984 ORDER 1. ORDER that until the hearing and determination of these proceedings or until further order the Respondent by itself its servants and agents be restrained from: (a) publishing, causing to be published, putting to air or causing to be put to air or otherwise advertising or causing to be advertised by any medium that portion of the advertisement described in Exhibits 4 and 1l ("the offending portion") described in the Schedule hereto or anv colourable imitation of the offending portion \ which expressly or impliediy incorporates an offer of the kind described in sub-paragraph (b) hereof; (b) publishing, causing to be published, putting to air or causing to be put to air or otherwise advertising or causing to be advertised by any medium any offer to exchange a Budget Card for a credit card issued by any other car rental company in Australia on substantially similar terms to those upon which an Avis Credit Card is issued or any offer to such effect; (c) representing that the Budget Corp-Rate ID Card is a credit card; {d) inducing holders of credit cards issued by the Applicant or by any other car rental company in Australia to deliver possession custody or control of such cards to the Respondent or its representatives. 2. QRDER that the Respondent be released from the undertakings given to the Court by its Counsel on 2 July 1984 and continued on 3 and 4 July 1984. 3. GRANT LIBERTY to apply gqenerally on two (2) days' notice, 4. RESERVE the costs of the Application for interlocutory relief. —- do ener eee ~- THE SCHEDULE The portion of the advertisement which contained the statement "and by the way, if you happen to have one of their credit cards, we will give you $10 cash and a new Budget card for it" and the fiimed portion of such advertisement showing a traveller arriving at the Budget desk, Mr. Ansett serving at such desk, and Mr. Ansett serving the traveller with the Budget card in exchange for $10 and a credit card on one of Budget's competitors. IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 211 of 1984 ) GENERAL DIVISION ) BETWEEN: W.T.H. PROPRIETARY LIMITED (trading as AVIS AUSTRALIA) Applicant AND: BUDGET RENT-A-CAR SYSTEM PrY. LIMITED Respondent CORAM: LOCKHART J. 4 JULY 1984 REASONS FOR JUDGMENT LOCKHART J. This is a dispute between two major motor vehicle rental companies. The applicant is W.T.H. Pty. Limited trading as Avis Australia (to which I shall refer for convenience as "Avis"). The respondent is Budget Rent-A-Car System Pty. Limited (to which I shall refer for convenience as "Budget"). Over about the last five vears Budget has substantially incresed its share of the Australian motor vehicle rental market. The dispute arises out of an advertising campaign recently embarked upon by Budget to increase further its share of that market. Avis seeks interlocutory injunctiohs to restrain Pudget from advertising, on television and in the wress, matter which is said to constitute misleading or deceptive conduct by Budget and therefore to 2. contravene s. 52 of the Trade Practices Act 1974. Avis also seeks to restrain Budget from inducing credit card holders to breach their contracts with Avis. Many affidavits have been read by the parties. No oral evidence was qiven. rere is no dispute on the facts at this stage of the case, aithough the correct inferences to be drawn from some of the evidence is not the subject of agreement. The major car rental businesses that operate throughout Australia include Avis, Budget, Hertz Rent-A-Car ("Hertz"), and Thrifty Rent-A-Car System Pty. Limited ("Thrifty"). Competition between car rental operators who conduct their businesses nationally is intense and all operators expend substanial sums of money on the advertising of their services. Between 1959 and 30 June 1979, Avis was granted exclusive car rental authorities at all major and many minor airports, pursuant to the Airports Business Concessions Act 1959. Following the lodging of tenders called by the Minister of Transport, Budget was granted one of two national authorities pursuant to the Airports Business Concessions Act 1959 to conduct the business of hiring self-drive motor vehicles for a period of five years from 1 July 1979 at all major and many minor Commonweaith alrports. Hertz was granted the other authority. \ On 1 July 1979, Budget by itself and its licensees established rental desks at 52 airport terminals, including all the major airports in Australia, pursuant to the authority granted by the Commonwealth and to contracts entered into with iocal authorities that also operate airports. The number of rental desks at airport terminals has now grown to 120. There is evidence that at the present time Budget holds about 55 per cent of the national motor vehicie rental market. Following a further change in Commonwealth Government volicy, as from 1 July this year there are to be four major car rental operators authorised to operate from Commonwealth airports. Tue four operators are Budget, Avis, Hertz and Thrifty. The change on 1 July 1984 has been much publicised and advertised. There is evidence that Budget assumed that in the period leading up tol July 1984 the other car rental companies would advertise extensively and endeavour to take from Budget part of its share of the car rental market, so Budget asserts that it decided that it needed to ensure not only that it retained its market share but also that it increased that share. As part of that endeavour, Budget says that it was imperative for it to produce innovative and attractive marketina and advertising programmes. \ Budget instructed its advertising agency to prepare an advertising campaign which would qive effect to its wishes. Budcet concluded that a flat daily rental rate for a large vart of the Budaet fleet of motor cars would be the best means of achieving its aims. Budget savs that 1t was important that the advertising campaign upon which it proposed to embark would be linked to Budget's celebration of having operated from Commonwealth atrports for five years, commencing with the breaking of Avis's exclusive airport coverage in 1979. Budget says that the focal point of its campaign was an advertisement made for television which emphasised the flat daily rental rate of $35 offered by Budget to renters of models up to and including the Holden Commodore during the month of July. Budget says that the daily rate of $35 is particularly competitive, as the equivalent rates are $49 for Avis, $48 for Hertz and $43 for Thrifty in respect of a Holden Commodore or equivalent vehicle. There is evidence from Budget that the advertising campaicn is one planned for the month of July 1984 only. Budget says that because of the critical importance of 1 July to the car rental industry, the campaian was prepared on the basis that it would only be effective in the period immediately preceding and subsequent to that date. Budget says that aif it is required by this Court not to publish the advertisements, which 1t says are an integral part of its campaiqn, it would be unable to devise in the time available to ita campaign which could take advantage of the 1 July 1984 changeover in airport operations of car rental operators. There is evidence from Budget that its success has been due in large part to its ability to adapt its advertising techniques and marketing campaigns to changing circumstances in the market place. Evidence has been given by the General Manager of Budget by affidavit that he believes that Budget will suffer irreparabie damage if its competitors are able to influence the marxet by their advertising carpaigns without competing advertising from Budget, which would then have to fall back on television advertisements which 1t had run for some time and which it now regards as stale and inapplicable to the circumstances of 1 July 1984. He says that the harm caused by such an event at this time could never be measured, and that this is particularly so with the introduction of both Avis and Thrifty as national operators from all Commonwealth airports. The same gentleman has sworn that the ability of Budget's competitors to advertise the importance of 1 July 1984 to car rental operators with no competitive advertising campaign from Budget will result in Budget's market share being in fact eroded, which would subsequently be very hard to regain. He says that a loss in Budget's growth and momentum would have direct consequences not only with Budget''s customers but also with its licensees and franchisees who are reliant upon Budget to meet the new competition at Commonwealth airports. Over 80 per cent of Budget's advertising expenditure is on television. Television is the major medium for Budget marketing. 6. On Wednesday, 27 June last an advertisement appeared on a Melbourne television channel advertising Budget and its new proposais. The same advertisement was screened on Channel 10 in Sydney on Thursday, 28 June. It runs for 30 seconds. I have seen 1t in court on more than one occasion. Avis asserts that the conduct of Budget in putting the advertisement to air constitutes misleading or deceptive conduct in that:- (a) It represents that the Budget card described in the advertisement is a credit card, which it is not; (b) It represents to Avis cardholders that by surrendering their Avis cards to Budget representatives upon receipt of $10 in cash anda Budget card they are not in breach of their contracts with Avis and are immune from suit from Avis; (c) It represents that Avis service desks are not manned at all, or 1f manned, are manned infrequently; and (d) it portrays the Avis service desk as manifestly inferior in quality and size to the Budaet desk, thus creating a false impression about Avis and its services. A further aqround of complaint, based on the associated jurisdiction of this Court, is that the cenduct to which I have briefly referred 1s said to constitute the tort of inducina Avis credit card holders to break their contracts with Avis. This complaint is based on the contract hetween Avis and its credit card 7. holders which provides that each Avis credit card remains the property of Avis and is not transferrable, it must be returned to Avis upon request and must be kept safe by the cardholder. Budget replies to Avis's complaints by asserting amondst other things thac:- (a) the advertisment does not represent that the Budget card portrayed in the advertisements is a Budget credit card. An Avis carholder upon seeing the advertisment would, so it 1s said, realise that it takes days or perhaps weeks for a company to process an application for a credit card, so that it would be unlikely for that person to think that what he receives across the counter from Budget upon presentation of his Avis card would be a Budget credit card; (bd) the advertisement does not encourage the Avis cardholder to break his contract with Avis; (a) by surrendering the Avis cards to Budget representatives, Avis cardholders are appointing Budget as their agent for the purpose of returning the cards to Avis and safeguarding them in the meantime; (ad) the advertisement does not represent that Avis desks at airports are not manned or are infrequently manned, and, even if it does, 1t is the fact that they are infrequently manned. Further it is said by Budget that this aspect of the advertisement is mere puffind; (e) any portrayal of the Avis desks in the advertisement as being inferior in quality or size to that of Budget is mere puffing. Avis sought and obtained from another Judge of this Court on last Friday, 29 June, injunctions restraining Budget from engaging in the impugned conduct. Those injunctions containued until Monday, 2 July. I commenced the hearing of this application for interlocutory relief on Monday afternoon, and the case was part-heard at the conclusion of the court's business that day. I accepted undertakings to the Court proffered by counsel for Budget and granted an injunction in respect of a matter not covered by those undertakings, which in essence continued the injunctions granted last Friday until yesterday. I resumed the hearing of the matter yesterday afternoon and, at the conclusion of the hearing yesterday, substantially the same procedure was followed, thus holding the position until today. As this is an application for interlocutory injunctive relief, I am not, of course, deciding any of the issues ona final basis. My first inquiry 1s to determine whether Avis has established a prima facie case in the sense outlined in Beecham Group Limited v. Bristol Laboratories Pty. Limited (1968) 118 C.L.R. 618, or, to put what is in my view substantially the same test, as expounded by the House of Lords in American Cynamid v. Ethicon Limited £1975] A.C. 296, whether there is a serious question to be! tried. Sometimes these tests are seen to be different in their character or operation. If there are any substantial differences between them, which I doubt. they do not matter in this case as my conclusions would be the same whichever test be applied. Tne balance of convenience must be examined if I reach a conclusion favourable to Avis on the first question, aithough 1t must not be forgotten that the balance of convenience 18s often interwoven with the earlier question whether there 1s a prima facie case or whether there is a serious question to be tried. The television advertisement in question requires some brief description. It lasts for 30 seconds and there are in the advertisement three simulated airport desks, one for Budget, one for Avis and so far as one can tell one for Hertz - possibly a fourth desk is in the background. Budget is the prominent desk which faces the viewer. A voice-over announces that "It is the biggest arrival at airports around Australia in five years". Mr. Robert Ansett walks in and stands behind the Budget desk. To the accompaniment of much clapping and cheering he produces a display card featuring the $35 flat rate promotion and places it upon the Budaet counter. Mr. Ansett then says, "Budget is celebrating five years at airports and for the month of July we are offering you a choice of a Holden Commodore, Camira or Gemini for just $35 a day. We are only too happy for you to compare our prices with our competitors whenever they arrive. And by the way if you happen to have one of their credit cards we will give you $10 and a new Budget bard for it". At or about this point a traveller arrives at the Budget desk and Mr. Ansett begins to serve him with what is described in the text of the 10. advertisement as a "trade-in"; that is, the customer trades in the rival rental company's credit card and receives $10 cash and a Budget card. Mr. Ansett is seen holding the $10 and the credit card and the voice-over announces, "More than ever Budget drives your doliar further". Impressions gained by the viewer of a television advertisement such as this are not only from the spoken word spoken but from the visual images in conjunction with the spoken word; it is the overall impression that matters. In my opinion, Avis has established a prima facie case that the advertisement suggests to a viewer (I am content to assume for present purposes that he is an Avis card holder) that he may exchange his Avis card for a Budget card entitling him to use the Budget credit facilities when seeking to rent a motor vehicle from Budget. It is common ground that the card which the Avis card holder will receive from Budget, on presentation of his Avis card, is not a Budget credit card but a card styled "Budget Corp. I.D. card" which is an identification card that entitles 1ts holder to rent a vehicle from Budget at what is called the "CorpRate" i.e. a discount of 15 per cent on normal rates. It does not entitle the hblder to use Budget credit facilities. Indeed, the Avis card holder must complete a Budget application form for a credit card and within a short time, after it has been processed, he will receive a Budget credit card. il. Although the evidence was not, in its earlier stages, at all free from ambiguity, it seemed to me that by the time it had concluded it was plain that Budget's policy is, at least now, to automatically issue, within about five days of the form of application being sianed, a Budget credit card to a rerson who surrenders a rival company's credit card and who receives his $10. However, there is no suqgestion that the Budget Corp card which the Avis card holder receives in return for his surrender of the Avis card and receipt of $10 in cash is itself a credit card. A prima facie case has been established that the advertisement offers the Avis card holder something which he does not in fact receive upon surrender of his Avis card at the Budget counter. A person seeing the television commercial would think that, if he held an Avis credit card, he would be able to surrender it to a Budget representative and receive in return $10 cash and a Budget credit card entitling him to the benefit of Budget's credit facilities. In my opinion, a prima facie case has been established that this conduct of Budget is misleading or deceptive conduct or conduct likely to mislead or deceive and is therefore in contravention of s. 52 of the Trade Practices Act. ' 12. I should add that the advertisement applies not only to Avis cards but to the cards of any other motor vehicle rental companies in competition with Budget. Also, in my view a prima facie case has been made out that, by offering a Budget card and $10 cash in return for an Avis card, Budget is inducing the viewers of the television commercial who hold Avis cards to breach their contract with Avis. The terms of that contract are set out in the form of application which the Avis card holder signs. Some of those terms are referred to or summarized on the back of the Avis credit card itself. These include terms that the Avis card is not transferable, remains the property of Avis, must be returned to Avis upon request, and must be kept safe by the card holder. A prima facie case has been established that these conditions are inconsistent with the act of the card holder surrendering his card to Budget representatives in the circumstances encouraged by the television advertisement. Counsel for Budget submitted that the proper conclusion from the relevant circumstances was that each Avis card holder who surrendered his Avis card to a Budget representative was appointing Budget his agent for the purpose of returning the card to Avis. Wnilst the point is not free from argument, I think that this is an unreal analysis of the facts and not one which is likely to succeed at the final hearing. However, I nave formed'! no concluded view on the Matter. evidence was well advanced, counsel for Budget informed the court Budget was prepared to proffer the following undertakings to court: After "1, the It wi (a) (b) 13. hearing had progressed to a point where ll not advertise: on television its offer to "trade-in" credit cards of its competitors without stating clearly and prominently as part of the advertisement at the time the "trade-in" is shown to occur the words "this will be a corporate ID card. Within seven days you will receive your Budget credit card"; in the press its offer to "trade in" credit cards of its competitors without stating as part of the advertisement: (1) that the replacement Budget credit card will be issued within seven days; and (41) that it will return those cards to the company that issued them. It will instruct its staff to advise all persons handing in the cards of one of its competitors in return for a Budget card that it will take up to. seven days before their replacement Budget CorpRate credit cards are delivered to them. It will deliver up to its respective competitors all credit cards which were issued by those competitors and handed in to Budget after receipt of those cards at Budaget''s head office in Melbourne. It will issue to each competitor's card holder a Budget CorpRate credit card within seven days of receipt by Budget at its head office of an application 'siqned by the card holder and setting out his billing name and address and no more." the that the 14. There are in my view various difficulties with the undertakings which were referred to in argument, one being that undertaking l(a) could be complied with by words appearing upon the screen and not resulting from any alteration or amendment to the film or the sound-track. I have serious reservations about this method of informing the viewer of the relevant words especially as the advertisement lasts only for 30 second and a lot happens in that time. Also, the initial written form of the undertakings handed to the Court by counsel for the respondent was changed on two later occasions during the course of argument. I do not say this critically, but it leads me to pause carefully in all the circumstances of the case before accepting the undertakings. I am strengthened in taking this view when it is remembered that the fact that undertaking 1(a) would be complied with only by words appearing on the screen and not by amendment to the film or sound-track, did not become apparent until towards the end of the proceedings before me. Having carefully considered the terms of the undertakings that are proffered I am not satisfied that the course sudgested by Budget would overcome the difficulties with the advertisement to which I have referred; particularly the inducement to Avis card holders to breach their contracts with Avis. It is true that the contracts between Avis and its card holders are terminable at will and that Budget cannot be restrained from trying to induce Avis card holders to leave Avis and become Budget card holders; but these matters are not germane to the 15. complaints of the applicant. Even if they could provide an answer to the complaints of the applicant, they do not in my view infringe the prima facie case that has been established and are more appropriate to be dealt with at the final hearing. In my opinion Avis has also established a prima facie case that the television advertisement represents to Avis card hoiders that, by surrendering their Avis cards to Budget representatives, upon receipt of the $10 cash and a Budget card they are entitled in law to do so and will not be in breach of their contractual commitments to Avis. I should emphasise that the television advertisment is not confined to Avis, or Avis cardholders. It encourages the card holders of any motor vehicle rental company in competition with Budget to adopt the course suggested in the advertisement. I need not deal separately with the proposed newspaper advertisement of Budget that is attacked by Avis. It suffers from certain of the same basic problems as does the television advertisement - though not all of them. I turn to the balance of convenience. Budget says that 1t will lose the benefit of its proposed advertising campaign if injunctions are aranted. It has spent a great deal of money on its campaign and, if enioined, it says 1t will have to resort to, in effect, old advertisements which are inappropriate to its proposed campaign. 16. Budget says that it will not increase its market share and possibly lose some of the share already gained. I have no doubt that Budget will suffer inconvenience if restrained by injunction. Perhaps Budget will have to resort to second-best in its advertising campaign. Iam not satisfied, however, that the dire consequences foreshadowed by Budget will necessarily result. It will, of course, have the benefit of Avis' undertaking as to damages. There is evidence that Avis will suffer harm if interlocutory injunctive relief is refused. IT accept that Avis may lose some of its credit cardholders to Budget if Budget's conduct continues unrestrained and that Avis may suffer some loss of market share. In my opinion, the public interest, not merely the private interests of Avis and other motor vehicle rental companies, overrides any inconveniences or damage to Budget that it may suffer consequent upon the granting of injunctive relief. Also it must be remembered that it is Budget which is seeking to disturb the status quo. I do not think it right that Budget should reap advantage at the expense of its competitors by engaging in what is prima facie misleading and deceptive conduct and unfair competitive behaviour. There was discussion between counsel and the Bench whether any injunctions granted, although interlocutory, would have a final effect in practice. This 1s a not uncommoh occurrence in matters of this kind. It was common ground throughout the hearing that all the Court was hearing was an application for interlocutory, not final, 17. relief. However, I should say that I have formed the view that Avis' case is on the stronger, not the weaker, side. I formed the impression that Budget has come a long way since 1979 when it was granted one of two national authorities to conduct the business of hiring self-drive motor vehicles at Commonwealth airports. Its market share apparently now stands, as I have said, at 55 per cent. It has achieved this spectacular result in the fact of competition and due to energy, force and imagination of those who control its affairs. Advertising has played a key role in its success. With the advent of a new era operative from last Sunday, Budget will be one of four major car rental operators authorised to operate from Commonwealth airports. It is natural that Budget wishes to continue its forward march and further enhance its business and increase its market share. But, as the market leader which it has become, in my view it should observe, not ignore, proper standards of conduct in its advertising and other commercial activities. Indeed, it could be playing a role in setting the proper standards of behaviour in the relevant part of the industry. The highly competitive nature of the motor vehicle rental business may bring those engaged in 1t close to the edge of misleading or deceptive conduct, but they should not 'cross the fine line that divides such conduct from fair competitive behaviour. i id 18. My remarks are in the context of the Trade Practices Act - in particular s. 52 - and are not intended to make judgments on matters of commercial morality unrelated to the issues in this case. It is not for the courts to do that. Whether inducements to holders of one company's credit cards to "trade them in" for a rival company's cards upon payment of a small sum of money for the purpose of aaining further business, 1s conduct acceptable to the Australian community today is for others to judge. A circular dated 22 June 1984 from Budget to its staff describes the television advertisement, the subject of this case, as something which "will deliver the final KO blow to Avis, Hertz and Thrifty". Budget staff are encouraged to "beat the hell out of the competitors". Notwithstanding the racy style of this document it is an interesting barometer of Budget''s attitude towards its new advertising campaign in which the television advertisement plays a critical role. Budget has, in my view, gone too far. I propose to restrain it from doing so. However, I do not wish to see Budget losing any benefit from its proposed advertising campaign except what is necessary to excise the offending elements. If Budget decides to amend its campaian, in particular its television and proposed newspaper advertisements, but wishes to have the court's approval to those amendments rather than run the risk of contempt, I am prepared to consider the material as amended and determine whether it would infringe the Trade Practices Act or violate any of the rights of Avis or its card holders. 19. Accordingly, I will qive leave to Budget to restore the matter to the list on two days notice qenerally and in particular for this purpose. I do not propose at the moment to make formal orders - I will stand the matter down until later to-day so that the parties may bring in short minutes of order. f. y that this and the Licureer! (7/3) I certi® preced ng pages ave a tru2 copy of the Reasons for Juadgmen* here cf his Honour Mr. Justice LecXtcvt C Associata Dated: 4 fuer 1984 we ee te ee ee