CATCHWORDS CONSUMER PROTECTION - misrepresentation as to entitlement to carry on business and to supply particular qoods and services - application for interlocutory iniunction - whether respondent entitled under their contract with applicant to carry on business under a particular name - nature of contract - balance of convenience. Trade Practices Act 1974 ss, 6, 52, 53 RONALD JAMES DICKSON V DENNIS GALLAGHER & ANOR No. G.217 of 1984 CORAM: WILCOX J DATE: 27 JULY 1984 PLACE: SYDNEY IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G.217 of 1984 GENERAL DIVISTON ) BETWEEN : RONALD JAMES DICKSON Applicant AND: DENNIS GALLAGHER & ANOR Respondents ORDERS CORAM: WILCOX J DATE: 27 JULY 1984 PLACE: SYDNEY Upon the Applicant by its counsel qivina the usual undertaking as to damages I make the following orders: 1. Order until further order that the respondents and each of them by themselves their servants or agents shall not in trade and commerce advertise, promote, offer for sale or sell anv aoods, business, franchise or dealership or anv other business known as or under the name "Mr Air Sweepers" or "Mister Air Sweeper" or any other name which is substantially identical with or deceptively similar to the said names to the extent that such conduct involves - (a) the use of postal, teleqraphic or telephonic services or takes place in a radio or television broadcast or (b) trade or commerce (1) amona the States, (iil) within a Territory, between a State and Territory or between two Territories or (iii) the supply of qoods or services to the Commonwealth or an authority or instrumentalitv of the Ccmmonwealth. 2. Order until further order that the respondents and each of them by themselves their servants or agents shall not in trade and commerce engage in conduct which is likelv to mislead consumers into the belief that the respondents have riahts or are able to distribute machinery produced bv or derived from Mr Air Sweepers Inc., to the extent that such conduct involves - (a) the use of postal, teleqraphic or telephonic services or takes place in a radio or television broadcast or (b) trade or commerce (i) amona the States. (11) within a Territory, between a State and Territory or between two Territories or (iii) the supply of goods or services to the Commonwealth or an authority or instrumentality of the Commonwealth. 3. Order until further order that the respondents and each of them by themselves their servants or agents shall not in connection with the supply or possible supply of qoods or services represent that the goods or services have the sponsorship or approval of the applicant or Mr Air Sweepers Inc., or anv of them to the extent that such conduct involves - (a) the use of postal, teleqraphic or telephonic services or takes place in a radio or television broadcast or (b) trade or commerce - (i) amond the States, (1i) within a Territorv, between a State and Territory or between two Territories or (1ii) the supply of qoods or services to the Commonwealth or an authority or instrumentality of the Commonwealth. 4. Order until further order that the respondents and each of them bv themselves Lheir servants or aqents shall not in connection with the supply or possible supply of dqoods or services represent that thev have the sronsarship or approval of the applicant or Mr Air Sweepers Inc.. or an affiliation with the applicant or Mr Air Sweepers Inc., to the extent that such conduct involves - (a) the use of postal, teleaqraphic or telephonic services or takes place ina radio or television broadcast or (b) trade or commerce (4) among the States, (ii) within a Territory, between a State and Territory or between two Territories or (iii) the supply of qoods or services to the Commonwealth or an authority or instrumentality of the Commonwealth. 5. Order until further order that the respondents and each of them bv themselves their servants or agents be restrained from passina off themselves or their qoods or their services as the applicant, the applicant's qoods or the applicant's services. IN QURT OF AUSTRALIA NEW SOUTH S DISTRICT REGISTRY No. G.217 of 1984 GENERAL DIVISION ~~~ BETWEEN : RONALD JAMES DICKSON Applicant AND: DENNIS GALLAGHER & ANOR Respondents REASONS FOR JUDGEMENT CORAM: WILCOX J DATE: 27 JULY 1984 PLACE: SYDNEY This is an application for interlocutory iniunctions in respect of alleged breaches of section 52 and section 53(c) and (d) of the Trade Practices Act to which had been added an alleaation that the respondents have passed oft themselves or their qoods or their services as the applicant and the applicant's qoods and services. The central issue for consideration in determining whether or not a prima facie case 1s revealed on the evidence is the nature of the aqreement which was entered into between the applicant on the one hand and the two respondents on the other in relation to the use by the respondents of the name. "Mister Air Sweepers", or alternatively, "Mr Air Sweepers" in the States of Victoria, South Australia and Tasmania. The evidence establishes that prior to the end of the year 1982 the applicant had entered into an arrangement with American principals for the franchise in Australia of a product. being a machine for cleaning parks and other larqe areas, which was marketed in American under the name of "Mr Air Sweepers". It further appears that the applicant had prior to that time registered a business name in New South Wales under that name. advertised in the Svdnev telephone directorv under that name. and had made a sale of at least one machine in November 1982. I am satisfied that bv the time that anv discussions with the respondents commenced. the applicant had aone into business under the title "Mr Air Sweepers" and was doina some busines, although perhaps at that stage in a modest way. It appears to be common around that there were discussions between the applicant on the one hand and the respondents on the other late in 1982 and early in 1983. In paragraph 5 of his affidavit the second respondent has set out the various items which were aqreed between the parties and I do not understand those items to be disputed, at least for the purposes of these proceedings. However, there 1s one sianificant difference between the parties and that relates to the duration of the agreement. I[n paragraph 5, Mr Warr makes no mention of anv cut off date. n the other hand the applicant has annexed to his affidavit a copy of a letter dated 22 February 1983 written by himself to Mr Warr for the purpose of confirming recent conversations concerning the distribution rights of a Mr Air Sweeper machine. The letter qoes on: "It is agreed, that Cleaning Trade Supplies will supply Cleaning Trade Supplies (Southern) exclusively, with this machine, for the States of Victoria, South Australia and Tasmania, for a period of six months, commencing 1 January 1983, to 30 June 1983, inclusively. "However. it is anticipated. that this arrangement will be reviewed at the end of this period." I should explain that Cleaning Trade Supplies is a busines name used by the applicant and Cleaning Trade Supplies (Southern) is a busines name used by the respondents. There was no reply to the letter of 22 Februarv 1983 and there has been no denial that such a letter was sent. In those circumstances it appears to me that I should take the view at least at this interlocutorv stage that the letter accurately sets out the terms of the aqreement. This is not inconsistent with acceptance that the details of the arrangement were as deposed to bv Mr Warr because the letter of 22 February does not purport to set out details. I think it 13 hiqghlv unlikelv that Mr Warr and his partner would have left unanswered a letter which stipulated for only a limited period, if in fact this was contrary to the arranaement which they had orallv negotiated shortly before. I therefore approach the matter upon the basis that this letter accurately set out the substance of the agreement. Notwithstanding that. Miss Bergin on behalf of the respondents contends that the letter was capable of a construction consistent with continuing rights after the expiration of a six months period. Her arqument is that the six months period should be treated as relating only to the period of exclusivitv, leavinda open an entitlement to continue to use the name. Mr Air Sweeper, after the expiration of six months. She said there is no evidence of anv termination of the entitlement at the end of six months, I cannot interpret the letter in that wav. It seems to me quite clear in its intent. The respondents were to be qivena particular riaght for a period of six months; that particular right can be described as an exclusive right to trade in Mr Air Sweeper machines in three states. The letter contemplated discussions for review of the aqreement at the end of the period but it does not seem to my mind to impart anv obligation on either partv to continue at the end of that time. The evidence does not indicate that there was anv subsequent aqreement to extend the contract. On the contrarv. there 1s evidence to suggest an acceptance that the arrangement would not continue bevond the end of June because the respondents were no longer interested in the machine but preferred to concentrate on their other business interests, particular computer programmes. There is some support for that view of the facts in Mr Warr's affidavit where he savs in paraqraph 5, speaking of himself and his partner the first respondent: "We were prepared to determine our agreement with the applicant at the end of June 1983." It appears that one only machine was purchased by the respondents, namely, early in 1983, but there is some dispute between the parties as to the circumstances of that sale. It is allead by the respondents that they were caused to believe thev would have an Australian-made machine whereas in fact they were sold an imported machine. I do not think it is necessary to qo into that issue for the present purposes. It is, I think, not without siaqniticance that that same machine is apparentlv still owned by the respondents and this ic a further pointer against anv notion that there has beena continuing busines carried on bv them after the end of June. Furthermore, it appears to be clear that there were discussions between the aplicant on the one hand and a companv called Ranger Truck Rentals and Leasing Pty Limited early in June 1983 for the granting to Ranger of national distribution rights. In his affidavit the applicant puts this into the context of virtually contemporaneous discussions with the respondents whereby they indicated they were not interested in continuing. Rangers are based in Melbourne and it seems to me likely that the situation is as deposed to by the applicant and that Ranaers would have been hiahly unlikely to have become interested if they were debarred from the markets in Victoria. South Australia or Tasmania. or even if thev were in a position of having to meet competition from an already established Melbourne distributor entitled to continue. The onlv inference I can draw from the evidence is that 1t was understood by all three parties, that 1s the applicant. the respondents and Rangers, in June 1983 that the respondents would cease their activity and clear the wav for Rangers to be given national distribution riqhts. Two siaqnificant events have occurred since the end of June 1983. One of these is that in about September 1983 the respondents reaistered the name Mr Air Sweeper in Victoria. This had the effect of preventing Rangers from reqistering the name as they would have wished. The second event is that on 4 February 1984 there was published in the Melbourne Age an advertisement under the heading Mr Air Sweeper Victorian Operation offering "a rare business opportunity for a person with limited initial finance". The advertisement referred to "our American desianed and world patented machine". Mr Wheelhouse on behalf of the applicant arques that there are two relevant misrepresentations in the advertisement. The first of these is a representation that the respondents had a subsisting business available for sale. He says that the advertisement was clear. an offer to sell a business, not a single machine. and I aqree with that interpretation of the advertisement. Secondly, he savs that the reference to the American desianed and world patented machine would not in context be read as a reference to a sinale unit available for sale as such but rather a type of machine which is available through the authors of the advertisement. and this again 15 a representation of a continuing business operation. I agree with that interpretation of the advertisement and I think that it is a clear representation that there was a continuing business with access to a particular tvpe of machine from undisclosed principals which was being put upon the market. Such a representation is of course consistent with maintenance of the registration fo the business name. Mr Wheelhouse seeks orders under the Trade Practices Act despite the fact the respondents are not corporations. He relies upon section 6(2)(h), read with section 6(3) of the Trade Practices Act. He points to the fact that the advertisement envisaged that interested persons would reply by using the postal services. He arques that this is a relevant breach of sections 52 and 53 because of the extensions qiven by sections 6(2)¢h) and 6(3)(a). It seems to me this araument is correct. and indeed Miss Berqin did not contend to the contrary. It is true to say that there is not a lot of material to justify the inference of any future breach of the Trade Practices Act. There is certainly no present overt threat. However, I think I am entitled to take into account in evaluating the possibilitv of a future breach that the respondents. despite requests from the applicant, had persisted in maintaining their reaistration of the business name. and indeed it is that persistence which has apparently led to the making of the Application and the application for interlocutory relief. The position seems to be that the Corporate Affairs Commissioner in Victoria is concerned about the fact that Ranver is using the name Mr Air Sweeper despite the fact that that business name was registered by the respondents. It is that practical problem which has led to this application. Miss Bergin says, and I think justifiably, that the applicant has been tardy in seeking relief. There was a period of five months between the time of the advertisement in The Age and the filing of the Application in this court. I take that into account, but I also take into account that during that time the applicant was seeking to resolve the matter and it was onlv the inabilitv of the applicant to obtain an aqreement by the respondents to withdraw the registration which has caused this Application to be made. It seems to be quite clear that the critical event was the letter from the Commisstoner ot Corporate Affairs dated 14 June 1984 which made it essential for some action to be taken rather than to allow the matter to drag on any futher. Miss Berqgin has also submitted that the balance of convenience favours her clients. She savs there is nothing to prevent the respondents beina ordered to keep accounts of anv profits thev make. I aaree with that, but there 1s also nothing to indicate that the respondents are making anv profits. It seems to me that the applicant's maior complaint is not that somebodv is making profits which he oudht to have and which in the tulness of time could be made the subject of an order for payment to him pursuant to account. Rather, his complaint is that the maintenance of the claim bv the respondents to the use of the business name is having the practical effect of frustrating the implementation of his arrangements with Ranaer 10. and, according to the applicant, this imperils the Ranger arrangement entirely. I think that this is not something to be discounted. aqiven the fact that Ranger is based in Melbourne. One could well understand that the company miaht decide that it is not interested in the national riahts if it had problems in its own State. If the Ranger arrangement qoes off, it is probable that the applicant would sustain siqnificant losses which it miaht be impossible to quantifv. I take the view that the balance of convenience favours the aranting of an iniunction. In this reaard I take into account the fact that bv letter dated 15 November 1983 the solicitors for the respondent made an offer to the applicant for their clients to "terminate their arrangement with you upon receipt of $7500 together with an agreement bv vou to take over the air sweeper machine presently owned by our clients." There has been some dispute between the parties as to the true value of the air sweeper machine, but [ think 1t would be comparatively easy for a court to put a value on that machine, aided bv proper evidence, and to add $7500 or some assessed lesser amount as being the damage which the respondents have suffered, if thev are frustrated from entoving the rights which at a final hearing thev may be found to have. In terms of quantification of damage, I have no doubt that the balance of convenience favours the arant of an iniunction so as to avoid the damage which would be sustained bv 11. the applicants if the Ranger arrangement fell through. I am satisfied it is a case for an interlocutory iniunction. On the applicants, by their counsel, giving the usual undertakings as to damages, I am prepared to make orders in accordance with paragraphs 1, 2, 3, 4 and 5 of the application to operate any further order. I certify that this and the +e CS) preceding pages are a true copy of the Reasons for Judgement herein of his Honour Mr Justice Wilcox. pated: 9 4 G4 Associate Karri eller