ae NY I cw xy Div Inlud } 10, "A " SS) — " / f \ \ RB3/7 ih CEIVED My gesenie7 vn & * ie 12} IN "RHE TEED) RL BiRt-o "OF AUSTRALIA \ BUINGIPAL austahtraN EAB rear TeRRrroRY No. ACT G 86 of 1986 DISTRINI-REGIOTRY GENERAL DIVISION BETWEEN : ANTHONY TAMMETT and JUNE MARIA TAMMETT Applicants AND: * GUCCI SHOPS INC. First Respondent MARK SPENCER & CO. PTY. LIMITED Second Respondent FRANK MARKOVIC Third Respondent MINUTE OF ORDER JUDGE MAKING ORDER Neaves J. DATE_ OF ORDER 5 February 1987 WHERE MADE + Canberra THE COURT ORDERS THAT: 1. The name of the first respondent be amended to Gucci America Inc. 2. The motion for leave to serve the application and statement of claim herein on the first respondent outside the Commonwealth of Australia and in the United States of America is dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY No. ACT G 86 of 1986 DISTRICT REGISTRY GENERAL DIVISION ' BETWEEN : ANTHONY TAMMETT and JUNE MARIA TAMMETT Applicants AND: GUCCI SHOPS INC. First Respondent MARK SPENCER & CO. PTY. LIMITED Second Respondent FRANK MARKOVIC Third Respondent CORAM: Neaves J. DATE: 5 February 1987 REASONS FOR JUDGMENT Anthony Tammett and June Maria Tammett ("the applicants") commenced proceedings in this Court by filing an application on 30 December 1986 claiming damages and injunctive relief against Gucci Shops Inc. ("the first respondent"), and damages against Mark Spencer & Co. Pty. Ltd. ("the second respondent") and Frank Markovic ("the third respondent"). The application was accompanied by a statement of claim. The applicants have now applied to the Court by motion for an order amending the name of the first respondent to Gucci 2. America Inc. and for leave to serve the application and statement of claim on the first respondent outside the Commonwealth and in the United States of America. The application to amend the name of the first respondent is based on information given to the solicitor for the applicants by a firm of New York attorneys, Messrs Q'Sullivan Graev & Karabell, that Gucci Shops Inc. is a New York corporation initially registered in 1953 but which changed its name, effective 30 April 1986, to Gucci America Inc. at On the basis of this information I order that the name of the first respondent be amended to Gucci America Inc. The other application, the application for leave to serve the application and statement of claim on the first respondent outside the Commonwealth is made pursuant to 0.8 of the Federal Court Rules and may only be granted where the Court is satisfied of the following matters (see 0.8, r.2(2)): (a) that the proceeding is a proceeding in which the Court has jurisdiction; . (b) that the proceeding is a proceeding to which 0.8, r.1 applies; and (c) that the applicants have a prima facie case for the relief which they seek. In addition to the application and statement of claim, I have before me a number of affidavits including an affidavit sworn by each of the applicants. For the purpose of considering the application for leave to serve the 3. application and statement of claim outside the Commonwealth, I have accepted the truth of the statements of fact deposed to in those affidavits. The applicants allege that on 4 December 1985 an agreement, expressed to be a licence agreement, was made between themselves and the second respondent which is alleged to be a trading corporation formed within the limits of Australia. By the agreement, the second respondent, for a consideration of $10,000 (cl1.5.01), purported to grant to the applicants "the right to operate a retail outlet being a designated Gucci Shop together with the right to use the trade names, trademarks, insignias, logos, advertising and merchandising methods and other materials distinctive to the sale of Gucci merchandise" (cl.2.01). The licence was for a period of three years though no commencing date is specified in the copy of the agreement in evidence (c1.2.02). The applicants undertook to conduct the business from such premises, presumably within the Australian Capital Territory, as were chosen by the applicants and approved by the second respondent (c1.2.01). The second respondent undertook to cause and procure that neither it nor any other person authorised by it would conduct any business under what was called "Gucci Identity" within the Australian Capital Territory during the currency of the licence (cl.2.03). The applicants agreed to purchase from the second respondent merchandise for sale at the licence premises at a 4. minimum invoice cost during each licence year, the minimum cost during the first licence year being $50,000 (c1.5.02). The second respondent agreed to supply all requirements of the applicants within 28 days of order (c1.5.02). The agreement recited that the second respondent "held the exclusive right pursuant to an agreement made ist January 1984 with Gucci Shops, Inc., of 685 Fifth Avenue, New York in the United States of America to operate retail outlets designated 'Gucci Shops' throughout Australia" and that, pursuant to such agreement, the second respondent had the right to use solely in connection with the Gucci Shops and the merchandise sold therein, Gucci's trade names, trademarks, insignias, logos, advertising and merchandising methods and other materials distinctive to Gucci. Clause 14.01 of the agreement provided: "WARRANTY Mark Spencer hereby unconditionally warrants and represents to the Licensee that Mark Spencer has full and unfettered power and authority to enter into this Agreement and to grant the rights powers benefits and privileges granted to the Licensee hereunder and that all and any consents approvals or permissions required for the granting of such rights powers benefits and privileges have been obtained." The applicants further allege that onthe date which the agreement bears a statutory declaration made on that date by the third respondent, who is and was at the material time a director of the second respondent, was handed to them by the solicitor for the second respondent. The statutory declaration set out provisions said to be 5. contained in the agreement dated 1 January 1984 between the first and second respondents and declared that there were no other relevant clauses or provisions in that agreement which prohibited or prevented the second respondent "from entering into a licence agreement permitting the nominated licensee to operate a business conducted for the purpose of selling merchandise under the Gucci label". . According to the statutory declaration, by the agreement made 1 January 1984 the first respondent granted to the second respondent or its franchisees during the term of the agreement the exclusive right to operate retail outlets designated "Gucci Shops" at certain specified locations in Sydney and Melbourne and provided further that during the term of the agreement the first respondent would not unreasonably withhold permission from the second respondent to open other Gucci Shops either by them or their designated franchisees in Australia. The second respondent was to have the right to use solely in connection with the Gucci Shops and the merchandise sold therein Gucci trade names, trademarks, insignias, logos, advertising and merchandising methods and other material distinctive to the first respondent. The agreement also provided, according to the statutory declaration, that the first respondent would grant no other right or franchise to operate a Gucci Shop in Australia during the term of the agreement. That term was for 5 years commencing on 1 January 1984 with the second respondent having an option to extend the agreement for a 6. further period of 5 years on certain terms and conditions in the agreement set forth. The applicants further say that they subsequently selected certain premises as the "Gucci" store in Canberra and that the third respondent, after inspecting those premises, approved them on behalf of the second respondent. On 10 June 1986 the applicants entered into a lease of the premises for a term of three years and the "Gucci" shop ~ opened on 27 June 1986. The application claims damages against the second and third respondents under s.82 of the Trade Practices Act 1974 (Cth) ("the Trade Practices Act") and against the second respondent under the general law. The claim against the second respondent under the Trade Practices Act is based on an allegation that the second respondent, in making certain representations and giving certain approvals, engaged in conduct that was misleading or deceptive or likely to mislead or deceive and so in contravention of s.52 of that Act. No particulars are given of the respects in which the conduct is said to be misleading or deceptive or likely to mislead or deceive, a circumstance which may be of some significance in view of the element of futurity involved in some of the representations relied upon. The representations are as follows: (a) A representation made on 4 December 1985 that the second respondent would during the term of the agreement make available sufficient quantities of "Gucci" (b) (c) (d) (e) (f£) (g) 7. merchandise for purchase by the applicants to enable them to fulfil their purchasing obligations under c1.5.02 of the agreement and to conduct a "Gucci Shop" in the manner contemplated by the agreement (statement of claim, par.5); A representation made on 4 December 1985 that the second respondent had the power and authority to enter into the agreement and to grant the rights, powers, benefits and privileges granted thereunder and that all or any consents, approvals or permits required for such grant had been obtained (statement of claim, par.6); A representation made on 4 December 1985 that pursuant to an agreement between the first respondent and the _ second respondent the second respondent had the right, with the consent of the first respondent, to designate franchisees who would have the right to operate "Gucci Shops" and also to enter into licence agreements permitting the licensees to Operate "Gucci Shops" (statement of claim, par.7); A representation made on 5 May 1986 that new "Gucci" merchandise was available for purchase by the applicants (statement of claim, par.8); Representations made between 1 June 1986 and early July 1986 that new summer season "Gucci" merchandise would soon become available (statement of claim, par.13); A representation made in approximately mid-July 1986 that the new summer season "Gucci" merchandise would he available for purchase in about three weeks upon the return of the third respondent from a purchasing trip to Italy (statement of claim, par.14); A representation in approximately the second week of August 1986 that the new season stock had arrived and was available for purchase (statement of claim, par.15). 8. The approvals relied upon are alleged to have been given on 20 May 1986. The first was an approval by the second respondent to the premises selected by the applicants for the purpose of operating the "Gucci Shop" (statement of claim, par.9). The second was an approval to a proposed television commercial to be used by the applicants' to promote their "Gucci Shop" (statement of claim, par.10). The making of the representation alleged in par.6 of the statement of claim (see par.(b) above) is also relied upon as contravening par.53(d) of the Trade Practices Act in that, so it is alleged, by cl1.14.01 of the agreement the second respondent represented that it had an approval it did not have. I have set out the allegations made against the second respondent in such detail as they also form the basis of the claim for damages under s.82 of the Trade Practices Act against the first respondent. The essence of that claim is contained in par.19 of the statement of claim as follows: "19. The making of the representations referred to in paragraphs 5, 6, 7, 8, 13, 14 and 15 herein and the giving of the approvals referred to in paragraphs 9 and 10 herein was conduct engaged in on behalf of the first respondent by the second respondent acting as agent of the first respondent and within the scope of its actual or alternatively ostensible authority." What I have so far recited draws upon the statement of claim and the affidavits sworn by the applicants. So far 9. as the statement of claim is concerned, there is no other factual material alleged therein relevant to the question whether, in making the representations and giving the approvals relied upon by the applicants, the second respondent was acting on behalf of the first respondent so as to make the first respondent, assuming all other elements of the cause of action are established, responsible in damages to the applicants. For completeness, however, I should refer to certain other matters deposed to in the affidavits which might be thought to bear upon the question whether the applicants have a prima facie case for the relief which they seek against the first respondent. Those additional matters may be summarised as follows: (a) In May 1986 the third respondent said to the male applicant: "A representative from Gucci Shops Inc. has visited Australia and they are pressuring me to get the Canberra Store open". (b) On various occasions between 1 November 1985 and 15 December 1986 the applicants observed that the office and show room of the second respondent at Double Bay, Sydney displayed the name "Gucci" as well as the name of the second respondent and various items of Gucci products with the Gucci logo and name on them. The name "Gucci" also appeared on the directory in the foyer of the building. (c) Between the same dates the applicants visited the shop of the second respondent situate at King Street, Sydney and there saw Gucci merchandise. The name "Gucci" was also displayed in large print on the windows of the shop and on the sign outside. 10. (d) On 16 December 1985 the third respondent gave the applicants Gucci international catalogues outlining stock in the Gucci ranges. One of those catalogues indicated that Gucci had shops in Sydney and Melbourne. The applicants assert that the only Gucci shops in Sydney and Melbourne were operated by the second respondent. (e) The name "Gucci" and the Gucci logo appeared on samples of stationery given to the applicants by the third respondent. - I have taken all the above matters into account but, in my opinion, the evidence falls far short of establishing, on a prima facie basis, that, in making the representations and giving the approvals relied upon by the applicants, the second respondent was acting as the agent of the first respondent. The case made by the applicants is that agency should be inferred from the circumstance that the second respondent was exercising the power and authority conferred upon it by the agreement dated 1 January 1984 between the first and second respondents. It can be asserted with some confidence that, in entering into the agreement with the applicants, the second respondent was exercising rights which it would not have had but for its agreement with the first respondent but that circumstance, of itself, does not mean that the conduct in which it engaged and which is relied upon as being misleading or deceptive or likely to mislead or deceive was the conduct of the first respondent. It is of some significance in this regard that, although one of the representations relied on is said to have been made il. expressly in cl.14.01 of the agreement between the second respondent and the applicants, it is not alleged that in entering into that agreement the second respondent was acting as the agent of the first respondent so as to make the agreement binding on that company. On the contrary, the case for the applicants recognises that the effectiveness of the licence granted by the second respondent depended upon the first respondent giving its permission thereto (albeit permission that was not to be unreasonably withheld) and it is alleged that such permission had not been given even though the second respondent expressly warranted that it had been obtained. Except in so far as the representations and approvals are to be found in written form, the applicant relies on what was said and done by the third respondent who, as mentioned above, is said to have been at all material times a director of the second respondent. No facts are alleged or deposed to which would support the conclusion, in terms of sub-s.84(2) of the Trade Practices Act, that the conduct engaged in by the third respondent was engaged in on behalf of the first respondent at the direction or with the consent or agreement of a director, agent or servant of the first respondent. In my opinion, the applicants have not established a prima facie case for damages under s.82 of the Trade Practices Act against the first respondent. 12. As already mentioned, the applicants also claim injunctive relief against the first respondent. The basis of that claim is an apprehension on the part of the applicants that the first respondent "may seek to procure a wrongful termination or other breaches of the current licence agreement or alternatively seek to grant another licence agreement toa third party which would allow that third party to operate a 'Gucci' shop within the Australian Capital Territory". That is a disparate claim based on the general law and may be entertained by the Court only if it falls within the Court's accrued jurisdiction. Its presence in the statement of claim is of no assistance to the applicants in their present application. The motion for leave to serve the application and statement of claim herein on the first respondent outside the Commonwealth and in the United States of America is, therefore, dismissed. I certify that this the preceding 11 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves. Vek Pheu, Associate Dated: 5 February 1987