JUDGMENT No.4 CATCHWORDS Trade Practices Act s.52 - Practice and procedure - Motion for perpetual stay on ground that previously unsuccessful proceedings in Supreme Court were duplicated - Difference between claim under s.52 and claim for passing off or claim under Business Names Act of New South Wales - Federal law not necessarily to be interpreted by reference to state boundaries - Power of summary stay to be exercised with caution - Motion refused. Trade Practices Act 1974, s.52 Business Names Act 1962 (NSW), s.9 SIMPLICITY FUNERALS LIMITED -V- SIMPLICITY FUNERALS PTY LIMITED & ORS. NSW G.156 of 1987 Burchett J. Sydney 2 September 1987 , "7 SEP 387 FEDE A .n°531 OF y+, ' AUSTRALIA , \ PRINCIPAL ' REGIS: RY . ~ S a -. 0 NE - IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G.156 of 1987 ~~ ewww GENERAL DIVISION BETWEEN: SIMPLICITY FUNERALS LIMITED Applicant AND: SIMPLICITY FUNERALS PTY LIMITED First Respondent [2 =z iw] LESLEY FREDERICK DARROCH Second Respondent AND: SIMPLICITY FUNERALS PTY LIMITED Cross-Claimant SIMPLICITY FUNERALS LIMITED First Cross-Respondent E Zz io] KEITH RUSSELL Second Cross-Respondent MINUTE OF ORDER OF THE COURT Judge Making Order: Burchett J. Where Order Made: Sydney Date of Order: 2 September 1987 THE COURT ORDERS THAT: (1) The motion be dismissed. (2) The costs of the motion be the applicant's costs in the action. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY No. G.156 of 1987 we eee GENERAL DIVISION BETWEEN: SIMPLICITY FUNERALS LIMITED Applicant Fd =z iw] SIMPLICITY FUNERALS PTY LIMITED First Respondent AND: | LESLEY FREDERICK DARROCH Second Respondent » Zz is) SIMPLICITY FUNERALS PTY LIMITED Cross~Claimant AND: SIMPLICITY FUNERALS LIMITED First Cross-Respondent KEITH RUSSELL Second Cross-Respondent REASONS FOR JUDGMENT BURCHETT J. In this matter the respondents (as applicants moving 2. upon notice of motion) seek against the applicant i1n_ the proceedings an order that the proceedings be stayed or dismissed generally. I shall refer to the parties by their designations, as applicant and respondents respectively, in the statement of claim. The statement of claim alleges that the first respondent has committed breaches of s.52 and s.53(d) of the Trade Practices Act 1974, and that the second respondent was knowingly concerned in those breaches. Alternatively, it is alleged that the first respondent has passed off its services as and for the services of the applicant. Injunctive relief is sought. The respondents requested that the applicant furnish certain particulars of the statement of claim, and some particulars have been supplied. Those particulars seem to me to be inadequate, but senior counsel for the respondents expressly stated that the question he wished to debate before me was "not one of particulars or precise mode of pleading - the application is put on the basis that the proceedings in themselves are an abuse." In order to understand the respondents' argument, it is necessary to say something of the origin of the present dispute between the parties. It is conceded by the respondents that the idea of a business providing low cost funeral services under the name "Simplicity Funerals" was the brainchild of Mr. Russell, who is a director of the applicant. He applied in 1979 for registration of that name in South Australia, and has since heen concerned with the conduct of business under that name in South Australia and elsewhere in Australia. On 13 March 1980 he made 3. an application to the Corporate Affairs Commission in New South Wales, but that application was defective in form. On 2 April 1980 the Commission indicated registration could only be effected if a fresh form were lodged and a prescribed fee paid. But on 22 March 1980 an article had appeared in the Melbourne Age newspaper referring to the business carried on by Mr. Russell, and that article was seen by the respondent Mr. Darroch, who must have acted upon it with great speed since he secured, within four days of the date of the article, registration in New South Wales under the Business Names Act 1962 of the name "Simplicity Funerals" on his own behalf. He personally commenced business under that name shortly afterwards. He has admitted that his actions resulted from his reading of the article in the Melbourne Age. Not surprisingly, litigation ensued. On 3 December 1980, Waddell J. delivered judgment on an application for interlocutory relief which had been made by Mr. Russell and the applicant against Mr. Darroch and certain other individuals apparently then associated with him. The claim was based on the equitable principles relating to passing off. Waddell J. held that it was incumbent upon the plaintiffs in the proceedings before him to establish, prima facie, that "at the time the defendants commenced business under the name Simplicity Funerals the plaintiffs had an established reputation in New South Wales under that name. Secondly, they must show that they had made some use of that reputation in New South Wales." On the evidence, at the relevant time, a prima facie case had not been made out in respect of either of these matters, and accordingly interlocutory relief was refused. Waddell J. stood over 4. generally the proceedings in which the application had been made, with liberty to apply on seven days notice. Nothing further has ever been done in those proceedings. However, the Corporate Affairs Commission in New South Wales had second thoughts about the registration of the business name "Simplicity Funerals" which it had granted to Mr. Darroch under the Business Names Act. Section 9(1) of that Act provides that a business name shall not be registered under the Act, except with the consent of the Minister, where the Minister has issued a relevant direction. The Minister had given a direction that the Commission should not without his consent accept for registration any business name that was misleading as to the nature, objects or purposes of the business or in any other manner. As a result of the Commission's initiative, the respondent Mr. Darroch brought proceedings against the Commission, Mr. Russell being later added as a defendant. In those proceedings, the issue which arose for determination was succinctly stated by Rogers J. as follows: "The question therefore in this case is whether the business conducted by Mr. Russell under the name of Simplicity Funerals had obtained a sufficient recognition in the public mind in New South Wales at _ the relevant time as to make the registration of the business name by Mr. Darroch = one constituting an infringement of the Attorney-General's direction." (The Attorney-General was the Minister administering the Business Names Act, and the relevant time referred to by Rogers J. was the time of Mr. Darroch's hurried application for registration.) Rogers J. concluded: "I have a very uncomfortable sensation that had the matter been presented by someone better acquainted with the laws of evidence than Mr. Russell there may have been some further material available which might have justified a conclusion different to that to which I feel I am obliged to come on the evidence before me. It is with some considerable amount of regret that I think I have to conclude that on the evidence before me there is no sufficient justification for the view that at the relevant time there was an association in New South Wales in the minds of the public between Mr. Russell and the words Simplicity Funerals. In the result the plaintiff succeeds." He made no order as to costs. The respondents submit that the same issue arises, in the proceedings in this Court, which was determined aqainst the applicant in the two proceedings in the Supreme Court; that the applicant 1s attempting to pursue in two Courts concurrently proceedings which are identical in substance (this argument refers to the fact that the proceedings in equity have never actually been discontinued); and that in all the circumstances the maintenance of the proceeding in this Court is oppressive to the respondents. The motion was not attempted to be supported on the basis of any estoppel, and it was conceded that the first respondent was not in existence at the time of the judgment of Waddell J., or at the time of the judgment of Rogers J., and although both proceedings in the Supreme Court involved the second respondent the claims then made concerning him did not include the claim now made, which is confined to the contention that he is liable as a person involved in the breaches of the 6. Trade Practices Act alleged against the first respondent. But it is argued that in substance the claim has not changed from a claim that Mr. Darroch "passed (himself) off as being the original Simplicity Funerals", that this has been twice rejected, and that the proceedings should be stayed perpetually upon the principle applied by Mason J. (as he then was) in Moore v. Inglis } (1976) 9 A.L.R. 509. It is of course not correct, quite apart from the question of the parties to the suit and the absence of any issue under the Trade Practices Act, that the applicant's claim against the respondents was rejected by Waddell J. No claim was before Waddell J. other than on an interlocutory and prima facie basis. It still remains entirely open to a Judge of the Supreme Court, 1f the proceedings in equity are reactivated, to reach a final determination directly contrary to the interlocutory result. The proceeding before Rogers J. was finally determined, but again, apart from the question of parties, it is clear that the only issue raised in that proceeding was whether the registration under the Business Names Act was in conformity with the provisions of s.9 of that Act. No issue arose under the Trade Practices Act, nor could any such issue have arisen since no conduct of a corporation was then involved, nor any other conduct to which the Trade Practices Act could have applied. It seems to me that the position in Moore v. Inglis was very different. There, the plaintiff had commenced a Supreme Court action, which was about to come to issue on the pleadings, when she brought in the High Court "another action on the same 7. subject matter, making minor alterations only to the substantive allegations and to the parties." Mason J. characterized this as "neither just nor fair". (See 9 A.L.R. at 515.) At 513-4 he applied the statement of Sir Gorell Barnes P. in Logan v. Bank of Scotland (No. 2) [1906] 1 K.B. 141 at 150: "For instance, in this country, where two actions are brought by the same 'person against the same person in different courts governed by the same procedure, and where the judgments are followed by the same remedies, it is prima facie vexatious to bring two actions where one will lie... ." Mason J. did not consider the slight differences between the High Court and the Supreme Court proceedings were of any significance. By contrast, it seems to me that there may be great significance in the differences between the respective causes of action in the Supreme Court proceedings against Mr. Darroch and the causes of action under the Trade Practices Act against the first respondent. In Moore v. Inglis at 516 Mason J. said: "In all the circumstances which I _ have outlined, the commencement and continuation of the action in this court is, in my opinion, vexatious and oppressive and constitutes an abuse of the process of the court. I am aware that the power to stay on this ground is one which should be exercised with caution." This statement echoes comments which have consistently been made by courts which have been called upon to exercise various powers to terminate proceedings summarily, thus denying to a party the opportunity to present his case fully for the adjudication of the 8. court. cf. Fancourt v. Mercantile Credits Limited (1983) 154 C.L.R. 87 at 99 where the joint judgment of the High Court, dealing with the power to order entry of summary judgment, stated: "The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried... ." See also General Steel Industries Inc. v. Commissioner for Railways (NSW) (1964) 112 C.L.R. 125; McMahon v. Smith (1986) 69 A.L.R. 527; and Elna Australia Pty Ltd v. International Computers (Australia) Pty Ltd (Gummow J., unreported, 16 July 1987). Once it is conceded that no estoppel arises, it seems to me that it is impossible for a court proceeding with caution, as I am required to do, to exercise a power summarily to stay the applicant's claim on the grounds" urged. So far as the respondents relied on the _ proceedings in the equitable jurisdiction of the Supreme Court, their argument ignored what Deane and Fitzgerald JJ. said in the Taco Bell case (1982) 42 A.L.R. 177 at 197: "(I)t is .... important to heed (the) emphatic rejection ... of any suggestion that s 52 is no more than a statutory re-enactment of passing-off principles ... . The backgrounds of s 52 and of the law of passing-off are quite different. Their respective purposes and the interests which they primarily protect are contrasting. Their areas of operation do not coincide." On the same page, their Honours pointed out that the decision in 9. Hornsby Building Information Centre Proprietary Limited v. Sydney Building Information Centre Limited (1978) 140 C.L.R. 216 was concerned with s.52 as it stood before the words "or is likely to mislead or deceive" were introduced into it. At 199 they said: "In our view, it is sufficient to enliven s 52 that the conduct, in the circumstances, answers the statutory description, that, is to say, that it is misleading or deceptive or is likely to mislead or deceive." In Chase Manhattan Overseas Corporation v. Chase Corporation Ltd (1986) 70 A.L.R. 303 at 305 Lockhart J. said: "The purpose of Pt V of the Trade Practices Act is to protect consumers by eliminating unfair trade practices. The object of s 52 is to prevent misleading or deceptive conduct which will affect the identification of goods or services." At page 306 his discussion of the circumstances of that case makes it clear that it was relevant to consider, not only whether the use of a name at the time business is commenced in that name is deceptive, but also whether the circumstances of the continuing operations of the business in Australia are such that the conduct of the respondent "is likely to amount to" misleading or deceptive conduct. Neaves J. too at 309 discussed the question whether "any activities in which the first respondent, on the evidence, is likely to engage (were) activities in an area of business which might properly be considered as a natural extension of the business being carried on in Australia by the appellants." 10. In Uprising Dragon Ltd v. Benedict Trading & Shipping Pty Ltd (unreported, 26 June 1987), French J. said: "In the present case the absence of a common law right does not impinge upon the ability of the applicant to seek relief under s.80 of the Trade Practices Act 1974. Where misleading and deceptive conduct is engaged in contrary to s.52 'any person' may approach the court for injunctive relief." ' See also Patrick v. Steel Mains Pty Limited (Wilcox J., unreported, 8 July 1987). Accordingly, even on the basis (on which the respondents' contentions were put) that the applicant's case must be judged as if it related to the original actions of Mr. Darroch, and not to any later intervention of the corporate respondent, I cannot hold that it merely duplicates the case with which Waddell J. was concerned. It will have been observed that the question considered by Rogers J., earlier referred to, was limited to whether, at the time of registration of the business name by Mr. Darroch, the business conducted by Mr. Russell had obtained a sufficient recognition in the public mind in New South Wales to enable it to be said that the registration of the business name by Mr. Darroch was misleading. Rogers J., though reluctantly, found no association at that time in the minds of the New South Wales public between Mr. Russell and the name Simplicity Funerals. With respect, this approach seems entirely appropriate for the application of a state law such as the Business Names Act 1962 of New South Wales. But there are at least two respects in which ll. the position may be significantly different under the Trade Practices Act, if Mr. Darroch's actions are viewed as taken on behalf of, or adopted by, the corporate respondent. In the first place, s.52 is not necessarily so limited in its impact. It includes conduct which is "likely to mislead or deceive". Clearly enough the applicant had already taken steps with a view to the carrying on of business in several states of Australia including New South Wales. I cannot summarily exclude the view that a court might properly hold, after a full hearing of all the evidence, that the relevant conduct was likely to mislead or deceive in the near future, though not actually deceptive at the moment of registration. In fact, the unsuccessful attempt of the Corporate Affairs Commission to withdraw registration within a few months is significant. By then, 1t could be said that the conduct of Mr. Darroch had in fact led to a situation where two businesses were beinq conducted under the name "Simplicity Funerals" in New South Wales. Whether that involved merely a risk of confusion or was misleading or deceptive at that time is a question which has not been determined. In the second place, it seems to me that 1t may not be appropriate to circumscribe the decision to be made under s.52 of the Trade Practices Act, a federal law, in quite the same way as was appropriate for Rogers J. when considering the reach of a state law, the Business Names Act. At the time of registration by Mr. Darroch, there was already a business being conducted in Australia along lines clearly indicative of an intention to operate throughout the country, in respect of which = an application (though marred by technical deficiency) had already 12. been made for registration in New South Wales. In those circumstances, it does not seem to me that the question under 8.52 must necessarily be answered as if it arose under a law concerned only with the conduct of business within the boundaries of New South Wales, or under the principles which have been developed in relation to passing off. So to interpret s.52 would be to adopt a restrictive construction of a Commonwealth law, for no reason having any federal logic, and contrary to the realities of Australia's steadily increasing commercial unity. I note that in Miki Shoko Co. Ltd. v. Merv Brown Pty Ltd (unreported, 22 May 1987) Northrop J. considered the question of the reputation of a name with respect to children's clothing on the basis that Australia, and not some section of the country, was the relevant geographical area. It seems to me that, in the present case, it would be open to a judge at the hearing to consider the evidence in order to determine whether he should do likewise. At all events, I do not accept that the evidence placed before me at this stage enables me to shut out such an approach. A fortiori, if, as I think, the first question raised by the applicant's claim is whether the corporate respondent, upon and since taking over the business formerly conducted by Mr. Darroch, has itself been in breach of s.52, there is no ground to deny the applicant an opportunity to seek an adjudication of that question by this Court. For all these reasons, I dismiss the _ respondents' motion. I have considered whether I should impose a term on the applicant that the proceedings in the equity division of the Supreme Court of New South Wales be discontinued, but in view of 13. the difference of parties, and in all the circumstances, I have concluded that 1t would not be appropriate to do so. I order that the costs of the motion be the applicant's costs in the action. I certify that this and the preceding twelve (12) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett. Cera hats Associate Dated: 2 September, 1987. Counsel for the Applicant: Mr. D. Catterns (Respondents in the Notice of Motion) Solicitors for the Applicant: Ronald J. Jones & Co. Counsel for the Respondents: Mr. B. Sully Q.C. with Mr. (Applicants in the Notice of N. Francey Motion) Solicitors for the Respondent: Simons & Baffsky Date of hearing: 27/8/87