NOT FOR GENERAL DISTRIBUTION JUDGMENT No. 7044, Sh IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) V. No. G 413 of 1987 ) ) GENERAL DIVISION BETWEEN : BONDPARK PTY. LTD. Applicant and GENEX CORPORATION PTY. LTD. and OTHERS Respondents QURT: NORTHROP J. Ci -7ercies7 =: FEDERA!. GUUST OF | ATE : 2 NOVEMBER 15387 ID PLACE: MELBOURNE AUS™RALIA FRINC PAR ¢ REGIA AY Air EX TEMPORE REASONS FOR JUDGMENT \.' <r In this matter the applicant 1s moving the Court for interlocutory orders similar to those granted in Aspar Autobarn Co-operative Society Ltd. v. Dovala Pty. Ltd. (1386) 8 A.T.P.R. 40,727. In substance, the applicant 15 seeking an injunction restraining the respondent, and when I use the word "respondent" I refer to the respondent Genex Corporation Pty. Led., from carrying on any trade or business in the photographic film processing industry by reference to any name, or trade name, mark or business name which includes the words "cut price photo" or the words "cut price photos" or any words which include the words "cut price" or any word or words substantially identical or deceptively or confusingly similar thereto. The applicant 15 also seeking ancillary orders, in substance, requiring the respondent to lodge with the Commissioner of Corporate Affairs an application to discontinue its registration of the business name "Cut Price Photos" which it presently has under the Business Names Act 1962 (Vic), and also orders having the effect of enabling the applicant to proceed with its registration of the business name "Cut Price Photos" to be registered under the provisions of the Business Names Act. The reasons for these orders will become apparent later in these reasons. The matters presently before the Court are interlocutory and in addition to constraints of time it must be remembered that the Court has not yet looked fully into all the facts affecting the issues between the parties nor has 1t conducted a full examination of all the law relevant to be applied to those facts. As in unterlocutory proceedings, tentative views have been formed of the facts and I am not involved in any way in determining the credibility of witnesses. Any attempt to do so, in reality, makes interlocutory procedures more like a final hearing and such a course should not be adopted except in very exceptional circumstances, and this is not one of those cases. As a result I should say that I have formed no final opinion on the facts or the law in this matter but proceed in the normal way as on an interlocutory application for orders, basing it upon what appears in the affidavits and without going into questions of credibility or great detail. The essential facts have already been set out in reasons for judgment published by Ryan J. on 29 October 1987, reasons which he gave for refusing to grant an interim injunction similar to the interlocutory injunctions now being sought. Those interim orders were sought ex parte, but notice had been given to the respondent of the application for the interim orders and at the hearing of the application the respondents were represented by counsel who made certain submissions to Ryan J.. It is not necessary for all those facts to be repeated and I accept those findings as 1llustrating a true picture of the dealings between the parties and of the facts leading up to the present issue. The essential facts for present purposes are as follows. The applicant and the respondent are engaged in the processing and printing of photographic films: as put in the form of the order sought, the business of photographic film processing. In particular, each of the parties has dealings with members of the public. Part of the business of each party can be described as a mail printing business, and, in substance, that business 1s carried on by the delivery to houses of an envelope, normally by the Postal Commission, and from the material appearing on the envelopes which are 50 delivered a service is offered to the recipients that, if the recipients place undeveloped films in the envelope together with an amount to cover the printing cost or by allowing for payment to be made by one of the credit facilities which are referred to, post that envelope, which has already been addressed to the processor, to an address at aG.P.0. box office number, the films will be processed and the processed prints will be returned to the sender. Custom 15 sought by the mailing of these envelopes, often referred to as the mail drop, and the amounts charged for the printing normally is much lower than that normally charged by other processing methods. Hence a descriptive phrase has been used in relation to this type of business, the mail drop business, of cut price photo or cut price photos. For obvious reasons, much depends upon the get-up of the envelopes. They must be attractive in form, rather arresting in appearance and likely to attract customers to accept the offers contained in che lettering of the envelopes themselves. The managing director of the applicant had been an officer of the respondent and details of this are set out in the reasons for judgment of Ryan J.. Differences of opinion had occurred between officers of the respondent, and the Managing director of the applicant left and decided to set up his own business in competition with the respondent. Commercial activities were commenced by the applicant early in the year 1987, and during the first 51x months of this year a certain degree of publicity was given to the actions taken by the managing director of the applicant in the financial press and in trade journals which described in scme detail his intention to develop an Australia-wide business under which he was proposing to conduct the film processing business under the name "Cut Price Photo." Pursuant to those plans, the applicant developed the concept of the mail drop and to this end produced what can be described as a brightly coloured and attractive envelope by which 1t sought custom from persons to whom the envelope was to be delivered by a mail drop. It also developed a logo as part of the business of "Cut Price Photo" which appeared on the envelopes as well. It is fair to say that the phrase "cut price photo" consists of words which are descriptive in nature and describe a photo and convey the impression that the cost of getting a photo printed from a film provided by a customer 1s cheaper, or is at a cut price compared with ordinary processing costs. The applicant was able to register the words "Cut Price Photo" as a business name in a number of States in Australia but was unable to do so in the State of Victoria because there was already registered as a business name in Victoria the words "Cut Price Photography." The applicant attempted to find the person in whose name that business name was registered to see 1f it could obtain a transfer of that registered business name to itself. It failed to find that person, but nevertheless, 1t went ahead with its plan to engage in activities in Victoria under the name "Cut Price Photo." To this end it inserted a number of advertisements in the Sunday papers which had some distribution in Victoria. These advertisements were inserted in issues of those newspapers between July 1987 and October 1987. The advertisement used the logo of the applicant; it also included in large print the price, namely from $3.95 develop and print. It gave the location of retail locations in New South Wales where the service could be provided. It also included a cut out form which could be used to enclose with unprocessed film to be returned to the applicant for processing and under which, if the money had been paid, the applicant would return the printed photos. The address was given as "Cut Price Photo" anda post office box in Kogarah in New South Wales, and was said to be a post-free latter. Also appearing in large print in the advertisement were the words "discount photo processing." I mention that because, again, in the words "discount photo processing" the word "discount" is used as descriptive of the photo processing to suggest that the price charged 15 less than the normal price. I mention that fact also because "discount photos" was a trade name used by the respondent in carrying sut a photo printing business in New South Wales. A similar advertisement appeared in the Age newspaper in Melbourne on 16 October 195987. This advertisement did not include the address of the locations in Sydney at which retail service was provided. It did contain the logo of the applicant, and also contained a comparison under the heading "Compare and Save", showing the charges made by the applicant and what are said to be, in substance, charges made normally by other photo processors. It also had the words in large printing "Discount Photo Frocessing", and gave a phone number "Enquiries Customer Service Phone (008) 25-1719", a free phone call for interstate or country subscribers to a Sydney phone number. The cut-out order form included the postal address, a G.P.0. Box Number at Melbourne, although from affidavit material it appears that, pursuant to an arrangement with the Postal Commission and the applicant, these envelopes when received at the G.P.O. Box in Melbourne were forwarded to a post office box in Sydney, probably the Kogarah post office box, where they were received by the applicant and the films were processed. About 15 September 1987, the applicant engaged ina large distribution in Victoria, through the Australia Post, of the envelopes, the mailers, as they are called, being the first mail drop of the envelopes in Victoria seeking customers in Victoria to forward their films to the applicant. As I said earlier, the envelopes are brightly coloured, they contain on the outside the loge of the applicant, a comparison of the prices charged by the applicant compared with those presumably charged by other processors, indicated the film processing was from 33.35 per roll and the envelope could be returned post free to "Cut Price Photo" at a G.P.0. Box in Melbourne, and further details appeared on the reverse side of the envelope, ancluding details of how orders were to be made. The important aspect was that money had to be included in the envelope to cover the cost of the processing or appropriate forms filled in in relation to credit cards, namely Bankcard, Mastercard or Visacard. On the material before the Court, I am satisfied that there was a substantial response to this mail drop; that a large mumber of customers accepted the offer contained by the actions of the applicant in conducting the mail drop, forwarded film to the applicant by post to Melbourne and that thereafter the envelopes were forwarded to s3ydney for processing in Sydney and the prints then returned to Melbourne. Meanwhile, the respondent was planning to extend its business in Victoria. Officers of the respondent decided to use the name "Cut Price Photos" in Victoria. On the Material before me, I am unable to make a finding on whether the officers concerned knew that those descriptive words had been adopted by the applicant, and [I am not satisfied that the respondent took the actions it did for the express purpose of thwarting the applicant 1n its endeavours to develop business in Victoria. The respondent had been using descriptive words in anumber of examples that 1t thought might be likely to attract custom for its photographic processing business. It used words of a descriptive nature that in reality did not describe the type of business being conducted; words that possibly were more emotive than accurate, but designed for the very purpose of attracting customers on the basis that the service provided was better than any competing service. They had registered the business names of "Discount Photo", "Rock-Bottom Photo", "Rabbit Photo" and "Rabbit Photo Express Systems." In many respects these descriptive words are meaningless; they may have some appeal to some persons but they seem to suggest cheapness and possibly speed. In those Circumstances 1t 1s not surprising that somebody with a bit of imagination also thought of the words "Cut Price Photos" because all these things really come down to the same type of thing, a description of a service being provided in relation to the processing of photographic films. The respondent sought to register the business name "Cut Price Photos" in Victoria but ait likewise discovered that that name or a similar name had been registered under the Victorian Business Names Act. The respondent discovered the identity and address of the registered owner of that name. As a result, it was able to get the registered name transferred to itself and therefore was able to register the business name "Cut Price Photos" in Victoria in relation to its photographic processing business, the registration being effected on 11 September 1987, and under the Business Names Act 1962 (Vic). Thus 1t 1s noted that it became registered as the proprietor of that business name at a time before the first mail drop in Victoria by the applicant. - 10 - When the applicant discovered what the respondent was doing 1t commenced these proceedings. Reference has been made also to the orders sought by the applicant which included the interlocutory orders mentioned at the beginning of the reasons. The claim was based upon the Trade Practices Act 13974 both under s.52 and 5.53, and also based on the tort of passing off. It is true that descriptive words can be used to acquire a reputation or goodwill with regard to a business. This is made clear by the High Court in B.M. Auto Sales Pty. Ltd. v. Budget Rent a Car System Pty. Ltd. (1976) 51 A.L.G.R. 254. At the same time, regard must be had to what was said by Stephen J. in Hornsby Building Information Centre Pty. Ltd. v. Sydney Building Information Centre (1978) 140 C.L.R. 216, and especially at pages 228 to 230, a long passage which was read during the course of submissions by counsel for the respondent and which I incorporate in these reasons for judgment. It is clear from that passage that persons who adopt descriptive words to describe their business do 50 at their own risk, and there is a great reluctance by the courts to support the giving of a monopoly to such a person who uses those descriptive words and it should be done only in very clear cases. - ll - I am satisfied that the applicant has spent time and money in promoting the name "Cut Price Photo" but I am satisfied that the words "Cut Price" in that phrase are descriptive of the type of business being carried on and not so much to the business itself. The business 15 the processing of photographic films, particularly ina way of the mail drop the words "Cut Price" are descriptive of an aspect of that business. I am satisfied that the applicant has used those words for a limited time. They are not made-up words; they are words which are used very commonly in advertising of all types of business and [ am not satisfied for the purposes of anterlocutory relief that the applicant has acquired a reputation or goodwill in those descriptive words in relation to the type of business it 1s conducting sufficient to support the making of the interlocutory orders sought. Further, in Victoria the position 1s affected by the provisions of the Business Names Act 1962. Under s.5 of that Act, a person, i1n substance, shall not carry on in Victoria a business under a business name unless the business mame satisf1res certain conditions, one of which 1s that the business name 1s registered under the Business Names Act. As has been said earlier, the applicant has not registered 'the mame "Cut Price Photo" under the Business Names Act in Victoria. I express no opinion at the moment on whether what it has done constitutes an offence under s.5 of the Business Names Act. The respondent has registered the name "Cut Price Photos" in Victoria and is carrying on that business in - 12 - Victoria. By its statement of claim, the applicant seems to have accepted the fact that it 15 carrying on business in Victorza under the name "Cut Price Photo." This appears from Paragraph 5 of the statement of claim, which reads:- "In March 1987 the Applicant commenced to carry on the business in Victoria of a photographic film processor under and by reference to the trade name 'Cut Price Photo'." Paragraph 7 reads:- "From March 1987 to the date hereof, the Applicant has, at all material times: - (a) carried on the business in the State of Victorza of a photographic film processor under and by reference to the trade name Cut Price Photo ; (b) extensively advertised and promoted the said business under and by reference to the said trade name in the State of Victoria; and (c) otherwise caused the said trade name to be identified in the minds of members of the trade and the public in the State of Victoria with the provision of photographic film processing goods and services." Particulars are then set out and in = substance those particulars allege the looking for suitable sites for its retail outlets in Victoria which commenced in March 1387; the ordering of mailers for distribution in Victoria in August 1987; the advertisements in the newspapers referred to earlier; since mid September, the mailing out of some 589,000 mallers; and the processing of those undeveloped photographic films from addresses in Victoria. There seems no doubt that those paragraphs were designed to allege the establishment of a reputation or goodwill in Victoria in the name "Cut Price Photo" but the draftsman of the statement of claim seems to have ignored the provisions of the Victorian Business Names Act. At the hearing before me, counsel, who had not appeared previously, was concerned with the effect of the Business Names Act and submitted that the provisions did not apply to the facts of this case. He referred to the definition of "carrying on business" a3 contained in sub-section 4(1) of the Business Names Act, namely: - "@. (1) In this Act unless the contrary intention appears - 'Carrying on business' includes establishing a place of business in the State and soliciting or procuring any order from a person in the State ... ." [It 15 noted that that definition is in the Form of an inclusive definition and so one first looks at what 15 the normal meaning of the phrase "carrying on business." No matter what 1s its normal meaning, 1t includes 'establishing a place of business in the State and soliciting or procuring any order from a person in the State." - 14 - Counsel argued that the "and" an that definition showed that the two requirements there listed were cumulative, mamely you must have a place of business in Victoria as well as the soliciting or procuring any order from a person in the State. I find that submission difficult to accept. On its true meaning, carrying on business normally would include, I would have thought, the soliciting of business in the State particularly when one has regard to the purposes behind the Business Names Act and the registration of trade names which do not include the names of the proprietors of the business. One aspect of that purpcse 15 to enable members of the public to ascertain who are the persons behind the trade name so they can see the persons with whom they are'dealing. The need for this protection 1s equally the same whether the place of business of the proprietor 1s in Victoria or whether he 1s soliciting custom in Victoria. In each case, the member of the public in Victoria should be able to ascertain the name of the person who 1S carrying on that type of activity. The aunclusive provisions in the definition merely support what is the normal meaning of the phrase "carrying on business." Counsel sought to rely upon exclusive provisions contained in sub-section 4(2) 0c). That sub-section provides: - - 15 - "4. (2) For the purposes of this Act a person shall not be regarded as carrying on business within the State for the reason only that within the State he - (c) effects any sale through an independent contractor;". Counsel argued that here the Postal Commission was in the position of an independent contractor and that any sales which were effected in relation to the photographic films were effected through the Postal Commission being an independent contractor. I rejyect that submissicn. A reference to the other paragraphs of sub-section 4(2) make 1t clear that what 1s being excluded is the type of activity which 1s purely incidental to other activities which are not in the nature of carrying on business. In paragraph :a), for argument's sake, 1Ff a person:- "(a) 15 or becomes a party to any action or suit or any administrative or arbitration proceeding, or effects settlement of an action suit or proceeding or of any claim or dispute;" that 1s mot sufficient; paragraph (b):- "(b) maintains any bank account." - 16- The other paragraphs as well all go to show that what 1s being excluded from the definition are incidental matters and not a case where a person undertakes an extensive mail drop activity in Victoria seeking custom. In those circumstances, the Postal Commission 15 not in the nature of an independent contractor effecting sales. It 15 merely, as it were, a person through which the applicant, the person making the Mail drop, effects a method by which 1t carries on its business in Victoria. Accordingly, For the purposes of the antet Locuctory relief, I am not satisfied that the applicant is not carrying on business in Victoria under a trade or business name. To put that in the positive form, for present purposes and on the evidence and the words of the Business Names Act, I am satisfied that the applicant 15 carrying on business in Victoria under a business name which 15 not registered in his name under the provisions of the Business Names Act. But, as I said earlier, I express no view on whether an offence has been created or not. The facts of this case are very different From the facts considered by Jenkinson J. ain aASpar Autobarn Co-operative Society Ltrd.. In that case, the applicant commenced to use a business name, Autobarn, believing on reasonable grounds that it would be able to get that name registered as its business name at a very short time in the future. That is very different to the present case. The applicant knew 1t was not registered or did not have - 17 - registered the business name "Cut Price Photos" in Victoria. It knew 1t could not get that name registered but in blatant disregard of the provisions of the Business Names Act decided to and, in fact, carried out the business in Victoria under that name without being registered under the Business Names Act. In the Aspar case, because of some rather unusual procedures within the office of the Commissioner of Corporate Affairs in Victoria, Aspar Autobarn Co-operative Society Ltd. was not able to get the trade name "Autobarn" registered under the Business Names Act because another company, Dovala, got that name registered. In Aspar, because of the particular facts of the case, the Court granted interlocutory orders and then made or gave incidental relief in relation to action to be taken with respect to the business name "Autobarn." The facts of the present case are such that there is no similarity and the Court should not make the orders sought by the present applicant. Further, on discretionary grounds, I would refuse to make the orders sought. At the present time, subject to the effect of the Business Names Act, the applicant can continue 1ts activities in Victoria in relation to mail drops and other activities. What it does is for 1t to decide. - 18 - This is a case where, 1n my opinion, the interests of the public are not adversely affected. What 1s being sought, in reality, is the granting of 4 monopoly ina name consisting of descriptive words for the benefit of the applicant and this should not be done. There has not yet been a sufficient length of time for activity or expense incurred, as in the Budget case, to establish such a reputation or goodwill. The words "Cut Price" are descriptive and if the applicant so desires, 16 cam continue those activities in Victoria. What is required is that this matter should come on for trial at an early date. This 15 4 case where there has already been much material put on affidavit both for and against the granting of relief. What should be done now 1s the giving of directions to enable a date to be fixed for the hearing of the action at an early date. I propose to refuse to grant the orders sought and to give directions now, but, in the light of what I have said, I want to hear submissions as to what directions should be given, particularly in a case like this when the affidavit material 1s so detailed. re - wee -- =o. 2 ee ee | Poeertue chet ris and the ~Loeuaun, C17 | ' ; F 7 peeediig pages ate a true cory of the 4 Qeisone tor Judenent boom of the i Borouw :ble Ih. guchce ROM Dp { d 3s WMhon ' ' . S © : Mharn Fol bose jate j : : £ Dnt: 2 Nwenour (Foh BOTTI ee ee |