AS6 / 8 IN THE FEDERAL COURT OF AUSTRALIA ) QUEENSLAND DISTRICT REGISTRY ) QLD G78 of i988 GENERAL DIVISION ) BETWEEN: ALAN JONES PIT-STOP CORPORATION PTY LTD Applicant AND: McMAHON McRAE PTY LTD First Respondent AND: MARKET POWER PTY LTD Second Respondent AND: MAXWELL JOHN McMAHON Third Respondent MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 21 APRIL 1988 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. the application for interlocutory relief be dismissed; the costs of and incidental to the application for interlocutory relief be the respondents' costs in the proceedings. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN U A ) D TRY ) QLD G78 of 1988 VISIO! ) BETWEEN: ALAN JONES PIT-STOP CORPORATION PTY LTD Applicant AND: McMAHON McRAE PTY LTD First Respondent AND: MARKET POWER PTY LTD Second Respondent AND: MAXWELL JOHN McMAHON Third Respondent PINCUS J. 21 APRIL 1988 EX TEMPORE REASONS FOR JUDGMENT This is an application for an interlocutory injunction in relation to the use of a business name. The applicant's outline of submissions says, as does the application itself, that relief is sought in relation to misleading and deceptive conduct, passing off and infringement of the applicant's right as registered user of certain trade marks. The argument was, in substance, confined to the first two aspects of the matter. On 27 August 1984, the applicant and the first respondent entered into a franchise agreement which contemplated that the first respondent would carry on a business of selling tyres and other such products at Cairns, with the assistance of the applicant as franchisor. That occurred, but a dispute arose, which resulted in other litigation in this Court which was tried in December 1987. The judgment in that case has not yet been delivered. During the currency of the franchise agreement, the first respondent carried on its business as a tenant on premises at Martyn Street, Cairns, under the name Alan Jones Pit-Stop. At the time the case referred to was tried, and shortly afterwards, the first respondent became fearful that it would lose its tenancy. For that and perhaps other reasons, those in control decided to give up the franchise and move the business. On 9 January 1988, the first respondent ceased to trade under the name Alan Jones Pit-Stop and, in the same premises, the second respondent began on 11 January 1988 to trade under the name "Cairns Pit Stop" or "The Cairns Pit Stop". On 12 February 1988, a company associated with the applicant, namely, Alan Jones Pit-Stop (U.S.A.) Inc. bought the land on which the business was conducted at Martyn Street. Thereafter, there were communications between the parties about the tenancy, the details of which do not seem to matter. On 4 April 1988, the business was relocated to a piece of land quite close to the original site, namely, 32-36 Florence Street, Cairns. It is there carried on under the name of Cairns Pit Stop; the second word is sometimes hyphenated, and sometimes split into two. Mr Morrison argued his case substantially as three contentions: (1) there is a breach of the franchise agreement; (2) the conduct of the respondents relating to the transition from one location to the other was misleading; and (3) the use of the name Cairns Pit Stop is itself misleading. As to the first point, clause 8 of the agreement provides for termination for breach and says that on termination the first respondent must, among other things, not use either the name of the applicant or any part thereof, or any business name under which the first respondent carried on the franchise business for any purpose whatsoever, and must not in any way represent itself as having been associated with the applicant in any respect. Mr Morrison argued that, although the use of the name of which the applicant complained was not a use by the first respondent, but by the second, it should nevertheless be treated as a breach of the agreement. There 1s nothing in the evidence to suggest that the second respondent's ownership and conduct of the business at Florence Street is a sham or that it conducts that business, in truth, on behalf of the first respondent. It is a possible inference, however, that perhaps those in control of the first respondent used the second respondent as a vehicle to escape from the obligation which would otherwise have been imposed by the franchise agreement as to the use of the former name of the business. As Mr Gibson pointed out, however, there is nothing in the agreement to hind the directors or shareholders of the first respondent. The question might be said to be whether there is any likelihood of the Court's lifting the veil at the trial, to use an expression which is not quite apposite, so as to treat the actions of the second respondent as being in substance actions of the first. That appears to me quite an improbable result. The applicant's difficulty lies not in the area of implication of terms, but has to do with a change of parties. The second question raised by Mr Morrison is based upon complaints about what I have called transitional advertising. These advertisements need not be set out in full, but some examples need to be given. An advertisement which was published on 19 December 1987, on behalf of the "Cairns Pit-Stop" business described it as "formerly Allan Jones Pit-Stop." It prominently said, "Only the name has changed (to protect the innocent)". Again, it appears that from 1 January to 4 February 1988 a television advertisement, the details of which are not proved, was repeatedly shown conveying similar information; in particular, the words, "formerly Alan Jones Pit-Stop," were used. Also, to indicate to customers what was happening, a sign appeared for some time outside the old premises in Martyn Street giving the new location, and saying, "Cairns PitStop have moved." None of the advertisements to which I have referred is very recent. There is, however, one recent advertisement of this general description which is exhibit "A2" to the affidavit of the deponent, C.L. Duncan. It informs or reminds the public that, "we have moved around the corner to 34 Florence Street," and thanks them for their loyal support. It contains an assurance: "You will continue to receive the same personal courtesy, service and detailed attention to your car that has been our pleasure to provide in the past." This transitional advertising has two features which require scrutiny. The first is the suggestion that the new business was formerly the Alan Jones Pit-Stop business. It appears to me arguable that advertisements of that sort might mislead the public as suggesting a possibility that although the name has changed, there is still a connection with Mr Jones. People having that notion, and holding it only faintly, might be reinforced by the advertisement mentioned above on 19 December 1987 which had in prominent type, "Only the name has changed". In fact, there was another significant change, namely the loss of the franchise. It does not appear to me, however, that there is any recent advertisement having this character of suggesting a connection with the applicant directly. The second feature of this transitional advertising needing discussion is that which suggests that the people involved in the Florence Street business are the same as those who were formerly involved in the Martyn Street business. In my opinion, the suggestion just mentioned, whilst it is to be found in exhibit "A2" of the newspaper advertisement exhibited to Mr Duncan's affidavit is not misleading. It is true that advertisements of the same general description might possibly, in the future, be framed so as to suggest a continuing connection with the franchise organization or with Mr Jones, but there appears to me to be no significant risk of that. The transitional period is over. The third issue is whether the current advertising signs used are misleading or constitute passing off. The current advertising signs say, "Cairns Pit Stop." It is true that the words "Pit Stop" are common to both the applicant and second respondent but there is no business in Cairns at present for which members of the public seeing these signs or advertisements might mistake the second respondent's business. The real complaint is, as paragraphs l(a) and 1(b) of the application imply, a suggestion of association with the applicant. It 1s my view that no such suggestion is conveyed by the use of the words "Cairns Pit Stop". Some might say, in criticism of the respondents, they might have been more careful to ensure that their unfranchised business was not seen as connected with the applicant or with Mr Jones. I did not, however, find it necessary to determine whether such a criticism would be valid as a matter of law, because, and this 15 the critical point, there is no evidence on which one could base a finding that there is a significant risk that the respondent will in the future suggest that the Florence Street business is connected with the applicant or with Mr Jones. I should mention that there was some brief discussion of the balance of the convenience. It would, of course, be inconvenient for the second respondent to discontinue the use of its present name, because it is in the current yellow pages. If I thought that there was a substantial risk that the second respondent might misrepresent the character or connections of its business, I would be inclined to require some disclaimer to be inserted in advertising, such as "No connection with Alan Jones Pit-Stop". But since the second respondent's current advertising is, in my view, quite unlikely to induce in the minds of the public the idea that the business is connected with Alan Jones, or with the applicant, the application for interlocutory relief should be refused. As to costs, in many of these cases it is appropriate to simply make the costs of the interlocutory applications costs in the proceedings. In the circumstances of this case, however, it is my opinion that some recognition should be given to the respondents' success today, but that they should not finally have their costs. The costs of and incidental to the application for interlocutory relief will, therefore, be the respondents' costs in the proceedings. The orders will be - (1) application for interlocutory relief refused; (2) costs of such application and incidental thereto to be the respondents' costs in the proceedings. f certify that this and the 7 Preceding Pe "5 ar@a trua com, of "he -a759ns for I" --ent herein of His Honour Mr Justice Pincus Associate Dated 2 Apris i9a¢