Gas Corp v Phasetwo Nominees Pty Ltd [1998] FCA 773

FEDERAL COURT OF AUSTRALIA EVIDENCE - survey evidence - whether survey evidence appropriate - claim for misleading or deceptive conduct, misrepresentation and passing-off - whether survey of persons requiring construction services in the oil and gas, mining and energy industry in Western Australia appropriate - whether proposed survey fails to meet usual criteria. Federal Court of Australia Practice Note No 11 Arnotts Ltd v Trade Practices Commission (1990) 97 ALR 555, followed Interlego AG v Croner Trading Pty Ltd (1992) 111 ALR 577, followed Taco Company of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177, followed GAS CORPORATION v PHASETWO NOMINEES PTY LTD WAG 13 of 1998 R D NICHOLSON J 6 JULY 1998 PERTH

GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WAG 13 of 1998

BETWEEN: GAS CORPORATION

Applicant

AND: PHASETWO NOMINEES PTY LTD

Respondent

JUDGE: R D NICHOLSON J

DATE OF ORDER: 6 jULY 1998

WHERE MADE: PERTH

THE COURT ORDERS THAT: The matter be set down for further directions at a time to be advised including directions relevant to the conduct of the survey proposed by the applicant. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA

DISTRICT REGISTRY WAG 13 of 1998

BETWEEN: GAS CORPORATION

Applicant

AND: PHASETWO NOMINEES PTY LTD

Respondent

JUDGE: R D NICHOLSON j

DATE: 6 July 1998

PLACE: perth

REASONS FOR JUDGMENT HIS HONOUR: The applicant seeks to conduct a public survey to obtain evidence upon which it will rely in the proceeding. In accordance with Federal Court Practice Note No 11, the applicant has given notice to the respondent together with an outline of the required matters specified in the Practice Note. The respondent opposes the obtaining and admission of such evidence. The parties have been unable to resolve this disagreement. The notice discloses the following concerning the intentions of the applicant. The purpose of the survey is stated to be to establish the sample population's awareness of, and beliefs about, companies operating in the oil, gas, petro-chemical and mining industries including Alinta Construction and AlintaGas. It is intended the survey will be directed to the samples' awareness of, and beliefs about, the business activities, associations and the products and services which each of those companies supplies. Nature of claim The issues to which the survey is directed arise out of the following paragraphs of the statement of claim. Paragraph 6 claims that on 22 September 1994 the State Energy Commission of Western Australia ("SECWA") registered the name "AlintaGas" under the Business Names Act 1962 (WA) for the use as the business and trading name of the corporation which was to be established to conduct the gas business of SECWA on its desegregation. Paragraph 7 pleads that on 22 November 1994 SECWA became the registered proprietor of certain trademarks being those consisting of the words "AlintaGas the Natural Gas Company" and "AlintaGas - the Natural Gas Company" ("the Trademarks"). Paragraph 10 pleads that with effect from 1 January 1995 and pursuant to certain State legislation SECWA ceased to exist and the applicant was established as the statutory corporation to carry on the gas business with all the assets of SECWA relating to that business vested in it. Paragraph 11 claims those assets which so vested included the business name AlintaGas, the Trademarks, the goodwill and reputation of the gas business as conducted by SECWA and the goodwill acquired by SECWA in the phrase and name "AlintaGas" and the Trademarks. Paragraph 13(a)(ii) and (iii) plead the applicant has so enjoyed the additional goodwill and reputation generated by the applicant's own business activities and in particular the goodwill and reputation generated in the phrase and name "AlintaGas" and the Trademarks. Further, it has enjoyed all the rights and privileges associated with the Trademarks, and that such Trademarks, are well-known to members of the public in Western Australia generally and in particular to participants in the energy and mining, oil and gas industries, including the market for services associated with the construction, maintenance and repair of gas piping, gas storage facilities and gas skids. Paragraph 14 pleads the respondent has at all times since its incorporation on 22 July 1996 used the name "Alinta Construction" in connection with its business including as a trademark. By par 15 it is alleged the name Alinta Construction is deceptively similar to the Trademarks and consequently the respondent has infringed those marks (par 16). Alternatively it is pleaded (par 17) the respondent has used the name "Alinta Construction" in connection with its business including as a trademark in respect of whatever goods it has produced and services it has provided in the course of trade. This use is pleaded (par 18) as likely to be taken by members of the public in Western Australia generally and, in particular, participants in the energy and mining, oil and gas industries, including the market for services associated with the construction, maintenance and repair of gas piping, gas storage facilities and gas skids as indicating a connection between the goods produced and services provided by the respondent in the course of trade and the applicant (par 19), so that the interests of the applicant are likely to be adversely affected. Further and alternatively it is pleaded the respondent has infringed the Trademarks. It is also pleaded (par 21) the respondent has represented or will continue to represent to members of the public generally and in particular, past, present and prospective customers of the applicant and participants in the energy and mining, oil and gas industries including the market for services associated with the construction, maintenance and repair of gas piping, gas storage facility and gas skids that it is the applicant, and its business as the business of the applicant, and associated matters. There is a pleading (par 22) that such representations are false so that the respondent, by engaging in such conduct, has engaged in trade or commerce which is misleading or deceptive or likely to mislead or deceive (par 23). Alternatively it is pleaded that by such conduct the respondent will represent that the goods or services provided by it are approved by the applicant when that is not the case so that there is a contravention of s 53 of the Trade Practices Act 1974 (Cth) and s 10 of the Fair Trading Act 1987 (WA). In par 27 of the statement of claim there is a further pleading the respondent has passed off or attempted to pass off its business and its goods as those of the applicant and that its conduct as previously referred to is likely to lead the members of the public generally, and the particular persons referred to in particular, to confusing the respondent with the applicant and confusing their businesses and services. Proposed survey The proposed questions for the survey are set out in a draft questionnaire before the Court along with the introductory statements and instructions to be given to persons conducting the survey. Other controls to be used in the interrogation process are also set out. It is proposed the survey sample would be comprised by the population who contract for the provisions of services associated with the construction of gas piping, gas containers or gas skids in the oil and gas, energy and mining industries in Western Australia. Interviewers will have at least 12 months experience in market surveys and the survey will be overseen by an expert in market and attitudinal surveys. Provision is made for representatives of the respondent and their legal advisors to be allowed to be present and to freely observe the briefing in interviews. Copies of the completed questionnaires will be available to each party. Requirements of survey The approach which the court should take to the question of survey evidence was comprehensively considered by a Full Court of this Court in Arnotts Ltd v Trade Practices Commission (1990) 97 ALR 555. The Full Court (Lockhart, Wilcox and Gummow JJ) there concluded it was not very profitable, at least in the Federal Court, to spend time in determining whether a particular survey was hearsay evidence because ordinarily the Court will have a discretion under O 33 r 3 of the Federal Court Rules to permit the evidence to be adduced. See now also subs 9(1) of the Evidence Act 1995 (Cth). On the broader question of the desirability of survey evidence the Court concluded (at 605‑607): "...in a civil case in which a market survey may cast light on relevant issues, it is desirable in principle to admit into evidence a report of a professionally conducted survey, upon proof that it has been satisfactorily conducted using relevant and unambiguous questions, and without requiring evidence from each of the participants. There are two reasons for our view. In the first place, market survey techniques have now been refined... ... [O]ur second reason: both of the alternate methods of proving consumers' habits and attitudes are unacceptable. ... [I]nformation is preferable to intuition. Where the state of public knowledge of, or attitudes to, some subject is a relevant factor in the courts adjudication of an issue, it is better to admit than to preclude evidence on those matters." In reaching these views the Court accepted that the criteria listed in the Handbook of Recommended Procedures for Trial of Protracted Cases (of the Judicial Conference in the United States) were equally appropriate for Australia. The necessary criteria as set out in that handbook at 429 and quoted by the Full Court at 603 were as follows: "The offeror has the burden of establishing that proffered poll was conducted in accordance with accepted principles of survey research, ie, that the proper universe was examined, that a representative sample was drawn from that universe, and that the mode of questioning the interviewees was correct. He should be required to show that the persons conducting the survey were recognised experts; the data gathered was accurately reported; the sample design, the questionnaire and the interviewing were in accordance with generally accepted standards of objective procedure and statistics in the field of such surveys; the sample design and the interviews were conducted independently of the attorneys; and the interviewers, trained in this field, had no knowledge of the litigation or the purposes for which the survey was to be used. Normally this showing will be made through the testimony of the persons responsible for the various parts of the survey." Despite the clarity of this Full Court decision it is contended for the respondent there are authorities which show survey evidence tends to unnecessarily complicate litigation, to prolong trials and increase costs and that it is given at best little weight in a final determination by the court. It is the case that when a court is presented with "an ordinary market survey" in the absence of "some real evidence, tested in cross-examination" it "may not be really sure of what was passing through people's minds": Neutrogena Corporation v Golden Ltd [1996] RPC 473 at 485‑486 per Jacob J. The principal thrust of the contentions for the respondent is that survey evidence is likely to be given little weight: see Arnotts at 358-364; State Government Insurance Corporation v Government Insurance Commission NSW (1991) 101 ALR 259 at 293; Interlego AG v Croner Trading Pty Ltd (1991) 102 ALR 379 at 407; that the court must be extremely cautious at drawing conclusions from such material: McDonald's System of Australia Pty Ltd v McWilliams Wines Pty Ltd (1979) ATPR 40-108 at 18,105; and that the responses are of no value unless the interviewees are cross‑examined: Mobil Oil Corporation v Registrar of Trademarks (1983) 51 ALR 735 at 739. It is clear the court must reserve for ultimate consideration the issues of weight to be placed upon survey evidence. However, it is also apparent from the decision in Full Court in Arnotts that the issue for the court at this stage of a proceeding is to determine whether survey evidence of the proposed kind is likely to have weight and to assist the proceeding given the nature of the pleadings and subject to issues of the methodology proposed. In Interlego AG v Croner Trading Pty Ltd (1992) 111 ALR 577 at 616‑618 the Full Court (Black CJ and Lockhart J agreeing with Gummow J) stated propositions as to the principles of evidence where the issue was whether Croner had marketed certain products in a way which misled or deceived or was likely to mislead or deceive consumers into believing the existence of a trade connection between the respondents and the appellants. Those principles were: (1) Potential consumers may give evidence as to the reputation of marks or get-up involved. (2) The question whether a mark or get up so nearly resembles another as to be deceptive or likely to deceive is a question for the tribunal of fact and is not a matter for any witness to decide. (3) Evidence of consumers and retailers as to the likelihood of deception will be critical if a special market is involved. This was supported by a reference to G E Trademark [1973] RPC 297 at 321 where Lord Diplock said: "...where goods are of a kind which are not normally sold to the general public for consumption or domestic use but are sold in specialised markets consisting of persons engaged in a particular trade, evidence of persons accustomed to dealing in that market as to the likelihood of deception or confusion is essential. A judge, though he must use his common sense in assessing the credibility and probative value of that evidence is not entitled to supplement any deficiency in evidence of this kind by giving effect to his own subjective view as to whether or not he himself would be likely to be deceived or confused." (4) Consumer evidence will also be admissible if it establishes the habits of purchasers, even if everyday items. (5) Such evidence as to the habits of purchasers does not include evidence of prospective purchasers that they would be deceived, or evidence or retailers that purchasers would be deceived. (6) Evidence of actual deception would be admissible (at least in that case). Appropriateness of survey In my opinion the general case mounted on behalf of the respondent against the obtaining of survey evidence focuses on issues relevant to the weight to be given to such evidence rather than substantive objections to the relevance of such evidence. The nature of the pleadings in this case is such that survey evidence of the nature proposed has the potential to play a helpful part in resolving the issues at trial. The repetitive references in those pleadings to members of the public generally and in particular to past, present and prospective customers of the applicant and participants in the energy and mining, oil and gas industries including the market for services associated with the construction, maintenance and repair of gas piping, gas storage facilities and gas skids, makes that the case. That is a reference to a specialised market of the type referred to by Lord Diplock in G E Trademark. The other level on which the case for the respondent contests the appropriateness of survey evidence is in relation to the particular methodology of the proposed survey. The objections are as follows: (1) It is submitted the court cannot be satisfied the interviewees will be selected so as to represent a cross-section of the relevant public: Auckland Regional Authority v Mutual Rental Cars (Auckland Airport) Ltd [1997] 2 NZLR 647 at 659. It is said the first series of questions contained in the applicant's proposed survey is directed towards the general public, with which the respondent does not deal. The survey, it is submitted for the respondent, should be drafted specifically mindful of the services provided by the respondent, the prospective purchasers of the services and the market covered by the respondent: Australian Woollen Mills Ltd v F S Walton & Co (1937) 58 CLR 641 at 658; Polaroid Corporation v Sole N Pty Ltd [1981] 1 NSWLR 491 at 498; Lego Australia Pty Ltd v Paull's (Merchants) Pty Ltd (1982) 60 FLR 465. In my view this is met by the applicant's submission, which could be made in the form of an undertaking if necessary, that the proposed population for the survey excludes the general public and is directed to the potential customers of construction services in the oil and gas, mining and energy industry in Western Australia including representatives from companies in Western Australia which may potentially require the construction or fabrication of gas containers, gas skids, pressure vessels and gas piping. (2) For the respondent it is said the surveys do not reflect the circumstances of real life consumer decision making in that consumers in the market for specialist welding services do not base decisions solely on names or logo but focus upon word of mouth reputation. In my view the questions directed to recognition of the respondent from a range of other companies mirrors, as submitted for the applicant, real life instances where the consumer is faced with a range of possible suppliers of goods and services. (3) It is submitted for the respondent the lack of a definition of a target population is fatal to the utility of the survey. The respondent claims an international reputation in its specific field and there has been no indication of how the survey will be directed to participants in industries in Europe and Latin America which are the international loci of the respondent's reputation. The case concerns the reputation within Western Australia. The market for the provision of construction services in the oil and gas, energy and mining industry in Western Australia is relatively small and can be identified. Reputation of the respondent outside Australia will not give rise to any defence of the applicant's claim: Taco Company of Australia v Taco Bell Pty Ltd (1982) 42 ALR 177. (4) It is said for the respondent the survey lacks a control mechanism by offering a comparison between the names "Western Power" and "Western Construction" or "United Energy" and "United Construction". This suggested mechanism is not such as in my view can be said to show the inutility of the proposed survey. (5) Then it is submitted the party intending to rely upon the survey has the burden of establishing the poll is conducted in accordance with accepted principles of survey research: Arnotts at 603 and Imperial Group Ltd v Phillip Morris Ltd (1984) RPC 293. The specific matters raised are those which are directed to the admissibility of the survey evidence and to its weight. There is nothing in the nature of the proposed survey which shows it to be so at odds with these criteria that no order should be made for the obtaining of the survey evidence. In my opinion the case for the respondent, both in its general contentions against the appropriateness of survey evidence in this proceeding and in its particular assertions concerning the proposed methodology of the survey, does not make out a case against the utility of survey evidence in the proposed form. In my view the proposed survey evidence, given the pleading, is likely to assist the trial and is not in disconformity with the principles of evidence previously set out. For these reasons I would accede to the application for directions to be made to enable such evidence to be obtained, the specific issues of admissibility and weight being reserved for trial. I certify that this and the preceding eight (8) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice R D NICHOLSON