FEDERAL COURT OF AUSTRALIA Azzi v Omar [2012] FCA 625 Citation: Azzi v Omar [2012] FCA 625 Parties: SAMIRA AZZI and SIMON AZZI v AZZELDEEN OMAR and MAHMOUD OMAR File number: NSD 714 of 2012 Judge: EMMETT J Date of judgment: 29 May 2012 Date of hearing: 29 May 2012 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 19 Counsel for the applicants: IS Wylie Solicitor for the applicants: Thomsons Lawyers Counsel for the respondents: RA Parsons Solicitor for the respondents: Sterling Legal IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 714 of 2012 BETWEEN: SAMIRA AZZI First Applicant SIMON AZZI Second Applicant AND: AZZELDEEN OMAR First Respondent MAHMOUD OMAR Second Respondent JUDGE: EMMETT J DATE OF ORDER: 29 MAY 2012 WHERE MADE: SYDNEY THE COURT NOTES THAT: 1. The first respondent undertakes to the Court to: 1.1 no later than 10am on 31 May 2012, cover or remove all external signs at 43-49 South Street, Granville which contain the Awafi name or the Awafi Rooster Device, and after that time not to display the Awafi name or device on the exterior of 43-49 South Street, Granville. 1.2 maintain the interior signage and get-up of the business at 43-49 South Street, Granville as is at the present date; 1.3 not display the Awafi name or the Awafi Rooster Device in any media advertising, handbills or like promotion; and 1.4 not use the Awafi name or the Awafi Rooster Device in connection with any business other than at 43-49 South Street Granville without first giving sixty (60) days' notice to the applicants' solicitors of his intention to do so; 2. The applicants undertake to the Court to: 2.1 no later than 10am on 31 May 2012, cover or remove all external signs at 107 South Street, Granville which contain the Awafi name or the Awafi Rooster Device, and after that time not to display the Awafi name or device on the exterior of 107 South Street, Granville; and 2.2 not display the Awafi name or the Awafi Rooster Device in any media advertising, handbills or like promotion. 3. The first applicant and first respondent each gives the usual undertaking as to damages. 4. The first applicant and first respondent each gives an undertaking to keep proper accounts and records of the trading at 43-49 South Street, Granville, in the case of the first respondent and 107 South Street, Granville, in the case of the first applicant. 5. The above undertakings are to continue until final hearing and determination of the proceedings, or until they are discharged by order of the Court. THE COURT ORDERS THAT: 6. The proceeding be listed for further directions at 9.30am on Friday, 1 June 2012 before the docket judge (Rares J). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 714 of 2012 BETWEEN: SAMIRA AZZI First Applicant SIMON AZZI Second Applicant AND: AZZELDEEN OMAR First Respondent MAHMOUD OMAR Second Respondent JUDGE: EMMETT J DATE: 29 MAY 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The applicants seek interlocutory orders restraining the respondents from representing that they have the sponsorship or approval of, or are otherwise affiliated, with the applicants, by using the word or mark Awafi, or a mark that I shall describe as the Awafi Device, as part of any logo or otherwise in signage in or about any food, takeaway or restaurant business owned or operated by them or as part of the name of any business or corporation owned or managed by them. They also seek an order that the respondents change the name of the business being conducted by them at 43-47 South Street, Granville to a name that does not include the word or mark Awafi. Their application is opposed by the respondents. 2 The evidence suggests that, during 2007, discussions were entered into between the applicants and the respondents concerning the establishment of a fast food business to be carried on by them in partnership. The present dispute appears to have arisen from that partnership arrangement. I have before me evidence in the form of untested affidavit evidence on behalf of the parties. The argument has proceeded, as is usual in an application of this nature, on the basis that the affidavit evidence is accepted, at least to some extent, as prima facie being correct. 3 The proposed partnership arrangement involved opening a takeaway food shop in Granville. The respondents were to provide labour and effort. The applicants were to provide some capital for the setting up of the shop. At that time, the applicants, or persons associated with them, had for some time used the mark Awafi, or the mark Al Awafi, in connection with fast food businesses. Following an informal arrangement that appears to have been made at some stage during 2007, over the course of a number of discussions, a business situated in Auburn was purchased. The premises at which that business operated were renovated in March and May 2008 and the business opened in June 2008. The business at the Auburn premises closed in July or August 2010. 4 In January or February 2009, a business operating at 43-45 South Street, Granville was purchased by the partners. On 23 March 2009, the business name Awafi was registered in the name of the first respondent. The premises at 43-45 South Street, Granville were renovated during 2009, and the business opened in October 2009. Subsequently, extensions were carried out and the business expanded to 43-47 South Street, Granville. 5 The respondents allege that, from late 2010, the applicants reduced the time that they spent engaged in the business at 43-47 South Street, Granville. The respondents assert that the applicants began to interfere in the conduct of that business. On 28 January 2011, a notice of cessation of the business name Awafi in respect of the Granville premises was lodged by the applicants. In February 2011, one of the applicants lodged an application for registration of a trademark in respect of Awafi name and the Awafi Device. In February 2012, the first respondent lodged notice of opposition to the trademark application lodged on behalf of the applicants. On 25 February 2012, the business at 43-47 South Street, Granville was closed. 6 In early 2011, the applicants became the tenants of premises situated at 107 South Street, Granville and commenced renovating those premises. From May 2011 the applicants commenced trading at the 107 South Street, Granville premises under the name Chalk. From late February 2012 the applicants displayed the Awafi name and marks at 107 South Street, Granville. 7 From early March, the applicants, through their solicitors, wrote to the respondents requiring them to cease and desist from using the Awafi name and marks. Despite those letters, the respondents made arrangements to recommence trading at the 43-47 South Street, Granville premises under the name Al Awafi. That has prompted this application, in that the applicants claim to be entitled to the mark and the goodwill associated with that name. They contend that the respondents are, in effect, passing off their business as having an association with the applicants' newly branded business in 107 South Street, Granville. 8 The question that arises in a proceeding such as this is twofold. First, it must be considered whether there is a serious question to be tried as to whether the applicants are entitled to final relief as claimed, namely, a final injunction restraining the respondents from use of the relevant name and get-up. Secondly, assuming that there is such a serious question to be tried, an exercise must be undertaken to determine where the balance of convenience lies. That is to say, it is necessary to assess the inconvenience to the applicants if the respondents are permitted to continue to trade and the applicants are ultimately found to be successful, against the inconvenience to the respondents if they are restrained pending a hearing of the dispute and the applicants ultimately fail in their proceeding. 9 Generally, the object of any interlocutory relief is to maintain the status quo without either party obtaining an advantage, until such time as the dispute between them can be resolved by the Court upon hearing evidence and resolving any disputed factual matters. The material presently before me indicates clearly enough that the Awafi and Al Awafi names and/or devices had been used by the applicants, or people associated with them, prior to its use in the partnership business in Auburn and at 43-47 South Street, Granville. The precise ownership of the marks, however, is somewhat obscure in that, as I have said, persons other than the present applicants appear to have been involved in the use of the name in the past and, indeed, may well continue to be involved in the use of the name. 10 The matter has, however, not been argued on the basis that the applicants do not have some entitlement to the name. The principal basis upon which the respondents contend that they are entitled to continue to use the name is that it is the name of the partnership business that they were engaged in with the applicants. They say that, upon the termination of the partnership, each partner would be entitled to continue to carry on under the partnership name in the absence of any agreement to the contrary, either in the relevant partnership agreement or in any arrangement made on the termination or dissolution of the partnership. 11 Certainly, upon the dissolution of a professional partnership without any sale or assignment of the goodwill of the partnership business, and without any provision as to the use of the partnership name, any of the partners would be entitled to carry on business under that name provided that that partner did not expose his former partners to any risk or liability. It would need to be made clear that, although the same name was being used, none of the former partners continued to have any authority to bind the others. That is to say, the use of the name should not be permitted to suggest that the partners were still in partnership together, such that the conduct of one former partner was capable of being sheeted home to the others. 12 Such a principle, of course, would apply where a partnership is formed and the partnership business name describes a business that has not previously been carried on. That is to say, if the Awafi name had not been used prior to the commencement of the partnership alleged in the present proceeding, it would be clear enough that that name was a partnership asset. However, the evidence suggests, as I have said, that the name had been used for some time before the commencement of that partnership business. To that extent, the use of the name by the partnership business might be taken to be authorised by the owner of the Awafi name. On the other hand, the respondents allege, and I make no finding as to the matter, that the applicants caused the closure of the partnership business, having established a competing business to which the Awafi name was then applied. 13 It is impossible to form a view, at present, as to where the merits of the present dispute lie. The object is to try to find a means of permitting both of the disputing parties to carry on their respective businesses without unfair interference, such that, when the matter is ultimately resolved, whatever business exists at the present time will be preserved for the benefit of the successful party. 14 There is some evidence that former customers of the business at 43-47 South Street, Granville have inquired of the proprietors of the current business at 107 South Street, Granville as to whether there is a connection between that business and the proposed new business intended to be established by the respondents at 43-47 South Street, Granville. There was, in fact, until very recently, signage on the shop front at 43-47 South Street, Granville indicating that the business that had closed in February was about to reopen. 15 The respondents have proffered undertakings to the Court that involve, in essence, covering up the external signage and undertaking not to display the Awafi name or Awafi Device on the exterior of the 43-47 South Street, Granville premises. They would also undertake not to use the Awafi name or Awafi Device in connection with any business other than one conducted at the premises at 43-47 South Street, Granville. However, they make that offer conditional upon the applicants agreeing to similar restrictions in relation to the usage of the name and device at the premises at 107 South Street, Granville. The respondents would also undertake not to use the name or device in any advertising in connection with the premises at 43-47 South Street, Granville, on the basis that the applicants would also agree not to use the name or device in any advertising in connection with the premises at 107 South Street, Granville. That is to say, there would be no restriction on the usage by the applicants of the name and device at any other premises where it is presently being used. 16 The evidence before me concerning the effect of covering the external signs is not entirely satisfactory, in that it consists of photographs taken in recent times. None of the photographs is completely clear. The concern is the extent to which there is a difference between the two premises, such that covering the external signs of one would be more damaging than covering the external signs of the other. Specifically, it has been suggested that covering the external signs at 107 South Street, Granville would be much more restrictive than covering the external signs at 43-47 South Street, Granville. 17 However, I have been unable to discern from the present evidence any greater detriment to one or the other. That position may, of course, change if different evidence can be produced, but, on the basis of the material before me, I consider that, if the undertakings proffered by the respondents were accepted by the Court, the balance of convenience would be against granting the injunctions sought by the applicants. That is to say, I consider, although it is not an easy question, that, if the undertakings proffered by the respondents were accepted, which undertakings are conditional upon the applicants giving undertakings that they are not bound to give, the status quo could be preserved, to the extent possible, on the basis that the parties would each act expeditiously with a view to contesting a final hearing as soon as practicable. 18 I have no doubt that the Court can provide a final hearing as soon as the parties are ready for it. However, I should say that this is a case which cries out for mediation. The costs of a final hearing of the dispute would be very substantial. There are clearly difficult factual questions, and serious allegations have been made by the respondents against the applicants. It is in the interests of none of the parties for those matters to be aired if continued operation can be ensured by means of an extra curial resolution. On the basis of the undertakings given by the respondents, and noting that they would proffer the usual undertaking as to damages, I consider that the application for interlocutory relief should be refused. 19 Following the giving of the above reasons in open Court, the parties have consulted, and agreed upon short minutes of orders reflecting the reasons. I propose to make orders in accordance with those short minutes. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 20 June 2012