Dist Dist Die Rev FeTviun PET REL coi He write aikle ealele Sait fax RIS? 470 HIGH COURT (1931, [HIGH COURT OF AUSTRALIA] NEED . i i : ' ' ; ' . APPELLANT; DrreNDANT, AND J. H. COLES PROPRIETARY LIMITED. . Responpent. PLaInTIFF, ON APPEAL FROM THE SUPREME COURT OF VICTORIA. H.C. or A, Trade Name—Authority to use—Contract—Licence—Revocation—Registration of firm 1931. name—Use of registered name prohibited—Baclusive right to use of name— Ww Loss of right—Injunction—Business Names Act 1928 (Vict.) (No. 3648), seo, 25. Mr.pourne, rari The appellant and the respondent entered into an agreement whereby it was agreed that the appellant should obtain the lease of a shop and should conduct a business there under the respondent's trade name, such business being similar to one carried on by the respondent, and that the appellant should buy all his stock from the respondent at a concession price. No time was fixed for the duration of the agreement. The trade name of the respondent was painted on the appellant's shop by, or under the direction of, the respondent. At first the appellant purchased all his stock requirements from the respondent, but, owing to the respondent being unable to supply the appellant's requirements, his purchases from the respondent diminished until at the end of three years they were almost negligible. After the parties had acted in accordance with the agreement for nearly threo years, the respondent, who was carrying on a similar business in various other shops, purported to terminate the agreement, and brought an action to restrain the appellant from continuing to use the respondent's name. Held by Rich, Evatt and McTiernan JJ. (Starke and Dizon JJ. dissenting), that no injunction should be granted as the respondent's name had been so used under the licence that at the time of the commencement of the action it did not sufficiently identify the appellant's business as being that of the respondent and that the respondent's conduct had debarred it from equitable relief by way of injunetion, Boussod, Valadon & Co. v. Marchant, (1907) 25 R.P.C. 42, applied. Decision of the Supreme Court of Victoria (Full Court) reversed. OF AUSTRALIA. \L from the Supreme Court of Victoria. 'The respondent, J. H. Coles Proprietary Limited, a company ch had for some years carried on a fancy goods business in the bs of Melbourne, brought an action against the appellant, hn Francis Need, the proprietor of a fancy goods shop at No. 339 ligh Street, Northcote, a suburb of Melbourne, seeking an injunction o restrain the appellant from having affixed to his shop the name the respondent and other trade names of the respondent, |. H. Coles, 3d. 6d. and 1/- J. H. Coles Stores" and to restrain from representing his business as being the business of the ndent. The respondent had duly registered the trade names the provisions of the Partnership Act 1915 (Vict.) in respect the other premises where it carried on business itself. The respondent moved for an interlocutory injunction in the of the writ of summons, which motion was, by consent, tre as the trial of the action. The motion was heard upon affidavit by Irvine C.J. on 10th March 1931, when the present nt alleged that the use of the name was due to the following That on 3rd January 1928 the respondent advertised in a ne newspaper that it was prepared to fit up and stock a number of stores on similar lines to its own and inviting gs, who was then the managing director of the respondent's and Jennings told him that if he would open a shop and e the name of 'J. H. Coles, 3d., 6d. and 1/- Store" as the title of the business, the Company would supply him with the classes of usually sold in the Coles Stores, and would supply them at t price with five per cent commission added, the defendant to buy ill his stock from the Company so far as it was able to supply the ods at: prices not more than those at which they were procurable ewhere; that the defendant agreed and procured a lease of a p at No. 339 High Street, Northcote, and was induced to spend 50 in fitting it up, and later £1,300 in alterations, and paid to the iff £1,500 for the first equipment of stock; that before the ess was opened Jennings sent to the premises the signwriter rho was usually employed by the respondent for such purposes, nd directed him to paint up the four signs, "J. H. Coles, 3d., 6d. H. C. or A, 1931. NgED v. J. H. Cotes Pry. Lrp. H. ©. or A. 1931. Ww Neep v J. H. Cotes Pry. Lro. HIGH COURT [1931. and 1/- Store" and "J. H. Coles," and the signwriter painted such signs where the signs complained of appeared on the shop at the date of the motion; that when the shop was opened for business all the directors of the respondent Company were present, they being the only shareholders in it other than corporations ; that for about nine months the defendant purchased all his stock requirements from the respondent Company, and then, discovering that the Company was not maintaining its stock sufficiently to supply his reasonable requirements, he explained this to Jennings and was told that the Company would not complain of his purchasing necessary stock elsewhere ; that the Company's stock became more scanty and Jennings assented to the appellant buying outside, and the fulfilment of the appellant's orders grew less and less complete until in some cases 75 per cent of them remained unfulfilled, and Jennings then told him to suit himself, and that presently when the plaintiff's stock was better maintained he should resume buying it; and that this state of affairs continued until the respondent Company went into liquidation on 13th June 1930, on some occasions only 10 per cent of the appellant's order being fulfilled. The appellant alleged that he continued to make purchases of goods upon the same terms from the liquidator up to and since the commencement of the action, and he put in evidence four typical invoices for the goods purchased indicating that the terms as to price had been observed throughout. On behalf of the liquidator an affidavit was filed in which it was stated that the deponent had since the liquidation offered to the appellant the opportunity of buying goods from the liquidator as an ordinary purchaser, and that the appellant then agreed to purchase such goods as suited him. An injunction was granted by Irvine C.J. on the ground that in his Honor's opinion the agreement as to the use of the name and purchase of goods was terminated by mutual consent when appel- lant soon after the liquidation agreed to buy as an ordinary purchaser. The defendant thereupon appealed to the Full Court consisting of Mann, Macfarlan and Lowe JJ., who dismissed the appeal. From that decision the defendant now appealed to the High Court. OF AUSTRALIA. chin, for the appellant. The judgment of Irvine C.J. turned n the question of fact as to termination of the agreement by The paramount consideration to the appellant was the right to use the name, and there is no evidence that he agreed to t e that right. He continued to buy throughout on the per cent terms of the original agreement. This is shown by he invoice dated 13th February 1931. The Full Court was in in holding the agreement terminable at will, as the promise 'on the one side was to grant the right to use the name and to supply oods at a concession price ; and on the other side it was a promise to open the shop and to buy all the stock from the respondent, and provide an outlet for its goods. By the agreement the appellant induced to expend a large sum of money, and so long as he ed in the premises the terms of the agreement to be performed him the agreement could not be terminated. By going into tion and disabling itself from performing its part of the nt, the respondent could not destroy the rights of the appellant. Goodwill resides in a trade name and reputation attached 'a business wherever the trader carried on (Rickerby v. Reay (1) ). Here the respondent itself actually affixed the name to the shop, d thus attached the goodwill to it, and sold for value the benefit hat goodwill to the appellant, and such a bargain was irrevocable while the appellant observed its terms. The appellant's right was 'licence coupled with an interest. It was an authority to do an ct for the benefit of the grantor, and involved obligations on both 8 (Guyot v. Thomson (2); Hurst v. Picture Theatres Ltd. (3); v. Brockwell (4) ). On the facts in this case the respondent permitted the appellant to use its name for nearly three years, and to build up a substantial new business in this locality as his own, and the respondent cannot now assert any exclusive right to the ie entitling it to an injunction. The material facts are practically the same as in Boussod, Valadon & Co. v. Marchant (5). The iness Names Act is directed to the protection of the public, and tes no greater right than existed at commonlaw. The respondent eens 380, at p. 988 (3) (1915) 1 K.B. 1, at p. 7. (2) (1894) 8 Ch. 888, at p. 39° (4) (1807) 8 East 308; 103 E.R. 359. is) (1907) 25 R.P.C, 42. H.C. oF A.wed Nerv v. J. H. Cougs Pry. Lap. 474 HIGH COURT f1931. H.C. or A. ig precluded from complaining under that Act because of having 1931, authorized the appellant to do what he did. NEED v Staite Robert Menzies K.C. (with him Fullagar and Thomson), for the Pry. Lr. respondent. In relation to the business of selling goods there is "property in the name of the respondent and that name is associated with that business, and if there were no other circumstances the respondent could get an injunction. The authority to use the trade name of the plaintiff was a revocable licence, and was properly revoked. The respondent is not disentitled to an injunction by reason of being involved in any misrepresentation to the public. The mere use of the name by the appellant conveyed no false representation to the public. In reality the shop owned by the appellant was under the general control of the respondent, and the appellant had the advantage of the respondent's methods, and this intimate connection with the respondent made the representation substan- tially true, and the appellant's business was, in effect, a branch of the respondent's business. The continuance of the business for a short period after the original agreement was altered involved no misrepresentation to the public (Orange Crush (Australia) Ltd. v. Gartrell (1) ). This case is distinguishable from Boussod, Valadon & Co. v. Marchant (2), as in that case the name was actually part of the building sold. Moreover, the respondent is entitled to an injunction against the further use of its name by virtue of the Business Names Act 1928. Hotchin, in reply. There is no evidence which shows that the shop was to be conducted according to the respondent's methods, or that it was to be under its control. Cur. adv, vult. The following written judgments were delivered :— Ricu J. This is an appeal from the judgment of the Full Court of the Supreme Court of Victoria, which confirmed the grant by Irvine C.J. of an injunction restraining the appellant from carrying on business under the name "J. H. Coles Stores," "J. H. Coles Dec. 23. (1) (1928) 41 C.L.R. 282. (2) (1907) 25 R.P.C. 42, OF AUSTRALIA. siness carried on at High Street, Northcote, is the business of Company or in any manner connected with the Company or its business. Some time in 1928 the respondent Company was on the business of selling goods by retail, the feature of business being that the goods dealt in were goods which could 6 old at fixed prices, apparently ranging from 6d. to 2/6. This was conducted in different parts of Melbourne and the in various shops. In this year the Company entered into ent with the appellant by which it in effect licensed the nt to use in connection with a business to be carried on by appellant at Northcote certain trade names which the Company | been using in connection with its own business. The appellant's ss was of the same type as that of the respondent Company. however, in no sense an agency of the respondent Company it belonged to the appellant and was carried on by him for his benefit. The only connection between the two businesses that under the contract the appellant was obliged to purchase from the respondent Company. Pursuant to the agreement nd the licence which it conferred, the appellant carried on his business used the trade names of the respondent Company to describe it. is no doubt that, prior to the institution of the suit and to the itinuation of the user of the trade names by the appellant which vas complained of in the suit, the licence had come to an end. The estion is whether the circumstances above set out are such as to lisentitle the respondent Company to the injunction to which it is ima facie entitled. Apart from any statutory rights which may erred by trade mark or kindred legislation, the law recognizes tight in any person to prevent another from using a trade name business licenses another to use a trade name of the er to denote a business of the same kind carried on by the r, it is difficult to escape from the conclusion that either the trader is countenancing and encouraging a deceptive use name or else the name thenceforth denotes a particular class u and not the business of a particular trader. If A licenses 1931. NEED J. H. Cougs Pry. Lap. Rich J. H. C. or A. 1931. —) NEED v J. H. Cotes Pry. Lrp. Rich J. HIGH COURT (1931, B to use A's trade name in connection with B's business and B acts on this licence to a substantial extent, A thereby prevents the particular name from in fact identifying a business as being the business of A, and can thenceforth get no protection in respect of it from a Court exercising equitable jurisdiction (Boussod v. Marchant (1); Thorneloe v. Hill (2)). When the names in question in the present appeal were used on the appellant's shop from 1928 to 1931, members of the public who had had dealings with, or otherwise knew of, the existence and identity of the respondent Company, may have supposed that the names indicated that the shop was a branch of the respondent's business ; and members of the public who were ignorant of the respondent Company's existence or identity may have supposed that the names indicated that the shop was the shop of the same particular trader whose trade the names identified. If such suppositions had been well founded, the right of the respondent Company to an injunction would haye been clear. But, if any such suppositions were entertained, the persons who had been led to form them had been misled by the respondent's conduct. In fact, the names since 1928 have not identified the business of any particular trader ; and, in my opinion, apart from the question of registration, the respondent Company is not entitled to an injunction on the basis that they do. There is no other basis on which any right to an injunction could be maintained in the present case. It remains to consider the question of registration. The fact that a name has been registered as a trade mark does not substantially affect the consequences which flow from the granting of a licence by the owner of the mark. It is clearly established by Bowden Wire Ltd. vy. Bowden Brake Co. Ltd. [No. 1] (3) that if the owner of a registered trade mark authorizes a licensee to use the mark upon goods for which it is registered but which are not the goods of the owner of the mark but the goods of the licensee and that licence is acted upon to a substantial extent, the mark is thereby, in — effect, destroyed. It ceases to be distinctive: it is liable to be deregistered, and it will receive no protection from a Court of equity (1) (1907) 25 R.P.C., at p. 53. (3) (1913) 30 R.P.C. 580; (1914) 31 (2) (1894) 1 Ch, 569, at p. 576. R.P.C. 385. C.L.R.] OF AUSTRALIA. ua the goods for which the licence has been given and exercised. eno reason why, in this respect the rights arising out of registra- under the Acts in question in the present case (the Partnership 1915, Part II. and the Business Names Act 1928) should confer n the respondent Company any higher rights than would have been ed by registration under the Trade Marks Act. For these reasons I think the appeal should be allowed. Starke J. This is a curious case, and to me somewhat puzzling. respondent carried on a fancy goods and variety stores business Melbourne and its suburbs. It used in that business its own me and such trade names as "J. H. Coles Stores" and "J. H. es 3d., 6d., 1/- Stores." In 1928 the respondent published an sement offering to fit up and stock a number of country d suburban stores on similar lines to its own. The appellant attracted by the advertisement and after some negotiations set up a business in High Street, Northcote. He owned the and carried it on for his own profit, and was in no sense ant or agent of the respondent. But the respondent arranged supply him with goods which were usually sold in what was n as Coles' Stores, at actual cost price. The terms of the gement were that the appellant should pay to the respondent ive per cent on all his purchases from it and should buy all his goods from the respondent so far as it was able to supply them at es not greater than those at which such goods were procurable here. Before the business was opened there was painted on the p and its verandah in large figures and letters, " 3d., 6d. & 1/- J. Coles Store" and twice on the windows in large letters, "J. H. These inscriptions were made by or under the direction the respondent. The directors of the respondent, who were it on 10th February 1928 at the opening of the shop, necessarily the inscriptions, and raised no objection to them. There was or carried it on. The appellant obtained his supplies | the respondent until October 1928, when difficulties arose in ning supplies from it. These difficulties gradually increased ¢ appellant had to obtain considerable supplies for his business - 'VOL. XLVI, 32 H. C. or A. 1931. we Nexp v. JH. Cones Pry. Lr. Rich J. HIGH COURT {1931. from other sources. But the inscriptions on the shop never changed and no objection was taken on the part of the respondent. Finally the respondent went into liquidation, and its liquidator on 10th December 1930 required the appellant '' immediately " to "remove from his premises the respondent's registered trade name, and sign an undertaking that there will be no infringement thereof in future." The respondent's "registered trade names" refer to names that had been registered under the Partnership Act 1915, Part II., or the Business Names Act of 1927, now consolidated in the Act of 1928. The appellant refused to remove the names or give the undertaking required, and the respondent then brought an action in the Supreme Court of Victoria and obtained judgment restraining the appellant, his servants and agents, from carrying on business under the name "J. H. Coles Stores" or the name "J. H. Coles 3d., 6d. & 1/- Stores" and from affixing the said names or either of them to his premises at Northcote and from otherwise representing to the public that the business carried on at Northcote aforesaid is the business of the respondent or in any way connected with the respondent or its business. It is from this judgment that this appeal has been brought to this Court. On the part of the appellant the argument is that the respondent has permitted him to build up a business in Northcote and acquire a local reputation under the names which he is now restrained from using. No doubt it is quite unimportant that the public should know that the appellant was the owner of the business. It is enough that he has obtained a reputation under the name he uses and has conducted his business accordingly. It is possible that many people who knew of the appellant's business would con- clude, but wrongly, that the appellant's business was a branch of that carried on by the respondent whilst others might conclude, and rightly, that the respondent's goods were handled in the appellant's shop. But there may have been and probably were a good many people who knew nothing of the respondent's business and to whom the appellant's shop was the only "J. H. Coles Stores" or "Coles 3d., 6d. & 1/- Stores" they knew, or were in the habit of dealing with under those names. It is, I think, beyond question that the respondent did allow the appellant 'C.L.R.] OF AUSTRALIA, 479 to use its trade names and to acquire some local reputation ¥- ©. or A. unde those names. The question, however, still remains, what is, roses m proper inferences from the evidence, the arrangement between Nex parties for the use by the appellant of the respondent's trade 5. H Coute The learned Judges of the Supreme Court have held, in P71". ce, that it was a licence revocable at the will of the respon- *t™e J- . Upon consideration, that view appears to me to be correct. trade names were not assigned to the appellant nor does the respondent ever appear to have abandoned them. Further, the right provisions of the Business Names Act 1928, sec. 25. _ Finally it is said that the respondent should not be assisted because was guilty of conduct leading to deception. But the arrangement in its inception was that the respondent's trade names should be used in ection with goods supplied by the respondent, and so far the itfails. As difficulty in supply arose, the names were certainly used in connection with goods supplied by other people. If this be ed.,p. 411. But this does not assist the appellant, for on this hesis he proposes to use the respondent's trade names in a nner that would be a fraud upon the public and without any nee on the part of the respondent. In such circumstances, what- er be the supposed demerits of the respondent, the obvious course prevent that deception on the public in the manner adjudged by Supreme Court. n my opinion, the appeal should be dismissed and the judgment mxon J. For ten years or so, one J. H. Coles conducted a goods and variety store. On Ist March 1927 a company was called "J. H. Coles Proprietary Limited," which is the dent upon this appeal. It took over his business and at the ing of 1928 it is said to have had a warehouse in the city of ne, and two shops, one of them being in Smith Street, ood, and the other in some other suburb. On 3rd January HIGH COURT [1931, H. G. or A. 1928 the Company published in the press the following advertise- 1931. ment :—" J. H. Coles Proprietary Limited, 3d., 6d., 1/- and 2/6 Stores. We are prepared to fit up and stock a limited number of country and suburban stores on similar lines to our own. Particulars from our head office, J. H. Coles Proprietary Limited, 230 Smith Street, Collingwood.'"" The appellant saw the advertisement and interviewed the Company's managing director. An arrangement was made that the appellant should open a shop to be carried on as a store of the kind described in the advertisement, but none of the terms of the arrangement were reduced to writing and some matters which ought to have been foreseen were left undiscussed. So far as the agreement was expressed, we must take the terms to have been these :—The appellant was to secure a shop, taking the lease in his own name ; he was to bear the cost of fitting it up in the style favoured by the Company; he was to buy from the Company a complete stock of goods and afterwards to obtain from it all his supplies. The Company was to paint the shop and fit it up in the style of its own stores with signs "J. H. Coles 3d., 6d. and 1/- Stores" and "J. H. Coles"; it was to provide a stock of goods of the kind usually sold in its stores and afterwards to keep the appellant regularly supplied with such goods according to his requirements ; the price it was to charge the appellant for the stock of goods was to be calculated by adding five per cent to the amount which the goods cost the Company. The business was to be carried on by the appellant as a '"'J. H. Coles 3d., 6d. and 1/- Store." No agreement was made as to the duration of the arrange- ment, unless by implication, and no discussion appears to have taken place as to the time it should last or the conditions in which it should end. A shop was selected in High Street, Northcote ; the appellant obtained a lease of it; alterations were made in it at a cost of £1,300; it was painted and fitted up at a cost of £450, and it was stocked with goods at a cost of £1,500. On 10th February 1928 it was opened for business in the presence of the three persons who constituted the Company's "only personal shareholders," whatever that may mean, and were its directors. A few days before, the Company, under Part II. of the Partnership Act 1915 (Victoria), which deals with the registration of firm names, had registered the }C.L.R.] OF AUSTRALIA. "J. H. Coles Stores" and "J. H. Coles 3d., 6d. and 1/- " as names under which its business was carried on. The ant conducted the shop under the arrangement without hitch about eight months, when he found the Company could not ipply him with goods which he required. The Company's managing 'director then consented to his making purchases occasionally from sources. The quantity of goods bought by the appellant other suppliers increased as time went on; he says because the ability of the Company to maintain supplies grew progressively In August 1929 the Company wrote to him complaining that he was buying from other sources in violation of the agreement y them, and further that he was doing so in the Company's e and upon its credit. The letter threatened an application an injunction, but, nevertheless, the Company went on supplying s to him, and the parties provisionally agreed that it should ge him five per cent on his purchases elsewhere as well as on e goods supplied to him. After a month or so the appellant und this charge objectionable and, early in 1930 it seems, he ed that it should be reduced to two percent. In the meantime the Company found greater difficulty in carrying on and supplying joods. Indeed, according to the appellant, about ninety per cent his orders were unfulfilled. At length, on 13th June 1930, the ompany went into voluntary liquidation. At the time the uidation began, the Company had six shops, four of which it had et up after the arrangement with the appellant was made. _ After the commencement of the liquidation the appellant bought more goods from the Company, which carried on for the purpose of Winding up. He received a letter from the former managing director, 0 was employed by the liquidator for a short time, which, in asked him to continue buying under the old arrangement, it, in writing this letter, the former director seems to have gone yond his authority. The liquidator informed the appellant that Company could not supply him with all his requirements, but t he could buy goods from it as an ordinary purchaser. On nd December 1930 the Company's solicitors wrote requiring him once to discontinue the use of the Company's trade names. H. C. or A. 1931. Nexp v. J. A. Cours Pry. Lev. Dixon J. H. ©, or A. 1931. Ww NEED » J. H. Cotes Pry. Lrp. Dixon J. HIGH COURT (1931, The liquidator has now made a tentative sale of the Company's business, but the buyer refuses to proceed with the transaction unless the appellant and others are prevented from using the names "J. H. Coles " and " J. H. Coles Stores." The liquidator accordingly instituted this suit seeking an injunction. Irvine C.J., who heard a motion, which was treated as the trial of the action, does not appear to have thought it doubtful that, if the arrangement were at an end, the Company was entitled to relief. He considered that no implication could be made in the agreement between the parties of a condition that the authority to use the trade names of the Company should not be withdrawn except upon reasonable notice. Moreover, he was of opinion that the agreement was terminated by mutual consent when the appellant assented to the liquidator's proposal that he should buy as an ordinary purchaser. He therefore restrained the appellant from carrying on business under the names "J. H. Coles Stores," "J. H. Coles 3d., 6d. and 1/- Stores," or from otherwise representing that the business carried on at High Street, Northcote, is the business of the Company, or in any manner connected with the Company, or with its business. This order was affirmed on appeal in the Full Court of Victoria by Mann, Macfarlan and Lowe JJ. Macfarlan J., with whom Mann J. appears to have concurred, thought that the arrangement involved no assignment by the Company of goodwill, but gave a mere licence revocable at will, that no question of reasonable notice arose because the appellant's claim was for a right to use the trade names, that the Company's own positive right to the exclusive use of the names arose not only from their registration, but also from the facts proved as to its previous use of the names, from its shops and from its reputation, and that this right had not been lost by reason of any change taking place in the meaning of the names, or by reason of any acquisition by the appellant under the trade names of a local goodwill of which it would be inequitable to deprive him. Lowe J. also considered that there was no more than a licence to use the trade names, that upon any view of the duration of the agreement, it had upon the facts been terminated and that thereupon the appellant ceased to be entitled to use the Company's trade names. LR.) OF AUSTRALIA. _Lagree with the view that the agreement was brought to an end d that it had ceased before the suit was commenced to confer the appellant a contractual right or licence to the use of the e names. I think that, if the agreement had not already ended, e between the appellant and the Company created a business in which the advantages reciprocally enjoyed and conferred nded on each continuing to carry on his or its trade. The eeper for his profit sold with the help of the Company's trade and methods the goods with which the Company supplied him. remuneration of the Company for the use of its names and for atever other service it gave was obtained from the profitable ly of the goods which the shopkeeper sold. Such an arrange- could not survive the termination of the business existence either party. I do not think that a contractual intention should be imputed to the Company and the appellant to confer upon the ellant a right to the use of the trade names on the termination 'the agreement. The parties did not, I think, consider what was to happen if the agreement was brought to an end, and the Company Jeast meant to do no more than allow its name to be used so long _ But the question remains whether the Company, in the events that have happened, is entitled to relief prohibiting the appellant from ising the trade names or carrying on under the style or in the manner thich he adopted not only with the consent but also at the instiga- of the Company. At the time when the appellant was to set upin heote, the Company had a goodwill connected with its two uburban shops and a warehouse, and it possessed, or so we must sume upon the evidence, some reputation as the proprietor or 'ontroller of the class of cheap store the branches of which are likely to appear in suburb after suburb. The registration of its trade under Part II. of the Partnership Act 1915 did not then hen or increase its right in them, but the Business Names Act came into operation on 11th April 1928, and this enactment, is re-enacted as the Business Names Act 1928, is said to give tutory title to their exclusive use. But, apart from this the Company's right at that time to protection from H.C. or A. 1931. oof Neep " JH. Cours Pry. Dixon J. H. C. or A. 1931. seats NEED v J. H. Cores Pry. Lro. Dixon J. lai HIGH COURT (1931, unauthorized use of the trade names or styles which it employed was clear. It would not matter that the unauthorized use caused no diversion of trade from the Company. If the adoption or imitation of its trade names amounted to an attempt to appropriate any benefit arising from the reputation attaching to them, or was likely to impair or diminish that reputation or any part of the Company's goodwill, the Company would have a prima facie right to an injunction. But when a new shop was established as one of the Company's stores an effect was necessarily produced upon the reputation attaching to the Company's trade names and upon its goodwill. Such a shop would attract public attention and, no doubt, would also form some trade connexion of its own. To its customers and to many others whose interests lay in the locality, the trade names would be primarily a means of identifying that shop and its business, and, if to them the names ever did denote a system of stores, that meaning would become of secondary importance, and, at best, the local branch would be prominent as a component of the system. The opening of the shop at Northcote was calculated to do two things—to create a local business having a goodwill of its own with which the trade names were connected and to enlarge the meaning of the trade names and widen the reputation attaching to them. But there can be no doubt that the appellant was and remains the proprietor of the actual business carried on at the shop at Northcote, and therefore of the goodwill which belongs to it. If the trade names had come to be a description of that business or of its proprietor and nothing more, it is manifest that, whether the parties intended such a consequence or not, the names would no longer form part of the business reputation of the Company and it would have nothing to protect by an injunction restraining their use. But while in the neighbourhood of the appellant's shop the names may in many minds, perhaps, almost: exclusively be associated with the business there carried on, yet, in the vicinity of each of the Company's own six shops, there will be many to whom the names serve to identify that shop, and among the wider public whose information does not depend upon observation confined to one locality, a class which probably includes the greater number of the appellant's customers, the trade descriptions adopted e R.J OF AUSTRALIA. one ownership or control. Independently, therefore, of the Names Act 1928, the Company possesses a trade reputation ection of an injunction restraining any unauthorized use of the _ The liquidator contends further that sec. 25 (1) (a) of the Business mes Act 1928, which forbids the use of a business name identical ith a firm name registered under Part II. of the Partnership Act 1915, or so nearly resembling that name as to be calculated to leceive, operates to give a legally protected interest in the names person registered of a kind which Courts of equity recognize 'and vindicate by means of equitable remedies. I think this conten- tion is correct. The general principles which apply are stated by Farwell J. in Stevens v. Chown and Clark (1), and have been applied in Cooper v. Whittingham (2), Attorney-General v. Ashborne Recreation f d Co. (3) and Carlton Illustrators v. Coleman & Co. (4), and dered in Fraser v. Fear (5) and in Musical Performers' Protection ciation Ltd. v. British International Pictures Ltd. (6). Sec. 25 of the Victorian statute is expressed in the form of a prohibition, it no penalty is provided and no remedy is specified. See. 70 (1) [ the Justices Act 1928 does not appear to apply, and I do not é any statutory provision operates to prescribe a penalty for e to observe the prohibition or to provide how such a failure Ss name registered by a person who has assumed or is about to assume it as the description of his business, and therefore relates a matter of private right. Moreover, the right is of a kind which been fostered and protected by equitable remedies. It is true sec, 25 (1) contains indications that its purpose includes the ition in the general interest of confusion over business names. r example, the exceptions expressed at the end of the paragraphs (b) and (c) are restricted to cases in which the registered firm person relinquishes business. It is also true that equitable ) (1901) 1 Ch, 894, at pp. 904-905, (4) (1911) 1 K.B. 771, at p. 782. (2) (1880) 15 Ch. D. 501. (5) (1912) 107 LT. 423. (1903) 1 Ch. 101 (particularly at (6) (1930) 46 TLR. 485, at p. 488. by the Company signify a system of stores organized or conducted H. ©. or A. 1931. ww NeEp which its trade names attach, and prima facie it is entitled to the y, 4."Corzs Pry. Lrp. Dixon J. H. ©. oF A. 1931. Ww Neep v. JH. Cours Pry. Lrp. Dixon J. HIGH COURT (1931. remedies would not be granted to restrain every violation of the statutory prohibition. Many cases can be imagined where relief would be refused. But these considerations do not displace the application of the doctrine which enables resort to the remedy of injunction to protect an interest arising from a statutory prohibition, at any rate if it is of a class recognized in equity as proprietary in character. It may turn out to be unfortunate that the statute should have this result, because it contains no provisions for ascertaining who, either in justice or law, should become registered and so obtain protection in respect of a trade name, or for dealing with conflicting claims which after registration may arise out of assignments and other dispositions or, in consequence of abandon- ment, attempted severance from goodwill and the like. These difficulties, however, arise out of the intrusion of an arbitrary statutory rule into an elaborate scheme of legal rights and duties, and afford no reason against enforcing the enactment by the remedies the law provides for the purpose. The Company is therefore entitled to an injunction unless there be an affirmative answer to its prima facie right. Do the facts disclose such an answer ? The question is whether the course of conduct pursued by the Company in authorizing the use of its trade names by the appellant disentitles it to relief. It may be said that if the use of its trade names by the appellant is now deceptive, the use of them which it instigated during the currency of the agreement was equally deceptive, and accordingly that the Company now seeks the intervention of equity to stop a course of deception for the commencement of which the Company itself was responsible. In considering this view of the matter, it may be important to notice that what the Company complains of is the use of its registered trade names after the authority given has determined. During the currency of the authority, the disconformity which is said to have existed between the representation made by the use of the names and the true facts consisted in the difference between proprietorship and that relation which really subsisted between the Company and the business in virtue of the arrangement with the appellant as modified from time to time. Now, however, the representation that the business is connected with that of the Company is entirely unfounded. sC.L.R.] OF AUSTRALIA. e real question appears to be whether the Company in the past i | allow a departure from truth which either in itself was enough to ify the Company afterwards from relief, at any rate against ongdoer who was enabled by the transaction to do the thing omplained of, or so contributed to establishing or strengthening he goodwill or reputation to which the trade names attach that protection of an injunction should be denied. The evidence ts that the actual name of the Company was displayed, but in any case it may be assumed that the use of its trade names upon 'appellant's shop was a representation that the business belonged he Company although, perhaps, many who were better informed to commercial methods might regard the names as signifying 'more than that the Company had some connection with the iness by way of superintendence or control. No doubt one ult would be to fasten on the Company the liabilities of the s incurred by the appellant within the apparent authority manager. But the Company did not mean to repudiate debts of the business, and it is the prejudice to customers that matters, assumptions upon which debts might be both incurred and paid. shop was to be supplied with the Company's goods, it was to be ed and arranged according to the style of the Company's stores dit was to be conducted according to the Company's methods. \t the hearing before Irvine C.J., the question does not seem to een raised or investigated whether relief should be refused the ground of deceptive trading, and, for anything we know, the Company may have exercised the closest supervision over the onduct of the business, and the appellant may have been content 0 follow the directions and advice of its officers. At any rate is nothing to show, and no reason to suppose, that in the conduct of the business customers were misled to their prejudice by the supposition that the Company was the proprietor 'the business. When the Company became unable to maintain pply of goods, its connection with the appellant's business bly must have weakened. The divergence between the tation of proprietorship and the facts no doubt became spot ly greater. Yet the course taken in allowing the lant to obtain goods elsewhere probably differed little, if at H.C. of A. 1931. ww Nexp J. H. Cones Pry. Lav. Dixon J. H. C. or A. 1931. we NeEeD v. J. H. Cones Pry. Lrv. Dixon J. HIGH COURT (1931. all, from that which would have been followed in the emergency, if the appellant had been managing the business and sharing in the profits. Further, it must be remembered that the identity of the persons interested in a business and the nature of their interests are usually regarded as of small importance in matters of trade reputation and goodwill. The important matter is the identity of the business and the identification of the trade reputation and the goodwill with the business. I do not think the reputation at present attaching to the Company's trade names or its goodwill can be said to arise directly from a trade conducted by means of misrepresenta- tion. A distinction between cases in which the plaintiff complains of a legal wrong and those in which he seeks protection for equitable property perhaps exists. (See per Isaacs A.C.J., dissenting, in Angelides v. James Stedman Hendersons Sweets Ltd. (1).) It may be that, if the alleged equitable property is composed of any impure ingredients, it will receive no recognition or protection in equity. In this case, however, the appellant proposes to continue the use of the Company's registered trade name in violation of a statutory prohibition intended for the protection of the registered trader. The continued or repeated commission of a legal wrong of such a nature is restrained although collateral representations are made in the course of the trade (Ford v. Foster (2) ). For these reasons I think the Company was entitled to an injunction restraining the appellant from using its trade names as the style of his business. The business is, however, his, and it does not follow that by the use of its trade names in Northcote the Company or its successor in title is at liberty to represent that it is carrying on the same business. The order of the Supreme Court is right, and the appeal should be dismissed with costs. Evatr J. In the Supreme Court of Victoria the respondent Company, J. H. Coles Proprietary Limited (in liquidation), succeeded in obtaining a finding that, in January 1931 the appellant, J. F. Need, was representing to the public that the business he then conducted in a store in High Street, Northcote, was the business of the (1) (1927) 40 C.L.R, 43, at pp. 65-66. (2) (1872) 7 Ch. App. 611, at pp. 625-626 and pp. 632-633. OF AUSTRALIA. dent. An injunction was granted restraining the appellant om —. on business under the name of "J. H. Coles "J. H. Coles 3d., 6d. and 1/- Stores" and from affixing names upon his business premises, and (b) from otherwise iting to the public that the business carried on at Northcote the business of J. H. Coles Proprietary Limited. j. H. Coles Stores" and "J. H. Coles 3d., 6d. and 1/- Stores." respondent Company was also using such names where its own ess or branches were being conducted, and, but for the special to which I shall shortly refer, the respondent Company would ously be entitled to retain its injunction. In 1928 J. H. Coles Proprietary Limited dealt in " fancy goods," on business in a warehouse in the city of Melbourne, and two retail shops elsewhere. In order to find an outlet for ; goods a number of other shops were opened in the suburbs of ne. Goods were supplied by the Company to the proprietors. the business, although not owned by the Company, used its rade name and signs. 'One of these shops was Need's. On January 3rd, 1928, the Company advertised that it was prepared to fit up and stock a limited number of country and suburban stores " on similar lines to uur own." Need saw the manager and it was agreed (1) that Need wild open a shop at Glenferrie and use the name of "J. H. Coles ., 6d. and 1/- Store" as the title of the business ; (2) that the it is ahops, at actual cost price, the Company taking five per cent 0 sion on all purchases ; and (3) that Need would buy all his from the Company so far as it could supply them and at prices more than those at which they were procurable elsewhere. No was fixed for the duration of the agreement. suitable shop could not be found at Glenferrie, so Need arranged the Company's manager to start his business, on the terms d, at 339 High Street, Northcote. Need took a lease of premises, spent £1,750 on fittings and made a £1,500 purchase oods from the Company. February 10th, 1928, was the opening of the business; the Company's directors attended and gave H.C. or A. 1931. ed N - J. H. Cours Pry. Lap. Evatt J. HIGH COURT [1931]. H.C. or A. the new enterprise their blessing. The Company's manager had 1931. himself directed a signwriter usually employed by the Company to affix on the front of the store the very signs and names which ; Need has been restrained from using. From February 1928 until January 1931, when this suit commenced, the Northcote business of Need's retained all the outward appearances of a business which was no more than one of the Company's branches. During this period of three years the actual relationship between the Company and Need's business may shortly be described :— (1) From February 1928 until October 1928, Need purchased all his stock from the Company on the five per cent commission basis, and sold no goods obtained from any other source. (2) After October 1928 Need was unable to obtain regular supplies from the Company, and, with the Company's consent, purchased goods from other places. (8) These outside purchases increased until July 1929, when Need's orders could only be fulfilled to a small extent by the Company, and he was then informed by the manager to "suit himself as to buying outside," to buy what he could from the Company and resume purchasing from the Company later, when it was able to maintain a better stock. (4) In September 1929 the Company arranged that Need would pay five per cent commission to the Company on the goods he purchased outside the Company. This arrangement Need found it difficult to keep up, and a suggestion was made that the commission should be reduced to two per cent. (5) From July 1929 until June 30th, 1930, when the Company went into liquidation, Need continued to obtain extensive supplies of goods from outside sources, and sold these goods in the course of his business. (6) After the liquidation Need continued to purchase from the liquidator and manager such goods as suited him. He continued, however, to purchase goods elsewhere. The manager for the liquidator has stated that he was "not concerned in any way with Need's purchases of goods from other sources."" It may fairly be assumed that in February 1928, when Need commenced to trade in Northcote, those residents of the suburb OF AUSTRALIA. became his customers probably thought that the business was being controlled by the same authority and to the same extent as the Company's own retail shops. But this was not true in t because, from the outset, the business was Need's and not the ny's. yr intimate business relationship between Need's Northcote business and the Company, and that such relationship existed in point of In my opinion the name implied much more. It was quite sible to indicate on the shop that the Company merely supplied goods to Need. The reason why this was not done was that the Company and Need intended the Northcote publie to that the business was merely a branch of the Company. The mpany stood to gain something by this representation. At the least it was a good advertisement, but it probably tended to attract s of the Northcote shop to those retail businesses which Company itself conducted elsewhere under the same names. - What the Northcote public was intended to believe was that the Company owned and controlled the business. Even if Mr. Menzies' contention be accepted, the position which was reached in October 1928, and continued until January 1931, that the Company was by no means the sole source of Need's stock-in-trade. The business relationship between the two became and more distant, until Need obtained only a small part of goods from the Company. But he still used the same trade e and style, with the acquiescence of the Company. 'How can the Company say that, in January 1931, after doing s and allowing Need to do business in this way for nearly years, the trade name and style used at Need's Northcote s were distinctive of its business ? A year earlier, in January edge and consent. What was conveyed by these symbols ? e first possibility is that they denoted that the Company owned d controlled the business. If so, the representation was false, false to the knowledge of the Company. The second possibility they implied that all or substantially all the goods sold by H. C. oF A. 1931. pee Nerp v. J. H. Cougs Pry. Lrp. Evatt J. H.C. or A 1931. a) NEED v. J. H. Cones Pry. Lr. Evatt J. sie HIGH COURT (1931. Need had been purchased from the Company. The Company cannot accept this position without convicting itself of an attempt to mislead the public. The third possibility is that the use of the name and signs merely indicated the particular shop and business carried on at Northcote. If this was what they denoted in January 1930, they also did so a year later, and no one could be deceived by this representation in 1931, because it was true. The fourth possibility is that the use of the name would, in January, 1930, be of no significance at all to many people, but the Company cannot complain in respect of those who in 1931 neither knew nor cared nor were affected by the trade names over the Northcote shop. In my opinion the Company has failed to show that the use by Need in 1931 of the names "J. H. Coles 3d., 6d. and 1/- Stores" and "J. H. Coles Stores" upon his shop at Northcote denoted a business there carried on by it; but I would add that, even if the evidence were sufficient to establish such fact, I would still be of opinion that the Company should not be accorded equitable relief, for its own conduct induced Need to sail under false colours from the outset, and it allowed him to do so for three years. Whether the case is put in that way or by saying that the name and signs used had ceased to be "its" name and signs in relation to the Northcote business, the result is that the Company's suit should have been dismissed. Two other matters should be mentioned. It is quite unnecessary to examine the extent of Need's contractual right to use the names by virtue of the contract made in 1928 between him and the Company. In the Supreme Court there was much discussion on the matter, and in this Court learned counsel for the appellant made the same approach to the matter until he was invited to discuss the broader question. T am also of opinion that sec. 25 of the Business Names Act 1928 does not affect the present case. If Need committed a breach of the prohibition contained in sec. 25, the Company was a direct party to a continuance of such breach over a long period. Even if, under ordinary circumstances, the remedy of an injunction would be granted at the suit of the owner of a registered business name, OF AUSTRALIA. 493, ; the use of such name by another person, this is not a H- ©. oF A. vase in which a Court of equity should intervene. at The appeal should be allowed with costs here and in the Full Neep and the action should be dismissed with costs. J. H. Couns Pry. Lap. "McTiervan J. I am of opinion that the appeal should be ®*#ttJ: d. I have nothing to add to the reasons of my brother Rich ond a reference to Cropper Minerva Machines Co. v. Cropper, & Co. (1), Bile Bean Manufacturing Co. v. Davidson (2) ind to Kerly on Trade Marks, 6th ed., at pp. 486-487. Appeal allowed with costs. Injunction order dissolved. Respondent to pay the costs of the appeal to the Supreme Court. Order of Irvine C.J. discharged, and in View thereof order that action be dismissed with costs. - Solicitors for the appellant, Dillon, Nichols & Starke. Solicitors for the respondent, Home & Wilkinson. H. D. W. (1) (1906) 23 R.P.C, 388, (2) (1906) 23 R.P.C, 725.