Ashton Manufacturing Pty Ltd v Express Sign Labs Pty Ltd

REASONS FOR JUDGMENT 1 Ashton Manufacturing (trading as Expression Coffins) and Express Sign Labs (trading as Lifestyle Coffins) are both involved in enterprises concerning the wrapping of coffins. Ashton Manufacturing is the prospective applicant for preliminary discovery against Express Sign Labs under Division 7.3 of the Federal Court Rules 2011 (Cth). Ashton Manufacturing also seeks substantial interlocutory relief against Express Sign Labs. Ashton Manufacturing's prospective claims include assertions of misleading or deceptive conduct by Express Sign Labs contrary to s 18 of the Australian Consumer Law and false representations under s 29(1) of the Australian Consumer Law. 2 The interlocutory application by Ashton Manufacturing was initially wide ranging. It included orders sought to restrain Express Sign Labs from continuing to make representations as follows: (1) "We are supplying wrapped coffins to funeral homes nationally and for this reason our competitor Ashton Manufacturing (Expression Coffins) have been trying to close us down by initiating a patent which has been unsuccessful." (2) "We have been wrapping coffins now since 2010 and we have the process perfected." (3) "We have never missed a deadline or had a complaint." (4) "We also get AFL Approval for Club themed wraps." (5) "The 'Lifestyle' coffin range are the highest quality MDF wrapped coffins you can source in Australia." 3 After a directions hearing, conferral between the parties, and undertakings offered by Express Sign Labs, the issues narrowed almost to vanishing point. There are now only two interlocutory issues remaining in dispute for this hearing: (1) whether the prospective respondent, Express Sign Labs, should be restrained from continuing to make the following two representations: (a) "We have been wrapping coffins since 2010"; and (b) "We also get AFL approval for Club themed wraps"; and (2) the order for costs that should be made. 4 Express Sign Labs provided affidavit evidence asserting that the representation 1(a) is a matter of historical fact and that representation (1)(b) is "factual". Express Sign Labs submitted that it would "be prejudiced if it was unable to advise its customers that it obtains AFL approval for Club themed wraps, or how long it has been wrapping coffins for". 5 Perhaps due to the urgency of this application, Ashton Manufacturing did not provide any evidence at this interlocutory stage from which I could conclude that there is a prima facie case that these statements involve misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law or that they are false representations under s 29(1) of the Australian Consumer Law. 6 Ashton Manufacturing initially accepted in correspondence with Express Sign Labs that the two representations need not be the subject of an interlocutory injunction provided that Ashton Manufacturing was given evidence from Express Sign Labs concerning: (1) invoices from 2010 proving that Express Sign Labs had been billing customers since 2010; and (2) a letter (even redacted if necessary) showing that Express Sign Labs had AFL approval for Club themed wraps. 7 As to the issue of approval, Express Sign Labs provided Ashton Manufacturing with an email which counsel for Ashton Manufacturing said displayed curiosities including that the approval appeared to have been given 30 minutes before it was requested. He said that no explanation was provided for this curiosity. 8 As to the production of invoices, only invoices from 2012 were provided. 9 The allegations by Ashton Manufacturing concerning misleading or deceptive conduct or falsity of representations may ultimately prove to be correct. But to accept these assertions of falsity without any evidence, even for the purposes of an interlocutory application, would reverse the onus of proof concerning whether a prima facie issue arises. 10 Ashton Manufacturing also claimed that the other potential representations, which Express Sign Labs will not make (pending trial), "infect" the two remaining representations. Even if this could somehow create a prima facie case, I do not accept that the making of the two representations in issue are matters that cannot be severed from the other representations. Indeed, Ashton Manufacturing has implicitly accepted that the two representations can be severed by its preparedness to remove them from its interlocutory claim if it had been shown some evidence that they were true. 11 Even if there were a prima facie case, on the currently limited evidence before the court that case would not be strong. Considered in that light, the balance of convenience would not favour any interlocutory injunction. In that context, Ashton Manufacturing's evidence as to why damages would be inadequate if these representations were to continue is outweighed by the inconvenience to Express Sign Labs if it were restrained from conducting its business, and making continuing representations to existing and future customers. 12 In Mr Kerr's affidavit he says that that Ashton Manufacturing is likely to suffer "irreparable damage to its commercial operations and goodwill". Mr Kerr says that the representations may confuse potential customers as to the quality and character of the products and services provided by the Express Sign Labs, the validity of the innovation patent, and the affiliation of Express Sign Labs with the AFL. 13 I accept that in relation to the two representations in issue loss would be difficult to assess (in particular loss of future custom based upon these representations). In a case like this, like cases involving restraint of trade, there can be some inadequacy in damages because of (i) the difficulties in establishing causation between any loss of business with customers and any actions of a respondent, and (ii) the difficulty of the calculation of the quantum of any damage arising from loss of business: Huhtamaki Australia Ltd v Botha [2004] NSWSC 386 [17] (Hamilton J). 14 These concerns about assessing damages should not be overstated. There are many cases where proof of quantum of damages can be difficult, and cases involving claims for loss of a chance of obtaining, or retaining, customers often involve these assessments. 15 Overall, even if I had been satisfied that there was a prima facie case, the weakness of any prima facie case would mean that the difficulty of assessment of possible loss would not be sufficient to restrain Express Sign Labs from making the two representations it seeks to make as part of its continuing business. Of course, if Express Sign Labs continues to make these two representations then it will do so in circumstances in which it is aware that the truth of the representations is contested. 16 As to costs, the parties agreed that in light of these reasons, delivered orally, the appropriate order was that costs should be reserved. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.