Aspar Autobarn Co-Op Society Ltd & Ors v. Dovala Pty Ltd & Ors [1986] FCA 348

Kettles and Gas Appliances Ltd. v. Anthony Horden and Sons Ltd. (1934) 35 S.R. (N.S.W.) 108

Tec and Thomas (Aust.) Pty. Ltd. v. Matsumiya Computer Co. Pty. Ltd. (1984) 53 A.L.R. 167

State of Queensland v. Australian Telecommunications Commission \1985) 59 A.L.R. 243

Fletcher Challenge Ltd. v. Fletcher Challenge Pty. Ltd. C1981] 1 N.S.W.L.R. 196

ASPAR AUTOBARN CO-OPERATIVE SOCIETY LIMITED AND ORS. v. DOVALA PIY. LTD. AND ORS.

IN THE FEDERAL COURT OF AUSTRALTA ) VICTORIA DISTRICT REGISTRY + NO. VG295 of 1986 GENERAL DIVISTON J

BETWEEN: ASPAR AUTOBARN CO-OPERATIVE SOCIETY LIMITED AND ORS.

JUDGE MAKING ORDER: Jenkinson J. DATE OF ORDER: 13 August, 1986 WHERE MADE: Melbourne

Upon each applicant by his or its counsel undertaking to the Court that he or it will pay to any party adversely affected by any of the orders numbered 1 and 2 such compensation (if any) as the Court thinks just, in such manner as the Court directs and that in the event that the claims for relief specified in Paragraph 4(b) of the originating application herein be ultimately refused in this proceeding he or it will pay all costs incurred by the respondent Dovala Pty. Ltd. in or in connection with the change of name hereinafter ordered to be effected And upon the applicant Aspar Autobarn Co-operative Society Ltd. by its counsel undertaking that it will forthwith apply for registration of the name "Autobarn" under the Business Names Act 1962 of the State of Victoria and that in the event that the claims aforesaid be ultimately refused in this proceeding it will at its own cost do all such acts and things and execute all such documents as may be necessary or desirable to be done or executed in order to enable the respondent Dovala Pty. Ltd. to assume once more its registered business name "Auto Barn"

1. Each of the respondents Dovala Pty. Ltd., Victor Demeris, Preben Hundahl and Donald Morris be restrained until the determination of the proceeding or further

order from using 1n any way in the course of or in connection with business or trade the name "Auto Barn"

or any other name which is substanlially identical with or deceptively similar to the name "Autobarn".

The respondent Dovala Pty. Ltd. lodge forthwith with the Commissioner for Corporate Affairs of the said State a statement of the kind which 1s ordained by Section 12(3) of the Business Names Act 1962 of the said State and in the form prescribed notifying the said Commissioner that it has ceased to carry on business in the said State under the business name "Auto Barn".

The applications for interlocutory relief as against the respondent Patchsell Pty. Ltd. be dismissed.

Each party's costs of the applicants' applications for interlocutory relief be reserved.

Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA ) VICTORIA DISTRICT REGISTRY » NO. VG295 of 1986 GENERAL DIVISION )

BETWEEN: ASPAR AUTOBARN CO-GFERATIVE SOCIETY LIMITED AND ORS.

CORAM: Jenkinson J. PLACE: Melbourne DATE: 13 August, 1986

There are in Melbourne some shops which sell motor vehicle accessories, some motor vehicle spare parts, and little else. The applicants, other than the first-named applicant, and the respondents are concerned in the conduct of shops or that kind. The shop keepers with which the respondents are associated are members of a company called Victorian Auto Accessories Group Pty. Ltd., which acts on behalf of its members to secure che financial advantages which purchasing of stock, and advertising, on behalf of all the members attracts. The members signify their membership by display of the trade mark "Auto Group". In the middle of 1985 unhappy differences led to the withdrawal or

expulsion of some members. Some of them joined with other motor

vehicle accessories shop keepers to form the first-named applicant under the Co-operation Act 1958 (Vic.) on 15 July 1385. The other

applicants are most of the firms and companies on behalf of which membership of the first-named applicant is held by natural persons. The objectives of the association which finds juristic expression in the first-named applicant are similar to those which animate the association which has for its trade name the expression "Auto Group". On 27 August 1985 the members of the first-named applicant resolved to use the word "Autobarn" as a trade name by which to designate their association and on 30 August 1385 that word was inserted into the Tirst-named applicant's name. But on 27 August 1985 the applicants' solicitors learnt that the name "Autobarn" could not be registered under the Business Names Act 1562 (Vic.) because the name "Braddy s Auto Barn" was registered in respect of an automotive repair business in West Geelong. Accordingly the name "Aspar Autobarn" was on that date registered as the first-named applicant's business name. It was the single word "Autobarn", however, which the other applicants and the first-named applicant on their behalf used as the trade name by which to advertise to the public their new association in trade. Although each member of that association continued to trade and to advertise under its own name or its own business name, each also gave prominence on its premises and in other advertising to the word "Autobarn". The get-up of the word was uniform-among the applicants : contiguous, coloured, parallel lines (green on yellow) below the word or at each end of the word, a capital letter ""O" in the middle of the word and a lower case "a" at the beginning. During September and

October 1985 many of the applicants painted the word in that

get-up on their shops and in late October and November they joined

in advertising 1n which the word and the get-up were prominent..

It was expected that on 4 October 1585 the registration of the name "Braddy's Auto Barn" might expire and TI infer that che extensive, and expensive, use of the word "Autobarn" by the applicants in September and October 19385 was thought to be justified by their expectation of securing registration of the word without association with the word "Aspar" after the lapse of a month after 4 October 1985, which 5.11(4) of the Business Names Act 1962 required the Commissioner for Corporate Affairs to allow before accepting the word for registration. When on 7 November 1985 the applicants' solicitor sought to apply for registration of the word "Autobarn", he found that registration of the word, in the form "Auto Barn", had been granted to the respondent Victor

The three natural persons who are respondents are directors of the first-named respondent and the respondent Victor Demeris is a director of the fifth-named respondent. The respondent Dovala Pty. Ltd. has since 30 November 1985 conducted a motor vehicle accessories shop at 155 Malop Street Geelong. The right to use the name "Auto Barn" was transferred by Mr. Demeris to Dovala Pty. Ltd. on 31 October 1985 and it is under that name that the business which Dovala Pty. Ltd. conducts at 155 Malop Street has been carried on. The word appears on the front panel of a door giving access to the shop from Malop Street, but that was not put on the door until May or June 1986. Within the shop a

sign about 8 feet wide and about 1 foot high has been displayed in

an elevated position since Dovala Pty. Ltd. commenced trading on

30 November 1985. On the sign is printed in letters about 6 inches high the word "Autobarn", as a single word and in letters of which only the first is a capital. The trade name "Auto Barn" is used to designate the proprietor of the shop on credit card documents. No advertising, except as has been already indicated, of the Geelong shop or its wares or the business conducted in it has been associated in any way with the word Autobarn or the words "Ruto Barn". The latter circumstance was explained in evidence as a consequence of the use of the trade mark "Auto Group" by the members of Victorian Auto Accessories Group Pty. Ltd., of whom Dovala Pty. Ltd. is one. There was evidence that members are subject to contractual restrictions on the use of a trade mark or

There was evidence, which Dr. Jessup of counsei for ~ the applicants did not submit that I should not accept for the purposes of these interlocutory proceedings, that the name "Auto Barn" was first suggested on 15 September 1985 to the minds of the directors of Dovala Pty. Ltd. as a possible business name for the shop they projected opening in Geelong, by a Geelong resident to whose mind the name suggested itself because it has been in use in Geelong in the phrase ""Braddy''s Auto Barn". Mr. Demeris deposed that he had heard a rumour, a few days before 23 October 1985, that "the proposed new business of the Applicants might adopt the name 'Autobarn'". But 1t was to secure the right to use the name, not to secure the means of preventing others from using it, that Mr. Demeris sought registration, the evidence

The fifth-named respondent conducts a motor vehicle accessories shop at 1 High Street Preston, where the mark "Auto Group" 1s prominently displayed. In about May or June 1986 there

was placed on the glass front door of the shop the following sign:

"Dovala Pty. Ltd. T/A Auto Barn Registered Office 1 High St. Preston"

Neither the word "Autobarn" nor the expression "Auto Barn" has been otherwise associated with any premises with which a respondent is connected, except the shop at 155 Malop Street

Each applicant other than the first-named applicant claims to have acquired, and now to enjoy, a reputation and a goodwill of substantial value under and by reference to the name "Autobarn", as being associated with the others in supplying motor vehicle accessories and spare parts. They claim that the use of the word by the first-named respondent in connection with its

supply of similar chattels at its shop in Geelong constitutes a

breach of 5.52 of the Trade Practices Act 1974 and of s.53(c) and

s.53(d) of that Act, in that use of the word is conduct likely to mislead consumers into the mistaken beliefs that the chattels sold in that shop have the sponsorship and approval of the applicants and that the first-named respondent has that sponsorship and approval. There has been, the applicants claim, a passing off by the first-named applicant of its business at Geelong as associated

with the businesses of the applicants under the trade name

"Rutobarn". Upon that ground the applicants claim interlocutory protection of their reputation and goodwill by injunction toa restrain use of the word ""Autobarn" and the expression "Auto Barn" by any of the respondents until the hearing and determination of

The applicant shopkeepers who formed the first-named applicant did not put into formal effect the trading practices which their combination made possible until the beginning of November 1985, but they had committed themselves to expensive and flaunting advertising of the word "Autobarn" in a quite distinctive get-up during a period of about two months before their reasonable expectation that use of the word would be lawful in and after November 1985 was disappointed on or about 7 November i$55. The reputation and goodwill the applicants assert undoubtedly gained most of the value now sought to be protected by injunction after the latter date, when the applicants who traded under the name "Autobarn" knew, as I would infer, that they were thereby contravening the provisions of s.5 of the Business Names Act 1962 (Vic.), which make it an offence to carry on business under a business name which is neither registered under that Act nor consists of the name of each of those who are carrying on business in association. But the evidence shows that that reputation and that goodwill had come into existence shortly before November 1985, and certainly before 7 November 1985. It was not until the end of that month that any of the respondents used the word in trade or commerce. By that time the use of the word in connection with the retail sale in Victoria of motor

vehicle accessories by a person not associated with the applicants

was, the evidence shows as a strong prima facie case, likely to mislead consumers into a mistaken belief that such an association did exist. But 1t 15 a question whether the applicants, in trading under the name ""Autobarn" after 7 November 1985, as they have done and still are doing, have not disentitled themselves to equitable relief: whether "the right relied on, and which the Court of equity is asked to protect or assist, is itself to some extent brought anto existence ...... By ...... illegal or unconscionable conduct of the plaintiff, so that protection for what he claims involves protection for his own wrong" (per Isaacs

Jd. in Meyers v. Casey (1913) 17 C.L.R. 90 at 124).

As has been observed, the right relied on - the reputation and goodwill associated with the word "Autobarn" - did not owe its existence cto any deliberate illegality : it came into existence before 7 November 1983 when the applicants could

reasonably have believed their use of the word to be, if

technically in breach of s.5 of the Business Names Act 1962, a use

virtually certain to be legitimated by registration under that Act

early in November 1985. It is the accretion in value of the right, not its existence, which has been achieved in contravention

The distinction, which was observed in Ford v. Foster

(1892) L.R.7 Ch. 611 at 625-626, 630-633, between a plaintiff who Might maintain an action for a legal remedy and sought injunctive relief in lieu of a succession of such actions, and a plaintiff

with no claim to any but an equitable remedy, was maintained by

Long Innes J. in Kettles and Gas Appliances Ltd. v. Anthony

Hordern and Sons Ltd. (1934) 35 S.R. (N.S.W.) 108 at 128-129. The former plaintiff might claim equitable relief, although guilty

himself of misrepresentation, unless his trade itself were fraudulent or there were a false representation in his trade mark. It may be doubtful whether such a distinction ought to ha Maintained in relation to claimants for the exercise of such a discretionary power as 5.80(2) of the Trade Practices Act 1974 confers on this court. But, if the distinction were maintained, the applicants who are shop keepers in the vicinity of Melbourne may be regarded as having shown an arguable case for the remedy in

The applicants' contraventions of s.5 of the Business Names Act 1962 caused no detriment which the evidence disclosed to the responcents, or to the public, except the detriment wuicn 'taé commission of a criminal offence necessarily causes the community. Dr. Jessup submitted that the offence was palliated by circumstances, of which evidence was adduced, which followed the applicants' solicitor's discovery that registration of the word "Auto Barn" had been granted to Mr. Demeris. It was submitted by that solicitor to the Commissioner for Corporate Affairs that he ought not to have accepted Mr. Demeris's application for registration, as it appears he did, before the expiration of one month after the expiry of the registration of the name "Braddy's Auto Barn". There were other grounds on which the solicitor based a submission advanced by him to the Commissioner that the Commissioner should take steps to cancel the registration he had

granted to Mr. Demeris. These submissions were promptly advanced

in a letter dated 8 November 1985. The Commissioner notified his

refusal to take any of the steps suggested by letter dated 3 February 1986. By letter dated 14 February 1986 he was requested by the applicant's solicitor to furnish, pursuant to s.8 of the Administrative Law Act 1978 (Vic.), a statement of his reasons for his decision not to cancel the registration he had granted to Mr. Demeris, and requested also to require Dovala Pty. Ltd. by notice under s.19(1)(b) of the Business Names Act 1962 to satisfy him that Dovala Pty. Ltd. was carrying on business under its registered name. It was not until July 1986 that the Commissioner's responses to those requests were communicated to the applicants' solicitor. This proceeding commenced on 18 July

Dr. Jessup relied also on the course of communications between the garties' solicitors from November 1985 uncil che commencement of this proceeding and on the ignorance under which the applicants laboured until May 1986 of any use in trade by a respondent of the registered name, hoth as mitigating the gravity of the breach of s.5 of the Business Names Act 1962 which the applicants were committing and as rebutting any suggestion of unreasonable delay on the part of the applicants in seeking curial protection of their rights. It was not until the word "Auto Barn" appeared on the door of 155 Malop Street Geelong and on the door at 1 High Preston that the applicants learnt that the word was being used by Dovala Pty. Ltd. in connection with its business. And the applicants' solicitors had from 8 November 1985 maintained in a continuing correspondence with the respondents' solicitors their clients' assertions that the applicants' business activities

in August, September, October and November 1985 had created a

substantial goodwill in the name ""Autobarn", in respect of which

those clients had in August and September 19385 lodged applications

under the Trade Marks Act 1955 (C'wlith), and that, unless the

respondents abstained from use of the name and took steps to have

the registration under the Business Names Act 1962 cancelled,

legal proceedings would be instituted against the respondents. The respondents' solicitors maintained in that correspondence their clients' assertions that the applicants should withdraw the applications under the Trade Marks Act 1955 and should cease to use the name. There are indications in the correspondence that each side was inclined to await the outcome of the representations and assertions each was making to the Commissioner for Corporate

Affairs before undertaking the hazards and expense of litigation.

iiy comciusion is that the reputation and goodwili ivf the protection of which the applicants seek the court's exercise of its injunctive power do not owe their existence, aithough substantial enhancement of their value is owed, to deliberate

contravention of s.5 of the Business Names Act 1962 by the

applicants; and that in all the circumstances of this particular case the evil consequences of those contraventions are not of a kind or gravity which would constitute a substantial impediment to

Business Names Act 1962 does not afford, in itself, the

respondents an answer toa claim that the use of the word has constituted a breach of 5.52, or s.53(c) or s.53(d) of the Trade

Practices Act 1974 : Tec & Tomas (Aust) Pty. Ltd. v. Matsumiya

Computer Co. Fty. Ltd. (1984) 53 A.L.R. 167 at 176 and cases there

cited. A serious question to be tried is shown by the applicants, as I think, and the question 1s which way the balance of

One may be permitted, I should think, to doubt that any very substantial loss of custom is likely to be caused any of the applicants pending the determination of this proceeding in consequence of the respondents' present use of the words "Auto Barn" and of the word ""Autobarn" in connection with the conduct of the business carried on by Dovala Pty. Ltd.. They would be few, I should think, who would during that period notice the signs at 155 Malop Street Geelong which include that word or those words and infer that the business being there conducted was associated with the other businesscs which used the word as a trade name or marx and be induced by that consideration to buy at 155 Malop Street instead of travelling abroad and, perchance, buying at one of the applicants' shops. The fears which the applicants entertained, when this proceeding commenced, that the respondents were about to advertise in the Yellow Pages Directory and in another business directory under the registered name have been dispelled during the hearing of this application by the respondents' offers or undertakings not to do so until after the determination of the proceeding. No other kind of damage can be plausibly suggested as likely to be caused to the applicants pending trial, except the damage they would suffer by abstaining, if they did abstain, from themselves using the registered name in contravention of s.5 of the Business Names Act 1962. Great expense would be caused by

taking measures to obliterate the word from the prominent

positions in which it is displayed in and on applicants' shops. There would almost certainly be other costs and losses,

It was submitted by Dr. Jessup that I should determine the application for interlocutory injunctive relief on the assumption that the applicants will not in future contravene that section, although there was no evidence that any applicant intended to observe the provisions of the section, nor any offer of an undertaking by an applicant that that law would be observed.

In those circumstances I do not consider that I should make any

Although the damage flowing from loss of custom caused by the misleading eiiccs on consumers minds of the respondents' use of the registered name at 155 Malop Street Geelong is not likely, as I think, to be substantial, it is damage which it would be almost impossible to quantify in proof, and in that sense damage which is irreparable. And, in addition, the applicants must, if the interlocutory relief they seek be refused, either incur heavy expense in obliterating the name under which they trade or risk the penal consequences of their contraventions of

The damage which Dovala Pty. Ltd. might sustain by loss of custom in consequence of the absence of the registered name from the consciousness of consumers who frequent the shop at 155 Malop Street Geelong is not likely to be substantial, but that

damage, also, would be very difficult to quantify. But the cost

of taking down or covering up the signs at the shop which display the registered name, and of restoring those signs after judgment for the respondents in this proceeding, is both small and capable of precise proof. Capable of precise proof, also, would be the costs and expenses of procuring for credit card purposes a name

other than "Auto Barn" and of restoring the latter name to use.

This is, as I think, a strong case for the applicants, whose prospects of success at trial are very good. And I think the balance of convenience also inclines in favour of the applicants. I think that the respondents, other than Patchsell Pty. Ltd., should be restrained from using the registered name in trade or commerce until the determination of the proceeding. It was not shown that Patchsell Pty. Ltd. had been party to putting the registered name on the front door of the shop at 1 High Street

Preston, or that that respondent had otherwise acted ina way which would justify the grant of any relief against it of the kind the applicants claim. The application against that respondent

The provisions of the Business Names Act 1962, particularly ss. 12(3), 13, 18 and 19, are such that cancellation of the registration of the name "Auto Barn" could be expected to follow cessation of use of the name by Dovala Pty. Ltd.. Certainly the scheme of that Act is such that only those who carry on business in Victoria under a name should retain registration of the name. But the steps to be taken to achieve cancellation might take some months. Dr. Jessup submitted that an order should be

made commanding Dovala Pty. Ltd. to execute an assignment to the

first-named applicant of all its right title and interest to and in the business name "Auto Barn", and commanding it to lodge forthwith a statement of the kind contemplated by s.12(3) of the

Business Names Act 1962, that 1t had ceased to carry on business

It will be observed that each of the orders suggested by Dr. Jessup is a mandatory interlocutory injunction. But the considerations which ordinarily govern the exercise of the power

to make such mandatory orders (as to which see State of Queensland

v. Australian Telecommunications Commission (1985) 59 A.L.R. 243

and Spry : Equitable Remedies (3rd ead.) pp. 503~528) do not in my

opinion have unqualified application to the second of the orders suggested, which is properly to be regarded as merely ancillary to the substantial interlocutory relief which is to be granted. Obedience by Dovala Pty. Ltd. to the order restraining its use of the name will have for a consequence the imposition on that

respondent, by s.12(3) of the Business Names Act 1962, of the

obligation to do within one month after it has ceased to carry on business in Victoria under the name, or within such further time as the Commissioner allows, what it 1s suggested that I should order that respondent to do forthwith. The suggestion is simply that I hasten by mandatory order the taking of one of the steps necessary to enable the applicants to render their use of the word ""Autobarn" lawful by gaining registration of the word under the State Act. In those circumstances the restrictions which ordinarily hedge about the grant of a mandatory interlocutory injunction may, I think, be accorded less weight. The second of

the two orders suggested by Dr. Jessup should in my opinion be

granted, upon appropriate undertakings by the applicants, of the kind which were taken by Powell J. in Fletcher Challenge Ltd. v. Fletcher Challenge Pty. Ltd. C19811 1 N.S.W.L.R. 196 at 207-208, for the protection of Dovala Pty. Ltd. against any difficulty in regaining registration, if that result be found to be just at the trial of the proceeding. The other order suggested ought not in my opinion to be made. No applicant has shown any right to the use of the expression "Auto Barn" (as distinct from the single word "Autobarn") or to the use of either of the two separate words "Auto" and "Barn" in the registered name. In any event, ro justification of such an order - compelling a respondent to divest itself of its property in favour of an applicant by an interlocutory order - has been shown, in my opinion.

Tic oreers disposing of the applicants' claims Zocor interlocutory relief will be made upon each applicant giving the usual undertaking as to damages, and undertaking that in the event that the claims for relief specified in paragraph 4(b) of the originating application herein be ultimately refused in this proceeding he will pay all costs incurred by the respondent Dovala Pty. Ltd. in or in connection with the change of name hereinafter ordered to be effected; and upon the first~-named applicant undertaking that it will forthwith apply for registration of the name ""Autobarn" under the Business Names Act 1962 of the State of Victoria and that in the event that the claims aforesaid be ultimately refused in this proceeding it will at its own cost do all such acts and things and execute all such documents as may be necessary or desirable to be done or executed in order to enable

the respondent Dovala Pty. Ltd. to assume once more its registered

business name. The orders will be, first, that each of the first,

second, third and fourth-named respondents be restrained until the

determination of the proceeding or further order from using in any way in the course of or in connection with business or trade the name "Auto Barn" or any other name which is substantially identical with or deceptively similar to the name "Autobarn"; second, that the respondent Dovala Pty. Ltd. lodge forthwith with the Commissioner for Corporate Affairs of the said State a statement of the kind which is ordained by Section 12(3) of the Business Names Act 1962 of the said State and in the form prescribed notifying the said Commissioner that it has ceased to carry on business in the said State under the business name "Auto Barn"; third, that the applications for interlocutory relief as against the fifth-named respondent be dismissed; and, fourth that each party s cuSsts of the applicants' applications 'ior