Budget Transport Industries Pty Ltd & Anor v. Giboland Pty Ltd & Ors [1986] FCA 106

Bullock and Others v. Pederated Furnishing Trades Society of Austraiia and Others (1985) 60 ALR 235

BUDGET TRANSPORT INDUSTRIES PTY LTD and BUDGET AIR SERVICES PTY LTD v.GIBOLAND PTY LTD and RODNEY CHARLES JOHNSON

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION

1. The applicants giving the usual undertaking in damages should it prove that this order should not have been made order that

as from Tuesday 25th March 1986 the second respondent by

Liberty to the parties to apply upon 24 hours notice.

The second respondent must pay the applicants' costs of and

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

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION

I have before me an application by the applicants against the second respondent seeking an injunction pursuant to s.80 of the Trade Practices Act 1974. The application is

By Statement of Claim filed on the 19th February last the applicants seek relief against both respondents, the cause of

the action arising out of a licence agreement entered into between

the first applicant (a company associated with the second applicant) whereby the first applicant granted a licence to Rod Johnson Aviation (a business then carcied on by the second respondent). The licence agreement entitled the second respondent (as pleaded in the Statement of Claim) "to enjoy the Budget name and other rights and benefits associated with the national operations of the Budget group of companies described in the licence agreement as the Budget systen for the purposes of the first or alternatively the second respondents' air services operation at Perth and Jandakot airports ("the airports") from lst

The agreement provided that the second respondent (Johnson) would procure a telephone service at the contemplated licenced premises in the name of the first applicant for use in the business the subject of the agreement. Further provisions relate to the maintenance of that telephone service. Clause 21(c) of the agreement required the licencee (which for present purposes embraced Johnson) upon termination of the agreement to "take all steps as may be necessary to transfer to Budget or such persons .as Budget may direct all rights to use, locate or otherwise deal with all telephone services used by the licencee" in the conduct of the business. Clause 21(b) provided that following effective termination of the agreement the second respondent should not "directly or indirectly identify itself in any manner as a Budget licencee or use the Budget System or the Budget names or any of

After the agreement came into aeration a telephone service (09) 277-1399 was duly precurced and it appeared in the telephone directory as Budget Air Services, and Johnson carried on business under that style. The evidence before me indicates the agreement was terminated by consent and for consideration as from 29th November 1985. The first respondent then arranged to discontinue this service but Johnson requested Telecom to defer this action. Some discussions took place on the basis that Johnson would carry on as the second applicant's agent in Western Australia but these apparently came to nought. The second applicant attempted to arrange for the service to be diverted to its toll-free number in Sydney. Johnson intervened and Telecom transferred the service 'itself into the name of Rod Johnson Aviation (Johnson's air charter business). At his request the service, listed in directories as a Budget number, was transferred

to Johnson's present employer Corporate Air Services (W.A.) Pty

Ltd. This company is apparently a stranger to the applicants.

I am satisfied that in February last callers connected to that service were answered by Johnson with the words "Budget Air". He had of course no association with the applicants at that time. Johnson, in his affidavit, agrees he did answer in this manner, on legal advice, but he deposes he no longer does go. He currently advises callers that Red Johnson Aviation is no longer associated with the Budget Group of Companies in any way and he is prepared to undertake to provide any caller who desires it with the Sydney telephone number of the Applicants. It is against this very bare bones background that the applicants seek orders restraining Johnson by himself and his servants and his

" (21) by the use of the telephone service from representing in any mannec whatsoever:

(A) that he is the proprietor of or otherwise has some right title or interest in the Budget name;

(B) that he is duly licensed to trade under the Budget name;

(C) that he has a sponsorship approval or affiliation with the applicants or either of then;

(ii) from passing off and continuing to pass off or attempting to pass off his business as the business of the first and second applicants or either of then.

At this stage the defence and/or cross-claim have not been filed. The evidentiary material before me is limited to the affidavits filed. Counsels' submissions indicate there may he substantial issues as to the agreement, its operations and events following termination. Be that as it may, the agreement and its terms and the termination agreement are proved. It is contended by Johnson that the agreement was, or should have been, varied but it does not appear that terms relevant to present considerations

The applicants claim that by continued use of the Budget telephone Johnson is in breach of s.52 of the Trade Practices Act

1974 as he thereby engages in conduct likely to mislead callers to the service and that he thereby represents sponsorship, approval or affiliation with Budget that ceased with the termination of the licence agreement contrary to the provisions of s.53(d) which as telephone services are involved extends to the second respondent

The afiidavit of Peter Miliard, the applicant's State Operations Manager, includes an undertaking as to damages. Johnson's concern is that if the service is now altered he will lose the benefits of associations and business contacts he built up by his own efforts during the operation of the licence agreement. But the position is complicated by reason of the fact that callers now contact his present employer by the Budget telephone. But I take the view that the applicant's contention that Johnson's continuing use of the telephone is likely to mislead the public, or some of them, to conclude there is an association with Budget as established. His explanation to callers may clarify the matter but it is probable that the perpetuation of the service in his hands will operate to the disadvantage of the applicants. In the background one cannot ignore what, at this stage, appear to be plain contractual obligations imposed by the agreement and its consensual determination. The law governing considerations to be applied in applications of this nature now appears well settled, namely that I must determine whether there is a serious question to be tried, and assuming that can be determined affirmatively, considerations relating to the balance of convenience arise. (Epitoma v. A.M.I.E.U. and Others (1984) 54 ALR 730; Bullock and Others v.

Federated Furnishing Trades Society of Australia and Others (1985)

60 ALR 235.) In the latter case Woodward J. briefly summarises the authorities at P.240.

Iam satisfied that there is indeed a serious question

to be tried. Continuation of the present situation is likely to

lead to confusion and the agplicants may well suffer loss of damages of a type not easily capable of evaluation or assessment

In so far as the balance of convenience is concerned, this is not a case in which the applicants seek to gain an advantage by the transfer of the telephone service in a manner which will divert all calls to their offices. It simply seeks an order that the position be neutralised by cessation of the use of the telephone service by Johnson. I must say, looking at the matter objectively that it is necessary that the situation and the business interests of the parties in so far as the telephone service is concerned, must be disentangled. This can simply be done by appropriate application to Telecom and the likelihood of disadvantage to Johnson does not appear great. The solution suggested by his counsel that he would undertake to place a recorded answering service on the service which would direct callers to Budget or to his own business interests has something to commend it, but the fact remains that Budget customers or intended customers ringing Budget's telephone number as shown in the directory will have their calls filtered by the answering service in a manner which may well have the effect of directing prospective Budget customers to a local air charter company. That is so even assuming Budget is involved in brokerage as opposed to direct air charter. It is probable competitive elements are still

I am persuaded that the balance of convenience dictates

injunctive relief to put anend to the use of the telephone

ond sespondent, Steps can then be taken by the parties to obtain independsnt telephone services. This will, on this aspect at any rate, put an end to representations which from the date of the order may be finally interpreted as being in breach of the Act. The respondent has the protection of the applicants' undertaking in damages should it prove the order should not have been made andas I have said I take note of the fact that Budget itself does not seek to use that particular service. It should not be difficult for Johnson (or his employer) if they wish to do so to circularise or otherwise inform established customers of the change of the telephone service number. And it must be born in mind that at present new customers who ring the number are likely to be persons ringing the number by reason of the Budget association shown in the telephone directory... The affidavit of Mr Millard deposes to the fact that the Budget group has acquired a substantial reputation in the transport industry for many years and I have no reason to doubt that. To assist Johnson to make necessary arrangements necessitated by my order, I will suspend its operation for ten

The applicants giving the usual undertaking in damages should it prove that this order should not have been made order that as from Tuesday 25th March 1986 the second respondent by himself, his servants and employees be restrained from using telephone service number (09)

Johngon''s present employer Corporate Air Services (W.A.) Pty Ltd is not a party to these proceedings. One would hope that the company will understand that the considerations leading to the relief granted are likely to apply to it under the Trade Practices Act in so far

I will leave the parties, by their counsel, to confer inan endeavour to agree a sensible method by which Johnson may use the telephone number until 25th March next. It will have to be on a basis which includes no representations as to sponsorship approval or affiliation with the Budget group. There will he

liberty to the parties to apply upon 24 hours notice.

I certify that this and the seven preceding pages are a true copy of the Reasons for Decision herein of his Honour Mr Justice Muirhead.