Gap (ITM) Inc v Temporary Department Store Pty Ltd [2006] FCA 725 | Case summary

REASONS FOR JUDGMENT 1 By a statement of claim filed on 15 February 2005, the applicants, as the registered proprietors of certain trademarks, alleged that the respondents have infringed, and are continuing to infringe, the marks (hereafter referred to as Gaps' registered trademarks). By a notice of motion filed on 18 April 2006, the applicants seek summary judgment against the second and fourth respondents (hereafter referred to as "the respondents"). The Court has already granted summary judgment against the first and third respondents. 2 The following matters appear from an affidavit sworn on 18 April 2006 by Christopher Jordan, the applicants' solicitor: · The respondents have executed a settlement agreement with the applicants. A copy of the settlement agreement was exhibited to Mr Jordan's affidavit. · The settlement agreement provided that the respondents would make undertakings to the Court. On 27 January 2006, the solicitor for the respondents gave these undertakings on behalf of the respondents. By these undertakings, the second respondent undertook to desist from infringing Gaps' registered trademarks and the fourth respondent undertook not to aid or to abet any such infringement. The respondents also undertook to deliver up to the applicants' solicitors within 30 days all products and promotional material bearing the applicants' marks and to verify the delivery up on affidavit at the time of delivery. The respondents have not delivered any material or provided an affidavit regarding delivery up. · The settlement agreement provided that the respondents will pay the first applicant $60,000 settlement monies in six instalments. Clause 5 of the agreement provided that, if any of these instalments were not paid, the applicants might re-list these proceedings and apply for summary judgment on "the claim for pecuniary relief for so much of the settlement amount … that is outstanding at the date the proceedings are re-listed". Clause 5 also provides that the applicants might provide a copy of the settlement agreement as "conclusive proof" of the consent of the respondents to such summary judgment against the respondents "on the claim and in respect of so much of the settlement amount as is outstanding". Clause 6 provided that the respondents would consent to the first applicant being awarded costs on an indemnity basis plus penalty interest. · The applicants' solicitors received the first two $10,000 instalments. The respondents paid the second instalment two days late. The third instalment was due on 6 March 2006. The respondents did not pay this amount and, as of 18 April 2006, the applicants had received no further settlement monies from the respondents. $40,000 remains owing under the settlement agreement. · On 9 March 2006, the applicants advised the respondents' solicitor that, unless they received payment of the third instalment, they would seek summary judgment, costs and interest. They also sought delivery up pursuant to the undertakings given to the Court on 27 January 2006. 3 In an affidavit of 1 June 2006, Emma Cashen, also the applicants' solicitor, affirmed that, at the time of making her affidavit, the applicants had still not received the third instalment of settlement monies or any other settlement payment. Ms Cashen also stated that her firm had served a copy of the notice of motion and Mr Jordan's affidavit of 18 April 2006 on the respondents by sending them to the respondents' solicitors and had informed the respondents' solicitors that the motion was to be heard on 2 June 2006. 4 The respondents did not appear at the hearing on 2 June 2006. The applicants' solicitors handed up copies of correspondence between them and the respondents' solicitor, Henry Magistrado. It appeared from this that, on 1 June 2006, Mr Magistrado sent a facsimile to the applicants' solicitors that stated:

6 Although Mr Magistrado has informed the applicants that he no longer acts for the respondents, there has been no attempt on his part to comply with O 45 r 7 of the Federal Court Rules 1979 (Cth) ("the Rules"). Accordingly, he remains the respondents' solicitor of record: see O 45 r 8. 7 At the hearing of the motion, the applicants submitted that they were entitled to summary judgment against the second and fourth respondents. They relied principally on the settlement agreement. They referred to s 31A(1)(b) of the Federal Court of Australia Act 1976 (Cth) and to O 20 r 1 of the Rules. However, by virtue of item 44 of Pt 2 of Schedule 1 of the Migration Litigation Reform Act 2005 (Cth), s 31A applies only to proceedings commenced after 1 December 2005. It does not therefore apply in this proceeding, which commenced in February 2005. 8 Order 20 rule 1 of the Rules provides as follows: "(1) Where, in relation to the whole or any part of the applicant's claim for relief, there is evidence of the facts on which the claim or part is based, and: (a) there is evidence given by the applicant or by some responsible person that, in the belief of the person giving the evidence, the respondent has no defence to the claim or part; or (b) the respondent's defence discloses no answer to the applicant's claim or part; the Court may pronounce judgment for the applicant on that claim or part and make such orders as the nature of the case requires. (2) Where the Court pronounces judgment against a party under this rule, and that party claims relief against the party obtaining the judgment, the Court may stay execution on, or other enforcement of, the judgment until determination of the claim by the party against whom the judgment is directed to be entered. (3) The Court in any application under this rule may give such directions, whether for amendment of the pleadings or otherwise, as may be thought fit." 9 Prior to the enactment of s 31A of the Federal Court Act, the standard to be satisfied before summary judgment would be granted was settled law. The authorities made it clear that the jurisdiction to give summary judgment should be exercised with great care and only where the Court was satisfied that the respondent had no arguable defence to the claim made by the applicant: see, e.g., Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129-130; Geoffrey Inc v Luik (1997) 38 IPR 555 at 557 ("Luik"); Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 ("Fancourt") at 99; and Webster v Lampard (1993) 177 CLR 598. Accordingly, the Court should apply these authorities in the disposition of this motion. 10 By its statement of claim the applicants alleged, amongst other things, that the respondents have contravened s 120 of the Trade Mark Act 1995 (Cth). Under this provision a trade mark will be infringed where a mark which is "substantially identical with, or deceptively similar to" a registered trade mark is used in relation to the same goods as the registered goods. The use complained of must be "use by the alleged infringer as a trade mark" and this requires consideration of the "purpose and nature of the impugned use": see Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 426 per Kitto J as cited in Johnson & Johnson Australia Pty Ltd v Sterling Pharmaceuticals Pty Ltd (1991) 30 FCR 326 at 347 per Gummow J. It is clear from pleadings and affidavits previously filed in the proceeding that the respondents' use of the allegedly infringing marks has been for the purposes of trade. 11 Under O 20 r 1 the applicants are required to adduce evidence of such facts as are necessary for their cause of action: see Rourke v Victorian Finance Guarantee and Share Co Ltd (1894) 20 VLR 8 at 11 and Evans Deakin & Co Pty Ltd v Kaiser Engineers and Constructors Inc [1968] Qd R 379 at 382. By their Defence the respondents in fact admitted that the applicants were the owners of Gap's registered marks. There was no issue as to the applicants' or the second respondent's incorporation. Further, the respondents admitted that, at all material times, the fourth respondent was the sole director of the second respondent, acting as its servant or agent, and in effective control of the business of the second respondent. In an affidavit sworn by Mr Jordan on 16 November 2005, he deposed to an arrangement between the first applicant and United Garment (Vietnam) Co Ltd ("UGV"), pursuant to which UGV was authorized to manufacture garments and apply Gap's registered marks only to the garments ordered. Mr Jordan's affidavit contained evidence that UGV had supplied garments bearing Gap's registered marks to the second respondent without the applicants' authority. Further, there was evidence in another affidavit of Mr Jordan sworn on 25 November 2005 that the respondents had imported the garments. Since it is manifestly clear that the respondents have no arguable defence, I accept that the applicants have satisfied the requirement in O 20 r 1 to adduce evidence of the facts necessary for their infringement claim. Ultimately, as the High Court said in Fancourt at 99, whether or not the Court is satisfied that that there is no real question to be tried will depend entirely on the circumstances of the case. 12 In his affidavit of 18 April 2006, Mr Jordan deposed that he believed that the respondents have no defence to the applicants' claim. A further requirement of O 20 r 1 is therefore met. 13 The respondents have not filed any affidavits in opposition or at all in this proceeding. It was common ground at the hearing on 27 January 2006, when the respondents appeared by their solicitor, that they had entered into the settlement agreement (referred to earlier) with the applicants. Their solicitor gave the undertakings (referred to above) on their behalf pursuant to that agreement. By virtue of this agreement, the respondents are estopped from raising their defences to the applicants' infringement claim; alternatively they have waived such rights as they had to rely on those defences: see Commonwealth of Australia v Verwayen (1990) 170 CLR 394 at 407, 410 per Mason CJ, 459 per Dawson J and Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd [1971] AC 850 at 883 per Lord Diplock. Accordingly, it is appropriate that the applicants should have summary judgment. 14 There are, however, some further observations I would make about the applicants' heavy reliance on the settlement deed as justifying the orders they seek. In support of their argument that the deed of settlement alone was sufficient to entitle them to summary judgment, the applicants relied on the decision of Hely J in Reid v Interarch Australia Pty Ltd [2000] FCA 1328 ("Interarch"), a case in which the applicants initially claimed damages for the respondents' allegedly misleading or deceptive advice in connection with the establishment of a business. In that case as in this, the parties compromised the proceedings by entering into a deed of settlement pursuant to which the respondents agreed to pay settlement monies by instalments. As in this case, the deed of settlement in Interarch provided that, if the respondents defaulted in making payments, then they would consent to summary judgment. The respondents failed to pay and the applicant brought a summary judgment application. Hely J considered the question whether the applicants should be required to institute fresh proceedings to enforce the compromise in the settlement agreement. After referring to Phillips v Walsh (1990) 20 NSWLR 206 ("Phillips"), his Honour noted (at [26]-[28]) that, in Interarch, there was only one "short issue of law" advanced on the summary judgment application, that there was no real virtue in fresh proceedings, and that there was "no substantive advantage to be derived from requiring the institution of fresh proceedings". These considerations led his Honour to order summary judgment. Interarch provides some support for the applicants' position in the present case that the deed of settlement alone is enough to entitle them to summary judgment. 15 When Phillips is examined, however, it is apparent that Interarch is of limited assistance. This is because after considering "the authorities which deal with the power of the court to enforce on motion in existing proceedings an agreement compromising those proceedings", McLelland J concluded, in Phillips at 210, that "[t]hese authorities present a confusing picture" and that he did not propose to analyse them since they were not dealt with in argument. He added, again at 210, that: "It is sufficient for present purposes to say that, although there is some arguable support for the proposition (although it is far from clear) that the Court might on motion in the present proceedings enforce a particular term of the agreement between the parties … which came within the ambit of the proceedings as originally constituted, it would not be proper to do so where substantial matters are involved beyond the ambit of the proceedings as originally constituted, or where, in the interests of justice, disposition of the matter on the summary application is inappropriate." His Honour did not grant summary judgment in that case. 16 Plainly enough, notwithstanding that certain comments in Interarch might suggest otherwise, Phillips is not authority for the proposition that the Court can enforce a deed of settlement in existing proceedings although McLelland J does not rule out this possibility in an appropriate case. 17 The order for summary judgment in the present case flows from my view that the requirements of O 20 r 1 are in fact satisfied and that summary judgment is otherwise appropriate. The applicants have succeeded because of the particular terms of the respondents' Defence and because they have in fact placed sufficient evidence of the facts necessary to make out their cause of action before the Court, as well as because there is, manifestly, no arguable defence. This is so notwithstanding that I would reject the respondents' primary argument that the deed of settlement alone was sufficient to justify an order for summary judgment pursuant to O 20 r 1 of the Rules. 18 The applicants' evidence that the respondents have failed to comply with their undertakings is uncontradicted. The applicants are entitled to the orders they seek with regard to the undertakings. 19 Further, in all the circumstances, including the terms of the deed of settlement, I would make the orders for costs in the terms sought by the applicants. 20 As the applicants requested, I would also make orders dealing with the position of the respondents' solicitor. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.

Gap (ITM) Inc v Temporary Department Store Pty Ltd

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