Phillip Morris Inc & Phillip Morris Ltd v Adam P. Brown Male Fashions Pty Ltd [1980] FCA 101

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG No. 14 of 1980 GENERAL DIVISION

PHILIP MORRIS INCORPORATED Appellants and PHILIP MORRIS LIMITED (Plaintiffs) and

(Defendant) ORDER JUDGES MAKING ORDER: C. A. SWEENEY, NORTHROP & FISHER JJ. DATE OF ORDER: 15 JULY 1980 WHERE MADE: MELBOURNE

THE COURT ORDERS THAT:

1. The judgment and order appealed from be set aside and in lieu

thereof it be ordered that the respondent's motion be dismissed.

2. The stay of proceedings granted on 28 April 1980 in respect of the order appealed from cease to operate upon the

prorouncement of the judgment of the Court on this appeal.

3. The respondent pay the appellants' costs of the respondent's

PHILIP MORRIS INCORPORATED AND PHILIP MOFPIS LIVITED

(Defendant) CORAM: C -A. SWEENEY, NORTHROP _& FISHER Jd. IS July 1980 :

The history of this matter 1s set out in detail in the reasons for judgment of Northrop, J. which I have had the advantage of reading. The plaintiffs unstituted an action seeking damages, injunctions and othcr relief in respect of alleged breaches of s.5? of the Trade Practices Act. and of allegations of passina off. They 1ssuec a summons for interlocutory injunctions restraining the defendent, until the hearing and determination of the action or further order, trom engaging in any of the conduct comulained of in their statement of claim. This summons care on for hearing before a single judye of this court on 11 Sapterber 1979. On the fitth day of the hearing, before tne case for the pieintiffs had been completed, senior counsel for the defenaant in open court offered to give an undertaking on hehalf ef his client in the terms of paragraph A(i) cof the summons. Senior counsel for the plaintiffs replied that they would prefer an

injunction but would accept such an undertaking and give a

Marlboro trade mark upon or in relation to cigarettes or clothing could be given by way of affidavit. Subsequently, the trial of the action by consent was fixed to commence on 5 May 1980.

By notice dated 2 April 1980 the defendant gave notice that on 10 April 1980, being the Thursday after Easter, the defendant would move -

"1. That the undertaking given by the abovenamed defendant to the Honourable Mr. Justice Keely on the 17th September 1979 be varied by the addition to the defendant's undertaking of the following proviso

'BROVIDED ALWAYS that for the purposes of the conduct of a professional market and/or public opinion survey to be carried out in aid of the defence to the plaintiffs' claims herein the defendant may offer for sale and sell in Australia items of apparel or other goods under or bearing or in relation to representations of the Marlboro red cigarette packet including the Marlboro label trade mark either or both of the red rooftop design and the trade mark 'Marlboro' and the trade name 'The Marlboro Company' variously referred to in the Statement of Claim

herein or any one or more of them or any other mark or mark (sic) deceptively similar to them or any of them.!

2. Such further or other orders as to the Court may seem fit."

The proviso set out is hereinafter referred to as "the proviso",

To support the motion the defendant relied upon affidavit Material to the effect that a market research company engaged by the defendant to prepare evidence for the hearing had advised that 1t was essential to the defence of the defendant that the market survey work be carried out with respect to the actual display and sale of the wearing apparel at retail outlets. The legal advisers of the defendant accepted that advice and considered it was essential for the proper defence of the action that the undertaking already given be varied to allow the conduct described in the proviso. The motion came on for hearing before the Federal Court constituted by the judge who in November 1979 had given the directions in the action. The plaintiffs and the defendant were each represented

by junior counsel. Counsel for the defendant made his submissions

in support of the motion. Counsel for the plaintiffs then submitted that -

1. The court does not have jurisdiction to vary an undertaking.

2. The court does not have jurisdiction to vary an undertaking in the terms sought by the defendant,

3. Although the court may entertain an application by the defendant for a release from an undertaking, it should only get that relief in limited circumstances which do not include the circumstances relied upon by the defendant.

4, The court ought not to vary an undertaking in the terms sought by the defendant.

The second, third and fourth submissions were said to be predicated on the assumption that the court does have jurisdiction to vary an undertaking which jurisdiction was expressly denied.

In support of his first submission, counsel relied upon Cutler v. Wandsworth Stadium, Ltd. [1945] 1 All E.R. 103. In that

case on an application for an interlocutory injunction, the

defendant gave an undertaking to the court in the following terms -

"The defendants, Wandsworth Stadium Ltd., and their agents and servants undertaking to admit the plaintiff to the Wandsworth Stadium until trial of the action or until further order."

Subsequently in other proceedings a Court of Appeal held, that having regard to the Betting and Lotteries Act 1934, an interlocutory

injunction in similar form to the undertaking was too wide and dissolved the injunction which had been granted. Wandsworth Stadium, Ltd. applied to the court to have the undertaking which it had

given, varied. The judge at first instance refused the application and the Court of Appeal dismissed an appeal from that order. In dismissing the appeal Morton L.J. at p.105 said -

why the litigant should be released from the undertaking which he has given. The undertaking

in this case was given until the trial of the action or further order and an order of the court was, of course, necessary before the giver of the undertaking could be released. Litigants are not ordered to give these undertakings; they choose to give them, and

an application to have an undertaking already given varied is wholly wrong in form. For that reason alone, the decision of Cassels, J., was, 1n my judgment, perfectly right. But I may add this,

that even if we were to treat the application as being in substance an application for a release from the undertaking coupled with the offer of a different undertaking, it seems to me that such an application ought to have been supported by evidence. It is not enough merely to rely on the fact of effluxion of time since the delivery of the statement of claim, nor is it enough to rely on the fact that the Court of Appeal in another action has taken the view that the injunction granted was granted in too wide terms. I do not see that these are matters which should be brought to the attention of the court, but, in my view, that would not be enough. No doubt the defendants are in an unfortunate position at the moment, and Saying as I do that, in my view, this appeal should be dismissed, I do not desire in any way to prejudice any application which the defendants may think fit

to make for a release from their undertaking on some future occasion."

In reply, counsel for the defendant stated that if 1t needed to be done, he would seek leave to amend the motion by seeking an order that the defendant be released from the undertaking already given upon terms that a fresh undertaking in the same terms be given, but subject to the proviso. Counsel for the plaintiffs did not seek an adjournment of the hearing to argue against the motion in the amended form. He was not offered, nor did he seek, leave to make submissions opposing the application to amend the motion or to make submissions opposing the motion in its amended

form. At the conclusion of the reply by counsel for the defendant, the Court said -

"It seems to me that in the circumstances in which this undertaking was given and having regard to the terms of the order in which 1t was incorporated, that the court remain in control of the continuance or otherwise of the undertaking which was given.

The question then 1s whether there is evidence before me which would justify the court at this stage

taking a different view of what 1S necessary for the proper protection of the plaintiff in the light of the litigation which 1s in train. The Plaintiff 1s entitled to such protection as 1s reasonable upon the balance of convenience; 1t being remembered that the issues between

the parties upon which any order at all is justified have not been decided.

in the position of the defendant should be enabled to take reasonable steps to obtain for itself such evidence as 1t thinks is necessary for 1ts protection at the trial and to get the very best class of evidence for its own protection, provided that having regard again to the balance of convenience, by so doing it is not likely

to do Jamage to the plaintiff out of all proportion to the benefits to be obtained by obtaining the best evidence and evidence obtained in circumstances which will best display the reaction of the members of the public whose reactions it is understood are important in the issues in this case.

I have to remember that although Mr. Gillard pressed on me that considerable damage might be done to

the plaintiffs' goodwill, there 1s no evidence to that effect. There 1s no affidavit which indicates to me the class of injury to goodwill which 1s likely to follow from the class of conduct which 1s foreshadowed in the affidavit of Mr. Lew.

Looking at the matter for myself, again with such knowledge as I have from the previous proceedings and the notorious fact that the plaintiff 1s a very well established organization, unlikely to suffer severely in its goodwill by three or four weeks activity in selling the defendant's goods in the manner which 1s indicated in the affidavit, I think on the balance of convenience that I should vary the undertaking and, if necessary, do so by permitting an amendment of the motion to seek a release of the undertaking and take a new undertaking in the form of the old undertaking as varied.

The variation will be a very limited variation, inasmuch as it will not go past 5 May. If the trial does not come on, 1f 1t 1s desired to Go more after that date, some other proceeding will have to be taken to seek sanction therefor. I think therefore

"that the order I should make should permit the amendment of the motion as indicated; that I should release the defendant from the existing undertaking, on the defendant giving an undertaking in the same terms, subject, however, to the proviso which 1s set out in the motion; that the proviso will operate only until 5 May.

I do not think that 1t is desirable that I should impose conditions upon the defendant pursuant to which the plaintiff should be anformed of the time and place of the surveys which are contemplated and invited to be present. The feeling I have is that each party should be free to gather its own information. This is not a survey ordered by the court. It 1s peculiarly a party effort to collect evidence. I do not think I have anything further to say. Do either of you want to add anything?"

Following further submissions, the court on 15 April 1980 made the order under appeal. The order recited that upon the defendant by 1ts counsel giving the undertaking subject to the proviso, all of whach was set out in full, the court ordered -

"1. The Defendant have leave to amend its Notice of Motion herein dated the 3rd April, 1980, by adding a claim in which it seeks an order that 1t be released from the undertaking given by it to the Honourable Mr. Justice Keely herein on the 17th September, 1979, upon terms that 1t give the undertaking to the Court hereinbefore set out in this Order.

2. The Defendant be released and discharged from the undertaking given on its behalf herein to the Honourable Mr. Justice Keely on the 17th September, 1979.

3. The costs of this application be costs in cause.

4. The parties herein have liberty to apply for any variation or release of the above undertakings upon such terms as to the Court may seem fit.

6. The Plaintiffs' application for formal release of 1ts undertaking contained in

" the Order of the Honourable Mr. Justice Keely made the 17th day of September, 1979, be adjourned to a date to be fixed."

The court refused to grant a stay of the order pending the hearing and determination of an appeal from that order.

The plaintiffs appéal from the whole of the order made on 15 April 1980. Under s,24 Federal Court of Australia Act the appeal is as of right. The order appealed from is an inter-

locutory order made in the exercise of a discretion conferred upon a judge. The principles to be applied by the Full Court which hears an appeal from an order of that kind are stated in Brambles Holdings 'Ltd. v. The Trade Practices Commission (1980)

28 A.L.R. 191, and I refer to the cases cited and opinions expressed by Bowen C.J. at p.193 and Northrop J. at pp.195-6. In brief, before the Full Court can substitute 1ts own discretionary judgment in place of the one already pronounced, 1t must be established

that the discretion of the trial judge mzscarried in one way or another. It is proposed to consider the matters raised on this appeal and apply the principles stated in those authorities.

Since the trial of the action had been fixed to commence on 5 May 1980, as a matter of urgency the hearing of the appeal commenced on 28 April. When the appeal came on for hearing, counsel for the defendant announced that since 15 April 1980, notice under s.78B Judiciary Act 1903, as amended, had been given to the Attorneys~General for the Commonwealth and for Victoria, since the action raised an issue of whether the Federal Court had jurisdiction to hear and determine the claim insofar as the plaintiffs relied upon the tort of passing off, but the Full Court proceeded to hear the appeal pursuant to the exercise of the discretion conferred by s.78B(5). During 28 April, it became obvious that the hearing of the appeal could not be concluded on that day. The defendant was engaging 1n conduct permitted by the proviso. On 28 April the Full Court ordered that all further proceedings on the judgment and order of the Federal Court made on 15 April 1980 be stayed until further order. At the same tame the court was aware that if the appeal failed the defendant ought to be given adequate time before

the hearing of the action in which to obtain material in the manner

When the hearing of the appeal resumed on Monday, 5 May, the parties announced that the commencement of the hearing of the action had been adjourned to a date to be fixed, and that the Attorney-General for Victoria had given notice that pursuant to s.40 Judiciary Act he proposed to apply to the High Court for an order that the plaintiffs' claim based on the tort of passing off, be removed into the High Court. Until such an order is made, the Federal Court has jurisdiction to continue to hear and determine all aspects of the appeal.

Before the Full Court, the defendant conceded that the Court had no jurisdiction to vary the undertaking given by the defendant in September 1979, Cutler v. Wandsworth Stadium, Ltd.,

supra. The parties argued the appeal on the basis that the defendant had sought an order that upon giving to the Court an undertaking containing the proviso, 1t be released from the undertaking it had given on 17 September 1979. The basis of the application was

that in the opinion of its legal advisers and an expert witness,

the defendant would need evidence of the kind contemplated in

the proviso in order to properly present its defence to the action. Counsel for the defendant contended that if they so desired, the plaintiffs could renew their application for an interlocutory injunction and in those proceedings the court would be free to determine whether to grant the injunction in full or subject to

the proviso. It was contended further that the plaintiffs had

not elected to adopt this course and so the only issue to be

decided was whether, on the balance of convenience, justice demanded that the defendant be permitted to prepare its defence in accordance

In my opinion the appeal should be allowed for the reasons about to be given. The plaintiffs have established that the discretion of the trial judge miscarried. The application before him was treated as one of extreme urgency, the date for the commencement of the hearing of the action having been fixed for 5 May 1980, and 1f the application succeeded the defendant needed adequate time in which to conduct the survey. Initially, the

application was for a variation of the undertaking already given

by the defendant. It was only after the plaintiffs had presented

a complete answer to that application that leave was given to amend the application. As a result, and in the absence of submissions

by counsel for the plaintiffs, the learned trial judge did not have the benefit of hearing submissions on the principles to be applied when considering whether a party should be released from an undertaking freely entered into. As a further result, the learned trial judge did not take into account the material relevant to the proper exercise of his discretion. He based his discretion solely on the balance of convenience, and did not give any, or any sufficient, weight to whether the defendant, in giving the first undertaking, acted in mistake or in error, or for any other reason

ought to be released from its undertaking. It follows that the Full Court now should exercise its own discretion on the application of the defendant.

In form, the defendant 1s seeking a release from and the discharge of the undertaking previously given and the giving of a new undertaking, but in truth the defendant is seeking a variation of the undertaking previously given. This can be illustrated. An undertaking of the type given by the defendant is normally offered by a defendant in lieu of an interlocutory injunction being sought by a plaintiff. In the present case the defendant offered the under- taking in lieu of the injunction being sought. The condition precedent to an undertaking of this kind being offered is an application by a plaintiff for an interlocutory injunction and normally the undertaking 1s given to the court in the proceedings constituted by the application for the interlocutory injunction. Indeed, it would be most unusual for a defendant, in the absence of an application for an interlocutory injunction by the plaintiff, to make an application to the court to offer an undertaking not to engage in certain conduct pending the hearing of an action. Yet this is precisely what the defendant did here. It sought an order to be released from an undertaking previously given. On the basis of that release, 1t then sought to give an undertaking. There was then before the court no application by the plaintiffs in which they were seeking an interlocutory injunction. In fact, before the Full Court, counsel for the defendant contended that the Court

should not look at or consider the material relied upon by the plaintiffs when they were seeking their interlocutory injunction in September 1979. Counsel for the defendant contended further that the plaintiffs were free to renew their application for an interlocutory injunction, but that in the meantime the defendant should be released from the undertaking previously given which undertaking had been discharged. The order under appeal must be treated as an order varying the undertaking previously given. In the absence of consent by the plaintiffs, the court should not by order vary an undertaking of this type, an undertaking which was freely given to the Court in proceedings in which the plaintiffs were seeking an interlocutory injunction. I agree with the

opinions expressed in Cutler v. Wandsworth Stadium Ltd., supra,

and would apply that decision to the facts of this case.

The Court has power to release a defendant from an undertaking freely given to the Court, but in order to obtain a release a defendant must prove that the undertaking was given under a mistake or in error. The position is clearly stated in

Harvey v. Croydon Union Rural Sanitary Authority (1884) 26 Ch.D. 249. In that case -

"An action was brought against a local board to restrain them from pulling down certain houses of

by consent without opening the case to the Court. Before the order had been passed, the Defendants formally withdrew their consent, and the Registrar thereupon declined to pass the order without the direction of the Court. The Plaintiff moved that

order. The Defendants alleged that their instructions to consent had been given under a misapprehension, but did not enter into any evidence in support of that allegation."

The Court of Appeal held that where counsel by the authority of his client consents to an order, the client cannot arbitrarily withdraw that consent. Cotton L.J. pp.255-6 said =-

"There being, however, no authority which is binding on us to the contrary, we must decide according to what we think the right course, and it must be understood henceforth to be the rule that a consent given by the authority of the client cannot be arbitrarily withdrawn. Probably in the state of the authorities Mr. Justice Pearson could not do other- wise than he did, but the Court of Appeal 1s ina different position, and the authorities are not in such a state as to prevent our laying down what we consider to be the right rule, and which is in accordance with the practice established in the Queen's Bench Division."

"I asked -Lord Justice Cotton to give judgment first in this case, because it turns on the practice in the Chancery Division, with which I am not familiar. In the Queen's Bench Division this case would not have been arguable, it being quite settled there that a consent given by counsel with authority and with full knowledge of the facts is binding and cannot be withdrawn. I agree with the Lord Justice Cotton that this is the right rule, both in the interest of counsel and of those who employ them."

See also Mullins v. Howell (1879) 11 Ch.D. 763 and Cutler v.

In the present case, counsel for the defendant does not claim that the undertaking given to the Court in September 1979 was given under a mistake or in error. In my opinion the fact that the defendant, for the purpose of preparing its defence, now desires to engage in conduct that might contravene that undertaking does not constitute a sufficient ground to release it from that undertaking. The undertaking was given after there had been a substantial hearing of the plaintiffs' application for an inter- locutory injunction. The plaintiffs had not completed their case when counsel for the defendant made the offer of the undertaking in the precise form of the interlocutory injunction being sought. The defendant is seeking a release from that undertaking to enable it to engage in conduct which, if the plaintiffs' claims are correct, would constitute a contravention of the Act and would constitute the tort of passing off. Such a course cannot be justified on

the evidence relied upon by the defendant. It follows, therefore,

that there are no grounds for releasing the defendant from that undertaking or for discharging that undertaking. The application for release from the undertaking must be refused. In these circumstances it is neither necessary nor desirable to express any opinion on the other matters raised before the Full Court.

ON_APPEAL FROM THE HONOURABLE MR. JUSTICE SMITHERS A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

PHILLIP MORRIS INCORPORATED and PHILLIP MORRIS LIMITED

CORAM: C.A. Sweeney, Northrop and Fisher JJ. REASONS FOR JUDGMENT

FISHER J.: This is an appeal against an order of Smithers J. ("the trial judge") made on 15 April 1980 whereby he discharged an under- taking given to the court by Adam P. Brown Male Fashions Pty. Ltd. ("the respondent") and accepted in lieu thereof the same undertaking with the addition of a proviso. This proviso in effect permitted the respondent to perform for a limited period, for the purpose

of conducting a market survey, acts which otherwise would have

been in breach of the terms of the original undertaking.

This latter undertaking was given to the court in the following

this action or until further order the pefendant will not by itself its servants or agents or otherwise howsoever manufacture distribute offer for sale supply or sell or cause to be manufactured distributed offered for sale supplied or solid in Australia any items of apparel or other goods under or bearing or in relation to representations of the Marlboro Red cigarette packet including the Marlboro label trade mark either or both of the red roof-top design and the trade mark "Marlboro" and the trade name "The Marlboro Company" variously referred to in the Statement of Claim herein or any

one or more of them or any other name or mark deceptively similar to them or any of them."

By the order of the trial judge this undertaking was discharged and replaced by a new undertaking which incorporated

the original undertaking but with the following proviso added there- to:

"Provided Always that for the purposes of the conduct of a professional market and/or public opinion survey to be carried out in aid of the defence to the Plaintiffs' claims herein the defendant may offer for sale in Australia at any one time not more than 240 units of the apparel and goods hereinbefore described and sell in Australia in total not more than 120 units of the apparel or goods hereinbefore described under or bearing or in relation to the representations of the Marlboro red cigarette packet 2ncluding the Marl»soro label trademark either or both of the red rooftop design and the trade mark "Marlboro" and the trade name "The Marlboro Company" variously referred to in the Statement of Claim herein or any one or more of them or any other name or mark deceptively similar to them or any of them until the

5th May 1980, or if the trial of the action herein is adjourned untilthe adjourned date for the trial of the

action herein (but not being a date later than the 3lst May 1980)."

The circumstances in which the abovementioned application and order were made may be shortly stated. On 6 June 1979 Philip Morris Incorporated and Philip Morris Limited ("the appellants") anitlated proceedings by writ of summons with statement of claim annexed out of the Victoria District Registry

ef this court. On the same day they also issued a summons

seeking interim or interlocutory injunctions which summons was returnable on 9 July 1979. The allegations in the statement of claim were, inter al1a, that the first named appellant was the registered proprietor of three Australian registered Trade Marks, two in respect of cigarettes being Marlboro and Marlboro label

and the other in respect of men and boys clothing, being Marlborough and device. The second named appellant was the licensed user of the first two marks and carried on business under the trade name

The statemefht of claim went on to allege that the respondent had for some time in the course of its business and without approval of either appellant attached to certain items of clothing tapes, labels and badges bearing marks identical or deceptively Similar to the said trade marks which apparel so marked was selling in Australia. The appellants' proceedings alleged contraventions of s.52 and s.53 of the Trade Practices Act 1974 and passing off associated with such contraventions. Relief in

the nature of but not confined to damages and injunctions was sought.

The appellants' summons claiming interlocutory relief until determination of the action or further notice came on for hearing before Keely J. on 11 September 1979. Both the appellants and

the respondent tendered affidavits.and oral evidence was taken.

On the fifth day of the hearing (17 September 1979) the respondent offered certain undertakings to the court. There were conflicting contentions before us as to the circumstances 21n which and the reasons for which such undertakings were offered at that

stage in the hearing. I do not see it as desirable or proper

that I should go carefully through the transcript of the hearing before Keely J. to attempt to construe the recorded statements for the purpose of attempting to determine such circumstances or reasons. The crucial fact was that upon the abovementioned undertaking to the court being offered by the respondent and the appellants offering the usual undertaking as to damaces, that judge made certain orders and the hearing terminated. The order incorporating the undertakings which was drawn up and entered

by the appellants' solicitors is not in the form of a consent order.

This order recited the abovementioned undertaking by the respondent to the court pending determination of the action or further order, which undertaking was virtually in terms of sub- paragraph 1(i) of the interlocutory summons. No undertaking was offered in terms of sub-paragraphs (11) to (v) of paragraph 1 of the summons or any other paragraph. The order recited tha fact that the second appellant gave the usual undertaking as to damages. The precise terms of the order were as follows:

2. That the costs of all parties of and incidental to this application shall be costs in the cause.

3. That each party hereto shall have liberty to apply generally and further herein as it may be advised.

4. That the defendant's Summons for Directions dated the 10th September 1979 be adjourned sine die with liberty

to either party to bring the same on upon 48 hours prior notice to the other party."

It 1S common ground that the summons for directions referred to 1n paragraph 4 of the order was a summons seeking un effect

This summons for directions came on before the trial judge on 12 November 1979, the upshot of which was that his Honour made an order granting leave to each party to place before the court hearing the action affidavit evidence as to the state of mind of members of the public in relation to the use of the Marlboro trade marks but subject to and reserving all just exceptions to the admissibility of such evidence other than the form thereof. Neither party objected to the tentative approval that this order appeared to give to survey evidence and each appeared to contemplate making use of the same but reserving the right to object other

than on the scoré that the evidence was in affidavit form.

On 10 April 1980 the application the order upon which 1s the subject of this appeal came before the trial judge. By notice of motion dated 2 April 1980 (being the Wednesday prior to Good Friday) the respondent sought an order that its undertaking to Keely J. be varied by adding thereto a proviso substantially in the form abovementioned. This application was supported by an affidavit of Harry Lew, a partner in the firm of solicitors advising the respondent. In it the following matters which I set out shortly and seriatim were deposed to: (a) In November 1979 the respondent engaged a market research company with a view to gathering evidence on the opinion, impression or state of mind of the public in respect of the use of the Marlboro trade marks. (b) This company recommended that the survey be conducted by displaying and offering for sale clothing in manner similar to other merchandise. (c) In early March 1980 the deponent asked the appellants

for consent to the arranging of a display and offering for sale of the clothing.

(d) The appellants in the first instance refused to give the consent requested notwithstanding the fact that the respondent offered to produce for the appellants' approval the relevant garments and placards and to keep an account of any sales. Ultimately they offered a narrow consent.

(e) The respondent's counsel had advised that it was of essential importance to its defence that the market survey recommended by the market research company be carried out properly and comprehensively, otherwise

1t was counsel's advice that the respondent would be greatly ampeded in its defence.

Upon the hearing before the trial judge, counsel for the respondent acknowledged the giving of the undertaking to Keely J. but submitted that a situation had arisen which had not been envisaged. Attention was drawn to the fact that the undertaking was given until determination of the proceedings or further

By its notice of motion the respondent sought an order varying the terms of the undertaking. However 1t was generally accepted that in seeking to "vary" the undertaking the notice of motion was defective and 1t appears not to have been disputed that the proper application was for the discharge of the undertaking conditional upon the giving of a substituted undertaking containing the proviso. There is no evidence that counsel for the appellants opposed the making of the amendment and he did not make what might be seen as an understandable request for an adjournment. The intervening days between the service of the notice of motion and the commencement of the hearing had, it appears, been taken up

It was conceded by counsel for the respondent that 1f the trial

judge was inclined to accede to the respondent's request notwith-

standing opposition from the appellants, their remedy was to proceed with the adjourned application for interim orders on the ground that the new undertaking did not adequately protect their

At the end of the day the trial judge granted the respondent's application but at the request of the appellants inserted certain limitations into the undertaking offered. He gave short oral

I would on two grounds dismiss this appeal against the decision of the trial judge. In the first instance I am of the opinion that as he was exercising his discretion in a matter of practice or procedure, this court should be reluctant to intervene. It should only interfere if 1t 1S satisfied that the trial judge was clearly wrong and that the appellant has suffered an injustice. In my view neither of these two criteria has been established. But I am furthermore of the opinion that the trial judge's exercise of his discretion has not miscarried and there is much to be said in

The contentions of the appelliantswere in essence that the trial judge had no jurisdiction to discharge the undertaking previously given and accept a new undertaking (which procedure I shall hereafter call the "variation" of the undertaking). In any event it was said that he should not have "imposed" the new undertaking on the appellants, particularly 1n circumstances where the prior undertaking had, in the words of their counsel, resolved the matter once and for all by a method which in effect amounted

to a compromise. These latter submissions fall for consideration

on the question whether the exercise of discretion has miscarried.

The principle that an appellate court ought only for "grave er powerful reason" (Bank of Montreal v Robertson (1892) 31 N.B.R.

(Can)653 at 659 cited by Hardie A.J. 1n De Mestre v A.D. Hunter Pty

Limited infra @ 147) interfere with a judge's discretion exercised in a matter of practice or procedure has been reiterated on a number of occasions. Such interference requires, as Hardie A.J. said when delivering the reasons for judgment of the Full Court

of the Supreme Court of New South Wales in De Mestre v A.D. Hunter Pty. Limited (1960) 77 N.S.W. W.N. 143 at p.146, that "a clear

case has been made out that he has acted on some wrong principle or has made an order which works a substantial injustice to one of

the parties". The Full Court was there dealing with an appeal against an anterlocutory order granting an injunction, which order Hardie A.J. was satisfied was a matter of practice and procedure. He cited McHarg v Universal Stock Exchange Ltd fi895] 2 9Q.B. 81

in which case Charles J. at page 82 said of the summons for an interlocutory injunction that it was "simply a step in the cause, a part of the machinery by which the action was to be worked out

to its final determination. I am quite unable to see why such a summons should not be a matter of practice and procedure",

Wright J., the other member of the court, was of the same opinion.

In Minister for Army v Parbury Henty & Co Pty. Ltd. (1945) 70 C.L.R. 459 at p.489 Latham C.J. identified matters of practice or

"In Poyser v Minors Lush L.J. said that the term 'practice' denoted the mode of proceeding to enforce a right as distinguished from the law which gives or defines the right, and that he took 'practice' and 'procedure', as

applied to that subject, to be convertible terms. Practice ian the common or ordinary sense of the word denotes 'the rules that make or guide the cursus curiae, and regulate the proceedings in a cause within the walls or limits

of the Court itself - Attorney General v Sillem per Lord Westbury."

Procedure; "...comprehends ail steps necessary to be taken in litigation for the establishment of a right in order that the right may be judicially recognised and declared in such manner as will enable the party asserting the right legally to enjoy it; 1t covers not only the acts of the judges of the court but also the acts of the officers of

the court which are necessary to give effect to judicial pronouncements,"

These comments on matters of practice and procedure and the

nature of an interlocutory injunction are, 1n my opinion, at least

equally applicable to the acceptance, variation or discharge by the court of undertakings offered to the court, and the adjournment of

The reason for the reluctance of an appellate court to interfere with discretionary powers in matters of practice or procedure was discussed by the Full Court of the Supreme Court

ef New South Wales in re The Will of Gilbert (1941) 46 S.R. (N.S.W.)

318. Jordan C.J. at page 323 said: "... there is a material difference between an exeirciso of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, 1f a taght rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigous disposition could at will in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal. But an appeal from an exercise of a so-called discretion which

1s determinative of legal rights stands in a somewhat different position. In this class of case too, a Court of Appeal submits itself to self-imposed restraints, but

restraints which, though strict are somewhat less stringent than those adopted in matters of practice or procedure."

This passage was referred to with approval in Brambles Holdings Limited v Trade Practices Commission (1980) 28 A.L.R. 191 at pp.193 and 198. I refer also to the cases cited in Williams, Victorian Supreme Court Practice 2nd ed. vol. 2 page 2376 under the heading "Practice and Procedure". The giving of undertakings to the court and subsequent variation of such undertakings are

not matters detefmining substantive or legal rights.

In Dougherty v Chandler and Others (1946) 46 S.R. (N.S.W.) 370 at p.374 Jordan C.J., after referring to the fact that a Court of Appeal has jurisdiction to override an exercise of discretior reiterated that where the discretion "has been exercised with respect to a matter of practice and procedure, an Appellate Court will do so only when satisfied that the course taken by the trial judge

is likely to have led to a miscarriage of justice."

I am satisfied that the trial judge's discretion was one with respect to a matter of practice and procedure, 1n which case we should be particularly loathe to interfere. The appellants' submissions do not satisfy me that a miscarriage of justice hag

occurred or, for the reasons which follow, that the trial judge

If, notwithstanding the nature of the discretion we are,

contrary to my opinion, inclined to intervene, it iS axiomatic

that notwithstanding that an appeal lies to this court as of right (Federal Court of Australza Act 1976, s.24) we should follow established principles in reviewing the exercise of the trial judge's discretion. As an appellate court we should only interfere if an error has been made in the exercise of the discretion, It 21S nothing to the point that we would, 1f in the

position of the trial judge, have adopted a different course or

It is apparent therefore that an appellant bears a heavy onus in seeking to disturb an order made in the exercise of a discretionary power. Bearing in mind this obligation it 1s appropriate to consider whether the contentions of counsel for the appellants establish that the exercise of discretion has miscarried by reason of an identifiable error or because the result is unreasonable or so plainly wrong or unjust that there has been a failure to exercise it (Gronow v Gronow (1980) 29 A.L.R. 129 and Australian Broadcasting Commission v Parish and Others (1980) 3 A.T.P.R. 42193, per Bowen C.J. at p.42,195 and Deane J.

at p.42,215). Unless such a miscarriage 1S established, this

court should not interfere; Brambles Holdings Limited v Trade

The appellants' first submission was that the trial judge erred because he had no jurisdiction to discharge the original undertaking and to accept another. It was said that the limited grounds upon which an injunction would be dissolved, such as mistake or error, (Halsburys Laws of England 4th ed. vol.24

para 1112) apply equally to the variation of an undertaking, in

the sense in which I am using that expression. However, 1n my opinion, such 1s not the case, and I am not aware of any authority supporting such a submission. Paragraph 1112 does not refer to interlocutory injunctions which according to paragraph 1111

may be dissolved at any time and the former paragraph makes no reference to a variation of an interlocutory order to take account of changed circumstances. I refer to Attorney General v Birmingham

Tame and Rea District Draining Board [191 1 ch 48 {1913 A.C. 788

at p.806, and Encyclopaedia of Court Forms and Precedents,

Lord Atkin Edition vol.9 p.645 as illustrating the control which

a court has over its interlocutory orders. Moreover a contention that an undertaking can only be discharged in limited circumstances

1s contrary to Cutler v Wandsworth Stadium Ltd fl945}2 All E.R.

103, where it was accepted that if a proper case has been made out, there is general power to discharge an existing undertaking in exchange for a new undertaking. The Court of Appeal in Mullins v Howell (1879) 11 Ch.D.763 referred to the control which a court has over its own orders and in particular interlocutory orders

"I do not think that the rules which have been laid down as the rules under which the court will enforce agreements apply to enforcing orders of the court, because the court has jurisdiction over 1ts own orders, and there 1s a

larger discretion as to orders made on interlocutory applications than as to those which are final judgments."

Smith v Baxter {1900} 2 Ch. 138 illustrates that a court will 1n appropriate circumstances accept the offer of an undertaking rather than make an order irrespective of the attitude of the

other party, and Iraqi Ministry of Defence v Arcepey Shipping Co S.A. (Gillespie Brothers & Co. Ltd. intervening) {1980] 1 All E.R.

480 1s an example of circumstances in which the terms of an

In my opinion the trial judge had jurisdiction to release the respondent from 1ts undertaking. Moreover there was no evidence that that undertaking was given to the court in the course of the carrying out of a compromise agreed between the parties. Certainly there was no submission to the trial judge that that the respondent's action in applying to vary the undertaking was in breach of an agreement, and no application to stay the respondent's action on this ground.

Likewise even if it be said that the original order was in substance though not in form made by consent, it has to me all the indications of an order remaining under the control of the court, which was entitled on proper application to vary, dissolve, discharge or adjust the order to meet changing circumstances. In form it was not made by consent, doubtless because the appellants had indicated that they would prefer an order restraining the respondent. However they did not oppose the adjournment of the application upon the court indicating that 1t was anclined to accept the undertaking. The fact that the respondent's undertaking was given "until trial or further order" (my underlining) and that the application was adjourned sine die with liberty to apply generally 1s indicative of the entitlement of a party to make

subsequent applications on the matters before the court.

In the light of my opinion that the trial judge had jur2zsdictio to vary the undertaking and the fact that the original order

expressly enabled an application to this end to be made, the

question arises whether there was material before the court upon

which the trial judge could rely in exercising his discretion

un favour of the respondent. In my opinion there was such

The respondent sought the release for the purpose of enabling 1t to obtain evidence to present at trial the results of a public opinion survey. The admissibility or relevance of such evidence is not a matter for our consideration. It suffices to say that on the application of the appellants, directions had earlier been given as to the mode in which it would be permissable to present such evidence. However, shortly prior to the application to vary the undertaking, the respondent was advised by its experts and its counsel that an appropriate survey could not be conducted without breachngthe terms of the undertaking, In these circumstances the respondent made application to vary the terme of its undertaking to the extent necessary to enable it to conduct

The appellants contended that this was not a proper or sufficient ground upon which the undertaking should be varied: particularly, 1t was said, because the variation would permit conduct which would amount to a contravention of the Act and to the tort of passing off. However there had been no finding, even on the evidence before the court on the application for an anterlocutory injunction, that the Act had been infringed or that the respondent had committed the tort of passing off. Moreover it is my opinion that there 1s the risk of injustice to the respondent if it 1S not permitted to obtain this evidence. A further ground which justified the exercise by the trial judge

of his discretion is the public interest, in that the Act 1s in

this area primarily concerned to protect the interest of consumers. In such circumstances all relevant evidence should be available to assist the court, and such assistance should not be denied because a party, in consequence of having given a prior undertaking,was prevented from seeking it out. It follows that 1n my opinion there was evidence before the trial judge on the basis of which he

could be justified in exercising his discretion to discharge the

The final matter for consideration is whether the trial judge made his decision without regard to the interests of the appellants, which companies it was said have in consequence suffered such an injustice as would indicate a failure to exercise his discretion. The contention was that the order would occasion irreparable harm to the appellants, but after considering all the evidence tendered at any time to the court, whether or not 1t was technically before the trial judge, I am not satisfied that this 1s the case. The extent to which the appellant was entitled by its new undertaking to perform the allegedly improper acts was specifically restricted by the trial judge and there was no submission that the public would suffer irreparable harm. The contention that such harm would be occasioned to the appellants was based on the alleged impossibility of calculating the extent of the harm. The trzal judge did take into account the interests of the appellants as his use of the expression "balance of convenience" indicates. If the appellants were msufficiently prepared to oppose the respondent's application an adjournment could have been sought. If 1t was, and the trial judge had refused it, other considerations

would arise, as they would 1f the appellants, being dissatisfied

with the varied undertaking offered, had sought and been refused

an adjournment to enable the adjourned application for a restraining order to proceed. However neither of these applications was

made, and it can not be correctly stated that an unacceptable undertaking was imposed on the appellants. No undertaking was imposed of: them, nor were they obliged,as indeed they couldnot be,tc

In giving his reasons the trial judge referred to what he called the balance of convenience. In my opinion, after satisfying himself that he had jurisdiction in the matter and that the applicant had made out a case for discharge of its earlier undertaking, 1t was proper for him to consider, in relation to the undertaking offered, the extent to which its new terms would inconvenience each of the parties. It cannot be said that by so doing he, as was alleged, reversed the onus of proof or paid

In my opinion, no error has been established as having been made by the trial judge in exercising his discretion. No incorrect principle upon which he acted has been identified, nor has any material upon which he should or alternatively should not have relied. Furthermore the decision is neither unreasonable nor plainly unjust. If it be relevant, my opinion of the order

In my opinion the appeal should be dismissed with costs.

{ certify that this and the /> preceding te. 'eS are a true copy of the Reasons tor