Trade Practices Act 1975: ss.52 and 53.

Counsel and Solicitors F G Lever and M A McDonogh instructed by

Counsel and Solicitors J J Garnsey QC and P Dunstan for First Respondents: instructed by Allen Allen & Hemsley

Counsel and Solicitors R J Webb instructed by for Second Respondent: Mallesons Stephen Jaques

1. The application be dismissed.

2. The applicant pay the costs of the first and second

respondents.

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

Equity Access Limited ("the applicant") seeks to enjoin each of the respondents, Westpac Banking Corporation and Westpac Savings Bank Limited ("the first respondents") and Challenge Bank Limited ("the second respondent") from using in conjunction with financial products marketed by them the words "equity access" whether or not those words are used in conjunction with the name "Westpac" or "Challenge Bank" as the case may be. The applicant relies on s.80 of the Trade Practices Act 1975 ("the Act") in conjunction with ss.52(1) and 53 of that Act as well as on the common law tort of passing off. Declarations are also sought.

2. The applicant's statement of claim alleges that the words "equity access" have, at all times since May 1988 been associated by members of the public and by persons engaged in the supply of financial services and financial advice as being associated with the business of the applicant and its "equity access" financial plan. It is said that the applicant has acquired and maintained a substantial reputation in respect of the words "equity access" throughout Australia.

3. The conduct complained of as involving breaches of ss.52 or 53 of the Act consist of the representations set out in clause 16 of the applicant's statement of claim which representations are pleaded in the following terms:

"(a) that the business of the respondents is the

business of the applicant,

(b) that the financial services of the respondents

are those of the applicant,

(c) that by purchasing the financial services of

the respondents or any of them, members of the

public are purchasing the financial services

of the applicant,

(d) that the financial services of the respondents

are of the same standard or quality as the

financial services of the applicant,

(e) that the respondents are affiliated with the

applicant,

(f) that the respondents have the sponsorship or

approval of the applicant, and

(g) that the financial services of the respondents

have the sponsorship or approval of the

applicant."

4. The applicant's complaint under s.53 of the Act is pleaded as follows:

"(b) (the respondents) have, in trade or commerce,

in connection with the supply or possible

supply of services and in connection with the

promotion of the supply or use of services:-

(i) falsely represented that the services

are of a particular standard, quality,

grade and composition,

(ii) represented that the services have

sponsorship, approval, performance,

characteristics, uses or benefits that

they do not have,

(iii) represented that the first and second

respondents have a sponsorship,

approval or affiliation which they do

not have

in contravention of section 53 of the Trade

Practices Act."

5. Affidavit evidence was led from a large number of witnesses many of whom were the subject of considerable cross-examination. At the end of the cross-examination however it appeared that no real doubt had been cast upon any of the evidence the subject of affidavits and in particular it became obvious that no question of credit arose. I accept that all of the witnesses were witnesses of truth. Hence at the end of the day there was little real dispute as to the facts although considerable dispute as to the proper interpretation to be given to them.

6. The applicant was incorporated in New South Wales in October 1988. The idea of incorporating a company had its genesis in conversations that took place between two of its three directors, Mr Ross Lambert and Mr Michael Moroney in March 1988. The purpose of so doing was to market a financial product the details of which were first set out in a brochure published by Mr Ross Lambert who registered the name "equity access" as a business name under the provisions of the Business Names Act 1962 (NSW) in that month.

7. The name "equity access" was devised by Messrs Lambert and Moroney. The word "equity" was said to represent both fairness and an owner's unencumbered interest in his or her property and the word "access" was used because it represented raising money by utilising or obtaining access to that unencumbered equity.

8. The July brochure, if indeed July was the correct date of it, was put out in the name of Equity Access Limited although the applicant was not incorporated until October. The brochure was headed "Lifestyle Money for the Over Sixty Five".

9. There was printed in various places on the brochure a drawing depicting a federation style cottage and there appeared on the brochure in various places a logo with the Southern Cross emblazoned on it and the name of the applicant in distinctive type. The brochure indicated that "Equity Access" would agree to purchase the home of the reader at a future point in time when the house was no longer required. The reader was to be entitled to live in the home rent free for the rest of his life. He could take a lump sum now or could decide to be paid an amount per year over a number of years. The benefit of any capital gain accruing was for the account of "Equity Access". The person dealing with that company was to continue as the owner of the home with "Equity Access" holding a registered first mortgage. He could move from the home in which event the contemplation was that the purchase price for the home would then be paid.

10. During May 1988 Messrs Lambert and Moroney canvassed 12 persons who were financial consultants, accountants, solicitors, marketing or public relations consultants about the product. No evidence was given as to the purpose of canvassing these persons or as to what was said although I would infer that some of the meetings at the very least related to attempts to obtain finance to implement the proposal. There were discussions with a solicitor, presumably directed towards documentation but no evidence was led as to the nature or content of the meetings which were said to have numbered six during the month of July 1988 with the solicitor. Financial projections were drawn up and between June 1988 and September 1988 were forwarded to nine financial institutions. As well, in July and August, Messrs Lambert and Moroney met with representatives of a bank and a merchant bank presumably to discuss financing of the business of the company which was about to be incorporated.

11. On 22 July 1988 Mr Ross Lambert took a lease of premises in Military Road, Mosman which he occupied until 1 November of that year when the applicant took up occupation of other premises in the same road in Mosman. A sign was installed showing the name "Equity Access" outside each of the premises. In late July 1988 Messrs Lambert and Moroney distributed 45 copies of a brochure in the Mosman area. This brochure was also headed "Lifestyle Money for the Over Sixty Five" and displayed prominently the drawing of the federation cottage, the applicant's name in distinctive typeface and its distinctive corporate logo. This brochure outlined the way the proposed financial product was to work. The benefits said to flow to a customer were that a person who entered into arrangements with Equity Access could:

"Remain in your own home; retain your pension and

benefits whilst receiving a tax free income to

maintain your lifestyle".

12. It might be said that the concept of a "tax free income" must of its very nature have been misleading. Further, if the amount in question were income, it is hard to see why social security benefits would not have been affected. Be that as it may, in October 1988 Mr Lambert left 150 copies of the brochure with the Mosman Senior Citizens Organisation for distribution to senior citizens and 200 copies of the brochure with an employee of Mosman Community Services for distribution to persons calling at that office. Also in October 1988 Mr Lambert and Mr Moroney commenced canvassing people who lived in the Lower North Shore area "to explain" the applicant's product. No evidence was given as to precisely what was said to the persons contacted or as to the use during the conversations of the words "equity access" in conjunction with the proposed financial proposal. However one of the persons so contacted, Ms Lance, did give evidence and from her evidence it appeared that the name "equity access" was used in the course of the discussion. As it turned out Ms Lance was not interested in the proposal as she had just sold her home.

13. In cross-examination Mr Lambert referred to having conducted a telephone survey before embarking "on canvassing" prospective customers and indicated that the purpose of the survey was "to find those people who were retired in the Mosman area" and who owned their own house. The matter was not pursued but I find that the telephone survey to which this cross-examination referred was the same telephone "canvassing" which Mr Lambert had referred to in his evidence in chief.

14. Approximately 1,200 people were contacted and from these telephone calls Mr Lambert prepared a bundle of 23 cards containing the names and addresses of persons who had expressed a definite interest in the financial product, as well as a list of 125 people to whom brochures and letters were sent. The geographical area of distribution was Mosman, Neutral Bay, Cremorne and Beauty Point all in the Lower North Shore of Sydney. The letter was in the following form:

"Recently a survey was conducted for our company

concerning retirement benefits.

Most responants (sic) from this survey had strong

views on the lack of financial support received by

retired people.

Equity Access has developed a way of providing a

monthly income for retired home owners. This

income will not attract taxation nor does it affect

pensions or associated benefits.

Although in most cases we have been able to

finilise (sic) arrangements promptly, at times due

to the response, there may be delays.

Enclosed you will find our brochure which explains

in detail how you can receive this income. We have

set out to cover all aspects of the Equity Access

Income in this brochure. However, we feel sure

that you will have other questions, so please feel

free to call and we will be happy to answer these

queries."

15. On 13 October Mr Lambert caused an advertisement to be placed in the Mosman daily newspaper, which was apparently a newspaper circulating in the Mosman area. The advertisement was headed "Tax Free Income]" "Lifestyle Money for the Over 65" and contained a reproduction of the federation cottage, the applicant's name in its distinctive type style and its address and telephone number.

16. On 17 November 1988 "The Mosman Daily" published an article headed "Making ends meet can be hard for asset rich". The article carried a photograph of Mr Ross Lambert identifying him as a director of the applicant. It referred, inter alia, to what was said to be a new scheme proposed by the applicant referring to it as "new on the scene in Mosman". What was said about the applicant's product was based in part upon a press release which the applicant had caused to be prepared in October 1988 and a subsequent interview which Mr Lambert had had with the editor.

17. Later, on 1 December 1988 "The Mosman Daily" in the second of a series of articles on options for retirement discussed in a quite long article schemes designed "to create an income while enabling you to stay on in your home". The author of the article referred to three such schemes, "Money for Living" promoted by the Advance Bank, "Selstay" promoted by a company called Selstay Pty Limited and "Equity Access". There was no reference as such to the applicant as being the promoter in that article.

18. A draft option deed and mortgage for use in conjunction with the proposal was prepared by the applicant's solicitors in November 1988. Additional copies of the brochure (5,000 in all) and stationery were printed. On 21 November 1988 the applicant commenced to carry out a letter-box drop of brochures in the Mosman area. Over a ten week period 1,000 brochures were distributed. Meanwhile negotiations took place with a number of financial institutions to secure finance for the applicant and with two firms of chartered accountants both to assist with the applications for finance and to locate possible clients for the applicant's product.

19. By 9 March 1989 the applicant's attempts to obtain finance had not met with any legally binding commitments although interest had been expressed in principle. Nor had the applicant managed to locate a client prepared to enter into an arrangement. By 12 May 1989 expressions of interest had been received from approximately 12 clients to whom letters of offer had been sent. It is not clear on the evidence whether all 12 names had been obtained prior to March 1989. A sample letter of offer in evidence was however dated 29 November 1988 and I am prepared to infer that all similar offers were made before March 1989. No business however ultimately emerged from these offers.

20. Merchant agreements were signed between the applicant and the major credit card financiers, Visa, Mastercard, Bank Card, American Express and Diners Club on 7 March 1989.

21. The relevance of 9 March 1989 is that this was the date when the second respondent first used the words "equity access" (albeit in conjunction with the name Challenge Bank) in connection with a financial product marketed by it. Nothing much appears to have happened between that date and 5 May 1989 when the first respondents first used the words "equity access" (albeit associated with the word "Westpac"). The present proceedings were instigated on 16 May 1989.

22. The months since the proceedings commenced have not greatly advanced the business activities of the applicant. The documentation proposed to be used, which was the subject of criticism from the respondents still remains in draft form and plans for finance remain rather indeterminate. While the brochures distributed prior to May 1989 were all pitched at the over 65's, since then the applicant has given its attention to those under 65 and has developed a product which proposes that advances are made which the applicant can require to be repaid and there is to be an option given to the applicant to purchase the relevant home. It is in respect of this, which might be thought to be a variation of the original proposal, that the applicant has received from five interested persons acceptances of offers, although the conditions attached are such that the applicant may withdraw from the arrangement if advances are not made within 60 days of the date of offer. As at 3 November of this year the applicant had a list of 27 prospective clients.

23. It is not now suggested that either of the respondents became aware of the use by the applicant of the name "equity access" and appropriated the name to itself. Rather, it is accepted that each of the respondents came upon the name "equity access" independently.

The Development by Westpac of Westpac Equity Access

24. Mr Irvine, as at April 1988 National Manager, Personal Lending of the applicant, formed the view around that time that there was a need for the company to promote a revolving line of credit facility aimed at persons with high income or considerable net worth similar to products that were available from some of the Bank's competitors. The product contemplated by Mr Irvine and ultimately marketed by the first respondent was directed at persons who had not yet retired, who had considerable equity in their home and who would mortgage their home to obtain advances which would ultimately be repaid before their retirement. I accept however that the policy at the Bank was not so inflexible that if a person came along who had in fact retired but who otherwise fulfilled the Bank's criterion such person would not be offered a facility.

25. The first respondent employed a market research organisation to assess the product which Mr Irvine contemplated would be offered to people with a minimum income of $50,000 or unencumbered assets of $500,000. The name "equity access" was one of a number of names discussed at a meeting held on 17 June 1988 and was the one which was resolved upon at that meeting subject to market research results which proved not unfavourable.

26. Ultimately a list of prospective customers was prepared based in part on the names of persons who were customers of the Bank with American Express Gold Credit Cards having a Westpac line of credit or who received the Bank's monthly journal "Portfolio" sent to customers of good standing in the Bank. The product was not launched until May 1989 when the first respondents' promotional material was sent to approximately 47,070 people throughout Australia, the launch having been delayed from an initial projected launch date of September or October 1988.

27. The direct mailing included a letter, a brochure and single page check list and reply paid envelope. The letter, on the letterhead of Westpac Banking Corporation which contains the distinctive "W" logo said in part:

"Because you are already a valued Westpac customer,

your bank manager felt that you might want to be

one of the first to be able to take advantage of a

brand new service. This service is called Westpac

Equity Access.

Provided you qualify by income and/or assets

Westpac Equity Access means you can use the equity

you have built up in your home to purchase an

investment property or a second home, to fund major

renovations, to buy shares, in fact, you can use

your equity for any reasonable purpose ... Equity

Access was developed with your needs in mind and

allows you to establish a line of credit worth up

to 85% of the assessment of the value of your house

- from $50,000 up to $500,000. The size of your

Westpac Equity Access account is based simply on

your ability to meet the repayments.

If you already have a mortgage, this will be paid

out by and replaced with Westpac Equity Access

(even if the mortgage is with another institution).

The balance of the facility is for you to use as

you like.

Once you have established your Westpac Equity

Access account you simply write a cheque from the

special cheque book you will receive - for the

amount you require - your money is always available

when you need it, however each drawing must be for

at least $5,000. Best of all, you only pay

interest on the amount you are using."

28. The letter was joined by a detachable page to a form headed "Westpac Equity Access Request" which was to be completed and returned to the Bank in the reply paid envelope as a sign of interest in the product. On the reverse of the request were a series of questions and answers concerning the product under the heading: "Who can you bank on to answer your questions about Westpac Equity Access?"

29. Both pages bore the distinctive Westpac logo with the words "You can bank on Westpac".

30. The accompanying brochure was headed: "If all your money is tied up in your house ... Who can you bank on?"

31. It contained a discussion of the product as being designed to "turn your home into instant credit". Throughout the brochure the product advertised is referred to as "Westpac Equity Access" and the name Westpac is given prominence. The Bank's logo and slogan appear prominently on the back page.

32. The first respondents spent a sum of $131,000 on developing advertising, promoting and marketing its Westpac Equity Access product. As at July of this year 416 Westpac Equity Access accounts have been opened of which 161 were in New South Wales.

The Development by Challenge Bank of Challenge Bank Equity Access

33. The second respondent commenced development of its Challenge Bank Equity Access financial product in about September 1988. The second respondent's product is for present purpose virtually identical to that promoted by the first respondents. A marketing research study had been commissioned in September 1988 to develop an appropriate "positioning" for the product and to help select a product name. Searches were instituted with the Corporate Affairs Commission in Western Australia to ascertain whether any name similar to equity access had been registered. That search failed to reveal the applicant which was not registered in Western Australia. The second respondent registered the business name "Challenge Equity Access" on 21 December 1988.

34. The second respondent commenced the launch of its product by a press statement released on 9 March 1989 but issued with an embargo until 11 March 1989. The release described "equity access" as "Challenge's entry in the growing field of special mortgage schemes which allow home and property owners to take advantage of rising property values". The release suggests that the unique feature of the Challenge scheme is that:

"With Equity Access, Challenge Bank customers who

meet the criteria need make no repayments until

their account reaches the maximum credit limit.

Then they need only make payments to keep the

account below the limit.

Alternatively, customers can choose to repay at the

rate of 2% or more a month, with a minimum of $200

a month."

35. The launch of Challenge Bank Equity Access took place in Western Australia, Queensland, South Australia and New South Wales on 13 March 1989 and in Victoria on 14 March 1989. A direct mail promotion was undertaken with a mailing to 9,000 customers in Western Australia and Victoria and press advertising was undertaken in New South Wales, Queensland and South Australia. The direct mailing package comprised a colour brochure headed "Challenge Bank Equity Access", a form to be completed by the customer requesting information and a reply paid envelope. The Challenge Bank name and logo appear on both documents. The letter was written on the letterhead of the second respondent which also included the logo. Reference in these documents was sometimes to "Equity Access" and sometimes to "Challenge Bank Equity Access" although a reader would be left in no doubt that the product was being promoted as a financial package of the second respondent.

36. In March 1989 the second respondent had spent $44,522.01 on national advertising and in April of the same year $38,906.25. By July, 409 Challenge Bank Equity Access accounts had been opened of which 12 were in New South Wales.

37. While it might be thought ironical that an Act to make trade and commerce more competitive might be used to protect the monopoly in a name (cf Parkdale Custom Built Furniture Pty Ltd v. Puxu Pty Ltd [1982] HCA 44; (1981-2) 149 CLR 191) and that the same Act in Part V, designed to protect consumers, could provide a statutory cause of action by one trader against another (cf Hornsby Building Information Centre Pty Ltd v. Sydney Building Information Centre Ltd [1978] HCA 11; (1977-8) 140 CLR 216), it is now well established that by the combined effect of s.52 and s.80 of the Act a trader having a distinctive reputation in a name may enjoin another from engaging in misleading and deceptive conduct by the use of that name. In the present case the applicant relies upon s.53(c) of the Act in addition to s.52. Sections 52 and 53(c) provide relevantly as follows:

"52.(1) A corporation shall not, in trade or

commerce, engage in conduct that is misleading or

deceptive or is likely to mislead or deceive.

(2) Nothing in the succeeding provisions of

this Division shall be taken as limiting by

implication the generality of sub-section (1)."

"53. A corporation shall not, in trade or

commerce, in connexion with the supply or possible

supply of goods or services or in connexion with

the promotion by any means of the supply or use of

goods or services -

...

(c) represent that goods or services have

sponsorship, approval, performance

characteristics, accessories, uses or benefits

they do not have".

38. These sections prescribe what may be called standards of conduct the observance of which will foster the efficient working of the market place in trade and commerce. They do not of themselves delineate any offence nor do they provide remedies to any person, albeit that conduct in contravention of these sections is made an offence by s.79 of the Act and remedies for breach may be found elsewhere in the Act as in the present case in s.80. Combined with s.80 and s.82, these sections overlap the area of operation of the tort of passing off, the five elements of which were described by Lord Diplock in Erven Warnink Besloten Vennootschap v. J Townend & Sons (Hull) Ltd (1979) AC 731 at 742:

"(1) a misrepresentation (2) made by a trader in

the course of trade, (3) to prospective customers

of his or ultimate consumers of goods or services

supplied by him, (4) which is calculated to injure

the business or goodwill of another trader (in the

sense that this is a reasonably foreseeable

consequence) and (5) which causes actual damage to

a business or goodwill of the trader by whom the

action is brought or (in a quia timet action) will

probably do so."

39. Nevertheless it is necessary to keep in mind that the proceedings under the Act are in aid of the protection of the public and that the ambit of the proceedings under the Act will not be confined to reference to the prior learning on the tort of passing off, concerned, as that tort is, with the protection of the proprietary rights of traders. Proceedings based upon a contravention of s.52 or s.53 of the Act are only confined by reference to the very words of the sections themselves. This is not however to say that the principles applicable in a case such as the present to the tort of passing off are irrelevant.

40. The scope for the operation of s.52 will thus be broader than that involved in the tort of passing off so that in a case such as the present where the claim is for the protection of the reputation in a name against the use of that name by another, failure to succeed under s.52 or s.53 will invariably mean that proceedings for passing off would likewise fail: Taco Company of Australia Inc v. Taco Bell Pty Ltd [1982] FCA 136; (1982) 42 ALR 177, 206; Telmak Teleproducts (Aust) Pty Ltd v. Coles Myer Ltd (unreported) 21 July 1989 Full Federal Court at p 18. Since it is conceded, properly in my view, by the applicant that the same result must follow in the present case under ss.52 and 53 of the Act on the one hand and in passing off on the other, I propose to consider the applicant's case under the Act.

41. While there remain many areas of difficulty in the application of s.52 of the Act to the facts of a decided case there have been established a number of propositions, relevant to the determination of the present case, which are no longer in dispute:

1. For conduct to be misleading or deceptive the conduct

must convey in all the circumstances of the case a

misrepresentation: Taco Bell at 202. In the present

case the misrepresentation on the part of the

respondents is said to be that the financial product

advertised and marketed by each of them is the product

of the applicant or that there is some business

relationship between the applicant and each of the

respondents or that the applicant has endorsed the

respective product of the respondents.

2. There will however be no contravention of s.52(1) of the

Act unless error or misconception results from the

conduct of the corporation and not from other

circumstances for which the corporation is not

responsible: Puxu per Gibbs CJ at p 6 and per Mason J

at p 15, Global Sportsman Pty Ltd v. Mirror Newspapers

Ltd [1984] FCA 180; (1984) 55 ALR 25, at p 34.

3. Conduct will be likely to mislead or deceive if there is

a "real or not remote chance or possibility" of

misleading or deception regardless of whether it is less

or more than 50%: Global Sportsman at p 34. The

question of whether conduct is misleading or deceptive

or likely to mislead or deceive is an objective question

which the Court must determine for itself. Hence

evidence that persons in the relevant class have been

misled will, although admissible, not be determinative.

In some cases however such evidence will be very

persuasive: Puxu per Gibbs CJ at pp 198-9.

4. Conduct of a corporation causing mere confusion or

uncertainty in the minds of the public in the sense that

they may be caused to wonder whether two products may

have come from the same source is not necessarily

coextensive with misleading or deceptive conduct: Puxu

at p 100; Bridge Stock Brokers v. Bridges (1984) 57 ALR

401 at p 413 per Lockhart J. Since actual deception

need not be shown the Court must consider whether a

reasonably significant number of potential purchasers

would be likely to be misled or deceived: Weitmann v.

Katies Ltd (1977) 29 FLR 336, 343. The test in passing

off cases is usually expressed as being whether a

"substantial number of persons likely to become

purchasers ... are liable to be deceived by the

defendant's use of the name. On the other hand it is

not necessary to show that all, or substantially all,

persons in the market associate the name with the

plaintiff's goods, if this can be shown of a substantial

proportion of persons who are probably purchasers of the

goods of the kind in question." (per Wilberforce J, as

he then was, in Norman Kark Publications Ltd v. Odhams

Press Ltd (1962) RPC 163 at 168 and see Saville

Perfumery v. June Perfect Ltd (1941) 58 RPC 147 at

175-6, 10th Cantanae Pty Ltd v. Shoshana Pty Ltd (1987)

79 ALR 299 at 315 per Gummow J).

5. In a case such as the present the applicant must

establish that it has acquired the relevant reputation

in the name, that is to say that the name had become

distinctive of the applicant's business in a particular

country or geographical area: Sheraton Corporation of

America v. Sheraton Motels Ltd (1964) RPC 202; BM Auto

Sales Pty Ltd v. Budget Rent A Car System Pty Ltd (1976)

12 ALR 363. However at least in some circumstances very

slight activities may be found to be sufficient to

establish that a name has become distinctive of a

person's business in a particular country: Miki Shoko

Co Ltd v. Merv Brown Pty Ltd (1988) ATPR 40-858.

6. Section 52 is not confined to conduct which is intended

to mislead or deceive: Puxu per Gibbs CJ at p 197 and a

corporation which acts honestly and reasonably may none

the less engage in conduct that is likely to mislead or

deceive: Yorke v. Lucas [1985] HCA 65; (1985) 61 ALR 307 at p 309.

42. In Taco Bell (supra) at pp 202-3 Deane and Fitzgerald JJ set out four guidelines for the application of s.52 to cases such as the present where the misrepresentation is not express. Their Honours said:

"First, it is necessary to identify the relevant

section (or sections) of the public (which may be

the public at large) by reference to whom the

question of whether conduct is or is likely to be,

misleading or deceptive falls to be tested ...

Second, once the relevant section of the public is

established, the matter is to be considered by

reference to all who come within it, 'including the

astute and the gullible, the intelligent and the

not so intelligent, the well educated as well as

the poorly educated, men and women of various ages

pursuing a variety of vocations. ...

Thirdly, evidence that some person has in fact

formed an erroneous conclusion is admissible and

may be persuasive but is not essential. Such

evidence does not itself conclusively establish

that conduct is misleading or deceptive or likely

to mislead or deceive. The Court must determine

that question for itself. The test is objective.

Finally, it is necessary to enquire why proven

misconception has arisen: Hornsby Building

Information Centre v. Sydney Building Information

Centre (18 ALR at 647; 147 CLR at 228). The

fundamental importance of this principle is that it

is only by this investigation that the evidence of

those who are shown to have been led into error can

be evaluated and it can be determined whether they

are confused because of misleading or deceptive

conduct on the part of the respondent."

43. Counsel for the applicant submitted that the relevant section of the public were:

"(a) potential users of the applicant's home equity

loan facilities,

(b) those who had seen the applicant's brochures,

read its newspaper advertisements or have been

told about its product ...

(c) those who qualify financially, who are looking

for a suitable loan package and who have some

accumulated equity in their homes to offer as

security,

(d) those shopping around generally for finance

packages,

(e) accountants and other financial advisers who

advise clients on the various financial

packages available,

(f) financial institutions who may be putting

together various financial packages using a

combination of their own products and those

offered by the applicant or the respondents,

(g) those financial institutions and accountants

who have been approached by the applicant.

44. This submission tends in my view to segment into smaller groups than is necessary those persons who are likely to be misled. A number of the categories may conveniently be merged.

45. The most obvious category of persons who could be misled would, assuming that the applicant had a sufficient reputation in the name "equity access", be those who are potential purchasers of a financial package whereby money is made available by a financier making use of the purchaser's equity in his home, that is to say those who are potential users of both the applicant's home equity loan facilities and the respondents' facilities.

46. An attempt was made on the part of the respondents to narrow the class of potential users to the over 65's. While it is true that the initial brochures for the applicant's product were addressed to the over 65's I think that persons under the age of 65 could in the circumstances be identified as among the persons capable of being misled having regard to the finding of fact which I have made that the applicant did not intend to confine its business to the over 65's. Thus I do not need to consider, in any detail, the submission made by the applicants that the respondents' criteria of eligibility which in essence looked at persons not retired was sufficiently flexible that in an appropriate case it would have been possible for a retired person to have obtained a Westpac Equity Access account. I should say however that I find it to be a fact that in some circumstances at least a retired person could have obtained a Westpac Equity Access account.

47. Although accountants and other financial advisers who advise clients on financial packages available might be included among the class of those likely to be misled, in the present case I do not think that there could be said at the relevant time to have been any members of that class. It is true that the applicant had consulted accountants, solicitors and financial advisers but none of those persons in the circumstances of the present case would have been likely to have been misled by the respondents' use of the name "equity access" in conjunction with the name Westpac or Challenge Bank as the case may be since each of them was well aware, it would seem, of the activities of the applicant. The same can be said of the financial institutions which were approached by the applicant.

48. In this connection Mr Webster, the Chief Manager of the Real Estate Services Division of Beneficial Finance Limited, gave evidence of his association with the applicant. He said that he associated the name "equity access" with the applicant and its product. However he conceded that he would not be likely to be misled into thinking that Westpac Equity Access or Challenge Bank Equity Access, as the case may be, was the same product as that of the applicant. Indeed he expressed the view that one would have to be rather naive not to believe when shown the Westpac literature concerning the product that it was not a Westpac product.

49. There was little in the way of evidence adduced by the applicant that would lead to the conclusion that as a matter of fact there were any persons who were in fact induced to form an erroneous conclusion by virtue of the use by the respondents of the name "equity access".

50. A Mr Shepherd, who was a director of Laboratory & Doctors' Office Systems employed by Boehringer Mannheim Australia Pty Limited, gave evidence that he commenced investigating the possibility of using the equity in his home as security for borrowing money to invest in real estate. He had known Mr Lambert for about 10 years, had read the article in "The Mosman Daily" of 17 November 1988 and had received from Mr Lambert a copy of the applicant's brochure. In his affidavit evidence Mr Shepherd stated that he had seen an advertisement for the Challenge Bank product without noticing that it referred to Challenge Bank, that he had assumed that it was the applicant's product and had telephoned the number shown in the advertisement to receive literature. Why he should have done so, if he had assumed that it was the same product as that offered by the applicant as set out in the brochure of which he already had a copy, is unclear to me.

51. Cross-examined as to the brochure which he had thereafter received from Challenge Bank Mr Shepherd, while conceding that the Westpac Equity Access product was clearly a product of the first respondents and not of the applicant, sought to maintain that he had believed that the brochure he had received from the second respondent was in fact about the applicant's product. This it seems had something to do with his lack of familiarity with the Challenge Bank. I must say I found it somewhat unlikely that Mr Shepherd would have been misled by the Challenge Bank brochure with its many references to the Challenge Bank and its 126 years of financial experience into thinking that its product was that of the applicant. Nevertheless I accept Mr Shepherd's evidence that he did believe there was a possibility that the applicant was involved in some way with the product that the second respondent was promoting.

52. It is difficult however to take Mr Shepherd as a typical person having regard to his friendship with Mr Lambert which makes it highly unlikely that at the end of the day he would have been misled other than momentarily.

53. Evidence was adduced on behalf of the applicant from Ms Patricia Lance, a part-time lecturer at the School of Orthoptics at the Cumberland College and in private practice at Dee Why. Ms Lance was one of the persons canvassed by Mr Lambert in his original telephone survey. Ms Lance had however sold her home prior to being contacted by Mr Lambert and was not therefore as such in the class of persons capable of being misled or deceived. According to her evidence, which I fully accept, she did not understand what the words "equity access" meant but when shown the Westpac promotional material she readily acceded to the proposition put to her that she would have believed it to be a promotion of Westpac and when shown the second respondent's advertising, readily agreed that the product in question was the product of the Challenge Bank.

54. Evidence was also adduced from an accountant, Mr Thomas Taylor, who in an affidavit filed, deposed to having received a copy of the applicant's brochure, to having read it and to now associating the plan referred to in the brochure (not the words "equity access" themselves) with the applicant. On cross-examination however Mr Taylor indicated that he had read in a Westpac magazine of the Westpac Equity Access product and while he thought there was a source of confusion in the names, was not in any way misled because the product itself was a substantially different product. In any event he readily acceded to the proposition that he had believed that the product promoted in the Westpac magazine was not a product provided by the applicant. He acceded as well when shown a copy of the Challenge Bank brochure that he would not have been in doubt that the product advertised was the product of the second respondent.

55. Finally, evidence was adduced on behalf of the applicant from a Mr Hill, a film producer and friend of one of the directors of the applicant. He deposed on affidavit to having visited seven branches of the first respondents to make enquiries about the equity access financial package being offered by that Bank and to conversations in which the words "equity access" were used without the word "Westpac" being used in conjunction with it. These conversations had taken place at the premises of the Bank. It could not however be said that Mr Hill was misled given the circumstance that he went deliberately to the premises of the first respondents at the request of Mr Lambert. It is significant also that each of the conversations in question occurred at the Bank itself where it was quite clear that the context of the discussion was the Westpac Equity Access product rather than the product of the applicant. I find little of assistance in Mr Hill's evidence.

56. At the heart of the present case is the question whether the applicant has shown that it had prior to the relevant dates in March and May 1989 acquired a sufficient reputation in the name "equity access" so that the use of the name by any of the respondents would signify that the product referred to was the product of the applicant or that the applicant was in some way associated with the product. For the respondents it was submitted:

* The acts of the applicant were insufficient to establish

a reputation in the name "equity access".

* The name "equity access" was a generic or descriptive

name and not a fancy name so that unless the applicant

had established a secondary meaning in the words "equity

access" as distinguishing it or its product to the

exclusion of all others it must fail. It was submitted

that it had not.

* In any event the name "equity access" has been used by

the respondents in conjunction with their own unique

name, that is to say, in association with the words

"Westpac" or "Challenge Bank" so that there would be no

likelihood of any person being misled or deceived.

57. The submissions of both the applicant and the first respondents proceeded on the basis that there was a dichotomy in law between names that were merely descriptive names and names that were not merely descriptive but were "fancy" names. Support for this submission might be thought to be had from the emphasis placed by Barwick CJ in Hornsby Building Information Centre Pty Ltd v. Sydney Building Information Centre Ltd [1978] HCA 11; (1977-8) 140 CLR 216 at 221 where his Honour said in refusing injunctive relief:

"The names under which the appellant and the

respondent operate were no more than merely

descriptive of the nature of the businesses

respectively carried on by them."

58. Stephen J in the same case examined the reason why persons, who had given evidence in the case that they had been misled, were so misled. His Honour pointed out that the name adopted by the Sydney Centre consisted of three descriptive words, prefixed by a word of locality. Having adopted such a name the Sydney Centre could not claim a monopoly in the descriptive words. His Honour said at pp 229-30:

"There is a price to be paid for the advantages

flowing from the possession of an eloquently

descriptive trade name. Because it is descriptive

it is equally applicable to any business of a like

kind, its very descriptiveness ensures that it is

not distinctive of any particular business and

hence its application to other like businesses will

not ordinarily mislead the public. In cases of

passing off, where it is the wrongful appropriation

of the reputation of another or that of his goods

that is in question, a plaintiff which uses

descriptive words in its trade name will find that

quite small differences in a competitor's trade

name will render the latter immune from action

(Office Cleaning Services Ltd v. Westminster Window

and General Cleaners Ltd (1946) 63 RPC 39, at p 42,

per Lord Simonds). As his Lordship said (at p 43),

the possibility of blunders by members of the

public will always be present when names consist of

descriptive words - 'So long as descriptive words

are used by two traders as part of their respective

trade names, it is possible that some members of

the public will be confused whatever the

differentiating words may be.' The risk of

confusion must be accepted, to do otherwise is to

give to one who appropriates to himself descriptive

words an unfair monopoly in those words and might

even deter others from pursuing the occupation

which the words describe.

...To allow (s.52) ...to be used as an instrument

for the creation of any monopoly in descriptive

names would be to mock the manifest intent of the

legislation. Given that a name is no more than

merely descriptive of a particular type of

business, its use by others who carry on that same

type of business does not deceive or mislead as to

the nature of the business described."

59. By contrast with the Building Centre case stand cases such as Tec & Tomas (Aust) Pty Ltd v. Matsumiya Computer Co Pty Ltd & Ors (1983-4) 53 ALR 167 where Beaumont J held that the use of the names "Seiko Computers" and "Seikosha" constituted false and misleading conduct as being representations to potential customers that the respondents' equipment was that of the applicant or the Hattori Seiko Group. At least in Australia the name Seiko qualifies as a "fancy" name.

60. The applicant thus sought to demonstrate that the name "equity access" was not a merely descriptive name such that the activities of the applicant in marketing its financial product had given it a sufficient reputation, notwithstanding its significant lack of commercial success in achieving sales. It was said that the word "equity" had three primary meanings in the finance industry (and evidence was adduced to this effect without objection, although recourse to a dictionary would have sufficed to demonstrate it). The first was "fairness", the second "shares" in contrast to debt securities and the third was the interest of a mortgagor in his equity of redemption. "Access", it was said, could refer to access to money or to access to the equity of redemption. The public, it was said, had no clear idea of the meaning of the word "equity". Thus Ms Lance said in evidence that she had recourse to a dictionary to seek to understand what equity was and found the extrinsic aid unhelpful.

61. In so far as the distinction between descriptive words and fancy words is a useful distinction it would seem that a test for determining whether words were merely descriptive words would be whether the words were "equally applicable to any business of the like kind". See Select Personnel Pty Ltd v. Morgan & Banks Pty Ltd (1988) 12 IPR 167 at 170 where McLelland J of the Supreme Court of New South Wales held that the name "Select Personnel" had acquired sufficient distinctiveness to found an injunction.

62. The cases which have considered whether particular trade names were merely descriptive or not indicate that the suggestion that there is a dichotomy valid in law is misconceived.

63. In Communication Credit Union Ltd v. National Westminster Finance Australia Ltd [1983] FCA 262; (1983) 78 FLR 148 the name "Phone-A-Loan" was said by Davies J not to be directly descriptive although it well conveyed the concept of a facility by which a loan might be initiated by a telephone call. No secondary meaning or reputation having been advanced, an injunction was refused. His Honour did not decide whether the words were capable of acquiring the appropriate secondary meaning or reputation. In Motorcharge Pty Ltd v. Motorcard Pty Ltd [1982] FCA 90; (1982) ATPR 40,302, the name "motorcharge" was said by Toohey J not to be simply descriptive. As his Honour said at p 43,729:

"No doubt it gives a clue as to the nature of the

business with which it is connected, suggesting

some method of credit in connection with the motor

industry. But it says little more than that;

particularly when used as a composite term, it is

capable of acquiring a reputation distinctive of

the applicant's business activity. The real

questions are whether 'Motorcharge' has become

distinctive of the applicant's business and whether

the use of the name 'Motor Card' is likely to

mislead or deceive."

65. In Lumley Life Limited and Drake & Eades Pty Limited v. IOOF of Victoria Friendly Society 16 November 1989, (unreported) Lockhart J held that the word "Flexibond", an amalgam of the abbreviation for "flexible" and the word "bond", each of which were descriptive words, was itself essentially a descriptive name describing the nature of a bond. His Honour said at p 15:

"Whether a name has acquired a secondary meaning or

become distinctive of a particular producer's

product will have a direct bearing on whether the

conduct in question is or is likely to mislead or

deceive the relevant public. Where descriptive

words are used the applicant for relief must

establish that those words have become

distinctively associated with his product in order

to provide a basis for the relevant

misrepresentation: Telmak Teleproducts (Aust) Pty

Limited v. Coles Myer Limited (1988) 10 ATPR

40-038. The applicants have failed to do this in

the present case."

66. The application for an injunction by the applicants to restrain the use by the respondent of the name "IOOF Flexi Bond" in conjunction with single premium insurance bonds was refused.

67. To similar effect was the judgment of Gibbs J, as his Honour then was, with whom Barwick CJ and Murphy J agreed in B M Auto Sales Pty Ltd v. Budget Rent A Car System Pty Ltd (1976) 12 ALR 363 where, in considering whether the name "Budget Rent A Car" had become distinctive of the respondent's business, his Honour, after pointing out that "budget" was an ordinary English word and that the phrase "rent a car" was commonly used to describe a business of a particular kind, said at p 369:

"However, it is clear law that a name composed of

descriptive words may become distinctive of the

business of a particular person, and if a plaintiff

shows that the name in fact distinguishes his

business and that the use of the name by the

defendant is calculated to deceive persons into

supposing that the business carried on by the

defendant is that of the plaintiff, and is likely

to cause damage to the plaintiff's business, he

will be entitled to relief ...".

69. As the Full Court of this Court held in Telmak Teleproducts (Australia) Pty Ltd v. Coles Myer Limited (21 July 1988 unreported) at pp 10-12, the distinction between descriptive words and fancy names is not one of underlying principle. As Wilcox and Einfeld JJ said:

"In each case, in order to succeed, the plaintiff

must show that the defendant has misrepresented its

business or goods as being that of the plaintiff.

In either case, there may be a passing off; in

either case, it may be determined, as a conclusion

of fact, that there has been no misrepresentation.

The difference is an evidentiary one.

As Lord Simonds remarked, the courts will jealously

guard the entitlement of people to use ordinary

English words to describe their businesses and

their goods. To give to the first comer, in

effect, a monopoly of the use of ordinary English

words may be to preclude others from using the

words which most aptly describe their own

businesses or goods; a result which is scarcely

conducive to the public interest. Accordingly,

protection will not be granted against the use by

another of descriptive words unless the person

claiming protection is able to establish that those

words have acquired, amongst members of the public,

a secondary meaning distinctive of that person's

business or goods. In the relatively rare cases in

which this can be shown, the courts will restrain

the use by another of the words, whether or not

that use results from an intentional copying. The

reason is that otherwise the public would be likely

to be misled into thinking that the subject

business or goods was that of the plaintiff.

In the case of ordinary English words, proof of

deliberate copying affords some evidence that

people might be misled by the words. However, that

proof is less significant than in the case of a

'fancy' word; ex hypothesi, the words are ordinary

words descriptive of the defendant's business or

product and which it would be natural for it to use

without having any sinister intent. And because

the words are descriptive of the defendant's

business or goods, even a small difference will be

accepted as adequate to avoid confusion.

In the case of a 'fancy' name, a plaintiff's case

still depends upon the proposition that the name is

distinctive of its own business or product, so that

use of that name is likely to occasion confusion.

But it is much easier for the plaintiff to

establish those two elements. As the name is one

which was invented to describe the plaintiff's

business or goods it is, by definition,

distinctive. The question whether the use by

another trader of that same name will cause

confusion must always be a question of fact; but

if the plaintiff is able to show that it has used

the name to describe its business or goods,

distinctiveness will readily be inferred."

70. Each of the words "equity" and "access" are ordinary English words. They are not completely descriptive. No one could say on seeing them that they are so apt to describe a particular kind of business or financial product that they would be equally applicable to any business of a like kind. This is not to say that when the words are used in a particular context as here (i.e. in the context of a financial product) that they might not be seen to be at least in part descriptive of that product. In such a context the words signify the use of the equity in an asset as some form of security for raising money. While the products of both the respondents and the applicant differ the name "equity access" in a broad way is descriptive of both. All of the applicant and the first and second respondents appear to have chanced upon the name at more or less the same time, notwithstanding that, so far as appears, no company has before used the name in connection with a financial product. That coincidence of itself suggests that to some extent the name has a descriptive role to play to describe a product where a person seeking cash uses the equity in his home to obtain that cash.

71. Just as the distinction between descriptive and fancy names is not a distinction of law so too it is wrong to see the distinction in black and white terms. The reality is that there is a continuum with at the extremes purely descriptive names at the one end, completely invented names at the other and in between, names that contain ordinary English words that are in some way or other at least partly descriptive. The further along the continuum towards the fancy name one goes, the easier it will be for a plaintiff to establish that the words used are descriptive of the plaintiff's business. The closer along the continuum one moves towards a merely descriptive name the more a plaintiff will need to show that the name has obtained a secondary meaning, equating it with the products of the plaintiff (if the name admits of this - a purely descriptive name probably will not) and the easier it will be to see a small difference in names as adequate to avoid confusion.

72. In the present case I am of the view that while the name "equity access" has a degree of descriptiveness about it, given the context in which it is used, the words do admit of acquiring a secondary meaning or reputation. However, the evidence does not satisfy me that as at the relevant dates in March and May 1989 the applicant had established a sufficiently substantial reputation so that the use by the first and second respondents of the name in conjunction with Westpac or Challenge Bank as the case may be would be such as to deceive or mislead or be likely to lead to deception or misleading of persons in the relevant classes. Not only do I find on the facts that no substantial number of persons likely to become purchasers of financial products are likely to be misled or deceived but also I find that it is quite unlikely that any person is likely to be deceived or misled by the conduct of the respondents provided they use the name, as they have in the past, in conjunction with the name "Westpac" or "Challenge Bank" as the case may be.

73. Rather the facts of the present case present something of an analogy to the facts considered by Lockhart J in Lumley Life (supra) of which his Honour said at p 17:

"There is a possibility ...that there might in the

minds of some people be temporary and commercially

irrelevant confusion, but nothing that constitutes

misleading or deceptive conduct..."

74. It is clear from the evidence that each of the respondent banks has, as a matter of policy, adopted a distinctive logo and a distinctive name for the precise purpose of ensuring through advertising, stationery and the like that they have, and the names "Westpac" and "Challenge Bank" have, a substantial reputation throughout Australia in the financial community and with those who deal at the retail level in financial products (i.e. consumers). The use in these circumstances by the respondents of their distinctive names in conjunction with the name "equity access" thus provides a clear differentiation between the product of each bank and the product of the applicant, to the extent, if at all, that the applicant has such a reputation.

75. The name "equity access" has not on the evidence become distinctive of the business of the applicant and hence the applicant lacks sufficient reputation to ground an injunction against the respondents whether under s.80 of the Act or on common law principles.

76. It is true, as the applicant submits, that a person in either bank might enquire about "equity access" and be given information about the product of that bank without the bank's name being used but no person dealing with the bank is likely to be misled into believing that the product sold by the bank is in some way associated with the applicant. There was some evidence that the first respondents sold financial products of associated companies (e.g. Bill Acceptance Corporation Limited) and some suggestion by a witness (Mr Shepherd) that he might be led to believe that the applicant had done some deal with the respondents when he saw the name "equity access" used by the respondents but that evidence in my opinion falls short of satisfying me on the facts of the present case either that there is any real likelihood of relevant persons being misled or deceived, or that there is any misrepresentation of the necessary kind to found a claim under either ss.52 or 53.

77. As Lockhart J said in Lumley Life (supra) at p 18:

"Section 52 is not concerned with conduct where the

risk of infringement is remote: Global Sportsman

Pty Limited v Mirror Newspapers Limited (1984) 6

ATPR 40-463 and INXS v South Sea Bubble Co Pty

Limited (1986) 8 ATPR 40-667 per Wilcox J. at

47,376. The risk must be a real risk in a

practical sense and in all the circumstances:

Bridge Stockbrokers Limited v Bridges (1985) ATPR

40-502 per Lockhart J. at 46,023."

78. It is therefore unnecessary for me to consider submissions put by both respondents that an injunction should be refused on discretionary grounds having regard to what were said to be defects in the applicant's scheme and elements in the documentation and publicity that might be said to be misleading and deceptive.

79. In the result I would dismiss the application with costs.