Federal Court of Australia|1993-09-09|Before: Gummow J

Service Station Association Limited VBerg Bennett and Associates Pty Limited [1993] FCA 445; (1993) Atpr 41-266 (1993) 117 ALR 393 (1993) 27 IPR 23 (9 September 1993)

SERVICE STATION ASSOCIATION LIMITED v.BERG BENNETT and ASSOCIATES PTY LIMITED

Trade Practices - consumer protection - rival trade publications - whether contravention of s. 52 of the Trade Practices Act 1974.

Contract - implied terms - whether implied term of good faith in performance.

Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359.

Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234.

B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 52 ALJR 20.

Counsel and solicitors for the applicant: Mr M.S. Willmott instructed

Counsel and solicitors for the respondent: Mr D.M. Yates instructed

(1) The publication by the respondent of the issue of "Service

Station", a copy of which is Ex. A, occurred without the approval

to all of the proofs therefor having been obtained by the

respondent from the applicant, and the respondent thereby acted in

breach of its contract with the applicant.

(2) By the publication of the issue of "Australian Service Station and

Convenience Store News" dated April 1993, a copy of which is Ex.

C, the respondent engaged in conduct which contravened s. 52 of

the Trade Practices Act 1974 ("the Act").

(3) By the publication of the issue of "Australian Service Station and

Convenience Store News" dated May 1993, a copy of which is Ex. D,

the respondent engaged in conduct which contravened s. 52 of the

Act.

AND THE COURT ORDERS THAT:

The proceeding stand over to a date to be fixed for the making of further

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

GUMMOW J The applicant is a company limited by guarantee. It is often referred to as "the SSA". Its objects are the promotion and furtherance of the commercial interests of the proprietors of service stations within New South Wales. Membership of the applicant is and at all material times has been open to all proprietors of service stations situated in New South Wales. Included in the concept of "proprietor" are individuals, companies and partnerships being lessees, franchisees or commission agents, in addition to independent owners of service stations. There are approximately 2,800 service stations operating in New South Wales which sell by retail 30,000 litres or more a month. Of these, some 1550 are members of the applicant. Since about 1985, an average of 60% of service station proprietors have been members.

2. The Motor Trades Association of Australia ("the MTAA") is a national body of which the SSA is a member. In other States and Territories there exist other organisations which fulfil comparable functions to those of the SSA, and these bodies are members of the MTAA.

3. For many years, the applicant has provided a monthly magazine which it has circulated to its members. Initially it was entitled "Sales and Service". Between 1958 and 1963 it was called "SSA Journal" and between 1963 and 1985 "Automotive Service". In 1985, the name of the magazine was changed to "Service Station". This was embodied in a logo printed in capital letters with horizontal lines running through the word "Station". The logo has appeared in this form on the front of every cover since January 1985. There has also been a second logo on each front cover, this one prominently featuring the initials "S.S.A.".

4. The purpose of the magazine has been to inform members of the applicant of its activities, and to advise and inform readers of matters pertaining to the operation of a service station business. There have been articles concerning features of equipment, rights of franchise proprietors, staff problems, petroleum agreements, regulatory legislation and regular features such as the comic strip "Polly the Pumper". The magazine has been distributed free to all members of the applicant. A small number of complimentary copies have also been distributed to non-members.

5. Before February 1988 the magazine was prepared and published by the SSA on its premises. The printing was done by a contract printer. This litigation arises from the breakdown of contractual relations between the applicant and the respondent pursuant to which the magazine was published for some years. The contractual relationship initially was the product of discussions in 1987 between Mr Kollington, who has been an officer of the applicants since 1987, and Mr Keith Berg, a principal of the respondent.

6. The respondent commenced business in October 1987. It offered a copywriting service for advertising, corporate newsletters, magazines and brochures. Arrangements were made later in that year whereby the applicant engaged the respondent to publish the magazine and to advise the applicant upon the design and layout. The contractual arrangements between the parties took various forms, being expressed partly orally and partly in writing. It is agreed that, subject to certain modifications thereafter, the contract took its final form in January 1990.

7. From about October 1988 the respondent took a large part of the financial burden and risk in publishing the magazine for the applicant. Part of the arrangement between the parties was that the respondent was entitled to seek out and enter into arrangements on its own behalf with advertisers. The contracts which it made with them were as principal, not as agent for the applicant. The receipts generated by this activity belonged to the respondent and were its principal source of income. The advertisers included suppliers of spare parts and other automotive products, including equipment for use by service stations. By June 1992 the magazine, on Mr Berg's evidence, was "breaking even on all its costs" and paying him an annual salary of about $65,000. At one stage there was an agreement that the applicant receive 15% of billings from advertisers, but this appears never to have been implemented.

8. In March 1990 the magazine "went national" i.e. it was distributed to non-members outside New South Wales, whilst within the State it was distributed to members. The cost of the national distribution was borne by the respondent. In August 1990 the magazine was first distributed to non-members in New South Wales. The cost of all distribution in New South Wales also now was borne by the respondent. There was dissatisfaction by some members at this change, and this dissatisfaction increased in 1991 and 1992. The respondent was opposed to any reimposition of a restriction upon circulation of the magazine. The parties also disagreed as to the editorial policy and general content of the magazine. There were many discussions between the parties, but they did not resolve these difficulties.

9. The editor was Mr Brian Mark. He was Executive Director of the SSA from 1982 until July 1993. On the title page of the "Service Station" magazine there appeared a statement that "Service Station" was published by Berg Bennett and Associates "on behalf of the Service Station Association in the interests of service station operators".

10. On 5 February 1993 the respondent wrote to the applicant stating that it would cease to publish the magazine after the March 1993 issue. The letter also stated: "We will publish a new industry magazine under a completely new title, which is yet to be decided . . .". It was said that the new magazine would be "totally independent of any oil company, trade association or industry supplier" and that it would concentrate more on commercial rather than Association matters. Further conversations and correspondence followed. On 1 March 1993, the respondent notified the applicant, by letter:

"After extensive research and detailed advice,

we are committed to the publication of the new

magazine, Australian Service Station and

Convenience Store News. We have been advised by

both our trade marks lawyer and our media lawyer

that the use of the words "service station" in

the title of the new magazine contravenes no

proprietorial rights. Indeed, there are many

precedents and one example is the co-existence

of three magazines: National Newsagent,

Newsagent and Stationer and Newsagency News."

11. The last issue of the magazine "Service Station" which was published under the arrangements which had existed between the applicant and the respondent bears the date March 1993 (Ex. A). It was distributed in the third week of March. The total print run of Ex. A was about 11,000. Of this, 1300 were complimentary copies for advertisers, industry suppliers and the like, 1550 went to members of the SSA, 1300 to subscribers, and the balance to other service station dealers, convenience store dealers and fuel distributors who were neither SSA members nor subscribers and who did not pay for the magazine. The first issue of the "Australian Service Station and Convenience Store News" bears the date April 1993 (Ex. C). Monthly issues under the same banner have followed. The publisher is shown as the respondent. There are about 1300 subscribers, but the principal source of revenue is from advertisements.

12. For its part, the applicant made other arrangements for the publication by MTA-Q Media, in Brisbane, of what it described as the "revitalised" "Service Station" magazine. ("MTA-Q Media" is a business conducted by The Motor Trades Association of Queensland ("MTAQ"); the MTAQ is a member of the MTAA.) The first of these issues appeared in June 1993, as Vol. 59 No. 6 (Ex. B). There had been no issues for April and May.

13. As matters stood at the time of the trial, in August, the two monthly magazines were in circulation. The applicant's magazine had a print run of 10,000 and that of the respondent 11,400. About 1600 copies of the applicant's magazine are distributed to its membership in New South Wales, and the balance to non-members (including advertisers in the magazine) both in New South Wales and elsewhere in Australia. Each publication appears to be distributed by mail. Neither is sold on newsstands.

14. In this proceeding, the applicant seeks injunctive and declaratory relief, damages and other relief. In particular, it seeks an injunction restraining the respondent from publishing, distributing or selling any magazine under a title bearing the words "service station" or any similar name so as to induce the belief that the publication emanates from or is authorised by the applicant. By agreement between the parties, issues of liability to declaratory and injunctive relief are to be determined before any questions as to the quantum of pecuniary remedy. The case against the respondent is based upon alleged breach of contract, passing-off, and contravention of s. 52 and s. 53 of the Trade Practices Act 1974 ("the T.P. Act"). A claim also is made for misuse of confidential information, being names and addresses of the members of the applicant and those non-members who were subscribers to the applicant's magazine.

15. The crucial terms of the agreement in its final form are found in a letter from Mr Berg to Mr Kollington bearing the date 22 January 1989 (an error for 1990) which was signed by Mr Kollington on 22 January 1990. It provided for termination by either party on 1 month's notice in writing. It also required that proofs be submitted by the respondent for approval by the SSA. This submission was to happen on the 10th day of the month preceding the month of the issue in question. The approved proofs were to be sent back to the SSA on the 12th day. There was to be national distribution by the respondent to service station operators and other parties outside New South Wales as the respondent saw fit, "except for existing SSA interstate mailings". The respondent was to meet the costs of non-New South Wales distribution "except for existing SSA interstate mailings" and the respondent was to "own all advertising revenue". Within New South Wales the respondent was to distribute as instructed by the applicant, and the applicant was to meet the costs of that distribution with no margins or supervision fees payable to the respondent. As I have indicated, the first national issue under these arrangements was that for March 1990. This also was the first issue run on a four colour press.

16. There were further modifications to this contract. In about July 1990, the parties agreed that the respondent would publish and distribute the magazine to non-members of the applicant in New South Wales, on condition that the respondent paid the distribution costs to both members and non-members in that State. The first issue to which this system applied was that for August 1990. Further, by supplementary agreement (evidenced by a letter dated 5 October) with effect from 22 October 1990, the respondent took over the sales and administration of subscriptions to the magazine, so that all costs, and all income, associated with subscription sales accrued thereafter to the respondent. The respondent was to pay the applicant a one-off lump sum of $6,000 on 29 June 1991 "in the form of a commission on subscription sales". Complementary copies were still to be handled by the applicant. The applicant was to provide an up to date list of all subscribers by 19 October 1990 for inclusion on the respondent's data base and to refer all subscription inquiries and renewals to the respondent. Further, the respondent was to pay to the applicant a monthly editorial fee of $500 commencing on 30 November 1990. This fee was to be indexed to the CPI and adjusted each November.

17. Thereafter the respondent substantially increased the list of subscribers to the magazine from about 120 to about 1300 by February 1993. As I have indicated, before the magazine had "gone national" in March 1990, the magazine (save for complimentary copies) had been distributed to members only. They got it as part of a consideration for their membership fee, and without further payment. There also had been about 120 service station proprietors in other States who had subscribed to the magazine; they were not members of the SSA.

18. The case for breach of contract rests upon implied terms alleged by the applicant. The first of these terms appears from paras. 20 and 21 of the Statement of Claim, and the second from paras. 22 and 23. The first term is said to be implied so as to give business efficacy to the express terms. The second term is said to be an obligation to act in good faith toward the applicant in performance of the contract.

19. I will set out the terms of paras. 20 and 21 and state my conclusions upon them before turning to consider the issues which, at the threshold, arise in relation to the second implied term.

"20. It was an implied term of each of the agreements that

the Respondent was not entitled to use or copy the

title, design, appearance, layout and format of the

magazine or any part thereof without the prior consent

of the Applicant for any purpose. The implied term is

inferred from the express terms of the agreements and

further by the fact that the magazine, from and during

the time the Respondent first contracted to provide

its services as previously described, was a journal

issued by and in the name of the Applicant and which

was directed primarily to the members of the Applicant

to further the interests of the Applicant and its members.

21. In breach of the implied term referred to in paragraph

20 hereof, the Respondent has printed, published and

distributed a magazine ("the pirated magazine")

entitled "Australian Service Station and Convenience

Store News" in the months of May and June 1993 which

pirated magazine is identical in design, layout and

format to the magazine and which carries as part of

its title the words 'Service Station'".

21. It will be readily recalled that the process by which terms are implied, not as a matter of law, but to give effect to some evident underlying intention of the parties and provide "business efficacy", is somewhat strictly regulated in Australia by a consistent body of High Court authority. The statement by the Privy Council in B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 52 ALJR 20 at 26, has been approved and applied in Secured Income Real Estate (Australia) Limited v St Martins Investments Proprietary Limited [1979] HCA 51; (1979) 144 CLR 596 at 605-606, Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 351-352, 404, Hospital Products Limited v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41 at 65-66, 95, 117-118, 121, Moorgate Tobacco Co. Limited v Philip Morris Limited (No. 2) [1984] HCA 73; (1984) 156 CLR 414 at 435, and The Corporation of the City of Adelaide v Jennings Industries Limited [1985] HCA 7; (1985) 156 CLR 274 at 281-282.

22. The crucial passage in the judgment of the Privy Council (52 ALJR at 26) was:

"Their Lordships do not think it necessary to

review exhaustively the authorities on the

implication of a term in a contract which the

parties have not thought fit to express. In

their view, for a term to be implied, the

following conditions (which may overlap) must be

satisfied: (1) it must be reasonable and

equitable; (2) it must be necessary to give

business efficacy to the contract, so that no

term will be implied if the contract is

effective without it; (3) it must be so obvious

that 'it goes without saying'; (4) it must be

capable of clear expression; (5) it must not

contradict any express term of the contract."

Their Lordships then went on to refer to passages from certain authorities, in particular the well known judgment of Bowen LJ in The Moorcock (1889) 14 PD 64 at 68.

23. Although on its face, para. 20 is concerned with the implication of a term in "each of the agreements" which are pleaded earlier in the Statement of Claim, this position was revised in the course of address. The Statement of Claim alleges agreements commencing in December 1987. But, as I have indicated, the agreement which was in force at the time of the conduct of the respondent of which SSA complains was that of 22 January 1990, as modified in July and October of that year.

24. The applicant relies upon the circumstance that from the time the respondent first became involved with the magazine, late in 1987, it was a journal issued in the name of SSA and primarily directed to its members and to the furthering of the interests of those members.

25. However, if that approach is to be adopted, it is necessary to look also to the position taken over this period by the respondent. The evidence then gives a clear picture that this is not a case of the development and manifestation during their previous dealings of attitudes or beliefs which were common to the parties; rather, the evidence suggests that what was agreed in January 1990, as modified thereafter, represented the totality of their willingness to agree: cf Codelfa supra at 346, 354. That being so, there is added force in the submission for the respondent that the implied term cannot be said to have been so obvious that "it goes without saying" and that it cannot be said that the contract would have been ineffective without the alleged implied term.

26. In late 1989, the respondent prepared a 6 page document headed:

S.S.A. Berg Bennett

Heads of Agreement

Service Station Magazine

Under the heading "Ownership of the Magazine" the following appeared:

"The S.S.A. is responsible for the reservation

of the Service Station name in all states, and

is the official publisher and owner of the

magazine.

B.B. owns the goodwill of readers and

advertisers, and the physical design of the

magazine."

This latter sentence was expressive of the contention advanced by Mr Berg from time to time in his dealings with Mr Kollington and Mr Brian Mark that the respondent "owned the look and feel of the magazine". In one of his affidavits, Mr Berg put the position as follows:

"At no time did Berg Bennett claim ownership of

the title of 'Service Station' nor did it lay

claim to the right of editorial control. Berg

Bennett has always laid claim to the design of

'Service Station', the database used for its

distribution, the goodwill of advertisers and

the means of production, all of which it had

developed independently of the (SSA)."

27. There is an issue which, in the event, it is unnecessary to resolve, of whether at a meeting between Mr Mark, Mr Berg and Mr Berg's business associate Robyn Bennett, on 23 April 1990, that is to say after entry into the 1990 contract, it was agreed between those present that whilst SSA owned the rights to the name "Service Station" and the logo, the respondent "owned the look and feel of the magazine". What is apparent from Mr Kollington's hand written annotations to the "heads of agreement" which had been prepared by the respondent in late 1989, is that the SSA had then rejected the contention that the respondent owned the goodwill of readers and advertisers and the physical design of the magazine. On the other hand, Mr Berg had urged and continued to urge that this was so. The matter was a bone of contention between the parties, and one which was not resolved by any express treatment in the agreement which they did reach in January 1990. I accept the submission for the respondent that the term pleaded in para. 20 was not necessary to give business efficacy to the particular form of contract that was agreed. The implication of such a term, in the circumstances as described, cannot be so obvious that "it goes without saying".

28. It follows that so much of the applicant's case as rests upon paras. 20 and 21 of the Statement of Claim fails.

29. Paragraphs 22 and 23 of the Statement of Claim are in the following terms:

"22. It was a further implied term of the agreements that

the Respondent was obliged to act in good faith toward

the Applicant and in particular the Respondent would

not, without the consent of the Applicant, make use of

any information of a confidential character

communicated to it by the Applicant without the prior

consent of the Applicant and further would not

compete, during the currency of the agreements, with

the Applicant by producing and/or distributing any

magazine of a like nature to the magazine.

(Emphasis supplied)

23. In breach of the further implied term referred to in

paragraph 22 hereof the Respondent without the consent

or knowledge of the Applicant (a) used certain

confidential information which had been communicated

to it by the Applicant, viz. the names of the members

of the Applicant and other subscribers to the

magazine, and distributed the pirated magazine to the

same; and (b) advertised the pirated magazine in the

March, 1993 issue of the magazine."

30. What, in Australian law, is involved in the implication of a term that one party is obliged to act in good faith towards the other during the currency of the contract between them? Counsel for the applicant referred to the well-known paper by Professor Lucke on the subject. Reference also was made in argument to Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234.

31. The concept of "good faith" appears in various areas of the law, in each case with a distinct body of authority as to its meaning and application. The doctrine of the "bona fide purchaser" of the legal estate is one example. Another is the obligation of the fiduciary to act in good faith towards the principal. The relationship of partners inter se calls for particular applications of this general fiduciary principle, even where there are written articles of partnership. Equity also imposes a particular obligation of good faith in the exercise of the powers of a mortgagee upon default: Downsview Nominees Ltd v First City Corp. Ltd (1993) 3 All ER 626. Another example may be equitable doctrines which are concerned with the setting aside of transactions (including contracts) by reason of misrepresentation, presumed undue influence, or illegitimate pressure, or the like. The term "good faith" also is used in important areas of statute law, for example bankruptcy law (e.g. Bankruptcy Act 1966, ss. 120, 121, 122, 123, 124) and insurance law (e.g. Insurance Contracts Act 1984, s. 13). See, further, Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1 at 40-41, per Handley JA.

32. Section 205 of the Restatement, Contracts 2d, 1981, states:

"Every contract imposes upon each party a duty

of good faith and fair dealing in its

performance and its enforcement."

As the Comment and Reporter's Note to the Restatement make clear, the Restatement is not concerned with good faith in any of the above senses. What does appear is that (a) a term to the effect of 205 is said to be implied as a matter of law, subject to the qualification that the parties are free to determine by express agreement what "good faith" will permit or require of them; see Burton "Breach of Contract and the Common Law Duty to Perform in Good Faith" (1980) 94 Harv L Rev 369 at 371-372, and (b) a duty of good faith is not imposed upon parties before they have reached agreement and whilst they are in negotiations: see Farnsworth "Contracts", 2nd Ed., 1990, 7.17.

33. In Australia, that latter proposition is to be contrasted with the operation of s. 52 of the T.P. Act in cases such as Demagogue Pty Ltd v Ramensky [1992] FCA 557; (1992) 110 ALR 608, esp. at 609-610, 614-619. But, viewed through the prism of the common law, a promise to negotiate in good faith may be illusory: Coal Cliff Collieries supra, Walford v Miles (1992) 1 All ER 453, and cf Farnsworth supra 2.13. The immediate point is that s. 52 is directed not to classes of case but to the circumstances of the particular case, something not adequately or readily accommodated in the implication of a term by law.

34. It is an unresolved question whether, as the applicant would have it, a term such as that in 205 is to be implied in Australia as a matter of law. A term is implied by law in at least two ways. The first is on the footing that the term has become so much a part of common understanding or practice that the courts import it as a matter of course. An example is the implication into the contract between members of unincorporated societies that on dissolution surplus funds should belong to the then existing members, subject to any expressly declared trusts or contract terms which confer benefits on third parties: Re Bucks Constabulary Widows' and Orphans' Fund Friendly Society (No. 2) (1979) 1 All ER 623. Secondly, the term is implied not by reference to the actual or presumed intention of the parties, but as part of "the felt necessities of the time" as to what ought to be the case: Devefi Pty Limited v Mateffy Perl Nagy Pty Limited (1993) 113 ALR 225 at 239-241. It then may be a question as to how these necessities may be ascertained and by and of whom.

35. Further, in the United States itself it has been said that the good faith performance doctrine may appear as a licence for the exercise of judicial or juror intuition, resulting in unpredictable and inconsistent applications, requiring repeated adjudication before an "operational standard" may be "articulated and evaluated": Burton supra 369-370. Given the diversity of common law jurisdictions in the United States, it will remain difficult to speak with any certainty of a generally accepted doctrine.

36. In United States Surgical Corporation v Hospital Products International Pty Limited (1982) 2 NSWLR 766 at 799-801, McLelland J accepted the expert evidence given as to the interpretation of 205 by Judge Breitel, then recently retired as Chief Judge of the New York Court of Appeals. Speaking of that evidence and of 205, McLelland J said (at 800):

"I accept, at least insofar as it would have any

application to the facts of the present case,

that this obligation 'extends only to the

performance of the express terms of an

agreement', 'may not be used as a springboard

for other implied terms' and 'simply means that

neither party to an agreement may do anything to

impede performance of the agreement or to injure

the right of the other party to receive the

proposed benefit' (affidavit of Judge Breitel,

par. 56). So considered, such an implied

obligation would appear not to demonstrate any

material divergence from the law of New South

Wales, and in substance probably represents the

principle stated by the High Court of Australia

in Secured Income Real Estate (Australia)

Limited v St Martins Investments Pty Limited

[1979] HCA 51; (1979) 144 CLR 596 at 607, quoting the words

of Griffith CJ in Butt v McDonald (1896) 7

QLJ 68, at 70, 71."

Further, on appeal to the High Court, Dawson J spoke with apparent approval of this passage in McLelland J's judgment, supra 156 CLR at 137-138. Professor Farnsworth, supra 7.17a, has said that many of the uses "to which the new concept of good faith is put today do not go beyond those to which the traditional techniques of interpretation and gap filling were put in yesteryear".

37. The particular passage in Secured Income Real Estate supra at 607-608, in the judgment of Mason J, is as follows:

"But it is common ground that the contract

imposed an implied obligation on each party to

do all that was reasonably necessary to secure

performance of the contract. As Lord Blackburn

said in Mackay v Dick (1881) 6 App Cas 251 at

263:

'as a general rule . . . where in a

written contract it appears that both

parties have agreed that something shall

be done, which cannot effect-ually be done

unless both concur in doing it, the

construction of the contract is that each

agrees to do all that is necessary to be

done on his part for the carrying out of

that thing, though there may be no express

words to that effect.'

It is not to be thought that this rule of

construction is confined to the imposition of an

obligation on one contracting party to

co-operate in doing all that is necessary to be

done for the performance by the other party of

his obligations under the contract. As Griffith

CJ said in Butt v McDonald (1896) 7 QLJ 68

at 70-71:

'It is a general rule applicable to every

contract that each party agrees, by

implication, to do all such things as are

necessary on his part to enable the other

party to have the benefit of the contract.'

It is easy to imply a duty to cooperate in the

doing of acts which are necessary to the

performance by the parties or by one of the

parties of fundamental obligations under the

contract. It is not quite so easy to make the

implication when the acts in question are

necessary to entitle the other contracting party

to a benefit under the contract but are not

essential to the performance of that party's

obligations and are not fundamental to the

contract. Then the question arises whether the

contract imposes a duty to cooperate on the

first party or whether it leaves him at liberty

to decide for himself whether the acts shall be

done, even if the consequence of his decision is

to disentitle the other party to a benefit. In

such a case, the correct interpretation of the

contract depends, as it seems to me, not so much

on the application of the general rule of

construction as on the intention of the parties

as manifested by the contract itself."

An illustration of the operation of the principles referred to in the last three sentences of this passage, is the decision of the New York Court of Appeals in Wigand v Bachmann-Bechtel Brewing Co. 118 NE 618 (1918). A promise by the defendant to sell to the plaintiff all of a particular commodity produced at its factory did not entitle the defendant to escape breach by discontinuing production; it was obliged for the life of the contract to continue production "in good faith".

38. The law also implies a negative covenant not to hinder or prevent the fulfilment of the purpose of an express promise: Shepherd v Felt and Textiles of Australia Ltd [1931] HCA 21; (1931) 45 CLR 359 at 378, per Dixon J.

39. Where one party has an express power the exercise of which will significantly affect the interests of the other party (e.g. by cancellation of their supply contract) if the holder of the power is satisfied that a certain state of affairs exists, the words of the contract are fairly readily construed (and the more so when the parties have given such a power to a third party) as requiring a reasonable as well as honest state of satisfaction; see the authorities referred to by Priestley JA and Handley JA in Renard Constructions supra at 260, 279-280, and see also Amann Aviation Pty Limited v Commonwealth of Australia [1990] FCA 55; (1990) 22 FCR 527 at 532, 542-3; and in the High Court[1991] HCA 54; , 66 ALJR 123 at 135. But this is a result arrived at by a process of construction of the express terms in the setting of the contract as a whole. It is best not seen at all as the implication of a further term.

40. There is a number of cases where an obligation to act reasonably and in good faith is implied as a term to give business efficacy to a contract which otherwise would be apt to fail for uncertainty. Loosely drafted terms in vendor and purchaser contracts as to the provision of finance (e.g. Meehan v Jones [1982] HCA 52; (1982) 149 CLR 571) and in leases as to the fixing of the rent by the nominee of a third party (e.g. Booker Industries Pty Limited v Wilson Parking (Qld) Pty Limited [1982] HCA 53; (1982) 149 CLR 600) provide examples.

41. However, as Handley JA pointed out in Coal Cliff Collieries supra at 40-41, these are cases where an express term is given business efficacy and saved from classification as an illusory promise by the addition of an implied term; these are not cases where an obligation of good faith in contractual performance is imposed by law.

42. A recent example of the operation of these principles is the decision of the Court of Appeal of British Columbia in Empress Towers Limited v Bank of Novia Scotia (1990) 50 BCLR (2d) 126. A lease provided that the rent for any renewal period would be "the market rental prevailing at the commencement of that renewal term as mutually agreed" between the parties. If no agreement was reached within two months of the exercise of a renewal option, the lease was determinable at the option of either party. The majority of the Court of Appeal were of the view that the renewal clause would be struck down for uncertainty if there was not implied "under the officious bystander and business efficacy principles" a term that the landlord would negotiate in good faith and that an agreement on a market rent would not be unreasonably withheld. On the other hand, Wallace JA (at 136) said:

"In the instant case, the parties were well

aware of various contractual provisions which

would remove any uncertainty respecting the

method of fixing of a renewal rental. They left

the rental to be fixed by the future consensus

of the parties. They anticipated such consensus

might not be attained and provided what the

rights of the respective parties would be in

such an event. There is nothing before us to

indicate such an agreement lacks 'business

efficacy'. I would reject the submission that

this contract be reformed by the court implying

a term of 'good faith'."

43. It might be thought a curious result if, in Australia, these principles applied to what might shortly be called "the business efficacy test" for implied terms, whilst there was, concurrently, a term implied by law of the loose nature of the "good faith" criterion of performance. "We must, of course, build upon established foundations and without destroying the symmetry of the existing building: but we need not be fearful of making additions to fill vacant spaces if they accord with what is already standing": Smith v Jenkins [1970] HCA 2; (1970) 119 CLR 397 at 417, per Windeyer J (emphasis supplied).

44. Further, it will be noted that 205 is expressed as an affirmative obligation. That presents obvious difficulty for the attraction of the jurisdiction to enjoin covenants which are negative in substance. Thus, it would apparently remain to be seen whether the positive obligation of performance in good faith implies a negative covenant not to perform in "bad faith": cf. O'Keefe v Williams [1910] HCA 40; (1910) 11 CLR 171 at 211. However, in Canada, it has been said that "good faith" cannot be defined with any meaningful precision and the only definition or guidance that can be provided "is via modern examples of bad faith behaviour": Gateway Realty Limited v Arton Holdings Limited (No. 3) (1991) 106 NSR (2d) 180 at 197. It is difficult to see how in many cases an injunction of the appropriate specificity might then be framed.

45. What does appear is that the various North American jurisdictions have not yet developed "a coherent theory of good faith": L cke "Good Faith and Contractual Performance" in Finn, Ed., Essays on Contract, 1987, p 155 at p 161, the paper to which counsel for the applicant referred. In Gateway Realty Limited v Arton Holdings Limited (No. 3) supra it was said:

"'Good faith' conduct is the guide to the manner

in which the parties should pursue their mutual

contractual objectives. Such conduct is

breached (sic) when a party acts in 'bad faith'

- a conduct that is contrary to community

standards of honesty, reasonableness or

fairness."

Invocation of "community standards" may be no more than an invention by the judicial branch of government of new heads of "public policy", something long ago regarded as a risky enterprise; cf Gollan v Nugent [1988] HCA 59; (1988) 166 CLR 18 at 35, per Brennan J. It cannot be less so in the modern administrative state "shaped by explicitly adopted policies, incorporated in legislation and implemented by a large array of large regulatory agencies": Gunningham "Public Choice: The Economic Analysis of Public Law" (1992) 21 Fed L Rev 117.

46. However, in Gateway Realty (at 197) it was then said:

"In most cases, bad faith can be said to occur

when one party, without reasonable

justification, acts in relation to the contracts

in a manner where the result would be to

substantially nullify the bargained objective or

benefit contracted for by the other, or to cause

significant harm to the other, contrary to the

original purpose and expectation of the parties.'"

That bears a closer relationship to the generally accepted position in Anglo-Australian law.

47. Before looking ahead, it may be wise to look to what has gone before. In the first edition of the Corpus Juris, Vol. 13, para. 721, published in 1917, the authors wrote:

"Each party to a contract impliedly agrees not

to prevent the other party from performing or to

render performance impossible by any act of his

own, and a promise to perform a particular act

implies a promise not to perform an inconsistent

act."

One of the authorities cited for these propositions was Sprague v Booth (1909) AC 576. In that case, at 580, the Privy Council set out the passage from the speech of Lord Blackburn in Mackay v Dick supra to which Mason J was to refer in Secured Investments supra. At that stage, therefore, it appears there was not a great deal of difference between the development of the common law on either side of the Atlantic.

48. In Kirke La Shelle Co. v Paul Armstrong Co. 188 NE 163 (1933), the New York Court of Appeals was dealing with a contract whereby the plaintiff was to receive half of the profits from the production of a particular play, the contract having been made before the invention of talking pictures. It was held that there was an implied obligation on the part of the licensor not to render valueless the rights conferred by the granting of talking picture rights to a third party. The court referred to various authorities and said (at 167):

"In the last analysis those cases only apply the

principle that in every contract there is an

implied covenant that neither party shall do

anything which will have the effect of

destroying or injuring the right of the other

party to receive the fruits of the contract,

which means that in every contract there exists

an implied covenant of good faith and fair

dealing" (Emphasis supplied)

If the passage underlined is read as more than a summary statement of the contents of that which went before it, then it was, one might have thought, a non sequitur.

49. However, one of the cases referred to in Kirke La Shelle was Brassil v Maryland Casualty Co. 104 NE 622 (1914). This is another decision of the New York Court of Appeals. There (at 624) the court had spoken, in fairly general terms, of an "implied obligation of good faith and fair dealing" in contractual performance. Brassil was also cited by the same court, in Wigand supra at 619, as authority that every contract "implies good faith and fair dealing between the parties to it". (But, as I have indicated, the result in Wigand is explicable on narrower grounds.) It is from authorities such as these that there existed the germs of the principle now sought to be generally applied by 205 of the Restatement on Contract, 2d.

50. Anglo-Australian contract law as to the implication of terms has heretofore developed differently, with greater emphasis upon specifics, rather than the identification of a genus expressed in wide terms. Equity has intervened in matters of contractual formation by the remedy of rescission, upon the grounds mentioned earlier. It has restrained freedom of contract by inventing and protecting the equity of redemption, and by relieving against forfeitures and penalties. To some extent equity has regulated the quality of contractual performance by the various defences available to suits for specific performance and for injunctive relief. In some, but not all, of this, notions of good conscience play a part. But it requires a leap of faith to translate these well established doctrines and remedies into a new term as to the quality of contractual performance, implied by law.

51. It also is to be borne in mind that treatment of the common law of simple contracts as a coherent whole is of fairly recent origin. There is already a degree of artificiality in forcing the wide range of contractual activities encountered in the community into the framework required by the standard contracts texts. One example is the application of contractual principles to the relations between past, present and future members of property owning unincorporated associations. See, for example, Master Grocers' Assoc. of Victoria v Northern District Grocers Co-operative Ltd [1983] VicRp 16; (1983) 1 VR 195 at 201-204, Ford and Lee "Principles of the Law of Trusts", 2nd Ed., 1990, 530. Another example is the classification in terms of offer and acceptance and animus contrahendi of dealings for value between the citizen and a public body, pursuant to statute, for the provision of information held only by that body and vital for the business affairs of the citizen; in one such case it was held there was no contact for the issue of a certificate under s. 149 of the Environmental Planning and Assessment Act 1979 (N.S.W.): Lismore City Council v Stewart (1989) 18 NSWLR 718 at 726.

52. The implication of a term by operation of law, applicable across the whole spectrum of the law of contract, is a major step. Further, in deciding to take any such step it is now idle to speak to "the law of contract" without a real appreciation of the deep impact in Australia of various statutory regimes, one of which, of course, gives rise to a most substantial body of work in this Court, and has done so now for many years.

53. The course of decision in North America may exemplify what the late Professor Stone called a category of indeterminate reference, predicated on a "fact-value" complex, not mere facts: "Legal System And Lawyers' Reasonings", 1964, Ch 7, 11. It is true that there may be a number of categories of indeterminate reference which already exist in the case law in Australia. However, that is no reason to add to them. The House of Lords and Privy Council have warned against extending the imprecisely framed tort of negligence so as to supplant other torts and equitable doctrines: CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] UKHL 15; (1988) AC 1013 at 1059, Downsview Nominees supra at 638.

54. One general concept of uncertain content which was not imported from the United States was the tort of "unfair competition"; see Moorgate Tobacco supra. The judgment of Deane J in that case, with its close analysis of the course of authority in the United States, at federal and State level, and of Australian case and statute law, serves to illustrate the caution necessary in accepting foreign importations, without prior scrutiny and comparison with development of the law here.

55. Another example is the recognition in David Securities Pty Limited v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 at 378-379, that in Australian law unjust enrichment is not a definitive legal principle according to its own terms, and that it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is unfair or unconscionable; rather, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality.

56. In any event, no authority which binds this Court supports the implication by law of a term of such a width as that in 205, or as pleaded in the opening passage of para. 22.

57. However, the pleader of paras. 22 and 23 also there alleges a narrower formulation of the term. It remains to be seen whether the paras. may be supported in this specific form.

58. The term alleged in para. 22 contains two specific elements. Each is put as an instance of the "good faith" obligation, not as an implication to give "business efficacy". The first element is that the respondent would not misuse certain confidential information. The second is that "during the currency of the agreements" the respondent would not compete with the applicant by producing or distributing any magazine "of a like nature" to that of the applicant. Again, the phrase "the agreements" is to be understood as a reference to the agreement of January 1990, as subsequently modified.

59. The position as to the first of these elements is readily determined by the course taken by the evidence. The alleged breach of the obligation as to confidential information is said to be the use by the respondent of the names of members of the SSA and of other subscribers for the distribution of the respondent's publication; this information is alleged to have been communicated by the SSA to the respondent.

60. Mr Foulds, who gave evidence and who is Managing Director of Uljan Holdings Pty Limited (which trades as Achip Information Technologies) was instructed by the respondent in January 1990 to develop a database of service stations in Australia. The business of Achip Information Technologies is the provision of programming, maintenance and training services in relation to computerised databases. The respondent supplied Mr Foulds with a body of data known as the desktop marketing system. This contained every listing which appeared in every regional issue of the yellow pages directory published in Australia for the year 1989, and yielded approximately 12,000 service station listings. He was also supplied by the respondent with a floppy disc containing listings of service stations throughout Australia. This had been supplied to the respondent by a Perth based company, Motorcharge Pty Limited, and the data had been gathered by field representatives of Motorcharge. This data was incomplete and contained only 4000 or 5000 listings. From this raw material, Mr Foulds devised a composite database of 11,700 service stations which was made available to the respondent in February 1990.

61. The details of the subscribers, the numbers of which were built up to about 1300 by February 1993, as a result of the efforts of the respondent, were added to the database. Early in March 1993, following instructions by Mr Berg, Mr Foulds deleted any indicia in the data of SSA membership. From the end of March 1993, no information regarding membership or otherwise of the SSA has been present on the database.

62. Accordingly, even if there were an implied term as to the use of confidential information, and even if the information in question had the necessary confidential character, there was, on the evidence, no breach of such a term.

63. I should add that paras. 24-27 contain a separate claim based directly in an equitable obligation of confidence. The factual findings which I have made also produce the result that this claim fails.

64. The remaining contractual allegation is that during the currency of the agreement, that is to say in the month after the giving of notice on 5 February 1993, the respondent prepared and published the March 1993 issue of "Service Station" and inserted on the centre pages an advertisement for its own coming publication "Australian Service Station and Convenience Store News". Further, on p. 4, the "Mail Bag" page, letters were solicited by inviting telephone calls to the number "(02) 555 1355". This was the telephone number of the respondent.

65. These activities during the final month of the contract between the parties are said to have broken an implied term that during the currency of the agreement the respondent would not compete by producing or distributing any magazine "of a like nature" to "Service Station". When, in late February 1993, Mr Kollington saw the final mock up of the March 1993 issue, he remonstrated with Mr Berg and complained of the reference to the respondent's phone number on the letter page and to the advertisement on the centre spread. Mr Berg said that he believed this was fair. Mr Kollington said "Of course you do, but they are out". In the course of a conversation on the next day, Mr Berg indicated that he would change the mail bag page but was not changing the centre spread. Mr Kollington indicated that he was now happy as to the position regarding the letter page, but said "I'll have to take advice on the centre spread". There were no further conversations between the parties on this subject prior to the appearance of the March 1993 issue.

66. The position thus was that both the centre spread and the detail in the letter page as appearing in the published issue, did not have the approval of the SSA.

67. I have earlier indicated that there was an express term in the January 1990 agreement that the proofs of each issue would first be submitted by the respondent for the approval of the SSA. In such a case, the law implied a negative covenant by the respondent not to hinder or prevent the fulfilment of the purpose of that express promise. I have referred earlier to authority for that proposition. The publication of the March 1993 issue by the respondent without obtaining the approval of the SSA to the proofs in the particular respects to which I have referred, was a breach of that negative covenant. What happened prevented the fulfilment of the purpose of the express promise.

68. The advertisement of the pending publication of the respondent's new magazine, in the centre page spread of the March 1993 issue of "Service Station", is given as the particular relied upon as a breach of the alleged implied term that the respondent would not, during the currency of the 1990 agreement, compete with the SSA by producing or distributing any magazine of a like nature to "Service Station".

69. As I earlier indicated, with reference to authority, there was implied in the 1990 agreement an undertaking by the respondent to do acts which were necessary for the performance by the parties, or by one of them, of the fundamental obligations under the agreement. It may be that this involved, in turn, an obligation not to compete during the currency of the contract by setting about the production of a magazine of like nature to "Service Station". If so, then the promotion of the new magazine in the last edition of "Service Station" thereby would have been wrongful.

70. In the event, it is unnecessary to decide the point. This is because there was the express term as to the submission of proofs for approval, and that carried with it the implied negative covenant to which I have referred. That covenant was broken by the very same activity relied upon as a breach of that term which is the second element of the term sought to be implied by para. 22 of the Statement of Claim.

71. It follows that there should be declaratory relief in favour of the applicant, as to the breach of contract which occurred by the use of the telephone number on the letter page and the insertion of the centre page spread, in the March 1993 issue of "Service Station". The other contractual claims fail.

72. I turn now to consider the remaining courses of action relied upon, namely contravention of ss. 52 and 53 of the T.P. Act and passing-off.

73. In the period between receipt of the letter of 5 February 1993 in which the respondent gave notice that the March 1993 issue would be the last issue of "Service Station" published by it, and before the appearance of that issue, the applicant took a number of steps to deal with the situation in which it thus had been placed. It informed all advertisers that whilst it would be unable to publish "Service Station" magazine for April and May, thereafter the publication would continue. Advertisers were requested to continue their association with the publication. Mr Mark informed the oil companies that whilst the respondent had given notice it would no longer publish "Service Station" magazine, the applicant would be continuing the magazine.

74. Further, the SSA circulated to its members an issue of "Nozzle News" for April 1993. This publication was of a less elaborate character than "Service Station". It contained no illustrations and was in monochrome print. On the front page for the April issue under the heading "New Production Team for 'Service Station'" there appeared an article stating that following lengthy discussions and debate which had failed to achieve consensus with "our long serving producers, Berg Bennett" a decision had been taken to terminate the relationship. The article continued:

"Unfortunately, reorganisation and new

production arrangements require a substantial

lead time which will prevent our rejuvenated

magazine from being published until early June,

1993. As the March journal will be the last

edition produced by Berg Bennett we must

regretfully advise that there will not be an

issue of 'Service Station' in April or May. We

do, however, assure all our readers and

advertisers that the first revitalised edition

will be worth waiting for and will be an

outstanding, quality magazine, published by the

trade exclusively for the trade. It will also

prove timely in early June to coincide with the

national Service Station Convention at the Pan

Pacific Hotel on the Gold Coast where the reborn

'Service Station' journal will be officially

launched."

The item appeared above the name of Mr Brian Mark. The SSA regarded "Nozzle News" not so much as a journal as a newsletter. It appeared on an irregular basis. The first issue had been in January 1993. That for April was the second.

75. In addition to the above steps, on 1 April 1993, the respondent implemented a procedure in its office whereby any person asking for Mr Berg or for Berg Bennett was informed that the SSA no longer had any dealings with them. Office staff were to inform callers that the SSA had appointed MTA-Q Media as the new producers of the "Service Station" magazine.

76. On 24 March 1993, Mr Michael Delaney, Executive Director of the MTAA notified various persons, including all executive directors of that body, that steps should be taken

". . . to repudiate Berg Bennett and Associates

to all those with whom we deal in terms of

advising that it is not possible for any MTAA

member to acknowledge or endorse 'Australian

Service Station and Convenience Stores News'

. . . National Advertisers will need to be

advised that the Berg Bennett publication does

not have the endorsement of any Member

organisation . . ."

77. In April 1993, the new publisher, MTA-Q Media issued to existing and prospective advertisers in "Service Station" a pamphlet headed "Dispel the Rumours]". On the front page, prominent use was made of the "Service Station" logo, the statement being "Service Station is being revitalised under a new production house" and that the reader should "be ready for the launch at the National Service Station Convention on the Gold Coast in June". On the following pages it was announced that rate cards would be published shortly and that in the meantime advertising space might be secured by phoning representatives in Adelaide, Brisbane, Melbourne and Sydney. The advertising deadline for the June issue was stated to be Friday 7 May. In a statement above the name of Mr Kollington it was said:

"The previous production house for 'Service

Station' decided to embark upon an outside

magazine project under a different name and with

apparently reduced industry information and more

emphasis on advertising revenue.

Exclusively, we will now be able to call upon

all the expertise and resources available from

the Association and present to you a

Market-integrated magazine. You will receive an

in-depth industry policy analysis as well as

increased management, marketing, selling and

industry-specific information. Advertisers will

be able to market more efficiently in

conjunction with co-ordinated trade shows

expositions and dealer conventions."

In a statement above the name of Mr Mark, it was said:

"The Service Station is not, however, content to

rest on its laurels, and following lengthy

discussions and debate - which failed to achieve

consensus with our long-serving producers, Berg

Bennet - a decision was taken to terminate the

relationship."

Finally, in late April 1993, MTA-Q Media circulated a rate card. On the front page there appeared the statements "the original Service Station", the latter two words appearing in the form of the logo, and "the trade publication of the Australian Service Station Industry".

78. In this period the respondent also undertook various activities designed to strengthen its position. Initially, after the letter of 5 February giving notice of termination, the respondent continued to solicit advertisements for "Service Station" without any indication of the changes which were to take place. Exhibit Q, a letter from the respondent dated 9 February 1993 to Environmental Products Amalgamated Pty Limited (which had advertised in the magazine in 1990) is an example. However, the respondent then changed tack.

79. Officers of the respondent approached all advertisers with whom it held contracts for bookings beyond March 1993 and informed them that the "Australian Service Station and Convenience Store News" was a new publication to be published by the respondent without any involvement of the SSA. Advertisers were told that the SSA would have nothing to do with the new magazine, and that it would be totally independent with a "more news oriented approach" which should attract a much larger readership. Most of the advertisers then re-issued bookings for the new magazine.

80. These steps were taken early in March 1993. In this period the respondent also sent to about 70 persons, being trade association executive directors outside New South Wales and key oil company personnel, a letter in common form. The letter was signed by Mr Grose who had been appointed Managing Editor of the new publication. The letter included the following statement:

"Berg Bennett and Associates won't be writing,

printing or distributing 'Service Station'

magazine after the March issue. At the time of

writing, we are unaware of any future plans that

the Service Station Association may have for its

magazine. 'Australian Service Station and

Convenience Store News' will be completely

independent of the SSA."

"You may care to circulate this letter to your

managers so that they might be aware of the

communication opportunities that will spring

from the new magazine."

81. As I have indicated, the monthly publication of "Service Station" resumed in June 1993, whilst the rival magazine had been published monthly from April. At the trial, in August 1993, there was (with the possible exception considered below) no evidence of any act or deception of advertisers or members of the SSA or other recipients of the respondent's magazine, being persons led to believe, or even caused to wonder whether, the respondent's magazine was associated with the magazine published for the SSA.

82. Mr B.P. McGill conducts a service station at Beecroft, a Sydney suburb. He is a member of the SSA and had received the April edition of "Nozzle News". He and other Shell dealers in the area knew that there had been a change in the publisher of "Service Station" and that the SSA was now to have it published in Queensland.

83. When Mr McGill received through the mail, early in May 1993, Ex. C, the first issue of the respondent's magazine, he assumed at first that it was the SSA's "Service Station" magazine. However, as I have indicated, he had already heard that the SSA was to have its magazine published in Queensland, and when he later read Ex. C he realised that this was not the SSA's magazine.

84. The evidence does not give a clear picture as to the handling of subscriptions by the respondent. In March 1993 there were a number of subscribers for a period which was still current. Twelve months appears to have been the usual subscription period. With the copies of Ex. A (the March 1993 issue of "Service Station") sent by the respondent to subscribers, there was included a document headed "An Important Notice From The Publisher" (Ex. L). In cross-examination, Mr Berg agreed that the subscriber reading Ex. L would infer that "Service Station" would be published in April with a few changes, which would improve the content. Exhibit L did state:

"The magazine will continue its close

association with the trade association movement

but will no longer carry the SSA logo or the

title, 'Service Station' and its content will

not be controlled by the SSA. Other than that,

the material in the magazine, although expanded,

will be much the same with the same regular

features. It will have the same regular

features. It will be produced by the same

people and read by the same people. It will

continue as the prime mover behind the

Australian Service Station and Convenience Store

Exhibition. It will even look the same.

So, from April onwards, your magazine will come

to you under a new title and it will have a

great deal more relevance to you and to your

business. Because of these changes, you have a

legal right to rescind your subscription if you

want to. So, if you no longer wish to receive

the magazine, please let us know . . ."

Earlier in Ex. L, it was said "we've decided to publish" under the title "Service Station and Convenience Store News" from April, and "we believe that the title of the magazine should reflect its readership". It was not made clear who was identified by the use of the term "we". Counsel for the applicant also pointed out that the subsequent statement that the magazine would be produced "by the same people" was inaccurate. There had been an editorial page in "Service Station" contributed by Mr Berg or Mr Kollington, and putting the SSA viewpoint on particular issues of concern to the readers.

85. Those current subscribers who did not elect to exercise their "legal right to rescind" referred to in Ex. L were "transferred" to the new magazine. Mr Berg conceded that the respondent's administration of subscriptions had not been good and by June 1993 there were about 370 subscribers who had been "unfinancial" for some months. In that month a circular was sent to them headed "Your Subscription" (Ex. M). A renewed annual subscription at $49 was solicited by Ex. M. The text of the document clearly differentiated between "the old 'Service Station' magazine" and to the new magazine "Australian Service Station and Convenience Store News", which was said to be "totally independent of any trade association, oil company or industry supplier". Others had been receiving complimentary copies but they were told also in June that the issue for that month was the last issue of "Australian Service Station and Convenience Store News" that they would receive unless a subscription at the rate of $49 per annum was taken out.

86. I turn now further to consider Ex. C, the first issue of "Australian Service Station and Convenience Store News". What was referred to in the evidence as the "banner" is one in which the most prominent features are the words "Service Station"; in particular the phrase "Convenience Store News" appears in print less than half the size of "Service Station". The SSA logo does not appear. The respondent pointed to the descriptive nature of the words "Service Station" when used upon the particular type of trade publication with which this litigation is concerned.

87. I was referred to the body of authority which emphasises the importance to be attached in such circumstances to additions or qualifications to the descriptive title. See, in particular, Office Cleaning Services Limited v Westminster Window and General Cleaners Limited (1946) 63 RPC 39 at 42, Dodds Family Investments Pty Limited v Lane Industries Pty Limited (Full Court, 2 June 1993, unrep.) and Shanahan "Australian Law of Trade Marks and Passing Off", 2nd Ed., 1990, pp. 404-405.

88. It is true, as is pointed out in Office Cleaning Services supra that the presence of an intention to deceive, even by the use of an apparently descriptive term, will assist the plaintiff's case. However, the evidence, to which I have referred, was that the respondent had legal advice, apparently received after 5 February and before 1 March 1993, that it was free to use the words "Service Station" in the title of the new magazine. The existence of that advice was not called into question. It is in this light that one must understand Mr Berg's evidence to the effect that the graphic designer commissioned to design the cover for the new magazine had access to copies of "Service Station".

89. On the other hand, the applicant emphasised the long period of use of the title "Service Station" for the applicant's magazine, and the perception among members of the SSA and advertisers that the magazine had the imprimatur of the SSA and was published in the interests of service station operators. Counsel also stressed that it was necessary to have regard not merely to the banner under which the respondent's magazine was published but also to the general style and layout, what in the evidence had been called the "look and feel" of the magazine. He submitted that as much had, in fact, been recognised by Mr Berg and Mr Grose. Their signatures appeared under a 2 page article on pp 4 and 5 of Ex. C. The first paragraph of this read:

"As you browse through the pages of this very

first issue of 'Australian Service Station and

Convenience Store News' you may be struck by its

similarity to another magazine that our company,

Berg Bennett and Associates, has been publishing

for some time. The same regular features. The

same cartoons. The same production team."

"Yet there is one major difference.

This new magazine does not carry the logo of any

trade association. No trade group, oil company

or industry supplier has any control of what

appears in these pages.

'Australian Service Station and Convenience

Store News' is truly independent and that's very

important. It means that you can read about

industry issues knowing that what you're reading

has been properly researched and has been

written without fear and without favour.

It also means that anyone connected with the

industry can put his or her point of view in the

pages of this magazine.

That's our pledge. Total impartiality.

Thorough research. Responsible reporting. And

no political posturing . . .

This magazine is NOT the voice of the industry.

You are] About half of you do not belong to a

trade association and comparatively few are part

of any kind of dealer group.

. . ."

The article contains the new banner in blue, red and white print across the top of the double page spread. The banner takes up almost one-third of both pages, such is the size of the type. Underneath in black bold lettering are the words "Our Pledge". Mr McGill's evidence was that it was on reading this article that he realised that the new magazine was not the magazine of the SSA. He has since received copies of both magazines and understands that the respondent's publication has no connection with the SSA. He has received "Service Station" for about 11 years.

90. The case of the applicant was not put in a fashion which clearly indicated the nature of the "business interest" of the applicant for which protection was sought by the passing-off claim. It has been said, with reference to authorities including the decision of this Court in Australian Society of Accountants v Federal of Australian Accountants Inc. [1987] FCA 298; (1987) ATPR 40-796:

"(A) professional association may sue to

restrain the use by another of a name

confusingly similar to its own, or the use by

non-members of words or letters indicating

membership of, or certification by, the

association. This has been put on the footing

that it is of 'pecuniary value' to the

association that it have as many members as

possible, and that such misrepresentations

reduce the status of the members and therefore

the number of members."

(Shanahan, supra p 338).

91. What is there written is not directly applicable to the present case. There is, however, a relevant interest of the applicant in having a magazine which is no longer published under its auspices not being taken by its members, subscribers or the trade generally, as retaining its previous status as a voice of the SSA. Although there is no evidence directly bearing upon the point, I am also prepared to infer that it also may be significant to advertisers and prospective advertisers that one of the rival magazines has, and the other does not have, this connection with the SSA.

92. As to contravention of ss. 52 and 53 of the T.P. Act, the more generous provisions as to standing in s. 80 means that, at least as regards injunctive relief, there is not the same necessity to find a "business interest" of the applicant. Nevertheless, the classes of persons to whom I have referred above are relevant here also, as the addressees and prospective addressees of the conduct by the respondent of which complaint is made by the applicant.

93. I am satisfied that whatever may have been the position some five months ago when the respondent's magazine made its first appearance, the smoke, to use a metaphor in some of Mr Berg's correspondence, since has settled. I am satisfied that among advertisers, potential advertisers, members of the SSA, and others in the trade who receive one or other or both publications, the distinction between the magazines is well understood. In particular, I infer that this understanding extends to an appreciation that the SSA has severed its connection with Mr Berg's company, and that the new magazine "Australian Service Station and Convenience Store News" no longer has any association with the SSA.

94. It follows that there should be no injunctive relief. However, a question remains as to whether there should be declaratory relief in respect of any passing-off or contravention of the T.P. Act at some earlier date, as a preliminary to the ascertainment of any quantum of damages. In an appropriate case, a declaration to this effect may be made; see RAIA Insurance Brokers Limited v FAI General Insurance Co. Limited [1993] FCA 92; (1993) 112 ALR 511.

95. Counsel for the applicant, in address, very properly took the approach that if the applicant did not succeed in showing contravention of s. 52 of the T.P. Act, it was most unlikely to make out its case of passing-off. Nor was any particular attention devoted to s. 53. Paragraph 31 of the Statement of Claim is an allegation that the respondent has falsely represented that its magazine had or has the sponsorship and/or approval of the applicant. I have taken this as an invocation of para. 53 (c); cf Green v Ford (1985) ATPR 40-603.

96. I have referred earlier to the steps taken by both sides before and at about the time of the appearance, in April, of the first issue of the new magazine to distance the respective publications in the eyes of advertisers, potential advertisers, members of the SSA and subscribers. The evidence of Mr McGill indicates that news of what was happening had reached at least some members of the SSA before the arrival of the new magazine in April. But I infer that the cumulative effect of publicity as to the forthcoming appearance of the two magazines, to be published concurrently, would not have been fully felt until the resumption of the publication of "Service Station" with the June issue.

97. Accordingly, it becomes necessary to consider whether the publication of the issues of the respondent's magazine for April and May involved the engaging by the respondent in conduct which contravened s. 52.

98. In approaching this question, it is necessary to bear in mind a particular factor. It is that whilst, as Mr Berg emphasised repeatedly in evidence, the style and format of "Service Station" owed much indeed to the efforts of the respondent whilst it was acting pursuant to its contractual arrangements with the applicant, the impact of this upon advertisers and readers may well have served to heighten the significance attached to the status of the magazine as published under the auspices of the SSA. The translation of that style and format to another magazine, in the same field, is not to be discounted in assessing the impression, said by the applicant to be conveyed by the new magazine, that it had the further attribute of the old magazine, namely the association with the SSA.

99. I have referred to the 2 page article on pp 4 and 5 of the first issue of the respondent's publication, which displayed the new banner in large type with the words "Our Pledge". The reader who perused this would be left in little doubt that the SSA was not associated with the new magazine, although, it should be observed, the SSA and "Service Station" were not identified by name. However, many readers might turn first to p 8 where there continued to appear the familiar comic strip "Polly the Pumper". The dialogue of the characters in the April 1993 strip reads as follows:

"Polly: Hey, guys] Have you seen the new magazine

they've sent us? . . . It's called

Australian Service Station and

Convenience. Store News] Catchy]

Service

Station

attendants: New? It all looks sorta familiar to me]

What do you think, Pol?

Polly: Rubbish] The girl in the comic strip is

much prettier]"

The reader would see in the same type face and layout the familiar pages headed "Golden Guide", "Heavy Metal", "Mailbag", "Management", "Motoring", "Overseas News", "Product News", "Smoko" and "Training", appearing, moreover, in the same order as they had appeared in the March 1993 issue of "Service Station". There is also the significant, though for the reasons I have earlier discussed, not decisive, consideration that the phrase "Service Station" appeared prominently in both titles.

100. The Court, in assessing whether there has been contravention of s. 52 in such a case, must have regard to the effect of the magazine as a whole upon reasonable members of the relevant classes of persons, being those to whom I have earlier referred: Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited [1982] HCA 44; (1982) 149 CLR 191 at 199 per Gibbs CJ.

101. Counsel for the respondent relied heavily upon what I might call the "distancing" activities of both parties as supplying a context in which it should not be said that the publication of the respondent's magazine amounted to conduct that was misleading or deceptive as alleged. He also pointed out that it cannot be said that from the time from which both magazines had been published concurrently readers, advertisers or subscribers have been confused between the two publications.

102. I attach weight to those submissions, as indicated by the finding that there should be no injunctive relief. Nevertheless, I have reached the conclusion that the publication of the first issue of the respondent's magazine, that for April 1992, was conduct which contravened s. 52.

103. The same conclusion follows for the succeeding issue of May 1993. Again on the Contents page, p 3, under the heading "Regular Features" there appeared the familiar items of "Golden Guide", "Heavy Metal" and the like. "Polly the Pumper" was again in evidence, but this time concerned with discouraging "yuppies" from using cellular telephones near fuel points in service stations. This time there was no recitation of "Our Pledge".

104. There should be declaratory relief as to the contraventions of s. 52 in the manner indicated. There should also be declaratory relief as to the breach of contract which I have found. In the light of the manner in which the case was conducted, it is unnecessary to determine whether there should also be supplementary declaratory relief as to contravention of s. 53 and passing-off.

105. The matter should stand over for further directions as to the conduct of the proceeding, in particular for an indication as to whether the applicant is minded to pursue any claims to damages.

106. I will then also hear the parties on the question of costs to date in the proceeding.

Planning and Assessment Act 1979

Shepherd v Felt and Textiles of Australia Ltd

At a glance

Court

Decision date

Before

Source

Judgment (162 paragraphs)

Service Station Association Limited VBerg Bennett and Associates Pty Limited [1993] FCA 445; (1993) Atpr 41-266 (1993) 117 ALR 393 (1993) 27 IPR 23 (9 September 1993)

Parties

Legislation Cited (3)

Cases Cited (25)