In Australian Competition and Consumer Commission v Harvey Norman Holdings Limited Justice Collier explored the provisions of false representation and misleading conduct explained in the Trade Practice Act 1947.

Facts:

The “Harvey Norman” brand is well-known in Australia for retailing a wide range of goods.

Independent franchisees, each of which is incorporated, have carried on retail businesses under the name, trade mark or logo “Harvey Norman®” (“the Franchisees”) pursuant to franchises granted by HNHL Subsidiaries.

HNHL published false representations in there catalogue and other campaigns that, potential purchasers from Harvey Norman franchise stores would be able to use their television to watch the Australian Football League and National Rugby League grand finals in 3D format in their local area.

While the fact was that such 3D broadcasting license was issued to the Seven Network and the Nine Network for to make the 3D Broadcasts in metropolitan Sydney, Melbourne, Brisbane, Newcastle, Adelaide and Perth (the 3D Broadcast Cities) only.

The suit was filed by Australian Competition and Consumer Commission (ACCC) against this false representation made by HNHL.

Statement of claims:

ACCC alleged, in summary, two types of conduct in respect of which it sought remedies:

1. 3D Conduct; and
2. Catalogue Conduct, which includes conduct involving the HN Catalogues and the HN Website.

Decision:

Justice Collier laid the following:

1. Incorporation of the statement “Watch the Grand Finals in HD and 3D with this TV” (the 3D Representation) into a draft of the 3D Catalogue, at which time the Australian Communications and Media Authority (ACMA) had not granted any licence to any free-to-air television network to make any such broadcast in 3D format was clearly a false representation.

2. The conduct by publication and distribution of 3D Catalogues containing the 3D Representation, to the public, throughout all major regional and metropolitan areas of Australia including places outside the 3D Broadcast Cities, during the Promotional Period, was seriously misleading and deceptive

Lesson:

This decision stresses the due diligence to be taken by retailers before making representations, by any means that their goods have particular uses or benefits that they might not in fact have.

In Perpetual Trustee Company Limited v Milanex Pty Limited (in liquidation),

Justice Macfarlan, while allowing the appeal, discussed the provisions relating to misleading and deceptive conduct and the liability of a concurrent wrongdoer.

Facts:

Milanex was a mortgage broker while Good Home Loans Pty Ltd (“GHL”) was the mortgage manager engaged by Calibre Financial Services Pty Ltd (“Calibre”).

Calibre was also appointed as trust manager by Perpetual Trustee Company Ltd (“Perpetual”), to act on Perpetual’s behalf in relation to mortgage lending.

Milanex presented Mr. Kotevski’s loan application to GHL.GHL provided the application to Perpetual through Calibre.

Perpetual advanced the loan amount to Mr. Kotevski’s account after the registration of mortgage of Mr. Kotevsk’s property in Perpetual’s favour.

Following a default under the mortgage, Perpetual commenced proceedings against Mr Kotevski for possession of his property.

The Primary Judge, while passing the decision in favour of Mr Kotevski, dismissed Perpetual’s cross claim against Milanex. The said decision of the Primary judge was challenged in this appeal.

Key Points:

1. Whether Perpetuals appeals challenging the primary judge’s dismissal of the cross claim must be allowed.

2. Whether solicitor is a concurrent wrongdoer within the meaning of Part 4 Civil Liability Act.

Decision:

The Hon Court observed the following while allowing the appeal:

1. Milanex made representations to Perpetual, including that it acted for Mr Kotevski, that Mr Kotevski wanted to mortgage his property and that Mr Kotevski had signed the various documents (including the Loan Application) that Milanex submitted to Perpetual’s agent, GHL .Thus, these representations made by Milanex are clearly misleading and deceptive because, inter alia, Milanex did not have instructions from Mr Kotevski and Mr Kotevski had not signed the documents that were submitted to Perpetual.

2. Mr Lo, the solicitor who purported to give legal advice to Mr Kotevski concerning the advance to him and the mortgage over his property, was a “concurrent wrongdoer”. Thus, Mr.Lo is liable under the provisions of Civil Liability Act 2002.

Thus, the Hon Courts proposed that Milanex should bear 75% of the damages while the rest to be borne by Mr.Lo.

Lesson:

This decision stands two fold one as a loop hole for future lenders from facing losses as well as an alert for Solicitors and mortgage brokers that each liability in the whole process will be looked into separately but simultaneously.

In Red Bull Australia Pty Ltd v Stacey1, Justice Rein upheld the right of a former employer to enforce a restraint clause on his former employees.

Facts:

Red Bull Australia Pty (Plaintiff), Ltd. deals with the production and distribution of energy drinks internationally. Red Bull Australia Pty., Ltd. operates as a subsidiary of Red Bull GmbH.

The Calidris 28 Group manufactures drinks called 28 Black and 28 White. They described their beverages as “a new generation of energy drinks” in their brochure.

After their termination from Red Bull but before the expiry of restraint of trade period, Mr Stacey and Mr Graebner (Defendants) were appointed as the Directors and employees of Calidris Australia.

An injunction was sought by Red Bull to stop their former employees from taking up their respective positions at Calidris Australia before the expiry of the restraint of trade period.

Key relevant point:

1. Can Calidris Australia be considered as a competitor to the Plaintiff’s business?

2. If so, are the Defendants in breach of the restraint clause mentioned in the employment contract.

Decision:

Justice Rein observed, among other matters, the following:

1. The plaintiff’s claim that Calidris Australia is a competitor of the plaintiff, even if a relatively small one, is very likely to be made out on the evidence. Among the submissions presented before the court it was clear that although not all of the customers who will be interested in 28 Black and 28 White will necessarily be Plaintiff’s customers, it was very clear that Calidris Australia has, as its business and probably its core business, the marketing of an energy drink.

2. The fact that the defendants were the only directors of Calidris Australia resident in Australia, therefore, effectively, at least, and in a practical sense, would be in control of the company, was highly significant. Thus this fact along with above mentioned facts shows that the defendants are clearly in breach of the restraint clause.

Justice Rein granted the injunction.

Lesson:

This case highlights an important fact that a restraint clause can be enforced by a former employer at any point of time before the expiry of the restraint period.

In a recent decision, the Federal Court of Australia discussed an issue pertaining to the grant of relief for the infringement of copyright and breach of the Trade Practices Act 1974 (Cth)

In Dynamic Supplies Pty Limited v Tonnex International Pty Limited (No 2)¹, Justice Yates passed a decision on the Dynamic’s claim of Copyright infringement and misleading and deceptive content.While deciding the above Justice Yates rejected the subsequent application for statutory injunction and corrective advertising submitted by Dynamic.

Facts:

Dynamic and Tonnex were printer cartridge resellers.

One of the employees of Dynamic used the available product data base to compile a user friendly compatibility chart. The chart was designed for the use by the potential customers and was available on the Dynamic’s website. .

Dynamic claimed that Tonnex committed Copyright infringement by copying the contents of Dynamic’s compatibility chart.

Further, Dynamic sought the following reliefs:

1. Declaratory relief for the Copyright infringed;
2. Statutory injunction against Tonnex;
3. Publication of a corrective advertisement by Tonnex.

Key points:

1. Dynamic’s compatibility chart was copyright protected;
2. Tonnex had reproduced a substantial part of the chart.

Decision:

Justice Yates opined that:

1. The compatibility chart developed by Dynamic’s employee comes under the category of original literary work, thus, was copyright protected;
2. Looking at the Tonnex’s chart it is clear that Tonnex had copied substantial parts of Dynamic’s chart;
3. Information regarding the authenticity of products and the tax benefits associated with Tonnex’s products are clearly misleading or deceiving;

Further, Justice Yates was of the opinion that the undertaking offered by Tonnex’s solicitor makes the need for a statutory injunction pointless. Also, application for corrective advertising cannot be passed as the provision was inapplicable in the present situation.

Lesson:

This case highlighted the importance of various duties and rights stated in the Australian Consumer Law. Most importantly, this case highlights a right entrusted to an author with regards to a compilation available in the internet for public access.

A recent decision by the Australian Trade Marks Office (ATMO) highlighted the importance of the intent of an applicant in filling a Trademark application.

In Marvel Characters, Inc v Gary Charles (Unreported), the hearing officer rejected a Trademark application on the grounds of bad faith.

Facts:

The applicant Gary Charles is a Brisbane clothing-store owner. He filed an application before the ATMO to register the mark “GHOST RIDER”.

The mark sought to be registered by Gary Charles was identical to the famous comic book character owned by Marvel Characters, Inc.

Marvel Characters, Inc objected to Gary Charles’s Trademark application.The objection was raised under Sec 62A of TRADE MARKS ACT 1995.According to this section:

“The registration of a trade mark may

be opposed on the ground that the

application was made in bad faith.”

Decision:

Hearing officer rejected the Trade Mark application on the following grounds:

1. Evidence provided by the opposition proved that the applicant had a history pointing to habitual misrepresentation;
2. Unauthorised sale of “Ghost rider” clothing

Lessons:

The above decision highlights the minute detail that would be looked into before accepting or rejecting a Trademark application. Further, it broadens the understanding of the concept of bad faith in relation to a Trademark application.

In Armitage v Gainsborough Properties Pty Ltd & Anor, Justice Almond discussed the scope and ambit of “Leave principle” under the common law.

Facts:

In Armitage, Chairmakers Pty Ltd (Chairmakers) and Colorclad Pty Ltd (Colorclad) were two related companies. The Court appointed a Liquidator to both companies.

While making a sale of the companies’ assets the liquidator sold a plant and forklift (property) which he considered as property owned by the companies.

Subsequently, Armitage (plaintiff) claimed to be the owner of the property sold by the liquidator.

Armitage sought leave of the Court to file proceedings against the liquidator on the grounds of conversion or negligence.

Key points:

1. Application for the leave of the Court to commence proceedings was dismissed at first instance.
2. The application was filled after expiry of the relevant limitation period.

Decision:

Justice Almond opined that it is essential to seek prior leave of the Court for suing Court appointed liquidators.

The requested leave was refused by on the following grounds:

1. Delay in filling the application for leave of the Court;
2. It had been 6 years since the liquidation took place;
3. The plaintiff was not able to prove sufficient cause of action or prospects of success if the suit was to be tried by the Court.

Lesson:

This case highlights the importance of procuring leave before initiating legal action against a Court appointed liquidator. Further it must be noted that while deciding to grant leave of Court, the Court will look into factors like the existence of a reasonable cause of action and that the value of the procedure of winding up is not lost.

In Fairfax Media Publications Pty Ltd v Reed International Books Australia Pty Ltd, Reed was accused of Copyright infringement by using articles including headlines over which Fairfax had a Copyright.

Facts:

Reed has a service called ABIX, which summarised various newspaper articles in electronic form to produce various newsletters. Fairfax is the publisher of AUSTRALIAN FINANCIAL REVIEW (AFR).

A dispute arose between the parties when Fairfax claimed that Reed had committed Copyright infringement by referring and mentioning headlines of the articles published in AFR.

Fairfax sought the following relief:

1. A declaration in favour of Fairfax against Reed’s act of infringement of AFR copyrighted material;

2. An injunction restricting Reed from future use of their articles.

Key points:

1. Fairfax claimed to have Copyright ownership over every article headline, by-line and edition of AFR.

2. Reed’s electronic newsletter ABIX referred to articles published in AFR.

3. Both parties accepted that Fairfax held Copyright over every edition of AFR including articles, headlines, and other material such as photographs and advertisements.

4. The decision in this said case was put on hold until a High Court decision in a similar case was published.

Decision:

Justice Bennett dismissed Fairfax’s application with the following observations:

1. Every newsletter published by Reed did not follow the same order or format of presentation as the referred original source.

2. Substantial part of AFR articles were not reproduced by ABIX;

3. Headlines do not qualify for Copyright protection as per the Copyright Act 1968 (Cth) (Act);

4. Further, the abstracts presented in ABIX were in a complete different form than AFR’s articles.

5. Order of the headlines presented was different from AFR.

6. Allowing Copyright to subsist in Titles/headlines would make it difficult for public to refer to the same as bibliographic reference.

7. Mostly all titles/headlines are published in similar forms to point out the original source and extending Copyright to titles/headlines will make the practice difficult to continue.

Lesson:

This case highlighted the two important precautions to be taken which would place an information provider in a better position in Copyright infringement claims:

1. If the original source of the article is mentioned correctly;

2. The reproduced work does not include a substantial part of the original publication.

In Bodum v DKSH Australia Pty Limited, the question was whether DKSH Australia Pty Ltd had committed an offence under Trade Practices Act and common law by conducting manufacture and sale of Euroline coffee plunger. The Euroline coffee plunger was found to have substantial similar comparison to Bodum’s Chambord coffee plunger.

Facts:

The Plaintiff Bodum is a well-established family owned company who are known to produce unique affordable products.

While the Defendant is a rival company, who, in this case was accused of infringement of Copyright or Design.

In the first instance, the Court found that the said infringed design had no legal registration under the Designs Act.

On the claims being refused, an appeal against this decision was put forth by the Plaintiff before Full Court of the Federal Court on the following grounds:

1. The said product could be easily identified and related to Bodum by the customers as it was always pictured in their packaging;

2. Unique shape of the product;
3. The above reasons would cause a customer to recognize a coffee plunger with similar features to be a Bodum product;
4. Bodum trademark was applicable to all of its products.

5. DKSH’s product had a lot of evident similarities that could be associated with the Bodum’s product;
6. DKSH’s product did not have even a differentiating brand excluding the word “pyrex” which could not help differentiate the product.

Decision:

Justice Greenwood overturned the decision passed by Justice Middleton. While doing so Hon’ Justice looked into the following matters:

1. Advertising and promotional material put before the court,

2. The evident connection of Chambord to the Bodum name or trademark that could be seen in the advertisements and promotion.

Thus, looking at the above factors, Justice Greenwood acknowledged the fact that a large number of consumers recognize a reputation arising from the Bodum name while purchasing Chambord Coffee Plunger.

And DKSH’s act of copying the features of Chambord Coffee Plunger would mislead the consumers.

This act could further be recognized as an offense under Trade Practices Act and common law.

The Court also pointed out that the mark “Euroline” under which DKSH products were sold was not distinctive enough as:

1. Consumers identify the product not the box;
2. “Euroline” suggests a European descent that could again be associated with Bodum’s European background.

Lesson:

This case has proved to operate as a loophole for potential manufacturers who don’t have their design registered and an alert to rival manufacturers.

Rival manufacturers are allowed to use other manufacturer’s products as a base idea but they must take steps to avoid infringement and ensure that the public is not mislead or deceived to believe that their product is from another well-established company’s production.

That said, had the Plaintiff not been successful in proving the secondary reputation that associates Chambord Coffee Plunger with Bodum, Defendant could not have been held liable for infringement.

In Al Jadeed TV v United Broadcasting International Pty Limited, the Federal Court of Australia analyzed the validity of the grounds and notices of termination sent to United Broadcasting International Pty Limited (UBI) by the Plaintiff.

Facts:

Al Jadeed is the broadcaster of the Arabic New TV service. Al Jadeed entered into a contract with UBI for broadcasting New TV service in Australia, on receipt of an annual license fee and a share of the advertising revenue.

During the contract period, UBI’s default forced Al Jadeed to seek the termination of contract. Al Jadeed sent notices to UBI with a view to ending the contractual relationship. The validity of the ground for termination and termination notices came up for discussion in the Court.

Key points:

1. A termination will be held valid regardless of the terminating party’s knowledge and reference to the facts leading to the termination;
2. The termination notice must be clear enough for a receiver to comprehend the exercise of right to terminate the contract by other party. Although, “absolute clarity” or “absolute absence of any possible ambiguity” is not an essential requisite;
3. In the present case, the recipient of the notice did not understand the language of the contract as it was written in a language different from his primary language.

Decision:

Justice Flick opined that:

Notice 1 was void as it was not clear enough for the receiver to comprehend that the contract was being terminated. Notice 3 was also void due to lack of clarity as to whether the contract was on hold or terminated or valid.

Notice 2 and 4 were held to be valid and effective. The words “terminated with immediate effect” by reason of “breach of contract” are sufficient for the receiver to understand that the contract was being terminated.

Further, Al Jadeed’s lack of knowledge of UBI’s incapacity to make payments and error in not citing this as the basis for the termination cannot make the termination void.

Justice Flick also upheld the validity of the grounds of termination due to UBI’s default in paying the license fee.

Lesson:

Through this case, the Court has upheld the importance of clarity of any form of communication in a contractual relationship. Clarity of the communicated facts is one of the essential criterion for the Courts to uphold notice’s validity.

In Duncan, in the matter of Megafert Pty Ltd (Administrators Appointed), Justice Besanko granted an extension of three months for the time period in which the administrator had to convene the second meeting of the creditors.

Facts:

In Duncan, two companies Megafert Pty Ltd and Interfert Pty Ltd., having common directors, were placed into voluntary administration. The companies dealt with the import and resale of fertilizers.

In their application, the administrators submitted that usual available time was not sufficient to submit a detailed report of the company for convening the second creditors’ meeting.

As the per the Corporations Act of 2001, the second creditors meeting must be held within five business days before or after the end of the convening period. Further, an adjournment is possible but not for a period exceeding 45 business days during which the administrators have to apply to the Court for an extension of time.

Decision:

The requested extension was granted by Justice Besanko on the basis:

1. All administrators are required to present a detailed report of the Company to facilitate decision making by the creditors, which will seal the fate of the company.

2. An extension of time for convening creditors’ meetings is left to the Court’s discretion.

3. While granting such extensions the Court may also look into object of Part 5.3A of the Act.

Lesson:

This case neither upheld nor established new laws, but informed future administrators that they can apply for extension, if required, to draft a detailed company report. It also reinforced the position that administrators must apply for an extension within the period prescribed by the Act.