M Hawke Nominees Pty Ltd v Commercial Dynamics Pty Ltd [1995] ACTSC 38 (13 April 1995)

SUPREME COURT OF THE ACT

M HAWKE NOMINEES PTY LTD v. COMMERCIAL DYNAMICS PTY LTD
No. SC94 of 1995
Number of pages - 7
Consumer Protection

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HIGGINS J

CATCHWORDS

Consumer Protection - section 52 Trade Practices Act - relevant test of misleading or deceptive conduct - advertising publications in newspaper format - would a significant section of readers of each publication be likely to confuse the defendant's publication with that of the plaintiff's - relevance of format and appearance - appearance must be likely to mislead or deceive to attract relief - necessity for relief to be framed around marketing strategy and format practices.

Printing and Newspaper Act 1961 (ACT)

Business Names Act 1966 (ACT)
Trade Practices Act 1974 (Cth), s52

Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd (1981) 1 NSWLR 196
Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191
Taco Co of Australia Inc and anor v Taco Bell Pty Ltd (1982) 42 ALR 177
10th Cantanae Pty Ltd v Shoshana Pty Ltd and anor (1988) 79 ALR 299

HEARING

CANBERRA, 24 February 1995
13:4:1995

Counsel for the Plaintiff: Mr I Bradfield

Instructing solicitors: Porter Pilkinton and Bradfield

Counsel for the Defendant: Mr M Walton

Instructing solicitors: Sly and Weigall

ORDER

THE COURT FINDS THAT:
The defendant has engaged in conduct that is false and misleading contrary to s52 of the Trade Practices Act 1974 (Cth).

The plaintiff is entitled to relief pursuant to s86 of the said Act.

AND ORDERS THAT:
The plaintiff have leave to bring in short minutes of orders to give effect to the above findings in accordance with these reasons.

DECISION

HIGGINS J The plaintiff is the owner and publisher of a publication known as the "Canberra Trading Post" which it purchased as a going concern in about May 1994. The "Canberra Trading Post" (CTP) is a newspaper style publication but contains only classified advertisements.

2. Until February 1995, there had also been a similar publication circulating in the Canberra region known as the "Canberra-Monaro Edition of the Classified Advertiser". There had been a similar publication circulated in Sydney and other parts of New South Wales by a company known as Research Resources Pty Ltd (Research Resources) since 1971 and known as "Weekly Trading Post". Before 1995 it had expanded its network of "Trading Post" publications. Some such publications also circulated in the Canberra region but were less relevant in their contents than the other two. CTP was the publication most relevant to the Canberra region.

3. On 31 March 1983, Research Resources granted to the defendant a licence to use the masthead "Weekly Trading Post" on its publications if it so chose.

4. On 12 August 1992, Research Resources registered "Weekly Trading Post" as a business name in this Territory. It had, on 15 October 1991, registered "Local Trading Post" as a business name in the Territory. It did not then trade under that name however.

5. From 25 July 1991 the defendant had published the "Hunter Valley Trading Post". It changed its name to "Local Trading Post" on 5 August 1993.

6. The defendant also published the "Northern Rivers Trading Post" from 5 June 1992. That publication changed its name to "Local Trading Post" on 26 March 1993. It circulates in the Lismore region.

7. There was also a "Southern Districts Trading Post" first published by the defendant on 15 August 1991. That circulated, inter alia, in the Canberra region. The name of that publication was changed to "Local Trading Post" on 29 July 1993.

8. Up until 9 February 1995, none of those publications had carried any reference to "the Canberra Region". None of them was particularly relevant to the Canberra-Queanbeyan area, although "Southern Districts included a significant part of the "Canberra Region".

9. The other classified publication which had some greater relevance to the Canberra region, the Canberra-Monaro Advertiser, announced in its 28 January 1995 edition:

ATTENTION]
BUYERS AND SELLERS
As of the issue of the 9th of February 1995
The Classified Advertiser
will be known as
The Local Trading Post
servicing the Canberra Region

10. This followed the acquisition of that masthead by the defendant. The Classified Advertiser had been purchased by the defendant for the purpose of being incorporated in and absorbed by the "Local Trading Post" series of classified publications. It appears that the intention was that the "Local Trading Post" series would replace both the Canberra-Monaro Advertiser and the Southern Districts Trading Post/Local Trading Post.

11. The CTP had circulated in the Territory since 1989. Whether it was first published to take advantage of the reputation of various other regional "Trading Post" magazines is not clear and I draw no conclusion as to that question even if it had been raised as a relevant issue.

12. On 7 February 1995, Mr Michael Hawke, managing Director of the plaintiff company, caused a letter to be sent to Research Resources protesting that the publication announced in the Canberra-Monaro Advertiser:

... inevitably will mislead advertisers into believing that
they are dealing with the Canberra Trading Post.

13. The plaintiff also claimed to be the registered proprietor in the Territory of the name "Local Trading Post" which it had registered under the Printing and Newspaper Act 1961 (ACT).

14. Solicitors for the defendant responded on 8 February 1995. They dismissed as lacking significance, the plaintiff's registration of the name "Local Trading Post". Their client had registered that name on 15 October 1991, apparently under the Business Names Act 1966 (ACT). It was not actively used in the Canberra or any other region, however, until July 1993.

15. The respective rights of the plaintiff and defendant in this matter cannot be resolved simply by reference to registration or timing of registration of a business or trade name: see Fletcher Challenge Ltd v Fletcher Challenge Pty Ltd (1981) 1 NSWLR 196. Further, neither party has, at any stage, sought relief claiming the other has been guilty of "passing off".

16. At the time when the plaintiff purchased CTP, Mr Hawke was aware of some of the other "Trading Post" publications in New South Wales. It also appears that classified advertising publications such as those published by the plaintiff and the defendant regularly rotate the colour of their masthead to enable readers to identify a new edition. It also appears that in July or August 1994, the plaintiff altered the style of the CTP masthead so that the word "Canberra" became less prominent and the words "Trading Post" more similar to the standard masthead style of the defendant's publications. It did not, however, emulate the characteristic "wooden plank" background used by the Southern Districts (and other regional names) Weekly/Local Trading Post publications.

17. On 13 February 1995, having received no satisfaction from the defendant, the plaintiff sued claiming that the defendant was engaging in conduct that was misleading or deceptive or likely to mislead or deceive.

18. It was alleged that the presentation and promotion of the "Local Trading Post", represented falsely that the defendant's business was that of the plaintiff and/or that their respective businesses were associated.

19. The making of those representations was alleged to be proscribed by s52 of the Trade Practices Act 1974 (Cth)(TP Act).

20. It may be accepted that purchasers of the two classified papers currently circulating might be confused.

21. Evidence was tendered from Ms Dianne Kirby and Mr Brian Gorman, to the effect that they were confused as to whether the "Local Trading Post - serving the Canberra Region" was the CTP with which they were familiar.

22. That confusion was, perhaps, heightened by the invoice sent for an advertisement each had placed in the "Local Trading Post" believing it to be the CTP. The invoice referred only to "Trading Post" and contained a notice which read:

WARNING - DON'T BE FOOLED
WE DO NOT PHONE OUR ADVERTISERS ASKING IF THEY WISH TO EXTEND
THEIR ADVERTISEMENTS. IF YOU RECEIVE A CALL IN THIS REGARD DON'T
BE FOOLED INTO THINKING YOU ARE DEALING WITH YOUR PREFERRED
TRADING POST. YOU ARE NOT. YOU ARE SPEAKING TO SOMEONE WHO IS
TRYING TO GAIN YOUR BUSINESS BY UNDERHAND MEANS.

23. In fact, both Ms Kirby and Mr Gorman were persuaded by telephone calls from the defendant's representatives to place advertisements with the "local Trading Post". They each understood the term "local" to mean "Canberra".

24. It must be said that the notice endorsed on the invoice is far from honest. It gives the misleading impression that the original "Trading Post" for the Canberra region was that published by the defendant and that some recently invented "Trading Post" was attempting to impose upon its market. It would, in fact, have been more appropriate for the plaintiff to have warned the public that "Local Trading Post" - "serving the Canberra Region" was the new publication so far as Canberra was concerned. The notice is also inconsistent with the assertion by Mr McAllery, the Executive Director of the defendant company, that the defendant's marketers were instructed to say that its publication was "not to be confused with the Canberra Trading Post". Neither Ms Kirby nor Mr Gorman had any such thing said to them. I do not accept that assertion by Mr McAllery in his affidavit. In any event, I am satisfied that it did not happen.

25. However, I do accept Mr McAllery's evidence that the defendant has, since 1991, been expanding its "Trading Post" network. Since April 1993, it is clear that a coordinated marketing strategy has been pursued using the name "Local Trading Post". The strategy involves splitting New South Wales, for example, into discrete regions and in each marketing a "Local Trading Post" soliciting and publishing classified advertisements relevant to those regions. The "regions" seem to follow usually understood regional divisions. For the Canberra region the definition used by the "Canberra Region Campaign Inc" appears to have been adopted. The other regions are said to be identified by reference to criteria adopted by the New South Wales State Chamber of Commerce. Expansion of the network of "Local Trading Posts" has been gradual since April 1993.

26. It is important to identify the "conduct" referred to as "misleading or deceptive". It is also necessary to identify the market relevantly affected by that conduct. There is no dispute that the parties, being corporations, were relevantly engaged in "trade and commerce".

27. For present purposes, it is enough to say that the consumers likely or not to be misled or deceived are those who might be expected to advertise in or purchase the Canberra Trading Post or competing publications: see Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; (1982) 149 CLR 191.

28. Each "Trading Post" clearly has a local circulation. Its primary focus is upon advertising relevant to the region in which it circulates.

29. In determining whether the relevant consumers are likely to be misled or deceived, the standard to be applied is that of the persons likely to fall within the relevant section of the public. That would include professional traders as well as occasional advertisers and purchasers. Their standard of education, astuteness, capacity to observe subtle or less than obvious differences, will vary: see Taco Co of Australia Inc and anor v Taco Bell Pty Ltd (1982) 42 ALR 177.

30. The relevant test, it seems to me, is whether a significant section of the readers of each publication would be likely to confuse the defendant's publication with that of the plaintiff. That was also the test applied by Wilcox J in 10th Cantanae Pty Ltd v Shoshana Pty Ltd and anor (1988) 79 ALR 299. I would not regard conduct as being "likely" to deceive or mislead if that effect would only be experienced by a person who is especially careless or unobservant, even after allowance for the fact that no special reason to be alert to the difference between the defendant's publication and that of the plaintiff would be apparent to the ordinary reader. Such readers might reasonably be unaware of the various classified advertisement publications in circulation.

31. It is also apparent that before the defendant launched its new publication in February 1995, there had been three classified publications circulating in the Territory and the surrounding region or, at least, significant parts of it. There was the Southern Districts Trading Post (first published 15 August 1991), the Canberra-Monaro Classified Advertiser (date of first publication not given) and the Canberra Trading Post (first published 8 December 1989). None of those gave rise to any apparent confusion, even after the Southern Districts Trading Post became the "Weekly Trading Post".

32. The "Southern Districts/Weekly Trading Post" changed its name to "Local Trading Post" on 29 July 1993. It is not alleged that any confusion was caused by that alteration so far as the Canberra region market was concerned. A perusal of the format of that "Local Trading Post" demonstrates that there is no reference to "Canberra" on its front page. The only reference to Canberra in the publication is to the names and addresses of the Canberra newsagencies at which it may be obtained. That is on page 11. It is one of seven such notices in the paper, the others referring to Campbelltown, South of Wollongong, South of Canberra, Southern Highlands, South Coast and Riverina. It would be unlikely that a Canberra based buyer or seller, used to the more specifically targeted "Canberra Trading Post" would have regarded that "Local Trading Post" as relevant to his or her needs.

33. That situation was altered with the publication in February 1995 of the "Local Trading Post" with the notation "Servicing the Canberra Region" just under the masthead.

34. In my view, that alteration did bring about a situation whereby consumers in the Canberra-Queanbeyan area particularly were likely to be misled or deceived into believing that that edition of the "Local Trading Post" was associated with or was the same publication as "Canberra Trading Post". The characteristic "wooden plank" background of the "Local Trading Post" is, in my view, insufficient to avoid this confusion of consumers.

35. It follows that the plaintiff has made out a case for relief under s52 of the TP Act.

36. As the relevant conduct was the defendant's change of format and marketing approach in late January, early February 1995, there is no substance in any suggestion of unreasonable delay or laches on the part of the plaintiff. Nor does it appear that the minor change of format made by the plaintiff after its purchase of the CTP had any role to play in causing consumers to become confused.

37. It is the case, however, that the plaintiff had acquiesced in the use of the term "Trading Post" as generic of classified advertising publications. Relief under the TP Act will need to be framed so as to permit the defendant to continue its use of the marketing strategy and format it has been accustomed to. However, some alteration in that strategy and format will be necessary to avoid confusion so far as the Canberra region is concerned. That may also entail some alteration in the defendant's marketing and billing procedures and documentation as well as some change in the presentation of the "Local Trading Post".

38. I propose to hear the parties as to the form of that relief and as to costs.