Re Horwitz Grahame Books Pty Limited v Performance Publications Pty Limited; Malcolm Frederick Douglas; Jolyon Edward Sykes and John Van Daal [1987] FCA 45 (18 February 1987)

FEDERAL COURT OF AUSTRALIA

Re: HORWITZ GRAHAME BOOKS PTY LIMITED
And: PERFORMANCE PUBLICATIONS PTY LIMITED; MALCOLM FREDERICK DOUGLAS; JOLYON
EDWARD SYKES and JOHN VAN DAAL
No. NSW G47 of 1987
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Wilcox J.

CATCHWORDS

Trade Practices - Application for interlocutory injunction - Alleged misleading conduct - Statements made in first issue of a magazine suggesting connection with another magazine - Whether statements were "a publication of matter in connection with the supply or possible supply of goods or services" - Exercise of Court's discretion - Significance of failure by respondents to object to misleading passages before binding of the magazine - Costs.

Trade Practices Act 1974 ss.52, 65A.

Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited [1982] HCA 44; (1982) 149 CLR 191 referred to.

HEARING

SYDNEY
18:2:1987

Counsel for the Applicant: Mr P H Blackburn-Hart

Solicitors for the Applicant: Murphy & Maloney

Counsel for the Respondent: Mr J S Hilton

Solicitors for the Respondent: Gray & Perkins

ORDER

The undertaking given to the Court by their counsel on behalf of the respondents and each of them that they will not repeat orally or in writing any statement:

(a) regarding the non-payment of purchase

price by the applicant to DBS
Publications or regarding any resultant
legal proceedings; and

(b) that any contract formerly entered into
by any advertiser in relation to
advertising in "Street and Custom" is
void or unenforceable.

The costs relating to this application, and to the application made on

Monday 16 February 1987, as to eighty per cent (80%) thereof only, be respondents' costs in the principal proceeding.

NOTE: Settlement and entry of orders is dealt with in Order

36 of the Federal Court Rules.

DECISION

Last Monday morning I was approached in chambers by counsel for the applicant seeking an interlocutory order in respect of the publication and distribution of a publication entitled "Super Street Magazine", which is intended to be published by the first respondent and in relation to which publication the second, third and fourth respondents are persons concerned. On that occasion I accepted an undertaking given on behalf of the respondents not to distribute the magazine up to and including today, and I gave leave to the applicant to make returnable this morning an Application and to move the Court today for an order restraining the publication and distribution of the magazine until the final hearing of the matter. Application was made today for various interlocutory orders.

2. There has been a deal of evidence, both affidavit and oral, and a considerable number of issues of various magazines concerned with motor cars have been tendered in evidence. In particular, reference has been made by counsel to certain similarities between the respondents' magazine and a magazine published by the applicant which is entitled "Street and Custom". The evidence indicates that "Street and Custom" was originally published by a company with whom Mr Malcolm Frederick Douglas, the second respondent, was concerned; and it may be that the other individual respondents were also concerned with that magazine. After the publication of issue number 6 of "Street and Custom", the title was sold to the present applicant. But it was a term of that agreement that the vendors would continue to be responsible for the preparation of the copy needed for future issues. Apparently Mr Douglas, and those associated with him, did prepare the necessary copy for issues 7, 8 and 9 and Mr Douglas took some steps towards getting together material for issue number 10. However, before copy for issue number 10 was delivered, and indeed, as I understand it, before the actual publication of issue number 9, there was some falling out between him and those concerned with the affairs of the applicant. As a result, the arrangement was terminated. Apparently the purchase price payable in connection with the sale was to be paid by instalments, some of which have not yet fallen due. There is litigation in another court in relation to various aspects of the contractual relationship between the parties; but I am not concerned with those matters.

3. The claim made by the applicant in this Court is that the distribution to the public of the projected first issue of "Super Street" will offend against s.52 of the Trade Practices Act 1974 in that such distribution constitutes misleading conduct. In reliance upon that contention, counsel for the applicant has referred to the similarity between the names of the two magazines and various similarities in layout, type style, etc. I do not think that it is useful for me to set out a catalogue of similarities and dissimilarities. There are certainly many features in common; although, as the evidence has demonstrated, "Street and Custom" does not have a monopoly of many of those various features. There are also a considerable number of dissimilarities.

4. In a case such as this, one has to ask oneself whether the members of the public at whom the two publications are aimed, and it is conceded that both publications are aimed at the same market, would be misled into thinking that the respondents' publication is in fact that of the applicant. In Parkdale Custom Built Furniture Pty Limited v Puxu Pty Limited [1982] HCA 44; (1982) 149 CLR 191 at pp.199-200, Gibbs CJ said this of s.52:

"Speaking generally, the sale by one
manufacturer of goods which closely resemble
those of another manufacturer is not a breach
of s.52 if the goods are properly labelled."

Statements to similar effect were made by the other members of the majority of the High Court in that case.

5. In the application of that test, questions of degree are involved. In the end, I think that it is really a matter of impression. I can only say that, looking at the two publications, I am not persuaded that there is a serious issue to be tried that persons who are interested in purchasing "Super Street Magazine" would mistake it for "Street and Custom"; or that persons who might purchase "Super Street Magazine," and might subsequently read it, would think that it was the applicant's publication. I do not think that, looking at the two magazines overall, there is any element of misleading conduct.

6. However, there are three particular sections of "Super Street Magazine" where specific statements are made and in relation to which -- and subject to one matter -- I think that there is a serious issue as to whether they amount to misleading conduct. The first of these appears at page 7 of the publication in an article dealing with a car produced in New Zealand by the Nissan company. The article opens with this sentence:

"THERE'S A lot in a name, as you'd realize from
our report in STREET & CUSTOM No. 9."

The remainder of the passage is not suggested to be in any way misleading; but it is said that the reference to "our report" would indicate to a reader that the publishers of the instant magazine, that is to say "Super Street Magazine", were also the publishers of "Street and Custom" number 9.

7. The second passage occurs at page 8 where there is a correction of the name of a person who was referred to in what is described as "last issue". In fact, the relevant article was contained in an issue of "Street and Custom". There was, of course, no "last issue" of "Super Street Magazine". The publication currently in contention is the first under that title.

8. The third material to which reference should be made appears in the letters column, entitled "Idle Chat", at page 112. There is there published a letter from one Arnie Rutkowski, who refers amongst other things to "your magazine" with praise and in particular to "your number 9 issue". This is clearly a reference to "Street and Custom" number 9. After Mr Rutkowski's letter there is an editorial comment which not only fails to disclaim a relationship between the publisher of "Super Street Magazine" and the publication referred to by Mr Rutkowski, but which associates the writer of the editorial comment with the articles to which he makes reference. A similar situation, although less marked, occurs in respect of a following letter by one Greg Hardy.

9. In relation to these three references, Mr Hilton on behalf of the respondents has contended that, even if they be construed as suggesting that the publisher of this magazine was also the publisher of earlier issues of "Street and Custom", there is no breach of s.52 because of the terms of s.65A of the Trade Practices Act. That section, which was added by amendment in 1984, has not, so far as I am aware, yet been the subject of any judicial consideration. The intention of the Parliament obviously was to remove from the operation of s.52, amongst other sections and subject to certain limitations, statements made by persons who were involved in the business of publishing information. The section provides that:

"65A.(1) Nothing in section 52, 53, 53A, 55, 55A
or 59 applies to a prescribed publication of matter by a
prescribed information provider, other than--

(a) a publication of matter in connection
with--

(i) the supply or possible supply of
goods or services;

(ii) the sale or grant, or possible sale
or grant of interests in land;

(iii) the promotion by any means of the
supply or use of goods or services;
or

(iv) the promotion by any means of the
sale or grant of interests in land,

where--

(v) the goods or services were relevant
goods or services, or the interests
in land were relevant interests in
land, as the case may be, in
relation to the prescribed
information provider; or

(vi) the publication was made on behalf
of, or pursuant to a contract,
arrangement or understanding with--

(A) a person who supplies goods or
services of that kind, or who
sells or grants interests in
land, being interests of that
kind; or

(B) a body corporate that is
related to a body corporate
that supplies goods or services
of that kind, or that sells or
grants interests in land, being
interests of that kind; or

(b) a publication of an advertisement.

(2) For the purposes of this section, a publication
by a prescribed information provider is a prescribed
publication if--

(a) in any case--the publication was made by
the prescribed information provider in
the course of carrying on a business of
providing information; or

(b) in the case of a person who is a
prescribed information provider by virtue
of paragraph (a), (b) or (c) of the
definition of 'prescribed information
provider' in sub-section (3) (whether or
not the person is also a prescribed
information provider by virtue of another
operation of that definition)--the
publication was by way of a radio or
television broadcast by the prescribed
information provider.

(3) In this section--

'consortium' ...

'prescribed information provider' means a person who
carries on a business of providing information and,
without limiting the generality of the foregoing,
includes--

(a) a person to whom, or each of the members
of a consortium to which, a licence has
been granted under Part IIIB of the
Broadcasting and Television Act 1942;

(b) the Australian Broadcasting Corporation;
and

(c) the Special Broadcasting Service;

'relevant goods or services', in relation to a
prescribed information provider, means goods or services
of a kind supplied by the prescribed information
provider or, where the prescribed information provider
is a body corporate, by a body corporate that is related
to the prescribed information provider;

'relevant interests in land' ..."

10. The effect of these provisions is that the section does not exclude s.52 in a case where the relevant matter relates to the supply, or possible supply, of goods or of services, being goods or services put out by the information provider itself. Thus a promotional statement in a newspaper or a magazine, or on television, regarding future issues of that newspaper or magazine or future programs of that television channel is excluded from the operation of s.65A and, therefore, remains governed by s.52 and the other provisions referred to in the opening words of s.65A(1)..

11. In the present case I do not think that any of the items referred to fall within the qualification contained in para.(a) of s.65A(1). It is, no doubt, true, in a general sense, that the publisher of the magazine, in inserting the material referred to, hopes to interest readers in purchasing future issues. But, I suppose, that same statement may be made about everything which is published in a newspaper or in a magazine, including straight news items. Each of the items published are intended to stimulate interest and to induce readers to purchase future issues. I think that the qualification in para.(a) is intended to relate to what might be called advertisements for, or promotions of, future issues; "self-advertisements" corresponding with advertisements published on behalf of others, which are dealt with by para.(b). It is important to note that para.(a) refers to particular published "matter", which matter must be "in connection with" the supply or possible supply of goods or services.

12. I do not need to reach any final conclusion regarding the application of s.65A to the three statements complained of. However, I have very considerable doubt, in the light of that section, whether these statements would offend s.52; and this notwithstanding that I think that they would convey to a reader the impression that the publisher of "Super Street Magazine" had also published the relevant issues of "Street and Custom". The reason why I do not think it necessary to reach a final conclusion on that matter is that, in my opinion and in any event, it would not be a proper exercise of discretion to make an interlocutory injunction.

13. If, as I have concluded, it is correct to say that the only material which arguably offends against s.52 -- leaving s.65A aside -- are these three relatively small and insignificant passages it would, in my view, be oppressive to the respondents to take a course of action which would, in effect, require them to pulp the whole of the present issue, consisting of about 35,000 copies, which have been printed and bound, shipped from New Zealand to Australia and are now ready for distribution. In this connection I note that a proof copy of the proposed publication was supplied by the solicitor for the respondents to the solicitor for the applicant very promptly on request made to him on Wednesday, 11 February. The proof copy was delivered at 4 pm on that day. At that time the publication had been printed but not yet bound. Apparently the respondents agreed to delete certain editorial matter from the publication at the request of the applicant. This could be done relatively easily before binding. The deletion was made before binding commenced early on Friday, 13 February. There was not a long time between delivery of the proof copy of "Super Street" and the commencement of binding, but there was a full working day and two nights. Having regard to the size of the magazine and the fact that there was between the parties long-standing disputation -- involving some bitterness -- as to their rights, I should have thought that those looking after the interests of the applicant would have made it their business to read the magazine carefully immediately upon receipt of the proof copy. If they did not do so, and thus failed to notice these particular passages, this has to be taken into account in considering what is the proper order to make. If they read the passages and did not regard them as misleading, then that also has to be taken into account in considering whether or not the Court should now, on a minute consideration of the material, take a course which requires the pulping of the issue. Had the Court been approached on Thursday, 12 February, it is likely that the matter would have been resolved at little expense -- possibly with some revision and reprinting of the relevant pages and a short delay -- but at much less expense than that which would be involved in pulping, and then reprinting and rebinding, the whole issue.

14. Having regard, firstly, to my preliminary view that s.65A does exclude these three items from the operation of s.52, secondly, to the relative unimportance in the overall picture of these three items and, thirdly, to the failure by the applicant to complain of these items in the time which was available to it, I think that I ought to exercise my discretion adversely to the applicant in relation to the material in the publication which is, in my view, arguably misleading.

15. This leaves one other aspect of the matter. There has, apparently, been considerable rivalry between the two parties in regard to advertisers, with solicitations on each side. On 20 November 1986 the first respondent put out a circular to advertisers. Complaint is made of various misleading statements in that circular. Of course, s.65A has no application to that circular. There are two statements in that circular which I regard as misleading. The first of them occurs in the fourth paragraph of the circular where the following appears:

"The full purchase price of the title has not
yet been paid to DBS Publishing. This matter
and its associated legal action is not the
concern of Performance Publications."

DBS Publishing was the company associated with Mr Douglas which had previously owned "Street and Custom". The clear implication of that passage is that default had been made by the purchaser, that is the present applicant, in payment of the purchase price and that legal action had been taken in respect thereof. In fact, there had been no default at that time, as Mr Douglas now concedes, and, although legal action had either been taken or was under consideration, there was no legal action in relation to payment of the purchase price.

16. The second matter which I think is misleading is the statement in the last paragraph on the first page of the circular in the following terms:

"Regardless of any previous advice, the
advertising contracts for Street & Custom
No.10 (and beyond) written with either DBS
Publishing or Performance Publications are now
void and unenforcable (sic) by any party. You
are therefore free to re-write your contract
and place your advertising with whoever you
wish."

There seems to be no basis at all for the statement that the advertising contracts previously written with DBS Publishing were now void and unenforceable. On the contrary, it is conceded that, under the agreement for sale of the title, existing advertising contracts were assigned to the purchaser, the present applicant. I think that the statement was a clear invitation to advertisers to ignore their contractual obligations with the intent, no doubt, that they might then transfer their advertising business to the new publication. On behalf of the respondents, counsel indicates that his clients are prepared to give appropriate undertakings in respect of statements made to advertisers or potential advertisers of this kind. I think that I should accept that offer. I do not accede to the submission that, as the statement was made three months ago and there is no evidence of any republication of these statements, there is no need for the Court to intervene. It is obvious that there is intense competition between the parties for advertising business and, in the absence of an appropriate undertaking or order, there is justifiable concern on the part of the applicant that misstatements along these lines will be repeated.

17. I think that the appropriate order for costs is dictated by two considerations. As Mr Hilton has said, the matter in relation to which he has failed, namely the circular letter, occupied very little time and there was no letter before action. Had there been a letter before action it is possible that the undertaking which he gave at the hearing would have been given earlier. Therefore I do not think that this matter should significantly affect the position. But it does cause me to take the view that the respondents should not have the whole of their costs. That leaves the question whether they should have their costs absolutely or whether the appropriate order should be that the costs of this application be their costs in the principal proceedings. The latter is the more usual order and I see no reason to depart from it. I think the appropriate order is that the costs relating to this application, and to the application last Monday, as to 80 per cent thereof be respondents' costs in the principal proceeding. There will be no order in respect of the other 20 per cent which represent some recognition of the letter.