Monarch Investments Pty Ltd v Yeramba Estates Pty Ltd & Anor [1997] FCA 150 (26 February 1997)

CATCHWORDS

TRADE PRACTICES - misleading and deceptive conduct - name of applicant company adopted by respondent as part of product name - reputation - relevant section of public - conduct to be assessed in context - respondent changed its advertising to sufficiently distinguish itself thus correcting the misleading conduct - effect of disclaimer - undertakings in lieu of or as a basis for an injunction.

TORT - passing off - no evidence of actual damage - in quia timet case no evidence of real and tangible risk or probability of damage.

Trade Practices Act 1974 (Cth) s 52

Hornsby Building Information Centre Pty. Ltd. -v- Sydney Building Information Centre Pty. Ltd. [1978] 140 CLR 26

Parkdale Custom Built Furniture Pty. Ltd -v- Puxu Pty Ltd [1982] 149 CAR 191

Taco Company of Australia Inc. & Anor. -v- Taco Bell Pty. Ltd. & Ors. [1982] FCA 136; [1982] 42 ALR 177

CBS Records Australia Ltd & Ors -v- Telmak Teleproducts (Aust) Pty Ltd [1987] 72 ALR 270

Elders Trustee & Executor Co Ltd -v- E.G. Reeves Pty Ltd [1987] FCA 332; [1987] 78 ALR 193

NSW Dairy Corporation -v- Murray-Goulburn Co-op Co. Ltd. & Anor [1989] 86 ALR 549

Snoid & Ors. -v- Handley & Ors [1981] ATPR 40-219

Dairy Vale Metro Co-operative Ltd. -v- Brownes Dairy Ltd [1981] ATPR 40-215

George Laurens (WA) Pty. Ltd. -v- Laurens and Co Australia Pty. Ltd. [1994] ATPR 41-329

Central Equity Limited -v- Central Corporation Pty. Ltd. [1995] ATPR 41-443

20th Century Fox -v- SA Brewing [1996] 34 IPR 247 at 251

Henderson -v- Radio Corporation Pty. Ltd. [1960] SR (NSW) 576

Erven Warnink Besolten Vennootschap -v- J Townend & Sons (Hull) Ltd. [1979] A.C. 731

MONARCH INVESTMENTS PTY LIMITED -V- YERAMBA ESTATES PTY LIMITED and STANNIC SECURITIES PTY LIMITED

NG 917 OF 1996

EINFELD J

SYDNEY

26 FEBRUARY 1997

IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 917 of 1996

GENERAL DIVISION )

Between: MONARCH INVESTMENTS PTY LIMITED

Applicant

And: YERAMBA ESTATES PTY LIMITED

First Respondent

STANNIC SECURITIES PTY LIMITED

Second Respondent

MINUTE OF ORDERS

1. The respondents are restrained from:

(a) displaying the large (7 X 3.6 metre) signs standing at the entrance to the Monarch Hills development and on Sparks Road, Warnervale.

(b) displaying any other promotional signs for "Monarch Hills" on the central coast unless they comply with the undertakings given with respect to media advertising, that is, to always precede "Monarch Hills" with the possessive "Yeramba's" or "Yeramba Estates'" and to include a disclaimer that "this development is not associated with any other land development company".

2. The amended application is otherwise dismissed.

3. I will hear the parties on costs.

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

EINFELD J

SYDNEY

26 FEBRUARY 1997

IN THE FEDERAL COURT OF AUSTRALIA )

NEW SOUTH WALES DISTRICT REGISTRY ) No. NG 917 of 1996

GENERAL DIVISION )

Between: MONARCH INVESTMENTS PTY LIMITED

Applicant

And: YERAMBA ESTATES PTY LIMITED

First Respondent

STANNIC SECURITIES PTY LIMITED

Second Respondent

REASONS FOR JUDGMENT

EINFELD J SYDNEY 26 FEBRUARY 1997

INTRODUCTION

The applicant, Monarch Investments Pty Limited (Monarch Investments), is a property developer principally operating in and around the greater Sydney metropolitan area. The first respondent, Yeramba Estates Pty Ltd (Yeramba), is also involved in property development but it operates primarily on the New South Wales central coast and in the Newcastle/Hunter region. In July 1995 the name "Monarch Hills" was registered in the name of the second respondent, Stannic Securities Pty Ltd (Stannic), and was adopted as the name for a Yeramba land development at Warnervale on the central coast. Because Yeramba and Stannic are associated and integrated companies, I shall refer to them either as Yeramba or the respondents unless it is necessary to distinguish them. Monarch Investments claims that by using the word "Monarch", Yeramba is in breach of section 52 of the Trade Practices Act 1974 (the Act) and is also committing the tort of passing off.

THE PARTIES

The applicant

Monarch Investments commenced business in 1955. Its field of activity has principally been property development including land subdivisions and, more recently, house and land packages. While Monarch Investments has developed land throughout the greater Sydney metropolitan area, its residential subdivision developments since 1990 have been in Sydney's west and south west, with one development at Quaker's Hill in the north west.

In 1994 Monarch Investments explored the possibility of residential development at Wadalba on the central coast. Wadalba lies less than two kilometres south of the Monarch Hills development. Currently, no negotiations are being conducted by the company regarding the purchase of this or any other property on the central coast. In fact Monarch Investments has never developed land or advertised on the central coast, although it has explored the possibility of property development in Devonport in Tasmania, Gungahlin in Canberra, and in the Hunter and Newcastle areas.

Monarch Investments has registered the business name "Monarch" and various business names incorporating the name "Monarch". It has also registered the name "Monarch" as a trade mark. The Monarch name and trade mark are used on Monarch Investments' stationery, current business cards, adhesive stickers and keyrings, and appear in advertising and in articles concerning Monarch Investments. The company has also established an internet address and a home page on the world wide web using the name "Monarch", is a member of several industry associations, and has received numerous awards and certificates of appreciation for its sponsorship.

Monarch Investments advertises extensively using a broad range of advertising and promotional mediums. The thrust of the promotional activity is corporate public relations which involves among other things, sponsorship of the Monarch Group's Australian Rules team, "The Monarch Blues", based in Campbelltown. The team plays in the State League and generates significant exposure for Monarch Investments as it plays matches throughout the state and features regularly in local newspapers circulating in the Campbelltown and Macquarie Fields areas. Generally, the newspaper articles covering Monarch Investments' sponsorship activities are confined to the suburban newspapers in west and south west Sydney, whereas advertisements and articles promoting Monarch Investments' residential developments appear in both suburban newspapers such as the Macarthur Chronicle and the Macarthur Advertiser, and the metropolitan daily papers such as the Sun Herald and Daily Telegraph Mirror. The name "Monarch" is also on display at point-of-sale signs which generally emphasise the words "Monarch Land".

In the newspaper advertisements, on point-of-sale signs and in respect to sponsorship activities, "Monarch" is usually written in a bold upper case Roman font. On the point-of-sale signs and in some of the print advertisements, the name appears below a logo of a sun rising over a green field. In other print advertisements, "Monarch" appears as part of the Monarch trade mark which is dominated by a simplified crown, "Monarch" being written above the crown and "Leaders in Land Property" written below.

The evidence clearly showed that forty years of involvement in real estate and property development combined with a broad range of promotional activities have established Monarch Investments as a fairly major player in the property market encompassing the greater or outer Sydney metropolitan area. It has a well established and apparently good reputation within its area of operations.

The respondents

Yeramba commenced business in 1951 and since that date has been continuously and exclusively developing land on the central coast and Hunter region of New South Wales. Its field of activity, like that of Monarch Investments, is property development including land subdivisions and house and land packages. Yeramba has a long standing reputation on the central coast and also advertises its central coast properties in the Sydney metropolitan area.

In 1989 Yeramba began to acquire land for a development at Warnervale on the central coast. Initially, the area of land was referred to within the respondents' offices as the Warnervale Estate. The respondents testified that that name was used merely for administrative purposes as a way to identify the land before the name "Monarch Hills" was adopted in 1995. However, in a number of official documents that were seen outside the companies' offices, the first letters of both "Warnervale" and "Estate" were capitalised -- for example, in the architectural plans lodged in support of the development application to Wyong Council and in a letter from Yeramba's company secretary to John Flakelar, a director of Bannister & Hunter the respondents' surveyors, concerning a contract for the Warnervale Estate entrance. The heading of a letter from Mr Flakelar to a company called Robson Excavations about this contract even had the words "Warnervale Estate" all in block capitals. Monarch Investments argued that this extended use supports the conclusion that the Warnervale land had already been given the name "Warnervale Estate" by Yeramba. This name was in use until May 1995 when the name "Monarch Hills" was adopted and subsequently registered by Stannic on 4 July 1995.

MONARCH HILLS ESTATE

In July/June 1995 entrance walls to the "Monarch Hills" development were constructed and large concrete name signs incorporating the name "Monarch Hills" were placed at the entrance to the estate. In March 1996, a large sign (7 metres x 3.6 metres) incorporating the name "Monarch Hills" was erected at the entrance and a similar sign was placed on the main road (Sparks Road) adjoining the estate. On these signs, "Monarch Hills" is written towards the top in a bold Roman font with only the first letters of each word capitalised. Positioned above "Monarch Hills" is a crowned lion. In the middle of the sign is written "Land Sale" in very large letters, while at the bottom of the sign and less prominent, the words "Yeramba Estates" and a contact phone number appear. On either side of the entrance there are a number of flags which display the name "Yeramba" and its logo.

Promotion of the Monarch Hills estate remained primarily confined to word of mouth promotion and the large entrance signs until October 1996 when Yeramba began to promote the estate in the Sydney and central coast areas on radio and television and in newspaper advertisements. Certain television and radio advertisements were tendered in evidence and a count was made of how often the names "Yeramba Estates" and "Monarch Hills" were heard or seen. The tally of audio references, while varying between advertisements, demonstrated equal exposure to Yeramba and Monarch Hills overall, the one exception being the series of advertisements on Sydney FM Radio Station 2MMM which made no reference to Yeramba and in one instance spoke of "Monarch" as opposed to "Monarch Hills". This series of advertisements was no longer airing at the time of the hearing. Most of the visual references were to "Monarch Hills" and frequently featured the entrance to the development.

The print media advertisements generally show a mud map of the estate, its position with respect to the ocean and the Pacific Highway, and its distance from Sydney. In the centre of the map is the name "Monarch Hills", written in a small flowing script encased by a border. A crowned lion stands above the border. Towards the bottom of the page is printed "Yeramba Estates" in a slightly larger type, along with the Yeramba logo and a contact phone number.

In certain publications, such as the Nine to Five magazine issued free in Sydney and the central coast newspapers, it is the name "Monarch Hills" that is always emphasised and prominent, and the font used is almost identical to that used by Monarch Investments. Similarly, in advertisements for other Yeramba developments, the name of the development rather than Yeramba Estates is again prominent. For example, an advertisement for Yeramba's Lakeland Estate featured the name "Lakeland" in a bold upper case Roman font at the top of the advertisement, whereas "Yeramba Estates" was placed at the bottom of the page in a smaller type.

PRIOR TO THE PROCEEDINGS

It was, according to the evidence, not until late October 1996 when Yeramba began advertising in Sydney that Monarch Investments became aware of the Monarch Hills development, and on 14 November 1996 it formally objected to Yeramba using the name Monarch Hills. Acting upon the concerns expressed, Yeramba took steps in November 1996 to ensure that all references to the words "Monarch Hills" in the advertisements in the Sydney newspapers, and on television and radio, were immediately preceded by the word "Yeramba's" or "Yeramba Estates'" so that the word "Monarch" only appeared in such phrases as "Yeramba's Monarch Hills" or "Yeramba Estates' Monarch Hills". For example, the head of the advertisement in Nine to Five was changed to read "Yeramba's" (in bold upper case Roman type), and on the next line "Monarch Hills - Near Toukley" (in a smaller upper case type).

An offer to continue this form of advertising was made by Yeramba during the current proceedings, but Monarch Investments did and does not accept the offer, arguing that it is impossible to appropriately qualify Yeramba's use of the name without compounding the potential for persons to be misled. In particular, Monarch Investments contend that preceding the word "Monarch Hills" by the possessive "Yeramba's" is susceptible to creating the impression that Yeramba has somehow or other acquired or taken over all or at least part of Monarch Investments' business or has some other association or commercial arrangement with it.

THE PROCEEDINGS

The application and statement of claim were filed on 19 November 1996. An amended application was filed on 3 December 1996. It contained claims by Monarch Investments for declarations, orders and injunctions designed to prevent Yeramba from using the name "Monarch" together with damages and costs. Interlocutory injunctions were sought pending the action. As it seemed to me at the time of the interlocutory motion in early December that justice would be better served by an early expedited hearing of the whole case, I fixed the final hearing for 23 December 1996 and sought undertakings from Yeramba that would hold the position until judgment could be delivered.

Accordingly, Yeramba gave an undertaking that there would be no television or radio advertising until February 1997 other than on Coast Rock (a radio station in Gosford) on 28, 29 and 30 December 1996. There would also be no newspaper advertising other than four small advertisements in the Daily Telegraph Mirror. This undertaking expired on 31 January 1997. On 30 January 1997, Bruce Stanley Johnson, a director of Yeramba, swore an affidavit that it was his company's intention to have no radio or television advertising of the Yeramba Estates and Monarch Hill's development in the following seven days, the first television advertisements being planned to appear on 15 February. A number of newspaper advertisements in the Daily Telegraph Mirror and Central Coast Express had been contracted to appear during that seven days. On the understanding that this in effect amounted to an undertaking by the respondents not to have any additional advertising during that period, the application for interlocutory relief was stood over until 7 February 1997, on which date Monarch Investments' application for an interlocutory injunction was refused on the balance of convenience.

THE EVIDENCE

The process by which Yeramba arrived at "Monarch Hills" as the name for its development at Warnervale is instructive. There was conflicting evidence as to why and how the name was decided upon. Yeramba contended that in naming the development "Monarch Hills", it was continuing a royal or prestigious theme that it had adopted with respect to two other developments -- the Park Royal Estate and the Crestwood Estate where the street names also follow a regal or prestige theme. The streets in the Monarch Hills development were similarly intended to bear regal names, but the previous owner of the land, being of Scottish descent, submitted to Wyong Council a list of Scottish names for the streets in the development, and Yeramba, without protest, chose the street names from this list. However, 15 out of 20 estates previously developed by Yeramba were named using the word "estate" and 12 out of 20 estate names used a geographic connotation thus appearing to establish a tradition of combining a geographic name with "estate". Mr Johnson argued that "times change", and that his companies have more recently been adopting a royalty theme for their estates to convey an impression of prestige.

Although Yeramba denied that the existence of Monarch Investments was a factor in choosing the name Monarch Hills, there was some circumstantial evidence that persons at Yeramba deliberately chose the name knowing of the existence of Monarch Investments and with the intention, so Monarch Investments argued, of passing itself off as possessing Monarch Investments' distinctive reputation in property development. Mr Flakelar, the person attributed with actually thinking up the name "Monarch" during a discussion with Mr Johnson in early 1995, denied that he knew of the existence of Monarch Investments, and there was no evidence to refute his assertion. Mr Johnson admitted that he had become aware of Monarch Investments' interest in purchasing land on the central coast in 1994, but denied that his knowledge of this interest and of the existence of Monarch Investments played any part in the choice of the name for the development. The evidence was that, after Mr Johnson's discussion with Mr Flakelar, a list of possible names was circulated around the office along with the information that Mr Johnson had a preference for Monarch Hills. As a result of office opinion and Mr Johnson's preference for the name, "Monarch Hills" was adopted as the name for the development not later than mid 1995.

There was a somewhat strange epilogue to this evidence. A company previously known as Little and Associates Advertising Agency Pty Ltd (Littles) did advertising work for Monarch Investments for some years prior to and during the periods when it was also retained by Yeramba in 1994 and 1995. Thus at all times during Littles' relationship with Yeramba, Douglas Christie, Little's managing director, and other members of his staff were aware of Monarch Investments and its interest, in 1994, in purchasing land on the central coast for the development of an estate. In late 1995 a conversation took place between Mr Johnson, Mr Christie and David Glassop, Yeramba's sales and marketing manager, who also knew of Monarch Investments' 1994 interest in a central coast development. The respective accounts of this conversation were conflicting. As I interpreted the evidence, Mr Christie probably raised the point that the choice of the name Monarch Hills might create some problems with Monarch Investments. Mr Johnson's probable response was to the effect that he did not care if Monarch Investments got upset as Yeramba had decided on the name months before, had registered the name, and had spent considerable money on preparatory advertising and signage. There may have been some discussion that Monarch Investments and Yeramba operated in different areas.

I accept that the name was chosen in the knowledge of the existence of Monarch Investments as a property developer operating in New South Wales. But in view of my later findings it is not necessary to determine whether the name Monarch Hills was chosen for Yeramba's estate at Warnervale with a deliberate view to, or contemptuously regardless of, public deception as between the two or to pass Yeramba's development off as that of Monarch Investments.

SECTION 52 CRITERIA

Section 52(1) of the Act provides:

A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

Monarch Investments' case is that the use of "Monarch" as part of the name for Yeramba's development at Warnervale is likely to mislead or deceive purchasers of property or potential customers of its business into believing that it is in some way involved in the development. Monarch Investments will not accept any form of qualification or disclaimer in Yeramba's advertising unless such a disclaimer states specifically that the development "is not associated with Monarch Investments". Yeramba denies that the use of the name is misleading or deceptive or likely to mislead or deceive consumers. It asserts that the applicant's claim amounts to an attempt to acquire a monopoly over an essentially descriptive word being used to promote the prestige nature of its development, and that Monarch Investments should not be entitled to remove the word from the language of advertising of real estate.

The adoption of a name which is descriptive of a business or product is unlikely to classify as misleading or deceptive conduct unless the name has acquired a distinct reputation through usage. The case of Hornsby Building Information Centre Pty. Ltd. -v- Sydney Building Information Centre Pty. Ltd. [1978] 140 CLR 26 provides an example where the applicant had adopted a name that was purely descriptive of the business services it provided and was denied relief on the grounds that the very descriptive nature of the phrase "Building Information Centre" ensured that it did not become distinctive of any particular business.

The word "Monarch", while an ordinary English word, does not describe the nature of the relevant business or product -- a residential subdivision -- nor does it describe its locality. At most it merely implies that the development is of high quality. Thus the starting point for assessing whether or not there has been a breach of section 52 in this case is the identification of the relevant section of the public against whom the effect of Yeramba's conduct is to be judged: Taco Company of Australia Inc. & Anor. -v- Taco Bell Pty. Ltd. & Ors. [1982] FCA 136; [1982] 42 ALR 177. As was stated by Toohey J in Dairy Vale Metro Co-operative Ltd. -v- Brownes Dairy Ltd [1981] 35 ALR 494 at 501:

While action under the provisions of the Trade Practices Act is not founded upon and does not require as an essential element protection of a trader's good will for the public to be misled or deceived it seems to me that there must be in the minds of the relevant public some established truth against which the notion of misleading or deceptive conduct can be measured.

In the present case, the scope of Monarch Investments' reputation as a land developer is helpful in identifying the relevant section of the public. While it has undoubtedly established a strong reputation in the outer Sydney metropolitan area, there is no evidence to support the argument that its reputation extends into the central coast. According to the evidence, it has conducted no advertising or development in this area. Apart from an investigation of some land at Wamberal in or about 1989, its only interest in the region involved confidential and secret negotiations with respect to one area of land at Wadalba in 1994. Evidence that two professionals working in land development on the central coast, Maurice Hennessy a real estate agent and John Flakelar a surveyor, had not heard of Monarch Investments further supports the conclusion that it has not established a distinctive reputation in this area.

It is thus difficult to comprehend how the public on the central coast could be misled or deceived, or are likely to be misled or deceived, by Yeramba's use of the name "Monarch Hills". There was ample evidence, which was not disputed, that Monarch Investments has a well established reputation as a developer of residential estates and subdivisions in the greater or outer Sydney area, especially in the west. For that reason, it seems to me that the target audience with reference to whom Yeramba's conduct is to be judged should be confined to this area. It should be noted that in a number of other cases the relevant section of the public has been similarly limited to an area within a state -- see Taco where the target audience was limited to Sydney. See also Snoid & Ors. -v- Handley & Ors [1981] FCA 180; [1981] 54 FLR 202.

Both parties are involved in residential development in areas out of the centre of Sydney and the target markets for these developments, while not identical, have some overlap, especially in media advertising. The relevant section of the public thus comprises prospective purchasers of residential homes and potential customers of Monarch Investments, principally in outer western Sydney. First home buyers, retirees or persons looking to move out of the city into a better environment that is a commutable distance from Sydney may be attracted to developments in both the outer western suburbs and on the central coast.

The context in which the name "Monarch" occurs is thus critical to the determination whether Yeramba's conduct is misleading or deceptive to, or is likely to mislead or deceive, these persons: Elders Trustee & Executor Co Ltd -v- E.G. Reeves Pty Ltd [1987] FCA 332; [1987] 78 ALR 193 at 241 where Gummow J stated that:

..... it would be wrong to select particular words or acts which, although misleading in isolation, do not have that character when viewed in context.

See also Gibbs CJ in Parkdale Custom Built Furniture Pty. Ltd -v- Puxu Pty Ltd [1982] HCA 44; [1982] 149 CLR 191 at 199.

Yeramba's use of the word "Monarch" cannot therefore be considered in isolation. "Monarch" is combined with the word "Hills" to form the name of the particular development at Warnervale. In all the advertising featuring "Monarch Hills", other than one series of advertisements on Radio 2MMM, the name "Yeramba Estates" is also mentioned. This is thus not a simple case of similar company names, or similar product names; it is a case in which the name used by a company has been adopted by another company as part of a product name. These factors play an important part in assessing the overall impression of Yeramba's advertisements and promotional work.

FIRST SERIES OF ADVERTISING

Another element in determining whether the conduct of Yeramba is likely to mislead or deceive is the two types of advertisements that have been run. The first advertisements appeared before Monarch Investments complained to Yeramba. They either emphasised the words "Monarch Hills" or gave equal weight to "Monarch Hills" and "Yeramba Estates". I am of the opinion that throughout these advertisements insufficient emphasis was given to Yeramba Estates as the developer. A potential purchaser of a residential home, aware of Monarch Investments' reputation as a developer of residential estates, was likely to see or hear these advertisements, recognise and identify with the name "Monarch", and reach the erroneous conclusion that Monarch Investments was in some way involved with the development on the central coast or associated with the developer, Yeramba Estates. The references to Yeramba were, in my view, insufficient to refute this conclusion.

In this context, the phrase "Monarch Hills" was easily open to the interpretation that the "Hills", or the land in question, was owned by Monarch Investments, and that that was the reason for the development's name. The central coast is geographically close enough to Sydney for people to make the reasonable assumption that Monarch Investments was expanding into the area. The type of development previously or currently being undertaken by Monarch Investments and the Yeramba development at Monarch Hills were substantially similar, both being residential subdivisions in areas out of the central Sydney region but within reasonably close proximity to Sydney.

Moreover, the possibility of purchasers being misled was made even more likely when "Monarch Hills" appeared in the same type font as that used by Monarch Investments. While this erroneous conclusion would more than likely be rectified before a major investment such as the purchase of a block of land is made, the customer has still been misled and may have initially contacted Yeramba only because of the perceived connection with Monarch Investments. Thus the conduct complained of could be the trigger for Yeramba actually making sales: George Laurens (WA) Pty. Ltd. -v- Laurens and Co Australia Pty. Ltd. [1994] ATPR 41-329 per Ipp J at 42,361.

In my opinion, Yeramba's conduct in the first series of advertisements went beyond being likely merely to confuse potential customers as to the developers involved. In light of the emphasis on "Monarch Hills", the series of advertisements run before a complaint was made, in particular on Radio 2MMM, were clearly misleading in their effect in conveying to a significant section of the target audience the representation that there was a connection between Monarch Investments and Yeramba's residential development at Warnervale.

SECOND SERIES OF ADVERTISEMENTS

In an effort to sufficiently distinguish Monarch Hills from Monarch Investments so as to fall outside the realm of conduct likely to mislead or deceive, Yeramba undertook to change the layout of their advertisements. Currently, all Yeramba advertisements for "Monarch Hills" clearly convey that it is a development by Yeramba. Through senior counsel, Yeramba stated in court that it is also willing to include a disclaimer that no other company is associated with the development. As previously noted, Monarch Investments argued that using the name "Monarch" misleads people into believing that Monarch Investments was involved in, or had been involved in and had subsequently been taken over by, Yeramba and that no disclaimer, other than that "Monarch Investments is not associated with this development" would remove the likelihood of deception.

In Twentieth Century Fox Film Corporation & Anor -v- South Australian Brewing Co Ltd & Anor [1996] 34 IPR 247 at 251, Tamberlin J observed, in respect of disclaimers, that because of the many possible factual variations that can arise, it is "unsafe to treat any particular decision as a precedent" and there is no general formula for determining the effect of a disclaimer. In my opinion, through the already adopted and proposed additional changes to its advertisements, Yeramba has sufficiently distinguished the Monarch Hills development from Monarch Investments as to avoid the possibility that persons will be misled. The type of advertising that Yeramba is currently using makes clear that Yeramba is developing a new residential estate under the name "Monarch Hills". It seems to me that members of the public seeking to relocate from outer western Sydney to this estate will recognise it as such and are unlikely to draw an association with Monarch Investments. Nor, as it seems to me, is the target audience likely to infer from the phrase "Yeramba Estates' Monarch Hills", either that the development was previously owned by Monarch Investments but has since been taken over by Yeramba, or that Monarch Investments itself has been taken over by Yeramba. The offered disclaimer will prevent any mistakes by purchasers as to the possible involvement of Monarch Investments.

This case can clearly be distinguished from those where a disclaimer was held not to be sufficient to prevent misleading or deceptive effects, such as George Laurens where there was no evidence of how the respondent was planning to distinguish its company from that of the applicant. The respondent undertook to rectify any mistakes by potential customers at the time when they first contacted it. The Court held that the undertaking was insufficient to prevent deception, largely because the potential customer, having contacted the respondent under a misapprehension, may still be persuaded to do business with it even when the mistake has been rectified.

Yeramba has already made significant changes to its advertising material and has complied with undertakings it gave freely at the commencement of the hearing. If Yeramba and Stannic again state in open court that they will continue to comply with their previous undertakings in this respect, and will also undertake to include the disclaimer in all future advertising and promotions for the sale of property at Monarch Hills and not to revert to the wording and presentation in the first series of advertisements or anything similar thereto, I will accept the undertakings in lieu of injunctive relief. In this event, it would not be necessary for Yeramba to change the font being used because it is a very common print type and any misleading or deception will already have been removed.

ACTUAL MISTAKE

Yeramba argued that there is no evidence of actual mistake by customers to support Monarch Investments' complaints. Whether conduct amounts to a breach of section 52 is an objective test to be determined by the Court. While evidence of actual deception can be persuasive, it is not essential; proof of actual error is unnecessary to a finding that the conduct is likely to mislead or deceive: Taco at 199.

Nevertheless Monarch Investments led some evidence of actual mistake. Peter Brian Icklow, managing director of Monarch Investments, testified that he had received a number of calls from other developers, sales people and people in the construction industry who questioned him as to whether Monarch Investments was involved in the development at Warnervale. He had kept no record of these calls and only three people, Michael Henry, Paul Donovan and Garry Hennessy were identified as persons who raised a question.

Mr Hennessy, a real estate agent involved in the sale of land at one of Monarch Investments' developments, gave evidence that a person who attended the development site office asked whether the company had some land on the central coast. Mr Hennessy also testified that when he saw a Monarch Hills television advertisement for the first time, he thought that Monarch Investments had purchased some land on the central coast. It was only after paying careful attention to the advertisement the next time he saw it that he realised that Yeramba was selling the land.

Mr Henry, a director of a construction company which subleases office space from Monarch Investments, gave evidence that when he saw an advertisement for Monarch Hills in one of the Sydney metropolitan papers, he wondered how Yeramba could have used Monarch Investments' name for the development. He later asked Mr Icklow whether Monarch Investments had an association with Yeramba.

Mr Donovan, a registered land valuer retained or consulted from time to time by Monarch Investments, heard radio advertisements for the "Monarch Hills" development. He gave evidence that he thought that Monarch Investments was involved in the development and that it may have been conducting a joint venture with Yeramba.

I was not impressed by this evidence. Deane and Fitzgerald JJ stated in Taco [1982] FCA 136; [1982] 42 ALR 177 at 199:

..... it is sufficient to enliven s 52, that the conduct in the circumstances, answers the statutory description, that is to say it is misleading or deceptive or is likely to mislead or deceive. It is unnecessary to go further and establish that any actual or potential consumer has taken or is likely to take any positive step in consequence of the misleading or deception.

Nevertheless, the fact that no evidence was tendered of customers for or purchasers of land from Yeramba or Monarch Investments being misled or deceived is a factor to be considered when determining whether Yeramba's conduct is likely to mislead or deceive members of the target audience.

THE ENTRANCE TO MONARCH HILLS

With respect to the entrance to "Monarch Hills", given the short distance from Sydney to the central coast, it is conceivable that potential purchasers from the target market, while visiting or driving through the area, will see the entrance and the signage positioned on the main road. The entrance and the large signs are dominated by the words "Monarch Hills" and "Land Sale" rather than Yeramba Estates, and the signs employ the same font as that used by Monarch Investments. Given that flags are often distorted in such a manner as to make reading of them virtually impossible, it is my impression that they would have little impact and fail to counteract the emphasis given to Monarch Hills. However, for the same reasons discussed with respect to the first series of advertisements, I find that there is a real chance that the visual promotion positioned at the entrance and on Sparks Road will mislead or deceive potential purchasers from outer western Sydney into believing that Monarch Investments is in some way involved in the development. Therefore I find that the conduct of the respondents with respect to the signage is a contravention of section 52 and that an injunction should go to restrain continuation of this conduct.

PASSING OFF

Monarch Investments argued that Yeramba's conduct amounts to a passing off in that Yeramba is attempting to trade on Monarch Investments' good reputation. In Erven Warnink Besolten Vennootschap -v- J Townend & Sons (Hull) Ltd. [1979] A.C. 731 Lord Diplock identified the five elements necessary to establish a cause of action in passing off as follows:

(1) a misrepresentation (2) made by a trader in the course of trade, (3) to prospective customers of his or ultimate consumers of goods or services supplied by him, (4) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably foreseeable consequence) and (5) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so.

These elements were cited with approval by Justice Drummond as recently as Central Equity Limited -v- Central Corporation Pty. Ltd. [1995] 32 IPR 481. I have little doubt that in its initial series of advertisements and the signage at and near the development site, Yeramba misrepresented to prospective customers that its development at Warnervale was in some way associated with Monarch Investments. However, Monarch Investments has proved no actual damage to its business or goodwill. Indeed it has merely claimed that such injury is possible in the future without attempting to establish that injury or damage is actually reasonably foreseeable or likely. See also CBS Records Australia Ltd & Ors -v- Telmak Teleproducts (Aust) Pty Ltd [1987] 72 ALR 270 at 279.

Monarch Investments drew my attention to a discussion in Henderson -v- Radio Corporation Pty. Ltd. [1960] SR (NSW) 576 at 593-4 on the requirement of actual damage. Evatt C.J. and Myers J. stated that in a quia timet action, that is, where the applicant fears some future probable injury to his rights or interests, the applicant must establish a reasonable probability of injury. Their Honours refined this element at 595 by themselves requiring that there be a "sufficiently real and tangible risk of damage". I am of the opinion that these qualifications add little to the fifth element stated by Lord Diplock in respect of a quia timet action such as the present case.

Monarch Investments has identified four potential heads of damage:

. profits which may have been made by Yeramba and which may be likely to be made by Yeramba as a result of the possibility of land purchasers associating the Monarch Hills development with Monarch Investments

. loss of sales that Monarch Investments may have suffered and may be likely to suffer through some land buyers purchasing properties at the Monarch Hills development who may otherwise have purchased land at one of the Monarch Group's other developments

. damage that Monarch Investments may have suffered or may be likely to suffer to its reputation by the use of the name "Monarch Hills" by Yeramba and Stannic and by any existing or emerging negatives associated with Monarch Hills

. monies that Monarch Investments may need to spend in addition to its normal advertising if it were to develop land on the central coast to distinguish the Monarch Group development either from this or another Yeramba development having regard to the promotion of the "Monarch Hills" development

However, it has not produced any evidence that there is a probability or a real and tangible risk of any of the four heads of damage itemised. I think that the possibilities in this connection are minimal. Hence the action for passing off must fail regardless of whether the other elements of the Diplock definition apply to the facts of this case.

RELIEF FOR SECTION 52 CONTRAVENTION

Nor has Monarch Investments made an effort to quantify any potential losses, still less to prove any actual loss or damage, as a result of the respondents' conduct which contravened section 52 of the Act.

That the applicants have not led a case of having already suffered actual damage from the actions of the respondents is no bar to a claim for injunctive relief under section 80 of the Act to restrain a continuing contravention of section 52. However, through the actual and projected changes to its advertisements, Yeramba has in my opinion so corrected the misleading conduct complained of as to no longer contravene the Act. It has in the process removed or very substantially reduced the risk of any damage that may have otherwise arisen had the misleading conduct continued. As I see the position, the only conduct of the respondents that continues to amount to misleading and deceptive conduct is the entrance and the promotional signs on the central coast.

I will accept an undertaking that Yeramba will permanently abide by its offers to precede any reference to "Monarch Hills" in its advertising by the word "Yeramba's" or the words "Yeramba Estates'", and to include in its advertising a disclaimer stating that "this development is not associated with any other land development company". I will require an additional undertaking, although possibly implied by those contained in its offer, that it will not revert to the wording and presentation used in its first series of advertisements or anything similar thereto.

ORDERS

The respondents are restrained from:

1. displaying the large (7 X 3.6 metre) signs standing at the entrance to the Monarch Hills development and on Sparks Road, Warnervale

2. displaying any other promotional signs for "Monarch Hills" on the central coast unless they comply with the undertakings given with respect to media advertising, that is, to always precede "Monarch Hills" with the possessive "Yeramba's" or "Yeramba Estates'", and to include a disclaimer that "this development is not associated with any other land development company"

I will hear the parties on the issue of costs.

For the applicant Mr Neil Francey & Miss M. Fraser instructed by Blessington Judd Solicitors

For the respondent Mr Malcolm Holmes QC instructed by Esplins Solicitors

Date of hearing 23 & 24 December 1996

Written submissions 31 January 1997

completed

Date of judgment 26 February 1997