Turner v General Motors (Australia) Pty Ltd [1929] HCA 22; (1929) 42 CLR 352 (7 October 1929)

Turner and Another Defendants, Appellants ; and General Motors (Australia) Proprietary Limited and Others Plaintiff and Defendants, Respondents .

Flannery K.C. (with him R. K. Manning ), for the respondent General Motors (Australia) Pty. Ltd.

In this suit the respondent Company sought to restrain the appellants and the infant respondents from using the words "General Motor" or "General Motors" in connection with a business carried on by them in Sydney, on the ground that the use of those words as part of the trade name of the business so carried on was calculated to lead to the belief that the business in question was identical with or a branch or department of or otherwise connected with the business of the respondent Company. At the trial Harvey C.J. in Eq. granted an injunction restraining the defendants from using the words "General Motor" or "General Motors" in connection with any business carried on by them or any of them without adding in text as large as those words the words "This business has no connection with General Motors (Australia) Proprietary Limited," and from using any name calculated to lead persons to believe that any business of the defendants is identical with or connected with the business of the plaintiffs, and from representing or holding out any business carried on by them as being identical or connected with the business of the plaintiffs. I agree with the learned trial Judge in thinking that the use proved to have been made by the defendants in connection with the business carried on by them of the words "General Motor" or "General Motors" was calculated and, indeed, intended to lead to the belief that their business was a part of or connected with the business carried on by the plaintiff Company and I think the facts referred to by my brother Dixon in the reasons which he is about to publish show that before the appellants began to use the words in question in the manner complained of the respondent Company had done sufficient in the direction of establishing and carrying on its business to entitle it to maintain an action for passing off, independently of any right of the American Corporation. I agree also that the facts proved do not support the defence of laches and acquiescence, and it follows that, in my opinion, the plaintiff was entitled to relief. But I think a modification should be made in the form of the injunction granted. The learned Chief Judge in Equity did not, as he possibly might have done, restrain the defendants absolutely from using the words "General Motor" or "General Motors" in connection with their business, and it may therefore be taken that he was of opinion that the defendants might so use those words if they used them fairly, and that it was the unfair use of them that was intended to be restrained. In Reddaway v. Banham[1] the House of Lords considered the form of injunction which should be granted in such a case, and Lord Macnaghten said[2]: "As regards the form of the injunction, I should be disposed to say that in all cases where the defendant is to be restrained from using unfairly words or marks which he is at liberty to use provided only they are used fairly, it would be better that the injunction should go in the form approved by this House in Johnston v. Orr Ewing1(1882) 7 App. Cas. 219.."

In accordance with this view I think the injunction in the present case should be varied by omitting the words "without adding in text as large as the words General Motor or General Motors the words This business has no connection with General Motors (Australia) Proprietary Limited," and by inserting in lieu thereof the words "without clearly distinguishing such business from the business carried on by the plaintiffs." Subject to this variation of the decree the appeal should be dismissed with costs to be paid by the appellants.

The unusual, perhaps unprecedented, circumstances of this case make it very necessary to state the precise principles of law which should govern the decision.

The main relevant proposition is well stated by Romer J. in Joseph Rogers & Sons Ltd. v. W. N. Rogers & Co.[4], in these terms: "It is the law of this land that no man is entitled to carry on his business in such a way as to represent that it is the business of another, or is in any way connected with the business of another." To this the learned Judge adds a qualification irrelevant to the present case, since it relates to a person carrying on business in his own name.

I shall cite only three or four out of the numerous authorities which support this proposition, and at the same time mark its limitations.

In Levy v. Walker[5] James L.J. says: "It should never be forgotten in these cases that the sole right to restrain anybody from using any name that he likes in the course of any business he chooses to carry on is a right in the nature of a trade mark, that is to say, a man has a right to say, You must not use a name, whether fictitious or real—you must not use a description, whether true or not, which is intended to represent, or calculated to represent, to the world that your business is my business, and so, by a fraudulent misstatement, deprive me of the profits of the business which would otherwise come to me. That is the principle, and the sole principle, on which this Court interferes. The Court interferes solely for the purpose of protecting the owner of a trade or business from a fraudulent invasion of that business by somebody else. It does not interfere to prevent the world outside from being misled into anything."

I would here interpose the observation that "fraud" for the purpose mentioned is not necessarily such as would support an action of deceit, but would be constituted by persistence after notice. In Cochrane v. MacNish[6] Lord Morris for the Judicial Committee said:—"The respondents erred, unwittingly at first. But as they persisted in their error after their attention was called to the fact that they were infringing the appellant's rights their conduct in the eye of the law amounts to fraud, and they must be held responsible for the consequences." (And see per Viscount Haldane L.C. in Nocton v. Lord Ashburton[7].)

Resuming the main proposition, the next case in order of date to which I shall refer is Borthwick v. The Evening Post[8]. There the Morning Post sought an injunction to restrain the Evening Post from using that name. At p. 463 Bowen L.J. said the gist of the action was that the defendants had "put forward an untruthful representation and an untruthful representation which is calculated to injure the property of the Morning Post —the untruthful representation being an implied representation that there was a proprietary connection between the new paper and the old paper." Both the probability of deception and the probability of injury to the business of the plaintiff had to be proved.

The third reference is to the judgment of Lord Parker of Waddington in A. G. Spalding & Bros. v. A. W. Gamage Ltd.[9]. There it is stated that a false representation is the basis of a passing-off action, and that the property to be protected is "property in the business or goodwill likely to be injured by the misrepresentation."

The injury may take many forms, and may arise even where the businesses are in fact concerned with different commodities (Walter v. Ashton[10]). In this particular case it is to the business as a business. The representation may take many forms. (See per Lord Parker in Spalding's Case[11].) A trading name is probably the simplest method of representing a connection of the two businesses, where there is some similarity of or connection between the commodities dealt in (Dunlop Pneumatic Tyre Co. v. Dunlop Lubricant Co.[12]).

As I read the statement of claim, it is on these principles the respondent's claim was, and, as I think, must be rested.

The material facts are these:—About 1912, or a little later, an American company called the General Motors Corporation, and manufacturing or controlling the manufacture of various makes of American cars, caused to be formed in Australia a subsidiary company called the General Motors Export Company Limited. As an instrument of the American company it imported fully assembled cars or chassis, and distributed them to various agents, so called, in Australia, including New South Wales, who sold them in their own names. This went on till 1926. On 6th May 1926 the American General Motors Corporation, the controlling corporation, caused to be formed and incorporated the respondent Company as a better instrument for its Australian operations, which had for several years been conducted by an Australian company called General Motors Export Company. Beginning on 7th May 1926 and continuing to some time in June 1926, numerous and prominent public newspaper announcements appeared, stating in effect that the American Corporation intended replacing the Australian Company with the respondent Company to take over the business of the earlier company, and also to undertake the full assembling of cars so as to deliver to distributing agents completed cars ready for delivery to purchasers.

There can be no doubt that the announcements so made created a belief in the public mind that the new General Motors Company when it started operations would carry on both the old business hitherto carried on by the expiring Australian company and the additional activities referred to. Into this field of public expectation came the appellants, under the trade name of General Motor Company, with the business of selling to anyone so desiring secondhand motorcars of every description. The appellant, Ernest Samuel Turner, who conceived and carried out the project, was well experienced in the motor trade. He had traded under various names. In May or June 1926 he approached the liquidator of a company that had been dissolved about fifteen years before to allow him to use its name, which was General Motor Company Limited. Of course, this was impossible. It was equally impossible at this time, which I apprehend was after 24th May 1926, when the registration of the respondent Company as a foreign company took place, to form and incorporate in Sydney a limited company with a name resembling that of the respondent. But without incorporation, the appellants came as close as possible.

It is, I think, and am willing to assume as, the fact, that the appellants actually began their business before the respondent opened its place of business in Marrickville. On this fact the appellants rest a contention that the appellants between July and October had done nothing legally wrong, at least as regards the respondent Company, and as they did nothing else afterwards, what they were doing in December could not be wrong or give a cause of action. The case of Montreal Lithographing Co. v. Sabiston[13] is an authority against that bald contention. But on principle the whole contention is fallacious. In the first place, a man who digs a pit in a path along which he has reason to believe another man will shortly travel, does nothing of which the man can legally complain before he comes to it. But if the latter happens to fall into the hole and suffers injury, does the argument of original freedom from responsibility avail the man who digs the pit? What Ernest Samuel Turner for all the defendants in the suit did was to dig a commercial pit in advance. If there ensued injury, or a probability of injury, there is surely a remedy. But I do not for a moment concede that before October 1926 the respondent would have been helpless. Having the undoubted intention to commence business, it could, in the circumstances, in my opinion, have obtained protection against the injury that the appellants were preparing in advance. Intention in such a case is an important factor. (See Beazley v. Soares[14]; Montreal Lithographing Co. v. Sabiston[15]; and Kerly on Trade Marks, 5th ed., at p. 577.)

To make the matter clear, let us see what the appellants did. Among other things, they opened a place of business at No. 4 Parramatta Road, Sydney. On the face of the building, in conspicuous lettering, were the words: "General Motor's Re-sale Depot and Service," "No. 4," "General Motor's Instruction Service," and again, "General Motor's No. 4." It is too plain to admit of hesitation that the effect of these words must have been to lead the public to believe that the new Australian company promised by the newspaper announcements had started business and had established this place as a No. 4 Branch for the purposes of a re-sale department and of instruction and service. The apostrophe in the word "Motor's" would be meaningless if this were the sole place of business of the proprietor, who, as stated, would be understood to be the respondent Company. To lose no possible chance there were also printed "General Motors." As Lord Parker said in Spalding's Case[16]: "The effect of a misleading advertisement is a continuing effect." The respondent Company could, therefore, in my opinion, as I have already stated, have at once restrained the appellants from fraudulently doing then what would probably, to say the least, have a continued effect, injuriously affecting the business then in train of the respondent when actually commenced. But whether this was so or not, it is not merely the effect of the open representations that was continuing. The representations themselves continued, and were hour by hour and day by day repeating themselves to all who saw them.

I entertain not the faintest doubt that at all events immediately the new company started its business—a business that, whether it was purchased from the former company or corporation or not, was at least a lawfully permitted business and capable of producing profit to the respondent—it could have restrained the appellants from continuing their injurious and fraudulent conduct.

Apart from the second line of defence—laches and acquiescence—the appeal must fail.

As to the laches and acquiescence it is clear from the evidence of Mr. Potter, a director and the manager of the respondent Company, that the respondent with the full knowledge of the continued false representation referred to, advisedly abstained from taking any proceedings to compel the appellants to discontinue trading in that fashion. That continued for a considerable time. The respondent Company, though defied by Turner, thought that judging by his previous trade history, his business would die out without litigation, which apparently required the consent of the parent American Corporation. However, the fact is that the appellants were allowed to continue, and therefore to some extent it must be taken that the appellants were suffered by the inaction of the respondent to acquire some goodwill, and probably some responsibilities, which it would be inequitable now absolutely to ignore. The inaction of the respondent, in my opinion, comes precisely within the principles enunciated by Lord Cairns L.C. in Evans v. Smallcombe[17]. To restrain the appellants simpliciter from using the name they have been trading under would, therefore, have been unjust. But that does not conclude the matter. The true principles on which the Court acts in such a case are stated by Lord Selborne L.C. for the Judicial Committee in Lindsay Petroleum Co. v. Hurd[18]. His Lordship said:—"Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases, lapse of time and delay are most material. But in every case, if an argument against relief, which otherwise would be just, is founded upon mere delay, that delay of course not amounting to a bar by any statute of limitations, the validity of that defence must be tried upon principles substantially equitable. Two circumstances, always important in such cases, are, the length of the delay and the nature of the acts done during the interval, which might affect either party and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy." Now, the balance of justice or injustice indicates that from the time of the institution of the suit the appellants were bound to distinguish their business from that of the respondent. That is the sense and effect of the judgment appealed from, which ought to be affirmed.

When, in May 1926, General Motors Corporation of America commenced in New South Wales to advertise largely that it was in course of reorganizing the business done in Australia in the many makes of motor-cars manufactured and distributed under its control, the male defendant appellant recollected that at one time he had traded in motor-cars under the name of "General Motor Company" and bethought himself that the time was opportune for the revival and adaptation of the disused title. Up till that time General Motors Corporation had appointed agents here to negotiate the sale of their cars which they exported to Australia, and had superintended the operations of those agents by means of a subsidiary company called General Motors Export Company. On 6th May 1926 the head Company caused the plaintiff General Motors (Australia) Pty. Ltd. to be incorporated under the law of the State of Victoria, and eighteen days afterwards caused it to be registered in the State of New South Wales. On 7th May 1926 advertisements began to appear in the press announcing that "General Motors" would organize a company in Australia, which would assemble and warehouse in Australia motor-cars manufactured under the control of General Motors in the United States, Canada and England, and deliver them to the distributors. These advertisements, which went on for some time, gave the name of the plaintiff as that of the new company, and stated that it would put bodies on the cars, and that it would erect large works in Sydney upon a site just acquired at Marrickville. As soon as the plaintiff Company was registered in New South Wales, it set up at the offices then occupied by General Motors Export Company, took over the functions of that body and proceeded at once to erect the works, which were completed on 16th October 1926. It then commenced the operations described in the advertisements, and has since conducted the business for which it was formed. Up till May 1926 the words "General Motors" were well understood by persons acquainted with the motor trade in New South Wales to mean the American Corporation which controlled the manufacture and distribution of many familiar kinds of car. From that time the words have increasingly come to mean the plaintiff Company. The male appellant, in June 1926, contemplated setting up at No. 4 Parramatta Road, Camperdown, in the secondhand car trade. He began his business there at the end of June, and called it "General Motor's Resale Depot." He had "No. 4" painted up conspicuously so as to convey to the unwary that it was a depot or establishment No. 4. He adopted letter headings also designed to lead persons to suppose that the business was that of "General Motors" or connected with it. Harvey C.J. in Eq. considered that his conduct was fraudulent, and that it was calculated to lead the public to believe that his business was that of the plaintiff or was connected with the plaintiff, and granted an injunction.

Of the appellant's intention and desire to appropriate to himself the advantage of a business reputation which belonged to another, there can be no doubt at all. It was said, however, that the business he did was in secondhand cars, and that it in no way competed with or affected the plaintiff's undertaking. But business reputation, in the view of the Courts of Equity, is a right of property which should be protected from misappropriation and that protection is not confined to cases where loss simply consists in the diversion of trade from one to another. Indeed, the argument is sufficiently answered by the authority of Lloyd's v. Lloyd's (Southampton) Ltd.[19].

It was then contended that the plaintiff, when the acts complained of first commenced, had not begun business, and had no goodwill and no reputation for the appellant to appropriate, and that if his use of the name "General Motors" was no violation of the plaintiff's rights, when he assumed it, nothing which occurred afterwards could make it wrongful.

The plaintiff did not plead or prove that General Motors Corporation of America had assigned to it any goodwill which may have attached to that body's operations in or in relation to Australia. It would, therefore, not be enough for the plaintiff to show that the appellant attempted to purloin some of that goodwill, and appropriate some of the reputation which belonged to that Corporation. But the plaintiff, from 24th May 1926, was carrying on business here, and its existence, objects and relation to the American Corporation had been widely advertised. The public had been told that, in a reorganization of the Corporation's business methods, the plaintiff had been constituted to conduct its Australian operations. When the appellant pretended that his business was part of, or connected with, "General Motors" Australian undertaking, he necessarily represented that his business was part of, or connected with, that which in fact the plaintiff conducted. This entitled the plaintiff to complain, whether the American Corporation might also do so or not. Time has not weakened the plaintiff's position, because it has confirmed and increased the plaintiff's reputation as "General Motors."

The appellant's final answer to the injunction was laches and acquiescence. It appears that the plaintiff complained to the appellant in July 1926; in August, wrote a letter protesting against the appellant's registration as a firm to the Registrar-General who communicated the protest to the appellant; in February 1927 and September 1927, caused traps to be laid for the appellant, and sued in December 1927. Its manager said he delayed because he thought the appellant's business might die out, and because he had to seek authority to sue from his head office. In the meantime the appellant was pursuing the course of deception which he had begun and was amplifying it with specious advertisements.

The principles upon which a plea of laches and acquiescence is to be determined are set out in a well-known passage in the opinion of Lord Blackburn in Erlanger v. New Sombrero Phosphate Co.[20], in which he cites from Lindsay Petroleum Co. v. Hurd[21]. I do not see how the plaintiff's conduct in abstaining from suit until December 1927, hoping first for the appellant's natural downfall, next for the sanction of its head office and last for conclusive evidence, can bring these principles into operation. How can it be said that this conduct "put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted," or was so wanting in "the degree of diligence which might reasonably be required and allowed such a degree of change to occur" that "the balance of justice or injustice is in favour of withholding the remedy"? The deception, which the appellant practised, was intentional and was maintained. He cannot say that he was deceived by the plaintiff's conduct into deception, misled into continuing a course of conscious impropriety. There is nothing in the facts of this case to support a plea of laches and acquiescence.

The injunction which has been granted does not restrain the appellant absolutely from using the words "General Motors," as perhaps it might have done. Probably the learned Judge, in qualifying it, acted upon the view expressed by Giffard L.J. in Lee v. Haley[22]: "In cases of delay, we must consider whether the nature of the injunction is such that if it is granted the defendant will have been injured by the delay."

But the condition in the injunction has an effect, which may not have been intended, particularly when the appellant's firm name is used merely as a signature to documents, and I agree that the form of the injunction should accordingly be varied.

Appeal dismissed with costs. Decree varied by omitting the words "without adding in text as large as the words General Motor or General Motors the words this business has no connection with General Motors (Australia) Proprietary Limited" and by inserting in lieu the words "without clearly distinguishing such business from the business carried on by General Motors (Australia) Proprietary Limited."

[1] (1896) A.C. 199.

[2] (1896) A.C., at p. 221.

[3] (1882) 7 App. Cas. 219.

[4] (1924) 41 R.P.C., at p. 291.

[5] (1878) 10 Ch. D. 436, at pp. 447, 448.

[6] (1896) A.C. 225, at pp. 230, 231.

[7] (1914) A.C. 932, at p. 952.

[8] (1888) 37 Ch. D. 449.

[9] (1915) 32 R.P.C. 273, at p. 284.

[10] (1902) 2 Ch. 282.

[11] (1915) 32 R.P.C., at p. 289.

[12] (1898) 16 R.P.C. 12.

[13] (1899) A.C. 610.

[14] (1882) 22 Ch. D. 660, at p. 662.

[15] (1899) A.C., at p. 614.

[16] (1915) 32 R.P.C., at p. 288.

[17] (1868) L.R. 3 H.L. 249, at pp. 255, 256.

[18] (1874) L.R. 5 P.C., at pp. 239-240, and Errata, p. ix.

[19] (1912) 29 R.P.C. 433.

[20] (1878) 3 App. Cas. 1218, at p. 1279.

[21] (1874) L.R. 5 P.C., at p. 239.

[22] (1869) L.R. 5 Ch., at p. 160.

High Court of Australia

Turner v General Motors (Australia) Pty Ltd [1929] HCA 22; (1929) 42 CLR 352 (7 October 1929)

HIGH COURT OF AUSTRALIA