Two recent Federal Court decisions give guidance as to the serious consequences of non-compliance, what you need to do to comply with Court orders and the importance of seeking orders that give you proper protection.

  • In the latest instalment of the 'Bob Jane' family feud, Justice Moshinsky has dismissed an application by Bob Jane Corporation to find Mr Jane breached an order restraining him from trading as a business using the family name.
  • Justice Flick has found that Lakemba Medical breached orders restraining it from displaying the words "Sydney Medical Services 2020" and ordered it to pay a $30,000 fine as well as a $500 daily fine for ongoing non-compliance.

Bob Jane: used JANE, but didn't breach the Orders

Background

Robert "Bob" Frederick Jane (Mr Jane) was a famous racing car driver and established a successful automotive accessories business, Bob Jane Corporation (Bob Jane Corp), using his own name as a trade mark. In 2002 his son, Robert Bruce Jane, became the CEO of Bob Jane Corp, and in 2011 Mr Jane ceased being a director and shareholder of the company as a result of a family dispute.

Around this time Mr Jane started a competing business which, following a fraught procedural history, ultimately resulted in Bob Jane Corp obtaining orders in the Federal Court in 2013:

  • restraining Mr Jane from using his own name and certain trade marks in relation to automotive accessories goods and services, and from making certain representations;
  • requiring him to change certain company names and signage and transfer registration of certain domain names to Bob Jane Corp;
  • restraining Mr Jane from trading as a business under any name that is (or includes) JANE or a name that is substantially identical with or deceptively similar to Bob Jane Corp's marks (Order 3); and
  • requiring him to deliver up on oath all goods, advertising and promotional material bearing the relevant trade marks.

In 2014, Bob Jane Corp brought contempt charges against Mr Jane for breach of the 2013 orders for failure to deliver up the relevant goods and materials, failure to change its company name to a name that does not include the relevant marks and failure to transfer the relevant domain names. Each of these charges were made out, and the Federal Court ordered Mr Jane and entities controlled by him to pay fines, which were collectively over $100,000 as well as daily fines for any ongoing non-compliance, and Bob Jane Corp's costs on an indemnity basis.

Bob Jane Corp also alleged that Mr Jane had not complied with Order 3, however it was unsuccessful on this contempt charge. Justice Besanko found that incorporating "Bob Jane T Marts Pty Ltd" and sending letters on letterhead alone bearing that name did not amount to "trading as a business", therefore Mr Jane was not in breach of Order 3 in relation to that conduct.

The latest contempt charges against Mr Jane

In September and October 2015, in order to promote a business he proposed to launch offering motor vehicle insurance, Mr Jane appeared in a segment of Channel Nine's A Current Affair and gave several interviews to journalists, which led to him appearing on the 60 minutes programme and two newspaper articles being published. He also incorporated "Bob Jane Integrity Insurance Limited".

Following this, Bob Jane Corp again brought contempt charges against Mr Jane for breach of Order 3. However, even though Mr Jane had used the name Jane as part of the company he had incorporated and had identified in the interview that he intended to launch a motor vehicle repair insurance company under a company name which included the name Jane, Justice Moshinsky dismissed the application. He did this because Bob Jane Corp had not proved that Mr Jane was "trading as a business" under that name. In reaching that conclusion, Justice Moshinsky found that:

  • the ordinary meaning of the expression "trading as a business" suggests transactional activity as a going concern;
  • preparatory steps, such as incorporation of a business, and promotional activities, such as media interviews, do not meet this definition; and
  • Bob Jane Corp had not established that Mr Jane had any ownership or financial interest in the businesses; therefore it had not proven that Mr Jane personally was "trading as a business".

Lakemba Medical: Promptly comply or risk heavy penalties

Background

Sydney Medical Service was established in 1966 and has been known as the "Sydney Medical Service Co-operative Limited" since at least 1971 (Sydney Medical). It provides an after-hours medical service and home visits throughout Sydney and has an extensive network of medical practitioners.

In 2016, Lakemba Medical Services Pty Ltd (Lakemba) incorporated "Sydney Medical Services 2020 Pty Ltd" and conducted a business under that name (with or without the number "2020"). The business of Sydney Medical Service 2020 was also promoted as being an after-hours medical service. It also displayed its name on its premises and motor vehicles, used the name on its websites, and lodged an application for a composite trade mark which included the name.

Upon becoming aware of Lakemba's actions, Sydney Medical commenced proceedings against Lakemba for misleading and deceptive conduct and false and misleading representations under the Australian Consumer Law, and for passing off.

Justice Flick found that Lakemba's use of the words "Sydney Medical Services" and "Sydney Medical Services 2020" amounted to breaches of ss18(1) and 29(1)(h) of the Australian Consumer Law. Key to those findings were the similarities in the name, correlations between websites, similar hours of operation, overlap in geographical areas where the services were offered, and that Lakemba first became aware of Sydney Medical the day before it registered "Sydney Medical Services 2020 Pty Ltd".

As a result, Lakemba was ordered to remove the words "Sydney Medical Services 2020" and "Sydney Medical Services" from its marketing material including websites, pamphlets, email and motor vehicles, and was generally restrained from trading using those words.

No orders were made regarding Lakemba's trade mark application, which is currently opposed by Sydney Medical in the Trade Marks Office.

The contempt charges against Lakemba

In September 2016, Sydney Medical brought contempt charges against Lakemba. Sydney Medical filed evidence documenting Lakemba's use of "Sydney Medical Services 2020" and "Sydney Medical Services" on signage at its place of business (including displaying the web address "www.sydneymedicalservices.com.au" on that signage), on websites and on motor vehicles. In addition, Lakemba had not complied with an order requiring it to file an affidavit setting out all the steps taken to ensure compliance with the orders.

The Court found that a director who gave evidence for Lakemba was "deliberately evasive" and "displayed a disturbing unwillingness to accept responsibility for either past or continuing contraventions" of the orders, by diverting responsibility to a fellow director and the "IT guy". Lakemba was also criticised for trying to get a sign writer at "mates rates" rather than ensuring timely compliance with the orders, and for offering an apology only after the absence of an apology was criticised by the Court.

As a result, Justice Flick ordered Lakemba to pay a fine of $30,000 for its deliberate and intentional disregard of the orders. Lakemba must also pay a daily fine of $500 for any ongoing non-compliance, and has been ordered to pay Sydney Medical's costs on an indemnity basis.

Lessons learnt

  • Breaching Court orders is serious, and may result in fines, sequestration of assets and, on occasion, imprisonment.
  • Take Court orders seriously and ensure you comply with them by the required date. It is not enough to ask the "IT guy" to do it or deflect responsibility to another person– the Court will have little sympathy for a party that willingly disregards Court orders. Further, as was shown in the TiVo v Vivo case, "confusion, other obligations and forgetfulness" are no excuse for non-compliance.
  • When seeking an injunction, consider the wording of the orders carefully to ensure that it captures the conduct that you seek to prevent.
  • Finally, have regard to the newly issued Federal Court General Practice Note titled "Enforcement, Endorsement and Contempt" (GPN-ENF), which provides detailed guidance regarding enforcement of orders in the Federal Court.