These proceedings concerned two corporations trading in the financial services industry both using brands incorporating the term “Crescent”. Both parties filed evidence in the proceedings at first instance that each were referred to by others (particularly the media) and in their own communications to the public simply as “Crescent.” The applicants in the proceedings at first instance are a provider or manager of private equity services, that is, fund raising from private investors: the respondents provide amongst other things Sharia-compliant finance services to small- to medium sized businesses (a crescent being a symbol of Islam with an etymology dating back to the Ottoman Empire) .

In the proceedings at first instance, Bennett J deemed that two of nine appellant entities and the tenth appellant Mr Talal Yassine (all of whom were the respondents in the original proceedings) were engaging in misleading or deceptive conduct through the use of names such as “Crescent Funds Management”, “Crescent Investments”, “Crescent Consolidated”, “Crescent Financial”, “Crescent Foundation”, “Crescent Holdings” and “Crescent Super” (described, together, by the primary judge as “Crescent Wealth”).

Further, the appellants were found to have made representations that their services or products were in some way connected to the respondents to the appeal, Crescent Capital Partners Management Pty Limited and Crescent Capital Partners Ltd (which the primary judge collectively referred to as “Crescent Capital.”)

Crescent Capital, in the proceedings at first instance, argued that all of the respondents were accessories to the contraventions of each of the other respondents, and were thus subject to remedial orders in favour of Crescent Capital.

Crescent Wealth on the other hand contended that there was no likelihood of any one being deceived or confused by their use of names that incorporate the term “Crescent” because the “scope, focus, and character” of their activities diverged from those of Crescent Capital. The phrase is not used in the appeal, but it seems to us that this decision goes towards disparate trade channels, a concept out of trade mark law.

The primary judge found the first two of the respondents at first instance – Crescent Funds Management (Aust) Limited and Crescent Investments Australasia Pty Ltd – had engaged in misleading conduct or were likely to have mislead or deceive in contravention of ss 18 and 29 of the Australian Consumer Law, and also of s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).

The tenth then-respondent, Crescent Wealth founder Mr Talal Yassine, was found to also have been knowingly involved in the conduct of the first and second respondents at first instance through operation of s12GF of the ASIC Act.

Mr Yassine and Crescent Wealth were restrained from offering or providing any investment services/products, or registering domain names, referencing “Crescent Funds” and/or “Crescent Investments” (Order 3), and were restrained from using the term or mark “CRESCENT WEALTH” (Order 4)

The respondents on appeal challenged the primary judge’s orders, contending that Bennett J made an error in framing Order 3 because the injunctions ought to have restrained “any use” of the terms CRESCENT WEALTH and/or CRESCENT in connection with investment services or products that bear any name “substantially identical” or “deceptively similar” to any of relevant brands, as opposed to limiting the scope to particular titles, fund names or domain names. Additionally, the respondents on appeal contended that Order 4 should have been “unqualified,” as the current order facilitates use “in conjunction with” with the use of a disclaimer.

Setting aside the use of disclaimers in militating against misleading and deceptive conduct – a discussion for another day – the major issue in this appeal decision is the “relevant consumer cohort” – the difference between “wholesale clients” and “retail clients”. The appellants argued that Crescent Capital deals mainly with small to medium-sized privately owned businesses, rather than being engaged in private equity (which is something that the primary judge also referenced in the proceedings at first instance). The argument was that small- to medium-sized businesses were not going to be engaged in seeking private equity investment, and, on the other side of the coin, participants in the private equity space were not going to be interested in the sorts of financial services typically provided to small-and medium-sized businesses.

The appellants noted that:

“many of these highly sophisticated investors who are thinking carefully about their investments before making an investment (and whether they will invest in a Crescent Capital Growth Fund), call in aid “expert advisers”. Many of these investors are “large institutions” or “high net worth individuals”.”

The appellants argued that the class of consumers under consideration by Bennett J cannot be considered as representative of the relevant consumer class, when determining whether relevant consumers are being, or are likely to be, misled by Crescent Wealth’s use of “CRESCENT WEALTH” and “Crescent” (in combination with other words or not). On the face of it this makes sense. A person with several million dollars in the bank wanting to invest this is unlikely to become confused with a business offering, say, accountancy services.

But this does not consider where the parties might go with the brand – a consideration of future conduct. The appellants argued that there is no evidence that established that Crescent Wealth had any intention or need to enter the private equity field, and that there was also a lack of evidence that, on the other hand, Crescent Capital was planning to offer Sharia-compliant lending, one of Crescent Wealth’s main offerings. The primary judge noted that Crescent Capital had entered into agreement with specific investors when it comes to limiting investments from its funds to “ethical investing,” some of which are consistent with “aspects of Sharia law”. So while Crescent Capital has not engaged in investing practices fully compliant with Sharia-law, this did not necessarily establish that they had removed themselves from offering Sharia-compliant investments. Also, Crescent Wealth by its conduct to date was not divorced from the possibility of entering the private equity field.

The primary judge accepted Crescent Capital’s argument that consumers in the financial industry do not “necessarily or practically” restrict themselves to one class of investment or offer of investment opportunities, diminishing Crescent Wealth’s argument around differentiation of their target market.

The Full Court noted that:

“47.At [61], the primary judge finds: There is no evidence that Crescent Capital, as a private equity firm, will offer superannuation products or that Crescent Wealth will set up a private equity business. : 48.That finding is subject to an immediate qualification by the primary judge drawing upon Crescent Wealth’s apparent recognition or acceptance that as Crescent Wealth grows, “it may attract wholesale investors” and “it is likely that any separation that can be said to presently exist in the class of investors in the respective funds will diminish” . At [63], the primary judge concludes that the “neat division” between “classes of consumers” within the financial services industry and in the fields of funds or investment management into “retail investors” and “wholesale investors”, between “unsophisticated” and “sophisticated” investors and between those who invest in “private equity” investments and those who do not, is “artificial” and fails to recognise that “fund managers and investors may make investments across many different asset classes and in order to balance their portfolio and to maximise returns”.”

With regard to all of the above, the Full Federal Court was satisfied that the primary judge was not in error in the original judgment with regard to the representative member of the class and the likelihood of that class of investors being mislead by Crescent Wealth’s use of the term “Crescent” and “Crescent Wealth”. The Full Federal Court referenced the landmark High Court decision in Campomar v Nike International (2000) 202 CLR 45 (“Campomar”):

“the Court (all seven Justices: Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ) observed that the question that arose in that case (as it does in this case) was whether there was a “sufficient nexus” between the conduct and the “contended misconceptions” (or contended deceptions) in the mind of others.”

Was the “sufficiency of nexus” between the two businesses enough here? The court also referred to Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 210 (“Puxu”), in discounting the reactions of persons which were extreme or fanciful. The primary judge accepted that the relevant consumer is not, in all the circumstances, “necessarily a sophisticated one”.

Additionally, the evidence really did not help Mr Yassine. It was clear that his businesses were in fact managing funds: “on 17 August 2015, Crescent Wealth issued a press release indicating that it has surpassed the $100 million benchmark in funds invested which represented a 245% growth in funds under management in the financial year 2015” [at 118]. Also, an email from Mr Yassine dated 1 October 2012, to Crescent Capital Chairperson ‘s Mr David Mortimer, noted that “it would be great to meet the Crescent Team (your Crescent Team),” inviting Mr Mortimer to join the Crescent Wealth Advisory Board. Mr Mortimer declined, citing that he and his colleagues felt that it could confuse people “with the names so close.” Reading this from the judgment alone and not from any evidence, if Mr Yassine did not think this email was provocative, then he misjudged the tone of his message and his audience.

The appeal was dismissed. In addition to an understandable desire to preserve goodwill in a brand abruptly fractured by the original judgment, we wonder whether the motivation in the appeal was the appellants’ promotion of their immaculate business ethics. Edelman J in his reasons for decision in the appeal noted this evidence: “Crescent Wealth had described its Sharia funds as “ultra-ethical” to distinguish them from “ethical” funds… This creates the impression of a continuum which fits neatly with Crescent Wealth’s marketing of its Sharia superannuation involving statements that “Money and Morals do mix”, “Socially Responsible Investing”, “investments that benefit society”, and a statement from a Private Equity CEO that “Islamic Finance is attractive to consumers of all faiths”. A vindication or restoration of reputation in that context by way of appeal might have spurred the Appellants on, noting that, with respect, in our view an appeal had respectable if not certain prospects. This is particularly having regard to Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd [2015] FCA 882; (2015) 115 IPR 67 which was a case where the relevant consumers were large institutional investors who would not have been misled. The judge at first instance distinguished this decision, because “Crescent Wealth was, and is, concerned with investors generally, not necessarily mum and dad investors” [at 148].

(Otherwise, the Full Federal Court also upheld Orders 3 and 4, concluding that the disclaimer condition upon the injunction was not made in error, and so Crescent Capital’s grounds of appeal were also dismissed.) Amidst the evidence, Mr Mortimer said that “on or about 7 August 2013 at a fundraising dinner hosted by Deutsche Bank in Sydney, the Australian Treasurer, Mr Hockey, had a conversation with him in which Mr Hockey said that he had met someone from “Crescent last week” whose name was “something like Yassine” and Mr Mortimer responded that Mr Yassine was not “connected to us” and that he “runs another company with the same name”.” We note (with a genuine absence of insincerity or glibness) that if the Australian Treasurer becomes confused between your businesses, you know you have a problem.