Ellison v Parmalat Australia Pty Ltd [2006] QSC 304

1 [2006] QSC 304 SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION WHITE J No 7395 of 2006 ANITA ELLISON Applicant and PARMALAT AUSTRALIA LTD (ACN 009 698 015) Respondent BRISBANE ..DATE 09/10/2006 JUDGMENT -- 1 of 8 -- 2 JUDGMENT 1 10 20 30 40 50 60 HER HONOUR: The applicant is the registered owner of trademark number 848047 bearing the words Mooloo Mountain Milk and artwork including the image of a milk cow. She seeks final relief restraining the respondent, Parmalat Australia Ltd, from using the trademark, alternatively an interlocutory injunction similarly restraining the respondent. Parmalat manufactures and distributes milk and dairy products and has cross-applied for an order restraining the applicant from using the trademark and for directions about the progress of the proceedings. Parmalat contends that the previous registered owner of the trademark Alait Pty Ltd, a company of which the applicant's husband Craig was manager, and his parents-in-law were the directors, granted it an exclusive licence to use the trademark from 17 June 2004 to 30 June 2007. Alait Pty Ltd was a supplier of milk to Parmalat packaged under the trademark. From 9 June 2005 Parmalat entered into negotiations with Alait through Mr Nigel Ulrich for Parmalat and Mr Craig Ellison for Alait for the grant of an exclusive licence to use the trademark. In that process the trademark licence and a contractors agreement were sent to the applicant's present solicitors who were the solicitors for Alait. The trademark licence gave Parmalat an exclusive licence to the trademark. The contractors agreement appointed Mr Craig Ellison a contractor to Parmalat. Those agreements were not executed. -- 2 of 8 -- 3 JUDGMENT 1 10 20 30 40 50 60 A heads of agreement between Parmalat, Alait and Mr Craig Ellison was executed by Alait and Mr Ellison and returned by facsimile transmission to Parmalat on 18 June 2004. On that day the Registrar of Trade Marks received correspondence to transfer the ownership of the trademark to the applicant. Her ownership was registered on 22 June 2004. The trademark had been assigned to her by deed dated 10 June 2004. After cross-examination of the applicant I was satisfied that no consideration passed so that principles discussed in Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 16, 20 to 21 and 24 come into play. Thereafter the applicant authorised Mooloo Mountain Milk Pty Ltd, a company of which her parents-in-law were the directors and husband the manager, to use the trademark in its distribution of milk. She contends that at no time did she authorise Parmalat to use the trademark. The applicant maintains that she authorised Mooloo Mountain Milk Pty Ltd to sublicense the use of the trademark to Parmalat in June 2004 through Mr Craig Ellison conditional upon a written agreement and payment of royalties. No agreement was apparently entered into. The applicant deposes that she thought there was such an agreement until recently and notes that she has not been paid any royalties for Parmalat's use of the trademark since mid- 2004. -- 3 of 8 -- 4 JUDGMENT 1 10 20 30 40 50 60 Mr Ulrich deposed that Norco Co-Operative Ltd, no earlier than 28 July 2006, was using the trademark. The applicant responded in her affidavit filed by leave that she had licensed The Endurance Stables of RAK Australia Pty Ltd, a company of which her husband is director, to use the trademark and to sublicense its use to Norco. Its use by Norco, she deposes, was deployed in negotiations to sell the trademark to Norco. Norco is a trade competitor to Parmalat. Clause 8 of the heads of agreement provided that Parmalat would examine a milk depot at Hervey Bay which was then leased to Mooloo Mountain Milk Pty Ltd with a view to taking an assignment of the lease. Parmalat became the lessee of that land after the lessor had released Mooloo Mountain Milk Pty Ltd. Throughout August 2004 Mr Ulrich met with Mr Ellison to discuss the Hervey Bay lease and to make changes to the labelling of products using the trademark with which Mr Ulrich says Mr Ellison agreed. At their meeting on 31st August 2005 Mr Ellison informed Mr Ulrich that the trademark was to be transferred to Mooloo Mountain Milk Pty Ltd. In December 2004 Alait was wound up after being in administration since November. Parmalat has used the trademark from June 2004 to the present time. Parmalat is in a trading relationship with Mooloo Mountain Milk Pty Ltd. Its trading ledger records a credit of -- 4 of 8 -- 5 JUDGMENT 1 10 20 30 40 50 60 $29,508.62 for royalty payments said to be pursuant to clause 7 of the heads of agreement which provided for a 1 per cent of net sales of all Mooloo and Parmalat products supplied to businesses identified as "Ellison-sourced customers". The parties are in dispute about the status of the heads of agreement. The applicant contends that as owner of the trademark she is not a party to the agreement and nor is Mooloo Mountain Milk Pty Ltd. Further, on her behalf, Mr K Fleming QC submits that at best the parties had agreed to negotiate within the parameters of the heads of agreement and thus fell within the third category in Masters v Cameron (1954) 91 CLR 353 at 360. Mr Fleming notes that the heads of agreement was not executed by Parmalat or at least no executed copy has been produced and that three agreements are contemplated by the heads of agreement, a trademark licence agreement, a contractors agreement, and a milk supply agreement and none have been executed. He mentions other unconcluded business associated with the heads of agreement but not of central importance. Mr Lilley, rather adroitly, sought to establish that all the key terms for agreement had been agreed by the parties and only details were to be worked out. Because of other considerations which cover the outcome of these applications I need not examine the binding nature of the heads of agreement too closely and since these proceedings are interlocutory will not comment on its status further. -- 5 of 8 -- 6 JUDGMENT 1 10 20 30 40 50 60 It seems clear that at all times relevant to these applications Parmalat understood it had been granted an exclusive licence by the registered owner of the trademark and proceeded to use it accordingly. It clearly did not greatly concern Parmalat who amongst the Ellisons or companies associated with the family, and there are other family members mentioned in the material apparently trading with Parmalat, because Mr Craig Ellison was the authorised agent of the registered owner. The applicant agrees that that was so and that she was kept informed of the progress of negotiations and in advance of decisions. At least for the purpose of these applications the applicant can be said to have taken her interest in the trademark with notice of Parmalat's equitable interest. See section 22 of the Trademarks Act 1995 Commonwealth and observations in Barr v Nicolay No 2 (1988) 164 CLR 604 at 613 and following, per Mason CJ and Dawson J. For two years Parmalat has operated under the exclusive licence. It has paid royalties and leased premises in Hervey Bay formerly leased by Mooloo Mountain Milk Pty Ltd. This was done with the knowledge and cooperation of Mr Craig Ellison, the applicant's agent, and it may be inferred pursuant to the heads of agreement, see discussion in K R Handley Estoppel by Conduct and Election (2006) at page 3 and following. -- 6 of 8 -- 7 JUDGMENT 1 10 20 30 40 50 60 These facts alone raise questions about the applicant's fitness to seek an interlocutory injunction. There can be no question of final relief. Further, there is a distinct possibility that the applicant took the trademark less than six months before the commencement of the winding up of Alait Pty Ltd which, in the hands of the liquidator, puts her title at risk. There are serious questions to be tried between the parties but the balance of convenience dictates that damages would be an adequate remedy for either of them. Despite requests to do so the applicant provided no undertakings as to damages for the interlocutory relief sought and it was not until the end of the hearing that Mr Fleming was able to offer an undertaking up to $20,000 which could, he said, be quarantined from milk sales using the trademark. This is hardly reassuring and there is a shadowy sense of widespread indebtedness on the applicant's side of the record. Parmalat's application is the converse of the applicant's. Mr Ulrich deposes to Parmalat's damages were it to be competitively in the market with others using the trademark. It will clearly lose market share and profits. The balance of convenience suggests that it should continue to have exclusive use of the trademark until the trial or earlier resolution. -- 7 of 8 -- 8 JUDGMENT 1 10 20 30 40 50 60 The damages, if it is unsuccessful, would be readily enough calculated from its own records. There is no doubt about the worth of the undertaking as to damages. Accordingly the orders as I foreshadowed are to dismiss the application brought by Mrs Ellison and upon Parmalat Australia Ltd giving the usual undertakings as to damages; Mr Anita Ellison be restrained; and an injunction be granted restraining her by herself, her employees or agents from using, as that term is defined in the Trademarks Act 1995 or in any other way authorising others to use the trademark registration number 848047 in clause 29, and the costs should be costs in the cause. ... ----- -- 8 of 8 --