Federal Court of Australia

StarTrack Express Pty Ltd v TMA Australia Pty Ltd [2023] FCAFC 200

ORDERS

THE COURT NOTES THAT:

A.    The appellant gives the usual undertaking as to damages in the form set out in the Usual Undertaking as to Damages Practice Note (GPN-UNDR).

THE COURT ORDERS THAT:

1.    The appellant have leave to appeal and to file an amended notice of appeal in the form of the draft notice provided to the Court this day.

2.    The appeal be allowed.

3.    Order 1 of the orders made on 23 October 2023 be set aside.

4.    In lieu thereof, there be an order in proceeding VID 822 of 2023 that:

Pursuant to ss 19 and 23 of the Federal Court of Australia Act 1976 (Cth), that until the hearing and determination of the proceeding or until further order, the respondent:

a.    be restrained from using and/or publishing any domain name that includes “Startrack”; and

b.    be restrained from sending any email or “electronic direct mail” to any person, which uses the word “Startrack” and which represents that the respondent or its business is associated with the appellant.

5.    Any questions in relation to costs be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT

Introduction

1    On 30 November 2023, we made the orders set out above having heard oral argument that day. These are our reasons.

2    We shall refer to the appellant as StarTrack, and to the respondent as TMA.

3    StarTrack sought leave to appeal and, if leave be granted, to appeal against a judgment of a judge of this Court refusing its application for an interlocutory injunction restraining TMA from, among other things, using the StarTrack URL (startrackgalaxy.tmagroup.com.au) and any part of the StarTrack domain name (www.startrack.com.au). The matter was heard on an expedited basis.

4    The primary judge’s reasons are at StarTrack Express Pty Ltd v TMA Australia Pty Ltd [2023] FCA 1271.

5    The primary judge held that the balance of convenience did not “tend[] strongly in favour of or against the grant of interlocutory relief” (J at [91]). His Honour dismissed StarTrack’s application principally because, given his Honour’s conclusions as to “the apparent weaknesses inherent in the causes of action that StarTrack pursues” (J at [92]), the balance of convenience did not warrant the grant of interlocutory relief.

6    We considered that the primary judge erred in his assessment of the prima facie case alleged by StarTrack. As we set out below, in the course of concluding that StarTrack’s prima facie case was not “strong”, but was “weak” (J at [67]), the primary judge mistook certain of the facts, and also failed to apply the correct principle. These are errors within the well-known principles set out in House v The King (1936) 55 CLR 499 at 504-5 (Dixon, Evatt and McTiernan JJ), to which we return below. Accordingly, it falls to us to re-exercise the discretion.

Background

7    StarTrack is a wholly-owned subsidiary of the Australian Postal Corporation (Australia Post) that provides parcel, freight and logistic services. StarTrack sells so-called “consumable products”, including satchels, envelopes, boxes and related packaging supplies. StarTrack’s business strategy encourages customers to treat it as a “one stop shop” for carriage of parcels as well as the purchase of consumables, but StarTrack’s customers who purchased consumables did not necessarily use its freight services, and vice versa.

8    In about August 2012, StarTrack and TMA entered into a contract pursuant to which TMA provided various services in connection with StarTrack’s consumables business.

9    From 2017 until September 2023, StarTrack customers ordered StarTrack consumable products via an online platform accessible at the StarTrack URL.

10    The platform was operated by TMA and used exclusively for the sale of StarTrack products to customers that StarTrack had pre-authorised. StarTrack provided a price list to TMA, to be applied to the specific customer; StarTrack set the prices on a customer-by-customer basis.

11    In May 2023, StarTrack gave TMA notice that it was terminating the contract.

12    TMA continued to operate an online platform at the StarTrack URL, but “repurposed” it to sell TMA’s own consumable products, including to StarTrack customers. The parties (somewhat confusingly) continued to call TMA’s repurposed portal “the ST Portal”.

The evidence

13    Before the primary judge, StarTrack read two affidavits of Rebecca Louise Arsenoulis sworn 4 and 12 October 2023 respectively. It also read an affidavit of Antonio Citera affirmed 4 October 2023. TMA read two affidavits of Rhys Andre Kneepkens affirmed 6 and 12 October 2023 respectively.

14    Ms Arsenoulis is a “Business Analyst – Security Guarding” in StarTrack’s “Group Security” team. She was previously, and for around eight years, a manager at StarTrack, involved in its consumables business.

15    Mr Kneepkens is a “Manager (Enterprise Solutions)” at TMA. Between 2012 and 2017, he was TMA’s account manager for its StarTrack account and was responsible for overseeing and managing the StarTrack relationship. In his current role, he has responsibility for all of TMA’s ecommerce platforms and, prior to the termination of the contract, was involved in the StarTrack account.

Access to the ST Portal

16    Mr Kneepkens deposed that once the ST Portal became operational in 2017, TMA sent StarTrack’s customers a “welcome email” which included their login details to access the ST Portal. The welcome email was also sent to new customers after the ST Portal became operational in 2017.

17    That welcome email was in the following terms:

WELCOME TO STARTRACK CONSUMABLES WEB PORTAL

StarTrack’s online ordering system for packaging & consumables for registered customers.

Dear Valued Client,

Welcome to StarTrack consumables online portal for ordering collateral and printed items.

We have provided a step by step guide below to help you log in for the first time. Please refer to the attached a list of the common consumable codes and price guide along with a Quick reference guide to help you order, customise your con notes and track your order.

First Steps:

The first step is to right click on the following URL and open Hyperlink:

www.startrack.com.au/packaging

We suggest you make this a favourite or bookmark on your browser.

Next Steps:

Sign in with your Username & Password. (please note that the portal is case sensitive and password should be entered in lowercase)

Username: []

Password: []

Once you have signed in, you should be taken through to the Product Page where you can start ordering.

…

18    The welcome email included a link to StarTrack’s packaging page, www.startrack.com.au/packaging (ST Packaging Page), and recommended that users make this page a favourite or bookmark on their internet browser.

19    Mr Kneepkens deposed that he expected that most users who received the email would have done so.

20    He also deposed that the ST Packaging Page included an “Order Now” button which redirected to the ST Portal at the StarTrack URL.

21    Ms Arsenoulis deposed that the ST Packaging Page was designed to assist customers, or potential customers, who used the Google search engine to find StarTrack and wanted to gain access to the ST Portal.

22    She further deposed that she was aware from her dealings with customers, that registered customers who regularly ordered StarTrack products from the ST Portal, would access it via a saved bookmark to the StarTrack URL, not via the ST Packaging Page.

23    Mr Kneepkens deposed to the fact that, after the termination of the contract with StarTrack, a customer using the link in the original welcome email would be taken to the ST Packaging Page (and not the ST Portal).

The ST Portal before and after 19 September 2023, and the StarTrack URL

24    Ms Arsenoulis also annexed to her second affidavit a comparison between the ST Portal as it appeared before and after 19 September 2023.

25    Before 19 September 2023, the ST Portal’s home page appeared as follows:

26    Since 19 September 2023, it has appeared as follows:

27    Ms Arsenoulis annexed to her first and second affidavits multiple screenshots of the ST Portal as it has appeared since 19 September 2023. In each case, the StarTrack URL appears in the address bar of the internet browser.

Pop-up and disclaimer

28    Mr Kneepkens deposed that, following the termination of the contract with StarTrack, a “prominent ‘Important Notice’” appears once a user signs into the ST Portal. This was referred to as a “pop-up”.

29    Until 9 October 2023, that pop-up appeared as follows (shown here in the context of the whole of the ST Portal):

30    The pop-up relevantly reads:

Important Notice: There’s a change coming for StarTrack Users | New TMA Online Shop available now

What are the benefits of the new TMA Online Shop?

•    You’re already registered, use your current login

•    Orders are charged direct to you

•    Your choice, receive an Invoice, or make it simple with a discounted Credit Card payment

•    Free Freight

•    Deal direct, no third parties

•    Talk to TMA about putting your logo and details on your Satchels and Boxes

…

31    Since 10 October 2023, that pop-up appeared with an additional disclaimer in red text as follows:

32    Mr Kneepkens and Ms Arsenoulis each deposed that the pop-up appears only after logging into the ST Portal.

TMA Promotional Email

33    On 19 and 20 September 2023, TMA sent a “promotional email” to 25,732 registered users of the ST Portal, in the following terms (TMA Promotional Email):

Important Notice:

There’s a change coming

for StarTrack Users

New TMA Online Shop

available now.

…

Dear Valued Customer,

We have heard your frustration and feedback and moving forward you will now be able to deal with TMA free from the frustrations and roadblocks as we now provide a direct offering free from any association with StarTrack.

This means better service, and cheaper pricing than you have currently been paying.

We are pleased to announce we will soon be launching our new TMA Online Shop – where you can order products such as satchel, cartons, printers, thermal labels, and much more, with free delivery and discounted prices.

What does this mean for me?

The new TMA Online Shop will provide an upgraded online ordering experience, replacing your old ordering platform.

What do I need to do?

It’s simple, just click the link and use your current login.

What are the benefits of the new TMA Online Shop?

•    You’re already registered, use your current login

•    Orders are charged direct to you

•    Your choice, receive an Invoice, or make it simple with a discounted Credit Card payment

•    Free Freight

•    Deal direct, no third parties

•    Talk to TMA about putting your logo and details on your Satchels and Boxes

…

34    The TMA Promotional Email contained two buttons labelled “CLICK HERE TO ORDER” which linked to the ST Portal. The “TMA Online Shop” referred to in the TMA Promotional Email is the ST Portal located at the StarTrack URL.

35    The TMA Promotional Email also informs its readers that “You’re already registered” and twice informs them to “use your current login”. Those login credentials would be as provided in the welcome email set out at paragraph [17] above.

36    Mr Kneepkens deposed as to the reach of the TMA Promotional Email on 19 and 20 September 2023. The TMA Promotional Email was sent to 25,732 addressees (and successfully to successfully delivered to 20,326 recipients) and opened by 6458 “unique recipients”. The link to the ST Portal was clicked by 5811 unique recipients, representing 22.6% of addressees.

Google searches

37    Ms Arsenoulis deposed that she undertook research on 19 and 20 September 2023 by entering the search terms “startrack packaging” and “tma consumables” into the Google search engine. The top result returned when the search was for “tma consumables” started with a link “Log in to StarTrack consumables”. When the search term “startrack packaging” was entered, the third result presented was a link to the StarTrack URL with the text “Log in to StarTrack consumables”.

StarTrack’s pleaded case

38    By its statement of claim, StarTrack pleads pursuant to ss 18 and 29(1)(g) and (h) of the Australian Consumer Law (ACL, being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) that TMA misrepresented and misrepresents to consumers that it is associated with StarTrack and/or involved in, or associated with, StarTrack’s consumables business by engaging in the following conduct: TMA’s use of the StarTrack URL; TMA’s sending of the TMA Promotional Email; and TMA’s operation of the “new TMA Online Shop” since around 21 September 2023. It also pleads a case in passing off.

39    StarTrack also pleads other causes of action, for breach of contract (including claims for breaches of provisions relating to confidential information and restraint of trade) and unconscionable conduct, but it is unnecessary to refer to or describe the pleading because the injunction we granted was founded only on the ACL and passing off case.

The primary judge’s reasons

40    The primary judge made the following relevant findings with respect to StarTrack’s ACL and passing off case.

Prima facie case

41    After setting out some of the evidence referred to above, including how customers gain access to the ST Portal from a web browser with login credentials, the TMA Promotional Email set out at paragraph [33] above, remarking on “an obvious similarity” between the current ST Portal and the previous version of it, the evidence about the use by customers of bookmarks, the pop-up set out at paragraph [30] above, the learned primary judge concluded that StarTrack’s ACL and passing off case was “weak”. His Honour reasoned as follows:

62    I accept that there is a prima facie case that, by continuing to operate the ST Portal in a form that bears at least some resemblance to how it appeared prior to 1 September 2023 and from a URL that contains reference to “StarTrack”, TMA is engaging in misleading or deceptive (or potentially tortious) conduct. It bears noting that conduct of that kind may inhere not merely in the inducement of a person to transact upon a false premise; but also in conduct that induces negotiations or offers to contract. That may be so even if steps are taken to correct false impressions before any resultant transaction is concluded: Verrocchi v Direct Chemist Outlet Pty Ltd (2015) 112 IPR 200, 212 [60] (Middleton J; cited with approval on appeal in Verrocchi v Direct Chemist Outlet Pty Ltd (2016) 247 FCR 570, 581 [68] (Nicholas, Murphy and Beach JJ)).

63    Thus, although not unimportant, TMA’s efforts to make clear to customers of the ST Portal that it no longer has any association with StarTrack (above, [53] [54] and [60]) are not sufficient to inoculate it altogether against a charge that it is engaging in misleading and deceptive (or analogously tortious) conduct. I accept that, insofar as it continues to engage in online commerce with customers who are accustomed to purchasing StarTrack products from a website that contains StarTrack’s name and an appearance not dissimilar to that which it currently sports, it is at least arguably liable to the charges now levelled against it.

64    Nonetheless, I do not consider that such prima facie case as has been established is especially strong. For reasons already alluded to, there is good cause for thinking that many—and perhaps most or all—of the customers who, since 1 September 2023, have continued to transact via the ST Portal have done so unaware that its URL contains any reference to “StarTrack” (if, indeed, they ever had such an awareness). Further, although the appearance that the portal now assumes bears more than a passing similarity to that which it has historically borne, it remains the case that it has been unambiguously rebranded. Although not non existent, the risk that present day users might arrive at the ST Portal thinking that they have accessed a StarTrack website (or a website otherwise associated in some way with it) seems very low.

65    Such risk as might exist (despite the rebranding of the portal and despite the unambiguous emails of 19 and 20 September 2023) is then quite effectively addressed by the pop up notification described earlier (above, [60]). It appears very much to be the case that no user of the ST Portal could now reasonably labour under the impression that any consumable products purchased from it are products of StarTrack’s, nor that any such transactions are transactions entered into with StarTrack or with a business associated with it.

66    Something should be said about TMA’s ongoing use of the ST Portal URL. That, I think, is StarTrack’s most persuasive angle of attack: that the continued use of a URL that contains its name is apt to mislead users into assuming an association that does not exist. Clearly, it could be (and I have accepted as much). An obvious solution to at least part of the dispute that has arisen between the parties would be for TMA to migrate the ST Portal to a new URL that does not include reference to “StarTrack”. The evidence demonstrates that that possibility has been explored. There appear to be highly technical considerations that render it uncommercial or impossible (or both) in the short term. Nothing turns upon that but I note it lest it be thought that that obvious solution has, thus far, gone unconsidered.

67    In all of the circumstances, I do not consider that there is a strong prima facie case that TMA’s continued operation of the ST Portal is such as might mislead or deceive customers into thinking that they are transacting—or even being invited to transact—with StarTrack or a business associated with it. Such case as there is in that regard appears to me to be weak.

42    His Honour also found that StarTrack’s case for breach of contract was not “inherently strong” (J  at [46]), and its unconscionable conduct claim was “weak” and not “inherently strong” (J  at [71], [76]).

The balance of convenience

43    The primary judge referred to the evidence concerning the business operations of StarTrack and the impact it perceived that TMA’s conduct was having, and would continue to have. His Honour acknowledged that the damage StarTrack apprehended to its goodwill and market share is difficult to quantify and is damage of a kind in respect of which an order for damages is ordinarily considered inadequate to address (J at [83]). The primary judge went on to set out various limitations of the evidence insofar as it went to StarTrack’s business operations and the extent to which TMA’s continued operation of the ST Portal poses a threat to StarTrack’s “one stop shop” value proposition (J at [86]). Nevertheless, the primary judge accepted that, insofar as it markets consumable products, StarTrack stood to endure “at least some damage to its goodwill and market share” (J at [88]).

44    Against that, however, the primary judge considered that there were compelling reasons to think that a grant of interlocutory relief would visit significant prejudice on TMA, and may result in employees being made redundant (J at [89]-[90]).

45    Having considered the parties submissions on the balance of convenience, his Honour concluded:

91    All told, I am not persuaded that the balance of convenience here tends strongly in favour of or against the grant of interlocutory relief to restrain TMA from continuing to operate the ST Portal or otherwise transacting with “StarTrack customers”. On the contrary, it appears that the prejudice inherent in either eventuality is balanced. It might well tend against what StarTrack proposes.

The notice of appeal

46    The amended notice of appeal contained 11 grounds.

47    Grounds 1-6 related to StarTrack’s ACL and passing off case, grounds 7 and 8 concerned claims relating to alleged misuse of confidential information in breach of the contract, and grounds 10 and 11 related to the question of balance of convenience.

48    Because of the scope of the injunctive relief ultimately sought on this appeal, it is not necessary to deal with grounds 7 and 8.

49    Grounds 1-6 and 10 and 11 were as follows (all errors in original):

Capitalised terms used below are as defined in the Appellant’s Statement of Claim dated 4 October 2023.

Misleading or deceptive conduct and passing off

1.    The judge incorrectly applied the legal test for misleading or deceptive conduct and passing off by finding that the risk of misleading or deceptive conduct and passing off is addressed by the pop-up notification that appears after a StarTrack Customer visits the StarTrack URL and logs into the ST Portal (J [64], [65], [67]). That was an error because misleading or deceptive conduct and the tort of passing off may occur by conduct that induces negotiations, without more.

2.    The judge incorrectly applied the legal test for misleading or deceptive conduct and passing off in that the judge (J [64], [66]) failed to consider whether the conduct had the character of being misleading for the whole class of persons who comprise the relevant class to whom the conduct is directed. That was an error because in considering whether the conduct (including the use of the ST Portal URL, which the judge found “is apt to mislead users into assuming an association that does not exist” (J [66])) had the character of being misleading, the Court must consider the likely characteristics of the persons who comprise the relevant class to whom the conduct is directed, and the likely effect of the conduct on ordinary or reasonable members of the class, disregarding reactions that might be regarded as extreme or fanciful.

3.    The judge erred in finding that the risk that present day users might arrive at the ST Portal thinking that they have accesed a StarTrack website (or a website otherwise associated in some way with StarTrack) seems very low (J [64]). In doing so, the judge erred in failing to take into account, or by giving insufficient weight to, the following matters:

a.    Mr Kneepkens’s evidence that the TMA Promotional Email sent by the Respondent to approximately 27,500 registered users of the ST Portal on 19 and 20 September 2023 (J [53]-[54]) was only opened by 6,451 registered users of the ST Portal (being 249 plus 6,202), such that many registered users of the ST Portal would, since 19 September 2023, have continued to access the ST Portal by way of a bookmark created before 19 September 2023 or by their other usual means of accessing the ST Portal before 19 September 2023;

b.    Ms Arsenoulis’s evidence that when a person uses the Google search engine to search for “startrack packaging”, that person sees search results and links referring to the Respondent, the new TMA Online Shop and the StarTrack URL;

c.    Mr Kneepkens’s evidence that it is only once a user has signed into the ST Portal that the “pop-up” notification appears, stating “TMA no longer has any commercial relationship with StarTrack and TMA now offers its own consumable products to all customers…which can be accesed via your current link”;

d.    the judge’s finding that it was only from 10 October 2023 that the “pop-up” notification on the ST Portal disaplyed the words “TMA no longer has any commercial relationship with StarTrack and TMA now offers its own consumable products to all customers…which can be accesed via your current link” (J 60]), such that a StarTrack Customer who logged into the ST Portal prior to 10 October 2023 did not see those words and, upon any login subsequent to 10 October 2023, might not have read the additional words;

e.    Ms Arsenoulis’s evidence that at least one StarTrack Customer who visited the ST Portal after 19 September 2023 was unable to independently determine whether the ST Portal was the correct way to order StarTrack consumables from StarTrack; and

f.    Ms Arsenoulis’s evidence about the similarity between the ST Portal home page before and after 19 September 2023.

The judge ought to have found that there is a significant risk that a significant number of present day users might arrive at the ST Portal, and log into the ST Portal, thinking that they have accesed a StarTrack website or a website otherwise associated in some way with StarTrack in circumstances where the judge found that:

i.    the ST Portal has, since its inception, operated from the StarTrack URL and continues to do so (J [50], [62]);

ii.    the StarTrack URL contains reference to “StarTrack” (J [62]);

iii.    some users access the ST Portal via a “bookmark” created for the StarTrack URL before the Respondent “rebadged” the ST Portal, or by using a search engine, or by opening the StarTrack “welcome email” sent to them prior to 1 September 2023 (J [51], [59]);

iv.    prior to 1 September 2023, the ST Portal was adorned with imagery and prose unambiguously associated with StarTrack (J [50]);

v.    the Respondent has maintained the same login credentials by which access to the ST Portal is gained by StarTrack Customers (J [34]);

vi.    since 1 September 2023, the ST Portal has born at least some resemblance, and “obvious similarity” to how it appeared prior to 1 September 2023 (J [55], [62]);

vii.    the Respondent is, by way of the ST Portal, engaging in online commerce with customers who are accustomed to purchasing StarTrack products from a website that contains StarTrack’s name and an appearance not dissimilar to that which it currently sports (at [63]); and

viii.    the pop-up notification (stating “TMA no longer has any commercial relationship with StarTrack and TMA now offers its own consumable products to all customers…which can be accesed via your current link”) did not appear until 10 October 2023 (J [60]).

4.    The judge erred in finding that:

a.    it is only by entering the StarTrack URL directly into a web browser, or by using a search engine to locate the StarTrack URL and click on it, that a user would gain any appreciation as to the content of the StarTrack URL (J [59]); and

b.    many – and perhaps most or all – of the StarTrack Customers who, since 1 September 2023, have continued to transact via the ST Portal, have done so unaware that the StarTrack URL contains any reference to “StarTrack”, if they were ever so aware (J [64]).

In doing so, the judge erred by failing to take into account, or by giving insufficient weight to the following:

i.    Ms Arsenoulis’s evidence that the word “startrack” appears, and would be seen by every user of the ST Portal, at the top of every single web page accessed by a user of the ST Portal, regardless of how the user accesses the ST Portal;

ii.    when a person uses the Google search engine to search for “startrack packaging”, that person sees search results and links referring to the Respondent, the new TMA Online Shop and the StarTrack URL; and

iii.    the judge’s finding that some users access the ST Portal via a “bookmark” for the StarTrack URL which they created for that purpose after receiving a “welcome email” directing them to StarTrack’s “packaging” webpage and the ST Portal (J [51] and [59]).

The judge ought to have found that the majority, if not all, users of the ST Portal before and after 1 September 2023 would have an appreciation that the ST Portal contains reference to “StarTrack”.

5.    The judge erred in assessing each cause of action by reference to a standalone enquiry of whether there was a “strong prima facie case” rather than determining whether the prima facie case in respect of each cause of action was sufficiently strong having regard to the nature of the right asserted and practical consequences flowing from the interlocutory order sought (c.f Australia Broadcasting Corporation v O’Neill (2006) 227 CLR 57at [65], [71] and [72]).

6.    Because of some or all of the errors in grounds 1 to 4 5 above, the judge erred in finding that the Appellant does not have a strong, alternatively, sufficiently strong, prima facie case that the Respondent is engaging in misleading or deceptive or tortious conduct, and that the prima case appears weak (J [64], [67]).The judge ought to have found that the Appellant has a strong, alternatively, sufficiently strong, prima facie case.

….

Balance of convenience

10.    Because of the errors in grounds 6 and 10 above, the judge erred in:

a.    finding that the balance of convenience does not call for an exercise of the court’s discretion to grant interlocutory injunctive relief to restrain the Respondent from operating the ST Portal (J [92]); and

b.    failing to consider whether the balance of convenience calls for an exercise of the court’s discretion to grant interlocutory injunctive relief to restrain the Respondent from using StarTrack Customers’ names, email addresses and delivery addresses.

11.    The judge erred in failing to take into account, or by giving insufficient weight to:

a.    Mr Kneepkens’s evidence that the Appellant (J [84]) markets the consumables that were once purchased via the ST Portal from the URL, https://auspost.com.au/startrack-shop/; and

b.    Ms Arsenoulis’s evidence that during the financial year ending 30 June 2023 Appellant generated revenue of $3.598 million from the sale of products which are “like for like” with the 32 products sold by the Respondent via the new TMA Online Store.

The relevant principles

50    There are two inquiries that must be undertaken when determining whether an applicant should be granted an interlocutory injunction.

51    The first relates to whether the applicant for an interlocutory injunction has a prima facie case in respect of its claim to final relief, the second to the balance of convenience.

52    The principles to be applied in determining whether or not to grant interlocutory relief were considered by the High Court in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 81-82 [65] (Gummow and Hayne JJ):

The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd [(1968) 118 CLR 618]. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued [(1968) 118 CLR 618 at 622-623]:

“The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.”

By using the phrase “prima facie case”, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument [(1968) 118 CLR 618 at 620]. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal [(1968) 118 CLR 618 at 622]:

“How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.”

53    The two inquiries are related, as the Full Court explained in Warner-Lambert Co LLC v Apotex Pty Ltd [2014] FCAFC 59: (2014) 311 ALR 632 at 646 [70] (Allsop CJ, Jagot and Nicholas JJ):

Whether an applicant for an interlocutory injunction has made out a prima facie case and whether the balance of convenience favours the grant of such relief are related questions. It will often be necessary to give close attention to the strength of a party’s case when assessing the risk of doing an injustice to either party by the granting or withholding of interlocutory relief especially if the outcome of the interlocutory application is likely to have the practical effect of determining the substance of the matter in issue or if other remedies, including an award of damages, or an award of compensation pursuant to the usual undertaking, are likely to be inadequate.

54    In cases where the grant of interlocutory relief would be tantamount to the grant of final relief, the strength of the prima facie case will often attract particular scrutiny. But the strength of an applicant’s prima facie case may still be relevant in other cases as the grant of interlocutory relief may still be warranted even if the balance of convenience is finely balanced where the prima facie case is relatively strong. Likewise, the grant of interlocutory relief may be warranted where the applicant has a strong case on the balance of convenience, but its prima facie case (while made out) is less compelling: see Bullock v Federated Furnishing Trades Society of Australia (No 1) (1985) 5 FCR 464 at 472 (Woodward J, with whom each of Smithers J and Sweeney J agreed); Samsung Electronics Co Ltd v Apple Inc (2011) 217 FCR 238 at 261 [67] (Dowsett, Foster and Yates JJ). Similarly, in GlaxoSmithKline Australia Pty Ltd v Reckitt Benckiser Healthcare (UK) Ltd [2013] FCAFC 102; (2013) 305 ALR 363 at 384-85 [81(j)], the Full Court (Bennett, Jagot and Griffiths JJ) observed that “the question of whether there is a serious question or a prima facie case should not be considered in isolation from the balance of convenience because they involve related inquiries and the apparent strength of the parties’ substantive cases will often be an important consideration to be weighed in the balance”.

55    A decision to withhold (or grant) interlocutory relief required the primary judge to exercise a judicial discretion. As the High Court explained in the well-known passage from House v The King at 504-5 (Dixon, Evatt and McTiernan JJ):

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.

56    Where an exercise of discretion miscarries, it falls to a court on appeal to make its own determination as on a re-hearing, that is, to exercise the discretion afresh. See, by way of example, Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 at 734 (Mahoney JA, with whom each of Glass JA and Samuels JA agreed).

57    An example of a case where discretion may miscarry is where a judge erred in rejecting important aspects of evidence relied upon. See Shercliff at 734.

Consideration

Grounds 1-4

58    StarTrack submitted that the learned primary judge at least mistook the significance of the facts in three critical respects.

59    First, it was submitted that the judge, in concluding that the risk that users might arrive at the ST Portal thinking they had accessed a StarTrack website, or a website associated with StarTrack, was “effectively addressed” by the pop-up (“TMA no longer has any commercial relationship with StarTrack and TMA”) failed to appreciate that the pop-up appeared only after a customer, using the login details previously issued to StarTrack customers, had logged in. It was submitted that the primary judge thus erred by not considering the effect of the impugned conduct prior to any member of the relevant class of consumer seeing the pop-up.

60    Secondly, it was submitted that the primary judge did not appreciate or understand the significance of the evidence that, on TMA’s own evidence, only 22.6% of people opened the TMA Promotional Email.

61    Thirdly, it was submitted that the primary judge did not refer to critical evidence that the Google search results for StarTrack packaging take the user to “hits” involving the ST Portal – that is, through what counsel called “the architecture of the internet”, the inclusion of “startrack” in the StarTrack URL resulted in the user being driven to the ST Portal by searching for the StarTrack name on the Google search engine. It was submitted that his Honour thus erred in finding that there was a “very low” risk that users might arrive at the ST Portal thinking that they had accessed a StarTrack website (or a website otherwise associated in some way with StarTrack); and that he ought to have found that there was significant, not a very low, risk of that type.

62    StarTrack submitted that the primary judge was wrong to regard its prima facie case as weak. Before his Honour, StarTrack submitted that its prima facie case was a strong one. That submission was made in the context of the principles we have set out at paragraph [54] above concerning the interrelationship between the strength of an applicant’s prima facie case and its position on the balance of convenience. It was only in respect of the contractual claims based on the restraint clause – with which we are not concerned – that StarTrack put its submissions on the strength of its prima facie case on the basis that the interlocutory relief it sought was tantamount to final relief, given that the restraint clause would likely have expired before trial. The conclusions we set out below concerning the strength of StarTrack’s prima facie case in respect of its ACL and passing off case are to be understood in this context.

63    While StarTrack maintained that it did not need to show that its prima facie case was a strong one – although it contended that it was – it submitted that the primary judge was wrong to regard the prima facie case as weak. StarTrack contended that the primary judge ought to have found that there was a sufficiently strong prima facie case that ordinary and reasonable members of the class of persons who arrived at the ST Portal would think they have arrived at a StarTrack website or a website otherwise associated in some way with StarTrack, having regard to that evidence.

64    We consider that the primary judge did err in each of those respects. It follows that we must exercise our own discretion in substitution for his, including because he mistook the facts and did not take into account material factual considerations, in the way contended for by StarTrack.

65    In our view, his Honour’s conclusion that StarTrack had established only a weak prima facie case with respect to the ACL and passing off claims is not to accepted. The prima facie case is, in our view, a strong one, for the following reasons.

66    First, the continued use of the StarTrack URL which contains StarTrack’s name (and appears at the top of a user’s internet browser on every page within the ST Portal) is, as the primary judge correctly said, “apt to mislead users into assuming an association that does not exist” (J at [66]). His Honour described this as StarTrack’s “most persuasive angle of attack”, and we would agree.

67    Secondly, Ms Arsenoulis’s evidence about Google search results makes clear that users who, for example, searched for “startrack packaging” and clicked a link to the ST Portal with the StarTrack URL, would think they arrived at a StarTrack website. The primary judge did not make any reference to this evidence. In our view, such evidence means that there was a significant risk that users might arrive at the ST Portal thinking that they had accessed a StarTrack (or StarTrack-associated) website. The force of this conclusion is not undermined by the fact that, as TMA stressed, customers who had read and understood from the TMA Promotional Email that the association with StarTrack had ceased, may not be misled.

68    Thirdly, as the primary judge observed, there was an “obvious similarity” between the ST Portal as it appeared before and after 19 September 2023 (J at [55]). The screenshots set out at paragraphs [24]-[26] above show that the only material difference is that references to StarTrack and its branding have been removed from the ST Portal. Other screenshots that were in evidence showed striking similarities in their look and presentation. In such circumstances, we do not share the primary judge’s view that the ST Portal had been “unambiguously rebranded” (J at [64]).

69    Nor do we accept TMA’s submission (advanced by reference to Verrochi v Direct Chemist Outlet Pty Ltd (2016) 247 FCR 570) that the similarity in the look and feel, or “getup” of the ST Portal did not contribute to the misleading or deceptive character of TMA’s conduct unless StarTrack proved that consumers associated that “getup” with StarTrack. The facts, and issues, in Verrocchi were very different. What the Full Court (Nicholas, Murphy and Beach JJ) recognised in Verrocchi at 580-81 [63]-[64] was that a trader can acquire a reputation for goods or services by reason of the getup used, and where the misleading or deceptive conduct arises from a competitor using the same, or a similar, getup, it will usually be necessary to establish a relevant reputation in the market associated with that getup. The short point here is the similarity in the look and feel of the ST Portal contributed to the misleading or deceptive conduct, not because that getup was distinctive in the market and associated with StarTrack, but because, in the context of other elements of the conduct (and in particular the use of the StarTrack URL), TMA harnessing the same getup contributed to the impression that customers arriving at the ST Portal were continuing to deal as they previously had. At the very least, the similarity in the getup failed to alert customers to the change.

70    Fourthly, the disclaimer contained in the pop-up, which did not appear until 10 October 2023, does not “quite effectively address” the problem, as the primary judge found (J at [65]). This is because the pop-up did not appear to a user until after they had logged into the ST Portal. By then they were already in TMA’s online shop, and had been brought there by deception.

71    In Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640, French CJ, Crennan, Bell and Keane JJ explained at 655 [50] that:

It has long been recognised that a contravention of [s 18 of the ACL] may occur … at the point where members of the target audience have been enticed into “the marketing web” by an erroneous belief engendered by an advertiser, even if the consumer may come to appreciate the true position before a transaction is concluded.

72    Because the pop-up did not appear until after the user had accessed the ST Portal, they by that point having already been drawn into the “marketing web”, the pop-up does not mean that the conduct by which customers arrived at the ST Portal was not misleading or deceptive.

73    Finally, the evidence about the TMA Promotional Email was that it was only opened by 22.6% of recipients. The primary judge did not record in his reasons the limited engagement with the TMA Promotional Email. Given 77.4% of recipients did not open, and thus never saw, the TMA Promotional Email, in our view it also did not address the risk of a significant number of consumers being misled.

74    For those reasons, in our view, the evidence discloses a strong prima facie case for StarTrack’s ACL and passing off claims. We take the strength of the prima facie case into account in re-exercising the discretion, having regard to the matters we address below regarding the balance of convenience.

Ground 5

75    This ground was only faintly pressed. We do not think there is any merit in it.

Balance of convenience

76    Because the primary judge erred in his assessment of the strength of StarTrack’s prima facie case, we need to assess the question of the balance of convenience afresh. Compare Warner-Lambert at 652 [94] (Allsop CJ, Jagot and Nicholas JJ).

77    As StarTrack submitted, there are four reasons why the balance of convenience favours the grant of an injunction.

78    The first reason contended for is that “if TMA is not restrained, it will continue to divert customers to its competing business. Not only will that make it difficult to win those customers back for StarTrack, but StarTrack will face the difficult task of quantifying its loss and damage”, citing J at [83].

79    The second reason contended for is that TMA’s conduct is likely to continue to mislead or deceive consumers. In that regard, counsel cited Samsung at 261 [68] (Dowsett, Foster and Yates JJ) (“It may also be necessary to consider and evaluate the impact that the grant or refusal of an injunction will have or is likely to have on third persons and the public generally”).

80    The third reason contended for is, as senior counsel put it in his oral submissions:

that TMA can fairly be regarded as the author of its own misfortune. It had the option of setting up a competing portal at a URL that did not appropriate StarTrack’s name and which did not deploy the existing customer registration details. In assessing the balance of convenience, it’s relevant to consider that little weight should be given to harm that would have been caused by the grant of an injunction if that was a risk that the respondent took with its eyes wide open.

81    In support of this submission, StarTrack relied again on Samsung at 288-90 [191]-[196]. There the Full Court discussed a number of authorities concerning the relevance of the knowledge of an alleged wrongdoer of the asserted right when embarking on the conduct said to infringe those asserted rights. While the context in Samsung is not on all fours (involving as it did, alleged patent infringement) we nonetheless accept that TMA’s conduct in repurposing the ST Portal as it did, and promoting it to the customer base built up over years as customers buying StarTrack consumables on a website that continued to use the “startrack” name as part of its URL, was sufficiently brazen as to moderate the weight that might otherwise be given to the obvious effects of an interlocutory injunction on the fledgling consumables business TMA was establishing on the repurposed ST Portal. The risks of TMA’s conduct resulting in an application of exactly the kind that StarTrack brought would have been obvious.

82    The fourth reason contended for is that Ms Arsenoulis’s uncontroverted evidence established that during the financial year ending 30 June 2023, StarTrack generated revenue of $3.598 million from the sale of products which are “like for like” with the 32 products sold by TMA via the ST Portal. Further, Mr Kneepkens gave evidence that in the first two weeks of trading of the ST Portal, selling the 32 products which are like for like, TMA generated revenue of $73,000. So the prospect of StarTrack losing significant ground in the market is likely to cause it not insubstantial losses.

83    In our view, those submissions are to be accepted. Taking them into account, and assessing the balance of convenience alongside our view as to the strength of StarTrack’s prima facie case, in our view, the lesser risk of injustice lies in the grant of the interlocutory relief we granted, and which is set out above.

Associate:    

Dated:    15 December 2023