case_text: On 16 May, during the course of oral argument, counsel appearing for the liquidator of Kelso raised the possibility that the actions of Provident may be seen to amount to an unequivocal election to surrender its security pursuant to s 554E of the Corporations Act 2001 (Cth) and in accordance with the principles stated by the High Court in Sargent v ASL Developments Limited [1974] HCA 40 ; (1974) 131 CLR 634. 4 I will set out the relevant legislative provisions which are as follows: Section 554E Proof of debt by secured creditor (1) In the winding up of an insolvent company, a secured creditor is not entitled to prove the whole or a part of the secured debt otherwise than in accordance with this section and with any other provisions of this Act or the regulations that are applicable to proving the debt. (2) The creditor's proof of debt must be in writing. (3) If the creditor surrenders the security to the liquidator for the benefit of creditors generally, the creditor may prove for the whole of the amount of the secured debt. (4) If the creditor realises the security, the creditor may prove for any balance due after deducting the net amount realised, unless the liquidator is not satisfied that the realisation has been effected in good faith and in a proper manner. (5) If the creditor has not realised or surrendered the security, the creditor may: (a) estimate its value; and (b) prove for the balance due after deducting the value so estimated. (6) If subsection (5) applies, the proof of debt must include particulars of the security and the creditor's estimate of its value. Regulation 5.6.24 Votes of secured creditors (1) For the purposes of voting, a secured creditor must state in the creditor's proof of debt or claim: (a) the particulars of his or her security; and (b) the date when it was given; and (c) the creditor's estimate of the value of the security; unless he or she surrenders the security. (2) A creditor is entitled to vote only in respect of the balance, if any, due to him or her after deducting the value of his or her security as estimated by him or her in accordance with regulation 5.6.41. (3) If a secured creditor votes in respect of his or her whole debt or claim, the creditor must be taken to have surrendered his or her security unless the Court on application is satisfied that the omission to value the security has arisen from inadvertence. (4) This regulation does not apply to: (a) a meeting of creditors convened under Part 5.3A of the Act; or (b) a meeting held under a deed of company arrangement. 5 The facts may be stated briefly. Provident entered into a deed of charge with Kelso on 2 August 2001. The charge is a fixed and floating charge and was registered on 9 August 2001. Kelso owned a factory and land situated at Wentworthville. That property was subject to Provident's charge. 22 Doyle CJ in Health & Life Care went on at 162 to explain the relationship between reg 5.6.24 and the provisions of s 554E of the Act. It is evident that even if the provisions of the regulations are not applicable, there may nonetheless amount to conduct on the part of a secured creditor which would constitute an election within the principles stated in Sargent v ASL . 24 Dutney J referred to the well-know statement of principle of Stephen J in Sargent v ASL where Stephen J observed that: The words or conduct ordinarily required to constitute an election must be unequivocal in the sense that [the words or conduct are] consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other. Stephen JA also observed that there may be less unequivocal conduct which may provide some evidence of an election and that this may be sufficient if it is coupled with actual knowledge of the right of election. 26 The effect of the reasoning in Surfers Paradise Investments seems to be that something more than the mere submission of the proof of debt is required to constitute an election in the sense referred to in Sargent v ASL . In Surfers Paradise Investments the Queensland Court of Appeal was of the view that there was an election because the receipt of the dividend cheque was unequivocal. At that point in time, as Dutney J observed at [37], the respondent was required to make a choice between accepting the cheque or returning it to the liquidator. The assertion of a right to retain the dividend evidenced by banking the cheque and retaining the proceeds was sufficient to constitute unequivocal conduct amounting to an election.


case_outcome: applied

case_text: Such a situation arose in a decision of the Queensland Court of Appeal in Surfers Paradise Investments Pty Limited (in liq) v Davoren Nominees Pty Limited (2004) 1 QR 567. In that case the respondent was a secured creditor who lodged a proof of debt for the full amount of the debt, disclosing a mortgage, but attributing no value to it. Subsequently the secured creditor received from the liquidator a dividend cheque which it banked and retained. The dividend was calculated on that basis of the full amount of the appellant's total indebtedness. The lead judgment was delivered by Dutney J, but there is also a useful statement of the applicable principles in the judgment of Williams JA. (Jerrard JA agreed with both Williams JA and Dutney J). 26 The effect of the reasoning in Surfers Paradise Investments seems to be that something more than the mere submission of the proof of debt is required to constitute an election in the sense referred to in Sargent v ASL . In Surfers Paradise Investments the Queensland Court of Appeal was of the view that there was an election because the receipt of the dividend cheque was unequivocal. At that point in time, as Dutney J observed at [37], the respondent was required to make a choice between accepting the cheque or returning it to the liquidator. The assertion of a right to retain the dividend evidenced by banking the cheque and retaining the proceeds was sufficient to constitute unequivocal conduct amounting to an election.


case_outcome: distinguished

case_text: I should add that the decision of Gzell J in Young v ACN 081 162 512 (formerly Dallen Design Pty Ltd) (2005) 218 ALR 449, which dealt with the question of inadvertence, does not arise in the present case. This is because the question of inadvertence would only need to be addressed if the creditor voted in respect of the whole debt or claim.


case_outcome: cited

case_text: Fourth, it is important to note that the concept of "income" under the Act is not to be equated with "income" under income tax legislation: Haldane-Stevenson v Director-General of Social Services (1985) 9 FCR 73 per McGregor and Pincus JJ at 75 and Davies J at 80. It is an act which provides for income maintenance : Davies J in Haldane-Stevenson 9 FCR at 80; Morling, Hartigan and Lee JJ in Secretary, Department of Social Security v Garvey (1989) 22 FCR 132 at 136; cf comments of O'Loughlin J in Barry v Repatriation Commission (1993) 41 FCR 529 at 532. "Earned, derived or received"


case_text: First, the Act is remedial legislation in that it gives benefits to persons and thereby remedies Parliament's perceptions of social injustice (Social Services Consolidation Bill (Cth), Second reading speech, 15 May 1947, Minister for Health and Social Services, the Hon Senator McKenna). Accordingly, it calls for no narrow or pedantic construction: Lockhart, Gummow and Einfeld JJ in Rose v Secretary, Department of Social Security (1990) 21 FCR 241 at 244, Secretary, Department of Social Security v "SRA" (1993) 43 FCR 299 per Black CJ at 303 (for similar observations, I also note Director-General of Social Services v Hales (1983) 47 ALR 281 per Sheppard J at 321 and Secretary, Department of Family and Community Services v Geeves [2004] FCAFC 166 at para 53).


case_text: In my view questions 1, 5 and 6 as pleaded in the applicant's notice of appeal are not questions of law which can form the basis of an appeal from the AAT, and upon which the Court can rule. While construction of any legislation undoubtedly raises legal issues, advancing as propositions for the court "the proper construction and operation" of a either a section of an Act (question of law 1 in the notice of appeal) or a phrase (questions of law 5 and 6 in the notice of appeal) do not, without more, present questions which the Court can properly consider. This is not a case where a question of law has been inelegantly drafted but nonetheless is a question the purport of which is tolerably clear ( Ergon Energy Corporation Limited v The Commissioner of Taxation [2006] FCAFC 125 at [51] ) - questions 1, 5 and 6 simply do not raise questions . 17 However, questions 2, 3 and 4 do raise questions, which can be characterised as questions of law. Indeed, for reasons I outline later, in my view questions 3 and 4 can be considered together. 18 I propose to look at the relevant legislation, and then consider each of these questions in turn.


case_text: Second, although the definition of "income" in the Act is construed broadly, the phrase "own use and benefit" necessarily implies rights of ownership of the relevant income amounts by the person receiving them. The breadth of the definition is demonstrated, for example, by the fact that it is not necessary that the relevant person does not have legal capacity to deal with the income amounts for the income amounts to be for the person's "own use and benefit". Income is for the "own use and benefit" of the person once it becomes their property which they can dispose of at will: cf Flannery v Secretary Department of Social Security (1987) 78 ALR 431 at 436 and Latham CJ in Mutual Acceptance Co Ltd v Federal Commissioner of Taxation [1944] HCA 34 ; (1944) 69 CLR 389 at 398.


case_title: Haldane-Stevenson v Director-General of Social Services (1985) 9 FCR 73


case_outcome: considered

case_text: In relation to the concept of income being "earned, derived or received", it is clear that: • the use of the verbs "earned", "derived" and "received" in juxtaposition in the definition of "income" in the Act suggests that each was intended to have a different meaning: Sheppard J in Inguanti v Secretary, Department of Social Security (1988) 80 ALR 307 at 311 • income cannot be "earned, derived or received" unless it is also realised: Read 167 CLR per Mason CJ, Deane and Gaudron JJ at 67 • income can be realised - and hence received - even if temporarily it is not accessible: Rose 21 FCR at 245 • income can be "derived" within the meaning of s 8(1) even if it is not at that time received ( Inguanti 80 ALR at 311) • "earned" relates to personal earnings and profits ( Inguanti 80 ALR at 310).


case_text: In summary, the applicant submits that the AAT misapplied the term "own use or benefit" within the context of s 8(1). In particular: • The phrase does not call for an assessment as to whether a person can in fact use the earnings as they wish or benefit from the earnings in an absolute sense. • The fact that the money may be earmarked to meet a particular obligation does not detract from the fact that the money is for the person's own use or benefit: Kear v Secretary, Department of Social Security [1998] 1087 FCA. • The fact that the repayments were made in respect of tasks performed by the respondent and made to the same entity who paid her wages seems to have clouded the issue. The situation is analogous to an employee who is found liable to the employer for damages for negligence arising out of the employee's actions in the workplace: even if the damages awarded were deducted from wages of the employee it could not be said that the employee's earnings were the lesser sum after the deduction of the damages award. • The circumstances surrounding the payment by the respondent and later reimbursement of $1,300 highlights the error in the AAT's approach. • The AAT appears to have been influenced by the fact that the applicant was unable to identify a benefit to the respondent from the amounts of the shortfalls. This is clearly an irrelevant consideration as the Act provides for the alternative of "use or benefit". The respondent in this case clearly used the amounts to meet her obligations. In any event the respondent did benefit from such amounts in that her superannuation entitlements were calculated on the basis of her gross earnings without deduction for the shortfalls as was apparent from the Employee Payment Summary provided by her employer. 14 In summary, the respondent submitted: 1. So-called questions of law 1, 5 and 6 specified in the notice of appeal are not, in fact, questions of law. 2. The AAT correctly recognised that the key question is whether the whole of the respondent's nominal gross wages can be said to be "income" as that term is defined for the purposes of s 8 of the Act . Expressed alternatively, could the amount of the withheld shortfall be said to be earned, derived or received by her for her own use or benefit? 3. The phrase "for the person's own use or benefit" entails the notion of a person being able to use property or income as the person wishes or sees fit, as opposed to being obliged to apply the property or income in a particular way. The respondent was never able, at the time of earning, derivation or (constructive) receipt to use the whole of her nominal gross wage as she wished or saw fit. Rather, to the extent of any shortfall, her employer was contractually entitled to withhold the amount of that shortfall from that gross wage and the respondent was obliged to accept that such an amount could be so withheld. 4. The words "without any reduction" which appear in s 1072 of the Act qualify only "income" as defined, namely the income earned, derived or received for the person's own use or benefit . 5. Reference by the applicant to the sum of $1,300 later received by the respondent by way of refund from her employer is a distraction as the appeal is unconcerned with that sum, although it will be relevant in any recalculation by the applicant of the amount, if any, of any overpayment of benefit. In any event, the AAT correctly regarded that sum as "ordinary income" for the purposes of the Act . 15 Appeals from the AAT are not appeals in the strict sense as they lie within the original jurisdiction of the Court. A party to a proceeding before the AAT may appeal to the Court from any decision of the AAT in that proceeding, but only on questions of law: s 44(1) Administrative Appeals Tribunal Act 1975 (Cth). 47 It is for the same reason that I find distinguishable from these facts the decision in Kear [1998] 1087 FCA where Heerey J held that the relevant money received by the applicant in that case was "his own money to deal with as he saw fit" notwithstanding that the applicant had other commitments or arrangements for which that money was earmarked.


case_text: Similarly, the facts of the case before me may be contrasted with those in Marsh v Secretary to the Department of Social Security (1986) 12 FCR 100 where, in finding that a training allowance paid to a part-time trainee was "income" within the meaning of the Social Security Act 1947 (Cth), Burchett J said at 104: "The whole of it was paid, so far as appears, not on condition that he expended any part of it upon a purpose associated with his part-time training, but to assist in his support whilst he was undergoing that training. How he chose to organize his life and expenditure during the period of the part-time course was entirely a matter for him... One can readily imagine a case of an allowance entitlement to receive which was dependent upon its expenditure for specified purposes, unrelated to the ordinary incidents of life, so as to entail the conclusion that either the whole of it, or some proportion of it, could not fairly be regarded as a net receipt 'for his own use and benefit' , within the meaning which the Full Court in Haldane-Stevenson's case ascribed to the definition..." (emphasis added) 46 A strong analogy can be drawn between the case before me and the case hypothesised by Burchett J in Marsh 12 FCR 100 - namely circumstances where income received is subject to the requirement of expenditure for certain purposes. The facts before me however may be distinguished from those in Marsh 12 FCR 100 where the manner in which the relevant employee spent his training allowance was a matter of choice for him.


case_title: Mutual Acceptance Co Ltd v Federal Commissioner of Taxation [1944] HCA 34 ; (1944) 69 CLR 389


case_text: Interestingly, the meaning of the phrase "own use or benefit" in s 8(1) of the Act has not previously been the subject of judicial decision in this Court, although it has been raised in argument in a number of cases without the need for the Court to make a decision (for example, in Secretary Department of Social Security v Davies [1997] 1024 FCA; Nelson v Secretary, Department of Social Security (Bowen CJ, Toohey and French JJ, 10 December 1986)).


case_text: The AAT affirmed the decision of the SSAT. Deputy President Hack in the AAT identified the key issue as whether a contractual obligation on the part of an employee to make good till shortfalls should be taken into account in determining the employee's income from that employment. It is useful to set out in full relevant observations from the AAT decision: "[19] As it seems to me, the critical issue for determination is whether Ms Richards ordinary income was the nominal amount calculated by reference to a number of hours at an hourly rate or the actual rate that is the nominal amount less any shortfall that Ms Richards had to make good. In my view the employment contract between Ms Richards and the Hotel was one where Ms Richards' wages were determined by reference to three factors - the number of hours worked in a week, an hourly rate and any till shortages. It is unnecessary for present purposes to determine whether it was lawful for the employer to oblige Ms Richards to make good the shortfall, rather the question is whether in circumstances where she did make good the shortfall her gross ordinary income was the nominal amount or the actual amount. [20] In Secretary, Department of Social Security v McLaughlin (1997) 81 FCR 35 at page 42 French J said, "The definitions of 'income' and 'income amount' in the Social Security Act indicate that like their statutory predecessors they are of wide application. This meets the public policy requirement that 'public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide' - Read v Commonwealth [1988] HCA 26 ; (1988) 167 CLR 57 at 69 (Brennan J)." His Honour went on to make the point that the concept of income in the Act is entirely different from that embodied in the comparable provisions of the Income Tax Assessment Act 1936 . ... [21] At pages 43-44 his Honour said, "The definition of 'income' extends to income amounts 'received' by a person. There is no requirement in the Act that such amounts are received in exchange for anything. They may therefore extend to gifts. This is reinforced by the extension of the definition of 'income' to 'a periodical payment by way of gift or allowance.' There is no requirement in the definition for the payment received to constitute a net gain. Absent such a requirement a payment of money received by a person for that person's own use or benefit is a payment of an income amount." [22] In my view the key to the present issue is to ask whether the amounts that went to making up the shortfall in the till were amounts that were received to Ms Richards' own use or benefit. That is so I consider because the definition of gross ordinary income in s 1072 of the Act incorporates the s 8 definition of income relevantly an amount earned, derived or received by a person for the person's own use or benefit. Thus s 1072 looks at income earned, derived or received for the use or benefit of the person in issue. It is in my view not to the point that s 1072 goes on to speak of 'without any reduction.' To treat the amounts of shortfall in this way simply recognises the reality that those sums were not received by Ms Richards for her own use or benefit. There was at best a nominal receipt but given that Ms Richards used those sums to satisfy her contractual obligation to make good shortfalls it could not be said that in any real sense she earned, derived or received those sums or that she had the use or benefit of them. [23] The Secretary was unable to identify any benefit to Ms Richards from these amounts beyond the benefit of retaining her employment. I do not think, with respect, that that could be seen as a benefit of the type contemplated by the definition of income in s 8. [24] It follows that in my view the decision of the Social Security Appeals Tribunal was correct and ought to be affirmed." 32 Third, the concept of "income" under the Act is broad. As Brennan J observed in Read v The Commonwealth [1988] HCA 26 ; (1988) 167 CLR 57 at 69 in relation to the definition of "income" under the Social Security Act 1947 (Cth) (which in the context of the proceedings before me is not materially different to the definition of income in s 8 of the Act): "The definition is exhaustive: the term 'income' means what it is defined to mean; it does not mean what 'income' would be understood to mean if the definition were not in the Act. The definition is couched in the widest terms, presumably to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide." (I note that Brennan J was in dissent in his judgment in Read [1988] HCA 26 ; 167 CLR 57. However, like Foster J in Secretary to the Department of Social Security v Cuneen [1997] 1033 FCA, I do not read the other judgments in Read [1988] HCA 26 ; 167 CLR 57 as differing from Brennan J's construction of the meaning of "income"). 34 In relation to the concept of income being "earned, derived or received", it is clear that: • the use of the verbs "earned", "derived" and "received" in juxtaposition in the definition of "income" in the Act suggests that each was intended to have a different meaning: Sheppard J in Inguanti v Secretary, Department of Social Security (1988) 80 ALR 307 at 311 • income cannot be "earned, derived or received" unless it is also realised: Read 167 CLR per Mason CJ, Deane and Gaudron JJ at 67 • income can be realised - and hence received - even if temporarily it is not accessible: Rose 21 FCR at 245 • income can be "derived" within the meaning of s 8(1) even if it is not at that time received ( Inguanti 80 ALR at 311) • "earned" relates to personal earnings and profits ( Inguanti 80 ALR at 310). 44 Fifth, in interpreting the phrase "own use or benefit" it is clear that the obligation of the respondent in this case can be contrasted, for example, with payments made by a person as a result of arrangements otherwise within his or her control, such as outgoings on residential properties of the person which constitute an expense in generating rental income on those properties. As pointed out by the Full Court in Garvey 22 FCR at 136 in relation to such circumstances, "It was not the purpose of the Act to provide a further source of income for a person who had applied his or her income to maintain a business conducted at a loss or upon outgoings incurred in acquiring or maintaining assets. (See Read v Commonwealth [1988] HCA 26 ; (1988) 167 CLR 57 per Brennan J (at p 69)."


case_text: First, the Act is remedial legislation in that it gives benefits to persons and thereby remedies Parliament's perceptions of social injustice (Social Services Consolidation Bill (Cth), Second reading speech, 15 May 1947, Minister for Health and Social Services, the Hon Senator McKenna). Accordingly, it calls for no narrow or pedantic construction: Lockhart, Gummow and Einfeld JJ in Rose v Secretary, Department of Social Security (1990) 21 FCR 241 at 244, Secretary, Department of Social Security v "SRA" (1993) 43 FCR 299 per Black CJ at 303 (for similar observations, I also note Director-General of Social Services v Hales (1983) 47 ALR 281 per Sheppard J at 321 and Secretary, Department of Family and Community Services v Geeves [2004] FCAFC 166 at para 53). 31 Second, however, the settled rules of construction apply to the Act , and ordinary words used in the Act should receive their ordinary and natural meaning unless, in accordance with accepted rules of statutory construction, there is good reason to prefer some other meaning (Black CJ in SRA 43 FCR at 303, Rose 21 FCR at 244). 34 In relation to the concept of income being "earned, derived or received", it is clear that: • the use of the verbs "earned", "derived" and "received" in juxtaposition in the definition of "income" in the Act suggests that each was intended to have a different meaning: Sheppard J in Inguanti v Secretary, Department of Social Security (1988) 80 ALR 307 at 311 • income cannot be "earned, derived or received" unless it is also realised: Read 167 CLR per Mason CJ, Deane and Gaudron JJ at 67 • income can be realised - and hence received - even if temporarily it is not accessible: Rose 21 FCR at 245 • income can be "derived" within the meaning of s 8(1) even if it is not at that time received ( Inguanti 80 ALR at 311) • "earned" relates to personal earnings and profits ( Inguanti 80 ALR at 310).


case_title: Secretary, Department of Family and Community Services v Geeves [2004] FCAFC 166


case_title: Secretary Department of Social Security v Davies [1997] 1024 FCA


case_text: Fourth, it is important to note that the concept of "income" under the Act is not to be equated with "income" under income tax legislation: Haldane-Stevenson v Director-General of Social Services (1985) 9 FCR 73 per McGregor and Pincus JJ at 75 and Davies J at 80. It is an act which provides for income maintenance : Davies J in Haldane-Stevenson 9 FCR at 80; Morling, Hartigan and Lee JJ in Secretary, Department of Social Security v Garvey (1989) 22 FCR 132 at 136; cf comments of O'Loughlin J in Barry v Repatriation Commission (1993) 41 FCR 529 at 532. "Earned, derived or received" 44 Fifth, in interpreting the phrase "own use or benefit" it is clear that the obligation of the respondent in this case can be contrasted, for example, with payments made by a person as a result of arrangements otherwise within his or her control, such as outgoings on residential properties of the person which constitute an expense in generating rental income on those properties. As pointed out by the Full Court in Garvey 22 FCR at 136 in relation to such circumstances, "It was not the purpose of the Act to provide a further source of income for a person who had applied his or her income to maintain a business conducted at a loss or upon outgoings incurred in acquiring or maintaining assets. (See Read v Commonwealth [1988] HCA 26 ; (1988) 167 CLR 57 per Brennan J (at p 69)." 48 Finally, in my view a construction of the phrase which would characterise moneys required to be repaid to the employer as being for the employee's "own use and benefit" is at odds with the purpose of the Act to maintain a basic level of income for those who are unable to receive sufficient income to provide for themselves ( Garvey 22 FCR at 136, Secretary, Department of Social Security v McLaughlin (1998) 81 FCR 35 at 42). Such an arrangement means that the money paid by the employee to the employer is not actually usable by the employee as income, and cannot be taken into consideration in any realistic way in maintaining a basic level of income for the employee. Contrary to the submissions of the applicant, I do not find the reporting by the Hotel for superannuation purposes helpful in this context. Secretary, Department of Social Security v McLaughlin


case_text: The AAT affirmed the decision of the SSAT. Deputy President Hack in the AAT identified the key issue as whether a contractual obligation on the part of an employee to make good till shortfalls should be taken into account in determining the employee's income from that employment. It is useful to set out in full relevant observations from the AAT decision: "[19] As it seems to me, the critical issue for determination is whether Ms Richards ordinary income was the nominal amount calculated by reference to a number of hours at an hourly rate or the actual rate that is the nominal amount less any shortfall that Ms Richards had to make good. In my view the employment contract between Ms Richards and the Hotel was one where Ms Richards' wages were determined by reference to three factors - the number of hours worked in a week, an hourly rate and any till shortages. It is unnecessary for present purposes to determine whether it was lawful for the employer to oblige Ms Richards to make good the shortfall, rather the question is whether in circumstances where she did make good the shortfall her gross ordinary income was the nominal amount or the actual amount. [20] In Secretary, Department of Social Security v McLaughlin (1997) 81 FCR 35 at page 42 French J said, "The definitions of 'income' and 'income amount' in the Social Security Act indicate that like their statutory predecessors they are of wide application. This meets the public policy requirement that 'public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide' - Read v Commonwealth [1988] HCA 26 ; (1988) 167 CLR 57 at 69 (Brennan J)." His Honour went on to make the point that the concept of income in the Act is entirely different from that embodied in the comparable provisions of the Income Tax Assessment Act 1936 . ... [21] At pages 43-44 his Honour said, "The definition of 'income' extends to income amounts 'received' by a person. There is no requirement in the Act that such amounts are received in exchange for anything. They may therefore extend to gifts. This is reinforced by the extension of the definition of 'income' to 'a periodical payment by way of gift or allowance.' There is no requirement in the definition for the payment received to constitute a net gain. Absent such a requirement a payment of money received by a person for that person's own use or benefit is a payment of an income amount." [22] In my view the key to the present issue is to ask whether the amounts that went to making up the shortfall in the till were amounts that were received to Ms Richards' own use or benefit. That is so I consider because the definition of gross ordinary income in s 1072 of the Act incorporates the s 8 definition of income relevantly an amount earned, derived or received by a person for the person's own use or benefit. Thus s 1072 looks at income earned, derived or received for the use or benefit of the person in issue. It is in my view not to the point that s 1072 goes on to speak of 'without any reduction.' To treat the amounts of shortfall in this way simply recognises the reality that those sums were not received by Ms Richards for her own use or benefit. There was at best a nominal receipt but given that Ms Richards used those sums to satisfy her contractual obligation to make good shortfalls it could not be said that in any real sense she earned, derived or received those sums or that she had the use or benefit of them. [23] The Secretary was unable to identify any benefit to Ms Richards from these amounts beyond the benefit of retaining her employment. I do not think, with respect, that that could be seen as a benefit of the type contemplated by the definition of income in s 8. [24] It follows that in my view the decision of the Social Security Appeals Tribunal was correct and ought to be affirmed." 48 Finally, in my view a construction of the phrase which would characterise moneys required to be repaid to the employer as being for the employee's "own use and benefit" is at odds with the purpose of the Act to maintain a basic level of income for those who are unable to receive sufficient income to provide for themselves ( Garvey 22 FCR at 136, Secretary, Department of Social Security v McLaughlin (1998) 81 FCR 35 at 42). Such an arrangement means that the money paid by the employee to the employer is not actually usable by the employee as income, and cannot be taken into consideration in any realistic way in maintaining a basic level of income for the employee. Contrary to the submissions of the applicant, I do not find the reporting by the Hotel for superannuation purposes helpful in this context. Secretary, Department of Social Security v McLaughlin 49 The applicant relied in its submissions on the decision of French J in McLaughlin 81 FCR 35. In that case the respondents, who had carried on business as milk vendors for a number of years, received $121,950 from the Western Australian Dairy Industry Authority under an industry deregulation scheme, in consideration for an undertaking of the respondents to have no involvement in the milk distribution or milk vending businesses in Western Australia for three years. The AAT found on the facts that the arrangement was for the Authority to pay the principal sum to the respondents without any intention that the respondents repay the money, but subject to a contractual term in the event of a breach of covenant giving the Authority the discretion to recover a similar amount. French J held that the amounts received by the respondents were "income" within the Act, notwithstanding that they had been not been received in exchange for anything; further his Honour accepted that the amounts had been received for the respondents' own use or benefit (at 44). However in my view the facts of the case before me are distinguishable from McLaughlin 81 FCR 35, in that: • whereas the income in fact earned, derived or received by the respondent in these proceedings was determined by reference to, inter alia , till shortfalls - • in McLaughlin 81 FCR 35 the power of the Authority to demand repayment of the amount paid to the respondents would appear to have required a determination that there had in fact been a breach of a term of the contract by the respondents; further the terms of the agreement between the Authority and the respondent stated that, if the Authority did not seek repayment by the respondents before a certain time, the respondents were not liable to repay any amounts paid by the Authority. Other than the provision with respect to possible breach of contract, there appeared to be no limitation on the entitlement of the respondents to deal with the moneys paid by the Authority as they chose. 50 In identifying whether amounts received are for the "own use and benefit" of the recipient, there is in my view a substantial difference between: • the obligation of the respondent to "make good" till shortfalls (however incurred) arising in the course of her employment, which in turn determines the income of the respondent, as was the case here, and • the contractual power of the Authority in McLaughlin 81 FCR 35 to demand repayment of paid amounts being limited to a period of time, and dependent upon a breach by the respondents of any terms of the agreement, but which power depended upon identification of such "breach" having taken place as a matter of contract law. 51 Accordingly, contrary to the submissions of the applicant I do not find the decision in McLaughlin 81 FCR 35 helpful in identifying whether moneys received by respondent in the case before me were for her "own use and benefit". $1,300 TAB till shortfall 52 The applicant also submitted that the circumstances surrounding the repayment by the respondent to the Hotel of a till shortfall of $1,300 and subsequent reimbursement of that sum by the Hotel highlights the error in the Tribunal's approach. However in my view it is clear that if moneys representing TAB till shortfalls are paid by the employee to the employer, but subsequently refunded to the employee - as occurred in relation to the $1,300 the subject of the fraud perpetrated on the Hotel - it is at the point they are refunded to the employee that they become income amounts for the own use and benefit of the employee. In those circumstances where the employee is in receipt of Centrelink benefits the employee at that point is required to advise Centrelink of the receipt of that income, because it is only at that point that the money becomes income for the employee's "own use and benefit" within the meaning of the Act. I find no error in the reasoning of Deputy President Hack in relation to this issue. 53 In light of my findings in this case the appropriate order is that the appeal be dismissed. I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. Associate: Dated: 9 November 2007 Counsel for the Applicant: E Ford Solicitor for the Applicant: Australian Government Solicitor Counsel for the Respondent: JA Logan SC Solicitor for the Respondent: Welfare Rights Centre Date of Hearing: 8 November 2006 Date of Judgment: 9 November 2007 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/1710.html


case_text: First, the Act is remedial legislation in that it gives benefits to persons and thereby remedies Parliament's perceptions of social injustice (Social Services Consolidation Bill (Cth), Second reading speech, 15 May 1947, Minister for Health and Social Services, the Hon Senator McKenna). Accordingly, it calls for no narrow or pedantic construction: Lockhart, Gummow and Einfeld JJ in Rose v Secretary, Department of Social Security (1990) 21 FCR 241 at 244, Secretary, Department of Social Security v "SRA" (1993) 43 FCR 299 per Black CJ at 303 (for similar observations, I also note Director-General of Social Services v Hales (1983) 47 ALR 281 per Sheppard J at 321 and Secretary, Department of Family and Community Services v Geeves [2004] FCAFC 166 at para 53). 31 Second, however, the settled rules of construction apply to the Act , and ordinary words used in the Act should receive their ordinary and natural meaning unless, in accordance with accepted rules of statutory construction, there is good reason to prefer some other meaning (Black CJ in SRA 43 FCR at 303, Rose 21 FCR at 244).


case_text: Third, the concept of "income" under the Act is broad. As Brennan J observed in Read v The Commonwealth [1988] HCA 26 ; (1988) 167 CLR 57 at 69 in relation to the definition of "income" under the Social Security Act 1947 (Cth) (which in the context of the proceedings before me is not materially different to the definition of income in s 8 of the Act): "The definition is exhaustive: the term 'income' means what it is defined to mean; it does not mean what 'income' would be understood to mean if the definition were not in the Act. The definition is couched in the widest terms, presumably to ensure that public expenditure is directed to those who stand in actual need of the periodic support which income-related pensions provide." (I note that Brennan J was in dissent in his judgment in Read [1988] HCA 26 ; 167 CLR 57. However, like Foster J in Secretary to the Department of Social Security v Cuneen [1997] 1033 FCA, I do not read the other judgments in Read [1988] HCA 26 ; 167 CLR 57 as differing from Brennan J's construction of the meaning of "income").


case_text: The applicant submitted that the AAT had erred in ignoring the words "gross" and "from all sources", and had (in error) focused in isolation on the s 8(1) definition of "income". However no error was demonstrated by the AAT's approach. As I have held, the threshold issue in relation to identifying ordinary income is determining whether it is actually " income " within the meaning of the Act . Once income is identified, ordinary income can be calculated in accordance with s 1072 by reference to the gross income from all sources for the relevant period without reduction other than reduction under Div 1A of the Act . Expressed another way, the adjective "gross" applies to income once it is identified as income. An example of the application of this principle is in Watson v Secretary, Department of Family and Community Services [2003] FCA 415 where Finn J considered whether payments received by the applicant in that case under an income protection policy bore the character of ordinary income of the applicant's business so as to allow the reduction for losses and outgoings permitted by Div 1A. In that case his Honour, correctly in my opinion, accepted the submissions of the parties that the relevant moneys in that case were "income" within the meaning of the Act . Similarly in this case, the first question is whether the moneys received in this case, in particular the moneys repaid by the respondent to the applicant, actually constitute "income" within the meaning of s 8(1). 28 This question was clearly viewed by the SSAT and the AAT as the key issue in this case. Indeed in considering whether the respondent's ordinary income included these sums, the question may be recharacterised as whether the sums subsequently repaid by the respondent to the Hotel in respect of TAB till shortfalls constituted income amounts earned, derived or received by the respondent for her own use or benefit. In this respect, as I indicated earlier in this judgment, this question subsumes question of law 4 posed by the applicant, and I will consider both questions of law 3 and 4 together. "Income" under the Act : general principles 29 In considering the meaning of "income" as defined by the Act , a number of propositions are clear.


case_text: At [70] to [72] (pp 83 and 84), their Honours went on to explain the similarities and differences between the test expounded in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; 118 CLR 618 and the test articulated in American Cyanamid Co v Ethicon Ltd [1975] UKHL 1 ; [1975] AC 396 as follows: 70 When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase "serious question" if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham , depends upon the considerations emphasised in Beecham . 71 However, a difference between this Court in Beecham and the House of Lords in American Cyanamid lies in the apparent statement by Lord Diplock that, provided the court is satisfied that the plaintiff's claim is not frivolous or vexatious, then there will be a serious question to be tried and this will be sufficient. The critical statement by his Lordship is "[t]he court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried" [1975] UKHL 1 ; [[1975] AC 396 at 407]. That was followed by a proposition which appears to reverse matters of onus [1975] UKHL 1 ; [[1975] AC 396 at 408]: So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought. (Emphasis added.) Those statements do not accord with the doctrine in this Court as established by Beecham and should not be followed. They obscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. 72 The second of these matters, the reference to practical consequences, is illustrated by the particular considerations which arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour of whichever party succeeded on that application [See the judgment of McLelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535-536 and the article by Sofronoff, " Interlocutory Injunctions Having Final Effect ", Australian Law Journal, vol 61 (1987) 341.95]. The first consideration mentioned in Beecham , the nature of the rights asserted by the plaintiff, redirects attention to the present appeal.


case_outcome: followed

case_text: In Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 ; (2001) 208 CLR 199 , a majority of the High Court held that, where an interlocutory injunction is sought (inter alia) in respect of private rights, it is necessary to identify the legal or equitable rights which are to be determined at the trial and in respect of which the final relief is sought. Their Honours who comprised the majority made clear that the final relief sought need not be injunctive in nature. See [8] to [21] (pp 216 220) (per Gleeson CJ); [59] to [61] (pp 231 232) (per Gaudron J); and [86] to [92] (pp 239 242); [98] to [100] (pp 244 246); and [105] (p 248) (per Gummow and Hayne JJ). At [10] (p 216), Gleeson CJ also specifically cited with approval Spry, The Principles of Equitable Remedies , 5th edn, 1997 (pp 446 456).


case_text: In Australian Broadcasting Corporation v O'Neill [2006] HCA 46 ; (2006) 227 CLR 57 at [65] (pp 81 82), when referring to the well-known passage in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; 118 CLR 618 at 622 623, Gummow and Hayne JJ said: 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) [1968] HCA 1 ; 118 CLR 618 at 620]. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal [1968] HCA 1 ; [(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."


case_text: These remarks of Mason ACJ which were approved by Gleeson CJ echo the observations made by the High Court in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; (1968) 118 CLR 618 at 622 623. 22 In Australian Broadcasting Corporation v O'Neill [2006] HCA 46 ; (2006) 227 CLR 57 at [65] (pp 81 82), when referring to the well-known passage in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; 118 CLR 618 at 622 623, Gummow and Hayne JJ said: 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) [1968] HCA 1 ; 118 CLR 618 at 620]. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal [1968] HCA 1 ; [(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." 23 At [70] to [72] (pp 83 and 84), their Honours went on to explain the similarities and differences between the test expounded in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1 ; 118 CLR 618 and the test articulated in American Cyanamid Co v Ethicon Ltd [1975] UKHL 1 ; [1975] AC 396 as follows: 70 When Beecham and American Cyanamid are read with an understanding of the issues for determination and an appreciation of the similarity in outcome, much of the assumed disparity in principle between them loses its force. There is then no objection to the use of the phrase "serious question" if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham , depends upon the considerations emphasised in Beecham . 71 However, a difference between this Court in Beecham and the House of Lords in American Cyanamid lies in the apparent statement by Lord Diplock that, provided the court is satisfied that the plaintiff's claim is not frivolous or vexatious, then there will be a serious question to be tried and this will be sufficient. The critical statement by his Lordship is "[t]he court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried" [1975] UKHL 1 ; [[1975] AC 396 at 407]. That was followed by a proposition which appears to reverse matters of onus [1975] UKHL 1 ; [[1975] AC 396 at 408]: So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought. (Emphasis added.) Those statements do not accord with the doctrine in this Court as established by Beecham and should not be followed. They obscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. 72 The second of these matters, the reference to practical consequences, is illustrated by the particular considerations which arise where the grant or refusal of an interlocutory injunction in effect would dispose of the action finally in favour of whichever party succeeded on that application [See the judgment of McLelland J in Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535-536 and the article by Sofronoff, " Interlocutory Injunctions Having Final Effect ", Australian Law Journal, vol 61 (1987) 341.95]. The first consideration mentioned in Beecham , the nature of the rights asserted by the plaintiff, redirects attention to the present appeal.


case_text: In his Reasons for Judgment, at [13] (p 218), Gleeson CJ expressly approved the following passage from the Reasons for Judgment of Mason ACJ in Castlemaine Tooheys Ltd v South Australia [1986] HCA 58 ; (1986) 161 CLR 148 at 153: In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that 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; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction. 25 The remaining questions identified by Mason ACJ in Castlemaine Tooheys Ltd v South Australia [1986] HCA 58 ; 161 CLR 148 require Sebel to show that: (a) it will suffer irreparable injury for which damages will not be adequate compensation unless an injunction is granted; and (b) the balance of convenience favours the granting of an injunction. 26 The first of these matters involves an assessment by the Court as to whether the claimant would, in all material respects, be in as good a position if he were confined to his damages remedy, as he would be in if an injunction were granted (see the discussion of this aspect in Spry, The Principles of Equitable Remedies , 7th edn, 2007 at pp 383 389; at pp 397 399; and at pp 457 462). 27 The second of these matters requires the Court to exercise a discretion.


case_text: The tort of passing off is notoriously difficult to define. A Full Court of this Court in Conagra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 explained the history, meaning and current relevance of the tort. At 355.8 356.2, Gummow J said: In Reckitt & Colman Products Ltd v Borden Inc [1990] UKHL 12 ; [1990] RPC 341 at 406, Lord Oliver of Aylmerton formulated the essential elements in a passing-off action without referring specifically to earlier authority. Now, Nourse LJ (in Consorzio del Prosciutto di Parma v Marks and Spencer plc [1991] RPC 351 at 368-369) has said that the formulations by Lord Diplock and Lord Fraser had not in his experience given the same degree of assistance in analysis and decision as "the classical trinity" of (1) reputation (2) misrepresentation and (3) damage. Nourse LJ regards what was said in the Borden case (supra) as signalling a "welcome return to the classical approach". It is neither necessary nor appropriate for us to comment upon these vicissitudes of the recent English case law. But it is to be observed that the law of passing off contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in short form. However, "the classical trinity" does serve to emphasise three core concepts in this area of the law. This appeal is concerned with all of them, namely, the geographical requirements for a sufficient reputation, the nature of the interests damaged, and the significance of fraud in the making of the misrepresentation. 166 More recently, in Hansen Beverage Co v Bickfords (Australia) Pty Ltd [2008] FCAFC 181 , another Full Court of this Court said (at [34] to [37]): 34 In order to succeed in a passing off action, an applicant must establish, as one element of tort existing as at the date when the conduct commenced, that the applicant had the requisite reputation in the name or goods in the jurisdiction of the respondent and that there is a likelihood of deception among consumers or potential consumers resulting from the respondent's actions. An applicant must prove that there are, within the relevant jurisdiction, a substantial number of persons who were aware of the applicant's name or product and are possible consumers. It is necessary to show in a practical and business sense a sufficient reputation in the forum and this requires an evaluation of the size and distribution of the population of prospective consumers likely to be affected: see ConAgra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 at 342, 343, 346 (per Lockhart J), and 380 (per French J). 35 The tort of passing off is designed to protect the property and goodwill of a business. It is only available where an applicant can show goodwill or reputation in relation to the name or get-up of his or her goods or services because they have become distinctive of his goods or services in a particular market. An applicant will succeed where he or she can show that a potential customer is likely to be misled into believing that the respondents' goods are goods of the applicant or are somehow associated with the applicant: see Cadbury-Schweppes Pty Limited v Pub Squash Co Pty Limited (1980) 32 ALR 387 at 393. 36 In Conagra 33 FCR at 381, in relation to a claim under the TPA, French J referred to the expression "a not insignificant number" of persons who would be potential customers as being an appropriate criterion. His Honour went on to observe that if the similarity complained of is "commercially irrelevant", having regard to the number of people who know of that similarity, then the name or get-up is not misleading or deceptive. 37 In considering the question of reputation, although s 52 of the TPA makes no reference to "reputation", decisions under that provision have referred to the need to prove a "significant" or "substantial" proportion of persons within the relevant market who would be likely to be misled: see 10th Cantanae Pty Ltd v Shoshana Pty Limited (1987) 79 ALR 299 at 301; National Exchange Pty Ltd v Australian Securities & Investments Commission (2004) 61 IPR 420 at 440; cf .au Domain Administration Ltd v Domain Names Australia Pty Limited [2004] FCA 424 ; (2004) 207 ALR 521 at 529-530.


case_text: In Global Brand Marketing Inc v YD Pty Limited (2008) 76 IPR 161 at [62] to [64] (pp 175 176), Sundberg J set out the principles relevant to the use of a shape as a trade mark as follows: 61 The principles relevant to use of shape as a trade mark are now set out. (a) A special shape which is the whole or part of goods may serve as a badge of origin. However the shape must have a feature that is "extra" and distinct from the inherent form of the particular goods: Mayne at [67], Remington at [16] and Kenman Kandy at [137]. (b) Non-descriptive features of a shape point towards a finding that such features are used for a trade mark purpose. Where features are striking, trade mark use will more readily be found. For example, features that make goods more arresting of appearance and more attractive may distinguish the goods from those of others: All-Fect at [25]. (c) Descriptive features, like descriptive words, make it more difficult to establish that those features distinguish the product. For example, the word COLA or an ordinary straight walled bottle are descriptive features that would have limited trade mark significance: All-Fect at [25] and Mayne at [61] [62]. (d) Where the trade mark comprises a shape which involves a substantial functional element in the goods, references to the shape are almost certainly to the nature of the goods themselves rather than use of the shape as a trade mark: Mayne at [63]. For example, evidence that a shape was previously patented will weigh against a finding that the shape serves as a badge of origin: Remington at [12] and Mayne at [69]. (e) If a shape or a feature of a shape is either concocted compared to the inherent form of the shaped goods or incidental to the subject matter of a patent, it is unlikely to be a shape having any functional element. This may point towards the shape being used as a trade mark: Kenman Kandy at [162] and Mayne at [69]. (f) Whether a person has used a shape or a feature of a shape as a trade mark is a matter for the court, and cannot be governed by the absence of evidence on the point: All-Fect at [35]. (g) Context "is all important" and will typically characterise the mark's use as either trade mark use or not: Remington at [19] and Mayne at [60] [62]. 62 As is apparent from the foregoing propositions, a shape mark case may require consideration of different types of features in determining whether the mark is used as a trade mark for the purposes of the Act. At one end of the spectrum are shapes or features thereof that are purely functional. The features may have derived substantially from a patented product, such as the S-shaped fence dropper, or go to the usefulness of the product: Remington at [3] and [12]. Cases such as Mayne and Remington show that such features point away from trade mark use. 63 At the other end of the spectrum are those features of a mark that are non-descriptive and non-functional. They ordinarily make the shape more arresting of appearance and more attractive, thus providing a means of distinguishing the goods from those of others. All-Fect and Remington show that non-functional features add something extra to the inherent form of the shape. A concocted feature will typically be considered non-functional: Kenman Kandy . 64 Finally, there will be cases, such as the present, that fall between the ends of the spectrum. These cases are not black and white. They involve consideration of whether one set of features supersedes, submerges or overwhelms the other.


case_text: More recently, in Hansen Beverage Co v Bickfords (Australia) Pty Ltd [2008] FCAFC 181 , another Full Court of this Court said (at [34] to [37]): 34 In order to succeed in a passing off action, an applicant must establish, as one element of tort existing as at the date when the conduct commenced, that the applicant had the requisite reputation in the name or goods in the jurisdiction of the respondent and that there is a likelihood of deception among consumers or potential consumers resulting from the respondent's actions. An applicant must prove that there are, within the relevant jurisdiction, a substantial number of persons who were aware of the applicant's name or product and are possible consumers. It is necessary to show in a practical and business sense a sufficient reputation in the forum and this requires an evaluation of the size and distribution of the population of prospective consumers likely to be affected: see ConAgra Inc v McCain Foods (Aust) Pty Ltd [1992] FCA 159 ; (1992) 33 FCR 302 at 342, 343, 346 (per Lockhart J), and 380 (per French J). 35 The tort of passing off is designed to protect the property and goodwill of a business. It is only available where an applicant can show goodwill or reputation in relation to the name or get-up of his or her goods or services because they have become distinctive of his goods or services in a particular market. An applicant will succeed where he or she can show that a potential customer is likely to be misled into believing that the respondents' goods are goods of the applicant or are somehow associated with the applicant: see Cadbury-Schweppes Pty Limited v Pub Squash Co Pty Limited (1980) 32 ALR 387 at 393. 36 In Conagra 33 FCR at 381, in relation to a claim under the TPA, French J referred to the expression "a not insignificant number" of persons who would be potential customers as being an appropriate criterion. His Honour went on to observe that if the similarity complained of is "commercially irrelevant", having regard to the number of people who know of that similarity, then the name or get-up is not misleading or deceptive. 37 In considering the question of reputation, although s 52 of the TPA makes no reference to "reputation", decisions under that provision have referred to the need to prove a "significant" or "substantial" proportion of persons within the relevant market who would be likely to be misled: see 10th Cantanae Pty Ltd v Shoshana Pty Limited (1987) 79 ALR 299 at 301; National Exchange Pty Ltd v Australian Securities & Investments Commission (2004) 61 IPR 420 at 440; cf .au Domain Administration Ltd v Domain Names Australia Pty Limited [2004] FCA 424 ; (2004) 207 ALR 521 at 529-530.


case_text: Counsel also submitted that the respondent does not use the shape or appearance of the Titan chair as a trade mark. He submitted that the respondent merely sells the Titan chair in that shape and depicts the shape of the chair in its brochure for the purpose of describing or identifying the product which it sells. He submitted that the shape of the Titan chair does not contain features which are additional to the inherent form of the chair. He relied upon the decision of the Full Court of this Court in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; (2000) 100 FCR 90 as supporting the above propositions. 98 In addition, Counsel for the respondent submitted that Sebel had also failed to demonstrate that the Titan chair was deceptively similar to the Sebel trade mark because: (a) There was no evidence of confusion on the part of any person, even though the Titan chairs had been sold in the United Kingdom for over 12 months and in Australia for a month or so; (b) There were many differences between the Titan chair and the Postura chair which would make it inherently unlikely that the two would be confused or that a person would have cause to wonder whether they came from the same source. He pointed to the catalogue of differences between the Postura chair and the Titan chair set out in Mr Holmes' evidence as well as the labelling on the chair itself; (c) There was no foundation for any concern that the Titan chairs were being discounted or unfairly sold at a lower price; and (d) The typical consumer was a purchasing officer within an educational institution who was price conscious and who would pay special attention to the chairs when making his or her purchase decisions and thus would not be confused. 99 Senior Counsel for Sebel put the proposition that consumers would likely be confused and misled into thinking that the Titan chair and the Sebel Postura chair came from the same source (Sebel), given that Sebel has a substantial reputation in Australia in respect of its Postura range of chairs. 138 In Global Brand Marketing Inc v YD Pty Limited (2008) 76 IPR 161 at [62] to [64] (pp 175 176), Sundberg J set out the principles relevant to the use of a shape as a trade mark as follows: 61 The principles relevant to use of shape as a trade mark are now set out. (a) A special shape which is the whole or part of goods may serve as a badge of origin. However the shape must have a feature that is "extra" and distinct from the inherent form of the particular goods: Mayne at [67], Remington at [16] and Kenman Kandy at [137]. (b) Non-descriptive features of a shape point towards a finding that such features are used for a trade mark purpose. Where features are striking, trade mark use will more readily be found. For example, features that make goods more arresting of appearance and more attractive may distinguish the goods from those of others: All-Fect at [25]. (c) Descriptive features, like descriptive words, make it more difficult to establish that those features distinguish the product. For example, the word COLA or an ordinary straight walled bottle are descriptive features that would have limited trade mark significance: All-Fect at [25] and Mayne at [61] [62]. (d) Where the trade mark comprises a shape which involves a substantial functional element in the goods, references to the shape are almost certainly to the nature of the goods themselves rather than use of the shape as a trade mark: Mayne at [63]. For example, evidence that a shape was previously patented will weigh against a finding that the shape serves as a badge of origin: Remington at [12] and Mayne at [69]. (e) If a shape or a feature of a shape is either concocted compared to the inherent form of the shaped goods or incidental to the subject matter of a patent, it is unlikely to be a shape having any functional element. This may point towards the shape being used as a trade mark: Kenman Kandy at [162] and Mayne at [69]. (f) Whether a person has used a shape or a feature of a shape as a trade mark is a matter for the court, and cannot be governed by the absence of evidence on the point: All-Fect at [35]. (g) Context "is all important" and will typically characterise the mark's use as either trade mark use or not: Remington at [19] and Mayne at [60] [62]. 62 As is apparent from the foregoing propositions, a shape mark case may require consideration of different types of features in determining whether the mark is used as a trade mark for the purposes of the Act. At one end of the spectrum are shapes or features thereof that are purely functional. The features may have derived substantially from a patented product, such as the S-shaped fence dropper, or go to the usefulness of the product: Remington at [3] and [12]. Cases such as Mayne and Remington show that such features point away from trade mark use. 63 At the other end of the spectrum are those features of a mark that are non-descriptive and non-functional. They ordinarily make the shape more arresting of appearance and more attractive, thus providing a means of distinguishing the goods from those of others. All-Fect and Remington show that non-functional features add something extra to the inherent form of the shape. A concocted feature will typically be considered non-functional: Kenman Kandy . 64 Finally, there will be cases, such as the present, that fall between the ends of the spectrum. These cases are not black and white. They involve consideration of whether one set of features supersedes, submerges or overwhelms the other. 141 In Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; 100 FCR 90 , a Full Court of this Court had to consider whether the promotion and sale by Remington of Remington's triple headed electric shaver infringed Philips' registered trade marks which comprised two-dimensional depictions of three shaving heads in the shape of an equilateral triangle. One of the issues in that case was whether Remington's activities involved the use of a trade mark as a trade mark in relation to goods. In the circumstances of that case, the Court held that Remington's promotion and sale of its triple headed electric shaver did not constitute trade mark use. 142 In the course of dealing with these questions, Burchett J (with whom Hill and Branson JJ agreed), said ( Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; 100 FCR 90 at [11] and [12] (pp 100 101)): 11 A trade mark is defined in the Trade Marks Act 1995 by s 17 as "a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person". When that definition -- which accords with the basal doctrine of trade mark law: see the passage from the United States Supreme Court decision Estate of P D Beckwith, Inc v Commissioner of Patents (1920) 252 US 538 at 543 which is cited in Johnson & Johnson at 342 -- is required to be applied, regard should be had to a so-called inclusive definition of the word "sign" which is to be found in s 6: the word "includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent". Insofar as it is the use of a trade mark in relation to goods with which the Act is concerned, regard must be had also to s 7(4), by which it is provided: "In this Act: use of a trade mark in relation to goods means use of the trade mark upon, or in physical or other relation to, the goods (including second-hand goods)." The nature of the primary right conferred by the registration of a trade mark is stated in quite summary terms in s 20(1): "If a trade mark is registered, the registered owner of the trade mark has, subject to this Part, the exclusive rights: (a) to use the trade mark; and (b) to authorise other persons to use the trade mark; in relation to the goods and/or services in respect of which the trade mark is registered." It will be observed that this subsection follows the practice, to which Kitto J alluded in Shell Co of Australia Ltd , of omitting to specify that the exclusive right of use is a right to use as a trade mark; however, having regard to the legislative history and the unvarying course of authority, the right must be understood to be so limited. In any case, and somewhat inconsistently, Parliament did decide to specify the nature of the use involved when it came to deal with the subject of infringement. Section 120 provides: "(1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. (2) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to: (a) goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or ." (Emphasis added in subs (1) and in the opening part of subs (2).) 12 In my opinion, merely to produce and deal in goods having the shape, being a functional shape, of something depicted by a trade mark (here the marks do depict, one more completely than the other, a working part of a triple rotary shaver) is not to engage in a "use" of the mark "upon, or in physical or other relation to, the goods" within s 7(4), or to "use" it "in relation to the goods" within s 20(1). "Use" and "use", in those contexts, convey the idea of employing the mark, (first) as something that can be "upon" or serve in a "relation" to the goods, (and secondly) so as to fulfil a purpose, being the purpose of conveying information about their commercial origin. The mark is added, as something distinct from the goods. It may be closely bound up with the goods, as when it is written upon them, or stamped into them, or moulded onto them (see Coca-Cola Co v All-Fect Distributors Ltd [1999] FCA 1721 ; (1999) 96 FCR 107 , or, in the case of a liquid, it may be sold in a container so formed as to constitute at once both container and mark. But in none of these cases is the mark devoid of a separate identity from that of the goods. The alternative ways of using a trade mark in relation to goods do not include simply using the goods themselves as the trade mark. The reason is plain: it is to be assumed that goods in the market are useful, and if they are useful, other traders may legitimately wish to produce similar goods (unless, of course, there are, for the time being, subsisting patent, design or other rights to prevent them from doing so), and it follows that a mark consisting of nothing more than the goods themselves could not distinguish their commercial origin, which is the function of a mark: Johnson & Johnson at 342 and 348-349. As Jacob J said of a "picture mark" in Philips Electronics NV v Remington Consumer Products at 292: "A picture of an article is equivalent to a description of it -- both convey information. If the picture is simply of an artefact which traders might legitimately wish to manufacture then to my mind it is just like the common word for it and, like the word for it, incapable of distinguishing." Even if such a mark achieves registration, that does not make the manufacture and sale of similar artefacts into a use of the mark as a trade mark; cf the remarks, quoted above, of Sargant LJ in Edward Young & Co Ld v Grierson Oldham & Co Ld at 579 about the effect of the registration of the word "port" in sloping capitals, remarks which seem to me to apply a fortiori. 144 The reasons of the Court in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; 100 FCR 90 make clear that: (a) Very often, the concept of use as a trade mark in relation to goods involves the physical application of the trade mark to the goods (eg by stamping or embossing thereon the manufacturer's name or logo) in order to state the origin of the goods for all to see. However, goods may be distinguished by other visible characteristics which they have (eg their shape or colour); (b) This concept of use as a trade mark usually involves the particular trade mark having an identity which is separate from the goods themselves; (c) Generally speaking, this notion of use does not include simply using the goods themselves as a trade mark because a mark consisting of nothing more than the goods themselves could not distinguish the commercial origin of those goods; (d) A shape which is dictated by the nature of the goods or by the need to achieve some particular technical result or functional outcome cannot operate as a trade mark. In order to function as a trade mark, the shape must be something which is extra or which is added to the inherent form of the particular goods as something distinct which can denote origin. A shape cannot function as a trade mark if it is something that other traders may legitimately wish to use either because it is inherent to the particular goods (ie it is of their nature ) or because it provides some technical or functional benefit to the goods. 145 As I understand Sebel's case, there are features of the shape of the Titan chair which are said by Sebel to constitute the use of that shape as a trade mark in relation to goods (namely, sidechairs moulded from plastic materials). Just exactly what those features are and how that use is said to arise were matters which were not made clear by Sebel at the hearing and are not at all clear to me now. 146 As the evidence presently stands, it seems to me that: (a) The alleged shape trade mark said to have been used by the respondent as a trade mark in relation to the Titan chair is not something which is distinct from the Titan chair but is rather of the essence of that chair; (b) The shape embodied in the Titan chair does not contain one or more features which are extra or additional to those which comprise or involve the functional elements of the Titan chair; (c) The shape is devoid of a separate identity from that of the Titan chair itself; and (d) The concept of using a trade mark in relation to goods does not include simply using the goods themselves as a trade mark. In the present case, the respondent is, at most, using or intending to use the Titan chair itself as the trade mark. 147 For these reasons, I am inclined to think that Sebel has failed to prove, even to a prima facie level, that the respondent has used a shape as a trade mark in relation to goods of the relevant class by reason of its promotion and sale of the Titan chair. 148 However, I am very conscious that I am presently dealing with an interlocutory application. For this reason, I am prepared to assume for the time being (without deciding) that Sebel has proven these matters to the requisite level. 180 These passages were cited and followed in Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; 100 FCR 90 (at [37] to [47] (pp 114 116), especially at [40] (pp 114 115). 181 For these reasons, I am of the view that Sebel has failed to establish a prima facie case of passing off. 182 There are two groups of Trade Practices Act claims.


case_text: In Global Brand Marketing Inc v YD Pty Limited (2008) 76 IPR 161 at [62] to [64] (pp 175 176), Sundberg J set out the principles relevant to the use of a shape as a trade mark as follows: 61 The principles relevant to use of shape as a trade mark are now set out. (a) A special shape which is the whole or part of goods may serve as a badge of origin. However the shape must have a feature that is "extra" and distinct from the inherent form of the particular goods: Mayne at [67], Remington at [16] and Kenman Kandy at [137]. (b) Non-descriptive features of a shape point towards a finding that such features are used for a trade mark purpose. Where features are striking, trade mark use will more readily be found. For example, features that make goods more arresting of appearance and more attractive may distinguish the goods from those of others: All-Fect at [25]. (c) Descriptive features, like descriptive words, make it more difficult to establish that those features distinguish the product. For example, the word COLA or an ordinary straight walled bottle are descriptive features that would have limited trade mark significance: All-Fect at [25] and Mayne at [61] [62]. (d) Where the trade mark comprises a shape which involves a substantial functional element in the goods, references to the shape are almost certainly to the nature of the goods themselves rather than use of the shape as a trade mark: Mayne at [63]. For example, evidence that a shape was previously patented will weigh against a finding that the shape serves as a badge of origin: Remington at [12] and Mayne at [69]. (e) If a shape or a feature of a shape is either concocted compared to the inherent form of the shaped goods or incidental to the subject matter of a patent, it is unlikely to be a shape having any functional element. This may point towards the shape being used as a trade mark: Kenman Kandy at [162] and Mayne at [69]. (f) Whether a person has used a shape or a feature of a shape as a trade mark is a matter for the court, and cannot be governed by the absence of evidence on the point: All-Fect at [35]. (g) Context "is all important" and will typically characterise the mark's use as either trade mark use or not: Remington at [19] and Mayne at [60] [62]. 62 As is apparent from the foregoing propositions, a shape mark case may require consideration of different types of features in determining whether the mark is used as a trade mark for the purposes of the Act. At one end of the spectrum are shapes or features thereof that are purely functional. The features may have derived substantially from a patented product, such as the S-shaped fence dropper, or go to the usefulness of the product: Remington at [3] and [12]. Cases such as Mayne and Remington show that such features point away from trade mark use. 63 At the other end of the spectrum are those features of a mark that are non-descriptive and non-functional. They ordinarily make the shape more arresting of appearance and more attractive, thus providing a means of distinguishing the goods from those of others. All-Fect and Remington show that non-functional features add something extra to the inherent form of the shape. A concocted feature will typically be considered non-functional: Kenman Kandy . 64 Finally, there will be cases, such as the present, that fall between the ends of the spectrum. These cases are not black and white. They involve consideration of whether one set of features supersedes, submerges or overwhelms the other. 140 Similar observations were made by Greenwood J in Mayne Industries Pty Limited v Advanced Engineering Group Pty Limited (2008) 166 FCR 312 at [60] to [70] (pp 337 340).


case_text: As Gibbs CJ said in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 199 200: Speaking generally, the sale by one manufacturer of goods which closely resemble those of another manufacturer is not a breach of s 52 if the goods are properly labelled. There are hundreds of ordinary articles of consumption which, although made by different manufacturers and of different quality, closely resemble one another. In some cases this is because the design of a particular article has traditionally, or over a considerable period of time, been accepted as the most suitable for the purpose which the article serves. In some cases indeed no other design would be practicable. In other cases, although the article in question is the product of the invention of a person who is currently trading, the suitability of the design or appearance of the article is such that a market has become established which other manufacturers endeavour to satisfy, as they are entitled to do if no property exists in the design or appearance of the article. In all of these cases, the normal and reasonable way to distinguish one product from another is by marks, brands or labels. If an article is properly labelled so as to show the name of the manufacturer or the source of the article its close resemblance to another article will not mislead an ordinary reasonable member of the public. 178 Mason J (at 210 211) and Brennan J (at 224 226) expressed similar views. 179 The same reasoning would apply to passing off.


case_text: In Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30 ; (1998) 195 CLR 1 at [65] and [66] (pp 41 43), Brennan CJ and McHugh, Gummow, Kirby and Hayne JJ, in a joint judgment, expressly adopted a passage from Spry, The Principles of Equitable Remedies (5th edn, 1997, at pp 402 403), which may be summarised as follows: (a) In assessing the balance of convenience in an interlocutory injunction application, the interests of the public and third persons are relevant and have more or less weight according to other material circumstances; (b) Whether those interests tend to favour the grant or the refusal of an injunction in any given case depends upon the circumstances of that case; and (c) Hardship visited upon third persons or the public generally by the grant of an interlocutory injunction will rarely be decisive. 32 I will summarise the relevant facts under the following headings: • Sebel's Postura Chair • The Titan Chair • Sebel's Knowledge of the Titan Chair and Alleged Delay in Bringing its Application • The Sebel Postura Plus Chair • The Letter of Demand and Reed Furniture's Response • The Balance of Convenience 33 Sebel's Postura chair was developed by Sebel in the period 1992 to 1995. It was the product of extensive research carried out by Sebel in this period. The main design principles and special features sought to be reflected in Sebel's range of Postura chairs are illustrated by the following extract from Sebel's 1999 catalogue for the supply by it to NSW Government departments and other NSW authorities and institutions of education and training furniture under NSW Supply Contract 992/1250:


case_text: The relevant principles are gathered together by French J (as he then was) (with whom Tamberlin J agreed) in Registrar of Trade Marks v Woolworths Ltd [1999] FCAFC 1020 ; (1999) 93 FCR 365 at [49] and [50] (pp 382 383) as follows: 49 The question of fact for the Court on an appeal from the Registrar in a case of alleged deceptive similarity between marks was posed by the High Court in Australian Woollen Mills Ltd v F S Walton & Co Ltd at 658: "whether in fact there is such a reasonable probability of deception or confusion that the use of the new mark and title should be restrained." The reference to "restrained" reflects the fact that unlike this case the Australian Woollen Mills Ltd case was an appeal in an infringement action. The judgment of the likelihood of deception or confusion is a very practical one and what has long been accepted as the proper approach to making that judgment was set out in Australian Woollen Mills Ltd . It requires assessment of the effect of the challenged mark upon the minds of potential customers. Impression or recollection taken away from the point at which the challenged mark is observed will be the basis of any belief about a connection between the new and the old marks. The effect of spoken description must be considered. What confusion or deception may be expected is to be based upon the behaviour of ordinary people. As potential buyers of goods they are not to be credited with high perception or habitual caution. Exceptional carelessness or stupidity may be disregarded. The question ultimately is not susceptible of much discussion (at 659): "It depends on a combination of visual impression and judicial estimation of the effect likely to be produced in the course of the ordinary conduct of affairs." 50 In Southern Cross Refrigerating Co v Toowoomba Foundry Pty Ltd at 594-595, which concerned the 1905 Act, Kitto J set out a number of propositions which have frequently been quoted and applied to the 1955 Act. The essential elements of those propositions continue to apply to the issue of deceptive similarity under the 1995 Act. Applied also to service marks and absent the imposition of an onus upon the applicant they may be restated as follows: (i) To show that a trade mark is deceptively similar to another it is necessary to show a real tangible danger of deception or confusion occurring. A mere possibility is not sufficient. (ii) A trade mark is likely to cause confusion if the result of its use will be that a number of persons are caused to wonder whether it might not be the case that the two products or closely related products and services come from the same source. It is enough if the ordinary person entertains a reasonable doubt. It may be interpolated that this is another way of expressing the proposition that the trade mark is likely to cause confusion if there is a real likelihood that some people will wonder or be left in doubt about whether the two sets of products or the products and services in question come from the same source. (iii) In considering whether there is a likelihood of deception or confusion all surrounding circumstances have to be taken into consideration. These include the circumstances in which the marks will be used, the circumstances in which the goods or services will be bought and sold and the character of the probable acquirers of the goods and services. (iv) The rights of the parties are to be determined as at the date of the application. (v) The question of deceptive similarity must be considered in respect of all goods or services coming within the specification in the application and in respect of which registration is desired, not only in respect of those goods or services on which it is proposed to immediately use the mark. The question is not limited to whether a particular use will give rise to deception or confusion. It must be based upon what the applicant can do if registration is obtained. In respect of the last proposition, Mason J observed in Berlei Hestia Industries Ltd v Bali Co Inc [1973] HCA 43 ; (1973) 129 CLR 353 at 362: "the question whether there is a likelihood of confusion is to be answered, not by reference to the manner in which the respondent has used its mark in the past, but by reference to the use to which it can properly put the mark. The issue is whether that use would give rise to a real danger of confusion."


case_text: He submitted that, in the present case, the comparison is not a side by side comparison but one based upon imperfect recollection ( Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd (1963) 109 CLR 407 at 415). He further submitted that size and colour were irrelevant to the question of trade mark infringement. 96 Counsel for the respondent submitted that Sebel had failed to show that it had a prima facie case or serious question to be tried. Counsel submitted that no prima facie case had been shown because: (a) The features of Sebel's trade mark encompass nothing more than functional aspects of a one-piece polypropylene chair; (b) It is notorious that shape trade marks are difficult to enforce where their features cover functional aspects of design and the impugned use concerns functionality of the respondent's product; (c) There are substantial differences between the Titan chair and the Postura chair and these differences lead inevitably to the conclusion that they are not substantially identical; and (d) In any event, both the circumstances in which the respective chairs are bought and sold (ie price sensitive consumers making informed and often complex purchase decisions), and the manner in which the Titan chair is marketed and supplied (with the Titan trade mark and logo and Reed's brand), make the suggestion of deceptive similarity very tenuous. 142 In the course of dealing with these questions, Burchett J (with whom Hill and Branson JJ agreed), said ( Koninklijke Philips Electronics NV v Remington Products Australia Pty Ltd [2000] FCA 876 ; 100 FCR 90 at [11] and [12] (pp 100 101)): 11 A trade mark is defined in the Trade Marks Act 1995 by s 17 as "a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person". When that definition -- which accords with the basal doctrine of trade mark law: see the passage from the United States Supreme Court decision Estate of P D Beckwith, Inc v Commissioner of Patents (1920) 252 US 538 at 543 which is cited in Johnson & Johnson at 342 -- is required to be applied, regard should be had to a so-called inclusive definition of the word "sign" which is to be found in s 6: the word "includes the following or any combination of the following, namely, any letter, word, name, signature, numeral, device, brand, heading, label, ticket, aspect of packaging, shape, colour, sound or scent". Insofar as it is the use of a trade mark in relation to goods with which the Act is concerned, regard must be had also to s 7(4), by which it is provided: "In this Act: use of a trade mark in relation to goods means use of the trade mark upon, or in physical or other relation to, the goods (including second-hand goods)." The nature of the primary right conferred by the registration of a trade mark is stated in quite summary terms in s 20(1): "If a trade mark is registered, the registered owner of the trade mark has, subject to this Part, the exclusive rights: (a) to use the trade mark; and (b) to authorise other persons to use the trade mark; in relation to the goods and/or services in respect of which the trade mark is registered." It will be observed that this subsection follows the practice, to which Kitto J alluded in Shell Co of Australia Ltd , of omitting to specify that the exclusive right of use is a right to use as a trade mark; however, having regard to the legislative history and the unvarying course of authority, the right must be understood to be so limited. In any case, and somewhat inconsistently, Parliament did decide to specify the nature of the use involved when it came to deal with the subject of infringement. Section 120 provides: "(1) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered. (2) A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to: (a) goods of the same description as that of goods (registered goods) in respect of which the trade mark is registered; or ." (Emphasis added in subs (1) and in the opening part of subs (2).) 12 In my opinion, merely to produce and deal in goods having the shape, being a functional shape, of something depicted by a trade mark (here the marks do depict, one more completely than the other, a working part of a triple rotary shaver) is not to engage in a "use" of the mark "upon, or in physical or other relation to, the goods" within s 7(4), or to "use" it "in relation to the goods" within s 20(1). "Use" and "use", in those contexts, convey the idea of employing the mark, (first) as something that can be "upon" or serve in a "relation" to the goods, (and secondly) so as to fulfil a purpose, being the purpose of conveying information about their commercial origin. The mark is added, as something distinct from the goods. It may be closely bound up with the goods, as when it is written upon them, or stamped into them, or moulded onto them (see Coca-Cola Co v All-Fect Distributors Ltd [1999] FCA 1721 ; (1999) 96 FCR 107 , or, in the case of a liquid, it may be sold in a container so formed as to constitute at once both container and mark. But in none of these cases is the mark devoid of a separate identity from that of the goods. The alternative ways of using a trade mark in relation to goods do not include simply using the goods themselves as the trade mark. The reason is plain: it is to be assumed that goods in the market are useful, and if they are useful, other traders may legitimately wish to produce similar goods (unless, of course, there are, for the time being, subsisting patent, design or other rights to prevent them from doing so), and it follows that a mark consisting of nothing more than the goods themselves could not distinguish their commercial origin, which is the function of a mark: Johnson & Johnson at 342 and 348-349. As Jacob J said of a "picture mark" in Philips Electronics NV v Remington Consumer Products at 292: "A picture of an article is equivalent to a description of it -- both convey information. If the picture is simply of an artefact which traders might legitimately wish to manufacture then to my mind it is just like the common word for it and, like the word for it, incapable of distinguishing." Even if such a mark achieves registration, that does not make the manufacture and sale of similar artefacts into a use of the mark as a trade mark; cf the remarks, quoted above, of Sargant LJ in Edward Young & Co Ld v Grierson Oldham & Co Ld at 579 about the effect of the registration of the word "port" in sloping capitals, remarks which seem to me to apply a fortiori. 156 In the present case, the comparison is not a side-by-side comparison but one based upon imperfect recollection ( Shell Co of Australia Ltd v Esso Standard Oil (Australia) Ltd 109 CLR 407 at 415; see also Australian Woollen Mills Ltd v FS Walton & Co Ltd [1937] HCA 51 ; (1937) 58 CLR 641 at 658). 157 The impression produced in the mind of potential customers which is carried away must be that the challenged trade mark is the same as the registered trade mark. 158 Mr Holmes, on behalf of the respondent, undertook a comparison between the Postura chair and the Titan chair based upon observations which he made. He then produced a catalogue of observable differences between the two chairs in order to negate any question of deceptive similarity between Sebel's trade mark and Reed Furniture's so-called trade mark. Some of these differences are, in my view, barely noticeable. In any event, as Sebel submitted, the approach reflected in Mr Holmes' comparison is not the correct approach to the issue of deceptive similarity.