Federal Court Maintains Injunction Against Respondents Until Full Hearing

OUTCOME: Allowed

FEDERAL COURT OF [COMPANY] v [APPELLANT[COMPANY] [2010] FCA 368 Citation: [COMPANY] v [APPELLANT[COMPANY] [2010] FCA 368

Parties: [APPELLANT] 100 459 667) v [APPELLANT[COMPANY] (ACN 100 433 752) and [APPELLANT] 100 276 015)

File number: QUD 121 of 2010

Judge: COLLIER J

Date of judgment: 16 April 2010

Catchwords: PRACTICE AND PROCEDURE – notice of motion to discharge ex parte interim injunction under Trade Practices Act 1974 (Cth) – whether full disclosure of material facts to Court by applicant for injunction – respondents reliant on affidavit sworn by solicitor for respondents – no personal knowledge or identification of sources of information in affidavit

Legislation: Evidence Act 1995 (Cth) s 75 Trade Practices Act 1974 (Cth) s 80(2) Trade Practices (Industry Codes – Oilcode) Regulations 2006 (Cth) ss 4, 35, 36

Cases cited: [NAME] v [NAME] (2005) 12 VR 639 cited [NAME] [COMPANY] v [NAME] (1912) 15 CLR 679 cited

Date of hearing: 16 April 2010

Place: [APPELLANT]: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 14

Counsel for the Applicant: [redacted]

Solicitor for the Applicant: [redacted]

Counsel for the [NAME]: [NAME] [COUNSEL]

Solicitor for the [NAME]: [COUNSEL]

IN THE FEDERAL COURT OF AUSTRALIA

[APPELLANT] 121 of 2010

[APPELLANT]: [APPELLANT] 100 459 667)

Applicant

[APPELLANT] 100 433 752)

[APPELLANT] 100 276 015)

[APPELLANT] OF ORDER: 16 APRIL 2010

[APPELLANT]

THE COURT ORDERS THAT:

1. The hearing of the notice of motion filed by the respondents on 16 April 2010 be adjourned until 10.15 am on 28 April 2010. 2. Costs be reserved.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA

[APPELLANT] 121 of 2010

[APPELLANT] 100 459 667)

Applicant

[APPELLANT] 100 433 752)

[APPELLANT] 100 276 015)

[APPELLANT]

JUDGE: COLLIER J

DATE: 16 APRIL 2010

PLACE: [APPELLANT] FOR

JUDGMENT 1 On Monday 12 April 2010 I granted an urgent ex parte interim injunction pursuant to s 80(2) of the Trade Practices Act 1974 (Cth) to the applicant in these proceedings, [NAME] [APPELLANT]. So far as relevant for today's hearing, I ordered that: Until 4.00 pm on 28 April 2010 or further order, each of the [NAME], be, and hereby is, restrained whether by itself, its agents or howsoever otherwise from: (a) entering upon; or (b) causing or procuring any other person to enter upon: (i) [ADDRESS], North Melbourne, Victoria; or (ii) [ADDRESS], Yamanto, Queensland; or (iii) [ADDRESS], Hatton Vale, Queensland; or (iv) [ADDRESS], Deception Bay, Queensland.

Background 2 The background circumstances to this order can be found in the affidavit of [NAME] [NAME] sworn 12 April 2010. [NAME] [APPELLANT] is a director of the applicant. In summary, [NAME] [APPELLANT] deposed that: · For some years he has had a business relationship with the respondents, in particular [NAME] [APPELLANT] [NAME], who is a director of the [APPELLANT[COMPANY] and the sole director of the second [APPELLANT], [COMPANY]. · Most recently the applicant has been a commission agent of the respondents within the meaning of s 4 of the Trade Practices (Industry Codes – Oilcode) Regulations 2006 (Cth) in relation to petrol stations of which the respondents appear to be the lessees. · The applicant operates stores at each service station, including hiring of 35 staff to operate the sites. The stores operate as general stores. · The agreements [APPELLANT] the applicant and the respondents are oral. · There appear to be issues in dispute [APPELLANT] the applicant (on one hand) and the respondents (on the other), in relation to, inter alia: o Compliance by the applicant with fuel sales obligations and competitor's pricing obligations. o Daily banking of fuel takings at each site. o Payment of 10% of the gross undertakings of the applicant to the respondents in respect of the applicant's occupation of the stores at the sites as a licence fee. · On 12 April 2010 persons unknown to the staff at each site, claiming to have authority from the respondents, entered the sites and directed the staff to follow their orders. · This day was pay day for the staff. [NAME] [NAME] cancelled his cheque books which were at the sites out of concern that persons who had taken over the sites could use the cheque books without his authority.

Accordingly, he could not provide pay cheques to the staff. · The business of operating the sites was the only source of income of [NAME] [APPELLANT] and the only source of revenue of the applicant. 3 On Monday night I formed the view that: · There were serious questions to be tried, including: o Does the agreement [APPELLANT] the parties, in whatever form it exists, manifest a right in the applicant to occupy the relevant premises? o Has the applicant engaged in conduct which would entitle the respondents to exclude it from occupation of the relevant premises? o Have the respondents acted unconscionably within the meaning of the Trade Practices Act 1974 (Cth)? o Does the applicant have long term rights to occupy the sites? o What are the terms of any agreements which exist including as to banking? o Has a fuel re-selling agreement been breached in terms of either s 35 or s 36 of the Trade Practices (Industry Codes – Oilcode) Regulations 2006? · The balance of convenience favoured the granting of the affidavit. · The applicant would suffer prejudice which could not be remedied by damages if an injunction were not granted. 4 Accordingly I ordered an interim injunction in the terms I have described, as well as directions for filing of material in preparation for the hearing for interlocutory relief on 28 April 2010.

Notice of motion by respondents 5 On Wednesday 14 April 2010 the respondents filed a notice of motion seeking orders that the injunction granted on 12 April 2010 be discharged. An amended notice of motion was filed in Court this morning. In this notice of motion the respondents seek orders:

1. Discharging the injunction made in paragraph 2 of the Orders of Justice Collier made in [APPELLANT] on 12 April 2010.

2. Alternatively, vacating the order made in paragraph 2 of the Orders made by Justice Collier in [APPELLANT] on 12 April 2010 and, in lieu thereof, making orders as follows: (a) an order that the Applicant pay to the [APPELLANT[COMPANY], the amount of $221,452 and to the [APPELLANT], [NAME], the amount of $5,833, by 4.00 pm on Friday 16 April 2010; (b) subject to the Applicant complying with the terms of the order referred to in paragraph 2(a) hereof, until 4.15 pm on 28 April 2010, or further order, each of the [NAME], be, and hereby is, restrained whether by itself, its agents or howsoever otherwise from: (i) entering upon; or (ii) causing or procuring any other person to enter upon: (A) [ADDRESS], North Melbourne, Victoria; or (B) [ADDRESS], Yamanto, Queensland; or (C) [ADDRESS], Hatton Vale, Queensland; or (D) [ADDRESS], Deception Bay, Queensland (collectively, [NAME]); (iii) save and except that the Respondents, whether by themselves, their agents, or howsoever, be permitted to enter upon the [NAME] for the purpose of: (A) purchasing and taking delivery of the fuel for each of the Service Stations Sites; (B) determining the price of fuel sold at each of the [NAME]; (C) collecting all money in respect of the sale of fuel from the [NAME]; (D) banking all money which is collected in respect of the sale of fuel from the [NAME]; (E) supervising the repair, service and maintenance of the Equipment (as defined in Schedule 1) at each of the [NAME].

3. Vacating Order Nos 3, 4 and 6 of the Orders made by Justice Collier at [APPELLANT] on 12 April 2010 and: (a) In lieu of Order No 3, an Order that the Applicant file and serve a Statement of Claim in support of the relief sought in the Application, on or before 4 pm on 23 April 2010; (b) In lieu of the Order No 4, an Order that the Respondents file and serve Defence or Defence and Counterclaim, on or before 4 pm on 14 May 2010; (c) Order No 6 be vacated; (d) Further direction be made that the Applicants file and serve a Reply to the Defence or a Reply and Answer to the Defence and Counterclaim, on or before 4 pm on 21 May 2010.

4. Such further orders and directions as to this [ADDRESS] might seem meet.

5. An order that the time fixed for service of this Notice of Motion pursuant to Order 19, Rule 3 of the Federal Court Rules be abridged to facilitate the hearing of the Motion at 10.15 am on 15 Aril 2010.

6. An Order that the Applicant pay the Respondents' costs of and incidental to the motion to be taxed.

7. The Applicant and the Respondents have liberty to apply on three clear days' notice in writing to the other party.

Removal of interim injunction 6 In a well-known passage in [NAME] [COMPANY] v [NAME] (1912) 15 CLR 679 [NAME] said: There is a primary precept governing the administration of justice, that no man is to be condemned unheard; and therefore, as a general rule, no order should be made to the prejudice of a party unless he has the opportunity of being heard in defence. But instances occur where justice could not be done unless the subject matter of the suit were preserved, and, if that is in danger of destruction by one party, or if irremediable or serious damage be imminent, the other may come to the Court, and ask for its interposition even in the absence of his opponent, on the ground that delay would involve greater injustice than instant action. But, when he does so, and the Court is asked to disregard the usual requirement of hearing the other side, the party moving incurs a most serious responsibility. [NAME] v [NAME], a case of high authority, establishes that it is the duty of a party asking for an injunction ex parte to bring under the notice of the Court all facts material to the determination of his right to that injunction, and it is no excuse for him to say he was not aware of their importance. Uberrima fides is required, and the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fail. (at 681-682) 7 In this case the respondents have submitted that the applicant has failed to make full disclosure of material facts which should have been brought to the attention of the Court, and for this reason the Court should order that the injunction currently in place be discharged. Critically for the purposes of today's hearing, the respondents have relied on the affidavit of [NAME] [COUNSEL], a solicitor in the office of [NAME] in [APPELLANT].

[NAME]'s affidavit 8 The applicant has submitted that [NAME] [APPELLANT] affidavit is inadmissible. In my view, while I consider that it is admissible, its weight is such that I am not prepared to make a finding on the basis of the evidence that there has been an absence of full disclosure by the applicant. I form this view for the following reasons: · The affidavit is sworn, and evidence given, by [NAME] [COUNSEL], the solicitor for the respondents. No real explanation has been given for why [NAME] [NAME] has given this evidence. [NAME] [NAME] deposes that the carriage of this matter in the law firm [NAME] is actually by solicitors in Melbourne, not himself. · There is no explanation as to why, for example, evidence was not given by [NAME] [APPELLANT] [NAME] who is not only a director of the [APPELLANT] but the sole director of the second [APPELLANT]. Such evidence could have been given by [NAME] from his own knowledge, and there is no explanation before the Court as to why this is not the case. I do not accept that the speed with which the matter was brought on for hearing is an explanation – the matter has been brought on urgently at the request of the respondents. · It appears that [NAME] [NAME] has no personal knowledge of the events to which he deposes other than being informed by [NAME] [NAME] and others. It follows that, with minimal exceptions (I note para 9 and para 10 of [NAME] [NAME] affidavit), [NAME] [NAME] evidence is hearsay in its entirety. · At an interlocutory stage the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source (s 75 of the Evidence Act 1995 (Cth)). However no evidence of source in respect of the evidence to which [NAME] [NAME] deposes has been given other than a statement in his affidavit that "All the facts and circumstances above deposed to are within my own knowledge, save such as are deposed to from information only, and my means of knowledge and sources of information, appear on the face of this my Affidavit". I agree with [NAME] [NAME] SC that material as to the sources of [NAME] [NAME] "sources of information" are scant (and are in themselves hearsay). This is particularly curious given that the respondents are prosecuting the notice of motion before me. · Exhibit PBH-3 and exhibit PBH-4 to [NAME]'s affidavit are, in my view, inadmissible. In particular, I consider that the contents of PBH-3 and PBH-4, which purport to be copies of facsimiled letters to [NAME] [NAME] from [NAME] and/or Mrs [NAME], are inadmissible because: (a) there is no evidence that they actually constitute correspondence [APPELLANT] the parties other than by reference to unidentified hand-written notes; and (b) notwithstanding the existence of facsimile transmission sheets interspersed [APPELLANT] the alleged correspondence, it is unclear how those transmission sheets relate to the other material in the exhibits. · [NAME] [APPELLANT] pressed the failure of the applicant last Monday night to disclose the existence of a letter from [NAME] to [APPELLANT] & [APPELLANT], the solicitors for the applicant, dated 25 March 2010 (in exhibit PBH-1 to [NAME] [APPELLANT] affidavit). [NAME] [NAME] submitted that this letter, in which [NAME] wrote that they had been instructed to say that the applicant had failed to make payments totalling $210,680 to the respondents, was in stark contrast to evidence of [NAME] [NAME] in para 14(e) of his affidavit sworn 12 April 2010 where [NAME] [NAME] deposed: [COMPANY] is ready, willing and able to pay any amount outstanding in respect of the Licence Fee obligation. Before today, I have never before received any correspondence, or any notice, asking me or [COMPANY] to remedy any alleged breach of that obligation. (emphasis added) 9 While in my view the statement of [NAME] [NAME] does stand in contrast to the demand in this letter, I am not prepared at this stage of the proceedings to find that this conflict warrants the discharge of the existing interim injunction. This is because at this stage I consider that: (a) The urgency attendant upon the application on Monday arose because, on evidence which is not in dispute, the respondents had entered the relevant properties without warning. This was the critical event prompting the application for the interim injunction – not whether any previous demands for payment by the applicant had been made. (b) I am not satisfied that the fact that the respondents' solicitor, in correspondence to the applicant's solicitor, had claimed that the applicant had failed to make certain payments constituted a fact material to my decision to grant the interim injunction, or that the failure to disclose that letter constituted a lack of good faith by the applicant. (c) There is no evidence before me that the applicant sought to mislead the Court. Rather, in light of the urgency with which the application for an injunction was made I could properly draw an inference that the failure to refer to the letter may have been an oversight, and as a matter of discretion such failure does not warrant discharge of the injunction: [NAME] v [NAME] (2005) 12 VR 639 per [NAME] at 648-649.

General observations 10 As was very clear from today's hearing, the evidence in these proceedings is far from complete on either side. In my view, on the state of the material before the Court, and in light of the fact that there appear to be serious questions to be tried and serious matters in dispute, it is appropriate that the interim injunction remain in place until the parties have an opportunity to put their respective cases before the Court on 28 April 2010. 11 In the course of his submissions, [NAME] [NAME] submitted, inter alia, that: · the respondents were likely to suffer prejudice should the interim injunction remain in place; · there is evidence that the applicant's undertaking as to damages was of no value; · the balance of convenience did not favour the grant of the interim injunction because the respondents were prepared to take over the employment contracts of the staff employed by the applicant; and · in any event, the respondents were prepared to credit to the applicant the value of the applicant's stock on the relevant sites. 12 In my view, in the absence of evidence before the Court supporting these submissions, in light of real doubts as to the practicality of the respondents' proposals concerning the employees, and in view of the fact that the applicant's evidence as to his financial reliance on the businesses operated at these sites was not disputed, I do not consider that the respondents' contentions support discharge of the injunction.

Conclusion 13 Although in my view the evidence of the respondents before me is unsatisfactory, I am not prepared at this stage to find that the respondents' application is otherwise without merit.

Accordingly, I am prepared at this stage to adjourn the hearing of the notice of motion to the hearing of the application for interlocutory relief on 28 April 2010. 14 I am not prepared at this stage to make the alternative orders sought by the respondents, in substance an injunction on the terms already in place subject to payment by the applicant to the respondents of the sums of $221,452 (to the [APPELLANT]) and $5,833 (to the second [APPELLANT]) by close of business today. The reason for this is that: · I understand from the affidavit of [NAME] [NAME] sworn 16 April 2010 that [NAME] [NAME] concedes that the amount of $5,833 is owed to the second [APPELLANT], and that [NAME] is causing the applicant to pay that amount immediately (para 12). In my view this is an important concession, compliance with which is capable of review at the interlocutory hearing. · The issue of whether the sum of $221,452 is owing by the applicant to the [APPELLANT] remains a matter of serious contention. On the evidence before me, at this stage of the proceedings, I see no reason to order that the applicant pay this sum to the [APPELLANT] as a condition of the respondents being restrained from entering the relevant properties. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier.

Associate: Dated: 19 April 2010