1. cA IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) No. VG 140 of 1982 } ) GENERAL DIVISION BETWEEN BARSON COMPUTERS PTY. LTD., SINCLAIR EQUIPMENT TAUSTRALASIA!) PTY. LTD. Applicants AND SINCLAIR RESEARCH LTD. SINCLAIR RESEARCH (U.K.) LTD., SINCLAIR EQUIPMENT INTERNATIONAL LTD., QASAR INDUSTRIES PTY. LTD. and BRIAN MEEHAN Respondents i { 8 OCTOBER, 1982 KEELY J. | { REASONS FOR JUDGMENT j On Friday, 1 October, 1982, upon the applicants by it their counsel giving the usual undertaking, the court made certain ex parte interim orders, pending the hearing and if determination of the application for interlocutory orders, | which hearing was fixed for Wednesday, 6 October, 1982. On the latter date the parties were in agreement that certain directions should be given as to the filing of affidavits by the respondents and affidavits in reply by the applicants and ' that the hearing of the application for interlocutory orders should be adjourned to 28 October, 1982. The parties were not in agreement as to the form of the interim injunctions in SES TT Be the meantime. a 2. ' The orders made ex parte on 1 October, 1982 were in the following form :- "(1) each of the firstnamed, secondnamed and thirdnamed respondents by itself its servants and agents are hereby restrained from making available its products for sale or distribution in Australia to the fourthnamed respondent and, or alternatively, the fiftthnamed respondent or to any other person other than the applicants; each of the fourthnamed and fifthnamed respondents by itself or his servants or agents are hereby restrained from - (i) selling, offering for sale, advertising or promoting in Australia any products acquired by it or him from the firstnamed, secondnamed or thirdnamed respondent or some or one of them; (ii) holding itself or himself out as the distributor an Australia of the products supplied by the firstnamed, secondnamed and tnirdnamed respondents or some or one of them; (iii) representing 1n any way that the applicants cannot lawfully or otherwise sell SSR eS aot SS See 3. distribute in Australia products supplied by the firstnamed, secondnamed or thirdnamed respondents or some or one of them." Mr. Callaway, of counsel, on behalf of the respondents, moved the court for orders that paragraphs (1) and (2)(1) of those interim injunctions be deleted and that the word "sole" be inserted before the word "distributor" in paragraph 2({ii) of the interim orders. Upon the applicants giving the usual undertaking he did not oppose the continuance of interim orders restraining the fourthnamed and fifthnamed respondents from holding itself or himself out as the distributor in Australia of the products supplied by the firstnamed, secondnamed and thirdnamed respondents or some or one of them and from representing in any way that the applicants cannot lawfully or otherwise sell or distribute in Australia products supplied by the firstnamed, secondnamed or, thirdnamed respondents or some or one of them. Mr. Chernov, of Oueens counsel, who appeared with Mr. Karkar for the applicants, sought the continuance of the interim orders except for a submission that, in paragraph 2(ii}, the words "a distributor" should be substituted: for the words "the distributor". His submissions included the following propositions which were formulated in writing : pee eT = = tf fT "L, 4. There is an agreement belween the Sinclair Group and BarsOn appointing Barson sole and exclusive distributor of the Sinclair products. It was a necessary element of this agreement that the Sinclair Group would not sell their goods in Australia to anyone other than Barson. Alternatively, by its conduct, the Sinclair Group would be estopped from denying that Barson is its exclusive agent for Australia: Taylors Fashions Ltd. v Liverpool Trustees Co. (1981) 2 W.L.R. 576 (f1982] 1 Q.B. 133, 155-6). The agreement was to subsist for a period of three years expiring in November 1983. Alternatively, the agreement was determinable on reasonable notice, such notice being 12 months' noticé: Decro-Wall International] S.A. v Practitioners in Marketing Ltd. (1971) 1 W.L.R. 361. The purported determination of the agreement by the Sinclair Group is ineffective and has not been accepted by Barson. The agreement is therefore still on foot and binding on each of the parties until October or November 1983: Decro-Wall Case, supra. at 375-6. The present true position therefore is that Barson is the sole and exclusive distributor 5. of Sinclair products duly appointed for thepurpose bY the Sinclair Group. The other factual situation is that by reason of Barson's endeavours and the exclusive distributorships, the Sinclair products have become and are exclusively associated with Barson in Australia. Because of that association, the market and dealers in the market in fact look to Barson as the sole provider of these products. It follows therefore that to tell the market, whether expressly or impliedly, that Barson is no longer the sole provider of the product is wrong and misleading. Further, to say that QOasar will be supplying the products in the future is tantamount to saying that Barson is no longer exclusively associated with the products, or that there is no longer an exclusive association between the products and Barson. This is inaccurate and misleading. Qasar's acts or threatened acts of advertising, distributing, selling or offering for sale amount to a representation that Oasar is a co-distributor of the product or that it is the sole distributor. In either case, such representation is inaccurate and misleading. 10. ll. 6. Qasar 1S nota co-distributor because there is only one lawful distributor, namely Barson; and in any event, the Sinclair Group intended to have only one distributor (so that if it is not Qasar, it must be Barson). Although a breach of contract per se may not amount to misleading conduct, if the party in breach or for that matter any other person, misrepresents to the market or to third persons the true contractual position, then that would amount to misleading conduct. Here Qasar, whilst not directly breaching any contract, nonetheless has induced a breach of the contract between the Sinclair Group and Barson and it is advertising or distributing, or threatening to advertise or distribute, the products. By these acts, Qasar is misrepresenting to the market the true contractual position as between Sinclair Groups and Barson and as to who has the right of exclusive agency. This amounts to misleading conduct on the part of Qasar. By supporting Qasar and supplying it with its goods, the Sinclair Group is aiding and abetting Qasar in its misleading conduct. Further, by purporting to hold out Qasar to the market as the exclusive distributor or as a 7. legitimate distributor of its products, the Sinclair Group is also engaging in misleading conduct as a principal. It is representing that Barson is not its exclusive distributor and it is also misrepresenting the true contractual position between itself and Barson. This is misleading conduct." Before turning to the respondents' contentions, I should say as to paragraph 10 of those submissions that in my opinion the material before the court at this stage does not establish a prima facie case that Qasar induced any breach of contract, although on that material the fourthnamed and fifthnamed respondents have been aware for sometime that the applicants claim to have exclusive rights to distribute Sinclair products in Australia and the Pacific Islands and also claim that any attempt by the Sinclair group to appoint . any other person to distribute Sinclair products within that area would be a serious breach of their distribution rights. Mr. Callaway in putting his submissions made it clear that, for the purpose of the present hearing only, he was assuming the truth of the applicants' affidavit material - but foreshadowed objections to admissibility and 'some dispute as to the facts at any later hearing after he has obtained detailed instructions from the respondents in the United Kingdom. His principal submission was that conduct by 8. the fourthnamed or fifthnamed respondents consisting of selling, offering for sale, advertising or promoting in Australia any products acquired from any of the other respondents (the Sinclair group) was incapable on its own of being misleading or deceptive conduct or of being conduct that is likely to mislead or deceive or of being contrary to s. 53(d) of the Trade Practices Act. He submitted that such conduct involves no misrepresentation; the only representations are that the respondent has a computer, is willing to sell and can confer a title to the property ~ ail of which representations are true. He submitted that the conduct concerned does not involve any representation about any contractual relationship with the Sinclair group and that to say that the conduct involves an implied representation that the distributor has not been appointed in breach of contract is fanciful arid is not a matter to which the section is directed. He agreed that the conduct involves a representation that the fourthnamed and fifthnamed respondents are distributing in the sense of selling and offering to sell the products but submitted that such a representation is as to a matter of fact and is in fact true. He also submitted that there was no representation of "affiliation" in the sense used in 5. 53(a) and, alternatively submitted that if there were such a representation of affiliation then the representation was true. 9. Paragraph 1 of the interim injunctions restrained the Sinclair group from making available its products for sale or distribution in Australia to the fourthnamed or fifthnamed respondents or to other persons. As to that paragraph Mr. Callaway submitted that it followed logically from his principal submission that such conduct by the Sanclair group could not constitute aiding or abetting a contravention of s. 52 of the Act nor could it be misleading conduct as a principal. As the Full High Court said, in Beecham's Case (1968) 118 C.L.R. 618 at 622, the court must first consider "whether the plaintiff has made out a prima-facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled-to relief". The same principle applies here in considering whether to continue the interim injunctions. The court is not required to forecast the ultimate result of the case but to determine whether the applicants have established that they have what Bowen C.Jd., in the Commercial Bank Case (1977) 16 A.L.R. 161 at p. 168, described as "a fair chance of success". Notwithstanding Mr. Chernov's carefully formulated propositions, some of which have been referred to in these reasons, the applicants have failed to establish that they have a fair chance of success, having regard to the analysis of the Jegal position advanced by Mr. Callaway. 10. The question of the "balance of convenience" does not arise unless a prima facie case is established. As Brennan J. said, in the Victorian Egg Marketing Board Case (1978) 33 F.L.R. 294 at 312, "... but a discretion does not arise until a prima facie case is established". Had I reached the conclusion that at the hearing the applicants will have a fair chance of success as to their propositions of law, I would have exercised my discretion in favour of the applicants, having regard to the material before the court at this stage and accordingly would have continued the interim injunctions. The order of the court is that the interim injunctions granted on 1 October, 1982 be varied in the manner sought in paragraphs 1 and 2 of the respondents' notice of motion dated 5 October, 1982. The further hearing™ of the application for interlocutory orders is adjourned to Thursday 28 October, 1982 at 10.15 a.m.. The time within which the respondents are to serve and file any affidavits on which they intend to rely at the adjourned hearing is extended to 20 October, 1982 and the time for serving and filing any affidavits in reply thereto is fixed at 25 October, 1982. Liberty is reserved to any party to apply. NO ee er: SR Se 'i if lat tos and the Aine i '+ yyees are a irue copy of the ij o © Judsuent herein of the ; oll f rate Va Justee Keely. ] Assocédte J: Sth Odobe 1982. H [i