NOYvE: NOT APPROPRLIAIC FOR RMPORTING OR TOR GHNERAL CIRCULATION. (AEW) 222 Jo GleQ | CATCHWORDS TTT TRADE PRACTICES ~ deceptive and misleading conduct - breach of confidence - undertaking offered - sufficient case made out for interlocutary relief - whether on the balance of convenience injunctions should issue. Trade Practices Act 1974 5.52 C, SEREBRYANSKI AND ANOR. v JALNA DATRY FOODS PTY. LIMITED No. VG 203 of 1984 Woodward J. 16 July 1984 Melbourne IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. VG 203 of 1984 GENERAL DIVISTON EX TEMPORE JUDGMENT BETWEEN: C, SEREBRYANSKI AND ANOR. Applicent v dALNA DAIRY FOODS PTV. LIMITED Respondent ORDER UUDGE MAKING ORDER : Woodward d. DATE OF ORDER : 16 July 1984 WHERE MADE "—- ¢ Melbourne THE COURT ORDERS THAT: 1. Application for interlocutory injunctions dismissed. 2. Costs reserved. wernera dare IN THE FEDERAL COURT OF AUSTRALTA VICTORIA DISTRICT REGISTRY No. VG 203 of 1984 we ee GENERAL DIVISTON EX TEMPORE JUDGMENT. BETWEEN : C. SEREBRYANSKI AND ANOR. Applicent Vv JALNA DAIRY FOODS PTY. LIMITED Respondent JUDGE: Woodward d. DATE: 16 July 1984 REASONS FOR JUDGMENT This 15 an application by the partners in a firm whicn earrics on business as a wholesale distributor of groceries, dairy produce and other foods. In the course of that business it has for the last several years distributed the products of the respondent company to some 75 outlets in the city of Sydney. That arrangement has now been terminated. be we ee ee ee The produce involved, so far as the respondent is concerned, is cultured dairy food, cottage cheese and similar products. Obviously the respondent, in the absence of any contract for a fixed term (as to which there 15 no evidence before me), is entitled to bring to an end the agreement whereby the applicants distribute its goods. It claims to have had a number of good commercial reasons for doing so, which can be sunmar.ized by saying that it claims that the applicants have not been as successful as they should have been, and have added to the cost of the respondent's products by an excessive mark-up. It is also said that the applicants have been unsatisfactory in making payments to the respondent, although J must say that, aus the evidence stands, any default under thot heading does not sce ta have been particularly serious. I am not really concerned with the validity of any of those complaints against the applicants because the respondent would have been entitled to terminate the contract even if the applicants had represented the respondent satisfactorily in all respects. What the applicants complain about 1s the method which the respondent has chosen to terminate the relationship between them. It is alleged, and for the purposes of this application I accept, that the respondent obtained from a servant of the applicants a list of the applicants' customers in the Sydney area who received the respondent's goods. There is a dispute as to whether at the time of receiving that list the respondent intended to make improper use of it, or whether the reason given for seeking the list - namely, to better promote the respondent's goods at the last Faster Show in Sydney - was a genuine one. Either way it is clear that at some stage it has occurred to the respondent's managers that it would be helpful to its business if it were to attempt to take over all the Sydney outlets which the applicants had built up for 1ts products. In the hope of achieving that end, the managers have made use of the Jists supplied to them for a completely different purpose fTrom that which the applicants intended. They have done so by writing directly to each of those customers of the applicants saying that it, the respondent, would aun future deal direcily with those shopkcepers and other distributocs and that the applicants wouid no longer act as its distributors. It is said on behalf of the applicants that this mis-use of the list that was provided for a different purpose, which was clearly a confidential list of customers, amounted to a breach of contract and a breach of trust within the principles referred to in the case of Robb v Green, 1895 2 QB 315. It is further said that this use of the documents amounted to a breach of section 52 of the Trade Practices Act, 1974 thereby giving jurisdiction to this Court. I should say in dere TU oraeranet pee wee AR er eee Bee oe passing that the respondents have delivered a conditional notice of appearance, but counsel has informed me that he does not wish to argue any question about the Court's jurisdiction. I think that all I need say about the merits of the matter are that, whichever of the tests I apply - whether I apply that laid down in the Australian Coarse Grain Pool Pty. Ltd. v The Barley Marketing Board of Queensland (1982) 57 ALUR 425, which asks if there is a serious question to be tried, or whether 1 use the wording of the decision of the Full Court of this Court in World Series Cricket v Parish (1977) 16 ALR 181 @ 186, which would require me to be sacisfied that the applicant has a fair chance of success, or whether I apply the more stringent test Jaid down in Beecham Group Ltd. v Bristol Laboratories Pry. Ltd. (1968) 115 CLR 618, which requires satisfaction that there is a probability of entitlement to relief as the evidence stands - 1 am satisfied thar the applicants have established a sufficient case to warrant the granting of interlocutory relief if I decide that the balance of convenience is in their favour. e In considering where the balance of convenience lies, I have reqard, among other things, to the undertaking which has been offered on behalf of the respondent in the following terms - "1. The respondent undertakes not to by its servants or agents telephone, write to, or call upon any of the customers on the customer list given to Campbell McLaren (being exhibit A referred to in the the Same item ee ne at A SS eet Ae affidavit of Campbell McLaren or exhibit Btote , affidavit of the first-named applicant) for a period of four weeks from today other than: a. Grace Brothers - b. David Jones c. Safeway ad. Woolworths e. New World/Coles In the event that a customer on the said list contacts the respondent or any of its servants or agents seeking any of the respondent's products whether in resgonse to the rospondent's general advertising or otherwise save as referred to abave the respondent shall be at Jibsrty to supply thac customer forthwith. In the event that the applicants fail to abide by the existing 30 day trading terms, specifically the payment of all cutstanding invoices by the first day of August 1984 then this undertaking shall lapse." This undertaking goes part of the way towards covering ground as would he covered by an interlocutory wen ee ep ren et ete tI Noten nanan Mae ae neal injunction. However, it has been criticised by counsel for the applicants, quite understandably, at a number of points which TI think I should advert to. In the first place, counsel has said that his client would wish to have an interlocutory injunction to last for six weeks, which his clients estimate as being the perjod that they would require to burid up an alternative source products which they had previously been supplying on behalf of the enable them to meet the res:ondent in ire) respondent, and which would fair competition with similac products. The undertaking only provider for a Lour week perfion in whicn the respondent will not solicit the applicants' customers. Secondly, st was poinred oul that the lise to wash the undertaking at first +elated differed to some extent From the list which was the subject of the application. It is not possible in the time available to identify tne differences, but I accert that the applicants were of the view that there were several other persons who ought to be covered by the undertaking or injunctions, and who were not. This objection has been met by relating the undertaking to the applicants' list of names supplied. Thirdly, the undertaking specifically excludcs several major companies, as to whom it appears that the pplicants presently supply one or perhaps a few stores with the re eondent''s product, but as to none of which, es LF understand whet JI hve bee told, 1s there a total coverage by the applicants. There would, of course, be a dirficulty about an injunction which prevented the respondent from supplying its product to any store in the Sydney metropolitan area of companies such as those specified. They did not need to be on any customer list to invite aoproaches. There is no evidence before me as to hov many stores there are in Sydney belonging to those companies, but f am prepared to assume thal, in total there would be quite a number. s The next criticism offered by courisel for the applicants is to the effect that the damage has already been done by the fctlesr of solicitation which wie sent seme tet weeks ago to - 4 the pusinesses on was List, =ad thar ror the reswondent new to Je undercahe no further solicitatiar a & not very nelplul. There is merit an thet point, although I think at the game time there is some distinct value to the applicants, and the likelihood of damage being reduced, in undertakings not to follow up the letter by telephone or any other form of direct contact with those customers. Finally, it is pointed out that the undertakings are made conditional upon the applicants making payment to the respondent of any moneys outstanding to it, in accordance with tne existing terms of the contract. That proviso, if it takes effect at all, would take cf{Fect on 1 August; and if woneys had not by then been paid, then the :espondent would regard itself as being told, is there a total coverage by the applicants. There would, of course, be a difficulty about an injunction which prevented che respondent from supplying its product to any store in the Sydney metropolitan area of companies such as those specified. They did not need to be on any customer list to invite approaches. There is no evidence before me as to hov many stores there are in Sydney belonging to those companies, but YJ am prepared to assume that. in total there would be quite a number. * The next criticism offered by counsel for the applicants is to the effect that the damage has already been done by che dobhier of golizitatien which was pETY Cone treet weeks ago to «il the pisinesses an tas List, and cnet for the resvondent now fo Me unde:cake no further solicitation ts not very helpful. There is werit in thac point, althovugh I think at the same time there is some distinct valve to the applicants, and the likelihood of damage being reduced, in undertakings not to follow up the letter by telephone or any other form of direct contact with those customers. Finally, it is pointed out that the undertakings are made conditional upon the applicants making payment to the respondent of any moneys outstanding to it, in accordance with che existing terms of the contract. That proviso, if it takes efrect at all, would take effect cn 1 August; and if moneys had not by endent would recard itself as heina then been paid, then the res neve released from its uncertaking. That could limit the effectiveness of the undertaking, but in wiew of the fact that T intend that this matter should be brought back before the Court at some tire before 1 August, T think that that is a matver which can be dealt with. Obviously if an injeaction such as the applicants sec. were given, it would go further than the undertaning in a number of ways, because the applicants seek to have the vespondent enjoined from any commercial dealings with the customers of the applicants during the six weeks period which they are seeking. They ask that the respondeac be restrained from selline 2: offering for sale, or givin away in trede of cowrerce, an, oF their products, to firms on the ticy, Cvring that period. The undertaking offered euLll enables uhe respondent toa fulfil anv orders that wight be placed with it by any cf the firms on the list, provided thak occurs without further solicitation, Another matter that I have to teke into account is the effect of the injunctions which are sought upon the companies and persons named on the customer list and on their customers. Thd effect of the aunjunction sought would be that the respondents could not supply their products to those shopkeepers during the glx week period, unless the shopkeepers took the initiative. ~ Ane released from its undertaking. That could limit the effectiveness of the undertaking, but in wiew of the fact that I intend that this matter should be brought back before the Court at some time before 1 August, T think that that is a matter which can be dealt with. Obviously if an injunction such as the applicants sec}. were given, it would go further than the undertaking in @ number of ways, because he applicants seek to have the respondent enjoined from any commercial dealings with the customers of the applicants during the six weeks period which they are seeking. Yrey ask thet the cespondenb be reseureined from selliny 2- offering For selec, or ocvine away in triic o¢ cowrerce, any 0% thelr products, to firms on the vise, during that period. 'the uugertacing offered stall crnables the respondent tu fulfil ary orders that wight be placed with it bp any cf the firns on the list, provideé thab occurs without further solicitation. Another matter that I nave to take into account is the effect of the injunctions which are sought upon the companies and persons named on the customer list and on their customers. The effect of the injunction sought wovld be that the respondents could not supply their products to those shopkeepers during the gix week period, unless the shopkeepers took the initiative. The applicants have said that they would not be ina position to supply alternative products until after a period of about six weeks, so that the shopkeepers would presumably heve to make their own arrangements and look elsewhere for their supplies. It is difficult for me to tell to what exteat they and their customers might surfer in that process, but they would at least be considerably inconvenienced, and there is a very rovl risk, it seems to me, that the market for these products might be. Jost both to the applicants and to the respondent, and that would not advantage either of the parties or the shopkeepers and their custome: s. Having vegare to chet consiceratien and to the fact tbas it fs clear thet this commercial arrangement has been brovdil us anend, and that scmc sin weeks frow now the respodadenr ana the applicants will be in commercial rivalry, attempting to sell different products to the firms on the list, 1t seems to me that any interlocutory injunction going beyond the undertaking which has been offered, would have an unacceptable degree of artificiality about it and that it would create a situation of some contusion 5 far as both the parties to this action and the people whose names are on the list are concerned. Thus a commercial arrangement has been brought to an end. It may well be that it has been brought to an end improperly and that dawmagss will flow an the event that those facts are The applicants have said that they would not be ina position to supply alternative products until after a period of about six weelkts, so that the shopkeepers would presumably have to make their own arrangements and look elsewhere for their supplies. It 1s difficult for mo to tell to what extent they and thelr customers might suffer in that process, but they would at least be considerably inconvenienced, and there is a very real risk, it seems to me, that the macket for these products might he lost both to the applicants and to the respondent, and that would not advantage either of the parties or the shopkeepers and their CUstoMmes 3. Havane redurad ta chet consideration and co che face thar it ts clesr thet this commercial arrangemanl has bee: brought wc th v 1e ht & a a an end, and that some sir weeks from nuw the responcent applicants will be in commercial rivalry, attempting to sell different products to the firms on the list, it seems to me that any interlocutory injunction going beyond the undertakiag which has been offered, would have an unacceptable degree ot artificiality about it and that it would create a situation of some confusion so far as both the parties to this action and the people whase names are on the list are concerned. Thus a commerci.v] arrangement has been brought to an end. It may well be that it has been brought to an end improperly and that damagas will flovy ain the event that those facts are established. It is true, as has been pourted out for the applicants, that those damages are going to be difficult to &foeas. That would be true whatevec happened from now on, whether the undertaking was accepted or the injunctions were granted or there was neither injunction nor undertaking. The only difference is thal the damages would probably, indeed almost certainly, be reduced by the undertaking that have been offered. It is a matter for conjecture whether they would he further reduced if injunctions were added to that undertaking; but the fact remains that the difficult task of assessing Woo oriats Garayas For the Liercbes chac are allecsd woata stati convenience in this cteacs cequires me to accept "he widens thet hos been offered, to refuses the aianjunctiens which have peen soucht, to do whatever can be done vo arrange for 2 specay piaring of the matters in issue and to rely upon the ultimate award of damages, if the case is made out, to produce justice between the parties. Accordingly, the application for interlocutory injunctions is dismissed. I reserve the costs of thak application to be dealt with at the trial. - il I hereby certify that the ten (10) preceding pages are a true and accurate copy of the Reasons for Judgment herein of The Hon. Mr. Justice Woodward x. Via aay) La te EN nohoote Dated: 16 July 1984 uy e