Fletcher, Geoffrey Ross & Ors v Foodlink Ltd & Ors [1995] FCA 879

IN THE FEDERAL COURT OF AUSTRALIA) QUEENSLAND DISTRICT REGISTRY ) No. QG 164 of 1995 GENERAL DIVISION ) BETWEEN : GEOFFREY ROSS FLETCHER and JANET BERYL FLETCHER personally and as trustees of the G. & J. FLETCHER FAMILY TRUST Applicants AND : FOODLINK LTD ACN 009 786 485 First Respondent AND : BON-IRS PTY LTD ACN 009 992 161 Second Respondent AND : G.C. BONNEY & CO. (DEVELOPMENTS) PTY LTD ACN 009 900 458 Third Respondent AND : GEOFFREY CLIVE BONNEY Fourth Respondent AND : JOHN TERENCE BERRY Fifth Respondent AND : ROBERT VICTOR HARRIS Sixth Respondent CORAM: Spender J PLACE: Brisbane DATE: 27 October 1995 MINUTES OF ORDER THE COURT ORDERS THAT: (i) leave to appeal from the order of Drummond J of 18 October 1995 be refused; (ii)the costs of the respondents on the motion be their costs in the principal proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA) QUEENSLAND DISTRICT REGISTRY ) No. QG 164 of 1995 GENERAL DIVISION ) BETWEEN : GEOFFREY ROSS FLETCHER and JANET BERYL FLETCHER personally and as trustees of the G. & J. FLETCHER FAMILY TRUST Applicant AND : FOODLINK LTD ACN 009 786 485 First Respondent AND : BON-IRS PTY LTD ACN 009 992 161 Second Respondent AND : G.C. BONNEY & CO. (DEVELOPMENTS) PTY LTD ACN 009 900 458 Third Respondent AND : GEOFFREY CLIVE BONNEY Fourth Respondent AND : JOHN TERENCE BERRY Fifth Respondent AND : ROBERT VICTOR HARRIS Sixth Respondent CORAM: Spender J PLACE: Brisbane DATE: 27 October 1995 REASONS FOR JUDGMENT This is a notice of motion filed on 23 October 1995 seeking that the applicants be granted leave to appeal from the order of Drummond J made on 18 October 1995. Further, the motion seeks that: " ... 2. Upon each of the applicants: a. giving the usual undertaking as to damages; and b. undertaking not to deal with the assets of their business operated at 119 Toolooa Street Gladstone other than in the ordinary course of business, c. undertaking to proceed with all due diligence and expedition to enable the applicants' appeal to be heard; and d. undertaking to proceed with all due diligence and expedition to enable any further interlocutory applications in this matter for interlocutory relief to be heard by a Full Court as soon as it is able to do so. 3. that the first respondent [and] the second respondent whether by themselves, their servants or agents or any of them or otherwise, be restrained until the hearing of the appeal or earlier order, from entering into possession of the applicants' business operated at 119 Toolooa Street Gladstone and the plant and equipment and stock thereat. " On 18 October, Drummond J ordered that: " Upon the first respondent by its counsel undertaking to keep an accurate record identifying the stock in trade at supermarket premises at 119 Toolooa Street, Gladstone sold and the amount of the purchase moneys it receives for the stock, the application seeking interlocutory relief against the first respondent is dismissed. " He further ordered that the application seeking interlocutory relief against the second respondent be dismissed and ordered that the costs be the respondents' costs in the proceedings. However, on an undertaking by Mr and Mrs Fletcher, by their counsel, which is set out in his Honour's orders, the Court granted an interim order restraining the first and second respondents, until the hearing of an application for leave to appeal, or until further order, from taking any action to enforce any of their default rights under the chattel mortgage and the operating agreement. I heard the motion seeking leave to appeal on 25 October 1995, when I indicated that I would give my reasons today. On 25 October I extended the interim injunction until judgment. The background facts are that the applicants operate a supermarket in Gladstone. The first respondent, Foodlink Ltd, supplies stock to the applicants' business under a supply agreement. A chattel mortgage secures to the first respondent payments by the applicants of all moneys due in respect of such supply, amongst other things. By notice dated 2 October 1995, the first respondent demanded payment of moneys which included a sum of $36,899 which should have been paid, according to the agreement, at the end of July 1995 by way of direct debit from the applicants' account, but which was not paid. Mr Fletcher, the male applicant, says that the applicants are not able at present to pay the sum of $36,899. The operating agreement is an agreement between the applicants and the second respondent which permits the applicants to have access to the store premises which are owned by the third respondent. It appears that the second respondent is a joint venture between the first and third respondents. The second respondent pays rent to the third respondent from funds available to it, including the payments due to the second respondent by the applicants under the operating agreement. The applicants originally paid $4000 a week to the second respondent under that agreement. In April 1995, the second respondent agreed to reduce this temporarily to $2500 per week as part of a package of assistance then offered to the applicants, but the second respondent later put the applicants on notice that it would require the $4000 to be paid in full from 4 September 1995. The applicants ceased paying the weekly operating fee on 5 October 1995, having in writing indicated that they will not pay that operating fee to trial, although there have been proposals, to which I will refer shortly, in that regard. The applicants have cancelled the direct debit facility. On 13 October 1995 the second respondent gave notice to the applicants of default under the operating agreement, based on the applicants being in default under the chattel mortgage to the first respondent, and based also on the applicants having given notice of their intention to cease payment of the operating agreement fee. The applicants commenced these proceedings in the Federal Court on 6 October 1995. In the light of the present application, it is important to have regard to the relief claimed by the applicants in the principal proceedings. They seek, first, an order pursuant to either s 82 or s 87 of the Trade Practices Act 1974 ('the Act') that the respondents pay to the applicants the amount of loss and damage suffered by them by reason of misleading or deceptive conduct engaged in by the respondents. Secondly, they seek orders pursuant to s 87 of the Act that the operating agreement be declared void ab initio, the chattel lease be declared void ab initio, the chattel mortgage between the applicants and the first respondent be declared void ab initio, and that the second respondent refund to the applicants all moneys paid by the applicants to the second respondent pursuant to the operating agreement. Drummond J held that while s 23 of the Federal Court of Australia Act 1976 confers wide power on the court to grant interlocutory injunctive relief, it did not extend to the making of the interlocutory orders sought by Mr and Mrs Fletcher in the present instance. As characterised by his Honour, their case for interlocutory relief was, in essence, that even though the business was a loss-making one, if they did not have to pay to the second respondent the operating fee of $4000 per week and did not have to remedy, at least immediately, the non-payment of the $36,889 due to the first respondent in July, they hoped to be able to fund both the action and to live from what they can derive from the business until the trial. They say that their claim for damages is of the order of half a million dollars and they contend that they ought to be permitted to continue to operate the business, albeit a loss-making one, until the determination of their claim for damages and their claim for orders under s 87. Drummond J referred to the decision of the High Court in Jackson v Sterling Industries Limited (1987) 162 CLR 612 and to the observation by Wilson and Dawson JJ at 619: " ...it cannot be suggested that either the power to grant relief under s 23 or an implied power to prevent an abuse of process extends to the creation and enforcement of rights in addition to those for the protection or enforcement of which the jurisdiction of the Court is invoked. " and the observations of Brennan J, as he then was, at 620-621 in two passages where he said: " ...s 23 confers on the Federal Court such powers as are necessary or incidental to the exercise of that Court's jurisdiction. But that is not to say that the Court's discretion to mould relief is at large. The relief which the Court is authorised to give does not extend beyond the grant of remedies appropriate to the protection and enforcement of the right or subject-matter in issue. ... The power to grant such an injunction [i.e. an interlocutory injunction] does not support the making of an order which goes beyond what is in reasonable protection of a legal or equitable right which the court may enforce by judgment..." Drummond J said, at pp 7-8 of his judgment: " The avoidance claim [under s 87 of the Act] is made in conjunction with a claim for damages for the losses they suffered as a result of entering into that agreement. They do not seek in the action to enforce any rights with respect to the premises. Rather do they seek an order which will establish that they have neither obligations nor rights with respect to those premises. " His Honour concluded that: " In my opinion, to grant an interlocutory injunction for the purpose frankly identified as that for which it is sought, would be to go beyond granting an interlocutory remedy appropriate to the protection or enforcement of any of the rights or subject matter in issue in this action. He said, at page 9: " There is no loss that the applicants could suffer as a result of the alleged infringing conduct of the second respondent that cannot be fully compensated by the award of the damages they seek even if the second respondent ejects the applicants from the premises now. The injunction is not sought to ensure that the applicants will be able to obtain a full vindication of the rights they say they have against the second respondent. " His conclusion was, at p. 10: " There is, in my opinion, no jurisdiction under s. 23 of the Federal Court of Australia Act 1976 (Cth) to grant an interlocutory injunction in such circumstances. "