Cabvan Pty Ltd & Anor v Salice, Arturo S.P.A. & Anor [1998] FCA 553

FEDERAL COURT OF AUSTRALIA

interlocutory injunction - termination of distributorship agreement - whether reasonable period of notice - serious issue to be tried - balance of convenience - appropriateness of supervision of ongoing commercial relationship by Court

Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 Co-operative Insurance Society Ltd v Argyll (Holdings) Ltd [1998] AC 1 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (High Court of Australia(Full Court), 4 May 1998, unreported)

CABVAN PTY LTD and ANOTHER v ARTURO SALICE S.P.A. and ANOTHER

VG 159 of 1998

JUDGE: HEEREY J

DATE: 11 MAY 1998

PLACE: MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 159 of 1998

BETWEEN: CABVAN PTY LTD and ANOTHER

ApplicantS

AND: ARTURO SALICE S.P.A. and ANOTHER

RespondentS

JUDGE: heerey j

DATE: 11 MAY 1998

place: MELBOURNE

THE COURT ORDERS THAT: 1. The application for an interlocutory injunction be dismissed. 2. The applicants pay the respondents' costs of the application, including reserved costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 159 of 1998

BETWEEN: CABVAN PTY LTD and ANOTHER

ApplicantS

AND: ARTURO SALICE S.P.A. and ANOTHER

RespondentS

JUDGE: heerey j

DATE: 11 MAY 1998

PLACE: MELBOURNE

REASONS FOR JUDGMENT The applicants seek an interlocutory injunction to restrain the respondents from acting on a purported termination of an existing distributorship agreement. The distributorship has existed since about 1990. It is for two products produced by the respondents, respectively runners and hinges for kitchen cupboards. The termination was effected in January 1998. The respondents gave six months' notice. The applicants claim that a reasonable period in the circumstances was 24 months' notice. It is common ground that the distributorship agreement, although informal and not reduced to writing, did contain an implied term for termination on reasonable notice. It is also accepted that the reasonableness of the notice has to be determined in the light of the circumstances at the time of termination. I have first to be satisfied as to whether there is a serious issue to be tried on the question of whether a reasonable term was 24 months, as against the 6 months which the respondents gave. There are, as Dr Pannam QC for the respondents pointed out, some serious obstacles in the way of the term for which the applicants contend. The two products generated, on the applicants' own figures, in total only some 20 per cent of their total turnover, and of the two, the runner product was a very small amount. The uncontradicted evidence at the moment is that there are other distributorships available for products in this market. There is no evidence on the applicants' part of existing commitments to customers which would be disrupted. The evidence of the expenditure of the applicants on building up this product is somewhat vague and in any event the figure of some $200,000 over seven years is, comparatively speaking, not great. Combined with this is the point made by members of the New South Wales Court of Appeal in Crawford Fitting Co v Sydney Valve & Fittings Pty Ltd (1988) 14 NSWLR 438 that, generally speaking, for representational arrangements of this type, the shorter the notice the better,. There are obvious practical problems of conflict of interest if the distributor applicants are trading within the notice period and at the same time trying to establish new relationships. Also, as is also pointed out in Crawford, a long period is not really in the interests of a distributor who, if the break must come, must deal with it sooner rather than later. However, while pointing out those difficulties, as I think it is proper to do since they were raised in argument, I am not prepared to hold that there is no arguable case. But the Court is entitled to look at the comparative strength of the cases presented as part of the overall exercise of the discretion: see ICF Spry, The Principles of Equitable Remedies (1997) at 464-465. I stress of course that I am only dealing with the case at the moment on necessarily limited material. What does persuade me firmly against the grant of an interlocutory injunction is the balance of convenience. It would seem to me undesirable for the Court to be involved in the supervision of an ongoing commercial relationship extending over a period of quite possibly 12 months or more. There was some mention made of an early trial but, this being a matter on my docket, my commitments are such that it is unlikely that a trial even limited to the issue of liability (which nevertheless I would imagine would take some four to five days at least) could be heard this year.