FEDERAL COURT OF AUSTRALIA Liebach Holdings Pty Ltd v Optus Networks Pty Ltd [2001] FCA 485 LIEBACH HOLDINGS PTY LTD AND MARK LIEBACH v OPTUS NETWORKS PTY LTD AND OPTUS MOBILE PTY LTD V 193 of 2001 GRAY J 11 APRIL 2001 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 193 OF 2001 BETWEEN: LIEBACH HOLDINGS PTY LTD (ACN 081 999 144) FIRST APPLICANT MARK LIEBACH SECOND APPLICANT AND: OPTUS NETWORKS PTY LTD (ACN 008 570 330) FIRST RESPONDENT OPTUS MOBILE PTY LTD (ACN 054 365 696) SECOND RESPONDENT JUDGE: GRAY J DATE OF ORDER: 11 APRIL 2001 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application for interlocutory relief is dismissed. 2. The proceeding be listed for directions on 23 April 2001. 3. The applicants pay the respondents' costs of today. 4. Otherwise the costs of the application for interlocutory relief be reserved. 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 V 193 OF 2001 BETWEEN: LIEBACH HOLDINGS PTY LTD (ACN 081 999 144) FIRST APPLICANT MARK LIEBACH SECOND APPLICANT AND: OPTUS NETWORKS PTY LTD (ACN 008 570 330) FIRST RESPONDENT OPTUS MOBILE PTY LTD (ACN 054 365 696) SECOND RESPONDENT JUDGE: GRAY J DATE: 11 APRIL 2001 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 This application for interlocutory relief arises out of issues as to the franchising by the respondents of their business through retail outlets. The respondents are in the business of providing telephone services, particularly mobile telephone services. Those services, together with the telephones by which they are operated, are generally sold to the public through retail stores. The respondents operate a scheme for franchising those retail stores. 2 The first applicant is a franchisee with respect to a store in Dandenong. The first applicant is a company controlled by the second applicant. What is in one sense a rival franchise is operated at North Dandenong by a company called Digital World Pty Ltd, which is controlled by a Mr Mustica. The first applicant conducts its franchise currently through a five year franchise agreement which commenced to operate on 5 October 2000. 3 The burden of the applicants' case is that for some years, from 1995 onwards, the representatives of the respondents have said and done things which have led the applicants to believe that the first applicant would be given the right to the franchise with respect to a store which was proposed to be opened in the Fountain Gate Shopping Centre at Narre Warren. 4 The first applicant regards as its geographical territory, on which it concentrates its marketing, the area of Dandenong and the suburbs to the east, whereas the North Dandenong franchisee tends to concentrate on the suburbs to the west of Dandenong. The first applicant has drawn some considerable percentage of its business from the Narre Warren area in the past. It is fair to say that if it were not the entity which controlled the Fountain Gate franchise, it would lose some of its custom from what it regards as its area. 5 The applicants put their case in part on the basis that there exists a binding contract between them and the respondents, whereby if the respondents were to open a store at the Fountain Gate centre the first applicant would be the franchisee of that store. I am far from persuaded that the applicants will make out a case in this respect at the trial. I need not go into details as to why I am far from persuaded to that effect. It is enough to say that whatever representations were made to the first applicant in the past did not seem to me to contain all of the necessary terms to make out a contract. It would be an interesting and indeed difficult analysis to work out who it was who is said to have made an offer and what is said to have constituted the acceptance of such an offer. It may be that there would be consideration in that the applicants say that the first applicant has refrained from expanding its business in other directions and has taken on commitments in anticipation of being awarded the Fountain Gate franchise. But it is certainly true that the first applicant has on many occasions acted inconsistently with the notion that there was a binding contract with the respondents. In particular, the applicants have participated in a selection process by which the respondents chose the franchisee for the Fountain Gate franchise in late 2000 and early 2001. At no stage did the second applicant protest that there was no need for such a process on the basis that the first applicant had a binding contract with the respondents. 6 The applicants also put their case in other ways. They say that the representations they allege were made to them amounted to misleading and deceptive conduct in breach of s 52 of the Trade Practices Act 1975 (Cth), and also gave rise to unconscionable conduct on the part of the respondents and to rights to make use of estoppels. 7 In respect of these claims, it may be that the applicants have made out a serious question to be tried that they occurred. There is, however, one difficulty about the causes of action of these kinds. If it be the case that no binding contract existed between the first applicant and the respondents with respect to the Fountain Gate franchise, then it seems to me that the applicants cannot be in as good a position as if they had a binding contract by reliance on misleading and deceptive conduct, unconscionability or estoppel. That is to say, the applicants cannot contend that the respondents owe to them obligations which are enforceable as if they were contractual obligations. In effect, what the applicants seek by way of interlocutory relief, and no doubt in due course by way of final relief, is specific performance of those obligations. The remedies available under the Trade Practices Act are in broad compass but it does not seem to me that they extend so far as to treat parties between whom there are no contractual obligations as parties between whom there are contractual obligations and to enable specific performance of those obligations. 8 I am therefore of the view that it would be unlikely, even if the applicants were to succeed at the trial, that they would succeed to the extent of obtaining the injunctions they seek; rather if they succeed their claim will be one that sounds in money and in damages. There is therefore a powerful reason why I ought not to award interlocutory injunctions at the present time. 9 An examination of the balance of convenience, however, gives rise to even more compelling reasons why I should refrain from granting injunctions. This application seeks to restrain the implementation of contractual obligations which have been entered into between the respondents and Digital World Pty Ltd. There is unchallenged evidence that, on 19 February 2001, the respondents selected Digital World Pty Ltd as the franchisee for the Fountain Gate franchise. The respondents have entered into binding contractual obligations with Digital World Pty Ltd, which in turn has entered into a binding lease with the lessor of the Fountain Gate premises. 10 It seems to me to be an almost insurmountable obstacle to an application for an interlocutory injunction that it would require the undoing of obligations enforceable between other parties. For that reason, if for no other, I am of the view that the balance of convenience overwhelmingly favours the refusal to grant interlocutory injunctions in the present case. 11 I might add that there are powerful grounds, having regard to the timing of the filing of the proceeding, that would also dictate that the same conclusion be reached. As I have said, the choice of the rival of the applicants was made on 19 February. The applicants did not commence this proceeding until 16 March. By that time the contractual obligations had come into being, at least to the extent that Digital World Pty Ltd had signed a document binding it to enter into a lease. The lease has been entered into subsequently. 12 It is not the case that the applicants were unaware that the choice was made or that the obligations would follow. They rely as an excuse for the delay on the fact that a request was made that the respondents provide them with reasons for the making of the choice. The respondents were not obliged to provide such reasons. It seems to me that if the applicants really had rights to assert, they should have asserted them at the very earliest opportunity and not have waited for the period between 19 February and 16 March to commence the proceeding. 13 For those reasons I propose to make an order refusing the applicants the interlocutory relief that they seek. 14 It remains, therefore, to deal with the future of the application. Discussion with counsel suggests that the best way to deal with it at the present time is to list it for directions on 23 April. This will give the applicants time to consider whether they wish to apply to the Court to join either or both of Digital World Pty Ltd and the landlord of the premises at Fountain Gate as parties to the proceeding. I have indicated that I would propose that there be a resumption of a mediation which has already taken place, at an early stage to see if the proceeding can be resolved by the application of commercial considerations, rather than strictly legal ones. 15 The orders that I make therefore will be: 1. The application for interlocutory relief is dismissed. 2. The proceeding be listed for directions on 23 April 2001. 3. The applicants pay the respondents' costs of today. 4. Otherwise the costs of the application for interlocutory relief be reserved. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. Associate: Dated: 11 April 2001 Counsel for the Applicant: Mr C D Golvan Solicitor for the Applicant: Middletons Moore & Bevins Counsel for the Respondent: Mr J D Elliott Solicitor for the Respondent: Gilbert & Tobin Date of Hearing: 11 April 2001 Date of Judgment: 11 April 2001