Peninsula Telecommunications Pty Ltd v Telstra Corporation Limited [2007] FCA 1073

FEDERAL COURT OF AUSTRALIA

Peninsula Telecommunications Pty Ltd v Telstra Corporation Limited [2007] FCA 1073

PENINSULA TELECOMMUNICATIONS PTY LTD (ACN 107 052 004) v TELSTRA CORPORATION LIMITED (ACN 051 775 556) VID 593 OF 2007

MIDDLETON J

12 JULY 2007

MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VID 593 OF 2007

BETWEEN: PENINSULA TELECOMMUNICATIONS PTY LTD (ACN 107 052 004)

Applicant

AND: TELSTRA CORPORATION LIMITED (ACN 051 775 556)

Respondent

JUDGE: MIDDLETON J DATE OF ORDER: 12 JULY 2007

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT:

1. The proceeding be placed into the fast-track list forthwith; 2. The proceeding be referred to mediation to be conducted before a Registrar of this Court on or before 30 July 2007; Upon the applicant undertaking by its counsel, and Worthy Investments Pty Ltd ACN 107 051 507 undertaking, to abide by any order this Court may make as to damages in case this Court shall hereafter be of the opinion that the respondent has suffered any by reason of this order which the applicant ought to pay: 3. until further order, the respondent, whether by itself, its servants or howsoever be restrained from relying upon the notice of termination dated 14 June 2007, being exhibit "EA-5" to the affidavit of Mr Eddie Assemani of 11 July 2007; 4. Costs 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 VID 593 OF 2007

BETWEEN: PENINSULA TELECOMMUNICATIONS PTY LTD (ACN 107 052 004)

Applicant

AND: TELSTRA CORPORATION LIMITED (ACN 051 775 556)

Respondent

JUDGE: MIDDLETON J

DATE: 12 JULY 2007

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 The applicant in this case seeks an interlocutory injunction to restrain the respondent from acting upon its termination notice dated 14 June 2007 to terminate, with effect from the close of business on 14 July 2007, the dealership agreement between the parties pursuant to which the applicant conducts business as a Telstra licence shop from premises at 10 and 11 Karingal Hub Shopping Centre, 330 Cranbourne Street, Frankston and a separate office at 414/446 Nepean Highway, Frankston. 2 The applicant's claims are set out in a statement of claim, and an amended statement of claim has been provided to the Court for which, at the moment, leave has not been granted to be filed and received but, nevertheless, sets out conveniently the causes of action. I do not need for the purposes of this proceeding to rehearse all the causes of action. I do observe that each of them has their own difficulties but it is not for me to assess each and every one of the claims, provided that I can be satisfied, within the expression used and understood in Australian Broadcasting Corporation v O'Neill (2006) 229 ALR 457, that there is a serious question to be tried in relation to at least one cause of action. 3 It does seem to me, and I am so satisfied, that there is a serious question to be tried in relation to paragraph 5 of the statement of claim, which alleges that the respondent induced the applicant to vary the term of the agreement, which was allegedly a 12 month agreement, to a periodic monthly term and confer upon the respondent a right to terminate that agreement on 30 days' notice. 4 It was correctly stated by the respondent that the material in support of this claim is not very strong. In paragraph 14 of the affidavit of Isabelle Worthy of 3 July 2007, Ms Worthy (who is the applicant's sole director) stated that on 4 April 2007 she received a telephone call from Ms McLellan of the respondent. Ms Worthy was told that if she did not sign the copy letter enclosed with a letter dated 26 March 2007 to signify the applicant's acceptance of the respondent's offer to vary the agreement to a month by month basis, by the close of the business day there would be severe repercussions, in that the applicant would be operating the business without a dealership agreement. Ms Worthy did not take legal advice at the time and neither did her husband and she stated that: In the belief that the dealership had already expired and that the business would be operating without the dealership agreement if I did not do so, we signed the letter which was enclosed with 26 March letter and returned it. 5 I am satisfied for the purposes of the application that this gives rise to a triable issue and there is a serious question to be tried in order to support the allegations made in paragraph 5. 6 I should interpolate that the material could justify a conclusion, and for the purposes of this hearing satisfy the test of there being a serious question to be tried, that on 26 February 2007 (or in March when the letter dated 26 February 2007 was delivered) there was an agreement between the parties entered into for a 12 month period and that the variation which was purportedly agreed upon on 26 March 2007 was in fact a variation to that 12 month agreement. If not for the purported variation, the agreement, on this basis, would continue for the 12 month period. 7 I should note that there are many issues that may arise as to the status of the 26 February 2007 letter and I am not saying that I have accepted necessarily by the applicant sending back the letter that there was acceptance of any agreement. That in itself is an issue that will need to be determined at trial. I am merely saying that there is sufficiently a serious question to be tried in relation to that issue and the alleged subsequent variation. 8 Having satisfied myself that there is a serious question to be tried, I then need to consider the balance of convenience. Undoubtedly, the business is one that is substantial and is obviously being run by the applicant, pursuant to some terms and conditions between the parties. It has been said by the respondent that damages in themselves would be an adequate remedy in this case. However I do not accept that, in circumstances where there is a business and someone is operating the business at premises, this is necessarily the case, particularly as there are now third parties involved in the purported assignment of the business. Whilst the contract of sale of the business is not in evidence, there is evidence that there was a contract entered into with third parties in relation to assigning the business. 9 It may well be also that the respondent is in the position to terminate for other reasons either because of a breach of the agreement or because of reliance upon a term of the agreement that allows termination within three months. At the moment though, no reliance is specifically placed upon those provisions in the sense that they have been activated to terminate the agreement with the applicant. I do not think that that in itself or in accumulation with other matters raised by the respondent show that an injunction should not be granted. I should say, however, that if circumstances change, not only in relation to that matter but also in relation to assignment, then the balance of convenience may change. Nevertheless, at the moment, I am working on the material that is before me and what has actually occurred between the parties. 10 It was also said that the applicant has voluntarily run down the business and this affects or could possibly affect the respondent's goodwill. I am of the view that the running down of a business in the way in which has been suggested could affect the respondent's goodwill, but I am not satisfied that the applicant has done this voluntarily or deliberately and I do not think it would be appropriate to take that into necessary account in determining not to grant the injunction. 11 It was also said by the respondent that there was some delay in bringing the proceeding. However delay in itself is not something which necessarily means that an injunction should not be given, although it is to be taken into account. I do not think the delay in the circumstances of this case is something which, if an injunction was otherwise to be granted, would be a reason for me not to grant the injunction. 12 I should also mention that it has been said that there may not be a possibility of an assignment without the respondent's consent. I did take that matter into account as to whether there was any utility in granting the injunction but it seemed to me that it may or may not arise – that is the consent being given. In any event, it could give rise to another issue – the reasonableness of withholding consent – and I do not take that as a basis for not allowing the injunction at this stage, based upon the material before me and based upon the fact that there is a serious question to be tried. 13 I am persuaded by the fact that there is a business which is continuing and once I am satisfied there is a serious question to be tried, I think that fact and the disruption to the business is an important matter in favour of the injunction. 14 The director of the applicant, Ms Worthy, was cross-examined as to the financial resources of the applicant in relation to its ability to give undertaking as to damages. Ms Worthy did not have a detailed knowledge of the financial position of the applicant, and so her husband, Mr Worthy, who was in Court, was called for cross-examination. He gave evidence that the applicant probably had no more than $60,000 available cash resources, however he stated that the applicant was owed a sum of money in the order of $300,000 from another company, Worthy Investments Pty Ltd. In the circumstances, the respondent sought that the latter company be called upon to give undertakings as to damages in addition to the applicant's undertakings. In my view this is appropriate. 15 In the circumstances I will order that, upon Counsel giving the usual undertakings as to damages, and Worthy Investments Pty Ltd also giving undertakings as to damages, the respondent, whether by itself, its servants or howsoever be restrained from relying upon the notice of termination dated 14 June 2007. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.