Idoport Pty Ltd v National Australia Bank Limited [1] [1999] NSWSC 828

New South Wales Supreme Court CITATION : Idoport Pty Ltd v National Australia Bank Limited [1] [1999] NSWSC 828 CURRENT JURISDICTION : Equity Division, Commercial List FILE NUMBER(S) : 50113/98 HEARING DATE(S) : 26, 27, 28, 29, 30.7.99; 2, 3, 4, 5.8.99 JUDGMENT DATE : 19 August 1999

PARTIES : Idoport Pty Ltd & anor (Plaintiffs) National Australia Bank Limited & ors (Defendants) JUDGMENT OF : Einstein J

COUNSEL : J.J. Garnsey QC, T.J. Hancock, M.C.L. Dicker and R.C. Titterton (Plaintiffs) T.E.F. Hughes (AO) QC, H.K. Insall (Defendants) SOLICITORS : Withnell Hetherington (Plaintiffs) Freehill Hollingdale & Page (Defendants) CATCHWORDS : Practice and Procedure - Interlocutory application for appointment of receiver and manager and for injunctive relief - applicable principles - Discretionary factors to be taken into account - Consideration of serious questions for trial and balance of convenience - Intellectual Property - 'e-commerce services' - Definition of words 'equivalent or similar functionality' - Equity - Fiduciary obligations - Interrelationship with contractual obligations - Whether terms of contract generally or with respect to a specific matter require one party to pursue the other's interests without regard to its own - Special relationships - Receiver and Manager - Appointment by Court - Plaintiffs' claim in final proceedings to very substantial amount by way of unliquidated damages - Preservation of subject matter of litigation - Conduct of defendants said to be damaging and destroying subject business - Plaintiffs having no proprietary interest in subject intellectual property or business - Applicants having unlimited guarantee given by bank in respect of defendants' compliance with obligations under contract - Whether damages an adequate remedy - Delay - Laches - Undertaking as to damages - Value of undertaking as to damages in circumstances - Trade Practices - Misleading and deceptive conduct - Alleged precontractual representations - Contract - Electronic Commerce Services - AUSMAQ system - Sale of intellectual property rights in automated trading/settlement/principal portfolio/reporting system able to effect real time transactions in financial markets and able to operate as a stock exchange - Electronic trading - Purchasing banking group interest in probable use for delivery and support of customer focused services - Changing nature of bank's business involving unbundling of product function from customer service function - Sale effected by complex set of interrelated agreements including restructuring and consultancy agreements - Plaintiff company [JMG] set up by vendors to provide consultancy services and as entity entitled to receive ongoing performance bonuses and with rights upon invocation of buyout procedures - Defendant company [NMG] acquiring all the shares in operating company and set up as wholly owned subsidiary of bank - Plaintiffs retaining no proprietary rights in undertaking, business or goodwill of NMG or operating company - Plaintiffs' claim that NMG and bank have by breaches of consulting agreement and by development of services infringing intellectual property rights to AUSMAQ system, threatened the subject matter of the litigation - Application for appointment of receiver and manager of bank's assets employed in relation to bank's development of e-commerce services - Application for interlocutory injunctive relief requiring bank to conduct e-commerce services within NMG so as to avoid alleged infringement of NMG's intellectual property rights and to preserve JMG's contractual interests in NMG's profitability - Contract - Construction - whether 'mutually known facts' and surrounding circumstances admissible in aid of construction - Implied terms - Principle in Mackay v. Dick (1881) 6 AC 251 - Derogating from grant - Principle in Trego v Hunt (1896) AC 7 - Contracting party not entitled to undermine benefit of a contract - Whether global operation, development and commercialisation of the system a term of the contract - Contract - Consulting agreement - Entitlement to service fees and to performance bonuses relating to the exploitation of an automated market quotation system - Contract - Interlocutory mandatory injunctions - Application for orders that alleged 'other' services developed by defendants outside consulting agreement be brought within the scope of consulting agreement - Functionality - Whether 'other' services have equivalent or similar functionality - Equity - Interlocutory mandatory injunction seeking attendance and participation at management meetings, submission of draft business plans - Whether party excluded from performing contractual obligations - Whether relief by way of interim specific performance appropriate - Constant supervision of Court - Contempt sanction - Persons subject to a mandatory order attended by contempt sanction must know with precision what is required - Possibility of repeated applications for rulings on compliance with orders requiring a party to run a business over an extended period to be discouraged - Equity - Interlocutory mandatory injunction - Obligation to keep separate accounts and records - Evidence - Expert evidence - 'Specialised knowledge based on training study or experience' - Weight to be accorded to the evidence of a partisan expert. ACTS CITED : Evidence Act 1995 s.79 Trade Practices Act 1974 s.52 A v Hayden [No 1] (1984) 59 ALJR 1 Admar Computers Pty Ltd v Ezy Systems Pty Ltd [1997] 853 FCA, 29 August 1997 Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 Appleton Papers Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208 Attorney-General v Sheffield Gas Consumers Co (1853) 43 ER 119 Australian Breeders Co-operative Society Ltd v Jones & Ors (1997) 150 ALR 488 Autodesk Inc v Dyason (No 1) (1992) 173 CLR 330 Baker v Selden (1879) 101 US 99 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 Bond Brewing Holdings Ltd & Ors v National Australia Bank Ltd & Ors (1989-1990) 1 ACSR 445; [1991] 1 VR 386 Breen v Williams (1995-6) 186 CLR 71 Brayson Motors Pty Ltd v Federal Commissioner of Taxation (1983) 57 ALJR 288 Buckley v Bennell Design & Constructions Pty Ltd [1977] 1 NSWLR 110 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Carlton & United Brewers Ltd v Tooth & Co Ltd (1986) 7 IPR 581 Cardile v LED Builders Pty Ltd (1999) 162 ALR 294 Carlton & United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 76 ALR 633 Castlemaine Tooheys Ltd & Anor v Carlton & United Breweries Ltd & Anor (1987) 10 NSWLR 468 Cayne v Global Natural Resources plc [1984] 1 All ER 225 CBFC Ltd v Pearce (1993) 112 FLR 478 C H Giles & Co Ltd v Morris [1972] 1 WLR 307 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Cohen v Peko-Wallsend Ltd (1986) 61 ALJR 57 Compagnie Industrielle de Precontrainte et D'Equipment des Constructions SA v First Melbourne Securities Pty Ltd [1999] FCA 660 Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 Cummins v Perkins [1899] 1 Ch 16 American Cyanamide Co v Ethicon Ltd [1975] AC 396 Donnelly v Amalgatated Television Services Pty Ltd & Anor (1998) 45 NSWLR 570 Dowty Boulton Paul Ltd v Wolverhampton Corporation [1971] 1 WLR 204 DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 Duffy v Super Centre Development Corporation Ltd [1967] 1 NSWR 382 Elders Trustee and Executor Co Ltd v EG Reeves Pty Ltd (1988) 78 ALR 193 Eng Mee Yong v Letchumanan [1980] AC 331 Environment Protection Authority v Caltex Refining Co Pty Ltd (1992-3) 178 CLR 477 Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 722 Frye v United States (1923) 293 F 1013 Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (in prov liq) (1990-1991) 3 ACSR 183 Henderson v Amadio Pty Ltd [No 1] (1995) 62 FCR 1 CASES CITED : Hollinrake v Truswell [1894] 3 Ch 420 Hospital Products Ltd v United States Surgical Corporation & Ors (1984) 156 CLR 41 Hubbard v Vosper [1972] 2 QB 84 Jackson v Sterling Industries Ltd (1987) 162 CLR 612 J C Williamson Ltd v Lukey (1931) 45 CLR 282 Jirna Ltd v Mister Donut of Canada Ltd (1973) 40 DLR (3d) 303 Johnson v Buttress (1936) 56 CLR 113 Jones & Anor v Australian Pacific Hotels (Challa Gardens) Pty Ltd (unreported Supreme Court of SA, 26 February 1998, Lander J) Kearns v Leaf (1864) 71 ER 299 Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 LAC Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR (4TH) 14 Mackay v Dick (1880-1881) 6 AC 251 Magna Alloys and Research Pty Ltd v Coffey (1981) VR 23 Mercator Property Consultants Pty Ltd v Christmas Island Resort Pty Ltd (unreported, Federal Court, 29 July 1998, Nicholson J) Moorgate Tobacco Co Ltd v Philip Morris Ltd (1984) 156 CLR 414 Moss Steamship Co Ltd v Whinney [1912] AC 254 National Australia Bank Ltd & Ors v Bond Brewing Holdings Ltd & Ors (1989-1990) 1 ACSR 722 National Australia Bank Ltd & Ors v Bond Brewing Holdings Ltd & Ors (1990) 8 ACLC 330 News Ltd v Australian Rugby Football League Ltd (1996) 139 ALR 193 New Zealand Netherlands Society "Oranje" Inc v Kuys [1973] 2 All ER 1222 Ni-Tech Pty Ltd v Parker [1998] 484 FCA, 27 April 1998 Parsons v The Sovereign Bank of Canada [1913] AC 160 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 72 ALJR 873 Prenn v Simmonds [1971] 1 WLR 1381 Pusey & Jones Co v Hanssen (1923) 261 US 491 Re McJannet; Ex parte Minister for Employment, Training and Industrial Relations (Qld) (1995) 184 CLR 620 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84 Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 Smith v Day [1882] 21 ChD 421 CS Phillips Pty Limited & Anor v Baulderstone Hornibrook Pty Ltd, (unreported, Supreme Court of NSW, 26 October 1994, Giles J) Stollznow v Calvert (1980) 2 NSWLR 749 Shercliff v Engadine Acceptance Corporation Pty Ltd (1978) 1 NSWLR 729 Trego v Hunt [1896] AC 7 Trust Company of Australia Limited v Perpetual Trustees WA Limited (unreported, SC NSW, 18 September 1996) United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 Wayland v Nidamon Pty Ltd (1986) 11 ACLR 209 Wentworth v Wentworth, (unreported, Supreme Court of NSW, 12 June 1997, Hodgson J) Whelan Associates Inc v Jaslow Dental Laboratory Inc [1987] FSR 1 DECISION : Short Minutes to be brought in.