Acmnet Pty Ltd v Ai Tel Pty Ltd - [2007] SASC 96

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
ACMNET PTY LTD v AI TEL PTY LTD
[2007] SASC 96
Judgment of The Honourable Justice Layton
16 March 2007
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - JURISDICTION AND GENERALLY
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - SERIOUS QUESTION TO BE TRIED - GENERALLY
EQUITY - EQUITABLE REMEDIES - INJUNCTIONS - INTERLOCUTORY INJUNCTIONS - BALANCE OF CONVENIENCE
Application for confirmation of an injunction – agreement between the applicant and the respondent to construct a wireless telecommunications network – an integral part was a “router”, located in premises controlled by the respondent – dispute between the parties as to ownership of the network provision of passwords and usernames to access the network and physical access to the router - ex parte injunction granted and continued – applicant seeking confirmation of a varied form of the injunction – whether there is a serious question to be tried – whether the balance convenience lies in favour of the applicant – whether the applicant comes to the court with “clean hands” – whether damages would be an adequate remedy – Held: There is a serious question to be tried as to the applicant’s proprietary rights in the network and contractual rights to continued network connection – the balance of convenience lies in favour of granting the application – damages would be an inadequate remedy – injunction confirmed.
Sale of Goods Act 1895 (SA) s 18; Supreme Court Civil Rules 2006 6SCR 246, referred to.
Australian Broadcasting Corporation v O'Neill (2006) 229 ALR 457; Jakudo Pty Ltd v South Australian Telecasters Ltd (1997) 69 SASR 440, applied.
American Cyanamid Co v Ethicon Ltd [1975] AC 396; Beecham Group Ltd v Bristol Laboratories (1968) 118 CLR 618, discussed.
Altman v Skippercraft (1981) 32 SASR 351; Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1038, considered.

ACMNET PTY LTD v AI TEL PTY LTD
[2007] SASC 96
Civil
LAYTON J:
Introduction

This is an application for confirmation of an injunction pursuant to 6SCR 246 of the Supreme Court Civil Rules 2006. The brief history is that an ex parte interlocutory injunction was granted on 22 December 2006, and continued on 29 December 2006 and 10 January 2007. The application was initially made for a confirmation of the previously ordered interlocutory injunction. In the course of the hearing a further document dated 29 January 2007 was filed, which set out a varied form of the injunction. That is the subject matter of this decision.
The injunction concerns a telecommunications network, the ownership and operation of which is the subject of dispute between the parties. There are significant areas of disagreement between the parties on almost all factual issues, and the inferences and the legal implications of the commercial relationship between the parties regarding the telecommunications network are also in dispute. In order to outline the subject matter of the injunction it is simplest to refer to the allegations which the applicant makes to support a foundation for the injunction.
The applicant alleges an oral agreement was initially entered into between United Technology Solutions Pty Ltd (“UTS”) and the respondent to build a Wireless Network Infrastructure (“the Network”) for UTS in the Upper Spencer Gulf region of South Australia (including Whyalla, Port Pirie and Port Augusta). Later this oral agreement was extended to include a Back Haul fibre optic loop/cable in Adelaide (“the fibre loop”). The fibre loop was to operate as an integral part of the Network.
UTS was one of a group of companies of which Unique Global Enterprises Pty Ltd (“Global Enterprises”) was the head company. Other relevant companies included the applicant company and Koala Telecom Pty Ltd (“Koala Telecom”), which was described as a retail arm of UTS.
The applicant says that the agreement included the following components:
·The respondent was to apply on behalf of UTS for a carrier licence;
·UTS would pay for equipment for the Network, including the fibre loop, upon invoices being rendered by the respondent;
·UTS was to be the owner of the Network and the fibre loop; and
·The Network was to be in operation by 30 November 2006.
Work proceeded and the respondent rendered invoices to UTS in the name of Frontier Business Pioneer, and these invoices were paid.
According to the applicant a number of problems occurred in the arrangement, including delays in completing the Network so that it would not be fully operational by 30 November 2006. Further, the respondent did not progress the application for a carrier licence, which looked unlikely to be achieved by 30 November 2006.
As a consequence, Global Enterprises decided that the applicant, which had a carrier licence, would be substituted for UTS, and the respondent was advised of this. Furthermore, as it was unlikely that the respondent would complete the Network by 30 November 2006, a further oral agreement was made in about October/November 2006. The terms of this agreement were that, upon an assurance given by the respondent that it would have the Network operational in the areas of Whyalla, Port Pirie and Port Augusta to be available to customers subscribed by the applicant, the applicant would go ahead with the planned launch date on 30 November 2006. Thereafter the respondent would continue to add the remaining connections between the towns already on the Network and would complete the Network.
The applicant and the respondent also entered into a written “novation” agreement set out in a document dated 29 November 2006, in which the applicant became the contracting party with the respondent in lieu of UTS (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1).
The launch went ahead and the Network become operational to the applicant’s subscribers in those three areas on 1 December 2006. However, problems between the parties continued, which included:
·Dissatisfaction about the progress and performance of the respondent.
·The Network did not meet the speed and bandwidth requirements.
·Certain elements of physical construction were alleged to be below standard and did not comply with regulations.
·The respondent was sending invoices demanding payments which the applicant refused to pay as it considered them to be unjustified.
On 19 December 2006 a meeting was held between the parties to try and resolve these matters. This resulted in a document being signed by the parties dated 19 December 2006 (Exhibit VC1 to affidavit of Vahid Chittleborough dated 10 January 2007), which the applicant understood would resolve the issues.
On or about 20 or 21 December 2006 the applicant received numerous telephone calls from their subscribers saying that their access to the Network had ceased. The applicant made attempts to contact the respondent to rectify the problem, but without success. The applicant was unable to access the Network in order to re-connect its customers because the respondent had changed the passwords and username sometime earlier (between 30 November 2006 and 22 December 2006). This then led to the ex parte application for an injunction, which was granted on 22 December 2006 and continued on 27 December 2006 and 10 January 2007.
Court Orders
Initially the order obtained and later sought to be confirmed before me was in the terms expressed in paragraph [3] of the order of 27 December 2006, namely:
3.The injunction granted by paragraph 1 of the order of 22 December 2006 whereby the respondent was injuncted until 12.00 noon on 27 December 2006 to provide the plaintiff full and unconditional access (including but not limited to electronic access by way of provision of passwords and usernames and the like) to:
3.1 the Wireless Infrastructure as that term is defined in the Professional Contractors Agreement made on 29 November 2006 between ACMNET Pty Ltd ACN 113 645 257 and AI TEL Pty Ltd ACN 116 247 002 (exhibited to this order and marked ‘A’); and
3.2 such other related infrastructure including but not limited to the fibre optics network in the State of South Australia to 132 Franklin Street in the said State and subsequently 465 Morphett Street in the said State; and
but only to such extent as the defendant granted such access to the plaintiff immediately prior to 19 December 2006.
In the course of the hearing before me, the applicant sought to vary the orders sought to be confirmed. The orders that the applicant now seeks to confirm are as follows:
1.The injunction granted on 22 December 2006 and further continued on 27 December 2006 and 10 January 2007 be varied to the form set out in paragraph 2 below, and be confirmed as so varied.
2.     The respondent is hereby injuncted until further order,
2.1    to not remove, turn off, damage or in any way interfere (whether physically or electronically) with the router located at 65 King William Street, Adelaide or any other equipment forming part of the network infrastructure of the said telecommunications network operated by the plaintiff, so as to cause the said network to cease to operate or to reduce the efficiency of its operations;
2.2    to allow the plaintiff physical access to the equipment referred to in paragraph 2.1 above on receipt of 2 hours notice in writing (which may be given by e-mail to the respondent at [email protected]), which access may be used by the plaintiff for the purpose only of maintaining or restoring the operation or efficiency of operation of the telecommunication network operated by the plaintiff.
In addition, having regard to concerns expressed by the respondent, an undertaking was given in the event that the injunction was granted. This is set out on page 127 of the transcript in the following terms:
The plaintiff undertakes that until final judgment in this action it will not save with the written permission of the respondent or pursuant to an order of this honourable Court sell or otherwise dispose of any equipment forming any part of the Wireless Network infrastructure and will not remove any such equipment from its current location save as is necessary for network maintenance or repair.
The relevant legal principles
The legal principles to be applied in relation to an interlocutory injunction have recently been the subject of discussion in the High Court in Australian Broadcasting Corporation v O’Neill (2006) 229 ALR 457. In that case Gleeson CJ and Crennan J agreed with the “organising principles” to be applied as expressed by Gummow and Hayne JJ. All judges reiterated the doctrine which the Court had established in Beecham Group Ltd v Bristol Laboratories (1968) 118 CLR 618.
In particular Gummow and Hayne JJ indicated:
[65] The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:
"The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief ... The second inquiry is ... whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted."
By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:
"How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks."
Following discussion by their Honours of the speech of Lord Diplock in American Cyanamid Co v Ethicon Ltd [1975] AC 396, their Honours concluded:
[71]However, a difference between this Court in Beecham and the House of Lords in American Cyanamid lies in the apparent statement by Lord Diplock that, provided the court is satisfied that the plaintiff's claim is not frivolous or vexatious, then there will be a serious question to be tried and this will be sufficient. The critical statement by his Lordship is "[t]he court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried". That was followed by a proposition which appears to reverse matters of onus:
"So unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought." (emphasis added)
Those statements do not accord with the doctrine in this Court as established by Beecham and should not be followed. They obscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought.
Consequently the Court reinforced the twofold test, which is:
(1)Whether there is a serious issue to be tried, namely that there is a sufficient likelihood of success of the applicant to relief at trial.
(2)Whether the inconvenience or injury the plaintiff would be likely to suffer if an injunction is refused, outweighs the injury the respondent would suffer if an injunction is granted.
In addition there is a third requirement to be satisfied, namely that damages are not an adequate remedy.[1] The onus lies on the applicant to satisfy me of these matters.
[1] Jakudo Pty Ltd v South Australian Telecasters Ltd (1997) 69 SASR 440, 442-3, cited with approval in Australian Broadcasting Corporation v O’Neill (2006) 229 ALR 457, 466 per Gleeson CJ and Crennan J.
Further, in assessing the strength of probabilities of the success of the applicant, I am not required to make findings of fact with regard to conflicting allegations of fact. Instead the focus is on the probabilities or likelihood of the success of the applicant to relief at trial, having regard to the material proffered in support of the injunction.
For convenience I will use the expression “serious issue to be tried” to mean a sufficient likelihood or probability of success of the applicant in its contentions which support relief at trial
Summary of the applicant’s case
I make the preliminary observation that in assessing whether the material before me demonstrates that there is a serious issue to be tried, I do not have the benefit of a statement of claim. There is simply a summons which seeks “that the defendant be injuncted to provide to the plaintiff full and unconditional access to the wireless infrastructure”. Therefore the relief sought is expressed in broad and non specific terms and no other relief is sought.
The applicant’s submissions primarily focused on confirming the earlier orders before their amendment. The variation sought as to the terms of the injunction did not occur until almost the completion of the applicant’s submissions. I have inferred that the arguments which were proffered in support of the original terms, remained the same for the varied terms.
The bases upon which the applicant seeks to support the interlocutory injunction may be summarised as follows:
1The applicant submits that it has a contractual right to ensure the continuing operation of the Network to service its customers pending completion of the Network, as well as proprietary rights to the Network and fibre loop. It seeks the injunction to prevent the respondent interfering with operation of the Network.
2The applicant claims that it has contractual rights as asserted by reason of:
i. an initial oral agreement between UTS and the respondent
ii.a further oral agreement in or about October/November 2006 regarding the Network completion process.
iii.a written agreement between Global Enterprises and the respondent of 19 December 2005 .
3The applicant claims that it has proprietary rights in respect of the Network and fibre loop by reason of:
i.an initial oral agreement between UTS and the respondent
ii.A verbal confirmation of ownership in a conversation between between Mr Bechara (Global Enterprises) and the Mr Hoi Taing for respondent on 2 August 2006
iii.a written agreement between the applicant and the respondent dated 29 November 2006.
iv.The arrangement for and subsequent payment of invoices which were rendered by the respondent to UTS.
v.a written agreement between Unique Global Enterprises and the respondent of 19 December 2005.
vi.The application of Part 2, s 18, r 5 of the Sale of Goods Act 1895 (SA).
As to the balance of convenience, in summary the applicant submits that the balance of convenience lies with it because if the injunction is refused then it is not in a position to ensure service and maintenance of the Network for its customers. It submits that it does not have possession or control of the router, which is an essential part of the function of the Network, and is therefore reliant on the respondent for the continual operation of the network. At the same time the applicant submits that the respondent will not suffer any injury if the injunction was granted.
Summary of the respondent’s case
First the respondent submits that the material upon which the applicant relies to found contractual or proprietary rights, which includes the alleged agreements, do not demonstrate a sufficient likelihood that the applicant will succeed in obtaining the relief that it seeks at trial.
As to the contractual claim, it submits that there was no agreement between the parties for the applicant to operate the Network for any customer of UTS and that it was for the respondent only to operate the Network, especially prior to completion of the Network and “hand over”. It was further argued that the placement of subscribers of the applicant on the Network was for “test purposes” and it was not intended that those customers continue during the completion process of the Network, which was still many weeks off.
As to the proprietorial claim, it is submitted that there was no agreement between the parties giving the applicant proprietary rights to either the Network or the fibre loop, particularly before the Network was completed. On the contrary, the respondent asserts that the proprietary rights lie with it as the Network has not been completed and paid for.
Secondly, the respondent submits that the payment of invoices is also insufficient to establish the right to an injunction.
Thirdly, the respondent submits that the Sale of Goods Act is inapplicable.

Fourthly, it is submitted that the Court should refuse confirmation, by reason of the applicant not having come to court with “clean hands”. It is submitted that the applicant has abused the interlocutory injunctions previously ordered by altering the status quo to prevent the respondent from having access to the Network, thereby effectively obtaining proprietary control of the Network to the exclusion of the respondent.
Fifthly, it is submitted that confirmation of the interlocutory injunction should not be granted because damages would be an adequate remedy.
There was a further submission by the respondent regarding the terms of an undertaking, which it was later indicated was not an issue. As a result of further information supplied, this argument was no longer pursued.
As to the balance of convenience, the respondent argues that it will suffer injury as a consequence of the granting of the injunction because this would effectively bring about a reversal of the previously existing status quo pending any trial. It was argued that the injunction would put the applicant in total control and effective possession of the whole of Network to the exclusion of the respondent, and would prevent the respondent from completing the outstanding work required to be done on the Network.
Evidence
The material upon which I am required to make a decision consists of a number of affidavits and exhibits tendered by both parties. Both parties sought to rely on documentation only without seeking the right to cross-examine the deponents of the affidavits. The documents are as follows:
·Transcript of proceedings of 22 December 2006 - including evidence given by Thomas Charles Knight, the Chief Executive Officer of the applicant, and Curtis Raams, an employee of the applicant company in charge of Engineering and Network Services. (Exhibit A1)
·Affidavit of Vahid Chittleborough dated 10 January 2007. (Exhibit A2)
·Affidavit of Hoi Yung Taing dated 16 January 2007 and filed 17 January 2007. (Exhibit R3)
·Further affidavit of Hoi Yung Taing dated 17 January 2007. (Exhibit R4)
·Affidavit of Mardi Ann Conduit dated 16 January 2007. (Exhibit R5)
·Affidavit of Ben Wannan dated 19 January 2007. (Exhibit A6)
·Affidavit of Curtis Raams dated 19 January 2007. (Exhibit A7)
·Affidavit of Tom Knight dated 19 January 2007. (Exhibit A8)
·Affidavit of Vahid Chittleborough dated 19 January 2007. (Exhibit A9)
·Affidavit of Tom Knight sworn on 31 January 2007. (Exhibit A10)
·Affidavit of Benjamin Wannan sworn on 2 March 2007. (Exhibit A11)
·Affidavit of Curtis Raams sworn on 2 March 2007. (Exhibit A12)
·Affidavit of Michael Blake sworn on 2 March 2007. (Exhibit A13)
·Affidavit of Tom Nemeth sworn on 2 March 2007. (Exhibit A14)
·Affidavit of Vahid Chittleborough sworn on 2 March 2007. (Exhibit A15)
The router and the injunction sought
Before addressing in detail the arguments put forward by each of the parties, I will briefly describe the subject matter of the injunction, namely the router. There appears to be one aspect of common ground between the parties, that is that the router is an integral part of both the Network and fibre loop and it is located in premises leased by the respondent at 65 King William Street Adelaide.
Fibre optic cables are either connected to or pass through the router which is operated through a switching mechanism. Save for this limited information, which has been gleaned from correspondence between the parties forming part of the material before me, the precise function and operation of the router is not known to me.
Both parties claim ownership of the router. The first specific reference to the router in any correspondence, is in a letter from the applicant’s solicitors to the respondent’s solicitors dated 16 January 2007, which refers to urgent access being sought to 65 King William Street, to undertake work on equipment. In that letter the applicant proposes removing the router so that it can extricate its Network from that of the respondent, and place the router in a different location. There is earlier correspondence concerning access to 65 King William Street, which may well relate to that piece of equipment, and I refer to that correspondence latter in these reasons. Following the letter of 16 January 2006, there is also an exchange of correspondence on the topic.
In relation to the router, as it is accepted by both parties to be an integral part of both Network and the fibre loop, instead of referring separately to the router each time I refer to the Network and fibre loop, I indicate that I include the router as being included by the terms “Network” and “fibre loop”.
In order to understand the circumstances which led to the varied injunction being sought after the orders obtained on 22 December 2006, it is necessary to set out a chronology of relevant events. I essentially rely on documentary material, recognising that much of the content consists of self-serving allegations and cross-allegations by each of the parties.
Events after the interlocutory injunction of 22 December 2006
22 December 2006
·Following the obtaining of the first injunction on 22 December 2006, an email was sent to Mr Hoi Taing and Mr Veng Taing, directors of the respondent company, attaching a copy of the Summons and the Order for Injunction and advising that the matter was again on before the Court on 27 December 2006 (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 24).
23 December 2006
·An email and letter was sent to Mr Hoi Taing and Mr Veng Taing in compliance with the directions given by Judge Withers. This email also enclosed a number of documents which included an agreement dated 29 November 2006; an agreement dated 19 December 2006; various correspondence; and a summary of the oral evidence given before the Judge by three witnesses: Tom Knight, the Chief Executive Officer of the applicant; Curtis Raams, an employee of the applicant; and Vahid Chittleborough, a solicitor (Affidavit Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 31).
·Mr Yapp advised the applicant’s solicitors by email that he was a solicitor instructed to act for the respondent. It was also stated that as his client did not have a copy of the agreement, then “consequently my client is unable to address the order”. (Affidavit Vahid Chittleborough,10 January 2007, Exhibit VC1, page 36)
27 December 2006
·The applicant’s solicitors sent an email attaching the agreement. (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 36)
·The matter again came on before the Court and an order for continuing injunction was issued. Mr Yapp appeared on behalf of the respondent and was present when further orders were made continuing the injunction.
·The applicant’s solicitors sent an email to Mr Hoi Tain and Mr Veng Taing, enclosing a copy of the continuing order and drawing attention to the requirement that the respondent grant access and to the consequences for failing to comply with the order. (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 60)
·A letter was also sent to Mr Veng Taing enclosing a copy of the order, and an email was sent to Mr Yapp also enclosing the same document.
·A letter was sent from the applicant’s solicitors to Mr Yapp by email, which referred to Mr Yapp’s email of 23 December, in which it was indicated that the respondent was unable to comply with the order because it did not have a copy of the agreement. The applicant’s solicitors called upon the respondent to provide access and asserted that there was now no excuse as the documents had been provided. Further, Mr Yapp was requested to advise whether he had instructions to act for the respondent in the event of possible contempt proceedings being brought against the respondent for failing to provide access. (Affidavit Vahid Chittleborough, 10 January 2007, Exhibit VC1, pages 96-97)
28 December 2006
·Mr Yapp sent an email indicating that according to his client’s instructions, “both the wireless network and the fibre optic network have been operational both before and since 19 December 2006”. He then stated that, “nothing has been changed, and neither does my client propose to change anything”. The email further added: “I am now instructed to request that your client identify any other network element/s for which access is required. My client is likely to grant access”. (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 98)
It is therefore apparent at this point that the respondent was not prepared to give access as ordered by the Court and contested why it should.
29 December 2006
·The applicant’s solicitors sent an email indicating that the applicants, “still do not have an operational wireless network”. The email gave details of the period over which the network had been down and still remained inactive. A request was again made for passwords, keys, as well as, “written permission to have physical access to all sites to find the source of the problem. This will enable our client to attend each site and view the outdoor cabinets and enclosures; it will then be in a position to clearly define what the technical problem is”. (Affidavit Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 99)
·Later that day the applicant’s solicitors sent an email to Mr Yapp, again stating the reasons for physical access being sought and asserting an entitlement to access the equipment under the agreement dated 29 November 2006. The email indicated that the applicant would be making its own generating facilities to remedy a failure in the power supply which was of the respondent’s making. A request was again made for passwords and keys and it was indicated that a failure to provide access could result in the issuing of contempt proceedings. (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 101)
·By return email, Mr Yapp stated that two of the sites, namely Merriton and Mambray Creek, were on temporary electricity supply, “for testing purposes only” and indicated that this was done, “pursuant to Aitel’s contract with … (UTS)”. Reference was made to the problems of running temporary diesel generators at remote locations during high fire season. It was also stated that there were no keys to be handed over as locks had not been installed on the various cabinets. It was then suggested that it was best if the applicant, “obtained fresh passwords from Crown Castle to access their premises”. This email did not deal with all of the matters raised by the applicant in the earlier email. (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 104)
3 January 2007
·Curtis Raams, an employee of the applicant, sent an email to Mr Veng Taing, requesting passwords, IP Addresses, and method of access, for access to radio boxes, backhaul, switches and servers. (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, page 108)
4 January 2007
·Solicitors for the applicant sent an email with a letter to Mr Yapp indicating that the applicant:
…had accessed the network sites and had themselves now managed to procure the installation of temporary generating equipment at Merriton, Port Augusta and Mambray Creek. Power has now been restored to those sites and subscribers reliant on those sites currently have an operational service after substantial disruption.
The letter continued to say that as a consequence of the respondent not providing relevant passwords, the applicant still did not have “network log-in access to inspect, monitor and maintain the network” and also indicated that passwords were still required. Importantly, the letter stated that:
In order to mitigate their loss, our clients are today taking the necessary steps to alter the passwords on the radios at the transmission towers so that it may access them. We realise that this may mean that your client will no longer have access under its old passwords. However, given that your client has refused to advise our client of the current passwords, this is the only technique our client can adopt to obtain access.
The letter continued to advise that the respondent’s solicitors could contact the applicant’s solicitors, “if your client wishes to have access for any purpose, although it seems by all accounts that your client, apart from obstructing our clients’ access, has washed its hands of the project”. (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, pages 110-111)
8 January 2007
·An email was sent by the applicant’s solicitors to the respondent’s solicitor, attaching a letter which set out a number of matters of history and explained the applicant’s position, which included:
§ The history of the changing of passwords.
§ The circumstances leading up to the written agreement of 29 December 2006.
§ The requirement for access to the Network being available to the applicant’s subscribers by 30 November 2006.
§ The agreement of 19 December 2006.
§ The problems with the respondent’s termination of the power to the applicant’s subscribers.
§ The applicant changing the passwords to the fibre optics network as well as the wireless network.
§ The request for password access to the back-haul radios.
The complaint about the Network as constructed by the respondent was that it was not “entirely stand-alone” but was reliant at some points on the transmission of signals through equipment owned by the respondent. This was inconsistent with the contractual obligation to deliver an independent network.
The letter referred to the applicant being “in the course of taking control of the network” and indicated that at the hearing on 10 January 2007 it would seek a continuation of the injunction to enable it to set up the Network so as to be entirely independent of the respondent’s passwords or equipment. (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1, pages 114-122)
10 January 2007
·The order for continuing injunction was made.
Events after the continuing interlocutory injunction of 10 January 2007
11 January 2007
·A letter was sent by the applicant’s solicitors pursuant to orders made by Judge Withers. This letter set out aspects of the applicant’s assertions and in particular indicated the two legal grounds upon which it sought to maintain the injunction, namely a contractual entitlement to access so that the applicant could maintain and operate the network to serve its customers, and a proprietary right with regard to the Network. It was suggested that there was “at the very least” a serious question to be tried regarding these claimed contractual and proprietary rights. The letter also summarised the applicant’s argument as to the balance of convenience. (Affidavit of Tom Knight sworn 19 January 2007, Exhibit TK9)
12 January 2007
·A letter was sent to the applicant’s solicitors by Camatta Lempens, who had been instructed to act as solicitors for the respondent. This letter requested information as to whether the applicant was the present holder of a carrier licence. (Affidavit of Vahid Chittleborough sworn 19 January 2007, Exhibit VC1)
·The respondent’s solicitors sent a letter complaining that the applicant had changed certain locks at 65 King William Street Adelaide, over which the respondent had a lease. The respondent indicated that at as a result, it did not have physical access and that instead, the applicant had unrestricted physical access to property which included the respondent’s own commercially sensitive and confidential information. The letter advised that the respondent was now making arrangements to change the locks on the premises again, and that it would not provide the applicant with a key. The letter indicated that in the event that the applicant required access in the ordinary course of business, Mr Hoi Taing could arrange such access with 48 hours notice. Further, in the event that “emergency” access was required, Mr Hoi Taing and Mr Veng Taing could be contacted on their mobile telephones to arrange such access on two hours notice. (Affidavit of Vahid Chittleborough, 19 January 2007, Exhibit VC1)
15 January 2007
·The applicant’s solicitors sent a letter confirming that the applicant had a carrier licence as from 1 August 2005. (Affidavit of Vahid Chittleborough, 19 January 2007, Exhibit VC1)
16 January 2007
·The applicant’s solicitors sent a letter to the respondent’s solicitors informing them that on 12 January 2007 an effort was made to obtain urgent access to the premises at 65 King William Street. It recorded that on 12 January 2007 it had sought access in accordance with the arrangements suggested by the respondent, which was refused on the basis that Mr Hoi Taing did not consider that the reason for the applicant’s access was an emergency. The same letter proposed removal of “our client’s router switch located at 65 King William Street so that our client can extricate its network from your client’s and relocate it to a location at which it may be accessed without going through your client”. Reasons were given for this proposal. The applicant sought the respondent’s co-operation and indicated that a variation of the injunction would be sought if access was refused. (Affidavit of Vahid Chittleborough, 19 January 2007, Exhibit VC1)
·By letter wrongly dated 15 January 2007 (should have been 16 January 2007), the respondent’s solicitors indicated that the respondent would permit access to the premises on terms previously specified in its letter of 12 January 2007. It was contended that removal of the router switch went beyond the terms of the injunction and it was requested that the applicant advise of any variation it sought to the proposed injunction. (Affidavit of Vahid Chittleborough, 19 January 2007, Exhibit VC1)
17 January 2007
·The applicant’s solicitors sent a letter to the respondent’s solicitors, asserting that the applicant owned the router, and that this was a consequence of the agreements of 29 November 2006 and 19 December 2006, together with an oral confirmation that the router was the applicant’s property. The letter stated that the proposal to remove the router was based on the assumption that the respondent did not claim ownership of the router. The applicant maintained that it owned the router, but proposed instead to relocate the fibre optic pairs on which the applicant’s communications are carried, and to link them to a new router purchased by the applicants and located in another room. The letter asserted that a refusal of this request would be interpreted as a desire on the part of the respondent to be in a position to continually frustrate the operation of the Network. It was further clarified that the proposal to remove the router had not been suggested as being pursuant to the injunction. (Affidavit of Vahid Chittleborough, 19 January 2007, Exhibit VC1)
·The respondent’s solicitors sent a letter to the applicant’s solicitors complaining about a change in the configuration of the Network, which it said prevented the respondent from accessing the Network and the turn key management and monitoring system. It indicated that, in the respondent’s view, the applicant had not had prior access to the Network and the turn key management system, and that therefore its actions were beyond the terms of the injunction. A request was made for the applicant to revert the configuration or provide the new password to enable the respondent to access it. The letter continued that the respondent remained ready, willing and able to perform its obligations to complete the Wireless Network, “in accordance with the original oral agreement between UTS and [the respondent]” as set out in an affidavit of Mr Taing. (Affidavit of Vahid Chittleborough, 19January 2007, Exhibit VC1) I will refer later to the contents of Mr Taing’s affidavit.
18 January 2007
·The applicant’s solicitors sent the respondent’s solicitor a letter which included the following points:
§ It was necessary for the applicant to change the configuration of the Network to perform diagnostics and maintenance and restore its functionality. In order to access the system and cause it to be operational and maintainable, the applicant was obliged to change the configuration and system passwords due to the continued failure of the respondent to provide passwords.
§ It asserted that the changing of the passwords was not being done as part of the terms of the injunction, but that the applicant was entitled to do so as owner of the Network.
§ The applicant refused to give an undertaking to revert configuration of the wireless network.
§ The applicant indicated that the new password would be supplied once the purpose was known and provided the respondent was prepared to “undertake not to use the password to disrupt the operation of the system”. (Affidavit of Vahid Chittleborough, 19 January 2007, Exhibit VC1)
Observations in relation to the chronology

One of the arguments of the respondent is that it had not failed to comply with the injunction as ordered on 22 December 2006, 27 December 2006 and 10 January 2007 as the requirement was to provide access was limited to “such extent as the defendant granted such access to the plaintiff immediately prior to 19 December 2006”. It was contended that the applicant had not had access to passwords and usernames to the Network prior to 19 December 2006. This was strongly denied in detail by the applicant as set out in the letter from the applicant’s solicitors of 8 January 2007. (Exhibit TK8 to the affidavit of Tom Knight, 19 January 2007) The information in that letter has not been refuted. I am satisfied on the material before me and on the documentary chronology of the following matters:
·The respondent has not complied with the orders for the injunction previously made on 22 December 2006, 29 December 2006 or 10 January 2007, and at no time has applied for any variation or release from its court ordered obligations.
·The excuses for non-compliance that are proffered by the respondent in correspondence, such as the letters of 23 December 2006 and 28 December 2006, have no foundation. The email of 29 December 2006 reveals a non-responsive and obstructionist approach to the concerns of the applicant to gain full and unconditional access the “Wireless Infrastructure”, including the “fibre optics network”, as ordered.
·The applicant, before taking action to change the configuration of the passwords and user names, gave notice of its intention by letter of 4 January 2007, and the taking of such action was a result of the failure of the respondent to comply with the orders. It is not asserted that the applicant took this action pursuant to the injunction, rather it was in response to the failure by the respondent to comply with the injunction. At the same time the applicant has indicated that access will be granted upon application so long as it does not obstruct the applicant’s connections.
·It appears from the correspondence that whilst the router is an integral part of the Network and fibre loop, it is also used by the respondent through other fibre optic cables, which are also connected to or pass through the router.
·There was no adequate response to the applicant’s allegations in the letter of 16 January 2006, regarding the attitude of the respondent and its refusal to give the applicant access to the router on 12 January.
·The changing and counter-changing of locks to the premises at King William Street was predominantly a consequence of the respondent’s generally uncooperative attitude in relation to access sought by the applicant.
In making these observations, I also understand that the respondent may have reacted in the way it has, because it contests the applicant’s contractual and proprietorial claims to the Network and fibre loop, and objects to their use. However, that fact does not excuse the failure to comply with the injunction and it does not sit well with the submissions being made by the respondent’s counsel that the applicant has not come to court with “clean hands”.
I turn now to the submissions made by the applicant in seeking confirmation of the injunction.
Proprietary claim to the Network and router
The applicant alleges that it owns the Network and fibre loop. There are five features which it puts forward to support the argument that there is a serious issue to be tried. I will consider each of these arguments separately, although they must also be looked at collectively in applying the test of “serious issue to be tried”.
I will deal with the first two features together, that is the alleged initial oral agreement between UTS and the respondent, and the invoices which were rendered by the respondent in the name of Frontier Business Pioneer and paid by UTS.
The initial oral agreement and payment of invoices.
The material in support of the oral agreement is largely contained in the affidavit of Tom Knight, which includes certain letters written by the applicant’s solicitors, (TK8 and TK9) the contents of which have been adopted by Mr Knight.
The terms of the alleged initial oral agreement are not contained in any one place. This is most unsatisfactory even taking into account the fact that this application has been taken out in circumstances of urgency. Having said that, I also note that the affidavit of Mr Hoi Taing also suffers from lack of clarity on the terms of the initial agreement, although there is more detail as to implementation and the agreement as to the fibre loop.
The content and terms of what I understand to be the oral agreement, appear to include that:
·An agreement was initially entered into between UTS and the respondent to build a Network for UTS in the upper Spencer Gulf area of South Australia (including Whyalla, Port Pirie and Port Augusta). (Affidavit of Tom Knight, 19 January 2007, Exhibit TK9)
·Later this was extended to the fibre loop, which was to operate as an integral part of the Network. (Affidavit of Tom Knight, 19 January 2007, Exhibit TK9)
·The respondent was to apply for a carrier licence of behalf of UTS to enable UTS to operate the Network. (Affidavit of Tom Knight, 19 January 2007, para [11] and Exhibits TK8 and TK9)
·UTS/ACMNet would pay for equipment including the fibre loop. The respondent would purchase the equipment then submit an invoice to UTS/ACMNet for the price of equipment plus a mark up for the respondent. UTS/ACMNet would pay the invoice and the respondent would then pay the supplier. (Affidavit of Tom Knight, 19 January 2007, para [43])
·The Network and the fibre loop would be “owned and provided” by UTS and would “at all stages be vested in UTS”. (Affidavit of Tom Knight, 19 January 2007, Exhibits TK8 and TK9)
·The respondent would have a right to use 30 per cent of the fibre loop for its own use but not for resale. (Affidavit Tom Knight, 19 January 2007, para [44] and Exhibit TK9)
·The Network was to be in operation by 30 November 2006, being the date set for a launch. (Affidavit Tom Knight, 19 January 2007, para [7] and Exhibits TK8 and TK9)
The initial oral agreement was a highly casual arrangement. It gave the appearance of having evolved over a period of time and there appears to be little regard to the legal entities of the parties alleged to be bound.
Mr Ower, counsel for the respondent, contends that there is no serious issue to be tried in relation to the allegation of current proprietorship of the Network, fibre loop and router. This argument is supported by reference to deficiencies in the material proffered to support the alleged initial oral agreement. In summary, Mr Ower points to:
·The lack of clarity as to the parties to the alleged agreement;
·The material set out in the affidavit of Mr Knight as being largely hearsay and reliant on what he was told by Mr Bechara;
·The failure of Mr Bechara to swear and file an affidavit when he is alleged to be a director of the applicant and his name appears frequently in the affidavit of Mr Knight as being the person through whom negotiations were conducted; and
·The agreement and its terms being expressed without clarity and mostly in the passive tense rather than the direct tense.
In relation to the assertion by the applicant that it has current ownership of the Network and fibre loop as a consequence of the oral agreement, as distinct from attaining proprietorship at a future date as contended by the respondent, the affidavit of Mr Knight is less than clear. Paragraphs [16], [24], [37] and [44] of his affidavit together with Exhibit TK8 (paras [2] and [4(b)]) suggest that it was intended for UTS to own the Network and fibre loop upon completion of the work. It is only in a letter from the applicant’s solicitors dated 11 January 2007, that it is categorically stated that:
It was an express term of the arrangements that property in both the northern equipment and the Adelaide loop would at all stages be vested in Unique Technology Solutions…
Thus there is ambiguity on the topic of current ownership arising from the material put forward by the applicant itself.
Although the applicant bears the onus in relation to the application, it is relevant to also have regard to the material proffered by the respondent on the same topic.
There appears to be an acceptance by the respondent in the letter of 17 January, that there was an oral agreement between UTS and the respondent (Affidavit of Vahid Chittleborough, 9 January 2007, Exhibit VC1). However, no terms are set out. On the other hand the affidavit of Mr Hoi Taing, which deposes to the oral agreement, is fragmented, and I am unable to clearly discern what the respondent says are the terms of, or the parties to, the oral agreement as to the Network. There is an inference that the respondent thought it contracted with Koala Telecom to build a Network. (Affidavit of Mr Hoi Taing, 17 January 2007, paras [11]-[15]) Later there is reference to invoices being rendered and paid by UTS (paras [29] and [32]). In paragraph [16] Mr Hoi Taing denies that ownership of the Network was discussed, and simply states that: “I assumed that upon final payment from Koala Telecom, ownership of the network would pass to them”. However, in para [15] Mr Taing states that:
…I also advised Bechara [a director of UTS] that our costing estimates were based on Ai Tel owning and operating the network for Koala Telecom. Bechara asked me to provide updated costing estimates for Koala Telecom to own the network.
The affidavit does not assert that the respondent has current ownership of the Network, and it inferentially accepts that the Network would ultimately reside with the applicant upon its completion and payment (paras [15] and [16]).
The first time the respondent asserts current ownership of the Network, is in a letter of 16 January 2007. The assertions in this letter are not referred to nor are they confirmed as accurate in the affidavit of Mr Hoi Taing, which is dated 17 January 2007.
In relation to the fibre loop, the respondent asserts current ownership by letter dated 21 December 2006 (Exhibit HYT8 of Mr Hoi Taing of 17 January 2007, wrongly referred to in para [95] of the affidavit as Exhibit HYT7). The affidavit of Mr Hoi Taing of 17 January 2007 deposes in paras [58]-[61] to the agreement to build the fibre optic network, and in relation to the ownership of the fibre loop, simply states in para [61] that there was no discussion about “who would own the fibre optic network prior to payment by UTS”.
I have not reflected each and every factual difference alleged between the parties about this alleged oral agreement, of which there are many.
In my view, the matters set out above should be considered in the context of the payment by UTS of accounts rendered by the respondent (under the name of Frontier Ai Tel Pty Ltd) of more than $1,000,000. I also note that in the invoices which are annexed to Mr Hoi Taing’s affidavit as Exhibit HYT4, there is an invoice for a “Cisco 7206VXR router” and a “Cisco 2821 router – advanced security and fire wall feature” on 14 October 2006. I do not know whether this is the router in question. No submissions were made on this point and I make no finding, but simply make the observation.
The respondent has received a very large amount of money for its work, including for the purchase of goods required for the Network and fibre loop, all of which appears to have been paid by UTS. This fact gives credence to an assertion that the applicant was not only to have ultimate ownership of the Network and fibre loop, but also had proprietary rights during its construction.
There is some force in Mr Ower’s submission about deficiencies in relation to certain aspects of Mr Knight’s affidavit. These are not of concern to me on the issue of the initial agreement between the parties and I will address these particular deficiencies later in these reasons.
I do not consider that the absence of an affidavit from Mr Bechara is of itself a matter from which I should draw an adverse inference against the applicant and its contentions on the initial agreement. Mr Knight is in a key position within the Corporation and he is an appropriate person to depose to the arrangements between the applicant and the respondent. This is not the trial of the action but an urgent application for an injunction.[2]
[2] Australian Agricultural Co Ltd v AMP Life Ltd [2003] FCA 1038, [106].
I am satisfied on the material before me that there is a serious issue to be tried as to whether there was an initial oral agreement between the parties that the applicant UTS was to have ownership of the Network and fibre loop, which included the router, at all stages of development. UTS is said to be one of the companies, along with the applicant, in the group comprising Global Enterprises. If the matters deposed by Mr Knight are proved at trial, those matters in conjunction with the invoices and their apparent payment to date as well as certain material contained in the affidavit of Mr Hoi Taing, satisfies me that there is a sufficient likelihood of success of the applicant on that issue at trial.
The written agreement dated 29 November 2006
The applicant’s submission includes an argument that the written agreement between the applicant and the respondent, dated 29 November 2006 (Affidavit of Vahid Chittleborough, 10 January 2007, Exhibit VC1), supports the applicant’s claim of current ownership of the Network, the fibre loop, and the router.
The respondent challenges this written agreement in a number of ways, all of which are directed to whether there is a sufficient likelihood of success at trial of the applicant’s argument based on this agreement.
Mr Ower raised the following arguments in relation to this agreement:
·The applicant has wrongly described the agreement as a “novation” as this alleged fact is not apparent on its face.
·There is no clause in the Agreement simply stating that the property in the Network vests in the applicant either at all or at any particular point in time.
·The terms relied upon as establishing a proprietary right are poorly drafted and do not cover the proprietary rights asserted.
·Bearing in mind the matters raised in Mr Hoi Taing’s affidavit, there is no material to the effect that the version allegedly given by Mr Knight was that which was signed at Mr Bechara’s house.
I will deal with the last argument first. Mr Hoi Taing in his affidavit at paras [81]-[88], deposes that he did not sign the copy of the Professional Contractor’s Agreement which is Exhibit VC1, HYT6” but another document which he annexes to his own affidavit (Exhibit “but wrongly referred to in para [82] of his affidavit as HYT7). The document in HYT6 contains a different front sheet from VC1. Further, the Recitals do not contain Recital “C” as set out in VC1, which is relied upon by the applicant, nor the definition of “New Property” as set out in para [2.9] of VC1, nor para [22.2], which states:
At not stage prior, during or after the construction is the Contractor to make out neither that the New Property is the property of the Contractor nor that the Contractor has complete or partial Ownership of the said New Property.
Mr Hoi Taing not only a denies that the document in VC1 was the written agreement, but also denies that the signature and the initials on the document are his. Essentially this appears to be an allegation of fraud. There is a greater evidentiary burden in making such an accusation.
Mr Knight, on the other hand, deposes in his affidavit in paras [17]-[21] as to the arrangements to sign the agreement in VC1, and denies the assertions of Mr Hoi Taing. I note that he also deposes to information given by Mr Bechara who has not provided an affidavit.
It is not for me to make a finding on this issue. It is a matter for trial. The fact that the agreement in VC1 appears to be signed by both parties is a matter which I can take into account for the purpose of assessing whether I am satisfied that there is a serious issue to be tried.
In relation to the respondent’s submission that the agreement was not a “novation” because it was not expressed to be so in the document, this may be a relevant argument at trial but it is not an argument which by itself would be determinative of the issue. The document appears to be signed at a time when it was common to both parties that a significant amount of the work for the Network and fibre loop had already been performed by the respondent and paid for by UTS, and there is material before me that the applicant and UTS are companies under the umbrella of Global Enterprises. The agreement indicates in the schedule that it is back-dated to commence on 1 August 2006. In my opinion it is reasonably arguable that the document was a novation agreement between the parties.
I now turn to whether the agreement, if it is expressed in terms as set out in VC1, raises a serious issue as to whether the applicant currently owns the Network and fibre loop.
In the agreement contained in VC1, Recital “C” provides:
CThe Contractor does not at any stage prior, during or after construction own or have complete or partial ownership in any of the New Property.
Clause 2.9 of the agreement defines “New property” as:
2.9 – “New Property” means Wireless Infrastructure – Towers.
This identification of New Property is then amplified in the following way:
22. New property
22.1 Any industrial property, intellectual property (including but not limited to copyright) discovery, invention process or improvement in procedure created made or discovered by the Contractor in the course of or in connection with the performance of the services (“the New Property”) shall belong to and be the property of the Company and at any time the Contractor (at the expense of the Company) shall apply or join in applying for Letters Patent or other protection in Australia or any other part of the world for all of or any of the new property and shall execute all instruments and do all things necessary for vesting the new property and all title and interest in the new property in the Company as the sole beneficial owner of the same.
22.2 At no stage prior, during or after the construction is the Contractor to make out neither that the New Property is the property of the Contractor nor that the Contractor has complete or partial Ownership of the said New Property.
The services which are to be provided under the agreement are referred to in clause [2.10] and also the schedule to the agreement. The services in the schedule refers to “Building a Wireless Network Infrastructure incorporating Back Haul from Adelaide and wireless network coverage of towns as shown in attachment A”.
It is immediately apparent that there is no consistency of expression used in the descriptions of “New Property” and “wireless network”. This confusion is amplified by the description of New Property in clause 22 which describes it as “Any industrial property, intellectual property (including but not limited to copyright) discovery, invention or improvement in procedure created, made or discovered by the contractor in the course of or in connection with the performance of the services”. This is the property which is stated as belonging to the applicant.
There are a number of concerns about these clauses and their meaning, not the least of which is what is meant by “industrial property”, which is most frequently associated with intellectual property rather than physical property.[3] There are also other arguments which may be raised at trial as to the interpretation of the agreement.
[3] See e.g. ‘Industrial or Intellectual Property’ in Words and Phrases: legally defined (3^rd ed, 1989) 427; International Convention for the Protection of Industrial Property, 20 March 1883.

My concern is whether the content of this document in the terms in which it is expressed satisfies me that there is a serious issue to be tried as to whether the applicant has current ownership of the Network and fibre loop. In my view this agreement and its contents, when viewed in the context of the initial oral agreement, the performance of work, and the payment of invoices previously described, satisfies me that there is a serious issue to be tried on this point.
I also mention in the context of considering the written agreement, Exhibit “HYT5” of the affidavit of Mr Hoi Taing, which does not appear to be referred to in the context of his affidavit, but exhibits an email from Koala Telecom addressed to Mr Hoi Taing of 29 November 2006 which states:
I have faxed through a copy of the Professional Contractors’ Agreement. It is important that it is signed today. It basically means that you are contracted to build the wireless infrastructure and that ACMNET is the owner of the infrastructure. If you have any problems please feel free to give me a call …(emphasis added)
In summary, I conclude that the written agreement and its interpretation gives rise to a serious issue to be tried in relation to alleged current proprietorship of the Network, the fibre loop and the router.
Verbal confirmation of ownership – oral conversation on 2 August 2006
Mr Ericson submitted that the respondent, through Mr Hoi Taing, had verbally confirmed the applicant’s ownership of the Network equipment, during a meeting with Mr Bechara. In para [47] of his affidavit, Mr Knight recalls a meeting on 2 August 2006, and deposes that Mr Bechara stated: “If I pay for it, I own it”, during which statement Mr Hoi Taing was present and did not dispute the statement. This related to “fibre loop equipment”.
There are concerns about the admissibility of this paragraph, bearing in mind that it also states:
I have spoken with Mr Bechara on this issue, and he states (and I believe) that, in addition to remembering this, he also remembers (and I believe although I do not independently recollect this) that Mr Hoi Taing stated, that if he invoiced UTS for equipment ordered by him and that invoice was paid, UTS would own the equipment.
This paragraph is so heavily qualified and derivative that in all of the circumstances I do not consider it has any real weight and would not meet the requirements of the test standing alone. This evidence of Mr Knight cannot be used to support the argument as presently expressed.
Written Agreement between Unique Global Enterprises and the respondent of 19 December 2005
After the Network became operational and the launch had taken place on 1 December 2006, a number of issues and disputes arose in relation to its construction, operation and administration. These matters gave rise to a meeting between the parties on 19 December 2006, which resulted in a document being signed by Global Enterprises and the respondent.
Matters specifically alleged to be relevant to proprietary rights are set out in paras [5] and [6] of that agreement as follows:
[5] That 65 King William Street is surrendered to Unique Global Enterprises Pty Ltd.
[6]That the fibre network established by Aitel and Unique technology Solutions in the City of Adelaide is handed over to the control of ACM Net Pty Ltd and that all assistance is provided in relation to the City of Adelaide to this end.
The respondent submits that this agreement, including the circumstances in which it was signed, does not provide a sufficient basis to meet the test of serious issue to be tried in relation to proprietorship of the Network and fibre loop.
The respondent points to paras [89]-[96] of the affidavit of Mr Hoi Taing. In essence, the respondent alleges that the agreement was signed under protest in circumstances where Mr Hoi Taing felt imprisoned in a room with only one exit and was being threatened with physical violence. Again, a higher than usual standard would be required to make out this allegation.
Mr Knight deposes in his affidavit, in particular at paras [26]-[28], that the allegations of Mr Hoi Taing are incorrect. In addition, an explanation is given in paragraph [29] as to why the agreement was entered into in the name of Global Enterprises.
It is not for me to make any finding as to the circumstances in which the document was signed. I can take account of the fact that it is agreed to have been signed. In relation to its contents, I note that the document refers to handing over control of both the Network and the fibre loop to the applicant. It does not in specific terms assert proprietorship.
Notwithstanding some concerns about the expressions used in the document, I am satisfied that its contents, in the context of the history of the matter as discussed earlier, are sufficient to amount to a serious issue to be tried with regard to proprietorship of the Network, fibre loop and router. Although the router appears to also be used by the respondent for its own purposes, this factor of itself does not alter my conclusion. The form in which the injunction is sought does not seek to change that situation. For example, the applicant does not apply for an order that the router be removed from the room in which it is presently situated. The injunction seeks simply to restrain certain actions of the respondent and to provide the applicant with physical access to the router.
In my view, the first of the two tests for an injunction has been satisfied on the contention by the applicant of proprietary rights to the Network and fibre loop, including the router.
Proprietary rights - Sale of Goods Act
The applicant submits that further support for its claims to proprietary rights to the Network and fibre loop pending completion, can be obtained by the application of Part 2, s 18, r 5 of the Sale of Goods Act. This rule provides:
(1)Where there is a contract for the sale of unascertained or future goods by description, and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the seller with the assent of the buyer, or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer. Such assent may be express or implied, and may be given either before or after the appropriation is made.
(2)Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee or custodier (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.
It is not necessary for me to reach a concluded as to the construction of this section and its application to this case for the purposes of confirming this injunction. It is only necessary for me to consider whether I am satisfied that there is a serious issue to be tried with regard to the interpretation of the Act and its potential application to the facts in this case as contended by the applicant.
Part 2 of the Sale of Goods Act specifically deals with the transfer of goods between buyer and seller. “Goods” is defined in s A2 as follows:
goods include all chattels personal other than things in action and money. The term includes emblements, industrial growing crops, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale;
The Rules are only applicable if in a contract between a buyer and a seller an intention cannot be discerned as to the transfer of property.
Mr Ower contends that the Act is inapplicable to the alleged facts in this case. It is submitted that the building of a network would not fit the descriptor of “goods” and further that the case of Altman v Skippercraft (1981) 32 SASR 351 is inapplicable. That was a case which considered the Act in the context of a boat builder refusing to complete and deliver remaining launches and one issue was the ownership of partly completed launches. Mr Ower submitted that the Network and fibre loop comprised a combination of equipment and the programming of components, which was completely different from a partly completed boat. That is obviously so, but that in itself does not negate the possibility that the Network and fibre loop may amount to “goods”. A closer analogy may be the construction of a radio, or a television set, or a specialised computer. The fact that each may contain individual parts as well as an aspect of programming, which is not a physical object, would not exclude it from being characterised as “goods”.
Mr Ericson submitted that if the Network and fibre loop could not be considered “goods” within the meaning of the Sale of Goods Act, nonetheless the router could be considered as a good. That may well be so, but then other considerations apply, such as whether the applicant is a buyer and the respondent was a seller of a router in isolation. A different contractual arrangement seems to come into play.
As I indicated it is not necessary for me to give a concluded view. This particular argument only requires consideration if the applicant’s primary contention, that proprietary rights were agreed between the parties, fails to meet the test of serious issue to be tried. I can see a number of issues potentially arising with the application of the Act, but this is not the only argument which the applicant uses to support its proprietary claims. I am satisfied on other points that there is a serious issue to be tried and that would not render the Sale of Goods Act as relevant on this hearing.
Contractual right to ensure continuing operation of the Network to service the applicant’s customers
Apart from its assertion of proprietorship, the applicant also contends in support of this application, that the respondent is contractually obliged to ensure that the Network continues to operate to enable the applicant to service its clients. It therefore seeks to restrain the respondent from taking actions in relation to the router such as to interfere with that connection, and also seeks access to the router to allow it to maintain and restore the Network.
The applicant relies on the initial oral agreement, a further oral agreement in about October/November 2006 regarding the completion process, as well as the written agreement dated 19 December 2005. Of the three agreements relied upon, the most specific appears to be the alleged oral agreement in about October/November 2006, taken in context with the earlier initial oral agreement between UTS and the respondent.
The applicant alleges that it was part of the initial agreement that the Network was to be operational by 30 November 2006, being the date set for the launch. (Affidavit of Tom Knight, 19 January 2007 para [9] and Exhibits TK8 and TK9) I also note that the schedule to the written agreement dated 29 November 2006, defines “The Term” of the agreement as being “Until Item 1 [The Services] has been completed or on the 30^th November 2006; whichever occurs first”.
To the contrary, Mr Hoi Tang asserts that he was never informed that UTS intended to use the Network for commercial purposes in December 2006, (Affidavit of Hoi Taing, 17 January 2007, paras [75-78]) and specifically asserts that there was firstly to be “limited testing with customers” using temporary power supplies and that the Network would not be finalised before late January 2007 (paras [75]-[76]).
The applicant in turn denies that the customers were to be “test customers”. (Affidavit of Tom Knight, 19 January 2007, para [10])
The applicant further submits that in October/November there was an additional oral agreement between the parties as to completion plans. This arose in view of the fact that the Network would not be completed by 30 November 2006. It is alleged that this agreement specified that the Network would be operating in Port Pirie, Port Augusta and Whyalla on 30 November 2006; the launch would proceed on 1 December 2006; the towns between Port Pirie and Two Wells would be placed progressively on-line; the applicant could continue to sign up subscribers whilst the Network was being completed; and that the respondent would inspect, monitor and maintain the Network until completion (Affidavit of Tom Knight, 19 January 2007 paras [9]-[10]), Exhibit TK8 paras 2.4(g)–(h)). Accordingly, advertising was developed and was undertaken by the applicants as from 1 December 2006 (Affidavit of Tom Knight, 19 January 2007 para [6], Exhibit TK2). The applicant also argues that the contents of Ben Wannan’s affidavit, dated 19 January 2007, reinforces that the respondent knew that the Network was to be completed by 30 November 2006 and that the applicant was relying on that.
Mr Ower submits that the material proffered in support of an oral agreement is deficient. He refers to the absence of an affidavit of Mr Bechara and to the passive language used by Mr Knight, instead of setting out direct and specific words comprising the agreement. As to Mr Wannan’s affidavit, he says that an apparent acceptance by the respondent of the hope of connection of the Network on 30 November 2006, cannot be interpreted as confirmation of a contractual agreement.
The third strand of the applicant’s argument arises from the written agreement dated 19 December 2006. I have already discussed this document earlier in my reasons in the context of proprietary rights. The conclusions which I reached regarding this agreement also apply in this context, save that I must give consideration to the contents of the document from a different perspective.
The document itself inter alia refers to a completion time for the installation, tuning and checking of the Network, and the handing over of control to the applicant. However, the document is silent on the particular aspect of servicing the Network and the customers of the applicant, pending completion of the Network.
Considering now all of the material on this point. As indicated in my reasons above, I consider that there is a serious issue to be tried in relation to the proprietorship of UTS / the applicant in the Network and fibre loop arising from the oral initial agreement. The purpose of the initial oral agreement and the later written agreement of 29 November 2006, appears to be having the respondent construct a Network and fibre loop to be paid for by the applicant to enable the applicant to service its subscribing clients. As a matter of commonsense and logic, the Network and fibre loop once operational would need to remain in operation in order to satisfy client requirements. Whether it was for testing purposes or not, the Network was in fact operational from 1 December 2006. Once operational it would require monitoring and maintenance as well as a means of rectifying problems to ensure continued connection of the subscribing clients to the Network and fibre loop.
Whilst there is some force in Mr Ower’s arguments, in my view I must bear in mind that this is not the trial of the matter but an application made for an injunction. I am not required to make any finding as to fact in relation to contradicted material, but simply to assess whether I am satisfied on the material before me that there is a serious issue to be tried as to whether there was an oral agreement as contended by the applicant, to the effect that, pending the completion of the Network, it would remain connected so that the applicant’s subscribers could maintain connection and new subscribers could be added. I am so satisfied.
“Clean hands”
Mr Ower submitted that the Court should not exercise its discretion to grant a confirmation of the injunction but should refuse it because the applicant had not come to court with “clean hands”. It was contended that the applicant, by virtue of changing the passwords and username for the Network so as to exclude the respondent, had abused the interlocutory injunctions previously granted. It had changed the status quo and it had effectively obtained proprietary control of the Wireless Network to the exclusion of the respondent, this being the final outcome to be sought at any trial.
Whilst this argument would normally be considered after I had addressed the balance of convenience, because the subject matter is similar I will consider this issue first.
In support of its argument the respondent relies on a chronology of events as detailed in paragraphs [41]-[43] of this judgment. In particular the respondent points to the letter of 17 January 2007 as set out in paragraph [42] above.
I have already made observations in paragraph [44] above, as to the chronology of events and what I consider these events appear to demonstrate. The chronology of events, and in particular the letters of 8 January 2007, do not persuade me that I should exercise my discretion and refuse an injunction by reason of a lack of “clean hands”. Instead the actions of the respondent reveal obstruction and a failure to provide the passwords and user names as required by the injunctions. It was the respondent’s conduct in failing to provide this information which led the applicant, after giving notice, to alter the passwords. It is true that the applicant could have taken out an application for contempt for breach of an injunction rather than taking the action which it did. However, such proceedings would have taken some time, as demonstrated by the present application. In the meantime, the applicant’s customers would remain unconnected to the Network.
Recent developments complained of by the applicant with regard to the conduct of the respondent have reinforced my conclusions.
Recent developments
On 31 January 2007 I reserved my decision, in order to consider the detailed material and submissions. On 28 February 2007 the applicant requested an urgent hearing, and sought to tender further material regarding recent events, in order to support its application for confirmation of the interlocutory injunction.
I brought the matter on again on 8 March 2007. At that time Mr Ericson sought to tender further affidavit material, being the affidavits of Benjamin Wannan (Exhibit A11), Curtis Raams (Exhibit A12), Michael Blake (Exhibit 13), Tom Nemeth (Exhibit A14), and Vahid Chittleborough (Exhibit A15), all sworn on 2 March 2007. This evidence was tendered to support the submission that the balance of convenience lies with the applicant, as well as to counter the argument as to “clean hands”. The affidavit material relates to incidents which occurred between 18 February 2007 and 20 February 2007, concerning a dispute over a motor vehicle which coincided with a loss of connectivity to the Network for the applicant and its customers. Essentially the applicant alleges that the respondent deliberately disconnected the Network.
Mr Ower took a global objection to the tendering of the affidavits, on the basis of relevance. After hearing submissions from both counsel, I overruled this objection and admitted the affidavits into evidence, save for a few lines in Mr Raams’ affidavit which I ruled inadmissible. I also ruled that certain aspects of the affidavits which were discretely the subject of objection by Mr Ower, should be admitted subject to consideration as to the weight which should be attached to them. I also indicated that I would provide reasons for my ruling, which are set out below. The respondent did not tender or seek to tender any affidavits in reply to the affidavits tendered by the applicant, nor did it seek to cross-examine the deponents.
The affidavits collectively deposed to a chronology of events which is set out hereafter. I have utilised certain aspects of a helpful chronology provided by the applicant.
The starting point is a disagreement between the parties as to the ownership of certain motor vehicles, one of which was a Toyota Landcruiser (registration XKG-879). This vehicle, along with three other vehicles, had been the subject of the written agreement of 19 December 2006 as previously discussed. The second clause of the agreement required the respondent to surrender the Landcruiser and the other vehicles to Global Enterprises, which apparently took place when the respondent delivered the vehicle to the applicant. As at 18 February 2007, this vehicle was being used by Mr Wannan to perform his duties for the applicant, as a wireless engineer responsible for maintaining the Network.

I turn now to the chronology supported by the affidavit material.

Time Description

18 February 2007
11:00 pm
B Wannan parked the Landcruiser outside 65 King William Street.

19 February 2007
8:45 am B Wannan returned to King William Street and found the Landcruiser missing.

8:50 am B Wannan reported the Landcruiser missing to Police Officer Davidson of Hindley Street Police Station.

20 February 2007 B Wannan received a telephone call from H Taing, who agreed to return B Wannan’s personal items from the vehicle if provided with a list of the items. H Taing demanded a key to the Landcruiser and B Wannan advised him to take the matter up with T Bechara. H Taing then threatened to call the Police.

28 February 2007
10:50 am B Wannan noticed the Landcruiser parked outside Autolab, being a workshop owned by H Taing’s brother and the primary workshop of the applicant.

12:00 pm B Wannan approached the Landcruiser and discovered it was unlocked.

12:49 pm B Wannan entered the Landcruiser via the passenger side door, disabled a steering wheel lock device and used keys to start the vehicle and drive it to 465 Morphett Street, being the applicant’s headquarters.

1:20 pm
B Wannan received a phone call from H Taing during which the following conversation took place:

“Have you been around to the workshop and taken one my vehicles?” – H Taing

“I’m not going to comment” – B Wannan

“Have you got the car?” – H Taing

“I’m not commenting” – B Wannan

“Tell whoever has the car to return it, or I will turn the network off” – H Taing (emphasis added)

1:22 pm B Wannan received phone call from H Taing, who threatened to report the vehicle stolen.
B Wannan advised H Taing to speak to T Bechara.

1:24 pm The wireless network lost connectivity and a display terminal indicated that the source of the loss was the wireless equipment at 65 King William Street.

1: 38 pm
M Blake telephoned H Taing to inform him:

“Hoi the network is still down, I can’t get into anything” – M Blake

“Speak to Ben, he knows” – H Taing

“Ben is here and doesn’t know anything” – M Blake

“Speak to Ben” – H Taing

1:41 pm M Blake made a second phone call to H Taing to inform him that the network was still down. H Taing again said to speak to B Wannan.

1:59 pm
M Blake made a third phone call to H Taing to ask:

“Hoi, what can I do to get the network back up” – M Blake

“Ben needs to undo what he did.” – H Taing

“What did Ben do, I can’t help unless I know” – M Blake

“Speak to Ben, he knows what he did, I can’t help until he un-does what he did” – H Taing

“Ok I’ll speak to Ben and call you back” – M Blake

“Thanks Mike, bye” – H Taing

2:23 pm M Blake rang H Taing and left a message on his voice mail asking for H Taing to return his call in relation to why the network was still down and why he wasn’t answering T Bechara’s calls.

2:27 pm
M Blake received a phone call from H Taing.

“Mike I got your message, Tony hasn’t tried to call me, I can’t help you because Ben took something from me” – H Taing

…

“Well just see if he has the car: see if it’s outside” – H Taing

“Ok, I will have a look, but Ben isn’t here and we have a big outage and Tony is on my back. My stuff is offline too” – M Blake

“No only the northern network is offline” – H Taing

“No Hoi, the Northern suburbs network connects through to Two Wells as well and its offline because of this” – M Blake

“Ok I didn’t know that was running from Two Wells” – H Taing

“Yes it is and its offline so can you please turn it back on for me” – M Blake

“I’ve got to go get my car back” – H Taing

2:41 pm M Blake made a phone call to H Taing and left a message on his voice mail asking H Taing to return his car in relation to the network outage and the vehicle.

2:44 pm
M Blake made a phone call to H Taing.

“Ok, I found the car; Tony had sent someone to go pick it up from your brother’s workshop; Tony said you can go pick it up from his place as long as you turn the network back on” – M Blake

“No I want it delivered to the workshop” – H Taing

“Well Tony told me you can go to his house; he will meet you there and give you the keys to the car” – M Blake

“No, I want it delivered back to the workshop or I’m not going to do anything for you” – H Taing

“Ok I will tell Tony that but I need the link turn back on please” – M Blake

“No, not until the car is back and I get a call from Pany saying it’s there” – H Taing

3:15 pm V Chittleborough of Finlaysons sent an email to M Conduit of Camatta Lempens regarding the network

3:20 pm V Chittleborough made a phone call to Camatta Lempens and left a message for M Conduit

3:25 pm V Chittleborough received a phone call from M Conduit, who said she had received the email and was seeking instructions

3:33 pm A display terminal showed that the wireless network was reconnected so as to restore the internet services to the applicant’s customers.

3:35 pm T Nemeth received an SMS indicating that network connectivity had been restored.

3:40 pm V Chittleborough received a phone call from M Conduit, informing him that network was operational

Time	Description
18 February 2007 11:00 pm	B Wannan parked the Landcruiser outside 65 King William Street.
19 February 2007 8:45 am	B Wannan returned to King William Street and found the Landcruiser missing.
8:50 am	B Wannan reported the Landcruiser missing to Police Officer Davidson of Hindley Street Police Station.
20 February 2007	B Wannan received a telephone call from H Taing, who agreed to return B Wannan’s personal items from the vehicle if provided with a list of the items. H Taing demanded a key to the Landcruiser and B Wannan advised him to take the matter up with T Bechara. H Taing then threatened to call the Police.
28 February 2007 10:50 am	B Wannan noticed the Landcruiser parked outside Autolab, being a workshop owned by H Taing’s brother and the primary workshop of the applicant.
12:00 pm	B Wannan approached the Landcruiser and discovered it was unlocked.
12:49 pm	B Wannan entered the Landcruiser via the passenger side door, disabled a steering wheel lock device and used keys to start the vehicle and drive it to 465 Morphett Street, being the applicant’s headquarters.
1:20 pm	B Wannan received a phone call from H Taing during which the following conversation took place: “Have you been around to the workshop and taken one my vehicles?” – H Taing “I’m not going to comment” – B Wannan “Have you got the car?” – H Taing “I’m not commenting” – B Wannan “Tell whoever has the car to return it, or I will turn the network off” – H Taing (emphasis added)
1:22 pm	B Wannan received phone call from H Taing, who threatened to report the vehicle stolen. B Wannan advised H Taing to speak to T Bechara.
1:24 pm	The wireless network lost connectivity and a display terminal indicated that the source of the loss was the wireless equipment at 65 King William Street.
1: 38 pm	M Blake telephoned H Taing to inform him: “Hoi the network is still down, I can’t get into anything” – M Blake “Speak to Ben, he knows” – H Taing “Ben is here and doesn’t know anything” – M Blake “Speak to Ben” – H Taing
1:41 pm	M Blake made a second phone call to H Taing to inform him that the network was still down. H Taing again said to speak to B Wannan.
1:59 pm	M Blake made a third phone call to H Taing to ask: “Hoi, what can I do to get the network back up” – M Blake “Ben needs to undo what he did.” – H Taing “What did Ben do, I can’t help unless I know” – M Blake “Speak to Ben, he knows what he did, I can’t help until he un-does what he did” – H Taing “Ok I’ll speak to Ben and call you back” – M Blake “Thanks Mike, bye” – H Taing
2:23 pm	M Blake rang H Taing and left a message on his voice mail asking for H Taing to return his call in relation to why the network was still down and why he wasn’t answering T Bechara’s calls.
2:27 pm	M Blake received a phone call from H Taing. “Mike I got your message, Tony hasn’t tried to call me, I can’t help you because Ben took something from me” – H Taing … “Well just see if he has the car: see if it’s outside” – H Taing “Ok, I will have a look, but Ben isn’t here and we have a big outage and Tony is on my back. My stuff is offline too” – M Blake “No only the northern network is offline” – H Taing “No Hoi, the Northern suburbs network connects through to Two Wells as well and its offline because of this” – M Blake “Ok I didn’t know that was running from Two Wells” – H Taing “Yes it is and its offline so can you please turn it back on for me” – M Blake “I’ve got to go get my car back” – H Taing
2:41 pm	M Blake made a phone call to H Taing and left a message on his voice mail asking H Taing to return his car in relation to the network outage and the vehicle.
2:44 pm	M Blake made a phone call to H Taing. “Ok, I found the car; Tony had sent someone to go pick it up from your brother’s workshop; Tony said you can go pick it up from his place as long as you turn the network back on” – M Blake “No I want it delivered to the workshop” – H Taing “Well Tony told me you can go to his house; he will meet you there and give you the keys to the car” – M Blake “No, I want it delivered back to the workshop or I’m not going to do anything for you” – H Taing “Ok I will tell Tony that but I need the link turn back on please” – M Blake “No, not until the car is back and I get a call from Pany saying it’s there” – H Taing
3:15 pm	V Chittleborough of Finlaysons sent an email to M Conduit of Camatta Lempens regarding the network
3:20 pm	V Chittleborough made a phone call to Camatta Lempens and left a message for M Conduit
3:25 pm	V Chittleborough received a phone call from M Conduit, who said she had received the email and was seeking instructions
3:33 pm	A display terminal showed that the wireless network was reconnected so as to restore the internet services to the applicant’s customers.
3:35 pm	T Nemeth received an SMS indicating that network connectivity had been restored.
3:40 pm	V Chittleborough received a phone call from M Conduit, informing him that network was operational

Mr Ericson submitted that the inference I should draw from this material is that, due to the dispute about a vehicle, the respondent deliberately disconnected a part of the Network to which the applicant and it’s customers were connected, and that soon after the respondent’s solicitors had received a letter of demand from the applicant’s solicitors, it was reconnected. Specifically, Mr Ericson relies on the portions of the telephone conversations between Mr Hoi Taing, Mr Wannan and Mr Blake, which are emphasised above.
Mr Ericson submitted that the interval of four minutes between Mr Hoi Taing’s threat at 1.20 pm, and the loss of connection of a portion of the Network at 1.24 pm, is so close in time that it would be a remarkable, and indeed an extraordinary coincidence, if the respondent did not disconnect the Network. It was also submitted that the interval of two minutes between a telephone conversation at 1.22 pm between Mr Wannan and Mr Hoi Taing in which Mr Taing threatened to report the car as stolen unless returned, and the loss of connection, is also a remarkable coincidence.
Further, Mr Ericson argued that Mr Hoi Taing’s conversations with Mr Blake linked the refusal to reconnect the Network with his demand for the car to be delivered to the workshop. In particular the statement at 1.59 pm: “Speak to Ben, he knows”, made in response to Mr Blake’s questions as to why the Network was out, creates a strong inference that the respondent disconnected the portion of the Network servicing the applicant’s customers, in retaliation for the reclaiming of the vehicle by the applicant.
Mr Ericson also pointed to the timing of a telephone conversation between Mr Chittleborough and Ms Conduit, during which Ms Conduit said she was seeking instructions from Mr Hoi Taing regarding the applicant’s threat of contempt proceedings if the network was not put back on, and the network being restored eight minutes later. Mr Ericson submitted that this creates a strong inference that the respondent reconnected the Network. Moreover, seven minutes after reconnection, Mr Chittleborough received a telephone call from Ms Conduit informing him that her instructions were that the network “was operational”.
Finally, Mr Ericson submitted that there is no evidence that contradicts such events having taken place, and further submitted that the information contained in the affidavits was credible and understandable given the continuing bad relationship between the parties.
By contrast, Mr Ower submitted that the material did not support the inferences that the applicant contended should be drawn. He submitted that gaps in the applicant’s evidence undermined these inferences and left it open to the Court to say that it was “unclear” why the Network ceased to operate on that day. It was submitted that Mr Nemeth’s affidavit failed to disclose how many times the network has previously ceased operating, for example whether it was a singular event or happened on a daily basis. Mr Ower submitted that Mr Nemeth’s affidavit failed to disclose relevant technical evidence showing that the network had been deliberately switched off. He suggested that the ‘outage’ on the day was subject to a multitude of explanations other than the deliberate actions of the respondent, which the applicant failed to eliminate.
In relation to Mr Taing’s threat and the subsequent conversations flowing from it, Mr Ower submitted that all Mr Taing said was that he wasn’t going to help the applicant get the network back up until he got the car back. Mr Ower argued that this was a totally understandable response from Mr Taing in the circumstances and that there was ultimately no evidence before the court to show that Mr Taing deliberately switched off the network. He submitted that the coincidence of events was “simply unfortunate”. Finally, Mr Ower submitted that it would not be appropriate for me to make any findings as to what specifically occurred on 28 February other than to note that there was a network outage.
I reject Mr Ower’s submissions entirely on this point. In my view, all of the above material establishes a solid foundation for the inferences which Mr Ericson has submitted I should draw. I am therefore satisfied on the balance of probabilities on the material before me that on 28 February 2007 the respondent deliberately disconnected the northern portion of the network, which excluded the applicant and it’s customers from having access for a period of more than two hours. I am also satisfied that this action was taken in response to a dispute over a vehicle, and that the respondent reconnected the Network after the applicant threatened contempt proceedings.
In my view this situation has relevance to two matters, namely the “clean hands” argument and more importantly the balance of convenience aspect of the test for an injunction.
As to the former, my conclusion on this material is that it tends to reinforce the reasons for the response previously taken by the applicant to the respondent’s failure to give passwords, and also highlights the continued vulnerability of the applicant to the whim of the respondent in remaining connected to the Network. It reinforces that I should not refuse to exercise my discretion to grant an injunction by reason of an argument as to the alleged lack of “clean hands” of the applicant.
Balance of convenience
The second part of the test requires me to consider the balance of convenience, namely whether the inconvenience or injury the applicant would be likely to suffer if an injunction is refused, outweighs the injury the respondent would suffer if an injunction is granted.
Taking into account all of the circumstances, it is my view that if the injunction is not confirmed in this matter the applicant is likely to suffer the following harm or injury:
·The applicant will be at the whim of the respondent who may decide at any time to cut off the applicant’s access to the Network and the access of the applicant’s customers.
·Such cutting off or obstruction is likely to result in a loss of customers, harm to reputation, and economic loss. (Transcript of evidence of Tom Knight on 22 December 2006,Affidavit of Tom Knight, 19 January 2007 paras [39]-[42] and Exhibit TK9; and Affidavit of Curtis Raams, 2 March 2007).
In so concluding, it is not necessary to rely on each of the matters deposed in the affidavit of Mr Raams. In particular I do not rely on his reference to:
·The applicant having commenced a $3.5M marketing strategy to advertise and promote its brand as from about 24 February 2007.
·Koala Telecom having spent approximately $1.874M on marketing its brand.
·A few hours after the outage on 28 February 2007, one of Koala Telecom’s key-sellers withdrew support for a continuing business relationship due to constant poor and intermittent performance of the network and Koala Telecom’s inability to guarantee when the services would be properly operational.
Mr Ower submitted that the evidence in relation to the termination of the applicant’s relationship with the key-seller in the Upper Spencer Gulf region soon after the outage is of little relevance and should be given little weight, as it fails to expressly state the link between the termination of this relationship and the outage. He also submitted that evidence of the applicant’s marketing strategy and subsequent expenditure should be disregarded because the respondent has created its own prejudices, and its commercial decision to undertake such a marketing strategy when the parties were in dispute, was not relevant consideration.
It is not necessary to rely on any of this contested evidence for the purposes of determining the balance of convenience.
I am prepared to accept Mr Raams’ deposition on the following matters:
·On or about 28 February, the call centre of Koala Telecom received approximately 120 calls from Wireless Internet Customers, both customers in the Spencer Gulf Region and customers in the northern suburbs of Adelaide, complaining that their internet access (and in some cases phone access provided as part of the same wireless service) had ceased.
·Many of these customers experienced the earlier outage in December 2006.
·The complaints from these customers represented approximately 15 to 20 percent of the customer base of approximately 560 to which wireless internet services are provided (in some cases also including wireless voice phone services).
·That the applicant has approximately 4,000 additional customers who receive ASDL or Voice Over Internet Protocol telephone services over phone lines, which are also connected to the Network. Whilst these services were not disconnected, they would also be vulnerable if the router at 65 King William Street was completely turned off.
·The combination of events has granted Koala’s direct competitor free access to the market pending a stable resolution to the network issues.
In my view, this evidence is relevant to the question of where the balance of convenience lies, in that it demonstrates that there is a real risk of harm to the applicant’s customer and commercial relationships, as well as its ongoing competitiveness in the communications industry, if the respondent is prevented from maintaining an effective connection to the Network.
I further accept on the material before me, that if the applicant is not able to gain access to the router, in the event of an outage as distinct from deliberate conduct by the respondent, it will not be in a position to properly monitor, maintain or restore the Network and fibre loop, as it would be beholden to the respondent. In summary, it is my view that the injury which the applicant would be likely to suffer if the injunction is not confirmed, is potentially very significant.
On the other hand, looking at the position from the respondent’s point of view, if the injunction is granted I consider that the respondent will suffer little harm or inconvenience. It will:
·Be prevented from taking detrimental action against the applicant. I cannot see how this is in any way detrimental or injurious to it.
·Be required to give access to premises it presently leases, on requisite notice. In my view this will also cause very little inconvenience.
To the extent that the respondent argues that the status quo has been reversed as a consequence of the actions of the applicant in changing the username and passwords, in my view this consequence has been caused by its own inappropriate conduct. I note that the respondent has not sought any remedy, nor given any undertaking or assurance to the applicant that it would be prepared to reasonably grant the respondent access to the Network. On the contrary, its recent actions strongly indicate that a court order is required
In short, I find that the balance of convenience lies overwhelmingly with the applicant in this case.
Damages and adequate remedy
In considering whether damages are an adequate remedy, it is not necessary for me to consider what the ultimate decision at the trial of any permanent injunction might be. My concern is only with respect to the confirmation of this injunction and whether I am satisfied that damages are an adequate remedy.
In the event that I did not confirm the injunction in this case, this would leave the applicant vulnerable to the respondent cutting the applicant and its customers off the Network. This strongly suggests that damages would not be an adequate remedy. The injunction in this case is appropriately being sought as a method of damage control in a situation where damages would be an inadequate substitute for continuing connection of the applicant’s customers with the Network. The respondent has still given no undertaking on this aspect, and given the background circumstances, is unlikely to be reliable in the absence a court order.
In short, I am satisfied that damages would not be an adequate remedy and that it is appropriate to confirm the injunction as varied with some further modifications which are required for clarity. I therefore make the following orders:
1.The injunction granted on 22 December 2006 and further continued on 27 December 2006 and 10 January 2007 be varied to the form set out in paragraph 2 below, and be confirmed as so varied.
2. The respondent is hereby injuncted until further order,
2.1to not remove, turn off, damage or in any way interfere (whether physically or electronically) with the router located at 65 King William Street, Adelaide or any other equipment forming part of the Wireless Network Infrastructure operated by the plaintiff, so as to cause the Network to cease to operate or to reduce the efficiency of its operations;
2.2to allow the plaintiff physical access to the equipment referred to in paragraph 2.1 above on receipt of 2 hours notice in writing (which may be given by e-mail to the respondent at [email protected]), which access may be used by the plaintiff for the purpose only of maintaining or restoring the operation or efficiency of operation of the Wireless Network Infrastructure operated by the plaintiff.
2.3For the purposes of this order, the Wireless Network Infrastructure is to include the Back Haul fibre optic loop.