Andrash Wholesale Fuel Pty Ltd v Disko Enterprises Pty Ltd - [2020] SADC 17

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Interlocutory Application)
ANDRASH WHOLESALE FUEL PTY LTD & ANOR v DISKO ENTERPRISES PTY LTD & ORS
[2020] SADC 17
Ruling of His Honour Judge Burnett
25 February 2020
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
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE
The plaintiffs sought an injunction to prevent the defendants from displaying, at the service station business they conducted at 895 Main North Road, Pooraka, signage or branding which displays trademarks or logos associated with the X Convenience Brand and the Mobil Brand. The plaintiffs are companies in the Andrash Group of Companies. The second plaintiff, Andrash Management Pty Ltd (Management), holds a licence from another member of the Group to use the trademarks and logos relating to the X Convenience Brand and associated brands. Management is also a sub-licencee of Mobil which entitles it to use Mobil trademarks and logos including the Synergy fuel trademarks and logos.
Management entered into a Licence Agreement dated 28 September 2019 with the second defendant Ariskus Pty Ltd (Ariskus) pursuant to which it granted a licence to Ariskus to use the X Convenience Brand. Management also granted a sub-licence to Ariskus to use the Mobil Brand. The first plaintiff Andrash Wholesale Fuel Pty Ltd (Wholesale) entered into a written Fuel Supply Agreement with Ariskus dated 1 August 2019 pursuant to which it agreed to supply fuel to Ariskus. It was a term of the Licence Agreement that it would automatically terminate in the event that the Fuel Supply Agreement was terminated.
A dispute arose between Wholesale and Ariskus relating to the Fuel Supply Agreement. Wholesale contended that the Fuel Supply Agreement and therefore the Licence Agreement were terminated for breach or as a result of the repudiatory conduct of Ariskus in December 2019. Ariskus contended that the agreements were repudiated by the plaintiffs and that it accepted that repudiation on 17 February 2020. The defendants further contended that they were entitled to continue to display signage relating to the X Convenience Brand and Mobil Brand for a reasonable time following the termination of the Licence Agreement. The issue for determination is whether the plaintiffs are entitled to obtain the injunction and whether they had established that there was a serious question to be tried and that the balance of convenience lay in favour of granting the injunction and that damages would not be an adequate remedy.
Held: There was a serious question to be tried that the Licence Agreement had terminated and the defendants had no further right to display the branding. The balance of convenience lay in favour of granting the application. Damages would not be an adequate remedy. The plaintiffs are entitled to an injunction against the first three defendants.
District Court Act 1992 (SA) s 30; District Court Civil Rules 2006 r 246; Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; Acmnet Pty Ltd v Ai Tel Pty Ltd [2007] SASC 96; Bradto Pty Ltd v State of Victoria (2006) 15 VR 65; JTA Le Roux Pty Ltd as trustee for the FLR Family Trust v Lawson (No 2) [2013] WASC 373; Shevill v Builders Licensing Board (1982) 149 CLR 620; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 149 CLR 17; Measures v McFayden (1910) 11 CLR 723; Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2001] FCA 1758; Re Venetoulis; Ex parte Calsil Ltd (1986) 13 ALR 625; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623; Paul Fishlock v The Campaign Palace Pty Ltd (2013) NSWSC 531; Gwinnett v Day [2012] SASC 43; Northam v Bowden (1855) 11 Exch 70; Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd [2013] FCA 373; Films Rover International Ltd & Ors v Cannon Film Sales Ltd [1987] 1 WLR 670; Freeth v Burr (1874) LR 9 CP 208, referred to.

ANDRASH WHOLESALE FUEL PTY LTD & ANOR v DISKO ENTERPRISES PTY LTD & ORS
[2020] SADC 17

This is an interlocutory application in which the plaintiffs seek an injunction pursuant to s 30 of the District Court Act 1992 (SA) and r 246 of the District Court Civil Rules 2006 (DCR) restraining the defendants from displaying at the service station at 895 Main North Road Pooraka (the Premises) any signage or branding of (1) the X Convenience and associated trademarks or logos and (2) the Mobil or Synergy trademark or logos.
The plaintiffs are part of the Andrash Group of Companies. That Group owns the X Convenience Brand and associated brands including Coffee Station, Smokes Express and X Burger. The Andrash Group operates a number of fuel outlets in South Australia. The first plaintiff, Andrash Wholesale Fuel Pty Ltd (Wholesale), is the supplier of fuel to the Andrash Group of Companies and to other companies outside of the Group. Since 2017, Wholesale has supplied fuel to one or other of the first, second and third defendants as the operator of the service station business conducted at the Premises. The second plaintiff Andrash Management Pty Ltd (Management) is the supplier of administrative and management services to the Andrash Group of Companies and to other companies, including to the operators of the Premises. These services include the licensing of the X Convenience Trademark and logos and associated trademarks and logos. It is clear that another company, Andrash Trademarks Pty Ltd, is the owner of the relevant trademarks and logos relating to the X Convenience Brand but licenses Management to use those trademarks and logos. Management also has a licence from Mobil to use Mobil and Synergy trademarks and logos.
From February 2017 to August 2019, Wholesale supplied fuel to the first defendant Disko Enterprises Pty Ltd (Disko). Until about August 2019, an informal oral contract governed this supply. During the period from February 2017 to August 2019 Wholesale issued invoices to Disko for the fuel, thereby suggesting that Disko was the operator of the service station business conducted at the Premises.
On or about 1 August 2019, Wholesale entered into a written Fuel Supply Agreement with the second defendant Ariskus Pty Ltd (Ariskus) pursuant to which Wholesale supplied fuel to Ariskus. Pursuant to the Fuel Supply Agreement:
(a)Wholesale agreed to supply and Ariskus agreed to purchase petroleum products in the quantities specified in the schedule (clause 3(a) and schedule 2);
(b)Ariskus agreed to purchase petroleum products exclusively from Wholesale (clause 3(d));
(c)Ariskus represented that it would purchase the specified quota of petroleum products (clause 3.1);
(d)Ariskus agreed to pay for the petroleum and associated products within 7 days (clause 7.2(a) and Item 10 of Schedule 1);
(e)Wholesale was entitled to terminate the agreement immediately inter alia (1) if Ariskus failed to pay when due any amount payable by it under the agreement (2) Ariskus failed to comply with the quota requirement (3) Ariskus acted in a manner that Wholesale deemed to have negatively impacted on the trademarks and branding for X Convenience, Coffee Station and Smokes Express (clause 17.1(b));
(f)The termination of the agreement terminated all rights of Ariskus under the agreement except to the extent that those rights had accrued prior to termination or were intended expressly or impliedly to survive termination (clause 17.3(c));
(g)Ariskus acknowledged that Management had a licence to use Mobil Branding in accordance with a Mobil Brand Management Agreement between Management and Mobil. Wholesale agreed to procure a sub-licence from Management to Ariskus on the terms set out in the Mobil Brand Agreement (clause 18(b));
(h)Ariskus acknowledged and agreed that all trademarks were the property of Wholesale and Wholesale was entitled to remove any signage which contained the trademarks from the Premises at its discretion (item 11 of schedule 1);
(i)Ariskus acknowledged and agreed that the trademarks were provided by Wholesale by way of Licence which Licence Wholesale could terminate at is discretion (item 12(a) of schedule 1).
The plaintiffs contend that although Ariskus was the purchaser of the fuel under the Fuel Supply Agreement, at is direction, the fuel was in fact supplied, through Ariskus to Disko or the third defendant, Paris 21280 Pty Ltd (Paris). In late 2019, Paris requested that the invoices that Wholesale that had been issuing to Disko be redirected to it, thereby suggesting it was at least also involved in the operation of the service station business at the Premises. The defendants could have, but chose not to adduce any evidence in relation to the operator of the service station business. In these circumstances and given the evidence to which I have referred I conclude, for the purposes of this application, that both Disko or Paris operated or were involved in the operation of the service station business at the Premises and received fuel, since August 2019, at the direction of Ariskus.
The fourth defendant and his wife Julie Mary Kuszki (from whom he has separated) are the directors of Ariskus. The fourth defendant is the sole Director of Paris. Ms Kuszki is the sole director or Disko. The fourth defendant guaranteed the obligations of Ariskus pursuant to the Fuel Supply Agreement and the Licence Agreement, to which I will refer below.
By written Licence Agreement dated 28 September 2019, Management agreed to authorise and permit Ariskus to use the X Convenience Brand in carrying on or in connection with the service station business at the Premises (clause 5.2). Further, under the Licence Agreement:
(a)Management was entitled to terminate the Licence Agreement immediately if the Fuel Supply Agreement was terminated for any reason or if Ariskus ceased to carry on the Business (of operating a service station) from the Premises (clauses 7.1 and 7.2);
(b)On termination, Ariskus was required to forthwith cease using the X Convenience brand (clause 8(2));
(c)On termination, Ariskus was required to remove, obliterate or destroy all signs, colour schemes and features of the Brand (clause 8.3);
(d)If the Fuel Supply Agreement was determined for any reason, then the Licence Agreement automatically ceased and determined contemporaneously with the determination of the Fuel Supply Agreement (clause 16.10).
In the period prior to August 2019, Disko was permitted to display at the Premises signage relating to the X Convenience Brand and signage relating to Coffee Station, Smokes Express and X Burger pursuant to the oral agreement with Wholesale or Management.
By December 2019, Wholesale claims that the defendants were in default of their obligations to Wholesale under the Fuel Supply Agreement in that there was default in the payment for the fuel that had been supplied. As at 16 December 2019, Wholesale claims that the sum of $191,285.41 was owed to it under the Fuel Supply Agreement. The claimed debt was addressed in text messages between the fourth defendant and Rachel Stewart, State Manager for the Andrash Group on 16 December 2019 where the following exchange occurred:
Mr Aristidis: “Where’s my Mobil money”;
Ms Stewart: “No approvals. And Steve wants to cancel the contract if payments are no [sic] made’’;
Ms Stewart: “I’ll ring Mobil chasing defects”.
Mr Aristidis: “Cool tell him to cancel it”.
An email was sent by Ms Stewart on 16 December 2019 to Mr Aristidis (at the Disko email address which was the usual address that was used between the parties) stating in part, ‘As per our text and the subsequent lack of payments we agree to cancel your contract with Andrash Wholesale Fuel Pty Ltd’. The email went on to say that Wholesale would organise the removal of all X Convenience and Mobil signage within the next 14 days.
There is no evidence of any response to that email disputing the contention that the contract had been cancelled.
The plaintiffs contend that the Fuel Services Agreement (and therefore the Licence Agreement) were terminated in December 2019 by repudiation or for breach. They rely upon the failure to pay invoices, the text messages and email of 16 December 2019 to which I have referred above and the failure of Ariskus to order fuel since 27 December 2019. Since that date, the defendants or one or other of them have ordered fuel from another supplier.
The defendants claim that there was no basis to terminate the Fuel Supply Agreement (and therefore the Licence Agreement) as any default in payment was that of Paris (which had been issued the redirected invoices) and not Ariskus.
The last delivery of fuel by Wholesale to the defendants (or any of them) was on 27 December 2019.
On 10 January 2020, lawyers for Wholesale and Management sent a letter and email to the defendants in which they alleged that the Fuel Supply Agreement and the Licence Agreement had been terminated. Wholesale and Management repeated their demand for payment and put the defendants on notice that if they continued to use the X Convenience and Mobil signage after 48 hours, the plaintiffs would apply to the District Court to restrain them from doing so.
The defendants do not dispute that the Fuel Supply Agreement and the Licence Agreement have now been terminated. However the defendants contend that the termination was effected through their acceptance by letter dated 17 February 2020 of the repudiation by the plaintiffs. The defendants further contend that despite this termination they are entitled, by clauses 8.2 and 8.3 of the Licence Agreement, to continue to use the signage for a reasonable time after termination, that time being about six weeks. That is the time the defendants say is required to remove the existing signage and to re-brand the site. The evidence from the plaintiff suggests that it would take about seven days to remove the existing signage. The defendants have not put forward evidence disputing that time. The defendants accept that after this six week period they are not entitled to display any of the signage or branding relating to the X Convenience Brand (or associated brands) or the Mobil or Synergy Brands.
The Relevant Legal Principles
The principles governing the granting of an interlocutory injunction are well settled.
The plaintiffs must make out a prima facie case in the sense that if the evidence remains as it is there is a probability that at the trial they will be entitled to relief.[1] The reference to a prima facie case does not mean that the plaintiffs must show that it is more probable than not at trial they will succeed, it is sufficient that they show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial.[2] How strong the probability needs to be depends on the nature of the rights the plaintiff is asserting and the practical consequences likely to flow from the orders that they seek.[3]
[1]    Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57, [65].
[2]    Id.
[3]    Id.
The plaintiffs must also satisfy two further requirements: namely that the balance of convenience, being the convenience or injury that the plaintiffs would be likely to suffer if an injunction is refused, outweighs the injury the defendants would suffer if an injunction is granted.[4] Thirdly, the plaintiff must show that damages are not an adequate remedy.[5]
[4] See Acmnet Pty Ltd v Ai Tel Pty Ltd [2007] SASC 96, [19].
[5] Ibid, [20].
The onus lies on the plaintiff to satisfy the court of each of the matters referred to above.[6]
[6] Id.
Although the injunction is framed as a prohibitory injunction, it is, in my opinion, in substance a mandatory injunction. Although the proposed order is framed in negative terms that the defendants be restrained from displaying the signage or branding, such an injunction, in the circumstances of this case, requires the defendants to engage in the positive act of covering up or removing the sign.
The preponderance of authority suggests that the test for a mandatory injunction is the same test that is applied in applications for a prohibitory injunction.[7] In Bradto Pty Ltd v State of Victoria,[8] the Victorian Court of Appeal observed:
… in our view, it is desirable that a single test be applied in all cases where an interlocutory injunction is sought. There is nothing in the body of authority to which we have referred, nor any consideration of principle, which requires a special test to be applied to one sub-category of such injunction applications, namely, those where mandatory relief is sought. On the contrary as pointed out convincingly by Hoffman J in Films Rover,[9] the grant for mandatory injunction may be justified in a case notwithstanding the court does not feel the requisite “high degree of assurance”.
[7] JTA Le Roux Pty Ltd as trustee for the FLR Family Trust v Lawson (No 2) [2013] WASC 373, [15]-[23] per Edelman J (as he then was).
[8] [2006] VSCA 89; (2006) 15 VR 65, 33.
[9] [1987] 1 WLR 670.
Serious question to be tried
In the present case, the plaintiffs seek to establish that there is a serious question to be tried (within the meaning of ABC v O’Neill) based on causes of action of breach of contract and conversion and detinue. The plaintiffs’ written submissions also refer to infringement of trademark. The plaintiffs did not elaborate on that cause of action in their oral submissions, no doubt recognising the difficulty that might arise from the fact that another entity, Andrash Trademarks Pty Ltd, in fact held the relevant trademarks.
I consider that the plaintiffs have established a serious question to be tried in relation to its claims based on breach of contract.
In my opinion, there is a serious question to be tried that the Fuel Supply Agreement and the Licence Agreement were terminated for breach in about December 2019. Under clause 17.1(b) of the Fuel Supply Agreement, Wholesale was entitled to terminate that agreement immediately if Ariskus failed to pay when due any amount payable by it pursuant to the agreement or otherwise failed to comply with the requirements in clause 3.1 of that agreement. The plaintiffs claim that as 20 December 2019 the sum of $488,146.02 was owed in relation to the supply of fuel and that there was default in the payment of $322,409.65.
The defendants submitted that the invoices that were outstanding were issued to Disko and then directed to Paris and therefore there were not amounts due by Ariskus under the Fuel Supply Agreement and therefore Ariskus was not in default of its obligations under the Fuel Supply Agreement. That undoubtedly will be an issue at trial. However, at this stage of the proceedings I am satisfied that there is a serious case to be tried that Ariskus is liable for the amounts outstanding or a portion of them and is therefore in breach of the terms of the Fuel Supply Agreement. From 1 August 2019, the Fuel Supply Agreement governed the purchase of fuel for the use of the business conducted at the Premises and Ariskus was responsible for the payment of that fuel. Arguably, as a matter of direction, invoices were sent to Disko and then later at the defendants’ direction to Paris, but that did not operate to absolve Ariskus from liability to pay those sums under the Fuel Supply Agreement. In these circumstances, I consider that there is a serious question to be tried that there were amounts outstanding owed by Ariskus pursuant to the Fuel Supply Agreement and therefore the failure to pay those amounts permitted the termination by Wholesale of that agreement and the termination of the Licence Agreement by Management.

I am also satisfied that there is a serious question to be tried that the Fuel Supply Agreement and the Licence Agreement were terminated in December 2019 by repudiation on the part of Ariskus and that the repudiation was accepted by Wholesale. The evidence that justifies this conclusion is the failure of Ariskus to pay the outstanding invoices, the text messages and email of 16 December 2019 to which there was no response by the defendants in relation to the proposition that the agreement had been terminated and the fact that from that time the defendants have conducted themselves as though the agreements had been terminated, the defendants from 29 December 2019 purchasing fuel from another supplier.
Repudiation of a contract occurs where a party, by its words or conduct, evinces an intention, no longer to be bound by the contract or to fulfil it only in manner substantially inconsistent with their obligations.[10] Repudiation is not ascertained by an inquiry into the defendants’ subjective state of mind: it is found in the conduct, whether verbal or other, of the party in default which conveys to the other party the inability or unwillingness to perform the contract or to perform in a manner substantially inconsistent with its obligations under the contract.[11]
[10] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) HCA 23, (1989) 166 CLR 623, 647, 658; Shevill v Builders Licensing Board (1982) 149 CLR 620, 625-6; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1985) 149 CLR 17, 33,40.
[11] Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) HCA 23, (1989) 166 CLR 623, 647-8.
Repudiation may be evidenced by a single act or an accumulation of conduct in circumstances where no individual act on its own constitutes a repudiation.[12]
[12] Paul Fishlock v The Campaign Palace Pty Ltd (2013) NSWSC 531, [45].
There will be repudiation of the contract if the conduct was such as to convey to a reasonable person in the position of the plaintiffs that there was on the part of the defendants a disavowal of the contract as a whole or a fundamental obligation under the contract.[13] Repudiation therefore depends on objective acts and omissions and not on uncommunicated intentions.
[13] Laurinda above 648, 658.
Repudiation is not to be inferred lightly and is a serious matter.[14] If there is not an express refusal to perform the contract (which is the clearest case of repudiation), repudiation may be established if a refusal to perform can be implied from the promisor’s words or conduct. Lord Coleridge CJ formulated the test in Freeth v Burr[15] as being ‘whether the acts or conduct … amount to an intimation of an intention to abandon an altogether refuse performance of the contract’.
[14] Paul Fishlock v The Campaign Palace Pty Ltd (above).
[15] (1874) LR 9CP208, 213.
Actual failure to perform a contract where performance is due may in some circumstances demonstrate an unwillingness or an inability to perform the contract at all.
By its continued failure to pay outstanding invoices, together with the text messages and the email of 16 December 2019 and later by its failure to order or purchase fuel, I consider that there is a serious question to be tried that Ariskus repudiated the Fuel Supply Agreement and that repudiation was accepted by Wholesale on 16 December 2019 or on 10 January 2020. I am conscious as the defendants have submitted, that the text messages are capable of more than one construction.
The consequence of any termination, whether by repudiation or breach, (subject to the questions of timing discussed below) is that Ariskus is not be able to continue to use the X Convenience signage. Clauses 8.2 and 8.3 of the Licence Agreement require Ariskus to cease using the signage forthwith and the removal of the signage. It also follows that the operator of the service station business conducted at the Premises could also not continue to use that signage. The operator only had authority to do so because of a sub- licence from Ariskus.
The right to use the Mobil Branding, including Synergy fuel branding, derives from a sub-licence from Management to Ariskus (see clause 18 of the Fuel Supply Agreement). Although the terms of the Mobil Branding Agreement referred to in clause 18 are not in evidence, there is no other source from which Ariskus claims that it has a right to use the Mobil Branding. In response to the demand that the defendants cease to use X Convenience and Mobil Branding, the defendants have not asserted that they have any right, except for that contained in the Fuel Supply Agreement or the Licence Agreement to use the Mobil Branding. Further, item 13 of the Fuel Supply Agreement deals with trademarks and signage, including the signage of Mobil. Item 12(a) of Schedule 1 of the Fuel Supply Agreement contains an acknowledgment that all trademarks are provided to Ariskus by way of licence which Wholesale could terminate at is discretion. Further item 12(g) requires Ariskus on the termination of the Fuel Supply Agreement to immediately return the trademarks and all property of Wholesale and Mobil. For all of these reasons, I consider that the plaintiffs have established a serious case to be tried in relation to the continued use by the defendants of the Mobil (including Synergy) signage.
The Fuel Supply Agreement the Licence Agreement did not refer to signage for the Coffee Station, Smoke Express and X buyer. It follows that or any authority to use those brands arose from an oral agreement which was terminated either as a consequence of the termination of the Licence Agreement or on the issue of these proceedings.
The defendants contend, as I have said, that it terminated the Licence Agreement on 17 February 2020 by accepting the repudiation of the plaintiffs. The defendants accept that they do not have any continued authority to use any of the signage or branding beyond a period of six weeks which would allow them time to re-brand the site. The defendants must therefore establish that their authority to use and display the signs continues for a period after the termination of the agreements. The defendants contend that this is the effect of clauses 8.2 and 8.3 of the Licence Agreement. The plaintiffs in response say that the terms of clause 8.2 are quite clear and require the defendants to forthwith cease using the Brand (being X Convenience). Further, the plaintiffs say that there can be no term implied in clause 8.3 of the Licence Agreement that the defendants be entitled a reasonable time to remove all the signs as such a term would not meet the criteria for the implication of a term.
On its normal meaning, the obligation imposed by clause 8.2 of the Licence Agreement to forthwith cease using the Brand, includes an obligation to cease displaying signage relating to the Brand. That is by advertising through the signage, the defendants are using the Brand. Further, the requirement to cease using the brand ‘forthwith’ requires some form of prompt action. In Measures v McFayden,[16] Isaac J quoted from the decision in the Queen v Berkshire where Justice Cockburn C.J. held:
The words ‘forthwith’ and ‘immediately: have the same meaning. They are stronger than the expression ‘within a reasonable time’, and imply prompt, vigorous action, without any delay and whether there has been such action is a question of fact, having regard to the circumstances of the particular case.
[16] [1910] HCA 74; (1910) 11 CLR 723, 736.
In Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd,[17] Lee and Finn JJ cited the above passage and concluded that in the circumstances of that case, the requirement to ‘immediately cease’ obliged the CFMEU to comply as soon as reasonably practicable.[18] In Re Venetoulis; Ex parte Calsil Ltd,[19] Riley J held that a requirement to sign forthwith required the act to be performed as soon as possible in the circumstances. I accept as, the defendants contend, that ‘forthwith’ takes it meaning from the circumstances and that there may be circumstances where forthwith means within a reasonable time (see Griffiths CJ in Measures v McFayden,[20] although that was a case requiring the defendants to erect certain alterations, additions and improvements to land). However, considering the matter on the basis of a serious question to be tried, I consider that, even if it is accepted that the defendants terminated the agreements on 17 February 2020 by accepting the repudiation of the defendants, the plaintiffs have established a serious question to be tried that the defendants do not have any right to continue to display the signage.
[17] [2001] FCA 1758.
[18] Ibid [14].
[19] (1976) 13 ALR 625, 627.
[20] [1910] HCA 74; (1910) 11 CLR 723.
The plaintiffs also contend that there has been conversion and detinue by the defendants but I do not need to consider these claims further at this stage. Conversion is the wrongful act of dealing with goods in a manner inconsistent with the intention of denying the owners’ rights or asserting a right inconsistent with them.[21] A licensee may be entitled to sue in conversion[22]. However, the acts constituting conversion must be unauthorised or unjustifiable. Therefore, if the acts are permitted by the Licence Agreement there can be no conversion. The claims based on conversion or detinue will therefore depend on whether the Licence Agreement permitted the defendants to continue to display the signs.
[21] Gwinnett v Day [2012] SASC 43 at [43] citing Hill v Region Pty Ltd [2007] NSWCA 295 at [122]-[123]
[22] Northam v Bowden (1855) 11 Exch 70 at 73.
The balance of convenience and adequacy of damages
In my opinion, the balance of convenience favours the plaintiffs. There will be obvious confusion in the marketplace if the signage is allowed to continue to be displayed. By its display of the signage, the defendants are representing that they continue to be licenced to display the X convenience, Mobil and other signage, when that is not the case. That may cause damage to the plaintiffs including to their general reputation and goodwill. It is notoriously difficult to quantify such damage.[23] I also consider that there is the possibility that the relationship between the plaintiffs and Mobil will be damaged as Mobil has demanded the removal of its signs from the Premises.
[23] Kismet International Pty Ltd v Guano Fertilizer Sales Pty Ltd [2013] FCA 375 at [147]
The nature of some of the damage that might be suffered by the plaintiffs are such that the ascertainment and quantification of damages will be difficult.
The defendants have submitted that they will also suffer inconvenience or damage if the injunction is granted and it is ultimately found that there were entitled to display the signage for a reasonable time after the termination of the Licence Agreement. The defendants have asserted that this damage will arise because the covering up of the signs relating to the fuel supplier and having the site unbranded may suggest to customers that the site is closed and lead the customers to take their business elsewhere. This damage or inconvenience can only arise if the defendants ultimately convince the Court that:
(a)The Licence Agreement was not terminated by Management in December 2019 for breach of the agreement by Ariskus or because of the repudiation of Ariskus;
(b)The Licence Agreement was in fact terminated by Ariskus on 17 February 2020 when it accepted the repudiation of the plaintiffs;
(c)Clause 8.2 of the Licence Agreement did not require Ariskus to cease immediately displaying the signs either because the display of signs was not a use of the Brands within the meaning of that clause or ‘forthwith’ permitted Ariskus a reasonable time to cease displaying the signs.
It is only if these matters are established that there is the possibility that Ariskus will sustain damage if the injunction is grantted but ultimately found not to be sustainable. That is, the damages that might be sustained by Ariskus will only arise in the limited circumstances referred to above.
Although the defendants have rejected the assertions by the plaintiffs that the Licence Agreement was terminated in December 2019, the defendants have been on notice since 10 January 2020 that the plaintiffs required the signage to be moved in relation to X convenience and Mobil. The inconvenience that the defendants might suffer arises because of the failure of the defendants to act at that time.
Any loss the defendants might suffer arises as a result of the signs not being able to be displayed in the remainder of the 6-week period before re-banding occurs. On the evidence put forward by the plaintiff, it will take only a week to remove the signs but on the defendant’s evidence it will take about 6 weeks to remove the signs and to re-brand the site. The loss that the defendants might suffer comprises lost sales suffered in the balance of that six week period and consequential losses suffered as a result of losing the business of customers who took their business elsewhere during the 6-week period and have not returned. The defendants have quantified that loss in their affidavit material as likely being about $100,000. In my opinion, that loss is capable of reasonable calculation and damages would be an adequate remedy.
There is also evidence that the business conducted by the defendants at the Premises was unbranded for at least one year between 2015 and 10 October 2016. This suggests that the likelihood of damage arising from temporary de-branding may be minimal.
Under the Fuel Supply Agreement, Wholesale is entitled to remove from the Premises any signage that contains the trademarks at its discretion. If Wholesale chooses to exercise that right, then the defendants will not suffer any loss as a result of the injunction being granted.
If ultimately it is established that either Disko or Paris is not involved in the operation of the business at the Premises, then I consider that no loss will be suffered by them as a result of the proposed injunction.
Orders
I do not consider the orders should be made against the fourth defendant. The fourth defendant was not an operator of the Premises, nor was he a party to any of the relevant agreements (other than as a guarantor). He was not personally granted any licence by Ariskus to display the signs.
In these circumstances, I propose to make an order that the injunction be granted against the first three defendants. I will hear the parties on the question of costs and precise terms of any order.