Business & Import Services Pty Ltd v Pix Transmissions Ltd

[2003] VSC 372

IN THE SUPREME COURT OF VICTORIA

AT MELBOURNE

COMMERCIAL AND EQUITY

PRACTICE COURT

No. 7630 of 2003

BUSINESS & IMPORT SERVICES PTY LTD

(ACN 006 998 018)

Plaintiff

v.

PIX TRANSMISSIONS LTD AND OTHERS

Defendants

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JUDGE:	BYRNE, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	29 September 2003
DATE OF JUDGMENT:	30 September 2003
CASE MAY BE CITED AS:	Business & Import Services Pty Ltd v Pix Transmissions Ltd
MEDIUM NEUTRAL CITATION:	[2003] VSC 372

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Practice and Procedure – injunction – interlocutory injunction – breach of exclusive distributorship agreement – triable issue – balance of convenience – order refused.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Andrew P. Dickenson	Vernon Da Gama & Associates
For the First Defendant	Mr I.R. Jones	Lewis Walker
For the Second and Third Defendants	Mr I.W. Upjohn	Chessell Williams

HIS HONOUR:

1. By a distribution agreement in writing dated 3 July 1997, the plaintiff, Business and Import Services Pty Ltd (“BIS”), agreed with the first-named defendant, Pix Transmissions Ltd (“Pix”), that BIS should have the exclusive distribution rights for Pix products throughout Australia, New Zealand and the Pacific Islands. 

1. BIS is a company incorporated and carrying on business in Victoria.  Pix is a company incorporated and carrying on business in India.  The parties continued to carry on business together, apparently satisfactorily, until late 2002.  At this time BIS was suffering from a lack of liquidity due to a substantial overpayment of GST. 

1. At this time, too, in November 2002, the sales manager of BIS, Robert Glendinning, the second-named defendant, ceased to be employed by BIS.  The circumstances of the termination of his employment are a matter of controversy.  Following the cessation of this employment with BIS, Mr Glendinning joined a new company, the third-named defendant, Finer Power Transmissions Ltd (“Finer”).  Finer was incorporated on 8 November 2002.  Its original director was Eldrid Max Forster.  On 23 December 2002 Mr Forster was joined by a second director, Mr Glendinning. 

1. According to Mr Glendinning, Finer started business on 1 January 2003, trading as a competitor of BIS.  By 1 January 2003, according to Mr Glendinning, Finer had, through Mr Forster, an agency to distribute Pix products.  According to Mr Forster, it was in July 2002 that he went to India to negotiate with Pix to distribute its products and, at some stage, was offered a dual agency on a twelve-months trial basis.  He says he was unaware of any exclusive distribution rights held by BIS.  He says that he was told by Sonepal Sethi of Pix, in or around September 2002, that Kenneth Michael Monks, the managing director of BIS, was aware of the dual distribution arrangement.  This is confirmed by an e-mail from Mr Monks to Mr Sethi dated 25 November 2002, in which Mr Monks speaks of BIS, not as an exclusive distributor, but as a first preferred supplier in Australia, New Zealand, Fiji and Papua New Guinea.  Mr Forster said that his first business transactions with Pix were in November 2002.  He was then requested to supply Pix products to certain customers of BIS whom BIS could not supply for want of funds.  As it turned out, these orders were returned to BIS.  In December 2002, Finer took delivery of a quantity of Pix stock which was destined for BIS because BIS was unable to pay for it.  Mr Forster also says that at this time he agreed with Mr Monks to purchase all of BIS’s stock on consignment.  Mr Monks later changed his mind and the transaction did not go ahead.  Mr Forster says that he was not aware of any complaint from BIS about the dual agency arrangement until 28 January 2003, when he received an e-mail from Mr Monks.  In this e-mail Mr Monks speaks of Finer holding a sub-distributorship, not a competing distributorship.  Mr Monks’s concern appears to be that Finer was poaching the customers of BIS.  So the matter proceeded in 2003.  I should add that the foregoing is taken from Mr Forster’s affidavit and may be controversial. 

1. The ensuing correspondence to which I was referred appears to concern complaints from Pix about non-payment by BIS.  These complaints are said by Mr Monks to be without substance.  By April 2003, it appeared that Pix was publishing the fact that Finer was its sole and exclusive distributor for Australia, New Zealand and the Pacific Islands.  Mr Monks became aware of this some time in April.  By June matters were in the hands of the solicitors for BIS.  They wrote seeking assurances from Pix that the distributorship contract was still on foot, and threatening litigation.  This attracted a demand from Pix for payment of some $36,000 said to be “pending from a long time ago”, and ultimately, on 29 July, a letter from the solicitors for Pix asserting that the distribution agreement was at an end.  It seems that for some time Pix has been refusing to supply BIS with its products. 

1. Against this background, much of it controversial, BIS has, on 12 September, commenced this proceeding, and by summons filed on the same day, seeks interlocutory relief, in effect restraining the defendants from breaching its exclusive trading rights. 

1. It is not my function in this application to resolve disputes of fact and I do not do so.  It is sufficient that I identify triable issues and determine whether BIS has a real possibility of succeeding at trial.  If this be the case, I may grant relief where the justice of the case, including the balance of convenience to the parties, directs.

1. I am satisfied that there is here a serious issue whether the exclusive distribution agreement entered into in 1997 is still on foot, so that Pix would be in breach by using another distributor.  I am somewhat less satisfied that there is a good claim against Mr Glendinning for disclosing names of the customers of BIS, but I do not reject this claim as hopeless.  I am satisfied also that there is a sufficient prospect of success of establishing that Finer induced Pix to breach its distribution agreement with BIS. 

1. Notwithstanding this, I will not make the order sought by BIS.  I am troubled by the delay by BIS in commencing this proceeding.  The position as it now stands is that BIS has lost its customers for Pix products to Finer.  Pix is reluctant or unwilling to supply it.  Finer has invested a considerable sum in establishing its competing business.  In these circumstances, I am satisfied, notwithstanding the evidence which suggests that Finer incurred this cost in the face of the BIS exclusive distribution, that the balance of convenience is against the making of the orders sought.  Moreover, it is unlikely that, at this time, the clock can be turned back nearly twelve months.  If it has a good claim, BIS will doubtless be able to seek financial recompense in the form of damages. 

1. I say nothing about other troubling aspects of this application.  These include the appropriateness of the injunctive relief sought, the amenability of Pix as a foreign corporation to the orders sought, and the value of the usual undertaking as to damages which BIS might give. 

1. I dismiss the plaintiff’s application with costs.

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