Century Yuasa Batteries Pty Ltd v D and C Martin Pty Ltd

[1998] FCA 69

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 10 of 1998

BETWEEN:

CENTURY YUASA BATTERIES PTY LTD
ACN 009 685 232
APPLICANT

AND:

D & C MARTIN PTY LTD
ACN 009 560 525
FIRST RESPONDENT

DAVID ROGER MARTIN
SECOND RESPONDENT

LAURENCE PAINE
THIRD RESPONDENT

APOLLO BATTERIES LTD
ACN 060 266 248
FOURTH RESPONDENT

GREG WARD
FIFTH RESPONDENT

JUDGE:	DRUMMOND J
DATE OF ORDER:	9 FEBRUARY 1998
WHERE MADE:	BRISBANE

UPON the applicant by its counsel giving the usual undertakings as to damages;

AND UPON the first and second respondents giving an undertaking that, until 4.00 pm on Tuesday 17 February 1998 or earlier order, the first and second respondents shall not:

1. use any confidential information belonging to the applicant;

2. publish or disclose such information to any other person, and in particular shall not publish or disclose such information to the fourth respondent or the fifth respondent;

AND UPON the first and second respondents giving an undertaking that the first and second respondents shall by 4.00 pm on Wednesday 11 February 1998 deliver to the applicant a copy of the list of customers of the business trading as “MP Autos” as at today’s date, whether those customers purchased products belonging to the applicant or otherwise;

THE COURT ORDERS THAT:

1. The first and second respondents be restrained from carrying on or being engaged in or concerned with directly or indirectly any business which includes the selling, distributing or marketing of batteries until 4.00 pm on Tuesday 17 February 1998, or earlier order.

1. The costs of today be reserved.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 10 of 1998

BETWEEN:

CENTURY YUASA BATTERIES PTY LTD
ACN 009 685 232
APPLICANT

AND:

D & C MARTIN PTY LTD
ACN 009 560 525
FIRST RESPONDENT

DAVID ROGER MARTIN
SECOND RESPONDENT

LAURENCE PAINE
THIRD RESPONDENT

APOLLO BATTERIES LTD
ACN 060 266 248
FOURTH RESPONDENT

GREG WARD
FIFTH RESPONDENT

JUDGE:	DRUMMOND J
DATE:	9 FEBRUARY 1998
PLACE:	BRISBANE

REASONS FOR JUDGMENT

I have before me a notice of motion seeking urgent interlocutory relief by the applicant who entered into a series of agreements with the first respondent under which the first respondent undertook to sell the applicant's products, essentially motor car and motor cycle batteries, in Tasmania as the exclusive agent of the applicant.   The interlocutory relief sought, if granted, will have the effect of shutting down the business activities of the first respondent.

The application was only filed late last week on Thursday, 5 February.  The first and second respondents, for whom Mr Daubney appears, have had therefore very little opportunity indeed to respond to the mass of material that has been now put on and delivered to them on behalf of the applicant.   It would not ordinarily be the case that the court in such circumstances would contemplate, even on a short-term interim basis, making orders which would have the effect of interrupting a trader's ability to continue to trade.  

The case, however, which the applicant seeks to make out against the first and second respondents is unusually strong on the face of things before me in the sense that the applicant relies upon a number of what are, on their face, serious breaches of the contractual arrangements between the applicant and the first respondent, of whom the second respondent is a principal, and other misconduct, all of which can be described as indicating serious dishonesty by the second respondent.   That dishonesty extends, in effect, to diverting trade to the second respondent or entities associated with him the benefit of which belongs, under the agreements, to the applicant.  The material relied on by the applicant includes evidence of false accounting by and at the behest of the second respondent to achieve that purpose.

The evidence, as I have said, is unusually strong insofar as it comes from a large number of persons who, in their affidavits read by the applicant, describe themselves as employees of the first respondent.  The true position may be that while they were employees when the affidavits were signed, some of them at least may no longer be employees of the first respondent.

There is another area of evidence which I also find significant in the present context.  The applicant complains that the first and second respondents have infringed Century's trademark rights and have engaged in passing off a business of their own for that of Century's, the business being apparently a new business that the second respondent intends to develop in the way of selling mobile telephones.   The evidence here is striking.   It includes a circular letter under a hand which is not disputed to be the second respondents, on a Century letterhead, referring to this new business, and a business card set up in a way similar to the letterhead which is distributed on behalf of the second respondent.  This evidence was flagged when the matter first came before me at 10 o'clock this morning.   I would have expected that if there were any possible innocent explanation for what the second respondent has done in the way of using the Century name to assist in the development of his mobile telephone business, counsel appearing for him who returned to court at 4 o'clock this afternoon would have been in a position at least to indicate from the bar table that there was an innocent explanation and the effect of that innocent explanation.   This evidence is very striking and it is fair to say it had a significant impact on me when I saw it, and it would have been apparent to counsel that that was my reaction to it, hence my comments about the absence of any innocent explanation being suggested from the bar table.

I am prepared to treat this case as a highly unusual one in which there is a real risk that if the first and second respondents are permitted to continue to trade, even under an elaborate supervisory regime, even for a short time, it may well be that trade which should belong to the applicant will be diverted away from the applicant surreptitiously.  It may also be that harm will be done by the first and second respondents persisting in practices which have been the subject of complaint by the applicant, notably the re-labelling of inferior products as Century products, which will cause harm to the business reputation of the applicant, that this will be engaged in similarly, in a surreptitious way, and that, in consequence, damages may well, in the unusual circumstances of this case, not be adequate compensation for harm that the material before me indicates the applicant may well suffer, even in the very short term.

There is no challenge made to the worth of the applicant's undertaking as to damages which it will have to give to obtain the draconic interim relief it seeks.

I should say that I have omitted to identify in much detail the range of conduct of the first and second respondents relied on by the applicant to claim this interim relief.  That material is summarised in a document headed “table of evidence of applicant” which I will make exhibit 1, which was handed to me by counsel for the applicant.

I rely upon the evidence supporting item A, which describes conduct which is all in breach of the contractual arrangements between the applicant and first respondent, evidence which shows that this conduct has been engaged in, if not continuously, at least over a period of recent time.  I also rely upon the complaint headed B on the second page of this table, which I would prefer to describe as a complaint that, by the use of the entity “MP Autos”, the second respondent has been obtaining secret commissions of the kind I discussed in the course of argument with counsel for the applicant.  I rely also on the complaint in para C of the table and the complaints in para E(a) and (c) of the table, the lastmentioned one relating to the mobile telephone business that I have referred to.

The first and second respondents, through their counsel, indicated that what they would seek to be able to do until the matter could come back before the Court on notice for an interlocutory hearing to be held is to be permitted to conduct their retail business carried on from premises at Launceston and Hobart.  That business, I am told by counsel, consists of selling Century batteries and possibly a range of other batteries that counsel was unable to identify.

Because of the nature of the complaints made and, in particular, because of the quality of the evidence relied on to support those complaints that the applicant has been able to put on and the absence of any suggestion that the second respondent has any answer to those complaints, I have come to the conclusion I have indicated that damages is not likely to be an adequate remedy, even if the respondents are allowed to trade for a short time, and that the harm likely to flow to the applicant out-balances the undoubted harm that will flow to the first and second respondents from any stoppage on their trading.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond

Associate:

Dated:             9 February 1998

Counsel for the Applicant:	EJ Lennon QC & KE Downes
Solicitor for the Applicant:	Kinneally Mahoney
Counsel for the Respondent:	AM Daubney
Solicitor for the Respondent:	Blake Dawson Waldron
Date of Hearing:	9 February 1998
Date of Judgment:	9 February 1998