Chatterjee, P.K. v Nightowl Franchising Systems P/L

[1993] FCA 1015

7	Fo/Z	> / J ~ ~ , ~ ' ? u T / O W
1015, 93

JUDGMENT No. ........ ........ .. .., ........ .

IN THE'FEDERAL COURT OF AUSTRALIA	1
QUEENSLAND DISTRICT REGISTRY	) No. 46191 of 1993
GENERAL DIVISION	)

BETWEEN :  PRASHANTA KUMAR CHATTERJEE

First Applicant

KUNAL DASGUPTA

Second Applicant

MANABENDRA NATH KAR AS TRUSTEES FOR THE

SUNRISE INVESTMENTS UNIT TRUST

Third Applicant

AND:  NIGHTOWL FRANCHISING SYSTEMS PTY LTD

First Respondent

RODNEY JOHN CRAIG

Second Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	SPENDER J
DATE OF ORDER:	3 DECEMBER 1993
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

(i)     the notice of motion filed 24 November 1993 be dismissed;

(ii)    the applicants pay the respondents' costs of the motion.

NOTE:	Settlement and entry of orders is dealt with in 0. 36 of
the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA	1
DUEENSLAND DISTRICT REGISTRY	) No. QG191 of 1993
GENERAL DIVISION	1

BETWEEN:  PRASHANTA KUMAR CHATTERJEE

First Applicant

KUNAL DASGUPTA

Second Applicant

MANABENDRA NATH KAR AS TRUSTEES FOR THE

SUNRISE INVESTMENTS UNIT TRUST

Third Applicant

AND:  NIGHTOWL FRANCHISING SYSTEMS PTY LTD

First Respondent

RODNEY JOHN CRAIG

Second Respondent

CORAM: Spender J.

PLACE: Brisbane

DATE :  3 December 1993

EX TEMPORE REASONS FOR JUDGMENT

This is a notice of motion filed on 24 November 1993
seeking an injunction until trial to restrain the first

respondent, Night Owl Franchising Systems Pty Ltd, its servants

business known as the Night Owl Convenience Store at Enoggera	or agents, from taking possession of the premises in which a
Road and Willington Street, Newmarket is being conducted, and from taking possession of the business and otherwise interfering with or disturbing the applicant's possession of the said premises and the said business. The sub-lessee is in default of obligations owed by it under the sub-lease to the first respondent. It seeks to have the terms of the sub-lease varied.
The applicants filed on 24 November 1993 an application which alleges that prior to the entry into a sublease of the premises in which the Night Owl Convenience Store business is conducted by the applicants, the second respondent, Rodney John Craig, on behalf of the first respondent, mademisrepresentations as to the existence of tenants in the shopping centre in which the convenience store is located, predictions as to the profitability and cash flow of the business, in contravention of various of the provisions of the Trade Practices Act 1974 ('the Act').
The applicants, apart from seeking declaratory relief, also seek "damages pursuant to ss. 82 and 87" of the Act and damages on other grounds; and also an order that the first respondent relieve the applicants from their obligation to pay rent and royalties as particularised in paragraph 21 of the statement of claim and that the first respondent pay the rent required to secure the applicant's tenancy of the subject premises. It also seeks an order that the first respondent pay
of chattel leases of certain equipment referred to in the to the applicants the amounts which they have to pay in respect statement of claim, as well as interest "and such further or other relief as the honourable court may think fit".
The application also seeks an injunction in terms of the notice of motion, but on a permanent basis.
The application, apart from the question of damages seeks an injunction permitting the applicants to remain in the occupation of the premises, on terms that they be relieved of their obligation to pay rent, and seeks orders that the first respondent pay the rent which is necessary to secure their tenancy of the premises, and that the first respondent also pay the outgoings in respect of the chattel leases of equipment used in the running of the business.
The material before me is voluminous, but in significant respects is not the subject of serious dispute. I have a degree of sympathy with the position of the applicants because the circumstances on which they rely, if made out, would indicate that the entry into this venture has been one that has been disastrous for them. The gravamen of their claim for interlocutory relief is that since their present predicament is the consequence of the respondents' actions, it would be right to permit them to remain in occupation until the trial of the action.
One difficulty is that there is no evidence to suggest of interlocutory relief. In fact, the evidence and the any capacity to honour an undertaking as to damages for the grant
submissions go further, it being suggested that the financial position of the applicants is parlous and that, without the cash flow of the operation of the business, their financial position is indeed extremely precarious. However, for the purpose of interlocutory relief, the important evidence is in paragraph 18 of the affidavit of Mr Chatterjee, the first applicant.

In that affidavit, he says that:

" Since t h e bus ines s commenced on 23 September

1992, we cannot make a p r o f i t a t a l l . "

.-

He then refers to other matters represented to him about the business. He says:

" The bus ines s has no t reached t h e cash and p r o f i t "

p r o j e c t i o n s r epre sen ted by llOr C r a i g .

He exhibits the balance sheets of the business and, importantly, he says:

" I s a y t h a t the bus ines s i s cont inuing t o l o s e

approximately $8000 per month. "

In addition to the rental payments, which are more than $4000 a month, the applicants say that in respect of the refrigeration equipment, originally $10,000 value leased, and a cold-room of some $80,000, the repayments are $353.56 on the refrigeration and $1778 on the cold-room.

M r Samios, for the applicants, candidly put the position

of the applicants and, in summary, the best that can be offered is that they might meet half of the rental the subject of the

written agreements, but there is nothing that can be done, in the	period up to trial, with respect to royalties or in respect of
stock so far supplied by the first respondent to the applicants.
The applicants would be prepared, between now and trial, to receive stock from the first respondent on a cash-on-delivery basis, but that nothing can be done in any significant way in respect of the claims by the respondent for some $66,599.40 which the respondents say is the amount presently owing.

The position is that the applicants do not have the capacity to offer anything in respect of moneys said by the first respondent to be due . They do not have assets which would underpin any undertaking as to damages. They are not able to meet the obligations which, on the respondents' case, they owe to the first respondent between now and trial. There is no evidence to suggest that the business, at trial, would be operating at a profit.

Having regard to Mr Chatterjee's sworn statement that the business is losing approximately $8000 a month, the position simply is that should the respondents win at trial, after the granting of the interlocutory relief sought, the respondents would be much more seriously worse off than they presently are. There is no basis on which one can entertain the expectation that the respondents would get from the applicants that to which on that scenario they would be entitled. In those circumstances and for those reasons, I am unable to grant the relief sought in the notice of motion.

While the factual situation and the nature of the competing claims are quite different from that considered by Morling J in Glandore Ptv Ltd v Elders Finance and Investment Co. Limited (1984) 4 F.C.R. 130, the issues that I have to face on these proceedings are not dissimilar. In those circumstances, it was made plain by his Honour that if the Court is able to mould an order which ensures adequate protection for the respondents and otherwise does justice between the parties during the period prior to a final hearing, then the court has the power

t o and can and would i n an appropriate case proceed on t h a t

b a s i s .

R e g r e t f u l l y , the ev idence b e f o r e me does not al low the

cour t t o make any orders which provides any adequate protec t ion

f o r t h e f i r s t respondent should it u l t i m a t e l y be s u c c e s s f u l .

I have predicated a l l o f my reasons t h u s f a r on a v i e w

t h a t t h e appl icants have demonstrated a ser ious ques t ion t o be

t r i e d i n respec t o f t h e i r prospects o f success . There i s o ther

evidence pointing t o t h e v iew t h a t the representa t ions as t o t h e occupation o f the centre on which t h e appl icants r e l y might v e r y w e l l have been made by Mr Cra ig , i n par t icu lar a l e t t e r o f 6

January 1 9 9 2 b y him t o M r D e Pasquale o f t h e l e s s o r says i n part

i n paragraph ( c ) :

" Vacant shops. - Guy Burgess guaranteed me, and our

potent ia l f ranchisee Prashanta Cha t t e r j e e , on many

occasions a l l shops would be l e t p r i o r t o September

1 s t 1992. I have made it very c l e a r t o Guy Burgess

t h e v i a b i l i t y o f the Nightowl S t o r e depended on

compatible t enan t s occupying t h e s i te pr ior t o

Nightowl opening. I repea t - I was guaranteed t h i s

would be t h e case .

And i n paragraph ( e ) , he sa id :

" The s t o r e i s t r a d i n g a t around $6000 per week. The

s t o r e should be	t a k i n g $9000 t o $12,000 having opened
i n September.	The owner operators a r e l o o s i n g (s ic)
thousands o f d o l l a r s each week and	each day we t rade

without support, i n c r e a s e s the f inancia l dra in on

t h e s e people.

In a l l t h e circumstances, it seems t o me t h a t it would

be wrong t o permit t h e bus iness t o f u r t h e r haemorrhage, t o the

extent to which M r Chatterjee swears, between now and when the trial can be heard. The justice of the matter viewed as a whole requires me to decline to make any interlocutory order and the motion is dismissed.

The respondents should have the costs of the motion.

I certify that this and the preceding

six (6) pages are a true copy of the reasons for judgment herein of the Honourable llLr Justice Spender.

~ L A C -

Associate

Date: 3 December 1993

Counsel for the applicants:	Mr N. Samios
Solicitors for the applicants:	H. Drakos & Company
Counsel for the first and

second respondents:  Mr A. V. Stone

Solicitors for the first and

second respondents:  McLa ughl in Ivey Woodman

Date of Hearing:  3 December 1993