Drake Personnel Ltd v Southern Long Line & Trawl Co Pty Ltd

[1992] TASSC 87

COURT:  SUPREME COURT OF TASMANIA

CITATION:Drake Personnel Ltd v Southern Long Line & Trawl Co Pty Ltd [1992] TASSC 87; B7/1992

PARTIES:  DRAKE PERSONNEL LTD
  v
  SOUTHERN LONG LINE & TRAWL CO PTY LTD

FILE NO/S:  395/1992
DELIVERED ON:  3 April 1992
JUDGMENT OF:  Underwood J

Judgment Number:  B7/1992
Number of paragraphs:  16

Serial No B7/1992

List "B"

File No 395/1992

DRAKE PERSONNEL LTD. v SOUTHERN LONG LINE & TRAWL CO PTY LTD

REASONS FOR JUDGMENT  UNDERWOOD J

(Given Orally)  3 April 1992

Injunctions – Interlocutory – Mandatory injunctions and prohibitory injunctions – Considerations on which discretion exercised – Beecham Group Ltd v Bristol Laboratories Pty Ltd (1967 – 1968) 118 CLR 618 applied.

1. The plaintiff, a foreign company carrying on business in Australia, has commenced proceedings against the defendant for damages for breaches of two agreements and for a mandatory injunction to the effect that the defendant execute such documents as the plaintiff requires in order to effect a transfer from the defendant to the plaintiff of two telephone numbers, one attached to a telephone and one to a facsimile machine. Presently before me is an interlocutory application for a mandatory injunction to the same effect as that sought in the principal proceedings or alternatively, for an order that, the defendant be restrained from using, promoting, or advertising the two specified telephone numbers. The matter arises in the following way.

1. The plaintiff operates a personnel consulting business in several different countries. It operates with a number of divisions, of which "Drake Personnel" and "Drake Overload" are two. The former provides permanent office staff and the latter, temporary office staff. "Drake Personnel" and "Drake Overload" are registered trademarks. On 13 March 1991 the plaintiff and the defendant entered into two agreements, called franchise agreements, one with respect to the use of the mark "Drake Personnel" and the other with respect to the use of the mark "Drake Overload".

1. The defendant company carries on a number of businesses in Tasmania including clothing retail outlets, fishing and personnel services. On entry into the franchise agreements, the defendant commenced to operate a personnel consultancy business using the two trademarks. It was a term of the agreements that the defendant would pay a royalty calculated in accordance with schedule 5(a) to each agreement, in essence, 15% of gross sales for permanent placements and 7% for temporary placements and workshop training services. In addition, the defendant agreed to contribute 2% of gross sales towards the cost of advertising and to make other payments as specified in accordance by the agreement. Relevantly, the franchise agreements provided:

"The franchisee [the defendant] acknowledges that Drake [the plaintiff] has the sole rights to all (telephone) numbers and listings and hereby acknowledges that a direction by Drake is conclusive evidence of the rights of Drake in such numbers and listings and its authority to direct their transfers and further agrees, upon the request of Drake, to execute such documents as may be required by Drake from time to time to effect a transfer to Drake of all numbers and listings, provided that Drake shall hold such executed document in escrow until termination or expiration of this agreement."

1. The agreements also provide that in the event of the defendant being in default in making payments due under the agreement, the plaintiff may terminate the agreements in the manner prescribed, such termination being without prejudice to the defendant's rights which have arisen under the agreement. Clause 15.05 in each agreement provides (inter alia) that, "upon the termination or expiration of this agreement for any reason whatsoever, the Franchisee shall cease to be a Franchisee of Drake and shall ... notify the telephone company and all listing agencies of the termination or expiration of the Franchisee's right to use all telephone numbers and all classified and other directory listings of the franchise services and, at Drake's option, assign any such telephone numbers to Drake." Clause 18.01 in each agreement appoints the plaintiff the defendant's attorney for the purpose of executing documents which, by the agreement, the Franchisee has agreed to execute but has failed to do so on request.

1. The plaintiff's claim, not well pleaded in this respect, is that the defendant is in breach of the agreements in that it has made default in the payment of monies due namely, $15,636.14. This claim is disputed and on the affidavit material before me there is insufficient to determine whether it is likely or not that the plaintiff will establish its claim. The affidavit material for the applicant simply asserts that the sum mentioned is due and owing and on behalf of the defendant it denies indebtedness on several bases listed in a summary manner.

1. On 5 March 1992 the plaintiff delivered the appropriate notices to terminate the agreement at the expiration of 21 days thereafter if the default was not made good in the meantime. As payment was not made, on 27 March 1992, the defendant opened its own office in Hobart and sent an authority and request to Telecom, signed by an officer of the plaintiff in purported reliance on the plaintiff's power of attorney, to transfer to it at its new premises the telephone and fax numbers used by the defendant when carrying on business under the plaintiff's trademark. Telecom did not or would not take any action pursuant to that request and accordingly, as the defendant has declined to sign the documentation the plaintiff required it to sign, this application was taken out. At the time of the hearing, there was no evidence to establish who was the present subscriber to the two telephone numbers, but, with respect to the telephone it clearly was not the plaintiff, there was uncontradicted evidence that it was not the defendant but the inference is clear that it is a person or company well disposed towards the defendant. The two numbers are presently being used by the defendant in the course of its other businesses one of which is Administration and Management Services, a training and consultancy business.

1. The gravamen of the applicant's complaint is that the defendant is contractually obliged to sign the documentation it requires the defendant to sign to transfer the telephone numbers and it declines to do so. In result, the plaintiff claims that it is losing business and suffering damage. The affidavit material does not enable me to assess the extent of this claimed loss of business but, as I infer that the plaintiff is aware of the names and addresses of all the defendant's clients during the time it was operating under the defendant's registered trademarks, the principal loss will be confined to business from those persons who look in either the white or yellow pages of the telephone book under the heading "Drake Personnel". Those persons wishing to engage the services of "Drake Personnel" will in fact make contact with the defendant operating (inter alia) Administration and Management Services.

1. It was neither submitted nor pleaded that the defendant was not entitled to operate a personnel consulting business from premises formerly used by it to conduct the same business under the defendant's registered marks. The submission was confined to the proposition that the defendant was contractually bound to execute the documents required by the plaintiff to transfer the telephone numbers to the plaintiff or in accordance with the plaintiff's direction.

1. The substantial submission on behalf of the defendant was that it was not so obliged. The defendant's argument was that, as no monies were due under the agreements, the plaintiff was not entitled to terminate them. Its action in purportedly terminating the agreements constituted repudiation which had been accepted by the defendant. Such repudiation deprived the plaintiff of the rights it relied upon to insist on the execution of documents. Upon a proper construction of cl 15.05, "termination or expiration of the agreement" meant termination in the event of default by the defendant or expiration by the effluxion of time and did not include termination or expiration by the plaintiff's unilateral act of repudiation.

1. Upon an application for interlocutory injunctive relief one consideration 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 action, the plaintiff will be entitled to relief", per Beecham Group Ltd v Bristol Laboratories Pty Ltd (1967 – 1968) 118 CLR 618 at 622 – 623. For the reasons set out by Zeeman J in Markham & Anor v The Commonwealth Bank of Australia & Anor 51/1991, I too consider that the law is as expounded by the High Court in the Beecham Group (supra) decision notwithstanding the subsequent criticism of that case by single justices of that Court and the English test as formulated in American Cyanamid Co v Ethicon Ltd [1975] AC 396. Another consideration on an application for interlocutory injunctive relief is whether the inconvenience or injury which the plaintiff would be likely to suffer if the injunction were refused is outweighed by the injury the defendant would suffer if it was granted. Of course, these are not separate isolated considerations but significant matters to be taken into account in the proper exercise of the discretion. See Magna Alloys v Ten–Haaf [1978] Tas SR 136. Insofar as the interlocutory application seeks a mandatory injunction the court must feel a degree of assurance that, at the trial, it will appear that the injunction was rightly granted and this is a higher standard than that required for a prohibitory injunction. See Shepherd Homes Ltd v Sandham [1971] 1 Ch 340 at 351; State of Queensland v Australian Telecommunications Commission (1985) 59 QLJR 562 at 563.

1. There is more than one reason for not granting an interlocutory mandatory injunction. In the first place, whether it will appear at the trial that such an injunction was rightly granted will depend upon whether or not the plaintiff will be able to establish that the defendant was in breach of the agreement and accordingly, that the plaintiff was entitled to terminate it. The material before me is not such to provide the requisite high degree of assurance that breach will be established. In the second place, as the defendant is not the subscriber to the telephone number, an order requiring it to execute the documentation would not, according to the evidence, have any effect at all. I infer that Telecom would only transfer telephone numbers from one subscriber to another upon the authority of the subscriber holding the number. As the defendant is not presently the subscriber to either telephone number its written direction and request to telecom would be of no practical effect. On behalf of the plaintiff it was submitted that the first part of cl 11.07 in each agreement did no more than require the defendant to execute the documents and proof of breach was not a prerequisite for compliance. The clause does provide that the plaintiff hold such documents in escrow until termination or expiration of this agreement, but the plain object of these proceedings is not to hold such documentation in escrow but to put it into effect and accordingly I attach no weight to that submission.

1. With respect to the application for both prohibitory and mandatory interlocutory injunctions, I am unpersuaded that the balance of convenience favours the applicant. As mentioned earlier, I infer that the plaintiff is aware of the names and addresses of all the persons with whom the defendant did business under the plaintiff's registered marks. Clause 8 of the agreements required the defendant to furnish information to the plaintiff on a regular basis which, inferentially, would have included those names and addresses. There is no material before me which would permit even a guess at the volume of that business although, from an affidavit filed on behalf of the defendant, there appears to be a suggestion that it was not high. With respect to those persons, i.e. existing or past customers of the defendant when trading under the plaintiff's marks, it would be relatively easy and inexpensive for the plaintiff to notify them of a new telephone number for its new Hobart premises.

1. The problem area is the yellow pages in the telephone book in which is listed, under the defendant's registered marks, the telephone number presently used by the defendant. To grant an injunction would divert new business arising by reason of persons consulting "Drake Personnel" in the yellow pages, away from the defendant and to the plaintiff. To grant an injunction would also deprive the defendant of a telephone number presently used by it in the course of its other businesses including its personnel consulting business. It is true that damages will be difficult to assess if a breach of the agreements is made out at trial. It is equally true that if the plaintiff fails at trial the damages recoverable by the defendant pursuant to the undertaking will be equally hard to assess.

1. It is for the plaintiff to satisfy me that the orders sought ought to be made and this it has failed to do. Without any indication of the volume of business the plaintiff might lose if the defendant continues to use the telephone number, I am not persuaded that the balance of convenience calls for the making of any order. This factor, taken into account with the absence of material which would permit an assessment of the strength of the plaintiff's case together with the impracticability of the court being able to enforce any prohibitory order, causes me to reach the conclusion that the application should be dismissed.

1. Throughout these reasons I have drawn no distinction between the telephone number used for the facsimile machine and the one used for the telephone. The affidavit read on behalf of the defendant makes no assertion that the defendant is not the subscriber of the facsimile number. There is simply no evidence of the identity of the present subscriber nor is there any evidence of its use in the business now or formerly conducted by the plaintiff. The facsimile number is not listed in the telephone book and in all the circumstances I see no reason to draw any distinction between the two numbers for the purpose of determining this application.

1. The order of the court is that the interlocutory application is dismissed.