Farahbakht v Midas Australia Pty Ltd (No 2)

In the Federal Court of Australia, Farahbakht, a former employee of Midas Australia Pty Ltd, sought an interlocutory injunction to restrain Midas from terminating a distribution agreement. The matter was heard by Justice Edelman. The crux of the dispute lay in the contention by Midas that the distribution agreement was terminated due to Farahbakht's fraudulent conduct. Farahbakht, however, denied these allegations and argued that Midas's termination was unlawful. The court needed to determine whether Farahbakht had demonstrated a serious question to be tried concerning the unlawfulness of the termination, and whether Farahbakht had established a prima facie case warranting interlocutory relief.

The court examined the requirements for interlocutory injunctions, focusing on whether Farahbakht had shown a serious question to be tried concerning the termination being unlawful. Justice Edelman held that if the termination was indeed unlawful, Farahbakht would face obvious but not insurmountable credit difficulties. However, Farahbakht had affirmatively established a defence to some allegations of fraud, which shifted the onus to Midas to prove the fraud at the trial. Given these factors, the court concluded that Farahbakht had demonstrated a serious question to be tried, and thus, an interlocutory injunction was warranted.

The court ultimately granted the injunction, restraining Midas from terminating the distribution agreement pending the outcome of the trial. Justice Edelman emphasised the need for a balance between protecting Farahbakht’s business interests and ensuring that the court's orders did not unduly prejudice Midas. The court recognised that Farahbakht had a credible case and that the balance of convenience favoured granting the injunction at this interlocutory stage. The final orders included the injunction against Midas terminating the agreement and directions for the continuation of proceedings to determine the merits of the case.