Fennell Tyres International Pty Ltd as Trustee for the Fennell Family Trust v Marathon Tyres Pty Ltd - [2005] WASC 183

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: FENNELL TYRES INTERNATIONAL PTY LTD as Trustee for the Fennell Family Trust & ORS -v- MARATHON TYRES PTY LTD & ANOR [2005] WASC 183

CORAM: LE MIERE J

HEARD: 22 JULY 2005

DELIVERED : 19 AUGUST 2005

FILE NO/S: CIV 1716 of 2005

BETWEEN: FENNELL TYRES INTERNATIONAL PTY LTD as Trustee for the Fennell Family Trust (ACN 111 954 851)
First Plaintiff
TYRE INVESTMENTS PTY LTD (ACN 114 733 890)
Second Plaintiff
BRETT GUY FENNELL
Third Plaintiff
AND
MARATHON TYRES PTY LTD (ACN 082 184 923)
First Defendant
MARATHON TYRES (WA) PTY LTD (ACN 009 130 858)
Second Defendant

Catchwords:

Contract - Interlocutory injunction - Application to discharge injunction - Principles for dissolution of injunction - Serious question to be tried - Whether parties should be held to have entered into contract - Damages not an adequate remedy - Balance of convenience

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

First Plaintiff                :     Mr B H Taylor
Second Plaintiff            :     Mr B H Taylor
Third Plaintiff               :     Mr B H Taylor
First Defendant             :     Mr N W McKerracher QC & Mr B D Deleuil
Second Defendant         :     Mr N W McKerracher QC & Mr B D Deleuil
Interested Party             :     Mr A R MacPherson

Solicitors:

First Plaintiff                :     Talbot & Olivier
Second Plaintiff            :     Talbot & Olivier
Third Plaintiff               :     Talbot & Olivier
First Defendant             :     Mallesons Stephen Jaques
Second Defendant         :     Mallesons Stephen Jaques
Interested Party             :     Hotchkin Hanly

Case(s) referred to in judgment(s):

Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540
Darbey v Whitaker (1857) 4 Drew 134; (1857) 62 ER 52

Case(s) also cited:

American Cyanamid Co v Ethicon Ltd [1975] AC 396
Appleton Papers Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199
Award Holdings Pty Ltd v Fairmont Nominees Pty Ltd [2001] WASC 179
Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 76 ALR 633
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Cayne v Global Natural Resources Plc [1984] 1 All ER 225
Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1
Cooper v Griffiths [2003] WASC 55
Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349
Masters v Cameron (1954) 91 CLR 353
Miller v Jackson [1977] QB 966
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1
Port Kennedy Resorts Pty Ltd v Huat & Ors [2000] WASCA 328
Smith Kline & French Laboratories (Australia) Ltd v Department of Community Services & Health (1989) 89 ALR 366
State Transport Authority v Apex Quarries Ltd [1988] VR 187

LE MIERE J: The defendants apply for the interlocutory injunction granted by McKechnie J on 17 June 2005 to be dissolved. Before addressing the parties' arguments I will briefly outline the history of this matter as narrated by the third plaintiff in his affidavit sworn on 17 June 2005.

Marathon Tyres Business

The third plaintiff, who I will refer to as Mr Fennell, has been involved in the tyre industry in Western Australia for over 25 years. His father started a tyre business in about 1978. Mr Fennell joined his father in the business in 1979. The business subsequently grew to become a significant enterprise trading as G E Fennell Tyre Wholesalers and Agents ("G E Fennell Tyre"). The business was owned and operated by Ripplewood Nominees Pty Ltd of which Mr Fennell and his father were directors and shareholders. The head office of G E Fennell Tyre was located at 169‑171 Kewdale Road in Kewdale. On or about 1 April 1997 Atkins Carlyle Ltd acquired Ripplewood Nominees Pty Ltd including the business of G E Fennell Tyre. After the business was acquired by Atkins Carlyle, Ripplewood Nominees Pty Ltd was renamed Fennell Tyres Pty Ltd. Mr Fennell continued to have operational control of G E Fennell Tyre and reported to a director of Atkins Carlyle.
In about late 1998 Atkins Carlyle acquired the business trading as Marathon Tyres in Newcastle, New South Wales. In or about September or October 1999 Mr Fennell resigned his position as a director of Fennell Tyres Pty Ltd. Atkins Carlyle merged the businesses of G E Fennell Tyre and Marathon Tyres and renamed the merged business as Marathon Tyres. Mr Fennell has deposed that the registered proprietor of the business which trades as Marathon Tyres in Western Australia is Marathon Tyres Pty Ltd, the first defendant in these proceedings. Atkins Carlyle was subsequently renamed Alesco Corporation Ltd.

Negotiations for Fennell to Purchase Marathon Tyres Business

In October 2004 Michael Nesbitt, the chairman of Marathon Tyres, contacted Mr Fennell and subsequently presented to him a business proposal for Mr Fennell to purchase the Kewdale and Kalgoorlie branches of Marathon Tyres because Marathon Tyres wanted out of their two Western Australian branches. In about late November 2004 Mr Fennell informed Mr Nesbitt that he was not interested.
In about December 2004 Mr Clark, the chief executive officer of Alesco Corporation, and Mr Nesbitt contacted Mr Fennell. Mr Fennell again told Mr Nesbitt and Mr Clark that he did not wish to purchase the Marathon Tyres business.
Marathon Tyres has continued to operate from leased premises at 169‑171 Kewdale Road. Those premises are owned by Lexus Holdings Pty Ltd as trustee for the Lexus Unit Trust of which Mr Fennell and his father are the sole beneficiaries. Shortly prior to the expiry of the lease Mr Fennell and his father met with Mr Greg Nesbitt and Stephen Cox. Greg Nesbitt was Mr Nesbitt's son and general manager of Marathon Tyres. Mr Cox was introduced as Greg Nesbitt's boss and as the person who looked after the entire operations at Marathon Tyres. Greg Nesbitt, Mr Cox, Mr Fennell and his father discussed a proposal to divide the premises leased into two separate premises to reduce the amount of space leased by Marathon Tyres. Agreement was reached and a new lease was executed for the subdivided premises between Lexus Holdings and Marathon Tyres. The new lease was for a three year term commencing on 1 March 2004. Since January 2005 Mr Fennell's businesses Tytec Pty Ltd and E‑Solution Professional Pty Ltd have operated from the other part of the subdivided premises.
In about March 2005 Mr Fennell telephoned Mr Cox and asked him whether he would be interested in getting out of the lease of the premises early and in return Mr Fennell would agree to purchase some of the assets of Marathon Tyres including the earthmoving service truck at a discounted rate. Mr Fennell also proposed that he, through his business Tytec Pty Ltd, could enter into a service agreement with Marathon Tyres to undertake some of their work on a contract basis. Mr Cox informed Mr Fennell that he would think about the proposal. Subsequently Mr Cox and Mr Fennell met at the head office of Alesco in Sydney on 18 April 2005. Thereafter there was a sequence of meetings between Mr Fennell, Mr Nesbitt and Mr Cox.
On 7 May 2005 Soldo Partners, chartered accountants, wrote to Mr Nesbitt as the managing director of Marathon Tyres. Soldo Partners said that they "act for [Mr] Fennell and his entities in this matter as accountants". Soldo Partners said that their client wished to express an interest in purchasing certain assets of the Marathon Tyre business located at Kewdale Road, Kewdale. The letter went on to outline the description of the business and assets proposed to be purchased, gross purchase price, proposed settlement date, provision in relation to assignment of the leased premises and some special conditions.
The plaintiffs allege that a binding agreement was made on 19 May 2005 between Mr Fennell, alternatively the first plaintiff, which I will refer to as Fennell Tyres International, and the defendants by which Mr Fennell, through himself or his nominee or nominees, alternatively Fennell Tyres International, agreed to purchase and the defendants agreed to sell the business trading as Marathon Tyres. Mr Fennell says the agreement was made in the course of a meeting between him and Mr Cox and Mr Nesbitt. I note at this point in the narration that the defendants deny that any binding agreement was made.
Mr Fennell says that at the end of the meeting on 19 May he said to Mr Cox and Mr Nesbitt that he would have the contract prepared to set out the agreement and that he would send it through to Mr Cox in the next two days.
Mr Fennell says that on or about 27 May 2005 his accountant, Mr Soldo, instructed Godfrey Virtue & Co, solicitors, to prepare the contract setting out the agreement. On 29 May 2005 Mr Fennell travelled to Melbourne to meet with Andy Tooth and Ken Kruithof of Michelin Australia to discuss marketing arrangements, the supply chain, relevant terms of supply and ordering methods for the Michelin product. Michelin Australia provide tyres to the Marathon Tyre business. Mr Fennell subsequently interviewed staff of Marathon Tyres in relation to considering the future employment of staff members. Mr Fennell says that on 3 June 2005 he received a message to call Mr Cox. He called Mr Cox and started the conversation by saying that the contract was ready and he was going to send it through to Mr Cox. Mr Cox replied that the matter had become more complicated than that. Mr Cox asked Mr Fennell to confirm that he was interested in taking over the lease of the premises only. Mr Fennell replied that the matter had moved too far forward and that the only way forward was to continue with the deal as they had agreed. Mr Cox then said that he had received a better offer on the Kewdale branch which was signed and sitting on his desk. Mr Fennell asked Mr Cox: "Where do we go from here?" Mr Cox replied that Marathon Tyres was reconsidering its position.
Mr Fennell then instructed Mr Soldo to send the contract through to Mr Cox by facsimile that day. Mr Soldo sent to Mr Cox by facsimile a document entitled "Agreement for the Sale of a business as a going concern". The document is a standard form document approved by the Real Estate Institute of WA. It is in the form of an offer to purchase. The form states that Fennell Tyres International and/or nominee company trust offers to purchase the business. The offer to purchase document was forwarded by Mr Soldo together with a facsimile transmittal sheet that stated it was sent to Mr Cox from Mr Fennell and said: "Please find enclosed contract for the purchase of Marathon Tyres – Kewdale".
Mr Fennell says that on 7 June he telephoned Mr Cox to confirm whether Mr Cox had received the contract. Mr Cox said that he had not been in his office. Mr Fennell told Mr Cox that he needed to know where the matter was going. Mr Cox replied that he was still rethinking his position.
Mr Fennell says that on 8 June Mr Cox telephoned him and said that Marathon Tyres had received a higher offer and that Mr Fennell would have to move his offer higher to secure the deal. Mr Fennell told Mr Cox that he did not have to do so as they already had reached the agreement, which was denied by Mr Cox. Mr Fennell said that he had no option but to seek legal advice in order to enforce the agreement.
Mr Fennell says that on 16 June 2005 he received a telephone call from Neil Montgomery of Michelin Australia who works at Michelin's Welshpool branch and whom Mr Fennell knew from his business dealings in the industry. Mr Montgomery said that he had heard that Michelin would be dealing with National Tyres in Perth. Mr Fennell says that he spoke with Mr Nesbitt on 17 June. Mr Nesbitt said that he had not seen the contract which Mr Fennell had sent to Mr Cox and that Mr Cox was the person dealing with the sale of the Kewdale branch. Mr Nesbitt then said that Marathon Tyres had sold the business to another party and that a deposit had been paid. Mr Nesbitt declined to say who the purchaser was.

The Present Action

On 17 June the plaintiffs issued the writ of summons. The indorsement seeks specific performance of an oral agreement entered into on or about 20 May 2005 between Fennell Tyres International and the second plaintiff, alternatively, Fennell Tyres International, alternatively, Mr Fennell on the one hand and the defendants on the other hand for the sale by the defendants to Fennell Tyres International and the second plaintiff of the business trading as Marathon Tyres. The plaintiffs also sought injunctions, damages and other relief.
On 17 June the plaintiffs applied ex parte for an interlocutory injunction to restrain the defendants from selling or otherwise disposing of the Marathon Tyres business. The application was supported by an affidavit sworn by Mr Fennell on 17 June 2005 which narrates the matters I have set out above. Counsel for the plaintiff informed McKechnie J that agreement was reached on 20 May after an in principle agreement had been reached the night before. I pause at this stage to note that in his subsequent affidavit Mr Fennell said that he had made an error in his dates and that the meeting at which the agreement was made took place on 19 May not 20 May. McKechnie J granted an injunction until judgment or further order that the defendants be restrained from selling or otherwise disposing of, or entering into negotiations with third parties to sell or dispose of, or encumbering any of the assets of the business conducted by the defendants from the Kewdale premises in the name of Marathon Tyres other than in the ordinary course of trade.
On 11 July 2005 the defendants applied for an order that the interlocutory injunction granted by McKechnie J on 17 June 2005 be dissolved. The application was supported by affidavits sworn by Mr Cox on 11 July, Mr Nesbitt on 12 July, and Ms Boden, a solicitor, on 19 July.

The Defendants' Evidence

Mr Cox and Mr Nesbitt each denied in their respective affidavits having made any binding agreement on behalf of the defendants to sell the business to Mr Fennell or any of his companies. Mr Cox says that in or about late May 2005 he was contacted by Eric Van Leewen of National Tyres in relation to acquiring the Kewdale business. Mr Cox told Mr Van Leewen that he was talking to other interested parties but was interested in discussing the terms of any proposal by National. Mr Cox says that he spoke to Mr Fennell on 3 June 2005. He told Mr Fennell that he had still not received the draft contract or the proposed employee list and that, as Mr Fennell already knew, he had also been discussing the sale of the Kewdale business with other potential purchasers. Mr Cox said that he had now received a substantially better offer from another party and Marathon Tyres was considering its position. Mr Cox says that at no stage during that telephone conversation did Mr Fennel say to him that Mr Fennel thought he had a binding agreement with Marathon Tyres.
Mr Cox said that he had further conversations with Mr Fennell on 7 June and 8 June. On 8 June Mr Cox told Mr Fennell that Marathon Tyres was talking to another party in relation to the sale of the Kewdale business and that Marathon Tyres had received a much better offer and that Mr Fennell would have to rethink what he was prepared to offer. At that point Mr Fennell said that he had a binding agreement with Marathon Tyres and would take legal action against Marathon Tyres.
On 16 June 2005 Mr Cox met with Mr Van Leewen and Darryl Bentley, another director of National Tyres, and signed an agreement to sell the business to National Tyres. The agreement is with Planet Corporation Pty Ltd trading as National Tyres. Planet Corporation paid a non‑refundable deposit of $100,000 to Marathon Tyres on 16 June 2005 under the contract of sale. Settlement under the contract of sale was due to occur on 4 July 2005.
Mr Cox says that following his telephone conversation with Mr Fennell on 8 June he did not hear anything further from Mr Fennell until he was informed by telephone by a representative of Marathon Tyres on 20 June that documents in these proceedings had been faxed to the office of Marathon Tyres in New South Wales.
On 1 July Mr Cox wrote to Planet Corporation stating: "As you are aware, an injunction has been issued against Marathon Tyres on the application of Mr Brett Fennell and his related entities, which prevents us from completing the sale of the business to National Tyres". The letter went on to say that Marathon Tyres was in the process of applying to the Court to seek orders dissolving the injunction to allow Marathon Tyres to complete the sale to Planet Corporation. The letter said that Marathon's legal advisers had indicated that the outcome of the application may not be known for four to six weeks and asked Planet Corporation to say whether it was prepared to await the outcome of the application by Marathon Tyres to dissolve the injunction so that Marathon Tyres could inform the court of National Tyre's position in relation to the completion of the sale. Mr Bentley of National Tyres replied by letter of 5 July 2005. Mr Bentley said that National Tyres "will await the outcome of the application by Marathon Tyres for removal of the injunction". Mr Bentley went on to say they had concerns regarded protracted legal proceedings beyond the times Mr Cox had indicated and that in the short term this may adversely affect the business relationship with clients and also the morale and loyalty of the staff.

Planet Corporation

When the matter came on for hearing before me on 22 July counsel for Planet Corporation applied for leave to appear and make submissions. I gave leave for Planet Corporation to lead evidence and make submissions. Planet Corporation tendered an affidavit sworn by Mr Van Leewen on 20 July 2005. Mr Van Leewen refers to his negotiations with Mr Cox to purchase the Marathon Tyres business at Kewdale. Mr Van Leewen confirmed that he and Mr Bentley signed a contract to purchase the business and a non‑refundable deposit of $100,000 was handed to Mr Cox. Mr Van Leewen says that on 20 June he was informed by Mr Cox that an injunction had been issued restraining settlement of the agreement. Mr Van Leewen says that although he knew Mr Fennell was also interested in the business he had not previously been informed that there had been any agreement reached between Marathon and Mr Fennell nor that Mr Fennell would assert that an agreement had been reached. Mr Van Leewen says that if Marathon is prevented from proceeding with the sale of the business to Planet Corporation, then it would regrettably have little option but to terminate the agreement and take action against Marathon for damages. When asked what Planet Corporation intended to do if the injunction remained in place counsel referred the Court to the statement by Mr Van Leewen in his affidavit that if Marathon is prevented from proceeding with the sale of the business to Planet Corporation then it would regrettably have little option but to terminate the agreement and take action against Marathon for damages.

Principles for Dissolution of Injunction

The injunction was granted ex parte. In those circumstances the application to discharge the injunction should be approached in the same way as an application for an interlocutory injunction. That is, the plaintiffs must satisfy the court that there is a serious question to be tried; that they are entitled to final relief in the form of specific performance of the alleged agreement for the purchase of the business; that damages would be an inadequate remedy and that the balance of convenience favours the grant or continuation of the interlocutory injunction. The parties conducted the hearing on that basis.

Statement of Claim

At the time of the hearing on 22 July the plaintiffs had not filed a statement of claim. On 26 July the plaintiffs filed a statement of claim. The statement of claim pleads that by an agreement entered into on or about 19 May 2005 between Mr Fennell, alternatively Fennell Tyres International, and the defendants, Mr Fennell, through himself or his nominee or nominees, alternatively Fennell Tyres International, agreed to purchase, and the defendants agreed to sell the business trading as Marathon Tyres together with the business name. The plaintiffs plead that the agreement was partly express and partly implied. It is pleaded that insofar as the agreement was partly expressed it was oral and constituted by conversations between Mr Fennell, on his own behalf or on behalf of his nominee or nominees, alternatively on behalf of Fennell Tyres International, on the one hand and Mr Cox and Mr Nesbitt on 18 and 19 May 2005. It is pleaded that insofar as the agreement was implied it is to be implied that the purchaser of the business was to be Mr Fennell or his nominee or nominees by reason of the expression of interest letter dated 7 May 2005 and by reason that Mr Fennell and Mr Cox and Mr Nesbitt, on behalf of the defendants, thereafter negotiated for the sale and purchase of the business by reference to Mr Fennell as the proposed purchaser of the business culminating in the conversations relied upon.

Alternatively, it is pleaded that insofar as the agreement was partly implied it is to be implied that the purchaser of the business was Mr Fennell by reason that the only trading in tyres involving Mr Fennell in any capacity with the defendants was through Mr Fennell.
The plaintiffs plead material express terms of the agreement. They plead that by the draft contract sent by facsimile to the defendants on 3 June 2005 Mr Fennell nominated Fennell Tyres and the second defendant as purchasers of the business. The plaintiffs plead that the first defendant purported to sell the business to Planet Corporation in breach of the agreement. The plaintiffs plead that they are now ready willing and able to perform their obligations under the agreement. It is pleaded alternatively that if the agreement was valid and binding but it was a term of the agreement that performance of the agreement be delayed pending the execution of a formal contract incorporating the terms of the agreement, then it was an implied term of the agreement that the parties would negotiate the terms of the formal contract in good faith.
The plaintiff claims specific performance of the agreement, an injunction restraining the defendants from selling or otherwise disposing of, or entering into negotiations with third parties to sell or dispose of, or encumbering any of the assets of, the business other than in the ordinary course of trade, all necessary and consequential accounts, directions and enquiries and damages in lieu of or in addition to specific performance.
On 26 July the plaintiffs amended the statement of claim to add a new paragraph pleading that if the nomination by the third plaintiff of the first plaintiff as the purchaser of the business by the draft contract was ineffective then the agreement was between Mr Fennell, alternatively Fennell Tyres International and the defendants.

Is There a Serious Question to be tried?

The plaintiffs' primary claim is that the agreement in question was made between Mr Fennell and the defendants on 19 May 2005. The plaintiffs claim that Mr Fennell nominated Fennell Tyres International and the second defendant as the purchasers of the business under the agreement by the draft contract.
It is common ground that the parties were in negotiations with a view to entering into an agreement for the sale of a business by the defendants to Mr Fennell or entities associated with him. The plaintiffs contend that although it was contemplated that there would be a more formal contract brought into existence, a binding agreement was entered into between the parties on 19 May 2005. The defendants deny that any final and binding agreement was made.
Mr Cox agrees that on 18 May 2005 there was an agreement that the proposed price of $60,000 for the plant and equipment would be acceptable but says that there was no agreement on several fundamental aspects of the proposal including:
"(a)The extent of the make‑good to be completed by Marathon Tyres (and the release of Marathon Tyres from the balance of its existing "make‑good" obligations under the lease);
(b)the items of stock that would be part of any sale, and the pricing mechanism for this stock; and
(c)the number of employees that Mr Fennell would agree to take on, thereby reducing Marathon Tyre's exposure to redundancy payments."
In his affidavits Mr Fennell says that agreement was reached on each of those issues on 18 and 19 May.
The plaintiffs argue that the true legal complexion which should be put upon the conversations between Mr Fennell, Mr Nesbitt and Mr Cox on 18 and 19 May 2005 is that they made a binding contract pursuant to which, in consideration for the agreed price, the defendants agreed to sell its Kewdale business to Mr Fennell. The defendants, on the other hand, contend that this is one of those cases where the parties first negotiate about, and seek to reach agreement upon, the most important matter of possible contention, that is to say, the price for plant and equipment; reach "agreement" on that subject without thereby binding themselves contractually; and subsequently negotiate, inconclusively, on other aspects of the transaction: see Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 per Gleeson CJ.
In short, the issue is whether, when the parties negotiated about, and made their agreement concerning the price for plant and equipment, they should be held to have entered into a contract, albeit one that would later be overtaken by a further more formal contract containing additional terms and conditions. The alternative view is that, contemplating that at some future time it would be necessary for them to make agreement on various other terms and conditions, they first set about agreeing on the price for plant and equipment, in expectation that if they could agree on that they could move on to reaching common ground on the other matters which they contemplated to have formed part of their contractual arrangement, but as to which in the events which happened, they never reached final agreement.
The defendants urge upon me that no concluded contract had been formed because no agreement was reached on the three critical issues concerning stock, employees and "making‑good" that I have referred to earlier.
There is clearly a dispute on the affidavit evidence as to what occurred during the meetings between Mr Fennell, Mr Nesbitt and Mr Cox in May 2005 and in particular on 19 May 2005. There is also clearly a dispute as to the legal effect, if any, of those discussions.
The Court does not confine its consideration to the evidence of the plaintiffs but takes into account all of the evidence before it. Nevertheless, it is not part of the Court's function in the course of an application for an interlocutory injunction to try to resolve conflicts of evidence on affidavit nor to decide difficult questions of law calling for detailed arguments or mature consideration.
I find that if the evidence of Mr Fennell contained in his two affidavits is accepted then the plaintiffs have made out an arguable case that there was a binding agreement between Mr Fennell and the defendants. The evidence tendered by the defendants contradicts important parts of Mr Fennell's evidence but does not displace it. I conclude that there is a serious question to be tried that there was a binding agreement between the defendants and Mr Fennell for the sale and purchase of the business.
The defendants further submit that even on Mr Fennell's evidence the plaintiffs have not raised a serious question to be tried that they, or any of them, will obtain specific performance of the alleged oral agreement for two principal reasons. First, even on Mr Fennell's evidence there are glaring disparities between the terms that the plaintiffs contend form the basis of the agreement and those that were in fact incorporated by Mr Fennell himself into the draft contract, that is the offer to purchase document. The plaintiffs concede that the draft contract does contain terms inconsistent with those said to be agreed. The plaintiffs submit that the inconsistencies in the draft contract ought be omitted. The plaintiffs submit that it is a matter for the trial Judge to weigh the inconsistencies together with all of the evidence adduced at a trial in determining whether there was a concluded bargain between the parties. The plaintiffs submit that those inconsistencies do not mean that the claim of the plaintiffs is frivolous or vexatious or that there is not a serious question to be tried.
The inconsistencies between the draft contract and the alleged oral agreement pose a difficulty for the plaintiffs' case. Nevertheless, I accept that it is a matter for the trial Judge to weigh the inconsistencies together with all of the evidence at trial to determine whether there was a concluded bargain. The inconsistencies do not prevent the plaintiffs having established a serious question to be tried.
Secondly, the defendants submit that even if there exists a serious question to be tried as to whether an enforceable agreement, partly oral and partly implied, was made between the parties, the relevant claim to final relief in aid of which the injunction is sought to be maintained is a claim for a specific performance of the alleged agreement and the terms of the alleged agreement are too vague to be the subject of an order for specific performance.
Senior counsel for the plaintiffs, Mr Kerracher QC, referred to Darbey v Whitaker (1857) 4 Drew 134; (1857) 62 ER 52. In that case the plaintiff sought specific performance of an agreement by which premises were to be sold for a fixed sum and in addition the plaintiff agreed to sell the fixtures and stock in trade for a sum to be valued. The Vice Chancellor refused a decree for specific performance on the ground that the decree sought payment to the plaintiff of such a sum of money as valuers shall fix. The Vice Chancellor held that such a decree cannot be made on the ground that the Court will never make a decree that it cannot see its way to enforce. That case, whilst relevant, is different from this case. The plaintiffs do not seek specific performance of an obligation that only arises upon an arbitrator or other third party making some determination.
There is force in the defendants' submissions. Nevertheless, the defendants' contentions are not so clearly right that there is no serious question to be tried.

Damages Not an Adequate Remedy

Both the plaintiffs and Planet Corporation submit that the Marathon Tyres business is of special value to them. Each of them argues that it would be difficult to assess their damages if the sale did not proceed to them. In my view it would not be just to confine the plaintiffs to a remedy in damages.

Balance of Convenience

In my view the balance of convenience favours the continuation of the injunction. If the injunction is dissolved it is likely that the Marathon Tyres business would be transferred to Planet Corporation. The plaintiffs would be denied the opportunity to acquire the business in circumstances in which the benefits to the plaintiffs of the purchase of the business are very considerable. There is evidence that the plaintiffs would not practicably be able to set up an alternative business. The plaintiffs would be denied the opportunity to purchase the business in circumstances in which their claim to the business is as first purchaser in time.
The defendants submit that the continuation of the injunction will frustrate the contract to sell the business to Planet Corporation, causing an innocent third party, Planet Corporation, who has acquired rights without notice of the plaintiffs' contentions and incurred obligations in good faith to suffer significant adverse consequences. In my view the force of that submission is lessened by the fact that if the sale to Planet Corporation does not proceed then Planet Corporation will have a claim for damages against the defendants, although I acknowledge Planet's contention that it would be difficult to assess damages.
The defendants further submit that the continuation of the injunction prevents Marathon Tyres from disposing of the business and places it in an untenable position of having to continue operating the business until these proceedings are finally determined. There is some force in that submission. However, this situation has now been continuing for two months. The plaintiffs have stated that if the injunction is not dissolved they will apply for an expedited hearing of this action. In view of the work that has been done to gather evidence for this interlocutory hearing the trial of the action should be able to proceed in a relatively short period of time.
The defendants submit that the relative strength of their case is a factor favouring the dissolution of the injunction. My impression of the evidence presently before the Court is that the plaintiffs' case is not a strong one. However, the Court must be wary of jumping to judgment too soon on the limited materials that are before the Court and without the benefit of the cross‑examination of the witnesses.
Taking all matters into account I consider that the balance of convenience favours the continuation of the injunction.

Discretion

The defendants submit that the Court should exercise its discretion against continuing the interlocutory injunction on the ground that the plaintiffs delayed in seeking the interlocutory injunction. On 8 June 2005 Mr Cox told Mr Fennell that he had received a better offer and Mr Fennell would have to improve his offer to secure the deal. Mr Fennell said there was a binding agreement. Mr Cox denied that. Mr Fennell said he would take legal advice. The plaintiffs did not issue their writ and seek and obtain the interlocutory injunction until 17 June, that is nine days later. In the meantime the defendants had entered into a contract to sell the business to Planet Corporation.
I do not consider that I should refuse to continue the interlocutory injunction on the grounds of delay. Mr Fennell told Mr Cox on 8 June that he was taking legal advice. The defendants, through Mr Cox, were on notice that Mr Fennell maintained there was a binding agreement and he was taking legal advice in relation to it. There was no unreasonable delay in commencing proceedings.

Conclusion

For the reasons stated I will not discharge the interlocutory injunction. However, the continuation of the interlocutory injunction is dependent upon the plaintiffs applying forthwith for the action to be entered into the expedited list and thereafter pursuing the action with all proper expedition so that it is resolved expeditiously.