Hafele Australia Pty Ltd v Maggbury Pty Ltd

[1999] QCA 98

COURT OF APPEAL	[1999] QCA 098
McPHERSON JA THOMAS JA MUIR J
Appeal No 1495 of 1999
HAFELE AUSTRALIA PTY LTD ACN 006 021 432 (First Defendant)
and
HAFELE GmbH & CO (Second Defendant)	Appellants
and
MAGGBURY PTY LTD ACN 011 007 793 (First Plaintiff)
and
GISMA PTY LTD
ACN 072 964 311 (Second Plaintiff)	Respondents
BRISBANE

..DATE 24/03/99
McPHERSON JA: Mr G W Allen developed a form of wall-mounted foldaway ironing
board the right to which he assigned to one or both of the two plaintiff companies which he
controls.
With a view to manufacturing and marketing this product he entered into a written agreement
with the two defendant companies, which are a German corporation and its Australian
subsidiary.

The agreement provided that the defendants should not use information about the ironing board "disclosed, shown or provided" to them, except for the purpose of assessing the ironing board for the purpose of considering its commercial exploitation.

In an action in which judgment was delivered on 22 January 1999, Mr Justice Byrne held that the defendants had acted in breach of the agreement. He awarded $25,000 damages for breach of contract. He also granted an injunction in favour of the plaintiffs restraining the

defendants from manufacturing or distributing an ironing board of their own manufacture, or any other such board designed or manufactured using information derived from documents or a prototype supplied by the plaintiffs.

In addition, the defendants were ordered to pay 90 per cent of the plaintiffs' costs. The defendants have appealed against that judgment and now ask for a stay of execution. They say that if they pay the $25,000 or the costs they will not get them back if the appeal succeeds. That is so, they say, because the plaintiffs are insolvent and so is Mr Allen; or perhaps one should say, there is some evidence that he may nearly be insolvent.

They also say that the injunction will cause serious losses to them which will not be recouped even if the injunction is set aside on appeal.

We are not in a position to make an accurate prediction about the likely outcome of the appeal. However, going by the careful reasons of Mr Justice Byrne, the critical issues on the appeal are likely to be (1) whether the defendants did make use of information derived from the plaintiffs' ironing board; and (2) whether the agreement is invalid as being contrary to public policy because the information was in the public domain.

As to the first point, there appears to be evidence from the defendant's own witnesses of a degree of deliberate copying or use of the plaintiffs' ironing board, or some of its features, in their design and manufacturing processes.

As to the second point, the agreement itself is not in dispute, and it therefore rests with the defendants to show it is invalid for reasons of public policy or otherwise.

The injunction that was granted by His Honour is not interlocutory but final in its form. It is,
therefore, not a matter of balancing relative inconvenience to the respective parties. What
the defendants are asking for is, to my mind, in effect, that the injunction remain, in a sense,
interlocutory in form, pending determination of the appeal.
To express it in the converse fashion, they are really asking for a form of interlocutory
injunction to restrain enforcement of the permanent injunction that has been granted pending
determination of the appeal.

They will suffer, they say, some not inconsiderable loss if it is not granted but conversely, if it is granted, the judgment given in the plaintiffs' favour will, effectively, be rendered nugatory, and the plaintiffs themselves may suffer a loss that cannot be, or will not be, capable of being met by the undertaking that has been offered by the defendants in this Court.

On these matters, what His Honour said at pages 26 to 30 of his reasons, seems to me to have a persuasive value and one that leads me to the conclusion that the plaintiffs real remedy in this case was, and was considered by His Honour to be, the injunction. To take it away will severely disadvantage the plaintiffs for no reason other than that there is an appeal now pending by the defendants. That, it seems to me, would not be a proper exercise of the discretion that is conferred on this Court to stay the proceedings.

There is a further argument that the form of the injunction is imprecise or ambiguous. On
first impression, that submission appears to me to be untenable. The injunction is in a form
not very different from that which is commonly granted in the case of confidential
information, and which was approved in Peter Pan Manufacturing Inc. v. Corset Silhouette
Limited
[1964] 1 Weekly Law Reports 96, to which the facts of this case bear some passing
resemblance.

As regards the damages, the sum at issue is, it must be said, small. No one, however, wants to lose $25,000 if they are entitled to get it back. In the end, I think that a stay of some kind should be granted in respect of payment of that sum, and the undertaking that has been offered by the defendants to pay into Court seems to me to sufficiently protect the plaintiffs' interests without unduly harming the defendants' interests in relation to that sum.

The circumstances are generally, in my view, not such as to warrant the granting of a stay which would deprive the plaintiffs of the benefit of the principal judgment for an injunction which has been given in their favour. So far as the costs are concerned, it will be some time

before they are assessed and become enforceable. However, I would be prepared to stay
enforcement of the plaintiffs' right to those costs when they are determined or become

certain in amount, that is to say, once they are taxed, assessed or agreed in amount.

Otherwise I would refuse the application. To sum up, I would order as follows.

Upon the payment into Court of the sum of $25,000 and upon the undertaking of the applicant defendants by their counsel forthwith upon the issue of the allocatur to pay into Court the amount of the plaintiffs' costs in the action as taxed, assessed or agreed, and except for the purposes of pursuing the taxation of those costs, the judgment given in the Court below for damages in an amount of $25,000 and the order that the defendants pay the plaintiffs' costs or 90 per cent thereof are stayed until the determination of this appeal or until further order.

In other respects the applications are adjourned to a date to be fixed. I would order that the costs of this application be costs in the appeal.

THOMAS JA: I agree.

MUIR J: I agree.

McPHERSON JA: In case I did not make it entirely clear I do not see why the assessment of costs or the taxation of the costs should not go ahead. In a sense there might be a waste if everything was reversed and the plaintiffs ended up having to pay the defendants' costs of the trial; but there must be a fair bit of common ground as to what the costs are that can be investigated without undue loss; possibly leading, even before the appeal is heard, to an

assessment on one side or the other.

I'm afraid I don't know enough about the costs system as it is now to make any confident predictions about this matter but the Court's underlying idea is that although the taxation of costs may go ahead there should not, without a further order at any rate, be enforcement of any judgment that arises out of the costs as assessed.

MR DOUGLAS: As Your Honour pleases, yes.

McPHERSON JA: Right. Is that satisfactory to you, Mr Lee?

MR LEE: Yes, Your Honour.

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