Kelair Holdings Pty Ltd v Archer Consolidated Equities Pty Ltd - [2009] FMCA 1127

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KELAIR HOLDINGS PTY LTD v ARCHER CONSOLIDATED EQUITIES PTY LTD

[2009] FMCA 1127

INJUNCTION – Interim injunction – application for – principles.

TRADE PRACTICES – Alleged misleading and deceptive conduct.

TORT – Injurious falsehood.

Trade Practices Act 1974, ss.4(1), 51A, 52, 80, 87
Federal Magistrates Act 1999, ss.8(3), 15

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46
CPSU v Commonwealth of Australia (2006) 157 IR 470; [2006] FCAFC 176
Fencott v Muller (1983) 152 CLR 570

Applicant:

KELAIR HOLDINGS PTY LTD

Respondent:

ARCHER CONSOLIDATED EQUITIES PTY LTD

File Number:

PEG 202 of 2009

Judgment of:

Lucev FM

Hearing date:

12 November 2009

Date of Last Submission:

12 November 2009

Delivered at:

Perth

Delivered on:

12 November 2009

REPRESENTATION

Counsel for the Applicant:

Mr P Hannan

Solicitors for the Applicant:

De Vita & Dixon Lawyers

For the Respondent:

No appearance

ORDERS

UPON the Applicant’s undertaking as to damages dated 11 November 2009 and filed herein that the Applicant will: (a) submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely effected by the operation of the following interlocutory orders or any continuation (with or without variation) thereof; and (b) pay the compensation referred to in (a) to the person there referred to,

AND UPON the undertaking of Mr Sam De Vita of De Vita + Dixon Lawyers (the solicitors for the Applicant) to fax to the Respondent’s registered office by 12 noon on 13 November 20009 a copy (without exhibits) of the affidavit of Tomo Francesco Mangione sworn 12 November 2009 and filed in Court this day,

THE COURT ORDERS THAT:

There be an abridgment of the times prescribed by rule 6.19 of the Federal Magistrates Court Rules 2001 (Cth).
Until 4.00 pm on 23 November 2009 or further order of the Court, the Respondent, whether by itself, its servants, agents or otherwise, be restrained and an interlocutory injunction is hereby granted restraining the Respondent from making, advertising, publishing or otherwise disseminating any statement concerning the Applicant to the effect of those statements contained in the notices quoted on page 2 of the letter dated 9 November 2009 from De Vita + Dixon Lawyers (the solicitors for the Applicant) to the Respondent.
Without limiting the generality of paragraph 2 above, the Respondent shall forthwith upon service of this order (as per paragraphs 5 and 6 below) remove any notices displayed at the Respondent’s premises at 862 Albany Highway, East Victoria Park, Western Australia containing words to the effect of the notices quoted on page 2 of the letter dated 9 November 2009 from De Vita + Dixon Lawyers (the solicitors for the Applicant) to the Respondent.
The solicitors for the Applicant shall, by no later than 12 noon on Friday 13 November 2009, serve a copy of this order by way of a fax to the office of Chris Clarke & Associates of Suite 11, 19 – 21 Outram Street, West Perth (being the registered office of the Respondent), and then send a further copy of the order by ordinary post to that office.
Mr Sam De Vita of De Vita + Dixon Lawyers (the solicitors for the Applicant) shall, by no later than 2 pm on Friday 13 November 2009, personally attend at the Respondent’s premises at 862 Albany Highway, East Victoria Park, Western Australia and serve a copy of:
1.this order; and
2.the letter dated 9 November 2009 from De Vita + Dixon Lawyers to the Respondent,
upon any person apparently in charge of the business conducted from those premises or any person apparently acting as a shop attendant at those premises.
In serving a copy of this order as per paragraph 5 above, Mr De Vita shall:
1.draw the attention of the person served to paragraph 3 above;
2.draw the attention of the person served to the Penal Notice at the foot of this order;
3.if it appears to Mr De Vita that the person served does not understand the provisions of this order referred to in sub-paragraphs (1) and (2) above, explain the effect of those provisions in as simple language as possible; and
4.suggest to the person served that she or he should use their best endeavours to inform Mr Ian Douglas Archer (the sole director of the Respondent) of the terms of this order.
The Respondent and any person (whether or not a party) adversely effected by the operation of the orders in paragraphs 2 and 3 above have liberty to apply on 48 hours written notice to the Applicant’s solicitors.
There be a directions hearing on 23 November 2009 at 9.00 am.
At the directions hearing referred to in paragraph 8 above the Court will also consider the Applicant’s application to continue the interlocutory orders (or some variation thereof) referred to in paragraphs 2 & 3 above.
The confidential exhibits remain on the Court file and not be opened without leave of a Federal Magistrate.
The costs of and incidental to the above orders be reserved.

PENAL NOTICE

TO: IAN DOUGLAS ARCHER

(BEING THE SOLE DIRECTOR OF THE RESPONDENT)

AND TO:ANY PERSON IN CHARGE OF, OR ACTING AS A SHOP ATTENDANT AT, THE BUSINESS CONDUCTED FROM THE PREMISES AT 862 ALBANY HIGHWAY, EAST VICTORIA PARK, WESTERN AUSTRALIA

IF YOU:

REFUSE OR NEGLECT TO DO ANY ACT WITHIN THE TIME SPECIFIED IN THIS ORDER FOR THE DOING OF THE ACT; OR
DISOBEY THE ORDER BY DOING AN ACT WHICH THE ORDER REQUIRES YOU TO ABSTAIN FROM DOING,

YOU WILL BE LIABLE TO IMPRISONMENT, SEQUESTRATION OF PROPERTY OR OTHER PUNISHMENT.

ANY OTHER PERSON WHO KNOWS OF THIS ORDER AND DOES ANYTHING WHICH HELPS OR PERMITS YOU TO BREACH THE TERMS OF THIS ORDER MAY BE SIMILARLY PUNISHED.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

PEG 202 of 2009

KELAIR HOLDINGS PTY LTD

Applicant

And

ARCHER CONSOLIDATED EQUITIES PTY LTD

Respondent

REASONS FOR JUDGMENT

(Ex tempore reasons edited from the transcript)

Introduction

In the window of a picture framing shop[1] in a busy thoroughfare in the inner Perth suburb of East Victoria Park, two identical notices in the following terms have recently appeared:
[1] “the Shop”.
PUBLIC NOTICE
BEFORE DEALING WITH
INSTANT WASTE MANAGEMENT
PHONE THE DEPARTMENT OF CONSUMER PROTECTION ON 9282 0777
OR
SMALL BUSINESS DEVELOPMENT CORPORATION ON
13 12 49
TO FIND OUT HOW THIS COMPANY TRAPS YOU IN LEGAL PITFALLS
DO NOT HIRE A BIN FROM INSTANT WASTE DUE TO CONTRACTUAL TRAPS AND PITFALLS
HIRE BINS FROM COMPANIES WHO ARE PROFESSIONAL AND HAVE INTEGRITY.[2]
[2] “the Notices”.
The form of the Notice is that it appears to be on white A4 paper.

It appears to have been, according to the evidence, put up in two places on the front window of the Shop. The Notice itself is in block capitals, with the words “Public Notice” being most prominent by reason of their font size, and the words “Instant Waste Management” appearing also in a large font size in red. The words, “do not hire a bin from Instant Waste due to contractual traps and pitfalls” also appear in red, and the words “hire bins from companies who are professional and have integrity” appearing, it seems, in blue.

Application

The application, which was filed yesterday, seeks both final and interlocutory or interim relief. The final relief which is sought is for a declaration that the Notices are false and for orders under ss.80 and 87 of the Trade Practices Act 1974 (Cth)[3] and s.15 of the Federal Magistrates Act 1999 (Cth)[4] requiring the removal of the Notices. Further final relief is sought for similar orders under the equivalent sections of the Fair Trading Act 1987 (WA)[5] and also for an injunction under ss.80 and 87 of the TP Act and s.15 of the FM Act restraining the respondent from making, advertising, publishing or otherwise disseminating any statement concerning the applicant to the effect of those statements contained in the Notices, and similar injunctive relief under the FT Act. The main application also seeks damages under the TP Act, FT Act, at common law, as well as exemplary damages.
[3] “TP Act”.
[4] “FM Act”.
[5] “FT Act”.
The interim relief sought is essentially contained in the minute of proposed order handed up this afternoon by counsel for Kelair Holdings Pty Ltd,[6] and takes the interim relief sought a little further than that which was originally contained in the interim application itself. Essentially, it seeks that there be:
i)an abridgment of time;
ii)a restraint in similar terms to that set out in the final relief sought;
iii)again that there be removal of the Notices;
iv)service of any order which issues upon the respondent’s registered office, service also at the Shop, and an explanation given to persons at the Shop by the solicitors for the applicant and the pointing out of the terms of this order;
v)various procedural orders.
[6] “Kelair Holdings”.

Background facts

The relevant facts for present purposes are that Kelair Holdings is a duly incorporated company capable of suing in its corporate name. It does carry on, and has carried on at all material times, the business of providing waste collection and disposal services to customers within the State of Western Australia, in consideration for the payment by such customers of fees to the applicant, and that business is carried out under the name “Instant Waste Management”.
The respondent, Archer consolidated Equities Pty Ltd[7] is also a duly incorporated company capable of being sued in its corporate name and, for relevant purposes, a trading corporation within the definition contained in s.4(1) of the TP Act. The Court is prepared to find that on the basis of the information contained in the affidavits, which appear to indicate that the business trades under the name “Art Mart Picture Gallery” and is effectively a picture framing business, in a busy commercial thoroughfare in the inner Perth suburb of East Victoria Park.
[7] “Archer Consolidated Equities”.
The evidence indicates that the Shop has a large front window facing onto the busy commercial thoroughfare, adjacent to a pedestrian footpath running in front of the Shop window, and that since at least 6 November 2009 two copies of the Notice, have been affixed on the inside of the Shop window, one it would seem at each end of the Shop window.

Grounds of the application

The applicant, Kelair Holdings, in the statement of claim filed with the application pleads a number of representations which it says are made by reason of the matters previously adverted to, but in particular the Notices, and they say that those representations are false. For present purposes, the Court is prepared to indicate that it certainly considers that the representations numbered 3-10, at para.11 of the statement of claim are, on the evidence presently available, including

Mr Mangione’s second affidavit tendered in Court today,[8] arguably false. The representations numbered 3-10, at para.11 of the statement of claim are reproduced as follows:
[8] “Mr TF Mangione’s Second Affidavit”.
(3)The company trading as “Instant Waste Management” has engaged in commercially unscrupulous practices.
(4)The company trading as “Instant Waste Management” has engaged in unprofessional conduct.
(5)The company trading as “Instant Waste Management” lacks commercial integrity.
(6)The company trading as “Instant Waste Management” has contracted with its customers by surreptitiously including in customer contracts provisions to which the customers would not have agreed had the customers been aware of those provisions.
(7)The company trading as “Instant Waste Management” has entered into contracts with its customers containing provisions that are unfair and/or unreasonable.
(8)Conducting business with the company trading as “Instant Waste Management” will result in an unsatisfactory business relationship with that company.
(9)In entering into contracts with future customers, the company trading as “Instant Waste Management” will surreptitiously seek to include in such contracts provisions to which the customers will not agree if the customers are aware of those provisions.
(10)In entering into contracts with future customers, the company trading as “Instant Waste Management” will seek to include in such contracts provisions that are unfair and/or unreasonable.
The Court further notes that the representations numbered 8-10 are future matter representations for the purposes of s.51A of the TP Act.
Kelair Holdings says that Archer Consolidated Equities’ conduct is conduct in trade or commerce that is misleading or deceptive or likely to be so and in breach of s.52 of the TP Act and as a consequence of which, Kelair Holdings has suffered or is likely to suffer loss and damage.
As the Court has previously indicated, the Court is prepared to find that the conduct of Archer Consolidated Equities is in trade or commerce, the Notices being affixed to the inside of the Shop window, which are commercial premises, which trade as a picture framing shop and which abut or face onto a footpath in a major commercial thoroughfare in a busy commercial precinct in East Victoria Park.
The terms of the Notice are also relied on to support a claim for injurious falsehood. Given what the Court has already said concerning the representations which are alleged by Kelair Holdings to have been made by the respondent – the Court notes in particular representations 3-7 at para.16 of the statement of claim – and as with similar representations in relation to the trade practices claim, the Court considers that it is arguable that each of the representations numbered 3-7 in para.16 of the statement of claim are arguably false. The representations numbered 3-7 in para.16 of the statement of claim are reproduced as follows:
(3)The company trading as “Instant Waste Management” has engaged in commercially unscrupulous practices.
(4)The company trading as “Instant Waste Management” has engaged in unprofessional conduct.
(5)The company trading as “Instant Waste Management” lacks commercial integrity.
(6)The company trading as “Instant Waste Management” has contracted with its customers by surreptitiously including in customer contracts provisions to which the customers would not have agreed had the customers been aware of those provisions.
(7)The company trading as “Instant Waste Management” has entered into contracts with its customers containing provisions that are unfair and/or unreasonable.
The Court also notes that on the evidence presently available the applicant has a number of existing customers in East Victoria Park and the surrounding suburbs, and the Court notes indeed that the existence of the Notice was brought to the attention of Mr TF Mangione by an existing customer who had been told about it by another existing customer.
Kelair Holdings says, and there is no reason to doubt that, it relies upon:
a)recommendations from existing customers to obtain new customers;
b)its business reputation in order to have existing customers renew contracts upon the expiry of contracts; and
c)its business reputation in order to obtain new customers.
The Court also notes that there is evidence before the Court which would indicate that Kelair Holdings does not understand why it is that the Notices have gone up in the Shop, or what the Notices actually relate to, as a matter of fact.
The Court also notes that on 9 November 2009, one of the applicant’s directors, Mr TF Mangione, attended at the Shop and requested the staff there present to remove the notices. The staff in attendance were not prepared to do so. Subsequently, what the Court will call a demand letter, was sent by Kelair Holdings’ solicitors, seemingly later that day on 9 November 2009, to Archer Consolidated Equities setting out the terms of the Notice, and what now appears in the statement of claim, and seeking the immediate removal of the signs.
The demand letter, which was served upon the registered office of Archer Consolidated Equities drew what, in the Court’s view, is a somewhat blasé response from a chartered accountant who has his business at the premises, which are the registered office of Archer Consolidated Equities. Relevantly, the receipt of the letter of

9 November was acknowledged and the chartered accountant concerned indicated that he had been unable to contact the client, being Archer Consolidated Equities, and had been informed by its staff that its officers would be uncontactable until Friday 13 November, as they were on leave.
The Court notes also the affidavit of Andrew Stephen filed in Court today,[9] indicating service of the application, statement of claim and relevant documents, save for Mr TF Mangione’s Second Affidavit. Thus Archer Consolidated Equities, seemingly unconcerned, has not appeared today and the evidence indicates that the Notices remain in place.
[9] “Mr Stephen’s Affidavit”.
Counsel for Kelair Holdings has quite properly put before the Court the evidence and made submissions as if this were an ex parte application. As the Court has indicated, Archer Consolidated Equities is not represented today, but the application was not made ex parte as such and the application and associated documents having been served on the registered office of Archer Consolidated Equities. It would appear that Archer Consolidated Equities has simply chosen not to appear.

Granting of an interim injunction

The Court has power to issue injunctive relief and also relief in the form sought in the minute of proposed order in support of a claim under the TP Act, and in the associated jurisdiction under the FT Act and at common law. The Court refers to ss.8(3) and 15(a) of the FM Act and to the High Court’s decision in Fencott v Muller.[10]
[10] (1983) 152 CLR 570.
The principles with respect to the grant of an injunction in the present circumstances are not in dispute, they are well-known and are set out by the Full Court of the Federal Court in CPSU v Commonwealth of Australia.[11] Suffice to say that in that judgment the Full Court referred to the judgment of the High Court in Australian Broadcasting Corporation v O’Neill,[12] and the judgment of Gleeson CJ and Crennan J, referring to the need for a serious question to be tried as to the applicant’s entitlement to relief and it being shown that the plaintiff or the applicant is likely to suffer injury for which damages would not be an adequate remedy and that the balance of convenience favours the granting of an injunction.
[11] (2006) 157 IR 470; [2006] FCAFC 176.
[12] (2006) 227 CLR 57; [2006] HCA 46.
In relation to those issues, in the Court’s view there is a serious question to be tried on the basis of the allegedly false representations in that those representations do give rise to an arguable case and a serious question to be tried as to whether or not they are misleading or deceptive conduct or likely to be so, but also a serious question to be tried as to the issue of injurious falsehood.
It is also the Court’s view that there is a likelihood of injury, for which damages would not be an adequate remedy, because of the possible damage and possible ongoing damage to Kelair Holdings’ business or commercial reputation by reason of the Notices remaining in place. As the Court has already indicated, the Notices are placed in the front window of the Shop, which has high visibility in a major thoroughfare, and has been seen by existing clients of the applicant. The Court also notes that it is near to a place, a coffee shop, to which the officers of Kelair Holdings take clients. Thus the likelihood of further injury being suffered, is in the Court’s view, fairly evident.
The balance of convenience in the Court’s view also favours the grant of an interim injunction at this stage. The alleged representations made involve serious allegations, or at least carry the implication of serious allegations, of wrongful conduct by Kelair Holdings and are capable, as the Court has previously indicated, of damaging Kelair Holdings’ business reputation.

The Court is satisfied from the evidence that is presently before it that the representations are live and ongoing and that at least for immediate purposes, in the absence of any positive action on the part of Archer Consolidated Equities, there is no prospect of the Notices being withdrawn without an interim injunction issuing.
The Court has considered the question of whether or not there might be any harm to Archer Consolidated Equities if the injunction is granted on an interim basis and the Court cannot see that any harm would be done to Archer Consolidated Equities by the injunction being granted on an interim basis.
In those circumstances, the Court is of the view that the balance of convenience requires that the interim injunction sought by Kelair Holdings in its terms be granted.
The Court also notes that an appropriate undertaking as to damages has been filed by an appropriate officer of Kelair Holdings.

Orders

For those reasons, the Court will make orders in terms of the minute of proposed order tendered in Court today by counsel for the applicant, with the following insertion; in order 2 the number “23” will be inserted before “November” and in order 8, there be a directions hearing on 23 November 2009 at 9 am.
There will be a new order 10 that the confidential exhibits remain on the Court file and not be opened without leave of a Federal Magistrate.
The order can appear in the terms of the minute of proposed order that counsel for the applicant has handed up, with the undertaking of service of Mr TF Mangione’s Second Affidavit recited at the beginning, in the terms previously read out by counsel for Kelair Holdings. There will be orders in those terms and the Court will adjourn.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Lucev FM

Associate: S. Dinon

Date: 16 November 2009