Landmark Systems Corporation v On-Line Consulting Pty Ltd

[1995] FCA 168

IN THE FEDERAL COURT OF AUSTRALIA  )   
  )       
NEW SOUTH WALES DISTRICT REGISTRY  )  No G 56 of 1995
  )     
GENERAL DIVISION  )     
  )     

BETWEEN:          LANDMARK SYSTEMS CORPORATION

First Applicant

LANDMARK SYSTEMS PACIFIC PTY LTD

Second Applicant

AND:                   ON-LINE CONSULTING PTY LIMITED

First Respondent            

DAVID READING

Second Respondent
Coram:        Davies J.
Date:          23 February 1995
Place:         Sydney

REASONS FOR JUDGMENT
  EX TEMPORE

I am of the view that there should be an injunction in terms of paragraph 5 of the notice of motion.  The letter of 10 February 1995 is in my opinion misleading.  In paragraph 1 it refers to the fact that the arbitration procedure may take some months to reach a concluded outcome.  In paragraph 4 it states that while the dispute is going through the arbitration process the distribution agreement provides that the duties
and responsibilities of both Landmark and On-Line will continue.

Then there is an assertion that the customer can continue to come to On-Line for support and that Landmark will continue to provide second level support.  It seems to me that that is a misleading statement.

This matter is coming up before the arbitrators in a short time.  It was hoped that the arbitrators would convene before 6 March when the matter next comes back to this court.  It appears that that may not be achieved but, in any event, it will come to the arbitrators in a relatively short time and this is an obvious case in which the arbitrators must give attention to interlocutory relief.

These arbitrators are, as I understand it, empowered to impose such a regime and it was for that reason that the undertakings were accepted when the matter last came before the Court.  Accordingly, it seems to me wrong to say to customers that Landmark is going to be bound until the arbitration procedure has reached a concluded outcome to provide a second level support to On-Line, or that the duties and responsibilities of both will continue, which is, as I read it, a final outcome.

For those reasons I think that the letter was misleading and it ought not to be sent.  There should be an injunction restraining such a letter until an appropriate time.  The undertakings were given until the close of 6 March 1995 or further order.  I think the injunction should be limited to that period.

Having said that, I should also go on to say that if there are any problems that do arise, and they may very well arise in the next two to three weeks, the parties should try to resolve them between themselves.  It was for that purpose that the undertakings were expressed to be on the condition of approval by the other party or leave of the court, so that if there was any problem the parties would get together to discuss it.  Problems will arise because of what has to be said to customers, but it should not be beyond the wit of two substantial companies to arrange their affairs in a sensible manner.  It is a difficult problem that has to be dealt with.  Preferably, it should be dealt with in a reasonable commercial manner rather than by coming before a judge.

Lastly, I should mention that it is not very long now before the arbitrators will sit.  Hopefully, the parties will be working towards coming to some agreement as to what the issues are that are going to be put with respect to an interlocutory regime.  If they can agree, then so much the better, but at least they ought to attempt to agree upon the basic issues that they will put before the arbitrators.

The costs of the motion will be costs in the cause.

I certify that this and the 2 preceding pages
are a true copy of the reasons for judgment herein of
the Honourable Justice Davies.

Associate:

Date:   23 February 1995

Counsel for the 1st & 2nd applicants:           D.K. Catterns QC 
  & J. Stevenson

Solicitors for the 1st & 2nd applicants:         Mallesons Stephen Jaques

Counsel for the 1st & 2nd respondents:        R.G. Forster SC

Solicitors for the 1st & 2nd respondents:      Abbott Tout

Date of hearing:  23 February 1995

Date of judgment:  23 February 1995