Maynila Holdings Pty Ltd v Santa Barbara & Co Pty Ltd

[1995] FCA 450

NOT FOR GENERAL DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    NG 221 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:     MAYNILA HOLDINGS PTY LIMITED

Applicant

AND:     SANTA BARBARA & CO PTY LIMITED

First Respondent

ARTHUR SANTA BARBARA

Second Respondent

NESTOR BERNAL

Third Respondent
CORAM: Burchett J.
PLACE: Sydney
DATE : 15 June 1995

REASONS FOR JUDGMENT

BURCHETT J.:

In this matter, the parties were able to work out an interlocutory regime by way of undertakings, except in one respect.  The matter is a claim on various counts, but including misrepresentation under s. 52 of the Trade Practices Act in respect of the sale of a shop business.  There was a contractual term involved in this sale, forbidding the vendor in fairly strong terms, after completion of the agreement, and during a period of some five years, from engaging in conduct derogating from the purchaser's right to obtain the full benefit of the goodwill of the business.  However, the vendor named in the contract was a corporation.  The director, shareholder and moving spirit of that corporation is the second respondent, Mr Santa Barbara, and the point of the misrepresentation alleged is that it was implicit, but also, on the evidence, made explicit, that the obligation of the corporation to which I have referred was to attach to him, he personally having the bulk of the goodwill in question.  I do not, of course, have to decide finally any of the facts which I am stating in these reasons.  But at this interlocutory stage, the evidence indicates the situation to which I have referred. 

It is, then, the case of the applicant (the purchaser of the business) that, a similar business having some months later started up very close to the business it purchased, Mr Santa Barbara has frequented the premises of this similar business, and the applicant's takings have dramatically reduced since he has done so.  Mr Santa Barbara has sworn an affidavit in which he conceded that he would several times a week wait for his wife at the premises of the new business, which is known as Kamayan, at approximately 6 pm, and that he could remain on the premises for up to 20 minutes.  In cross-examination, he started out by endeavouring to suggest that this would only happen about once a week, despite the terms of his affidavit.  I simply do not believe that.  It having been clearly stated in the affidavit "several times a week", I do not accept that an average of once a week was meant; and I do not think that the witness, whose demeanour I observed, was endeavouring to tell the truth when he suggested an average of once a week.  At the same time, the cross-examination did elicit that probably the 20 minutes is understated.  At any rate, it is understated as an outside figure, which is what is suggested by the phrasing of the expression, "could remain in the premises up till 20 minutes".  In fact, I am satisfied he remains in the premises for significantly longer.

There was also evidence that Mr Santa Barbara is in the habit of staying for a meal in the premises, that he speaks to customers, and that he promotes goods in the shop to customers, including customers who were customers of the business he sold.  His explanation for this is that he sells wholesale to the owner of Kamayan, and is therefore only promoting his own goods.  Obviously, he only gets the benefit of doing that, as a wholesaler, by promoting Kamayan's goods in its capacity as a retailer.  In addition, he has given evidence of attending frequently at Kamayan for the purpose of collecting money in relation to an entirely separate business, which has nothing to do with the present case.  However, in light of the rest of the evidence, his doing so, during the hours when the shop is open and customers are there, is likely to lead to the promotion of the goods of the shop, and in view of the fact that he is very well known in the area as the proprietor of a shop selling the same type of goods until less than a year ago, and as he has by his frequent visits to Kamayan kept up the familiarity of customers with him, it seems to me that I can and should infer, at least on a prima facie basis, that his very presence in the shop promotes its goodwill.  It would also suggest to customers a continuing link which could only have the effect, to at least some degree, of destroying the goodwill that he sold to the applicant. 

I cannot see any significant matter to put in the scales, in which the balance of convenience must be weighed up, on the side of the respondent.  On his evidence, the only purpose of his visits to the shop, interference with which would have any potential to cause him any significant loss if an injunction were to issue, is the business in which the collection of money is involved.  That can readily be taken into account by an exception permitting him to call at the shop at a time when his calls would not be likely to lead to his being brought into contact with his former customers.

Accordingly, I think it is appropriate that an interlocutory injunction should issue.  I note that the usual undertaking as to damages has been given by Mr Perrignon on behalf of his client.  Upon that undertaking as to damages, and until further order, I order that the second respondent, Arthur Santa Barbara, do not enter the premises of Kamayan at any time between the hours of 8.30 am and 9 pm on any day.  That will leave him free to enter after 9 pm to collect the money that he says he needs to collect for the other business.  I order that the second respondent pay the costs of this interlocutory application.

I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Burchett.

Associate:  Date: 28 June 1995

Counsel for the Applicant:           Mr R.J. Perrignon

Solicitors for the Applicant:             Gordon Naylor & Associates

Counsel for the First and Second     Mr R.E. Lee
     Respondents:

Solicitors for the First and         Belen Oag
     Second Respondents:

Date of hearing:  15 June 1995