Monster Energy AU Pty Ltd v Whincup
[2013] NSWSC 87
•14 February 2013
Supreme Court
New South Wales
Case Title: Monster Energy AU Pty Ltd v Whincup Medium Neutral Citation: [2013] NSWSC 87 Hearing Date(s): 13 February 2013 Decision Date: 14 February 2013 Jurisdiction: Equity Division - Commercial List Before: Stevenson J Decision: Amended notice of motion dismissed with costs
Catchwords: REMEDIES - injunctions - interlocutory injunctions Category: Interlocutory applications Parties: Monster Energy AU Pty Ltd (plaintiff / applicant)
Jamie Whincup (first defendant / respondent)
Triple Eight Race Engineering Australia Pty Ltd (second defendant / respondent)
Red Bull Australia Pty Ltd (third defendant / respondent)Representation - Counsel: Counsel:
I M Jackman SC with T W Marskell (plaintiff / applicant)
N Kidd SC with G E S Ng (first and second defendants / respondents)
A A Henskens SC with S J Duggan (third defendant / respondent)- Solicitors: Solicitors:
HWL Ebsworth Lawyers (plaintiff / applicant)
Hugh & Associates (first defendant / respondent)
Hughlaw Pty Ltd (second defendant / respondent)
Swaab Attorneys (third defendant / respondent)File Number(s): SC 2012/349785 Publication Restriction: Nil
EX TEMPORE JUDGMENT
This is an application for an interlocutory injunction pending the final hearing of these proceedings on 12 and 13 March 2013. In my opinion, the application should be dismissed.
The plaintiff ("Monster Energy") markets, sells and distributes an energy drink known as "Monster Energy". One of its direct competitors is the third defendant ("Red Bull") which markets, sells and distributes an energy drink known as "Red Bull".
The first defendant, Mr Jamie Whincup, is a prominent motor racing competitor. He is the defending champion of the annual Drivers Championship of the Australian V8 Supercar Championship Series.
The second defendant ("Triple Eight") is a participating team in that series. It holds a racing entitlement contract from the governing body of the series, V8 Supercars Australia.
During 2012, the parties entered into three agreements as follows.
First, a "Racing Driver's Agreement" was made between a company of which Mr Whincup is the sole director and shareholder ("Whincup Motorsport Pty Ltd" - "WCM") and Triple Eight on 19 March 2012.
Mr Whincup is not expressed to be a party to this agreement. At the hearing there will be an issue as to whether, on the proper construction of the agreement, Mr Whincup is a party to the agreement, whether Mr Whincup is entitled to enforce the agreement even if he is not a party, and whether there is, in any event, an implied agreement between Mr Whincup and Triple Eight to the effect of the Racing Driver's Agreement. I am not in a position, and it would not be appropriate for me, to express any opinion about those matters at this stage. For the purposes of this application, I propose to proceed upon the basis that, one way or the other, Mr Whincup is bound by the promises set out in the agreement.
Those promises are that: -
(a)WCM will supply Triple Eight with Mr Whincup's services "exclusively to drive a Team Super Car" for the 2013 and 2014 Australian V8 Supercars Championship Series;
(b)WCM and Mr Whincup will promote Triple Eight and all "sponsors allied to the Team"; and
(c)Mr Whincup will wear team clothing, racing uniform, overalls and the like.
The agreement contains a provision in which Mr Whincup purports to acknowledge that "no personal sponsorship will be permitted... that could be deemed to conflict and/or clash with a Team sponsor".
Second, Monster Energy and Mr Whincup entered into a "Promotion/Endorsement Agreement" on 26 March 2012 pursuant to which: -
(a)Mr Whincup agreed to promote and endorse Monster Energy products during 2012 and 2013 (and, at Monster Energy's option, 2014) including by wearing a Monster Energy branded helmet when motor racing and making personal appearances at three events at which he competes;
(b)Mr Whincup agreed to not at any time "promote the products of a competitor that either directly or indirectly" competes with Monster Energy products.
Third, on 28 September 2012 Red Bull and Triple Eight entered into a "Sponsorship Agreement" pursuant to which: -
(a)Red Bull became the sponsor of the Triple Eight V8 Supercar Team;
(b)Triple Eight gave Red Bull exclusive rights to name Triple Eight's V8 Supercar Team "Red Bull Racing Australia";
(c)Triple Eight agreed to ensure that no other "non-alcoholic beverage brand" was associated directly or indirectly with the Triple Eight V8 Supercar Team without Red Bull's consent; and
(d)Triple Eight and Red Bull agreed if any severance payment was required to terminate Mr Whincup's agreement with Monster Energy, they would share that cost on an agreed basis and up to a specified limit.
When Mr Whincup entered into the agreements in March 2012 with Triple Eight (through WCM) and with Monster Energy, the major sponsor of Triple Eight was Vodafone Hutchison Australia Pty Ltd ("Vodafone"). In June 2012 Vodafone announced that its sponsorship of the Triple Eight V8 Supercar Racing Team would finish at the conclusion of the 2012 V8 Supercar series.
In early August 2012 Triple Eight and Red Bull announced that Red Bull would become the Triple Eight sponsor in the upcoming season. The Triple Eight Team agreed to call itself "Red Bull Racing Australia".
Mr Whincup was thereby placed in a difficult position. He (through his company) had agreed to drive exclusively for Triple Eight and not to enter into a sponsorship agreement which would conflict or clash with the team sponsor. Presumably, it was on this basis that he entered into the Promotion/Endorsement Agreement with Monster Energy a few days later.
Once Red Bull became Triple Eight's sponsor, Mr Whincup found himself in the position where, on one view of it, he was bound by inconsistent contractual obligations. No doubt that is a matter to be explored at the hearing.
The 2013 V8 Supercar series is about to commence. There are two events scheduled between now and the hearing date of 11 March 2013. This coming Saturday, 16 February 2013, the "Official V8 Supercar test" will take place at Eastern Creek in Sydney. Between 28 February and 3 March 2013 the "Clipsal 500" event will take place in Adelaide. Mr Whincup is scheduled to drive in each of these events.
In these circumstances Monster Energy seeks the following orders: -
(1)Upon the plaintiff by its Counsel giving to the Court the usual undertaking as to damages, an order that until further order of the Court the defendant, Jamie Whincup, be restrained from promoting Red Bull products in breach of the written agreement made between the plaintiff and the defendant on 26 March 2012 (Promotion and Endorsement Agreement) other than by driving a Red Bull branded racing car for the first respondent, Triple Eight Race Engineering Australia Pty Ltd, while displaying "Monster Energy" trademarks on the defendant's clothing and equipment specified in the Promotion and Endorsement Agreement.
(2)Upon the plaintiff by its Counsel giving to the Court the usual undertaking as to damages, an order that until further order of the Court the first respondent, Triple Eight Race Engineering Australia Pty Ltd, and the second respondent, Red Bull Australia Pty Limited, be restrained for the term of the Promotion and Endorsement Agreement from inducing the first defendant to breach the Promotion and Endorsement Agreement by promoting Red Bull products other than by instructing the defendant, Jamie Whincup, to drive a Red Bull branded racing car for the first respondent, Triple Eight Race Engineering Australia Pty Ltd, while displaying "Monster Energy" trademarks on the defendant's clothing and equipment specified in the Promotion and Endorsement Agreement.
It can be seen from those orders that Monster Energy does not seek, in terms, to restrain Mr Whincup from competing in the forthcoming events. Indeed, Mr Jackman SC, who appeared with Mr Marskell for Monster Energy, emphasised in oral submissions that Monster Energy did not wish to achieve that result.
Mr Jackman agreed that if the effect of granting the injunction sought would, or may be, that Mr Whincup be "sidelined", and prevented from driving in any of those events, that would be a powerful reason why the injunction should not be granted.
In written submissions, Monster Energy said: -
"Interlocutory relief is sought in a limited form only. The relief would restrain Whincup from promoting Red Bull products unless:
(a) The promotion involved Whincup driving a Red Bull branded car; and
(b) Whincup displays the Monster Energy trademarks that he promised to display in his agreement with Monster Energy."
Thus, Monster Energy is, for present purposes, content for Mr Whincup to drive in a car bearing Red Bull logos and the like, but seeks, in effect, to compel the result that Mr Whincup also display Monster Energy logos (for example, on his helmet and clothing).
Serious question
In relation to Monster Energy's claim against Mr Whincup, two main issues arise.
First whether, as Mr Whincup alleges, the Promotion/Enforcement Agreement between Monster Energy and Mr Whincup has been frustrated by reason of Triple Eight's appointment of Red Bull as team sponsor.
Second, whether by reason of representations allegedly made by Monster Energy to Mr Whincup during August 2012, Monster Energy is estopped from enforcing the Promotion/Endorsement Agreement.
As between Monster Energy and Red Bull, the issue is whether those companies induced Mr Whincup to breach his contract with Monster Energy.
Although the merits of those issues were canvassed, extensively, in the defendants' written submissions, in oral argument it was not suggested, at least with any great enthusiasm, that no serious question arises in respect of those matters.
I am satisfied that a serious question does arise in relation to each of the issues.
Balance of convenience
If no injunction is granted
In my opinion, it is hard to see what damage, of any significance, Monster Energy will suffer if no injunction is granted.
But for Triple Eight's engagement of Red Bull as team sponsor, Mr Whincup would feature the Monster Energy logo on his helmet and racing suit. Absent restraint, Mr Whincup will, as he has assured the Court in an affidavit sworn on this application, pending the determination of these proceedings, wear a "neutral" helmet (that is one bearing no branding of any drink manufacturer). I infer his racing suit will feature Red Bull's logo, rather than that of Monster Energy.
Monster Energy does not seek to restrain Mr Whincup from driving a car featuring Red Bull's logo. The team in which Mr Whincup will be racing is now called "Red Bull Racing Australia" and, I would infer, Red Bull's logos will feature prominently on the car that Mr Whincup drives and generally on the occasions in question.
The prominence that Red Bull's logo will achieve may well distract spectators' attention from Monster Energy's competing product. That may well cause Monster Energy damage. But it is hard to see what further damage Monster Energy will suffer by reason of its logo being absent from Mr Whincup's helmet and racing suit.
If the injunction is granted
On the other hand, if an injunction is granted there is a real possibility, in my opinion, that Mr Whincup will not be able to race in the events scheduled between now and the hearing.
Mr Roland Dane, the managing director of Triple Eight, stated in his affidavit: -
"I am concerned that Triple Eight would be in breach of its sponsorship agreement with Red Bull Australia if Whincup displayed "Monster Energy" branding on his racing helmet or any part of his racing uniform while driving a Red Bull branded racing car for Triple Eight...
... if the court make the interlocutory order sought... Triple Eight will, given the concern described... above, direct Whincup not to participate as a member of the Triple Eight Racing Team in the official V8 Supercar test, the Clipsal 500, or any other Championship Series race meeting this year pending the final determination of these proceedings. It is possible that Triple Eight may not use Whincup as a driver in any race during the 2013 season. This is because, having lost the opportunity to earn Championship points at the Clipsal 500, Whincup's ability to successfully defend his driver's championship from last year will be seriously compromised, as a consequence of which it may be futile for Triple Eight, later in the year, to have one of its cars driven by a driver who has no chance of winning the Championship."
As this is an interlocutory hearing, Mr Dane was not cross-examined.
However, Mr Jackman submitted, despite this evidence, and "even if Mr Dane was to be believed" it was "inconceivable" that Triple Eight would direct Mr Whincup not to drive in the forthcoming events. This was because, Mr Jackman submitted, it was in the commercial interest of all of the parties, including Triple Eight and Red Bull, that Mr Whincup drive. Mr Jackman pointed to a number of matters.
First, Triple Eight's letter of 20 September 2012 to Red Bull which was written some eight days before Triple Eight and Red Bull entered into the sponsorship agreement.
That letter read: -
"This is to confirm that Triple Eight and Jamie Whincup are both working together to ensure that the existing JW Monster Energy contract is terminated.
Regardless, both Triple Eight and Jamie Whincup can hereby confirm that Jamie will, barring normal Force Majeure circumstances, be driving for the Triple Eight V8 Supercar team in years 2013 and 2014. Jamie can also confirm that he will not be sponsored by Monster Energy during that time."
Second, Mr Jackman pointed to the evidence of Mr Andrew Waddell, the managing director of Red Bull (given on information and belief by Red Bull's solicitor, Mr Thomas Johnston) that Mr Whincup as "reigning champion" was "irreplaceable".
Third, Mr Jackman pointed to the fact that there is no evidence from Triple Eight that it had sought Red Bull's permission to have Mr Whincup drive wearing the Monster Energy logos on his helmet and racing suit, nor from Red Bull that it would withhold that consent.
As to Triple Eight's letter of 20 September 2012, the last sentence of that letter suggests that, at that time, Mr Whincup remained hopeful of coming to an arrangement with Monster Energy whereby he would be released from his obligations under the Promotion/Endorsement Agreement. That has proved to be optimistic on Mr Whincup's behalf but, in my opinion, the statement that Mr Whincup would be driving for Triple Eight in the 2013 season "regardless" must be seen in that light.
As to Mr Waddell's statement that Red Bull regarded Mr Whincup as "irreplaceable", as Mr Henskens SC, who appears with Mr Duggan for Red Bull, pointed out, the context in which that statement was made makes clear that Mr Waddell was speaking of a situation in which Mr Whincup was not permitted to drive. I do not infer from Mr Waddell's statement that Red Bull's position is that it would countenance Mr Whincup driving while wearing its competitor's logo.
It is true there is no evidence before me that Triple Eight has sought Red Bull's permission to have Mr Whincup drive wearing Monster Energy logos nor from Red Bull that it would withhold that consent. However, I do not think this factor weighs very heavily in the balance as I would infer that the probability of Red Bull giving such permission is low indeed.
On the face of Mr Dane's unequivocal statement that, were the injunction to be granted, Triple Eight "will" direct Mr Whincup not to participate in the upcoming events, and in the absence (understandable in an interlocutory context) of direct challenge to that evidence, I do not feel able to discount Mr Dane's evidence in the manner contended for by Mr Jackman.
In my opinion, on the evidence before me, there is at the very least a real possibility that, were I to make the injunction sought, Mr Whincup would be "sidelined" from the test and the first race meeting of the 2013 series.
I am also satisfied that were that to happen, it would have very serious consequences for Mr Whincup so far as his defence of his position as reigning champion is concerned and otherwise, and also for Triple Eight and Red Bull.
As I mentioned, Mr Jackman did not dispute that if the effect of granting the injunction would be that Mr Whincup was unable to drive in the forthcoming events, the balance of convenience would favour refusing an injunction.
This provides a sufficient basis, in my opinion, to refuse the application.
Other reasons were advanced by the defendants for refusing to make the injunction: delay; the form of the restraint sought; the likely effect on third parties; lack of proportionality; difficulties with supervision; the alleged inadequacy of the undertaking offered on behalf of Monster Energy as to damages, and the contention that Monster Energy was seeking an impartial enforcement for negative restraint in their Promotion/Endorsement Agreement.
The conclusion to which I have come means it is not necessary to deal with those matters.
The plaintiff's amended notice of motion of 1 February 2013 is dismissed with costs.
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