Parker Enzed Technology P/L v Enidow P/L

[1992] FCA 748

JUDGMENT No. ........ ........ .. ........ .... 7 ? 8 , q ~ -

IN THE FEDERAL COURT OF AUSTRALIA	)
VICTORIA DISTRICT REGISTRY	)
GENERAL DIVISION	) NO. VG 344 of 1992
B E T W E E N :

PARKER ENZED TECHNOLOGY PTY LTD

Applicant

- and -

ENIDOW PTY LTD

First Respondent

- and -

NEIL OUALTROUGH ' \

Second Respondent

- and -
PATRICIA OUALTROUGH

Third Respondent

Coram:  Olney J

- 7 OCT 1992

Place:  Melbourne FEDERAL COURT ufi

AUSTRALIA PRINCIPAL

Date:  2 October 1992 REQISTRV

REASONS FOR JUDGMENT

Put shortly, the applicant's case is that it (as franchisor) entered into an agreement with the second and third .

By notice of motion filed in these proceedings on 14 September 1992 the applicant seeks interlocutory injunctive relief to compel the respondents to transfer all of their right title and interest in the telephone service 03 872 3822, including the number itself, to the applicant or to such person as it may in writing direct.

respondents (as franchisees) on 6 June 1986 whereby it granted to them an Enzed Service Centre franchise for the establishment of an Enzed Service Centre in the territory prescribed in the agreement in consideration of the second and third respondents paying to the applicant a prescribed franchise fee. It is said, and not disputed, that shortly after 6 June 1986 all rights duties and obligations of the second and third respondents under the agreement were assigned,

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to the first respondent and the applicant and the respondents.	,
agreed to novate the agreement by substituting the first respondent for the second and third respondents. (For present purposes it is convenient to treat the respondents as a single entity and they will hereafter be referred to collectively as the respondents.)
For about 4 years from July 1986 the respondents conducted an Enzed Service Centre first at Nunawading and later at Mitcham. The applicant says that it terminated the franchise agreement on 21 August 1992 after having given notice in accordance with
agreement contravened section 47(6) of the T r a d e P r a c t i c e s A c t	the terms of the agreement. The respondents say that the
1976 and was therefore void, but in any event if that be not so, they say that the applicant by its conduct repudiated the agreement and that on 17 August 1992 they accepted such repudiation.
Paragraph 17.l(i) of the agreement provides that upon
termination or expiration of the agreement the franchisee

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shall forthwith assign and transfer to the franchisor all the franchisee's telephone, telex, TWX and other communication numbers and listings used in operation of the Enzed Service Centre. It is this provision of the agreement which the applicant seeks to enforce pending trial of the substantive proceedings, in which, inter alia, the applicant seeks injunctive relief in identical terms to that sought in the notice of motion.

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The respective cases of the parties have been supported by an almost overwhelming volume of affidavit evidence. The issues were canvassed by counsel over the better part of two days. There is unquestionably a serious question to be tried in so far as the applicant's case is concerned but it is by no means certain that at trial the applicant will succeed. At this stage there are many conflicts in the evidence and none of it has been tested by cross-examination. No factual findings can be made nor inferences drawn. All that can be said is that the arguments advanced on each side are credible and will

require serious consideration.

The live issue on the notice of motion has to do with the balance of convenience.

It is common cause that for one or other of a variety of

reasons the parties are not presently bound in the

relationship of franchisor and franchisee. In fact, the

respondents now carry on a business similar in nature to the

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franchise business from the same premises as they occupied as

Enzed franchisees but under an altogether different business

name. The trade name and distinctive markings of the

applicant have so far as possible been erased from the

premises and it is not said that the respondents purport to

use the applicant's name in connection with their business.
The applicant has allocated the respondents' former territory

to a new franchisee and obtained a new telephone number for the franchise business. The clients of the former franchise l

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have been extensively canvassed by the applicant and the new franchisee who have distributed advertising material publicising the new telephone number. The two "hose doctors" who were formerly engaged in the conduct of the respondents' franchise have been re-engaged by the new franchisee.

All of this would suggest that the applicant has taken proper and effective action to minimise any loss that may have been occasioned by the termination of the franchise. But central to the applicant's case is the fact that the telephone number

of the former franchise business is retained by the	respondents and used by them in their current business.
The applicant points to the entries in both the current Yellow
Pages and White Pages telephone directories for the Melbourne
metropolitan area which list the various Enzed Service Centres
together and show the respondents' number as the number for
the Mitcham area. Furthermore, the applicant says that it has
consistently adopted the technique in its advertising material

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to urge clients to refer to the Yellow Pages.

Obviously there is potential for some confusion and possible loss to the applicant so long as the current telephone directories show the respondents' telephone number for the Mitcham franchise of the Enzed organisation. -But against this there is evidence to suggest that a new edition of the Yellow Pages directory will be published in November 1992 and the

1993 White Pages will be issued in about April 1993 and that

the new franchisee's number will appear in both publications.

Both parties claim that they are in jeopardy of suffering irreparable harm. In the applicant's case it is said such harm will occur if the respondents are not required to transfer their telephone number as sought in the notice of motion, and in the respondents' case it is said they will be similarly affected if they are so required. Some evidence was put in by the applicant in an attempt to show that the new Mitcham franchisee is not obtaining the volume of business

previously obtained by the respondents, but that evidence is	at the best equivocal and at the worst tends to show that
after taking into account seasonal factors and current economic conditions there is not much to choose between the two situations which are sought to be compared.
The respondents say that they have established their own goodwill in the industry and that their business has been associated with the same telephone number since they moved premises to Mitcham in 1989.
It seems to be common cause that if the respondents are deprived of the use of their current telephone number, their business will be prejudiced to a significant degree a result the applicant seeks to achieve and the respondents to avoid. But from the evidence as it stands, it seems unlikely that any 1066 so occasioned to the respondents could be made good if

' 1 the applicant should fail in these proceedings and be required

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to re-transfer the number to the respondents. There is a real chance that the respondents would not remain in business long if the number is transferred to the applicants.

It cannot be denied that the respondents have been able to demonstrate that they have more than a merely arguable case to put in response to the applicant's claims. The argument based on section 4 7 ( 6 ) has substance and although it may not necessarily carry the day for the respondents, there is more than a possibility that it will have a considerable bearing

upon the outcome of the proceedings. Having regard to all

aspects of the case, the balance of convenience is fairly evenly balanced but in my opinion tends slightly against interfering with the status quo. The applicant will not go out of business if the number is not transferred but the respondents may if it is. The respondents have demonstrated that they maintain a comprehensive and efficient system of record keeping and accounting which would enable any damages that may be awarded against them to be readily assessed. This is a case in which it seems more likely than not that damages would be an adequate remedy to the applicant and accordingly I decline to make the order sought.

I certify that this and the

preceding 6 pages are a true copy of the Reasons for Judgment of the Honourable Mr Justice Olney

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Associate:

W

Dated:  2 October 1992

Mr H. Hansen and Mr G.B. Johnston (instructed by Baker &

McKenzie) appeared for the applicant.

Mr M. Heaton (instructed by Cornwall Stoddart) appeared for the respondents.

Date of Hearinq:	25 and 28 September 1992
Place:	Melbourne
Date of Judment:	2 October 1992