Phone Hospital v Acar

[2010] NSWSC 888

CITATION:	Phone Hospital v Acar & Ors [2010] NSWSC 888
HEARING DATE(S):	28 July 2010
JUDGMENT DATE :	11 August 2010
JUDGMENT OF:	Ball J
DECISION:	1. Plaintiff's application for interlocutory injunction dismissed. 2. Costs reserved.
CATCHWORDS:	TRADE PRACTICES - misleading and deceptive conduct - "Phone Doctor" and "Phone Hospital". TRADEMARKS - whether unregistered mark used by the defendant infringes plaintiff's. RESTRAINT OF TRADE - franchise - during and after termination of agreement. CONFIDENTIAL INFORMATION - contractual obligations of confidence. CONTRACTS - whether contract terminated - effect of termination on obligations of parties. INJUNCTIONS - balance of convenience
LEGISLATION CITED:	Trade Practices Act 1974 (Cth)
CATEGORY:	Procedural and other rulings
CASES CITED:	Buckenara v Hawthorn Football Club Ltd [1988] 1 VR 39 Cooper Engineering Company Pty Ltd v Sigmund Pumps Limited (1952) 86 CLR 536 Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 191 Drake Personnel v Beddison [1979] VR 13 at 19 Hospital Products International Pty Ltd v United States Surgical Corporation [1984] HCA 64; 156 CLR 41 Peters (WA) Limited v Petersville Ltd (2001) 205 CLR 126 Starr Partners Pty Ltd v Dem Prem Pty Ltd (No. 2) [2006] FCA 1269 Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405 United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157
TEXTS CITED:	R Meagher, D Heydon and M Leeming, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies, 4th ed (2002)
PARTIES:	Phone Hospital Pty Ltd (Plaintiff) Okan Acar (First Defendant) John Tivoli (Second Defendant) Zeren & Jason Pty Ltd (Third Defendant) Elmus Pty Ltd (Fourth Defendant)
FILE NUMBER(S):	SC 2010/242473
COUNSEL:	C D Wood (Plaintiff) Ms T M Catanzeriti (Plaintiff) T Orlizki (First and Fourth Defendants) M Newman (Second and Third Defendants)
SOLICITORS:	Macpherson Greenleaf (Plaintiff) Kent Attorneys (First and Fourth Defendants) Newman & Associates (Second and Third Defendants)

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BALL J

11 AUGUST 2010

2010/242473 PHONE HOSPITAL v ACAR & ORS

JUDGMENT

1 The plaintiff has, since December 2004, carried on the business of a mobile telephone repairer. Its sole director is Mr Ali Bolat, who holds seven of the ten shares issued in the plaintiff. Mr Bolat either himself or through a corporate vehicle has been carrying on the business of repairing mobile telephones since 2001. The other three shares in the plaintiff are held by Mr Tuncay Bolat, who is Mr Ali Bolat’s brother. Mr Tuncay Bolat is also the holder of trademark 1156767. That mark consists of a red rectangle. In the top right hand quarter of the rectangle are the words “mobile phone”. The second word is printed under the first. Both words are in white. In the top left hand quarter of the rectangle is a Greek cross in a circle, again in white. The word “hospital” is printed across the bottom half of the rectangle, also in white. Mr Tuncay Bolat has licensed the use of the trademark to the plaintiff in connection with its business. He has also written job management software for the plaintiff which it uses in its business.

2 From 2002 to 2004, the corporate vehicle through which Mr Ali Bolat carried on his business was Mobile Phone Hospital Pty Ltd (MPH). MPH originally commenced operations in March 2002 at a kiosk at Westpoint Shopping Centre, Blacktown, which is operated by Queensland Investment Corporation (QIC)). Six months later, MPH opened another kiosk at Westfield Penrith and, about 18 months after that, it closed the kiosk at Westpoint while that shopping centre was being renovated.

3 In December 2004, Mr Ali Bolat caused the plaintiff to be incorporated and the goodwill owned by MPH was transferred to it. The plaintiff trades under the name “Mobile Phone Hospital”. In December 2007, the plaintiff opened a third kiosk at Westfield Chatswood. The lease to that kiosk is in the name of the plaintiff, although the shop itself is operated by a franchisee.

4 The plaintiff reopened its kiosk at the Westpoint Shopping Centre in Blacktown in late 2008 or early 2009. Again, the premises were leased by the plaintiff, but operated by a franchisee who, in the case of that kiosk, was the third defendant. The directors of the third defendant were, at the time, the first and second defendants. Mr Ali Bolat had met the second defendant a number of years previously though a friend. Following his return after spending several years in Turkey, the second defendant approached Mr Bolat about getting into a business here and Mr Bolat suggested that the second defendant reopen the kiosk at Blacktown. The third defendant was incorporated for that purpose and the second defendant introduced the first defendant, who was in Australia on a student visa, to Mr Bolat as his business partner. The first defendant became the sole director and secretary of the third defendant and the first and second defendants each owned 50 per cent of the shares in the third defendant. In all, the first defendant invested $55,000 in the third defendant.

5 Before starting at the Westpoint kiosk, the second defendant spent two to three months at the Penrith kiosk learning how to repair mobile telephones and to operate the business. The first defendant did the same, for a short time at the Penrith kiosk and then at the one located at Chatswood.

6 The plaintiff uses, and permits its franchisees to use, the trademark and similar marks in connection with its business. For example, the kiosk at Westpoint has a large vertical red sign with a Greek cross in a circle in white at the top and the words “mobile phone hospital” written horizontally underneath, with each word under the preceding one.

7 In late February 2009, the plaintiff and third defendant entered into a franchise agreement in relation to the kiosk at Bankstown. The agreement is expressed to be between them alone. However, both the first and second defendants signed the agreement as guarantors and the agreement purports to impose a number of obligations on them. In my opinion, the plaintiff has a strong case that the first and second defendants are parties to that agreement and are bound by the obligations imposed on them by that agreement.

8 Clause 3.1 of the franchise agreement provides:

“The Franchisor hereby grants to the Franchisee and the Franchisee hereby accepts a non-exclusive licence to operate the MPH System as a franchise in the Territory from the Premises for the Franchise Fee on the terms of this Agreement.”

The “MPH System” is broadly defined to mean the procedures, techniques, systems and business methods for running a business of repairing mobile telephones and similar devices. The “Premises” are defined as the premises of the Westpoint Shopping Centre and the “Territory” is defined to mean an area encompassed by a circle with a radius of one kilometre from the Premises. The commencement date of the franchise agreement is expressed to be 7 March 2009 and the expiry date is expressed to be 5 March 2014.

9 Clause 9.2 of the franchise agreement provides:

“The Franchisee and Guarantors (and where the Franchisee is a corporation, then also its directors and shareholders jointly and severally) must not operate or have any direct or indirect interest in any business activity that is or may be harmful to or in competition or is similar to the Franchised Business.”

10 Clause 18.9 of the franchise agreement provides:

“On termination the Franchisee, its directors and shareholders is [sic] not to operate or have any direct or indirect interest in any business the same or similar to the Franchised Business for a period of 18 months of termination within any state or territory of Australia or in which the Franchisor operates or in any country in which the Franchisor operates which has a population of less than 50 million.”

11 By clause 26 of the franchise agreement, the Guarantors guarantee the performance of the agreement by the Franchisee. Clause 26.2 of the agreement provides:

“The guarantee under this clause 26 and the liability of the Guarantors under it (whether as Guarantor, indemnifier or deemed principal party) is not affected by the granting of any time indulgence or concession to the Franchisee or by the compounding, compromise, release, abandonment, waiver, relinquishment, variation, alteration, deletion or renewal of the rights of the Franchisor against the Franchisee or by any neglect or omission to enforce any rights or any other matter or thing relating to sureties which might but for this provision release the Guarantors or any of them from their obligations under the terms of the Agreement.”

12 Clause 31 of the franchise agreement provides:

“31.1 The Franchisee and Guarantors shall not use or disclose any Confidential Information to any third party other than as required by law. This is an ongoing obligation that continues after the Termination Date.
31.2 The Franchisee and Guarantors acknowledge and agree that they each shall sign at the request of the Franchisor a separate confidentiality agreement to protect the Confidential Information and the parties acknowledge and agree that any breach of such separate confidentiality agreement will be deemed to constitute a breach of this Agreement.”

“Confidential Information” is defined to mean:

“Information obtained by the Franchisee from the Franchisor used as part or utilised in the operation of MPH Systems including but without limitation the Intellectual Property, financial and customer information and the Manual”.

“Intellectual Property” is defined to mean:

“Any business name, logo, domain name, copyright, trademark, patent, know-how, business systems … used by the Franchisor including but without limitation the Trade Name, Business Name, copyright, Trademarks”.

“Trading Name” is defined to mean “”Mobile Phone Hospital” – Blacktown”. “Trade Marks” is defined broadly to include the registered mark and any other logos, graphics or symbols using the name “Mobile Phone Hospital” or “MPH”. “The Manual” is defined to mean a user manual supplied by the Franchisor to the Franchisee.

13 A number of other obligations are imposed on the franchisee and performance of those obligations are guaranteed by the guarantors. However, those obligations are not placed directly on the guarantors.

14 For a period of time after the franchise agreement was signed, the first and second defendants worked in the business operated by the third defendant at the Westpoint Shopping Centre. However, several months later, the first defendant ceased to work there. Mr Ali Bolat was informed of that fact. The first defendant told Mr Bolat that he proposed to repair some mobile telephones from home. Mr Bolat says that he objected to the first defendant doing so. The first defendant says that Mr Bolat said that he was happy for the first defendant to do so.

15 In about September 2009, the first defendant moved to Brisbane, where he is studying for a Master of Information Systems at Central Queensland University. On 22 September 2009, he and a friend of his, Mr Mustafa Biyikli, incorporated the fourth defendant. Mr Biyikli had experience repairing mobile telephones in Turkey. The fourth defendant began operating a mobile telephone repair business at the Hyperdome Shopping Centre at Loganholme, Queensland under the name “Mobile Phone Doctor”. The fourth defendant has a 5 year lease for the kiosk at that shopping centre and both the first defendant and Mr Biyikli have guaranteed the fourth defendant’s obligations under that lease. The shopping centre is also owned by QIC, and the plaintiff sought to make something of the fact that it appears that the first defendant used his knowledge and connection with the plaintiff’s kiosk at Westpoint to negotiate the terms of the lease at Loganholme. At the kiosk at Loganholme, the business name of the fourth defendant appears on a large shop sign. It is printed vertically in silver on a white background with a red Greek cross near the top right hand corner of the sign. It appears that, in connection with that business, the fourth defendant used software written by Mr Tuncay Bolat and other material, such as repair receipts, in respect of which the plaintiff claims copyright.

16 Sometime in late 2009, the first defendant sold two thirds of his shares in the third defendant for $30,000. He says that he retained the rest of his shares in the hope that he would be repaid the balance of his investment some time in the future. The first defendant resigned as the director and secretary of the third defendant on 17 December 2009. The ASIC records suggest that he was reappointed as a director of the third defendant on 15 June 2010. The first defendant says, and I accept, that that is a mistake.

17 There is a dispute between the parties about precisely when the plaintiff became aware of the business carried on by the fourth defendant. On the evidence before me, it appears to be on or about 4 March 2010 when an email intended for the fourth defendant was mistakenly sent to the plaintiff’s Penrith store. Following receipt of that email, the plaintiff engaged Lyonswood Investigations & Forensic Group to make investigations in relation to the fourth defendant’s business. The plaintiff received that report on or about 8 July 2010. It commenced these proceedings shortly afterwards.

18 The plaintiff and second and third defendants have resolved the dispute between them. As part of that settlement I made a consent order on 28 July 2010 in the following terms:

“The second defendant be released from all arrangements signed with the plaintiff from the effective date [that is, 12.00 pm on 30 July 2010].”

19 As a result of that settlement, this application now only concerns the first and fourth defendants. As against them, the plaintiff seeks interlocutory orders restraining them:

a From trading in Australia in the business of mobile telephone repair until further order of the court;
b From trading at the Hyperdome Shopping Centre in Loganholme, Queensland, in connection with repair of mobile telephones until further order;
c From using the trademark “Mobile Phone Doctor” in connection with the repair of mobile telephones until further of the court.

20 Following the commencement of these proceedings, the first and fourth defendants gave undertakings to the court that they and their servants and agents will not:

a Use any software of the plaintiff;
b Use any material the subject of the plaintiff’s copyright, including repair receipts, in connection with any business operated by them until further order of the court.

21 Also following the commencement of these proceedings, the first defendant resigned as a director of the fourth defendant and sold his one share in the fourth defendant to Mr Biyikli. The first defendant continues to work for the fourth defendant for approximately 20 hours each week repairing mobile telephones for which he is paid $15 per hour.

22 The plaintiff puts its case in various ways. First, the plaintiff says that the fourth defendant has infringed its trademark. Second, the plaintiff says that the fourth defendant, by using the name “Mobile Phone Doctor”, has engaged in misleading or deceptive conduct in contravention of ss 52, 53(c) and 53(d) of the Trade Practices Act1974 and that the first defendant was knowingly involved in those contraventions in breach of s 75B of the Trade Practices Act. The plaintiff also says that the fourth defendant made misleading statements to QIC in connection with the negotiation of the lease at the shopping centre in Brisbane. Third, the plaintiff says that the first and fourth defendants have misused confidential information belonging to the plaintiff. Finally, the plaintiff says that the first defendant is in breach of various provisions of the franchise agreement – in particular, clauses 9.2 and 31.

23 On 5 August 2010 the solicitor for the first and fourth defendants made an application for leave to file some supplementary submissions in relation to the effect of the consent order that I made on 28 July 2010 on the basis that he had not discovered the terms of those orders until 30 July 2010 – after the hearing finished. I granted that leave and leave to the plaintiff to file submissions in response to those submissions. I also directed the first and fourth defendants to file any submissions in reply by 6 August 2010.

24 In my view, the case based on ss 52 and 53 of the Trade Practices Act is weak. I doubt that the names and get up used by the fourth defendant is sufficiently similar to that used by the plaintiff to be misleading or deceptive or likely to mislead or deceive. I do not think that the names themselves are sufficiently similar. Although, of course, it is true that both names rely on a medical analogy, I doubt that the analogies are so similar that members of the public are likely to confuse the two. The words “hospital” and “doctor” are quite different in sound and meaning.. Similarly, although both the plaintiff and fourth defendant use a Greek cross in their logos, the crosses themselves are in different colours. One is surrounded by a circle and the other is not and both appear in different contexts – one on a white background with silver writing written vertically, the other on a red background with white writing written horizontally. Moreover, the cross is typically associated with anything medical. Consequently, I do not think that it itself is distinctive of the plaintiff’s business. Rather, it is a distinctive feature of the medical analogy that both businesses have used. No doubt, the idea of the fourth defendant’s business name is taken from the business name of the plaintiff. However, that is not sufficient to make it misleading or deceptive or likely to mislead or deceive. For similar reasons, I think that it is unlikely that the plaintiff will establish that the unregistered mark of the fourth defendants is substantially identical with or deceptively similar to the registered mark used by the plaintiff: cf Starr Partners Pty Ltd v Dem Prem Pty Ltd (No. 2) [2006] FCA 1269; Cooper Engineering Company Pty Ltd v Sigmund Pumps Limited (1952) 86 CLR 536. For these reasons, I do not accept that there is a serious question to be tried in relation to the plaintiff’s case based on misleading or deceptive conduct or infringement of its trademark.

25 In circumstances where the franchise agreement contains express terms dealing with confidentiality, it is unlikely that the first defendant owes the plaintiff any equitable duty of confidence: see, for example, Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167 at 191, referred to in R Meagher, D Heydon and M Leeming, Meagher, Gummov and Lehane’s Equity Doctrines and Remedies, 4^th ed, at [41-020]. In any event, the confidentiality obligations imposed by the franchise agreement are expressed in broad terms and it is difficult to see that the plaintiff could obtain an injunction on the basis of an arguable breach of an equitable duty of confidence where it fails to do so on the basis of a contractual obligation. For that reason, I do not deal separately with the question whether the first defendant or, for that matter, the fourth defendant owe an equitable duty of confidence.

26 A preliminary issue in relation to the franchise agreement is whether it is still on foot. In my opinion, the plaintiff’s argument that it is is weak. It seems to me that the effect of the consent orders made between the plaintiff and the second and third defendants was to bring the franchise agreement to an end. Even if the orders did not do so expressly, that seems to me to be the consequence of those orders and the parties’ conduct. The effect of those orders is that the third defendant now no longer has any connection with the Blacktown kiosk. Consequently, the subject matter of the franchise agreement has come to an end; and with it, the agreement. The plaintiff submitted, on the basis of clause 26.2 of the franchise agreement, that the first defendant was still bound by the terms of the franchise agreement, even if the plaintiff has reached a compromise with the second and third defendants. However, in my opinion, this submission is misconceived. The first and second defendants guaranteed the performance of the third defendant’s obligations under the franchise agreement. There is no suggestion that the third defendant was in breach of any obligation under the franchise agreement in relation to the establishment of the kiosk at the Loganholme Shopping Centre. Consequently, there can be no obligation imposed on the first defendant in respect of that conduct as guarantor. That is so whether or not the third defendant has been released from any liability it has under the franchise agreement.

27 On the other hand, I do not see how it could be said that the franchise agreement continues to impose primary obligations on the guarantors even if it has ended so far as the franchisee is concerned. As I have said, the subject matter of the agreement – the franchise at Blacktown – has come to an end. The result must be that the agreement itself has come to an end so far as it concerned all the parties to it.

28 The conclusion of the previous paragraph leaves two outstanding issues. The first is whether the guarantors, and in particular the first defendant, breached the franchise agreement during its term and if he did the consequences of that breach. The second is whether the franchise agreement places any post contractual obligations on the first defendant.

29 It is convenient to deal with the second question first. In my opinion, the plaintiff’s argument that the first defendant is in breach of post contractual obligations arising from of the franchise agreement is weak. There are two relevant obligations. The first is not to compete (cl 18.9). The second is an obligation of confidentiality (cl 31).

30 One difficulty with the non-compete is that it is not expressed to be an obligation imposed on the Guarantors. Rather, the obligation is imposed on “the Franchisee, its directors and shareholders”. An obligation of that type could not be imposed on the directors and shareholders except to the extent that they are parties to the agreement or the Franchisee can be said to be contracting on their behalf. It is true, of course, that in this case the directors and shareholders are the Guarantors; and, for that reason, it may well be possible to read “directors and shareholders” as a reference to the Guarantors. But even if that can be done, there is another difficulty with the clause. That is with the expression “within any state or territory of Australia or in which the Franchisor operates”. In my opinion, there is a strong argument that the word “or” in the expression “or in which the Franchisor operates” is an error, and that the relevant part of the clause should read “within any state or territory of Australia in which the Franchisor operates”. Read with the word “or”, the second disjunct of the clause identifies a subset (states and territories where the franchisee operates) identified by the first (all states and territories) so that the second disjunct has no work to do. It makes greater commercial sense for the restraint to be imposed only in states or territories in which the plaintiff operates; and, indeed, there is a question whether a clause which prevents the Guarantors from operating in a state where the plaintiff does not is unenforceable as an unreasonable restraint of trade. Moreover, a reading which ignores the word “or” is consistent with the second half of clause 18.9 – which is clearly limited to countries where the plaintiff operates (and which have a population of less than 50 million).

31 Mr Ali Bolat gave evidence that the plaintiff’s business was not confined to its 3 kiosks and that people from interstate, and indeed overseas, sent their telephones to the plaintiff to be repaired. However, I doubt that that is a sufficient basis to say that the plaintiff operates in each place from where a telephone is sent for repair.

32 As to the obligation of confidentiality, it appears that the main information that the plaintiff still seeks to protect is general knowledge of how to repair a mobile telephone. In my opinion, the plaintiff has a weak argument that it is entitled to prevent the first (or fourth) defendant from using knowledge of that type. The general principle in the context of restraints on employees is that the general skill that an employee learns during the course of his or her employment is not cannot be made the subject of an obligation of confidence. As Anderson J explained in Drake Personnel v Beddison [1979] VR 13 at 19:

“General skill and knowledge which a person of ability necessarily acquires in his employment is not a trade secret of his employer, and such skill and knowledge are not things in which an employer can claim any proprietary interest.”

In my opinion, the first defendant has a strong argument that the same principle applies to the confidentiality obligation imposed by the franchise agreement. The plaintiff sought to counter this argument by leading evidence of the particular skills that are required to repair mobile telephones, the fact that the repair of mobile telephones requires specialised equipment which is difficult to source and the fact that the plaintiff has compiled a database from different sources showing how different models of telephones are to be repaired. Much of this evidence appears to me to be evidence of the types of skill that a person trained to repair mobile telephones would acquire and, for the reasons I have given, I think that it is unlikely that the plaintiff will succeed in establishing that, to the extent that cl 31.1 of the franchise agreement prevents the first defendant using that information, it imposes a reasonable restraint. On the other hand, I think that the plaintiff has a much stronger case that the database it has compiled can be made the subject of a confidentiality obligation. However, I do not understand the plaintiff to suggest that the first defendant took a copy of that database with him or that he is using it.

33 On the other hand, I think that there is a serious question to be tried in relation to the issue whether the first defendant breached cl 9.2 of the franchise agreement and whether the fourth defendant induced that breach. It is clear that the restraint of trade doctrine applies to restraints which operate during the course of a contract as well as those that operate after the contract has terminated: Peters (WA) Limited v Petersville Ltd (2001) 205 CLR 126. However, somewhat different considerations apply in determining whether restraints of that type are reasonable since the context in which they operate is one where the restrained party continues to receive the benefit of the contracts: see Buckenara v Hawthorn Football Club Ltd [1988] 1 VR 39. In my opinion, the plaintiff has a strong case that cl 9.2 is a reasonable restraint of trade. The clause is directed to ensuring that the parties to the franchise agreement will devote their energies to the success of the franchised business. In my opinion, the plaintiff also has an arguable case that the first defendant breached cl 9.2 and that the fourth defendant induced that breach. Indeed, it is far from clear to me what defence the first defendant has to a claim that he breached that clause.

34 The question remains whether the balance of convenience favours granting an interlocutory injunction in this case. In my opinion, it does not. It seems to me that the nature of the injunction that the plaintiff seeks in this case based on a breach of cl 9.2 is a “spring board” injunction. Essentially, what the plaintiff says is that, by breaching cl 9.2, the first defendant has got a head start. It should be prevented from obtaining the benefits of that head start even if the obligation imposed by cl 9.2 have come to an end. There is no doubt that a court can give an injunction of that type: see, eg, United States Surgical Corporation v Hospital Products International Pty Ltd [1983] 2 NSWLR 157 at 228ff (reversed on other grounds in Hospital Products International Pty Ltd v United States Surgical Corporation [1984] HCA 64; 156 CLR 41). Although cases of that type normally involve the misuse of confidential information, I do not see why the spring board principle cannot apply in a case such as this. However, I do not think that the balance of convenience is in favour of granting an interlocutory injunction in this case. There are several reasons.

35 First, the plaintiff does not operate in Queensland and has no immediate plans of doing so. Consequently, this is not a case where the fourth defendant is taking customers away from the plaintiff. Mr Ali Bolat gave evidence that the plaintiff may open stores in Queensland in the future. However, there was no evidence that that is likely to happen in the near future. As I have said, Mr Bolat also gave evidence that the plaintiff does have interstate customers. However, it seems unlikely that that would be the main part of its business or that the fourth defendant’s kiosk is interfering substantially with that business.

36 Second, although the plaintiff appears to have a strong claim against the first defendant, it is not clear how strong its claim is against the fourth defendant. The strength of that claim is one matter that should be taken into account in assessing the balance of convenience so far as it concerned that defendant: see, eg, Tidy Tea Ltd v Unilever Australia Ltd (1995) 32 IPR 405 at 416 per Burchett J. Moreover, any injunction against the fourth defendant will have an indirect effect on Mr Biyikli and there is no evidence to suggest that he was involved in any breach by the first defendant of the franchise agreement. For example, if an injunction were granted against the fourth defendant, the fourth defendant would no longer be able to meet its obligations under the lease with QIC and Mr Biyikli would be liable under the personal guarantee that he has given.

37 Third, the first and fourth defendants have made some concessions to the plaintiff. They have given the undertakings I referred to earlier. The first defendant is no longer a director of the fourth defendant and he says that he only works at the fourth defendant’s kiosk 20 hours a week as an employee. I accept the plaintiff’s submission that this evidence must be taken with a grain of salt given what appears to be the first defendant’s deliberate breach of the franchise agreement in the past. Even so, it appears that Mr Biyikli has the skills necessary to run the business at Loganholme and there is no evidence to suggest that those skills were derived from the plaintiff. In those circumstances, I do not think that it is appropriate to grant an injunction against the fourth defendant. However, if it is not appropriate to grant an injunction against the fourth defendant, it does not seem appropriate to grant injunction against the first defendant either, since it appears that the fourth defendant could continue in business in his absence with a similar effect on the plaintiff as not granting an injunction at all. The only purpose in those circumstances of granting an injunction against the first defendant from working for the fourth defendant would be to punish him. I do not think that I should grant an injunction for that purpose.

38 For these reasons, I decline to grant interlocutory injunctions in the terms sought by the plaintiff.

39 The question of costs should be reserved.

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