POS Media Online Ltd v Queensland Investment Corporation
[2000] FCA 1154
•17 AUGUST 2000
FEDERAL COURT OF AUSTRALIA
POS Media Online Ltd v Queensland Investment Corporation [2000] FCA 1154
POS MEDIA ONLINE LIMITED AND MALL MEDIA AUSTRALIA PTY LIMITED v QUEENSLAND INVESTMENT CORPORATION AND PACIFIC ECHO PTY LIMITED AND EASTLAND PROPERTY HOLDINGS LIMITED AND WATERGARDENS PTY LIMITED AND PERPETUAL TRUSTEES AUSTRALIA LIMITED AND CANBERRA CENTRE INVESTMENTS PTY LIMITED AND QIC LOGAN HYPERDOME PTY LIMITED AND JOHN CLIFFORD LONGHURST
N 803 OF 2000
LEHANE J
17 AUGUST 2000
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 803 OF 2000
BETWEEN:
POS MEDIA ONLINE LIMITED
(ACN 072 964 179)
FIRST APPLICANTMALL MEDIA AUSTRALIA PTY LIMITED
(ACN 085 953 859)
SECOND APPLICANTAND:
QUEENSLAND INVESTMENT CORPORATION
FIRST RESPONDENT
PACIFIC ECHO PTY LIMITED
(ACN 074 053 466)
SECOND RESPONDENTEASTLAND PROPERTY HOLDINGS LIMITED
(ACN 055 780 295)
THIRD RESPONDENTWATERGARDENS PTY LIMITED
(ACN 066 255 205)
FOURTH RESPONDENTPERPETUAL TRUSTEES AUSTRALIA LIMITED
(ACN 000 431 827)
FIFTH RESPONDENTCANBERRA CENTRE INVESTMENTS PTY LIMITED
(ACN 067 682 893)
SIXTH RESPONDENTQIC LOGAN HYPERDOME PTY LIMITED
(ACN 076 279 699)
SEVENTH RESPONDENTJOHN CLIFFORD LONGHURST
EIGHTH RESPONDENT
JUDGE:
LEHANE J
DATE OF ORDER:
17 AUGUST 2000
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The application for interlocutory relief is refused.
2. The matter be listed for directions at 9:30 am on 23 August 2000.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 803 OF 2000
BETWEEN:
POS MEDIA ONLINE LIMITED
(ACN 072 964 179)
FIRST APPLICANTMALL MEDIA AUSTRALIA PTY LIMITED
(ACN 085 953 859)
SECOND APPLICANTAND:
QUEENSLAND INVESTMENT CORPORATION
FIRST RESPONDENT
PACIFIC ECHO PTY LIMITED
(ACN 074 053 466)
SECOND RESPONDENTEASTLAND PROPERTY HOLDINGS LIMITED
(ACN 055 780 295)
THIRD RESPONDENTWATERGARDENS PTY LIMITED
(ACN 066 255 205)
FOURTH RESPONDENTPERPETUAL TRUSTEES AUSTRALIA LIMITED
(ACN 000 431 827)
FIFTH RESPONDENTCANBERRA CENTRE INVESTMENTS PTY LIMITED
(ACN 067 682 893)
SIXTH RESPONDENTQIC LOGAN HYPERDOME PTY LIMITED
(ACN 076 279 699)
SEVENTH RESPONDENTJOHN CLIFFORD LONGHURST
EIGHTH RESPONDENT
JUDGE:
LEHANE J
DATE:
17 AUGUST 2000
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The applicants (POS Media and Mall Media) have commenced a proceeding against the respondents claiming, primarily, relief in the nature of specific performance of what they claim to be licence agreements, said to entitle the applicants to install and operate advertising screens within shopping malls owned or operated by various of the respondents. Substantially similar relief is sought under s 80 and s 87 of the Trade Practices Act 1974 (Cth) on the basis of conduct said to have infringed various provisions of Pt V of the Trade Practices Act and corresponding provisions of the Fair Trading Acts of Queensland, New South Wales and Victoria.
The matter now before me is a claim for interlocutory relief against the first respondent (QIC) only. The interlocutory relief sought is an order restraining QIC from entering into any agreement with any party other than the applicants, being a grant of a licence for the broadcasting or screening of material and information by the use of video and audio/video media in any of eight listed shopping centres: two in Queensland, two in New South Wales, three in Victoria and one in the Australian Capital Territory.
FACTUAL BACKGROUND
In addition to documents which were tendered, the evidence on the interlocutory application comprises two affidavits of Mr Peter Ross Aynsley, a Director and Chief Executive Officer of POS Media, and an affidavit of Mr Bruce Rodney Keech, the Manager, Retail Business Development, of QIC. Neither deponent was cross‑examined. There is no material dispute about the factual context in which the interlocutory application is to be decided.
POS Media is a listed public company. Its listing followed a public offer of its shares pursuant to a prospectus dated 18 November 1999. Mr Aynsley described POS Media as a digital media and technology company whose main operations include the installation of media delivery systems and interactive electronic service terminals and the retail sale of products including video screens, data projectors, digital players and media network systems. An aspect of its business includes the installation, in areas such as shopping centres, of screens and sound systems designed to carry, principally, advertising and promotional material. Mall Media is its wholly owned subsidiary.
QIC is a statutory corporation constituted by the Queensland Investment Corporation Act 1991 (Qld). By virtue of s 11 of that Act, QIC represents the State of Queensland and has all the immunities of the State of Queensland. The second, third, fourth, sixth and seventh respondents are subsidiaries of QIC. Of those, the second, third and (apparently) the fourth respondents each own one of the eight shopping centres with which the case is concerned. QIC itself owns two of them. One is owned in equal shares by QIC and the sixth respondent. Another is owned by the seventh and eighth respondents in equal shares. The remaining centre is owned by the fifth respondent. At least some – possibly all – of the centres are held by their owners on trust, presumably (though it does not matter) for other investors. The evidence is clearly to the effect that QIC, whatever the precise legal relationships may be, plays an active role in relation to all eight centres. It conducted the negotiations with POS Media, which I shall describe below. Mr Keech gave evidence that in his role as an employee of QIC he was concerned with “raising supplementary income products in respect of” all eight centres.
Dealings between POS Media and QIC began in the latter part of 1998. On 25 November 1998, POS Media submitted to QIC a “capability statement” and, on 4 December 1998, an outline of a proposed licence arrangement. The nature of that document is indicated by its opening paragraph:
“This document is submitted to the Queensland Investment Corporation (“QIC”) by P.O.S. Abilities (Aust) Pty Ltd (“POS”) in response to a request by QIC for details of the basis upon which POS would install its Mall Media systems to existing QIC centres. The Mall Media installations would comprise Video posters, televisions and monitors, all of varying sizes, located at sites within the public areas of each QIC shopping centre. Each site would be agreed in advance with QIC. POS would deliver video and audio/video material on an exclusive basis to each shopping centre owned and/or managed by QIC.”
The document proceeded to state the terms proposed by POS (which adopted its present name shortly before listing) for such an arrangement.
QIC’s response was encouraging. Its lawyers provided a draft licence agreement and there was some initial correspondence about its terms. Following a meeting in Brisbane between Mr Aynsley (accompanied by another POS employee, Mr Grayham Rundle) and Mr Daryl Stubbings, then an employee of QIC, Mr Stubbings wrote to Mr Aynsley on 15 February 1999, seeking clarification or confirmation of various matters and suggesting “meetings in Queensland, New South Wales and Victoria with our Centre Management team to identify possible sites, screen sizes and progress our commercial discussions”. During a subsequent conversation, Mr Aynsley, according to his evidence, said to Mr Stubbings:
“We would be happy to carry out the site inspections once we have agreement on the main commercial terms but until we reach that stage we can’t commit the resources or enter into that level of disclosure about our systems.”
To that, according to Mr Aynsley, Mr Stubbings replied:
“I understand. Why don’t you have your lawyer write to Allens and request the changes that you require.”
Over the next several months discussions continued; they included some further negotiation of the draft form of licence agreement. Mr Stubbings, in company with representatives of POS, inspected the POS installations at the Macquarie Centre (owned by the AMP Society) near Sydney. In early July 1999, according to Mr Aynsley, Mr Stubbings said to him:
“We’ve now reached a point where we are happy to proceed. I’ll be sending you a letter in the next week or so to confirm that. Once you receive the letter – I would like to arrange for the site inspections to start. … I would like you to look at Castle Towers as the first cab off the rank because it has been under redevelopment and we would like to have a large screen operating there in time for the opening of the next stage in late September.”
A letter from Mr Stubbings to Mr Aynsley of 15 July 1999 included the following paragraph:
“Subject to the finalisation of documentation satisfactory to the board of QIC we propose to proceed with POS Abilities generally in accordance with the correspondence between QIC and POS.”
That prompted a reply from Mr Aynsley dated 16 July 1999, on which POS places in its amended statement of claim, and placed in argument, considerable reliance. It read:
“Further to our your [sic] letter of the fifteenth instant, … we write to confirm the position regarding commencement of site surveys and screen placement arrangements.
As you are aware, it has been many months since the commencement of site inspections was first discussed. Our position at that time was that we would not commence this process until such time as the legal terms were agreed and QIC had committed to proceed. That position has not changed from our view, and relates directly to two key considerations:
·the manpower commitment of undertaking this initial work; and
·the level of disclosure of our intellectual property.
The process of locating and agreeing sites for the AMP installations took from December 1998 to April 1999, and was only commenced after AMP had agreed the terms and agreed to proceed with us. We understand that your decision to appoint a dedicated co-ordinator on QIC’s behalf is intended to streamline the overall process, but nonetheless we still envisage both a substantial time (and cost) commitment and the same need to disclose key aspects of our business as part of the process of finalising the screen locations.
Unlike a conventional retail tenancy, where a site can be identified on plan from the overall centre layout, and attached to the lease agreement, the screen locations must be carefully planned into the existing layout. Screen type, screen size, and location relative to both traffic flows and existing infrastructure must all be assessed prior to settling on the final locations.
Your internal reviews over the past several months have established the decision to proceed with us, but the sites still have to be finalised in each Centre – and to do this we must initiate the final site selection process. We will only do so on the clear understanding that the legal agreement must be settled in full, ready for execution once the screen locations are appended, before we can complete the review process and submit the screen sites for final approval and incorporation as attachments to each contract.
We understand that the locations and screen types may vary once we move through the site review process. This is acceptable and usual. Invariably local management requires its more detailed input and can frankly change views on location more than once in the process, as Centre Management interacts with Marketing, with Operations, and with “Head Office”. In the final analysis, however, it is not impossible to obtain consensus on the locations of around six screens on average to a typical centre – and your appointment of co‑ordinator should facilitate this.
All of this has been discussed previously, but I wanted to make it clear before we move forward. Your letter of the fifteenth instant says ‘subject to documentation satisfactory to the Board of QIC …’ And it is important that we are on the same level of understanding as to just what this means. We are not party to QIC’s internal processes. Once you advise us that the agreements have been settled (and this by necessity will be prior to completion of the site photomontages and final locational sign‑off) then the execution of the documents themselves will become automatic once the screen photomontages can be appended. We will move diligently to complete on‑site surveys and prepare the photomontages for attachment to the agreed contracts.
We understand that there are still several items to be finalised in relation to the contracts, however the template provided to us by your lawyers at the end of last year is a sound working document and we are confident that the matters can be finalised within your target timeframe for Castle Towers.
Please do not hesitate to advise should you require any further information at this juncture.”
There is no evidence that there was any direct reply to that letter. Negotiation of the draft licence agreement continued. In the course of the negotiations, Mr Aynsley informed Mr Stubbings of the proposed listing of POS; he also informed Mr Stubbings that Mall Media, rather than POS, would enter into the licence agreement in respect of each of the centres. There followed negotiations concerning the extent to which POS should be granted exclusive rights and the circumstances in which those rights might be brought to an end. A proposal by Mr Aynsley on that topic was agreed in the first half of September 1999 by Mr Stubbings and, on 17 September, QIC’s solicitors provided a further draft of the licence agreement incorporating the substance of Mr Aynsley’s proposal.
On 20 September 1999, Mr Stubbings sent a memorandum (a copy of which was obtained by POS) to the manager of each of the eight centres. It is, perhaps, of some significance and incorporates a useful summary of the content of the draft form of licence agreement. It read:
“Over the past 12 months we have been in discussions with potential suppliers of Video Mall Advertising systems. The underlying concept that is common amongst all suppliers is the provision of several video screens and digital cameras that are centrally linked to a data bank of digitised video advertisements and news services.
Whilst this is a relatively new concept in Australia, America [sic] and European Centres have utilised this revenue generating technology for several years.
We have decided to proceed with an agreement with P.O.S. Abilities Pty Ltd (Mall Media Australia Pty Ltd) on the following commercial terms.
Licence Term: 5 years – no option
Licence Rental: Gross Revenue from advertising Payable to QIC
Up to $750,000 pa 10%
$750,000 to $1,500,000 15%
$1,500,000 to $3,000,000 20%
Over $3,000,000 25%Rental Payments: Every three months to each Centre.
Termination: If the total turnover rental payable to QIC across the portfolio falls below $500,000 per annum, then QIC can give 3 months notice to remedy, if the income does not increase above $500,000 at the end of the 3 months notice period, then QIC can terminate the agreement.
Installation: Within 3 months of the Licence date (exchange of documentation).
Content: 10% of the available screen time will be entertainment based material.
20% of the monthly airtime will be available to QIC for corporate advertisements, promotional material (including retailers) [sic] community material at no charge provided we are responsible for the production costs.
This is the only part of the business that we must drive, particularly with retailer and community involvement.
The agreement allows QIC to promote new retailers, retailers at risk, etc, via the video screens at no cost other than production.
Advertisements are not to be:
-politically biased.
-overtly religious.
-contain graphically disturbing images.
-be in direct competition with retailers or the Centre.
Screen Locations: Subject to the approval of each Centre Management team. It is intended to finalise the agreement over the next 2 weeks. Each Centre will be provided with plans/photographs of the [proposed] location of each screen in due course. It is the decision of the Centre Management team as to location, number and size of each screen but as a general rule our discussions on income have been based on approximately 6 screens per Centre.
Please review and provide comments to myself confirming the approved locations and screen sizes at your earliest opportunity. Once finalised, the installation at each Centre will be co‑ordinated so as to ensure an orderly roll out.
I have suggested to Mall Media that it would be appropriate to arrange an on‑site review/presentation with each Centre Management team prior to installation. Peter Aynsley from MMA will be in contact to arrange a suitable time over the next few weeks.
In addition, the system is now operational in most AMP Centres if you would like to have an early review.”
It may be added that a separate agreement was contemplated for each centre. The parties were to be the owner of the centre as licensor and Mall Media as licensee. The “licensed areas” were defined as areas forming part of the common area of the centre where a screen was located. Those areas were to be identified by means of photographs and plans to be attached to the agreement. On 27 September 1999, POS provided to QIC a “set of plans and photomontages for each Centre”: those were to be used, apparently, for the purpose of defining the licensed areas in each centre.
Towards the end of September, POS’s solicitors suggested some further alterations to the agreement which, according to Mr Aynsley, drew a protest (“Why are there these changes after we have already reached agreement?”) from an officer of QIC, Mr Swann: Mr Stubbings had left QIC and Mr Swann had taken over from him. POS withdrew most of the suggested amendments and on 25 October 1999 Mr Aynsley received from QIC’s solicitors, in duplicate, licence agreements, complete with attachments, for four of the centres. Mr Aynsley made, in handwriting, some minor changes to them and they were then executed on behalf of Mall Media.
That occurred on or about 28 October 1999. Those signed documents were returned to QIC’s solicitors on or about 10 November. They were never executed by the licensors.
On 20 October 1999, meantime, POS’s solicitors had sent to QIC’s solicitors a document described as “Heads of Agreement”. The context in which that document was prepared is explained by a message from POS’s solicitors sent the next day by electronic mail:
“Given that a prospectus will be (hopefully) lodged by next Wednesday (any later and we miss capital raising this year) I would still like to have:
1. as many agreements signed as possible in this time frame; and
2. a heads of agreement to cover the rest.”
The document contained four substantive provisions. The first would have obliged the parties to execute a licence agreement in a form attached for each of the shopping centres as soon as reasonably practicable. The second would have required the parties to negotiate in good faith to reach agreement on the minimum number and location of screens to be installed under each agreement. The third would have required QIC to use its best endeavours to procure any co‑owners of any of the shopping centres to execute the agreement for that centre. Finally, the fourth provided for the possibility that the co‑owner would not agree to execute a licence agreement for a centre: in that event, the parties would have been required to negotiate in good faith to agree on “a revised turnover rent benchmark for exclusivity”. The heads of agreement were never signed. The evidence does not reveal what discussions, if any, took place between the parties about it.
POS proceeded to lodge its prospectus in circumstances where Mall Media had executed licence agreements for four of the eight centres, but no licensor had executed such an agreement. The prospectus recorded that Mall Media had reached agreement with QIC on the terms of a formal licence agreement for four centres and that formal agreements for the other centres were expected to be concluded before the issue of shares under the prospectus. It described in some detail the provisions of the agreements which Mall Media had signed. It should be said that the evidence indicates that POS had, at that time, every reason to think that the arrangement would proceed. I have already referred to some of the relevant evidence; and the letter from QIC’s solicitors of 25 October 1999, enclosing the four agreements for execution, included the following:
“Please sign each agreement where indicated and return them to us. We will then arrange for the agreements to be executed by the appropriate entities from QIC and stamped where necessary.”
The arrangements, however, did not proceed. The first sign of trouble came in November 1999, when some centre managers expressed concern about the system. On 12 November, Mr Swann wrote to Mr Aynsley a letter which included the following:
“… once I have all the screen locations and other information to hand I will submit a final paper to the Executive General Manager, Property for his final consideration. If he approves the final proposal I will then contact you to arrange execution of the documentation and agree the implementation details.
Both parties have allocated significant resources to this process, however, until we have a binding agreement we should both be aware of the importance of not making any commitments to third parties regarding potential advertising within QIC’s portfolio.”
Then, on 3 December 1999, a meeting took place in QIC’s offices in Brisbane. Among those present were Mr Aynsley and Mr Swann. According to Mr Aynsley’s evidence (which is not contradicted), Mr Swann made a statement to the following effect:
“Following the departure of Daryl Stubbings I have re‑opened the consideration of Mall advertising and promotion generally including static signage etc. Since Daryl Stubbings left there is a need to look at the big picture and it is inappropriate for us to go ahead with you without first deciding our overall objectives. I realise a lot of work has been done to date by POS Media but we need to examine our overall objectives.”
Mr Aynsley retorted that not only had POS done a lot of work, but it had executed agreements with QIC; to that Mr Swann responded that he had no knowledge of executed agreements and would check with QIC’s solicitors. Mr Aynsley said that POS had gone to the market with a prospectus referring to the agreements with QIC. Mr Swann retorted:
“I am aware of that but I didn’t approve the prospectus. You decided to put that in.”
Mr Swann confirmed, by a letter dated 8 December 1999, that he was reviewing the situation. That drew a response from Mr Aynsley on 8 December, in which he made some comments about operational issues, said nothing about contracts binding upon QIC but referred to the decision to include in the prospectus information about the QIC arrangements as arising “directly as a result of the execution of the first four contracts”. Then, in mid December, Mr Swann told Mr Aynsley, on the telephone, that QIC’s lawyers had advised him that there was no legally enforceable contract in existence between QIC and POS. Mr Aynsley commented mildly that they had a difference of opinion about that and promised co‑operation in the “current process of reviewing the mall media situation”. Then, on 20 December, Mr Richard Rice, who had taken over from Mr Swann, wrote to Mr Aynsley:
“Further to your discussions with Rob Swann, QIC has determined that no legally enforceable agreement exists between QIC or any of its Centres under management and Mall Media.
However, QIC is reviewing its total mall media advertising requirements with a view to developing a more broadly based policy for the company.
When the overall direction has been decided, we hope to be in contact with you to further examine opportunities of mutual interest.”
This did not draw an immediate and strong protest. Mr Aynsley replied only on 19 January 2000. He noted QIC’s determination and added that clearly there was a difference of legal opinion between the parties’ legal advisers. He proceeded to outline what he described as key features of the arrangements between POS and QIC.
Negotiations between the parties proceeded, though the evidence does not indicate that they were pursued with great vigour. At some time during the early part of 2000, a revised draft agreement was provided by QIC. That included various changes which Mr Aynsley regarded as unacceptable. On 7 April 2000, he wrote to yet another officer of QIC, Mr Keech. Mr Aynsley informed Mr Keech that he had been briefed by one of his colleagues, who had told him that “the transaction has already been approved on a certain basis by QIC’s Board” but that certain further amendments might be negotiable. Mr Aynsley proposed to Mr Keech, recognising “that the market has moved somewhat from the time the original agreements were executed by us”, a revised basis for the payment of rent. Mr Keech replied, by letter dated 26 April 2000, that the QIC Board had not approved any commercial terms and that QIC was considering Mr Aynsley’s suggested revised terms.
The evidence reveals no further relevant activity until 5 June 2000, when Mr Keech wrote the following letter to Mr Aynsley:
“QIC has determined that no legally enforceable agreement exists between QIC and Mall Media for the provision of media services at Castle Towers, Westpoint, Logan Hyperdome, Canberra, Eastland, Watergardens, Woodgrove and Grand Central shopping centres.
QIC has recently completed a strategic review of the issue of QIC’s advertising portfolios and its shopping centres. As a result, QIC has decided to shift its overall strategy and will no longer be pursuing an agreement with Mall Media.
As there are no legally enforceable agreements in existence, this letter serves as notice that there will be no further negotiations on the issue and that this matter is at an end.”
Mr Aynsley replied the next day, writing that there appeared to be no alternative “but to litigate this matter to the fullest extent”, and asking whether someone was authorised by QIC to accept service. This proceeding was commenced by an application filed on 25 July 2000. Again, it can hardly be said that matters moved with great speed between 6 June and 25 July. The only explanation given was one offered from the bar table, to the effect that time was required for the preparation of the application, statement of claim and evidence. Mr Aynsley explained the omission to take vigorous action immediately after receiving Mr Keech’s letter of 20 December 1999 as follows:
“Whilst we could have taken a more aggressive position by referring the matter directly to litigation we did not want to take this route. QIC was one of the two main companies mentioned in our prospectus and we did not want to have a public brawl with such a major retail owner as this would affect our credibility in the whole market place.”
Mr Keech gave evidence that in October or November 1999, as a result of his concerns over the installation and use of POS’s video screens, he began to “look into other products”. Since that time he had conducted, on behalf of QIC, negotiations with two alternative suppliers, R Buzz Pty Ltd and Digicom Pty Ltd. Those negotiations continue; it is not suggested, however, that execution of an agreement with either of those companies is imminent.
APPLICANTS’ CLAIMS
The claims made by the applicants in their amended statement of claim filed on 4 August 2000 are based on contract, estoppel and allegations of infringement of the Trade Practices Act and the Fair Trading Acts.
The contractual claim as pleaded commences with the propositions that QIC acted not only for itself but also on behalf of the other respondents in its dealings with POS and Mall Media and that POS acted in the negotiations, to the knowledge of the respondents, for its wholly owned subsidiary, Mall Media, as well as for itself. The next step is that the letters of 15 and 16 July 1999, referred to and extensively quoted above, gave rise to a contract:
“between the parties that the Respondents would acquire the Applicants’ services in the malls or centres owned or controlled by the Respondent [sic] upon terms that:
(a)the Applicant and First Respondent would negotiate in good faith to settle in full the terms on which the Applicants would install and operate screens in each of the malls, with the second applicant as the contracting party with the mall owner(s) being the Respondents herein (“the Mall Agreement”);
(b)while negotiations to finalise the terms of the Mall Agreement were being conducted between the parties, the Applicants would:
(i)undertake the site surveys, discussions, recommendations and negotiations as to the placement of screens in conjunction with the Respondent’s [sic] representatives and particular centre management, with a view to agreeing the number and location of screens in each centre,
(ii)disclose confidential information to the First Respondent and the centre manager;
(iii)prepare and submit to the First Respondent plans and photomontages to reflect the agreed number and locations of screens;
(c)whereupon, the parties would execute, in respect of each particular centre, the Mall Agreement, added to or amended to the extent necessary to reflect the identity and features of each particular mall or centre and particular arrangements as to screen numbers, location and installation that had been so agreed between the parties.”
Although the pleading claims that the agreement arose “by reason of” the two letters (which do not, perhaps, themselves indicate very clearly a meeting of minds), the applicants plead also that QIC did not, by conduct or correspondence, qualify or contradict the matters set out in the letter of 16 July 1999 and that, on and after 16 July, the parties continued to deal upon the terms of that letter. The pleading describes the agreement thus alleged as the “Head Agreement”. Subsequent negotiations and correspondence, up to mid November at least, are alleged to have been conducted pursuant to and in accordance with the Head Agreement. It is thus pleaded that once the form of Mall Agreement was settled, either by 17 September 1999 (when Mr Stubbings said that he would ask QIC’s solicitors to “issue the final documents”) or, in any event, not later than 19 October 1999 (when the final drafting suggestions were disposed of), the parties were obliged by the Head Agreement “to prepare and execute all such documents and do all such things as were necessary to give effect to the Mall Agreement”. Thus, in broad terms, the parties were obliged, so it is said, to execute (and complete) the documents which Mall Media in fact executed and to take all necessary steps to complete and execute agreements in the same form in relation to the other four centres. It is said that the respondents have repudiated both the Head Agreement and the four agreements executed by Mall Media.
The basis of the claims under the Trade Practices Act and the Fair Trading Acts is an alleged representation by QIC to POS and Mall Media, made from time to time after 16 July 1999, that:
“in the event that general terms of agreement as to the installation and operation of the Applicants [sic] equipment at centres or malls were agreed between the parties (the Mall Agreement), as the parties inspected, negotiated and agreed the particulars of the location and the number of screens to be installed within particular centres and prepared photomontages and the documentation for a particular centre, the parties would execute a Mall Agreement modified and adapted in relation to each particular centre.”
POS and Mall Media are alleged to have acted on that representation and subsequent conduct of QIC by expending time and effort in negotiations, inspections and preparation of photomontages and by disclosing confidential information; it is said also that the representation induced POS to publish the statements, to which I have referred, in its prospectus. The representation and conduct are said to have been undertaken in trade and commerce; to have been unconscionable within the meaning of s 51AA of the Trade Practices Act and to have been misleading or deceptive in breach of s 52. POS and Mall Media also rely on s 58 of the Trade Practices Act. The applicants rely on ss 41, 42 and 53 of the Fair Trading Act 1987 (NSW) and the corresponding provisions of the Queensland and Victorian legislation. The applicants claim to have suffered loss as a result of the respondents’ conduct.
The alleged representation and acts of reliance are also claimed to have given rise to an estoppel: the respondents, it is said, are estopped from denying that there is a legally binding agreement in respect of each of the eight centres in terms of the Head Agreement and the settled form of Mall Agreement.
Finally, the applicants make a quantum meruit claim for the reasonable costs of work and services performed: that, of course, is of no significance to the question of interlocutory relief.
INTERLOCUTORY APPLICATION
SERIOUS CASE TO BE TRIED
Although the picture may change by the time of a final hearing, the limited evidence before me at present suggests that there are significant difficulties in the applicants’ path. The first relates to the claims under the Trade Practices Act and the Fair Trading Acts. The “federal’ element attracting the jurisdiction of the Court arises from the claims against the second to seventh respondents based on the Trade Practices Act. Those claims appear to depend, as the amended statement of claim is drawn, on the allegation that the conduct infringing the Trade Practices Act was conduct of QIC as the agent of each of those respondents. The amended statement of claim pleads that QIC “was acting … as agent” for the other respondents, so that its conduct, relevantly, is to be regarded as theirs. It is reasonably clear that QIC is not itself bound by the provisions of the Trade Practices Act which the respondents are said to have contravened: s 2B; Bass v Permanent Trustee Company Limited (1999) 73 ALJR 522 at 528, 529. Thus, agency appears to be critical if the Trade Practices Act claims, on which jurisdiction depends, are to be established. There is no direct evidence of agency (or of authority given to QIC to make representations or engage in conduct on behalf of any of the other respondents) and it is not entirely clear on what basis such an agency or authority might be inferred from the evidence at present before me. Of course, the evidence suggests that QIC conducted negotiations on the apparent assumption that the centre owners would accept, and agree to be bound by, their outcome. But it does not follow that QIC had authority to bind the other respondents. In that context it is to be remembered that one of the corporate centre owners (the fifth respondent) is not a subsidiary of QIC and, in the case of one of the other centres, the eighth respondent is a co‑owner. It is also critical for the applicants to establish agency because a claim to relief under the Trade Practices Act similar to an order for specific performance must, I should think, require that liability, under that Act, be established on the part of the centre owners. That applies equally to claims for relief of a similar kind under the Fair Trading Acts, although the applicants may be in a stronger position, at least under certain of those Acts, than they are under the Trade Practices Act, in relation to claims against QIC for damages resulting from misleading or deceptive conduct of QIC: QIC appears to be bound, relevantly, by the Fair Trading Act 1989 (Qld) (s 7); it may be bound by the Fair Trading Act 1999 (Vic) (s 5); it may well not be bound by the Fair Trading Act 1987 (NSW) (s 3(1)).
The contractual case, equally, is not without its difficulties. The first step is to find in the correspondence, and what followed it, the alleged Head Agreement. In relation to four of the centres, the number and location of screens to be installed have not, on any view, been agreed. If it is said that the agreement on which the applicants sue is an agreement to negotiate those aspects of the agreement (in addition to the standard terms) in good faith, such an agreement is highly unlikely to be enforceable: Coal Cliff Collieries Pty Ltd v Sijehama Pty Ltd (1991) 24 NSWLR 1; and, even if such an agreement were enforceable by way of an action for damages for breach, it would be a very unlikely candidate for an order for specific performance. Even in relation to the four centres for which Mall Media executed agreements, one significant matter remained unresolved (and, of course, has not been resolved subsequently). Clause 10.2 of each of the agreements provided:
“You will, within three (3) months of the starting date, install the number and type of screens specified in item 10 in the locations indicated in the photographs in Schedule 1 unless otherwise mutually agreed between the parties.”
The signatories on behalf of Mall Media initialled in the margin against clause 10.2 of each agreement. The point of that appears from the letter of 10 November 1999 with which POS’s solicitors returned the agreements to QIC’s solicitors:
“Our client instructs us that their agreement with your client is that our client will complete 3 centres within the first 3 months, another three by the end of month 4 and the last 2 by the end of month 5. The order in which the centres are to be completed is a decision for your client to make. Once your client determines the order in which the centres are to be completed, please make the appropriate amendment to Clause 10.2 by hand.”
Quite apart from the question whether there is a complete and enforceable contract, it is not easy to see what form an order for specific performance of a contract in that condition would take. Additionally, in relation to the contracts, there is the question – involving once again, among other things, issues of agency – whether, in any event, the centre owners (other than QIC itself) are bound.
Of the estoppel case, it need be said only that it faces difficulties similar to those affecting the claims in contract.
In short, while I do not find that there is no serious case to be tried, it cannot be said, on the evidence at present before the Court, that it is a strong one. That is a relevant matter to be taken into account when weighing the balance of convenience.
DELAY
The applicants’ delay in commencing this proceeding is also, of course, a matter to be taken into account. Counsel for QIC referred me to two decisions of judges of the Supreme Court of New South Wales (Network Ten Ltd v Fulwood, unreported, Young J, 4 December 1995; Zuellig Credit Insurance Brokers Ltd v Pulver, unreported, Rolfe J, 3 February 2000) in which relatively short delays were held sufficient, as a matter of discretion, to preclude interlocutory relief. It may be that in this Court a less stringent view has been taken: certainly the significance of delay, particularly relatively short delay, will vary according to the prejudice caused to the respondent (Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing NSW Ltd (1987) 76 ALR 633 at 638, 639).
In this case, QIC informed POS in writing on 20 December 1999 that it had “determined” that no legally enforceable agreement existed. That followed discussions in which the question whether there was an enforceable agreement had been squarely raised. That letter drew no response until 19 January 2000; and, while the response indicated that POS maintained that there was a binding agreement, in fact POS proceeded to acquiesce in what appears to have been a somewhat desultory renegotiation until, on 5 June 2000, QIC reiterated that no enforceable agreement existed and terminated negotiations. Although POS then immediately (though in rather general terms) threatened litigation, litigation was not commenced until 25 July 2000. Mr Aynsley’s evidence makes it clear that the failure to litigate, or indeed to be more vigorous in asserting the rights which POS and Mall Media claimed, resulted from a deliberate decision made on commercial grounds. The delay after 5 June 2000 has been explained (though not in evidence) only by reference to the need to prepare the application, statement of claim and evidence. But there is no particular complexity about the evidence and it is impossible to avoid the impression that the matter was not pursued with any great degree of urgency.
Since 20 December 1999, QIC has been pursuing negotiations with two alternative suppliers. Those negotiations have, on the evidence, progressed substantially; as I have mentioned, there is no suggestion that a contract with either supplier is imminent. Certainly, there is no evidence or suggestion that QIC has incurred obligations inconsistent with the claims which POS and Mall Media make against it. In short, there has been considerable delay; there is evidence that that delay has resulted in some, though relatively slight, prejudice to QIC.
ADEQUACY OF DAMAGES AS A REMEDY
There is also an issue as to whether, even if interlocutory relief is refused and ultimately the applicants succeed in establishing a cause of action, the absence of interlocutory relief will have caused them loss or injury which cannot be adequately compensated by an award of damages. Mr Aynsley deals with this question in each of his affidavits. His earlier affidavit refers to particular losses which, he claims, POS (or Mall Media) has suffered. But the losses to which he refers have already been incurred: that is, they cannot be prevented by interlocutory relief. He also refers to what he describes as the likely effect of POS not having exclusive rights in relation to QIC’s shopping centres, but without indicating any basis on which it might be found that loss resulting from that could not be made good by damages.
In his later affidavit, Mr Aynsley gives the following evidence:
“…
16.The eight QIC shopping centres were specifically targetted [sic] by POS Media for the installation of its delivery systems as the location and size of these centres complemented the AMP centres for which POS Media had existing agreements. The QIC centres together with the AMP centres provided POS Media with a significant presence along the east coast of Australia, which would be difficult, if not impossible to replicate by signing other smaller centres individually or en masse.
17.The location and demographics of the QIC shopping centres would have enabled POS Media to substantially increase it’s [sic] portfolio of malls and access to markets which were not previously available. For example the QIC malls in Blacktown and Castle Hill together with the AMP Macquarie centre in North Ryde provided POS Media with a significant presence in Western Sydney which outside of the shopping malls owned by Westfields, would have been unavailable to POS Media. Furthermore the Canberra Centre in the Australian Capital Territory is one of the largest, if not the largest centre in the Canberra area. QIC has three major centres in Victoria which when combined with the one AMP centre at Knox City outside Melbourne provided a significant presence in that state. These centres provided POS Media with a portfolio of centres across the 3 eastern states of Australia which excluding Westfields would not be otherwise available through other major owners of retail shopping centres.
18.The loss to POS Media occasioned by not having these centres is extremely difficult to assess because of the way in which elements of the business interact. There is an immediate and calculable loss in relation to the revenues from particular screens or groups of screens. However, there is a significant further loss. In my experience, there is a critical mass of centre numbers and locations and therefore demographic of shoppers, which drive the economics of the POS Media system in aggregate operation. The number and quality of shopping centre malls signed attracts other malls to sign to the product. The number and quality and demographic of centres attracts advertisers. The quality of content attracts viewers of the screens which increases their effectiveness and, therefore, demand for exposure by advertisers on them and the price paid by advertisers and, therefore, the revenue that can be paid to centres.
19.It is for this reason that it is very difficult to model or approximate the extent of the whole of the losses suffered by POS Media by reason of not having the POS media system in QIC shopping centres. Their presence strengthens not only the ability to penetrate other chains and centres but also to command premium rates for advertising from advertisers using the system. POS Media had already negotiated and reached agreements with advertisers on the basis that its portfolio of centres included the QIC malls.”
That evidence approaches the issue more directly. It is, however, even given the limitations of an interlocutory application, not particularly specific: what, for example, is one to make of the phrase “a significant presence … which would be difficult, if not impossible to replicate …”? What, precisely, is the significance of the Westfield shopping malls? Is it actually the case that there are no other comparable owners or managers of shopping malls? Is the problem – see par 19 – simply that damages are difficult to calculate or is it, rather, the case that the likely loss is one which, of its nature, cannot adequately be compensated in damages? It is not obvious why one should conclude, on Mr Aynsley’s evidence, that it is the latter rather than the former.
QIC, on the other hand, submits that I should take into account evidence of Mr Keech to the effect that QIC has formed the view that it is inappropriate to install the applicants’ screens; that QIC, whether rightly or wrongly, regards them as unsatisfactory; and the Court should not force upon QIC (and the centre managers) an intrusive arrangement which, on consideration, they do not want, or prevent QIC from reaching what it regards as a more satisfactory arrangement with another party. Plainly, if all other matters were resolved in the applicants’ favour, that would be a relevant consideration when considering, at a final hearing, whether to grant the discretionary remedy of specific performance or analogous relief. It is, I think, also relevant to an application for interlocutory relief which is intended to maintain the status quo – and thus prevent QIC from dealing with other suppliers – until the claim for specific performance can be dealt with.
CONCLUSION
In the light of all those matters, my conclusion can be shortly stated. The case in favour of specific performance or remedies having a similar effect is, on the material before me, not a strong one; there has been considerable delay, on the part of the applicants, in taking steps to enforce what they claim as their legal right; it is by no means clear that, in the absence of interlocutory relief, the applicants, if ultimately successful, will have suffered irreparable damage, in the sense of injury or loss which cannot appropriately be compensated in damages. Those considerations combine, in my view, even in the absence of evidence of particularly significant prejudice likely to result to QIC (though there is evidence that it would suffer some prejudice), as a result of the restraint which the applicants seek, to show that this is not an appropriate case for interlocutory relief.
For the reasons I have given, the application for interlocutory relief is refused. I direct that the matter be listed for directions at 9.30 am on 23 August 2000; if QIC seeks an order for payment of its costs, that question may be argued then.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lehane. Associate:
Dated: 17 August 2000
Counsel for the Applicant: N Cotman SC Solicitor for the Applicant: Abbott Tout Counsel for the Respondent: A Leopold Solicitor for the Respondent: Allen Allen & Hemsley Date of Hearing: 7 August 2000 Date of Judgment: 17 August 2000
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