Rototek Pty Ltd v Ad Engineering Pty Ltd
[2004] WASC 108
ROTOTEK PTY LTD & ANOR -v- AD ENGINEERING PTY LTD [2004] WASC 108
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2004] WASC 108 | |
| Case No: | CIV:2283/2003 | 9 MARCH 2004 | |
| Coram: | SIMMONDS J | 26/05/04 | |
| 17 | Judgment Part: | 1 of 1 | |
| Result: | Injunction granted | ||
| B | |||
| PDF Version |
| Parties: | ROTOTEK PTY LTD (ACN 097 944 164) VANESSA JOAN PALLISTER AD ENGINEERING PTY LTD (ACN 008 908 969) |
Catchwords: | Equity Interlocutory injunctions Principles governing grant of injunction Mandatory injunction for delivery up Turns on own facts Confidential information Confidentiality agreements Anticipatory breach Injunctive relief |
Legislation: | Copyright Act 1968 (Cth), s 115(4) |
Case References: | Allen v Jambo Holdings Ltd [1982] 2 All ER 502 Cadura Investments Ltd v Rototek Pty Ltd [2003] WASC 255 Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 Custom Credit Corporation Ltd v Whitehall Holdings Pty Ltd, unreported; SCt of WA; Library No 920231; 7 April 1991 Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657 Shepherd Homes Ltd v Sandham [1971] Ch 340 Webster v Lampard (1993) 177 CLR 598 White & Carter (Councils) Ltd v McGregor [1962] AC 413 Amber Size & Chemical Co Ltd v Menzel [1913] 2 Ch 239 Bairstow v Berry [2003] WASC 155 Brian D Collins (Engineers) Ltd v Charles Roberts & Co Ltd (1965) 82 RPC 429 Cadbury Schweppes Inc v FBI Foods Ltd [1999] 1 SCR 142 Clark v Rowell Consulting Services Pty Ltd [2003] WASC 178 Coco v AN Clark (Engineers) Ltd (1969) RPC 41 Foran v Wight (1989) 168 CLR 385 Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 Seager v Copydex Ltd [1967] 1 WLR 923 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
VANESSA JOAN PALLISTER
Second Plaintiff
AND
AD ENGINEERING PTY LTD (ACN 008 908 969)
Defendant
Catchwords:
Equity - Interlocutory injunctions - Principles governing grant of injunction - Mandatory injunction for delivery up - Turns on own facts
Confidential information - Confidentiality agreements - Anticipatory breach - Injunctive relief
Legislation:
Copyright Act 1968 (Cth), s 115(4)
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Result:
Injunction granted
Category: B
Representation:
Counsel:
First Plaintiff : Mr L A Tsaknis
Second Plaintiff : Mr L A Tsaknis
Defendant : Mr P D C Robinson
Solicitors:
First Plaintiff : Holborn Lenhoff
Second Plaintiff : Holborn Lenhoff
Defendant : Williams & Hughes
Case(s) referred to in judgment(s):
Allen v Jambo Holdings Ltd [1982] 2 All ER 502
Cadura Investments Ltd v Rototek Pty Ltd [2003] WASC 255
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Custom Credit Corporation Ltd v Whitehall Holdings Pty Ltd, unreported; SCt of WA; Library No 920231; 7 April 1991
Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657
Shepherd Homes Ltd v Sandham [1971] Ch 340
Webster v Lampard (1993) 177 CLR 598
White & Carter (Councils) Ltd v McGregor [1962] AC 413
Case(s) also cited:
Amber Size & Chemical Co Ltd v Menzel [1913] 2 Ch 239
Bairstow v Berry [2003] WASC 155
Brian D Collins (Engineers) Ltd v Charles Roberts & Co Ltd (1965) 82 RPC 429
Cadbury Schweppes Inc v FBI Foods Ltd [1999] 1 SCR 142
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Clark v Rowell Consulting Services Pty Ltd [2003] WASC 178
Coco v AN Clark (Engineers) Ltd (1969) RPC 41
Foran v Wight (1989) 168 CLR 385
Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203
Seager v Copydex Ltd [1967] 1 WLR 923
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1 SIMMONDS J: This matter came before me in chambers as the hearing of the application of the defendant, AD Engineering Pty Ltd ("AD Engineering"), for an interlocutory injunction against the plaintiffs, Rototek Pty Ltd ("Rototek") and Vanessa Joan Pallister ("Vanessa Pallister"). The matter came on for hearing before me as a result of an order for injunction granted by her Honour McLure J in chambers on 25 November 2003 to the defendant. The order, after the usual recital as to the defendant undertaking to the Court as to damages, was as follows:
"1. Until further order, the Plaintiffs, whether by themselves, their officers, agents and servants or otherwise, be restrained and an injunction is hereby granted restraining them from:-
1.1 breaching Clause 2.5 of the Manufacturing Agreement made between the Plaintiffs and the Defendant dated 11 July 2003;
1.2 in particular, and without prejudice, to the generality of order 1.1, using the intellectual property for Mobilert System to manufacture and package the Mobilert System.
2. The Defendant's application for an interlocutory injunction dated 19 November 2003 be adjourned to a special appointment to be heard with the Plaintiffs' application dated 24 October 2003."
- Then followed orders principally of a programming nature, as well as reservation of the matter of costs.
2 The application of the first plaintiff, Rototek, and of the second plaintiff, Vanessa Pallister, dated 24 October 2003 referred to in McLure J's order had resulted in the orders of his Honour EM Heenan J of 28 October 2003, which was as follows, excluding the programming orders and costs orders:
"1. Until further order, the Defendant whether by its officers, servants, agents or otherwise be restrained and an injunction be granted restraining it from:
(a) Disposing, disclosing, divulging or making use of the things in paragraphs 1 and 2 of the Plaintiffs' Amended Minute of Proposed Orders dated 28 October 2003 other than for the purpose of
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- performing its obligations under the Manufacturing Agreement dated 11 July 2003, the disposal, disclosure, divulging, or use of such things to first be agreed in writing between the parties.
- (b) Dealing with any third party in relation to the things in paragraphs 1 and 2 of the Amended Minute of Proposed Orders other than for the purpose of performing its obligations under the Manufacturing Agreement dated 11 July 2003, the dealing to be first agreed in writing between the parties.
- 2. The balance of the Plaintiffs' application for an interlocutory injunction dated 28 October 2003 (the Application) be adjourned to a Special Appointment before a Judge in Chambers."
3 That is, the defendant's application was before me with the plaintiffs' as a result of the determination made previously that this was a convenient way of dealing with the issues in common that they raised. The defendant's application before me was for a continuation of McLure J's orders as an interlocutory injunction with a variation to which I will return, together with an order for return of a prototype device made by the applicant under its Manufacturing Agreement and said to have been taken by the corporate respondent without the applicant's authority.
4 In the event, at the hearing before me, the parties by consent agreed that the order of EM Heenan J should be continued as an interlocutory injunction with a change not material in these proceedings. From now on, with that other injunction application so dealt with, I will, for the most part, refer to the defendant, AD Engineering as the applicant, and the plaintiffs, Rototek and Vanessa Pallister, as the respondents. This being the immediate procedural context, it is only necessary to refer to the larger such context briefly.
5 This application arose ultimately out of an action commenced by Rototek and Vanessa Pallister against AD Engineering concerning agreements leading up to, as well as the agreement representing the culmination of an agreement for the defendant to assist Rototek in the development and commercialisation of certain intellectual property in a safety device designed to save lives at sea by immediately raising an
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- audible alarm the moment a crew member fell or was knocked overboard from a vessel. This device was referred to in the proceedings as Mobilert. The agreements comprised a Confidential Disclosure Agreement entered into on or about 8 August 2002, Heads of Agreement entered into on or about 20 May 2003 and a Manufacturing Agreement entered into on or about 11 July 2003. Rototek and AD Engineering were the parties to the first agreement, Rototek and Vanessa Pallister with AD Engineering were the parties to the second agreement and Rototek, Vanessa Pallister and AD Engineering were the parties to the Manufacturing Agreement.
6 The relief sought was for the delivery up by AD Engineering to Rototek of listed material, principally confidential information, components, products, tooling and intellectual property, other than things required for the purpose of AD Engineering performing its obligations under the Manufacturing Agreement. In addition, the relief claimed included an injunction restraining the defendant in the terms of the interlocutory injunction granted by consent in this case. There was also a claim for damages, including damages pursuant to s 115(4) of the Copyright Act 1968 (Cth), as well as interest on damages.
7 In order to understand the nature of the defendant's application for an interlocutory injunction in this case, it is necessary to know more of the terms of the Manufacturing Agreement, and I return to that matter below.
8 I begin with the applicable principles, upon which there was little dispute between the parties. These principles are conveniently set out, as the applicant properly submitted, in the judgment of Mason ACJ in Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148, at 153, from which I quote as follows:
"The principles governing the grant or refusal of interlocutory injunctions in private law litigation have been applied in public law cases, including constitutional cases notwithstanding that different factors arise for consideration. In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at a trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction."
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9 The parties' submissions, both in writing and at the hearing, proceeded in general terms under these headings.
10 It is only necessary to add, before considering those submissions under those headings, that, as the respondents properly indicated, and as Seaman, Civil Procedure Western Australia, at [52.1.6] indicates, "The degree of likelihood of success [at trial] is a factor related to the balance of convenience", such that "an apparently strong claim may lead a Court more readily to grant an injunction when the balance of convenience is fairly even, but a claim of less strength which nevertheless raises a serious question to be tried may attract interlocutory relief where there is a marked balance of convenience in favour of it: Bullock v Federated Furnishing Trade Society of Australasia (No 1) (1985) 5 FCR 464 at 472; 60 ALR 235 at 241".
11 I should conclude this introductory account of the relevant principles by adding that, of course, this hearing is not a trial of the action. Although the Court, as Seaman at [52.1.9] indicates, "does not confine its considerations to the evidence of the plaintiff, but takes into account all of the evidence before it … it is not part of the Court's function to try to resolve conflicts of evidence on affidavit nor to decide difficult questions of law calling for detailed arguments or mature consideration". I note further from that same source that Courts have considered it appropriate to decide a question of law "if it is susceptible of resolution without evidence and the urgency of the matter does so [sic not] render it impractical to give it proper consideration" or the "question of law" is one "arising on undisputed facts … unless time does not permit proper consideration of the question at the interlocutory stage". I do not consider any of the significant questions that appear to be involved in this matter to have so arisen or to be so susceptible. The respondent drew my attention to Webster v Lampard (1993) 177 CLR 598 at 604 and 608, a case of an appeal to the High Court from the decision of the Full Court of this Court, upholding the decision of a Master granting a police officer's application for summary judgment in his favour based on defences to an action against that officer for damages for wrongfully requiring the plaintiffs to give up possession of certain commercial property. The dicta so cited in that case clearly illustrate the wisdom of not determining disputes and proceedings such as these on contested affidavit evidence, unless the affidavits are themselves inherently incredible. I agree with the respondent, in its submission in that regard, that none of the affidavits here is inherently incredible.
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12 There is a further matter of the applicable law here which goes to the undertaking as to damages that, as Seaman at [52.1.17] indicates, "is a very important, if not essential, means of preventing injustice before the rights of the parties have been finally determined … it is the price of the injunction". That paragraph goes on to indicate that an undertaking as to damages of "limited value" will not prevent an injunction being issued where justice requires issuance (Allen v Jambo Holdings Ltd [1982] 2 All ER 502, at 505, 506). If the applicant is a corporation unable to give an undertaking of "any value", the Court may accept an undertaking of those who stand behind it. However, there "may be unusual circumstances such as those in which the applicant would be effectively deprived of his right to a full trial in which justice may demand the grant of an injunction even if no undertaking of any value from any person is forthcoming" (Custom Credit Corporation Ltd v Whitehall Holdings Pty Ltd, unreported; SCt of WA; Library No 920231; 7 April 1991). In this case, undertakings as to damages were offered both by the applicant and by Mr David John Watkin, its managing director, who between them were registered proprietors of five properties in Halls Head, Subiaco and Claremont (Mr Watkin) and two in West Leederville (AD Engineering). There was substantial argument directed to the adequacy of these undertakings by reference to the expected value of the properties concerned. I consider it appropriate to return to the matter after the other considerations in relation to the grant of an interlocutory injunction have been reviewed. This is in view of the material from Seaman at [52.1.7], to which I have referred, that indicates to me that my conclusion on those matters has the potential to affect the acceptability or otherwise of undertakings offered.
Serious question to be tried
13 The applicant submitted that there were four questions in this respect. The first was as to steps being taken by the respondent through an associated corporation called Ilert Ltd, whose Website indicated that it claimed to be the sole manufacturer and distributor of the Mobilert system. There was other material emanating from the respondents, or those associated with them, tending to confirm this or so the applicant submitted emerged from its evidence.
14 The second serious question to be tried related to the return of the prototype said to have been taken from the applicant without its authority, and said in the material filed on behalf of the applicant to be necessary for production of the system to meet orders from the respondent.
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15 The third serious question to be tried related to evidence indicating that employees of the applicant were being approached by the corporate respondent, or those acting on its behalf, to enable the respondent, or those acting on its behalf, to engage in manufacture of the Mobilert system in breach of the applicant's exclusive licence.
16 The fourth serious question to be tried related to evidence of steps towards manufacture by Ilert to which the applicant's evidence related.
17 The respondents replied that they were entitled to source product of Mobilert from other Australian providers in view of the failure of the applicant to produce. Reference was made for this purpose to cl 7.3 of the Manufacturing Agreement, which provided that the respondents, on giving prior written notice to the applicant (which all parties conceded had been done), could manufacture or source the system elsewhere to fill the particular order in respect of which delivery had not been made. It was not contested that orders had been submitted which the applicant had not filled. Thus, in effect, it was submitted that the exclusive licence in cl 2.5 was qualified by the agreement itself in circumstances that obtain here.
18 In addition, the respondents argued that the licence was suspended altogether for the failure of the applicant to deliver. I indicated at the hearing some difficulty with this argument, as the parties agreed that the Manufacturing Agreement had not been terminated. I refer for the source of my doubt to cl 17.4 of the agreement to do with termination for breach of a material obligation, followed by failure to remedy the breach within 30 days after receiving notice. In view of the applicable principles in this area, I do not consider it possible in proceedings such as these to resolve this difficulty. But it appears to be a more serious problem for the respondents than the issue of the applicability of cl 7.3, to which I will return below.
19 This, in the respondents' submission, dealt with the serious questions to be tried, except for the prototype and its return. Here, the respondents relied on the Manufacturing Agreement cl 14.1, which stipulates that the applicant will "keep confidential and safe all Confidential Information disclosed to it by Rototek and will return, upon demand or upon expiry or earlier termination of this agreement, all Documentation embodying any of the Confidential Information". This had to be read with the definition of "Confidential Information" in the Manufacturing Agreement which refers to it as including information "embodied in documents, software, photographs, diagrams, prototypes or any other form, but excluding information legally in the public domain". This I was told should be read
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- against the backdrop of the parties' earlier Confidentiality Agreement, as reinforcing the fundamental importance to the respondent of maintaining the confidentiality of information supplied by it to the applicant. I indicated at the hearing that I was impressed with this argument at first sight. Further deliberation has, however, qualified this. I note, in particular, the words "return" and "documentation embodying" in cl 14.1. Again, the position of the applicant is less weak or put another way stronger on the law than the respondents' submission would suggest.
20 The respondents went on to argue that this was a case where injunctive relief would not be appropriate as ordinarily breaches of clauses like cl 2.5 would sound in damages. It was suggested further that granting an injunction in a case such as this would go to issues of the sort canvassed in White & Carter (Councils) Ltd v McGregor [1962] AC 413, the well-known case on anticipatory breach. Nor, it was said, would the Court ordinarily grant an injunction where the other party is in breach. I believe that these matters are more appropriately dealt with under the discretionary considerations below, and do not, in fact, relate to the issue of the serious question to be tried.
21 The fundamental issue here goes to the continued currency and the scope of the exclusive licence to manufacture in cl 2.5. This is at the heart of the serious questions to be tried for the purposes of the application before me. There is, in my view, on the authorities good reason to conclude that this question and the issues it raises are not frivolous or vexatious ones, but rather ones with, on the applicant's evidence if unmodified at trial, a significant, if not necessarily preponderant, possibility of success: see the canvassing of the authorities in Meagher R P , Heydon J D and Leeming M J (eds) Meagher Gummow and Lehane's Equity Doctrines and Remedies 4th ed, Butterworths, Lexis Nexis, Sydney 2002, at [21-355] - [21-375]. The most significant problems for the issues in question as a matter of law would appear to me to be those arising out of cl 7.3 of the Manufacturing Agreement. Undoubtedly that qualifies the exclusive licence during its currency. The respondents strongly argue that they have complied with the Manufacturing Agreement so far as it calls for payments to be made by way of deposit on at least an order for 1000 units of the Mobilert system. However, the applicant has a response with respect to that argument, that the orders in question are part of a larger order, with a correspondingly greater deposit requirement that has not been met. The respondents conceded to me that if the order is to be so treated, that would be the case. The respondents argue that the order should not be so treated. The applicant also argued that, even if the order can be disaggregated, the
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- deposit on the initial disaggregated order has likewise not been paid in view of other "product" within the Manufacturing Agreement that the applicant said it had completed for the purposes of the agreement provisions on the payment by the respondents of an advance (see Manufacturing Agreement cl 11 read with definition of "advance"). The respondents contested this interpretative approach also.
22 In the final analysis for the purposes of these proceedings, I have concluded that there remains a serious question to be tried notwithstanding cl 7.3.
23 I have already dealt with the matter of the return of the prototype. Here, I note that the applicant is relying upon the implied duty of the respondent arising under cl 2.5 not unreasonably to interfere with the performance by the applicant of its manufacturing for the purpose of the licence. I note that this implication is one that would draw some support from the view expressed in Meagher et al [21-205] that there should be implied in every contract an undertaking by each party not to prevent the other side performing. Again, I repeat my earlier remarks about the inappropriateness of resolving a matter of this sort in proceedings such as these.
24 I turn, then, to the remaining matters arising out of the applicable law.
Damages not adequate remedy
25 The applicant submitted that it had made a substantial investment under the Manufacturing Agreement to date, by reference to the evidence in the affidavits, which pointed to concentration on the Mobilert project at the expense of other parts of the applicant's business, and the applicant also drew my attention to the system's worldwide applications, the supplier's goodwill which loss of the exclusive right to manufacture the product locally would entail, and to related matters referred to in the affidavit evidence.
26 The applicant also referred to grounds for concern about the corporate respondent's ability to meet a damages claim against it which it said emerged from the failure of that respondent to supply requested evidence to support assertions as to its assets position in the affidavit evidence filed on its behalf. I was also referred to a Mareva injunction made by Pullin J headed "Asset Preservation Order" against the respondent in other proceedings, Cadura Investments Ltd v Rototek Pty Ltd [2003] WASC 255.
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27 The respondents replied that the loss of goodwill and specialised investments was unsupported by any evidence from the applicant. The respondents further submitted that the applicant had been more than compensated for its costs by the respondents' advance already made under the Manufacturing Agreement, an advance of $518,000. I note that the applicant did not dispute this payment, but there is in the affidavits before me a dispute as to the sufficiency of this amount to cover the applicant's scheduled manufacturing expenses to meet its manufacturing requirements. These include the requirements to meet the respondents' orders.
28 The respondents also noted that the applicant had not asserted that the denial of the injunction would lead to the applicant's business closing, although the applicant replied that this was an inference reasonably open to me as a significant risk from denial of the injunction.
29 I take the law to be that the adequacy of damages goes to two issues, namely, whether damages would be appropriate compensation were the serious question to be tried resolved in the applicant's favour, and also whether or not the other side at that point would be able to pay such damages: Owen J, writing extra-curially in "The Interlocutory Injunction", in R Carroll ed, Civil Remedies: Issues and Developments (1995) at page 253. However, with respect to the first question I note that damages are "rarely seen" as an adequate remedy for invasion of rights of a proprietary or possessory nature (Owen J at 253). The right here, it appears to me, is of such a nature; I further note the approach to injunctions in respect of express or implied negative stipulations referred to in Meagher et al [21-200] to which my attention was drawn by the applicant.
30 With respect to the matter of the inability or otherwise of the respondent to pay damages, I note the reference from Owen J, at page 254 that mere assertion by those claiming inability is not sufficient. Rather, admissible and persuasive evidence is necessary. I find it difficult to draw strong inferences from the failure by the respondents to supply material to corroborate the corporate respondent's assertions as to its ability to pay damages; but I do note the order made by Pullin J in Cadura as offering some support to the applicant's assertions in this case.
31 In the final analysis with respect to the second aspect of damages as an adequate remedy, I would see the issues here blending with the balance of convenience ones; see Meagher et al, [31-375]. Further, in light of what I had to say as to the first aspect of this issue, I do not believe that
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- White & Carter (Councils) (supra) is a major barrier to the relief the applicant seeks.
32 This takes me to the final matter on the applicable law that I need to address.
Balance of convenience
33 The applicant submitted that the balance of convenience favoured it on the basis of three arguments. The first is that the effect of a grant of relief it sought would simply be to preserve the status quo that had obtained since the consent order of McLure J. I note in this regard Seaman at [52.1.7], which appears to offers support for this argument. The applicant also referred to the well-understood role of relief of the sort it conceded it was seeking, to preserve the ability of the Court to give final relief at trial. Finally, the applicant submitted that a grant of injunction would not involve undue hardship or expense to the corporate respondent because such grant would simply hold it to its exclusive licence, which did not extend to sourcing a Mobilert system from outside Australia, thus leaving the corporate respondent in a position to seek supply from such international sources.
34 All of these matters needed to be weighed against the hardship that the applicant here would suffer if the injunction were not granted, matters to which I have referred under the previous heading, "Damages not an adequate remedy".
35 The respondents replied that the corporate respondent would suffer harm from being forced to deal with no local manufacturer except the applicant. Here, it was important, on the respondents' submission, to note that the applicant on at least some of the evidence from the respondents was not in a position to manufacture, a matter, as I have said, which the applicant strongly contests. That contestation is on the basis of the possibility of financing manufacture from another source (provided the exclusive licence to manufacture was still on foot), and the possibility that the corporate respondent might deal with the applicant if the exclusive licence to manufacture were upheld.
36 There is the further matter to be weighed in the balance, of this (qualified) constraint on the corporate respondent's ability to source the Mobilert, that might in practical terms force it to deal with the applicant. This matter was pressed on me by the respondents. However, I do not see this as a case involving compulsion to deal sufficient to engage the concerns referred to in Seaman at [52.1.25]. That is because the
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- constraint is only a qualified one, and the respondents had not sought to terminate the Manufacturing Agreement. In the event, I do not consider that, in those circumstances, and given the seriousness of the case to be tried as I have assessed it, this factor is determinative.
37 The respondents further submitted that there was a contest on whether the prototype whose return was sought was needed for manufacture, referring me to evidence from the affidavits filed on their behalf.
38 The respondents referred to orders for 1400 Mobilerts at $2200 per unit that the affidavits indicated had been received, although there was some contest between the parties as to the existence and firmness of these orders. The respondents indicated that I could extrapolate from this order at that price to the possibility, based on the fact that the corporate respondent had ordered 5000 units from the applicant, of at least something in the order of $15,000,000 of gross income at stake in this case. The respondents further referred to material in the affidavit evidence valuing the Mobilert technology in the $10,000,000 to $20,000,000 range. I should note that such an extrapolation from the existing order would appear to me to be of a rather speculative nature, and further not to take account of the other costs that the respondents would likely need to bear, and on which, as the respondents conceded, I had no evidence. The applicant referred to the respondent's failure to produce the valuation report relating to its technology where such support had been sought by the applicant.
39 The respondents also indicated that there was some evidence that the corporate respondent had invested more in the project than the applicant by reference to the advance which the respondents and the applicant had admitted had been paid, and the evidence as to amounts expended under the Manufacturing Agreement contained in the applicant's own affidavit evidence. The applicant did not concede that the disparity, if there was one, was of this magnitude, and I would have difficulty on the material in front of me in making such a determination. In any event, the balance of convenience or hardship appears to me to go beyond the amounts that might be at risk if the relief was granted or withheld to considerations of the impact of that loss on the respective parties. Here, I was unable to determine whether the loss of the respective investments would be more likely to cause the respondents' business to fail than the applicant's. It was conceded before me by both parties that if the probabilities were equally weighted, then the balance of convenience, assuming I were satisfied
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- there was a serious question to be tried, would point me towards granting the relief sought.
40 The respondents devoted some argument to the risk of the loss of their technology which they said would flow from permitting the applicant to attempt to manufacture, and to use the prototype returned to it. In my view, such a risk is adequately addressed by the injunction granted by consent to the respondents in this case, as I have indicated.
41 Finally, it was suggested to me by the respondents that if an injunction were denied to the applicant in this case, it could always reapply against better evidence of a serious question to be tried and hardship to it from activities of the respondents. For this purpose, the respondents indicated they would be prepared to undertake that they would supply the applicant on a regular basis with information as to the sourcing of production elsewhere and sales made. These records would, it would appear, be ones that the respondents were suggesting the applicant could use to show the impact on its business of the respondents' activities. I do not believe, in the final analysis, that this argument or this undertaking adds anything of significance to the analysis of this issue.
42 A rather more substantial consideration was represented by the respondents' submission that the prototype, the return of which was sought, was crucial to the respondents' pending application for a patent. There was some question raised by the applicant at the hearing about whether a patent might already have been granted. Further, shortly before these reasons were to be delivered, I was informed by counsel for the plaintiff respondent that it was no longer proposed to lodge applications for the complete patents. The respondent has had the prototype for some significant time, and the usual terms of an order of the sort being sought by the applicant in this case would allow for the respondents to seek a prototype back for the purposes of any later patent application.
43 There is also, however, the matter that this aspect of the relief the applicant seeks is in the nature of a mandatory injunction. It is clear on the authorities that this is a significant matter for me to weigh in the balance of convenience. The Court in a normal case must "feel a high degree of assurance that at the trial it will appear that the injunction was rightly granted; and this is a higher standard than is required for a prohibitory injunction": per Megarry J in Shepherd Homes Ltd v Sandham [1971] Ch 340 at 340 quoted in Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657 at 664, quoted with approval by Kennedy J in Cash Converters Pty Ltd v Hila Pty Ltd (1993)
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- 9 WAR 471 at 483; and see Seaman at [52.1.24]. I interpret this as requiring me to test the seriousness of the case to be tried as the factor affecting the balance of convenience in this way. So tested, I do not consider this is a case where it is appropriate to make the order for return requested.
Conclusion
44 In the final analysis, on the applicable law, I am able to grant the orders the applicant seeks in its amended minute of order. This is notwithstanding some reservations I have about the certainty of the order 1.1, which is in terms of "breaching cl 2.5 of the Manufacturing Agreement". This is referred to in Seaman [52.1.22] in terms of the desirability that an interlocutory injunction restrain a particular activity in explicit terms so that "the parties can be under no misapprehension as to what was intended". Order 1.2 is, in this respect, rather clearer than 1.1. At the same time, no objection was taken at the proceedings to 1.1, which was the proposed order that had been before the parties since the initial application for the injunction was lodged by the applicant and was part of McLure J's order. And I note that application could be made in this respect for variation of my order if the parties, or one of them, saw fit.
45 It also follows that an undertaking as to damages is appropriate in this case. Undertakings have been offered on behalf of the applicant and by its managing director. I have already referred to the real estate holdings of this entity and that person. Some substantial argument was directed to me at the hearing about the value that could be placed on that real estate, and I was invited to give little weight to the valuation references in the material supplied on behalf of the applicant. Reference was again made to the substantial value of both the orders on hand and in prospect for the system from third parties, as well as the value placed on the technology. I do not consider that there is a reason to doubt that assets of significant value have been shown to belong to those submitting the undertaking, and I am not persuaded that, in light of such indications, I should treat the undertaking as being inadequate for the purposes of the order I make today. At least I should not do so in light of the assessment of the other matters that bear on the exercise of my discretion.
46 Accordingly, the order is:
"1. Until after judgment in this action, or further order, the Plaintiffs, whether by its officers, agents and servants or otherwise, be restrained and an injunction be granted restraining them from:-
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- 1.1 Breaching Clause 2.5 of the Manufacturing Agreement made between the Plaintiffs and the Defendant dated 11 July 2003;
1.2 In particular, and without prejudice, to the generality of order of 1.1, using the intellectual property for the Mobilert System to manufacture and package the Mobilert System in Australia.
- 2. There be liberty to the parties to apply on 48 hours' written notice."
47 This order in terms follows that of McLure J, with a variation, to align cl 12 with the limited geographic scope of the exclusive licence in cl 2.5 to which I have referred.
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