Tasmanian Publishing Co Pty Ltd v Mathys
[2010] FCA 1313
FEDERAL COURT OF AUSTRALIA
Tasmanian Publishing Co Pty Ltd v Mathys [2010] FCA 1313
Citation: Tasmanian Publishing Co Pty Ltd v Mathys
[2010] FCA 1313Parties: TASMANIAN PUBLISHING CO PTY LTD (ACN 139 345 645) v JONATHAN MATHYS File number: TAD 47 of 2010 Judge: MARSHALL J Date of Judgment: 26 November 2010 Legislation: Trade Practices Act 1974 (Cth) ss 52, 80
Corporations Act 2001 (Cth)
Fair Trading Act 1990 (Tas)Cases cited: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464Date of Hearing: 22 November 2010 Date of Order: 22 November 2010 Date of Publication of Reasons: 26 November 2010 Place: Melbourne (via video to Hobart) Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 28 Counsel for the Applicant: Mr R Strong Solicitor for the Applicant: Dobson Mitchell & Allport Counsel for the Respondent: Ms M Ogilvie Solicitor for the Respondent: Ogilvie & Associates
IN THE FEDERAL COURT OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
GENERAL DIVISION
TAD 47 of 2010
BETWEEN: TASMANIAN PUBLISHING CO PTY LTD (ACN 139 345 645)
ApplicantAND: JONATHAN MATHYS
Respondent
JUDGE:
MARSHALL J
DATE OF ORDER:
22 NOVEMBER 2010
WHERE MADE:
HOBART
UPON the applicant by its counsel undertaking to the Court:
(a) to submit to such order (if any) as the Court may consider to be just: for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) thereof; a
(b) to pay the compensation referred to in (a) to the person there referred to
THE COURT ORDERS THAT:
1.The Respondent, whether by himself, his employees, agents or otherwise howsoever, shall not represent in trade or commerce that:
(c) he is employed by, connected with or otherwise engaged in the business of the Applicant and or alternatively the publication of the magazine Tasmanian Life;
(d) he is authorised by the Applicant to enter into contracts or engagement, and or alternatively to receive or give directions with respect to the payment of money, on behalf of the Applicant,
or make any other representations substantially to the same purport or effect.
2.Until the hearing and determination of the Application until trial or further order the Applicant have the possession and use of the following property:
(a) the computer equipment referred to in paragraph 38 of the affidavit of Claire Andrews sworn on 17 November 2010 including all cables and peripheral equipment used therewith;
(b) all software, backup disks and other documents containing information presently or formerly stored on such equipment in the possession or under the control of the Respondent;
(c) the motor vehicle registered no A88UB (Tas).
3.The Respondent within 24 hours deliver up the property referred to in Order 2 to the solicitors for the Applicant.
4.The directions hearing in the proceeding is adjourned to 10.00 am on 10 December 2010 in Hobart.
5.Costs reserved.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
TASMANIA DISTRICT REGISTRY
GENERAL DIVISION
TAD 47 of 2010
BETWEEN: TASMANIAN PUBLISHING CO PTY LTD (ACN 139 345 645)
ApplicantAND: JONATHAN MATHYS
Respondent
JUDGE:
MARSHALL J
DATE:
26 NOVEMBER 2010
PLACE:
MELBOURNE (VIA VIDEO LINK TO HOBART)
REASONS FOR JUDGMENT
On 22 November 2010, the Court made interlocutory orders in this proceeding. What follows are the Court’s reasons for making those orders.
Interlocutory relief has been granted based on the evidence in the proceeding as it stood on 22 November 2010. Whether final relief is granted or not depends on the evidence before the Court at trial, should the matter proceed to trial. It is no bar to the grant of interlocutory relief that the orders sought in a claim for such relief overlap or are largely consistent with the final relief claimed, provided that the well-known tests for the grant of interlocutory relief are satisfied.
The applicant, Tasmanian Publishing Co Pty Ltd, applies for interlocutory relief against the respondent, Mr Mathys. In this proceeding the applicant seeks declarations and injunctive relief under s 80 of the Trade Practices Act 1974 (Cth) (“the Act”) for alleged contravention by the respondent of s 52 of the Act. The application also relies on certain provisions of the Corporations Act 2001 (Cth), the Fair Trading Act 1990 (Tas) and on the common law.
Background facts – evidence of Ms Andrews
The applicant’s sole director and shareholder is Ms Claire Andrews. The applicant is the publisher of the magazine, “Tasmanian Life”. In the latest edition of the magazine (the October/November 2010 edition), Ms Andrews is referred to as the director and arts editor of the magazine. The respondent is referred to as the editor. Both Ms Andrews and Mr Mathys are referred to as the people to contact for “editorial and advertising enquiries”.
In late March early April 2009, Mr Mathys discussed with Ms Andrews the purchase of Tasmanian Life, whose then owner, Mr Smith, or his company, had decided to cease publication. According to Ms Andrews, during the period April to May 2009, Mr Mathys told her that the purchase price of the magazine was $87,500, but that he could not purchase it as he was financially unable to do so at that time and was unable to qualify for a loan. Mr Mathys told Ms Andrews that she would have to raise the money to purchase the magazine. At the time Mr Mathys and Ms Andrews were in, or developing, a personal relationship.
In July 2009, Mr Mathys took Ms Andrews to a Tasmanian Government Service Centre and lodged a “change of proprietors carrying on business” form to record Ms Andrews as the proprietor of the business known as “Tasmanian Life Magazine”. Instead of taking over the business name from Mr Smith, or his company, the form revealed that Ms Andrews took over that name from Mr Mathys. Between May and August 2009, Ms Andrews, through Mr Mathys, arranged to pay Mr Smith for the purchase of the magazine business.
In September 2009, Ms Andrews arranged to set up and incorporate the applicant company, with her as its sole director and sole shareholder. On 22 September 2009, the Federal Magistrates Court made a sequestration order against the estate of Mr Mathys and noted that “the date of the act of bankruptcy is 12 May 2009”.
On 1 December 2009, Ms Andrews claims to have made a payment of $31,921 from her personal funds to the printer of the magazine. On 4 December 2009, Ms Andrews opened a bank account with the Commonwealth Bank called “Claire Andrews trading as Tasmanian Life Magazine” due to difficulty arising in opening the account in the name of the company. Until that time the magazine business utilised an account held by Mr Mathys with Westpac Bank.
It was not until 1 February 2010 that the applicant opened a bank account with the Commonwealth Bank. Ms Andrews was the sole signatory to that account on its opening. From that time, the applicant paid Mr Mathys what Ms Andrews terms a wage of $600 per week. Ms Andrews gave Mr Mathys payment authority for internet banking purposes.
Ms Andrews states that in or about early December 2009, she accompanied Mr Mathys to Officeworks in Hobart where they selected computers and office furniture for the business. The equipment was installed at Mr Mathys’s apartment in Kingston where the business was to be conducted. On 4 December 2009, Ms Andrews signed a rental agreement for the hire of that equipment. It required payments of $246.78 per month which she contends that she or the applicant has continued to pay since then. The equipment has been used to publish the magazine and run the business. The computers and external hard drive hold files used for publishing the magazine, invoicing the recording of contributors and advertising, as well as newsagent details, emails and unfinished articles.
In late December 2009, or early January 2010, Ms Andrews contends she became aware that in late April 2009, Mr Mathys had agreed with Mr Smith to purchase the magazine business from Mr Smith’s company, Canongate Partners Pty Ltd. She also contends that she became aware Mr Mathys had signed a deed on 28 May 2009, which was also signed by Mr Smith, setting out the terms of the proposed sale to Mr Mathys.
On 8 January 2010, Mr Mathys sent an email to Ms Lucy Barbour in which Ms Barbour was offered employment with the applicant. The email commenced (after salutations) with the following words:
As discussed yesterday I have spoken with Claire and she has advised that as owner of Tasmanian Life Magazine, Tasmanian Publishing Pty Ltd would like to engage your journalistic and sales services on the following basis….” (emphasis added).
In early May 2010, Mr Mathys and Ms Andrews spoke to Mr Barry Hamilton, a registered liquidator. As a result of these discussions it was apparent to Mr Mathys and Ms Andrews that, as an undischarged bankrupt, Mr Mathys would not be permitted to be involved in the management of the company by the applicant, but was permitted to be employed by it.
In September 2010, the applicant employed Mr Matt Ody as a designer. Mr Ody loaned funds to the applicant to permit it to print the next edition of the magazine, which is the current issue, having been published in late October 2010.
On 20 October 2010, Ms Andrews moved out of Mr Mathys’s Kingston premises. It is alleged that Ms Andrews told Mr Mathys in early October 2010 that she was planning to move herself and the business from his home. Mr Mathys remained an employee of the applicant.
On 26 October 2010, Mr Mathys sent an email to Mr Ody in which he purported to terminate Mr Ody’s employment summarily, despite acknowledging in the email that the applicant employed Mr Ody. Mr Mathys appeared to claim in the email an entitlement to dismiss Mr Ody “from the Tasmanian Life Business”. Mr Mathys appears to have asserted a right to the business of the magazine, notwithstanding that the business was and is managed by the applicant as director of the company.
In late October 2010, Mr Mathys sent purported invoices to newsagents in respect of sales of the magazine, without authorisation by Ms Andrews or the applicant. The invoices sought the payment of funds into a Westpac Bank account held by Mr Mathys, an account which is not opened or operated by the applicant or Ms Andrews.
By letter from solicitors acting for the applicant, the applicant purported to terminate Mr Mathys’s employment summarily on 28 October 2010, as a result of the issuing of the unauthorised invoices and the seeking of payments into an account held by Mr Mathys. The letter also sought immediate return of the applicant’s “two computers and external hard drive”, as well as a vehicle owned by the applicant.
In response to the solicitor’s letter, Mr Mathys asserted a right to send such invoices and seek payment into his account. Mr Mathys claimed that he was never an employee of the applicant but conducted the business of the magazine in a partnership capacity with the applicant. He asserted a right to continue to operate the business. On 15 November 2010, Mr Mathys emailed a large number of Tasmanian newsagents requesting payment for copies of the magazine to be made by cheque sent to his Kingston residence.
In the week beginning 15 November 2010, Mr Mathys sent an email to an advertiser in the magazine asserting that he owned the magazine and intended to publish its next issue and carry on its business.
As a result of Mr Mathys’s conduct, the applicant commenced this proceeding and sought interlocutory relief in substantially the form of the order made by the Court on 22 November 2010.
Background facts – evidence of Mr Mathys
In his affidavit filed in the proceeding, Mr Mathys asserts that he purchased Tasmanian Life magazine in May 2009. That assertion is not supported by other evidence apart from the agreement he entered into with Canongate to effect a purchase. He does not deny that Ms Andrews provided funds for the purchase and that the applicant was established to conduct the business of the magazine. He refers to Ms Andrews as “an investor who loaned money to the business and has…received repayments of capital and interest”. At paragraph 39 of Mr Mathys affidavit he claims that a meeting took place between Ms Andrews and himself in about June 2010, where it was agreed that “the business should start repaying Ms Andrews at the rate of $1000 per week until either half the funds she advanced were repaid with interest or that the entire amount was repaid with interest”. Mr Mathys then contends that as of 20 October 2010, he believed Ms Andrews had been repaid about $57,000, but that the loan account stands at around $225,000, (not including expenses for Ms Andrews car or relocation) “because she put more money into the business”. No documentary evidence in support of any payments made to Ms Andrews has been supplied. Mr Mathys contends that the records are in Ms Andrews’s possession. Counsel for Mr Mathys did not call for the documents during the interlocutory hearing.
Mr Mathys contends that Ms Andrews and the applicant were investors who became “operational partners” in the magazine’s business, without evidence to support his claim. Mr Mathys further contends that there was an agreement in place between himself and Ms Andrews, in that Ms Andrews and Mr Ody would run the design section of the business and Mr Mathys would “continue to run everything else” from his office.
Mr Mathys contends that he has “at all times” owned and operated the magazine business “as a sole trader”. This is inconsistent with his email to Ms Barbour and inconsistent with the evidence of Ms Andrews concerning relevant events and documents.
The test for interlocutory relief
The principles for the grant of interlocutory relief are not in dispute, see Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [19]. The first issue is whether the applicant has shown that there is a serious question to be tried as to its entitlement to relief. Counsel for Mr Mathys conceded that the applicant has shown the existence of a serious issue to be tried. However, the strength of that serious issue is a matter which may be taken into account in considering the balance of convenience.
The second issue is whether the applicant is likely to suffer an injury for which damages will not be an adequate remedy. Mr Mathys is an undischarged bankrupt. It is difficult to see how an award of damages against him could be an adequate remedy.
The third issue is whether the balance of convenience supports the granting of an injunction. As Woodward J (with whom Smithers and Sweeney JJ agreed, on this issue), said in Bullock v Federated Furnishing Trades Society of Australasia (1985) 5 FCR 464 at 472 the tests of “serious question” and “balance of convenience” need not be considered in isolation from each other. Where the applicant’s claim is strong, it is appropriate to grant interlocutory relief even if the balance of convenience is fairly even. However, here the balance of convenience favours the applicant. The applicant, through its sole shareholder and director has supplied evidence that it purchased the magazine business and seeks to run the business without interference from Mr Mathys who has disclosed scant documentary evidence to any entitlement to be involved in the conduct of the applicant’s business. Again, as stressed in the first paragraph of these reasons, that is the current state of the evidence.
Orders
It was for the foregoing reasons that the Court made the orders contained in the order page of these reasons. The orders were made in accordance with a draft submitted by Counsel for the applicant. Counsel for Mr Mathys informed the Court that she wished to make no submission about the form of the relief sought by the applicant. This occurred after the Court announced that it proposed to grant interlocutory relief and invited submissions on the content of that relief.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate:
Dated: 26 November 2010
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