The City of Sydney v Streetscape Projects (Australia) Pty Limited

[2010] NSWSC 608

CITATION:	The City of Sydney v Streetscape Projects (Australia) Pty Limited & Anor [2010] NSWSC 608
HEARING DATE(S):	2/06/10
JUDGMENT DATE :	9 June 2010
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Council to be released from the material undertakings. Short minute of order to be brought in.
CATCHWORDS:	Practice and procedure - Final hearing dates requiring to be vacated - City of Sydney seeks release from undertakings given to the Court by reason of the new environment where no substitute hearing date has been given - Interlocutory injunctions - Principles
CATEGORY:	Procedural and other rulings
PARTIES:	The City of Sydney (Plaintiff) Streetscape Projects (Australia) Pty Limited (First Defendant) Moses Edward Obeid (Second Defendant)
FILE NUMBER(S):	SC 2009/298673
COUNSEL:	Mr S Finch SC, Mr S Climpson and Mr C Bova (Plaintiff) Mr J Garnsey QC, Mr J Gooley and Mr G Connolly (Defendants)
SOLICITORS:	Holding Redlich (Plaintiff) Colin Biggers & Paisley (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Wednesday 9 June 2010

2009/298673 The City of Sydney v Streetscape Projects (Australia) Pty Limted & Anor

JUDGMENT

The notices of motion

1 In the wake of the recent vacation of the final hearing date of these proceedings both parties have filed notices of motion seeking adjustments of the anterior interlocutory orders.

2 The orders sought by the plaintiff are as follows

1. An order that the plaintiff be released from the undertaking given to the Court on 29 March 2010 upon the cross-claimant giving the usual undertaking as to damages secured by a payment into Court in the sum of $150,000 and upon the plaintiff giving the following undertaking in place of the undertaking given on 29 March 2010:

“Without admissions, until final determination of these proceedings at first instance or until further order of this court, the plaintiff undertakes to the court that it will not enter into any agreement relating to the sale of the Intellectual Property in the “S1” and “S2” series of “Smartpole” poles provided that, until such final determination or further order:
(a) The plaintiff shall be entitled to obtain supply of “S1” and “S2” “Smartpole” poles and accessories from third parties and supply drawings and specifications to third parties for the purpose of producing those streetpoles and accessories upon the basis that:


(i) Any such third party will be obliged to keep the designs and drawings entirely confidential and will return them to the plaintiff upon demand.

(ii) No Intellectual Property rights in the “Smartpole” will be given to such third parties.

(iii) The plaintiff will keep proper account of sales by any third party to it pending final determination of these proceedings.

(b) The plaintiff shall be entitled to obtain services for the maintenance of existing “S1” and “S2” “Smartpoles” and accessories and any further “Smartpoles” and accessories purchased pursuant to 2(a) from third parties and to supply drawings and specifications to third parties for the purpose of maintaining the “Smartpoles” upon the same basis as set out in (a) (i), (ii), (iii) above.

(c) The plaintiff shall be entitled to provided drawings and specifications for the “Smartpole” and accessories to any other Council within Australia provided that they are supplied to such Council on the same terms set out in (a) (i), (ii) and (iii) above.”

3 By what the defendants senior counsel accepted was a ‘tit for tat’ response, the defendants have themselves formulated a notice of motion seeking the following orders:

1) An order and injunction restraining the plaintiff by itself, servants, officers or agents until the final determination of Supreme Court proceedings 50130 of 2009 and Federal Court proceedings NSD 1013 of 2009 from taking any further steps to evaluate, assess, progress or award the tender 0971 or any part of it, or to negotiate in respect of responses to that tender or any part of it or to enter into any agreement or arrangement concerning the subject matter of the components of the tender, or to place any orders or enter into any dealings or make any disposition in respect of the component parts of the tender including but not limited to the intellectual property the subject of the tender.

2) An order and injunction restraining the plaintiff by itself, servants, officers or agents until the final determination of Supreme Court proceedings 50130 of 2009 and Federal Court proceedings NSD 1013 of 2009 from dealing with or disposing in any way with and from disclosing to any person the intellectual property the subject of the tenders or any intellectual property, drawing, specification or information provided to the plaintiff by the defendants or either of them and concerning or relating to multi-function streetpoles or component parts or accessories thereof.

3) An order and injunction restraining the plaintiff by itself, servants, officers or agents until the final determination of Supreme Court proceedings 50130 of 2009 and Federal Court proceedings NSD 1013 of 2009 from procuring or obtaining the manufacture or supply or maintenance or servicing of multi-function poles known as Smartpoles, accessories and related equipment the subject of the tenders from any person or corporation except from the first defendant.

The nature of the proceedings

4 The relevant background commences in approximately 1999 when the City of Sydney requested a tender for the supply of Smartpoles in connection with the Sydney Olympic Games. Streetscape became the licensee following that tender process

5 The proceedings brought by the City of Sydney pertain to a license agreement entered into in 2002 whereunder the City of Sydney granted to Streetscape Projects a license to use the intellectual property defined in the license agreement for the sole purpose of the manufacture and sale of Smartpole Street Poles subject to the terms and conditions of the licence agreement. The so-called Smartpoles were used to support lights, banners, traffic lights and the like and are often referred to as multifunctional poles.

6 For present purposes and although a number of the matters which I am about to describe are disputed by the defendants, the plaintiffs describe the position as follows:

i. The tender relates to street poles known as “Smartpole” poles. The City owns the intellectual property in the “Smartpole” poles. What is a “Smartpole” and the intellectual property in the “Smartpole” is referred to in paras 13 to 19 of the affidavit of Sylvia Fernandez sworn 25 March 2010 (“the Fernandez affidavit).

ii. There are two ranges of the “Smartpole” poles known as the “S1” series of the “Smartpole” poles (“the S1 poles”) and the “S2” series of the Smartpole poles (“the S2 poles”). The S1 poles have a diameter of 215 mm and are of varying heights between 4.8m and 12.6m. The S2 poles have a diameter of 166mm and are of varying heights between 4.8m and 12.6m. The S2 poles have a diameter of 166mm and are of varying heights between 4.8m and 7.2m.

iii. The City’s ownership of the intellectual property in the S1 poles is acknowledged in clause 7.2 and other parts of the licence agreement (under Tab 9 and Ex.SZF2 and SZF3 of the Fernandez affidavit). The City’s ownership of the intellectual property in the S2 poles is acknowledge in clause 5(a) of the Second Deed of Variation (Tab 11 of the Fernandez affidavit). Schedule 2 of the first Deed of Variation (Tab 10 of the Fernandez affidavit) refers to the different types of S1 pole and S2 pole of the intellectual property which is owned by the City (as well as the accessories).

7 The proceedings have been on foot for some time and following some manoeuvring which involved the Federal Court for a period, the proceedings are now fixed in the Commercial List in this court. A further date for the final hearing is awaited from the list judge.

The course of the hearing of the motions

8 An enormous amount of material was mobilised more particularly by the defendants in relation to the two sets of a notice of motion. It is fair to say that only a minuscule part of all of that material was referred to. This habit of plying the Court with so many ultimately insignificant details has to my mind, become far too frequent to avoid mention.

9 Notwithstanding all of the paper before the Court, it is plain that in the circumstances which now prevail the Court is thrown back to a reconsideration of the interlocutory regime which has regulated the passage of the proceedings for quite some time. And as always the critical parameters involve the serious question issue and the balance of convenience.

The plaintiff’s position

10 The plaintiff's position is that the recent vacation of the final hearing dates gives rise to its entitlement to re-agitate the interlocutory position. It is clear from the material before the Court that it regards the new regime which it seeks to put forward as fair and equitable in the circumstances. It's contention is that it regards its desire to be able to obtain supply of the poles and accessories and to obtain maintenance of the poles from third parties as unexceptional pending the final hearing. Its contention is that it does not seek to be bound into the exclusive relationship with Streetscape which it contends, never paid for [and which it contends] the agreement did not provide for]

11 The plaintiff has candidly acknowledged that in the event the Court presently varies the interlocutory regime in accordance with the plaintiffs claimed orders, but the defendants succeed in the litigation, the defendants will be in a position to assert that they had lost the opportunity to provide the material smart poles.

12 In this regard the plaintiff accepts that it will be required to keep records of every sale it makes so that the defendants will be in a position to as a simple matter of accounting, make the appropriate loss of opportunity submissions to the Court.

13 In short the plaintiff’s proposition is said to be a modification which leaves on foot, what was described as 'the fence around dealing with the IP itself' but which simply allows the plaintiff to obtain supply and maintenance of poles from other third parties so that the plaintiffs may have a competitive tender.

14 The proposition is that the defendants effectively have at the moment [but only because the plaintiffs had agreed to it some time ago in order to obtain an early hearing], an exclusive licence to supply and maintain. The proposition is that the defendants had such an exclusive licence some time ago, but it ran out. The contention what that the defendants are achieving presently, simply does not amount to the maintenance of the status quo, but rather involves the defendants stealing a march on the plaintiff.

The time parameter

15 One of the significant matters requiring to be closely dealt with on the cross applications concerns the likely the period of time before a final decision comes forward following a final hearing. Obviously if the final hearing was fixed to commence in a few days time the chances of either party succeeding in yet a further interlocutory application aimed at tampering with the existing interlocutory position would be likely close to zero. But that is not the current position.

16 Whilst is very difficult in the current circumstances where the list judge has not been able to identify on what new date the proceedings will be fixed, in my view it is very likely that a trial judge in proceedings as complex as the current proceedings will require some real time in order to bring down a judgment. Hence I proceed upon the assumption that even if a final hearing date was to be given in the next few months, the likelihood would be that the trial judge may not be able to bring down the judgment until some time in the first few months of next year.

17 I referred earlier to the defendants’ motion as being put in ‘a tit for tat fashion’. Without being critical in that regard senior counsel for the defendant made perfectly plain that it would not be pressing its notice of motion were the plaintiffs to fail on their notice of motion.

Amended Cross Claim

18 Since the giving of the undertakings, the cross claimant has filed an amended cross summons and an amended commercial list cross claim statement. The amended summons now seeks an order for specific performance of the “agreement for the purchase of the Intellectual Property between City of Sydney and SPA” (order 1); a declaration that the plaintiff holds the Intellectual Property on trust for the cross claimant (order 2) and, alternatively, a declaration that the plaintiff holds Intellectual Property on trust for the cross claimant (order 3). Declarations are also sought to the effect that the various agreements between the parties were ultra vires (order 4-7).

19 The “agreement for the purchase of the Intellectual Property” (sought in order 1) is based on the same allegations concerning the March 2007 representations and the September 2007 representations which are summarised in paragraphs 10 to 14 of the original submissions. Relevantly, paragraph 35(c) of the cross claim statement alleges that the March 2007 representations included the following:

(a) that the Council would sell all of its Intellectual Property in the Smartpoles during the first quarter of 2008 and that the Cross claimant would be offered the Intellectual Property in the Smartpoles in that period. (paragraph 35(c)(iii-iv));

(b) the Cross Claimant would continue to remain the supplier of Smartpoles and accessories and S2 Streetpoles for as long as the Council owned the Intellectual Property. (paragraph 35(c)(v)).

(c) the Cross Claimant would continue to provide maintenance services to the Council in relation to the Smartpoles, S2 Streetpoles and associated accessories for as long as the Council owned the Intellectual Property. (paragraph 35(c)(vii)).

20 Similar representations are alleged in relation to the September 2007 representations (see paragraph 52(c), (d) and (f)).

Decision

21 In my view the plaintiffs have succeeded in establishing sufficient of a prima facie serious case to require the Court to look at the balance of convenience.

22 Further the a clear balance of convenience favours the plaintiffs position, that is to say:

i. the Council seeks to vary the undertakings so that it may proceed to enter into contracts for the supply of Smartpoles and accessories to itself and enter into contracts for the maintenance of existing Smartpoles and accessories.

ii. The simple fact is that the current undertakings have the effect of prohibiting the council from:


(a) selling the intellectual property in the Smartpole;

(b) entering into any contract for the supply of smart poles to itself;

(c) entering into any contract for the maintenance of existing Smartpoles which have been installed by the Council.

23 A continuation of the undertakings, particular in the context that the cross claimant now appears to be continuing to carry on its business of selling both S1 and S2 poles, has the effect of giving the cross claimant exclusivity in relation to the sale of such poles, as well as exclusivity in relation to the supply of poles to the City and the maintenance of those poles.

24 The principled exercise of the material discretion is for the Court to not allow the continuation of such exclusivity, and to release the Council from the material undertakings.

25 Having also examined the injunctive relief sought by the defendants, the principled exercise of the material discretion is to refuse that relief. The Court is not satisfied to the requisite standard that the defendants have shown sufficient of a prima facie case. Further the clear balance of convenience is against the granting of that injunctive relief.

26 Further it is clear that in many ways the corollary of the Court’s decision in favour of granting the plaintiff the relief which they have sought, is to refuse the defendants’ application for further injunctive relief.

Short minutes of order

27 The parties are to bring in short minutes of order to reflect these reasons.

*******************