Tonks, G.D. v Bioengineering Australia Pty Ltd

[1986] FCA 648

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LIMITED DISTRIBUTION

CATCHWORDS

TRADE PRACTICES - consumer protection - interlocutory relief - whether

conduct misleading and deceptive - balance of convenience - effect and

construction of	warranty in	contracts - whether appropriate relief
sought.

Trade Practices Act 1974 (Cth): ss. 52, 53.

GREGORY DENNIS TONKS

v. BIOENGINEERING AUSTRALIA PTY. LIMITED

G 515 of 1986

LOCKHART J.

1 DECEMBER 1986

SYDNEY

IN THE FED=	COURT OF AUSTRALIA	1
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NEW SOUTH WALES DISTRICT REGISTRY	)	No. G 515 of 1986
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GENERAL DIVISION	)

BETEEN: GREGORY DENNIS TONKS

Applicant

AND:	BIOENGINWING AUSTRALIA
PTY. LIMITED

Respondent

JUDGE MAKING ORDER:	LOCKHART J.
DATE OF ORDER:	1 DECEMBER 1986
WHERE ORDER MADE:	SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.	The application for interlocutory	injuncitve	r lief	be
dismissed.

2.	The costs of this	application	be	the	respondent's	costs	in
the proceeding.

m:	Settlement and entry of orders is dealt with in Order 36	of
the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEM SOUTH WALES DISTRICT REGISTRY	No.	G 515 of 1986
GENERAL DIVISION

B!3kEEN: GREGORY DENNIS TONKS

Applicant

AND: BIOENGINEERING AUSTRALIA

F'TY. LIMITED

Respondent

1 December 1986

REASONS FOR JUDGMENT

LOCKHART J.

This is an application for interlocutory injunctive relief by

Gregory Dermis Tonks. The case relates to a system called the

Bio Treat system which converts household waste water to clear

odourless water that may be automatically distributed round people's

gardens. The Bio Treat system is manufactured by the respondent,

Bioengineering Australia Pty. Limited, which has an application

pending for a trademark, ("Bio Treat"), in respect of the goods

constituted by the system but, as yet, no mark has been registered.

No claim under the Trademarks Act 1955 arises in these proceedings.

The applicant conducts the business of supplying, installing

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and maintaining the Bio Treat system. The contractual relations

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!	between the parties commenced in about March 1985 when the applicant
and the principal of the respondent, a Mr. Rogan, had a discussion
from which. it is asserted by the applicant, an agreement was reached
upon terms that included the applicant being appointed by the
respondent as its agent and distributor of the Bio Treat system in an
area described in the evidence as the Central Coast area; the applicant had the exclusive right to enter into contracts with customers on behalf of the respondent and to supply, install, maintain
and service the Bio Treat system for them: the applicant was to
install the system for customers at his own expense; and the
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I	respondent was to pay the applicant a sum for each unit supplied and
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I	installed. Pursuant to that arrangement contracts were concluded with various customers.
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i The applicant asserted that in August 1985 an oral variation

!	to the agreement was made between the parties whereby the applicant
I	would supply, install and maintain the systems sold to customers as
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principal; the respondent would supply the applicant with the systems
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I	and associated products on the basis that the applicant would pay to
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the respondent the agreed wholesale price.

I Pursuant to that varied oral agreement the applicant said

that he entered into some twenty contracts. The applicant also said

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I	that the agreement between the parties was further varied in November
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j	1985, whereby the applicant's area of operations was extended to
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include certain areas on the South Coast; otherwise in all material

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respects the terms of the original agreement.	as	varied in August,
remained.

The applicant opened an agency in the South Coast area and

advertised the Bio Treat system manufactured by the respondent.	He
made representations concerning the system to various authorities

including those in Local Government. However, apparently the

respondent has since about April this year represented to potential

customers of the applicant in the South Coast area , s it has since

January this year in the Central Coast area, that it could supply and maintain the system.

In about August this year the respondent approached customers

of the applicant, including some with whom the applicant contracted as

principal, and represented to them that the respondent was entitled to

receive directly from them moneys owed to the applicant. These

representations included representations that the customers should

withhold money owed to the applicant.

The applicant said that of the twenty contracts which he

negotiated in his name, seven customers have either declined to retain

his services for the purposes of maintenance and service or have made

it clear that they will look elsewhere. In effect it is for the

remaining thirteen of these customers that the applicant seeks

interlocutory relief. The evidence consists of an affidavit of the

applicant and an affidavit from Mr. Rogan, the General Manager of the

respondent, who seems to be its principal. Neither deponent has been

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cross-examined.

The applicant seeks to restrain the respondent from, in

effect, further seeking to induce the remaining thirteen of the

applicant's customers from continuing their contractual relations with

him so that, pending the final hearing, the applicant will be free to

continue to maintain and service the units that have already been

installed.

The applicant said that some of the representations that have

been, and are being, made by the respondent to these people will

unsettle them and may have n adverse effect upon his own goodwill and

reputation in the areas in which he carries on his business. The

respondent denied the case as put forward by the applicant. Each

party has conducted this matter before me, although in part upon the

question of whether there is a erious question to be tried, mainly on

the issue of the balance of convenience.

As this is an interlocutory hearing I make no final decisions

on any of the issues. I am satisfied that there is a serious question

to be tried and it is essentially the balance of Convenience which

determines the outcome of the present matter.

In favour of the applicant it is true that the granting of

interlocutory relief will maintain the status quo in that he will be able to continue to service the existing thirteen contracts without the customers being subjected to any pressure by the respondent. So

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far as any fresh contracts are concerned, the orders would not, of

course, apply in relation to them and the applicant did not seek to

make out a case in relation to this.

The applicant has expended sums of money in building up his

business and the goodwill which revolves around this product although

he has, since the relations between the parties have soured, been

providing a different product which performs a similar function.

There are some features of the case which are troubling so

far as interlocutory relief is concerned. The relevant contracts with

customers are in writing and copies are in evidence. This form of

contract is based on the earlier form of contract which the applicant

used, being a contract printed on behalf of the respondent in which it

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appeared as "the company", and the applicant as "the distributor".

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The applicant took the same form of contract and inserted his name as

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distributor and the name of Greg Tonks Pty. Limited, as the company.

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I I am informed by counsel for the applicant that he does not have a

company Greg Tonks Pty Limited, and that it simply appears that way in

I	the contract because "Pty Limited" has not been excised from the
contract. Be that as it may, the applicant in effect appears as both
"distributor" and "company"; I ignore for the moment the corporate
name Greg Tonks Pty Limited. It does, I think, create difficulties to
the conditions of the contract. I do not propose to construe them
I	finally at this stage of the case, but it is necessary to examine them
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I	to some extent.
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6.

A warranty appears in condition 2 and, by its terms, the

I	"company" warrants that the Bio Treat system, including its mechanical
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I	and electrical components, is free from defects in manufacture and
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~	installation where such was carried out by the "company" or its
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I	authorised agents. The warranty is dependant upon the "company" being
I	satisfied, amongst other things, that there has been no work carried
i	out on, or any interference with, the Bio Treat system by anyone other
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than the "company" or its authorised agents. Such a warranty would
make sense if the respondent were giving it as the "company" but, of
course, in these latter contracts, it is the applicant who gives the
warranty. He is not the manufacturer. He is the distributor. It is
!	I	an odd warranty for a distributor to give, though perhaps not totally
I	unknown commercially. The problem is that it may be, and it is
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certainly arguable, that the terms of the warranty are such as not to
enable prospective purchasers to have recourse, in the event of
breach, against the respondent. On a literal interpretation the
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applicant possibly would not be bound by the warranty because, although he gave it, it cannot be relied upon, according to the terms
I I	of condition 2, unless he is satisfied that there has been no work
carried out on or interference with the system by any person other
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than himself or his authorised agents. This is a very strange
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I	provision as the system is made by the respondent. I mention that
because it is one of a number of provisions in the form of contract
I	that are relevant and troublesome at this interlocutory stage, and I
i	I	think they could trouble and confuse the remaining thirteen members of
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I	the public who have contracts with Mr. Tonks.
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In the body of the agreements with the thirteen people it is

provided that, as a condition of approval by relevant Health

Authorities for the installation of a system, the householder - that

is, the purchaser - must enter into a service agreement with the

I	"company" or its authorised nominees. Such of the evidence as exists
I	at the moment supports the conclusion that the Health Authorities
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would require the customers to contract with the manufacturer or
distributor or his agene or other person authorised by Bioengineering
Australia Pty. Limited.
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In other words, the evidence that I have at the moment

suggests that the Health Authorities would require that it is the

respondent, or its authorised nominee, who should enter into the

relevant service agreement. I find that this condition of approval

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I	inserted in the body of the contract fits ill with the assertion in
I	the contract that the applicant is himself the "company".
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It may be true that letters which have been sent by the

respondent to certain of the customers of the applicant (a copy of

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which is annexure "R" to the affidavit of Mr. Tonks sworn on 6

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November 1986 and relied on in these proceedings) has been sent to

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other customers. The relevance of this point is that it may be that people other than those who have already said to the applicant that

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they do not propose to continue contractual relationships with him may

have reached the same conclusion and are taking steps to terminate the

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contractual relations with him; in which case it would tend to

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militate against the granting of injunctive relief.

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8.

If the Court granted injunctive relief, bearing in mind it

would only be on a temporary footing as this is an interlocutory

hearing, it would not be without considerable problems. The more one

examines the appropriate orders to be made, the more the problem to

which I have adverted becomes obvious. I have the uneasy feeling that

if disputes between the parties were to proceed further, then they

would fall to be determined in the light of a contempt application

which would not be the appropriate vehicle for their rights to be

determined.

In essence this dispute is really one for damages between two

people who have fallen out with each other. They chose to enter into

a very general and oral contractual relationship. It is not, at this

stage of the case, for me to determine the precise terms on which the

contracts were made. It is obvious that the parties' relationship

has severed. Indeed, the applicant himself has terminated the

relationship between the parties on the basis of assumed repudiatory

conduct by the respondent. It does not necessarily affect adversely

his right to injunctive relief in the case of these thirteen

customers. However, it shows that the arrangements between them have

come to an end and we are now witnessing the sorting out of the

winding up or termination of those arrangements. I think this matter

is best left to the applicant, the respondent and the thirteen

customers concerned to sort out themselves according to the behaviour

of the marketplace and not by an interlocutory injunction from this

Court. The claim is ultimately one for damages and it is in that

field that the parties should adjust their respective rights and

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liabilities.

Accordingly, I dismiss the claim for interlocutory injunctive

relief. The costs of this application are to be the respondent‘s

costs in the proceeding.

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Counsel and solicitor	for	D.L. Williams instructed by
Applicant	Alan Jessup. ‘h ,, ,

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Counsel and solicitor for	N.F. Francey instructed by
Respondent	Fiddes Pogson Mackay
Date of Hearing:	1 Dcember 1986
Date of Judgment:	1 December 1986

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