United Airport Parking Pty Ltd v TMA Tech Pty Ltd
[2014] VSC 343
•21 July 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT
S CI 2014 03643
| UNITED AIRPORT PARKING PTY LTD (ACN 050 237 593) | Plaintiff |
| v | |
| TMA TECH PTY LTD (ACN 151 272 463) | Defendant |
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JUDGE: | GINNANE J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 17 July 2014 | |
DATE OF JUDGMENT: | 21 July 2014 | |
CASE MAY BE CITED AS: | United Airport Parking Pty Ltd v TMA Tech Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 343 | |
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INJUNCTIONS – Ex parte interlocutory injunction – Obligations under commercial contract – Non-disclosure of material facts – De novo application for new interlocutory injunction – More limited interlocutory injunction granted – Disputed sum to be paid into court
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Dinelli | Holding Redlich |
| For the Defendant | Mr S Anderson QC Ms G Coleman | K & L Gates |
HIS HONOUR:
This is a revised version of the oral reasons I delivered on 21 July 2014.
United Airport Parking, UAP, operates a car park with 1,050 spaces next to Melbourne Airport and has done so for some 20 years. A shuttle bus transports persons from the car park to the airport. The car park has an automated entry and exit system with a barrier or boom gate and automatic ticket computer-based printing system which records when a car enters the car park, and the system enables people to pay by credit card.
On the evening of Monday 14 July 2014, T. Forrest J granted UAP an ex parte interlocutory injunction obtained, it was said, as a matter of urgency. I will not repeat the terms of that interlocutory injunction. The plaintiff at that stage was UAP. The interlocutory injunction was obtained because of what was said to be a threat to close the operation of the car park by some technical step to be carried out by the defendant at midnight that evening.
The nature of what was proposed is, as I understand it, set out in the affidavit of Anthony Karam who is the Chief Executive Officer and Managing Director of the TMA Group of Companies. TMA Tech Pty Ltd is the defendant.
In paragraph 13 of his affidavit under the heading “Shutting down the UAP parking system” Mr Karam states:
The TMA parking system installed at UAP’s car park comprises hardware and software. The software system is set up to operate subject to a licence granted by TMA to UAP to use it. That licence was set up with an expiry date such that when that date passes, the licence automatically expires and the software and management system will cease operating. This is incorporated in the software system as a measure to protect TMA from clients who fail to pay for products purchased. When a customer pays the balance of the purchase price, TMA will provide the customer with an indefinite licence for the software. For UAP the expiry date was 15 July 2014.
UAP contends that there are faults and malfunctions with the automated ticket and payment systems, in other words, entry and exit parts of the parking operating system. Those alleged complaints and malfunctions are set out in the affidavit and exhibits thereto of Marie-Antoinette Saraceno, who is the financial controller of the Saraceno Group of which the plaintiff forms part. A number of examples of alleged defects are given.
Mr Karam in paragraph 21 of his affidavit replies to those allegations, stating that the system was installed, commissioned and operational by around 16 August 2013, and that UAP has used it to transact $2.8m in value of car parking transactions. TMA has requested that UAP’s employees participate in a detailed training program. However UAP has not agreed to them doing so.
He also states that the system has a 24-month warranty, and that TMA has complied with it by causing its service personnel to carry out such work as has been necessary to fix any problems with the system. He further states that he has been advised that problems have been caused by misuse of the user, and, as I have stated, points to his contention that there has been a failure by UAP to agree to its staff receiving proper training. This is an interlocutory application. Accordingly, I make no findings about these allegations and responses to them, but note the ambit of those allegations.
It is next necessary to identify the contract between UAP and perhaps Bundy Enterprises which is described in affidavits as the second plaintiff but is yet to be joined as a plaintiff, although I will refer to it and UAP as the plaintiffs. Bundy Enterprises is one of a group of companies controlled by the Saraceno family. Ms Saraceno says that it operates as the central management entity that supplies the Saraceno Group with goods and services. His Honour in granting the ex parte injunction was told that it was a subsidiary. Its correct status was identified in Ms Saraceno’s affidavit of 16 July 2014.
The plaintiffs contend that in September 2012 they engaged the defendant to create, install and maintain the technical system that operates the car park, including the boom gate. Payment was to be $256,300 of which half has been paid and, as I understand it, the sum of $128,150 remains owing.
The plaintiffs’ case in respect of the contract is set out in paragraph 12 of Ms Saraceno’s affidavit, in which she says that in or about September 2013 Bundy Enterprises engaged the defendant to design, supply, commission and maintain an automated car park access control system, licence plate recognition system, and an ADVAM credit processing facility system. ADVAM provides card payment processors and clearing services. It is a separate company to the plaintiffs. Although Ms Saraceno’s affidavit refers to September 2013, it may have been intended to be a reference to September 2012.
In paragraph 15 Ms Saraceno states, “The provision of the system was governed by a document entitled ‘Lump Sum Subcontract’ dated 27 September 2012. Although the Agreement was not formally executed by the parties, its terms have governed the relationship between the parties”. That is the case that was put to His Honour on the evening of Monday 14 July 2014.
The Lump Sum Subcontract is headed with the name “Bundy Enterprises Pty Ltd”. It says that the subcontract was made on 27 September 2012 between Bundy Enterprises and TMA. It states in a highlighted paragraph under that identification of parties the following:
The Design, Supply, Installation and Commissioning, Maintenance and Warranting of a Carpark Access Control System and Licence Plate Recognition System and ADVAM Credit Card Processing facility (including PCI Compliant Cisco Security Router) complete with all necessary software and operator training as set out in TMA’s letter dated 26 September 2012 and ADVAM’s letter dated 27 September 2012.
That document was not signed. It is a lengthy document, it includes, for instance, Clause 31 dealing with progress claims which is in a form often found in building contracts. It requires a statement relating to a breakup of the Subcontract Sum, a percentage complete figure for the Subcontract Works claimed, and a statutory declaration about payment of subcontractor entitlements and workplace entitlements.
It was put to His Honour that the Lump Sum Subcontract contained the understanding of the parties as to the terms on which the work was carried out. What was not put to His Honour was that TMA arguably did not accept that that document contained the terms of the relationship between the parties. That is clear enough from the affidavit of Gary Byrne, who is now TMA’s National Sales Manager in Australia and the Philippines but, at the relevant time, held the position of Sales Executive – Equipment.
He states in his affidavit that the agreement between the parties was, in effect, embodied in a letter of 24 September 2012, and that on 11 October 2012 he received an email from Ms Saraceno attaching the Lump Sum Subcontract, stating, “I have attached our subcontract for signing. Let me know a suitable time next week to finalize all outstanding issues, including the maintenance contract”.
Mr Byrne states he had not seen the Lump Sum Subcontract previously and that there had been no previous discussion about it. He points to the description of the scope of the work contained in the Lump Sum Subcontract and in particular to the reference to the ADVAM credit card processing facility. He states that that was contrary to all his previous discussions with UAP and that other than installing the credit card readers, the arrangements between UAP and ADVAM were separate to the arrangements between TMA and UAP. He states in addition that before receiving this email there had never been any discussion about TMA contracting with Bundy Enterprises rather than UAP.
Mr Byrne says that he then sent an email on 22 November 2012 responding to Ms Saraceno’s email. In his email he wrote:
There has been some discussion with TMA because to Mosstyn [Mosstyn Howell was UAP’s Sales Director] and I were a little surprised to receive a contract. We [thought] that this was the reason why we signed and redid the proposal under your terms with a handshake? In addition, the contract places Advam and your agreement under us. While we are assisting you to coordinate and in effect project managing the installation and hardware for the Credit Card solution, the Agreement for the setup, configuration, software, keyloading, router, ongoing charges etc which all formed part of the Advam proposal are part of an agreement between your two parties. This gives you the freedom to negotiate your own rates and conditions while TMA stays impartial. This is particularly true with EMV (which relates to various credit cards), as the readers go straight back to Advam and we are not in control of the transactions and your credit card reporting at all.
Mr Byrne and Mr Karam contend that the agreement between UAP and their company TMA was set out in a letter dated 24 September 2012, which is headed, “Re: Proposal for Scheidt & Bachmann Parking Systems for United Airport Parking”. Scheidt & Bachmann is the name of the particular parking system that was to be installed. That letter contains a proposal which describes the equipment that may be installed as including items such as the barrier, entry station, exit station and management systems. It then contains signatures of representatives of the parties, or as I understand it some of them, and provided for payment terms of 50 per cent of the payment on commencement, 50 per cent on practical completion, and six per cent being a guarantee of the total price of $233,000.
That letter was subsequently responded to by an email the following day from Ms Saraceno addressed, as I understand it, to TMA, stating in part, “Good afternoon, Gentlemen, Thank you for your time yesterday. It was a great outcome for both parties. As promised I have attached a copy of the signed document. Gary, I look to you for guidance with Advam and DPS”.
There was a further version of TMA’s letter of 24 September 2012 sent by TMA on 26 September 2012. It was in substantially similar terms.
The letter of 24 September 2012 was not put before His Honour.
In Ms Saraceno’s affidavit of 16 July 2014 she again stated that the agreement was in the Lump Sum Subcontract, and again makes no reference to the letter of 24 September 2012. No explanation has been given to the court as to why no reference was made before His Honour to the letters from TMA to which I have referred.
Another matter raised by UAP is that it alleges that TMA has had unlawful access to the parking system. UAP alleges that in May 2014 the plaintiffs agreed with the defendant that it would not access the parking system without first giving the plaintiffs notice and obtaining their permission. UAP alleges that TMA has had unlawful access to the parking system this month. The basis of the allegations is set out in the affidavits of Ms Saraceno and of Ms Kathryn Howard.
TMA’s solicitors responded to these allegations in a letter of 17 July 2014 that was tendered as Exhibit 1. The letter states in effect that TMA has accessed UAP’s system in order to provide support services and to comply with the mandatory injunction granted against it on 14 July 2014. The access was obtained, inter alia, by a licence plate recognition system subcontractor, Sensor Dynamics, which it asked to obtain UAP’s consent. It says that it has not taken any steps to cause UAP’s parking system to malfunction or not to function correctly.
TMA’s solicitor’s letter also denies the allegations that it has locked out the Saraceno accounts, and responds to allegations that it has deleted files.
I have mentioned ADVAM but a little more needs to be said about its role. TMA says that it on-sells the ADVAM credit card readers which are generally sold as part of the parking system. But TMA does not provide the integration, configuration and ongoing credit card payment clearance services. Those services are configured by ADVAM according to an independent agreement.
Mr Byrne states that TMA also installed the credit card payment readers which were supplied by ADVAM. However, once TMA provided ADVAM’s proposal to UAP by Mr Byrne’s email of 28 September 2012, TMA had no further involvement with the arrangements between UAP and ADVAM. TMA was informed by ADVAM in February 2013 that it would be supplying the credit card readers. They were subsequently supplied by ADVAM and installed by TMA. TMA has no control over the credit card processing and client services provided by ADVAM to UAP.
No affidavits have been filed by the plaintiffs to contradict TMA’s account of the role of ADVAM.
The defendant made a number of allegations that UAP had not disclosed material facts to Justice T. Forrest who granted the ex parte injunction. His Honour was informed by counsel for UAP, “I’m instructed that that document (being the Lump Sum Subcontract) was never executed but all of the parties proceeded on the basis that that governed the arrangement between them and in accordance with the subcontract, the system was designed and installed”.
There was also a reference by counsel to the payment terms being 50 per cent on delivery and 50 per cent on completion, rather than practical completion. His Honour was informed that the system was not working. He was told that the defendant had threatened to shut down the system, and so the car park would have to operate manually. UAP submitted that damages were not an adequate remedy.
Upon the return of the interlocutory injunction before me on Thursday 17 July 2014, counsel for the defendant referred to the matters I have just mentioned. They also referred to the fact that the first plaintiff failed to disclose that ADVAM and its credit card processing facility are separate to the arrangement between the first plaintiff and the defendant, and that the defendant is not a party to the arrangement between the first plaintiff and ADVAM.
Counsel for the defendant also submitted that another matter of material non-disclosure was the first plaintiff’s suggestion that it would suffer prejudice because of the chaotic environment at the car park if the parking system was shut down. He submitted that this suggestion was at odds with the defendant’s proposition, that in its 20 years of operation the first plaintiff would have had experience in manual operation of the car park. He also referred to UAP’s breach of the undertaking given to the court that it would issue a writ. Again, no proper explanation of why that did not occur has been provided to the court.
Following from the submissions that I have noted, the defendant submitted that it would have been entitled to have the interlocutory injunction set aside because of the failure to disclose material facts, but that because of the realities of the chronology of the litigation, and the fact that an application for a further injunction was before the court, that was not a practical consideration.
The plaintiffs have filed an amended summons which contains the proposed orders that they seek. It seeks orders that the defendant be restrained from taking any step that causes to be shut down, otherwise renders inoperable by the plaintiffs, prevents the access of any servant or agents of the plaintiffs to or interferes with the proper operation of the access control system and licence plate recognition system and ADVAM credit card processing facility (including PCI Compliant Cisco Security Router) at the United Airport Carpark at Trade Park Drive in Tullamarine.
I do consider that there was a failure to disclose material facts to His Honour. The material before me does not enable me to attribute responsibility for that failure. It certainly seems it was not in any way attributable to counsel who, from the transcript, seems to have been particularly aware of his obligation to disclose material facts to His Honour.[1] The defendant disavowed any suggestion that counsel or the solicitors for the plaintiffs bore responsibility for the non-disclosure of material facts.
[1]The plaintiff’s counsel on 14 July 2014 was not the same counsel who appeared for both plaintiffs on 17 July 2014.
However, it was the fact that the defendant disputed, and should have been known by UAP to dispute, that the Lump Sum Subcontract was the governing agreement between the parties. That is apparent enough from the material that I have already referred to. There is also the defendant’s contention that the documents dated 24 September 2012 were the relevant documents. Under their terms, the balance of the purchase price was due only on practical completion. His Honour was not told of the separate contractual relationship between UAP and ADVAM.
I accept, of course, that inadvertent errors can occur on the run, particularly when urgent applications are being made, even when parties are aware of the need to disclose matters to the court. But, in this matter two days later, on 16 July 2014, Ms Saraceno made an affidavit which substantially repeated a number of matters made to His Honour, save that the fact that Bundy Enterprises was a member of the group, and not a subsidiary, was disclosed.
Each of the matters I have mentioned may have influenced in whole or in part His Honour’s consideration of whether to grant the interlocutory injunction. They were material matters. As I have said, no proper explanation has been provided to the court for the failure to disclose these matters. Nor has there been a proper explanation of the failure to comply with the undertaking to issue a writ. Instead, an originating motion was issued, and that would not have required, without further order, the pleading of the contract that UAP relied on.
I accept counsel for the defendant’s submissions that in the normal course, and if time had permitted, the defendant would have been entitled to have the interlocutory injunction set aside or discharged. However, the plaintiffs have now applied for a new injunction. The authorities suggest that even though an original interlocutory injunction has been obtained by the failure to disclose material facts the court can still consider and grant, if so satisfied, a new interlocutory injunction.[2]
[2]Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 at 681-683 and Town & Country Sports Resorts (Holdings) Pty Ltd v Partnership Pacific Limited (1988) 20 FCR 540 at 543.
The failure to disclose material facts is of course relevant to costs of the proceeding before the court and, as was pointed out by counsel for the defendant, to the weight that I should give to the material filed by the plaintiffs to obtain a new interlocutory injunction.
The plaintiffs must satisfy the court that there is a serious question to be tried as to their entitlement to relief, and show to the court that they are likely to suffer injury for which damages will not be an adequate remedy. They also have to establish that the balance of convenience favours the granting of an injunction.[3]
[3]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 68 [19].
I consider that while taking a cautious approach to the plaintiffs’ evidence, the combination of the plaintiffs’ and the defendant’s material does establish an arguable case that the defendant has threatened to take action in respect of the parking system that it is not entitled to take. I consider that that proposition, at an interlocutory level, is established by the paragraph of Mr Karam’s affidavit justifying the shutting down of the UAP parking system, that I set out at the commencement of my reasons.
Mr Karam’s contention was that the licence sets up an expiry date so that when that date passes the licence automatically expires and the software and management system will cease operating. No provision of any document was put to me to support that proposition. There is no suggestion, as I have read the documents, that the software that activated the parking system was only to be awarded under a licence. It was put by counsel that, really, what Mr Karam meant was that UAP was receiving the parking system for a fixed period and that was all. But I was not taken to any part of the documents to justify that conclusion.
The significance of the date of 15 July 2014, when the threat was made to close down the system, was not apparent.
I therefore consider that the plaintiffs have established an arguable case that the defendant has no right to shut down the system.
On the other hand, I am not persuaded that the plaintiffs have established an arguable case that the defendant has unlawfully accessed the system. I do not consider that the evidence to which I have referred justifies that conclusion.
I then turn to questions of adequacy of damages and balance of convenience. In the usual commercial case, a breach of contract is compensated by an award of damages. This case in many respects is a common case where allegations about the practical completion of work have to be determined, but cannot be determined on an interlocutory application. It is the sort of case, bearing in mind the amount of money involved and the likely costs that will be incurred, that should be the subject of mediation as soon as possible, a matter that I will raise with the parties shortly. The plaintiffs point to what they allege is the chaotic and unpredictable situation that will arise at their airport car park if the parking system is shut down. They also refer to the competitive environment for car parking at the airport and the reputational damage that they will suffer with their customers, many of whom, presumably, have ongoing contracts with UAP to access car parking spaces. They have also offered to pay the balance of the moneys alleged to be owing into court.
The defendant disputes these matters and says that the plaintiffs could undertake manual operation of the car park. It points out that courts are well versed in assessing damages and loss of goodwill, which are readily quantifiable in respect of a company that has been in operation for 20 years.
I have considered these competing arguments, and taken into account UAP’s failure to disclose material matters. However, I have decided that, subject to the plaintiffs giving the usual undertaking as to damages and paying the sum disputed into court, the balance of convenience favours the grant of a further interlocutory injunction.
I have reached that conclusion for the following reasons. The plaintiffs’ risk of reputational damage if unable to operate an automated car park has to be considered in the context of the effect on third parties of the shutdown of the automated features of the car park. As I have mentioned, many of those third parties would appear to have contracts with the plaintiffs. The figures put before the court by the plaintiffs show that 50 per cent are corporate clients, 16 per cent have a connection with an adjoining hotel that leases car parking spaces from UAP, five per cent are UAP clients of that adjoining hotel, one per cent are employees of Bankwest, and the rest seem to be casual customers.
Those customers no doubt expect an automated parking system rather than a slower and more cumbersome manual system. Speed and accessibility to the car park are likely to be particularly important with airport parking. Those third parties are not before the court, and I consider the matter primarily by reference to the arguments that the parties have advanced concerning the plaintiffs’ claims of reputational damage. But in considering the award of an interlocutory injunction the relationship between the plaintiffs and their customers, that I have mentioned, is of at least some importance.
The assessment of damages would be more complicated in this case because an assessment would be required not just of the value of lost customers, or the value of lost tickets or charges to be awarded in respect of those customers, but also of damages that might be recovered by customers under their contractual rights against UAP.
I do consider that the plaintiffs should pay the amount in dispute, which seems to be $128,150, into court to abide the outcome of the proceedings. That is a course sometimes followed as a price for obtaining an interlocutory injunction. It is appropriate in this case, which in large part involves whether TMA has any obligation to further complete the system when, as it points out, it has been used for over 12 months and has apparently earned substantial parking fees for UAP.
On the material before me, I do not consider that the interlocutory injunction I propose to issue should make reference to ADVAM’s equipment or any obligation on the defendant to maintain or not interfere with that equipment. I have already referred to the evidence before me that TMA is not involved with that equipment and has no control over the credit card processing and clearing services. There is no evidence to the contrary and I do not consider that in those circumstances the court should make assumptions which are not based on matters in affidavits.
It is important that a mediation should be undertaken as soon as possible, otherwise the costs of the litigation will dwarf the matters in dispute.
I need to hear the parties as to the joinder of Bundy Enterprises, and I need to receive an undertaking as to damages from counsel for the plaintiffs as to payment of the sum into court.
Subject to hearing anything further from counsel, the interlocutory injunction I would propose to award would be in the terms of the amended summons, save that it would not include the words at the top of p.2 of the summons, appearing after the conjunction “and”, and down to the end of the parenthesis, “referring to, (including PCI Compliant Cisco Security Router)”. So, the part that refers to the ADVAM facility would be deleted.
I would propose to require that a defence be filed within seven days and that a mediation be conducted thereafter within 14 days. If the mediation fails the case will have to go to the Listing Associate Justice for further directions.
I will hear submissions about costs. For the reasons I have given in respect of the failure to disclose material matters to the court my provisional view, which is by no means final and is subject to submissions, is that the court should make orders in respect of costs that take account of that failure. Again, expressing a provisional approach, the court should not fail to attach consequences to the non-disclosure, or leave its consequences for another judge to determine.
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