University Co-operative Bookshop Limited ARBN 009 937 160 v University of New South Wales

[1997] FCA 510

CATCHWORDS

INJUNCTIONS  -  interlocutory injunction  -  exercise of discretion to grant injunction  -  delay in prosecuting application.

Trade Practices Act 1974 (Cth) s 52

Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Limited (1987) 76 ALR 633

UNIVERSITY CO-OPERATIVE BOOKSHOP LIMITED
ARBN 009 937 160               v
UNIVERSITY OF NEW SOUTH WALES & ANOR

NG20 OF 1997

CORAM:      BRANSON J
PLACE:         SYDNEY
DATE:           12 JUNE 1997

IN THE FEDERAL COURT OF AUSTRALIA     )
NEW SOUTH WALES DISTRICT REGISTRY    )          No. NG 20 of 1997
GENERAL DIVISION  )

BETWEEN:              UNIVERSITY CO-OPERATIVE
  BOOKSHOP LIMITED
  ARBN 009 937 160
  Applicant

AND:  UNIVERSITY OF NEW SOUTH WALES
  First Respondent

UNIVERSITY OF NEW SOUTH WALES
  PRESS LIMITED
  Second Respondent

CORAM:      BRANSON J
PLACE:         SYDNEY
DATE:           12 JUNE 1997

REASONS FOR DECISION

APPLICATION

Pursuant to a direction of a judge of the Court made on 2 June 1997, the applicant moved the Court on 5 June 1997 for interlocutory relief as follows:

“2.       Until final determination of these proceedings or further order, the First Respondent be restrained from acting upon or giving effect to its decision that the First Respondent operate and the Second Respondent have a right to manage, or alternatively that the Second Respondent have the right to operate, the bookshop at the Kensington campus of the First Respondent (‘the Bookshop’).

3.Until final determination of these proceedings or further order, the First Respondent be restrained from taking any steps to require the Applicant to vacate the Bookshop.

4.Alternatively, until final determination of these proceedings or further order, the First Respondent be restrained from granting any leave, licence or other rights of occupation to the Second Respondent and/or to any person other than the Applicant in respect of the Bookshop.”

BACKGROUND

The background to this application may be summarised as follows.

By a deed made on 1 August 1991 between the applicant and the first respondent, the first respondent granted to the applicant the right to use certain premises on the Kensington campus of the first respondent for the purpose of selling by retail books, magazines, periodicals and teaching notes to students and staff of the first respondent during the term specified by the deed.  Such term, as subsequently extended pursuant to the deed, will expire on 30 June 1997.

In late August and early September 1996 the first respondent placed an advertisement (“the advertisement”) in various newspapers in Australia in the following terms:

“EXPRESSIONS OF INTEREST
   for the Provision of a Bookshop
  on Kensington Campus

The University of New South Wales seeks Expressions of Interest from appropriate individuals/organisations for the provision of a Bookshop on its Kensington Campus from 1 July 1997.

The Kensington Campus which is the main campus of the University has a population of approximately 31,500 full-time and part-time staff and students.

Currently a bookshop operates on campus and is located within the Quadrangle Building on mid Campus.  The area is air-conditioned and has an area of approximately 418m².

The suitability of individuals/organisations will be assessed against the following criteria:

1.ability to meet the University’s service requirement.

2.ability to demonstrate experience in the provision of a bookshop and/or related services

3.ability to liaise and co-operate with University administration

In addition individuals/organisations submitting expressions of interest should indicate:

.          rent which is proposed
           .          range of services proposed
           .          nature/style of any fitout envisaged

Responses addressing the criteria, should be forwarded by Wednesday 18 September 1996 to Mr Robert Noble, Manager Finance & Property, University of New South Wales, Sydney NSW 2052.

Enquiries may be directed to Mr R Noble on [phone] before the closing date.”

During September 1996 the first respondent appointed a committee (“the committee”) to consider on its behalf the expressions of interest lodged in response to the advertisement and to make recommendations to it concerning such expressions of interest.

The applicant and others responded to the invitation to submit expressions of interest as sought by the advertisement.

On 18 October 1996 the committee met to consider the expressions of interest received in response to the advertisement.  The notes of the meeting include the following paragraph:

“Co-op Bookshop

There was extensive discussion about the performance of the Co-Op Bookshop.  The Committee felt the type of service it provides does not meet that desired by UNSW.  Despite the fact that they had been informed on a number of occasions about their performance there has been no real change.  There was also some disquiet about the actual discounts being offered.  After considering this information the Committee did not believe the Co-Op had the capacity to change and was therefore discounted.”

The Committee at its meeting of 18 October 1996 decided to seek additional responses on nominated issues from two parties who had submitted expressions of interest.  The second respondent was one such party.  The other was Kundabung Holdings Pty Ltd.

On 15 November 1996 the committee again met.  It had before it on that day the additional responses which it had sought.  It agreed unanimously that the “offer” from Kundabung Holdings Pty Ltd was superior to that of the second respondent.  It recommended that the first respondent enter into an agreement with Kundabung Holdings Pty Ltd for the lease of the bookshop on the Kensington campus of the first respondent (“the bookshop”).

On 9 January 1997 the applicant commenced this proceeding against the first respondent. The statement of claim filed on that day alleged first, breach of an equitable obligation of confidence concerning certain commercial information provided by the applicant to the first respondent, secondly, breach of natural justice and thirdly, misleading and deceptive conduct contrary to s52 of the Trade Practices Act 1974 (Cth) (“the Trade Practices Act”). The statement of claim pleaded that the applicant at the time that it submitted its expression of interest held a legitimate expectation that, in effect, its expression of interest would be given equal consideration with other such expressions of interest submitted in response to the advertisement and that it would be assessed in the light of the criteria identified in the advertisement. The allegation of a breach of s52 of the Trade Practices Act was based upon the allegation that certain representations had been made by the first respondent when it placed the advertisement. Such representations were pleaded in terms which accorded with the pleaded legitimate expectation of the applicant. The statement of claim alleged that the first respondent failed to act in accord with such representations.

On 10 March 1997 Kundabung Holdings Pty Ltd advised the first respondent that it would not proceed with its proposal to operate the bookshop.

On 17 March 1997 the first respondent determined as follows:

“That UNSW rebadge the bookshop on the Kensington Campus as the ‘UNSW Bookshop’ and that UNSW Press be offered a contract to operate the bookshop until November 1999, when, if both parties believe the operation has been successful, negotiations for a further lease should proceed.”

On 27 March 1997 revised heads of agreement between the first respondent and the second respondent were signed pursuant to which the second respondent agreed to operate the bookshop as manager for the University for an initial period to run until 30 November 1999.  The heads of agreement record “the goal that the UNSW Bookshop will open at the latest by 28th July, and preferably by 21st July”.  The heads of agreement record that the first respondent  “will provide campus office space for 3 people from 1st April until 31 July”, and that the first respondent will fund the fitting and furnishing of the bookshop to a maximum cost of $200,000 and equip the bookshop with appropriate equipment to a maximum cost of $140,000.

On 27 March 1997 the first respondent issued a press release announcing the selection of the second respondent to operate the bookshop.

On 24 April 1997 the applicant filed an amended application and an amended statement of claim in this proceeding which joined the second respondent as a party to the proceeding. The amended statement of claim alleges a denial of procedural fairness and natural justice in respect of the consideration by the first respondent of the expressions of interest and the decision to enter into an agreement with the second respondent pursuant to which the second respondent is to manage the bookshop on behalf of the first respondent. It further alleges that the decision of the first respondent of March 1997 to offer a contract to the second respondent to operate the bookshop until November 1999 was a decision that no reasonable person could have reached having regard to the criteria contained in the advertisement calling for expressions of interest. The amended statement of claim, as further amended pursuant to leave granted on 5 June 1997, further asserts that upon the applicant submitting its expression of interest a contract came into existence between the applicant and the first respondent which included terms that the applicant would be accorded procedural fairness and natural justice in the process of the consideration of its expression of interest and that the applicant would be permitted to remain in occupation of the bookshop until the first respondent had completed such process and the applicant had not been chosen to operate the bookshop. The amended statement of claim also contains allegations of misleading and deceptive conduct contrary to s52 of the Trade Practices Act and breach of an equitable obligation of confidence in respect of certain commercial information.

By the amended application filed on 24 April 1997 the applicant claimed interlocutory relief restraining the applicant from, amongst other things, permitting the second respondent or any person other than the applicant, to operate, conduct or manage the bookshop.

In the meantime correspondence had been exchanged between the applicant and the second respondent touching on the possibility that the applicant would seek interlocutory relief of the kind now sought.  By letter dated 5 December 1996, addressed to the Vice-Chancellor of the first respondent, the then solicitors for the applicant sought certain undertakings from the first respondent.  The letter concluded:

“Should we not have a satisfactory response from you by 4.00 pm Friday, 6 December 1996 our client will take further advice in relation to approaching the Supreme Court for an injunction, damages and costs.”

By letter dated 27 March 1997 from the solicitors for the applicant to the solicitors for the respondent, the solicitors for the applicant advised:

“Our client is extremely concerned at the course of events, and the press release in particular, and is giving serious consideration to amending its application to seek injunctive relief against your client and the University of New South Wales Press because of the nature of the selection process and the fact that it received confidential financial information and obtained a springboard or unfair advantage in relation to other parties.  We are presently seeking advice from senior counsel in relation to this matter.”

A letter dated 8 April 1997 from the solicitors for the first respondent to the solicitors for the applicant concluded with the following paragraph:

“If your client considers itself entitled to any interlocutory relief then it should pursue its application for that relief without delay.  ...  [O]ur client will be relying upon your client’s delay in making an interlocutory injunction application as a ground for submitting that the Court’s discretion to grant any such relief should not be exercised.”

A letter dated 11 April 1997 again from the solicitors for the first respondent to the solicitors for the applicant contained the following paragraph:

“Whether or not you propose on next Tuesday to seek leave to amend your client’s Application our client remains seriously concerned at your client’s continuing failure to prosecute its alleged entitlement to interlocutory injunctive relief.”

In their response dated 14 April 1997 to the letter of 8 April 1997 referred to above, the solicitors for the applicant commented as follows on the issue of interlocutory relief:

“3.       In the circumstances, we agree that it will be necessary either for an application for interlocutory relief to be heard before 1 July 1997 or for there to be an early final Hearing prior to this date.  Our client will proceed with these matters as soon as possible but it is not appropriate to seek an urgent Hearing at this stage until a number of issues have been resolved including the outstanding discovery issue, the issue of confidentiality of documents and the fact that there has been no discovery of relevant documents relating to the appointment of University Press Limited as announced on 27 March 1997.  Please arrange to produce for our inspection as a matter of urgency all documents relating to the selection and appointment of University Press Limited.

4.Our client has proposed a sensible interim regime to remove the undue pressure upon our respective clients resulting from the 1 July 1997 deadline.  That is, without prejudice to your client’s rights, our client conducts the Bookshop until 31 December 1997.  We fail to see how your client would be prejudiced by that arrangement and, in any event, we would have thought that a changeover at the end of the year would be less disruptive to staff and students than a changeover in the middle of the year.

5.We fail to see the relevance of correspondence between our client’s former solicitors and your firm, in circumstances where any interlocutory relief would concern the new decision by your client about which we have just received notice.”

At a directions hearing before Lindgren J on 15 April 1997 counsel for the first respondent “put on the record” the fact that his client would place reliance on delay in opposition to any claim that the applicant might make for interlocutory relief.

A letter dated 23 April 1997 from the solicitors for the first respondent to the solicitors for the applicant contains the following paragraphs:

“We refer to our letter of 8 April 1997, enclosing a copy letter dated 10 February 1997 and sent to your client’s former solicitors (Eakin McCaffery Cox).  We enclose a further copy of those letters.

In each of those letters, we expressed our client’s concern for a smooth transition in the use of the Campus bookshop premises, upon the expiry of your client’s licence to occupy them on 30 June 1997.

In our letter dated 10 February 1997, Eakin McCaffery Cox was asked to obtain instructions from your client regarding a meeting to arrange the smooth transfer in the operation of the bookshop.  As you are aware from our 8 April 1997 letter, our client has been making preparations for this transfer.  In the same letter, you were specifically advised that your client’s foreshadowed interlocutory relief would, if granted, cause disruption to both staff and students, and cause significant loss and damage to our client.  We also advised that we intended to rely upon your client’s delay in the event that you sought such injunctive relief.

Please obtain instructions and reply to the above letters as soon as possible.

By letter dated 27 May 1997 the solicitors for the respondents (the second respondent had now been joined in the proceeding) challenged the bona fides of the applicant’s claim for interlocutory relief and advised as follows:

“So that there may be no doubt, our client does not consent to your client’s continued occupation of the premises it presently occupies after the expiration of the licence.  ...

As we have made clear in correspondence and at directions hearing, our client is proceeding to undertake all necessary steps to ensure that it is able to open a bookshop on 1 July 1997.  Our client, through its agent UNSW Press, is incurring substantial expense by way of hiring of staff, purchase of computer equipment, the letting of contracts for shop fitouts and arrangements being made for the purchase of stock.”

In a reply to the above letter bearing the same date the solicitors for the applicant advised, amongst other things, that -

“5.       It has always been our client’s position that it will comply with its legal obligations.  At present, that means that it would deliver vacant possession of the bookshop to your client on 30 June 1997 unless it is permitted to remain by an order from the Court, or by reaching an agreement with your client.  ....

6.We note your claim that your client and the UNSW Press are making preparation for the conduct of the bookshop from 1 July 1997.  If so, that would be a commercial decision which is entirely a matter for them.  However, you will no doubt have advised them that any such preparation made in the face of the final relief claimed in our client’s Application is entirely at their own risk: see, for example, Day v Pinglen Pty Limited (1981) 148 CLR 289.

7.Your letter of 27 May 1997 again refutes the offer made by our client to remain in possession of the premises until the present proceedings are resolved, without prejudice to the rights of either party.  There is, in our view, a compelling case for your client as a publicly accountable institution to accept such an offer in the interests of the members of, and stakeholders in, UNSW.”

Reasons in support of this final expression of view were set out in the letter.

On 2 June 1997 Lindgren J granted leave to the applicant to file and serve a notice of motion seeking interlocutory relief and stood over the applicant’s motion for an expedited hearing to the date fixed for hearing the motion for interlocutory relief.

HEARING ON 5 JUNE 1997

The motion for interlocutory relief came on for hearing before me on 5 June 1997.  Having at the close of argument formed a firm view that such interlocutory relief should be refused, I considered that it was in the interests of the parties to so advise them immediately and I did so.  These are my reasons for so deciding.

REASONS FOR REFUSAL OF INTERLOCUTORY RELIEF

As the Full Court of this Court pointed out in Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Limited (1987) 76 ALR 633 at 638:

“The grant of injunctive relief, interim or final, is, of course, discretionary.  Delay by an applicant in instituting or prosecuting a claim for an injunction may be a ground for refusing relief, even at a final hearing.  Where an interim injunction is sought on the basis that the applicant need show only a ‘serious’ question of fact or of law, delay in seeking that relief is an important discretionary consideration: see Meagher, Gummow and Lehane, Equity - Doctrines and Remedies, 2nd ed, para 3606, p 758.”

Although the applicant in this case foreshadowed the possibility of an application for interlocutory relief as early as 5 December 1996 and amended its application on 24 April 1997 to claim such relief, it did not commit itself to prosecuting such claim until 2 June 1997; that is, only 4 weeks before the expiration of the term of its licence to operate the bookshop.

By 2 June 1997 the respondents had considerably advanced the implementation of the heads of agreement which they had signed for the second respondent to operate the bookshop as manager for the first respondent.  As part of this process four permanent staff and a consultant have been employed in preparation for the opening of the bookshop.  Orders for the purchase of books have been placed, although it appears that it may be possible to cancel such orders.

It is not controversial, as I understand it, that the opening weeks of the second semester (i.e. the weeks up to the end of August 1997) may be expected to be weeks of high sales at the bookshop and that thereafter sales in 1997 may be expected to drop dramatically.  The respondents have formulated a budget for the bookshop which is based on the assumption that they will be operating the bookshop during the opening weeks of the second semester of 1997.  Their financial planning will be disrupted should they be unable to operate the bookshop during the opening weeks of the second semester but obtain possession of the bookshop later in the semester. 

As is mentioned above, it is the case of the applicant that upon the applicant submitting its expression of interest in response to the advertisement, a contract came into existence between it and the first respondent a term of which was that it would be entitled to remain in occupation of the bookshop until the process notified by the advertisement had been completed and the applicant had not been chosen to operate the bookshop.  This allegation must be seen as crucial to the applicant’s claim for interlocutory relief.  Absent this asserted contractual term, the applicant has no entitlement to remain in occupation of the bookshop after 30 June 1997.  If it were necessary for me to be satisfied that there is a serious question to be tried as to the existence of this asserted contractual term, I would have difficulty in being so satisfied.  If the applicant cannot establish a serious question to be tried as to its right to remain in occupation of the bookshop, the balance of convenience would not, in my view, favour the making of orders which could effectively prevent the operation of a bookshop on the first respondent’s Kensington campus.

However, I prefer to base my decision in this matter on another ground.  In the particular circumstances of this case, which concerns the right to occupy premises after 30 June 1997, I consider that the applicant’s delay in prosecuting its claim for interlocutory relief from at least late March until 2 June 1997 has been insufficiently explained.  The applicant had foreshadowed a claim for interlocutory relief as early as December 1996 and it made the claim for interlocutory relief by its amended application filed on 24 April 1997.  In view of the bases upon which the applicant’s claim has been formulated, it is not clear why issues concerning discovery were regarded as preventing the applicant from prosecuting this claim for interlocutory relief.  Appropriate directions concerning such discovery as may have been relevant to a motion for interlocutory relief could have been sought as part of the management of the application for such relief.

It is my opinion that the applicant’s delay in prosecuting its claim for interlocutory relief is sufficient reason for the Court in the exercise of its discretion to decline to grant the relief sought.

I certify that this and the thirteen (13) preceding pages are a true copy of the Reasons for Decision of the Honourable Justice Branson.

Associate:

Date:

Counsel for the applicant:  Mr W.H. Nicholas QC with
  Mr T.D. Castle and Mr A.J. Bulley

Solicitors for the applicant:  Barker Gosling

Counsel for the respondents:  Mr P.G. Hely QC with
  Mr N.J. Williams and Mr T. Reilly

Solicitors for the respondents:              Kemp Strang & Chippindall

Date of hearing:  Thursday 5 June 1997