Werribee Football Club v Tattersalls Gaming Pty Ltd
[2005] VSC 144
•23 February 2005
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 4548 of 2005
| WERRIBEE FOOTBALL CLUB | Plaintiff |
| v | |
| TATTERSALLS GAMING PTY LTD | Defendant |
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JUDGE: | KAYE J. | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 22 February 2005 | |
DATE OF JUDGMENT: | 23 February 2005 | |
CASE MAY BE CITED AS: | Werribee Football Club v Tattersalls Gaming Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2005] VSC 144 | |
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INTERLOCUTORY INJUNCTION – Interlocutory relief achieves principal final relief in proceedings – Onus on plaintiff to show more than a serious issue to be tried – Agreement to agree – Estoppel – Balance of convenience.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W.T. Houghton, Q.C. with Ms S.L. Hinchey | Bazzani Brand Lawyers |
| For the Defendant | Mr A.J. Kelly | Minter Ellison |
HIS HONOUR:
This is an application by the plaintiff for an interlocutory injunction. The plaintiff is the proprietor of the Werribee Football Club. That club is a non-profit organisation providing sporting, social and function facilities at its venue at Hoppers Crossing. The venue is called “the Tigers Club House”. It has some 1200 members.
The defendant is one of two organisations licensed in Victoria to install and operate electronic gaming machines in hotels and clubs. Tabcorp Limited is the other licensed organisation.
On 7 February 2000, the plaintiff and the defendant entered into a Venue Operator’s Agreement. Under that agreement, the plaintiff agreed to make its premises available, and the defendant agreed to install at those premises, a number of electronic gaming machines. Clause 2.1 combined with Item 3 of Schedule A of the agreement provided that the term of the agreement was for five years, terminating on 7 February 2005, unless extended by written agreement. Clause 13 of the agreement provided that upon expiration of the Venue Operator’s Agreement, the defendant must remove all property owned by it which was installed during the term of the agreement.
The number of machines which might be installed at a particular venue is subject to the approval of the Casino and Gaming Authority. Pursuant to the agreement between the plaintiff and the defendant, 35 electronic gaming machines were installed at the premises. The plaintiff’s Venue Operator’s licence authorised it to have that number of machines at its premises.
On 14 October 2002, the defendant sent to the plaintiff a letter entitled “Werribee Football Club Venue Operator’s Agreement request for additional gaming machines.” The letter commenced as follows:
“I refer to recent meetings and discussions between Michael Klein and Garry Carter of Tattersalls, and Bruce Montgomery and John Kerr, in which the supply of further gaming machines to your venue was requested. The request was recently considered by Tattersalls Venue Selection Committee. I am pleased to inform you that the committee has approved the supply of ten further gaming machines and the preparation of a social and economic impact submission. Also at this meeting, the committee agreed to offer the club a further term of three years to your current Venue Operator’s agreement which expires on 7 February 2005.”
The letter then proceeded to state that Tattersalls approval for the supply of ten further gaming machines was subject to seven conditions which were each specified in the letter. The letter then proceeded as follows:
“Tattersalls has recently redrafted its Venue Operator’s agreement and is seeking approval from the Victorian Casino & Gaming Authority. There are various changes, with the main change to the agreement being the removal of all comparative turnover criteria or performance measurement. As such the offer, as outlined above, is also subject to the Venue Operator’s Agreement being approved by the VCGA. The VCGA is currently reviewing this new agreement. Tattersalls will be offering all venue operators who now sign a VCGA approved Venue Operator’s Agreement a machine mix that includes 15 per cent component of additional machines. Please be assured that this revision will apply across our entire network as agreements are renewed, so no venue operator will be at a disadvantage. If the Werribee Football Club Inc is prepared to accept the offer detailed in this letter, I would appreciate it if two authorised officers would indicate that acceptance by signing and dating the enclosed copy of this letter and returning it to Deborah Hicks within 14 days from the date of this letter.”
On the third page of the letter, after the Manager Network Liaison & Strategic Development of the defendant had signed, is then contained the words “for and on behalf of Werribee Football Inc I hereby agree and accept the offer set out above.” The letter is then dated. It was signed by two authorised officers of the plaintiff. Their signatures were witnessed, and the letter was returned to the defendant.
In these proceedings, the defendant contends that that letter constituted a binding agreement by the plaintiff to extend the term of the existing Venue Operator’s Agreement to 7 February 2008. On the other hand, the plaintiff contends that the letter does not constitute such a binding agreement, but at most it was an agreement to enter into a future agreement.
Subsequently, on 21 April 2004, the defendant sent to the plaintiff a further letter entitled “Werribee Football Club Venue Operator’s Agreement.” Again it is necessary to quote from that letter and I do so as follows:
“As you are aware, your Venue Operator’s Agreement is due to expire on 7 February 2005. I am pleased to inform you that at the recent meeting of Tattersalls Venue Selection Committee, Tattersalls management agreed to offer your venue an extended term and a new Venue Operator’s Agreement. As you would be aware, Tattersalls Gaming Pty Ltd has recently received approval from the Victorian Casino & Gaming Authority (VCGA) for our new Venue Operator’s Agreement pursuant to s.68 of the Gaming Machine Control Act 1991. The agreement will have a machine mix of 85 per cent core and 15 per cent additional machines. Please now find enclosed a Venue Operator’s Agreement in duplicate, to be executed where indicated by two authorised offers of Werribee Football Club Inc. Please ensure all the schedules in the agreements have been completed. Please note: 1) The commencement date of the new Venue Operator’s Agreement will be 26 April 2004, and the expiry date will be 7 February 2011; and, 2) The electronic gaming machine mix will comprise of 30 core and five additional, formerly known as provisional electronic gaming machines. I have also enclosed a deed of termination of Venue Operator’s Agreement in duplicate, the effect of which is to terminate your current Venue Operator’s Agreement. This document should also be executed where indicated by two authorised officers of Werribee Football Club Inc.”
That letter is relied upon in these proceedings by the plaintiff in support of its contention that the letter of 14 October 2002 was no more than an agreement to agree.
Mr Whitehouse has sworn an affidavit on behalf of the defendant which explains the sending of that letter. He states that the letter was one of a proforma bunch of letters taken from the computer and sent to some 189 venues to which Tattersalls supplied electronic gaming machines. Mr Whitehouse explains that the date referred to in the first sentence of the letter was simply taken from the existing Venue Operator’s Agreement, and by an oversight failed to take into account the date of the letter which the defendant had sent to the plaintiff dated 14 October 2002.
From October 2004 to December 2004, the plaintiff negotiated with Tabcorp Limited for the possible supply of electronic gaming machines and other gaming facilities for the plaintiff’s venue. Ultimately, and consequent upon those negotiations, the plaintiff decided to enter into a new agreement with Tabcorp and signed an agreement to that effect on 3 December 2004.
On 15 December 2004, the plaintiff notified the defendant by letter of its decision. In response, the plaintiff wrote a letter to the defendant contending that the letter of 14 October 2002 constituted a binding agreement between the parties. Further correspondence ensued between the parties in which the issue was hotly contested. In the course of that correspondence, the plaintiff requested the defendant to remove the machines on 7 February 2005 on the expiration of the agreement, and stated that if the defendant would not do so the plaintiff would resort to self-help and remove the machines and store them elsewhere.
To that letter the defendant responded by reiterating that the letter of 14 October 2002 was a binding agreement. The defendant contended that the removal by the plaintiff unilaterally of the machines not only constituted a contravention of the Gaming Control Act 1991, but might also constitute a criminal offence. Understandably, the plaintiff chose not to remove the machines after 7 February 2005 and they have remained at its premises.
In these proceedings, the plaintiff seeks by an interlocutory injunction an order that the defendant, pending the trial of this action or further order, remove the electronic machines pursuant to Clause 13 of the Venue Operator’s Agreement so that Tabcorp can, pursuant to the agreement between the plaintiff and the defendant, install 35 machines at the venue.
This is an application for an interlocutory injunction. In general, an applicant for such relief must at this preliminary stage show, firstly, that there is a serious question to be tried, and, secondly, that the balance of convenience weighs in favour of the grant of the interlocutory relief.
There was some debate before me whether in a case such as this the plaintiff must show more than simply a serious question to be tried. Mr Kelly, of counsel, who appeared for the defendant, contended that normally an interlocutory injunction is granted to preserve the status quo. On the other hand, here the grant of an injunction would alter the existing state of affairs by requiring the defendant to remove its machines from the venue. Further, Mr Kelly pointed out that if such interlocutory relief wa1s granted to the plaintiff, it would be tantamount to the grant of final relief in favour of the plaintiff.
In those circumstances, Mr Kelly referred me to the authorities which hold that where such relief at interlocutory level would effectively entitle the plaintiff to the final relief it seeks in the proceedings, a higher onus rests on the plaintiff and the plaintiff must show more than a serious issue to be tried. In particular, in such cases, the court does embark on an assessment of the merits and strength of the plaintiff’s case. I refer to the judgment of Gillard J in Hartleys Limited v Martin,[1] Cayne v Global Natural Resources Pty Ltd.[2]
[1][2002] VSC 301, especially at paragraphs 32 to 37.
[2][1984] 1 ALL E.R. at 255.
Mr Kelly also submitted that this is an application for an interlocutory mandatory injunction and that, accordingly, the plaintiff needed to show that there was a high level of assurance that it would succeed at trial. I was referred, amongst other cases, to the decision of Southwell J in Data Force Pty Ltd v Brambles Holdings Ltd.[3]
[3][1988] 1 VR 771 at 776.
This case is somewhat different to the cases in which interlocutory mandatory injunctions are sought and in which courts require satisfaction to a high level of assurance. In those cases, the plaintiff effectively seeks relief to enforce a contract. Often the effect of the relief sought at interlocutory level will be to ensure that the plaintiff and the defendant either continue in an ongoing relationship, or alternatively that the defendant carry out a number of acts which it may not be obliged to carry out.
Here, of course, the relief sought by the plaintiff is quite circumscribed. It simply involves the removal of machines. In the State of Queensland v AustralianTelecommunications Commission,[4] Gibbs J, as he then was, quoted with apparent approval a passage from Hallsbury Laws of England,[5] which suggested that if the act required to be performed by interlocutory mandatory injunction is a simple and summary one, then the onus resting on the shoulders of the plaintiff might not be as high as otherwise.
[4](1985) 59 ALR 243 at 245.
[5]Vol. 24 at p.948.
Further, it is true, in a sense, that if I grant interlocutory relief to the plaintiff in this case, the plaintiff will thereby achieve the principal final relief which it is seeking by writ in this action. In a practical sense, if the machines were to be removed now from the premises, the plaintiff would be free to complete and perform its contract with Tabcorp. In such a case, if in fact it were held at trial that the plaintiff is bound, or was bound by the terms of the letter it signed in 14 October 2002, the defendant would need to establish a claim for damages for breach of contract.
On the other hand, it must be borne in mind that if I were to deny the plaintiff an interlocutory injunction as sought by it, the plaintiff would thereby be precluded from performing its contract with Tabcorp. In practical terms, that would force the plaintiff either to contract with the defendant, or to enter into some relationship with the defendant in order that electronic gaming machines be operated at its venue. If, at trial, the plaintiff’s contentions are upheld and the court were to hold that the letter of 14 October 2002 is not a binding agreement, the plaintiff would then be confined to a claim for damages.
Thus, on either view of the case, in a practical sense, the determination of this application for an interlocutory injunction, will in all probability determine the question of whether the electronic gaming machines are to be removed from the premises or not. Nevertheless, I am mindful that if I do decide this application in favour of the plaintiff, such a decision will achieve for it, at interlocutory level, the principal relief which it seeks in a final form. In accordance with the authorities to which I have referred, it is therefore relevant for me, not only to determine whether the plaintiff has established that there is a serious issue to be tried, but also to perform, albeit at a preliminary stage of the case, some assessment of the potential strength of the plaintiff’s case on that issue.
The critical issue, of course, is whether the letter of 14 October 2002 is a binding agreement. As I have stated, the plaintiff submits that it is not a binding agreement, but rather an agreement to agree, thus bringing it within the third category of cases, described in the joint judgment of Sir Owen Dixon, CJ and McTiernan and Kitto JJ in Masters v Cameron.[6]
[6](1954) 91 C.L.R. 353 at 360.
Mr Houghton of Queens Counsel, who appeared on behalf of the plaintiff with Ms Hinchey, relied on the following features, inter alia, of the agreement to support his contention that the letter was no more than an agreement to agree. Firstly, the letter indicated that the Venue Operator’s Agreement, or the form of it, originally entered into between the parties, was subject to being redrafted. Indeed, the letter referred to “various changes” to that form of agreement. In a sense, as Mr Houghton states, the form of the ultimate agreement to be entered into between the parties was still a work in progress. On any view, some terms of the agreement were to be different to the form of the agreement already on foot between the plaintiff and the defendant. There was nothing in the letter which indicated what those terms were, other than a general description of them.
Secondly, the letter pointed out, correctly, that any new form of agreement would be subject to the approval of the Victorian Casino & Gaming Authority and to that extent could not be entered into there and then by the parties. Thirdly, under the Gaming Machine Act 1991, the effect of s.68 is that the letter of 14 October 2002, itself, can not there and then be binding. Section 68 provides that a relevant contract must be in accordance with a form approved by the authority or itself be approved.
On the other hand, Mr Kelly relied particularly on the formal execution clauses of the letter, and the words which preceded them, in other words, “for and on behalf of Werribee Football Inc, I hereby agree and accept the offer set out above.” The form of those words and the formal nature of the execution page, Mr Kelly contended, points strongly in favour of an intention to the parties to enter into a binding agreement there and then. Secondly, Mr Kelly met the proposition that the formal agreement is being subjected to changes with the proposition that, whatever agreement was to emerge, it would be common to all venue operators supplied by the defendant. Further, the Victorian Casino and Gaming Authority, under the Act, could only approve a form of agreement which is not harsh and unconscionable. In those circumstances it is not inconceivable that the plaintiff might there and then bind itself to the terms of an agreement which had not been completed and which had not been yet approved by the Authority.
It is not necessary for me to decide this issue, as this is, of course, an interlocutory application. It is, I think, fair to observe that the arguments on both sides are fairly put and each has some weight. Realistically and sensibly, Mr Kelly has conceded that the plaintiff, with those arguments, does establish a serious issue to be tried and I agree with that assessment. I am loath to embark on an assessment of the strength of the plaintiff’s case, but, as I have stated, it is necessary for me, albeit at a preliminary stage, to make some assessment of it in accordance with the authorities to which I have adverted.
Page 1 of the letter of 14 December 2002 commences by offering the plaintiff a further term of three years “to your current venue operator’s agreement which expires on 7 February 2005”. If the letter stopped there, then there would be significant force in Mr Kelly’s submission that the letter constituted an extension of the term of the existing agreement. However, it is clear that the letter went further than that. On page 2 the letter, it is stated that a new form of venue operator’s agreement was being entered into, that there were “various changes” between that form and the form of the agreement already entered into, and that the relevant authority was currently reviewing what the letter described as “this new agreement”. The letter clearly contemplates that a new form of agreement will be signed. In other words, the letter does not contemplate that execution of its terms per se extends the term of the existing agreement.
In those circumstances, it seems to me, and I stress this is a preliminary assessment, made in some haste, that the plaintiff has a relatively strong argument that the letter does not of itself constitute a renewal of the agreement, but rather an agreement to enter into a new agreement. That proposition, of course, is not fatal to the case of the defendant. As the joint judgment in Masters v Cameron points out, the agreement may well fall within the first category of cases there discussed, namely, an agreement which is already binding, but containing a provision that the parties contemplate entering into a more formal agreement which will better express its terms and conditions.
However, as I have already pointed out, there are a number of features attaching to the letter of 14 October 2002 which would, at the least, give strength to the plaintiff’s contention that the letter falls within category 3 rather than category 1 of the cases discussed in Masters v Cameron. Firstly, the letter, as I have stated, contemplates the execution of a new agreement which has “various changes” to the existing form of agreement. Secondly, the form of agreement was still subject to approval. Thirdly, the letter not only contemplates the execution of a new agreement, but it is clear, both from the letter and from the statutory regime, that the execution and approval of such a new agreement was critical to the completion of the parties’ contractual relationship. Unless and until then, no valid contract would be constituted under the Act.
As I have stated, it is unnecessary, and indeed I consider undesirable, for me to express views, particularly in any positive sense, about the strength or otherwise of the plaintiff’s case. This is an application for an interlocutory injunction. It has to be decided in some haste and without the benefit of full argument, notwithstanding the high quality of the submissions which were put to me yesterday. It is sufficient, I think, for me to indicate at this stage that the plaintiff has established more than a serious issue to be tried. Putting the matter in its most neutral sense, I can certainly indicate that from my perception the plaintiff has far from a weak case in terms of the principal issue.
The plaintiff also relies in support of its case on the letter of 21 April 2004. The parties accept the proposition that subsequent conduct of parties, whilst inadmissible in relation to the construction of an agreement, may be relevant to determining whether the original document of October 2002 was signed with the intention to there and then create legal relations: see Brambles Holdings Ltd v Bathurst City Council.[7] As I have stated, Mr Whitehouse has embarked on an explanation of that letter. It is a factual issue whether that explanation were accepted, but prima facie certainly the letter at least adds some strength to the plaintiff’s case.
[7][2001] NSWCA 61 at [26].
The defendant contends that in any event the plaintiff is estopped by its conduct between October 2004 and 15 December 2004 from denying that the letter of 14 October 2002 constituted a binding agreement between the parties. In its affidavits the defendant gave evidence that in that period of time, namely, between October 2002 and December 2004, it materially supported an application by the plaintiff for an additional ten electronic gaming machines to be installed at the premises. In order to assist the plaintiff, it declined similar requests from other venues for an increase in the number of machines to be installed at those premises. The defendant’s evidence is that it would not have embarked on that conduct if it had not been for the understanding that the letter of 14 October 2002 bound both parties. In the course of that period the defendant also at its own expense funded an Economic and Social Impact Statement prepared on behalf of the plaintiff to assist it in installing further machines at its premises.
At this stage it is sufficient to say that the defendant on its material does establish an arguable basis of estoppel, and that must be taken into account in assessing the relative merits of the competing cases between the parties. However, taking that into account, it does not detract from the view I have already expressed, that is, that in my view the plaintiff has a far from weak case on the main issue between the parties.
I turn then to the question of the balance of convenience between the parties. A number of issues were agitated in the affidavits. In particular, one issue is whether the existing and past relationship between the plaintiff and the defendant is and has been harmonious and co-operative. The plaintiff contends that the relationship is and has been strained and therefore, if it was forced to continue on with the defendant, the defendant might not adequately perform the contract and there would be difficulties in the relationship. In its affidavit material the defendant denies that contention and claims that the parties have enjoyed and continue to enjoy an amicable and mutually beneficial relationship. It is not possible for me to resolve that issue of fact at this stage. Such an issue could, of course, only be adequately resolved on evidence being given viva voce and subjected to cross-examination.
There are also issues agitated in the affidavits as to whether the support services provided by the defendant to the plaintiff are of the same standard or inferior to those which might be provided to the plaintiff by Tabcorp. The plaintiff’s affidavits allege that Tabcorp is capable of providing a level of support which is superior to that offered by the defendant. Again the defendant takes heated issue with that proposition and again that is not an issue which I can resolve at this stage.
However, one matter is clear from the affidavits and that is that the plaintiff has used its own commercial judgment in deciding to contract with Tabcorp rather than to continue in a relationship with Tattersalls. In that context it is relevant that if I do not grant an injunction I may thus be forcing the plaintiff against its own commercial judgment to remain in a relationship with the defendant which the plaintiff considers is not as beneficial to it as its relationship with Tabcorp might turn out to be. Mr Kelly has contended that I should not reward the plaintiff for contracting with Tabcorp in the face of its existing agreement with the defendant. That argument assumes that the plaintiff is bound to continue on with the defendant after 7 February 2005, which, of course, is the central issue between the parties.
Having said that, it is necessary then in brief compass to try to perform some analysis and weighing of the respective balance of convenience. As I have stated, if I refuse the grant of the interlocutory injunction, the plaintiff in practical terms will be forced to contract with the defendant for the supply of electronic gaming machines at its venue after 7 February 2005, contrary to its own commercial judgment that it is in its best interests to contract with Tabcorp. If at the trial of this action the plaintiff’s contention on the principal issue is upheld, and thus that the October 2002 letter is found not to be a binding contract, the plaintiff will thus have been forced to contract with the defendant when it was not legally obliged to do so. If that were to occur the plaintiff would, of course, be able to resort to a claim for damages for the loss of its contract with Tabcorp and the loss of its opportunity to derive profits from that contract. However, it is clear, and I think fairly obvious, that an assessment of such damages would be most difficult and a matter of considerable conjecture. The plaintiff would need to prove what would be essentially a hypothetical, namely, what profits it would have derived from the Tabcorp contract in contrast to the profits which it had in fact derived from the Tattersalls contract. There is, as I say, a significant element of conjecture attaching to that analysis, heightened by the fact that the plaintiff has, of course, not had any commercial relationship with Tabcorp and thus has no yardstick against which it might be able to measure the profits which it will claim it has lost by virtue of not being able to enter into a contract with Tabcorp.
On the other side of the ledger, if I grant a mandatory injunction, as I have stated, in a practical sense that will bring to an end the contract between the plaintiff, although not in a legal sense. In those circumstances the defendant will be left with a claim against the plaintiff for damages for breach of contract. I acknowledge and accept that those damages are not straightforward and easy to prove. There will be some difficulties for the defendant to establish what revenue it would have derived from the continuing contract with the plaintiff. It might also be met with an argument that it has failed in the meantime to take reasonable steps to mitigate its loss. In such a scenario, the proof of damages by the defendant would involve proof by it of a hypothetical. However, such a hypothetical would not be as difficult to assess as would be the type of damages which would be sought by the plaintiff if I refused an injunction. In establishing its claim for damages in the scenario I have thus mentioned, the defendant would be able to rely on the past record of earnings it has derived from its contract with the plaintiff since February 2000. Thus its proofs would have at least a sound factual basis as a springboard from which to develop its proofs of the loss of profits for the years after February 2005.
On that analysis, I consider that the balance of convenience does favour the plaintiff. In other words, the plaintiff would suffer greater damage if an injunction were refused and its claim were ultimately upheld, than would the defendant if I were to grant an injunction and its claim were upheld. I have already found, and indeed it has been acknowledged, that the plaintiff has established a serious issue to be tried. I have further found that I have been persuaded, albeit, and I emphasise, at a preliminary stage, that the plaintiff has a respectable claim to relief which, in neutral terms, is far from weak. The balance of convenience favours the grant of an injunction. In those circumstances I consider that the plaintiff has made out its claim for an interlocutory injunction.
Accordingly, subject to the plaintiff providing the usual undertaking as to damages and subject to correction of draftsmanship by counsel, I propose granting relief in the terms set out in clause 1 of the plaintiff’s summons dated 11 February 2004, namely, I shall order that, pending the hearing and determination of this action or further order, the defendant forthwith remove from the plaintiff’s venue the 35 electronic gaming machines and other property owned by the defendant and installed at the plaintiff’s venue.
I will make the usual order that the costs be costs in the cause.
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