Lumo Digital Outdoor Limited v O'Sullivan
[2023] NZHC 2357
•28 August 2023
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2023-485-395
[2023] NZHC 2357
BETWEEN LUMO DIGITAL OUTDOOR LIMITED
Applicant
AND
MEGAN MARY O’SULLIVAN
Respondent
Hearing: 24 August 2023 Counsel:
J W A Johnson and G Cullinane for the Applicant M Freeman and R Bull for the Respondent
Judgment:
28 August 2023
JUDGMENT OF GWYN J
Introduction
[1] This application concerns an advertising site licence (Licence) between Lumo Digital Outdoor Ltd (Lumo) and the administrator of the estate of Denis Lashlie (Estate) under which Lumo operates two digital billboards (on land owned by the Estate. The billboards are located at 241–243 Thorndon Quay and 51 Kenepuru Drive, Porirua.
[2] The Directors of Lumo, Phillip Clemas and Thomas Harrison, negotiated the Licence with the interim administrator of the Estate, the deceased’s brother Tony Lashlie. Mr Lashlie executed the Licence on 26 August 2021.
[3] On 22 March 2022, Megan O’Sullivan, the deceased’s partner and sole beneficiary of the Estate, took over as administrator of the Estate. Ms O’Sullivan is the respondent in this application.
LUMO DIGITAL OUTDOOR LIMITED v O’SULLIVAN [2023] NZHC 2357 [28 August 2023]
[4] The Licence provided for a two-year trial period, commencing on 1 September 2021. On 7 June 2023 Lumo received a notice from Ms O’Sullivan, advising that the Licence would be terminated from 31 August 2023 and thereafter Go Media would operate the digital billboards.
[5] Shortly after, on 12 June 2023, Go Media issued a public announcement that it had “won back” the billboards and would be operating them from September.
[6] Lumo’s claim is that Ms O’Sullivan has breached the Licence. It says Ms O’Sullivan’s apparent decision to contract with Go Media, without first offering advertising rights to Lumo on similar terms, is a clear breach of the terms of the Licence. It relies in particular on the term of the Licence that states that before contracting with any third party, the licensor must offer the licensee a first right of refusal.
[7] Lumo seeks orders restraining the respondent from contracting with any third parties in relation to the billboards until a first right of refusal has been offered to Lumo and Lumo has declined it.
[8] Ms O’Sullivan says that the terms of the Licence do not apply during the two- year trial period, so she was not obliged to give Lumo a right of first refusal.
Arbitration
[9] Lumo says its application for injunction is made in anticipation of arbitration. For that reason it has not filed a statement of claim in this Court.
[10]The Licence provides at cl 15.1:
15.1. Unless any dispute or indifference arising under or in connection with this agreement is resolved by mediation, the same shall be submitted to the arbitration of one arbitrator who shall conduct the arbitral proceedings in accordance with the Arbitration Act 1996.
[11] Clause 15.1 is qualified by cl 15.3 which specifies that a dispute is not to be treated as a submission to arbitration “in circumstances where the rights and/or remedies of a party can only be secured through injunctive relief”.
[12] Counsel says the Arbitration Act 1996 preserves the Court’s ability to grant interim relief in the context of arbitrations.1
[13] Mr Johnson, counsel for Lumo, indicates that a notice of arbitration has not yet been filed but will be filed promptly and proposes that any injunction be issued on the basis that the submission be made within a specified period and reserving leave for the respondent to apply for discharge of the injunction if the notice is not filed with the specified timeframe.
Evidence
[14] The application for injunction is supported by affidavits from Phillip Clemas, Thomas Harrison and Tony Lashlie. Ms O’Sullivan has filed two affidavits in opposition to the application.
The Licence
[15] The parties to the Licence were Mr Lashlie, as Licensor, and Lumo, as Licensee.
[16] The Licence was a “revocable licence to upload and display advertising on the Signs [the two digital billboards] on the Licensed Area [the locations described at [1] above], from the Commencement Date and for the Term, in accordance with the terms and conditions of this licence …”
[17] The terms and conditions of the Licence are set out in Schedules 1, 2 and 3 1– 3 and “form part of this Licence”.
[18]Schedule 1 provides:
SCHEDULE 1
…
INITIAL TERM: Ten (10) years;
1 Arbitration Act 1996, sch 1, cl 9(1).
Deferred until the completion of a Two (2) Year Trial Period. If upon the completion of the Trial Period, or anytime earlier by mutual agreement, both the Licensee and Licensor are satisfied with the arrangement, the parties will Commence the Term.
TWO (2) YEAR TRIAL PERIOD
COMMENCEMENT: 1st September 2021. The Licensor will waive the first
month’s Fee.
LICENSE COMMENCEMENT DATE:
If the Two Year Trial Period is completed satisfactorily for both parties, then the License Agreement will commence on 1st September 2023 or earlier by mutual agreement between the Licensor and Licensee.
…
EXPIRY DATE: Ten (10) years after the Commencement Date.
FURTHER TERM: First right of renewal for a further Ten (10) years
[19]Other definitions are contained in Schedule 2 to the Licence.
Legal principles – interim injunction
[20] The High Court has power to grant interim injunctions under the High Court Rules 2016 and in the exercise of its inherent jurisdiction.2
[21]As the Court of Appeal said in Commerce Commission v Viagogo AG:3
[30] The principles that govern the grant of interim injunctions under r 7.53 and the court’s inherent jurisdiction are well settled. The court will usually adopt a two-stage approach. The first inquiry is whether there is a serious question to be tried. If that threshold is met, the court moves on to consider whether the balance of convenience favours granting or refusing relief. But as this Court observed in Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd, considerations are marshalled under these (non-exhaustive) heads as “an aid to determining, as regards the grant or refusal of an interim injunction, where overall justice lies. In every case the Judge has finally to stand back and ask himself that question.”
[22]Accordingly, I must consider:
2 The inherent jurisdiction of the High Court is recognised in s 12 of the Senior Courts Act 2016.
3 Commerce Commission v Viagogo AG [2019] NZCA 472, [2019] 3 NZLR 559 (footnotes omitted).
(a)whether there is a serious question to be tried;
(b)whether the balance of convenience favours the granting of an injunction; and
(c)whether the overall interests of justice favour granting the interim injunction.
[23] In considering the questions at (b) and (c) above, it is necessary to assess the adequacy of damages, preservation of the status quo, disadvantages to either party and the relative strengths of their cases.4
Is there a serious question to be tried?
[24] As to what is a serious question to be tried, the Court must determine whether there is a tenable combination of resolution of the issues and facts on which the applicant can succeed.5 The applicant must adduce sufficiently precise evidence about the facts to satisfy the Court there is a real prospect of success.6 It is insufficient for the applicant to say only that there is a tenable course of action from a legal perspective and a conflict of evidence on the facts.7
Applicant’s submissions
[25] Lumo says the termination of the Licence gives rise to three issues, which will form the basis of its claims at arbitration:
(a)whether the respondent has breached implied contractual duties of good faith;
(b)whether the respondent has breached cl 10.2 of the Licence; and
4 Air New Zealand Ltd v Wellington International Airport Ltd HC Wellington CIV-2007-485-1756, 30 July 2008 at [6]–[14].
5 Mikitasova v ASB Bank Ltd [2016] NZHC 897, cited in Hannon v Senior Trust Capital Ltd [2023] NZHC 16, (2023) 26 PRNZ 205 at [39].
6 Hannon v Senior Trust Capital Ltd, above n 5.
7 Ansell v New Zealand Insurance Finance Ltd HC Wellington A434/83, 30 November 1983 at 6, cited in Aviation Workers United Inc v Chief Executive of the Ministry of Business, Innovation and Employment [2023] NZHC 1463 at [71].
(c)whether the respondent has breached cl 18.1 of the Licence.
[26] While the first and third of these grounds are canvassed in the written submissions for both parties, Mr Johnson did not pursue them in oral submissions, on the basis that Lumo’s strongest ground in this application is the alleged breach of cl 10.2. Given that, I have not set out my assessment of the other two grounds.
[27] Having said that, the factual basis for the alleged breach of cl 18.1 (which requires the parties to keep the existence and terms of the Licence confidential, with permitted disclosure to certain parties) is relevant to the assessment of the balance of convenience and I will return to it under that heading.
[28] Accordingly the “serious question” raised in this application is whether Ms O’Sullivan had a right to terminate the Licence without affording Lumo a right of first refusal under cl 10.2.
[29] Clause 10 is the termination provision and the relevant portions provide as follows:
10.Termination
10.1.The Licensor may terminate this Licence if any instalment of the Licence Fee or any other money payable under this Licence remains unpaid by the Licensee for more than 10 working days after the due date for payment and the Licensee has failed to remedy that breach within 10 working days after service on the Licensee of a notice in accordance with section 245 of the Property Law Act 2007; or
10.2.The Licensor agrees to offer the Licensee an option of a right of first refusal on the sites thirty (30) days prior to the final expiry date or sooner termination on terms and conditions no less favourable than offered to any other party. The Licensee shall within fourteen (14) days confirm to the Licensor the option of the exercise of right of first refusal in writing. If the Licensee elects not to exercise its option and only after fourteen (14) days have elapsed, the Licensor is free to offer the sites to any other interested party but will not offer it to any other party on more favourable terms than offered to the Licensor without first re-offering it on those terms to the Licensee.
[30] Lumo says that the obligation in cl 10.2 that the respondent is to offer Lumo a right of first refusal, before contracting with any third party, is engaged, not just upon the Licence’s final expiry date, but also upon any “sooner termination”.
[31] It is common ground that the respondent did not make an offer to Lumo to continue operating from the sites, before it contracted with Go Media. Lumo says that is a breach of cl 10.2.
[32] Lumo says the starting point is the text of the Licence. The definition of “Trial Period” reads as follows:
“Trial Period” means a period whereby the Licensor and Licensee will enjoy a temporary two (2) year Licence Term that allows time for each party to assess the relative performance of the partnership and an option for either party to terminate at the end of the Trial Period by providing written notice no less than one (1) month from the end of the Trial Period. If neither party chooses to terminate in writing at the end of the Trial Period, it will be deemed that that License will Commence as described in the Terms. Nothing in this agreement prevents the Licensor and Licensee mutually agreeing to completing the Trial Period earlier and commencing the License Agreement earlier.…
(emphasis added)
[33] “Licence Term” (as that term appears in the definition of Trial Period) is not separately defined, but is capitalised. As such it must be interpreted as a conjunction of the two separately defined terms: Licence and Term, which are defined as follows:
“Licence” means this advertising licence agreement including any schedules and plans, as may be varied from time-to-time in writing by the parties.
“Term” means (subject to any earlier termination in accordance with the provisions of this Licence) the initial term of this agreement as inserted in Schedule 1, and (if taken up) any Further Term.
[34] On a plain reading of those terms, the Trial Period is simply a shorter version of the Licence’s proper term (that is, the full 10-year term). The terms of the Licence itself must apply during the Trial Period including, critically, cl 10.2. Consequently, a termination of the Licence during the Trial Period, as exercised by Ms O’Sullivan on 7 June 2023, triggered a right of first refusal in Lumo’s favour.
[35] The applicant says it is clear from the parties’ negotiations that they anticipated the terms of the Licence would be binding during the Trial Period — for example, an initial draft of the Licence specified that the Trial Period would commence on 1 September 2021, or “as soon as this agreement is unconditional.”
[36] Anticipating the respondent’s argument, counsel says that is it not plausible that, either:
(a)none of the Licence’s terms applied during the Trial Period; or
(b)some of the Licence’s terms applied during the Trial Period, but cl 10.2 did not.
[37] Lumo says neither hypothetical is satisfactory. Without certain terms of the Licence applying during the Trial Period, the Licence could not have operated on any practical level. Lumo refers in particular to the Trial Period termination mechanism itself (the obligation to give one month’s notice of termination). Without that, the Trial Period would simply be terminable at will. It also refers to the indemnity and insurance provisions, the exclusive use provision (by which the respondent agreed not to grant advertising rights to any third party) and the provisions regarding the Licence Fee. It asks the rhetorical question — if none of the terms applied, on what basis has Lumo paid a significant amount in licensing fees to the respondent over the past two years?
[38] Mr Johnson refutes the respondent’s argument that it would be entirely inconsistent with the parties’ clear purpose if cl 10.2, providing Lumo with an option of a right of first refusal, applied. Ms O’Sullivan would be “beholden” to Lumo’s right of first refusal. In response, Mr Johnson says the right of first refusal does not give Lumo “control” as contended. What terms and conditions were proposed would be within Ms O’Sullivan’s control.
[39] Once it is accepted that some of the Licence’s provisions must apply during the Trial Period, the question then becomes why not all of them?
[40] In conclusion, Lumo says there is a serious question to be tried about the respondent’s alleged breach of cl 10.2.
Respondent’s submissions
[41] In response, the respondent says there is no serious question to be tried because the Licence is clear: the Trial Period was different from the Initial Term of the Licence. The Initial Term had not yet begun and the parties were still in the Trial Period, where either party could terminate with one month’s notice. Notice of termination was given during the Trial Period, with the effect that the Licence never came into operation and the terms of the Licence were not engaged.
[42] Mr Freeman for the respondent notes Schedule 2 of the Agreement defined the Trial Period as a temporary term allowing time for each party to assess the relative performance of the partnership and provide either party with an option to terminate at the end of the Trial Period by providing written notice. Further, in Lumo’s proposal, the Trial Period was communicated as being a “short-term offer”.
[43] Mr Freeman says the uncontested evidence from the parties’ negotiations as to the purpose of having a trial period is admissible.8 The prior drafts of the Licence with the parties’ comments on them, make clear that the purpose was because Mr Lashlie, who was negotiating the Licence for the Estate, was inexperienced and wanted to see how a licence worked, and whether Lumo met the terms of the licence, before entering into a longer term.
[44]The proposal (by Lumo) for a trial period was communicated as:
You requested a short-term offer to help give you time to properly evaluate the partnership. We think that is a prudent idea for both parties. Therefore, we have included a 24 month ‘trial’ period with a suggested review timeframe prior the end of that trial period. This will give us the opportunity to assess how the partnerships is working, resolve any issues that may exist before agreeing to a longer term licence under the same basic terms. Either party will retain a right to terminate upon completion of the trial.
[45] Counsel says that clear purpose is inconsistent with cl 10.2 which confers a right of first refusal on Lumo and effectively puts Lumo in control of whether the Licence is at an end on completion of the Trial Period or not. That is inconsistent with
8 Bathurst Resources Ltd v L & M Coal Holdings Ltd [2021] NZSC 85, [2021] 1 NZLR 696 at [67(a)].
the parties’ intention that the Trial Period would give the respondent an “out” if the relationship was not working satisfactorily.
[46] The respondent says there is no serious question to be tried and the applicant is claiming a right that does not exist.
Discussion
[47]Schedule 1 defines “Initial Term” as:
Ten (10) years;
Deferred until the completion of a Two (2) Year Trial Period. If upon the completion of the Trial Period, or anytime earlier by mutual agreement, both the Licensee and Licensor are satisfied with the arrangement, the parties will Commence the Term.
[48]It defines “Licence Commencement Date” as:
If the Two Year Trial Period is completed satisfactorily for both parties, then the License Agreement will commence on 1st September 2023 or earlier by mutual agreement between the Licensor and Licensee.
[49] Both these definitions reflect the idea of “satisfaction” of both parties with a trial arrangement, before the Initial Term commenced.
[50] The definition of “Trial Period” also reflects the idea of each party assessing the “relative performance” of the arrangement during the two-year Trial Period.
[51] While the subjective intentions of the parties are not relevant to the interpretation question, these references in the Licence are consistent with the parties’ evidence and the comments on and amendments to the draft Licence during the process of negotiation, as to the purpose of the Trial Period. They show that the parties did mutually intend a trial period which would enable both parties to assess how the relationship was working.
[52] But on closer examination, whether and how that intention was given effect to is a vexed question. Both parties’ positions have their difficulties.
[53] Under cl 10.2 the right of first refusal arises 30 days prior to the Final Expiry Date. “Final Expiry Date” is defined in Schedule 2 as “means (subject to any earlier termination in accordance with the provisions of this Licence) the expiry date of the Final Term, as inserted in Schedule 1.” The Final Term is not defined. “Expiry Date” is defined as 10 years after the Commencement Date. The “License Commencement Date” is in turn defined as 1 September 2023, or earlier by mutual agreement, “if the Two-Year Trial Period is completed satisfactorily for both parties”. The reference to “earlier” would not capture the current situation, where it is the Trial Period that has come to an end, but cl 10.2 also refers to “or sooner termination”, which arguably might be referable to the end of the Trial Period.
[54] The respondent is correct that, if cl 10.2 applies at the end of the Trial Period, that would mean that neither party had a completely unfettered right to terminate on one month’s notice, as they appear to have intended.
[55] However, Ms O’Sullivan’s overall position is somewhat unclear and inconsistent. Initially the submission on her behalf was that the terms of the Licence simply did not apply at all during the Trial Period.
[56] But Mr Freeman conceded that if Lumo had defaulted in payment of the Licence Fee before the expiry of the Trial Period, the Trial Period provision would not itself have afforded Ms O’Sullivan a remedy. It provides an option for either party to terminate by notice “at the end of the Trial Period”. Both of the “Initial Term” and “Licence Commencement Date” definitions record that the Initial Term could commence earlier than on the expiry of the “Trial Period”, by mutual agreement. However, there is no reference in those definitions to early termination of the Trial Period for any other reason, for example breach by one of the parties.
[57] Ms O’Sullivan would have had to rely on cl 10.1. However, in Mr Freeman’s submission, that would not have brought cl 10.2 into operation.
[58] That seems to me to highlight the difficulty with the respondent’s position. If some only of the Licence terms are relevant to the Licence Period, which are they?
[59] The principal difficulty for the respondent is that although the parties may have intended that the two-year Trial Period be a carve-out from the Licence, which stood on its own, that was not the practical reality. The Licence is not well-drafted and it is difficult to discern how the various provisions were intended to interrelate.
[60] As the applicant submits, for two years Lumo paid the licence fee and insurance for the signs and the respondent made the property available and provided a right of exclusive use and access. They must have done so by reference to the terms of the Licence, as the Trial Period provision alone does not address these and other contractual issues. The agreement between the parties to have a Trial Period did not, and could not, operate without reference to other Licence terms.
Conclusion on serious question to be tried
[61] Going back to the test articulated in Mikitasova,9 there is no material dispute as to the facts in this case. But there are arguable differences as to the proper interpretation of the Licence. Mr Freeman invites the court to reach a substantive conclusion on those legal issues now, on the basis that, he submits, there is nothing more that the parties could usefully put before the Court (or an arbitrator). Mr Johnson opposes that course and points to further evidence raised by the material before the court but not presently included in the evidence.
[62] I agree that in the absence of certainty as to the full case for each of the parties it would not be appropriate to make a substantive determination at this point. As Moore J said in Mikitasova,10 the Court should not be concerned with deciding difficult questions of law which call for “detailed argument and mature considerations”.
[63]In my view the legal issues are matters on which the applicant could succeed.
[64]I therefore go on to consider the balance of convenience.
9 Mikitasova v ASB Bank Ltd, above n 5.
10 At [99], citing American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) at 407.
Where does the balance of convenience lie?
[65] Factors relevant to an assessment of the balance of convenience include the following:
(a)Would damages be an adequate remedy for Lumo if this application for interim injunction is not allowed, but it ultimately succeeds at arbitration?
(b)Would damages be an adequate remedy for Ms O’Sullivan if interim orders are made but Lumo is unsuccessful at arbitration?
(c)Conduct of the parties.
(d)Interests of third parties.
[66]Clearly there is an overlap between these factors.
Adequacy of damages for Lumo
[67] Lumo says that as a consequence of the respondent’s purported termination of the Licence it will suffer financial loss. It is losing one of its more lucrative sites — one that it has been operating for two years — to a direct competitor. Lumo’s present estimate of lost income over the life of the Licence is approximately $6 million ($50,000 in monthly income over the expected 10-year term).
[68] While Lumo accepts that loss of profits can be readily quantified, it says it will, in addition, suffer irreparable and unquantifiable damage to its market share and brand goodwill. Those attendant losses are more difficult to assess. Lumo relies on Foodstuffs North Island Ltd v Ravla Trading Ltd.11
[69] Lumo says that cl 18.1 of the Licence is relevant to the loss of goodwill. Clause 18.1 requires the parties to keep the existence and terms of the Licence confidential (although with permitted disclosure to certain parties).
11 Foodstuffs North Island Ltd v Ravla Trading Ltd [2019] NZHC 2357 at [48].
[70] The applicant says it is plain from the timeline that Ms O’Sullivan had been negotiating with Go Media for some time and by the time she gave notice of termination to Lumo on 7 June 2023 she had apparently entered into an “alternative supplier contract” with Go Media. Go Media itself made online and LinkedIn announcements less than a week after the notice of termination.
[71] The Go Media public announcement will likely have had a negative effect on the public perception of Lumo and will result in a loss of market share. The announcement on 12 June 2023 said “Go Media network ‘hits the ton’, puts on a party and wins back Wellington gateway”. A more detailed statement released by Go Media said: “Earlier we announced that Pōneke’s best billboard will be returning to our portfolio from September …”. That is potentially relevant to the submission that Lumo will have suffered loss of goodwill.
[72] Further, Lumo says there is no evidence of the respondent’s ability to meet an award of damage.
[73] The respondent in reply says damages are an adequate remedy for Lumo. If it is successful then its loss is quantifiable as it can only be its lost profit from the Licence from 1 September 2023 until the matter is ultimately determined. That loss is capable of reasonably accurate calculation or estimation.
[74] The respondent does not accept that there can be any intangible loss to Lumo, such as loss of goodwill. It says Lumo does not have any vested interest in the billboards. Even if there is such a loss that too can be readily quantified.
[75] I am not able at this point to assess whether Lumo’s losses might encompass loss of goodwill. In any event, there is nothing before me to suggest that Ms O’Sullivan could meet any claim in damages. It may be that she could, but there is no evidence of that. This points towards making the order sought.
Adequacy of damages for Ms O’Sullivan/Interests of third parties
[76] Lumo says that any losses which the respondent might sustain through the grant of an injunction are readily compensable. Lumo has filed an undertaking as to
damages. Although it has not provided any supporting evidence as to its financial position, Lumo says it is willing to do so once the respondent indicates the nature and likely quantum of any loss. Mr Freeman rejects the suggestion that the respondent should file such evidence, essentially saying that, as a competitor in the same market as Go Media, Lumo can itself assess the likely loss.
[77] In the meantime, Mr Johnson notes that Lumo is a reputable commercial company and, plainly, was able to meet the substantial licensing fees it paid to the respondent for the last two years.
[78] While damages potentially claimable by Ms O’Sullivan would no doubt encompass any liability she might have incurred to Go Media in the meantime, there is no evidence or submission from Ms O’Sullivan as to what that might encompass, or that damages would not be an adequate remedy.
[79] I am satisfied that Lumo is in a financial position to meet any claim in damages if it is ultimately unsuccessful. This too is a factor in favour of granting the interim orders sought.
[80] The question whether damages would be an adequate remedy for Ms O’Sullivan if interim orders are made, but Lumo is unsuccessful at arbitration, is connected with the issues of conduct of the parties and the interests of Go Media, the relevant third party in this case, both of which are discussed below.
Conduct of the parties
[81] The key issue under this heading is whether the status quo has shifted and, if so, who should bear the burden of that.12
[82] The respondent says that the status quo has shifted. Lumo is seeking to restrain contractual commitments to other providers, but Ms O’Sullivan has already made a contractual commitment to another provider, Go Media. An injunction would put the respondent in breach of that contract.
12 Kauri Timber Building Ltd v Go Media [2022] NZHC 1539, (2022) 23 NZCPR 317.
[83] The fact of the contract with Go Media was known to Lumo before it applied for the injunction. Counsel for Ms O’Sullivan points to the 14 day “delay” between the notice being given and Lumo asserting that the termination was not valid. He submits that delay was not reasonable. Ms O’Sullivan triggered her rights under the Licence agreement as she reasonably understood them to be, acting in good faith. She has not sought to create a situation to advantage her in anticipation of an injunction application.
[84] In essence, Mr Freeman submits that if Lumo considered there was no right to terminate during the Trial Period, that view ought to have been articulated (either at the time the Licence was being entered into, or certainly when Ms O’Sullivan gave notice terminating the Trial Period on 7 June 2023).
[85] Lumo resists the submission that the shifting of the status quo is a factor for the Court to consider in assessing the balance of convenience.
[86] It says the respondent was fully aware of, and adopted a course of action entirely inconsistent with, the terms of the Licence. She cannot now say she would be inconvenienced by an injunction because she has contracted with someone new.
[87] Lumo points to Ms O’Sullivan’s affidavit where she says, in relation to the 21 July 2023 letter from Lumo’s solicitors, “At that stage I was already in negotiation with GoMedia, because it was important that there was continuity in the income stream from the billboards”. Lumo says it is clear from this evidence that the status quo did not shift until after Ms O’Sullivan was put on notice as to Lumo’s position.
[88] Lumo refers to New Zealand Farmers Co-op Assoc of Canterbury Ltd v Farmers Trading Co Ltd, where Chilwell J said:13
In my judgment it is idle for the defendants to come to this Court and plead “We have done it; it is irreversible; it has been done at great expense. We are now sorry. To make us undo the prima facie wrong to the plaintiff will cost us dearly”. A similar argument was advanced in the Gallaher case. It failed. The reason is simply this. A defendant cannot create his own inconvenience
13 New Zealand Farmers Co-op Assoc of Canterbury Ltd v Farmers Trading Co Ltd (1979) 1 NZIPR 212 (SC) at 18.
and then have it taken into account in balancing the scales of inconvenience – at least not when he embarks upon questionable conduct with his eyes open.
[89]Mr Johnson’s submission is that Ms O’Sullivan is in the same position.
[90] One of the difficulties for this Court is that Ms O’Sullivan has chosen not to put in evidence the chronology of her discussions with Go Media and the date on which she signed a licence agreement with Go Media, which might have assisted the Court in weighing the impact of the new contractual agreement on the balance of convenience. In the absence of that information, I am inclined to accept the applicant’s submission that any shift in the status quo is at the respondent’s doing and does not shift the balance of convenience in her favour.
Interests of third parties
[91] The respondent says the fact that there is now a third party with contractual rights that might be detrimentally affected if interim orders were granted is a factor relevant to an assessment of the balance of convenience.
[92] This question is closely linked to the previous question of conduct of the parties and shifting of the status quo.
[93] Go Media is not a party to this proceeding. Nor has Ms O’Sullivan filed any evidence from Go Media, or directly addressing Go Media’s position, other than a copy of a letter of 5 July 2023 from Go Media’s solicitor which states that Go Media had entered into the agreement with Ms O’Sullivan in good faith. The letter records Go Media’s view that the agreement remains on foot.
[94] Lumo says any loss to Go Media is a matter of contract as between it and Ms O’Sullivan.
[95] In any event I note, as above, that there is insufficient evidence before the Court on which to assess the impact of Go Media’s interests on the balance of convenience.
Conclusion on balance of convenience
[96] I am satisfied that the balance of convenience favours the granting of the interim orders sought.
Overall interests of justice
[97] For the reasons set out above I consider that the overall justice of the case requires the granting of interim relief.
Result
[98]I make the following interim orders:
(a)restraining the respondent, Megan O’Sullivan (the Administrator) from contracting with any third parties, or implementing any contractual arrangement with third parties, regarding advertising rights for the digital billboards located at 241–243 Thorndon Quay, Thorndon, Wellington and 51 Kenepuru Drive, Porirua (together, the Sites) without having first:
(i)offered advertising rights for the Sites to Lumo on terms no less favourable than those offered to any other third party;
(ii)received Lumo’s declinature of that offer; and
(iii)confirmed to Lumo in writing that any contract with a third party will contain terms no more favourable than those previously offered to Lumo;
(b)directing the above restraints remain in place until the determination of the substantive dispute between Lumo and the Administrator at arbitration (subject to (c) and (d) below);
(c)directing the applicant to file its submission to arbitration by 8 September 2023; and
(d)reserving leave to the respondent to seek to discharge the interim orders referred to at (a) above if the applicant fails to file its submission to arbitration by 8 September 2023.
Costs
[99] I did not hear from the parties on costs. Costs are therefore reserved. If costs cannot be agreed, a joint memorandum is to be filed within 20 working days from the date of this judgment. If costs cannot be agreed, counsel for the applicant is to file and serve a memorandum within five working days of the date of the joint memorandum. Counsel for the respondent is to file and serve the respondent’s memorandum within five working days of service of the applicant’s memorandum on the respondent.
[100] Costs memoranda are not to exceed four pages (excluding attachments). I will determine costs on the papers.
Gwyn J
Solicitors:
Burton Partners, Auckland
Thomas Dewar Sziranyi Letts, Lower Hutt
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