FEDERAL COURT OF AUSTRALIA

Metro Investments Holdings Pty Ltd v GM Holden Ltd [2017] FCA 1523

ORDERS

THE COURT ORDERS THAT:

1.    The application for interlocutory relief contained in the originating application filed on 7 November 2017 is refused.

2.    The question of costs of and incidental to the interlocutory application be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WHITE J:

1    On 6 December 2017, I delivered judgment refusing an application for interlocutory injunctions pending trial. I said that I would publish my reasons later. The following are my reasons.

2    The First Respondent, GM Holden Ltd (GMH), conducts the Holden motor vehicle business in Australia through a network of authorised dealers. The dealers sell and service Holden vehicles and sell Holden parts and other products.

3    The First Applicant, Metro Investments Holdings Pty Ltd (Metro Investments), has since about 1988 been one of GMH’s dealers. It operates from premises at 1 Port Road, Thebarton (a suburb of Adelaide) (the Property) and trades under the name of Metro Holden. Mr Jack Torcaso is the Managing Director and major shareholder of Metro Investments.

4    Metro Investments has operated as one of GMH’s dealers under a succession of dealership agreements each entitled “Dealer Sales and Service Agreement” (DSSA). Its current agreement commenced on 1 January 2013 and is to expire on 31 December 2017.

5    The Second Applicant is G.O. & M.J.T. Nominees Pty Ltd (Nominees). It owns the Property. The shares in Nominees are owned by Mr Torcaso and his wife.

6    Mr Gino Raschella is the “Dealer Principal” for Metro Holden and has been since mid-2012. Through his company, Gino Raschella Nominees Pty Ltd, Mr Raschella holds a 13.3% interest in Metro Investments.

7    The Second Respondent, General Motors-Holden’s Sales Pty Ltd (GMH Sales), is a subsidiary of GMH.

8    It is common ground that at a meeting on 21 December 2015, two senior employees of GMH (Mr Bennett and Mr Keley) told Mr Torcaso that, on its expiry on 31 December 2017, GMH would not be renewing the Metro Investments’ DSSA. This was equivalent to two year’s notice. GMH has since confirmed that position in correspondence dated 18 March 2016 and 26 June 2017 and in oral communications.

9    The present proceedings including the claim for interlocutory relief were commenced on 7 November 2017.

10    The Applicants seek injunctive, pecuniary and other relief in respect of GMH’s decision not to grant a further DSSA. In particular, they seek an injunction restraining GMH from giving effect to its decision not to offer a renewal or extension of the DSSA and an order pursuant to s 87(2)(b) of the Competition and Consumer Act 2010 (Cth) (the CC Act) or, alternatively, pursuant to ss 232, 237 and 243(b) of the Australian Consumer Law (the ACL) contained in Sch 2 to the CC Act:

(a)    extending the term of the current DSSA on such terms as the Court may consider fit;

(b)    alternatively, requiring GMH to consider in good faith whether to offer Metro Investments a renewal or extension of the current DSSA.

11    By their Originating Application, the Applicants also seek orders by way of interlocutory relief, namely:

(a)    restraining GMH from giving effect to the decision not to offer a renewal or extension of the current DSSA;

(b)    extending the term of the current DSSA on such terms as the Court may consider fit.

12    As will be seen, the Applicants’ delay until 7 November 2017 in bringing the proceedings is a significant factor in the decision to refuse their application for interlocutory relief.

Interlocutory injunction principles

13    The principles relating to the Court’s grant of interlocutory injunctions are settled and it is not necessary to refer to the authorities in detail. They were summarised by the Full Court in Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 at [52]-[74]. An applicant for an interlocutory injunction must identify the legal or equitable rights which it seeks to have determined at the trial and in respect of which final relief is sought. When such rights have been identified, the Court has regard to two principal matters: first, whether the applicant has made out a prima facie case, in the sense that if the evidence remains as it is at trial, there is probability that it will be held entitled to relief; and, secondly, whether the balance of convenience favours the granting of the injunction. That includes consideration of whether damages or other remedies will be an adequate remedy. The two questions are not independent. The more that the balance of convenience supports a respondent, and the more serious the consequences for a respondent, the stronger will be the prima facie case that the applicant may need to establish to support an interlocutory injunction. Conversely, when the balance of convenience strongly favours the applicant, then the strength of the prima facie case required to support the interlocutory injunction diminishes: Ocean Dynamics Charter Pty Ltd v Hamilton Island Enterprises Ltd [2015] FCA 460 at [28].

14    In cases in which the grant or refusal of an interlocutory injunction will in a practical sense determine the substance of the matter in issue on a final basis, the Court gives particular attention to the strength of the applicant’s case for final relief: Australian Broadcasting Corporation v O’Neill [2006] HCA 46, (2006) 227 CLR 57 at [72]; Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 2) [2009] FCA 17, (2009) 253 ALR 324 at [28].

15    The Court will also consider and evaluate the impact that the grant or refusal of an injunction will have, or is likely to have, on third persons and the public generally: Samsung at [68].

Alleged misleading or deceptive conduct

16    The Applicants’ Statement of Claim indicates that they wish to pursue causes of action of three kinds: misleading or deceptive conduct; unconscionable conduct; and a failure by GMH to act with good faith.

17    For the misleading or deceptive conduct allegations, the Applicants pleads seven different sets of representations said to have been made by senior employees of GMH. The first representations are alleged to have been made in 2001 and the last in 2009-2010. Looked at generally, the tenor of the pleaded representations is to the effect that GMH conveyed that it held both Metro Investments and the Property in high regard and that it contemplated that Metro Investments’ DSSA would, in the future, be extended.

2001 representations

18    The 2001 representations are said to comprise three oral statements made by Mr Ross McKenzie of GMH at a time when Mr Torcaso and GMH Sales were contemplating purchase of the premises at 1 Port Road, Thebarton. The Applicants allege that Mr McKenzie made the following representations:

(a)    GMH regarded the Property as the most strategically important site in the Adelaide area for a Holden dealership;

(b)    it was imperative that GMH secure the Property so that that the site was not available to another motor vehicle business trading in competition with GMH;

(c)    GMH considered that the City Holden site in Grenfell Street, Adelaide was not suitable in the long term for the operation of a Holden dealership because of its limited size and because its inner-city location meant that it not would be economical in the longer term for use as a car dealership.

19    The Applicants allege that, at the request of GMH and relying on the 2001 representations, Mr Torcaso executed a contract for the purchase of the Property and, in accordance with the direction from GMH, nominated GMH Sales as its purchaser. Thereafter, Metro Investments operated the dealership from the Property pursuant to a lease with GMH Sales.

2005 representation

20    In 2005, GMH Sales negotiated the sale of the Property to Nominees. The Statement of Claim alleges that, in the course of negotiations, Mr Torcaso raised concerns about the price having regard to the lack of security “in terms of the tenure of his Metro Holden Dealership franchise beyond the next five year term to be agreed with [GMH]” which was expected to commence some 18 months later. The Applicants allege that Mr McKenzie said words to the effect that the Property “will always be a Holden Dealership and is the best site in Adelaide to operate a car dealership”.

The implied representations

21    The Applicants allege that the 2005 representation, by itself or in combination with the 2001 representation, GMH’s practice with respect to renewing dealerships and the absence of any suggestion that GMH would wish to have a Holden dealership at the property operated by anyone other than Mr Torcaso constituted an implied representation that “GMH would, in the absence of some material failure to meet [GMH]’s performance standards, continue to offer Metro Investments dealership renewals at the property”.

The Mooney representations

22    The Applicants allege that in the period between 2003 and 2007, GMH’s Managing Director, Mr Mooney, made oral representations to Mr Torcaso to the same effect as the 2001 representations and the 2005 representation.

The Batey representations

23    The Applicants allege that in the period between 2009 and 2010, Mr Batey, GMH’s Managing Director, made oral representations to Mr Torcaso to the effect that “Metro Holden would always be the Adelaide Holden dealership because City Holden’s dealership at Grenfell Street would not be there in the long term”.

The Premium dealership representations

24    The representations said to comprise the Premium dealership representations are alleged to have been made during 2006. The Applicants allege that a director of GMH, Mr Batish, orally represented to Mr Torcaso that:

(a)    GMH was promoting the concept of full service “premium dealerships” which would retail not only Holden vehicles but also other brands available for sale by GMH or its related entities;

(b)    the property was the best location in Adelaide for such a “premium dealership” but not its current condition;

(c)    GMH wanted the Applicants to upgrade and refurbish the site to meet its required standards for such a “premium dealership” including expanding and upgrading the showroom facilities and the service department;

(d)    GMH would allow Mr Torcaso to start a Saab dealership at Metro Holden’s other premises at 84-88 Main North Road, Prospect (the Prospect site) once some building works and fit-out works were undertaken there and, in due course, transfer the dealership to the Property.

The Hummer representation

25    The Applicants allege that Mr Batish made a further representation to it while it was carrying out works at the Prospect site, namely, that if Metro Investments refurbished the property to GMH’s standards, it would also be granted a Hummer franchise.

Reinforcement of the implied representations

26    Finally, the Applicants plead that the Premium dealership representations, the Hummer representations, the Mooney representation, the 2005 representation, 2001 representations and GHM’s practice with respect to renewing dealerships impliedly conveyed and reinforced the implied representations.

Reliance

27    The Applicants allege that, in reliance on the various representations, Metro Investments caused Nominees to acquire the Property in 2005 and that it and Nominees embarked in 2009 and 2010 on a substantial program of capital improvements with a view to the long term operation of a premium dealership at the Property. They incurred the capital costs of doing so and losses arising from the interruption to the ordinary course of business while the capital works were being undertaken.

28    The Applicants allege that GMH’s conduct in making the representations, and subsequently resiling from them, constitutes misleading or deceptive conduct in contravention of s 52 of the former Trade Practices Act 1974 (Cth) (the TPA) and, after 1 January 2011, contraventions of s 18 of the ACL.

Unconscionable conduct

29    The Applicants make their claim of unconscionable conduct by GMH in two ways. First, they allege that GMH’s conduct in making the representations and subsequently resiling from them constitutes unconscionable conduct.

30    The second basis upon which the Applicants make the claim of unconscionable conduct concerned GMH’s decision making with respect to the decision not to renew Metro Investments’ DSSA.

31    The Applicants make a number of allegations concerning GMH’s decision-making process including allegations that it:

(a)    did not give genuine consideration as to whether Metro Investments should be offered a renewal of the DSSA;

(b)    acted arbitrarily or capriciously;

(c)    did not have regard to its own conduct in making the various representations which are the subject of the misleading or deceptive conduct claim and the conduct of the Applicants in reliance on those representations;

(d)    based its decision on matters such as the ethnicity or residence of Mr Torcaso; and

(e)    did not act in good faith.

Breach of the Franchising Code

32    Finally, the Applicants allege that the DSSA constitutes a franchise agreement to which the Franchising Code of Conduct contained in Sch 1 to the Competition and Consumer (Industry Codes – Franchising) Regulations 2014 (Cth), and its predecessors, apply. Clause 6(1) of the 2014 Code requires each party to a franchise agreement to act towards the other party with good faith, within the meaning of the unwritten law from time to time. Section 51ACB of the CC Act proscribes contraventions of applicable industry codes.

33    Metro Investments alleges that GMH has not acted towards it with good faith in relation to its decision not to extend the DSSA.

34    I mention one particular matter. Mr Torcaso deposed that, on 21 December 2015, GMH gave as one reason for not extending the DSSA that it did not regard the name Torcaso as fitting in with the Holden brand. Each of Mr Bennett and Mr Keley has denied that anything to that effect was said. It is not possible to resolve that dispute presently, but I note two matters:

(a)    this claim of Mr Torcaso has been raised only relatively recently, despite the apparent extensive correspondence between the parties;

(b)    counsel for the Applicants did not seem to attach significance to it in his submissions concerning their prima facie case.

The GMH decision

35    The Respondents accept that Metro Investments has been one of its high performing dealers. It does not suggest that the decision not to extend the DSSA for Metro Investments is related to performance issues.

36    Mr Bennett is presently employed by GMH as its Dealer Network Development Manager. He deposed that GMH undertakes a review of its dealer network “footprint” every five years with a view to determining the appropriate number of dealers and their locations for “the long term optimisation of Holden sales, efficiency and dealer profitability”. Mr Bennett deposed to particular considerations relating to South Australia given GMH’s expectation that the sales of Holden vehicles in the Adelaide metropolitan area will decline following the cessation of manufacture of Holden vehicles at its Elizabeth plant. He deposed that GMH retained a consultant, Urban Science, in early 2015 to report on the desirable number of dealers in the Adelaide Metropolitan area and on their locations. Following the receipt of the report from Urban Science, Mr Bennett prepared a plan (the Network Plan). It reflected Mr Bennett’s judgment as to the appropriate location of GMH dealerships. In effect, the Network Plan involved GMH making a choice between which of two dealerships, City Holden or Metro Holden, should be renewed. Mr Bennett deposed to the reasons for his recommendation which included the relative connections of the owners of Metro Holden and City Holden with the Adelaide community, the extent to which they had secured fleet sales, the nature of their respective succession plans and the ownership of properties.

37    The matters to which Mr Bennett deposed are supported by Mr Keley, the Managing Director of Onstar, a branch of GMH.

The terms of the DSSA

38    Some features of the DSSA are to be noted. Clause 2.3 of the DSSA provides for its renewal. In particular, cl 2.3(c) provides:

Not later than 6 months before the end of the Term, Holden will notify the Dealer of its intention either to offer the Dealer a further term of appointment and the period of, and any conditions (including, but not limited to, condition precedent) attaching to, that term of appointment or not to offer the Dealer a further term of appointment. Holden has full discretion in making that decision. The Dealer has no recourse against Holden arising from any adverse decision of Holden.

39    Clause 25 is an entire agreement clause. It provides (relevantly):

The Dealer acknowledges that:

(a)    in entering into this agreement:

(i)    it has not relied on any representations or warranties about its subject matter except as expressly provided by the written terms of this agreement; and

(ii)    it has done so freely after having had an opportunity to obtain independent legal advice; …

The strength of the Applicants’ prima facie case

40    One potential difficulty for the Applicants is the time which has lapsed since the representations on which they rely were made. Further, subject to one qualification, none of the representations on which they rely was documented. The Applicants will therefore be relying on recollections of conversations which occurred up to 16 years ago. That being so, the Applicants may face the difficulties of proof of the kind to which McLelland CJ in Eq referred in Watson v Foxman (1995) 49 NSWLR 315 at 318-9. Nevertheless, it may be plausible that senior employees of GMH did make statements indicating an expectation that Metro Investments would, subject to continued satisfactory performance and compliance with the terms of its DSSA, be granted renewals of the DSSA. That is especially so having regard to the high regard with which Metro Investments and the Property have been held by GMH.

41    The qualification just mentioned is that Mr McKenzie did in a letter to Metro Investments of 8 June 2005 in relation to the proposed sale of the Property to Mr Torcaso state Holden’s “considered view that it is correct to value the property on the basis of an ongoing dealership operation”. That is consistent with representations as to the expectation to which I have just referred.

42    The mere fact that Holden does not intend any longer to maintain Metro Investments as a dealer at the Property does not of course render representations made many years ago misleading or deceptive. The representations may well have reflected GMH’s state of mind at the time they were made. The fact that circumstances have changed leading GMH to review its position does not, of itself, mean that its earlier representations were misleading or deceptive. The Applicants recognised this and pleaded that, insofar as the representations are with respect to future matters, they were made without a reasonable basis on GMH’s part. By this plea, it is evident that the Applicants have sought to invoke s 4 of the ACL and the former s 51A of the TPA.

43    Whether those provisions will avail the Applicants will depend, amongst other things, on their proof of the precise representations relied upon. Further, whether the representations proved were misleading will depend upon an assessment of them in the light of all surrounding circumstances: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; (2004) 218 CLR 592 at [38]-[39], [109]. Those circumstances include the knowledge of the parties that GMH’s practice was to issue DSSAs with a five year term and that, while there was an expectation that new DSSAs would be granted, there was no obligation on GMH to do so. Mr Torcaso himself recognised this as he deposed that, in the course of negotiations over the sale price for the Property in 2005, he had said words to Mr McKenzie to the following effect:

[51.2]    I am not prepared to pay Holden’s asking price because of the lack of security in terms of the tenure of my Metro Holden Dealership franchise agreement beyond the next five year term to be agreed with Holden after the expiry of my existing franchise agreement in about 18 months’ time.

44    The Applicants’ submissions placed considerable emphasis on GMH’s alleged failure to act toward Metro Investments with the good faith required by cl 6 of the Franchising Code of Conduct in the context of (a) the long duration of the relationship; (b) Metro Investments’ superior performance as a dealer; and (c) the course of conduct before December 2015, including the representations and Metro Investments’ reliance on those representations. They submitted that, while the obligation to act with good faith did not require GMH to subordinate its own interests to theirs, it did involve obligations to act honestly, reasonably and with fair dealing having regard to the interests of the parties: Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268 at [9]-[14]. In particular, the Applicants submitted that GMH was required to comply with standards of conduct which were reasonable having regard to the legitimate interests and reasonable expectations of both parties: Ibid.

45    The Applicants articulated their claim with respect to a want of good faith as follows:

[28.2]    … Just as, in a purely contractual context, the obligations are to be assessed and interpreted in light of the contractual benefit bargained for, in the context of a franchising arrangement which involves periodic renewals, it will be submitted that the obligations of fair dealing and reasonableness will take their content from and be affected by past dealings, including general practice (giving rise to reasonable expectations) and to representational conduct. In relational contracts such as a franchise agreement, good faith requires a high degree of communication and predictable performance.

[28.3]    In the present case, there is a serious question to be tried whether the requirements of good faith and good conscience were met in circumstances where, without prior consultation or an opportunity to be heard, a dealer of some 29 years’ standing was summarily excluded from consideration for a renewal, notwithstanding its impeccable history of performance, and the fact that the applicants had, at significant cost and for the mutual benefit of them and GM Holden (i) acquired the dealership, (ii) secured the freehold for GM Holden, (iii) purchased the freehold at GM Holden’s request and (iv) substantially upgraded the premises at GM Holden’s encouragement in a way which was uniquely suited to a Holden Premium Dealership. The decision is all the more extraordinary given the continued acknowledgment that Thebarton is the best site, and the fact that Claridge Holden subsequently closed.

[28.4]    GM Holden’s decision-making process failed to comply with basic standards of fair dealing. It is one thing to recognise that good faith does not involve a subversion of one’s own commercial interests, it is another to suggest that it does not require account to be given to and taken of one’s own past conduct and practices and the impact that a departure, without proper consideration of the reasons and consequences, will have on another party. Further, for GM Holden to have regard to the ethnicity or name of Mr Torcaso was plainly not consistent with the requirements of good faith or fair dealing, since it is an extraneous, arbitrary and unjustified form of discrimination.

(Citations omitted)

46    The circumstances of this case are unusual. Metro Investments is a long term dealer of GMH. It is well regarded and there is no suggestion of any dissatisfaction with its performance. The decision by GMH not to extend the DSSA results from its decision to reduce its dealership “footprint” and its view that this required a choice between two well regarded dealerships, Metro Holden and City Holden.

47    If this case proceeds to trial, it will involve consideration of the content of the obligation of good faith in this particular context. That may support a conclusion that good faith did require Metro Investments to be given some opportunity to address the matters which GMH regarded as relevant to its decision. This is not to say that the principles of procedural fairness developed in the context of administrative law are to be incorporated: cf Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825, (2015) 329 ALR 1 at [1004]-[1005] (Edelman J) with reference to Braganza v BP Shipping Ltd [2015] UKSC 17, (2015) 1 WLR 1661 at [28].

48    I consider it appropriate, without further analysis, to proceed on the basis that the Applicants have established a prima facie case in the requisite sense. I do not think that it should be characterised as strong, having regard to the evidentiary issues and legal issues I have mentioned. But nor should it be regarded as slight.

The balance of convenience

49    A number of matters tell in the balance of convenience.

50    The Applicants emphasised that if interlocutory injunctive relief is refused, Metro Investments will have to cease its business at the Property. The evidence indicates that, at least in the short term, Metro Investments will have difficulty in obtaining a dealership from another vehicle manufacturer, and that the size and layout of the Property make it unsuitable for a used car operation. The closure of the business will be significant, not only for Metro Investments and Nominees, but also for the 73 employees it engages. Further, if the Applicants are ultimately found to be entitled to the non-pecuniary orders they seek, it will be difficult for Metro Investments to re-establish its operations.

51    The Applicants submitted that the matter could come to trial relatively quickly, especially if the trial is heard in stages with the first stage confined to the liability aspects; that they are continuing in the business with arrangements in place for 2018 (the Applicants submitted that this had the imprimatur of GMH); that if the injunction is granted, it is likely that the Metro Holden business will continue to be profitable for both GMH and it; and that the evidence of prejudice to GMH is of a limited, and for the most part general, kind.

52    GMH emphasised the inconvenience to it and its continuing dealers which the grant of interlocutory injunction would cause. In this respect, it referred to its allocated areas of primary responsibility (APR) which are allocated to each dealer. These areas are defined by postcodes. GMH has now decided the APRs for its dealers commencing on 1 January 2018 on the basis that Metro Investments will not be allocated an area. The area forming Metro Investments’ APR is now been allocated to other dealers, principally, it seems, to City Holden.

53    Mr Bennett deposed:

[61]    The terms of Holden’s new DSSA for 2018-2022 are different to the current DSSA. If Metro is permitted to continue as a Holden dealer after its existing DSSA expires on 31 December 2017, it will cause considerable confusion and potential dissatisfaction within Holden and the dealer network, as different dealers will be operating on different terms. This is likely to negatively impact Holden’s relationship with, and reputation amongst, its dealer network.

Later, Mr Bennett referred to “significant confusion” occurring in surrounding APRs.

54    Mr Bennett deposed to difficulties which Metro Investments may create if it takes orders for vehicles with future delivery dates which it will be unable to fulfil if it does not succeed in obtaining a permanent injunction. I accept that this may cause some difficulties but doubt that it will be significant or unable to be managed sensibly. Clause 19 of Metro Investments’ DSSA provides for the manner in which orders which have not been completed at the time of the termination or expiry of DSSA are to be addressed. It is to be expected that there could be some adaptation of these provisions if an injunction is granted. Moreover, in a letter of 10 October 2017, GMH addressed this very situation in relation to the expiry of the Metro Investments dealership on 31 December 2017. The letter, authored by Mr Bennett, contained an “outline [of] the process leading up to the closure of the Dealership including the responsibilities and obligations of both parties prior to and after the closure date” and stated:

[1]    Under the DSSA clause 19.7 Holden will, upon expiration of the [DSSA], purchase eligible new or unused motor vehicles (excluding Special Vehicles and modified, damaged or deteriorated vehicles) of the current lines purchased by the Dealer, or by a financing organisation, from Holden during the 12 months preceding the effective date of closure. Eligible vehicles are vehicles that are unregistered, have no accessories fitted and have less than 150 kms on the speedometer. The prices payable for the eligible new vehicle stock are the net prices and charges paid to Holden less any allowances paid by Holden.

…

[2]    Holden has exercised its option to purchase any special tools recommended by Holden in accordance with the Service Policies and Procedures Manual …

[3]    Holden has the option to purchase any parts inventory and this will be determined closer to the effective date of closure. However it is the intention of Holden to purchase any parts that are of merchantable quality (current and relevant) and in unbroken packaging. …

[6]    The Dealer will plan to deliver as much of the current new vehicle stock by 31 December 2017. Holden SA zone office will review the stock situation with the Dealer on a regular basis to achieve the targeted outcome …

(Emphasis omitted)

55    Mr Bennett referred to other matters, for example, the need to train Metro Investments’ staff in relation to the vehicles it will be selling in 2018 and to the effect on GMH’s incentive scheme. However, GMH did not provide any real detail as to the extent of the inconvenience either would cause or of the extent to which each could be accommodated by sensible and practical arrangements.

56    Next, GMH referred in a very general way to the arrangements been put in place with respect to the sale of parts. Mr Bennett deposed:

[69]    I have been informed by Paul Rietveld, Aftersales Operations Manager at Holden, and verily believe that:

(a)    he has been working with three Adelaide dealers who are considering upgrading their parts distribution business on the basis that Metro (which previously was a large parts provider to the area) would no longer be in the market;

(b)    he expects that in early December 2017, Holden will enter into Direct Parts Dealer Agreement with some or all of these dealers; and

(c)    the Direct Parts Dealer Agreement will require that the dealer, prior to 1 January 2018, take steps to secure sufficient space to operate the parts business, meet inventory requirements, upgrade their facilities for delivery truck accessibility and ensure they have the people capability.

57    Next, Mr Bennett deposed to the effects on City Holden. It has undertaken works at different sites to prepare to manage its enlarged APR. In this respect, Mr Bennett deposed:

All of this expense and work will be wasted if Metro Holden is allowed to continue to trade from the Thebarton site, as it assumes that City Holden will take responsibility for customer previously serviced by Metro. City Holden will not have any need for the Mile End site if Metro Holden continues to trade.

58    As can be seen, this evidence seems to go more to the question of whether a permanent injunction should be granted rather than an interlocutory injunction.

59    Finally, Mr Bennett deposed:

[77]    [I]f Metro continues to operate as a Holden dealership after 31 December 2017 then Holden’s arrangements for the South Australian market, which have been the subject of significant works since at least 2015, will be fundamentally disrupted for the foreseeable future. Based on my experience and knowledge of Holden’s business, I would expect the consequences of this for Holden and its continuing dealers to be complex and difficult to quantify.

60    One may readily accept that there will be some dislocation to GMH’s plans, and those of its continuing dealers, if an interlocutory injunction is granted. The passages I have set out indicate, however, the very general way in which GMH put the evidence as to that interference before the Court.

61    An important consideration is that the Court would be required to fix the terms of the continuing contractual relationship. This is not insuperable and it may be that the terms of the existing DSSA could provide an appropriate basis. Nevertheless, it is a reason for the Court to proceed circumspectly.

Delay

62    In a context in which both the applicants and the respondents will be prejudiced by the refusal or grant of an interlocutory injunction, as the case may be, delay by an applicant in seeking the Court’s intervention is an important consideration. It may tilt the balance of convenience against the grant of interlocutory injunctions. That is so in the present case.

63    As already indicated, Mr Torcaso was informed some two years before the expiry of Metro Investments’ DSSA that GMH would not be granting a further DSSA. Further, GMH confirmed that in correspondence dated 18 March 2016 and 26 June 2017. Despite this forewarning, the Applicants did not commence the present proceedings until 7 November 2017, only some eight weeks before the expiry of the DSSA.

64    It is appropriate to refer to some of the events which have occurred since GMH first gave the notice. Between 29 March and June 2016, the solicitors for the parties exchanged correspondence. In a letter of 24 May 2016, GMH’s solicitors confirmed its willingness to participate in a mediation with Metro Investments and sought a more complete articulation of the Applicants’ claim. They repeated that willingness again by a letter of 16 June 2016.

65    On 22 August 2016, the Applicants’ solicitors informed GMH’s solicitors that Metro Investments did not wish to mediate the dispute. The letter said (relevantly):

Our client no longer wishes to participate in a mediation process with Holden. The mediation process requires there to be an element of goodwill and trust between the participating parties. The goodwill and trust that our client had in Holden has been shattered by the events of December 2015 …

This dispute can be resolved very easily and inexpensively by Holden agreeing to the position put by us to you in our letter of 23 May 2016. Unless the offer put by our client to your client in that letter is accepted within 14 days our client has no option but to commence proceedings in the Supreme Court of South Australia seeking appropriate declarations from the Court with respect to the granting by Holden of a new DSSA to a third party or in the alternative damages against Holden for the loss and damage our client will suffer as a result of the refusal by Holden to continue to extend the existing DSSA in respect of 1 Port Road Thebarton.

We trust this can be avoided and await your response.

66    It is pertinent to add that the solicitors recounted in that letter a number of the same matters upon which the Applicants rely presently. It is also pertinent to note that, not only did the solicitors convey Metro Investments’ decision not to participate in the mediation process, they also foreshadowed the imminent commencement of proceedings in the Supreme Court of South Australia. Despite that intimation, no proceedings were commenced.

67    By letter 8 September 2016, GMH’s solicitors denied the allegations of misrepresentations made in the Applicants’ solicitors’ letter of 22 August 2016.

68    Between 8 September 2016 and 12 July 2017, a period of some 10 months, there was no further correspondence from Metro Investments’ solicitors to GMH’s solicitors. Correspondence between the solicitors resumed with a letter from Metro Investments’ solicitors on 12 July 2017 and led to the mediation on 8 September 2017. Even then, a further two months elapsed before the proceedings were commenced in this Court.

69    Counsel for the Applicants sought to explain the lapse of time by reference to the circumstance that one of GMH’s dealers, Claridge Holden, had surrendered its dealership in about September or October 2016. Mr Torcaso had enquired of GMH as to whether that would lead to any change of attitude by GMH with respect to Metro Holden. Mr Keley deposed that he informed Mr Torcaso on 2 November 2016 that GMH was assessing the effect of the closure of Claridge Holden and added that “it would be wrong for me to convey any impression that Holden’s current position concerning the future of Metro beyond the current DSSA would be likely to change”. Mr Torcaso also deposed to having received a telephone call while he was at the Clipsal race in early March 2017 which led him to think that GMH was not persisting with its plans. There is a dispute as to precisely what was said in that telephone call which will have to be resolved if the matter proceeds to trial. For present purposes, there may be some question as to whether that telephone call, in the circumstances in which it was made, could reasonably be understood as having had the effect for which Mr Torcaso contends. In any event, GMH confirmed its position by a letter dated 26 June 2017 and stated expressly that it would not be renewing its DSSA with Metro Investments.

70    A delay by an applicant in instituting a claim for an injunction is an important discretionary consideration and may by itself be a sufficient reason for declining the grant of an interlocutory injunction: Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 76 ALR 633 at 638; Network Ten Ltd v Fullwood (1995) 62 IR 43 at 47; Williment v Federal Commissioner of Taxation [2010] FCA 808, (2010) 190 FCR 234 at [17]-[18].

71    An important feature of this case is the very long period of notice which GMH gave Metro Investments that it would not be extending the DSSA. The period was such that the Applicants could have brought proceedings, had a full trial and even an appeal determined within the two year period. Had the Applicants brought proceedings after receiving GMH’s letter of 26 June 2017, a trial on at least the liability aspects is likely to have been possible. This is a case in which the Applicants themselves have created the circumstance in which the Court is now been asked to intervene. It is not necessary that the Applicants’ delay be characterised as unreasonable. The fact that they have waited almost two years before bringing the present proceedings counts strongly against the grant of the interlocutory relief which they seek.

Damages as an adequate remedy

72    Further, this is a case in which, if the Applicants establish their respective causes of action, damages may well provide an adequate remedy. The principal losses to the Applicants would appear to be the loss of valuable income source, possible diminution in the value of the Property and possible wastage of expenditure on capital improvements. Each of those matters is capable of sounding in an award of damages. In expressing that conclusion, I am not overlooking that there may be some difficulties in quantification but it was not suggested that they will in insuperable. In fact, the Applicants advanced little by way of submissions to the effect that damages would not be an adequate remedy.

Conclusion

73    These are my reasons for refusing the application by the Applicants for interlocutory relief.

Associate:

Dated:    13 December 2017