FEDERAL COURT OF AUSTRALIA

Mindshare Communications Ltd v Orleans Investments Pty Ltd

[1999] FCA 1865

MINDSHARE COMMUNICATIONS LIMITED v

ORLEANS INVESTMENTS PTY LIMITED AND ANOR

N 1437 OF 1999

HILL J

20 DECEMBER 1999

SYDNEY

THE COURT ORDERS THAT:

1.                  Orders 1, 3 and 4 quoted below are set out in the document which has been initialled and dated, and which will be placed with the papers.  The reference to (b), (c) and (d) refer to (b), (c) and (d) in the schedule to the application filed 14 December 1999.

“1.       Upon the applicant by its counsel –

(a)               giving the usual undertaking as to damages;

(b)               undertaking to lodge with the Court on or before 31 December 1999 a guarantee or bond by an Australian trading bank, to pay to the Registrar of the Court’s NSW District Registry such total sum (not exceeding $A80,000) as the Court may order the applicant to pay to the first and/or second respondents pursuant to the usual undertaking as to damages;

ORDER that, pending the final determination of these proceedings, the respondents and each of them, by themselves, their servants and agents, be restrained from publishing, in trade or commerce, or by means involving the use of Australian telephonic services, to any person, any representation the same or substantially the same as any of the following:

(b)               standard industry rebates (including discounts or bonuses), or rebates (including discounts or bonuses) obtained by the applicant, for the television medium in Taiwan:

(i)                 are 3.375% to 5.0% or more for terrestrial television stations;

(ii)               are 3.8% to 18.9% for terrestrial brokers; and

(iii)             exceed 25% with most cable television channel groups;

(c)               the conduct of the Applicant in relation to rebates (including discounts or bonuses), or rebates (including discounts or bonuses) obtained by the applicant, applicable to purchases of air time from media operators and brokers in Taiwan on behalf of J Walter Thompson, Taiwan Ltd (JWT) and Ogilvy & Mather (Taiwan) Co Ltd (O&M)  (collectively Advertising Agents) constitutes and has constituted:

(i)                 passing on of charges that have not been incurred;

(ii)               charging for services that have not been provided;

(iii)             breach of contract;

(iv)             fraud or misappropriation of funds or both; and

(v)               contravention of Article 339 of the Republic of China Criminal Code;

(d)               the Applicant, in its dealings with the Advertising Agents, retains media rebates (including discounts or bonuses), or rebates (including discounts or bonuses) obtained by the applicant, in addition to charging commissions or service fees.

3.         Grant liberty to restore the matter to the list on two business days’ notice.

4.                  Reserve the costs of 20 December 1999.”

2.                  Applicant to file and serve any affidavits on which it proposes to rely on or before 21 January 2000.

3.                  Respondents to file and serve any affidavits on which they propose to rely on or before 11 February 2000.

4.                  Applicant to file and serve any affidavits in reply on or before 21 February 2000.

5.         Stand the matter over for directions before Justice Katz on 25 February 2000.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

EX TEMPORE REASONS FOR JUDGMENT

1                     The applicant, Mindshare Communications Limited, is a company incorporated in Hong Kong.  It has applied to the Court for injunctive relief restraining the first and second respondents, Orleans Investments Pty Limited trading as Orleans Media Consultancy and Wayne Gregory Eckett from publishing, in trade or commerce or by means involving the use of telephonic services, four representations referred to in the schedule attached to the application lodged with the Court.  For the present it seeks interlocutory relief in the same terms save that orders in respect of the first of the representations are agreed should not be made.

2                     The four representations presently in dispute as they are set out in the schedule to the application are as follows:

“(a)     rebates apply to almost all purchases of air time from media operators and brokers in Taiwan;

  (b)      standard industry rebates for the television medium in Taiwan:

(i)                 are 3.375% to 5.0% or more for terrestrial television stations;

(ii)               are 3.8% to 18.9% for terrestrial brokers; and

(iii)             exceed 25% with most cable television channel groups;

(c)        the conduct of the Applicant in relation to rebates applicable to purchases of air time from media operators and brokers in Taiwan on behalf of J Walter Thompson, Taiwan Ltd (JWT) and Ogilvy & Mather (Taiwan) Co Ltd (O&M)  (collectively Advertising Agents) constitutes and has constituted:

(i)                 passing on of charges that have not been incurred;

(ii)               charging for services that have not been provided;

(iii)             breach of contract;

(iv)             fraud or misappropriation of funds or both; and

(v)               contravention of Article 339 of the Republic of China Criminal Code;

(d)        the Applicant, in its dealings with the Advertising Agents, retains media rebates in addition to charging commissions or service fees.”

3                     For the purposes only of the present interlocutory application the respondents have agreed that injunctions in the form referred to in (c) and (d) should be granted subject to the question of appropriate undertakings as to damages and security therefore.  The respondents submit also that while injunctive relief could at present be granted on the evidence in respect of the first of the now remaining representations any injunctive relief should be limited to representations made to clients of the applicant. 

4                     As the matter comes before me the only evidence that has been filed is evidence of the applicants.  It largely details the events which have given rise to the present interlocutory dispute.  There is little need to say a great deal about this evidence which has not presently been the subject of challenge.  If it stays as it is it demonstrates that the applicant is part of a group of companies which provides communication services and in particular does so in Taiwan under the name Mindshare Taiwan.  Part of its business, at least, consists of wholesaling on air advertising time which it offers as part of its services, mainly to retail agencies but also to a number of individual clients.  The retailers are mainly advertising agents and include J. Walter Thompson, Oglivie and Mather and Euro.  Both of the first two companies are part of the WPP group. 

5                     While Mindshare does not sell air time as such it provides its clients with a package of services.  The agreements which it enters into with clients, in effect provide that its remuneration is to come from rebates, bonuses or volume discounts such as are returned to it from the media.  On 6 May 1998 an agreement was entered into between Mindshare Taiwan and the respondents by way of consultancy.  It is perhaps only relevant to note that that agreement provided for a monthly remuneration of $US20,800.  The consultancy agreement between the respondents and the applicant was brought to an end on 26 July 1999 purportedly pursuant to a term in the consultancy agreement under which Mindshare Taiwan made a payment of $US62,400 in lieu of giving notice.

6                     Relationships between the applicant and the respondents deteriorated.  One evidence of this was proceedings commenced in Taiwan against the respondents by the applicant seeking injunctive relief for disclosure of certain confidential information.  Subject to what effectively was payment of a sum of money by way of security for potential damages it seems that the Taiwanese court in due course did grant an injunction.   The precise circumstances in which this was granted have not been investigated and I say no more about it.

7                     As the evidence presently stands the applicant has demonstrated that the respondents, through Mr Eckett at least, have made representations of the kind referred to above.  As the evidence presently stands while it is clear, despite some denial, that rebates are granted by media interests in Taiwan they are not of the order suggested in the representations.  I should say that the representations were in the form apparently of faxes, and perhaps e-mails, originating from Australia ensuring thereby that jurisdiction was clearly available to this Court under the Trade Practices Act.  The evidence is also that the representations are false.  It is not necessary for me to detail that evidence at this stage.  It no doubt may be the subject of dispute when the matter finally comes to hearing.

8                     I am satisfied that the applicant has in these circumstances demonstrated an arguable issue to be tried and in due course I will give directions for the filing of evidence in respect of a final hearing.  The evidence satisfies me that the representations would be potentially harming to the business of the applicant and on the state of the evidence as it stands it seems to me that the respondents have little to say on the question of balance of convenience.  On the one hand the applicant, if the evidence stays as it is, has demonstrated that it stands to suffer considerable damage.  The respondent, on the other hand, has not really demonstrated why the respondent could not carry on business in Taiwan without making representations which, on the face of them, are false.  I should add that there are no discretionary matters at the moment which would be suggested as relevant to the consideration of whether injunctive relief should be granted.

9                     As I have already indicated the only real dispute in relation to the granting of injunctive relief at the present time lies in whether the injunctive relief should, in respect of the first representation, be restricted to representations made to clients of Mindshare.  I raised with counsel for the respondent why injunctive relief should not be granted so as to prevent the making of misleading and deceptive statements in trade or commerce to persons who were potential clients of the applicant.  If the representations are in fact misleading and deceptive it is hard to see why they should be permitted to be made to anyone, and certainly not to persons who potentially would be clients, as it would be practically impossible to identify by name those who were or were not potential clients.  For these reasons I think any injunctive relief on an interim basis should be granted in a form which does not restrict the relief to existing clients as at a particular date such as the day when the agreement between the respondents and the applicant was terminated in July 1999.

10                  The applicant proffers the usual undertaking as to damages, however, the respondent points out that the applicant is a company incorporated in Hong Kong carrying on business in Taiwan and that there is no evidence before me which would suggest that should ultimately the injunction be dissolved the applicant could meet from assets in Australia any damages which the respondents might suffer.  The applicant responds that the applicant could provide a bank guarantee or other security acceptable to the Registry to provide security for any damages which the respondents might suffer.  It is not in dispute between the parties that such a guarantee would not be sufficient to deal with the question.  The issue between them is rather the amount of the security.

11                  There is considerable difficulty on my part in assessing what amount would suffice to secure the respondents should ultimately the injunction be dissolved.  Counsel for the applicant pointed to the order in Taiwan which from the bar table is said to amount to approximately $A50,000.  Counsel for the respondent points to the consultancy agreement between the parties pursuant to which an amount of $US20,800 was payable on a monthly basis and submits that the security should be in an amount of $US240,000 (approximately $A330,000).  That figure is said to have some relationship to the $US20,800 referred to in the consultancy agreement.  Quite what relationship, I know not, since it would be roughly 12 months and one would hope that the ultimate outcome of the case would not last that long.

12                  One could hope that apart from the summer vacation the matter could be heard relatively early in the new year, particularly when directions could be made for the filing of affidavits and the evidence to be totally complete before the beginning of term next year.  If urgency is made clear I have no doubt the matter could get on for hearing some time around March of next year after the Full Court sittings in February.  As I have said, there is almost no evidence on which I can sensibly arrive at a figure. 

13                  Perhaps all I can do is take a period of, say, three months at the moment which would take it through into the time for hearing and proceed on the figure of $US20,800 for the three month period. If the respondents are able to demonstrate by evidence that this amount would be inadequate to deal with damages then no doubt they can make application to vary the order accordingly.  At least this way the matter is held until close to hearing and can be the subject of further consideration or agreement between the parties should that ever prove to be possible.

14                  Three months at approximately $US20,000 is approximately $A80,000.  In the want of any other evidence to the contrary I would order as a condition of granting relief that the applicant lodges on or before a certain date a guarantee or bond in that amount. 

15                  I make the following orders:

1.         Orders 1, 3 and 4 quoted below are as set out in the document which I have initialled and dated, and which will be placed with the papers.  The reference to (b), (c) and (d) refer to (b), (c) and (d) in the schedule to the application filed 14 December 1999.

“1.       Upon the applicant by its counsel –

(a)        giving the usual undertaking as to damages;

(b)        undertaking to lodge with the Court on or before 31 December 1999 a guarantee or bond by an Australian trading bank, to pay to the Registrar of the Court’s NSW District Registry such total sum (not exceeding $A80,000) as the Court may order the applicant to pay to the first and/or second respondents pursuant to the usual undertaking as to damages;

ORDER that, pending the final determination of these proceedings, the respondents and each of them, by themselves, their servants and agents, be restrained from publishing, in trade or commerce, or by means involving the use of Australian telephonic services, to any person, any representation the same or substantially the same as any of the following:

(b)        standard industry rebates (including discounts or bonuses), or rebates (including discounts or bonuses) obtained by the applicant, for the television medium in Taiwan:

(i)         are 3.375% to 5.0% or more for terrestrial television stations;

(ii)               are 3.8% to 18.9% for terrestrial brokers; and

(iii)             exceed 25% with most cable television channel groups;

(c)                the conduct of the Applicant in relation to rebates (including discounts or bonuses), or rebates (including discounts or bonuses) obtained by the applicant, applicable to purchases of air time from media operators and brokers in Taiwan on behalf of J Walter Thompson, Taiwan Ltd (JWT) and Ogilvy & Mather (Taiwan) Co Ltd (O&M)  (collectively Advertising Agents) constitutes and has constituted:

(i)         passing on of charges that have not been incurred;

(ii)               charging for services that have not been provided;

(iii)             breach of contract;

(iv)             fraud or misappropriation of funds or both; and

(v)               contravention of Article 339 of the Republic of China Criminal Code;

(d)        the Applicant, in its dealings with the Advertising Agents, retains media rebates (including discounts or bonuses), or rebates (including discounts or bonuses) obtained by the applicant, in addition to charging commissions or service fees.

3.         Grant liberty to restore the matter to the list on two business days’ notice.

4.         Reserve the costs of 20 December 1999.”

2.         Applicant to file and serve any affidavits on which it proposes to rely on or before 21 January 2000.

3.                  Respondents to file and serve any affidavits on which they propose to rely on or before 11 February 2000.

4.                  Applicant to file and serve any affidavits in reply on or before 21 February 2000.

5.         Stand the matter over for directions before Justice Katz on 25 February 2000.

I certify that the preceding fifteen (15)

numbered paragraphs are a true copy of the

Reasons for Judgment herein of the

Honourable Justice Hill.

Associate:

Dated:              20 December 1999

Counsel for the Applicant:                                 A Leopold

Solicitor for the Applicant:                                 Allen Allen & Hemsley

Counsel for the First and

Second Respondents:                                       G Lucarelli

Solicitor for the First and

Second Respondents:                                       Carneys

Date of Hearing:                                               20 December 1999

Date of Judgment:                                             20 December 1999