REASONS FOR JUDGMENT

1                                             This is a notice of motion filed by the applicants seeking certain interlocutory injunctions.  It is brought on an ex parte basis. 

2                                             The application commencing the proceedings was filed yesterday (that is, 10 November 2010).  It seeks declarations that the respondents have contravened provisions of the Trade Practices Act 1974 (Cth) (specifically ss 52, 51AC and 47(6)), as well as damages for these alleged contraventions.  Alternatively, the application seeks an order for damages for alleged breaches of contract and/or equitable compensation.

3                                             I dealt with the matter in chambers yesterday, at which time I made orders abridging the time for service and enabling service to be effected by facsimile.  The applicants (who have appeared today in support of their application for interlocutory relief) have drawn to my attention a facsimile communication dated 11 November 2010 from Comlaw Barristers & Solicitors.  That facsimile states that Comlaw acts for Cold Rock Management Pty Ltd and that:

We have been provided with court documents filed with the Federal Court of Australia...  We do not have a complete set of the Court documents.  We do not believe our client has received a complete set. 

We do not have instructions at this stage to appear on behalf of our client.  As you are aware we are Melbourne based, as is our client…

The second defendant is in England at this time and we are not in a position to obtain meaningful instructions or even seek instructions to act on his behalf.

4                                             The facsimile contains other information, including that Comlaw did not expect to be in a position to respond to the matters alleged in the Court documents in a meaningful manner until 18 November 2010. 

5                                             The applicants, however, have proceeded with their application today and in support have read the following affidavits: 

(1)               the affidavit of David Anthony Rose affirmed 9 November 2010,

(2)               the affidavit of Paul Anthony O’Neill sworn 9 November 2010,

(3)               the affidavit of Chriss Liristis sworn 10 November 2010,

(4)               the affidavit of Rajive Kapoor sworn 10 November 2010,

(5)               the affidavit of William Arthur Morgan sworn 9 November 2010,

(6)               the affidavit of Anthony Joseph Andrews sworn 9 November 2010, and

(7)               the affidavits of Paul Gerard Lynch sworn 10 and 11 November 2010.

6                                             The facsimile from Comlaw stated that the respondents had instructed a third party, Norco Co-Operative Limited (Norco), to continue to supply the applicants with base mix at least until the end of this week.  However, I am informed that base mix has not been made available.  Accordingly, I am persuaded that this application should be dealt with on an urgent basis today notwithstanding the absence of the respondents. 

7                                             Mr Coulsen of counsel has helpfully provided an outline of argument.  The applicants, for the purpose at least of the interlocutory injunctions sought today, rely upon the alleged contraventions of ss 52 (that is, misleading and deceptive conduct) and 47 (that is, the exclusive dealing provision) of the Trade Practices Act, as well as the allegations of equitable estoppel and breach of contract.

8                                             The relevant principles in relation to interlocutory relief are clear.  First, there must be a serious question to be tried in the sense that the applicant has made out a prima facie case, so that if the evidence remains as it is there would be a probability at the trial that the applicant would be held entitled to relief.  Second, it must be the case that the applicant would suffer irreparable injury for which damages will not be adequate compensation unless the injunction is granted.  Thirdly, the balance of convenience must favour the granting of the injunction.

9                                             The affidavit material which has been read in support of the application is sufficient to raise a prima facie case of contravention of s 47(6) of the Trade Practices Act.  In short, the evidence, at least at the prima facie stage, indicates that the first respondent supplies the second and third applicants with the right to operate their stores, being Cold Rock ice cream stores, under franchise agreements on the condition that they acquire ice cream from one of three approved suppliers.

10                                          The evidence in the affidavits, again at least at this prima facie stage, indicates an attempt by the first respondent to prevent the second and third applicants from obtaining ice cream from the first applicant by taking steps to cause Norco (the third party supplier of the base mix) not to supply base mix to the first applicant.  From the evidence, it is apparent that the first applicant needs this Norco base mix to manufacture ice cream for supply to the second and third applicants.  The urgency arises from the fact that, according to the evidence, the first applicant only has enough base mix left to make ice cream for a short period of time. 

11                                          In terms of the allegations of misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act there is also a prima facie case disclosed by the affidavits read in support of the application. 

12                                          The evidence, at least at this stage if all other things remain the same, suggests that the first respondent has by its conduct led Mr Rose (the director of the first applicant) to believe that he could manufacture and supply ice cream to Cold Rock franchise stores and manufacture ice cream at an off-site factory.  There is evidence that in reliance on this conduct Mr Rose took a number of steps, at not inconsiderable expense, and started manufacturing ice cream for the purpose of supply to Cold Rock franchise stores.  However, there is also evidence that the first respondent is now informing franchisees and Norco that the first applicant is not an approved manufacturer and supplier of Cold Rock ice cream.  If the evidence otherwise remains the same, there is at least a serious question to be tried as to whether the first respondent has thereby engaged in misleading and deceptive conduct.

13                                          The equitable estoppel allegations arise from and, at least at this interlocutory stage, are sufficiently supported by the same factual circumstances underlying the misleading and deceptive conduct case.  In other words, there is also a serious question to be tried in relation to the equitable estoppel allegations. 

14                                          As to the breach of contract, a verbal agreement between the first applicant and first respondent is alleged and there is evidence to support its existence.  The terms are set out in Mr Coulsen’s written submissions, particularly that the first applicant is approved to manufacture Cold Rock ice cream and to supply it to other franchisees.  According to the applicants, and sufficiently supported by the evidence at this stage, the first respondent has evinced an intention since 25 August 2010 not to be bound by the terms of this verbal agreement.  The applicants seek to restrain the first respondent from continuing to engage in conduct in breach of the verbal agreement. 

15                                          As to the balance of convenience, it is not necessary to say much given that the respondents have not appeared today.  However, it is clear on the evidence that the first applicant has made considerable capital investment by way of purchasing of plant and equipment and motor vehicles, the financing of which is dependent on the continued operation of the manufacturing facility.  There is evidence of the first applicant’s entry into a lease, that the manufacturing facility is at present exclusively used for the manufacture of Cold Rock ice cream and that the first applicant employs some 10 staff.  There is no indication, at least at this stage, that the making of the interlocutory orders sought subject to the proffering of the usual undertaking as to damages will result in any particular harm to the respondents.  On the other hand, not making the interlocutory orders sought will have substantial adverse impact upon the first applicant and potential impacts on others.  In particular, the first applicant will no longer be able to manufacture ice cream for the purpose of supply to Cold Rock stores if it cannot obtain the relevant base mix and if other franchisees believe that they are prohibited from purchasing ice cream from the first applicant.

16                                          In these circumstances, I am satisfied that orders should be made as sought subject to the usual undertaking as to damages.  As the orders are being made ex parte there should be liberty to apply on 24 hours’ notice and a suitably early return date of the matter before the duty judge next week so that the respondents will have the opportunity to appear before the Court.  With the benefit of the respondents’ appearance a decision can then be made as to whether the injunctions should be continued or not.

Associate:

Dated:         11 November 2010