FEDERAL COURT OF AUSTRALIA

Wirrimanu Community Store Aboriginal Corporation v Outback Stores Pty Ltd [2019] FCA 1882

File number:

NTD 34 of 2019

Judge:

WHITE J

Date of judgment:

8 November 2019

Catchwords:

PRACTICE AND PROCEDURE – application for interlocutory injunctions requiring certain action by the respondent by way of “hand over”, and restraining it from engaging in certain conduct following the purported suspension by the applicant of the agreement pursuant to which the respondent managed the applicant’s store – whether the applicant has shown a prima facie entitlement to a legal or equitable right to be protected by the grant of the interlocutory injunctions sought – whether applicant had shown, prima facie, a right to suspend the agreement – applicant’s conduct in suspending the agreement not shown to be authorised with the consequence that the applicant is seeking the interlocutory injunctions to make effective conduct which was, prima facie, unlawful – application refused.

Legislation:

Australian Consumer Law ss 20, 21, 236, 237

Competition and Consumer Act 2010 (Cth)

Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth)

Cases cited:

BP Refinery (Westernport) Pty Limited v Hastings Shire Council (1977) 180 CLR 266

Samsung Electronics Company Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238

Date of hearing:

8 November 2019

Registry:

Northern Territory

Division:

General Division

National Practice Area:

Commercial and Corporations

Sub-area:

Commercial Contracts, Banking, Finance and Insurance

Category:

Catchwords

Number of paragraphs:

42

Counsel for the Applicant:

Mr E Belperio

Solicitor for the Applicant:

Johnson Winter & Slattery as agents for Bottoms English Lawyers

Counsel for the Respondent:

Mr M Hoffmann QC

Solicitor for the Respondent:

MinterEllison

ORDERS

NTD 34 of 2019

BETWEEN:

WIRRIMANU COMMUNITY STORE ABORIGINAL CORPORATION (ICN 7293)

Applicant

AND:

OUTBACK STORES PTY LTD (ACN 120 661 234)

Respondent

JUDGE:

WHITE J

DATE OF ORDER:

8 NOVEMBER 2019

THE COURT ORDERS THAT:

1.    The application for interlocutory injunctive relief contained in the interlocutory application filed 1 November 2019 is dismissed.

2.    The Applicant is to pay the Respondent’s costs of and incidental to that application.

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

EX TEMPORE REASONS FOR JUDGMENT

WHITE J:

1    This judgment concerns an application for interlocutory injunctive relief.

2    The applicant in the proceedings is the Wirrimanu Community Store Aboriginal Corporation. It is a corporation registered under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (the CATSI Act). The applicant owns a retail store known as the Wirrimanu Community Store at Balgo in Western Australia (the Store). Balgo is in a remote location, being on the edge of the Tanami Desert and about a three hour drive on a metal road from Halls Creek.

3    On or around 24 August 2015, the applicant entered into a Management Agreement with the respondent, pursuant to which the respondent agreed, on the terms and conditions contained in the Agreement, to manage the Wirrimanu Store (the 2015 Agreement). Before that date, the respondent had managed the store pursuant to two preceding agreements. The 2015 Agreement has a 20 year term.

4    In the underlying proceedings commenced in the Court on 23 October 2019, the applicant seeks relief pursuant to ss 236 and 237 of the Australian Consumer Law (the ACL) contained in Sch 2 to the Competition and Consumer Act 2010 (Cth). The applicant’s Statement of Claim indicates that it seeks, by an award of damages pursuant to s 236, the aggregate of rebates it alleges the respondent has received from suppliers of goods for sale in the Wirrimanu Store. It seeks two forms of orders under s 237 of the ACL. The first is a declaration that the 2015 Agreement is void “at all times on and after the date of judgment in this matter”. The second, expressed as an alternative to the declaration just mentioned, is an order that the respondent pay to the applicant the amount of all the rebates it receives under or in connection with the 2015 Agreement “from the date of judgment in this matter to the date of termination of the 2015 Store Management Contract”. In addition, the applicant seeks some incidental forms of relief which it is not necessary to mention separately.

5    The cause of action identified in the Statement of Claim said to entitle the applicant to this relief is unconscionable conduct to which ss 20 and 21 of the ACL refer. The applicant alleges that the respondent engaged in conduct of that character in its performance of a previous management contract and in its negotiation of the 2015 Agreement.

6    Of particular relevance for present purposes is that the Statement of Claim does not contain any allegation that the 2015 Agreement has been terminated. On the contrary, the terms of the Statement of Claim, and the forms of relief which the applicant seeks, indicate the applicant’s position that the 2015 Agreement remains on foot, and further, will remain on foot until the Court’s final determination of the proceedings.

7    Because the proceedings have only just commenced, the respondent has not yet filed a defence.

8    The interlocutory relief which the applicant seeks is as follows:

[1]    An order that Respondent take all steps necessary to effect a handover of the IT systems and software at the Wirrimanu Community Balgo Store to the Applicant by 5.00pm on 8 November 2019, including by:

   (a)    providing all passwords to the Applicant;

(b)    enabling communication between the back office computer and the registers;

(c)    unlocking the back office computer and the Grocery Manager software;

   (d)    disabling the Respondent's access to the Grocery Manager software;

(e)    enabling all systems and software to be connected to Aboriginal Investment Group's Group Controller system; and

(f)    instructing WorldSmart Retech to take any of the steps referred to in this order.

[2]    An order that the Respondent is restrained from entering, or causing or enabling any of its employees, directors, offices, agents or contractors to enter or interfere with the Wirrimanu Community Balgo Store until trial or further order of the Court.

9    In effect, the applicant seeks an order which would restrain the respondent from performing its duties under the 2015 Agreement in the Wirrimanu Store and which would require it to hand over to the applicant the IT systems and software which the respondent has used in running the Store. I will refer to the circumstances in which the applicant seeks that relief shortly.

10    The application for the interlocutory injunctions is supported by an affidavit made by Mr Warren John Bretag and an affidavit of Mr Lloyd Wicks who is a member of the firm of lawyers in Adelaide acting as agents of the applicant’s Cairns-based solicitors. The principal purpose of Mr Wicks’ affidavit is to put before the Court some documents referred to in the affidavits of others.

11    Mr Bretag deposes that he and Mr Hugh Lovesy are the joint Chief Executive Officers of the Wirrimanu Aboriginal Corporation (WAC), an entity which is separate and distinct from the applicant. The record of the Office of the Registrar of Indigenous Corporations indicates that the applicant has six members, five of whom are individuals and one of whom is WAC.

12    Mr Bretag deposes that he and Mr Lovesy are, in their positions as joint Chief Executive Officers of WAC, responsible for the day-to-day operations and management of the applicant. He deposes that the respondent was engaged in 2008 by a predecessor of the applicant to provide management services in the Store and that it has done so ever since (at least until 15 October 2019). Mr Bretag does not refer to a second Management Agreement entered into in 2011 which was superseded by the 2015 Agreement.

13    Both the applicant’s Statement of Claim and Mr Bretag’s affidavit indicate that the applicant has some concerns about aspects of the respondent’s conduct in the management of the Store. For the purposes of this decision, it is not necessary to detail those concerns or to express a view about whether any of them are justified. It is pertinent to record, however, that Mr Bretag’s affidavit does not address the matters pleaded in the Statement of Claim said to warrant the characterisation of the respondent’s conduct as unconscionable. It may be that Mr Bretag could not do so because he was not employed in any relevant position at the time the pleaded conduct is said to have occurred.

14    By a letter of Thursday, 10 October 2019 signed by Nathaniel Stretch, who described himself as the chairman of the applicant, the applicant notified the respondent of obligations under the 2015 Agreement which it contended were owed by the respondent and which it had failed to meet. In addition, the applicant alleged that the respondent had engaged in unconscionable conduct within the meaning of s 21 of the ACL. The letter said that it was provided pursuant to cl 15.2(a)(i) of the 2015 Agreement. I will return to the significance of that shortly.

15    The applicant’s letter of 10 October 2019 nominated Mr Andrew Philp QC of the Cairns Bar as an external mediator and proposed that any mediation be in Cairns, Queensland. It invited the respondent to make alternative suggestions as to a suitable mediator and sought the respondent’s response by midday on Monday, 14 October 2019.

16    Mr Bretag deposes that the applicant did not receive a response to its letter by that deadline.

17    By a letter dated Tuesday, 15 October 2019 and signed by Mr Stretch, the applicant informed the respondent that the 2015 Agreement was temporarily suspended. It said:

We hereby inform you that we will temporarily suspend our Store Management Agreement with you effective 9am Australian Central Time Tuesday 15 October 2019. The suspension of the agreement means that [the applicant] will take over all aspects of the management and operations of Wirrimanu Community Store.

We ask for your full cooperation to ensure the handover is smooth and trouble free. It is important that our community store continues to operation normally to ensure food security is maintained and for the general well being of the community.

The Store Management Agreement between [the respondent] and [the applicant] will remain suspended until mediation has been held between both parties and a mutually acceptable outcome reached on the way forward. If an acceptable outcome is achieved, then [the respondent] will be invited by [the applicant] to resume management of the store. Time lost from the total contract period due to suspension will be added onto the end of the contract thus ensuring that the total contract period remains as agreed in the 2015 Agreement.

However, if mediation does not take place, or if the outcome of the mediation is not to the mutual satisfaction of both parties as of 18 January 2020, [the applicant] may terminate the agreement. [The applicant] will raise specifics regarding such termination with [the respondent] as part of the mediation process.

18    The letter also addressed some aspects of a “handover” by the respondent of the management of the applicant’s store in consequence of the suspension. Mr Bretag confirmed the suspension of the 2015 Agreement in an email to the respondent’s Chief Executive Officer, Mr Borg, on 15 October 2019.

19    By letter dated 23 October 2019, Minter Ellison, the respondent’s solicitors, informed the applicant’s solicitors that the respondent’s position was that the applicant had acted “with clear disregard” of its rights under the 2015 Agreement. The solicitors went on to say that unless the applicant took the necessary action to remedy its breach of the 2015 Agreement, the applicant would exercise its legal rights.

20    In subsequent correspondence, the respondent’s solicitors have confirmed their view that the applicant’s purported suspension of the 2015 Agreement is a breach of that agreement.

21    Otherwise, the parties and their solicitors have exchanged a considerable amount of correspondence regarding aspects of the handover, particularly, with reference to matters concerning the information technology used by the respondent in the Store. Their lack of agreement about these matters gives rise to the application for interlocutory relief and, in particular, the relief sought by the applicant in [1] of the application.

22    The principles on which the Court acts in relation to applications for 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 Company 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, at trial, the evidence remains as it is, there is a probability that it will be entitled to relief and, secondly, whether the balance of convenience favours the grant of the injunction. That includes consideration of whether damages or other remedies would be an adequate remedy.

23    On the hearing of an application for an interlocutory injunction, the Court does not undertake a preliminary trial, nor does it make a prediction as to the ultimate success or otherwise of the applicant’s claim. It is sufficient if the applicant shows a sufficient likelihood of success to justify, in the circumstances of the case, the preservation of the status quo pending the trial of the action.

24    The two matters just mentioned are not independent of one another. The more the balance of convenience favours the respondent and the more serious the consequences for the respondent if an injunction is granted, the greater the strength of the prima facie case to be established by the applicant. Conversely, if the balance of convenience favours the applicant strongly, then the strength of the prima facie case required to support the interlocutory injunction will usually be less.

25    In the present case, the applicant has difficulty in identifying either a legal or equitable right which it will seek to have determined at trial, in respect of which final relief will be sought, and for which interlocutory relief is appropriate. Although the applicant’s Statement of Claim was filed on 23 October 2019, eight days after the purported suspension of the 2015 Agreement, it does not contain any allegation with respect to that suspension, nor any allegation with respect to the subject matter of the proposed interlocutory injunctions. On the contrary, and as already noted, the terms of the Statement of Claim and the relief which the applicant seeks indicates an acceptance that the 2015 Agreement remains on foot and will do so at least until the final order of the Court in the proceedings.

26    Further, and quite independently of that consideration, the applicant’s suspension of the 2015 Agreement, which is the foundation for its claim for interlocutory relief, does not, at least on the material presently before the Court, appear to be an action authorised by the 2015 Agreement. Counsel for the applicant acknowledged that the 2015 Agreement does not contain any express provision entitling the applicants to suspend, temporarily, the 2015 Agreement. Counsel submitted, however, that such a right is implied.

27    Counsel’s submissions did not address in any detail the matters about which a Court must usually be satisfied before holding that a term is to be regarded as implied into a commercial contract which is otherwise complete on its terms, as the 2015 Agreement appears to be. In BP Refinery (Westernport) Pty Limited v Hastings Shire Council (1977) 180 CLR 266 at 283, the Privy Council indicated that in order for a term to be implied, the following conditions must be satisfied:

(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

28    At least on the material presently before the Court, it appears that the applicant would have difficulty in establishing each of those five elements, even taking into account that in some of the later authorities, the strictness or rigour with which those elements are applied may have been relaxed a little. I will return to those element shortly but first it is appropriate to note some further features of the 2015 Agreement.

29    In addition to the 20 year term already mentioned, the 2015 Agreement provides expressly for circumstances in which it may be terminated during the currency of its 20 year term. In respect of the applicant’s rights of termination, cl 15 provides:

15.    TERMINATION

15.1    Events of Termination

This Agreement can be terminated as follows:

a)    if Outback Stores agrees with the Store Owner to end the Agreement early, this Agreement will end on the date agreed in writing by both parties;

b)    if the Store Owner terminates this Agreement early according to clause 15.2;

   c)    if Outback Stores terminates this Agreement early:

i.    by giving the Store Owner notice to terminate this Agreement in accordance with clause 15.3; or

ii.    if the Store Owner is in breach of this Agreement, and Outback Stores terminate this Agreement in accordance with clause 15.4.

15.2    The Store Owner’s early default termination rights

a)    If the Store Owner has cause to think Outback Stores has not met its obligations under this Agreement:

i.    the Store Owner must provide its notice in writing to Outback Stores with sufficient details of alleged obligations not met.

ii.    Outback Stores will make available a suitable manager to meet with the Store Owner and seek an amicable solution to the issues raised within a reasonable timeframe.

iii.    If a solution cannot be achieved, an external mediator acceptable to both parties can be appointed and each party bears equal costs of the mediator.

b)    The Store Owner’s requirement to undertake mediation in accordance with clauses 15.2(a)i)-a)iii) is subject to the Store Owner’s rights to seek immediate injunctive relief from the Courts.

c)    If seeking mediation as outlined in clause 15.2(a) fails, the Store Owner may terminate this Agreement by giving Outback Stores not less than three (3) months notice of such termination if Outback Stores have failed to discharge any of Outback Stores obligations under this Agreement:

    i.    which is not the subject of a genuine dispute;

    ii.    which is overdue for performance by at least 60 days;

iii.    the Store Owner have given Outback Stores a written demand requiring Outback Stores to perform the outstanding obligation and that demand is prominently marked for the attention of Outback Stores Chief Executive Officer;

iv.    the written demand clearly identifies the obligation Outback Stores have breached and states that the obligation is overdue for performance by at least 60 days, and that the Store Owner may terminate this Agreement in 3 months’ time if Outback Stores have not remedied Outback Stores breach by then; and

v.    Outback Stores do not remedy Outback Stores breach within that 3 month period.

30    As is apparent, cl 15.1 provides for termination of the contract in three situations: termination by mutual agreement, termination at the instigation of the applicant and termination at the instigation of the respondent. There is no suggestion that termination by mutual agreement or termination at the instigation of the respondent has occurred in the present case.

31    Clause 15.2 provides for the circumstances and the process by which the applicant may terminate the 2015 Agreement. The process involves progressive steps of consultation, mediation, written demand and notice and provides for periods of time in which the parties may seek to address any causes of grievance or difference which have occurred. Termination may occur only at the end of this process.

32    By its letter of 10 October 2019, the applicant indicated that it was taking the first step in the cl 15.2 process, namely, providing the respondent with notice in writing of the obligations which it alleged the respondent had not met. However, the applicant does not allege that any of the remaining steps have been taken and, in any event, it is obvious that the requisite periods of time contemplated for the steps in cl 15.2 have not yet elapsed. Clause 15.2 contemplates that the respondent will, during the carrying out of the steps, continue to discharge its functions under the 2015 Agreement until such time as a termination of the Agreement in the manner it contemplates becomes effective.

33    I return to the implied term authorising the applicant to suspend the Agreement, for which counsel contended. At least as things stand today, it appears doubtful that the implication of a term entitling the applicant to suspend the 2015 Agreement could be regarded as reasonable and equitable. It is sufficient to refer, in that respect, to the fact that contemporaneously with the entry into the 2015 Agreement, the applicant entered into a loan agreement with the respondent, pursuant to which the respondent loaned to it a substantial sum of money, which sum is repayable over a 15 year term. The principal sum advanced, which I understand to be $2 million, has, according to the respondent’s Chief Financial Officer, Mr Rathore, reduced to $1,590,496. Mr Rathore deposed that the 20 year term for the 2015 Agreement was fixed so as to provide the opportunity for the applicant to trade profitably and thereby have the funds available to meet its repayment obligations, so that the respondent would have “visibility of the Store finances”, and so that the respondent would have an authorisation to make the loan repayments using the Store’s funds.

34    The existence of the loan agreement and that understanding of the reason for the long term of the 2015 Agreement would make it difficult at this interlocutory stage to conclude that the applicant has a prima facie case of showing that the implied term for which it contends is reasonable and equitable.

35    Nor does it appear that the applicant has a prima facie case that the suggested implied term is necessary to give business efficacy to the 2015 Agreement. On the contrary, the Agreement appears to be efficacious without such a term, particularly, having regard to the content of cl 15.2.

36    Nor does it appear that the applicant has a prima facie case that the term is so obvious that it goes without saying. On the contrary, the implication of such a term in a contract of the kind of the 2015 Agreement may be unusual.

37    Finally, the applicant does not appear to have prima facie prospects of establishing that the suggested implied term would not contradict a term of the contract. In particular, the postulated implied right of suspension appears inconsistent with the process contemplated by cl 15.2.

38    In short, the implied right of suspension, which was the only basis on which counsel sought to justify the suspension which occurred on 15 October 2019, appears to be doubtful.

39    At least, prima facie, therefore, it seems, on the material presently available to the Court, that the applicant’s conduct in suspending the 2015 Agreement and its subsequent conduct in relation to the handover was unlawful. I emphasise that this is how the position appears on the information and evidence presently before the Court.

40    If that be right, then it suggests that the applicant is, in effect, seeking injunctive relief from this Court so as to make effective the consequences of its own unlawful conduct. That would not be a proper basis upon which to grant an interlocutory injunction. That is so for two reasons: first, the applicant does not, in the circumstances, point to any legal or equitable right which may be protected by the interlocutory injunctions and, secondly, it does not establish that it has a prima facie case of entitlement to relief.

41    In these circumstances, it is not necessary for the Court to consider issues concerning the balance of convenience.

42    Accordingly, the application for the interlocutory injunctions filed on 1 November 2019 is refused.

I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

Associate:

Dated:    15 November 2019