JMG Investments Pty Ltd v RML & Associates Pty Ltd
[2002] QDC 203
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- Unreported Judgment
- JMG Investments Pty Ltd v RML & Associates Pty Ltd[2002] QDC 203
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JMG Investments Pty Ltd v RML & Associates Pty Ltd[2002] QDC 203
JMG Investments Pty Ltd v RML & Associates Pty Ltd[2002] QDC 203
DISTRICT COURT OF QUEENSLAND
CITATION: | JMG Investments Pty Ltd v RML & Associates Pty Ltd and Anor [2002] QDC 203 |
PARTIES: | JMG INVESTMENTS PTY LTD ACN 069 852 222 |
FILE NO/S: | 586/2002 |
DIVISION: | Trial |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 26 July 2002 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 23 July 2002 |
JUDGE: | Judge Alan Wilson SC |
ORDER: | Application dismissed |
CATCHWORDS: | INJUNCTION – INTERLOCUTORY INJUNCTION – applicant with perceived weaknesses in its case – serious question to be tried – balance of convenience Rover International Ltd v Cannon Film Sales Ltd (1986) 3 All ER 772 |
COUNSEL: | Mr K Howe for the Applicant/Plaintiff |
SOLICITORS: | Gadens Lawyers Gold Coast for Applicant |
- [1]The plaintiff seeks an injunction until trial restraining the defendants from any activity or involvement in the business of real estate agents near Coolangatta.
- [2]Prior to 24 August 2001 the first defendant conducted, in partnership, a real estate business on the Gold Coast called “ Ray White Coolangatta/Tweed Heads”. At the same time the plaintiff or, at least, one of its directors, Mr Cassar conducted a similar franchise business in nearby Gold Coast suburbs. Around July 2001 negotiations commenced between the second defendant Mr Laufer, who is a director of the first defendant, and Mr Cassar for the plaintiff’s purchase of the first defendant’s business at Coolangatta. A written contract was signed on 24 August, and settled on 28 September 2001.
- [3]The plaintiff asserts it was a term of the contract that neither the first nor second defendants would trade or practice as real estate agents within a radius of five kilometres of the Coolangatta business for three years after the sale. In the alternative, it alleges a pre-contractual representation from Mr Laufer, to Mr Cassar, that neither he nor the first defendant would conduct a real estate business in that area in that period, and that the plaintiff entered the contract in reliance upon that representation. The plaintiff asserts that Mr Laufer is now working as a real estate salesman, and should be enjoined from doing so until trial. The defendants deny all of these allegations.
- [4]There is evidence, which I find persuasive, that Mr Laufer is engaged in work as a real estate agent. He admits that since December 2001 he has been employed by Colliers Jardine at a sales office for a proposed unit development on the Gold Coast called “Latitude 28o” but says (and his superior Mr Mark Worth confirms) that it was only on 17 July 2002 that the Tweed Shire Council approved a concept plan for the proposed development and “until development and building applications have been prepared and lodged no units can be sold and the role of Colliers Jardine sales staff including the second defendant is … to obtain written expressions of interest only”. As Mr Worth goes on to say, however:
“6. I say that in respect of each of the salespersons employed on the development, it is requirement of Colliers International that the on-site sales person sell only the units in the development. They are prohibited from engaging in the sale or in any way be interested in, outside real estate and a breach of this condition would entitle Colliers International to terminate their employment.”
- [5]Activity of this kind can arguably be categorised as something ordinarily performed by a real estate agent. The definition of that term in the Auctioneers & Agents Act 1971 s 76(1) includes “… negotiating for such buying, selling, exchanging or letting …”; and, see Greg Roughsedge Realty Pty Ltd v Whitecross (2001) QCA 426.
- [6]The plaintiff contends the contract of 24 August 2001 contained this clause:
“13 Restriction of Vendor’s Competition
13.1 The vendor shall not in any manner whatsoever either directly or indirectly be concerned or interested either alone or in partnership with or as manager servant or agent for any other person, company or corporation in the Business described in Item J or any other business of a similar nature within the prescribed period as set out in Item V(b) PROVIDED HOWEVER that should either the period set out in Item V(b) or the area set out in Item V(a) be found to be excessive by any court or competent jurisdiction then the Vendor may serve upon the Purchaser notice of variation of this clause specifying a reduced period and area and upon the service of such notice the period and area shall be so reduced and the parties agree to be bound by the provisions of this clause as varied by the notice of variation. Nothing in this clause 13.1 shall prevent any court of competent jurisdiction from reading down the area or period of restraint if such court is empowered to do so in order to validate these restraints.
13.2 The parties agree that:
- (a)this clause 13 is for the benefit of the Purchaser to protect the goodwill of the Business; and
- (b)if the Vendor is a company or a corporation then the Vendor will on or before the date of Completion obtain a covenant in terms of clause 13.1 from the directors and shareholders of the Vendor in favour of the Purchaser.
13.3 If this clause 13 is annulled by any order of any court of competent jurisdiction, then this clause 13 shall be severable from this Contract.”
The clause forms part of a standard REIQ document called “THE STANDARD CONDITIONS OF SALE – BUSINESS SALE”, exhibited to the affidavit of the plaintiff’s present solicitor, Mr Sing. There is, however, real doubt whether that document formed part of, or was incorporated into the contract of 24 August 2001. Mr Cassar’s first affidavit filed 8 July 2002 purports to exhibit a copy of the contract of that date but the exhibit (Exhibit A) does not incorporate the Standard Conditions or, separately, clause 13 of it. Later in that affidavit Mr Cassar exhibits another document which was, he says, incorporated in the contract and which itself has the effect of incorporating the Standards Conditions but does not, in my opinion, do so. Furthermore, that exhibit (Mr Cassar, Exhibit “G”) is not signed by any party and the solicitor who acted for the defendants in the sale, Mr Fenwick, has sworn a detailed affidavit showing, I think fairly persuasively, the course of negotiations and the exchange of written contracts, and that Exhibit “G” was never part of those documents. Ultimately this question involves matters of credit (and, perhaps, construction) to be determined by the trial judge but for present purposes it cannot be said the plaintiff’s case is in this respect a strong one.
- [7]Questions of credit will also determine the ultimate judgment between the parties with respect to the other major ground upon which the plaintiff relies: ie, the representation allegedly made by Mr Laufer to Mr Cassar, before contract, that neither he nor the first defendant would trade within five kilometres, for three years. There is, however, no evidence the plaintiff ever demanded of the first defendant that it provide a covenant from Mr Laufer of the kind mentioned in clause 13.2(b), and the absence of that evidence also weakens, I think, the plaintiff’s case on this issue. In his affidavit sworn 23 July 2002, and filed by leave on that day, Mr Laufer deposes (para 6) to a recollection of a conversation between him, his partner and Mr Cassar wherein the latter discussed a restraint of trade after contract and said words to the effect that he wanted to include a clause to prevent the first defendant from setting up another agency in competition with him. As a result of that conversation he believed, he says “… that this statement by Mr Cassar related to my company and not to me personally”. He does not say he agreed to that. Plainly, he also relies upon the alleged absence of anything like clause 13 in the subsequent contract.
- [8]Mr Laufer and Mr Cassar also disagree about some conversations they had, probably in November 2001 concerning Mr Cassar’s employment at “Latitude 28o”, Mr Cassar asserting Mr Laufer sought to be relieved of the restraint to which he had agreed, while Mr Laufer claims he simply informed Mr Cassar of his intentions, while denying he had ever entered into any restraint of trade agreement.
- [9]These conflicts of evidence could not, usually, be decided on the occasion of an interlocutory application, and neither party sought to do that by, eg, cross examining the various deponents of affidavits each filed. Ultimately Mr Howe for the applicant/plaintiff relied principally upon the alleged breach of the pre-contractual representations to establish there is a “serious question to be tried”: American Cyanamid Co v Ethicon Ltd 1975 AC 396.
- [10]As the defendants counsel Mr Woods pointed out, it is a well established principle that if the parties to a contract execute a memorandum of the terms which do not include a pre-contractual statement later relied on as a term, it is unlikely the court will infer the statement was a term because the failure to include it is some indication that it was not so intended: Hospital Products Ltd v United States Surgical Corp (1994) 156 CLR 41, at 62. I agree, but the fact a restraint of some kind would ordinarily be expected in a contract for the sale and purchase of a real estate agent’s business, and the existence of a clear conflict on the evidence concerning, at least, the alleged pre-contractual representations are sufficient, in my view, to establish that there is a serious question to be tried. The perceived weaknesses in the plaintiff’s case mean, however, that it cannot be said to have established that pre-requisite with clarity and strength and, in the spectrum which the concept embraces, falls at the weaker end.
- [11]The balance of convenience involves, here, potential hardships which might be visited upon both the plaintiff, and the second defendant. It is material, I think, that although the plaintiff has known of the second defendant’s activities since December last year it did not move, for over six months, to inhibit them.
- [12]The proper approach to applications for interlocutory injunctions was stated by Hoffman J in these terms in films Rover International Ltd v Cannon Film Sales Ltd (1986) 3 All ER 772:
“The principal dilemma about the grant of interlocutory injunctions, whether prohibitory or mandatory, is that there is by definition a risk that the court may make the “wrong” decision, in the sense of granting an injunction to a party who fails to establish his right at the trial (or would fail if there was a trial) or alternatively in failing to grant an injunction to a party who succeeds (or would succeed) a trial. A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been “wrong” in the sense I have described. The guidelines for the grant of both kinds of interlocutory injunctions are derived from this principle.”
- [13]The delay which has occurred since the plaintiff became aware of the second defendant’s activities, the risk to the second defendant’s livelihood if the injunction is granted, and the fact that the plaintiff, if it moves properly, could obtain a fairly speedy determination of the whole action in the District Court at either Southport, or Brisbane all suggest that the balance of convenience favours the defendants, and that refusal of the injunctive relief sought carries the lower risk of injustice if it should turn out to be wrong. That conclusion is more readily reached, I think, because the plaintiff’s case appears as the evidence presently stands to be less than persuasive.
- [14]The plaintiff also sought to restrain the defendants from using the business name “Ray White Cooloongatta/Tweed Heads” and adduced evidence of one instance, at least, where Mr Laufer corresponded with a third party on letterhead which still bore that name. I am satisfied by his explanation that, in the circumstances, he did not do so for any purpose actually, or potentially injurious to the plaintiff; and that the occasion does not, by itself, warrant injunctive relief.
- [15]The application is dismissed.