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Amalgamated Pest Control Pty Ltd v SM & SE Gillece Pty Ltd[2016] QDC 134

Amalgamated Pest Control Pty Ltd v SM & SE Gillece Pty Ltd[2016] QDC 134

DISTRICT COURT OF QUEENSLAND

CITATION:

Amalgamated Pest Control Pty Ltd v SM & SE Gillece Pty Ltd, Trustee of the Gillece Family Trust [2016] QDC 134

PARTIES:

AMALGAMATED PEST CONTROL PTY LTD (ACN 009 712 958)

(applicant/plaintiff)

SM & SE GILLECE PTY LTD (ABN 32 382 330 855) AS TRUSTEE OF THE GILLECE FAMILY TRUST

(first respondent/defendant)

and

SIMON MATTHEW GILLECE

(second respondent/defendant)

and

SARAH ELIZABETH GILLECE

(third respondent/defendant)

FILE NO/S:

1921/2016

PROCEEDING:

Application

ORIGINATING COURT:

District Court of Queensland at Brisbane

DELIVERED ON:

3 June 2016

DELIVERED AT:

Brisbane

HEARING DATE:

31 May 2016

JUDGE:

RS Jones DCJ

ORDER:

  1. The application is dismissed.
  2. The respondents’ costs for the application be costs in the cause.

CATCHWORDS:

APPLICATION FOR INTERLOCUTORY INJUNCTIVE RELIEF – where franchise agreement between the plaintiff and the first respondent terminated – where first respondent carried out a pet control business as a franchisee – where plaintiff the franchisor and the first respondent the franchisee – where second and third respondents were guarantors for the first respondent’s performance – where following termination of the franchise agreement the second and third respondents carried out similar if not identical business under another name

WHERE THE CARRYING OUT OF NEW BUSINESS WAS IN BREACH OF RESTRAINT OF TRADE TERMS AND CONDITIONS OF THE FRANCHISE AGREEMENT – whether damages are sufficient remedy – whether a serious question existed – whether plaintiff had a legitimate interest warranting protection

WHERE THE BALANCE OF CONVENIENCE

WHERE BALANCE OF CONVENIENCE LAY

American Cyanamid Co v Ethicon Ltd [1975] AC 396 at 406

Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57

Bowen Central Coal Pty Ltd v Aquila Coal Pty Ltd & Anor [2011] QCA 334

Dino Rod Plc v Reeve (1999) FSR 148

Ezy DVD v Lahrs Investment Queensland Pty Ltd [2010] 2 Qd R 517

High Court in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 623

JMG Investments Pty Ltd v RML & Associates Pty Ltd & Ors [2002] QDC 2003

KA & C Smith Pty Ltd v Ward (1998) 45 NSWLR 702

Raine and Horne Pty Ltd v Adacol Pty Ltd [2006] NSWSC 36

Re Goods of De Rosaz (1877) 2 PD 66

Rover International Ltd v Cannon Film Sales Ltd (1986) 3 Al ER 772

COUNSEL:

Mr D de Jersey for the applicant

Mr C Tam for the respondents

SOLICITORS:

Thynne and McCartney Lawyers for the applicant

Doyle Wilson Solicitors for the respondents

  1. [1]
    This proceeding was concerned with an application for interlocutory injunctive relief. Unfortunately, for reasons it is not necessary to go into, the hearing of the matter was delayed and, as a consequence, my decision had to be reserved. Given the nature of the application there was, of course, a serious degree of urgency involved. For the reasons given below the orders of the Court are:
  1. The application is dismissed.
  1. I will hear further from the parties as to any consequential orders.

Background

  1. [2]
    On 1 July 2009 the first respondent entered into what was described as a Territory License Agreement (the License Agreement) with the applicant as the “Head Licensor” and a separate entity, Annroy Pty Ltd, as the “Licensor”. The first respondent was the “Licensee” and the second and third respondents were described as Principals and Guarantors. That License Agreement expired on 1 February 2012. Notwithstanding the agreement containing an option for a further term of five years (to commence of 2 February 2012) the first respondent did not exercise that option but nonetheless, continued to carry on business under the name of the applicant. It was not disputed that that arrangement was facilitated pursuant to clause 9.4 of the agreement.
  1. [3]
    By deed dated 1 November 2015, Annroy Pty Ltd assigned all its rights and obligations under the License Agreement to the applicant. By a separate deed also dated 1 November 2015 between the applicant and the first respondent the first respondent acknowledged and accepted the assignment arrangements.
  1. [4]
    Nearly seven years after entering into the License Agreement, on 26 April 2016 the first respondent gave notice that it wished to terminate the agreement from 9 May 2016.
  1. [5]
    The evidence would suggested that the first, second and third respondents were valued operators and the applicant made a number of attempts to keep them operating under the brand of the applicant. Those negotiations were, of course, unsuccessful.
  1. [6]
    In what would appear to be a very short time after the termination of the License Agreement the first and second respondents created a new business called “Border Regions Pest Control”. They also established an office for that business in the Goondiwindi area, established a Facebook page under that business name and booked local radio advertising for the business. And, of particular significance, began to carry out pest control operations with parties who had previously been customers of the first respondent who, was of course then operating under the Amalgamated Pest Control banner.
  1. [7]
    There are also allegations that the first and/or second respondents diverted calls which were formally received by the business when it was operated as a franchisee and deliberately contacted former customers with the intention of diverting their business from Amalgamated Pest Control to Board Regions Pest Control.
  1. [8]
    There are also a number of allegations that the first and/or second respondent made a number of representations intended to lull the applicatant into believing that they did not intend to operate as commercial competitors. These included that the second respondent indicated that he had no intention of working in the pest control industry but intended to look for farm work or be a “stay at home dad”. While many, if not most, of the allegations made against the first and second respondents are denied, there is no doubt that the second and third respondents are carrying out a pest control business under the name Border Regions Pest Control within an area which they had previously serviced under the Amalgamated Pest Control banner.
  1. [9]
    Indeed, in the second respondent’s first affidavit he states:[1]

“I estimate that eighty percent of my work comes because of the individual relationship that I have developed over time and because people knew me personally. I believe this work would have come to me irrespective of whether I was with APC or not.”

He also asserts:[2]

“Most of my customers are repeats customers. If a new residential customer came to town and I did work for them it was usual that I came back and did any ongoing work. The bulk of my work was repeat business.”

  1. [10]
    The general thrust of the second respondent’s first affidavit is that while he currently services a number of customers which he had previously serviced under the applicant’s banner the name Amalgamated Pest Control had little, if any, effect. That is, his customers were attracted to him personally and the name of the applicant was of no advantage.

The restraint of trade clauses

  1. [11]
    By letter dated 9 May 2016 the applicant’s solicitors wrote to the respondents drawing their attention to clause 46 of the License Agreement which provided:

Consequences of termination

46.1On termination of this document the Sub-Licensee must:

  1. (1)
    Cease to operate the Licensed business, cease to use the image, system marks and intellectual property, and refrain from holding itself out as being in any way associated with the Licensor and the Head Licensor.
  1. (2)
    Return to the Licensor or, where instructed by the Head Licensor in writing destroy all property belonging to the Licensor or the Head Licensor or any related entity including the vehicle, or copies of the manual, computer software and databases, uniforms, customer listings or other confidential information, all stationary, brochures, publications;
  1. (3)
    Remove from all and any vehicles, signs, hoardings, documents and any other items in possession or control of the Sub-Licensee and all trademarks, trade names and insignia relating thereto;…”
  1. [12]
    Initially relief was sought requiring that the respondents refrain from using any confidential information (as defined in the License Agreement). That relief is no longer being sought.
  1. [13]
    Clause 34 of the License Agreement relevantly provided:

34Protection of the Head Licensor’s goodwill

34.1The Sub-Licensee and the guarantor (if any) acknowledge and agree that:

  1. (1)
    The Head Licensor has considerable and recognisable goodwill in the conduct of its business of developing and promoting the system and the network;
  1. (2)
    the Head Licensor is entitled to protect that goodwill for its own benefit and the benefit of the Licensor and all the network by restricting the Sub-Licensee’s ability to damage that goodwill by competing with the Head Licensor, the Licensor or any of the network; and
  1. (3)
    Each of the restraints imposed by the Sub-Licensee under clause 34.2 is fair and reasonable and is no greater than is reasonably necessary to protect this goodwill.

34.2Sub-Licensee and the Guarantor (if any) jointly and severally agree with the Head Licensor and the Licensor that neither the Sub-Licensee nor any Guarantor will during the Restraint Period, directly or indirectly do any of the following things:

  1. (1)
    Within the Restraint area engage or be concerned or interested in any business that:

(a) supplies the:

  1. (i)
    the approved product and services; and/or
  1. (ii)
    products or services the same as or similar to those at any time supplied in the Licensed business.
  1. (b)
    compete with the Head Licensor, the Licensor or any of the network; or

(c)could be reasonably regarded as a marker (sic) competitor of:

(i) the Head Licensor

(ii) the Licensor

(iii) any of the network or

(iv) the system.

  1. (2)
    Canvasses or solicit with a view to supplying any product or service the same as or similar to those at any time supplied in the conduct of the Licensed business, any person who is or has been in the 24 months before the end of the Licensed business a customer of:

(a) the Licensed business...

  1. (3)
    Employ or engage any person who is or has been in the 12 months before the end of the Licensed business employed by the…

34.6Each of the provisions of this clause 34 operates concurrently and independently. If any separate provision is unenforceable, illegal or void that provision is severed and the other separate provisions remain in force.”

  1. [14]
    The “Restraint period” is defined as being, relevant to this proceeding, three years. On the evidence as it currently stands, the respondent’s current business activities under the name Border Regions Pest Control are, prima facie, in breach of clauses 34.2(2) of the License Agreement. However, while the “Restraint Period” is defined within the agreement the “Restraint Area” is not defined. The licensed territory is identified by reference to a map described as Annexure A.[3]However the “Restraint Area” is not defined and the relevant part of the agreement has been left blank.[4]As can be discerned by Annexure A, the licensed territory is extensive.

The goodwill of the applicant

  1. [15]
    The customers of the first respondent when operating under the Amalgamated Pest Control franchise were not the customers of the applicant but the customers of the first respondent as the franchisee. In the statement of claim filed by leave on 31 May 2016 the alleged breaches of the License Agreement have said to have resulted in loss and damage caused by:
  1. (a)
    A reduction in the number of customers renewing their requests for services from the plaintiff since the defendant’s commenced operating the new business;
  1. (b)
    The loss of opportunity to license the Territory to prospective replacement franchisees given the defendant’s activities since 10 May 2016; and
  1. (c)
    Damage to the integrity of the applicant’s (sic) brand name and the systems which it has developed, occasioned by the defendant’s conduct as particularised therein.
  1. [16]
    To put it perhaps somewhat crudely, what the applicant wants to protect is the value or worth of the franchise by restraining the respondents from reducing the number of potential customers of any future franchisee and from otherwise damaging the applicant’s business opportunities and reputation. Also as I understand it, the applicant retains some 23% of the first respondent’s gross fees.[5]
  1. [17]
    In Ezy DVD v Lahrs Investment Queensland Pty Ltd Fraser JA relevantly observed:[6]

“…a restraint of trade is not enforceable unless the party benefitted demonstrates that it affords no more than adequate protection to the interests of that party in respect of which it is entitled to be protected. It is therefore appropriate first to ascertain the legitimate interest which the party benefitted was entitled to protect and then to determine whether the restraint was no more than adequate for that protection…”

  1. [18]
    Restraints of trade are prima facievoid on grounds of public interest. However, it is recognised that, subject to the restraints being no more than adequate, restraint of trade clauses are enforceable. In KA & C Smith Pty Ltd v Ward[7]Austin J observed in respect of the question of the reasonableness of the duration of a restraint of trade clause:

“To preserve the franchisor’s ‘goodwill’ (referred to above as an interest in the patronage of the franchised business and the confidentiality of products and processes) the franchisor needs time to obtain a substitute franchisee to work the franchise area, and the new franchisee needs time to become established. Direct competition by the former franchisee would be likely to damage the transition process. Given the nature of the business and the expertise which needs to be acquired by tuition or self teaching or both, a two year restraint is appropriate.”

  1. [19]
    To a similar effect where the observations of Neuberger J in Dino Rod Plc v Reeve.[8]
  1. [20]
    In my view the applicant here clearly has a legitimate interest (of the type identified above) which it was entitled to protect.

Discussion and consideration

  1. [21]
    I must say that the restraint period of three years appears to be excessive to me but, no complaint was made about it during the hearing of this application and that matter is best left for another day. The respondents though take issue with the so called “Restraint Area”. As identified above, that area was not defined within the License Agreement. According to Mr Tam, counsel for the respondents, that omission is fatal. According to him that was so for several reasons.[9]First, the failure to identify a restraint area within the agreement meant that it was not a matter that had been agreed between the parties. Second, it could not be assumed that the restraint area was meant to mirror the “territory area” shown in Annexure A to the Exhibit of Mr Hall. Third, “it does not appear that an error occurred requiring (or permitting) rectification (because of a mistake) of the franchise agreement so as to rewrite and define the ‘restraint area’”.
  1. [22]
    Mr Tam relied on a passage from the case in Re Goods of De Rosaz[10]where Sir James Hannen P said:

“A complete blank cannot be filled up by parol testimony, however strong. Thus a legacy to Mr – cannot have any effect given to it, nor a legacy to Lady –. But if there are words to which a reasonable meaning may be attached, parol evidence may be resorted to shew what that meaning is.”

  1. [23]
    Mr Tam relied on the above passage in particular to address the affidavit of Mr Farr which relevantly stated:[11]

“(Amalgamated Pest Control) lawyers have referred me to the schedule of the Gillece Territory License Agreement where it lists ‘Restraint Area’ and then is blank. This was left blank because Territory was defined by reference to the plan in Annexure A. I discussed with the Gilleces the ‘Restraint Area’ and it was the same area of land and that is why no one thought to specify the ‘Restraint Area’…  (Attached) is a true copy of a letter from me to Gillece Pty Ltd and Simon Gillece dated 6 June 2009, with the attached disclosure documents for the territory to be licensed and a map of the territory.”

  1. [24]
    That letter and attachments[12]identified the licensed area as that being defined in “Annexure A – territory map”. As far as I can tell that map mirrors the territory map in the license agreement. However, I was not taken to any part of that letter or the attachments which expressly or by necessary implication identified the restraint area as being the territory area or vice versa.
  1. [25]
    In his first affidavit the second respondent strongly refutes the assertions made by Mr Farr:[13]

“In the short time available I have reviewed, though not carefully, Mr Farr’s affidavit. I refute the matters contained in paragraph four of his affidavit. In particular, I deny having a discussion with Mr Farr in the terms that Mr Farr deposes in that paragraph.

In particular, I deny that Mr Farr discussed with me any matters relating to the territory and the area of the restraint of trade clauses. The only occasion in which I spoke to Mr Farr was about four years ago when I shook his hand and he said hello Simon…”

  1. [26]
    While not expressing any final view about it, it seems to me that in circumstances where one party is seeking to restrain another from being a commercial competitor it would be incumbent upon the benefitted to identify with precision both the term of restraint and the extent of the restrained area. Accordingly, the failure to identify the restraint area in the License Agreement might well prove fatal to the applicant’s case and will be a matter of serious legal debate at the eventual trial. Also, while again not expressing a final view about it, I have some real reservations about whether the extent of the alleged restraint area is reasonable. The area is extensive and, for the second respondent to carry out his business outside of that area would require extensive travelling time and, as raised by Mr de Jersey, the possibility of overnight accommodation.[14]
  1. [27]
    During argument I was referred to a decision of Wilson SC DCJ (as he then was) in JMG Investments Pty Ltd v RML & Associates Pty Ltd & Ors[15] where his Honour said:[16]

“As the defendant’s 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 would infer the statement was a term because the failure to include it is some indication that it was not so intended…  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 agents 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 prerequisite with clarity and strength and in the spectrum which the concept embraces, falls at the weaker end.”

  1. [28]
    According to Mr Tam, the absence of a clear definition of the restraint area goes beyond placing the applicant’s case at the “weaker end”. That is, the deficiency is fatal.
  1. [29]
    It is tolerably clear that in the JMG Investmentscase when his Honour was referring to “a serious question to be tried” he was referring to passages of the judgment of Lord Diplock in American Cyanamid Co v Ethicon Ltd.[17]It was not in contest before me that the relevant tests were those enunciated by the High Court in Beecham Group Ltd v Bristol Laboratories Pty Ltd[18]and Australian Broadcasting Corporation v O'Neill.[19]
  1. [30]
    Both of those cases were referred to in the decision of the Court of Appeal in Bowen Central Coal Pty Ltd v Aquila Coal Pty Ltd & Anor[20] where it was said:[21]

“[35]In my respectful opinion, Aquila was not exposed to any adverse consequence which could justify the grant of this interlocutory injunction.

[36]In American Cyanamid Co v Ethicon Ltd Lord Diplock, with whose reasons Viscount Dilhorne and Lords Cross, Salmon and Edmund-Davies agreed, described the object of an interlocutory injunction in a case of this kind:

‘The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff’s need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff’s undertaking in damages if the uncertainty were resolved in the defendant’s favour at the trial.’

[37]Lord Diplock went on to consider what the plaintiff needed to prove at this interlocutory stage in order to establish the right which it sought to protect by the injunction. That aspect of the decision is not the law in Australia. In that respect, Aquila referred to the statement by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill that:

‘The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued:

‘The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.’

By using the phrase ‘prima facie case’, their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:

‘How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks.’” (citations omitted)

[38]The issue there concerned the content of the requirement that the plaintiff make out a “prima facie case”. Contrary to one of Aquila’s arguments, the High Court did not need to consider the manner in which a court should conduct the “second inquiry”, that is “whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.” However, that way of describing the second inquiry is consistent both with Lord Diplock’s description of the object of the remedy and with his Lordship’s following statement of the manner in which a court should consider whether the balance of convenience favours the grant or refusal of the relief:

‘As to that, the governing principle is that the court should first consider whether, if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendants continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If damages in the measure recoverable at common law would be adequate remedy and the defendant would be in a financial position to pay them, no interlocutory injunction should normally be granted, however strong the plaintiff’s claim appeared to be at that stage. If, on the other hand, damages would not provide an adequate remedy for the plaintiff in the event of his succeeding at the trial, the court should then consider whether, on the contrary hypothesis that the defendant were to succeed at the trial in establishing his right to do that which was sought to be enjoined, he would be adequately compensated under the plaintiff’s undertaking as to damages for the loss he would have sustained by being prevented from doing so between the time of the application and the time of the trial. If damages in the measure recoverable under such an undertaking would be an adequate remedy and the plaintiff would be in a financial position to pay them, there would be no reason upon this ground to refuse an interlocutory injunction.

It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case.’” (original emphasis) (citations omitted)

  1. [31]
    In Australian Broadcasting Corporation the High Court was concerned with interlocutory injunctions in a defamation case. Gleeson CJ and Crennan J said:[22]

“The principles were discussed, for example, in Chappell v TCN Channel Nine Pty Ltd (a decision referred to by Crawford J in a passage quoted above), National Mutual Life Assn of Australasia Ltd v GTV Corporation Pty Ltd and Jakudo Pty Ltd v South Australian Telecasters Ltd.  As Doyle CJ said in the last-mentioned case, in all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff’s entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ, and their reiteration that the doctrine of the Court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd should be followed.” (footnotes deleted)

  1. [32]
    For the reasons expressed above I have reservations about whether or not the applicant has made out a prima faciecase against the respondents in the sense that if the evidence remained as it was there is a probability that at the trial of the action it would be entitled to the relief sought. That said, I intend to proceed on the basis that the applicant has established a prima faciecase, albeit only just.

Discretionary grounds

  1. [33]
    During the course of submissions Mr de Jersey did not contest that damages would be an adequate remedy. That is, there was otherwise no special feature of the case that would warrant the injunctions sought. However, it was his submission that on the second respondent’s own evidence it was highly unlikely that any judgment would be able to be successfully enforced. The likelihood of the defendant being able to meet an award of damages was seen as relevant in Bowen Central Coal.
  1. [34]
    The statement of claim as presently formulated claims damages not exceeding $750,000. While I was not taken to any evidence about the value of the franchise or the extent of the damages likely to be sought by the applicant, it seems to me highly unlikely that damages would be anything like the amount presently claimed.
  1. [35]
    The financial circumstances of the second and third respondents are set out in the first affidavit of the second respondent.[23]It would be fair to say that as at today’s date the first and second respondents might find it difficult to meet any substantive judgment. On the other hand, no attempt was made to try and identify what loss and damage the applicant might sustain as a consequence of the alleged breaches. While Mr Farr identified what he described as a “dramatic” reduction in the number of customers renewing their services, no attempt was made to quantify in monetary terms the financial damage attributable to the actions of the respondents that might cause to the applicant’s business. In this context it is noted that while a potential franchisee has expressed some concerns about the value of the franchise, it was not suggested that that potential franchisee considered the franchise to be worthless.[24]I was not taken to any probative evidence that the applicant’s reputation and brand was in any way being materially damaged, nor that the respondents were unlawfully using confidential information.
  1. [36]
    In such circumstances I am not prepared to draw the inference against the respondents that they would be incapable of meeting any award for damages against them. In this regard there was also evidence that the respondents were owed some $30,000.00 from “outstanding accounts”.[25]
  1. [37]
    There are other strong discretionary grounds for refusing application, in my view. Although the respondents’ current business will likely erode the customer base of any future franchise it will not bring to an end the applicant’s franchise operations in the area. In addition to the interest of a potential franchisee identified above the un-contradicted evidence of the second respondent is that the applicant still has two subcontractors operating in the Goondiwindi area under the Amalgamated Pest Control banner.[26]On the other hand, it is tolerably clear that to bring the respondents’ current business to an end forthwith would likely result in potentially catastrophic personal and financial circumstances for them.
  1. [38]
    It was said by Mr de Jersey that those consequences should raise little concern because that is but a direct consequence of their breach of contract. That may well prove to be correct but that does mean that it is an irrelevant consideration in assessing the balance of convenience. The public interest in ensuring parties abide by their contractual obligations is a significant matter to be taken into account but it is not determinative.[27]At this interlocutory stage I have concluded, to adopt the terminology of Kitto, Taylor, Menzies and Owen JJ in Bristol Laboratories, the inconvenience or injury the respondents would suffer if the injunctions were granted outweighs the inconvenience or injury the applicant might suffer as a consequence of the relief not being granted.
  1. [39]
    Significant reliance was placed by Mr de Jersey on the judgment of McDougall J in Raine and Horne Pty Ltd v Adacol Pty Ltd.[28]That case involved an application for interlocutory injunctive relief in circumstances where the plaintiff terminated the franchise agreement as a consequence of the defendants’ breach of contract. The defendants conducted the business of real estate agents under the banner Raine and Horne Brighton and Raine and Horne Ramsgate Beach in each of those respective suburbs. That was done pursuant to a franchise agreement made between the plaintiff (Raine and Horne) and the defendants. Following the termination of the franchise agreement the premises at Brighton and Ramsgate Beach, which had once been painted and decorated under the Raine and Horne colours and signage were repainted and redecorated under Ray White real estate colours and signage. That occurred as a consequence of the defendants entering into a franchise agreement with Ray White. That is, as a consequence of the defendants’ actions, the presence in both of those suburbs that had once been that of Raine and Horne was now that of a strong competitor.
  1. [40]
    Mr de Jersey placed some emphasis on paragraphs 55, 56 and 58 of the reasons of McDougall J and in particular paragraph 58. There his Honour said:

“The defendants pointed to the hardship that they, and their staff, would suffer if the businesses were closed down. Again, this appears to proceed on some misconception. There is no evidence to suggest that the premises will close down if they have to be re-established more than 5km away from their present location. I accept that it will be inconvenient to do so. That, however, seems to me to be not so much a function of Raine and Horne’s application but a simply result of the defendants’ breach of contract, in circumstances where they must have appreciated the consequences.”

  1. [41]
    The facts and circumstances in Raine and Horneare materially different to those in this case. In Raine and Hornethe plaintiff not only had its brand presence obliterated in the two suburbs but, to add insult to injury, was replaced by a significant competitor. The respondents’ business of course introduces a new competitor into the area but the applicant here retains a brand presence in the district. Second, any locational advantage or goodwill that might have existed in the Raine and Horne case was of course lost. In this case the business is not locational but highly mobile. Finally, the subject business is not concerned with operating within a metropolitan suburb but with providing a wide range of services over an extensive area incorporating towns, semirural areas and substantial farming enterprises.
  1. [42]
    Turning finally to the question of public interest, quite aside from the advantages provided by additional competition, the second respondent in his first affidavit deposed:[29]

“Pests are a significant problem in the area, particularly rodents and termites. However there is some competition in the area including APC and Rent a Kill who will be able to do this work however they probably do not have the capacity to deal with all the demand. At this time of year the spraying work for insects does ease off however there is a very high demand at the present time caused by a mouse plague which requires a lot of baiting and follow up visits. There is one other business known as Gundy Pest Control but it only does fumigation of silos.”

  1. [43]
    Notwithstanding me granting leave for Mr de Jersey to, cross-examine the second respondent on a very limited basis, he was not challenged on that part of his evidence. It may well be that an additional operator under the amalgamated pest control banner, together with the existing operators including Rent a Kill, might in total have the capacity to deal with demand. That however would not seem to provide a total solution to what is an immediate and high demand to deal with a mouse plague.
  1. [44]
    On balance I consider the public interest component is of only marginal significance but insofar as it has any significance it falls in favour of the respondents.
  1. [45]
    In Rover International Ltd v Cannon Film Sales Ltd[30]Hoffman J said:

“The principle 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) at 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.”

  1. [46]
    For the reasons given I have reached the conclusion that the balance of convenience favours the refusal of the application. In my view, it would result in a lower risk of an injustice occurring.
  1. [47]
    For the reasons given the orders of the Court are:
  1. The application is dismissed.
  1. I will hear further from the parties as to any consequential orders.

Footnotes

[1]At para 28.

[2]At para 30.

[3]Affidavit of Mr Hall, Exhibit 2 at pp 125 and 126.

[4]Ibid at p 125.

[5]Second Respondent’s first affidavit at para [9].

[6][2010] 2 Qd R 517, 520 [10].

[7](1998) 45 NSWLR 702.

[8](1999) FSR 148 (see para 89 of BB Australia case).

[9]Respondents’ supplementary outline of submissions.

[10](1877) 2 PD 66 at 69. Referred to in the interpretation of contracts in Australia. Sir Kim Lewis and David Hughes. Law Book Company 2012.

[11]At para 4.

[12]Exhibit 3, pp 78-125.

[13]At paras 52-53.

[14]Transcript (T) 1-37 ll 6-46; T1-38.

[15][2002] QDC 2003.

[16]At [10].

[17][1975] AC 396 at 406.

[18](1968) 118 CLR 618 at 623.

[19](2006) 227 CLR 57 at 81-82.

[20][2011] QCA 334.

[21]At paras 35-38.

[22]At [19].

[23]Paras 4-11.

[24]Ibid para 13.

[25]Second respondent’s affidavit at para 9: T1-36 ll37-47; T1-37 l1.

[26]Second respondent’s first affidavit at para 67.

[27]E.g. Raine and Horne v Adocol referred to below.

[28][2006] NSWSC 36.

[29]At para 68.

[30](1986) 3 Al ER 772.

Close

Editorial Notes

  • Published Case Name:

    Amalgamated Pest Control Pty Ltd v SM & SE Gillece Pty Ltd, Trustee of the Gillece Family Trust

  • Shortened Case Name:

    Amalgamated Pest Control Pty Ltd v SM & SE Gillece Pty Ltd

  • MNC:

    [2016] QDC 134

  • Court:

    QDC

  • Judge(s):

    Jones DCJ

  • Date:

    03 Jun 2016

Litigation History

EventCitation or FileDateNotes
Primary Judgment[2016] QDC 13403 Jun 2016Application to restrain former franchisee from operating business dismissed: RS Jones DCJ.
Appeal Determined (QCA)[2016] QCA 26018 Oct 2016Application for leave to appeal refused: Margaret McMurdo P, Gotterson JA and Jackson J.

Appeal Status

Appeal Determined (QCA)

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