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Associated International Group of Nurseries Inc v Nutrafruit Pty Ltd[2024] QSC 234

Associated International Group of Nurseries Inc v Nutrafruit Pty Ltd[2024] QSC 234

SUPREME COURT OF QUEENSLAND

CITATION:

Associated International Group of Nurseries Inc v Nutrafruit Pty Ltd [2024] QSC 234

PARTIES:

Associated International Group of Nurseries Inc

(Applicant)

v

Nutrafruit Pty Ltd

(Respondent)

FILE NO/S:

BS11190/24

DIVISION:

Trial Division

PROCEEDING:

Civil Application 

ORIGINATING COURT:

Supreme Court at Brisbane 

DELIVERED ON:

Order made: 2 October 2024

Reasons published: 3 October 2024

DELIVERED AT:

Brisbane

HEARING DATE:

25 September 2024

JUDGE:

Ryan J

ORDER:

The application is dismissed with costs.

If the applicant wishes to make submissions about refining the terms of the respondent’s undertaking, then it may contact my associate to arrange a suitable time for that issue to be dealt with.

CATCHWORDS:

EQUITY – EQUITABLE REMEDIES – INJUNCTIONS – INTERLOCUTORY INJUNCTIONS – GENERALLY – where the respondent entered into a contract appointing the applicant to be its exclusive agent for the global marketing and commercialisation of the Queen Garnet plum – where the respondent formed the view that the applicant had breached the contract – where the respondent purported to terminate the contract – where the respondent then took steps itself to market the plum globally – where the applicant applied for declarations that the contract termination was invalid and that the contract remained in force – where the applicant sought an interlocutory injunction to restrain the respondent from interfering with the applicant’s rights as the respondent’s exclusive agent until its application for declarations was determined – where the balance of convenience lay – whether the applicant’s delay disentitled it to relief

Aveo Retirement Homes Limited v Springfield City Group Pty Ltd [2024] QCA 120, considered

Capgemini US v Case [2004] NSWSC 674, considered

Groupline Constructions Pty Ltd v CDI Lawyers Pyt Ltd [2024] QSC 209, considered

Imac Security Services Pty Ltd v Tyco Australia Pty Ltd [2002] VSC 592, considered

Scyne Advisory Business Services Pty Ltd v Heaney [2024] NSWSC 275

Tasman Fighters Pty Ltd v Teremoana [2024] QSC 226, considered

Zuellig v Pulver [2000] NSWSC 7, considered

COUNSEL:

M T Hickey with T E Randall for the applicant

C Templeton for the respondent

SOLICITORS:

Robinson Nielsen

Resolve Litigation Lawyers (Russells as town agent)

  1. [1]
    By written contract, the respondent appointed the applicant to be its sole and exclusive agent for the global marketing and commercialisation of the Queen Garnet plum.  The respondent became dissatisfied with the applicant’s performance under the contract, and formed the view that the applicant was in breach.  It terminated the contract for cause and took steps to market the plum itself.  The applicant applied for declarations that the termination was invalid and that the contract remained in force.  Pending the hearing of the application for declarations, the applicant sought orders restraining the respondent from interfering with its rights as the respondent’s sole and exclusive agent.  I heard the application for the interlocutory injunction.  I dismissed it on 2 October 2024, with costs, and informed the parties that I would publish my reasons as soon as possible thereafter.  These are my reasons.  As they reveal, I reached my decision to dismiss the application on the basis of the respondent’s undertaking to the court in the terms it proposed at the hearing (among other matters).  If the applicant wishes to make submissions to me about refining the terms of that undertaking, then it may contact my associate to arrange a suitable time for that issue to be dealt with.

Background

  1. [2]
    Scientists working for the Queensland State Government developed a new variety of plum, known as the Queen Garnet plum (QG), which was said to have certain health benefits.  The State of Queensland owns the intellectual property in the QG.  The State of Queensland wished to commercialise the QG globally. 
  2. [3]
    On 2 March 2010, the State of Queensland entered into a Master Commercialisation Agreement (MCA) with Nutrafruit (NF), in pursuance of which it granted a licence to NF to “commercialise” the intellectual property it held in the QG.  The intellectual property it licenced to NF included rights under an Australian “PBR” (which protected the intellectual property rights of plant breeders) and under a United States Plant Patent.
  3. [4]
    Item 6 of Schedule 1 to the MCA set out the purpose of the licence and the field of commercialisation as follows:

[The relevant government department] wishes to appoint Nutrafruit as the exclusive commercial development partner to manage the commercial development, propagation, promotion and marketing of the “Queen Garnet” plum fresh fruit and fruit products.

The opportunity exists to propagate, grow, promote and market fresh fruit and/or fruit products from trees of “Queen Garnet” plum and similar varieties bred by [the relevant government department], that have elevated levels of antioxidants and anthocyanin which may have human health benefits when consumed.  

  1. [5]
    The meaning of “commercialise” in the MCA included – 
    1. … 
    2. in relation to material of a plant variety, to produce or reproduce, condition for propagation, offer for sale, sell, import, export, or to stock for the purpose of doing any of those things; …
    3. … 
  2. [6]
    Under clause 3.1 of the MCA, NF was permitted to grant a sub-licence to any person (on certain conditions).  Under clause 4 of the MCA, NF was required to pay the Government a licence fee (4.1) and a royalty fee (4.2).[1]

The contract between Nutrafruit and AIGN for QG; and the agreement between AIGN and Vitaplum

  1. [7]
    AIGN is an American company.  It asserts that it specialises in the global management of plant breeder intellectual property; fruit tree commercialisation; and nursery operations.  Among other things, it asserts that it develops co-ordinated marketing plans at a global level for tree sales and commercial fruit production.  It has a network of members from various countries around the world, including the Australian Nurserymen’s Fruit Improvement Company Ltd (ANFIC) in Australia.  Its promotional material asserts an expertise in intellectual property protection, including the following:

How We Support Our Members

…

Intellectual Property Protection

Protecting your product from replication is imperative to ensure the highest returns to the stakeholders.  We are experts in Intellectual Property Protection and have the tools to help you navigate the complex process of keeping your investment secure.    

  1. [8]
    NF “faced problems” regarding an application for plant breeder’s rights (PBR) for QG in various countries, including China, Chile, and Argentina.  
  2. [9]
    Material before me included emails from 2018 between the relevant Queensland Government department (the Department of Agriculture and Fisheries), an entity called Davies Collison Cave Intellectual Property (DCC), Nutrafruit, and others about PBR protection in China and Chile for the QG and importing budwood into those countries.  I note that most of the discussion about PBR and importation was between the Government department and DCC.  I also note the complaint by the Government department about Nutrafruit “causing some unnecessary delays” in an email dated 10 May 2018.
  3. [10]
    In about 2019, NF contacted AIGN to (NF said) assist it with its PBR applications, and in the commercialisation of QG.  NF said it provided AIGN with all relevant documents and information about the PBR issues it was having during its precontractual negotiations with AIGN.  
  4. [11]
    On 12 November 2019, AIGN provided to NF an “Exclusive Worldwide Plant Variety Commercialisation Proposal”, which stated that an early indication of the commercial potential of QG could see more than 30,000 tonnes (700 ha) produced globally as fresh fruit.  Under the proposal, AIGN said that it would – 
    1. distribute QG globally to the majority of AIGN territories [that is, nominated countries or regions from around the world];
    2. continue QG’s evaluation and commercial assessment in the AIGN territories;
    3. manage all marketing of trees, fruits and by-products of QG in all AIGN territories; and
  1. “use its best endeavours to include [Nutrafruit’s existing] test growers and organisations in the AIGN global commercialisation plans”.
  1. [12]
    Also, under the proposal, AIGN said that it would “continue to manage existing IP applications and grants”.
  2. [13]
    On 31 January 2020, AIGN entered into an agreement – a Multi-Territory License Agreement – with Vitaplum Technology Pty Ltd, for the GW1 plum variety which was owned by Vitaplum (in the same way as the QG was “owned” by the State of Queensland).  NF considered the GW1 plum a QG competitor.  AIGN considered the GW1 plum and the QG to be complementary varieties and saw benefit in marketing them (and a third variety of plum) together.
  3. [14]
    On 10 June 2020, NF entered into a sub-licence agreement with AIGN, entitled “Multi Territory Marketing Services Agreement for Queen Garnet Plum”.  I will refer to this agreement as the “contract” to reflect the language of the application.
  4. [15]
    The background to the contract included the following recital:

AIGN desires to provide services to Nutrafruit to assist Nutrafruit with the marketing of Plums as defined below and selection of Sublicensees[2] as defined below and as provided herein.

  1. [16]
    A “sub-licensee” was defined as “any party with whom AIGN enters into a Sublicense on behalf of Nutrafruit”.  “Marketing” was defined as “the propagation, growth, harvest and sale of [Queen Garnet Plum] Plants [including scion, nursery trees and budwood] and the harvest, packing, distribution and sale of Plums in specified Territories”.  The “Territories” included “China … South Korea, Japan, New Zealand, South Africa, the United States, Mexico, Canada, Turkey, Europe, including the UK, Chile, Argentina and any other territories that the parties may agree upon from time to time”.
  1. [17]
    By clause 2 of the contract, NF appointed AIGN as “its sole and exclusive agent to pursue Marketing of the Variety [the Queen Garnet plum] in the Territories including the development of an exclusive brand with Trademarks for the Variety in the terms of this Agreement and AIGN accepts appointment on those terms”.  If NF wished to pursue the marketing of QG in other territories of the world, then, by clause 2(b), AIGN had a right of first refusal to market in that other territory.  By clause 2(c), AIGN was authorised by NF to solicit, negotiate, and sign or otherwise conclude Sublicenses on behalf of NF with the prior written approval of NF “whose consent must not be unreasonably withheld, conditioned or delayed”, for the purpose of marketing the QG.
  2. [18]
    By way of consideration, AIGN was to receive a commission equal to 50 per cent of the royalties received by NF under any sub-licence.  The royalty rate was to be determined on a territory-by-territory basis.  
  3. [19]
    Clause 9.2 set out the mechanism for termination of the contract, including for cause as per clause 9.2(a)(i):
  1. (a)
    A party may terminate this Agreement for cause if - 
  1. (i)
    the other party fails to pay royalties or materially abide by the terms and conditions of this Agreement and fails to cure the breach within twenty-one (21) days of receiving a written notice from the other party.
  1. [20]
    The contract was signed by Luke Couch, a director of NF, and Lynnell Brandt, a director of AIGN.

The relative expertise of Nutrafruit’s and AIGN’s witnesses

  1. [21]
    The evidence before me on this application included affidavits from Dr Gavin Porter for AIGN and from Mr Indrajit Ghosh for NF.
  2. [22]
    Where there was a contest between Dr Porter and Mr Ghosh about matters involving fruit trees, such as the expected timeline from quarantine to commercial production, the applicant invited me to prefer Dr Porter’s evidence over Mr Ghosh’s evidence because of Dr Porter’s experience, which it contended was more relevant than Mr Ghosh’s experience.  
  3. [23]
    Dr Porter is the current chief executive officer (CEO) of AIGN.  Dr Porter has 17 years’ experience as an academic in the field of intellectual property management and the commercialisation of new fruit varieties; a “Ph D” in Botany; and 22 years of private industry experience in fruit crop production.  Dr Porter is also the CEO of ANFIC.  In his affidavit of 23 September 2024, he outlined his experience in detail.
  4. [24]
    Mr Ghosh has been a trader of agricultural products; a majority shareholder in a company which traded in seeds, including fruit seeds; and a shareholder and director of companies, including those in the fruit industry.  He advised a Government about the export of rice between 2005 and 2009.  Mr Ghosh claimed significant expertise acquired over years of industry experience.  He was appointed a director of Nutrafruit in 2019 and in that position gained experience in several aspects of the marketing and commercialisation of QG in Australia and Spain.  
  5. [25]
    On the strength of the affidavit evidence, I could not choose who was the “better” expert.  But as it turned out, their relative expertise was not a matter of significance in this application.  I was prepared to accept that the process of commercialisation took time, and that there was no guarantee of success. 

The lead up to the present application and the issues for me

  1. [26]
    According to Dr Porter, a successful QG global marketing campaign in the EU, the USA, South Africa and China could be expected to generate a revenue for AIGN of approximately USD $714,000,000.00 by the year 2040.  While this was not spelt out in the evidence before me, I infer that NF could expect the same, given the parties’ agreement upon a 50:50 revenue split.  
  2. [27]
    Obviously, it was to the benefit of both AIGN and NF for AIGN to work as hard as it could to commercialise the QG, and for NF to co-operate with AIGN, to the extent to which it was reasonable, to further commercialisation proposals.  However, within a relatively short period of time, each party was complaining about the other and accusing the other of breaching the contract.
  3. [28]
    Ultimately, NF gave notice to AIGN of its intention to terminate the contract (the breach notice) on 11 March 2024 (if AIGN did not do certain things within 21 days) and notice of termination on 5 April 2024.  
  4. [29]
    AIGN refused to accept the termination as valid.  
  5. [30]
    On 23 August 2024 AIGN filed an application for declarations that the contract was in force and that NF’s purported termination was of no effect.  In the same application, it sought an interlocutory injunction to restrain NF from (among other things) –

interfering with or seeking to interfere with the continuance of the applicant’s right to act as the respondent’s sole and exclusive agent for the Marketing and sub-licensing of the Queen Garnet variety of plum, except by engaging in this proceeding.

  1. [31]
    As is well known, the matters for a court to consider on an application for an interlocutory injunction are: (a) whether the applicant has a prima facie case (that is, a case with a sufficient likelihood of success as to justify, in the circumstances, the preservation of the status quo pending the trial); and (b) where the balance of convenience lies, which may include consideration of any delay by the applicant in bringing its application.  I was also required to consider whether damages would be an adequate remedy for any harm that might be done to AIGN by my not granting the injunction if AIGN were proved to be right at trial about the invalidity of the termination.  
  2. [32]
    At the hearing of the application for the interlocutory injunction, AIGN explained that I was not required to consider (a) as a reason for granting the injunction.  And, to the extent to which AIGN’s likelihood of success was relevant to my assessment of the balance of convenience, the parties agreed that it was a neutral factor.  They acknowledged that I could not possibly evaluate AIGN’s prospect of success in the substantive application on the material before me.  
  3. [33]
    AIGN offered the usual undertaking as to damages offered in these applications.  Mr Ghosh challenged the value of that undertaking in detailed affidavit material.  However, I was informed at the hearing that I need not worry about that issue, because any order for an injunction that I might make could be or would be conditioned on the provision of an undertaking by AIGN by way of the payment of money into court, and that money, in an agreed amount, was already in AIGN’s solicitor’s trust account. 
  4. [34]
    To evaluate where the balance of convenience lay and to gain an understanding of the harm that might be suffered by AIGN were there to be no order for an injunction, and whether damages would be an adequate remedy for it, I considered the progress made under the contract.

Progress under the contract and the deterioration of the relationship between the parties 

  1. [35]
    Dr Porter’s affidavit of 23 August 2024 set out the actions taken by AIGN under the contract.  They included: shipping budwood to certain territories, taking steps to maintain intellectual property rights in EU and the USA, investigating the status of plant breeder rights, registrations and trademarks in certain of the territories, contacting 20 test growers “to establish test trees “in as many AIGN territories that were able to receive plant material through Plant Quarantine as was possible”; taking steps to resurrect the plant breeder rights applications (made by NF) through plant material distribution in China and New Zealand; causing trees to be planted in some of the territories; and paying quarantine fees (of about USD $120,000 per year).  The actions took place mostly between 2020 and 2023, with the payment for quarantine being the only action listed for 2024.[3]
  2. [36]
    AIGN also “sought methods to commercialise the Queen Garnet globally in a coordinated manner, as plant material was distributed globally and established prior to evaluation of the Queen Garnet variety for climatic and commercial adaptability”.  To explain: the State of Queensland had secured intellectual property rights for the QG in some of the AIGN territories before AIGN was in the picture and before any sub-licence had been entered into in those territories.  For territories in which plant breeders’ rights could not be established, NF expected AIGN to establish alternative intellectual property rights (such as brand development using trademark names) so that there would be commercial value for growers to invest in the QG. 
  3. [37]
    On 9 April 2021, Dr Porter provided NF with a report on the status of the QG’s marketing and commercialisation.  It is fair to say that the report did not contain much good news.  It noted that AIGN had been “partially successful” in contacting the various QG testers, previously licenced by NF, to access QG fruit for initial evaluation.  It set out the “major challenges” faced by AIGN in globally commercialising the QG which included there being several territories where plant breeders’ rights were unlikely to be granted (for example, New Zealand, China, and Chile).  AIGN said –

Commercialisation will be difficult enough in these territories with PBR but without it, it will be close to impossible and that’s assuming QG isn’t already illegally imported into these territories.

  1. [38]
    Another challenge was that, although the NF testers had access to QG plant material since 2020 to propagate trees and evaluate the variety, there were – 

very small numbers of test trees planted in most territories, little fruit variety evaluation has been done and while there appears to have been some uncontrolled semi-commercial plantings in Europe with fruit sold as red fleshed plum and not Queen Garnet, there’s been little commercial evaluation in the past 10 years.

  1. [39]
    Further, most of the licenced testers were “antagonistic” towards AIGN and initial access to them had been difficult.  AIGN’s members would try again in 2021 to confirm the tree numbers planted by past testers.  AIGN was continuing to develop a global commercialisation and marketing plan, but COVID 19 had affected its work practices and it was not finalised.  
  2. [40]
    Having said all of that, AIGN still considered 1.75 million trees (on 700 hectares) to be a realistic amount to plant in the USA, the EU, and South Africa initially.  There were already test growers in some of the territories and AIGN said it would use its best endeavours to include those test growers in its global commercialisation plans.  
  3. [41]
    In a more detailed analysis of the state of things, AIGN raised issues about other matters, including but not only – 
    1. its inability to access plant material which had been established in test blocks in New Zealand;
    2. the challenge of commercialisation in China because there was no ability to enforce plant breeders’ rights there (a PBR application having not been successful);
    3. the plan to plant 5000 trees in Morocco which was abandoned;
    4. that none of the testers on the list of EU testers provided by StarFruits (one of AIGN’s EU members) was under an AIGN testing agreement because no new test trees had been planted in the past year;
    5. that in 2020, there were some fruits in the South of France but none in Italy because of Spring frost damage;
    6. that 2021 would be difficult in Europe because of frost which had already had an impact on France, Spain, and Italy; and
    7. that in New Zealand, McGrath Nurseries refused to share any QG plant material with AIGN’s New Zealand member without being paid NZ $220,000 for plant quarantine and the propagation of the initial test trees which AIGN considered an unjustifiable price. 
  4. [42]
    There were more positive signs, including but not only that – 
    1. Cameron Nursery (sub-licensed by AIGN in the USA for the purposes of propagating and trialling QG) supplied AIGN with propagation material in August 2020 so that AIGN could build mother trees for its block;
    2. AIGN would be collecting more material “this coming fall” for further propagation of trial trees – 250 were proposed, to be available in 2023;
    3. Stargrow (which had been licenced by NF as a test grower) had approximately 600 trees planted in a semi-commercial planting; and
    4. TopFruit (AIGN’s South African member) had been in contact with Stargrow and accessed plant material to propagate an additional 5,000 trees for semicommercial planting in July 2022.
  5. [43]
    On 22 October 2022, Dr Porter provided to Mr Couch an update about the status of testing the QG in the northern and southern hemispheres and the impact of COVID 19.  The update included reports of very attractive fruit and easy to manage trees from one crop in France; with similar feedback from Spain.  The update included reasonably positive news and plans from Europe; less positive and more cautious news and plans from the USA; and optimistic, yet cautious, news and plans from South Africa.  
  6. [44]
    On 6 January 2022, Dr Porter provided to Mr Couch an AIGN proposal for a sublicence in the USA.  It was sent under cover of an email which said, “Please find attached an AIGN proposal from our USA AIGN member for consideration by Nutrafruit for the Farmgate fruit sales market sector for QG.  This is just a precursor to a future commercial proposal for the USA orchard sector but these market sectors work in harmony in the USA”.  
  7. [45]
    The USA proposal was authored by Mr Kevin Brandt.[4]  The proposal was by way of a one-page, relatively informal, letter.  The proposal was in the following terms:

While we work to build the commercial segment for the Queen Garnet cv., we have been approached by a closely affiliated nursey that has an interest in providing Queen Garnet cv trees to growers who provide fruit to the farmgate segment of the industry … 

  1. [46]
    The proposal referred to the impact of COVID 19 on the purchasing habits of consumers – including causing consumers to order online and not to enter crowded stores thereby hindering the introduction of new fruit to them.  It said that plums were number 19 of the top 20 fruits sold within the USA and that customer satisfaction with them to date had been quite low.  It said that Farmers’ Markets in the USA made Honeycrisp “what it is today” (a very successful apple).  It said, “Tens of thousands of Honeycrisp trees are grown specifically for the farmgate market and we envision Queen Garnet as having the same potential once promotional activities and consumer recognition takes hold” (my emphasis).  It sought permission to licence the QG, to be grown and sold specifically for the farmgate market.  It proposed a $2 per tree royalty rate with a continuing fruit production royalty (the detail of which I will not set out here).  However, the farm gate proposal did not include much detail at all.  For example, it did not include detail about the size of the planting contemplated; or planting rates; or timeframes; or why Farmgate growers might be interested in the QG.[5]
  1. [47]
    On 25 January 2022, AIGN provided to NF a proposal to commercialise QG plants in South Africa.  The form, content and detail of this proposal may be contrasted with Mr Brandt’s one-page, casual, Farmgate letter proposal.  
  2. [48]
    The South African proposal included a royalty of $1.30 per tree (capped at 2,500 trees) and a certain production royalty.  It proposed that TopFruit would manage the overall coordination of the commercialisation.  The final page of the proposal explained that the document was an initial draft and ought to be seen as a discussion document.  It contained several cautions, including in relation to congestion in the stone fruit market; and the reasons why growth was slowing down.  It concluded with the following dot points:
    • TopFruit sees a promising opportunity for Queen Garnet, within the South African industry, provided that the business case is profitable for all involved, with the emphasis on the grower who makes the biggest investment when establishing an orchard.
    • Queen Garnet is already seen as a promising premium variety and TopFruit believes that the uptake will be good.
  3. [49]
    Neither Mr Brandt’s proposal nor AIGN’s South African proposal were endorsed by NF.  Mr Ghosh did not consider Mr Brandt’s letter to amount to a commercial proposal and the South African proposal as it stood (that is, as an initial draft for discussion) was, from the State Government and NF’s point of view, uncommercial. 
  4. [50]
    On 15 March 2022, Dr Porter provided to NF a report on the state of the global nursery market by way of a presentation entitled “AIGN Management Team Presentation”.  The presentation was not optimistic about the state of the global market although, obviously, I am not suggesting that AIGN was responsible for downturns in markets, or frosts, or increasing competition, or lost excitement, or lost appetite for new varieties, or the impact of COVID 19 et cetera.  Individual AIGN members’ reports (which were part of this presentation) were also, on the whole, pessimistic about the state of the fruit industry generally: however they were not plum specific and tended to focus on apples and pears.  
  5. [51]
    On 14 June 2022, Dr Porter provided to Mr Couch a report on the status of the QG’s commercialisation and the issues it was facing.  Dr Porter explained that, at its recent AGM, AIGN’s members had discussed at length the QG variety and its potential global commercial development.  He said – 

The AIGN President and AIGN Executive are becoming concerned about some of the roadblocks now being encountered with QDAF[6] /Nutrafruit, which will hinder the successful global commercialisation by AIGN for QG in the current global economic climate and the impact on each AIGN territory’s plum industry.  As AIGN is unable to put a global IP system in place to assist with global commercialisation, to make these global plans work and be commercially viable, AIGN has to explore other means of both variety and brand protection.  This takes time and considerable funds to be achieved globally, without a global IP system in place.   

  1. [52]
    Dr Porter went on to elaborate upon the problems caused by a lack of global IP rights.
  2. [53]
    He raised the South African TopFruit proposal, and explained that, because of the royalty rates required by QDAF (which he said exceeded royalty rates for similar programs in South Africa by 200 – 300 per cent), the program was unsustainable and unviable and there was little chance of attracting growers to it.  Dr Porter requested a meeting with Mr Couch and QDAF to further discuss the global outlook, the South African proposal, and QDAF’s royalty expectations.
  3. [54]
    On 28 June 2022, Mr Couch replied to Dr Porter.  He said the IP challenges described by Dr Porter were “legacy issues for Queen Garnet that all parties have been aware of for a period of time far preceding [the contract]”.  He continued, “To flag these concerns as a challenge to commercialisation 2 years after the execution of the agreement doesn’t fill us with confidence that AIGN is actually committed to the success of the variety internationally”.  Mr Couch also discussed in detail the TopFruit proposal for South Africa.  
  4. [55]
    On the legacy issues point, Dr Porter said that AIGN was aware that QDAF and NF were having issues with PBR applications in China, Chile, and New Zealand, and intended to provide assistance in that regard.  
  5. [56]
    Dr Porter said that AIGN asked NF for a power of attorney to assist it in relation to PBR issues.  His affidavit said “AIGN did not receive this”.  His affidavit went on to explain that NF told AIGN that another entity had power of attorney and attached an email chain from June 2020 (not long after the contract had been executed).  In an email to NF in that chain, Dr Porter expressed AIGN’s excitement about the arrangement and indicated that NF’s input was required in relation to several matters, including the granting of power of attorney to AIGN.  Dr Porter said –

Some of the AIGN members eg Chile and China, have expressed a willingness to assist in any PBR applications, as they have members in-country, as well as established IP protection pathways with all of the various Plant Breeders Rights offices and personnel.  To assist in these PBR applications, would Nutrafruit please provide a Power of Attorney (POA) or similar to allow us to inquire and assist in gaining PBR in any outstanding jurisdictions.

  1. [57]
    In reply to that request, Mr Couch said:

DAF [the Government department] looks after PBR for the variety so I’m unsure if they would look to sign over POA.  They use Davies Collison Cave in Melbourne and we haven’t had much in the way of progress over the last few years.  If your members want a link to talk through the history today, I’d be happy to bring all parties together.  

  1. [58]
    In March/April 2023, NF was contacted by Evan Lin on behalf of Joy Wing Mau (JWM).  JWM is a leading wholesaler of fresh fruit in China and a 25 per cent shareholder in Shennong Variety Management LTD (SVM), AIGN’s member in China.  The relevant email chain exhibited to Mr Ghosh’s affidavit commenced on 20 March 2023 with Mr Lin’s email to [email protected] and concluded with Mr Lin’s email to Mr Couch dated 29 May 2023.  
  2. [59]
    On 27 March 2023, Mr Couch replied to the first email in the chain, thanking Mr Lin for his enquiry; sending him information; and stating that NF was interested in starting discussions with JWM about the potential to commercialise QG in China.  He suggested a meeting.  On the same day, Mr Lin replied with a proposed meeting agenda which mentioned JWM’s desire to become NF’s partner if QG were suitable for planting in China.  The next few emails consisted of an exchange of information and a discussion of possible dates for a Zoom meeting – settling on 6 April 2023.  
  3. [60]
    On 10 April 2023, Mr Lin raised some issues with Mr Couch, including the following:

Since JWM and SVM … are related, please tell us what your commitment to SVM is?

  1. [61]
    Mr Lin also asked about NF’s propagating rights or licences in China.
  2. [62]
    On 19 April 2023, Mr Couch told Mr Lin that, “[a]s discussed,[7] Nutrafruit has an agreement with AIGN giving them rights to commercialise in overseas territories, (including China) in conjunction with Nutrafruit.  We have no relationship with SVM but understand they are a member of AIGN.  SVM is also the sponsor of QG into quarantine in China”.  Mr Couch told Mr Lin about the NF board’s response to an opportunity in China:

The opportunity in China was discussed by our Board at yesterday’s meeting.

As we discussed, for Nutrafruit to move forward with JWM (particularly on an exclusive basis) we will need a proposal on the size of the opportunity in China and a proposed planting program …

  1. [63]
    Mr Couch told Mr Lin he was going on annual leave “tomorrow” and would be back on 15 May 2023.  He asked Mr Lin to provide his projections for QG (before 15 May) so that he might discuss them with Mr Lin upon his return to work.
  2. [64]
    On 20 April 2023, Mr Lin emailed Mr Couch the detail requested.  He also explained that his boss, Mr Liu, was “quite concerned” because of the relationship between JWM and SVM and asked Mr Couch to ensure that JWM’s cooperation with NF would not cause conflicts.  After an exchange of inconsequential emails, Mr Couch replied to Mr Lin on 24 May 2023 (see below).
  3. [65]
    On 26 April 2023, AIGN provided a report for the 2022 season.  It explained, with reasons, that AIGN had no prospect of commercialisation in the EU or the USA in the next two years.  It noted that – 
    1. the Farmgate proposal was declined because it was not commercially viable for NF; 
    2. the TopFruit proposal was not going forward because there was no agreement with NF about its terms; 
    3. the attempt to re-introduce the QG into New Zealand was unsuccessful because the trees in quarantine died;
    4. the cost of attempting to import QG into New Zealand again might not be worth it, given the limited size of their plum market;
  1. the time to commercialisation in Chile was about 7 years;
  2. plant material was still in quarantine in South Korea; 
  3. the plant material in China was still viable; and
  4. QG was in a Chinese market.  
  1. [66]
    The report also noted that NF had declined to add India to the AIGN territories for QG evaluation and potential commercialisation. 
  2. [67]
    On 23 May 2023, Mr Couch emailed Mr Lin and invited a discussion about the timeline for trials of the QG in China and its subsequent commercialisation and other details.  He concluded his email with an assurance that NF would “not look to cause tension between JWM and SVM” and that NF was “currently exploring options that we believe could be beneficial to all parties”.  
  3. [68]
    On 29 May 2023, Mr Lin provided details about quarantine, explaining that JWM had its own quarantine facilities which meant that the plant material did not have to be quarantined in customs quarantine and that it could be tested and trialled at the same time, saving two to three years.  The trial period would be of three to four years. He also said –
  1. –
    About the schedule and projection for commercial planting

Frankly speaking, we are interested in QG and we have already made a timeframe and projection for commercial planting.

However, as you know, our boss is one of the directors of AIGN and he just went to Australia for the annual board meeting of AIGN.  They clearly told him that AIGN has signed agreements with Nutrafruit and they are titled (sic) for managing QG internationally, including the business in China.

In this case, I am not allowed to send you the timeframe and projection until we figure out who we should talk to about the partnership.  I hope you can understand and sort out with AIGN. 

  1. [69]
    On 12 June 2023, AIGN wrote to Mr Couch “Re: Notification To Nutrafruit Re Breach of Multi-Territory Marketing Services Agreement Due to Nutrafuit’s Recent Commercial Discussion in China”.  The letter complained about Nutrafruit’s CEO having discussions about commercialisation in China, in “clear breach of the agreement Nutrafruit has with AIGN, as its sole and exclusive agent to pursue the Marketing of Queen Garnet in many territories, including China (and Hong Kong)”. It continued:

This action shows further disregard by Nutrafruit for AIGN, our sole and exclusive licence and our international capability, as we had previously presented two AIGN commercial proposals for other territories to Nutrafruit, which were denied.

  1. [70]
    It referred to the “rescue project” terms put to Nutrafruit by AIGN in July 2022 and said the rescue project was only possible if Nutrafruit approved AIGN’s commercial proposals and did not undermine AIGN’s international capability.  
  2. [71]
    It warned about IP issues:

The lack of PBR for Queen Garnet in many territories, has already likely led to illegal propagation and marketing of Queen Garnet with NO opportunity for Nutrafruit and the variety owner to manage this or enforce any IP rights.

The longer AIGN is denied the ability to proceed commercially with the international proposals made to Nutrafruit, the higher the risk of unauthorised and illegal activity which no-one will be able to stop.  Queen Garnet will effectively become a “public” fruit variety … if some authorised commercial activity isn’t started in the territories, which already have access to Queen Garnet plant material.  

  1. [72]
    It also warned about the state of the industry and suggested that AIGN’s proposals were the best opportunities currently available.  
  2. [73]
    It requested three actions by NF, namely, (a) to advise it of the commercial terms it was willing to accept for China, so that AIGN could prepared a proposal for NF for immediate acceptance; (b) to share AIGN’s previously submitted proposals with the Queensland Government for review and potential acceptance; and (c) to provide its written feedback and that of the Queensland Government on the reasons for acceptance or rejection of the AIGN’s commercial proposals.
  3. [74]
    On 19 June 2023, Resolve Litigation Lawyers, for NF, wrote to Stokes Lawrence, the lawyers for AIGN.  It listed NF’s concerns about AIGN, which included (but not only) concerns that AIGN had not entered into any sub-licensing agreements with growers other than with test growers, including those with whom NF had a previous relationship; and concerns that PBR and trademark applications had not been pursued in the territories.  It noted that there had not been a proposal put to NF for the propagation of QG.  It was also concerned that AIGN had a conflict of interest as agent for both GW1 and QG.  It asserted that the difficulties AIGN referred to in correspondence about its inability to put in place a global IP system and the inability to use “Queen Garnet” as a trademark were the same issues faced by NF and conveyed to AIGN during pre-contractual negotiations.  Further, those issues related only to China and some South American countries.  
  1. [75]
    The letter referred to the complaints made by AIGN about NF “speaking with a certain party in China” and asserted that NF was not in breach of the contract by doing so.  In response to AIGN’s complaint that NF was unreasonably rejecting its proposals, it asserted that the proposals were uncommercial and therefore reasonably rejected.  The letter informed AIGN that NF had formed the preliminary view that AIGN had committed a material breach of the contract and requested that AIGN “show cause in writing, within 14 days” as to why AIGN had not committed a material breach; failing which, NF would consider its entitlement to terminate.  In the meantime, NF “reserved its rights”.
  2. [76]
    On 6 July 2023, Stokes wrote to Resolve, responding to the 19 June 2023 letter. Stokes’ letter conveyed that:
  1. AIGN fundamentally disagreed with the allegations made.
  2. It was Nutrafruit who was in breach of the contract.
  3. The demand for a response in 14 days was inconsistent with paragraph 9(2)(i) of the contract, which provided for a 21 day cure right.
  4. There was no basis for termination and AIGN wished to invoke the dispute resolution process contained in paragraph 10 of the contract.  
  5. AIGN had no responsibility for PBR – its role related to marketing.  
  6. The deadline for global PBR applications was 13 July 2016 – four years before AIGN’s involvement.  AIGN did what it could to help in relation to PBR issues but it did not accept responsibility for curing them.  
  7. There was nothing improper about AIGN’s representing Vitaplum and QG.  
  8. Nutrafruit’s denials of AIGN’s two commercial proposals were on a nominal basis.
  9. Rejecting proposals on the basis that the royalty stream was not large enough was arbitrary, capricious and unreasonable.
  10. Nutrafruit inexplicably went cold on the prospect of licencing in India.
  1. [77]
    After other complaints, the letter concluded with a demand (made previously) that the parties resolve their issues by way of the dispute resolution process provided for in the contract. 
  2. [78]
    On 6 November 2023, Dr Porter provided to Mr Couch a report on the status of the plum’s testing and marketing in the northern hemisphere and an interim update on southern hemisphere testing.  There were some positives in this report.  The QGs from some French trees were of good calibre and good eating.  In the USA, the harvested fruit from test trees provided “a very pleasant eating experience”, although testers needed to be educated about when to pick the QG.  Semi-commercial plantings had been established in South Africa, with the first fruit to be harvested in March/April of 2024.  And the AIGN member in Chile continued to monitor the QG in quarantine, awaiting its release.  
  3. [79]
    Also on 6 November 2023, Dr Porter provided a proposal to Mr Couch to commercialise Queen Garnet plums in China, through JWM.  The covering letter from Dr Porter included the following – 

In addition to the AIGN Commercial Proposal, Joy Wing Mau would like to propose the following tree and fruit production royalty proposals for consideration by Nutrafruit for the Chinese territory.

  • US$0.50 - $1.00 per tree Tree Royalty
  • 3-5% Fruit Production Royalty
  • (These royalty rates would be split 50%:50% between Nutrafruit and the AIGN Licenced Member)

I understand similar commercialisation timelines may have already been shared with you directly by Joy Wing Mau, so you will be familiar with the time required prior to full commercialisation in China.

  1. [80]
    The proposal contained a timeline, with Stage 1 (trials and evaluations) in 2024 – 2026, through to Stage 4 (full commercialisation) in 2032 – 2035 – that is, as I read the timeline, 8 – 9 years.  

Termination for cause 

  1. [81]
    On 11 March 2024, Mr Ghosh sent to Mr Lynnell Brandt a notice under section 9.2(a)(i) of the contract (a breach notice).  
  2. [82]
    Under the heading “Background”, the notice referred to AIGN’s proposal of 16 October 2019 for the commercialisation of QG worldwide, and its estimates that more than 30,000 tonnes could be produced globally as fresh fruit.  It also noted that, before 2020, various plant growers in the territories showed an interest in QG, including Stargrow in South Africa.  It identified some of AIGN’s obligations under the contract and asserted that the contract contained implied terms – including that AIGN, as NF’s agent, was to exercise reasonable skill, care, and diligence in carrying out its responsibilities and use all reasonable endeavours to pursue Marketing, as defined in the contract.  It noted that, since June 2020, AIGN had provided only two, non-commercial proposals to NF (from the USA and South Africa).  It had facilitated, or attempted to facilitate test growing in several territories, but none resulted in a proposal for propagation of QG.  It asserted that AIGN “failed to plant even a single tree” contrary to its 16 October 2019 proposal.  It complained about the South African proposal as follows – 

[AIGN has] progressed commercialisation of QG in South Africa by facilitating the execution of a semi-commercial agreement on 12 August 2022 which led to the approval of QG as a varietal listing in South Africa on 24 August 2022, but failed to provide for a commercial return and did not result in a proposal being given to NF for the propagation of QGs.

  1. [83]
    The notice referred to NF’s concerns about AIGN’s non-compliance with its obligations, as set out in the letter dated 19 June 2023, and asserted that AIGN failed to address its concerns.  
  2. [84]
    It noted that JWM/Mr Lin contacted NF directly in June 2023 to discuss collaboration for the commercialisation of QG in China; and informed NF that AIGN had not approached JWM about commercialisation of QG in China.  It noted that the proposal for China sent by AIGN to NF on 6 November 2023 contained terms which were inconsistent with the royalty structure in the MCA.  It observed that the proposal was not attributable to any steps taken by AIGN but rather to the communication between JWM and Nutrafruit.  The notice asserted that each of AIGN’s proposals were uncommercial or inconsistent with the royalty structures in the MCA.  The notice asserted that AIGN had not progressed plant breeder’s rights or trademark registrations in any of the territories.  It also alleged, as a breach, AIGN’s working as agent, for an alleged competitor of QG – GW1/Vitaplum, which was sold in the same time period as QG.  
  3. [85]
    In paragraph 21, AIGN was given 21 days to cure its alleged breaches by: (a) procuring one written proposal from a credible grower (other than those which had approached NF directly) which was consistent with the royalty structure in the Master Commercialisation Agreement; (b) ceasing to market Vitaplum; and (c) providing a plan outlining specific marketing strategies.  In paragraph 22, the notice stated that if the alleged breaches were not cured within 21 days, NF reserved its right to terminate the contract and to treat AIGN’s conduct as repudiation of the contract. 
  4. [86]
    The covering letter from Mr Ghosh provided an example of royalty terms which would be consistent with the MCA and possibly satisfactory to NF.  Additionally, it referred to previous attempts to clarify the origin of the GW1 plum and asked for a statutory declaration confirming: (a) “the accuracy and truthfulness of the origin of GW1…”; (b) that QG and GW1 were not related varieties; and (c) that AIGN made no representations about the origin of GW1.  
  5. [87]
    There was no relevant response from AIGN in that 21-day period.  
  6. [88]
    Material tendered referred to a letter sent on AIGN’s behalf to NF dated 4 April 2024.  That letter is not before me, but it is described in other material as not containing a substantive response to the notice and confirming that AIGN had taken no steps to cure the alleged breaches.  
  7. [89]
    On 5 April 2024, Mr Couch sent a notice of termination of the contract for cause to Mr Lynnell Brandt.  

AIGN’s response to the notice of termination

  1. [90]
    Dr Porter asserted that, since 5 April 2024, AIGN acted as if the contract remained on foot.  He described AIGN’s actions in general terms in paragraph 43 of his affidavit as follows:

AIGN has since [5 April 2024]:

  1. provided Nutrafruit with an annual marketing plan;
  2. continued to Market the Queen Garnet with AIGN members;
  3. continued the testing of Queen Garnet in certain regions;
  4. distributed plant material to as many AIGN territories as possible while meeting territory importation requirements through plant quarantine facilities; and
  5. paid quarantine facility fees as and when they fall due.
  1. [91]
    As was observed at the hearing, the description of AIGN’s activities since 5 April 2024 was in very general terms without details such as: the dates upon which the marketing referred to in (b) took place, or the name of the members to whom the QG was marketed; or the dates of the testing referred to in (c); or the regions in which the QG was tested; or the dates upon which the plant material was distributed referred to in (d), or the date upon which quarantine facility fees were paid referred to in (e).
  2. [92]
    As to (a): On 9 April 2024, Mr Brandt wrote to Mr Couch.  His letter bore the heading “Re AIGN Annual Marketing Plan for Queen Garnet”.  Among other things, it defended AIGN’s progress to date.  It said that–
    1. AIGN’s members with existing test QG trees had provided reports to AIGN about their QG as part of the research and development of QG in the member’s territories;
    2. additional test trees had been planted in recent years – and attached an Appendix, which showed tree planting in Chile (2022), France (2021, 2022, 2023), Italy (2022, 2023), Spain (2022, 2023) and the USA (2014 and 2022);
    3. it had been unable to commercialise QG because its proposals had been arbitrarily rejected by Nutrafruit;
  1. “AIGN continues to evaluate the Queen Garnet variety in trial sites pending the grant of future commercial licenses”; and
  2. it had visited most of the previously licensed test growers and asked them to sign new AIGN test agreements to protect the IP of the QG and to provide them with commercialisation opportunities under a global marketing plan.  All previous and current test growers had “resigned” (I assume he meant “resigned”) under AIGN test agreements.
  1. [93]
    It went on –
    1. 4
      The Forecasts of Queen Garnet fresh plum fruit are outlined below with a commercial license grant date of 2024 for the AIGN territories of the EU, South Africa, USA and China.  These sales estimates are approx. 3,600 ha producing 110.000 tonnes of fruit within 15 years …
    2. 5
      The Marketing steps and strategies to be developed once commercial licences have been granted include:
    1. a
      The development of a new trademark for the Queen Garnet plum variety.
    2. b
      Through current market research … in various markets … to drive the branding and marketing strategies in each of the major markets.
    3. c
      The development of unique packaging for each market …
    4. d
      Advertising and promotion …
  1. [94]
    It qualified its plan with the following –

If the commercial cooperation from Nutrafruit is received by AIGN in a prompt, fair and reasonable manner and commercial licenses were granted for the various AIGN member territories proposed, then there is an indication of the Annual marketing Plan and commercial timelines possible, provided no impediment to global plant material distribution occurs.

  1. [95]
    The report envisaged that trees would be planted by the end of 2024 and provided a document which set out the number of trees to be planted in the EU, South Africa, the USA, and China.  
  2. [96]
    In his affidavit, Mr Ghosh challenged the forecast – explaining why planting by the end of 2024 would not be possible and expressing his opinion that the number of trees to be planted per hectare were inflated and unrealistic.

Nutrafruit’s actions since the notice of termination

  1. [97]
    Nutrafruit’s actions, since the notice of termination, included, but not only, the following – 
    1. From about 10 April 2024, Mr Ghosh has been in negotiations about the potential commercialisation of QG in South Africa.  On 12 April 2024, he became aware of a semi-commercial QG plantation in South Africa from which AIGN’s member, TopFruit, had received a one-time royalty, and continues to receive five per cent of the value of the sales.   
    2. From mid-April 2024, Mr Ghosh has been in discussions with Joy Wing Mau about the export of QG and value-added products from Australia to China.
    3. Mr Ghosh has been in discussions with growers in Spain.  QG plants are already being commercialised in that country.  And in August/September 2024, Mr Ghosh discussed planting 100 acres of QG with two growers.  
    4. Mr Ghosh intends to attend the “Fruit Attractions” conference in Madrid between 8 – 10 October 2024, during which he has arranged to speak to: a marketing agent from the UK, who will introduce him to growers in Italy; Stargrow representatives who will introduce him to growers in France; and a representative of a Spanish grower who will introduce him to growers in Chile.  
    5. Mr Ghosh is in discussions with the largest importer in the UK who is the sole importer for Sainsbury’s. 

Lawyers’ correspondence post the notice of termination

  1. [98]
    On 10 April 2024, Polczynski Robinson (PR), AIGN’s new lawyers, wrote to Resolve.  PR’s letter referred to prior communication between Resolve and AIGN’s former American lawyers (Stokes), and between AIGN to NF, from 12 June 2023 until 12 February 2024.  It noted that the issues between AIGN and NF had been ongoing for some time.  The letter stated that AIGN wished to work productively with NF – but maintained its position (as reflected in the correspondence mentioned above) that – 
    1. NF had unreasonably rejected AIGN’s commercial proposals;
    2. NF had attempted to circumvent AIGN in the Chinese, Indian, European and United Kingdom territories; and
    3. NF had attempted to compel the purported termination of the contract in bad faith.
  2. [99]
    The letter went on to refute many of the claims made by NF against AIGN.  It argued why its proposals had been commercial.  It stated that QDAF’s royalty expectations meant the commercialisation of QG was not sustainable.  The letter also dealt with the origin of the GW1 plum.  
  3. [100]
    Under paragraph 4, it set out inter alia the actions taken by AIGN.  I note that some of the actions were expressed in terms that suggested current activity – such as (my emphasis):
    1. “Stargrow are working with AIGN … AIGN continue to evaluate the QG variety in [South Africa and the EU].”
    2. “AIGN is taking steps to resurrect each of the PBR applications in China and New Zealand …”
  4. [101]
    AIGN denied that it was in breach of contract.  AIGN considered NF in breach, including by failing to abide by the dispute resolution clauses of the contract.  Thus, it argued, the notice was invalid.  It also defended its complementary marketing of GW1 and QG: GW1 was not QG’s competitor.  
  5. [102]
    The letter concluded with the following – 
    1. 7.1.1
      Nutrafruit’s purported Notice is ineffective and amounts to a repudiation of the [contract] which is not accepted.
    2. 7.1.2
      AIGN requires Nutrafruit to withdraw all of the allegations in the Notice; and
    3. 7.1.3
      AIGN considers that the [contract] remains on foot, and it will continue with all reasonable endeavours to pursue Marketing … of QG in the Territories.
  6. [103]
    The letter also stated that AIGN reserved its rights, including its right to damages, for NF’s conduct and purported termination of the contract.  
  7. [104]
    On 16 May 2024, Resolve replied to PR’s letter.  It referred to an email dated 4 April 2024, from PR, which Resolve asserted “did not contain a substantive response to the Notice or the 11 March Letter, and, indeed, confirmed that no steps had been taken to cure the Breaches”.  Resolve set out the justification for the notice of termination and responded to the arguments made on AIGN’s behalf in PR’s letter including by challenging the commerciality of the proposals put by AIGN, given the requirements of the MCA; and denying that NF discussed any commercial terms with Joy Wing Mau.  It challenged AIGN’s assertion that it [AIGN] was currently working with Stargrow, on the basis of NF’s “recent” discussions with Stargrow; it asserted that its master plan, provided on 26 April 2023, did not include what it was required to include under the contract; and maintained that GW1 and QG were competitors.  It concluded with assertions that the contract had been validly terminated on 5 April 2024.  It required AIGN to immediately cease acting as NF’s agent.  And NF “reserved all of its rights including, but not limited to, its rights under the [contract], negligence and the Australian Consumer Law as well as in relation to AIGN’s fiduciary obligations”.
  8. [105]
    As the parties put it – it was then “pistols at dawn”, in that each implicitly threatened legal action unless the other did as demanded.
  9. [106]
    On 30 May 2024, PR wrote to Resolve and demanded that NF cease and desist solicitation of business contrary to the terms of the contract; and cease its repudiatory conduct with respect to the contract.  It made it plain that AIGN did not accept NF’s purported repudiatory conduct and that it considered that the contract remained on foot.  It complained about the conduct of Mr  Ghosh in, essentially, soliciting business in South Africa on 10 – 12 April 2024; and in China on 15 May 2024.  It asserted that this was not the first time conduct of that kind had occurred and referred to a letter from Stokes to Resolve dated 12 February 2024.  It gave NF seven days to respond to the letter and comply with AIGN’s “Required Steps” as set out in the letter.  It concluded with the following –
    1. 4.2
      AIGN is concerned that QDAF is not aware of the full extent of the work undertaken by AIGN including but not limited to the various opportunities that Nutrafruit has refused to pursue.  AIGN will set out those details in further communication.
    2. 4.3
      This letter may be relied upon on the question of costs, including on an indemnity basis, should the need arise.
  10. [107]
    On 7 June 2024, Resolve replied to PR’s letter, asserting that – 
    1. The contract was validly terminated;
    2. NF was therefore entitled to solicit QG business as it thought fit;
    3. AIGN was obliged to cease acting as NF’s sole agent;
  11. [108]
    It contained the following warning:

Our client will not hesitate to take whatever steps as it may be advised to protect its interests in the event that your client interferes or hinders, or attempts to interfere or hinder, with our client’s rights to communicate, solicit business, discuss commercial opportunities or grant exclusive sub-licences to any third parties.  In particular, and without being exhaustive, your client must not make any representations to growers, nurseries or any other third parties to the effect that:

  1. the AIGN Agreement remains on foot;
  2. AIGN continues to hold the right to act as the sole and exclusive agent for the commercialisation of QG in the Territories; or
  3. Nutrafruit may not enter into any testing or licensing negotiations or agreements with nurseries or growers in the Territories.

If growers, nurseries or others were to rely on some or all of the Representations and … [that could cause] Nutrafruit to suffer substantial loss and damage.  Nutrafruit reserves its right to hold [AIGN] liable, and to pursue all appropriate remedies against [AIGN] in that regard.

  1. [109]
    It also indicated that Nutrafruit would vigorously defend any proceedings brought by AIGN and reserved its rights, including to claim/cross-claim against AIGN for loss and damage. 
  2. [110]
    No legal action was taken (by either party) until the application for declarations and an interlocutory injunction was filed by AIGN on 23 August 2024.

Arguments about balance of convenience

  1. [111]
    Each party’s case included an argument to the effect that it ought to be allowed to pursue the marketing and commercialisation of the QG, prior to the determination of the substantive application, because it would achieve better results that the other party.  
  2. [112]
    AIGN submitted that the question for me was not who was best placed to commercialise the QG – but rather whether the inconvenience or injury which the applicant was likely to suffer if an injunction were refused outweighed the inconvenience or injury the respondent was likely to suffer if the injunction were granted.  That is the correct way to understand the “balance of convenience” issue.  However, AIGN’s submissions were to the effect that Mr Ghosh/NF did not have the necessary experience to commercialise QG or protect its IP, which was why AIGN was engaged by NF in the first place.  AIGN submitted, in effect, that the applicant was likely to suffer more harm if an injunction were refused than that which NF would suffer if it were granted because NF was not as well placed as AIGN to commercialise the QG or protect its IP.
  1. [113]
    The issue about relative injury or harm was complicated by the fact that the contract between AIGN and NF required any revenue from the commercialisation of QG to be equally shared.  Speaking generally – if AIGN was right, and the contract had been invalidly terminated, then no matter who earned commercialisation revenue prior to the resolution of the substantive proceeding, the other would benefit as the contract envisaged (and would continue to benefit into the future).  And AIGN accepted that, if its application for an injunction were granted and it ultimately emerged that the contract was validly terminated, then it would not be required to turn over 100 per cent of any revenue it made in the intervening period to NF (as it had originally submitted).  It would have a claim on some of that revenue, on a quantum meruit type basis.  
  2. [114]
    AIGN referred me to correspondence in which it said NF estimated its potential damages as “$100,000”.  AIGN submitted that that did not amount to significant prejudice.  (NF pointed out that its estimate was “a least $100,000”.)  AIGN submitted that the potential harm to NF if the injunction were granted would be limited.  Its only identifiable direct financial loss was the payments of commissions to AIGN, which would be recoverable if the contract were found to have been validly terminated.  AIGN submitted that NF could only benefit from AIGN’s being allowed to continue to act as its agent.
  3. [115]
    On the evidence before me, while the period between now and the trial provided an opportunity for the negotiation of sub-licences, it was unlikely that significant revenue would be generated in that period.  Indeed, Mr Ghosh made predictions about when royalties and commissions might be expected to flow in his affidavit of 11 September 2024.  None were predicted in the next year.  The real risk in the period between now and trial was the risk of lost opportunity to make progress towards a sublicense agreement and a risk that IP in the QG might be lost.
  4. [116]
    AIGN submitted that it risked suffering significant commercial harm if the injunction were not ordered because it would be unable to negotiate potentially lucrative sublicences, including because NF would withhold its consent.  
  5. [117]
    NF argued that the terms of the injunction did not assist AIGN in that regard.  NF submitted that that the injunction ought not to be ordered because its terms would not in fact allow AIGN to pursue a financial benefit under the contract.  This was because NF was not obliged to do anything under the terms of the injunction sought.  For example, it was not obliged to give its (not unreasonably withheld) consent for AIGN to enter into sub-licensing agreements, although it acknowledged that if AIGN secured a financially promising sub-licencing agreement, then it would be contrary to NF’s interests to withhold its consent to it.  
  6. [118]
    It is correct that AIGN did not seek an injunction which expressly compelled NF to act in accordance with the contract.  AIGN applied for an injunction to restrain NF from: carrying on a business inconsistent with AIGN’s role as NF’s sole agent in the Territories; marketing QG in a territory outside the Territories without giving AIGN a right of first refusal to market in that territory; soliciting customers away from AIGN; persuading customers to stop dealing with AIGN; and interfering with the continuance of AIGN’s right to act as NF’s sole agent for the marketing and sublicensing of QG.  
  7. [119]
    In my view, restraining NF from interfering with, or seeking to interfere with, AIGN’s right to act as NF’s sole and exclusive agent in the marketing and sub-licensing of the QG (as per paragraph 1(e) of the application), interpreted reasonably, would extend to restraining NF from not unreasonably withholding its consent to a sub-licence proposed by AIGN.  Thus, in my view, my ordering an injunction in the terms sought would allow AIGN to pursue a financial benefit under the contract (if it managed to find a suitable potential sub-licensee and compose a commercial proposal).
  8. [120]
    AIGN argued, in effect, that NF brought it on board because NF did not have the skills to market and commercialise the plum.  Therefore, without the injunction, and on the assumption that the contract was invalidly terminated, there would be lost opportunities for commercialisation, and it would suffer losses which were unquantifiable because of the difficulties in calculating the financial cost of lost opportunities, bearing in mind the numerous variables at play.  Thus, damages would be an inadequate remedy.
  9. [121]
    NF argued, in effect, that if the injunction were granted, there would be a stalemate. AIGN would do nothing or nothing productive (based on its past performance), and NF could do nothing, in furtherance of the commercialisation of the QG.  It submitted, in effect, that AIGN had performed unsatisfactorily under the contract and had provided insufficient detail about what it was presently doing (or would continue to do if the injunction were granted).  This was to be contrasted with the quality of the evidence of the steps NF was undertaking to commercialise the QG.  Further, Mr Ghosh’s affidavit outlined in significant detail what he said would be the financial consequences to NF if the injunction were granted – particularly in relation to commercialisation in China, South Africa, the UK and the EU.  NF argued that it was at risk of unquantifiable losses of opportunity if the injunction were granted.
  1. [122]
    AIGN said it was concerned about the State of Queensland and NF’s ability to protect intellectual property rights – and submitted, in effect, that AIGN was best placed to do so and there was a risk that those rights would be lost if there were no injunction ordered.  He asserted that NF had already failed to secure IP rights in New Zealand and China, where commercial sales of the QG had already started.  A failure to adequately secure the IP rights associated with the QG meant the rights were lost and unrecoverable.  A grower in a region in which the rights had been lost would see no value in paying for a sub-license for a fruit which did not require one.  QG was already being copied in Australia.  AIGN also made an argument that – since the purported termination of the contract – NF had not commenced proceedings to protect PBRs which might be infringed by AIGN, proving that NF “could not be trusted” to protect PBRs.  
  2. [123]
    Mr Ghosh said that it was not correct to say that commercial sales of QG had already started in New Zealand and China:  NF had not exported plant material to those countries and had only exported QG to China through other entities.  Mr Ghosh was not aware that QG was being copied, or that there had been unauthorised planting of it.  He would have expected that information to be conveyed to NF by AIGN, pursuant to paragraph 7(d) of the contract, which required one party to immediately notify the other of any infringement or misappropriation.[8]
  1. [124]
    NF made the point that, under the contract, AIGN was obliged to protect the QG’s IP and to prosecute and maintain PBR and yet it had done very little in the four years since the contract was executed – little more than investigate the status of PBR and trademarks.  In other words, NF argued that there was no evidence that AIGN would be any better than NF in protecting the QG’s IP.  
  2. [125]
    Dr Porter said that AIGN entered into the contract with NF “in conjunction with two other contracts for the sub-licensing of two other varieties of plum plants”.  One had a high antioxidant quality, like the QG.  The other was early maturing.  But both had different harvest windows.  Thus, the three were complementary.  This allowed growers to have a larger market window during a fruit’s harvesting season.  According to Dr Porter, AIGN had been pitching to potential licensees their ability to invest in three plums at once – thus spanning the course of the harvest market using a trademark branding marketing approach.  If the injunction were not granted, AIGN could not market all three varieties together it would therefore be deprived of “deriving maximum opportunity from each of the plum varieties and diminish the potential market for the Queen Garnet”.  Dr Porter continued:
    1. [50]
      … This significantly detracts from the value of the potential sub-licensees signing an agreement with AIGN for all three plant varieties.
    2. [51]
      If Nutrafruit is not restrained from marketing the Queen Garnet, the harm AIGN will suffer with these potential sublicensees is not just a monetary amount but also the loss of time required to grow test trees to a stage of producing test fruit for potential sub-licensees.  This can be a period between two to three years.
  3. [126]
    None of the reports provided by AIGN mentioned AIGN’s plans for marketing QG with two other plum varieties, or suggested that AIGN was “pitching” a three-plumsat-once investment opportunity.  
  4. [127]
    As evidence of NF’s knowledge of the complementary marketing plan, AIGN pointed to an email from Tony Mahoney from “Ripe Planet” to Dr Porter and Mr Couch, copying in Mr Lynnell Brandt, “Bonney” Ghosh, who I understand is Indrajit Ghosh, and Sid Ghosh, both also of Ripe Planet, dated 12 June 2020, which said – 

Thank you Gavin and Lynnell.

Really exciting development [the contract between AIGN and NF]

I look forward to the path forward.

Queen Garnet then coupled with GW1 Vitaplum that AIGN will also be managing globally is going to be an extremely powerful plum offer going forward.

  1. [128]
    In oral submissions, AIGN said that the email came from NF, which implied a relationship between NF and Ripe Planet.  That relationship was not apparent from the evidence before me, but I was prepared to proceed on the basis Mr Mahoney was associated with NF in some way.
  2. [129]
    Mr Ghosh said that he was aware that AIGN had entered into a contract with Vitaplum but was not made aware, during contract negotiations, that AIGN intended to market QG along with two other varieties.  He said that, at the time of those negotiations, GW1 and QG were in different stages of development, and he had no reason to expect complementary marketing.
  3. [130]
    While an “extremely powerful plum” offering involving QG and one other plum may have been contemplated by AIGN in June 2020, and communicated then to Mr Ghosh, there was no further mention of it by AIGN to NF.  But this application was not the time to say anything more about whether NF knew of AIGN’s intentions.  
  4. [131]
    NF submitted that any injury which might arise from AIGN’s not marketing three plums together was likely to be less harmful than AIGN marking a competitor plum – but conceded that it was extremely difficult to make that argument quantitatively.
  5. [132]
    Each party claimed a risk of damage to its reputation and goodwill if it were, in the case of NF, not permitted to continue its current discussions in the territories about the marketing and commercialisation of QG; or, in the case of AIGN, if it were ousted from discussions in its territories and NF were permitted to take over.
  6. [133]
    AIGN submitted that, if the injunction were not granted, its reputation would be damaged because NF would inform potential sub-licensees that AIGN was no longer associated with QG.  Also, potential licensees who have a relationship with AIGN and wished to maintain that relationship would be placed in the difficult position of missing out on sub-licensing the QG because NF had been marketing to their competitors.
  7. [134]
    NF observed that there no evidence – only speculation – that NF had informed potential sub-licensees that AIGN was no longer associated with QG.  More relevantly, NF submitted that there was an equal reputational risk to it if the injunction were granted.
  8. [135]
    In oral submissions, NF emphasised that “prejudice” in the context of balance of convenience arguments in this case “cut both ways”, as did the arguments about damage to reputation.  Additionally, it made the following points: 
    1. In the four-odd years since the contract was signed, AIGN had not achieved a concluded sub-license agreement, from which royalties might be derived.  
    2. The injunction sought would restrict NF from marketing QG plants for commercialisation but did not compel AIGN to perform its obligations under the contract which could result in there being no marketing of QG.
    3. After the contract was terminated, NF had undertaken substantive steps to commercialise QG in the territories which would be interrupted if the injunction were made.  
    4. AIGN would not lose any claim it might have upon NF for royalties earned pending the resolution of the substantive matter (if the contract were found to remain on foot) and NF would preserve AIGN’s potential share of royalties in an Australian bank account.
  9. [136]
    To elaborate upon (d): Nutrafruit aged to provide the following undertaking to the court, which would operate until the conclusion of the substantive proceeding.  It would – 
    1. keep accounts of all payments received by it in relation to the Marketing of the Queen Garnet in the Territories; and
    2. keep 50% of all monies received by it in relation to the Marketing of Queen Garnet in the Territories in a separate Australian bank account.
  10. [137]
    NF submitted that this proposal weighed heavily in favour of NF on the balance of convenience issue.  
  11. [138]
    Each party argued that there had been delay on the part of the other.  AIGN submitted that because there was delay on both sides, it was not an issue of significance.  NF argued, in effect, that practical realities explained its delay but AIGN’s delay was not explained; and it weighted heavily against the granting of the injunction.  I have dealt separately with the delay issue below.

Consideration of balance of convenience arguments

  1. [139]
    On the evidence, I found it impossible to weigh the potential loss to AIGN of the opportunity to market three plums together, pending the resolution of the substantial application, against the cost to NF of AIGN marketing what NF considered to be a competitor fruit.  On the evidence, it was not possible for me to meaningfully compare the risk to the IP of the QG if the injunction were granted against the risk if it were not.  To the extent to which the evidence allowed me to assess it, I found the risk to AIGN’s reputation if the injunction were not to be granted to be equal to the risk to NF’s reputation if it were.  
  2. [140]
    NF provided detailed evidence about the steps it had been taking to market the QG since it gave notice of termination of the contract.  AIGN’s evidence about its steps post notice of termination was in general terms, as I have observed.  On the evidence, I had a better understanding of what NF stood to lose if I were I to grant the injunction than I did of what AIGN stood to lose if I were not to grant the injunction.  
  3. [141]
    On the evidence, I found that the risk of loss to AIGN if the injunction were not granted probably did not outweigh the risk of loss to NF if it were.  On the evidence, I found that NF probably had more to lose if the injunction were granted.  In other words, the balance of convenience in this regard did not favour the injunction.  I added to that finding the offer made by NF to keep accounts and preserve any income it might earn until the resolution of the substantive matter if the injunction were not granted.  Giving particular weight to that offer (whilst recognising the undertaking as to damages offered by AIGN), I considered the balance of convenience, as canvassed under this heading, to favour the dismissal of the application.  

Delay

  1. [142]
    An applicant’s delay is another factor relevant – either as part and parcel of balance of convenience considerations, or as a stand-alone discretionary consideration.  
  2. [143]
    On NF’s calculations, AIGN did not file its application until – 
    1. 5 ½ months after the breach notice;
    2. 4 ½ months after the notice of termination; and
    3. almost three months after its 30 May 2024 demand of NF to cease and desist.
  3. [144]
    AIGN submitted that there were delay arguments going both ways, in that NF had not brought proceedings to enforce the termination of the contract.  It submitted that its delay was not fatal and suggested that the delay issue was not going to be determinative.  However, to the contrary, as will emerge, AIGN’s delay carried weight in my decision to dismiss the application.  
  4. [145]
    NF complained that AIGN had not sought relief promptly as it should have done.  It relied upon Zuellig v Pulver (Zeullig)[9] to illustrate that a court may, in its discretion, refuse to grant an interlocutory injunction if there has been a delay which has not been adequately explained.  
  5. [146]
    NF relied upon Capgemini US v Case[10] for the proposition that delay served as a litmus test of the seriousness of the infringement alleged.  In that case, Campbell J referred to Zeullig and the need for an application for interlocutory relief to be brought promptly, and continued at [40]:

… The court is always entitled to use, as a litmus test of the seriousness of the infringement of the plaintiff’s rights which is occurring, how fast the plaintiff reacts to the infringement of its rights.  It is not only as an example of the equitable doctrine of laches that delay is relevant on an application for an interlocutory injunction; it is also as an admission by conduct about how serious the infringement of the plaintiff’s rights is.  Thus, it is a matter which goes to the balance of convenience and not merely to the question of whether there is a serious question to be tried, which might be met by a defence of laches at the trial.

  1. [147]
    Before considering Zuellig, I note, on the “litmus test” point, that delay as evidence of lack of prejudice or hardship can do no more than give rise to an inference that may be displaced by more direct evidence – cf Imac Security Services Pty Ltd v Tyco Australia Pty Ltd.[11]
  1. [148]
    In Zuellig, the court considered a delay of a matter of weeks to be too long.  On 14 January 2000, Zuellig applied for an injunction restraining two of its former employees from misusing confidential information.  The employees had tendered their resignations on 15 December 1999 and Zuellig was aware that they were going to start working for its competitor on 14 January 2000.  
  2. [149]
    Through its lawyers, on 23 December 1999, Zuellig asked the defendants for undertakings in terms of a certain deed and said it would commence proceedings against them on 29 December 1999 if the undertakings were not given.  On 24 December 1999, the defendants’ lawyers offered more limited undertakings than those sought by Zuellig which, inter alia, made it plain that, after 13 January 2000, the defendants considered themselves entitled to act as they pleased.  
  3. [150]
    Proceedings for an interlocutory injunction were not commenced until 14 January 2000.  Rolfe J concluded that, because the undertakings of 24 December 1999 were limited, Zuellig was obliged to commence proceedings much sooner than it did.  His Honour said that, if he had not refused the application for other reasons, then he would have refused it in the exercise of his discretion because of the delay, which he described as “gross”.  His Honour said:
  1. [36]
    … The grant of interlocutory relief is dependent upon a party seeking that relief moving with expedition.  Each case must, of course, be judged according to the facts.  However in the present case, there was no acceptable reason, so far as the evidence has disclosed, why the plaintiff did not move several weeks before it did.  As Young J observed in Network Ted Limited v Fullwood (4 December 1995 – unreported):-

“Finally, the Court expects in cases of interlocutory injunction that people will act promptly.  As I sit here in this duty list, if a person has let a week go by it is only in a very strong case that I can be persuaded to grant an injunction or grant short service because if a person is to seek an injunction it should be sought promptly.

Subsequently, his Honour said, after considering certain submissions in relation to this matter:-

“However, there is a separate principle that on an interlocutory injunction the Court in its discretion will refuse the injunction if there has been delay which is not adequately explained.  I do not consider that the delay has been adequately explained in this case.  Accordingly, in my view, the defendants are ahead on this second matter.”

  1. [37]
    Whilst I would not necessarily fix any specific period as the period within which a party must act, each case depending on its own facts, it seems to me that on the facts of this case as the plaintiff was aware no later than 15 December 1999 that the defendants would commence employment with [its competitor] on 14 January 2000, and as the undertaking in the letter of 24 December 1999 expressly provided that this may happen, that the plaintiff was bound to move earlier than 14 January 2000. 
  1. [151]
    NF submitted that, as at 30 May, AIGN knew or at least suspected that NF was “seeking to drum up sub-licence agreements itself”.  It demanded that NF cease those activities within 7 days.  But after those 7 days – when NF did not cease – AIGN did nothing until 23 August 2024: “the best part of three months”.  NF submitted that it was also significant that AIGN did not respond to the breach notice within 21 days.  NF submitted that if AIGN took its position seriously, it might have been expected to not only refute the allegations made against it within 21 days, but also to make an application for injunctive relief at the same time.  Further, NF emphasised that AIGN had provided no explanation for its delay.
  2. [152]
    AIGN “readily acknowledged” the delay on its part in commencing proceedings.  However, it submitted that “it lay ill in the mouth of Nutrafruit” to rely upon AIGN’s delay when it had engaged in a war of words only, and not commenced proceedings itself.  It argued that in the face of AIGN’s assertion that the contract was not validly terminated, NF ought to have protected its interests by commencing proceedings and it did not do so “at its peril”.
  3. [153]
    To make this point, AIGN referred me to a recent decision of Muir J in Groupline Construction Pty Ltd v CDI Lawyers Pty Ltd,[12] in which her Honour referred to the decision of Morrison JA in Aveo Retirement Homes Ltd v Springfield City Group Pty Ltd. (Aveo)[13] and concluded that any delay on the part of Groupline for an injunction was not such as to warrant the court refusing to grant the relief.
  4. [154]
    In the case before Muir J, “Groupline” and “Chevron” were companies engaged in litigation over a construction contract.  Groupline applied for an injunction restraining “CDI” (a law firm) from acting for Chevron in the litigation because one of CDI’s partners, Mr Pyman, had obtained confidential information about Groupline when he was a partner at another law firm.  Mr Pyman acted for Groupline for many years, from 2006 until 2019.  
  1. [155]
    One of the arguments made by CDI in resisting the application was that Groupline failed to act promptly in seeking the restraint.  
  2. [156]
    After an appeal in 2020, Groupline stopped retaining Mr Pyman.  In October 2020, Groupline asked Mr Pyman, who was then at CDI, whether he was acting in a matter (not the Chevron matter) against Groupline and whether he had a conflict of interest. Mr Pyman replied by stating “I am not acting”.
  1. [157]
    Groupline first became aware that CDI was acting for Chevron on 30 March 2023 in the first dispute between the companies under the construction contract.  That dispute was resolved in less than three weeks through settlement discussions.  Her Honour accepted that Groupline said nothing about CDI’s involvement with Chevron at that point in time because it thought it had a good and workable relationship with Chevron and did not expect further disputes.  
  2. [158]
    But by October 2023, as her Honour put it, “the rumblings of another dispute started to bubble”.  In early February 2024, Groupline was made aware that CDI was acting for Chevron in the dispute.  On 28 February 2024, Groupline (through its lawyers) asked CDI to stop acting for Chevron in the dispute and threatened to bring restraint proceedings if they did not do so.  
  3. [159]
    Groupline lodged its first adjudication application on 6 March 2024.  On 14 March 2024, CDI informed Groupline’s lawyers that it was acting for Chevron.  On 28 March 2024, Groupline commenced Supreme Court proceedings against Chevron and the construction contract’s superintendent claiming more that $3 million in damages for breach of the construction contract.
  4. [160]
    On 30 April 2024, Groupline filed an originating application seeking permanent injunctions, restraining CDI or Mr Pyman, from acting for Chevron against it.  
  5. [161]
    Her Honour held that Groupline’s “delay” did not require the court to refrain from restraining CDI and Mr Pyman from acting for Chevron in the dispute for five reasons.  
  6. [162]
    The third of those reasons was that Mr Pyman and CDI knew that Groupline objected to them acting against Groupline’s interests in October 2020 – but Mr Pyman did not respond by stating that he could act against Groupline whenever he wished to or that Groupline had no reason to object.  As I understand her Honour’s point, she found that there was no reason for Groupline to be concerned about Mr Pyman acting against it in October 2020, which meant the delay was measurable in terms of weeks, not years.  
  7. [163]
    The fourth of those reasons included the reference to Aveo.  At [85], her Honour said:

Fourth, as Morrison JA recently observed in Aveo …, once a party is aware that the other side objects to the state of affairs (there being the continuation of an expert determination), that party proceeds at its own peril – the objecting party is not to be penalised for any delay henceforth. 

  1. [164]
    Her Honour made orders, restraining CDI and Mr Pyman from acting for Chevron.  
  2. [165]
    In the present matter, distinguishing it from Groupline, each parties objected to the state of affairs asserted by the other, and in that sense, it might be said that both proceeded “at their peril”.  
  3. [166]
    Turning to Aveo, upon which AIGN relied: Briefly, the facts were that Aveo – which develops seniors’ living communities – and the owners and developers of the suburb Springfield entered into a deed to govern Aveo’s development of a seniors’ living community in Springfield.
  4. [167]
    Springfield and Aveo fell into dispute about whether Aveo was complying with the terms of the deed.  Under the deed, Aveo was to submit Business Plans to Springfield.  The dispute between the parties concerned Business Plans for 2021 and 2022.  Those disputes were referred to an expert – as anticipated by the deed.  However, the parties disagreed about whether, on the proper interpretation of the deed, the matters were matters the parties agreed were to be determined by an expert because, Springfield argued, the purported Business Plans were not Business Plans under the deed.
  5. [168]
    On 6 June 2023, Springfield commenced proceedings in the Supreme Court seeking: (a) declarations that the Business Plans for 2021 and 2022 were not Business Plans for the purposes of the deed; (b) a declaration that the appointment of the expert was invalid and of no effect; and (c) a final injunction, restraining Aveo from taking any steps in the expert determinations.  Springfield also sought an interlocutory injunction, restraining Aveo from participating further in the expert determination process until the substantive proceedings were determined.
  6. [169]
    The primary judge granted the injunction.  Aveo appealed.  Its appeal was dismissed.  In attempting to resist the injunction at first instance, Aveo relied upon Springfield’s delay in bringing its application.  The primary judge determined not to penalise Springfield for delaying “until it became clear to them that the something of commercial significance was at stake”.  His Honour did not wish to encourage commercial parties to seek relief for matters of little commercial consequence.  His Honour did not find that delay, or its consequences for Aveo, disentitled Springfield to interlocutory relief.  On appeal, Aveo challenged the evidential basis for the primary judge’s finding.
  7. [170]
    The Court of Appeal (Morrison JA, with whom Boddice JA and Williams J agreed) held that the evidence inferentially supported the primary judge’s statement that Springfield took action when it was clear that something of commercial significance was at stake.
  8. [171]
    Aveo also submitted, on appeal, that the primary judge should have characterised the delay as Springfield’s failure to commence proceeding earlier, knowing that Aveo was spending time and money on the expert process (weighing against the granting of interlocutory relief).  Morrison JA did not accept this submission.  His Honour said that the characterisation of the delay; who was at fault; and whether it was a disqualifying delay, were matters for the primary judge.  The primary judge’s finding, that the delay was not fatal, was open to him.  That another judge may have characterised the delay differently was not the test.  The primary judge’s finding about the reason for the delay provided a basis for its characterisation as explicable, rather than fatal.  Also, the delay was relevant if it caused material prejudice.  Aveo relied upon the costs it had expended on the expert process.  But Morrison JA said than any impact on Aveo from its proceeding with the expert process lay with its own decisions, not with the decisions of Springfield.  Aveo always knew that Springfield contended that the Business Plans did not qualify as such under the deed.  
  9. [172]
    The primary judge recognised that Aveo might have avoided incurring costs on the expert process had Springfield sough an injunction sooner.  But Aveo was aware that Springfield contended that the 2021 and 22 Business Plan were not Business Plans under the deed.  Avel did not seek a declaration or other relief to clarify the rights of the parties in this respect.  And to that extend, Aveo incurred costs with knowledge that their costs might be wasted.  Aveo submitted on appeal that the primary judge erred in finding that it was incumbent upon it to seek declaratory relief.  
  10. [173]
    Morrison JA observed that the primary judge examined the significance of Aveo’s costs as part of the overall assessment of balance of convenience and in that context observed that Aveo had not sought declaratory relief.  Morrison JA considered that to be a fact which the primary judge could taken into account and that his Honour’s finding that, to that extent, Aveo incurred costs with knowledge that they might be wasted, was unexceptional.  
  11. [174]
    It must be remembered that the challenge in Aveo was to the factual findings of the primary judge.  In my respectful view, Aveo makes it plain that the characterisation of delay, and who was at fault, and whether a delay was satisfactorily explained; and who acted aware of a risk, et cetera were matters for assessment by a primary judge about which minds might differ.  
  12. [175]
    AIGN also referred me to Tasman Fighters Pty Ltd v Teremoana,[14] a recent decision of Martin SJA in furtherance of its arguments about delay not working against it because the timelines in the cases were similar.  
  13. [176]
    Teremoana is a boxer.  He entered into a Promotion Agreement with Tasman Fighters (TF) on 1 January 2021, to conclude on 1 January 2025 by which he appointed TF his exclusive promoter.  
  14. [177]
    Termoana complained that TF breached the Promotion Agreement by not using reasonable endeavours to provide him with the number of fights required by the contract.  He rescinded, or purported to rescind, the contract on 27 May 2024.  The last fight under his contract with TF had been in 2022.  TF purported to affirm the contract one month later.
  1. [178]
    Teremoana entered into a contract with another promoter, Matchroom Boxing.
  2. [179]
    In about September 2024, TF Fighters applied for an interlocutory injunction restraining Teremoana from participating in any boxing match without its prior consent or entering into any agreement for the promotion of any boxing matches in relation to him.  Martin SJA made an order in terms of the interlocutory relief sought.
  3. [180]
    His Honour was satisfied that TF had demonstrated a prima facie case.
  4. [181]
    On the balance of convenience question, his Honour said:
  1. [19]
    The balance of convenience is in the applicant’s favour.  Tasman Fighters has undertaken to perform its agreement in accordance with its terms during the pendency of any trial in this matter.  This is not a case in which damages are either easily assessed or an adequate remedy … Secondly, there is some force to the argument by the applicant that to remove a person who has some ability and recognition from their “stable” of boxers under management would damage their reputation in the eyes of those who engage in the promotion of boxing matches.
  2. [20]
    The usual undertaking as to damages has been given … [and] is valuable and is sufficient …

…

  1. [23]
    The applicant should not have to suffer because the respondent decided to take the risk of entering into another arrangement.  In Bulldogs Rugby League Club Ltd v Williams Austin J[15] said:
  1. “[65]
    There is authority for the proposition that the Court will place little or no weight on hardship suffered by defendants where they are the authors of their own misfortune: John Fairfax v Birt  at [49] per Brereton J.  In the present case the first defendant’s possible hardship would be that he would have to forego his playing opportunities in France and bring to an end whatever work arrangements he had entered into with the second defendant.
  1. [182]
    AIGN relied upon the Tasman Fighters case to submit that any prejudice that might inure to NF if the injunction were granted (because any steps it had taken to commercialise the QG in China and South Africa would have been wasted) was something NF had brought upon itself by acting as it did without bringing an application to the court to, for example, declare the contract validly terminated.
  1. [183]
    It was not clear whether the undertaking given by TF was an undertaking to the court, or something less formal.  AIGN submitted that it was akin to the statements made by Dr Porter about what AGIN would do if the injunction were granted.  NF very properly acknowledged that, practically speaking, AIGN would be motivated to do something in pursuance of the contract to affirm it – even if it did not offer a formal undertaking to do so.
  2. [184]
    With reference to those authorities, AIGN submitted that it was plain to NF that AIGN rejected the validity of the purported termination when it provided an annual marketing plan on 9 April 2024 (two business days after the notice of termination).  It was put beyond doubt on 10 April 2024.  AIGN submitted that NF’s conduct after this time was with knowledge that proceedings were likely to be brought.  AIGN submitted that it was relevant that NF did not commence proceedings seeking a declaration that it had validly terminated the contract, when it could have done so.  Indeed, NF insinuated that it would commencing proceedings, and in not doing so, acted “at its own peril”.
  3. [185]
    AIGN submitted that its delay was relatively short, in the context of the matter.  In its written submissions, it argued the matter this way:
    1. [67]
      Nutrafruit issued the Purported Notice on 11 March 2024 and the Purported Termination on 5 April 2024.  AIGN responded to reject the validity of those two notices on 10 April 2024.  Nutrafruit respond[ed] on 16 May 2024, 30 days after.
    1. [68]
      Based on the length of time it took to receive a response, AIGN would have been justified in not have [sic] expected a response from Nutrafruit (sic) until 1 July 2024.  The proceeding was filed on 23 August 2024.  Accordingly, there was only 39 business days’ delay.  The affidavit of Dr Porter shows [by inference] that during this time AIGN changed solicitors from the Melbourne based firm Polcynski Robinson to its current solicitors.
  4. [186]
    AIGN’s argument was (I think) that it was entitled to wait until 1 July 2024 to see if NF ceased and desisted as AIGN demanded it to before making a decision about bringing an application.  The 39 business days refers to the period between 1 July 2024 and 23 August 2024.  This was an unappealing argument, and it was not supported by evidence.  AIGN’s better argument to explain its delay might have been that it changed lawyers sometime after 30 May 2024 but there was simply no direct evidence about the reason for the delay.  
  5. [187]
    NF responded to AIGN’s arguments by inviting me to look at “the practicalities”: It could not be the case that everyone who terminated a contract was obliged to come to court seeking a declaration that the contract was valid.  NF acknowledged that what AIGN did post the purported termination was a relevant consideration.  However, in addition to the provision of a marketing plan on 9 April 2024, the only other evidence of what AIGN did was to be found in Dr Porter’s affidavit and was in very general (NF said “bland”) terms, as I observed above.  NF made the point that AIGN did not mention any discussion of substance with a potential sub-licensee.  NF invited me to contrast the “flaky” evidence of AIGN’s activities post purported termination with the “quite specific evidence” of Mr Ghosh about what he had been doing and intended to do.  
  6. [188]
    I found the case of Scyne Advisory Business Services Pty Ltd v Heaney,[16] (which the parties provided to me) quite helpful on the issue of delay as a discretionary consideration.  The applicant sought an injunction against its former employee to enforce restraints in her employment contract with the applicant which restricted her freedom to accept employment in a competing business.  The application was refused by Parker J.  His Honour was satisfied that the applicant had reasonable prospects of success in its substantive application.  In terms of the balance of convenience, his Honour observed that the defendant knew or ought to have known that she was at risk of an application being brought to enforce employment restraints upon her and the onus was upon her to demonstrate hardship as a defence to it.  His Honour found the evidence of hardship she produced to be unimpressive and gave it little, if any, weight.  At that point, his Honour would have been inclined to grant the relief.  But his Honour found the delay a lengthy one, which had not been adequately explained, and on that basis, refused the relief.  The defendant resigned on 29 November 2023.  The application for an injunction was brought on 4 March 2024.
  7. [189]
    On the issue of delay, his Honour referred to Capgemini and said (at [67]) that delay in applying for interlocutory relief may be an answer to such an application.  His Honour did not need to resolve the doctrinal question whether delay went to the balance of convenience or was a separate defence to the application because the applicant’s counsel accepted that it was an important discretionary consideration which might itself be a sufficient reason for declining an application for an interlocutory injunction ([68]).
  1. [190]
    The plaintiff/applicant acknowledged its delay, but submitted that it was not fatal for three reasons – 
    1. Ms Heaney was on “gardening leave” until 29 February 2024 – thus, the delay was short;
    2. There were extensive exchanges between the parties, during which the plaintiff/applicant attempted to persuade the defendant to return to it or to give relevant undertakings – which, while not excusing the delay, was a mitigating factor; and
    3. Laches required some sort of detriment and the defendant had not shown that she had taken action she would not otherwise have taken – thus the delay was immaterial.
  2. [191]
    As to (a) – there was no evidence that the plaintiff/applicant delayed because the defendant was on gardening leave.  Nor was there any reason why the applicant/plaintiff had to wait until the defendant was in breach if there was sufficient evidence of a threatened breach.  That threat was clear from the outset.  
  3. [192]
    As to (b) – there was no evidence that the plaintiff/applicant delayed bringing proceedings because of its belief that litigation could be avoided by negotiations.  Indeed, the correspondence between the parties could not be accurately described as negotiations.  The defendant’s position was uncompromising.  She did not ever hold out the possibility of changing her mind.  Nothing justified the plaintiff/applicant from holding off.  
  4. [193]
    As to (c) – the defendant’s mind was made up from the outset.  There was nothing to suggest that the plaintiff/applicant’s delay made any difference to her decisionmaking processes or to her financial decisions.  But that did not exhaust the detriment resulting from the delay.  His Honour observed that had the application been brought promptly, it could have been resolved while the defendant was on gardening leave.  His Honour considered it most unreasonable to restrain the defendant now from continuing with her well-signalled intention to join another employer because the plaintiff/applicant had belatedly discovered the urgency of the case.
  1. [194]
    Overall, his Honour considered the delay tipped the scales against the injunction.  It was lengthy, it had adverse effects upon the defendant, and it was not adequately explained.  
  2. [195]
    It is worth considering the chronology of events in the present matter:
    1. AIGN’s report of 9 April 2021 was not an overly optimistic one.  It set out all of the challenges to commercialisation which it faced.
    2. AIGN knew, in about January 2022, that NF rejected its sub-licensee proposals for the USA farmgate market and in South Africa.
    3. AIGN’s March 2022 report to NF was not optimistic.
    4. AIGN’s June 2022 report to NF complained about the State Government and NF’s roadblocks to commercialisation.
    5. In reply, on 28 June 2022, Mr Couch expressed a lack of confidence in AIGN.
    6. In March/April 2023, JWM approached NF directly about commercialisation of the QG.
    7. AIGN’s April 2023 report to NF was not optimistic.
    8. April/May 2023, AIGN was likely aware of the communication between NF and JWM, via SVM.
    9. On 12 June 2023, AIGN accused NF of breaching the contract and asked NF to do three things.  
    10. On 19 June 2023, NF accused AIGN of breaching the contract and asked AIGN to show cause, within 14 days, as to why it was not in breach – failing which NF would consider its entitlement to terminate.
    11. On 6 June 2023, AIGN asserted that it was not in breach.
    12. On 6 November 2023, AIGN provided NF with a more positive report, and JWM’s proposal to commercialise QG in China.
    13. On 11 March 2024, NF sent AIGN a breach notice – which required a response within 21 days.
    14. On my count, 21 days expired on 1 April 2024.
    15. On 4 April 2024, AIGN sent a letter to NF which confirmed that AIGN had taken no steps to cure the alleged breaches.
    16. On 5 April 2024, NF terminated the contract.
    17. On 9 April 2024, AIGN produced a marketing plan to NF – conveying that it did not accept that the contract had been terminated.
    18. On 10 April 2024, AIGN expressly told NF that it considered the termination invalid.
    19. On 16 May 2024 NF told AIGN that the contract had been validly terminated and to cease acting as NF’s agent.
    20. On 30 May 2024, AIGN demanded that NF cease acting in AIGN’s territories.
    21. On 7 June 2024, NF told AIGN that the contract had been validly terminated and to cease acting as NF’s agent.
    22. On 23 August 2024, the application for an injunction was filed.
  3. [196]
    The correspondence demonstrated that – up until 7 June 2024 – neither party was going to back down.  But there was no evidence before me that AIGN delayed in bringing the application in the hope that the parties could resolve the matter via correspondence.  And even if that was a reasonable inference to draw, relevant correspondence ceased on 7 June 2024, with the demand from NF.  In the face of that correspondence, AIGN waited about two and a half months from that date to file its application.  There was no explanation for that delay in circumstances were AIGN was aware by 30 May 2024 that Mr Ghosh had been to South Africa in April 2024 and to China on 15 April 2024.  AIGN’s unexplained delay weighed against my granting the application.

Conclusion

  1. [197]
    As the parties acknowledged, it was simply not possible for me to evaluate the applicant’s prospects of success in the substantive application at this stage.
  2. [198]
    Although it was not easy to evaluate, on the strength of the evidence, NF was active in pursuing the marketing of the QG as soon as it gave notice of termination, and on that basis, seemed to have more to lose if the injunction were granted that AIGN had to lose if it were not.  And I found its offer, to hold AIGN’s potential share of any income, in an Australian bank account, to be something which weighed in favour of refusing the application.   
  3. [199]
    Of most weight in favour of refusing the application was AIGN’s unexplained delay in bringing it.  NF’s notice of termination was unequivocal.  The fact that AIGN rejected it did not cause NF to pause in its pursuit of marketing opportunities, to AIGN’s knowledge.  NF’s demand on 7 June 2024 was just as unequivocal, yet AIGN delayed for two and a half months, without explanation, to bring this application.
  4. [200]
    For these reasons, I dismissed the application, with costs, as per the general rule that costs follow the event.

Footnotes

[1]The MCA was varied and extended on 16 July 2012.

[2]“Licence” was spelt with a “c” in some documents and an “s” in others, reflecting the fact that AIGN is an American company dealing with an Australian company.

[3]For what it was worth, Mr Ghosh stated that, in his experience, nurseries did not charge for quarantining, propagating, or evaluating plant material. He gave as examples: the nurseries used by NF in France prior to the signing of the contract; the Stargrow nursery in South Africa; and the Escande Nursery in France.

[4]The evidence did not disclose whether Kevin Brandt was related to Lynnell Brandt, the director of AIGN who signed the contract.

[5]In later correspondence (dated 16 May 2024), on behalf of NF, NF’s lawyers asserted that the proposal did not constitute a commercial proposal because it omitted details about the total area under production; the expected target area/target markets; areas of production; financial costs and returns; the total number of trees to be planted; and fruit yield annually over a period of time.

[6]The acronym for the Queensland Department of Agriculture and Fisheries.

[7]I assume during the Zoom meeting on the 6th.

[8]Paragraph 7(d): “Nutrafruit and AIGN must both take all reasonable proactive steps to prevent or restrict any third party activities involving plant variety infringement, trademark infringement or trade secret misappropriation related to the Variety. Nutrafruit and AIGN must both use reasonable diligence to determine whether or not any infringement or misappropriation has occurred. If either party learns of any infringement from its own investigations or from other sources that party must immediately notify the other party of such infringement.

[9][2000] NSWSC 7 at [36]–[37].

[10][2004] NSWSC 674.

[11][2002] VSC 592.

[12][2024] QSC 209.

[13][2024] QCA 201

[14][2024] QSC 226.

[15][2008] NSWSC 882

[16][2024] NSWSC 275.

Close

Editorial Notes

  • Published Case Name:

    Associated International Group of Nurseries Inc v Nutrafruit Pty Ltd

  • Shortened Case Name:

    Associated International Group of Nurseries Inc v Nutrafruit Pty Ltd

  • MNC:

    [2024] QSC 234

  • Court:

    QSC

  • Judge(s):

    Ryan J

  • Date:

    03 Oct 2024

  • White Star Case:

    Yes

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Bulldogs Rugby League Club Ltd v Williams [2008] NSWSC 882
1 citation
Jump To
Cite 1 - [2008] NSWSC 882
Capgemini US v Case [2004] NSWSC 674
2 citations
Jump To
Cite 1 - [2004] NSWSC 674
Cite 2 - [2004] NSWSC 674
Groupline Constructions Pty Ltd v CDI Lawyers Pty Ltd [2024] QSC 209
2 citations
Jump To
Cite 1 - [2024] QSC 209
Cite 2 - [2024] QSC 209
Imac Security Services Pty Ltd v Tyco Australia Pty Ltd [2002] VSC 592
2 citations
Jump To
Cite 1 - [2002] VSC 592
Cite 2 - [2002] VSC 592
R v WCD [2024] QCA 120
1 citation
Jump To
Cite 1 - [2024] QCA 120
Scyne Advisory Business Services Pty Ltd v Heaney [2024] NSWSC 275
2 citations
Jump To
Cite 1 - [2024] NSWSC 275
Cite 2 - [2024] NSWSC 275
Tasman Fighters Pty Ltd v Teremoana [2024] QSC 226
2 citations
Jump To
Cite 1 - [2024] QSC 226
Cite 2 - [2024] QSC 226
Wikeley v Kea Investments Ltd [2024] QCA 201
1 citation
Jump To
Cite 1 - [2024] QCA 201
Zuellig v Pulver [2000] NSWSC 7
2 citations
Jump To
Cite 1 - [2000] NSWSC 7
Cite 2 - [2000] NSWSC 7

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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