Background
4 The applicant is a subsidiary of a public company, Cash Converters International Limited. The public company is listed on the Australian Stock Exchange and the London Stock Exchange. The applicant carries on business in Australia as a franchisor. Under its franchise system the applicant grants rights to franchisees to carry on business as dealers in second hand goods and as pawnbrokers under a marketing plan substantially controlled by the applicant. Each franchised business is substantially associated with trademarks, advertising and commercial symbols owned and licensed by the applicant. Each of the franchises granted by the applicant is in respect of a specific area, described in the franchise agreement as a territory. The applicant is the registered owner of certain trademarks which depict the applicant's logo 'Cash Converters' with the accompanying words: 'We Buy, We Sell, We Loan'. The applicant has 115 franchisees operating across Australia including 37 franchisees operating in Queensland.
5 The first respondent is a company which carries on business as a franchisee of the applicant from premises forming part of the Video Ezy Plaza Shopping Centre in Robina, Queensland. The first respondent has been a franchisee of the applicant since 29 April 2004. The first respondent became a franchisee of the applicant by taking an assignment of a franchisee agreement from a previous franchisee of the applicant. The second respondent is a director of the first respondent. The third respondent is a company which carries on business in Queensland as a money lender of amounts which do not exceed $2000in any one transaction. The sector of the money lending industry in which the third respondent operates is known as 'micro lending'. It operates its business from four different locations in Queensland, one of these locations is Robina. In the course of conducting its business, the third respondent uses a software system which facilitates the conduct of the money lending business. At locations, other than at Robina, the business is operated under the name of 'Small Loans For You'. At the Robina location the business is operated under the name of 'Cash Providers'. The fourth respondent is a director of the third respondent and is also the son of the second respondent.
6 The franchise agreement between the applicant and its franchisees provides only for the carrying on of business as second hand goods dealers and pawnbrokers. The applicant does not purport to franchise the carrying on of a cash advance business. However, a franchise does have the opportunity, should it elect to do so, to carry on a cash advance business from the same premises that it operates its franchised business, and by using the intellectual property of the applicant, by entering into an agreement with a company, MON‑E Pty Ltd ('MON‑E').
7 The background to the relationship between MON‑E and the applicant is as follows. In 1999, the applicant was approached by MON‑E. MON‑E had developed a software system to facilitate the means by which loans could be granted to customers repayable by direct debit from a customer's bank account out of a customer's salary. MON‑E wished to sell and promote the cash advance software system throughout Australia. Mr Cooke says that the applicant conducted a due diligence investigation of MON‑E and the services and systems provided by it, and was satisfied that the services and systems were effective and learnable, complied with all relevant consumer protection legislation and met sufficient quality standards.
8 After having concluded its due diligence investigation of MON‑E, the applicant entered into an agreement with MON‑E (which is not in evidence) pursuant to which the applicant granted to MON‑E a licence to approach the applicant's franchisees with a view to MON‑E procuring that each of the franchisees enter an agreement with MON‑E to operate a cash advance business in the franchisee's stores using the MON‑E software system. Pursuant to that agreement with MON‑E, the applicant is entitled to receive a fee in respect of each advance made to customers by each of the franchisees operating a cash advance business under an agreement with MON‑E.
9 A franchisee is not obliged to enter into an agreement with MON‑E for the conduct of a cash advance business using the MON‑E systems from the franchised premises. However, if a franchisee does enter such agreement, then the applicant requires that the cash advance business be conducted from a separate booth within the franchised premises known as a Personal Finance Centre booth. The Operations Manual of the applicant prescribes in detail the get up and dimensions of any such booth to be constructed within the franchise premises.
10 The Operations Manual relevantly states:
'… drawings showing the proposed location within the premises of all fixtures, fittings, signage, colour and finishings must be provided for new and upgraded fitouts. The proposed Personal Finance Centre must be in compliance with the standards described in the Australian Store Standards Manual. Variations approved in writing by [Cash Converters].'
11 The Operations Manual provides that the size of the booth is to be 'no less than 3.60 m wide and 2.40 m deep'.
12 In about May 2004, the first respondent, in furtherance of its intention to enter into a contract with MON‑E for the conduct of a cash advance business, submitted plans for the construction of a Personal Finance Centre booth at its Robina store to the Queensland office of the applicant.
13 In June 2004 an agreement was entered into between Deckeon Pty Ltd ('Deckeon'), a company controlled by the second respondent, and being the management company of the first respondent, and MON‑E for the conduct of a cash advance business at the first respondent's Robina store, using the MON‑E software system. This agreement is known as the Application Service Provider Agreement. The applicant contends that Deckeon was acting as agent of the first respondent in entering into that agreement. Clause 18 of the agreement provides for the payment by the franchisee of fees to MON-E for the use of the system. Clause 23 of that agreement permits either party to terminate the agreement on three months notice.
14 In June 2004 the first respondent's plans for the Personal Finance Centre booth were approved and the first respondent completed construction of the Personal Finance Centre booth in the Robina store in accordance with the approved plans. The completed Personal Finance Centre booth was located within the confines of the Robina store. There was no direct access to the booth from the street.
15 There is a colour photograph in the evidence of the completed booth. It shows that the booth comprised two vertical front panels on either side of the entrance and a top horizontal panel above the entrance stretching the entire width of the booth. The background colour of the top panel is referred to in the evidence and the Operations Manual as 'carmine red' ‑ a colour which more closely resembles maroon than red. The top panel is divided into three horizontal bands of 'carmine red' of equal height by two narrow white lines. In the top horizontal band and placed above the centre of the entrance to the booth is the 'Cash Converters' logo. The logo comprises the words 'CASH CONVERTERS' contained within a border comprising a rectangle with rounded corners. The border is in white. The word 'Cash' is placed immediately above the word 'Converters'. Both words are in capital letters. However, the letters of the word 'Cash' are in a different font to the letters comprising the word 'Converters'. Both words are of equal width with the effect that each of the letters in the word 'CASH' are substantially larger and wider than each of the letters of the word 'CONVERTERS'.
16 Further, in the word 'cash' the letter 'S' is substituted by a '$' sign - so that the word reads 'CA$H'. Only the outline of the letters comprising the word 'CA$H' is in the colour white - with the consequence that the colour of the letters of that word is overwhelmingly 'carmine red' or maroon. By contrast the colour of each of the letters comprising the word 'CONVERTERS' is entirely white.
17 In the middle band of the top panel, also centrally located immediately above the entrance to the booth are the words in solid white, 'PERSONAL FINANCE'. The words are in capital letters.
18 In the bottom band of the top panel also immediately above the centrally placed entrance is the words 'CENTRE'. That word is in capital letters and is in solid white colour and is located within a border comprising a rectangle with rounded corners. The border is in solid white.
19 The picture of the booth shows that there is a counter in the booth. There are also signs on the interior wall behind the counter. The wall is painted white. Mr Cooke also says that there were chairs and a carpet in the booth. The Operations Manual expresses a preference for the use in the booth of a specific brand of chairs and carpet.
20 It is now necessary to say something about the outside of the Robina store. There is also in evidence a photograph of the outside of the Robina store. The store is part of a row of shops in a shopping centre. The frontage of the store contained two entrances. The two entrances are separated by an expanse of wall forming the front of the Robina store. Prior to January 2005 the first respondent used only one of the two sets of doors to provide an entrance for the public to the store. The other set of doors was permanently locked.
21 On the front wall of the store and located above the set of doors used as the entrance to the store is the 'Cash Converters' logo and beneath that logo were two large signs reading 'Stock Wanted' and 'Cash Loans and Personal Finance'. On the front wall above the unused doors to the left of the main set of doors there is a large sign comprising the words 'Jewellery New & Old'. These words are in the same font and colour as that used in the two signs above the main set of doors. The colour is 'carmine red'.
22 Sometime after June 2004 the first respondent commenced conducting a cash advance business under its agreement with MON-E at the Robina store from the booth to which I have referred.
23 At some time prior to 22 October 2004 the second respondent became dissatisfied with the Mon‑E software that he was required to use in the conduct of the cash advance business and he started using a software system, which he had developed, and which was being used by the third respondent in its cash advance business. By a fax dated 22 October 2004 (which was not put into evidence) Mr Ian Day, on behalf of the applicant, apparently complained to the second respondent about this. By an email undated but sent in October 2004 the second respondent responded to Mr Day by saying:
'I have not chosen to stop using the CCPL approved cash advance product. Had I done so I would have exercised my rights under clause 23 of the contract between Deckeon Pty Ltd and MON‑E. It is true that I am using my own software within the store. I disagree emphatically that I am in breach of my franchise agreement with CCPL. To the contrary, I believe that CCPL is in breach of their franchise agreement with Deckeon. CCPL have provided an extremely poor software package that prohibits me from managing my businesses in anything other than a rudimentary manner. Were it not for the captured CCPL franchisees, your system would not survive in the general market place. …
You have asked me to cease immediately using my software. This I will not do, for to do so would jeopardise the very viability of my store. There are a number of options that I would be prepared to consider. I could incorporate the cash lending under my "Pawnbroking Licence". I could exercise clause 23 under the contract between MON‑E and Deckeon and open or encourage an open 'arms length' third party to open a Cash Lending business. In my case I have a vacant site adjacent to my current location. Either of these two points could be enacted within hours. Conversely, CCPL could use its considerable influence over MON‑E and encourage it to use some of its huge cashflow to spend some R & D and give all franchisees the business tools that CCPL is obliged to do under the franchise code of practice.'
24 The second respondent then went on in the email to make a number of specific criticisms of the MON‑E system and to point out what he regarded to be the advantages and differences between the software system he was using and the MON‑E system of software. He also referred to a meeting proposed to be held by Queensland franchisees of the applicant. He stated:
'The meeting will take place over lunch at the Boat House Tavern, Coomera, 12 noon 26/10/04. As for me calling the meeting, this is ridiculous. I hardly know anybody but I do know that a groundswell of anger exists throughout the network here on the coast and also in Brisbane. The anger is directed against both CCPL and MON‑E. … Your problems with your franchisees existed long before I came on the scene. Anyone of the franchisees could have started the bushfire. I am sorry it had to be me but I will not roll over when I believe that I am being used. I have been invited to have lunch with a couple of franchisees tomorrow. It is not at this moment anything other than that. These friends of mine are concerned you will not approve of my actions. You have joined these other franchisees, either by threatening them and/or I with, and I quote "completely illegal" "very serious consequences" which you will pursue with "most vigorously".[sic] And therefore in view of your last paragraph, I will table your letter together with my response so these independent men can decide whether they can afford to have lunch with me.'
25 On 26 October 2004, the second respondent attended the meeting of franchisees. Mr Lemon and Mr Strickland, amongst others also attended that meeting. They have sworn affidavits. Each was the principal of a company, which was a franchisee of the applicant and which also operated a MON‑E cash advance business.
26 Mr Lemon says the inference he drew from what the second respondent said was that he was inviting him and the other franchisees to 'join forces with him and start using the alternative [software] system in our franchise store irrespective of the fact that Cash Converters had not approved this alternative system.' Mr Strickland's evidence is to like effect.
27 By an email dated 8 November 2004, Mr Cooke writing on behalf of the applicant advised the second respondent that the applicant had only licensed the use of the Cash Converters trade mark and franchise system for use in conjunction with the MON‑E system, he went on to say:
'I must insist that you cease offering or making any cash advances (save through MON‑E's system) and loans and other products referred to in the correspondence in breach of the applicant's rights.'
28 In an email dated 12 November 2004 in response to Mr Cooke's email of 8 November 2004, the second respondent on behalf of the first respondent said that there were two options that he had in relation to the conduct of the cash advance business. The first was to lend money using the current Pawnbrokers Licence. The second option was to:
'… encourage an independent operator to open an adjacent store completely independent of the Cash Converters brand, using a different image, brand name and staff uniforms and offering different financial products. This course of action could be operational within hours. My franchise agreement with you does not preclude this action. Despite what you may have been told, I have not encouraged any franchisees to break their franchise agreement with you. I have shown the software I am currently using to five of my contemporaries. Should I be forced to take the path of involvement of a third party, then the restraint I have imposed upon myself of not encouraging other franchisees to restructure their operations will be at an end. Trust me when I say that a strong current of resentment exists in your network over your exorbitant charges and your inferior software package.'
29 By an email dated 15 November 2004 Mr Cooke on behalf of the applicant sent an email to the second respondent pointing out that the software which he complained about was MON‑E software and that if it had any complaints with the software he should take it up with MON‑E not the applicant. Mr Cooke went on to say:
'While you are not obliged to use the MON‑E software or to offer their product, it is not practical for CCPL to permit each franchisee to do his own thing in relation to lending products. CCPL is entitled to ensure uniform standards throughout the franchise chain and to protect the name and goodwill of the chain as a whole. If a particular franchisee uses a product, we must spend the time and money to ensure that the product is lawful and that consumers are being protected in accordance with the law. If one franchisee does something which results in a consumer complaint or attacked by any consumer protection body the whole chain is tainted by that. CCPL cannot and will not tolerate franchisees using their own software for products as they like because then we would have no way of monitoring the multitude of systems which spring up and in no way ensuring standards legality etc. Besides, it is our franchise system and we will decide what franchise we offer and what franchisees are licensed to do and there is no law which obliges us to extend those rights simply because we want them extended.
Of course you can lend your own money by way of pawnbroking as permitted by your franchise but if by this option, you mean using your pawnbroking licence in some way to lend cash advances or other similar products, we will not permit that.
It may be that your personal drive and needs as a businessman are not suited to being in a franchise system. Perhaps you should reconsider your involvement. …
Please provide your immediate assurance to me that you will not undertake any lending of the kind reflected in your letters to Ian Day by way of any software other than cash advances. Please also confirm that you will not attempt to encourage any independent operator as threatened by you. …'
30 On 5 December 2004, the second respondent sent an email to Mr Ian Day on behalf of the applicant stating:
'I have given last Tuesday's telephone conversation much thought and consideration. I have talked with my solicitor and others whose opinion I respect and have reached a final decision. I will not be using the MON‑E system of cash advance. I do not agree with your position that it is illegal for Robina to use its own system from within the Robina store. I hold the conviction that a legal challenge against your position would not be a complete waste of resources. However, I consider myself to be pragmatic and the correctness of this legal point is not of sufficient importance for me to run a test case at this time. I will defer to your request and stop trading my Micro Lending operation from within the framework of Cash Converters Robina. The actual timing of when this will happen is dependent upon the outcome of this email.
I have completed discussions with a third party to purchase my existing database and rent a shop adjacent to my Robina shop. I see no reason to be anything other than completely transparent and honest with you on this matter Small Loans For You will be offering a full suite of financial products and will trade under the business registered name of 'Cash Providers'. SLFY is owned and managed by my son Brian Michael Towell. It may be easy to believe that Brian is acting as a front for me. If you come to that conclusion, then you would be manifestly wrong. SLFY has 6 other offices and has been in the micro lending industry for about 5 years. Again I have not signed off on this agreement, as it will also depend on your response.
During our Tuesday's telephone conversation, I was encouraged that you both felt that I was not attempting to lead or promote a "Ginger Group" within your network. I have been avoiding other franchisees even to the point of not attending Saturday's Christmas party. This has not stopped many other franchisees from questioning me, as to what is happening between Cash Converters and myself. My standard stock answer is that "I am still standing". I only mention this as I am of the strong belief that if I am forced to take the above measures, others will follow. Further I believe SLFY may see a business opportunity and may attempt to gain further market share by offering its many products including its business name to other Cash Converters' franchisees.'
31 Later in the email the second respondent proposes that the applicant permit it to operate the second respondent's cash lending system 'alongside the MON‑E system'. He goes on to say:
'I not have the benefit of perusing your contract with MON‑E but where there is a will there is a way! Alternatively, make me a fair and reasonable offer and buy me out.
I continue with my undertaking to you to do nothing further and to keep the status quo.'
32 By an email dated 10 December 2004, Mr Day on behalf of the applicant advised the second respondent that it would not permit the sale of the first respondent's customer database to the third respondent nor would it permit the establishment of a small loans business next door to its Robina store.
33 On 14 December 2004, Mr Cooke sent an email to the solicitor acting on behalf of the first respondent whereby he demanded an undertaking that the first respondent would make 'no further use of the offending software' and that 'no further financial products would be offered from the Robina store' except as expressly authorised by the applicant. In response, Mr Cooke received a letter from the first respondent's solicitor dated 17 December 2004 stating inter alia that:
'In order to prevent the matter escalating any further, and without any admissions whatsoever on its part [the first respondent] the franchisee has instructed us to undertake on its behalf that it will not offer cash advance financial products from the Robina store as from Saturday, 18 December 2004 (our client needs to give notice to staff to terminate their employment) and will conduct the Business as identified in the franchise agreement.'
34 In January 2005, Ms Horsman and Mr Hoffman, employees of the applicant visited the Robina store. Each discovered that the first respondent had made substantial changes to the Robina store. Each of the two employees of the applicant reported to Mr Cooke that the Personal Finance Centre booth previously located within the premises of the Robina store had been dismantled. An area in the front corner of the Robina store had been segregated and enclosed by the erection of stud walls. One of the two sets of front doors of the premises of the Robina store which had previously been locked had been unlocked, and was now being used to provide direct access to the newly segregated and enclosed area The stud walls enclosing the new area did not reach the ceiling. A small loans cash advance business was being conducted from within the enclosed area. There was within the enclosed area a counter and chairs. The countertop and chairs were of the kind specified by the applicant for a Cash Converters' Personal Finance booth. There was a person behind the counter. He was Jamie Ryan who had previously worked in the cash advance business in the Robina store and, prior to that, at other Cash Converters' stores in Queensland.
35 The walls of the enclosed area were painted bright lime green with an oval shaped sign on the wall behind the counter which said 'Small Loans For You'. A large paper sign was stuck in the window next to the entry door to stating:
'Small loans'.
36 There is in evidence a photograph taken by Mr Hoffman when he visited the Robina store in January 2005. This photograph shows that the sign 'Jewellery New & Old' was still in place above the set of doors which previously had been locked, but which now formed the entrance to the new premises.
37 In his report Mr Hoffman also mentioned that on 13 January 2005 he had spoken by telephone to the second respondent about the Cash Providers business. During that conversation the second respondent said that he had instructed the members of staff at the Robina store 'not to specifically direct customers to Cash Providers but they can mention that the finance business next door may be able to help them.'
38 On 25 January 2005 Mr Wessels, who is an employee of Safrock Finance Pty Ltd (a company which provides financial services to franchisees of the applicant), visited the Cash Converters store operated by the first respondent at Robina. Mr Wessels says that he walked into the Robina store and asked one of the staff where the Personal Finance Centre was. He says that he was advised that they no longer had one in the store but directed him next door to the Cash Providers operation. Mr Wessels says that he was informed by the employee that it was not the same company as Cash Converters but the employer said to him that it was 'connected in the business sense'.
39 Since the date of Ms Horsman's and Mr Hoffman's reports in January 2005, the stud walls enclosing the new premises have been extended to the ceiling with the consequence that the new premises have therefore become completely sealed off from the rest of the Robina store premises. Further, since then professionally prepared signage has been appended to the new premises. There is in evidence a photograph of the new store after the application of the signage. This shows that the paper sign 'SMALL LOANS' has been removed. A large new sign had been erected above the entrance to the store. The background colour of the new sign is bright red. On this bright red background appear the words 'CASH Providers'. The word 'CASH' is in capitals and is in bright yellow. The word 'Providers' is in lower case and is in white. A different font is used for each of these words. The font used is very different to the font used in the sign 'Cash Converters'. The walls of the premises are painted in bright lime green. The sign, 'Jewellery New & Old' is no longer above the entrance doors to the premises. The sign was removed in March 2005.
40 The second respondent deposes that as from November 2004 the first respondent was trading very badly. He says that overall traffic in the store was down between 50 per cent to 60 per cent following the closure of the gymnasium that had been situated in the building where the store is located. The second respondent says that he was exploring ways to reduce his overheads. In December 2004 the second respondent and the fourth respondent, who is the director of the third respondent, approached the landlord of the Robina store with a view to procuring that the landlord agree to the surrender by the first respondent of the lease in respect of a portion of the premises comprising the Robina store. The landlord agreed to the agreed to the surrender of the lease in respect of part of those premises. The landlord also agreed to enter into a fresh lease with the third respondent for the surrendered portion of the premises. Pursuant to that lease, the third respondent is liable to pay the landlord the sum of $2200 per calendar month until the expiry of the lease term on 30 November 2005. It is one of the terms in the new lease that the third respondent carry on its business from the premises continuously during the term of the lease. The surrender of the lease in respect of portion of the premises comprising the Robina store, has had the effect of reducing the rent payable by the first respondent.
41 The evidence of the fourth respondent is that the third respondent has conducted business in the micro lending industry since 2001. He says that he was also a founding member of the Micro Lending Association of Australia which was established in 2002. On the Gold Coast, the third respondent has stores at Palm Beach, Nerang and Logan in addition to the Robina store. The third respondent has traded successfully from the Robina premises since December 2004 and is now returning an average monthly profit of $20 000 from those the business being conducted from those premises.
The applicant's interest in the micro lending cash advance business
42 I now need to say something about the nature of the interest of the applicant in the micro lending business. The applicant's primary business is the franchising of pawnbroking and second hand dealerships. In the conduct of this business, it permits its franchisees to use its intellectual property for the purposes of conducing the franchised businesses. The applicant earns income from the payment of fees by the franchisees. The applicant does not conduct business as a money lender in the micro lending industry. In this regard, the applicant's position is to be distinguished from that of the third respondent. The applicant earns revenue from micro lending in a more indirect way. It has permitted a third party, MON‑E to contract with its franchisees and has permitted those contracted franchisees to use the applicant's intellectual property in carrying on a specific cash advance business. The applicant earns royalties from MON‑E which are linked to the volume of business transacted by each of the franchisees that has elected to operate its cash advance business pursuant to a contract with MON‑E. However, because a franchisee is not obliged to enter into the agreement with MON‑E and because a franchisee can terminate its agreement with MON‑E on three months notice, the applicant will receive royalty payments from MON‑E in respect of any particular franchisee only for so long as a contract exists between MON‑E and that franchisee. Therefore, the right of the applicant to receive royalties from MON‑E (and, therefore, income from micro‑lending) in respect of any particular franchisee is dependent upon the continuing willingness of the franchisee to operate a cash advance business under a MON‑E contract. It is plain that in this case the first respondent elected to cease operating a cash advance business under its contract with MON‑E at the end of December when, it dismantled the Personal Finance Centre booth and ceased offering the cash advance service from the Robina store.
Substantive application
43 In broad outline, there are three main elements to the amended statement of claim filed by the applicant in these proceedings.
44 Firstly, the applicant claims that in establishing and conducting the Cash Providers business at the Robina store, and\or in participating in the establishment and conduct of that business, the respondents engaged in conduct that was misleading or deceptive or likely to be misleading or deceptive. It is alleged that the impugned conduct falsely conveys to consumers a connection or affiliation between 'the applicant's operations and franchise system and the Cash Providers operation'. The applicant claims that the impugned conduct is conduct in breach of ss 52 and 53(d) of the TP Act and ss 38 and 40(f) of the Fair Trading Act 1987 (WA) ('the FT Act'). The applicant also alleges the respondents are liable as accessories to the impugned conduct. The applicant claims that by reason of the respondents' conduct it has suffered of a loss of commission that it would have earned from MON-E, and that it has suffered and will continue to suffer, loss and damage to its goodwill. The applicant claims damages and a permanent injunction.
45 Secondly, the applicant claims that in surrendering the lease of a portion of the Robina store and in permitting the third respondent to establish its cash advance business under the name 'Cash Providers' in the surrendered portion of the premises, the first respondent breached several terms of the franchise agreement. The applicant seeks damages and specific performance of the franchise agreement and a permanent injunction.
46 Thirdly, the applicant claims that the first respondent and the second respondent have sought to interfere with the contractual relations between the applicant and its franchisees in that the second respondent has sought to induce other franchisees, who are conducting cash advance business under contracts with MON-E, to breach their respective franchise agreements by using software other than MON-E software in the conduct of those businesses without the approval of the applicant. The applicant claims a permanent injunction.
Relief sought in the notice of motion
47 The applicant seeks the following relief in the notice of motion before the court:
'1. Until further determination of the application or further order, the First Respondent be restrained by an injunction pursuant to sections 80 and 87 of the Trade Practices Act 1975 [sic] Cth (the Act) from:
(d) allowing the Third Respondent to use part of the original Robina Franchise Store, as originally approved by the Applicant, for the purpose of carrying on its business;
(e) displaying and installing at the Robina Franchise store any fixtures, fittings, plant, equipment, signage, shop facades, trade marks, logos, insignia, markings, words, colours and designs forming part of the Applicant's intellectual property except to the extent permitted by the Applicant, in particular allowing the sign "JEWELLERY NEW & OLD" to remain above the entrance door of the Third Respondent's business being carried on from within the original Robina Franchise store, being the store originally approved by the Applicant;
(f) informing customers in any way whatsoever, whether by written or oral conduct, that there is a connection nor affiliation between the operations, franchise system and goodwill of the Applicant and the Third Respondent's business;
(g) engaging in conduct from the Robina Franchise store which promotes the business of the Third Respondent, including the referral of any customers of the Robina Franchise store to the Third Respondent's store and the provision of information to the Third and/or Fourth Respondents about the customers of the Robina Franchise store;
(h) surrendering any further part of the Robina Franchise store to the Third Respondent or to anyone else;
(i) either on its own or through Deckeon Pty Ltd, selling or supplying the customer database developed through the cash advance business previously operated at the Personal Finance Booth in the Robina Franchise store to the Third and/or Fourth Respondents;
(j) interfering with the contractual relations between the Applicant and its franchisees by urging, inciting or counselling the franchisees or any of them to engage as franchisees in the cash advance business by utilising the products and services of the Third Respondent and/or Fourth Respondent;
2. Until further determination of the application or further order, the Second Respondent be restrained by an injunction pursuant to sections 80 and 87 of the Act from:
(d) allowing the Third Respondent to use part of the original Robina Franchise Store, as originally approved by the Applicant, for the purpose of carrying on its business;
(e) displaying and installing at the Robina Franchise store any fixtures, fittings, plant, equipment, signage, shop facades, trade marks, logos, insignia, markings, words, colours and designs forming part of the Applicant's intellectual property except to the extent permitted by the Applicant, in particular allowing the sign "JEWELLERY NEW & OLD" to remain above the entrance door of the Third Respondent's business being carried on from within the original Robina Franchise store, being the store originally approved by the Applicant;
(f) informing customers in any way whatsoever, whether by written or oral conduct, that there is a connection nor affiliation between the operations, franchise system and goodwill of the Applicant and the Third Respondent's business;
(g) engaging in conduct from the Robina Franchise store which promotes the business of the Third Respondent, including the referral of any customers of the Robina Franchise store to the Third Respondent's store and the provision of information to the Third and/or Fourth Respondents about the customers of the Robina Franchise store;
(h) surrendering any further part of the Robina Franchise store to the Third Respondent or to anyone else;
(i) either on its own or through Deckeon Pty Ltd, selling or supplying the customer database developed through the cash advance business previously operated at the Personal Finance Booth in the Robina Franchise store to the Third and/or Fourth Respondents;
(j) interfering with the contractual relations between the Applicant and its franchisees by urging, inciting or counselling the franchisees or any of them to engage as franchisees in the cash advance business by utilising the products and services of the Third Respondent and/or Fourth Respondent;
3. Until further determination of the application or further order, the Third Respondent be restrained by an injunction pursuant to sections 80 and 87 of the Act from:
(a) carrying on business from within the original Robina Franchise store, being the store originally approved by the Applicant;
further, or alternatively:
(b) informing customers in any way whatsoever, whether by written or oral conduct, that there is a connection, or affiliation between the operations, franchise system and goodwill of the Applicant and the Third Respondent's business;
(c) using the business name "Cash Converters" in conducting business from within the original Robina Franchise store, being the store originally approved by the Applicant; and
(d) allowing the sign "JEWELLERY NEW & OLD" to remain above the entrance door of the Third Respondent's business being carried on from within the original Robina Franchise store, being the store originally approved by the Applicant;
4. Until further determination of the application or further order, the Fourth Respondent be restrained by an injunction pursuant to sections 80 and 87 of the Act from:
(a) carrying on business from within the original Robina Franchise store, being the store originally approved by the Applicant;
further, or alternatively:
(b) informing customers in any way whatsoever, whether by written or oral conduct, that there is a connection, or affiliation between the operations, franchise system and goodwill of the Applicant and the Third Respondent's business;
(c) using the business name "Cash Converters" in conducting business from within the original Robina Franchise store, being the store originally approved by the Applicant; and
(d) allowing the sign "JEWELLERY NEW & OLD" to remain above the entrance door of the Third Respondent's business being carried on from within the original Robina Franchise store, being the store originally approved by the Applicant;'
Principles applicable
48 In determining whether to grant an interlocutory injunction the Court will have regard to two main issues. These are whether:
1. there is a serious question to be tried, and
2. the balance of convenience favours the granting of the injunction.
49 These two elements are not to be considered in isolation. Accordingly, the apparent strength or indeed the weakness of the applicant's case can be taken into account in assessing the balance of convenience (Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 154).
50 A further consideration in relation to the balance of convenience in a case where the applicant seeks an interlocutory injunction on the basis that it fears that it will suffer irreparable loss unless the injunction is granted, is the assessment of the risk of imminent and serious damage to the applicant on one hand, and the prejudice to the respondent on the other hand if the injunction is granted (Spry, Equitable Remedies, 6th edn, Law Book Co, Sydney, 2001).
51 In weighing the balance of convenience it is also necessary to take into account the impact of the injunction upon third parties and the public. The authorities are discussed by Steytler J (as he then was) in Redman v Southern Cross Broadcasting (Australia) Ltd [2001] WASC 9. I turn now to deal with each of the claims.
Injunctions against the third and fourth respondents - par 3 and par 4 of the notice of motion
52 I deal firstly with the claim for an injunction that the third and fourth respondents be restrained until trial or further order from continuing to carry on business under the name 'Cash Providers' from its current location in the Video Ezy Shopping Plaza in Robina. It was said by counsel for the applicant that this was the primary item of relief sought in the application. Counsel for the applicant argues that by reason of the impugned conduct, the third and fourth respondents have created the misleading impression in the relevant class of consumers that the applicant has an association with the third respondent and has 'endorsed the veracity of Small Loans and its services'. Counsel argues that an injunction should be granted until trial because the applicant fears that if the injunction is not granted consumers will associate it with the loan services being offered by the third respondent and the applicant will accordingly suffer irreparable loss to its reputation and goodwill.
53 The first question to be considered is whether there is a serious question to be tried that the third respondent's conduct is misleading or deceptive or likely to mislead or deceive in breach of s 52 and s 53(d) of the TP Act, and s 38 and s 40(f) of the FT Act.
54 The applicant argues that there are several aspects of the third respondent's conduct which contribute to creating the misleading impression in the relevant class of consumers that there is an association between the applicant and the business conducted by the third respondent at the Robina store. The applicant argues that the name of the store 'Cash Providers' is similar to the name 'Cash Converters', that the colours used by the third respondent in the get up and the signage at the Robina store are similar to the colours which are used by the franchisees of the applicant in their stores, that third respondent's Robina store uses the same chairs, carpet and desktop as those used by the first respondent and other franchisees of the applicant in their Personal Finance Centre booths, that the Cash Providers' shop has the same façade as the first respondent's Cash Converters franchise store, and the fact that the Cash Providers' operation is in a location from which the first respondent carried out its cash advance business under the Cash Converters' banner.
55 Counsel for the third respondent argues that there is no serious question to be tried. Firstly, counsel submits that there is nothing distinctive about the chairs and the carpet used in the third respondent's shop in Robina. The furniture and the carpet is available for purchase by members of the public. Further, counsel argues that the relevant consumers will not be misled or be likely to be misled into believing that there was an association between the Cash Providers operation and the applicant by any similarity in the names and get up of the Cash Providers operation and that of the first respondent's Cash Converters operation because there is a substantial difference in the appearance and colours of the names and in the signage of the respective business operations. The third respondent also argues that at many shopping centres the shops in the shopping centres have the same façade. As to the fact that the premises once formed part of the franchised premises, it is argued that this is irrelevant because there was nothing in the franchise agreement precluding the reduction in the size of the premises.
56 Counsel for the third respondent argues that this is a case which falls within the category of cases where the impugned conduct would not cause the relevant class of consumers to be misled as to the relationship between the Cash Providers business and the operations of the applicant. The third respondent relies upon the following dictum of Lockhart J in the case of Chase Manhattan Overseas Corporation v Chase Corporation Limited (1986) 12 FCR 375 at 377‑378 where his Honour said:
'Conduct does not contravene s 52 merely because members of the public would be caused to wonder whether it might not be the case that two products came from the same source or two services were provided by the same source or two business names suggest that they came from the same stable. The purpose of Part V of the Trade Practices Act 1974 is to protect consumers by eliminating unfair trade practices. The object of s 52 is to prevent misleading or deceptive conduct which will affect the identification of goods or services. Conduct which merely causes some uncertainty in the minds of the public does not infringe s 52.'
57 In determining whether there is a serious question to be tried that there has been a contravention of the TP Act, it is necessary to have regard to the class of persons by reference to which the question as to whether the conduct is misleading or deceptive or likely to mislead or deceive must be assessed. In the case of Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 the High Court said at 87:
'The initial question which must be determined is whether the misconceptions, or deceptions, alleged to arise or to be likely to arise are properly to be attributed to the ordinary or reasonable members of the classes of prospective purchasers.'
58 In this context, the question of whether the conduct was misleading or deceptive or likely to mislead or deceive must be assessed by reference to the reaction of the ordinary or reasonable person seeking to avail himself or herself of micro lending services in the Robina area. The evidence of Mr Cooke is that 75 percent of the customers of the cash advance business which was carried out in the Robina store by the first respondent prior to the termination of the business, were repeat customers.
59 There was no evidence from any consumer that he or she had actually been misled or deceived by the location or the get up of the Cash Providers operation into believing that the applicant was associated with, or endorsed the 'veracity of the Small Loans services'. However, that does not conclude the matter and I now turn to consider the question by reference to whether the misconception alleged would be suffered by a hypothetical individual who would have been an ordinary or reasonable member of the class of persons seeking to avail themselves of micro lending services in Robina.
60 There are in my view, significant differences between the appearance of each of the logos and names of each of the stores at the Robina location. The name 'Cash Converters' as it appears on the outside wall at the Robina location is in the form of the logo referred to above, namely, the word 'Cash' is located immediately above the word 'Converters', the 'S' in the word 'CASH' is replaced with a dollar sign so that the word reads 'CA$H', both words are in capital letters albeit that they are in a different font, the predominant colour of the word 'CA$H' and of the logo containing the name is maroon (although described as 'carmine red'). The name and logo of 'Cash Converters' also appeared in this manner on the Personal Finance Centre booth when it was located within the Robina store. By contrast, the words in the name 'CASH Providers' as they appear in the signage at the Robina location are not placed immediately above each other but are immediately adjacent to one another. The word 'CASH' is in capital letters and the word 'Providers' is in lower case, the background colour on which the words appear is bright red. The word 'CASH' is in bright yellow. The word 'Providers' is in white.
61 Further, there is another substantial difference between the appearance and get up of the Personal Finance Centre booth and the Cash Providers premises in that the walls of the Cash Providers premises are painted in a bright lime green colour whilst the walls of the Personal Finance Centre booth were painted in white. I regard it of minor significance that the carpet, countertop and stools which are used in the third respondent's premises at Robina are the same as those which are prescribed in the applicant's Operations Manual as the preferred brand for use in the Personal Finance Centre booth. The evidence is that both the stools and the carpet are commonly available products. Further, there is nothing distinctive about the countertop, but, in any event, the base of the counter in the Cash Providers' shop is distinctively different to that used in the Personal Finance Centre booth. The similarity between the stools and the carpet, would be substantially outweighed in the mind of the ordinary or reasonable member of the relevant class of consumer by the very distinctive differences between the get up and appearances of the Personal Finance Centre booth and the third respondent's Cash Providers premises at Robina.
62 There is, of course, some similarity in the names 'Cash Converters' and 'Cash Providers' in that both include the word 'Cash'. However, subject to what I say below, that similarity would also be outweighed as a factor likely to cause an ordinary or reasonable member of the relevant class of consumers to be misled, by the distinctive differences in the appearance and get up of the two operations referred to above.
63 In my view, if the matters to be taken into account in assessing whether an ordinary or reasonable person seeking to avail himself or herself of micro lending services in Robina would be misled, were to be confined to the alleged similarities in the names, signs, colours and get up used by the third respondent at its Cash Providers' operation at Robina I would find that there was no serious question to be tried. However, the Court must have regard to the conduct as a whole. Accordingly, a further factor which must be taken into account is the fact that the new business is located within the former premises of the Robina store.
64 In this regard I am of the view that there may be persons availing themselves of micro lending services in Robina who would not appreciate that the business operated by the first respondent under the name 'Cash Converters' was operated as an independent business by the first respondent under a franchise agreement with the applicant, and would also not appreciate that the creation of the new premises from within the boundaries of the former premises at the Robina store, occurred by reason of acts of persons other than the applicant. They may, therefore, conclude that the applicant endorses the creation of the new premises and the commencement of the new business. They may further conclude that, as the micro lending business formerly conducted at the Cash Converters' premises at Robina had now ceased, the new business was a related replacement for the business previously conducted there. In this context, the similarity in the names, arising from the use of the word 'Cash' may take on a different perspective, notwithstanding the very significant differences in presentation to which I have referred above. In that way, the view could be held that the Cash Providers business of the third respondent at the new Robina premises is associated with, or approved by, the applicant.
65 In my view, there is a serious question to be tried whether the view referred in the preceding paragraph could be held by an ordinary or reasonable member of the relevant class of consumers. It follows that I reject the argument of the third respondent that there is no serious question to be tried because, on any view, it is clear that the impugned conduct would cause an ordinary or reasonable member of the relevant class of consumers only to wonder whether there was an association between the applicant and the Cash Providers business. It follows, also, that I find that there is a serious question to be tried as to whether the impugned conduct constitutes a breach of s 52 and s 53(d) of the TP Act, and s 38 and s 40(f) of the FT Act.
66 I turn now to consider the balance of convenience. The applicant argues that the Small Loans For You system operated by the third respondent is an untested and unapproved system. The applicant argues that if the third respondent is allowed to continue its business from its current location in Robina 'there is a real risk that the goodwill and reputation of the applicant will be damaged between now and trial and that the difficulty of measuring or regaining the applicant's loss, goodwill and reputation outweighs any loss which may be sustained by the respondents. It is said that a good reputation is an important factor in the pawnbroking and second hand dealing business. The applicant relies on the case of Earthtech Consultants (Qld) Pty Ltd v Earth Tech Engineering Pty Ltd (2001) 53 IPR 555.
67 Mr Cooke has in his evidence identified other premises which he says are available to be leased by the third respondent between now and trial. Counsel for the applicant argues that if the third respondent is restrained from carrying on business at its current location and under the name 'Cash Providers' it can relocate in the same area and carry on business in that area under the name 'Small Loans For You'. It is said that this will not cause any substantial disruption to the business of the third respondent. The argument is also made that in any event any disruption to the business of the third respondent and any consequential losses associated with the disruption between now and trial, should be considered in light of the fact that the decision to set up the new business at the place and by the means used, was intentional conduct, and that the respondents had been warned that the applicant would commence proceedings including proceedings for an injunction. Also, it is argued that there has not been any substantial investment undertaken by the third respondent in establishing the business at Robina.
68 The evidence of the fourth respondent is that if the injunction was granted it would cause substantial disruption and harm to the third respondent. The fourth respondent says that the third respondent is obliged under the lease to pay rent of $2200 per month and if it were required to vacate the premises it would have a continuing monthly liability for rent and no income to support the expense. He says that the practical effect is that the business will have to be closed.
69 The fourth respondent says that there would be relocation costs which he estimates to be about $15 000. The fourth respondent also says that the reputation of the third respondent would suffer because persons would infer that the business was closing because of financial difficulties. Counsel for the third respondent argues that the lease requires the third respondent to operate its business continuously throughout the term and the injunction would require the third respondent to breach the lease by abandoning the premises. Counsel for the third respondent argues that for all these reasons the balance of convenience favours the third respondent.
70 I turn now to assess the risk that the applicant will, because of a misconception among the relevant class of consumers that it endorses the micro lending services offered by the third respondent from its Robina store, suffer irreparable loss to its reputation and goodwill if an injunction is not granted until trial.
71 The extent of the risk that the applicant will suffer irreparable harm to its reputation and goodwill will depend upon the nature and the extent of the potential harm to the applicant's reputation and goodwill posed by the third respondent continuing to carry on its Cash Providers business until trial. There is no evidence that the fact that the third respondent has been carrying on of the Cash Providers business in Robina since January 2005 has interfered with the business of the applicant insofar as the marketing and servicing of its franchises is concerned, or otherwise in relation to its dealings with its franchisees. In his evidence, Mr Cooke says that the threat arises from the fact that the applicant has not tested and approved the Small Loans For You system that is being used by the third respondent in its Cash Providers' business. Mr Cooke gives some hearsay evidence as to the Small Loans For You system. He says, on the basis of information and belief, that the Small Loans For You system differs from the MON‑E system in that sums of money up to a maximum of $10 000 can be advanced under the Small Loans For You system in any one transaction, whereas the maximum that can be advanced under the MON-E system is $1000. Further Mr Cooke says that under the Small Loans For You system security can be taken whereas no security is taken under the MON-E system and loans are repaid by deductions made directly from the salary of the borrower. Also, under the MON‑E system no further loans are made until the first loan is repaid. It is Mr Cooke's opinion that 'Small Loans engages in more risky and less regulated lending.' However, in contrast to that evidence is the evidence of the fourth respondent that under the Small Loans For You system the maximum amount that is loaned in any one transaction is $2000. That evidence is consistent with the evidence from Ms Horsman to the effect that when she spoke to Mr Ryan in January 2005 about the third respondent's Cash Providers operations, Mr Ryan said that the third respondent made loans to a maximum of $2000. I find for the purposes of this application that the maximum loan in any one transaction made by the third respondent in its business is $2000. There is also the evidence of the fourth respondent that the Small Loans For You system has been in operation for 4 years and that the business is operating profitably. There is no evidence of any consumer complaints in relation to the operation of the Small Loans For You system. Nor is there any evidence from any objective third party that there are any major deficiencies or special risks to consumers in the operation of the Small Loans For You system.
72 Another factor to be taken into account in assessing the risk of the applicant suffering irreparable harm to its reputation prior to trial is that the third respondent is operating its Cash Providers operation from only one store in Queensland. At its other stores it operates under the name 'Small Loans For You'. Therefore, the number of persons who may be misled or deceived into believing that the Small Loans For You product is endorsed or approved by the applicant is very small compared to the extensive scale of the applicant's operations in Australia and worldwide.
73 The differences in Small Loans For You and the MON‑E products appear, on the evidence, to be matters of degree only and the Small Loans For You product does not appear to be inherently dangerous to consumers. When this circumstance is linked to the fact that, compared to the extensive scale of the applicant's worldwide operations, there are only a relatively small number of consumers who potentially may be misled, it is my view that there is only a small risk that the applicant would suffer irreparable damage to its reputation and goodwill if the third respondent was permitted to carry on its Cash Providers business at the Robina location until trial or further order.
74 I now consider the harm which would be caused to the third respondent by the granting of the injunction. This would require the third respondent to cease operating its business from its current premises until trial. In this regard, I take into account that if an injunction is granted it is likely that the third respondent would remain liable for the rent under the existing lease, even if it were able to rent alternative premises. Albeit that the applicant points to the availability of other premises to let, it does not point to any potential tenants to replace the third respondent in its Robina premises. I also take into account that there is likely to be removal costs. I also accept the argument of counsel for the third respondent that a factor to be taken into account is the fact that the grant of the injunction would result in the third respondent having to abandon the premises which will place the third respondent in breach of its lease. I also accept that there is a risk that its reputation may suffer. In my view, the inconvenience and potential harm which would be caused to the third respondent outweighs the risk of irreparable harm being caused to the reputation of the applicant. I accordingly, find that the balance of convenience favours the third respondent.
75 The applicant relied upon the Earthtech case to argue that the interlocutory injunction should be granted because damage to goodwill is difficult to assess and therefore damages would not be an adequate remedy for any damage to its reputation and goodwill that it may suffer between now and trial. The Earthtech case is however distinguishable. In the Earthtech case, the court dealt with a passing off application. In that case, the plaintiff and the defendant were engaged in the same business and were potential competitors. The plaintiff had been operating in Queensland for some time under the name 'Earthtech'. The defendant was part of a multi‑national corporation that had used the name 'Earth Tech' internationally for sometime. The defendant wanted to enter the market in Queensland under its name which was the same name as the plaintiff had been using. By the time the application for the interlocutory injunction was brought, the defendant had quoted on some jobs in Queensland in competition with the plaintiff for work in the engineering area. There was direct evidence of confusion among the relevant class of customers. One reason why the court granted the injunction was because of the difficulty that would arise in trying to measure the extent to which any loss of business to the plaintiff was due to the confusion caused to clients, and possibly former clients, of the plaintiff by the similarity in the names.
76 In the Earthtech case the defendant was potentially a direct competitor with the plaintiff and there was evidence that there was confusion in the market place because of the similarity in names. There was an imminent threat from the defendant competitor that could result in the potential loss of clientele with attendant serious consequences for the future of the plaintiff's business. In this case, however, the third respondent and the applicant are not competitors, and there is no imminent threat of the applicant's business being irretrievably lost by the seepage of clients to the third respondent. In this case, the applicant, as part of a multi‑national group, conducts a nationwide business in selling and servicing franchises and the impugned conduct is confined to circumstances in only one of its 37 franchised territories in Queensland and 115 franchised territories in Australia. The risk of irreparable harm being caused to the applicant is substantially different to the risk faced by the plaintiff in the Earthtech case.
77 I have had regard to the applicant's argument that the Court should take into account the fact that the applicant warned the respondents that it would apply for an injunction, and also that the conduct of the respondent in setting up and in participating in the setting up of the 'Cash Providers' operation was deliberate conduct. I accept that the evidence does reveal that the respondents were aware that the applicant intended to take legal action and also that in establishing the Cash Providers operation, the respondents acted deliberately. However, these matters do not, in my view, operate to tilt the balance of convenience in favour of the applicant. Further, I reject the applicant's argument that a factor favouring the applicant is the absence of any investment costs made by the third respondent in the Robina business. The third respondent has undertaken liabilities in the form of the lease and I have already found that if the third respondent was required to cease trading pending trial it is likely that it would have to continue paying that rent.
78 In my view the balance of convenience lies in favour of the third respondent and I accordingly decline to grant the interlocutory injunction referred to in par 3(a) and par 4(a) of the notice of motion.
79 There is no evidence that either the third respondent or the fourth respondent has engaged in, or threatens to engage in, the conduct referred to in par 3(b) and par 3(c) and par 4(b) and par 4(c) of the notice of motion and, accordingly, I decline to grant the injunctions referred to in those paragraphs of the notice of motion.
80 I also decline to grant the injunctions referred to in par 3(d) and par 4(d) of the notice of motion because the evidence shows that the sign referred to in those paragraphs was taken down from the front of the building in March 2005.
Injunctions against first and second respondents in pars 1(a), (b) and (e) and pars 2(a), (b) and (e) of the notice of motion
81 The injunctions sought at par 1(a) and par 2(a) of the notice of motion seek to enjoin the first and second respondents respectively from allowing the third respondent to use that part of the premises previously occupied by the first respondent as part of its Robina store, and which the third respondent is now using to carry on the Cash Providers business.
82 The applicant argues that by permitting the third respondent to occupy and use that portion of the original Robina store which is now occupied by the third respondent, the first respondent acted in breach of the franchise agreement. In addition, the applicant pleads that in so doing the first respondent acted in contravention of s 52 and s 53(d) of the TP Act and s 38 and s 40(f) of the FT Act. It also alleges that the second respondent aided and abetted the first and third respondents and was knowingly concerned in a contravention of s 52 and s 53(d) of the TP Act. It also pleads, that the conduct of the second respondent comprised a contravention of s 38 and s 40(f) of the FT Act.
83 By the injunction claimed the applicant seeks an order that will in effect require the first and second respondents to cause the third respondent to vacate the premises which were surrendered by the first respondent and are now the subject of a new lease between the third respondent and the landlord.
84 The applicant pleads the first respondent's conduct in surrendering the lease in respect of part of the premises of its Robina store comprised a breach of a number of the clauses of the franchise agreement. For example, it is said that by permitting the third respondent to occupy part of the original premises of the Robina store, the first respondent acted in breach of cl 3.1(36) of the franchise agreement which provides that the franchisee is 'not to lose the right to occupy the franchised premises'. At the heart of the argument between the parties is the proper construction of the term 'franchised premises' in the franchise agreement. The applicant argues that the term refers to the premises in its original area and configuration. The respondents argue that there is nothing in the franchise agreement that defines 'franchised premises' by reference to its original dimensions and configuration. Therefore, they argue, there is nothing in the franchise agreement which precludes a franchisee from reducing the size of its premises.
85 In light of my conclusions below in relation to the balance of convenience, I do not intend to embark upon a close analysis of the respective arguments. Whilst there may well be a serious question to be tried in relation to the proper construction of the franchise agreement, by reason of the intervention of third party rights in the form of the new lease between the third respondent and the landlord, I have doubts, on the facts as they now stand, that there is a serious question to be tried that the applicant would obtain final relief at trial in the form of specific performance or injunction which would have the effect of restoring the rights in the surrendered portion of the Robina store to the first respondent such that it could exercise control over the third respondent's occupancy thereof.
86 However, the applicant also claims that by surrendering the part of the premises in the knowledge, and with the intent, that the third respondent would carry on the business of a small loans provider in those premises under the name 'Cash Providers', the first respondent and second respondent engaged in, or were otherwise accessories to, misleading or deceptive conduct or conduct likely to mislead or deceive. In light of my conclusions that in relation to the claim against the third and fourth respondents there was a serious issue to be tried, I also to hold that the impugned conduct by the first respondent and second respondent in question gives rise to a serious question to be tried that the first respondent engaged in conduct that was misleading or deceptive or was likely to mislead or deceive and the second respondent was knowingly concerned in such conduct.
87 However, in my view, the balance of convenience precludes the granting of the injunction claimed by the applicant. The surrender of the lease in respect of the relevant part of the premises at the Robina store has already taken place. The portion of the premises that was surrendered cannot revert to being part of the premises leased by the first respondent without the co‑operation of the landlord and the landlord is not party to the proceedings. The right to occupy those premises is now a matter between the landlord and the third respondent. I have already ruled that the third respondent would be likely to suffer harm and disruption to its business if it were required to vacate the premises pending trial and that, as against the applicant, the balance of convenience favour the third respondent. I, accordingly, decline to make the orders sought in par 1(a) and par 2(a) of the notice of motion.
88 I now turn to the injunctions claimed in par 1(b) and par 2(b) of the notice of motion. These injunctions seek to enjoin the first and second respondents from displaying and installing at the Robina store any materials, such as, fixtures, fittings, plant, equipment, signs and logos except to the extent permitted by the applicant, and in particular from allowing the sign 'Jewellery New & Old' to remain above the door at the Robina premises being used as the entrance to the third respondent's business at the Robina store.
89 The gravamen of this injunction is directed towards allowing the sign 'Jewellery New & Old' to remain above the entrance door of the third respondent's Cash Providers business at Robina. This sign has now been removed. There is no evidence that there is any intention between now and trial to reinstate the sign above the premises. Accordingly, in my view, the sign having been removed, there is no basis on which to make any orders relating to the removal of the sign. To the extent that the injunction seeks to require the first and second respondents to procure the removal of the stud walls and materials comprising the Cash Providers operation from their present location and to procure the restoration of the status quo ante, the same considerations regarding third party interests apply as are referred to above. I, accordingly, decline to make the orders sought at par 1(b) and par 2(b) of the notice of motion.
90 There is no evidence that the first respondent is threatening to surrender its lease in respect of any further parts of the premises currently comprising its Robina store and, therefore, I decline to make the orders sought at par 1(e) and par 2(e) of the notice of motion.
Injunctions against the first and second respondents at pars 1(c) and (d) and pars 2(c) and (d) of the notice of motion
91 The injunctions sought at par 1(c) and par 2(c) are directed at enjoining the first and second respondents respectively from informing customers of the Robina store that there is a connection or affiliation between the franchise operations and the business of the applicant and the third respondent's business.
92 In support of this item of relief, the applicant relies upon the evidence of Mr Wessels. Mr Wessels says he attended at the first respondent's Robina store in January 2005 and was advised by an employee at that store that the 'third respondent's business was connected to the first respondent in the business sense'.
93 The injunctions sought in par 1(d) and par 2(d) respectively seek to enjoin the first respondent and the second respondent respectively from engaging in conduct from the first respondent's Robina store which 'promotes the business of the third respondent' including the referral of any customers of the first respondent's Robina store to the third respondent's store and the provision of information to the third and fourth respondents about the customers of the first respondent's Robina store.
94 In support of this item of relief the applicant relies on the evidence of the telephone conversation that Mr Hoffman had with the second respondent who said that he had instructed staff to advise interested customers of the first respondent's Cash Converters Robina store that 'the finance business next door might be able to help them'.
95 At the hearing counsel for the respondents conceded that there was a serious question to be tried in respect of each of the injunctions sought under these paragraphs of the notice of motion. However, counsel argued that the balance of convenience favoured the first and second respondents in respect of both injunctions. Counsel also argued that the terms of the injunctions sought were too vague.
96 In my view, in respect of the injunctions sought at par 1(c) and par 2 (c) the balance of convenience favours the applicant. There is plainly no connection or affiliation between the applicant's operations and its franchise system, on one hand, and the third respondent's business being carried out at its Robina premises, on the other. There would be no hardship in the first respondent and second respondent being enjoined from making statements to that the effect specified by the applicant. However, there is some risk, although it is a small risk, that the applicant will suffer some harm from a consumer being misled into believing that there is an association between the business of the applicant and that of the third respondent. I would, accordingly, grant an injunction in terms substantially similar to the terms of par 1(c) and par 2(c) of the notice of motion
97 As to the injunctions sought at par 1(d) and par 2(d), there are different considerations. The gravamen of this injunction is directed to preventing members of the staff of the first respondent from referring customers of the Robina store to the third respondent's 'Cash Providers' store. An injunction in those terms has the propensity to affect ordinary communications between the staff of the first respondent and members of the public. An injunction in the terms sought could create an embarrassing and artificial situation both for the first respondent's staff and the members of the public who may be making a simple enquiry as to the whereabouts of the nearest micro money lender. In considering the balance of convenience, I take into account that the grant of an injunction in those terms has the potential to expose members of the first respondent's staff to penal consequences in respect of their ordinary dealings with customers. This factor outweighs the small risk that the applicant will suffer harm if the injunction is not granted. I find that the balance of convenience is in favour of declining to grant an injunction enjoining that conduct. However, the same considerations do not apply to the form of injunction sought seeking to preclude the first and second respondents from disclosing information about customers of the Robina store to the third and fourth respondents, and I am prepared to grant an injunction enjoining that conduct pending trial or further order. In the circumstances I decline to make an order in terms set out in par 1(d) and par 2(d) of the notice of motion, but will grant an injunction in more limited terms.
Injunctions against the first and second respondents at par 1(f) and par 2(f) of the notice of motion
98 I now turn to consider the injunction that the first respondent and the second respondent should be enjoined from 'selling or supplying the customer database developed through the cash advance business previously operated at the Personal Finance Centre booth in the Robina store to the third respondent and/or the fourth respondent.'
99 The applicant refers to the contents of the second respondent's email of 5 December 2004 in which the second respondent said that he had completed discussions with a third party to purchase 'his existing database'. It is said that the contents of this email constitutes a threat by the second respondent to transfer or cause the transfer of the customer database of the MON‑E cash advance business previously conducted by the first respondent to the third respondent.
100 Although it is not entirely clear, it appears that in its amended statement of claim, the applicant alleges that by continuing to operate the Cash Providers business the third respondent continues to convey the misleading impression that there is an association between the applicant and the third respondent's Cash Providers business; and that by transferring the database to the third respondent, the first respondent and the second respondent would be aiding and abetting the third respondent in its misleading or deceptive conduct.
101 I have found that there is a serious question to be tried as to whether the third respondent has engaged in misleading and deceptive conduct or conduct likely to mislead or deceive. In my view, it follows that there is also a serious question to be tried whether the threatened conduct, namely, the transfer of the customer database amounts to aiding and abetting the third respondent to engage in misleading or deceptive conduct, or conduct likely to mislead or deceive.
102 As to the balance of convenience the first respondent and the second respondent argue that there is no imminent threat that the database will be transferred to the third respondent. It is said that in the second respondent's email of 5 December 2004 the second respondent said that he had not yet concluded the agreement pursuant to which he said he intended to transfer the database. However, the fact is that since the writing of that email the second respondent has in fact given effect to the course of events foreshadowed in the email. He has cooperated in the establishment of the third respondent's Cash Providers business within the original premises of his Robina store. Counsel for the respondents also points to the fact that the second respondent has deposed that he has not transferred the database to the third respondent. However, in light of the terms of the email referred to above and the subsequent participation by the second respondent in the establishment of the Cash Providers business, together with the close relationship between the second respondent and the fourth respondent, I find that there is an ongoing risk that the second respondent may decide to transfer or cause the transfer of the database to the third respondent
103 In balancing the potential harm by the transfer of the database I find that the balance of convenience favours the applicant. No harm can be suffered by the first respondent and second respondent if the status quo in relation to the database is maintained until trial. However, there is risk that if the database is transferred it will be used in the business of the third respondent and thereby contribute to the risk, albeit that it is a small risk, of the applicant suffering harm through consumers in Robina being misled into believing that there is an association between the applicant and the third respondent's Cash Providers business. Accordingly, I will make the orders claimed in par 1(f) and par 2(f) of the motion.