Create Business Australia Pty Ltd v AURFS Pty Ltd

The issues for determination

A preliminary question at the hearing on 26 May 2017 was whether the onus was on the defendants to persuade the court that they should be released from their undertaking given on 28 April 2017 or whether the onus was on Create Business to persuade the court that interlocutory injunctions in the terms sought (including in terms of the undertaking) should be given.
Create Business, relying on the decision of Stevenson J in Uber BV v Howarth (Supreme Court (NSW), 21 December 2015, unreported), submitted that the principles relevant to releasing a party from an undertaking given at an interlocutory stage and pending a final determination of proceedings were the same as those relevant to the variation of an interlocutory injunction, namely: What must generally be shown is that there has been a material change in circumstance since the undertaking was given, sufficient to justify its discharge or variation (at [5]).
Create Business submits that in this case the undertaking was given "until further order of the Court", as was the undertaking given in Uber BV. Consequently, the onus was on the defendants to establish that circumstances had changed sufficiently to justify the discharge or variation of the undertaking.
In general, I accept the submission made by Create Business concerning the circumstances in which the court will release a party from an interlocutory undertaking given until further order of the court. However, in the present case, it is apparent from the consent orders that were made at the time the undertaking was given, that the undertaking, despite the terms in which it was phrased, was only intended to operate until the defendants had had an opportunity to put on evidence and there could be a contested hearing on the application for an interlocutory injunction. The undertaking was given on the first return date of the summons, before the defendants had had a reasonable opportunity to put on evidence resisting the interlocutory injunction sought by Create Business. There was no point in the court making the consent orders it did on 28 April 2017 except in anticipation that there would be a contested hearing on whether the undertaking should continue past 26 May 2017, when the matter next came before the court. It could not have been anticipated that the question before the court at that time would be whether circumstances had sufficiently changed to justify the court releasing the defendants from the undertaking they had given. Plainly, what was intended was that the defendants' evidence would address the question whether the injunction should be granted. In those circumstances, the undertaking must be understood as operating only until the court delivered a decision on that question.

Should the injunctions be granted?

In determining whether an interlocutory injunction should be granted, it is necessary for the court to consider two main questions. The first is whether the plaintiff has made out a prima facie case or established that there is a serious question to be tried in the sense that there is a sufficient likelihood of success to justify the granting of an interlocutory injunction. The second is, if there is, whether the balance of convenience favours granting the injunction: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-3 per Kitto, Taylor, Menzies and Owen JJ; Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 at [65] per Gummow and Hayne JJ. The court will also consider whether there are any discretionary reasons for refusing an injunction, such as delay: Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 76 ALR 633.
In the present case, I have concluded that, with two qualifications, Create Business is not entitled to the interlocutory injunctions that it seeks and that the defendants should be released from the undertaking that they gave. The first qualification is that the defendants should be restrained from providing its Professional Package to any person who did not subscribe to that package before 26 April 2017. The second qualification is that Mrs Mannix should be restrained from providing training or instruction on money recovery methods, processes or techniques to members of the Australian Association for Virtual Industry Professionals Limited. I have reached those conclusions for a number of reasons.
First, although I accept that Create Business has established that there is a serious question to be tried, the defendants have raised substantial defences that could well succeed. In particular, there is a real question whether, in the context in which it operates, cl 2.4(d) is sufficiently wide to prevent the defendants from providing advice to individual customers on how to recover particular sums of money to which they might be entitled. And if cl 2.4(d) is sufficiently wide to have that effect, there is a real question whether an estoppel arises from the email exchange between Mrs Mannix and Ms Borg on 22 and 23 August 2017.
Different considerations apply to the Professional Package. That package is made available to assist third parties to conduct business as a recovery agent of unclaimed moneys and through the fact sheets it provides information to them on how to operate that business. That package arguably falls more squarely within the prohibition in cl 2.4(d) and is less obviously the subject of the estoppel on which the defendants rely. It is also a prohibition that is more likely to be saved by s 4 of the Restraints of Trade Act 1976 (NSW), assuming that cl 2.4 is an unreasonable restraint of trade.
Different considerations also apply to Mrs Mannix's membership of the board of AAVIP. Mrs Mannix's precise role with AAVIP is unclear from the evidence. There may be a question whether mere membership of a trade or professional organisation that provides training to members on techniques for recovering unclaimed moneys breaches cl 2.4(d) of the Deed. There is also a factual question concerning the extent to which AAVIP provides training to members which cannot be resolved on the current application. However, to the extent that Mrs Mannix is involved in any training that is given, there appears to be a strong case that that involvement breaches the clause.
Second, in my opinion, the balance of convenience favours refusing the injunctions in the form in which they are sought. The evidence is that the effect of the undertaking given by the defendants is that they have been prevented from carrying on their business. It is true that they may be able to carry on their business, or a modified version of their business, without running the risk of breaching cl 2.4(d) of the Deed if they made changes to the website. There is no evidence before the court on what that would involve, how much time it would take and how much it would cost. To a large extent that information is within the knowledge of the defendants, or within their power to ascertain. Consequently, it was a matter on which they could have been expected to lead evidence and they did not do so. The only evidence they sought to lead on the issue was inadmissible. Despite that, it may be inferred from the fact that they have not done so, that modification of the website is not a trivial matter. At a minimum, for example, it would involve making modifications to each fact sheet to which a link is provided. Perhaps more significantly, assuming Create Business were to succeed, it could do so to varying degrees depending on the view the court ultimately takes on the correct construction of cl 2.4(d) of the Deed, the defendants' estoppel defence and the operation of s 4 of the Restraints of Trade Act 1976. Consequently, any modifications that the defendants made to the website now may prove to be worthless, or to exceed what is necessary, depending on the outcome of the case.
Again, the position is different in the case of the Professional Package. There are reasons for not extending the injunction to cover existing customers. There are only two of them and their businesses may be affected if they are prevented from obtaining access to the database. However, at present the Professional Package forms a small part of AURFS's business that it is difficult to see that the balance of convenience favours permitting the defendants to continue to offer that package to new customers pending the determination of the proceedings.
On the other hand, it is not clear that Create Business will suffer any damage in the near term if the injunction is not granted in relation to the Unclaimed Money Search Package. Of course, if Create Business is successful in establishing that there has been a breach of cl 2.4(d) and the defendants fail to establish any of their defences then, in the normal course of events, Create Business is likely to obtain a final injunction; and as Create Business submitted the difficulty of assessing damages is a reason for granting an injunction, not a reason for refusing it. But here, the interest of Create Business is in protecting its business of training persons to become recovery agents of unclaimed moneys; and the point is that it is not clear how that business will be harmed, at least in the short term, if the defendants provide instructions to individuals on how to collect particular sums of money. It is possible that AURFS's website could become so successful that the demand for the services of recovery agents diminishes over time. It is also possible that, rather than completing Create Business's course and obtaining a licence to use its materials, a person seeking to set up a business of recovering unclaimed moneys on behalf of customers might seek to use material available from the AURFS's website to train themselves and create their own materials. But neither of those possibilities appears to create a significant threat to Create Business's business in the short term.
Again, different considerations apply to an injunction to restrain Mrs Mannix from providing training to members of AAVIP. To the extent that training is available through that organisation, that may affect Create Business's ability to attract customers. An injunction restraining Mrs Mannix from providing training to members of AAVIP will not affect AURFS's business.
Third, in my opinion, Create Business has been guilty of delay. The evidence is that Ms Borg was given a detailed demonstration of AURFS's website on 1 December 2016. Create Business waited almost five months before doing anything. That delay is substantial. Create Business submitted that the defendants have not proved that what Ms Borg saw was the same as what is now available on AURFS's website. However, according to Mrs Mannix, she showed Ms Borg the fact sheets. It is to be inferred from her evidence that those fact sheets have not changed substantially since then. If they had, it was open to Ms Borg to give evidence that what she saw on 1 December 2016 was substantially different from what is available on the website now. She did not do so.
Delay is, of course, also relevant to whether an injunction should be granted to restrain sales of the Professional Package, since it appears that that package was also demonstrated to Ms Borg on 1 December 2016. However, as I have said, that package forms such a small part of AURFS's business. If AURFS were permitted to continue to sell that package, but the court concluded at a final hearing that Create Business was entitled to an injunction in the terms that it sought, that may have an impact on the businesses of persons who subscribed to the package between now and the time the injunction is granted. Consequently, there are additional discretionary reasons favouring the injunction notwithstanding the delay.
Fourth, the court is likely to be in a position to give the case an urgent final hearing. That is relevant to the likelihood that Create Business will suffer any significant harm in the meantime.

At a glance

Court

Decision date

Before

Source

Judgment (6 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (4)

Cited By (1)