Kazzi v Raptime Pty Ltd trading as Community First Real Estate & Anor.

Kazzi v Raptime Pty Ltd trading as Community First Real Estate & Anor. - [2006] NSWSC 1261 - NSWSC 2006 case summary — Zoe

[27]

15 Other authorities of similar weight to the group to which I have referred refer to three guidelines, the third being that the plaintiff must prove that damages are not an adequate remedy: eg see Australian Broadcasting Corporation v O'Neill (above) at [19] per Gleeson CJ and Crennan J; Castlemaine Tooheys Ltd v The State of South Australia (1986) 161 CLR 148 at 153 (Mason ACJ); The Mayo Group International Pty Ltd v Hudson Respiratory Care Inc [2005] NSWSC 445 at [25] (Young CJ in Eq); and Tampalini v Robinson [2005] WASC 182 at [3] (Jenkins J). The difference in approach can be seen in recent judgments of the High Court in Australian Broadcasting Corporation v O'Neill (above). Gummow and Hayne JJ adopted the two guidelines approach at [65]: The relevant principles in Australia [in relation to interlocutory injunctions] are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd … This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the court addresses itself to two main inquiries and continued: The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief… the second inquiry is… whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted. By using the phrase " prima facie case ", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument… With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal: How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks. Gleeson CJ and Crennan J adopted the three guidelines approach at [19]: … In all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff's entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles and the reasons of Gummow and Hayne JJ and their reiteration that the doctrine of the Court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd should be followed.

[42]

Me: So that'll be your next invoice? We'll have to sign a new agreement which sets that out. … 168 On or about 1 April 2004, I again called Mark into my office. I gave him a copy of the new Contractor's Agreement. We went through it together. We had a conversation to the following effect: Mark: I'm not going to sign it. I don't want to sign it. Me: Is there any particular reason why not? Mark: I don't want to be locked into anything for 12 months. I want to keep my options open". The new Contractor's Agreement provided in clause 4.1 that it was for an initial term of 12 months, the same as Mark's Original Contractor's Agreement dated 26 May 2003. Me: Okay if that's how you feel. You keep giving me your invoices and we'll consider everything agreed to. … 170 I didn't bother trying to explore further Mark's comment about possibly setting himself up on his own. He was pissed off. In any event, he wasn't going to get a better deal than I was giving him anyway. 27 Mr Kazzi's submission placed particular emphasis on the words attributed to Mr Smith "there's nothing stopping you". It was submitted that Raptime is now inconsistently contending that there is something stopping Mr Kazzi, namely the restraint of trade covenant in the 2003 agreement. In my view, having regard to the context of negotiations in which the discussion occurred, this is not overwhelming evidence of abandonment or waiver of the 2003 agreement or of a conventional estoppel. Notwithstanding this evidence, there remains a serious issue to be tried that the 2003 agreement continued in force 28 There is evidence that since June 2006, after the sale of the shares in Raptime to a third party, three former customers of Raptime became dissatisfied with its services and took their business to Mr Kazzi who was operating a few doors away from Raptime's office. In the case of one of those customers, this occurred after Mr Kazzi gave the undertaking to the Court to which I have referred. The evidence indicates prima facie breaches of cl 10.3(a) of the 2003 agreement by Mr Kazzi

[50]

36 Finally, it seems more just in all the circumstances to grant an injunction than to confine Raptime to a remedy in damages. If the restrictive clause is valid yet no interlocutory injunction is granted, Raptime is likely to find it difficult to prove its damages and, if proved, there is doubt as to whether it would recover them. The losses referred to in the last paragraph may be argued to be losses that Raptime would have incurred in any event because customers had decided to take their business elsewhere even if not to Mr Kazzi. There may be difficulty in quantifying the unknown component of potential future losses including losses incurred after the expiry of the 12 month restraint of trade period but claimed to be attributable to a breach prior to that time. The capacity of Mr Kazzi to meet a damages award against him for breach of the restraint of trade covenant is unclear. His statement of claim para 22 pleads that on about 19 July 2005 he secured finance from the ANZ bank to assist in the purchase of Raptime's rent roll business pursuant to his alleged oral agreement with Raptime for the purchase of that business, an agreement which Raptime denies. A notice to produce issued by Raptime to Mr Kazzi and the documents produced in response to it were tendered in evidence. The notice to produce required production of the documentation relating to the application for finance but the answer was that it was not in Mr Kazzi's possession. He produced in response to the notice to produce an agreement dated 31 August 2006 for sale of a rent roll by Actopay Pty Ltd to Liverpool Rental Specialists Pty Ltd for over $630,000, which Mr Kazzi guaranteed; and a loan agreement between First Mortgage Company Home Loans Pty Ltd and Aziz-Eid Kazzi for a finance facility in excess of $522,000, apparently brought into existence in September 2006. There is substance in Raptime's submission that one would have expected more financial information to have been produced in response to the notice to produce than was in fact produced.

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