N.A. Retail Solutions Pty Ltd v St George Bank Limited

N.A. Retail Solutions Pty Ltd v St George Bank Limited - [2010] FCA 290 - FCA 2010 case summary — Zoe

[6]

REASONS FOR JUDGMENT 1 On 17 March 2010 the applicants filed an application seeking interlocutory and final relief against St. George Bank Limited ('St. George') in respect of alleged breaches of an implied term to act in good faith in commercial transactions, and of alleged breaches of ss 45, 45D and 51AC of the Trade Practices Act 1974 (Cth) ('the Trade Practices Act'). Such relief was sought in respect of the termination by St. George of an EFTPOS Merchant Facility as detailed hereunder. 2 The application came before Flick J on 18 March 2010. On that occasion there was no appearance by St. George. Instead, an appearance was made by Westpac Banking Corporation ('Westpac') and the Court was informed by counsel for Westpac that St. George 'no longer exists, it merged with Westpac'. Accordingly, leave was granted to amend the application to join Westpac as the second respondent. 3 The evidence in support of the application consisted of two affidavits of Adil Azir Magar ('Mr Magar'), the principal of the first applicant ('N.A. Retail'), sworn 17 March 2010 and 18 March 2010 respectively. Westpac relied upon affidavits of Sasha Alexander Slevac, National Manager Card and Merchant Risk Operations for St. George Bank - a division of Westpac Banking Corporation, sworn on 18 March 2010, and Ngaire Elizabeth Ballment, also sworn on 18 March 2010. 4 Flick J heard the contested application for interlocutory relief. Having heard evidence and submissions, his Honour ordered that the claim for interlocutory relief be dismissed and that the costs of such application be the respondent's costs in the proceedings: see N.A. Retail Solutions Pty Limited v St George Bank Limited [2010] FCA 259. 5 In dismissing the claim for interlocutory relief his Honour also made directions for the future conduct of the proceedings. Those directions were as follows: 3. Any further application for interlocutory relief, together with all affidavit evidence on which reliance is to be placed, are to be filed and served by 4:00 pm on 19 March 2010.

[26]

38 The applicants submit that such obligations have been breached by St. George. 39 The claims alleging breaches of ss 12CA, 12CB and 12CC of theASIC Act have been incorporated in the event that it be determined that the claims made against St. George are made in relation to the provision of financial services in respect of which relief under the Trade Practices Act may not be available. 40 Westpac submits that the notices of termination, even if invalid, do not necessarily constitute breaches of any contractual arrangement between St. George and the applicants nor do they necessarily involve any statutory breach as alleged. Westpac also submits that the doctrine of good faith cannot operate to prevent a termination of the Merchant Agreements if express rights permit St. George to do so. In this respect it is submitted that St. George was entitled to assess its forward analysis to assess the risk of the first applicant and to decide that the risk of future dealings with the applicants was unacceptable. 41 In respect of the operation of any implied terms into the Merchant Agreement, Flick J at [18]-[22], having referred to the relevant authorities, concluded that a breach of implied term of good faith might prima facie be available to the applicants. The Court respectfully adopts his Honour's reasons. The Court also refers to the decision of Davies J in Sundararajah v Teachers Federation Health Ltd [2009] NSWSC 1443 in which his Honour found that serious questions to be tried arose because within the unqualified power to terminate the agreement in the proceedings then before him there existed the possibility for implication of contractual limitations or equitable constraints. 42 Flick J found that the alleged breaches of the terms of such agreement, including any conduct relating to 'blacklisting' the applicants for EFTPOS facilities with other institutions, and of any breach of the Trade Practices Act or of the ASIC Act, gave rise to serious questions to be tried.

[47]

65 In exercising the discretion of the Court, a number of factors need to be taken into account. 66 A decisive element in the Court's decision whether to hear the amended application lies in its status as an urgent application. The application was filed on 17 March 2010 and was returnable on 19 March 2010. The first application was heard on that day. The Court takes this factor into account in assessing the failure of the applicants to adequately identify the correct Respondent. The Court also accepts the submission of the applicants that the short period between the filing of the application and the first hearing resulted in inadequacies in the preparation of all relevant evidence relating to the business relationship between the applicants themselves. These two factors were material to Flick J's decision to dismiss the initial application. 67 The Court does not find any vexatious element in the further application, nor considers it an abuse of process of the type referred to by Mason P in Manning at [6]-[7]. The Court also takes into consideration the fact that the orders made on 18 March 2010 specifically contemplate a further application. In such an instance, concerns of certainty and finality as referred to by Hayne JA in D.A. Christie at 602-603 do not arise. 68 In applying the fourth limb of Goldberg J's test, the Court respectfully adopts the reasoning of Heydon JA in Manning and Palmer AJA in Pierson as that approach ensures that the Court exercises its necessary discretion so as to avoid any injustice. There may be instances such as the present which warrants the Court considering a second application without the constraints inherent in the 'strict approach'. 69 Taking into account the above considerations, the Court, under the fourth limb of the Goldberg J test and as a matter of discretion, finds that the justice of the matter requires that the Court should entertain the application now before it. As such, the amended application will be heard and determined on its merits.

[52]

78 Based upon the evidence of Mr Magar, the Court is satisfied that without the provision of Eftpos facilities, there is the risk that the businesses of the applicants may not be able to continue to trade. In such an event, the loss to the applicant may be unquantifiable, not merely difficult to calculate. For the above reasons the Court is satisfied that damages would not be an adequate remedy. 79 As to the third consideration of Mason ACJ in Castlemaine Tooheys, namely the balance of convenience, Westpac submits that the balance of convenience does not operate in favour of the applicants. However, the Court notes that the respondent has not claimed that it would be prejudiced if orders were made for interlocutory relief as sought, nor that any damage would flow to it if injunctive relief were granted. Whilst there was some suggestion that Westpac might be 'at risk', such evidence was not pressed as being a reason for refusing relief and in any event, the evidence was too vague for the Court to conclude a risk existed sufficient for the Court to decline relief. In these circumstances the Court is satisfied that the balance of convenience lies in favour of granting the relief sought. 80 Flick J has already dealt extensively in his reasons for decision with the principles concerning the grant of interlocutory mandatory relief: see [13]-[17]. The Court respectfully adopts his Honour's conclusions, namely that the test in Businessworld Computers as stated by Gummow J at 502 should be applied. That is, that the Court will grant an injunction because the withholding of such relief would carry a greater risk of injustice than granting it, even though the applicants may ultimately be found to be unsuccessful. 81 Accordingly, the Court makes the orders as sought by the applicants. In doing so it will order that the name of St. George be deleted as a respondent to these proceedings. I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cowdroy.

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