Plaintiff v Defendant

Supreme Court of Victoria|2005-02-22|Before: KAYE, J.

INJUNCTION - Interlocutory injunction - Where relief sought will be final - Contract - Implied term to act in good faith - Trade Practices Act ss.51AA, 51AC, 52 - Balance of convenience.

1 The plaintiff, Hoppers Crossing Club Limited, conducts a club ("the Club") at 180-200 Pannam Drive, Hoppers Crossing. The Club is apparently the largest provider of public sporting, recreational, meeting and function facilities for Hoppers Crossing. The main users of the facilities are the youth, young mothers and the elderly. A significant proportion of the income generated by the Club is derived from 70 Electronic Gaming Machines ("EGMs") which the plaintiff is presently licensed to operate and which are located at the Club. The Club has approximately 3,000 members, of whom approximately 1,800 patronise the Club in order to use its gaming facilities.

2 The defendant, Tattersalls Gaming Pty Ltd ("Tattersalls"), is one of two organisations licensed in Victoria to install and operate EGMs in hotels and clubs. Tabcorp Limited ("Tabcorp") is the other licensed organisation. The defendant now has 260 venues in Victoria which operate its electronic gaming machines.

3 Since approximately 1993 the defendant has installed electronic gaming machines at the plaintiff's premises. On 30 September 1998 the plaintiff and the defendant entered into a Venue Operators Agreement, pursuant to which the defendant agreed to install EGMs at the plaintiff's venue on the terms set out in the agreement. The agreement commenced on 1 July 1998 and is due to expire on 17 May 2005. The schedule to the agreement provides for the defendant to install 56 EGMs at the venue. In addition, the agreement provides for the defendant to install up to 14 EGMs which are described as "provisional" EGMs at the venue. At present 14 "provisional" EGMs are installed at the Club. The plaintiff holds a licence from the Victorian Commission for Gambling Regulation ("the Commission") entitling it to maintain the full compliment of 70 machines at its premises.

4 In 2004 the plaintiff and the defendant entered into negotiations concerning the possible extension of the term of the agreement beyond its expiration date of 17 May 2005. The plaintiff decided not to renew the contract with the defendant after its expiration but, instead, to enter into a contract for the supply of EGMs, wagering and sports betting products and games of skill with Tabcorp. Accordingly, on 10 November 2004, the plaintiff sent a letter to the defendant notifying the defendant that the plaintiff did not intend to renew the agreement or enter into a new venue operator agreement after 17 May 2005. In response, the defendant wrote a letter to the plaintiff notifying the defendant's intention to remove the 14 provisional gaming machines from the plaintiff's premises upon the expiration of 60 days. On 16 November 2004 the defendant sent a further letter to the plaintiff advising the plaintiff that it would be required to amend the conditions of its Venue Operators Licence, and to obtain approval to modify the gaming machine area of the plaintiff's premises, so that the plaintiff's club in the future was only permitted to operate 56 gaming machines at the venue.

5 The plaintiff issued these proceedings on 15 December 2004, claiming, principally, a permanent and an interlocutory injunction restraining the defendant from removing the 14 provisional gaming machines from the venue of the plaintiff until the expiration of the Venue Operators Agreement on 17 May 2005. The plaintiff's summons seeking interlocutory relief came before Hansen J on 17 December 2004. On that day the defendant gave an undertaking (inter alia) that it would not until 14 February 2005 or further order remove the 14 provisional gaming machines from the plaintiff's venue. By agreement of both parties that undertaking was extended to this date.

6 The plaintiff's claim for the injunction and other relief is based on three principal grounds, namely:

(a) that the removal by the defendant by the 14 provisional gaming machines constitutes a breach by the defendant of an implied term in the Venue Operators Agreement that the plaintiff and the defendant would act in good faith toward each other in exercising their respective rights and obligations under the agreement;

(b) that the defendant, by threatening to remove the 14 provisional gaming machines, is engaging or threatening to engage in conduct that is unconscionable within the meaning of s.51AC, alternatively 51AA, of the Trade Practices Act 1974 (Cth);

(c) that in threatening to remove the provisional gaming machines the defendant is departing from representations made by it to the plaintiff in July 2004, and accordingly such conduct is a contravention of s.52 of the Trade Practices Act 1974 (Cth).

7 Clause 4.1.2, together with Item 4 of Schedule A of the agreement as varied, provides that the defendant "shall install at the venue" 56 EGMs. Clause 4.2 provides for the installation of the provisional EGMs. It states:

"4.2 In addition to the number of Gaming Machines to be installed at the Venue by Tattersalls as set out in Item 4 of Schedule A of this Agreement, Tattersalls may install the number of Provisional Gaming Machines specified in Item 5 of Schedule A of this Agreement subject to the following terms and conditions ... -

4.2.1 Tattersalls will in its absolute discretion decide on the type or types of Provisional Gaming Machines that are to be installed at the Venue;

4.2.2 Sub-clause 4.7 applies to the Provisional Gaming Machines for the purposes only of calculating Gaming Machine Performance and Market Segment Performance, but in no other respect. Tattersalls may from time to time, in its absolute discretion remove some or all of the Provisional Gaming Machines (without being required to comply with sub-clause 4.7) upon the expiration of sixty (60) days written notice of its intention to do so given to the Venue Operator by Tattersalls. This sub-clause 4.2 shall continue to apply to the balance of the Provisional Gaming Machines that remain installed at the Venue, whether or not some Provisional Gaming Machines have been removed;

4.2.3 Tattersalls give no promise or warranty as to the length of time the Provisional Gaming Machines will remain installed at the Venue;

4.2.4 The Venue Operator must obtain the approval of the Victorian Casino and Gaming Authority as required under ss.27 and 29 of the Act immediately upon the Venue Operator receiving notice from Tattersalls to remove some or all of the Provisional Gaming Machines. The installation cost of the Provisional Gaming Machines will be borne equally between Tattersalls and the Venue Operator and costs in removing any Provisional Gaming Machines will be borne by Tattersalls;

4.2.5 The Venue Operator must not make any objection or claim for compensation for expenses or fees incurred and will not be entitled to claim for any loss or damage suffered by the Venue Operator, as a result of the removal of some or all of the Provisional Gaming Machines from the Venue by Tattersalls;

4.2.6 For the avoidance of doubt, the parties agree that (apart from sub-clause 4.7 not applying to the removal of Provisional Gaming Machines) all provisions of this agreement apply to any Provisional Gaming Machine installed at the Venue from time to time."

8 The matter came before me on an application for an interlocutory injunction and was therefore heard on the affidavits. It is necessary at this stage to summarise the key facts as they relate to the three causes of action sought to be advanced by the plaintiff.

9 In April 2004 the plaintiff and the defendant entered into negotiations concerning the possible extension of the Venue Operators Agreement after its expiry in May 2005. The defendant made an offer to the plaintiff that the present Operators Agreement be terminated, and be replaced with a new agreement which was to commence in April 2004 and expire in April 2012. The defendant offered the plaintiff 60 core EGMs and an additional ten Provisional EGMs. The plaintiff did not accept that offer but continued to participate in negotiations with the defendant.

10 A meeting occurred between representatives of the defendant and members of the board of the plaintiff on 21 July 2004. The affidavit sworn by Gavin Best, a director of the plaintiff, deposed that at that meeting the plaintiff asked the defendant's representatives whether the defendant could commit to supply 70 EMGs, to which the defendant's representatives advised that the law would not permit Tattersalls to "lock in" 100% of the EGMs which it was able to supply the plaintiff as "core" machines. Mr Best further deposed that the defendant's representatives stated that the defendant needed flexibility to relocate its machines if performance within a particular venue was poor, but that removal of machines would only occur if the plaintiff failed to perform and would not take place just because the defendant had another opportunity elsewhere. In an affidavit sworn on behalf of the defendant, Mr Makryllos, the Manager, Gaming Operations of the defendant, took issue with the version of the meeting proffered by Mr Best. In particular, Mr Makryllos, in his affidavit, states that no representations were made to the plaintiff concerning the non-removal of Provisional Gaming Machines under the Venue Operators Agreement. The plaintiff relies on Mr Best's version of the meeting in order to support its claim for relief under s.52 of the Trade Practices Act.

11 As I stated, ultimately the plaintiff decided not to continue in a contractual relationship with the defendant after the expiration of the Venue Operators Agreement in May 2005, and gave notice to the defendant of that intention by letter dated 10 November 2004. According to Mr Best's affidavit, at approximately midday on 11 November 2004 he received a telephone call from Mr Makryllos, in which Mr Makryllos advised that, unless the plaintiff would negotiate with the defendant, the defendant would remove the discretionary EGMs located at the Club. Mr Best responded by saying there would be no negotiation veiled in threat. Mr Makryllos in his affidavit states that when he spoke to Mr Best, he explained that the defendant had the right to remove the Provisional Gaming Machines in order to ensure that he was aware of the operation of the contract. Mr Makryllos states that he did so simply to give an explanation of the position under the Venue Operators Agreement.

12 Later on the same day, Mr Best and Mr Ron Eggleton, the President of the plaintiff, met with Mr Makryllos and Mr Scott Clareborough, the General Manager, Commercial Operations Division, of the defendant, at a hotel in the City of Melbourne. Mr Eggleton and Mr Best explained the reasons why they considered that Tabcorp was better placed to address the plaintiff's future needs than Tattersalls. Mr Clareborough responded by asking if there was any prospect of negotiation. The plaintiff's representative said that the decision was final. According to Mr Best's affidavit Mr Clareborough stated that "We should not blame him if Tatts exercised its rights." Mr Makryllos' affidavit does not take substantial issue with that version, and says that Mr Clareborough stated that Tattersalls may choose to exercise its rights under the agreement.

13 On the next day, 12 November 2004, Mr Clareborough sent a letter to the President and Members of the Board of the plaintiff, notifying the plaintiff that it intended to remove the 14 Provisional Gaming Machines from the Club upon the expiration of 60 days. The letter concluded:

"If you do not wish us to proceed with this action, we request your response to this letter by close of business on Monday 15 November 2004."

14 The plaintiff responded to the defendant's letter with a letter from Mr Best to Mr Clareborough dated 15 November 2004 protesting that the defendant's letter was not within the spirit of the agreement between the parties, and that the request to provide a direction by the close of business on 15 November 2004 was unreasonable. The defendant then sent a letter to the plaintiff dated 16 November 2004 responding to those allegations. The second-last paragraph of the letter stated:

"The Hoppers Crossing Club will be required to amend the conditions of its Venue Operators Licence under s.3.4.17 of the Gambling Regulation Act 2003 and also will be required to obtain the approval of the Commission to modify the gaming machine area of the venue under s.3.3.16 of the Act."

15 The plaintiff's principal cause of action is based on the proposition that the defendant breached an implied term of the agreement that it would act in good faith in its dealings with the plaintiff. The plaintiff relies on the conversation between Mr Best and Mr Makryllos on 11 November 2004, on the comment made by Mr Clareborough at the meeting on the same date concerning the potential exercise by the defendant of its rights under the agreement, and on the contents of the defendant's letters dated 12 November 2004 and 16 November 2004, which I have quoted above. Mr Houghton QC, who appeared with Miss S. Hinchey on behalf of the plaintiff, contended that, at trial, a court would be entitled to draw an inference from those facts that, in threatening to remove the Provisional Gaming Machines from the premises of the plaintiff, the defendant was not seeking to advance any legitimate commercial interest of its own, but rather was seeking to intimidate the plaintiff to continue to negotiate with the defendant concerning the renewal of the Venue Operators Agreement beyond its expiration date in May 2005. The plaintiff contends that the conduct of the defendant was capricious and unreasonable, and directed to a motive which is not consistent with the implied obligation of the defendant to exercise good faith in its dealings with the plaintiff. Alternatively it is put that, based on the same inferences, the conduct of the defendant is unconscionable in contravention of s.51AA and s.51AC of the Trade Practices Act.

16 In this context, the defendant denies that it was actuated by the motive attributed to it by the plaintiff in seeking to remove the Provisional Gaming Machines from the plaintiff's premises. In his affidavit Mr Makryllos states that terms of the agreement, enabling Tattersalls to remove the Provisional Gaming Machines, are intended to ensure that Tattersalls maintains control over the numbers of gaming machines and the venues at which they are located. That flexibility is important to Tattersalls principally because the gaming industry in Victoria is highly regulated so that the number of gaming machines which are able to be installed and operated in licensed venues in Victoria is capped. Thus the ability of Tattersalls to move gaming machines between venues and to have them available for new or developing venues is of great commercial importance to Tattersalls. Mr Makryllos states that the venue is located in the Wyndham local government area. Although the Minister for Gaming has not set a limit on the number of permissible gaming machines in the Wyndham area, it is his belief that any future applications for licenses would be unlikely to be successful if they had the effect of increasing the number of gaming machines in the Wyndham area. In support of that belief Mr Makryllos points to the stated policy of the Wyndham City Council, set out in documents exhibited to Mr Makryllos' affidavit. Those documents evidence the views of the Wyndham City Council that there is already an excessive number of EGMs in the area, and that the council would not support any application for a new venue or for an increase in EGM numbers unless it could be clearly demonstrated that the increase would be of net economic and social benefit to the community.

17 Mr Makryllos then deposes that if Tattersalls was to set up a venue or increase the number of machines located at a venue in the Wyndham area it would need to decrease the number of machines at another venue. As a matter of practice, a decrease in the number of machines at a venue must be carried out before an application is made to use or increase the number of machines at another venue. In other words if Tattersalls wished to move the machines to another venue, it must first remove them from an existing venue. Mr Makryllos states that if Tattersalls is precluded from removing the 14 Provisional Gaming Machines in sufficient time before the expiration of the Venue Operators Agreement on 17 May 2005 in order to enable it to relocate them, Tattersalls will thereby be exposed to the real risk that they will lose the ability to have those machines installed and operated in the Wyndham area. Instead, on the expiry of the Venue Operators Agreement, the plaintiff would seek approval to operate 70 gaming machines at the venue after 17 May 2005 to be supplied to it by Tabcorp. Thus Mr Makryllos deposes that the decision to remove the gaming machines from the premises of the plaintiff was made in order to preserve Tattersalls' position in the Wyndham area against its sole competitor, Tabcorp.

18 Ordinarily, in order to obtain an interlocutory injunction, the plaintiff must show

(b) that the balance of convenience between the parties favours the grant of the interlocutory injunction.[1]

19 The satisfaction of the first requirement, namely, that there is a serious issue to be tried, does vary from case to case. In some cases, where the apprehended harm may be considerable if the injunction is not granted, the court may be readily satisfied, even on a weak case, that there is a serious issued to be tried. On the other hand, in other cases, the court may be slower to accept that there is a serious issue to be tried given the nature of the application which is made on behalf of the plaintiff. Thus in Magna Alloys and Research Pty Ltd v Coffey[2] the Full Court of the Supreme Court of Victoria adopted as a correct and useful statement of the law the following passage from the judgment of Lush J in Slater Walker Superannuation Pty Ltd v Great Boulder Gold Mines Limited[3]:

"The weight to be given to the various considerations shown by the authorities to be relevant will vary from case to case. ... There will be situations in which the plaintiff cannot be expected to be granted an injunction unless he can show that he can prove positively the existence of his rights and the infringement of them. There will be other situations in which though the plaintiff's proof of his rights or the infringement of them is not strong, an injunction may be granted because to withhold it would do the plaintiff irreparable harm, while to grant it would not greatly injure the defendant. The possible variety of situations is unlimited."

20 In this case, as Mr Kelly, who appeared on behalf of the defendant, correctly pointed out, if an interlocutory injunction were granted to the plaintiff, it would be tantamount to the plaintiff being granted final relief. Such an injunction would entitle the plaintiff to retain at its premises the 14 provisional gaming machines until the completion of the agreement on 17 May 2005. Where the grant of interlocutory relief is, to all intents and purposes, tantamount to the grant of final relief, then the Court must proceed with caution; see for example Australian Exhibitions and Conferences Pty Ltd v Australian Exhibition Services Pty Ltd[4]; Hartleys Limited v Martin[5]; Brilliant Lighting (Aust) Pty Ltd v Baillieu[6]; Drake Personnel Limited v Beddison.[7] The hearing before me proceeded on affidavits, and without the parties having the benefit of cross-examination. There are disputed facts. Further, the plaintiff invites me to draw inferences which are contrary to the sworn evidence of the defendant. If I were merely to apply the usual formula of ascertaining whether there is a serious issue to be tried, such an approach would unfairly favour the plaintiff, in circumstances where, if an interlocutory injunction were granted, it would thereby achieve final relief. Thus it is appropriate that I approach this application on the basis that the plaintiff need either to persuade me that it has a strong case on which it would be able to maintain on a trial of the action, or alternatively that the balance of convenience is strongly weighted in favour of the grant of an injunction.[8]

21 I therefore turn to consider the plaintiff's contention that it has established that there is a serious issue to be tried in respect of the causes of action on which it relies.

22 The principal claim of the plaintiff is based on the proposition that there is to be implied into the agreement between the plaintiff and the defendant a term that they each act in good faith in exercising the powers conferred on them by the agreement. In support of that proposition I was referred to a number of cases including Renard Constructions (ME) Pty Ltd v Minister for Public Works[9]; Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd and anor[10]; and Far Horizons Pty Ltd v McDonalds Australia Limited[11].

23 The implication of a term that parties act with good faith to each other in a contractual relationship is of relatively recent origin. The High Court has not, as yet, had occasion to consider whether such a term ought to be implied into contracts, and if so, into which contracts such a term might be implied, and the content and reach of any such implied term. In Royal Botanic Gardens and Domain Trust v South Sydney City Council[12] the High Court expressly[13] left open for future determination the issue concerning the existence and scope of any such implied term. On the other hand in Far Horizons Pty Ltd v McDonalds Australia Limited[14] Byrne J, in the context of a franchise agreement, considered that he was not at liberty to depart from what he described as "the considerable body of authority in this country" which has followed the decision of the New South Wales Court of Appeal in Renard Constructions[15] supporting the implication of such a term.

24 This is not the occasion upon which to determine whether such a term is implied either generally, or in the agreement in question. However, as Mr Kelly pointed out, while it may be accepted that there is a serious question whether such a term might be implied particularly in respect of the contractual rights in clause 4.2, the lack of binding authority reflects upon the strength or otherwise of any case to be advanced on behalf of the plaintiff based on the existence of such an implied term. Further, it is trite law that a term will not be implied which is inconsistent with the express terms of an agreement; see Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Limited[16]; BP Refinery (Westernport) Pty Ltd v Shire of Hastings[17]. Thus, in Central Exchange Limited v Anaconda Nickel Limited[18] Steytler J observed that the principles of good faith "do not block use of terms that actually appear in the contract." Accordingly, any such implied term must be consistent with "the absolute discretion", expressly reposed by the agreement in Tattersalls to remove the provisional EGMs upon the expiration of sixty days' notice.

25 Further, it is clear that, if and insofar as any term contended for by the plaintiff is implied in the contract, it would not operate so as to preclude the right of a party to act in pursuit of its own legitimate commercial interests. Thus in Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd and anor[19] Finkelstein J stated, in the context of a clause providing for the termination of an agreement appointing the respondent as an authorised dealer of Subaru motor vehicles:[20]

"In my view, a term of a contract that requires a party to act in good faith and fairly, imposes an obligation upon that party not to act capriciously. It would not operate so as to restrict actions designed to promote the legitimate interests of that party. That is to say, provided the party exercising the power acts reasonably in all the circumstances, the duty to act fairly and in good faith will ordinarily be satisfied."

26 On behalf of the plaintiff it was submitted that there is a serious issue to be tried that the defendant has, in threatening to withdraw the 14 provisional gaming machines from the plaintiff's premises, breached the implied term that it act in good faith. It was submitted that the defendant has not sought to withdraw the machines for its own legitimate commercial purposes. Rather, it was submitted that the evidence establishes that the defendant has threatened to withdraw the 14 provisional gaming machines in order to coerce the plaintiff to continue to negotiate with the defendant for either the extension of the current Venue Operators Agreement beyond its expiration date on 17 May 2005, or alternatively to enter into a new Venue Operators Agreement with the defendant. The plaintiff contends that such a purpose may be inferred from the conduct of the defendant in November 2004. In particular the plaintiff relies on:

(a) The statement made by Mr Makryllos to Mr Best in the telephone conversation on 11 November 2004, that unless the plaintiff would negotiate with the defendant, the defendant would remove the discretionary EGMs located at the club.

(b) The remark made by Mr Clareborough later on 11 November 2004 to the representatives of the plaintiff to the effect that the plaintiff should not blame him if Tattersalls exercised its rights.

(c) The letter from Mr Clareborough to the plaintiff dated 12 November 2004 (which I have summarised at paragraph 13 above).

(d) The letter by the defendant to the plaintiff dated 15 November 2004 (which I have summarised at paragraph 14 above).

27 The plaintiff does not rely on any direct proof, by way of admission or the like, that the defendant was actuated by the motive which the plaintiff relies on in support of its contention that the defendant acted in breach of its contractual obligation to act in good faith in exercising its powers under the agreement, including the power to remove provisional EGMs from the Club. Rather the plaintiff seeks to infer such a motive from the evidence which I have referred to above. In order to succeed at trial the plaintiff will need to show, on the balance of probabilities, that the inference for which it contends is the most likely inference which may be drawn from that evidence; Holloway v McFeeters[21].

28 In this context the plaintiff of course seeks to establish that there is a serious issue to be tried that the defendant did not act in good faith, in other words, that it acted capriciously and unreasonably in the circumstances. While such a breach, expressed in those terms, does not reflect particularly adversely on the defendant, nevertheless the inference which the plaintiff seeks to draw, in order to establish such a breach, is one which imputes, at the very least, improper behaviour to the defendant. In those circumstances, in order to persuade a court on the balance of probabilities to accept such an inference at trial, the plaintiff would need to persuade a court to a level of satisfaction consonant with the gravity of the allegation which it is making against the defendant; see Briginshaw v Briginshaw[22].

29 In the present case, the defendant has, through Mr Makryllos, deposed that it was not actuated by the motive attributed to it by the plaintiff, but, rather, that its action in threatening to remove the provisional gaming machines from the plaintiff's premises was intended to protect the defendant's position in relation to the number of machines which it might be licensed to supply to venue operators in the Wyndham area. In response to that affidavit Mr Best has sworn a further affidavit stating that, to his knowledge, Tattersalls has not lodged any application to establish a new licence site within the City of Wyndham. He notes that Mr Makryllos does not swear that Tattersalls either has a new site proposed, or an existing site for which an increase in gaming machines will be approved by all appropriate authorities within the City of Wyndham. Nevertheless it was common ground before me that Tattersalls does install EGMs at venues other than the plaintiff's which are located within the City of Wyndham.

30 The question whether the defendant, in threatening to remove the EGMs, was actuated by the motive attributed to it by the plaintiff is essentially a question of fact. I consider that the four items of evidence relied on by the plaintiff do establish that the plaintiff does have an arguable case as to the existence of that purpose, albeit that such a case would, at this stage, and based on that evidence alone, be somewhat weak. However, given that a grant of relief in this case would be tantamount to the grant of a permanent injunction, I cannot disregard the fact that Mr Makryllos has sworn an affidavit deposing to what he has said was the purpose of Tattersalls in seeking to remove the EGMs. If a court were to accept that Tattersalls was acting pursuant to such a purpose, it was not argued by Mr Houghton on behalf of the plaintiff that such a motive would constitute a breach of any implied term in the agreement. Clearly there would not be such a breach, since Tattersalls would simply be seeking to protect its own legitimate commercial interests.

31 Even if I were to disregard the sworn evidence of Mr Makryllos, I would not regard the plaintiff's case on the issue of breach as being anything but relatively weak. Each of the matters relied on by the plaintiff do not necessarily, either collectively or individually, give rise to the inference contended for by the plaintiff. They are equally consistent with the defendant cautioning the plaintiff that if the parties were not to continue in a contractual relationship, the defendant might, in its own interests, need to withdraw the 14 provisional EGMs. Thus while the inference contended for by the plaintiff is open to be drawn from the evidence relied upon by Mr Houghton, such an inference is but one possible inference which might be derived from the evidence. Certainly, even in the absence of the evidence of Mr Makryllos, I would not regard the plaintiff's case, in support of such an inference, as particularly strong.

Trade Practices Act 1974 (Cth) s.51AA, 51AC

32 The second cause of action alleged by the plaintiff against the defendant is based on alleged contravention by the defendant of s.51AA, or alternatively s.51AC, of the Trade Practices Act 1974. Both of those provisions proscribe conduct in trade or commerce which is "unconscionable". In alleging that the defendant has breached those provisions of the Trade Practices Act, the plaintiff relies on the same allegation which I have discussed above, namely, that the defendant has threatened to remove the provisional EGMs from the plaintiff's premises in order to intimidate the plaintiff to renew its contract with the defendant.

33 For the reasons which I have already set out above, and on the materials before me, I consider that the plaintiff has a relatively weak case in support of its contention that the defendant was actuated by the motive reached by the plaintiff. Certainly, for the reasons which I have already expressed, the evidence so far adduced by the plaintiff, particularly in the context of the defendant's affidavit to the contrary, does not satisfy me that the plaintiff has anything more than an arguable case that the defendant was acting pursuant to the motive alleged by the plaintiff.

34 Further, and on the assumption that the plaintiff is able to make out a case that the defendant was acting for the purpose of seeking to intimidate the plaintiff to renew the contract, the plaintiff must also establish that such conduct constituted a contravention of s.51AA or s.51AC of the Trade Practices Act.

35 Section 51AA(1) provides that a corporation must in trade or commerce engage in conduct " ... that is unconscionable within the meaning of the unwritten law, from time to time, of the states and territories." Although the matter was not argued before me, it is debatable whether, even if the plaintiff was able to establish the motive which it attributes to the defendant, that the defendant would thereby be acting in a manner which the law deemed to be "unconscionable" under ordinary equitable principles; compare, for example, Blomley v Ryan[23]; Commercial Bank of Australia Limited v Amadio[24]; Louth v Diprose[25]; Baumgartner v Baumgartner[26]. The categories of conduct which are deemed unconscionable by equity are not closed. However, the conduct alleged by the plaintiff in this case against the defendant is quite different to the type of conduct which has been held to be unconscionable in equity in the cases to which I have just referred.

36 Section 51AC(1)(a) of the Trade Practices Act provides that a corporation must not in trade or commerce in connection with the supply or possible supply of goods or services to a person (other than a listed public company) engage in conduct " ... that is, in all the circumstances, unconscionable." Section 51AC does not define the term "unconscionable". Section 51AC(3) lists a number of matters which the Court may have regard to in determining whether the supplier of the goods or services has contravened s.51AC(1). None of the matters set out in s.51AC(3) have immediate relationship to the type of conduct alleged by the plaintiff. In Hurley v McDonalds Australia Limited[27] the Full Court of the Federal Court attributed to the term "unconscionable" a particularly broad meaning, encompassing " ... serious misconduct or something clearly unfair or unreasonable." The Court considered that the term "unconscionable" imports a "pejorative moral judgment." If that definition were to be given to the term "unconscionable" to its fullest extent then it might well encompass the conduct attributed by the plaintiff to the defendant. However, it must be borne in mind that Hurley's case was concerned with the supply by a large national corporation of hamburgers to individual consumers. The matter was not fully argued before me. However, it is certainly open to argument whether, in any event, the plaintiff would make out a case under s.51AC(1) of the Trade Practices Act, even if it were able to establish that the defendant threatened to remove the provisional EGMs in order to pressure the plaintiff to renew the contract between them.

37 In those circumstances, I do not consider that the plaintiff's claim, as it presently stands, based on contraventions of s.51AA and s.51AC of the Trade Practices Act, is any more than an arguable claim.

38 The third cause of action relied upon by the plaintiff arises out of its allegation that, at the meeting between representatives of the defendant and members of the board of the plaintiff on 21 July 2004, representatives of the defendant stated that the provisional EGMs would only be removed if the plaintiff failed to perform financially, and would not take place just because the defendant had another opportunity elsewhere. The plaintiff alleges that such conduct was misleading or deceptive or likely to mislead or deceive contrary to s.52(1) of the Trade Practices Act.

39 The cause of action under s.52 of the Trade Practices Act is based on a disputed issue of fact. The defendant denies that any representations were made to the plaintiff concerning the non-removal of the provisional EGMs under the Venue Operators Agreement.

40 Further, if the plaintiff is successful at trial in proving that the assurances given, two other difficulties arise. First, as pointed out by Mr Kelly, the plaintiff alleges that it relied on the assurance giving its notice to the defendant, on 10 November 2004, that it would not renew the Venue Operators Agreement upon its expiration in May 2005. The parties had been in negotiation for some as to the renewal of that agreement. If the plaintiff was not intending to renew it, any further negotiations would not be conducted by it in good faith. Thus the plaintiff may have difficulty establishing that it did rely on the assurance allegedly given to it in July 2004 when it gave notice to the defendant on 10 November 2004. Secondly, no new agreement was concluded as a result of, or in reliance on, the alleged assurance given to the plaintiff in July 2004. In those circumstances, it is not clear how the plaintiff could rely on the assurance allegedly given to it in support of an injunction to restrain the plaintiff exercising its legal rights of removal of the provisional EGMs.

41 Thus, on the material presently before me, I do not consider that the plaintiff has more than an arguable prospect of success in relation to the cause of action based on s.52 of the Trade Practices Act.

42 The plaintiff contends that if it is deprived of the use of the 14 EGMs before 17 May 2005 it will suffer loss and damage which can be described in the following four categories:

(1) A loss of the direct revenue which would have otherwise been derived from the 14 EGMs.

(2) If the plaintiff is deprived of the use of the 14 EGMs, it will suffer a fall in its patronage, as a consequence of which it will lose profit it will otherwise have made on the sale of food and beverages to those customers.

(3) Since 2002 the plaintiff has embarked on an upgrade of its premises. It now has incomplete capital works requiring approximately $1,000,000 to complete. The financier of the plaintiff, the Commonwealth Bank of Australia ("CBA") has applied a cap to the plaintiff's borrowings being six times the net earnings of the plaintiff. If the plaintiff's profitability declines, the CBA will impose a borrowing cap. As a result, the work commenced will need to be staged at as lower pace. The delay in completion of the works would detract from the ability of the plaintiff to attract new members. The plaintiff would thereby suffer a further loss of profit.

(4) If the 14 provisional EGMs are removed from the plaintiff's premises, then it will need to amend its Venue Operators Licence pursuant to the Gambling Regulation Act. The plaintiff would suffer loss and damage if it was not able later to amend the Venue Operators Licence in order to increase the number of machines to be operated by it back up to 70.

43 The first category of loss and damage alleged by the plaintiff is clearly capable of simple calculation and assessment. Indeed, Mr Best's affidavit alleges that that item of loss and damage would be calculated in the sum of $118,800. The second category of loss and damage - loss of profit on the sale of food and beverages -would also be susceptible of proof by the plaintiff and assessment by a court should the occasion arise.

44 The third category of loss and damage - the loss of potential future membership because of the retardation of the upgrade of the plaintiff's premises - might be more difficult to prove. However, I do not consider that the difficulties would be insuperable. Nothing has been put forward to satisfy me that, should the plaintiff succeed at trial, it would not be able to establish a claim for loss and damage under this heading if it were able to prove an entitlement to such loss.

45 The fourth category of loss and damage may attract some difficulties of proof. Of course the plaintiff would be able to prove the loss of the 14 EGMs on its licence. If it were unable to re-amend the licence to regain the 14 EGMs on the licence, that fact could be simply proven. There may be argument as to why the plaintiff was refused the right to re-amend its licence, if that were to occur. However, I do not regard the difficulties associated with such an issue as being insurmountable. Similar issues are, from time to time, agitated before the courts on claims for loss and damage.

46 On the other hand, if an injunction was granted to the plaintiff, the defendant, according to Mr Makryllos' affidavit, may suffer damage consisting of its inability to install the 14 EGMs at another venue in the Wyndham area. The loss and damage alleged by the defendant would have similar difficulties of proof which apply to the fourth category of loss and damage relied upon by the plaintiff. In other words, such a loss and damage may be difficult to prove, but not impossible.

47 Thus, on an assessment of the balance of convenience, the scales are relatively even. Either side may suffer loss and damage should the other succeed on this application. The plaintiff may have some difficulties in establishing some of its items of loss and damage, but, on the other hand, the defendant would have similar difficulties in establishing the loss and damage alleged by it.

48 Certainly, I am far from convinced that the balance of convenience weighs significantly, if at all, in favour of the grant of an injunction. Indeed, on the materials placed before me, the balance of convenience is, for all intents and purposes, relatively even.

49 Thus, for the reasons I have already set out, the plaintiff has established an arguable claim for relief on the materials put before me. However, the plaintiff's claim is no more than arguable. In terms of the test propounded by the authorities, if the plaintiff has established a "serious issue to be tried", it has only barely done so. If relief was granted to the plaintiff, that relief would have the same effect as final relief, obtained by the plaintiff without the opportunity for the defendant to test the plaintiff's evidence by cross-examination. In such a case, it would only be appropriate to grant an interlocutory injunction as sought by the plaintiff if the balance of convenience were at least reasonably significantly weighted in favour of the plaintiff. However I have concluded that the balance of convenience is relatively equal. For those reasons I conclude that the plaintiff has not established a case which entitles it to the grant of the interlocutory injunction sought by it.

50 Originally the plaintiff also sought interlocutory relief in relation to a claim by it that the defendant had wrongfully refused to deploy new EGMs to it in November 2004. A new deployment of such EGMs was due to be carried out in November 2004 but was cancelled by the defendant. However it has been subsequently carried out by the defendant in January 2005. When the matter was before Hansen J on 17 December 2004 the defendant undertook to perform and observe its obligations pursuant to clause 12 of the Venue Operator Agreement. The defendant is prepared to give such an undertaking to the plaintiff and the plaintiff has agreed to accept that undertaking from the defendant.

51 Thus, and subject to the relevant undertaking being formulated in relation to performance of the defendant of its obligations under clause 12 of the Venue Operator Agreement, the plaintiff's application for an interlocutory injunction should otherwise be dismissed. I shall hear the parties on the question of costs.

[1] See, for example, The Australian Coarse Grain Pool Pty Ltd v The Barley Marketing Board of Queensland (1982) 57 ALJR 545; Murphy v Lush (1986) 60 ALJR 423.
[2] [1981] VicRp 3; [1981] VR 23 at 28.
[3] [1979] VicRp 13; [1979] VR 107 at 110.
[4] [2001] VSC 226 at [45 - 47].
[5] [2002] VSC 301 at paras 32 - 34.
[6] [2004] VSC 248 at para 7.
[7] [1979] VicRp 3; [1979] VR 13 at 24 - 25.
[8] See NWL Litd v Woods [1979] 1 WLR 1294 at 1307 (per Lord Diplock).
[9] (1992) 26 NSWLR 234, especially at 268.
[10] (1999) ATPR 41 - 703, especially at 43,014.
[11] (2000) VSC 310.
[12] [2002] HCA 5; (2002) 186 ALR 289.
[13] At para 40.
[14] Above at para 120.
[15] Above.
[16] [1986] HCA 14; (1986) 160 CLR 226 at 236.
[17] (1977) 180 CLR 266 at 283.
[18] (2002) 26 WAR 33 at 52 [64].
[19] Above at p.43,014 [57].
[20] At pp.43,014 - 5 [37] - [38].
[21] [1956] HCA 25; (1956) 94 CLR 470 at 480 - 481.
[22] [1938] HCA 34; (1938) 60 CLR 336, especially at 362 - 3 per Dixon J.
[23] [1956] HCA 81; (1956) 99 CLR 362.
[24] [1983] HCA 14; (1983) 151 CLR 447 at 461.
[25] [1992] HCA 61; (1992) 175 CLR 621.
[26] [1987] HCA 59; (1987) 164 CLR 137.
[27] [1999] FCA 1728 at para 22.

Gambling Regulation Act 2003

At a glance

Court

Decision date

Before

Source

Judgment (79 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (13)