Plaintiffs v Defendant

INJUNCTIONS - Injunction to restrain termination of contract - Whether plaintiffs have a prima facie case - Whether balance of convenience favours granting injunction - Issue of the plaintiffs' solvency - Whether value of an undertaking for damages is diminished - Where injunctive relief unsuitable because parties will be forced to continue a fraught relationship.

1 By Summons on Originating Motion dated 23 January 2019, David A Harris Pty Ltd and Mr David Harris (the plaintiffs) seek orders restraining AMP Financial Planning (AMPFP or the defendant) from:

(a) relying on the Notice of Revocation and Termination issued to each of the plaintiffs on or about 26 March 2018 (termination notices), thereby restraining the defendant from:

(i) terminating the Authorised Representative Deed of Agreement (Representative) between the first plaintiff and the defendant; and

(ii) terminating the Authorised Representative Deed of Agreement (Corporate Practice) between the second plaintiff and the defendant; and

(iii) revoking the personal authorisation of the first plaintiff as an authorised representative and credit representative of the defendant; and

(iv) revoking the corporate authorisation of the second plaintiff as an authorised representative and credit representative of the defendant.

(b) issuing any further notices of revocation and termination to each or any of the plaintiffs;

until such time as a final determination is made by the Court.[1]

2 The above mentioned Authorised Representative Deeds of Agreement are herein referred to as the Authorised Representative Agreements.

3 For the reasons that follow, I have decided to refuse the relief that is sought by the plaintiffs. I will order that the plaintiffs' Summons and Originating Process be dismissed.

4 In summary my reasons for refusing the relief sought by the applicant plaintiffs are:

(a) there is no serious issue to be tried as asserted by the plaintiffs, or at best for the plaintiffs, the asserted serious issue has very little prospect of success at trial on present materials;

(b) in the circumstances of this matter, damages are likely in any event to be an adequate remedy for the plaintiffs;

(c) because of the representative and special nature of the relationship of the parties under the Authorised Representative Agreements, and because that relationship is now fraught and dysfunctional, the parties should not be forced to attempt to maintain the present contractual relationship until trial; and

(d) the balance of convenience, including because of (c) above and the plaintiffs' suspect solvency, also favours the defendant.

5 The plaintiffs have for 30 years provided financial advice as an 'authorised representative' of the defendant,[2] pursuant to the Authorised Representative Agreements,[3] and corresponding Master Terms.[4] This suite of contracts is the subject of the present proceeding and is one of the bases for the plaintiffs' claims.

6 The business operated by the plaintiffs trades as Harris Financial Group (HFG). The first plaintiff deposes that his record as an Authorised Representative of the defendant is 'unblemished' and that he has been 'exceptionally successful'.[5]

7 The Authorised Representative position, role and duties of the plaintiffs' are attended with obligations relating to disclosure, monitoring and control by the defendant, and cooperation and mutual trust.[6]

8 The defendant emphasises that the relationship between the parties has now broken down. This is said to result from, among other things, the first plaintiff's accusations of negligence and improper conduct, the defendant's concerns about the plaintiffs' solvency, and the first plaintiff's failure to provide information when reasonably requested to do so.[7] The defendant, to this end, emphasises that 'it is no longer able or willing to continue its business relationship with Mr Harris'.[8]

9 Both the plaintiffs and the defendant make allegations against each other which belie the continued existence of trust and cooperation. In short, the relationship between the parties appears to be practically dysfunctional. In an interlocutory application such as the present, is it not possible or safe to attempt to finally resolve these or the other similar factual disputes highlighted by the parties.[9]

10 In or around 2014, the plaintiffs incurred a tax liability of $220,000 to the ATO (ATO Debt) related to both company and personal taxes for the financial years ending 2012 and 2013.[10] It appears that from the point at which the plaintiffs incurred this tax liability the parties' relationship has deteriorated rapidly.

11 On 28 January 2015, the first plaintiff met with AMP Bank (an entity related to the defendant) for assistance managing the ATO Debt.[11] The first plaintiff describes the purpose of this meeting as being to arrange a restructuring of the plaintiffs' loans, the borrowing additional funds to incrementally decrease the ATO Debt, and to arrange for an injection of cash flow into HFG.[12]

12 The ATO required the first plaintiff to advise them of his refinancing arrangements no later than 24 February 2015.[13] AMP Bank approved the loan in principle on 3 March 2015.[14]

13 There was a disagreement between the plaintiffs and AMP Bank with respect to how the loan amount would be paid. In essence, while AMP Bank wanted the loan to be paid against the plaintiffs' personal debt, the first plaintiff believed that this would create a new source of taxable income and jeopardise his ongoing negotiations with the ATO.[15]

14 In March 2015, AMP Bank decided that the personal loan would be secured against the 'company asset' of HFG.[16] In relation to this arrangement, the first plaintiff asserts:

I ultimately accepted the way in which the Loan was to be distributed by AMP Bank, reluctantly and under duress. The terms of the Loan were put to me by AMP Bank as a 'take it or leave it' deal, and if I didn't accept it there would be no finance provided, which would have resulted in the ATO Debt and the personal debts remaining outstanding.[17]

15 On 30 April 2015, the loan funds were paid by AMP Bank into two existing loan accounts.[18]

16 The ATO had entered into a payment plan allowing the plaintiffs to incrementally reduce the ATO Debt. However, the ATO then decided that the loan arrangement was directed to the plaintiffs personal debts and rejected a proposed ATO Debt repayment plan,[19] and issued proceedings against the plaintiffs in June 2017 to recover the ATO Debt.[20]

17 These proceedings with the ATO were resolved in August 2018.[21] The ATO agreed to waive certain penalties and interest on compassionate grounds.[22] Currently it appears that there is no dispute between the plaintiffs and the ATO. However, the issues that gave rise to the immediate litigation are closely related to the defendant's concerns as to the plaintiffs' solvency and the defendant's attempts to manage the ATO Debt, between 2015 and 2018.

18 Although the plaintiffs' evidence is that they have negotiated a repayment plan with the ATO in respect of the ATO Debt owed by the second plaintiff, no evidence has been advanced as to compliance with that payment plan or as to the extent of the outstanding debt, if any.

19 The first plaintiff deposes to a number of serious medical issues.[23]

20 The first plaintiff asserts that the ATO Debt and his dealings with AMP Bank and the defendant have exacerbated his medical issues.[24] He also asserts that AMP was in various ways cognisant of his deteriorating mental health. In particular, the first plaintiff deposes that his wife attempted to contact the former Chief Executive Office of the defendant about his mental health issues;[25] and later met with the former Managing Director of the defendant to discuss the financial pressures to which he was subject and his 'general personal circumstances'.[26]

21 On 2 August 2016, the first plaintiff submitted an application for finance to AMP Bank. This application was made on the understanding that AMP Bank had entered into discussions with AMP Bank on the plaintiffs' behalf.[27]

22 AMP Bank formally declined the application for finance on 3 August 2016.[28] The first plaintiff claims, however, that the defendant led him to believe that the application was still being processed.[29] Specifically, between 5 and 6 August 2016, AMP Bank and the defendant sent emails to the first plaintiff seeking further personal financial information.[30] The first plaintiff asserts that this personal financial information was supplied 'under the belief that the loan was being considered'.[31]

23 On 15 August 2016, the defendant suggested to the first plaintiff that he consider a 'purchase and lease back' arrangement with AMPFP in respect of HFG.[32] An offer to this effect was made by AMPFP on 5 September 2016.[33] The first plaintiff describes the 'essence' of this offer as follows:

...I would sell my financial planning business back to AMPFP, with an agreement in place that I could buy it back three years later at the same rate. The offer stated that I would be required to pay interest only on the sale price until I bought it back (if I did). There was a comment made in the email that I should seek my own independent financial and legal advice, and that I should seek to negotiate with the ATO any capital gains tax implications that may occur as a result of this offer.[34]

24 The first plaintiff asserts that the purchase and lease back arrangement was engineered to 'take advantage of my financial and mental health situation'; that it was only of benefit to AMPFP; and that it entailed an exceptionally high level of risk for himself and HFG.[35] The plaintiffs also assert that the proposal was made only after AMP had sought information under the 'false pretence' that a further loan was being considered.[36]

25 In 2017, the plaintiffs and AMPFP had further discussions about injecting capital into HFG in light of the ongoing ATO Debt.[37] In substance, the first plaintiff was advised that AMPFP required an independent financial analysis of HFG's current assets and liabilities.[38]

26 To this effect, in 2017 KPMG were engaged as auditors.[39] In light of KPMG's analysis, the first plaintiff alleges that the defendant presented him with two options on 3 November 2017:[40]

(a) to organise his assets and liabilities in such a way as to demonstrate to the ATO that he only has 'limited net assets' from which to offer a settlement; or

(b) to organise his finances, including a sale of his home and business, to minimise the debt and 'package' outstanding liabilities at a 'lower interest rate than many seem to be carrying'.

27 On 6 November 2017, the first plaintiff emphatically rejected both options.[41] He did, however, authorise KPMG to take over ATO negotiations on his behalf providing sensitive health information remained confidential.[42] The first plaintiff deposes to his understanding that KPMG's negotiations with the ATO formed part of its broader mandate to prepare independent recommendations for AMP to assist the plaintiffs.[43] Accordingly, the first plaintiff instructed his accountants and lawyers to respond to KPMG's requests for financial information and information concerning the ATO Debt.[44]

28 The first plaintiff now makes a number of assertions to the effect that KMPG and AMPFP were colluding against his interests. Broadly, the first plaintiff asserts that (i) he was lulled into providing sensitive personal, medical and financial information to KPMG on the pretence that KPMG would be impartial;[45] (ii) this information was used by AMPFP, with the direct or indirect assistance of KMPG, to make strategic decisions against the plaintiffs' interests;[46] and (iii) KPMG did not allow the first plaintiff to see any of its findings or refute the contents of a report prepared for AMPFP.[47]

29 The first plaintiff also asserts that the defendant remotely and without proper authorisation accessed the HFG client file system. He deposes that the timing of this breach, as KPMG were preparing the purportedly independent set of recommendations and valuation of the HFG Business, caused him great concern and triggered his suspicions that the independence of the process had been compromised.[48]

30 On 24 January 2018, a meeting was held on this date between KPMG and the first plaintiff.[49] The following occurred:

(a) KPMG advised they had 'solvency concerns' about the HFG business, and that a 'show cause letter' would be issued;[50]

(b) the first plaintiff demanded to see the audit findings, but was prevented from doing so;[51]

(c) the first plaintiff alleged that KPMG were colluding with AMPFP;[52]

(d) KPMG advised that AMPFP would be 'buying [him]/HFG out';[53] and

(e) the first plaintiff noted that he would approach AMP Bank regarding the '$500,000 equity [he] had in the HFG business pursuant to the "buyer of last resort formula" used by AMPFP and AMP Bank'.[54]

31 Emails were exchanged between the Debbie Harris (the first plaintiff's wife), Catherine Brenner (of AMP) and Jack Regan (of AMP). The first plaintiff's wife raised concerns about KPMG's involvement and the approach to this issue taken by AMPFP.[55]

32 On 1 February 2018, the first plaintiff received letter from the defendant raising solvency concerns about HFG.[56] This letter foreshadowed that the first plaintiff would soon receive a show cause letter requiring a formal demonstration of solvency. The letter was based on KMPG findings to which the first plaintiff alleges he had been denied access.

33 On 5 February 2018, the first plaintiff received a show cause letter from the defendant requiring him to demonstrate HFG's solvency within ten business days, via an accountant or qualified insolvency expert.[57] The defendant extended the deadline to 26 February 2018 after the first plaintiff pushed back. This letter asserted that AMPFP tried to help find appropriate solutions (such as employing the first plaintiff in the AMP Advice practice). The first plaintiff denies this.

34 This letter also claimed that the first plaintiff requested a loan of $500,000 from the defendant.[58] The first plaintiff states this is incorrect, and that his communication was to reflect that he only said he would 'approach AMP Bank regarding the $500,000 equity [he] had in the HFG Business'.[59]

35 On 26 March 2018, the first plaintiff received a letter from the defendant advising of their decision to terminate the Agreement 'within 90 days notice from the date of the letter'.[60] That letter also stated that AMPFP 'may' be agreeable to discussing withdrawal of the termination notice if P1 could demonstrate that HFG was solvent.[61] In this setting it appears the parties continued to negotiate the resolution of these issues. For example, by letter dated 30 January 2019, solicitors for the defendant wrote to solicitors for the plaintiffs making the following offer:

Despite the above, and in circumstances where it has no obligation to do so, our client now makes an open offer to buy-back the Company's Client Register Rights in accordance with, and subject to all relevant requirements and conditions, in the BOLR Policy with the following exceptions:

(a) the requirement for the Company to provide AMPFP 6 months notice of the intention to exercise BOLR provided for in the 'Notice Period' section of AMPFP's BOLR Policy will be reduced to 1 day; and

(b) in determining the value of the Client Register AMPFP will apply all applicable principles and conditions set out in the AMPFP BOLR Policy save for disregarding entirely the Notice and any effect it may have on the Company.

(the Offer)

The Offer is:

(a) open for acceptance until 9:00am on 31 January 2019 after which it will automatically lapse;

(b) is made without any admission of liability and strictly reserving all rights under the Notice; and

(c) conditional upon your client consenting to orders that the Proceeding is dismissed with no order as to costs;[62]

36 During the hearing on 31 January 2019, Senior Counsel for the defendant noted that the above offer by the defendant had not been accepted and had lapsed.

37 In deciding whether to grant an interlocutory injunction, the Court considers the following organising principles identified by High Court of Australia (High Court) in Australian Broadcasting Corporation v O'Neil:[63]

(a) Is there a serious question to be tried,[64] or do the plaintiffs have a prima facie case,[65] such that the plaintiffs could be entitled to relief after trial of the action?

(b) Will the plaintiffs suffer injuries for which damages are an inadequate remedy?

(c) Does the balance of convenience support granting an injunction?

38 Further, in respect of the above considerations and informing their application, the Court should take 'whichever course appears to carry the lower risk of injustice if it should turn out to have been "wrong"'. [66]

39 The first requirement was explained by the High Court in Beechem Group Ltd v Bristol Laboratories Pty Ltd[67] as follows:

...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... How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks.[68]

40 With respect to the above passage, in Australian Broadcasting Corporation v O'Neil,[69] Gummow and Hayne JJ have commented:

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.[70]

41 For the reasons that follow, I am not satisfied that the plaintiffs' case gives rise to a serious question to be tried, or at least a serious question which has a sufficient likelihood of success to, in these circumstances, justify an order which both impairs the defendant's contractual rights and forces the parties to attempt to continue until trial and possibly longer an ongoing relationship.

Master Terms create unqualified termination rights

42 The termination notices that are the subject of this application were issued pursuant to the following clauses of the Master Terms of the Authorised Representative Agreements:[71]

14. TERM OF AUTHORISATION

14.1 Term

The Authorisation given to the Representative continues until revoked in accordance with this Agreement.

14.2 Revocation

(a) Return by Representative

The representative may return the Authorisation to AMP Financial Planning. Upon return, the Authorisation will be revoked.

(b) Revocation by AMP Financial Planning by notice

AMP Financial Planning may revoke the Authorisation of the Representative by giving not less than 90 days' notice in writing to the Representative.

(c) Revocation by AMP Financial Planning on the happening of certain events

AMP Financial Planning may revoke the Authorisation of the Representative immediately by written notice to the Representative (but without any prior notice) on the happening of any of the following events:

(i) if any of the events specified in clauses 2.4(iv)(A) to (H) inclusive or clause 15.2 occurs; or

(iA) if any of the following events occur:

(A) ASIC gives AMP Financial Planning a direction to provide a statement about the Representative and it appears to AMP Financial Planning that the Representative is likely to have breached a Relevant Law;

(B) ASIC commences an investigation that includes an investigation of the Representative and it appears to AMP Financial Planning that the Representative is likely to have breached a Relevant Law; or

(C) The Representative is subject to a banning order of disqualification under a relevant Law whether as an Authorised Representative or as an officer of a corporation;

(D) ASIC takes steps to issue or does issue a banning order against the Representative;

(E) the Representative, without the prior approval of AMP Financial Planning, recommends, induces, suggests or encourages a Client to transfer or move their business or custom away from AMP Financial Planning.

(ii) if the Representative fails to comply with any material obligation under this Agreement, the Authorisation or the Relevant Law. For the purposes of this sub-clause (c)(ii), all obligations under this Agreement on the part of the Representative, but for the obligations under clause 6, are material obligations); or

(iiA) if the Representative repeatedly fails to comply with an obligation under this Agreement, the Authorisation or the Relevant Law which, if capable of remedy, is not remedied within 14 days after AMP Financial Planning has given the Representative notice of the failure; or

(iii) If AMP Financial Planning is of the reasonable opinion that the Representative has, or if AMP Financial Planning reasonably suspects that the Representative has, engaged in or falls within one or more of the following:

(A) conduct that is considered to be an act of dishonesty or serious misconduct;

(B) [Deleted]

(C) conduct which brings or is likely to bring AMP Financial Planning, the AMP Group or the Product Issuers into disrepute or which is prejudicial to the reputation, business or goodwill of AMP Financial Planning, the AMP Group or the Product Issuers;

(D) fails to perform their duties efficiently, honestly and fairly;

(E) is not of good fame or character; or

(F) loses legal capacity or physical or mental capacity to manage their own affairs; or

(iv) if the Representative is Working for the Practice and:

(A) the Representative ceases to be employed or engaged by the Practice; or

(B) the Practice fails to comply with any term or condition contained in the Authorisation or this Agreement; or

(v) If, the Representative is a Corporate and without the prior written consent of AMP Financial Planning, there is a change in the ownership, management, control or decision making function of the Corporate; or

(vi) If the Authorisation becomes void or the Licence is revoked.

It is agreed that each of the above events give AMP Financial Planning the right to revoke the Authorisation of the Representative notwithstanding that the events may, in some cases, overlap.

15. TERMINATION OF AGREEMENT

15.1 Term of agreement

This Agreement commences on the date agreed between the Representative and AMP Financial Planning and ends on a date determined in accordance with this clause.

The Representative may terminate this Agreement by giving not less than 90 days' notice in writing to AMP Financial Planning.

15.3 AMP Financial Planning termination rights

AMP Financial Planning may terminate this Agreement:

(a) by giving not less than 90 days' written notice to the Representative; or

(b) immediately if the Representative returns their Authorisation to AMP Financial Planning in accordance with clause 14.2(a); or

(c) immediately by written notice to the Representative (but without any prior notice) on the happening of any of the events listed or described in clause 14.2(c).

43 The plaintiffs accept that the termination notices were issued pursuant to these provisions of the Authorised Representative Agreements.[72] Termination pursuant to such clauses stands in contrast to the alternative situation where a contracting party elects at common law to terminate for the other party's for essential breach or repudiation of the agreement. In the present circumstances, by contrast, the defendant's right to terminate the agreement is derived the agreement itself. Here, I consider it is likely that the parties intended that the expressly agreed mode(s) of termination are comprehensive and strictly define their rights and entitlements.

44 The use of such terms has been acknowledged as common. In Oceanic Sun Line Special Shipping Co. Inc. v Fay,[73] Wilson and Toohey JJ observed:

Whether the right to 'cancel' a cruise was one that could be exercised arbitrarily or whether it was subject to some implication of reasonableness it is unnecessary to dweIl upon. But a right in one party to determine a contract, even though there has been no breach by the other party, is by no means uncommon.[74]

45 Proceeding on the basis that the termination notices were issued pursuant to cls 14.2 and 15.3 of the Master Terms, the question is the extent to which the defendant's right to terminate under those clauses is qualified or fettered by limitations of the kind asserted by the plaintiffs.

Alleged qualifications to express termination rights

46 The plaintiffs assert two such qualifications. First, the plaintiffs submit that issuing the termination notices pursuant to cls 14.2(b) and 15.3(a) of the Master Terms in these circumstances 'breached an implied term of good faith and fair dealing' owed by the defendant to the plaintiffs under the Authorised Representative Agreements.[75] Secondly, the plaintiffs submit that issuing the termination notices in these circumstances amounts to 'unconscionable conduct of the defendant' under the Australian Securities and Investments Commission Act 2001 and the Australian Consumer Law.[76]

47 In effect, the plaintiffs' submission is that the defendant's right under the Master Terms to terminate the Authorised Representative Agreements is qualified by either an obligation to perform in good faith or the prohibition against unconscionable conduct. To this end the plaintiffs presented affidavit material alleging that the conduct of the defendant was devoid of good faith and unconscionable.

48 In relation to a want of good faith, the plaintiffs asserted that the defendant had acted 'inappropriately' in a number of respects as detailed in their submissions,[77] including by obtaining financial information from the plaintiffs under false pretences; seeking to have the plaintiffs enter into a purchase and leaseback arrangement in order to obtain the plaintiffs' business; obtaining information from the plaintiffs via KPMG on the false pretence that KPMG were independent; failing to inform the first plaintiff about KPMG's reports; and inappropriately advising the plaintiffs in a way which encouraged them to deceive the ATO.

49 Quite apart from my view that cls 14 and 15 of the Master Terms preclude or at least render the plaintiffs' asserted serious issue for trial most unlikely to succeed, the plaintiffs' material itself, in my view, fails to effectively impugn the defendant's contractual entitlement to deploy its right to terminate at will.[78] Further, I note that I am not persuaded that the material relied on by the plaintiffs prima facie establishes the 'inappropriate' conduct alleged at [8(g)] in its submissions.

50 Ultimately, for the above reasons and also for those which follow, I consider the plaintiffs must fail on their principal argument. Properly construed, the Master Terms do not import an obligation of good faith that qualifies the defendant's express right to terminate.

51 The plaintiffs submit that the express rights to terminate and revoke are fettered or qualified through an implied term of good faith. Even if the defendant has the right to bring the agreement to an end at its convenience, the plaintiffs submit that the defendant must be acting in 'good faith' and 'fairly' when it decides to exercise that right vis-à-vis the plaintiffs.

52 There are at least three reasons for rejecting that submission in the present case:

(a) First, there is no generally-accepted contractual term implied in law in Australia requiring parties to act in good faith in either the negotiation of the contract or the performance of the contract.[79]

In Carter, Courtney, Peden, Riley and Tolhurst's article, published in the aftermath of the High Court's decision in Commonwealth Bank of Australia v Barker,[80] it is explained:

One aspect of the contrast between terms implied in law and implied in fact is the use of different legal presumptions. A contract is presumed to include any term which is implied in law as an established incident of the contract. By contrast, the contract is presumed not to include a term propounded as one implied in fact. Since established incidents are taken to be included, construction has a negative orientation. The question is 'have the parties agreed to the contrary'? For terms implied in fact, a positive construction inquiry is made: 'does the term satisfy the applicable criteria'?[81]

The absence of any generally-accepted term implied in law requiring parties to act in good faith in performance of the contract leaves the plaintiffs with two options. The first is that, notwithstanding the absence of a generally-accepted term, the plaintiffs can assert that the present contract is of such a class that a term requiring good faith performance is implied in law. That was not argued by the plaintiffs here.

(b) Secondly, although the plaintiffs could separately assert that such a term satisfies the requirements of BP Refinery (Westernport) Pty Ltd v Shire of Hastings (BP Refinery),[82] and can be implied into the Authorised Representative Agreements in fact, the onus here is on the plaintiffs in all relevant respects, and has not been satisfied.

In this application, the plaintiffs did not demonstrate, or attempt to demonstrate, that the requirements of BP Refinery are met in these circumstances. Further, I am not satisfied that a term qualifying the defendant's right to terminate, by reference to an amorphous standard of good faith, is either 'so obvious that it "goes without saying", 'necessary to give business efficacy to the contract', and 'capable of clear expression'.[83] The plaintiffs did not, amongst other relevant criteria, demonstrate that the putative term was a necessary element to the parties' agreement or that it did not contract other express terms. Any attempt to imply such a term in fact in these circumstances must also be rejected.

Taken at its highest level, the putative term is, in my view, at odds with the broad discretion to terminate or revoke enjoyed by the defendant as evidenced by the wording of cls 14.2(b) and 15.3(a). Those clauses state, '...may revoke the Authorisation of the Representative' and '...may terminate this Agreement' respectively. The rights are expressly unqualified. I also note that the plaintiffs themselves hold similar rights under analogous provisions of the Authorised Representative Agreements. There are sound commercial reasons for conferring such unconditional and unqualified rights on the parties to an ongoing relationship, such as the need for the parties to rearrange their affairs to accommodate a supervening event such as insolvency. By contrast, to imply any fetter upon those rights would be inconsistent with the express terms of the contract.

(c) Finally, the parties have taken care to reduce their agreement to written instruments and set precise requirements for exercising the right to terminate or revoke at will. Specifically, the plaintiffs can via written notice allow the defendant to either terminate or revoke the Authorised Representative Agreements pursuant to cls 14.2(b) and cl 15.3(a). There is nothing to suggest that the requirements contained in the written instruments are anything other than exhaustive. In this regard the existence and juxtaposition of sub-clauses 14.2(b) and (c) and 15.3(a) and (c), which provide for termination by AMPFP at will and separately for revocation by AMPFP on the happening of certain events, strongly supports the conclusion that the parties intended to establish a comprehensive two-limbed regime for termination: one exercisable by AMPFP at will and the other for cause. This comprehensiveness also militates against the notion of 'good faith' being available to adjust the clear and express terms of the parties' bargain.

53 The plaintiffs relied extensively on the first instance decision of Hansen J in Kellogg Brown & Root Pty Ltd v Australian Aerospace Ltd[84] (Kellogg Brown). Hansen J found that there was a serious question to be tried as to, inter alia, the existence of an implied term requiring performance in good faith. I note, however, that it was 'conceded [before Hansen J] there was a serious question to be tried on the matter of the implied term'.[85] By contrast, in this application, the alleged existence of the implied term was a fundamental point of difference between the parties.

54 Furthermore, the factual setting in Kellogg Brown was materially different. In that case, the subject contract was a procurement contract, whereas here, the subject contract is a representative contract with significant ongoing reporting, control and cooperation obligations.

55 In the present circumstances, I am more assisted by the defendant's reliance on the decision of Bergin CJ (in eq.) in Starlink International Group Pty Ltd v Coles Supermarkets Pty Ltd.[86] In that case the term in question provided:

During the term, Coles may terminate this Agreement at any time without a reason by giving the Service Provider 45 days written notice.[87]

These are commercial parties that have been engaged in a commercial relationship for a number of years. SC 1 has formed part of their contractual relationship since 2005. The plaintiff was willing to enter into this Agreement on the basis that the defendants had an entitlement to terminate it on 45 days written notice at any time without a reason. The implication of a duty to act in good faith in exercising the right under SC 1 would be to impose a condition on the defendants inconsistently with the express term of the contract. It would be to impose a condition on the defendants that not only must they have a reason to exercise the right under SC 1 but also that it must be a good reason. There is no justification to imply the term as claimed.[88]

57 To recognise an obligation to perform in good faith would, in essence, be tantamount to imposing the requirement that termination of the contract occur for a 'good reason'. Her Honour recognised that is inconsistent with the express term of the contract allowing termination 'at any time without a reason'.

58 The plaintiffs were correct to point out that the wording of the clause above differs from cls 14 and 15 of the Master Terms. However, that difference is immaterial. Her Honour's reasoning can be applied to the present circumstances. It would likewise be inconsistent with the terms of the Authorised Representative Agreements (specifically cls 14.2(b) and 15.3(a) of the Master Terms) to recognise an implied qualification on the defendant's expressly unqualified right to terminate or revoke.

59 Except in cases where a term is implied by statute, the process of finding an implied contractual term in fact must give way to the express terms of the parties' agreement. That is decisive here. The wording of cl 14.2 and 15.3 affords a discretion to the defendant to terminate or revoke at will. There is no serious question to be tried that this carefully-articulated discretion is fettered by an amorphous and unparticularised requirement of 'good faith'.

60 For completeness, I observe that, in some cases, duties of good faith have been recognised as a term implied in law. In Vodafone Pacific Ltd v Mobile Innovations Ltd,[89] Giles JA made the following observation:

I am content to assume, expressly without deciding, that unless excluded by express provision or because inconsistent with the terms of the contract, Vodafone was under an implied obligation to act in good faith and reasonably in exercising its powers under the ASP Agreement, specifically the power of determining target levels in cl 18.4. Whether the assumption might be justified by commercial contracts already carrying the implied term or now being found to have that status does not matter. I consider that the present case can be decided by addressing whether the implication of the term as a matter of law, as to the power conferred by cl 18.4 of the ASP Agreement, is precluded by expression of a contrary intent.[90]

61 However, the learned author of Carter on Contract takes a different view:

...as the law currently stands, there is no general contractual term, implied in law, requiring parties to act in good faith when negotiating a contract. Similarly, there is no such (general) implied term requiring the exercise of good faith in contract performance.[91]

62 Nothing turns on this debate for present purposes. Even acknowledging the doctrinal uncertainty attending the implication of 'good faith' duties in Australian contract law, in my view in the particular contractual circumstances of this matter there is no serious question to be tried as to the plaintiffs' asserted 'implied term' of good faith. Further, at best for the plaintiffs such an assertion has a very low prospect of success at trial. The plaintiffs fail on either position.

The second alleged qualification: unconscionable conduct at general law

63 It seems the phrase 'unconscionable conduct' refers to either of two things. First, there is a well-established equitable jurisdiction, developed through cases such as Commercial Bank of Australia v Amadio,[92] to relieve from the effects of a transaction procured via exploitation of a person suffering from a special disadvantage. Secondly, 'unconscionable conduct' has been used as an umbrella term referring to miscellaneous equitable doctrines that temper and limit the unconscionable assertion of common law rights derived from, inter alia, enforceable contracts.

64 To the extent that the plaintiffs sought to imply a term prohibiting unconscionable conduct, such a submission is unsubstantiated and must be rejected. Further, as Gummow J observed in Service Station Association Limited v Berg Bennett & Associates Pty Ltd:[93]

To some extent equity has regulated the quality of contractual performance by the various defences available to suits for specific performance and for injunctive relief. In some, but not all, of this, notions of good conscience play a part. But it requires a leap of faith to translate these well-established doctrines and remedies into a new term as to the quality of contractual performance, implied by law.[94]

65 Aside from mooting the possibility of an implied term and referring to examples of where 'unconscionable conduct' may arise,[95] the plaintiffs did not identify a specific equitable doctrine striking at unconscionable conduct (for example, relief against forfeiture or penalties) that would support enjoining the defendant in these circumstances. Nor in the face of the defendant's submissions repudiating the relevance or applicability of any notion of unconscionable conduct did the plaintiffs seek to press reliance on the allegedly unconscionable conduct of the defendant.

The second alleged qualification: unconscionable conduct under statute

66 The plaintiffs referred to two statutory prohibitions against unconscionable conduct. The first was s 12CB of the Australian Securities and Investments Commission Act 2001 (the ASIC Act).

12CB Unconscionable conduct in connection with financial services

(1) A person must not, in trade or commerce, in connection with:

(a) the supply or possible supply of financial services to a person; or

(b) the acquisition or possible acquisition of financial services from a person;

engage in conduct that is, in all the circumstances, unconscionable.

(2) This section does not apply to conduct that is engaged in only because the person engaging in the conduct:

(a) institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or

(b) refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition.

(3) For the purpose of determining whether a person has contravened subsection (1):

(a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and

(b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.

(4) It is the intention of the Parliament that:

(a) this section is not limited by the unwritten law of the States and Territories relating to unconscionable conduct; and

(b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and

(c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of:

(i) the terms of the contract; and

(ii) the manner in which and the extent to which the contract is carried out;

and is not limited to consideration of the circumstances relating to formation of the contract.

67 The second provision was s 21 of the Australian Consumer Law:

21 Unconscionable conduct in connection with goods or services

(1) A person must not, in trade or commerce, in connection with:

(a) the supply or possible supply of goods or services to a person; or

(b) the acquisition or possible acquisition of goods or services from a person;

engage in conduct that is, in all the circumstances, unconscionable.

(2) This section does not apply to conduct that is engaged in only because the person engaging in the conduct:

(a) institutes legal proceedings in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition; or

(b) refers to arbitration a dispute or claim in relation to the supply or possible supply, or in relation to the acquisition or possible acquisition.

(3) For the purpose of determining whether a person has contravened subsection (1):

(a) the court must not have regard to any circumstances that were not reasonably foreseeable at the time of the alleged contravention; and

(b) the court may have regard to conduct engaged in, or circumstances existing, before the commencement of this section.

(4) It is the intention of the Parliament that:

(a) this section is not limited by the unwritten law relating to unconscionable conduct; and

(b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and

(c) in considering whether conduct to which a contract relates is unconscionable, a court's consideration of the contract may include consideration of:

(i) the terms of the contract; and

(ii) the manner in which and the extent to which the contract is carried out;

and is not limited to consideration of the circumstances relating to formation of the contract.

68 However, I accept the defendant's submission that a party to an agreement does not act 'unconscionably' in serving a notice of termination in circumstances where that party was entitled under a termination for convenience clause (such as cls 14.2(b) and 15.3(a) of the Master Terms) to serve the notice of termination.[96] Accordingly, in my view, on the present material and argument, the defendant did not act unconscionably in serving the termination notices on the plaintiffs.

69 For the reasons above, any prohibition against 'unconscionable conduct', whether at general law or under the ASIC Act or Australian Consumer Law, does not give rise to a serious question to be tried in these circumstances.

70 The starting point in relation to a consideration of the adequacy of damages is as follows:

The very first principle of injunction law is that prima facie you do not obtain injunctions to restrain actionable wrongs, for which damages are the proper remedy.[97]

71 However, an injunction will be granted where the rights of the plaintiffs cannot be adequately protected via an award of damages:

...in this case an action for damages would not afford an adequate remedy, and that we should give effect to the rule that where the plaintiff has established the invasion of a common law right, and there is ground for believing that without an injunction there is likely to be a repetition of the wrong, he is, in the absence of special circumstances, entitled to an injunction against such repetition.[98]

72 The plaintiffs point to the following consequences that would follow from termination of the Authorised Representative Agreements:

(a) HFG staff losing their jobs;[99]

(b) the cessation of cash flow from the business that would impact upon the plaintiffs' abilities to pay debts in the short term (including payment plans with the ATO and loan arrangements with the AMP Bank);[100] and

(c) the triggering of a capital gains tax event upon disposal of the business.[101]

73 The plaintiffs further submit that the question is not whether damages are an adequate remedy, but whether 'it is just, in all the circumstances, that the plaintiffs should be confined to a remedy in damages'.[102]

74 The plaintiffs refer to asserted harm that will ensue upon the termination coming into effect on 1 February 2019. In particular, the plaintiffs refer to the closure or transformation of the HFG business and the loss of staff jobs, as well as the loss of the subject business' cash flow and the impact that may ensue in the short term to other creditors, as well as the possible impact of an unexplained 'triggering of capital gains tax event'. In my view, however, the plaintiffs' material is very scant in respect of these asserted financial consequences. Further, although raised by the plaintiffs, and clearly of potential significance, including in relation to the plaintiffs solvency, no evidence was tendered as to the extent of money owing by the plaintiffs to the ATO at the date of this application, or as to the state of compliance with the payment plan referred to by the plaintiffs. Likewise, the extent to which 'staff' would be affected, and the way in which 'clients' would be affected, is unexplained and without any detail. The same can be said for the 'capital gains event' to which the plaintiffs referred and also as to how or why the first plaintiff would lose his ability to practice.

75 In short, for the above reasons, I have ascribed very little weight to the plaintiffs' argument that in this matter damages from the defendant, including for the KPMG value of the plaintiffs' business in the sum of $1.749 million would not be an adequate remedy.

76 In these circumstances, because of the weakness of the plaintiffs' case, the inappropriateness and risks in this context of forcing these parties into an ongoing commercial relationship against the defendant's will,[103] including because of the plaintiffs' suspect solvency and the adequacy of damages likely to be available to the plaintiffs if their presently-asserted claims are ultimately made out, I consider the factors to which the plaintiffs refer are far from sufficient to justify the issue of the interlocutory injunction sought in this application.

77 In Bradto Pty Ltd v State of Victoria,[104] Maxwell P and Charles JA observed:

...whether the relief sought is prohibitory or mandatory, the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong', in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.[105]

78 The potential insolvency of the plaintiffs is, legally, neither a cause nor a necessary requirement for termination of the Authorised Representative Agreements. Termination and revocation pursuant to cls 14.2(b) and 15.3(a) is permitted at the convenience of the defendant subject to provision of the required notice periods. However, in the broader commercial dispute between the parties, the potential insolvency of the plaintiffs weighs in the balance of convenience.

79 In submitting that the balance of convenience favours refusing injunctive relief, the defendant points to the following factors:

(a) That the defendant will be impaired from effectively supervising the plaintiffs, and may itself breach the conditions of its Australian Financial Services License and commit regulatory breaches if the plaintiffs are allowed to shirk their obligations under the Authorised Representative Agreements;[106]

(b) That the insolvency of the first plaintiff may result in a loss of professional indemnity cover for the practice;[107] and

(c) That there are negative implications for a potentially insolvent financial planner being permitted to manage the financial affairs of other persons.[108]

80 The evidence appears to presently establish that the first plaintiff's financial position, over a year ago in late 2017, was in the approximate sum of $170,000.[109] At the same time the defendant asserts that the second plaintiff had a net asset deficiency of about $440,000. That assertion was on notice and was not sought to be refuted by the second plaintiff.

81 Neither did the plaintiffs seek to address the defendant's assertions that the plaintiffs' parlous financial position in late 2017 had not improved between then and the date of this application. In my view, these matters and the financial detail referred to in the defendant's written submissions,[110] make it unlikely that the plaintiffs will be in a position to meet any substantial order for damages. Further, the continuation of the plaintiffs' business in these circumstances gives rise to the abovementioned risks associated with an Authorised Representative of AMPFP which is or could become insolvent.

82 I also observe that given the nature of the defendant and the entities to which it is related, as well as the broader presence of AMP in the Australian (and global) financial sector, there does not appear to be any realistic concern about the defendant's ability to meet an award of damages. The plaintiffs did not argue to the contrary.

83 Finally, because of the representative and special nature of the relationship of the parties, outlined above in relation to the Authorised Representative Agreements, and because that relationship is now fraught and dysfunctional, I consider that the parties should not be forced to attempt to maintain the present contractual relationship until trial. In this regard I am also of the view that it is most undesirable that the plaintiffs which have such trenchant criticisms of the defendant should continue to hold themselves out as the defendant's representatives to members of the public. For these further reasons, an injunction of the type sought perpetuating the present situation should not go.

84 Accordingly, for the above reasons, considered holistically, the lower risk of injustice in my view lies with refusing the injunctive relief that is sought by the plaintiffs.

85 For the above reasons, I have decided to refuse the injunctive relief that is sought by the plaintiffs.

86 I will order that the plaintiffs' Summons and Originating Process be dismissed.

87 I shall await the parties' submissions in relation to the form of final orders, including as to costs.

[1] Summons on Originating Motion (25 January 2019).

[2] Affidavit of David Harris (25 January 2019) [4] (Harris Affidavit).

[3] Exhibit DH-1 (Authorised Representative Deed of Agreement: Representative) and Exhibit DH-2 (Authorised Representative Deed of Agreement: Corporate Practice) to the Harris Affidavit.

[4] Exhibit DH-3 to the Harris Affidavit (Master Terms).

[6] Master Terms cls 2.1, 2.4, 2.5, 5 and 8.2.

[7] Affidavit of Sara McQueen (30 January 2019) [23]-[24] (McQueen Affidavit).

[9] The defendant agreed to the hearing of the plaintiffs' applications on an interim basis and sought no adjournment notwithstanding that the defendant complained that it had been allowed too little time to file responsive affidavit material, in particular in relation to the parties' extensive communications and dealings between 2015 and 2017: T27-28.

[30] Ibid [38]; Exhibit DH-15 to the Harris Affidavit.

[33] Ibid [42]; Exhibit DH-17 to the Harris Affidavit.

[61] Exhibit DH-39 to the Harris Affidavit.

[62] Exhibit SM-1 to the McQueen Affidavit, 39-40.

[63] [2006] HCA 46; (2006) 227 CLR 57.

[64] Ibid 68 (Gleeson CJ and Crennan J).

[66] Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65, 73 (Maxwell P and Charles JA).

[67] [1968] HCA 1; (1968) 118 CLR 618.

[68] Ibid 622 (Kitto, Taylor, Menzies and Owen JJ) (citations omitted).

[69] [2006] HCA 46; (2006) 227 CLR 57.

[71] Exhibit DH-3 to the Harris Affidavit.

[72] Indorsement of Claim for Originating Motion (25 January 2019) [4]-[5].

[73] [1988] HCA 32; (1988) 165 CLR 197.

[75] Plaintiffs' Submissions (31 January 2019) (Plaintiffs' Submissions) [7](a); Kellogg Brown & Root Pty Ltd v Australian Aerospace Ltd [2007] VSC 200.

[78] I note that this application was argued on limited responsive material from the defendants.

[79] Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169, 195-96 (French CJ, Bell and Keane JJ); 214 (Kiefel J); Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45, 63 (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ); Service Station Association Ltd v Berg Bennett & Associates Pty Ltd [1993] FCA 638; (1993) 45 FCR 84 (Gummow J).

[80] [2014] HCA 32; (2014) 253 CLR 169.

[81] JW Carter et al, 'Terms Implied in Law: "Trust and Confidence" in the High Court of Australia' (2015) 32 JCL 203, 215.

[84] [2007] VSC 200.

[86] [2011] NSWSC 1154.

[89] [2004] NSWCA 15.

[91] JW Carter, Carter on Contract (Butterworths, 2002) [11-170].

[92] [1983] HCA 14; (1983) 151 CLR 447.

[93] [1993] FCA 638; (1993) 45 FCR 84.

[96] Defendant's Submissions (31 January 2019) (Defendant's Submissions) [15]; Trans Petroleum (Australia) Pty Ltd v White Gum Petroleum Pty Ltd (2012) 268 FLR 43.

[97] London and Blackwall Railway Co v Cross (1885) 31 Ch D 354, 369 (Lindley LJ).

[98] Beswicke v Alner [1926] VicLawRp 10; [1926] VLR 72, 76.

[99] Plaintiffs' Submissions [17(a)].

[103] JC Williamson Ltd v Lukey [1931] HCA 15; (1931) 45 CLR 282, 299-300 (Dixon J); Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1, 46-7 (Gummow J).

[104] [2006] VSCA 89; (2006) 15 VR 65.

[106] Defendant's Submissions [29(a)].

[109] Exhibit DH-56 to the Harris Affidavit.

[110] Defendant's Submissions [21]-[25].