SOUTHERN CROSS BROADCASTING (AUSTRALIA) LTD (ACN 006 976 974)

Injunctions - Application for interlocutory injunction - Serious question to be tried - Whether damages an adequate remedy - Where balance of convenience lies - Whether prejudice to third parties in granting injunctive relief - Turns on own facts

American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396

Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266

Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499

Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471

Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337

Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772

Glen Holdings Pty Ltd v AGC (General Finance) Ltd, unreported; FCt SCt of WA; Library No 930366; 2 June 1993

Harman Pictures NV v Osborne [1967] 2 All ER 324

Herbert Clayton & Jack Waller Ltd v Oliver [1930] AC 209

Locabail International Finance Ltd v Agroexport [1986] 1 WLR 657

McCarty v North Sydney Municipality (1918) 18 SR (NSW) 210

White v Australian and New Zealand Theatres Ltd [1943] HCA 6; (1943) 67 CLR 266

1 STEYTLER J: The plaintiffs are radio announcers. They appear as such on the radio station 96 FM breakfast program. That radio station is operated by the defendant which is the plaintiffs' employer. The defendant has engaged two other radio announcers, Gary Shannon and Jane Marwick, both of whom had previously been employed by a rival radio station, to join its breakfast program. The plaintiffs believe that Shannon and Marwick, and Shannon in particular, are likely to become the breakfast program's principal radio announcers. The plaintiffs say that their appointment as such will be in breach of the contract of employment which each plaintiff has with the defendant. They consequently applied for an injunction restraining the defendant from:

"(a) engaging on the defendant's commercial radio station 96 FM on the breakfast program between the hours of 6.00 am and 10.00 am each weekday Gary Shannon, Jane Marwick or any other person as the primary presenters;

(b) promoting or advertising the breakfast program as being other than the Redman and Kay Show."

2 At the conclusion of argument I declined to grant to the plaintiffs the injunctive relief sought by them and said that I would later provide written reasons for my decision. These are those reasons.

3 It is not in dispute that Shannon and Marwick have been engaged by the defendant to appear on the 96 FM breakfast program. It also appears from the evidence to be probable that Shannon, in particular, will be the radio station's "principal" breakfast announcer. So much is apparent from the fact that the defendant proposes to market its breakfast program by placing heavy reliance upon Shannon's name. However the defendant contends that nothing which it has done, or proposes to do, is in breach of either plaintiffs' contract of employment with it.

4 Each plaintiff contends that he was employed by the defendant pursuant to an agreement which was partly oral, partly in writing and partly to be implied. That is so notwithstanding that each plaintiff entered into an agreement in writing with the defendant on 22 October 1999. Each agreement recites (recitals C and D) that the "breakfast announcer" has offered to provide certain "program packages" for the defendant upon the terms and conditions therein referred to and that those packages "will feature the performance of the presenter as a breakfast announcer and producer". By cl 3 of each agreement the "presenter" (each plaintiff) "agrees that during the term of this agreement he shall provide to 96 FM program packages and services as follows:

(a) A minimum of five program packages a week, one for each weekday, each of a minimum of four hours of live daily programming, for broadcast on 96 FM between 6.00 am and 10.00 am or of such other minimum duration and for broadcast on such other stations and at such other times as may from time to time be agreed between Southern Cross [the defendant] and the presenter.

... "

5 By cl 5(b) and (c) of each agreement each "presenter" undertook to comply with all reasonable directions given by the General Manager and/or the Program Director on behalf of radio station 96 FM and to comply with "all reasonable directions which may be given by 96 FM with regard to the format, content and presentation of radio programs pursuant to [the] agreement".

6 Clause 5 of each agreement also provided that, subject to the other provisions thereof, "the presenter will have full control over the editorial content of his contribution to the programs".

"During the term of this agreement the presenter acknowledges and admits that his services, being of a special character due to the specialised expertise to be provided by the presenter to 96 FM, have a special and unique value to 96 FM the loss of which may not be reasonably or adequately compensated in damages and the presenter expressly agrees that 96 FM, in addition to any other claims or remedies it may have against the presenter, shall be entitled if reasonable in the circumstances to a remedy of an injunction to enforce the provisions of this agreement."

8 There is no similar acknowledgment by the defendant in respect of any "special and unique value" to either plaintiff, the loss of which might not reasonably or adequately be compensated in damages.

9 Finally, so far as is presently relevant, cl 8(g) of each agreement provides that:

"If the ratings performance of the program continues at a level below 8.4% for three consecutive surveys, Southern Cross reserves the right to review the agreement and if it decides to terminate the agreement will give six months' written notice to the presenter. Such review cannot occur within the first six months of this agreement."

10 The term of each agreement was a period of two years terminating on 20 October 2001, unless terminated earlier pursuant to the provisions of the agreement.

11 The plaintiffs contend that the partly oral, partly written and partly implied agreement relied upon by them (and the written portion is said to include the written agreements to which I have referred above) included a term to the effect that that the plaintiffs would "jointly contract as the major presenters of the breakfast program". They say also that it was agreed that the defendant would promote the program as the plaintiffs' program and that there was an implied undertaking on the part of the defendant not to engage other "primary presenters" during the course of the agreement.

12 While the argument as to the existence of an implied undertaking in the terms asserted by the plaintiffs is, I think, a difficult one, it is enough to say, for present purposes, that it seemed to me that there was undoubtedly a serious question to be tried (as to which see, for example, Castlemaine Tooheys Ltd v State of South Australia [1986] HCA 58; (1986) 161 CLR 148 at 153), as regards the plaintiffs' contention that it is implicit in the agreement made by each of them with the defendant that each would be a principal presenter of the 96 FM breakfast program over the duration of the contract term and that no other presenter or presenters would, during the currency of that term, be engaged by the defendant, without the consent of the plaintiffs, on terms giving to that other presenter or those other presenters a principal role or roles on the 96 FM breakfast program in such a way as to downgrade the role of the plaintiffs or either of them to one which was subsidiary or subservient to that assigned to the other presenter or presenters. While it is unnecessary, and inadvisable, at this stage to traverse the arguments of the parties in this respect in any detail I should perhaps say that some support for the plaintiffs' contentions is provided both by the background circumstances in which the plaintiffs were engaged by the defendant and by some of the terms of the written agreement executed by each of them, particularly cl 8(g) thereof.

13 It also seemed to me, from the evidence as it stood, that there was quite plainly a serious question to be tried as regards the proposition that the defendant did, as I have already mentioned, intend to engage Shannon, in particular, as a principal presenter on the 96 FM breakfast program, leaving each of the plaintiffs in a subsidiary or subservient position to him, albeit the terms upon which Shannon and Marwick have been engaged by the defendant were not before the court.

14 While I am, as I have said, prepared to find that there is a serious question to be tried in each of these respects I am not prepared to categorise the plaintiffs' case as either strong (as I was invited to do by counsel for the plaintiffs) or as weak (as I was invited to do by counsel for the defendant). It seems to me to be premature, at this stage (and the defendant has as yet not had a full opportunity to file and serve answering affidavits), to reach any conclusion in that regard.

15 That brings me to the balance of convenience and to the related question whether it would be just, in all of the circumstances of the case, to confine the plaintiffs to a remedy in damages.

16 The plaintiffs contended that, if no injunction was granted, their professional reputations would be adversely affected by their reduced status. They said that the damage which they would suffer in this respect would be extremely difficult to estimate in money terms and that it would be irreparable.

17 The defendant pointed to affidavit evidence which has been filed on its behalf to the effect that if it is unable to improve its ratings, as it believes it will do by adding Shannon and Marwick to its breakfast program (as it claims to be entitled to do), then it will suffer a very substantial loss of revenue. Mr Declan Kelly, the defendant's sales director, has said in this respect that even a one per cent increase in ratings would amount to approximately $500,000 in extra advertising income.

18 There were other matters which had to be taken into account.

19 These included the interests of Shannon and Marwick. It is well settled that the rights of the plaintiff and the defendant are not the only rights which are considered in determining where the balance of convenience lies. In Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [1998] HCA 30; (1998) 195 CLR 1 at 41 - 42 Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ quoted what had been said by Sir Richard Kindersley V-C in Wood v Sutcliffe [1851] EngR 963; (1851) 2 Sim (NS) 163 at 165 -166 as follows:

"[W]henever a Court of Equity is asked for an injunction in cases of such a nature as this, it must have regard not only to the dry strict rights of the Plaintiff and Defendant, but also to the surrounding circumstances, to the rights or interests of other persons which may be more or less involved: it must, I say, have regard to those circumstances before it exercises its jurisdiction (which is unquestionably a strong one), of granting an injunction."

"The principle in Wood v Sutcliffe was approved by Cumming-Bruce LJ in Miller v Jackson [1977] EWCA Civ 6; [1977] QB 966 at 988:

'Courts of equity will not ordinarily and without special necessity interfere by injunction where the injunction will have the effect of very materially injuring the rights of third persons not before the court.'

His Lordship cited with approval a passage from Dr Spry's Equitable Remedies 5th ed (1997), pp 402 - 403. We too adopt the author's statement:

'the interests of the public and of third persons are relevant and have more or less weight according to the other material circumstances. So it has been said that courts of equity "upon principle, will not ordinarily and without special necessity interfere by injunction, where the injunction will have the effect of very materially injuring the rights of third persons not before the courts". Regard must be had "not only to the dry strict rights of the plaintiff and the defendant, but also the surrounding circumstances, to the rights or interests of other persons which may be more or less involved". So it is that where the plaintiff has prima facie a right to specific relief, the court will, in accordance with these principles, weigh the disadvantage or hardship that he would suffer if relief were refused against any hardship or disadvantage that might be caused to third persons or to the public generally if relief were granted, even though these latter considerations are only rarely found to be decisive. (Conversely, detriment that might be caused to third persons or to the public generally if an injunction were refused is taken into account.)'

Miller v Jackson has been approved and applied on a number of occasions in Australian courts: Clark v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 at 419 (per Thomas J with whom Campbell CJ and Andrews SPJ agreed); O'Keeffe Nominees Pty Ltd v BP Australia Ltd [1990] ATPR 41-057 at 51,740-51,741, per Spender J; Gilltrap v Autopromos Pty Ltd [1995] ATPR 41-395 at 40,377, per Spender J. See also Perry v Mordiesel Co Pty Ltd [1976] VicRp 58; [1976] VR 569 at 576, per Lush J."

20 There is no suggestion, on the evidence as it presently exists, that either of Shannon or Marwick had any notice of the fact, if it be the fact, that their proposed employment with the defendant would result in the defendant breaching its contract or contracts with the plaintiffs.

21 Next, in deciding whether or not to grant an injunction courts have often, in the past, expressed concern at the prospect of making orders which might be difficult to work out in practice and which might result in the involvement of the court in "constant supervision" of continued conduct. (See, for example, J C Williamson Ltd v Lukey [1931] HCA 15; (1931) 45 CLR 282 at 298 and H Jones & Co Pty Ltd v Talbot (1948) 180 CLR 63 at 66.) More recently, in the Patrick Stevedores case, above at 46 - 47, Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ said, after considering what had been said by Lord Hoffman in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1997] UKHL 17; [1998] AC 1, that:

"What is significant is the acceptance by the House of Lords that the concept of 'constant supervision by the court' by itself is no longer an effective or useful criterion for refusing a decree of specific performance ... Rather, Lord Hoffman placed stress on other propositions. First, a person who is subject to a mandatory order attended by a contempt sanction (which 'must realistically be seen as criminal in nature' (Witham v Holloway (1995) 183 CLR 525 at 534)) ought to know with precision what is required (Argyll [1997] UKHL 17; [1998] AC 1 at 13 - 14); and, second, the possibility of 'repeated applications for rulings on compliance' with orders requiring a party 'to carry on an activity, such as running a business over a more or less extended period of time' (Argyll [1997] UKHL 17; [1998] AC 1 at 13) should be discouraged."

22 Callinan J, in Patrick Stevedores, above at 90, quoted, with apparent approval, the following extract from the judgment of Dixon J in J C Williamson Ltd v Lukey, above, at 299:

"Probably the true rule is that an injunction should not be granted which compels, in substance, the defendant to perform his side of the agreement when the continuance of his obligation to do so depends upon the future conduct of the plaintiff in observing conditions to be fulfilled by him."

23 Once it was accepted (as it was, quite rightly, by counsel for the plaintiff) that no injunction could properly be ordered which restrained the defendant from making any use, at all, of Shannon and Marwick on its breakfast program, the difficulties in formulating appropriate injunctive relief became immediately apparent. If an injunction was to be granted it would have had to be in terms which permitted those persons to participate in the breakfast program but which prevented them from being allowed somehow to "take over" the breakfast program at the expense of the plaintiffs or from being permitted to perform their role in such a way as to leave that of the plaintiffs subservient or subsidiary to them. It is no easy task to formulate orders of that kind with the requisite precision, as became evident during the course of submissions to the court. Moreover orders of this kind carry with them a very high prospect of repeated applications for rulings on compliance.

24 Counsel for the plaintiffs acknowledged these difficulties but suggested that they might be overcome by giving programming control of the defendant's breakfast program to the plaintiffs and to Shannon and Marwick on alternate days or, perhaps, in alternate spells on the same day. However this would give rise to potentially serious administrative difficulties and also to problems in deciding what amounts to "control" for that purpose. It might also result in the defendant's inability to exercise important programming control rights which it has reserved to itself under the contracts made with the plaintiffs. Other suggested solutions suffered from similar difficulties in formulation.

25 It is also important to mention, in this respect, that the defendant had undertaken to the court that it would not promote its breakfast show as "the Gary Shannon show" or anything similar to that and it was, on the evidence before me, still prepared to have the plaintiffs continue as presenters on that show together with Shannon and Marwick.

26 It seemed to me, when all of these circumstances were taken into account, especially the interests of the third parties to whom I have referred (and I repeat that there is presently no evidence that either of them knew that their engagement by the defendant would result in any breach of the contract or contracts entered into with the plaintiffs) and the real difficulties which would inevitably follow from the making of orders of the kind to which I have referred, that this is a case in which the most appropriate exercise of discretion, on the facts as they presently stand, is one which would, on the strength of the undertaking which has been given, deny to the plaintiffs the injunctive relief which they seek and confine them to a remedy in damages.

27 The application was, upon the defendant's undertaking to which I have referred above, consequently dismissed.

28 It would, of course, remain open to any party to approach the court afresh should there be a material alteration in circumstances.