Supreme Court of WA|2002-11-22|Before: Barker J

Sds Corporation Ltd v Pasdonnay Pty Ltd & Anor [2002] WASC 276 (22 November 2002)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : SDS CORPORATION LTD -v- PASDONNAY PTY LTD & ANOR [2002] WASC 276

Applications for mandatory interlocutory injunction and prohibitory interlocutory injunction - Business Asset Sale Agreement - Due diligence investigations clause - Obligation on vendor to provide "all assistance" - Turns on own facts - Injunctions granted

Mandatory and prohibitory interlocutory relief granted

Australian Mutual Providence Society v 400 St Kilda Road Pty Ltd [1999] 2 VR 417

Bullock & Ors v Federated Furnishing Trades Society of Australasia & Ors (No 1) [1985] FCA 19; (1985) 5 FCR 464

Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410

Foran & Anor v Wight & Anor [1989] HCA 51; (1989) 168 CLR 385

G R Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631

Garden Cottage Foods Ltd v Milk Marketing Board [1983] 3 WLR 143

Hoffman-La Roche & Co v Secretary of State of Trade [1975] AC 295

Hubbard v Vosper [1972] 2 QB 84

Nina's Bar & Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613

Regent's Pty Ltd v Subaru (Aust) Pty Ltd (1996) ATPR 41-463

Temwood Holdings Pty Ltd v Asean Australian Assets Pty Ltd [2000] WASC 84

1 By an application dated 18 October 2002, which I heard on 31 October 2002, the plaintiff seeks a mandatory interlocutory injunction requiring the defendants to provide all assistance required by the plaintiff (SDS) to enable SDS to complete due diligence investigations under an agreement between SDS, the first defendant (Pasdonnay) and the second defendant (Mr Rear) entered into in July 2002.

2 By an application dated 15 November 2002, which I heard on 19 November 2002, SDS also seeks a prohibitory interlocutory injunction to prevent the defendants from adversely affecting the business or disposing of assets of the business the subject of the agreement.

3 In the action, SDS seeks specific performance of certain obligations contained in the agreement which it says will enable it to complete due diligence investigations provided for by the agreement, or damages in lieu of specific performance, as well as damages and interest on damages. The relief sought in the first application would largely, if not wholly, obviate the need for final relief, at least if granted in the form requested.

4 By an undated agreement between the parties entered into in July 2002 (the agreement), Pasdonnay agreed to sell and SDS agreed to buy the business assets of the hammer and bit manufacture business carried on by Pasdonnay in Western Australia under the business name "International Drill Quip" (or IDQ). Additionally, Pasdonnay agreed to be released from, and SDS agreed to assume, certain liabilities, on the terms and conditions contained in the agreement.

5 Conditional upon completion of the sale of the business assets, Mr Rear, who is a director of Pasdonnay, agreed to enter into a licence agreement with SDS under which he will licence certain patents to SDS, and depending on the circumstances, transfer the patents to the purchaser. Those patents are used in the business conducted by Pasdonnay.

6 By cl 3.1 of the agreement, the purchase price of the "Business Assets" shall be the total value of the "Net Assets", as these terms are defined in the agreement. The parties estimate that the purchase price shall be $5,000,000.

7 By cl 6.1 of the agreement, in substance, the completion of the sale and purchase of the Business Assets shall take place at 10.30 am on the "Completion Date", or at such other time on that day as the parties agree. The expression "Completion Date" is defined by cl 1.1.19 to mean the date that is 10 "Business Days" after the satisfaction of the "Conditions" or such other date agreed by the parties. The expression "Conditions" is defined by cl 1.1.21 to mean the conditions precedent listed in cl 4.1.

8 On the face of the agreement, although the nature and effect of the obligations created by it are somewhat in dispute, it was contemplated by the parties that, prior to the Completion Date, a number of things should happen, including the preparation of "Pre-Completion Accounts" and the conduct by SDS of "due diligence investigations" in relation to the "Business, the Business Assets and the Patents", as those various expressions are defined in the agreement. As already noted, the agreement is affected by conditions described as "conditions precedent".

9 At all material times upon the hearing of the two applications, the Completion Date had not arrived.

10 SDS says the agreement is still on foot. It effectively seeks the right to complete the due diligence investigations provided for by the agreement. If it can do this, it says it will be able to determine whether or not to complete the purchase under the agreement. Additionally, it says this will enable it to satisfy the Commonwealth Bank of Australia that it should provide finance, as contemplated under the agreement. The defendants say SDS has been given all the information it requires to enable it to complete due diligence investigations. In any event, the defendants say the agreement is at an end.

Principles for grant of interlocutory injunctions

11 It is generally accepted that the principles governing the grant or refusal of interlocutory injunctions in private law litigation require the plaintiff to show (1) that there is a serious question to be tried or that 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; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction: Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 149 at 153 per Mason ACJ.

12 The first application is for a mandatory interlocutory injunction. As noted, the terms of the application would effectively obviate the final relief sought in the action, if granted in the terms sought. The application seeks an order that the defendants do all things necessary to comply with their obligations under cls 4.3.1, 4.3.2, 4.5.1 and 19 of the agreement and, in particular, provide all assistance required by SDS to conduct due diligence investigations in relation to the Business, the Business Assets and the Patents.

13 It is plain that only in very rare cases will a mandatory injunction be granted at an interlocutory stage: Cash Converters Pty Ltd v Hila Pty Ltd (1993) 9 WAR 471 at 483 per Kennedy J; Seaman, Civil Procedure of Western Australia, [52.1.24]. It is not common to grant a mandatory injunction which would, if granted, effect the major part of the relief in the action and the application should be approached with caution and granted only in a clear case: HB Homes Pty Ltd v Beer [1986] 2 Qd R 379 at 381. Further, a mandatory injunction will only be granted where its terms can be clearly understood: Redland Bricks Ltd v Morris [1970] AC 653 at 667. Similarly, the Court should not become involved in the supervision of an injunction: J C Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282. In the generality of the circumstances, the Court may regard the degree of assurance it feels will appear at trial that the injunction was rightly granted: Queensland v Australian Telecommunications Commission [1985] HCA 25; (1985) 59 ALR 243 at 245; [1985] HCA 25; 59 ALJR 562 at 563; Cash Converters Pty Ltd v Hila Pty Ltd (supra) at 484 - 484. However, the fundamental principle in relation to interlocutory injunctions, whether prohibitory or mandatory, is that the court should take whichever course carries the lower risk of injustice in the event that the party who claims the injunction fails to establish his or her right at trial: Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772 at 781; [1986] 1 WLR 670 at 680; Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499, 501 - 504.

14 I accept that ordinarily the grant of a mandatory interlocutory injunction is a particularly rara avis, as observed in Meagher Gummow and Lehane, "Equity, Doctrines and Remedies", 3rd ed at page 600, par [2178]. I also accept the learned authors' comment that:

"This is partly because a mandatory injunction is usually more onerous for a defendant to comply with than a prohibitory one; moreover, the usual purpose of an interlocutory injunction is to preserve the status quo, a consideration inapplicable to mandatory injunctions. But there is nothing to prevent a court from issuing an interlocutory mandatory injunction. Typically, but not exhaustive, examples in cases where the plaintiff's property would otherwise be in danger (eg through risk of fire from the storage of combustible material on the defendant's premises) [footnote omitted] where the defendant's conduct has been contumelious [footnote omitted] or evasive [footnote omitted] or where the defendant has attempted to forestall the court's order [footnote omitted]. ...

In truth, a Judge hearing an application for an interlocutory mandatory injunction must apply exactly the same test as he would in the case of an application for an interlocutory prohibitory injunction, not some different or more exacting test; nor is the fact that the relief sought is mandatory a ground for refusing relief; but in the application of the normal tests, often, but not always, the fact that the relief sought is mandatory will tilt the balance of convenience in the defendant's favour. In England, this is the approach which Hoffmann J took in Films Rover International Ltd v Cannon Film Sales Ltd [1986] 3 All ER 772, disregarding the confusing lucubrations of the Court of Appeal to the opposite effect in Locabail International Finance Ltd v Agroexport [1986] 1 All ER 901. In Australia it is the view which Judge Heenan took in Franconi Holdings Pty Ltd v Gunning [1979 - 81] 1 SR(WA) 341, in which Gummow J took in Business World Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 (declining to follow, in this respect, the decision of Gibbs CJ in Queensland v Australian Telecommunications Commission [1985] HCA 25; (1985) 59 ALR 243)."

15 The following provisions of the agreement are particularly relevant to the determination of the applications before me:

2.1 Business Assets

Pasdonnay shall sell, and the purchaser [SDS] shall buy, the Business Assets free of all Encumbrances subject to the terms and conditions set out in this agreement.

2.2 Assumed Liabilities

Pasdonnay shall assign and be released from, and the purchaser shall assume, the Assumed Liabilities subject to the terms and conditions of this agreement."

4.1 Conditions

Completion is subject to and conditional on:

4.1.1 the results of the due diligence investigations to be undertaken by or on behalf of the Purchaser in relation to the Business, the Business Assets and the Patents being satisfactory to the Purchaser in its absolute discretion (for the avoidance of doubt, the due diligence investigations will include a review of the matters (if any) set out in the Disclosure Letter from the Asset Holders [the defendants, jointly and severally]);

4.1.2 If required by the listing rules of Australian Stock Exchange Ltd, the Resolution being passed at an extraordinary general meeting of the Purchasers' shareholders;

4.1.3 HSBC, as financier of Pasdonnay, consenting to the sale and purchase of the Business Assets and the assumption of the Assumed Liabilities in accordance with this agreement and, if consent is conditional, where such conditions are satisfactory to Pasdonnay and the Purchaser;

4.1.4 Commonwealth Bank of Australia, as financier of the Purchaser, consenting to the sale and purchase of be Business Assets and the assumption of the Assumed Liabilities in accordance with this agreement and, if consent is conditional where such conditions are satisfactory to the Purchaser and Pasdonnay; and

4.1.5 the Pre-Completion Accounts and the Certificate being prepared in accordance with clause 4.4.

4.2.1 Subject to the Asset Holders complying with their obligations under clause 4.3.1, the Purchaser shall conduct due diligence investigations in relation to the Business, the Business Assets and the Patents.

4.2.2 The Purchaser must use its Best Endeavours to procure the satisfaction of the Conditions in clause 4.1.2, clause 4.1.4 and clause 4.1.5.

4.2.3 Pasdonnay must use its best endeavours to satisfy the Condition in clause 4.1.3 and clause 4.1.5.

4.3.1 the Asset Holders must provide all assistance required by the Purchaser to enable it to conduct the due diligence investigations to be conducted by the Purchaser in accordance with clause 4.2.1. Without limiting the generality of this clause 4.3.1, the Asset Holders will give the Purchaser:

(a) access to all information necessary for the Purchaser to conduct due diligence investigations in relation to the Business, the Business Assets and the Patents, such information to be all information necessary for the Purchaser to make an informed decision as to whether or not to purchase the Business Assets and enter the licence agreement;

(b) access to all relevant personnel, officers and advisers and to the Business Assets; and

(c) responses to any queries raised by the Purchaser in relation to the Business and/or the Business Assets and/or the Patents.

4.3.2 the Asset Holders must provide all reasonable assistance to the Purchaser in procuring the satisfaction of the Conditions in clause 4.1.2 and clause 4.1.4.

4.3.3 the Purchaser must provide all reasonable assistance to Pasdonnay in procuring the satisfaction of the condition in clause 4.1.3.

4.10.1 in the event that the Conditions in clause 4.1.2 or clause 4.1.4 have not been satisfied or waived by 30 September 2002 or such other date as the parties may agree in writing, then this argument may be terminated by either Pasdonnay or Rear giving the other parties notice of such termination.

4.10.2 in the event that the Conditions in clause 4.1.2, clause 4.1.3 or clause 4.1.5 have not been satisfied or waived by 30 September 2002 or such other date as the parties may agree in writing, then this agreement may be terminated by the Purchaser giving the other parties notice of such termination.

4.10.3 if this agreement is terminated under clause 4.10, then in addition to any other rights provided by law:

(a) each party is released from its obligations to continue performance under this agreement; and

(b) each party retains the rights it has against any other party in respect of any past breach.

4.10.4 notwithstanding clause 4.10.3, if this agreement is terminated under this clause 4.10, the provisions of clauses 15, 16, 17 and 18 shall survive such termination and remain in full force and effect."

16 (I have removed the emboldening of some words in the original, as they are not relevant to these reasons.)

17 While many words and expressions are defined in the agreement, the agreement does not provide any definitions or interpretation in respect of the expressions "due diligence" or "due diligence investigations". Clause 4.1.1 provides, however, that the due diligence investigations will include a review of the matters (if any) set out in the "Disclosure Letter" from the Asset Holders. There is no evidence before me of a Disclosure Letter as defined in the agreement, and so there is no evidence before me of any matters set out in such a letter for the purpose of determining what the due diligence investigations must include by reason of this clause for the purposes of the agreement.

18 SDS also pleads that the agreement is subject to an implied term that each party will do all things necessary to ensure that the other might have the benefit of the agreement.

19 SDS submits that Pasdonnay and Mr Rear have breached the terms of the agreement in that:

(1) Pasdonnay and Mr Rear have failed to produce information necessary for SDS to conduct due diligence in relation to the Business, the Business Assets and the Patents requested by facsimiles dated 8 August 2002, 13 August 2002 and 16 August 2002 from SDS's agent, Deloitte Touche Tohmatsu (Deloittes).

(2) On 2 September 2002, Andrew Gilbert, an employee of Pasdonnay, informed Rochelle Armstrong of Deloittes that Pasdonnay would not provide any further information in relation to the Business, the Business Assets and the Patents and/or would not respond to queries raised by Deloittes in relation to the Business and/or the Business Assets and/or the Patents until further notice.

(3) By facsimile dated 19 September 2002 addressed to SDS, Pasdonnay and Mr Rear asserted that the agreement was meaningless and unenforceable and by necessary implication that they refused to perform it.

(4) Despite demands made on 25 September 2002 and 30 September 2002 by facsimile by SDS's solicitors, Thomson Playford, Pasdonnay and Mr Rear failed to provide information necessary for SDS to conduct due diligence in relation to the Business, the Business Assets and/or the Patents and have failed to respond to queries raised by Deloittes in relation to the Business and/or the Business Assets and/or the Patents.

(5) In the premises, Pasdonnay and Mr Rear have failed to do all things necessary for SDS to have the benefit of the agreement.

20 SDS says it has been unable to complete its due diligence investigations as a result of the breach of the agreement pleaded.

21 In its amended defence dated 13 November 2002, amended following the hearing of the first application, the defendants in substance answer both applications of SDS by saying three things:

(1) That the requirement that the defendants provide all assistance to SDS to enable it to conduct the due diligence investigations referred to in the agreement is to be construed as an obligation requiring the defendants to provide all assistance reasonably required by the plaintiff to conduct such investigations and that the obligation on the defendants to give the plaintiff information necessary for it to conduct such investigations is to be construed as an obligation requiring the defendants to give SDS all information reasonably necessary for it to conduct such investigations.

(2) That the agreement came to an end on 22 October 2002 by reason of HSBC (HSBC Bank Australia Ltd), without any fault on the part of the defendants, refusing its consent to the assumption of the Assumed Liabilities by SDS, pursuant to cl 4.1.3 of the agreement.

(3) Alternatively, the agreement came to an end on 8 November 2002 pursuant to cl 4.10.1 of the agreement, because the Condition in cl 4.1.4 which provided that the Commonwealth Bank of Australia, as the plaintiff's financier, should consent to the sale and purchase of the Business Assets and the assumption of the Assumed Liabilities by 30 September 2002 or such other date as the parties might agree in writing, had not been satisfied. The defendants purported to give notice of termination to SDS by notice dated 8 November 2002.

22 In response to the purported termination of the agreement by the defendants by notice on 8 November 2002, SDS says that a party may only terminate for non-satisfaction of a condition precedent (to performance) if it has not breached the contract in such a way as to cause or contribute to the failure of the condition. In this instance, SDS says that it is the conduct of Pasdonnay in refusing to comply with its request for further information to enable the completion of its due diligence investigations, that has led to the non-satisfaction of the condition precedent. As a result, SDS claims that the purported termination of the agreement for this reason is without legal effect.

23 As to the submission of the defendants that the agreement came to an end on 22 October 2002, SDS submits that, by reason of the terms of cl 4.10 and especially cl 4.10.2, cl 4.1.3 is a condition for the plaintiff's benefit and termination for its non-satisfaction is only at the election of SDS, and SDS has not elected to terminate.

The nature and extent of the obligation under cl 4.3.1 to provide "all assistance"

24 In these circumstances, it is appropriate first to have regard to the nature of the obligations that pertain to the due diligence investigations. Unless there is a serious issue to be tried in respect to the pleaded obligation of Pasdonnay and Mr Rear to provide assistance to SDS, both applications of SDS for interlocutory relief will fall away.

25 In late July 2002, SDS retained Deloittes to conduct due diligence investigations for the purposes of the agreement and to provide a report detailing the results of their investigations. Following various communications between representatives of Deloittes and representatives of Pasdonnay, the position appears to have been arrived at by 2 September 2002 that the defendants indicated they would not provide further information sought by and on behalf of SDS. Pasdonnay and Mr Rear then took the view that the additional information SDS required was not necessary to enable SDS or Deloittes on its behalf, to complete the due diligence investigations required for the purposes of the agreement. They maintain that position. In short, the defendants say that the information that SDS considers to be outstanding is not reasonably required.

26 The requests for further information made by Deloittes that are acknowledged by the parties to be "outstanding" are 12 in number. They are identified in a document prepared by Mr Gavin Buckingham of Ernst and Young (consultants to the defendants), which is attachment A to the affidavit of Andrew Stephen Gilbert sworn 28 October 2002, on the basis of information provided by Mr Gilbert.

27 SDS says it is entitled to have its requests answered, notwithstanding the defendants' view that the information requested is not reasonably necessary, in its view and that of its accounting advisers, to complete due diligence investigations of the type required under the agreement.

28 At first glance, the obligation set out in the first sentence of cl 4.3.1 appears to be unqualified. It may suggest that any request made by SDS must be answered by the defendants, because a failure to do so will constitute a failure to provide "all assistance".

29 However, there are two important features of cl 4.3.1, when read as a whole, which deny the adoption of this unqualified view. First, the obligation to provide "all assistance" is expressly stated to be "to enable it to conduct the due diligence investigations to be conducted by the Purchaser in accordance with clause 4.2.1". Clause 4.2.1 makes it clear that the Purchaser, that is SDS, has an obligation to "conduct due diligence investigations in relation to the Business, the Business Assets and the Patents". As noted earlier, each of these words or terms is defined.

30 The second aspect of cl 4.3.1 that must be taken into account is the further provision that, "without limiting the generality of this clause 4.3.1" the defendants will give SDS access to information, access to persons and responses to queries of the type and in the circumstances specified in subcls (a), (b) and (c). In my view, it follows that where the assistance required under cl 4.3.1 is in the nature of "access to information", "access to personnel, officers and advisers" or "responses to queries", the right of SDS to require the assistance of the defendants and the obligation of the defendants to provide it, is governed by the terms of subcls (a), (b) and (c) respectively. In such cases, a circumscribed right and obligation cannot be enlarged by the words of the first sentence of cl 4.3.1, notwithstanding the words "without limiting the generality of this clause 4.3.1". If the position were otherwise, it would be open to SDS to insist, notwithstanding the terms of cl 4.3.1(a), that it is entitled to access to information even though the information is not necessary to the making of an informed decision by it whether or not to purchase the Business Assets and enter into the Licence Agreement. That plainly cannot be said to be the intention of the parties.

31 That the intention of the parties cannot be so construed, is confirmed by the ultimate purpose of due diligence investigations identified by condition precedent cl 4.1.1. The "results" of the due diligence investigations to be undertaken on behalf of SDS in relation to the Business, the Business Assets and the Patents, must be "satisfactory to the Purchaser in its absolute discretion" otherwise the agreement will be at an end.

32 In these circumstances, it is my view that any request for assistance made by SDS to either of the defendants pursuant to cl 4.3.1 must satisfy the following criteria:

(1) It must be a request that will enable SDS to conduct the due diligence investigations in relation to the Business, the Business Assets and the Patents.

(2) If the request for assistance constitutes a request for "access to information", "access to personnel, officers and advisers" or "responses to queries", then the obligation to provide such access or responses is governed respectively by subcls (a), (b) and (c).

(3) In the case of all requests for assistance, the request for access for information, access to persons, responses or other assistance must be to enable SDS to make an informed decision as to whether or not to purchase the Business Assets and enter into the Licence Agreement.

33 On this view, if a request for assistance objectively appears to relate to the Business, the Business Assets and the Patents, there will be a prima facie obligation on the defendants to assist. Depending on the nature of the request for assistance, the second criterion may come into play. However, there may be forms of assistance that do not fit under subcls (a), (b) or (c) of cl 4.3.1. They will not be affected by that criterion. All requests for assistance, however, must satisfy the third criterion.

34 If must also follow, in my view, on the proper interpretation of the rights and obligations created by cl 4.3.1, that SDS is only entitled to require assistance, whether it be by way of access to "information" or information held by personnel, officers and advisers to whom access is obtained, and information the subject of responses to queries, or otherwise, in respect of information that is within the control or possession of the defendants. In some cases, such information may be in a documentary, including electronic, form. In other cases, it may be knowledge possessed by a person. Where the request for "information", however, goes beyond information that is currently controlled or possessed by the defendants, but on a true analysis is a request for information not currently controlled or possessed by the defendants, then it will not be a request for assistance falling within cl 4.3.1.

35 In my opinion, given the manner in which these questions of interpretation of cl 4.3.1 were raised on the hearing of the applications, I do not consider that an interpretation of cl 4.3.1 other than that which I have set out in these reasons is sufficiently arguable for the purpose of disposing of the first application. Put another way, I am not satisfied that the interpretation of cl 4.3.1 contended for by counsel for SDS constitutes a triable issue, at least not one that would be likely to be sustained at trial.

36 The facts remain that the defendants have failed or neglected to answer certain requests put by or on behalf of SDS. I now turn to them in order to decide whether relief in the form of a mandatory interlocutory injunction should go to require the defendants to provide the required assistance.

37 While counsel for SDS drew the Court's attention to the list of outstanding requests in Mr Buckingham's report and suggested that it was a convenient list of those outstanding matters and the position the defendants have taken in respect of them, the particular requirements of Deloittes, upon whose advice SDS is relevant in these matters, are set out in an affidavit of Rochelle Argo Armstrong sworn 31 October 2002 and filed in support of the plaintiff's applications. Ms Armstrong is a Client Manager at Deloittes and commenced work on the due diligence investigations and report for SDS on 29 July 2002. It appears from par 11 of her affidavit that, as at 23 September 2002, she held the view, which she conveyed to the solicitors in South Australia who act for SDS, that the "key outstanding" areas were in regard to:

38 She also then held the view that the remainder of the information was relatively less significant to completion of the due diligence.

39 In her affidavit at par 13.1, she deals with the need for a detailed analysis of the increase in the working in progress (WIP). At par 13.2, she deals with the request for further information to reconcile the Stock Valuation Report provided on 14 August 2002 by Pasdonnay. In par 13.3, she deals with the request for a reconciliation of certain assets listed in a letter from John Hart (a valuer) against some of the items on the Fixed Asset Register provided by Pasdonnay. In par 13.4, she deals with information requested from Pasdonnay in relation to the maintenance schedules for machinery. In par 13.5, she deals with the question of stock obsolescence.

40 Given the opinion of Ms Armstrong that, apart from the three key outstanding areas identified by her, the remainder of the information was relatively less significant to completion of the due diligence investigations, I have formed the view that, leaving aside for the moment these three areas, responses to the outstanding requests identified in Mr Buckingham's report are not necessary for the Purchaser to make an informed decision as to whether or not to purchase the Business Assets and enter into the Licence Agreement. Moreover, on the evidence before me, and as a matter of discretion, given the relative level of importance attached to those other matters by Ms Armstrong, I would not be prepared to grant relief in respect of them by way of a mandatory interlocutory injunction given the finality of such relief and the disputation that surrounds the question whether such information has already been provided or is particularly necessary to the due diligence process or, as in the case of the forecast cash flow for 2003, is information that does not exist. That, then, leaves consideration of the three "key outstanding areas" identified by Ms Armstrong and whether or not, in respect of requests made for assistance in those areas, relief should be granted.

41 I turn to the first of the "key outstanding areas" identified by Ms Armstrong in par 13.1 of her affidavit, namely, the need for a detailed analysis of the increase in the work in progress (WIP) from $473,000 as at 30 June 2001 to $1.1 million as at 30 June 2002. She says the fact that the work had doubled within one year is significant. She requested further information to determine if production had increased for the purposes of meeting a demand, alternative, whether or not there had been a change in the standard costing system over the two financial years. She says the value of WIP is a factor that impacts on the overall assessment of the profitability and value of the assets of the company. Job cost sheets referred to in her facsimile to Pasdonnay of 8 August 2002 were requested as one method to assess whether the increase in the value of the WIP was attributed to a significant change in standard costing, and to assist in determining if its book value reflected accurately the true value of WIP. In answer to this proposition, the defendants rely, in essence, on what Mr Buckingham says in his report by way of summary and response. He says he understands that Deloittes has been provided with a report, outlining the total WIP by job number, and that this report agreed with the general ledger as at 30 June 2002. Additionally, he understands that the sale agreement will allow for a full stocktake of WIP to be attended by representatives from Deloittes and SDS on completion date. The results of this stocktake will determine the purchase price to be paid for stock, including WIP, under the agreement. He says it is difficult, therefore, to understand the purpose of the request. As to the movement in WIP from 30 June 2001 to 30 June 2002, it is said that this has already been explained by Mr Gilbert of Pasdonnay to Mr Benson of SDS. He also says that, before the sale is completed, another stock count is to be conducted. The defendants contend, therefore, that any movement in WIP from 30 June 2001 to 30 June 2002 would not have any bearing on the purchase price of the business and thus it is difficult to understand why any further explanations on the movement are necessary. The particular issue concerning the movement in WIP is the subject of item 7 of the letter from Deloittes to Mr Geoff Brennan of Thomson Playford, which is attachment RAA5 to the affidavit of Ms Armstrong.

42 In my opinion, the request for information identified constitutes a proper "query" for the purposes of cl 4.3.1(c) and satisfies the three criteria referred to earlier. If an undertaking to respond to such a query or provide such assistance is not offered by or on behalf of the defendants, then a mandatory injunction requiring a response to such query or the provision of such assistance will go.

43 The next "key outstanding area" identified by Ms Armstrong is in par 13.2 of her affidavit. She says she requested further information to reconcile the stock valuation report provided on 14 August 2002 by Pasdonnay against a sample count performed during stocktake by a Deloitte auditor on 15 June 2002. She says that the review revealed that stock on hand had changed between the stocktake performed on 15 June 2002 and the information in the stock valuation report dated 12 August 2002, as would be expected. The purpose of the review was to test the physical existence and movement of stock as per the stock valuation report. Purchase orders, sales invoices or stock movements were sought to assist with the reconciliation of the stock movement in the time-frame 15 June to 12 August 2002, and the cause of the difference. She says Mr Gilbert provided her with a stock movement list. However the codification of the list required clarification by discussion with Mr Gilbert and therefore the differences remain unreconciled. In Mr Buckingham's report, it is noted that, as a result of normal trading, the stock balance had moved since the count on 15 June 2002. It is further said that, prior to the sale being completed, another stock count is to be conducted. Thus, it is suggested that any further analysis of the movement in stock from 15 June 2002 to 30 June 2002 does not have any bearing on the purchase price and should not be of any consequence. Mr Buckingham says in his report that he can understand this request for further reconciliations of stock if this were the final count for inventory, but it is not.

44 In my view, a query concerning the cause of the difference in the reconciliation of the stock movement in the time-frame 15 June 2002 to 12 August 2002 is properly a query for the purposes of cl 4.3.1(c). Again, unless the defendants are prepared to provide an undertaking to provide a response to that query or further assistance in relation to it, an injunction requiring such a response or the provision of such assistance will go.

45 The next "key outstanding area" identified by Ms Armstrong in her affidavit is that set out in par 13.3. She says that, on 13 August 2002, she sought a reconciliation from Mr Gilbert of certain assets listed in a letter from John Hart, a valuer, against some of the items on the Fixed Asset Register provided by Pasdonnay. At the time, she sought confirmation as to whether certain items not previously listed in the Fixed Asset Register had been included on it at the time of revaluation. In par 3 of the request, she sought a reconciliation of certain leased assets contained in the schedule, as marked, to the Fixed Asset Register, including motor vehicles by licence plate number, as marked. She says she sought clarification as to whether or not leased assets should be excluded from the Fixed Asset Register provided. The purpose of the review is to verify what Business Assets are to be transferred. Mr Buckingham deals with the question in his section dealing with Fixed Asset reconciliation. He states that he understands that, based on discussions with Mr Gilbert, prima facie, it is possible for Deloittes to reconcile the information from the schedules. He says he understands that Deloittes sighted and performed test counts when they visited Pasdonnay's premises.

46 In my opinion, these unresolved requests constitute proper queries for the purposes of cl 4.3.1(c) and satisfies the three criteria referred to earlier. Again, unless an undertaking to provide a response to such query or assistance is given, a mandatory injunction will go.

47 The next "key outstanding area" identified by Ms Armstrong in her affidavit is that set out in par 13.4. She says that, in her facsimiles of 8 August 2002, she sought information from Pasdonnay in relation to the maintenance schedules of machinery, namely, monthly reports that recorded the number of machine hours used for each machine. A machine maintenance schedule was provided on 26 August. However, the identity of the items on the maintenance schedule could not be matched to descriptions on the Fixed Asset Register and the number of machine hours requires further discussion or clarification. She says that this clarification has not yet formally been sought. In relation to this matter, Mr Buckingham in his report comments that it is possible for Deloittes to reconcile information on the basis of the maintenance schedule and the Fixed Asset Register so provided and that it is common practice for the potential purchaser to perform basis analysis of certain information provided to them as part of the due diligence process. He also says that it is understood that representatives for SDS and Deloittes have sighted major machinery items as part of their 15 June 2002 stocktake and thus are aware of their physical existence.

48 In light of the facts deposed to by Ms Armstrong, information has been sought and provided. There do not appear to be any outstanding requests for information or queries requiring response. I would not grant relief in respect of this particular matter identified in Ms Armstrong's affidavit.

49 The next matter identified by Ms Armstrong in her affidavit as a "key outstanding area" is that dealt with in par 13.5 relating to stock obsolescence. She says stock obsolescence was the subject of a request by facsimile dated 16 August 2002 to Pasdonnay. She says stock obsolescence is determined by the age of the stock and is a matter impacting upon its net realisable value. Mr Gilbert provided a report stating that the value of stock that had not moved for 12 months was $220,972. She requested confirmation as to whether the report excludes product which has been moved from one location or stock area to another within the first defendant's business, that is, product which has not been sold. Should it be the case that "not moved" for the purpose of the report is determined by no movement from one location to another within the business, a report indicating which stock had not been sold in the last 12 months was requested. Mr Buckingham in his statement says that he has understood that Pasdonnay discussed the quantum of the obsolete stock with Mr Benson on 21 August 2002 and copies of the stock product listings and catalogues were provided to SDS. He comments that, given that SDS operates in the same industry as Pasdonnay, it is not unreasonable to expect that SDS representatives would have had sufficient experience to identify any items of stock that they consider obsolete during their tour and based on the stock information provided to them. He says if SDS has any residual concerns regarding obsolete or slow-moving stock, they appear to have had the opportunity to address these concerns at the next stock count and to ensure that they are reflected in the purchase price.

50 Ms Armstrong, in her affidavit, says that the age of the stock may impact upon the net realisable value of it for consideration by the directors of SDS. It is her understanding that a stocktake is to be conducted prior to the sale of the business which may alleviate some requirements for further information. She says that, notwithstanding that a stocktake is to be conducted, the value of the stock and WIP and provision of obsolescence is a matter that will impact on the overall assessment of the profitability of the business.

51 In my view, a request for assistance or query requiring a response concerning whether those items of stock referred to as "not moved" in the report provided by Mr Gilbert for Pasdonnay reflects the fact that there has been no movement from one location to another within the business, then a request for assistance or response to a query concerning which stock had not been sold in the last 12 months is obviously one capable of a response by or on behalf of Pasdonnay and which satisfies the three criteria referred to earlier. Unless Pasdonnay is prepared to provide an undertaking that such a response will be provided, a mandatory injunction will go.

52 In my view, in a case where the business efficacy of the agreement between the parties depends upon one of the parties, in this case SDS, having the opportunity to conduct and complete due diligence investigations in order to determine, amongst other things, whether it should rely upon the condition precedent set out in cl 4.1.1, it is entitled to have relief in respect of those requests for assistance or responses to those queries which I have identified. Whether or not the provision of such assistance and responses to such queries ultimately provides SDS with helpful information is for it to determine. On the face of it, such information is relevant, exists and may assist SDS in determining whether or not to purchase the Business Assets and enter into the Licence Agreement. It is not for the Court to make some assessment on how useful the provision of such information will be to SDS following completion of the due diligence investigations.

53 I consider that, although the grant of a mandatory interlocutory injunction is a rare bird, this is an appropriate case in which to grant such relief. The obligations imposed are clear and capable of compliance. They serve the interests of the bargain made between the parties and may prevent its easy frustration.

54 There is a further issue, however, whether a mandatory interlocutory injunction should be granted at all in light of the defendants' purported termination of the agreement. This issue is also relevant to the fate of the second application.

55 By its amended minute of order for injunction, SDS seeks orders that are designed to prevent the business being conducted otherwise than in the ordinary course of business and preventing the defendants from disposing or encumbering any of the assets of the business pending trial or until further order.

56 The terms of the prohibitory injunction sought in this regard reflect the terms of cl 5.1 of the agreement. The reason why the injunction is now sought by SDS is, as I apprehend it, for two reasons: first, as a result of the conduct of the defendants subsequent to the hearing of the first application in purporting to terminate the agreement, SDS apprehends that the defendants may feel themselves freed from the constraints previously imposed on them by cl 5.1 of the agreement. Secondly, or in substance by way of confirmation of that fear, the frank and proper disclosure by Mr Rear in his affidavit dated 18 November 2002, that he has concluded certain funding arrangements with a Mr Barry Thomson by which on 13 November 2002 an unsecured sum of $125,000 has been advanced by Mr Thomson to the first defendant. SDS considers this provides legitimate grounds for its concern that the defendants, unless restrained by injunction, might otherwise seek to dispose of or encumber the business or assets contrary to the terms of cl 5.1 of the agreement.

57 The defendants resist the making of any such prohibitory injunction or mandatory interlocutory injunction, on the basis that SDS has no basis upon which to resist the argument has come to an end by reason of non-fulfilment of condition precedent cl 4.1.3 or, alternatively, to argue that the defendants have not properly and effectually terminated the agreement by notice dated 8 November 2002.

58 As to the defendants' argument that the agreement has already come to an end by reason of non-fulfilment of condition precedent cl 4.1.3, I accept the submissions of counsel for SDS that termination of the agreement on this basis is provided for expressly by cl 4.10.2 of the agreement. That clause provides, so far as it is relevant, that in the event that the condition in cl 4.1.3 has not been satisfied or waived by 30 September 2002, or such other date as the parties may agree in writing, then the agreement may be terminated by SDS giving the other parties notice of such termination. In other words, the condition and the provision for its termination are for the benefit of SDS, not the defendants. Accordingly, I consider there is a strong triable issue from the point of view of SDS that the agreement has not come to an end by reason of the non-fulfilment of cl 4.1.3 of the agreement.

59 I now turn to the defendants' further submission that the agreement was terminated by virtue of their notice dated 8 November 2002. In that regard, the defendants draw attention to cl 4.10.1 of the agreement, referred to above, and say that cl 4.1.4 had not been satisfied or waived by 30 September 2002 and no other date for satisfaction or waiver has been agreed by the parties in writing. Thus, it is said, the defendants are entitled, as provided for by this clause, to terminate the agreement by notice of such termination. The defendants say they gave notice of such termination by notice to the plaintiff dated 8 November 2002. They contend the agreement is thereby at an end.

60 There is no doubt that, as a matter of fact, cl 4.1.4 of the agreement has not been satisfied or waived by 30 September 2002 or some other date agreed to by the parties in writing. That clause, referred to above, required the Commonwealth Bank of Australia, as financier of SDS, consenting to the sale and purchase of the Business Assets and the assumption of the Assumed Liabilities in accordance with the agreement and, if consent is conditional, where such conditions are satisfactory to SDS and Pasdonnay. SDS contends, however, that its attempts to have the Commonwealth Bank provide its consent or consent on conditions has, in effect, been frustrated by the failure or refusal of Pasdonnay to provide the assistance, previously identified in these reasons as part of the due diligence investigations. In those circumstances, SDS contends that it is not open to the defendants to give notice of termination of the agreement under cl 4.10.1.

61 There is ample authority for the proposition that, it is a general rule applicable to every contract that each party agrees, by implication, to do all that is necessary on its part to enable the other party to have the benefit of the contract: see Expectation Pty Ltd v Pinnacle VRB Ltd [2002] WASCA 160 per Steytler J (with whom the other members of the Full Court agreed) at [89] and the authorities there referred to. It follows, as Steytler J there said:

" ... that if performance of the contract is conditional on some event which is to any degree within the control of a party, that party must co-operate reasonably in bringing it about. Failure to co-operate in that way will generally disqualify the defaulting party from relying upon the non-fulfilment of the condition, or, to put it differently (as is sometimes done), courts will, in such cases, treat the condition as having been satisfied."

(I omit the authority his Honour refers to at [89] in so stating.)

62 In this case, the defendants argue that the exercise that the power of termination in cl 4.10.1 is not expressly conditional on the provision of assistance, information or response to queries concerning the due diligence investigations. SDS contends, however, that the termination power is conditional upon the defendants having complied with their obligations, in effect, to assist SDS in the completion of the due diligence investigations which, amongst other things, are designed to enable SDS to satisfy the Commonwealth Bank of Australia that it should signify its consent for the purposes of cl 4.1.4 of the agreement.

63 In my view, the contentions of SDS are arguable and there is a serious issue to be tried in that respect. While it is true, as previously noted, that the purpose of due diligence investigations are directly concerned with the condition precedent cl 4.1.1, that is not to say that the information that comes to SDS in the course of those investigations cannot, and is not intended to, be made available to SDS's bank for the purpose of satisfying the bank that it should give its consent conditionally or unconditionally for the purposes of cl 4.1.4. Indeed, as noted above, cl 4.3.2 of the agreement expressly provides that the defendants "must provide all reasonable assistance to the Purchaser in procuring the satisfaction of the conditions in clause 4.1.2 and clause 4.1.4". While this clause does not expressly state that information required as part of the due diligence investigations is for the purpose partly or wholly of enabling the Commonwealth Bank of Australia to decide whether or not it will grant its consent, the assistance to which it refers arguably is capable of including the provision of the information Ms Armstrong has requested and I have found should be provided by the defendants.

64 Of course, if SDS is to make out its case that non-compliance with its contractual obligations to assist, takes away the defendants' right to terminate, there must be a direct causal relationship between that non-compliance and the failure to complete the contract, with the onus of proof lying upon the non-defaulting party: Expectation Pty Ltd v Pinnacle VRB Ltd (supra) per Steytler J at [90] and the authorities there referred to.

65 In this case, SDS relies on the affidavit of Kevin Vincent Benson sworn 15 November 2002 as providing the evidence that but for the failure of the defendants to provide the type of assistance and response to the queries referred to above, the Commonwealth Bank would by 30 September have made a decision whether or not to consent in terms of cl 4.1.4 of the agreement. Paragraphs 9 - 17 of Mr Benson's affidavit deal with the question of the Commonwealth Bank's consent. He says that he and others from SDS met with representatives of the Commonwealth Bank in June 2002. He says that at the meeting the representatives of the bank said, in effect, that the bank was likely to support the purchase subject to SDS satisfying the bank that the transaction was viable. He says that later in June he had a telephone conversation with a representative of the bank who informed him, in effect, that the bank had retained Ferrier Hodgson, chartered accountants, to perform a review of SDS, both in its present form and also on the basis that it proceeded with the purchase. He then supplied Ferrier Hodgson with various pieces of financial information, including forecasts to assist them in performing their review of SDS. He received a letter from Ferrier Hodgson dated 9 July 2002, detailing the scope of the review and report to be prepared by Ferrier Hodgson for the bank. On 27 July 2002, an e-mail from Martin Jones of Ferrier Hodgson to Neil Cowie of the bank of that date was also forwarded to Mr Benson. In it, Ferrier Hodgson advise the bank that they still awaited:

(1) Information in relation to the overseas companies in the Group; and

66 Mr Benson says that he agreed with Mr Cowie of the bank that once Ferrier Hodgson had completed its review of SDS, it would also review the due diligence report which SDS had instructed Deloittes to prepare. He says he agreed with Mr Cowie that he would prepare a balance sheet and forecast for SDS on the basis that it proceeded with the purchase and that Ferrier Hodgson would then complete its report to the bank in relation to the purchase. Mr Benson says on 27 September 2002, he received a draft copy of the Ferrier Hodgson report on SDS, not taking into account the business the subject of the purchase. On 16 October, he received the final version of this report which was dated 3 October 2002.

67 Mr Benson says that SDS has been unable to provide Ferrier Hodgson with information required by them to complete their report to the Commonwealth Bank on the purchase so as to enable the bank to decide whether to provide its consent to the purchase under the terms of the agreement. He says that Ferrier Hodgson had not been able to do this because he has not received Deloittes' due diligence report. He says that Deloittes has informed him that Deloittes has been unable to complete its own due diligence review for SDS because it is awaiting information it has requested from Pasdonnay and Mr Rear as part of that review. Mr Messer of Deloittes and Ms Armstrong have sworn affidavits to that effect.

68 On 22 October 2002, Mr Benson says that he and others met with Mr Cowie and Mr Butcher of the bank to provide them with an update as to SDS's performance and to discuss the purchase. He says that at this meeting Mr Cowie and Mr Butcher said, in effect, that the bank required Deloittes' due diligence investigations for SDS to be completed and that Ferrier Hodgson would then review Deloittes' due diligence report, and then report to the bank, before the bank would provide consent, as contemplated by the agreement.

69 This is the evidence, then, upon which SDS contends that, in effect, the defendants have so conducted themselves as to deny the implied term of the agreement that the defendants would do all that is necessary on their part to enable SDS to have the benefit of the contract. It may be said on this evidence that it is not altogether factually clear that by 30 September - the relevant date specified in cl 4.10.1 of the agreement - the defendants had so conducted themselves in relation to the provision of assistance or responses to queries in the due diligence investigations as to have prevented the bank from having the opportunity to consider whether or not its consent should be given for the purposes of cl 4.1.4 of the agreement. It is clear, however, that the bank, after 30 September, namely, on 22 October 2002, according to Mr Benson, indicated that the bank required to sight Deloittes' due diligence report before deciding whether or not consent should be granted.

70 In my view, if the facts are available to support the proposition, it is arguable as a matter of law that a failure by the defendants to supply the type of "key outstanding information" identified by Ms Armstrong in her affidavit could lead to SDS being unable to place before the Commonwealth Bank information relevant to the decision the bank had been asked to make concerning the consent required under cl 4.1.4 of the agreement. However, it is not at all clear to me that the bank has, in effect, been unable to determine the consent question as a consequence of any failure or refusal of the defendants in their dealings with SDS to provide the type of "key outstanding information" to SDS, as identified by Ms Armstrong in her affidavit. Nonetheless, there does seem to me on the facts to be a reasonably arguable case that what is alleged may be so.

71 That there is a conflict in or insufficiency of evidence before the Court on the hearing of an interlocutory application does not necessarily mean that the application should be refused. As it is said in Spry, Equitable Remedies, 6th ed, (2001), page 465 - 466:

" ... often the court is not well equipped on an interlocutory application to decide what the true position may be, especially if those who have given evidence on affidavit are not cross-examined. Sometimes, indeed, in view of unresolved disputes as to the facts the plaintiff is unable to establish his case with a high enough probability to justify equitable intervention in all of the circumstances [footnote omitted], but the inability of the court to reach a confident conclusion by no means necessarily leads to the refusal of relief. Often it is found that risks of substantial prejudice to the plaintiff are so great that, provided that it appears that there is a substantial question to be determined at the final hearing, the balance of justice favours the grant of interlocutory relief. So it has been said, 'It is certain that the court will in many cases interfere and preserve property in statu quo during the pendency of a suit, in which the rights to it are to be decided, and that without expressing, and often without having the means of forming, any opinion as to such rights. [Great Western Railway Co v Birmingham & Oxford Junction Railway Co (1848) 2 Ph 597 at page 602, 41 ER 1074 at p 1076; De Mestre v AD Hunter Pty Ltd (1952) 77 WN (NSW) 143; and see generally Earl of Ripon v Hobart (1834) 3 Ny & K 169[1834] EngR 471; , 40 ER 65.]":

72 It follows that I consider it to be a triable issue whether the defendants effectually terminated the contract on 8 November 2002. Accordingly, there is no necessary reason why the mandatory interlocutory injunction I propose should not go.

73 Additionally, the question is whether, if there is a serious case to be tried, as I consider there is, an interlocutory prohibitory injunction should be granted in terms of the application, effectively to prevent the business being operated in a manner differently from that contemplated by the agreement and the assets of the business being affected contrary to what the agreement contemplates in cl 5.1.

74 SDS contends that the agreement is an agreement of which specific performance would usually be ordered. I accept that this is so: see Newcombe v Chapple (1985) 3 BPR 9391 (Hodgson J); Re MAS Food Industries (Australia) Pty Ltd (In liq) [2000] WASC 155 at [21] - [23]; Dougan v Ley [1946] HCA 3; (1946) 71 CLR 142 at 151 and 153. Because the contract is one for which equity would ordinarily grant specific performance, damages are not an adequate remedy; especially in a case such as the present where SDS has bargained for the potential acquisition of the Business Assets and Patents.

75 The question then arises whether the balance of convenience favours the grant of the relief sought. In that regard it is usual to favour the status quo so far as the dealings of the parties are concerned and what might be necessary to maintain it, at least where the other factors going to convenience are evenly balanced. SDS argues that the status quo is that which subsisted until 8 November 2002 when the defendants purported to terminate the agreement. That is, until then there was on foot a specifically enforceable contract.

76 In Carr Boyd Minerals Ltd v Ashton Mining Ltd (1989) 50 ACLR 599, the Full Court of the Supreme Court of Western Australia concluded there was a serious question of substance between the parties to be tried, namely, whether or not it was an express term of an agreement as varied that the defendant would not seek to appoint more than two representatives on the company's board of directors, and the balance of convenience lay in granting an interlocutory injunction with reference to that question. The relevant status quo was held to be the state of affairs created by the entry into and conclusion of the agreement, namely, that the defendant acquired a 30 per cent shareholding in the plaintiff subject to the condition preventing an increase of board representation. Malcolm CJ (with whom Brinsden and Walsh JJ agreed) said at 605:

"In such a case the status quo would be preserved by preventing an alleged breach of the agreement occurring, notwithstanding the fact that the agreement was disputed. ... The determination of what is, or what is not, the status quo in any given case for the purpose of considering an application for an interlocutory injunction is, in my view, a question of fact.

.... When one takes what ... is the correct view of the status quo, it will be seen that one result of the failure to grant the injunction in the more comprehensive form is that the appellant would be deprived of the right it presently has to have the dispute over the agreement litigated. I say that because it would seem that the probabilities are, or the practical reality of the situation is, that that would be the result of the meeting taking place. This would flow from Ashton's votes being cast in favour of the proposed resolutions and the board then discontinuing the proceedings.

Where an injunction would have this effect that is a material matter in the exercise of discretion."

77 Brinsden J, to similar effect, at 607 noted that:

"Once it is accepted, as I do, that the status quo is that Ashton has a shareholding of 30 per cent of the issued shares in Carr Boyd upon the basis of a disputed term that it would not seek representation on the board in excess of two directors and that, as the learned Commissioner found, there is a serious issue between the parties to be tried, it follows that to maintain the status quo to enable the litigation to be determined as a matter of practical reality as between these parties - and I emphasise 'these parties' - the injunction sought on appeal should be granted if the balance of convenience indicates the injunction should go."

78 In this case, having found that there is a triable issue as to the entitlement of the defendants to terminate the agreement as of 8 November 2002, it seems to me that, to maintain the status quo to enable the litigation to be determined, the injunction should be allowed if the balance of convenience indicates the injunction should go.

79 In circumstances where the defendants appear to take the view that they are free to deal with the Business, the Business Assets and the Patents the subject of the agreement in such manner as they may desire - and the recent dealings between Mr Rear and Mr Thomson provide some, even though no conclusive, evidence of that, an injunction should go substantially in the terms of the amended minute, which reflect cl 5.1 of the agreement. Such an injunction will maintain the status quo.

80 SDS has indicated that it would have no objection to Pasdonnay raising temporary working capital from Mr Thomson now and in the future, provided that the terms of that raising are that -

(1) No security is given over assets the subject of the agreement.

(2) If security is granted over assets of limited value, the security is discharged by SDS paying the sum secured direct to Mr Thomson from the purchase moneys at settlement.

However, I would not make an order in those terms by way of qualification to the interlocutory injunction granted unless the defendants consented to such an order.

81 I will hear from the parties on the final terms of the injunctions I have indicated I am prepared to make.

82 I would, however, propose making orders to the following effect:

(1) Mandatory interlocutory injunction

Upon the usual undertaking as to damages being provided by the plaintiff:

(1) The defendants are ordered and an injunction is hereby granted requiring them to perform the following acts under and for the purposes of the Business Asset Sales Agreement made between them in July 2002:

(a) The defendants provide the job sheets and general explanation of the increase in WIP for the year ended 30 June 2002, referred to in par 7 of attachment RAA5 to the affidavit of Rochelle Argo Armstrong sworn 31 October 2002 (Ms Armstrong's affidavit).

(b) The defendants provide the information necessary to assist with the reconciliation of the movement in stock in the period 15 June 2002 to 12 August 2002 and referred to in par 13.2.1 of Ms Armstrong's affidavit and par 6 of attachment RAA5 to Ms Armstrong's affidavit.

(c) The defendants provide the information necessary to assist in the reconciliation of fixed assets as referred to in par 13.3 of Ms Armstrong's affidavit.

(d) The defendants provide the information concerning stock obsolescence referred to in par 13.5(a) of Ms Armstrong's affidavit.

(2) The first and second defendants have liberty to apply on 24 hours' notice to the plaintiff to dissolve or vary this injunction.

(3) Costs reserved.

(2) Prohibitory interlocutory injunction

An order in terms of the amended minute of order for injunction dated 19 November 2002, save that in par 2, third line, the word "unreasonably" be substituted for the word "reasonably".

(3) Expedition of trial

The plaintiff shall forthwith apply pursuant to O 31A r 2(4) for this action to be entered in the Expedited List , noting that this order was made and that, in the opinion of this Court, the making of the mandatory interlocutory injunction and the prohibitory injunction in the circumstances of this case make it desirable that the matters in dispute in the action be resolved as soon as possible to the commercial advantage of all the parties.

Sds Corporation Ltd v Pasdonnay Pty Ltd & Anor [2002] WASC 276

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (137 paragraphs)

Sds Corporation Ltd v Pasdonnay Pty Ltd & Anor [2002] WASC 276 (22 November 2002)

Principles for grant of interlocutory injunctions

The nature and extent of the obligation under cl 4.3.1 to provide "all assistance"

Parties

Cases Cited (10)