The South Australian Brewing Company Pty Ltd v Carlton & United Breweries Ltd

BETWEEN: THE SOUTH AUSTRALIAN BREWING COMPANY PTY LTD ACN 007 065 267

AND: THE SOUTH AUSTRALIAN BREWING COMPANY PTY LTD ACN 007 065 267

EX TEMPORE REASONS FOR JUDGMENT 1 This application is listed for final hearing on 18 June 2001. There is before the Court today a motion dated 7 June 2001 for leave to file and serve a second further amended application in terms of a document attached to that motion. The second further amended application seeks to raise more recent conduct of the respondent as giving rise to a cause of action on the part of the applicant against the respondent principally but not exclusively for breach of section 52 of the Trade Practices Act 1974 (Cth) ("the Act"). I have given that leave to amend. I have done so in the light of the respective positions of the parties and, in particular, that the leave as given will not put at risk the hearing date fixed for 18 June 2001. 2 I appreciate that both parties are anxious for the matter to proceed at that time, and that the respondent has expressed clearly its desire to make sure that the matter proceeds in respect of all of the claims made by the applicant against it at that time. Having allowed that second further amended application, the applicant now claims interlocutory relief in respect of conduct on the part of the respondent which is detailed at some length in the affidavits of Stuart Yorston and Katrina Angela Rathie. 3 I will not deal with the facts in any detail. It is sufficient to note that the applicant claims to have had longstanding sponsorship arrangements with the Adelaide Football Club and the Port Adelaide Football Club and with the South Australian National Football League ("SANFL"). The material indicates in general terms the nature of those arrangements and the extent to which the applicant has developed or built up by that sponsorship, and invested in, its association with the two football clubs and with the SANFL over the years. It clearly has made a substantial commitment in that regard and, in the course of doing so, has sought to secure the identification of its product with those two football clubs, with that league, and to secure through participation of players of those football clubs identification of its product with them. 4 The particular concerns of the applicant which give rise to the present application arose, at least on its part, as the result of a promotion of a competition associated with a football match proposed between the two football clubs on 5 August 2001. I am satisfied on the material that the applicant learnt of the proposed promotion called "Win the VB Super Box at the Power versus Crows Game Sunday, 5 August 2001" and associated promotional material only on 31 May 2001. There is an issue as to whether the applicant should have foreshadowed or anticipated such a promotion, so as to give rise to the consideration whether it should not be entitled to interlocutory relief at this stage. I will refer to that contention later. I find that on the material before me that it learnt of the particular promotion in its details only at that time. 5 The applicant complains of that promotion, so far as it has been identified in that material, because it contends that the promotion and advertising in connection with the promotion by the respondent constitutes a representation that the respondent and its Victoria Bitter beer product is a sponsor of the Adelaide Crows football team and of the Port Adelaide Port Power football team when in fact the respondent is not a sponsor of either team. It also complains that the conduct constitutes a representation that both of those football teams consent to and have authorised, the promotional and advertising material put out by the respondent in relation to the promotion to which I have referred. Again, it says that that representation is false. There is material before me from the chief executive officers of each of the football teams upon which I am satisfied that there is a serious question to be tried that, if that representation is made, it is not a true representation. 6 The material which constitutes the promotion and advertising material associated with it has been put in evidence. It comprises a proposed television advertisement, which has not yet gone to air, and packaging and documentation relating to the promotion which I will not describe but which is set out and contained in some detail in the documents which are Exhibit KAR3 to the affidavit of Ms Rathie sworn on 6 June 2001. That material appears also to be represented in Exhibit PS6 to the affidavit of Peter Donald Sinclair filed on behalf of the respondent. 7 It is sufficient to refer to one particular part of the promotion to identify the nature of it. It contains the reference to the competition for the "super box" at the football game to which I have referred. It has the logos of the AFL, in conjunction with the CUB mark, and the logo of the Victoria Bitter product. It also has a photograph of the captains of the two football teams, apparently wearing the football guernseys of their sides, and on each of those pictures appears a logo which I assume is the logo of the Adelaide Crows and of the Port Power football teams respectively. That representation also appears on the packaging. 8 There are also two photographs showing each of the captains of the football teams wearing their club guernseys and signed by them, with the AFL CUB logo or mark, the Victoria Bitter mark and respectively the Adelaide Crows logo and the Port Power logo for each of them. It is that material which is said to give rise to the representations to which I have referred. 9 I do not need to and do not decide whether that material produces or gives rise to the representations which are alleged. It is sufficient if I am satisfied that there is a serious question to be tried that that material does convey those representations - that is, that the respondent is a sponsor of the two football teams when it is not, in fact, the sponsor of either of them and that the two football teams consented to or authorised the promotional and advertising material referred to, when they did not. 10 In forming a view as to that, I have had regard to the authorities to which counsel has referred me and what has been called in these submissions the target audience. It is sufficient to indicate that, in my view, having regard to the particular form of presentation of that material, including the proposed television advertisements to which I have referred, there is an arguable case that it does convey the representations complained of and, as I have said, there is an arguable case clearly that if those representations are conveyed, they are not in fact accurate. 11 Therefore, it seems to me, the applicants have made out an arguable case on the merits, and I should consider the submissions as to whether interlocutory injunctive relief should be granted in the particular circumstances. Before I address that matter, I indicate that there is in the affidavits filed on behalf of the respondent, but in particular the affidavit of Andrew John Dillon, the legal services manager of the Australian Football League, exhibited extensive documentary material showing the contractual relationship between the Australian Football League and the respondent, showing the contractual relationship between the Australian Football League and players participating under a Collective Bargaining Agreement, and showing particular agreements made between players of the Adelaide Crows football team and that football team, and between players of the Port Adelaide football team and that football team. Further exhibited in that material are agreements between the respondent and the captains of each of the two football teams, and of other players who participate as members of each of the two football teams. 12 That material shows that there is a complex set of arrangements in place involving extensive contractual relationships. It has not been argued on this application that, by virtue of those contractual arrangements themselves, the Court should not give effect to s 52 of the Act if an arguable case of conduct in contravention of the Act is made out. What was put is that the applicant should not be given the interlocutory relief sought for two reasons, one of which was that the applicant had not disclosed to the Court adequately the nature of those complex and interrelated contractual arrangements including the fact that the respondent is what is called an AFL-preferred sponsor, and has the right to so appear at AFL games, including AFL games at Football Park where the particular football game on 5 August 2001 will take place. It has also been put that the Court should refuse interlocutory relief to the applicant in this matter because of the timing of the application. 13 In my view neither of those two factors leads me to the conclusion that the interlocutory relief should not be granted, subject to considering and putting into the balance the issue of the balance of convenience. I am not satisfied that the applicant, in presenting the material to the Court in the way in which it did, failed to disclose material relevant to its contention in a way which warrants the Court exercising its discretion in refusing to grant interlocutory relief. It is the applicant's contention that whatever the nature of that interrelated contractual relationship through those series of agreements, and whatever the nature of the respondent's entitlements by virtue of its arrangement with the AFL, and indirectly with the AFL member clubs, those factors are not relevant to the grant of relief. In the course of submissions, counsel for the applicant did refer in a general way to that material, albeit by reference to the affidavits of the respondent. In my judgment, nothing is shown which warrants the Court declining to grant interlocutory relief for failure to disclose significant material to the Court. 14 It was put in respect of the delay that the respondent on 27 March 2001 publicly announced that it had appointed the captains of the Adelaide Crows and the Port Power to be CUB AFL ambassadors in South Australia. There is also evidence that the applicant became aware of that announcement after it was made and by the end of March 2001. However, I do not take the additional step of concluding that, by virtue of that general knowledge, it was then in a position where it ought to have brought proceedings for interlocutory relief, such as those which it has now brought, or that it should be criticised for not having brought this application for interlocutory relief before it learnt on 31 May 2001 of the particular matters to which I have referred. In my view its general knowledge of the announced relationship between the two captains of the football clubs concerned and the respondent was not such as to impose upon it, either in a legal or in a practical sense, an obligation to act in early April 2001 by proceedings seeking injunctive relief of the sort which is now sought. 15 I turn then to consider the balance of convenience. There is much to be said on either side on that topic. The assessment of damages, if the applicant is not given the interlocutory relief which it seeks, will be very complicated. That is not to say the assessment of damages could not be made, but it will be a very complex assessment. Equally, it is said on behalf of the respondent, that if the interlocutory relief is granted but the claim fails, the assessment of the damages which it will suffer and which it will be able to recover from the applicant, upon the applicant's undertaking in the usual terms, which the applicant has offered, will equally be very difficult to quantify. I accept each of those submissions. 16 On balance, however, I have come to the view that the balance of convenience in this particular matter warrants the grant of interlocutory relief at this point and I indicate in particular the following factors: 17 The trial of the matter is listed for hearing only a little over a week away. It is the expectation of the Court that the trial of the matter will proceed and be disposed of efficiently, bearing in mind the work which the solicitors for the respective parties have undertaken to this time, and that a decision on the matter will be able to be granted promptly. The extent of the interlocutory relief to be granted will therefore extend only for a period of a few weeks. 18 In my view, the damage which the applicant will suffer is likely to be more difficult to quantify if the interlocutory relief is not granted and the application succeeds than the damage which the respondent will suffer if the interlocutory relief is granted and it is subsequently found at trial that the applicant was not entitled to that interlocutory relief. I have had particular regard to the affidavit of Mr Sinclair to which I have referred in reaching that view. 19 I note the time at which the proposed television advertising campaign is presently proposed to commence. I note, further, that perhaps due to the shortage of time Mr Sinclair has not specified precisely the consequences of the making of the interlocutory orders now sought, if they are made today. In particular, whilst I accept that a significant quantity of product has been manufactured and also to a large extent distributed, I am not satisfied on the material before me that the product will not be able to be used if there is a delay of a few weeks before the entitlement of the parties is finally determined. 20 If the applicants ultimately succeed, the consequences to the respondent by the grant of the present interlocutory injunctions which I propose to make will not be relevant. If the applicants do not succeed, there will be but a period of delay of a couple of weeks in the promotion suggested, but there will then be, as I understand it, some five to six weeks during which the promotion will be able to be undertaken in any event. 21 The evidence of Mr Sinclair about the interrupted ability of the respondent to supply the South Australian market with its product, if it is not able to supply the product packaged in the way about which the complaint is made, is not specific. For instance, Mr Sinclair says that if the respondent were required to cease distribution of the particular product packaged in the way of which there is complaint, there would be an interruption in the ability of the respondent to supply the South Australian market, but he says that it could, not would, take days to restore supplies in standard packaging. He also says that it will be particularly difficult if the supply is restrained over the Queen's Birthday long weekend. He says many retailers may run out of VB product and be unable to supply until new stocks are delivered. He says that it would be difficult to procure alternative stock in standard packaging at short notice. 22 I accept that an inability to supply retailers with the product of the respondent, even for a few days, will have a significant impact upon its business, but I do not draw from the affidavit a clear picture other than of a possibility or perhaps a significant possibility, that the respondent will have difficulty in substituting standard packaged product for the present packaging of products to satisfy the South Australian market over the next week or two. 23 I am also not satisfied that there would be a necessity to repackage the products currently packaged in promotion packaging, although of course repackaging would have a significant expense. If that proves to be necessary, and ultimately from the point of view of the applicant unwarranted, that cost is able to be quantified. He also refers to beer products having a limited shelf life. He does not say what that limited shelf life is, or over what period of time the product may deteriorate. I accept that the product has a limited shelf life but I am not prepared to conclude, on the basis of the material in that affidavit, that a delay of a few weeks will have the consequence that the product concerned will need to be destroyed or will require to be repackaged. 24 Accordingly, I do not think that the detriment to the respondent of the making of an interlocutory injunction more or less in the terms which the applicant seeks will have as drastic a consequence for the respondent as might have been perceived on a less careful reading of Mr Sinclair's affidavit. In my judgment, the balance of convenience in this matter weighs in favour of making the interlocutory relief sought, and I propose to make those orders in those general terms. 25 I propose making orders generally in terms of paragraphs 1, 2, 3, 4 and 5 of the claim for interlocutory relief in section B of the second further amended application. I will amend paragraph 1 by substituting for the words "a video copy of which is document 79 to the respondent's unsworn list of documents" the words "a video copy of which is exhibit A8 on this application". I do not think it is necessary to make the orders numbered 6, 7 and 8 in part B of that application. In my view, paragraph 6(a) is too general in its terms to warrant such an order, at least for the short period until the hearing, and paragraph 6(b) is really another way of putting the orders which I have already indicated I propose to make. Counsel for the applicant did not strongly press an order in terms of paragraph 7, and I would not make an order which restrained use of the words "VB super box" in the terms in which it is sought. 26 Given the short period of time to trial and given the prospect that the applicant may be unsuccessful at trial, so that the respondent may be found to be entitled to pursue the promotion and the advertising material, I do not think the proposed order in paragraph 8 is appropriate and counsel for the applicant did not pursue that order. 27 I accordingly indicate that I will make orders on the interlocutory orders until further order generally in the terms in which I have indicated and provided the applicant, by its counsel, is prepared to offer to the Court an undertaking in the usual terms, which is indicated in the Court practice notes. I note that that undertaking is offered by counsel. 28 The Court heard further contentions from counsel on the terms of those orders. I propose to make the following orders. I propose to make the following orders on the claim for interlocutory relief. Paragraph 1 of those claimed orders will read, after the words "a video copy", "a video copy of which is exhibit A8 on this application". Paragraphs 2, 3 and 4 will remain as they are presently expressed. I will add a new paragraph 5 which will read as follows: 5. Direct that the respondent shall sufficiently comply with paragraphs 2 to 4 hereof by: (a) forthwith ceasing to dispatch packaged beer which is packaged in any of the promotional material referred to in paragraphs 2 to 4 hereof; (b) giving to the retailers to which it has supplied any such promotional material, as soon as practicable, a written request that they forthwith cease to display any such promotional material (other than as comprised on the packaging of packaged beer); (c) further complying with such further directions and orders as the Court may make at 4.30 pm on 12 June 2001 or thereafter. Paragraph 5 will become paragraph 6, and I will insert after the words "or otherwise" in line 2 "from 12 noon Central Standard Time on 12 June 2001". Paragraph 7 will read that the question of further orders to be made to ensure the respondent's compliance with paragraphs 2 to 4 hereof will be adjourned until 4.30 pm, 12 June 2001. Paragraph 8 will provide that the costs of the application for interlocutory relief be reserved.

I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment herein of the Honourable Justice Mansfield.

Counsel for the Applicant: Mr F M Douglas QC and Dr R J Baxter Solicitor for the Applicant: Johnson Winter & Slattery as agents for Mallesons Stephen Jaques

Counsel for the Respondent: Mr T R Anderson QC with Mr I Robertson and Mr S Hannaford Solicitor for the Respondent: Thomson Playford as agents for Corrs Chambers Westgarth

Date of Hearing: 8 June 2001 Date of Judgment: 8 June 2001