The Truffle Group Performance Pty Limited v The Sydney Opera House Trust

The Truffle Group Performance Pty Limited v The Sydney Opera House Trust - [2006] NSWSC 460 - NSWSC 2006 case summary — Zoe

[23]

Rather the High Court should be understood as referring to the degree of probability which may be high or low. No doubt the strength or weakness of the plaintiff's case will be relevant when the judge comes to the question of the balance of convenience, if he ever does." 22 At page 216 McLelland J cited Lord Diplock's judgment in American Cyanamid in terms of the power to grant interlocutory injunctions. The passage was as follows: "My Lords, when an application for an interlocutory injunction to restrain a defendant from doing acts alleged to be in violation of the plaintiff's legal right is made upon contested facts, the decision whether or not to grant an interlocutory injunction has to be taken at a time when ex hypothesi the existence of the right or the violation of it, or both, is uncertain and will remain uncertain until final judgment is given in the action. It was to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved that the practice arose of granting him relief by way of interlocutory injunction; but since the middle of the nineteenth century this has been made subject to his undertaking to pay damages to the defendant for any loss sustained by reason of the injunction if it should be held at the trial that the plaintiff had not been entitled to restrain the defendant from doing what he was threatening to do. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiff's need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiff's undertaking in damages if the uncertainty were resolved in the defendant's favour at the trial." 23 At page 216, McLelland J pointed out that it is the task of the Court on an application for an interlocutory injunction to seek to fulfil this purpose in the manner best calculated to achieve justice between the parties in the circumstances of the particular case. McLelland J pointed out that with possible exception of a passage in the Beecham Group case which deals with what are said to be special considerations arising in a patent suit in which there is a substantial issue as to the validity of the patent, which McLelland J then proceeded to consider,

[24]

". . . the decisions to which I have already referred provide authoritative guidance (not however to be interpreted as `rigid formulae') as to how this task of the Court should normally be approached, but do not deny the proposition that the ultimate task of the Court is as I have described it." 24 I have endeavoured to approach the present application for interlocutory relief applying the principles as expressed by McLelland J. The matter is put shortly by Meagher, Gummow & Lehane, Equity Doctrines and Remedies, 2nd Edition at para 2168. "What the plaintiff must prove is that he has a serious, not a speculative, case which has a real possibility of ultimate success and that he has property or other interests which might be jeopardised if no interlocutory relief were granted. Then it becomes a matter of seeing if, in all the circumstances of the case, the Court should nonetheless exercise its discretion by declining to issue an interlocutory injunction." 25 Likewise in Meagher, Gummow and Lehane at paragraph 217 the learned authors say: "What is meant by saying that the Court must take into account the balance of convenience and the question of hardship is that it must consider carefully what effects the granting of an injunction will have on both parties and in particular whether to grant one would cause hardship to the defendant or to refuse one would cause hardship to the plaintiff." Specification of breaches - the principles 26 Plainly enough the serious question issue in so far as treating with the attack on the notice of breach, requires that some attention be given to what is the requisite content of such a notice. 27 In FPM Constructions Pty Ltd v Council of the City of Blue Mountains [unreported New South Wales Court of Appeal, 10 October 2001] Basten JA drew attention to a number of authorities dealing with the required content of a notice specifying breach. His Honour observed that what may be sufficient to "specify" a matter sufficiently for a particular purpose has been considered in differing contexts with different levels of precision and detail required. 28 Basten J drew attention to the following observations made by Gleeson C J in Drummoyne Municipal Council v Australian Broadcasting Corporation (1990) 21 NSWLR 135 at 137:

[110]

v. In relation to future referrals and business introductions: a) industry connections and industry reputation are an important and vital part in the catering business; b) the negative impact of a termination of the Services Agreement on Truffle's market standing and reputation and consequent reduction in business referrals will be significant; c) these referral sources include inbound tour operators, corporate event managers, tourism operators, and other venues. 57 There is evidence put forward by the Group in terms of its balance sheet as at 31 March 2006 disclosing net assets of over $1,000,000 58 There is evidence that the Group's current operations at the Sydney Opera House are profitable. 59 There is in place A$60,000 guarantee. 60 The contention put forward by the Trust to the effect that damages are clearly shown to be an adequate remedy hence requiring that the interlocutory application be dismissed, fails to treat with the entitlement of the Group to require its contract with the Trust to be honoured, absent an entitlement in the Trust to terminate pursuant to one or other of the routes provided for in clause 22. Nor do the contentions put forward by the Trust comprehend the need for the litigious process on a final hearing to treat with the Groups contention that in truth the essential nature of the agreement is somewhat akin to that of a licensee of premises: the proposition being that there is no evidence suggesting constant supervision or similar. 61 The contentions put forward by the Trust suggesting a loss of confidence in the Group have been taken into account in the overall assessment of the balance of convenience. Ultimately the strength of the serious case must also be taken into account as a loss of confidence can only have a material effect if shown to be justifiable in particular terms. These are matters to be litigated. 62 Finally I note that the Group has undertaken to apply for expedition, to have its evidence available within 10 days and to pursue a hearing date as soon as possible thereafter. Decision 63 The principled exercise of the discretion is to grant the interlocutory relief pending the determination of the proceedings. Objections to evidence 64 Each of the parties has taken certain objections to material in the affidavit evidence sought to be produced by the other. 65 It has to be recalled that the Court is not dealing with a final hearing. In truth the touchstone involves the requirement, subject to dispensation with such, that the usual rules applied to the adducing of evidence at an interlocutory hearing require to be complied with. Evidence of Mr Whitton 66 The Trust has objected to the whole of the affidavit of Mr Whitton sworn on 12 May 2006. In my view the whole of that affidavit is admissible on the interlocutory hearing. Relevantly:

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ii. the further proposition that the requirements of the Evidence Act 1995 s79, summarised by Heydon JA in Makita v Sprowles (2001) 52 NSWLR 705 at 85 and following have not been observed. 68 As to i it must be remembered that the inquiry involves whether or not the Court should be satisfied that there is a sufficient prospect that particular evidence will be forthcoming on a final hearing. The effect of the evidence given by Mr Whitton is that following a limited interim review of the revenue audit trail, a number of particular steps which were involved were ascertained. The review was carried out by an employee of Lawler Partners. This is an accounting and audit firm. 69 Mr Whitton has given evidence referring to that review as "our review". Based upon the matters set out in his report he proceeds to set out his own opinion that "the records of the Group are in sufficient detail to enable an independent auditor to verify compliance by [the Group]" with the agreement. 70 Whilst I would certainly accept that the report is borderline in terms of exposing the reasoning processes which were involved, it certainly outlines particular of the steps involved in terms of the audit trail of revenue recording of events held. There is sufficient, although just sufficient, appearing from the report, to permit its admission into evidence at an interlocutory level as pointing to the likelihood of more detailed evidence of similar ilk being available at the final hearing. The shortcomings in the report are essentially matters going to weight which in the circumstances is only slender. 71 The objection grounded upon the proposition that the material work was carried out by the above described employee and not by Mr Whitton is misconceived on this interlocutory application, because Mr Whitton has clearly exposed himself as having sufficiently participated in the exercise, to permit him to express the opinions which he has. 72 Even had this evidence of Mr Whitton been rejected, the above-described reasons for finding that a serious case has been established would have been no different. The issues raised going to the suggested invalidity of the notice of breach raise a number of technical questions of law. The anterior question of whether the records of the Group were at a particular point of time in sufficient detail to enable an independent auditor to verify compliance by the Group with the agreement are far too complex to permit of clarity of resolution on one interlocutory hearing. Evidence of Mr James and Ms Barnes 73 The whole of the affidavits of Mr James are allowed. He has been a director of the Group since 1999. He is in a position to give evidence of the matters dealt with in these affidavits. 74 Seemingly an important area of objection concerns the evidence which he gives, (1) in relation to the number and value of events which the Group has under contract in the Opera House from the present time up until the end of 2006; and

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