United Insurance Advisers Pty Ltd v United Insurance Advisers

relevant legal principles 10 The principles governing the grant of interlocutory injunctions are well known and there is no need for any substantial restatement here. In essence, the Court must be satisfied that there is both a serious question to be tried in a principal proceeding and that the balance of convenience favours the grant of an injunction. Those two questions are not considered in isolation from each other. The strength or weakness of the claim will have a bearing on what is required by way of the balance of convenience. Discretionary factors such as delay may also come into account. 11 The purpose ordinarily served by an interlocutory injunction is to preserve the status quo. The question essentially is whether the justice and convenience of imposing a restraint pending the hearing of the final action is required so as to prevent the practical destruction of the rights that are asserted. In this context, the adequacy of damages as a remedy also needs to be taken into account. 12 Thus far, I have referred to various introductory facts which are essentially not in dispute. I will turn to the more crucial issues in a moment. Before doing so, it is worth repeating that on an application like this the Court does not embark on anything resembling a trial, and ordinarily the Court will not attempt to reach any conclusion as to the facts or matters in dispute. It will merely inquire whether there is a serious question to be tried, and it will inquire into factual matters that bear upon the balance of convenience or discretionary considerations. 13 For the reasons that follow, I am not satisfied that a case has been made out for the grant of interlocutory relief.

the combined database 14 I will deal firstly with the claim relating to the combined database. The applicants' essential case is that there is an implied agreement or equitable obligation not to use information in the combined database to solicit business from clients who formed part of the applicants' pre-merger client base. The applicants' contention is not only that such an obligation exists, but that there is sufficient evidence that it has been breached at least to raise a serious question to be tried. 15 The respondents contend that the applicants have not defined with any precision the confidential information which they seek to protect. They contend further the combined database belongs to both the first applicant and the first respondent and that the parties envisaged that both sides would have unrestricted access to the information in the duplicate combined databases. Finally, the respondents contend that, in any event, even if an obligation can be found to exist on the facts, there is no evidence of any breach of it. 16 For the purposes of this application I do not need to express a view about some of these contentions. I am prepared to assume, without deciding, even at the level required for this application, that the applicants disclosed client information for the purposes of the combined database on the basis that the information would be used only for the purposes of the merged business. I am also prepared to assume, again without expressing any view about it, that an implied agreement or equitable obligation might be established to the effect that after the demerger the respondents would not use information in the combined database that derived from the applicants' pre-merger client base to solicit business from those clients. 17 I can make those assumptions because it seems to me the claim fails at the next step. There is simply no adequate evidence that any obligation of confidence or implied agreement was breached. The applicants rely on the fact that approximately 20 of its clients, who were previously serviced by the third respondent, Mr Peril, transferred their business to the respondents. Mr Peril serviced most, if not all, of these clients. The respondents have filed affidavits from Mr Peril and from these clients deposing that they were not solicited or, in their words, 'poached', by the respondents to transfer their business in this way but made their own decision to follow Mr Peril to his new employment. 18 The applicants criticise Mr Peril's affidavit where it states that clients contacted him after receiving renewal notices from the first applicant. The applicants point out that this timing does not explain at least one client, which transferred its business to the respondents in May 2005. However, in the face of the direct oral evidence that there was no active solicitation, I do not attach any significant weight to this argument. Mr Peril may only have been making an assumption that the client was provoked by a renewal notice to transfer his business in the same way as others had been. In any event, it is quite possible that the transfer may have been the result of any number of prompts, including simply the client becoming aware that Mr Peril had moved to his new employment. There is, in short, no evidence of solicitation of clients in breach of the assumed obligation of confidence or implied agreement to which I have referred. 19 The applicants also point out that the appointment letters from various clients in favour of the respondents contain information that probably derives from the combined database. Making that assumption, I observe that the information is relevantly also the clients' information, and the clients may have instructed the respondents to draw up the appointment letters. 20 Even if I am wrong in thinking that the evidence does not rise to the level of a serious question, the case would stand at the very weakest end of the spectrum. 21 In any event, I would not grant an injunction in the circumstances of this case, having regard to my assessment of the balance of convenience and discretionary factors. Any alleged misuse of information in the combined database related to a handful of clients who followed Mr Peril. The alleged wrongful conduct ceased by about August 2005. The applicant complained of the conduct in late 2005 but took no action. There is, moreover, no evidence of ongoing conduct by way of continuing misuse of information to solicit clients. These circumstances, in my view, cast further doubt on the foundations of the claim. They do not support the contention that there is a real threat of irreparable harm warranting the grant of injunctive relief. 22 The respondents relied upon delay itself as a discretionary factor, but the respondents' counsel did not point to any prejudice occasioned by the delay. Its only significance may be to cast doubt on the contention that there is a serious question to be tried. For those reasons, the claim concerning the database information does not support the grant of interlocutory relief.

the company name 23 I next turn to the claim based on the use of the company name United Insurance Advisers (National) Pty Ltd. The legal claim is founded either in passing off or in misleading conduct. In my view, the evidence does not make out a case for the grant of injunctive relief that would restrain the very limited ongoing use of this name. The adoption of the name by the respondents goes back to the merger. At the time of the merger the first applicant and the first respondent agreed that the first respondent would change its name from Andrew Young & Associates Pty Ltd to United Insurance Advisers (National) Pty Ltd. The Australian Securities and Investments Commission was so advised, and the first respondent had its licensing arrangements changed accordingly. Effectively that means that until approximately 2006 the respondents' licence is held in the name of United Insurance Advisers (National) Pty Ltd. 24 There is no evidence that the first respondent has been using the disputed name other than to comply with regulatory requirements. There is certainly no evidence that the name is being used actively as a trading name or promotional name for the respondents' business. On the contrary, the evidence shows that the first respondent uses the name Andrew Young & Associates as its trading name, including on its building, in its logo, on stationery and the like. There is no evidence that the name is used to advertise the respondents' business. 25 There is some evidence that the name was used in the post-demerger transition period between about May 2005 and October 2005 in the course of correspondence with various clients. This is understandable, as earlier in the year the clients were contacted using that disputed name because it was the agreed name for the merged business. It was inevitable that some clients would communicate thereafter for some period of time with the respondents by reference to the disputed name. In my opinion the evidence does not establish a question, let alone a serious question, of passing off or misleading conduct contravening the Trade Practices Act 1974 (Cth). 26 In any event, where there has been for many months now no ongoing use of the name in a promotional, advertising or trading sense, it seems to me that there is no case, on the balance of convenience, for the grant of the relief sought.

costs 27 After I delivered these reasons orally, Mr Wilson, senior counsel for the respondents, applied for the costs of the interlocutory application, including reserved costs, to be paid on an indemnity basis. In addition, he sought an order that would dispense with the ordinary operation of O 62 r 3(3) of the Federal Court Rules. This sub-rule provides that an order for costs of an interlocutory proceeding shall not entitle a party to have a bill of costs taxed until the principal proceeding has been concluded, unless the Court otherwise orders. 28 My attention has been drawn by counsel for both parties to well-known authorities dealing with indemnity costs, including NMFM Property v Citibank Ltd (2001) 109 FCR 77, Colgate Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 and Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397. The Court has a discretion concerning the scale of costs. The discretion is unfettered except that it must be exercised judicially. The cases concerning indemnity costs illustrate that much turns upon the facts of the particular case. The essential principle is that a discretion can be exercised to order costs on an indemnity basis where the actions of the unsuccessful party have been unreasonable or high-handed or where the claim in question was totally frivolous or hopeless or fundamentally flawed. 29 I have already explained why there was a clear case for the rejection of the application. In support of his application for costs, Mr Wilson drew my attention to a letter dated 22 February 2006 from the respondents' solicitors to the solicitors for the applicants. The letter was delivered on the basis that it was without prejudice save as to costs. The letter sets out the reasons why the respondents contended that the application for interlocutory relief was doomed to fail. In addition, it offered that if the applicants withdrew their interlocutory application before further costs were incurred and on the basis that the applicants would pay the respondents' costs of the application up to 22 February 2006 on an ordinary party-party basis, the name of the first respondent would be changed as at 14 May 2006. 30 The letter asserted that if the proposed interlocutory application proceeded and it was lost, then costs would be sought on an indemnity basis and on the basis that they be paid forthwith. It may be that the offer to change the name of the first respondent with effect from 14 May 2006 did not meet that part of the case brought by the applicants which was of most concern to them, which related to the client information in the combined database. Nevertheless, it did address an important part of the interlocutory relief that the applicants were seeking, namely a restraint on the use of that name. 31 This is a case in which there are grounds for thinking that the applicants and their advisers should have known that the interlocutory application was likely to fail. The case is very close to the line of being so fundamentally flawed that it would attract an exercise of discretion to award indemnity costs. On the other hand, I am conscious that until the respondents filed evidence, the case may have appeared much stronger. At the hearing the applicants drew attention to what they said were discrepancies in the evidence and issues of timing that they said gave weight to their allegations. They ought to have realised then that their case was very weak, but it would go too far to say it was totally frivolous. In all the circumstances and despite the fact that I have hesitated about this matter, I have concluded that it is not a case in which I should order indemnity costs or taxation forthwith.

orders 32 Accordingly, I will make orders that the application for interlocutory relief be dismissed and the applicants pay the respondents' costs of the interlocutory application, including reserved costs. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Young.

Solicitor for the Applicants: Goddard Elliot Barristers & Solicitors

Counsel for the Respondents: S K Wilson QC with W E Lye

Solicitor for the Respondents: Diakou Faigen Lawyers