V Shop Pty Limited v RSL COM Personal Communications Pty Limited

1 On 27 February 2001 the applicant, V Shop Pty Limited, commenced these proceedings under s106 of the Industrial Relations Act 1996 ('the Act'). An application for interlocutory relief was filed on 8 March, seeking the urgent determination of the application and orders seeking to restrain the respondent from relying upon or enforcing various provisions of the agreement between the parties, the subject of these proceedings. 2 The hearing of the motion was dealt with yesterday on an urgent basis. At the hearing the parties consented to the conciliation of these proceedings being conducted on an expedited basis. Having in mind the matters to which I refer below, I am of the view that it is appropriate to grant such expedition. The matter will be listed for conciliation at 2pm on the afternoon of 23 March. 3 No agreement was able to be reached as to the other orders sought. 4 The agreement between the parties concerns a business conducted by the applicant as a retailer of telecommunication products, operating four stores as the respondent's exclusive 'Comstore' dealer. A fifth store is in the process of being fitted out. 5 The summons for relief seeks the variation of clauses 2.3 and 11.1 of the agreement, the inclusion of a number of new provisions in the agreement, as well as monetary relief. The orders pursued on an interlocutory basis seek to restrain the respondent from relying on or enforcing clauses 2.3 ( an exclusivity provision), 2.8, 3(f) (a sales objective provision) and 11.1 (the termination provision) of the agreement, as well as clause 8.1 of another agreement, the Loan agreement of 28 April 2000 between the parties, which is seemingly not the subject of any application made in the initiating summons. 6 Various allegations were made in the initiating summons as to the unfair conduct of the respondent, as well as representations made, but not delivered, and the adverse consequences that were being visited upon the applicant as result. The effect, sworn to by Mr Gaby Khoury, a director of the applicant, was said to include that the applicant is trading at a loss; that the applicant has had to lay off staff; that it has had to sell stock at a loss to maintain cashflow; that the applicant's suppliers have stopped credit arrangements; that the applicant has fallen behind in its payments to the respondent and is being prevented by the respondent from taking steps to address its precarious financial position. The employment of the applicant's continuing employees is also said to have been put in jeopardy. 7 Mr M White of counsel for the applicant submitted that there was jurisdiction to grant the interlocutory injunctive relief sought, for the purpose of ensuring that the 'due process of the Court would not be frustrated or be put at naught' Gase v Hardy [2000] NSWIRComm 31 at para 11. The orders would permit the survival of the applicant's business and maintain the status quo, pending the resolution of the application. 8 Submissions that there was a serious issue to be tried, that the balance of convenience lay with the applicant and that an undertaking as to damages had also been given, were also advanced. The position of the applicant's employees was also relied upon. (See TeleTech International Pty Ltd v Medical Benefits Fund of Australia Limited [1998]NSWIRComm 534.) 9 Mr J Phillips of counsel for the respondent submitted that the Court had no jurisdiction to grant the relief sought, it falling squarely within that class of injunctive relief discussed in the authorities as falling outside the Court's power - see Darvall v NZI Securities Australia Limited & Others (1990) 39 IR 215 at 219. 10 It followed, so it was submitted, that the relief here sought, was directed to achieve the creation of a position to which the applicant had no current legal right, but was seeking to have created for the purpose of the determination of the application. There was no power to grant such relief. Furthermore, the initiating summons and supporting material made plain that the complaints in this case would adequately be compensated by the making of a monetary order. There was no basis upon which it could be concluded that the balance of convenience here lay with the applicant. In any event, the Court would not on the one hand accept that the applicant was close to insolvency and on the other, that an undertaking as to damages had been proffered. 11 In reply, Mr White explained the basis upon which a personal undertaking as to damages had been proffered by Mr Khoury.

Consideration 12 The jurisdiction of this Court to grant interlocutory relief has now been oft considered. The law is as outlined in the judgement of Peterson J in Gibson v Western Sydney Area Health Service [2000] NSWIRComm 13 at para 15 to 25. I agree with his Honour's analysis and do not need to add more to it. 13 The interlocutory relief here seeks to preserve the continuation of the agreement between the parties and to vary that agreement in two ways. Firstly, in similar terms to the final relief sought in these proceedings and secondly, in a number of other ways, so as to preserve the financial viability of the applicant pending the determination of this application. The variation sought to the loan agreement between the parties, seemingly not otherwise the subject of any application in these proceedings, is directed to this same end. 14 So understood, it seems to me that the relief is not within the Court's jurisdiction. This cannot be characterised as relief necessary to ensure that the Court's final orders are not 'frustrated or put at naught'. While the absence of the interlocutory relief may even have dire consequences for the financial position of the applicant, that cannot affect the Court's determination of the issues raised in the summons. 15 The Act does not grant the Court power to preserve or create a particular factual situation or set of circumstances, pending the hearing of an application brought under s106. The powers there granted do not even permit orders preserving the status quo, pending a hearing. Rather, they depend upon the conclusion being reached by the Court that the contract in question is an unfair one, as defined in s105. Nor is there power granted for provisional views about that question to be formed by the Court, so as to grant a basis for relief pending a final hearing. 16 While I note the submissions here advanced in relation to the employees of the applicant, they are not parties to the proceedings and no matter that I may be sympathetic to their position or even that of the applicant, which has conditioned the views which I have formed in relation to the question of expedition, I can see no basis in these proceedings for their potential situation to provide a jurisdictional basis for the grant of the interlocutory relief sought. 17 The circumstances here do not provide a basis for the view that the absence of the orders sought would frustrate the due process of the Court, by denying the applicant the right to receive the amount of the orders which the Court considers just in the circumstances of the case. There is no issue here, after all, as to the financial viability of the respondent. 18 For these reasons, I must conclude that the Court is without power to grant the interlocutory relief sought. 19 That is not to say that the conduct about which the applicant complains, or any like conduct after the giving of this judgement, if made out on the evidence, would not be relevant to the question of whether the contract here in question was unfair and whether relief in favour of the applicant should be granted by the Court . The conduct of both parties must, after all, be considered by the Court in accordance with s106(2) of the Act. The parties to the proceedings would thus both be well advised to conduct themselves with that provision in mind. 20 The motion is granted as to urgency in the manner earlier outlined. Otherwise it is dismissed. Costs of the motion are reserved. ------------------------

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