Hoppers Crossing Club v Tattersalls Gaming [2005] VSC 114

What the court decided

Under a Venue Operators Agreement due to expire on 17 May 2005, Tattersalls was to install 56 machines at the club and could install up to 14 "provisional" machines [3]. Clause 4.2.2 let Tattersalls remove provisional machines in its absolute discretion on 60 days' written notice [7]. On 10 November 2004 the club gave notice that it would not renew the agreement, as it intended to contract with Tabcorp [4]. Tattersalls responded with notice that it would remove the 14 provisional machines [4]. The club relied on an implied term of good faith, unconscionable conduct under sections 51AA and 51AC of the Trade Practices Act 1974 (Cth) and misleading conduct under section 52 [6].

His Honour accepted the defendant's submission that an injunction would be tantamount to final relief, calling for caution [20]. On disputed facts without cross-examination the usual serious issue formula would unfairly favour the club, so it had to show a strong case or a strongly favourable balance of convenience [20].

His Honour said this was not the occasion to decide whether a term of good faith is implied, a question the High Court had left open [23], [24]. Any such term would have to be consistent with the absolute discretion given to Tattersalls to remove the provisional machines [24]. Nor would it preclude a party acting in pursuit of its own legitimate commercial interests [25].

The club sought to infer from statements and letters in November 2004 a motive of coercing it into further negotiations [26]. At trial it would need to show that this was the most likely inference, to a level of satisfaction consonant with the gravity of the allegation [27], [28]. Tattersalls' manager deposed that the removal was intended to protect its position in the Wyndham area [29]. His Honour found the club's case arguable but somewhat weak, and said he could not disregard that sworn evidence when relief would be tantamount to a permanent injunction [30]. The club did not argue that such a protective purpose would breach any implied term, and his Honour said there clearly would be no breach [30]. Even disregarding that evidence, the matters relied on were equally consistent with Tattersalls cautioning the club [31].

Although the point was not argued, his Honour said it was debatable whether the alleged conduct was unconscionable under section 51AA [35]. On section 51AC, not fully argued, it was open to argument whether the club would succeed even if it proved that motive [36]. Those unconscionable conduct claims were no more than arguable [37]. The section 52 claim relied on representations allegedly made at a meeting in July 2004 [38]. Whether they were made was a disputed issue of fact [39]. Even if proved, reliance might be hard to show, and no new agreement was concluded in reliance on them [40]. That claim had no more than an arguable prospect of success [41].

Mr Best, a director, swore affidavits for the club [10], [29]. On the balance of convenience, its direct revenue loss was capable of simple calculation, put by Mr Best's affidavit at $118,800 [43]. Lost profit on food and beverages would also be susceptible of proof [43]. The club's other losses, and Tattersalls' loss if it could not relocate the machines, might be harder to prove but not impossibly so [44], [45], [46]. The scales were relatively even, and his Honour was far from convinced that the balance weighed significantly towards an injunction [47], [48].

Any serious issue to be tried had only barely been shown, and relief would be appropriate only if the balance were at least reasonably significantly weighted in the club's favour [49]. On a separate claim, Tattersalls offered an undertaking about clause 12 of the agreement, which the club agreed to accept [50]. Subject to that undertaking, the application should otherwise be dismissed, and his Honour would hear the parties on costs [51].

Why it matters

Where an interlocutory injunction would in effect give final relief on contested affidavit evidence, the applicant needs a strong case or a balance of convenience strongly in its favour. A barely arguable case resting on contested inferences, with an even balance, was not enough here. The decision also illustrates the limited reach of any implied duty of good faith against an express absolute discretion, at least where it is exercised for legitimate commercial reasons. The views on good faith and the Trade Practices Act were interlocutory and left those questions undecided [24], [35], [36].

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.