Allphones Retail Pty Ltd v Weimann

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FEDERAL COURT OF AUSTRALIA

Allphones Retail Pty Ltd (ACN 008 168 090) v Weimann [2009] FCAFC 135

CORRIGENDUM

ALLPHONES RETAIL PTY LTD ACN 008 168 090 v NORBERT CHRISTIAN WEIMANN AS TRUSTEE FOR THE WEIMANN FAMILY TRUST NO. 3

WAD 107 of 2009

SIOPIS, TRACEY AND MCKERRACHER JJ
30 SEPTEMBER 2009 (CORRIGENDUM 12 NOVEMBER 2009)
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

GENERAL DIVISION

WAD 107 of 2009

APPLICATION FOR LEAVE TO APPEAL FROM A JUDGE OF THE FEDERAL COURT

BETWEEN:

ALLPHONES RETAIL PTY LTD
ACN 008 168 090
Applicant
AND:

NORBERT CHRISTIAN WEIMANN
AS TRUSTEE FOR THE WEIMANN FAMILY TRUST NO. 3
Respondent

JUDGES:

SIOPIS, TRACEY AND MCKERRACHER JJ

DATE OF ORDER:

30 SEPTEMBER 2009

WHERE MADE:

PERTH

CORRIGENDUM

At the certification and appearances section of Tracey and McKerracher JJ’s reasons, Counsel for the Respondent should read “N Morcombe QC with IMO Matthews” not “GD Cobby”.

I certify that the preceding one (1) numbered paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justices Tracey and McKerracher.

Associate: 

Dated:       12 November 2009

FEDERAL COURT OF AUSTRALIA

Allphones Retail Pty Ltd (ACN 008 168 090) v Weimann [2009] FCAFC 135

PRACTICE AND PROCEDURE - appeal from decision of single judge to convert proceeding to a representative proceeding under s 33C of the Federal Court of Australia Act 1976 (Cth) – whether leave to appeal should be granted – whether ‘group B’ members have a ‘claim’ within the definition of s 33C – whether real question that is not abstract or hypothetical exists

Federal Court of Australia Act 1976 (Cth) ss 22, 33C
Judiciary Act 1903 (Cth) s 78B
Trade Practices Act 1976 (Cth) ss 51AC, 80, 87, 87(2)(b)

Constitution ss 75-77

AON Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14
Allphones Retail Pty Ltd (ACN 008 168 090) v Weimann[2009] FCA 849
Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406
Australian Competition & Consumer Commission v Allphones Retail Pty Ltd (No 2) (2009) 253 ALR 324
Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512
Australian Gas Light Company v Australian Competition and Consumer Commission (No 2) [2003] ATPR 41-962
Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334
Bright v Femcare Ltd (2002) 195 ALR 574
Cultivaust Pty Ltd v The Grain Pool of Western Australia [2001] FCA 1812
Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397
Dormer v Solo Investments Pty Ltd [1974] 1 NSWLR 428
Employers Reinsurance Corporation v Ashmere Cove Pty Ltd (2008) 166 FCR 398
Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179
Forster v Jododex Australia Pty Limited (1972) 127 CLR 421
Galaxy Communications Pty Ltd v Paramount Films of Australia Inc (unreported, New South Wales Supreme Court of Appeal, 27 March 1998)
Pampered Paws Connection Pty Ltd (ACN 116 460 621) (on its own behalf…

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Details
Case
[2009] FCAFC 135
Decision Date

CaseChat Overview and Summary

In the case of Allphones Retail Pty Ltd v Weimann, the central issue was the interpretation of the term 'claims' as it appears in section 33C of the Federal Court of Australia Act 1976 (Cth) (FCA) concerning representative proceedings. The court needed to determine whether 'claims' should be interpreted narrowly, to include only those claims that have fully matured, or broadly, to include current claims regarding the interpretation of existing contracts. The primary judge had permitted an amendment to the application to convert the proceeding into a representative action under Part IVA of the FCA, which Allphones contested on the basis that the group B franchisees did not have present 'claims' within the meaning of section 33C.

The court considered whether the group B franchisees had a justiciable controversy at the time of the proceeding, despite their franchise agreements not being due for renewal until future dates. The primary judge concluded that the group B franchisees had relevant 'claims' and that the proceeding raised real concerns with real consequences. The court found that the primary judge's decision was correct, as the pleadings established a basis for the inference that Allphones' approach to the renewal of the franchise agreements for group B members was likely to be consistent with its approach to group A members. The court held that the relevant question was whether the representative proceeding raised real concerns with real consequences, depending on the outcome, rather than whether there was a current dispute between the parties.

Regarding the claim for a declaration, the court determined that the pleadings disclosed a reasonable cause of action for a declaration as to the construction of clause 3 of the franchise agreement. The court found that the making of a declaration regarding the lawfulness of future conduct could constitute an exercise of federal jurisdiction if it arose from a contemporary controversy in which a party’s freedom of action was challenged. The court concluded that there was a real controversy about the right or freedom of Allphones to proceed with its proposed conduct concerning the franchise agreements.

The appeal was dismissed, and leave to appeal was granted. The applicant was ordered to pay the costs of the respondent.

Orders

Orders of the court

1. Leave to appeal be granted.

2. The appeal be dismissed.

3. The applicant is to pay the costs of the respondent, to be taxed if not agreed

Note:

Background

Background to the litigation

This appeal raises the proper meaning of ‘claims’ where that word appears in s 33C of the Federal Court of Australia Act 1976 (Cth) (FCA) relating to a representative proceeding. Specifically, does ‘claims’ in that context relate only to claims which have fully matured or does it include current claims as to the disputed interpretation of existing contracts? For reasons which follow, the meaning of ‘claims’ requires the broader approach so as to include the class described. BACKGROUND The applicant (Allphones) grants franchises to sell telephones and related products which it supplies. There is a standard form franchise agreement between Allphones and such franchisees (the Old Franchise Agreement). The question arising is the extent to which, if at all, Allphones is entitled to require franchisees to enter into an amended form of franchise agreement when the franchisees exercise a right of renewal in the Old Franchise Agreement. Clause 3 of the Old Franchise Agreement provides:This Agreement shall commence on the date specified in the Schedule hereto and continue for the term specified in the Schedule hereto. Provided that the Franchisee shall have properly performed its obligations under this Agreement and taken all action necessary to ensure that the Franchised Business conforms to the then System and Image, the Franchisee may renew this Agreement for the further term set out in the Schedule hereto. The Franchisee shall inform the Franchisor of its intention to renew by giving written notice to that effect to the Franchisor no more than one hundred and eighty (180) days nor less than ninety (90) days prior to the expiration of the initial term of this Agreement. Renewal shall be affected (sic) by the execution by the Franchisor and the Franchisee of the Franchisor's then current franchise agreement (save that this clause shall be excluded) and any other documents then used by the Franchisor in granting franchises. No fee shall be charged for the renewal of this Agreement. The respondent commenced the proceeding against Allphones in his own right. Subsequently he sought to amend his application and statement of claim to convert it into a representative proceeding under Pt IVA FCA. On 23 June 2009, the primary judge in Weimann v Allphones Pty Ltd [2009] FCA 673 permitted leave to file and serve an amended application including an application under Pt IVA FCA as well as an amended statement of claim. All of the franchisees joined in the representative proceeding are parties to contracts in the terms of the Old Franchise Agreement. The franchisees have been divided into two sub-groups. The first of those sub-groups (group A franchisees) are those who have already exercised a right to renew their respective franchise agreements. The second group, (group B franchisees) are those whose franchise agreements do not fall due for renewal until dates ranging between 2010 and 2012. Allphones has accepted the inclusion of group A franchisees as group members but opposed (before the primary judge) and opposes again (for the purpose of the appeal) the inclusion of the group B members for which his Honour provided. Essentially Allphones’ opposition is based on the fact that group B members do not at present have ‘claims’ within the meaning which should properly be attributed to that term in Pt IVA FCA.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

SIOPIS, TRACEY AND MCKERRACHER JJ
Allphones’ application for leave to appeal and the appeal were referred to this Court to be heard together, subject to any other order of the Court (see Allphones Retail Pty Ltd (ACN 008 168 090) v Weimann [2009] FCA 849). THE JUDGMENT Section 33C FCA relevantly provides as follows:33C Commencement of proceeding(1) Subject to this Part, where:(a)7 or more persons have claims against the same person; and(b)the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and(c)the claims of all those persons give rise to a substantial common issue of law or fact;a proceeding may be commenced by one or more of those persons as representing some or all of them. In making orders permitting the joinder of both group B franchisees as well as group A franchisees, the primary judge concluded that the group B franchisees had relevant ‘claims’ (at [80], [111]). His Honour also held that the Court was not being asked to entertain a hypothetical proceedings (at [111]); that the claims by the group B franchisees were ‘matters’ before a Ch III Court (at [111]); that the franchisees in the group B category were entitled to entertain real concerns concerning their legitimate contractual rights at this time (at [81]); and that the issue of concern has already been identified as such by the position taken by Allphones with the group A franchisees. His Honour accepted the respondent’s submission that by inference, there is no reason to believe given the background to the proceedings including prior proceedings in this Court involving Allphones that its approach to the renewal of the franchise agreements of the group B members was likely to be any different from that currently evinced in relation to the group A franchisees (at [81]). Although Allphones characterised this inference as being drawn in the absence of evidence or a pleading, there was sufficient from the pleading itself to which reference is made below which would establish a basis for that inference at an interlocutory level. His Honour held that the relevant question was whether or not the representative proceeding on behalf of all franchisees, both group A and group B franchisees, raised real concerns with real consequences, depending on the outcome (at [89]). Allphones contend that this is not the relevant question. It argues that the relevant question is whether there is in existence now a justiciable controversy in the sense that there is a current dispute between the parties which is not dependent upon the emergence of facts at a future time. Allphones opposes the primary judge’s conclusion (at [107]) that group B franchisees were entitled to know what their present contractual entitlements are so that they are properly informed, in good time, to decide whether or not they should exercise the option to renew their franchise agreements. The primary judge declined (at [124]) to strike out the claims for relief under s 80 and s 87 of the Trade Practices Act 1974 (Cth) (TPA) on the basis that they were properly formulated claims. The primary judge also found that the facts substantially raised a common issue of law and fact in relation to the relief sought on behalf of all franchisees in respect of the alleged unconscionable conduct of Allphones (at [87]) and that the fact that the current franchise agreement of Allphones may continue to evolve was not relevant to the consideration of whether there was a justiciable controversy between group B franchisees and Allphones (at [84]).LEAVE TO APPEAL

Ratio Decidendi

Legal Principle Established

Established by: SIOPIS, TRACEY AND MCKERRACHER JJ

Allphones also contended that, because there was no reasonable cause of action at the instance of the group B members in relation to the declaratory relief sought, it was also not arguable that the group B members had a “claim” within the meaning of s 33C of the Federal Court of Australia Act 1976 (Cth) (the Act). This is because the word “claim” has to be constructed consistently with the limits on the exercise of judicial power.THE CLAIM FOR A DECLARATION In relation to the claim for declaratory relief, Allphones contended that until such time as the group B members have made a decision as to whether to exercise the right to renew, there is no real dispute which could constitute a justiciable controversy. Until that time, there was only a hypothetical question before the Court because the claim at the instance of the group B members anticipates what may happen in the future. The question of whether there is a reasonable cause of action is to be assessed by reference to the pleadings. The question then is whether the claim pleaded at the instance of the group B members arguably, discloses a controversy affecting “real interests” (Forster v Jododex Australia Pty Limited (1972) 127 CLR 421, per Gibbs J (as he then was) at 437‑438). The amended statement of claim pleads that Allphones has acted, and is likely to act, in its dealing with the group members, in accordance with its construction of the franchise agreement. It is pleaded that Allphones has devised a plan to migrate its existing franchisees from agreements in the form of the existing franchise agreement to a new form of franchise agreement (para 12E). Further, it is alleged that Allphones has informed the applicant and the group members, in effect, that if the applicant or group members decline to execute the new franchise agreement, Allphones would nonetheless require that the applicant and the group members execute a franchise agreement in terms of the new franchise agreement in the event that the applicant or the group member exercised the right to renew (para 19). It is also pleaded that Allphones has applied, and threatened to apply, commercial pressure to achieve its objective. Further, it is pleaded that in respect of those persons who have already exercised their right of renewal, Allphones has sought to insist on those persons executing a new agreement. Further, it is pleaded that the group members will be likely to suffer damage if Allphones is permitted to proceed as it has threatened (para 47). The pleaded case, accordingly, is that Allphones has expressed an intention to act on its construction of cl 3 of the franchise agreement, in relation to all the group members, whether falling into group A or group B, and that the group members are likely to suffer loss or damage if Allphones persists with its threatened conduct. In the Australian Gas Light Company v Australian Competition & Consumer Commission (No 2) [2003] ATPR 41-962, French J (as he then was) after examining a number of High Court authorities, made the following observations at 47,554, at [40] which, in my view, are germane to the question of whether the pleaded case discloses a reasonable cause of action for a declaration as to the construction of cl 3 of the franchise agreement:The making of a declaration as to the lawfulness of future conduct has long been accepted as an exercise of judicial power. The fact that declaratory relief relates to future conduct does not place it outside the bounds of federal jurisdiction. If the claim for the declaration arises out of a contemporary controversy in which a party’s freedom of action is challenged in some way, that controversy can constitute a matter for the purposes of the exercise of federal jurisdiction. Whether or not there is a real controversy is a question of judgment. In the present case, in my opinion, there is a real controversy about the right or freedom of AGL to proceed with the proposed acquisition in relation to the Loy Yang A power station and the coal mine. Its freedom to do so has been challenged in a very practical way by the regulator in correspondence and most explicitly in its defence where it denies that the proposed acquisitions would not contravene s 50 of the Trade Practices Act. Reservations about or opposition to a proposed acquisition expressed by the regulator can have very concrete commercial consequences and may in some, if not most, cases effectively prevent an acquisition from proceeding. (Emphasis added.)