Australian Pharmaceutical Industries Ltd v Central Park Pharmacy (Sydney) Pty Ltd; Australian Pharmaceutical Industries Ltd v Lemon
[2021] VSC 796
•3 December 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
S ECI 2021 01025
| AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED (ACN 000 004 320) & ORS (according to the attached Schedule) | Plaintiffs/Defendants by Counterclaim |
| v | |
| CENTRAL PARK PHARMACY (SYDNEY) PTY LTD (ACN 155 798 397) & ORS (according to the attached Schedule) | Defendants/Plaintiffs by Counterclaim |
S ECI 2021 01012
| AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED (ACN 000 004 320) & ORS (according to the attached Schedule) | Plaintiffs/Defendants by Counterclaim |
| v | |
| CHRISTOPHER IAN LEMON & ANOR (according to the attached Schedule) | Defendants/Plaintiffs by Counterclaim |
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JUDGE: | Attiwill J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 June 2021 (further written submissions provided 25 June 2021) |
DATE OF JUDGMENT: | 3 December 2021 |
CASE MAY BE CITED AS: | Australian Pharmaceutical Industries Ltd v Central Park Pharmacy (Sydney) Pty Ltd; Australian Pharmaceutical Industries Ltd v Lemon |
MEDIUM NEUTRAL CITATION: | [2021] VSC 796 |
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PRACTICE AND PROCEDURE – Pleadings – Strike out application by plaintiffs/defendants by counterclaim – Summary judgment application by plaintiffs/defendants by counterclaim – Supreme Court (General Civil Procedure) Rules2015 (Vic) r 23.02 – Civil Procedure Act 2010 (Vic) ss 61, 62, 63, 64, 65 – Applicable principles – Choice of law clause - Alleged agreement for application of Victorian statute – Power of the Court to grant relief under s 7 of the Contracts Review Act 1980 (NSW) – Declarations in civil proceedings concerning criminal conduct –Pleadings not disclosing a defence – Unintelligible pleadings – Pleadings may prejudice, embarrass or delay the fair trial of the proceedings – Applications allowed in part – Leave to replead (in part).
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APPEARANCES: | Counsel | Solicitors |
| For Australian Pharmaceutical Industries Limited (ACN 000 004 320) & Ors (according to the attached Schedule) | A McClelland QC A Christophersen | HWL Ebsworth Lawyers |
| For Central Park Pharmacy (Sydney) Pty Ltd (ACN 155 798 397) & Ors (according to the attached Schedule) | E Nekvapil J Hartley | T F Grundy Lawyer/Levitt Robinson Solicitors |
| For Christopher Ian Lemon & Anor (according to the attached Schedule) | E Nekvapil J Hartley | T F Grundy Lawyer/Levitt Robinson Solicitors |
TABLE OF CONTENTS
1. INTRODUCTION.......................................................................................................................... 1
2. PARTIES’ MATERIALS............................................................................................................... 2
3. BACKGROUND............................................................................................................................. 2
Central Park proceeding.................................................................................................................. 3
Manly proceeding............................................................................................................................ 4
Pharmacy Council of New South Wales.......................................................................................... 5
4. PROCEDURAL HISTORY........................................................................................................... 5
5. APPLICABLE LAW....................................................................................................................... 7
6. OVERVIEW OF THE PLAINTIFFS’ APPLICATIONS........................................................ 14
7. PLAINTIFFS’ APPLICATIONS: CL 5 OF THE NSW PHARMACY ACT.......................... 14
7.1 NSW Pharmacy Act cl 5 declaration application................................................................ 14
Submissions........................................................................................................................ 14
Applicable law................................................................................................................... 20
Analysis............................................................................................................................... 27
7.2 NSW Pharmacy Act cl 5 no contravention application..................................................... 33
Submissions........................................................................................................................ 33
Analysis............................................................................................................................... 36
7.3. NSW Pharmacy Act cl 5 no nexus application................................................................... 39
Submissions........................................................................................................................ 39
Analysis............................................................................................................................... 42
7.4 NSW Pharmacy Act cl 5 deficient pleading application................................................... 44
Submissions........................................................................................................................ 44
Analysis............................................................................................................................... 45
8. PLAINTIFFS’ APPLICATIONS: CL 10 OF THE NSW PHARMACY ACT........................ 46
8.1. NSW Pharmacy Act cl 10 no nexus application................................................................. 46
8.2. NSW Pharmacy Act cl 10 deficient pleading application................................................ 47
Submissions........................................................................................................................ 47
Analysis............................................................................................................................... 48
8.3. NSW Pharmacy Act cl 10 consequential pleading application....................................... 49
9. PLAINTIFFS’ APPLICATIONS: CONSEQUENTIAL RELIEF........................................... 50
Submissions................................................................................................................................. 50
Analysis........................................................................................................................................ 51
10. PLAINTIFFS’ APPLICATIONS: VICTORIAN PHARMACY ACT................................... 51
Submissions................................................................................................................................. 52
Analysis........................................................................................................................................ 58
11. PLAINTIFFS’ APPLICATIONS: CONTRACTS REVIEW ACT......................................... 63
11.1 Contracts Review Act Court’s lack of power application................................................ 63
Submissions........................................................................................................................ 64
Analysis............................................................................................................................... 67
11.2 Contracts Review Act relief not available application..................................................... 73
Submissions........................................................................................................................ 74
Analysis............................................................................................................................... 77
11.3 Contracts Review Act deficient pleading application...................................................... 81
Submissions........................................................................................................................ 81
Analysis............................................................................................................................... 81
11.4 Contracts Review Act summary judgment application................................................... 82
12. CONCLUSIONS AND ORDERS........................................................................................... 83
HIS HONOUR:
1. INTRODUCTION
These proceedings were commenced in the County Court of Victoria and transferred to this Court on 29 March 2021.[1]
[1]Orders of Muller JR in Australian Pharmaceutical Industries Ltd v Lemon (County Court of Victoria, CI-19-02415, 29 March 2021); Orders of Muller JR in Australian Pharmaceutical Industries Ltd v Central Park Pharmacy (Sydney) Pty Ltd (County Court of Victoria, CI-19-02418, 29 March 2021).
The plaintiffs and defendants by counterclaim in proceeding S ECI 2021 01025 (‘Central Park proceeding’) and in proceeding S ECI 2021 01012 (‘Manly proceeding’) (collectively ‘the plaintiffs’) have made applications, by summonses filed 24 December 2020, pursuant to:
(a) s 63 of the Civil Procedure Act 2010 (Vic) (‘Civil Procedure Act’) for summary judgment with respect to a number of the defences and counterclaims of the defendants and plaintiffs by counterclaim (collectively ‘the defendants’); and
(b) r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015 (‘Rules’) for orders striking out a number of the defendants’ defences and counterclaims.
At the hearing of the plaintiffs’ applications, the Court raised with the plaintiffs that the plaintiffs’ summonses, and the plaintiffs’ written submissions, did not adequately identify the sources of power upon which they relied to seek the orders set out in the summonses.[2] Subsequent to the hearing, the plaintiffs provided a document titled ‘Plaintiffs’ note regarding sources of power in respect of each order sought in summonses filed 24 December 2020’ (‘Plaintiffs’ Note on Sources of Power’).[3] This identified the sources of power and the particular relief sought by the plaintiffs. The defendants did not object to this and did not subsequently raise any issue with the Plaintiffs’ Note on Sources of Power, despite being given the opportunity to do so.[4]
[2]The plaintiffs’ summonses do not identify any source of power. The plaintiffs’ submissions dated 7 June 2021 refer to rr 23.01 and 23.02 of the Rules. No reference is made to s 63 of the Civil Procedure Act.
[3]The Plaintiffs’ Note on Sources of Power is attached to these reasons.
[4]Transcript of Proceedings, Australian Pharmaceutical Industries Ltd v Central Park Pharmacy (Sydney) Pty Ltd & Australian Pharmaceutical Industries Ltd vs Lemon (Supreme Court of Victoria, S ECI 2021 01025 & S ECI 2021 01012, Attiwill J, 15 June 2021) 146.16-28 (Mr Nekvapil) (‘Transcript of Proceedings’).
2. PARTIES’ MATERIALS
The plaintiffs relied upon the affidavits of:
(a) Anne Mustow, general counsel and company secretary of the first plaintiff, sworn 23 December 2020 in the Central Park proceeding (‘Central Park Mustow affidavit’) and an affidavit sworn 23 December 2020 in the Manly proceeding (‘Manly Mustow affidavit’). Ms Mustow deposed to various background matters, including details concerning the parties and their contractual relationship, and exhibited a number of key documents, including credit applications and franchise agreements; and
(b) Clare Grainger, solicitor of the plaintiffs’ solicitors, sworn 10 June 2021 in the Central Park proceeding (‘Central Park Grainger affidavit’) and an affidavit sworn 10 June 2021 in the Manly proceeding (‘Manly Grainger affidavit’). Ms Grainger deposed that she has read the Central Park Mustow affidavit and the Manly Mustow affidavit and deposed to her belief that the defences and counterclaims described in the summonses have no real prospect of success.[5]
[5] Manly Grainger affidavit, [3]; Central Park Grainger affidavit, [3].
The plaintiffs relied upon submissions dated 7 and 14 June 2021, the Plaintiffs’ Note on Sources of Power and an undated submission titled ‘Plaintiffs’ note regarding the effect of section 14(3) of the Jurisdiction of Courts (Cross-Vesting) Act (Vic) (‘Plaintiffs’ Note on Section 14(3)’). The defendants relied upon submissions dated 11 and 25 June 2021. Counsel for the plaintiffs and the defendants made oral submissions at the hearing.
3. BACKGROUND
There was no dispute between the parties on the relevant background facts except that the defendants submitted that ‘there are more purported guarantees and indemnities pleaded than the Plaintiffs refer to in their submissions’.[6]
[6]Defendants’ submissions dated 11 June 2021, [8], [51]-[56]. See especially at [53] in which the defendants submitted: ‘The Plaintiffs go on to plead that Christopher Lemon and Mark McHugh guaranteed those obligations of Central Park and indemnified the Plaintiffs against any loss in relation to the same (SOC [8]-[9])’. See also plaintiffs’ submissions dated 7 June 2021, [5]-[12].
The plaintiffs are related parties and are part of the Priceline Group of companies. At all material times:
(a) the first plaintiff sold pharmaceutical and dispensing goods to the first defendant in the Central Park proceeding and to the defendants in the Manly proceeding;
(b) the second plaintiff sold over-the-counter non-pharmaceutical/dispensing goods to the first defendant in the Central Park proceeding and to the defendants in the Manly proceeding; and
(c) the third plaintiff operated the Priceline pharmacy business as franchisor.[7]
Central Park proceeding
[7] Central Park Mustow affidavit, [5]; Manly Mustow affidavit, [5].
There are three defendants. At all material times, the second and third defendants were pharmacists.[8]
[8] Central Park Mustow affidavit, [3].
On 6 June 2012, the first defendant completed a document entitled ‘Application for Credit Account’ as a ‘Priceline Pharmacy Franchisee’ with respect to a new pharmacy to be located at Shop RB08, Central Shopping Centre, 1 Central Avenue, Chippendale in the State of New South Wales (‘Central Park Pharmacy’) (‘Central Park Credit Application’).[9] The second and third defendants also completed Section 7 of the Central Park Credit Application titled ‘Guarantee, Indemnity & Charge by Related Persons’ (‘Central Park Guarantee, Indemnity & Charge’).[10] The Central Park Credit Application sets out, among other things, that the second defendant had a 33.33% interest in the ‘Forestway Pharmacy’ and the third defendant had a 100% interest in the ‘Dee Why Day & Night Pharmacy’.[11]
[9]Exhibit ‘AEMM-1’ to the Central Park Mustow affidavit. The Central Park Credit Application was signed on behalf of the first defendant by the second and third defendants on 14 May 2012 and 6 June 2012 respectively.
[10]Exhibit ‘AEMM-1’ to the Central Park Mustow affidavit, pg 8 of 13.
[11]Ibid pg 5 of 13 (there are two pgs 5).
The first defendant commenced operating the Central Park Pharmacy pursuant to a franchise agreement dated 6 November 2013 (‘Central Park franchise agreement’), with a start date of 31 October 2013.[12]
[12]Exhibit ‘AEMM-3’ to the Central Park Mustow affidavit.
The second and third defendants sold their interest in the Central Park Pharmacy on or about 20 February 2019.[13] The defendants have never operated a Priceline pharmacy in Victoria.[14]
Manly proceeding
[13]Central Park Mustow affidavit, [3].
[14]Ibid [4].
There are two defendants. At all material times, the defendants were pharmacists.[15]
[15] Manly Mustow affidavit, [3].
On 23 April 2015, the defendants completed a document entitled ‘Application for Credit Account’ as a ‘Priceline Pharmacy Franchisee’ with respect to premises located at Shops 5-8, 28 The Corso, Manly, in the State of New South Wales (‘Manly Pharmacy’) (‘Manly Credit Application’).[16] The defendants also completed Section 7 of the Manly Credit Application titled ‘Guarantee, Indemnity & Charge by Related Persons’ (‘Manly Guarantee, Indemnity & Charge’).[17] The Manly Credit Application sets out, among other things, that the defendants had a 33.3% interest in the ‘Forestway Pharmacy’ and a 25% interest in the ‘Central Park Pharmacy Sydney’.[18]
[16]Exhibit ‘AEMM-1’ to the Manly Mustow affidavit.
[17]Ibid pg 8 of 14.
[18]Ibid pg 5 of 14.
The Manly Credit Application and the Manly Guarantee, Indemnity & Charge are largely in the same terms as the Central Park Credit Application and the Central Park Guarantee, Indemnity & Charge.
The defendants commenced operating the Manly Pharmacy pursuant to a franchise agreement dated 25 November 2015 (‘Manly franchise agreement’), with a start date of 28 June 2015.[19] The Manly franchise agreement is largely in the same terms as the Central Park franchise agreement.
[19]Exhibit ‘AEMM-3’ to the Manly Mustow affidavit.
The defendants sold their interest in the Manly Pharmacy on or about 28 March 2019.[20] The defendants have never operated a Priceline pharmacy in Victoria.[21]
[20]Manly Mustow affidavit, [3].
[21]Ibid [4].
Pharmacy Council of New South Wales
At all relevant times, the evidence establishes that the Pharmacy Council of New South Wales was aware that:
(a) the defendants in the Central Park proceeding operated the Central Park Pharmacy as a Priceline pharmacy pursuant to the Central Park franchise agreement;
(b) the defendants in the Manly proceeding operated the Manly Pharmacy as a Priceline pharmacy pursuant to the Manly franchise agreement; and
(c) all pharmacists operating Priceline pharmacies as franchisees from premises in New South Wales were doing so pursuant to franchise agreements that were the same or similar to the Central Park franchise agreement and the Manly franchise agreement (collectively the ‘franchise agreements’).[22]
[22]Central Park Mustow affidavit, [12]; Manly Mustow affidavit, [12].
As at 23 December 2020, neither the Pharmacy Council of New South Wales, nor the Attorney-General of New South Wales, have prosecuted any of the plaintiffs for any alleged contravention of the Health Practitioner Regulation National Law 2009 (NSW) (‘NSW Pharmacy Act’).[23]
[23]Central Park Mustow affidavit, [13]; Manly Mustow affidavit, [13].
4. PROCEDURAL HISTORY
On 28 May 2019, the plaintiffs commenced the Central Park proceeding and the Manly proceeding, by filing writs and statements of claim in the County Court of Victoria. The plaintiffs claim payment of unpaid debts for goods that had been supplied on credit to the defendants’ pharmacy businesses, unpaid franchisee fees in respect of those pharmacy businesses, and related amounts.[24] The statements of claim have not been amended. The following matters, among others, then took place in both the Central Park proceeding and the Manly proceeding.
[24]Plaintiffs’ submissions dated 7 June 2021, [9].
On 9 July 2019, the defendants filed defences and counterclaims. On 1 October 2019, the plaintiffs filed replies and defences to counterclaim.
On 5 May 2020, the plaintiffs filed summonses seeking orders that the defendants’ defences be struck out, the counterclaims be dismissed and judgment be entered in favour of the plaintiffs. On 6 May 2020, the defendants filed summonses seeking orders that they be given leave to file amended defences and counterclaims.
On 10 June 2020, his Honour Judge Cosgrave made orders by consent, among others, dismissing the plaintiffs’ summonses filed 5 May 2020, ordering the defendants to serve proposed amended defences and counterclaims addressing the plaintiffs’ objections, and otherwise adjourning the defendants’ summonses filed 6 May 2020. On 7 July 2020, his Honour made further orders by consent which, among other things, gave the defendants leave to amend the defences and counterclaims and dismissed the defendants’ summonses.
On 7 July 2020, the defendants filed their amended defences and counterclaims. These are the pleadings the subject of the plaintiffs’ applications in this Court. The substantive pleadings are largely identical. The defendants deny liability to the plaintiffs and counterclaim, relying upon sch 5F of the NSW Pharmacy Act; the Pharmacy Regulation Act 2010 (Vic) (‘Victorian Pharmacy Act’); the Contracts Review Act 1980 (NSW) (‘Contracts Review Act’) and sch 2 of the Competition and Consumer Act 2010 (Cth) (‘Australian Consumer Law’).
On 21 October 2020, the plaintiffs filed replies and defences to the amended counterclaims. On 21 December 2020, the defendants filed replies to defences to the amended counterclaims.
On 21 December 2020, the defendants’ solicitors sent a letter to the plaintiffs’ solicitors in which they stated, in part:[25]
It is possible that you misunderstand our pleading. Taking Manly for example, by [7C.2] it pleads that “in the premises, by agreement between the parties, section 11 of the [Act] applied ... .” The pleading is that, in the premises pleaded in [7C.1 ], the parties agreed to treat the Victorian statute as though it were binding on them. That is, the parties agreed that, whatever effect the statute would have (were it applicable of its own force), it has that effect by virtue of the parties’ agreement (rather than by force of the statute itself).
[25]Exhibit ‘AEMM-7’ to the Central Park Mustow affidavit, pg 2; Exhibit ‘AEMM-7’ to the Manly Mustow affidavit, pg 2.
On 24 December 2020, the plaintiffs filed the summonses the subject of the plaintiffs’ applications in this Court.
On 11 January 2021, the defendants filed referrals under pt 3 of the Courts (Case Transfer) Act 1991 (Vic). On 24 February 2021, Burchell JR made orders, among others, vacating the trial and recording in ‘Other Matters’ that the County Court of Victoria has no jurisdiction to deal with the matter under the Contracts Review Act. On 15 and 16 March 2021, Burchell JR gave notice of her determination that pursuant to pt 3 of the Courts (Case Transfer) Act, the proceedings should be transferred to this Court. On 29 March 2021, Muller JR ordered that that the proceedings be transferred to this Court.
5. APPLICABLE LAW
Rule 23.02 provides:
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c)may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
No evidence is admissible on the question of whether a pleading offends against r 23.02 of the Rules.[26]
[26]Rules r 23.04(2).
In Meckiff v Simpson[27] the Full Court of this Court said of a previous rule of the Court that authorised the Court to strike out pleadings:
It is important at the outset to stress that the order appealed against was made on an application under O. XIX, r. 27, which authorizes a judge to strike out any matter in any pleading which may tend to prejudice, embarrass or delay the fair trial of the action. As is shown by numerous authorities on this rule, which takes its place in an order dealing with pleadings generally, matter in a pleading will be struck out under this rule only where there is some defect in the pleading attacked, e.g. where the pleading is unintelligible, ambiguous, vague or too general, so as to embarrass the opposite party who does not know what is alleged against him. The rule is one to ensure compliance with the rules of pleading and nothing else.
[27][1968] VR 69, 70 (Adam J for Winneke CJ, Adam and Gowans JJ).
In Wheelahan & Anor v City of Casey & Ors (No 12)[28] John Dixon J summarised the principles to be applied:
[28][2013] VSC 316, [25] (‘Wheelahan’) (citations omitted). Wheelahan was referred to with approval by the Court of Appeal in Uber Australia Pty Ltd v Andrianakis (2020) 61 VR 580, 599–600 [50] (Niall, Hargrave and Emerton JJA) (‘Uber’).
Casey contended that three recent decisions of this court, SMEC Australia Pty Ltd & Anor v McConnell Dowell Constructors (Aust) Pty Ltd & Ors (No 2), Environinvest Ltd v Pescott & Ors; Environinvest Ltd v Blackburne Pty Ltd & Ors, and Clarke & Ors v Great Southern Finance Pty Ltd & Ors identify the relevant principles that govern its application. Frankston took no issue in written or oral submissions with Casey’s contention as to the applicable principles. Relevantly:
(a)Order 13 of the Rules set out the relevant requirements of a sufficient pleading, while r 23.02 provides the grounds on which the sufficiency of a pleading may be impugned;
(b)the function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial;
(c)the cardinal rule is that a pleading must state all the material facts to establish a reasonable cause of action (or defence). The expression ‘material facts’ is not synonymous with providing all the circumstances. Material facts are only those relied on to establish the essential elements of the cause of action;
(d)as a corollary, the pleading must be presented in an intelligible form – it must not be vague or ambiguous or inconsistent. Thus a pleading is ‘embarrassing’ within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged;
(e)the fact that a proceeding arises from a complex factual matrix does not detract from the pleading requirements. To the contrary, the requirements become more poignant;
(f)pleadings, when well-drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);
(g)a pleading which contains unnecessary or irrelevant allegations may be embarrassing – for example, if it contains a body of material by way of background factual matrix which does not lead to the making out of any defined cause of action (or defence), particularly if the offending paragraphs tend to obfuscate the issues to be determined;
(h)it is not sufficient to simply plead a conclusion from unstated facts. In this instance, the pleading is embarrassing;
(i)every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));
(j)the effect of any document or purport of any conversation, if material, must be pleaded as briefly as possible, and the precise words of the document or the conversation must not be pleaded unless the words are themselves material (r 13.03);
(k)particulars are not intended to fill gaps in a deficient pleading. Rather, they are intended to meet a separate requirement – namely, to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met. An object and function of particulars is to limit the generality of a pleading and thereby limit and define the issues to be tried;
(l)a pleading should not be so prolix that the opposite party is unable to ascertain with precision the causes of action and the material facts that are alleged against it;
(m)extensive cross-referencing of facts in a pleading may render parts of the pleading unintelligible;
(n)in an application under r 23.02, the court will only look at the pleading itself and the documents referred to in the pleading;
(o)the power to strike out a pleading is discretionary. As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown; and
(p)if the objectionable part of the pleading is so intertwined with the rest of the pleading so as to make separation difficult, the appropriate course is to strike out the whole of the pleading.
In Babcock & Brown DIF III Global Co-Investment Fund, LP & Anor v Babcock & Brown International Pty Limited & Ors (No 2),[29] Hargrave J referred to the principles summarised by John Dixon J in Wheelahan and added the following observation:
To this summary, I would add that the Court should consider the pleading under a challenge as a whole and adopt a practical case management approach to pleading objections, rather than accepting technical objections when the true nature of the case to be met is clear from reading the pleading as a whole and there is no embarrassment to filing a responsive pleading. Such an approach accords with the discretionary nature of the power to strike out and with the overarching purpose under the Civil Procedure Act. However, in cases alleging dishonesty or fraud, precise pleadings with full particulars are required.
[29][2017] VSC 556, [15] (‘Babcock’). Babcock was referred to with approval in Uber (n 28) 600–1 [52]–[53].
In Babcock,[30] Hargrave J also stated:
Before considering these issues, it is necessary to stand back and consider the statement of claim and the third party notice as a whole and, in that light, ask:
Does the plaintiffs’ case previously advanced against Ms Talintyre, as adopted and expanded by the RBS defendants in the third party notice, give Ms Talintyre clear notice of the case she needs to meet at trial?
[30]Babcock (n 29) [17].
In CA & CA Ballan Pty Ltd v Oliver Hume (Australia) Pty Ltd,[31] the Court of Appeal stated:
[31](2017) 55 VR 62, 71–73 [21]–[28] (Redlich, Tate and Ferguson JJA) (citations omitted).
21Pleadings are important. Primarily, they are used to help the parties define the real issues in dispute. But it is prudent to bear in mind that they are procedural tools only.
22On a strike out application, it is usually assumed that the matters pleaded can be established.
23The Agents relied upon cases such as General Steel Industries Inc v Commissioner for Railways (NSW) as authority for the proposition that there is a high threshold to be overcome if a pleading is to be struck out. In that case, Barwick CJ observed that a plaintiff should not be denied the right to prosecute a claim unless it was clearly demonstrated that there was no cause of action. The Chief Justice referred to various expressions that had been used to describe the test for disposing of a proceeding summarily — phrases such as: ‘so obviously untenable that it cannot possibly succeed’; ‘manifestly groundless’; ‘so manifestly faulty that it does not admit of argument’; ‘discloses a case which the Court is satisfied cannot succeed’; ‘under no possibility can there be a good cause of action’; ‘be manifest that to allow them (the pleadings) to stand would involve useless expense.’
24Care should be exercised in applying such terms now. The case of General Steel and like authorities pre-date the Civil Procedure Act. That legislation introduced a test of ‘no real prospect of success’ for when summary judgment may be given. A pleading that would not survive a summary judgment application will be struck out, for to allow it to go forward would be futile. According to Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd, a prospect which is not ‘real’ is ‘fanciful’; although the ‘no real prospect of success’ test in s 63(1) of the Civil Procedure Act is more liberal than the common law test of ‘hopeless’ or ‘bound to fail’, there may not be much difference between them in practice; and, properly understood, a real question to be tried is one which realistically might result in the Agents to an application for summary judgment succeeding in the proceeding. The correct test to apply in the present case is whether the amendments raise a claim that has no real prospect of success, in the sense of being fanciful.
25It is still the case, however, that the effect of striking out a statement of claim if no right to replead is granted brings the proceeding to a peremptory end. In this regard, the older authorities provide some salutary warnings. As Dixon J said in Dey v Victorian Railways Commissioners:
A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.
26In the same case, Latham CJ took what might be viewed as a slightly more robust approach. His Honour said:
If, as a result of argument, the court reaches a clear decision which could not be altered by any evidence which could be adduced at the trial, then it is proper in the interests of both parties to dismiss the action instead of allowing the parties to incur completely useless expense.
27Picking up on his Honour’s reference to evidence, the effect that it may have at trial cannot be underestimated. Experience tells that evidence at trial can shape the case in ways that have not been anticipated despite the best efforts of litigants and their legal advisers. As Whelan JA observed in Mutton v Baker:
Even if it is said that an issue is purely a question of law, the court should not strike out a claim on this basis if it is conceivable that some factual matter could emerge at trial which might alter the analysis.
28In General Steel Barwick CJ referred to the passage from Dixon J’s judgment in Dey that we have set out above. The Chief Justice then stated:
Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.
Section 61 of the Civil Procedure Act provides that a plaintiff may apply to the Court for summary judgment in the proceeding on the ground that a defendant’s defence or part of that defence has no real prospect of success.
Section 62 of the Civil Procedure Act relevantly provides that a defendant in a civil proceeding may apply to the Court for summary judgment in the proceeding on the ground that a plaintiff's claim or part of that claim has no real prospect of success.[32]
[32]The plaintiffs made their applications under s 61 of the Civil Procedure Act. However, some parts of the challenged pleadings also concerned the defendants’ counterclaims.
Section 63 of the Civil Procedure Act relevantly provides that, subject to s 64, a court may give summary judgment if satisfied that a claim, defence or a counterclaim, or part of the claim, defence or counterclaim, has no real prospect of success. Section 64 of the Civil Procedure Act provides that:
Despite anything to the contrary in this Part or any rules of court, a court may order that a civil proceeding proceed to trial if the court is satisfied that, despite there being no real prospect of success the civil proceeding should not be disposed of summarily because –
(a) it is not in the interests of justice to do so; or
(b)the dispute is of such a nature that only a full hearing on the merits is appropriate.
Section 65 of the Civil Procedure Act provides that the powers of a court under pt 4.4 (including ss 61 to 64 of the Civil Procedure Act) are in addition to, and do not derogate from, any powers a court has under rules of court in relation to summary disposal of any civil proceeding.
An application by a plaintiff for summary judgment under s 61 of the Civil Procedure Act must be made in accordance with ord 22 pt 2 of the Rules.[33] Rule 22.04(1) sets out the material to be provided by a plaintiff when making an application under s 61.
[33]Rules r 22.03.
In Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd,[34] the Court of Appeal set out the test to be applied when determining whether to give summary judgment in a civil proceeding pursuant to s 63 of the Civil Procedure Act as follows:
Upon the present state of authority:
(a)the test for summary judgement under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a “real” as opposed to a “fanciful” chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the “hopeless” or “bound to fail test” essayed in General Steel;
(c)it should be understood, however, that the test is to some degree a more liberal test than the “hopeless” or “bound to fail” test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.
[34](2013) 42 VR 27, 40 [35] (Warren CJ and Nettle JA). Neave JA agreed with the answer given by Warren CJ and Nettle JA at 40 [36] and further stated at 42 [41]: ‘Nevertheless I am concerned that undue emphasis on the caution with which a court must exercise the power of summary dismissal runs the risk of reinforcing the historical approach to summary dismissal and may result in the legislative liberalisation of the test in s 63 having little impact in practice.’
6. OVERVIEW OF THE PLAINTIFFS’ APPLICATIONS
The plaintiffs sought relief with respect to the defendants’ amended defences and counterclaims concerning:
(a) cl 5 of sch 5F of the NSW Pharmacy Act;[35]
[35]Plaintiffs’ Note on Sources of Power, [1].
(b) cl 10 of sch 5F of the NSW Pharmacy Act;[36]
[36]Ibid [2].
(c) consequential relief to the extent that the Court grants relief with respect to cl 5 and/or cl 10 of sch 5F of the NSW Pharmacy Act;[37]
(d) the Victorian Pharmacy Act;[38] and
(e) the Contracts Review Act.[39]
[37]Ibid [3].
[38]Ibid [4].
[39]Ibid [5].
7. PLAINTIFFS’ APPLICATIONS: CL 5 OF THE NSW PHARMACY ACT
7.1 NSW Pharmacy Act cl 5 declaration application
The plaintiffs applied pursuant to s 63 of the Civil Procedure Act for summary judgment with respect to paragraphs A and H of the prayer for relief in the Central Park proceeding and the Manly proceeding on the basis that there is no real prospect of the Court making those declarations.[40]
[40]Ibid [1].
Submissions
Mr McClelland QC, counsel for the plaintiffs, submitted that, for the purpose of this application, the plaintiffs do not seek to impugn the allegations in the amended defences and counterclaims.[41] He submitted that the plaintiffs only sought to impugn paragraphs A and H of the prayers for relief.[42] This was a substantial departure from the plaintiffs’ written submissions dated 7 June 2021 in which the plaintiffs sought to impugn the allegations in the amended defences and counterclaims.[43]
[41]Transcript of Proceedings, 10.14-11.31, 13.11-29, 16.23-18.4, 60.9-22 (Mr McClelland QC).
[42]Ibid 8.2-9.23 (Mr McClelland QC).
[43]See, eg, plaintiffs’ submissions dated 7 June 2021, [13].
The plaintiffs submitted that in Sankey v Whitlam[44] the High Court acknowledged that while a court could exercise its power to make a declaration in a civil dispute in respect of conduct that was otherwise criminal, and that it would do so in the ‘unsatisfactory’ and ‘exceptional’ circumstances of that case, which involved issues of great public and constitutional importance, such relief could be permitted only in rare circumstances.[45]
[44](1978) 142 CLR 1 (Gibbs ACJ, Stephen, Mason, Jacobs and Aickin JJ).
[45]Plaintiffs’ submissions dated 7 June 2021, [22].
The plaintiffs submitted that the relief sought by the defendants would necessarily require the Court to make a finding that the plaintiffs have committed crimes, but in a context where the plaintiffs would be deprived of the procedural safeguards that they would otherwise be entitled to in a criminal prosecution. The law is clear, that the Court will only grant declarations which are necessarily predicated on findings of criminal conduct in exceptional circumstances, and no exceptional circumstances have been pleaded in this case.[46]
[46]Ibid [13].
The plaintiffs submitted that the amended defences and counterclaims expressly plead the commission of offences under cl 5 of sch 5F of the NSW Pharmacy Act.[47] Mr McClelland QC submitted:[48]
… the defendants in this case do allege an offence has occurred, and that’s the essential predicate of the declaration, and that’s why we say that the granting of the declaration would carry with it the necessary consequence that Your Honour has, in effect, declared that the plaintiffs have committed an offence under section – under clause 5.
[47]Ibid [25].
[48]Transcript of Proceedings, 66.16-22 (Mr McClelland QC).
Mr McClelland QC submitted:[49]
… can I tell you what our concern is. I mean, it’s one thing in reasons for judgments that only operate inter partes for Your Honour to make a conclusion that statutory offence provisions have been contravened and that gives an entitlement to damages.
But as soon as Your Honour makes a declaration, in effect, that a crime has occurred, it puts – well, particularly my client, in a particularly invidious position, because, as Your Honour will be aware, there is a New South Wales regulator who regulates New South Wales pharmacies.
Now, if Your Honour were to make a declaration that is a formal statement by a superior court, in effect, that my client has engaged in crimes, then the position as between my client and the regulator is extremely difficult, because the regulator, as you will have seen from the affidavit of Ms Musto[w], has not issued any prosecution against my client.
And if it were to issue a prosecution and my client were to seek to defend it, it would, therefore, be in a position where – it’s difficult to know how that would pan out, but you’ve got a position where my client would be seeking to defend an allegation that it’s committed crimes, but in a context where there has been a formal statement to the public by the court by way of a declaration that my client has, in fact, committed those crimes.
A declaration not solely operating inter partes between the parties to this proceeding, and that’s precisely why the rule exists against the granting of declarations. So that’s our concern, and we also say it’s just not necessary for Your Honour to make declarations in this case, because the franchise agreements are not on foot.
They can seek whatever relief they like. They don’t need to seek a declaration in addition to that, and we say that the declarations ought not be made. So that’s the nub of the issue.
[49]Ibid 14.20-15.27 (Mr McClelland QC).
The plaintiffs submitted that in Pharmacy Guild of Australia v Ramsay Health Care Ltd,[50] the New South Wales Supreme Court struck out allegations against a pharmacy franchisor on the basis that the allegations, and the relief claimed, amounted to a claim that the franchisor had engaged in conduct in contravention of cl 5 of sch 5F of the NSW Pharmacy Act.[51] The reasoning in Ramsay is determinative of the defendants’ claims based on alleged contraventions of cl 5 of sch 5F of the NSW Pharmacy Act, and the Court ought to refuse to grant the declarations sought by the defendants.[52] The Court’s reasons in Ramsay apply a line of authority to the effect that courts in civil proceedings are capable of granting declarations in respect of allegedly criminal conduct but ought not do so unless there are exceptional circumstances.[53] The plaintiffs submitted:
[50][2019] NSWSC 1045 (Ward CJ in Eq) (‘Ramsay’).
[51]Plaintiffs’ submissions dated 7 June 2021, [23].
[52]Ibid [32].
[53]Ibid [26].
(a) a question of pure law is a more appropriate subject for a declaration;
(b) where facts are in issue, the court is less likely to grant a declaration, for the obvious reason that findings of fact will be made in the civil way without the fundamental protections and processes that would apply in respect of criminal prosecution; and
(c) a declaration in respect of future conduct is more likely to be granted, and a declaration in respect of past conduct is less likely to be granted, for the obvious reason that a declaration in respect of future conduct does not determine whether or not a criminal contravention has occurred on the particular facts.[54]
[54]Ibid [29].
The plaintiffs submitted that it is significant that the present claims are made by private businesses in the context of a regulated industry where the relevant legislation is administered by the government regulator, the Pharmacy Council of New South Wales. The franchise and supply agreements that are the subject of the claimed declarations have been provided to the Pharmacy Council of New South Wales in connection with the registration of the pharmacy businesses, and the regulator approved the registration and operation of the relevant pharmacy businesses pursuant to those agreements.[55] The plaintiffs referred to the decision of CrownBet Pty Ltd v New South Wales[56] and submitted that the Court considered that it was determinative in that case that the declarations sought arose in the context of a highly regulated industry and that the regulator had been alerted to the issues in the proceeding but had elected not to express a view.[57]
[55]Ibid [31].
[56][2017] NSWSC 1470 (Stevenson J) (‘CrownBet’).
[57]Plaintiffs’ submissions dated 7 June 2021, [31].
The form of declarations cannot avoid the fact that the declarations are, to the extent that they depend on cl 5 of sch 5F of the NSW Pharmacy Act, in substance a declaration of the commission of a past criminal offence.[58] The plaintiffs submitted that it is inappropriate for this Court to be called upon in the present proceeding to make findings in respect of allegations of criminal conduct, and there is no reasonable prospect of the Court granting relief in the form claimed by the defendants, being declarations that are predicated on such findings.[59]
[58]Ibid [34].
[59]Ibid [36].
The plaintiffs submitted that they do not cavil with the proposition that a defendant to a debt claim founded on a contract might plead, by way of a properly articulated and particularised defence, that the contractual provision creating the debt was illegal and therefore unenforceable. The plaintiffs submitted that is wholly different from a positive claim seeking a declaration and associated relief that, in substance, crimes have been committed. They submitted that the latter circumstance squarely raises the principles in Ramsay.[60]
[60]Plaintiffs’ reply submissions dated 14 June 2021, [2].
Mr McClelland QC submitted that: [61]
there is no reason why a declaration should be made in this case and, indeed, a decisive factor, we say, which establishes that no exceptional circumstances exist in this case is that the defendants themselves no longer operate the pharmacy businesses …
[61]Transcript of Proceedings, 9.2-6 (Mr McClelland QC). See also at 139.24-140.3 (Mr McClelland QC).
Mr McClelland QC described paragraph H of the prayer for relief as having the same effect as paragraph A of the prayer for relief[62] and submitted:[63]
Now, I’ll come to the consumer law claim, but the essence of the consumer law claim, when I come to it, as you’ll see, is that they say that the plaintiffs, effectively, represented to them that the franchise agreements were in compliance with law, whereas, in fact, they weren’t.
[62]Ibid 9.22-23 (Mr McClelland QC).
[63]Ibid 9.25-30 (Mr McClelland QC).
Mr McClelland QC submitted:[64]
[s 236 of the Australian Consumer Law]… simply provides for the recovery of loss or damage, and s243, which is referred to in sub-paragraph (h), in sub-paragraph 243(e) allows the court to make an order directing the respondent to pay the injured person the amount of the loss or damage.
Now, in neither of those provisions is it a necessary precondition to the granting of relief pursuant to those sections that Your Honour make declarations. So we do say that the contention that it is necessary to make a declaration is, with respect, incorrect.
[64]Ibid 140.21-30 (Mr McClelland QC).
The defendants submitted that once it is accepted that the material facts must stay (because they are necessary to the defendants' pleaded defence), there is also a real controversy as to whether the relevant contractual provisions are void and unenforceable.[65]
[65]Defendants’ submissions dated 11 June 2021, [38].
The defendants submitted:[66]
[66]Ibid [39] (citations omitted).
As to the Plaintiffs' reliance…on the factors in Ramsay relevant to whether declarations of criminal conduct would be granted, the Defendants say as follows.
(1)Whether there is a real dispute between the parties. Here, there is: it is an important part of the defences and counterclaims that provisions the Plaintiffs rely upon are void because they are inconsistent with a prohibition in statute.
(2) Whether there are facts in dispute. Here, there are.
(3)Whether there is any public or private interest in granting the declaration. Here, there is a private interest. A declaration would reflect findings necessarily made in deciding who should succeed on the claim and the counterclaim, and it would pronounce the legal state of affairs that determines those claims.
(4)Whether the declaration relates to past or future conduct. Here, it is past.
(5)Whether criminal proceedings are pending or threatened. Here, there is no evidence that any such proceedings are pending or threatened.
(6)Whether the declaration seeks to make certain conduct criminal or not criminal. Here, it does not. As the Plaintiffs acknowledge … the declaration sought is that particular provisions "are void and unenforceable."
(7)Whether other, more-appropriate, remedies are available, such as an injunction. Here, an injunction would not serve the same purpose. Possibly the Plaintiffs could be restrained from enforcing clauses which the Court finds are void and unenforceable, but that would not explain (e.g.) restitutionary relief in the Defendants' favour. Declarations, if granted, would "capture in a convenient way the Court's findings ... , and achieve that purpose more effectively than the Court's reasons for decision alone.”
Mr Nekvapil, counsel for the defendants, submitted:[67]
… if there is some legitimate controversy between the parties which involves the court making findings of fact in a legal context which might, if it were to go in a different direction, support a conclusion that they had breached a criminal law, as long as there’s some legitimate civil proceeding type reason for going there, there's no case that says there’s a problem with that.
[67]Transcript of Proceedings, 100.22-29 (Mr Nekvapil).
Mr Nekvapil submitted: ‘Your Honour just couldn't conclude that there's no real prospect of it being granted on discretionary grounds.’[68]
[68]Ibid 102.5-7 (Mr Nekvapil).
Mr Nekvapil submitted:[69]
… if I go back to part J, and there are specific pleadings like 22F, which might – which would require the court to make a finding that they were void as a matter of law.
…
So, Your Honour, we do need that [declaration in paragraph H of the prayer for relief] because that’s actually an order made under the Australian Consumer Law. We need that to have the effect of – that's a bit different from just declaring the state of the law. That one has got a substantive effect. And so we would need that in order to have that effect. It’s really just A, I think, that falls into the category of we could do without it in terms of our other positive forms of relief.
[69]Ibid 120.12-15, 120.19-27 (Mr Nekvapil).
Applicable law
Section 36 of the Supreme Court Act1986 (Vic) provides:
A proceeding is not open to objection on the ground that a merely declaratory judgment is sought, and the Court may make binding declarations of right without granting consequential relief.
The Court has inherent power to grant declaratory relief.[70] In Ainsworth v Criminal Justice Commission[71] Mason CJ, Dawson, Toohey and Gaudron JJ stated:
It is now accepted that superior courts have inherent power to grant declaratory relief. It is a discretionary power which “[i]t is neither possible nor desirable to fetter … by laying down rules as to the manner of its exercise.” However, it is confined by the considerations which mark out the boundaries of judicial power. Hence, declaratory relief must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. The person seeking relief must have “a real interest” and relief will not be granted if the question “is purely hypothetical”, if relief is “claimed in relation to circumstances that [have] not occurred and might never happen” or if “the Court’s declaration will produce no foreseeable consequences for the parties”.
[70]Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 581 (Mason CJ, Dawson, Toohey and Gaudron JJ).
[71]Ibid 581-582 (citations omitted).
In Director of Consumer of Affairs Victoria v Mecon Insurance Pty Ltd[72] Elliott J stated:
[72][2016] VSC 42, [22] (Elliott J) (citations omitted).
The court’s jurisdiction to grant declaratory relief is not in issue. The exercise of the discretionary power is not possible or desirable to fetter. A proceeding is not open to objection on the ground that a merely declaratory judgment is sought. However, certain factors are relevant to the consideration of the appropriateness of declaratory relief in a particular circumstance:
(1)The declaratory relief “must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions”.
(2) The plaintiff or applicant must have a “real interest” in seeking the relief.
(3) There must be a “proper contradictor” in the sense of a person who has “a true interest to oppose the declaration sought”. In appropriate cases, this requirement may be fulfilled notwithstanding the declarations are sought by consent.
(4) Declaratory relief may not appropriate where the “declaration will produce no foreseeable consequences for the parties”.
A number of recent cases in this Court have considered applications for the grant of declaratory relief in civil proceedings concerning criminal conduct.
In Warburton Environment Inc v VicForests (No 2),[73] the plaintiff, a not-for-profit association, sought declarations in a statement of claim, and subsequently in an amended statement of claim, that the defendant had contravened s 45(1) of the Sustainable Forests (Timber) Act 2004 (Vic). The defendant sought orders, inter alia, striking out this relief. The plaintiff sought orders, inter alia, for leave to file and serve a further amended statement of claim seeking declarations that the timber was harvested ‘in contravention of laws in force in the place where the timber was harvested’.[74]
[73][2020] VSC 738, [58] (Garde J).
[74]Ibid.
Garde J stated:[75]
[75]Ibid [59]-[60] (citations omitted) (emphasis added).
59.The general rule is well established in relation to applications for declaration of criminal conduct in civil proceedings. While there is jurisdiction in a proper case to make a declaration that a defendant has committed a crime, such a declaration will not ordinarily be made because a criminal court is the proper forum for the question. It is necessary to demonstrate exceptional circumstances before a civil court will grant declaratory relief in relation to allegations that may be the subject of criminal proceedings.
60.The general rule is grounded in the need for fairness and justice. If a prosecution were initiated, VicForests would have the rights afforded to an accused including:
(a) the standard of proof in criminal proceedings;
(b)the requirements contained in the Criminal Procedure Act 2009 (Vic);
(d) the time limit for a proceeding for an offence under s 92A of the SF Act;
(e) the power of the Director of Public Prosecutions to take over and discontinue a private prosecution to prevent abuse of process; and
(f) the ability of a successful defendant to bring an action for damages for malicious prosecution.
Garde J struck out the allegations in the statement of claim, and in the amended statement of claim, that the defendant engaged in criminal conduct contrary to s 45(1) of the Sustainable Forests (Timber) Act 2004 (Vic).[76] His Honour found:
[76]Ibid [68].
(a) the facts pleaded in the statement of claim and in the amended statement of claim did not seek to establish that the circumstances are exceptional or provide any reason to depart from the general rule;[77]
[77]Ibid [61].
(b) allegations of criminal offences must be proven beyond reasonable doubt, and not on the balance of probabilities as the standard for civil proceedings;[78]
(c) there was a fundamental problem for any prosecution given the ambiguity in a direction in the relevant standards;[79] and
(d) the plaintiff is not authorised to be an informant under the legislation and did not satisfy the informant restriction.[80]
[78]Ibid [62].
[79]Ibid [63].
[80]Ibid [64].
Garde J also did not allow the plaintiff to make an amendment to the prayer for relief to seek a declaration that the timber harvested by the defendant was harvested ‘in contravention of laws in force in the place where the timber was harvested’.[81] Garde J observed that this was consistent with an allegation that the defendant had engaged in criminal conduct under s 15 of the Illegal Logging Prohibition Act 2012 (Cth).[82] His Honour stated:[83]
78.… The FASOC does not refer to the law or laws said to have been contravened. I am not minded to entertain such a form of declaration as it is too general and ambiguous.
79.Allegations of criminal conduct against VicForests in the FASOC are likely to fail without further clarification. Unless Warburton Environment can plead a claim that has a real prospect of success, there is no benefit in letting these claims proceed to trial.
[81]Ibid [78].
[82]Ibid [69].
[83]Ibid [78]-[79].
His Honour also found:
(a) the facts pleaded in the proposed further amended statement of claim were not sufficient to demonstrate exceptional circumstances, nor did they provide any reason to depart from the general rule;[84]
[84]Ibid [74].
(b) it would have been unfair to the defendant to make a determination of guilt or innocence of an offence on the balance of probabilities in a civil proceeding;[85]
(c) there was a fundamental problem for any prosecution given an ambiguity in a direction in the relevant standards[86] and it was difficult to determine whether particular conduct falls or is likely to fall within the scope of the Illegal Logging Prohibition Act 2012 (Cth);[87] and
(d) the pleading did not plead some of the necessary facts.[88]
[85]Ibid.
[86]Ibid [75].
[87]Ibid [76].
[88]Ibid [77].
In Kinglake Friends of the Forest Inc. v VicForests (No 3),[89] the defendant sought summary dismissal of claims for certain declarations on the basis that they would amount to declarations that it has committed criminal offences. The plaintiff sought leave to amend its prayer for relief to seek the following declarations:[90]
E.A declaration that the timber harvested by VicForests in each of the Unscreened Coupes was harvested in contravention of laws in force in the place where that timber was harvested, namely sections 14(2), 16, and 46(a) of the Sustainable Forests (Timber) Act2004 (Vic).
F.A declaration that the timber harvested by VicForests in each of the Overharvested Coupes was harvested in contravention of laws in force in the place where that timber was harvested, namely section 44 of the Sustainable Forests (Timber) Act 2004 (Vic).
[89][2020] VSC 777 (Richards J).
[90]Ibid [19].
The defendant contended that the amendment should not be allowed because the plaintiff had no real prospects of obtaining declarations to that effect.[91]
[91]Ibid [20].
Richards J gave the plaintiff leave to file and serve a further amended statement of claim, excluding the proposed declarations in the prayer for relief.[92] In refusing leave, Richards J stated:[93]
I accept VicForests’ submission that Kinglake FF has no real prospect of obtaining the proposed declarations framed by reference to the Illegal Logging Prohibition Act. Declarations in that form would not determine any real controversy between Kinglake FF and VicForests, based on facts alleged in the ASOC or the proposed FASOC. They would produce no foreseeable legal consequences for VicForests, which is not a timber processor to which the Illegal Logging Prohibition Act applies. Nor would they vindicate any public interest that Kinglake FF claims it has standing to protect. Notably, Kinglake FF does not plead that it has a special interest in the observance by unnamed timber processors of the provisions of the Illegal Logging Prohibition Act, and has not attempted to establish standing in relation to that statutory framework.
[92]Ibid [5].
[93]Ibid [28].
Her Honour also considered whether leave should be granted to amend the claim for declaratory relief to a simpler alternative, namely, declarations that the timber harvested by the defendant in each of a number of coupes was harvested in contravention of s 45(1) of the Sustainable Forests (Timber) Act 2004 (Vic).[94] Her Honour, in refusing leave to amend the claim for declaratory relief, stated:[95]
31.While declarations in this form would determine real controversies arising from facts alleged in the ASOC and the proposed FASOC, they would in my view still amount to declarations that VicForests has engaged in unauthorised timber harvesting operations that are prohibited by s 45(1) of the Act. In other words, they would in substance amount to declarations that VicForests has committed criminal offences. The structure of the Act is that VicForests must comply with the prescriptions in Pt 5 and Pt 6, and with the Code and the Standards, on pain of criminal liability. I do not accept that Kinglake FF can sidestep the problem by omitting from its proposed declarations the ultimate legal consequence of the alleged breaches.
…
33.Given that Kinglake FF does not seek to plead exceptional circumstances that might justify making declarations that VicForests has committed criminal offences, it has no real prospect of obtaining them …
[94]Ibid [30].
[95]Ibid [31], [33] (citations omitted).
In WOTCH Inc v VicForests (No 7),[96] Keogh J allowed an amendment to a statement of claim that contained a prayer for relief in the following terms:
A declaration that any past and ongoing timber harvesting operations within the meaning of s 3 of the Sustainable Forests (Timber) Act 2004 (Vic) in the coupes particularised in paragraph 22 above were and/or are unlawful.
[96][2020] VSC 817, [6] (Keogh J) (‘WOTCH’).
Keogh J stated:[97]
[97]Ibid [13]-[15].
13.For the following reasons I do not accept VicForests’ submissions. First, there is a general approach that a civil court will not make a declaration that a defendant has committed a crime.
…
Second, a more flexible or nuanced approach may be required when considering a prayer for declaratory relief which may raise issues of criminal conduct but is not in the form of a declaration that the defendant has committed a crime. Third, in contrast to many of the cases in which a prayer for declaratory relief has been struck out or the relief has been refused, the plaintiff in this proceeding does not allege in the pleadings or seek a declaration that VicForests has committed an offence under the SFT Act.
…
Fourth, I do not accept the assertion by VicForests that any non-compliance with the Code would have the necessary consequence, subject to any available defence, that VicForests was guilty of an offence under s 45(1) of the SFT Act.
...
Fifth, VicForests is not being prosecuted for any alleged breaches of s 45(1) relevant to the facts and circumstances of this proceeding, and there is no suggestion this will occur in future. Sixth, whether, and if so in what way, VicForests has breached the Code, and what if any relief should be granted, are questions for trial.
14.Seventh, a declaration to the effect that in the period since January 2020 VicForests has failed to comply with the Code in the manner alleged when undertaking timber harvesting activity in coupes which it or DELWP knew to contain threatened species or the habitat of those species would determine a real controversy between the parties.
…
15.Eighth, I do not agree that the amendment proposed to paragraph A of the prayer for relief would unworkably expand the issues for determination …
Further, in Ramsay,[98] Ward CJ in Eq considered, among other things, an interlocutory application brought by defendants seeking orders dismissing the proceedings pursuant to r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’) or, in the alternative, striking out the plaintiffs’ statement of claim pursuant to r 14.28 of the UCPR. Her Honour stated:[99]
19.In their statement of claim, the plaintiffs seek declaratory relief in relation to the alleged contraventions.
20.By prayer 1, they seek a declaration that Ramsay Health and/or Ramsay Retail holds a financial interest, within the meaning of cl 2 of Schedule 5F to the National Law, in the pharmacy businesses (the Ramsay branded pharmacies), the business names of which are owned by Pharmire (those being the businesses identified at [26] of the statement of claim).
21.By prayer 2, the plaintiffs seek, further or alternatively, a declaration that Ramsay Health and/or Ramsay Retail holds a financial interest, within the meaning of cl 2 of Schedule 5F to the National Law, in the Ramsay branded pharmacies, the business names of which are owned by Lekarna (those being the businesses identified at [34] of the statement of claim).
[98]Ramsay (n 50) [1].
[99]Ibid [19]-[21].
In summarily dismissing the proceeding, her Honour stated:[100]
167.I am firmly of the view that it is not appropriate for an application for such declaratory relief to be entertained in the context of the present proceedings – a civil suit and one commenced by an industry body (not the regulator) and three competitors of the entities said to be in breach of the National Law (who clearly have a personal interest in eliminating competition as much as they might also be said to have an interest in enforcing compliance by other pharmacists with the National Law). I accept that there is a high standard to be met for an order summarily dismissing proceedings (see, among others, General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69). However, it is difficult to see how the position would be any different if the matter were permitted to proceed to close of pleadings and I do not accept that it is appropriate to wait until then in order to ascertain whether (as seems to me almost inevitable given the stance adopted by the defendants in these and other proceedings to date) the defendants dispute the alleged contraventions (or the facts relied upon as giving rise to them), particularly given the deficiencies in the existing pleading to which the defendants have pointed.
168.The authorities considered above point to the undesirability of the Court embarking in the present proceedings on a determination as to whether there is or has been conduct which would amount to the commission of a criminal offence. The conclusion I have reached in that regard leads me to conclude that the proceedings should be summarily dismissed (without the need to consider the issues raised in relation to standing, abuse of process and the deficiencies identified in the pleading) …
[100]Ibid [167]-[168].
Analysis
For convenience, I will address my reasons to the Manly amended defence and counterclaim (which apply equally to the Central Park amended defence and counterclaim).
Paragraph A of the prayer for relief is as follows:
A declaration that the provisions of the Lemons Agreement described in Part D.1.4 above are void and unenforceable against the Lemons.
Part D.1.4 of the amended defence and counterclaim concerns both cls 5 and 10 of sch 5F of the NSW Pharmacy Act:
(a) paragraphs 11RR to 11BBB in Part D.1.4(a)-(c) concern cl 10 of sch 5F of the NSW Pharmacy Act. Paragraphs 11GGG and 11HHH may also concern cl 10 of sch 5F of the NSW Pharmacy Act as they concern ‘Part D.1.4’, but they are in Part D.1.4(d) concerning cl 5 of sch 5F of the NSW Pharmacy Act; and
(b) paragraphs 11CCC to 11HHH in Part D.1.4(d) concern cl 5 of sch 5F of the NSW Pharmacy Act.
Paragraph A of the prayer for relief identifies the provisions the subject matter of the declaration. However, it does not expressly state on what basis those provisions are void and unenforceable. The defendants’ counterclaim is alleged in paragraphs 38 to 84. The defendants do not allege in the counterclaim that all of the provisions in Part D.1.4 are void and unenforceable.[101] The precise basis for the relief in paragraph A of the prayer for relief is not clear. However, both parties conducted the matter on the basis that paragraph A of the prayer for relief is based upon the provisions being void and unenforceable by reason of the matters pleaded in Part D.1.4 of the amended defence.[102]
[101]The Manly counterclaim does plead that some of the provisions are void and unenforceable: at [47], [53], [63] (Compulsory Acquisition Provisions) and at [59] (Sister Club Provisions).
[102]Plaintiffs’ submissions dated 7 June 2021 [19]; defendants’ submissions dated 11 June 2021, [38].
Paragraph H of the prayer for relief provides as follows:
An order under section 243(a)(ii) of the Australian Consumer Law declaring that the following provisions of the Lemons Agreement are void ab initio:
(1) the Sister Club Fee Provisions;
(2) the Compulsory Acquisition Provisions;
(3) the Control Provisions;
(4) the Provisions Giving Rise to a Financial Interest;
(5) the Start Up Fee Provisions;
(6) the Franchise Fee Provisions;
(7) the Rebate Provision.
Paragraph H of the prayer for relief identifies the provisions the subject matter of the declaration. It does not expressly state on what basis those provisions are void ab initio. The defendants do not allege in the amended defence and counterclaim that these provisions are void ab initio. Further, the pleas of entitlement to relief made pursuant to the Australian Consumer Law are made in the amended defence and in different terms.[103] The precise basis for the relief in paragraph H of the prayer for relief is not clear.
[103]See, eg, Manly amended defence and counterclaim, [22U], [22W].
I am not satisfied, at this stage of the proceeding, that there is no real prospect of the Court making declarations in the form of paragraphs A and H of the prayer for relief. Declarations in that form will not necessarily raise issues of criminal conduct. Declarations based upon a finding of a contravention cl 5 of sch 5F of the NSW Pharmacy Act, alleged in Part D.1.4(d), would raise issues of criminal conduct. A contravention of cl 5 of sch 5F is a criminal offence. The defendants plead that there has been such a contravention.[104] However, declarations based upon a finding of a contravention cl 10 of sch 5F of the NSW Pharmacy Act, alleged in Part D.1.4(a)-(c), would not necessarily raise issues of criminal conduct. A contravention of cl 10 of sch 5F is not a criminal offence. The plaintiffs submitted that the necessary result of the present pleading is that every allegation made in respect of a contravention of cl 10 of sch 5F of the NSW Pharmacy Act is a contravention of cl 5 of sch 5F of the NSW Pharmacy Act.[105] However, as I set out later in these reasons, the pleading with respect to cl 5 of sch 5F of the NSW Pharmacy Act will be struck out.[106] Critical parts of the pleadings are unintelligible. The defendants will be given an opportunity to replead in accordance with these reasons.
[104]Ibid [11FFF.1(b)].
[105]Plaintiffs’ submissions dated 7 June 2021, [45].
[106]See below [150]-[151].
Further, I am also not satisfied, at this stage of the proceeding, assuming that declarations in the form of paragraphs A and H of the prayer for relief raise issues of criminal conduct, that there is no real prospect that the defendants will establish exceptional circumstances for the making of the declarations at a trial.
First, it is not possible to determine, in the absence of an intelligible pleading, whether declarations in the form of paragraphs A and H of the prayer for relief would determine real controversies between the parties. I am not satisfied, at this stage, that there is no real prospect of that being established. The gist of the relevant controversies appears to be that the third plaintiff contravened cl 5 of sch 5F of the NSW Pharmacy Act and that, as a result, certain provisions are void and unenforceable against the defendants and that as a consequence, among others:
(a) the plaintiffs cannot rely upon such provisions in their claims against the defendants; and
(b) the defendants make claims under the Australian Consumer Law and also seek restitution for monies paid pursuant to such provisions.
The nature and extent of such controversies may only be properly understood in the event the defendants provide an intelligible pleading that addresses the deficiencies I set out later in these reasons, including the lack of a nexus between the provisions relied upon by the plaintiffs and the alleged void and unenforceable provisions.
Secondly, it is also not possible to determine, in the absence of an intelligible pleading, what facts are likely to be relevant to the Court’s exercise of discretion with respect to the declarations and the extent to which they may be in dispute. The defendants submitted that, in fact, there are facts in dispute,[107] but did not identify them with any precision. This cannot be properly determined in the absence of an intelligible pleading.
[107]Defendants’ submissions dated 11 June 2021 [39(2)].
Thirdly, there is no evidence that there are any criminal proceedings pending or threatened.
Fourthly, the evidence does not support a finding that the alleged contravention of cl 5 of sch 5F of the NSW Pharmacy Act has been brought to the attention of the regulator, but it has decided not to take action. The evidence establishes that the Pharmacy Council of New South Wales is aware that all pharmacists operating Priceline pharmacies as franchisees from premises in New South Wales, including the defendants, were doing so pursuant to franchise agreements that were the same or similar to the Central Park franchise agreement and the Manly franchise agreement.[108] The present case may be distinguished from CrownBet.[109] In that case, Liquor & Gaming NSW had been approached by the parties for guidance, in the circumstances of the gaming industry being regulated, but Liquor & Gaming NSW did not provide that guidance. Stevenson J found that it was his strong opinion that this supported the ‘inappropriateness of the Court intervening’.[110]
[108]Central Park Mustow affidavit, [12]; Manly Mustow affidavit, [12].
[109]CrownBet (n 56).
[110]Ibid [128].
Fifthly, I do not accept that the reasoning in Ramsay is ‘determinative’ of the defendants’ claims for the grant of declaratory relief in paragraphs A and H. Ramsay may be distinguished in important respects from the present case. In Ramsay, the declaratory relief was sought in the context of a proceeding by an industry body and three competitors ‘who clearly have a personal interest in eliminating competition as much as they might also be said to have an interest in enforcing compliance by other pharmacists with the National Law’.[111] The present case concerns claims made by persons who entered into various agreements with the plaintiffs. In Ramsay, the declarations were in the form that the defendants held a financial interest within the meaning of cl 5 of sch 5F of the NSW Pharmacy Act.[112] The present case concerns a declaration that certain provisions are void and unenforceable. Critically, in Ramsay, her Honour found that ‘it is difficult to see how the position would be any different if the matter were permitted to proceed to close of pleadings … ’.[113] As I have already stated earlier in these reasons, I am satisfied that the defendants should be given an opportunity to replead.[114]
[111]Ramsay (n 50) [167] (Ward CJ in Eq).
[112]Ibid [12].
[113]Ibid, [167].
[114]See above [83].
Sixthly, I do not accept that, as the parties are no longer in a commercial relationship, this is ‘determinative’ against the grant of declaratory relief in paragraphs A and H. In Lifeplan Australia Friendly Society Ltd v Ancient Order of Foresters in Victoria Friendly Society Ltd (No 2)[115] the Full Federal Court considered whether the primary judge erred in declining to grant declaratory relief against the respondent. The primary judge found that the respondent knowingly assisted employees of the first appellant in the breach of their fiduciary duties but that there were no profits which the appellants were entitled to recover from the respondent. The appellants also sought a declaration that the respondent had knowingly assisted former employees to breach fiduciary duties. The primary judge declined to grant the declaratory relief and stated:[116]
… the declaration should nevertheless be refused because it will have no foreseeable consequences for the parties. There is nothing to suggest that the parties have an ongoing relationship. It may be taken that there is “disapproval” of Foresters’ conduct as identified in the principal reasons, but this case does not have a public interest element, for example, a misstatement in a disclosure document where a declaration will serve a purpose of correcting a falsehood or untruth.
[285]Transcript of Proceedings, 134.6-17 (Mr Nekvapil).
Analysis
Section 6(2) of the Contracts Review Act provides:
A person may not be granted relief under this Act in relation to a contract so far as the contract was entered into in the course of or for the purpose of a trade, business or profession carried on by the person or proposed to be carried on by the person, other than a farming undertaking (including, but not limited to, an agricultural, pastoral, horticultural, orcharding or viticultural undertaking) carried on by the person or proposed to be carried on by the person wholly or principally in New South Wales.
In Quikfund (Australia) Pty Ltd v Airmark Consolidators Pty Ltd[286] the Full Federal Court stated:
Early in the life of the operation of the [Contracts Review Act], McLelland J construed s 6(2) in Toscano. There, Mr Toscano had for some years carried on an earthmoving business, first on his own account and then in partnership with his wife. In 1979, the partnership business was transferred to a family company. McLelland J said at 148 that “[t]hese arrangements appear to have been implemented by the Toscanos’ accountant and it is not at all clear how much practical regard (if any) either of the Toscanos paid to the technicalities of the position. Neither change seems to have affected the way Mr Toscano dealt with outsiders”. McLelland J saw as central whether the business in question was that of the company in order to determine whether it or Mr Toscano was carrying it on. One did not look broadly to a business being carried on by Mr Toscano and his wife through a company. The company was the owner of the business and thus carried it on. It was not a business carried on by the Toscanos.
[286](2014) 222 FCR 13, 39 [124] (Allsop CJ, White and Wigney JJ) (‘Quikfund’).
The Full Federal Court stated that the implicit ownership of the business contained in the word ‘carried on by the person’ in s 6(2) of the Contracts Review Act must be recognised and that the relevant test is: ‘In the course of whose business (that is owned by whom) was the contract entered into?’[287]
[287]Ibid 43-44 [136].
In the Central Park proceeding, the second and third defendants signed the Central Park Guarantee, Indemnity & Charge on 14 May 2012 and 6 June 2012 respectively.[288] This was a substantial period prior to the execution and start date of the Central Park franchise agreement. On or about 6 November 2013, the first defendant entered into the Central Park franchise agreement, with a start date of 31 October 2013.[289] Clause 8.26(a)(iii) of the Central Park franchise agreement relevantly provided:[290]
[288]Exhibit ‘AEMM-1’ to the Central Park Mustow affidavit, pg 7 of 13.
[289]Exhibit ‘AEMM-3’ to the Central Park Mustow affidavit.
[290]Ibid [8.26(a)(iii)] (emphasis added).
8.26. Management of Priceline Business
(a) Unless we otherwise agree in writing:
…
(iii)if you are a corporation, you must ensure that at least one of your directors (who is registered as a pharmacist) ("the manager director') devotes his or her whole time and effort to the management and conduct of the Priceline Business.
I am not satisfied that at the time the second and third defendants signed the Central Park Guarantee, Indemnity & Charge on 14 May 2012 and 6 June 2012 respectively, it was in the course of, or for the purpose of, their profession as chemists. It cannot be concluded that as at 14 May 2012 and 6 June 2012, that they did so ‘to enable [them] to carry on their profession as pharmacists within the Central Park business…’.[291] They were pharmacists, but it cannot be concluded that they both intended to carry on their profession within the Central Park Pharmacy. As a result, I am not satisfied that the paragraphs in the Central Park proceeding based upon the Contracts Review Act fail to disclose a cause of action or defence insofar as the plaintiffs submit that relief is not available to the second and third defendants by reason of s 6(2) of the Contracts Review Act.
[291]Plaintiffs’ submissions dated 14 June 2021, [13].
The plaintiffs may establish these matters at trial but that will depend upon the evidence.
In the circumstances, I will refuse the plaintiffs’ application in the Central Park proceeding.
In the Manly proceeding, the defendants carried on the business as partners under the name ‘Priceline Pharmacy Manly’. A partnership is the relation which exists between persons carrying on a business in common with a view of profit.[292] A partnership (other than an incorporated limited partnership) is an unincorporated body without any separate legal identity. It is the persons within the partnership that carry on the business. The distinction between a partnership and a company has been recognised as being important for the purpose of s 6 of the Contracts Review Act. In Toscanov Holland Securities Pty Ltd,[293] McLelland J specifically referred to ‘[a]t some time prior to 1 July 1978 Mr Toscano’s earthmoving business came to be carried on by himself and Mrs Toscano in partnership’. His Honour then found that as a result of the transfer of that business to a company on or about 17 September 1979, Mr and Mrs Toscano did not carry on the business from that time.[294] In Brighton v Australia and New Zealand Banking Group Ltd[295] Campbell JA referred to Toscano and stated: ‘McLelland J there considered a situation in which a business was carried on by a company that had only two shareholders, who had previously carried on the business in partnership’.
[292]Partnership Act 1892 (NSW) s 1(1).
[293](1985) 1 NSWLR 145, 148 [G] (McLelland J) (emphasis added).
[294]Ibid 148 [G]-149 [B].
[295][2011] NSWCA 152, [117] (Campbell JA, Giles and Hodgson JJA agreeing) (emphasis added).
I am satisfied that the defendants entered into the Manly Guarantee, Indemnity & Charge in the course of and for the purpose of the business of the Manly Pharmacy carried on by them, or proposed to be carried on by them, as partners.
Quikfund, and the ‘position’ of judges for over nearly 30 years referred to by the Full Federal Court, may be distinguished from the present case, as those cases were concerned with: [296]
… the boundaries of s 6(2), that is, in deciding what sort of relationship between shareholder, director or manager of a company and the business of the company would suffice to lead to the conclusion that the business of the corporation was carried on by her or him.
[296]Quikfund (n 286) 43 [134] (Allsop CJ, White and Wigney JJ) (emphasis added).
The question posed in Quikfund applies in the context of a company. It is concerned with ‘ownership’ by a separate legal identity of the particular business. A ‘partnership’ is not a separate legal identity.
I am satisfied that the paragraphs in the Manly proceeding based upon the Contracts Review Act fail to disclose a cause of action or defence insofar as the plaintiffs submit that relief is not available to the defendants by reason of s 6(2) of the Contracts Review Act. The defendants are not entitled to relief under the Contracts Review Act by reason of s 6(2) of the Contracts Review Act. I will allow the plaintiffs’ application in the Manly proceeding. The paragraphs in the Manly amended defence and counterclaim concerning the Contracts Review Act will be struck out, including the words ‘paragraphs 7A-7B’ in the particulars to paragraph 7.2(c), paragraphs 7A and 7B and paragraph J of the prayer for relief.
Further, given the submissions of Mr Nekvapil concerning the correct identification of the relevant ‘contract’,[297] paragraph J of the prayer for relief in the Central Park proceeding will be struck out with leave to replead.
[297]See above [261].
11.3 Contracts Review Act deficient pleading application
The plaintiffs applied pursuant to r 23.02(c) of the Rules to strike out the following paragraphs of the amended defences and counterclaims on the basis that they may embarrass or delay the fair trial the proceedings by reason of the failure to plead the material facts by which it is alleged that the impugned clauses are unjust:[298]
(a) Central Park proceeding: paragraphs 13B and 13C;
(b) Manly proceeding: paragraphs 7A and 7B.
[298]Plaintiffs’ Note on Sources of Power, [5].
Submissions
The plaintiffs submitted that the defendants’ pleadings do not contain any material allegations of fact, or even particulars, that disclose the basis upon which the defendants contend that relief under s 7 of the Contracts Review Act should be granted.[299]
[299]Plaintiffs’ submissions dated 7 June 2021, [57].
Mr McClelland QC submitted:[300]
… there’s no material allegation of fact alleged as to why that relevant clause is unjust and, indeed, the Contracts Review Act contains a set of mandatory considerations that the court must take into account …
None of those have been pleaded …
[300]Transcript of Proceedings, 28.11.-14, 28.16 (Mr McClelland QC).
Mr Nekvapil submitted that the amended defences and counterclaims could be more clearly pleaded to articulate the case that is sought to be made.[301]
[301]Ibid 88.29-89.6 (Mr Nekvapil).
Analysis
I have set out s 7 of the Contracts Review Act earlier in these reasons.[302] Section 9 sets out the matters to be considered by a court in determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made.
[302] See above [236].
In Sturesteps v Khoury,[303] Slattery J considered the adequacy of a pleading of relief under s 7 of the Contracts Review Act. His Honour found that the pleading did plead material facts and that they were sufficiently identified for the Court to take them into consideration when assessing whether certain deeds were unjust.[304] That case may be readily distinguished from the present case.
[303] [2015] NSWSC 1041.
[304]Ibid [132].
In the present case, the defendants do not plead any material facts that are alleged to constitute the relevant circumstances why the provisions are ‘unjust’ for the purposes of s 7(1). The defendants allege that they ‘were unjust in the circumstances relating to any such contract at the time it was made’.[305] No circumstances are identified. No basis for why it was unjust is identified. The pleading is manifestly defective.
[305]Manly amended defence and counterclaim, [7A]; Central Park amended defence and counterclaim, [13B].
In the circumstances, I will allow the plaintiffs’ application. Accordingly, the paragraphs in the Central Park amended defence and counterclaim concerning the Contracts Review Act will be struck out, including the words ‘paragraphs 13B-13C’ in the particulars to paragraph 7.2(c), paragraphs 13B and 13C and paragraph J of the prayer for relief. I will give the defendants leave to replead.
I have stated earlier in these reasons that paragraphs in the Manly amended defence and counterclaim concerning the Contracts Review Act will be struck out.[306] They are also liable to be struck out on this application.
[306]See above [277].
11.4 Contracts Review Act summary judgment application
The plaintiffs applied pursuant to s 63 of the Civil Procedure Act for summary judgment with respect to the following paragraphs of the amended defences and counterclaims on the basis that the paragraphs form part of a defence or claim that has no real prospects of success:
(a) Central Park proceeding: paragraphs 13B and 13C;
(b) Manly proceeding: paragraphs 7A and 7B.
I refuse this application and refer to my reasons set out earlier in this judgment concerning the Contracts Review Act Court’s lack of power application.[307]
[307]See above [235]-[255].
12. CONCLUSIONS AND ORDERS
In conclusion:
(a) I will refuse the NSW Pharmacy Act cl 5 declaration application;
(b) I will refuse the NSW Pharmacy Act cl 5 no contravention application;
(c) I will allow the NSW Pharmacy Act cl 5 no nexus application and strike out (with leave to replead):
(i) Central Park proceeding: paragraphs 13III, 13JJJ and 15.2(b), 16.2(b), 17.2(b), 18.1A, 19.1, 20.1 and 22 (insofar as they concern Part E.1.4(d));
(ii) Manly proceeding: paragraphs 11GGG, 111HHH and 13.2, 14.2, 15.2, 16.1A, 17.1, 18.1, 20 (insofar as they concern Part D.1.4(d)).
(d) I will allow the NSW Pharmacy Act cl 5 deficient pleading application and strike out (with leave to replead):
(i) Central Park proceeding: paragraphs 13EEE-13HHH, 26E.6 and 26M-26P;
(ii) Manly proceeding: paragraphs 11CCC-11FFF, 22E.6 and 22M-22P;
(e) I will allow the NSW Pharmacy Act cl 10 no nexus application and strike out (with leave to replead):
(i) Central Park proceeding: paragraphs 15.2(b), 16.2(b), 17.2(b), 18.1A, 19.1, 20.1 and 22 (insofar as they concern Part E.1.4(a)-(c));
(ii) Manly proceeding: paragraphs 13.2, 14.2, 15.2, 16.1A, 17.1, 18.1, 20 (insofar as they concern Part D.1.4(a)-(c)).
(f) I will refuse the NSW Pharmacy Act cl 10 deficient pleading application;
(g) I will allow NSW Pharmacy Act cl 10 consequential pleading application (in part) and strike out paragraph 43.2 of the Central Park amended defence and counterclaim and paragraph 39.2 of the Manly amended defence (with leave to replead);
(h) I will allow the NSW Pharmacy Act consequential relief application (in part) and I will strike out (with leave to replead):
(i) Central Park proceeding: paragraphs 7C.8-7C.11, 26F, 26H and 26I (insofar as they concern the alleged ‘pecuniary interest’) and paragraph H(4) of the prayer for relief;
(ii) Manly proceeding: paragraphs 7E.8-7E.11, 22F, 22H and 22I (insofar as they concern the alleged ‘pecuniary interest’), and paragraph H(4) of the prayer for relief.
(i) I will allow the Victorian Pharmacy Act application and strike out the claims based upon the Victorian Pharmacy Act:
(i) Central Park proceeding: paragraphs 7A (and the title to that paragraph), 13JJ, 13UU.1, 13XX.1, 13AAA.1, 26E.1, 26E.3; references to ‘Victorian Act’ in paragraphs 11.2(d), 18.10, 26D and 26X and the reference to ‘paragraph 7A’ in paragraph 7.2(e)(ii);
(ii) Manly proceeding: paragraphs 7C (and the title to that paragraph), 11HH, 11SS.1, 11VV.1, 11YY.1, 22E.1, 22E.3; references to ‘Victorian Act’ in paragraphs 11.2(d), 16.10, 22D and 22X and the reference to ‘paragraph 7C’ in paragraph 7.2(e)(ii).
(j) I will refuse the Contracts Review Act Court’s lack of power application;
(k) I will refuse the Contracts Review Act relief not available application in the Central Park proceeding;
(l) I will allow the Contracts Review Act relief not available application in the Manly proceeding and paragraphs in the Manly amended defence and counterclaim concerning the Contracts Review Act will be struck out, including the words ‘paragraphs 7A-7B’ in the particulars to paragraph 7.2(c), paragraphs 7A and 7B and paragraph J of the prayer for relief;
(m) I will allow the Contracts Review Act deficient pleading application and paragraphs in the Central Park amended defence and counterclaim concerning the Contracts Review Act will be struck out, including the words ‘paragraphs 13B-13C’ in the particulars to paragraph 7.2(c), paragraphs 13B and 13C and paragraph J of the prayer for relief (with leave to replead);
(n) I will refuse the Contracts Review Act summary judgment application.
I will give the defendants leave to replead in accordance with these reasons. Further, to the extent that the defendants identify that further amendments should be made to the pleadings, as a result of the paragraphs being struck out or to otherwise conform with these reasons, then I give leave to the defendants to also attend to those matters. I am satisfied that this will facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute. It will not prejudice the plaintiffs’ right to object to any new pleading. Such leave will also enable the defendants to attend to other matters, including:
(a) the errors in the pleadings and other matters of drafting that are referred to in these reasons;
(b) giving consideration to whether any remaining parts of the pleading may be further amended to ensure that the real issues in dispute are identified; and
(c) possibly incorporating a table of contents and a glossary of defined terms to make the pleading more intelligible.
I do not accept that it is appropriate for the defendants to seek to remedy the defects in the pleadings by providing submissions or some other document that seeks to further explain these matters now or prior to trial. A proper pleading is essential. The plaintiffs are entitled to know the case against them with precision. A proper pleading will allow the parties to join issue and for the real issues to be identified.
The plaintiffs made forensic challenges to particular parts of the pleadings. In those circumstances, I do not consider it appropriate to strike out the whole of the defendants’ pleadings. I also do not consider that the pleadings will remain unintelligible if the struck out paragraphs are removed.
The parties are directed to confer and provide draft consent orders or, in the absence of consent, draft orders and submissions in support (limited to 5 pages) addressing the following matters by 4:00pm on 13 December 2021:
(a) the determination of the plaintiffs’ summonses filed 24 December 2020 as set out in these reasons;
(b) the costs of the plaintiffs’ summonses filed 24 December 2020; and
(c) a timetable for further interlocutory steps.
SCHEDULE OF PARTIES
S ECI 2021 01025
| BY ORIGINAL PROCEEDING | |
| AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED (ACN 000 004 320) | First Plaintiff |
| PRICELINE PTY LTD (ACN 005 968 310) | Second Plaintiff |
| NEW PRICE RETAIL SERVICES PTY LTD (ACN 100 732 750) | Third Plaintiff |
| -and- | |
| CENTRAL PARK PHARMACY (SYDNEY) PTY LTD (ACN 155 798 397) | First Defendant |
| CHRISTOPHER IAN LEMON | Second Defendant |
| MARK ANTHONY MCHUGH | Third Defendant |
| BY COUNTERCLAIM | |
| CENTRAL PARK PHARMACY (SYDNEY) PTY LTD (ACN 155 798 397) | First Plaintiff by Counterclaim |
| CHRISTOPHER IAN LEMON | Second Plaintiff by Counterclaim |
| MARK ANTHONY MCHUGH | Third Plaintiff by Counterclaim |
| -and- | |
| AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED (ACN 000 004 320) | First Defendant by Counterclaim |
| PRICELINE PTY LTD (ACN 005 968 310) | Second Defendant by Counterclaim |
| NEW PRICE RETAIL SERVICES PTY LTD (ACN 100 732 750) | Third Defendant by Counterclaim |
S ECI 2021 01012
| BY ORIGINAL PROCEEDING | |
| AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED (ACN 000 004 320) | First Plaintiff |
| PRICELINE PTY LTD (ACN 005 968 310) | Second Plaintiff |
| NEW PRICE RETAIL SERVICES PTY LTD (ACN 100 732 750) | Third Plaintiff |
| -and- | |
| CHRISTOPHER IAN LEMON | First Defendant |
| JENNIFER FAY LEMON | Second Defendant |
| BY COUNTERCLAIM | |
| CHRISTOPHER IAN LEMON | First Plaintiff by Counterclaim |
| JENNIFER FAY LEMON | Second Plaintiff by Counterclaim |
| -and- | |
| AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED (ACN 000 004 320) | First Defendant by Counterclaim |
| PRICELINE PTY LTD (ACN 005 968 310) | Second Defendant by Counterclaim |
| NEW PRICE RETAIL SERVICES PTY LTD (ACN 100 732 750) | Third Defendant by Counterclaim |
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