Belcar Pty Ltd v Premier Automotive Group Australia Pty Ltd
[2007] SASC 240
•29 June 2007
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BELCAR PTY LTD v PREMIER AUTOMOTIVE GROUP AUSTRALIA PTY LTD
[2007] SASC 240
Reasons of Judge Burley a Master of the Supreme Court
29 June 2007
PROCEDURE - DISCOVERY AND INTERROGATORIES
Pre-action discovery - contractual relationship between parties terminated - whether possible causes of action available to plaintiff - whether plaintiff entitled to pre-action discovery - meaning and effect of rule.
Supreme Court Civil Rules 2006 r 32; Supreme Court Rules 1987 r 60, r 60.02(a); Trade Practices Act 1974 (Cth) s 51AA, s 51AB, s 51AC, s 52, s 53, s 56, s 57, s 58, s 59(2) ; Fair Trading Act 1987 (SA) s 56, s 57, s 58, s 68; Misrepresentation Act 1972 s 7, referred to.
Robertson v Police [1957] NZLR 193; Blyth v Blyth [1966] 1 All ER 524; Re Woodcock [1957] NZLR 960; Briginshaw v Briginshaw (1938) 60 CLR 336; Modbury Hospital v O'Loughlin (1988) 49 SASR 452; Shaw v Vauxhall Motors [1974] 1 NLR 1035 (C.A.); Dunning v United Liverpool Hospital Board [1973] 1 WLR 586; Taylor v Santos (1998) 71 SASR 434; Gerard Industries v Wee (supra); Rush v Commissioner of Police (2006) 150 FCR 165; ACCC v Four Wheel Drive Systems Pty Ltd (2003) 200 ALR 491, considered.
BELCAR PTY LTD v PREMIER AUTOMOTIVE GROUP AUSTRALIA PTY LTD
[2007] SASC 240Civil
JUDGE BURLEY. This is an application pursuant to r 32 of the Supreme Court Civil Rules 2006 whereby the plaintiff seeks the following order:
1.That the Defendant, Premier Automotive Group Australia Pty Ltd (“PAGA”), make pre-action discovery to the Plaintiff of all evidentiary material in its possession, custody or power including, but not limited to, correspondence, letters, e-mails, facsimiles, file notes, internal PAGA memoranda and any and all information held in electronic form, relating to or evidencing:
1.1 The decision of PAGA to offer to the Plaintiff in or about December 2004 two Land Rover Dealer Agreements each for a term of 2 years commencing 1 January 2005 notwithstanding that it had offered or proposed to offer longer terms to other Land Rover dealers;
1.2 The decision of PAGA to give notice to the Plaintiff in or about January 2006 that the Land Rover Dealer Agreements executed by the Plaintiff on or about 27 April 2005 would be terminated by PAGA effective on 30 June 2007;
1.3 PAGA’s deliberations on, and evaluation, consideration and assessment of, the Plaintiff’s suitability for the sale of Land Rover brand motor vehicles post April 2007;
1.4 The conception and objectives of the PAGA market representation strategy to consolidate the Jaguar, Land Rover and Volvo brands under single dealerships (the “3-Brand Scheme”) and the strategy for the implementation of the 3-Brand Scheme including the mode and timing of the termination of Jaguar, Land Rover or Volvo dealers not selected to be 3-Brand Scheme dealers;
1.5 PAGA’s planned introduction of the PAGA 3-Brand Scheme in South Australia;
1.6 PAGA’s consideration, evaluation and assessment of the Plaintiff as a potential 3-Brand Scheme dealer in Adelaide;
1.7 PAGA’s consideration and assessment of the proprietors of Solitaire Automotive and Cheney Dutton Volvo or Eurocars (SA) as potential 3-Brand Scheme dealers in Adelaide;
1.8 The Jaguar Dealer Agreement offered to the proprietor of Solitaire Automotive by PAGA in or about December 2004;
1.9 The Jaguar Dealer Agreement entered into between PAGA and proprietor of Solitaire Automotive in force as at 30 January 2006;
1.10 Notice given to the proprietor of Solitaire Automotive of PAGA’s intention to introduce the 3-Brand Scheme in Adelaide;
1.11 Invitations extended to the proprietor of Solitaire Automotive to submit plans or proposals for consideration by PAGA in its deliberations for the selection of the 3-Brand Scheme dealer in Adelaide;
1.12 Submissions, proposals or offers submitted by the proprietor of Solitaire Automotive to PAGA in support of any request by the proprietor of Solitaire Automotive to be considered by PAGA for selection as the 3-Brand Scheme dealer in Adelaide;
1.13 The expectations of PAGA for 3-Band Scheme dealers and the criteria to be satisfied by any applicant wishing to be considered for selection as a 3-Brand Scheme dealer;
1.14 Negotiations between representatives of PAGA and the person or entities identified by PAGA as potential candidates to become the 3-Brand Scheme dealer in Adelaide in 2007 and beyond; and
1.15 The negotiations between PAGA and Rover Australia Pty Ltd pursuant to which dealer agreements entered into by Rover Australia Pty Ltd for the sale of Land Rover, Jaguar and Volvo vehicles in Adelaide in 2007 and beyond;
1.16 The agreements between PAGA and Rover Australia Pty Ltd pursuant to which dealer agreements entered into by Rover Australia Pty ltd for the sale of Land Rover brand motor vehicles were transferred or assigned to PAGA;
1.17 Identifying the criteria required to be satisfied by Land Rover dealers between May 2001 and 30 January 2006 in order for such dealers to qualify for “Land Rover Centre Bonuses” or “Brand @ Retail Bonuses” including the criteria to be satisfied for a dealership to qualify as a “Satellite Land Rover Centre”.
An order has already been made in terms of paragraphs 1.1, 1.16 and 1.17 without opposition from the defendant. The defendant does not oppose an order in terms of paragraphs 1.8 and 1.9 of the application.
The relevant parts of r 32 are as follows:
32—Investigation
(1)If the Court is satisfied, on application by a person (the plaintiff) that the plaintiff may have a good cause of action and requires further information—
(a) to determine whether a cause of action exists; or
(b) to formulate the claim properly; or
(c) to determine against whom the claim lies,
the Court may exercise the investigative powers conferred by this rule in anticipation of an action.
(2)The Court may, if satisfied that a person may be in possession of evidentiary material relevant to the possible cause of action, make an order imposing one or more of the following requirements—
(a) to disclose to the Court whether the person is or has been in possession of relevant evidentiary material and, if so, to disclose full particulars of relevant evidentiary material that is, or has been, in the person's possession;
(b) if the person is in possession of relevant evidentiary material—to produce it to the Court;
(c) to verify the person's response to the order by affidavit.
It is convenient to divide the rule into those parts which identify the elements of the application contemplated by the Rule. These are:
·If the Court is satisfied;
·May have a good cause of action;
·Requires further information – (a) to determine whether a cause of action exists; or (b) to formulate the claim properly; or (c) to determine against whom the claim lies;
·May exercise the investigative powers;
·In anticipation of an action;
·The Court may;
·If satisfied that a person may be in possession;
·Of evidentiary material;
·Relevant to the possible cause of action;
·Make an order (a) to disclose whether [the respondent] is or has been in possession of relevant evidentiary material;
·And, if so, to disclose full particulars of same;
·(b) to produce the documentation;
·(c) to verify the response by affidavit;
Both sub-rules (1) and (2) require the Court to be satisfied of something. Whether or not the Court is satisfied as to a particular matter is a question of degree. At its highest, the degree of satisfaction may constitute proof beyond reasonable doubt. It is unlikely, in my view, that r 32 requires proof to that degree.
In Robertson v Police [1957] NZLR 193, F.B. Adams J had to consider a provision of the Licensing Act 1908 relating to persons being found on licensed premises. It was a defence to a quasi-criminal prosecution if the person charged could satisfy the Court that he was an inmate, servant, lodger or bona fide traveler. As to the meaning of the word “satisfied”, his Honour said:
The mind of the Court must be “satisfied” that is to say it must arrive at the required affirmative conclusion – but the decision may rest on the reasonable probabilities of the case, which may satisfy the Court that the fact was as alleged, even though some reasonable doubt may remain. If the probabilities, when considered in the light of all such doubts as may arise with regard to them, do in fact persuade the Court, that is, in my opinion, all that is necessary in order to entitle the Court to say that it is “satisfied” of the fact.
In Blyth v Blyth [1966] 1 All ER 524, the House of Lords had to consider the word “satisfied” as it appeared in the Matrimonial Causes Act 1950. Lord Denning concluded that the provision did not impose an onus of proof beyond reasonable doubt. He said (at 536):
The legislature is quite capable of putting in the words “beyond reasonable doubt” if it meant it. It did not do so. It simply said on whom the burden of proof rested, leaving it to the Court itself to decide what standard of proof was required in order to be “satisfied”.
Lord Pearson said (at 541):
The phrase used in section 4(2) of the Act of 1950 is simply “is satisfied”, with no adverbial qualification. The formula “satisfied beyond reasonable doubt” has been a very familiar one for a great many years, and if that meeting had been intended the formula could and should have been used.
The phrase “is satisfied” means, in my view simply “makes up its mind”; the Court on the evidence comes to a conclusion which, in conjunction with other conclusions, will lead to the judicial decision. There is no need or justification for adding any adverbial qualification to “be satisfied”.
Another New Zealand case, Re Woodcock [1957] NZLR 960, equated the degree of satisfaction to “an actual persuasion”, a phrase used by Dixon J in Briginshaw v Briginshaw (1938) 60 CLR 336. That was a decision involving the Marriage Act 1955, one of the provisions of which gave the Court a discretion to permit marriages within prescribed degrees of affinity.
In my opinion, the decisions in the Robertson v Police and Blyth v Blyth are more applicable to a Rule of Court which has for its purpose the regulation of civil proceedings. Both of those decisions invite a consideration of the balance of probabilities. In my opinion, the use of the word “satisfied” in r 32 means that the Court must be satisfied on the balance of probabilities as to the matters required to be established by the applicant.
The next ingredient of the rule arises from the words “the plaintiff may have a good cause of action and requires further information”. The word “and” in that clause could be taken to mean “but”. That is the sense in which I take it. The use of the word “may” also involves a question of degree, a matter to which I will return later in these reasons.
Sub-paragraph 32(1)(a) refers to determining whether a cause of action exists. To that extent the rule incorporates an element that was to be found in r 60.02(a) of the Supreme Court Rules 1987 where the phrase “to be likely parties to subsequent proceedings” is used. There is, however, a significant difference between that provision and the current rule because there is, in the current rule, no requirement of likelihood, nor is there the element futurity referred to by Bollen J in Modbury Hospital v O’Loughlin (1988) 49 SASR 452 when he referred to Shaw v Vauxhall Motors [1974] 1 NLR 1035 (C.A.) and Dunning v United Liverpool Hospital Board [1973] 1 WLR 586.
Bollen J said (at 413):
The decisions of the Court of Appeal in Dunning’s case and Shaw v Vauxhaull Motors (supra) suggest very strongly that the question of whether the parties are likely to be parties in subsequent proceedings does not depend on the state of affairs prior to pre-action discovery. If one concentrates solely on things as they stand prior to pre-action discovery then it will often be impossible to say that anyone is likely to be a party to any subsequent proceedings.
The current rule limits the application to reliance upon the state of affairs immediately prior to the application because it refers to a “good cause of action” which the applicant “may have”.
What is common to both the former and the current rule is that:
[t]here must be some grounds for making the application; there must be some foundation for the belief that discovery is necessary; speculation and hope and unwarranted suspicion are not enough; and busybodies on fishing expeditions ought to be discouraged. (per White J in Gerard Industries v Wee (1986) 43 SASR 562 at 568).
Sub-paragraph 32(1) refers to the formulation of the claim properly. In that regard I think that the word “claim” is synonymous with “good cause of action”. “Properly” is again a relative concept. In my opinion, the degree to which further information is required is determined by the need on the part of the plaintiff to formulate a comprehensible claim. In other words, the pleading to be produced by reference to the further information must satisfy the ordinary pleading rule, namely, that the opposing party has proper notice and adequate detail of the type of claim being pursued. That does not mean that the pleading must be perfect.
If the applicant for pre-action discovery is unable to file an adequate pleading, all things being equal, the applicant is entitled under the rule to further information (evidentiary material) to enable an adequate pleading to be prepared. (By adequate, I mean that the applicant is able to address the matters referred to in sub-paragraphs 32(1)(a)(b) and (c)). However, if the applicant is already in possession of sufficient information which by itself would enable an adequate pleading to be prepared, an order would be refused. This is a statement of the obvious, but it needs to be mentioned because, in my opinion, the rule does not extend to a case where an applicant is able to provide an adequate pleading which would be improved if discovery were to be given. In such a case, the substantive proceedings should be commenced and, if, after discovery, it becomes apparent that the statement of claim should be amended, the appropriate amended pleading should be filed either pursuant to the rules or by consent or if permission is given by the Court.
Sub-rule 32(1) provides that if the requirements of the sub-rule are made out, the Court may exercise certain investigative powers in anticipation of an action.
The investigative powers are set out in sub-rule (2). I do not think that the phrase “in anticipation of an action” means anything more than that any order under r 32 may be made prior to the commencement of an action by the applicant.
In r 32(2) the words “possession” and “evidentiary material” are used. “Possession” is defined in r 4 as follows:
Possession - a person is taken to be in possession of a document or object if –
(a) A document or object is in the person’s custody or control; or
(b)It lies within the person’s power to obtain immediate possession of the document or object or to control its disposition (whether or not the power is one that would be recognized at law or inequity);
With one significant exception, the cases collected in Lunn’s Civil Procedure (1987 Rules) at paragraphs 58.01.20 and 58.01.25 remain applicable. The exception arises from the inclusion in parenthesis of reference to a power, whether or not it would be recognized at law or inequity. In Taylor v Santos (1998) 71 SASR 434, the Full Court held that the power to call for a document means an immediately enforceable legal right as opposed to some practical arrangement that may exist as between a parent company and its subsidiary. That principle has now been abrogated by sub-paragraph (b) of the definition of possession in r 4.
Rule 4 also provides:
Evidentiary material means any document, object or substance of evidentiary value in an action and includes any document, object or substance that should, in the opinion of the court, be produced for the purpose of enabling the Court to determine whether or not it has evidentiary value;
The evidentiary material must be relevant to the possible cause of action. The rule does not say “directly relevant” or “indirectly relevant”. This is unlike r 136 and r 139 where those expressions have been used and in respect of which there is a body of authority dealing with what those phrases mean. In relation to r 32, I do not think that it is necessary to engage in a debate as to what might constitute something which is directly or indirectly relevant to the possible cause of action. In my opinion, the word “relevant” in r 32(2) takes its meaning from the definition of “evidentiary material”. That definition contains the requirement that the document etc must be “of evidentiary value in an action” and includes “any document … that should … be produced for the purpose of enabling the Court to determine whether or not it has evidentiary value”. I take “evidentiary” to mean “probative”. This means that the disclosure which may be ordered by the Court consists of documentation, objects or substances which may be admitted as evidence or which may assist with determining whether the document etc is probative.
Before turning to the facts, it is convenient to refer to an agreement which has been reached between the plaintiff and Solitaire Automotive relating to production of documents which might be commercially sensitive and confidential to Solitaire. The arrangement reached is contained in Exhibit P1 consisting of two letters in which Solitaire, by its solicitors sought undertakings relating to the question of production of such documentation if an order for disclosure and production in relation thereto is made. The other letter is from the plaintiff’s solicitors confirming it will not seek to inspect any such documentation without the approval of Solitaire and, if there is a dispute as to the terms of inspection, the plaintiff would not oppose the Court granting permission to Solitaire to be heard on the question of the terms of inspection. Resort to this agreement will only be necessary if the plaintiff otherwise establishes a right to an order for disclosing of the particular documentation.
The facts
The plaintiff relies upon the affidavit of Mr Mario Corradini sworn on 10 April 2007. The defendant has elected not to respond to that affidavit. The defendant has not conceded the accuracy of Mr Corradini’s evidence but accepts, as it must, that it is the only evidence before the Court.
Mr Corradini is the managing director of the plaintiff. That company operates three motor vehicle dealerships trading respectively as “Prestige Walkerville”, “Black Forest Land Rover” and “Prestige Formula”. Since 1982 Mr Corradini, through corporate entities, has had the right to sell new Land Rover motor vehicles in Adelaide. The plaintiff was incorporated in December 1993 and has held the exclusive rights to sell new Land Rover motor vehicles in Adelaide since about February 1994. In his affidavit Mr Corradini stated:
4.The application stems from PAGA’s [the defendant] termination of two contracts described “Land Rover Dealer Agreement” as executed by Belcar and PAGA on 27 April 2005, one in respect of Prestige Walkerville, the other, Black Forest Land Rover (“the 2005 Agreements”) and from PAGA’s refusal to pay bonus commissions which Belcar maintains are due to it. …
…
5.The application for pre-action discovery has been made in order to obtain information and materials that will assist Belcar in determining that it has (and to properly plead) a cause (or causes) of action against PAGA (and the strength of the same) arising from execution and/or termination of the 2005 Agreements and therefore the aforesaid failure to pay bonus commissions.
It can be seen that the application has a twofold purpose: the first in relation to the possible causes of action relating to the termination of the 2005 Agreements; and second, in relation to additional commission relating to the sales of vehicles from the Walkerville site.
The second aspect of the plaintiff’s application is not contentious. The orders sought in relation thereto are paragraphs 1.16 and 1.17 of the interlocutory application. Orders in those terms were made by the Court on 27 April 2007 without opposition from the defendant.
A chronology of events commences at paragraph 7 of Mr Corradini’s affidavit. The following narrative consists of my findings of fact for the purposes of this application.
In about May 2001, PAGA acquired from Rover Australia Pty Ltd the exclusive rights to distribute in Australia Land Rover, Jaguar and Volvo motor vehicles. Prior to that, the contractual arrangements between Rover Australia and the plaintiff were contained in Letters of Appointment dated 27 August 1996 and, subsequently, 3 April 1998, copies of which are Exhibit MRC5. In each instance the letter provides:
The appointment will be for an indefinite term, terminable by either party in accordance with the provisions in this letter.
In each letter, clause 9 deals with termination and, among other things, provides that either party may give the other three months’ notice in writing of any decision to terminate the Agreement. Mr Corradini refers to these agreements as “evergreen”. By that I take him to mean that the Agreements had a permanence which was not present in the 2005 Agreements. The latter are for a fixed period until 31 December 2006 unless extended by the defendant. A fundamental feature of the causes of action which the plaintiff says may exist against the defendant is, that by the alleged wrongful conduct on the part of the defendant, the plaintiff gave up an “evergreen” agreement in exchange for an agreement of limited duration. It seems to me that the distinction drawn by the plaintiff is illusory. On its own case, all that the plaintiff ever had under the previous arrangements with Rover Australia was an agreement that could be terminated by either party on three months’ notice to the other. If anything, the 2005 Agreements created greater security as to the duration of the dealership because they provided for a fixed term. These matters are material to the question of whether or not “the plaintiff may have a cause of action”, a question to which I will return later in these reasons.
To continue the narrative, in about October 2003 Mr Corradini attended a PAGA Land Rover “Senate Meeting” in Sydney which was attended by representatives of retailers of Land Rover motor vehicles across Australia. He said that the CEO of PAGA, Mr Richard Snijders stated that PAGA was contemplating the introduction of changes to its national franchise strategy and that dealers would be given due notice of any proposed changes. In addition, there would be an assessment of retailers individually so as to afford to each of them an opportunity to rectify any concerns held by PAGA.
In early 2004, Mr Corradini attended a meeting in Adelaide with the newly appointed CEO of PAGA, Mr Speck and the Principals of the Volvo and Jaguar dealerships in Adelaide. Mr Speck announced that PAGA had developed a strategy which would see Land Rover, Volvo and Jaguar motor vehicles sold by one dealer at one site in each Australian State. Mr Corradini referred to this proposal as “the 3 Brand Scheme”. He was informed that the scheme would be implemented in South Australia in 5 – 7 years. Mr Speck invited Mr Corradini and the other two principals to consider negotiating a “take out” by one retailer of the other two in anticipation of the implementation of the 3 Brand Scheme in South Australia.
It is apparent from paragraph 11 of Mr Corradini’s affidavit that after the meeting, he understood (an understanding that was not communicated at that stage to any of the other affected parties) that whoever lost the relevant dealership would be compensated for losing the same to the extent that goodwill attached to the dealership even though the right to such compensation was never included in any letter of appointment.
In about August 2004, Mr Corradini had discussions with the principal in relation to the Volvo franchise. Mr Corradini discussed an offer to purchase the South Australian Volvo franchise. No agreement was reached between them but Mr Corradini advised a Ms Lorraine Giles of PAGA, who was the franchise strategy manager, of his unsuccessful attempt to acquire the Volvo franchise.
Mr Corradini made no further attempt either to sell the Land Rover franchise or acquire the Volvo franchise. It was his understanding that there was a lead time of least five years before the implementation in South Australia of the 3 Brand Scheme.
It is apparent that Mr Corradini was anxious to place himself in as favourable a position as possible in relation to the implementation of the 3 Brand Scheme. In November 2004 he commissioned architects to prepare plans for a multi-franchise site at Walkerville. The final version of the plans was provided by the architect in March 2005.
By letter dated 14 December 2004, a copy of which is Exhibit MRC7, the defendant provided to the plaintiff dealer agreements which were to replace the current dealer agreement. They provided for the commencement of a two-year term on 1 January 2005. As I understand it, the documents enclosed with the letter were the 2005 Agreements (Exhibit MRC1). The agreements were for a period of two years, ending on 31 December 2006 and could only be renewed by the defendant. It is common ground that the agreements were renewed and that the expiry date is 30 June 2007.
On receipt of the agreement, Mr Corradini was concerned that it only offered a two year term. He rang a friend who was the proprietor of the Perth Land Rover franchise who informed Mr Corradini that he had been offered a five-year term.
In about February 2005 he telephoned the defendant’s financial planning manager, Mr Stubbs. He pointed out to Mr Stubbs that he had been offered a two-year term whereas the Perth dealer had been offered a five year term. He asked why the term offered to him was for a lesser period. Mr Corradini said that Mr Stubbs advised him that the agreements were merely “interim” agreement and that he had nothing to worry about. Mr Corradini had known Mr Stubbs for a number of years and trusted him. He accepted his reassurances without further enquiry. He then executed the 2005 Agreements on behalf of the plaintiff in light of what he termed were the representations of Mr Speck and Mr Stubbs.
In about mid 2005, Mr Corradini had conversations with the principal of the Jaguar franchise with a view to making an offer to acquire the Jaguar franchise. These discussions did not lead to any agreement. Mr Corradini informed Ms Giles that he was not able to acquire the Jaguar franchise and that consequently it was unlikely that one of the franchisees would buy out the others. He said that she responded:
PAGA is not concerned with Adelaide because it has three very strong independent dealers.
In December 2005, Ms Giles met with Mr Corradini and others at Adelaide. It was at that meeting that Mr Corradini informed her that he had had architectural plans drawn up for an expansion of the site at Walkerville. She in turn provided Mr Corradini with plans of a new PAGA site which he might take into account in considering any proposal to conduct the 3 Brand Scheme. Mr Corradini asserted that at that meeting Ms Giles did not tell him that the defendant had either already determined (or was close to determining) to select the current Jaguar franchisee as the preferred operator of the 3 Brand Scheme. He asserted that she did not inform him that the principal of that franchise had been in negotiations with the defendant for some time, nor did she tell him that the defendant had provided information to the Jaguar principal to assist him with the proposals to be put by him to the defendant. He also asserted that he was not informed by Ms Giles that the appointment of a franchisee was imminent and that it would be futile for the plaintiff to submit a proposal. Finally, he asserted that he was not informed that he would not be paid for the goodwill he had established in respect of the Land Rover brand.
The next meeting occurred on 31 January 2006 at which Mr Speck and Ms Giles attended with Mr Corradini and others. At that meeting, Mr Corradini was presented with notices of termination of the 2005 Agreements. The termination was to be effective from 30 June 2007. The letter of termination explained that the termination was to give effect to the defendant’s marketing strategy involving the consolidation of the Jaguar, Land Rover and Volvo brands under a single ownership. It was the defendant’s contention that the notice was given not long after Mr Corradini had disclosed that he had had plans drawn up for the Walkerville site, and therefore in time to prevent the plaintiff from incurring needless expense in developing the Walkerville site.
As a result of the meeting on 31 January 2006, Mr Corradini sought to advance the plaintiff’s claim to be appointed the operator of the new marketing strategy but to no avail. He complains in his affidavit that he was never advised of the imminence of the appointment and that consequently he had not taken active steps to pursue the new 3 Brand Scheme. Eventually, in August 2006, Mr Corradini was advised by the defendant that it would proceed with its decision to appoint the Jaguar franchisee as the new 3 Branch Scheme operator.
At paragraph 38 of his affidavit Mr Corradini said:
38.By reason of the misrepresentations made to me by PAGA as outlined in paragraphs 10.2, 10.3, 17 and 23 herein, and Belcar’s reliance on them, I was lulled into a false sense of security by PAGA, caused Belcar to unwittingly submit to taking on a “caretaker” role as the Land Rover retailer in South Australia for such time as PAGA needed to select an alternative retailer for its 3-Brand Scheme and for that other retailer to construct the required facilities and thereby Belcar lost the opportunity to renegotiate the agreements to provide for fairer terms for Belcar and lost the opportunity to realise the considerable goodwill Belcar has enjoyed from my and my staff’s dedication to the Land Rover brand for over 25 years. Instead, via the termination of the 2005 Agreements, PAGA has permitted [the Jaguar franchisee] to exploit that goodwill for no consideration.
Mr Corradini next deposed to the fact that he could not be certain that at the time of the 2005 Agreements and at the time that he was assured in June 2005 by Ms Giles that “PAGA is not concerned with Adelaide because it has three very strong independent retailers, PAGA had already determined to implement the 3 Brand Scheme in South Australia and had excluded Belcar as a potential 3 Brand Scheme franchisee. He asserts that the internal records of the defendant will reveal whether his claims are correct and that he requires access to the relevant documentation to determine whether or not the plaintiff has a cause of action against PAGA arising from the plaintiff’s loss of the Land Rover franchises.
Whether an order should be made
Detailed submissions, both written and oral, were put by counsel for and against the making of an order. Reference was made to a number of cases dealing with applications under r 60 of the Supreme Court Rules 1987. Those submissions were helpful in establishing the approach to be taken to the new rule. What has emerged from the submissions and from my analysis of the rule at the commencement of these reasons is that the essential question to be answered is whether or not I can be satisfied that the plaintiff may have a good cause of action. If I can be so satisfied, there is little doubt in my mind that the plaintiff requires further information to determine whether or not causes of action exist and, if so, to formulate a claim properly. I am equally satisfied that the defendant may be in possession of evidentiary material relevant to the possible causes of action. In particular, I am satisfied that the types of documentation sought in the interlocutory application are relevant evidentiary material.
There are, in my view, no factors militating against exercising the discretion in favour of the plaintiff should the plaintiff establish that the application comes within the rule.
I turn now to the essential question identified above. I must be satisfied on the balance of probabilities that the plaintiff may have a good cause of action. “May” is a relative word. It embraces, at one end of the spectrum, the concept of a slight possibility and, at the other end, the concept of a near certainty. Where is the bar to be set with respect to this rule? Either end of the spectrum is impractical: the bar would be too low at one end and too high at the other. Consequently, I must look to setting the bar somewhere between the two extremes, bearing in mind the purpose of the rule, the rights of the parties and the efficient conduct of litigation.
A useful purpose is to be served by allowing pre-action discovery where there is doubt that a claim may be maintained. In my opinion, to meet the objectives of the rule, the bar should not be set too high. Nevertheless, as I have said earlier in these reasons, a respondent to an application should not be subjected to the process and a subsequent order if the claimed entitlement is based largely on surmise, speculation or conjecture. (See Gerard Industries v Wee (supra) and Rush v Commissioner of Police (2006) 150 FCR 165)
The possible causes of action said to be based on the facts as I have outlined, are identified at paragraph 25 of the plaintiff’s written submissions-in-chief. Reference is made to s 51AB, s 52, s 53 and s 59(2) of the Trade Practices Act1974 (Cth), s 56, s 57, s 58 and s 68 of the Fair Trading Act 1987 (SA) and s 7 of the Misrepresentation Act 1972. Alleged breach of contract is also relied upon.
The defendant asserted (paragraph 6 of the written submission) that the representations referred to in paragraphs 6.1 to 6.13 of Mr Corrandin’s affidavit are covered by paragraph 1.1 of the application to which the defendant consents. I accept the correctness of the submission and, in particular that, to the extent that the plaintiff relies upon causes of action based on alleged misrepresentation, the consent order in terms of paragraph 1.1 of the application will properly meet the plaintiff’s legitimate requirements in respect of that possible cause of action.
The remaining possible causes of action may be divided into three categories: first, misleading and deceptive conduct under the various provisions of the Trade Practices Act and the Fair Trading Act; second, alleged unconscionable conduct based on s 57 of the Fair Trading and s 51AA and s 51AB of the Trade Practices Act; and third, alleged breach of contract.
Misleading and deceptive conduct
The defendant referred to paragraph 6.4 of Mr Corradini’s affidavit, where he said that the plaintiff relied upon the assertion that, prior to the termination of the 2005 Agreements, the defendant failed to provide the plaintiff with an opportunity to:
6.4.1Demonstrate its capabilities to be the exclusive retailer of, not only Land Rover motor vehicles, but also Jaguar and Volvo motor vehicles, in Adelaide in 2007 and beyond; or
6.4.2Sell its rights and interests as the exclusive retailer of Land Rover motor vehicles in Adelaide, including the goodwill it has established since it commenced to trade in 1993 and which it inherited from its predecessors …
The defendant submitted that no possible cause of action had thereby been disclosed because any such alleged failure could not constitute misleading and deceptive conduct. It was argued that no misrepresentation was made and Mr Corradini’s belief that he was entitled to compensation did not assist because he was mistaken in that belief. There was nothing to suggest that mistaken belief was induced by the defendant. It was further submitted that there was no allegation in Mr Corradini’s affidavit that any representation was made to him that he would have an opportunity to demonstrate the plaintiff’s capabilities to be the exclusive retailer or that the plaintiff would have the opportunity to sell its rights and interests as the exclusive retailer of Land Rover motor vehicles.
The defendant contended that it was under no obligation to the plaintiff to inform the plaintiff what its future plans were. Its obligations were limited to complying with the terms of the contractual relationship between the plaintiff and the defendant.
Lastly, the defendant contended that, since it was the plaintiff’s case that in 2005 the defendant had already decided not to renew his franchise, no loss can be said to have arisen from any unlawful conduct attributed to the defendant because, whatever occurred, the plaintiff had lost its franchise. It was submitted that actual damages were an essential element of a claim based on the Fair Trading Act or the Trade Practices Act and, in the absence of damages, no possible cause of action based on those two statutes could be said to exist.
If the defendant’s assessment of the nature of the causes of action contended for by the plaintiff based on alleged misleading and deceptive conduct is correct, there is some substance in the submissions put by the defendant that there is no discernable cause of action revealed in Mr Corradini’s affidavit. However, the plaintiff responded by providing detailed written submissions in reply, a large part of which was directed towards the contention that the defendant’s understanding of the possible causes of action contended for by the plaintiff was incorrect.
It must be said that it is not the function of the Court on an application such as this to determine the rights and liabilities of the parties. It is theoretically possible for the Court to come to the conclusion, on any given application, that, on the material before it, the plaintiff’s or the defendant’s contentions are without merit, but such a conclusion does not decide the substantive rights of the parties. It is neither possible nor appropriate to do so on this application. In my view, an examination of the strength of the plaintiff’s contentions (and the defendant’s contentions to the contrary) as to the existence of possible causes of action is limited to the parameters set by sub-rule 32(1).
Unconscionable conduct
In its written submissions in respect of possible causes of action based on alleged unconscionable conduct, the defendant correctly identified that it was not possible for the plaintiff to rely upon the provisions specified in paragraph 25 of the plaintiff’s written submissions-in-chief. The plaintiff’s response to that was to assert, in its submissions in reply, that by oversight, reference was not made to s 51AC of the Trade Practices Act. I accept that that section is not subject to the limitations of the other “unconscionable conduct” sections referred to at paragraph 25 of the plaintiff’s written submissions-in-chief.
The written submissions in reply by the plaintiff fall short of a draft proposed statement of claim, but the causes of action which the plaintiff contends that may be available to it are more clearly set out than the references to potential causes of action contained in Mr Corradini’s affidavit. I do not intend to set out in detail what is contained in the written submissions in reply. It is sufficient to state that the plaintiff contends that representations were made to it that it would be given fair notice of any planned changes to the franchise strategy, that the plaintiff would have the opportunity to address any concerns that the defendant might have as to the plaintiff’s suitability to take over the new marketing strategy, that the implementation of the 3 Brand Scheme in South Australia was not urgent and that it would be implemented within the time span of approximately five to seven years and that each of the three existing franchisees were potentially suitable entities to take over any new strategy.
Further, the plaintiff relies upon alleged representations that the 2005 Agreements were merely interim and that there would be no adverse consequences to the plaintiff arising from the fact that some dealers had been given a longer term. The plaintiff also relies upon alleged representations made later in the piece which were confirmatory of or tended to confirm the earlier representations.
It is asserted that the representations constituted false and misleading conduct and/or unconscionable conduct on the part of the defendant. As a result, it is alleged, a number of adverse consequences were visited on the plaintiff: it was not provided with the opportunity to seek the dealership contemplated by the 3 Brand Scheme; it was not given the opportunity to dispose of its asset, namely a dealership for Land Rover vehicles which, by various entities, had existed over a period of 20 years; and it lost the opportunity to bargain for a better deal in relation to the 2005 Agreements.
Whilst I accept that it may well be arguable, even strongly arguable, at trial that the conduct relied upon does not constitute false and misleading conduct or unconscionable conduct, I cannot rule out that the discovery sought may assist the plaintiff in establishing such conduct. Reference was made to the decision of Selway J in ACCC v Four Wheel Drive Systems Pty Ltd (2003) 200 ALR 491 and the cases referred to therein. Mr Swan relied upon this decision in support of his contention that the plaintiff had failed to make out a case based on unconscionable conduct. Much of what was submitted by Mr Swan, in both his oral and written submissions, revealed the potential weaknesses of the plaintiff’s position. It is correct that the defendant had no contractual obligation to the defendant beyond the Letters of Appointment and the 2005 Agreements. It is arguable that the facts relied upon as constituting either false and misleading conduct or unconscionable conduct do not, on their face, establish the legal requirements in respect of such conduct. I agree that, to some extent, the plaintiff’s arguments are circular or barely maintainable. However, viewed as a whole, there is, in my view, a reasonable prospect that the plaintiff may have available to it the causes of action (or some or one of them) contended for. There is a demonstrated need for the documentation sought to be disclosed so that the matters referred to in sub-paragraphs 32(1), (a) and (b) may be addressed by the plaintiff.
Had the plaintiff’s submissions, both the written and oral, not addressed the matters raised in the defendant’s written submissions, there may well have been a proper basis for refusing this application on the grounds that the possibility that causes of action may be available to the plaintiff was a matter of guesswork and conjecture. However, in my opinion, the written submissions in reply, in particular, point to a reasonable possibility that the plaintiff may have available to it causes of action of the type articulated in the written submissions in reply. The situation is by no means clear, but, in my opinion, the lack of clarity does not detract from the plaintiff’s application. On the contrary, it enhances the application because it points to the fact that the plaintiff requires further information to determine whether or not causes of action are available to it and, if so, to formulate such claims properly.
Breach of contract
I have found no basis for making any order for pre-action discovery where a possible cause of action based on breach of contract is relied upon.
For the above reasons there will be an order in terms of sub-paragraphs 1.2 – 1.15 of the application. There will be liberty to apply on the question of production of documents. I indicate that I am not part heard on the question of production. That aspect may be dealt with by another master if necessary.
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