Biman International Pty Ltd v Amalgamated Security Services Pty Ltd
[2003] FCA 801
•1 AUGUST 2003
FEDERAL COURT OF AUSTRALIA
Biman International Pty Ltd v Amalgamated Security Services Pty Ltd
[2003] FCA 801BIMAN INTERNATIONAL PTY LTD v AMALGAMATED SECURITY SERVICES PTY LTD AND ORS
N 927 of 2002ALLSOP J
1 AUGUST 2003
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 927 of 2002
BETWEEN:
BIMAN INTERNATIONAL PTY LTD
(ACN 087 748 007)
APPLICANTAND:
AMALGAMATED SECURITY SERVICES LTD
(ACN 084 183 362)
FIRST RESPONDENTDARRYL JOHN EVANS
SECOND RESPONDENTRYNAS PTY LTD
(ACN 010 140 520)
THIRD RESPONDENTAUSTRALIAN TENDER SERVICES PTY LTD
FOURTH RESPONDENTJUDGE:
ALLSOP J
DATE OF ORDER:
1 AUGUST 2003
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The application of the first to third respondents to strike out paragraphs 7, 9A to 15A, 16, 17 and 19 and portions of paragraphs 18 and 20 of the Further Amended Statement of Claim be dismissed.
2.On or before 6 August 2003 the applicant file and serve a draft minute of order on the question of discovery and the further conduct of the proceedings.
3.The first to third respondents pay 85% of the costs of the applicant in relation to the argument concerning striking out parts of the Further Amended Statement of Claim and the question of discovery by the respondents.
4.The proceedings stand over to a date to be fixed for further directions.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 927 of 2002
BETWEEN:
BIMAN INTERNATIONAL PTY LTD
(ACN 087 748 007)
APPLICANTAND:
AMALGAMATED SECURITY SERVICES LTD
(ACN 084 183 362)
FIRST RESPONDENTDARRYL JOHN EVANS
SECOND RESPONDENTRYNAS PTY LTD
(ACN 010 140 520)
THIRD RESPONDENTAUSTRALIAN TENDER SERVICES PTY LTD
FOURTH RESPONDENT
JUDGE:
ALLSOP J
DATE:
1 AUGUST 2003
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is a dispute concerning pleadings and discovery.
Part IVB of the Trade Practices Act 1974 (Cth) (the Act) was introduced in 1998. By s 51 AD of the Act:
A corporation must not, in trade or commerce, contravene an applicable industry code.
The phrase “applicable industry code” is defined in subs 51ACA(1) for the purposes of Part IVB as follows:
(a)the prescribed provisions of any mandatory industry code relating to the industry; and
(b)the prescribed provisions of any voluntary industry code that binds the corporation.
The phrase “industry code” is defined in subs 51ACA(1) as meaning:
a code regulating the conduct of participants in an industry towards other participants in the industry or towards consumers in the industry.
The phrase “mandatory industry code” is defined in subs 51ACA(1) as meaning:
an industry code that is declared by regulations under section 51AE to be mandatory.
Industry codes may be made by regulation: s 51AE, which provides as follows:
The regulations may:
(a)prescribe an industry code, or specified provisions of an industry code, for the purposes of this Part; and
(b)declare the industry code to be a mandatory industry code or a voluntary industry code; and
(c)for a voluntary industry code, specify the method by which a corporation agrees to be bound by the code and the method by which it ceases to be so bound (by reference to provisions of the code or otherwise).
The Trade Practices (Industry Codes – Franchising) Regulations 1998 were prescribed, and commenced on 1 July 1998. They amount to a mandatory industry code. I will refer to them as the “Code”.
It is necessary to appreciate some of the provisions and requirements of the Code.
Subregulation 4(1) defines a “franchise agreement” as follows:
(1) A franchise agreement is an agreement:
(a) that takes the form, in whole or part, of any of the following:
(i) a written agreement;
(ii) an oral agreement;
(iii)an implied agreement; and
(b) in which a person ( the franchisor ) grants to another person ( the franchisee ) the right to carry on the business of offering, supplying or distributing goods or services in Australia under a system or marketing plan substantially determined, controlled or suggested by the franchisor or an associate of the franchisor; and
(c) under which the operation of the business will be substantially or materially associated with a trade mark, advertising or a commercial symbol:
(i) owned, used or licensed by the franchisor or an associate of the franchisor; or
(ii) specified by the franchisor or an associate or the franchisor; and
(d) under which, before starting business or continuing the business, the franchisee must pay or agree to pay to the franchisor or an associate of the franchisor an amount including, for example:
(i) an initial capital investment fee; or
(ii) a payment for goods or services; or
(iii)a fee based on a percentage of gross or net income whether or not called a royalty or franchise service fee; or
(iv)a training fee or training school fee;
Subregulation 4(2) includes as a franchise agreement a transfer, renewal or extension of a franchise agreement.
Various well known legal and commercial relationships are taken out of the purview of a franchise agreement by subreg 4(3): employment, partnership, tenancy, mortgage, loan and a co-operative under relevant legislation.
Part 2 of the Franchise Code deals with disclosure. Regulation 6 (in its current form) provides for what is called a “disclosure document” in the following terms:
(1) A franchisor must give a disclosure document in accordance with Annexure 1 to:
(a) a prospective franchisee; or
(b) a franchisee proposing to renew or extend a franchise.
(2) A person who proposes to transfer a franchise or a franchised business must give a disclosure document in accordance with Annexure 2 to the proposed transferee.
(3)However, a proposed transferee who is the franchisor may waive this requirement.
(4) If a franchisor proposes to grant a master franchise, the franchisor must give a disclosure document in accordance with Annexure 1 to the prospective subfranchisor or master franchisee.
(5) If a subfranchisor or master franchisee proposes to grant a subfranchise to a franchisee:
(a) the franchisor and subfranchisor, or the master franchisee:
(i) must individually give a disclosure document to the franchisee or prospective franchisee; or
(ii) must give to the franchisee or prospective franchisee a joint disclosure document that addresses the respective obligations of the franchisor and the subfranchisor; and
(b) the subfranchisor, or the master franchisee, must comply with the requirements imposed on a franchisor by this Part.
In 1999 the form of regulation 6 was somewhat different in terms; though, for present purposes, the differences do not matter.
On either version, the relevant annexures to the regulations provided for mandatory disclosure of such matters as:
(a)details of the franchisor and those in management positions: cl 2
(b)details of the business experience of those involved with the franchisor: cl 3
(c)details of litigation in which the franchisor was involved: cl 4
(d)details of existing franchises: cl 6
(e)details of intellectual property: cl 7,
and other matters.
It is common ground that no disclosure document was provided.
It is now necessary to go to the pleadings. The applicant filed a Further Amended Statement of Claim (FASC) on 21 March 2003. There had been correspondence to this point between the solicitors for the applicant and the first to third respondents about the adequacy of the pleading and its particulars. The asserted continued inadequacy in this regard is the basis of the motion to strike out parts of the FASC. It is therefore necessary to examine the FASC in some detail.
It should be noted that the paragraphs of the FASC sought to be struck out were 7, 9A to 15A, 16, 17 and 19, the phrase “16 and 17” in paragraph 18 and the phrase “16, 17 and 19” in paragraph 20.
It should be noted that the applicant seeks the following relief in the application:
1.An order declaring each of the Master Licence Agreement, the Variation Agreement and The Transfer (as those terms are defined in the Statement of Claim):
(a) to be void; and
(b) to have been void ab initio or at all times after such other date as the Court may specify.
2.An order that the First Respondent and/or the Third Respondent and/or the Fourth Respondent refund to the Applicant the amounts paid by the Applicant pursuant to the Master Agreement and the Variation Agreement.
3.Damages
4.Such further or other orders as the Court sees fit.
5.Costs
The applicant pleads a number of complaints. It says that in August 1999 the first respondent (described as “ATSO”) agreed to grant it (described as “Biman”) a franchise agreement as described in [6] of the FASC:
6.On 5 August 1999 ATSO agreed to grant to Biman the exclusive licence to use and exploit certain intellectual property relating to a system for the provision of government tender information to subscribers (“the Business”) within New South Wales (“the Master Licence Agreement”).
This agreement was said to be a franchise agreement for the purposes of the Code. The first to third respondents sought particulars as to why this was so, and were provided with the following information by letter dated 22 November 2002 from the applicant’s solicitors:
4..The ‘Master Licence Agreement’ was;
(a)an agreement whereby the first respondent granted to the applicant the right to carry on the business of offering tender information subscription services in Australia under a system substantially determined, controlled or suggested by the first or second respondents;
(b)an agreement under which the operation of the business by the applicant was substantially or materially associated with a trade mark, advertising or commercial symbol being the trading name ‘Australian Tender Services’;
(c)an agreement under which before starting the business the applicant was required to pay to the first respondent an amount including a capital sum and a fee based on a percentage of gross income, specifically, the fee prescribed in clauses 4.1 and 4.2
We enclose copies of the Master Licence Agreement and the Variation Agreement.
It is alleged that the so-called Master Licence Agreement was varied in October 1999, and later in March 2000, at that later time involving the third respondent. The March 2000 variation was also said to be a “franchise agreement” for the purposes of the Code.
It is alleged in [15B] and [15C] that before entry into the Master Licence Agreement, the first respondent represented to the applicant various matters as follows:
15B…that if Biman were to enter into the Master Licence Agreement; first that it would be realistic to expect that Biman would achieve in the range $200,000 to $300,000 in annual revenue; and then that there were approximately 700 existing customers of the business in New South Wales who were paying average annual subscriptions of $500 each, so that Biman could expect to receive $350,000 in annual revenue from those customers (thereby implying that those existing customers, or most of them, would renew their subscriptions).
Particulars
The first representation was made in a facsimile sent by ATSO to Biman on 21 July 1999 (point 7 under the heading ‘Features of GTS to Prospective Purchasers’). The second representation was made orally by Evans on behalf of ATSO to Nikolas Widjaja on behalf of Biman during a visit by Widjaja to ATSO’s offices at Nerang on 23 July 1999.
15C The said representations were as to future matters and ATSO did not have reasonable grounds for making them (in this regard Biman relies upon section 51A(2) of the Trade Practices Act 1974) with the consequence that ATSO by making the representations contravened section 52 of the Trade Practices Act 1974.
In [16] it is alleged that in contravention of the Code the first respondent did not, prior to the entry into the Master Licence Agreement, do any of the following:
(b)give a copy of the Code and of a disclosure statement prepared in accordance with the Code to Biman; or
(c)receive from Biman a written statement that Biman had received, read and had a reasonable opportunity to understand such disclosure document and the Code;
(d)receive from Biman the signed statements relating to independent advice prescribed by clause 11(2) of the Code,
…
There is no dispute that these matters did not occur.
In [17] the same is alleged about the March 2000 variation, this time including the third respondent.
In [18] it is alleged that the second respondent was knowingly concerned in the contraventions in [15C], [16] and [17].
Then, in [20], relevantly for the first to third respondents, there is a claim for loss and damage, as follows:
By reason of the contraventions referred to in paragraphs 15C, 16, 17 … above, Biman has suffered losses from the operation of the Business (including the payments on account of the Master Licence Fee referred to in paragraphs 9 and 15 above), and has thereby suffered loss and damage.
Pursuant to an earlier direction made by me the applicant sought to identify the causal connection between [16] and [17], and [20]. The document provided was, relevantly, in the following terms:
The Applicant provides the following further and better particulars setting out how it is said the allegations in paragraphs 1 to 19 of the Statement of Claim have a causal relationship with matters set out in paragraph 20 of the Statement of Claim and the relief claimed in the Application.
1.As to the conduct in paragraph 16 of the Statement of Claim:
(c)Had ATSO given to Biman the disclosure statement prescribed by the Code, the giving of that disclosure statement (either by itself or combined with the requirement that Biman provide a signed statement that it had received, read and understood the statement) would have revealed to Biman the matters prescribed in clause 1 to 19 of Annexure 1 to the Code.
(d)Without limiting the matters which would thereby have been revealed to Biman, the disclosure statement would have revealed, that a substantial number of the existing customers of the New South Wales franchise were dissatisfied with the service being provided and were unlikely to renew their subscriptions, which was likely to result in the franchise being unprofitable or marginally profitable.
(e)Had ATSO required from Biman the statement as to independent advice prescribed by the Code, Biman would have obtained such advice, and having received such advice (including advice on the matters revealed by the disclosure statement), Biman would not have entered into the Master Licence Agreement and accordingly would not have suffered the losses alleged in paragraph 20 of the Statement of Claim.
2.As to the conduct in paragraph 17 of the Statement of Claim:
(a)Had ATSO and Rynas given to Biman the disclosure statement prescribed by the Code, the giving of that disclosure statement (either by itself or combined with the requirement that Biman provide a signed statement that it had received, read and understood the statement) would have revealed to Biman the matters prescribed in clauses 1 to 19 of Annexure 1 to the Code.
(b)Had ATSO and Rynas required from Biman the statements as to independent advice prescribed by the Code, Biman would have obtained such advice, and having received such advice (including advice on the matters revealed by the disclosure statement), Biman would not have entered into the Variation Agreement but would instead have exercised its rights against ATSO arising out of ATSO’s contravention in relation to the Master Licence Agreement and accordingly:
(i)Biman would not have suffered such of the losses alleged in paragraph 20 of the Statement of Claim as were incurred for the period after the date of the Variation Agreement; and
(ii)to the extent that the lapse of time between the date of the Variation Agreement and the date of institution of the proceedings may have resulted in ATSO being unable or less able to meet the claims made against it, Biman would not have suffered such loss.
Thus, at least two substantive matters were raised by the further particulars to [16]. First, it was said that the disclosure would have revealed substantive customer dissatisfaction with a consequential effect on profitability. In later correspondence it was stated that this would have been revealed by clauses 19.1 and 19.5 of annexure 1 to the Code. These clauses dealt with earnings information and what had to be provided if earnings information was given. It is not readily seen that disclosure called for by clauses 19.1 and 19.5 would necessarily have thrown up this information.
Secondly, 1(c) stated, in effect, that whatever would have been disclosed, the applicant upon receiving advice would not have entered the agreement.
Also, [15B] and [15C] pleaded express representations about future matters concerning revenue, and customer renewals.
Further particulars were sought of [17] of the FASC and [2] of the further particulars provided and referred to at [27] above. Further particulars were provided. It was said that the variation agreement was a franchise agreement for the Code, one clause in particular of the agreement was referred to. Also, when asked which of clauses 1 to 19 of annexure 1 to the Code “about which the applicant would have taken advice” as described in [2(b)] set out at [27] above and what that advice would be the applicant’s solicitors stated the following in a letter dated 22 November 2002:
3.(a) The applicant alleges that it would have taken advice on all the matters disclosed in accordance with the Code in addition to advice on the franchise agreement itself.
(b)It will be alleged that the advice would have been that Biman should not enter into the Variation Agreement but should instead pursue its rights against ATSO arising out of ATSO’s contravention in relation to the Master Licence Agreement.
By letter dated 13 November 2002 the solicitors acting for the first to third respondents sought what might be termed “structural particulars” of the claim against the third respondent. The third respondent was said to be involved by its participation in the variation agreement in March 2000. The letter stated, amongst other things:
The cause of action which the Applicant purports to rely upon is not apparent to us from those paragraphs. Pursuant to the orders made by His Honour we ask you to spell the claim out by reference to the specific provisions of the Code and Trade Practices Act and facts upon which the applicant relies.
Secondly, in our view the Variation Agreement did not render your client a new “prospective franchisee” or a “franchisee proposing to renew or extend a franchise.” Nor does it render Rynas a “Franchisor”. The provisions of the Code upon which the Applicant applies to rely in relation to the Variation Agreement do not appear to us to operate as claimed. We invite you to explain the basis of the allegations made against our client in that regard.
To this the applicant responded shortly thereafter:
The cause of action pleaded against Rynas arises from the contravention of section 51AD of the Trade Practices Act 1974 as set out in paragraph 16 of the Amended Statement of Claim. We do not accept your comments concerning the Variation Agreement. It will be contended that the Variation Agreement (and in particular clause 6) brought into existence a relationship of franchisor and franchisee between Rynas and Biman, and accordingly that entry into the Variation Agreement subjected Rynas to the obligations imposed by the Code.
We should also point out that even if this contention is unsuccessful, if our client is successful against ATSO or ATS it will seek relief under section 87(2)(a) in relation to the Variation Agreement as a ‘collateral arrangement’ and the joinder of Rynas is appropriate on that additional basis.
We do not agree with your observations of the proceedings of 12 November 2003 contained in the penultimate paragraph of your letter. As we understand it, the discussion concerning security for costs, which took place on that occasion related to security for the Fourth Respondent’s costs. We understand from your letter dated 11 November 2002 that your clients have sought security for estimated costs of $30,000. We have sought our client’s instructions on this matter and anticipate being in a position to respond before 26 November 2002.
The first to third respondents sought further particulars by letter of their solicitors dated 10 February 2003, by reference to the particulars provided in November and referred to at [27] above. The letter of 10 February 2003 was in the following terms:
We refer to the Amended Statement of Claim and the Applicant’s Statement of Particulars of Claim and request the following supplementary further and better particulars of the allegations made in it:
Paragraph 16 (paragraph 1 of the Applicant’s Statement of Particulars of Claim)
1.As to the conduct alleged in paragraph 16 please advise which specific disclosures the Applicant alleges were required pursuant to clauses 19.1 and 19.5 of the Code that, if made by the first respondent, would have revealed the matters described in 1(b) of the Applicant’s statement of particulars.
2.Apart from the allegation that “a substantial number of existing customers …….were dissatisfied with the service being provided” what other matters does the Applicant claim would have been disclosed by compliance by the first respondent with the Code which would have caused the Applicant not to have entered into the Master Licence.
3.Please specify the legal advice which the Applicant alleges in paragraph 1(c) of its statement of particulars it would have received which would have caused it not to enter into the Master Licence Agreement.
Paragraph 17 (paragraph 2 of the Applicant’s Statement of Particulars of Claim)
4.As to conduct alleged in paragraph 17 please advise which specific disclosures the Applicant alleges were required pursuant to the Code that, if made by the first respondent, would have revealed the matters described in 2(b) of the Applicant’s statement of particulars.
5.Please specify the legal advice which the Applicant alleges in paragraph 2(b) of its statement of particulars it would have received which would have caused it not to entered [sic] into the Variation Agreement.
The response to this letter was in a letter dated, 17 March 2003, in the following terms:
We refer to your letter dated 10 February 2003 seeking further particulars of the Amended Statement of Claim and reply as follows:
1.It will be alleged that the First Respondent represented to the Applicant prior to entry into the Master Licence Agreement that, among other things, it was realistic to expect sales in the range of $200,000 to $300,000 for the franchised business, Accordingly, the grounds of this estimate were required to be disclosed, including such matters as the frequency of renewals of subscriptions by customers, the first respondent’s expectations concerning renewals of the current customers and the level of complaints received by the first and second respondents from existing customers. These matters would have to be disclosed under 19.5(a) and 19.5(b) of Annexure 1 to the Code.
2.The answer to this question is not within the knowledge of the applicant. Further particulars will be provided in this regard following the completion of discovery.
3.This is properly a matter for evidence rather than particulars. It is alleged that the legal advice would have been such as to dissuade the applicant from entering into the Master Licence Agreement in its existing form.
4.We presume your reference to paragraph 2(b) of the Statement of Particulars is intended to be a reference to paragraph 2(a). So understood, the answer to this question is not within the knowledge of the applicant. Further particulars will be provided in this regard following the completion of discovery.
5.This is properly a matter for evidence rather than particulars. It is alleged that the legal advice would have been such as to dissuade the applicant from entering into the Variation Agreement in its existing form and would have led to the Applicant taking action as particularised in paragraph 2(b) of the Statement of Particulars.
It is not clear to me that the reference to 2(b) in [4] and [5] of the letter of 10 February was a mistake. In any event, that is where the supply of particulars rests.
The matter can be summed up as follows. There are triable issues pleaded as to whether the Master Licence Agreement and variation agreement were franchise agreements for the purposes of the Code. If they were, there have been contraventions of the Act because the disclosure and other requirements of the Code were not met. There is also a triable issue as to whether the revenue projections made orally were misleading or deceptive. The applicant has stated that had a disclosure statement been given and a certificate of independent advice required it would not have entered the agreements. That is said without knowing what would have been thrown up by the statement.
There are two applications before me. They have not been formalised by notices of motion. I dispensed with the need for such filing. They are as follows:
(a)The first to third respondents seek to strike out the parts of the FASC referred to at [17] above.
(b)The applicant seeks discovery of various documents, identified in its submissions, including documents relating to clauses of the Code.
It is plain that the applicant cannot state what would have been disclosed by the respondents had compliance with the Code been made. From that, the respondents say the applicant is fishing. It is said that the material facts are not pleaded and so the pleading is embarrassing. It is said that there have not been shown to be facts to “ground a suspicion of a good case”. The proceedings are essentially, it was said, speculative in nature. Reference was made to David Holdings Pty Ltd v Coles Myer Ltd (1993) ATPR 41-227; Davey v Bentinck [1893] 1 QB 185; Nixon v W Phelan & Son Pty Ltd [1959] VR 83; Nestle Australia Ltd v Commissioner of Taxation (1986) 10 FCR 78, 83; and WA Pines Pty Ltd v Bannerman (1980) 30 ALR 559, 567, 569.
I think these submissions pass over an important element of the pleading – that on the hypothesis that these agreements are franchise agreements, contraventions of the Act took place. The effect of them and the nature and extent of any remedy flowing therefrom is unclear. The applicant has said that there were misrepresentations, and has said that in any event it would not have proceeded if the regime of the Code had been followed. In those circumstances the inability of the applicant to tell the respondents what they, the respondents would have said in a document, if they had not (on this hypothesis) contravened the Act, does not make the case speculative.
Rather, the extent of liability (if any) in damages, perhaps additional bases for liability, and the nature of relief may be affected by the information, but the primary causes of action and complaints as to conduct are pleaded.
I do not think that the pleading should be struck out. To require the applicant to give particulars of what the respondent would have told it might be necessary if there was unable to be identified any contravention of the Act. Here that has been done. In these circumstances I do not propose to strike out the claim or any part of it.
As to discovery, debate took place around categories nominated by the applicant. Whilst that debate took place, I propose to order discovery freed of what has become a growing burden – the notion of party nominated categories. Categories were intended by Practice Note 14 to reduce, not provoke argument. As illustrated by the argument before me, that has often not been achieved.
I propose to order discovery of the following classes of documents for the reasons given below. The documents to be discovered are those of the kind, referred to in O 15 r 2(3) and (4). The discovery is otherwise to take place according to O 15 in respect of the following subjects:
(a)the negotiations, entry and variation of the pleaded agreements
This relates to matters directly in issue and should not be in any way oppressive.
(b)any disclosure document either prepared in draft or otherwise for any franchisee or prospective franchisee of the respondents or any of them for the business the subject of the Master Licence Agreement, in existence at 5 August 1999, 1 March 2000 and 3 March 2000.
This will throw up any cognate disclosure documents (if any) for the same business used or drafted in respect of the applicant or any other franchisee.
(c)concerning the subject matter of the following clauses of Annexure 1 to the Code in existence at 5 August 1999, 1 March 2000 and 3 March 2000:
2.4, 2.5, 2.6
3.1, 3.2
4.1, 4.2 and 4.3
5.1
6.1, 6.2 and 6.4
7.1
11.1 and 11.2
12.1
13.3
20.2This disclosure will give the applicant an understanding of matters which would or may have been disclosed to it. For the reasons already given, this is not speculative. On the hypothesis propounded by the FASC there is a contravention pleaded.
(d)any balance sheets, profit and loss accounts, cash flow statements, management accounts, or other accounts (however styled) including revenue or earnings statements or forecasts whether final or draft for the years or any part thereof 1998, 1999, and 2000.
These documents should be in existence and easily identifiable and bear upon the pleaded question of earnings.
(e)any letters or other documents constituting or recording complaints by customers of the Business dated or received in 1998, 1999 or 2000.
These documents should be in existence and easily identifiable and bear upon the pleaded question of earnings.
It may be that this is not an exhaustive body of production for the applicant’s purposes. However, I think it is adequate and appropriate for the current state of the proceedings. It may be that once evidence has been filed the question of specific discovery can be revisited.
No evidence was filed on behalf of any respondent identifying any oppression in complying with the discovery sought by the applicant. A submission was put that I should assume that the discovery sought would be oppressive. I do not think that in the absence of evidence I can or should do this. In any event, the discovery that I have ordered is somewhat narrower than that sought by the applicant.
The parties filed submissions on the proper scope and reach of s 23 of the Federal Court of Australia Act 1976 (Cth). I have not found it necessary to decide the matter by reference to s 23. However, the implied power given by that section is not irrelevant. The legislature has here decreed that in certain circumstances a notice of disclosure should be given. If, in contravention of the Act, disclosure has not been given, it becomes very difficult for any applicant to know what would have been the consequences of the undoubted contravention of the Act until such time as he, she or it obtains discovery of or access to the records of the party contravening the Act. There are or may be a number of ways of resolving such an issue. A multi-staged approach to the hearing may be one alternative. However, for the avoidance, in the long run, of unnecessary costs I do not think it inappropriate to require the production of documents pursuant to O 15 in circumstances where, on one hypothesis of the pleading, a contravention of the Act has taken place. (Of course, by saying this, I have not purported to decide any question in the case; rather, if the various agreements were franchise agreements for the Code it is common ground that no disclosure was given.) In circumstances where the legislature has, in remedial or beneficial legislation, provided for the compulsory disclosure of information it would be somewhat strange and not a little inappropriate if the procedures of the Court were so construed as to limit access to documents relevant to the disclosure which on the hypothesis propounded should have been given, but which was not.
In circumstances where no oppression is proved and where the call for the documents can be limited in terms to the kind of documents which one would have expect to both be in existence and to be readily at hand, I see no reason why the applicant should not have orders along the lines that I have identified.
Whilst I have limited somewhat the scope of the documents called for by the applicant the applicant has been substantially successful in both matters the subject of debate. I think a fair attribution of costs would be that the first to third respondents pays 85% of the applicant’s costs of arguing both matters.
I will have the applicant bring in an order reflecting my views on discovery. I do this because it may be that the terminology to be employed needs to be refined by reference to the documents and issues in the case. This, however, is not an invitation to seek to expand any orders which I have made or to resuscitate arguments about the extent of what I have ordered. If there be any debate I will set the matter down for hearing at 9.30 am for no longer than twenty minutes.
Thus, the orders which I make are as follows:
1.I dismiss the motion of the first to third respondents to strike out paragraphs 7, 9A to 15A, 16, 17 and 19 and parts of paragraphs 18 and 20 of the Further Amended Statement of Claim.
2.I order that the applicant file and serve a draft minute of order embodying my reasons on the question of discovery.
3.I order the first to third respondents to pay 85% of the costs of the applicant in relation to the argument concerning the strike out of the statement of claim and the question of discovery by the respondents.
The parties are also required to relist the matter within seven days so that further directions to bring this matter to hearing can be made. Subject to hearing from the parties, the following is an appropriate regime: discovery of the respondents of the relevant documents is to be made within four weeks; the evidence of the applicants is to be filed within two months; and the respondents are to have six weeks thereafter to file their evidence. These matters can be formulated into short minutes, to be the subject of orders at the next directions hearing.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate:
Dated: 1 August 2003
Counsel for the Applicant: Mr G Parker Solicitor for the Applicant: Beswick Solicitors Counsel for the Respondents: Mr M Ashurst Solicitor for the first to third Respondents: Kemp Strang Solicitor for the fourth Respondent: Comlaw Barristers & Solicitors Date of Hearing: 14, 16 May 2003 Date of Judgment: 1 August 2003
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