Dew & Associates Pty Ltd (ACN 009 633 952) & Anor v Angus & Robertson Bookworld Pty Ltd (ACN 060 424 124) Angus & Robertson Bookworld Pty Ltd (ACN 060 424 124) v Dew & Associates Pty Ltd (ACN 009 633 952) & Anor
[1996] FCA 1168
•12 Dec 1996
CATCHWORDS
IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY ) No. QG 77 of 1996
GENERAL DIVISION )
BETWEEN: DEW & ASSOCIATES PTY LIMITED (ACN 009 633 952)
First Applicant
AND: BARRY ERNEST DEW
Second Applicant
AND: ANGUS & ROBERTSON BOOKWORLD PTY LTD (ACN 060 424 124)
Respondent
AND: ANGUS & ROBERTSON BOOKWORLD PTY LTD (ACN 060 424 124)
Cross-Claimant
AND: DEW & ASSOCIATES PTY LIMITED (ACN 009 633 952)
First Cross-Respondent
AND: BARRY ERNEST DEW
Second Cross-Respondent
CORAM: Spender J
PLACE: Brisbane
DATE: 12 December 1996
MINUTES OF ORDER
THE COURT ORDERS THAT:
The motion filed 29 November 1996 be dismissed.
The costs of the motion be the respondent's costs in the principal proceedings.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
QUEENSLAND DISTRICT REGISTRY ) No. QG 77 of 1996
GENERAL DIVISION )
BETWEEN: DEW & ASSOCIATES PTY LIMITED (ACN 009 633 952)
First Applicant
AND: BARRY ERNEST DEW
Second Applicant
AND: ANGUS & ROBERTSON BOOKWORLD PTY LTD (ACN 060 424 124)
Respondent
AND: ANGUS & ROBERTSON BOOKWORLD PTY LTD (ACN 060 424 124)
Cross-Claimant
AND: DEW & ASSOCIATES PTY LIMITED (ACN 009 633 952)
First Cross-Respondent
AND: BARRY ERNEST DEW
Second Cross-Respondent
CORAM: Spender J
PLACE: Brisbane
DATE: 12 December 1996
REASONS FOR JUDGMENT
This is a notice of motion filed on 29 November 1996 by the applicant Dew and Associates Pty Limited ('Dew') for orders that paragraphs 4, 6(a) and 12 of the defence and paragraphs 13 to 35 of the cross-claim be struck out or such further or other orders or directions. As the detailed facts behind the pleadings illustrate, I have a large measure of sympathy for the position in which the applicant finds itself as a result of what is pleaded in paragraph 4(a) to (n) inclusive of the defence and cross-claim. It is at least
possible at the trial that the difficulties facing the applicant by what is pleaded in that paragraph will be more than matched by the difficulties of the respondent on trial in establishing the chain of title on which one of the alternative bases of its cross-claim is based.
It probably is useful, if somewhat lengthy, that I set out what is pleaded in paragraph 4 of the defence and cross-claim:
"As to paragraph 7:
(a)on or about 8 June 1990 Gordon and Gotch Ltd ("G & G") entered into an agreement with Brashs Pty Ltd ("Brashs") for the sale to Brashs of the assets of the business known as Angus & Robertson Bookshops ("the G & G agreement");
(b)on or about 29 June 1990, completion of the G & G agreement was effected;
(c)by the G & G agreement Brashs, inter alia, agreed to unconditionally assume in favour of the First Applicant ("Dew") and other franchisees of Angus & Robertson Bookshops all of the liabilities and obligations of G & G under certain franchise agreements, including the agreement pleaded in paragraph 5(b) of the Amended Statement of Claim ("the franchise agreement").
(d)from about 29 June 1990 to 30 November 1993, Brashs performed the obligations of G & G under the franchise agreement;
(e)by the G & G agreement, G & G assigned to Brashs the benefit of the franchise agreement and the guarantee by the Second Applicant referred to in paragraph 19 of the Amended Statement of Claim ("the guarantee");
(f)by a novation agreement entered into between Dew and Brashs on or about 1 December 1992 ("the novation agreement") Dew, inter alia, agreed and confirmed that as from 29 June
1990 the provisions of the franchise agreement applied and were binding upon Dew and Brashs as if Brashs had been named therein in the place of G & G.
(g)by the novation agreement and, or alternatively, the conduct of Brashs and Dew subsequent to 29 June 1990 in mutually assuming the benefit of the franchise agreement and performing obligations under the franchise agreement, inter alia, by Dew paying fees thereunder to Brashs, an assignment, or alternatively novation of the franchise agreement was effected;
(h)by a written sale agreement made in November 1993, the Respondent (formerly called Sesta Pty Ltd) purchased from Brashs the Angus and Robertson Bookshop business and all the assets thereof;
(i)in selling the business to the Respondent, Brashs assigned to the Respondent the benefit of the franchise agreement and the guarantee;
(j)by written notices dated 5 November 1993 from Brashs and Whitcoulls Group Ltd (the Respondent's ultimate holding company), Dew was given notice of the said sale;
(k)from about 1 December 1993, the Respondent assumed the rights and obligations of the franchisor described in the franchise agreement, with the knowledge and consent of the applications;
(l)accordingly Dew was, and remained, bound to perform its obligations pursuant to the franchise agreement until the date of its expiration, namely 5 December 2001;
(m)accordingly, the Respondent had (and has) the benefit of the guarantee of the Second Applicant securing performance by Dew of its obligations pursuant to the franchise agreement;
(n)the Respondent otherwise denies the allegations therein. "
What is apparent immediately from the pleading, in summary, is that the applicant was the franchisee of Gordon and Gotch Ltd. Gordon and Gotch Ltd in 1990 entered into an agreement with Brashs Pty Ltd ("Brashs").
It is asserted that by that agreement there was an assignment to Brashs of the benefit of the franchise agreement and the guarantee of the second applicant and that there was a novation agreement between Dew and Brashs on or about 1 December 1992 by which Dew agreed and confirmed that as and from 29 June 1990 the provisions of the earlier franchise agreement applied as between Dew and Brashs.
The difficulty for the applicant is also a difficulty for the respondent in that the agreement or agreements on which paragraphs (a) to (e) are predicated is not available to the respondent and consequently to the applicant. It has not been produced pursuant to O 15 r 10 of the Federal Court Rules, although the affidavit of Ian Morris Rosenfeld sworn 11 December 1996 frankly addresses the difficulty that the respondent has in the first instance in relation to the absence of that agreement, but also deposes to the steps that are being currently undertaken to obtain it.
While it is, as I say, understandable that the applicant sees difficulties in pleading to assertions concerning the terms of a document without knowing what in fact that document says, at the present stage of the litigation, the respondent has done the best it can. It may
be that at trial it will fail to establish what is asserted, in which case it will suffer the consequences.
As opposed to that, however, there is produced to the applicant in the principal proceedings a document which in my opinion provides a sufficient basis to resist the strike-out application based on the absence of the agreement in 1990 between Gordon and Gotch Ltd and Brashs.
That document, it must be confessed, has difficulties as well. It is headed:
"THIS NOVATION OF FRANCHISE AGREEMENT is made..."
and then the date is unexecuted but there is a stamp indicating 1 December 1992. The document commences:
"BETWEEN GORDON & GOTCH LIMITED of 25-37 Huntingdale Road, Burwood in the State of Victoria ("G & G") of the First Part
ANDBRASHS PTY LIMITED of 276 Collins Street, Melbourne in the State of Victoria ("Brashs") of the Second Part
ANDof ("Franchisee")
of the Third Part
ANDTHE PARTY (IF ANY) DESCRIBED IN PARAGRAPH 2 OF THE SCHEDULE ("the Guarantor") of the Fourth Part "
The recitals include the following:
"A. In this Agreement each of the following definitions shall have the meaning respectively assigned to it below:
...
"Sale Agreement" means the agreement for the sale of assets of the business known as Angus & Robertson Bookshops entered into on
8 June 1990 between G & G as vendor, Brashs as purchaser and Harper & Collins Publishers (Australia) Pty Limited.
...
C.By the Sale Agreement Brashs agreed to unconditionally assume in favour of the Franchisee all of the liabilities and obligations of G & G under the Franchise Agreement to be performed after the Effective Date and since the Effective Date Brashs have in fact performed all of the obligations of G & G under the Franchise Agreement. "
The body of the agreement commences:
"NOW THIS AGREEMENT WITNESSES AS FOLLOWS:
1.The parties hereto hereby mutually agree and confirm that as from the Effective Date the provisions of the Franchise Agreement shall be applied and be binding upon the Franchisee and Brashs as if Brashs had been named therein in the place and stead of G & G AND the Franchisee by its execution hereof hereby releases G & G as and from the Effective Date from all obligations and liabilities to the Franchisee under or arising from the Franchise Agreement. "
There is no guarantor named in the schedule but the execution page of that document indicates that the common seal of Brashs Pty Limited was affixed with the signatures of the Secretary and a Director of Brashs.
In addition, the execution page on the photocopy exhibited to an affidavit of Mr Rosenfeld and also exhibited to the affidavit of Neil Jolyon Breen filed on 29 November 1996 includes the following:
"THE COMMON SEAL OF Dew & Associates P/L was affixed by the authority of the Board of Directors in the presence of: "
And there follows a signature underneath which the legible words "Barry Ernest Dew" appear over the typewritten words
"(Name of Secretary/Director in full)". Further, under a signature which is above the words "(Signature of Director)"
there is "Mark Ernest Dew" in legible handwriting above the words "(Name of Director in full)".
The photocopy does not, to my inspection in any event, show a seal.
Consistent with the authorities as to the caution with which a strike-out application ought to be approached, it seems to me that it is at the least arguable that this document constitutes an acknowledgment by the applicant in the principal proceedings of the fact that after its execution Brashs was substituted for Gordon and Gotch Ltd as franchisor and that from the effective date of execution, the original franchise agreement was to operate as if Brashs had been the franchisor.
This, of course, may not be established at trial but at least it is arguable that the effect of that document is to that effect. If that is the case, then much of the difficulties by the missing agreement between Gordon and Gotch Ltd and Brashs is overcome. It is, of course, to be hoped that the original document or a copy of it will be able to be
obtained by avenues which are available to either the applicant or the respondent.
The balance of paragraph 4 concerns the arrangements that occurred between Brashs and the respondent. Those arrangements involved other parties as well and it is acknowledged by me that those other parties caused some difficulty for the respondent. It should be remembered nonetheless that the original franchise agreement, a copy of which is exhibit to Mr Breen's affidavit filed on 29 November 1996, indicates that the franchisor was Gordon and Gotch Ltd (trading as Angus and Robertson Bookshops) ("A and R") and in the agreement the definition clause says inter alia:
"Unless inconsistent with the context when used herein -
"A & R" includes its successors and assigns.
"A and R Bookshops" means retail bookshops operated by A & R and not its franchisees. "
Clause 15 contemplates that:
"A and R may at any time sell or transfer the business of A and R Bookshops... "
It seems to me, therefore, that cl 15 is not relevant.
The agreement for purchase of the business of 29 November 1993 has as its parties the following:
"BETWEEN BRASHS HOLDINGS LIMITED (ACN 004 276 172) having its registered office at 276 Collins Street Melbourne, Victoria 3000, Australia, BOOKWORLD STORES PTY LIMITED (ACN 010 909 047) having its registered office at [276 Collins Street, Melbourne, Victoria, 3000, Australia as trustee of the Herbert Dodd Unit Trust, BIXULO PTY LIMITED (ACN 003 027 807 having its registered office at 276 Collins Street, Melbourne, Victoria, 3000, Australia and BRASHS PTY LIMITED (ACN 004 054 808) having its registered office at 276 Collins Street, Melbourne, Victoria 3000 Australia (individually "Vendor" and collectively "Vendors")
ANDSESTA PTY LTD (ACN 006 424 124) having its registered office at Level 28, Rialto, 525 Collins Street, Melbourne, Victoria ("Purchaser")
ANDWHITCOULLS GROUP LIMITED a company incorporated in New Zealand having its registered office at Level 11, 48 Quay Street, Auckland, New Zealand ("Guarantor") "
The recitals commence:
"A. The Vendors carry on the business of wholesale and retail distribution and sale of and the franchising of the sale of books, and other publications and products under the names of "Angus & Robertson", "Bookworld", "Angus & Robertson Bookworld" and "Angus & Robertson The Bookshop" throughout Australia.
BThe Vendors have agreed to sell and the Purchaser has agreed to purchase the assets of the business on the following terms. "
In the interpretation clause:
""Assets" means the following assets of the Business:
...
(h)Franchise Agreements; and
(i)all other property and assets of the Vendor connected with the Business... "
Clause 1.2(k) says:
"In this agreement unless the contrary intention appears:
...
(k)a reference to "Vendor" is deemed to include all of the persons named as Vendor both jointly and severally; "
Clause 2.1 provides:
"The Vendors agree to sell and the Purchaser agrees to purchase the Business and the Assets for the Purchase Price and on the terms and conditions of this agreement with effect from the opening of business on the Effective Date. As a result of that sale and purchase the Purchaser will obtain the exclusive right to represent itself as carrying on the Business as the successor to the Vendors. "
Clause 16.1 and 16.2 are relevant on the strike-out application and I am sure will be even more relevant at the trial. Those clauses provide:
"CONTRACTS, INTELLECTUAL PROPERTY LICENCES AND FRANCHISE AGREEMENTS
16.1The Vendors must do everything necessary before or as soon as reasonably practicable after Completion to enable the Purchaser to obtain the full benefit of the Contracts, Intellectual Property Licences and the Franchise Agreements from the opening of business on the Effective Date. The Vendors must obtain a written assignment or novation of each Franchise Agreement (including any guarantee given by any person in respect of the obligations of the Franchisee under the Franchise Agreement) to the Purchaser as soon as is reasonably practicable after the Completion Date. The Vendors must also use their best endeavours to obtain the consent of the other parties to any Contracts and Intellectual Property Licences specified by
the Purchaser to the assignment of those Contracts and Intellectual Property Licences to the Purchaser or to the novation of those Contracts and Intellectual Property Licences. The Purchaser must assist the Vendors to obtain a novation of any of the Contracts and Intellectual Property Licences specified by the Vendors.
16.2From Completion the Purchaser accepts responsibility for the performance of the Contracts, Intellectual Property Licences and the Franchise Agreements as from the opening of business on the Effective Date. The Vendors must hold the benefit of any Contracts, Intellectual Property Licences and Franchise Agreements not assigned or novated on the Completion Date for the Purchaser and the Purchaser must properly perform the obligations of the Vendors under the Contracts, Intellectual Property Licences and Franchise Agreements on their behalf. "
In an appendix to that agreement, the "WARRANTIES, REPRESENTATIONS AND INDEMNITIES BY THE VENDORS" include a warranty:
"70. Where a Vendor is not an original party to a Franchise Agreement the Franchise Agreement has been validly assigned or novated to the Vendor. "
Schedule 14 to that agreement makes reference to a franchise at Alice Springs where the franchisee is described as B and M Dew. The agreement is said to be with Gordon and Gotch Ltd, the date of which is 12.12.86. The franchise referred to by those descriptions does not coincide with the franchise agreement that was executed in 1988 with Gordon and Gotch Ltd as the franchisor. Nonetheless, it seems to me that it is at least arguable at the trial that what is described
there is in truth a reference to the franchise agreement originally between the applicant and Gordon and Gotch Ltd in 1988, which again arguably was novated with Brashs assuming the obligations and duties of franchisor of Gordon and Gotch Ltd.
The application by the applicant is based on O 11 r 16 of the Federal Court Rules, which provides that:
"Where a pleading -
...
(b)has a tendency to cause prejudice, embarrassment or delay in the proceedings;
...
the Court may at any stage of the proceedings order that the whole or any part of the pleading be struck out. "
It is, as I have indicated, a power to be exercised sparingly. The power to strike out is primarily designed to ensure compliance with the rules or pleading.
A pleading is embarrassing in the technical sense if it is susceptible of various meanings: see State of Western Australia v Wardley Australia Limited (1991) 13 ATPR 41-130.
In Pan Continental Mining Limited v Posgold Investments Proprietary Limited (1994) 121 ALR 405, Beaumont J at 413 said:
"The court's power to deal with the present motions is found in O 11, r 16. For present purposes, the question is whether the matters
pleaded have a "tendency to cause prejudice, embarrassment or delay in the proceeding" or otherwise constitute an "abuse of the process of the Court". As Mason CJ and Gaudron J remind us (Banque Commerciale SA en Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279 at 286; 92 ALR 53 at 58):
'The function of pleadings is to state with sufficient clarity the case that must be met...In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. '
As a corollary of this principle, it is settled that a pleading must be framed with reasonable particularity: see Trade Practices Commission v David Jones (Australia) Pty Ltd (1985) 7 FCR 109 per Fisher J at 114; Charlie Carter Pty Ltd v Shop, Distributive and Allied Employees' Association of Western Australia (1987) 13 FCR 413 per French J at 417-18.
In my opinion, the general statements of principle made in Allied Mills are well established by authority and should be followed. It is true, however, that in Allied Mills itself, as well as in Korp and in Chow, the application of the general rule depended, in the end, upon an analysis of the pleadings in the light of the proper interpretation of the applicable legislation. "
In my opinion, while the difficult position in which both the applicant and the respondent are placed as a result of the inability to locate the original agreement or a copy of it between Gordon and Gotch Ltd and Brashs, the pleading is not embarrassing in the sense contemplated by the rule. The respondent has set out its case that there are difficulties facing it in the light of the documents on which it relies. That may be accepted.
Nonetheless, particularly in the light of the document which bears stamp 1 November 1992 and which on its face appears to be executed by either a secretary and director or two directors of the applicant, it seems to me that the case is not so unarguable as to warrant its striking out. The difficulties facing the applicant in respect of those pleadings are not difficulties of embarrassment. They are difficulties brought about by the fact that the document on which the respondent relies is not available to the applicant.
Directing attention to paragraphs 13 to 35 of the cross-claim and in particular to the alternative bases on which the cross-claim is based, again, it is clear, but for even stronger reasons, that the cross-claim in those paragraphs ought not be struck out. There is a meaningful difference in this case between a pleading which is not embarrassing in the strict sense but in respect of which the pleading party may have difficulties at the trial in the light of the documents on which that pleading is based, and a pleading which is embarrassing and which is such as to put the party requiring to plea to the pleading in a position where he does not know what is alleged against him and what he has to answer. I will not accede to the relief that is claimed in the motion.
I do, however, express a fervent hope that the matters that are referred to in the affidavit of Mr Rosenfeld
succeed in locating the primary original document. If, however, it is not located then the respondent relying on that document will have to face the difficulties that flow from its inability to be produced.
I dismiss the motion.
It seems to me that I ought to order the costs of that motion to be the respondent's costs in the principal proceedings.
I certify that this and the preceding fourteen (14) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.
Associate
Date: 12 December 1996
Counsel for the first and
second applicants : Mr D Cooper
instructed by : Neil Breen
Counsel for the respondent : Mr D M Logan
instructed by : Rigby Cooke
Date of Hearing : 12 December 1996
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