Egan v YENBASE Pty Ltd - [2001] WADC 193

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: EGAN & ANOR -v- YENBASE PTY LTD [2001] WADC 193

CORAM: REGISTRAR KINGSLEY

HEARD: 30 MAY 2001

DELIVERED : 13 AUGUST 2001

FILE NO/S: CIV 649 of 2000

BETWEEN: FRANCIS JOHN EGAN
First Plaintiff
EGAN HOLDINGS (WA) PTY LTD
Second Plaintiff
AND
YENBASE PTY LTD
Defendant

Catchwords:

Practice - Application for leave to substitute a defence - Turns on own facts

Legislation:

Nil

Result:

Leave granted

Representation:

Counsel:

First Plaintiff                :     Mr J R B Ley
Second Plaintiff            :     Mr J R B Ley
Defendant:     Dr J T Schoombee

Solicitors:

First Plaintiff                :     Arthur Auguste
Second Plaintiff            :     Arthur Auguste
Defendant:     Downings Legal

Case(s) referred to in judgment(s):

A N A C v Robinson [1997] JR 87

Case(s) also cited:

Nil

REGISTRAR KINGSLEY: In March 2001 on the plaintiff’s objections the defendant was refused leave to file and serve a substituted defence. Leave was given to the defendant to bring in a further minute of substituted defence. That now has been done in a minute dated 25 May 2001 but the plaintiff continues to have objection to the further minute of substituted defence ("the minute").
Relevantly the plaintiff’s plead at par 7 of the statement of clam an agreement made 25 September 1996, partly in writing and partly to be implied, between the plaintiffs and the defendant - and others - that the defendant would grant the plaintiffs two franchises. The plaintiff pleads to the extent the agreement is in writing it is constituted by a Deed dated 25 September 1996 and by the usual franchise agreement the defendant entered into with the franchisee. To the extent the agreement was implied, the implication arises from an express term of the deed that the plaintiffs would take the franchises on all the terms of a usual franchise agreement – subject to one limitation – and the fact that at 25 September 1996 there was no usual franchise agreement.
At par 8 of the statement of claim the plaintiff’s plead the term of the agreement as being 10 years and, at par 9, the plaintiff’s plead the defendant withdrew from the agreement and took back from the plaintiffs their right to conduct the franchises. By reason of that breach of agreement the plaintiffs allege they suffered damage.
By par 6 of the minute the defendant denies each allegation in par 7 of the statement of claim. The defendant goes on to plead that the plaintiffs and defendant entered into the franchise agreement on or about 25 September 1996 and that the agreement is constituted by two documents, firstly a deed dated 25 September 1996 and, secondly, by incorporation all the terms of the defendant’s usual written franchise agreement – other than one limitation.
At par 7 of the minute the defendant denies par 8 of the statement of claim and pleads that each of the two franchises were to be conducted for 10 years from 25 September 1996. At par 8 of the minute the defendant denies par 9 of the statement of claim and at par 8(b) goes on to plead specific issues as to the agreement. It is to par 8(b) that the plaintiff principally objects.
At par 8(b)(ii) the defendant pleads further and in the alternative it was an essential term or condition that the franchise must meet certain performance criteria. Paragraph 8(b)(i) had pleaded an express term of the agreement that if the franchisee failed to meet performance criteria the defendant had the right to terminate upon notice being given.
During the course of argument the defendants’ counsel amended par 8(b)(ii) to plead "it was an express term and an essential term."
In my opinion the amendment made by counsel for the defendant clearly expresses what the issue is. The defendant’s case is that the agreement contained an express term and essential term or condition that the franchisee meet the performance criteria in respect of both franchises. That is something the plaintiff can plead to and cannot be embarrassed.
At par 8(b)(iii) the defendant pleads the franchisees were required to meet a performance criteria that they had to earn a minimum gross amount of $25,000 per annum from the two franchises. At par 8(b)(vi) the defendant pleads that the gross earnings from the franchises were not meeting the performance criteria. But plaintiff’s counsel argues the defendant had not held the franchises for a year and accordingly subpar (vi) and (v) do not disclose a reasonable defence.
In effect defendant’s counsel submits that this is a matter of evidence – that the figures to the point of termination could be extrapolated to 12 months to demonstrate that the franchises could not earn $25,000 per annum. I am of the opinion that par 8(b)(vi) and (v) are not embarrassing to the plaintiff.
During the course of arguments an issue arose as to whether the defendant is obliged to provide particulars at this point. The defendant’s counsel argues the plaintiffs' bear the onus to show they were, at the material time, ready and willing to perform the contract. Plaintiffs’ counsel argues that the plaintiffs only bear an onus if the defendant alleges the plaintiffs were not ready and willing to perform the contract citing A N A C v Robinson [1997] JR 87. At p 91 Young CJ comments that a defendant must specifically plead the plaintiff was not ready, willing or able to perform their part of the contract otherwise it is assumed the plaintiff is ready, willing and able. But once a question is raised whether the plaintiff was ready, willing and able, the burden of proving readiness or willingness falls on the plaintiff.
In par 8(b)(vii) the defendant pleads the franchisee ("the plaintiffs") failed or refused to meet the performance criteria. In my opinion that is sufficient to pass the burden to the plaintiff and accordingly any particulars may be left until there is a reply.
At par 8(b)(vi) there was an issue as to the fact no date of service of the notice on the plaintiffs was specified. That has been cured by an amendment to the pleading from the Bar Table.
At par 8(b)(vii) the plaintiffs submit that they are embarrassed, as there are no particulars of what the plaintiffs could or should have done to remedy the alleged defaults. The issue is whether the plaintiffs are so embarrassed by this pleading that they are unaware of the case they have to meet. The pleading at par 8(b)(vi) sets out the terms of the default and at par 8(b)(vii) the subsequent result is pleaded – that is, a failure or refusal to meet the performance criteria. I am of the opinion that the pleading is not embarrassing.
At par 8(b)(viii) the defendant pleads the defendant duly terminated the entitlement of the plaintiffs to the two franchises. The plaintiff argues that the franchises could only be terminated where written notice is given and the default not cured within 30 days of the notice of breach. In this case the notices of breach were served on 2 June 1998 and the notices of termination were therefore served less then 30 days after service of the notice of breach. Thus, the plaintiff argues the notices do not disclose reasonable cause of defence.
The defendant’s counsel refers back to par 8(b)(vi) where the defendant pleads that notice of breach was given on 24 July 1997. That argument is not wholly untenable and therefore in my opinion there is an arguable defence at par 8(b)(vii).
Accordingly, I am of the opinion that the minute of substituted defence dated 25 May 2001, as amended during argument, is a pleading to which the plaintiff can respond. Within seven days of publication of these reasons the defendant to file and serve the substituted defence. There will be liberty to apply.
On the issue of costs I understood defendant’s counsel to say that the plaintiffs ought have the costs on the application. The costs will be the plaintiffs' costs, including costs reserved, such costs to be taxed in any event.