FNH United Pty Ltd v United Petroleum Franchise Pty Ltd

[2024] VSC 366

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

GROUP PROCEEDINGS LIST

S ECI 2022 04261

FNH UNITED PTY LTD (ACN 639 802 798)	Plaintiffs
(and others according to the schedule)
v
UNITED PETROLEUM FRANCHISE PTY LTD (ACN 127 764 989)	Defendants
(and another according to the schedule)

---

JUDGE:	Nichols J
WHERE HELD:	Melbourne
DATE OF HEARING:	22 November 2023; Further submissions 13 February, 20 February, 27 February and 6 March 2024
DATE OF RULING:	26 June 2024
CASE MAY BE CITED AS:	FNH United Pty Ltd v United Petroleum Franchise Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 366

---

GROUP PROCEEDINGS — PRACTICE AND PROCEDURE — Application to join fifth plaintiff and third defendant — Joinder general principles — Whether there may exist a question arising out of or relating to or connected with any claim in the proceeding — Whether joinder is just and convenient — Where there exist common questions between current and proposed parties — Application for joinder granted — Boral Resources (Vic) Pty Ltd v Robak Engineering and Construction Pty Ltd [1999] VSCA 66 — S Pirrie Equities Pty Ltd v Venetian Media [2023] VSC 253 — Meyer Heine Line Pty Ltd v NM Insurance Pty Ltd [2023] VSC 430 — Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 9.06(b).

GROUP PROCEEDINGS — PRACTICE AND PROCEDURE — Pleadings — Application to amend statement of claim — Where proposed amendment anticipates joinder of new parties — Pleading of knowledge — Where allegations rolled up embarrassing and not properly particularised — Application to amend statement of claim in present form refused — Supreme Court (General Civil Procedure) Rules 2015 (Vic), Order 13.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr E Gisonda Mr B May	Levitt Robinson
For the First Defendant	Mr S Rosewarne KC with Ms A Batrouney	King & Wood Mallesons
For the Second Defendant	Mr N De Young KC with Mr D McAloon	Norton Rose Fulbright

HER HONOUR:

Part A — Introduction and Summary

1. This group proceeding is brought on behalf of franchisees who operated service station business, selling fuel and retail goods in the United Petroleum franchise network, under standard from Franchise Agreements with the first defendant (UPF).[1] The circumstances in which the defendants incorporated the ‘Pie Face’ business into the network, requiring franchisees to stock and sell baked goods under the Pie Face brand, are said to have involved contraventions of industry codes, misleading or deceptive conduct and unconscionable conduct by UPF,[2] to which the second defendant (Silver) is alleged to have been an accessory. 

   [1]The existing represented group comprises all persons who from any time during the period 19 October 2016 to 20 October 2022 who were franchisees in the ‘United Network’ pursuant to standard form franchise agreements with the first defendant, or who were guarantors of a franchisee’s obligations under those agreements.

   [2]Contrary to ss 18 and 21 of the Australian Consumer Law (ACL).

1. The first to fourth plaintiffs have applied to add to the proceeding a new plaintiff (Yug Sharma Pty Ltd).  Yug is intended to be a representative of a new sub‑group of group members, namely ‘Commission Agents’ who also operated service station businesses in the United Petroleum network but pursuant to standard form ‘Commission Agency’ agreements with United Petroleum Pty Ltd (UP).[3]  Yug wishes to bring claims against UP, whom the present plaintiffs seek to join as the third defendant, for that purpose.  Yug also seeks to bring claims against Sliver as an accessory to the various alleged breaches of obligation by UP.  If leave to join both Yug and UP to the proceeding is granted the proceeding will consist of two sub‑groups of group members, namely those represented by the first to fourth plaintiffs who sue UPF and Silver, and those represented by the (new) fifth plaintiff (Yug) who sue UP and Sliver.  The claims against Silver will be the link between the claims by the two groups.  Silver was a director of each of UPF and UP, and other companies said to comprise the United Petroleum Group.

   [3]The proposed amended group definition is intended to incorporate all persons who were commission agents in the United Network pursuant to standard form commission agency agreements with UP or who were guarantors of a commission agent’s obligations under those agreements, during the period between the date of filing of the claim and six years before the date of filing.  If leave were granted to file the claim on say 1 July 2024, the claim period would be 30 June 2018 to 1 July 2024.

1. The plaintiffs have applied to amend their statement of claim for the purposes of the joinder applications and to correct problems with the pleading raised by the existing defendants. UPF (the first defendant) opposes the joinder of Yug, on the basis that the criteria specified by r 9.06(b)(ii) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) are not satisfied.  It accepts that if the joinder of Yug is allowed it will follow that the joinder of UP as a third defendant should be permitted.

1. Silver submitted that there are fundamental difficulties with the proposed amendments and the existing pleading against him.  His position was that it would be open to the Court to decide the joinder issue and, if leave be granted, permit the filing of claim on the basis that Silver’s right to bring a subsequent strike‑out application be preserved.  However, the claims against Silver are the cornerstone of the joinder application, the alleged commonality between the franchisees and the commission agents being said to arise from their claims against him.  The better course is therefore to refuse leave to amend the claim in its present form and once the pleadings issues are resolved (if that is possible) to re‑consider the joinder application.  UPF itself, who is the party opposing joinder, did not submit that the application should be deferred until a revised pleading was filed.  It did not itself bring an application in respect of the pleadings.

1. This case has a complex history.  After the commencement of these proceedings in October 2022, Silver’s solicitors raised numerous criticisms of the formulation of the claim with the plaintiffs’ solicitors.  The parties agreed that the plaintiffs were to file any amended statement of claim by March 2023.  On 18 April 2023, the plaintiffs issued a summons seeking to amend the statement of claim and to join UP as the third defendant and filed a proposed amended pleading.  The application, listed for July 2023, did not proceed.  The parties exchanged extensive correspondence about the proposed pleading and joinder.

1. A central issue in dispute between UPF and the plaintiffs, was whether the plaintiffs were required to add a plaintiff who had a claim against UP.  The first to fourth plaintiffs do not have such a claim.  The plaintiffs resisted that contention for some time.  They did not meet the timetabling orders in respect of the application, which was vacated and re‑listed in September 2023.  A further proposed pleading was served 3 days before the hearing date, which included claims by a proposed new commission agent plaintiff against UP and Silver.  That hearing was vacated.  A dispute then arose about communications between representatives of the defendants and group members, and protocols were put in place by court order.  The proposed new commission agent withdrew his instructions.[4]  The plaintiffs’ solicitors in due course obtained instructions from Yug to apply to add it to the proceeding and filed the present version of the proposed amended statement of claim including claims for Yug.  Silver’s pleading objections include some issues raised in respect of earlier versions of the pleading which he says, persist.

   [4]FNH United Pty ltd v United Petroleum Franchise Pty Ltd [2023] VSC 608.

1. As mentioned, before the proposed joinder of a commission agent, the plaintiffs and UPF had been dispute about the satisfaction of the threshold requirements for the commencement a group proceeding specified by s 33C of the Supreme Court Act 1986 (Vic), in circumstances where the plaintiffs were seeking by their amended claim to pursue claims for commission agents. However, on this application that dispute was not pursued. In respect of the proposed pleading, UPF no longer submitted that the requirements of s 33C were not satisfied. UPF submitted that joinder should be refused because the requirements of r 9.06(b)(ii) were not satisfied and for discretionary reasons, but not because of the requirements imposed by s 33C.

1. For the reasons that follow, leave to join Yug as the fifth plaintiff will be granted.  Leave will be granted notwithstanding the inadequacies of the present pleading.  The plaintiffs will be permitted to file and serve an amended statement of claim for that purpose, but not in the form of the document considered on this application.  The amended claim must address the issues discussed in these reasons. 

1. It is convenient to deal first with the pleading issues.

Part B — Pleadings 

1. The parties were in agreement that although pleadings have not closed (and ordinarily leave would not be required to amend), where the plaintiffs have on foot an application for leave to join a party, it is open to the Court to consider that it is desirable, being just and efficient, to proceed as though leave was required to amend the pleading.[5]  If a proposed pleading would be liable to be struck out as defective the proposed pleading will not be allowed.[6] 

   [5]Hird v Allmine Group Pty Ltd [2021] VSC 125, [39]–[41].

   [6]ABL Nominees Pty Ltd v Mackenzie (No. 2) [2014] VSC 529, [18]; Business Service Brokers Pty Ltd v Optus Mobile Pty Ltd (No 3) [2022] VSC 283, [25].

1. On the hearing of the application the parties relied on numerous iterations of written submissions which addressed partly superseded versions of the claim. The plaintiffs’ submissions did not identify the ‘questions’ said to attract the operation of r 9.06(b)(ii) on which they relied for the joinder application. I directed that by further submissions the plaintiffs identify the relevant questions by reference to the paragraphs of the claim, that the defendant respond to those submissions and that Silver indicate which if any of the paragraphs of the pleading relied upon for the joinder application would in his submission be liable to be struck out, but without prejudice to his ability to seek further particulars of any allegation or bring a later application in respect of the pleading.  

1. Silver submitted that certain paragraphs of the pleading ought not be permitted (they would be liable to be struck out if contained in an existing pleading) because the particulars given did not support them.  Several of the objections applied to allegations concerning Silver’s knowledge.  It was also said that certain paragraphs were impermissibly rolled up and as a consequence, did not properly identify the material facts and particulars to support the allegations made.

1. The relevant principles are these:

(a)        The function of a pleading in civil proceedings is to alert the other party to the case they need to meet (and hence satisfy basic requirements of procedural fairness) and further, to define the precise issues for determination so that the court may conduct a fair trial.[7]  Pleadings, when well‑drawn, serve the overarching purpose of the Civil Procedure Act 2010 (Vic);[8]

[7]The function of defining issues for trial is required from an early stage.  Otherwise, discovery and other interlocutory process are likely to be misdirected: Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd & Ors [1996] ATPR 41‑522 at 42 (Burchett J).

[8]Multigroup Distribution Services Pty Ltd v TNT Australia Pty Ltd & Ors [1996] ATPR 41‑522.

(b)       Every pleading must contain in a summary form a statement of all material facts upon which the party relies, but not the evidence by which the facts are to be proved (r 13.02(1)(a));

(c)        Particulars are not intended to fill gaps in a deficient pleading.  They serve a distinct purpose – to enable the other party to plead, clarify and confine the scope of issues, and to avoid the other party being surprised at trial.[9]  They are intended to fill in the picture of the plaintiff’s cause of action (or defendant’s defence) with information sufficiently detailed to put the other party on guard as to the case that must be met.[10] 

[9]Rule 13.10; Wheelahan v City of Casey & Ors [2013] VSC 316 (Wheelahan), [25].

[10]Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, 286; Clarke v Great Southern Finance Pty Ltd (2010) 243 FLR 451, 455 [9] (Clarke).

(d)       it is not sufficient to simply plead a conclusion from unstated facts.  In this instance the pleading is embarrassing;[11] 

[11]Wheelahan, [25]; Gunns Limited v Marr (No 2) [2006] VSC 329, [10].

(e)        A pleading must be presented in an intelligible form – it must not be vague or inconsistent.  Thus a pleading is embarrassing within the meaning of r 23.02 when it places the opposite party in the position of not knowing what is alleged.  The fact that a pleading arises from a complex factual matrix does not detract from the pleading requirements.  To the contrary, the requirements become more poignant;[12]

[12]Wheelahan, [25].

(f)        A party who alleges a condition of mind must state in the pleading the material facts upon which the party relies.[13]  Knowledge may be pleaded by reference to facts and circumstances from which it may be inferred that the relevant party had the knowledge, provided the inferences are reasonably arguable.[14] 

[13]Rule 13.10(3)(b).

[14]Webster v Murray Goulburn Co-op Co. Ltd(No 2) [2017] FCA 1260, [6].

(g)       There are specific requirements applicable to allegations of knowledge where a defendant is alleged to have participated in a primary contravention.  The pleadings will necessarily engage with the requirements of the substantive law.  Relevantly, a person cannot be ‘knowingly concerned’ in a contravention unless he has knowledge of the essential facts constituting the contravention.[15]  That person must be an intentional participant in the contravention, the necessary intent being based upon knowledge of the essential elements of the contravention.[16]  ‘Knowledge’ means actual and not constructive or imputed knowledge.[17]  However, actual knowledge may be inferred from a combination of suspicious circumstances or by a failure to make an inquiry (‘wilful blindness’) if that is the only rational inference available.[18]  It is not necessary to establish that the person knows that the relevant facts are capable of characterisation in the language of the statute.[19]  The expression ‘concerned in’ requires conduct, by act or omission, which implicates or involves the alleged accessory in the contravention or shows a practical connection between the accessory and the contravention.[20] 

[15]Yorke v Lucas (1985) 158 CLR 661, 669–670.

[16]Yorke v Lucas (1985) 158 CLR 661, 669–670.

[17]Young Investments Group Pty Limited v Mann [2012] FCAFC 107, [11].

[18]Pereira v DPP (1988) 82 ALR 217, 220; ACCC v IMB Group Pty Ltd [2003] FCAFC 17, [135].

[19]Rural Press Ltd v ACCC (2003) 216 CLR 53, 74 [48].

[20]Australian Securities and Investments Commission v ActiveSuper Pty Ltd (in liq) [2015] FCA 342, [407]–[410].

(h)       There is an unresolved conflict in intermediate appellate court authority on the question of the extent of knowledge required to establish accessorial liability in the context of misrepresentation.  The narrow view is that knowledge that the representation is in fact false is required.  The wider view is that knowledge of facts which would have falsified the representation had they been adverted to, suffices.[21]  Recently, in Anchorage Capital the New South Wales Court of Appeal adopted the narrow view.[22]  In Productivity Partners[23] the Full Federal Court endorsed the ‘wider view’, stating that the phrase ‘knowledge of the falsity of the representation’ is more aptly a reference to ‘knowledge of the circumstances that render the representation false’.[24]  More recently, in Care A2 Plus Pty Ltd v Pichardo,[25] the New South Wales Court of Appeal observed that ‘a live debate remains as to whether persons can become accessorily liable on a wider basis, being that they have knowledge of the underlying facts which would have falsified the misrepresentation’, noting that in Anchorage Capital the Court ultimately concluded that only the ‘narrow view’ should be adopted.  It is unnecessary to resolve that conflict in this case.[26] 

[21]Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88 (Anchorage Capital), [329].

[22]Anchorage Capital, [342]–[343].

[23]Productivity Partners Pty Ltd (trading as Captain Cook College) v Australian Competition and Consumer Commissioner [2023] FCAFC 54 (Productivity Partners) — to which Anchorage Capital did not refer.

[24]Productivity Partners, [302]–[306].

[25]Care A2 Plus Pty Ltd v Pichardo [2024] NSWCA 35, [121]–[122].

[26]The plaintiffs have pleaded their case on both bases in the alternative. 

(i)         A pleading which involves an allegation as serious as unconscionable conduct demands a particular degree of clarity and precision.  It is not enough to plead facts which expose unfairness or general and wide ranging conduct, nor is it enough for an applicant to plead a set of facts and a bare conclusion that what has taken place is unconscionable.  Each element of the cause of action of unconscionable conduct needs to be properly pleaded and particularised, and an applicant must explain why the facts and circumstances stated lead to the conclusion contended for, in a coherent way, anchored in the facts.  Thus, for the purposes of an allegation of unconscionable conduct in contravention of either s 20 or s 21 of the ACL, a pleading must elaborate the particular conduct which is said to give rise to the alleged unconscionability, as well as set out why that conduct is said to be unconscionable.[27] 

[27]JB Asset Management v LBA Capital Pty Ltd [2023] VSC 183, [36] citing Teddo Corporation Pty Ltd v Owners Corporations No 1 [2022] VSC 667, [53]–[58].

(j)         With respect to the pleading of the knowledge element in accessorial liability for statutory unconscionability, as the Full Federal Court said in Stefanovski v Digital Central Australia (Assets) Pty Ltd:[28]

[28]Stefanovski v Digital Central Australia (Assets) Pty Ltd (2018) 368 ALR 607, 628 [71].

… [W]here a claim is pursued that a person was “knowingly concerned” in unconscionable conduct in contravention of a legislative prohibition of that activity, particular difficulties arise. The existence of unconscionable conduct is often divined from all of the circumstances of a particular case, and especially, from the relationship between the entities involved. For a person to be liable as being “knowingly concerned” in such it would have to be pleaded and proved that they were aware of, at least, all of those circumstances. In a trial where the claim of unconscionability is based upon a breach of duty of good faith the applicant would have to put to the respondents that they were aware of the obligation of good faith and that the conduct on which they relied was in breach of that obligation.

(k)       In considering objections on the ground of embarrassment (as the Victorian Court of Appeal said in Uber Australia Pty Ltd v Andrianakis):[29]

[29]Uber Australia Pty Ltd v Andrianakis (2020) 61 VR 580, 600–01 [52]–[53], and the cases cited there.

The Court should stand back and consider the pleading as a whole and in that light ask: does the case alleged give clear notice of the case to be met at trial?

This modern approach to applications to strike out pleadings on the ground that they are embarrassing is reflected in this Court’s decision in CA Ballan, where the Court stated that, while important, pleadings are primarily used ‘to help the parties define the real issues in dispute’, while bearing in mind that pleadings are ‘procedural tools only’ (citations omitted);

(l)         the power to strike out a pleading is discretionary.  As a rule, the power will be exercised only when there is some substantial objection to the pleading complained of or some real embarrassment is shown.[30] 

[30]Clarke, 456 [11].

1. As will be seen, I have accepted many of Silver’s criticisms of the pleading.  The difficulties appear to stem in large measure from the generality with which the allegations are articulated and the absence of particulars referring even to the plaintiffs’ personal cases.  As a result, the pleading does not sufficiently ground the allegations in concrete facts.  The other essential problem is that several of the allegations have been particularised in a rolled up way and most have been particularised by cross‑reference to other paragraphs.  The result is ambiguity, confusion and unnecessary complexity. 

1. Notwithstanding that I have not upheld all of Silver’s complaints, the pleading in its present form will need to be re-drafted. 

1. Certain paragraphs of the claim about which complaints were made are in my view formulated sufficiently to convey the substance of the allegation and set out  material facts sufficiently to allow the defendant to plead.  That is subject in some instances to the provision of particulars (where indicated below) and in all instances to the requirement that the facts relied upon be stated in substance and not merely by cross‑reference to other paragraphs.  To be clear, this ruling is not intended to foreclose Silver seeking further particulars of any allegation in the statement of claim, once re‑formulated.  Specifically:

(a)        [49A]: the allegation that Silver had primary responsibility for negotiating the acquisition of the Pie Face franchise and intellectual property for the United Group, UFP and UP sufficiently states the material facts.

(b)       [52D]: This paragraph states as a general proposition that the United Petroleum Executive reported to and took direction from Silver and Eddie Hirsh, who were the directors of UPF and UP.  As a general proposition the plea is unobjectionable.  Later parts of the pleading identify relevant directions that were given by Silver. 

(c)        [52H]: the allegations concerning Silver’s access to, amendment of and approval of the Pie Face rollout schedule states the material facts at a general level but with enough particularity that the allegation is capable of being clearly understood. 

(d)       [66P]: The allegation that at all material times a ‘pricing matrix’ for a stock category had to be approved by Silver or a member of the United Group management acting on his instructions, sufficiently states the material facts.

(e)        [76E]: It is alleged (at paras 76C and D) that the surveillance team reported any failure to comply with Pie Face site directions to the United Petroleum Executive and if a breach were discovered a termination or breach notice to the relevant franchisee or commission agent could result.  At para 76E it is alleged that termination notices were approved by Silver prior to issue.  I accept that the issue of termination notices must necessarily have occurred as individual instances.  However, an allegation to the effect that it was the general business practice within UPF and UP for Silver to approve notices of termination prior to their being issued (were that the case) would not be inherently embarrassing.  The complaint about this paragraph is that no particulars are given.  Particulars of this allegation must be provided.

(f)        [289]: It is alleged that Silver was responsible for negotiating the acquisition of the Pie Face franchise on behalf of the United Group and ‘installing the franchise into sites in the United Network’.  By way of particulars it is said that Silver was one of the two directors of all companies in the United Group and as such it can be inferred that the acquisition of the Pie Face franchise was with his approval;[31] that with respect to the allocation of board responsibility of companies within the United Group including UPF and UP, Silver ‘predominantly’ gave instructions and directions to the United Petroleum Executive and Managers employed by UPF and UP with respect to the retail and convenience store offering of sites within the United Network, which included the ongoing implantation and ongoing management of the Pie Face franchise within the United Network’[32] and that Silver amended and approved the Pie Face rollout schedule prior to it being actioned for any particular store within the network.[33]  I note that separately, it is alleged that after the acquisition of the Pie Face franchise UP and UPF began installing the franchise into sites throughout the network run by franchisees and commission agents.[34]  Silver’s objection is the particulars given do not support the allegations.  The allegation that Sliver was responsible for negotiation the acquisition of the franchise is plain, and sufficiently particularised.  The allegation that he was responsible for the installation the franchise into the network relies upon his position and authority within the United Group which included UPF and UP and that he personally amended and approved the Pie Face rollout schedule prior to its implementation in any store.  It is reasonably arguable that the fact alleged may be inferred from the matters particularised.  If any other facts are in fact relied upon they should be stated.

[31]Paragraph 49A.

[32]Paragraph 52F.

[33]Paragraph 52H.

[34]Paragraph 50.

(g)       [290]: it is alleged that Sliver was aware of the financial history of the Pie Face franchise at the time of its acquisition.  His knowledge is said to have arisen by reason of his having negotiated the acquisition of the franchise for United Group.  The specific matters the subject of the alleged knowledge are described.  The allegation of knowledge is sufficiently pleaded to enable the defendant to understand the case and to responsively plead.

(h)       [291]–[292]: It is alleged that throughout the relevant periods Silver was aware of the franchise and commission agency agreements, disclosure documents and operations manuals, and that those documents made no reference to the Pie Face franchise, and to the various directions and requirements in respect of the Pie Face franchise alleged elsewhere in the claim.  By way of particulars it is said that lawyers engaged by the United Group drafted its franchise and commission agency agreements, pursuant to directions given by Silver.  The allegation in respect of Silver’s knowledge of the franchise and commission agency agreements is sufficiently pleaded and particularised.  The allegation in respect of the disclosure documents and manuals is not particularised at all.  Particulars in respect of those documents must be given.

(i)         [293]: It is alleged that Silver was ‘responsible for negotiating rebates from suppliers to the United Group, which rebates were received each time ‘UPF and/or UP’ ordered relevant stock.  The particulars to the allegation refer to numerous other paragraphs, including paragraphs 268 and 269 by which it is said that UPF and UP and other United Group companies themselves obtained rebates from suppliers and that prices for stock were set by agreement between UPF and UP and the suppliers.  Read with the particulars, the allegation is confusing and does not sufficiently put the defendant on notice of the case.  Proper particulars must be provided.

1. Objection is taken to a number of paragraphs on the basis that no specific instances of the conduct alleged have been given.  Many of the relevant paragraphs concern directions or instructions said to have been given to UPF and UP or to the United Petroleum Executive for implementation in the network.  In response the plaintiffs say that they have sufficiently described the directions and other conduct and that individual instances may be given at a later point in time, by way of evidence.

1. The extent to which it is necessary for the plaintiffs to identify specific instances of conduct in order for Silver to sensibly plead will depend in part on the nature of the conduct alleged.  Speaking abstractly at least, some directions might have been given by an instruction to adopt a generally applicable policy that required the business including all sites in the Network, to be conducted in a particular way (a business‑wide or system‑based direction).  Other directions might have been made individually on a case by case basis.  Some directions might reflect both individual and systemic elements.  All would require implementation on a site by site basis, through representatives of each of the relevant contracting parties, UPF and UP.

1. What is necessary is to make the nature of the case sufficiently plain so as to allow the defendants to plead and to define the issues in contest, grounding the pleading in concrete facts.  Most allegations in this claim are presently pleaded at a high level of generality.  Further, because of the adoption of the cross‑referencing technique, conclusions are at times inferred from unstated facts. 

1. Particulars in respect of the plaintiffs’ personal circumstances should at this juncture be apt to show the implementation of those directions in an illustrative way, sufficiently to allow the defendant to plead.  That is not to say that at a later time particulars ought not be given of the extent of implementation across the Network.  At present, the pleading (by and large) does not provide particulars even in respect of the plaintiffs’ own cases.

1. The allegations about the operation of the defendants’ business are relevant in this context.  In this case it is alleged that UP and UPF were members of the United Group which comprised at least 18 companies.  Silver was a director of every company; Silver and Hirsch were the only directors of UPF and UP.  UPF operated service stations via a network of licensed businesses operated by franchisees and UP was the contracting party for commission agents.  Although there is some ambiguity in the pleading[35] the United Network is said to comprise both franchisee and commission agent‑operated sites.  If sites run by commission agents were operated differently from franchisee sites in a way that is material to the facts in issue, so much does not appear on the face of the pleading.  The United Group is said to have operated in a particular way.  Franchisees and commission agents took direction from area managers who in turn took direction from state managers, who took direction from the United Petrolem Executive who reported to and took direction from Silver and Hirsch.  At board level, including within UP and UPF, it was Silver who ‘predominantly’ gave instructions to the Executive and Managers about the Pie Face franchise and retail and convenience store offerings.[36] 

   [35]See paragraph 8.

   [36]Paragraphs 52A–F.

1. As to the paragraphs in issue:

(a)        [66B]:  It is alleged that at leadership team meetings Silver directed the United Executive to increase the licence fee of individual commission agents, based on his expectation of their potential sales, without warning or consulting with them.  The directions are said to have been given from time to time throughout the period, to named executives.  It is said that the amount of each increase was at the discretion of Silver.  The plaintiffs say that they are unable to identify all of the individual increase by dates, amounts and agents.  However, no increases at all, are identified.  On its face this allegation concerns individual commission agencies and separate exercises of discretion by Silver.  Without particulars of any instances whatsoever, the allegation is embarrassing.  The paragraph must be properly particularised.

(b)       [75A]: It is alleged (at paragraph 75) that UPF and UP directed franchisees and commission agents as to how to display, retail and sell pie face stock (Pie Face site directions).  It is said that the directions were at times in the form of a planogram, at times in email form or at times conveyed verbally by UP and UPF representatives in site visits.  By paragraph 75A it is alleged that those directions were issued or caused by the United Petroleum Executive acting on instructions from Silver received at leadership team meetings or informal conferences.  The executives to whom the directions were given are named in the particulars, as is the substance of the instruction from Silver, namely to ensure that all sites within the United Network that were being allocated Pie Face stock had full display cabinets at all times so that no Pie Face product would appear to be low or out of stock.  Given the substance of the direction, it appears on the face of the pleading that the instructions by Silver were of a generic kind, applicable to the Network generally, but to be implemented by each of UPF and UP.  Subject to the provision of particulars concerning the plaintiffs’ personal cases where applicable (which will ground the allegations in specific facts), the material facts sufficiently put Silver on notice of the case being advanced, so as to allow him to plead.  Particulars in respect of the plaintiff(s) where applicable, must be provided.

(c)        [76AA]: It is alleged (at paragraph 76) that UPF and UP audited compliance of Pie Face sites with the Pie Face site directions, and by paragraph 76AA that the audits were issued or caused by the United Petroleum Executive acting on instructions from Silver received at leadership team meetings informal conferences.  The executives to whom the directions were given are named in the particulars, as is the substance of the directions, namely ‘to audit a franchisee or commission agent’s compliance with the planograms for any franchisee or commission agent [who] was deemed to be failing to comply with the Pie Face site directions’.  This allegation concerns directions given on an individual (site by site) basis.  Without particulars of any instances of instructions from Silver, even in respect of the plaintiffs’ personal cases, the allegation is embarrassing.  The paragraph must be properly particularised.

(d)       [76A]: It is alleged that following the acquisition of the Pie Face Franchise, Silver directed the installation of cameras into sites in the United Network to monitor compliance with the Pie Face site directions.  The substance of the directions and the names of the persons to whom the directions were given, are particularised.  The substance of the direction was ‘to install cameras within sites in the United Network into which the Pie Face franchise was to be installed, and to ensure those camera faced locations that would display Pie Face stock’.  The allegations reads on its face as appliable to the network generally.  The material facts are sufficiently stated to put the defendant on notice of the case being advanced.

(e)        [77B, D, E]: It is alleged (at paragraphs 77–77A) that from time to time, representatives of UP and UPF ordered Pie Face stock from suppliers in quantities that UP and UPF determined, to be allocated and sent to franchisees and commission agents.  Prior to allocation, lists of allocated stock were prepared by a member of senior management of the United Group.  By paragraphs 77B, D and E it is alleged that throughout the relevant periods lists of allocated stock were provided to Silver for approval (77B); Silver directed the United Petroleum Executive to issue allocated stock throughout the network (77D).  The particulars set out the substance of the directions (namely, to allocate Pie Face stock in the possession of United throughout the United Network and to ensure that all stores that contained a Pie Face franchise stocked the full range of Pie Face products), to whom they were given and how they were given (orally, at leadership team meetings).  It is then alleged  that the United Petroleum Executive issued the allocated stock throughout the United Network upon the direction of Silver, by the CEO directing state managers and area managers to issue the stock throughout the network (77E).

(f)        The allegation at paragraph 77B appears to be directed to a generally applicable practice of obtaining approvals although it is not entirely clear.  That issue should be clarified in the pleading.  The allegation concerns approvals made throughout each of the relevant periods.

(g)       The allegation at paragraph 77D appears to be directed to a general practice insofar as it concerns the requirement that all stores stock the full range of Pie Face products.  However, I infer that directions for the allocation of stock would have to occur from time to time and on a site by site basis.  If a substantive network practice is intended to be alleged it is not apparent.  The pleading does not specify any particular instance.  The paragraph requires further particularisation in respect of the directions.  Paragraph 77E should particularise the relevant allocations to the plaintiffs.  On the present pleading Silver could properly respond to the contention that he gave the ‘full range of stock’ direction but the pleading otherwise requires amendment in the respects discussed.  

(h)       [90A–B]: At paragraph 90 is alleged that UPF and UP at various times ordered retail stock in quantities determined by them and without request by franchisees and commission agents to be sent and allocated to franchisees and commission agents.  The allegation is put generally in those terms; specific orders are not particularised.  It is then alleged (at paragraphs 90A–B): that Silver directed the United Petroleum Executive to issue allocated retail stock throughout the United Network and that the Executive issued the stock throughout the network upon the direction of Silver.  It is said that the directions were given orally in leadership team meetings at the United Group headquarters, to the CEO and to the Chief Operating Officer (COO).  It is said that, ‘the directives were to allocate retail stock in the possession of United throughout the United Network’.  The allegation against UPF and UPF concerns orders placed from time to time.  The substance of the directions said to have been given by Silver is described in vague terms.  Without more, the allegation is not sufficiently particularised.  The plaintiffs must at least particularise their case with respect to directions concerning stock allocated to them.

(i)         [270 D and H]: These paragraphs concern Silver’s alleged responsibility for the amount of revenue derived by UP, UPF and the United Group from margins and rebates on stock.  It is necessary to describe their immediate context.  The unconscionable conduct claim includes allegations that revenue earned by UPF and UP by way of rebates from suppliers consequent upon orders placed by them for Pie Face and for retail stock to be allocated throughout the United Network.  It is said that the prices of that stock were set by agreement between UP and UPF and the relevant suppliers, at levels that would maximise the rebate that UPF and UP could obtain but without regard to the legitimate interests of franchisees and commission agents, who were required by UP and UPF to purchase the stock allocated to them.  It is alleged that the greater the amount of allocated stock, the greater the ‘revenue rebate stream’.[37]  A similar allegation is made in respect of the ‘margin revenue stream’.  It is alleged that the allocated Pie Face and retail stock was purchased from wholesalers by UPF and UP or a member of the United Group and allocated to franchisees and commission agents with UPF and UP adding a margin on the wholesale price of the goods without having regard to the legitimate interests of the franchisees and commission agents.  It is said that the greater the amount of allocated stock, the greater the ‘margin revenue stream’ to UPF and UP.  The prices, rebates, margins and income derived are not particularised; it is said that they will be given in evidence following discovery.  Against that background (at paragraphs 270D and H) it is alleged that Silver was responsible for the amount of the margin revenue stream and the amount of the rebate revenue stream  derived by UPF, UP and the United Group.  Silver’s responsibility is said to arise by reason of his having directed the United Petroleum Executive to issue the allocated retail stock throughout the network and approving the lists of allocated Pie Face stock, and the fact that at board level within UP and UPF, Silver ‘predominantly gave instructions and directions to the United Petroleum Executive and Managers employed by UP and UPF’ with respect to the retail and convenience store offerings of sites within the United Network, including as to the implementation and ongoing management of the Pie Face franchise within the network.  

[37]Paragraphs 266–270.

(j)         It is apparent that the amount of each revenue stream derived by members of the United Group was a function of both the margins and rebates agreed and set, and the volume of stock allocated.  It is alleged in each case that Silver directed the allocation of stock.  There, is however, no allegation that he was responsible for  setting margins.  Rather, it said[38] that UPF and UP added a margin on the wholesale prices.  At paragraph 293 it alleged that Silver was responsible for negotiating the rebates from suppliers to the United Group which were received each time UPF and UP ordered allocated retail or Pie Face stock, and from which the rebate revenue stream was derived.  The particulars to that allegation refer to things done by UPF and UP, to Silver directing the allocation of stock, and to Sliver’s role in the United Group.  Those particulars do not support the allegation that Silver himself negotiated rebates from suppliers.  In this respect the pleading is circular.  What remains is only the allegation that Silver directed the allocation of stock.  It is not  reasonably open to infer that Silver must have been responsible for the amounts of the margin or revenue streams simply by reason of the facts alleged.  These paragraph are later incorporated into the allegation that Silver was involved in the unconscionable conduct of the primary defendants.  It is necessary that the conduct said to be attributable to Silver be defined clearly and unambiguously.  The allegations at paragraphs 270A and 270D are ambiguous and must be properly pleaded and particularised.

[38]Paragraph 270C.

(k)       [270 H, L]: Similar allegations are made in respect of the ‘franchise fee revenue stream’ and the ‘commission agency licence fee revenue stream’.  The revenue streams were derived by reference to the franchise agreements and commission agency agreements.  It is alleged that under the franchise agreements UPF could increase the franchise service fee by a percentage of gross monthly revenue.  As noted earlier, Silver’s involvement in the fixing of fees is on its face an individual issue.  Whilst it might be that in each case the revenue was a function only of the amount of stock allocated, it is also said that the fees charged to agents and franchisees were ‘not reduced’ to take account of stock wastage.  Whether the contracts permitted or required that is not stated.  Silver’s involvement in that circumstance, if any, is not specified.  These paragraphs too, are later incorporated into the unconscionable conduct allegations.  It is necessary that the conduct said to be attributable to Silver be defined clearly and unambiguously.  On the whole these paragraphs attributing responsibility to Silver from the amount of the revenue streams are ambiguous and must be properly pleaded and particularised.

(l)         [284A,B]: It is alleged (at paragraph 284) that UPF and UP issued fines to franchisees and commission agents who were identified as failing to comply with UPF and UP[39] or for having sold stock purchased from suppliers other than retail suppliers, and that there was no contractual entitlement for UP or UPF to issue the fines.  It is then alleged that Silver directed the United Petroleum Executive to cause the fines to be issued and that as a result of those directions the Executive caused the fines to be issued.  The directions are said to have been given orally at leadership team meetings, to the CEO and COO.  Individual directions and fines are not particularised.  The issue of fines is, on its face, an individual issue.  If the plaintiffs in fact intend to allege something more, they need to do so explicitly.  The pleading in its current form does not sufficiently define the issues and must be properly pleaded and particularised.  Appropriate particulars should be given in respect of the directions by Silver and also as to the issuing of fines to the plaintiffs, if applicable.

[39]It is alleged that where fines were issued by a representative of UP, it was done with the authority of UPF.

(m)      [298]: It is alleged that Silver was aware of ‘the Retail Stock Wastage’, ‘the Pie Face Wastage’ and the ‘Pie Face Overheads’ that demonstrated the detrimental effect of the Allocated Retail Stock and Pie Face Stock and the Pie Face Franchise on the business of franchisees and commission agents.[40]  Allocated stock refers to stock ordered and allocated to franchisees and commission agents without their request in quantities not determined by them.  Wastage refers to stock not sold by its expiry dates, disposed of and recorded by franchisees and commission agents as ‘wastage’.  Pie Face overheads are particular types of costs incurred by franchisees and commission agents in connection with the Pie Face franchises.  By way of particulars of knowledge the plaintiffs rely (in summary) on Silver’s position and responsibilities within the companies (as set out above); the fact that Silver had access to internal systems and records that recorded gross sales, what stock was being sold or wasted and daily profitability of all sites within the United Network; the pricing matrix showing retail and wholesale prices and profit margin, and profit and loss statements for individual sites that were supplied on an ad hoc basis to the group Executive.  It is said that accordingly, Silver was in a position to assess whether franchisees and commission agents could be reasonably expected to sell and were selling allocated stock, and had access to and knowledge of profit and loss statements that demonstrated the detrimental effect of the alleged aspects of the franchise business.  It is also said that Silver attended certain meetings at which various matters were discussed.  Silver’s objection to paragraph 298 is that the matters relied upon only go to show that Sliver had means of knowledge or access to information, not that he in fact accessed that information or did know of things of alleged.

[40]The plaintiffs advised that ‘commission agents’ had been inadvertently omitted from paragraph 298.

(n)       The allegation relies on inferences of two kinds — first, that the material available to Silver demonstrated the conclusions alleged at paragraph 298 (the detrimental effect of the Allocated Retail Stock and Pie Face Stock and the Pie Face Franchise  on the business of franchisees).  The second is that Silver in fact accessed and assessed or drew inferences from the material available to him.  The plaintiffs correctly submit that knowledge may be particularised by inference from facts and circumstances provided the inferences are reasonably arguable.  However, the allegations made elsewhere in the pleading and relied upon as particulars to paragraph 298 are not themselves particularised so as to give details of what any of the material (such as wastage reports and profit and loss statements) showed or was capable of showing.  Because those earlier paragraphs are so generally put, mere reference to them does not itself show how the material available to Silver demonstrated the detrimental effect of the characteristics of the Pie Face franchise, or was capable of doing so.  What may be in fact be inferred from the available material is not said.  With that context it is significant that the pleading does not say that Silver accessed or assessed any particular material or what inferences were available from the material that was available to him.  The criticism of the paragraph is well founded.  Proper particulars of knowledge must be given.  There is a related issue that bedevils this paragraph.  The particulars are given in a rolled up fashion.  Rather than set out the inferences that may be drawn from particular facts, the paragraph merely cross‑references other paragraphs throughout the pleading.  It includes factual matters which themselves are particularised by reference to other paragraphs.  It leaves the reader to piece together a raft of allegations in an effort to discern what may be inferred from the facts to which reference is made.  The results are ambiguity, lack of clarity and a failure to clearly state how the inference of knowledge arises.  The style of pleading (which is adopted throughout) may have been intended to reduce the length of the pleading but it does not assist.  In its present form this paragraph is embarrassing and must be re‑pleaded.

(o)        [299]: it is alleged that throughout the relevant periods Silver caused UPF and UP do to specific things: to install the Pie Face franchise into sites in the United Network and maintain them; to order Pie Face stock and allocate it to franchisees and commission agents in order to benefit the United Group and himself (because of his controlling interest in UPF and UP) through the relevant revenue streams; to require franchisees and commission agents to pay for allocated stock, to comply with Pie Face site directions and undertake audits.

(p)       Particulars are given by cross‑refence to other paragraphs of the pleading.  They are given in a rolled up fashion for all allegations in this paragraph.  Those cross‑referenced paragraphs refer to Silver’s position within the United Group and to the chain of command within the United Group (from Silver to the Executive to state managers, area managers, then to franchisees and commission agents).  They refer to UP and UPF giving Pie Face site directions, to Pie Face audits having been caused by the Executive acting on instructions from Silver, to Silver having directed the United Executive to issue the allocated Pie Face and retail stock throughout the United Network.  They also refer to the allegations at paragraphs 266–270M which concern the various revenue streams.  Silver’s objection is that no specific conduct said to amount to ‘causing’ the conduct of UP and UPF, is particularised.  The real difficulty with the paragraphs is that they are particularised in a rolled up fashion.  Certain cross‑referenced paragraphs appear to support some allegations and not others.  As discussed earlier, some of the cross‑referenced paragraphs are sufficiently pleaded and others themselves required re‑pleading.  Each sub‑paragraph alleging that Silver caused UPF or UP to act as alleged, must be individually particularised to make plain what the case is in each instance.  If Silver’s role is to be inferred only from his position in the hierarchy that should be made clear.  If an inference is to be drawn from particular facts taken together they should be set out unambiguously.

1. The plaintiffs claim against the first defendant (and if permitted, the third defendant) that they made various representations concerning the Pie Face franchise, to franchisees and commission agents.  At paragraphs 300 to 300M it is variously alleged that Silver knew that the representations were made and that they were misleading or deceptive or that they were made without reasonable grounds.

1. The ‘Original Pie Face Profitable Franchise Representation’,[41] the ‘Future Pie Face Profitable Franchise Representation’,[42] the ‘Original Pie Face Market Demand Representation’,[43] the ‘Future Pie Face Market Demand Representation’[44] and the ‘Pie Face Increased Profit Representation’[45] concerned the viability or future viability of the Pie Face franchise — that ‘the franchise’ was or would be profitable; that there was or would be strong market demand for Pie Face products; that the costs to a franchisee or commission agents of retailing Pie Face products would in the ordinary course of business be exceeded by the corresponding revenue to be derived and so result in ‘increased profit’ for franchisees or agents.  The representations are all said to arise in the same way, namely that by consenting to the installation of the Pie Face franchise into sites in the United Network UPF and UP made the relevant representations.  It is said that the representation in each was implied in circumstances where a reasonable person in the position of a franchisee or commission agent would assume from the conduct of UPF or UP that in undertaking installations of the Pie Face franchise that it was or would be a profitable franchise; that there was or would be strong market demand for its profits and so on.  The representations are also said to have been conveyed by silence in circumstances in which UP and UPF undertook installations of the franchises but remained silent about the true state of affairs (the financial history of the franchise, its predicted profitability, the true market demand for its products, the likely costs of and revenue to be derived from retailing Pie Face products).

   [41]Paragraph 162.

   [42]Paragraph 168.

   [43]Paragraph 175.

   [44]Paragraph 181.

   [45]Paragraph 188.

1. It is said (at paragraphs 300, 300B, 300D, 300F, 300H) that Silver knew that those representations were made.  Silver submits that knowledge of the making of the representations cannot properly be inferred only from his directorship.  I agree.  The plaintiffs rely on the fact that Silver as one of two directors of each company, had primary responsibility for the retail and convenience store offering within the United Network, and no more.  It is not reasonably arguable that from those facts alone, it may be inferred that Silver knew that by installing Pie Face franchises UP and UPF were making the representations alleged.  To the extent the plaintiffs wish to contend that it was a necessary inference from the installation of the franchises that the matters alleged were represented by the principal parties and that it may be further inferred that Silver knew of those matters, the plaintiffs have not given the necessary particulars, assuming knowledge could be particularised in that way.  To the extent that the making of the representations is said to have been founded on silence where certain matters were not disclosed, it is not said that Silver knew that those matters were not disclosed.  Those paragraphs in their current form are embarrassing.  The basis of the knowledge alleged must be specifically particularised.

1. It is alleged (at paragraphs 300A and 300E) that Silver knew that the representations were misleading or deceptive or likely to be so; alternatively that he had knowledge of the facts that made the representations misleading or deceptive, alternatively that he was wilfully blind towards facts that gave the representations that character.  Where the representations were in respect of future matters it is alleged (at paragraphs 300C, 300G, 300I) that Silver knew that UP or UPF had no reasonable grounds for making the representation.  The plaintiffs’ case allows for the possibility that the broader or narrower view of what must be shown in respect of an accessory’s knowledge, might be shown to be correct.  The issue in contention was not in fact about the prevailing legal position (about which there is unresolved conflicting authority, as discussed).  It was about whether the matters to which the plaintiffs refer are properly capable of supporting the inferences of knowledge.

1. As to paragraph 300A it is specifically alleged by reason of the matters set out that Silver was aware of the true position.  The representation was that the Pie Face franchise was profitable immediately prior to its acquisition by the United Group.  It is alleged that Silver negotiated the acquisition of the franchise and was aware of its financial history at that time.  The ‘franchise’ in this context appears to connote the Pie Face franchise business in whatever form it was acquired by the would‑be franchisor (the United Group or on of its entities) as distinct from the business installed as a ‘franchise’ operated by a franchisee.  It is said that Sliver had responsibility for negotiating the acquisition of Pie Face for the United Group and that he was aware of its financial history at the time, including the facts set out at paragraph 300A (negative cashflow, amounts owing to unsecured creditors, liquidation).  Leaving to one side the limitations of that representation, it is reasonably arguable that the matters particularised support the alleged knowledge.  

1. As to paragraph 300E, the same particulars given for paragraph 300A are relied upon.  However, the representation in this case was that there was strong market demand for Pie Face products (prior to its acquisition by United Group).  The factual matters said to have been known by Silver say nothing of market demand for Pie Face products.  It is not said whether or why such knowledge could be inferred from knowledge of Pie Face’s historical performance under pervious ownership, at the time of acquisition.  The particulars are inadequate.  The same may be said of paragraph 300G which concerns Silver’s knowledge of fact that the ‘future market demand’ representation was not made on reasonable grounds.  The inadequacy is compounded because the representation concerns the then prospective market demand for the products.

1. At paragraph 300C it is said that Silver knew that UP and UPF had no reasonable grounds for making the ‘Future Pie Face Profitable Franchise Representation’.  The representation was that the Pie Face franchisee would be a profitable franchise.  It was said to be directed to franchises and commission agents.  Fairly read, it concerns profitability from a franchisee or commission agent perspective.  The same particulars given for paragraph 300A are relied upon.  It is not said whether and how it might be inferred from Silver’s knowledge of the historical financial performance of the Pie Face franchise immediately before its acquisition (which as I have said, connotes the business as a whole, acquired by the new franchisor) that Silver knew that the franchise would be profitable — after its acquisition by United Group and when installed into sites in its network. The particulars are inadequate.

1. At paragraph 300I it is alleged that Silver knew that UP and UPF had no reasonable grounds for making the ‘Pie Face Increased Profit Representation’.  The representation was that the cost to a franchisee or commission agent in the ordinary course of business would be exceeded by the revenue to be derived from retailing Pie Face products in the ordinary course of business and so result in ‘increased profit’ for the franchisee or agent.  The same particulars given for paragraph 300A are relied upon to support Silver’s alleged knowledge.  They are not reasonably capable of supporting the allegation.  Knowledge of the historical performance of the Pie Face franchise business in the hands of its previous owners, says nothing of what Silver knew about whether Pie Face franchises installed by UPF and UPF into sites in the United Network would generate revenue that would exceed the costs of franchisees and commission agents and so generate ‘increased profit’ for them (whatever ‘increased’ profit might mean). 

1. The ‘No Minimum Inventory’ representations, ‘No Purchase Obligation’ representations, ‘No Change’ representations, and ‘Stock Control’ representations each concern the obligations (or absence thereof) on franchisees and commission agents under their respective standard form contracts.  For example, it is alleged that the defendants impliedly represented that there would be no obligation on any franchisee or commission agent to maintain minimum inventory or to acquire goods and services as directed by UPF or UP, and that they would have the ability to control their own stock levels and not forced to pay for stock they did not order or need.  The representations are all said to have arisen in the same way, by reason of the conduct of UP and UPF in providing their franchisees and commission agents with their standard form franchise agreements and commission agency agreements.  It is said that the representations were implied in circumstances where a reasonable person would assume from being provided with the agreement that it would contain all information relevant to the operation of a site in the United Network (including information the subject of the representation).  It is also said that the representations were conveyed by silence in circumstances where UP and UPF did not disclose the true position (the requirements that were in fact imposed on franchisees and commission agents). 

1. It is alleged at paragraphs 300J, 300L, 300N and 300P that Silver knew that those representations had been made by UP and UPF.  In each case Silver’s knowledge is alleged to have arisen in the same way.  It is said that Sliver knew of the contents of franchise and commission agency agreements (he was involved in drafting them and it was his usual practice to execute them).  It is then said that Silver accordingly knew that those documents made no reference to [the various obligations the subject of the representations] and therefore represented that there would not be [an obligation on franchisees and agents, of the relevant kind]’.  In substance it is said that because Silver knew that the contracts did not mention the relevant obligations, he knew that the documents therefore represented that there were no such obligations imposed.  Silver submits that the matters particularised cannot support the alleged knowledge.  There is no difficulty with the contention that Silver knew the contents of the contract and by implication, what they did not contain.  It does not follow, however, that sufficient facts are alleged from which it might be inferred that Silver knew that by proffering the contracts UP and UPF made representations to franchisees about the absence of obligations not addressed in the documents.  The representations were said to have been implied in all the circumstances by reference to what a reasonable person would assume and by silence where the true position was not disclosed.  It may be possible to infer from a set of facts that a person knew that another person made an implied representation.  However, it is not alleged that Silver knew of the matters giving rise to the implication.  The pleading does not address the basis on which it is to be inferred that because Silver knew that the contracts did not include certain obligations that there was an implied representation to franchisees and commission agents about the non‑existence of such obligations.  The allegations of knowledge have not been sufficiently particularised.  

1. At paragraphs 300K, 300M, 300O and 300Q it is alleged that Silver knew that those representations were misleading or deceptive (adopting the three variations described earlier).  Silver’s knowledge is said to arise from his knowledge of the true position – namely that he knew that franchisees and commission agents would be required to maintain minimum amounts of inventory as directed by UP and UPF and would be obliged to purchase stock as directed by UPF and UP, to provide goods and services that did not form part of the range described in their agreements, and that they would not have the ability to control their own stock levels.  It is reasonably arguable that the knowledge alleged may be inferred from the fact stated in those paragraphs.

1. At paragraph 302 it is alleged that by reason of numerous matters set out in 22 sub‑paragraphs and the matters alleged at paragraphs 288 to 300Q, Silver aided, abetted, counselled or procured the contraventions of UPF and UP and/or was directly or indirectly, knowingly concerned in or party to the contraventions (and the plaintiffs and group members are accordingly entitled to recover the amount of their loss from Silver under s 236 of the ACL).  Silver submits that the allegation is defective because it is based on other allegations that are themselves devoid of proper particulars and is in a rolled up form that does not seek to identify the particular facts or circumstances said to support Silver’s involvement in the specific alleged contraventions by UPF and UP.  I agree.  Some but not all of the allegations incorporated into the referenced paragraphs required re‑pleading, as discussed earlier.  I also agree that the pleading is bad in form because it is rolled up.

1. The allegation as to knowing involvement (to use an umbrella term) must encompass and address both a practical connection between the accessory and the contravention and the relevant state of mind.  The material facts set out in the sub-paragraphs to paragraph 302 (and those incorporated by reference to paras 288 to 300Q which encompass the whole of the claim otherwise concerning Silver) are not organised by reference to the fourteen separate sets of contraventions (misrepresentations by UP and UPF).It is possible to read the pleading by creating a mental list of those allegations concerning Silver that appear to be relevant to particular contraventions.  That task should not be left to the reader.  The basis on which it is said that Silver participated in each contravention (i.e. each category of representation) should be separately identified, together with the relevant state of mind (to which reference might be legitimately made to the earlier paragraphs specifically addressing state of mind).

1. At paragraph 303 it is alleged that Silver had actual knowledge of or alternatively wilful blindness ‘towards the facts and circumstances set out in paragraphs 266 to 281 which made the conduct of UP and UPF pleaded at paragraphs 270 to 281 unconscionable within the meaning of s 21 of the ACL’.

1. Paragraphs 266 – 281 set out the ‘revenue stream’ allegations described earlier.  It will be recalled that in that part of the claim it is said that Silver was ‘responsible for’ the amount of the revenue streams.  Those parts of the claim require repleading or further particularisation in the respects discussed earlier.  Also in that part of the claim (in particular at paragraphs 272–281)  it is said that in allocating retail stock and Pie Face stock UPF and UP acted for the purpose of maximising the amount of profit that could be gained by them and the United Group.  It is said that the effect of their conduct on franchisees and commission agents was to require them to incur costs for products they did not order or need, to reduce their available cash flows, revenue and profit and to shift the relevant cost of overheads and business risk from UPF and UP to franchisees and commission agents and to provide UP and UPF with a revenue stream benefiting them at the expense of franchisees and commission agents.[46]  It is also said that the stock allocations and revenue stream benefitted Silver personally by reason of his indirect interest in UP and UPF.  It is alleged that UPF and UP were aware of those matters, and that by reason of the conduct alleged they conducted the business of the network in a manner that prioritised increasing the profit to be obtained by them and ultimately by Silver, to the disregard of the legitimate interests of franchisees and commission agents.[47]  The characterisation of that conduct and other conduct alleged elsewhere in the claim is addressed at paragraph 282 by reference to the non‑exclusive criteria for unconscionable conduct under s 21, set out at s 22 of the ACL.

   [46]Paragraphs 272–278, 280.

   [47]Paragraph 281.

1. By particulars to paragraph 303 it said that the requisite degree of knowledge can be inferred by reason of the matters set out in 11 sub‑paragraphs.  Those sub‑paragraphs reference matters pleaded earlier.  They include Silver’s role in the United Group, his access to information about profitability of sites and the like, his attendance at leadership meetings and two additional meetings.  The particulars are rolled up.  They do not without more, support the knowledge alleged.  I accept that knowledge may (indeed must in circumstances of this particular claim) be established and therefore pleaded by reference to a process of inference.  However, care has not been taken in this paragraph to set out the basis on which it is said that Silver had knowledge of the circumstances described at paragraphs 272–281 in particular, which articulate the core of the unconscionability claim.  The particulars to paragraph 303 are inadequate.

1. By paragraph 304 it is said that by reason of the matters set out in 21 sub‑paragraphs, Silver aided, abetted, counselled or procured the contraventions of UPF and UP (their unconscionable conduct) and/or was directly or indirectly, knowingly concerned in or party to the contraventions (and the plaintiffs and group members are accordingly entitled to recover the amount of their loss from Silver under s 236 of the ACL).  Silver submits that the allegation is defective because it is based on other allegations that are themselves devoid of proper particulars and is in a rolled up form that does not seek to identify the particular facts or circumstances said to support Silver’s involvement in the specific alleged contraventions by UPF and UP.  As noted, an allegation as to knowing involvement must address both a practical connection between the accessory and the contravention and the relevant state of mind.  The state of mind allegations have been addressed above, in the context of paragraph 303.  Paragraph 304 addresses Silver’s conduct by reference to earlier allegations – the fact that he directed or caused certain things to occur, gave approvals and was responsible for the amounts of the revenue streams.  For the reasons discussed above, some but not all of those earlier allegations require repleading or further particularisation.  As a result, paragraph 304 will require re‑casting.  I accept that the unconscionable conduct alleged against UPF and UP is said to consist of the imposition of a handful of requirements imposed on franchisees and commission agents for particular purposes and with particular effects.  As a result, the claim comprises several inter‑related elements.  So much is not unusual in a business unconscionability claim.  As a consequence, the claim against Silver as an accessory to or knowing participant in that conduct itself necessarily comprises several inter‑related elements.  That fact heightens rather than minimises the need for clarity in pleading and for connections between facts and inferences to be stated rather than assumed to have been alleged by the recitation of cross‑referenced paragraphs.  In its present form paragraph  304 is unclear and ambiguous and requires re‑pleading.

Part C — Joinder

Principles

1. The joinder of Yug is sought under r 9.06(b)(ii) which provides as follows:

At any stage of a proceeding the Court may order that –

…

(b)any of the following persons be added as a party –

…

(ii)a person between whom and any party to the proceeding there may exist a question arising out of, or relating to, or connected with, any claim in the proceeding which it is just and convenient to determine as between that person and that party as well as between the parties to the proceeding.

1. Elliot J helpfully summarised the requirements of the rule in these terms in Pirrie Equities:[48]

An applicant who seeks to invoke the Court’s jurisdiction under rule 9.06(b)(ii) must prove that:

(i)there are two entities, namely the person to be added and a party to the proceedings;

(ii)between the two entities there may exist a question arising out of or relating to or connected with any claim in the proceeding;

(iii)it is just and convenient to determine that question between the proposed party and the other party as well as between the parties to the proceeding.

[48]S Pirrie Equities Pty Ltd v Venetian Media Group Pty Ltd [2023] VSC 253 (Pirrie), [84].

1. Rule 9.06 is designed, amongst other things, to enhance the efficient and economic resolution of proceedings heard in the civil jurisdiction of this Court.[49]  A cardinal object of the rule is to avoid a multiplicity of proceedings.[50] 

   [49]Construction, Mining and Energy Union Board v Boral Resources Pty Ltd [2013] VSCA 378 [13].

   [50]Boral Resources (Vic) Pty ltd v Robak Engineering and Construction and Anor; FCH Consulting Pty Ltd Pty Ltd v Wimmera‑Mallee Rural Water Authority and Anor [1999] VSCA 66 (Boral v Robak), [5].

1. In their submissions the plaintiffs emphasised the proposition they took from the authorities that it is not a necessary prerequisite to the making of an order under r 9.02(b)(ii) that the question to which the rule refers ‘should have arisen’ between existing parties to the proceeding, and that it is sufficient that the question arises out of, relates to or is connected with any claim in the proceeding.  UPF submitted that it is not sufficient that there may exist a question between the party sought to be joined and a party to the proceeding that arises out of, relates to or is connected with a claim in the proceeding.  The authorities recognise that the question may not presently exist between the parties to the proceeding (it is sufficient that it may exist between them).  But the rule nevertheless requires that the same question may exist between both sets of persons (the person sought to be joined and an existing party, and also the existing parties to the proceeding). 

1. The leading authority remains that of the Victorian Court of Appeal in Boral Resources v Robak Engineering.[51]  It is instructive to refer to the reasoning in that case, and to its context.  There, the defendant[52] had applied under r 9.06(b)(ii) to join a third party to the proceeding as an additional defendant, against the wishes of the plaintiff. The trial judge had refused joinder on discretionary grounds. The plaintiff (Robak), who was the head contractor to its principal, had sub‑contracted parts of its concreting works to Foster Hall Pty Ltd, who had obtained concrete for the building project from Boral. Robak alleged that the concrete was defective but had sued only Boral. Boral said in its defence that if it had any liability to Robak, Foster Hall was also responsible for the loss claimed by Robak. Section 131 of the Building Act 1993 (Vic) had introduced proportionate liability in building actions, requiring that judgment against each defendant found to be jointly or severally liable for damages be apportioned between each defendant according to its responsibility for the loss. The Building Act precluded the defendants from claiming contribution from one another.  Third parties were not taken to be ‘defendants’ within the meaning of the Building Act.  Boral had joined Foster Hall only as a third party but wished also to join it as a defendant to the proceeding in order to bring it within the operation of the proportionate liability provisions.  Unless Foster Hall were joined as a defendant Boral would bear the whole of the liability for any award of damage in favour of the plaintiff subject to recovering contribution from Foster Hall in separate proceedings for contribution.  The purpose of seeking joinder was to enable Boral to accomplish in a proceeding commenced against it by Robak, what might be achieved as a result of a subsequent proceeding by it against Foster Hall.[53] 

   [51]Boral Resources (Vic) Pty ltd v Robak Engineering and Construction and Anor; FCH Consulting Pty Ltd Pty Ltd v Wimmera‑Mallee Rural Water Authority and Anor [1999] VSCA 66.

   [52]Boral v Robak dealt with two separate cases which both raised the same issue.  It is unnecessary to refer to both cases in order to describe the Court’s reasoning.

   [53]Boral v Robak, [6].

1. Before the joinder of the third party, its liability to the plaintiff was not raised on the pleading between the plaintiff and the defendant, at least not with any legal consequence.[54]  After the joinder, it would be raised.  As Chernov JA said,[55]

If Foster Hall were joined as defendant, the provisions of s 131(1) would operate to raise as between Robak and Boral, the extent of Foster Hall’s responsibility for the plaintiff’s damage. The same question, or course, already exists between Boral and Foster Hall.

[54]Boral v Robak, [3].

[55]Boral v Robak, [73].

1. Where proportionate liability was in issue and if joinder were effected, the question of the extent of the responsibility of each of Boral and Foster Hall (i.e. their respective responsibilities) would be in issue both between the plaintiff and Boral, and between the plaintiff and Foster Hall.

1. An issue considered on the appeal in respect of the application of r 9.06(b)(ii) was the fact that the question between the third party and the defendant was not, before joinder, raised on the pleadings between the plaintiff and the defendant. The Court decided that that fact did not preclude the operation of the rule. Batt JA explained the issue in these terms:[56]

I have, however, been concerned as I shall explain, whether the applications for joinder satisfy subpara (ii). In the proceeding brought by the Authority the question between the defendant and the third party is not at present in issue between the plaintiff and the defendant. In other words, the addition, if allowed, will bring the question into issue between the two groups of persons referred to in subpara. (ii).

[56]Boral v Robak, [20].

1. Batt JA went on to conclude that the fact that the question existing between Foster Hall and Boral was not in issue before the joinder (‘at present’) between the then existing parties to the proceeding, did not have the result that subparagraph (ii) of the rule was not satisfied.  His Honour said that requiring that the question existing between the proposed new defendant and the party applying for joinder should already exist in the proceeding between the plaintiff and the defendant, would undesirably fetter the operation of the rule.  In that context, Batt JA said (in a passage that is quoted by the plaintiff in this cases but without its context),[57]

‘I consider that the question need not exist in the proceeding constituted at the time of the application for addition. It is, for instance, sufficient that it be “connected with a claim” in the proceeding as so constituted. Questions of this kind are not limited to questions already in issue between the plaintiff and the defendant.

(emphasis added).

[57]Boral v Robak, [22].

1. The reasoning of Tadgell JA was to the same effect.  His Honour said that it was not a necessary prerequisite for the making of an order under the rule that the question to which the rule refers ‘should have arisen between existing parties to the proceeding’.  His Honour went on to say that,[58]

What D is required to show … is that there may exist between D and X[59] a question which (a) arises out of or relates to or is connected with any claim made in the proceeding; and (b) it is just and convenient to determine “as between” D and X “as well as between” D and P.  These are the expressed prerequisites for an order under the rule; and I discern neither need nor justification, as a matter of interpretation, to erect another. The last italicised words mean, in my view, that it is just and convenient to determine the question, not only as between D and X but also as between D and P, in the action that has been commenced by P.

The question that D seeks to have determined as between D and X appears to me in each case … to be one which at least arises out of the claim by P against D in the sense that it would not have arisen at all if P had not sued D. Moreover, it appears to me to be just and convenient in each case that the question of any liability of D and X respectively to P should be determined in P’s action not only as between D and X but also as between P and D.

(emphasis in original).

[58]Boral v Robak, [3]–[4].

[59]D refers to the defendant and X, to the proposed new defendant (the ‘person’ within the language of the Rule).

1. The issue with which the Court was concerned on the construction of the rule was a temporal one — whether the relevant question must exist in the proceeding as constituted before the joinder, between the existing parties.  The decision is not authority for the proposition that in order to attract the rule it is only necessary that the identified question or questions arise out of, relate to or are connected with a claim in the proceeding and that it is not necessary that once joined is effected that the question must arise for determination between the existing parties as well as between the person proposed to be joined and an existing party. As the language of r 9.06(b)(ii) makes clear, both requirements must be observed. To the extent the plaintiffs submitted otherwise I reject those submissions. The remaining first‑instance decisions to which the parties referred were not to the contrary. The elements of the rule identified in Pirrie in the passage set out above are consistent with the reasons in Boral v Robak.[60]  

   [60]To the extent that the application of the Rule at paragraph [97] of the reasons in Pirrie might be relied upon to suggest that the only requirement of the Rule is that the identified question arise out of, relate to or be connected with a claim in the proceeding, such a reading would not be consistent with the parsing of the Rule in Pirrie at paragraph [84] or with the decision in Boral v Robak.  Pirrie was cited with agreement in Meyer Heine Line Pty Ltd v NM Insurance Pty Ltd [2023] VSC 430 (Meyer Heine).  The reasoning in MeyerHeine is consistent with the reasoning in Boral.  The plaintiff refers to Tred Nominees Pty Ltd v Albarran [2021] VSC 494. That case did not determine a relevant issue under r 9.06(b)(ii) and, in passing, gives only a partial statement of the requirements of the Rule.

1. In my view, the questions that the plaintiffs said arose in relation to both groups,[70] as expressed on the current form of the pleading fall broadly into three groups.  The groupings are for convenience only:

   [70]I have addressed only those questions identified by the plaintiff.  It is not the role of the Court to formulate different questions that might satisfy the Rule.

(a)        Some questions appear to require determination between both groups of parties and are at least related to or connected with the existing claims in the proceeding, within the meaning of the rule;

(b)       Some questions include elements that are likely to require determination between both groups of parties and are also connected or related to the claims in the proceeding, and are also closely tied to individual questions (such as implementation of system‑wide directions by UPF and UPF in respect of their franchisees and commission agents).  There is ambiguity in relation to some questions because of the lack of particularity of the present form of the pleading.

(c)        Some questions are distinct and relate only to one group.  Of these, a number raise what might be called ‘parallel’ questions, by which I mean that questions of substantially the same kind are raised on the claim by Yug against Silver, and the claim by the first to fourth plaintiffs against Silver.

1. Questions that arise for determination between both sets of parties and which are at least related to or connected with the existing claims in the proceeding, are as follows:

(a)        At paragraph 49A whether Silver had primary responsibility for negotiating the acquisition of the Pie Face franchise;

(b)       At paragraphs 52D–52F, 52I, 52J — whether the decision making hierarchy within the United Group, its regular holding of meetings and who was usually in attendance, was as alleged;

(c)        At paragraph 66F, 66M — whether Silver had access to internal software systems and to the ‘shared drive’;

(d)       At paragraph 66O, whether the Pricing Matrix was stored on the shared drive and available as alleged (on the assumption that there was a pricing matrix that covered both franchisee and commission agent sites, which is not said explicitly);

(e)        At paragraph 66P, whether the Pricing Matrix for a stock category had to be approved by Sliver or management acting on his instructions (on the assumption that there was a pricing matrix that covered both franchisee and commission agent sites);

(f)        At paragraph 76A, whether Silver directed the installation of cameras into sites in the United Network to monitor compliance with the Pie Face directions, and at paragraph 76B, that the cameras were monitored by Silver.  The allegations read on their face as appliable to the network generally.

(g)       At paragraph 88M, whether at a meeting held in 2018 (described as a ‘delivery aggregators meeting’) Silver directed members of the United Petroleum Executive ‘to increase the profit margin for the United Group at the expense of franchisees and commission agents’.  The profit margin refers in the context of paragraph 88, to the margins disclosed on a pricing matrix for products delivered through UberEats and MenuLog, said to have been tabled at the meeting.  Insofar as what Mr Silver said at the meeting, the issue appears on the face of the pleading to be ‘common’ between the two groups of parties.  How the pricing affected franchisees and commission agents may or may not be common to them; the pleading does not make that clear.  

(h)       At paragraph 145, whether Silver had an indirect interest in the Pie Face bakery (although this allegation does not appear to be made relevant to any claim).

(i)         At paragraph 288, whether Silver and Hirsch together exercised control over ‘the United Group’ by reason of their directorships of the relevant companies.

(j)         At paragraph 290, whether Silver was aware of the financial history of the Pie Face franchise at the time of its acquisition by the United Group.

1. Questions that include elements that are likely to require determination between both groups of parties (and are relevantly related or connected to claims in the proceeding, and therefore raise question within the meaning of the rule), and which are also closely tied to individual questions, or about which there is ambiguity because of the lack of particularity of the present form of the pleading, are as follows:

(a)        At 66F, 66K, 66KKK, whether Silver had access to records showing what stock was being sold at what price and margin, what stock was being wasted and the daily profitability of each site in the network.  If the records for franchisee and commission agent sites were maintained and accessible in a common way, the same question will arise between both groups of parties.

(b)       At paragraph 75A, whether Silver instructed the United Petroleum Executive to issue the Pie Face site directions.  The instructions may have been ‘common’, raising a question within the meaning of the rule.  The issue of the directions themselves must have occurred by each of UPF and UP on a site by site basis. 

(c)        At paragraph 77B, the question whether lists of stock were provided to Silver for approval appears to refer to a general practice relevant to the United Network.  It relates to approvals made from time to time throughout each of the periods.

(d)       At paragraph 77D, the form of direction to allocate Pie Face stock in the possession of the United Group throughout the network and ensure that all stores stocked a full range of Pie Face products appears in part to refer to a general practice (stores to stock the full range of products) that would raise questions that require determination between both groups of parties (i.e. a ‘question’ within the meaning of the rule).  The allocation of stock would have occurred from time to time and on a site by site basis.

(e)        At paragraphs 90A–B the directions given by Silver were, I infer, given from time to time.  It is not clear that a factual question requiring determination for both groups of parties would arise – the pleading is ambiguous.

(f)        At paragraph 269 it is alleged that the prices of allocated retail and Pie Face stock were ‘set by agreement between UPF and UP on the one part and the Retail Suppliers and the Pie Face Suppliers on the other’.  It is then said (at paragraph 270) that the prices were ‘set at a level so as to maximise the rebate that could be obtained by UPF and UP and the United Group without regard to the legitimate interests of the franchisees and commission agents’.[71]  There might be some ‘common’ questions of fact entailed in this allegation, but it is unclear.  UP and UPF are separate entities.  It is not alleged how they earned rebates and whether the acted jointly or otherwise, in dealing with suppliers.  The pleading requires clarification.

[71]The plaintiffs said that the pleading had inadvertently omitted reference to commission agents at para 270.

(g)       It is alleged at paragraphs 270D and 270H Silver ‘was responsible’ for the amount of the rebate revenue stream and the margin revenue stream  derived by UP, UPF and the United Group, by directing that certain things occur.  The occurrence of those things (the allocation of stock throughout the network) involves individual transactions.  The giving of instructions by Silver has been discussed above.  That issue might involve common factual questions.  Whether those things meant that Silver was responsible for the amounts of the margin and revenue streams will require, among other things, consideration of the conduct of UPF and UP respectively adding margins to the wholesale prices that they charged to their franchisees and commission agents.  These allegations require re‑pleading.  It is possible that some questions might require determination between both groups of parties.  It will necessarily also involve questions only relevant to each group, but that is all that can be said at this time.  

(h)       At paragraph 289 it is allege that Silver was ‘responsible’ for installing the Pie Face franchise into the sites in the United Network.[72]  It is also alleged at paragraph 50 that UPF and UP installed the Pie Face franchise into sites throughout the network run by franchisees and commission agents.  Determining whether Silver was ‘responsible’ for the installation will involve examining his dealings with UPF and UP.  That might involve some ‘common’ questions and will also involve questions only relevant to each group.

(i)         At paragraph 293 it is alleged that Silver was ‘responsible for negotiating rebates from suppliers to the United Group, which rebates were received each time ‘UPF and/or UP’ ordered relevant stock.  The particulars to the allegation refer to paragraphs by which it is alleged that UPF and UP and other United Group companies themselves obtained rebates from suppliers and that prices for stock were set by agreement between UPF and UP and the suppliers.  What Silver in fact did is not made clear.  It is possible that the allegation might raise for determination some questions between both groups of parties.  The pleading requires clarification.

[72]That paragraph also repeats an allegation made at paragraph 49A.

1. There are some questions that appear in fact to relate only to one group or which concern individual (site by site) issues, namely: 

(a)        [66B]: Silver’s directions to the executive to increase licence fees for individual commission agents;

(b)       [66S]: The lawyer’s drafting commission agency agreements and franchise agreements on Silver’s instructions;

(c)        [76AA]: Pie Face audits (which occurred a site by site basis) being issued or caused by the United Petroleum Executive acting on instructions from Silver;

(d)       [76E]: the approval of termination notices, which were issued to individual franchisees or commission agents;

(e)        [88]: Silver’s knowledge of profit and loss statements for franchisees and commission agents;

(f)        [143]: whether Silver was an ‘associate’ of UP;

(g)       [270L]: whether Silver was ‘responsible’ for the amount of the licence fee revenue stream (applicable only to commission agents) derived by UP and the United Group;

(h)       [270H]:  whether Silver was ‘responsible’ for the amount of the franchise fee revenue stream derived by UPF and the United Group;

(i)         [284A]: Silver’s direction to the United Petroleum Executive to issue fines to franchisees and commission agents.  The fines were issued from time to time in relation to individual franchisees and commission agents (paragraph 284).

(j)         [291]: whether Silver was aware of the franchise agreements and associated documents; and whether Silver was aware of the commission agency agreements and associated documents;

(k)       [294], [295]: Silver’s access to information that recorded the amount of allocated stock being sold by individual franchisees and by individual commission agents;

(l)         [296], [297]: Silver’s access to ‘wastage’ reports and profit and loss statements for individual sites;

(m)      [298]: whether Silver was ‘aware of ‘the Retail Stock Wastage’, ‘the Pie Face Wastage’ and the ‘Pie Face Overheads’ that demonstrated the detrimental effect of the Allocated Retail Stock and Pie Face Stock and the Pie Face Franchise  on the business of franchisees and commission agents.’  The businesses conducted at each site are individual.  Assuming they followed similar patterns, the businesses conducted by franchisees on the one hand and commission agents on the other, were governed by the franchise agreements and the commission agency agreements respectively.  If there are common factual questions arising in respect of these allegations the pleading does not make that clear.

(n)       [299]: whether Silver caused UPF and UP respectively, to so certain things.  The actions of Silver that are alleged to have been ‘causative’ are not clearly alleged and the paragraph requires repleading.  Whether UPF and UP were in fact caused to do certain things are questions that concern each of them individually.  What they did (allocating stock, auditing sites, requiring payment for stock and so on) was implemented on a site by site basis.  In the course of determining things some ‘common’ questions of fact might conceivably arise but the pleading does not make that clear;

(o)        [300], [300A], [300B], [300C], [300D], [300E], [300F], [300G], [300H], [300I], [300J], [300K], [300L], [300M], [300O], [300P], [300Q]: Whether Silver knew that the various representations alleged to have been made by UPF and UP were in fact made, and whether Silver knew that those representations were misleading or deceptive;

(p)       [302]: whether Silver was involved in the contraventions of UPF arising from its  alleged misrepresentations;

(q)       [302]: whether Silver was involved in the contraventions of UP arising from its alleged misrepresentations;

(r)        [303]: whether Silver knew of the facts and circumstances that made the conduct of UPF unconscionable;

(s)        [303]: whether Silver knew of the facts and circumstances that made the conduct of UP unconscionable;

(t)        [304]: whether Silver was involved in the contraventions of UPF by its alleged unconscionable conduct;

(u)       [304]: whether Silver was involved in the contraventions of UP by its alleged unconscionable conduct.

1. There may well be other ‘common’ and individual ‘questions’ identifiable on the pleading.  I have dealt with the questions that the plaintiffs formulated on this application.  

1. The first plaintiff and the third and fourth plaintiffs (in their capacities as trustees of the JJ Unit Trust) have claims against UP for the return of bank guarantees provided by them to UP as security under their franchise agreements with UPF.  The plaintiffs did not clearly rely on this claim for the purposes of the joinder application at the hearing of the application.  They accepted that the claim is not one that the plaintiff brings in a representative capacity because there are not 7 or more persons who share that claim.  That is so, notwithstanding that at paragraphs 287F–P a claim is made in generic terms for franchisees and commission agents.  That claim is not particularised.  Obviously, if there is no basis for those allegations other than in respect of specific persons, that claim, put in general terms, should not be maintained.  In later written submissions the plaintiffs said that they did rely on bank guarantee claims as a further reason why joinder should be permitted.  It was said that if joinder is permitted ‘UP will be required to give discovery in a single proceeding of all bank guarantees given to it, not only by franchisees (as limited as that number might be) but also by the potentially large number of commission agents, including discovery of document which reveal the bank guarantees that have been returned and not returned.’ The submission had the air of fishing for a claim. In those circumstances (and given the plaintiffs’ late change of position) I do not consider it appropriate to assess whether in respect of ‘bank guarantee’ claims, any questions might arise within the meaning of r 9.06(b)(ii) should a claim beyond the personal claims now advanced, be pleaded.

1. Despite the requirement that the claim be repleaded or re‑particularised in the respects discussed, it is tolerably clear that some questions that satisfy the requirements of the rule, leaving to one side momentarily, the ‘just and convenient’ requirement.  The application could not be rejected on the basis that there are no questions arising within the meaning of the rule.  

The ‘just and convenient’ requirement

1. The rule requires that it be just and convenient to determine the relevant questions between Yug and Silver as well as between the parties to the proceeding.

1. On the present pleading there are several relevant questions.  I accept UPF’s submission that some of them appear relatively inconsequential.  Some may prove to be more consequential.  They include the direction to ensure that all stores in the network stocked a full range of Pie Face products, approvals by Silver of the pricing matrix and the directions to increase the profit margins.

1. Whether it is ‘just and convenient’ to determine the questions in a single proceeding with the consequences that it entails, requires considering the circumstances of the proceeding more broadly. The first relevant circumstance is that notwithstanding the contest about the existence of questions that satisfy the rule, UPF did not pursue its earlier contention that the proceeding failed to meet the threshold requirements imposed by s 33C of the Supreme Court Act. The corollary was that it accepted that the proceeding as constituted in the current proposed amended statement of claim (with Yug and UP joined as parties) met those requirements. So much was clear. Counsel for UPF said that it would have been open for the plaintiffs to join Yug at the outset but they could not do it this time because of the requirements of the rule. There was implicitly a tension in the positions taken by UPF. In the circumstances UPF did not address in its submissions the relationship, if any, between the requirements of the rule and the requirements of s 33C. That issue did not arise on the application.

1. The second point is that although a number of the ‘questions’ identified by the plaintiffs did not in fact meet the requirements of the rule, they raised ‘common’ issues in a broader, non‑technical sense.  Within the context of the United Petroleum Group whose members (relevantly UP and UPF) were controlled by the same directors, it is alleged that each of UPF and UP engaged in conduct of the very same kind in relation to the sites in the United Network, concerning the installation of the Pie Face franchise and the imposition of requirements on franchisees and commission agents to stock and pay for Pie Face products, with the same effect.  The two sets of claims concerns two parts of the United Petroleum retail and convenience business that are alleged to have been operated in relevantly the same manner.  They did so of course, under different contractual arrangements.  Each group contracted with a different entity, but each of those entities was a member of the same corporate group controlled (on the plaintiffs’ case) by same directors.  In that broad sense I accept that the claims of the two groups arise in a common factual matrix. 

1. This point is underscored by the acceptance by UPF that if Yug were to issue a separate proceeding it should be managed together with the present proceeding and that both may be tried together, with the evidence in one taken as evidence in the other.  I accept that that fact does not compel the conclusion that joinder must be permitted (and nor is there any principle to that effect).  However, it supports rather than undermines the conclusion that it is just and convenient to permit joinder.

1. In light of those considerations, it open to conclude that it is just and convenient that the ‘questions’ that meet the requirements of r 9.06(b)(ii) be determined in a proceeding to which Yug is joined, subject to the relevant discretionary considerations. Those considerations may be regarded as informing the just and convenient requirement and also the court’s residual discretion.

1. UPF submitted that it would be better to refuse joinder but manage and hear the proceedings together.  This argument turned on questions of the added complexity and cost of joining a new party with a new set of claimants and the possibility of conflict between plaintiffs and sub‑groups.  UPF did not submit that it would be prejudiced by the joinder of Yug.  Its argument concentrated upon the possible consequences for the plaintiffs and group members, of joinder of a new plaintiff.

1. This is an unusual case in that the party resisting joinder was the defendant, who sought to resist it on the basis of factors that for the most part concerned what would be better for the plaintiffs and group members.  UPF accepted that if Yug were joined it would have no basis to resist the joinder of UP.  UPF and UP are related to one another and represented by the same solicitors, although UP was not heard on this application.  Self‑evidently, it would serve UP’s interests were UP not joined to the proceeding.  It would not be joined if the joinder of Yug were refused.  The existing plaintiffs themselves seek to join a new plaintiff who itself has consented to act in a representative capacity in these proceedings, if joined.

1. The ‘discretionary’ factors raised by the parties were not compelling one way or the other.  I accept that from the perspective of the existing plaintiffs their proceeding will be made more complex by joinder.  Looked at individually, two separate proceedings (one for franchisees and the other for commission agents) would each be ‘simpler’ than one proceeding for all claimants because each proceeding would address claims only for one group of claimants.  That must be balanced against the fact that all parties accept, and I consider, that if two proceedings were maintained (with a fresh proceeding issued by Yug), it would be convenient to manage and hear them together.  I would go further and say that assuming a separate proceeding were issued by Yug it would be inconvenient and duplicative of the resources of the Court and the parties for the cases not to be managed together, and inconvenient and possibly unfair to the matters to be heard separately, because of Silver’s role in each of them.  I say possibly unfair, because the precise issues to be determined at trial (assuming separate proceedings or a combined proceeding) have not yet been articulated with any degree of precision.  That would not in the ordinary course occur until later in the life of the proceedings.  

1. I accept that a ‘simpler’ proceeding may well be easier to settle than a complex proceeding.  But nothing more concrete can be said about that contention and nothing was put beyond the general proposition.  For example, UPF’s willingness to settle the franchisees’ proceeding even if it remains ‘uncomplicated’ by the addition of claims for commission agents, is (unsurprisingly) not known.  

1. The plaintiffs contended that a single proceeding would be less costly because interlocutory steps would not have to be duplicated.  There may be some truth in that but the submission was put very generally.  It can be accepted that a trial of a single proceeding involving all claimants would take longer to complete than a trial for only one group of claimants.  But it is probably unlikely that a joint trial of two separate proceedings would result in appreciable costs savings compared with a trial of a combined proceeding.

1. The fact that the existing plaintiffs have already prepared a joint pleading cannot legitimately amount to a consideration in favour of joinder.  That is a bootstraps argument (they have taken steps to support their application which mean that the application should be granted).  The claim will in any event require re‑pleading in the respects discussed.

1. Three things may be said of UPF’s submission that joinder might involve the two groups of plaintiffs in a conflict. First, I accept that in any group proceeding involving sub‑groups a possibility of conflict can be postulated. Second, the submission focused on responsibility for the costs incurred to date. Any costs imposed on group members by reason of their sharing of the plaintiff’s costs at the conclusion of the proceedings would require approval of the Court exercising its powers under s 33V of the Supreme Court Act.  In approving costs the Court has power to ensure that sub‑groups of group members are treated equitably.  Third, the submission was put at a high level of generality and involved speculation.  UPF speculated about what advice might or might not have been given to Yug about exposure to adverse costs.

1. On balance, although it is not the only available course, the plaintiffs have established that there is a basis to permit the joinder of Yug and the discretionary considerations upon which UPF relies are not sufficient to persuade me to the contrary.

1. I have given consideration to Silver’s submission that it would be preferable to defer the question of joinder until a new pleading is filed.  Although that course would have been open, I consider that allowing joinder on the basis of the issues exposed by the existing pleading will reduce the prospect of further disputation.

1. That result necessarily leaves open the possibility that Silver will agitate pleadings complaints once the new pleading has been delivered.  But the prospect of further complaints could not be eliminated even if I directed the plaintiffs to prepare a revised pleading before determining the joinder application.

1. The plaintiffs must take the opportunity to carefully consider the issues discussed in Part B of these reasons, and also the ambiguities of parts of the claim discussed in Part C.  They must state their case clearly, including with a view to avoiding further pleadings disputes.  The current proposed statement of claim has not been prepared by counsel (at least not as the names on the pleading reveal).  The plaintiffs do not appear to have been well served by the choice of their solicitors not to entrust that task to independent counsel.

Part D — Costs

1. Section 24(1) of the Supreme Court Act provides that unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid. The ordinary principles governing an award of costs are as follows:

(a)        the ordinary rule is that costs follow the event.

(b)       conduct on the part of a successful party in relation to the litigation, who would ordinarily be entitled to costs, may provide a reason to depart from the ordinary rule.

(c)        the ‘event’ may be contestable, and the contest usually arises where there is a multiplicity of issues upon which the parties have enjoyed mixed success.

(d)       inherent in an award of costs is recognition of the fact that the successful party has had the engage in a contest against the opposing party in order to obtain what has been won.  The question is ultimately one of fairness.

(e)        the ‘fairness’ inquiry also permits of consideration of responsibility for the incurring of costs.[73] 

[73]See the authorities cited in Allen v G8 Education Ltd (No. 3) [2022] VSC 302, [5].

1. ‘Costs thrown away’ are those costs that ‘have been reasonably incurred that relate to work done and wasted’.[74]  The question of whether costs are thrown away involves a causal enquiry.[75]  It is necessary to ask whether costs that were incurred would not have been incurred but for the relevant event (in this case, the amendment).[76] 

   [74]Cassimatis v Australian Securities and Investments Commission [2016] FCA 131 (Cassimatis), [56].

   [75]Cassimatis, [57].

   [76]Cassimatis, [57].

1. Silver seeks an order that the plaintiffs pay his costs of and incidental to his strike out application in respect of the original statement of claim and in considering and responding to previous iterations of the plaintiffs’ proposed pleading including the costs incurred in connection with submissions filed by Silver in August 2023 concerning the version of the pleading then propounded.

1. As Silver correctly submits, the plaintiffs conceded by March 2023 that an amended pleading was necessary.  The proposed amended claim was further revised after that date.  A number of the amendments were made in light of matters raised in Silver’s submissions.  The further revised statement of claim filed in June 2023 was overtaken by the current version of the proposed claim and Silver’s costs of considering and responding to it were wasted.  Furthermore, Silver has been substantially successful in pressing the criticisms of the current proposed statement of claim.

1. The plaintiffs did not resist paying Silver’s costs thrown away but did resist an order that they be taxed and payable forthwith.  Rule 63.20.1 provides that a party in whose favour an order for costs is made on an interlocutory application shall not tax those costs until the proceeding has concluded, unless the Court orders that the costs may be taxed immediately.  In Setka v Abbott MP (No 2)[77] the Victorian Court of Appeal said that the following factors may warrant an order for immediate taxation of costs:

   [77][2013] VSCA 376, [27].

(a)        where there is a prospect of considerable delay in the completion of the proceedings;

(b)       where the issue the subject of the interlocutory order is discrete from what will eventually require determination;

(c)        where the party against whom the order was made has been guilty of unsatisfactory conduct meaning conduct that was unreasonable, reprehensible or involving a want of competence or diligence.

1. Given the broad discretion conferred by r 63.20.1, those factors are not closed.  It is accepted that even if one of those factors is present, the court may decide that in the exercise of its discretion a departure from the rule ought not to be made.  In Setka v Abbot no order was made even though the plaintiff had been responsible for some delay. 

1. The plaintiffs submit that their conduct has not been unreasonable or reprehensible or involving a want of competence and diligence.  They received complaints about the pleading and made attempts to address those complaints.

1. I accept the submission that the plaintiffs’ ongoing failure to properly plead a claim against Silver has caused delay in the progress of the proceeding.  I have been critical of the plaintiffs’ solicitors’ decision not to file a pleading signed by counsel.  However, I also accept that the plaintiffs have made attempts to respond to the criticism made, albeit in many respects unsuccessfully.  Inadequacies in the pleadings cannot properly be described as reprehensible or involving unsatisfactory conduct in my view.  Given the history of this matter I am concerned that an order for immediate taxation would have a real prospect of requiring the diversion of resources away from the conduct of the proceeding proper.  I will refuse the order for immediate taxation.

1. UPF submitted that even if it were unsuccessful in resisting the application for joinder the plaintiffs ought pay UPF’s costs thrown away until at least 13 November 2023, being the date on which the plaintiffs filed their evidence and submissions in support of the summons.  That is because prior to that time UPF had been responding to an application to join UP that was premised on the erroneous assertion that it was not necessary to join a commission agent plaintiff.  Until September 2023 the plaintiffs did not seek to join a commission agent when serving proposed amended pleadings and material in support of their application to amend.  Indeed, they expressly took the position that it was not necessary to join a commission agent.  On 8 September 2023 the plaintiffs filed an affidavit attaching a proposed further amended pleading which included the claim of a commission agent plaintiff (Radhu).  The late service of the pleading resulted in the adjournment of the hearing of the summons.  On 15 September 2023 that proposed plaintiff withdrew and on 13 November the plaintiffs served their present pleading. 

1. The plaintiffs did resist UPF’s application for costs thrown away until 8 September 2023, and accepted that up until 8 September, they were seeking to join UP without also proposing the joinder of a named plaintiff.  However, beyond 8 September, when a named commission agent was being sought to be joined, the plaintiffs submit the costs should be costs in this application. 

1. I will order that the plaintiffs pay UPF’s costs thrown away by reason of the application until and including 8 September 2023.  The period between 8 September and 13 November 2023 was complicated by the withdrawal of the first proposed commission agent plaintiff.  UPF did not demonstrate the basis for the payment of its costs in respect of that withdrawal.  Otherwise, given the outcome of the application, the plaintiffs should have their costs of the application.  I will make the following orders:

(a)        the plaintiffs pay UPF’s costs thrown away by reason of the application incurred during the period up until and including 8 September 2023;

(b)       the parties’ costs in respect of the application incurred during the period 9 September 2023 up until and including 12 November 2023 be costs in cause;

(c)        UPF pay the plaintiffs’ costs of the application incurred during the period from 10 September 2023.

---

SCHEDULE OF PARTIES

S ECI 2022 04261
BETWEEN:
FNH UNITED PTY LTD (ACN 639 802 798)	First Plaintiff
and
FAHIM ISTANIKZAI	Second Plaintiff
and
JIGARKUMAR BHARATBHAI PATEL	Third Plaintiff
and
JAYDEEP DEVJIBHAI BHATTI	Fourth Plaintiff
and
YUG SHARMA PTY LTD (ACN 640 132 190)	Fifth Plaintiff
v
UNITED PETROLEUM FRANCHISE PTY LTD (ACN 127 764 989)	First Defendant
and
AVI SILVER	Second Defendant
and
UNITED PETROLEUM PTY LTD	Third Defendant