Global Food Retail Group Pte Ltd v Shahin Enterprises Pty Ltd - [2023] SASC 72

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal to a Single Judge)
GLOBAL FOOD RETAIL GROUP PTE LTD v SHAHIN ENTERPRISES PTY LTD
[2023] SASC 72
Judgment of the Honourable Justice McIntyre
11 May 2023
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SEPARATE DECISION OR DETERMINATION OF QUESTIONS AND CONSOLIDATION OF PROCEEDINGS - SEPARATE DECISION OR DETERMINATION - OF LIABILITY AND DAMAGES
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - WHEN APPEAL LIES - FROM SUPREME COURT - BY LEAVE OF COURT - INTERLOCUTORY ORDERS AND JUDGMENTS
The appellant appeals from an order of a Master of the Supreme Court that the issues of liability and quantum of loss are heard separately in two trials.
The appellant contends that leave to appeal should be granted in the interests of justice because the decision is attended with sufficient doubt to warrant its reconsideration on appeal, the decision raises an issue of principle in relation to the propriety of separate trials on liability and quantum where loss is an essential ingredient to the establishment of liability and the issue of whether any loss has been suffered at all is in contest, and allowing the decision to stand would cause the appellant substantial injustice by potentially permitting the respondent to defer proof of an essential element of its case.
The respondent submits that leave ought to be refused as this is a matter of practice and procedure which does not raise any issue of principle. The respondent argues that no injustice is occasioned because it is a purely procedural issue which does not operate to relieve the respondent from its obligation to establish every element of its case.
Held:
1. Leave is denied.
Uniform Civil Rules 2020 (SA) rr 1.5, 151.1(2), 213.1; Australian Consumer Law ss 18, 236; Australian Competition and Consumer Act 2010 (Cth) s 51ACB, referred to.
Commonwealth v Saadat [2019] SASCFC 124; Draoui v Le [2021] SASCA 33; Candetti Constructions Pty Ltd v M & I Samaras (No 1) Pty Ltd [2011] SASC 189; Ansett Transport Industries v Australian Federation of Air Pilots [1991] 2 VR 636; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; Abigroup Contractors Pty Ltd v Hardesty & Hanover International LLC [2008] SASC 369; Tepko Pty Ltd v Water Board (2001) 206 CLR 1, considered.

GLOBAL FOOD RETAIL GROUP PTE LTD v SHAHIN ENTERPRISES PTY LTD
[2023] SASC 72
Single Judge Appeal: Civil
McINTYRE J:
Introduction

The appellant, Global Food Retail Group Pte Ltd (GFRG), appeals from an order made by a Master of the Supreme Court on 22 November 2022 allowing the application of the respondent, Shahin Enterprises Pty Ltd (SEPL). The order sought by SEPL was that “there be decided at a first trial all issues of liability in the proceedings, to be followed by a second trial (if necessary) on issues of quantum of loss and any other relief.”[1]
[1] FDN 73.
This decision was interlocutory in nature and an appeal requires a grant of leave pursuant to rule 213.1 of the Uniform Civil Rules 2020 (SA) (UCR). For the reasons that follow I decline to grant leave.
Background facts
The factual background is set out in the Master’s reasons for decision dated 22 November 2022. In short, SEPL signed a multi-unit franchise agreement (MUFA) with Wendy’s Supa Sundaes Pty Ltd (WSS) on 14 August 2013. WSS granted rights to SEPL to open and operate Wendy’s outlets in its “On The Run” stores. The term of the MUFA is defined as seven years from 13 January 2014 which concluded on 12 January 2021. The renewal term is defined as an additional seven years. SEPL undertook to open a minimum of 25 stores by 31 October 2016 and 50 by 31 October 2021. In accordance with the agreement SEPL proceeded to set up Wendy’s outlets. In September 2014, WSS’s intellectual property was transferred to GFRG. On 2 July 2015, WSS was placed into administration by its directors.
On 23 December 2015, GFRG issued proceedings against SEPL. GFRG’s statement of claim alleges trademark infringement, passing off and misleading and deceptive conduct. SEPL filed a counterclaim by which it alleges that GFRG has contravened s 18 of the Australian Consumer Law (ACL) and s 51ACB of the Competition and Consumer Act 2010 (Cth). SEPL joined cross-respondents alleging accessorial liability in respect of these breaches. In addition, SEPL alleges that GFRG and the cross-respondents sought to induce or procure WSS to breach its contractual relationship with SEPL under the MUFA, and that they aided and abetted WSS to breach its obligations to SEPL under the Franchising Code.
Leave to appeal
The impugned decision was a discretionary decision made on a matter of practice and procedure. It is interlocutory in nature. Accordingly, leave is required to appeal the decision under UCR r 213.1.
Granting leave to appeal interlocutory decisions should be exercised with caution in light of the important legal policy considerations standing behind the requirement.[2] Such appeals invite the potential to create unnecessary delays, may result in disproportionate costs of litigation and the risk of judicial officers producing different results based idiosyncratic approaches to discretionary case management processes. These policy considerations are reflected in the objects of the UCR which are to “facilitate the just, efficient, timely, cost-effective and proportionate resolution or determination of the issues in proceedings governed by these Rules”.[3]The question of whether permission ought to be granted is discretionary. Factors to be considered in relation to a grant of leave are:
·whether the correctness of the decision sought to be impugned is attended by sufficient doubt as to warrant its being reconsidered on appeal;[4]
·whether allowing the decision to stand would result in substantial injustice to the appellant;[5]
·whether the issue is one of general importance as opposed to simply depending upon the facts of a particular case;[6]
·whether, when viewed objectively, the issue raised is one upon which reasonable minds may differ, or involves a difficult or complex question of law;[7] and
·whether the order has the effect of determining or altering the substantive rights of the parties as opposed to a matter of practice and procedure.[8]
[2]     Commonwealth v Saadat [2019] SASCFC 124 at [50].
[3]     UCR r 1.5.
[4]     Draoui v Le [2021] SASCA 33 at [60].
[5] Ibid.
[6]     Candetti Constructions Pty Ltd v M & I Samaras (No 1) Pty Ltd [2011] SASC 189 at [6].
[7] Ibid.
[8] Ibid.
SEPL argues that none of these matters supporting a grant of leave are present. On the other hand, GFRG contends that it is in the interests of justice that leave to appeal be granted, and the appeal be allowed, because:
·the decision is attended with sufficient doubt to warrant its reconsideration on appeal. GFRG contends that paragraph [31] of the decision is unclear. Specifically, it is said that it is not clear whether the issue of loss in its entirety was split off to a subsequent trial or, alternatively, whether the learned Master proceeded on the basis that the issue of loss can be presumed subject to proof of actual loss at a subsequent trial. GFRG contends that, in the circumstances of this matter, either view is erroneous.
·the decision raises an issue of principle in relation to the propriety of separate trials on liability and quantum where loss is an essential ingredient to the establishment of liability and where the issue of whether any loss has been suffered at all is in contest.
·allowing the decision to stand would cause substantial injustice to GFRG by potentially permitting SEPL to defer proof of an essential element of its case on liability where there is a real issue as to whether SEPL has suffered any loss at all.
Consideration
The proceedings have been on foot since 2015. No discovery has been made. Neither side has filed final pleadings nor served any expert reports. In August 2020, the parties agreed to limit the issues to be determined at trial to questions of liability with the question of quantum as to both the claim and counterclaim to be determined subsequently. No formal order was made but the agreement was recorded in a Record of Outcome dated 25 August 2020.
GFRG says that, as at this date, the issues arising on the counterclaim were limited to a specific alleged breach of the Franchise Code and a claim of misleading and deceptive conduct to the effect that WSS, by its conduct, represented that the MUFA would not be terminated and would be renewed for a further term for which it is claimed that GFRG and others were accessorily liable. GFRG contends that this situation changed significantly when SEPL filed and served the fourth counterclaim on 25 March 2021. That counterclaim included new causes of action alleging that GFRG’s conduct constituted the tort of inducing or procuring WSS to breach its contractual relationship with SEPL or, alternatively, that GFRG aided and abetted WSS to breach its obligations to SEPL arising under the Franchising Code and thereby the Competition and Consumer Act 2010 (Cth). GFRG contends that these new pleas give rise to a need to revisit the issue of separation of liability and quantum because the tortious claim now propounded includes loss as an essential element.
GFRG’s submissions in relation to the issue of principle and the issue of injustice are, to some extent, related. It is said that it is not just or convenient to remove the obligation on a party who propounds a cause of action of having to prove each of the elements of liability before coming to assess the loss. GFRG says that this is not an appropriate case in which to assume loss as in the case of Ansett Transport Industries v Australian Federation of Air Pilots.[9] GFRG contends that it was appropriate in that matter to infer that there would be losses but there is no such inference available in this matter in relation to the tort of inducing a breach of contract.
[9] [1991] 2 VR 636.
GFRG argues that neither SEPL nor any other entity has accounted for, or paid, franchising fees to any of the parties to the action since 2 July 2015. Any failure to provide franchising services would be acclaimed as against WSS, not the parties to the proceedings. No specific quantum of loss is alleged nor are the “direct damages” and “consequential losses” particularised in the statement of claim. GFRG says that direct losses must be assessed against the failure to pay any franchising fees such that if the alleged losses do not exceed the amount payable under the franchising fee, no loss has in fact been incurred in relation to the alleged tortious interference with contract. Further, it is said that the claim for loss of profit necessarily requires an accounting of both revenue and expenditure under the Wendy’s mark compared to the revenue and expenditure whilst trading under the Moe’s Dog & Shake mark, the intellectual property mark the Wendy’s stores were rebadged as after the franchise agreement ended. It is said that SEPL needs to quantify its loss in order to establish actual loss as an essential element of their cause of action on their counterclaim. In circumstances where SEPL has to quantify its loss, at least to some extent, there is no utility, no saving, and no benefit in separating quantum from liability as it will only increase the cost and complexity of the trial.
Finally, GFRG says that the decision of the Master and the ordering of separate trials infers that the Court will presume loss by SEPL. GFRG says that it is inappropriate for the Court to presume that loss has arisen when it is a fundamental issue in dispute between the parties. If loss is presumed at this stage of proceedings, it is said that this prejudices GFRG in their ability to obtain impartial justice.
SEPL on the other hand contends that the situation is not significantly different to the situation that applied at the time of the agreement for a split trial. SEPL submits that if the decision for a split trial, upon which all parties were proceeding, was reversed, then the proceedings would be bogged down in discovery about loss and damage. Extensive discovery would be required in relation to SEPL’s trading profits across several sites. Expert reports would need to cover the question of loss on all possible grounds for liability as opposed to a specific basis which would be established if SEPL was successful at the trial on liability.
SEPL says that leave ought to be refused as this is a matter of practice and procedure about the particular facts and circumstances of the case which does not raise any issue of principle. SEPL also says that no injustice is occasioned to GFRG because the impugned decision does no more than provide for separate trials for questions of liability and quantum, a purely procedural question that does not determine the substantive rights or obligations of the parties. The impugned decision does not operate to relieve SEPL from its obligation to establish every element of its case upon the crossclaim.
I do not accept the contention that the Master’s decision is attended by sufficient doubt to warrant its reconsideration. The learned Master said “I consider that liability can be determined subject to the finding of actual loss at a subsequent trial.”[10]This finding recognises that loss must be determined as an element of liability at the liability trial but that the quantum of the loss is to be determined at the quantum trial if liability is in fact established. The use of the term “actual loss” at paragraphs [31] and [33] of the impugned decision is, when taken in context, a reference to quantum. The Master further said that:[11]
…the quantum of any loss, indeed, the fact of loss itself will be almost impossible to determine until the issues of liability have been dealt with … the quantum of any loss will be affected by the success or otherwise of each of the competing claims.
[10] At [31].
[11] At [31].
This recognises that liability is to be determined at the first trial with the quantum of loss, if liability is established, to be determined at a second trial. It is implicit in the impugned decision that the learned Master accepted SEPL’s submissions that:
·the element of loss in the cause of action of the tort of inducing or procuring a breach of contract is not proof of an exact amount of loss but proof of any loss at all; and
·claims based on intentional torts are circumstances where a court is most likely to be able to infer damage.[12]
[12] Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (No 2) [1991] 2 VR 636 at 649.
Loss is an essential element of the tort of inducing breach of contract as contended by GFRG. However, prior to the filing of the fourth statement of counterclaim, it was also the case that loss was an element of GFRG’s claims in relation to the tort of passing off and for misleading and deceptive conduct under the ACL. Likewise, SEPL’s counterclaim has always included a claim for misleading and deceptive conduct under the ACL which requires proof of loss or damage in order to establish liability.[13] Accordingly, the addition of the new causes of action in the fourth iteration of the counterclaim have not materially altered the situation that existed at the time of the agreement for separate trials in August 2020.
[13] ACL s 236; Wardley Australia Ltd v Western Australia (1992) 175 CLR 514.
Further, whilst the fact that damage is the gist of a cause of action is a relevant matter when deciding how to exercise the discretion, it is not the only factor. GFRG’s contention appears to be that, once it is established that damages are the gist of an action, it is not possible to split the trial. That is not correct. There is nothing to preclude a trial proceeding in that way; indeed it is an order contemplated by the rules.[14]
[14] UCR r 151.1(2).
The impugned decision reflects the different findings that could in theory be reached as to liability on the parties’ various claims as against each other and the significant effect that will have on the question of measuring the parties’ damages.
There has been no error of principle. The Master appropriately considered the question in light of the general rule that all issues should be dealt with in a single trial. She set out the warnings by White J in the decision of Abigroup Contractors Pty Ltd v Hardesty & Hanover International LLC[15] and by the High Court in the decision of Tepko Pty Ltd v Water Board.[16]The Master took the relevant factors into account in the exercise of her discretion.
[15] [2008] SASC 369.
[16] (2001) 206 CLR 1.
The decision should also be viewed against the procedural background of the matter, including the fact that the action has been on foot since 2015, that there was an agreement between the parties in August 2020 to split the trials, and that, at the time of that agreement, a number of causes of action had damages as an issue. There were good case flow management principles behind the decision. The trial on questions of liability alone could be heard within the near future but a trial on all questions will likely require considerable court time even further into the future. To alter that position would run counter to the objects of the UCR and the “just, efficient, timely, cost-effective and proportionate resolution” of the issues in this case.
In my view, allowing the decision to stand would not result in substantial injustice to GFRG. The issue is not one of general importance and does not involve a difficult or complex question of law. Further, the order does not have the effect of determining or altering the substantive rights of the parties. Therefore, I decline to grant leave.