McShane v Rohan - [2009] FMCA 1131

FEDERAL MAGISTRATES COURT OF AUSTRALIA

McSHANE v ROHAN & ORS

[2009] FMCA 1131

TRADE PRACTICES – Case management of claim for relief relating to franchise agreement – application for change of venue – parties conducting businesses in different States – effect of submission to jurisdiction clause in franchise agreement – onus of persuasion for change of venue not satisfied – inadequate pleading of defence of corporate respondents – struck out for embarrassment – refusal of future representation by managing director – costs awarded for extensive interlocutory hearing – directions for future preparation of proceedings.

Fair Trading Act 1987 (NSW)
Federal Court Rules (Cth), O.11 rr.2, 3, 10, 13, 16
Federal Magistrates Act 1999 (Cth), s.52
Federal Magistrates Court Rules 2001 (Cth), rr.1.05(2), 1.05(3), 1.05(3)(b), 4.05(2)(b), 4.05(3), 8.01, 9.04
Trade Practices Act 1974 (Cth), ss.86(1A), 86AA, 87

Ace Insurance Ltd v Moose Enterprise Pty Ltd [2009] NSWSC 724
Lolliland Pty Ltd v Dollar Sweets Company Pty Ltd [2009] FMCA 257
Sartori v BM2008 Pty Ltd (ACN 005 762 685) [2009] FCA 467

Applicant:

KENNETH EDWARD McSHANE

First Respondent:

BRIAN FRANCIS ROHAN

Second Respondent:

MR CARPORTS LICENSING PTY LTD

ACN 079 909 587

Third Respondent:

ROHAN LICENSING PTY LTD

ACN 091 303 481

Fourth Respondent:

ACTIVE ASSETS PTY LTD

ACN 091 303 525

File Number:

SYG 1875 of 2009

Judgment of:

Smith FM

Hearing date:

11 November 2009

Delivered at:

Sydney

Delivered on:

11 November 2009

REPRESENTATION

Counsel for the Applicant:

Mr D Clarke

Solicitors for the Applicant:

Clamenz Corporate Lawyers

Counsel for the First Respondent:

First Respondent in person

Representing the Second, Third and Fourth Respondents:

First Respondent appeared in his capacity as Director of the Second, Third and Fourth Respondents (with leave of the Court)

ORDERS

The first respondent has leave under r.9.04 to represent the corporate respondents today, but not in relation to any future document filed or step taken on their behalf in the proceedings.
The respondents’ application for change of venue is refused.
The pleadings filed on 7 October 2009 by the respondents are struck out under r.4.05(3), 1.05(3)(b) and Federal Court Rules O.11 r.16.
The respondents must pay one half of the applicant’s costs in relation to the two interlocutory applications listed today, as agreed or as assessed at 80% of his costs taxed in accordance with Federal Court Rules O.62. Pursuant to r.21.02(2)(c), refer those costs for taxation by a registrar under O.62. The balance of the parties’ costs are to be their costs in the cause.
The respondents must make any request for particulars of the statement of claim on or before 9 December 2009.
Any such request must be answered on or before 23 December 2009.
The respondents must file and serve their defences and any cross‑claims on or before 29 January 2010.
Any request for further particulars of a defence or cross‑claim is to be made on or before 17 February 2010.
Such request is to be responded to on or before 3 March 2010.
A defence to cross‑claim and reply is…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] FMCA 1131
Decision Date: 11 November 2009

CaseChat Overview and Summary

McShane v Rohan involved a legal dispute between Mr McShane and Mr Rohan, alongside several corporate respondents, before the Federal Court. Mr McShane filed a claim against the respondents, and Mr Rohan sought to represent the corporate respondents in the proceedings. The central issues before the court were whether Mr Rohan could continue to represent the corporate respondents, whether the pleadings filed by the respondents were adequate, and if the case should be transferred to a court in South Australia based on jurisdictional clauses in a franchise agreement. The court determined that while Mr Rohan could appear and represent himself, he required additional leave to represent the corporate respondents in future proceedings. The pleadings filed by the respondents were deemed inadequate and were struck out. The application to transfer the case to South Australia was refused. The court further issued detailed orders regarding the timeline for filing and serving documents, requests for particulars, and the use of affidavits and subpoenas in the proceeding. The case was also referred for mediation.

Orders

Orders of the court

The first respondent has leave under r.9.04 to represent the corporate respondents today, but not in relation to any future document filed or step taken on their behalf in the proceedings.

The respondents’ application for change of venue is refused.

The pleadings filed on 7 October 2009 by the respondents are struck out under r.4.05(3), 1.05(3)(b) and Federal Court Rules O.11 r.16.

The respondents must pay one half of the applicant’s costs in relation to the two interlocutory applications listed today, as agreed or as assessed at 80% of his costs taxed in accordance with Federal Court Rules O.62. Pursuant to r.21.02(2)(c), refer those costs for taxation by a registrar under O.62. The balance of the parties’ costs are to be their costs in the cause.

The respondents must make any request for particulars of the statement of claim on or before 9 December 2009.

Any such request must be answered on or before 23 December 2009.

The respondents must file and serve their defences and any cross‑claims on or before 29 January 2010.

Any request for further particulars of a defence or cross‑claim is to be made on or before 17 February 2010.

Such request is to be responded to on or before 3 March 2010.

10.

A defence to cross‑claim and reply is to be filed on or before 24 March 2010.

11.

The parties have leave to request the issue of more than 5 subpoenas.

12.

All evidence in chief in the proceeding shall be by way of affidavits.

13.

The applicant must file and serve all affidavits relied upon on or before 24 March 2010.

14.

The respondents must file and serve all affidavits relied upon on or before 21 April 2010.

15.

The applicant must file and serve any affidavits in reply on or before 12 May 2010.

16.

The matter is referred to a registrar for mediation pursuant to Part 27 of the

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

I gave Mr Rohan leave to represent the respondents at the first court date, and have given leave today for him to appear and represent them again. However as I shall explain, I do not propose to extend that leave which is required pursuant to r.9.04 of the Federal Magistrates Court Rules: 9.04Corporation must be represented Except as provided by or under an Act or regulations made under an Act, or with the leave of the Court, a corporation may not start or carry on a proceeding otherwise than by a lawyer. In the absence of any contrary submission, it appears to me that the second to fourth respondents require the further leave of the Court if Mr Rohan is to continue to carry on the proceedings on behalf of those respondents. Mr Rohan, of course, is entitled to appear and represent himself in the proceedings. He is, however, not the principal respondent in the proceedings, since the relief was principally directed at the corporate respondents, although Mr Rohan faces a possible personal liability to damages as a person involved in alleged contraventions of the Trade Practices Act. In my orders at the first court date, I directed that a pleading by way of defence and cross‑claim should be filed on or before 2 October 2009. I made no directions for the provision of further particulars, since this was not sought. It appears today that, in fact, particulars of the statement of claim have not been sought by Mr Rohan, nor by any solicitor engaged to act on behalf of the respondents. Instead, unaided by any apparent legal assistance, Mr Rohan filed on 7 October 2009, a bundle headed “Pleadings – General Federal Law”, which I shall consider further below. Mr McShane has brought an interlocutory application which was returnable for hearing today, seeking to strike out those ‘pleadings’ pursuant to O.11 r.16 of the Federal Court Rules in their application in this Court. This provides: 16Embarrassment etc Where a pleading: (a)discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; (b)has a tendency to cause prejudice, embarrassment or delay in the proceeding; or (c)is otherwise an abuse of the process of the Court; the Court may at any stage of the proceeding order that the whole or any part of the pleading be struck out. Also returnable today was an interlocutory application by Mr Rohan, on behalf of himself and the corporate respondents, seeking an order “that the case be transferred to the relevant court in South Australia”. In support of this application, Mr Rohan made reference to two clauses which were claimed to be in the franchise agreement with Mr McShane: 1.7Applicable Law and Construction This Agreement shall be governed by and construed in accordance with the laws of the State of South Australia. The covenants, provisions and conditions of this Agreement and each and every part thereof contained in this Agreement shall be construed so as not to infringe the provisions of any Act of Parliament applicable thereto or be void or invalid according to the common law but if any such covenant, provision or condition on its true interpretation does infringe any such provision or is void or invalid according to the common law that covenant, provision or condition shall be read down to such extent as may be necessary to ensure that it does not so infringe or is not so void or invalid and as may be reasonable in all the circumstances so as to give it a valid operation of a partial character and in the event that the infringing covenant, provision or condition cannot be so read down it shall be deemed to be void and severable. … 1.9Jurisdiction The Licensor and the Licensee irrevocably submit to the jurisdiction of the relevant Court of the State of South Australia in respect to all disputes which may arise in respect to this Agreement. There appears to be no issues that, in fact, there is an agreement between the parties containing those clauses.