Pets Paradise Franchising (SA) Pty Ltd v Krescendo Pty Ltd
[2012] VCC 399
•12 April 2012 (revised 17 April 2012)
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted |
AT MELBOURNE
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-08-00103
| PETS PARADISE FRANCHISING (SA) PTY LTD | Plaintiff | |
| v. | ||
| KRESCENDO PTY LTD & ORS | Defendants | |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 April 2012 | |
DATE OF JUDGMENT: | 12 April 2012 (revised 17 April 2012) | |
CASE MAY BE CITED AS: | Pets Paradise Franchising (SA) Pty Ltd v. Krescendo Pty Ltd & Ors | |
MEDIUM NEUTRAL CITATION: | [2012] VCC 399 | |
REASONS FOR JUDGMENT
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Catchwords: Practice and procedure – Judgment – Stay of execution – Related proceedings in the Federal Court of Australia.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. Metaxas | Paradise Retails Holdings Pty Ltd |
| For the Defendant | Ms S. Axarlis in person |
HIS HONOUR:
On 18 March 2009, after the trial of the proceeding on 10 and 11 March 2009, I entered judgment for the plaintiffs against the third defendant, Susan Axarlis, for the sum of $151,110.92. Mrs Axarlis now seeks a further stay of execution upon the judgment until the final determination of Federal Court proceeding number VID418 of 2009.
In the trial before me in March 2009, Mrs Axarlis was represented by her son. In response to the claim, she sought to set up defences based upon alleged breaches by the plaintiff of to provisions of the Trade Practices Act 1974. The principal complaint was that the plaintiff had breached the exclusive dealing provisions in section 47 of the Act by requiring franchisees to deal exclusively with a supply company associated with the franchisor. These allegations were also made in the alternative as breaches of other sections of the Trade Practices Act.
I considered at that time that the trial should proceed but that the allegations in the counterclaim raising issues under the Trade Practices Act should be struck out, firstly, because the Court had no jurisdiction to deal with allegations relating to breaches of section 47 of the Act and secondly, because the other allegations raising claims pursuant to other provisions of the Act had not been properly articulated and it was unlikely, so long as Mrs Axarlis did not have legal representation, that those claims could be appropriately articulated.
The decision I made was considered by Justice Dodds-Streeton in Federal Court proceeding no. VID001 of 2010. Her Honour was required to determine an appeal from a decision of a Federal Magistrate dismissing the application by Mrs Axarlis to set aside or extend time for compliance with a bankruptcy notice issued against her and based upon the judgment debt of $151,110.92.
Justice Dodds-Streeton dismissed the appeal. In her judgment, Her Honour referred to the following matters:
a.Mrs Axarlis had not appealed from my decision in March 2009;
b.The Federal Court had, at some stage, considered that it was inappropriate for that Court to stay execution of the judgment I had ordered;
c.Although the County Court lacked jurisdiction to consider the cross claims Mrs Axarlis wished to raise in the County Court proceeding, she could have made application for the transfer of the County Court proceeding, initially to the Supreme Court and then from the Supreme Court to the Federal Court. Her Honour noted that this option had not been indicated as a possibility to Mrs Axarlis’ representative at the hearing before me.
6 Her Honour was not satisfied, “on the basis of the material adduced, that the appellants have a prima facie case, a claim of sufficient substance or a fair chance of success to recover an amount equal to, or exceeding the judgment debt, such that they should be entitled to litigate rather than to comply with the bankruptcy notice” (para 44).
7 Her Honour was satisfied that she should follow the decision of Hill J in Re Ling; ex parte Ling v Commonwealth (1995) 58 FCR 129, where it was held “that a cross claim can be set up in the same proceeding in which the judgment was obtained notwithstanding that it requires the transfer of the proceeding to another court or the favourable exercise of discretion to, for example, consolidate the proceeding” (para 53).
8 Mrs Axarlis and her co-defendant in the County Court proceeding, Fiona Miller, have commenced proceedings against the plaintiff in an action in the Federal Court, no. VID418 of 2009. That proceeding is being case managed by Justice Gray. Apparently the proceeding has not been set down for trial pending the determination of similar claims in Federal Court proceeding no. SAD142 of 2008. In the latter proceeding, Mansfield J at a recent trial found that, “In relation to the misleading and deceptive conduct claims, I have concluded that only in one respect has the case of the applicants been made out. That is in respect of the recurring or isolated payments representation about the allocated stock provided by Global from time to time under the Global Supply Agreement” ([2012] FCA 25 at para 272).
9 At para 273, Mansfield J noted that he proposed giving the parties the opportunity to consider his reasons for decision before “addressing how they wish the matter to further proceed”. At para 272, Mansfield J stated, “I suspect that it will be difficult for the applicants to show that, but for that representation, Pampered Paws would not have entered into the franchise agreement at all, although I have no concluded view on that question”.
10 In paragraphs 86 and 87, Mansfield J set out the allegation relied upon as constituting the recurring or isolated payments representation and, at paragraphs 150 to 167, his reasons for concluding that “the respondents have engaged in misleading or deceptive conduct in the particular circumstances by failing to disclose in the disclosure document that it would be necessary for Pampered Paws as the then putative franchisee to sign and agree to the Global Supply Agreement, and thereby to accept from time to time allocated stock and to pay for it”. On this basis, Mansfield J concluded that the disclosure document should have set out the “recurring charge payable for allocated stock” (para 165).
11 In proceeding VID418 of 2009, in respect of which Mrs Axarlis is an applicant, it does not appear that at present she makes an allegation equivalent to the recurring or isolated payments representation. She does, however, in that proceeding make a claim similar to a claim described by Mansfield J as the “Global representation” whereby it was alleged that “the disclosure document represented that franchisees were not required to purchase goods from Global, but that contrary to that representation, Pampered Paws was in fact required to purchase goods from Global” (para 82).
12 At para 132, Mansfield J had found that “Pampered Paws was not required to purchase all of its stock from Global. It could purchase stock from other suppliers, provided it was approved stock”. Mansfield J was not prepared to accept that there was “no bona fides approval process” or that the approval process was simply a “sham”. At para 148, Mansfield J stated, “I specifically do not make the finding as requested by the applicants that the Global process was to provide a product at a significant mark up from its cost to Global and at the expense of franchisees”.
13 The case before Mansfield J was a group proceeding involving a number of franchisees and the decision represented his findings in relation to the evidence concerning a limited number of members of the group. The proceeding before Gray J in the Victorian Registry of the Federal Court, in which Mrs Axarlis is an applicant, is a separate proceeding and must be determined on its own facts. There does not, however, appear to be anything in the decision of Mansfield J which would give any confidence to the applicants, including Mrs Axarlis, that her proceeding will be successful. Apparently Gray J had deferred listing that matter for trial until after the decision of Mansfield J. It is not clear when the proceeding might be determined. Accordingly, there appears to be little basis upon which to further stay execution in the present proceeding.
14 The general principles upon which a warrant of execution should be stayed were recently stated by Kaye J in Talston Pty v Daisley [2004] VSC 2023 at para 10, where his Honour said: “Rule 66.16 of the Rules of the Supreme Court is general in its expression and simply states that the Court may stay execution of judgment. The authorities recognise that under that rule, the Court has a wide discretion: see for example Joskovitz v Bonnick [1964] VR 654, 656. It is well recognised that the circumstances which relate to the issue of whether or not a stay should go must be matters relating to the enforcement of the order and must not be matters that go to the correctness of the order: see for example State Bank v Parry [1989] WAR 242, 244”.
15 In my view, Mrs Axarlis is seeking to contest the appropriateness of execution being permitted whilst her claims against the present plaintiff are pursued in Federal Court proceeding no. VID418 of 2009. By doing so, she seeks to challenge execution upon the judgment in circumstances where the Court simply determined the plaintiff’s claim against her rather than also taking account of possible cross claims that she might have. I do not consider that this in appropriate basis for a further stay of execution.
16 Dodds-Streeton J referred to the fact that the appellants before her, including Mrs Axarlis, had not taken an appeal from my decision in March 2009 to the Supreme Court and that Mrs Axarlis’ representative had not been advised by me, and was apparently unaware, that the cross claims Mrs Axarlis wished to raise might have been raised in the context of the proceeding, if it had been transferred to the Supreme Court and then to the Federal Court.
17 In the circumstances, I am prepared to grant a further stay of 30 days in order that Mrs Axarlis can consider whether to seek leave out of time to appeal my decision made in March 2009 and whether by that avenue the basis for the present judgment against her might be challenged. Mrs Axarlis indicated during discussion with me that she did not intend to follow that course. If she does subsequently decide to make application for leave to appeal out of time, it may take some weeks before an application for leave might be determined by the Court of Appeal. If she undertakes that course, it may be appropriate for there to be a further stay of execution until the matter comes before the Court of Appeal and I would be prepared to entertain an application on the papers made to my Associate for a further continuation of the limited stay I propose to order.
Certificate
I certify that these 4 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 12 April 2012 (and revised on 17 April 2012).
Dated: 17 April 2012
Hannah Christensen
Associate to His Honour Judge Anderson
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