Weimann v Allphones Retail Pty Ltd - [2009] FCA 673

FEDERAL COURT OF AUSTRALIA
Weimann v Allphones Retail Pty Ltd [2009] FCA 673
PRACTICE AND PROCEDURE – whether current proceedings should be converted to a representative proceeding – preconditions to s 33C of the Federal Court of Australia Act 1976 (Cth) made out – representative proceeding in this case would serve the administration of justice and enable a cheaper and more efficient means of resolving the dispute – leave granted to amend the application and statement of claim
Constitution, s 75, s 76, s 77
Airports (Business Concessions) Act1959 (Cth)
Corporations Act 2001 (Cth), s 177(1A)(a)
Federal Court of Australia Act 1976 (Cth), Pt IVA, s 33C, s 33C(1), s 33C(1)(a), s 33C(1)(b), s 33C(1)(c), s 33N
Trade Practices Act 1974 (Cth), s 50, s 51AC, 51AC(3)(g), s 80, s 80(1), s 82, s 87, s 87(1) s 87(2)(b)
Trade Practices (Industry Codes – Franchising) Regulations 1998 (Cth), s 29(2), cl 6B, c 10
Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 2) [2009] FCA 17
Australian Gas Light Company v Australian Competition and Consumer Commission (No 2) [2003] FCA 1229
Bass v Permanent Trustee Company Limited (1999) 198 CLR 334
BMW Australia Ltd v Australian Competition and Consumer Commission (2004) 207 ALR 452
Bray v F Hoffmann-LA Roche Ltd (2003) 130 FCR 317
Bright v Femcare Ltd (2001) 188 ALR 633
Bright v Femcare Ltd (2002) 195 ALR 574
Commonwealth v Sterling Nicholas Duty Free Pty Ltd (1972) 126 CLR 297
Draper v British Optical Association [1938] 1 All ER 115
Dormer v Solo Investments Pty Ltd (1974) 1 NSWLR 428
Foster v Australian Competition and Consumer Commission (2006) 149 FCR 135
Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810
Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 3) [2008] FCA 967
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248
IMF (Australia) Ltd v Sons of Gwalia Ltd (administrator appointed) (2005) 143 FCR 274
King v GIO Australia Holdings (2000) FCR 209
Marks v GIO Australia Holdings Limited (1998) 196 CLR 494
Melstrom v Garner [1970] 2 All ER 9
Pacific Brands Household Products Pty Ltd v Singan Investments Pty Ltd [2003] VSC 76
Re Clay, Clay v Booth [1919] 1 Ch 66
Tobacco Control Coalition v Philip Morris (Australia) Ltd [2000] FCA 1004
Truth About Motorways Pty Ltd v Macquarie Infrastructure Investment Management Ltd (2000) 200 CLR 591
Wong v Silkfield Pty Ltd (1999) 199 CLR 255
NORBERT CHRISTIAN WEIMANN AS TRUSTEE FOR THE WEIMANN FAMILY TRUST NO 3 v ALLPHONES RETAIL PTY LTD
WAD 45 of 2009
BARKER J
23 JUNE 2009
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

WAD 45 of 2009

BETWEEN:
NORBERT CHRISTIAN WEIMANN AS TRUSTEE FOR THE WEIMANN FAMILY TRUST NO 3
Applicant

AND:
ALLPHONES RETAIL PTY LTD
Respondent

JUDGE:

BARKER J

DATE OF ORDER:

23 JUNE 2009

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
1.The applicant has leave to file…

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] FCA 673
Decision Date: 23 June 2009

CaseChat Overview and Summary

In the case of Weimann v Allphones Retail Pty Ltd, the applicant, a franchisee operating an Allphones store in Adelaide, sought leave to amend the current application and statement of claim. The primary dispute revolves around the renewal of the franchise agreement between the applicant and the respondent, Allphones Retail Pty Ltd, and the manner in which the respondent proposed to enforce the renewal. The legal issues at hand included whether the proceedings should be converted to a representative proceeding under Pt IVA of the Federal Court of Australia Act 1976 and whether leave should be granted to amend the application and the statement of claim considering the respondent's objections.

The Court examined the preconditions for a representative proceeding under section 33C of the Federal Court Act, finding that they were satisfied for the group A franchisees who had exercised the option to renew their agreements. For the group B franchisees, who had not yet exercised their renewal option but were potentially affected by the respondent's conduct, the Court also found that they had relevant claims. The Court concluded that the proposed amendments to the application and the statement of claim adequately addressed the respondent's objections and that the issues were best resolved after a trial.

Consequently, the Court allowed the applicant's notice of motion and dismissed the respondent's notice of motion. The orders included granting the applicant leave to file and serve an amended application and statement of claim, directing the respondent to pay the applicant's costs for the hearing of the notice of motion, dismissing the respondent's notice of motion, and requiring each party to bear its own costs in relation to the dismissal.

Orders

Orders of the court

1. The applicant has leave to file and serve an amended application including an application under Pt IVA of the Federal Court of Australia Act 1976 (Cth) in the form annexed to the affidavit of Idris Mark Owain Matthews, sworn 19 May 2009 and filed in support of the notice of motion filed 18 May 2009, with the further amendment that, at the end of paragraph 2(e) of the amended application, the words "in respect of these proceedings" be added.

2. The applicant has leave to file and serve an amended statement of claim in the form annexed to the affidavit of Idris Mark Owain Matthews sworn 19 May 2009 and filed in support of the notice of motion filed 18 May 2009.

3. The respondent pay the applicant's costs of and incidental to the hearing of the applicant's notice of motion filed 19 May 2009.

4. The respondent have the costs thrown away by reason of the amendments.

5. The respondent's notice of motion filed 4 May 2009 is dismissed.

6. Each party is to bear its own costs in relation to the dismissal of the respondent's notice of motion filed 4 May 2009.

Note:

Background

Background to the litigation

There are two issues currently before the Court, by reason of the notice of motion dated 18 May 2009 filed by the applicant for leave to amend the current application and statement of claim in the proceedings, namely:·Whether the current proceedings should be converted to a representative proceeding pursuant to Pt IVA of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act).·In connection therewith whether leave should be granted to amend the application and the statement of claim in the form of the minutes filed with the notice of motion in light of objections taken by the respondent.BACKGROUND TO NOTICE OF MOTION By application filed 30 March 2009, the applicant – who operates an Allphones franchise business in the Rundle Mall, Adelaide under a franchise agreement with the respondent dated 1 April 2004 – claims, on grounds stated in his accompanying affidavit:1.An order that the applicant having given notice of exercise of the right to renew the franchise agreement, that agreement be specifically performed.2.Declarations that upon the proper construction of cl 3 of the current franchise agreement:•the applicant is not obliged to execute the draft franchise agreement forwarded by the respondent to the applicant on or about 6 February 2009 in order to renew the current agreement.•the respondent is obliged to provide a franchise agreement in the same or substantially the same terms as the existing franchise agreement, save that the franchise agreement be for a term of five years commencing 1 April 2009, to the applicant for execution and to execute that agreement itself.3.A declaration that the respondent in requiring the applicant to execute the draft franchise agreement has engaged in unconscionable conduct contrary to s 51AC of the Trade Practices Act 1974 (Cth) (TPA).4.Alternatively to claim 2 an order pursuant to s 87(2)(b) of the TPA varying the effect of cl 3 of the current agreement so as to require the respondent to provide to the applicant and execute a franchise agreement in the same or substantially the same terms as the current agreement, save that the franchise agreement be for a term of five years commencing 1 April 2009, in circumstances where the applicant has given notice of its intention to exercise the right to renew the existing franchise agreement, such variation to take effect from the date of execution of the existing franchise agreement.5.Damages for breach of contract, alternatively pursuant to s 82 of the TPA.6.Interest on all damages awarded.7.Further or other relief.8.Costs. In the application, the applicant sought by way of interlocutory relief, amongst other things, an interlocutory injunction restraining the respondent from dealing with the applicant other than on the basis that the applicant has validly exercised the right to renew the current agreement and in accordance with the terms of that agreement until further order. On 6 April 2009 detailed directions were given by the Court to permit the filing of pleadings and the preparation of the proceedings for a trial which was then listed for an expedited hearing between 22 July and 31 July 2009, save for 28 July 2009. These directions were made on the respondent's undertaking not to deal with the applicant other than on the basis that the franchise agreement remained valid and subsisting until further order (which undertaking was given by the respondent without any admission) and upon the applicant giving the usual undertaking as to damages in his own right and as trustee for the Weimann Family Trust No 3.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

BARKER J

While the Court may in appropriate circumstances order that costs on an interlocutory proceeding be taxed and paid forthwith, I do not consider that the circumstances here justify such an order. As indicated above, in relation to the claim that the costs be taxed on an indemnity basis, I do not consider that the objections taken to the conversion of the proceeding to a representative proceeding or the objections taken in respect of the amended application and the amended statement of claim to have been so lacking in substance that such an order ought be made. Similarly, I do not consider that there is any case made out for the early payment of assessed costs.CONCLUSION AND ORDERS For the reasons above, I would allow the applicant's notice of motion filed 18 May 2009 and formally dismiss the respondent's notice of motion filed 4 May 2009. While there may be issues concerning the extent to which the relief claimed may be available to the applicant, as claimed, those issues are best left to final argument after trial of the issues. Accordingly, the following orders are indicated:1.The applicant has leave to file and serve an amended application including an application under Pt IVA of the Federal Court of Australia Act 1976 (Cth) in the form annexed to the affidavit of Idris Mark Owain Matthews sworn 19 May 2009 and filed in support of the notice of motion filed 18 May 2009.2.The applicant has leave to file and serve an amended statement of claim in the form annexed to the affidavit of Idris Mark Owain Matthews sworn 19 May 2009 and filed in support of the notice of motion filed 18 May 2009.3.The respondent pay the applicant's costs of and incidental to the applicant's notice of motion filed 19 May 2009.4.The respondent's notice of motion filed 4 May 2009 is dismissed.5.Each party is to bear its own costs in relation to the dismissal of the respondent's notice of motion filed 4 May 2009. I will, however, hear from counsel as to the final terms and form of the orders to be made.

Ratio Decidendi

Legal Principle Established

Established by: BARKER J

The applicant says that because of the current conduct and course of conduct by the respondent designed to see franchisees enter into the New Agreement, the dispute as to what the contract between all franchisees and the respondent means for the current justiciable dispute, is not a hypothetical one. Accordingly, it is not necessary for the group B franchisees to be required to wait until the time they choose to exercise their option to renew the agreement before they can seek relief against the respondent.Consideration Concerning Representative Proceeding As to the applicant and other franchisees who fall into the group A category described above, namely those franchisees who have actually exercised the cl 3 option to renew their franchise agreements, it is plain enough, in terms of s 33C(1) that there are:•Seven or more persons who have claims against the same person, namely the respondent.•The claims of all those persons, as franchisees, are in respect of, or arise out of, the same, similar or related circumstances namely, the insistence of the respondent that it can require these franchisees to execute a new franchise agreement in terms different, even substantially different, from the current agreement under which each operates their franchise.•The claims of all the franchisees in this group A category give rise to a substantial common issue of law or fact, the primary common issue of law being the proper construction of cl 3 of the Old Agreement. In that regard, the questions posed in claims 4(a), (b), (c), (d) and (e) of the proposed amended application reasonably identify substantial common issues of law that the persons' claims give rise to.•There also appears to be a substantial common issue of fact or issues of fact concerning whether the conduct of the respondent towards these franchisees as a group constitutes unconscionable conduct. Indeed the respondent, leaving aside its specific pleading objections to the amended statement of claim and relief sought in the proposed amended application, does not contend that the preconditions to a representative proceeding are not made out in respect of the group A franchisees. Accordingly, I find that so far as the group A franchisees are concerned the preconditions to a representative proceeding specified in s 33C of the Federal Court Act are satisfied. The real issue between the parties is whether or not the s 33C preconditions are made out in respect of the group B franchisees, that is to say, those franchisees who in broad terms operate under a current franchise agreement which contains cl 3 of the Old Agreement or its equivalent, but for whom the time has not yet arrived to exercise the option to renew the agreement. As stated above, the facts show that there are a much larger number – 28 or so – franchisees in this group B category. In some cases, the time to exercise the option to renew the agreement will not arrive until some time in the period 2010 to 2012. For my part, I consider that these persons do in fact have relevant "claims" against the respondent. In my view it matters not, in the present circumstances, that these persons do not currently have the contractual right to exercise the option to renew the agreement under which they operate their franchise. Their current interests raise real issues with real consequences depending on their resolution.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	WAD 45 of 2009

JUDGE:	BARKER J
DATE OF ORDER:	23 JUNE 2009
WHERE MADE:	PERTH