Allphones Retail Pty Ltd (ACN 008 168 090) v Weimann

Federal Court of Australia (Full Court)|1998-03-27|Before: McKerracher JJ, Siopis J

INTRODUCTION 39 This appeal raises the proper meaning of 'claims' where that word appears in s 33C of the Federal Court of Australia Act 1976 (Cth) (FCA) relating to a representative proceeding. Specifically, does 'claims' in that context relate only to claims which have fully matured or does it include current claims as to the disputed interpretation of existing contracts? For reasons which follow, the meaning of 'claims' requires the broader approach so as to include the class described.

BACKGROUND 40 The applicant (Allphones) grants franchises to sell telephones and related products which it supplies. There is a standard form franchise agreement between Allphones and such franchisees (the Old Franchise Agreement). The question arising is the extent to which, if at all, Allphones is entitled to require franchisees to enter into an amended form of franchise agreement when the franchisees exercise a right of renewal in the Old Franchise Agreement. Clause 3 of the Old Franchise Agreement provides: This Agreement shall commence on the date specified in the Schedule hereto and continue for the term specified in the Schedule hereto. Provided that the Franchisee shall have properly performed its obligations under this Agreement and taken all action necessary to ensure that the Franchised Business conforms to the then System and Image, the Franchisee may renew this Agreement for the further term set out in the Schedule hereto. The Franchisee shall inform the Franchisor of its intention to renew by giving written notice to that effect to the Franchisor no more than one hundred and eighty (180) days nor less than ninety (90) days prior to the expiration of the initial term of this Agreement. Renewal shall be affected (sic) by the execution by the Franchisor and the Franchisee of the Franchisor's then current franchise agreement (save that this clause shall be excluded) and any other documents then used by the Franchisor in granting franchises. No fee shall be charged for the renewal of this Agreement. 41 The respondent commenced the proceeding against Allphones in his own right. Subsequently he sought to amend his application and statement of claim to convert it into a representative proceeding under Pt IVA FCA. 42 On 23 June 2009, the primary judge in Weimann v Allphones Pty Ltd [2009] FCA 673 permitted leave to file and serve an amended application including an application under Pt IVA FCA as well as an amended statement of claim. 43 All of the franchisees joined in the representative proceeding are parties to contracts in the terms of the Old Franchise Agreement. The franchisees have been divided into two sub-groups. The first of those sub-groups (group A franchisees) are those who have already exercised a right to renew their respective franchise agreements. The second group, (group B franchisees) are those whose franchise agreements do not fall due for renewal until dates ranging between 2010 and 2012. 44 Allphones has accepted the inclusion of group A franchisees as group members but opposed (before the primary judge) and opposes again (for the purpose of the appeal) the inclusion of the group B members for which his Honour provided. Essentially Allphones' opposition is based on the fact that group B members do not at present have 'claims' within the meaning which should properly be attributed to that term in Pt IVA FCA. 45 Allphones' application for leave to appeal and the appeal were referred to this Court to be heard together, subject to any other order of the Court (see Allphones Retail Pty Ltd (ACN 008 168 090) v Weimann [2009] FCA 849).

THE JUDGMENT 46 Section 33C FCA relevantly provides as follows: 33C Commencement of proceeding (1) Subject to this Part, where: (a) 7 or more persons have claims against the same person; and (b) the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and (c) the claims of all those persons give rise to a substantial common issue of law or fact; a proceeding may be commenced by one or more of those persons as representing some or all of them. 47 In making orders permitting the joinder of both group B franchisees as well as group A franchisees, the primary judge concluded that the group B franchisees had relevant 'claims' (at [80], [111]). His Honour also held that the Court was not being asked to entertain a hypothetical proceedings (at [111]); that the claims by the group B franchisees were 'matters' before a Ch III Court (at [111]); that the franchisees in the group B category were entitled to entertain real concerns concerning their legitimate contractual rights at this time (at [81]); and that the issue of concern has already been identified as such by the position taken by Allphones with the group A franchisees. His Honour accepted the respondent's submission that by inference, there is no reason to believe given the background to the proceedings including prior proceedings in this Court involving Allphones that its approach to the renewal of the franchise agreements of the group B members was likely to be any different from that currently evinced in relation to the group A franchisees (at [81]). Although Allphones characterised this inference as being drawn in the absence of evidence or a pleading, there was sufficient from the pleading itself to which reference is made below which would establish a basis for that inference at an interlocutory level. 48 His Honour held that the relevant question was whether or not the representative proceeding on behalf of all franchisees, both group A and group B franchisees, raised real concerns with real consequences, depending on the outcome (at [89]). Allphones contend that this is not the relevant question. It argues that the relevant question is whether there is in existence now a justiciable controversy in the sense that there is a current dispute between the parties which is not dependent upon the emergence of facts at a future time. Allphones opposes the primary judge's conclusion (at [107]) that group B franchisees were entitled to know what their present contractual entitlements are so that they are properly informed, in good time, to decide whether or not they should exercise the option to renew their franchise agreements. 49 The primary judge declined (at [124]) to strike out the claims for relief under s 80 and s 87 of the Trade Practices Act 1974 (Cth) (TPA) on the basis that they were properly formulated claims. The primary judge also found that the facts substantially raised a common issue of law and fact in relation to the relief sought on behalf of all franchisees in respect of the alleged unconscionable conduct of Allphones (at [87]) and that the fact that the current franchise agreement of Allphones may continue to evolve was not relevant to the consideration of whether there was a justiciable controversy between group B franchisees and Allphones (at [84]).

LEAVE TO APPEAL 50 To justify a grant of leave to appeal from an interlocutory judgment, Allphones was required to satisfy the test established in Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397. That test involves two requirements, namely: · whether in all the circumstances the decision is attended by sufficient doubt to warrant it being reconsidered by the Full Court; and · whether substantial injustice will result if leave were refused, supposing the decision to be wrong. 51 We were satisfied that the argument advanced was sufficiently meritorious and important to be worthy of consideration by way of an appeal. The determination of what are 'claims' for the purposes of s 33C found in Pt IVA FCA warranted consideration. So also did the argument that 'claims' there found, must conform with and be confined by the extent of federal judicial power. In essence, the argument for Allphones was that the claims of the group B members were directed to possible future conduct, at best, when qualified rights of renewal fall to be exercised and to circumstances which may never occur and hence were hypothetical or lacking a real issue or controversy between the parties. The primary judge held that there were 'real issues' raised by the proposed amendment in respect of the group B members. Allphones' argument however was that the proper construction of the franchise agreements held by the group B members was not an issue sufficient to attract federal judicial power and to constitute 'claims'. 52 Another topic which emerged in the course of argument was the weight, if any, to be given to the limits on judicial resources. Was there a desirability that any statutory construction afforded to 'claims' in s 33C be consistent with the avoidance of wasted resources by a multiplicity of proceedings essentially raising the same or very similar issues? For Allphones, it was argued that federal jurisdiction could not be created simply by convenience. However attractive it may be to the group B franchisees to be informed as to their contractual rights, such information was no more than an advisory opinion given that the exercise of the rights, if at all, would not take place until a future time. As will be seen, this was not an argument we favoured. Nevertheless, it was an argument which, in our view, satisfied the first test in Décor Corp 33 FCR 397. 53 As to the question as to whether substantial injustice would result if leave were refused and the decision were wrong, while the Court had some reservations, from a practical perspective it was desirable to hear the leave application together with the appeal to form a view on the entire argument. Advanced in support of the contention that Allphones would suffer injustice if the order was allowed to stand were submissions that: · it would be forced to engage in litigation with franchisees who would not otherwise be permitted to make a claim against it; · it would then be obliged to defend more complex, protracted and expensive proceedings and arguably without any subsequent right to re-agitate the question of the nature of a 'claim' for the purpose of s 33C FCA; · any judgment against it would have uncertain consequences for its potential future dealings with franchisees, particularly where the group B members sought declaratory relief in general terms and where any order for consequential relief was unlikely to be made given the passage of time before the relevant events may possibly occur; and · Allphones would 'be required to respond to an action brought on behalf of 35 group members rather than 10, with attendant complexity and associated costs occasioned for the proceedings'. 54 We were satisfied that, despite the argument having arisen at the interlocutory stage, these considerations do not raise merely minor matters of practice and procedure but were capable of having a substantive effect on the rights of Allphones. For those reasons leave to appeal was granted.

THE APPEAL 55 As a preliminary issue, a question was raised as to whether the appeal involved the Constitution in the sense referred to in s 78B of the Judiciary Act 1903 (Cth). Section 78B requires that where a cause pending in a federal court involves a matter arising under the Constitution or involving its interpretation, it is the duty of the court not to proceed in the cause unless and until the court is satisfied that notice of the cause, specifying the nature of the matter has been given to the Attorneys‑General of the Commonwealth and of the States, and a reasonable time has elapsed since the giving of the notice for consideration by the Attorneys‑General, of the question of intervention in the proceedings or removal of the cause to the High Court. 56 Although no notices had been served, the parties and the Court proceeded on the basis that reference to the Constitution in Allphones' argument was intended only to illuminate the proper meaning of 'claims' in s 33 FCA. As such the obligation under s 78B of the Judiciary Act was not enlivened.

Federal judicial power 57 It is not controversial that 'claims' in s 33C FCA must conform to the limits of jurisdiction conferred on the Court under s 22 FCA which in turn is required to conform to the limits of federal judicial power under ss 75-77 of the Constitution. Those sections provide, respectively, as follows: 22 Determination of matter completely and finally The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided. 75 Original jurisdiction of High Court In all matters: (i) arising under any treaty; (ii) affecting consuls or other representatives of other countries; (iii) in which the Commonwealth, or a person suing or being sued on behalf of the Commonwealth, is a party; (iv) between States, or between residents of different States, or between a State and a resident of another State; (v) in which a writ of Mandamus or prohibition or an injunction is sought against an officer of the Commonwealth; the High Court shall have original jurisdiction. 76 Additional original jurisdiction The Parliament may make laws conferring original jurisdiction on the High Court in any matter: (i) arising under this Constitution, or involving its interpretation; (ii) arising under any laws made by the Parliament; (iii) of Admiralty and maritime jurisdiction; (iv) relating to the same subject-matter claimed under the laws of different States. 77 Power to define jurisdiction With respect to any of the matters mentioned in the last two sections the Parliament may make laws: (i) defining the jurisdiction of any federal court other than the High Court; (ii) defining the extent to which the jurisdiction of any federal court shall be exclusive of that which belongs to or is invested in the courts of the States; (iii) investing any court of a State with federal jurisdiction. 58 By virtue of s 77 of the Constitution, the judicial power of the Commonwealth is restricted to adjudication on 'matters' as defined in s 75 and s 76 of the Constitution. 59 Although there is no definition of 'claims' in the FCA, in Finance Sector Union of Australia v Commonwealth Bank of Australia (1999) 94 FCR 179 (at [20]) this Court equated the term to its use in s 22 FCA concluding that 'claims' for the purposes of s 33C 'is used to encompass everything that might lawfully be brought before the Court for a remedy'. Allphones draws on that description to support its argument that if a claim is not a 'matter', it cannot be lawfully brought before the Court. 60 Allphones relies upon the dictum of Lindgren J as to the meaning of 'claims' in Australian Competition and Consumer Commission v Giraffe World Australia Pty Ltd (1998) 84 FCR 512 where his Honour said (at 523): As to the meaning of "claims" in s 33C(1)(a), certain matters are tolerably clear. First, the claims must be claims recognised by the law. Second, s 33C(2)(a)(i) shows that a claim for discretionary equitable relief qualifies, and, therefore, that the "claims" to which s 33C(1)(a) refers are not confined to claims to relief as of right. Third, whatever the word "claims" in the provision denotes, they have an existence independent of, and antecedent to, the commencement of the proceeding, since it is only if seven or more persons have claims against the same person that a proceeding under Pt IVA may be commenced by one or more of them. Perhaps this signifies that it is not a sufficient condition of the existence of a claim that a claim has been "made", "asserted" or "threatened". Fourth, for obvious reasons, s 33C(1)(a) does not speak of a "right" or "entitlement" to relief -- a matter which cannot be known until a final hearing. Fifth, it is not required that the persons who have the claims be aware that they have them, let alone that they have asserted them.

Purpose of s 33C FCA 61 The construction of 'claims' in s 33C FCA requires a meaning not only consistent with the limits of judicial power but also one that reflects the purpose of the provision. From a practical perspective, it would be an unsatisfactory state of affairs if it were necessary for the group B franchisees to re-litigate all the issues otherwise open to be litigated and resolved in the proceedings which involve (subject to the outcome of this appeal) all franchisees. 62 That can be illustrated by the fact that there are currently nine group members who have exercised their rights to renew and are therefore in group A but between now and the proposed December trial, further group B members may become eligible to exercise their rights to renew before trial and will notionally, at least, move from group B to group A. There would be others in group B whose rights may accrue between the time of trial and judgment. In our view, there is no realistic prospect that any of those who have sought to join the representative proceeding do not wish to have their circumstances clarified. 63 The distinction between group A and group B is only temporal. Such an artificial distinction would not do justice to the purpose of s 33C FCA in representative proceedings if those claims that fell for consideration just outside the time of trial were unable to have their contractual position judicially determined. While there are others whose position may be further removed in time, there is no suggestion that the difference between the various group B members from the various group A members or from one another is anything other than temporal.

Is there no arguable 'claim'? 64 One of the challenges confronting Allphones was that in order to succeed on its argument, it needed to establish that it was not even arguable that the group B franchisees had claims within the meaning of s 33C FCA. This was the appropriate test because the issue for determination by the primary judge was simply whether the pleading for the group B franchisees arguably disclosed a 'claim' such that the group B franchisees could be included with the group A franchisees in the representative action. 65 The approach required in assessing the matters arising under s 33C FCA is to consider the question on the basis of the application and the pleadings. In Bright v Femcare Ltd (2002) 195 ALR 574, Kiefel J said (at [126]): The focus of s 33C(1), particularly paras (b) and (c), is upon the applicant's claims. It follows, in my view, that a determination as to whether the requirements of s 33C(1) have been met is to be made by reference to the pleading or other document in which the claims of the applicant and the group members are made. Section 33H(1) is intended to facilitate that assessment. Whether those issues will remain at the close of pleadings, and whether the evidence which will be led in each case might differ in some respects, are not matters which are relevant to a determination as to whether there is a common question and whether s 33C(1) is satisfied. 66 Likewise, in Pampered Paws Connection Pty Ltd (ACN 116 460 621) (on its own behalf and in a representative capacity) v Pets Paradise Franchising (Qld) Pty Ltd (ACN 054 406 272) [2008] FCA 1606, Mansfield J observed (at [31]): In my view, the correct approach to the question whether s 33C(1)(a) is satisfied is by reference to the matters alleged in the statement of claim. The respondents relied upon evidence of Mr Diamond that PP-Qld, PP-SA and PP-NSW all operate within their respective State boundaries and have no relationship with each other, at least in a practical sense. Whether, as alleged, Retail is in fact the holding company of each of them is a matter which should await the hearing. Mr Diamond's affidavit does not gainsay the allegation in the statement of claim. 67 The parties have accepted that it is the pleading which has precedence over any other evidentiary assertions when the process of analysis for the purposes of s 33C FCA is undertaken. It follows that it is to be the group B members' pleaded case which falls for consideration rather than, for example, additional assertions by Allphones to the effect that the New Agreement is under continuing review and frequently updated. 68 Allphones accepted that this was the standard which its argument must meet but contended that it was very clear that there was no present 'matter' and therefore no claim for the purposes of s 33C FCA as: · the rights of renewal, if available at all, were not available to be exercised until some future point in time; · each such right is contingent upon the group B members having, by the time that the agreement falls for renewal, 'properly performed [their] obligations under this agreement and taken all action necessary to ensure that the Franchised Business conforms to the then System and Image'; · the group B members electing to exercise their right of renewal; · relevantly to any dispute, the terms of the renewed franchise agreement provided by Allphones to group B franchisees at the time of exercising of any renewal being unacceptable to the group B franchisees; and · declarations are sought on behalf of group B members concerning the effect of the draft agreement forwarded by Allphones in February 2009, notwithstanding that the franchise agreement is under continuing review and is frequently updated including subsequent to the document given by Allphones.

'Matter' - constitutional significance 69 There are many cases dealing with the meaning of 'matter'. In early cases such as In re Judiciary and Navigation Acts (1921) 29 CLR 257, a matter was described by the High Court as meaning 'some immediate right, duty or liability to be established by the determination of the Court'. More importantly, referable to the current argument, the power to confer jurisdiction under Ch III of the Constitution did not include a jurisdiction to 'determine abstract questions of law without the right or duty of any body or person being involved'. This passage has been cited with approval on a number of occasions including in Employers Reinsurance Corporation v Ashmere Cove Pty Ltd (2008) 166 FCR 398 at [43]. 70 For Allphones, it is contended that a matter must involve an adjudication of a real controversy between the parties that is more than merely hypothetical and does not involve an advisory opinion by the Court. Again, those submissions are not controversial. It is a question of examining the nature of the dispute which the group B franchisees seek to ventilate and have 'quelled'.

The contractual debate 71 The primary judge correctly outlined the nature of the contractual debate (at [16]‑[20]). In short, that debate is whether the proper construction of cl 3 of the old franchise agreement permits (against the argument of the franchisees) Allphones to stipulate that terms contained in the new franchise agreement or a new franchise agreement be imposed on the exercise of options for renewal by the franchisees. Although the occasion for the exercise of the option for the group B members has not yet arisen, there is no doubt that the group B members seek, by their asserted claims, resolution of that dispute as to their current contractual entitlements. 72 In relation to the current claim of group B members, although such persons do not now have the contractual rights to actually exercise the option to renew under the old franchise agreement, the primary judge was correct in observing that their current interests do raise real issues with real consequences depending on their resolution. We would agree with the primary judge who concluded (at [81]) that the franchisees in the group B category are entitled to entertain real concerns concerning their legitimate contractual rights at this time and that they are not merely hypothetical. This is partly because the issue of concern has already been identified by the position actually taken by Allphones with the group A franchisees. The purely temporal difference between group A and group B franchisees is the only material difference which distinguishes the two groups. All franchisees have under cl 3 of the old franchise agreement an entitlement which they seek to have clarified in light of the current disputation.

The unconscionable conduct claim 73 Over and above the contractual interpretation claims sought to be advanced by the group B franchisees as to the proper construction of the old franchise agreements, there are claims that Allphones has engaged in unconscionable conduct in contravention of s 51AC of the TPA 'in requiring or threatening to require group members to execute draft franchise agreements in a form or upon terms corresponding [to those provided by Allphones in February 2009]'. Relief is sought pursuant to s 80 and s 87 TPA (the TPA Claim). 74 In relation to the TPA Claim, the argument is slightly different. The franchisees' pleaded claim is that the conduct has already occurred so there is not the contingent or hypothetical aspect about the particular conduct. But Allphones contends that the TPA Claim suffers from the same or a similar vice as the contractual claim. To understand that argument it is necessary to consider the reasons of the primary judge (at [124]) where his Honour said: The applicant on behalf of both group A and group B franchisees identifies present conduct as a basis of the claimed relief. The fact that group B applicants have not yet been obliged contractually to exercise their options to renew the franchise agreement is irrelevant. The claims made on behalf of the group B franchisees in any event is that, if they are forced, in effect, to sign a New Agreement in due course, then they are persons who are 'likely to suffer' loss or damage for the purposes of s 87 (emphasis added). 75 Allphones contends that, properly understood, the TPA Claim, like the contractual claim, is referable only to possible future circumstances when the group B members come to renew their respective franchise agreements in the ordinary course. Allphones argues that the relief itself bears no relation to any present conduct. The entitlement to the relief, it is contended, could only be considered at the point in time in the future where there were concrete facts upon which the Court could act, that is, once the right of renewal has actually been exercised. There also needs to be a causal connection, Allphones argues, between the conduct of which complaint is raised and the actual loss or damage likely to be suffered by the persons seeking relief. The present conduct constituting alleged threats, it is said, cannot of itself constitute a causal nexus for the imposition of a varied franchise agreement at a point in the future. 76 This leads to a consideration of the nature of the relief sought.

THE NATURE OF THE RELIEF SOUGHT IN THE PLEADED CASE 77 Allphones argues that analysis of the relief sought supports its argument that for group B members, the issue is only hypothetical and therefore declaratory relief would not be granted. This, it is argued, supports the conclusion that there cannot yet be any 'claims' for the purposes of s 33C FCA. It also places reliance upon the discretionary factors to be taken into account in determining whether or not the Court would grant declaratory relief. Amongst those discretionary factors is the question of whether or not there is presently an immediate practical interest involved in a declaratory order being made. 78 It is important to distinguish between the exercise of discretion involved in granting declaratory relief on the one hand and the jurisdiction of the Court to grant declaratory relief on the other. It cannot be accepted that no declaration will be granted because of the lack of an immediate practical interest. The discretionary factors involved in exercising the Court's jurisdiction will require weighing up of a significant number of factors in this dispute. It may be that in a particular instance, for whatever reason, a declaration is not granted but that does not mean for present purposes that there is no claim, matter or jurisdiction. The cases relied upon by Allphones tend to fall into the discretionary area rather than the jurisdictional area, although the boundary may be blurred at times. Thus, in Pacific Brands Household Products Pty Ltd v Singan Investments Pty Ltd [2003] VSC 76, Habersberger J declined to grant a declaration as to the meaning of the terms of an option to purchase which was contained within a lease between the parties as 'unless and until the plaintiff exercises the options to purchase there is no dispute in respect of which the Court can be asked to adjudicate'. So also in Dormer v Solo Investments Pty Ltd [1974] 1 NSWLR 428, Holland J refused to make a declaration that in effect the plaintiff was entitled to serve a notice of rescission of a contract where no such notice had been served. Holland J observed: I am not the least inclined to find limits on the beneficial jurisdiction of this Court to make declarations of right, but it is one thing to declare present contractual rights of the parties, another to declare them contingently on the plaintiff electing to take some course that he has not yet taken is not bound to take and may not take. 79 We assume without comment the correctness of those decisions but do not accept that they support Allphones' contention that the group B members have not, in the present circumstances, established a claim for the purpose of s 33C FCA. 80 A 'claim' is a term to be given a wide meaning. The position taken by the group B members in respect of their current legal entitlements is manifestly clear. All of those legal entitlements presently exist. The only thing that lies in the future for members of group B is the question of what steps they will take in relation to the present legal rights. 81 A passage in Zamir & Woolf, The Declaratory Judgment (2nd ed, 1993) was cited with approval by the High Court in Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334 at 356 and by the New South Wales Court of Appeal in Galaxy Communications Pty Ltd v Paramount Films of Australia Inc (unreported, New South Wales Supreme Court of Appeal, 27 March 1998) per Priestley, Meagher and Stein JJA. It was observed: ... the fact that the plaintiff has an immediate practical interest in the declaration is not sufficient to render real an issue otherwise hypothetical. Nor is it sufficient that, additionally, the defendant has a real interest in opposing it. A substantial interest of both parties in disputing the issue is, indeed, important; but this is not in itself sufficient. If the issue in dispute is not based on concrete facts the issue can still be treated as hypothetical. The absence of a dispute based on concrete facts is critical. This is the missing element which makes a case hypothetical. This element, however, can take different forms and can be lacking to differing degrees. Hypothetical cases have accordingly been divided into four classes for the purposes of discussing the effect of the absence of this element. These are: (a) where there is no dispute in existence; (b) where the dispute is divorced from the facts; (c) where the dispute is based on hypothetical facts; and (d) where the dispute has ceased to be of procedural significance. 82 Applying these tests, there can be no doubt that there is a dispute in existence. The dispute is not divorced from the facts, the dispute is not based on hypothetical facts and the dispute has procedural significance. The dispute is as to both the proper construction of the existing contract and as to the conduct of Allphones in relation to the current contractual relationship between Allphones and the franchisees. 83 As observed by French J (as his Honour then was) in Australian Gas Light Company v Australian Competition and Consumer Commission (No 2) [2003] ATPR 41-962, the fact that declaratory relief relates to future conduct does not place it outside the bounds of federal jurisdiction. The future remains an unknown country and the facts upon which any declaration as to future conduct is made or an injunction granted may change. There is nothing in that circumstance which goes to jurisdiction. The question whether the Court should, in the exercise of its discretion, make the declarations sought falls for determination in the final judgment. 84 In Ashmere Cove 166 FCR 398 (at [53]) the Full Court adopted similar reasoning citing the decision of the Full Court in Aussie Airlines Pty Ltd v Australian Airlines Ltd (1996) 68 FCR 406. 85 Jurisdictional argument aside, even at the discretionary level, Allphones cannot make out its argument to the requisite level. In Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, Lord Dunedin observed (at 448) that the question must be a real and not theoretical question; the person raising it must have a real interest to raise it, he must be able to secure a proper contradictor, that is to say, someone presently existing who has a true interest to oppose the declaration sought. Lord Sumner (at 452) also noted that it had been the accepted practice in cases in the Commercial List to hear and determine claims for a declaration of right, when a real and not a fictitious or academic question is involved and is in being between two parties, in order that they may know what business course to take. 86 In Aussie Airlines Pty Ltd 68 FCR 406, the Full Court, after referring to Russian Commercial and Industrial Bank [1921] 2 AC 438, held that the question of whether Aussie Airlines was a 'new entrant into the domestic aviation industry' under the terms of Qantas' head leases of airport facilities was an appropriate subject for a declaration prior to Aussie Airlines commencing negotiations with Qantas as to the terms of the proposed sub-leases. 87 Allphones raise a similar complaint concerning the injunctive relief because once again it turns only on steps which group B members might take at a future time in relation to their franchise agreement. There is a further argument in relation to the unconscionable conduct claim which turns on alleged threats in relation to reducing or refusing the supply or distribution of stock. That complaint is that the allegations raised against Allphones are already the subject of injunctive orders made by Foster J in Australian Competition & Consumer Commission v Allphones Retail Pty Ltd (No 2) (2009) 253 ALR 324. On the basis that there is no evidence that Allphones is engaging in conduct which would contravene the orders made by his Honour, it is asserted by Allphones that the amendment permitting such claims to be made was not open and should not have been made. 88 This argument appears to overlook the fact that it is the franchisees themselves rather than the Australian Competition and Consumer Commission (ACCC) who are raising the claims and who seek to have the claims resolved not only on an interlocutory basis as, on Allphones' argument, has been achieved in Allphones Retail Pty Ltd (No 2) 253 ALR 324 but at trial by way of permanent injunction. The fact that interlocutory relief to that end has already been granted in another proceeding at the instance of another applicant, (the ACCC), does not preclude these franchisees being able to rely upon that conduct in support of relief which they would seek in their own favour. 89 As with all the matters under consideration, whether or not such relief would or will be granted, is not to the point, the question is whether the claim is arguable. In our view it is. The claim is arguable because there is a real dispute brought to the Court by the group B franchisees who have been informed by Allphones that those franchisees, if they seek renewal of their franchises will be obliged to enter into agreements which differ from the current agreements in a manner which is unfavourable to the franchisees. 90 Quite apart from the obvious practical desirability of having one set of proceedings resolve the matter, we are not persuaded that the dispute is purely hypothetical. 91 The pleaded case relates to a current commercial dynamic in which there is major disputation and significant commercial concern on the part of all parties. It is appropriate for the application of s 33C FCA. As the learned primary judge said (at [85]): … the very purposes and objects of the representative proceeding provisions of the Federal Court Act were designed for a case such as this. A representative proceeding includes both group A and group B franchisees enables a relatively inexpensive and efficient means of clarifying the contractual rights of the franchisees in both categories.

CONCLUSION 92 The primary judge was correct in observing that the current proceedings may be seen to be a continuation of a general commercial dispute between Allphones and a number (if not all) of its franchisees concerning the terms upon which current franchise agreements are to be renewed. That is sufficient for all of those claims to qualify for the purpose of s 33C FCA. 93 Further, from a commercial perspective the dispute is of real importance to any group B member who may presently be contemplating sale of a store, raising borrowings, renewing a lease or other practical considerations. The only difference between group A and group B members is that the latter have not yet sought to renew their contracts. Those matters taken together with the existence of claims render the inclusion of the group B franchisees in the group for representative proceedings highly desirable. 94 For those reasons, the Court should grant leave to appeal but dismiss the appeal. The applicant is to pay the costs of the respondent, to be taxed if not agreed.

I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Tracey and McKerracher.

Counsel for the Applicant: RJ Whitington QC with BC Roberts

Trade Practices Act 1976(Cth)ss 51AC, 80, 87, 87(2)(b)

Trade Practices Act 1974(Cth)

REASONS FOR JUDGMENT SIOPIS J: 1 Mr Weimann is a party to a franchise agreement with Allphones Retail Pty Ltd, the applicant in this application for leave to appeal. 2 On 30 March 2009, Mr Weimann commenced an application in this Court in which he sought, amongst other relief, a declaration as to the construction of cl 3 of the franchise agreement. I will refer in these reasons to Mr Weimann as "the applicant". I will refer to the applicant for leave to appeal as "Allphones". Clause 3 of the franchise agreement deals with the right of a franchisee to renew the franchise agreement. The applicant commenced the application because there was a dispute between the applicant and Allphones as to the proper construction of that clause. In general terms, Allphones contends that cl 3 permits it to require a franchisee who exercises his, her or its right to renew the franchise agreement, to enter into a new franchise agreement which contains terms which are less favourable to the franchisee. The applicant contends that he is, on renewal, entitled to enter into a renewed agreement on the same terms as the existing franchise agreement. 3 By a notice of motion filed on 18 May 2009, the applicant applied to amend the application and statement of claim so as to convert the proceeding into a representative proceeding on behalf of group members comprised of a number of franchisees of Allphones. The group as defined included franchisees who had already exercised their right to renew under cl 3 of the franchise agreement (referred to, before the primary judge, as the group A members) and those who had not yet done so because the time for the exercise of that right had not yet fallen due (referred to, before the primary judge, as the group B members). 4 I interpose to say that at the time of the primary judge's decision there were seven group A members and some 28 group B members. However, group B members would move into the group A category as, with the passing of time, their rights under cl 3 became available for exercise. 5 In very general terms, the amended statement of claim pleads that the applicant and the group members have a different view as to the construction of cl 3 of the franchise agreement. The amended statement of claim goes on to plead that, in effect, Allphones has insisted on dealing with the group members in accordance with its construction of cl 3, and that it has subjected, and threatens to subject, the group members to commercial pressure with the object of procuring that, on renewal, they enter into a new, less advantageous franchise agreement. It is alleged that this conduct by Allphones is unconscionable conduct in contravention of s 51AC of the Trade Practices Act 1974 (Cth) (the TPA). 6 The amended application seeks relief by way of declarations as to the construction of cl 3 of the franchise agreement. It also seeks injunctive relief under s 80 and remedial orders under s 87 of the TPA. 7 On 23 June 2009, the primary judge allowed the applicant's application to amend the application and statement of claim. Allphones seeks leave to appeal from the decision of the primary judge. 8 I have had the advantage of reading the reasons of Tracey and McKerracher JJ who have decided that Allphones should have leave to appeal, and that the appeal should be dismissed. In my view, the decision of the primary judge is not attended with sufficient doubt to warrant the grant of leave to appeal. I briefly set out below my reasons for coming to that view. 9 I gratefully adopt the account of the reasons of the decision of the primary judge, which is set out at [46]-[49] of the reasons of Tracey and McKerracher JJ. 10 In support of its application for leave to appeal, Allphones relied upon the same grounds as it raised before the primary judge in opposition to the applicant's application for leave to amend the application and statement of claim. 11 In the case of Cultivaust Pty Ltd v The Grain Pool of Western Australia [2001] FCA 1812 at [7], Mansfield J said that the test to be applied in opposing an amendment was similar to the test which would be applied if the impugned paragraphs were already included in the statement of claim and there was an application to strike them out as not being capable of sustaining the cause of action pleaded. Senior counsel for Allphones accepted that this was the appropriate test to be applied. 12 Allphones' core contention is that the amendments to the application and statement of claim should have been disallowed because no reasonable cause of action was disclosed in respect of the claims made on behalf of the group B members. 13 As to the claims made on behalf of the group B members, for declarations as to the proper construction of cl 3 of the franchise agreement, it was said that because the group B members had not yet exercised their right of renewal under cl 3 of the franchise agreement (and may never do so), any claim by them for a declaration as to the proper construction of that clause did not give rise to a justiciable controversy. It was said that such a claim did no more than to invite the Court to provide an advisory opinion. 14 As to the claims made on behalf of the group B members, for relief based on the alleged unconscionable conduct of Allphones, it was contended that the fact that the group B members had not yet exercised their rights under cl 3 precluded them from claiming relief under s 80 and s 87 of the TPA. 15 Allphones also contended that, because there was no reasonable cause of action at the instance of the group B members in relation to the declaratory relief sought, it was also not arguable that the group B members had a "claim" within the meaning of s 33C of the Federal Court of Australia Act 1976 (Cth) (the Act). This is because the word "claim" has to be constructed consistently with the limits on the exercise of judicial power.

THE CLAIM FOR A DECLARATION 16 In relation to the claim for declaratory relief, Allphones contended that until such time as the group B members have made a decision as to whether to exercise the right to renew, there is no real dispute which could constitute a justiciable controversy. Until that time, there was only a hypothetical question before the Court because the claim at the instance of the group B members anticipates what may happen in the future. 17 The question of whether there is a reasonable cause of action is to be assessed by reference to the pleadings. The question then is whether the claim pleaded at the instance of the group B members arguably, discloses a controversy affecting "real interests" (Forster v Jododex Australia Pty Limited (1972) 127 CLR 421, per Gibbs J (as he then was) at 437‑438). 18 The amended statement of claim pleads that Allphones has acted, and is likely to act, in its dealing with the group members, in accordance with its construction of the franchise agreement. It is pleaded that Allphones has devised a plan to migrate its existing franchisees from agreements in the form of the existing franchise agreement to a new form of franchise agreement (para 12E). Further, it is alleged that Allphones has informed the applicant and the group members, in effect, that if the applicant or group members decline to execute the new franchise agreement, Allphones would nonetheless require that the applicant and the group members execute a franchise agreement in terms of the new franchise agreement in the event that the applicant or the group member exercised the right to renew (para 19). It is also pleaded that Allphones has applied, and threatened to apply, commercial pressure to achieve its objective. Further, it is pleaded that in respect of those persons who have already exercised their right of renewal, Allphones has sought to insist on those persons executing a new agreement. Further, it is pleaded that the group members will be likely to suffer damage if Allphones is permitted to proceed as it has threatened (para 47). 19 The pleaded case, accordingly, is that Allphones has expressed an intention to act on its construction of cl 3 of the franchise agreement, in relation to all the group members, whether falling into group A or group B, and that the group members are likely to suffer loss or damage if Allphones persists with its threatened conduct. 20 In the Australian Gas Light Company v Australian Competition & Consumer Commission (No 2) [2003] ATPR 41-962, French J (as he then was) after examining a number of High Court authorities, made the following observations at 47,554, at [40] which, in my view, are germane to the question of whether the pleaded case discloses a reasonable cause of action for a declaration as to the construction of cl 3 of the franchise agreement: The making of a declaration as to the lawfulness of future conduct has long been accepted as an exercise of judicial power. The fact that declaratory relief relates to future conduct does not place it outside the bounds of federal jurisdiction. If the claim for the declaration arises out of a contemporary controversy in which a party's freedom of action is challenged in some way, that controversy can constitute a matter for the purposes of the exercise of federal jurisdiction. Whether or not there is a real controversy is a question of judgment. In the present case, in my opinion, there is a real controversy about the right or freedom of AGL to proceed with the proposed acquisition in relation to the Loy Yang A power station and the coal mine. Its freedom to do so has been challenged in a very practical way by the regulator in correspondence and most explicitly in its defence where it denies that the proposed acquisitions would not contravene s 50 of the Trade Practices Act. Reservations about or opposition to a proposed acquisition expressed by the regulator can have very concrete commercial consequences and may in some, if not most, cases effectively prevent an acquisition from proceeding. (Emphasis added.) 21 Further, it is well recognised that the identification of a justiciable controversy is a matter of impression and practical judgment (Re Wakim; Ex parte McNally (1999) 198 CLR 511, per Gummow and Hayne JJ at 585, at [140]). 22 In my view, the amended statement of claim pleads facts upon which it will be open to a court at the trial of the application to determine that there is a real controversy which affects the real business interests of all of the group members (including those in group B). This is particularly so in light of the accepted position that the identification of a justiciable controversy is not an exact science and involves matters of impression and the exercise of practical judgment. Further, the trial court will, in making that assessment, be guided by the consideration that one of the functions of the Court is to provide guidance to those engaged in commerce as to their rights so they may regulate their future conduct. In this case there is, on the pleadings, plainly a dispute as to the meaning of cl 3 of the franchise agreement. Further, in light of the pleading that the group members are likely to suffer loss or damage if Allphones persists in its threatened conduct, founded on its construction of cl 3, it will be open to the trial court to find that the declarations will be of practical assistance to Allphones, as well as the group B and group A members, in making their respective commercial decisions. 23 Although not directly in point, the importance of the role of the courts in assisting those engaged in commerce to order their affairs on the basis of an early understanding of their commercial rights and liabilities has been recently adverted to by Heydon J in AON Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14 at 51, at [137]. 24 Allphones referred to a number of cases in which a court had declined to make declarations sought on the grounds that the claim raised hypothetical questions for determination. However, none of those cases were concerned with the question of whether a reasonable cause of action for a declaration was disclosed in the face of an objection that the pleaded case did not arguably give rise to a justiciable controversy sufficient to invoke the exercise of judicial power under Ch III of the Constitution. 25 It follows, in my view, that it will also be open to a trial court on the pleading to find that the claim for the declaration at the instance of the group B members constitutes a "claim" for the purpose of s 33C of the Act. 26 In my view, the primary judge did not err in rejecting Allphones' objection.

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