Just Better Care Australia Pty Ltd v Just Better Care Canberra Pty Ltd

THAWLEY J 1 By an interlocutory application filed on 15 February 2018, the applicant seeks an order joining Ms Ann Therese Nelson (Ms Nelson) as the sixth respondent to the proceedings. 2 On 2 March 2018, I made various orders including orders to facilitate the determination of the joinder application on the papers. The applicant filed submissions dated 9 March 2018 and an affidavit sworn by Ms Nevin on 9 March 2018. The applicant also relies on this application on evidence filed earlier and referred to in its written submissions, including affidavits of Ms Chandler sworn 24 January 2018 and 7 February 2018. The first and second respondents filed submissions dated 16 March 2018 and two affidavits affirmed 16 March 2018, one by Mr Nelson and the other by Ms Nelson. The applicant filed submissions in reply dated 20 March 2018. 3 A summary of the background to the proceedings can be found in Just Better Care Australia Pty Ltd v Just Better Care Canberra Pty Ltd (Trustee) [2018] FCA 114. The applicant (JBCA) is a franchisor who supplies community home support and other goods and services. The first respondent (JBCC) was the franchisee for the Canberra region from 18 January 2013 until 18 January 2018 under a franchise agreement. 4 The second respondent (Mr Nelson) was a former director of JBCC and apparently the manager of the third respondent (Vivere). Vivere has apparently supplied services in competition with JBCA since about 10 January 2018. 5 The fourth respondent (TFR) is a company which, since December 2017, has apparently employed community support providers and nurses to assist the patients formerly of JBCC, now Vivere. Mr Nelson contends that JBCA approved TFR being the employment vehicle. 6 The fifth respondent (Mr Woolley) performed duties for JBCC's business as an employee of Nelson Admin Pty Ltd. He was apparently employed by Nelson Admin Pty Ltd from 27 November 2013 to 18 January 2018. He is now the sole director of Vivere and TFR. 7 The applicant claims that the respondents have, inter alia, breached the franchise agreement and an equitable duty of confidence and contravened the Australian Consumer Law (ACL), being Schedule 2 of the Competition and Consumer Act 2010 (Cth), and unlawfully interfered with contractual rights. 8 The proposed claims against Ms Nelson arise out of substantially the same facts as against the existing respondents and substantially overlap with them. They are contained in an Amended Originating Application and an Amended Statement of Claim which were filed on 2 March 2018. The claims are for alleged: (1) misuse of confidential information; (2) misleading or deceptive conduct contrary to s 18 of the ACL; (3) unlawful interference in contractual rights. 9 Ms Nelson is the wife of Mr Nelson. She has been the sole director and shareholder of Nelson Admin Pty Ltd (ACN 161 030 852) (Nelson Admin) since 31 October 2012. Nelson Admin provided administrative and human resources services to JBCC, but was not a party to any agreement with JBCA. 10 There is a dispute as to the extent of Ms Nelson's involvement in the business of JBCC: (1) The applicant, JBCA, contends her involvement was from 19 April 2012 to 12 January 2017 and 30 June 2017 to 17 January 2018. This contention is supported by the affidavit of Ms Nevin of 9 March 2018 which annexes a "User Login Audit Log Report" which indicates that Ms Nelson logged into "Procura" which was JBCA's client management system used by JBCC on a regular basis between those dates. Ms Nevin is the Operations Manager of JBCA. The affidavit states that "Procura" can only be accessed by employees of JBCC, each of whom is given a personal username and password. (2) The first and second respondents, JBCC and Mr Nelson, contend Ms Nelson was employed by JBCC only for about two months. As to her involvement with the business, Mr Nelson says Ms Nelson "was never involved in the management decisions of JBCC". Ms Nelson in her affidavit of 16 March 2018 says she was an employee of JBCC for a period of two months in or around April 2012, during which time she worked at reception answering calls and emails. Ms Nelson's affidavit only addresses the question of her employment by JBCC and does not address more generally her involvement, if any, in its business. It does not address the evidence of Ms Nevin or address whether she logged in to "Procura" over the period asserted by JBCA and, if so, for what purpose. This is not addressed in any of the evidence filed at this stage. 11 There is also a dispute as to whether Ms Nelson knew about the franchise agreement. Ms Nelson in her affidavit says she has not read the franchise agreement and is not aware of the terms of any such agreement. JBCA points to the fact that Ms Nelson has had "a not insignificant role" in the business of JBCC, is married to Mr Nelson and is a director of Nelson Admin Pty Ltd. 12 There is material before the Court which indicates involvement on the part of Ms Nelson in the business of Vivere since January 2018. The applicant in its submissions referred to an affidavit of Ms Chandler sworn 24 January 2018, which indicates that Ms Nelson sent emails from her address ann.nelson@justbettercare.com to ann@vivereaustralia.com.au, attaching (amongst other documents) invoices sent to customers of JBCC. That information permits identification of customers, certain contact details and certain other information. Ms Chandler's evidence was referred to and relied upon in the applicant's submissions dated 9 March 2018. Ms Nelson does not respond to this material directly in her affidavit of 16 March 2018. The first and second respondents submit that, to the extent confidential information belonging to JBCA was transferred to Vivere, this was a matter described by Mr Nelson in his affidavit affirmed 7 February 2018 at [74]-[75] and "had nothing to do with Ms Nelson". No explanation has been provided as to how the emails identified in the affidavit of Ms Chandler above were sent or by whom. 13 These disputes are questions of fact which are appropriately resolved at trial, when the evidence is complete and there is the opportunity for cross-examination, if necessary. 14 The applicant submits that: (1) Ms Nelson should be joined to the proceeding pursuant to r 9.05(1)(b)(iii) of the Federal Court Rules 2011 (Cth) "in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings" because their dispute against Ms Nelson is both "related to the proceedings" and is "sufficiently arguable": Fewin Pty Ltd v Burke [2016] FCA 503 at [48(2)] and [56] per Markovic J. (2) The proposed claim against Ms Nelson is a "related dispute" - see: ACCC v Launceston Superstore Pty Ltd [2013] FCA 297 at [13]-[15], per Edmonds J. It is related, so it is contended, because they arise out of the same facts, namely the creation by Mr Nelson, Mr Wolley, Vivere and TFR of a business in competition with JBCA through a step of transferring customers and clients of JBCC (the franchisee) to Nelson Admin Pty Ltd (of which Ms Nelson is the sole director and shareholder). (3) The related dispute is "sufficiently arguable". The application "should not be refused unless it is clear that there is no real question to be tried in the sense that there needs to be a high degree of certainty about the ultimate outcome of the proceeding" - see: Sienkiewicz v Salisbury Group [2013] FCA 977 at [38] and [42], per Robertson J. 15 The first and second respondents, JBCC and Mr Nelson: (1) accept that the claims against Ms Nelson are a "related dispute" within the meaning of r 9.05(1)(b)(iii); (2) submit that joinder should be refused because: (a) first, the causes of action against Ms Nelson have no reasonable prospects of success and they would not withstand an application for summary judgment, referring to Review Australia Pty Ltd v Redberry Enterprise Pty Ltd [2003] FCA 1009 and Jefferson Ford Pty Ltd v Ford Motor Company of Australia Limited (2008) 167 FCR 372 at [19]; and (b) secondly, the joinder is an abuse of process. 16 The first and second respondents make various complaints about what is referred to as a "lack of precision" in the pleadings and the ability of the applicant to make out its case. The principal question is whether Ms Nelson should be joined. Disputes about pleadings and particulars, if not resolved between the parties as would commonly occur, can be dealt with later. 17 It is sufficiently arguable for the purposes of joinder that the information transferred was confidential information belonging to JBCA and that Ms Nelson had some involvement in its transfer and that she may have owed an obligation of confidence to the applicant. I do not make any findings in that respect and note that the evidence in relation to the claim and the defence of it has not been completed. The claim appears at least sufficiently arguable for the purposes of permitting Ms Nelson to be joined. 18 As to the claim of interference in contractual relations, I would not prevent joinder of Ms Nelson in respect of this claim merely because of her denial of knowledge of the terms of the franchise agreement. A joinder application is not usually defeated merely by a denial by the prospective party to be joined of one of the material facts which must be proved by the applicant. The first and second respondent say that it has not been explained how the movement of employees of Nelson Admin could constitute a breach of the franchise agreement to which Nelson Admin is not a party. The franchise agreement contained non-compete and other clauses binding the franchisee, JBCC. The complaint as I apprehend it is that the relevant respondents, including Ms Nelson if joined, unlawfully interfered in the contractual relations between JBCA and JBCC. In my view, any deficiency in the pleading can be rectified by amendment if necessary or clarified by a request for and the provision of particulars. The substance of the claim being advanced is sufficiently arguable for the purposes of joinder. 19 The misrepresentation claim revolves around an email sent by Ms Nelson from her email address ann.nelson@justbettercare.com stating that "as of 18 January 2018 we will rebrand as follows Vivere (it means 'to live')". The email was sent to a Finance Officer employed by Involve Eurobodalla (Disability Service). This is pleaded to misrepresent, in contravention of s 18 of the ACL, that there was some lawful connection or affiliation between Vivere's business and JBCA's business. It is pleaded that, by reason of the contravention, Involve Eurobodalla (Disability Services) has not entered into any service agreement with the Franchisor and that further particulars of loss and damage will be provided after discovery. The first and second respondents submit that the email did not include the representation. In my view, it is arguable that the email did convey that representation, or something similar, such that the claim is sufficiently arguable. Secondly, the first and second respondents submit that JBCA has not entered into any service agreements with any person and that the applicant cannot prove that the alleged misrepresentation caused the pleaded loss. In my view, it is premature to conclude that the applicant cannot prove loss. 20 The first and second respondents claim that the joinder application is an abuse of process and is made for an ulterior purpose, namely "to maximise pressure on Mr and Ms Nelson personally". The submission is that such an inference should be drawn for three reasons: first, that Nelson Admin is "the natural respondent to the claims"; secondly, that the claims have no reasonable prospect of success; thirdly, the expense of bringing and maintaining the claims is "manifestly unlikely to justify the expense of bringing" the claims. I do not accept that the joinder application is an abuse or process. As to the first matter, there may be reasons not to join Nelson Admin, such as its capacity to meet a judgment if the applicant were to succeed. The applicant has presumably made forensic decisions about who to join and who not to join. As to the second matter, the claims appear at least sufficiently arguable at this stage and I do not conclude that they have no reasonable prospects of success. As to the third matter, it is premature to determine whether the costs outweigh the benefit and I would not be convinced in any event that - even if that were established - that would necessarily support a conclusion that the joinder was an abuse of process or made for an ulterior purpose. The incremental cost associated with expanding the proceedings to include Ms Nelson might not be that significant and are likely to be significantly less than would be the case if the applicant were to bring separate proceedings against Ms Nelson. 21 I am not able to conclude on the material before me that the applicant's contentions are hopelessly unarguable and it seems to me that they are sufficiently arguable to warrant taking them to trial. In my view, joinder of Ms Nelson is appropriate. If Ms Nelson had been joined from the outset and an application had been sought for summary judgment, it would not have been granted on the material before me on this application. If she were not joined to these proceedings, the applicant could institute separate proceedings against her, making the claims it now wishes to make. This would increase costs and the risk of other unsatisfactory outcomes including the potential for two proceedings in respect of the same factual substratum giving rise to the possibility of inconsistent findings. This is plainly undesirable. 22 For these reasons, I make the following orders: (1) I grant leave to the applicant to join Ms Nelson as sixth respondent. (2) The applicant serve the Amended Originating Application and Amended Statement of Claim filed on 2 March 2018 on Ms Nelson on or before 13 April 2018. (3) Ms Nelson is to file any notice of address for service or defence upon which she intends to rely within 28 days after service of the Amended Originating Application and Amended Statement of Claim. (4) Costs of the interlocutory application filed 15 February 2018 be costs in the cause. (5) The proceedings be listed for a case management hearing at 9:00am on 17 May 2018. (6) Reserve liberty to the parties to apply on 3 days' notice. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Thawley.

SCHEDULE OF PARTIES NSD 69 of 2018 Respondents Fourth Respondent: THE FORWARD ROAD PTY LTD (ABN 78 614 839 164) Fifth Respondent: ROBERT WILLIAM EDWARD WOOLLEY