Punchbowl Casual Dining Pty Ltd v Rashays Cafes & Restaurants Pty Ltd

1. The applicants be granted leave to amend the originating process in the form annexed to the affidavit of Mr Vaughan dated 17 September 2024.
2. Leave to amend the statement of claim in the form annexed to that affidavit be refused.
3. The applicants pay the respondent's costs of the interlocutory application dated 17 September 2024. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

JACKMAN J: 1 These proceedings concern a "Rashays" restaurant in the Sydney suburb of Punchbowl operated by the first applicant, the franchisor being the respondent. The proceedings were commenced on 4 December 2023. I granted an ex parte interlocutory injunction in December 2023 which was continued on 16 February 2024 over the opposition of the respondent: see Punchbowl Casual Dining Pty Ltd v Rashays Cafes & Restaurants Pty Limited (No 2) [2024] FCA 127. Accordingly, an interlocutory injunction remains in place restraining the respondent from evicting the applicant from the Punchbowl premises or taking possession of those premises or otherwise interrupting the applicants' business operations there. 2 On 16 February 2024, the matter was set down for final hearing commencing on 29 May 2024 with an estimate of three days. On 1 March 2024, I made orders for the service of pleadings, lay and expert evidence, the preparation of a court book, objections and submissions by certain dates for the preparation of that hearing, and I made new orders relating to those matters on 21 March 2024. On 24 May 2024, the hearing listed on 29 May 2024 was vacated and the applicants were ordered to pay the costs associated with the vacation of the initial trial. I then set the matter down for a final hearing on 2 October 2024 with an estimate of three days and made new orders for the conduct of the pre-trial steps. Those orders were subsequently varied on 20 August 2024. The matter was listed before me on 13 September 2024 for case management at the request of the respondent as a result of the applicants having defaulted in compliance with the orders made on 24 May 2024 and varied on 20 August 2024. On the evening of 16 September 2024, the applicants advised the solicitor for the respondent for the first time that they intended to bring an interlocutory application seeking to amend the original application and statement of claim. 3 The interlocutory application seeks to raise a new allegation of breach of a clause in the franchise agreement concerning the exclusivity of the franchise granted to the applicant within the defined territory. It is alleged that on or about 26 June 2023, the respondent opened a franchise in Beverly Hills, which is within the territory and thereby breached the franchise agreement, causing loss and damage to the applicant. An expert report by Mr Lee, which was served by the applicant on 16 September 2024 in breach of the timetable, opined on there having been a material loss of revenue to the applicants' Punchbowl franchise attributable to the opening of the franchise at Beverley Hills. 4 The applicants have led no evidence as to when they became aware of the opening of the Beverly Hills franchise. In the absence of that evidence, I infer that they would have known about the opening of the Beverly Hills franchise very shortly after late June 2023, and if that franchise had caused a material diminution in revenue, then that would have been a matter apparent to the applicants very shortly after that. There is no evidence at all seeking to explain the delay in bringing the amendment application, other than a reference to the expert evidence of Mr Lee seeking to quantify the damage allegedly resulting from the proposed allegation of breach of the exclusivity clause. 5 The solicitor for the respondent, Mr O'Donnell, gives evidence that the respondent is unable to prepare evidence to meet the new allegation in time for the hearing commencing next week on 2 October 2024. The respondent has retained an expert accountant, Mr Mullins, who is unable to respond to Mr Lee's report as to the proposed amendment in sufficient time and may also require additional evidence from a geodemographic expert. 6 The matter is plainly urgent, especially given the continuation of the interlocutory injunction. It is for that reason that I sought to give it the earliest final hearing the Court could accommodate, initially 29 May 2024, and after that date was vacated, 2 October 2024. If the amendment is allowed, it will cause irremediable prejudice to the respondent, which, on the evidence before me, is unable to prepare expert evidence in response to the new allegation in sufficient time. No application has been made by the applicants to vacate the hearing dates, which would in itself have been problematic and would probably have caused irremediable prejudice to the respondent also. That is sufficient to require refusal of the amendment application. That conclusion is fortified by the lack of any explanation or evidence for the delay in bringing the application to amend, in circumstances where I infer that the material facts have been known to the applicants (if true) for more than a year. 7 The application also seeks to amend the originating process to include claims for equitable compensation in conjunction with allegations of an equitable estoppel. Those amendments are not opposed, and I allow those amendments on the basis of the allegations made in the statement of claim, not on the basis of the proposed amended statement of claim. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.