Robberds & Anor v Turner Franchising and Allied Services Pty Ltd & Ors

FIRST RESPONDENT Turner Franchising and Allied Services Pty Ltd PARTIES : SECOND RESPONDENT Clive Turner

THIRD RESPONDENT Chooka's International Pty Ltd

FOURTH RESPONDENT Kevin Payne

RESPONDENT ON MOTION Lendlease Real Estate Investments Ltd GPT Management Ltd FILE NUMBER: 4921 of 2003 CORAM: Staff J CATCHWORDS : Unfair contract - Summons under s 106 of Industrial Relations Act - Notice of motion by respondents for joinder of additional respondents - Deed of release and lease between applicants and additional respondents not challenged - Applicants oppose notice of motion - Public policy interests - s 108 of Industrial Relations Act - Preliminary or threshold jurisdictional issue - Whether "appropriate stage" reached - Motion dismissed - Costs LEGISLATION CITED : Industrial Relations Act 1996 Retail Leases Act 1994 Brown v Rezitis (1970) 127 CLR 157 Cukeric v David Jones Limited (1997) 78 IR 430 Dr Payne v The University of Sydney [2000] NSWIRComm 102 Dollfus Mieg Et Compagnie SA v Bank of England [1951] Ch 33 Eslick v Exben Pty Ltd [2001] NSWIRComm 68 Euphoric Pty Limited v Ryledar Pty Limited (2002) 117 IR 1 Heath Group Australasia Pty Limited v Pengly (2001) 110 IR 376 Henry v Global Switch Australia Pty Ltd & Anor [2003] NSWIRComm 307 Hyde v Energy Australia (1999) 92 IR 409 CASES CITED : King v Cake it Away Pty Ltd & Ors [2002] NSWIRComm 45 Metrocall Inc v Electronic Tracking Systems Pty Ltd (No 2) (2000) 102 IR 309 Mitchforce v Industrial Relations Commission of New South Wales (2003) 124 IR 79 Nagle v Tilburg (T/as WD & LJ Nagle & Sons) (1993) 51 IR 8 Paviour-Smith v National Mutual Life Association of Australasia Ltd (1999) 91 IR 8 Robert Rolles and Ors v Donald Scott Surgicals Pty Limited and Anor Fisher P, Cahill VP, Bauer J, (unreported matter No 1948 of 1986, 19/2/1998) Victor Lahoud & Ors v Joseph Lahoud & Anor [2002] NSWIRComm 182 Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 Wong v Cheng T/as Artist Production (1999) 91 IR 369 William John Lyons v Caltex Australia Petroleum Pty Limited [2001] NSWIRComm 11 HEARING DATES: 05/14/2004 DATE OF JUDGMENT: 06/04/2004

FIRST AND SECOND RESPONDENT/APPLICANTS ON THE MOTION Mr P Elias Slater & Elias Solicitors

THIRD AND FOURTH RESPONDENT ON THE MOTION Mr M Burns Hicksons Solicitors

Lendlease Real Estate Investments Ltd and LEGAL REPRESENTATIVES: GPT Management Ltd Mr A Robertson SC Solicitor: Mr P. Stern Piper Alderman

APPLICANTS/RESPONDENTS ON THE MOTION Mr I Neil of counsel Solicitor: Mr G Thiele Rockliffs

JUDGMENT: - 1 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION Coram: Staff J 4 June 2004

ROBBERDS & ANOR V TURNER FRANCHISING & ALLIED SERVICES PTY LTD & ORS.

Application under s 106 of the Industrial Relations Act 1996 INTERLOCUTORY JUDGMENT [2004] NSWIRComm 157

1 On 3 September 2003, Gregory Mervyn Robberds and Eileen Robberds filed a summons for relief under s 106 of the Industrial Relations Act 1996 ("the Act"). The respondents were named as Turner Franchising & Allied Services Pty Ltd ("first respondent"), Clive Turner ("second respondent"), Chooka's International Pty Ltd ("third respondent"), Kevin Payne ("fourth respondent").

2 On 24 October 2003 the first and second respondents filed a notice of motion seeking orders to have Lend Lease Real Estate Investments Ltd ("order 1") and GPT Management Ltd ("order 2"), ("the additional respondents") joined as respondents to the substantive proceedings.

3 In addition, the first and second respondents sought a third order that the first and second applicants file an amended summons within 14 days of the additional respondents being joined to the proceedings.

4 The orders sought in the notice of motion were opposed by Mr A Robertson of senior counsel who appeared for the additional respondents and Mr I Neil of counsel who appeared for the applicants.

5 Before dealing with the submissions in respect of the notice of motion, it is necessary to set out the relevant background.

6 The first and second respondents carry on business as franchisors of franchised retail chicken stores known as "Chooka's Chargrill". The third respondent acts as the master franchisor and the territory franchisor in relation to New South Wales. The fourth respondent is the managing director of the third respondent.

7 On or about 16 December 2002, the applicants, relying upon representations in respect of turnover, the level of fitout, and extended trading hours, entered into a franchise agreement with the first respondent. The premises for the franchise were to be a shop at Erina Fair Shopping Centre on the Central Coast that the first respondent had leased from the additional respondents. The term of the lease was seven years. The additional respondents are the owners of Erina Fair.

8 The applicants paid the sum of $303,822 to the first respondent comprising payment of the fitout costs and the franchise fee. The applicants also entered into a lease agreement with the first respondent.

9 The additional respondents subsequently agreed that the lease of the shop which they had with the first respondent could be transferred to the applicants as joint tenants.

10 The lease permitted extended trading hours until 9.00 pm on Thursdays and Fridays and until 7.00 pm on each other day apart from Sunday when the trading hours concluded at 6.00 pm.

11 However, the Lend Lease Lessor and Lessee Disclosure Statement ("the disclosure statement") which accompanied the original lease and which was executed by the first respondent reserved the additional respondents (lessors) right to adjust the core trading hours to those reflected above. The core trading hours provided for in the disclosure statement were 9.00 am to 5.30 pm Monday to Wednesday; 9.00 am to 9.00 pm Thursday and Friday; 9.00 am to 5.00 pm Saturday and 10.00 am to 4.00 pm Sunday.

12 By letter dated 26 February 2003 the additional respondent (Lend Lease) wrote to the first respondent advising that the lessor no longer reserved the right to adjust (extend) the core trading hours and that they would remain as set out in the disclosure statement.

13 The applicants contend that on or about February 2003 the additional respondents informed them that the trading hours of businesses at Erina Fair, including their business, would be reduced requiring the shop to close at 5.30 pm Monday to Wednesday; 9.00 pm Thursday and Friday; 5.00 pm Saturday and 4.00 pm on Sunday. The National Retail Leases Manager of Lend Lease Property wrote to the first and second respondents seeking authorisation to insert a replacement page 18 into the lease setting out the reduced hours.

14 The first and second respondents refused the request to authorise the reduced trading hours and the insertion of replacement page 18 into the lease contending that Chooka's Chargrill traditionally did 70% of their business after 5.00 pm. The lease was registered with a replacement page 18. The first and second respondents wrote to Lend Lease advising that as it was a meal replacement business and that the applicants had relied upon the extended trading hours. The first respondent contended that the reduction in hours would affect business dramatically and requested an urgent meeting with the proposed additional respondents (Lend Lease).

15 The reduced trading hours resulted in a significant decrease in the profitability of the franchise leading to the applicants vacating the premises and seeking relief in these proceedings.

16 Shortly prior to the commencement of these proceedings on 3 September 2003, the applicants and the additional respondents entered into a deed of release pursuant to which they released each other from all claims.

17 The applicants seek various relief including a declaration that the franchise arrangement and any part thereof, including the franchise agreement was unfair, harsh and unconscionable and contrary to the public interest.

18 Paragraph 20 of the summons sets out the unfairness of the franchise arrangement as follows: (20) In the premises, the Franchise Arrangement, including the Franchise Agreement, were and are unfair, harsh and unconscionable and contrary to the public interest in that they: (a) allowed or permitted, or operated in practice in such a way that allowed or permitted the First, Second, Third and/or Fourth Respondents to make the Turn Over, Fit-Out and Franchisors' Trading Hours Representations, which they knew or ought to have known were false, misleading and deceptive, in order to induce the Applicants to enter into the Franchise arrangement, and without furnishing any of the information stipulated in clause 19 of the Franchising Code of Conduct; (b) did not give any or any proper or adequate contractual force or effect to the Turn Over, Fit-Out and Franchisors' Trading Hours Representations; (c) purported to disentitle the Applicants from relying upon the Turn Over, Fit-Out and Franchisors' Trading Hours Representations, notwithstanding that they were made for the purpose of inducing the Applicants to enter into the Franchise Arrangement;

(d) failed to prevent the First, Second, Third and/or Fourth Respondents from failing to comply with the Assistance Obligation;

(e) failed to provide for any, or any adequate or fair remuneration for the Applicants, including total remuneration that is not less than persons performing the Applicants' work would receive as employees performing the same work;

(f) permitted, or operated in practice in such a way that permitted, the First, Second, Third and/or Fourth Respondents to take unfair advantage of the Applicants' lack of commercial experience and business acumen; and

(g) were otherwise unfair, harsh and unconscionable and contrary to the public interest upon such grounds and for such reasons as the Commission in Court Session may find. 19 The applicants' loss and damage is stated in paragraph 21 as follows:

(21) In the premises, the Applicants have suffered loss and damages as a consequence of the facts and matters set out in paragraph 20, including (a) the total consideration paid by the Applicants to the First Respondent in respect of the Franchise Business was $303,822.00; (b) the trading losses incurred by the Applicants from the date of commencement of the business to 31 July 2003 were $100,118.46 (and continuing); (c) the costs incurred by the Applicants on account of interest payments on the Loan, particulars of which will be provided in due course; (d) the legal costs incurred by the Applicants in connection with the Franchise Agreement and the Loan, particulars of which will be provided in due course; and (e) the total remuneration that the Applicants would have received performing the work as an employee is, particulars of which will be provided in due course.

20 The first and second respondents foreshadowed the filing of their notice of motion at a directions hearing before Marks J on 6 November 2003. His Honour invited the first and second respondent to redraft the applicants' summons to include the allegations which they say ought properly be made by the applicants against the additional respondents or if it was by way of a cross claim to identify the contract under which work was performed or the collateral arrangement.

21 By letter dated 12 November 2003 the solicitors for the first and second respondent forwarded what was described as a "draft amended summons" for relief to the Associate to his Honour.

22 In summary, the additional relief that the first and second respondents sought the applicants to claim was a declaration that the lease and release are unfair, harsh and unconscionable (para 4); an order avoiding the franchise arrangement, the lease and release (para 5); an order varying the franchise agreement, the lease and release (para 6); an order that the proposed additional respondents be jointly or severally liable to indemnify the applicants against any liability (para 6(d),(e)); an order that the proposed additional respondents indemnify the first, second, third and fourth respondents against any order made by the Commission in favour of the applicants (para 11).

23 Mr P Elias, solicitor, appeared for the first and second respondents. His submissions had five prime elements: · Firstly, it is necessary to have the additional respondents before the Commission to determine all of the relevant facts and, if the Commission considers the contract became unfair, who was responsible for that unfairness and the relative apportionment of any liability. · Secondly, Mr Elias relied on an affidavit of Clive Turner sworn on 24 October 2003, filed in support of the notice of motion. Mr Elias submitted that Mr Turner's evidence unequivocally demonstrates that the additional respondents have a sufficient connection and an involvement in the contract or arrangement the subject of the proceedings and were culpably involved in the circumstances giving rise to the unfairness. · Thirdly, it was not a relevant issue in the joinder application whether the applicants sought to challenge the deed of release they entered into with the additional respondents. Mr Elias relied on Eslick v Exben Pty Ltd [2001] NSWIRComm 68; Wong v Cheng T/as Artist Production (1999) 91 IR 369 and William John Lyons v Caltex Australia Petroleum Pty Limited [2001] NSWIRComm 11 to support the principle that the relevant issue is whether it is in the interests of justice that the additional respondents be added to the proceedings and whether it is necessary to have the additional respondents before the Court in order to properly resolve the issues raised in the summons for relief. · Fourthly, Mr Elias submitted that the first and second respondents did not necessarily seek to overturn the deed of release but rather to have the Commission examine the deed as a collateral arrangement or contract and to assess any relevant culpability of the respondents to the proceedings, including the additional respondents, thereby giving it the ability to properly assess the apportionment of any money orders made between the respondents. Mr Elias relied on Cukeric v David Jones Limited (1997) 78 IR 430 and Paviour-Smith v National Mutual Life Association of Australasia Ltd (1999) 91 IR 8 in which the Commission found an unfair release and declared it void. · Fifthly, Mr Elias submitted that the lessors were culpably involved in the circumstances giving rise to the unfairness set out in the summons and that their joinder is necessary in order to properly resolve and determine the issues raised in the summons. Mr Elias summarised his position this way: We don't seek to attack the deed of release that was executed between the Robberds and the lessors. We don't seek to attack the lease itself. What we seek to attack is the conduct of the lessors which led to the formation of the franchise arrangement of which the lease was a collateral document and the ultimate objective of having the lessors joined to these proceedings is that if an adverse order was made against the Turners, then we would seek a further order by the Commission on the facts of this case that the lessors indemnify the Turners against any adverse order made by the Commission, and that's clear, the clear purpose of this notice of motion, and it's not a novel application ...

24 Mr Burns, Solicitor, appeared for the third and fourth respondents and adopted the submissions of Mr Elias.

Submissions for additional respondents (Lendlease and GPT Management)

25 Mr Robertson opposed the joinder advancing the following submissions:

26 Firstly, relying upon Henry v Global Switch Australia Pty Ltd & Anor [2003] NSWIRComm 307, there is no contractual relationship between the first and second respondent and the additional respondents. In Henry the Commission held in determining whether to allow an amendment to proceedings to join additional parties, it was not necessary to consider the merits of any claim. However, the Commission also held that an obvious exception to this approach was where the variation of the proceedings would constitute an abuse of process in some way. Mr Robertson submitted that joinder here would amount to an abuse of process.

27 Secondly, it was submitted it is unnecessary to have the additional respondents before the Commission to determine the issues raised in the summons as the first and second respondent cannot relevantly attack the deed between the applicants and the proposed respondents. Mr Robertson submitted that reliance upon Cukeric and Paviour was misplaced in the circumstances of this case. In Cukeric Mr Robertson observed that the applicant was a party to the deed of release that he sought to overturn. This is not the case here where the first and second respondent are not parties to and have no standing to bring the deed before the Commission. The deed is not a release in respect of an employment contract raising misrepresentation or duress or unconscionability which it was submitted was the case found by the Commission in Paviour.

28 Thirdly, Mr Robertson submitted that the public policy interest is in enforcing the bargains between the parties in settling matters between them and ensuring that parties can be confident that where such bargains are reached the Courts will not easily overturn them, particularly where it cannot be shown that there was any unconscionable conduct on behalf of either of the parties and where the parties to the settlement do not seek to re-visit the arrangement.

29 Fourthly, Mr Robertson submitted that the principles for dealing with interlocutory applications at an early stage were stated in Virtue v New South Wales Department of Education and Training (1999) 92 IR 428; Victor Lahoud & Ors v Joseph Lahoud & Anor [2002] NSWIRComm 182 and Euphoric Pty Limited v Ryledar Pty Limited (2002) 117 IR 1. Mr Robertson summarised the principles as being: although desirable to determine questions of jurisdiction, where possible at a preliminary stage, such determination may only be made where the absence of jurisdiction is clear. A respondent must demonstrate that there is no power in the Commission to grant any relief sought in the application.

30 Mr Robertson submitted there is a clear jurisdictional issue on the deed that can be determined as a preliminary matter to save costs and the inconvenience of the additional respondents in defending an action.

31 Furthermore, it was submitted the Commission does not have jurisdiction to determine matters relating to the lease between the applicants and the additional respondents. In this regard Mr Robertson relied upon Mitchforce v Industrial Relations Commission of New South Wales (2003) 124 IR 79 and the Retail Leases Act 1994 (NSW).

32 Fifthly, Mr Robertson submitted the first and second respondent did not have standing to bring the lease and deed before the Commission under s 108 of the Industrial Relations Act 1996 ("the Act") relying upon Heath Group Australasia Pty Limited v Pengly (2001) 110 IR 376. In that case the Commission held that where the applicant was not alleged to be a party to the arrangement (in that case an arrangement between the first respondent and the third and fourth respondent which they sought to attack as a collateral contract) it had no standing. The Commission's findings were summarised by Mr Robertson as follows: a) it was necessary to consider the ordinary language used in the context of the totality of the provisions; b) section 108 of the IR Act was intended to limit those persons who are entitled to institute proceedings under s 106 of the IR Act; c) section 108 is intended to be restrictive and not expansive and this can be gleaned from the final words contained within the section, namely "and not otherwise"; d) an application under this section can only be made by a party to the contract, the arrangement, the related condition or the collateral arrangement which is the subject of the orders sought under s 106(1) of the IR Act.

33 Mr Robertson submitted the only parties to the lease and release are the applicants in the proceedings and the additional respondents. As the first and second respondent are not parties to the lease or the release, they do not fall within the categories of persons who may apply for an order pursuant to s 108 of the Act and accordingly have no standing to commence proceedings on these contracts or to seek the joinder. The only persons that have standing to bring these contracts or arrangements before the Commission are the applicants who have declined to do so and have signed a deed preventing them from doing so.

34 Mr Robertson also referred to King v Cake it Away Pty Ltd & Ors [2002] NSWIRComm 45 where the Commission considered the procedure in respect of cross claims. Mr Robertson summarised the Commission's findings as follows: a) There is no procedure by way of cross claim in the Industrial Relations Commission Rules 1996 ("the Rules"); b) Rule 89.5 of the Rules provides that the procedures of the Supreme Court should be used where the rules are silent and there is no established procedure. Section 78 of the Supreme Court Act applies to cross claims; c) A cross claim by a defendant can only be made under section 78 where the Court has power to grant relief against the cross defendant as if the cross defendant were a defendant in separate proceedings commenced by the cross-claimant; d) If the Commission adopts the procedure of cross claim brought by a defendant as contained within section 78 of the Supreme Court Act, it is necessary for the cross-claimants to demonstrate that they would be entitled to relief as if they were applicants for relief in separate proceedings commenced against the respondents in the Commission. 35 Mr Robertson contended that the first and second respondent had no standing under s 108 of the Act and accordingly there was no basis upon which they could bring a cross claim.

36 Mr I Neil opposed the orders sought by the first and second respondents. Mr Neil's principal submission was that there was no jurisdiction to grant joinder of the additional respondents in circumstances where no relief was sought against them and it would be necessary to add the new subject matters of the lease and the deed to the summons and in effect compel the applicants to amend.

37 Mr Neil acknowledged that s 170 of the Act permitted the Commission to join a party but submitted the Commission could not compel an amendment to the summons by the applicants. Similarly, r 148 does not compel the applicants to amend the proceedings to plead a new cause of action against new parties. In other words, Mr Neil contended that there was not jurisdiction in the Commission to compel the applicants to prosecute a cause of action against the additional respondents. Mr Neil submitted that there was no established practice, procedure or usage of the Commission or indeed any other superior court, that would authorise such an irregular proceeding. None of the authorities to which the first and second respondents have referred to, bear any relevant similarity to the present application. Mr Neil relied on Dollfus Mieg Et Compagnie SA v Bank of England [1951] Ch 33 for the proposition that an applicant cannot be compelled to proceed against other persons for whom there is no desire to sue.

38 Furthermore, Mr Neil submitted that the first and second respondents do not suggest that they would or could indemnify the applicants against the costs of prosecuting any proposed new claim, any order for costs that might be made against them in relation to the proposed new claim, or any liability that they may incur as a consequence of being compelled at the suit of the first and second respondent to contravene their contractual obligations to the proposed new parties.

39 Mr Neil submitted that if the first and second respondents wished to bring a claim against the proposed new parties, then they cannot do so by seeking to compel the applicants to act as their proxies; the only course available to them is to seek to prosecute the claim themselves.

40 Finally, Mr Neil referred to a number of matters in submitting that in any event the Commission should decline to exercise its discretion, these included who would compel the applicants to open their case against the additional respondents; who compels the applicants to call evidence against the additional respondents; who protects the applicants from any consequences they might suffer as a result of such actions; who will be liable for costs if the applicants fail against the additional respondents and why should the applicants' solicitors be required to provide a certificate under s 198L of the Legal Profession Act 1987 certifying the arguability of a case against the additional respondents to whom they have already given a deed of release.

41 In reply Mr Elias submitted that it was not necessary that there be any amendment to the summons as filed and that the first and second respondents did not seek such an amendment.

42 There can be no doubt that power lies with this Court to join persons who are not necessarily parties to a contract sought to be avoided under s 106 of the Act: see s 170 of the Act; r 83(c) of the Rules. In addition, see the observations of Barwick CJ in Brown v Rezitis (1970) 127 CLR 157 at 163-164.

43 This Court has, on numerous occasions, ordered that a person(s) be added as a respondent to proceedings commenced under s 106 of the Act or its predecessor. On occasions, the application has been made by an existing respondent to have further respondents added to the proceedings. See Eslick v Exben Pty Ltd [2001] NSWIRComm 68; Robert Rolles and Ors v Donald Scott Surgicals Pty Limited and Anor, Fisher P, Cahill VP, Bauer J, (unreported, matter No 1948 of 1986, 19/2/1998); William John Lyons v Caltex Australia Petroleum Pty Limited [2001] NSWIRComm 11.

44 There is much to commend the approach that the Court has adopted in joining additional respondents in applications brought under s 106 of the Act. It enables the "actors deriving benefit from the making or the execution of the contract or arrangement" to use Barwick CJ's description (at 164) in Brown v Rezitis to be before the Commission when it is considering a contract, arrangement or collateral arrangement within the broad limits of s 106 and determining the matter in the one hearing.

45 In my view what is required to be considered in this matter is the propriety of adding the additional respondents. As Mr Neil submitted, quite correctly in my view, there is no jurisdiction to compel the applicants to amend their summons to plead a new cause of action against new parties, nor could the applicants be compelled to prosecute such a cause of action. The deed of release and the lease between the applicants and the additional respondents are not part of the pleadings relied upon by the applicants.

46 This, in my view, weighs heavily against joining the additional respondents. Furthermore, the applicants, having entered into a deed of release with the additional respondents, make no claim against them. In both Cukeric and Paviour the applicants were parties to a deed of release that they sought to overturn. This is not the case here. No attack is made by the applicants on the terms of settlement reached with the additional respondents as being unfair. In Dr Payne v The University of Sydney [2000] NSWIRComm 102, Schmidt J said at [91]: Courts may have a discretion to decline to enforce a compromise, if injustice would result from its enforcement. In Harvey , the High Court took the view that there was no such discretion where an agreement was made in settlement of the matter, where express instructions to settle the matter had been given, even as a result of moral pressure from a party's legal adviser.

47 Later at [94] her Honour said: The Court cannot overlook the important public interest in parties adhering to the bargains which they make in settlement of proceedings which they have brought, thereby bringing litigation to an end. This must especially be the case when one side of the bargain has acted in accordance with the agreement reached and the other has benefited as a result.

48 The applicants in the proceedings had independent legal advice and received benefits from entering into the deed by way of release from rental arrears and future obligations. The additional respondents have relied on the deed and have entered into other contracts (leases) in respect of the property the subject of the deed.

49 In my view the public policy interest is in enforcing the bargains between the parties in settling matters between them and ensuring that the parties can be confident that when such bargains are reached the courts will not easily overturn them, particularly where it cannot be shown that there was any unconscionable conduct on behalf of either of the parties, and where the parties to the settlement do not seek to re-visit the arrangement.

50 In Robert Rolles and others v Donald Scott Surgicals Pty Limited and Anor, Fisher P, Cahill VP, Bauer J (unreported, matter No 1498 of 1986, 19 February 1988) found that the joining of additional respondents in an application under s 88F (a predecessor to s 106) was within jurisdiction. The fact that a settlement of the application between the applicants and the original respondents had occurred after the proceedings had commenced was found not to affect the jurisdiction or discretion of the Commission to make orders affecting the additional respondents.

51 The matter proceeded after settlement had been reached with the applicants on the basis of a cross claim being pressed by the additional respondents against the original respondents.

52 The Full Bench on appeal found no error with this approach nor with the findings made by Sweeney J at first instance that the sum agreed to be paid to the applicants should be apportioned between the respondents.

53 Although such an approach is open to the Court, it seems to me that it would create an unnecessary burden upon the applicants, particularly where the contract or arrangement sought to be challenged involves a lease and a release that is not attacked by the applicants. Furthermore, unlike in Donald Scott Surgicals Pty Ltd, no settlement has been reached between the applicants and the respondents in these proceedings.

54 The subject of the existing summons is the franchise arrangement between the applicants and the existing respondents. The "amended summons" proposed to add two new causes of action against new respondents, the subject matter of those causes of action being the lease and the deed of release. The third order sought in the notice of motion was that the first and second applicants file an amended summons. As I understand Mr Elias' submissions, the first and second respondents do not rely upon the "amended summons" in support of the notice of motion. They now seek joinder of the additional respondents to the proceedings on the existing summons.

55 The difficulty I have with this approach is that there is no contractual relationship between the first and second respondents and the additional respondents. This raises the issue of whether the first and second respondents have standing to bring the deed of release and the lease before the Court in circumstances where the applicants decline to do so.

56 This matter was raised by Mr Robertson who referred the Court to s 108 of the Act.

57 Section 108 of the Act relevantly provides: 108 An order may be made under this division on the application of: a) any party to the contract, or b) any person who, but for the making of such an order would be a party to the contract. ... and not otherwise.

58 Section 108 limits the class of persons who are entitled to apply for relief under s 106. Relevantly, for the present purposes this is a party to a contract (franchise agreement), as that word is defined in s 105. The first and second respondents are not parties to the release or the lease and the summons filed by the applicants seeks no relief against the additional respondents.

59 The origin of s 108 was conveniently summarised by Wright J President in Hyde v Energy Australia (1999) 92 IR 409 commencing at 423. His Honour's observations were adopted by a Full Bench of this Court in Metrocall Inc v Electronic Tracking Systems Pty Ltd (No 2) (2000) 102 IR 309. The Full Bench confirmed that when considering the meaning of the term "contract" where used in s 108, it is necessary to take into account the definition of "contract" contained in s 105. Section 108 permits an application for such an order to be made, for relevant purposes, only by a party to the contract, the arrangement, the related condition, or the collateral arrangement which is the subject of the orders sought under s 106(1).

60 It follows that in these proceedings, the first and second respondents cannot seek orders declaring void the contract or arrangement between the applicants and the additional respondents. The only persons that would have standing to bring these contracts (the lease and the release) before the Court are the applicants in the proceedings or the additional respondents each of whom in this case have declined to do so and have signed a deed preventing them from doing so.

61 In this matter, it is also necessary to consider whether this is the "appropriate" stage to determine this aspect of the proceedings.

62 The principles for determining a preliminary or threshold jurisdictional issue at an early stage of the proceedings were considered by the Full Court of the former Industrial Court of New South Wales in Nagle v Tilburg (T/as WD & LJ Nagle & Sons) (1993) 51 IR 8. The Court stated at 11-12: We would draw from those authorities the proposition that whilst it is desirable for a case to be determined at an early stage it is only open to do so at the appropriate stage of the proceedings, that is, where the facts, either established by evidence or plainly agreed in terms, enable the Court to determine what the contract or arrangement is or, at least, the parameters of the contract or arrangement. In other words, it seems to us, unless the facts are sufficiently established to enable the Court to be satisfied it has the necessary material to reach a clear and final decision on the question then the appropriate stage has not been reached for such a determination to be made.

63 The relevant principles established by this Court and its predecessors were recently restated by Wright J President in Virtue v New South Wales Department of Education and Training (1999) 92 IR 428 at 447. These principles, as summarised by his Honour are as follows: (1) The discretion of a court to determine a case at an early stage, when appropriate, has been repeatedly accepted. (2) As a general rule it is desirable that an objection to jurisdiction be determined as early as circumstances will conveniently admit so that the tribunal does not embark on a hearing which it lacks authority to conduct. The course of a court entertaining a challenge to jurisdiction in a preliminary or threshold way is often a sensible one where a party has a substantial threshold argument which, if it succeeds, will knock out the claim and save the costs and inconvenience that attend a protracted hearing of proceedings on the merits. (3) However, a further general proposition is that all issues arising should be dealt with in the substantive proceedings unless the basis for a challenge, either on jurisdictional grounds, or for lack of a reasonable cause of action, be clearly demonstrated. (4) Threshold relief of the kind sought here must be conserved to a clear case where it is plain that the invocation of the jurisdiction impugned is wholly misconceived or, upon analysis, lacks an arguable legal foundation. (5) Necessarily, refusal of relief at the threshold will not finally determine that jurisdiction exists for any order which the Court might make between the parties. This is because, to secure relief, the claimants must demonstrate that no order could be made which would be within jurisdiction. The resulting burden is a heavy one. (6) Accordingly, whilst it is desirable for a case to be determined at an early stage it is only open to do so at the appropriate stage of the proceedings. That is, where the facts, either established by evidence or plainly agreed in terms, enable the Court to determine what the contract or arrangement is or, at least, the parameters of the contract or arrangement. In other words, unless the facts are sufficiently established to enable the Court to be satisfied it has the necessary material to reach a clear and final decision on the question then the appropriate stage has not been reached for such a determination to be made. (7) Similarly, the jurisdiction to terminate an action summarily for want of a cause of action is to be sparingly employed and ought not to be used save where the lack of the cause of action was clearly demonstrated.

64 In the present proceedings the first and second respondents are not seeking to have a jurisdictional issue determined. What is being sought is the addition of two respondents. The application for joinder gives rise to a jurisdictional issue in respect of whether the existence of a deed of release not challenged by the applicants and to which the first and second respondents are not a party should be sufficient, when considering the public interest, to preclude the joinder of the proposed respondents. In my view it should. Although the Court has wide powers under s 106, such powers should not be used to interfere with legally binding arrangements entered into between parties who wish to adhere to their agreement.

65 In my view, the appropriate stage has been reached for a determination to be made. The application by the first and second respondent lacks an arguable legal foundation in circumstances where they are not parties to a deed of release and a lease. The applicants, if the motion were granted, would be put to additional costs if the additional respondents were added to the proceedings.

66 In addition, as Mr Neil observed the applicants cannot be compelled to bring any evidence against the proposed respondents if joined to the proceedings. Furthermore, the applicants may incur a liability in circumstances where there was contravention of their contractual obligations to the proposed new parties.

67 I am of the view that public interest considerations weigh more favourably in dismissing the motion for joinder. It seems to me that were I minded to join the proposed parties, it could give rise to an injustice between the applicants and the additional parties in circumstances where they have settled the issues between them and reflected their agreement in a deed of release. Such deed contains the usual standard clauses regarding mutual releases, binding effect of the deed and bar to proceedings. Neither party to the deed seeks to impugn it in these proceedings. It would therefore be unjust to add as defendants parties against whom the applicants have no claim and do not desire to prosecute. The additional defendants should not be added for the convenience of other defendants.

68 For the reasons outlined, I consider that it is not in the overall interests of justice to join Lendlease and GPT Management to these proceedings in order to fully and properly resolve and determine the issues raised in the summons for relief.

1. The notice of motion is dismissed. 2. The first and second respondents are to pay the costs of Lendlease Real Estate Investments Ltd and GPT Management Ltd. 3. In all other respect costs are reserved.

4. I fix this matter for a conciliation conference at 10.00 am on 23 June 2004.

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