SW & JD Reilly & Sons Pty Ltd v Australian Co-operative Foods Limited

Industrial Relations Commission (NSW)|2012-02-14|Before: Marks J, Mr P

Judgment ON APPLICATION TO AMEND PROCEEDINGS 1These are proceedings brought under s 106 of the Industrial Relations Act 1996 ("the Act"). The applicant is SW & JD Reilly & Sons Pty Ltd and the respondent is Australian Co-operative Foods Limited. The proceedings were originally commenced on 1 May 2002. The contract that is sought to be impugned is a contract between the respondent, trading under the name Dairy Farmers, and the applicant, pursuant to which the applicant would distribute Dairy Farmers' milk product to supermarkets in a particular area. That delivery contract was originally, and remains, the only contract that is the subject of these proceedings. The applicant now seeks by motion to further amend the proceedings. The respondent has resisted the amendment. 2The proceedings are currently constituted by an amended summons for relief filed on 18 April 2006. 3The respondent became concerned about the delay in the preparation of the applicant's evidence and filed a motion seeking certain orders on 11 March 2008. In proceedings heard on 3 April 2008, I ordered that the applicant was to file and serve all evidence upon which it relied in the proceedings in its case in chief by 1 May 2008 and indicated that it would not be permitted to rely on any evidence not filed by that date "without further order of the Court or without the consent of the respondent." This order did not extend to expert evidence. The applicant's expert evidence was eventually filed on 22 April 2009. 4In 2009, the respondent filed a motion seeking to strike out the proceedings on the basis that the Court lacked jurisdiction to deal with them under s 106 of the Act. In dismissing the motion, I held that the appropriate time in the proceedings had not been reached to determine this jurisdictional issue. See SW & JD Reilly & Sons Pty Limited v Australian Co-operative Foods Limited [2009] NSWIRComm 176. The respondent subsequently appealed to a Full Bench of this Court and later to the New South Wales Court of Appeal. It was unsuccessful in both appellate proceedings. See Australian Co-operative Foods Limited v SW & JD Reilly & Sons Pty Limited [2010] NSWIRComm 110 and [2011] NSWCA 148. 5The delivery contract, which is at the heart of these proceedings, was initially for a fixed period, and thereafter on a month-to-month basis. A substantial amount of correspondence between solicitors acting for both the applicant and the respondent was tendered into evidence for the purpose of this interlocutory application. It is indicative of a number of problems arising relating to deliveries to particular supermarkets, including access to delivery docks, relationships with supermarket personnel and the times of delivery. These difficulties extended, significantly, between 2007 and 2010. Furthermore, the applicant complained, through its solicitors, that a number of supermarkets within shopping complexes had been "rebranded" and that it had been denied the ability to deliver Dairy Farmers' products to the rebranded supermarkets, allegedly contrary to the provisions of the delivery contract. 6Ultimately, in the context of particular disputation between the parties about whether the applicant was or was not performing particular obligations, the respondent gave the applicant six months' notice on 22 December 2010 that the delivery contract would come to an end. It seems that it terminated on 22 June 2011.

The proposed amendments 7The amended summons in its current form is somewhat lengthy, consisting of approximately 14 closely typed pages. I shall endeavour to summarise the substance of the amendments sought rather than endeavour to describe them in detail within the context of the overall current amended summons. 8The summons in its current form does not refer to the termination of the delivery contract. The proposed amended summons seeks the making of certain orders varying the delivery contract by way of relief in consequence of any finding of unfairness. One of the variations is to prohibit termination for any reason other then serious and wilful misconduct without giving two years' notice or making payment in lieu. Another variation seeks an order that upon termination, other than summary termination, certain payments will be made by way of compensation. 9Finally, the following additional orders by way of variation are sought: 3. ... (o) In the event the Respondent does not allow the Applicant or their agents to perform the Contract at any time prior to its termination the Respondent shall pay the Applicant the Commission they would have earned but for the conduct of the Respondent. (p) In the event the Respondent appoints another person to deliver to the Applicant's supermarkets without the consent of the Applicant the Respondent shall pay the Applicant the Commission it would have earned if it had delivered to those supermarkets. 10Prima facie, matters concerning the termination of the delivery contract are new to the proceedings. The applicant said that the catalyst for the insertion of these additional orders was the actual termination of the delivery contract, which became effective in June 2011. The respondent, in support of its motion, submitted that whenever the termination of the contract occurred, the fact of termination and the circumstances in which it could occur should always have been present in the minds of the applicant and those advising it. It was said by the respondent that if the applicant thought that the provisions of the contract dealing with termination were unfair, this is a matter that would have been apparent on an initial reading of the contract, certainly by a legal practitioner. 11Given that the circumstances leading up to the termination of the contract, prima facie, seem to be well known to the respondent because of the extensive correspondence between its solicitors and the applicant's solicitors over some years and the fact that the actual termination was effected in correspondence from the respondent's solicitor, there must be some doubt about whether or not the respondent is prejudiced by having to deal with the insertion of these additional proposed orders, other than in the time taken and the cost of so doing. 12Part B of the summons is entitled "Summary of matters of fact and law". The rules of this Court governing the issue of summons require that such material be provided. 13Additional [17] to [21], sought to be added to the amended summons, referred particularly to the involvement of Mr Stephen Reilly and his family in performing the delivery contract on the part of the applicant. 14The jurisdictional issue, which has already been ventilated on three occasions pursuant to the respondent's interlocutory strike out application, remains at large in the proceedings and, as asserted by Mr Kite SC, senior counsel for the respondent, will be advanced strongly in the proceedings. 15The applicant indicated that no additional evidence would be sought to be adduced on its behalf in connection with these additional paragraphs contained within Part B. In that the additional material is intended, as was said by the applicant's counsel, Mr Britt, to be explanatory of the manner in which the applicant asserted that the delivery contract was within jurisdiction, there must be some doubt as to the extent to which the respondent is prejudiced by this amendment. 16There is additional material in the existing amended summons that contains an allegation that the respondent unilaterally reclassified the applicant's supermarket contract at a particular shopping centre and approved another franchisee to commence delivering products to that supermarket. There is also reference to attempts to reclassify a new supermarket as new trade, notwithstanding that the applicant had the right to deliver to that particular supermarket. In this context, the applicant seeks to amend the proceedings by making reference to the reopening of a supermarket in a particular shopping centre in 2009 under a different brand name and the allocation of that rebranded supermarket to another contractor. Again, the applicant asserts that this is something that occurred after the date of the last amendment and is indicative of a course of conduct that is already referred to in the existing summons. 17A new proposed [24] seeks to add certain factual material as arising "as a consequence of the respondent's conduct". It is asserted that the "applicant lost runs that the applicant had under the contract and which he had purchased." The particulars that follow in [24] detail matters that occurred in October 2007 and in 2010. There is reference in that paragraph, and in three further proposed additional paragraphs, to the termination of the contract effective from 22 June 2011 and an allegation that the applicant received no compensation, on termination, for the loss of the runs purchased and was deprived of the value of the runs by the respondent. 18Again, all of this material post-dates the circumstances that prevailed in 2006, at the time of the last amendment to the proceedings. 19Finally, in detailing the manner in which the applicant alleged that the delivery contract was unfair for the purpose of s 106 of the Act, the applicant sought to include four additional allegations. These were that the contract allowed the respondent to terminate the contract with insufficient notice, it allowed the respondent to unilaterally alter delivery times and impose obligations (unspecified) on the applicant, it allowed the respondent to transfer runs to another person without the applicant's consent and it allowed the respondent to terminate the contract without compensation for the costs incurred in purchasing the business and undertaking the business, together with loss of goodwill.

The respondent's grounds 20The respondent relied upon a number of grounds in support of its application to resist the proposed amendment. 21Firstly, the respondent said that certain of the amendments were beyond jurisdiction because they were, in effect, a claim for breach of contract simpliciter and were directed to allegations of wrongful termination. Whether or not this is so must wait, in my opinion, for the determination of all of the issues at the hearing. 22Furthermore, the respondent alleged that certain of the amendments fundamentally change the nature of the case against the respondent. These were the amendments that detailed the involvement of Mr Stephen Reilly and his family in the performance of the delivery contract. The applicant resisted this submission on the ground that the proposed amendments were directed always to the same delivery contract that has formed the basis of these proceedings since their inception. In that the applicant has confined itself, and will be confined during the hearing, to the delivery contract, it seems to me that the proposed amendments do no more than flesh out the jurisdictional issue which, as I have said, has always been a significant matter in these proceedings. I reject the submission that the nature of the case brought against the respondent is fundamentally changed by their insertion. 23The respondent also asserts that the proposed amendments should not be made given the state of the proceedings and their history. I have already indicated that they were initiated in 2002. Even allowing for a period to reflect the time taken in pursuing the respondent's jurisdictional arguments, there has been a significant delay in the prosecution of these proceedings by the applicant. The history of the proceedings, not all of which I have referred to, supports this assertion. Furthermore, on 25 November 2011, in interlocutory proceedings conducted as part of the case management process, I made orders concerning the filing of the proposed further amended summons and dealing with a controversy concerning a summons for production. (This latter matter was determined by me by the making of interlocutory orders on 14 February 2012.) On that occasion, I listed the proceedings for hearing commencing 2 July 2012 for a period of three weeks. The respondent asserts that it is now too late to amend the proceedings. The applicant informed the Court that it wishes to reopen the evidence in the proceedings and file fresh evidence, which it has undertaken to attend to within 14 days of being informed of any order made by me amending the proceedings. The respondent will require some additional period in which to consider that evidence and put on any further evidence as part of its case. The applicant might then need an additional period to put on any evidence in reply. All of this could conceivably prejudice the respondent in the preparation and presentation of its case. It would need to obtain evidence from a number of persons in connection with the matters referred to, going back to 2009, and arguably touching upon incidents that occurred prior to that time. It was the evidence of the respondent's solicitor that a large number of persons had left the employment of the respondent, whose ownership has changed dramatically since the commencement of the proceedings. Initially, the respondent was a co-operative, later became a wholly owned subsidiary of National Foods Limited, which company in turn was acquired by Kirin Holdings Limited in 2007. The respondent is now ultimately owned by that company, although there has been a further corporate restructure consequent upon the acquisition of the Lion Nathan organisation. The respondent's solicitor's evidence indicated that a number of persons are no longer employed by the respondent, but that evidence did not extend to any suggestion that the persons concerned were not available to give evidence in the proceedings.

The relevant principles and their application to these proceedings 24The Court has a wide discretion in determining whether to permit the applicant to amend the proceedings in the manner sought. In determining whether that discretion should be exercised, the Court is required to take into account all of the circumstances pertaining to the particular proceedings within the context of the need to facilitate their quick, just and cheap determination. 25In Aon Risk Services Aust Ltd v ANU [2009] HCA 27; (2009) 239 CLR 175, Gummow, Hayne, Crennan, Kiefel and Bell JJ said: [111] An application for leave to amend a pleading should not be approached on the basis that a party is entitled to raise an arguable claim, subject to payment of costs by way of compensation. There is no such entitlement. All matters relevant to the exercise of the power to permit amendment should be weighed. The fact of substantial delay and wasted costs, the concerns of case management, will assume importance on an application for leave to amend. Statements in J L Holdings which suggest only a limited application for case management do not rest upon a principle which has been carefully worked out in a significant succession of cases. On the contrary, the statements are not consonant with this Court's earlier recognition of the effects of delay, not only upon the parties to the proceedings in question, but upon the court and other litigants. Such statements should not be applied in the future. [112] A party has the right to bring proceedings. Parties have choices as to what claims are to be made and how they are to be framed. But limits will be placed upon their ability to effect changes to their pleadings, particularly if litigation is advanced. That is why, in seeking the just resolution of the dispute, reference is made to parties having a sufficient opportunity to identify the issues they seek to agitate. [113] In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings. (Citations omitted) 26These proceedings have been on foot for almost 10 years and, even allowing for the time taken in the respondent's unsuccessful attempt to have them disposed of on a jurisdictional basis, should have been completed many years ago. My perusal of the proceedings, including my involvement in their case management, is indicative of a substantial delay occasioned by the applicant in complying with a succession of court timetables. The delay has further been compounded by an extensive discovery process initiated by the applicant. 27However, the matters that, on my analysis, have motivated the applicant to seek to amend the proceedings are circumstances that have arisen in recent years. Overall, I am of the opinion that the applicant should not be unduly deprived of the opportunity of pursuing its claim having regard to more recent events and the impact of those events in the context of any claim that it might be found to have under s 106 of the Act. Whilst I acknowledge that the respondent will be inconvenienced in the sense that it will need to attend to the investigation and preparation of its response to the claim as amended, I am not at this stage persuaded that the inconvenience is such that the amendments sought by the applicant should be denied. 28I intend to accommodate any reasonable circumstances of the respondent that would unduly prejudice it in the preparation of its response and in the presentation of its case at the hearing, which, as I have said, is scheduled to commence on 2 July next. 29I have already rejected the respondent's submission that the proposed amendment would create a different cause of action. Any submission that the respondent wished to advance that, in effect, the claim as amended is one for breach of contract only, should be considered at the substantive hearing. 30Furthermore, I reject the respondent's contention that the amendments sought, or at least some of them, constitute an abuse of process, or are not founded on the evidence. 31A principal concern in determining whether to allow the amendment is any prejudice that might be suffered by the respondent having regard to the commencement of the hearing fixed for 2 July next. On one view, this is a period that exceeds four months. On another view, experience dictates that it is not always easy to gain immediate access to witnesses and documents, especially in circumstances where some of the witnesses are no longer employed by the respondent. I propose to accommodate the circumstances of the respondent within the orders that I propose making and within the liberty to apply, which I propose to grant.

Costs 32Both parties sought a costs order in its favour. I propose to reserve costs.

Orders 33I make the following orders

Leave is granted to the applicant to amend the proceedings in terms of the further amended summons for relief, being annexure A to the applicant's notice of motion filed 30 January 2012. The further amended summons should be filed and served within 7 days of this date.
The applicant is to file and serve all additional evidence upon which it relies in connection with the amendments contained within the further amended summons for relief within 14 days of this date. The applicant will not be permitted to rely on any such evidence not filed and served within that period without either the consent of the respondent or the further leave of the Court.
The parties are to endeavour to reach sensible agreement about a timetable for the filing and service of any further reply and response documents. If they are unable to do so, the applicant must exercise liberty to apply without delay.
The parties are directed to confer about whether any further conciliation is necessary or desirable under s 109 of the Act.
The respondent is granted leave to approach the Court if the respondent, despite its best efforts, is prejudiced in the preparation of its defence of the proceedings, having regard only to the amendments hereby granted in the context of the commencement of the hearing on 2 July next. The liberty to apply should be exercised in the first instance by making telephone approach to my associate with notice to the applicant.
Costs are reserved.
Liberty to apply generally on short notice.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 February 2012

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