Weimann v Allphones Retail Pty Ltd

circumstances in which orders are sought 5 Given the relative urgency of the application and the need to make a decision on the applicant's notice of motion forthwith, it is appropriate to provide only a short account of the background circumstances in which the application has been made. 6 The applicant commenced this proceeding by application filed 30 March 2009, together with a notice of motion seeking interim injunctions restraining the respondent (Allphones) from dealing with the applicant other than on the basis that he has validly exercised his right to renew the franchise agreement between the applicant and Allphones dated 1 April 2009 until further order; and other interlocutory relief. On 31 March 2009, an interim injunction in these terms was made until 6 April 2009. 7 On 6 April 2009, consent orders were entered to the effect that Allphones gave an undertaking to the applicant in lieu of an injunction on terms akin to the interim injunction ordered on 31 March 2009, and an expedited trial was listed to take place on 22 July 2009. 8 The consent orders made on 6 April 2009 also gave directions addressed to such matters as pleadings, discovery, the filing of witness statements and the preparation of a book of documents for trial, as well as the setting of the trial date, which was then provisionally listed on dates between 22 July and 31 July 2009. 9 On 18 May 2009, the applicant filed a notice of motion seeking leave to file and serve an amended application to convert the proceeding into a representative proceeding. 10 On 9 June 2009, the Court ordered that the trial listed to commence on 22 July 2009 be vacated. 11 On 23 June 2009, the Court, amongst other things, granted leave to convert the proceeding into a representative proceeding (see Weimann v Allphones Retail Pty Ltd [2009] FCA 673). The Court then made further directions as to the conduct of the matter towards trial in the same areas as before and the proceeding was adjourned to a further directions hearing on 2 September 2009. 12 The amended application and amended statement of claim was filed and served by the applicant on 25 June 2009. 13 On 30 June 2009, Allphones filed a notice of motion seeking leave to appeal the representative proceeding judgment of 23 June 2009 converting the proceeding into a representative proceeding. 14 Allphones filed and served its defence and cross‑claim on 7 July 2009 in accordance with the orders previously made on 23 June 2009. 15 On 8 July 2009, the applicant filed and served a notice of motion seeking interlocutory relief on behalf of ten franchisees who formed part of the group represented by the applicant. That notice of motion was heard on 22 July 2009. 16 Following submissions of counsel for the parties, the Court tentatively listed the proceeding for trial from 3 to 11 December 2009. 17 The Court on that occasion emphasised that it was appropriate to set the trial date and proceed on the basis that the proceeding would go to a hearing before the end of 2009. 18 On 31 July 2009, the Court ordered by consent that Allphones have leave to join nine franchisees who were the beneficiaries of undertakings earlier given as cross‑respondents and granted Allphones leave to file an amended counter claim which addressed amendments necessary to identify the cross‑respondents. 19 On 31 July 2009, the applicant and cross‑respondents filed a reply and defence to cross‑claim. By the orders made 23 June 2009, these pleadings were due to be filed some 10 days earlier on 21 July 2009. 20 One of the cross‑respondent group members subsequently indicated its desire not to be part of the representative proceeding and Allphones then indicated its intention formally to discontinue its cross‑claim against that cross‑respondent. 21 By reference to the orders made 23 June 2009, Allphones has provided discovery as has the applicant and first cross‑respondent. However, the second to tenth cross‑respondents have not given discovery. 22 While on 23 June 2009 the applicant was ordered to file and serve witness statements signed before 25 August 2009, that order has not been complied with. 23 On 2 September 2009, at the directions hearing in relation to the proceeding, counsel for the applicant raised the issue of consolidation of these proceedings with the proceedings commenced against Allphones by the ACCC that were in the docket of Justice Foster in the New South Wales Registry of the Federal Court of Australia. Counsel also mentioned that private mediation was proposed to commence. It was submitted that discovery generally was premature. Counsel for Allphones expressed concern that the current trial dates should not be avoided. The Court then confirmed the view that the proceeding should stay "on track" for a trial in December 2009. 24 Consequently orders were made extending the time for discovery to 31 August 2009, time for filing statements of witnesses to 28 September 2009 and adjourning the directions hearing to 5 October 2009 with a direction that parties file minutes of proposed orders leading to trial and the conduct of trial on 2 October 2009. The applicant was also ordered to disclose the identity of group members to the respondent by close of business 3 September 2009. 25 Since that time, while identify of group members has been disclosed by the applicant and additional discovery made by the respondent and the time for filing witness statements further extended, such witness statements have not been filed by the applicant. They were due to be filed in the light of consent orders by 24 October 2009. 26 On 22 October 2009, the matter came on again for a directions hearing. Counsel for the applicant foreshadowed that the applicant was considering making an application to consolidate the proceedings with the ACCC proceedings before Justice Foster. 27 On 4 November 2009, the matter again came on for directions before me and the question of consolidation or alternative orders, which were then the subject of the recently filed notice of motion, was listed by me for hearing on 10 November 2009.

consideration 28 In written submissions for the hearing on 10 November 2009, supplemented by oral submissions by senior counsel for the applicant, the applicant contends that to a very significant extent the rights to relief claimed in the ACCC proceedings before Justice Foster and this proceeding arise out of the same transaction or series of transactions, being the entry by Allphones' franchisees into the Old Agreement (as to which see outline of causes of actions and pleadings in the proceeding before me in Weimann v Allphones Retail Pty Ltd [2009] FCA 673). 29 If it be the case that there are significant common questions of law or fact between the two sets of proceedings - those before Justice Foster and this proceeding - then commonsense, confirmed by a long line of authority, would suggest that the two proceedings not be determined separately but that they either be consolidated or heard together in an appropriate fashion: see for example Cousins v Cousins (1948) 51 WALR 57; Pegasus Gold Inc v Bateman Project Engineering Pty Ltd [1999] FCA 490. Indeed, O 29, r 5 of the Federal Court Rules 1979 (Cth) permits the Court, in an appropriate case, to consolidate proceedings or order they be tried at the same time or one immediately after the other or may order them to be stayed until the determination of them. Plainly, in many circumstances it will be sensible to make an appropriate order under O 29, r 5 to avoid the possibility of disparate findings of law or fact being made in relation to common issues. Additionally, in some cases convenience and efficiency may also dictate the close association of concurrent proceedings so that they are not conducted separately of each other. 30 Senior counsel for the applicant emphasises that in both proceedings the terms of the Old Agreement will be compared and contrasted with the New Agreement that Allphones has been requiring or desiring franchisees to execute on the exercise by franchisees of their right of renewal of the Old Agreement that currently controls the relationship between the parties. 31 In general terms, however, the issues raised by the current proceeding before me involve the proper construction of the Old Agreement so far as the right of a franchisee to renew is concerned, as well as separate allegations concerning unconscionable conduct by Allphones towards franchisees. The details once again are set out in Weimann v Allphones Retail Pty Ltd [2009] FCA 673. 32 In its written submissions, the applicant says the following common questions of law or fact arise: · The basic common question in both proceedings is "What, on their proper construction, are the terms of the Old Agreement?". The ACCC pleads the effect of the most important financial provisions of the Old Agreement. · The ACCC also pleads that Allphones caused franchisees to incur capital expenditure and are not entitled to put franchisees on "stock hold" and "commission hold". It is said that these are questions common to the current proceedings. · The fundamental common question in both proceedings is "Did Allphones act in accordance with the financial provisions of the Old Agreement?". · In the current proceedings, the applicant says it pleads the terms of the New Agreement and pleads that those terms alter the rights of the parties under the Old Agreement and are detrimental to the interests of the applicant and group members and are not detrimental or alternatively, beneficial, to Allphones. The applicant says this plea will be made out by comparing the terms of the Old and the New Agreements and by demonstrating that where possible the effect (financial or otherwise) of the New Agreement as compared to the Old Agreement. It is said the financial effect of the change from the Old Agreement to the New Agreement can be readily demonstrated and is a common question for both this proceeding and the ACCC proceeding before Justice Foster. · A related common question pleaded in both is whether the "effect" of the Hoy Mobile decision (Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2005] FCA 810; and Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd [2009] FCAFC 85)was that Allphones was contractually obliged to pay franchisees on the Old Agreement the income which the Court there found had been withheld. · Another fundamental common question involves compliance with the Franchising Code of Conduct. 33 By contrast, Allphones contend there is minimal overlap on material issues. First, it contends that the applicant alleges that Allphones has impermissibly required franchisees under the Old Agreement to sign the New Agreement as a condition of renewing their franchise. 34 Secondly, that the applicant's case is that Allphones has engaged in conduct designed to unreasonably or unfairly pressure the applicant and other franchisees to execute the New Agreement and thereby has engaged in unconscionable conduct contrary to s 51AC of the Trade Practices Act 1974 (Cth) (TPA). 35 Allphones contends that to the extent that the current proceedings before me allege breaches of statutory obligations, those matters are wholly directed towards supporting the applicant's case in contract or unconscionability and are all directed towards the question of renewal of the Old Agreement. 36 Allphones says that by contrast the ACCC proceeding before Justice Foster is brought by a regulatory body in relation to alleged breaches of trade practices law in which the following relief is sought: · Declaratory relief of alleged breaches of ss 51AC, 51AD, 52 and 59 of the TPA. · Injunctive relief restraining allegedly contravening conduct requiring Allphones to communicate certain matters to franchisees and compelling future payments to franchisees on a particular basis. · Orders that Allphones establish an education, training and trade practices compliance program. 37 Allphones says that the declaratory and injunctive relief sought by the ACCC relates to alleged misleading and deceptive conduct or false or misleading conduct regarding the alleged representations to be found in brochures, handouts and documents prior to the entry into their respective franchise agreements. 38 Additionally, the ACCC claims declarations and injunctions in respect of commission payment summaries and bonuses and rebates in respect of which the proceedings currently before me make no claims for relief. 39 Consequently, in short, Allphones say the overlap in the proceedings relate only to the existence of the franchise agreement in one common form which provides the background (in different circumstance and context) to each action. In other words, the terms of the franchise agreement, other than the construction of the renewal clause merely provide a backdrop to the questions of fact and law in issue in the proceedings. 40 Allphones also complain about delay and prejudice if the orders sought are made. 41 The submissions made on behalf of Allphones are not without force. The validity and construction of the renewal clause of the Old Agreement is not a primary issue in the ACCC proceedings before Justice Foster. However, it is a primary issue in the proceeding before me. 42 The additional unconscionability claims made in the proceedings before me are more difficult to assess. They go to restraining Allphones from maintaining that conduct in relation to the renewal by the franchisees of their Old Agreements. However, the conduct complained of appears, in many respects to provide a foundation for the ACCC's action before Justice Foster. 43 In substance, the nature of the proceeding presently before me concerns the private contractual rights between Allphones and its franchisees. The ACCC proceedings before Justice Foster, again in broad terms, have to do with enforcement of the TPA designed to achieve fair trading at a broad policy level. That said, the ACCC action, if successful, may well have important ramifications for the conduct of the franchise relationship between Allphones and its franchisees, even though not primarily concerned with the proper interpretation or construction of the contractual relationship between the parties. 44 While a close examination of the causes of action relied on in the separate proceedings may, as Allphones contends, suggest - at least on fine analysis - that there are real conceptual differences between the two proceedings, I remain concerned that, at a practical level, there is a risk that competing findings of fact and law to be made in relation to issues raised by these various causes of action could intrude upon the proper administration of justice in this case. 45 However, there are also issues of delay and prejudice and the rights of Allphones to an early trial in an orderly fashion. 46 When one takes into account the orders that have been made by me during the course of this year, in order to protect on an interim or interlocutory basis the interests of the applicant and subsequently other franchisees pending a trial of the primary issues raised in this proceeding and the constant attempts to focus the parties' attention on a trial to be held before the end of 2009, a case is built to suggest it is inappropriate at this point to, in substance, vacate the current trial dates in this proceeding and transfer this proceeding to the docket of Justice Foster so he can determine when the proceeding should go to a hearing subsequent to the trial of the ACCC proceeding. See generally Aon Risk Services Australia Ltd v Australian National University (2009) 258 ALR 14. 47 To some extent the applicant in the proceeding before me discloses it is not ready for a trial in December because it is a small firm that has been engaged in the conduct of the appeal against the representative proceeding decision and in the mediation of the dispute between Allphones and the franchisees, which was the subject of further proceeding before McKerracher J recently: see Weimann v Allphones Retail Pty Ltd (No 2) [2009] FCA 1230. However, the parties to these proceedings have understood right through the year since the matter first came before me, that all parties are entitled to the earliest possible determination of the important commercial issues raised here. The matter is now clouded, however, by the ACCC proceedings against Allphones in Sydney. This is a new factor that must be considered. 48 For me, the most important consideration is whether there truly is a significant overlap of issues, particularly the legal issues informed by the facts in dispute between the parties, such that it would, in the end, be more convenient and efficient, and ultimately just, to have one judge hear all proceedings. This calls for the exercise of judgment; there is no uniquely right answer. It is a discretionary consideration. While I do not consider that the conceptual or primary legal causes of action significantly overlap, a range of the issues which are likely to come before Justice Foster on the ACCC complaint will, I believe, require careful consideration of the Old Agreement, its terms and the conduct of Allphones towards franchisees. While I do not think that all of the issues that will be agitated in the ACCC proceedings before Justice Foster will be at all identical with those that need to be determined in the proceeding currently before me, I consider there is a real, not fanciful risk, that if two judges were separately to determine these two sets of proceedings they might possibly form differing views about some of the underlying facts in dispute as well about the contractual obligations and related rights of the parties under the Old Agreement and proposed New Agreement. Such an outcome, to say the least, would be unfortunate. It is, however, precisely the sort of consideration that, in my view, weighs the final determination that I need to make in favour of allowing the motion currently before me. 49 It is, in the end, my view that it will be best if the one judge hears the two different sets of proceedings involving Allphones and its franchisees, and the ACCC, to avoid any risk of different findings of fact or different findings of law that will determine or influence the outcome of the different proceedings. 50 However, it is not without some reluctance that I come to this decision, because I consider that the applicant has been well aware for some time that the Court has considered that this proceeding should proceed expeditiously to trial in the interests of all parties. 51 I recognise that this decision undoubtedly will cause some prejudice to Allphones. It has prepared for a December trial of this issue. That trial will now be delayed. That produces commercial insecurity for it in its dealings with its franchisees - although it may be said, also for the franchisees. It also adds to the costs of the proceedings no doubt. 52 However, against that, by having the two proceedings before the one judge means they can be more conveniently and efficiently conducted and the risk of discordant findings avoided. This consideration is ultimately of fundamental importance to all parties an what guides my determination of the motion before me. 53 No doubt, once these proceedings go into the docket of Justice Foster, he will ensure that the interests of all parties are adequately protected by bringing this matter to an early hearing and determination.

conclusion and orders 54 For these reasons orders will be made substantially in the form sought, but retaining the discretion of Foster J to make additional appropriate or necessary directions. 55 The Court orders: 1. These proceedings be heard by the same judge as hears Action NSD 408/2008. 2. These proceedings be heard immediately following Action NSD 408/2008, or as that judge directs. 3. The evidence in Action NSD 408/2008 or so much as that judge directs, stands as evidence in these proceedings. 4. Costs of the motion be in the cause. 5. These proceedings be listed before Justice Foster on a date to be fixed for a directions hearing. I certify that the preceding fifty-five (55) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Barker.

Associate: Dated: 11 November 2009 Counsel for the Applicant: Mr NW Morcombe QC and Mr GD Cobby

Counsel for the Respondent: Mr D Pritchard SC and Mr B Roberts

Counsel for the ACCC: Mr S Rushton SC with Mr J Giles

Solicitor for the ACCC: Corrs Chambers Westgarth Lawyers