FEDERAL COURT OF AUSTRALIA Hurley v McDonald's Australia Ltd [2000] FCA 124 DISCOVERY – right of applicant to demand documents kept or produced by licensees or franchisees of the respondent to the action – entitlement to information or reports does not imply an entitlement to actual possession or control of documents JANETTE LYN HURLEY v McDONALD'S AUSTRALIA LIMITED Q 194 of 1999 DOWSETT J 11 FEBRUARY 2000 BRISBANE IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 194 OF 1999 BETWEEN: JANETTE LYN HURLEY APPLICANT AND: McDONALD'S AUSTRALIA LIMITED RESPONDENT JUDGE: DOWSETT J DATE OF ORDER: 11 FEBRUARY 2000 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. No order be made with respect to documents in the possession of McDonald's franchisees. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY Q 194 OF 1999 BETWEEN: JANETTE LYN HURLEY APPLICANT AND: McDONALD'S AUSTRALIA LIMITED RESPONDENT JUDGE: DOWSETT J DATE: 11 FEBRUARY 2000 PLACE: BRISBANE REASONS FOR JUDGMENT 1 For present purposes, it is relevant to distinguish between retail stores operated by the respondent and those operated by franchisees pursuant to licence agreements entered into with the respondent. There are in each store documents which are at least arguably relevant to these proceedings. 2 The case has been conducted substantially upon the basis that, from a substantive point of view, no distinction is to be drawn between the respondent and the various franchisees. However, throughout the hearing, it has been made clear by the respondent that it is not necessarily in a position to discover documents in the possession of franchisees which may be relevant for present purposes. As much appears, for example, at p 1384 of the transcript relating to proceedings on 21 October last year. 3 It is now submitted on behalf of the applicant that the respondent has an obligation pursuant to an order for discovery to discover documents in the possession of franchisees. I do not construe the order for discovery in that way, and it is quite clear from the passage in the transcript to which I have referred that the parties were not proceeding upon that basis during the earlier part of the hearing. 4 Alternatively, the applicant submits that the documents in the possession or power of the franchisees are, in any event, in the possession of the respondent for present purposes. In support of this assertion, the applicant refers to par 7(a) of the standard form licensing agreement, and in particular to the sentence: Licensee shall, so long as this licence subsists and for a period of three years thereafter, keep and preserve full and complete records of gross sales in a manner and form satisfactory to licensor and shall also deliver such additional financial operating and other information and reports as licensor may reasonably request in the manner and form prescribed by licensor. 5 It is submitted that this authorises the licensor to demand the records kept by the various licensees, or franchisees, as I have previously referred to them, and to produce those documents by way of discovery. I cannot so read the clause. An entitlement to information and reports does not imply an entitlement to actual possession or control of documents. 6 In any event, as I understand it - and this is the basis upon which the application has been argued - some of the franchisees are unwilling to cooperate. It would, in my view, be quite inappropriate to determine this question so as to compel the respondent to produce such documents without giving the franchisees an opportunity to be heard. In reality, the question is as to the entitlement to possession and/or control as between the present respondent and its franchisees. 7 In those circumstances, I refuse to make any order with respect to documents in the possession of the franchisees. I certify that the preceding seven (7) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett. Associate: Dated: 27 March 2000 Counsel for the Applicant: Mr D Gordon Ms D Skennar Solicitor for the Applicant: Shine Roche McGowan Counsel for the Respondent: Mr P McMurdo QC Mr D Robinson Solicitor for the Respondent: Baker & McKenzie Date of Hearing: 11 February 2000 Date of Judgment: 11 February 2000