FEDERAL COURT OF AUSTRALIA Biman International Pty Ltd v Amalgamated Security Services Pty Ltd [2002] FCA 1403 BIMAN INTERNATIONAL PTY LTD v AMALGAMATED SECURITY SERVICES PTY LTD & ORS N 927 of 2002 ALLSOP J 12 NOVEMBER 2002 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 927 of 2002 BETWEEN: BIMAN INTERNATIONAL PTY LIMITED (ACN 087 748 007) APPLICANT AND: AMALGAMATED SECURITY SERVICES PTY LIMITED (ACN 084 183 362) FIRST RESPONDENT DARRYL JOHN EVANS SECOND RESPONDENT RYNAS PTY LIMITED (ACN 010 140 520) THIRD RESPONDENT AUSTRALIAN TENDER SERVICES PTY LIMITED FOURTH RESPONDENT JUDGE: ALLSOP J DATE OF ORDER: 12 NOVEMBER 2002 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The notice of motion filed by the fourth respondent on 28 October 2002 be dismissed. 2. The fourth respondent pay the applicant's costs of the notice of motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 927 of 2002 BETWEEN: BIMAN INTERNATIONAL PTY LIMITED (ACN 087 748 007) APPLICANT AND: AMALGAMATED SECURITY SERVICES PTY LIMITED (ACN 084 183 362) FIRST RESPONDENT DARRYL JOHN EVANS SECOND RESPONDENT RYNAS PTY LIMITED (ACN 010 140 520) THIRD RESPONDENT AUSTRALIAN TENDER SERVICES PTY LIMITED FOURTH RESPONDENT JUDGE: ALLSOP J DATE: 12 NOVEMBER 2002 PLACE: SYDNEY REASONS FOR JUDGMENT 1 I have before me a notice of motion dated 25 October 2002, filed on 28 October 2002, in which the fourth respondent seeks, in order 2, being the only order moved on substantively, to dismiss under O 20 r 2 of the Federal Court rules the claim in par 19 of the amended statement of claim and pars 1 and 2 of the application. It is sought to dismiss those claims on the grounds that they reveal no reasonable cause of action against the fourth respondent and/or that the proceeding is frivolous or vexatious as against the fourth respondent. 2 The nature and structure of the motion makes relevant cases and principles too well known to need detailed exposition as found in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, and more recently Webster v Lampard (1993) 177 CLR 598 and Walton v Gardiner (1993) 177 CLR 378. Mr Burley, who appears for the fourth respondent, properly and frankly accepted the burden he has to carry in this motion. This is not a motion for a separate issue under Order 29. It is a motion for summary disposal of part of a claim. 3 The amended statement of claim is one marked by its brevity. It deals with claims based on alleged contraventions of s 51AD of the Trades Practices Act 1974 (Cth) (the Act), which is in terms as follows: A corporation must not, in trade or commerce, contravene an applicable industry code. 4 For the purposes of the pleading and the debate today, the applicable industry code is one made by regulation pursuant to s 51AE and is entitled "Franchising Code of Conduct" (the Code). The Code provides a number of provisions concerning the provision of information and disclosure to franchisees by franchisors. The Code also provides for disclosure of information by franchisees to proposed transferees from franchisees. That latter aspect of the code is not relevant. 5 The pleading, first of all, pleads that there was an agreement entitled a "Master Licence Agreement" which was said to be a franchise agreement enlivening the obligations of disclosure upon the first respondent. The first respondent appears, for today's purposes at least, to be the original franchisor in which company a Mr Evans appears to have an interest. Mr Evans is the second respondent. 6 The franchise agreement deals with some aspect of intellectual property in relation to a system for the provision of government tender information to subscribers. The first complaint in the amended statement of claim is directed at the first respondent for the failure to comply with the provisions of the Code in relation to the entry into the franchise agreement when that agreement was first entered. 7 In October 1999 there was a variation to the franchise agreement. In this arrangement, the applicant and the first respondent agreed to vary the agreement by varying commission payments. Such variation is not relevant. 8 An arrangement was made in early March 2000 between the applicant, the first respondent and third respondent. The third respondent appears to be, or I assume to be, a company associated with Mr Evans because the effect of this variation was to direct some of the payments to be made to the third respondent. 9 At around about the same time, in March 2000, there was apparently an agreement entered between the first respondent, the applicant and the fourth respondent. This is referred to as the "Transfer" in the pleading. Notwithstanding this defined term, the essence of it appears to be, as pleaded, that the fourth respondent was to take over from the first respondent, in effect, as franchisor. That arrangement appears to have been put in place. Mr Parker's submission is, and at one level it must be right, that the arrangement must have taken effect as a form of novation. Before coming back to the consequences of that proposition, I should add that in May 2002, the fourth respondent purported to terminate the whole arrangement with the applicant which termination was accepted by the applicant. The applicant has certain monetary contractual claims as against the fourth respondent which are pleaded in pars 21 and 22 of the amended statement of claim and which are not the subject of the application before me. 10 The scheme of the facts which I have outlined above, identifying the fourth respondent as a substitute franchisor, if I may use that expression, gives rise to the claim by the fourth respondent, enunciated by Mr Burley, that on no basis whatsoever could the industry Code apply to the position of the fourth respondent requiring the fourth respondent to make the disclosures contained within Divs 2.1 and 2.2 of the Code. 11 Mr Burley has provided me with some written submissions for which I am grateful and which I will initial and date today and leave with the papers. I will not set out in full or extensively those submissions. It is sufficient, I think, to dispose of the motion to say as follows. First, the fourth respondent could not in the circumstances identified in the pleading be seen to be a franchisor. Secondly, that the applicant, in the position it was in by March 2000, could not be seen as a prospective franchisee or a franchisee proposing to renew or extend a franchise for the purposes of subs 6(1) of the Code. It is also said that Div 2.2 of the Code, and in particular ss 10 and 11, is derivative upon the operation of Div 2.1. 12 It is important to understand, I think, that this is a notice of motion under O 20 r 2 and not a separate issue under O 29. 13 If I may say so with respect to Mr Burley, I can see some force in each of the propositions that he puts forward, but I think in respect of each of them, there is a real argument to be put forward on behalf of the applicant. This is a new code and a reasonably recent body of provisions of the Act pursuant to which the Code has been created. 14 I think that the application of both Divs 2.1 and 2.2 will have to be analysed by reference to and with the assistance of a clearer understanding of the legislative and contextual background and I think the argument is more difficult than put forward by Mr Burley, although as I said, I recognise that there is some force in each of the elements of Mr Burley's argument. I simply do not think that it is appropriate in all the circumstances to be disposed of under a notice of motion seeking summary disposal. 15 For those reasons, the notice of motion will be dismissed and the fourth respondent will pay the applicant's costs of the notice of motion. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Allsop. Associate: Dated: 20 November 2002 Counsel for the Applicant: TGR Parker Solicitor for the Applicant: Beswick Solicitors Counsel for the 1st to 3rd Respondents: JR Graham Solicitor for the 1st to 3rd Respondents: Kemp Strang Counsel for the 4th Respondent: SCG Burley Solicitor for the 4th Respondent: Comlaw Barristers & Solicitors Date of Hearing: 12 November 2002 Date of Judgment: 12 November 2002