FEDERAL COURT OF AUSTRALIA Dybner v Stay In Bed Milk & Bread Pty Ltd (Trading As Aussie Farmers Direct) [2010] FCA 1122 Citation: Dybner v Stay In Bed Milk & Bread Pty Ltd (Trading As Aussie Farmers Direct) [2010] FCA 1122 Parties: MARAT DYBNER and DINA DYBNER v STAY IN BED MILK & BREAD PTY LTD (TRADING AS AUSSIE FARMERS DIRECT) (ABN 39 115 166 982) File number: VID 145 of 2010 Judge: JESSUP J Date of judgment: 3 September 2010 Catchwords: PRACTICE AND PROCEDURE – Discovery – Application for further and better discovery – Whether respondent had adequately complied with discovery obligations Cases cited: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Date of hearing: 3 September 2010 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 12 Counsel for the Applicants: Mr M Rivette Solicitor for the Applicants: Kelly Hazell Quill Lawyers Counsel for the Respondent: Mr R Keen Solicitor for the Respondent: HWL Ebsworth Lawyers IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 145 of 2010 BETWEEN: MARAT DYBNER First Applicant DINA DYBNER Second Applicant AND: STAY IN BED MILK & BREAD PTY LTD (TRADING AS AUSSIE FARMERS DIRECT) (ABN 39 115 166 982) Respondent JUDGE: JESSUP J DATE OF ORDER: 3 SEPTEMBER 2010 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The application by the applicants for further and better discovery be dismissed with costs. 2. The proceeding be removed from the Fast Track list. 3. The applicants' Amended Fast Track Statement filed 18 June 2010 stand as their Statement of Claim. 4. The respondent's Response to the Amended Fast Track Statement filed 6 August 2010 stand as its Defence. 5. The applicants' Reply to the respondent's Response to the Amended Fast Track Statement filed on 23 August 2010 stand as their Reply. 6. The respondent be released from each of the undertakings given by it to the Court on 9 March 2010, referred to in the Order of Justice Ryan on 9 March 2010. 7. The applicants file and serve the affidavits upon which they intend to rely at trial by 30 September 2010. 8. The applicants file and serve an affidavit exhibiting the report of any expert witness upon which they intend to rely at trial by 30 September 2010. 9. The respondent file and serve the affidavits upon which it intends to rely at trial by 4 November 2010. 10. The respondent file and serve an affidavit exhibiting the report of any expert witness upon which it intends to rely at trial by 4 November 2010. 11. The applicants file and serve any affidavit in reply upon which they intend to rely at trial by 25 November 2010. 12. The proceeding be listed for trial on a date to be fixed with an estimate of two weeks. 13. The costs of this day's directions hearing be reserved. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 145 of 2010 BETWEEN: MARAT DYBNER First Applicant DINA DYBNER Second Applicant AND: STAY IN BED MILK & BREAD PTY LTD (TRADING AS AUSSIE FARMERS DIRECT) (ABN 39 115 166 982) Respondent JUDGE: JESSUP J DATE: 3 SEPTEMBER 2010 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 In this matter, there is a motion on behalf of the applicants to require the respondent to improve upon the discovery which it gave in purported compliance with order 5 of the orders made on 11 June 2010. 2 As outlined by counsel for the applicants during the course of this hearing, the complaint is confined to what is said to be the respondent's omission to give discovery of documents residing in nine folders which were in the custody of the respondent's former solicitors. The solicitors had been retained by the respondent for the purpose of assisting it to draw the franchise agreements which have become controversial in this case. It seems clear that the franchise agreements contain no written provision by which they might have been terminated by the respondent on reasonable notice, but it is part of the respondent's foreshadowed case that an implied term for termination existed in the agreements by reference to the principles referred to in Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 ("Codelfa Construction"). 3 The respondent has purported to give discovery in accordance with order 5 of the orders made on 11 June 2010, and I have been assured by its counsel this morning that it has examined the nine files of presently contentious documents as part of the suite of documents which are in its possession, custody or power for the purposes of complying with its discovery obligations. 4 The present controversy arises from a letter written on behalf of the applicants by their solicitor on 9 August 2010, asserting that certain classes of documents had not been, and ought to have been, discovered. Relevantly to the present motion, the class of documents identified in that letter was described by reference to subject matter, rather than by reference to the forensic impact which those documents might have, as envisaged by order 5 of the orders made on 11 June 2010. As the applicants' case was refined before me today, it is said that the correspondence which followed the letter of 9 August 2010 made it clear that the respondent excluded from consideration documents which did no more than reveal the course of its internal deliberations, including communications with its then solicitors, as to the content of the agreements which were then in the course of being drafted. 5 The order which counsel for the applicants proposed I should now make was one under which the respondent would be obliged to discover all documents not previously discovered relating to the preparation of the contentious agreements insofar as those documents contained instructions given to, or advice received from, the respondent's former solicitors about the term, or proposed term, of any such agreement. It was said that documents meeting that description would have the potential to be relevant to the applicants' response to the respondent's case on implied term. 6 The way it was explained to me this morning, the applicants propose to rely upon what was said by Mason J in Codelfa Construction, that a term would be implied only if there had been a failure by the parties to direct their minds to a particular eventuality, and to make explicit provision for it. It seems clear that the eventuality in question in the present case was not the subject of explicit provision in the contract, but that the applicant wishes to run a case in which it would say that there had not been a failure by the parties to direct their minds to the question whether the contract should contain a provision providing for their termination. 7 The applicants have no evidence that the respondent ever directed its mind to that matter. On the applicants' case, the only communication from the respondent, and the only statement by reference to which any such directing of the mind might be inferred, was something said by a former officer or manager of the respondent at some point to the applicants to the effect that there was no termination provision in the contracts. If that statement had been made, it seems that it would have been an accurate observation so far as the written terms of the contracts were concerned. 8 As I understand the respondent's position, they accept that any document which falls within order 5 of the orders made on 11 June 2010 and which relates to that statement is one which ought to be discovered. However, the present motion raises the question whether the respondent should go further than that and give discovery of any communication with its former solicitors, or of any document in the former solicitor's files, which relates to the question whether there should be a termination term in the contracts then in the course of preparation. I am not disposed to accept that that kind of internal or unilateral consideration arising in the course of the drafting of a document – which, for present purposes, is assumed to be the drafting of one party only – is what Mason J had in mind when he referred to the failure of the parties to direct their minds to a particular eventuality. 9 In the course of drafting a commercial contract, one or other of the parties may have all sorts of ideas and notions about things that might be useful in the contract, and might prepare drafts in which many things previously thought useful were subsequently deleted. There might be situations in which a party might ask its solicitor whether there would be any point in including a particular provision, and subsequently abandon the idea. I am not persuaded that documents are discoverable for no better reason than that they relate to something which was ultimately not included in a formal commercial agreement committed to writing. 10 My observations in this respect relate only to the deliberations and communications which exist entirely on one side of the contractual record, as it were, and, of course, would not apply to communications or to documents passed between the parties. So, for example, if there were communications between the parties in which the inclusion, in or the omission from, a contract of a particular term were a matter of discussion, then what I say now would not exclude the prospect that the internal documents of one party in relation to that aspect might be discoverable. But here there is no proposition put before me on behalf of the applicant that, as a matter of bilateral contemplation or communication between them, the parties ever thought it possible that this contract might have a provision for termination included in it. 11 Save for the single observation by one of the former employees of the respondent to which I referred, all I have before me today is a written commercial contract which does not contain a termination provision, and the case on behalf of the respondent that such a provision should be implied. If such a provision is to be implied, it will be implied by reference to the matrix of facts and circumstances, including the communications and other documents, which are common to the parties, not by reference to one or other party's internal deliberations. Those deliberations, in my view, would not have the potential to throw light upon the presumed intentions of the parties as an objective matter in the sense explained in Codelfa Construction. 12 I am, in the circumstances, obliged to accept the oath of the respondent that it has discovered all the documents which it was required to discover under order 5 of the orders made on 11 June 2010. Save for the matters with which I have dealt in these reasons, nothing has been put before me which would cast doubt upon the adequacy of that oath. I reject the motion for further and better discovery. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jessup. Associate: Dated: 14 October 2010