FEDERAL COURT OF AUSTRALIA Julstar Pty Ltd v Hart Trading Pty Ltd [2011] FCA 657 Citation: Julstar Pty Ltd v Hart Trading Pty Ltd [2011] FCA 657 Parties: JULSTAR PTY LTD ACN 122 620 400, SEMOLINA PTY LTD ACN 117 933 570 and JULIANNE STARIHA v HART TRADING PTY LTD, COLLEEN TRACEY HART, FRONTLINE RECRUITMENT GROUP PTY LTD ACN 078 126 851 and PETER JOHN DAVIS File number(s): QUD 16 of 2011 Judge: GREENWOOD J Date of judgment: 9 June 2011 Catchwords: PRACTICE AND PROCEDURE – consideration at a directions hearing of an application in relation to categories of documents to be discovered by the parties Date of hearing: 7 June 2011 Date of last submissions: 7 June 2011 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 67 Solicitor for the Applicants: Mr P G Lynch, Lynch Morgan Lawyers Solicitor for the First and Second Respondents: Mr J Henderson, Thomsons Lawyers Solicitor for the Third and Fourth Respondents: Mr A A Evans, HWL Ebsworth Lawyers IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 16 of 2011 BETWEEN: JULSTAR PTY LTD ACN 122 620 400 First Applicant SEMOLINA PTY LTD ACN 117 933 570 Second Applicant JULIANNE STARIHA Third Applicant AND: HART TRADING PTY LTD First Respondent COLLEEN TRACEY HART Second Respondent FRONTLINE RECRUITMENT GROUP PTY LTD ACN 078 126 851 Third Respondent PETER JOHN DAVIS Fourth Respondent JUDGE: GREENWOOD J DATE OF ORDER: 9 JUNE 2011 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The parties confer with a view to formulating a draft order for discovery of documents having regard to the reasons for judgment arising out of the directions hearing on 7 June 2011, and submit such draft to the Associate to Justice Greenwood within seven days for the consideration of the Court. 2. Costs are 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 QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 16 of 2011 BETWEEN: JULSTAR PTY LTD ACN 122 620 400 First Applicant SEMOLINA PTY LTD ACN 117 933 570 Second Applicant JULIANNE STARIHA Third Applicant AND: HART TRADING PTY LTD First Respondent COLLEEN TRACEY HART Second Respondent FRONTLINE RECRUITMENT GROUP PTY LTD ACN 078 126 851 Third Respondent PETER JOHN DAVIS Fourth Respondent JUDGE: GREENWOOD J DATE: 9 JUNE 2011 PLACE: BRISBANE REASONS FOR JUDGMENT 1 The present interlocutory proceedings concern one of those largely unproductive and inherently costly debates concerning disputes as to the description of categories of documents about which discovery is to be given. The making of orders for discovery by reference to categories of documents rather than an order for general discovery is, of course, designed to limit the scope of discovery and thus save costs. In principle, this reductionist isolation of categories of documents for discovery rather than requiring general discovery ought to save both time and costs in the forensic preparation of the various issues in controversy, for trial. 2 It may have done so in this matter. It may not. However, the parties are unable to agree about approximately 37 categories of documents (having regard to all of the subparagraphs in contention of the particular formulation of the categories). 3 I do not propose to formulate extensive reasons explaining directions in relation to each of these categories. I propose to indicate the view I take about the categories and contextualise that matter as necessary. I will then invite the parties to submit to my Associate a draft proposed order which provides for the discovery of documents by categories as indicated in these reasons. The categories (both those in contention and those not) are set out in a proposed draft order which has been marked up to reflect the scope of the debate, by the solicitors for the applicants, Lynch Morgan. 4 The background to the proceedings, in brief, is this. 5 The applicants contend that the first applicant, Julstar Pty Ltd ("Julstar"), entered into financial and other administrative arrangements to take up or enter into a franchise agreement to operate a retail recruitment business described as the "Gold Coast Frontline Retail Agency" (the "Agency") on 8 December 2006 with the third respondent, Frontline Recruitment Group Pty Ltd ("FRG"), in reliance upon representations made by the second respondent, Ms Colleen Hart ("Hart") on behalf of the first respondent Hart Trading Pty Ltd ("HT") to the third applicant, Ms Stariha: see paras 8, 9, 10, 11, 12 and 13 of the Statement of Claim filed 3 February 2011. 6 The applicants also contend that on 6 November 2006 (or a date not later than 6 November 2006) FRG by its Managing Director, Mr Davis, made representations to Ms Stariha upon which she also relied to cause Julstar to enter into a franchise agreement with FRG in relation to the operation of the Agency by Julstar. See paras 15, 16, 17 and 18 of the Statement of Claim. Reliance by Ms Stariha and Julstar upon the representations at paras 8 to 13 and paras 15 to 18 is pleaded at paras 19, 20, 21 and 22 of the Statement of Claim. 7 The applicants also plead that in the period between June 2007 and 30 September 2007 FRG by Mr Davis made representations to Ms Stariha in her capacity as director of the second applicant, Semolina Pty Ltd ("Semolina"). See paras 23 and 24 of the Statement of Claim. The applicants contend that Semolina in reliance upon the representations pleaded at paras 16(a), 16(b), 23 and 24 of the Statement of Claim entered into a franchise agreement with FRG on 1 October 2007 by which Semolina acquired the right to operate a hospitality franchise agency (the "Semolina Agency") in a particular geographic area essentially described as the Gold Coast (having regard to a definition based upon particular local government areas). To do so, Semolina, it is said, entered into particular financial and administrative arrangements relevant to the Semolina Agency. Other reliance arrangements concerning the Semolina Agency are pleaded at para 26. 8 The applicants at para 27 plead that the representations made on behalf of HT at paras 8(a) to (c) and 8(f) to (g) were misleading or deceptive or likely to mislead or deceive for the reasons there identified. The representation at 8(d) is said to be misleading for the reasons mentioned at para 28, and 8(e) is said to be misleading for the reasons mentioned at para 29. 9 The representations at paras 9(a) and 12 are said to be misleading for the reasons mentioned at para 30, and the para 13 representations are said to be misleading for the reasons mentioned at para 31. All of these representations are said to have been made by HT, by Hart. At paras 32 and 33 the applicants plead that the representations at paras 8(a), 8(c) and 13 were representations with respect to future matters for which there were no reasonable grounds in making the representations. 10 The representations at para 15 (pleaded against FRG by reason of oral statements by Mr Davis and otherwise) are said to be misleading for the reasons set out at para 35(a) to (f) and the representations pleaded against FRG at paras 16 and 23 are said to be misleading for the reasons set out at para 36(a) to (c). The representations pleaded in paras 17, 18 and 24 are said to be misleading for the reasons pleaded at paras 37, 38 and 39. 11 At paras 40 and 41 the representations pleaded at paras 15, 16(c) and 23(c) are said to be representations with respect to future matters for which there were no reasonable grounds in making the representations. The damages suffered by Julstar pleaded at paras 44 to 48 are said to constitute a total claim of $495,932.09. The damages suffered by Semolina pleaded at para 49 are said to constitute $79,649.31. The damages of Ms Stariha are pleaded at paras 50 to 54 although the aggregate amount of those damages is not set out. 12 Paragraphs 55 to 57 plead facts going to a claim of accessorial liability on the part of Ms Hart. Paragraphs 58 to 61 plead a claim of accessorial liability on the part of Mr Davis. 13 Other causes of action are pleaded having regard to contended breaches of contract, a collateral agreement and a failure on the part of FRG to comply with the Franchising Code of Australia. 14 It is not necessary to identify each element of the responsive pleading by the first and second respondents (HT and Hart) who are represented separately from the third and fourth respondents (FRG and Davis). For present purposes, it is sufficient to say that HT and Hart put in controversy each of the allegations made against them by the applicants whether in terms of the representations made, reliance on the part of the applicants, the quality of the representations alleged and the contended loss and damage suffered by the applicants. As to reasonable grounds, HT and Hart deny the making of the representations but plead that if they are found to have made the representations, there was a reasonable basis for the representations. The first and second respondents do not plead to those paragraphs which solely concern conduct on the part of FRG and Davis. 15 FRG and Davis also put in controversy each of the allegations made against them whether as to the representations made, the issue of reliance, the quality of the representations and the contended loss and damage. FRG and Davis also plead that if they are found to have made the representations as alleged (although denied), there was a reasonable basis for making the representations. 16 The applicants have put on a lengthy reply to the defence of HT and Hart, and a much more succinct reply to the defence of FRG and Davis. 17 As to the categories, the position is this. Paragraph 1(a), (b), (c) and (d) Categories 18 The categories reflected at para 1(a), (b), (c) and (d) of the proposed order are agreed. Paragraph 2(a), (b), (c) and (d) Categories 19 The categories at para 2(a), (b), (c) and (d) are all now agreed. Paragraph 2(e) Category 20 The category at para 2(e) is described in these terms: Correspondence (e-mails, letters, faxes) between [FRG] and franchisees [which I take to mean franchisees of FRG] in which the requirement to provide only the information contained in the franchise template was communicated. 21 Documents within this category are said to be relevant for this reason. 22 At para 15 of the Statement of Claim, the applicants say that FRG by Davis represented to Ms Stariha that the Agency would "easily achieve" the minimum territory growth benchmarks for the Agency if Ms Stariha acquired the business; the Agency was "capable of achieving sales of $500,000 per annum"; and, if Ms Stariha purchased the Agency she would achieve a minimum development performance or growth [in revenue] of "$240,000 in her first year of operating the [Agency]". At para 40 of the Defence of FRG and Davis, they repeat and rely upon their earlier denial of the making of the para 15 representations and repeat and rely upon their denial of the misleading quality of those representations. They plead other facts relevant to that matter. Then, at para 40 of the Defence, they say that even if the para 15 representations were made by FRG, there were reasonable grounds for making them. In asserting reasonable grounds, FRG and Davis rely upon three documents: a Sales-Consultant Summary for the period 8/12/2005 to 7/12/2006; Schedule 15 of the Standard Franchise Agreement; and, a Sales-Consultant Detail 1/07/2005 to 7/12/2006 otherwise described as a 2006 Sales Figures Summary. No other documents are pleaded (or particularised) as the basis for the contended reasonable grounds for making the para 15 representations (otherwise denied). 23 At para 40 of the Defence, they also plead that they deny that anything FRG has said or done or omitted to say or do was misleading or deceptive or likely to mislead or deceive. 24 The applicants say that whether reasonable grounds existed is informed by reporting "templates" used by franchisees to report performance to the franchisor. The templates are discovered as a separate category of documents. The applicants say that whether reasonable grounds existed for the making of the pleaded representations is informed not only by the templates but also the instructions given by FRG to franchisees as to the content of the information in the templates. The point is illustrated by suggesting that particular expenses or costs might be excluded from the reporting templates and to the extent that the templates show a particular financial performance, it might simply be a result of the methodology adopted by the franchisor by which the franchisees are compelled to report. In other words, the templates (although discovered) either are or may be constrained in their information by instructions from FRG. 25 It seems to me however that the templates speak for themselves. The format and content of the template is evident from the template. The nature of the expenses reported by the template will be evident from the template. If the template requires, on its face, reporting according to particular expenses or classes of expenses and those expenses do not reflect the actual expenses incurred, other documents (orthodox financial accounts) will presumably reflect the true position. 26 It seems to me that it is not necessary to require the production of documents which go to instructions to franchisees about the information required by the franchisor by the template. 27 On this topic the applicants, according to the annotated proposed order, also say that the documents are required having regard to paras 15, 18 and 51 of the Defence of HT and Hart. 28 As to that matter, HT and Hart at paras 15 and 18 of their Defence do not plead to paras 15 and 18 of the Statement of Claim as those paragraphs make no allegation concerning HT and Hart. At para 51, HT and Hart respond to para 51 of the Statement of Claim which pleads that Ms Stariha did not receive a gross wage of $50,000 per annum during the period 14 January 2007 to 19 February 2010 and instead received gross wages of "$24,607 in the period from 30 June 2007; $25,895 in the period from 30 June 2008". In answer to that paragraph, HT and Hart say at para 51 that profit and loss statements were attached to an email dated 4 December 2008 authored by Ms Stariha that show that the franchisee salary for the 2006/2007 financial year was $50,575 and Julstar derived a profit of $68,929.74; and the franchisee salary for the 2007/2008 financial year was $38,150 and Julstar derived a profit of $99,109.85. At para 51.2, they plead that a profit and loss statement was attached to an email dated 19 January 2009 authored by Ms Stariha which discloses that the franchisee salary for the 2008/2009 financial year was $22,253.44 and Julstar's profit was $4,021.29. 29 At para 23 of the Reply, the applicants admit the allegations of HT and Hart at para 51 of the Defence but also rely upon the matters recited at paras 20(b) and 20(c) of the Reply which plead matters going to allegations made by HT and Hart at para 44 of their Defence. 30 At para 44, HT and Hart say that Ms Stariha's email of 4 December 2008 also represented that the Earnings Before Interest and Tax (EBIT) for the period 1 July 2006 to 30 June 2007 was $130,000 (including a salary) and the EBIT for the period 1 July 2007 to 30 June 2008 was $166,000 (including a salary). At para 44.2 they plead that by an email dated 24 November 2008 authored by Ms Stariha, she forecast EBIT for the financial year ended 30 June 2008 of $155,000 (including a $50,000 salary) and that since the purchase of the business by Julstar in October 2006, "it had a '$80k ebit consistent profit'". 31 The applicants say that the email of 4 December 2008 authored by Ms Stariha attached a financial template for the period 1 July 2006 to 30 June 2007 and 1 July 2007 to 30 June 2008 and that the information in the email was derived from those financial templates. 32 The point made by the applicants is that to the extent that HT and Hart rely upon the email and what is said in it, regard must be had to the attached financial templates which gave rise to the financial results recorded in the email and, in turn, those financial results (especially in relation to EBIT statistics which are the subject of particular representations) are dictated by the content of the templates which is determined by the franchisor. Therefore, it is said, emails, letters and faxes from FRG to franchisees mandating the content of the template information are relevant. Documents in the proposed category, whether in the hands of FRG and Davis or in the hands of HT and Hart (or copies of documents in the hands of either) ought to be produced upon discovery as it all ultimately comes back to an assessment of the financial performance in the context of the representations. 33 Notwithstanding this elaboration of the basis for the formulation of the category at 2(e), I am not satisfied that these underlying emails, letters or faxes (correspondence) ought to be a separate category for discovery. The emails, attached templates, templates themselves and the financial accounts deal with the topic. Paragraph 3(a), (b), (d), (e), (f), (g), (h), (i) Categories 34 These categories are agreed. Paragraph 3(c) Category 35 The text of the para 3(c) category is the subject of the ruling made on 7 June 2011. Paragraph 3(j) and (k) Categories 36 Category 3(j) is to be removed from the proposed list of categories by agreement. 37 Category 3(k) is to be amended as agreed so as to read "profit and loss statements, balance sheets and tax returns in respect of the businesses with which [Ms Stariha] was associated, known as 'CafÉ Addict' and 'International Working Holidays'". Paragraph 3(l) Category 38 The category is to be described in these terms: (l) emails, letters, notes and other communications and documents relating to research commissioned or undertaken by the applicants into the Gold Coast recruitment market and any feasibility or viability study undertaken by the applicants in respect of the proposed [Agency] and the proposed Gold Coast Frontline Hospitality Agency. Paragraph 4 Category 39 Paragraph 4 consists of 22 categories or subparagraphs all of which are the subject of objection by the applicants. Paragraph 4 introduces the categories with the description: [T]he applicants' financial and business performance of the Gold Coast Retail and Gold Coast Hospitality businesses (paras 44 to 53 of the Statement of Claim and paras 48 and 80 of the Hart Defence). The types of documents which would be discoverable under this category are: 40 In relation to a number of the 22 categories, the applicants contend that the categories fall within the broader description in category 7. Category 7 is in these terms: Bank records, tax invoices, receipts, loan documents, group certificates, wage records, documents recording hours of work contributed by the first applicant to the second and third applicant's business and documents evidencing capital contributions to the second and third applicants, documents relating to the loss and damage alleged to be suffered by the applicants and bank statements, loan documents, deposit slips evidencing capital contributions obtained from the third applicant [Ms Stariha] her husband and LA Stariha Homes Pty Ltd to the franchised business, cash payments books and cash receipts books of the first and second applicants [Julstar and Semolina] and of LA Stariha Homes Pty Ltd, balance sheet, profit & loss and financial statements (MYOB electronic accounts including general ledger); (paragraphs 21, 22, 25, 26, 45, 46, 47, 48, 49, 54, 72 and 77 of the statement of claim). 41 Each of the categories within para 4 are said to relate to paras 44 to 53 of the Statement of Claim. Paragraphs 44 to 48 of the Statement of Claim plead material facts going to the damages suffered by Julstar by reason of the contended conduct in contravention of s 52. Paragraph 49 pleads Semolina's damages. Paragraphs 50 to 53 (but also para 54) pleads Ms Stariha's loss. Paragraph 48 of the Defence of HT and Hart pleads at 48.3 that if Julstar has suffered loss, it has done so "as a direct consequence of either Stariha's or [Julstar's] own conduct". HT and Hart then plead particulars of that conduct at 48.3(a) to (m). For example, at particular (a) they plead that "Julstar and/or Stariha invested over $60,000 in a fitout which was excessive and unnecessary". At particular (c), they say that "[B]y email dated 24 November 2008 from Stariha to Downer, Stariha said, in relation to the two agencies, '[T]hese are good business [sic], I just haven't been able to handle the two'". At particular (d) it is said that from May 2008 Stariha became less involved with the Agency "for health reasons". At particular (f) they plead a telephone conversation Ms Stariha had with Hart in September 2008. 42 The pleading at para 48.3 of the Defence of HT and Hart is not clear. It seems to suggest that if Julstar has suffered loss, the loss is not referable to any conduct of HT and Hart in contravention of s 52 of the Trade Practices Act 1974 (Cth) (which is denied) but is entirely referable to Julstar's own conduct (or that of Ms Stariha). Although the applicants describe para 48.3 as a pleading of contributory negligence (which is not an answer to a claim under s 82(1)) the pleading seems to suggest that the claim fails entirely under s 82(1) because none of the loss or damage has been "suffered by conduct of another … done in contravention of … s 52" (s 82(1)) and is entirely referable to the conduct of the applicants (assuming that the representations are found to have been made; the representations were relevantly misleading; reliance is established; and, to the extent that the representations concern future matters, no reasonable grounds are made out for the making of the representations). 43 In other words, the pleading seems to suggest that there is no causal link between any conduct that might be established and the contended loss. 44 The first particular at 48.3(a) of that break in the causal link is said to be that Julstar and/or Stariha invested over $60,000 in a fitout which was excessive and unnecessary. It is not clear whether HT and Hart say that the fitout costs are not at all causally related to any reliance conduct asserted by the applicants (the causal link point) or whether the real position is that they contend that the fitout costs ought to have been a much lesser figure, say $30,000. 45 It is correct to say that if the contention is that there is no causal relationship between the categories of loss pleaded by Julstar at para 48 amounting to $495,932.09, and the conduct of HT and Hart, by reason of intervening conduct by Julstar and/or Stariha which breaks the chain of causation, material facts (properly particularised) need to be pleaded which assert the conduct of Julstar and Stariha which brings about that result. 46 No challenge however has been made to the adequacy of the pleading of HT and Hart as to that matter. The applicants seek to limit the categories of documents about which discovery might be given on the footing that the categories are not shown to be relevantly connected with a matter which is properly put in controversy having regard to the state of the pleading. Perhaps it would have been helpful of the question of the adequacy of the pleading had been raised and determined before time, effort and cost was dedicated to a contest about these categories of documents (relevantly or not) linked to the sequence of particulars of the conclusionary assertion at 48.3 that Julstar's loss has been suffered "as a direct consequence of either Stariha's or its own conduct". 47 The categories of the applicants' documents (concerning their financial and business performance as framed by the introductory words of para 4) now in contention on the damages point includes sales reports; financial reports exchanged with FRG; profit and loss statements; balance sheets and financial reports and source documents; emails etc concerning representations or diary notes recording conversations about financial performance; emails etc containing representations or diary notes recording conversations about management issues; tax invoices, receipts, bank records, quotations, tenders and proposals relating to the fitout of the Agency; emails etc relating to the engagement of Amy Doberer; employment contracts between Julstar and Semolina and employees or consultants; performance reviews and appraisals; employee and superannuation records; reports of business activity and compliance with key performance indicators; emails etc between the applicants and FRG and Davis relating to the reasons why the Agency or the hospitality business failed; emails etc relating to Stariha's level of satisfaction concerning the purchase of the Agency or the hospitality business; emails etc relating to a retail franchise in North Queensland; emails etc between the applicants and FRG or Davis concerning disruption to the business of the Agency or the hospitality business as a consequence of the change of a phone system; emails etc sent or received by the applicants to other parties concerning the possible sale of the Agency or the hospitality business; telephone records relevant to business development activities; all plans, drawings, approvals etc relating to materials used and work performed in the fitout of the premises; emails, letters, etc sent or received by the applicants to and from Stariha relating to the operations of the Agency or the hospitality business; bank statements in relation to payments to Lee Stariha and/or La Stariha Homes Pty Ltd; invoices, receipts, emails and other documents relating to communications between suppliers and contractors (on the one hand) and Lee Stariha and/or La Stariha Homes Pty Ltd (on the other) in relation to materials used and work undertaken in the fitout of the premises; and, documents relating to payments made by the applicants and/or Lee Stariha and/or La Stariha Homes Pty Ltd to suppliers and/or contractors in respect of material supplied and/or work undertaken in respect of the fitout of the premises. 48 The proper course for HT and Hart would have been to properly plead the conduct of the relevant applicants said to break the causal chain and to properly particularise that conduct. Categories of documents shown to be relevant to that conduct might then be reasonably formulated. I will not order discovery by reference to all of these various sub-categories of the proposed Order 4. Documents ought to be discovered falling within Category 7. To the extent that Category 7 is thought not to require discovery of documents relevant to the question of damages, I will order general discovery in relation to damages. I will treat para 48 of the Defence of HT and Hart (being the paragraph said to be engaged by reference to these categories) as a denial that Julstar suffered the loss pleaded at para 48. The applicants will be required to provide discovery by reference to what is called Category 7 documents but also to provide general discovery of documents relating to the heads of damage claimed at paras 48 and 49 of the Statement of Claim. 49 Paragraph 80 of the Defence of HT and Hart contends that Julstar and Stariha "have failed to mitigate the damages claimed by them (which is expressly denied) and in the event that it may be found that [HT] and/or [Hart] are liable to pay such damages, then any such loss or damage ought to be reduced accordingly" [emphasis added]. 50 The pleading at para 80 of the Defence is not clear. 51 Presumably, HT and Hart contend that although the applicants say they suffered loss (claimed to have been caused by conduct of the relevant respondents in contravention of s 52 and compensable under s 82(1)), that loss arose, partly at least, out of the claimant's failure to take reasonable care (and the relevant respondents did not intend to cause the loss or damage suffered by the claimant and did not fraudulently cause the loss or damage). These are the integers of s 82(1B) by which the damages the claimant may recover under s 82(1) are to be reduced to the extent the Court thinks just and equitable having regard to the "claimant's share in the responsibility for the loss or damage": see s 82(1B) of the Trade Practices Act being the provision that applied at the moment in time when the reliance loss was suffered as pleaded. Section 82(1B) takes its current form as s 137B of the Competition and Consumer Act 2010 (Cth). 52 These integers have not been pleaded properly under para 80 of the Defence of HT and Hart. 53 The orders for discovery ought to be framed in terms of the content of the documents described in what is presently para 7 coupled with a general order for discovery in relation to damages. Paragraph 5 Categories (a), (b), (c), (d) and (e) 54 These categories were resolved at the directions hearing on 7 June 2011. Paragraph 6 Categories (b), (c), (d) and (e) 55 These categories of the proposed order are agreed. Paragraph 6 Category (a) 56 Category 6 is introduced by the description "[T]he replacement process initiated when a recruitment candidate supplied by Julstar or Semolina did not remain in employment for at least 90 days (paras 13 and 62 to 68 of the statement of claim)". The documents at para 6(a) are described as "client agreements between [FRG] and the clients who conducted business in [the territory of the Agency] as at 6 November 2006 and as at 9 December 2006". The respondents accept that the client agreements relating to the clients set out at Schedule D to the Statement of Claim ought to be produced but that the production of all client agreements between FRG and clients in the territory as at 6 November 2006 and 9 December 2006 is oppressive and burdensome. They say that it would be enough to simply produce a list of the clients of FRG at the relevant dates rather than the documents themselves. The applicants say that the client agreements in the main are one page documents and it ought not to be oppressive to produce a collection of those agreements. 57 Paragraph 13 of the Statement of Claim goes to the contention that at some point between 21 October 2006 and 3 November 2006, HT by Hart, represented that the Agency, if purchased by Stariha, would have access to "401 contracted clients for whom job placements could be made". 58 Paragraphs 62 and 63 plead matters in relation to a particular clause of the Julstar Franchise Agreement concerning an obligation on the part of Julstar to supply a replacement candidate to any clients of FRG in circumstances where FRG had a legal obligation to supply a replacement candidate to a client. Paragraph 64 pleads that FRG entered into agreements with the clients referred to in Schedule D and para 65 pleads that it was a term of the client agreement that FRG would source candidates to fill employment positions with the client and that FRG must supply a replacement credit to the client if the employee so placed did not remain in employment to the end of the 90 day period and the client had paid the placement fee within seven days of the relevant invoice. At para 66 a breach of the Julstar Franchise Agreement is pleaded in that FRG required Julstar to provide replacements to clients of FRG in circumstances not contemplated by the pleaded clauses. At para 67, Julstar pleads that it supplied replacement employees described as replacement "credits" and the particulars of that supply are contained in Schedule D. 59 At para 68, Julstar pleads the loss and damage it suffered by reason of the breach of the agreement and the measure of that loss is said to be the value of the replacement credits set out in Schedule D which amount to $109,814.56. 60 It is these Schedule D agreements with these clients that the respondents concede ought to be produced within the description of the category at para 6(a). However, the applicants contend that there ought to be broader discovery because one of the representations is that Julstar would have access to 401 clients pursuant to client agreements at the relevant representation dates. 61 The category of documents to be produced by reference to this issue ought to include all client agreements between FRG and clients of the Agency in the relevant territory as at 6 November 2006 and 9 December 2006. Paragraph 6 Category (f) 62 This category was abandoned by agreement at the directions hearing on 7 June 2011. Paragraph 7 Category 63 Paragraph 7 is set out at [39] of these reasons. Discovery of documents by reference to this category is to occur supplemented by a general order for discovery in relation to damages as pleaded. Paragraph 8 Categories (a) and (b) 64 Category 8(a) is introduced by the description "Documents relevant to propensities, credit and or reliability of parties". Category 8(a) is described as emails, letters, etc sent and/or received by the applicants to and/or from other parties "relating to the receipt of any monies by the applicants directly from Frontline clients that were not recorded in the sales figures reported by [Julstar and/or Semolina] to [FRG]". There seems to be no dispute as to the discovery of documents within this category. 65 Category 8(b) is struck out in the draft as it has been relocated to fall within the scope of category 3(b). The Conclusionary Part 66 The remaining part of the draft order concludes with the words "the first and second respondents have no discovery obligations in relation to any of the matters referred to in paragraphs 1(c), 1(d), 2, 3(a), 3(b), 3(f), 4(a), 4(b), 4(h), 4(i), 5(a), 5(c) and 6". This provision is shown in the proposed order as a deletion. HT and Hart seek to retain this conclusionary part of the order on the footing that virtually all of the documents relevant to the issues will be discovered by FRG and Davis and thus costs will be saved by not obliging HT and Hart to give discovery. Discovery by HT and Hart is said to be duplicatory. However, the applicants ought to have discovery from HT and Hart and it may be that discovery can be given by those parties by undertaking an examination of the proposed verified list formulated by FRG and Davis and then forming a view about whether that list reflects the entirety of the documents otherwise discoverable in the hands of HT and Hart. If so, a relevant deponent can adopt the list as an accurate verified list of the documents HT and Hart would otherwise produce. It may result in a supplemental list of documents not contained within the other list. However, HT and Hart ought to verify a list of documents in their possession or control relevant to the questions in issue in the proceeding. 67 The parties will be directed to formulate a proposed order which reflects the content of these reasons and submit the proposed order to my Associate within seven days. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 9 June 2011