FEDERAL COURT OF AUSTRALIA Julstar Pty Ltd v Hart Trading Pty Ltd [2012] FCA 131 Citation: Julstar Pty Ltd v Hart Trading Pty Ltd [2012] FCA 131 Parties: JULSTAR PTY LTD ACN 122 620 400, SEMOLINA PTY LTD ACN 117 933 570 and JULIANNE STARIHA v HART TRADING PTY LTD ACN 114 806 996, 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: 24 February 2012 Catchwords: PRACTICE AND PROCEDURE – consideration of an application for leave to rely upon amended statements for the purposes of a trial of the proceeding commencing on 12 March 2012 Date of hearing: 15 February 2012 Date of last submissions: 17 February 2012 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 30 Solicitor for the Applicants: Mr P G Lynch, Lynch Morgan Lawyers Counsel for the First and Second Respondents: Mr C Jennings Solicitor for the First and Second Respondents: Mr J Henderson, Thomsons Lawyers Counsel for the Third and Fourth Respondents: Mr M Jones 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 ACN 114 806 996 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: 24 February 2012 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. Leave is given to the third and fourth respondents to rely upon the following statements at the hearing of the trial of this proceeding: amended statement of Peter Davis filed 15 February 2012; amended statement of Helen Wilson filed 14 February 2012; amended statement of Bronwyn Butcher filed 15 February 2012; amended statement of Jodie Briede filed 14 February 2012; amended statement of Melinda Flavell filed 14 February 2012; the amended witness statement of Melissa Moseley filed 14 February 2012; and the amended statement of Doug Downer filed on 23 February 2012. 2. The third and fourth respondents shall pay the costs of the applicants of and incidental to their examination of the proposed amended witness statements; the formulation of submissions in relation to the question of leave in relation to those amended statements; and the costs of and incidental to taking instructions in relation to the matters raised by each of the amendments. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 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 ACN 114 806 996 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: 24 february 2012 PLACE: BRISBANE REASONS FOR JUDGMENT 1 This proceeding is set down for trial from 12 March 2012 to 16 March 2012. 2 On 15 February 2012, the Court made extensive directions in the matter having regard to the application of the first and second respondents for leave to rely upon five amended witness statements filed in the first week of February 2012 and three new witness statements filed at about the same time. 3 In addition, the third and fourth respondents sought leave to rely upon the following witness statements: amended statement of Peter Davis filed 14 February 2012 (actually filed 15 February 2012); amended statement of Doug Downer (not filed); amended statement of Helen Wilson filed 14 February 2012; amended statement of Bronwyn Butcher filed 14 February 2012 (actually filed 15 February 2012); amended statement Jodie Briede filed 14 February 2012; amended statement of Melinda Flavell filed 14 February 2012; and the amended statement of Melissa Moseley filed 14 February 2012. 4 On the hearing of the Application for Leave the applicants were not in a position to express a view about whether they would be prejudiced by the giving of leave as they had only received the amended statements late the preceding afternoon. Accordingly, directions were made on 15 February 2012 (Order 11) for submissions to be put on within two days by the applicants indicating their attitude to the Application for Leave in relation to these additional statements. The third and fourth respondents were required to respond within a further day. The question of whether leave might be given was to be determined on the papers. 5 These reasons deal with that determination. 6 The first statement is that of Mr Peter Davis and the applicants make three points in relation to it. 7 By para 62 of the Statement of Claim, the applicants plead clause 2.39 of the Julstar Franchise Agreement ("JFA") concerning a franchisee's obligation to provide clients with a three month guarantee period for placed candidates the subject of the franchise undertaking. At para 63, the applicants plead an implied term which is supported by particulars going to the issue of the implication of the term being necessary "to give business efficacy to clause 2.39 of the [JFA]". Four facts are then pleaded in support of that contention. The third and fourth respondents at para 63 say that no implied term, as contended, arises because the implied term is said to be inconsistent with the express provisions of clause 2.39; the term is not necessary to give business efficacy to the JFA; and the term is otherwise not capable of implication into the JFA as a matter of law. 8 The first point made by the applicants about the amended statement is that by the new para 52A, Mr Davis talks about the demands of clients for a replacement guarantee, and normally a 90 day replacement guarantee. Examples are then given. The applicants say that evidence of industry practices goes beyond the pleading and if leave is given, discovery (including third party discovery) would be required in order to meet allegations about industry practice. Giving leave is said to be procedurally unfair in all the circumstances. 9 Paragraph 51 of Mr Davis's statement as it stands, talks about standard industry practice in replacing the candidate who leaves a job within a few months of starting that job and para 52 talks about a 90 day replacement guarantee being an industry standard. It seems to me that the question of industry practice was alive on the pleadings and addressed at paras 51 and 52 in any event. Paragraph 52A (and para 53A) simply expand upon that matter. 10 I am not satisfied that leave ought to be refused in relation to those amendments notwithstanding that they come very late in the day. 11 The second point made about Mr Davis's amended statement is this. 12 By para 8(e) of the Statement of Claim, the third applicant says that the first respondent represented to her on or about 4 October 2006 that she would receive "the benefit of $10,000.00 worth of initial training from the third respondent" [emphasis added]. At para 29, the representation in para 8(e) is said to be misleading and deceptive or likely to mislead or deceive because the third respondent did not provide the first applicant (a company controlled by the third applicant) with "any initial formal training" and despite requests the third respondent refused to provide the first applicant with any initial formal training (and particulars are given of such requests). 13 At paras 225A and 225B, Mr Davis says things about the two day induction training program; its set-up; brief content of the particular training that the third applicant is said to have received; and, the time when such training was offered. 14 The applicants say that para 29 addresses a failure on the part of the third respondent to provide Ms Stariha (and the third applicant) with initial formal training as the expression of a failure to act consistently with a representation made on 4 October 2006 being a representation concerning training that the applicants say was promised to be provided if Ms Stariha elected to purchase the franchise business. At para 225, Mr Davis adds a sentence which says that the relevant records indicate that Ms Stariha undertook induction training on 18 October 2005. The applicants say that paras 225A and 225B build upon that sentence and are concerned with the content of the training provided on or about 18 October 2005. That matter is said to be irrelevant because the pleaded issue concerns the provision of training after 4 October 2006 and, relevantly, after reliance upon the representation in the purchase of the franchise undertaking. 15 At para 29 of the Amended Defence, the third and fourth respondents say that they deny the failure or refusal to provide initial formal training to the first applicant and that otherwise (since the representation is said to be one made by the first respondent) they are not required to plead to the allegation. At para 225 of the pre-amended statement, Mr Davis talks about some aspects of the induction training Ms Stariha would have received. The new paragraphs however give some content and timing to the induction training, by reference to an examination of relevant records. It may be that the provision of induction training on or about 18 October 2005 will be shown to be irrelevant to the question of whether the third respondent failed or refused to provide training to a certain value on or after 4 October 2006. It may be that the content of the earlier training was thought to be or treated as training for purposes, on the facts, relevant to the issue concerning matters on or after 4 October 2006. 16 I am satisfied that the matter was sufficiently alive that leave ought to be given to rely upon the proposed paragraphs. 17 The third point made about Mr Davis's amended statement is this. 18 The third and fourth respondents accept that on 23 November 2006, the third respondent forwarded a Disclosure Document to Ms Stariha for the purposes of the Franchising Code of Australia. The applicants contend by para 74 and the third and fourth respondents accept by para 74(a) of the Amended Defence that the Disclosure Document did not disclose the third respondent's involvement in Court proceedings in the Supreme Court of New South Wales described as the "Aura Proceedings". Apart from that admission at para 74(a), the third and fourth respondents deny that the Aura Proceedings were not disclosed to the first applicant and say that those proceedings were disclosed by Mr Davis on 6 November 2006, at an event known as "Discovery Day". At para 352 of the amended statement, Mr Davis says that the Aura Proceedings were also referred to by him in a letter he sent dated 13 April 2006 and at a retail conference in January 2006. The applicants say that these further references are irrelevant as the pleaded contention concerns the failure to disclose the proceedings in the Disclosure Document. 19 Nevertheless, the issue of disclosure on the facts is alive on the pleadings and is the subject of existing evidence. It may be that disclosures outside the Disclosure Document will be shown to be relevant at least in relation to possible relief. I am not satisfied that reliance upon the additional paragraphs is prejudicial. 20 As to the amended statement of Ms Bronwyn Butcher, two points are made about that statement. 21 At paras 33A, 33B and 33C, Ms Butcher talks about replacement credits and her experience of the demands and practices of clients in relation to that matter. The applicants raise the same point in relation to these paragraphs as they raised in relation to paras 52A and 53A of Mr Davis's amended statement. I propose to give leave to rely upon these paragraphs of the amended statement for the same reasons leave has been given concerning the related proposed amendments to Mr Davis's statement. 22 Paragraphs 36, 37A and 37B address Ms Butcher's knowledge of disclosures made by Mr Davis about the Aura Proceedings. At para 37B, Ms Butcher addresses her recollection of a discussion of the Aura Proceedings in the presence of Ms Stariha. I propose to give leave to rely upon these paragraphs for the same reasons given for granting leave in relation to para 352 of Mr Davis's statement concerning the issues raised by para 74 of the Statement of Claim and the responsive para 74 of the Amended Defence of the third and fourth respondents. 23 The proposed amendments to the statements of Briede, Wilson and Flavell all fall into issues concerning the disclosure or otherwise of the Aura Proceedings, albeit outside the Disclosure Document. I propose to give leave in relation to those amendments for the same reasons earlier mentioned concerning the topic of the Aura Proceedings. 24 I have taken into account the submissions of the applicants in reply and particularly the commentary set out in the Schedule in response to the submissions in reply of the third and fourth respondents. However, I propose to give leave to the third and fourth respondents to rely upon each of the statements I have mentioned. 25 As to the amended statement of Doug Downer, the third and fourth respondents attach a Schedule to their submissions commenting on approximately 25 paragraphs of Mr Downer's statement. The Schedule seeks to demonstrate why it is that those amendments ought to be the subject of leave. The third and fourth respondents say that the applicants were not served with the statement until the afternoon of 16 February 2012. The applicants have not responded on the topic of Mr Downer's statement in their response to the submissions in reply from the third and fourth respondents. In the document of the applicants of 16 February 2012, the applicants object to any further evidence from Mr Downer. 26 The amended statement of Mr Downer was filed electronically as recently as yesterday. The original statement (which is signed "November 2011") was filed on 4 November 2011. Although the applicants have not responded to the proposed amendments to Mr Downer's statement because they have only recently received that statement, and they object generally to any amendments, it falls to the Court to examine the original statement as filed and consider the proposed amendments so as to determine the scope of the changes and whether the interests of justice are served by giving leave. 27 I am satisfied that the proposed amendments to Mr Downer's statement are not generally prejudicial subject to one consideration. At para 29 of the original statement, Mr Downer deals with the topic of Ms Stariha receiving (or not) additional franchise training when Semolina Pty Ltd commenced the hospitality franchise. Mr Downer had said at para 29 that since Ms Stariha had already been an employed consultant and was already a retail agency franchisee through Julstar Pty Ltd, he doubts that he "would have arranged additional basic franchisee training for Julianne". At para 29A, Mr Downer seems to have now recalled, specifically, that Ms Stariha asked him "not to give her training". Paragraphs 29A to 29G elaborate upon that matter and refer to conversations between Mr Downer and Ms Stariha. By those paragraphs, some additional documents are attached to the statement. 28 I propose to give leave, as part of the general leave, to amend the statement in respect of paras 29A to 29G. The subject matter of these paragraphs (training requests or otherwise) has already been raised by the principal statement and the additional matters will involve the advisers to the applicants taking instructions from Ms Stariha about the contentions, the conversations and the attachments. More fundamentally, the paragraphs ought to form part of the record as giving content and context to the earlier and later evidence generally having regard to Mr Downer's further recollection set out in the amended statement of February 2012. 29 I am not satisfied that giving leave in relation to the amended statements requires further discovery. 30 The third and fourth respondents will be ordered to pay the costs of the applicants of and incidental to the consideration of the amendments to the statements and the taking of instructions in relation to those matters having regard to the late proposal on the eve of trial to make these various amendments. Rather than further preparing the case, the applicants are, as well, now put to the cost and expense of addressing each matter the subject of the amendments. No doubt some of those matters can be dealt with efficiently and quickly. Others might require further attention. The statements ought to have been prepared as fully as possible at the outset. I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate: Dated: 24 February 2012