Industrial Relations Commission of New South Wales in Court Session CITATION : Pilgrim and anor v Wendy's Supa Sundaes Pty Ltd and ors [2002] NSWIRComm 238 FIRST APPLICANT Stephen John Pilgrim SECOND APPLICANT Julie Anne Pilgrim FIRST RESPONDENT Wendy's Supa Sundaes Pty Limited PARTIES : SECOND RESPONDENT Oraka Pty Limited THIRD RESPONDENT Bryan Clifford Johnson FOURTH RESPONDENT Ann Margaret Johnson FILE NUMBER: IRC1028 of 1999 CORAM: Peterson J CATCHWORDS : Unfair contract proceedings - finding of fact made erronerously - error found before judgment perfected by entry of orders - power to withdraw reasons and orders considered - relevant reasons and orders withdrawn and subjected to further consideration. LEGISLATION CITED : Industrial Relations Act 1996 s106 Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (2001) 4 VR 28 CASES CITED : Smith v Australia and New Zealand Banking Group Ltd and Ors No 2, unreported 21 November 1996 - 95/40392 Brown v Rezitis (1970) 127 CLR 157 HEARING DATES: 08/30/2002 DATE OF JUDGMENT: 09/13/2002 APPLICANTS Mr J B Whittle SC with Mr J V Gooley of counsel SOLICITOR Barry Lazarus Lawyers SYDNEY. FIRST RESPONDENT Mr V F Kerr of counsel LEGAL REPRESENTATIVES: SOLICITOR Piper Alderman Lawyers SYDNEY SECOND TO FOURTH RESPONDENTS Mr I M Neil of counsel SOLICITORS Gordon & Johnstone Lawyers SYDNEY. JUDGMENT: - 3 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: PETERSON J DATE: 13 SEPTEMBER 2002 Matter No. IRC1028 of 1999 STEPHEN PILGRIM AND JULIE PILGRIM v WENDY'S SUPA SUNDAES PTY LIMITED AND ORS. Application under s106 of the Industrial Relations Act 1996. SUPPLEMENTARY JUDGMENT 1 I delivered my reasons for judgment in this matter, which concerned proceedings under s106 of the Industrial Relations Act 1996 ('the Act'), on 12 August 2002. The applicants, Mr and Mrs Pilgrim, had brought proceedings against Wendy's Supa Sundaes Pty Limited and its master franchisee for New South Wales, Oraka Pty Limited and the principals of Oraka, Mr and Mrs Johnson. 2 The primary result of the judgment was to the effect that the applicants should have the benefit of an order in the sum of $255,000 plus interest. That sum comprised $185,000, being the price paid by the applicants for the franchise of the subject business, an ice cream shop, and $70,000, being the cost of a removal and refurbishment of the shop which they had expected to receive at no cost. 3 The interest element of the order was not identified precisely although the usual order, if interest is ordered, would be that interest run from the date of commencement of the proceedings until judgment. 4 The sum of $185,000 plus interest was intended to be payable, on the basis of joint and several liability, by Wendy's, Oraka and Mr Johnson. The sum of $70,000 plus interest was intended to be payable by Oraka and Mr Johnson, again on a joint and several basis. 5 In the course of judgment I referred to a fact found as being that Oraka received the benefit of the business as the result of the applicants having returned it to Oraka in December 2000. Those observations were as follows: 1. In the Chronology set out in paragraph 14 of the judgment the final step was recorded as: December 2000 The Pilgrims surrendered their business to Oraka. 2. In paragraph 50 I said: By vacating the premises upon the expiry of the lease, the applicants thereby returned to Oraka an asset upon which they had spent more than $255,000 but which had returned them income over a period of years. Oraka, having sold the business for $200,000 regained it for nothing. The applicants' loss was thus Oraka's gain. 3. In paragraph 51 I said: The arrangement was also unfair in that it permitted Oraka to regain at no cost the benefit of the business for which it had been paid full value. 4. In paragraph 64 this was said: The business, then valued at $185,000 without demur from Mr Johnson, was handed back to Oraka for nothing. 6 On 15 August 2002 the solicitors for Oraka and Mr Johnson wrote to the solicitors for Wendy's drawing to attention alleged factual errors in my judgment of 12 August. The primary error, which is now accepted as such by all parties, was the finding that Oraka took possession of the applicants' franchise in December 2000, when in fact the franchise was handed back to Wendy's. The error would seem to have occurred on the basis of the amended summons which made the erroneous reference and a later prepared chronology which maintained it, although it must readily be said that senior counsel for the applicants corrected the position in his opening of 18 June 2001 and the written submissions for both the first respondent and the second, third and fourth respondents made a correct reference to the first respondent (that is, Wendy's). 7 The factual error was an obvious one and was my error. The question which arises is what consequence that should have for the judgment and the orders which flowed from the findings. 8 The parties accept that since judgment has not yet been perfected there is no bar to the Commission in Court Session, as a superior court of record, calling up judgment for the purpose of correcting the error. In that respect, counsel relied upon the judgment of Chernov JA to which Charles and Vincent JJA relevantly agreed in Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (2001) 4 VR 28 where Chernov JA said: In the case of a superior court of record, judgment is not relevantly finalised until it is entered in the records of the court. Hence, until that occurs, the judge can recall the order and the reasons and make a different order and give different reasons: Smith v Australia and New Zealand Banking Group Ltd (unreported, NSW Court of Appeal, 21 November 1996, per Priestley, Sheller and Powell JJA); Sherpa v Anderson (unreported, NSW Supreme Court, 14 October 1993, per Young J); Mulvena (at 11 per Mahoney JA); Re Harrison's Share Under a Settlement ([1955] Ch 260 at 284). But once judgment is perfected the judge cannot, in substance, rewrite the given reasons so as to give different reasons for the decision or, in the words of Willmer LJ in Bromely v Bromley ([1965] P 111 at 114), "put a different complexion on the issue in dispute". In Nakhla v McCarthy ([1978] 1 NZLR 291), Woodhouse J (at 296 for the Court of Appeal) said that in general a judge cannot alter the reasons so as to modify or change the effect of the judgment once it has been perfected. Similarly, in Nova Scotia v Province of Nova Scotia ((1977) 23 NSE 357 at 357-8, the Novia Scotia Court of Appeal held that once judgment is entered, the substance of the reasons cannot be changed; if correction is needed it can only be made by a higher court. 9 Smith v Australia and New Zealand Banking Group Ltd and Ors No 2 - unreported 21 November 1996, 95/40392 - was an appeal in which, after judgment, the Court of Appeal was moved, before orders were entered, to vacate its judgment due to a misdescription of the facts. Priestley JA, whose judgment was primarily in question, accepted the misdescription occurred and proposed that the reasons be withdrawn and further argument be allowed; these became the relevant orders of the Court of Appeal. The Court then proceeded to consider and give further judgment in the matter in the light of the further argument. 10 In the present matter it seems to me sufficient that I withdraw my orders and only so much of my reasons as I have identified which relate to the primary but erroneous finding. Accordingly, I recall my judgment and orders of 12 August 2002 for the purpose of withdrawing and correcting the finding of fact and the observations to which I have referred. 11 In substitution for that finding of fact now withdrawn, I find that the franchise was returned to Wendy's in December 2000. 12 Turning to the consequences of the problem which has developed, Mr Neil submitted that the factual basis for the finding against Oraka and Mr Johnson being erroneous, the withdrawal of those findings should have the consequence that any order with respect to the repayment to the applicants of the sum of $185,000 should not operate against Oraka and Mr Johnson. 13 Mr Kerr of counsel for Wendy's, in accepting that the error earlier referred to required recognition, submitted that it would be necessary to review the extent to which Wendy's would be liable. However, it was submitted that I had in my earlier judgment "inferred in a sense that there was some positive conferral of a benefit back to the franchisor by whatever act might have taken place at that time. Your Honour has no evidence as to what happened in December" 2000. 14 During the course of the supplementary submissions, reference was made to consent orders made in the proceedings by Maidment J on 3 November 2000 dismissing a motion by consent and also noting an agreement between the applicants and Wendy's relating to the manner in which the applicants' equipment installed in the premises might be disposed of, particularly by way of possible purchase by Wendy's. This was a matter not the subject of any evidence in the proceedings and, according to Mr Kerr's submission, was not material upon which any reliance could be now placed. 15 It would seem to follow that had Wendy's purchased some of the equipment in the premises then a payment to the applicants of a sum otherwise embracing, through the virtual purchase price, the value of that equipment might be a double payment. However, I propose to accede to the proposition that the material is not in evidence and accordingly ought not be utilised for any present purpose. This seems to me to be particularly appropriate where the recovery of the purchase price was utilised as a means of achieving a form of restitution which reflected that the level of earnings received would be unfair otherwise. 16 Mr Whittle submitted that the court could maintain the orders it had already indicated, namely that Wendy's, Oraka and Mr Johnson should be liable on a joint and several basis because of their participation in what was a tripartite arrangement, particularly having regard to the observations in Brown v Rezitis (1970) 127 CLR 157 (and see particularly 165 per Barwick CJ and 170-1 per Menzies J) concerning the persons against whom orders could be made in proceedings such as this. 17 My approach to the matter in the earlier judgment reflected an intention to ensure that firstly, the party receiving the benefit of the yielding up of the franchise business would be liable. That was, mistakenly, a basis upon which Oraka and Mr Johnson were perceived to have a liability in that regard. Secondly, the inclusion of Wendy's in that regard related essentially to Wendy's role as an active participant in the franchise arrangement. It seemed to me inappropriate that Wendy's should escape any liability whatsoever in the circumstances as then found. In the light of this review of the findings, and the obvious need to substitute Wendy's for Oraka and Mr Johnson in the context of the recovery of the franchise business, a matter about which there may be no detailed evidence but there never was any dispute, it is obviously necessary that Wendy's remain liable in respect of the sum of $185,000 referable to the return of the franchise business. 18 The question then arises whether I should maintain a liability in Oraka and Mr Johnson in that respect. They were associated to an equal if not greater degree than Wendy's in the arrangement and shared the proceeds by way of franchise fees. They are clearly open to inclusion in the liability on the principles in Brown v Rezitis. It is clear enough that the major contribution in this respect ought be Wendy's, but I consider there is no reason why Oraka and Mr Johnson ought not be included in the same way as was Wendy's initially. I therefore maintain the order originally identified with respect to the sum of $185,000. 19 Mr Neil also submitted that I should deal with a finding made to the effect that the applicants were denied the opportunity to sell their business by virtue of the respondents' having denied their approval to effect the sale. It was submitted that no prospective purchaser had been presented to the respondents for consideration and that no approval was withheld. The fact of the matter was that the applicants were informed by the respondents that it would be necessary that any prospective purchaser be advised of a need to expend the sum of $30,000 to restyle the business to conform with the then current styling. This had a dampening effect which, it was suggested by the applicants, achieved a not dissimilar result. The applicants had put the business for sale in Oraka's hands but nothing came of this over a period of time. Whether any prospective purchasers presented to Oraka is unknown, Mr Johnson not having gone into evidence. Further, this issue does not have any bearing upon the ultimate disposition of the business as described above. In these circumstances, I am not persuaded that I should take any steps in this respect vis-a-vis my primary judgment. 20 In my primary judgment I gave an intimation of the attitude I was tending to form on the matter of costs, subject to any submissions made by the parties on that matter. In the light of these amended findings and conclusions I consider that the earlier intimations ought stand. I will hear the parties on the issue of costs if necessary. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.