FEDERAL COURT OF AUSTRALIA

Hurley v McDonald’s Australia Ltd ]1999] FCA 1497

JANETTE LYN HURLEY v McDONALD’S AUSTRALIA LIMITED

ACN 000 697 763

Q 194 of 1999

DOWSETT J

5 NOVEMBER 1999

BRISBANE

THE COURT ORDERS THAT:

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     The applicant has applied to amend her statement of claim and reply.  I have already refused the application to amend the statement of claim.  The trial has now been proceeding for about a month.  Two of the proposed amendments to the reply are opposed.  In order to understand their significance, it is necessary to understand something about the cause of action. 

2                     As is well-known, between June and August of this year, the respondent conducted a competition in conjunction with the retail sale of its fast-food products through stores throughout Australia.  Some of the stores are operated by the respondent; others are operated by franchisees.  The competition borrowed the get-up associated with the well-known parlour game “Monopoly”.  In the course of the competition the respondent supplied to persons buying certain of its fast-food products, small “game stamps” which were affixed to the relevant products in such a way that the faces of the stamps could not be seen at the point of purchase.  They could, however, be easily removed and identified after purchase.  The faces of many of the stamps were designed to represent the various “property” cards used in the game of Monopoly in that each bore the name of a well-known geographical feature in Greater London such as Pall Mall, Mayfair or Kings Cross Railway Station.  The various locations or “properties” were grouped together into sets of two, three or in one case, four.  Thus Park Lane and Mayfair constituted a “set”, as did four London railway stations. 

3                     As with the game of Monopoly each of the game tickets in a set (other than the railway stations) bore a distinctively coloured bar.  Thus game tickets showing Park Lane or Mayfair each bore a blue bar, whilst game tickets showing properties in another set, Regent Street, Oxford Street and Bond Street, bore green bars.  The idea was that any player who obtained game tickets for all of the properties in a particular set would win the prize identified for that set.  Thus one needed both Park Lane and Mayfair in order to win a motor car.  This part of the competition was called “Collect and Win”.  Some of the game stamps did not bear property names, but rather indicated that the player had won a food prize which could be redeemed at any of the stores.  Others indicated that the player had won what was called an “Instant Win”, immediately entitling him or her to a major prize without collecting a property set.  Still others entitled players to participate in another “draw” for advertised prizes which had not been claimed.  Only the Collect and Win section of the competition is presently relevant.

4                     An integral aspect of the Collect and Win section was the supply by the respondent to players of what have been called “game mats”.  I understand that these mats were supplied as table mats for persons consuming products within the various stores and were also supplied to people who purchased products at “drive-through” facilities.  The game mats identified the various property sets, reproducing in enlarged form the face of each game stamp and grouping them in their sets.  The prize associated with each set appeared on the enlarged reproduction of each game stamp in that set.  A player was to affix the relevant game stamps to the enlargements, thus completing the set.  That part of the mat which related to the set in question could then be cut out and forwarded to those conducting the competition.  The back of the mat was so designed that when a set was cut out, the back of the excised portion would provide a space in which the player could enter his or her name, address and telephone number.  The game mat also bore instructions on how to play and referred to notices erected in the stores which set out the complete conditions.  I will refer to them in more detail at a later stage.  The game mat and the conditions also identified the number of major prizes which were available in the competition.  The respondent conducted a similar competition in 1998, however the game stamps used on that occasion differed from those used for the 1999 competition in some ways which were visible and some which were not.  Over 100 million stamps were printed for the 1999 competition, as I have been informed.

5                     Given the very large number of tickets to be issued, reflecting the large number of individual products likely to be purchased bearing game stamps, it was necessary for the respondent to exercise control over the number of opportunities available to win the major prizes.  This was done by regulating the number of stamps printed for one property in each set so that the opportunities to win reasonably reflected the number of prizes available in that category.  I will refer to those properties as “control properties”.  It may be that in some cases, rather more control property stamps were printed than there were available prizes, reflecting the expectation that a substantial number of customers would not bother to participate in the game.  That is not presently relevant.  In respect of Mayfair and Park Lane, Park Lane was the control property in the 1999 competition.  As only four cars were to be won in the Collect and Win competition, only four Park Lane stamps were printed.  The number of Mayfair stamps totalled some millions.  In the 1998 competition, the Mayfair property was the control property, and so millions of Park Lane stamps were printed, but only a small number of Mayfair stamps.

6                     Quite early in the competition, the respondent or its agents received a number of claims which combined a stamp or stamps, printed and issued for the 1999 competition, with one stamp apparently issued, or issued in the respondent’s opinion, for the 1998 competition.  The respondent has consistently rejected all such claims.  Again by reference to the Park Lane/Mayfair set, it is easy to demonstrate the respondent’s concern.  There were millions of Mayfair tickets printed for the 1999 competition and in circulation, and an unknown, but potentially large number of Park Lane tickets which had been issued in the course of the 1998 competition for which it was not a control property.  The applicant is a person whose claim to a major prize has been rejected for this reason.  She sues on behalf of all such claimants, with the exception of those who have chosen to opt out of the proceedings.  The claimants are persons who claim to have won prizes, but whose claims have been rejected because, in each case,  one of the relevant game stamps is, in the respondent’s opinion, not a valid stamp in the 1999 competition.  In most, if not all cases, the challenged stamp is for a relevant control property.

7                     Because of the very large number of potential claimants, it is not practicable for all claims to be determined at this stage in the action.  We have taken evidence from a relatively small number, I think about thirty-five, with supporting evidence from other witnesses in some cases.  We have now heard all of the evidence which is to be led on behalf of each of these claimants concerning his or her acquisition of the relevant stamps.  The respondent has asserted in each case that the relevant disputed stamp was not obtained from a McDonald’s store in the course of the 1999 competition.  Although some of the claimants are unsure as to precisely when or where they obtained their stamps, most have been able to assert particular times and places.  Each is adamant that as far as he or she is aware, the relevant stamp was not obtained in the 1998 competition.  There are a number of possible inferences to be drawn from the claimants’ evidence.  They may be either dishonest or mistaken.  Alternatively, the respondent’s organisation of the competition may have broken down in some way, leading to the issue of previously unissued 1998 stamps in the course of the 1999 competition.  The respondent is presently addressing that issue, leading evidence said to demonstrate the unlikelihood of such a breakdown.  There are numerous points at which it is suggested that this could have occurred.  It is not necessary to say anything more about the facts for present purposes.

8                     The applicant puts her claim in four ways, asserting that the respondent:

·                          has engaged in misleading or deceptive conduct contrary to the provisions of the Trade Practices Act 1974 (Cth);

·                          has acted negligently;

·                          has acted in breach of contract; or

·                          is liable to supply the various prizes by virtue of the provisions of the Lotteries and Art Unions Act 1991 (NSW) (the “Lotteries Act”).

9                     Only the claim in contract is relevant for present purposes, although the Lotteries Act is also marginally relevant.  That claim is put in a number of ways.  It is asserted that the publication of the terms and conditions on the tray mat and on the posters in the stores constituted an offer which was capable of acceptance by doing one or more of a number of different acts required of persons in order that they win prizes.  The various acts which might constitute acceptance are said to be, at the earliest, obtaining a stamp by purchasing a product and, at the latest, posting the completed part of the game mat to the respondent.  There are other intermediate steps also alleged as possible acts of acceptance leading to contracts.  The respondent denies the existence of any contract. 

10                 By par 19 of the defence the respondent pleads “in answer to the whole of the further amended statement of claim” the following conditions of entry in the competition:

(a)       that the promoter’s (McDonald’s) decision on all matters pertaining to the 1999 competition would be final; (sub-par 19(a))

(b)       that all prize claims would be subject to security and verification checks at the absolute discretion of the promoter (McDonald’s); (sub-par 19(b))

(c)        that the claims made in the 1999 competition would be ineligible if they failed any of the promoter’s (McDonald’s) security and verification checks; (sub-par 19(c))

(d)       that the prize claims made in the 1999 competition would be ineligible if mutilated, illegible, stolen, forged, reconstructed, altered, incomplete or tampered with in any way; (sub-par 19(d))

(e)        that to the extent permitted by law, McDonald’s, its franchisees, employees and agents would not be liable for any claims, losses, damages, injuries, costs and expenses suffered sustained or incurred (including but not limited to indirect or consequential) as a result of, or arising out of, or in any connected with the 1999 competition and/or its prizes. (sub-par 19(e))

11                  The respondent then alleges:-

·                          that the claimants have used stamps “not issued on items … sold during the course of the 1999 competition”;

·                          that the prize claims have failed the security and verification checks applied by the respondent;

·                          that the respondent has determined that the various claimants have not satisfied the conditions of entry to the 1999 competition; and

·                          that prize claims were ineligible by reason of incompleteness, mutilation, illegibility, theft, forgery, reconstruction, altering or tampering.

12                  The proposed amendments to the reply which are in dispute relate to the respondent’s claim to rely on the conditions concerning finality of the promoter’s decision (condition 4) and security and verification checks (condition 9). 

Condition 4

13                  Condition 4 provides as follows:

All prize claims and entries become the property of the Promoter (the respondent) and the Promoter’s decision on all matters pertaining to this game is final.  No correspondence will be entered into.

14                  The applicant wishes to amend to allege that:

(c)        Further or alternatively, upon the true construction of the condition (as alleged in par 19(a) of the defence), any decision of the respondent on matters of fact is final only if the decision is made in good faith and is fair and reasonable;

(d)       Further or alternatively, it was an implied term of the agreements between the applicant and group members on the one hand and the respondent on the other, necessary to give efficacy to the agreement, that a decision of the respondent on matters pertaining to the competition would be final only if made reasonably and in good faith, or alternatively, reasonably; … .

15                  It is further to be alleged that in rejecting the claims, the respondent failed to act reasonably, fairly and in good faith.  Particulars are provided of alleged deficiencies in the security and verification programme and of steps not taken by the respondent which allegedly ought to have been taken.

16                  As can be seen, the proposed amendments assert a particular construction of condition 4 or alternatively, an implied term to similar effect.  This assumes the existence of a contract.  To establish a contract, the applicant must overcome the difficulties posed by condition 4 and conditions 9 and 17.  Condition 9 provides that:

Printing and other quality control errors will not invalidate an otherwise valid prize claim.  Prize claims will be subject to security and verification checks at the absolute discretion of the Promoter.  Prize claims are ineligible if mutilated, illegible, stolen, forged, reconstructed, altered, incomplete or tampered with in any way, or if they fail any of the Promoter’s security and verification checks.  McDonald’s Restaurant staff are unable to verify any claims other than Instant Win food prizes.

17                  Condition 17 provides that:

To the extent permitted by law, the Promoter, its franchisees, employees and agents shall not be liable for any claims, losses, damages, injuries, costs and expenses suffered sustained or incurred (including but not limited to indirect or consequential) as a result of, or arising out of, or in any way connected with this Promotion and/or its prizes. 

18                  In the light of conditions 4, 9 and 17, there must be considerable doubt as to whether the respondent offered to undertake any liability by its promotion of the competition, particularly as concerns the award of prizes.  See Placer Development Ltd v The Commonwealth (1969) 121 CLR 353 at 356 (per Kitto J), cited in Meehan v Jones (1981-1982) 149 CLR 571 at 581 (per Gibbs CJ) and 590 (per Mason J).  However, assuming a contract, condition 4 purports to appoint the respondent as the final arbiter on all matters.  It is difficult to see how the condition can be construed so as to imply an obligation to act in good faith, fairly and reasonably.  Such a construction would raise the possibility of disputes  necessitating resolution, precisely the situation which is excluded by the provision for finality and the refusal to enter into “correspondence”.  The proposed implied term faces the same problems.  The applicant does not point to any other condition which compels such construction or the implication of such a term.

19                  Condition 9 poses further difficulties.  The proposed construction or implied term would be inconsistent with the “absolute discretion” with regard to the imposition and conduct of unspecified “security and verification checks”.  Such a construction would expose to challenge both the appropriateness of checks used by the respondent and their application in any particular case.  Condition 17 poses particular difficulties.  It is at the heart of the law of contract that the parties must appear objectively to have intended to undertake legal obligations.  A clear intention not to do so is antithetical to the creation of a contract.  Condition 17 appears to evidence such an intention.  In order to find a contract, it would be necessary to read down condition 17.  The only justification for this would be some other aspect of the conditions indicating an intention that the respondent undertake legal liability.  Again, it is difficult to find any such justification.  Even assuming a contract, condition 17 would be difficult to reconcile with the proposed construction of condition 4 or the implication of the proposed term. 

20                  The applicant’s argument appears to rely upon one or more of the following assumptions:

·                          That there is an enforceable contract between each claimant and the respondent;

·                          That each such contract has as its primary purpose, the conferment upon a winning competitor of a right to a prize;

·                          That in construing a clause of a contract to determine the ambit of the obligations imposed, one may consider the relevant clause in isolation from the rest of the contract;

·                          That clauses such as conditions 4, 9 and 17 should also be construed in isolation;

·                          That a party to a contract may be subject to a duty in exercising rights thereunder, although such duty is not expressly imposed, nor consistent with other terms of the contract; and

·                          That such a duty may be imposed by an implied term not consistent with other terms of the contract.

21                  I am not presently concerned to determine whether there are binding contracts between the claimants and the respondent, although I will have to deal with that question in due course.  It may be that it is artificial to try to resolve the present problem in isolation from that question, but it is necessary that I do so.  I therefore assume that there is arguably a contract between each claimant and the respondent.  The terms are to be found in the tray mat (ex 3) and the conditions (ex 4).  It is said that the “main object of the contract was for the respondent to award prizes to winning claimants based upon the criteria set out in the terms and conditions”.  This proposition is said to “narrow” the operation of conditions 4, 9 and 17.  There is an obvious fallacy in this argument.  If one refers to conditions 1 and 2, which deal with the award of prizes, both state that a “win” is “subject to verification and conditions”.  Obviously enough, the “conditions” include conditions 4, 9 and 17.  Those conditions are therefore expressly made part of the description in the contract of that which the applicant says is its main object.  The wording on the back of the game mat is in the same form.

22                  The other assumptions which underlie various parts of the applicant’s submissions can be dealt with together.  At first blush, the suggestion that aspects of a contract may be construed in isolation is contractual heresy.  Three fundamental rules of construction of a contract should be kept in mind.  They are:

·                          The object of all construction exercises is to discover the intention of the parties.  See Cholmondeley (Marquis of) v Clinton (Lord) (1820) 2 Jac & W 1 at 91; 37 ER 527 at 559.

·                          The meaning of a document is to be sought in the document itself.  See, for example, Smith v Lucas (1881) 18 Ch D 531 at 542, per Jessel MR:

“… one must consider the meaning of the words used, not what one may guess to be the intention of the parties.”

·                          The whole contract must be considered.  See Chamber Colliery Co Ltd v Twyerould (1893) reported [1915] 1 Ch 268n at 272

23                  I cite these well-known propositions only because the applicant’s argument appears to deny them.  It is submitted, relying on Cheshire and Fifoot’s Law of Contract, 7th Australian Ed, at par 10.53 that the “conventional approach is to segregate terms which assume obligation from terms which limit it; whether there has been a breach is decided by considering the contract as if it contained no limiting term, and the impact of the limiting term is then considered”.  Although the learned authors appear to have thought otherwise, I see nothing in the decision of the High Court in Darlington Futures Ltd v Delco Australia Pty Ltd (1986) 161 CLR 500 at 508-10 which dictates or approves such an artificial approach to construction.  Indeed, their Honours appear to suggest that the approach to construction of an exemption clause should take the same form as that involving the construction of any other term.  The passage quoted from Cheshire and Fifoot appears to be an attempt to reincarnate the doctrine of fundamental breach.

24                  The applicant also sought comfort in the decision of the High Court in Meehan v Jones (supra).  That was a case, famous in its time, in which a contract for the sale of land was subject to “the purchaser or his nominee receiving approval for finance on satisfactory terms and conditions in an amount sufficient to complete the purchase hereunder”.  It was argued that the clause rendered the contract void for uncertainty.  At 580-581 Gibb CJ said:

The intention of such a clause in my opinion is to leave it to the purchaser himself to decide whether the terms and conditions on which finance is available are satisfactory.  The condition prevents a purchaser from being obliged to go through with a sale when he does not believe that he can raise the necessary funds.  Such a condition is generally entirely for the protection of the purchaser, and it is the satisfaction of the purchaser, not that of some hypothetical reasonable man, that will satisfy the condition.  No doubt it may be implied that the purchaser will act honestly in deciding whether or not he is satisfied.  However, it does not seem to me necessary, in order to give business efficacy to a contract, that a condition should be implied that the purchaser will make reasonable efforts to obtain finance.  The parties may expect that he will, but he does not contract to do so.

25                  Mason J (as his Honour then was) said at 589:

To say that a ‘subject to finance’ or ‘subject to finance on satisfactory terms and conditions’ clause denotes finance which is satisfactory to the purchaser is not to say that he has an absolute or unfettered right to decide what is satisfactory.  To concede such a right would certainly serve the object of the clause in protecting him.  But it would do so at the expense of the legitimate expectations of the vendor by enabling the purchaser to escape from the contract on a mere declaration that he could not obtain suitable finance.  With some justification the vendor can claim that the agreement made by the parties is not an option but a binding contract which relieves the purchaser from performance only in the event that, acting honestly, or honestly and reasonably, he is unable to obtain suitable finance.

26                  At 597, Wilson J said:

It seems to me that the weight of the authorities discussed by his Honour (Mason J) favours the conclusion that, subject always to the construction of the contract in the particular case, the court will imply no greater obligation on the purchaser than that he is obliged to act honestly in determining whether the available finance is satisfactory.  I am inclined to think there is force in this view.

27                  The case is certainly not authority for the applicant’s assertion of any implied term other than, perhaps, one requiring that the respondent act honestly.

28                  The first question must always be whether or not there is a contract, which depends upon a demonstrated shared intention to undertake legal obligations.  Once such an intention is found, the extent of the obligations is a matter of construction.  Where there is a clear absence of any intention to undertake contractual obligations, there is no contract.  Where there is evidence of such an intention, but an aspect of the agreement is not sufficiently precise to enable a court to ascertain the obligations undertaken, the purported agreement may fail for uncertainty.  That means that despite appearances, there is no contract.  Cases in this latter category have been very rare in Australia since the decision in Meehan v Jones which demonstrated that such problems could be solved by construing the relevant terms so as to provide appropriate precision or by implying terms having that effect.  This approach may suggest a two-stage process as suggested by Cheshire and Fifoot, but it is really an attempt to ascertain the overall intention of the parties as disclosed by their conduct, including their words.  In that case, it was readily apparent that the parties intended to undertake contractual obligations although, in the purchaser’s case, this was conditional.  The case was resolved by giving meaning to the expression “satisfactory finance”, having regard to the whole of the contract.  It is not correct to suggest that the implication of a term as to the meaning of that expression was undertaken without regard to the other terms of the contract.  In fact, it was the other terms which compelled the implication of the term.

29                  In the present case, the position is to the contrary.  The question is whether there can be an implied term (or a construction of a term) which is inconsistent with other express terms.  In BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283, the Privy Council held that an implied term must not contradict any express term.  The High Court endorsed this approach in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347.  This is nothing more than an expression of the general rule that a contract must be construed as a whole.  Reading condition 4 with condition 9 and 17, it is not possible to construe condition 4 in the way asserted in the proposed amendment, nor is it possible to imply a term such as that proposed.  Further, there is nothing in the other conditions which would justify either approach.

30                  A secondary argument advanced on behalf of the applicant is that s 18A of the Lotteries Act negates the effect of condition 17.  That section provides:

(1)       A person or organization that conducts a lottery, game of chance or art union must award the winner of each prize in that lottery, game of chance or art union the prize concerned.

(2)       A person or organization that contravenes this section is guilty of an offence.  In a case of an unincorporated organization, every trustee or other person who, at the time of the offence, was a member of the governing body of the organization is guilty of an offence.

Maximum penalty: 50 penalty units

(3)       It is a defence to a prosecution for an offence under this section if the person or organization did not, after making all reasonable enquiries, award the prize to the winner because the winner could not be located.

31                  It is submitted that the effect of this section “is impliedly to prohibit the inclusion in a contract concerning a game of chance of a provision, the effect of which is to deny the winner of a prize the prize concerned.”  This is simply not correct.  The section obliges the promoter of the competition to award the prize but says nothing about other legal relationships between the promoter and those who take part.  There is nothing in the section which would create a contract where one does not exist, nor does it affect the circumstances relevant to the construction of any contract or the implication of any term, at least in the absence of evidence that the provision was itself part of the factual matrix against which the contract is to be construed.  See Codelfa at 352 (per Mason J) and at 403-4 (per Brennan J).  Although there may be an argument as to whether the applicant has an enforceable statutory right conferred by the section, that has no relevance to the claim in contract.

32                  There are three others matters with which I should deal briefly.  The first concerns the nature of the offer in this case.  In effect, it is an offer to the world at large to participate in the competition on the basis of conditions which are clearly specified.  Those conditions, fairly read, appear to exclude any contractual relationship.  They certainly exclude any contract other than upon conditions which include conditions 4, 9 and 17.  I find it hard to understand why anybody who responds to that offer should be permitted to insist upon any other basis of participation in the competition.  In particular, I cannot see why any construction of those conditions should be adopted which does not allow them their natural meaning.  I also do not understand how any term can be implied which contradicts these express terms.  Further, it is difficult to see that any such implication is compelled by the need to give business efficacy to the alleged contracts.

33                  The second matter is the decision of the Court of Appeal of New South Wales in State Lotteries Office v Burgin BC 930 1896, 19 May 1993.  That case concerned the proper construction of the wording on a “scratch lottery ticket” which prescribed the contents of a winning ticket.  The Court also considered the requirement that a winning ticket satisfy security testing.  Although it is possible that the case may offer assistance in deciding whether the 1998 tickets were valid tickets in the 1999 competition, it has no relevance for present purposes.

34                  The third matter concerns the decision of the House of Lords in Esso Petroleum Ltd v Commissioner of Customs and Excise [1976] 1 All ER 117.  Relevantly, the case was concerned with the manufacture of “coins” for distribution in conjunction with the retail sale of petrol, the question being whether they were produced for sale for the purposes of revenue legislation.  Again, although this case may have relevance at a later stage, it is not of assistance for present purposes.

35                  If the amendment is allowed, it will result in a very substantial additional burden upon the respondent in preparing to meet the new case so raised.  The various factual matters offered as particulars of its alleged failure to act honestly and reasonably relate to the whole of the respondent’s conduct in the investigation and resolution of the many claims which it has rejected.  I should say a little more about the particulars of the allegation that it failed to act honestly and reasonably.  They are at par 2A(a) of the proposed amended reply.  In sub-pars (ii), (iii) and (iv) it is effectively alleged that the respondent ought to have made enquiries of all “group members” as to how they had obtained their game stamps, before rejecting any claims.  I have been told that about 6,000 claims were rejected.  Although some claimants have elected to opt out of these proceedings, such election had not been made at the time at which the respondent made its decisions.  Presumably, the applicant wishes to allege that the respondent ought to have made enquiries of all such claimants before rejecting any of the currently relevant claims.  The failure to do so is said to evidence unreasonable or unfair conduct or absence of good faith.  The decisions in question are those alleged in par 2(g) of the reply, that each claimant had not collected the relevant stamp during the 1999 competition.  It may be that the respondent so decided because the stamp in question was a stamp designed for the 1998 competition and not for the 1999 competition, rather than after any consideration of how each claimant obtained the ticket in question.

36                  It is necessary to consider the possible effect of the respondent’s not having made enquiries of all claimants before making such decisions.  There is an implication that such enquiries may have revealed more reliable information than the in-built security checks associated with the game stamps, the information in question being as to whether or not the claimants had obtained the relevant stamps from the respondent during the 1999 competition.  This implication necessarily assumes something about what such further investigation may have revealed.  It is not clear what that assumed revelation may be, but presumably, it would have related to the circumstances in which the claimants obtained their stamps.  Thus it is to be alleged that had the respondent made such enquiries, it may have been convinced by the outcome that the disputed stamps were issued during the 1999 competition, notwithstanding their having been printed for the 1998 competition.  It is said that the failure to make such enquiries demonstrates a failure to act honestly and reasonably.  That approach may be overly simplistic, for as I understand the respondent’s position, it disputes that the 1998 tickets were, in any event, winning tickets, regardless of when or where they were obtained.  Thus its conduct in not seeking further information from claimants can hardly be characterized as subjectively dishonest or unreasonable.  Such information would be irrelevant, given that point of view.

37                  Setting aside that problem, and accepting that the applicant wishes to allege that the respondent, acting honestly and reasonably, ought to have sought information from all claimants as to the circumstances surrounding their acquisition of stamps, her expectation can only be that the claimants will say, if asked, that they obtained the stamps from McDonald’s stores during the 1999 competition.  The applicant presumably wishes to assert that such a preponderance of evidence may have led the respondent to accept that all claimants, especially those presently relevant, had obtained their stamps in the same way.  The assumption as to what other claimants would have said, if asked, is easy to make, but it is not so easy to prove its validity.  It is also not clear to me why the respondent should have made such an assumption when considering the various claims.  Its validity can only be tested by speaking to the claimants to ascertain how they would have responded had they been questioned by the respondent at the relevant time.

38                  It would not be surprising if, in preparing to answer the amendment, the respondent wished to question all such claimants, or at least a substantial cross-section of them.  The obvious difficulty inherent in such a task suggests that it should not be lightly imposed upon the respondent at this point in the trial.  The applicant sought to gain some advantage from the fact that the trial has now been adjourned until mid-February, asserting that the respondent has an opportunity to pursue any enquiries it wishes to make.  This assertion overlooks the substantial proportions of the case as presently constituted.  It is reasonable to assume that many aspects will require attention between now and then.  It may give an unfair tactical advantage to the applicant to impose a further burden on the respondent, particularly given the lack of prospects of any success likely to flow from the amendments.

39                  There is a further problem.  Cross-examination of the present claimants has demonstrated that about 70 per cent of them say that they received their 1998 game stamps attached to 1999 wrapping material.  For reasons that I need not go into now, that is, on one view of the facts, less likely than it would be if each claimed to have received such stamps on 1998 wrapping material.  A second issue involves the shapes of the 1998 stamps.  Stamps were issued singly or in pairs, depending on the product in question.  A single stamp differed in shape from a stamp which was one of a pair.  A number of claimants have said that they received 1998 stamps, which can be seen to be either “single” or “double”, with products which should not have borne stamps in that category.  Given the nature of these proceedings, it is probable that some of the claimants who are not immediately involved in the action, are watching closely.  It is therefore likely that they will have an opportunity to tailor their versions to deal with these matters.  The respondent’s capacity to obtain truthful information about these matters from claimants who have not yet given evidence may well have been compromised by the conduct of the trial to date. 

40                  In those circumstances, it cannot be said with confidence that the respondent will not be unduly prejudiced by the proposed amendment.  It is likely that it will, in any event, be so prejudiced in the resolution of claims other than those presently under consideration, but that is not presently relevant.  The presently relevant potential prejudice is in connection with the present claims.  Any information now available from such other claimants for use in connection with the current claims may be similarly tainted.  Thus an amendment at this stage of the trial involves a potential prejudice to the respondent, which prejudice is directly related to the time at which the application to amend has been made.

Condition 9

41                  The other proposed amendment to the reply which is opposed raises similar allegations with respect to condition 9, the text of which appears above.  Clause 2B of the proposed amendment alleges:

(a)       As a matter of construction of the conditions referred to in pars 19(b) and 19(c), the security and verification checks were to be:

(i)        capable of determining whether claimants collected the key game stamps during the 1999 competition; and

(ii)       reasonable and carried out fairly and in good faith;

(b)       Alternatively, it was an implied term of the agreement between the applicant an each of the group members on the one hand and the respondent on the other hand, necessary in order to give efficacy to the said agreements that the security and verification checks were to be:

(i)        capable of determining whether claimants collected the  key game stamps during the 1999 competition; and

(ii)       reasonable and carried out fairly and in good faith;

… .

42                  It is then alleged that on this construction of the contract, or having regard to this implied term, the respondent is in breach of contract. 

43                  It is impossible to read the expression “will be subject to security and verification checks at the absolute discretion of the promoter” as meaning “will be subject to reasonable security and verification checks capable of determining whether stamps were collected during the 1999 competition, which are reasonable and carried out fairly and in good faith … .”  That is hardly consistent with the expression “at the absolute discretion of the promoter”.  An implied term to that effect would be similarly inconsistent.  For reasons which I have given, condition 17, which must, in any event, be read down in order that there be any enforceable contract, is also incompatible with the implication of a term or adoption of a construction of condition 9 which extends the obligations upon the respondent by limiting the operation of that latter condition.  Condition 4 must also be taken into account.  The other considerations  (relating to the investigations to be undertaken by the respondent should the amendment be allowed, and the consequences of the conduct of proceedings to date) also apply to this proposed amendment.  In the circumstances, I refuse the application to amend the reply in these respects.

44                  I will hear submissions as to the form of order in the light of these reasons.

Associate:

Dated:              5 November 1999