FEDERAL COURT OF AUSTRALIA

TSG Franchise Management Pty Ltd v Cigarette & Gift Warehouse (Franchising) Pty Ltd (No 1) [2015] FCA 739

THE COURT ORDERS THAT:

1.    Subject to strict compliance by the respondent with orders 2, 3 and 4 hereof, the respondent has leave to adduce evidence from Andrew Whelan.

2.    By 12.00 noon on 20 July 2015 the respondent file and serve a copy of an affidavit setting out the evidence in chief of Andrew Whelan in admissible form.

3.    By 12.00 noon on 20 July 2015, the respondent file and serve a further supplementary list of documents verified by Mr Whelan on oath listing each email, letter, memorandum, sms message or other written communication (and all attachments thereto) passing between himself and Travers Beynon or Andrew Wild during the period 17 June 2014 to 15 December 2014 (inclusive) which document(s) in any way concern or relate to:

(a)    the subject matter of the documents found at Court Book 402 to 510;

(b)    the respondent's "Competitor Project";

(c)    any approach by the respondent to franchisees of the applicant, Cignal, CTC or King of the Pack for the purpose of inducing or procuring such franchisee to become a franchisee of the respondent; and/or

(d)    any offers by the respondent to franchisees of the applicant, Cignal, CTC or King of the Pack seeking to induce or procure such franchisee to become a franchisee of the respondent and any agreements entered into as a result of such offers.

4.    By 12.00 noon on 20 July 2015 the respondent electronically serve upon the applicant's solicitor readable electronic copies of each and every document listed in the further supplementary list of documents the subject of order 3 above.

5.    The Court reserves to the applicant the right to recall any witness and/or adduce any further evidence necessitated by order 2.

6.    Subject to order 5 or further order, closing addresses in this trial shall commence immediately upon the conclusion of the oral evidence of Andrew Whelan with the respondent addressing first and the applicant addressing second.

7.    Paragraph 3 of the Order made on 15 July 2015 be vacated.

8.    The further hearing is adjourned to 22 July 2015 at 10:15am.

9.    The costs of the respondent's oral application made on 16 July 2015 are reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

RULING (Revised from Transcript)

1    This proceeding commenced hearing on Monday, 13 July 2015 on an estimate of four days. At the conclusion of day 2, senior counsel for the applicant closed its case subject to the need to recall one witness, a Ms Norvock, to put documents to that witness that were the subject of a call for production made earlier that day by the applicant’s senior counsel. At the conclusion of day 3, senior counsel for the respondent closed the respondent’s case, subject to the recall of Ms Norvock by the applicant. By then, the respondent had produced the relevant documents to the applicant and senior counsel for the applicant advised that it would be necessary to recall Ms Norvock to put those documents to her. That occurred on the morning of day 4 and the witness was cross-examined on her further evidence.

2    At the conclusion of the examination of Ms Norvock, senior counsel for the respondent applied for leave to call one further witness, a Mr Whelan, the general manager of the respondent. The Court was told that the need to call Mr Whelan arose out of the evidence that had just been given. The application was opposed by senior counsel for the applicant, who argued that the explanation given by the respondent for the need to call Mr Whelan was disingenuous and the Court should draw the conclusion that the decision to call Mr Whelan was deliberately delayed for tactical reasons. Amongst the matters raised for the Court’s consideration was the failure by the respondent to discover the very documents that were the subject of the call and the reason for the recall of Ms Norvock. The respondent’s senior counsel admitted that the documents were discoverable pursuant to the Court orders and that they had not been. The applicant submitted further that it would be substantially prejudiced in the conduct of its case if Mr Whelan was called at this late stage as the case for the applicant had been prepared, and conducted, on the reasonable expectation and understanding that Mr Whelan was not giving evidence.

3    The High Court in Smith v New South Wales Bar Association (1992) 176 CLR 256 at 266-7 referred to the considerations relevant to determining whether to permit the reopening of a case during the course of a trial. In the present case, both parties had conditionally closed their cases, but the considerations referred to by the High Court in Smith are, in my view, apposite to the present case:

If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to enquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending upon whether the case is simply one in which the hearing is complete, or one in which the reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to reopen should be exercised.

4    In the present case, there was a deliberate decision not to call Mr Whelan as a witness. So much was conceded by senior counsel for the respondent. However, senior counsel stated that this decision was made based upon the affidavits that were filed on behalf of the applicant as constituting the evidence that would be led by the applicant at trial. That evidence did not include an affidavit from Ms Norvock. The respondent was first made aware by the applicant that Ms Norvock was to be called by the applicant when the respondent’s solicitors received notice on 7 July 2015 of a subpoena recently issued to Ms Norvock together with a list of the proposed topics of her evidence. Initially, the respondent opposed Ms Norvock giving evidence but withdrew that objection having reviewed an affidavit sworn by the solicitor for the applicant on 13 July 2015 which explained the reason for the late subpoena and why no affidavit was provided for Ms Norvock.

5    I accept that the late calling of Mr Whelan has the potential to cause prejudice to the applicant with respect to the conduct of its case. It is clear from the opening for the applicant and the cross-examination of the respondent’s witnesses that the applicant has conducted its whole case on the basis that Mr Whelan would not be giving evidence for the respondent. It is also highly relevant to take into account that the respondent failed to provide discovery of the very documents that gave rise to the need to recall Ms Norvock. The failure to make that discovery deprived the applicant of the opportunity to review those documents before deciding on the evidence that it would adduce and the cross-examination that would be conducted of the respondent’s witnesses and the late production necessitated the recall of Ms Norvock. It is also relevant to take into account the requirements of ss 37M and 37N of the Federal Court of Australia Act 1976 (Cth) and the principles of case management expressed by the High Court in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175, which was heavily relied upon by the applicant in opposition to the application. There is no doubt that the calling of Mr Whelan will extend the trial, with additional expense and time involved, where the evidence otherwise would have been completed.

6    The matters raised by the applicant’s senior counsel in opposition to the respondent’s application are powerful considerations against the grant of leave. The question is whether the interests of justice nonetheless require that the application be allowed. In this regard, it would appear that Mr Whelan may be a key and critical witness whose evidence is likely to be material to the determination of this case. It is relevant that Ms Norvock’s evidence had not been foreshadowed by the applicant until shortly before the trial commenced and relevant that the respondent’s case has not dealt with the documents that the applicant put to Ms Norvock. Whilst the failure to deal with that evidence rests solely with the respondent and the respondent’s failure to discover those documents is a matter that will need to be addressed at a later stage, the fact remains that those documents are now in evidence and the hearing is not complete. The respondent should be given the opportunity to respond to that evidence in order fairly to put its case.

7    In the circumstances, I have concluded that the application should be granted. It will be necessary to put in place appropriate trial directions to ensure that the applicant is not prejudiced by the late calling of Mr Whelan as a witness. The question of the appropriate costs orders to make should be stood over to a later date.

Associate:

Dated:    17 July 2015