FEDERAL COURT OF AUSTRALIA

Davaria Pty Limited v 7-Eleven Stores Pty Ltd [2019] FCA 2214

ORDERS

UNDERTAKING:

1.    The First Respondent undertakes to the Court, until proceeding VID 180/2018 and proceeding VID182/2018 (Class Action) are finally determined as against the First Respondent (including any appeal) or until further order, it will:

(a)    provide a letter in the form of Annexure A to all franchisees from whom it wishes to obtain a release in respect of the Class Action before entering into a deed containing such a release; and

(b)    not seek any release (whether in relation to the Class Action or otherwise) as a condition attaching to the grant of its approval to a transfer involving the changeover of a store from a vendor franchisee to a purchaser franchisee.

THE COURT ORDERS THAT:

2.    The Applicant’s Further Amended Interlocutory Application (in the form of which leave was granted on 11 December 2019) be dismissed other than in relation to paragraph 1.1(a) to the extent that it concerns opt-out.

3.    The Opt Out Notice appearing at Attachment 1 to the orders made on 13 June 2019 (in relation to opt out and settlement notices), as amended by orders dated 19 July 2019, 29 July 2019 and 21 October 2019, be replaced with the Opt Out Notice that appears as Annexure B to these orders.

4.    The First Respondent has leave to file and serve the Proposed Amended Defence to Further Amended Statement of Claim exhibited at NDJ-72 to the Affidavit of Nigel David Jones affirmed on 9 December 2019.

5.    The words “within 14 days of” in line 2 of order 2 made on 13 June 2019, as amended by orders made on 19 July 2019, 29 July 2019 and 21 October 2019, be replaced by the words “within 42 days (but not before 35 days) after”.

6.    The matter be listed for further case management hearing on 28 February 2020 at 10.15am.

7.    Costs of the Further Amended Interlocutory Application be reserved.

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

ANNEXURE ‘A’

ANNEXURE ‘B’

ORDERS

UNDERTAKING:

1.    The First Respondent undertakes to the Court, until proceeding VID 180/2018 and proceeding VID182/2018 (Class Action) are finally determined as against the First Respondent (including any appeal) or until further order, it will:

(a)    provide a letter in the form of Annexure A to all franchisees from whom it wishes to obtain a release in respect of the Class Action before entering into a deed containing such a release; and

(b)    not seek any release (whether in relation to the Class Action or otherwise) as a condition attaching to the grant of its approval to a transfer involving the changeover of a store from a vendor franchisee to a purchaser franchisee.

THE COURT ORDERS THAT:

2.    The Applicants’ Further Amended Interlocutory Application (in the form of which leave was granted on 11 December 2019) be dismissed other than in relation to paragraph 1.1(a) to the extent that it concerns opt-out.

3.    The Opt Out Notice appearing at Attachment 1 to the orders made on 13 June 2019 (in relation to opt out and settlement notices), as amended by orders dated 19 July 2019, 29 July 2019 and 21 October 2019, be replaced with the Opt Out Notice that appears as Annexure B to these orders.

4.    The First Respondent has leave to file and serve the Proposed Amended Defence to Further Amended Statement of Claim exhibited at NDJ-72 to the Affidavit of Nigel David Jones affirmed on 9 December 2019.

5.    The words “within 14 days of” in line 2 of order 2 made on 13 June 2019, as amended by orders made on 19 July 2019, 29 July 2019 and 21 October 2019, be replaced by the words “within 42 days (but not before 35 days) after”.

6.    The matter be listed for further case management hearing on 28 February 2020 at 10.15am.

7.    Costs of the Further Amended Interlocutory Application be reserved.

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

ANNEXURE ‘A’

ANNEXURE ‘B’

REASONS FOR JUDGMENT

MIDDLETON J:

1    I have before me application pursuant to s 33ZF of the Federal Court of Australia Act 1976 (Cth) for various forms of relief, principally seeking to restrain the first respondent (‘7- Eleven’) from communicating with group members concerning compromises or releases that relate to the subject matter of these proceedings.

2    I have already granted leave for the applicant to file and rely upon a further amended interlocutory application, which in addition to dealing with communications concerning the prospects of or progress of any proposal to compromise any claim in or arising out of the subject matter of these proceedings, also includes communications concerning opt-out. I will return to this later.

3    The parties have provided to the Court full written submissions and extensive evidence in support of and in opposition to the further amended interlocutory application before me. As I indicated to the parties, I had the opportunity of reading that material before the hearing commenced this morning.

4    Just prior to the application being heard, the parties exchanged open offers, which involved undertakings and proposed orders. In essence, 7-Eleven offered an open undertaking that until the proceedings were finally determined as against 7-Eleven (including any appeal), or until further order, it would provide a letter, in the form of annexure A to the submissions provided by 7-Eleven, to all franchisees from whom it wished to obtain a release in respect of the class action before entering into a deed containing such release, and would not seek any release, whether in relation to class action or otherwise, as a condition attaching to the grant of its approval to a transfer of a store from a vendor franchisee to a purchaser franchisee.

5    This form of undertaking was reiterated by Mr Young QC, who appeared for 7-Eleven, including, though, that the further amended interlocutory application be dismissed. Nevertheless, in relation to the question of opt-out, it was accepted by everybody that that would be dealt with at another time, and so any dismissal of the further amended application would not relate to that particular issue from being ventilated at a later hearing.

6    The applicant sought orders that in part accepted the proposal of 7-Eleven, but went further, in that, in addition to the letter in the form of annexure A, it sought that 7-Eleven:

…not seek any release whether in relation to the Class Action or otherwise in relation to: (i) any transfer involving the changeover of a store from a vendor franchisee to a purchaser franchisee; (ii) any renewal or extension of a franchise agreement or store release; or (iii) any moneys paid or due to be paid under the Independent Fels Wage Panel, the Wage Repayment Program, or the Wage Claims Program.

7    It will be readily seen that the orders that were sought by the applicant extend beyond what 7-Eleven was prepared to undertake before the Court. Relevantly, 7-Eleven was prepared to undertake not to seek any release (whether in relation to the Class Action or otherwise) as a condition attaching to the grant of its approval, not it would undertake not to seek any release at all; and also, the undertaking 7-Eleven was prepared to give did not relate to any renewal or extension of a franchise agreement or store lease, or any moneys paid or due to be paid under the Independent Fels Wage Panel, the Wage Repayment Program, or the Wage Claims Program.

8    When the matter came before me today, it seemed to me that the efficient way to deal with this matter was to consider the latest position of the parties. However, I have kept in mind the evidence and the submissions to determine the appropriate approach to take in the circumstances, having regard to what is now put by the parties.

9    The question before me involves balancing the interests of the applicant and group members and the business and legitimate interests of 7-Eleven. I readily accept that group members should not be treated unfairly. And there is evidence before the Court that indicates that the Court needs to make sure that group members do not give up their entitlements in these proceedings without proper guidance, and being unfairly or inappropriately influenced.

10    I have not reached the conclusion that there is any attempt by 7-Eleven to act unfairly or put economic duress on franchisees, but there evidence that some franchisees feel they are in a vulnerable position, arising from individual comments made to them and the individual franchisees’ own individual position.

11    The Court’s role is to address these concerns of the group members to the extent it can, but in my view should be careful not to impede 7-Eleven from carrying out its business arrangements in accordance with law and in accordance with its own economic interests.

12    Before going to the position we have reached now, I should indicate that whilst I allowed the further amended interlocutory application dealing with the opt-out position, which will be heard later if necessary, the further amended interlocutory application is in itself very wide in its terms, and I accept the criticisms made of it by Mr Young QC for 7-Eleven. I propose to dismiss the application, but, as I have mentioned, that will be done save and except in relation to paragraph 1.1(a) and the issue concerning opt-out. In view of Mr Young’s criticisms, this may need to be redrafted, but I will leave that to the advisors of the applicant.

13    The opt-out issue must necessarily come back to the Court, and arguably involves a different context in which to consider the position of communications with the group members. There is no doubt the Court has a supervisory role, and must focus its attention on the group members and the information they receive, perhaps even more so, when dealing with the opt-out procedure.

14    I have come to the view that the undertaking offered by Mr Young QC on behalf of 7-Eleven will be enough to protect, and more importantly inform, the group members without the need for further intervention that will impact upon the legitimate lawful activities of 7-Eleven. The proposal set out by 7-Eleven provides an explanation to the effect of the release sought, indicates that the group members should seek legal advice, and provides a period of time in which advice can be considered. I cannot, sitting here, direct that such advice be sought. All one can do at this stage is to put a mechanism in place whereby the group members are advised, in a appropriate form, as to their opportunities to seek legal advice, and the effect of a release.

15    I am not persuaded the Court should go any further, as to prevent persons already in contractual relationship acting in accordance with those contracts or other legal requirements. As I have said, I am not satisfied that 7-Eleven have acted in a misleading or deceptive way, or that they have acted unlawfully. If any group member, as it turns out, has a complaint, then there are remedies at law and in equity, for any unconscionable behaviour. I do not see the evidence, at the moment, rising to that level.

16    Let me say this in relation to the extended proposal of the applicant dealing with releases generally. I have accepted Mr Young’s submissions that it could be inappropriate to make that order, so that no release would be sought at all in the terms of the orders that are sought, involving either a transfer, renewal or extension of franchise agreement or moneys paid. In relation to renewal and extension and any moneys paid in relation to, for instance, the Wage Claims Program, whilst they are matters that influence and are important to the group members, they are matters that do not go to the heart of whether or not a person can pursue, in this Court, a class action. The issue at heart there is whether or not there is a release or not, and the proposal set forward by 7-Eleven deals with that particular aspect, so that a group member is not precluded from pursuing his or her claim in this Court by entering into a release without being properly informed.

17    For the sake of completeness, although I do not know if there is any dispute about it any longer, there was an order sought that where a group member, personally or by Levitt Robinson, has notified 7-Eleven that Levitt Robinson acts for that group member in respect of the class action or other matters, 7-Eleven will communicate only with Levitt Robinson in relation to the group member in respect of the class action or any of those matters. Mr Young indicated that in actual fact, if 7-Eleven know there are lawyers involved, then communication will be made through the lawyers themselves.

18    In any event, I would not be disposed to make an order in the way in which it is currently framed, which seems to me, would impact upon the opportunity for parties themselves to have discussions directly. I see no reason why that should be inhibited, even in a class action of this type.

19    For the above reasons, I propose to accept the undertaking given by 7-Eleven in the form in which it is given, which is in the form annexed to the submissions of Mr Young QC, Mr Craig QC and Ms Shand, of 9 December 2019. I propose to order that the further amended interlocutory application be otherwise dismissed, other than paragraph 1.1(a), to the extent that it concerns opt-out.

20    And I propose to reserve the costs of the application.

Associate:

Dated:    11 February 2020