FEDERAL COURT OF AUSTRALIA

Davaria Pty Limited v 7-Eleven Stores Pty Ltd [2020] FCA 398

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s application for leave to appeal be dismissed.

2.    The applicant pay the first respondent’s costs of and incidental to that application, but otherwise there be no order as to costs.

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

REASONS FOR JUDGMENT

BEACH J:

1    Davaria Pty Limited, the applicant in the principal proceeding, seeks leave to appeal from interlocutory orders of the docket judge, Middleton J, made on 11 December 2019. The principal proceeding is a group proceeding brought on behalf of franchisees against their franchisor, a related entity and Australia and New Zealand Banking Group Ltd. There is a related group proceeding concerning the claims of directors of franchisees and guarantors of franchisees’ obligations under franchise agreements and related loan agreements. The interlocutory orders from which leave to appeal is sought were made in both group proceedings. But for the purposes of my discussion I need only consider the principal proceeding.

2    His Honour dismissed an application made by Davaria for orders under s 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act) restraining the first respondent (7-Eleven) from engaging in certain communications with group members who were its franchisees. Davaria sought to restrain 7-Eleven from communicating with franchisees concerning, inter-alia, a release of 7-Eleven’s liability in the principal proceeding as a condition of 7-Eleven:

(a)    agreeing to any transfer of a store from a vendor franchisee to a purchaser franchisee;

(b)    agreeing to any renewal or extension of a franchise agreement or store lease; or

(c)    compromising claims concerning moneys paid or due to be paid under various wage claims programs.

3    His Honour dismissed Davaria’s application on the basis of an undertaking proffered by 7-Eleven regarding the sending of a letter and an undertaking to the effect that it would not seek any release from a group member as a condition attaching to the grant of its approval to a transfer of a store from a vendor franchisee to a purchaser franchisee. The undertaking accordingly addressed the first of the three matters described above. 7-Eleven did not offer any undertaking addressing the second and third matters.

4    The undertaking was in the following form (the undertaking):

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.

5    The relevant part of the terms of the letter in the form of Annexure A stated:

Enclosed please find a draft of the Deed for your consideration.

Please note that the Deed contains a release clause (see clause 23 [update as necessary]) and various covenants (see clause 22 [update as necessary]) in respect of the current Class Action brought against 7-Eleven.

The scope and content of the Class Action is explained in the annexure to this letter. It is important that you understand the consequences of entering into the Deed. In relation to the Class Action, a very brief summary of the key consequences of signing the Deed are as follows:

1.    You and your company (the Claimants) will be:

a.    releasing 7-Eleven (and related entities and personnel) from all claims in the Class Action.

In simple terms, the “release” means that the Claimants are agreeing to give up any claims against 7-Eleven which are made against 7-Eleven in the Class Action. Broadly, the claims made against 7-Eleven in the Class Action include breach of contract, misleading and deceptive conduct, unconscionable conduct breach of Industry Codes of Conduct and unfair contract terms. As stated above, these claims and the claims made against ANZ are set out in more detail in the annexure to this letter. Further, we are also happy to provide to you copies of the Court documents filed in Federal Court Proceedings VID 180/2018 and VID 182/2018 which set out the claims fully. Please let us know if you would like us to do so; and

b.    agreeing not to take action or participate in claims against the ANZ (or other financial institutions) in relation to claims in the Class Action or claims which are similar to or related to the subject-matter of the Class Action.

2.    If any judgment is handed down in the Class Action or a settlement is reached which is approved by the Court, the Claimants will not be entitled to any part of the financial proceeds of such judgment or settlement.

3.    In addition to the Class Action, the Deed also provides for the Claimants broadly to release or “give up” any claims against 7-Eleven (and related entities and personnel) on any other account whatsoever (whether known now or only in the future). There are some limited exceptions to this as set out in the definition of “Franchisee Claims” in the Deed.

7-Eleven strongly recommends that you obtain your own independent legal advice in respect of the content of the Deed and before deciding whether or not you wish to enter into the Deed.

You have 14 days to consider the Deed and obtain any legal advice, should you wish to do so. If you would like to have more time to do so, please let us know. If you wish to enter into the Deed in a shorter period of time than 14 days, you may request this in writing to 7-Eleven.

6    Davaria submits that in refusing to grant the relief sought by its application, his Honour made a number of errors. First, it is said that his Honour erred in giving no or no sufficient consideration to the real risk that franchisees may be confused, misled or pressured to give up their rights in the principal proceeding in the circumstances covered by the second and third matters. Second, it is said that his Honour made errors in respect of the scope and effect of the undertaking. Third, it is said that his Honour erred in failing to conclude that 7-Eleven had engaged in misleading, unfair and unconscionable conduct, and in failing to conclude that it had imposed undue pressure and economic duress on franchisees.

7    As I have said, the principal proceeding is a group proceeding commenced by Davaria for itself and on behalf of certain franchisees of 7-Eleven. The proceeding has been on foot for over two years and is listed for trial commencing in September 2020. I note that Davaria’s application as originally filed was in substantially the same form as a previous application seeking to impose a communications protocol, which application was dismissed by orders made by the docket judge in May 2018. I will return to the evolution in the form of Davaria’s application later.

8    Davaria relied on numerous affidavits, the deponents of which were not cross-examined. In opposing the application, 7-Eleven relied on eight affidavits from its General Manager of Retail Operations and its relevant managers in three States. Davaria did not cross examine any of 7-Eleven’s witnesses.

9    On the basis of the evidence before him, the docket judge concluded that that there was no attempt by 7-Eleven to act unfairly or put economic duress on franchisees. His Honour concluded further that he was not satisfied that 7-Eleven had acted in a misleading or deceptive way or that it had acted unlawfully. Further, although his Honour observed that there was evidence that some franchisees considered that they were in a vulnerable position, he did not accept that 7-Eleven had acted unfairly, improperly or inappropriately.

10    Now as I have said, in dismissing the relevant parts of Davaria’s application, the docket judge accepted an undertaking from 7-Eleven in relation to two matters. First, 7-Eleven undertook that it would provide a pro forma letter to all franchisees from whom it wished to obtain a release in respect of the principal proceeding before entering into a deed containing such a release. Second, it undertook that it would not seek a release, whether in relation to the principal proceeding or otherwise, as a condition attached to the grant of its approval to a transfer involving the changeover of a store from one franchisee to another franchisee.

11    His Honour found that the undertaking proffered by 7-Eleven would be enough to protect and inform group members, including because 7-Eleven’s proposed letter set out an explanation of the effect of the release sought by 7-Eleven, indicated that group members should seek legal advice and provided a period of time in which group members should seek legal advice.

12    His Honour concluded that in view of the undertaking, it would be inappropriate to make any of the orders sought by Davaria. Indeed, he considered that such orders would inappropriately interfere with the legitimate and lawful activities of 7-Eleven.

13    In summary, and for the reasons that I will now elaborate on, I would refuse leave to appeal. It seems to me that his Honour engaged in a plain vanilla application of well established concepts infused with commerciality and common sense.

14    Before delving into the detail, let me say something about the principles.

15    The relevant considerations for determining whether to grant leave are not in doubt. The first question is whether, in all the circumstances, the interlocutory judgment is attended with sufficient doubt such as to warrant it being reconsidered on appeal. The second question is whether substantial injustice would result if leave were refused, supposing the interlocutory judgment to be wrong. But although these are the usual criteria, they are not exhaustive. Moreover, their necessary fluidity is a function of the infinite variety of circumstances under which they are to be applied. Further, if the output being whether to grant leave is a function of the conjunction of these two principal variables, they do not necessarily have to have equal value. In other words and assuming both to be satisfied, in a particular case a greater value for one of the criteria with a lesser value for the other may, together, warrant the grant of leave.

16    In the present context given the nature of the discretionary judgment being exercised, to demonstrate a sufficient doubt there must be a substantial basis for considering that the kind of House v The King (1936) 55 CLR 499 type error will be established should leave to appeal be granted.

17    Further, not only was a discretion being exercised but the docket judge was dealing with a matter of practice and procedure. Therefore particular caution is to be exercised in determining whether to grant leave. No substantive rights of Davaria or group members were determined by the orders. Accordingly, considerable restraint should be exercised in revisiting the docket judge’s discretionary ruling, particularly where his Honour was asked to evaluate a morass of evidence without cross examination.

18    I have referred to the two usual criteria for the grant of leave. For completeness, I should say that there is a third criterion which sometimes is applied albeit less transparently. It can usefully be formulated as a question. Is the present case a suitable vehicle for dealing with a contentious principle of general application? An affirmative answer may bolster the first of the usual criteria and diminish the strength needed for the second of the usual criteria. In the present context I do not need to discuss this elusive third question further.

19    Let me at this point say something about s 33ZF of the Act.

20    Section 33ZF empowers the “making of orders as to how an action should proceed in order to do justice” (BMW Australia Ltd v Brewster (2019) 94 ALJR 51 at [3] per Kiefel CJ, Bell and Keane JJ). And any order that the Court considers necessary to protect the integrity of a proceeding may be made.

21    The power under s 33ZF can be exercised to control communications between a respondent and group members in order to avoid injustice or unfairness to group members (Courtney v Medtel Pty Ltd (2002) 122 FCR 168 at [54] per Sackville J). Moreover, actual or threatened conduct by a respondent concerning such communications need not rise to the level of actual or likely unlawful conduct in order to justify the exercise of such a power.

22    There can be little doubt that s 33ZF empowers the Court to make orders which ensure that group members do not compromise their rights in circumstances which are unfair (Capic v Ford Motor Company of Australia Limited [2016] FCA 1020 at [20] to [21] per Perram J). And an order directed to ensuring that group members do not unfairly give up rights in the proceeding is an order that ensures that “the proceeding is brought fairly and effectively to a just outcome” (BMW Australia at [47] per Kiefel CJ, Bell and Keane JJ). Group members must be in a position to make a free and informed choice.

23    Now as Goldberg J observed in Williams v FAI Home Security Pty Ltd (No 3) [2000] FCA 1438 at [24]:

The nature of class actions brought pursuant to provisions of Pt IVA of the Act are such that it is imperative that any communications made to group members, in whatever form, be accurate especially in relation to the rights which they have in relation to class actions of which they are a group member ...

24    And as the docket judge said in the context of an earlier application, in the specific context “of potentially misleading communications the Court has an important and continuing role in managing representative proceedings in the public interest” (Davaria Pty Ltd v 7-Eleven Stores Pty Ltd [2018] FCA 984 at [27]). It is convenient to also say at this point that his Honour, as appears from his earlier ruling, was well aware of the relevant principles that he then applied in the present context.

Davaria’s Submissions

25    Davaria says that the restraining orders sought by it did no more than prevent 7-Eleven from engaging in conduct that would subject franchisee group members to unfair pressure in relation to their rights in the principal proceeding.

26    Davaria says that the docket judge should have found that 7-Eleven had engaged in misleading and unlawful conduct in its dealings with franchisees. But even without a finding of misleading or unlawful conduct, Davaria says that his Honour’s findings were sufficient to support the orders sought by it. It says that those orders were appropriate and necessary to address the risk of franchisees failing to understand, or feeling pressured to relinquish, their rights in the principal proceeding.

27    Although the docket judge concluded that the undertaking proffered by 7-Eleven was sufficient to protect group members, Davaria says that an undertaking in the terms proffered by 7-Eleven provides no protection for franchisees required by 7-Eleven to provide releases:

(a)    as a condition for any renewal or extension of a franchise agreement or store lease; or

(b)    concerning moneys paid or due to be paid under the wage claims programs.

28    Davaria says that in the absence of any undertaking extending to renewals, extensions or wage claims programs payments, it was appropriate and necessary to grant the relief sought by Davaria in order to ensure that the franchisees’ rights in the proceeding were adequately protected.

29    It says that any communication requiring a franchisee to provide a release as a condition of, inter-alia, agreeing to a renewal or extension will place inappropriate pressure on the franchisee to give up their rights in the principal proceeding. In that context it says that the terms of the orders sought by it went no further than preventing 7-Eleven from engaging in communications of this type.

30    Davaria says that the evidence established that 7-Eleven had engaged or sought to engage in conduct of this kind. But even in the absence of such evidence, it says that the orders sought by it were appropriate and necessary to avoid injustice.

31    Now the docket judge was persuaded that he needed to make sure that group members did not give up their entitlements in the proceedings without the opportunity to obtain proper guidance, and to ensure that group members were not being unfairly or inappropriately influenced. And his Honour appreciated that some franchisees felt that they were in a vulnerable position, particularly given the known imbalance of power between franchisors and franchisees generally.

32    But Davaria says that his Honour did not fully consider such findings or the very real risk of franchisees misunderstanding, or feeling pressured to give up, their rights in the proceeding if 7-Eleven was permitted to continue to engage in communications of the type threatened concerning the second and third matters that I set out at the start of my reasons. Moreover, Davaria says that the only communications which it sought to restrain were likely to place improper pressure on franchisees to give up their rights in this proceeding.

33    It says that these matters were relevant considerations which his Honour did not take into account when determining whether it was appropriate to make the orders sought under s 33ZF in order to avoid injustice to group members. I would say now that in my view his Honour was very alive to such questions even if his succinct reasons did not fully set them out.

34    Further, Davaria says that the communications which it sought to restrain were communications connected with franchisees’ rights in the principal proceeding. Accordingly, it says that such communications cannot be properly characterised as within the ordinary course of business. Accordingly, it is said that the orders it sought could not impede 7-Eleven’s usual business and contractual arrangements.

35    Further, it says that his Honour acted upon the erroneous view that making the orders sought by Davaria would prevent persons already in contractual relationships acting in accordance with those contracts. And it says that such an error led to his Honour concluding that it was neither appropriate nor necessary to restrain 7-Eleven from requiring group members to release it from liability in this proceeding as a condition of inter-alia granting renewals or extensions.

36    Further, Davaria says that the evidence adduced by it established that franchisees were misled and were pressured to grant releases giving up their rights against 7-Eleven in the principal proceeding. It says that 7-Eleven required some franchisees to enter into releases as a condition attaching to the grant of renewals or extensions of store leases. It says that one franchisee received numerous telephone calls from 7-Eleven seeking a release including of 7-Eleven’s liability in the proceeding, in the context of discussions about the franchisee’s lease.

37    Further, it says that other franchisees were required to enter into a release as a condition of 7-Eleven agreeing to make wage claims payments. Further, it says that franchisees were also told that if they did not provide releases they would be liable to repay 7-Eleven for wage claims monies that it had paid. It is said that one franchisee was told that if he did not sign a release he could be liable to repay $154,000 to 7-Eleven. I note at this point though that this relates to the third matter concerning the wage claims programs rather than the second matter concerning the question of renewal that Davaria focused upon in its oral submissions.

38    Further, Davaria says that another franchisee was requested on numerous occasions to sign a release in return for payment of the franchisee’s unpaid wage claims. The same franchisee asked 7-Eleven whether, if he did not “sign this [release] letter, will it affect my renewal?” The response from 7-Eleven was: “if you don’t sign the release letter, it’s going to be hard for you to renew your franchise agreement. Head Office will know if you don’t sign it. …” Davaria says that the franchisee felt pressured by that communication to execute a release relieving 7-Eleven from any liability in the principal proceeding.

39    Generally, Davaria says that the evidence established that a number of franchisees felt pressured to sign releases and that they had no alternative but to do so. One franchisee felt “extreme pressure to sign the Deed of Release” and great stress and anxiety about 7-Eleven not wanting to work with him if he continued to participate in the proceeding. Other franchisees told Davaria’s solicitor that 7-Eleven would “black-list” them if they did not provide releases to 7-Eleven and give up their rights in the principal proceeding.

40    Further, Davaria says that there was also evidence that franchisees misunderstood and were misled about their rights in the proceeding. It points to evidence that one franchisee was told by 7-Eleven that he was signing “straightforward changeover documents” and that he had no idea that he had signed a document which affected his rights in the principal proceeding.

41    Overall, Davaria complains that his Honour did not address the extensive affidavit evidence adduced by Davaria in any detail in his ruling. It says that the evidence established not only that franchisees were at risk of being misled, confused and pressured in relation to their rights in the principal proceeding, but also that some franchisees had in fact been misled and unfairly pressured by 7-Eleven. It says that his Honour failed to address and make findings in respect of this material, and that his failure to take this material into account led to his decision not to make the orders sought by Davaria.

Analysis

42    Let me begin my analysis by first discussing the form of the orders originally sought and the evolution thereof.

(a) Orders sought

43    Paragraph 1.1 of Davaria’s further amended application in the form in which leave was granted to amend on 11 December 2019 was in the following form:

Pursuant to section 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act), and until further or other order of the Court:

(a)    That the First Respondent (7-Eleven) be restrained, by its officers, employees, agents and legal representatives, from communicating with any group member concerning opt out, the prospects of, progress of, or any proposal to compromise, any claim in or arising out of the subject matter of this proceeding unless 7-Eleven has first given fourteen (14) days’ written notice to Levitt Robinson of the terms of the proposed communication and the identity of the group member to whom the communication is intended to be made;

(b)    If Levitt Robinson, within twelve (12) days after receipt of a notice pursuant to (a) above, applies to the Court in respect of the proposed communication, 7-Eleven shall not make the communication until the Court has determined the Applicant’s application.

44    In terms of the breadth of these orders, a number of matters may be noted.

45    First, the communications the subject of the proposed restraint applied to communications with any group member. It was not restricted to unrepresented group members or group members who were clients of Levitt Robinson, but even applied to communications with group members who had chosen independent legal representation in their dealings with 7-Eleven. Moreover, even in the final evolution of the orders as sought, which I will discuss in a moment, the proposed restraint had this breadth.

46    Second, the original form of the restraint was not restricted to communications instigated by 7-Eleven, but also embraced a communication 7-Eleven made in response to an approach made by a group member including through the group member’s lawyer. This is now less of a problem in the final evolution of the order sought.

47    Third, the subject matter of the communications covered by the restraint appeared to be wide enough to cover anything concerning the proceeding, and any claims arising out of the subject matter of the proceeding. In the final evolution of the order sought, an inappropriate breadth problem still arises which I will elaborate on in a moment.

48    Fourth, the proposed restraint contained a mandatory requirement that 7-Eleven give Levitt Robinson 14 days’ notice of two matters: first, the terms of the proposed communication, and second, the identity of the relevant group member. This mandatory requirement was required regardless of whether the group member was desirous of their identity being known by Levitt Robinson and regardless of whether they had independent legal representation. This is no longer an issue in the final evolution of the order sought.

49    Fifth, the original form of the restraint contemplated that Levitt Robinson could within 12 days after receipt apply to the Court in respect of any proposed communication which it determined was misleading or unfair to another group member. But as 7-Eleven pointed out, such an application could be made by Levitt Robinson unreasonably or irrespective of the view taken by the group member or their independent lawyer. Further, such an application could be made regardless of any sense of urgency desired by a group member seeking a resolution of its concerns with 7-Eleven. And until the Court then adjudicated on such an application, 7-Eleven would be restrained from making the communication with the group member. So, in essence, such a restraint could be imposed in the first instance solely as a result of Levitt Robinson’s subjective determination.

50    Now the docket judge, in my view quite correctly, accepted the various criticisms made by 7-Eleven of the formal orders sought by Davaria in its further amended application.

51    Let me turn now to how the matter then evolved. At the hearing before the docket judge, 7-Eleven proffered a form of undertaking that was not acceptable to Davaria, although it was acceptable to his Honour. I have set this out at the start of my reasons.

52    Davaria put a counter-proposal, saying in a letter of its solicitors dated 9 December 2019 that:

The Applicants will consent to the following orders. The Court orders that:

Paragraph 1.1 orders

1.    The First Respondent (7-Eleven) undertakes to the Court, that until proceeding VID180/2018 and proceeding VID182/2018 (the Class Action) are finally determined as against 7-Eleven (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;

(b)    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 of store lease; 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;

(c)    not seek to procure that a franchise opt out of the Class Action by any communication 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 of store lease; 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.

Paragraph 1.2 orders

2.    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 other matters.

53    Putting to one side the infelicitous form of what had been expressed in this letter, which suggested that the Court should order that an undertaking be provided, what Davaria was in essence suggesting was a modified form of undertaking. So, the debate before the docket judge proceeded on the basis of duelling forms of undertaking.

54    But there were still significant problems with the width of what Davaria was suggesting.

55    Paragraph (b) of Davaria’s proposed undertaking referred to not seeking any release “whether in relation to the Class Action or otherwise”. There were substantial difficulties with what it was proposing.

56    The words “or otherwise” were well beyond what it was entitled to seek or could reasonably justify. Further, the words “in relation to” were impermissibly broad.

57    And related to these propositions, what Davaria was seeking was not limited to attaching specific conditions to any release.

58    On any view then, his Honour was quite entitled to reject the form of order/undertaking that Davaria was seeking by reason of these matters alone and irrespective of whether it made good its other criticisms of his Honour’s reasoning. Put another way, Davaria could not satisfy the second limb of the leave to appeal test in any event because of the breadth problem in its own proposal which independently was not justifiable. Now Davaria sought to finesse itself out of this difficulty before me by suggesting that his Honour should somehow have imposed a modified form of Davaria’s proposed undertaking to get around these difficulties. But given the manner in which the matter was argued before the docket judge, I do not accept that his Honour made any error in not applying any poly-filler to help repair Davaria’s edifice.

59    Before saying something further about the docket judge’s application of s 33ZF, let me say something about the evidence.

(b) The evidence

60    As the evidence relied upon by Davaria was contested by the affidavit evidence filed by 7-Eleven, and given that there was no cross-examination either way, it was open to the docket judge to conclude that he was not satisfied that there was any attempt by 7-Eleven to act unfairly or put economic duress on franchisees.

61    Further, it was also open for him to conclude that he was not satisfied that 7-Eleven had acted in a misleading or deceptive, unfair or inappropriate way, and even if some franchisees had felt that they were in a vulnerable position.

62    Let me first say something generally on the renewal question as revealed by the evidence.

63    At the expiry of the term of a store agreement that is normally for 10 years, there is no automatic right to renewal.

64    Davaria’s contention that franchisees were required to enter into a release as a condition of the granting of renewals or extensions of store leases was not supported by the evidence. 7-Eleven’s evidence established that it would take into account a range of factors when considering whether to grant a renewal at the expiry of the store agreement. Whether a franchisee had entered into a release was not a factor proposed to be taken into account. Further, whether an underlying lease is extended also is store specific.

65    Further, as was pointed out by 7-Eleven, the evidence established that 7-Eleven had chosen to have an ongoing relationship with a number of franchisees including by renewing store agreements where such franchisees had chosen not to execute a deed of release.

66    Further, as to both of the examples cited by Davaria involving franchisees from whom 7-Eleven sought releases in relation to wage claims payments that had been made on their behalf by 7-Eleven, neither of the franchisees ultimately entered into a release. Further, 7-Eleven’s decision whether to renew or extend the relevant lease or store agreements for these two franchisees was not contingent on whether a release was signed.

67    Let me elaborate further on the various wage claims programs.

68    Davaria contended that franchisees were required to enter into a release as a condition of 7-Eleven agreeing to make wage program payments that were owed to them. But I agree with 7-Eleven that this misstates the effect of the wage claims programs. Under the wage claims programs, 7-Eleven agreed to pay certain amounts to present or former employees of franchisees who had been underpaid by the franchisees, provided that those employees had made verified claims within the applicable time periods. 7-Eleven sought releases from franchisees where it had made wage claims program payments to their underpaid employees. But the evidence shows that in communications with franchisees, 7-Eleven said that it would make the payments regardless of whether the franchisees agreed to enter into a release, and advised franchisees to get legal advice.

69    Let me say something further on the evidence.

70    In respect of one of the franchisees referred to by Davaria, 7-Eleven sought a release from the franchisee on the basis that 7-Eleven had made $154,670 in wage claims program payments on behalf of that franchisee to the franchisee’s employees. The franchisee was told that whether or not he signed a deed of release would not negatively affect his long-term relationship with 7-Eleven, and he was counselled to seek legal advice. Moreover, notwithstanding that 7-Eleven had made the wage claims program payment, the franchisee did not sign a release and remained a franchisee. No unfairness was demonstrated in the evidence by 7-Eleven’s conduct.

71    Let me elaborate. In a conversation between Mr Mark Nance, the then Victorian State Manager of 7-Eleven, and this franchisee on 21 May 2019, the following was said:

 MN:    So we have paid, we have paid, we have paid them $154,000.00 okay?

 F1:    Hmm, hmm.

MN:    Three claims. What we are offering you is, if you sign this Deed, we will never come back to you seeking the $154,000.00. If you don’t sign the Deed, there is a chance that we will.

 F1:    Hmm, hmm.

MN:    Down the track. Once this, once this has finished. So two things from me: one, we are offering you to pay, we’ve paid them, right? We’re offering a release to do that. Now that release is for that part of your agreement and that issue, right?

 F1:    Hmm, hmm.

 MN:    It excludes you from going into the, um, Class Action.

 F1:    Yeah.

 MN:    And you’re not a part of that, right?

 F1:    No, No.

MN:    And if you want a future with 7-Eleven going forward, we want to work with people who are prepared to draw a line in the sand and move forward.

 F1:    Yeah so what does that, what will that be, line in the sand?

MN:    Well it means that if something was to happen to your store for example, like closed, I would try to help relocate you because we think you are a good franchisee.

 F1:    Hmm, hmm. Yeah because you know

MN:    But if we’ve got people in the Class Action that don’t want to work with us, um, that’s fine, but we’ll let them go.

 F1:    Yeah.

 MN:    So I am happy to work with you in the future, yeah?

 F1:    What.

 MN:    But we need to draw a line in the sand on those things.

 F1:    Hmm, hmm.

 MN:    And move forward.

 F1:    I mean so you’ll be extending my store lease the one I have?

 MN:    I’ll be what?

 F1:    Extending the store lease?

 MN:    Exiting?

 F1:    No, extending.

MN:    We don’t know yet. So when does it, when does it...I was just looking for the date, errr, we only make decisions about six months out...

F1:    Hmm, hmm.

MN:    But I think you’d be well aware that the store is not performing anywhere near what it needs to.

F1:    Hmm, hmm.

MN:    So it’s actually May next year. It’s August next year. Yeah? Is that what you understood?

F1:    May, I think, yes.

MN:    August. So it’s August next year and it has one five year option.

F1:    One more option.

MN:    To August 2025. So if we exercise it, uh so we haven’t made a decision on that but we will towards the end of this year, once the landlord starts talking to us. We lose a lot of money. You don’t make a lot of money. How long have you been there?

F1:    Eight years now. This November it will be eight years.

…

72    In my view there is nothing wrong with this conversation in terms of any suggestion that 7-Eleven was acting inappropriately. First, clearly discussions of any releases concerned the third matter of wage claims payments, including the “line in the sand” comment. Second, it seems that F1 raised the issue of renewal with Mr Nance, and Mr Nance quite properly said that that was a matter in essence for down the track.

73    Further, prior to that conversation the following conversation had taken place on 16 January 2019 between the franchisee, Mr Brent Shegog, the then Victorian Retail Business Manager for 7-Eleven, and Mr Nance:

BS:    So basically, those claims about to be paid. Today I’ve got what’s called a deed of release, so there’s two copies of the same document. And we give you this legal document to take away, and if you want to get some legal advice on the document itself, quite entitled to. In really simple terms, what it does is, 7-Eleven will move to pay those claims. What it means by signing this deed of release, that we would never ask you for any of that money back, for the claims that we’ve paid on behalf of your store. So that’s under the Wages Claims Program. Prior to that, there was the other Wages Repayment Program, which was confidential. It also means that we indemnify you against ever asking for any money back that may have been paid out under that system as well. And most of the claims were paid out under the earlier system. Um so we’ve indemnified you against ever having to reimburse 7-Eleven for these claims that will get paid. On the other hand, what it does do, it indemnifies you us from you taking action against us, in specifically, the class action.

 F1:    Oh class action? Ok.

BS:    So if you sign these deeds, it means you can’t participate in the class action. That’s it in simple terms.

F1:    Yeah, but anyway, I’m not in anyway. Let me tell you, work, home, work, home, you know? 7 days a week, 365 days.

BS:    So so, in some ways, can I, can I, so it’s probably a a relatively, I would think, a relatively simple decision, but it’s a decision you have to make yourself. So, I’ll give you these deeds to take away, and what would normally happen from here is I will give you a call in about a week’s time. And you can say, Brent, I’m getting legal advice, Brent, I’ve signed them, Brent, I’ve not signed them. Um, if you say, no, you’re not signing them, I will simply put no on the spreadsheet, that you’re not going to sign them, and we move on.

F1:    Mmm hmm.

BS:    That’s the end of the story. Uh, if you say yes you are going to sign them, I’ll arrange to come out and pick them up off you. Uh if you need a little bit more time to get legal advice, we’ll tee up another phone call after that.

F1:    Yep.

BS:    So it’s up to you what you elect to do. No matter what you do, it’s not going to alter the relationship you have with 7-Eleven, and the way we view you. It does indemnify you against those payments being, they will be made. So we will be making them. So if you say, no, I’m not signing it, that won’t stop us from paying that, we will still be paying those claims.

MN:    We will be paying them.

…

74    Again, there is nothing inappropriate about this conversation. Further, Mr Nance gave relevant evidence in his affidavit of 19 August 2019, none of which substantially assists Davaria.

75    Further, the evidence of another franchisee referred to by Davaria was contested through the evidence of the relevant 7-Eleven State Manager who deposed that he told the franchisee that he could choose to sign or not sign the deed of release, and either way it would not impact the business going forward. Further, the franchisee was told that it was important to obtain legal advice about the deed of release. Moreover, the franchisee told the State Manager that he was getting legal advice about the deed. Ultimately there was no further communication about the deed.

76    I note that the relevant State Manager gave the following evidence concerning this franchisee:

On 3 January 2019 at 3pm, I met with F2 at the [Store]:

(a)    I spoke to him about the WCP process in accordance with my standard practice.

(b)    The conversation that I had with F2 was very casual and friendly and took place at the back of the store.

(c)    In accordance with my standard practice, I told F2 that the WCP claims made against him had been paid out by 7-Eleven and therefore that the time to argue any claims had ceased.

(d)    I provided him with a copy of a Deed of Release. In accordance with my standard practice I am confident that I spoke in simple terms about the effect of the Deed.

(e)    I am confident that I followed my standard practice and that I said words to the effect that F2 can choose to sign or not sign the Deed, and either way it would not impact the business going forward. I said that it was important to obtain independent legal advice about the Deed. I recall that F2 told me that he would find a lawyer.

Following this discussion, I followed up with F2 a few times in February and March 2019.

(a)    I called F2 and left a message on 8 February 2019. F2 sent me a text message in response on 11 February 2019 in which he said “Finally I got appointment with lawyer on 25th feb regarding deed of release. I will let you know after the appointment what lawyer’s advice is for deed.”

(b)    On 28 February 2019, F2 and I exchanged further text messages, in which he said he was still waiting for a reply.

(c)    I understood from F2’s text messages that he was following up with a lawyer to get legal advice about the Deed of Release. I have not followed up with him again since early March 2019 and have not had any communications about WCP with him since that time.

Ongoing relationship with F2

F2’s franchise agreement does not expire until late 2021. Given F2’s very good track record in operating the [Store], at the present time, I cannot see any reason why 7-Eleven would not enter into a new franchise agreement with him when the time comes, regardless of whether he has signed a Deed of Release or not. Ultimately, whether or not a new franchise agreement is offered will depend on all the normal criteria the 7-Eleven considers when doing store renewals.

77    Now ultimately, even if I accept that there was some conflicting and unresolved evidence concerning F2, at the end of the day I do not consider that it was of such weight and could be extrapolated more broadly such as to suggest that his Honour made any substantive and operable error in how he evaluated the evidence overall.

78    Further, there is no suggestion that either of the franchisees referred to in Davaria’s hearsay evidence had entered into a deed of release with 7-Eleven. And both remain within the 7-Eleven network. In my view the hearsay evidence relied on before his Honour had little weight, although I accept that franchisees might have subjectively felt under pressure.

79    Further, more general evidence was given by various State Managers of 7-Eleven and also the General Manager, Retail Operations. And none of this evidence supports Davaria’s assertions.

80    Generally, Davaria says that the evidence from franchisees about the nature of their communications with 7-Eleven establishes that his Honour erred in not having regard to that evidence in his ruling and in concluding that there was not any relevant unfairness warranting the protection of group members under s 33ZF.

81    But I have looked at the evidence before his Honour that the parties took me to. And I am not satisfied that the evidence established a real risk that franchisees may be misled or inappropriately pressured to give up their rights in the principal proceeding. I am not satisfied that the evidence before his Honour demonstrated improper pressure or influence being brought to bear upon franchisees or, at the least, an improper attempt to persuade franchisees from being involved in the principal proceeding. Moreover, his Honour not being so satisfied is not attended with any sufficient doubt such as to warrant the grant of leave to appeal.

(c) More on the renewal question

82    Davaria made a submission concerning the apparently inconsistent approach of 7-Eleven concerning whether renewal, being the second matter I referred to at the outset, was being or to be linked with any release.

83    The evidence before his Honour filed by 7-Eleven would suggest that at management level there was not any such link nor intended to be. Yet it was said that for those “on the ground”, employees of 7-Eleven were communicating such a linkage to franchisees. Therefore, so it was said, 7-Eleven was engaging in misleading conduct.

84    Further, Davaria also put that given that the undertaking given by 7-Eleven did not rule out the link to the condition concerning the second matter, 7-Eleven was keeping its options open.

85    Now there are a number of observations to be made on this aspect of the argument.

86    First, the evidence of discussions with franchisees more concerned the third matter rather than the second matter that I identified at the outset.

87    Second, this so called inconsistency concerning 7-Eleven’s approach to the second matter does not seem to have been to the fore in Davaria’s submissions before the docket judge, which were heavily focused on releases concerning the third matter.

88    Third, when one looks at the evidence that was before the docket judge, the so-called inconsistency is not as stark as Davaria would have it.

89    Fourth and importantly, if in any settlement proposal 7-Eleven seeks to link the release with the second matter of renewal, then the franchisee by reason of the terms of the letter to be sent which is part of the undertaking will have the opportunity to seek legal advice. Now it was put that any lawyer from whom advice was sought may not know of any inconsistency in 7-Eleven’s position as disclosed in the evidence before the docket judge. But assuming such prior inconsistency, so what? 7-Eleven would have been entitled to change its position. And any legal advice sought would at the time have to address what is, rather than what was.

90    Fifth, I should note that Davaria’s focus on the second matter before me rather than the third matter suggests that its concern has diminished concerning the absence of any undertaking about not linking any release to the third matter.

91    Sixth, as to the second matter I should note that an issue was raised by Mr Noel Hutley SC for Davaria concerning the Franchising Code of Conduct (Sch 1 to the Competition and Consumer (Industry Codes – Franchising) Regulation 2014). The Franchising Code is prescribed for the purposes of s 51AE of the Competition and Consumer Act 2010 (Cth) and is a mandatory industry code.

92    Davaria pointed out that cl 20(1) of the Franchising Code states, inter-alia, that a franchise agreement must not require a franchisee to sign “a general release of the franchisor from liability towards the franchisee”. Further, it was pointed out that cl 5 defines “franchise agreement”, and provides in cl 5(2) that the “transfer or renewal of a franchise agreement” is taken to be a franchise agreement; likewise, the “extension of the term…of a franchise agreement” is taken to be a franchise agreement.

93    As I understood Davaria’s argument, it was said that the release sought by 7-Eleven was a “general release” and that it was proposed to make it “a condition of a renewal agreement that you give it”. So, it would be part of the renewal agreement. And as any renewal agreement would be a franchise agreement, therefore such a condition would be proscribed by cl 20(1).

94    I queried with Mr Hutley the scope of the release sought as to whether it would be a “general release” or just one in respect of the claims the subject of the principal proceeding. He drew my attention to a proposed form of Deed of Release in evidence which satisfied me that it was reasonable to accept for present purposes that the release sought was a form of general release; see cl 5.1 of that proposed form and the breadth of the definitions of “Claim” (cl 1.1(8)) and “Franchisee Claims” (cl 1.1(13)).

95    But in my view it is unlikely to be a “general release” of the type envisaged in the Franchising Code. I tend to agree with Mr Neil Young QC for 7-Eleven that for the purposes of cl 20(1) of the Franchising Code one is looking at such a release from a forward looking perspective. In other words, it is dealing with the scenario where one has entered into a franchise agreement with a general release continuously speaking during the term of the franchise, rather than a collateral release standing outside the franchise agreement, but which may be a condition precedent for entering into a franchise agreement or, in this case, the renewal of the franchise agreement which is also taken to be a franchise agreement. I should say that I have looked at the Explanatory Statement for Select Legislative Instrument No 168, 2014 issued by the then Minister for Small Business, but unsurprisingly nothing in the discussion concerning cl 20 throws any light on this question.

96    Now Mr Hutley responded that a conditional collateral contract would be caught by the breadth of cl 5 (1)(a) of the Franchising Code which provides that a franchise agreement can be written, oral or implied. So, he asserted that an agreement which provided for a general release as a condition of renewal would be a franchise agreement and therefore would fall foul of cl 20. But I very much doubt it. First, it is doubtful that such a conditional collateral contract would be a franchise agreement. Second, the broad release in the proposed form of Deed of Release on one view appears to be more in respect of extant or past claims arising under the present franchise agreement, rather than future claims under the new posited conditional collateral contract (assuming this to be a franchise agreement) or the renewal agreement (itself a franchise agreement) going forward; I take this more from the definition of “Franchisee Claims” and the boundaries of (a) to (f) thereof rather than “Claims”, which admittedly includes “future”, in the proposed form of Deed of Release. So it is doubtful that any such conditional collateral contract would contain a “general release” of the type contemplated in cl 20(1) of the Franchising Code in terms of speaking continuously going forward concerning future circumstances.

97    But there is a broader problem for Davaria concerning the submissions of Mr Hutley who went off-piste. The order sought by Davaria from the docket judge was not directed specifically to this scenario. The order sought (in reality the form of undertaking proposed by Davaria) was directed to any discussion of any release that had any connection at all, temporal or otherwise.

98    In summary, I do not consider that anything that Davaria has pointed to concerning the Franchising Code throws any significant doubt on the docket judge’s disposition of Davaria’s application. And any issue concerning the Franchising Code will no doubt be addressed by both franchisor and franchisee at the relevant time after obtaining appropriate advice. Possible issues arising thereunder provide no basis now for impugning the docket judge’s disposition of the application before him.

(d) Conclusions re: evidence

99    Let me at this point state some conclusions concerning the evidence.

100    First, Davaria complains that his Honour did not address in any detail Davaria’s evidence. Indeed, it elevated this complaint to a failure to give any or any adequate reasons. In my view, in the context of what was a matter of practice and procedure, his Honour’s reasons were quite adequate. This Court should discourage the sort of cottage industry that has flourished in other courts concerning such a ground.

101    Second, I do not infer from his Honour’s lack of reference to the detail in his written reasons that he did not consider this evidence. Clearly his Honour read the evidence and considered it (see at [3], [8], [9] and [10]).

102    Third and given that there was no cross-examination, his Honour was entitled to reach the views that he did through a process of evaluation as set out in his reasons (at [10] and [15]) to the following effect:

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.

…

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.

103    Fourth, the evidence relied upon concerning discussions about releases between 7-Eleven and its franchisees more concerned the third matter that I referred to at the outset (wage claims programs) rather than the second matter (renewals).

104    Now as I have indicated, I do not consider there to be any force in Davaria’s submissions as to the evidence concerning the renewal question. And let me say something further about the third matter in Davaria’s proposed form of undertaking. In my view there would have been no sound basis for his Honour seeking to extract an undertaking from 7-Eleven seeking to prevent 7-Eleven from dealing with such a matter. After all, 7-Eleven had paid wage debts owed by franchisees to their employees who had allegedly been underpaid. As a result of 7-Eleven paying such amounts, 7-Eleven had a claim back against the franchisees. And that had nothing to do with the first and second matters in Davaria’s proposed form of undertaking. So in essence, and as Mr Young described the third matter:

7-Eleven had paid the wages debt. It was saying, “We will offset our claim against you if you release the claims you have against us in the class action,” and it was all done quite properly with recommendations that they obtained advice in connection with the deeds of release.

105    There was nothing commercially remarkable about 7-Eleven so linking the third matter to any release let alone anything impermissible. There is no basis for saying that his Honour was somehow in error in not extracting from 7-Eleven an undertaking concerning the third matter in Davaria’s proposal.

106    Generally, I see no substantial doubt in how his Honour evaluated the evidence and the conclusions that he drew, bearing in mind that the overall context was a matter of practice and procedure and there was no cross-examination either way.

(e) Docket judge’s application of s 33ZF

107    The docket judge had a discretion under s 33ZF to make any order considered appropriate or necessary to ensure that justice was done in the proceeding.

108    Section 33ZF empowers the Court in appropriate cases to control aspects of a respondent’s communications with group members where the group members are not represented in the proceedings, including in order to protect the integrity of the court process. That intervention may be warranted where a respondent makes or is about to make an offer to group members in terms which are misleading or in circumstances which are unfair.

109    But the Court’s discretionary power under s 33ZF to restrain or control communications between a respondent and an individual group member ought not to be exercised in relation to communications or offers to settle a proceeding that are otherwise lawful and not subject to any ethical constraint and where those communications are not misleading or unfair.

110    Now as I have said, it is well apparent that the docket judge was aware of the relevant authorities having set them out in detail in his earlier ruling.

111    In the present context his Honour correctly recognised that group members should not be treated unfairly, and that they should not give up their entitlements in the principal proceedings without proper guidance and without being unfairly or inappropriately influenced. But at the same time, his Honour correctly recognised that 7-Eleven should not be restrained from carrying out its business arrangements in accordance with law and its own legitimate economic interests. Further, it is not appropriate for the Court to interfere with communications which occur for a legitimate purpose in the context of an ongoing business relationship between a respondent and group members.

112    In my view the docket judge’s decision to exercise his discretion to accept the undertaking proffered by 7-Eleven on the basis that it would be sufficient to protect and inform group members without further intervention was unremarkable.

113    It is well established that an appropriate standard of communications about offers by a respondent with unrepresented group members should usually satisfy the following criteria in order to avoid the risk of being characterised as misleading or unfair, namely, that:

(a)    the offer and accompanying material should be in writing;

(b)    the documentation should explain the consequences of accepting or not accepting the offer;

(c)    the period of acceptance should be sufficient to obtain legal advice; and

(d)    the documentation should make it clear that the group member might benefit from independent legal advice.

114    I accept, of course, that such criteria are not exhaustive and that satisfying them may in some cases, although not this one, not provide a respondent with a complete answer.

115    Clearly, the undertaking and the letter, the terms of which I have set out earlier, contemplated that if 7-Eleven sought a release from a group member in respect of the principal proceeding, it would provide a copy of the deed containing a release to the group member. Moreover, the undertaking in its broad sense did extend to renewals, extensions or wage claims programs payments. The undertaking contemplated that the letter would be provided to all group members from whom 7-Eleven sought a release in respect of the principal proceeding, in whatever context be it renewals, extensions, wage claims programs payments or otherwise.

116    Further, the letter provided an explanation of the requested release and stated:

7-Eleven strongly recommends that you obtain you own independent legal advice in respect of the content of the Deed and before deciding whether or not you wish to enter into the Deed.

You have 14 days to consider the Deed and obtain any legal advice, should you wish to do so. If you would like to have more time to do so, please let us know.

117    In my view, not only is there not sufficient doubt in the decision reached, but his Honour was correct in concluding that the undertaking would be enough to protect group members’ interests on the basis that the letter set out an explanation of the effect of the release sought by 7-Eleven, indicated that group members should seek legal advice and provided 14 days within which group members should seek legal advice.

118    Now Davaria asserts that his Honour overstated the significance of the letter. According to Davaria, the relevantly impugned conduct on the part of 7-Eleven is its attempts to require or seek to require that franchisees release it from liability in the principal proceeding as a condition of one of the matters that I have identified. Davaria says that it is at this stage of negotiations that 7-Eleven’s conduct gives rise to the unfairness and the real risk that group members may be unfairly or inappropriately influenced to give up their entitlements in the proceedings. It says that for so long as 7-Eleven is allowed to continue that conduct, providing the letter to a group member before they execute a release document does not cure the injustice or the real risk of injustice to group members caused by the impugned conduct. I disagree.

119    First, there is no suggestion that the form of communication being proposed by 7-Eleven is false, misleading or inaccurate in any respect.

120    Second, the communication is to be in writing. This provides substantial protection against any supposed undue pressure.

121    Third, any franchisee receiving the letter proposed will be given adequate time to consider their position and to seek legal advice if they so choose. Indeed, the letter recommends that legal advice be sought. I cannot assume that this is not a viable option for franchisees to avail themselves of. And if they do not do so, that is a matter for them. Any misunderstanding of their rights would then be self-induced.

122    Fourth, if the franchisees are in a vulnerable position concerning any settlement proposal of 7-Eleven, that arises from the very nature of the franchise relationship in combination with the fact that the franchisees have chosen to sue their franchisor. It does not result from anything improperly done or said or proposed to be done or said by 7-Eleven in the context of any settlement offer. Perhaps the franchisees may feel under pressure or be influenced by any such communication. But if they are, this does not amount to “any improper pressure or any improper influence” (my emphasis) to use the language of Goldberg J in Williams (at [38]). I have used the phrase “improper pressure” in contrast with “unfair pressure” to better emphasise what is required to be shown. Further, “pressure” simpliciter is not enough to be shown. Any group member receiving an offer of settlement from a respondent in a group proceeding may perceive some pressure or may be under some pressure to seriously consider it or accept it because of their commercial circumstances. But so be it. Section 33ZF is not designed to protect or hide them from such commercial realities.

123    Fifth, I should say something about the notion of communications “in the ordinary course of business”. The Court’s current group proceedings practice note says (at [11.1]):

Unless leave is granted by the Court, if a class member is a client of the applicant’s lawyers then any communication with the class member by the respondent or the respondent’s lawyers or agents in relation to the proceeding shall only be through the applicant’s lawyers. However, there is no intention to limit the respondent’s communication with class members in the ordinary course of business. Where the respondent’s lawyers are uncertain as to whether the class member is a client of the applicant they should liaise with the applicant’s lawyers to clarify the status of the class member, before any communication takes place. In an appropriate case, the Court may make an order that the applicant’s lawyers inform the other parties whether class members are clients of those lawyers.

124    Clearly, the proposed communication by 7-Eleven is not in the ordinary course of business although 7-Eleven and each franchisee are in a continuing business relationship with each other. This context, though, cannot be ignored. And the docket judge was rightly sensitive of it. So, in his Honour’s consideration of what was proposed, his Honour had to consider any protective role the Court had concerning group members’ interests having regard to and being sensitive to the broader business relationship. But it is wrong to take the practice note as suggesting that if the communication was not “in the ordinary course of business”, then the business relationship could simply be ignored or discounted.

125    Sixth, any protective role is sufficiently met by ensuring that the Court has considered the above matters with the relevant communication with group members conforming to the permissible precepts suggested.

126    Finally, Davaria’s submissions assume that the only permissible way that his Honour could exercise his discretion under s 33ZF was by making far-reaching injunctive orders that would interfere with 7-Eleven’s lawful pursuit of its business interests. But this assumption is not maintainable. His Honour did not consider that it was appropriate to prevent persons already in contractual relationships from acting in accordance with those contracts or other legal requirements. With respect, that position is well justified. By definition, each franchisee is in a contractual relationship with 7-Eleven under their store agreement. The orders sought by Davaria would have presented an undue interference in that contractual relationship in circumstances inter-alia where 7-Eleven lawfully sought a release when it was discussing renewal or extension of the store agreement. The docket judge was quite entitled to take the view that it would be inappropriate to make an order preventing 7-Eleven seeking any release at all in the terms sought in the application. A respondent is entitled to seek to compromise claims it has by, inter-alia, procuring releases of other claims against it including releases of the subject matter of the principal proceeding.

127    For completeness I should deal with one other point.

128    I have dealt with Davaria’s principal arguments in both its oral and written submissions. I have also perused Davaria’s draft notice of appeal. For completeness, none of the matters raised in that draft notice raise any sufficient doubt in my mind concerning any operable error in his Honour’s approach or conclusions. But even if they did, nevertheless the second limb of the leave to appeal test would still not be satisfied.

129    In summary, Davaria has not satisfied me as to the first limb of the leave to appeal test.

(f) No substantial injustice

130    Davaria says that there is a real risk of group members giving up their rights in the principal proceeding in circumstances where they do not intend or wish to. But this assertion is contradicted by the docket judge’s evaluation of the evidence. In any event, the assertion overlooks the protective and informative function of the letter, and the protection afforded by the other aspects of the undertaking.

131    Further, if it turns out that any group member has a complaint about a release, it would be open to a group member to seek to have the deed of release set aside, although I do accept that the value of such an option in some cases would be more perceived than real.

132    Accordingly, there is no substantial basis for any concern that group members will unwittingly give up their rights in the principal proceeding.

133    Let me deal with another matter. I am here not dealing with any opt out context. Although Davaria also sought orders concerning opt out, the impugned orders did not concern the opt out process. Subsequently, the docket judge made orders by consent dismissing the residual component of Davaria’s further amended interlocutory application in respect of communications concerning opt out. Orders were later made on 31 January 2020 on the further undertaking by 7-Eleven that it would not initiate any communications with group members in connection with the opt out process other than by an agreed form of letter annexed to the 31 January 2020 orders.

134    In summary, even if the docket judge’s decision on the matters that concern me was wrong, substantial injustice would not result if leave was refused.

Conclusion

135    Leave to appeal will be refused. I see no good reason why costs should not follow the event.

Associate:

Dated:    25 March 2020