Federal Court of Australia

United Petroleum Pty Ltd v Istanikzai [2023] FCA 149

ORDERS

THE COURT ORDERS THAT:

1.    The Respondents’ interlocutory applications each dated 28 October 2022 be dismissed.

2.    The Respondents pay the Applicants’ costs of these applications.

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

REASONS FOR JUDGMENT

ANDERSON J:

Introduction

1    By identical applications dated 28 October 2022, the respondents in proceedings VID 525 of 2021 (Istanikzai Proceeding), and VID 703 of 2021 (Bhatti Proceeding), seek that those proceedings be stayed pending the determination of proceeding FNH United Pty Ltd & Anor v United Petroleum Franchise Pty Ltd & Anor S ECI 2022 04261 (Representative Proceeding) in the Supreme Court of Victoria; and may not proceed until such time as this Court grants leave.

2    The respondents, Fahim Istanikzai (Mr Istanikzai) and FNH United Pty Ltd (FNH) in VID 525 of 2021, and Jaydeep Devjibhai Bhatti (Mr Bhatti) and Jigarkumar Bharatbhai Patel (Mr Patel) in VID 703 of 2021 are the plaintiffs in the Representative Proceeding, while the first applicant in the proceedings in this Court, United Petroleum Franchise Pty Ltd (United Petroleum) is the first defendant in the Representative Proceeding.

3    The second applicant in the proceedings in this Court, United Petroleum Pty Ltd as trustee for United Petroleum Unit Trust (UP), is not a defendant in the Representative Proceeding.

4    One of the directors of United Petroleum, Mr Avi Silver, is the second defendant in the Representative Proceeding.

5    It is well established that the Court’s powers under s 23 of the Federal Court of Australia Act 1976 (Cth) (Act) and r 1.32 of the Federal Court Rules 2011 (Cth) are broad, and include the power to order a stay of proceedings.

background TO PROCEEDINGS

6    The respondents provided the following background to the proceedings, which I adopt.

7    United Petroleum and UP (collectively, United) are companies within a group trading under the “United” brand (United Group).

8    United Petroleum operates a range of petrol stations and convenience stores across Australia, through a network of businesses operated by franchisees and commission agents (United Network).

9    Mr Istanikzai, Mr Patel, and Mr Bhatti are former franchisees who operated United Petroleum sites.

10    In or about April 2017, the United Group acquired the intellectual property to a franchise known as ‘Pie Face’ that sold pies and other bakery products (Pie Face Franchise). United Petroleum then began installing the Pie Face Franchise into sites throughout the United Network.

11    On or about 17 April 2020, FNH, of which Mr Istanikzai is the sole director, entered into a franchise agreement with United Petroleum for a site at Cranbourne South, Victoria. Mr Istanikzai was a party to the franchise agreement in the capacity of guarantor.

12    Prior to the commencement of FNH’s franchise agreement, United Petroleum installed Pie Face into the site at Cranbourne South.

13    On or about 25 February 2021, United Petroleum terminated FNH’s franchise agreement.

14    On or about 29 May 2018, Mr Patel and Mr Bhatti entered into a franchise agreement (in their capacities as trustees for the JJ Unit Trust) with United Petroleum for a site at Wallan, Victoria. Both     `Mr Patel and Mr Bhatti were also parties to the franchise agreement as guarantors.

15    During the term of Mr Patel and Mr Bhatti’s franchise agreement, United Petroleum installed Pie Face into the site at Wallan.

16    On or about 26 January 2021, United Petroleum terminated Mr Patel and Mr Bhatti’s franchise agreement.

17    In April and July 2021, Mr Istanikzai accessed the email account associated with the Cranbourne South site.

18    On or about 20 June 2021, ABC News published an article entitled “Under the Pump” (ABC Report) and a news broadcast (ABC Broadcast) containing allegations against United Petroleum by several former franchisees.

19    Mr Patel and Mr Bhatti were filmed as part of the ABC Broadcast, and made (or had attributed to them) a number of statements regarding the financial viability of their franchise following the installation of Pie Face, which included the ability to properly pay workers award wages under United’s business model. These representations were described by United in the Bhatti Proceeding as the “ABC Representations”.

20    The ABC Broadcast also showed turning pages of the franchise agreement for the Wallan site, and a moving image of a document entitled “Wastage Audit by Reason – Wallan” for September 2020 (September Wastage Report).

21    On 2 July 2021, Mr Istanikzai sent an email from a private email account to various recipients, including other United Petroleum franchisees in Victoria (Mr Istanikzai’s July Email). Mr Istanikzai’s July Email stated, inter alia:

As we all know that none of the sites can afford to pay the Fair Work award wages with the current business model of United, most of the sites are hardly covering the daily costs. They made the system that only benefits United, the amount of work and responsibilities are too much and it’s increasing day by day but the benefits and rewards all stays [sic] the same.

22    In July 2021, Mr Patel sent an email to Mr Daniel White, the former adviser to the Hon. Anthony Byrne MP, regarding his experience with United Petroleum. This email contained a number of statements about the circumstances in which Pie Face was installed into the Wallan site, and the termination of the franchise agreement. This email is said by United (in the Bhatti Proceeding) to give rise to a number of representations described as the “White Representations”.

23    In September 2021, Mr Istanikzai met with Mr White and shared his experience with United Petroleum. It is contested between the parties whether Mr Istanikzai also sent an email to Mr White.

Istanikzai Proceeding

24    The Istanikzai Proceeding was commenced on 14 September 2021. In their Amended Concise Statement dated 8 November 2021, United alleges that:

(a)    Mr Istanikzai’s access to the email account associated with the franchise after the termination of the franchise agreement constituted a breach of an implied term of the franchise agreement;

(b)    the list of email addresses of the various United Petroleum stores to which Mr Istanikzai’s July Email was sent was information confidential to United Petroleum, and constituted confidential information under the franchise agreement;

(c)    the sending of Mr Istanikzai’s July Email meant Mr Istanikzai used confidential information without the authorisation of United Petroleum and has committed a breach of confidentiality, both expressly under the agreement and in equity;

(d)    the access to the email account amounted to trespass to goods;

(e)    Mr Istanikzai’s July Email contained statements that were misleading or deceptive, described by United as the “Istanikzai Representations”;

(f)    the allegations made in the disputed email to Mr White (which Mr Istanikzai denies sending) were also misleading or deceptive, also described by United as the “White Representations”; and

(g)    Mr Istanikzai and FNH have committed the tort of injurious falsehood by the sending of Mr Istanikzai’s July Email and the disputed email to Mr White.

25    The misleading or deceptive statements arising from Mr Istanikzai’s July Email are said by United to be that:

(a)    none of United Petroleum’s franchisees and commission agents can afford to operate their sites while paying award wages because of United Petroleum’s business model; and

(b)    most of United Petroleum’s franchisees and commission agents are hardly covering their daily costs.

26    The White Representations, with respect to Mr Istanikzai, relate to:

(a)    United Petroleum allegedly not providing proper training;

(b)    the sale of pies to Muslim customers that were advertised as halal but were not; and

(c)    various other general allegations, including that United Petroleum are ‘thieves’, ‘corrupt’, and ‘ripping off poor people’.

27    In the Istanikzai Proceeding, United seek declaratory relief, injunctive relief, damages, and compensation. Relevantly for present purposes, United Petroleum seek an order restraining Mr Istanikzai from:

… making the Istanikzai Representations or White Representations or any other statements or claims similar to the Istanikzai Representations or White Representations to third parties or aiding, abetting, counselling or procuring the making of the Istanikzai Representations or White Representations or any other statements or claims similar to the Istanikzai Representations to third parties.

28    In response to the Amended Concise Statement, Mr Istanikzai and FNH:

(a)    deny the implied term in the franchise agreement contended for by United;

(b)    deny having breached the franchise agreement, and say that United have articulated no loss by reason of the alleged breaches;

(c)    deny the alleged breach of confidence, deny receiving the email addresses of the recipients of Mr Istanikzai’s July Email from United Petroleum, and further deny that those email addresses amounted to confidential information;

(d)    deny the alleged misleading or deceptive conduct, on the basis that the statements alleged to comprise the Istanikzai Representations were not made in trade or commerce; that they were genuine expressions of opinion; that United has not articulated how the recipients were misled or deceived, and further that United has suffered no loss;

(e)    deny that Mr Istanikzai is responsible for the disputed email to Mr White, and say that in any event, communications with a member of parliament or his or her agents cannot amount to conduct in trade or commerce, and would be understood as expressions of opinion; and

(f)    deny the allegations of injurious falsehood and trespass to goods.

29    In response to the whole of United’s claim, Mr Istanikzai maintains that he accessed the email account for personal reasons, including deleting personal information and obtaining information to prepare his tax return. Mr Istanikzai and FNH also claim that Mr Istanikzai was acting in a personal capacity in so doing, and that, accordingly, FNH has been improperly joined to the Istanikzai Proceeding.

Bhatti Proceeding

30    The Bhatti Proceeding was commenced on 29 November 2021. In their Concise Statement dated 29 November 2021, United allege that:

(a)    the franchise agreement and the September Wastage Report were confidential information under the franchise agreement and in equity;

(b)    by leafing through the franchise agreement, Mr Patel and Mr Bhatti have disclosed it to at least the camera operator, the reporter, producers of the ABC Broadcast and anyone who watched the ABC Broadcast;

(c)    it can be inferred that the September Wastage Report was disclosed to the ABC by either or both of Mr Patel and Mr Bhatti knowing that it would be broadcast to the public;

(d)    in the circumstances, Mr Patel and Mr Bhatti have breached their obligations of confidentiality under the franchise agreement and in equity;

(e)    by making the ABC Representations, Mr Patel and Mr Bhatti engaged in misleading or deceptive conduct and the tort of injurious falsehood; and

(f)    by making the White Representations, Mr Patel and Mr Bhatti engaged in misleading or deceptive conduct and the tort of injurious falsehood.

31    The ABC Representations are said by United to be representations made by Mr Patel and Mr Bhatti that:

(a)    United’s franchisees and commission agents cannot afford to operate their sites while paying award wages because of the structure of United’s business;

(b)    United does not audit its commission agents and only audits its franchisees; and

(c)    United increased their rent charge by $150 per week in July 2020 (although it should be noted that the ABC Report and the ABC Broadcast refer to “$150 a day”).

32    The White Representations with respect to Mr Patel and Mr Bhatti are (in summary) said by United to involve:

(a)    the introduction of Pie Face into the United Petroleum site at Wallan, and whether it was done against the wishes of Mr Patel and Mr Bhatti;

(b)    an alleged increase in rent in July 2021 without explaining that additional rent charged in error was returned;

(c)    whether a breach notice was issued by United when Mr Patel and Mr Bhatti opposed the rent increase;

(d)    a representative of United threatened Mr Patel and Mr Bhatti with further audits as a result of them prosecuting their complaints through their legal representative; and

(e)    United evicted Mr Patel and Mr Bhatti in order to avoid renewing the franchise agreement.

33    In the Bhatti Proceeding, United seek declaratory relief, injunctive relief, damages, and compensation. Relevantly for present purposes, United Petroleum seek a similar restraint to that sought in Mr Istanikzai’s Proceeding, being an order restraining Mr Patel and Mr Bhatti from:

making the ABC Representations or White Representations or any other statements or claims similar to the ABC Representations or White Representations to third parties or aiding, abetting, counselling or procuring the making of the ABC Representations or White Representations or any other statements or claims similar to the ABC Representations or White Representations to third parties.

34    United also seek an order restraining Mr Patel and Mr Bhatti from “disclosing, using, publishing or otherwise making available [the] Confidential Information”.

35    In response to the Concise Statement dated 29 November 2021, Mr Patel and Mr Bhatti:

(a)    deny that the franchise agreement for their site is confidential information, and do not admit that the September Wastage Report amounts to confidential information;

(b)    deny that by “leafing through” the franchise agreement on camera it was disclosed to the camera operator, the reporter, the producers of the ABC Broadcast or anyone who watched the ABC Broadcast, or that it can be inferred that the agreement was provided to the producers of the ABC Broadcast off camera;

(c)    say that the franchise agreement and the September Wastage Report appeared in the ABC Broadcast for a matter of seconds, and were unable to be read by any member of the public on a normal viewing of the ABC Broadcast;

(d)    deny any breach of the franchise agreement and or of any obligation of confidentiality, and say that United has not articulated any loss by reason of the ABC Broadcast, ABC Report, or the White Email;

(e)    deny that the ABC Representations and the White Representations were made in trade or commerce; say that they constituted genuinely held statements of opinion; deny that those representations amounted to misleading or deceptive conduct; and otherwise say that United has not suffered any loss; and

(f)    deny the allegations of injurious falsehood.

36    Accordingly, the issues to be determined in the Bhatti Proceeding are:

(a)    whether the franchise agreement and the September Wastage Report amount to confidential information, and if so, whether there has been any breach of Mr Patel and Mr Bhatti’s obligations in this respect;

(b)    whether each or any of the ABC Representations or White Representations were made, and if so, whether each or any of those representations amounted to conduct in contravention of s 18 of Schedule 2 to the Competition and Consumer Act (Australian Consumer Law), or the tort of injurious falsehood; and

(c)    if any of the allegations are made out, has United suffered any loss.

Representative Proceeding

37    The Representative Proceeding was commenced by way of writ and statement of claim filed in the Supreme Court of Victoria on 21 October 2022.

38    As noted above, FNH, Mr Istanikzai, Mr Patel and Mr Bhatti are the lead plaintiffs in the Representative Proceeding. United Petroleum and Mr Silver are the defendants.

39    The group members are specified to be all persons who, at any time from 19 October 2016 and 20 October 2022, were or commenced to be a franchisee in the United Network pursuant to a standard form franchise agreement with United Petroleum, as well as any person who was a guarantor of a franchisee’s obligations.

40    The principal factual allegations made on behalf of group members by FNH, Mr Istanikzai, Mr Patel and Mr Bhatti can be summarised as follows:

(a)    the Pie Face Franchise acquired by the United Group was essentially a failed franchise, with unsecured creditors owed over $50 million at the time it was acquired;

(b)    following its acquisition, the Pie Face Franchise was thereafter installed into sites throughout the United Network without the consent or agreement of franchisees, described as (“Pie Face Sites”);

(c)    in operating a Pie Face Site, franchisees incurred higher costs including utility bills (due to the energy consumption requirements of ovens and freezers), additional staff, and uniform and training costs;

(d)    franchisees had stock allocated to them by United Petroleum, including Pie Face stock, that they did not order or need, described as the “Allocated Pie Face Stock” for Pie Face stock and “Allocated Retail Stock” for general retail stock;

(e)    franchisees were required to pay suppliers for the Allocated Pie Face Stock and Allocated Retail Stock;

(f)    United Petroleum and other members of the United Group obtained rebates from suppliers for ordering the Allocated Retail Stock and the Allocated Pie Face Stock;

(g)    the prices of the Allocated Retail Stock and the Allocated Pie Face Stock were set by agreement between United Petroleum and suppliers, and were set at a level so as to maximise the rebate that could be obtained by United Petroleum;

(h)    during the Relevant Period, the volume of Allocated Retail Stock and Allocated Pie Face Stock that United Petroleum required franchisees to purchase, regularly exceeded what could be reasonably sold by franchisees;

(i)    any Allocated Pie Face Stock or Allocated Retail Stock that was not sold by the expiry date was thrown away and recorded as ‘wastage’, without the franchisee being reimbursed by United Petroleum, described as the “Pie Face Wastage” and “Retail Stock Wastage”;

(j)    the Pie Face Wastage and the Retail Stock Wastage caused franchisees to suffer loss; and

(k)    United Petroleum was in a position to know the loss that was being suffered by franchisees due to the Allocated Pie Face Stock and Allocated Retail Stock by reason of point of sale information and wastage reports.

41    On the basis of those factual allegations, the principal legal claims of the plaintiffs in the Representative Proceeding can be summarised as follows:

(a)    by installing the Pie Face Franchise into Pie Face Sites without consent, United breached the Franchising Code, the Oil Code, as well as both the express and implied terms of the franchise agreements;

(b)    United engaged in misleading or deceptive conduct with respect to the Pie Face Franchise, by making representations to franchisees that:

(i)    the Pie Face Franchise was a profitable franchise prior to its acquisition by the United Group;

(ii)    Pie Face would be a profitable franchise going forward;

(iii)    there was strong market demand for Pie Face products prior to the acquisition of the Pie Face Franchise by the United Group;

(iv)    there would be strong demand for Pie Face products in the future;

(v)    the installation of the Pie Face Franchise would result in increased profits for franchisees;

(vi)    by reason of the material provided to franchisees at the commencement of their franchise, there would be no requirement for a minimum amount of inventory;

(vii)    by reason of the material provided to franchisees at the commencement of their franchise, there would be no obligation to acquire goods or services as directed by United Petroleum;

(viii)    by reason of the material provided to franchisees at the commencement of their franchise, there would not be any obligation on a franchisee to acquire goods or services from a supplier controlled by an associate of United Petroleum; and

(ix)    by reason of the material provided to franchisees at the commencement of their franchise, United Petroleum would not significantly change the nature of the franchise business; and

(c)    United Petroleum engaged in unconscionable conduct with respect to the Pie Face Franchise, by reason of the fact that:

(i)    the purpose of United Petroleum allocating the Allocated Retail Stock and Allocated Pie Face Stock to franchisees, despite the ongoing Retail Stock Wastage and Pie Face Wastage, was to maximise the amount of profit that could be gained by United Petroleum through rebates and sales;

(ii)    the effect of United Petroleum requiring Franchisees to acquire the Allocated Retail Stock and Allocated Pie Face Stock was to:

(A)    cause franchisees to incur costs for products they did not order or need;

(B)    reduce the cash flow available to franchisees;

(C)    reduce the revenue available to franchisees;

(D)    reduce the profit available to franchisees; and

(E)    to shift the cost of the overheads and business risk associated with the sale of Allocated Retail Stock and Allocated Pie Face Stock from United Petroleum to franchisees;

(iii)    United Petroleum was aware of these matters but continued to require franchisees to acquire the Allocated Pie Face Stock and Allocated Retail Stock;

(iv)    the effect of requiring franchisees to acquire the Allocated Retail Stock and Allocated Pie Face Stock was to provide United Petroleum and the United Group with a revenue stream benefitting United Petroleum at the expense of franchisees, and;

(v)    United Petroleum conducted the business of the United Network in a manner that prioritised increasing the profit to be obtained by United Petroleum and the United Group, including from the Pie Face Franchise, to the disregard of the legitimate interests of franchisees.

42    United alleged that Mr Silver was involved in the contraventions of the Australian Consumer Law by United Petroleum.

legal principles

43    The relevant legal principles to a stay application were not in dispute between the parties. I adopt the parties’ summary of those principles.

44    A leading authority in this area is Sterling Pharmaceuticals Pty Ltd v The Boots Company (Australia) Pty Ltd (1992) 34 FCR 287 (Sterling Pharmaceuticals). Lockhart J observed at 290 – 291:

The court has a general power to control its own proceedings, and that power extends to enable it to order a temporary stay of proceedings in various circumstances including the case where proceedings are pending in another court and it is desirable that those proceedings should proceed to their conclusion first: see L Grollo Danvin Management Pty Ltd v Victor Plaster Products Pty Ltd (1978) 33 FLR 170 at 177; Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 at 351-354, per Bowen CJ; Muller v Fencott (1981) 53 FLR 184 at 189, per Toohey J; Bond Corporation Ply Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193 at 203, per French J.

45    Lockhart J held at 291, that the following considerations apply to such a case:

    which proceeding was commenced first;

    whether the termination of one proceeding is likely to have a material effect on the other;

    the public interest;

    the undesirability of two courts competing to see which of them determines common facts first;

    consideration of circumstances relating to witnesses;

    whether work done on pleadings, particulars, discovery, interrogatories and preparation might be wasted;

    how far advanced the proceedings are in each court;

    the law should strive against permitting multiplicity of proceedings in relation to similar issues;

    generally balancing the advantages and disadvantages to each party; and

    the undesirability of substantial waste of time and effort if it becomes a common practice to bring actions in two courts involving substantially the same issues;

46    Sterling Pharmaceuticals was cited with approval in Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Oswal [2011] FCA 424 (Burrup) at [9] – [10] per McKerracher J, and was approved in Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCAFC 117; 85 ACSR 531 at [29] per Mansfield and Foster JJ (with whom Dowsett J agreed).

47    In Burrup, McKerracher J cited the observations of Dixon J in Union Steamship Co of New Zealand Ltd v The Caradale (1937) 56 CLR 277, who observed at 281:

[t]he inconvenience and embarrassment of allowing two independent actions involving the same question of liability to proceed contemporaneously in different courts needs no elaboration.

48    In Apotex Pty Ltd v Les Laboratoires Servier (No 6) [2012] FCA 745 (Apotex) at [8]-[10], Bennett J identified five key guidelines in assessing whether a stay ought be granted:

(a)    prima facie a plaintiff is entitled to have their action tried in the ordinary course of the procedure and business of the Court (citing Rochfort v John Fairfax & Sons Ltd [1972] 1 NSWLR 16 (Rochfort));

(b)    it is a grave matter to interfere with this entitlement by a stay of proceedings, which requires justification of proper grounds: Rochfort at [19]

(c)    the burden is on the defendant in a civil action to show that it is just and convenient that the plaintiff's ordinary rights should be interfered with (Jefferson Ltd v Bhetcha [1979] 2 All ER 1108 (Jefferson) at [1113];

(d)    the Court’s task involves “the balancing of justice between the parties”, taking account of all relevant factors: Jefferson at [1113]; and

(e)    each case must be judged on its own merits, and it would be wrong and undesirable to attempt to define in the abstract what are the relevant factors: Jefferson at [1113].

49    In Apotex at [16], her Honour also noted that the issue of whether different jurisdictions were involved should be taken into consideration (citing Hughes Motor Services Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 at 351–353, per Bowen CJ).

50    In Clorox Australia Pty Ltd v International Consolidated Business Pty Ltd (2005) 66 IPR 506 (Clorox), Sundberg J observed at [5] that “to obtain a stay, an applicant must show that the interest of justice would be best served by its grant”. In that case, a later filed proceeding was stayed pending the outcome of the first filed proceeding, which is the opposite to the case now before this Court.

51    In Clorox, Sundberg J found that a stay was in the interests of justice. This was because the actions involved the same parties, the same subject matter and success of the first proceeding, would mean that the applicant claimed all the same relief as sought in the second proceeding.

52    In FA Faulding & Co Ltd v Bristol-Myers Squibb Co (1997) 40 IPR 511 (Faulding), a factor militating against the grant of a stay was the potential for the other proceeding to be weighed down in interlocutory disputes and delays due to other cases in the docket. Heerey J declined the grant of a stay in circumstances that amounted to “indefinite postponement of the trial to await hypothetical litigation”. His Honour further noted (at 512) that “someone who brings a legitimate, genuinely arguable claim to the court is entitled to have that claim heard as soon as the court can conveniently arrange it, consistently with the demands of other litigants”.

53    In Shaw v Official Trustee in Bankruptcy of the Australian Financial Security Authority [2022] FCA 775, Cheeseman J cited Burrup and Apotex, and held at [24] – [25]:

In exercising the available discretion, each case turns on its own facts. As Bennett J observed in Apotex (at [16]), little direct assistance is gained from analysing other cases, save than to observe that some general principles apply when two proceedings form the basis for an application for a stay of one of them, including the right of an applicant to have its proceedings determined. The burden is on the applicant contending for the stay to show that it is just and convenient to interfere with the other party’s ordinary rights. The Court will look to the factors that, generally, balance the advantages and disadvantages to each party and to the Court. A stay will be appropriate where there are two separate proceedings between the same parties with related subject matter and where the hearing of one of the proceedings may dispose of the need for the second. Another factor which is relevant for the Court to consider in exercising the discretion to temporarily stay one proceeding until another is determined is the risk of inconsistent findings in the two proceedings in respect of related or overlapping subject matter. The Court may exercise its discretion where the interests of justice would be served by a stay of the proceedings: Clorox Australia Pty Ltd v International Consolidated Business Pty Ltd [2005] FCA 1135; 66 IPR 506, 507 to 508 at [5] (Sundberg J).

The overarching purpose of the civil practice and procedure provisions in s 37M of the FCA Act must also be borne in mind. While the authorities concerning the exercise of the Court’s discretion to stay proceedings have generally focussed on s 23 of the FCA Act, s 37M is also relevant. In exercising its discretion, the Court will consider the efficiency and costs implications involved in the duplication of proceedings, including with respect to the efficient use of the administrative resources available to the Court: Porter at [30]; Apotex at [8] to [10].

consideration

Overlap of Issues

54    The Amended Concise Statement in the Istanikzai Proceeding summarised above, discloses that the claims made by United against Mr Istanikzai for breach of the franchise agreement and breach of equitable obligations of confidence in relation to confidential information, have nothing in common with the issues that arise for the determination in the Representative Proceeding. The only claim in which there is an overlap of issues is in respect of the misrepresentation claim alleged in paragraph [21] which is in the following terms:

21.    The email sent by Istanikzai represented that:

(a)    none of United’s franchisees and commission agents can afford to operate their sites while paying award wages because of United’s business model; and

(b)     most of United’s franchisees and commission agents are hardly covering their daily costs.

(Istanikzai Representations)

55    I am not satisfied, on the evidence filed by Mr Istanikzai on this application that refuting the Istanikzai Representations will require the examination of the same financial accounts and records as would appear to be relevant in the Representative Proceeding to establish whether the incorporation of the Pie Face Sites resulted in franchisees suffering loss and damage. I observe that the Istanikzai Representations make no reference to the Pie Face Sites. Furthermore, the Representative Proceeding has issues which are not part of the Istanikzai Proceeding such as allegations of franchisees incurring higher costs after the incorporation of the Pie Face Sites in the form of utility bills, additional staff and training costs. The Representative Proceeding has allegations concerning the allocation of Pie Face stock and general retail stock which are not present in the Istanikzai Proceeding. The Representative Proceeding also has allegations of losses suffered by franchisees as a result of wastage which form no part of the allegations made in the Istanikzai Proceeding.

56    In the Bhatti Proceeding, it is alleged by the respondents that the ABC Representations overlapped with the Representative Proceeding. I am not satisfied, on the evidence relied upon by the respondents, that there is likely to be any material overlap in the evidence put on to refute the ABC Representations. The ABC Representations make no reference to the incorporation of the Pie Face Sites.

57    I am not persuaded that there is a sufficient overlap in the evidence that would be put on in the Istanikzai Proceeding and the Bhatti Proceeding which is likely to be put on in the Representative Proceeding to warrant granting a stay of these proceedings. For this reason, I do not accept the submission that the Representative Proceeding is a better vehicle in which to examine issues relevant to the Istanikzai Proceeding and the Bhatti Proceeding.

58    The determination of the Representative Proceeding will not determine the issues in dispute in the Istanikzai Proceeding and the Bhatti Proceeding. There is no public interest to be served in staying the proceedings in this Court pending the hearing and determination of the Representative Proceeding.

Identity of Parties

59    The second applicant in the proceedings in this Court is not a party to the Supreme Court Proceeding.

Status and Timing of Proceedings

60    The Istanikzai Proceeding was commenced on 13 September 2021. The Bhatti Proceeding was commenced on 29 November 2021.

61    The Representative Proceeding is still in its infancy. The Representative Proceeding was listed for initial case management conference before Justice Nichols on 16 December 2022. That initial case management conference was vacated by orders made by Justice Nichols on 15 December 2022 as United had foreshadowed making interlocutory applications in the Representative Proceeding to:

(a)    strike out parts of the plaintiff’s statement of claim;

(b)    delist the proceeding pursuant to s 133L and/or 33M of the Civil Procedure Act 2010 (Vic); and/or

(c)    transfer the proceeding to the Federal Court to be heard and determined at the same time or subsequently to these proceedings in the Federal Court;

(d)    apply for security for costs.

62    On 15 December 2022, Justice Nichols made orders in the Representative Proceeding by consent (among other things) that:

(a)    United must file and serve any strike out and/or transfer applications and security for costs together with supporting affidavits and submissions by 17 February 2023;

(b)    the plaintiffs must file any response together with affidavit evidence and submissions by 17 March 2023;

(c)    the defendants must file any affidavits or submissions in reply by 31 March 2023;

(d)    the proceeding be listed for a further case management hearing on a date to be fixed;

(e)    the defendants are not required to file and serve a defence until these interlocutory applications have been heard and determined.

63    If United proceeds with the foreshadowed interlocutory applications, it would appear likely that the Representative Proceeding will not proceed beyond the filing of an initial statement of claim until about the middle of 2023.

64    In contrast, the Istanikzai Proceeding and the Bhatti Proceeding are further advanced.

65    In the Bhattti Proceeding, the pleadings have closed. In the Istanikzai Proceeding, the applicants have foreshadowed a further amendment to the Concise Statement.

66    Orders for discovery have been made in both proceedings.

67    A mediation has been attempted in both proceedings but the matters have not resolved.

68    Subject to the outstanding application to amend in the Istanikzai Proceeding, the parties are in a position to prepare and file their affidavit evidence. United has requested that I fix a date for trial.

Circumstances elating to witnesses

69    There is no evidence as to the likely number of witnesses in the Representative Proceeding or the likely duration of the trial. Counsel for the respondents, Mr May, took me to Annexure A to the affidavit of Ms Oraha, dated 21 February 2023, which shows that United operates over 250 stores throughout Australia that stock Pie Face pies. The number of potential group members and the complexities of the matters alleged in the Representative Proceeding would tend to indicate that the Representative Proceeding is likely to be a trial of substantial magnitude whereas the Istanikzai Proceeding and the Bhatti Proceeding are relatively confined on the issues raised in the Concise Statements.

70    If I were to grant the stay applications, there is a real prospect that there would be an indefinite postponement of the Istanikzai Proceeding and the Bhatti Proceeding to await the outcome of the Representative Proceeding with all the present uncertainty that that entails. In Faulding, Heerey J at 512 declined to grant a stay in circumstances that amounted to “indefinite postponement of the trial to await hypothetical litigation” and that “someone who brings a legitimate, genuinely arguable claim to the Court is entitled to have that claim heard as soon as the Court can conveniently arrange it, consistently with the demands of other litigants”.

71    In determining whether or not to grant the stay applications, the overarching purpose of civil practice and procedure contained in s 37M of the Act needs to be taken into account. I am not satisfied on the evidence filed by the respondents, that granting the stay applications will achieve the overarching purpose in s 37M of the Act to facilitate the just resolution of the Istanikzai Proceeding and the Bhatti Proceeding as quickly, inexpensively and efficiently as possible.

72    Considering each of the factors to which I have referred above, I am not satisfied that the interests of justice would be best served by granting a stay of the Istanikzai Proceeding and the Bhatti Proceeding. United is prima facie entitled to have its proceedings in this Court tried in the ordinary course of the procedure and business of the Court. It is a grave matter to interfere with this entitlement by a stay of proceedings. The respondents have not discharged the burden to show that it is just and convenient that United’s ordinary rights should be interfered with.

disposition

73    For the reasons given, the applications for stay in the Istanikzai Proceeding and the Bhatti Proceeding will be dismissed with costs.

Associate:

Dated:    2 March 2023