Bakers Delight v New South Wales

SYDNEY - In November 2005 my husband and I commended proceedings against Bakers Delight Holdings Limited in the Industrial Relations Court of New South Wales using the 'Unfair Contracts' provision.

Our case is a good example of the lengths that a franchisor will go to to drag out proceedings; objecting to, and appealing, every possible technicality along the way. 

For three and a half years the games have continued.

This latest judgement, by the Supreme Court of Appeal, now clears the way for our case to be heard.

Bakers Delight Holdings Limited v Industrial Court of New South Wales [2009] NSWCA 126

Bakers Delight Holdings Pty Limited (Franchisor) v Industrial Court of New South Wales, Illawarra Breads Pty Ltd, South Coast Bakeries Pty Limited (in liquidation), South Coast Breads Pty Limited (in liquidation), Deanna Donna De Leeuw, Mark Andrew Massie.

Judgement 02 June 2009

Details:

Franchisor: Bakers Delight Holdings Pty Limited; and

Franchisee: Illawarra Breads Pty Ltd, South Coast Bakeries Pty Limited (in liquidation), South Coast Breads Pty Limited (in liquidation), Deanna Donna De Leeuw, Mark Andrew Massie.

Facts: Ms de Leeuw and Mr Massie were the shareholders and directors of Illawarra Breads Pty Limited, South Coast Bakeries Pty Limited and South Coast Breads Pty Limited.

Ms de Leeuw conducted bakeries, pursuant to franchise and license agreements with Bakers Delight Holdings Limited. Bakers Delight terminated each franchise and license agreement.

In November 2005, the former franchisees and their companies instituted proceedings against Bakers Delight under s 106 of the Industrial Relations Act 1996 (Unfair Contracts) in the Industrial Court of New South Wales. In May 2006, they amended their Summons, which is now known as the Amended Summons.  

By Notice of Motion of 7 May 2007, Bakers Delight challenged the Industrial Court’s jurisdiction to hear the case. In response, by Notice of Motion of 2 August 2007, Ms de Leeuw, Mr Massie and their companies sought leave to amend the Amended Summons in the form of a Further Amended Summons.

Bakers Delight objected to the Amended Summons being Further Amended on two grounds.  

1. The amendment was barred by s 108B (1) of the Act which states that an application for relief for a contract that has been terminated must not be made later than 12 months after termination of the contract; and 

2. That the amendment was “futile”, because it did not overcome the jurisdictional objections which Bakers Delight was bringing on to get the case knocked out of the Industrial Relations Court.

In September 2007, the Full Bench of the Industrial Court found in the former franchisees favour and granted leave to amend.

Action brought on under the New South Wales Court of Appeal:

In response to the Full Bench decision in the Industrial Relations Court, Bakers Delight has invoked the supervisory jurisdiction of the New South Wales Court of Appeal.  

Bakers Delight seeks orders from the Court of Appeal to prevent the Industrial Relations Court decision to allow the Further Amendment of the Amended Summons. Bakers Delight also seeks to prohibit any further conduct of proceedings, even under the Amended Summons due to their jurisdiction objections. 

Franchisor Alleges: In this Appeal the franchisor, Bakers Delight Holdings Ltd challenges the Full Bench decision to allow the amendment, and seeks to stop any further running of the case due to their jurisdiction objections.

The Judge’s findings in the Court of Appeal:

The appeal brought on by Bakers Delight was dismissed.

Result: The Full Bench dismissed Bakers Delight’s Appeal and awarded costs to the franchisee. The Industrial Relations Court decision, and the Further Amended Summons, is allowed to stand.

The matter will now return to the Industrial Relations Commission where a timeline for discovery will be agreed and the date for trial will be set.