Atarashii Stone Pty Ltd v Granite Transformations Pty Ltd

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

Atarashii Stone Pty Ltd v Granite Transformations Pty Ltd

Citation:

[2017] ACTSC 116

Hearing Dates:

10, 17, 19 May 2017

DecisionDate:

19 May 2017

Before:

Murrell CJ

Decision:

See [43] – [46]

Catchwords:

CIVIL LAW – JURISDICTION, PRACTICE AND PROCEDURE – Application for interlocutory injunction – termination of franchise contract by franchisor – whether serious question to be tried – whether balance of convenience favours injunctive relief

Legislation Cited:

Competition and Consumer (Industry Codes—Franchising) Regulation 2014 (Cth) sch 1 cls 6, 27

Court Procedures Rules 2006 (ACT) r 700

Cases Cited:

Australian Broadcasting Corporation v O'Neill [2006] HCA 46; 227 CLR 57

Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; 118 CLR 618

Willis Australia Group Services Pty Ltd v Griggs [2012] NSWSC 659; 222 IR 172

Parties:

Atarashii Stone Pty Ltd (Plaintiff)

Granite Transformations Pty Ltd (Defendant)

Representation:

Counsel

Mr P Walker SC and Mr B Buckland (Plaintiff)

Mr D Mahendra (Defendant)

Solicitors

Trinity Law (Plaintiff)

Gilberts Legal (Defendant)

File Number:

SC 138 of 2017

MURRELL CJ:

Background

1. This is an application by a franchisee for interlocutory injunctive relief against a franchisor who has purported to terminate the franchise agreement.

1. The defendant has the exclusive Australian distribution rights to a granite benchtop product used in kitchen renovations.  It operates a franchise system.  In late 2016, the defendant sold to the plaintiff a successful Canberra franchise that operated from premises in Gladstone Street, Fyshwick.  The licence agreement (the contract) is contained in the affidavit of Ms Malone, who is the sole director of the plaintiff. The contract contained a force majeure provision (cl 27). The transaction was completed on 12 December 2016.  

1. Subsequently, in mid to late December 2016, there was a fire at the premises adjoining those occupied by the plaintiff’s business.  The fire caused damage to the plaintiff’s premises.  At about the same time, tools and equipment were stolen from the plaintiff’s premises.

1. Since the outset, the plaintiff’s franchise business has been relatively unproductive. The plaintiff says that this is largely because of the fire, the break-in, and the associated insurance claims.

1. Between January and March 2017, the defendant received a number of customer complaints. In early 2017, the plaintiff dismissed experienced staff who had transferred from the former business to the plaintiff’s business.  On 10 February 2017, Mr D’Addio was dismissed.  He had acted as project coordinator for the plaintiff’s business and its predecessors.  The shedding of experienced staff, particularly Mr D’Addio, and the receipt of customer complaints caused the defendant to become concerned.  The defendant had difficulty contacting the plaintiff.  The defendant sought information and documents from the plaintiff, but these were not provided.

1. On 28 March 2017, the defendant issued a breach notice requiring the plaintiff to take specified action within 30 days.

1. On 1 May 2017, the defendant purported to terminate the franchise agreement on grounds set out in the March breach notice and subsequent correspondence dated 19…