BB Australia Pty Ltd v Danset Pty Ltd

BB Australia Pty Ltd (the franchisor) and Danset Pty Ltd (the franchisee) were parties to a franchise agreement. The dispute arose when the franchisee sold the business assets to a third party without the franchisor's knowledge, thereby denying the franchisor the opportunity to exercise an option to purchase those assets under the franchise agreement. The franchisor alleged it suffered loss as a result. The matter was heard in the Court of Appeal.

The Court of Appeal was required to determine whether the franchisor had suffered a loss due to the franchisee's actions, and if so, the quantum of that loss. Specifically, the court considered whether the resultant loss was equal to the difference between the price paid by the third party and the price stipulated in the option to purchase. Furthermore, the court had to consider claims relating to deceit and fraud by the franchisee, and whether the third party had been induced to breach the contract. The court also had to determine if the assets were held on trust for the franchisor, or if the franchisor had an equitable interest in the business assets, which would form a basis for an award of an account of profits or equitable compensation. Finally, the court considered whether certain claims reserved by the trial judge for future consideration should be determined by the Court of Appeal.

The Court of Appeal found that no such difference in price, as alleged by the franchisor, had been proven. The court also determined that no trust was established and no fiduciary duty was shown, meaning there was no basis for an award of an account of profits or equitable compensation. The court concluded that the franchisor had not established that it suffered a loss. Consequently, the appeal and cross-appeal were dismissed.

The orders of the Court of Appeal were that the appeal be dismissed, the cross-appeal be dismissed, and that BB Australia Pty Ltd pay the costs of all other parties to the proceedings in the Court of Appeal.