New South Wales
Court of Appeal
CITATION: BB Australia Pty Ltd v Karioi Pty Ltd [2010] NSWCA 347 HEARING DATE(S): 16 and 17 September 2010
JUDGMENT DATE:
13 December 2010JUDGMENT OF: Giles JA at 1; Macfarlan JA at 2; Sackville AJA at 103 DECISION: The appeal is dismissed with costs. CATCHWORDS: CONTRACT - franchise agreements - whether ending of franchise relationships constituted termination of agreements - whether franchisor had right to acquire franchisee's leasehold interests for no consideration - contractual interpretation - commercial, businesslike construction - CONTRACT - restraint of trade - franchise agreements - whether restraints on franchisee and its directors constituted reasonable protection of franchisor's legitimate interests - whether contractual regime sufficiently protected any interest in confidential information and industrial property - ESTOPPEL - estoppel by convention - whether conventional estoppel arose when franchise businesses continued after conclusion of specified contractual terms - parties did not make any consistent, clearly identifiable assumption about the nature of their relationship and how it was to end LEGISLATION CITED: Restraints of Trade Act 1976 CATEGORY: Principal judgment CASES CITED: Blockbuster Pty Ltd v Karioi Pty Ltd [2009] NSWSC 1089
Bridge v Deacons [1984] 1 AC 705
Chipsaway International Ltd v Kerr [2009] EWCA Civ 320
Commissioner of Taxation of the Commonwealth of Australia v Murry [1998] HCA 42; (1998) 193 CLR 605
Dyno Rod Plc v Reeve [1999] FSR 148
EzyDVD Pty Ltd v Lahrs Investments Qld Pty Ltd [2009] QCA 389
Geraghty v Minter [1979] HCA 42; (1979) 142 CLR 177
Hanna v OAMPS Insurance Brokers Ltd (ACN 005 543 920) [2010] NSWCA 267
KA & C Smith Pty Ltd v Ward (1998) 45 NSWLR 702
Lindner v Murdock’s Garage [1950] HCA 48; (1950) 83 CLR 628
Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25
Nordenfelt v Maxim Nordenfelt Guns and Ammunition Company Ltd [1894] AC 535
Ryeldar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65; (2007) 69 NSWLR 603
Stenhouse Australia Ltd v Phillips [1974] AC 391TEXTS CITED: J D Heydon, The Restraint of Trade Doctrine, 3rd ed (2008) LexisNexis Butterworths Australia PARTIES: BB Australia Pty Ltd (Appellant)
Karioi Pty Ltd (First Respondent)
Peter Lindsay Fife (Second Respondent)
Ronald James Fortington (Third Respondent)FILE NUMBER(S): CA 2009/298475 COUNSEL: F Kunc SC/J Emmett (Appellant)
I Pike/A Shearer (Respondents)SOLICITORS: DLA Phillips Fox (Appellant)
Marque Lawyers (Respondents)LOWER COURT JURISDICTION: Supreme Court - Equity Division LOWER COURT FILE NUMBER(S): SC 4338/2008 LOWER COURT JUDICIAL OFFICER: Price J LOWER COURT DATE OF DECISION: 16 October 2009 LOWER COURT MEDIUM NEUTRAL CITATION: Blockbuster Australia Pty Ltd v Karioi Pty Ltd [2009] NSWSC 1089
CA 2009/298475
13 DECEMBER 2010GILES JA
MACFARLAN JA
SACKVILLE AJA
BB AUSTRALIA PTY LTD v KARIOI PTY LTD
Judgment
1 GILES JA: I agree with Macfarlan JA.
:
Nature of case and conclusions
3 By two Franchise Agreements dated 2 April 1998 and in substantially identical terms the appellant (“Blockbuster”) granted to the first respondent (“Karioi”) the right to conduct…
Keep reading for free
Create a free CaseChat account to read BB Australia Pty Ltd v Karioi Pty Ltd and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
Details
- Case
- [2010] NSWCA 347
- Decision Date
CaseChat Overview and Summary
BB Australia Pty Ltd (the franchisor) and Karioi Pty Ltd (the franchisee) were parties to franchise agreements. The dispute concerned whether the franchisor's actions in ending the franchise relationships constituted a termination of these agreements, and whether the franchisor was entitled to acquire the franchisee's leasehold interests without payment. The matter was heard on appeal in the Supreme Court of New South Wales, Court of Appeal.
The Court of Appeal was required to determine two primary legal issues. Firstly, it had to consider whether the ending of the franchise relationships amounted to a termination of the franchise agreements, and if so, whether this termination entitled the franchisor to acquire the franchisee's leasehold interests for no consideration. Secondly, the Court had to assess whether certain restraints of trade imposed on the franchisee and its directors were reasonable in protecting the franchisor's legitimate interests, and whether the contractual framework adequately protected the franchisor's confidential information and industrial property. The Court also considered whether an estoppel by convention arose from the parties continuing their business relationship after the expiry of specified contractual terms.
In relation to the termination and acquisition of leasehold interests, the Court applied principles of contractual interpretation, favouring a commercial and businesslike construction of the agreements. The Court found that the agreements did not grant the franchisor the right to acquire the leasehold interests for no consideration upon the ending of the franchise relationships. Regarding the restraints of trade, the Court determined that they were not reasonable in protecting the franchisor's legitimate interests, particularly as the contractual regime did not sufficiently protect confidential information and industrial property. The Court also found that no estoppel by convention arose, as the parties had not made any consistent, clearly identifiable assumption about the nature of their relationship or how it was to end.
The appeal was dismissed, and the franchisor was ordered to pay the franchisee's costs.
The Court of Appeal was required to determine two primary legal issues. Firstly, it had to consider whether the ending of the franchise relationships amounted to a termination of the franchise agreements, and if so, whether this termination entitled the franchisor to acquire the franchisee's leasehold interests for no consideration. Secondly, the Court had to assess whether certain restraints of trade imposed on the franchisee and its directors were reasonable in protecting the franchisor's legitimate interests, and whether the contractual framework adequately protected the franchisor's confidential information and industrial property. The Court also considered whether an estoppel by convention arose from the parties continuing their business relationship after the expiry of specified contractual terms.
In relation to the termination and acquisition of leasehold interests, the Court applied principles of contractual interpretation, favouring a commercial and businesslike construction of the agreements. The Court found that the agreements did not grant the franchisor the right to acquire the leasehold interests for no consideration upon the ending of the franchise relationships. Regarding the restraints of trade, the Court determined that they were not reasonable in protecting the franchisor's legitimate interests, particularly as the contractual regime did not sufficiently protect confidential information and industrial property. The Court also found that no estoppel by convention arose, as the parties had not made any consistent, clearly identifiable assumption about the nature of their relationship or how it was to end.
The appeal was dismissed, and the franchisor was ordered to pay the franchisee's costs.
Orders
Orders of the court
The appeal is dismissed with costs.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.