BB Australia v Danset (No 2) - [2018] NSWSC 1745

Supreme Court

New South Wales

Medium Neutral Citation: BB Australia v Danset (No 2) [2018] NSWSC 1745
Hearing dates: On the papers
Date of orders: 14 November 2018
Decision date: 14 November 2018
Jurisdiction: Equity - Commercial List
Before: McDougall J
Decision:
Dismiss plaintiff’s claim for its costs to be indemnified by the defendants. Order the plaintiff to pay the first, second and third defendants’ costs of the proceedings.

Catchwords: CONTRACT – whether defendants required to indemnify plaintiff for costs incurred in attempting to enforce the franchise agreement – construction of the franchise agreement and the deed of indemnity and guarantee – relevant clauses not engaged when plaintiff commences proceedings which are ultimately unsuccessful – claim dismissed.
Cases Cited: BB Australia Pty Ltd v Constanti [2017] VSC 114
BB Australia Pty Ltd v Danset Pty Ltd [2017] NSWSC 1307
BB Australia Pty Ltd v Danset Pty Ltd [2018] NSWCA 101
Precious Metals Australia Limited v Xstrata (Schweiz) A-G [2005] NSWSC 141
Category: Costs
Parties: BB Australia Pty Ltd (Plaintiff)
Danset Pty Ltd (First Defendant)
Jorge Manuel Simoes Miraldo (Second Defendant)
Maria Graca Samagaio Miraldo (Third Defendant)
Tresblue Pty Ltd (Fourth Defendant)
John Kevin Price (Fifth Defendant)
Representation:
Counsel:
P D Herzfeld (Plaintiff)
I R Pike / J S Burnett (First, Second and Third Defendants)
Solicitors:
Macpherson Kelley Lawyers (Plaintiff)
Slater and Gordon (First, Second and Third Defendants)

File Number(s): 2016/94570

Judgment

HIS HONOUR: The plaintiff (BBA) operates the “Blockbuster” franchise in Australia. The first defendant (Danset) was a franchisee of BBA from October 2002 to October 2012. It conducted the franchised business from rented premises at Bondi. The second and third defendants (Mr and Mrs Miraldo) are the principals of Danset, and guaranteed its obligations under the franchise agreement. The fourth and fifth defendants can be left to one side for present purposes.
The video rental market declined in the years leading up to 2011. Mr and Mrs Miraldo, alarmed at the decline in their business, decided to sell out. Accordingly, they sold the assets of Danset’s business to a competitor, the fourth defendant. This they did without giving any notice to BBA. There is no doubt, and Danset did not dispute, that in so acting, Danset breached the franchise agreement in a number of ways.
When BBA learned of the sale, it commenced proceedings. It sought damages, or alternatively equitable compensation or an account of profits.
I heard the dispute over five days commencing 28 August 2017, and gave judgment on 28 September 2017[1] . I found (not surprisingly) that Danset had breached the franchise agreement. However, I concluded, BBA did not prove that it had suffered any loss. I found, further, that Danset owed no fiduciary obligations to BBA, and was not a trustee of the business assets for the benefit of BBA, so that there was no basis for awarding equitable compensation. As to the claim for an account of profits, I concluded that there was no basis on which Danset should be ordered to account to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading BB Australia v Danset (No 2)

Details

AGLC: BB Australia v Danset (No 2) [2018] NSWSC 1745
Case: [2018] NSWSC 1745
Decision Date: 14 November 2018

CaseChat Overview and Summary

The defendants, BB Australia, brought proceedings against Danset seeking to enforce an indemnity agreement under a franchise agreement. The defendants alleged that the plaintiff had failed to comply with the franchise agreement, and they were seeking compensation for the costs incurred in attempting to enforce the franchise agreement. The case came before the court to determine whether the defendants were required to indemnify the plaintiff for the costs incurred in enforcing the franchise agreement. The legal issues before the court were whether the relevant clauses in the franchise agreement and the deed of indemnity and guarantee were engaged when the plaintiff commenced proceedings which were ultimately unsuccessful. The court held that the relevant clauses in the franchise agreement and the deed of indemnity and guarantee were not engaged when the plaintiff commenced proceedings which were ultimately unsuccessful. The court found that the plaintiff had not breached the franchise agreement and that the defendants were not required to indemnify the plaintiff for the costs incurred in enforcing the franchise agreement. The court dismissed the claim brought by the defendants.

The court considered the construction of the franchise agreement and the deed of indemnity and guarantee. The court found that the relevant clauses in the franchise agreement and the deed of indemnity and guarantee were not engaged when the plaintiff commenced proceedings which were ultimately unsuccessful. The court held that the plaintiff had not breached the franchise agreement and that the defendants were not required to indemnify the plaintiff for the costs incurred in enforcing the franchise agreement. The court dismissed the claim brought by the defendants. The court's reasoning was based on the interpretation of the relevant clauses in the franchise agreement and the deed of indemnity and guarantee. The court found that the relevant clauses were not engaged when the plaintiff commenced proceedings which were ultimately unsuccessful. The court held that the plaintiff had not breached the franchise agreement and that the defendants were not required to indemnify the plaintiff for the costs incurred in enforcing the franchise agreement. The claim brought by the defendants was dismissed.

Orders