Clifton, J. v Mincourt Pty Ltd

[1991] FCA 802

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IN THE F E D E W COURT OF AUSTRALIA	)	NO. QG 10 of 1991
DUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	1

BETWEEN: JOHN CLIFTON AND DOROTHY AMANDA CLIFTON

AND ROBERT ARTHUR WOOD AND MAJORIE SOPHIA
WOOD AND CHRISTOPHER ROBIN READ AND
MADELINE CLARE READ AND CARL EDWARD

STEPHAN AND HEATHER MAUREEN STEPHAN

Applicants

AND: MINCOURT PTY. LTD. (IN LIOUIDATION)

First Respondent

AND: ALLEN JOHN LEVER

Second Respondent

AND: MICHAEL BOYLE

Third Respondent

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J
DATE OF ORDER:	12 DECEMBER 1991
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.   Judgment be entered for John Clifton and Dorothy Amanda Clifton in the amount of $60,530.55 against the third respondent.

NOTE:	Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.

2.   Judgment be entered for Robert Arthur Wood and Majorie Sophia Wood in the amount of $80,226.61 against the second respondent.

3.   Judgment be entered for Christopher Robin Read and Madeline Clare Read in the amount of $65,189.68 against the third respondent.

4.   Judgment be entered for Car1 Edward Stephan and Heather Maureen Stephan in the amount of $79,408.63 against the second respondent.

IN THE FEDERAL COURT OF AUSTRALIA	1	No. QG 10 of 1 9 9 1
DUEENSLAND DISTRICT REGISTRY	1
GENERAL DIVISION	1

BETWEEN: JOHN CLIFTON AND DOROTHY AMANDA CLIFTON AND ROBERT ARTHUR WOOD AND MAJORIE SOPHIA WOOD AND CHRISTOPHER ROBIN READ AND MADELINE CLARE READ AND CARL EDWARD STEPHAN AND HEATHER MAUREEN STEPHAN

Applicants

AND: MINCOURT PTY. LTD. (IN LIOUIDATION)

First Respondent

AND: ALLEN JOHN LEVER

Second Respondent

AND: MICHAEL BOYLE

Third Respondent

0 PINCUS J.

PLACE: BRISBANE

W:  12 DECEMBER 1 9 9 1

REASONS FOR JUDGMENT

This is an assessment of damages against the second and third respondents made pursuant to an order of the Court of 24 June 1 9 9 1 . Each of the applicants sues on allegations of having been damaged as a result of entering into a franchise agreement with the first respondent. It is

convenient to deal with each group of applicants separately.

Clif ton

John Clifton and Dorothy Amanda Clifton ("the Cliftons") are entitled under the order to an assessment of damages in respect of misleading statements made by the third reepondent on behalf of the first respondent, which induced them to enter into a franchising arrangement. Their evidence is that they paid $ 3 0 , 0 0 0 as a franchise fee, agreed to pay sums totalling nearly $40,000 for a van and incurred other expenses. Although neither the application nor the pleading specifically says so, it appears that the claim can be allowed against the third respondent only, not the second respondent. I do not propose to set out the evidence relating to each item in these claims, but shall mention only those which require some discussion.

As to the franchise fee, the evidence seems to me sufficient to justify a finding, which I make, that the Cliftons got nothing of value for that payment. There are two other large items in the Cliftons' claim. One is a sum said to have been over-charged for equipment bought - i.e. the difference between the value of the equipment and the amount paid; this is $16,241.35 and appears to me to be recoverable. The other is a sum of $19,950, described as "payments on loans for franchise fee for van payments". After I queried the basis of that claim and discussion took place about it, it was ultimately abandoned. The items allowed therefore are as

follows : 

Deposit on franchise fee

Corporate Affairs fees

Corporate Affairs fees
Balance franchise fee

Application fee on loan

Overcharging for van & equipment	16,241.35
Losses for the first four (4) months of the business
Reconnection of telephone
Changing signs on the van
Business Lands Register
Refinancing application fees
Advertising new telephone number in Yellow Pages

The Cliftons also claim interest under s.51A of the Federal Court of Australia Act 1976, which gives a prima facie right to interest on the whole or part of the sum for which judgment is given for the whole or part of the period between the date of the cause of action and the date of judgment - or a lump sum in lieu. Mr. Douglas, for the Cliftons, submitted that an appropriate date at which to start the interest running is March 1990, and I accept that. Interest will be allowed on the sum of $50,267.70 at the rate of 12% per annum from 31 March 1990 up to today, i.e. up to 12 December 1991.

The total judgment in favour of the Cliftons against the third respondent is therefore the sum of $60,530.55.

Robert Arthur Wood and Majorie Sophia Wood ("the

Woods") make a claim of a similar kind to that just dealt with. The Woods also allege that they entered into a franchise agreement on the basis of misleading conduct - this time on the part of the second respondent. The damages they have proved are as follows:

Deposit on franchise fee Balance of franchise fee Losses for eight (8) months

Loss on sale of van

Again, I am prepared to allow interest and therefore the judgment in favour of the Woods against the second respondent will be in the sum of $80,226.61.

Read

The allegations made by Christopher Robin Read and Madeline Clare Read ( "the Reads") are based upon

representations made by the third respondent of the same general character as those relating to the Cliftons. On the Reads' evidence, they are entitled to damages as follows:

Deposit on franchise fee

Balance of franchise fee

Loan application fees and stamp duty
Security stamp duty fee
Bank charges
Bank charges
Deposit on gas bottles
Commissioner of Corporate Affairs
Insurance premiums
Operation losses eleven months

Over-priced van

With interest, therefore, the judgment in favour of the Reads against the third respondent will be in the sum of $65,189.68.

Ste~han

The claim by Car1 Edward Stephan and Heather Maureen Stephan ("the Stephans") is based upon representations made by the second respondent and is as follows:

Deposit on franchise fee	$ 3,000.00
Balance of franchise fee	27,000.00
Losses for the first five (5) months
of operation of business	5,180.77
Loss on forced sale of property	10,000.00
Commission on sale of property	3,450.00
Loss on forced sale of van and
equipment	27,314.26
Interest payments on van prior to
its sale by the hire purchase company	12,500.00

Of these items, it emerged during the course of the hearing that there was no sufficient evidence to support the claim for loss on forced sale of property or the claim for interest payments on the van (the last item).

Allowing, again, interest under s.51A of the Federal Court of Australia Act from 31 March 1990 and making the adjustments I have mentioned, judgment will be given in favour of the Stephans against the second respondent in the sum of

I certify that this and the five preceding pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Pincus.

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Associate