Cold Rock Management Pty Ltd v Pickering Miles Services Pty Ltd

[2012] VCC 1610

IN THE COUNTY COURT OF VICTORIA Revised
(Not) Restricted

AT MELBOURNE

COMMERCIAL LIST
GENERAL DIVISION

Case No. CI-11-01911

COLD ROCK MANAGEMENT PTY LTD	Plaintiff
v.
PICKERING MILES SERVICES PTY LTD & ORS	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	19 October 2012
DATE OF JUDGMENT:	19 October 2012 (revised 22 October 2012)
CASE MAY BE CITED AS:	Cold Rock Management Pty Ltd v Pickering Miles Services Pty Ltd & Ors
MEDIUM NEUTRAL CITATION:	[2012] VCC 1610

REASONS FOR JUDGMENT

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Catchwords:            Assessment of damages – Franchise agreement – Guarantee of franchisee’s obligations – Outstanding fees and contributions – Deduction for amounts becoming due in the future – Calculation of interest.    

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D. Hancock	ComLaw Barristers & Solicitors
For the Second Defendant	Mr T. Pickering in person (via videolink)

HIS HONOUR:

1Judgment was entered by default against the second defendant Mr Pickering on 18 April 2012 when he failed to file an appearance. Today, I have conducted a hearing to assess the damages to which the plaintiff is entitled. Mr Pickering was unable to attend court, but has participated in the proceeding by telephone connected to the court video system.

2The plaintiff’s claim is for marketing contributions and service fees payable by a franchisee, and by the guarantors of the franchisee’s obligations, including Mr Pickering. The term of the franchise agreement was to run for a period of ten years until 30 June 2016. The plaintiff’s claim therefore includes a claim for the fees and contributions for a period well into the future. I consider that these fees and contributions are recoverable.

3Mr Pickering made submissions that the plaintiff should have done more when it became apparent the franchisee would not continue to operate the business. These are matters of defence. The defendant, if it wishes to raise the specific plea that the plaintiff has not properly mitigated its loss, bears the onus of establishing that issue. It was said that Mr Pickering’s partner, Mr Miles, conducted the business of the franchisee in a way which prejudiced Mr Pickering’s interests and, more relevantly in the present proceeding, that the plaintiff did not do enough to ensure that Mr Pickering’s interests were safeguarded.

4Further, Mr Pickering submitted that when the franchisee abandoned the business premises, the plaintiff should have itself taken over the business (as it was entitled to do) and continue to conduct the business. Whilst Mr Pickering has made submissions in relation to these matters, there is insufficient evidence for me to conclude that the plaintiff should be disentitled to the claims it makes. However, some allowance should be made for the fact that part of the plaintiff’s claim relates to monies which would have been payable at dates in the future. There is approximately 3.75 years of the agreement to run. In those circumstances, it is appropriate that a multiplier of 184 should be applied to the weekly sum that would have become due pursuant to the agreement, for the remainder of its period of operation.

5The total claim is $127,353.86. The portion of the claim which is applicable to the future period is $87,000, being the period from today until 30 June 2016. Applying the multiplier of 184 to the weekly sum that was payable, results in a total of $83,375.

6To that sum must be added the fees owing in respect of the past period of $40,336, making a total of $123,711. Interest must also be added pursuant to the agreement on the sums which have become due at regular intervals since 2 February 2011. The appropriate interest rate is 12.65%, being 2% in addition to the current overdraft rate of 10.65%. It is appropriate to only allow interest in respect of half the period from the date the first payment was due in February 2011 until today to take account of the different dates the fees and contributions became due. The interest calculation is $915.31.

7The plaintiff is entitled to recover $124,626.31. From this sum must be deducted the amount recovered by the plaintiff from the third defendant, Mr Miles, of $33,000. The plaintiff is entitled to judgment against Mr Pickering in the sum of $91,626.31.

8Accordingly, there will be judgment for the plaintiff against the second defendant that the second defendant pay to the plaintiff the sum of $91,626.31. I will further order that the second defendant pay the costs of the assessment of damages, including any reserved costs and the cost of the hearing today, to be taxed on a solicitor and client basis in default of agreement.

9I was asked to make an order for indemnity costs. The agreement between the parties refers to “solicitor and own client costs”. The plaintiff submitted that such costs were equivalent to indemnity costs. However, because of the different language used, I consider it appropriate to exercise my discretion in favour of the second defendant and order the costs to be taxed on the less onerous scale.

10The judgment debt against the second defendant will carry interest from the date of judgment pursuant to section 73(4) of the County Court Act 1958 (Vic). I will grant a stay in respect of the judgment and the costs order until 19 November 2012.

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Certificate

I certify that these 2 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 19 October 2012, revised on 22 October 2012.

Dated: 22 October 2012

Philippa Gilkes

Associate to His Honour Judge Anderson