Gabjet Pty Ltd v Funk Franchise Pty Ltd

Gabjet Pty Ltd and Jetgab Pty Ltd brought claims against Funk Franchise Pty Ltd and other associated entities (the respondents) for misleading and deceptive conduct under the Australian Consumer Law, as well as claims under the Franchising Code of Conduct. Gabjet sought damages for its purchase of a franchise from the respondents which it claimed was of no value. Jetgab sought damages for the seizure of its plant and equipment by the respondents after it purchased a different franchise. The respondents counterclaimed for unpaid rent. The primary issues for the court to determine were whether the respondents engaged in misleading or deceptive conduct, whether the applicants suffered loss as a result, and whether certain individuals were knowingly involved in the alleged breaches. The court found that Funk Franchise Pty Ltd misled Gabjet regarding the circumstances of a previous franchisee's termination, which induced Gabjet to purchase the franchise. Funk Franchise Pty Ltd and its associated entities were found to have engaged in misleading conduct regarding the financial viability of the Waymouth Street franchise, though Jetgab was not induced by this conduct. The individuals connected to the respondents were found to have been knowingly involved in the breaches. Gabjet was awarded damages for its purchase of the Victoria Square franchise, while Jetgab was awarded recompense for its seized plant and equipment. The respondents were awarded costs on their counterclaims.

The court ordered that Gabjet be awarded damages for its loss in purchasing the Victoria Square franchise, less the written down value of the plant and equipment and fixtures. The respondents were ordered to pay costs on their counterclaims. The court also ordered that Jetgab be recompensed for the value of its seized plant and equipment, fixtures and fittings, and that Funk Coffee and Food Pty Ltd be awarded costs on its counterclaim. The court will hear further submissions regarding the final calculation of damages, interest and costs.