Instant Security Doors & Screens Pty Ltd v Trebilcock (No 2)

[2014] SADC 186

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

INSTANT SECURITY DOORS & SCREENS PTY LTD v TREBILCOCK (No 2)

[2014] SADC 186

Judgment of His Honour Judge Lovell

11 November 2014

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS

Plaintiff sought to enforce a contractual negative covenant - declaration granted - prohibitory injunction refused - plaintiff found to have been involved in misleading and deceptive conduct - rectification of initial term of Franchise Agreement granted.

Briginshaw v Briginshaw (1938) 60 CLR 336; Strong v Woolworths Ltd (2012) 246 CLR 182; Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262; Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1; Chamberlain v R (No 2) (1984) 153 CLR 521; Watson v Foxman (1995) 49 NSWLR 315; Optus Networks Pty Ltd v Telstra Corporation Ltd (2010) 265 ALR 281; Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd [2011] FCA 1319; Deta Nominees Pty Ltd v Viscount Plastic Products Pty Ltd [1979] VR 167; Del Casale v Artedomus (Aust) Pty Ltd (2007) 73 IPR 326; Coles Supermarkets (Aust) Pty Ltd v FKP Ltd [2008] FCA 1915; Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2; Smith Kline & French Laboratories (Aust) Ltd v Secretary, Department of Community Services and Health (1990) 22 FCR 73; John Fairfax Publications Pty Ltd v Birt and Others (2006) NSWSC 995; Ice TV Pty Ltd v Ross [2009] NSWSC 980; Pet Tech Pty Ltd v Batson [2013] NSWSC 1954; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834; Spunwill Pty Ltd v BAB Pty Ltd (1994) 36 NSWLR 290; Hammond and Another v VAM Ltd [1972] 2 NSWLR 16; Council of the Upper Hunter District v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429; KA & C Smith Pty Ltd v Ward (1998) 45 NSWLR 702; Dalgety Wine Estates Pty Ltd v Rizzon (1979) 141 CLR 552; Maggbury Pty Ltd v Hafele Australia Pty Ltd 185 ALR 152; Orleans Investments Pty Ltd and Another v Mindshare Communications Ltd (2009) 254 ALR 81; ICI Operations Pty Ltd v Trade Practices Commission (1992) 110 ALR 47; Hydron Pty Ltd v Harous [2005] SASC 176; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535; Queensland Co-operative Milling Association Ltd v Pamag Pty Ltd (1973) 133 CLR 260, considered.

INSTANT SECURITY DOORS & SCREENS PTY LTD v TREBILCOCK (No 2)
[2014] SADC 186

Background material

1. Stephen and Patricia Frampton are the directors of the plaintiff company. The plaintiff was incorporated on 13 April 1999 and prior to that the Framptons ran a partnership business of fabricating and installing security doors and windows. Since 1999 the plaintiff has been engaged in the business of licensing to franchisees the business of on-the-spot manufacture and installation of security doors and window screens.

2. They originally purchased a screen door fitting truck and business for sale in 1993. I will turn to the design in more detail in due course. Suffice it to say, that in 1998 they decided to expand the business and convert their business into a franchise model. They engaged the services of Mr Newnes, a franchise developer. They also engaged a coach builder to build the new Mobile Workshop for prospective franchisees. In the end they used a Ford Transit platform and instructed Aldom to design the workshop to fit atop a 1999 model Ford Transit. When a new franchisee entered into an agreement to license the plaintiff’s ‘System’, the plaintiff either commissioned a new mobile workshop to be built by Aldom or the prospective franchisee purchased the workshop from another franchisee that was discontinuing the business.

3. Mr and Mrs Frampton developed a quote book and a work diary to fit the business model.

4. An Operations Manual was also provided, as was training for about four weeks for a new franchisee.

5. Under the Franchise Agreement all franchisees were to provide weekly and monthly sales reports in the form contained within the Operation Manual. The Agreement required franchisees to purchase and maintain a mobile telephone number which was to be placed on the side of his Mobile Workshop.

6. Weekly and monthly sales reports, enabled the franchisor to calculate franchise fees and advertising fees that were due and owing pursuant to the Agreement.

7. It was common ground that the Framptons had known Mr and Mrs Trebilcock since approximately October 1998. They originally met while holidaying in Indonesia. After that time they kept in contact on their return to Australia and became friends.[1]

   [1]    T 114.

8. The Trebilcocks lived at Willunga and the Framptons lived at Wynn Vale. It was common ground that there were reasonably regular barbeques such that the Framptons and the Trebilcocks became quite close family friends.[2]

   [2]    T 137.

9. Mr Frampton agreed that at the social functions he would, in general terms, discuss how the business was going.[3] He agreed that as a friend he would talk about the fact that the franchises were busy and that there was money to be made.[4] Mr Frampton agreed that from time to time he did suggest that the defendant could perhaps give a franchise a go if he was ever interested. I do accept his evidence that he did not pressure Mr Trebilcock to purchase a franchise.

   [3]    T 140.

   [4]    T 140.

   Credit issues

10. I heard evidence from Mr Frampton and Mr Trebilcock. They were the central witnesses in relation to the contentious issues.

11. Unfortunately, neither witness was totally creditworthy. Both were giving evidence about events that occurred over five years ago. Clearly, neither could remember precisely what transpired.

12. There was common ground between them. It is also important to understand the background and therefore the context in which a number of the meetings took place.

13. The Framptons and the Trebilcocks had become friends after meeting each other in Bali in 1998 whilst on holiday. After that time they socialised over a number of years, leading up to Mr Trebilcock purchasing a franchise. Mr Trebilcock did not suggest that he was, prior to 2009, subject to any pressure from Mr Frampton to purchase a franchise.

14. Over the years, on social occasions, Mr Frampton had mentioned that his business was successful.

15. Prior to 2008, Mr Frampton had employed a broker, Mr Newnes, to negotiate the sale of his franchises. Mr Newnes died before Mr Trebilcock made his decision to purchase the franchise.

16. Mr Frampton, prior to dealing with Mr Trebilcock over this franchise, had not dealt with any other franchisee. All the negotiations and paperwork had been handled by Mr Newnes.

17. It is against that background that I have to assess the evidence of Mr Frampton and Mr Trebilcock. For the reasons expressed later, I generally prefer the evidence of Mr Trebilcock over that of Mr Frampton. Where there is conflict between their evidence over important meetings, I prefer the evidence of Mr Trebilcock unless I state otherwise.

18. Largely this is a case of ‘oath against oath’. However, there are some documents which assist in my determination of issues. Although the demeanour of a witness has less of a role to play in assessing credibility than previously, it has played some role in my assessment. I preferred the demeanour of Mr Trebilcock on the contentious issues. I discuss those matters in more detail later in these reasons.

19. Obviously each party bears the onus of proof in relation to their respective cases. In this case, in my view, the defendant bears the onus of proof in relation to the issues where there is a credit issue between him and Mr Frampton. The burden of proof required is ‘on the balance of probabilities’.

20. As Dixon J said in Briginshaw v Briginshaw:[5]

    The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of mere mechanical comparison of probabilities independently of any belief in its reality.

    [5] (1938) 60 CLR 336, 361.

21. The onus can also be discharged by consideration of the probabilities in circumstances in which the evidence cannot establish precisely a fact in issue.[6]

    [6]    Strong v Woolworths Ltd (2012) 246 CLR 182.

22. Proof of any fact on the balance of probabilities can be established by circumstantial evidence.[7]

    [7]    Seltsam Pty Ltd v McGuiness (2000) 49 NSWLR 262.

23. A fact may be proved by inference if, according to common experience, the fact is the more probable inference from the unexplained primary facts. Certainty is never possible and is not required, and all that is necessary, is that the circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought.[8] A court should consider the ‘accumulation of all the evidence’.[9]

    [8]    Bradshaw v McEwans Pty Ltd (1951) 217 ALR 1.

    [9]    Chamberlain v R (No 2) (1984) 153 CLR 521 at 535.

24. A court may draw an inference from facts (intermediate or otherwise) even if none of them in isolation would support the inference.[10]

    [10]   Chamberlain v R (No 2) (1984) 153 CLR 521 at 536.

25. I have also had regard to the observations of McLelland CJ in Watson v Foxman[11] in relation to the difficulties that confront a party, such as Mr Trebilcock, in trying to persuade a court that a particular oral statement was uttered and that it was misleading and deceptive particularly where such a statement was made (allegedly) many years before.

    Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question, whether spoken words were misleading, may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another or absence of some word or qualifying phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often, what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.

    [11] (1995) 49 NSWLR 315, 318.

26. I remind myself that simply because I prefer the evidence of Mr Trebilcock does not mean he has discharged the burden of proof cast upon him. I must consider the evidence against the background mentioned and in the context of the objective material and logic of events. I accept that Mr Trebilcock was not a reliable witness upon all matters on which he gave evidence.

27. The evidence-in-chief was given by way of affidavit with some supplementary questions by counsel. The affidavits were prepared for the purpose of interlocutory proceedings. Not all the matters addressed in the affidavits were particularly relevant at the trial.

28. I understand the reasons in favour of such a course being adopted. However, it has led to a few peripheral matters being disputed and no other evidence being given. I do not intend to resolve such matters. I will assume that counsel have cross-examined on all issues that require resolution. Largely the other matters are simply a matter of perception and emphasis and would have no bearing on my overall findings.

29. However, it is necessary that I summarise the affidavit evidence.

    Plaintiff’s evidence

    Evidence of Stephen John Frampton

    First Affidavit

30. Mr Frampton and his wife Patricia are the directors of the plaintiff. They operated in partnership having originally purchased what they describe as the ‘System’ from vendors in 1993. They purchased the screen door fitting truck and business in 1993. Included was a 1972 Bedford truck with a Mobile Workshop bolted on to the rear of the chassis.

31. The vendors of that business had re-clad the truck with colorbond steel and whiteboard insulation. Inside the workshop mounted on the truck was a workbench, a saw bench (with a mitre saw bolted in), and various racking and storage for ancillary parts and components.

32. Mr and Mrs Frampton, over the next few years, began to modify the truck design to accommodate materials used in the fabrication process and to minimise waste. For example, they designed an external mounting system to contain door frames in their uncut specification, and a ‘roller’ system which replaced the saw bench originally in the truck. They further increased the number of storage spaces and moved those spaces to ensure that the materials required could be located in appropriate places in the workshop. There was a modification to the truck to improve airflow and protection from the weather.

33. Mr Frampton described the final design of the workshop as consisting of a workbench with a lock-press on one side, a sawing bench with rollers and a sliding ruler on the other side. He asserted that the layout was designed so that two people could work in the truck at the same time. The final design included particular locations for drills, saws, other tooling, air flow, rollers, cupboard and storage, exterior racking and lighting within the workshop. It also included particular flooring and wall-lining materials to minimise damage to the doors. Air and power lines were installed in conveniently accessible positions.

34. Mr Frampton asserted that the design and the placing of the workbench was such that the work that would ordinarily be done on it from all sides could be performed when accessing one side of the bench only. Mr Frampton asserted that all of the benches and the storage receptacles were custom-built to fit the confines of the workshop and these were fabricated by hand. This evidence was not really disputed.

35. Mr Frampton said that he and Patricia were always protective about the ‘System’ and particularly the layout of the Mobile Workshop and how they used it. To them the Mobile Workshop was the embodiment of the ‘System’ and the most easily identifiable component of it. He asserted that he and Patricia assured that all franchisees including the defendant, knew of the importance of preventing customers and lay people having access to the Mobile Workshop and therefore seeing the screen door building process as the process and workshop layout were crucial to the business.

36. In 1998 they made a decision to expand the business and adopt the franchise model. They engaged the services of Mr Newnes, a franchise developer. The process took approximately one year to complete.

37. They approached Aldom Motor Body Builders (Aust) Pty Ltd (‘Aldom’) to replicate the Mobile Workshop which would be fitted to a Ford Transit truck. As the Ford Transit vehicle was smaller than the original Bedford truck, Aldom modified the workshop layout to suit a smaller space. This meant that decisions had to be made regarding space utilisation including the location of tools, air lines, power points. This process took about eight weeks; although Aldom was ultimately able to build other mobile workshops for new franchisees in a quicker time. The cost in 2001 was $21,000.

38. In relation to franchisees generally, once Aldom handed over the workshop and truck package, the Framptons and the new franchisee would spend a few days to bring the truck to a standard where the franchisee could fulfil customer orders. This included acquiring stock and ensuring that all the tools had been installed correctly and safely.

39. In addition, Mr and Mrs Frampton developed versions of a quote book and also a work diary. The quote book and diaries were given to all franchisees upon the commencement of their franchise. They were then available as required.

    Plaintiff’s business relationship with the defendant

40. As mentioned, the Framptons got to know the defendant and his wife when they met while holidaying in Bali. They became close family friends throughout that period of time until 2013.

41. In early 2009, Mr Frampton learnt that Mr Trebilcock had lost his job and was looking for a new one. He was aware that the franchisee in the southern suburbs, Mr Fleming, was considering selling his Mobile Workshop and ending the franchise.

42. There were discussions with Mr Trebilcock about the possibility of buying Mr Fleming’s franchise including his Mobile Workshop.

43. What followed from there was a matter of some dispute. I will quote the initial affidavit of Mr Frampton.

    68In or around March 2009, the Plaintiff provided the Defendant with a Disclosure Document, as required by the Trade Practices (Industry Codes – Franchising) Regulations 1998 (Cth) (the Franchising Code of Conduct). Now shown to me and marked SJF-06 is a copy of the Disclosure Document as provided to the Defendant.

    69On 16 March 2009 the Plaintiff entered into a franchise agreement with the Defendant (the Franchise Agreement).

    70Now shown to me and marked SJF-07 is an unsigned copy of the Franchise Agreement for the South territory.

    71The franchise period is twenty years, with five rights of renewal for every five year period after the initial twenty year period. Patricia and I clearly explained this to each prospective franchisee, including the Defendant, before they entered into their respective Franchise Agreements with the Plaintiff. There has never been any doubt as to the length of the Franchise Agreement with any of our previous franchisees (my underlining).

    72Since 1999, the Plaintiff has had a total of twelve franchisees other than the Defendant. Some of these franchisees ultimately decided that they no longer wanted to be a franchisee of the Plaintiff. In these situations, the franchisee would locate a new franchisee and organise to sell his truck, stock and equipment to him. The Plaintiff would only be involved in this process to vet the prospective new franchisee, as it is entitled to under the Franchise Agreement.

44. I will discuss the importance of his evidence on these matters later in these reasons.

45. Around 16 March 2009, Mr Fleming transferred his truck and setup to Mr Trebilcock. Mr Frampton had no direct involvement in the aspect of the sale of the franchisee’s business.

46. Mr Trebilcock commenced work on 17 March 2009. Between 17 March 2009 and 17 April 2009, Mr Fleming trained Mr Trebilcock as required under clause 11.3 of the Franchise Agreement. An Operations Manual was given to Mr Trebilcock.

47. Mr Frampton said that the defendant would regularly contact him in relation to how to use the Mobile Workshop to accommodate specific customer orders. He would always provide Mr Trebilcock with help.

48. Mr Frampton stated that the Franchise Agreement required all franchisees to provide weekly and monthly sales reports in the form contained within the Operation Manual. He asserted that the defendant regularly failed to provide weekly and monthly sales reports in a timely fashion since he commenced his business in March 2009. I will come back to this topic later although there were some concessions by the defendant about that.

49. Mr Frampton asserted that approximately 48 quotes were missing from the defendant’s weekly and monthly sales reports for the period between January 2013 and April 2014. He asserted that Mr Trebilcock’s failure to provide regular sales reports has made it difficult to reliably assess the amount of the franchise service fee and advertising levy that was due and payable.

1. On 17 March 2014, the plaintiff received a letter from the defendant’s lawyer. The plaintiff was advised that the defendant was going to ‘terminate the Franchise Agreement with effect from 17 April 2014’. The defendant expressed the wish to terminate the Agreement so that he was no longer ‘an Instant Security Doors & Screens franchisee’. The defendant expressed the view that he did not wish to engage in litigation or disputation but that he simply ‘wished to sever ties with your company in an amicable manner’.

2. Not surprisingly, the plaintiff, through his solicitors, responded to that letter by letter of 8 April 2014. The plaintiff pointed out that the Franchise Agreement was for 20 years but wished to know what the defendant proposed to do after his proposed termination date of 17 April 2014. The plaintiff was ‘amenable to Mr Treblicock terminating the Franchise Agreement and selling his interest in the franchise, including his work vehicle, any materials he currently possesses, and the goodwill in his franchise’. The plaintiff further pointed out that the defendant was prohibited from competing in a business of a similar nature to that conducted by the plaintiff located within 10 kilometres of the territory for two years after termination of the Franchise Agreement.

3. The defendant responded by letter of 14 April 2014. He did not respond to the question regarding his intentions after 17 April 2014.

4. Subsequently, discussions were held between the parties in an attempt to resolve the issues but settlement was not reached and proceedings were issued.

5. By letter of 6 June 2014, the plaintiff terminated the Franchise Agreement forthwith on the basis that the defendant had ‘voluntarily abandoned the franchise relationship as of 17 April 2014’. The plaintiff exercised its right to immediately terminate the Agreement pursuant to clause 22.6.3.

6. The events surrounding the termination of the Agreement by the plaintiff were not disputed by the defendant.

7. Interlocutory court proceedings were taken and various orders were made by judges of this Court for the purpose of the interlocutory proceedings.

   Second Affidavit

8. I have read and considered this affidavit. It relates to issues relevant to the interlocutory proceedings.

   Third Affidavit

9. This was filed in response to the First Affidavit of Mr Trebilcock. The issues between Mr Frampton and Mr Trebilcock started to become more focussed.

10. In response to the suggestion of representations as to the length of the Franchise Agreement, Mr Frampton denied telling Mr Trebilcock that it would be for five years with five rights of renewal for five years.

11. He stated:

    10... On the occasions that the question of the length of the franchise arose in conversation between me and the Defendant, I always said that the franchise period was for 20 years, with five further rights of renewal for five years.

    11All but one of the other franchisees that the Plaintiff has ever had and currently has have all entered into 20 year franchise agreements, including Tony, the person from whom the Defendant bought his franchise (my underlining). The only exception to this is Scott, the Plaintiff’s newest franchisee, who entered into a 25-year agreement on his own request.

12. Again this part of his evidence is discussed later. It was shown to be incorrect. Mr Frampton disputed a number of the more peripheral matters raised in Mr Trebilcock’s First Affidavit. As mentioned previously, a number of these were of little consequence.

13. Mr Frampton stated that he had numerous problems with Mr Trebilcock’s sales reports throughout the entire term of his franchise. He alleged that the defendant did not provide all ‘numbers, names of customers or sufficient other details for which he could properly scrutinise the value of the jobs done’. It later transpired that Mr Frampton’s scepticism about the weekly and monthly sales reports of Mr Trebilcock was well founded.

14. Mr Frampton agreed that there was a meeting whereby the question of the use of the Yellow Pages was discussed with the franchisees.

15. Mr Frampton agreed that there are now other on-site security door manufacturing and fitting businesses operating in Adelaide. He alleged at paragraph 30 of this affidavit that the Mobile Workshop designs between the plaintiff, Down South and On Site were very different, contrary to Mr Trebilcock’s assertion. He asserted that they own considerably larger trucks; they are harder to drive and harder to place near customer locations. He stated that the small size of the plaintiff’s Mobile Workshop was one of the unique benefits of the plaintiff’s ‘System’.

    Fourth Affidavit

16. This affidavit deals with the development of the Mobile Workshop design. It was not disputed by Mr Trebilcock.

17. Significant features of the final design as stated by Mr Frampton included:

    15.1The right-hand side bench had been removed and replaced with removable rollers which can be inserted and moved depending on how large a frame is being cut, and removed completely in the event that the user needs more floor space to manoeuvre him/herself around the left-hand side bench. The design as depicted at SJF-31 left the user with only ~60cm of space between both benches to move around. Now, with the rollers removed, the user has ~1 metre of space to move. This is particularly important if two people are in the workshop, or where a particularly wide/long door is being built. It also brought great benefits from a safety perspective in case the user needed to quickly leave the workshop or move out of the way;

    15.2We had installed a sliding ruler next to the roller bench, which could be moved to suit different starting and end points for taking measurements (particularly important as the roller bench is now entirely modular);

    15.3We had moved all air lines and power lines, and air and power tools, to areas around the roller bench and left-hand side bench so they would be most readily accessible when required at different stages of the process to fabricate a security door;

    15.4We had developed a modular storage depository setup in the Luton top area which meant that the entire space could be used for storage, or some storage depositories could be removed for access to the ventilation flap;

    15.5We made more efficient use of the over-head space for storage of frames and mesh, by installing extra workshop-length storage racks at the top of both sides of the workshop and extra shelving in the Luton top (while not obstructing access to the Luton ventilation flap); and

    15.6We modified the doors on the rear of the workshop with an adjustable gas-lift strut, such that the doors could either be used as shade/protection and if needed, to shield the Mobile Workshop from overly interested people to keep the workshop design private, or opened completely for access.

18. Mr Frampton stated that, due to limited space available within the workshop, space efficiency was very important and that the work spaces were designed with that in mind.

19. Photographs were exhibited to his affidavit showing parts of the Mobile Workshop of a truck owned by Mr Wayne Reid. I had the opportunity to view the truck and workshop of Mr Reid.

20. The affidavit also refers to a number of inspections Mr Frampton made of trucks that may be suitable for the Mobile Workshop. He disputed that the On-Site trucks were the same design as his.

21. In relation to the contract terms, Mr Frampton stated as follows:

    61In response to the matters raised by the Defendant in his Second Affidavit sworn on 23 June 2014, I say the following:

    61.1  I have always verily believed that each of the Plaintiff’s franchisees had a 20 year contract term.

    61.2  Stephen Newnes was our franchise agent who had dealt with all of the Franchise Agreements. He had previously informed me that each franchisee had entered into a 20 year contract and I always verily believed this to be the case.

    61.3  On a review of the franchise agreements entered into between Geoff Harvey, Scott Butler and Tony Fleming, I can now confirm that their franchise agreements all contain a 5 year period in their respective First Schedules.

    61.4  However, I have always verily believed that the Defendant’s Franchise Agreement was to run for a period of 20 years. Patricia and I never considered a 20 year contract to be a burden to a franchisee because the mechanism in clause 21 allows a franchisee to sell his franchise to a new franchisee, which would deliver a better financial outcome for the franchisee than if they were to cease being a franchisee, and be left with a truck and Mobile workshop design that they were not allowed to use. This clause had been invoked by previous franchisees who wanted or needed to quit the franchise, including Tony Fleming, who sold his franchise to the Defendant after a marriage breakdown and left his franchise without any further obligations to the Plaintiff.

    61.5  I specifically remember having one conversation with the Defendant in or around February 2009, which took place at his house, where we discussed the 20 year term. I remember that this conversation took place just after the Defendant had mentioned that he needed stability in his employment.

22. In relation to the Disclosure Document Mr Frampton said:

    87On or around February 2009, when the Defendant and I were discussing him buying Tony’s Ford Transit and entering into the Franchise Agreement, I provided the Defedant with a copy of the Disclosure Document exhibited at SJF-6.

    88Patricia and I orally told the Defendant about the history of the other franchisees who had ended their franchise relationship with the Plaintiff, and explained why each of them had on-sold their franchises to new franchisees.

    89The Disclosure Document did contain a statement that in my and Pat’s opinion, we believed the Plaintiff would be able to pay its debts as and when they fell due. The Plaintiff has always paid its debts as and when they fell due for the entire period of the Defendant’s franchise until our termination on 5 June 2014, and currently.

    90The Disclosure Document did not include an account of the Advertising Fund expenses for the 2007/2008 financial year.

    91The Disclosure Document was not signed.

    92The Disclosure Document did not contain financial statements as required by clause 20.2 of the Disclosure Document.

23. In relation to the advertising account, Mr Frampton stated that he had always run the account professionally and transparently. This was in answer to Mr Trebilcock complaining about the way that it was run. He asserted that the defendant repeatedly paid his advertising fees late, and to avoid going into overdraft as a result of late payments, Mr and Mrs Frampton occasionally topped up the accounts from their own funds. He noted that the defendant had never asked for the advertising account to be audited. He had never complained about how the advertising account was run until the proceedings commenced.

24. Regarding the meeting convened in approximately October 2012 in relation to the advertising and marketing direction, Mr Frampton stated:

    84At every meeting at which we discussed Yellow Pages and Messenger advertising, a majority of franchisees agreed that we should continue with our original strategy which focused on these two forms of advertising. Patricia, me and all of the franchisees agreed that Yellow Pages and the Messenger were our most successful sources of advertising.

    85The only changes to this strategy were as follows:

    85.1  to decrease the size of the Yellow Pages advertisement, to allow for a bigger proportion of the Yellow Pages spend to be spent on online listings instead – this is reflected in the minutes of the 10 May 2013 meeting in SJF-47; and

    85.2  to reduce the frequency of the Messenger ads placed in all of the franchisees’ territories from weekly to fortnightly, while the advertising account remained low or in overdraft (advertising fee revenues were down, as the franchisees were quieter during winter months, and some of the franchisees had still not paid up their advertising fees). This was again agreed to by all franchisees except for the Defendant, who later agreed to pay extra to retain weekly advertising in the South territory only, constituting extra spend on advertising in an area that only benefited him.

    Fifth Affidavit

25. This affidavit relates to what Mr Frampton described as undeclared jobs. Whilst this was relevant to an extent at the trial, it was more relevant to the interlocutory proceedings. Mr Frampton alleged that Mr Trebilcock was doing work in contravention of the orders made by his Honour Judge Slattery during the course of the interlocutory proceedings. The parties have agreed to postpone the issue of underpayment of franchise and advertising fees.

26. Mr Frampton added to his affidavits with some evidence-in-chief.

27. Mr Frampton said he believed he got a phone call from Mr Trebilcock after Christmas in January 2009. He was told that a job offer had fallen through and he wanted to talk to him about the franchise. He remembered no further discussion about the Trebilcock’s going to Queensland.

28. Mr Frampton gave evidence regarding the licence. He agreed there was no document describing the licence.

29. Mr Frampton agreed that he and his wife did not have a formal meeting for the grant of the licence. However, the purpose for the incorporation of the company was to allow them to set up the franchise and they had also received advice from their accounting firm. He and his wife had never run a franchise ‘System’ prior to the company being set up. What he intended was what was described in Recital A of the Franchise Agreement. This evidence was not challenged and I accept it. I reject the submissions of the defendant regarding the granting of a licence.

30. Mr Frampton recognised Exhibit P5 as a copy of the Franchise Agreement between Instant Security and Mr Trebilcock. He was able to identify the initials of Mr Trebilcock. He agreed that the common seal was most likely not affixed at the time Mr Trebilcock initialled and signed the document. He thought it would have been done afterwards. He witnessed Mr Trebilcock’s signature.

31. Mr Frampton thought that a Franchise Agreement was signed when they were at Mr Trebilcock’s house. He thought the date of the Agreement was 16 March 2009. He thought that Mrs Trebilcock was home at that time.

32. Mr Frampton believed that there was general discussion at the time the document was signed. This included things such as viewing the truck and getting on with the job. Mr Frampton conceded that the meeting was a long time ago and he could not be specific.

33. He recalled there being some discussion about Mr Trebilcock’s ability to do the job as he had always been a white collar worker. He thought Mrs Trebilcock had mentioned that. Mr Frampton believed he could do it and he had faith that with training he could perform the job.

34. Mr Frampton elaborated on how the purchase of the franchise came about. He said that Mr Trebilcock had wanted to join the company. He was, at that point, unemployed and Mr Frampton facilitated the sale of a franchise from a franchisee who was trying to sell. He had told Mr Trebilcock that once he got started there would be a training period and that Mr Frampton would back him up for at least a four week period and that he would always be supported with any problems. Training would have involved setting the accounts up and learning how to buy the materials.

    Signing of Documents

35. Mr Frampton was asked whether Mr Trebilcock looked at the Franchise Agreement when he was present. His answer was ‘I would say so, yes. I would hope so. Yes. Well, yes.’ When asked whether Mr Trebilcock looked at it before he placed his initials on it and signed it, he said he could not recall that.

36. Mr Frampton could only say that he believed that Mr Trebilcock had looked at the document before he initialled it and signed it.

37. He then went on to say that Mr Trebilock sat down at the kitchen table and read through the Agreement and that it took him five or 10 minutes.[12]

    [12]   T 106.

38. Mr Frampton took the original document home and then photocopied it. He was unable to now locate the original.

39. He described that they had a ‘shelving collapse’ a couple of years ago and a number of documents were disposed of.[13] He said it was not something he would throw away on purpose but they can’t find it.

    [13]   T 107.

40. Mr Frampton said he believed he gave Mr Trebilcock a photocopy of the original Agreement at a meeting in Mile End a few weeks after it had been signed.

41. In relation to the Disclosure Document, Mr Frampton agreed that there was a meeting at the coffee shop at Castle Plaza. He also agreed that the signature appeared to be that of Mr Trebilcock’s and was dated 25 February 2009. He agreed that that was signed at the coffee shop at Castle Plaza.[14] He was taken to the Disclosure Document that was exhibit ‘SJF-06’ to his First Affidavit. The third page of that document has the date of Disclosure Statement as 10 March 2009.

    [14]   T 160.

42. Initially Mr Framptons evidence about the meeting was:

    QDid he read it when he was in front of you.

    AI can’t say, yes, I’d say – we sat for a while, we were there for a good hour or so.

    QSo, you think he did read it in front of you.

    AYes.

    QHow long did that take for him to read it.

    A15-20 minutes I suppose.

    QDid he ask many questions arising out of the disclosure statement.

    ANo.

    QDid he make any statements to you after he’d looked at the disclosure statement.

    ANo.

    QDid he mark the disclosure statement.

    ANo.

    QWhat did he do with it then, having looked at it.

    AHe looked at it, he would have signed it if he wanted to go ahead with the franchise. I would have taken it away and got it photocopied.

    QThat answer says he would have signed it, I’m confused now. Did he sign the disclosure statement in front of you or not.

    AYes.

    QHe did.

    AYes.

    QWhat part of the disclosure statement did you see him sign. Which is to ask you whether he signed all of it or only part of it.

    AHe would have signed all of it, I wouldn’t have let him sign just part of it.

    QDo you have an actual memory of watching him sign it.

    ANo.[15]

    [15]  T 109

43. It was clear that Mr Frampton really had no recollection of what happened at that meeting. Indeed his evidence in chief in relation to the signing of the Disclosure Document and the Franchise Agreement demonstrated that he really had little or no recollection of the events.

    Trebilcock’s business

44. Generally Mr Trebilcock would tell him that he was always busy.[16] He did not say within the last two years of the franchise that his trade had fallen off.[17]

    [16]   T 117.

    [17]   T 117.

45. Mr Frampton said that at the franchise meetings, Mr Trebilcock would express opinions relating to ‘getting into the electronic age more’.[18] He wanted to introduce iPads as a means of diarising his work. Mr Trebilcock also expressed a desire to use social media as a form of advertising. Mr Frampton felt that this was a dangerous medium to be in and he told Mr Trebilcock that.[19]

    [18]   T 118.

    [19]   T 118.

46. Eventually, there was a decision not to use social media, although Mr Trebilcock did start up his own Facebook page, unknown to Mr Frampton.[20] Mr Frampton denied ever saying that ‘Pat and I make all the final decisions’. He did say that he would have said something along the lines of ‘somebody has to make the final decision and being as we’re the franchisor, it is us’. Little turns on the difference.

    [20]   T 119.

47. Mr Frampton was also asked questions about the truck owned by Mr Maynard. For the purpose of this evidence, he had a photograph of Mr Maynard’s truck which was exhibited to Mr Trebilcock’s affidavit. He also had to hand photographs[21] of the interior of the workshop owned by Mr Wayne Reid.

    [21]   Fifth Affidavit of Stephen John Frampton (exhibits ‘SJF-33’-‘SJF-37’).

1. Mr Frampton described the differences between the two trucks as being one of ‘physical size for starters’.[22] He mentioned that he had a free standing modular type bench. I do not intend to go through all of the differences. They are set out in the transcript.[23]

   [22]   T 125.

   [23]   T 126.

   Cross-examination of Mr Frampton

2. Mr Frampton said he did not have a diary that recorded all of his appointments in 2009.[24]

   [24]   T 130.

3. Mr Frampton conceded that, on at least one occasion, he had been present during the business sale contract agreement being signed between a franchisee selling his business to another.

4. Mr Frampton agreed that about 90 per cent of the work done by franchisees is for domestic premises. Therefore there is not much follow-up work from that although, of course, there could be referral work. He agreed that the truck itself with its badge and signs and its telephone number is another way that franchisees can pick-up the work. He agreed that a good source of advertising for them was the Messenger newspaper. He was still not persuaded that the Yellow Pages was necessarily a bad form of advertising.[25]

   [25]   T 136.

5. Mr Frampton agreed that he used a person by the name of Steven Newnes from Franchising Network to assist in setting up the ‘System’.

6. He would advertise for a prospective purchaser and then interview the person. If they were deemed suitable from the interview, Mr Newnes would handle the paperwork. Mr Newnes delivered all necessary documents to the potential franchisees including the Disclosure Statements.[26]

   [26]   T 138.

7. Mr Frampton agreed that he would talk to Mr Trebilcock over the years about how his business was going. This would only be in general conversation.[27] He agreed that, in a friendly way, he may well have asked Mr Trebilcock to consider purchasing a franchise.[28]

   [27]   T 140.

   [28]   T 140.

8. Mr Frampton agreed that there may have been an evening in November 2008 where the question of Mr Trebilcock’s employment in Queensland was discussed. However, he denied that that was when he first raised the opportunity with Mr Fleming’s franchise. He believed that at that time Mr Trebilcock was going to Queensland, so in November 2008, the franchise was not of any interest to him.[29]

   [29]   T 143.

9. Mr Frampton remembered getting a phone call from Mr Trebilcock, he believed in early 2009, asking whether the franchise was still available. At that stage they were ‘fending off work’.[30] He did not remember Mr Trebilcock asking him what the cost of the business may be. As far as he was concerned Mr Fleming would do that. He saw his job as only putting Mr Trebilcock and Mr Fleming in touch with each other. He conceded that Mr Trebilcock may well have asked a number of questions such as the territory, the type of truck and things of that nature.

   [30]   T 144.

10. It was put to Mr Frampton that one of the questions Mr Trebilcock asked was, the period of time for the initial term of the Agreement. He denied the suggestion that he told Mr Trebilcock it was five years. He did agree that in Mr Fleming’s Franchise Agreement the initial term was five years.

11. Mr Frampton agreed that the term of the Franchise Agreement between himself and Mr Trebilcock had nothing to do with Mr Fleming.

12. Mr Frampton was cross-examined about paragraph 71 in his First Affidavit. I have set out those passages earlier in these reasons. His statements are not correct and he later acknowledged that.

13. The only explanation Mr Frampton could give was that he was mistaken.[31]

    [31]   T 150.

14. Mr Frampton said that by 2009, Mr Newnes was no longer dealing with the Franchise Agreements as he was deceased.

15. At the time he swore the affidavit he had 12 franchisees. Only one of them had a 20 year term. He said that that clouded his thought process.[32]

    [32]   T 153.

16. He agreed that negotiating the Franchise Agreement with Mr Trebilcock was the first one that he had done since Mr Newnes had passed away.[33] Mr Frampton refused to concede that he may have been mistaken in relation to the discussions he had with Mr Trebilcock about the length of the term. [34]

    [33]   T 153.

    [34]   T 155.

17. Mr Frampton agreed that he was kept informed about when Mr Fleming and Mr Trebilcock had reached an agreement on the terms. He agreed that was around 16 March 2009.[35] He agreed he did not sign him up to any ‘kind of confidentiality document’.[36] He agreed he didn’t do that because he was a friend.

    [35]   T 158.

    [36]   T 158.

18. I have already dealt with Mr Frampton’s evidence in chief about the signing of documents.

19. The topic of the execution of the Disclosure Statement was taken up in cross-examination. It was suggested to Mr Frampton that the front part of the document did not come into existence until 10 March 2009, some two weeks after 25 February 2009. That is the front part of the document that contained the date 10/3/09 had not been created when Mr Trebilcock signed the back pages of the document on 25 February 2009. Mr Frampton was unable to explain the difference. It was suggested to Mr Frampton that he only took the four back pages of the document to the Castle Plaza and got him to sign it. He denied that and he denied saying to Mr Trebilcock that it was just a formality.

20. The original Disclosure Document with Mr Trebilcock’s signature attached to it was tendered through him and marked Exhibit P2.

21. Mr Frampton did not agree that he failed to give Mr Trebilcock a copy of the Franchising Code of Conduct at the coffee shop. He believed he did.[37] It was also suggested to him that he did not give him a copy of the Franchise Agreement at the coffee shop on 25 February 2009.[38] He said ‘I believe that it was all there with the paperwork for him to sign and he initialled the pages that he had’. It was suggested to him that his evidence was false to his own knowledge.[39] Mr Frampton denied that he had a motive to induce Mr Trebilcock into the franchise. Although he was losing on franchise fees and advertising fees he had six other franchises that were working. He said that he had no motive at all other than we needed a franchise and Richard needed a job.

    [37]   T 165.

    [38]   T 166.

    [39]   T 167.

22. Mr Frampton eventually agreed that he probably did not leave a copy of the franchising code with Mr Trebilcock.[40] He also agreed that Mr Trebilcock did not leave with a copy of the Franchise Agreement. The final position of Mr Frampton is markedly different to his initial position.

    [40]   T 169.

23. For reasons discussed later I do not accept his evidence on this point. It was clear to me that Mr Frampton has little or no memory at all of what occurred at the coffee shop meeting. His evidence was exposed as simply a reconstruction and a version of what he would have liked, in hindsight, to have happened.

24. Mr Frampton’s evidence became a little more confused when he said that he had later sent a Disclosure Statement to Mr Trebilcock. Mr Frampton later said that he had given Mr Trebilcock a Disclosure Statement sometime after the meeting at the coffee shop but before emailing a copy of it, at Mr Trebilcock’s request, to him in 2013.[41] He thought that might have been a meeting in a coffee shop in Mile End but he could not say that one hundred per cent.[42]

    [41]   T 171.

    [42]   T 171.

25. Mr Frampton agreed that this meeting was not in any of his affidavits.

26. In relation to the original document he described how his shelving collapsed and it took him days to clear up. He just said that there was a lot of material that he just wanted to get rid of. They had a general clear out of the paperwork and he can only assume the document may have been part of it.[43]

    [43]   T 173.

27. Mr Frampton was cross-examined about the change in his evidence. He had originally said that the purpose of the coffee shop meeting at Mile End was a reference to a handing over of the signed Franchise Agreement. He later changed that to say he had handed over documents including the Disclosure Document and the code.[44] He agreed it seemed to be quite different. He stated that he was working on memory ‘of five years ago’.

    [44]   T 176.

28. While I accept that as a general explanation, his evidence remained inconsistent. Mr Frampton had a tendency, where reconstructing, to do so with an account that supported his case. Under cross examination that tendency was exposed.

29. Other topics in cross examination related to issues of ‘confidentiality’. Given my findings I do not need to make specific findings in relation to that particular issue. However the evidence was not an unimportant part of the background.

30. Mr Frampton agreed that the issue of training Mr Trebilcock was left entirely to Mr Fleming for the first four weeks. He knew that Mr Fleming would be showing Mr Trebilock how to use the truck. That included the equipment.

31. Mr Frampton was cross-examined about the Operations Manual, in particular he was cross-examined about the secrecy and confidentiality provisions of the document.[45] (The point of these questions was to show that there is a cloak of secrecy over the manual but there is nothing to the effect that the contents or the configuration of the truck were secret and confidential.)

    Accounting issues

    [45]   T 180.

32. The parties as mentioned have agreed to postpone the accounting issue. However the issues raised were important in relation to credit findings.

33. Mr Frampton was cross-examined about the advertising summary as from 1 July 2009 to 30 June 2010 and for the following years.[46]

    [46]   Fourth Affidavit of Stephen John Frampton (exhibit SJF-47).

34. Mr Frampton agreed that in relation to the advertising summary to the end of 30 June 2012 that there had been a drop in the order of about 20 per cent. There was a further drop the following year. Mr Hoile pointed him to the increase in the Yellow Pages (census). He further pointed out that their Messenger advertising had gone down.

35. Mr Frampton agreed that Mr Trebilcock was not the only franchisee who was late paying his advertising levy.

36. In relation to the meeting of the franchisees regarding the advertising, Mr Frampton agreed that Mr Trebilcock raised the fact that the Messenger advertising was more effective than the Yellow Pages. Mr Frampton agreed with parts of the conversation but not others. Not much turns on the difference.

37. In particular, Mr Frampton denied that he threatened Mr Trebilcock with sending him a bill for $10,000 ‘for income derived from what you have been doing in the unpurchased areas’. He stated that the $10,000 was going to be the cost for the territory.

38. There was generally common ground about these issues. There were differences of emphasis which in the end do not affect my findings.

39. In relation to the advertising and franchise fees evidence generally, I found Mr Frampton to be a satisfactory witness.

40. Mr Hoile suggested to Mr Frampton that he had never told Mr Trebilcock he should not let people look in the back of the truck for reasons relating to the preserving of secrets that were in there. Mr Frampton did not agree with that.[47]

    [47]   T 195.

41. Mr Frampton disagreed that the truck had not changed much since he purchased it in 1994. He said that he and his wife spent a lot of time changing things in the truck so they could build more efficiently.[48] He was cross-examined about paragraph 19 in his affidavit where he described the modifications. There was a modification to the roller but it was suggested to him that what he really did was ‘just some tidying up’.[49] Mr Frampton disagreed with that. He accepted they put extra storage in the truck but disagreed that that’s all they had done.

    [48]   T 198.

    [49]   T 200.

42. It was suggested that at the time the Franchise Agreement was signed by Mr Trebilcock, his wife was not present. Mr Frampton did not agree.

43. Mr Frampton disagreed that when the Franchise Agreement was signed that Mrs Trebilcock was not there.[50] He professed to remember the words ‘that she said to him when he was looking at the franchise’.

    [50]   T 203.

44. Mr Frampton did not agree that the annual statements relating to advertising were a cause of complaint by Mr Trebilcock.[51] Mr Frampton agreed that they had not been audited but there were no complaints from Mr Trebilcock about that.

    Re-examination

    [51]   T 206.

45. Mr Frampton said that he first dealt with Mr Newnes around the start of 1998. The franchise was organised by 1999. It took Mr Newnes about a year to organise things. Before the Franchise Agreement with Mr Trebilcock he had about seven or eight franchisees which had been engaged by Mr Newnes. He allowed Mr Newnes to do the negotiations for those agreements. He may have been in attendance but they had different roles. His role was to go through how the business ran and have them sign a secrecy document before they were shown the truck. Although Mr Newnes drew the contracts for the seven or eight franchisees, he did sign them in each case.

46. In re-examination Mr Frampton stated that before his first discussion with Mr Trebilcock about his Franchise Agreement he was not familiar with the concept of renewals of Franchise Agreements.[52] While the topic is one of ‘renewals’ rather than the initial term this concession is in stark contrast to his bold assertion in his First Affidavit about discussions with potential franchisees about the term of the contract.

    [52]   T 209.

47. Mr Frampton conceded that he was not present when Mr Newnes had discussed rights of renewals with potential franchisees.

48. He said that when he swore his First Affidavit the discussions with Mr Newnes and the franchisees when he was there did not ‘come to his mind’.[53]

    [53]   T 209.

49. In relation to the question of the provision of the Disclosure Document bearing the date 10 March, he said that the exhibit to his affidavit came from his computer.[54] He was unable to say whether there was more than one version of the Disclosure Document on the computer. He proffered an explanation that the document in some way may have been ‘updated’ when he looked at it for the last time.[55] He stated it was possible the document was an updated version of an earlier one.[56] He was unable to actually say though whether the one exhibited was an update as opposed to the original one.

    [54]   T 215.

    [55]   T 216.

    [56]   T 216.

50. Mr Frampton said that he had not appreciated the difference in dates until Mr Hoile had asked him questions about it.[57]

    [57]   T 218.

51. Mr Frampton agreed that Mr Newnes was dealing with the disclosure of statements prior to the arrangement with Mr Trebilcock. Mr Trebilcock was the first time he had to deal with it.[58]

    [58]   T 220.

52. Mr Frampton said that when Mr Newnes died they did not have any franchises coming up at that stage. When Mr Trebilcock’s came up they received information from Mr Newnes’ wife to put on the computer. None of the matters raised in re-examination explained the difference in the dates.

    Evidence of Patricia Margaret Frampton

53. Mrs Frampton’s affidavit of 28 July 2014 was admitted as her evidence-in-chief. In paragraph 10 she agreed with her husband’s affidavit in various paragraphs. Interestingly enough, she did not adopt paragraph 71 or 72 of his affidavit regarding the initial term of the franchise period being 20 years. This is despite the confident assertion by Mr Frampton in his First Affidavit that his wife was always present when the term of 20 years was discussed.

54. I note that by 28 July 2014, when this affidavit was signed, the issue of the length of time of the Franchise Agreement had been ventilated in the defendant’s affidavits.

55. Mrs Frampton confirmed Mr Frampton’s evidence that they had worked hard in modifying the original Mobile Workshop design that they had purchased.

56. Not surprisingly, she confirmed that proper record keeping was essential for accounting, tax and warranty purposes. She pointed out that a franchisee’s work diaries were the only means by which the plaintiff could verify that a franchisee was honestly reporting the jobs in his weekly and monthly sales reports. She stated that Mr Trebilcock almost never submitted his weekly and monthly sales reports on time, nor would he pay the advertising levies and franchise service fees in a timely manner.

57. She was able to identify 26 messages in total to the defendant between 31 October 2010 and April 2014 which raised the issue of him failing to make payments and provide the necessary sales reports.

58. Mrs Frampton was able to identify a document given by the defendant on 8 March 2014 which was not recorded in the weekly sales reports for 14 March 2014. I accept her evidence about that.

59. Mrs Frampton confirmed in her evidence-in-chief that as far as she was concerned there was no falling out of her friendship with Melodee Trebilcock.

60. During the course of the franchise she would deal regularly with Mr Trebilcock and he was always friendly and that did not seem to change throughout the time of the franchise.[59] At no time was she told that there was a down-turn in work during the franchise period.

    [59]   T 226.

61. She confirmed that he was often late with his advertising levy. He wasn’t the only one but he was the worst one.[60]

    [60]   T 229.

62. Mrs Frampton also had to remind him to complete his franchise weekly report. There was also the difficulty from her perspective because of his attitude to paperwork for her to marry the yellow copy quotes with the weekly reports. That made it difficult for them to check what work the franchisee had actually done. That affected of course the franchise fee entitlement and the advertising levy entitlement.

63. Mrs Frampton was not cross-examined.

    Evidence of Darryl Wayne Reid

64. Mr Reid is currently a franchisee of the plaintiff company. He confirmed that he had purchased the workshop and two franchise territories (north and north-east) for about $50,000. He knew Mr Trebilcock as another franchisee.

65. He confirmed that in all the discussions he had with both Mr and Mrs Frampton he was told that he should not disclose how the workshop operated. Mr Frampton had told him not to let people into the Mobile Workshop both for safety reasons and to keep the design a secret.

66. Mr Reid said that he had regular telephone contact with Mr Trebilcock. They would regularly discuss how the respective franchise businesses were going. Mr Trebilcock told him in March 2014 that he was going to leave the franchise and set up by himself in competition.

67. The franchise meetings occurred approximately once every six months.[61]

    [61]   T 237.

68. He confirmed that Mr Trebilcock may have mentioned at the last franchise meeting that there had been ‘a downturn in his business.’[62]

    [62]   T 238.

69. This was something they all talked about as, ‘Things were not as good as they had been due to the economy’.[63] He also confirmed that Mr Trebilcock had complained occasionally about having insufficient work.

    [63]   T 238.

70. Mr Reid confirmed that there was a meeting where there was a difference of opinion. He would not call it a ‘blow-up’.[64]

    [64]   T 239.

71. He remembered a discussion about the advertising, which in fact was discussed at every meeting.[65] He remembered a discussion between Mr Trebilcock and Mr Frampton about money being spent on the Yellow Pages rather than the Messenger. He was prepared to concede that this may have been a ‘forceful’ discussion.[66]

    Defence evidence

    [65]   T 241.

    [66]   T 241.

    Evidence of Richard Leon Trebilcock

    First Affidavit

72. As with the evidence of the plaintiff, the defendant’s affidavits used in the interlocutory proceedings were tendered as evidence-in-chief and supplemented with oral evidence.

73. Mr Trebilcock basically confirmed the evidence of Mr Frampton relating to how he became interested in the franchise. Mr Trebilcock confirmed that initially he was not particularly interested in the franchise, but after taking time out after leaving his employment, he thought he would find out more about the business. He said that in about January 2009, he contacted Mr Frampton asking for more information. He was informed that the current franchisee, Mr Fleming, was not currently operating the business and that Mr Frampton wanted someone to take it over as soon as possible.

1. Mr Trebilcock and Mr Frampton went to a yard in Lonsdale and spent some time looking through the truck including the Mobile Workshop on the back.

2. Mr Frampton gave him Mr Fleming’s details. He subsequently met with Mr Fleming and a sale price for the business was negotiated. The sale price was $60,000.

3. Mr Frampton had informed Mr Trebilcock that if he wanted to buy Mr Fleming’s business, once a sale had been negotiated, he would be required to enter into the Franchise Agreement. Mr Trebilcock stated that during one of the conversations, Mr Frampton informed him that the term of the franchise was for five years with further options to renew the franchise which would give him the possibility of holding the entire franchise for 20 years if all options were exercised.

4. Mr Trebilcock denied Mr Frampton’s statement in paragraph 71 of his First Affidavit that Mr Frampton and Patricia clearly explained to him that the franchise period was for 20 years with five rights of renewal for every five year period after the initial 20 years. Further, Mr Trebilcock said that he had no discussions with Mrs Frampton about this topic.

5. On Wednesday 25 February 2009, Mr Trebilcock arranged a meeting with Mr Frampton at a coffee shop in the Castle Plaza Shopping Centre at Melrose Park.

6. As I have done with Mr Frampton, I will set out this part of his initial affidavit in full. He said as follows:

   3.12... At that time Stephen showed me the Disclosure Document, a copy of which is exhibited to the First Frampton Affidavit and marked “SJF-06” (“the Disclosure Document”). At the end of the meeting Stephen took the Disclosure Document from me and told me that it was his only copy and that he would copy it and provide another copy to me. He did not give me the Disclosure Document again before I signed the franchise agreement, and the next time I saw the Disclosure Document was after I asked Stephen for a copy of it in 2013.

   3.13At the time of the meeting on 25 February 2009, to the best of my recollection, Stephen did not provide me with any other documentation. In particular, Stephen did not provide me with a copy of the proposed franchise agreement nor did he provide me with a copy of the Franchising Code of Conduct.

   3.14I subsequently signed the franchise agreement, a copy of which is exhibited to the First Frampton Affidavit and marked “SJF-07” (“the franchise agreement”). I cannot now recall the date on which I signed the franchise agreement but Stephen had brought the document to my house and I signed it in his presence at my home at that time. I had not previously seen the franchise agreement. Because of our acquaintance and friendship of more than 10 years, I completely trusted Stephen and had no reason whatsoever to suspect that the franchise agreement was for a term that was different from that which Stephen had told me it was, namely 5 years with options allowing for a total of 20 years.

7. Mr Trebilcock later went on to say that the first time he became aware that the Franchise Agreement stated that the initial term was for 20 years, was in March 2013 when he had sought advice regarding issues relating to leaving the franchise business. He sought advice from the solicitors Grope Hamilton.

8. Mr Trebilcock commenced operating the business on Monday, 16 March 2009. Mr Fleming provided him training for about a month. This involved how to operate the business including marketing, providing quotations, filling out paperwork in addition to the operation of the tools and the making and installing of security screen doors. He was not told by Mr Fleming that there was any degree of secrecy or confidentiality about the processes used to manufacture the doors.

9. Mr Trebilcock agreed that he was provided with an Operations Manual. He stated that it was never updated.

10. In relation to the work, Mr Trebilcock said that all of the jobs that he completed could have been carried out in a workshop in a factory and brought on site. All the doors, hinged and sliding security doors were made to Australian standards using the same materials and the same processes.

11. He believes that there are three separate businesses operating in South Australia, apart from the plaintiff and its franchisees that manufacture and install security doors and screens with mobile workshops. To his knowledge they were:

    1.     On Site Security Doors;

    2.     Down South Security Doors and Screens;

    3.Cobra Onsite Doors, which operates in the Murray Bridge and Murraylands area.

12. Over the period of five years that he operated the business he made a number of modifications to enable him to more efficiently carryout his tasks. These included:

    1.     Introducing air drills;

    2.     Installing a vacuum induction system for the drop saw;

    3.Bringing in new tools consisting of a puller, which was an air tool, an 18 volt impact driver cordless, Bosch electrical multi tool, electric shears, electric dremel, Bosch laser measurer and a 10 volt cordless impact driver;

    4.Removal of three quarters of the original storage system and a new storage system put in its place;

    5.Bringing in a separate metal tool box with sliding retractable doors;

    6.Introducing different aluminium track work for sliding door applications and rubber seals for fly screens and fly screen doors;

    7.Replacing the existing air compressor, with a large belt driven air compressor;

    8.Installing a reversing camera including an audible warning device;

    9.Fitting the bottom tail gate with a shock absorber.

13. Mr Trebilcock stated that Mr Frampton, in the first few years when he operated the franchise, would carry out price comparisons for the major suppliers. Mr Trebilcock said that Mr Frampton stopped doing this and therefore he directly negotiated rates with suppliers and communicated this to other franchisees.

14. He further alleged that the plaintiff operated the marketing fund into which he was required to contribute six per cent of his gross takings. Mr Trebilcock complained that during the course of the Franchise Agreement, the plaintiff had not at any stage provided him with properly audited financial statements of the advertising and marketing fund as required by clause 11.15 of the Franchise Agreement. He further stated that he had become increasingly concerned about the management of the business by the plaintiff. He said there were no meetings of franchisees from the date on which he started until November 2012 when a meeting was convened at his urging. At this meeting he queried the plaintiff’s marketing strategy. Of significant concern was that too much money was being spent on the Yellow Pages and some of the franchisees considered it to be a poor use of the money. Certainly, Mr Trebilcock expressed the view that he wanted more advertising in the local Messenger newspaper.

15. The plaintiff did not change the way the money was spent on marketing and advertising.

16. Mr Trebilcock said that from about September 2012 onwards, he noticed a reduction in the number of leads provided by the plaintiff to him. He thought that coincided with the reduction in the advertising and marketing spent by the plaintiff. At that time he had a belief that the Franchise Agreement was of only five years duration and he decided to terminate the Agreement. He alleged that Mr Frampton had become unapproachable about matters relating to the business. As a result, he instructed his solicitor to send the letter giving notice of his intention to terminate the Agreement. He ceased operating as a franchisee on 17 April 2014. He returned the Operations Manual and paid all fees that were due to the plaintiff at that time and submitted all relevant reports. At that stage he removed the plaintiff’s brand signage from the truck.

17. He acknowledged that his present intention was to operate his own business of manufacturing and installing security screen doors using the Mobile Workshop which he owns. As of 20 June 2014 (the date of the affidavit), he stated he had intended not to operate the business within the 27 suburbs of the southern region named in the schedule to the Franchise Agreement. He stated that it was his present intention to service areas south of those suburbs. As a preparatory step to the business change he had registered a new business name ‘Flash Security Doors and Screens’ on 12 March 2014.

    Second Affidavit

18. This affidavit was signed and filed on 23 June 2014. It established that Mr Trebilcock had made inquiries of two other franchisees and had been supplied with information which is exhibited to the affidavit showing that they had a contract term of five years with rights of renewal of five years.

    Third Affidavit

19. This affidavit was sworn and filed on 25 June 2014. It set out what Mr Trebilcock said were a summary of his gross sales that he had received from the business up to and including 17 April 2014. These were for the calendar years 2012/2013 and the first three and a half months of 2014.

    Fourth Affidavit

20. This affidavit was executed on 25 July 2014 but not filed until 28 July 2014. I note that the last affidavit of Mr Frampton was 25 July 2014.

21. In the context of the defendant’s case this was a significant affidavit.

22. At paragraph 31 of the affidavit, Mr Trebilcock refers to the affidavit sworn on 20 June 2014 where he deposed to the meeting where he said he had been shown a copy of the Disclosure Document. In this affidavit he said he now knows that he was mistaken in that belief. He asserted in the Fourth Affidavit that he was only shown the pages that he had signed and he exhibited those to this affidavit (‘RLT15’).

23. He alleged that he met with Mr Frampton on 25 February 2009 at a coffee shop at Castle Plaza. The meeting was just between himself and Mr Frampton. He stated that at the meeting Mr Frampton gave him ‘some loose pieces of paper to sign’. These were the pieces of paper exhibited to his affidavit and marked ‘RLT15’. Mr Frampton gave him these pieces of paper to sign and told me ‘it was just a formality to get things underway’. He said that although he may have skim read the documents ‘I did not ask Stephen any questions about them.’ Having signed them Mr Frampton asked for them back and he gave them back to him. He stated that he now knows those papers that he signed to be only a part of the Disclosure Document that Mr Frampton was required to give him prior to entering into the Franchise Agreement. At the time he said he did not know what the purpose of the documents was other than Mr Frampton had told him that they were ‘a formality to get the business up and running’.

24. Mr Trebilcock alleged that he only saw the complete Disclosure Document for the first time after he asked Mr Frampton for it in 2013 and Mr Frampton provided it on 27 May 2013. He further alleged that Mr Frampton had told him at the meeting at the coffee shop on 25 February 2009 that he would provide Mr Trebilcock with the copies of documents that he had signed but he said he had never received them.

25. Mr Trebilcock alleged that he had no knowledge of franchising law at this time and he did not know that it was a legal requirement that the franchisor had to provide him with a copy of the Disclosure Document, the proposed Franchise Agreement and the Franchising Code of Conduct at least 14 days prior to him entering into the Franchise Agreement.

26. Mr Trebilcock alleged that at the meeting of 25 February 2009 there was no discussion about the length of the Franchise Agreement. At this meeting Mr Frampton gave him the contact details for Tony Fleming and Mr Trebilcock alleged he met with Mr Fleming on 5 March 2009 and discussed the purchase of the business. He then arranged finance through Westpac and he was to commence business on 16 March 2009.

27. Although he was unable to remember the precise date, Mr Trebilcock said in the week leading up to 16 March 2009, Mr Frampton came to his house. Mrs Frampton was not there and his wife was not at home. Mr Frampton gave him the Franchise Agreement and told him where to sign. He said that he had previously not seen the Franchise Agreement. He was not concerned about signing the Agreement because he trusted Mr Frampton and considered him a friend. He alleged that Mr Frampton said that: ‘signing this document was just a formality to get things moving along’. He alleged that Mr Frampton did not actually give him a chance to read the Franchise Agreement. He initialled the foot of each page and signed where indicated. A true copy of the signed Franchise Agreement was exhibited to his affidavit and marked ‘RLT16’.

28. He alleged that Mr Frampton took the Franchise Agreement away and he did not retain a copy of it. He did not get a copy of the Franchise Agreement until much later. Mr Trebilcock said that at the time he signed the Franchise Agreement he was unaware that the initial term of the Agreement was 20 years.

29. Mr Trebilcock alleged that, had he been made aware that the franchisor was required to provide him with a copy of the Disclosure Document, the proposed Franchise Agreement and the Franchising Code of Conduct at least 14 days prior to entering into the Franchise Agreement he would have ensured that the documents were provided to him. If they had been provided to him he would have spent time reading and reviewing the Agreement. He said he would have given them to his wife Melodee to read. Although he was the franchisee he always considered the business to be a joint one with his wife. The loan obtained from Westpac for the business was in joint names. He alleged that had he seen that the initial term of the Agreement was 20 years and not five years, he would not have entered into the Franchise Agreement. At the time of signing he was 46 years of age and still considering other options including a possible future move to Queensland. He did not at that time want to commit himself to a business that would tie him down for 20 years. He said he would have gone back to Mr Frampton and told him that he was not prepared to sign the Agreement for 20 years but only five years because that was his understanding of the length of the Agreement.

30. He further alleged that his wife had contacts within the legal profession and in particular with a lawyer named Julie-Ann Simkin. He alleged he may have sought legal advice.

31. Mr Trebilcock gave evidence-in-chief supplementing his affidavit.

32. He stated that there are Australian standards when making and fitting sliding security doors or screens and he has to ensure that what he makes meets the Australian standard.[67]

    [67]   T 259.

33. Mr Trebilcock confirmed that he competes against On-Site Security Doors in the southern area. They have a mobile workshop and they are a competitor. They tend to produce the same product.[68] By that he meant that they have to match the Australian standards as well.

    [68]   T 260.

34. Mr Trebilcock stated that he had not seen inside the truck of the ‘On-Site Security Doors’ business. He also competes against Down South Security Doors and Screens. To his knowledge they do the same and he has seen in the back of their truck. They perform the same function.[69]

    [69]   T 262.

35. In relation to the question of the franchisee meeting, he elaborated in paragraph 22 of his affidavit. He stated that Mr Frampton advised him that he would need to pay additional costs for having continued weekly advertising in the Messenger which he agreed to do.

36. Mr Trebilcock confirmed that the table in his Third Affidavit prepared a summary of the gross sales revenue that he received from the business. He accepted and had agreed that the plaintiff was entitled to have the opportunity to conduct an accounting and this was to happen at a later date. He accepted that there were some sales which he had made which did not form part of the figures in the Third Affidavit.[70]

    [70]   T 263.

37. Under cross-examination, Mr Trebilcock agreed that Mr Frampton did not push hard to sell him the franchise business.[71]

    [71]   T 266.

    Cross-examintion of Mr Trebilcock

    Initial term of Franchise Agreement

38. Mr Trebilcock was cross-examined on his affidavit.[72] He said that he spoke to Mr Frampton about the initial term both in person and on the telephone. He confirmed that in relation to those conversations only one of them related to the five year term.[73]

    [72]   T 267.

    [73]   T 268.

39. Mr Trebilcock said that he did not read the Franchise Agreement before he signed it at all.[74] He continued to assert that when he initialled it and then signed it that he did not recognise in item 3 the term of 20 years.[75] He was unable to recall whether he had any conversation with Mr Frampton about the advertising fees or the franchise fees.[76] He also agreed that he did not know particularly what the territory was within his franchise area. He said he trusted Mr Frampton as they had known each other for about 10 years and they had had some general discussion about the terms of the area without specifically discussing the individual suburbs.[77]

    [74]   T 270.

    [75]   T 272.

    [76]   T 272.

    [77]   T 273.

40. Mr Trebilcock confirmed that Mr Fleming, the vendor of the business, had told him that he had had an initial term of five years.[78]

    Return of the Franchise Agreement

    [78]   T 274.

41. Mr Trebilcock conceded that he thought that he had got a copy of the signed document a few weeks after he had signed the agreement.[79] He said that his wife was aware prior to the meeting that he was going to be entering into the agreement and then he told her after she got home that he had signed it.[80]

    [79]   T 274.

    [80]   T 274.

42. Mr Frampton had indicated to him that once it had been signed that Mr Frampton was going to take it away for the common seal to be put on and that he would get a copy in due course.

43. He said that when he got the copy from Mr Frampton he did not read it. He put it in his filing area.[81] He said his focus was on learning how to build doors. He did not recall whether he had told his wife that he had received a copy of the Franchise Agreement.[82]

    [81]   T 275.

    [82]   T 275.

44. Mr Trebilcock confirmed that prior to working as a franchisee he had worked for numerous companies around Adelaide and for a professional recruiting agency starting in 2006. He had some experience with contracts in that business. He conceded he had an employment contract with the firm. He said he did not go through that contract.[83] He agreed that he may not have asked his wife or anyone else to look at that document.[84]

    [83]   T 278.

    [84]   T 278.

45. In relation to the contract for the sale of the business, he said he had a clear understanding of the terms of the sale with Mr Fleming.[85] He did not read it at the time of signing it.

    [85]   T 279.

46. He said that he went to a professional business broker’s premises. The contract was written up while he was there and he was given a copy of that agreement after he had signed it. He was unable to remember whether he showed it to his wife.[86]

    [86]   T 281.

47. He agreed that there was an alteration relating to the amount of the deposit which had been initialled.[87]

    Meeting at the coffee shop at Castle Plaza

    [87]   T 282.

48. Mr Trebilcock confirmed that at that meeting he was shown three to four loose pages. No one else was there other than Mr Frampton.[88] This meeting occurred before he had signed the business sale agreement.

    [88]   T 282.

49. He believed they met in mid-morning. They had a general discussion and Mr Trebilcock indicated he wanted to progress further with the opportunity. Mr Frampton presented him with a number of loose pages and asked that he sign it, which he did. He did not read them and Mr Frampton took them and said ‘I am going to copy them and you will get a full copy of the document in due course.’[89] He knew it was something to do with the franchise but did not know exactly what it was. He did not understand that the document was not complete. He was asked whether he thought it was a complete document or that he didn’t care and answered, ‘I can’t honestly say.’[90]

    [89]   T 283.

    [90]   T 284.

50. Mr Trebilcock agreed that when he swore his First Affidavit that he had read the whole of Mr Frampton’s First Affidavit. He agreed that at the time he swore his affidavit he had received the Disclosure Document.[91]

    [91]   T 285.

1. Mr Trebilcock says that Mr Frampton told him the original term was for five years and that this was consistent with Mr Fleming’s term, he relied on Mr Frampton’s statement and did not check the Agreement before he signed it.

2. I accept Mr Trebilcock’s evidence about that and reject Mr Framptons.

3. In relation to this topic (and others), I found Mr Frampton to be a poor witness who was reconstructing his evidence. Whilst reconstruction is a common feature in any trial,  in this matter, I find that Mr Frampton was reconstructing his evidence to suit what he thought was best for him at trial on a number of issues.

4. Mr Frampton’s initial affidavit asserted that the franchise period is 20 years, and that he and his wife had clearly explained that to every prospective franchisee, including the defendant. He further asserted that there had never been any doubt as to the length of the Franchise Agreement with any of our previous franchisees.

5. In his Third Affidavit he again erroneously asserted that ‘all but one of the franchisees’ had entered into 20 year Franchise Agreements.

6. Before he swore his Fourth Affidavit he had clearly become aware that the assertions in his First and Third Affidavits were clearly incorrect. Only one other franchisee had signed an agreement with an original term of 20 years.

7. Mr Frampton’s initial assertion that he and his wife had clearly explained to each potential franchisee that the term was 20 years (as opposed to a five year term with three rights of renewal of five years) could not be correct given almost every other purchaser had signed up for a five year term. I note Mrs Frampton, in her affidavit, albeit signed later, did not support her husband’s position.

8. In his Fourth Affidavit, Mr Frampton asserted Mr Newnes, his own franchise agent, had previously informed him that ‘each franchisee’ had entered into a 20 year contract and he had believed him.

9. The best that can be said for Mr Frampton is that he had an imperfect understanding of what Mr Newnes was talking about. Mr Newnes is deceased.

10. I cannot accept that Mr Newnes, who was in the business of ‘franchise agent’, would have misled his own customer. Mr Frampton must have signed every other Franchise Agreement and kept a copy.

11. I do not accept his evidence about Mr Newnes. If he thought the term was 20 years when he eventually signed them, why didn’t he raise the discrepancy with Mr Newnes?

12. When cross-examined he was unable to give a satisfactory explanation. All he could say was that he was mistaken and that the one franchise of 20 years had ‘clouded his thought process’. Such an explanation cannot stand with the filing of two affidavits that were incorrect on a fundamentally important matter. He had every opportunity before he swore his Third Affidavit to think hard about the issue. I reject that explanation given his earlier unequivocal statement about explaining the 20 year term, with his wife, to every other potential franchisee. It simply could not have happened.

13. Mr Frampton, in his Fourth Affidavit, then asserted that he remembered a specific conversation with the defendant, at Mr Trebilcock’s house ‘where we discussed the 20 year term. I remember that this conversation took place just after the defendant had mentioned that he needed stability in his employment’.

14. Again, this is simply Mr Frampton reconstructing his evidence and then embellishing it, by adding the piece about ‘stability’ to suit his own case. I reject his evidence relating to the suggestion that it arose in the context of the defendant requiring ‘stability in his employment’. I find that Mr Frampton was being disingenuous about that.

15. Mr Frampton was trying to remember a conversation he had with a friend some 5 years ago. It was obvious that he had little or no recollection and indeed he really had little or no idea of what any of the previous franchise agreements said. Mr Framptons concern with Mr Trebilcock was to get the franchise operating again. There is no criticism of Mr Frampton for that. Mr Trebilcock would naturally have had more interest in the length of the initial term given he was about to start a business venture in an unfamiliar occupation.

16. I do accept that it would not be easy to remember details after so many years. That does explain Mr Frampton’s evidence. As mentioned, I find generally his evidence was unreliable. I discuss other aspects of that later in these reasons particularly when discussing the question of the Disclosure Statement.

17. Given his evidence about what Mr Newnes had allegedly told him, it is clear that Mr Frampton actually was confused about a 20 year original term (with subsequent rights of renewal) and an agreement for five years with three rights of renewal of five years adding up to a potential 20 year agreement.

18. Given my later findings in relation to how the Disclosure Statement and Franchise Agreement came into existence and were executed, Mr Frampton’s evidence gains no support from the signed Agreement.

19. Where there is a conflict between Mr Frampton and Mr Trebilcock about this, I prefer the evidence of Mr Trebilcock.

20. A rejection of Mr Frampton’s evidence does not of course lead to an acceptance of Mr Trebilcock’s evidence. This is particularly so where under cross-examination by Mr Ross-Smith his evidence was also unsatisfactory.

21. Mr Trebilcock stated in his First Affidavit, before he was aware of the evidence in relation to all other Franchise Agreements that Mr Frampton had informed him that the term of the franchise was for five years which further options to renew the franchise giving him the possibility of holding the entire franchise for potentially 20 years. (The actual Agreement signed was different both as to the original term and the number of rights of renewal).

22. Mr Trebilcock said that at the time of signing he was 46 years of age and did not want to tie himself down to an agreement of 20 years. He said he was still considering a move to Queensland. Mr Trebilcock said that he did not notice the term of 20 years when he signed the Agreement and had he noticed it he wouldn’t have signed it. He relied upon the statement of Mr Frampton that it would be five years. He said he was unaware the term was 20 years until he sought legal advice. His behaviour and the timing of his behaviour were consistent with that.

23. I have carefully considered Mr Trebilcock’s evidence particularly in light of other aspects of his evidence where it has been demonstrated that he cannot be relied upon. However I am satisfied, on balance, that I can accept his evidence on this point.

24. Although neither witness was able to identify precisely when the discussion took place, it was common ground that there was a discussion about the original term. Not surprisingly neither party could remember verbatim what was said. I find specifically that the initial term was discussed and Mr Frampton told Mr Trebilcock that it was for five years. I find that Mr Frampton informed him that the term of the franchise was for five years with further options to renew the franchise which would give him the possibility of holding the entire franchise for 20 years if all options were exercised.

25. The initial term was a matter of fundamental importance to Mr Trebilcock. Indeed it no doubt would be to any prospective franchisee.  Mr Trebilcock’s major investment was the purchase price for the business and that was a negotiation he had to undertake with Mr Fleming not Mr Frampton.

26. It was argued that the defendant acted in a way towards his legal rights for which he should be criticised.[172] To an extent I agree but it cannot be ignored that Mr Frampton, in the way he acted towards his obligations particularly in relation to the Disclosure Statement, contributed to the problem. An important matter was described by Mr Frampton as just a formality. As I have stated the friendship coloured the way they both went about their respective tasks.

    [172] Argy v Blunts and Lane Cove Real Estate (1990) 26 FCR 112.

27. Independent facts support Mr Trebilcock’s version. Mr Fleming’s term was for five years. Mr Trebilcock behaved in 2013 and 2014 as if thought the term was for five years. I accept his evidence about that. His wife was under the impression it was for five years. I accept his evidence that given it was a change of occupation for him he would not have wanted to lock himself into a 20 year contract.

28. I find that when he signed the Agreement he did not check the terms and relied on the earlier representation of Mr Frampton. Given my findings in relation to the Disclosure Statement, he had not been left with a copy of the Franchise Agreement as required. I find that had he noticed, or become aware of, the 20 year term in the Agreement he would not have signed it; he would only have signed an agreement for five years with rights of renewal.

    Disclosure Statement

29. In relation to this issue there was common ground. The parties agreed that a meeting took place between Mr Frampton and Mr Trebilcock at a coffee shop in the Castle Plaza shopping area. It was not in dispute that the likely date of the meeting, given the date on the Disclosure Statement, was 25 February 2009.

30. The obligation was on Mr Frampton to provide Mr Trebilcock, 14 days before a Franchise Agreement was entered into, with the Disclosure Statement, a copy of the Franchise Code and a draft of the Franchise Agreement.

31. As already discussed, this was the first Franchise Agreement the plaintiff was entering into since Mr Newnes had died. This was the first time Mr Frampton had undertaken this aspect of the negotiations and paperwork. Further, again as already discussed, I find the nature of the friendship between Mr Frampton and Mr Trebilcock influenced the way they both went about the details of this transaction.

32. In his initial affidavit, Mr Trebilcock stated that at this meeting Mr Frampton showed him the Disclosure Statement (and that he signed it), but he was not given a copy of the Franchise Code or of the proposed Franchise Agreement. He said he signed the document and gave it back to Mr Frampton. Mr Frampton told him that it was his only copy and that ‘he would copy it and provide another copy to me’.

33. In his Fourth Affidavit Mr Frampton stated that he had given Mr Trebilcock a copy of the Disclosure Statement. He stated that it did not contain an account of the advertising fund nor did it contain certain financial statements as required by clause 20.2 of the statement. Mr Frampton did not respond to the allegation by Mr Trebilcock that he (Mr Frampton) had not given him a copy of the Franchise Code or proposed Franchise Agreement.

34. In his Fourth Affidavit Mr Trebilcock changed his version of events. He said that his memory was now that Mr Frampton hadn’t given him the Disclosure Statement but only some loose pieces of paper to sign which he did. Mr Frampton had told him ‘it was just a formality to get things underway. Mr Trebilcock said he only saw the complete Disclosure Document for the first time when he asked Mr Frampton for it in 2013.

35. He alleged that Mr Frampton said he would provide him with copies of what he had signed but that didn’t happen until 2013.

36. Mr Trebilcock said that at this meeting he was given Mr Flemings details by Mr Frampton.

37. Mr Trebilcock stated that had he been made aware of the nature of the documents he would have made sure he got a copy of them. He said he would have given them to his wife to read and that he may have contacted a lawyer, Ms Simkin, about them.

38. Mr Trebilcock was cross-examined about his change of story. He agreed that at the time he swore his First Affidavit he had read Mr Frampton’s affidavit and he already had a full copy of the Disclosure Statement (Exhibit D2).

39. Mr Trebilcock explained that he did not read the whole of the Disclosure Statement until after he had sworn his First Affidavit. The date ‘10/3/09’ on the document triggered a memory. It was then that he remembered that he had only been given the three or four loose sheets and not the whole document. Mr Trebilcock agreed that he signed that part of the document which said he had received the full document.

40. Mr Trebilcock agreed, in cross-examination, that he had signed the document so that the process of purchasing the franchise could continue without realising what the documents were or without taking the trouble to understand them. Until 2013 he had not taken the trouble to request a copy.

41. Mr Frampton did not respond by affidavit to this latest allegation made by Mr Trebilcock (there was no requirement for him to do so). Under cross-examination he agreed it was likely that the meeting was 25 February 2009. Mr Frampton denied that he only gave Mr Trebilcock loose pieces of paper to sign or that he had told Mr Trebilcock that signing it was just a formality.

42. The problem for Mr Frampon and his version of events is that the front of the Disclosure Document bears the typewritten date 10/3/09 whereas the signature of Mr Trebilcock is dated 25/2/09. The obvious inference is that the front of the document was created some 14 days after Mr Trebilcock had signed it. This is consistent with Mr Trebilcock’s later version of events.

43. Mr Frampton was unable to explain the typewritten date of the 10/3/09 appearing on the Disclosure Statement.

44. The only copy of the Disclosure Statement initially was that exhibited to Mr Frampton’s affidavit. This copy bears the date 10/3/09 but does not bear Mr Trebilcock’s signature on the last few pages. He proffered an explanation that the document may have been ‘updated’ when he looked for it previously.

45. There are parts of the Disclosure Document itself which suggest that the document was not prepared with Mr Trebilcock in mind. For example, clause 13.3(f) states that a franchise fee of $30,000 was payable to the franchisor to begin operations. That is repeated in clause 13.6(b). The payment was to be made on execution of the Franchise Agreement. The Franchise Agreement itself records no payment being sought.

46. Further, in clause 20.1 the certification by the directors refers to the financial year ended 30/6/02. The document (or part of it) was signed in 2009.

47. Neither of the above two matters are of great consequence. Mr Frampton agreed he had no experience in handling these documents. They are simply matters that confirm that position.

48. However, the original Disclosure Statement was produced. This was the one sent by Mr Frampton to Mr Trebilcock in 2013. It is clearly the original document as it bears the original signature of Mr Trebilcock. The front of the document bears the typewritten date 10/3/09.

49. I accept Mr Trebilcock’s evidence in relation to the meeting of 23February 2009. While it was not his initial version, his later version is supported by the original document Exhibit D2. I accept his evidence about how his memory was prompted. I have not overlooked the fact that in some areas his evidence was unreliable. It was faintly suggested that Mr Trebilcock had in some way ‘tampered’ with the document. Mr Trebilcock rejected that suggestion and I accept his evidence about that.

50. Mr Frampton’s evidence about the meeting was unsatisfactory. It smacked of total reconstruction. It is contradicted by the differing dates on the document. His attempted explanation is fanciful. When he sent Mr Trebilcock the original in 2013 it contained the conflicting dates.

51. I find that he either did not understand his obligations towards a potential franchisee or he allowed his friendship with Mr Trebilcock to influence him to cut corners. It could be a combination of both factors.

52. I find that not only did he give Mr Trebilcock only four loose sheets to sign, he did not give him a copy of the Franchise Code of Conduct or a copy of the Franchise Agreement. At the time, his motive was not to induce Mr Trebilcock into the franchise. However, he did not comply with his obligations.

53. I reject as nothing but reconstruction his evidence about what occurred at this meeting.

54. I also reject Mr Frampton’s evidence about what occurred when the Franchise Agreement was signed. I prefer Mr Trebilcock’s evidence. I find there was a consistent theme throughout the events leading up to the signing of the Franchise Agreement. Mr Frampton was careless with his obligations and Mr Trebilcock trusted his friend. I do not mean by that comment that Mr Frampton acted out of a sinister motive towards his then friend. Simply put, the friendship clouded the business judgment of both men.

55. However, before me, Mr Frampton’s evidence has been unsatisfactory about many of those events. It is clear that he feels, justifiably, that Mr Trebilcock has not dealt openly with him and indeed has cheated him out of his proper entitlement to franchise fees and advertising fees. That has led to him reconstructing and colouring his evidence to support his case.

56. The question remains as to what would have happened if Mr Frampton had left the required documents with Mr Trebilcock. The evidence established that he had a cavalier attitude to reading documents.

57. There are other matters to look at however. He would have had the documents for at least 14 days. I accept the evidence of Mrs Trebilcock that if the documents were left with her husband she would have looked at them. It is likely that the issue over the original term would have been noticed.

58. While the business was in his name she was providing security for the loan. That she did not push her husband for documents before he signed the Franchise Agreement was clouded by the fact that they had not been given to him.

59. The actions of Mr Frampton deprived the defendant and his wife of the opportunity to read the documents before the Franchise Agreement was signed. While Mr Trebilcock was trusting of Mr Frampton I find it is likely that Mrs Trebilcock would have looked at the documents if they had been made available. Inevitably that would also have involved Mr Trebilcock.

60. I have no doubt that Mr Frampton would have been prepared to give a five year original term had it been requested given that such a term had been standard.

    Summary

61. In summary, I find the following matters proved by the defendant:

    1.Mr Frampton represented to him that the original term of the Franchise Agreement was five years with a number of rights of renewal of five years;

    2.Mr Frampton engaged in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act;

    2.Mr Trebilcock relied on that representation;

    3.Mr Frampton failed to provide Mr Trebilcock with a full copy of the Disclosure Statement, or any copy of both the Franchise Agreement and the Franchise Code of Conduct on 25 February 2009;

    4.Had those documents been left with Mr Trebilcock he would have read them (as found earlier). It is likely that the 20 year initial term would have been noticed;

    5.Mr Trebilcock signed the Franchise Agreement without noticing the initial term was for 20 years. He did so relying on the representation made earlier by Mr Frampton;

    6Had he become aware that the initial term was for 20 years he would not have entered into the Agreement. He would only have entered into an agreement containing an initial term of five years.

    7.The plaintiff failed to comply with the Franchising Code of Conduct as found.

62. I find that prior to the execution of the Franchise Agreement the plaintiff engaged in misleading and deceptive conduct with his representation as to the length of the initial term. In my view, that conduct alone, is sufficient for the defendant to have proved his case. However, as is obvious from my findings, I have found the other conduct as pleaded and proved by the defendant to have also contributed to the breach of s 52.

63. I find that the plaintiff is in breach of s 51AD of the Trade Practices Act. The defendant did not try to argue that, aside from the initial term, he would not have gone ahead with the arrangement. I do not accept the plaintiff’s submissions that the defendant would not have acted differently. I have found that he would have acted differently in relation to the initial term of the Franchise Agreement. The breach of s 51AD is a fundamental one on the facts of this case.

1. The defendant is entitled to relief and an order for rectification of the Agreement as sought. I order rectification so that the initial term of the Franchise Agreement set out in Item 4 of the First Schedule is for five years commencing on 16 March 2009.

2. I will hear the parties further on the precise nature of the orders.

   Advertising Fund

3. I reject the defendant’s submissions in relation to this aspect of the claim. Given my earlier findings, it is not necessary for me to make specific findings.

4. I will hear the parties further on the orders and the question of costs.