Price Attack Franchising Pty Ltd v Molluso
[2012] FCA 1386
•30 November 2012
FEDERAL COURT OF AUSTRALIA
Price Attack Franchising Pty Ltd v Molluso [2012] FCA 1386
Citation: Price Attack Franchising Pty Ltd v Molluso [2012] FCA 1386 Parties: PRICE ATTACK FRANCHISING PTY LTD (ACN 010 979 923) and BRABUS PA IP PTY LTD (ACN 128 193 322) AS TRUSTEE FOR THE BRABUS PA IP v SONIA ANNA MARIA MOLLUSO File number: VID 194 of 2012 Judge: MARSHALL J Date of judgment: 30 November 2012 Date of hearing: 30 November 2012 Place: Melbourne Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 18 Counsel for the Applicants: Mr D Luxton Solicitor for the Applicants: Mills Oakley Lawyers Counsel for the Respondent: Mr B Carew Solicitor for the Respondent: Monica Shamon Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 194 of 2012
BETWEEN: PRICE ATTACK FRANCHISING PTY LTD (ACN 010 979 923)
First ApplicantBRABUS PA IP PTY LTD (ACN 128 193 322) AS TRUSTEE FOR THE BRABUS PA IP
Second ApplicantAND: SONIA ANNA MARIA MOLLUSO
Respondent
JUDGE:
MARSHALL J
DATE OF ORDER:
30 NOVEMBER 2012
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The respondent’s interlocutory application dated 12 October 2012 is dismissed.
2.The respondent pay the applicants’ costs of the interlocutory application.
Note:Entry of orders is dealt with in Order 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 194 of 2012
BETWEEN: PRICE ATTACK FRANCHISING PTY LTD (ACN 010 979 923)
First ApplicantBRABUS PA IP PTY LTD (ACN 128 193 322) AS TRUSTEE FOR THE BRABUS PA IP
Second ApplicantAND: SONIA ANNA MARIA MOLLUSO
Respondent
JUDGE:
MARSHALL J
DATE:
30 NOVEMBER 2012
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
(Revised from transcript)
By an interlocutory application dated 12 October 2012, the respondent, Ms Sonia Molluso, applies for specific performance of the terms of settlement entered into between her and the applicants to resolve the substantive application in this proceeding. The applicants, who I shall occasionally refer to as “Price Attack”, resist the application for specific performance. They allege that Ms Molluso has not complied with the terms of settlement, such that there is no binding agreement to resolve the proceeding. That is one of their submissions. They raise other matters, which the Court does not find necessary to determine.
For the reasons which follow, the Court accepts the submission of Price Attack that Ms Molluso did not comply with an essential term of the settlement agreement. As a consequence, the terms of settlement cannot be specifically enforced. The substantive proceeding remains live and it will be necessary for the Court to make further orders by way of directions to facilitate the future conduct of the matter.
THE CLAIM
By their application dated 2 March 2012, the applicants sought relief against Ms Molluso, claiming, amongst other things, trademark infringement and passing off and seeking enforcement of a franchise agreement amongst other relief. Ms Molluso filed a defence in which she denied the allegations made against her in the applicants’ statement of claim.
On 13 April 2012, the Court ordered that the matter be referred to mediation by a Registrar of the Court as soon as practicable. Mediation took place before a Registrar on 1 June 2012. The mediation was adjourned to a telephone mention, at 2.00 pm on 14 June 2012. On 12 June 2012, the parties met (without the Registrar) at the offices of the solicitors for the applicants. The parties there continued the discussions which had been commenced at the mediation on 1 June 2012. The matter was not resolved. A telephone mention of the mediation went ahead on 14 June 2012 as scheduled.
The mediation resumed on 26 June 2012 and the parties agreed on a settlement. The parties are in dispute about whether the terms of settlement have been satisfied. Of particular relevance are the following paragraphs of the parties’ settlement agreement:
Para 2A: The Respondent does not have sufficient funds to make any payment towards the relief and/or the Applicants’ costs in the Proceeding…
Para 5: The Respondent must provide the Applicants with a sworn statement of financial position, setting out in full detail her assets, liabilities and income and expense (sic) – within 14 days of this agreement.
Also significant, is paragraph 6 which reads:
Upon the Respondent satisfying the terms set out in paragraphs 4 and 5 above, the parties will seek that the Court make the following orders by consent: (i) the proceeding be dismissed; (ii) there is no order as to costs.
Paragraph 4 concerns a term of the settlement agreement (which was fulfilled) dealing with the vacation by Ms Molluso of certain premises.
The parties have not approached the Court for an order by consent dismissing the proceeding. The applicants have resisted such an order in light of their contention, amongst other contentions, that paragraph 5 of the settlement agreement has not been satisfied.
PURPORTED COMPLIANCE WITH PARAGRAPH 5 OF THE SETTLEMENT AGREEMENT
On 10 July 2012, Ms Molluso provided the applicants with a statutory declaration. That declaration referred to eight properties owned by her. She claimed that she had no equity in any of those properties. She referred to debts which were the subject of a notice served on her by the sheriff. She estimated that she owed the Australian Taxation Office about $100,000. She mentioned a credit card debt of $34,000 and threatened legal action against her by the State Revenue Office for Land Tax, in the sum of $13,000. She also attached an invoice for approximately $27,000 concerning arrears of rent and other charges in respect of a rental property in Moonee Ponds.
By letter dated 12 July 2012, the applicants’ solicitors wrote to the solicitors for Ms Molluso, claiming that the 10 July 2012 statutory declaration was “manifestly deficient”. The letter referred to an exhibit to the statutory declaration which contained bank statements. These statements did not provide any specific detail concerning the properties. The letter also referred to Westpac bank statements, which mentioned deposits made by direct debit from another Westpac account. The solicitors asked for the corresponding statements from the other Westpac account. The letter went on to seek statements in respect of three ANZ accounts referred to in an annexure to the statutory declaration. The applicants’ solicitors also sought full details of all bank accounts held by Ms Molluso as well as other sources of income, including evidence of rental income.
On 16 July 2012, Ms Molluso made a second statutory declaration. It set out the bank statements relevant to her eight properties. It contained a bank statement concerning a Westpac account and three ANZ accounts, the subject of the 12 July letter from the applicants’ solicitors. Ms Molluso referred to rental income being derived from a property in St Albans and another in Kurunjang. However, bank statements concerning some property loans were not current, for example, the ANZ statement in respect of the Darley property referred to the next scheduled payment on 14 February 2012. One Ocean Grove property was referred to in a statement from Westpac, the date of the last entry being 21 February 2012. NAB statements in respect of another Ocean Grove property were only current as at the end of February 2012. The second statutory declaration was also deficient in that it did not state where the rental income from the two St Albans rental properties was being paid or refer to how the mortgages on the properties were being serviced.
Further unanswered queries arose from the terms of the second statutory declaration. They were dealt with in correspondence by the solicitors for Price Attack. By letter dated 24 July 2012 to Ms Molluso’s solicitors, Mr Tobin referred to the second statutory declaration. He acknowledged that it addressed some of the deficiencies in the first statutory declaration, but referred to a number of issues arising from it which cast doubt on whether, from his perspective, Ms Molluso had given a full and frank disclosure of her financial affairs as contemplated by the settlement agreement.
The letter also raised several unanswered questions about the source of payments made into some of Ms Molluso’s accounts and a question about the ability of the respondent to service loan accounts on properties which were not subject to rental agreements. On 20 July 2012, Ms Molluso affirmed an affidavit in which she gave an explanation of her financial position regarding the eight properties. She also referred to deposits in an account as having been sourced from her previous income in a business, which she said she no longer operated.
By letter dated 24 August 2012, the applicants’ solicitors sought from Ms Molluso’s solicitors all correspondence regarding default on payment of the loans in respect of the eight properties. They also sought copies of requests for hardship relief and evidence of life insurance or any other payments received in respect of the death of Ms Molluso’s spouse. By letter dated 29 August 2012, the respondent’s solicitors referred to her request for a loan re-payment holiday. They also said that she had not received any moneys or income as a result of her husband’s death.
On 28 August 2012, Ms Molluso completed a third statutory declaration. Annexed to that statutory declaration is a page dealing with her properties. An examination of that page shows that she has equity in all bar one of those properties, which is contrary to the information provided in her first statutory declaration.
By letter dated 2 October 2012, the solicitors for the applicants formally gave notice to rescind the settlement on the basis that it had been executed on a misleading representation. Perhaps, it would also have been wise for that letter to have addressed the issue subsequently raised in submissions, that an essential condition of the settlement agreement had not been fulfilled. That is, there had been no provision of a full and frank statement of financial affairs by Ms Molluso within 14 days.
Counsel for Ms Molluso submitted that “time was not of the essence” for the disclosure of her true financial position. That submission is rejected. Although the applicants pressed Ms Molluso for details concerning gaps in the financial information which she provided to them, they were entitled under the terms of settlement to a prompt response to their request for an accurate statement of her financial position. The financial position of Ms Molluso was a critical factor in Price Attack’s decision to settle. Had the applicants known that Ms Molluso had equity in seven of her eight properties, it is almost certain that they would not have agreed to compromise the proceeding.
Ms Molluso claimed that, at the time of her first statutory declaration, she understood that she had no equity in her properties, due to her assessment of what it would cost to sell the properties. I do not accept that evidence. My impression of Ms Molluso’s evidence was that she was prepared to say anything to assist her case, including that she had started to use internet banking relevant to her accounts only recently, when she later admitted that she had done so in transactions in 2011.
CONCLUSION
Ms Molluso is not entitled to an order for specific performance of the terms of settlement. She did not comply with paragraph 5, an essential term of the agreement. Instead of giving a full and frank account of her assets, liabilities, income and expenditure, she asserted that she had no equity in any of her eight properties. Her latest statutory declaration demonstrates that she has equity in seven of them. It is highly likely that she had equity in seven of them at the time of her first statutory declaration and so much appeared to be conceded by her counsel in submissions today.
The applicants seek a declaration that the terms of settlement were validly rescinded or that they are void as a result of misrepresentation. It is sufficient simply to note that an essential term of the agreement was not carried out. As such, paragraph 6 of the agreement has not been enlivened and the proceeding cannot be dismissed by consent. The proceeding has not been settled and a directions hearing should be scheduled to program it for trial. The Court will otherwise order that the respondent’s interlocutory application is dismissed with costs.
I certify that the preceding eighteen (18) numbered paragraphs is a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate:
Dated: 6 December 2012
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