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Shingle Inn Franchising Pty Ltd v Majestic Coffee Pty Ltd

Shingle Inn Franchising Pty Ltd v Majestic Coffee Pty Ltd

Case [2020] NSWDC 142 22 May 2020

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District Court

New South Wales

Medium Neutral Citation: Shingle Inn Franchising Pty Ltd & Anor v Majestic Coffee Pty Ltd & Anor [2020] NSWDC 142
Hearing dates: 18, 19 and 20 March 2020
Date of orders: 22 May 2020
Decision date: 22 May 2020
Jurisdiction: Civil
Before: Smith SC, DCJ
Decision:
1. Verdict and judgment on the amended statement of claim in favour of the second plaintiff against the defendants in the amount of $19,666.72.
2. Verdict and judgment on the cross claim in favour of the cross claimant against the first cross defendant in the amount of $171,292.
3. The parties are directed to submit short minutes of order within 14 days reflecting the appropriate amount of interest and costs in respect of each judgment.
4. Failing agreement in respect to order 3, each party is to file an outline of submissions on those issues of no more than 2 pages indicating whether there is consent to the issues being determined on the papers.

Catchwords: LICENSING – Breach – licence agreement – licence term – unpaid fees.
TORT – conversion – damages – conversion of business assets – value of goods.
TORT – bank guarantee – failure to return on demand – conversion.
Legislation Cited: Competition & Consumer (Industry Codes-Franchising) Regulation 2014 (Cth), Div 5 of Pt 3 to Sch 1
Cases Cited: Australian Development Corporation v Allco Steel Corporation [1999] NSWSC 736
Bunnings Group Limited v CHEP Australia Limited (2011) 82 NSWLR 420
Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653
Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185
Ferguson v Eakin & Ors [1997] NSWCA 106
Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175
Hoath v Connect Internet Services Pty Ltd (2006) 229 ALR 566
Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545
M’Leod v M’Ghie (1841) 133 ER 771
MBF Australia Limited v Malouf [2008] NSWCA 214
OBG Ltd v Allan [2008] 1 AC 1
Simic v New South Wales Land & Housing Corporation (2016) 260 CLR 85
Strand Electric & Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246
T C Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130
Wenkart v Pitman (1998) 46 NSWLR 502
Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443
Category: Principal judgment
Parties: Shingle Inn Franchising Pty Ltd – First Plaintiff/First Cross Defendant
Shingle Inn Leasing 1 Pty Ltd – Second Plaintiff/Second Cross Defendant
Majestic Coffee Pty Ltd – First Defendant/Cross Claimant
Troy Benjamin Battese – Second Defendant
Representation:
Counsel:
Mr M Gunning – Plaintiffs/Cross Defendant
Ms McDonald - Defendants/ Cross Claimant
Solicitors:
Baybridge Lawyers – Plaintiffs/Cross Defendant
Coleman Greig Lawyers – Defendants/Cross Claimant

File Number(s): 2018/170988
Publication restriction: Nil

Judgment

The first plaintiff, Shingle Inn Franchising Pty Ltd (“Franchising”) is the franchisor of a coffee shop and restaurant franchise. In 2016, the first defendant, Majestic Coffee Pty Ltd (“Majestic”) entered into…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Shingle Inn Franchising Pty Ltd v Majestic Coffee Pty Ltd

Details

AGLC: Shingle Inn Franchising Pty Ltd v Majestic Coffee Pty Ltd [2020] NSWDC 142
Case: [2020] NSWDC 142
Decision Date: 22 May 2020

CaseChat Overview and Summary

Shingle Inn Franchising Pty Ltd and Majestic Coffee Pty Ltd were parties in a legal dispute that reached the courts. The primary issue revolved around a licensing agreement, with the dispute focusing on alleged breaches, unpaid fees, and the conversion of business assets. The matter was heard in the Australian court system, with the specifics of the case leading to a detailed examination of the terms of the licence agreement and the subsequent actions of the parties involved.

The court was tasked with determining several legal issues, including whether there was a breach of the licence agreement by Majestic Coffee Pty Ltd, the validity of the unpaid fees claimed by Shingle Inn Franchising Pty Ltd, and the proper valuation of business assets that were allegedly converted by Majestic Coffee Pty Ltd. Additionally, the court examined the claim regarding a bank guarantee that was not returned upon demand, assessing whether this constituted a tort of conversion.

In reaching its decision, the court meticulously analysed the evidence and arguments presented by both parties. It concluded that there was indeed a breach of the licence agreement by Majestic Coffee Pty Ltd, leading to the award of damages for unpaid fees. Furthermore, the court found that the value of the goods converted by Majestic Coffee Pty Ltd was appropriately assessed, resulting in a monetary award. The court also determined that the failure to return the bank guarantee on demand constituted a tort of conversion, thereby awarding damages accordingly.

The court ordered that a verdict and judgment be entered in favour of Shingle Inn Franchising Pty Ltd against Majestic Coffee Pty Ltd for the amount of $19,666.72, along with an additional amount of $171,292 for the cross-claim. The court further directed the parties to submit short minutes of order within 14 days, detailing the appropriate interest and costs for each judgment. If the parties could not agree on these matters, they were instructed to file outlines of their submissions, indicating whether there was consent to the issues being determined on the papers.

Orders

Orders of the court

1. Verdict and judgment on the amended statement of claim in favour of the second plaintiff against the defendants in the amount of $19,666.72.

2. Verdict and judgment on the cross claim in favour of the cross claimant against the first cross defendant in the amount of $171,292.

3. The parties are directed to submit short minutes of order within 14 days reflecting the appropriate amount of interest and costs in respect of each judgment.

4. Failing agreement in respect to order 3, each party is to file an outline of submissions on those issues of no more than 2 pages indicating whether there is consent to the issues being determined on the papers.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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Citations

Shingle Inn Franchising Pty Ltd v Majestic Coffee Pty Ltd [2020] NSWDC 142

Cases Citing This Decision

No citing cases yet.

Cases Cited

Simic v New South Wales Land and Housing Corporation [2016] HCA 47
Citation 1 (Para 74)

…t of one party to a contract in favour of another party pursuant to a requirement of the contract: Simic v New South Wales Land & Housing Corporation (2016) 260 CLR 85 at [2] (French CJ). Their purpose is to act as security for the due performance of the contract ( Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 4…
Bunnings Group Ltd v CHEP Australia Ltd [2011] NSWCA 342
Citation 2 (Para 52)

…The essential elements of the tort of conversion were explained by Allsop P in Bunnings Group Limited v CHEP Australia Limited (2011) 82 NSWLR 420; at [124] as follows:…
MBF Australia Limited v Malouf [2008] NSWCA 214
Citation 3 (Para 73)

…dealings with documents such as title deeds, life insurance policies, guarantees and cheques may amount to conversion: MBF Australia Limited v Malouf [2008] NSWCA 214; M’Leod v M’Ghie (1841) 133 ER 771. However, title to sue does not arise merely by virtue of the value represented by the document, but by the posses…
Hoath v Connect Internet Services Pty Ltd [2006] NSWSC 158
Citation 4 (Para 73)

…at is a chose in action rather than a chattel: Ferguson v Eakin & Ors [1997] NSWCA 106 at [15] cited in Hoath v Connect Internet Services Pty Ltd (2006) 229 ALR 566, see also OBG Ltd v Allan [2008] 1 AC 1.…
Wenkart v Pitman, Wenkart v Abignano [1999] HCATrans 239
Citation 5 (Para 46)

…tive (Aust) Pty Ltd (1986) 161 CLR 653, 673; T C Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130, 138; Wenkart v Pitman (1998) 46 NSWLR 502, 523.…
Australian Development Corporation v Allco Steel Corporation [1999] NSWSC 736
Citation 6 (Para 61)

…The facts of Australian Development Corporation v Allco Steel Corporation [1999] NSWSC 736 are closer to this case. There, the plaintiff had bought two lots of steel to be used for construction work. One of the lots was specially manufactured for that work. The other lot was raw steel. Both lots were retained by th…
Ferguson v Eakin [1997] NSWCA 106
Citation 7 (Para 73)

…sion is not available in respect of the balance in a bank account because that is a chose in action rather than a chattel: Ferguson v Eakin & Ors [1997] NSWCA 106 at [15] cited in Hoath v Connect Internet Services Pty Ltd (2006) 229 ALR 566, see also OBG Ltd v Allan [2008] 1 AC 1.…
Haines v Bendall [1991] HCA 15
Citation 8 (Para 59)

…gs, Strand Electric & Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246 and Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175 for the proposition that the fact that it was not using the goods did not impede its claim for damages. Those were cases where the business of the ow…
Burns v Man Automotive (Aust) Pty Ltd [1986] HCA 81
Citation 9 (Para 46)

…reasonably have been expected to avoid. The party in breach has the onus of establishing failure to mitigate: Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653, 673; T C Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130, 138; Wenkart v Pitman (1998) 46 NSWLR 502, 523.…
Wood Hall Ltd v Pipeline Authority [1979] HCA 21
Citation 10 (Para 74)

…2016) 260 CLR 85 at [2] (French CJ). Their purpose is to act as security for the due performance of the contract ( Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443 at 445) and take the “form of a promise by the issuing institution that it will pay, to the beneficiary named in the bond, an amount up to the limit…
Butler v Egg and Egg Pulp Marketing Board [1966] HCA 38
Citation 11 (Para 57)

…nversion the general rule is that the plaintiff is entitled to recover the full value of the goods converted: Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185 at 191.…
TC Industrial Plant Pty Ltd v Robert's Queensland Pty Ltd [1963] HCA 57
Citation 12 (Para 46)

…ng failure to mitigate: Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653, 673; T C Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130, 138; Wenkart v Pitman (1998) 46 NSWLR 502, 523.…
Penfolds Wines Pty Ltd v Elliott [1946] HCA 46
Citation 13

…tary rights of the owner if it is an intended act of dominion or assertion of rights over the goods: see generally Penfolds Wines Pty Ltd v Elliott (1946) 74 CLR 204 at 217–220 (per Latham CJ), 228–230 (per Dixon J, with whose statements of principle Starke J agreed at 221), 234–235 (per McTiernan J), and 239–244 (p…

Legislation Cited

No legislation cited in this judgment.

Medium Neutral Citation:	Shingle Inn Franchising Pty Ltd & Anor v Majestic Coffee Pty Ltd & Anor [2020] NSWDC 142
Hearing dates:	18, 19 and 20 March 2020
Date of orders:	22 May 2020
Decision date:	22 May 2020
Jurisdiction:	Civil
Before:	Smith SC, DCJ
Decision:	1. Verdict and judgment on the amended statement of claim in favour of the second plaintiff against the defendants in the amount of $19,666.72. 2. Verdict and judgment on the cross claim in favour of the cross claimant against the first cross defendant in the amount of $171,292. 3. The parties are directed to submit short minutes of order within 14 days reflecting the appropriate amount of interest and costs in respect of each judgment. 4. Failing agreement in respect to order 3, each party is to file an outline of submissions on those issues of no more than 2 pages indicating whether there is consent to the issues being determined on the papers.
Catchwords:	LICENSING – Breach – licence agreement – licence term – unpaid fees. TORT – conversion – damages – conversion of business assets – value of goods. TORT – bank guarantee – failure to return on demand – conversion.
Legislation Cited:	Competition & Consumer (Industry Codes-Franchising) Regulation 2014 (Cth), Div 5 of Pt 3 to Sch 1
Cases Cited:	Australian Development Corporation v Allco Steel Corporation [1999] NSWSC 736 Bunnings Group Limited v CHEP Australia Limited (2011) 82 NSWLR 420 Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653 Butler v Egg & Egg Pulp Marketing Board (1966) 114 CLR 185 Ferguson v Eakin & Ors [1997] NSWCA 106 Gaba Formwork Contractors Pty Ltd v Turner Corporation Ltd (1991) 32 NSWLR 175 Hoath v Connect Internet Services Pty Ltd (2006) 229 ALR 566 Hortico (Australia) Pty Ltd v Energy Equipment Co (Australia) Pty Ltd (1985) 1 NSWLR 545 M’Leod v M’Ghie (1841) 133 ER 771 MBF Australia Limited v Malouf [2008] NSWCA 214 OBG Ltd v Allan [2008] 1 AC 1 Simic v New South Wales Land & Housing Corporation (2016) 260 CLR 85 Strand Electric & Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246 T C Industrial Plant Pty Ltd v Robert’s Queensland Pty Ltd (1963) 180 CLR 130 Wenkart v Pitman (1998) 46 NSWLR 502 Wood Hall Ltd v Pipeline Authority (1979) 141 CLR 443
Category:	Principal judgment
Parties:	Shingle Inn Franchising Pty Ltd – First Plaintiff/First Cross Defendant Shingle Inn Leasing 1 Pty Ltd – Second Plaintiff/Second Cross Defendant Majestic Coffee Pty Ltd – First Defendant/Cross Claimant Troy Benjamin Battese – Second Defendant
Representation:	Counsel: Mr M Gunning – Plaintiffs/Cross Defendant Ms McDonald - Defendants/ Cross Claimant Solicitors: Baybridge Lawyers – Plaintiffs/Cross Defendant Coleman Greig Lawyers – Defendants/Cross Claimant
File Number(s):	2018/170988
Publication restriction:	Nil