Sigma v Shams - [2021] VCC 713

IN THE COUNTY COURT OF VICTORIA

AT Melbourne

COMMERCIAL DIVISION

Revised
(Not) Restricted
Suitable for Publication

General List

Case No. CI-20-00460

Sigma Company Limited (ACN 004 132 923) (and others in the schedule attached)	Plaintiffs
v
Halimah Shams (and another in the schedule attached)	Defendants

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JUDGE:	HER HONOUR JUDGE MARKS
WHERE HELD:	Melbourne
DATE OF HEARING:	26, 28 October and 5 and 23 November 2020
DATE OF JUDGMENT:	4 June 2021
CASE MAY BE CITED AS:	Sigma v Shams
MEDIUM NEUTRAL CITATION:	[2021] VCC 713

REASONS FOR JUDGMENT
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CONTRACT –– whether supplier entitled to issue later invoices for amounts allowed as ‘settlement credits’ where payments were made on earlier invoices after the due dates and settlement credits were available if payment had been made by the due date –– supplier entitled to issue later invoices

UNCONSCIONABLE CONDUCT –– whether supplier issuing later invoices for amounts allowed as ‘settlement credits’ where payments were made on earlier invoices after the due dates, and settlement credits were available if payment had been made by the due date ––
–– not unconscionable conduct

MISLEADING AND DECEPTIVE CONDUCT –– whether alleged representations were conveyed and relied on prior to entry into franchise agreements by franchisee

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APPEARANCES:	Counsel	Solicitors
For the plaintiffs	Mr P Wallis SC	K & L Gates
For the defendants	Mr J O’Sullivan	Quest Legal

SCHEDULE OF PARTIES

Sigma Company Limited (ACN 004 132 923)

First Plaintiff

and

Discount Drugstores Pty Ltd (ACN 067 616 826)

Second Plaintiff

and

Central Heathcare Services Pty Ltd (ACN 142 005 552) Third Plaintiff

and

Halimah Shams First Defendant

and

Inform Neutral Bay Pty Limited (ACN 153 076 843)

trading as Inform Pharmacy Neutral Bay (ABN 95 153 076 843)

Second Defendant

Contents

Introduction

Pleadings & submissions

Evidence

Witnesses

Documents

Claims by Sigma and CHS

Liability admitted
Set offs claimed

Settlement credits
Late fees
Interest

Counterclaim by Shams

Misleading and deceptive conduct

1st Representation
2nd Representation
3rd Representation
4th Representation
5th Representation
6th Representation
7th Representation
8th Representation
9th Representation
Reliance

Good faith
Unconscionable conduct

Loss

Orders

Conclusion

HER HONOUR:

Introduction
1This case concerns claims by a franchisor for franchise fees and money owing under various agreements for the supply of pharmaceutical goods, on the one hand, and various set off and counterclaims including claims of misrepresentation and unconscionable conduct, on the other hand.
2Halimah Shams has operated a pharmacy in Neutral Bay in New South Wales since 2004 (in more recent years, through a company called Inform Neutral Bay Pty Ltd (Inform)). She has also operated a pharmacy in North Sydney since 2005, and in Thornleigh since 2010.
3Discount Drugstores Pty Ltd (DDS) operated a pharmacy franchise system. It gave franchisees the right to use its system of purchasing, selling and marketing pharmaceutical and related products and services developed by it, and the right to use various brands, confidential information and intellectual property of DDS.
4In around May 2013, Shams, and her husband Sanjeet Khaira approached DDS. Shams was considering joining one, or all three, of her pharmacies to DDS’ franchise network. Shams, Khaira, and various DDS representatives, met both in person and by telephone; and many documents and emails were also exchanged in the course of nearly a year’s negotiations.
5On 21 May 2014, Shams entered a franchise agreement with DDS in relation to the North Sydney pharmacy.
6In September 2014, Sigma Company Limited (Sigma) acquired DDS. Sigma, and its subsidiary Central Healthcare Services Pty Ltd (CHS), operated businesses that included supplying pharmaceutical products to pharmacies.
7Shams started to use Sigma and CHS as suppliers for the pharmaceutical goods she needed for her pharmacies, signing credit agreements with them for the pharmacies in November 2014. After that, Sigma and CHS supplied pharmaceutical goods to the Thornleigh and North Sydney pharmacies, and Sigma supplied them to the Neutral Bay pharmacy.
8On 12 October 2015, Shams entered another franchise agreement with DDS, this time for the Thornleigh pharmacy.
9In July 2017, Shams entered into bulk specials agreements with CHS in relation to the North Sydney and Thornleigh pharmacies.
10This case commenced with Sigma, DDS, and CHS suing Shams and Inform for debts said to arise from the supply of pharmaceutical goods under the credit and bulk specials agreements, and for franchising fees under the franchise agreements.
11After this proceeding was commenced, Inform paid the amount it had been sued for by Sigma under the Neutral Bay credit agreement; I do not need to deal with this aspect of the claim in this judgment.
12What remains to be decided on the plaintiffs’ claims are issues as to what is owing on those invoices, and whether various set offs are available by way of defence.
13Shams also counterclaims, alleging that representations were made to her causing her to enter into the North Sydney and Thornleigh franchise agreements. Shams wants these agreements either set aside as void ab initio, or orders that she is not liable for the debts. She also alleges that DDS, Sigma and CHS acted unconscionably in some of their dealings with her.
14An allegation concerning alleged misrepresentations in relation to television advertising was not pursued by the defendants by the close of trial. I do not need to deal with this aspect of the counterclaim in this judgment.
15For the reasons set out below, I find for Sigma, DDS and CHS on their claims and do not allow any set off, and I will dismiss Shams’ counterclaim.

Pleadings & submissions
16The plaintiffs rely on their statement of claim dated 6 February 2020.
17The defendants rely on their further amended defence and counterclaim dated 5 November 2020. I will refer to that pleading as the defence and counterclaim in this judgment.
18The plaintiffs then rely on their reply and defence to the amended defence and counterclaim dated 19 June 2020.
19Counsel filed an agreed issues list on 10 November 2020.
20After the close of evidence, extensive written and oral closing submissions were made, with final written submissions being filed on 25 November 2020.
21The allegations pleaded in the defence and counterclaim are pleaded in relatively short scope. However, the evidence that was given by the defendants (and the cross examination directed to the plaintiffs’ witnesses) traversed a significant number of additional matters. From the outset of the trial, the plaintiffs made it clear that they would hold the defendants to their pleading, and that they had come to court to meet the case pleaded. Counsel for the defendants confirmed repeatedly in the course of the trial that the defendants did not seek to depart from their pleaded case. Ultimately, however, some of the defendants’ submissions went further. They then argued that certain matters were ‘in the ring’ as having been accepted as issues between the parties. Those further matters were not part of the case the plaintiffs had come to meet at this trial. I will not deal with them.

Evidence
22In considering the evidence – much of it about events which took place up to seven years ago – I take the following principles into account.
23McLelland CJ in Equity observed in Watson v Foxman (1995) 49 NSWLR 315 at 319:
… 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 process 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.
24In the English High Court of Justice decision of Blue v Ashley (No 2) [2017] EWHC 1928 (Comm), Leggatt J said at [67]:
… I expressed the opinion in the Gestmin case (at para 22) that the best approach for a judge to adopt in the trial of a commercial case is to place little if any reliance on witnesses’ recollection of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence and known or probable facts.
25I put primary emphasis on the objective facts surrounding what occurred, including the contemporaneous documents.
Witnesses
26Shams is a pharmacist. Her evidence was often unclear and difficult to follow. She was frequently unresponsive to the questions asked, and appeared determined, instead of answering particular questions put to her, to tell the Court things she considered important to promote her view of her case. Shams spoke very quickly in answering many questions (she said at one point that she had put a ‘slow’ sign next to her to remind her to speak more slowly). She answered simple questions at great length. She initially claimed to have a ‘perfect recollection’ of particular conversations which occurred years ago, but her evidence of them was contradictory. She gave evidence that she quite definitely recalled that she had read certain parts of documents she was given about seven years ago, but that she had definitely not read other parts. She claimed that she and her husband did not ‘do’ contract negotiation, but contemporaneous documents show that they were involved in detailed negotiations with DDS prior to the entry into the franchise agreements. Although she claimed she had a very clear recollection of key documents central to her case, she then recollected very little of other relevant discussions in a similar period. Much of what she said, about what she knew and did leading up to the entry into the franchise agreements, was contradicted by emails she or Khaira had sent, or had sent to them, and other contemporaneous documents. They shared a common email address at the time negotiations occurred and talked regularly about pharmacy matters.
27Having observed her giving evidence – nearly seven years after many of the events in question – I am not satisfied that at the time of trial, she actually remembered (as opposed to reconstructing) what had been said to her on critical matters relating to the alleged representations.
28Khaira is Shams’ husband. He is a qualified architect, but since Shams took over the pharmacies has principally worked assisting her with aspects of managing them, visiting the various pharmacies, and helping when requested by her. His evidence, like that of Shams, descended into significant detail of what he recalled had been said to Shams and to him by DDS representatives, over a series of meetings in Brisbane many years ago, despite the fact that no notes had been taken and that he could not recall other salient details from that time. He admitted that he remembered only the ‘essence’ rather than the detail of relevant conversations and meetings. He was clearly reconstructing much of his evidence. He downplayed the extent to which he had been involved in reading emails and draft documents and his involvement in assisting Shams with negotiating aspects of the franchise agreements. The contemporaneous documents show his careful attention to detail at the time, including emails he sent questioning various aspects of what DDS put to him, and his insistence on going through every page of a relevant Disclosure Statement with Shams’ solicitor.
29I do not accept the evidence of either Shams or Khaira, save where it is supported by contemporaneous documents or supported by other witnesses.
30Otherwise, I accept the witnesses generally were endeavouring to be honest in giving their accounts of events that had occurred years ago.
31Counsel for the defendants submitted that I should find that John Clark (the founder and former director of DDS) was not honest in giving his evidence. The principal basis for putting this was that it was submitted that alleged representations made and approved by Clark in the DDS brochure (which I refer to below) on all the objective available financial data were not true, and that therefore impugns his credit.
32However, the defendants did not discharge their burden of proof in showing that the alleged representations were untrue (as discussed below).
33Clark had not been involved in the DDS business for some years by the time he gave his evidence, and did not have documents with him, relating to relevant events. He was not able to descend into particulars on some matters. However, I found him to be endeavouring to be honest and straightforward. I accept his evidence generally.
Documents
34The documents that were referred to in evidence, or agreed between Counsel as relevant, were listed in an agreed amended court book index at the close of the trial, and formed part of Exhibit 1. The plaintiffs did not consent to the inclusion of a number of documents that the defendants sought to admit into evidence (These were marked for identification as Exhibit 2). I did not receive any detailed argument as to their relevance or otherwise, and will admit them into evidence. Where they were not put to any witness, nor any explanation given as to how they were put together, I give them little weight.
35I have considered all these documents.

Claims by Sigma and CHS
Liability admitted
36Shams and Inform admitted liability to pay amounts claimed against them totalling $405,606.35, subject to the their defences, as outlined below. They admit the following amounts are payable (as set out in the agreed issues list):
(a)the sum of $16,825.93 to Sigma in respect of pharmaceutical goods supplied to the North Sydney pharmacy, pursuant to the North Sydney Sigma Credit Agreement;
(b)the sum of $19,576.36 to CHS in respect of pharmaceutical goods supplied to the North Sydney pharmacy, pursuant to the North Sydney CHS Credit Agreement;
(c)the sum of $7,048.84 to CHS in respect of pharmaceutical goods supplied to the North Sydney pharmacy, pursuant to the North Sydney Bulk Specials Agreement;
(d)the sum of $117,563.07 to DDS in respect of the goods and services (comprising franchise fees) provided to the North Sydney pharmacy under the North Sydney Franchise Agreement;
(e)the sum of $140,340.31 to Sigma, in respect of pharmaceutical goods supplied to the Thornleigh pharmacy pursuant to the Thornleigh Sigma Credit Agreement;
(f)the sum of $7,696.60 to CHS in respect of pharmaceutical goods supplied to the Thornleigh pharmacy, pursuant to the Thornleigh CHS Credit Agreement; and
(g)the sum of $96,555.24 to DDS in respect of the goods and services (comprising franchise fees) provided to the Thornleigh pharmacy under the Thornleigh Franchise Agreement.

Set offs claimed
37Shams says that Sigma and CHS reversed settlement credits, and charged late fees and interest in relation to earlier invoices sent to her, without being entitled to do this. She claims that she is entitled to set off $167,310 – which she says is the total of those reversed settlement credits, late fees and interest charges – against the amount otherwise due.

Settlement credits
38Shams claims that DDS wrongfully reversed $46,765.73 of what were described in the course of the trial as ‘settlement credits’ on the North Sydney pharmacy account (as at 10 September 2020); and that Sigma wrongfully reversed $106,147.30 of settlement credits on the Thornleigh pharmacy account (as at 10 July 2020).
39I do not accept that there was any wrongful reversal, and I will not allow any set off in relation to what occurred with the settlement credits.
40Shams’ allegations in relation to the reversals alleged are only briefly set out in the defence and counterclaim. The allegations were expanded on in argument.
41Paragraph 54 of the defence provides:
Further, in answer to the whole of the Statement of Claim, the Defendants refer to and repeat the matters set out in the Counter-Claim and claim the amounts set out therein by way of equitable set-off.
42Paragraph 48 of the counterclaim[1] alleges:
From about March 2019, Sigma reversed rebates or “trade credits” without proper justification, notice or explanation.
[1]Confusingly, within the defence and counterclaim pleading, the paragraph numbering starts with the defence component at [1], and then starts at [1] again when the counterclaim component commences.
43Paragraph 52 of the counterclaim alleges the same reversal point, but about CHS, rather than Sigma:
From about March 2019, CHS reversed rebates or “trade credits” without proper justification, notice or explanation.
44I agree with the submissions for Sigma and CHS, that the way this ‘defence’ was raised is unsatisfactory. As submitted:
[31] … If the defendants had wished to pursue such a claim, it should have been pleaded as a set-off and counterclaim, with the cause of action identified and the invoices by which the settlement credits were first credited to the defendants in evidence, together with the invoices by which the credits were reversed. As it happens, none of the first class and only a portion of the second class of invoices are in evidence … the defendants have not pleaded any right to set off the reversed settlement credits by reason of the fact that Sigma did not have a contractual or other right to reverse them.

45However, the issue of whether the defendants were entitled to claim the amounts referable to the settlement credit invoices issued from February 2019 was squarely before the Court during the trial, and able to be determined on the evidence that was before the Court; so I have determined this issue.
46The invoices issued by Sigma for the supply of goods and services were somewhat confusing. After listing the cost of various items, at the bottom they indicated, by a statement in bold, in a box at the bottom right of the invoices, the amount payable if the account was paid by a particular date (the Due Date). A statement in a box to the right of that said that the amount payable includes a Settlement Credit (of a specified amount), which will be charged if the account is not paid by the Due Date.
47For example, one such invoice has a total amount due stated in a box in the right hand corner: ‘Amount payable if account paid by 25 Feb 2020 (Due Date) 70.62 incl. 6.42 GST’. Immediately to the left of that box, another box stated: ‘Amount Payable includes Settlement Credit of 19.93 incl. 1.81 GST. This extra amount will be charged if account is not paid by the Due Date.’
48Shams did not always not pay invoices on time. But even when she paid after the due date, she always paid the amount noted on the relevant invoice as being payable if it was paid by the due date.
49The evidence does not make clear precisely when Sigma first invoiced Shams for the additional amounts. But from February 2019 (in relation to the North Sydney pharmacy) and September 2019 (in relation to Thornleigh pharmacy), Sigma issued separate invoices to Shams. In these separate invoices, Sigma claimed the amounts that were unpaid on the initial invoices where Shams had paid too late to have earned the benefit of the deduction of the settlement credit amounts. In other words, it invoiced Shams for the value of the settlement credits.

50The way Shams has analysed what occurred is to say that settlement credits were given and were subsequently reversed.
51Although there is a reference in the invoices to ‘settlement credits’, Shams argues that because the Sigma Trading Terms did not refer to trade credits or reversing them, such reversals were not allowed.
52Shams points to clause 19.1(i) of the Sigma Trading Terms which provides that:
These terms prevail to the extent of any inconsistency, over the terms of any Purchase Order or invoice or other arrangement between the parties and displace any contradictory terms or provisions.
53This argument is misconceived. There is nothing inconsistent in what is said in the Sigma Trading Terms compared to what is in the invoices. Clause 8 of the Sigma Trading Terms provides:
Unless otherwise agreed in writing, the price payable by the Customer for the Goods is the price specified in the Company’s current price list at the time of ordering …
54Clause 11 of the Sigma Trading Terms provides:
(a)For each delivery of Ordered Goods, the Company must provide an invoice to the Customer for the amount payable under the Agreement for those Ordered Goods together with details of:
(i) the applicable prices;
(ii) discounts or rebates (if any); and
(iii) Additional Fees (if any).
(b) Notwithstanding clause 11(a), the Company may invoice the Customer for any Additional Fees calculated by the Company as owing by the Company from time to time.
…
(f) If the Customer fails to make payment in accordance with the Terms or the Agreement or any other agreement between the Company and the Customer, after demand for payment by the Company, then the Company may do one or both of the following:
(i)   suspend performance of its obligations under the Agreement and Agreement [sic] until all amounts owing by the Customer to the Company (whether under the Agreement, the Agreement [sic] or otherwise and whether or not actually payable at that time) are paid in full; and
(ii) charge interest on the amount outstanding at the rate of 15%
     accruing daily from and including the due date for payment until
     the date of payment in full.

55‘Additional fees’, as defined in the Sigma Trading Terms, does not refer to trade credits or reversals. It refers to such things as order service fees, after hours callout fees, administration fees and credit card surcharges.
56The later invoices sent by Sigma do not amount to some type of additional fee.
57As Sigma argues:
[34].There is no such inconsistency. The trading terms provide that they “form part of any agreement to supply Goods to the Customer by the Company”. Such an agreement comes into existence when Shams submits a purchase order for particular goods and Sigma accepts it. Once the purchase order is accepted, Sigma is required to provide an invoice to Shams for the amount payable for the goods with details of “the applicable prices”, ‘discounts or rebates (if any)’ and “Additional Fees (if any)”. Shams is then obliged to pay the full amount of each invoice within a specified time. Cl 11(a)(ii) of the trading terms is broad enough to encompass the provision of a discount or rebate to Shams that is conditional upon her paying the invoice within a specified time. Each of the invoices that Sigma issued to Shams did just that in the clearest possible terms. The box in the bottom right hand corner says in bold: “Amount payable if account paid by 25 February 2020 (Due Date) - $70.62”. The box immediately to the left of this box says: “Amount Payable includes Settlement Credit of $19.93. The extra amount will be charged if account is not paid by the Due Date”. The settlement credits are therefore a particular type of “discount” or “rebate” referred to in the trading terms, not inconsistent with those trading terms.
[footnotes omitted; the underlining is part of the submission quoted]

58I consider that the proper analysis of all this is as follows.   Under each of the invoices initially issued, Shams owed a certain amount.   She was entitled to pay a lesser amount (less the amount described as ‘settlement credit’ on each invoice) but only if she paid by the Due Date. When she did not pay by the Due Dates, the amounts otherwise owing as unpaid remained due. The invoices specifically stated that those settlement credit amounts ‘will be charged if the account is not paid by the Due Date’. The course that was taken by Sigma of later issuing invoices for those amounts in fact gave Shams an indulgence, as she has not been asked to pay interest on the unpaid amounts until after the later invoices were issued. Looked at another way, the invoices said that those settlement credit amounts ‘will be charged’ if the amounts due were not paid by the relevant due dates; when Sigma issued the later invoices it charged those amounts.
Late fees
59Shams claims that CHS was not entitled to charge her what were described as ‘late fees’ totalling $1,295.07 for the North Sydney Pharmacy account (as at 31 December 2018), and $477.16 for the Thornleigh Pharmacy account (as at 31 December 2018).
60Clause 11(f) of the CHS Trading Terms and Conditions provided that:
(f) If the Customer fails to make payment in accordance with the Terms or the Agreement or any other agreement between the Company and the Customer, after demand for payment by the Company, then the Company may do one or both of the following:
(i)   suspend performance of its obligations under the Agreement and Agreement [sic] until all amounts owing by the Customer to the Company (whether under the Agreement, the Agreement or otherwise and whether or not actually payable at that time) are paid in full; and
(ii) charge interest on the amount outstanding at the rate of 15%


accruing daily from and including the due date for payment until


the date of payment in full.

61Shams accepts that CHS had a contractual entitlement to charge interest at the rate of 15% accruing daily, but argues it would be unconscionable for this contractual entitlement to be enforced.
62I am not satisfied it would be unconscionable to enforce CHS’ contractual entitlement to charge these fees.
Interest
63Shams claims that Sigma was not entitled to charge her interest of $1,958.71 on the North Sydney Pharmacy account (as at 8 September 2020), and $10,666.49 on the Thornleigh Pharmacy account (as at 30 October 2020), because the interest that was claimed was claimed in relation to the settlement credit invoices.
64Shams argues:
[27]As noted above, Clause 11(f) of the Sigma Trading Terms: CB738; provided that if a customer failed to pay an invoice on time, Sigma could, after demand for payment, charge interest on the outstanding amount at 15% accruing daily.
[28]If Sigma was not entitled to reverse trade credits or it would be unconscionable for Sigma to reverse trade credits, Sigma had no contractual or other entitlement to charge interest on invoices for reversals of trade credits, as there was no liability upon which the claim for interest could fix.

65I have determined that Sigma was entitled to the amounts claimed in the later settlement credit invoices.

Counterclaim by Shams
Misleading and deceptive conduct
66Shams alleged that DDS, Sigma and CHS had made various representations to her which amounted to misleading and deceptive conduct.
67In any case where misleading or deceptive conduct is alleged, it is necessary to look carefully at what message is alleged to have been conveyed by words and conduct.
68To succeed in their claim in relation to any of the representations, the defendants need first to establish that the conduct complained of, that is, the conduct set out in the particulars, conveyed the relevant representations as pleaded.
69If it is established that the plaintiffs made any of the pleaded representations, they need to establish that those pleaded representations were misleading or deceptive or likely to mislead or deceive in contravention of s18 of the Australian Consumer Law (ACL) or false and misleading in contravention of s29 of the ACL.
70To the extent that the plaintiff made the alleged misleading representations with respect to current or past matters, the next issue is whether they were true.
71To the extent that the alleged representations relate to future matters, the next issue is whether the plaintiffs had reasonable grounds for making the representations.
72The defendants would then need to establish that they relied on those misleading representations in entering into the franchise and credit agreements with the plaintiffs.
73The final issue is whether the defendants established loss and damage as a result of the conduct complained of.
74I turn now to the various representations alleged to have been made.

1^st Representation
75The defendants plead:
11. On or about 11 June 2013, DDS represented to the Defendants that Halimah should adopt the DDS Franchise System.

Particulars
The representation was express and was made orally by John Clark (“John”) on behalf of DDS to Halimah and Sanj on behalf of the Defendants using words to the effect: “Inform will benefit from joining the DDS franchise network”.
The representation was also to be implied from writing comprising a table provided on 11 June 2013 by John and Reg Bright to Halimah and Sanj, setting out the growth and profit figures Inform could expect to attain after joining the DDS Franchise Network.

76I am not satisfied that the alleged representation was conveyed.
77The defendants submit that Shams ‘had a distinct memory of her first meeting with John Clark, and Doug Kuskopf Dallas in July 2013 at North Sydney’. However, neither Shams nor Khaira gave evidence that words to that effect were said to them by Clark. And it was not put to Clark in cross-examination that he said such words.
78Shams’ evidence of that day included recalling that she was with her husband, in their Mini, and the others in a different car, and that it was peak hour as they drove to the North Sydney store. Her evidence about what Clark said was also specific:
…he said this will be a great site, great opportunity, we have an inner-city model that’s going to do gangbusters for you guys, you know once again I think he threw some numbers up, 30, 40 per cent, you know, increase in turnover. “We have an exciting range”, dah, dah, the usual – what he put in an email once before I think about – “Inner city model, we’ll work with (indistinct) run it in, I believe, in Brisbane,” yeah that was it pretty much.
79As set out above in my comment about her evidence generally, I do not accept that Shams remembers the details of the conversations that she gave evidence about in any event. And in this case, her evidence did not even state that the representation was made.
80The defendants relied on evidence that Reginald Bright gave in cross examination. (at the relevant times, he was DDS’ National Franchise Sales Manager). But Bright was very clear that he did not recall those words or words to that effect being said. The highest his evidence went, when pressed as to whether he could recall Clark saying words along these lines encouraging Shams and Khaira to sign up as DDS franchisees, was to say, ‘I don’t recall it’, and then, ‘but I mean of course you would say that. Of course you would say that’.
81The table referred to in the particulars does not convey the representation.
82Finally, even if that representation had been made, it would have been in the nature of ‘commendatory puffery and not ‘an actionable kind’ of representation: see Kenny J’s comments in Sanders v Glev Franchises Pty Ltd [2002] FCA 1332 (Sanders) at [270].
2^nd Representation
83The defendants plead:
13.In about July 2013 DDS represented to the Defendants that they could increase the turnover of their pharmacies by up to 70% in their first six months as a DDS franchisee, between 30-90% in their first year as DDS franchisees, and by up to “$6M plus” in three years of becoming a DDS franchisee.

Particulars
The representation was express and in writing made in a prospectus document entitled “Discount Drug Stores more than just low prices” provided by John to Halimah and Sanj that stated: “Gain the DDS Advantage - $2.5 Million - $6 Million plus turnover in 3 years; $1.2 Million - $6 Million plus in turnover in 3 years; $1.5 Million to $6 Million in 3 years; 70% increase in turnover in six months; $2.2M to 9M in 5 years; A brand that has helped franchisees increase turnover between 30-90% in their first year”.

84The various statements mentioned in the particulars are contained in different places in the prospectus provided to the defendants. However, each of them must be read in the context of the prospectus as a whole.
85The words do not convey what the defendants allege was represented.
86Counsel for the defendants submitted that these statements conveyed that the defendants’ pharmacies would have these results if they joined the DDS franchise. For example, in oral submissions in closing, he said:
And it's obvious to any reader that the whole point of making these representations is to say, "And you too can increase your turnover by 30 to 90 per cent in the first year, and you too could go from 1.2 million to 6 million in the first year”.
87I disagree.
88As submitted for the plaintiffs:
[83]… the words in the prospectus convey only that particular DDS branded pharmacies had historically achieved the results set out in the brochure, not as the defendants contend that each of their pharmacies “could” achieve the particular results that they plead in paragraph 13 of the counterclaim.
[84]The evidence demonstrates that the defendants had different expectations for the potential improved financial performance of the North Sydney and Thornleigh pharmacies as DDS branded pharmacies. This reflected the fact that each pharmacy was different in terms of size and location and faced different commercial circumstances, including the demographics of the target market and competition from rival pharmacies. The defendants must therefore have understood that the brochure was not conveying that each of their pharmacies could achieve the same improvement in financial performance as the other and as was achieved by each of the pharmacies referenced in the brochure, without assessing the comparability of the referenced pharmacies to their pharmacies. The defendants must also have understood that an assessment of the likely extent of improvement of the financial performance of any particular pharmacy under the DDS brand would require an individual analysis of the particular circumstances of the pharmacy. This is precisely the type of analysis that Mr Clark sought to undertake in his email to Mr Khaira dated 10 July 2013 and that the defendants subsequently sought to undertake themselves.
[85]The various levels of improved financial performance pleaded by the defendants are not even internally consistent in that the defendants could not both increase turnover by 70% in the first 6 months but only increase turnover by 30% in the first year. They also could not increase turnover from $1.2 million, $1.5 million and $2.5 million to $6 million in 3 years, as the 3 pharmacies featured at CB 283 and 284 had done. This reinforces the fact that the brochure contains a compilation of historical results of different pharmacies and does not convey a representation about the possible future performance of the defendants’ pharmacies.
[86]The fact that the pleaded representation was not conveyed is further demonstrated by the fact that the level of improvement referred to in the brochure was substantially higher than the level of improvement that Mr Clark had told Mr Khaira he hoped the North Sydney store would be able to achieve in his email sent on 10 July 2013, 3 days prior to the date that the representation conveyed by the brochure was alleged to have been made.
[87]Therefore, the alleged representation is not conveyed by the brochure …
[88]Even if the alleged representation was conveyed, the use of the word “could’ suggests that the improvement referred to in the brochure is no more than a possibility that is subject to a range of unidentified factors. This is not akin to a representation that the defendants “would” achieve these improved results. Instead, as stated above, it calls for an analysis of the circumstances of the particular stores pictured in the brochure and a comparison of their circumstances with those of the North Sydney and Thornleigh stores, before any conclusions can be drawn about the potential for either of those stores to achieve similar levels of improvement to the stores pictured in the brochure. The fact that the evidence plainly establishes that the defendants accepted that the potential improvement in each of their stores was materially different (with the Thornleigh store having substantially more scope for improvement than the North Sydney store) reinforces this point. The pleaded representation (even if, contrary to the plaintiffs’ submissions, it was conveyed) is therefore again in the nature of puffery in that it is not capable of being negatived.
…

[90]Contrary to the impression created by the defendants’ outline of closing submissions, the defendants do not allege that the brochure contained representations as to the historical performance of the pharmacies shown in the brochure and that the historical performance was not as stated in the brochure. It is therefore not necessary for the Court to consider these questions.
[91]Even if it did, the defendants have not established that the representations as to historical performance of the stores shown in the brochure were not accurate. Both Mr Clark and Mr Bright steadfastly maintained their evidence under cross-examination that the representations reflected the historical performance of the pictured stores. Mr Clark gave uncontradicted evidence that he had personal knowledge of the performance of the stores, including because he had operated one of them. As shown in the analysis of the available contemporaneous financial records of the pharmacies in question … those documents do not establish that the representations were not accurate. The defendants did not seek to call any owners of the pharmacies in question to say that the representations were not accurate. They also did not seek to subpoena any financial records of those pharmacies to show that the representations were not accurate.
[92]The fact that Mr Clark was unsure as to the precise dates of the periods in which the pharmacies achieved the improvement in performance stated in the brochure, and that the plaintiffs no longer have complete financial records relating to the stores, is not surprising given the passage of time since the brochure was published in around 2012 and the uncontradicted evidence of Mr Meikle set out in his affidavit. Given that the defendants bear the onus of proof in relation to this allegation, they cannot satisfy that onus by leading no evidence of their own and criticising the plaintiffs for not retaining comprehensive documentary evidence that if available may have demonstrated the true position. This is particularly the case given that the counterclaim does not allege that the individual representations with respect to the historical performance of the pharmacies were not accurate.
[footnotes omitted]

3^rd Representation
89The defendants plead:
14.On or about 10 July 2013 DDS represented to the Defendants that the North Sydney Pharmacy would be able to increase turnover by around 30-40% over the term of a franchise agreement under the DDS Franchise System.

Particulars
The representation was express and was made orally by John to Halimah and Sanj using words to the effect: “The North Sydney business would be able to increase turnover by around 30-40%.”
The representation was also made expressly and in writing in an email dated 10 July 2013 from John to Sanj stating: “…I would hope that the North Sydney store would be able to increase its turnover by around 30-40% over the term of the FA [Franchise Agreement] under the DDS retail model and operations systems.”

90I am not satisfied that this alleged representation was conveyed.
91So far as it is alleged that this representation was made orally, I do not accept that either Shams or Khaira remembers the details of their conversations with Clark. I have noted my views about their evidence more generally, above. Their evidence in any event was unclear about this issue.
92As submitted for the plaintiffs:
[106]Insofar as it is based on the alleged oral statement by Mr Clark, the representation falls at the first hurdle because the evidence of Ms Shams, Mr Khaira and Mr Clark was not sufficiently precise for the Court to be satisfied on the balance of probabilities as to what (if anything) Mr Clark said to Ms Shams and Mr Khaira about the prospects of the North Sydney pharmacy on or about 10 July 2013. Ms Shams gave evidence in chief that in early July 2013 Mr Clark “threw some numbers up, 30, 40% increase in turnover”. In cross-examination, Ms Shams conceded that she could not recall the precise words that Mr Clark had said during the conversation. Mr Khaira gave evidence in chief that when visiting the North Sydney pharmacy (on an unspecified date) Mr Clark said that “you’ll have an up-trade straight away in turnover 30 – 40%”. However, in cross-examination, when faced with Mr Clark’s email dated 10 July 2013, which referred to an increase of 30 – 40% over the period of the franchise agreement, Mr Khaira changed his account of the conversation to be that Mr Clark had said the initial uplift would be 30%. Mr Clark had no recollection of making this oral statement. Given the importance of the precise words used, such as whether Mr Clark said “would” or “could” or what qualifications Mr Clark expressed with any statement about increased turnover, the Court should find that the defendants have not proven that the oral statement as alleged was made.
[footnotes omitted]

93The email relied on does not convey this representation. It clearly states a hope not a promise about the increase of the percentage stated. The difference between someone saying they hope something will happen, and promising it will happen, is stark. It did not convey a representation that growth of around 30-40% would occur over the term of the franchise.
94In any event, even if I had considered the representation was conveyed, to the extent that it related to a future matter, there are further problems with the defendants’ case. They did not prove that Clark did not hold such an opinion, or that he did not have a proper basis for it. He gave evidence, which I accept, that he would not have expressed the opinion in the email unless he genuinely held that opinion. That evidence was not challenged in cross examination. And, as submitted for the plaintiffs, the contemporaneous emails demonstrate that Clark ‘took some time to consider the opinions set out in the email after he visited the North Sydney pharmacy and sought information and advice from colleagues about the area’.
4^th Representation
95The defendants plead:
15.On 16 July 2013 DDS represented to the Defendants that the North Sydney Pharmacy should fit into DDS’ “inner-city model” that would result in higher gross profit than the standard DDS model by 1-1.5%.

Particulars
The representation was express and in writing comprising an email dated 16 July 2013 from John to Sanj stating: This [ie the North Sydney] store would fit into what we would call our inner-city model. The following is what we are doing and also what we hope to develop more fully shortly
-   Higher GP% [Gross Profit] than standard DDS by 1-1.5% (occurring already);
-   More focus on pharmacy services;
-   More focus on pharmacy medicines;
-   Fast service beauty. This is because your customers are time poor (lunch hour).
-   Using the latest technology to increase customer data base and service…
-   Specific plan-o-grams for a city environment focussing more on profitable categories rather than FMCG’s;
-   Looking at grey market perfumes as a good profit opportunity.

96I am not satisfied that this alleged representation was conveyed.
97As submitted by the plaintiffs:
[102]… the Court must assess what was conveyed by the statements in Mr Clark’s email, judged in the light of the whole of the email and the surrounding circumstances. In the email, Mr Clark refers to “what we would call our inner-city model”, that “we are still developing this” and “the following is what we are doing and also what we hope to develop more fully shortly”. All of these statements indicate that the “inner-city model” is not yet fully developed. The defendants have sought to seize on only one of the 7 bullet points that Mr Clark goes onto list in his email (namely higher GP% than standard DDS by 1-1.5%), which Mr Clark refers to as a list of some things that DDS is doing and some things that DDS is hoping to develop more fully. It must have been plain to a reader of the email that any ultimate gross profit achieved by the North Sydney store would depend on the level of success it enjoyed in doing the various things listed in the email, among other things. Given that the precise gross profit percentage achieved by any individual “standard” DDS store would vary depending on the particular performance of the store, it also must have been clear that Mr Clark was referring to the “inner-city model” stores on average achieving a higher gross profit percentage than the average gross profit percentage of the “standard” DDS stores. Whether this in fact would be achieved on average over a meaningful period of time could not be known or measured for some time, and at least not until the inner-city model was fully developed. All of this indicates that Mr Clark was not providing any warranty to Ms Shams and Mr Khaira that the North Sydney pharmacy in particular would achieve a higher gross profit than the standard DDS model by 1-1.5%, as the defendants allege. …

98Even if I had considered the representation was conveyed, to extent that it related to a future matter, there are further problems with the defendants’ case. They did not prove that Clark did not hold such an opinion, or that he did not have a proper basis for it.
99As submitted by the plaintiffs:
[103]… Mr Clark’s evidence was that DDS did have what he regarded as an inner-city model in the form of pharmacies in central Brisbane that were achieving higher gross profit than other DDS pharmacies and that he believed that the North Sydney pharmacy may be able to make use of that model. Mr Clark steadfastly maintained this position in cross-examination. The fact that Mr Bright was not aware that Mr Clark regarded DDS as having an inner-city model does not establish that Mr Clark either did not have the opinion or that Mr Clark did not have a proper basis for the opinion. The defendants have not established that the various statements of fact referred to in the bullet points in the email were not accurate. This provides strong support for Mr Clark both genuinely holding the opinion he expressed and having a proper basis for it, particularly given the qualified way in which it was expressed as being a model that the North Sydney DDS “should” fit into.

5^th Representation
100The defendants plead:
16.On or about 20 July 2013 DDS represented to the Defendants that the Thornleigh Pharmacy should potentially generate $4.5 - $5M per annum.

Particulars
The representation was express and made orally by John to Halimah and Sanj using words to the effect: “Whilst the size of the Thornleigh store may limit any future potential sales increase, the store should potentially be doing $4.5-$5 million in turnover, based on generating $30,000/m2 which well run DDS’s do in a good centre. You should be doing 10% of what the Woolworths is doing - $50M based on our IMS data.”
The representation was also made in writing comprising an email dated 10 July 2013 from John to Sanjeet Khaira (“Sanj”) stating: “Of more interest is the data re Thornleigh Marketplace. This is a very strong centre with the Woolworths particularly strong trading at $50m turnover. This would indicate the pharmacy there is trading well below what it should be. Without having been there to see for myself if the pharmacy is positioned reasonably in position to Woolworths the pharmacy should as a DDS be expecting to be turning over around $4.5 - $5m. You said the store was around 160m2 in size so this might limit the potential sales increase but the store should potentially be doing $4.5-5m in turnover (based on generating $30,000/m2 which well run DDS’s do in a good centre). There is a very strong case for you to do something in this site as the store is definitely under trading based on this information.
The representation was also made impliedly in writing comprising an email dated 15 July 2013 from John to Greg Stephan on behalf of the Defendants stating: “Franklins & Supa IGA’s were always attributed with 7% re; Pharmacy Sales as a % of Grocery MAT and then Coles and WW came in at 9 and 10% respectively…”

101I am not satisfied that the alleged representation was conveyed.
102Neither Shams or Khaira gave evidence of having a discussion with Clark about the Thornleigh pharmacy on around 20 July 2013.
103The email of 10 July 2013 contains the words pleaded in the second paragraph of the particulars, but what was conveyed by those words must be considered in the light of the surrounding circumstances, which includes the whole email.
104In the email, Clark states that he is providing his comments without having seen the pharmacy; and he qualifies his comments by saying the size of the store ‘might limit the potential sales increase’. He refers to ‘total retail’ as being a ‘guesstimate from warehouse withdrawals...’
105Even if I had considered the representation was conveyed, to extent that it related to a future matter, the defendants have not proven Clark did not hold the opinion. As submitted for the plaintiffs:
[110].… Mr Clark’s evidence was that he would not have expressed the opinion in the email unless he genuinely held the opinion. In cross-examination, Mr Clark steadfastly maintained his evidence that he believed that the Thornleigh pharmacy had the potential to achieve the increase in sales to $4.5 – 5 million if it was done properly. The contemporaneous emails demonstrate that Mr Clark took some time to consider the opinions set out in the email and sought information and advice from colleagues about the area. Mr Clark also gave evidence that his reliance on the turnover of supermarkets located near pharmacies as a basis for estimating the potential turnover of the pharmacy was based on his experience. This provides strong support for Mr Clark both genuinely holding the opinion he expressed and having a proper basis for it, particularly given the qualified way in which it was expressed.
[footnotes omitted]

106The defendants’ submissions referred in some detail to parts of the evidence that was given about DDS’ pharmacies turnover more generally. But, as the plaintiffs submitted:
[111]The defendants’ extensive reliance on what they say is evidence that very few DDS pharmacies achieved turnover of $30,000 per m2 is misplaced. As Mr Clark explained in re-examination, the $ per m2 figure that a pharmacy can be expected to achieve will depend on the size of the pharmacy and the turnover of any adjacent supermarket. He took each of these matters into account in referencing the $30,000 per m2 in relation to the Thornleigh pharmacy. Mr Clark also gave evidence that DDS had many stores that achieved more than $33,000 per m2. The defendants’ criticism that the plaintiffs did not lead evidence about the average $ per m2 of its DDS stores is without merit given that this is not an issue that is raised by the pleadings. In any event, it was for the defendants to prove that DDS stores could not achieve $30,000 per m2, to the extent that they wish to now contend that this was an issue relevant to their counterclaim.
[footnotes omitted]

6^th Representation
107The defendants plead:
17.On 3 September 2013, DDS represented to the Defendants that they would receive rebates paid to DDS by the supplier for stores.

Particulars
The representation was express and contained in an email dated 3 September 2013 from John to Halimah stating: “…stores receive 100% of the rebates paid to us by the supplier for stores. The only 2 things I can think of to say to on the payments are firstly if you meet their rebate requirements e.g. full core ranging rebates are paid and secondly that we pay you (if it paid to us directly. Some go to the store) after they have paid us.
The representation was also contained in the “Disclosure Document – Discount Drugstores – Version 16” provided by John to Halimah and Sanj in about mid 2013 that stated at paragraph 9(j)(II): “Some of the rebates are shared with the Franchisees directly and indirectly and some are not.”

108The defendants did not establish that the alleged representation was in fact made.
109The representation conveyed by the documents referred to in the particulars is that it was DDS’s then practice to pass on to franchisees some rebates that DDS received from suppliers.
110The defendants did not establish that this representation was not true. As submitted for the plaintiffs:
[115]The defendants have not led any evidence that DDS’s practice as at 3 September 2013 was not to pass on to franchisees some rebates that DDS received from suppliers. Even if the representation in the form alleged by the defendants was conveyed, … the evidence was that Ms Shams did receive credits into her account with DDS for rebates paid to DDS by the supplier for the stores. The only complaint made by the defendants is that Ms Sham’s account was substantially in debit by more than the amount of the rebate credits, so that she did not receive any cash in respect of the payments. This does not constitute a proper basis to allege that Ms Shams did not receive the rebates.

111The defendants relied on evidence from Paul O’Sullivan, the then Group Manager of Credit and Treasury and Group Commercial Manager of Sigma, that he was not aware of rebates ever having been paid to the North Sydney and Thornleigh pharmacies. They also referred to evidence from Clark, that he did not know if DDS paid supplier rebates to Shams. They referred to particular invoices DDS issued for franchise fees to North Sydney and Thornleigh which referred to rebates, but had no amount referrable to rebates credited in the ‘Total’ column.
112However, there was documentary evidence of some rebates being provided. When Shams was taken, in cross examination, to that evidence, she admitted that there were some rebates that were credited to her account.
113Her complaint appeared to be that the rebates shown on her account were just a ‘paper trail’. This is a misconception of what it means to receive a rebate.
7^th Representation
114The defendants plead:
18.On 15 November 2013 DDS represented to the Defendants that they should trust DDS and that the DDS Franchise System would grow the Defendants’ turnover at a far greater rate than any other franchise in the market.

Particulars
The representation was express and made in writing comprising an email dated 15 November 2013 from Reg Bright to Sanj and Halimah stating: “…certainly be influenced by John’s comments and have trust in our very experienced management that do know what will and won’t happen at Thornleigh with trust being the operative word here.
Don’t let emotions overrule your business decision making, as the DDS model will grow the turnover at a far greater rate than any other franchise in the market.”

115The final statement in Bright’s email that ‘the DDS model will grow the turnover at a far greater rate than any other franchise in the market’ is clearly puffery (as discussed in Sanders).
116The comment about trust he makes beforehand is referrable to the final statement.
117Neither comment (taken singly, or together) amounts to an actionable representation.
8^th Representation

118The defendants allege that DDS represented they should switch suppliers to Sigma and CHS, and also that that representation was made by both Sigma and CHS.
119They plead:
19.In about October 2014, DDS represented that the Defendants should switch wholesale suppliers from their previous supplier to Sigma and CHS.

Particulars
The representation was express and was made orally by John to Halimah using words to the effect: “You should switch all your wholesale supplier to Sigma and CHS as they now own and supply DDS franchises and you need to support them for them to support you”.

…
22.Sigma also made the representation pleaded in paragraph 19 by its agent, DDS (“Sigma Misrepresentation”).

Particulars
As at October 2014, DDS was a wholly owned subsidiary of Sigma and DDS made the representation on behalf of and for the benefit of Sigma with its ostensible authority.

23.CHS also made the representation pleaded in paragraph 19 by its agent, DDS (“CHS Misrepresentation”).
Particulars
As at October 2014, DDS and CHS were the wholly owned subsidiaries of Sigma and DDS made the representation on CHS’ behalf and for the benefit of CHS and through it, for the benefit of its parent company, Sigma.

120The evidence did not establish that the representation was made.
121Shams gave evidence that when she heard that the DDS franchise had been sold to Sigma, she had a ‘kick in the guts’ moment. She said:
The first thing I did, I rang up Sanj, I said, “Sanj, oh my God, he’s sold the franchise”. “What do you mean?” I said, “He sold the franchise to Sigma”.
Cause you know what that means as soon as a wholesaler buys a franchise you don’t have a choice who you have to do your wholesaling business with, so what it means that now I had to switch suppliers which I’m sure was going to happen and lo and behold a week or so later John Clark calls me and says “Halimah moving forward now. The preferred supplier for all DDS franchise is Sigma. So now you have to cease, we recommend you cease trading with your current wholesaler,’ which at that stage was Symbion, “And switch the supply chain to Sigma". And I said, you know, which all pharmacies will probably ask, ‘Can I not load your DDS discounts or buying opportunity that was currently” you know, which we had which, you know, started with Symbion, ‘cause [indistinct] started,he goes, “No, no, all that will cease to happen, to support the franchise, for the best interest of the franchise you now have to switch your supply chain which is your wholesale supply from your current supply chain to Sigma”. And that’s what I did. Not just Sigma, we also had to then nominate to use Central Health Services… to get some other products or our other lines from them…
122Cross examined on the basis that he told Shams she ‘should switch all [her] wholesale supplies from Sigma to CHS as they now own and supply DDS franchisees and you need to support them for them to support you’, Clark did not recall this discussion ‘at all’. Asked if he said to all his franchisees they should switch their wholesale suppliers to Sigma and CHS, he said no.

123The representation therefore falls at the first hurdle because the evidence does not support the pleading. Even to the extent that Shams remembers being told that she now had to cease trading with her current supplier and switch to Sigma, in that same conversation she swears Clark said ‘we recommend’ this course.
124As indicated above, I do not accept that she remembers what was said in any event.
125In any event, I am not satisfied such a comment can be characterised as a representation, as opposed to a suggestion. Recommending something, or saying someone should do something, is not making an actionable representation.
9^th Representation
126The defendants plead:
24.At all material times, the Plaintiffs DDS represented that the Plaintiffs DDS would act in good faith towards the Defendants with respect to all matters concerning the DDS Franchise System and any agreements between them relating to it.

Particulars
The representation was implied by law, being section 6 of the Franchising Code of Conduct set out in the Competition and Consumer (Industry Codes - Franchising) Regulation 2014, section 23A in the Franchising Code of Conduct set out in the Trade Practices (Industry Codes - Franchising) Regulations 1998 and at common law.

127As the plaintiffs conceded, cl 6(1) of the Franchising Code of Conduct imposes an obligation on each party to a franchise agreement to act towards the other party with good faith, within the meaning of the unwritten law from time to time, in respect of any matter arising under or in relation to the franchise agreement and the Franchising Code.
128But this does not mean DDS made an implied representation that it would act in good faith, particularly in the way that obligation is pleaded (which goes further than the obligation to act in good faith imposed by the Franchising Code).
129Further, as the plaintiffs submit:
[129]Even if the representation in the terms alleged was found to have been made, the fact that DDS may subsequently not have acted in good faith (which is denied) would not render the representation false, misleading or deceptive. In order to have any prospect of establishing a contravention of s 18 of the ACL in respect of such conduct, the defendants would have needed to advance a case that DDS’s statement of intention to act in good faith was made without it having had such an intention. The defendants have not sought to advance any such case. …

Reliance
130If I had considered that any of the misrepresentations were made, I would then need to have turned to the issue of whether Shams entered into the North Sydney and Thornleigh franchise agreements as a result of relying on those misrepresentations.
131As the defendants submit:
[49]A plaintiff who seeks an award of damages under s236 of the ACL must demonstrate to the Court the existence of a sufficient causal link between the misleading or deceptive conduct of the defendant and the loss and damage which it alleges that the plaintiff suffered: Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525; [1992] HCA per Mason CJ, Dawson, Gaudron and McHugh JJ; Marks v GIO Australia Holdings (1998) 196 CLR 494; [1998] HCA 69 at [41]-[42] per McHugh, Hayne and Callinan JJ; Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [95], [130] per McHugh J, [158] per Hayne J; Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 at [37] per Gleeson CJ, Hayne and Heydon JJ.
[50]In Henville v Walker,(2001) 206 CLR 459; [2001] HCA 52, McHugh J said at [106]:
If the defendant’s breach has “materially contributed” to the loss or damage suffered, it will be regarded as a cause of the loss or damage, despite other factors or conditions having played an even more significant role in producing the loss or damage. As long as the breach materially contributed to the damage, a causal connection will ordinarily exist even though the breach without more would not have brought about the damage. In exceptional cases, where an abnormal event intervenes between the breach and damage, it may be right as a matter of common sense to hold that the breach was not a cause of damage. But such cases are exceptional [citations omitted].

[51]In Travel Compensation Fund v Tambree, (2005) 224 CLR 627; {2005] HCA 69, Gummow and Hayne JJ said at [32]:
Misrepresentation will rarely be the sole cause of loss. If, in reliance on information, a person acts, or fails to act, in a certain manner, the loss or damage may flow directly from the act or omission, and only indirectly from the making of the representation. Where the reliance involves undertaking a risk, and information is provided for the purpose of inducing such reliance, then if misleading or deceptive conduct takes the form of participating in providing false information, and the very risk against which protection is sought materialises, it is consistent with the purpose of the statute to treat the loss as resulting from the misleading conduct [citations omitted].
It would be a rare situation where it is possible to identify a misrepresentation as the sole cause of loss in the case of carrying on a business. The success of a business impacted by many factors. Some may affect all businesses in the sector, such as general economic conditions, changes to the regulatory regime or consumer tastes. Other factors that may affect the specific business such as a change of location, product lines or prices will also all interact. However, it can be seen from the above authorities that even if it is not possible to isolate a misrepresentation as the sole cause of loss, the court will treat it as such if the misrepresentation caused the person to take a risk and a loss materialised.

132Even if the defendants had established that the relevant misleading and deceptive conduct occurred, I would not have been satisfied on the evidence that such conduct induced their entry into the franchise agreements.
133In seeking to establish reliance, the defendants referred to Shams’ and Khaira’s oral testimony – which was limited on this point, and which in any event I do not accept – and on certain sentences plucked, out of context, from different communications.
134But it was clear from the evidence that Shams made considered commercial decisions, with the assistance of lawyers and accountants, about whether to enter the franchise agreements.
135As submitted for the plaintiffs:
[131]Some of the important factors that lead to the conclusion that Ms Shams made her own careful decisions to enter into the agreement based on her own experience and research and that any misrepresentation made by the plaintiffs did not materially contribute to any of those decisions are as follows:
(a)The alleged representations were for the most part made at the start of a long period of negotiations between DDS and Ms Shams;
(b)The contemporaneous documents do not indicate that Ms Shams made ongoing reference to the documents containing the representations;
(c)In relation to the DDS brochure, Ms Shams did not read all of it, could not recall which parts of it she read, and “filed it away” after receiving it;
(d)In relation to Mr Clark’s email dated 10 July 2013, Mr Khaira responded with an email setting out his own views on the prospects of the North Sydney and Thornleigh pharmacies;
(e)After the making of the alleged representations, DDS provided Ms Shams with forecasts that included express disclaimers about Ms Shams’ reliance on the forecasts;
(f)Ms Shams and Mr Khaira went on to undertake further enquiries and analysis as to the prospects of the North Sydney and Thornleigh pharmacies under the DDS model, both with DDS and on their own;
(g)Ms Shams did not enter into the North Sydney Franchise Agreement until 21 May 2014, approximately 12 months after the start of the negotiations with DDS;
(h)Over a number of months before entering into the North Sydney Franchise Agreement, Ms Shams’ lawyers reviewed and negotiated the terms of the agreement, as evidenced by the numerous contemporaneous emails which passed between DDS, DDS's in-house counsel and Juan Perez of Derwent Perez Lawyers;
(i)During this period, Ms Shams also obtained advice about entering into the North Sydney Franchise Agreement from her experienced accounting advisors;

136The defendants operated the franchises for years. They had financial difficulties, after some time, and they negotiated with the plaintiffs as to whether various amounts claimed were actually owing, or should be waived. The first time they raised the alleged misrepresentations with the plaintiffs was after the plaintiffs sued them, when they filed the defence and counterclaim.
137The Thornleigh pharmacy franchise was entered into years after the representations alleged to have induced the entry into that franchise agreement were made, and when Shams had had the opportunity to see the progress of the North Sydney pharmacy as a DDS franchise. By then, Shams knew, for example, that there was no 30 or 40 % increase in profits in the first year or so of that pharmacy’s takings.
138I would not have been satisfied that the defendants relied on any of the alleged misrepresentations in entering the franchise agreements.
Good faith
139The defendants allege a breach of a duty to act in good faith. This breach has not been established.
140The defendants plead:
44. At all material times, DDS was under a duty to act in good faith towards the Defendants with respect to all matters concerning the DDS Franchise System and any agreements between them relating to it.
Particulars
The duty was imposed by law, being section 6 of the Franchising Code of Conduct set out in the Competition and Consumer (Industry Codes—Franchising) Regulation 2014, section 23A in the Franchising Code of Conduct set out in the Trade Practices (Industry Codes—Franchising) Regulations 1998 and the common law.

45. From at least 10 April 2015, the Defendants requested that DDS co-operate with them to achieve the purpose of the agreements pleaded in paragraphs 19 to 27 above (“Agreements”).
Particulars
[Various emails and letters are particularised, not reproduced here]
46. In breach of the duty pleaded in paragraph 45 above, DDS failed to co-operate with the Defendants to achieve the purpose of the Agreements.
Particulars
a) Failing to disclose at any time before about 8 September 2014, which coincided with the North Sydney Pharmacy commencing trading under the DDS Franchise System, that DDS was in the process of selling DDS or all of the assets comprising the DDS Franchise System to Sigma.
b) Failure to make changes to encompass additional product ranges suited to a city demographic for the North Sydney Pharmacy.
c) Failure to rationalise the product range on selected product categories to maximise space in the North Sydney Pharmacy.
d) Failure to review pricing on key product categories for the North Sydney Pharmacy.
e) Failure to provide price review on key departments for the Thornleigh Pharmacy.
f) Failure to assist in reducing stock on hand through an agreed exit strategy for the North Sydney Pharmacy and Thornleigh Pharmacy.
…
i) Requiring the Defendants to sell products at extremely low margins (of about 1 – 2%) for prolonged periods that were insufficient to enable them to make a net profit.
…
k) Failure to provide adequate support and advice in order to increase the profitability of the North Sydney Pharmacy and the Thornleigh Pharmacy including failing to provide the assistance of a business development manager at any time beyond about November 2017 and failing to provide adequate direction as to marketing.
l) Making and refusing to correct the DDS Misrepresentations, the Sigma Misrepresentation and the CHS Misrepresentation dishonestly or arbitrarily.

141As set out in the plaintiffs’ submissions:
[143] Clause 6(1) of the Franchising Code provides:
Obligation to act in good faith
(1) Each party to a franchise agreement must act towards another party with good faith, within the meaning of the unwritten law from time to time, in respect of any matter arising under or in relation to:
(a) the agreement; and
(b) this code.

This is the obligation to act in good faith.
[144]Clause 6(3) of the Franchising Code provides:
Matters to which a court may have regard
Without limiting the matters to which a court may have regard for the purpose of determining whether a party to a franchise agreement has contravened subclause (1), the court may have regard to:
(a) whether the party acted honestly and not arbitrarily; and
(b)whether the party cooperated to achieve the purposes of the agreement.

[145]Clause 6(6) of the Franchising Code provides:
Other actions may be taken consistently with the obligation
To avoid doubt, the obligation to act in good faith does not prevent a party to a franchise agreement, or a person who proposes to become such a party, from acting in his, her or its legitimate commercial interests.
[146]In Australian Competition and Consumer Commission v Ultra Tune Australia Pty Ltd, Bromwich J considered the meaning of the term “good faith” in cl 6(1) of the Franchising Code and held that:
“a franchisor must not use the powers and opportunities available to it to the detriment of a franchisee in the absence of any objective legitimate interest in doing so; and must co-operate to the extent possible with a franchisee or potential franchisee, providing that such co-operation is not to the detriment of the franchisor.
…
the obligation to act in good faith requires consideration by the franchisor of the position and interests of the franchisee, however, the franchisor is entitled to prefer its own commercial interests where there is competition. What is prohibited is conduct that harms the franchisee where such conduct is not necessary for the protection of the franchisor’s interests.”

[147]In Australian Competition and Consumer Commission v Geowash Pty Ltd (No 3), Colvin J summarised the current state of the unwritten law as to the meaning of “good faith” for the purposes of cl 6(1) of the Franchising Code as follows:
(1)the term ‘good faith’ imports a normative standard to be observed by the parties in dealings as to matters to which the standard is applied;
(2)the normative standard embraces an obligation to act honestly and with fidelity to the bargain concluded between the parties;
(3)the normative standard also embraces an obligation to act co-operatively in matters related to performance;
(4)the standard does not require a party to subordinate its legitimate interests to those of the counterparty, but is does require due regard to the legitimate interests that both parties have in the performance of the contract they have made;
(5)conduct which is dishonest, capricious, arbitrary or motivated by a purpose which is antithetical to the evident object of any provision of the franchise agreement or the Code that governs the conduct being scrutinised or conduct which is otherwise motivated by bad faith will not meet the standard;
(6)where the scrutinised conduct, viewed in the particular context, is objectively unreasonable then the unreasonableness may form part of the basis for a conclusion that there has been a lack of good faith, but objective unreasonableness is insufficient of itself to amount to a lack of good faith; and
(7)the quality of the scrutinised conduct is to be evaluated having regard to the circumstances of the particular parties, particularly their sophistication, commercial power and the relative significance for each party of the subject matter of the conduct.

[citations omitted]

142So far as the allegation at particulars (a) to paragraph [46] of the defence and counterclaim is concerned, the fact a franchisee is negotiating to sell its business is not something it is required at law to disclose to franchisees. No authority was cited for such a proposition.
143So far as the allegations at particulars (i) to paragraph [46] of the defence and counterclaim is concerned, the alleged misrepresentations relied on by the defendants were not established.
144So far as the other particulars are concerned, I agree with the plaintiffs’ submissions:
[149]With the exception of sub-paragraph (a) above, the defendants have not led evidence that enables the Court to find that the alleged failures listed above in fact occurred. In any event, none of those failures, either individually or collectively, constitute a breach of DDS’s obligation of good faith as interpreted in accordance with the authorities referred to above.
…
[151]In respect of sub-paragraphs (b) to (e) and (h) above, the alleged failures appear to be directed at the fact that the defendants were not satisfied with the outcomes of some of the steps taken by DDS to assist them in operating the North Sydney and Thornleigh pharmacies and seek to ignore the extensive efforts made by DDS in this regard. Annexure J to these closing submissions is a chronology of the various steps taken by DDS to support and assist Ms Shams in the operation of the North Sydney and Thornleigh pharmacies. The Chronology demonstrates that DDS devoted very substantial time and resources to the North Sydney and Thornleigh pharmacies and is inconsistent with the contention that DDS failed to cooperate with the defendants to achieve the purpose of the franchise agreements.
[152] With respect to sub-paragraph (f) above, the evidence establishes that DDS did assist the pharmacies to reduce stock and did seek to negotiate an exit strategy for the defendants in respect of the North Sydney and Thornleigh pharmacies.
[153]In respect of sub-paragraph (g) above, the defendants have not led evidence to establish that DDS required Ms Shams to sell products at margins of 1-2%. In any event, selling products at lower margins was part of the DDS franchising model that DDS applied consistently across all of its franchises. In those circumstances, requiring Ms Shams to also sell products at low margins cannot constitute a lack of good faith by DDS.

Unconscionable conduct
145The defendants also plead that each of DDS, Sigma and CHS engaged in unconscionable conduct.
146They have not established these claims.
147So far as DDS is concerned, the parties summarised the issue as:
[27]Did DDS engage in unconscionable conduct in contravention of s 21 of the ACL by reason of the alleged misleading misrepresentations and alleged failure to cooperate with the defendants to achieve the purpose of the franchise and credit agreements (para 47)?

148The defendants plead:
47. In engaging in the conduct pleaded in paragraphs 36, 37 and 46 above and then purporting to enforce the North Sydney Franchise Agreement and the Thornleigh Franchise Agreement (“Franchise Agreements”) DDS has engaged in conduct that is unconscionable in contravention of section 21 of the ACL.

Particulars
a) DDS was in a stronger bargaining position than the Defendants.
…
c) The Defendants could have acquired identical or equivalent goods and services to those provided by Sigma and CHS under the trade agreements from persons other than the Plaintiffs for less.
d) DDS unreasonably failed to disclose to the Defendants its intended conduct that might affect the interests of the Defendants, being the proposed sale of DDS or the DDS Franchising System to Sigma.
e) DDS unreasonably failed to disclose any risks to the Defendants arising from the Plaintiffs’ intended conduct (being risks that the supplier should have foreseen which would not be apparent to the customer), including Sigma and CHS reversing trade credits without proper justification, notice or explanation.

149Section 21(1) of the ACL provides:
(1) A person must not, in trade or commerce, in connection with:
(a)the supply or possible supply of goods or services to a person; or
(b)the acquisition or possible acquisition of goods or services from a person;

engage in conduct that is, in all the circumstances, unconscionable.

150Section 22(1) of the ACL sets out various matters the Court may have regard to for the purpose of determining whether a supplier has contravened s21.
151As submitted for the plaintiffs:
[137]For section 21 of the ACL to have been contravened, the relevant conduct must be unconscionable in all the circumstances. Although section 21 of the ACL is wider than the equitable doctrine of unconscionability, there is still a threshold question of whether the alleged conduct was against conscience when measured against the norms of commercial behaviour guided by business conscience permeated with accepted and acceptable community values.
[138]In ACCC v Geowash, Colvin J characterised unconscionability as being a substantial departure from that which is generally acceptable commercial behaviour. It is a departure which is so plainly or obviously contrary to the behaviour to be expected of those acting in good commercial conscience that it is offensive.
[139]In Mr Rental Australia Pty Ltd v IRD Services Pty Ltd, Meagher JA stated:
“The concept of statutory unconscionability, as explained by Allsop P in Tonto Home Loans Australian Pty Ltd v Tavares [2011] NSWCA 389 ; 15 BPR 29,699 at [291], includes conduct having the following features or characteristics:
a high level of moral obloquy on the part of the person said to have acted unconscionably … [T]he conduct must be irreconcilable with what is right or reasonable … The range of conduct is wide and can include bullying and thuggish behaviour, undue pressure and unfair tactics, taking advantage of vulnerability or lack of understanding, trickery or misleading conduct.”

[140]Guidance can also be obtained from decisions made in respect of franchisees who have claimed that their franchise agreement is “unfair, harsh or unconscionable” and therefore voidable pursuant to ss 105 and 106 of the Industrial Relations Act 1996 (NSW).
[141]In Buck v Second Mountain Gate Nominees Pty Ltd, a number of Copperart franchises failed due to the combination of a range of factors, including increased competition, the devaluation of the Australian dollar, stock shortages and a fall-off in customer demand. In rejecting the franchisees claims that the franchise agreements were unconscionable, Macken J held that the reasons for the failure of the franchisees’ businesses had “their origins wholly in a set of external circumstances and in no way reflected any alleged unfairness in the franchise agreements themselves, nor in their operation”.
[142] In Autobake Pty Ltd v Budd, the franchisee purchased a “Cookie Man” franchise to manufacture and sell Cookie Man biscuits at a shop located in a new shopping centre in a suburb of Sydney. The franchise was not successful because the shop was badly located in relation to passing trade in the shopping centre where a number of other shops fared badly over the same period. Fisher, Cahill and Lawson JJ held that the franchise agreement was not unconscionable and stated:
“The case is an illustration of the perils involved in seeking to make use of the wide discretions provided by s 88F [of the Industrial Arbitration Act 1940 (NSW) (now Pt 9 Ch 2 of the Industrial Relations Act 1996 (NSW)] as a means of rescue where a calculated business risk is taken which, contrary to expectations, turns out not to be as profitable as anticipated and results in loss to all concerned. To adopt the words of Sheldon J in an earlier case under the section, Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 at 374, s 88F(1)(a) and (b), in particular, should not “become a refuge for those who are merely disgruntled with a bargain entered into on even terms”.
…
It is not sufficient for an application under s 88F(1)(a) and (b) to succeed that it should relate to an unprofitable business transaction entered into on even terms.”

[citations omitted]

152It follows from my findings in relation to the alleged misleading misrepresentations, and the alleged failure to co-operate, that I am not satisfied that the unconscionable conduct claim is made out.
153And, as submitted for the plaintiffs:
[158] … in light of the authorities referred to above, even if some or all of the conduct was established, it would not be sufficient to meet the high threshold for unconscionable conduct under s 21 of the ACL. The defendants cannot point to anything resembling “moral obloquy” or a failure to meet normal commercial standards on the part of DDS, even if the Court considers that DDS could have improved some discrete aspects of its performance (which the plaintiffs say is not established on the evidence in any event).
[159]In respect of the particulars to paragraph 47 of the counterclaim:
(a)The defendants have not established that DDS made any (let alone improper) use of any stronger bargaining position that it enjoyed with respect to the defendants;
(b)The defendants have not led evidence that establishes that they could have acquired identical or equivalent goods and services to those provided by Sigma and CHS under the trade agreements from other persons for less. To the contrary, Ms Shams’ evidence was that she was not buying any worse with Sigma and CHS than she was previously;
(c)For the reasons set out above, it was not unreasonable for DDS not to disclose the potential sale of DDS to Sigma to the defendants until the sale was completed;
(d)DDS did not fail to disclose the risk of reversal of trade credits as it was expressly referred to on every invoice issued by Sigma to the defendants over the course of their dealings and Ms Shams was well aware that this might occur.

154So far as Sigma and CHS are concerned, the parties summarised the issue as:
[29]Did Sigma and CHS engage in unconscionable conduct in contravention of s 21 of the ACL by making the alleged agent representation, through the alleged reversal of trade credits without proper justification, notice or explanation, by issuing invoices in a format that was extremely difficult to understand or reconcile and by putting the Thornleigh pharmacy on cash terms only without providing adequate notice and refusing to offer credit terms that were reasonable in the circumstances (paras 51 & 55)?

155This was pleaded as:
51.In engaging in the conduct pleaded in paragraphs 40, 48, 49 and 50 above and then purporting to enforce the Sigma Agreements, Sigma has engaged in conduct that is unconscionable in contravention of section 21 of the ACL.

Particulars
g) Sigma was in a stronger bargaining position than the Defendants.
h) The Defendants were not able to understand the invoices issued by Sigma to them.
i) The Defendants could have acquired identical or equivalent goods and services to those provided by Sigma under the Sigma Agreements from persons other than Sigma for less.
j) Sigma unreasonably failed to disclose to the Defendants its intended conduct that might affect the interests of the Defendants, being the proposed acquisition by Sigma of DDS or the DDS Franchising System.
k) Sigma unreasonably failed to disclose any risks to the Defendants arising from the Plaintiffs’ intended conduct (being risks that the supplier should have foreseen which would not be apparent to the customer), including Sigma reversing trade credits without proper justification, notice or explanation.

…
55. In engaging in the conduct pleaded in paragraphs 43, 52, 53 and 54 above and then purporting to enforce the CHS Agreements, CHS has engaged in conduct that is unconscionable in contravention of section 21 of the ACL.

Particulars
m) CHS was in a stronger bargaining position than the Defendants.
n) The Defendants were not able to understand the invoices issued by CHS to them.
o) The Defendants could have acquired identical or equivalent goods and services to those provided by CHS under the CHS Agreements from persons other than CHS for less.
p) CHS unreasonably failed to disclose any risks to the Defendants arising from the Plaintiffs’ intended conduct (being risks that the supplier should have foreseen which would not be apparent to the customer), including CHS reversing trade credits without proper justification, notice or explanation.
…

156I have found that the alleged representation was not made. I have found that the defendants’ allegations about the so called reversal of trade credits being not permitted under contract, or being unconscionable, were not made out.
157As submitted for the plaintiffs:
[165]… Sigma had a contractual right to reverse the trade credits provided to Ms Shams when the conditions for them being granted were not satisfied. The evidence shows that Ms Shams did not satisfy those conditions in respect of the reversed settlement credits. Ms Shams’ evidence was that she raised her concerns with the reversal of trade credits with Mr O’Sullivan in early 2019. She also received invoices in respect of all reversed trade credits and monthly statements that listed all invoices and set out the balance owing on the account. Ms Shams’ evidence was that she understood that in order to retain the settlement credits, she needed to pay her account on time and not have an outstanding balance on the account. For these reasons, the allegations in paragraph 48 of the counterclaim have not been made out.
[166]The defendants have also failed to lead evidence that the invoices issued by Sigma were issued in a format that was in any way difficult for Ms Shams to understand or reconcile. A review of the invoices indicates that this was not the case. The monthly statements also served to clearly demonstrate to Ms Shams the outstanding liabilities she owed to Sigma pursuant to the various invoices. For these reasons, the allegations in paragraph 49 of the counterclaim have not been made out.
[167] The evidence does not establish that the circumstances in which Sigma put the Thornleigh pharmacy on cash terms was in any way unfair to Ms Shams. Sigma took this step after consultation with Ms Shams, arising from the fact that she had been behind in paying her invoices for some considerable period of time. In these circumstances, Sigma was entitled to protect its commercial interests by ceasing to provide goods on credit to Ms Shams at the Thornleigh pharmacy. For these reasons, the allegations in paragraph 50 of the counterclaim have not been made out.

Loss
158Even if I had been satisfied of the prerequisite matters so that the question of loss and damage suffered by the defendants became relevant, the pleaded loss and damage suffered was not established.
159The loss and damage claimed in the counterclaim in relation to all of the alleged contraventions and breaches was the combined values of the North Sydney and Thornleigh pharmacies as at 2014.
160This was pleaded as:
56. By reason of the Plaintiffs’ contraventions and breaches pleaded in paragraphs 32, 33, 36 and 37 above, the Defendants have suffered or will suffer loss and damage.
Particulars
Loss of the combined value of the North Sydney Pharmacy and the Thornleigh Pharmacy as at 2014 of approximately $2.99M including goodwill to their current value of about $600,000 for stock in hand and fit out only, being a loss of approximately $2.4M. Further particulars will be provided in evidence.

161However, at trial this loss was not pursued. Rather, the defendants sought damages ranging between $854,959 and $1,450,098 (as set out in an expert report of Matthew Gwynne, a forensic accountant).
162In closing submissions, the defendants explained the loss claimed:
[210]In short, Mr Gwynne calculates the position Halimah would have been in had she not become a DDS franchisee. He does so by taking the performance of her businesses prior to them becoming DDS franchisees and assuming that they would have continued at the same level of net profitability. He calculates loss on two bases, yielding an estimated loss of either $1.45M if comparing the performance of the two DDS franchises to the independent Neutral Bay franchise and assumes that they would have achieved similar results, or $854,959 if one assumes that the DDS franchises had continued to trade on the trends they exhibited before becoming DDS franchise: see report of John Gwynne at paras [2.1], [10.6], [10.9]. As his report involves analysis of actual trading results of all three pharmacies, it contains little speculation or assumption and is therefore a reliable indicator of the loss the defendants/counter-claimants have suffered.

163I found Gwynne to be a careful witness, willing to admit that if any assumptions underlying the expert report he had given were wrong, his analysis might not be correct, and careful to answer the precise questions put to him.
164In his report, Gwynne dealt with the instructions he was given, and what he was told to take into account. He carefully compared, for example, what he was told were the costs the defendants could have purchased certain items for had they not been in the relevant franchise arrangements, in contrast to what he was told they actually purchased them for. Using this information he arrived at sums said to indicate Shams’ losses suffered as a result of representations made to her.
165The difficulty with Gwynne’s evidence is that it does not go anywhere, because the defendants did not prove the assumptions underlying his expert report. In other words, they did not call evidence to establish the truth of the assumptions Gwynne was asked to take into account in making his expert report.
166Khaira gave very broadbrush evidence to the effect that the assumptions underlying various parts of the report were correct, but it was clear he did not have knowledge of many of the matters he was agreeing to, and the relevant underlying documentation was not put into evidence. This was entirely unsatisfactory as a method of establishing the truth of the assumptions.
167This has the effect that, even if the defendants had established their counterclaim, or any part of it, they have not established the amount of any loss and damage suffered.

Orders
168The defendants sought orders declaring the franchise and credit agreements void ab initio or that they not be enforced against the defendants pursuant to ss 237 or 243 of the ACL.
169It follows from my reasons that they are not entitled to such orders.

Conclusion
170The plaintiffs have established their claims and I will give the plaintiffs judgment on the claim.
171The defendants have not established their counterclaim.
172I direct the parties to consider the orders that should be made as a result of these reasons, including as to interest and costs. If the proposed orders are not agreed, submissions as to the proposed orders should also be provided by each party. If a hearing is required on these matters, it will then be listed.

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Certificate

I certify that these 45 pages are a true copy of the reasons for judgment of Her Honour Judge Marks, delivered on 4 June 2021, revised on 15 June 2021.
Dated: 15 June 2021

Zeinab Ali

Associate to Her Honour Judge Marks

15/ Jun/ 2021