St Leger Investments Pty Ltd v True Blue James Pty Ltd

In the Supreme Court of New South Wales, Justice O’Dwyer considered a dispute between St Leger Investments Pty Ltd (the applicant) and True Blue James Pty Ltd (the respondent). The applicant alleged that the respondent had failed to comply with its regulatory disclosure obligations under franchise legislation and had made misleading and deceptive representations to induce the applicant to enter into a franchise agreement, on which the applicant claimed to have relied. The respondent, in turn, filed a cross-claim alleging breach of the franchise agreement by the applicant.

The central legal issues before the court were whether the respondent had breached its disclosure obligations, whether any representations made by the respondent were misleading or deceptive, and if so, whether such conduct caused loss to the applicant. The court also had to determine the standard of proof required for allegations of oral misrepresentation and assess the merits of the respondent's cross-claim for breach of the franchise agreement. Finally, the court was asked to consider whether the conduct of the successful litigant warranted an order for costs other than the usual order following the event.

Justice O’Dwyer dismissed the applicant's claim, finding that the applicant had not discharged the burden of proof in establishing the alleged breaches of disclosure obligations or misleading and deceptive conduct. The court applied principles relating to the degree of precision required for oral representations and the causal link between any such representations and the applicant's loss. The court found in favour of the respondent on its cross-claim for breach of the franchise agreement. The court then requested submissions on the appropriate costs order.