Susu Pty Ltd v M Marinos Pty Ltd (No 5) - [2007] SASC 405

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
SUSU PTY LTD v M MARINOS PTY LTD & ANOR (NO 5)
[2007] SASC 405
Reasons of Judge Lunn a Master of the Supreme Court
19 November 2007
PROCEDURE
Application to strike out parts of statement of claim which had previously been inserted by amendment - held not necessarily abuse of process subsequently to seek to strike out a pleading for which leave to file had been granted - held justice required application to be entertained subject to order for costs - parts of statement of claim struck out.

SUSU PTY LTD v M MARINOS PTY LTD & ANOR (NO 5)
[2007] SASC 405
Reasons on defendants’ further application to strike out parts of the statement of claim.

JUDGE LUNN: I now repeat what I said about the background of the action in my earlier reasons published on 9 February 2007.
“The Cheesecake Shop Pty Ltd, (“the Franchisor”) has sold franchises for Cheeecake shops. In about January 1996 it appointed Suffolke Parke Pty Ltd (“Suffolke”) to be the Master Franchisee of its franchises in this State (“the SA/NT Master Franchise Agreement”). In about June 1996 Baranco Pty Ltd (“Baranco”), Suffolke and the Franchisor entered into an agreement whereby Baranco was franchised to operate a cheesecake shop at 295 Magill Road, Trinity Gardens (“the Premises”) and Baranco commenced such a business there (“the Business”). In about September 1997 the plaintiff bought the Business from Baranco and entered into an agreement with Suffolke and the Franchisor (“the original Franchise Agreement”) whereby the plaintiff was given the right to operate a cheesecake shop at the Premises for the balance of Baranco’s first term of 5 years with an option for another 5 year term. Prior to 1 April 2001 the plaintiff purported to exercise that option. On 10 April 2002 the plaintiff entered into a further agreement with Suffolke and the Franchisor (“the Franchise Agreement”).
In April 2002 Suffolke assigned its Master Franchise to the first defendant (“the Assignment). In about February 2003 the first defendant required the plaintiff to undertake an upgrade of the Premises which was carried out by the plaintiff. From about May 2004 the plaintiff took unsuccessful steps to sell the Business. The defendant refused to give the plaintiff any further extension of the Franchise Agreement. In early April 2005 the first defendant attempted to evict the plaintiff from the Premises which was resisted by the plaintiff. On 18 May 2006 I discharged an interim injunction preventing the first defendant from re-taking the Premises and on that day the plaintiff went out of possession. In this action the plaintiff has claimed, inter alia, that an extended term of its Franchise Agreement did not expire until 10 April 2007, that it had a right to a further extension of its franchise and damages and equitable compensation. (In this outline of the background I have used the same definitions as appear in the statement of claim).”
On 9 February 2007 I struck out some paragraphs of the then statement of claim and ordered further material facts to be pleaded for other paragraphs. On 26 April 2007 I gave leave to the plaintiff to file a new statement of claim (“the statement of claim”). At that hearing, the defendants’ counsel informed me that he still had objections to the proposed new statement of claim, but he did not wish to delay the action by raising any further challenge to it. In an argument on 5 October 2007 on the plaintiffs’ application for further discovery by the defendants, the defendants’ counsel indicated that because of a ruling which I had made about what documents were directly relevant on the pleadings for purposes of discovery he wished to bring an application to strike out parts of the statement of claim before the balance of the discovery application was heard. On 9 October the defendants issued an application seeking that a number of paragraphs of the statement of claim be struck out or alternatively that the plaintiff provide further material facts of them.
At the outset of the argument on the defendants’ application the plaintiff contended that the application was an abuse of process because of the defendants’ previous intimation that they would not object to the statement of claim. I held that it was not an abuse of process. I now give my reasons for that ruling.
The plaintiff’s counsel relied upon the following passages from the judgment of Master Adams in Southern Equities Corporation v Western Australian Government Holdings( No 2), (1993) 10 WAR 351 at 352:
That principle is to the effect that where specific amendments are before the court and require leave to be effected that is only done upon notice to other parties to the action, and those parties then have the opportunity to raise objections to the pleading or reserve their rights to apply later to strike out the pleading, and if they do not do so, that is either object or reserve their rights, then they cannot be heard later to apply to strike it out.
…..
It is true that adherence to this principle can have some disadvantages and some of those were referred to in argument this morning. Whether or not they can be overcome in practise, I do not know, but the principle of the rule is clearly advantageous to the proper administration of justice and to the sensible dispatch of business in the court, particularly in the practise court.
Insofar as this case lays down an absolute rule that a party who does not oppose leave to amend cannot later apply to strike out the amendment I do not accept it as good law in this State. It is not an instance of Anshun estoppel as that does not apply to interlocutory decisions: Australian Granites Limited v Eisenwerk Hensel Bayreuth [2001] 1 Qd R 461. It is an instance of abuse of process, but the general authorities on abuse of process are to the effect that the Court retains a discretion in the circumstances of the case not to bar subsequent proceedings because of it: Development Assessment Commission v Macag Holdings Pty Ltd (2001) 80 SASR 104; Haines v Australian Broadcasting Corporation (1995) 43 NSWLR 404; Nominal Defendant v Manning (2000) 50 NSWLR 139; Ashmore v British Coal Corporation [1992] All ER 981.
The attainment of justice is the paramount consideration for the Court: Cirillo v Citicorp (2001) 216 LSJS 259 at 272. The defendants took an understandable tactical decision not to delay the proceedings further by contesting the adequacy of the statement of claim. They have been pressing to have the matter brought on for trial. However, for reasons outside the control of the defendants the action has not proceeded as quickly as might have been expected on 26 April 2007. The defendants are not to be precluded from changing their tactical decision after it became clear that it had adverse effects for them on the subsequent discovery application. The plaintiff has not yet completed its discovery and is not ready for trial. Any prejudice to the plaintiff will be cured by the order for costs which I will make in its favour. It is generally in the interests of justice that any inadequacies in the pleadings should be dealt with before the action is referred for trial, albeit that it should have occurred earlier. Accordingly, the defendants are not to be barred from now bringing their application to strike out parts of the statement of claim.
The statement of claim is a convoluted document which is difficult to follow. The crux of it is the “Extension Policy”, which is pleaded in paragraph 10:
At some time between July 1997 and September 1997 the Plaintiff was orally informed by Suffolke (Suffolke’s Representations”) of a policy, the effect of which was that so long as franchisees were in substantial compliance with the franchise agreements, the franchisee would, upon its request be entitled to extend the franchise agreement after the initial 10 years in 5 year terms subject to payment of ½ of the then current franchise fee (“the Extension Policy”).
PARTICULARS
10.1Ian MacKenzie and Suzanne du Bois were orally informed of the Extension Policy by Mr Greg Bradshaw in the immediate vicinity of the Hawthorn Cheesecake Store.
10.2On the said occasion the Plaintiff made an enquiry of Mr Bradshaw (representing Suffolke) as to the continuation of the franchise following the expiry of the initial 10 years.
10.3In response Mr Bradshaw said words to the effect that:
10.3.1 the Cheesecake Shop Franchise was run on the basis of maintaining existing franchises.
10.3.2 so long as franchisees were not in default, were compliant and paid ½ of the then current franchise fee there would be no problem in obtaining a further franchise term.
The main issue in this case is the extent to which the first defendant was bound by this Extension Policy and to what legal remedies the plaintiff is entitled from the defendants not adhering to it. In compliance with R 46A.03(c) of the Supreme Court Rules 1987 the plaintiff has pleaded four alternative causes of action, although some of them are not directly linked to the facts as pleaded. The four causes of action are broadly contractual breaches, equitable estoppel, unconscionable conduct contrary to ss 51AC and 51AA of the Trade Practices Act and misleading or deceptive conduct contrary to s 52 of that Act. The contractual breaches pleaded in paragraph 70 to 79 of the statement of claim are not the subject of complaint in the present application. The other causes of action are attacked, inter alia, because they seek relief based on the first defendant being obliged to grant to the first plaintiff a 5-year extension of its franchise. It is the pleading of the plaintiff’s alleged entitlement to this extension which causes the major difficulties.
This issue in turn depends upon when and how the defendants first became aware of the Extension Policy and that the plaintiff was relying upon it. The defendant only became the Master Franchisor in April 2002 when it obtained an assignment of the interest of Suffolke in the SA/NT Master Franchise agreement. On the causes of action alleged it is of vital importance whether the first defendant knew of the Extension Policy and the plaintiff’s reliance upon it at the time at which it received the assignment from Suffolke. There was no authority cited, and it is contrary to my understanding of the law, that the first defendant could be made liable to grant a 5-year extension to the first plaintiff if it only first became aware of the Extension Policy after it took the assignment from Suffolke. It if learnt of it subsequently, there may be other remedies available to the plaintiff, but not a 5-year extension of the term of the franchise.
Paragraph 25 of the statement of claim pleads:
By reason of the matters set out in paragraphs 2, 19 and 21 to 24 above, the Defendants were aware or it is to be inferred that the Defendants were aware, both as at the date of the Assignment and at all times thereafter;
25.1of the Extension Policy, and/or
25.2of franchisees’ expectations that extensions would be granted consistent with the Extension Policy in addition to any option in their franchise agreement, and/or
25.3of the Franchisor’s expectation that extensions would be granted after the initial 10 years, and/or
25.4that the Extension Policy and/or extensions were inconsistent with the written terms of the franchise agreements,
25.5other Master Franchisees’ and the Franchisor’s intentions for extensions to occur after the initial 10 years.
The plea that the defendants “were aware, both as at the date of the Assignment and at all times thereafter” is nonsense. If they were aware at the time of the Assignment, they must have also been aware of it at later times. If it is meant to be a plea in the alternative that either the defendants were aware at the time of the Assignment or, if not, they first became aware at some later time, it needs to be pleaded differently. The effect of the plea as it stands is only that they were aware at the time of the Assignment, and, if the matters in paragraphs 2, 19, and 21-24 do not support this, they must be struck out. Those paragraphs plead (paragraph 2 can be ignored for this purpose):
19Prior to the Assignment alleged in paragraph 20:
19.1Suffolke, the Franchisor and the Defendants engaged in negotiations in respect of the sale and/or assignment of the SA/NT Master Franchise Agreement from Suffolke to the First Defendant (“the Assignment Negotiations”).
19.2the Franchisor informed the Defendants that there was no extension policy in respect of the SA/NT Master Franchise Agreement and/or that the SA/NT Master Franchise Agreement might expire at the end of January 2011.
19.3the Defendants carried out due diligence research in respect of the Master Franchise and in respect of the Assignment (“Due Diligence”).
19.3.1 Suffolke and/or the Franchisor provided the Defendants with a number of documents including a copy of a standard franchise agreement;
19.3.2 the Defendants and/or their employees or agents prepared or caused to be prepared a number of documents for the purpose of the Due Diligence;
19.3.3 the Defendants and/or their employees or agents spoke with a number of people involved in the Cheesecake Shop Franchise;
19.3.4 the Defendants and/or their employees or agents and/or Suffolke caused a cashflow forecast (“the Cashflow Forecast”) to be prepared;
19.3.4.1 the Cashflow Forecast included “income” from royalties and Extensions and the opening of new franchises;
19.3.4.2 the Cashflow Forecast did not include “income” from selling existing franchises.
…..
21On 30 July 2002 the Franchisor, the Plaintiff and other franchisees, discussed Extensions and/or the Extension Policy and/or the application and operation of the Extension Policy in the presence of the First Defendant represented by the Second Defendant.
PARTICULARS
21.1At a CIT meeting on 30 July 2002 it was noted that the standard franchise term was 5 years with an optional second 5 year term. Jane Smart, a representative of the Franchisor:
21.1.1 confirmed that so long as franchisees were in substantial compliance with their franchise agreements, the franchisee, if they wished, would be entitled to extend the franchise agreement after the initial 10 years in 5 year terms subject to payment of ½ of the then current initial franchise fee;
21.1.2 noted that an Extension Policy after the initial 10 years would not be automatically granted, but would be granted if an application for an extension was made.
21.1.3 noted that parties purchasing a franchise business part way through the optional term would have to follow the same procedure.
(“the Confirmation of the Extension Policy”)
22The Defendants did not demur from the Franchisor’s Confirmation of the Extension Policy.
23The First Defendant:
23.1caused minutes of the CIT meeting on 30 July 2002 to be prepared which recorded the Confirmation of the Extension Policy;
23.2caused those minutes to be circulated to all franchisees.
24Between April 2002 and March 2005 the First Defendant permitted extension of franchises consistent with the Extension Policy and otherwise were aware of franchisee’s expectations of being granted extensions.
24.1In the course of the transfer of each of the Glenelg, Port Adelaide, Modbury, Torrensville, Findon and Prospect franchises, the vendor and/or the purchaser sought a further franchise term after the initial 10 years on the basis of the Extension Policy.;
24.2The First Defendant permitted the sale by the franchisee of each of the Glenelg, Port Adelaide, Modbury, Torrensville, Findon and Prospect franchises upon the basis that a further term after the initial 10 years was granted for each respective franchise.
I am not satisfied that paragraphs 21-24 do plead, or plead properly, that the first defendant was aware of the extension policy, and the plaintiff’s reliance upon it, at the time of the assignment. There is nothing pleaded in those paragraphs to support any inference that the defendants were aware in April 2002. Thus the reference to paragraphs 21-24 is to be struck out of paragraph 25. This leaves the factual basis of paragraph 25 only supported by paragraph 19.
Paragraph 19 is unaltered from the equivalent paragraph which I struck out from the earlier statement of claim. In my reasons of 9 February 2007 I said concerning it:
….. paragraph 19, standing alone, cannot support what is pleaded in paragraph 20 (now 25). It is fundamental to much of the plaintiff’s case to show that the defendants became aware of the alleged extension policy when it took the Assignment from Suffolke. When paragraph 19 is analysed it says no more that the defendants made apparently thorough investigations about the master franchise before taking the Assignment. In essence its thrust is that an inference is to be drawn that Suffolke of the Franchisor must have disclosed the Extension Policy in their dealings with the defendants which led up to the Assignment. That is no more than mere speculation. Indeed sub-para 19.2 discloses that there was specific reference to some “extension policy” in relation to the Master Franchise Agreement, but there is no similar reference to the Extension Policy in relation to sub-franchises granted by Suffolke in this State. If there was to be no “extension policy” for the Master Franchise Agreement, it seems somewhat incongruous that Suffolke or the Franchisor should also inform the defendants that the plaintiff had been told of an extension policy to which the first defendant might not be able to give effect if its own Master Franchise Agreement was not extended. Thus on what is pleaded it is no more likely that Suffolke or the Franchisor would have disclosed any Extension Policy to the defendant than that they would not have done so. …..
The mere fact that cashflow forecasts implicitly recognised the continuation of sub-franchises is not indicative of any “Extension Policy”: it would be equally consistent with new franchises being granted. Likewise, the absence of any value of goodwill upon the sale of existing sub-franchises in the cashflow forecast does not indicate an awareness of the “Extension Policy”. If there was some proper pleading of Suffolke or the Franchisor disclosing the “Extension Policy”, similar to sub-para 19.2, further particularity of it might be properly left until after discovery, but here it appears the plaintiff is engaged on a “fishing” expedition in the hope that discovery by the defendants of the due diligence documents will disclose something on which the plaintiff can then mount a case that the defendants were aware of the “Extension Policy”. Accordingly, paragraphs 19 is to be struck out as embarrassing and as not disclosing a cause of action.
A further defect in the pleading of 19.3 is that it pleads a number of documents, but it does not, as is required by R 46A.09.16 and R 46.05(2) of the Rules, plead their effect: Wunda Joinery Pty Ltd v Wunda Projects Australia Pty Ltd, Lunn M, 16 August 2007, Judgment No [2007] SASC 301. Here there is no pleading that the effect of the documents is that they gave notice of the Extension Policy to the first defendant.
Paragraph 23 is contrary to R 46A.02(b) in being merely a plea of evidence. It appears to be only a means of proving what is alleged in paragraph 21.
If paragraph 24 was meant to deal with the extension of franchises between April 2002 and 30 July 2002, it should have been expressly pleaded as being in that period. Paragraph 24 is also defective in pleading “and otherwise were aware of franchisees’ expectations of being granted extensions”. Insofar as those expectations were not based on the Extension Policy, as pleaded in paragraph 10, they cannot be relevant to the plaintiff’s case.

Accordingly, paragraphs 19, 23, 24 and 25 are to be struck out. I decline to strike out paragraphs 21 and 22.
The defendants also seek to strike out paragraphs 26, 27 and 28 of the statement of claim which provide:
26Notwithstanding the matters set out in paragraph 25 above, from a date not known to the Plaintiff up to about March 2005 the Defendants silently maintained a position that the First Defendant retained a discretion as to whether or not to offer extensions to franchisees.
26.1On or about 25 August 2003, during the course of a proposed transfer of the Prospect Cheesecake Store, the Second Defendant, representing the First Defendant, told the intending purchasers that an extension was entirely within his discretion and, if he so chose, he could take over the franchise himself at the end of the franchise without compensation to the franchisees;
26.2Despite advising such position to the intending purchasers, neither of the Defendants advise such position to the Plaintiff, the Franchisor or any of the franchisees.
27At no time between April 2002 and March 2005 did either of the Defendants:
27.1demure from the Confirmation of the Extension policy;
27.2advise the Plaintiff that the Extension Policy did not apply;
27.3advise the Plaintiff that the First Defendant would not grant a new franchise term to the Plaintiff, any transferee, or any proposed transferee on the expiry of the initial 10 years;
…..
27.6advise the plaintiff of the First Defendant’s position that it considered that it retained a discretion as to whether or not to offer extensions.
28The Plaintiff knew of the matters set out in paragraphs 2 and 20 to 24 inclusive above.
Paragraph 26 is an embarrassing pleading in that it assumes that the retaining of a discretion is contrary to the Extension Policy as pleaded in paragraph 10. The plea in paragraph 10 is conditional upon substantial compliance and the making of a payment. That may well have allowed the defendant some discretion about offering extensions. Paragraph 26 is to be struck out.
Paragraph 27 likewise is embarrassing in that it assumes there was a duty on the defendants as from April 2002, but no proper basis for it has been pleaded. Paragraph 27 is to be struck out.
The plaintiff’s knowledge pleaded in paragraph 28 of the matters in paragraphs 2 and 20-24 inclusive is irrelevant to any cause of action, and is to be struck out.
Paragraphs 37 and 38 of the statement of claim plead:
37In or about September 2004 the Franchisor confirmed with the Defendants that the SA/NT Master Franchise Agreement would not be extended beyond the end of January 2011.
38In about September 2004 the Franchisor confirmed with interstate Master Franchisees that their Master Franchise agreements would expire at the end of the respective Master Franchise agreements.
Counsel for the plaintiff described paragraph 37 as a trigger for what is pleaded in paragraph 39. I accept it is therefore a proper pleading under R 46A.03(b). Paragraph 38 is sufficiently linked to paragraph 73 which is not challenged.
The defendants sought to strike out paragraphs 39 and 40 of the statement of claim which provide:
39From September 2004, and as a result of the Franchisor’s confirmation set out in paragraph 37 above, the Defendants developed a scheme (“the Scheme”) to recover as much financial return as possible, using the First Defendant’s position as Master Franchisee of the Cheesecake Shop Franchise in South Australia and the Northern Territory.
PARTICULARS
39.1The Defendants planned to:
39.1.1 renege on the Extension Policy and/or refuse to allow Extensions;
39.1.2 use the First Defendant’s position on refusing Extensions as leverage in a dispute with the Franchisor about the validity of the Franchisor’s proposed course of action to let the SA/NT Master Franchise Agreement lapse in January 2011’
39.1.3 advise franchisees that the Defendants considered that the First Defendant retained a discretion whether or not to offer Extensions.
39.1.4 refuse Extensions as late as possible;
39.1.5 take maximum advantage of franchisee’s upgrades, sales efforts and sales expenses;
39.1.6 allow the initial 10 years of franchises to expire;
39.1.7 immediately thereafter re-issue franchise agreements but with the Defendant as “vendor”;
39.1.8 convert the capital value on the sale of a franchise business from the franchisee to the First Defendant;
39.1.9 encourage other master franchisees to adopt a similar course and/or to take legal action against the Franchisor in respect of the matters set out in paragraphs 37 and 38.
40The Scheme is to be inferred from the facts set out in paragraphs 19 to 27 and 36 to 38 above and paragraphs 41 to 43, 45, 46.4, 47 to 49, 52, 57 to 60 and 63 below.
I accept these paragraphs can be a plea of unconscionable conduct under ss 51AC and 51AA of the Trade Practices Act. Under s 51AC(3)(f) of that Act evidence is admissible of the defendants’ conduct in transactions with other franchisees compared with its conduct towards the plaintiff.
Paragraph 39 is only a plea of intention. That is permissible where the intention is wholly or partially carried into effect. However, subparas 39.1.2 and 31.1.9 are not related to any other plea that they were carried into effect. (Paragraph 73 is inconsistent with 39.1.9 having been carried into effect). Furthermore, even if they were carried into effect, there is no plea of any casual connection between these matters and the plaintiff. I do not see how alleged unconscionable conduct of the first defendant which has no direct effect on the plaintiff can form part of the plaintiff’s case. Accordingly, subparas 39.1.2 and 39.1.9 will be struck out.
The defendants sought to strike out paragraph 49 which provides:
49On 1 April 2005 the Defendant refused an Extension for the Elizabeth Cheesecake Shop and the Second Defendant informed the intending purchasers of the Elizabeth Cheesecake Shop (“the Faircloughts”) that Extensions in respect of other franchises coming up for renewal would not be granted either.
I accept this is a proper plea of implementation of the plan in paragraph 39.
The defendants seek to strike out paragraph 50 of the statement of claim which provides:
50In early April 2005 the Plaintiff was informed of the matters set out in paragraph 49 above by Mr Simon Winter.
Paragraph 50 is not relevant. It is also unclear on the pleading whether Mr Simon Winter was meant to be the agent of the plaintiffs or the defendants or of both.
The defendants seek to strike out paragraphs 84 to 86:
Equitable Breaches
84The First Defendant, by reason of the matters set out in paragraphs 10 to 12 and 19 to 28 was estopped from denying the Plaintiff an Extension.
85The First Defendant, in equity, ought to have granted and (sic) Extension to the Plaintiff and had such Extension been granted, the Plaintiff would have sold the business for a net capital return estimated at but not limited to $280,000.
86In equity, the First Defendant ought to be ordered to pay the Plaintiff compensation estimated at but not limited to $380,000.
As stated above, I do not consider as a matter of law any such estoppel could operate to require an extension unless the defendant was aware of the Extension Policy, and the plaintiff’s reliance on it, at the time of the assignment from Suffolke. It is to be inferred from paragraph 79 that the compensation claimed in paragraphs 85 and 86 was based on a sale with a 5 year extension, but no basis in law has been made out on the pleadings for that. Paragraphs 84-86 are to be struck out.
The defendants also seek to strike out paragraphs 87 to 95 which provide:
Trade Practices Act Breaches
87Further the First Defendant has, in trade or commerce, in connection with the supply of Master Franchisee services, by reason of its refuse to honour the Extension Policy and/or by reason of its refusal to provide an Extension for the Plaintiff engaged in conduct that is, in all the circumstances set out above, unconscionable and the First Defendant has breached s 51AC of the Trade Practices Act.
88As a consequence of the First Defendant’s breach set out in 87 above the Plaintiff was unable to sell the Business and has suffered loss and damage estimated at but not limited $280,000 being the estimated net capital value not received from the Lost Sales.
89Further the First Defendant has, in trade or commerce, in connection with the supply of Master Franchisee services, by reason of its failure to advise the Plaintiff about the First Defendant’s position in respect of the Extension Policy and/or Extensions in June 2002 or before August 2003 engaged in conduct that is, in all the circumstances set out above, unconscionable and the First Defendant has breached s 51AC of the trade Practices Act.
90As a consequence of the First Defendant’s breach set out in 89 above the Plaintiff has suffered loss and damage estimated at but not limited (sic) $280,000 being:
90.1the lost opportunity to sell the Business earlier;
90.2lost opportunity to pursue alternative business interests;
90.3the lost Quisnos deposit;
90.4The Upgrade Costs incurred;
90.5the wasted sales Costs incurred.
91The first Defendant has, in trade or commerce, by reason of the matters set out in paragraphs 20, 21 and 84 engaged in conduct that is unconscionable within the meaning of the unwritten law and has breached of s 51AA of the Trade Practices Act.
92As a result of the First Defendant’s breach of s 51AA of the Trade Practice Act the Plaintiff has suffered loss and damage and refers to paragraph 85 above.
93The First Defendant has engaged by reason of the matters alleged in paragraphs 19 to 27, and in the alternative the Scheme, in misleading and deceptive conduct in breach of s 52 of the Trade Practices Act.
94As a consequence of the First Defendant’s breach set out in 93 above the Plaintiff has suffered loss and damage estimated at but not limited $280,000 being:
94.1the lost opportunity to sell the Business earlier;
94.2lost opportunity to pursue alternative business interests;
94.3the lost Quisnos deposit;
94.4The Upgrade Costs incurred;
94.5the wasted sales Costs incurred.
95The Second Defendant aided, abetted and procured the First Defendant’s contraventions set out above and/or was directly or indirectly knowingly concerned and a party to the First Defendant’s contraventions of ss 51AC, 51AA and 52 of the Trade Practices Act set out above.
95.1The Second Defendant was the sole director and secretary of the First Defendant and each of the First Defendant’s actions took place at the direction of and/or in the knowledge of the First Defendant.
For the reasons set out above, paragraphs 88, 90 and 94 are to be struck out insofar as they claim a loss of $280,000 based on the plaintiff’s having a right to an extension of the franchise. Otherwise those paragraphs can stand.
Although it was not sought, clearly paragraph 98 is to be struck out.
I have today made the following orders:
1That paragraphs 19, 23, 24, 25, 26, 27, 28, 39.1.2, 39.1.9, 50, 84-86, 88, 90, 94 and 98 be struck out from the statement of claim.
2That the plaintiffs pay to the defendants their costs of the application for striking out.
3That the defendants pay to the plaintiffs their costs thrown away by reason of FDN 50 not having been dealt with on 26 April 2007.
4Fit for counsel.
5Further Directions Hearing set for 5 December 2007 at 9.15 am.