Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 30 May 2008
• Neutral Citation: [2008] FCA 810
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2)

[2008] FCA 810

TRADE AND COMMERCE – Trade Practices Act 1974 (Cth) and related legislation – Trade Practices (Industry Codes – Franchising) Regulations 1998 (Cth) – Franchising Code of Conduct – consequences of franchisor’s failure to comply with cll 10 and 11 of Code – whether franchisor’s non-compliance made franchise agreement void – whether decision in Ketchell v Master of Education Services Pty Ltd[2007] NSWCA 161 should be followed – purpose of Code – need to seek guidance from implications in legislative framework

Held: Franchising Code of Conduct does not evince legislative policy of striking down every franchise agreement entered into by franchisor who fails to comply with its provisions – intention of code is to protect franchisees and place obligations on franchisor to comply – failure of franchisor to comply entitles franchisee to seek to set aside agreement or to seek relief for unconscionable conduct

CONTRACT – fraud – when each party is in breach of an essential term or has conducted itself in a manner amounting to a repudiation – whether one party may terminate based on other’s breach or repudiation – whether one party may terminate under express contractual right to do so when other party has committed fraud – whether party must be ready and willing before being entitled to terminate

Held: When each party is in breach of an essential term or has conducted itself in a manner amounting to a repudiation, neither is ready and willing to perform; neither may terminate at common law or pursuant to a contractual term: Foran v Wight(1989) 168 CLR 385 considered

CONTRACT – general contractual principles – construction and interpretation of contracts – ambiguity in written provision regarding exclusive territory – relevance of pre-contractual discussions – conflicting evidence given by both parties – neither party’s evidence believed – interpretation of common intention of parties – consideration of what each party, by words or conduct, would have led a reasonable person in position of other party to believe – consideration of surrounding circumstances known to parties and purpose and object of transaction – natural and common sense approach to construction – necessity to construe agreement so as to avoid commercial inconvenience

Held: Ambiguousprovision to be interpreted by reference to objective common intention of parties based on reasonable person’s understanding in circumstances of case

CONTRACT – Fraud by franchisee – whether franchisor elected to affirm franchise agreement by its words or conduct – principles of election – whether franchisor confronted with two mutually exclusive courses of action necessitating a choice – whether franchisor communicated election to franchisee – whether reasonable person in franchisee’s position would have understood franchisor’s conduct to amount to affirmation of contract

Held: Franchisor had not elected to affirm the contract – parties understood that franchisor would refrain from terminating for fraud until franchisee given opportunity to respond

CONTRACT – general implication that parties contract to do all that is necessary for the other to have benefit of contract – duty to co-operate may be implied from objective consideration of whole of terms of contract – whether franchisor’s right to impose certain charges on franchisee pursuant to agreement restricted

Held: Franchisor’s power to impose charge on franchisee to effect work required by terms of agreement limited to amount that is reasonable – necessary for franchisor to reduce amount charged to a reasonable amount

COURTS AND JUDGES – precedents – statutory interpretation – State Court of Appeal in Ketchell v Master of Education Services Pty Ltd[2007] NSWCA 161 construed earlier version of legislation and decided every franchise agreement void when made in compliance with legislation – relevant provision re-enacted – whether single judge of Federal Court obliged to follow State Court of Appeal – whether State Court of Appeal decision ‘plainly wrong’ – whether subsequent decision of High Court in ACCC v Baxter Health Care(2007) 237 ALR 512 showed State Court of Appeal’s approach to statutory construction wrong – whether intention of legislation to make void or to provide remedy

Held: State Court of Appeal not followed; purpose of legislation remedial; not intended to avoid for any non compliance

Trade Practices Act, ss 51AC, 51AD, 51AE, 87

Trade Practices (Industry Codes – Franchising) Regulations 1998 (Cth), cll 6A, 10, 11, 23(f)

Allen v Tobias (1958) 98 CLR 36 applied

Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd(2007) 157 FCR 564 cited

Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588 cited

Attorney General (NSW) v World Best Holdings Ltd (2005) 63 NSWLR 557 cited

Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987) 75 ALR 461 cited

Attorney-General v Guardian Newspapers Ltd [1987] 1 WLR 1248 cited

Australasian Performing Rights Association Ltd v Monster Communications Pty Ltd (2006) 71 IPR 212 cited

Australian Competition and Consumer Commission v Baxter Health Care(2007) 237 ALR 512 applied

Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 25 cited

Australian Securities and Investments Commission v National Exchange Pty Ltd(2005) 148 FCR 132 referred to

Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 cited

Blatch v Archer (1774) 1 Cowp 63 cited

Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] AC 909 cited

Cannon Australia Pty Ltd v Patton[2007] NSWCA 24 cited

Champtaloup v Thomas [1976] 2 NSWLR 264 cited

Clough v London & North Western Railway Co (1871) LR 7 Ex 26 cited

Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288 applied

Collins v Baltern (1767) 2 Wils 347 referred to

Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 cited

Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22 cited

Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU) v Australian Competition and Consumer Commission (2007) 162 FCR 466 cited

Compomar Sociedad Limitada v Nike International Ltd(2000) 202 CLR 45 cited

Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 30 cited

DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 applied

Duncan v Koster; The Teutonia(1872) LR 4 PC 171 applied

Emhill Pty Ltd v Bonsoc Pty Ltd (No 2) [2007] VSCA 108 followed

Farah Constructions Pty Ltd v Say-Dee Pty Ltd(2007) 230 CLR 89 referred to

Fitzgerald v Masters(1956) 95 CLR 420 referred to

Foran v Wight (1989) 168 CLR 385

Fraser v NRMA Holdings Ltd (1995) 55 FCR 452 cited

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd(2003) 128 FCR 1 cited

Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40 not followed

Green v Sommerville (1979) 141 CLR 59 referred to

Highmist Pty Ltd v Tricare Ltd [2005] QCA 357 referred to

Hilditch Pty Ltd v Dorval Kaiun KK (No 2)[2007] FCA 2014 cited

Horrocks v Lowe[1975] AC 135 referred to

Hughes v Metropolitan Railway Co(1877) 2 App Cas 439 cited

Hunter BNZ Finance v GC Maloney Pty Ltd (1988) 18 NSWLR 420 cited

Hurley v McDonald’s Australia Ltd(2000) ATPR 41-741 referred to

Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW)(1993) 182 CLR 26 followed

International Air Transport Association v Ansett Australia Holdings Ltd(2008) 242 ALR 47 cited

Jones v Dunkel (1959) 101 CLR 29 applied

Ketchell v Master of Education Services Pty Ltd[2007] NSWCA 161 not followed

Koompahtoo Local Aboriginal Land Council v Sanpine(2007) 241 ALR 88 referred to

Kyrwood v Drinkwater[2000] NSWCA 126 considered

Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 referred to

Lazarus Estates Ltd v Beasley [1956] 1 QB 702 cited

Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 referred to

Marshall v Director-General, Department of Transport(2001) 205 CLR 603 referred to

Master v Miller (1791) 4 TR 320 followed

Matthews v Smallwood [1910] 1 Ch 77 cited

McNamara v Consumer Trader and Tenancy Tribunal(2005) 221 CLR 646 referred to

Melbourne Harbour Trust Commissioners v Hancock (1927) 39 CLR 570 cited

Nguyen v Nguyen (1990) 169 CLR 245 cited

Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 considered

Owendale Pty Ltd v Anthony (1967) 117 CLR 539 referred to

Paal Wilson & Co v Partenreedere Hannah Blumenthali [1983] 1 AC 854 referred to

Pilmer v Duke Group Ltd (in liq) (2001) 207 CLR 165 cited

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 768, 196 ALR 257 cited

Qantas Airways Ltd v Cameron(1996) 66 FCR 246 cited

R v Burdett (1820) 4 B & Ald 95 cited

R v Paulson[1921] 1 AC 271 cited

Radaich v Smith(1959) 101 CLR 209 referred to

Rawson v Hobbs (1961) 107 CLR 466 referred to

Roadshow Entertainment Pty Ltd v CAN 053 006 269 Pty Ltd (Receiver & Manager Appointed) (1997) 42 NSWLR 462 considered

Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289; 76 ALJR 436; [2002] HCA 5 referred to

Scarf v Jardine(1882) 7 App Cas 345 applied

Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 applied

Sellars v Adelaide Petroleum NL (1992) 179 CLR 332 applied

State Training Corporation of India Ltd v Golodetz Ltd [1989] 2 Lloyd’s Rep 277 considered

Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 referred to

SZFDE v Minister for Immigration and Citizenship(2007) 237 ALR 64 cited

Tanwar Enterprises Pty Ltd v Cauchi(2003) 217 CLR 315 referred to

TheOphelia [1916] 2 AC 206 cited

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd(2004) 219 CLR 165 applied

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