Ali v Australian Competition and Consumer Commission

I The claim, defence and issues for determination ([17]-[57]) 13 The claims made against the respondents at first instance were set out in a concise statement that was not amended. Reference was made in argument that this was a pleading. It was not. Its nature as a convenient and effective way of supporting the commencement of a proceeding by identifying anticipated issues is set out in the Central Practice Note. It forms the foundation for later case management and the delineation of issues. Here, no pleading was filed. Affidavit evidence was read and cross-examined upon and documents were tendered. The reasons of the primary judge can be taken to reflect the development and resolution of the issues. At LJ [50], the primary judge referred to the breadth of the evidence and, implicitly, the difficulties in delimitation of the case thereby. In these circumstances he took the ACCC as confined to the concise statement.

The Charging Representation 14 In the introduction to Part I, after briefly describing the three website representations, the primary judge described the Charging Representation at LJ [20] as follows: The ACCC also claims that, as to the costs and expenses of establishing an operating franchise site, Geowash represented to prospective franchisees that it would charge franchisees in accordance with the terms of a standard form franchise agreement and a disclosure document. It says that the representation was made by the provision of the franchise agreement and disclosure document (in various versions) to franchisees. This is referred to as the Charging Representation. 15 At LJ [26], the primary judge described the claim as to the falsity of the Charging Representation: As to the Charging Representation, the ACCC claims that a disclosure document and a draft standard form franchise agreement were provided by Ms Ali and Mr Cameron to potential franchisees. The documents had specific provisions about charging. None of them allowed for an up front capital sum to be charged. Rather, they allowed for recoupment of actual costs of fitting out premises and costs of set-up that were incurred by Geowash. It is alleged that the presentation to prospective franchisees of the franchise agreements and disclosure documents in that form represented that charging for fit-out and set-up would occur in the manner expressed in those documents. There are two aspects of this representation to be borne in mind: First, it was part of the ACCC's case that an up-front capital sum could not be demanded under the terms of the contract. Secondly, the contract permitted the recoupment of actual costs of fit-out and set-up incurred by Geowash. 16 At LJ [27], the primary judge set out the case advanced by the ACCC as to the falsity of the Charging Representation: The case advanced for the ACCC as to the falsity of the Charging Representation is that the dealings by Ms Ali and Mr Cameron with franchisees concerning payments to be made did not reflect the terms of the franchise agreements and disclosure documents provided to prospective franchisees. Instead, Ms Ali and Mr Cameron dealt with franchisees in the following way: (1) Ms Ali or Mr Cameron or both of them would ascertain the maximum budget of the prospective franchisee; (2) negotiations with the franchisee would be undertaken on the basis that a franchise could be acquired for a lump sum which was discussed and agreed being typically the maximum budget of the prospective franchisee; (3) shortly after a franchise agreement was entered into, Ms Ali or Mr Cameron or both of them would demand on behalf of Geowash the payment of a lump sum; (4) the demand for the lump sum amount was made without reference to the actual costs of fit-out or set-up of the franchise site; and (5) it was the business model or practice of Geowash to make a demand for a lump sum payment shortly after a franchise agreement was entered into by the franchisee. Within this description of the case advanced, one can see elements of the unconscionability case (to which we will come): the way the "budget" was framed divorced from actual cost (of fit-out and set-up), and its demand in two lump sums. 17 The case was put on the ground of deliberate falsity as was explained by the primary judge at LJ [28]: … The case alleged is that because of the evidence of the actual dealings with franchisees as to payments to Geowash, the matters stated in the disclosure documents and the franchise agreements as to the manner in which franchisees would be charged were not true. It is said that the matters stated in those documents conveyed a representation as to what Geowash intended to charge when the intention of Geowash, through Ms Ali and Mr Cameron was to act in the way that they did. They were not intending to recover actual costs. Rather, it was always their intention to charge lump sums by reference to amounts established by reference to an assessment of the capacity of the individual franchisee to pay and then apply significant parts of those monies for their own benefit. 18 The nature of the defence to the Charging Representation case (taken from the concise response and the process of pre-trial case management) was described (without any submitted inaccuracy) by the primary judge at LJ [35]-[36], [38] and [40] as follows: [35] As to the Charging Representation claim, Ms Ali and Mr Cameron say that there was nothing in the disclosure documents or the franchise agreements about how the franchisees would be invoiced. They say that in their dealings with the franchisees they asked for a budget in order to ascertain how much the franchisee wanted to spend, to avoid exploring inappropriately cheaper options and to act in the franchisee's interest to pursue the best opportunity available. Further, they say that the way in which Geowash charged its franchisees was explained in plain English documents given to all prospective franchisees. It was those documents that franchisees relied upon when entering into the franchise agreements and it was not misleading in any way to deal with franchisees in relation to charges for fit-out and set-up costs in a way that reflected those documents. [36] Ms Ali and Mr Cameron also say that franchisees were charged in accordance with the terms of the franchise agreements or at least their understanding of how those documents operated which understanding was based on legal advice received by Geowash. … [38] They accept that monies received from franchisees were used to pay amounts to each of them that were calculated based upon a percentage of those amounts, but they say that Geowash was entitled to pay those amounts from the monies received from the franchisees. They say that the percentage based amounts were to remunerate Ms Ali and Mr Cameron for the work that they did to negotiate lease terms, establish the franchise premises and arrange the fit-out, permits and other matters required for each site. On that basis, they were part of the costs that Geowash was entitled to charge franchisees. … [40] They also say that by reason of the legal advice given to Geowash, they believed that the charging conformed to the requirements of the franchise agreement and, on that basis, they could not be knowingly concerned in or party to any misrepresentation about price by Geowash. 19 Thus the primary judge was clear in his recognition that the case of all three respondents was that nothing in the franchise agreement or disclosure document prevented the charging of two lump sum payments, that the budget was innocently ascertained to assist the franchisees, that the surrounding plain English documents explained what they were doing, that what was done accorded with those documents, that moneys accepted to be paid to them were legitimate remuneration by Geowash for work they did as to amount to costs, and that they believed on legal advice that the charging (and implicitly treating remuneration by commission as costs) conformed with the franchise agreement. 20 It can be seen from these descriptions of the defence concerning the Charging Representation that a central issue was the honesty of both Ms Ali and Mr Cameron and, implicit within that, whether they understood that how they were behaving was contrary to the franchising documents and whether they were consciously misleading the franchisees.

Unconscionability and lack of good faith 21 At LJ [41], the primary judge set out the ACCC's claims on unconscionability (and lack of good faith), setting the claim out in nine propositions: (1) negotiating the sale of franchises to prospective franchisees who were typically unsophisticated when it came to owning and operating a business; (2) ascertaining from the prospective franchisees their maximum budget; (3) negotiating with prospective franchisees as if a franchise could be acquired for a lump sum, being typically the maximum budget; (4) engaging in the above conduct despite it being inconsistent with the terms of the franchise agreement and disclosure document; (5) representing that the prospective franchisee would be able to acquire an operating Geowash franchise within the discussed budget; (6) invoicing for lump sums under franchise agreements when there was no right to do so; (7) demanding and pressing for urgent payment of lump sums that were usually more than the budget that had been discussed; (8) failing to deliver an operating car wash to the majority of its franchisees; and (9) spending a significant portion of the funds received from franchisees for purposes that were not permitted under the franchise agreements, including payment of general operating expenses of Geowash, the payment of commissions to Ms Ali and Mr Cameron and transferring funds into assets directly or indirectly controlled by Ms Ali or Mr Cameron. 22 It is to be noted that direct evidence was given in relation to seven (7) franchisees. The case made, however, concerned 30 franchisees who had signed the franchise agreements and paid some fees, of whom 18 had proceeded to make lump sum payments to Geowash to secure and develop a franchise site. Part of the dispute on appeal is the legitimacy of the conclusions that the primary judge drew about all franchisees from the evidence led in respect of the seven, in particular in the context of the applicability of s 21(4)(b) of the ACL about system or pattern of conduct. Section 21(4)(b) was and is in the following terms: 21 Unconscionable conduct in connection with goods or services … (4) It is the intention of the Parliament that: … (b) this section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct or behaviour; and … 23 In the following paragraph (LJ [42]) the primary judge expressed more broadly and more summarily the nature of the claims of unconscionability and lack of good faith: As to the unconscionable conduct, in broad terms the ACCC says that Geowash dealt with prospective franchisees by agreeing a lump sum amount to be paid for a franchise that reflected the budget of the franchisee. Those agreements were reached with franchisees at a time when there had been no fit-out. The ACCC claims that although Geowash was entitled to undertake the fit-out as agent for the franchisee and charge for the fit-out costs and certain other specific charges, what occurred was that Geowash, without regard to actual fit-out costs or charges that could be made by Geowash under the franchise agreement, invoiced franchisees for two instalments of the lump sum amount. It says that when the instalments were paid, a considerable proportion was used to pay amounts to Ms Ali and Mr Cameron based upon a percentage when the franchise agreement did not allow Geowash to charge franchisees for such commissions. It also says that the instalment amounts were applied to meet general operating costs of Geowash rather than to meet the cost to fit-out the premises for the particular franchise. Ultimately, it is claimed that Geowash failed to deliver an operating car wash franchise to the majority of its franchisees. 24 At LJ [44]-[48], the primary judge set out the elements of the defence to these claims. These included that the franchisees did not lack sophistication; that the representations to the franchisees about charging and their dealings with all franchisees were consistent; that the franchisees committed to their franchises on the basis of the communications with Ms Ali and Mr Cameron, not on the basis of a close reading of the contractual documentation; and in these circumstances there was and could be no exploitation or taking advantage of franchisees by Geowash acting consistently with information given to the franchisees. As to the charges, one way that was sought to justify them was described by the primary judge at LJ [45]: that all the deductions and payments were in a sense costs of the projects, saying: As to the charges that were made, Ms Ali and Mr Cameron say that Ms Ali developed an estimate as to what the development cost would be for a particular site based on a business model that involved Ms Ali and Mr Cameron doing work 'in-house'. This enabled them, it was said, to keep costs to franchisees at a competitive level. By invoicing franchisees in lump sum 'staged payments' they say that they were acting in accordance with legal advice to Geowash. They also say that the advice was to the effect that Geowash could include the percentage based payments made to Ms Ali and Mr Cameron as part of the staged payments. 25 It was also submitted that operating businesses were delivered and that the unconscionability and lack of good faith cases could not extend beyond the franchisees who gave evidence: LJ [48].

The distillation of the issues for determination 26 The primary judge was presented with a great deal of evidence: oral, written and documentary. The case was broad and to a degree fluid, especially because of the inconsistency in the self-justificatory evidence of the appellants, especially Ms Ali's which was found to be exaggerated and dishonest. 27 In dealing with the submissions, the primary judge made this comment at LJ [51] about the submissions, especially those of the appellants: I directed that the parties file closing submissions in which the findings that the Court was invited to make were stated. Much of the evidence was not addressed in those submissions. In particular, submissions advanced for Ms Ali and Mr Cameron were not constrained by the discipline of a close consideration of the documents, affidavits and oral evidence. Instead, the submissions were constructed at a level of generality that failed to engage with the detail. The Court was not taken to many of the documents that were received into evidence whether by way of references to support submissions or findings the Court was asked to make or otherwise. These reasons reflect the way matters were addressed by way of closing submissions and the findings that the Court was invited to make. Similar comments could be made about the approach to the appeal. 28 At LJ [52]-[56], the primary judge sought to distil the case into manageable conceptual form. The broadest distillation was expressed at LJ [52]: … [T]he main case advanced by the ACCC focussed upon the way Geowash charged franchisees who entered into a franchise agreement and what it did with the money. Although a lot of evidence was led to place those dealings in context, ultimately, the case concerned only the dealings by Geowash (through Ms Ali and Mr Cameron) in relation to those charges. Speaking broadly, the case alleged by the ACCC as to what franchisees were charged reduced to two main parts. 29 The two parts were elaborated upon at LJ [53] and [54]. The first part of the case advanced was the representation that Geowash would charge for actual costs of the fit-out and set-up when the intention was to charge for what each franchisee was willing to pay and to use this money to pay commissions and to meet Geowash's general operating costs and expenses (which latter costs included, but were not confined to, fit-out and set-up of each outlet): see LJ [53]. Though in this expression of the matter the primary judge did not use the words "intentionally mislead the franchisees", it was clearly wide enough to encompass such a case of dishonest representation. Key to the first part of the case was the commission payments, the primary judge saying at LJ [53]: … Ms Ali and Mr Cameron maintained that the commissions were actually payments for work done to establish and set-up each franchise. The ACCC maintained that they were payments made for securing the 'sale' of a franchise. Linked to this part of the case was the claim that charges were rendered by Geowash to franchisees on the basis of what they were willing to pay. It was this manner of charging that provided the means by which Geowash could plan to pay the commission payments and then use the balance of the amounts received from franchisees to meet actual fit-out and set-up costs. These matters were central to his Honour's later findings of dishonesty. 30 The second part of the case advanced concerned with charging was the unconscionability and lack of good faith described in LJ [54] as follows: … Essentially, franchisees were told they could acquire a franchise within a budget, they were then invoiced lump sum amounts that Geowash was not entitled to charge that were often more than the budget and a considerable part of those amounts was applied to pay commissions to Ms Ali and Mr Cameron and to meet general operating costs of Geowash rather than to meet the costs of establishing the franchise. Ultimately, Geowash failed to deliver an operating car wash to a number of franchisees. The franchisees were relatively unsophisticated when it came to setting up a franchise business. 31 The evidence did not establish with any precision how much money was spent on each franchise from the moneys paid, despite attempts by both sides: see LJ [55].

II Overview of course of dealings between Geowash and franchisees ([58]-[81]) 32 The overview, though in a sense introductory, dealt with some evidence common to all franchisees. At LJ [58], the primary judge concluded "that, for the most part, dealings by prospective franchisees followed a similar course". Importantly, this was based in part on Ms Ali's and Mr Cameron's evidence. 33 An email would be sent after an enquiry with a "Franchise Overview". This was described by the primary judge at LJ [61]-[64], of which no complaint was made. The ACCC emphasised that to the extent the document spoke of use of funds, it referred to costs and variability of set-up depending on design and fit-out. No statement was made about commissions or appropriation of funds to the general revenue of Geowash. 34 Geowash also provided a document entitled "Franchise FAQs". At LJ [65], the primary judge referred to the part of the document dealing with the two 50% payments "of your purchase price". The appellants emphasised this in their submissions below and on appeal: That the true character of what happened was not a dishonest and deceptive series of courses of dealing of saying one thing (in writing and orally) to franchisees, and intentionally doing another, but was a commercial negotiation of a purchase price of a franchise. The ACCC submitted that this type of reference to "purchase price" was consistent with their case because it should be seen as used in the context of discussion of costs of fit-out and set-up. 35 At LJ [66], the primary judge dealt with the third explanatory document entitled "Your Next Step" which had five steps from application to commencement of business: Stage 1 Complete the details at the back of this profile and E-mail them back to info@geowash.com.au. Please also include the signed copy of the Confidential Non-Disclosure Agreement. Your application will be reviewed where we will hope to ensure you have the ideal characteristics for the business structure. If your application is successful, you will be invited to proceed to the Second Stage. Stage 2 At the Second Stage, Geowash will make an offer to purchase the rights for your selected region, territory, state or country. Stage 3 Once the offer is accepted, you will be asked at this point to sign the Franchise agreement and pay the Franchise Fees for the purchase of your Geowash Franchise. Stage 4 Once you have purchased the Geowash Franchise, we will provide you with further information required for the establishment of your outlet. You will be trained under our comprehensive training program. Stage 5 (Final Stage) With our personal assistance you will commence your business. 36 A deposit of $4,000 or $5,000 would entitle a prospective franchisee to receive a draft franchise agreement and a disclosure document. Whilst the primary judge dealt with the terms of these agreements in some detail, his Honour's general conclusion can be seen at LJ [75], a follows: At this stage I note that neither the Disclosure Document nor the franchise agreement provided expressly for the payment of a purchase price or for payment of fit-out and other set-up costs in two instalments. Rather, the documents referred to the payment of a franchise establishment fee and the actual costs associated with the fit-out of the site. 37 The establishment fee was $35,000 or thereabouts, including any deposit already paid. It was payable upon signing of the franchise agreement. Ms Ali or Mr Cameron was entitled to a 40% commission of this sum, depending on who introduced the franchisee. No complaint about that payment was made by the ACCC. 38 After the franchise agreement was signed discussions took place about a site. Once the site was selected Geowash invoiced the franchisee for the first instalment of the "Purchase Price", "usually being 50% of the balance of a specified amount that had been raised in discussions between the parties before the franchisee committed to signing the documents": LJ [71]. These discussions (both before and after signing) lay at the heart of the case, and lie at the heart of the appeal. 39 At LJ [78] and [79], the primary judge adverted to a central group of issues: first, at LJ [78], the evidence of Ms Ali and Mr Cameron that: … Ms Ali estimated the costs of fit-out and that an amount of up to 20% of the purchase price or staged payments was due as 'commission' when those payments were received by Geowash. This can be seen as part of one strand of the appellants' defence at first instance that the commission (on the two instalment payments) was a legitimate cost of fit-out and set-up. 40 At LJ [79], the primary judge posited the ways the two instalments should be viewed: … [W]hether the instalments were based upon a price that was an agreed purchase price for a Geowash franchise or whether they reflected an estimate of likely fit-out costs undertaken by Ms Ali or whether the instalments were, in substance, a demand for payment of the maximum amount that the franchisee was willing to pay irrespective of the actual costs that might be incurred in establishing the particular franchise. …

III The franchise agreement ([82]-[93]) 41 Before turning to the franchise agreements, in the overview at LJ [76], the primary judge referred to the disclosure document that accompanied each draft franchise agreement: The Disclosure Document typically stated that costs of 'Fit-out of kiosk and storage including plans, signage connection of water and power' being 'Approximate cost $35,000-$400,000 (exclusive of GST) depending on the type of site' were to be paid, in the case of new businesses, 'to the franchisor or direct to contractor or supplier' and to be due 'as required by the franchisor or supplier/contractor preforming [sic] work'. 42 The franchise agreements were in relevantly similar terms. "Initial Payments" were dealt with in cl 2.1 and those payments were to be made before Ongoing Payments of licence fees and marketing contributions referable to an ongoing business were payable. The fees in cl 2.1 were: 2.1 Initial Payments The Franchisee must make the following initial payments to Geowash (and/or suppliers) in the manner provided for in this Franchise Agreement: (a) Establishment Fee; (b) Initial Training Fee; (c) Documentation Fee; (d) payment for Equipment; (e) Site selection and lease costs (clause 4.4) as may be applicable; (f) Fit Out Costs as may be applicable; and (g) Security Deposit (if required). 43 The phrase "Fit Out Costs" was dealt with by the primary judge at LJ [87]-[89], as follows: [87] Fifth, where fit-out was required by Geowash, the franchisee was responsible for payment of the 'Fit Out Cost': cl 4.7(a). The term Fit Out Costs was defined to mean: Such amount as may be necessary to cover the costs of the Fit-Out including architect costs, fit-out management costs, lessor approval costs, permit costs, building contractor's costs, pre-fabricated kiosk, materials, equipment and installation costs. [88] In later versions of the franchise agreement the definition was changed to add after 'management costs' the words '(including any Geowash management fees for managing the process of design and Fit Out)'. It may be accepted that these additional words allowed Geowash to render an account to franchisees for fair and reasonable costs of managing the design and fit-out of a franchise site. I note that there is no evidence that Geowash rendered any accounts for management fees or took steps to assess a fair and reasonable fee for any such fees. [89] Significantly, the obligation was to pay actual fit-out costs. The agreement did not contemplate the payment of an agreed price to Geowash for arranging the fit-out that was set by reference to some measure other than cost (such as the budget as to the amount that the franchisee was willing to pay). Nor did it refer to the payment of sales commissions to Geowash staff or a master franchisee. Further, by specifying particular costs it was evidently not a means by which Geowash could request franchisees to pay monies to be applied by Geowash in meeting its general operating costs and expenses. 44 The later version of the definition of "Fit Out Costs" was as follows: Fit Out Costs means such amount as may be necessary to cover the costs of the Fit Out including (without limitation) design costs, architect costs, fit out management costs (including any Geowash management fees for managing the process of design and Fit Out), lessor approval costs, permit costs, planning advice costs, building contractor's costs, pre-fabricated kiosk, materials, equipment and installation costs. 45 The primary judge summarised his views of the franchise agreement at LJ [93], as follows: So, although the terms of the franchise agreement may have justified requests for substantial staged payments on account of expected Fit Out Costs, it defined those costs. There was no power to make a general request for payment of amounts as part of an assessment as to what the 'purchase price' might be for a franchise. Further, any such amount that was paid in advance would have to be accounted for by Geowash. It could only be retained if indeed Fit Out Costs in that amount were incurred. 46 Criticism was made of the primary judge's interpretation of the franchise agreements as too narrow. We will come to these submissions, but as a preliminary comment it is difficult to interpret or construe with any degree of business honesty or reasonableness provisions such as cl 2.1 (Initial Payments), 2.5 (application of moneys), 4.4 (costs), 4.7 (Fit Out) and the definitions in cl 46 of "Costs & Expenses", "Fit Out", "Fit Out Costs", as directed other than to the payment by the franchisee of reasonable costs including a justifiable and reasonable management fee of Geowash for undertaking site selection, fit-out and set-up. The conclusions in LJ [89] and [93] are difficult to escape after any honest and reasonable reading of a not particularly complex legal agreement drafted in readily accessible English.

IV Dealings with individual franchisees ([94]-[457]) 47 This long section of the primary judge's reasons (65 pages and 363 paragraphs) recites his Honour's findings about the dealings of seven (7) individual franchisees with Geowash, through Ms Ali and Mr Cameron. The appellants criticise any extrapolation from these franchisees to make broader conclusions as to a system or pattern of behaviour as urged by the ACCC, and as found by the primary judge. But it should be said at the outset that his Honour's conclusions (to which we will later come) were based not only upon the evidence of the seven individuals, but also upon the evidence of Ms Ali and Mr Cameron themselves, and the documents in evidence. 48 It is unnecessary to traverse this section of the liability judgment in comprehensive detail. In Part VI of the liability judgment (LJ [558]-[584]) after not only this review of the seven franchisees' evidence, but also after a review of the evidence of Ms Ali and Mr Cameron, the primary judge set out his general findings concerning the dealings of Geowash with its franchisees. Nevertheless, some remarks are appropriate.

The first franchisee: Mr Rajvinder Singh (The Domain Car Park Site) 49 Mr Singh took up (through a company) a franchise at the Domain Car Park. His background reveals the limitations of such expressions as "unsophisticated" or "sophisticated". He held a Bachelor of Commerce from an Indian University. His first language was Punjabi. He migrated to Australia in 1999. In Australia, he had run a small two person security guard service with a friend. He had driven taxis. He had been a part-time nursing assistant. When cross-examined about these activities as not unsophisticated business arrangements, he did not understand what was meant by the phrase "not unsophisticated". The money that he had to invest in the business ($230,000) came from selling his home. 50 This kind of background can be seen in other franchisees: a modest fund of money; a desire to commence a small independent business; little or no long or deep experience in commerce; but a degree of intelligence, combined with a desire to build a business life and a living from a small business enterprise. 51 Mr Singh read the documents. He understood them as requiring him to pay costs: see LJ [107]: Mr Singh was cross-examined at some length about what he understood from those documents. His responses were to the effect that the amount to be paid was dependent on the particular site and how much it was going to cost. He understood that once there was a fixed site he needed to pay the balance of the purchase price which 'was going to be on the basis of what your site would be'. He was asked about his understanding of a statement in the Franchise Overview to the effect that after seven days of signing a franchise agreement the franchisee may now proceed and pay the balance of the Franchise Purchase Price. He said his understanding was that the payment 'will be … based on what your site is going to cost because you wouldn't make the payment without knowing what your site is and how much it is going to cost'. 52 Mr Singh told Ms Ali and Mr Cameron at the first meeting of his budget. He expressed his need to stay within his budget. The emails he received from Ms Ali (see LJ [112] and [115]-[118]) were reassuring and referable to costs, not commission or any overall purchase price. At LJ [122], the primary judge concluded the following about Mr Singh's dealings with Ms Ali and Mr Cameron before signing the franchise agreement: The clear impression created for a person in the position of Mr Singh by these dealings is that he will be able to secure an individual car wash franchise site with a café for an amount that would not exceed $230,000 and the final amount would reflect the actual cost of establishing the site. He would have to pay an amount that depended upon those costs and that would be the purchase price for his franchise. 53 After signing the agreement Mr Singh received the invoice for 50% of the "Part Payment for the Purchase". He later (after changing sites) received another like invoice. We pass over the detail of the communications about these in which Mr Singh expressed his concerns: LJ [128]-[132] and [138]-[143]. It is relevant, however, to understand the primary judge's conclusion as to how Ms Ali justified the invoices: see LJ [144]: Apart from the clear concerns being raised by Mr Singh to ensure that costs were kept within his budget, the significance of the above exchange is the position being maintained by Ms Ali that the instalments of the purchase price reflect actual costs being incurred by Geowash in relation to the fit-out. Of course, this reflects the terms of the Disclosure Document and franchise agreement. It is inconsistent with the case advanced by Ms Ali and Mr Cameron that the parties agreed a lump sum purchase price and the instalments requested by Geowash were for payment of that purchase price.

The second franchisee: Mr Tejinder Singh Chhina (The South Fremantle Site) 54 Mr Chhina's profile was similar to that of Mr Singh. He was from India (Punjab), immigrating to Australia in 2010. He was an engineer in India. In Australia he worked as a taxi driver until taking up the Geowash franchise which was his first business enterprise. 55 This franchise is important to the arguments of the appellants, because it is one of the two franchises excluded from the conclusions of the primary judge as to unconscionability. The site was opened in August 2014. 56 Mr Chhina had two colleagues in the franchise, Mr Hardevinder (Harry) Singh Randhawa and Mr Sukhdeep Singh, each being a shareholder and director of a company formed to run the business. 57 The primary judge set out at LJ [174]-[192] the flow of events leading up to the opening of the site in South Fremantle. The draft franchise agreement and disclosure document were sent to Mr Chhina after he paid the deposit. He did not read them. He and his two colleagues had been looking for a business that cost around $150,000 and would be easy to run. After signing the agreement and paying the establishment fee, he visited prospective sites in Perth, meeting Ms Ali and Mr Cameron in March 2014. Mr Chhina and his colleagues expressed interest in the Beaconsfield site in South Fremantle. The discussions about this site and its cost were not in terms of cost of fit-out or set-up, but rather a price to buy. The price was simply put at $250,000. Mr Chhina was told by a Mr Kalyan, who identified himself as the Geowash master franchisee, that if Mr Chhina did not want the site or could not pay $250,000, he (Mr Kalyan) would take it. Mr Chhina and his two colleagues agreed to pay $250,000. At LJ [195], the primary judge summarised the position as follows: What is evident is that the amount charged to establish the Beaconsfield site was not determined by reference to any measure of actual cost. Rather, the amount of $250,000 plus GST was presented as the amount that would have to be paid to secure the site. If it was not agreed then the site would be taken by the master franchisee. 58 Mr Chhina was unhappy about the quality of the work undertaken by Geowash, but such defects did not form part of the claims of the ACCC. 59 It will be necessary to return to this episode; it is sufficient for present purposes to refer to the submission of the appellants that if their conduct in relation to Mr Chhina was not unconscionable, notwithstanding the sending of the franchise agreement and disclosure document, there was little distinction or distance to be identified from this (not unconscionable) conduct and their dealings and conduct with other franchisees that was found to be unconscionable.

The third franchisee: Mr Harvinder Brar (The Northbridge Site) 60 Mr Brar was also from India. He held a diploma qualification in electronics and communication engineering from a College in Punjab. He came to Australia as a student and completed diploma courses at a TAFE college and a private college. He had worked in Perth as a disability support worker. He listed his work experience in the application documentation as taxi driver, farm worker, car washer and labourer. He had saved $40,000 to start a business. After enquiring he received an email from Mr Cameron and a Franchise Overview document. He thereafter communicated with Mr Cameron and Ms Ali and was provided with the Franchisee FAQs document. Mr Brar decided to take a franchise. 61 At LJ [222], the primary judge set out what he accepted from Mr Brar's evidence (having rejected much of Mr Cameron's evidence): As Mr Brar said in his oral evidence, he knew that there would be a final price for the franchise that would relate to the particular site and the features of the franchise business that would be established at the site. His evidence, which I accept, was that first it was necessary to find a good site and then costing would be discussed. He was told that Geowash could work to make the site affordable and that he would be invoiced for the establishment fees of $35,000, 50% of the balance of the purchase price upon selection of the site and 50% of the remainder on commencement of site construction. Whatever the final price might be, that was how he was to be invoiced. 62 Mr Brar had indicated that he had limited funds ($100,000) but that he would be prepared to borrow additional funds. It is unnecessary to refer to much of the exchanges. He was offered a site at Northbridge in Perth for $200,000 plus GST. There were various communications after the first invoice for $110,000 (including GST). At LJ [256], the primary judge found as follows: In any event, what is shown by the dealings is that the quantum of the invoice was not connected with any estimate of likely actual cost by Ms Ali or Mr Cameron or anyone else at Geowash and the course of dealings involved Geowash, through Ms Ali and Mr Cameron, pressing for payment of an amount that they specified after discussing arrangements with Mr Brar arrangements [sic] to pay amounts that were increasing considerably from those that were discussed at the time of the initial inquiry concerning the franchise. 63 Importantly, however, these communications were to the effect that the charge was determined by reference to actual cost, the primary judge finding as follows at LJ [260] and [262]-[263]: [260] Significantly, these communications indicate that Geowash was charging an amount determined on the basis of actual cost, not some price agreed up-front. … [262] Mr Brar said that he wanted to be involved in the process of design and buying equipment and furniture. Ms Ali responded: More than happy for you to see the items that budget allows for furniture etc. Where an item you wish to upgrade costs more than we have budgeted for you can upgrade at the cost of the item as long as we can approve the purchase. Obviously you are buying a franchise and there is a look and feel and also equipment listing required to run the business and this is done by the Franchisor. Thats after all why you brought a franchise instead of setting up your own car wash. [263] Despite the reference to budget, no documents of that kind have been produced and relied upon by Ms Ali or Mr Cameron. 64 Mr Brar's loan application within the bank was refused and he withdrew from the Northbridge site. He sought to withdraw and obtain a refund of his money. It was refused for certain given reasons which the primary judge found to be unfounded. The primary judge made clear the position at LJ [275]-[276] and [278]: [275] Therefore, the position adopted by Ms Ali in her email to Mr Brar concerning the payments that had been made was inconsistent with the franchise agreement. It was also inconsistent with my findings as to their dealings. There was no oral agreement that a 'purchase price' would be paid. Rather, there was discussion of an overall cost that would be incurred that would depend upon the type of franchise to be established. Ultimately, what was paid would depend upon actual costs. There would be two instalments to be paid. [276] Therefore, in November 2014, the position was not that B Company, Mr Brar and Mr Sran could not terminate the agreement. Rather there had to be reasonable further efforts to find a suitable site. … [278] The position adopted by Ms Ali was inconsistent with the terms of the agreement and the discussions with Mr Brar. It proceeded from the false premise that Geowash had a right to retain all the amounts that had been paid irrespective of the circumstances. 65 Mr Brar's communication in writing with Ms Ali included seeking a cheaper option. Ms Ali responded negatively in an email that told Mr Brar how his money had already been expended. Once again it was explicit and implicit that his investment went to actual costs. The email said (see LJ [280]): As per previous emails to you I cannot simply vary our original agreement. The investment required for the Franchise business you committed to is substantially higher than the amount you ended up having. I understand at the time that you had financial pressures but I cannot be held responsible for your misfortune. Your problems in not being approved securing a loan to complete our transactions as per the obligations imposed on you in our agreement is not in my control. Indeed our arrangements were never subject to finance. I understand from you that Amaninder did not provide the appropriate visa to indicate to the lender he was a permanent resident. All I can suggest is to reapply but ensure the documentation you provide supports an approval. May be try another bank or look at other funding options. We expended much of your monies finding sites and negotiating lease for sites you had indicated approval of. I remind you, the ones you selected had a price point which you were well aware of. In light of your approval we spent funds on architects and flew builders in at expense to view proposed works. You not proceeding was a breach of your agreement, and whilst we attempted to secure another franchisee for that site we were not successful in time. The site as I understand is now leased. So as you can see I haven't banked your money waiting for you to add to it to secure you a site and build you a store. Management & consultants time have been incurred in ensuring I complied with my obligations to you. Even if I had a shopping centre site ready to give you, which I don't, you would need to have the ready money required to build the store. Its an unfortunate situation you are in and whilst I sympathise, I can't see what I can do to help. I can't and won't vary our current arrangements but am open to assisting where I can if you can secure the funds required for a store under a new agreement. Please let me know as I will help if I can. 66 The falsity of this was explained by the primary judge at LJ [281]: I do not accept the statements made by Ms Ali about where the money was expended. Ms Ali had no records on which such a statement could be based. At no point did dealings with Mr Brar reach a stage where it would be reasonable or appropriate to incur costs on architects and builders. As I have found elsewhere, Geowash paid substantial commissions on monies received from franchisees. It is the payment of those commissions that would have accounted for a significant part of those funds. No accounting record was produced that itemised as part of an expense line in a ledger or other usual accounting record the particular expenditure that related to the franchise agreement with B Company. 67 The end of Mr Brar's investment is recounted by the primary judge at LJ [282]-[284]: [282] On 13 August 2015, Mr Brar sent an email to Ms Ali asking for 'the details about the expenses from the total deposit money I gave you last year. Also the price for shopping center site. I need to calculate the difference so that I can figure out what options I have. You can understand without details nobody can understand what I invested how much spent and what I have left to use further. I need your help here Sanam please'. This was a request that was entirely justified given the terms of the franchise agreement and the dealings by Mr Brar with Mr Cameron and Ms Ali. [283] Mr Brar received no further response from Ms Ali or Mr Cameron. [284] Geowash did not deliver a franchise outlet of the kind discussed due a number of factors including the fact that finance was unable to be obtained by Mr Brar.

The fourth franchisee: Mr Jamal Khan Khalid (The Palmyra Site) 68 Mr Khalid came to Australia from Pakistan in 1994. He had been a seafarer in the merchant marine. In Australia he had worked at McDonalds, as a bus driver and as a taxi driver. He wanted to run his own business. He had made enquiries of another car wash franchise, "Magic Hand". He made enquiries of Geowash after viewing its website. 69 At their first meeting with Ms Ali and Mr Cameron, Mr Khalid and his partner said that they could only afford $300,000 plus GST with 50% of that by loan. The primary judge found Mr Cameron's response (LJ [288]) as follows: … Mr Cameron said that the price would be capped at $300,000 plus GST and for that amount they would get a standalone site with a café like Magic Hand Carwash on Canning Highway. They were also told that ANZ would lend 50% of the price but may lend more. 70 The primary judge found (at LJ [292]-[293]) that after the meeting: [292] … Mr Cameron sent an email to Mr Khalid. It included the following: Stand Alone Car Wash Sites are around $300,000 plus GST (inclusive of negotiated lease, shop fit out, all equipment fixtures and fittings, establishment of business with the set up initial ongoing customers - turnkey operation) basically all that is required to make money from the first day of operation. As discussed your investment to build will be capped at $300,000.00 plus GST. In this offering we establish the management and staff at the premises, operate the business to ensure training and rosters and then it is handed over to you. [293] The email from Mr Cameron attached a version of the Your Next Steps document and the Franchisee FAQs. It included an application form to become a Geowash franchisee. 71 The ACCC emphasised the contents of the email about costs and expenses. The appellants emphasised that the "Franchise FAQs" document referred to purchase price. 72 Mr Khalid and Mr Cameron met at the opening of the South Fremantle Geowash in August 2014. Mr Cameron was disbelieved in his version of this conversation (LJ [295]-[300]) that concerned the "cap" of $300,000, Mr Cameron saying that Mr Khalid said he could pay more. 73 In August 2014, Mr Khalid chose the site at Palmyra. Again Mr Cameron was disbelieved in his evidence on this subject matter. The primary judge rejected Mr Cameron's evidence that the cap of $300,000 could not be offered for this site (at LJ [302]). 74 In early September 2014, Mr Khalid and his partner met Ms Ali and Mr Cameron to sign the franchise agreement. The primary judge recorded his findings of the meeting (at LJ [312]-[314]) as follows: [312] On 2 September 2014, Mr Khalid and Mr Mansoor met with Mr Cameron and Ms Ali at Crown Metropol Hotel in Perth to sign the franchise agreement. This was the first time he had looked at the franchise agreement. He had not received the document by mail. Mr Khalid did not read the Disclosure Document, but he did read the figures in the schedule. He started reading the documents in detail for the first time when there was a dispute with Geowash. [313] Mr Khalid put the position concerning his understanding of the agreement in the following way when being cross-examined: To be honest, to make it simple for you, there was so many things was sent from Charles Cameron, but we were all relying on Charles Cameron regarding to how we will pay and whatever steps it was there, it was not taken properly. We were not explained, this is steps is this, this is step is this and this will take this. With regards to the - as you said the price, I was clearly told by them and I was clear by them that I cannot afford more than 300 plus GST. That was my maximum price. So there are so many documents which says this, that, but we have really good relation with Mr Charles Cameron as he was presented by him to us, and we were totally relying on him. [314] I accept this evidence as recording Mr Khalid's state of mind when he entered into the agreement. Further, on the basis of the findings I have made, at the time that the franchise agreement was signed by Mr Khalid, Mr Mansoor and Western Care, Mr Cameron knew that those parties were proceeding in the belief that the franchise set-up costs would be capped at $300,000 plus GST. Further, by reason of the evidence concerning the way in which Ms Ali and Mr Cameron dealt with each other in relation to matters concerning Geowash, I find that Ms Ali would also have been aware at that time of the arrangements in relation to the cap of $300,000 plus GST. 75 The establishment fee was then paid and the lease signed. 76 The delivery of the first 50% invoice of $120,000 plus GST and Mr Khalid's reaction to it were dealt with by the primary judge at LJ [318]-[321]. 77 By May 2015 (8 months later), building had not started and lease payments were commencing. At the end of May and the beginning of June 2015, Mr Cameron sent emails to Mr Khalid requiring more money. Importantly, as the primary judge noted (at LJ [328]) these emails "continue[d] the impression that the invoiced amounts [were] to cover set-up costs as actually incurred by Geowash". 78 As the primary judge found (contrary to the disbelieved evidence of Mr Cameron), there was to be a cap of $300,000 plus GST for the site. The emails and their purpose (which worried Mr Khalid) were set out and described at LJ [326]-[328] and [332] as follows: [326] On 29 May 2015, Mr Cameron sent an email to Mr Khalid in the following terms: Thank you for your remittance of $25,446.66 to Acton Commercial Estate Agent, being 2 months' rental leasing deposit for proposed Geowash site at 343 Canning Highway Palmyra. To date we have received from you, Stage 1 payment for this site to the amount of $132,000. To fulfil your further obligations to the Geowash Franchisor, and to establish your business at the Palmyra site, estimated next stage financial commitments for you to complete include:- $38,170 Rental Bond Guarantee - payable when the lease is signed $40,000 Working capital - funds to be available from the date the lease is signed. $l65,000 Balance of site building costs - payable upon commencement of site build To ensure that the proposed site is retained for you to operate your Geowash franchise, can you please confirm your capacity to fulfil these requirements? [327] Then on 3 June 2015, Mr Cameron sent a further email to Mr Khalid in the following terms: Further to our conversation today and in reference to my email to you dated Friday the 29th May, 2015:- In that email it did not include all the additional costs for this site already explained to you and agreed to by you. As per these previous discussions the estimated budgeted cost to build your store is, subject to any variations:- $360,000 plus GST You have already paid the following amount to the project:- Geowash Pty Ltd $35,000.00 plus GST Geowash Pty Ltd $120,000.00 plus GST Total paid to Geowash Pty Ltd is $155,000.00 plus GST Therefore your balance owing to complete construction (subject to variations) is $205,000.00 plus GST Could you please confirm that a loan amount including provision for some working capital of $200,000.00 will enable you to proceed with this site? You have already paid to Acton Commercial Estate Agent, $25,446.66.00 being 2 months' rental leasing deposit. You still require a 3 month rental bond of $38,170.00 payable when the lease is signed And minimum $40,000.00 Working capital If bank provides funds of $200,000.00 you will require around $95,000.00 plus GST. Could you please confirm prior to us proceeding any further on this site that you are in a position to come up with the shortfall of around $95,000.00 plus GST (subject to variation) as described above after the bank's contribution, assuming your loan meets their loan parameters and is approved. [328] The reference to a balance owing 'to complete construction (subject to variations)' is significant. It continues the impression that the invoiced amounts are to cover set-up costs as actually incurred by Geowash. … [332] I do not accept the evidence that the June email was sent to provide full details of costs. There were no details provided in the email, just a higher figure. I find that despite the agreed cap, Geowash was seeking to charge a much higher amount. Mr Cameron was pressing Mr Khalid to accept the additional cost or forfeit the Palmyra site. The reference in Mr Khalid's email of 3 June 2015 to 'any variation required to complete the site' reflects the conversations with Mr Cameron at the time being about the need to pay more than the capped amount of $300,000. 79 The parties then fell into dispute over the $95,000 said to be owing. The denouement of the unsatisfactory relationship was described by the primary judge at LJ [340]-[343] and [345]-[346] as follows: [340] On 9 October 2015 Mr Khalid sent a long email to Ms Ali about his dispute with Geowash. He proposed that the parties have a detailed discussion. The factual account given in the email at a time when Mr Khalid was seeking to reach agreement to be able to proceed is consistent with the account he gave in these proceedings. In particular, it details his complaint that he was told the costs would be $300,000 but by that time (October 2015) the project would cost nearly $450,000. [341] It appears that neither that discussion proposed by Mr Khalid in his email nor the loan proceeded because a formal breach notice was sent on 15 October 2015. [342] Building by Geowash on the Palmyra site never commenced and no further funds were paid by Mr Khalid, Mr Mansoor or Western Care to Geowash. [343] Rent continued to be paid on the Palmyra site by Western Care until about March 2016. There was a dispute about the lease. Western Care resumed paying rent in May 2017 and has built a carwash business on the site trading as Impeccable Hand Carwash. … [345] I accept the evidence of Mr Khalid that if he had known at the outset that the cost would be more than $300,000 then he would not have entered into the franchise agreement with Geowash. [346] Geowash did not deliver a site to Mr Khalid because it sought to obtain payments from Mr Khalid that substantially exceeded the cap that it had agreed. The monies received from Mr Khalid, Mr Mansoor and Western Care were applied, in accordance the usual practice of Geowash, to pay commissions and to meet the general operating costs of Geowash. Those matters may have contributed to the need for Geowash to seek further monies. What can be said on the evidence is that Geowash would not have had at its disposal all of the monies that had been paid to it for the Palmyra site.

The fifth franchisee: Mr Rajiv Kalyan (Geowash East Perth) 80 Mr Kalyan's background was dealt with by the primary judge at LJ [347]-[348]: [347] Mr Kalyan was born in India and has lived in Australia since 2005 and in Perth since 2007. He obtained a Bachelor of Science degree in India. He studied hospitality management in Australia. He owns a property in High Wycombe that he bought with his friend Mr Jasvinder Singh. He lives in the property with his wife and daughter and Mr Singh. [348] Mr Kalyan and Mr Singh are the trustees of the Rhods Family Trust. Mr Kalyan was questioned about his knowledge of trust structures. Based on his answers I would not conclude that he had a sophisticated understanding of different business structures. In Australia, Mr Kalyan has worked as a cook, security guard and taxi driver. His involvement with a Geowash franchise was his first business. 81 Mr Kalyan and Mr Singh wanted to own a small business using their savings and a loan. From the internet they identified Magic Hand Carwash and Geowash as prospective businesses. Upon contacting Geowash, Mr Kalyan began dealing with Mr Barjesh (Bajji) Kalyan who came from the same village in India as Mr Kalyan. In introductory discussions Mr Bajji Kalyan and a colleague from Geowash said that a franchise costs about $200,000 for the store and between $240,000 and $265,000 with a café. 82 After paying a deposit and receiving the draft franchise agreement and disclosure document Mr Kalyan and Mr Singh met with Ms Ali, Mr Cameron and Mr Bajji Kalyan in Perth. Ms Ali said the cost of setting up the franchise was generally between $250,000 and $350,000, depending upon the size of the café: LJ [354]. 83 In September 2014, the documents were signed and the establishment fee paid. At LJ [359], the primary judge made the following findings regarding Mr Kalyan's knowledge: Mr Kalyan did not have a detailed legal understanding of the franchise agreement. It was the other material that he received and the conversations that he had that provided him with his understanding of the arrangements. He did not rely upon the detailed terms of the franchise agreement concerning the cost of the franchise. 84 Possible sites became available in early 2015. An invoice for $130,000 was sent on 24 March 2015, as dealt with by the primary judge at LJ [360]-[361] as follows: [360] There were discussions about possible sites. On 24 March 2015, Ms Ali sent an email to Mr Kalyan saying that a site in Mandurah had been secured and attaching an offer to lease. An invoice was attached for $130,000 plus GST. The email said that matters had progressed to Stage 2. It then said: 1. Part-Payment of the Geowash Hand Car Wash Franchise. Please find attached Tax Invoice relating to the purchase of your Geowash Franchise Store. Your next step is to attend to the payment of the attached Tax Invoice. Our staff and management team then commences / continues the management process of discussions with Planning Officers, Engineers, Senior Draftsman, Council, Builders, Solicitors etc. Please note, once you have paid the attached invoice, our town planners and engineers will be undertaking the following tasks to prepare and submit the Development Application and negotiate its approval and we personally will be overseeing and managing the process: - Task 1 - Due Diligence • Review planning requirements of the City of Mandurah; • Review relevant Local Planning Policies; • Undertake site visit to survey existing development on the subject land and surrounding sites. • Provide Building Designer with a short summary of relevant findings. Task 2 - Organisation and Coordination of Co-Consultant Inputs • Brief, request quotations, review and provide recommendation on the engagement of Technical Specialists (if required). • Confer with and review outputs of Technical Specialists. Task 3 - Preparation of Draft Development Application • Review and provide input to prepare Development Plans. • Prepare draft Development Application and consulting with the council • Oversee Land Owner Authorisation of the application Task 4 - Formal Lodgement of Development Application with Council • Refine DA to reflect any feedback received. • Prepare final DA and covering letter, print and arrange formal lodgement with the City. Task 5 - Post Lodgement: Monitoring and Reporting. • Monitor Council processing, assessment and officer reporting on DA. • Attend follow up meetings as required with City of Mandurah to negotiate acceptable outcome. • Progress reporting to the City of Mandurah. Once you have completed the first step of this stage, we will then proceed to step 2 of formally securing the site for you. [361] No estimate of costs was provided with the invoice. It was sent as soon as there was a lease proposal. No documents have been produced by Ms Ali to support any costing in relation to the site. The email sets out very generalised information about the steps to be taken of a kind that was provided to other franchisees at the same stage of their dealings with Geowash. The email is presented in a way that indicates that there will be engagement of external parties to undertake much of the work required. Notably, the email refers to town planners and engineers undertaking tasks to submit applications for development approval. 85 The invoice was paid. 86 Mr Kalyan became dissatisfied with delays in finding a suitable site. Mr Kalyan and Mr Singh met with Ms Ali and Mr Cameron in July 2015 (see LJ [363]): … Mr Kalyan expressed his frustration about the delays. Ms Ali said that the site could be pulled together in four to six weeks. He asked about cost. Ms Ali said that the cost would be $250,000 to $275,000 plus GST including the café, but $75,000 less if they did not want a café. 87 In August 2015 the second invoice was the subject of discussion with Ms Ali as set out at LJ [365]: In late August 2015 Mr Kalyan had a telephone conversation with Ms Ali in which she said that she would be sending an invoice for the second stage payment of $176,000. He asked why the invoice would be for so much when she had said that the business would cost between $250,000 and $275,000 plus GST including the café. Ms Ali explained that the additional amount was because certain costs were not going to be covered by the owner of the premises but the owner had agreed to give a further three months rent free period which was about the same as the difference. On that basis Mr Kalyan agreed to pay the extra. The invoice came on 2 November 2015 and it was paid on 6 January 2016. 88 Mr Kalyan was dissatisfied with the work and the delay. After an administrator was appointed to Geowash he finished the fit-out and rebranded the business. At LJ [368], the primary judge found: Mr Kalyan says that the costs that he paid for the establishment of the Geowash franchise were more than he was told and the fit-out was never finished. He was not provided with a breakdown of actual costs incurred by Geowash in establishing his franchise.

The sixth franchisee: Mr Rajiv Kumar (Geowash Baldivis) 89 Mr Kumar was born in India where he completed studies in computer applications before coming to Australia on a student visa where he studied cooking and business management. He worked in restaurants and as a store person. He was interested in establishing his own business. He thought he could afford about $200,000 to $250,000, using savings of $80,000. After seeing an advertisement for Geowash in late 2013, he made contact. The primary judge described the response at LJ [371], as follows: … He received an email response from Geowash. It referred to prime exclusive territories being available 'from $149,500 plus GST (inclusive of negotiated lease, shop fit out, all equipment fixtures and fittings. establishment of business with the set up and initial ongoing customers)'. It attached the Franchise Overview and Your Next Steps documents. The Franchise Overview described 'Geowash Hand Car Wash Set-up Costs' as ranging from $89,000 for a multi-level car park to $250,000 for carwash and café. 90 Mr Kumar's first discussion with Geowash follows, as set out by the primary judge at LJ [372]: Mr Kumar then spoke to Mr Gujral on the telephone. Mr Kumar said he was in Baldivis and Mr Gujral said that Geowash had a site there for a franchise. Mr Kumar asked about cost. Mr Gujral told him that the starting price would be $149,500 plus GST, but a store with a café would be a maximum of $250,000 plus GST. Mr Kumar asked whether everything was included in the $250,000 and Mr Gujral confirmed that everything was included. He said that it would take three to six months to get the franchise started because Geowash had good relationships with councils. 91 Later he completed an application form. He met Ms Ali some months later at the opening of the South Fremantle store. He paid a deposit and was sent the franchise agreement and disclosure document in November 2014. 92 Mr Kumar read the documents. At LJ [378]-[382], the primary judge described the email exchange between Mr Kumar and Mr Cameron about Mr Kumar's enquiries about costs. These paragraphs are important to the findings in the case generally: [378] On 5 December 2014, Mr Kumar sent an email to Ms Ali in the following terms: I have few questions to clarify before signing the agreement. Would you be able to provide me roughly idea regarding how much would be the total cost altogether and what would be included in it. I have read the agreement and I want to know about how much we have to pay now and what would be included in that because it mention in the agreement about establishment fees, training cost, licence fees, documentation fee and so on. Is everything included in the money that we have to pay after we sign the agreement i.e $33,500 or all these are to be separately pay out? [379] Mr Cameron responded the next day with the following: As discussed you don't get separate invoice for training fee as it is packaged in total price of setup. You would already have received the documentation fee invoice from the solicitor and this is paid directly to them after you sign the hard copy of the agreement next week (you have already signed the signature pages and emailed us the copy of the pages you signed of the agreement you received by email). We cannot pay the documentation fee as it is the legal cost or documentation fee for the solicitor preparing the agreement and we cannot pay your legal fee. Also, as discussed, there are many variables into the price that is paid for a Geowash store that won't become evident until a site is selected and plans and permits are approved and obtained. At this point we can obtain a quote from the builder or builders who will tender for the works. The estimated price will then be provided but will still be subject to the level of fit out of the Cafe', as you have seen at our stores there is a variance in Cafe' finish selected and therefore a different price costed for those stores. As discussed we will have more of an idea once sites are selected and we know more about council requirements etc. Obviously if you select a site of say 1500 square meters and council requires the whole area to be paved then your cost will be more than if the site is already concreted. its was easier for you to get an estimate for the cafe you went into partnership with because you knew the site and a cafe is different to quoting for a site the details and size of which at this stage are not known. You are also not forced to chooses any site shown to you. I confirm that you will be paying your establishment fee by Monday. I look forward to seeing you next week and in the meantime please call me if you have any further questions. [380] Mr Cameron's email was copied to Ms Ali, Mr Barjesh Kalyan and Mr Gujral. [381] The response from Mr Cameron is a significant document in a number of respects. First, there is no suggestion that the arrangement was for an agreed price. Second, Mr Cameron is describing a process of a kind provided for in the franchise agreement, namely the amount to be paid will depend upon the actual cost of the fit-out. Third, there is no suggestion that there will be charges for time spent by Geowash personnel in respect of the costs of constructing the outlet. The email refers to obtaining quotes from a builder as part of a tender and final cost depending upon the level of finishes. [382] Other franchisees have given evidence that the arrangements that they made were to similar effect, namely the amounts to be paid to Geowash after the establishment fee were for the costs of arranging the fit-out. Those franchisees referred to oral communications with Ms Ali and Mr Cameron at about the same time. The email from Mr Cameron in response to the general inquiry from Mr Kumar about how costs would be charged under the franchise agreement for the establishment of the franchise site provides substantial support from a contemporaneous document authored by Mr Cameron for the version of events given by each of the franchisees. It is completely contrary to the case advanced by Ms Ali and Mr Cameron that franchisees agreed a price payable in two instalments. 93 At LJ [383]-[399] the primary judge described the communications between Mr Kumar, Mr Cameron and Ms Ali. Importantly, the primary judge found the following at LJ [392] and [398]-[399], referring to different emails in the overall exchange: [392] Again, the process described in the second email is significant in the context of the present proceedings. Ms Ali does not state that a purchase price had been agreed and the instalments were based upon the agreed amounts. The impression created by the content of the email is that Geowash would be incurring external costs to fit-out the site. The email refers to a site plan and permits and a quote from builders which will enable an estimated price to be provided subject to the level of fit-out of the café. Specific figures are provided 'to pencil in the figure range' identified. These statements suggest that there will be an itemisation of all the costs and that is what will be charged to Mr Kumar based upon what is actually incurred. There is no indication that Geowash would itself be charging a fee for administering or managing this process over and above the establishment fee or that money received by Geowash would be used to pay commissions. … [398] The 'last payment' referred to was to coincide with the commencement of construction. There is no suggestion that the payments are part of an agreed purchase amount. The email exchanges are making clear that the amount to be paid is determined by the actual cost of approvals, design, building and fit-out. The amounts being charged are referrable to cost. [399] All these emails provide substantial support for the evidence given by other franchisees as to their communications with Geowash at about the same time being to the effect that the payments sought by Geowash were to cover costs of setting up the Geowash site, not instalments of an agreed price that Geowash could then expend how it saw fit (including on paying commissions). 94 Ms Ali later told Mr Kumar that the site he wanted was now not available and suggested another (at Rockingham) for a higher price. Mr Kumar and his partner sought legal advice and subsequently sought to terminate the agreement. 95 Although Mr Kumar read the contractual documents, the primary judge made the following findings at LJ [411] about his understanding: In cross-examination Mr Kumar agreed that his understanding of what Geowash was to do was based on the plain English documents that he received rather than the technical documents (being a reference to the franchise agreement and Disclosure Document). However, that statement does not assist Ms Ali or Mr Cameron. As I have noted, the emails exchanged with Mr Kumar both before and after Shri Ganpate Namah and he entered into the franchise agreement are not consistent with the case advanced by Ms Ali and Mr Cameron.

The seventh franchisee: Mr Prabhjot Bhaur (The Wanneroo Site) 96 Mr Bhaur came to Australia from India in 2007 after finishing high school. In 2014 he and his brother, cousin and friend began to look for a business. None had any experience. They had a budget of $250,000 to $270,000 plus GST which they told the Geowash representatives, Mr Gujral and Mr Barjesh Kalyan, to whom they spoke in August 2014. 97 They paid a deposit, were sent documents, paid the establishment fee and they then expressed interest in a site at Wanneroo. They then received an email that indicated a cost of $300,000. They queried this and received the following email from Mr Gujral (see LJ [424]): Regarding the investment level of $270k, correct me if I am wrong but we informed that the Geowash(sanam) has increased the budget which Sukhdeep bhajji paid for Fremantle which was $250k to at least $270k but it will depend on site for how much every site will cost to build and Sukhdeep bhajji said we should get looked after as this is already a second store from the existing franchisee and I told regarding the investment on any site Sanam does all the costing and if she can offer you at $250k or $100k I have no problem with that but costing is done by Sanam. It doesn't mean we can't offer you site at $270k, we can but looking at waneroo site specifically it's only a ground lease so it costs money to get the ground level and concrete the floor and build the structure and all the equipment and caffe in so would cost more money but there can be other sites which will cost $260k or a little bit less depending how much owner is ready to contribute in order to get his site leased for a long period. I will be at work tomorrow morning at osborne park, you are welcome to come and visit the site and also the quality of the equipments and the cafe built with signage and not to mention amount to money to which is required to get the approvals and the designers and the engineers etc, we get all the costing out at very early stage to keep you posted. Sanam was in Perth this week and is back in Perth not next week but the week after you can discuss this with Sanam as well. 98 The primary judge commented at LJ [425]: There was no suggestion that the amount to be paid after the establishment fee included payment of monies other than the amount of the cost to set up and fit-out the site. In particular, the content of the email would be inconsistent with Geowash being able to apply monies received by way of instalment for costs in a way that allowed Geowash to retain monies irrespective of whether there was any associated cost. Put another way, the email contemplates charges by reference to actual costs, not by reference to a lump sum amount with Geowash being able to retain any surplus for distribution to Ms Ali or Mr Cameron by way of commissions or otherwise. 99 After some discussion Ms Ali sent a tax invoice for $143,000 under a covering email set out and commented upon by the primary judge at LJ [428] and [429]: [428] On 25 November 2014, Ms Ali sent an email to each of Mr Bhaur and his brother in which she said that Geowash had received an offer to lease the site in Wanneroo and attached the offer. The email said 'You have now progressed to the next stage of your purchase of Geowash Hand Car Wash Franchise (Stage 2)'. It then summarised the next stage under the heading 'Part-Payment of the Geowash Hand Car Wash Franchise' in the following terms: Please find attached Tax Invoice relating to the purchase of your Geowash Franchise. As explained to you in our meeting last week at Crown Metropol, please attend to the payment as your next step. Once you have made the payment, we then want you to sign the offer to lease and return it back to us for execution. Our staff and management team then commences / continues the management process of discussions with Planning Officers, Engineers, Senior Design Draftsman, Council, Builders, Leasing Agents, Solicitors etc. [429] There followed a list of steps to be completed, expressed in generic terms. I have already quoted such lists from communications with other franchisees. 100 Mr Bhaur was shocked and there followed a detailed and important exchange set out at LJ [431]-[437], as follows: [431] Mr Bhaur was shocked by the amount of the invoice. Mr Bhaur's brother sent an email to Ms Ali dated 26 November 2014 in which he asked a number of questions, namely: 1. Regarding the invoice from Geo wash of amount $143,000. What percentage of total amount reflects that amount? 2. Does that invoice include the initial payment of $38,500 made earlier? 3. What is the total final figure of the purchase of our Franchise licence? 4. What will be our next payment time frames and amounts? (for example, the next instances when we will be required to pay). If you can answer these points above, it will be easy for us to organize the rest of the payments in time. [432] Ms Ali responded to each of these questions in an email response copied to all four of the business partners. The terms of the email are revealing in the context of the way Ms Ali and Mr Cameron put their case in the present proceedings. [433] As to question one, Ms Ali said: As discussed in Perth we estimate your site will cost around $295,000 plus GST. However, this will be determined once we tender the job to builders which requires engineering drawing to be complete. The figure will also vary as we have a detailed specs of what a coffee looks like now and equipment schedules, but a franchisee can also elect to upgrade various features of their store at their cost. For example if you wanted an 80 inch TV instead of a 65 inch for your cafe' then the difference in prices will be at your cost and add to your set up fee. [434] As to question two: The amount of $38,500.00 is for your franchise establishment fee. It is included in the $295,000.00 plus GST. [435] As to question three: See answer 1 above. [436] As to question four: Once this invoice is paid there are no further amounts payable until we have gone through council permit and change of use procedures, obtained a building permit and are appointing the builder to commence the building process. It is at that stage that you pay the balance of the cost of building your store. We estimate 30 days to design the plans and lodge with council, 60 - 90 days to obtain the permit, and a further 2 to 3 weeks to get the building permit. This of course depends on us being able to submit the application before the council close for the Christmas and New year break. So therefore, the next payment won't be due for around 120 days unless we receive the council approval sooner than the usual timeframe which is very highly unlikely. Please advise when me you've paid the invoice as I am keen to engage the architect to commence his works to try to adhere to the guidelines required so that we may lodge the application in time. As explained to you earlier, lets act in a quick smart manner here to ensure we beat the Christmas period. [437] The following aspects are to be noted. First the reference to the estimate of cost and the amount depending upon the detailed specifications for the café. This is a response in similar terms to that provided to like inquiries made by Mr Kumar. Second, the estimate is of an all up amount (including the establishment fee). Third, there will be a further instalment payable when building is to commence. Again this represents a process whereby the four business partners are being charged for the cost of approvals and building the franchise outlet. There is no suggestion that the amount being charged has a margin or profit to Geowash over and above the actual cost being incurred or that Geowash will charge for the time spent by its own personnel or will use the money to pay commissions. 101 The invoice was paid notwithstanding the concerns that were expressed. Disagreements remained. Later the following year a further invoice for $143,000 was delivered. 102 There was a significant cost overrun in building the site. A total of $416,000 was paid to Geowash. The detail is not presently relevant. At LJ [456] the primary judge said: The significance of the dealings between Geowash and Panjab as to the cost overrun in the context of the present proceedings is that they show that Ms Ali dealt with Panjab and the four business partners on the basis that there could be further charges based upon Geowash's claims that there had been additional costs. There was no suggestion that there were two instalments to be paid as a purchase price. Rather, Ms Ali pressed for further payments on the basis that there were further costs.

V Evidence of Ms Ali and Mr Cameron ([458]-[557]) 103 The primary judge concluded that Ms Ali was not a witness of truth, her evidence being characterised by lies, exaggeration and misrepresentation: LJ [462]. In a careful and thorough discussion over nearly seven pages the primary judge set out the reasons for these crucial findings. 104 Mr Cameron was not the subject of a similar comprehensive rejection as untruthful. Nevertheless much of his important evidence was rejected. The unreliability of his evidence is manifest from these findings. 105 The primary judge dealt with four main topics in analysing the evidence of Ms Ali and Mr Cameron: (a) the charging of franchisees: what they were told and how the amounts were determined; (b) the commissions that were paid; (c) the amounts spent on setting up sites; and (d) the claim that they acted on legal advice.

Charges to franchisees 106 The discussion and findings at LJ [485]-[504] contain careful analysis of the different and sometimes contradictory and inconsistent evidence, especially of Ms Ali. 107 Ms Ali was clear that she communicated the contents of the franchise agreement to at least Mr Brar, Mr Kumar and Mr Khalid. 108 Ms Ali and Mr Cameron understood the terms of the franchise agreement and disclosure document, and they knew these formed the contractual terms of the arrangement, not the other three documents: the overview, the Franchise FAQs and the "Your Next Step" document. 109 One strand of her evidence and defence justified all these charges and (implicitly) the use of the funds as being for costs described in the agreement and disclosure document: see LJ [486]. 110 One aspect of this was the attempt by Ms Ali in evidence (in cross-examination for the first time during the hearing) to use the cost of setting up South Fremantle as a reference point for estimates of costs to other franchisees. This was comprehensively rejected by the primary judge at LJ [489]-[490]. 111 A second (and inconsistent) strand of Ms Ali's evidence, and one that featured prominently in the appeal arguments, was that there was in fact a purchase of the franchise sites for a lump sum in two instalments. This was rejected by the primary judge. One difficulty found by the primary judge was the lack of clarity and consistency in Ms Ali's evidence. See for example LJ [495]-[496]: [495] Ms Ali agreed that her understanding was that franchisees were to be invoiced on the basis of staged payments. The staged payments provided for an establishment fee and then 50% of estimated costs to be charged in two instalments, one at the time the site was identified and one when the fit-out works were to commence. She said that her understanding was that costs and expenses could be invoiced in accordance with the definition of those terms in the franchise agreement as well as the definition of franchise costs. It was unclear from her evidence whether Ms Ali was advancing a case that Geowash simply charged the amount that was discussed with franchisees when entering into the franchise agreement or whether the invoices for the staged payments were for an amount on account of the actual fit-out and set-up costs. She was simply unable to give clear evidence as to the nature of the charges and her evidence justifying the charges was not consistent. [496] Mr Cameron explained the staged payments as having been developed for payment up-front because you could not be 100% certain as to what the costs of fit-out would be. This evidence sought to characterise the staged payments as being for the costs of fit-out which he said were assessed by Ms Ali. However, the evidence of Ms Ali did not describe a process of assessment of costs beyond the evidence concerning the use of South Fremantle as a benchmark for actual costs (which I have not accepted). 112 Importantly there was no system for recording or allocating costs to any particular franchise or particular site: LJ [498]. Site selection was ad hoc and unsophisticated (see LJ [499]): … There was no evidence of assessments being made as to suitability. The site alternatives were simply presented and the franchisee invited to make a choice with little more than a statement from Ms Ali or Mr Cameron as to likely cost. Franchisees were asked to sign a document to confirm that they had been presented with alternatives and had made a choice themselves. 113 Ms Ali asserted an entitlement to charge for management fees, but there was no formula or rational basis for any particular charge. The primary judge concluded at LJ [503]-[504] as follows: [503] However, what is significant is that there is no evidence of steps being taken to establish a fair and reasonable fee for design and project management. Nor was the time spent or costs incurred tracked or allocated. The invoices issued to franchisees provided no itemisation of management fees or other charges. There was no breakdown of any costs and no evidence of an estimate or budget or calculation of such costs for an individual franchisee. [504] I find that the staged payments were determined by Ms Ali on the basis of a general view that Geowash could cover its overheads, meet the actual costs of fit-out and set-up and also make a profit on setting-up each site if an overall amount of at least $250,000 was charged to franchisees. The view was also taken that if costs were greater than what was expected then there could be further amounts charged. On that basis Ms Ali and Mr Cameron dealt with franchisees by obtaining information on what they were willing to pay, expecting that they would be paid commissions and Geowash would expend much less than the invoiced amount on setting up a franchise outlet (see below).

The payment of commission 114 Payments from Geowash to or on behalf of Mr Cameron to his wife and to Ms Ali were recorded as commissions. Forty percent of the establishment fee was so payable. No complaint is made about that. It is the diversion of the invoiced payments about which complaint was made by the ACCC. 115 Mr Cameron's evidence was vague as to his relationship with the work actually done; but he did not undertake the work of a project manager: LJ [507]. 116 Ms Ali's evidence was to a point clear: the 20% of the invoiced payments was a commission for achieving the "sale": LJ [508]. She described Mr Cameron's remuneration as a salary of $150,000, 40% of the establishment fee and 20% of the staged payments: LJ [508]. 117 Ms Ali's evidence concerning her remuneration was unclear: LJ [510]. She appeared to receive similar amounts to Mr Cameron, depending upon who was involved in the deal: see the transcript at LJ [510]. 118 In her affidavit, Ms Ali had attempted to link commissions to costs: LJ [513]. The difficulties with sustaining this were pointed out by the primary judge at LJ [514]-[516]. His Honour concluded that they were both paid the commissions "irrespective of the degree of activity in fitting-out and setting-up individual sites": LJ [517]; that Mr Cameron's description of the work he supposedly did was invented: LJ [518]; that the 20% commission was paid on all invoiced payments after the establishment fee: LJ [518]; that the 20% for commission did not depend on any level of exertion as to any site: LJ [519]; and that the payments of commission were made shortly after the funds were received: LJ [521]. 119 The primary judge concluded this section of his reasons with the following clear finding at LJ [522]: I find that the arrangement made by Geowash was to pay 40% of the franchise establishment fee to Mr Cameron and 20% of all fees after that (including staged payments to cover fit-out and set-up costs). Payments were made to Mr Cameron on that basis. These were commission payments for securing the sale and that is why they were described as such when the payments were made. After the event, Ms Ali and Mr Cameron have sought to justify the payments on the basis that they were for project management services when that was not the case.

Evidence as to expenditure by Geowash in setting-up franchise sites 120 There were no contemporaneous records of allocation of spending to individual franchise sites: LJ [523]. Ms Ali sought to reconstruct this in her evidence. Her evidence was rejected, in part based on her unreliability, and in part on the lack of records: LJ [523]. 121 Ms Ali's attempted justification for expenditure was general and generic, expressed in "grandiloquent terms", there being little evidence of specific tasks, and no evidence at all of detailed costings or estimates for any type of expenditure: LJ [524]. 122 At LJ [525], the primary judge set out the "comprehensive" site selection process of which Ms Ali gave evidence. The primary judge's findings wholly rejecting this evidence were at LJ [526]: The evidence before me did not reflect a process of this kind. Rather site selection involved an ad-hoc identification of sites where a car wash may be established. There was no evidence of a 'workshop' with the franchisee. There was no process of alignment between the franchisees goals and the goals of Geowash. There was no structured or organised process by which planning opportunities and constraints were identified. I find that exaggerated evidence of this kind which also dealt with lease negotiation, development approval, alleged design documentation and tender process and project management grossly overstated what was actually done by Geowash and was an attempt to justify after the event the large payments that had been made to Ms Ali and Mr Cameron. 123 There was an attempt to characterise Mr Cameron's work as project management for the sites: LJ [527]. This was rejected. He had no skills or experience in this field: He had been a salesman and a mortgage broker. His role at Geowash was to secure franchisees: LJ [527]. He did not give any evidence about his systems and practices or work that he did as project manager: LJ [527]. Not a great deal of any substance was done by him by way of project management: LJ [528]. 124 At LJ [529]-[530], the primary judge referred to the confused evidence that was given in justification for the two "staged payments". The confusion reflected the inconsistent approach to, and tension in, the defence of the case: that the charges represented costs; and that the charges represented a purchase price. That same tension can be seen in the submissions on appeal; although the latter justification - that sites were sold and purchased - came to dominate the submissions on appeal. The difficulty created by the evidence for this paradigm of sale and purchase of the franchise at the site can be appreciated in the findings at LJ [529]-[530]: [529] There was confused evidence from Ms Ali as to the nature of the two 'staged payment' invoices. At times she referred to the invoices as being part of the 'purchase price' for each Geowash franchise. As I have noted, the invoices themselves described the amounts as being part of the purchase price for the franchise. At other times, she referred to the invoices as being requests for costs on account of fit-out as provided for in the Disclosure Document and the franchise agreements. For example, in her affidavit she referred to invoicing by stages as 'simply a shorthand way of requesting the costs of the fit out up front as allowed in accordance with clause 4.7(c)'. [530] The staged payments were referred to in the documents provided by Geowash to franchisees before the Disclosure Document. They refer to the staged payments as being for the 'purchase price'. However, as I have noted, the franchise agreement did not provide for payment of a purchase price. Save for the case of the Geowash Fremantle outlet, the evidence of dealings with franchisees was not to the effect that a purchase price was agreed. Rather, a 'price' was established by reference to a budget or amount that the franchisee was willing to spend. It was not a fixed amount. Nor was it agreed as the amount upon payment of which Geowash was obliged to deliver the outlet. It was justified by Ms Ali and Mr Cameron by reference to the likely cost of establishing the outlet, including fit-out and set-up. Therefore, it was not a purchase price in the usual sense. Rather, it was an amount determined by reference to the budget as discussed.

The legal advice 125 Ms Ali gave general evidence that she acted on legal advice. That was rejected in all relevant respects. Certainly Geowash's lawyers, Madgwicks, drafted the franchise agreements and disclosure documents. Based on the oral evidence and documents, the primary judge found (at LJ [533]): … that Madgwicks were not told that there were staged payments being charged to franchises, were not told that sales commissions were being paid to Geowash staff and were not told that the staged payments were treated as general revenue of Geowash that could be applied to meet general operating costs and expenses. Accordingly, Madgwicks did not provide advice as to those matters or on the basis that it was aware of those matters. 126 There was some evidence (referred to at LJ [542]) that Geowash was agreeing at total price with some franchisees. These findings (as to a site at Rockingham near Perth) became part of the central arguments on appeal that the primary judge's conclusions on unconscionability could not be sustained: There is an email dated 29 January 2016 from Ms Ali to Ms O'Neill at [Madgwicks] (copied to Mr Verebes). It sets out an instruction sheet for a new Geowash franchisee, Mr Gurdit Singh who will be setting up in Rockingham. It says that the establishment fee and all other costs are encompassed in 'a total price of $315,000.00 plus GST for which we have agreed to build the store'. The draft agreement prepared by Ms O'Neill made no change to the provisions of the franchise agreement that allow Geowash to charge for fit-out costs. This email is very late in the day. There was no evidence referring to the instructions. It is evidence that indicates that Madgwicks was aware that Geowash was agreeing a total price with some franchisees. However, it is not evidence that Madgwicks was aware that Geowash was charging commissions or applying staged payments to general Geowash expenses in cases where no fixed price was agreed. 127 At LJ [543], the primary judge noted the amendment to the definition of Fit Out Costs to include words to cover management fees for managing the process of design and fit-out. Nevertheless, the primary judge found that no such fees were actually expressly charged (see LJ [543]): … However, that change did not authorise Geowash to charge a sales commission being 20% of the staged payments. Nor did it allow a general charge by Geowash for administration, travel and other costs. It permitted a specific charge for managing two matters, design and fit-out. A charge confined in that way was not made by Geowash. As I have noted, there was no evidence of Geowash charging any franchisee a management fee of the kind described in the amended definition of Fit Out Costs. 128 At LJ [544] and [545], the primary judge drew such conclusions as could be made about legal advice. The findings concerning Ms Ali were at LJ [544]: Ms Ali could not point to any specific instance where legal advice was given that Geowash could charge franchisees in the manner that it did. She gave very general evidence to the effect that she told her lawyers what she was doing and was advised that it complied with her obligations under franchising laws. Evidence of that kind does not deal with the key issue. As to the methods of charging and operating, the primary judge made the following findings at LJ [545]: … I accept that there was knowledge on the part of Mr Verebes and others at Madgwicks that on some occasions Geowash agreed a fixed price to set-up a Geowash outlet and that on other occasions it established a capped amount. However, this was not the usual case. I do not accept that Madgwicks was aware that for all franchisees Geowash charged general management and administration costs. … I consider it to be most unlikely that a lawyer who was advised that Geowash was including charges for general management and administration costs (and the payment of commissions) would amend the definition in that way. Further, there is no evidence that Mr Verebes or others at Madgwicks were aware of the practice of invoicing franchisees according to two staged payments determined by reference to an amount discussed with the franchisee. There is no evidence that Madgwicks provided advice as to the contents of documents such as the Franchise Overview, the Franchisee FAQs and the Your Next Step document. It was those documents that referred to the staged payments. The advice provided by Madgwicks concerned the Disclosure Document and the franchise agreement. There is simply no evidence of instructions by Geowash to any lawyers on the key issue or advice concerning the practice of paying sales commissions and applying the monies received from franchisees on the basis that they were funds that Geowash could apply to meet general operating costs and expenses. 129 At LJ [546]-[551], the primary judge dealt with an exchange between Mr Cameron and Madgwicks concerned with a franchisee who wanted a cap on the charges for the site. In his explanation to Madgwicks (set out at LJ [548], below) Mr Cameron explained the system of invoicing, but made no mention of commission payments: Effectively he [the franchisee] wants to be invoiced and pay only when tendered with an invoice with corresponding proof of payment by Geowash of expenditure on his site. There are many things that are not tracked such as executive time and this would not work or be approved. We also have a system of invoicing ahead of the game meaning that a deposit is placed for disclosure documents, then establishment fee, then 50% of the total investment balance once franchisee selects a site with the final 50% being due on approval of permit and when we are ready to instruct the builder. Effectively franchisees put the franchisor in funds to complete the project and pay on invoice. … I have spoken to him this morning and the concession made was we are happy that the attached invoice forms part of the agreement as in a Schedule 3 with the words underneath it along the lines of the parties agree that The franchisees investment will be capped at $250,000 plus GST for the initial set up of the business and in accordance with the items described in the invoice. 130 At LJ [557], the primary judge concluded as follows: In the above circumstances, I do not accept the claims that legal advice was received by Geowash that was known to Ms Ali and Mr Cameron to the effect that the charging practices actually adopted by them when dealing with franchisees were in accordance with the franchise agreement or otherwise lawful.

VI Summary of findings concerning dealings by Geowash with its franchisees ([558]-[584]) 131 In this part of his reasons, in a little over six pages, the primary judge drew together the findings concerned with the seven franchisees and the evidence of Ms Ali and Mr Cameron, set in the context of the documentary material. 132 Before describing these findings, it is helpful to recall the important statement of Kirby J in State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) [1999] HCA 3; 160 ALR 588 at 619 [90] (approved by Gleeson CJ, Gummow and Kirby JJ in Fox v Percy [2003] HCA 22; 214 CLR 118 at 126 [23]) as the true advantages of the trial judge in fact-finding: The true advantages in fact-finding which the trial judge enjoys include the fact that the judge hears the evidence in its entirety whereas the appellate court is typically taken to selected passages, chosen by the parties so as to advance their respective arguments. The trial judge hears and sees all of the evidence. The evidence is generally presented in a reasonably logical context. It unfolds, usually with a measure of chronological order, as it is given in testimony or tendered in documentary or electronic form. During the trial and adjournments, the judge has the opportunity to reflect on the evidence and to weigh particular elements against the rest of the evidence while the latter is still fresh in mind. … (Footnotes omitted.) 133 The first finding (at LJ [558]) was that with two exceptions: … the evidence as to the course of dealings by Geowash with its franchisees establishes that, for present purposes, the relevant aspects of the overall course of dealings was the same for each of the franchisees. 134 The element of consistency as to charging was clear in the findings at LJ [559]: The evidence of both Ms Ali and Mr Cameron was that the approach whereby franchisees were charged staged payments for the fit-out and set-up costs was adopted for all Geowash franchisees. The same is the case for the payment of the commissions. There was no suggestion by the respondents that there was a process by which the staged payments were reconciled to the actual fit-out and set-up costs incurred by Geowash. There was no suggestion that there was anything particular about the way the fit-out and other set-up costs were charged to the franchisees who gave evidence compared to other franchisees. On the contrary, the approach adopted by Ms Ali and Mr Cameron in dealing with franchisees was said to reflect the same business practice for all franchisees. 135 No records of time spent on any particular franchise were kept: LJ [560]. 136 As to commission (and other) payments, the findings at LJ [560] were: … Commission payments of at least 20% were paid in respect of the staged payments. I say at least 20% because there is evidence that further payments were made to the master franchisees for Western Australia. Also, the evidence shows that considerable amounts were distributed to Ms Ali when staged payments were received from franchisees (at least in the earlier period of Geowash entering into franchise agreements). 137 At LJ [561], the primary judge expressed his satisfaction that he could make general findings as to the nature of the dealings with most franchisees (not just the seven who gave evidence). There were two qualifications with which his Honour dealt before making the general findings. Importantly, however, the primary judge did not just draw inferences from the evidence of the seven franchisees. He did not just "extrapolate" from that evidence, as was put on appeal. His Honour based these general findings on evidence which included that of Ms Ali and Mr Cameron which was not limited to the seven franchisees who gave evidence. 138 The first qualification concerned the South Fremantle site of Mr Chhina and another site at Rockingham. As to these two sites the primary judge was prepared to conclude that there was an agreement to pay a fixed sum to acquire the franchise at the site: in effect an agreed purchase price. As to South Fremantle, the primary judge made the following findings at LJ [562] and [563]: [562] … The franchise agreement that was signed did not record an arrangement of that kind. However, that was the nature of the dealings between the parties. The discussion between the parties was as to how much would be paid for a Geowash franchise to be operated from the South Fremantle site. There was also discussion about what would be delivered for that price, namely a site that was like the Magic Hand car wash on Canning Highway. There was no discussion about the price changing or depending upon ultimate cost. It was a specified price for a specified standard of site. [563] I note that the South Fremantle site was used by Geowash to assist in marketing its car wash franchises. The fact that it was set up as an initial example may explain why such an approach was adopted in dealing with the franchisee for that site. Subsequently, in dealings with other franchisees, various amounts were presented as the 'cost' that had been incurred at South Fremantle. Those statements were used to justify the likely cost that would be involved in establishing a car wash and café at other sites. 139 As to Rockingham, the primary judge noted at LJ [564]: … there is also evidence indicating a similar arrangement was contemplated for a Geowash site in Rockingham. 140 The second qualification concerned cost capping dealt with at LJ [565], as follows: The second qualification is that in some but not all cases there was an agreed cap on the cost of establishing particular Geowash outlets. I note that the use of a cap has particular significance for those cases because it is contrary to any agreement being reached as to a price that was payable irrespective of the cost to Geowash. Rather, it indicates that there will be an amount to be charged based upon cost but Geowash is providing an assurance to the franchisee that the final charge will not exceed a specified amount determined by reference to the actual costs incurred. 141 At LJ [566], the primary judge prefaced his findings as to the course of dealing and the 12 characteristics exhibited within by saying: Save for those two qualifications, I find that the course of dealings by Ms Ali and Mr Cameron (and others acting for Geowash) with the Geowash franchisees who gave evidence shared the following characteristics. Based upon the extent of the involvement of Ms Ali and Mr Cameron in dealings with particular franchisees, I also find that the fact that franchisees were being dealt with in the manner described below was known to each of them at the time. 142 This paragraph should be read together with LJ [561] which concerned the extrapolation of findings about the course of dealing involving the six franchisees (seven, less South Fremantle) who gave evidence: Therefore, based upon that evidence and the respects in which there were consistencies between the manner in which Ms Ali, Mr Cameron and other Geowash personnel dealt with each of the seven franchisees who gave evidence, I am satisfied that general findings can be made concerning the matters in issue as to the nature of the dealings with most Geowash franchisees. I will deal with my overall findings as to those matters shortly. However, I first deal with the two qualifications to the general position. 143 At LJ [567], the primary judge found that the franchisees who gave evidence were unsophisticated, and that was a matter known to Ms Ali and Mr Cameron. The legitimacy of that conclusion can be gleaned from what we have already set out. That conclusion was not made about other franchisees who did not give evidence, the primary judge saying at LJ [568]: It is not possible to make findings as to whether other franchisees were unsophisticated because no evidence was led concerning the business experience of other franchisees. 144 At LJ [569] his Honour then said: Otherwise, I make the following findings as to the course of dealings with the franchisees who gave evidence. 145 This paragraph (in its context, in particular LJ [561] and [566]) can be taken as meaning that the following (12) findings as to the course of dealing with the franchisees who gave evidence were made "concerning the matters in issue as to the nature of the dealings with most Geowash franchisees": vide LJ [561]. The paragraphs (LJ [570]-[581]) should be read as a whole, as a carefully expressed description or articulation of the approach or method or system used by Ms Ali and Mr Cameron, in dealings with most of the franchisees. It is useful, however, to extract some essentials or essences. 146 First (LJ [570]), there was a discussion about the cost to establish a franchise: … It has not been shown that the topic of the budget that the franchisee was willing to spend was a matter that was always instigated by Ms Ali or Mr Cameron or someone else acting for Geowash. It was a topic in which both parties were interested. The franchisees were told a likely cost to establish a franchise. The amounts were presented as being dependent upon the particular site that was ultimately chosen and the detail of the fit-out. … 147 Secondly (LJ [571]), a reference point was often given for the cost including by reference to the South Fremantle franchise, but different franchisees were told different figures. 148 Thirdly (LJ [572]), there was some inconsistency in what was said about specified cost and the franchisee's budget: … There were instances where the specified amount was quite a bit more than the original budget and there was an expectation that finance could be obtained to meet the difference or the franchisee accepted the higher figure. In some cases, franchisees were told that the amount that would be paid would be capped at a particular amount. The capped amounts were not consistent. The lack of consistency provides support for an inference that the amounts reflected an assessment by Ms Ali and Mr Cameron of the willingness and capacity of a franchisee to pay (taking account of any borrowings) rather than any real and genuine assessment by Geowash of the expected costs for each franchisee. An inference of that kind is also supported by the absence of any evidence of any document indicating that an assessment was undertaken of the actual cost to establish a franchise outlet and the lack of records concerning expenditure for each site. Finally, the dealings with individual franchisees show that they were pressed to pay more and threatened with losing the opportunity to secure a site if they did not commit and pay the specified amount, conduct that was consistent with testing the capacity to pay of individual franchisees. In all the circumstances, I infer that the invoiced amounts for the staged payments were established by reference to an assessment undertaken by Ms Ali or Mr Cameron or both of them of the capacity of the particular franchisee to pay rather than any assessment of the likely cost to be incurred by Geowash in setting up a particular site for the franchisee. These findings must be considered like many others in the appeal in the light of the advantage of the trial judge referred to in SRA v Earthline Constructions, Fox v Percy, and Lee v Lee [2019] HCA 28; 266 CLR 129 at 148 [55], fortified as they were by the strong findings of lack of credit and dishonesty concerning Mr Cameron and Ms Ali. 149 Fourthly (LJ [573]), to the extent that the word 'price' was used in communications (with the exception of South Fremantle and Rockingham) the term was used in a context where it indicated an amount to meet the cost of establishing the site in question: … Therefore the term 'purchase price', in context, was presented by Ms Ali, Mr Cameron and other Geowash personnel as being an amount that depended upon the actual cost incurred by Geowash to establish the site. … The consistent justification for the specified amount presented by Geowash to each franchisee was the cost that would be incurred by Geowash to fit-out and set-up a site and the need for the franchisee to pay that cost. 150 Fifthly (LJ [574]), information provided to franchisees about costs contained general descriptions of types of costs, referable to external parties, but no mention was made of management time by Geowash personnel or commissions. 151 Sixthly (LJ [575]), the discussion resulted in a figure or a narrow range as to what it would cost to establish a car wash, not as an agreed price, but rather: … It was simply an amount that the franchisee was willing to pay and an amount that Geowash presented to the franchisee as an amount that would be required in order to meet the costs of establishing a car wash site. This specified amount was not an amount determined by reference to any detailed costing undertaken by Geowash. 152 Seventhly (LJ [576]), after execution of the agreement, enquiries from franchisees about more detailed costs were met in similar fashion: (1) the costs being incurred by Geowash were described in general terms; (2) the instalment invoices were justified to franchisees on the basis that they reflected costs that were actually being incurred by Geowash; and (3) no details of estimated or actual costs for each site were ever provided. 153 Eighthly (LJ [577]), franchisees were invoiced in two instalments based on the amount discussed irrespective of actual costs incurred. Sometimes instalments were permitted. The first invoice was sent as soon as a site was chosen; the second before fit-out work commenced. 154 Ninthly (LJ [578]), sometimes the invoicing went above the specified amount discussed. This was relevant as to the rejection of the strand of defence about the sum being a purchase price: … So, when it suited Geowash to do so, it claimed more based upon an asserted liability to meet actual costs. It is not necessary to make findings as to whether the additional invoices reflected actual costs that were greater than the amount specified at the outset. What is significant for present purposes is that Geowash itself did not treat the instalments invoiced to franchisees as if they were an agreed purchase price (as distinct from a payment on account of costs to be incurred). 155 Tenthly (LJ [579]), there was no evidence of any cost reconciliation or allocation to particular fit-outs. This reflected that: … Geowash treated the process as one in which it could charge the full specified amount (and press for more in a number of instances) and apply those monies how it saw fit. 156 Eleventhly (LJ [580]), as to commissions: … Geowash paid commissions to Ms Ali and Mr Cameron that were at least 20% of the staged payments. The payments were sales commissions for securing a franchise agreement with a franchisee. The payments were not for management of the design or fit-out of the Geowash outlet for the franchisee. 157 Twelfthly (LJ [581]), the staged payments were treated by Geowash as general revenue: … There was no accounting by which the payments were treated as being on account of actual costs to be incurred in the design, fit-out and set-up of the franchise outlet. The funds were applied to meet the general costs and expenses of Geowash which included the costs that were incurred in setting up particular sites, but were not confined to them. 158 At LJ [582], the primary judge concluded: By dealing with franchisees in the above way, Geowash established an amount that the franchisee was willing to pay and presented that specified amount as the actual cost to fit-out and set-up a Geowash site when in fact Ms Ali and Mr Cameron intended to use the funds to cover the payment of a series of commissions that had been agreed between them and to retain as profit any surplus that could be earned (after paying both commissions and costs) by charging the specified amount to the franchisee. However, this was both not disclosed to any franchisee and was contrary to the actual dealings with individual franchisees, particularly the terms of the Disclosure Document and the franchise agreement. 159 The conduct and intention of Ms Ali and Mr Cameron was dishonest. 160 At LJ [583] the primary judge rejected certain aspects of the ACCC's case: That Ms Ali and Mr Cameron dealt with franchisees on the basis that they would not get a franchise site. That is, that they were taking the franchisees' money without intending to provide any site. This aspect of the case as propounded should be noted, the primary judge saying at LJ [583]: … There was no consistency as to the outcomes concerning the delivery of the site. The reasons why sites were not delivered varied from franchisee to franchisee. The ACCC has not established a system of dealings with franchisees by which Geowash did not plan to establish sites or was unconcerned whether there would be funds to establish sites. It is important to bear in mind that the case advanced by the ACCC did not allege that the failure to deliver a site was caused by conduct of a particular kind on the part of Geowash. The ACCC made no case that depended upon the particular reason why a site was not established for a particular franchisee. Rather, the nature of the case alleged was that there was a course of conduct or system in dealing with all franchisees that included a failure to deliver Geowash outlets for most franchisees. That aspect of the claim has not been established. 161 Further, as noted by the primary judge at LJ [584] the case made concerned how franchisees were charged: how money was extracted from them and what was done with the money. It was not concerned with any lack of particular accounting.

VII Other financial evidence ([585]-[611]) 162 Attempts were made by two witnesses called by the ACCC to make some sense of Geowash's accounting records: Mr Cromwell, the investigating officer and Ms Yan, a forensic accountant. Mr Cromwell's evidence reconstructing bank statements was not accepted. Ms Yan's evidence was, to a degree, accepted as helpful by the primary judge. Using contemporaneous descriptions (including that of "commissions") on the bank statements, Ms Yan concluded the following amounts were paid by Geowash (see LJ [589]): Amounts paid by Geowash and its related entities HTN and Geowash Supplies (other than inter and intra entity transactions) were divided into six categories: (a) for the benefit of franchisees ($2,380,271); (b) operating expenses of Geowash and its related entities ($2,845,226); (c) potential operating expenses ($733,292); (d) personal expenses ($77,296); (e) commissions ($2,646,254); and (f) unknown ($1,052,976). 163 At LJ [591], the primary judge said: … I find that a reasonable degree of confidence can be placed in the use of the description commissions as indicating payments that were mostly made for effecting sales of franchises. Therefore, the analysis by Ms Yan shows that a large amount of the payments made by Geowash were for commissions. 164 At LJ [592], the primary judge found the following as to "personal expenses": Likewise, amounts that could be identified from their descriptions as personal expenses are likely to be reasonably accurate (bearing in mind the approach of including in a separate category amounts where there was uncertainty). They show that a considerable amount was paid to meet expenses that were not business expenses. The cross-examination of Ms Ali identified quite a number of these items. Despite Ms Ali's attempts to characterise some of those items as business expenses, I do not accept that evidence as credible. 165 The primary judge could not, however, conclude what had been spent on fit-outs and set-ups (at LJ [593]), finding: … As to that aspect, I have found that there was no means by which Geowash could ensure that the amounts invoiced to franchisees by way of staged payments corresponded to the actual costs incurred even though the staged payments (described as instalments of a 'purchase price') were justified to franchisees on the basis that they represented charges for actual costs. For the purposes of these proceedings it is not necessary to undertake a precise calculation of the extent to which there was a divergence. On the basis of all the evidence, I find that there was no correspondence between the staged payments received from franchisees and the actual costs of fit-out and set-up of the franchise outlets as expended by Geowash. Instead, Ms Ali and Mr Cameron established an amount that would be invoiced to franchisees and then paid themselves commissions based on those amounts and did not otherwise track or account for the expenditure of those funds on the particular fit-out or set-up of individual franchises. 166 His Honour's conclusions from Ms Yan's evidence were at LJ [594]: I accept the analysis of the flow of funds undertaken by Ms Yan. It showed that of the funds received into the various bank accounts over the period 2012 to 2016, Ms Ali and Mr Cameron and his wife were the ultimate beneficiaries of a considerable part of those funds. Ms Ali received and retained $1,766,305. Mr Cameron received and retained $199,631. Mrs Cameron received and retained $1,187,098. 167 The primary judge also made findings drawn from the financial statements of Geowash, upon which Ms Ali was cross-examined. At LJ [597], the primary judge found that the evidence suggested that commissions paid from invoiced charges exceeded 20%, but without being precise: … What is shown is that a considerable part of the amounts invoiced to franchisees and paid to Geowash (most of which was for staged payments) was paid out by Geowash as commissions for the benefit of Ms Ali and Mr Cameron and their associates. 168 At LJ [599]-[604], the primary judge made findings as to moneys paid by each of the franchisees who gave evidence. At LJ [605]-[606], the primary judge made the following findings from the bank statements in the light of the evidence of Ms Ali: [605] … The evidence of the bank balance levels is telling. It shows that when Geowash was receiving monies that, even on the account of Ms Ali and Mr Cameron were to be applied to meet costs associated with fit-out and set-up of Geowash outlets, the bank account of Geowash was being depleted of funds by making payments to each of Ms Ali and Mr Cameron. The bank records to which I have referred show that on many occasions the Geowash bank account was left with little money to expend on actual fit-out and set-up costs. The monies were received well before such works were to be undertaken yet very little of those funds were retained by Geowash for that purpose. Consequently, Geowash could only secure the necessary funds by monies obtained from further franchisees or by further injections of capital. The lack of funds placed in jeopardy the completion of the fit-out and set-up of the franchise when the time came for those works to be undertaken. [606] The evidence of the flow of funds strongly supports the case advanced by the ACCC that monies obtained by Geowash from franchisees were treated as Geowash's own funds and applied to pay commissions to Ms Ali and Mr Cameron and pay general expenses. The result was the funds were not available to establish the Geowash outlets and the ability of Geowash to deliver car wash outlets as represented was compromised with the likely consequence that such outlets could not be delivered or would be inferior in standard because of the depleted funds. 169 At LJ [607]-[611], the primary judge dealt with Ms Ali's attempt in her evidence in chief to identify (through a process of reconstruction) income and expenditure from each site. The effect of her evidence was set out in tabular form in LJ [607]: (1) for Mr Singh and Domain car park: income $221,750, expenditure $105,369.29; (2) for Mr Chhina and South Fremantle: income $275,000, expenditure $341,539.27; (3) for Mr Brar and Northbridge: income $115,500, expenditure $24,500; (4) for Mr Khalid and Palmyra: income $170,500, expenditure $103,648.96; (5) for Mr Kumar and Baldivis: income $181,500, expenditure $43,120.46; (6) for Mr Kalyan and East Perth: income $357,500, expenditure $302,174.43; (7) for Mr Bhaur and Wanneroo: income $449,500, expenditure $368,469.46. 170 This evidence was rejected, in part because of the findings of credit otherwise made, and otherwise because of the lack of evidence of any proper record keeping. 171 Even assuming that there was a degree of reliability in the figures, the primary judge found at LJ [609] that the figures: … demonstrate that for most cases there is a significant shortfall between actual costs said to have been expended and the amounts received from franchisees. … 172 The primary judge dealt with South Fremantle at LJ [610]-[611]: [610] Otherwise, the only case where Ms Ali claims that more was spent by Geowash than it received is South Fremantle. It is to be remembered that in communications with franchisees they were told quite varied amounts as to what it would cost to establish a franchise. They were told those amounts before a site had been selected. In their evidence Ms Ali and Mr Cameron sought to justify those amounts on the basis of what it had cost to establish South Fremantle. As I have noted, in the context of that evidence it is odd that the costs said to have been incurred for that site were well in excess of the amounts communicated by Ms Ali and Mr Cameron to a number of franchisees. [611] Nevertheless, Ms Ali produced some information which was advanced to support the figure of about $341,000 in the Geowash Site Summary in the case of South Fremantle. Those figures included GST of $25,000 (when the amounts discussed with franchisees were exclusive of GST); legal fees of $27,012; commissions to master franchisees of $15,400; travelling cost for management of $5,000; head office time and set up cost of $10,000; website, marketing campaign, research costs of $5,000; and miscellaneous payments of $9,177. The actual building and construction cost was said to have been a total of $203,152 including project management of $9,350. So, on the face of the figures provided they do not justify actual expenditure of fit-out and set-up over and above the amount received from the franchisee.

IX (VIII is missing) False, misleading and deceptive conduct ([612]-[657]) 173 The primary judge commenced this section of his reasons with a discussion of general principles, in respect of which there was no complaint on appeal. The misrepresentations on the website were not the subject of appeal; the found misrepresentation as to charging was. As to this latter representation, it was based on, as the primary judge stated at LJ [612], "allegations as to what occurred in dealings with individual franchisees" (emphasis added). 174 The charging representation was dealt with by the primary judge at LJ [641]-[651]. It was necessary for the primary judge to restate findings already or otherwise made by reference to the focus of this misrepresentation, which focus his Honour set out at LJ [641] as follows: Unlike the claims concerning the revenue, profit and affiliation representations where the conduct was directed at the public at large, the claim concerning the charging representation concerns dealings with individual franchisees. It was not said that there was a confined class of persons to whom the relevant conduct was directed. Rather, the charging representation was alleged to arise from the interactions between Geowash and each franchisee. There was said to be common characteristics in respect of those dealings. Further, the evidence of the dealings in relation to seven of the franchises was advanced to support a claim that dealings with all franchisees had followed the same course. As I have noted, the evidence of Ms Ali and Mr Cameron concerning the manner of charging was to the effect that there was a common way in which Geowash dealt with franchisees concerning charges. However, despite this evidence concerning common characteristics of the dealings with each franchisee, for reasons I have given, in cases where the misleading or deceptive conduct is said to arise from dealings with a particular party then it is necessary to consider the conduct in the context of the overall dealings with the particular franchisee. It is important to bear this aspect in mind in considering the charging representation claim. 175 The summary findings about the communications in the dealings (not just in the prospectively constituent contractual documents) were set out at LJ [642] and [643], as follows: [642] For reasons I have given, it has been established that before they entered into a franchise agreement substantially the same matters were communicated to each of the 18 franchisees concerning the charges to be made by Geowash. The franchisees were told that they would be charged by staged payments being 50% at the time that a site was identified and a further 50% when work commenced on the site. Although this was described as a purchase price, in the context of the evidence of the dealings with the seven franchisees, save for the case of the South Fremantle site, it was not presented as a fixed amount. Rather, it was represented as a budgeted amount that would provide sufficient funds to meet the actual costs to fit-out and set-up a site of the kind described to the franchisee. [643] Each franchisee was given a Disclosure Document and the franchise agreement. Those documents described charges for fit-out and set-up based upon actual costs incurred for the particular franchise site. There was no provision within those costs for the commission payments that were made to Ms Ali and Mr Cameron or for payment of Geowash's general operating costs and expenses. The Disclosure Document was required to be provided in order to inform franchisees of various matters relating to the franchise, including what they would be charged. The franchise agreement was a document that was to record the obligations of the parties, including what the franchisee was obliged to pay. I am satisfied that in the usual course of events those documents when provided to a franchisee would represent to the franchisee that Geowash would charge for the establishment of the franchise site in the manner set out in those documents. 176 At LJ [644]-[645] the primary judge continued his findings about the dealings (other than in relation to South Fremantle and Rockingham): [644] … the statements made to franchisees about staged payments did not detract from the above conclusion. In context, the description of the staged payments were statements about how franchisees would be invoiced on account of the costs of the kind described in the Disclosure Document and the franchise agreement. Mainly, they were costs that had to be met by the franchisee in order for the franchise outlet to be set-up. The franchise agreement provided for the actual costs of fit-out to be invoiced in advance. Invoicing by staged payments was consistent with such an approach. [645] … [Other than South Fremantle and Rockingham] there was no evidence led to indicate that there was any different or unusual course followed for the other sites that meant that a different position as to costs was represented to a particular franchisee. Therefore, based on the evidence of the usual practice I find that for the 16 franchisees other than South Fremantle and Rockingham a representation was made by Geowash to each franchisee that it would charge according to the terms of the franchise agreement. In particular, charges for the design, fit-out and set-up of the particular franchise site would reflect the actual costs incurred by Geowash. Relevantly, for present purposes, that representation would be misleading if the intention of Geowash at that time was to charge for the costs of commissions incurred by Geowash and for its general operating costs and expenses being costs that could not be charged to a franchisee under the agreement. 177 The relevant intention to make the representation misleading was expressed by his Honour in the following paragraph (LJ [646]): I am satisfied on the evidence that the intention of Geowash (by Ms Ali and Mr Cameron) at all times was to pay commissions and general operating costs and expenses out of the staged payments that it received from franchisees. That is the practice that was followed. Therefore, in that respect and to that extent, there was misleading and deceptive conduct by Geowash concerning the charges to franchisees. There can be little doubt from the other findings as to dishonesty and knowledge (at least as to Ms Ali) that the misleading nature of the representation was dishonest and deliberate. 178 At LJ [647], the primary judge concluded from all the evidence including that of Ms Ali and Mr Cameron: Having regard to the nature of the conduct alleged and the evidence from Ms Ali and Mr Cameron to the effect that the same approach was adopted for all franchisees when dealing with the manner of charging franchisees because that was the business model of Geowash, I am satisfied to the requisite standard that the approach as to charging had a tendency to lead any franchisee dealing with Geowash into error. Put another way, unless there was a departure from the business model (such as where a fixed price was agreed) the particular circumstances of each franchisee, the level of commercial sophistication of each franchisee and other conduct forming part of the dealings with each franchisee would not detract from the tendency for franchisees to be misled as to the nature of the costs they were being charged. The conduct was likely to cause franchisees to believe that they were to be charged for actual fit-out and set-up costs when, in fact, they were to be charged an amount that included substantial sales commissions and a margin which was to be applied to meet general costs and expenses of Geowash (with the possibility of a surplus to be retained as profit to Geowash). 179 At LJ [648] and [649] the primary judge dealt with the argument, repeated on appeal, that most franchisees did not rely on the "technical" language of the franchise agreement and disclosure document: [648] A submission was advanced for Ms Ali and Mr Cameron to the effect that particular franchisees did not rely upon the 'technical' language of the Disclosure Document and the franchise agreement but rather relied upon the statements that there would be staged payments of a purchase price. However, that submission assumed, contrary to the facts I have found, that the impression created for franchisees by documents such as the Franchisee Overview and the Franchisee FAQs was that there would be a price charged in two instalments irrespective of the actual cost and that Geowash could apply those instalments how it saw fit. [649] Further, whether particular franchisees in fact relied upon the contents of the Disclosure Document or the franchise agreement when deciding whether to enter into a franchise agreement is not relevant when determining whether there has been misleading or deceptive conduct. Actual reliance is only relevant to the remedy that might be granted to a particular party who seeks relief such as damages or orders to the effect that the agreement could not be enforced or could only be enforced if it was varied in some way. In determining whether there has been a contravention by Geowash, it is necessary to undertake an objective assessment as to whether the conduct had a tendency to lead the particular franchisee into error. Submissions for Ms Ali and Mr Cameron to the effect that it was relevant to consider whether particular franchisees were actually misled in any way were misconceived. As I have found, the conduct of Geowash, by Ms Ali and Mr Cameron, in dealing with each franchisee as to the charges for design, fit-out and set-up was to create the impression that it was the intention to charge in the manner set out in the Disclosure Document and the franchise agreement which was for such charges to be made as to actual costs. In fact, the intention of Geowash at the time, through Ms Ali and Mr Cameron, was to charge amounts that would be applied to sales commissions and general costs. Conduct of that kind had the tendency to lead each franchisee into error.

X Unconscionable conduct ([658]-[683]) 180 At LJ [658]-[670], the primary judge set out the applicable principles for the claim of statutory unconscionability under s 21 of the ACL. The proceedings were decided by his Honour before the High Court delivered judgment in Australian Securities and Investments Commission v Kobelt [2019] HCA 18; 267 CLR 1. His Honour expressed the applicable principles by reference to Paciocco v Australia and New Zealand Banking Group Ltd [2015] FCAFC 50; 236 FCR 199; Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; 217 CLR 315; Kobelt v Australian Securities and Investments Commission [2018] FCAFC 18; 352 ALR 689; and Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; 266 FCR 631. 181 No direct criticism was made of the primary judge's statement of applicable principle; although, as will be seen, there was an attempt in submissions to use some aspects of the reasons of some of the justices in the High Court to undermine the primary judge's conclusions as to unconscionability. These submissions were founded on a proposition, drawn from the judgment of the primary judge in another (and later) case (Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd (No 2) [2020] FCA 802) that some form of pre-existing disability or disadvantage in the object of the impugned conduct was necessary for a conclusion of statutory unconscionability. For the reasons discussed below these submissions must be rejected in the light of the Full Court's reasons in allowing the appeal in Australian Competition and Consumer Commission v Quantum Housing Group Pty Ltd [2021] FCAFC 40; 388 ALR 577. 182 The case of unconscionability put by the ACCC in final address before his Honour was framed by the primary judge at LJ [671] as follows: In closing submissions, the ACCC invited the Court to make the following findings which were said to amount to unconscionable conduct: (1) Geowash, by Ms Ali and Mr Cameron, negotiated the sale of franchises to prospective franchisees who were typically unsophisticated when it came to owning and operating a business. (2) In doing so, they ascertained from the prospective franchisee their maximum budget. (3) Despite the terms of the franchise agreement and disclosure document, and inconsistently with those documents, they negotiated with prospective franchisees as if a franchise could be acquired for a 'lump sum' and the lump sum discussed was, typically, the maximum budget the prospective franchisee told Ms Ali or Mr Cameron they could afford or could afford in the event that finance was approved. (4) They represented to the prospective franchisee that they would be able to acquire an operating Geowash franchise within the discussed budget. (5) Once they had negotiated the sale of a franchise and the prospective franchisee paid an initial franchise establishment fee and executed a franchise agreement, they invoiced the franchisee a series of lump sums, and required those lump sums to be paid when there was no right under the terms of the franchise agreement that entitled them to invoice or require payment in the way that occurred. (6) Requests for payment of lump sums often coincided with Geowash's bank account being short of funds. (7) Geowash demanded franchisees pay lump sums that were often more than the budget the franchisee had discussed. (8) The payments were not applied as contemplated by the terms of the franchise agreement. (9) Ultimately, Geowash failed to deliver an operating car wash franchise to a number of franchisees. (10) Contrary to the terms of the franchise agreement, they spent significant portions of the funds franchisees paid Geowash for purposes not permitted under the franchise agreement and not otherwise disclosed to franchisees, including: (a) the payment of the general operating costs and expenses of Geowash; and (b) the payment of 'commissions' to Ms Ali and Mr Cameron. (11) Commission payments to Ms Ali or Mr Cameron were often made immediately after receipt by Geowash of a lump sum payment from a franchisee. 183 At LJ [672], it was noted that the deployment of funds received from franchisees to pay sales commissions and general operating expenses was also said to be unconscionable. 184 At LJ [673], the primary judge made clear that a case of a practice or system had been clearly made by the ACCC: It was suggested that the ACCC could not establish unconscionability as to all franchisees by leading evidence concerning only seven of the franchisees. I do not accept that to be the case where the allegation is of a system or practice. Further, Ms Ali provided evidence in her affidavit of the extent to which she said there had been expenditure on the fit-out and set-up for each franchisee. Both she and Mr Cameron gave evidence of a business model that was said to apply to all dealings with franchisees. The evidence they gave concerning the payment of commissions related to all franchisees. I am satisfied that the ACCC made clear that the case advanced as to unconscionability concerned dealings with all franchisees who entered into agreements with Geowash. 185 At LJ [674], the primary judge (with respect, correctly) identified the task as one of overall characterisation: It is necessary to look at the range of conduct in respect of which the ACCC invited the Court to make findings and evaluate its overall character. It is not appropriate to compartmentalise aspects of the conduct and seek to characterise each aspect. Rather, the task is to assess every connected aspect as a whole. 186 At LJ [675]-[683], the primary judge re-expressed the findings which he had otherwise canvassed in the earlier sections of his reasons. At LJ [675] and [676], the primary judge referred to how Geowash (Ms Ali and Mr Cameron) dealt with the funds received from franchisees contrary to the terms of the contracts with franchisees and contrary to what they told franchisees in its and their dealings with them. At LJ [677], the primary judge referred to the practice of two staged invoicing by reference to an amount established through discussion of a willingness to pay rather than likely cost, whilst representing that it was by reference to anticipated cost. In fact the sums charged were for commission (of at least 20%) and costs and Geowash's general expenses. This was a "dishonest and sharp practice" whereby (LJ [678]): … franchisees were encouraged to invest in the belief that most of the money they were providing would be applied to the quality of their Geowash outlet to be set-up by Geowash when this was not the case. 187 At LJ [679], the primary judge said: The amounts involved were significant such that they might be expected to be applied to construct an outlet of an appropriate standard. In fact, Geowash took the funds that Ms Ali and Mr Cameron said were to be applied to meet the costs of establishing the franchise and used them first to pay sales commissions to themselves and then used the monies as if they were general funds available to Geowash to meet its own costs and expenses. This was conduct that would be considered to involve trickery and deception when measured against business norms. 188 The consequences of this are set out at LJ [680]: As a consequence, funds that should have been available to meet fit-out costs were not available when required. This lead [sic] to instances where Geowash then had to request more money (for example, Geowash Wanneroo) and instances where there were complaints about the standard of the fit-out being substantially inferior to that which had been represented (for example, Geowash Domain). In some cases, there were reasons why there were delays in establishing a site, such as planning issues or failure to reach an agreement with a proposed landlord. However, the significant problem with Geowash applying funds to meet sales commissions and general costs and expenses was that funds which should have been held and set aside for fit-out and set-up (or ultimately refunded if it was not possible to identify and set-up a suitable site within the time available) were deployed by Geowash for other purposes. Inherent in the course of conduct by Geowash was that it exposed franchisees to the very real risk that Geowash would take their money and not be able to establish an outlet of the kind that had been described or not be able to establish a hand car wash outlet at all. Franchisees were vulnerable to such a risk because Geowash had complete control of the funds which were received well before they were required and in respect of which Geowash had no practices or systems to ensure that the funds were applied only to meet the costs of fit-out and set-up. Ms Ali and Mr Cameron simply took the money and paid large amounts of it to themselves and their associates, leaving only the balance to meet fit-out and set-up costs. 189 These last paragraphs introduce the question of vulnerability or special disadvantage to which reference was made in submissions on appeal by reference to statements in the High Court in Kobelt. The question of vulnerability and taking advantage was developed by the primary judge in LJ [681]-[682] in his Honour's articulation of the unconscionability: [681] Of the franchisees who gave evidence, most were unsophisticated and inexperienced in business. They were applying most if not all of their available financial resources to the franchise and some were being encouraged by Geowash to borrow more funds. There is no evidence as to the level of experience of other franchisees. In those circumstances, on the evidence, I do not find that all were vulnerable by reason of their lack of experience. However, given the nature of the course of conduct followed by Geowash, as directed by Ms Ali and Mr Cameron, it was conduct that would be likely to result in Geowash taking advantage of any trusting franchisee, even one who had been in business before. The unconscionable nature of the conduct was not in taking advantage of any gullibility or inexperience. Rather, the business model was inherently dishonest. It involved presenting the staged payments as being amounts that were necessary to meet the costs to fit-out and set-up an outlet of a particular standard for the particular franchise and therefore would be applied to set-up costs when the intention was that a large part of the monies would not be used for that purpose at all. I also note that the nature of the franchise is such that it is likely to attract inexperienced people with little business experience. [682] In those circumstances, I find that the conduct of Geowash in dealing with franchisees as to the charges to be made for a franchise and the application of those funds was unconscionable. It was not simply a case of a breach of the franchise agreement or a failure on the part of those acting for Geowash to properly understand their obligations. It was a considered practice that involved creating the false impression that the money paid to Geowash by franchisees would go towards the costs of the fit-out for their outlet when, in fact, Ms Ali and Mr Cameron intended to pay large amounts to themselves from those monies. It involved invoicing franchisees well before the funds were required for the fit-out of their outlet. It involved treating the monies received as Geowash funds and keeping no records as to the application of funds for the fit-out of each franchise site. As a result, if Geowash went into administration (as in fact occurred) there would be no funds set aside for the benefit of each franchisee against which a claim could be made that the funds should be returned or applied for the purpose for which they had been paid, namely the fit-out and set-up of a particular outlet. In that event, when the merry-go-round stopped, some franchisees would have paid a very large amount of money and be left without an outlet and others would have an outlet on which Geowash had spent much less than had been represented. 190 The conclusion of unconscionability was reached notwithstanding certain conclusions that aspects of the ACCC's case had not been made out, as discussed at LJ [683]: I do not accept that the ACCC has demonstrated that the requests for payments coincided with the bank account of Geowash being short of funds. The requests were made when a site was selected and when works were to be commenced. I do accept that as soon as funds were received they were used to meet commission payments to Ms Ali and Mr Cameron and then treated as general funds available to Geowash. For reasons I have already given, I do not accept that it was part of the course of conduct that Geowash would not deliver an operating car wash. However, the conduct engaged in by Geowash substantially compromised its ability to deliver an outlet of the kind that Ms Ali and Mr Cameron described in their dealings with franchisees. In my view, these qualifications to the findings sought by the ACCC do not detract from the charging conduct I have found being characterised as unconscionable.

XI Breach of good faith ([684]-[765]) 191 Under cl 6(1) of the Code: 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. The provisions of the Code take effect as regulations under the CC Act and pecuniary penalties apply. They took effect from 1 January 2015. 192 The whole of cl 6 should be set out: 6 Obligation to act in good faith 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. Civil penalty: 300 penalty units. (2) The obligation to act in good faith also applies to a person who proposes to become a party to a franchise agreement in respect of: (a) any dealing or dispute relating to the proposed agreement; and (b) the negotiation of the proposed agreement; and (c) this code. Matters to which a court may have regard (3) 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. Franchise agreement cannot limit or exclude the obligation (4) A franchise agreement must not contain a clause that limits or excludes the obligation to act in good faith, and if it does, the clause is of no effect. (5) A franchise agreement may not limit or exclude the obligation to act in good faith by applying, adopting or incorporating, with or without modification, the words of another document, as in force at a particular time or as in force from time to time, in the agreement. Other actions may be taken consistently with the obligation (6) 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. (7) If a franchise agreement does not: (a) give the franchisee an option to renew the agreement; or (b) allow the franchisee to extend the agreement; this does not mean that the franchisor has not acted in good faith in negotiating or giving effect to the agreement. 193 At LJ [688]-[698], the primary judge made some important observations about the content of the obligation of good faith. No exception was taken to these in the submissions on appeal. At LJ [697]-[705], the primary judge made further observations about and arising from the secondary material attending the introduction of cl 6 of the Code. Again, no criticism of these observations was made in submissions on appeal. At LJ [706]-[745], the primary judge examined a number of decisions in the field of contract law and drew a distinction between cases concerning the construction of contractual powers as subject to a requirement of reasonable exercise, or the contractual duty to co-operate or not hinder the fulfilment of promises and express contractual provisions requiring dealing in good faith, on the one hand, and cases concerned with an obligation of good faith applicable to all contracts irrespective of their terms on the other. In this second context the primary judge examined a number of important intermediate appellate court and first instance decisions in New South Wales, Western Australia and in this Court. 194 After discussing these cases the primary judge at LJ [746] summarised the current state of the unwritten law as to the meaning of good faith for the purposes of cl 6(1) 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. 195 The primary judge added the following comments at LJ [747]-[750], as follows: [747] I note that sometimes the standard is described as incorporating an obligation to act fairly or engage in fair dealing. However when such terms are used they must be understood as being subject to the ability of a party to pursue its own legitimate interests. Further, as I have noted, in s 6(1) of the Code the good faith obligation extends to dealings between the parties before entering into an agreement. The common law use of good faith in such a context appears not to embrace a notion of fair dealing as is indicated by the decision in Strzelecki Holdings. Argument has not been addressed to that aspect. In the view which I take, it is not necessary to consider in this case the extent to which the good faith obligation may import an obligation of fair dealing as to the terms proposed in negotiations. Accordingly, that is an issue that will remain for consideration on another occasion. [748] In the early decision in Renard, Priestley JA referred to the ideas of unconscionability, unfairness and lack of good faith having a great deal in common (at 268). Those terms each express a normative standard of behaviour that is imposed by the law in particular contexts. However, there are important differences. As I have explained above, unconscionability involves a considerable departure from accepted business norms of behaviour such that the conduct is plainly or obviously conduct of a kind that is outside the bounds of those norms. Good faith requires both honesty as well as a genuine commitment to the purposes of the agreement. [749] Clause 6(1) of the Code imposes a standard that is applicable to the manner in which franchisor and franchisee must act toward each other in any action or dealing that is governed by the terms of the franchise agreement or the Code. This follows from the language of cl 6(1) expressing a standard that must be observed by franchisor and franchisee in the way they act towards each other 'in respect of any matter arising under or in relation to' the agreement and the Code. It is not a provision directed towards ensuring that the terms of all franchise agreements meet an objective standard of fairness or reasonableness. Rather, the Code has provisions that are designed to ensure that franchisees have all the information to make an informed decision as to whether to enter into a franchise agreement and, if so, on what terms: as to the disclosure obligations see Ultra Tune at [26]-[57]. [750] So, application of cl 6(1) in any particular case requires the identification of the matter arising under or in relation to the agreement or the Code in respect of which there has been a failure to act in good faith by one party towards the other. It does not enable a general claim to be made that there has been a failure to act in good faith. So, it is to be expected that where a complaint is made as to the conduct of a franchisor 'the focus of an obligation of good faith should ordinarily be on a franchisor's use of powers and opportunities available by reason of the franchise relationship': Ultra Tune at [358]. 196 The primary judge commenced with an application of these principles by referring to the difficulty of how the ACCC had formulated its case as one of a general breach of the duty of good faith. At LJ [751] and [752], his Honour explained as follows: [751] As I have noted, the case advanced by the ACCC was to describe a number of aspects of dealings with franchisees that were alleged to be part of a pattern of behaviour and then to make a general claim that conduct of that kind was unconscionable or in breach of the good faith obligation under the Code. There was no attempt by the ACCC to identify in submissions the provisions of the franchise agreements or the Code that applied to the conduct. Rather, the case for the ACCC was advanced on the basis that the same conduct that was unconscionable was also a breach of the good faith obligation in cl 6(1). I have some difficulty with a case formulated in that way given the terms of cl 6(1) which do not impose a general overarching obligation to act in good faith, but rather require the parties to observe the good faith standard when dealing with each other in respect of a matter that arises under or in relation to the agreement or the Code. [752] However, having regard to the nature of the case advanced, I am satisfied that it focussed upon two aspects of the charging practices of Geowash. First, the nature of the statements made in the Disclosure Document (being a document required to be provided to franchisees under the terms of the Code) about the nature of charges to be made by Geowash, particularly those for fit-out and set-up of the franchise site. Second, the way the two staged payments were applied by Geowash having regard to the terms of the franchise agreements entered into with its franchisees. Having regard to the way the case was run, I accept that a claim was made by the ACCC that the manner in which Geowash said it would charge its franchisees in the Disclosure Document and the manner in which it did charge its franchisees (being respectively matters arising under the Code and the agreement) involved a failure to act in good faith. 197 Much of the evidence concerned events before 1 January 2015. The further difficulty in how the case was formulated was described at LJ [753]-[755]: [753] However, much of the evidence relied upon by the ACCC concerned events that occurred prior to 1 January 2015. The ACCC then claimed simply that to the extent that the conduct occurred after 1 January 2015 (when cl 6(1) of the Code took effect) there had been a contravention of that provision. There was no attempt to identify with any precision what occurred after 1 January 2015 in respect of the dealings with any particular franchisee. Clause 6(1) did not provide for the establishment of a breach by demonstrating a general course of dealing. Rather, it was necessary to demonstrate that there had been conduct after 1 January 2015 by Geowash in dealing with particular franchisees that was a failure to act towards that party in good faith. [754] Further, the case advanced by the ACCC was that conduct of the kind described in relation to the unconscionability claim also breached cl 6(1). Accordingly, no case was advanced which segregated that conduct such that part of it, considered separately, amounted to a different kind of conduct that was a breach of the good faith obligation. The character of the conduct alleged to breach cl 6(1) involved each of the aspects of the conduct that was said to be unconscionable. In the circumstances, the ACCC must be confined to the case alleged. [755] Nevertheless, having regard to the nature of the claim made by the ACCC, where Geowash has been shown to charge franchisees after 1 January 2015 then, in the context of the nature of the dealings that I have found to amount to unconscionable conduct, it has been demonstrated that there has been conduct after 1 January 2015 of the kind alleged. That is to say, charging by Geowash after 1 January 2015 cannot be divorced from the earlier dealings concerning the nature of those charges even though they occurred before 1 January 2015. In that context, if there was charging after 1 January 2015 as part of the course of dealing that I have found to have occurred then there has been conduct of the kind alleged by the ACCC to which the Code applies. 198 The primary judge then considered the seven franchisees who gave evidence and concluded that in relation to four (Mr Khalid, Mr Kalyan, Mr Kumar, and Mr Bhaur) there was conduct after 1 January 2015. At LJ [765], the primary judge summarised why the findings that had already been made amounted to a breach of the obligation of good faith: For reasons I have given, the amounts were invoiced and received by Geowash on a dishonest basis. They were presented as being invoices for the costs of set-up and fit-out when they were actually invoices for amounts to be used to pay sales commissions and to be applied to meet general fees and expenses of Geowash. They were charges that were not made in accordance with the franchise agreement but were invoiced on the basis that they were due under the franchise agreement. The nature of the bargain made was that Geowash would apply the funds to meet fit-out costs and amounts it was otherwise entitled to charge under the agreement. Notwithstanding the conduct of Geowash in presenting the staged invoices as being for amounts that were needed to set-up the franchise, they were actually to be applied to generate considerable returns for Ms Ali and Mr Cameron. The conduct went beyond a failure to observe the terms of the franchise agreement. As the conduct concerned the charges that Geowash as franchis[or] could render to franchisees it was conduct in respect of a matter arising under the franchise agreement.

XII Accessorial liability of Ms Ali and Mr Cameron ([766]-[778]) 199 No issue was raised on appeal in relation to the primary judge's findings as to the accessorial liability of Ms Ali and Mr Cameron. The primary judge found that both Ms Ali and Mr Cameron were knowingly concerned in and parties to the misleading conduct, the unconscionable conduct and the breach of cl 6(1) of the Code by Geowash.

XIII Remedies ([779]) 200 On 24 January 2020, in the RJ, the primary judge made declarations, imposed penalties, made injunctive orders and set up a redress scheme pursuant to s 239 of the ACL. 201 The primary judge made the following declarations against the first respondent (Geowash): 1. The first respondent: (a) from 2013 until approximately October 2016, by the provision to prospective franchisees of a standard form franchise agreement (Franchise Agreement) and a document titled 'Disclosure Document for Franchisee or Prospective Franchisee' (Disclosure Document), represented to prospective franchisees (save for two franchisees) that it would charge franchisees in accordance with these documents (Charging Representation), when this was not true; and (b) between 21 May 2015 and 13 May 2016, in the course of marketing franchises, made representations on its website, www.geowash.com.au, to the effect that: (i) prospective franchisees could make gross revenues of $70,216 in an average 28-day period based on the actual average monthly revenue of a leading franchise (Revenue Representation); (ii) prospective franchisees could make gross profits of $30,439 in an average 28-day period based on the actual average monthly profit of a leading franchise (Profit Representation); and (iii) Geowash had a commercial relationship or affiliation with each of Nissan, Kia, Renault, Audi, Emirates, Shell, Hertz, Holden, Ikea and Thrifty (Affiliation Representation), when the representations were not true, and (as to the Revenue Representation and Profit Representation) were made in circumstances where the first respondent did not have reasonable grounds for making the representations; and the first respondent thereby in trade or commerce: (c) in respect to the Charging Representation, Revenue Representation, Profit Representation and Affiliation Representation, engaged in conduct that was misleading or deceptive or likely to mislead or deceive, in contravention of s 18 of the Australian Consumer Law (ACL); and (d) in connection with the supply or possible supply of a franchise and franchise establishment services: (i) in respect to the Revenue Representation and Profit Representation, made representations that were false or misleading in a material particular and concerned the profitability, risk or other material aspect of a business activity, in contravention of s 37(2) of the ACL; and (ii) in respect to the Affiliation Representation, made a false or misleading representation that it had sponsorship, approval or an affiliation, in contravention of s 29(1)(h) of the ACL. 2. From 2013 until approximately October 2016, the first respondent engaged in a system of conduct whereby it: (a) negotiated the sale of franchises to prospective franchisees, some of whom were unsophisticated when it came to owning and operating a business; (b) despite the terms of the Franchise Agreement and Disclosure Document, and inconsistently with those documents, negotiated with prospective franchisees a 'purchase price' that reflected an assessment made by the first respondent, as to what the franchisee was willing to pay rather than an assessment of the likely cost of a franchise; (c) represented to prospective franchisees that the amount charged was required to meet the actual costs to fit-out and set-up a franchise when in fact it was calculated with the expectation of the first respondent, that the amount would cover sales commissions of at least 20%, the costs of fit-out and setup, and also provide further funds that could be applied to the general purposes of the first respondent; (d) well before they were required, took the funds that were to be applied to meet the costs of establishing the franchise and used them first to pay sales commissions to the second and third respondents and then used the monies as if they were general funds available to [the] first respondent to meet its own costs and expenses; (e) as a consequence, funds that should have been available to meet fit-out costs were not available when required which exposed franchisees to the very real risk that the first respondent would take their money and not be able to establish an outlet of the kind that had been described or not be able to establish a hand car wash outlet at all; and (f) thereby adopted a business model which was inherently dishonest, and the first respondent thereby in trade or commerce: (g) engaged in conduct that was, in all the circumstances, unconscionable, in contravention of s 21 of the ACL; and (h) failed to comply with cl 6 of the Franchising Code of Conduct, thereby contravening s 51ACB of the Competition and Consumer Act 2010 (Cth) (CCA), in respect of its dealings with the following four franchisees after 1 January 2015: (i) Western Care Pty Ltd; (ii) Rhods Family Trust; (iii) Shri Ganpate Namah Pty Ltd; and (iv) Panjab Pty Ltd. 202 Declarations 3 and 4 were to the effect that Ms Ali and Mr Cameron caused Geowash to engage (as to Ms Ali) in the conduct in declarations 1 and 2 and (as to Mr Cameron) in the conduct in declaration 2, and was thereby (as to Ms Ali) knowingly concerned in or a party to the contraventions of Geowash declared in orders 1 and 2, and (as to Mr Cameron) in orders 1(c) (the Charging Representation) and 2. 203 The primary judge imposed penalties of $2,500,000 upon Geowash (orders 5 and 6), $1,045,000 upon Ms Ali (order 7) and $656,000 upon Mr Cameron (order 8). 204 By orders 9 and 10, Ms Ali and Mr Cameron were restrained for a period of five years from being involved in conduct of a kind dealt with by the declarations. 205 By orders 32 and 33, Ms Ali was disqualified from managing a corporation for five years, and Mr Cameron for four. 206 A redress scheme was set up by orders 11-31 of the orders as follows: 11. Pursuant to s 239 of the ACL, each of the second and third respondents do pay the amount of $500,000 (Funds) by way of non-party consumer redress in the manner provided for in these orders. 12. These orders are for partial redress for loss and damage suffered in relation to the contravening conduct described in order 2 only to the extent provided for by these orders. 13. Within 21 days of the date of these orders, the applicant do file and serve an affidavit deposing to: (a) the expertise and experience of a proposed accountant to act in accordance with these orders; (b) the terms, including as to remuneration, upon which the proposed accountant is willing to be appointed under the terms of these orders, such terms to specify the maximum amount that the proposed accountant may charge for undertaking the appointment, subject to further order of the Court approving additional remuneration; and (c) a form of consent from the proposed accountant that he or she is willing to be appointed to act in accordance with these orders. 14. Upon being notified of an order by the Court that the proposed accountant is approved by the Court, the accountant (Accountant) shall notify the second and third respondents of the appointment and the second and third respondents shall within 30 days of such notice pay the Funds to the Accountant in the manner directed by the Accountant. 15. The Accountant shall arrange to hold any Funds in a trust account and shall administer the Funds in accordance with these orders. 16. Subject to order 17, any person who entered into a franchise agreement with the first respondent and paid monies in addition to a deposit and establishment fee to the first respondent for the purposes of fit-out and set-up of a Geowash outlet other than by payment of a fixed purchase price shall be entitled to make a claim for partial redress from the Funds (Redress Class). 17. The Redress Class shall not include SSS WA Services Pty Ltd, Tejinder Singh Chhina, Hardevinder Singh Randhawa and Sukdeep Singh in respect of payments concerning the South Fremantle/Beaconsfield Geowash franchise. 18. The applicant shall provide to the Accountant all such information in its possession as may assist the Accountant in notifying persons in the Redress Class of the terms of these orders. 19. The Accountant shall take reasonable steps to notify persons in the Redress Class of the terms of these orders, including by publication of a notice in a national newspaper and shall invite claims to be made by a specified date for payment of redress from the Funds. 20. Any person making a claim for redress from the Funds must provide a declaration substantially in the terms annexed to these orders on or before the specified date. 21. The specified date may be extended by the Accountant if in the opinion of the Accountant an extension is necessary in order to afford a reasonable time to any person in the Redress Class to make a claim. 22. Members of the Redress Class shall be entitled to a pro-rata distribution of the Funds (after paying the costs of the Accountant in accordance with these orders) to be calculated based upon the member's share of the total amount of payments made to the first respondent to establish the Geowash franchise (excluding payments by way of deposit or establishment fee) (Total Payments) by all members of the Redress Class who have made claims in accordance with these orders. 23. Within six months of the date of appointment, the Accountant shall provide a brief report and financial statement (Report) to the applicant, the second respondent and the third respondent setting out the proposed distribution of the Funds. 24. Within 14 days of receipt of the Report, the applicant shall apply to the Court for orders approving the proposed distribution of the Funds. 25. Upon approval by the Court of the proposed distribution, the Accountant shall arrange the distribution of the Funds in accordance with the Report. 26. The Accountant shall be entitled to payment of remuneration out of the Fund in accordance with the terms of the Court's approval of the appointment of the Accountant. 27. Within a reasonable time after the appointment of the Accountant, the applicant shall publish on its website the terms of these orders and details as to where persons in the Redress Class may make claims for redress from the Funds. 28. No person shall be bound to accept any payment from the Funds. 29. Any person accepting payment shall be at liberty to exercise such other rights that they may have, including any claim to loss or damage that exceeds any amount received from the Funds by way of partial redress. 30. No person is entitled to redress in an amount that exceeds 20% of the amount paid by that person to the first respondent in addition to a deposit and establishment fee for the purposes of fit-out and set-up of a Geowash outlet. 31. If there is a surplus in the Funds after distribution in accordance with these orders then the surplus shall be returned to the second and third respondents in proportion to their contribution to the Funds.

The appeal 207 The appellants' supplementary notice of appeal contains one ground of appeal in relation to the Charging Representation (ground 1), seven grounds of appeal in relation to the findings of unconscionability and breach of good faith, two grounds of appeal on penalty, two grounds of appeal on the redress orders and one ground of appeal on the question of disqualification.

Introductory remarks on the appeal on liability 208 Ground 1 in relation to the Charging Representation does not challenge the primary judge's finding of misleading or deceptive conduct, rather it challenges the primary judge's finding that the Charging Representation was made to all prospective franchisees, save for two. 209 The seven grounds of appeal relating to the findings of unconscionability and breach of good faith progress in the following manner. Ground 2 (like ground 1 in respect of the Charging Representation) challenges the primary judge's extrapolation of the evidence given by six franchisees (seven, minus South Fremantle) to all potential franchisees in order to make findings as to unconscionability. Grounds 4 to 8 challenge the findings of fact as to the conduct described in declarations 2(b) to 2(f). Ground 3 challenges the primary judge's findings that the conduct identified in declarations 2(b) to 2(f), "or otherwise", constituted contravention of s 21 of the ACL and cl 6 of the Code. Given that ground 3 is based on findings challenged in grounds 4 to 8, it is appropriate to deal with this ground last. 210 Before turning to each of the specific grounds of appeal, six observations can be made about the appellants' arguments on appeal. First, the appellants' submissions shifted in focus to a degree. The written submissions and the oral submissions on the first day of the hearing of the appeal were both wide-ranging and (in particular the oral address on the first day) focused on the appellants' conduct being not outside the norms of acceptable commercial conduct, despite its potentially dishonest character. On the second day, the focus was upon the submission that the conduct was not inherently dishonest, being ground 8 in the supplementary notice of appeal. 211 Secondly, despite any such shift in focus or perspective, an important theme of the appellants' arguments concerned the nature of the negotiations between Geowash and the prospective franchisees. Many of the arguments on appeal, including those falling under grounds 1, 2, 4, 5 and 8, reflect a central theme that the primary judge did not take into account the reality of individual negotiation with the franchisees when making his findings as to unconscionability. Closely connected to these arguments about the negotiations was the primary judge's treatment of South Fremantle as a fixed purchase price agreement and the exclusion of South Fremantle and Rockingham from the findings as to the Charging Representation and the redress orders concerning unconscionability. The appellants submitted that the exclusion of South Fremantle and Rockingham from these findings undermined the findings of unconscionability in a number of ways. According to the appellants, the individual nature of the negotiations and the exclusion of the fixed-price franchisees meant that the primary judge could not extrapolate the evidence of the other six franchisees to all prospective franchisees to find misleading or deceptive conduct and unconscionability (grounds 1 and 2). It was submitted that the negotiations show that the "purchase price" of a particular franchise was not based on what the parties could afford but a number of (legitimate) factors (ground 4). The appellants also submitted that the representations made during the negotiations assumed primacy in the minds of the parties, and therefore it is those representations that were relevant to unconscionability, not the representations made in the franchise documents because those documents were not read or understood by the franchisees. According to the appellants, the negotiations and accompanying plain English documents did not include representations to the effect that costs only included external construction costs and, without the contractual documents, the negotiations and plain English documents cannot form the basis of the unconscionability (ground 5). This, in conjunction with the appellants' position that the franchise documents permitted charges for commissions and operating expenses, shows that the appellants did not have an intention to deceive, which is necessary to find that the conduct was inherently dishonest (ground 8). The nature of the negotiations also meant that a fixed price could be reached with any of the franchisees, further negating a finding that the system was inherently dishonest and that the appellants had an intention to deceive (ground 8). Finally, the appellants submitted that the fact that the negotiations could end in a fixed price for any of the franchisees meant that the finding as to unconscionability was illogical in circumstances where franchisees who agreed upon a fixed price with Geowash were excluded from the unconscionability (ground 3). These submissions are addressed in further detail below, but broadly speaking the appellants' submissions place significant weight on the role of the franchise documents in the primary judge's findings as to unconscionability, but they fail to appreciate that the findings were based on the overall conduct of the appellants with the franchisees, including the negotiations, and including the evidence of Ms Ali and Mr Cameron, and not just the franchise agreements and disclosure documents. 212 Thirdly and related to the point above, the appellants complained of the primary judge's characterisation of the appellants' conduct as a "system", as that term is used in s 21(4)(b) of the ACL, and his Honour's use of that "system" or "business model" to make findings of unconscionable conduct in respect of all but two franchisees. The appellants further argued that this approach in the liability judgment contradicted the primary judge's approach to quantifying the penalties imposed on the appellants in the relief judgment. 213 To call this a system (as his Honour did) is only to use the language of the statute. It was an unconscionable way of approaching and dealing with (a series of unrelated) people to tell them in clear terms, whether in the contractual documents or otherwise and in conversation, that they had to pay money for the fit-out and set-up of a franchise site when in fact the money was being used in significant respects for the personal financial reward of the promoters. There was no precise or scientific system, but there were a number of common characteristics in the manner in which the franchisees who gave evidence were treated by the appellants, identified by the primary judge at [570]-[581]. People were consistently misled to extract money from them for purposes different to that which they were told. This common pattern of behaviour was identified using evidence not only from the franchisees who testified, but also from Ms Ali's and Mr Cameron's evidence and the documents tendered. 214 Fourthly, there was some confusion and tension in the appellants' submissions about exactly how they say franchisees were charged. At times, it was contended that Geowash worked on a cost-charging model, but that the costs that could be charged were not limited to external costs. This position was used to support the appellants' argument that they were not inherently dishonest, on the basis that they believed that they were charging in accordance with the franchise documents. At other times, and by reference to other grounds of appeal, it was submitted that the appellants charged an all-inclusive "purchase price" that was divorced from any cost-charging mechanism. For example, the argument as to the narrowness of the distinction between the negotiations with fixed price franchisees and with non-fixed price franchisees proceeded on the basis that the notion of a "purchase price" was discussed with both types of franchisee. The arguments as to ground 4 also suggest that included in the "purchase price" were things other than costs - the price depended on competition in the market, for example. The oscillating nature of the appellants' position is demonstrated by the careful language that senior counsel employed during oral submissions. At Tp 11, lines 42-46, senior counsel submitted: the appellants at no point in this litigation shied away from the method that they were providing the cost - sorry, the price that was charged was to provide the Geowash carwash franchise. And within that they spent money on operating expenses as well as on construction and also in paying themselves a commission. At other times, senior counsel seemed to accept that the appellants were using a cost-based model and charging for fit-out costs in accordance with the franchise agreements, but that those fit-out costs included internal costs and they would be invoiced in lump sums at two stages (a form of invoicing which the primary judge found was not prohibited under the contractual documents). This changing position on charging tends to undermine the appellants' arguments on a number of grounds, which is noted in the course of addressing each submission. 215 Fifthly, the appellants highlighted at various times in their oral and written submissions that particular parts of the ACCC's case at first instance were not accepted by the primary judge. For example, the ACCC did not establish that lump sum invoicing was prohibited under the franchise agreements or disclosure documents. While it is correct that the primary judge did not accept every aspect of the ACCC's case at first instance, what is important is that the central aspects of the case were accepted and sufficient aspects were accepted to establish a finding of unconscionability. 216 Finally, respectfully of the way the matter was run before the Court, the case is a difficult one to argue. After a two week trial, all of the advantages of seeing the witnesses and assessing them in person, meticulously analysing the documents, and becoming familiar with the case as the evidence fell out over the course of the trial, the primary judge made clear and devastating findings of credit against Ms Ali and of similar force against Mr Cameron. Much is said in the submissions based on logic or the necessity for consistency, but the reality is that the appellants made no full-frontal attack on the findings of dishonesty made by the primary judge. Given the lack of a full-frontal attack on the findings of dishonesty, the submissions of the appellants have, with respect, a certain diffuseness and lack of consistent focus. It is therefore difficult to deal with them other than seriatim. To do so brings about a certain degree of repetition in the consideration and disposition of the arguments. That cannot be avoided. To put the matter thus is not to be critical of counsel in the preparation of the written submissions or oral address. It is only a reflection of the difficult forensic task of persuading a court that people who dishonestly engaged in business were not acting unconscionably or in bad faith.

Ground 1 217 Ground 1 is (excluding repetitious definition) in the following terms: The primary judge erred in finding at [645] of the Liability Judgment that Geowash made the Charging Representation to the 11 franchisees who did not give evidence and thereby contravened s 18 of the ACL.

The appellants' submissions 218 The appellants take issue with the primary judge's remarks in LJ [645]: There was evidence to the effect that for the South Fremantle site and the site in Rockingham a fixed price was agreed. Otherwise, there was no evidence led to indicate that there was any different or unusual course followed for the other sites that meant that a different position as to costs was represented to a particular franchisee. Therefore, based on the evidence of the usual practice I find that for the 16 franchisees other than South Fremantle and Rockingham a representation was made by Geowash to each franchisee that it would charge according to the terms of the franchise agreement. … 219 Ground 1 is the only ground directly challenging the Charging Representation. Ground 1 does not challenge the primary judge's findings as to the content of the Charging Representation, or the conclusion that it was misleading or deceptive conduct; ground 1 simply challenges the finding that the Charging Representation was made to all but two of the franchisees. There was some disagreement between the parties on appeal as to the number of potential franchisees included in declaration 1(a), which simply refers to "prospective franchisees (save two franchisees)". The appellants asserted that there were 18 potential franchisees, whilst the ACCC asserted that there were 30, including 12 potential franchisees who signed the franchise documents, paid some fees but did not go any further with the franchise. It is clear from LJ [645] that declaration 1(a) referred to 18 franchisees, minus the two franchisees at South Fremantle and Rockingham. This makes it unnecessary to deal with the appellants' submission in reply at [28] that there was no evidence that the remaining 12 prospective franchisees were invoiced in a manner contrary to the Charging Representation or that they took part in the system of conduct. 220 The appellants submitted that the finding as to misleading and deceptive conduct ought to have been limited to the seven franchisees who gave evidence (minus one, the South Fremantle franchisee, to whom the Charging Representation was not made). The submission rests on the primary judge's finding that there were two franchisees to whom the Charging Representation was not made. One of these franchisees, the owner of the South Fremantle franchise, gave evidence that he had reached an agreement with Geowash on a fixed purchase price. The appellants submitted that, given that the South Fremantle franchisee did not conform with the business model, other franchisees who did not give evidence might have been in a similar position. According to the appellants, the evidence established that the business model was of individual negotiation and that the individual circumstances of each franchisee, including the outcome of their negotiations with Geowash, would need to be considered to determine whether there had been a fixed price arrangement that took them outside of the Charging Representation. 221 In support of this ground, the appellants made the following criticisms of the primary judge's approach: (a) There was no cross-examination of the appellants that distinguished the treatment of South Fremantle from any of the other sites and the ACCC did not run its case on the basis that South Fremantle was different to the other sites: that was a finding made by the primary judge. (b) There was no evidence of a random sample of franchisees and without a random sample the evidence of the franchisees could not be extrapolated to those who did not give evidence. (c) The primary judge did not consider it relevant that in most instances there was no evidence of actual reliance on the franchise agreement or disclosure document by the seven franchisees who gave evidence. (d) The primary judge had in the second sentence of LJ [645] reversed the onus of proof, requiring the appellants to prove that outside the six franchisees who gave evidence and to whom the Charging Representation applied, the remaining franchisees were not subject to the Charging Representation.

Consideration of ground 1 222 We reject these submissions. The fundamental difficulty for the appellants is that the primary judge's conclusions concerning the conduct towards the other 10 franchisees was based on the whole of the evidence, including, in particular, the evidence of Ms Ali and Mr Cameron. The primary judge found that the representation was made to 16 franchisees, six of whom gave evidence. The seventh franchisee who gave evidence was excluded (South Fremantle). The Rockingham franchisee (who did not give evidence) was also excluded (based on email correspondence between the appellants and the franchisee): see LJ [542] and [573]. Therefore, the "extrapolation" was from six franchisees to the remaining 10. The reference to "11" in ground 1 thus appears to be a mistake. 223 It is simply wrong, and contrary to his Honour's reasons and approach, to say that this was some improperly based statistical extrapolation without substantiating evidence. The findings at LJ [641] (see [174] above) made this clear: …[T]he evidence of Ms Ali and Mr Cameron concerning the manner of charging was to the effect that there was a common way in which Geowash dealt with the franchisees concerning charges. 224 The primary judge was prepared, after hearing the totality of the evidence, including weighing up the deeply unsatisfactory evidence of Ms Ali and Mr Cameron, to conclude that it was more probable than not that the Charging Representation was made to all prospective franchisees except the two where the evidence differed. This is not a conclusion that some process of logic defeats, or can defeat. It is a judgment based on all of the evidence and the inferences drawn therefrom. That the ACCC did not run a different case for these two franchisees is irrelevant. The finding was one made on the basis of all the evidence. A lack of statistical evidence in a case such as this, in the light of the evidence of Ms Ali and Mr Cameron, is irrelevant. Whether or not there was reliance on the franchise documents was dealt with by the primary judge at LJ [648]. Further, whether particular franchisees relied on documents in writing does not affect the fact that there was misleading and deceptive conduct: see LJ [649]. There was no reversal of the onus of proof in the second sentence of LJ [645]. This was a summary of the evidence of Ms Ali and Mr Cameron which was the foundation of the finding and the inference. 225 Ground 1 should be dismissed.

Ground 2 226 Ground 2 also challenges the primary judge's extrapolation of the evidence of the seven franchisees, this time in relation to the primary judge's findings as to unconscionability. Ground 2 states: The primary judge erred at [674]-[683] in making findings of fact in relation to conduct characterised as unconscionable based on the evidence of 7 franchisees. 227 The paragraphs cited in ground 2 are those paragraphs where the primary judge made findings as to unconscionable conduct.

The appellants' submissions 228 The submissions made by the appellants in relation to ground 2 overlapped in many respects with the submissions made in relation to ground 1. The arguments as to the business model comprising individual negotiation, with franchisees falling outside of the "usual practice", and as to the reversal of the onus of proof were also raised in relation to the unconscionability findings. In essence, the appellants argued that the business model on which the primary judge based the unconscionability findings can only include the six franchisees who gave evidence, because any of the franchisees who did not give evidence could have negotiated a fixed purchase price, taking them outside of the unconscionability. The appellants submitted that there was no evidence upon which to be satisfied that the negotiations played out in the same way for the remaining franchisees and the primary judge accepted this when he carved-out from the redress orders any franchisee who had a fixed price contract. Where the crucial difference between a finding of unconscionability or not is the outcome of the negotiations, the appellants submitted that the primary judge needed to consider each negotiation individually. The appellants submitted that it was not for the appellants to put evidence on to show the lengthy negotiations and that other franchisees agreed a fixed purchase price; it was for the ACCC to establish that they did not. According to the appellants, without establishing the outcome of the negotiations the conduct should not have been characterised as a system of conduct extrapolated out to include all potential franchisees. The appellants submitted that the carving out of anyone with a fixed purchase price from order 16 of the redress orders has a fundamental impact on his Honour's findings generally in relation to unconscionable conduct, which is addressed further in the grounds below. 229 The appellants made further submissions that were specific to ground 2. First, the appellants submitted that the evidence did not allow for extrapolation to establish a system of unconscionable conduct because there were no relevant common characteristics between the franchisees that allowed for extrapolation. The appellants relied on a statement by the Full Court in Unique International College Pty Ltd v Australian Competition and Consumer Commission [2018] FCAFC 155; 266 FCR 631 at 662 [133] that: … The proportion or distribution or some other feature that the individual consumers can be seen to represent of the entire consumer class may be important. Whether the class can be said to have substantially common relevant characteristics, or not, will also matter. … At 663 [135], the Full Court stated: Most critically, the nature of the allegations of unconscionable conduct will govern how probative the evidence of individual consumers will be. The more generic the alleged conduct, and the less the unconscionability depends on the attributes of consumers, the more probative evidence about what happened to a number of consumers may be. … 230 The appellants submitted that the ACCC relied at first instance on both the specific vulnerability of the group of franchisees (being a lack of sophistication) and the business model at a general level. The primary judge relied solely on the latter, the business model, as his Honour determined that he could not make a finding that the franchisees as a group lacked sophistication. Further to the arguments set out above, the appellants submitted that, as the business model related to a "business" of individual negotiation, it does not fit with the various examples that the Court has considered to date in finding a "business model", such as in Australian Competition and Consumer Commission v EDirect Pty Ltd [2012] FCA 1045 at [108] and Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) (No 3) [2019] FCA 1982. The appellants submitted that, given the primary judge identified South Fremantle as an outlier in the evidence given by the franchisees (meaning that a "business model" could not be established in the sense contemplated in EDirect and AIPE), for extrapolation to occur it is necessary for the franchisees to be identified as having substantially common relevant characteristics. The appellants submitted that the primary judge failed to identify any common relevant characteristics. During the hearing of the appeal, it was suggested to senior counsel for the appellants that the relevant vulnerability shared by the franchisees was the risk of not obtaining a franchise, should the business fail. In response, senior counsel submitted that the risk of the business failing could not put the business model into the realm of unconscionable conduct. 231 The appellants further submitted that because "few if any of the franchisees had read or understood the documents in which [the charging] representation was made" (see [22] of the appellants' written submissions), the communications that were relevant to the unconscionability were the direct communications between Geowash and the franchisees, including the plain English documents and the email communications. Thus the findings as to the six franchisees could not be extrapolated out based purely on the fact that all franchisees were given the franchise documents; what was relevant was the individual negotiations and direct communications between Geowash and the franchisees and those were not amenable to extrapolation.

Consideration of ground 2 232 With respect, these submissions are over-elaborate and apt to confuse a fairly straightforward case. The primary judge had all the evidence, including the unreliable and false evidence of Ms Ali and Mr Cameron. His Honour was able to draw inferences about a consistent pattern of conduct which was deceitful and dishonest. It was not a matter of merely some extrapolation; nor was it a matter of statistics. There was nothing inconsistent with the Court's approach in Unique. In that case, there was a dearth of evidence. Not so here. There was ample evidence from the appellants as to usual practice. Their difficulty was that so much of the evidence was inconsistent and unreliable. That only some of the franchisees were found to be unsophisticated (no inference being able to be drawn about other people) does not prevent a dishonestly deceptive body of conduct from being characterised as unconscionable. 233 The so-called "business model" was a largely consistent approach to extract money from a group of people by falsely representing to them (conformably with documents given to them) that moneys would be used in a particular way, when it was not intended to do so. 234 Pre-existing vulnerability or disability is not a necessary element of statutory unconscionability: Quantum Housing Group [2021] FCAFC 40. The characterisation of the system or pattern of conduct as unconscionable was founded upon deliberate deceptiveness and dishonesty. The unconscionability did not rest on the taking advantage of vulnerability. Some of the persons may have been unsophisticated, but the offence to the conscience was the approach, sufficiently common in character to prospective franchisees, of extracting money by a deliberately dishonest body of representations as to how money would be used, when it was in fact used for surreptitious gain. The conduct was broader than the misrepresentation from documents. The findings focused on the conduct in all the dealings with the franchisees. See in particular LJ [570]-[581]. 235 The appellants engaged in a course of dishonest conduct with people, in circumstances where they intended that they would be trusted by those people. That can be seen as taking advantage of people's honesty and the requisite degree of trust a person requires to undertake business. Such can be seen as taking advantage not of the disability or vulnerability, but of the requisite degree of trust that people bring to business. Such requisite degree of trust is essential for the efficient conduct of commerce. The dishonest dealing with people (who may not be in any way gullible) can be characterised as unconscionable. It is unconscionable because it offends the conscience to take advantage of the requisite degree of trust given by counterparties in business, which may, thereafter, place those persons in a position of financial vulnerability. The point of unconscionability is to reinforce a standard of conduct in business dealings where honesty is valued and can be assumed.

Ground 4 236 Ground 4 is in the following terms: The primary judge erred by making the findings of fact at Liability Judgment [675] as set out in paragraph 2(b) of the declarations by failing to give proper weight to the uncontested evidence that: a. Geowash and the Appellants operated in a competitive market for selling or providing car wash franchises which included competitors at the time such as Magic Hand Car Wash (Liability Judgment [186], [202], [211], [220], [235], [287] to [290], [349], and [562] as against [572]); b. Geowash's first franchise development in Western Australia, the South Fremantle outlet in Beaconsfield (South Fremantle), was subject to a fixed price agreement, yet the costs of developing the franchise through external suppliers exceeded the fixed cost agreement and the price that the franchisee ultimately paid (Liability Judgment [489] as against [490] and [607]); c. After the experience of South Fremantle Geowash and the Appellants undertook development of franchises by undertaking much of the development work internally, rather than engage external suppliers (Liability Judgment [502]); and/or d. Geowash and the Appellants negotiated the purchase price of franchises with franchisees, presenting a range of options with different prices from which the franchisee could chose the option that they wished to pursue (Liability Judgment [570], see also [70], [107], [108], 182], [200], [205], [222], [242], [383], [384] and [424]); and had proper weight been given to any of this uncontested evidence, the primary judge would not have found that the Appellants negotiated a purchase price as to what the franchisee was willing to pay rather than an assessment of the likely costs of a franchise. 237 At declaration 2(b), the primary judge found that, despite the terms of the franchise agreement and disclosure document, and inconsistently with those documents, Geowash negotiated with prospective franchisees a "purchase price" that reflected an assessment made by Geowash as to what the franchisee was willing to pay rather than an assessment of the likely cost of a franchise. At LJ [675], the primary judge stated that the way Geowash dealt with the funds it received from franchisees was contrary to the terms of the franchise agreements. The rest of the paragraph sets out what fees Geowash was entitled to charge under the agreements. At LJ [677], the primary judge found that Geowash adopted a practice of invoicing for the two staged payments by reference to an amount established through discussions with the franchisee and it was an amount that reflected an assessment made by Ms Ali and Mr Cameron as to what the franchisee was willing to pay, rather than an assessment of the likely cost. 238 As to what the primary judge meant when he used the phrase "purchase price" in declaration 2(b), at LJ [676] the primary judge stated: … in the context the reference to a 'purchase price' was a description of an amount that comprised the establishment fee, the leasing fee and Fit Out Costs. It was an amount justified by Geowash on the basis of what it would actually cost to set-up the franchise. This was reflected in the practice of Geowash in a number of cases agreeing to place a cap on the 'purchase price' amount. The cap reflected the character of the amount of the staged payments being presented as what needed to be spent by Geowash to establish the site. 239 It is clear from this that the primary judge was not using the phrase "purchase price" in the sense of a fixed purchase price, which was used in the context of the South Fremantle franchise.

The appellants' submissions 240 In essence, the appellants submitted that there was not a simple dichotomy between charging based on external fit-out costs and fixing prices based on capacity to pay. The appellants referred to the finding of the primary judge at LJ [571]-[572] where his Honour said: [571] … a number of franchisees were given a likely cost figure on the basis that it would be for a franchise that was like a Magic Hand franchise or the South Fremantle franchise in Beaconsfield. Even though the figures were provided using a similar reference point, franchisees were told different figures. This evidence indicates that the figures were being set by reference to matters other than expected cost. [572] … The lack of consistency provides support for an inference that the amounts reflected an assessment by Ms Ali and Mr Cameron of the willingness and capacity of a franchisee to pay … rather than any real and genuine assessment by Geowash of the expected costs for each franchisee. The appellants disagreed with this statement and said that a number of factors affected pricing that were not considered by the primary judge. 241 First, the appellants submitted that, as a factor listed under s 22 of the ACL, the presence of competitors in the market was relevant to how the price was determined and whether it was unconscionable. According to the appellants, the presence of a competitor in the market placed a competitive limit upon Geowash's ability to set a price and provided guidance as to whether Geowash's price setting may have been fair. 242 Secondly, the appellants submitted that the dichotomy applied by the primary judge (either charging for external construction costs or charging based on capacity to pay) failed to take into account the complexity of the negotiations between Geowash and franchisees, and the range of options that were presented to franchisees in terms of location and the type of carwash. Related to this, the appellants submitted orally and in writing that it was always open for the franchisees to build the franchise themselves. Senior counsel for the appellants accepted, however, that once the franchise agreement was signed, it was Geowash who could opt-out of conducting the fit-out and instead require the franchisees to do it (cl 4.7(a)(ii) of the franchise agreement). The franchisees could not opt to build the franchise themselves. 243 Thirdly, the appellants submitted that the primary judge should have taken into account the evidence that prices were based on external costs for South Fremantle and that the appellants decided to move work in-house after their experience with building the South Fremantle franchise. 244 The appellants further submitted that the primary judge was wrong to reject Ms Ali's evidence on the use of South Fremantle costs for pricing. According to the appellants, his Honour incorrectly rejected the evidence because, contrary to the primary judge's assessment, Ms Ali's evidence was not of recent invention. At footnote 19 of their reply submissions, the appellants cited a number of references to other locations in which this evidence was apparently raised. According to the appellants, Ms Ali had provided explanations about the costing process and the invoices in relation to the South Fremantle development to the ACCC during its investigation. The appellants in their written submissions argued that the rejection of the evidence meant that the appellants were found to have failed to adequately substantiate factual matters that were not contradicted by the ACCC's evidence or contested in the ACCC's case. The appellants submitted that his Honour's rejection of Ms Ali's evidence amounted to a conclusion that it was unconscionable for Geowash not to maintain better record keeping to satisfy the Court as to how much money was spent to develop a franchise and the appellants emphasised that adverse credibility findings at trial are not a sufficient basis for a finding as to unconscionable conduct. In particular, the appellants submitted, the primary judge erred in stating that the appellants' explanation as to how a price was derived was inadequate on the basis of credibility. 245 Finally, the appellants submitted that declaration 2(b) assumed a primacy of the franchise agreements and disclosure documents, and in accordance with ground 5 addressed below, these documents were not relevant to the assessment of whether the conduct was unconscionable. According to the appellants, the effect of the primary judge's finding was that no party acted with reference to these documents, so any knowledge the appellants had as to what the documents contained does not support a finding that the price was determined inconsistently with those documents.

Consideration of ground 4 246 Once again, the appellants sought to fasten on to extrinsic factors that do not address the essential dishonesty of the pattern of conduct. That there was a degree of competitive pressure in the market may have had some effect on the choice of the "purchase price". The "purchase price", however, was largely taken from what was said by the prospective franchisees as to what could be afforded. Any competition was irrelevant to the deliberate and dishonest misleading of the prospective franchisees as to the use of the funds. As submitted by the ACCC, competition in a market and the potential for other providers to charge higher fees does not justify conduct that is deliberately dishonest and in that respect unconscionable. 247 The South Fremantle costs were not relevant. Along with Rockingham, it was excluded from the unconscionability findings. Further, whatever it cost, the essence of the unconscionability as to the dealings with the other franchisees was as to the found deliberate misrepresentation as to the use of money. The primary judge otherwise rejected all the attempts by Ms Ali in evidence to justify the extraction of moneys by reference to actual costs. 248 The rejection of Ms Ali's evidence was based on an overall impression of demeanour and inconsistency. There was no glaring improbability about the rejection of her evidence. There is no basis put forward for overturning the comprehensive findings of credit against Ms Ali and Mr Cameron. The lack of records was clearly a matter of relevance in assessing whether the conduct was unconscionable in circumstances where the findings as to representations referable to the costs of fit-out are plain. Unconscionability was not found because of poor record keeping, but because of a system or pattern of conduct of deliberate dishonesty. 249 As submitted by the ACCC, the terms of the franchise agreement did not assume any "primacy" in the findings that the appellant negotiated a "purchase price" with the franchisees. The findings were based on the conduct of the appellants. Part of that conduct was putting forward documents, available to prospective franchisees to be relied on, which falsely stated outcomes with the yields. Such falsity was also replete in the appellants' exchanges and engagement with the prospective franchisees. 250 Ground 4 should be dismissed.

Grounds 5 and 6 251 Grounds 5 and 6 are in the following terms: 5. The primary judge erred by making the findings of fact at Liability Judgment [573]-[581] as set out in paragraph 2(c) of the declarations and by: a. concluding that either the Franchise Agreements or Disclosure Documents created any legal obligation to the effect that monies from a franchise purchase price could not be applied to the general business costs of Geowash, including payments to the Appellants (Liability Judgment [75]-[77], [87]-[93], [528], [543] and [675]); and b. drawing the inference that the franchisees drew any representation that restricted the manner in which funds would be applied by Geowash and the Appellants from their communications with Geowash and the Appellants because: i. few of the franchisees that gave evidence had regard to, developed an understanding of, or placed reliance on, the franchise agreements or disclosure documents (Liability Judgment [114], [179], [359], [411]); and ii. the summary of findings in Part IV of the Liability Judgment do not record consistent direct communications that support the conclusion in Liability Judgment [676] (see Liability Judgment [107]-[108], [120], [177], [184]-[188], [195]). 6. The primary judge erred in respect of the findings of fact at Liability Judgment [677], [679] and as set out in paragraph 2(d) of the declarations for the same reasons as at ground 5 above (see also Liability Judgment [683]).

The appellants' submissions 252 Ground 5 challenges the finding of fact as set out in declaration 2(c) that the appellants represented to prospective franchisees that the amount charged was required to meet the actual costs to fit-out and set-up a franchise when in fact it was calculated with the expectation that the amount would cover sales commissions of at least 20%, the costs of fit-out and set-up, and also provide further funds that could be applied to the general purposes of Geowash. This finding was challenged in three ways. First, the appellants challenged the primary judge's construction of the franchise agreements and disclosure documents, submitting that these documents did not create any legal obligation to the effect that monies from a franchise "purchase price" could not be applied to the general business costs of Geowash and the payment of sales commissions. Secondly, even if the primary judge's construction of the contractual documents was correct (and the documents did only allow the fees to be paid toward the actual costs of construction), the primary judge found that few of the franchisees read or understood the documents. The effect of this, according to the appellants, is that the representations conveyed in those documents did not operate on the minds of the franchisees and thus had no role to play in determining whether the conduct was unconscionable. Instead, the appellants submitted that the relevant representations were those contained in the plain English documents and the other direct communications between the appellants and the franchisees, including email communications. This led to the third limb of this ground, namely that the direct communications with franchisees did not contain a representation that the amounts charged were what was required to meet the costs of fit-out. Ground 6 challenges the finding of fact in order 2(d), namely that Geowash took funds that were to be applied to meet fit-out costs and used them to pay sales commissions and general operating expenses, on the same bases as those set out under ground 5. 253 In respect of ground 5(a), the appellants submitted that the primary judge should not have construed the contractual documents as requiring fit-out costs to be limited to external costs or requiring Geowash to record time separately against each franchise. The appellants said that the interpretation placed on these documents by the primary judge results in an extreme position that Geowash was then only permitted to use the funds on external costs of the construction of the carwash. Nothing could be spent on operating expenses. In their oral and written submissions, the appellants described this as the primary judge imposing a trust structure on Geowash. In oral submissions the appellants submitted that there were no financial consequences in the franchise agreement in the event that the franchisee wished to complain that the fit-out did not comply with what they expected. The appellants argued that this is consistent with their construction that the fit-out costs included to a certain extent the operating expenses and the commissions. The appellants also referred to the primary judge's finding that although management costs for the fit-out were permitted under the description of fit-out, there wasn't any evidence in relation to a management fee being separately invoiced. The appellants said that this is consistent with their understanding that fit-out costs included all internal costs and were billed to the franchisees in the lump sum process. 254 Further, related to the submission above, the appellants submitted that the primary judge applied his own view of prudent business practices in finding that Geowash ought to have maintained better internal records. According to the appellants, the primary judge supplanted his own standards, contrary to the Full Court's comments in Paciocco. 255 Finally in relation to ground 5(a), there was a suggestion in footnotes 24 and 49 of the appellants' written submissions that the Code limited the particular form of the contractual documents and how payments could be described in the documents. 256 In relation to ground 5(b)(i), the appellants submitted that the primary judge relied on the franchise agreements and disclosure documents that few of the franchisees read or understood. The appellants at several points in their written submissions referred to the findings made by the primary judge as to what each franchisee who gave evidence understood from the contractual documents. The appellants said that Mr Singh of the Domain Car Park franchise did not have a sophisticated understanding of the franchise documents (LJ [114]); Mr Chhina of South Fremantle did not read the documents thoroughly or get legal advice about them (LJ [179]); Mr Kalyan of East Perth did not rely on the franchise agreement concerning the cost of the franchise (LJ [359]); and Mr Kumar of the Baldivis franchise developed his understanding of what Geowash was to do based on the plain English documents that he received rather than the franchise agreement and disclosure documents (LJ [411]). The appellants submitted that where the franchise documents were not read or understood, the Charging Representation had no role to play in determining whether the conduct was unconscionable. The representation did not operate on the minds of the franchisees and they did not place reliance on the alleged misleading conduct as to how the price was derived. 257 In relation to ground 5(b)(ii), the appellants submitted that, without the franchise agreements and disclosure documents (which the appellants said should not be taken into account because they were not read or understood by the franchisees), the direct communications between Geowash and the franchisees, including emails and the plain English documents, do not demonstrate representations to the effect that Geowash would not charge costs where it had undertaken work internally or not spend money on operating expenses or commissions. The primary judge at [676] stated "in addition to the terms of the franchise agreement about the funds, franchisees were told that the amount charged was what was required to meet the costs to fit-out and set-up the outlet." The appellants submitted that the direct communications, including the Franchise Overview, Franchise FAQs and Next Steps documents, were not capable of supporting the primary judge's finding that franchisees were "told" the amount charged was what was required to meet the costs of fit-out. The appellants said that that finding only flows from the previous findings his Honour made in relation to the franchise documents and the manner in which the appellants could charge under those franchise documents. There is no express representation of that kind in the direct communications between the appellants and the franchisees; it is the documents - the franchise agreement and disclosure document - despite the FAQ, and then the email exchanges which his Honour uses to reach that finding at [676]. According to the appellants, his Honour looked at the emails which talk about additional costs and he characterised those emails as in effect an implied representation as to what the other lump-sum payments (which had already been made) were for.

Consideration of grounds 5 and 6 258 The difficulty with all these submissions is that they and the grounds fail to grapple with the case as found. The findings of misrepresentation and unconscionability rested on all the dealings of Ms Ali and Mr Cameron with the prospective franchisees (which dealings were infused with dishonesty) and not just upon the contractual documents. As submitted by the ACCC, the conclusion that Geowash represented to prospective franchisees that the amount charged was required to meet actual costs to fit-out and set-up a franchise was drawn by reference to the dealings between the appellants and the prospective franchisees, which dealings did not reveal to the franchisees the other purposes for which the funds were to be used by Geowash. The ACCC was correct to submit that the conduct went well beyond an "operative breach of contract". 259 We reject the submissions as to construction of the documents. Subject to the changes in later versions of the franchise agreement where the phrase "Fit Out Costs" could include management fees for the process of design and fit-out, the construction by the primary judge was plainly correct. Subject to the variation, there was no basis for deducting the commission or anything other than direct costs. As to the later variation there was no attempt whatsoever to render accounts for such reasonable costs. 260 The appellants' submissions left the position entirely unclear as to what the charges levied on franchisees were for or what the construction of the contract ought to have been, if it was not what the primary judge found it to be. At times (such as [73]-[74] of the written submissions), the appellants appeared to accept that the terms provided for deductions for costs of fit-out and set-up (just not limited to external costs of fit-out and set-up); at other times (such as at Tp 23) the position was expressed as: The terms of the franchise agreement do not prevent payments of this kind. The bargain that was entered into by the appellants and Geowash with the franchisee was 'for this amount of money we would give you a Geowash sites'. That was the bargain. 261 The findings of the primary judge (South Fremantle aside) were that the dealings, including the provision of documents, involved representations as to costs, not an overall purchase price. 262 The criticism of the primary judge that he imposed his idiosyncratic views of commercial morality should be rejected. A system based on dishonest representation offends an Australian business conscience. The finding that there was no system for recording or allocating costs of a particular franchise site was not just a piece of evidence by which a fact in issue could be inferred; it was also a feature of the conduct upon which one could draw an inference about what the course of the practice was, and it was also part of the course or pattern of conduct that assists in the characterisation of that course or pattern of conduct. It was not simply sloppy business practice in its whole context. It found its place in the overall finding of a deliberate and dishonest pattern or system of conduct. 263 We reject the submission that the Code somehow constrained Geowash's ability properly to disclose the manner in which it would use a franchise fund. The submission is unfounded. As submitted by the ACCC, the Code neither requires usage of some particular charging model, nor does it require misleading or unconscionable conduct as to charging models. 264 As to the submissions on ground 5(b)(i), the primary judge's findings as to unconscionability were factually distinct from, and broader than, the conduct underlying the Charging Representation. As submitted by the ACCC, the findings were not simply based on the contractual documents but also on Geowash's conduct in its dealings with prospective franchisees as a whole episode. Further, the findings as to what each franchisee understood from the contractual documents must be put in context. It is incorrect to say that the franchisees did not understand that it was a cost-based charging arrangement. The primary judge did not make that finding. 265 We reject the submissions as to ground 5(b)(ii). The plain English documents are consistent with, and make clear that, the arrangement was to be governed by a franchise agreement (for example the "Your Next Steps" document refers to signing a franchise agreement). The suggestion that the plain English documents made clear that it is not a cost-based charging model for set-up and fit-out, but rather some kind of agreed price model, cannot be accepted. Further, the email correspondence reinforces a cost-based charging model and the prospective franchisees' understanding of the arrangements. 266 Grounds and 5 and 6 should be dismissed.

Ground 7 267 Ground 7 is in the following terms: The primary judge erred in respect of the findings of fact at Liability Judgment [680] and as set out in paragraph 2(e) of the declarations by: a. drawing a conclusion as to a hypothetical event such as not being able to meet fit out costs of a franchise that did not eventuate (see Liability Judgment [683], further Liability Judgment [484] and Penalty Judgment [25]); b. drawing a conclusion as to the standard or quality of franchises or franchise development services that had been delivered in the absence of any objective or valuation evidence (Liability Judgment [680]).

The appellants' submissions 268 Ground 7 challenges the findings of fact in LJ [680] and declaration 2(e), which stated that the funds that should have been available to meet fit-out costs were not available when required, exposing franchisees to the risk that their money would be taken and they would not get a franchise at all or a franchise of the kind described. The findings in LJ [680] were much broader than the declaration in 2(e), and much of the appellants' written submissions on this ground attacked these findings, as opposed to the terms of declaration 2(e). The appellants submitted that the findings as to the quality of the fit-out were not supported by objective evidence, and a case as to the quality of the fit-out was never alleged by the ACCC. The appellants also submitted that there are no operative representations from which the representation as to a particular standard of quality could be said to arise. The appellants contended that there are difficulties with the specific examples given in LJ [680]. For instance, Wanneroo is referred to as an example of Geowash requesting additional money, but the primary judge found that it had been subject to a cost overrun. The appellants further submitted at [94] of their submissions that the findings at LJ [680] contradict the fact that the ACCC failed to establish that Geowash invoiced franchisees when short of funds and would not deliver a franchise. The appellants submitted that the declaration as to risk could only have been based on a finding of fact on the balance of probabilities that substandard franchises were delivered.

Consideration of ground 7 269 In considering the appellants' submissions, it is necessary to appreciate that the declaration does not refer to the standard of the fit-outs in fact provided. The declaration refers to the "very real risk" that Geowash's business model created. As submitted by the ACCC, it is difficult to see how any challenge can be advanced to the declaration where there is no challenge to the fact that significant proportions of the funds advanced by franchisees for the purposes of establishing an outlet were instead used by Geowash to pay commissions and operating costs. The ACCC highlighted that over fifty per cent of the total revenue of Geowash in FY 2013, 2014 and 2015 was paid by way of commissions. In those circumstances, we consider that the risk was plain. Further, it is clear from the paragraphs surrounding LJ [680] that the primary judge was not saying that it was part of the unconscionable system that there would be poor quality developments. His Honour found that the system adopted by Geowash created risks of not being able to do the job and it risked franchisees not getting refunds when the amounts spent to fit-out and set-up their franchises were lower than the amounts paid in lump sum (see RJ [119]). Although there was no evidence of funds not being available when required, what matters is that there was a risk that was created by using funds to pay commissions when those funds were supposed to be for the cost of fit-out.

Ground 8 270 Ground 8 is in the following terms: The primary judge erred in respect of the findings of fact at Liability Judgment [681] and as set out at in paragraph 2(f) of the declarations as a result of the errors identified in grounds 4 to 8 above. 271 Declaration 2(f) stated that, based on the findings in 2(a) to 2(e), the appellants adopted a business model that was inherently dishonest. At LJ [681] the primary judge found that the model involved presenting the staged payments as being amounts that were necessary to meet the costs to fit-out and set-up an outlet of a particular standard for the particular franchise when the intention was that a large part was not used for that purpose at all.

The appellants' submissions 272 The appellants' written submissions in respect of this ground were limited. The appellants submitted that the elements of dishonesty identified were dependent on the set-up of a franchise outlet to a particular standard as represented and that the amounts paid to Geowash would be applied in accordance with the franchise agreements and disclosure documents. The appellants complained that the ACCC did not plead a case as to the quality of the set-up, nor was this established through objective comparative evidence. These arguments are addressed under ground 7 above. The appellants also submitted that the finding of dishonesty was dependent on the finding that the amounts paid to Geowash would be applied in accordance with the franchise documents, in circumstances where the primary judge found that the franchisees had not had regard to those documents in forming their understanding as to what Geowash would deliver. In these circumstances the dishonesty could only be founded on the oral or direct representations made by Geowash to franchisees. The appellants submitted that the direct communications did not contain representations to the effect that Geowash would not charge costs where it had undertaken work internally without engaging an external supplier or Geowash would hold funds in specific project based accounts. These arguments are addressed above under ground 5. 273 On the second day of the hearing of the appeal, the appellants took a broader approach to ground 8 and the inherent dishonesty argument. The appellants essentially made two points. First, the appellants' course of conduct in relation to South Fremantle indicated an intention and an openness to have negotiations of this kind with any franchisee. This argument rested upon the similarities between the appellants' course of conduct in relation to the fixed price franchisees and non-fixed price franchisees. In support of this argument, the appellants pointed to the use of the phrase "purchase price" in discussions with both fixed and non-fixed price franchisees. As submitted by the appellants, the notion of a purchase price or a fixed price appears in the plain English documents and negotiations between the appellants and various franchisees, not just the negotiations with the South Fremantle and Rockingham franchisees. For example, the Franchise FAQs document stated that a purchase price is to be paid in two lump sums. In relation to Palmyra, Ms Ali sent an email to the franchisees (set out at LJ [319]) referring to the franchise establishment fee and the two lump sum payments: "you pay 50 per cent of the balance of your purchase price upon selection of your site". According to the appellants, there was no clear distinction between communications concerning agreements where franchisees would pay for costs or where they would pay a fixed purchase price. The appellants submitted that at any point, consistent with their perspective that the phrase "purchase price" used in those documents referred to a price like that agreed in relation to South Fremantle, the end point of a fixed purchase price could be reached with any of the franchisees. According to the appellants, the nature of the negotiations and the narrowness of the distinction between the fixed price and non-fixed price franchisees indicated an openness to have negotiations and reach the conclusion of a fixed purchase price (which would not be unconscionable) with other franchisees. Thus, the appellants submitted, the very act of excising the fixed price franchisees discounts the dishonesty finding. 274 Secondly, the appellants submitted that for the conduct to be dishonest, the primary judge needed to have found an intention by the appellants to engage with the franchisees so that the franchisees believed the reference to the cost or purchase price was only for fit-out and that fit-out did not include commissions or operating expenses. According to the appellants, to find dishonesty his Honour needed to find that the appellants intended to be dishonest. The appellants submitted that no intention can be found because, first, despite the primary judge's conclusions on the construction of the franchise documents, the appellants thought that fit-out costs included operating costs and commissions and according to the appellants they have maintained that interpretation throughout the case, and secondly, the primary judge did not find any direct representations made by the appellants that costs were fit-out costs and did not include operating costs and commissions. The appellants said that they never shied away from the fact that they paid commissions and operating expenses and understood the "purchase price" as including those payments. So once the primary judge found that on the franchise agreement the fit-out costs could not include commissions and operating expenses, then the fact that the appellants always believed they were included shows that their knowledge and belief did not accord with an intention to deceive. 275 The argument as to the lack of a finding that the appellants intended to be dishonest was not included in the appellants' written submissions. This argument is related to ground 5(b)(ii) and the submissions made by the appellants concerning a lack of a clear representation in the direct communications said to establish the unconscionable conduct. Essentially, the appellants submitted that they saw the franchise agreement as including the commissions and the operating expenses and his Honour never found that there were express representations or that there was an intention to mislead the franchisees into thinking it was actual construction costs: see LJ [530] and LJ [570]. There was, it was submitted, no positive step taken by the appellants to mislead the franchisees.

Consideration of ground 8 276 We reject the submission that the finding that Geowash's business model was inherently dishonest was based on the failure to set-up an outlet of a particular standard. The case was about a system or pattern of conduct being dishonesty in communication regarding the use of money. 277 The submission that the finding of dishonesty was somehow not soundly based on findings of intention is without foundation. As submitted by the ACCC, the inherent dishonesty in the appellants' business model was patent. The appellants' real complaint seemed to be that the judgment does not have a sentence saying that the misleading conduct was intentional. It was plain that his Honour found that the conduct directed to the prospective franchisees was intentional and dishonest. That arises from a fair reading of the whole judgment, including the use of the word "dishonest". We also reject the argument that there was no clear distinction between the conclusion as to South Fremantle and the other use of the phrase "purchase price" (otherwise explained by the primary judge). The findings of fact are clear and without any apparent error that the term "purchase price" in context was presented by the appellants as being an amount that depended upon the actual costs incurred by Geowash to establish the site (and this was not fixed, in contrast to the position in relation to South Fremantle). Reference may for instance be made, as senior counsel for the ACCC did, to Tp 407 lines 19-21 in the transcript of Ms Ali's cross-examination: They weren't asking you to sell them a franchise for a fixed price and you weren't proposing to sell them a franchise for a fixed price, were you? - In a couple of instances, yes. But no, apart from those instances, no. 278 Ground 8 should be dismissed.

Ground 3 279 Ground 3 is in the following terms: The primary judge erred in finding that the [sic] Geowash contravened: a. section 21 of the ACL; and b. clause 6 of the Franchising Code of Conduct, thereby contravening section 51ACB of the Competition and Consumer Act 2010 (Cth) (CCA); in the manner set out in the declaration at order 2 of the Penalty Judgment because the primary judge erred in finding the conduct identified at paragraphs 2(b) to 2(f) as set out at grounds 4 to 8 below or otherwise finding the conduct was unconscionable and contravening the obligation of good faith in cl 6 of the Franchising Code. As a consequence, the primary judge erred in: c. finding that the First and Second Appellants were knowingly concerned in those contraventions as per the declarations at orders 3 and 4 of the Penalty Judgment; d. imposing penalties against the First and Second Appellants in relation to contraventions of section 21 of the ACL and section 51ACB of the CCA. 280 Ground 3 challenges the primary judge's findings that the conduct identified in orders 2(b) to 2(f), "or otherwise", constituted contravention of s 21 of the ACL and cl 6 of the Code. The appellants did not include a separate section in their written submissions on this ground. There are, however, a number of submissions made by the appellants orally and in writing that do not otherwise fall under other grounds of appeal, and it is appropriate to deal with those arguments under this ground.

Dishonesty alone is insufficient 281 At [104]-[105] of their written submissions, the appellants submitted, in effect, that even if the business model was dishonest in the manner described by the primary judge, that dishonesty is insufficient to establish unconscionability. This submission was also pursued on the first day of the hearing. The appellants submitted that even if the direct representations were operative, any false representation as to how a price is derived does not make an agreement on that price unconscionable, particularly where the ACCC did not establish that the amounts paid substantially differed from the range quoted. According to the appellants, more is required. Further, the appellants submitted there was no evidence as to the extent to which any dishonesty impacted upon the franchisee's decision making in their dealings with Geowash and there was no evidence that the franchisees placed reliance on the misleading conduct. There was also never any obligation on Geowash to tell the franchisees that funds paid would be used for commissions. Thus, even if it was a breach of the franchise agreement or misleading or deceptive conduct, it was not a relevant factor to be taken into account in unconscionability. In this respect the appellants emphasised that the focus of unconscionability should be on the minds of the contracting parties as they enter the commercial arrangement and whether they received what they understood would take place. It was submitted that the primary judge incorrectly concerned himself with how the money was spent, which is a "post-conduct analysis" that had no part to play in finding unconscionability. In oral argument at Tp 27, lines 7-15, senior counsel for the appellants phrased the argument as: Even if your Honour was to accept that the proper characterisation of the dishonesty was knowing that the other side of the bargain thought it was giving money and the money was only going to construct the franchise and … [y]ou didn't tell them what you were spending the actual money on. Your intention was still to provide the franchise. What have you done with this particular person or class of people that means you have taken advantage of them in letting them think that while you're spending the money in other ways? 282 We reject the submissions. A systematic dishonest system or pattern of conduct is well able to be characterised as unconscionable. It is difficult to see what more is required to offend a business conscience. 283 Reliance upon some aspects of what was provided for in documents or in oral statements misses the point. The pattern or system was to extract funds by deliberately misrepresenting what the money would be used for. Focus on the use of the money does not amount to so-called "post conduct analysis". It was always known by the appellants how the funds would be used and yet the false representations were made. However, in any event s 21 is expressed in terms of conduct that in all the circumstances is unconscionable. It is conduct in connection with the supply of goods and services. That is not limited to conduct prior to entering into any contract: see in this respect s 22(j) and s 21(4)(c) of the ACL.

Absence of four necessary findings 284 In connection with the arguments about dishonesty being insufficient, the appellants submitted orally that there were three things that were not pleaded or found which were necessary to a finding of unconscionable conduct and without those findings, the dishonesty finding alone was not unconscionable and there is not enough to make a finding that the conduct was against the norms of commercial conduct. Some of these points were raised in the appellants' written submissions at [33] and [93]-[94]. First, the ACCC did not plead and it was not found that there was no intention to provide a Geowash carwash to franchisees. This was phrased differently in the written submissions, without focus on the intention of the appellants: the ACCC failed to establish that Geowash failed to deliver an operating car wash to a majority of its franchisees. Secondly, it was not pleaded that Geowash would produce a low quality product. The appellants submitted that the primary judge rejected the suggestion that a lesser quality carwash was part of the system (although the primary judge did find that the conduct substantially compromised Geowash's ability to deliver an outlet of the kind that they described to franchisees). This argument appears to contradict ground 7 where the appellants submitted that the primary judge erred by making findings as to the quality of the franchises. Thirdly, the appellants submitted that the primary judge specifically found that it was not the case that invoices were sent by Geowash when Geowash needed operating funds. A fourth factor that was not present but, according to the appellants, was necessary to make a finding of unconscionability was added at the conclusion of senior counsel's address, namely that the appellants were not responsible for certain sites not being completed. 285 We reject these submissions. None of these features is necessary for a conclusion of unconscionability in the circumstances here. As submitted by senior counsel for the ACCC, it is no answer to a finding of unconscionability to say that the conduct could have been worse. The absence of these four features, individually or collectively, does not lessen the force, or detract from the characterisation, of the conduct as found. Any one or more of these factors would have made the unconscionability worse.

Lack of vulnerability 286 The appellants made a number of submissions related to the vulnerability of the franchisees and the primary judge's characterisation of the vulnerability. They submitted that the primary judge's reasons are inconsistent with declaration 2(a), which stated that "some of [the prospective franchisees] were unsophisticated when it came to owning and operating a business". The appellants said that this finding is contrary to the primary judge's finding at LJ [681] where his Honour stated that he could not find that all franchisees were vulnerable by reason of their lack of experience, nor could he find that Geowash had taken advantage of any gullibility or inexperience. 287 The vulnerability relied upon by the ACCC is found at [7] of its concise statement, namely that the franchisees were typically unsophisticated when it came to owning and operating a business. The appellants said that, based on the primary judge's finding at LJ [681], his Honour did not rely on this vulnerability. Instead, the appellants submitted that the primary judge "adopted a shift in the ACCC's case from the conduct that was pleaded". The ACCC did not plead or allege a case that depended on shortfalls of funds at particular times, yet the primary judge found that the relevant vulnerability was the risk of the business failing and franchisees not being provided with completed franchises or being provided with franchises of a lower standard of quality. The appellants submitted that this was in error for two reasons. First, it was not consistent with the manner in which the case was run in terms of vulnerability and secondly, according to the appellants, the approach of the primary judge inverted the process of analysis. The appellants in oral argument criticised the primary judge's "inverted approach" of finding that the business model was inherently dishonest and then finding that by way of this dishonesty, the appellants took advantage of franchisees. 288 Related to this, the appellants submitted that bad business management is not unconscionable and the end point of a business failing should not be used to view the conduct and the system as unconscionable. In oral argument, senior counsel for the appellants submitted that the risk of the business failing was not enough to create a vulnerability in the franchisees because the Court needed to find a deliberate system and a system could not be deliberate if the risk was unintentional. 289 Further, according to the appellants, the risk of non-completion identified by the primary judge in declaration 2(b) was the same for fixed and non-fixed franchisees: the risk that Geowash would take the franchisees' money and not be able to establish an outlet of the kind described or at all was a risk that was relevant to franchisees with a fixed price contract, as well as franchisees who were charged on the basis of costs. The appellants submitted that the fixed price agreement did not prevent this consequence (of non-completion) or the risk and, therefore, the risk could not be an element of the system of conduct. The risk was still alive for fixed-price franchisees but the primary judge found that they were not part of the unconscionable system. Thus, according to the appellants, reliance on this risk as part of the system was illogical when it is considered that the fixed-price franchisees, who according to the appellants were subject to the same risk, were excluded from the unconscionable system. The appellants also submitted at [44] of their reply submissions that the risk of Geowash entering administration remains the same as it does for any party contracting with a corporation, but this submission was not pursued any further orally. 290 During oral argument senior counsel for the appellants was asked whether any High Court authority suggested that statutory unconscionability could not be found in the absence of a special disadvantage being identified in one or more of the victims. Senior counsel responded that there was some lack of clarity as to whether or not a particular vulnerability was necessary after the High Court decision in Kobelt, but that she did not need to rely on any of the judgments in Kobelt. Senior counsel stated that her argument was that the vulnerability relied on by the ACCC was a lack of sophistication and, it was submitted, without more, a lack of sophistication was insufficient. According to the appellants, it is necessary to look at how that lack of sophistication manifested and what sophistication was on the other side of the bargain. This submission was not taken any further. Later during the hearing, senior counsel for the appellants compared the High Court decision of Kobelt to the circumstances in the present case. Senior counsel submitted that in Kobelt the ACCC relied on a particular vulnerability and therefore Kiefel CJ and Bell J had not found it necessary to resolve whether a particular vulnerability was necessary (unlike Keane J). Similarly, in this case, the appellants said that the ACCC did rely on a specific vulnerability - franchisee sophistication. Even though the declarations said that some of the franchisees were inexperienced and not sophisticated, the vulnerability in the judgment was the risk that the franchises would not be built because of the way in which the business operated. The appellants say that was an error for the reasons set out above. 291 The ACCC identified the vulnerability found by the primary judge: The franchisees were vulnerable to the risk of the business failing and, as a consequence, not being provided a franchise. This was because Geowash had complete control of the funds which it received well before those funds were required, and in respect of which no systems were in place to ensure that the funds were applied only to meet the costs of fit-out and set-up. The conduct would likely result in Geowash taking advantage of any trusting franchisee, even one who had been in business before. The ACCC also highlighted the last sentence of LJ [681], that the nature of the franchise was such that it was likely to attract inexperienced people with little business experience. Senior counsel for the ACCC also referred to RJ [119]-[120] as another iteration of the vulnerability and risk identified by the primary judge. 292 As to the application of Kobelt, the ACCC highlighted that no challenge was made by the appellants to the analysis of the relevant legal principles by the primary judge at LJ [658]-[670]. No ground of appeal raises any criticism that his Honour erred by not finding some sufficiently specific disadvantage or individual disadvantage and the ACCC did not understand that point to be put by the appellants. Nevertheless, senior counsel for the ACCC in oral argument emphasised the significance of this being a system case. In s 21(4)(b) of the ACL, the intention of Parliament is that the section is capable of applying to a system of conduct or pattern of behaviour, whether or not a particular individual is identified as having been disadvantaged by the conduct and behaviour. His Honour did not find, and did not need to find, that any particular individual was identified as having been disadvantaged, save for his identification of the risks to which the franchisees were exposed. 293 Ultimately the appellants' arguments lacked precise focus. There was no ground of error asserted that the primary judge applied the wrong legal principle. 294 Whilst vulnerability was put forward and a lack of sophistication in some respective franchisees was found, the nature of the unconscionable conduct was entirely within the parameters of the concise statement: a deliberately dishonest pattern or system of conduct to misrepresent the use of money being extracted from franchisees. 295 The Full Court decision in Quantum Housing Group [2021] FCAFC 40 puts an end for present purposes to any attempt to extract from the High Court in Kobelt a requirement for some form of pre-existing vulnerability or disability outside the transaction in question.

Removal of the fixed price franchisees from the unconscionability finding was illogical 296 On the first day of oral argument the appellants submitted that the primary judge's conclusion as to unconscionability was illogical in circumstances where his Honour found that reaching a fixed purchase price took the conduct out of the realm of unconscionability. The appellants submitted that the fact that the negotiation could result in a fixed price shows that the negotiation, which formed part of the unconscionable conduct, could not be part of a fixed business system (that is, it could not be a definitive system). The appellants submitted that if the opportunity arises during the negotiations for a fixed price, the fact that that could correct any suggestion of dishonesty and could remove the vulnerability of the risk the funds would not be there to complete the site is illogical and inconsistent with the business model found by the primary judge. 297 With respect, there is nothing illogical in the primary judge's findings of unconscionability in respect of some, but not all of the franchisees. As senior counsel for the ACCC submitted, there may have been some generosity to the appellants in the conclusions about unconscionability in respect of the two fixed price sites. That, however, does not undermine the conclusions reached about other franchisees based on all the conduct towards them.

Section 22 factors 298 The appellants submitted that the factors in s 22 of the ACL were highly relevant in assessing what was outside societal norms of accepted commercial behaviour. According to the appellants, the legislature has provided these factors as an indicator of relevant objective considerations which may assist the Court in objectively assessing the impugned conduct against a common standard. 299 As submitted by the ACCC, the appellants' attempt to construct (or reconstruct) the facts by reference to the factors in s 22 fails to engage with the actual conduct that gave rise to the findings by the primary judge. The circumstances of the conduct and the process of their characterisation is not an abstract deconstruction of a party's behaviour into a matrix based on s 22. These factors may assist in evaluation. They do not define it. Nevertheless the present relevance of paras (a), (b), (d), (j)(iii) and (l) of s 22(1) tell powerfully against the appellants and against the argument that an analysis by reference to s 22 somehow absolves Ms Ali and Mr Cameron of the serious conduct found against them.

Breach of the duty of good faith under the Code 300 The appellants did not raise any grounds of appeal or make any submissions that specifically addressed the primary judge's findings in relation to the breach of good faith at LJ [684]-[765]. Instead, the appellants submitted that the primary judge erred in finding a breach of good faith under cl 6 of the Code by reason of the errors identified in grounds 2 to 8, which related to the primary judge's findings on unconscionability. 301 For the reasons set out above, the appellants' attack on the breach of the obligation of good faith, based on grounds 2 to 8, should fail. We do not consider that the primary judge erred in his Honour's analysis of the appellants' breach of the good faith obligation under the Code.

Rejection of the appeal on liability 302 Before commencing examination of the relief judgment and the appellants' complaints about the relief that was granted, it is helpful to conclude this section of the reasons, as it was to commence (see [7] above), with a summary of the primary judge's findings about the conduct taken from the commencement of the relief judgment. This summary involves a coherent overall characterisation of the conduct. It was written by his Honour as a coherent narrative, not broken up into abstract pieces. As a whole descriptive narrative, it captures the appropriate focal length of attention to embody the wrongfulness of Geowash's, Ms Ali's and Mr Cameron's conduct, which must necessarily be borne in mind when considering relief, especially deterrence. The following is taken from RJ [10]-[19]: [10] First, Ms Ali and Mr Cameron took legal advice as to the structure of the franchise arrangements and the nature of the disclosure documents that were required. They understood that there was an obligation under the applicable laws to provide those documents and give effect to them in their dealings with franchisees. However, in their dealings with franchisees they disregarded those documents. The extent of divergence between the requirements of the franchise agreements, the disclosure documents and their actual dealings with prospective franchisees was stark. It is properly characterised as a complete disregard of the documents and the obligations that they imposed upon Geowash. The respondents adopted a methodology for charging franchisees and appropriating the funds received that was at complete odds with the fundamental structure of the franchise agreement and the disclosure document. [11] Second, although the major part of the franchise fees to be paid to Geowash was presented to franchisees as being an amount that was required to meet the cost to fit-out and set-up a site, when those fees were paid to Geowash, it treated the monies as general revenue of Geowash. The conduct of Geowash in doing so was known to Ms Ali and Mr Cameron by reason of their knowledge of the business practices of Geowash and the substantial amounts paid to them (or for their benefit) from those funds. In addition, it was known to Ms Ali because she was responsible for the financial records of Geowash. [12] Third, the dealings with franchisees were undertaken by establishing an amount that the franchisee was willing to pay and then presenting that amount as the actual cost to fit-out and set-up a site when in fact Ms Ali and Mr Cameron made no calculation or assessment of the likely actual cost and used a considerable proportion of the funds to cover a series of payments to be made to themselves by way of commissions. [13] Fourth, the extent of the commissions paid to Ms Ali and Mr Cameron (in the latter case received through a trust structure) was considerable. Therefore, they benefited financially to a considerable degree from the conduct. [14] Fifth, the parties who gave evidence risked much or all of their available financial resources on a Geowash franchise in circumstances where that position would have been known to Ms Ali and Mr Cameron. For the most part, those parties were relatively naïve in terms of small business experience and plainly trusting of what was said by Ms Ali and Mr Cameron. Indeed, dealings by Ms Ali with those individuals who gave evidence (and their business associates) were designed to engender trust and extract the most that those individuals might be willing to pay for a franchise. [15] Sixth, for the parties who gave evidence (and their business associates) there were serious financial risks because they were committing much of their available financial resources to Geowash and in a number of cases were borrowing considerable amounts in order to invest in a Geowash franchise. [16] Seventh, in consequence of their lack of business experience and the extent of their financial investment, the parties who gave evidence were plainly financially vulnerable. These matters were known to Ms Ali and Mr Cameron because the nature of their dealings with franchisees involved determining how much they had available to invest in a franchise and encouraging them to borrow for that purpose. [17] Eighth, the franchisees made a substantial personal commitment to their franchises. The establishment of a small business involves great personal effort and the commitment of a period of your life to the venture. Senior counsel for the ACCC described the conduct as having the consequence of crushing the entrepreneurial spirit by drawing people into an endeavour that required them to commit time, money and energy only to find that their money was not used to provide the level and quality of support justified by the extent of their investment. I accept that submission. [18] For the ACCC, it was also submitted that the conduct manifested a lack of morality or moral compass. I accept that submission. The stark difference between what was documented and what was done and the extent of commissions paid from funds to Ms Ali and Mr Cameron that were misrepresented as monies that were being deployed to meet the costs of fit-out and set-up for the franchise justify that description. These aspects have significance for specific deterrence and the extent to which Ms Ali and Mr Cameron should be ordered to make redress. [19] The conduct has been found to be both unconscionable and, as to dealings after 1 January 2015 with four franchisees, a breach of the duty of good faith imposed upon parties to a franchise agreement by the Franchising Code of Conduct. Both Ms Ali and Mr Cameron have been found to have been knowingly concerned in the conduct. 303 None of these summary findings or conclusions was undermined on appeal.

The appeal on relief 304 On 24 January 2020, the primary judge made orders and published reasons on the question of relief: see Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 4) [2020] FCA 23. We have set out above at [200]-[206] the form of the declarations and orders. 305 The seriousness of the underlying conduct that was the subject of appeal was set out at RJ [10]-[19] which we have already quoted. 306 The primary judge dealt with the website representations at RJ [20]-[23]. The three representations were blatant. They were serious and were designed to engender trust in the standing and status of Geowash. These matters can be taken from LJ [627]-[639] and RJ [21]-[23]. 307 As to the explanations and mitigation by Ms Ali the primary judge examined her evidence at RJ [25]-[33]. Importantly for the question of penalty the evidence of Ms Ali revealed a lack of insight into her own wrongdoing. She showed little or no remorse or contrition. 308 Much the same can be said for the evidence of Mr Cameron dealt with by the primary judge at RJ [34]-[39]. 309 At RJ [64]-[74], the primary judge dealt with the question of disqualification from managing a corporation. His Honour directed himself by reference to Australian Securities and Investments Commission v Adler [2002] NSWSC 483; 42 ACSR 80 (Santow J) as approved by McHugh J in Rich v Australian Securities and Investments Commission [2004] HCA 42; 220 CLR 129 at [48]. 310 No complaint was made about the principles applied by the primary judge. 311 The notice of appeal only contests the length of disqualification as consequential upon the effects of successful challenges to findings of unconscionable conduct. Those challenges fail wholly. There is no ground to interfere with the discretion of the primary judge in relation to disqualification. 312 The primary judge dealt with penalties in an extensive discussion at RJ [75]-[153] of his reasons. 313 The primary judge first directed himself to the maximum penalty for a contravention of s 21, being $1,100,000 for a body corporate and $220,000 for a natural person. These maxima applied to "each act or omission": s 224 of the ACL. 314 His Honour then had regard to the matters set out in s 224(2) to which the Court must have regard as well as the question of double jeopardy referred to in s 224(4)(b). 315 His Honour then referred to the maximum penalty for the relevant contravention of s 51ACB of the CC Act being 300 penalty units: s 51AE(2) of the CC Act and cl 6 of the Code. 316 The primary judge recognised at RJ [82] that it was the whole of the contravening act that may give rise for liability to pay a civil penalty, not just some part of it. Therefore, it was necessary to consider the nature of the case advanced and established in order to determine whether it involved more than one contravening act and, relevantly, more than one instance of unconscionable conduct. Likewise, it was necessary in relation to the breach of the obligation of good faith in the Code to examine the whole of the conduct said to comprise the breach. It was thus also necessary to consider the nature of the case advanced and established in order to determine the number of breaches of the obligation and therefore the maximum penalty that may be imposed: RJ [83]. 317 It was common ground that the misrepresentations comprised two separate acts, being the revenue and profit representations and the brand affiliation representations. On that basis each act may attract a separate penalty: RJ [84]. 318 At RJ [85]-[88], the primary judge had regard to what has been referred to as the course of conduct principle and in particular his Honour referred to what was said in Construction, Forestry, Mining and Energy Union v Cahill [2010] FCAFC 39; 269 ALR 1, observing at RJ [88] that: … [I]t is not the case that a single course of conduct means that the penalty must be within the maximum for a single penalty. It is only where there is a single contravening act that the whole of the conduct constituting the contravention is amenable to one penalty that must be within the maximum for a single contravention. 319 The primary judge correctly referred to the need to have regard to all relevant matters: RJ [90]. 320 The primary judge then referred to the need to employ the process of instinctive synthesis in coming to an appropriate penalty: RJ [92]. 321 The primary judge correctly referred to the role of deterrence as the primary, if not only, purpose of the civil penalty: Commonwealth of Australia v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482. 322 At RJ [95], the primary judge referred to having regard to the level of financial gain that might be secured through the contravention. 323 The primary judge referred at RJ [98] and [99] to the available evidence as to the degree of inexperience of the people seeking to establish small businesses in this case. These people were investing a substantial amount of their available financial resources and were being encouraged to borrow funds to meet the costs involved. 324 The primary judge at RJ [102] referred to the breach not being clandestine but having an essence of engendering trust on the part of franchisees about matters peculiarly within the knowledge of Geowash. This assisted in the conclusion at RJ [105] that the conduct in question was blatant, serious, deliberate and sustained over a number of years, exploiting the trust of franchisees in its disregard of the terms of the disclosure documents and of the effect of communications with franchisees. The primary judge considered the size of Geowash, the dishonesty involved in the deliberate conduct, the cessation of the conduct when the ACCC commenced its investigation, the lack of insight, contrition and remorse, and the extent of personal gain (at RJ [107]-[117]). 325 The primary judge recognised that the ACCC did not set out to establish the extent of the loss or damage suffered by individual franchisees. The primary judge recognised, however, the consequences for franchisees, as explained at LJ [682]. His Honour recognised that there were at least two types of loss that might be suffered by the franchisees. First, the money paid out as commissions should have been applied to fit-out and set-up costs, and had it been so applied it would have been reflected in the quality of the premises; alternatively, if the amounts paid exceeded what was required then the excess funds could have been returned. Secondly, the franchisees may have been left without completed premises if Geowash went into administration, as in fact occurred. There was evidence to the effect that the franchisees had made complaints of this kind. Against this, there was evidence from Ms Ali that substantial amounts were paid by her to ensure the completion of franchise sites. 326 The primary judge concluded that loss and damage of the first kind was likely suffered by the individual franchisees. 327 At RJ [124]-[141], the primary judge dealt with statutory maximums, system and course of conduct. The primary submission of Ms Ali and Mr Cameron was that the ACCC had alleged one system of underlying conduct that contravened two distinct penalty regimes. 328 The ACCC submitted that each dealing with the franchisee that resulted in a franchise agreement was a separate contravention. At RJ [131], the primary judge made detailed comments on the way the case was advanced by the ACCC, as follows: (1) The case was commenced by application, concise statement and supporting affidavits and answered by a concise response. (2) The concise statement described unfair conduct by Geowash in its dealings with prospective franchisees, but did not identify particular franchisees. (3) The concise statement claimed that by engaging in the conduct as described, Geowash had engaged in conduct that was unconscionable and had failed to comply with its good faith obligation and that Ms Ali and Mr Cameron were knowingly concerned in that conduct. (4) The ACCC also delivered affidavits from seven franchisees setting out in some detail the course of their dealings with Geowash, Ms Ali and Mr Cameron. (5) Ms Ali and Mr Cameron filed a concise response which identified how many franchise agreements it had made and identified differences in the terms of the agreements made at different times. (6) The concise response included a detailed annexure in which a detailed summary of the dealings with each of seven franchisees the subject of the ACCC's affidavit evidence was set out. (7) A separate annexure to the concise response described the position in respect of each of the franchisees at the time of the administration of Geowash. (8) Ms Ali and Mr Cameron also sought further and better particulars of the matters stated in the concise statement filed by the ACCC. The requests included a number that sought details as to 'each prospective franchisee'. It included a request for particulars 'of each discussion between the franchisees and Geowash'. (9) In response to the request, the ACCC identified each of the parties with whom Geowash had entered into a franchise agreement (being 26 in number) and stated that further particulars may be provided. It also provided a similar list of each prospective franchisee. It also provided a table of the demands made by Geowash of each of the seven franchisees who provided affidavits for the payment of fees and identified the budget discussed with each of those franchisees. (10) Ms Ali and Mr Cameron filed detailed affidavits dealing with the evidence given by the seven franchisees. They also gave evidence of the manner in which they said they dealt with all franchisees, not just those who gave evidence. (11) In the outline of opening submissions for the ACCC, the elements of the conduct said to amount to unconscionable conduct was described in generic summary terms as conduct engaged in with 'prospective franchisees'. The submissions then stated that the ACCC would rely upon the evidence of the seven franchisees which would establish 'the unconscionable scheme employed by Geowash, Ms Ali and Mr Cameron'. (12) The ACCC's outline stated that the conduct also amounted to a contravention of the good faith provisions of the Franchising Code of Conduct and that the ACCC relied upon the same evidence as to that claim. (13) The outline also said that the affidavits of the individual franchisees and the correspondence attached to those affidavits showed that Ms Ali and Mr Cameron were the primary representatives and decision-makers of Geowash in dealings with franchisees and they were the recipients of commissions 'paid out of funds contributed to Geowash by franchisees'. (14) The outline of opening submissions for Ms Ali and Mr Cameron contended that Geowash opened 18 franchises, having attempted to commence 30 but 'only a subset have been brought before the Court'. A claim that a Jones v Dunkel inference should be drawn as to the other franchisees was foreshadowed. It characterised the ACCC case as alleging a 'pattern of conduct'. (15) The ACCC tendered in evidence the disclosure documents and franchise agreements for each of the franchisees. (16) In closing submissions, the ACCC invited the Court to find that the conduct of Geowash 'was a system of conduct or pattern of behaviour in respect to all Geowash's franchisees and not just the seven who were called to give evidence' (relying upon the approach of Beach J in Get Qualified). The good faith part of the claim relied upon the same conduct. (17) On the basis that the case alleged by the ACCC was one of a system or practice and on the basis that Ms Ali and Mr Cameron had given evidence of a business model that was said to apply to all dealings with franchisees, I made findings as to unconscionable conduct in respect of all franchisees: Liability Judgment at [672]-[673]. 329 From this, the primary judge concluded that it was not correct to characterise the case as to unconscionable conduct that was advanced as one where the contravening conduct was confined to the conception and implementation of a scheme without regard to particular dealings with each franchisee. In other words the system case was not one limited to the formulation of the manner of dealing with franchisees. Rather, the case depended upon demonstrating a system or pattern as to the way in which Geowash dealt with each franchisee: RJ [132]. 330 Further, as to the breach of the obligation of good faith, this depended upon it being established that there was a deal with a particular franchisee in relation to a franchise agreement: RJ [134]. 331 The primary judge was satisfied that the unconscionability case was not confined to a single contravention, but there were multiple contraventions on the prohibition on unconscionable conduct: RJ [135]. 332 At RJ [136], the primary judge recognised that the same conduct was said to be both unconscionable and a breach of a good faith obligation and that separate penalties for the breach of the good faith obligation should take that into account. 333 At RJ [137]-[138] and following, the primary judge concluded that the conduct should not be viewed as a single course of conduct. The dealings were over a considerable period; they involved a separate and extended engagement with each prospective franchisee; although the overall approach was the same, the meetings and much of the correspondence were specific to the particular franchisee; and the fees charged to each franchisee were not the same. His Honour was of the view that to treat the conduct as a single course of conduct would not reflect the sustained nature of the behaviour and the need for separate dealings with each franchisee. The primary judge recognised that the same overall approach was adopted for each franchisee but not in the sense of a single body of conduct whereby a single act was directed at many customers on one occasion, such as by publication of a statement on a website or in an advertisement. Each dealing was with a particular franchisee and involved separate and distinct conduct repeating the same pattern of behaviour. 334 The primary judge dealt with the website conduct at RJ [139]-[141]. The relevant material was on the website for about a year. No attempt was made to quantify or identify the number of downloads or the identity of those downloading. The evidence revealed that the website was accessed by people. 335 The case was that there was a separate contravention each time there was a download, relying on Australian Competition and Consumer Commission v Hillside (Australia New Media) Pty Ltd trading as Bet365 (No 2) [2016] FCA 698 at [12]-[14] (per Beach J). Nevertheless the acts by which the revenue and profit representations were made occurred together; the acts by which the affiliation representation was made were distinct. For these reasons, the primary judge concluded at RJ [141]: … In circumstances where there was no attempt by the ACCC to identify the extent to which the information was downloaded from the website and there were separate direct dealings with prospective franchisees, it is appropriate to treat the contraventions as being in two groups and for each group to be treated as a single course of conduct for the purposes of assessing penalty. 336 At RJ [142]-[143], the primary judge dealt with the question of relativities in the penalties, as between corporate and personal defendants. At RJ [143], the primary judge said: However, where there are reasons why an individual bears more culpability and more responsibility for the conduct such that a higher relative penalty is required to deter the individual than may the case for the corporation, then the penalties imposed may not reflect the statutory relativity. Further, where the individual is the author of the conduct, controlling mind of the corporation and entitled to the benefit of the shareholding in the company, those factors may mean that a penalty closer [to] the maximum is appropriate for the individual than the corporation. … 337 At RJ [145]-[147], the primary judge said: [145] Here, Ms Ali is the embodiment of the corporation as its sole director and was the main instigator of the conduct, the main actor in the conduct and a major beneficiary of the conduct. She caused Geowash to be established for the purpose of the venture. She was the instigator behind the establishment of the business and the approach to be adopted in dealing with franchisees. For those reasons, it is appropriate for her penalties to be assessed at a level that is higher (relative to that applicable maximum for individuals) than for Geowash (relative to the applicable maximum for corporations). [146] In the case of Mr Cameron, he was a substantial beneficiary of the conduct. The commissions paid to him (or to the family trust) represented a substantial part of the monies received by Geowash. [147] This is not a case where Geowash itself benefitted from the conduct. Rather, the unconscionable dealings operated to the personal benefit of Ms Ali and Mr Cameron. In effect, Geowash was used as a vehicle by which Ms Ali and Mr Cameron appropriated monies that ought to have been expended by Geowash on fit-out and set-up of franchises (or returned to franchisees). This is a significant reason why it is appropriate for their penalties to be assessed at a higher level than those for Geowash in terms of their relativity to the applicable maximum. 338 As to quantum, the primary judge assessed the three respondents as follows at RJ [151]-[153]: [151] As to quantum, taking account of the factors I have identified, I assess the following penalties in respect of Geowash: (1) for unconscionable conduct, $2,000,000; (2) for the additional contravention in the form of breaches of the obligation of good faith under the Franchising Code of Conduct by engaging in the same conduct, $50,000; (3) for the profit and revenue representation contraventions, $300,000; and (4) for the affiliation representation contraventions, $150,000. [152] Taking account of the factors I have identified, and bearing in mind the disqualification order that I propose to make, I assess the following penalties in respect of Ms Ali: (1) for unconscionable conduct, $800,000; (2) for the additional contraventions in the form of breaches of the obligation of good faith under the Franchising Code of Conduct by engaging in the same conduct, $20,000; (3) for the profit and revenue representation contraventions, $150,000; and (4) for the affiliation representation contraventions, $75,000. [153] Taking account of the factors I have identified and bearing in mind the disqualification order that I propose to make, I assess the following penalties in respect of Mr Cameron: (1) for unconscionable conduct, $640,000; and (2) for the additional contraventions in the form of breaches of the obligation of good faith under the Franchising Code of Conduct by engaging in the same conduct, $16,000. 339 As to injunctions against Ms Ali and Mr Cameron, the primary judge concluded at RJ [155], as follows: For Ms Ali and Mr Cameron it was submitted that any injunctions should reflect the terms of declaratory relief. The ACCC accepted that position. Injunctive relief may be granted whether or not there is a likelihood of the conduct being repeated. The grant of injunctive relief minimises the risk of future contravention by introducing the possibility of the sanctions applicable to contempt of court. The conduct in this case continued for many years and was sought to be defendant and justified by Ms Ali and Mr Cameron. I am satisfied that there should be injunctions in the terms sought. 340 At RJ [156]-[222], the primary judge dealt with redress orders, provided for by ss 239-241 of the ACL. Sections 239-241 of the ACL provide as follows: 239 Orders to redress etc. loss or damage suffered by non-party consumers (1) If: (a) a person: (i) engaged in conduct (the contravening conduct) in contravention of a provision of Chapter 2, Part 3-1, Division 2, 3 or 4 of Part 3-2 or Chapter 4; or (ii) is a party to a contract who is advantaged by a term (the declared term) of the contract in relation to which a court has made a declaration under section 250; and (b) the contravening conduct or declared term caused, or is likely to cause, a class of persons to suffer loss or damage; and (c) the class includes persons who are non-party consumers in relation to the contravening conduct or declared term; a court may, on the application of the regulator, make such order or orders (other than an award of damages) as the court thinks appropriate against a person referred to in subsection (2) of this section. Note 1: For applications for an order or orders under this subsection, see section 242. Note 2: The orders that the court may make include all or any of the orders set out in section 243. (2) An order under subsection (1) may be made against: (a) if subsection (1)(a)(i) applies - the person who engaged in the contravening conduct, or a person involved in that conduct; or (b) if subsection (1)(a)(ii) applies - a party to the contract who is advantaged by the declared term. (3) The order must be an order that the court considers will: (a) redress, in whole or in part, the loss or damage suffered by the non-party consumers in relation to the contravening conduct or declared term; or (b) prevent or reduce the loss or damage suffered, or likely to be suffered, by the non-party consumers in relation to the contravening conduct or declared term. (4) An application under subsection (1) may be made at any time within 6 years after the day on which: (a) if subsection (1)(a)(i) applies - the cause of action that relates to the contravening conduct accrued; or (b) if subsection (1)(a)(ii) applies - the declaration is made. 240 Determining whether to make a redress order etc. for non-party consumers (1) In determining whether to make an order under section 239(1) against a person referred to in section 239(2)(a), the court may have regard to the conduct of the person, and of the non-party consumers in relation to the contravening conduct, since the contravention occurred. (2) In determining whether to make an order under section 239(1) against a person referred to in section 239(2)(b), the court may have regard to the conduct of the person, and of the non-party consumers in relation to the declared term, since the declaration was made. (3) In determining whether to make an order under section 239(1), the court need not make a finding about either of the following matters: (a) which persons are non-party consumers in relation to the contravening conduct or declared term; (b) the nature of the loss or damage suffered, or likely to be suffered, by such persons. 241 When a non-party consumer is bound by a redress order etc. (1) A non-party consumer is bound by an order made under section 239(1) against a person if: (a) the loss or damage suffered, or likely to be suffered, by the non-party consumer in relation to the contravening conduct, or the declared term, to which the order relates has been redressed, prevented or reduced in accordance with the order; and (b) the non-party consumer has accepted the redress, prevention or reduction. (2) Any other order made under section 239(1) that relates to that loss or damage has no effect in relation to the non-party consumer. (3) Despite any other provision of: (a) this Schedule; or (b) any other law of the Commonwealth, or a State or a Territory; no claim, action or demand may be made or taken against the person by the non-party consumer in relation to that loss or damage. 341 The orders that the Court may make include all or any of the orders set out in s 243, which provides as follows: 243 Kinds of orders that may be made Without limiting section 237(1), 238(1) or 239(1), the orders that a court may make under any of those sections against a person (the respondent) include all or any of the following: (a) an order declaring the whole or any part of a contract made between the respondent and a person (the injured person) who suffered, or is likely to suffer, the loss or damage referred to in that section, or of a collateral arrangement relating to such a contract: (i) to be void; and (ii) if the court thinks fit - to have been void ab initio or void at all times on and after such date as is specified in the order (which may be a date that is before the date on which the order is made); (b) an order: (i) varying such a contract or arrangement in such manner as is specified in the order; and (ii) if the court thinks fit - declaring the contract or arrangement to have had effect as so varied on and after such date as is specified in the order (which may be a date that is before the date on which the order is made); (c) an order refusing to enforce any or all of the provisions of such a contract or arrangement; (d) an order directing the respondent to refund money or return property to the injured person; (e) except if the order is to be made under section 239(1) - an order directing the respondent to pay the injured person the amount of the loss or damage; (f) an order directing the respondent, at his or her own expense, to repair, or provide parts for, goods that had been supplied by the respondent to the injured person; (g) an order directing the respondent, at his or her own expense, to supply specified services to the injured person; (h) an order, in relation to an instrument creating or transferring an interest in land, directing the respondent to execute an instrument that: (i) varies, or has the effect of varying, the first mentioned instrument; or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the first mentioned instrument. 342 The evidence upon which the redress orders were sought and granted was that of Ms Yan, a forensic accountant, based on the banking records of Geowash, Ms Ali, Mr Cameron and others. That evidence was the subject of discussion and findings by the primary judge at LJ [588]-[594] (see [162]-[166] above). 343 At RJ [158]-[163], the primary judge drew on estimates of commissions received from the contravening conduct by both Ms Ali and Mr Cameron of $2,000,000, noting that Ms Ali contributed about $550,000 of her own funds to complete some fit-outs and set-ups. 344 At RJ [164]-[178], the primary judge discussed the statutory power in s 239. His Honour adopted the approach of Murphy J and Banks-Smith J in Director of Consumer Affairs Victoria v Domain Register Pty Ltd (No 2) [2018] FCA 2008 and Australian Competition and Consumer Commission v Ashley & Martin Pty Ltd (No 2) [2019] FCA 1739, respectively, that it was not necessary in order for a redress order to be made for loss or damage to be clearly identifiable, nor for each putative case to be decided on its merits. 345 After examining (at RJ [179]-[184]) a number of cases concerning redress orders, the primary judge examined (at RJ [185]-[193]) the nature and extent of the power to make redress orders under s 239. In the light of the statutory provisions, especially s 240(3), the primary judge concluded (at RJ [185]-[187]): [185] … By inference, redress orders may be made on the basis that the nature of the conduct means that it is appropriate for redress to be ordered that will flow to the class of persons affected. There is no requirement that the Court be satisfied that there is a precise correspondence between the redress that might be received by a particular member of the class and the actual loss suffered by that member. [186] Rather, the Court must be satisfied as to the appropriateness of the order given the nature of the conduct and the loss or damage for a class. In many instances, the present case is an example, the nature of the conduct itself will make it difficult to determine the precise loss or damage suffered by each member of the class. The failure to keep records, the extent of inquiries that may need to be made, the fact that the conduct has enabled the contravening party to benefit to a considerable degree by imposing relatively small financial losses onto a large number of people or the fact that there may be an undue burden placed upon parties if they were required to make individual claims are all reasons why it may be appropriate for a redress order to be made in a particular form even though it cannot be said with certainty or particularity that it will result in redress that is precisely calibrated to the actual loss of each member of the class. It may be that there is a degree of confidence that redress to a particular level is appropriate because there can be a degree of confidence that there has been loss or damage by members of the class of at least that extent. [187] Of course, it will be necessary to consider whether the nature and extent of the loss has been established with sufficient certainty to make the orders appropriate in all the circumstances. Further, the manner in which the orders will operate in respect of individual members of the class must be considered to be correspondent in a general way with the loss suffered by those individuals. As provided of in s 238(2), the Court must consider that the redress orders will compensate the non-party consumer in whole or in part for loss or damage or prevent or reduce loss or damage. The orders must be made in circumstances where, as framed, they will effect compensation rather than some form of outcome such as a penalty or punitive response. 346 At RJ [189]-[192], the primary judge addressed full and partial redress by reference to s 241. 347 At RJ [193], the primary judge concluded as follows as to the general nature of the power to order redress: The orders sought should not be made unless they are considered to be appropriate, in the sense of being suitable or fitting the purpose of effecting redress. Any orders must be reasonable and adapted to the purpose of effecting redress, which involves striking a balance between relevant interests to provide an outcome which is fit and proper: Vella v Commissioner of Police (NSW) [2019] HCA 38 at [50]. This involves a consideration of the interests of all parties: Akron Securities Ltd v Iliffe (1997) 41 NSWLR 353 at 368 (Mason P). 348 The nature of the redress orders sought was described at RJ [194]: The form of redress order sought by the ACCC would not require Ms Ali and Mr Cameron to make a refund to Geowash franchisees. Rather, it would require them to pay amounts into a fund to be administered by an independent accountant who would make a pro rata distribution of those amounts to franchisees who make a claim against the fund. The distribution would be based upon evidence provided by franchisees as to the extent of monies paid to Geowash. It would be justified by the findings as to the extent of commissions received for the benefit of Ms Ali and Mr Cameron. 349 At RJ [195]-[206], the primary judge dealt with Ms Ali's and Mr Cameron's submissions against the making of redress orders. It is convenient to discuss these arguments by reference to their submissions on appeal. 350 At RJ [207]-[214], the primary judge explained why he considered redress orders were appropriate: [207] Based on the findings made in the Liability Judgment, I am satisfied that the unconscionable conduct of Geowash in which Ms Ali and Mr Cameron were involved was likely to have caused Geowash franchisees (being a class of non-party consumers) to suffer loss and damage being the amounts paid to the benefit of Ms Ali and Mr Cameron that, but for the conduct, should have been expended on fit-out and set-up or refunded to the franchisee. Therefore, the discretion to make a redress order is enlivened provided I am satisfied that it is appropriate to make a redress order and that it will have at least one of the consequences specified in s 239(3). [208] For reasons I have given, I am satisfied that it is appropriate to make redress orders of the kind proposed but confined to the creation of a fund of $1,000,000. On the findings in the Liability Judgment and the evidence generally, there can be a high degree of confidence that the unconscionable conduct enabled commissions at least of that order to be paid to the benefit of Ms Ali and Mr Cameron and retained. Further, given the fact that commissions were paid in respect of payments received from all franchisees it can be inferred that the funds available for each franchisee for fit-out and set-up were depleted. This is not a case where the nature of the conduct suggests that there was a different type of financial consequence for each franchisee. In broad terms, commissions were being paid at the same rate for each franchisee and the balance applied to general Geowash operating costs and fit-out and set-up of franchise premises. [209] Therefore, it is appropriate to make redress orders on the basis of a pro-rata entitlement to payment from the redress fund based upon amounts paid to Geowash for fit-out and set-up. It should exclude amounts paid for other fees such as establishment fees or any other particular fees paid to Geowash. [210] Each of Ms Ali and Mr Cameron should be required to contribute to the fund. Even though the commissions paid to Ms Ali were greater than those paid to Mr Cameron, taking account of the amount of about $550,000 paid into Geowash by Ms Ali to enable franchise premises to be completed and the fact that the dealings of both Ms Ali and Mr Cameron that gave rise to their involvement in the contravening conduct were broadly similar, I consider it to be appropriate that they should each contribute equally to the fund. [211] It seems unlikely that there could be payments to any individual franchisee that are likely to overcompensate if the fund is limited to $1,000,000. However, in the unlikely event that there are only limited claims on the fund, the orders should provide that no party is entitled to redress in an amount that exceeds 20% of the amounts contributed to Geowash (being the findings as to the level of commissions paid). Further, there should be provision for any surplus to be returned to Ms Ali and Mr Cameron in proportion to their contributions to the fund. [212] Orders in the above form would establish a procedure that can be administered by the independent accountant, rather than orders requiring the accountant to make determinations or assessments. The accountant's role would be confined to notifying possible claimants, receiving the amounts from Ms Ali and Mr Cameron, receiving the claims, making the assessment of the pro-rata entitlements, providing a brief report and financial statement to Ms Ali, Mr Cameron and the ACCC setting out the proposed distribution and then after a specified period distributing the fund. [213] The fees of the independent accountant should be met out of the fund. As a practical matter, terms of engagement of the accountant should be arranged by the ACCC and presented to the Court for approval. They should specify a reasonable limit on the fees that might be charged without further Court approval. [214] For the reasons I have given, I am satisfied that orders of the kind I have described should be made. I will make those orders and reserve liberty to apply to vary those orders to ensure they can be practically administered and operate in the manner contemplated by these reasons. 351 At RJ [218]-[221], the primary judge excluded the South Fremantle and, potentially, Rockingham franchisees from participation in the fund and, at RJ [222], any other franchisees who had agreed a fixed price with Geowash.

Penalties: grounds 9 and 10 352 Grounds 9 and 10 of the notice of appeal challenge the penalties imposed by the primary judge as follows: 9. The primary judge erred in relation to the penalties imposed by Order 7 against [Ms Ali] in that: a. If the Court upholds ground 2 or ground 3, either separately or in combination with any of grounds 4 to 8: i. no penalty can be imposed for the contravention of s 21 of the ACL; and/or ii. no penalty can be imposed for the contravention of clause 6 of the Franchising Code of Conduct; b. Was otherwise in error because the penalty of $800,000 for the contravention of s 21 of the ACL: i. exceeded the statutory maximum for the single contravention available for the "system" of unconscionable conduct pleaded by the Respondent and found in the Liability Judgment; and/or ii. manifestly excessive for the objective seriousness of the conduct; c. The $150,000 penalty imposed in respect of the profit and revenue representation was manifestly excessive for the objective seriousness of the conduct; and d. The $75,000 penalty imposed in respect of the affiliation representation was manifestly excessive for the objective seriousness of the conduct. 10. The primary judge erred in relation to the penalties imposed by Order 8 against [Mr Cameron] in that: a. If the Court upholds ground 2 or ground 3, either separately or in combination with any of grounds 4 to 8: i. no penalty can be imposed for the contravention of s 21 of the ACL; and/or ii. no penalty can be imposed for the contravention of clause 6 of the Franchising Code of Conduct; b. was otherwise in error in that the penalty of $640,000 for the contravention of s.21 of the ACL: i. exceeded the statutory maximum for the single contravention available for the "system" of unconscionable conduct pleaded by the Respondent and found in the Liability Judgment; and/or ii. manifestly excessive for the objective seriousness of the conduct. 353 Grounds 9(a) and 10(a) only arise if the Court sets aside the declarations of contravention in relation to s 21 of the ACL and cl 6 of the Code. Grounds 9(b) and 10(b) apply if the appellants' submissions in relation to grounds 1 to 8 are not accepted. In the light of these reasons, grounds 9(a) and 10(a) do not arise. 354 Grounds 9(b)(i) and 10(b)(i) challenge the primary judge's imposition on the appellants of penalties which exceeded the single statutory maximum available for individuals knowingly concerned in one "system" of unconscionable conduct. 355 Grounds 9(b)(ii) and 10(b)(ii) allege that the penalties imposed on the appellants were manifestly excessive against the objective seriousness of the conduct of the appellants. 356 Grounds 9(c) and 9(d) allege that the penalties imposed upon Ms Ali for her knowing involvement in Geowash's contraventions of s 37 and s 29 of the ACL for the Profit and Revenue Representation and the Affiliation Representation respectively were manifestly excessive.

The appellants' submissions 357 The substantive complaint of the appellants was that the primary judge erred in not approaching the question of imposition of penalties for unconscionable conduct by reference to one maximum penalty for the employment of one system. 358 The appellants submitted that the primary judge used one analysis for the purposes of liability: that there was a system or pattern of conduct (see LJ [673]); and another at the stage of determining penalty. It was submitted that the error was to overlook the distinction between a system or pattern and a series of cases of proof of individual disadvantage. The appellants submitted that the error was illuminated in RJ [132]: In the above circumstances, it is not correct to characterise the case as to unconscionable conduct that was advanced by the ACCC as one where the contravening conduct was confined to the conception and the implementation of a scheme without regard to the particular dealings with each franchisee. The present case is to be distinguished from the nature of the cases advanced in each of Kobelt and Westpac. The case advanced by the ACCC depended to a considerable degree upon the evidence of the actual dealings with the seven franchisees. It was not a system case in the sense that the case advanced as to the nature of the contravening conduct was confined to the formulation of the manner of dealing with franchisees. Nor was this a case of broadcast conduct whereby a single act was directed at many customers such as by the publication of a statement on a website or in an advertisement. Rather, the case depended upon demonstrating a system or pattern as to the way in which Geowash dealt with each franchisee. However, it was necessary to examine the particular conduct in dealing with each of the seven franchisees and the circumstances of each franchisee in order to determine whether there was a pattern of behaviour that enabled inferences to be drawn as to the manner in which Geowash dealt with all of its franchisees. 359 The appellants drew support from the approach of the trial judge (White J) in Australian Securities and Investments Commission v Kobelt [2017] FCA 387 where the Australian Securities and Investments Commission pursued a single system case irrespective of proof of the circumstances of or dealings with particular individuals. Justice White found a single contravention. The approach was not the subject of analysis in the Full Court or High Court. 360 The appellants submitted that there were clear errors in the approach of the primary judge in RJ [131]: (a) RJ [131(1)-(3)] did not consider the concise statement. (b) RJ [131(8)-(16)] overlooked the difference between how the case was pleaded and then proved. (c) The submission at RJ [131(14)] was wrongly accepted when it had been rejected on liability. (d) RJ [131(17)] is answered by the phrasing of the system at LJ [673]. (e) The case, it was submitted, was run as one system, not as thirty contraventions. The appellants referred to [4]-[15] of the concise statement to reinforce the notion of a single system or pattern. (f) The appellants referred to the expression of the matter such as at LJ [558]-[566] and LJ [672]-[674] as a system of unconscionable conduct, not as separate instances. Expressions used by the primary judge such as "the course of dealing" with franchisees reveal, it was submitted, one course of conduct. The phrasing of LJ [673] ([184] above) was submitted to be crucial.

Consideration of grounds 9(b)(i) and 10(b)(i) 361 The proper starting point is the statute. Relevantly, s 224 provides as follows: 224 Pecuniary penalties (1) If a court is satisfied that a person: (a) has contravened any of the following provisions: (i) a provision of Part 2-2 (which is about unconscionable conduct); … the court may order the person to pay to the Commonwealth, State or Territory, as the case may be, such pecuniary penalty, in respect of each act or omission by the person to which this section applies, as the court determines to be appropriate. (2) In determining the appropriate pecuniary penalty, the court must have regard to all relevant matters including: (a) the nature and extent of the act or omission and of any loss or damage suffered as a result of the act or omission; and (b) the circumstances in which the act or omission took place; and (c) whether the person has previously been found by a court in proceedings under Chapter 4 or this Part to have engaged in any similar conduct. 362 Thus, it is each act or omission to which the section applies. That is, in the context of s 21 and s 224(1)(a)(i), each engagement, in the course of the supply or possible supply of goods or services to a person, in conduct that is in all the circumstances unconscionable. 363 Section 21(4)(b) makes clear that the section (the provision relevantly set out above) is capable of applying to a system of conduct or pattern of behaviour whether or not a particular individual is identified as having been disadvantaged. So, a contravention may be established by proof that a system of conduct or pattern of behaviour that was unconscionable has been employed. It does not follow that such means there has only been one act or omission or one engagement in conduct for the combined purposes of s 21(1) and s 224(1). The question is: What was the relevant act or omission here? The primary judge found, the case having been propounded by the ACCC, that in relation to the supply or possible supply of goods or services to a series of unrelated counterparties Geowash (and complicitly Ms Ali and Mr Cameron) on a number of occasions engaged in conduct that was in all the circumstances unconscionable. Seven franchisees were called. The finding was made in relation to six, and findings were made that the same unconscionable conduct occurred with others. That finding was made, as we have said more than once, based on all the evidence, including that of Ms Ali and Mr Cameron. The appellants approached these individuals in connection with the supply or possible supply of goods or services in a systematic way using a pattern of conduct described by the primary judge and in these reasons. The finding of the system of conduct or pattern of behaviour enabled findings to be made about individuals who gave evidence and individuals who did not. 364 The case as presented was not just about a system of conduct or pattern of behaviour, but how the finding of such explained, and provided support for factual findings as to how a collection of identified individuals and a group of people were treated over a significant period of time: how Geowash (and complicitly, Ms Ali and Mr Cameron) engaged in conduct on a number of occasions that was unconscionable. The conclusion by the primary judge that the case advanced was not confined to the conception and implementation of a scheme without regard to particular dealings was plainly correct. 365 It can be accepted that how s 21 and s 224 apply in any case can be affected by how the ACCC chooses to construct, present and run the case. The case was framed by the concise statement. In short form it set out how prospective franchisees were dealt with by Geowash, Ms Ali and Mr Cameron. To the extent that the concise statement sought to summarise a system of conduct or pattern of behaviour, such was in aid of assertions as to how Geowash dealt with a group of prospective franchisees. The unconscionable conduct referred to in [20(b)] of the concise statement was about how the franchisees were treated including: by the provision of documents to prospective franchisees: [4]-[5] of the concise statement; in the negotiations with prospective franchisees; how on those occasions when they were selling franchises a system of conduct or pattern of behaviour would be used or exhibited: [7]-[8] of the concise statement; and how in relation to the franchisees the funds were used: [13] and [14] of the concise statement. 366 The case as run and as discussed by the primary judge in the LJ and the RJ focused upon how individuals who were called were treated, and how, from the whole of the evidence, findings could be made as to how other prospective franchisees were treated. The case was about a system of conduct or pattern of behaviour, but it was also about how that system of conduct or pattern of behaviour was applied to a group of franchisees; and how it explained, and how it permitted conclusions about, the engagement in unconscionable conduct with a significant number of people over the course of a number of years. 367 There was no error, nor any unfairness whatsoever, in the approach of the primary judge. 368 We consider that there was no error in the approach to penalty described in RJ [137]-[138] which we have summarised at [333] above, but which we set out in full because not only does it demonstrate concisely and lucidly why there was no single, so-called course of conduct, but also it demonstrates the true nature of the case as set out in the LJ and the RJ: [137] As to whether the conduct should be viewed as a single course of conduct, in my view that would not be appropriate. The dealings were over a considerable period. They involved a separate and extended engagement with each prospective franchisee. Although the overall approach to the dealings was the same, the meetings and much of the correspondence were specific to the particular franchisee. The fees charged to each franchisee were not the same. To treat the conduct as a single course of conduct would not reflect the sustained nature of the behaviour and the need for separate dealings with each franchisee. [138] Although the same overall approach was adopted for each franchisee, it was not a case of broadcast conduct whereby a single act was directed at many customers such as by the publication of a statement on a website or in an advertisement. Each dealing was with a particular franchisee and involved separate and distinct conduct repeating the same pattern of behaviour in dealing with different franchisees. It was not a general scheme to engage with all customers by a single program. It involved reaching a separate agreement with each franchisee. It was continued for a number of years. These aspects of the contraventions make the system of conduct an inappropriate tool for the present case. What is more significant is the totality principle and an understanding of the extent of the consequences for franchisees. Whether it be described as a system or as a pattern of behaviour, the contraventions involved essentially the same behaviour formulated as a general approach to dealing with franchisees and then implemented for each of them. It would be inappropriate to assess the contraventions on the basis that they involved completely distinct types of contravening behaviour.

The appellants' submissions 369 There were two elements to the complaints by Ms Ali and Mr Cameron as to the penalties imposed on them of $1,045,000 and $656,000, respectively: (a) an incorrect assessment of the objective seriousness of the conduct; and (b) a misalignment of the respective penalties by reference to the maximum penalty such as not to reflect appropriate notions of parity. 370 As to (a) above, the unconscionable conduct and the objective seriousness of the conduct, the earlier submissions on the question of liability were largely repeated. The unconscionability was submitted to arise from how a franchise price was derived - and was at the "very low end of the objective seriousness". The submissions noted the findings at LJ [683] that the ACCC had not proved that requests for moneys coincided with Geowash being short of funds and that it was not part of the course of conduct that Geowash would not deliver an operating car wash. 371 As to the Profit and Revenue Representations, Ms Ali submitted that the conduct was not serious. Only six franchisees signed the agreements with Geowash after publication of the representations in May 2015 and none of these gave any evidence of reliance. Ms Ali removed the representations after concern was raised. It was submitted that the conduct was at the low end of seriousness. 372 As to the Affiliation Representation, again this was submitted to be at the low end of objective seriousness. There was only one page of information. No franchisee called to give evidence had any regard to it. The page was removed after the ACCC raised concerns. 373 As to (b) above, the misalignment of the penalties against the maximum penalty, the submission was that there was one course of conduct for each contravention and that there was a "fundamental imbalance as against the statutory maximum available". Also, the proportions between Geowash, Ms Ali and Mr Cameron did not, it was submitted, "show a consistent determination of the objective seriousness of the conduct". This was reflected in the following table in the appellants' submissions: Contravention Geowash Ms Ali Mr Cameron Profit and Revenue Representation - s 37(2) of the ACL $300,000 against a statutory maximum of $1.1 million $150,000 against a statutory maximum of $220,000 NA Low end, approximately 30% of the maximum High end, approximately 68% of the maximum Affiliation Representation - s 29(1)(h) of the ACL $150,000 against a statutory maximum of $1.1 million $75,000 against a statutory maximum of $220,000 NA Low end, approximately 15% of the maximum Mid to low range, approximately 34% of the maximum Unconscionable conduct - s 21 of the ACL $2 million against the statutory maximum of $1.1 million for a body corporate $800,000 against the statutory maximum of $220,000 $640,000 against the statutory maximum of $220,000 for an individual Approximately two times the worst case Approximately four times the worst case Approximately three times the worst case Breach of the Good Faith Obligation - s 51ACB of the CCA $50,000 against a statutory maximum of between $51,000 to $54,000 $20,000 against a statutory maximum of between $51,000 to $54,000 $16,000 against a statutory maximum of between $51,000 to $54,000 High end Mid to low end Mid to low end

374 In particular, the correlation between Ms Ali and Geowash when one took into account penalties for breach of the Code was disproportionate, being twice as heavy for Ms Ali. This revealed, it was submitted, that there was no reasonable relationship between the theoretical maximum and final penalty imposed contrary to Australian Competition and Consumer Commission v Reckitt Benckiser (Australia) Pty Ltd [2016] FCAFC 181; 340 ALR 25 at [156] and Markarian v The Queen [2005] HCA 25; 228 CLR 357.

Consideration of grounds 9(b)(ii) and 10(b)(ii) 375 All the submissions whether in relation to (a) or (b) at [369] above fail to come to grips with the primary judge's findings and approach and fail to identify any error of principle sufficient to impugn a discretionary sentencing judgment. 376 As to the objective seriousness of each of the contraventions, the restatement of the submissions on liability for unconscionability, repackaged in summary form in dealing with penalty, did not identify any error in how the primary judge looked at the seriousness of the unconscionable conduct. It involved a pattern of systematic dishonest conduct over a number of years. The primary judge treated it as serious. It was serious. The primary judge gave careful reasons for the differences in penalties appropriate to Geowash, Ms Ali and Mr Cameron which revealed no error. The statutory maximum is an important consideration. The reasons of the primary judge reflect an understanding of that. The variations in ratios of the different respondents was explained in clear and cogent reasons not otherwise criticised. 377 As to the website representations, again no error of principle was identified. That the deception was on "one page" is hardly relevant. That the witnesses called did not rely on the page does not affect its misleading quality. The subjects of the misrepresentation were such as were apt to lead to confidence and trust in the organisation - the kind of requisite and proper business trust that was otherwise undermined by the dishonest pattern of unconscionable conduct. 378 We agree with the ACCC's submissions that as to both types of conduct the primary judge undertook a careful and considered analysis of the conduct and its nature at RJ [7]-[23], of the explanations and mitigating conduct at RJ [25]-[39] and all relevant factors at RJ [75]-[153]. The utility of comparative penalties in individual fact-sensitive cases such as the present is limited. Certainly, however, the penalties do not bespeak any manifest excess for systematic dishonest conduct and blatant misrepresentations.

The appellants' submissions 379 There were initially three aspects to the appeal on the consumer redress orders: (a) as a matter of construction of s 239 of the ACL and s 51ADB of the CC Act the franchisees were not non-party consumers; (b) the orders to create a trust fund to be administered by an accountant under the supervision of the Court were novel and beyond power; and (c) the quantum of funds to be contributed by each of Ms Ali and Mr Cameron was arbitrary, inappropriate and manifestly excessive. 380 The first group of arguments was abandoned at the hearing of the appeal. 381 As to the second, (b) above, contained in ground 11, it was submitted that the form of the orders was novel, indeed unprecedented. The argument was, as it had to be, that such a form of order was and is outside the terms of s 239. It was submitted that the kinds of orders that may be made are listed in s 243 and all operate on a bilateral basis against (see s 239) the contravening party. The extrinsic material was submitted to support this bilateral limitation. 382 It was also submitted that the damage of the non-party consumers was not identifiable; that each case would require some consideration of the merits of the individual's relationship and negotiation with Geowash. 383 As to the quantum of the contribution, (c) above, contained in ground 12, the sums were arbitrary and separate from any need for redress. It was submitted, again relying on arguments put forward on unconscionability, that the redress gave a discount on the price of businesses that had been negotiated by the parties. It was further submitted to be inappropriate to give redress where it was not possible on the evidence "to identify the particular extent to which any particular franchisee might have received less by way of expenditure on fit-out and set-up than the amount contributed": (RJ [163]). There will be, it was submitted, arbitrary guess work involved. 384 Further, in the light of the evidence that there had been out of court settlements with three franchisees, that some had rebranded their businesses and brought the agreements to an end, and that Ms Ali had contributed $550,000 into Geowash after it entered into administration, the making of the orders was inappropriate and excessive.

Consideration of grounds 11 and 12 385 We reject these submissions. 386 The novelty of the structure of such a structured redress order is no defect. The width of the power is confined only by the text of s 239 and the statutory purpose of remedying the likelihood of loss. 387 The orders were undoubtedly against Ms Ali and Mr Cameron. The orders were carefully drafted and crafted to fit the consequences of the systematic unconscionable conduct. The unconscionable conduct saw money extracted from franchisees for (on the basis of the representations) fit-out and set-up when a significant percentage was taken in commissions. To that extent loss and damage can be posited as the diversion of funds through the dishonest conduct away from the represented purpose. The scheme can be seen to be analogous to "an order directing the respondent to refund money": s 243(d). 388 The analysis of the primary judge was careful and led to the conclusion, not squarely challenged, that the unconscionable conduct led to commissions of at least $1,000,000 to be paid to and retained by the appellants: RJ [208]. 389 The evidence allowed the conclusion that commissions were paid at the same rate for each franchisee, making a pro-rata entitlement to payment appropriate and fair, irrespective of the other individual circumstances of the franchisees. 390 It was not arbitrary to require $500,000 each. Ms Ali had made reparation of $550,000. Both were involved in the systematic dishonest conduct: an equality of burden was not inappropriate. 391 There is no need for the accountant to undertake any extended examination of the facts of each franchisee. What is relevant is the amount of the payments, which will be readily apparent. There is no basis to think that there will be over-compensation. Any surplus will be returned. The accountant's role is administrative and under the supervision of the Court. In other cases where there might be more judgment involved it may be wiser to direct that a Registrar of the Court examine the function such that decisions that may be judgmental or judicial in character can be subject to review as contemplated by Harris v Caladine [1991] HCA 9; 172 CLR 84. 392 The amounts were not excessive. We do not need to repeat our views (which are the same as the primary judge's views) that the conduct was very serious: as systematic dishonesty. There is nothing excessive about a scheme designed to redress the consequences of the dishonesty. 393 There is no basis to conclude that the orders directed against Ms Ali and Mr Cameron to pay with the consequential supervisory orders on the accountant to administer the scheme are somehow outside s 239. That proper professional costs of the administration of the fund are to be paid is legitimately incidental and appropriate. 394 We see no error in the primary judge's choice of structure of the order or in the content of the orders.

Ground 13: Excessive disqualification 395 Once again the appellants sought to downplay the seriousness of the conduct as at the low end of seriousness. 396 We have rejected this earlier in these reasons. This was systematic dishonest conduct. Once that seriousness is recognised, there can be no basis to consider that the primary judge was too harsh. Indeed, no error of principle was put forward. The complaint rested on the characterisation of the seriousness of the conduct. That complaint is ill-founded. This ground also fails.

Orders 397 The appeal of each appellant should be dismissed with costs. The orders as to costs made by the primary judge in relation to the first instance proceedings should not be disturbed: Australian Competition and Consumer Commission v Geowash Pty Ltd (Subject to a Deed of Company Arrangement) (No 5) [2020] FCA 440. I certify that the preceding three hundred and ninety-seven (397) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Allsop and Justices Besanko and Perram.