Devon v Madgwicks

Counsel for the First and Third Respondents: D Snyder

Solicitor for the First and Third Respondents: Colin, Biggers & Paisley

Counsel for the Second and Fourth Respondents: M O'Sullivan

Solicitor for the Second and Fourth Respondents: Furman Legal

AND: MADGWICKS (A FIRM) First Respondent

BERNARD PATRICK CARROLL Second Respondent

PETER ROBERT KENNEDY (and another named in the Schedule) Third Respondent

JUDGE: DAVIES J DATE OF ORDER: 4 August 2016

1. The proceeding be dismissed.
2. The applicant pay the first respondent's costs and third respondent's costs, including reserved costs, on a party-party basis, such costs to be taxed in default of agreement.
3. The applicant pay the second respondent's costs and the fourth respondent's costs, including reserved costs, on an indemnity basis, such costs to be taxed in default of agreement. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

introduction 1 The applicant ("Mr Devon") has sued the respondents in relation to the sale of a franchise business which did not proceed. The franchise business in question was Bartercard Melbourne South, owned by a company called Trade Pty Ltd ("Trade Co"). At the relevant time, Mr Devon's wife, Kathleen Devon, was the sole director and shareholder of Trade Co. Trade Co's franchise agreement with Bartercard Australia Pty Ltd ("Bartercard") had a 10-year term which, according to Bartercard (though disputed by Mr Devon) ended on 28 February 2014. In or around early December 2013, Trade Co entered into what has been termed in these proceedings as a "Heads of Agreement" ("the Heads of Agreement") with a company called MSBC VIC Pty Ltd ("MSBC") to sell the franchise business to MSBC for $600,000. MSBC paid a deposit of $20,000 on the signing of the Heads of Agreement which was deposited into the trust account of Finn Franchise Brokers Victoria ("Finn Franchise Brokers"), Trade Co's agent for the sale of the franchise business. Whilst the Heads of Agreement provided for a settlement date in late December 2013, as at 28 February 2014, settlement had not occurred. Around 6 March 2014, Bartercard took over the franchise business, including the premises in which it was trading, and locked out Trade Co. MSBC claimed that as, in consequence, there was no longer any business to sell, the contract was at an end and it was entitled to the return of the deposit. Finn Franchise Brokers shortly afterwards released the deposit to MSBC. 2 Mr Devon has sued Madgwicks, the solicitors instructed by Mr Devon to prepare the formal sale agreement; Mr Kennedy, the managing partner of Madgwicks; the agent's representative from Finn Franchise Brokers, Mr Bernie Carroll; and the company through which he provided his services to Finn Franchise Brokers, in respect of the non-completion of the sale and the return of the deposit. The claims against the respondents are based in contract and tort, as well as claims said to be made under the Australian Securities and Investments Commission Act 2001 (Cth) and the Australian Consumer Law, Sch 2 to the Competition and Consumer Act 2010 (Cth). Whilst Mr Devon was not the owner of the franchise business, he has personally sought $600,000 (plus additional alleged losses) in damages in respect of the non-completion of the sale and $20,000 in damages in respect of the return of the deposit. Mr Devon has claimed that he has the entitlement to recover such damages pursuant to an agreement dated 18 November 2013 (but it appears was signed on 2 December 2013) between his wife, himself and Trade Co by which he took an assignment of "all rights and benefits (including income and capital and right to claim) in the sale of the franchise asset of [Trade Co]". 3 Mr Devon, who represented himself, has insurmountable difficulties with the claims he has made and, for the reasons that follow, the proceeding must be dismissed.

factual context 4 The basic facts were essentially not in dispute and before going into detail about the nature of the claims made by Mr Devon, it is useful to set out a chronology of events to provide a context for the claims that Mr Devon has made. 5 In October 2013, Mr Devon, signing on behalf of Trade Co, appointed Finn Franchise Brokers to sell the franchise. The agency agreement was signed by the second respondent, Mr Bernie Carroll, as the agent's representative for and on behalf of Finn Franchise Brokers. Mr Carroll provided services to Finn Franchise Brokers through the fourth respondent company, Triumph Management Group Pty. Ltd. ("Triumph"). 6 On 26 November 2013, Mr Devon informed Mr Carroll that he had found a buyer for the franchise business, a Mr Andrew Donoghue ("Mr Donoghue") who had already been in contact with the franchisor, Bartercard. In or around late November or early December 2013, Trade Co entered into the Heads of Agreement with MSBC (Mr Donoghue's company) to sell the franchise to MSBC for $600,000. The sale was made subject to finance on the following terms: 4 AGREEMENT SUBJECT TO FINANCE 4.1 The parties agree that the Agreement is subject to the Buyer obtaining finance from an approved lender for the purchase of the business. 4.2 The Buyer covenants to make all reasonable endeavours to obtain finance from an approved lender for the purchase of the business. 4.3 In the event the Buyer is unable to obtain finance within 21 days of the date of acceptance of this Agreement and before the Franchise Agreement is signed, the Agreement will be deemed to be terminated with no right by the Vendor for any costs or expenses … Purchaser is entitled to a refund of the initial deposit of $20,000 ONLY. 4.4 Unless the Buyer notifies the Seller to the contrary within 21 days of the date of acceptance of this Agreement, the Buyer will be taken to have obtained finance from an approved lender. 7 The Heads of Agreement document was not dated but Mr Devon's case is that cl 4.4 became operative by, at the latest, around 23 December 2013, and as from that date the contract was unconditional as MSBC was "taken to have obtained finance from an approved lender". 8 Mr Devon provided the signed Heads of Agreement to Mr Carroll by email on 2 December 2013 and Mr Carroll met with Mr Donoghue on or around 6 December 2013. At that meeting, Mr Donoghue paid a $20,000 deposit as stipulated in the Heads of Agreement, which Mr Carroll deposited into the trust account of Finn Franchise Brokers. 9 On the recommendation of Mr Carroll, Mr Devon retained the law firm Madgwicks on 10 December 2013 to provide legal services with respect to the sale of the franchise business. 10 A Mr Chris Verebes from Madgwicks met with Mr Devon on 11 December 2013. Mr Devon's instructions to Mr Verebes included that Trade Co's franchise agreement with Bartercard terminated on 28 February 2014 and would not be extended and the sale needed to be settled before that date. 11 On 12 December 2013, Mr Verebes sent a letter of engagement with details of the legal services which Madgwicks had been asked to provide and an estimate of fees to Mr Devon. The letter relevantly stated: 1. Acceptance of Terms If you agree with the Standard Terms, as well as details of the legal services to be provided and the estimate of fees set out in this letter, please sign the Acceptance Page at the end of this letter and return it to us as soon as possible. Alternatively, engaging Madgwicks or continuing to instruct Madgwicks after the date of this letter will confirm your acceptance of our Standard Terms, the details of the legal services to be provided and the estimate of fees. Details of the Legal Services 1.1 The Matter: Sale of Business: Bartercard South Melbourne … 2. Estimate of Fees and Charges Our legal fees in respect of the above matter (excluding GST) are as follows: (a) Receiving instructions, advising and preparation of Sale Agreement $2,500.00-$3,500.00 (b) Attending to negotiation of execution and exchange of Sale Agreement $1,500.00-$3,000.00 (c) Attending to transfer of Lease $900.00-$1,800.00 (d) Attending to necessary steps to settlement (including adjustments) $1,500.00-$2,500.00. 12 Mr Devon did not sign the Acceptance Page but he did, nonetheless, continue to instruct Mr Verebes in relation to the sale of the franchise business. 13 On 13 December 2013, Mr Verebes emailed Mr Devon a draft sale agreement for his review and approval and on 16 December 2013, Mr Devon responded with comments on the draft agreement. The sale agreement provided for a completion date of "20 January 2014 or such other date as may be agreed by the parties in writing". The sale agreement also contained a subject to finance clause in the following terms: 4. Finance 4.1 Loan Approval This Agreement is subject to the lender specified in Item 18 of the Particulars unconditionally approving a loan of not less than the Loan Amount not later than the Loan Approval Date. 4.2 Termination The Buyer may terminate the Agreement if a loan for not less than the Loan Amount is not approved by the Loan Approval Date but only if the Buyer: (a) has made application of the loan as soon as reasonably practicable after the Agreement Date; (b) has done everything reasonably required to obtain approval of the loan by the Loan Approval Date; (c) gives written notice not later than two (2) Business Days after the Loan Approval Date of its intention to terminate the Agreement; and (d) is not in default under any other conditional (sic) in this Agreement when the notice is given. 4.3 Refund of Deposit Subject to the terms of any other conditions precedent to completion contained in this Agreement, where this Agreement is terminated under clause 4.2 and the Buyer has complied with its obligations, the Seller or its stakeholder must refund the deposit to the Buyer without deduction. 14 On 17 December 2013, Ms O'Neill, on behalf of Mr Verebes, forwarded an amended sale agreement to Mr Devon for his approval and late on 17 December 2013, Mr Devon instructed Mr Verebes to send the contract to MSBC's solicitors, which Ms O'Neill did on behalf of Mr Verebes the next day by email to MSBC's solicitor, Mr John Gdanski ("Mr Gdanksi") at Rockwell Olivier, copied to Mr Devon and Mr Carroll, with the notation: We act for the vendor in the above matter and enclose Sale of Agreement for execution and exchange. 15 The sale agreement was also separately sent to Ms Justine Oakhill at Bartercard by Mr Devon. 16 Late on 20 December 2013, Ms Oakhill from Bartercard emailed Mr Carroll and Mr Devon to advise that Bartercard had two changes it wanted to the sale agreement which, she stated, Mr Devon had agreed to "in principle" and requested Mr Carroll to liaise with both parties and Madgwicks in relation to the amendments. One of the amendments was that Bartercard was to be paid $264,000 directly from the sale proceeds in discharge of outstanding debts owed by Trade Co to Bartercard. 17 The same day, Mr Devon emailed Bartercard, copying in Mr Carroll (but not Mr Verebes) advising that he had not agreed to this proposed amendment. 18 As at 23 December 2013, Mr Verebes, who was not involved in Mr Devon's negotiations and dealings with Bartercard, had not heard from either Mr Devon or Mr Gdanski, the solicitor for MSBC, as to progress with signing or commenting on the agreement. He instructed his personal assistant, Ms O'Neill, to send an email to Mr Devon requesting an update, which she did that day. Despite his admission in cross-examination that he received this email, Mr Devon did not respond to the email or make contact with Mr Verebes. 19 Later that day, Mr Verebes received an email from Mr Carroll forwarding the 20 December 2013 email from Ms Oakhill of Bartercard in relation to the two amendments required by Bartercard. Mr Carroll noted that Mr Devon was "quite agitated in regard to this request and my suspicion is that there are other undisclosed issues." 20 On 24 December 2013, Mr Verebes emailed Mr Devon and Mr Carroll attaching a further version of the sale agreement incorporating the amendments requested by Bartercard. Despite his admission in cross-examination that he received this email, Mr Devon did not respond to this email either or make contact with Mr Verebes. 21 On 2 January 2014, Mr Steve Quinn from Bartercard emailed Mr Devon, copied to Mr Carroll (but not Mr Verebes) in relation to "the terms of settlement with respect to [Trade Co]". Mr Carroll acknowledged receipt but there appears to have been no response from Mr Devon and no contact made by Mr Devon, or, it appears, by Mr Carroll, with Mr Verebes. 22 Mr Carroll's unchallenged evidence was that negotiations between MSBC, Bartercard and Mr Devon in relation to the sale of the franchise business continued into January 2014. Madgwicks was not involved in those negotiations and Bartercard dealt directly with Mr Devon and Mr Carroll. It appears that Mr Devon and Bartercard were negotiating various issues as between them concerning the franchise business and the terms upon which Bartercard was prepared to give its approval for the transfer of the franchise to MSBC. It appears that sometime around 9 January 2014, Bartercard and Mr Devon resolved their issues concerning the terms on which Bartercard would give its approval to the transfer of the franchise business to MSBC. It appears also that around that time, Mr and Mrs Devon executed the documents required by Bartercard for its approval of the transfer of the Bartercard Melbourne South franchise business from Trade Co to MSBC. However, neither Mr Devon, nor it appears Mr Carroll, had any communication with Mr Verebes to update him on the progress of negotiations with Bartercard. At this time, Mr Verebes still had not received any response to the 23 or 24 December 2013 emails from Ms O'Neill on his behalf. 23 On 13 January 2014, Mr Verebes had Ms O'Neill send an email to Mr Carroll requesting an update as Madgwicks had not received any further communication from either Mr Devon or Mr Gdanski as to the progress with signing or commenting on the sale agreement. Mr Devon did not respond to this email either although he agreed in cross-examination that he was aware that Madgwicks had requested the update and agreed he had not contacted Madgwicks between 23 December 2013 and 13 January 2014. His evidence in cross-examination contradicted his affidavit of 8 August 2015 at [15] where he stated "There was repeated pleas to the agent and [Mr Verebes] to get the contract signed." I accept the answer in cross-examination as truthful. The evidence did not support a finding that Mr Devon made any pleas to the agent or Mr Verebes over that period to get the contract signed. 24 According to Mr Devon, Mr Donoghue signed the franchise agreement with Bartercard in or around mid-January 2014 and in evidence was the page containing Mr Donoghue's signed execution clause. It appears, however, that Mr Donoghue did not return the signed document to Bartercard as on 24 January 2014, Mr Quinn from Bartercard emailed Mr Carroll advising that Bartercard had not received back any signed documents from MSBC and asking him to follow this up. Mr Carroll apparently made attempts to contact Mr Donoghue but without success. On 29 January 2014, Mr Quinn followed up with Mr Carroll advising that Bartercard had still not received any documents back from Mr Donoghue and he was "concerned about achieving a January settlement." Mr Carroll responded that he had been unable to contact Mr Donoghue and understood he was away, as in fact was the case. 25 On 13 February 2014, Ms Oakhill from Bartercard emailed Mr Carroll, copied to Mr Devon stating: I have repeatedly asked Hugh Devon to supply a copy of the signed contract between Trade Pty Ltd and MSBC VIC Pty Ltd for the sale of Bartercard Melbourne South. The only copy we have ever received to date was the original version, without signatures and Andrew Donoghue informed us that there were to be further changes made. Can you please supply a copy of the contract between the parties. 26 Mr Carroll responded on 14 February 2014, copied to Mr Devon: I understand your frustration - unfortunately the contract is being held by Andrew Donoghues solicitor and will not release until Andrew returns - I will chase the contract and as soon as I am aware of any developments I will let you know. 27 Mr Devon telephoned Mr Verebes on 14 February 2014. Mr Verebes' unchallenged evidence was that Mr Devon told him that the sale agreement was still held by Mr Gdanski as the purchaser was discussing varying the contract because he had insufficient funds. Mr Devon also said that he was under pressure because Bartercard were insisting that the franchise would end on 28 February 2014. 28 On 17 February 2014, Mr Devon sought advice from Mr Verebes by email on whether a default notice could be issued to MSBC and on whether he could stop Bartercard from taking the franchise on 28 February 2014. On 18 February 2014, Mr Verebes responded that he was happy to assist but to give meaningful advice he needed to be properly instructed and a conference was required. 29 Mr Devon met with Mr Verebes on 19 February 2014. Mr Verebes' unchallenged evidence was that Mr Devon informed him for the first time that he (Mr Devon) had an ongoing franchising dispute with Bartercard and had lodged a Notice of Dispute under the Franchising Code of Conduct (Sch 1 to the Competition and Consumer (Industry Codes - Franchising) Regulation 2014 (Cth)) in November 2013. The dispute related to the franchise end date. Mr Devon told Mr Verebes that a mediation had been set down for 19 February 2014 but he had vacated the mediation. Mr Devon requested advice from Mr Verebes as to the steps that could be taken by him in relation to that dispute, including potential court action to prevent Bartercard from terminating the franchise on 28 February 2014. 30 Later on 19 February 2014, Mr Devon sent an email to Mr Verebes instructing Mr Verebes to put MSBC on notice that Trade Co was ready to settle and stating that: Agreement is unconditional. Buyer approved by Bartercard. [MSBC is] short of funds and unable to settle. Mr Devon also instructed Mr Verebes that he wanted an injunction to prevent Bartercard from taking possession of the franchise on 28 February 2014 as the franchise did not expire until 14 June 2014. 31 On 20 February 2014, Madgwicks opened a new file for the dispute matter with Bartercard. A new letter of engagement was sent to Mr Devon containing the same "Acceptance of Terms" clause as the earlier letter of engagement and requesting that Mr Devon provide Madgwicks with the amount of $3,000 as an advance on their anticipated fees, charges and expenses. Mr Devon did not sign the Acceptance of Terms or provide the $3,000 as requested but nonetheless continued to instruct Madgwicks. 32 Also on 20 February 2014, Madgwicks sent Mr Devon an invoice for fees to 23 December 2013 in the amount of $3,914.23 in relation to the legal services provided with respect to the sale of the franchise business. 33 On 20 February 2014 another solicitor within the firm of Madgwicks, Ms Ballantyne, drafted a letter to Bartercard seeking assurances that the franchise agreement would not be terminated before 14 June 2014. Mr Verebes settled that letter which was then emailed to Mr Devon for his approval. On 24 February 2014 Madgwicks emailed the letter to Bartercard with a copy to Mr Devon. On 25 February 2014, Mr Devon emailed Madgwicks advising that "your client is Trade Pty Ltd[.] Melb South was the former franchise holder. Great letter". On 26 February 2014, Madgwicks sent a letter to Bartercard clarifying that Madgwicks was acting for the current franchisee, Trade Co. 34 It was the case that the letter had incorrectly identified the relevant owner of the franchise business as Melbourne South Pty Ltd, a company associated with Mr and Mrs Devon which was the former owner of the franchise and had transferred the franchise business to Trade Co in 2012. Mr Verebes' evidence was that Mr Devon had instructed Mr Verebes that he approved the letter before he sent it. Mr Devon's evidence was that it was sent without his approval. Part of Mr Devon's case against Madgwicks is that the letter identifying the incorrect franchisee led to Bartercard having a major loss of confidence in him. 35 On 27 February 2014, Madgwicks wrote to Mr Gdanski requesting that he urgently provide Madgwicks with the following: 1. A signed contract of sale. 2. A copy of the approval your client received from Bartercard Australia Pty Ltd dated 15 January 2014. 3. Confirmation as to the amounts held in your trust account in relation to this sale; and 4. Confirmation that your client is ready to settle. 36 Mr Verebes spoke with Mr Gdanski later that afternoon. On 28 February 2014, Mr Verebes emailed Mr Devon to advise that he had spoken to Mr Gdanski the previous afternoon and Mr Gdanski had confirmed that although he had seen a draft contract of sale, to his knowledge there was no signed contract and he was not holding one. Mr Devon responded on 2 March 2014 stressing the urgency of getting the contract signed and stating "Andrew Donoghue has said he has signed a copy that I signed." 37 Also on 28 February 2014, Mr Carroll received an email and letter from Mr Gdanski requesting a return of the deposit "In light of the contract now at an end and pursuant to our instructions from our client". Mr Carroll forwarded this correspondence by email to Mr Devon and Mr Verebes with a request for advice and instructions. 38 On 2 March 2014, Mr Devon responded to Mr Verebes' email of 28 February 2014 advising that: 1. … I understand [MSBC] does not have the money he said he has. The buyer is aware that he (sic) have a time frame that our franchise comes to an end on 28 February 2014. … WE MUST HAVE A WRITTEN LIVE CONTRACT WITH ALL CONDITIONS AND IMPLICATIONS. Need to have a round table meeting urgently. IF settlement does not happen by 6th March 2014 [Bartercard] have said they will terminate. 2. Andrew Donoghue has said he has signed a copy that I signed. 3. Intent of the contract and heads of agreement. a) proceeded with Bartercard ("BCA") approval in QLD. Was approved. b) advised me and Bartercard that he is ready to settle and he has the funds of $330,000 now. c) provided Bartercard with a balance sheet that he has over $1 000 000 cash and more coming in May 2014. d) Requested (through John Gdanski) settlement statement from BCA and ready to settle. Various correspondence and purposely kept us out of the loop. e) Negotiated with BCA a lower franchise renewal fee of $50K but was refused by BCA as BCA wants $110K. (incl gst) f) has signed the franchise agreement and other documents that BCA sent to him as the approved buyer. g) I have seen a copy of the letter of approval dated 15 January 2014 sent to Andrew Donoghue. 4. Deposit As a result of 3 above we say that he has make (sic) clear intent to proceed and accordingly the contract is unconditional; and we are unable to settle. We will not be providing a deposit back. 39 On 3 March 2014, Ms Ballantyne from Madgwicks had two telephone conversations with Mr Devon in which he requested further assistance in relation to arranging a proposed informal mediation with MSBC and Bartercard. Ms Ballantyne then emailed Mr Devon setting out her understanding of his instructions and confirming that she could not act further unless he paid $3,000 which was previously requested from him. Mr Devon responded the same day advising that he needed time to pay the account. Madgwicks responded that in the circumstances it was unable to continue to act on his behalf. Madgwicks did not thereafter receive any further instructions from Mr Devon. 40 On 11 March 2014, Mr Carroll received another letter from Mr Gdanski by email stating "As you are aware the sale was not satisfied" and requesting the return of the deposit. Mr Carroll responded that the matter was in dispute and that he would obtain advice from the vendor and the vendor's solicitor. The email also stated: Has your client notified the Vendor that he does not intend to progress?? If so please provide copy of same. Based on verbal discussions between the parties, the Vendor is under the impression that [the] sale is progressing. 41 Mr Gdanski responded to Mr Carroll, copied to Mr Devon: Left detailed message on your phone. There is no contract, there is zero to sell as franchisor has entered property and taken over. 42 Mr Carroll also had a telephone discussion with Mr Gdanski who told him that Bartercard had, on the basis of legal advice, taken over the franchise business including the premises in which it was trading and had locked out Trade Co. Later Mr Carroll also had confirmation from Ms Oakhill from Bartercard that Bartercard had taken over the franchise business from Trade Co. At or around this time Mr Devon also told Mr Carroll that "he had terminated Madgwicks" and was seeking alternative counsel and said he had an unconditional contract which MSBC had failed to settle and he was therefore entitled to retain the deposit. 43 On 13 March 2014: (a) Mr Carroll wrote to Mr Devon seeking written instructions from his solicitor in regard to the treatment of the deposit by close of business on 14 March 2014 "upon which if not received the Deposit will be returned as per Andrew Donoghue's instructions". Mr Devon responded that he did not authorise the deposit to be returned and requested the funds remain in the trust account pending determination by a Court; (b) Mr Carroll also had a telephone discussion with Mr Verebes who told Mr Carroll that Madgwicks no longer represented Mr Devon due to his failure to pay their accounts and also told Mr Carroll that the contract of sale had not been signed and therefore could not be unconditional as claimed by Mr Devon. Mr Devon's case was that Mr Verebes advised Mr Carroll that the deposit could be returned. Mr Verebes disputed that he instructed Mr Carroll that the deposit should be released; (c) Mr Carroll emailed Mr Gdanski, stating that the deposit had not been released as Mr Devon disputed the release. Mr Carroll advised that he had contacted Mr Donoghue for his written instructions in regard to the deposit and confirmation that Mr Gdanski acted for him in relation to the transaction and had also contacted Mr Devon requesting that he provide written instructions from his solicitor regarding the treatment of the deposit, failing which he would release the deposit as per Mr Donoghue's instructions; (d) Mr Donoghue confirmed that Mr Gdanski acted for him. 44 Also on 13 March 2014, Madgwicks invoiced Mr Devon for $3,619.93 in relation to the franchise dispute. Mr Devon did not pay that invoice. 45 Mr Carroll deposed that on 14 March 2014: … taking into consideration the views of the parties and discussion with Rod Justin from Finn Franchise Brokers Victoria the decision was made to refund the deposit to the buyer Andrew Donohue (sic) based on the rationale that the contract of sale was not signed, that it was therefore not un-conditional, that the franchisor had assumed ownership of the Business which meant that [Mr Devon] no longer had an asset to sell, and that the buyer had clearly withdrawn from the sale process ending the matter. 46 On 17 March 2014, Mr Carroll informed Mr Devon that he had received advice that Mr Devon's instructions did not have any legal basis and accordingly the initial deposit had been returned to Mr Donoghue. 47 On 18 March 2014 Mr Devon emailed Mr Carroll stating that he had commenced legal proceedings against Mr Donoghue "regarding losses suffered as a result of the failed business purchase" and putting Mr Carroll on notice that he was "not authorised to return the deposit". 48 The deposit return process commenced on 18 March 2014 but due to some administrative difficulties was not finalised until 2 April 2014. 49 Also on 18 March 2014, Mr Devon informed Madgwicks that the account should have been invoiced to Trade Co, not to him and requested that the invoice be reissued. This did not happen. Following further correspondence from Mr Devon, the administration manager at Madgwicks informed Mr Devon that she had spoken to the managing partner (Mr Kennedy) who had advised that on receipt of the amounts outstanding under the invoices, Madgwicks would be "more than happy to Re-address the accounts". This email forms the basis of Mr Devon's claim against Mr Kennedy. 50 Following the failure of Mr Devon to pay the outstanding fees invoiced to him, Madgwicks issued proceedings at the Magistrates' Court in Melbourne on 5 August 2014 suing Mr Devon for non-payment. Mr Devon filed a notice of defence disputing the claim. Mr Devon's defence alleged as follows: 1. The total claim is disputed by the Defendant. No Money is owing. 2. The defendant had not engaged the services of the Plaintiff. 3. No contract either verbal or in written is between the Plaintiff and the Defendant. 4. In reference to the facts in the Statement of Claim: Statement 1 and 2 admitted. 5. Statement 3. Denied in full. Particulars (i) Defendant did not own the franchise business, Bartercard Melbourne South that was under an agreement for sale. (ii) Defendant did not retain the services of the Plaintiff. (iii) On 9 December 2013 the selling agent, Bernie Carroll instructed the Plaintiff and forwarded the Plaintiff the sale of the franchise business Heads of Agreement by: Trade Pty Ltd a company and owner of the business. (iv) The Heads of Agreement came with confirmation of bank cheque of $20 000 as deposit by the purchaser. (v) The Plaintiff was aware of the time frames of the franchisor, namely if the franchise is not settled by 28 February 2014 the franchise would not be renewed and would not be granted a new term to the purchaser of the franchise. (vi) The Plaintiff was negligent, wasteful and ineffective in carrying out their duties. namely no follow through to enable settlement and signature of their drafted contract. (vii) The Plaintiff also failed to retain the deposit of $20 000 on an unconditional contract and accordingly was negligent. (viii) As a direct result of the Plaintiffs and agents actions, The vendor company, Trade Pty Ltd had suffered loss a sale of $600 000 and the franchise. The Franchisor, Bartercard Australia Pty Ltd did not grant a new franchise. 6. Statements 4 - 12 denied. 7. The Defendant advised the Plaintiffs on many occasions that the client is Trade Pty Ltd. as Trade Pty Ltd was as per the Heads of Agreement provided by the sales agent, the vendor prior to any engagement of services. The Defendant is not an owner of the company ie not a shareholder of the company nor was the Defendant the franchise operator of Franchise Principal. 8. The Defendant has advised the Plaintiff on numerous occasions to change the invoice to reflect the true instructions of the services. The Plaintiff advised that they would change the name on the invoices only after payment was made by Trade Pty Ltd. 9. The Plaintiff has acted improper. The Plaintiff as lawyers would know the difference between a vendor company and a vendor individual. 10. Statement 13 and 14 and 15 denied. 11. The Plaintiff advised that if no funds in the trust account by Trade Pty Ltd there would not be any legal service. 12. IT is noted the Plaintiff is a firm, partnership and not legal entity for legal proceedings and charging fees to self-represent. 51 Mr Devon agreed in cross-examination that, notwithstanding the pleaded claims, at the hearing the only defence he relied on was his claim that Trade Co, and not him, was liable for the fees. He otherwise abandoned the other defences. 52 Following a contested hearing on 19 March 2015, the Magistrates' Court found against Mr Devon and ordered Mr Devon to pay Madgwicks the sum of $11,230.95. 53 One of the claims made by Mr Devon against Madgwicks in this proceeding is that Madgwicks engaged in unconscionable conduct and misleading and deceptive conduct in relation to the charging of fees to him, and not to Trade Co.

the claims 54 The claims made by Mr Devon against the respondents are pleaded as follows in the originating process: This application is made under *section [12] 12BA-12BEA, 12BF-12BM, 12CA-12CC, 12DA-12DC of the ASIC Act and Competition and Consumer Act 2010 S267-270, S 18-28 Breach of Contract and Unconscionable Conduct: ASIC Act and Australian Consumer Law On the facts stated in the supporting affidavit(s), the plaintiff claims: A. Gross Negligence by the First and Second Defendants by failing to get unconditional contract signed and settlement of the franchise business. As direct consequence the Applicant, Hugh Devon lost $600 000 consideration for the unconditional sale of a franchise that was to expire at 28 February 2014. B. Breach of contract and Breach of duty of care in under taking legal and professional services. Total disregard to the time frames and gross failure to get correct instructions. C. Deceptive, misleading and unconscionable conduct by the first and third Defendants. Failure to detail and explain contract of service. Unfair service contract terms that have not been accepted. Voidable service agreement. D. The Applicant seeks damages of $600 000 from the first, second and third Defendants and further damages as decided by the court. 2. Breach of contract by the Second Defendant for the release of the $20 000 deposit held in the trust account for a unconditional contract of sale of a franchise business. The Applicant made clear written and verbal instructions not to release the funds to the defaulting purchaser. The Applicant is seeking $20 000 from the First and Second defendants. 3. Misleading and deceptive conduct of the First and Third Defendant in respect of service agreement. 55 In the course of his application to join Triumph as the fourth respondent, Mr Devon agreed that the claims made against Triumph were identical to the claims against Mr Carroll and were put in the alternative to the claims against Mr Carroll. 56 Mr Devon's affidavits and submissions in support provided some clarification as to the nature of the claims made, though not necessarily as recognisable causes of action. I had the sense of "shifting sands" in relation to what Mr Devon was alleging against the respondents but as best as can be understood from the way in which Mr Devon presented his case, his claims may be stated as follows. 57 Mr Devon has sued Madgwicks and Mr Carroll for breach of contract and in negligence and also for unconscionable conduct in failing to obtain a signed contract from MSBC "knowing the urgent time frame", failing to have the sale of the franchise business completed by that date and, as against Madgwicks, failing to "follow through" with the purchaser's solicitors. Mr Devon has claimed damages in the amount of $600,000 plus additional losses (quantified as $95,000) in respect of a borrowing that Mr Devon alleged he was required to make in order to pay out a bank loan which was to have been paid out of the proceeds of the sale of the franchise business. 58 Mr Devon has also sued Madgwicks (and it appears Mr Kennedy as well though it is not entirely clear whether such a claim is separately made against him) for misleading and deceptive conduct and engaging in unconscionable conduct by charging him for the legal services rendered when he was not the client and for not explaining to him that he, and not Trade Co, would be personally liable for Madgwicks' fees in respect of the legal services rendered. Mr Devon has alleged that the service agreement is thereby "voidable" and he cannot be personally liable. No specific relief has been sought in respect of these claims, though presumably it is relief from liability to pay Madgwicks. In his affidavit of 8 August at [29], Mr Devon stated the fees are "part of the damages", although there is no evidence that he made any payments to Madgwicks for which he could be compensated. 59 Mr Devon has also made a negligence claim against Madgwicks in relation to the 24 February 2014 letter to Bartercard seeking Bartercard's confirmation that the franchise would not be terminated on 28 February 2014. Mr Devon's case was that Madgwicks failed to act on correct information and communicated incorrect information to Bartercard "that reduced the negotiability with the Franchisor" and "Once the information was corrected [Madgwicks] then terminated the services in the middle of the negotiations rendering these services of [Madgwicks] as no commercial value". Mr Devon has sought unquantified damages "for the conduct of [Madgwicks] to fail to complete the instructions correctly". 60 As against Madgwicks and Mr Kennedy, an unintelligible claim of unconscionable conduct, unjust enrichment and alleged breach of taxation administration laws is made against them which appears to be based upon a claim that Trade Co, not Mr Devon, was the client and Madgwicks and Mr Kennedy "were aware or ought to be aware that [Mr Devon] was NOT registered for GST" and Trade Co has been "denied" a GST credit in respect of the amounts invoiced to Mr Devon in respect of the legal services provided. 61 As against Madgwicks, Mr Carroll and Triumph, Mr Devon has also sued them in contract and tort in relation to the release of the deposit of $20,000 and has sought damages in that amount. 62 Mr Devon bears the burden of proving causation and the loss or damage suffered: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54, 80 (Mason CJ and Dawson J), 138 (Toohey J), 99 (Brennan J); Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 77 ALJR 768; [2003] HCA 10, [37].

the claims against madgwicks 63 Madgwicks has raised several defences to the claims made against it. These defences are considered in turn below, together with whether Mr Devon has established his claims against Madgwicks.

The claims are precluded by the doctrine of res judicata or Anshun estoppel 64 The first substantive defence is that all the claims made against Madgwicks are precluded either by the doctrine of res judicata or by Anshun estoppel by reason of the Magistrates' Court judgment. That defence may be accepted in part.

Res judicata 65 Mr Devon cannot use this proceeding to establish that he does not have a liability to Madgwicks in respect of the fees invoiced to him, as the question of his liability in respect of those fees was determined by the Magistrates' Court following a contested hearing in that Court in the proceeding in which Madgwicks sued him for non-payment. Madgwicks successfully obtained judgment against him in respect of the non-payment of the fees, and the judgment of Magistrates' Court created a res judicata and is final and binding on him: Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45, 597 (CLR) (Gibbs CJ, Mason and Aickin JJ); Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (in liq) (1993) 43 FCR 510, 521 (Northrop and Lee JJ). He is accordingly precluded by the judgment in the Magistrates' Court from re-contesting that he is liable for the fees invoiced to him and he cannot attempt again to contest his liability by commencing proceedings in this Court to re-litigate a dispute that has been judicially determined already.

Anshun estoppel 66 The claims based upon allegations of unconscionable conduct and misleading and deceptive conduct that Mr Devon has made against Madgwicks in this proceeding in relation to the charging of fees to him for the legal services rendered are based on substantially the same matters of fact which were the subject of the debt claim in the Magistrates' Court and are claims that could, and should have been, brought by Mr Devon against Madgwicks in that Magistrates' Court action by way of defence and/or cross-claim. In circumstances where a party to a subsequent proceeding seeks to litigate a claim or defence which could and should have been litigated in the earlier proceedings, Anshun estoppel will arise and preclude the party from making the claim in the subsequent proceeding. In Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45, Gibbs CJ, Mason and Aickin JJ stated at 602: … there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. Although the estoppel was expressed in reference to the failure to raise a defence, the principle equally applies with respect to a cross-claim: Bryant v Commonwealth Bank of Australia (1995) 57 FCR 287, 298. The "unreasonableness" criterion involves an evaluative element based upon what a litigant could reasonably have been expected to do in the earlier proceeding. The claims now made are "so relevant to the subject matter" of the Magistrates' Court action that it was "unreasonable" for Mr Devon not to have raised those claims in that action: Champerslife Pty Ltd v Manojlovski (2010) 75 NSWLR 245; [2010] NSWCA 33, [4]. Accordingly those claims are the subject of Anshun estoppel. 67 The remaining contractual and tortious claims in respect of the alleged failure by Madgwicks to have the sale agreement settled and completed by 28 February 2014 are in a different category. They are claims which are independent of the subject matter of the Magistrates' Court action and accordingly no Anshun estoppel arises.

No breach of contract or duty of care 68 Mr Devon claimed it was a contractual term of the retainer that Madgwicks was to prepare a contract of sale and "have [it] signed" before the franchise came to an end on 28 February 2014. Mr Devon contended that Madgwicks "failed grossly in preparing the documents in a suitable, professional [time] and to have the purchaser sign the contract agreement knowing that the matter [was] urgent". He claimed that: At no times had [Madgwicks] tried to arrange for the contract to be signed. It was almost as if they were preparing a document for no reason; no commercial reason. And in fact, it had no commercial purpose. That's the essence of the breach of contract and the breach of duty … and that Madgwicks "simply didn't take the necessary steps", "knowing the timeframe to prepare the contract". 69 Madgwicks did not dispute that it was retained to prepare a sale agreement, attend to the negotiation and exchange of sales contracts and to the settlement of the sale of the franchise business to MSBC, nor did Madgwicks dispute the instruction from Mr Devon that the franchise terminated on 28 February 2014 and settlement was required by 28 February 2014. Madgwicks did, however, dispute that the scope of its retainer extended to obtaining MSBC's signature to the contract or ensuring that a contract of sale was signed by MSBC and also disputed that the non-completion of the sale by 28 February 2014 was due to some failure on its part in the performance of its retainer. I agree with the defences raised. 70 The terms of Madgwicks' retainer determined the work that it was required to do and therefore determined the scope and content of the duty in contract and tort that Madgwicks owed in the performance of its retainer: Hill v Van Erp (1997) 188 CLR 159; [1997] HCA 9, 167-168 (CLR) (Brennan CJ); Badenach v Calvert [2016] HCA 18, [81] (Gordon J). Although Mr Devon strenuously argued that Madgwicks was required to have the sale agreement for the franchise business exchanged and settled by 28 February 2014, the evidence did not substantiate that the non-completion of the sale was occasioned by, or the consequence of, any breach by Madgwicks in the performance of its retainer. 71 It was not within the scope of Madgwicks' retainer, nor did Madgwicks have a duty of care, to obtain MSBC's signature on the sale agreement or ensure that MSBC signed the agreement. Madgwicks did not act for MSBC, which had its own solicitors representing it with respect to the sale. The terms of the retainer only required Madgwicks to undertake the steps that were necessary on the vendor's part (ie Trade Co) for settlement to be effected by 28 February 2014. Whilst the performance of that retainer required Madgwicks to act in a timely fashion and take all reasonable steps to achieve settlement by that date, there was no unwarranted delay on the part of, or dilatoriness by, Mr Verebes in undertaking the work he was retained to do. Mr Devon contended that Mr Verebes did nothing between 23 December 2013 and 14 February 2014, but the inaction over that period was not due to any omission or failure to take action on the part of Madgwicks. Madgwicks had acted promptly in preparing a sale agreement in accordance with Mr Devon's instructions which Mr Verebes sent to MSBC's solicitor for comments or execution by MSBC by 18 December 2013. Mr Verebes also acted promptly in making the further amendments requested by Mr Carroll on Mr Devon's behalf on 23 December 2013, and Mr Verebes sent the amended version of the contract of sale to MSBC's solicitor the next day at 9am. Thereafter, Mr Verebes had no word from Mr Devon until 14 February 2014, despite the follow up email on 13 January 2014 which Mr Devon admitted he received but chose to ignore. The "inaction" between 24 December 2013 and 14 February 2014 was due wholly to the failure on the part of Mr Devon to communicate with Madgwicks or provide Madgwicks with the instructions that Madgwicks requested. The claim that Madgwicks was dilatory is fanciful and farfetched. It is plain on the evidence that Madgwicks did not fail to carry out Mr Devon's instructions with professional skill and care and took all reasonable steps to achieve settlement by 28 February 2014. As the evidence showed, ultimately MSBC did not execute the sale agreement and so the sale did not proceed. MSBC's failure to execute the contract was not occasioned by any omission or inaction on the part of Madgwicks. Rather the evidence was that MSBC did not sign the contract because it did not have the finance to complete the sale, which Mr Devon himself told Madgwicks on 14 February 2014. 72 It follows that the related claim of unconscionable conduct must also fail.

No causation 73 The third substantive defence is a failure to show causation. As stated, the evidence showed that the failure by MSBC to execute the sale agreement and settle before the expiry of the franchise agreement was not occasioned by, or attributable to, any conduct or lack of conduct on the part of Madgwicks but, rather, because MSBC did not have the funds to settle, as Mr Devon himself told Madgwicks. To establish his claims, Mr Devon had to prove, on the balance of probabilities, that but for some alleged failure by Madgwicks in the performance of the retainer, the agreement would have been signed and the sale of the franchise business would have settled before the expiry of the term. Mr Devon's case did not get to that stage because he did not establish any contractual or tortious breach by Madgwicks but in any event, the evidence showed that a supervening event was why signed contracts of sale ultimately were not exchanged, namely that MSBC did not have the funds to settle. To put it another way, there was no contract signed by MSBC because of its unwillingness to proceed with the sale, not because of some fault on the part of Madgwicks.

The Wrongs Act defence 74 The fourth substantive defence is based on the Wrongs Act 1958 (Vic) ("the Wrongs Act"). Section 55 of the Wrongs Act provides as follows: No liability for materialisation of inherent risk (1) A person is not liable in negligence for harm suffered by another person as a result of the materialisation of an inherent risk. (2) An inherent risk is a risk of something occurring that cannot be avoided by the exercise of reasonable care. (3) This section does not operate to exclude liability in connection with a duty to warn of a risk. 75 Section 55 is contained in Pt X of the Wrongs Act. Section 44 provides that Pt X applies to any claim for damages resulting from negligence which is defined in s 43 as "a failure to exercise reasonable care", regardless of whether the claim is brought in tort, in contract, under statute or otherwise. 76 I accept the submission that the risk that MSBC would not sign the agreement and proceed with the sale was an inherent risk that could not be avoided by Madgwicks by the exercise of reasonable care. Accordingly, by reason of s 55 of the Wrongs Act, Madgwicks is not liable in negligence for harm suffered by Mr Devon (or Trade Co) as a result of the materialisation of that inherent risk. This is yet another obstacle for Mr Devon in establishing his case.

No loss and damage 77 In the absence of showing a causal link between the existence of the loss and damage that Mr Devon has claimed he suffered and some contractual or tortious breach (or unconscionable conduct) by Madgwicks (which Mr Devon has not proved), Mr Devon cannot recover any damages from Madgwicks, whether as the assignee of "all rights and benefits (including income and capital and right to claim) in the sale of the franchise asset of [Trade Co]" or otherwise. 78 There is another difficulty with Mr Devon's claim. Mr Devon ran the inconsistent case that the Heads of Agreement constituted a binding contract made between Trade Co and MSBC. Whether or not a concluded contract was made upon the signing of the Heads of Agreement was not the subject of argument and I make no finding on whether there was, or was not, a concluded contract. However if there was a concluded contract, as Mr Devon submitted, it would mean that any loss or damage was caused by MSBC's breach of that contract in not completing the sale and paying the balance of the purchase price. In that circumstance, the relevant cause of the loss and damage claimed by Mr Devon would be MSBC's breach, not a breach referrable to Madgwicks. 79 For the sake of completeness, another argument advanced by counsel for Mr Carroll was that Mr Devon's claim to be entitled to the proceeds of sale was inconsistent with the terms of the Heads of Agreement pursuant to which the proceeds of sale were expressed to be payable not to Trade Co or to Mr Devon but to Cambray Place Pty Ltd, a company associated with Mr Devon, as "assignee". The evidence also showed that Mr Devon had instructed Mr Verebes that the debt (ie the sales proceeds) were "to be assigned formally to and in favour of Cambray Place Pty Ltd". However there is no evidence that the debt was actually assigned to Cambray Place Pty Ltd whilst there is evidence of an assignment to Mr Devon. Nevertheless, this does not alter my findings above that no breach of duty, nor causation, has been established and that Madgwicks is therefore not liable to Mr Devon. 80 I also note for completeness in relation to Mr Devon's claim for $95,000 in respect of brokers' fees on the refinancing of the Delphi Bank loan that Mr Devon admitted in cross-examination that he personally had not borrowed the funds required to repay the Delphi Bank when the sale did not proceed. Rather, a company called Southco Enterprises Pty Ltd had taken out the loan and borne the refinancing costs. There was, accordingly, never any factual foundation for that claimed head of damage.

The "wrong name" claim 81 This claim also lacked any merit as there was no evidence to show that Madgwicks' incorrect reference to Melbourne South Pty Ltd, in lieu of Trade Co, in the 24 February 2014 letter to Bartercard, seeking Bartercard's confirmation that the franchise would not be terminated on 28 February 2014, led to any loss or damage allegedly suffered by Mr Devon. The mere assertion of negligence does not discharge the burden of proving causation and loss.

The release of the deposit 82 Mr Devon asserted without any evidentiary foundation that Mr Verebes advised Mr Carroll that the deposit could be released to MSBC. Mr Verebes denied that he gave that advice to Mr Carroll and it was not Mr Carroll's evidence that he did. Also, Mr Devon admitted in cross-examination that Madgwicks never told him that the deposit should be released. Accordingly no factual foundation has been established as against Madgwicks for the claim in relation to the release of the deposit of $20,000 and this claim also must fail.

Standing 83 The question of Mr Devon's standing to claim any loss and damage was the subject of some argument and it was submitted that the assignment to him of "all rights and benefits (including income and capital and right to claim) in the sale of the franchise asset of Trade Co" did not confer on Mr Devon any rights in contract or negligence (or otherwise) to sue Madgwicks. It is, however, unnecessary to make a finding on Mr Devon's standing, as whether or not he had such standing, he has not proved that he is entitled to recover any damages from Madgwicks.

Claim against Mr Kennedy 84 As stated, this claim was unintelligible and no recognisable separate cause of action was pleaded against Mr Kennedy. Accordingly, it is not dealt with.

claims against the second and fourth respondents 85 Mr Carroll and Triumph also relied on similar defences in respect of the claims made against them to those raised by Madgwicks.

No breach of contract or duty of care 86 Mr Devon submitted that Mr Carroll's failure to obtain a contract signed by MSBC was a "fundamental breach of his duty as an agent. And it goes to the very core of the instructions of engagement". However, it was neither a term of the agency agreement that Mr Carroll was to obtain MSBC's signature to the agreement nor within the scope of the duties owed by Mr Carroll, as the agent's representative, to Mr Devon or to Trade Co under the agency agreement. The relevant agency services are set out in cl 3 as follows: 3 Appointment and role 3.1 The Agent will actively market the Franchised Business during the Term. 3.2 The Agent shall report to the Client providing details of any reasonable written expressions of interest in the purchase of the Franchised Business. 3.3 Once a prospective buyer is located, the Agent will: (a) assist with the negotiation of a heads of agreement on the basic terms of sale, (b) liaise with the Client's solicitor and the solicitor for the buyer to pass on any relevant information required (that the Client has provided) and to assist the solicitors where appropriate in the drafting and finalisation of a full contract of sale, (c) receive a deposit for the sale of the Franchised Business once a final contract has been signed, and (d) assist where possible with the franchisor approval process. 87 The evidence did not establish any failure, omission or inaction by Mr Carroll in relation to the performance of those agency services. To the contrary, the evidence showed that Mr Carroll acted promptly in assisting Mr Devon to obtain the services of Madgwicks to prepare the formal sale agreement and in passing on relevant information to Madgwicks. The evidence also showed that Mr Carroll assisted with the franchisor approval process. As stated already, the non-completion of the sale was occasioned by MSBC's failure or refusal to sign and exchange contracts due to lack of funds. The evidence did not substantiate that the non-completion was attributable in any way to any failure on the part of Mr Carroll properly to perform the agency services which Mr Devon had contracted.

No causation and no loss or damage 88 Accordingly, similarly for the reasons that Mr Devon did not establish causation as against Madgwicks or any entitlement to recover loss and damage from Madgwicks, Mr Devon has also not established causation as against Mr Carroll or any entitlement to recover compensation for loss and damage from him in relation to the non-completion of the sale of the franchise business.

The Wrongs Act defence 89 Mr Carroll and Triumph also relied on s 55 of the Wrongs Act which also applies in relation to the negligence claim against them, for the same reasons that the section applies to the negligence claim against Madgwicks. Accordingly s 55 of the Wrongs Act is a complete defence to the negligence claim against Mr Carroll and Triumph (if otherwise a tortious duty was established, which, in any event, was not the case).

The wrong party 90 It was further submitted that Mr Devon had sued the wrong party as the relevant contracting party to the agency agreement was the franchise agent, Finn Franchise Brokers, not Mr Carroll who was the agent's representative. I accept that submission. 91 Section 13A of the Estate Agents Act 1980 (Vic) ("the Estate Agents Act") provides: Estate agents to be responsible for the acts of their representatives If an estate agent employs an agent's representative, the estate agent is responsible, in tort and in contract, for any thing done or not done by the agent's representative - (a) within the scope of the agent's representative's authority; or (b) for the benefit, or for the purported or intended benefit, of the estate agent or the estate agent's business. 92 An "estate agent" is defined in s 4 to mean a person: … who exercises or carries on or advertises or states that he (sic) exercises or carries on or that he is willing to exercise or carry on or in any way holds himself out to the public as ready to undertake the business of - (a) selling buying exchanging letting or taking on lease of or otherwise dealing with or disposing of; (b) negotiating for the sale purchase exchange letting or taking on lease of or any other dealing with or disposition of; (c) collecting rents for - any real estate or business on behalf of any other person. 93 The definition thus includes franchise agents and the Estate Agents Act applies to franchise agents. 94 An "agent's representative" is defined in s 4 to mean any person: (a) who is not a licensed estate agent but who - (i) is employed by, or who acts for or by arrangement with, a licensed estate agent; or (ii) is a director, member or officer of a corporation that is a licensed estate agent; and (b) who performs for that estate agent any of the functions of an estate agent (other than work ordinarily performed by clerks, cashiers or accountants) - regardless of whether his or her remuneration is by way of salary, wages, commission or otherwise[.] 95 Accordingly by virtue of s 13A, the correct party to sue was the proprietor of Finns Franchise Brokers, namely Justin Family Holdings Pty Ltd, and not Mr Carroll. 96 Another hurdle for Mr Devon is that he was not the contracting party to the agency agreement, which Mr Devon also admitted. The contracting party was Trade Co, as stated in the "client details" section of the agency agreement. The assignment agreement on which Mr Devon relied for his standing to sue and right to claim damages did not purport to transfer ownership of the franchise business from Trade Co to Mr Devon. Rather, what was purported to be assigned by Trade Co to Mr Devon was "all rights and benefits (including income and capital and right to claim) in the sale of the franchise asset of Trade Pty Ltd to the Purchaser". The assignment agreement did not by its terms, and was not effective to, confer standing on Mr Devon to sue on the agency agreement for breach of contract in relation to the performance of that agreement: cf Goldsbrough, Mort & Co Ltd v Tolson (1909) 10 CLR 470; [1909] HCA 80 where the High Court (Griffith CJ, O'Connor and Isaacs JJ) held that choses in action evidenced by certain receipts and certificates were not passed to the appellants by the words "chattels and effects" contained in mortgage deeds. It is possible that a duty of care owed by Finns Franchise Brokers to Mr Devon as a third party may be said to have existed (about which I make no finding) but, even if so, no causation was made out in any event.

The release of the deposit 97 Mr Devon claimed that Mr Carroll returned the deposit to MSBC contrary to his instructions that the deposit was not to be returned because he had a contract with MSBC that was "unconditional". 98 This raised for consideration whether Mr Devon had a binding, enforceable and unconditional contract with MSBC for the sale of the franchise business as he claimed. Counsel for Mr Carroll and Triumph did not contend that the Heads of Agreement which MSBC had signed did not constitute a binding contract and accordingly I make no finding on whether there was a binding contract absent execution of the formal contract. Rather the argument focussed on whether Mr Devon had established that the contract was unconditional. Mr Devon argued that the contract was unconditional because, as from 23 December 2013 (or thereabouts), MSBC was "taken to have obtained finance from an approved lender" (cl 4.4 of the Heads of Agreement) and because Bartercard gave its approval for the sale of the franchise business to MSBC in or around mid-January 2014 and, according to Mr Devon, MSBC signed a franchise agreement with Bartercard (see Recital D of the Heads of Agreement). 99 The full text of cl 4 is extracted at [6] but is set out again for convenience: 4 AGREEMENT SUBJECT TO FINANCE 4.1 The parties agree that the Agreement is subject to the Buyer obtaining finance from an approved lender for the purchase of the business. 4.2 The Buyer covenants to make all reasonable endeavours to obtain finance from an approved lender for the purchase of the business. 4.3 In the event the Buyer is unable to obtain finance within 21 days of the date of acceptance of this Agreement and before the Franchise Agreement is signed, the Agreement will be deemed to be terminated with no right by the Vendor for any costs or expenses … Purchaser is entitled to a refund of the initial deposit of $20,000 ONLY. 4.4 Unless the Buyer notifies the Seller to the contrary within 21 days of the date of acceptance of this Agreement, the Buyer will be taken to have obtained finance from an approved lender. 100 Also as previously mentioned, the Heads of Agreement document was not dated but Mr Devon's case is that cl 4.4 became operative by, at the latest, around 23 December 2013. 101 Recital D of the Heads of Agreement stated that : [MSBC], [Trade Co] who has procured the Franchisee have agreed to enter into this Agreement in the anticipation of entering into a formal Franchise Agreement and if necessary, a contract of sale for the business ("the formal contracts"). 102 Mr Devon did not give evidence that MSBC did not notify Trade Co on or before 23 December 2013 that it had not obtained finance. His affidavit evidence went no further than that "the purchaser" advised Bartercard that: 20. … [The] finance condition in the heads of agreement was waived and they had the funds to purchase the franchise. This was also a condition of franchise approval that the purchaser had the funds to buy the franchise and had working capital to finance the operations of the franchise. 21. The buyer was able to prove to the franchisor that they were credit worthy and had capital. 22. On or about 10 January 2014, the purchaser was approved by the franchisor after spending 2 days at the National office, at Southport Queensland. 23. Upon the approval by the franchisor of the purchaser, the unsigned contract was unconditional. 103 Mr Devon was cross-examined on his claim that the contract was unconditional and in response to a question as why he said that the contract was unconditional, Mr Devon replied: Firstly, because all the ingredients of the contract have been satisfied, namely - firstly, it was associated - firstly, was the condition of finance which they had 21 days. That was waived because it expired, and so by the time the actual contract by Madgwicks was prepared, the finance clause was not applicable. So that's the first part. That's very important. Second part, which is the most critical part of all, was the approval by Bartercard. 104 Also in cross-examination Mr Devon gave evidence for the first time that he told Mr Verebes that MSBC had waived the finance condition in the Heads of Agreement. Mr Verebes denied this and I accept Mr Verebes' evidence that he was not so told. It is consistent with Mr Verebes' inclusion of a finance clause in the draft sale agreement, and also consistent with the course of events that followed. 105 Ultimately the only evidence in support of Mr Devon's claim that the two conditions in the Heads of Agreement had in fact been satisfied were his assertions to that effect. Furthermore, the assertion that MSBC had "waived" the finance condition and was ready to settle even though the formal sale agreement was not signed was also contradicted by the evidence that MSBC did have not have the necessary funds to complete the purchase, as Mr Devon knew, and by the evidence that MSBC did not return a signed franchise agreement to Bartercard. The assertion that a formal franchise agreement had been entered into between MSBC and Bartercard was also contradicted by Bartercard's actions in taking back the franchise business and premises on around 6 March 2014. Accordingly, Mr Devon's assertion that the contract became unconditional cannot be accepted as reliable evidence of that fact and I do not accept that the evidence established that the two conditions were satisfied, as Mr Devon urged. 106 In the circumstances, even assuming that Mr Devon had a binding and enforceable contract although the formal sale agreement had not been signed, Mr Devon has not established that Mr Carroll wrongfully returned the deposit to MSBC. By s 59 of the Estate Agents Act, Finn Franchise Brokers received the deposit as a stakeholder or in trust pending the completion of the sale of the franchise business and was required to retain that money in its trust account until paid "to the persons entitled thereto … or such persons' legal practitioners or at such persons' direction". Clause 12.2 of the agency agreement provided: All monies received by the Agent as a deposit from the buyer shall be held in the Agent's trust account. The Agent will not disburse any monies from its trust account until either: (a) the contract of sale has completed, or (b) the contract of sale has been terminated, and the Agent has been notified in writing by either the buyer's or the Client's solicitor that the sale has completed or been terminated as the case may be. 107 In this case, Mr Carroll waited until he received notification from MSBC's solicitor that the contract had been terminated before he disbursed the deposit. Mr Carroll was, in the circumstances, expressly authorised by cl 12.2 to disburse the deposit.

conclusion 108 Mr Devon has failed to establish any of the claims made and accordingly the proceeding must be dismissed. I certify that the preceding one hundred and eight (108) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies.

SCHEDULE OF PARTIES VID 436 of 2015 Applicants Applicant: HUGH DEVON Respondents First Respondent: MADGWICKS (A FIRM) Second Respondent: BERNARD PATRICK CARROLL Third Respondent: PETER ROBERT KENNEDY Fourth Respondent: TRIUMPH MANAGEMENT GROUP PTY. LTD.