Dresna Pty Ltd v Linknarf Management Services Pty Ltd

AND: LINKNARF MANAGEMENT SERVICES PTY LTD (IN LIQUIDATION) formerly FRANKLINS MANAGEMENT SERVICES PTY LTD (ACN 000 052 077)

LINKNARF LIMITED (IN LIQUIDATION) formerly FRANKLINS LIMITED (ACN 000 929 902)

introduction 1 These proceedings arise out of the withdrawal of the Franklins supermarket chain from the Australian market. The Franklins business was operated by Franklins Limited, the parent company of which was the Hong Kong-based Dairy Farm International Holdings Limited ("Dairy Farm"). Following a strategic review in 2000, Dairy Farm decided to "cut its losses and wholly leave Australia". To do so involved the sale or closure of 287 stores. 2 The Franklins supermarket chain had been one of three major national supermarket chains. The other two national chains were operated by Coles Myer Limited ("Coles") and Woolworths Limited ("Woolworths"). The exit of one of the three major players in the market plainly raised competition issues. In particular, if the entirety, or a large portion, of the Franklins business were sold to one of the two national competitors, this had the potential to infringe s 50 of the Trade Practices Act 1974 (Cth) ("the TPA") - the prohibition on acquisitions that would result in a substantial lessening of competition. 3 On 22 May 2001, the Australian Competition and Consumer Commission ("the ACCC") announced that it had reached an in principle agreement with Dairy Farm. The agreement was for about 200 stores to be sold to independent retailers, and a maximum of 67 stores to be sold to Woolworths. This agreement was conditional upon acceptable undertakings being given by the parties to the ACCC. 4 Accordingly, on 4 June 2001, undertakings were given by Franklins Limited and Dairy Farm Management Services Limited (a subsidiary of Dairy Farm) to the ACCC pursuant to s 87B of the TPA ("the undertakings"). 5 Generally speaking, the intended effect of those undertakings was to ensure that as many as possible of the Franklins stores allocated for sale to independent operators did, in fact, end up being sold to those operators. As part of the undertakings, over 100 of the Franklins stores were earmarked for sale to independent supermarket operators pursuant to a process called the Joint Independent Divestiture Alliance ("JIDA") process. The JIDA process involved independent operators submitting "bids" for stores to the "JIDA Committee". The JIDA Committee was a body made up of representatives of Franklins Limited and Metcash Trading Limited, a wholesaler of groceries and stock to independent supermarkets. 6 The undertakings also required Franklins Limited to obtain the consent of the ACCC before selling any stores to Woolworths or Coles, other than the 67 stores the ACCC had already agreed could be sold to Woolworths. The undertakings further required Dairy Farm Management Services Limited and Franklins Limited to report to the ACCC any development that materially affected the sale of Franklins stores in accordance with the undertakings. 7 Woolworths also gave undertakings to the ACCC, dated 7 June 2001. Amongst other things, those undertakings prevented Woolworths from interfering in the JIDA process. 8 No undertakings were given by Coles. This was unsurprising, given that in mid-2001, there was no proposal before the ACCC for Coles to acquire any Franklins stores. 9 The applicant in this proceeding is a company which sought to purchase the Franklins store at Mentone, a suburb in Melbourne, Victoria ("the Mentone store"). While an agreement was reached for the sale of the Mentone store to the applicant, the respondents claim that they were unable to secure, from the landlord of the Mentone store, consent to an assignment of the lease to the applicant. As such, the respondents contend that they were unable to complete the sale and terminated, on notice, the sale agreement with the applicant. The Mentone store was ultimately sold to Coles for $2.3 million. This was the same price as had been negotiated with the applicant. 10 Mr Leo Blake is a director and shareholder of the applicant. The other director and shareholder of the applicant is Mr Blake's wife. Mr Blake owns a number of supermarkets, including the "Leo's Fine Food and Wine" stores at Kew and Heidelberg. In his view, the purchase of the Mentone store was a "one off opportunity". In simple terms, Mr Blake claims that the Mentone store should have been sold to him, and not to Coles. He claims that he failed to acquire the Mentone store as a result of the respondents' wrongful conduct, and claims damages that include the lost profits he would have earned from the Mentone business.

history of litigation 11 The litigation arising out of the applicant's failure to secure the purchase of the Mentone store has a long and complex history. 12 These proceedings were transferred from the Supreme Court of Victoria to this Court on 13 December 2002, following the addition of a claim against Coles for misuse of market power under s 46 of the TPA. At that time there were five respondents in the proceeding. Those respondents can be grouped into three categories: · Misu Nominees Pty Ltd and Kandara Pty Ltd, the lessors of the Mentone store site ("the Lessor"); · Franklins Management Services Pty Ltd ("FMS") (an entity wholly owned by Franklins Limited and the holder of the lease over the Mentone store) and Franklins Limited; and · Coles. 13 Since the commencement of proceedings, the Franklins parties have gone into liquidation. As such, the names of the Franklins parties have changed. Franklins Limited is now Linknarf Limited (in liq) and FMS is now Linknarf Management Services Pty Ltd (in liq). I will refer to these parties jointly in these reasons for judgment as "Franklins". 14 At the time of the transfer of proceedings to this Court, the applicant relied upon numerous causes of action. They included claims under s 46 and s 52 of the TPA, as well as claims for inducing breach of lease, unlawful interference with lease, and tortious conspiracy as between Coles and the Lessor. 15 On 19 December 2003, I gave a judgment in relation to an application by the applicant for leave to amend its statement of claim: Dresna Pty Ltd v Misu Nominees Pty Ltd [2003] FCA 1537. Further background to these proceedings is set out in those reasons for judgment. That decision was appealed to the Full Court: Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169. The effect of the Full Court's decision was that the applicant was able to plead claims of conspiracy as between Franklins Limited and Coles (in addition to its claim of tortious conspiracy as between Coles and the Lessor). 16 In May 2005, the applicant settled its claims against Coles, and the Lessor. It did not, however, resolve its claims against Franklins. In June 2005, Franklins, somewhat belatedly, sought leave to bring cross-claims against Coles and the Lessor. Such leave was refused: Dresna Pty Ltd v Linknarf Management Services Pty Ltd (In Liq) formerly Franklins Management Services Pty Ltd [2005] FCA 1011. 17 In its final incarnation, the application before me against the remaining respondents, the two Franklins parties, is an application for damages for breach of contract, breach of s 52 of the TPA, and breach of fiduciary duty.

the applicant's claims 18 The applicant's claims for breach of contract arise from two agreements. The first agreement is a business sale agreement dated 8 August 2001 between Franklins on the one hand, and the applicant and Mr Blake on the other. It will be convenient to describe this business sale agreement as "the Mentone BSA". The second agreement, which was said to be partially written, and partially oral, was entered into on or about 28 September 2001. That agreement, between Franklins and the applicant, involved them in jointly bringing proceedings, in the Supreme Court of Victoria, against the Lessor for unreasonably withholding consent to the assignment of the lease of the Mentone store to the applicant. For convenience sake, I will refer to this agreement as "the litigation agreement". 19 The applicant also claims that its joint collaboration with Franklins in pursuit of a common objective, namely obtaining the consent of Lessor to the assignment of the Mentone store lease, gives rise to a fiduciary relationship. The litigation agreement is said to be part of that joint collaboration. 20 The applicant submits that despite the existence of an agreement to sell the Mentone store to it, Franklins dealt with Coles and agreed, or had a "deal in principle" to sell the store to Coles ("the Franklins/Coles deal"). The applicant submits that this deal was part of a wider dealing between Franklins and Coles that took place in August 2001, that encompassed a number of stores, and was in disregard of the undertakings. The applicant contends that, in the context of this wider deal, the price for Mentone was negotiated in late August/early September 2001. This was well before Franklins gave notice terminating the Mentone BSA, on 28 November 2001, and well before it obtained ACCC consent for the sale to Coles, on 21 December 2001. 21 In the alternative, the applicant submits that Franklins and Coles entered into an agreement for the sale of the Mentone store on or about 23 November 2001. The applicant contends that Franklins did not disclose the existence of that agreement to it, or to the ACCC. The applicant also submits that Franklins did not disclose to the applicant the fact that it had made a confidential submission to the ACCC on 23 November 2001, seeking the ACCC's consent for the sale of the Mentone store to Coles. Together, I shall refer to these matters as "the late November 2001 dealings". 22 In addition, the applicant further submits that Franklins was aware, at least from 15 October 2001, of an arrangement between Coles and the Lessor, by which Coles had agreed to take up the lease on the Mentone store on a "vacant possession" basis ("the Lessor/Coles deal"). The applicant contends that Franklins failed to disclose its knowledge of that arrangement to it, or to the ACCC. 23 The applicant claims that the Franklins/Coles deal, the late November 2001 dealings, and Franklins' failure to disclose its knowledge of the Lessor/Coles deal, amount to breaches of Franklins' contractual and fiduciary obligations. 24 In addition, the applicant submits that these matters give rise to a claim of misleading or deceptive conduct under s 52 of the TPA, both in terms of Franklins failure to disclose these matters to the applicant, and its failure to disclose these matters to the ACCC. 25 The applicant contends that, had it been aware of these matters prior to the end of December 2001 (when the Mentone store was sold to Coles), it could have made use of the information to take steps to ensure the completion of the sale of the Mentone store to it. The applicant submits it would have done this either by taking legal action to force the assignment of the Mentone store lease, or by persuading the ACCC to refuse its consent for the sale of the Mentone store to Coles. 26 Likewise, the applicant contends that had these matters been disclosed to the ACCC, it would have intervened to ensure the sale of the Mentone store to the applicant. 27 The applicant claims that it has suffered loss as a result of these matters, including the costs expended in the Supreme Court proceedings taken against the Lessor and the lost profits the applicant would have earned had it acquired the Mentone store.

franklins' defences 28 In general terms, Franklins claims that it tried its best to sell the Mentone store to the applicant. However, the Lessor refused to consent to the assignment of the lease. Franklins joined with the applicant for a time in taking legal action against the Lessor to try to force the assignment. However, by November 2001, Franklins submits that it was apparent that time had simply "run out" in terms being able to complete the sale to the applicant before the complete closure of the Franklins business at the end of January 2002. On 16 November 2001, at a directions hearing in the proceedings Franklins and the applicant brought against the Lessor, Habersberger J indicated that the matter would not be able to be given a trial date in 2001, and set the matter down for further directions on 15 February 2002. Shortly after that directions hearing, on 28 November 2001, Franklins terminated the Mentone BSA. Only after ACCC consent was obtained on 21 December 2001, according to Franklins, did it negotiate the sale price of the Mentone store with Coles. 29 Franklins claims that it was known or understood by the applicant at all material times that some of the stores originally allocated for sale pursuant to the JIDA process would ultimately be sold to Coles. This, Franklins submits, would be for a variety of reasons. One potential reason was that no appropriate bids had been received for a store. Another potential reason was that a landlord may refuse to assign the store lease to an independent operator. 30 Furthermore, Franklins contends that at all material times it made the applicant aware that it needed the support of its Hong Kong parent company, Dairy Farm, to remain solvent, and that this support would not continue beyond the end of January 2002. Consequently, Franklins submits, the managed sell-down needed to be completed within a narrowly confined timeframe. 31 Turning specifically to the alleged "deals" between Franklins and Coles, Franklins submits there was no deal in relation to the sale of the Mentone store prior to late December 2001. It contends that the price for the Mentone store was only agreed between 21 December 2001 (the date upon which ACCC approval was given for the sale of the Mentone store to Coles) and 24 December 2001 (the date the agreement to sell the Mentone store to Coles was signed). Franklins submits that the first time the potential sale of the Mentone store was discussed between Coles and Franklins was on 23 November 2001 and, following one last attempt obtain the Lessor's consent to the assignment of the lease, which attempt was rejected on 27 November 2001, the ACCC was approached to obtain its consent to sell the store to Coles, and the Mentone BSA and litigation agreement were terminated. 32 Franklins does not dispute that it made its submission to the ACCC on 23 November 2001, five days before both giving notice to terminate the Mentone BSA and terminating the litigation agreement, on 28 November 2001. 33 In relation to the Lessor/Coles deal, Franklins does not deny the existence of such a deal. It is clear on the evidence that an agreement between the Lessor and Coles was signed on 29 June 2001. This was revealed in the Supreme Court proceedings on 18 December 2001 after the Lessor responded to a subpoena to produce documents, and was disclosed in an affidavit of Mrs Judith Wasser, the director and "owner" of the Lessor, filed the following day. 34 As previously indicated, the nature of the Lessor/Coles deal was that Coles agreed "in principle" to take up the lease of the Mentone store on a vacant possession basis. The idea behind the arrangement was that if the Lessor refused to consent to Franklins assigning the lease, Franklins would be forced simply to close the Mentone store. The property would then be vacant, and Coles could take up the lease. This would allow Coles to acquire the Mentone store without having to obtain ACCC approval, as the undertakings did not apply to Coles or the Lessor. 35 Coles stated in its offer to the Lessor, dated 6 June 2001, that "it is not our intention that you breach any contractual obligations that you may have in respect of the Site". However, the terms of the Lessor/Coles deal required the Lessor to use reasonable endeavours to ensure that Franklins continued to trade until the proposed Coles lease commenced and to negotiate to acquire stock from Franklins which Coles would then purchase from the Lessor. It is clear that the Lessor/Coles deal was an attempt to effect a practical outcome as close to assignment as possible, while trying to avoid unlawful interference with the Lessor's obligations under the existing lease. 36 The issue in this proceeding is the time at which Franklins became aware of the Lessor/Coles deal. In its final submissions, Franklins did not reject the contention that it knew of the Lessor/Coles deal prior to 18 December 2001. In its final submissions, it states: "It is true that Franklins did not disclose to Dresna the fact that Coles had entered into an agreement in principle with the landlord based on vacant possession, learned at least by some within Franklins on about 15 October 2001". 37 However, Franklins submits that even if there was non-disclosure in relation to the Lessor/Coles deal, causation of loss or damage cannot be established. In relation to the line of causation through the ACCC, namely that the ACCC would have blocked the sale of the Mentone store had it known of the Lessor/Coles deal, Franklins submits that there is no evidence to support this contention. In relation to the line of causation through the Supreme Court proceedings, namely that an expedited hearing would have been obtained, and judgment given in the applicant's favour, had the Court been told of the Lessor/Coles deal, Franklins contends that the case could not be brought on for hearing in 2001, irrespective of whether or not the Court was told of the Lessor's "collateral purpose" in refusing assignment of the lease. And, Franklins submits, even if the case had been brought on in 2001, there is no assurance that the applicant would have succeeded.

FACTUAL ISSUES FOR DETERMINATION 38 The factual issues to be determined on this application include the following: · whether the applicant has established the existence of the Franklins/Coles deal, as alleged, or alternatively, the existence of the November 2001 dealings; · whether the applicant has established that Franklins became aware on or about 15 October 2001, if not before that date, of the existence of the Lessor/Coles deal; · whether the applicant has established that Franklins' knowledge of the existence of the Lessor/Coles deal was not disclosed to the applicant, or to the ACCC, until 18 December 2001 during the Supreme Court proceedings; · whether, had either of these "deals" been disclosed to the applicant, or to the ACCC, the ACCC would have blocked the sale of the Mentone store to Coles; · whether, had either of these "deals" been disclosed to the applicant, an expedited hearing would have been granted in the Supreme Court proceedings (ie before January 2002), so that the Lessor would have been compelled to assign the lease of the Mentone store to the applicant.

mr leo blake 39 Mr Blake's evidence goes to the knowledge of the applicant and what the applicant would have done had it been told of the "deals" it alleges. His evidence also provides helpful background to the circumstances surrounding the sale of the Mentone store. 40 In late May 2001, Mr Blake became aware that the Mentone store was available for purchase from Franklins. Mr Blake says that he was keen to purchase the Mentone store because of what he regarded as favourable rent on the property, the lease being a long term lease, there being less competition in that area than others, the car parking facilities, the customer base and the potential to upgrade the liquor licence. 41 Mr Blake said that he regarded the sale of the Mentone store as a "one off opportunity" because independents are not usually able to acquire stores of this type. 42 On 31 May 2001, Mr Blake met with Mr Geoff Webb. Mr Webb was contracted by Franklins to assist with the JIDA process. Mr Blake, in his evidence in-chief, described the meeting as follows: "On 31 May 2001, I met with Geoff Webb of Franklins at my office in Kew. During the course of that meeting Webb gave me various documents in relation to the sale of Franklins stores, some of which I had already received. He said that he was here to do a deal. I asked him whether he had authority to do a deal given the formal bidding process outlined by Franklins. He said that he did. I offered to pay $2 million for Mentone. He stated that Mentone was a very profitable store and if I wanted Mentone I would also have to take a "dog store" with it, rather than cherry pick the good store. I offered $2m for Mentone and $500,000 for North Blackburn. He said the $500,000 for the North Blackburn store was okay. He then consulted a document in his briefcase and said that the $2,000,000 offered for Mentone was insufficient. I then said "What price was Franklins looking for?" He responded by saying "$2.3 million because the store is showing a profit of $1.25 million". I then said "Are you in a position to do a deal now if I offered $2.3 million and the $500,000 now?" Webb said "Yes". " 43 Mr Blake says he had doubts as to whether Mr Webb had the authority to sell the store to him outside of the JIDA process. The JIDA process involving buyers bidding for stores and those bids being considered by the JIDA committee had been well-documented in the supermarket industry. Mr Blake wrote a short handwritten note to "cement" the deal which both he and Mr Webb signed. 44 Following this meeting, Franklins denied any agreement to sell to Mr Blake because he had not followed the proper process, namely submitting a bid to the JIDA Committee, and because Mr Webb was not authorised to sell. 45 However, after proceedings were commenced by Mr Blake against Franklins ("the Webb proceedings"), Franklins agreed to honour the deal struck between Mr Blake and Mr Webb, and on 8 August 2001, the applicant and Franklins entered into the Mentone BSA for the sale of the Mentone store. 46 Clause 4.1 of the Mentone BSA provided that a condition precedent to the completion of the sale was for the Lessor to give its consent to the transfer of the lease. Clause 4.2 provided that the parties to the sale must use "reasonable endeavours" to satisfy this condition. 47 On or about 13 August 2001, Mr Blake met with Ms Susan Herbert of Arnold Bloch Leibler ("ABL"), solicitors for the Lessor. He provided her with a submission in support of the assignment. By early September 2001, the Lessor had not given its consent to the assignment. Despite this, Mr Blake gave evidence that after the signing of the Mentone BSA, he prepared for the refurbishment of the Mentone store which he planned to undertake. This included meeting with subcontractors such as plumbers, carpenters and electricians. He proceeded with this work because, in his opinion, the Lessor had no basis upon which to object to an assignment of the lease. 48 The assignment clause in the Mentone store lease, clause 9.1, is relevantly in the following terms: "… the Lessee shall not, subject to subclause 9.2, assign … this Lease … without consent of the Lessor such consent not to be unreasonably withheld provided that:- 9.1.1 The Lessee proves to the reasonable satisfaction of the Lessor that the proposed assignee is a respectable, responsible and solvent person or company of sound financial standing of comparable commercial standing to the Lessee …" 49 On 6 September 2001, the Lessor refused consent to the assignment. On 7 September 2001, Mr Herbert Fischbacher of Mason Sier Turnbull, Mr Blake's solicitors, wrote to Franklins offering, among other things, to indemnify Franklins if they issued proceedings against the Lessor seeking orders to compel it to consent to an assignment of the Mentone store lease. 50 A supplementary submission was then made by Mr Blake to the Lessor, which included the offer of further security by way of personal and bank guarantees equivalent to the sum of 12 months rent. On 24 September 2001, the Lessor again rejected the request to assign the lease. Preparations were then made for Franklins, indemnified by Mr Blake, to take legal action against the Lessor to force the lease assignment. 51 On 16 October 2001, proceedings were commenced against the Lessor by FMS, the applicant, and Mr and Mrs Blake. Directions hearings before Habersberger J were held on 19 October 2001 and 16 November 2001. On 27 or 28 November 2001, Mr Blake was informed by Mr Fischbacher that Franklins had decided to pull out of the litigation and would serve a notice of termination of the Mentone BSA. An injunction restraining Franklins from disposing of the Mentone store was granted on 10 December 2001, but was dissolved on 20 December 2001. 52 Mr Blake says that he was informed by some contractors, on 13 December 2001, that Coles was seeking tenders to fit out the Mentone store. He gave this information to his solicitor, Mr Alan Foster (after Franklins pulled out of the litigation, Mr Blake changed solicitors), and on 18 December 2001, Mr Blake says he became aware for the first time that Coles "had done a deal" with the Mentone landlord. Mr Blake also gave evidence that he did not have any knowledge of any dealings between Franklins and Coles in relation to Mentone, prior to the termination of the Mentone BSA. 53 Mr Blake says that had he known of the Lessor/Coles deal on or about 15 October 2001 (the date Mr Blake says he now understands that Franklins knew of that deal), or had he learned of any dealings between Franklins and Coles in relation to the Mentone store while the Mentone BSA was on foot, he would have instructed Mr Fischbacher to take "whatever steps were available to secure the store". He also says he would have contacted the ACCC himself, or through his lawyer. 54 Mr Blake says that the Mentone store was very important to him and his business, and that he would have done everything he could to ensure he obtained it. 55 Under cross-examination, Mr Blake acknowledged that, in general he was aware that a landlord may be able to thwart the sale of a supermarket to an independent by refusing to consent to the assignment of the lease. He also acknowledged that he was aware of the clause in the Mentone BSA that provided that the Lessor's consent to the assignment of the lease was a condition precedent to completion of the sale. He further acknowledged that by mid-August 2001, it was well-documented in the press that a number of independent supermarket buyers were having difficulty getting consents from landlords because landlords preferred chain operators, namely Coles and Woolworths, as tenants. This was because they believed that having a chain store as a tenant increased the capital value of their property. However, Mr Blake said that he believed that in his case there would be no problems getting an assignment from the Lessor, and on this basis he began preparing for the store refit to ensure that the Mentone store was ready for trading at Christmas.

Mr herbert fiscHbacher 56 As previously indicated, Mr Fischbacher is Mr Blake's solicitor. His main area of expertise is industrial relations law. However, he is also experienced in commercial transactions and litigation. He was responsible for the conduct of the Supreme Court litigation against the Lessor for both Mr Blake and Franklins, up until 30 November 2001. At that time, the solicitors for Franklins claimed that Mason Sier Turnbull, Mr Fischbacher's firm, was precluded from acting on behalf of Mr Blake in the litigation against the Lessor. 57 Mr Fischbacher gave evidence relating to the circumstances in which he sought the consent of the Lessor to the assignment of the Mentone store lease to the applicant. He gave evidence about his communications with Ms Herbert, solicitor for the Lessor, and explained how a number of his calls, seeking assignment of the lease, were ignored or not returned over August and September 2001. He also explained that ABL gave him "excuses" as to why instructions could not be obtained from Mrs Wasser in relation to the assignment request. 58 Mr Fischbacher then explained how Mr Blake and Franklins had arranged to commence proceedings against the Lessor for unreasonably withholding consent to the assignment, and the course that those proceedings took. As previously indicated, the first directions hearing took place before Habersberger J on 19 October 2001. The Lessor was represented by Ms Gordon. The plaintiffs were represented by Dr Croft SC and Mr Osborne. At that first directions hearing, Habersberger J refused Dr Croft's application for the matter to be given a hearing date straight away. A further directions hearing was held on 16 November 2001. At that hearing Mr Osbourne appeared for the plaintiffs and Mr Nettle QC and Ms Gordon for the Lessor. Habersberger J indicated at that point that a hearing in December 2001 was impossible and that the earliest a further directions hearing could be held was 15 February 2002, at which time his Honour would consider setting the matter down for trial. 59 In his examination in-chief, Mr Fischbacher gave evidence about a meeting he had on 19 November 2001 with Ms April Arslan and Mr Roger Stansfield, of Home Wilkinson and Lowry ("HWL"), solicitors for Franklins. Ms Mary Weir, General Counsel for Franklins, was also present by way of telephone hook up. 60 At that meeting, Mr Fischbacher says that Ms Weir stated that while the "situation" (continuing to try to obtain the consent of the Lessor to assignment) could not go on indefinitely: · the Mentone store could be kept open post-January; but · support from Dairy Farm was only week to week and would cease by Christmas 2001; and · it was apparent that Coles were interested in Mentone. 61 Mr Fischbacher says he was also informed at this meeting, for the first time, that ABL had indicated to Mr Stansfield that the Lessor was interested in assigning the lease to Coles. However, Mr Fischbacher says that he assumed there was no way Coles could obtain the store. 62 Mr Fischbacher's evidence was that during the period between August to late December 2001, he had "no idea" of the existence of the Lessor/Coles deal. He says that had be been told about this deal on or before 15 October 2001, his "whole strategy would have been fundamentally different". He asserts that the case against the Lessor would have been "much simpler and more powerful" if it could have been shown that the reasons for refusing consent to the assignment were "merely a pretext". Similarly, Mr Fischbacher says had he known of the "dealings" between Franklins and Coles in relation to the Mentone store, prior to 29 November 2001 (when he says he became aware of Franklins seeking the ACCC's consent to sell the store to Coles), this would have also "fundamentally" changed his strategy. He says he may have contemplated commencing proceedings against Franklins, in addition to the Lessor. Mr Fischbacher also says he would have "reported" any dealings to the ACCC. 63 Under cross-examination, Mr Fischbacher acknowledged that he was aware of other independent operators who were experiencing difficulties similar to those of the applicant in obtaining consents to assignments of leases over Franklins' stores. He also acknowledged that he had "suspicions", by about mid-October, that Coles was interested in the Mentone store and that the Lessor may have wanted Coles as a tenant. Mr Fischbacher was shown a letter written by him to Mr Blake on 7 November 2001, summarising the progress of the proceedings against the Lessor, where he stated: "It has been suggested that Metcash take a head lease over the Mentone property and sublease to you. I share your view that, in my opinion, the landlord would not accept this as an alternative to, say, Coles Myer taking the lease." 64 He also acknowledged under cross-examination that it was his firm view at that time that Coles were the competition.

Mr Gerry Masters 65 Mr Masters was subpoenaed to give evidence by the applicant. He is currently the Managing Director of Coles Myer Supermarkets. Mr Masters was the primary point of contact within Coles for Mr Ian Cornell, the Managing Director of Franklins Limited, over the period of the managed sell-down. During 2001, Mr Masters had various discussions with Mr Cornell about the possible sale of Franklins stores to Coles. Mr Masters' evidence goes to the existence of the Franklins/Coles deal, and to the November 2001 dealings. 66 It is fair to say that Mr Masters' recollection of events in 2001, beyond the general, was not strong. However, his evidence does provide helpful background to Coles' commercial goals before and during the managed sell-down. 67 Mr Masters gave evidence that in about mid-2000, Coles had become aware that Franklins was considering quitting the Australian market. It commissioned a merchant banking firm to consider the acquisition of Franklins stores. That project became known as "Project Lincoln". This led to Coles making an offer to acquire a package of Franklins stores in late 2000/early 2001. That offer was rejected. However, in early 2001, Dairy Farm asked Coles to submit a new offer whereby stores in all States were "cherry picked". On 16 February 2001, Coles offered to acquire 116 Franklins stores, conditional upon Coles acquiring 21 "core stores". Mentone was included in the 116 stores, but was not identified as a "core store". That offer was rejected by Franklins as well. 68 Mr Masters gave evidence that at some stage after this, Franklins announced the sale of the parcel of stores to Woolworths and announced the JIDA process. Accordingly, Coles appeared to have been "shut out of the deal". Mr Masters was shown a draft memorandum dated 24 April 2001 from Mr Dennis Eck, the Managing Director of Coles, to Coles Directors. That draft memorandum asked "how did this position develop". He identified the document as one that had been read by him at the relevant time. The draft memorandum concludes by stating "[f]inally we will open dialogue with the landlords at the appropriate time but mindful of Dairy Farm's threat". Mr Masters was not asked to explain what the Dairy Farm "threat" referred to. 69 Coles continued to express its interest in purchasing Franklins stores following the announcement of the Woolworths sale and JIDA process. Mr Masters recalled that some time after the announcement of the JIDA process, Coles contacted a number of landlords of Franklins stores, expressing an interest in taking on the lease of the store, provided those landlords were "free to deal" with Coles. 70 Mr Masters referred to an internal Coles memorandum sent to himself, amongst others, from the Coles Property Department. The memorandum was dated 17 May 2001, and indicated that Coles had contacted the landlords of 106 Franklins stores over the preceding 24 hours. The Mentone store was listed as one of the 106 stores. The memorandum stated: "The overwhelming response from lessors is positive and there appears a genuine desire to further discussions/negotiations with CML [Coles] subject to ACCC, Franklin's [sic] and CML Board approval." 71 Mr Masters referred to other internal Coles documents which indicated Coles' concern, in May 2001, that it may miss out on acquiring any Franklins stores during the managed exit. Mr Masters explained that Coles continued to have discussions with landlords during this period. 72 Mr Masters gave evidence that he and Mr Cornell had various discussions about the possible sale of Franklins stores which might be available to Coles. He referred to a number of internal communications in relation to "Project Lincoln", none of which mentioned the Mentone store specifically. Those communications included a memorandum dated 29 June 2001 from Mr John Kop, the project manager for Project Lincoln, and Ms Rebecca King, an employee in the Coles Property Department, to Mr Masters. The memorandum stated, amongst other things: "Real estate is continuing to negotiate with landlords of identified stores on the basis of vacant possession. This process is operating separately to any other negotiations that may be taking place." 73 Mr Masters said he had no particular recollection of this memorandum. 74 Mr Masters was subject to wide-ranging and thorough examination by Mr Garratt QC, counsel for the applicant. At one stage, Mr Garratt sought, and was granted, leave to cross-examine Mr Masters. 75 In relation to the specific dealings between Mr Cornell and Mr Masters, Mr Masters stated that he did not recall Mr Cornell saying the Mentone store was not available to Coles. In fact, he could not recall any specific conversation with Mr Cornell in relation to the Mentone store at all. Nor, strangely, was Mr Masters aware of Franklins giving undertakings to the ACCC. He stated that they formed no part of his thinking when dealing with Mr Cornell. 76 Mr Masters was unable to explain how the same purchase price as that which Mr Blake had agreed to pay for the Mentone store had also been negotiated by Coles. He was however, taken to an email, sent from Mr Nat Portelli, a senior employee in the Coles Property Department, to him on 10 October 2001. That email stated: "The owner [the Lessor] continues to support the approach in line with the RDC approved lease offer which also demonstrated our ability to pay up to approximately $4m in good will if so required (remembering Leo Blake's offer is for $2.3m, which is as communicated by the lessor)." 77 Therefore, although Mr Masters could not remember how the price for the Mentone store was arrived at, it is clear that Coles was made aware, by the Lessor, of the price the applicant had agreed to pay. 78 Mr Masters confirmed that Coles' preference was to acquire stores as going concerns. He said that he would have thought that Coles would not have been able to conclude a deal with a landlord, without having concluded a deal with Franklins. He said he would have thought the two deals would have been done together. 79 Mr Masters said that in general, due diligence would take place after an in principle agreement had been struck between himself and Mr Cornell. He said due diligence was not used as a price negotiation tool. Mr Masters was shown a bundle of documents. He agreed that the documents appeared to be due diligence reports conducted in relation to the Mentone store. The reports all bore dates of mid-December 2001. 80 Mr Masters was taken to a document headed "Discussion with I.C. today (23/11/01)". Mr Masters identified the first page of that document as having been prepared by himself, and the following pages as having been prepared by either Ms King or Mr Kop. The first page noted that Franklins were preparing a submission to the ACCC. That submission would outline that "[d]espite all Franklins' best efforts there are a group of stores that remain unresolved and this position won't change" and "Franklins will argue that the best result for all concerned is if they are allowed to sell there [sic] stores to CML". The note also recorded that Franklins would have a meeting with the ACCC on 27 November 2001, and that "I.C." (presumably Mr Cornell) would telephone Coles with an update on the evening of 27 November 2001. The note then stated that Franklins believed they would have a response from the ACCC by the middle of the following week, and that "[i]f everything is okay we will start the usual checks and approval processes within the company". 81 The following pages of this document began by stating "[t]he purpose of this paper is to set out the current position and the opportunity for CML to participate in the final stage of the Franklins exit from Australia". The note went on to state: "3. Franklins' proposal · Franklins are proposing that CML acquire a third tranche of stores. · The third tranche comprises 13 stores with the possibility of a further 2 falling into the third tranche. Of these 13, due diligence has already been conducted on 6. · If the ACCC agrees to Franklins' position, due diligence would take place early December. · The legal documentation for the sale and lease assignment would be completed on or before 21 December, 2001. … 4. The opportunity for CML … · CML and Franklins have agreed to an initial purchase price for the additional 13 stores, totalling $18.2 million, subject to Due Diligence, ACCC, RDC & Board approval." (emphasis added) 82 The final page of the document contains an attachment which identifies the Mentone store as one of nine stores in "tranche 3" (another four stores are listed as "other stores" which, when added to the nine stores, may account for the reference in the note to 13 stores). No breakdown of the $18.2 million figure was found in any documents produced by Franklins or Coles. 83 Under cross-examination, Mr Masters agreed that neither Mr Cornell nor he would have engaged in negotiations concerning Franklins stores unless Mr Cornell was "free to deal" with a particular store. When it was suggested that Mr Cornell told Mr Masters at their meeting in June that Coles should not interfere in the JIDA process by contacting landlords of stores which had been the subject of successful JIDA bids, Mr Masters said he had no recollection of this, but did not deny it either.

Mr nick Carter 84 Like Mr Masters, Mr Nick Carter was subpoenaed to give evidence. Mr Carter was employed by Coles in 2001, and worked in Coles' property division in Victoria. However, he no longer works for Coles. 85 During the period of the Franklins managed sell-down, Mr Carter was involved with the strategy to contact and negotiate with landlords of Franklins stores directly. Mr Carter sent the original letter of offer to the Lessor on 6 June 2001, as well as the final letter of offer that was signed by the lessor on 29 June 2001. The letter of offer essentially constituted an agreement based upon Coles taking vacant possession of the Mentone store and entering into a new lease. Mr Carter sent out similar letters of offer to other landlords of Franklins stores. 86 The introduction to the letter was in the following terms: "We refer to our recent discussions concerning our participation in the Site. We confirm that it is not our intention that you breach any contractual obligations that you may have in respect of the Site. Nothing in this letter is intended to lead to you breaching those contractual obligations. However, on the basis that you are able to deal with us, we put the following offer to you." 87 The letter then goes on to set out the proposed terms and conditions of the arrangement. 88 Mr Carter was asked about any meetings he had with Mrs Wasser or her legal advisers. He did not have any specific recollections, but believed that there had been at least one meeting. Mr Carter was taken to documents that indicated that discussions between Coles and Mrs Wasser and her advisers had taken place after the original 6 June 2001 letter of offer was sent out, and which led to the terms of the offer being amended. 89 Mr Carter was taken to a letter, faxed on 18 October 2001, from Coles to Mrs Wasser. The letter stated: "Further to our recent discussions, I now confirm that Coles Myer will agree to enter into a new lease in the form agreed with you at a Base Rent equivalent to $120 per square metre per annum with a Percentage rental rate applicable of 2%, in the event that Coles Myer acquire the Franklins business at your Mentone store." (emphasis added) 90 Mr Carter identified the signature on the letter being that of Ms Kylie Morton, his Personal Assistant, signed on his behalf. 91 Mr Carter accepted, under cross-examination, that it would be a fair summary of Coles' position that it was very keen to get the Mentone store.

Mr Peter Acton 92 Mr Acton is a management consultant and investment adviser retained by the applicant as an expert witness. He gave evidence as to the value of the income stream that would have accrued to the applicant had it succeeded in acquiring the Mentone store in 2001. 93 Mr Acton assessed the value of the income stream foregone as being between $9.2 million and $9.9 million.

Mr Arthur Hayes 94 Mr Hayes gave evidence on behalf of the applicant. He has 46 years experience in the supermarket industry, including as a supermarket owner, as Chief Executive Officer of independent chains of supermarkets, and as the head of a large distributor of groceries. 95 Mr Hayes' evidence went to the success of Mr Blake's supermarket operations. He considered Mr Blake to be a remarkable retailer, and one of the top independent operators in the industry. He noted that Mr Blake has succeeded in both the top end of the supermarket industry, with his Leo's Fine Food & Wine operations, and in the budget end of the market, with his Maxi Foods supermarket. Mr Hayes said that Mr Blake had an excellent commercial reputation in the supermarket industry, both in 2001 and today. These aspects of Mr Hayes' evidence were not challenged.

Mr Alan Foster 96 Mr Foster is the applicant's solicitor and has conduct of the current proceeding. He took over the conduct of the proceeding on behalf of the applicant on 30 November 2001, following Franklins giving notice of termination of the Mentone BSA and termination of the litigation agreement. At that time, as was previously mentioned, Franklins claimed that Mason Sier Turnbull, Mr Fischbacher's firm, was precluded from acting on behalf of Mr Blake in the litigation against the Lessor. 97 Mr Foster gave evidence that he first became aware that Coles may have entered into an agreement or an arrangement in relation to the Mentone store on 14 December 2001. He referred to an affidavit he swore in the Supreme Court proceedings on that date, in which he stated: "At 1.45pm today I was informed by Mr Leo Blake … and verily believe that yesterday he was informed by Shopfitters and Electricians that Coles Myer Limited (or related company) has put out tenders to various contractors to the supermarket industry relating to the refurbishment of the Franklins Mentone store located at 81-93 Mentone Parade, Mentone Victoria. The works are to be carried out between 16 and 21 January 2002. He informed me and I verily believe that in his discussions with the respective contractors they mentioned that the works were being undertaken under a code name "Project Lincoln."" 98 The remainder of Mr Foster's evidence in-chief was directed to some of the details surrounding the conduct of the Supreme Court proceedings during December 2001. He also gave evidence as to the costs incurred in respect of that litigation from 30 November 2001 to 20 December 2001. 99 Mr Foster was cross-examined as to his evidence in relation to costs. However, it is unnecessary to say anything further about that matter.

Mr Kerry Jones 100 At the time of the Franklins managed sell-down, Mr Kerry Jones was a Commissioner at the ACCC. He was the Commissioner responsible for mergers, and accordingly, had oversight of the Franklins managed sell-down. Mr Jones was subpoenaed by the applicant to give evidence. 101 The importance of Mr Jones' evidence is as follows. Assuming that the ACCC had been aware of the Franklins/Coles deal, or the Lessor/Coles deal, what steps, if any, would it have taken? Specifically, would it have refused consent to the sale of the Mentone store to Coles? Accordingly, Mr Jones' evidence goes to the issue of causation of loss or damage. 102 In Mr Jones' evidence in-chief, he outlined certain aspects of the undertakings. He stated that, pursuant to the undertakings, Franklins Limited was required to obtain the prior written consent of the ACCC before selling a store to Woolworths (other than 67 stores that Woolworths had already been permitted to purchase) or to Coles. Furthermore, Franklins Limited was also required to report to the ACCC any development that materially affected the sale of stores in accordance with the undertakings, or might prevent completion of the sale of Franklins stores in accordance with the undertakings. It was required to do so within two business days of Franklins becoming aware of the development. 103 Mr Jones' evidence was that the ACCC was very reluctant to give its consent to the sale to Coles or Woolworths of a store assigned for sale pursuant to the JIDA process, unless it became apparent the store could not be sold to an independent. 104 Mr Jones stated that if there were discussions between Coles and Franklins about the sale to Coles of the Mentone store, in early or mid-August, either as part of a parcel of stores, or on its own, the ACCC was unaware of them. He stated that if such discussions had taken place, they should have been reported to the ACCC as "material developments", pursuant to the undertakings. However, under cross-examination, Mr Jones agreed that the undertakings did not extend to preventing Franklins from discussing stores with Coles, and that the ACCC was aware this was happening. He also acknowledged that the ACCC always expected that some of the JIDA stores which could not be sold to an independent would ultimately be sold to Coles. 105 Mr Jones considered that if Coles had informed Franklins that it had "done a deal" with the Lessor on the basis of vacant possession, Franklins would be under an obligation to report this to the ACCC. 106 Mr Jones readily acknowledged under cross-examination that there was no obligation on the part of Coles to reveal to the ACCC that it had concluded agreements with landlords, save for any local competition issues that may arise from Coles taking over a particular store. Nor was there any such obligation imposed upon landlords. 107 Mr Jones acknowledged that it was "quite reasonable to think" that the ACCC assumed by November of 2001 that a position had been reached between many landlords and Coles that if vacant possession was available, Coles would take up the lease on the store. Mr Jones said that this seemed to be a logical reason why some landlords were adopting a "hard-nosed attitude" in terms of refusing assignment of leases to independents. He said he could not think of another good reason why a landlord would do this unless it had some sort of arrangement with Coles. 108 Mr Jones' analysis accorded with a file note, tendered before me, prepared by Mr Russell Phillips, Director of Mergers and Asset Sales at the ACCC, of a discussion between himself, Mr Jones and representatives of Metcash on 28 November 2001. Mr Phillips worked under Mr Jones. The discussion was generally described as "about the JIDA process and how the process is to conclude". That file note, dated 3 December 2001, recorded that: "[i]t is clear to Metcash that Coles has approached landlords and made it known that it is interested in these stores. Landlords would not be so hard nosed if they didn't have the Coles option up their sleeve." 109 The file note also recorded, in response to Franklins' 23 November 2001 submission requesting permission to offer nine stores, including Mentone, to Coles that: "Mr Jones indicated that his first preference is to get the nine stores to independents. But if that looks unlikely, he does not see merit in forcing the closure of the stores along with the disruption to trading/competition and employee entitlements. Should this happen, Coles will finish with the stores anyway and so there are costs for no benefits." 110 Following this meeting and a meeting between Franklins and the ACCC, Mr Phillips and Mr Jones had a discussion regarding Franklins' 23 November 2001 submission. The file note of this discussion, also prepared by Mr Phillips and dated 3 December 2001, recorded one of the main points arising as follows: "If Franklins was put in liquidation, the losers would be Franklins/DFI [Dairy Farm] because it would get nothing for the stores and possibly sued for breach of lease; employees would lose jobs and entitlements; local competition would be disrupted; and small, speciality store owners in the shopping centres would suffer during the closure of the stores. Metcash would also be a loser as it would not get the sales volume from the nine stores. The "winner" would be Coles as it would get the stores for no cost." 111 The same file note recorded that: "It was accepted that refusing consent appears to offer a worse outcome than granting consent IF Franklins/DFI is serious about walking away at the end of January 2002. Metcash will lose either way but competition, employees and specialty store owners are better off if consents are granted (note: the one exception was Belmont, where a sale to Coles is undesirable on local competition grounds)." 112 Mr Jones agreed that these file notes reflected the ACCC's views at the relevant time. It is interesting to note that even though the note records that the ACCC had local competition concerns in relation to a store at Belmont, a suburb of Newcastle, Mr Jones gave evidence that the ACCC ultimately gave its consent for this store to be sold to Coles as well, rather than forcing Franklins to close it. 113 Another file note prepared by Mr Phillips of a discussion held with Mr Jones on 19 December 2001 states that Mr Jones "also decided that Mentone could be offered to Coles if the Court decision on Thursday goes the same way as the Hampton Park decision". In the Hampton Park case, a landlord was refusing to assign the lease to another independent operator. In that case, Mr Phillips had reported to Mr Jones that the judge had "agreed to listen to case on its merits in January" and that "the Court appeared to have some sympathy for the landlord's position". 114 Mr Jones was also taken to a letter written by Mr Mark Pearson of the ACCC to Mr Blake's solicitors in response to their submission, made on 2 January 2001, that the ACCC intervene in the sale of the Mentone store to Coles. The letter was dated 8 January 2002. In general terms, Mr Jones indicated that the letter accurately reflected the ACCC's position at the time. In that letter, Mr Pearson stated: "the Commission has been aware since early June 2001 that Coles was approaching landlords at locations where it had an interest in operating a store. In fact, it was Coles that informed the Commission of its intended actions. … The Commission formed the view that the approaches made by Coles to landlords were not a contravention of the Trade Practices Act 1974". 115 The same letter also stated that the undertakings "do not prevent Franklins from talking to Coles".

Mr Ian Cornell 116 The evidence of Mr Cornell, Franklins' principal witness, goes to whether there was any "deal" between Coles and Franklins in relation to the Mentone store prior to December 2001. It also provides helpful background to the circumstances surrounding the managed sell-down. 117 Mr Cornell was the Managing Director of Franklins Limited between January 1999 and Easter 2002, and was responsible for conducting the managed sell-down. By 2002, Mr Cornell had had 26 years experience in supermarket retailing. 118 Mr Cornell explained that Franklins had lost money for three out of four years before the year ending December 2000. Following these losses, it was decided that the Franklins' supermarket business should be sold off. In about July 2000, Dairy Farm unsuccessfully attempted to find an overseas buyer for the business. In late 2000, Mr Cornell had discussions with Aldi, a German owned retailer, about the possibility of purchasing some of Franklins' stores. Ultimately, these discussions were also unsuccessful. 119 In about November 2000, Mr Cornell approached the ACCC to try to establish a basis upon which Franklins could be sold domestically. Mr Cornell said that he knew the ACCC would have to approve any sale, by reason of the competition concerns that would arise out of such a transaction. 120 In December 2000, Mr Cornell had discussions with Coles about buying Franklins stores. Coles made what Mr Cornell considered to be a "ridiculously low offer" for Franklins' Queensland and New South Wales stores. Mr Cornell said that he thought then that Coles were not seriously interested in buying Franklins' stores, or were "totally unrealistic" about any possible purchase of stores. At the same time, discussions were progressing with Woolworths for the purchase of Franklins stores. 121 On 30 March 2001, Dairy Farm and Franklins made a confidential written submission to the ACCC, proposing the sale of Franklins' stores to the following parties: (a) 170 stores to independents; (b) 79 stores to Woolworths; and (c) 18 stores to Coles or independents. Twenty stores were allocated for closure under the proposal. 122 Following negotiations with the ACCC, on 18 April 2001, Franklins announced the managed sell-down. It stated that approximately 120 stores would be sold to independents under the JIDA process and approximately 80 stores would be sold to Woolworths. 123 On 15 May 2001, Mr Cornell participated in a video conference with, amongst others, Mr Jones and Mr Phillips of the ACCC. Mr Cornell gave evidence that Coles' contact with landlords and its likely interference with the process of stores going to independents were topics of discussion. He said that he, or one of his advisers, told the ACCC that Dairy Farm would prefer not to allocate stores to Coles, but rather would prefer to offer them to independents through the JIDA process, with Franklins seeking the ACCC's consent to offer any unsold stores to Coles. He told the ACCC that Dairy Farm expected Coles would get approximately 30 stores at the end of the process, most of these being large stores with "landlord problems". 124 After these further discussions with the ACCC, the ACCC announced on 22 May 2001, as previously mentioned, that it had come to an in principle agreement with Dairy Farm for the sale of about 200 stores to independents, and a maximum of 67 stores to Woolworths. 125 Ultimately, by the conclusion of the managed sell-down, the 287 Franklins stores had been dealt with in the following way: (a) 144 stores sold to independent operators; (b) 72 stores sold to Woolworths; (c) 33 stores (and one site) sold to Coles; and (d) 38 stores closed. 126 Mr Cornell gave evidence as to the ACCC undertakings and the JIDA process. It is unnecessary to summarise the detail of that evidence. 127 Turning to the Mentone store itself, Mr Cornell explained that Mentone was included in the list of stores which Woolworths had wanted to buy in early 2001. However, when the ACCC approved the sale of only 67, rather than 79, stores to Woolworths, the Mentone store fell out of the Woolworths acquisition, and was included in the JIDA process. 128 Following the close of bids for JIDA stores, Mr Cornell met with Mr Masters and Mr Tim Hammon, Coles' legal counsel, on 19 June 2001. He says that they had general discussions about Coles' interest in stores that could not be sold through the JIDA process, or where Coles was likely to end up as the only possible purchaser. Mr Cornell said that while he did not recall the detail of the discussions, the Mentone store was not discussed because it had been the subject of a successful bid under the JIDA process, and therefore was "off the table" as far as he was concerned. The "successful bid under the JIDA process" was a reference to the fact that prior to Franklins agreeing to sell the store to the applicant (in settlement of the Webb proceedings), another company, Ritchies, had been selected as the purchaser of the store. 129 Mr Cornell also says that during the meeting he told Mr Masters and Mr Hammon in general terms that Coles should not interfere with the JIDA process by contacting landlords of stores where successful bids had been made. 130 Mr Cornell gave evidence relating to his meetings with the ACCC in July 2001, following the closure of bids for JIDA stores. Franklins had a list of about 20 stores that it wished to offer to Coles. According to Mr Cornell, Mr Phillips at the ACCC said he understood Franklins' position and the likelihood that these stores could go to no-one other than Coles. 131 On 3 August 2001, Mr Cornell sent a note to Mr Masters listing 22 stores he wished to discuss with him. Mr Cornell said that the Mentone store was not on that list, and that when he later spoke with Mr Masters about these stores, Mentone was not discussed. 132 Mr Cornell said that he did remember at least one occasion, which must have been after August 2001 but well before November 2001, when Mr Masters mentioned the possibility of Coles acquiring the Mentone store. Mr Cornell said that he told Mr Masters that the Mentone store was not available to Coles, and that it had been sold to Mr Blake. 133 On 8 October 2001, it was announced that 18 stores and two sites (without stores yet operating) would be sold by Franklins to Coles. On 18 October 2001, Mr Cornell attended a meeting with Mr Phillips to discuss further stores which Franklins wished to offer to Coles, as well as reporting on other stores, including Mentone. A file note of the meeting records that the Mentone store was discussed as being the subject of litigation. 134 Mr Cornell gave evidence as to the successful JIDA bid by Ritchies and the subsequent litigation and settlement agreement with Mr Blake. Mr Cornell said that he settled the Webb proceedings because he was under instructions from Dairy Farm to complete the managed sell-down expeditiously, and the matter was likely to be protracted. In his opinion, "Franklins did not have time for lengthy litigation over who was to be the purchaser of an individual store". 135 After the signing of the Mentone BSA, Mr Cornell says that he instructed Ms Weir and Franklins' property officers to give priority to obtaining the Lessor's consent to the assignment of the Mentone store lease to the applicant. He referred to an email written by Ms Weir on 5 August 2001 to Franklins' property officers, which stated: "as soon as the contract is signed we need to urgently move forward with landlord consent issues. I will let you know so that Alan Rattray-Wood can contact Mr Blake and organize to meet the landlord. At this stage, I am unaware of any reason why landlord consent will not be given. However, should this arise on either or both stores, we have agreed with Ritchies that they can purchase the stores. Nevertheless, we will be doing all things necessary to secure landlord consent for the sale to Blake." 136 Mr Cornell gave evidence that Franklins communicated with the Lessor and its solicitors, but by mid-October 2001, the Lessor had consistently refused to consent to any assignment of the Mentone lease to the applicant. Mr Cornell stated that after obtaining advice from Ms Weir, he decided that Franklins would take legal action against the Lessor to compel it to assign the Mentone lease to the applicant, provided that Franklins were indemnified for costs of the proceeding by Mr Blake and his corporate entities, and provided that the proceedings were conducted expeditiously and finalised before the end of 2001. 137 Mr Cornell said that on 7 November 2001, he was instructed by Dairy Farm that Franklins must cease operating all stores by 31 January 2002. After this date, Dairy Farm would not provide any financial support. Mr Cornell said he was told that this instruction was final and irrevocable. To contravene the direction would expose him to personal liability. He said that the implication of the instruction was that sales of stores had to be finalised in December 2001, with transfers finalised in January 2002. 138 When the Supreme Court refused the application for expedition in the proceedings Franklins and the applicant had taken against the Lessor, Mr Cornell says that he had only two options in relation to Mentone and the other remaining stores. The first option was to try to sell them to Coles (or perhaps Woolworths) with ACCC consent. The second was to close the stores and surrender the leases. Mr Cornell said the first option was best. However, it could take some weeks to complete. The second option meant that Franklins would obtain no value for the store, and risked attracting claims for damages. 139 On that basis, Mr Cornell said that he instructed Franklins' external solicitors to make confidential submissions to the ACCC to seek its consent in offering the nine remaining stores to Coles. That submission was made on 23 November 2001. On the same day, Mr Cornell said that he spoke with Mr Masters about the remaining Franklins stores. Mr Cornell said that he believed that during this conversation, he and Mr Masters discussed "global indicative" or "ball-park" prices for the remaining stores that each of the companies would expect. He did not recall discussing an indicative price for the Mentone store. 140 Mr Cornell said that he did not "offer" these stores to Coles for sale at that time. He said he was still keen to get as many as possible to independents. Mr Cornell gave evidence that he instructed Ms Weir to make one last approach to the Lessor and offer to "buy" an assignment of the lease over the Mentone store. That offer was refused on 27 November 2001. 141 On the same day, Mr Cornell attended a meeting in Canberra with Mr Jones and Mr Phillips from the ACCC. The ACCC's consent in relation to the nine remaining stores was discussed. On 28 November 2001, notice to terminate the Mentone BSA was served and the litigation agreement was terminated. On 5 December 2001, the ACCC advised by letter that it did not consent to the sale of the Mentone store to Coles, due to it still being subject to legal proceedings. It did, however, consent to the sale of some of the other nine stores to Coles. 142 Mr Cornell gave evidence that by early December 2001, Franklins no longer had a buying, marketing or advertising department, and had either disposed of or sold all of its warehouses. He gave details about the winding down of other parts of the company during December 2001. In early December 2001, Mr Cornell expected that Franklins would have no substantial business assets by the end of that month, other than the unsold stores. 143 As previously mentioned, on 10 December 2001, an interim injunction was granted in the Supreme Court proceedings restraining Franklins from selling the Mentone store. That injunction was dissolved on 20 December 2001. When the injunction was dissolved, the ACCC consented the following day to the sale of the remaining stores to Coles, including Mentone. 144 Mr Cornell said that it was after this consent was received that he spoke with Mr Masters about the sale price of the remaining stores. He said that Coles originally offered less than the $2.3 million that Blake had agreed to pay. However, on 24 December 2001, Franklins and Coles signed agreements for the sale of the remaining stores. The sale price for Mentone was agreed to be $2.3 million, plus stock. 145 Mr Cornell stated that there was no "secret deal or arrangement" between Franklins and Coles in relation to the Mentone store. He stated that when the deal was done with Mr Blake, he believed it was in Franklins' best interests to sell the store to the applicant. According to Mr Cornell, it was only when Franklins was running out of time that he considered a sale of the Mentone store to Coles. 146 Mr Cornell emphasised the enormity of the managed sell-down, a project completed over an eight to nine month period. He stated that it involved dealing with a wide variety of stakeholders, and that continual problems arose. Mr Cornell said that he devoted a disproportionately large portion of time to attempting to finalise the sale of the Mentone store to the applicant, given that Mentone was one of 287 stores he had to deal with. Mr Cornell emphasised that Franklins did want to sell to the applicant, and that its "money was as good as Coles'". However, Franklins just ran out of time to litigate against the Lessor. 147 Mr Cornell was subject to sustained, detailed and probing cross-examination over the course of three days. Mr Cornell acknowledged that he and Mr Masters had direct access to each other via telephone, including mobile telephone. He was questioned about the meeting with, amongst others, Mr Masters on 19 June 2001. He reiterated that the purpose of the meeting was to discuss, in general terms, whether Coles would be interested in purchasing stores "at the appropriate time". He stated that he did not "offer" any stores to Coles for purchase on that day. 148 When it was put to Mr Cornell that he had a discussion with Mr Masters on 17 August 2001, and that this discussion embraced the Mentone store, Mr Cornell said he had no reason to doubt this. However, he denied that this was with a view to reaching some kind of agreement with Mr Masters. 149 Mr Cornell acknowledged that in late November or early December 2001 he held discussions with Mr Masters about the sorts of prices Franklins would be looking for in relation to a group of stores that included Mentone. When taken to the Coles note of 23 November 2001, which purported to record an agreement to sell a third tranche of stores to Coles, Mr Cornell said he did not specifically recall the $18.2 million figure. However, he acknowledged that he did have a discussion with Coles about the purchase of a group of stores for what "may have been around" that figure. Nonetheless, Mr Cornell did not recall telling Mr Masters that $2.3 million was what Franklins would be looking for in relation to Mentone. 150 Under cross-examination, Mr Cornell remained firm in his evidence that he had only negotiated the final price of the Mentone store with Coles following the receipt of ACCC approval and, prior to that, he had merely discussed the possibility that if it became available, Coles and Franklins could enter into negotiations about it. When pressed, Mr Cornell said that he did have "discussions" with Coles relating to "some of the stores and their particulars" from late November onwards. However, he reiterated that negotiations for the final price of the stores sold on 24 December 2001 (including Mentone) took place in the week prior to Christmas. Mr Cornell stated that it would not be wise for him to negotiate the sale price of a store with Coles prior to receiving ACCC approval because, if that consent was not forthcoming, it would have undermined his credibility with Coles. 151 Mr Cornell denied that there was an in principle agreement between Franklins and Coles that, if a sale to an independent fell over for some reason, Coles would buy the store for the same price as the independent. He also denied the existence of any arrangement between Franklins and Coles whereby Coles could have any JIDA store it liked when Franklins was in a position to provide it. 152 In general terms, Mr Cornell was unwavering from his original evidence that although the Mentone store had come up in discussions between himself and Mr Masters during 2001, a deal had not been done on that store until ACCC approval had been obtained on 21 December 2001.

Ms Mary Weir 153 Between about 3 October 2000 and 21 December 2001, Ms Weir was General Counsel of Franklins Limited. Ms Weir reported to Mr Cornell. Together with Mr Cornell, Ms Weir was responsible for Franklins' dealings with the ACCC. She was also responsible for instructing Franklins' external legal advisers. 154 Ms Weir, in her witness statement, explained that the managed sell-down was a very complex, time consuming and demanding process, and that she did not have a clear recollection of the many specific conversations she had with solicitors for both Franklins and for other parties involved in the process. 155 Ms Weir stated that she had always understood that the managed sell-down had to be completed by Christmas 2001. She said that it was known to her in 2001 that Coles were approaching landlords and indicating that Coles was interested in taking a lease of their premises, in the event that the landlord was free to do. Ms Weir said she was aware that this added to Franklins' difficulty in getting landlords to assign leases to independent operators who had emerged as the preferred bidder from the JIDA process. 156 Ms Weir described how, from July 2001 onwards, when it became apparent to Franklins that there would be difficulties selling certain stores to independent operators, Franklins would approach the ACCC to obtain its consent to offer a package of stores to Coles. 157 Ms Weir stated that in July 2001, Franklins offered the first "tranche" of stores to Coles. This "tranche" of stores was offered to Coles either because no viable bids had been received from independents under the JIDA process, or because of opposition from landlords. The ACCC had given its consent for the first tranche of stores to be offered to Coles. 158 Ms Weir said that during negotiations for the sale of the first tranche of stores to Coles, Franklins had sought to obtain a promise from Coles that it not disrupt further JIDA sales. Coles was not prepared to give such a promise. 159 Ms Weir attested to the difficulties Franklins specifically faced in obtaining an assignment from the Mentone Lessor, namely that the Lessor had refused three written requests to consent to an assignment to the applicant. She explained how the Supreme Court proceedings were commenced seeking a declaration that the Lessor's refusal to consent to an assignment was unreasonable, and in breach of the Mentone lease. 160 Ms Weir stated that by November 2001 the litigation was becoming "more difficult", with the Lessor making allegations of Franklins breaching the Mentone lease. This concerned Ms Weir because if the Lessor terminated the lease, Franklins may receive nothing for the Mentone store. By this stage, Ms Weir said that "time was running out for Franklins". In this context, on 16 November 2001, an application for expedition of the proceedings against the Lessor was made. 161 After the hearing of the unsuccessful expedition application, Ms Weir said that she recalled having a lengthy telephone conference with Mr Fischbacher. She did not, however, recall the detail of what was said during the conference, although she did recall being gravely concerned about the progress of the litigation. She said that while Franklins was required to cease operations by 31 January 2002, the reality was that no practical support could be given to the operation of stores beyond Christmas 2001. 162 Ms Weir's evidence was that after the application for expedition failed, she realised that Franklins had run out of time to effect the sale of the Mentone store to the applicant. She then instructed Franklins' solicitors to seek the ACCC's consent to offer the Mentone store, and eight other stores, to Coles. After Mr Cornell and Ms Weir met with Mr Jones and Mr Phillips at the ACCC on 27 November 2001, the ACCC gave its consent for the sale on 21 December 2001. Ms Weir left Franklins' employment on 21 December 2001. 163 Ms Weir's evidence was that Franklins tried very hard to sell the Mentone store to the applicant, but ultimately ran out of time. She said she was not aware of any deal or arrangement between Franklins and Coles in relation to the purchase of the Mentone store prior to the termination of the Mentone BSA on 28 November 2001. 164 An important document to which Ms Weir was taken was a facsimile sent from Ms Joanne Turner to Mr Alan Rattray-Wood. Ms Turner worked within Franklins property group and Mr Rattray-Wood was a consultant engaged to assist Franklins with the property aspects of the managed sell-down. The facsimile is a copy of an email sent from Mr Rattray-Wood to Ms Turner, to which Ms Turner appears to have responded by hand, at the bottom of the email, and faxed back to Mr Rattray-Wood ("the Turner document"). 165 The Turner document is important and, as such, I shall set it out in full. The email from Mr Rattray-Wood states: "From: Alan Rattray-Wood Sent: Monday, 15 October 2001 9.59 To: Joanne Turner Cc: Roger Stansfield; Jim Rush; Natalie Wilson Subject: Mentone -Blake Jo, Could you please let me know when you have managed to get Coles to call Susan Herbert (Landlord Solicitor 03 92299999) about advising her client that Coles have no interest in this property. As advised on Friday, this looks like going full on legal if we don't quash their perceived options. thanks, Alan" 166 There is then a handwritten note on the print out of the email saying "John Kop please call". As previously mentioned, Mr Kop was the project manager for Project Lincoln within Coles. 167 Under this is another handwritten note which states as follows: "Alan, Mary has spoken to Coles. Coles have done a deal in principle here, based on vacant possession. Mary has told Coles that Franklins is going to litigate & hopefully scared them off with the threat of tortious interference, let alone jeopardising our deal with Coles on the whole. Jo." (emphasis added) 168 When asked about the Turner document under cross-examination, Ms Weir said she had never seen the document (either with or without the handwriting) and did not know in whose handwriting the "John Kop please call" comment was made. Ms Weir gave evidence that she did not recall any conversation of the type the note purports to record, although she also said she was not suggesting that there was no basis for the note. Ms Weir said that the reference to "jeopardising the deal on the whole" did not make any sense to her. She said she was not aware of any "deal" at that time that could be jeopardised. She said that the sale of stores in the first tranche had already been signed, and ten days earlier Franklins had requested the ACCC's consent for the sale of a second tranche of stores. At that stage, there was no other "deal" with Coles that she was aware of. 169 In re-examination, Ms Weir said that the term "tortious interference" was often used by Franklins' property staff in a not very technical sense, and was used sometimes just to mean that the landlords were not necessarily cooperating or that their actions were perceived as "wrong". She said it was used as a "bit of a buzz word". 170 Ms Turner was not called to give evidence.

Mr Roger Stansfield 171 Mr Stansfield, a partner at HWL, acted for Franklins during 2001 in relation to the Mentone BSA, the attempts to secure the Lessor's consent for the assignment of the Mentone lease to the applicant, and arrangements for the conduct of the Supreme Court proceedings. 172 Mr Stansfield's evidence goes to what the applicant or, more specifically, what Mr Fischbacher, the applicant's legal representative, knew or suspected in relation to Coles' interest in the Mentone store. It also goes to what Mr Fischbacher was told in relation to Franklins' ability to pursue the Supreme Court proceedings against the Lessor beyond a certain date. These matters are relevant to the causation aspects of the applicant's claims, namely that the applicant knew (or should have known) that Coles may have had an arrangement with the Lessor, and that the applicant knew the Supreme Court proceedings would have to be resolved before the end of 2001. 173 Mr Stansfield also gave evidence as to the dealings with the Lessor, and its refusals to consent to assignment of the lease. It is unnecessary to summarise that evidence in any detail. 174 Mr Stansfield said that he had several conversations with Mr Fischbacher during August and October 2001 regarding the obtaining of consent from the Lessor to the assignment of the lease. Mr Stansfield gave evidence that during these conversations, Mr Fischbacher told him that the reason for the Lessor's refusal of consent was because the Lessor "had a deal with Coles" or was "holding out for a deal with Coles". Mr Stansfield did not have any file notes of these conversations. 175 Mr Stansfield specifically referred to a meeting between himself, Mr Rattray-Wood, Mr Blake and Mr Fischbacher, held at Mr Blake's "Leo's Fine Food and Wine" store on 11 September 2001. Mr Stansfield made a file note of the meeting, which records: "We discussed allegations that Arnold Bloch Leber [sic] and various landlords including Morris [sic] Alter had in fact been advising the landlord at Mentone as to the means by which she could achieve a "major" (the term major was referring to Coles Myer/Woolworths." 176 Mr Stansfield stated that during preparation for the Supreme Court proceedings, he told Mr Fischbacher that Franklins would require an expedited trial because it would "not be around that long". He referred to file notes of discussions with Mr Fischbacher where the words "expedition" and "[Franklins] would need to reserve the right to end litigation" were recorded. Those file notes were undated, but Mr Stansfield believed they were made some time in September or early October 2001. 177 In substance, Mr Stansfield's evidence was that he told Mr Fischbacher, at the time of the litigation agreement, and after proceedings had been commenced, that a hearing needed to be obtained before the end of 2001. 178 Following the directions hearing held on 16 November 2001, which Mr Stansfield attended, he informed Ms Weir of the virtual impossibility of a hearing date being available in December 2001, and the unlikelihood of a hearing taking place in early 2002. He organised a telephone conference, held on 19 November 2001, with Mr Fischbacher, Ms Weir, and with Ms Arslan attending. At that meeting, Mr Stansfield said that Ms Weir told Mr Fischbacher that a hearing going into the New Year would be impossible and emphasised that "this can't go on indefinitely". He said that Mr Fischbacher asked Ms Weir to "battle on". 179 Mr Stansfield stated that during this period he was not aware of the Lessor/Coles deal, and the information in Ms Turner's email was not communicated to him. Nor was Mr Stansfield aware of any agreement or negotiations between Coles and Franklins relating to the Mentone store before 28 November 2001, although he was aware that a submission was made by Franklins to the ACCC in late November seeking consent to sell the Mentone store to Coles.

Ms April Arslan 180 Ms Arslan is a senior associate with Home Wilkinson and Lowry. She commenced work on this matter when proceedings were instituted in the Supreme Court. Her evidence essentially goes to the same matters as Mr Stansfield's evidence. 181 Ms Arslan gave evidence that she had a conversation with Mr Fischbacher on 15 November 2001 in relation to some amendments to Mr Blake's affidavit in the Supreme Court proceedings. She stated that she believed that this conversation is the conversation Mr Fischbacher recorded in a file note as occurring on 16 November 2001. She stated that during the conversation Mr Fischbacher said that Coles obviously wanted the Mentone store, and that Woolworths could not be after the store because they had given undertakings. Ms Arslan referred to a contemporaneous handwritten file note of the discussion, which recorded: "Says obviously Coles/Myer want this store - If they can get L/L to not provide consent they will fight it & try to win & get in It can't be Woolworths bec they had given undertakings". 182 Mr Fischbacher's file note of this conversation only records matters relating to the amendment of Mr Blake's affidavit. 183 As previously indicated, Ms Arslan attended the telephone conference held on 19 November 2001 between Mr Fischbacher, Mr Stansfield and Ms Weir. She also made a contemporaneous file note of this conversation. Ms Arslan's evidence was that during this conference, Ms Weir told Mr Fischbacher that all stores had to be "sorted" and closed by the end of January 2002, and that following the directions hearing held on 16 November 2001, the defendants had avoided a trial date in 2001. 184 Ms Arslan referred to her file note, which stated: "Closure Stores … Including Mentone - End of January must be sorted and closed … Post Christmas no staff left inc my self [Mary Weir] … They can't go on indefinitely … Where we have got to in this lit? - discovery takes a lot no staff - ACCC undertakings apply today Public - website Confid - not " - Coles - no undertakings Woolies - have undertakings - we've had no reason to ask ACCC views on Mentone Friday - Defts have avoided trial date this year FMS will not be trading in after January Unless we get this thing on in Jan they will defeat us be & Defts aware of time limits … · Expedition - Affidavit - Herbert - if coles is interested can we dissuade them ? Mary doubts it" 185 Ms Arslan expressly challenged some of Mr Fischbacher's evidence of the 19 November 2001 meeting. She said that she did not recall Ms Weir suggesting that Coles were interested in Mentone, but rather her note indicates that it was Mr Fischbacher who made this comment.

Conclusions 186 Although the parties addressed the Court at some length on both factual and legal issues, the case seems to me to be capable of being resolved essentially by reference to its own particular facts. I will refer to the relevant legal principles only where it is necessary to do so. 187 It is important to recall that, in general, the applicant bears the burden of proof on all of the factual issues discussed below. The standard of proof is the balance of probabilities. Where I refer to being "satisfied" or "persuaded" of a particular matter, I use those terms in that sense.

the franklins/coles deal 188 In its closing submissions, the applicant submitted that I should infer, from the totality of the evidence, that the Franklins/Coles deal was struck some time during August 2001. That deal was said to consist of an "in principle agreement" whereby Franklins agreed to sell to Coles the stores that Coles wanted to acquire at prices to be determined by a formula, or specifically agreed, unless it proved beyond Franklins' power to sell the stores to Coles. It also submitted that I should infer that the final price for the Mentone store was struck in late August/early September 2001, and that this agreement committed Coles to taking the store, notwithstanding any issues that arose out of due diligence. 189 Mr Cornell categorically and emphatically denied the existence of any such deal. He maintained that position in the face of sustained and vigorous cross-examination. In the end, I found him to be a thoroughly credible, truthful and reliable witness. I have no hesitation in accepting his evidence. 190 By way of contrast, Mr Masters was unable to recall anything of real substance in relation to the Mentone store. He was vague on many issues, and evasive on some. His evidence did not assist the applicant. I note, in any event, that he appeared not to appreciate the significance of the constraints under which Franklins was placed by reason of the undertakings that it had given to the ACCC. Perhaps surprisingly, he seemed to have no detailed grasp of the strategy that Coles had embarked upon in 2001, or its implementation. His role essentially appeared to be to negotiate the price of any stores that were to be acquired, on a somewhat ad hoc basis. 191 Accordingly, the applicant was forced to rely largely upon inference to support this aspect of its case. It was submitted that I should infer the existence of the Franklins/Coles deal, as alleged, for the following reasons: · it was in both Coles' and Franklins' commercial interests to strike such a deal; · on 18 October 2001, Coles agreed to a further deal with the Lessor. As already indicated, that deal involved Coles confirming that it would enter into a new lease with the Lessor on the same terms and conditions as the vacant possession deal already entered into, if it were instead to acquire the Mentone store directly from Franklins. It was submitted that Coles would not have entered into such a deal unless it knew, at that stage, just how much it would have to pay Franklins to acquire the Mentone store; · a deal must have already been done between Coles and Franklins as there was no other explanation for Coles not having sought to take advantage of Franklins' obviously deteriorating bargaining position in late 2001; · although a number of conversations took place between Mr Masters and Mr Cornell at around this time, and indeed throughout 2001, only one note of any such conversation was produced. This suggested that they were engaged in clandestine activities, and subterfuge; · the Turner document referred to Franklins' "deal with Coles on the whole". There is no explanation, apart from the existence of the Franklins/Coles deal, as to what could have been meant by this expression; · an internal Coles document, dated 16 August 2001, discussed the Lessor's request that the Lessor/Coles deal be confirmed, and referred to the need to consider the implications for "the wider negotiations" of confirming that deal. The reference to "the wider negotiations" should be understood as a reference to the Franklins/Coles deal; · it was not credible that the final purchase price for the Mentone store was only agreed between 21 December 2001 and 24 December 2005, as Mr Cornell stated. There was no documentary support for this claim. Moreover, these dates were a Friday and Monday respectively. Mr Masters and Mr Cornell both gave evidence that they did not negotiate on weekends; and · if Mr Cornell did not give truthful evidence in relation to the date of the agreement of the final purchase price, his evidence in relation to the existence of the Franklins/Coles deal should also be rejected. 192 However, it must be borne in mind that there is also a body of evidence that supports Mr Cornell's denial of the existence of the Franklins/Coles deal. To take just two examples, if there was a deal, in principle, with Coles of the type alleged, why did Franklins offer, in late November 2001, to pay compensation to the Lessor if it agreed to an assignment of the Mentone lease to the applicant? Franklins was certainly not contractually obliged to take such a step. And why was there reference in an internal Coles document, dated 3 September 2001, seeking approval for the vacant possession deal with the Lessor to the maximum amount of goodwill that "could be paid … to Franklins should the Lessors' action generate an opportunity for Franklins to negotiate a business acquisition direct with CML" (emphasis added)? The terms of this document are inconsistent with an already existing deal whereby Coles would acquire stores from Franklins on a predetermined formula in relation to price, unless it proved beyond Franklins' ability to get the store to Coles. 193 There is no doubt that Mr Masters and Mr Cornell had a number of discussions throughout the second half of 2001. That of itself is of no great significance. The undertakings did not prevent Franklins from having discussions with Coles about Franklins stores, and the ACCC was well aware that such discussions were taking place. Moreover, having "discussions" with Coles regarding the possibility of selling some Franklins stores to Coles in the event that they could not be sold through the JIDA process, was not, of itself, in breach of the obligations that Franklins owed to the applicant under the Mentone BSA and the litigation agreement. 194 I am not satisfied, on the evidence before me, taken as a whole, of the existence of the Franklins/Coles deal, as alleged. I accept the evidence of Mr Cornell that no such deal ever existed. I am not prepared to infer, from the documentary and other evidence led by the applicant, that Mr Cornell was engaged in a clandestine arrangement with Mr Masters, and that he lied about that matter before this Court. 195 Many of the documents upon which the applicant relied in support of its circumstantial case were prepared by people who would not have been directly involved in any negotiations that took place between Franklins and Coles, and may not have known what was happening at the level that counted. For example, the Turner document, though capable of having the sinister connotation that the applicant placed upon it, it also perfectly capable of being read in an innocent light. One interpretation of the document is that Ms Turner did not appreciate that the agreement to sell the first tranche of stores to Coles had already been finalised ten days earlier, and that was the "deal with Coles on the whole" to which she was referring. The fact that Ms Turner was not called to give evidence lends some support to the applicant's case regarding the interpretation to be given to this document. See generally Jones v Dunkel (1959) 101 CLR 298. However, that does not, in my view, override the highly favourable impression that I formed of Mr Cornell as a witness in this proceeding.

the November 2001 dealings 196 It is arguable that the applicant has a stronger case in relation to its claim that the November 2001 dealings constituted a breach of Franklins' contractual obligations. The real substance of this claim is that Franklins "jumped the gun" in terms of seeking the ACCC's consent to sell the Mentone store to Coles, and in concluding an agreement with Coles to do so. It did both these things, according to the applicant, while it still owed obligations, both contractual and fiduciary, to the applicant. 197 The Mentone BSA and the litigation agreement were both still on foot on 23 November 2001. Notice to terminate these agreements was not served until 28 November 2001. The Mentone BSA required seven business days notice to be terminated. Accordingly, the Mentone BSA remained on foot until 7 December 2001. However, in relation to the litigation agreement, the applicant accepts that it came to an end on 28 November 2001. 198 There is no dispute between the parties that Franklins made a submission to the ACCC on 23 November 2001 seeking its consent to offer the Mentone store, as well as a number of others, to Coles. There is, however, a dispute as to whether the agreement to sell the store to Coles was concluded at around this time as well, or whether that agreement was only concluded after ACCC approval had been obtained on 21 December 2001. 199 The evidence the applicant relies upon to support this aspect of its case is as follows: · the internal Coles document dated 23 November 2001 referred to agreement to a price of $18.2 million for a group of stores. This included the Mentone store; · the Coles documents referred to due diligence being undertaken on the Mentone store at least by early December 2001. Both Mr Cornell and Mr Masters gave evidence that due diligence was only undertaken after an in principle deal in terms of price had been struck; · the inference that a deal must have been done between Mr Cornell and Mr Masters prior to 21 December 2001, because that date was a Friday, and both Mr Masters and Mr Cornell said they did not negotiate on weekends; · the inference that the $2.3 million figure could not have been arrived at as a result of genuine negotiation, given that it was the same figure that the applicant had agreed to pay, yet Franklins was in a deteriorating bargaining position; and · Franklins would not have terminated the Mentone BSA unless it was sure it could sell the store to Coles at a pre-agreed price. 200 I am not persuaded by these contentions. The evidence does not satisfy me that Franklins and Coles agreed the final price of the Mentone store on or about 23 November 2001, at a time when Franklins still owed obligations to the applicant. 201 In relation to the Coles document of 23 November 2001, the lack of any breakdown of the figure of $18.2 million for a group of stores, including Mentone, is consistent with Mr Cornell's evidence that "ballpark" figures only were discussed on that date. Moreover, five out of the 13 stores identified in the note did not end up being sold to Coles. Nor did the sale price of the eight stores that were sold to Coles in December add up to $18.2 million. Accordingly, the document cannot, in my view, properly be regarded as evidence of an agreement between Franklins and Coles to sell the Mentone store to Coles, as at that date. It seems to me that the note merely records an optimistic view by either Ms King or Mr Kop of Coles' position in relation to its negotiations with Franklins at that time. It does not purport to record a legally binding agreement, and there is no evidence that it was written by anyone who had first hand knowledge of the precise state of the negotiations between Franklins and Coles at the time. 202 The other evidence relied upon by the applicant in support of this aspect of its claim is at most tenuous. It is circumstantial in nature. That, of itself, does not pose a problem since circumstantial evidence can be both cogent and reliable. The difficulty is that much of the material does not point all one way. 203 To take one example, in relation to the due diligence point, although reference is made in the due diligence documents to inspections of cooling towers having been conducted in late November, it appears that these inspections were mandatory inspections carried out for Franklins, the reports of which were then provided by Franklins to Coles. The individual due diligence reports on the Mentone store are dated 11 December 2001 (detailing a walk through inspection conducted the previous day), 12 December 2001 (reporting on refrigeration), and part of a due diligence report written by Allens Arthur Robinson (Coles' solicitors) which appears to be dated 12 December 2001, and which analyses the cooling tower reports previously mentioned. This evidence indicates that at least part, and possibly all, of the due diligence was not conducted at Mentone until after the Mentone BSA came to an end, on 7 December 2001. 204 To take another example, it is entirely possible that Mr Cornell and Mr Masters agreed upon the final price of the Mentone store on 21 December 2001, as Mr Cornell claimed, and that documentation was prepared by Franklins' advisers over the weekend of 22-23 December 2001. I accept that there is no actual evidence that Franklins' advisers did draft documentation over that weekend. However, when I am invited to draw inferences, I am bound to consider alternative explanations as well. There is nothing particularly complex about the documentation in question, and I am conscious of the evidence concerning how much pressure there was upon Franklins, at that stage, to wind up its Australian operations. 205 There remains, however, the issue whether Franklins' breached any contractual, fiduciary, or statutory obligations by seeking the ACCC's consent to sell the Mentone store to Coles while the Mentone BSA was still on foot. This requires some discussion of the detail of those obligations. 206 Franklins had an express obligation under clause 4.2(a) of the Mentone BSA to use reasonable endeavours to obtain the Lessor's consent to the assignment of the lease. The applicant relies upon a further three terms that it contends are implied in the Mentone BSA. 207 First, the applicant says that the Mentone BSA contained an implied term not to deprive a party of the benefit of that agreement. The applicant submits that this term should be implied by operation of law or, alternatively, on an ad hoc basis. I understand that latter category of implied term to refer to what is sometimes described as an "implication of fact", and to which the rules laid down in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266 ("BP Refinery") and Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 ("Codelfa") apply. 208 In Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234 ("Renard"), Priestley JA commented upon the notion of implications on an ad hoc basis. His Honour said, at 255-6: "Questions of construction and different kinds of implication tend to blur together. In recent years terms implied in contracts have been said to fall into two classes the first of which has come to be called, somewhat misleadingly, implication in fact, the second, implication by law. The so-called implication in fact is really implication by judge based on the judge's view of the actual intention of the parties drawn from the surrounding circumstances of the particular contract, its language, and its purposes, as they emerge from the language and in the circumstances. This has been called implication ad hoc (see Professor Lucke "Ad Hoc Implications in Written Contracts" (1973-1976) 5 Adelaide Law Review 32) a usage I will adopt." 209 In relation to the implied term not to deprive a party of the benefit of that agreement, the applicant relies upon Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 at 378, where Dixon J stated that the express promise of the appellant to use his best endeavours to obtain fabric orders for the respondent fabric manufacturer "necessarily includes an obligation not to hinder or prevent the fulfilment of its purpose". The applicant contends, by analogy, that the express promise of Franklins to use reasonable endeavours to satisfy the condition precedent necessarily includes an obligation not to hinder or prevent fulfilment of it. 210 Second, the applicant contends that a duty to act in good faith should also be implied into the Mentone BSA generally, or into the right to terminate specifically. The general duty is said to include an obligation of full and frank disclosure of all matters relevant to the implementation of the agreement. The applicant submits that the term is to be implied ad hoc, and as a matter of law. See Renard; Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151 at 190-98 per Finn J; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349; Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd (1999) ATPR ¶41-703; Central Exchange Ltd v Anaconda Nickel Ltd (2001) 24 WAR 382; GEC Marconi Systems v BHP-IT (2003) 128 FCR 1 at [920] per Finn J; and Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 at [61]-[65] per Finkelstein J. I note that the latter case was the subject of a Full Court appeal in which judgment was given following the hearing of this proceeding. However, the majority of the Full Court did not deal with the findings of the primary judge in relation to the implied duty of good faith in the exercise of a termination right: see Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40 at [119] per Finn and Sundberg JJ. 211 Third, the applicant submits there is an implied term requiring Franklins to do all such acts as are necessary on its part to enable the applicant to enjoy the promised benefits of the agreement. The applicant contends that this term is to be implied by operation of law or, alternatively, on an ad hoc basis. It referred to Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596 at 607 per Mason J to support its contention. 212 The applicant also relies upon two implied terms it submits constitute part of the litigation agreement. The first term is the same term implied into the Mentone BSA, namely an obligation not to deprive a party of the benefit of an agreement. The second term is an implied term requiring each party to provide full and frank disclosure of any matter relevant to the Supreme Court proceedings. This term is said to be implied by operation of law as a concomitant of the duty to act faithfully or, alternatively, on an ad hoc basis. See BP Refinery and Codelfa. 213 In addition, the applicant contends that it was owed fiduciary obligations by Franklins at least until the litigation agreement was terminated on 28 November 2001. 214 Turning to the issue of breach, I am not persuaded that Franklins' submission of 23 November 2001 to the ACCC constituted a breach of clause 4.2(a) of the Mentone BSA. The submission should, in my view, be regarded as nothing more than the commencement of contingency plans for the remaining parcel of stores. As far as Franklins was concerned, it still had an outstanding offer to the Lessor to pay it "compensation" in return for its consent to the assignment of the lease. Had the Lessor accepted this offer some time between 23 November 2001 and 27 November 2001, I infer that Franklins would have gone ahead with the sale of the Mentone store to the applicant. My view is strengthened by the fact that the ACCC would plainly not have consented to the sale to Coles, at that time, if the Lessor's consent had been forthcoming. The Mentone BSA was only terminated once this last offer to the Lessor was rejected. Accordingly, the submission to the ACCC, seeking its consent to offer the store to Coles, can properly be regarded as precautionary, rather than representing, at that stage, an effort to subvert the sale to the applicant. I do not regard the submission as a breach of Franklins' obligation under the Mentone BSA to use reasonable endeavours to obtain the Lessor's consent to the assignment of the lease. 215 I am also not persuaded that Franklins owed any fiduciary obligations to the applicant. In R Meagher, D Heydon and M Leeming, Meagher Gummow & Lehane's Equity: Doctrines & Remedies (2002, 4th ed), the learned authors describe the distinguishing characteristic of a fiduciary relationship in the following terms, at [5-005]: "its essence, or purpose, is to serve exclusively the interests of a person or group of persons; or, to put it negatively, it is a relationship in which the parties are not free to pursue their separate interests, Thus, the essence of a trust is that a trustee holds and deals with property in the interests of beneficiaries; the purpose of a partnership is to conduct a business in the joint interest of the partners; the agent acts for (in the interests of) the principal." (emphasis added) 216 It is true that the parties in this case agreed to join together to procure the Lessor's consent to the assignment of the lease, including jointly commencing proceedings against the Lessor in the Supreme Court. However, the basis for those arrangements was a conditional, commercial, arms length agreement for the sale of a business from one party to another. While Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 per Mason J at 99-100 makes clear that commercial transactions do not "stand outside the fiduciary regime", it does not follow that such transactions necessarily give rise to fiduciary obligations. 217 The applicant relied upon the following passage in United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 12 per Mason, Brennan and Deane JJ to support its case: "In particular, a fiduciary relationship with attendant fiduciary obligations may, and ordinarily will, exist between prospective partners who have embarked upon the conduct of the partnership business or venture before the precise terms of any partnership agreement have been settled. Indeed, in such circumstances, the mutual confidence and trust which underlie most consensual fiduciary relationships are likely to be more readily apparent than in the case where mutual rights and obligations have been expressly defined in some formal agreement. Likewise, the relationship between prospective partners or participants in a proposed partnership to carry out a single joint undertaking or endeavour will ordinarily be fiduciary if the prospective partners have reached an informal arrangement to assume such a relationship and have proceeded to take steps involved in its establishment or implementation." 218 The relationship between Franklins and the applicant was not one of "mutual trust and confidence". The arrangements between Franklins and the applicant concerning the efforts to obtain the consent of the Lessor to the assignment of the Mentone store lease had a singularly fragile quality. They could be terminated on short notice. At the first directions hearing in the Supreme Court proceedings on 19 October 2001, counsel then appearing for the applicant and Franklins submitted, in support of the application for expedition, that there was "nothing to stop the parties walking away". When counsel spoke of "the parties" he was referring to the applicant and Franklins. He also said that it was "a fair inference, given the nature of the commercial dealings between the parties, that the matter is quite fragile". That was an accurate statement of the parties' legal position vis-a-vis one another. 219 The reality of the litigation agreement was that Franklins lent its name to the Supreme Court proceedings, but the applicant's solicitors, Mason Sier Turnball, and counsel conducted the proceedings, and the applicant funded them. However, at the same time, Franklins retained HWL to maintain what Mr Colbran QC, counsel for Franklins, described as a "supervising brief" over the proceedings. 220 To give an example of exactly what the "supervising brief" entailed, on 14 November 2001, HWL wrote to Mason Sier Turnball complaining, inter alia, that a reply had been filed and served in the Supreme Court proceedings without seeking instructions from HWL. HWL insisted on Mason Sier Turnball seeking instructions from Franklins through HWL "when there are documents filed by our opponents, or are to be filed and served by us in the proceedings, before responding to any request or document". Under cross-examination, Mr Fischbacher of Mason Sier Turnball agreed that HWL's request was in accordance with what had been agreed between the parties. Such arrangements hardly bear the characteristics of a relationship of mutual trust and confidence. 221 The applicant and Franklins had no obligation of a fiduciary nature to refrain from pursuing their own, separate and individual interests, save for their contractual obligations to one another and, in Franklins' case, the restrictions imposed on it by the undertakings. The contractual obligations were limited in their terms. For example, as Mr Colbran correctly noted, the obligation in clause 4.2(a) of the Mentone BSA was merely to use "reasonable endeavours" to obtain the Lessor's consent to the assignment of the lease. It did not extend to using "best endeavours". In my view, the relationship between the parties in this case did not go beyond their contractual obligations to each other, and did not manifest characteristics of a fiduciary nature. 222 In relation to the implied terms, I am prepared to assume, without finally deciding, that there should be implied into the Mentone BSA a duty on the part of Franklins "not to deprive the applicant of the benefit of that agreement", a duty "to do all such acts as were necessary on its part to enable the applicant to enjoy the promised benefits of the agreement", as well as "a duty to act in good faith". I am also prepared to assume, without finally deciding, that the litigation agreement contained the implied terms pleaded by the applicant, including the duty of full and frank disclosure. Franklins, while not accepting that the terms the applicant contended should be implied into the Mentone BSA and litigation agreement, did acknowledge that there was a general duty on the parties to a contract to cooperate in the performance of that contract. 223 Even so, the applicant must still overcome the hurdle of demonstrating that Franklins, by making the submission to the ACCC, breached these implied terms. Indeed, the applicant must go further. It must establish that any breach of these implied terms caused it to suffer the loss or damage claimed. 224 The applicant argues that if it had known of the Franklins submission to the ACCC, it would have responded immediately. It says that it would have joined Franklins as a defendant in the Supreme Court proceedings, and that it would have sought interlocutory relief preventing Franklins from terminating the Mentone BSA. By implication at least, it asserts that it would have been successful in gaining such relief. 225 The difficulty with this submission is that it leaves a great deal to speculation and conjecture. It may be that the applicant would indeed have taken the steps outlined above. Whether or not it would have been successful in gaining interlocutory relief of the type foreshadowed is problematic. Even if it had gained such relief, it must be doubtful that this would have resulted in the applicant ultimately obtaining the Mentone store. It must be remembered that the Lessor's attitude had repeatedly been made clear. Mrs Wasser would not consent to the applicant taking the lease, even when offered "compensation" to do so. She wanted a "major". In the face of such intransigence, and an apparent willingness to vigorously contest the matter in court, it is highly speculative to assume that anything that the applicant could have done, at this stage, would have altered the course of events. 226 Accordingly, I am not prepared to find that Franklins, by making the 23 November 2001 submission to the ACCC, and by not disclosing this to the applicant, caused any loss or damage to it. That is assuming that these actions did constitute breaches of Franklins' contractual obligations in the first place, a matter that is open to serious doubt. 227 For the same reasons, irrespective of whether Franklins' conduct in this regard gave rise to a breach of s 52 of the TPA, the evidence falls short of establishing any loss or damage brought about by such contravention, and therefore any right to relief pursuant to that Act.

the lessor/Coles deal 228 As I explained at the outset, the issue in relation to the Lessor/Coles deal is not whether such an arrangement existed. That is incontrovertibly established on the evidence. Rather, the issue is when Franklins learnt of its existence. 229 It is clear from the Turner document that by 15 October 2001, some people at least within Franklins knew of the Lessor/Coles deal. Plainly, they included Ms Turner and Mr Rattray-Wood. However, I am unable to conclude, on the basis of the evidence that Franklins, and Mr Cornell in particular, knew of that deal at any time significantly prior to that date. I accept Mr Cornell's evidence in that regard. 230 Ms Weir did not have any recollection of the conversation the Turner document purported to record. However, she did not suggest that there was no basis for the note. She also stated that the part of the note which recorded that Coles had "done a deal in principle based on vacant possession" did not surprise her. Ultimately, her evidence was somewhat vague as to when she became aware of the Lessor/Coles deal. However, I am unable to conclude, as Mr Garratt invited me to, that if Ms Weir did know of the Lessor/Coles deal, she was directed by Mr Cornell not to disclose this to the applicant. There are too many steps to be taken, by way of inference, to justify arriving at that conclusion. 231 Even if Franklins' lack of disclosure did constitute a breach of its implied contractual obligations, the applicant must still demonstrate that the breach caused it to suffer loss or damage. There are serious difficulties with this aspect of the applicant's case on the Lessor/Coles deal. 232 The applicant relies upon the evidence of Mr Fischbacher to demonstrate that, had it been informed of the Lessor/Coles deal, its litigation strategy would have been fundamentally different. However, at the very least, on the basis of his own evidence, Mr Fischbacher had suspicions as far back as mid-October 2001 that Coles wanted the Mentone store. 233 Moreover, to make good this claim, the applicant has to prove, on the balance of probabilities, that not only would its litigation strategy have been different, but that this would have resulted in the Supreme Court proceedings being expedited. In addition, the applicant must prove, again on the balance of probabilities, that the outcome of those proceedings would have been in the applicant's favour, and that it would have gained the Mentone store. 234 As previously indicated, at the first directions hearing in the Supreme Court proceedings, held on 19 October 2001, Habersberger J refused the application for expedition. His Honour was sympathetic to the applicant's position, and ordered a very tight timetable in terms of trial directions. However, Habersberger J stated that while it was in the applicants' interests that the matter be dealt with as soon as possible, that was not to occur "to the detriment of the defendant [the Lessor] being able to run its case". 235 It must be remembered that it was the Lessor's contention that it had a right to refuse consent to the assignment of the lease, pursuant to clause 9.1.1. The Lessor indicated that it would submit that the applicant did not satisfy the requirements of the clause because it was not of "of comparable commercial standing" to Franklins Limited, in the sense in which that expression was used in that clause. The Lessor's case was arguable, and would, in any event, have required time to prepare. The Lessor indicated that expert evidence would be obtained, presumably after a significant discovery process. There was every indication that the Lessor was aware of Franklins' dire position, which had been well documented in the media and elsewhere. There was also every indication that the Lessor was aware, through its legal advisers, and perhaps also through the commercial advice of Mr Maurice Alter, of the significant advantage that it could gain simply by delaying the final resolution of the proceedings, for what in the context of cases of this type, was a relatively short time. 236 There is nothing in the transcript of the first directions hearing to suggest that had evidence of the Lessor/Coles deal been placed before Habersberger J, the matter would have been granted an expedited hearing. Evidence of that deal might have been regarded as indicating merely that the Lessor had acted on the rights that it asserted. Of course, it is also possible that such evidence may not have been viewed in that way. Habersberger J was not called to give evidence before me, even assuming that any such evidence could have been led: see generally s 16 of the Evidence Act 1995 (Cth). I have no idea what effect such evidence would have had upon his Honour, or what practical steps if any were available to facilitate an expedited hearing of a complex matter that was likely to have been hotly contested. Once again, the matter is highly speculative. I am not persuaded that disclosure of this information would have been likely to have resulted in an order for an expedited trial. 237 When the matter came on for directions again on 16 November 2001, Habersberger J indicated that a hearing in December 2001 was impossible. His Honour suggested that the parties come back before him for directions on 15 February 2002. Again, there is nothing in the transcript of this second hearing that suggests that earlier disclosure of the Lessor/Coles deal would be likely to have resulted in the obtaining of an early trial date, and it must be remembered that the intervening Christmas period was hardly conducive to a speedy resolution of this matter. 238 However, the applicant faces a further hurdle. Ultimately, on this limb of the case, it must satisfy me of the likelihood that the Supreme Court not only would have found in its favour against the Lessor, but that it would have done so in a sufficiently timely manner to avoid Franklins simply walking away. Once again, having regard to the evidence which points clearly to Dairy Farm ceasing its Australian operations entirely by no later than January 2002, the prospects of such a timely result in favour of the applicant must be viewed as highly doubtful. 239 Whatever else may be said about the merits of the applicant's claim, I am not persuaded that a particular outcome would have been achieved arising from a trial that never took place. 240 Although the applicant submitted that clause 9.1.1 was susceptible of only one interpretation, and that it was inevitable that the Lessor would have been ordered, at the end of the day, to grant consent to the assignment of the lease, I am unable to accept that contention. I have no idea what the evidence would have been regarding Franklins' commercial standing at the time the lease was entered into, or indeed, at the time of the proposed assignment. I do not know which of the Franklins' entities would have been regarded as the appropriate comparator, given that FMS was the leaseholder, but was a non-trading entity, wholly owned by Franklins Limited. It is not clear precisely how the Lessor would have put its case regarding the construction of the relevant clause of the lease. To conclude that, as a matter of probability, the applicant would have been successful, is to engage in conjecture, and not the drawing of legitimate inferences. 241 The matter is complicated still further by the fact that the Lessor foreshadowed bringing a counterclaim against Franklins alleging various breaches of the lease on its part. Whether or not there was anything to this, or whether it was simply a delaying tactic, I cannot say. What is certain, however, as the history of this case demonstrates, is that complex commercial litigation can take many unforeseeable twists and turns. The reality is that a well-resourced, competently-advised, and highly determined litigant, such as the Lessor, can make it difficult for a party such as the applicant, which was under extreme pressure, to have its case heard and determined within a very short timeframe. It is no answer to say, as the applicant does, that the courts will ensure that no one will be denied justice by reason of the adoption of such tactics. The harsh reality is that delay can work against the interests of plaintiffs, and that fact is well understood by commercially astute defendants. It must be remembered that the rights of plaintiffs to have their cases heard speedily have to be balanced against the rights of defendants to have sufficient time to prepare and present their cases adequately. 242 Accordingly, the applicant is left to rely, in relation to the lack of disclosure of the Lessor/Coles deal, upon the line of causation through the ACCC. Its case is that had it been informed of that deal by Franklins on or about 15 October 2001, as it ought to have been, the applicant could have passed on this information to the ACCC. The scenario is that upon receipt of this information, the ACCC would have been likely to have blocked the sale of the Mentone store to Coles. 243 The evidence of Mr Jones, and the documentary evidence of the ACCC, was seriously damaging to this aspect of the applicant's case. The ACCC had been aware since June 2001 that Coles was approaching landlords of Franklins stores, and in fact Coles had informed the ACCC of its intended actions. Mr Jones acknowledged that at least by November 2001, it was "quite reasonable to think" that the ACCC assumed that a position had been reached between many landlords and Coles that if vacant possession were available, Coles would take up the lease on the store. 244 Mr Jones acknowledged that the ACCC could not force a landlord to take on a certain tenant. The ACCC had no power to stop Coles and landlords coming to such arrangements, subject only to any local competition concerns. There were no such concerns in the case of Mentone. Even in one case where there had been such concerns, the ACCC had ultimately agreed to the sale. The ACCC was concerned with the "macro" outcome of the managed sell-down, and not with individual transactions. 245 The reality was that in circumstances where landlords were "digging their heels in", the ACCC preferred to consent to the sale of those stores to Coles, rather than blocking those sales. The reason was plain. The ACCC, sensibly, did not wish to see stores being closed, with employees losing their jobs, local competition being disrupted, and inconvenience to the public, only to see Coles obtain those stores in any event on a vacant possession basis. 246 The evidence points strongly against any finding that "confirmation" of what the ACCC already suspected, namely the existence of the Lessor/Coles deal, would have made any difference to the ACCC's position. I am not persuaded that this would have led the ACCC to refuse consent to the sale of the Mentone store to Coles after 21 December 2001, the date upon which it ultimately gave its consent. 247 The applicant's claim in relation to misleading or deceptive conduct fails for the same reason, even if I were to find that the lack of disclosure constituted a contravention of s 52.

concluding comments 248 It needs to be understood that the dealings between the applicant and Franklins during the second half of 2001 took place against a particular background. While Franklins wished to sell the Mentone store to the applicant, and did what it could to facilitate that sale, the Lessor adamantly refused to consent to the assignment of the lease. In part, that was because the Lessor had already entered into a deal with Coles, which would either take vacant possession of the property, or buy the business from Franklins. 249 Although the right of the Lessor to refuse consent to the assignment was, at best, unclear, the Lessor almost certainly knew that Franklins was pressed for time. The Lessor's legal advisers, ABL, Mr Nettle QC and Ms Gordon, must have appreciated that anything other than an immediate hearing of the case brought against their client, would work in its favour. Franklins would then be forced either to seek the ACCC's consent to sell the Mentone store to Coles, or simply close it down. Either way, Coles would get the Mentone store by reason of its deal with the Lessor, and the Lessor would achieve its goal of having a "major" as its tenant. 250 Franklins decided, following the second directions hearing before Habersberger J on 16 November 2001, and following the final refusal by the Lessor to consent to the assignment, that time had simply run out. There was no realistic prospect, so far as it was concerned, of obtaining orders forcing the Lessor to give its consent. I am not persuaded that there was, at that stage, or indeed at any stage, a "backroom" deal regarding the sale of the Mentone store between Franklins and Coles. The fact that Franklins made a final approach to the Lessor in late November indicates to me that it was still genuinely attempting to procure the Lessor's consent at that time. 251 It is possible that Franklins acted prematurely, and in breach of implied contractual obligations, by seeking the ACCC's consent to sell the Mentone store to Coles before it formally terminated both the Mentone BSA and the litigation agreement. It may also be that Franklins breached implied contractual obligations by not disclosing the knowledge that some of its staff had of the Lessor/Coles deal. However, I am not satisfied that the disclosure of these matters to the applicant would have been likely to have made any difference to the ultimate fate of the Mentone store. 252 The evidence before me suggests that Mr Blake is an excellent supermarket retailer. Had there been sufficient time to litigate the matters in dispute between himself and the Lessor, he may well have succeeded in establishing that the Lessor had no right to refuse consent to the assignment of the lease. 253 However, the reality is that Coles, which had earlier missed out on obtaining a slice of the Franklins business, and was determined to remedy that situation, and the Lessor, which was equally determined to have a "major" as a tenant, exploited the time pressure, extreme in the end, that Franklins was under to exit Australia. Neither Coles nor the Lessor had any obligations preventing them from interfering with the JIDA process. The applicant was simply outflanked by a well advised, and well resourced, Lessor, determined to secure Coles as its tenant, and not an independent. There was nothing that Franklins could realistically have done, given the time constraints it was under, to change that situation. 254 For the reasons set out above, the application must be dismissed, with costs. I certify that the preceding two hundred and fifty-four (254) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg.

Counsel for the Applicant: Mr R.M. Garratt QC and Mr M.K. Moshinsky

Counsel for the Respondent: Mr M.J. Colbran QC and Mr G.J. Fitzgerald

Solicitor for the Respondent: Home Wilkinson Lowry

Dates of Hearing: 22, 23, 24, 25, 26 and 29 August 2005 and 2, 5, 6, 7, 8, 15 and 16 September 2005