Plainly it cannot be said in the light of the authorities to which I have referred above, which hold that the requisite jurisdictional element is made out in the case of franchise agreements, that it is essential there be in existence something analogous to a payment by one party to a contract or arrangement in exchange for the performance of work for or on behalf of that party by the other party to the contact or arrangement. Nevertheless, on the authority of Solution 6 , there must be at least some, indeed a close, connection between relief sought and the performance of work.
(See also [83]).
68 Although the $60,000 represented 50 per cent of the purchase price of the business paid by the applicant it was nevertheless in my opinion sufficiently or closely connected to the performance of his work under the deed. The applicant's duties under the deed, and in relation to the ProFitness business, involved sourcing and supplying stock for sale in the business. This stock which included the stock supplied to the value of $60,000 deposited into the loan account was supplied by the applicant to the ProFitness stores for sale.
69 I do not find the same necessary connection, however, between the applicant's work, sourcing and supplying stock to the ProFitness stores and his shareholding in the second respondent. The applicant's shareholding was representative of his business relationship with the respondents when they entered into a partnership in the commercial sense (as opposed to the legal sense). It bears little or no direct relationship to the applicant's work as I have characterised it. In any event it seems that the applicant has nominated the value of $25,000 as the value of his shareholding. This figure apparently is derived during the negotiations between the parties following the 1 June 2003 letter when some preliminary agreement was reached to transfer the applicant's shareholding in that amount. It will be recalled that the transfer did not proceed at law following failed negotiations. There is, however, no other evidence that might reliably be used to ascertain a reasonable estimate of the value of the shareholding. The respondents contend that until the loan funds are paid out the second respondent has no real value and the amount of its goodwill is negligible. No money has been directed to the second respondent, besides loan funds, and only two shares were issued with a value of $1.00 each.
70 In my view, even if the applicant's shareholding could be said to relate directly or closely to his work, which I have not found, the evidence is insufficiently conclusive to enable me to identify a reasonable value for the shareholding. The figure of $25,000 was used by the parties during negotiations in relation to a share transfer in accordance with clause 10 of the deed. In the absence of any evidence as to the derivation of this amount, I am unable to conclude that the amount has been reliably assessed or is representative of an estimate of the true value of the business.
71 Finally, any relief granted should in my view be payable jointly and severally by the first, second and third respondents, who were all parties to the deed together with the applicant. In addition, the first respondent invoked clause 11 of the deed which, as I have found, operated unfairly in the circumstances against the applicant. The second respondent as the applicant's employer benefited from the services provided by the applicant which included the supply of stock in the amount of $60,000 which was deposited into the applicant's loan account with the second respondent. The third respondent also benefited either directly or indirectly from the receipt of monies from the applicant. According to the Profit & Loss Statements of the second respondent for the financial years ending 30 June 2003 and 30 June 2004, the third respondent was paid management fees in the sums of $18,000 and $31,2000 respectively.
72 Interest should also be payable on the amount of $60,000 from the date of the summons that is from 16 September 2003 until the date of this judgment.
73 The variation to the deed sought by the applicant nominates the first respondent (as the "defaulting party") as liable to pay the amount outstanding in the loan account. The respondents contend that if this variation were granted then the nature of the commercial arrangement is fundamentally changed and the first respondent is effectively obliged personally to pay the outstanding amount. The loan account, they say, was never in the first respondent's name but in the second respondent's name. The respondents did not proffer any suggestions that might resolve the issue if it became necessary. The applicant did not address it.
74 An order making the three respondents jointly and severally liable should overcome the problem. In addition, since the loan account has always been with the second respondent in the applicant's name, in my view, the variation sought should nominate the second respondent as the "defaulting party".
75 I should add for completeness that I did not understand the applicant to pursue any claim for outstanding salary under sub-clauses 9.4 and 9.5 if I were to find, as I have done, that the deed was terminated on 1 June 2003. In any event there was no evidence placed before the Court which would have enabled me to conclude one way or the other that the applicant was entitled to outstanding salary payments, consequent upon any finding of unfairness, referable to any part of the deed.
Orders