Mac Developments (Gold Coast) P/L v Rams Financial Group P/L [2010] QSC 477

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - OTHER MATTERS - where plaintiff franchisee and defendant franchisor parties to a franchise agreement - where disputes between plaintiff and defendant - where parties entered into deed of settlement - where plaintiff argues defendant failed to refer and allocate customers and provide customer information - whether plaintiff argues defendant breached franchise agreement - whether plaintiff's claims precluded by deed of settlement - whether plaintiff released defendant from claims

Trade Practices (Industry Codes - Franchising) Regulations 1998 (Cth), clause 29(1)

Bank of Credit and Commerce International SA (in liq) v Ali [2001] UKHL 8; [2002] 1 AC 251, cited

Elderslie Property Investments No 2 Pty Ltd v Dunn [2008] QCA 158, cited

Federal Commissioner of Taxation v Taylor [1929] HCA 13; (1929) 42 CLR 80, cited

Fraser v The Irish Restaurant & Bar Company Pty Ltd [2008] QCA 270, cited

Grant v John Grant & Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112, considered

JLF Corporation Pty Ltd v Mount Petrie Developments Pty Ltd [2004] QSC 44; [2004] 2 QdR 267, cited

Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26

R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd [2006] NSWCA 177, cited

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165, cited

West Wake Price and Co v Ching [1957] 1 WLR 45, cited

[1] Margaret Wilson J: The defendant owns and operates the "RAMS Home Loans" business. The plaintiff is a franchisee of the business. In this proceeding it seeks damages for breach of the franchise agreement between it and the defendant.

[2] On 5 March 2010 PD McMurdo J ordered that the following questions be determined prior to trial -

"(a) Is the Settlement Deed referred to in the defence and counter-claim valid and binding as between the entities nominated as parties to the deed?

(b) If the Deed of Settlement is valid and binding as between the entities nominated as parties to the deed:

(i) has the plaintiff, by clause 9 of the Settlement Deed, released the defendant, in whole or in part, from the claims made by the plaintiff in these proceedings?

(ii) if the plaintiff has released the defendant from any or some of the claims made in these proceedings which claims have been released and to what extent?

(iii) has the plaintiff breached clause 10 of the deed by bringing these proceedings?"

[3] It is now common ground that the answer to question (a) is "Yes". Accordingly the Court must determine the answers to questions (b)(i), (ii) and (iii).

[4] The defendant[1] is a company incorporated in New South Wales. Until 4 January 2008 it was wholly owned by RHG Home Loans Pty Limited ("RHL") (formerly known as RAMS Home Loans Pty Limited); since then it has been wholly owned by Westpac Banking Corporation ("Westpac").

[5] The "RAMS Home Loans" business was established in 1996. Until 4 January 2008, it was conducted by RHL and related companies, including the defendant. The assets of the business, with some exceptions, were transferred to the defendant prior to the completion of Westpac's acquisition of the shares in the defendant.

[6] From about 2003 RAMS-branded loan products were offered for sale to retail customers through a network of franchisees and independent brokers. Since mid-2010 they have been offered for sale exclusively through the franchise network.

[7] There is a separate Franchise Agreement between each franchisee and the defendant as franchisor. It is in standard form, and incorporates an Operations Manual, which the defendant may amend.

[8] The franchisor's role is to provide a common business system, including a database, website and call centre. The database, website and call centre are provided by an unrelated third party Unisys Credit Services Pty Limited ("UCS").

[9] Each franchisee has a defined territory. A franchisee from outside that territory may sell within it, but only in limited circumstances. And while the broker system was in operation, a broker might also sell within it.

[10] Each franchisee has a shopfront and access to a secure website, and it receives referrals from the call centre. It earns commissions by introducing customers who take out loans and perform their repayment obligations. Those commissions include "trail commissions", payable over time provided loans continue in force.

[11] The plaintiff is the franchisee of an area on the Gold Coast described as "Gold Coast North", pursuant to a Franchise Agreement dated 7 July 2005 between it and the defendant as franchisor. The plaintiff's sole director is Mr David MacInnes.

[12] Mr MacInnes has been involved in the operation of the Gold Coast North franchise since 2003. From November 2003 until July 2005 it was operated by DMP (Gold Coast) Pty Ltd ("DMP"). Mr MacInnes and two other people, Peter Jones and Michael Christie, held interests in DMP when it commenced to operate the franchise. Subsequently Mr Christie disposed of his interest, and in July 2005, after a dispute between Mr MacInnes and Mr Jones, the plaintiff took over the franchise.

[13] At the time Westpac acquired all the issued shares in the defendant, there were 54 franchisees. During January 2008 Westpac received Notices of Dispute, issued under the Franchising Code of Conduct,[2] from 40 of the franchisees (including the plaintiff), many of them in identical terms.[3]

[14] The defendant entered into negotiations with the franchisees, with a view to settling with them all in similar terms. Ultimately there was a Deed of Settlement between the defendant and the plaintiff, executed by the plaintiff on 11 April 2008 and by the defendant by 6 June 2008.[4] There was no evidence establishing how many of the other franchisees who had served Notices of Dispute entered into similar deeds.[5]

[15] On 7 August 2008 the defendant received a fresh Notice of Dispute from the plaintiff's lawyers.[6] On 20 August 2008 the plaintiff withdrew that notice and issued another one.[7]

[16] The plaintiff commenced this proceeding on 5 February 2009, claiming damages for breaches of the Franchise Agreement between it and the defendant - that is, breaches alleged to have occurred since the Deed of Settlement.

[17] The defendant contends that the plaintiff's claims are precluded by the Deed of Settlement.

[18] The Franchise Agreement dated 7 July 2005 was a standard form document, prefaced by a three-page overview. The agreement was drafted in plain English. The defendant was referred to in the first person ("we", "us", "our") and as "RAMS", and the plaintiff was referred to in the second person ("you", "your", "yours").

[19] The following appeared in the overview against the side heading "About this Agreement" -

"This Agreement sets out the terms on which RAMS grants you certain rights in relation to operating a RAMS Home Loans Centre as a Franchisee. It also sets out the obligations on RAMS as the franchisor.

This whole Agreement is made up of three documents: the Operations Manual, this franchise agreement and the Disclosure Document. In addition, there may be special conditions relating to your particular Franchise Agreement. These (if any) will be set out in clause 34 of this Agreement.

You should read all of the Documents together. If there is any discrepancy between this Agreement, the Operations Manual, and the special conditions the documents must be interpreted and applied in the following order: First the special conditions, second the Operations Manual, and last this Agreement."

[20] The clauses dealing with the defendant's obligations began with this general statement -

We agree to do certain things under this Agreement. Some of the things we agree to do are by way of general support mechanisms that may change over time and others are contractual obligations that we cannot change or cease doing without your agreement. These are set out in this section. Also, some of our obligations are detailed in other more appropriate sections of this Agreement."

"4.17 We agree to provide (whether directly or through another party) a technology platform including a mortgage processing system, a system capable of tracking Franchisees' loan applications processing, a commission system to calculate Commissions and we agree to provide access to existing Customer information.

5.1 We may operate one or more Call Centres to service Customers or we may engage a Third Party to do this on our behalf.

5.2 We may refer Leads to you from the Call Centre but we are under no obligation to do so.

5.3. If a Customer contacts a Call Centre and requests to be referred to a Home Loans Centre we will refer the Customer to the Home Loans Centre closest to the Customer's residence or, if requested by the Customer to the Home Loans Centre closest to the Customer's place of work.

5.4 Where we do refer a Lead to you from the Call Centre and you make a sale from that Lead, the Customer becomes part of your Customer Database.

7.17 We agree to provide you with Customer Information in report format from time to time as provided for in the Operations Manual."

RAMS Franchise Direct, Broker and Internet sales

7.19 Where a Customer is originated through RAMS Franchise Direct, a Call Centre (or other telephone contact centre operated or engaged by RAMS), the RAMS Internet site or a RAMS accredited mortgage broker that Customer will be allocated to the Franchisee operating within the Allocated Territory within which the Customer resides for the purpose of Managing the Customer Relationship.

14.8 You acknowledge and agree that we may vary the Operations Manual from time to time and you acknowledge that we anticipate that this will happen at reasonably frequent intervals.

14.9 We agree to give you reasonable notice of any changes to the Operations Manual and to consult with Franchisees where a change to the Operations Manual would result in a significant cost to the Franchisees.

14.10 We agree to provide the Operations Manual to you in electronic format and to notify you promptly of any changes to the Operations Manual.

14.11 If there is a discrepancy between your interpretation of the Operations Manual and ours; you agree that our interpretation will prevail.

14.12 You agree that clause 14.11 is necessary to ensure that all Franchisees are subject to the same interpretation of the Operations Manual.

14.13 We agree to act reasonably when interpreting the Operations Manual."

[22] The parties to the Deed of Settlement were the plaintiff ("the Franchisee"), the defendant ("RFG") and Westpac ("WBC").

[23] There had been systemic issues between the defendant and its various franchisees. Only one franchisee (the plaintiff) was a party to the Deed of Settlement relied on in this proceeding. The deed began by reciting that its terms were available to all franchisees;[8] it defined the dispute that was being compromised by reference to claims made by any of the franchisees;[9] and it provided a compensation package that was generic rather than individualised in character.[10] The package dealt (inter alia) with payment of the present value (as at 30 June 2008) of the amount payable under the new payment scheme for trail commissions on the old book loans, revised provisions for repayment of borrowings against trail commissions, contributions to marketing costs, and additional commissions on the refinancing of old book loans and incentives for customers to refinance. There were consequential amendments to the agreement by which the plaintiff could borrow against trail commissions. The defendant and Westpac entered into the deed without any admission of liability.[11]

[24] The parties intended to finally resolve the Claims released by the deed. Clauses 14 and 15 provided -

(i) it enters into this Deed fully and voluntarily on its own information and investigation;

(ii) it is aware that it, its legal advisors or other agents or advisers may discover facts different from or in addition to the facts it now knows or believes to be true with respect to the subject matter of this Deed; and

(iii) it fully, finally, absolutely and forever settles according to the provisions of this Deed and all Claims which it releases under Clause 9.

(b) The Franchisee represents and warrants to WBC and RFG that:

(i) as of the Settlement Date, the Franchisee will not have transferred to any other person any Claim referred to in Clause 9; and

(ii) prior to the execution of this Deed, the Franchisee has obtained legal, accounting and tax advice on the effect of entering into the Settlement Deed.

Except as otherwise provided, this Deed supersedes all earlier conduct and prior agreements and understandings between the parties in connection with its subject matter but the parties acknowledge that the Franchisee Arrangements in the from amended (or to be amended) remain in full force and effect in accordance with their terms (including, without limitation, all indemnities and guarantees, personal or otherwise or any security arrangement by fixed or floating charge or otherwise)."

[25] In answering the questions for preliminary determination, the Court must decide whether the plaintiff's claims in this proceeding fall within the release and covenant not to sue in clauses 9 and 10 of the deed.

[26] The plaintiff's claims in this proceeding are that since 12 April 2008 and or since about 6 June 2008 the defendant has breached the Franchise Agreement by -

(a) failing to provide it with customer information as required by clause 4.17;[12]

(b) failing to refer to it customers who contacted the call centre and asked to be referred to a home loan centre as required by clause 5;[13]

(c) failing to allocate to it customers originating through any of the specified means and residing within its allocated territory as required by clause 7.19;[14] and

(d) failing to provide it with customer information in report format from time to time on a daily, weekly or monthly basis or at all as required by clause 7.17.[15]

"[10] In breach of its obligations under clause 4.17 of the Franchise Agreement since about 12 April 2008 and or since about 6 June 2008 RAMS has neglected, refused and failed to provide to Mac Developments access to the data base of Customer information;

(a) The best particulars which the plaintiff can provide until the completion of the interlocutory steps in this action are that:

(i) In or about early 2005 Mr O'Regan for RAMS said to Mr MacInnes for Mac Developments words to the effect that Mac Developments could not contact any persons on the RAMS existing customer data base of Customer Information because to allow RAMS' franchisees to contact such persons would interfere with the relationship which RAMS had with independent mortgage brokers;

(ii) On or about 9 March 2005, Mr O'Regan for and on behalf of RAMS advised by email that RAMS would in the near future remove from the data base of customers available to the franchisees including Mac Developments any Customer that had been sourced by way of a mortgage broker;

(iii) The admission by Allens Arthur Robinson for and on behalf of RAMS in its letter of 2 September 2008 to Ffrench Commercial Lawyers for Mac Developments that prior to 11 January 2008 RAMS had determined to withdraw Mac Development's right of access to the data base of customers;

(iv) RAMS has refused and failed to provide to Mac Developments any computerised access to the database of customers.

[11A] In breach of the obligations in clause 5 of the Franchise Agreement since 12 April 2008 and or since about 6 June 2008 RAMS has neglected, refused and failed to refer to Mac Developments all customers who when contacting a call centre requested to be referred to a Home Loans Centre and whose place of work was closer to the Home Loan Centre conducted by Mac Developments than any other Home Loan Centre;

(i) as a result of the breach of the obligation of RAMS to provide to Mac Developments access to the customer data base the best particulars which the plaintiff can provide are:

(1) the marketing campaigns and call centre campaigns conducted by RAMS since about April 2004 and or since about 6 June 2008 would have generated a substantial number of Customers whose place of work was closer to the Home Loan Centre conducted by Mac Developments than any other Home Loan Centre;

(2) a significant portion of such Customers would have requested to be referred to a Home Loans Centre;

(3) in the period since 12 April 2008 and or since about 6 June 2008 RAMS has neglected failed and refused to refer any such Customers to Mac Developments

[12] In breach of its obligations under clause 7.19 of the Franchise Agreement since 12 April 2008 and or since about 6 June 2008 RAMS has neglected, refused and failed to allocate to Mac Developments all Customers residing within the Allocated Territory of Mac Developments which were originated through:

(b) a Call Centre (or other telephone contact centre operated or engaged by RAMS);

[13A] In breach of its obligations under clause 7.17 of the Franchise Agreement since about 12 April 2008 and or since about 6 June 2008 RAMS has neglected, refused and failed to provide Mac Developments with the Customer information in a report format from time to time on a daily, weekly or monthly basis or at all;

(a) The best particulars which the plaintiff can provide until completion of the interlocutory steps in this action are that:

(i) RAMS has refused and failed to provide to Mac Developments any report in any format with the Customer information contained in it.

(ii) In or about early 2005 Mr O'Regan for RAMS said to Mr MacInnes for Mac Developments words to the effect that Mac Developments could not contact any persons on the RAMS existing customer data base of Customer Information because to allow RAMS' franchisees to contact such persons would interfere with the relationship which RAMS had with independent mortgage brokers;

(iii) On or about 9 March 2005, Mr O'Regan for and on behalf of RAMS advised by email that RAMS would in the near future remove from the data base of customers available to the franchisees including Mac Developments any Customer that had been sourced by way of a mortgage broker;

(iv) The admission by Allens Arthur Robinson for and on behalf of RAMS in its letter of 2 September 2008 to Ffrench Commercial Lawyers for Mac Developments that prior to 11 January 2008 RAMS had determined to withdraw Mac Development's right of access to the data base of customers."[16]

[28] The plaintiff alleges that the defendant is engaging in a continuing course of conduct in breach of the Franchise Agreement. It does not allege that the defendant's conduct after either of the dates referred to in the pleading differed from its conduct before the Deed of Settlement. Rather, its case is that the defendant has breached the Franchise Agreement by continuing, after those dates, to do what it had been doing before.

[29] The relief available to a party who alleges a continuing course of conduct in breach of contract is not limited to relief in respect of past breaches. The Court has jurisdiction to rule on the legality of the conduct and to give relief in respect of future breaches. As counsel for the defendant submitted, the aggrieved party has potential four remedies:

(a) damages for breach of contract in respect of conduct that has already occurred;

(b) a declaration that the conduct in question contravenes the contract: this would bind the parties in respect of both past and future conduct;

(d) damages in addition to or instead of an injunction:[17] these would be awarded on a once and for all basis, and would be compensation for future breaches.[18]

[30] Parties to a dispute about a continuing course of conduct may enter into a compromise agreement not only with respect to past breaches, but also with respect to future breaches.[19] The ambit of a compromise agreement necessarily turns on its proper construction.

[31] Clauses 9 and 10 of the Deed of Settlement provide -

On and from the Settlement Date, and whether or not the Franchisee has issued a Notice of Dispute, the Franchisees [sic] releases RFG, WBC and each of RFG's and WBC's Related Entitles from:

(ii) the circumstances or allegations giving rise to or referred to in the Dispute; and

(b) any other Claim which is or could reasonably have been known to a party as at the date of this Deed, whether or not the Claim is or could be known to a party and whether or not the Claim arises from or is connected with the Dispute.

On and from the Settlement Date the Franchisee will not bring or pursue, or procure that a third party bring or pursue, a Claim against RFG, WBC or any of RFG's or WBC's directors, officers or Related Entitles in respect of any matter which is the subject of a release under Clause 9."

[32] The Deed of Settlement is a commercial agreement, and the principles of construction applicable to such agreements are well settled. The Court's role is to ascertain and give effect to the intentions of the parties.[20] In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd the High Court said[21] -

"This Court, in Pacific Carriers Ltd v BNP Paribas,[22] has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction."[23]

[33] In Elderslie Property Investments No 2 Pty Ltd v Dunn[24] Muir JA, with whom Holmes JA and White J agreed, summarised the principles generally applicable to the construction of commercial contracts -

"[20] The object of contractual construction is to 'ascertain and give effect to the intentions of the contracting parties'.[25] Those intentions, to be determined objectively, are 'what a reasonable person would have understood [the words of the contract] to mean'.[26] And to ascertain that 'normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.'[27] Such a reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation which they were in at the time of the contract.[28] The Deeds, as commercial contracts, 'should be given a businesslike interpretation'. The interpretation of each Deed requires 'attention to...the commercial circumstances which the document addresses, and the objects which it is intended to secure'.[29] Commercial contracts are to be construed with a view to making commercial sense of them.

[21] In Wickman Machine Tool Sales Ltd v L Schuler AG[30] Lord Reid said:

'The fact that a particular construction leads to a very unreasonable result must be a relevant consideration. The more unreasonable the result the more unlikely it is that the parties can have intended it, and if they do intend it the more necessary it is that they shall make that intention abundantly clear.'

[22] In Antaios Compania Naviera SA v Salen Rederierna AB,[31] Lord Diplock expressed stronger views concerning the imperative to make business sense of commercial contracts, stating:

'If detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.'"

[34] In Grant v John Grant & Sons Pty Ltd[32] the High Court discussed the principles for the construction of releases, and in particular equity's concern to prevent the unconscientious reliance upon the general words of a release. Dixon CJ, Fullagar, Kitto and Taylor JJ said[33] -

"...a releasee must not use the general words of a release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor."

[35] In Qantas Airways Ltd v Gubbins[34]Gleeson CJ and Handley JA put it this way -

"The rule is that the general words of a release will, in an appropriate case, be read down to conform to the contemplation of the parties at the time the release was executed."

[36] As the Court of Appeal noted in Fraser v The Irish Restaurant & Bar Company Pty Ltd,[35] there is some uncertainty in Australia whether the principle in Grant is an exception to the general principles of construction. In England that question arose in Bank of Credit and Commerce International SA (in liq) v Ali.[36] However, applying general principles for the construction of contracts, the House of Lords held (by majority) that the parties had not intended to provide for the release of rights and the surrender of claims which they could not have had in their contemplation. Thus it was unnecessary for their Lordships to consider whether equity would restrain unconscientious reliance on the release in question. But both Lord Nicholls of Birkenhead and Lord Clyde eschewed the notion of there being different rules in equity and at common law for the construction of contracts.

[37] The principle in Grant is concerned with general words in a release. But a party may agree to release a claim of which it is unaware and of which it could not be aware, provided clear words are used. [37]

[38] I accept the submission of counsel for the defendant that in the present case the outcome is the same whether or not the principle in Grant represents an exception to the general principles of construction. They made five points in support of that submission -

(ii) When the plaintiff executed the Deed of Settlement it knew of its claims in respect of the defendant's practices concerning access to information about brokers.

(iii) The terms of the Deed of Settlement, particularly clause 14(a), clearly evince an intention that the release extend to claims of which the plaintiff might be unaware.

(iv) Even if the plaintiff was unaware of the terms of the Notices of Dispute served by other franchisees in January 2008, it was aware of the existence of those notices and the language of the release (even without clause 14) is sufficiently clear to extend to a release of claims not in fact known to the plaintiff.

(v) To the knowledge of the defendant, the plaintiff obtained legal advice on the terms of the Deed of Settlement before executing it. Thus there is no unconscientious conduct on the part of the defendant that equity would restrain.

[39] In March 2005, in response to complaints from brokers that franchisees were contacting their customers and attempting to "churn" their loans, (that is, to unnecessarily re-write their loans), the defendant told franchisees that customer communications were under review, and that they were to have no communication with broker customers pending the review. According to Mr George Sattout, the defendant's National Franchise Business Manager, in about March or April the defendant decided to block franchisees' access to information about broker customers on the database permanently. However, the franchisees were never given written notice of this decision, and in fact it was still possible to access that information until December 2007.

[40] The plaintiff entered into its Franchise Agreement with the defendant, and in the ensuing months it experienced trading difficulties. This led to a number of conversations between Mr Sattout and Mr MacInnes about the plaintiff's level of performance.

[41] According to Mr Sattout ("GS"), at a meeting in or around October 2005, he had a conversation with Mr MacInnes ("DM") in words to the following effect:

"GS: David, we're concerned about how your business is going. Your sales are still in the bottom 20% against our performance standards, and we need to work on getting your sales up.

DM: I know my sales haven't been great. They would be better if I was allowed to market to the broker customers in my territory. When we joined the franchise network, Paul O'Regan[38] told us we'd be able to market to everyone on the database.

GS: David, this matter has already been addressed and you know the reasons why this can't happen. There's a real concern that franchisees could use broker customer information to churn customers. At the moment the franchise model as a whole is supported by the broker channel. You know brokers have threatened to boycott RAMS if their customers are contacted. We can't put that channel at risk.

DM: I know all that. But that doesn't change the fact that it was promised to us. We were told we'd be able to market to all the customers in our territory.

GS: David, we've been down this road before. It's not going to change, Anyway, that's not the issue. The issue is sales and settlements. The reason they're not where we'd like them to be isn't because you can't market to broker customers. We can identify areas where the business can be improved. You need to take on more staff, so we need to get out there and advertise for some loan writers. We need to up the local area marketing too. We need to be innovative here - get to the local community at a grass-roots level, get them involved."[39]

[42] Mr Sattout's account of the conversation is evidence of an assertion by the plaintiff, made known to the defendant, that the franchisees were entitled to market to all customers in their allocated areas (including broker customers), and evidence of the defendant's intransigence on the issue.

[43] There is no written record of the conversation, but Mr Sattout claimed to have a clear recollection of it because it was outside the normal agenda of his meetings with franchisees.

[44] In cross-examination Mr MacInnes denied raising a concern about access to broker customers. He said he did not do so because he believed the issue was under review. His prime concern was the difficulty he was having in recruiting suitable sales staff. This can be contrasted with the less dogmatic position he adopted in his affidavit -

"(d) I may have had a conversation with Mr Sattout in which I said words to the effect that Mac Developments and other franchisees had suffered loss because they relied upon the representations made by RAMS prior to entering into the franchise agreements that they would have access to the customer database and RAMS did not fulfil that promise;

(e) I do not ever recall Mr Sattout ever saying to me words to the effect that the matter had already been addressed and you know the reasons why this cannot happen. I do not believe that was said. ..."[40]

[45] There is an inherent improbability in Mr MacInnes' evidence that he did not raise the issue of access to broker customers. He was under pressure from Mr Sattout because of his poor performance levels. In those circumstances it is inherently unlikely that he would have restrained himself from raising the issue of access to broker customers because he thought it was under some ongoing review - a review for which no timeframe had been identified to the franchisees.

[46] I accept Mr Sattout's evidence about the conversation, and reject that of Mr MacInnes.

[47] In January 2007 Mr Sattout sent an email to all franchisees about a proposed "roadshow" to discuss their concerns with the franchise model and asking for particulars of their concerns and their proposed solutions. One of the franchisees, Mr Mark Harvey, responded with an issues memorandum dated 24 November 2006. Mr MacInnes contributed to the preparation of the memorandum, and was aware of its being sent, although he denied authorising its issue. The issue of withdrawal of access to broker customers was squarely raised in that memorandum.

[48] In February 2007 the defendant wrote to the plaintiff about its failure to meet requisite performance standards. The plaintiff replied on 14 February 2007 with a complaint about the allocation of leads -

"Furthermore, there appears to be a severe discrepancy in the amount of leads that have been referred to my franchise by RAMS as opposed to other franchisees. It should be noted that if I am not receiving the same or similar amount of leads as other franchisees, then this puts me immediately at a disadvantage in meeting the performance standards."[41]

[49] By September - October 2007 the defendant was in negotiation with Westpac about Westpac's acquisition of its business. The defendant held meetings with franchisees to discuss the effect of this on them, in particular on their dealings with old book customers.

[50] On 19 December 2007 Mr Sattout sent an email to all franchisees about the changes that would take place on 4 January 2008 on completion of Westpac's acquisition of the defendant and the implications for them.[42] It included -

On Day 1, we will be starting a new business and building a new book. ...... The Old Book will close as of 31/12/2007 and will be used as the basis for determining the Westpac guaranteed trail for each franchisee.

➢ ....................

➢ The offer will be based on the following key principles:

• By request from customers only and there must be a genuine need. It is not our intention is not to encourage churn.
• e.g. Offers must be customer-driven and the customer must have made the decision to leave RHG (old RAMS).

Q: Will RAMS have a broker channel in time for settlement?

No. The Westpac acquisition did not include the purchase of the broker channel. However, RAMS has made the decision to continue to participate in the broker channel in a new way. Details to be provided soon.

Q: If a customer from the 'old book' calls seeking information about their existing home loan, what will they have to do?

Customers will need to be redirected to RHG - new name for the 'old RAMS'.

Q: What if a RHG customer wants to refinance to RAMS?

Customers have the right to choose who they want to have their mortgage with and can refinance to the most competitive offer.

If customers choose to refinance from RHG to RAMS and there is a genuine need, we will make suitable arrangements to accommodate their financial needs.

We will assess each customer's needs on an individual basis.

Q: What if a RHG customer is complaining about the cost of their RHG loan compared to the new offer by RAMS?

We understand the issues existing customers face, but they are now RHG customers, not RAMS customers. RHG customers will need to call the RHG customer assistance line on 1300 658 489. Should an opportunity present itself where the customer will consider refinancing, then we will assist as per the previous question."

[51] From the time Westpac acquired control of the defendant, there were effectively two loan books - the old loan book of customers prior to Westpac's acquiring control, and the new loan book of customers from that time on. The old loan book remained with RHL, and the new loan book with the defendant (effectively with Westpac, its sole shareholder). Each of the franchisees entered into a deed giving effect to a new payment regime for trail commission on the "old book".

[52] Westpac entered into a new outsourcing agreement with UCS, for the provision of services similar to those previously supplied. Pursuant to that agreement, UCS set up a new database, containing information about prospective and new customers of RAMS and their loans.

[53] Westpac notified franchisees of the terms on which old book customers could be provided with refinance and the terms on which they could access the old database. Access to the old database was subsequently discontinued.

[54] From about 11 January 2008 the defendant was served with Notices of Dispute by 40 of the franchisees.

[55] The Notices of Dispute were in two main formats, each containing numerous complaints.

(i) The first format, which the plaintiff used, included a complaint about the manipulation of "leads" - that is, the way in which contacts by potential customers were allocated to individual franchisees.

(ii) The second included a complaint that, contrary to representations made to them, franchisees were denied access to information to customers the defendant had acquired through independent brokers.

The franchisees' remuneration model had been revamped in January 2007 ("the new remuneration model"). In each format the franchisee's "desired outcome" was to have the new remuneration model applied retrospectively.

[56] Between January and April 2008 the defendant held meetings and conducted negotiations with the franchisees. Mr Robert Graham, the defendant's acting Chief Executive Officer, had charge of the negotiations.

[57] There were two meetings between senior employees of the defendant and a group of franchisees purporting to represent all franchisees held at Westpac's offices in Kent Street, Sydney in February 2008 - on 6 and 27 February. Mr MacInnes did not attend either. At the second meeting Mr Harvey said words to the effect -

"I can't believe no-one from Westpac came to talk to a franchisee about this before Westpac bought RAMS. You would have been told that there are some serious issues across the franchisee network: the commission structure is insufficient, franchisees are forced to rely too heavily on the Trailer Borrowing Scheme and we should be provided with access to the database of customers."

[58] In late February the defendant tabled a conceptual proposal on a without prejudice basis, and subsequently on 7 March 2008 Ms Reyes on behalf of Mr Graham emailed an amended proposal to all franchisees. A formal settlement proposal was emailed to all franchisees on 21 March 2008, and amendments to it were emailed to all franchisees on 28 March 2008.

[59] Ms Susan Bannigan is the defendant's Chief Financial Officer. Mr Graham asked her to take responsibility within the defendant for negotiating settlement of the disputes arising out of the Notices of Dispute.

[60] From about 18 March 2008 until at least the beginning of the week commencing 31 March 2008, Mr Graham worked from Melbourne rather than his usual office in Sydney, because his mother was critically ill. On 27 March 2008 he called Ms Bannigan: he told her he had received a telephone message from Mr MacInnes and asked her to call him back. She sent an email to herself: "Call David MacInnes", followed by a mobile telephone number.

[61] According to Ms Bannigan ("SB") she called Mr MacInnes ("DM") and left a message; he called her back. They had a telephone conversation on or about 31 March 2008 in words to the following effect -

"DM: Susan, I received Rob Graham's email and I'd like to try to resolve this commercially.

DM: But I can't settle on the terms Rob has proposed. I have some issues with the Franchise Agreement. In particular, I really feel strongly that my business has suffered because I have not had access to the customer data that RAMS promised me when I entered into my Franchise Agreement.

SB: OK. I'm afraid we can't move on access to broker customers, David. The financial success of our business is heavily reliant on our broker channel. We need the broker channel to fund our investments in the franchise channel. We can't jeopardise that.

DM: My business has suffered because of the broken promises of RAMS.

SB: Well let's look at how we can structure your settlement to focus on growing your revenues in the future for the benefit of both you and RAMS. The settlement offer on the table is a starting point but I recognise the issues facing each franchisee are not the all same. There are things specific to your business. We would be happy, for example, to talk about how we might better structure the Trailer Borrowing Scheme to suit your cashflow needs. So why don't you have a think about this and come back to me with how we can work with the current offer to suit your business."[43]

Ms Bannigan did not make a diary note or other written record of this conversation.

[62] Mr MacInnes denies that this conversation occurred. It is pertinent to note what occurred over the next few days before determining whether it did occur.

[63] On 1 April 2008 Mr MacInnes emailed Mr Graham about the proposal to settle the dispute with the franchisees. He said that he had had discussions with his financial and legal advisors, and asked the defendant to consider a number of changes, including allowing a period of 24 months from July 2008 in which interest only would be payable on the balance of the trailer borrowing scheme debt, to allow for growth of what was basically a new business.[44]

[64] The next day Mr MacInnes called the defendant and spoke with Ms Bannigan. He says that to the best of his recollection that was the first time he spoke with her. He says he explained that he had sent an email to Mr Graham and its contents, and that she was able to tell him what was acceptable to the defendant and what was not. He says that that was the first occasion on which he spoke with Ms Bannigan.

[65] Ms Bannigan's recollection is of a conversation along these lines -

"DM: Susan, I sent Rob Graham an email yesterday about the settlement offer, but I haven't heard back. I'm keen to draw a line under these issues. I've got some proposals for you and some proposed changes to the settlement terms - are you in a position to consider them?

He sent a copy of his email to Mr Graham. She recommended to Mr Graham that Mr MacInnes' proposal about interest on the TBS debt be accepted but that others be rejected. Mr Graham accepted her recommendation, and she telephoned Mr MacInnes and advised him accordingly. Then she sent Mr MacInnes an email confirming what they had agreed.

[66] Two days later, she emailed Mr MacInnes apologising for delay in forwarding the documents, and he replied that his legal advisors would need at least two working days to review the new proposal. He inquired about progress on 8 April 2008.

[67] On 9 April 2008 Mullins Lawyers delivered a Notice of Dispute to the defendant on behalf of numerous franchisees including the plaintiff. It contained many complaints, including a complaint about the defendant's failure to provide franchisees with access to a database including broker customers and a database of customer information. Mr MacInnes advised the defendant that he did not want to be involved in the dispute any further. The next day Ms Bannigan arranged for the settlement documents to be emailed to him. He executed them on 11 April 2008.

[68] Was there a conversation between Mr MacInnes and Ms Bannigan on or about 31 March 2008 in the terms she recounted? If there was, it was another instance of an assertion by the plaintiff, made known to the defendant, that the plaintiff was entitled to market to broker customers, and another instance of the defendant's unwillingness to change its attitude on the issue.

[69] Ms Bannigan has a distinctive voice, as Mr MacInnes observed. He said he would have remembered speaking with her if they had had the conversation she alleges.

[70] Ms Bannigan is a chartered accountant by profession. She has worked for Westpac since 1995. It is surprising that she did not make a diary note of the conversation. But I accept her explanation that it was not her practice to make diary notes of conversations before about the end of March 2008, when she was advised of the importance of doing so by the head of the Legal Department. She did, however, have a practice of sending an email to confirm any commercial terms agreed.

[71] I accept that Mr Graham called her from Melbourne and asked her to ring Mr MacInnes in response to a call from him.

[72] It is inherently improbable that Mr MacInnes would have sent the email of 1 April 2008 without having first sounded out the defendant about changes to the settlement proposal. His reference to allowing for growth of what was essentially a new business is consistent with what she claims to have said in the conversation.

[73] Mr MacInnes and other franchisees had been unhappy about lack of access to broker customers for a long time. By the end of March 2008 the negotiations between the defendant and them were nearing finalisation. It is unlikely that he would have missed an opportunity to voice his concern.

[74] I find that Mr MacInnes' recollection of oral communications with officers of the defendant was faulty and unreliable. I reject his evidence that did not speak with Ms Bannigan until 2 April 2008, and I accept her evidence of the conversation.

(i) by paragraph (a) of clause 9, the plaintiff released Claims having a certain nexus with the Dispute; and

(ii) the Claims released by paragraph (b) of that clause were identified by reference to the knowledge (actual or constructive) of a party.[45]

[76] Are the plaintiff's claims in this proceeding within the description "any Claim arising from or connected with the Dispute or the circumstances or allegations giving rise to or referred to in the Dispute"?

[77] "Claim" is defined in clause 1.1 as follows -

"The following definitions apply unless the context requires otherwise.

Claim includes any claim or liability of any kind (including one which is prospective or contingent and one the amount of which is not ascertained) and costs (whether or not the subject of a court order)."

[78] In its ordinary meaning "claim" may mean the assertion of an entitlement or a right itself. In West Wake Price and Co v Ching[46] Devlin J considered whether the plaintiffs, a firm of accountants, were entitled to be indemnified under a policy of insurance against claims made by former clients. Three causes of action were alleged against the accountants - negligence, money had and received and conversion, and only one loss claimed, the whole of it being attributed to one or other of the causes of action. His Lordship held that despite the form of the pleadings, there was only one claim, which was primarily in respect of fraud and outside the scope of the policy. He said -[47]

"I think that the primary meaning of the word 'claim' - whether used in a popular sense or in a strict legal sense - is such as to attach it to the object that is claimed; and is not the same thing as the cause of action by which the claim may be supported or as the ground on which it is based. In the Oxford Dictionary 'claim' is defined as: first, 'A demand for something as due; an assertion of a right to something'; secondly, 'Right of claiming; right or title (to something or to have, be, or do something; also on, upon the person, etc, that the thing is claimed from.' All the examples given under these two heads are examples of claims made to an object or on a person. Under the verb 'to claim' it is observed that it is 'often loosely used, especially in the United States for: contend, maintain, assert'. I do not doubt that the word is frequently used in this looser meaning of 'contention', or that it is often used by lawyers as if it meant the same thing as a cause of action."

See also R & J Lyons Family Settlement Pty Ltd v 155 Macquarie Street Pty Ltd.[48]

[79] The definition of "Claim" begins "Claim includes any claim... of any kind". In doing so it invokes the ordinary meaning of claim. Its meaning is not limited to a technical one such as cause of action or originating process. It includes an assertion about an entitlement under the Franchise Agreement, however that assertion may be pursued in legal proceedings - for example, by a claim for damages for breach of contract or by a claim for equitable relief.

[80] The definition goes on to include a claim "which is prospective...". The Shorter Oxford English Dictionary gives the following meanings of "prospective" -[49]

"prospective: 1 Characterized by looking forward into the future. 2 Used or suitable for viewing at a distance. 3 Fitted to afford a fine prospect. 4 That looks or has regard to the future; operative with regard to the future. 5 That looks forward or is looked forward to; that is in prospect; future."

Thus a "prospective claim" is, in its ordinary meaning, one that has not yet arisen, and in my view that is its meaning in the Deed of Settlement.

[81] That conclusion is supported by the surrounding circumstances and by the inherent probability that that is what the parties intended.

[82] Franchisees including the plaintiff had alleged that the defendant's practice of denying them access to information about broker customers was in breach of the Franchise Agreements. But to the knowledge of both the plaintiff and the defendant, the defendant did not intend changing that practice following the execution of the Deed of Settlement. Similarly, franchisees had made complaints about the allocation of "leads", but to the knowledge of both the plaintiff and the defendant, the defendant did not intend making any relevant changes.

[83] Viewed objectively, it is unlikely that the parties intended that the plaintiff should be prevented from suing only in respect of the defendant's past conduct when they both knew that the defendant intended to continue that conduct beyond the execution of the Deed of Settlement.

[84] The words "any Claim arising from or connected with" in clause 9(a) are of wide import. Construed in their context, they would embrace a claim made by a franchisee in the Dispute.

[85] "Dispute" and "Notice of Dispute" are defined in clause 1.1 in this way -

"Dispute means any and all claims and assertions made by any of the RAMS Franchisees against RFG or WBC in relation to facts, matters and circumstances arising before 11 January 2008 including, but not limited to, claims and assertions made in any of the Notices of Dispute.

Notice of Dispute means a 'Notice of Dispute' issued by a Franchisee and provided to RFG at any time between 1 January 2008 and the date of this Deed."

[86] "Dispute" is not defined by reference only to claims made by the plaintiff, but by reference to claims made by any of the franchisees "in relation to facts, matters and circumstances arising before 11 January 2008."

[87] The claims need not have been made in any of the Notices of Dispute issued between 1 January 2008 and the date of the Deed of Settlement.

[88] The dates which appear in the pleading, 12 April 2008 and 6 June 2008, reflect the uncertainty about the date to be ascribed to the Deed of Settlement. The deed contained a heading "Date" and a space for the date to be inserted. The plaintiff executed it on 11 April 2008, and left that space blank. The precise date on which it was executed by the other parties is unknown. On 25 July 2008 the defendant delivered the fully executed deed, bearing the date 6 June 2008, to the plaintiff. Counsel for the plaintiff submitted that the plaintiff delivered the deed to the other parties in escrow,[50] and that upon its execution by them, it became effective as from the date the plaintiff had executed it. Counsel for the defendant's primary submission was that the date of the deed is 6 June 2008. They submitted that in leaving the date blank the plaintiff impliedly authorised the other parties to fill it in,[51] that the deed bears a sensible date inserted with the authority of all the parties, and that in the circumstances, "the date of this Deed" should be construed as 6 June 2008.[52] For present purposes, little turns on the resolution of this question. It is common ground that nothing of relevance to the determination of the preliminary questions occurred between 11 April and 6 June 2008.

[89] The plaintiff and other franchisees assertions about the defendant's practice of denying them access to information about broker customers and its allocation of "leads" were claims in the Dispute.

[90] In my view the claims now made by the plaintiff were prospective claims in the Dispute which was compromised by the Deed of Settlement. By sub-clause 9(a) the plaintiff released the defendant from these claims.

[91] The release effected by sub-clause 9(b) does not require a nexus to the Dispute.

[92] By clause 9(b) "the Franchisee" released the defendant and Westpac from any Claim within the actual or constructive knowledge of "a party" at the date of deed, whether it was or could be known to "a party". Thus, so long as the Claim was one within the actual or constructive knowledge of one party, it was released, even if another party did not know of it or could not have known of it. This construction is consistent with clause 14(a) by which each party acknowledged that it might subsequently discover facts different from or in addition to those of which it was aware when the deed was executed.

[93] The names of the parties to the deed (the plaintiff, the defendant and Westpac) were set out on the first page, immediately following the date. The way each party was to be referred to throughout the deed followed each name in brackets - in the plaintiff's case "the Franchisee".

[94] On the plain meaning of the words used, the plaintiff released the defendant and Westpac from Claims (i.e. entitlements or assertions of entitlement), including "prospective claims", within the actual or constructive knowledge of the plaintiff or the defendant or Westpac.

[95] In circumstances where the conduct now complained of is continuing conduct about which the plaintiff complained to the defendant before the date of the deed, and about which both the plaintiff and the defendant knew that the defendant had no intention to change, the claims now made were prospective claims within the constructive knowledge of them both.

[96] By sub-clause 9(b) the plaintiff released the defendant from those claims.

[97] The present proceeding is prohibited by clause 10.

[98] By that clause the defendant covenanted not to sue "in respect of any matter which is the subject of a release under Clause 9." The words "in respect of" are naturally of wide import, and their effect is to broaden the scope of the covenant not to sue beyond any Claim released under clause 9.

[99] Given my conclusions that the claims now made were released by sub-clauses 9(a) and 9(b), nothing turns on this broader operation of clause 10.

[100] The parties did not intend to amend the Franchise Agreement by the Deed of Settlement. By clause 15 they expressly acknowledged that it was to remain in full force and effect according to its terms.

[101] I do not accept the submission of counsel for the plaintiff that the releases for which the defendant contends would amount to a variation of the Franchise Agreement, contrary to clause 15. The release of a claim, in the sense of an assertion about an entitlement under the agreement, including a future assertion of such an entitlement, does not amount to a variation of the agreement.

[102] The claim of breach of clause 4.17 of the Franchise Agreement pleaded in paragraph 10 of the further amended statement of claim falls within sub-clause 9(a) of the Deed of Settlement because -

(a) It arises from or is connected with the claims made by the plaintiff against the defendant at the meeting between Mr MacInnes and Mr Sattout in October 2005, in the issues memorandum dated 24 November 2006 sent by Mr Harvey in January 2007, and in the telephone conversation between Mr MacInnes and Ms Bannigan on or about 31 March 2008, all of which were claims concerning facts, matter and circumstances arising before 11 January 2008, or it arises from circumstances giving rise to those claims;

(b) It arises from or is connected with the claims made by Mr Harvey at the meeting on 27 February 2008, or alternatively it arises from circumstances giving rise to those claims; and

(c) It arises for or is connected with claims made in a number of Notices of Dispute issued in January and February 2008 and the Notice of Dispute issued on 9 April 2008, or alternatively it arises from circumstances giving rise to those claims.

It falls within the release granted by sub-clause 9(b) because -

(a) As at the date of the Deed of Settlement (whether it was 11 April 2008, 6 June 2008 or 25 July 2008), it was known to the defendant through Mr Sattout and Ms Bannigan; and

(b) It was known to, or could reasonably have been known to, the plaintiff as evidence by Mr MacInnes' complaints to Mr Sattout and Ms Bannigan about lack of access to customer information, his being a contributor to Mr Harvey's issues memorandum, his seeing the Notice of Dispute of 9 April 2008, and the fact that the defendant's practices in this regard did not change after he executed the deed.

[103] The claim of breach of clause 5 of the Franchise Agreement pleaded in paragraph 11A of the further amended statement of claim falls within sub-clause 9(a) of the Deed of Settlement because -

(a) It arises from or is connected with the claims made by the plaintiff in the letter of 14 February 2007, or alternatively arises from circumstances giving rise to those claims; and

(b) It arises from or is connected with claims made in a number of the Notices of Dispute issued in January 2008, including that issued by the plaintiff, and the Notice of Dispute issued on 9 April 2008, or alternatively arises from circumstances giving rise to those claims.

It falls within the release granted by sub-clause 9(b) because -

(a) As at the date of the Deed of Settlement (whether it was 11 April 2008, 6 June 2008 or 25 July 2008), it was known to the defendant through Ms Bannigan; and

(b) It was known to, or could reasonably have been known to, the plaintiff as evidenced by Mr MacInnes having complained about the allocation of leads in his letter of 14 February 2007 and the Notice of Dispute issued on behalf of the plaintiff in January 2008, and the fact that the defendant's practices in this regard did not change after he executed the deed.

[104] The claim of breach of clause 7.19 of the Franchise Agreement pleaded in paragraph 12 of the further amended statement of claim was released for the reasons given in respect of the claim in paragraph 11A.

[105] The claim of breach of clause 7.17 of the Franchise Agreement pleaded in paragraph 13A of the further amended statement of claim was released for the reasons given in respect of the claim in paragraph 10.

[106] The questions ordered to be determined prior to trial should be answered as follows:

(a) Is the Settlement Deed referred to in the defence and counter-claim valid and binding as between the entities nominated as parties to the deed? Yes.

(b) If the Deed of Settlement is valid and binding as between the entities nominated as parties to the deed:

(i) has the plaintiff, by clause 9 of the Settlement Deed, released the defendant, in whole or in part, from the claims made by the plaintiff in these proceedings? Yes.

(ii) if the plaintiff has released the defendant from any or some of the claims made in these proceedings which claims have been released and to what extent? All of the claims have been wholly released.

(iv) has the plaintiff breached clause 10 of the deed by bringing these proceedings? Yes.

[1] Formerly called RAMS Franchising Pty Ltd.

[2] See Trade Practices (Industry Codes - Franchising) Regulations 1998 (Cth), clause 29(1).

[3] See Court Bundle (exhibit 1) tabs 32, 29.

[4] The precise date upon which the defendant executed the deed was not established. However, for present purposes nothing turns on this, as I shall explain.

[12] Further amended statement of claim filed 15 March 2010 (court document no 12) para 10.

[13] Further amended statement of claim filed 15 March 2010 (court document no 12) para 11A.

[14] Further amended statement of claim filed 15 March 2010 (court document no 12) para 12.

[15] Further amended statement of claim filed 15 March 2010 (court document no 12) para 13A.

[16] Further amended statement of claim filed 15 March 2010 (court document no 12)

[17] Equity Act 1867 (Qld) s 62, abrogated by The Repealing Rules 1900 and repealed by The Statute Law Revision Act 1908, but see Conroy v Lowndes [1958] QdR 375 at 383 and Barbagallo v J & F Catelan Pty Ltd [1986] 1 QdR 245 at 250 - 251.

[18] Defendant's Outline of Submissions (court document 34) paras 42-47.

[19] CSR Limited v Amaca Pty Limited [2008] NSWCA 329 at [63]- [64] per Beazley JA (Giles JA and Young CJ in Eq. agreeing); Butler v St John of God Health Care Inc. [2008] WASCA 174 at [47]; Barrett v Universal-Island Records Ltd [2006] EWHC 1009 at [157]- [161]; Kitchen Design and Advice Ltd v Lea Valley Water Co. [1989] 2 Lloyd's Law Reports 221 at 224.

[20] See Homburg Houtimport BV v Agrosin Private Ltd [2003] UKHL 12; [2004] 1 AC 715 at 737; cited by Muir J in Thiess Services Pty Ltd v Mirvac Queensland Pty Ltd [2005] QSC 364 at para 39.

[21] [2004] HCA 52; (2004) 219 CLR 165 at 179.

[22] [2004] HCA 35; (2004) 218 CLR 451.

[23] Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at 461-462.

[24] [2008] QCA 158.

[25] Homburg Houtimport BV v Agrosin Private Ltd (The Starsin) [2003] UKHL 12; [2004] 1 AC 715 at 737.

[26] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 179.

[27] Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 179.

[28] Per Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 at 912.

[29] McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 at 589.

[30] [1973] UKHL 2; [1974] AC 235 at 251.

[31] [1985] AC 191 at 201.

[32] [1954] HCA 23; (1954) 91 CLR 112.

[34] (1992) 28 NSWLR 26 at 29.

[35] [2008] QCA 270.

[36] [2001] UKHL 8; [2002] 1 AC 251; [2001] 1 All ER 961.

[37] See Grant [1954] HCA 23; (1954) 91 CLR 112 at 129; Salkeld v Vernon [1758] EngR 153; (1758) 1 Eden 64; 28 ER 608 per Lord Keeper Henley; Karam v ANZ Banking Group Limited [2001] NSWSC 709 at [406] per Santow J.

[38] The defendant's Head of Franchising.

[39] Affidavit of George Sattout filed 16 July 2010 (court document no 22) para 24.

[40] Affidavit of David John MacInnes filed 2 August 2010 (court document no 25) para 80(d) and (e).

[43] Affidavit of Susan Jane Bannigan filed 22 July 2010 (court document no 24) para 18.

[45] Defendant's Outline of Submissions (court document no. 34) paras 70, 76.

[46] [1957] 1 WLR 45.

[48] [2006] NSWCA 177 at [43] - [45].

[49] Oxford University Press, 3rd edition, 1973.

[50] Third further amended defence and counterclaim filed 5 August 2010 (court document no 30) para 21I(b); Reply and answer to the second amended defence and counterclaim filed 7 July 2010 (court document no 17) para 21I(a); Federal Commissioner of Taxation v Taylor [1929] HCA 13; (1929) 42 CLR 80 at 86 - 87.

[51] Armor Coatings (Marketing) Pty Ltd v General Credits (Finance) Pty Ltd (1978) 17 SASR 259 at 277; Warburton v National Westminster Finance Australia Ltd (1988) 15 NSWLR 238 at 248; Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 323 per Gleeson CJ; ANZ Banking Group Ltd v Rodgers [2003] QSC 304 at [81]- [82]; Samaha v Corbett Court [2006] NSWSC 1441 at [24]; Paradise Constructors v Poyser [2007] VSCA 316 at [51]; Bishop of Crediton v Bishop of Exeter [1905] 2 Ch. 455.

[52] JLF Corporation Pty Ltd v Mount Petrie Developments Pty Ltd [2004] QSC 44; [2004] 2 QdR 267 at 269-270.