48 Peterson J gave effect to the finding of unfairness relating to the relocation claim by ordering that Oraka and Mr Johnson pay to the Pilgrims an amount that was characterised as being the cost of the relocation and refurbishment and assessed at $70,000, together with interest thereon. Senior counsel for Oraka and Mr Johnson submitted that these orders were erroneous on the following grounds:
1. If, contrary to the evidence and the findings of the trial judge, the Franchise Agreement did result from a representation that there would be a relocation and refurbishment of the shop premises at no expense to the Pilgrims, then logically and in light of the evidence the only proper order would be limited to the amount by which the profitability or value of their business was relevantly affected. As the Pilgrims led no evidence by which any finding could be made that there was such an effect, or, if there was, its amount, his Honour's conclusion that the loss suffered by the Respondents should be assessed at the amount that they paid for the relocation and refurbishment is an assumption that is neither logical nor supported by the evidence.
2. If Peterson J's assumption was correct, his assessment that the amount paid for the relocation and refurbishment was $70,000, was contrary to the evidence. The evidence established that the cost of the re-location was not $70,000, but rather was no more than $46,700. His Honour wrongly accepted the Pilgrims' assertions in this respect, and ignored the evidence that the Pilgrims had included in their claim for $70,000 amounts of $12,300 that they had spent on a new car and $11,000 that they had spent on a new soft-serve machine, neither of which had anything to do with the relocation. Further, the evidence was that the Pilgrims were relieved on about 29 August 1995 of their obligation to pay a levy of 2.5 per cent of turnover as a contribution to advertising expressly on account of the cost of the relocation. This should have been, but was not, set off against any liability of Oraka and Mr Johnson on account of the relocation.
49 It was submitted that Peterson J's initial finding that the arrangement associated with the franchise agreement was unfair because it "permitted Oraka to regain at no cost the benefit of the business for which it had been paid full value" was vitiated by the fact that the Pilgrims had never contended for such a finding. The circumstances in which the Pilgrims had given up the shop and the business were mentioned, only in passing and without any relevant suggestion of unfairness, when the Pilgrims' case was opened. The circumstances were not mentioned in their pleadings, evidence or submissions. Contrary to principle, the capital loss claim ($185,000) was determined by Peterson J without any notice to Oraka, Johnson or Wendy's: Bourke Air Charter v Easton (2001) 109 IR 443 and Burgess v Mt Thorley Operations Pty Ltd (2002) 115 IR 13 at [119].
50 In the supplementary judgment delivered on 13 September 2002, Peterson J withdrew his finding that Oraka had received the benefit of the business as a result of the Pilgrims having returned it to Oraka, and in substitution found that the franchise was returned to Wendy's in December 2000. However, Peterson J found that Oraka and Mr Johnson should continue to be jointly and severally liable with Wendy's on the capital loss claim. The only basis that was then suggested for this finding (it not having been mentioned in the first decision) was that Oraka and Mr Johnson had been associated with Wendy's in the arrangement and shared the proceeds by way of franchise fees. Counsel for Oraka and Mr Johnson submitted that there was no rational, sensible or just basis for the orders against Oraka, and still less against Mr Johnson, given that by December 2002, Oraka and Mr Johnson ceased to have anything to do with the franchise agreement, having earlier assigned their interest to Wendy's and that the Pilgrims' complaints about the franchise fees had not been accepted by his Honour earlier in the proceedings.