Rafferty v Madgwicks [2012] FCAFC 37

Rafferty v Madgwicks [2012] FCAFC 37

The Full Court upheld the trial judge's findings that both the Heads of Agreement and the Rights Agreement fell within the Franchising Code of Conduct, that the Donovan parties contravened s 51AD and s 52 of the Trade Practices Act 1974 (Cth) due to misleading representations and failure to comply with the Code, and that orders for repayment of moneys were within power. The Court also confirmed the trial judge's conclusion that the solicitors, Madgwicks, did not have actual knowledge of the contraventions, did not breach their duties, and did not engage in misleading conduct. Both appeals were dismissed with costs.

Parties
First Appellant (sad 123 of 2010), First Respondent (sad 124 of 2010): Patrick Campbell Rafferty; Second Appellant (sad 123 of 2010), Third Respondent (sad 124 of 2010): Karaville Holdings Pty Limited; Respondent (sad 123 of 2010), Fourth Respondent (sad 124 of 2010): Madgwicks; First Appellant (sad 124 of 2010): Time 2000 Systems (Australia) Pty Limited; Second Appellant (sad 124 of 2010): Time 2000 Operations (Australia) Limited; Third Appellant (sad 124 of 2010): Embleton Limited (A company incorporated in Hong Kong); Fourth Appellant (sad 124 of 2010): Stephen Gerard Donovan; Second Respondent (sad 124 of 2010): Santora Holdings Pty Limited
Jurisdiction
Australia
Judgment Date
20 March 2012
Procedural Posture
Appeal / Federal Court of Australia Full Court (appeal From Single Judge Decision)
Outcome
Both appeals dismissed with costs
Legal Topics
Contravention of S 51 AD Trade Practices Act 1974 (cth), Misleading and Deceptive Conduct – S 52 Trade Practices Act 1974 (cth), Application of Franchising Code of Conduct, Breach of Retainer by Solicitors, Relief Under S 87 Trade Practices Act 1974 (cth), Company Pre Incorporation Contracts S 131 Corporations Act 2001 (cth)
Trade Practices Law Franchising Law Contract Law Corporations Law Fair Trading Contravention of S 51 AD Trade Practices Act 1974 (cth) Misleading and Deceptive Conduct – S 52 Trade Practices Act 1974 (cth) Application of Franchising Code of Conduct +3 more

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Parties

Patrick Campbell Rafferty

First Appellant (sad 123 of 2010), First Respondent (sad 124 of 2010)

Karaville Holdings Pty Limited

Second Appellant (sad 123 of 2010), Third Respondent (sad 124 of 2010)

Madgwicks

Respondent (sad 123 of 2010), Fourth Respondent (sad 124 of 2010)

Time 2000 Systems (Australia) Pty Limited

First Appellant (sad 124 of 2010)

Time 2000 Operations (Australia) Limited

Second Appellant (sad 124 of 2010)

Embleton Limited (A company incorporated in Hong Kong)

Third Appellant (sad 124 of 2010)

Stephen Gerard Donovan

Fourth Appellant (sad 124 of 2010)

Santora Holdings Pty Limited

Second Respondent (sad 124 of 2010)

Procedural Posture

Appeal / Federal Court of Australia Full Court (appeal From Single Judge Decision)

Legal Issues

  1. 1 Whether the Franchising Code of Conduct applied to the HOA and RA agreements under the Trade Practices Act 1974 (Cth)
  2. 2 Whether there was misleading and deceptive conduct by the Donovan parties under s 52 of the TPA
  3. 3 Whether the trial judge erred in finding entitlement to relief under s 87 of the TPA

Ratio Decidendi

The Full Court upheld the trial judge's findings that both the Heads of Agreement and the Rights Agreement fell within the Franchising Code of Conduct, that the Donovan parties contravened s 51AD and s 52 of the Trade Practices Act 1974 (Cth) due to misleading representations and failure to comply with the Code, and that orders for repayment of moneys were within power. The Court also confirmed the trial judge's conclusion that the solicitors, Madgwicks, did not have actual knowledge of the contraventions, did not breach their duties, and did not engage in misleading conduct. Both appeals were dismissed with costs.

Court Disposition

Both appeals dismissed with costs

Orders

  • The appeal in SAD 123 of 2010 be dismissed.
  • The appellants in SAD 123 of 2010 pay the respondent's costs of and incidental to the appeal.