Watt v Shepherd (No 2) [2021] FCA 826

Watt v Shepherd (No 2) [2021] FCA 826

The deemed admissions resulting from striking out the defence established that the respondents made multiple misleading and deceptive representations and engaged in unconscionable conduct, including failing to comply with mandatory franchising disclosure obligations, subjecting applicants to unfair tactics and disadvantage. These contraventions entitled applicants to have the franchise agreements declared void from 30 June 2018, restoration of business assets, and judgment for damages to be assessed. The individual and corporate respondents were also accessorily liable for the statutory contraventions.

Parties
First Applicant: Espie Ian Watt; Second Applicant: Mazzawattie Pty Ltd ACN 096 943 476 as trustee of SMSUT; Third Applicant: Wattabear Pty Ltd ACN 148 915 262; Fourth Applicant: Sylvia Watt; Fifth Applicant: Glen McCallum; Sixth Applicant: Kerrie Peacock; Seventh Applicant: Asbet Pty Ltd ACN 003 317 404; Eighth Applicant: Burroughs Pty Ltd ACN 613 528 028; Ninth Applicant: Hermidale Holdings Pty Ltd ACN 151 952 939; First Respondent: Phillip Charles Shepherd; Second Respondent: Mark Robert Steidle; Third Respondent: RX Holdings Pty Ltd ACN 612 534 746; Fourth Respondent: Summit Pharmacy Group Pty Ltd ACN 152 166 660
Jurisdiction
Australia
Judgment Date
23 July 2021
Procedural Posture
Civil / Default Judgment Following Strike Out of Defence; Assessment of Available Relief Other Than Damages
Outcome
Franchise agreements declared void from 30 June 2018; orders for restoration of website and business name; judgment for damages to be assessed; costs reserved.
Legal Topics
Misleading and Deceptive Conduct, Unconscionable Conduct, Franchising Law, Accessorial Liability, Default Judgment, Voidable Contracts, Remedies
Competition and Consumer Law Contract Law Commercial Law Misleading and Deceptive Conduct Unconscionable Conduct Franchising Law Accessorial Liability Default Judgment +2 more

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Parties

Espie Ian Watt

First Applicant

Mazzawattie Pty Ltd ACN 096 943 476 as trustee of SMSUT

Second Applicant

Wattabear Pty Ltd ACN 148 915 262

Third Applicant

Sylvia Watt

Fourth Applicant

Glen McCallum

Fifth Applicant

Kerrie Peacock

Sixth Applicant

Asbet Pty Ltd ACN 003 317 404

Seventh Applicant

Burroughs Pty Ltd ACN 613 528 028

Eighth Applicant

Hermidale Holdings Pty Ltd ACN 151 952 939

Ninth Applicant

Phillip Charles Shepherd

First Respondent

Mark Robert Steidle

Second Respondent

RX Holdings Pty Ltd ACN 612 534 746

Third Respondent

Summit Pharmacy Group Pty Ltd ACN 152 166 660

Fourth Respondent

Procedural Posture

Civil / Default Judgment Following Strike Out of Defence; Assessment of Available Relief Other Than Damages

Legal Issues

  1. 1 Whether respondents' representations constituted misleading and deceptive conduct under s 18 of the Australian Consumer Law (ACL)
  2. 2 Whether respondents engaged in unconscionable conduct under s 21 of the ACL
  3. 3 Whether failure to provide franchising documents as required by the Code was unconscionable

Ratio Decidendi

The deemed admissions resulting from striking out the defence established that the respondents made multiple misleading and deceptive representations and engaged in unconscionable conduct, including failing to comply with mandatory franchising disclosure obligations, subjecting applicants to unfair tactics and disadvantage. These contraventions entitled applicants to have the franchise agreements declared void from 30 June 2018, restoration of business assets, and judgment for damages to be assessed. The individual and corporate respondents were also accessorily liable for the statutory contraventions.

Court Disposition

Franchise agreements declared void from 30 June 2018; orders for restoration of website and business name; judgment for damages to be assessed; costs reserved.

Orders

  • Each contract between fourth respondent (Summit Pharmacy Group Pty Ltd) and specified applicants be void on and from 30 June 2018.
  • Third respondent (RX Holdings Pty Ltd) to assign to first applicant (Espie Ian Watt) the ownership and sole administrator rights of bushchemist.com.au website.