Robert Mario Ferfolia and anor v Master Education Services Pty Ltd & ors [2009] NSWIRComm 17

Robert Mario Ferfolia and anor v Master Education Services Pty Ltd & ors [2009] NSWIRComm 17

The franchise agreement was unfair both in its terms and the way it was entered and operated, due to significant misrepresentations regarding likely profitability, support, and material provision, as well as failures of the franchisor to provide contractual and reasonable commercial support. These facts rendered the contract void ab initio except as to any business returns, and entitled the applicant to restitution of the purchase and franchise fees paid under the contract, less any outstanding loan.

Jurisdiction
Australia
Judgment Date
24 February 2009
Procedural Posture
Unfair Contract Application Under S 106 of the Industrial Relations Act 1996 / Final Judgment at First Instance
Outcome
Application granted in substantial part; franchise agreement declared void ab initio (except as to business returns); restitutionary orders made in applicant's favour.
Legal Topics
['unfair Contracts' 'misrepresentation' 'franchise Agreements' 'remedies for Unfairness' 'clean Hands Principle']
['employment Law' 'contract Law' 'franchising Law'] ['unfair Contracts' 'misrepresentation' 'franchise Agreements' 'remedies for Unfairness' 'clean Hands Principle']

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Procedural Posture

Unfair Contract Application Under S 106 of the Industrial Relations Act 1996 / Final Judgment at First Instance

Legal Issues

  1. 1 ['Whether there was unfairness in the franchise agreement as entered into and operated under s 106 of the Industrial Relations Act 1996;' 'Whether pre-contractual and ongoing representations by the franchisor amounted to unfairness;' 'Whether the franchisees received the goods, services, material, and support they paid for;' "Whether the 'clean hands' principle barred relief;" 'What remedies should be granted for the unfair contract']

Ratio Decidendi

The franchise agreement was unfair both in its terms and the way it was entered and operated, due to significant misrepresentations regarding likely profitability, support, and material provision, as well as failures of the franchisor to provide contractual and reasonable commercial support. These facts rendered the contract void ab initio except as to any business returns, and entitled the applicant to restitution of the purchase and franchise fees paid under the contract, less any outstanding loan.

Court Disposition

Application granted in substantial part; franchise agreement declared void ab initio (except as to business returns); restitutionary orders made in applicant's favour.

Orders

  • ['Franchise agreement declared void ab initio (except as to actual returns made in business operation)' 'Respondents to repay applicant $57,500 (franchise purchase price)' 'Respondents to repay applicant $21,600 (franchise fees paid)' 'Respondents to reimburse applicant $1,999 (English materials)' 'Deduction of...