Blockbuster Australia Pty Ltd v Karioi Pty Ltd [2009] NSWSC 1089

Blockbuster Australia Pty Ltd v Karioi Pty Ltd [2009] NSWSC 1089

No estoppel by convention arose as the parties did not mutually conduct their relationship on the basis alleged by Blockbuster. Franchise agreements for Noosaville and Nambour did not terminate but expired after a period of consensual negotiation. Therefore, Blockbuster was not entitled to exercise termination rights under cl 18.6 (option to purchase selected assets) or cl 18.9 (lease assignment). Clauses 18.9 and 32, properly construed, gave primacy to the fair market value option in cl 32 upon expiration. Restraint of trade provisions were unreasonable in protecting Blockbuster's interests where goodwill was primarily built up by Karioi. Blockbuster was entitled to confidential...

Parties
Plaintiff: Blockbuster Australia Pty Ltd; 1st Defendant: Karioi Pty Ltd; 2nd Defendant: Peter Lindsay Fife; 3rd Defendant: Ronald James Fortington
Jurisdiction
Australia
Judgment Date
16 October 2009
Procedural Posture
Principal Judgment / Trial
Outcome
Claims for restraints and lease assignment dismissed; claims for delivery up and injunctions as to confidential information partly allowed; cross-claim dismissed.
Legal Topics
Franchise Agreements, Restraint of Trade, Estoppel by Convention, Goodwill, Confidential Information, Lease Assignment
Contract Law Franchising Law Equity Franchise Agreements Restraint of Trade Estoppel by Convention Goodwill Confidential Information +1 more

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Parties

Blockbuster Australia Pty Ltd

Plaintiff

Karioi Pty Ltd

1st Defendant

Peter Lindsay Fife

2nd Defendant

Ronald James Fortington

3rd Defendant

Procedural Posture

Principal Judgment / Trial

Legal Issues

  1. 1 Whether franchise agreements expired or were terminated
  2. 2 Whether estoppel by convention applies to continuation of franchise agreements
  3. 3 Whether options to purchase assets or require lease assignments were validly exercised

Ratio Decidendi

No estoppel by convention arose as the parties did not mutually conduct their relationship on the basis alleged by Blockbuster. Franchise agreements for Noosaville and Nambour did not terminate but expired after a period of consensual negotiation. Therefore, Blockbuster was not entitled to exercise termination rights under cl 18.6 (option to purchase selected assets) or cl 18.9 (lease assignment). Clauses 18.9 and 32, properly construed, gave primacy to the fair market value option in cl 32 upon expiration. Restraint of trade provisions were unreasonable in protecting Blockbuster's interests where goodwill was primarily built up by Karioi. Blockbuster was entitled to confidential...

Court Disposition

Claims for restraints and lease assignment dismissed; claims for delivery up and injunctions as to confidential information partly allowed; cross-claim dismissed.

Orders

  • Defendants to deliver up all copies of customer databases for Noosaville and Nambour businesses as at 31 August 2008 and any database of persons who were customers as at that date which has been developed since 1 September 2008.
  • Defendants restrained from using for their own benefit any part of the customer database of the Noosaville and Nambour franchise businesses as at 31 August 2008 and any developed since 1 September 2008, until further order.