Sureslim Australia v Mansell [2002] NSWSC 945

Sureslim Australia v Mansell [2002] NSWSC 945

The court held the franchisees breached the agreement by failing to pay fees, but found no actionable misleading or deceptive conduct or unconscionable conduct by franchisor. The restraint of trade clause was enforceable to the extent reasonable: limited to 2 years and within 30 kilometres of any SureSlim clinic operating as at 2 April 2002 in NSW. The cross-claims failed.

Jurisdiction
Australia
Judgment Date
11 October 2002
Procedural Posture
Equity – Contract Dispute (franchise) With Cross Claim for Statutory Relief / Hearing on Liability and Orders to Set Aside Franchise Deeds (damages to Be Heard Separately)
Outcome
Plaintiff's claim for breach of contract and reasonable restraint orders succeed; cross-claim dismissed; damages to be assessed separately.
Legal Topics
['breach of Contract' 'restraint of Trade' 'misleading and Deceptive Conduct' 'unconscionable Conduct']
['contract' 'trade Practices' 'equity'] ['breach of Contract' 'restraint of Trade' 'misleading and Deceptive Conduct' 'unconscionable Conduct']

Case Brief

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Procedural Posture

Equity – Contract Dispute (franchise) With Cross Claim for Statutory Relief / Hearing on Liability and Orders to Set Aside Franchise Deeds (damages to Be Heard Separately)

Legal Issues

  1. 1 ['Whether non-payment of franchise fee amounted to breach of franchise agreement' 'Whether restraint of trade clause in the franchise agreement was too wide and therefore unenforceable' 'Whether the franchisees should be restrained from operating a competing business' 'Whether representations about the franchise were misleading or deceptive under s52 of the Trade Practices Act 1974' 'Whether the conduct of the franchisor was unconscionable under s51AC of the Trade Practices Act']

Ratio Decidendi

The court held the franchisees breached the agreement by failing to pay fees, but found no actionable misleading or deceptive conduct or unconscionable conduct by franchisor. The restraint of trade clause was enforceable to the extent reasonable: limited to 2 years and within 30 kilometres of any SureSlim clinic operating as at 2 April 2002 in NSW. The cross-claims failed.

Court Disposition

Plaintiff's claim for breach of contract and reasonable restraint orders succeed; cross-claim dismissed; damages to be assessed separately.

Orders

  • ['Interim judgment for $50,000 against the Mansells; $43,000 against Finlayson.' 'Injunctions granted to enforce restraint of trade covenant, limited as stated, expiring on 2 April 2004.' 'Damages for breach of contract to be assessed; matter stood over for final orders.' 'Cross-claim dismissed.']