Carazi Pty Ltd v Blow Dry Bar Franchising Pty Limited (in liq) & Anor (No. 2) [2015] NSWSC 108

Carazi Pty Ltd v Blow Dry Bar Franchising Pty Limited (in liq) & Anor (No. 2) [2015] NSWSC 108

Carazi Pty Ltd validly rescinded the franchise agreement as it was induced by fraudulent misrepresentations. The defendants' representations regarding site suitability, franchise profitability, future profits, and management support were misleading or deceptive, and liability attaches pursuant to s 18 and s 236 of the Australian Consumer Law. Damages of $732,697 are awarded, with liberty reserved to apply for further damages concerning lease obligations, following the line of authority in Polkinghorne v Holland and related cases.

Parties
Plaintiff: Carazi Pty Ltd; First Defendant: Blow Dry Bar Franchising Pty Limited (in liq); Second Defendant: Nathan Cuneen (a bankrupt)
Jurisdiction
Australia
Judgment Date
03 February 2015
Procedural Posture
Principal Judgment / Judgment and Orders
Outcome
Judgment for the plaintiff; franchise agreement validly rescinded; damages awarded.
Legal Topics
Fraudulent Misrepresentation, Rescission, Misleading or Deceptive Conduct, Accessory Liability, Measure of Damages, Once and for All Rule
Contract Trade Practices Damages Fraudulent Misrepresentation Rescission Misleading or Deceptive Conduct Accessory Liability Measure of Damages +1 more

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Parties

Carazi Pty Ltd

Plaintiff

Blow Dry Bar Franchising Pty Limited (in liq)

First Defendant

Nathan Cuneen (a bankrupt)

Second Defendant

Procedural Posture

Principal Judgment / Judgment and Orders

Legal Issues

  1. 1 Whether the plaintiff was induced to enter a franchise agreement by fraudulent misrepresentation
  2. 2 Whether representations made to the plaintiff were misleading or deceptive under s 18 of the Australian Consumer Law
  3. 3 Whether the second defendant was knowingly involved in statutory contraventions

Ratio Decidendi

Carazi Pty Ltd validly rescinded the franchise agreement as it was induced by fraudulent misrepresentations. The defendants' representations regarding site suitability, franchise profitability, future profits, and management support were misleading or deceptive, and liability attaches pursuant to s 18 and s 236 of the Australian Consumer Law. Damages of $732,697 are awarded, with liberty reserved to apply for further damages concerning lease obligations, following the line of authority in Polkinghorne v Holland and related cases.

Court Disposition

Judgment for the plaintiff; franchise agreement validly rescinded; damages awarded.

Orders

  • Declare that by letter dated 11 November 2013 the plaintiff validly rescinded the franchise agreement dated 26 October 2012.
  • Judgment for the plaintiff against both the first defendant and the second defendant in the amount of $732,697.