Lee v Passiontree Velvet Pty Ltd & Ors [2019] NSWDC 710

Lee v Passiontree Velvet Pty Ltd & Ors [2019] NSWDC 710

The franchise agreement was terminated by consent and the plaintiff's contractual right to repayment arose under the June 2017 repayment arrangement, as varied in November 2017. Passiontree Velvet failed to make the agreed repayments, so the plaintiff's debt claim against it was made out. The claim against Mr Kim failed because the promises to repay did not, without more, imply a representation as to Passiontree Velvet's future capacity to repay, and in any event the plaintiff did not prove reliance or causation linking any alleged representation to the loss of the $400,000 already paid.

Jurisdiction
Australia
Judgment Date
13 December 2019
Procedural Posture
Civil Proceeding for Debt/contract and Misleading or Deceptive Conduct Arising From a Franchise Arrangement / Principal Judgment After Hearing
Outcome
Judgment for the plaintiff against the first defendant for $453,495.89 including interest; first defendant's cross-claim dismissed; judgment for the second defendant against the plaintiff.
Legal Topics
['franchise Agreement' 'termination by Consent' 'repayment of Franchise Fee' 'misleading or Deceptive Conduct' 'future Representations' 'absent Defendant' 'deed of Company Arrangement' 'costs']
['contract' 'australian Consumer Law' 'civil Procedure' 'corporations'] ['franchise Agreement' 'termination by Consent' 'repayment of Franchise Fee' 'misleading or Deceptive Conduct' 'future Representations' 'absent Defendant' 'deed of Company Arrangement' 'costs']

Case Brief

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Procedural Posture

Civil Proceeding for Debt/contract and Misleading or Deceptive Conduct Arising From a Franchise Arrangement / Principal Judgment After Hearing

Legal Issues

  1. 1 ["Whether the plaintiff's claim against Passiontree Velvet arose under the franchise agreement or under the later repayment arrangements made in June 2017 and November 2017." 'Whether Passiontree Velvet was liable to repay the $400,000 franchise fee with interest.' 'Whether promises to repay the franchise fee by instalments conveyed an implied representation that Passiontree Velvet would have the future capacity to repay.' 'Whether s 4 of the Australian Consumer Law deemed any future representation to be misleading in the absence of evidence of reasonable grounds.' 'Whether the plaintiff established reliance and causation for the misleading or deceptive conduct claim against Mr Kim.' "Whether judgment should be entered against an absent first defendant and how the first defendant's cross-claim should be dealt with."]

Ratio Decidendi

The franchise agreement was terminated by consent and the plaintiff's contractual right to repayment arose under the June 2017 repayment arrangement, as varied in November 2017. Passiontree Velvet failed to make the agreed repayments, so the plaintiff's debt claim against it was made out. The claim against Mr Kim failed because the promises to repay did not, without more, imply a representation as to Passiontree Velvet's future capacity to repay, and in any event the plaintiff did not prove reliance or causation linking any alleged representation to the loss of the $400,000 already paid.

Court Disposition

Judgment for the plaintiff against the first defendant for $453,495.89 including interest; first defendant's cross-claim dismissed; judgment for the second defendant against the plaintiff.

Orders

  • ['Judgment for the plaintiff against the first defendant for the sum of $453,495.89 (incl of interest).' "The first defendant is to pay the plaintiff's costs of the proceeding referable to the plaintiff's claim in debt against the first defendant." 'Orders 1 & 2 are not to be enforced without the plaintiff obtaining...