Tomlinson P.J. & Anor v Cut Price Deli Pty Ltd [1995] FCA 637

Tomlinson P.J. & Anor v Cut Price Deli Pty Ltd [1995] FCA 637

The first respondent, through its officers, engaged in misleading and deceptive conduct by representing that a 38% gross profit was achievable on a $16,000 weekly turnover, without reasonable grounds, thereby inducing the applicants to purchase a worthless franchise business and causing their loss. Accessory liability attaches to individuals knowingly concerned in such conduct. The applicants are entitled to damages reflecting the loss suffered by reliance on these representations, but not to avoidance of the contract; a set-off for unpaid fees is allowed on the cross-claim.

Jurisdiction
Australia
Judgment Date
12 July 1995
Procedural Posture
Civil / Judgment After Trial
Outcome
Judgment for the applicants against first, second and fourth respondents. Proceedings against third and fifth respondents dismissed. Orders as to costs made accordingly.
Legal Topics
['misleading and Deceptive Conduct' 'damages' 'franchise Agreements' 'accessory Liability' 'set Off and Cross Claims' 'rescission and Avoidance']
['trade Practices' 'contract' 'torts'] ['misleading and Deceptive Conduct' 'damages' 'franchise Agreements' 'accessory Liability' 'set Off and Cross Claims' 'rescission and Avoidance']

Case Brief

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Procedural Posture

Civil / Judgment After Trial

Legal Issues

  1. 1 ['Whether representations by the franchisor regarding turnover and gross profit were misleading or deceptive contrary to s 52 of the Trade Practices Act 1974 (Cth).' 'Whether the applicants relied on the representations made in deciding to purchase the franchise.' 'Assessment of damages for misleading conduct, including consequential loss.' 'Whether accessory liability arises for other respondents under s 75B of the Trade Practices Act 1974 (Cth).' 'Whether avoidance of the franchise agreement is an appropriate remedy under s 87 of the Trade Practices Act.' 'Whether the franchisor is entitled to a set-off for unpaid fees and rental.']

Ratio Decidendi

The first respondent, through its officers, engaged in misleading and deceptive conduct by representing that a 38% gross profit was achievable on a $16,000 weekly turnover, without reasonable grounds, thereby inducing the applicants to purchase a worthless franchise business and causing their loss. Accessory liability attaches to individuals knowingly concerned in such conduct. The applicants are entitled to damages reflecting the loss suffered by reliance on these representations, but not to avoidance of the contract; a set-off for unpaid fees is allowed on the cross-claim.

Court Disposition

Judgment for the applicants against first, second and fourth respondents. Proceedings against third and fifth respondents dismissed. Orders as to costs made accordingly.

Orders

  • ['Judgment for the applicants against the first respondent for $102,108.' 'Judgment for the applicants against the second respondent for $248,175.' 'Judgment for the applicants against the fourth respondent for $248,175.' 'Proceedings against the third and fifth respondents dismissed.' "The first, second and fourth...