ROUSELLIS v MAIURANO and ANOR [1998] NSWCA 195

ROUSELLIS v MAIURANO SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

PRIESTLEY and BEAZLEY JJA and FITZGERALD AJA 21 September 1998, 19 November 1998

[1998] NSWCA 195

CONTRACT — necessary to differentiate between issue estopped and res judicata in its extended sense — possible to recover both debt owed under franchise agreement and damages for misrepresentation which induced entry into agreement.

Priestley JA I agree with Fitzgerald AJA's reasons for his decision in this appeal, and with the orders he proposes.

Beazley JA I agree with Fitzgerald AJA.

Fitzgerald AJA The appellant was induced by misrepresentations to enter into a contract, described as a "franchise agreement", with two companies, which at the time were insolvent and were later ordered to be wound up on that ground. The appellant paid $100,000 to the companies as consideration for the franchise agreement. He also performed work under the franchise agreement for which he was underpaid the sum of $68,459. The respondents were directors of the companies and, at all material times, knew of the companies' "parlous financial position", to adopt a phrase used by Wilcox J in the Federal Court in a previous proceeding between the parties to this appeal.

The appellant sued the respondents (and others) in the Federal Court for damages for breach of s51A and s52 of the Trade Practices Act 1974 (Commonwealth), s41 and s42 of the Fair Trading Act 1987 (NSW), deceit and negligence. Wilcox J, who was the trial judge, held that the appellant was entitled to damages equivalent to the $100,000 consideration paid for the franchise agreement plus interest, but refused to award additional damages for the amount unpaid to the appellant for work which he had performed under the franchise agreement, which presumably includes some profit". His Honour expressed the tentative view that "... costs incurred by [the appellant] in connection with the unpaid jobs... as distinct from the total sum owing to him..." might have been recoverable as damages, but the appellant "... did not allege or prove such a case, nor did he establish his costs".