Hungry Jack's v Burger King [1999] NSWSC 1029

New South Wales Supreme Court CITATION : Hungry Jack's v Burger King [1999] NSWSC 1029 CURRENT JURISDICTION : Equity Division Commercial List FILE NUMBER(S) : 50258/1996 HEARING DATE(S) : 27/04/99-29/04/99, 03/05/99-07/05/99, 10/05/99-13/05/99, 17/05/99-21/05/99, 01/06/99, 03/06/99, 07/06/99, 10/06/99, 15/06/99-17/06/99, 23/06/99-25/06/99, 28/06/99-30/06/99, 01/07/99, 05/07/99, 06/07/99, 08/07/99, 12/07/99-16/07/99,19/07/99-22/07/99, 26/07/99-30/07/99, 02/08/99-04/08/99, 09/08/99-12/08/99, 16/08/99, 17/08/99, 23/08/99-25/08/99, 13/09/99-16/09/99, 20/09/99-22/09/99. JUDGMENT DATE : 5 November 1999

Hungry Jack's Pty Limited - Plaintiff PARTIES : Burger King Corporation - First Defendant The Shell Company of Australia Limited - Second Defendant Burger King Australia Pty Limited - Third Defendant JUDGMENT OF : Rolfe J

COUNSEL : Mr T.F. Bathurst QC/Mr N.C. Hutley SC/Mr T.D. Castle - Plaintiff Mr B.C. Oslington QC/Mr M.R. Ellicott - First and Third Defendants SOLICITORS : Mallesons Stephen Jaques - Plaintiff Corrs Chambers Westgarth - First and Third Defendants CATCHWORDS : General Principles Relating to the Construction of a Commercial Contract:; Cehane NV v Bremer Handekgesellschaft mbH [1976] QB 44 at 71, Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99 at 109, Ankar Pty Limited v National Westminster Finance (Australia) Limited (1987) 162 CLR 594 at 556-557 and Hide & Skin Trading Pty Limited v Oceanic Traders Limited (1990) 20 NSWLR 310 applied.; Whether a breach of contract is curable and meaning to be attributed to that word:; Batson v De Carvalho & Ors (1948) 48 SR 417, Tricontinental Corporation Limited v HDFI Limited (1990) 21 NSWLR 689, F.L. Schuler AG v Wickman Machine Tool Sales Limited [1974] AC 235 applied.; Dr J.W. Carter "Termination Clauses" Vol 3 Journal of Contract Law (1990-1991) 90 at 95 referred to.; Whether a term or condition of a contract:; Tramways Advertising Pty Limited v Luna Park (NSW) Limited (1938) 38 SR 632, DTR Nominees Pty Limited v Mona Homes Pty Limited & Anor (1978) 138 CLR 423, Bentsen v Taylor & Sons & Co (No 2) [1893] 2 QB 274, Amann Aviation Pty Limited v Commonwealth of Australia (1990) 22 FCR 527, Hong Kong Fir Shipping Co Limited v Kawasaki Kisen Kaisha Limited [1962] 2 QB 26, and Shevill v Builder's Licensing Board (1981) 149 CLR 627 applied.; Whether a fiduciary duty created:; United Dominions Corporation Limited v Brian Pty Limited (1987) 157 CLR 1 at 12, Australian Breeders Co-operative Society Limited v Jones (1997) 26 ACSR 26, Marr v Arabco Traders Limited [1987] 1 NZBLC 102,732 at 102,745, Bialla v Mallina (1993) 11 ACSR 785 at 831, Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41 at 72-73, Bristol and West Building Society v Mathews [1998] 1 Ch 1 at 17, Biala Pty Limited v Mallina Holdings Limited & Ors (1993) ACSC 11.785, Dickie v Torbay Pharmacy (1986) Limited [1995] 3 NZLR 429 at 439-440 and Brunninghausen v Glavanics (1999) NSWCA 199 applied.; Consequences of Breach of Fiduciary Duty and Causation:; Beach Petroleum NL v Abbott Tout Russell Kennedy (1997) 26 ACSR 114 noted.; Greater Pacific Investments Pty Limited (In Liquidation) v Australian National Industries Limited & Anor (1996) 39 NSWLR 143 at 154, O'Halloran v R.T. Thomas & Family Pty Limited (1998) 45 NSWLR 262, Environment Agency (formerly National River Authority) v Empress Car Co (Abertillery) Limited [1998] 2 WLR 350, Target Holidays Limited v Redferns [1996] 1 AC 421, Cansor Enterprises Limited v Broughton & Co (1991) 85 DLR (4th) 129, Maguire & Anor v Makaronis & Anor (1997) 188 CLR 449, and London Loan and Savings Co v Brickenden (1934) 34 DLR 465 applied.; Term of Contract for Co-operation:; Mackay v Dick (1881) 6 App Cas 251 at 263, Butt v McDonald (1896) 7 QLJ 68 at 70-71, Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Limited (1979) 144 CLR 596 and News Corporation Limited v Australian Rugby League (1996) 139 ALR 193 noted and applied.; Terms of Contract for Reasonableness and Good Faith:; Renard Constructions (ME) Pty Limited v Minister for Public Works (1992) 26 NSWLR 234, Hughes Bros Pty Limited v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney & Anor (1993) 31 NSWLR 91, Alcatel Australia Limited v Scarcella & Ors (1998) 44 NSWLR 349 and Aiton Australia Pty Limited v Transfield Pty Limited (1999) NSWSC 996 noted and followed.; Dispensation with performance of contract:; Peter Turnbull & Co Pty Limited v Mundus Trading Company (Australasia) Pty Ltd (1954) 90 CLR 235, Mahoney v Lindsay & Ors (1980) 55 ALJR 118 and Foran & Anor v Wight & Anor (1989) 168 CLR 385 followed.; Application of Rules in Browne v Dunn:; Browne v Dunn (1894) 6 R 67 and Allied Pastoral Holdings Pty Limited v Commissioner of Taxation [1983] 1 NSWLR 1 applied.; Measure of Damages; Malec v J.C. Hutton Pty Limited (1990) 169 CLR 638; Tszyu v Fightvision Pty Limited & Anor (1999) NSWCA 323 (13 September 1999), Norris v Blake (No 2) (1997) 41 NSWLR 49 and Sellars v Adelaide Petroleum NL & Ors (1994) 179 CLR 332 at 355 applied.; Inference where a witness not called:; Jones v Dunkel (1959) 101 CLR 298, Favre v Arenales & Anor (1992) 27 NSWLR 437, Ghazal v Government Insurance Office of New South Wales (1992) 29 NSWLR 336 and Payne v Parker [1976] 1 NSWLR 191 noted and applied.; Mistake and Breach of Fiduciary Duty: ; Taylor & Ors v Johnson (1983) 151 CLR 422, Tutt & Anor v Doyle & Anor (1997) 42 NSWLR 10, Brickenden v London Loan & Saving Co [1934] 3 DLR 465 at 469 and Commonwealth Bank of Australia v Smith (1991) 102 ALR 453 applied.; Accessory Liability:; Royal Brunei AIrlines Sdn BHd v Tan [1995] 2 AC 378 applied.; Exemplary Damages Not Awarded for Breach of Contract:; McGregor on Damages (16th Edition) (1997) para 442, Halsbury's Laws of Australia (Volume 6) para 110-11060, Butler v Fairclough & Anor (1917) 23 CLR 78, Gray v Motor Accident Commission (1999) 73 ALJR 45, Flamingo Park Pty Limited v Dolly Dolly Creation Pty Limited & Ors (1996) 65 ALR 500 at 526 and Wehbe & Anor v Rolando Pty Limited & Ors (1990) NSWSC 384 applied. DECISION : Held:-; 1. That upon the proper construction of a "one off" agreement the defendant was not, in the circumstances, entitled to terminate it; 2. That a breach is capable of cure, generally speaking and in the circumstances of this case, if it can be cured for the future; 3. That on the facts, the defendant owed the plaintiff a fiduciary duty, which it breached, in circumstances entitling the plaintiff to equitable compensation; 4. That the plaintiff was entitled to damages for breach of contract. Consideration given to the calculation of damages especially for loss of opportunity; That, on the facts, the defendant was liable under the accessory liability principle for the breach of fiduciary duty to the plaintiff of its employee, in which breach it had acted, and that certain contracts could be rescinded on that ground and for mistake; 6. Circumstances in which ; (a) the need to cross-examine arose, and; (b) the Jones v Dunkel inference would not arise; considered; 7. Consideration of implied terms of reasonableness, good faith and co-operation.