Wallera P/L v CGM Investments P/L & Anor [2001] NSWSC 96

New South Wales Supreme Court

CITATION : Wallera P/L v CGM Investments P/L & Anor [2001] NSWSC 96 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3989/99 HEARING DATE(S) : 7 February 2001 JUDGMENT DATE : 1 March 2001

Wallera Pty Limited (Plaintiff)

v PARTIES : CGM Investments Pty Limited (First Defendant)

A Whistle and Co Pty Limited (Second Defendant) JUDGMENT OF : Davies AJ at 1

COUNSEL : P: Mr P W Gray Ds: Mr J T Johnson SOLICITORS : P: Sullivans Solicitors Ds: McNeil James CATCHWORDS : Franchise Agreement - notice of breach - whether the notice adequately identified the breach - Practice - motion for judgment under Part 34 rule 8 - whether motion appropriate when counsel addressed generally on the case. LEGISLATION CITED : Supreme Court Rules, Pt 34 r 8 Conveyancing Act, 1919, s 129 Stroud's Judicial Dictionary, Fifth Edition CASES CITED : Fletcher v Nokes [1897] 1 Ch 271 Fox v Jolly [1916] 1 AC 1 Austin v Secretary, Department of Family and Community Services (1999) 92 FCR 138 DECISION : See paragraph 46.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

DAVIES AJ

THURSDAY, 1 MARCH 2001 3989/99 - WALLERA PTY LIMITED v CGM INVESTMENTS PTY LIMITED & ANOR

JUDGMENT 1 HIS HONOUR: The plaintiff, Wallera Pty Limited ("Wallera"), has sued for a declaration that a Franchise Agreement dated 15 May 1984, entered into between it as franchisee and the first defendant, CGM Investments Pty Limited ("CGM") as franchisor, remains binding on CGM. The plaintiff claims orders restraining CGM and the second defendant, A Whistle and Co Pty Limited ("Whistle"), from taking any action which would implement or be dependent upon the purported termination of the Franchise Agreement and from doing any act or thing which would bring about the cancellation or omission of the plaintiff's entry in the Yellow Pages telephone directory. 2 CGM and Whistle have cross-claimed for a declaration that the Franchise Agreement has been validly terminated and for orders restraining Wallera from holding itself out as being associated with a business under the name "Electrodry" or from utilising Trade Mark No A565298 and No A439894 issued in favour of Whistle. 3 At the hearing, Mr P W Gray of counsel appeared for Wallera and Mr J T Johnson of counsel appeared for CGM and Whistle. 4 At the conclusion of the plaintiff's case, Mr Johnson moved the Court for judgment in accordance with Part 34 rule 8 of the Supreme Court Rules which reads, inter alia:- … (2) An opposite party may, after the conclusion of the evidence in the beginning party's case in chief or after the conclusion of the evidence given for all parties, move the Court for judgment for that opposite party in the proceedings generally or on any claim for relief in the proceedings on the ground that, on the evidence given, judgment for the beginning party could not be supported. (3) Where the ground of an opposite party's motion under subrule (2) is established, the Court shall give judgment for the opposite party accordingly. (4) Where an opposite party moves the Court under subrule (2), he may not adduce evidence or further evidence in the proceedings generally or on the claim for relief in question, as the case may be. … 5 This rule has particular application in a case where it is alleged that a plaintiff's case must fail for lack of evidence. On such a motion, the issue is whether, taking the plaintiff's evidence at its highest, the plaintiff must fail. Notwithstanding that a motion under the rule may be dismissed, the court may nevertheless go on to dismiss the plaintiff's case on the ground that one or more witnesses for the plaintiff should not be believed or that their evidence should not be given the effect for which the plaintiff contends. An application of the rule is useful when counsel for the defendant proposes not to address generally on the evidence in the case but rather to point to some specific matter or matters said to constitute a fatal flaw in the plaintiff's case. 6 It appeared during the course of submissions that counsel were intending to address generally on all aspects of the case. It seems to me, therefore, that the motion under the rule achieved nothing other than to give Mr Johnson the tactical advantage of addressing first. As counsel addressed on the basis that they were making final submissions, I do not propose to deal separately with the motion. 7 Wallera was set up when, in 1984, Mr N K Jain, who is now the principal executive of Wallera, and Mr P H Burchell, who is the principal executive of CGM and Whistle, proposed that a company should be formed to take on, inter alia, the franchise for the Sydney area of a carpet dry-cleaning process which the defendants were promoting. Wallera was incorporated with a nominal share capital of $100,000 divided into 100,000 shares at $1 each. Originally, two shares were issued, one of which became registered in the name of CGM and the other in the name of Jain Co. Services. 8 On 15 May 1984, a Loan and Shareholders Agreement was entered into whereby it was agreed that CGM and Jain Co Services would each advance to Wallera $50,000 interest free for a term of three years. There was a right conferred upon each of the debtors to redeem the loan in whole or in part by the issue of shares at a premium of $999 each. On the same day, a Deed of License was executed which recited that Whistle owned the name "Electrodry" and had made application for a trademark and which further recited that Whistle had certain rights to use the process originally developed by Fibrecare Corporation of America to electromagnetically dry-clean carpets. The Deed went on to provide that Whistle grant to CGM an exclusive licence to use the name "Electrodry" and to operate the process for the term of fifty years from the date of the Deed.