Carazi Pty Ltd v Blow Dry Bar Franchising Pty Limited (in liq) & Anor (No. 2) [2015] NSWSC 108

Supreme Court New South Wales

Medium Neutral Citation: Carazi Pty Ltd v Blow Dry Bar Franchising Pty Limited (in liq) & Anor (No. 2) [2015] NSWSC 108 Hearing dates: 2 and 3 February 2015 Date of orders: 03 February 2015 Decision date: 03 February 2015 Jurisdiction: Equity Division Before: White J Decision: Refer to paras [67] and [68] of judgment. Catchwords: CONTRACT – vitiating factors – fraudulent misrepresentation – rescission – where plaintiff was induced to enter a contract with the first defendant by reason of fraudulent misrepresentations made by the first defendant and its sole director, the second defendant – held that the plaintiff validly rescinded the contract

TRADE PRACTICES – claim by plaintiff for damages in respect of pre-contractual misleading or deceptive conduct contrary to s 18 of the Australian Consumer Law – plaintiff entered franchising agreement with first defendant – representations made by first defendant and its sole director, the second defendant, as to the suitability of a franchise location selected by the first defendant for the plaintiff, the profitability and management of the franchise to be conducted by the plaintiff, and the profitability of other franchises - representations as to future matters under s 4 of the Australian Consumer Law – no "evidence is adduced to the contrary" under s 4(2) of the Australian Consumer Law – held that each representation was misleading or deceptive – held that the second defendant was knowingly involved in contraventions by the first defendant

DAMAGES – general principles – consideration of the 'once and for all' rule – plaintiff entered lease with third party in reliance on the defendants' fraudulent misrepresentations – plaintiff claimed, among other heads of loss, the value of the future rent payments to be made under the lease – unclear whether the lessor would grant consent to the assignment of the lease from the plaintiff to another company – whether Court can award damages and grant leave to the plaintiff to apply for further damages in the event that the lessor does not consent to the assignment of the lease – held that the Court could so order, applying the High Court's decision in Polkinghorne v Holland – ordered that the damages awarded be without prejudice to the plaintiff's right to recover any further sum as damages in respect of the plaintiff's continuing obligations under the lease Cases Cited: Carazi Pty Ltd v Blow Dry Bar Franchising Pty Ltd [2015] NSWSC 28 Gould v Vaggelas (1984) 157 CLR 215 Pennant Hills Restaurants Pty Limited v Barrell Insurances Pty Limited (1981) 145 CLR 625 Polkinghorne v Holland (1934) 51 CLR 143 Rabelais Pty Ltd v Cameron (1995) 95 ATC 4,552 Turner v TR Nominees Pty Ltd (1995) 31 ATR 578 Sydney Refractive Surgery Centre Pty Ltd v Beaumont [2004] NSWSC 164 Deeny v Gooda Walker Ltd (in liq) [1995] 1 WLR 1206 Walton Construction Pty Limited v Illawarra Hotel Company Pty Limited [2011] NSWSC 1188; (2012) 28 BCL 202 Category: Principal judgment Parties: Carazi Pty Ltd (Plaintiff) Blow Dry Bar Franchising Pty Limited (in liq) (1st Defendant) Nathan Cuneen (a bankrupt) (2nd Defendant) Representation: Counsel: G Sirtes SC with D Moujalli (Plaintiff)