Supreme Court New South Wales Medium Neutral Citation: BB Australia Pty Ltd v Danset Pty Ltd [2017] NSWSC 1307 Hearing dates: 28/08/2017, 29/08/2017, 30/08/2017, 31/08/2017 and 01/09/2017 Date of orders: 28 September 2017 Decision date: 28 September 2017 Jurisdiction: Equity - Commercial List Before: McDougall J Decision: See at [132]. Catchwords: CONTRACT – franchise agreement – where defendants breached the franchise agreement inter alia by denying the plaintiff its right of first refusal or option to purchase – whether plaintiff would have pursued its right of first refusal or option to purchase but for the breach – CONTRACT – franchise agreement – whether breach of the franchise agreement caused the plaintiff loss – CONTRACT – franchise agreement – whether misleading or deceptive conduct by the defendants caused the plaintiff loss – EQUITY – trusts – whether the terms of the franchise agreement operated to create a trust over the assets of the defendants' store Legislation Cited: Civil Procedure Act 2005 (NSW) Evidence Act 1995 (NSW) Supreme Court Act 1970 (NSW) Category: Principal judgment Parties: BB Australia Pty Ltd (Plaintiff) Danset Pty Ltd (First Defendant) Jorge Manuel Simoes Miraldo (Second Defendant) Maria Graca Samagaio Miraldo (Third Defendant) Tresblue Pty Ltd (Fourth Defendant) John Kevin Price (Fifth Defendant) Representation: Counsel: K Rees SC / P D Herzfeld (Plaintiff) I R Pike / J S Burnett (First, Second and Third Defendants) J A Darvall (Fourth and Fifth Defendants) Solicitors: Macpherson Kelley Lawyers (Plaintiff) Slater and Gordon (First, Second and Third Defendants) Paul Mattick & Associates (Fourth and Fifth Defendants) File Number(s): 2016/94570 Judgment 1. HIS HONOUR: The plaintiff (BBA) operates the "Blockbuster" franchise in Australia. The first defendant (Danset) was a franchisee of BBA from October 2002 to October 2012. It conducted the franchised business from rented premises at O'Brien Street, Bondi. The second and third defendants (Mr and Mrs Miraldo) are the shareholders in and directors of Danset, and guaranteed its obligations under the franchise agreement. 2. The fourth defendant (Tresblue) operates a number of "Civic Video" franchises. One of those is, and at relevant times was, located at Curlewis Street, Bondi, about 600 metres from Danset's store. The fifth defendant (Mr Price) is the shareholder and director of Tresblue. 3. The video rental market entered a state of decline – on the evidence, irreversible decline – by no later than 2009. Video rental shops throughout Australia were closing, at an increasing rate, as consumers turned to alternative sources of gratification for their desire to watch movies on a small screen. By 2011, Mr and Mrs Miraldo decided that they wanted to get out of the video rental business. Mr Price came to the view that the local market (that is, in the Bondi area) could not sustain two video rental businesses. In the result, Tresblue bought the assets of Danset's business, but not the rights of Danset under its franchise agreement. The contract for sale was made on 30 August 2012 and settled on 9 October 2012. 4. There is no doubt, that by selling its business assets to Tresblue, Danset breached its obligations under the franchise agreement in a number of ways. The sale was negotiated, agreed and settled without any notice to BBA. Danset feared (correctly, I think) that if BBA got wind of the sale, it would commence proceedings for injunctive relief to prevent exchange or completion, as the case might be. 5. BBA commenced these proceedings, seeking damages or, alternatively, equitable compensation or an account of profits. As against Danset, BBA says that it is entitled to damages for breach of contract or for misleading or deceptive conduct. Alternatively, BBA says, Danset held the assets that it sold to Tresblue on trust for BBA, because of BBA's right of first refusal, and option to purchase, under the franchise agreement. That is the basis for BBA's claim, as against Danset, for equitable compensation or an account of profits. 6. As against Tresblue, BBA claims damages for inducing Danset to breach its contract. Alternatively, BBA says, Tresblue induced or procured the breach of trust or, again alternatively, assisted with knowledge in Danset's dishonest and fraudulent design resulting in Danset's breach of trust. 7. BBA says that Mr and Mrs Miraldo are liable as having been knowingly involved in Danset's misleading or deceptive conduct. It says, further, that Mr and Mrs Miraldo and Mr Price either induced or procured Danset's breach of trust, or are liable for knowing assistance in that breach of trust. The agreed issues 1. The parties agreed on the issues that arose on the pleadings. I set out their list of issues (omitting references to the pleadings): BREACH OF CONTRACT 1. Danset admits that it breached cll 15.4 and 15.5 of the franchise agreement (transfer franchise without agreement of Blockbusters) and cl. 9.10(b) (make loans to a Competitive Business). The remaining questions on breach of contract are: Did Danset / the Miraldos breach: (a) the duty to co-operate in the franchise agreement? (b) the restraints in cl 9.10(c) and cl. 18.10 of the Franchise Agreement (and the comparable cll 1.3 and 4.6(b) of the Deed of Confidentiality and Restraint) from diverting business or economic opportunities from a Blockbuster Video Store; rendering services to a Competitive Business; or diverting any customer or business to a Competitive Business — and if so, are the restraints are an unreasonable restraint of trade? (c) cl 9.16 (ensuring employees with access to "Confidential Information" sign a Deed of Confidentiality and Restraint)? 2. Would BB would have acquired the equipment and inventory of the Bondi Store and either: (a) operated the Bondi Store as a "corporate store"; or (b) identified a new franchisee for the Bondi Store? 3. If BB would have acted as set out in 2. above did BB suffer any loss, and if so what was that loss? 4. Is BB entitled to recover its costs and expenses of enforcement either: (a) as damages; or (b) on an indemnity basis under the Franchise Agreement, and, if so, what is the amount of those costs and expenses? 5. Are the Miraldos obliged to indemnify Blockbuster under the Deed of Guarantee and Indemnity for: (a) any loss or damage identified in paragraph 3 above; and (b) any costs or expenses identified in paragraph 4 above; MISLEADING OR DECEPTIVE CONDUCT CLAIM 6. Did Danset and/or the Miraldos engage in misleading or deceptive conduct in trade or commerce, contrary to s 18 of the Australian Consumer Law? 7. Were the Miraldos involved in Danset's misleading or deceptive conduct? 8. What loss did BB Australia suffer as a result? INDUCING BREACH OF CONTRACT 9. Did Tresblue and/or Price induce a breach of contract by Danset? 10. What loss did BB Australia suffer as a result? TRUST CLAIMS 11. Did Danset hold the assets of the store on trust for BB Australia either: (a) on terms in accordance with the "First Right of Refusal" contained in the Franchise Agreement; or (b) on terms in accordance with "Option to Purchase" contained in the Franchise Agreement? 12. Did Danset breach any such trust? 13. Did the Miraldos / Tresblue / Price induce the breach of trust, or did they assist with knowledge in a dishonest and fraudulent design on the part of Danset? 14. What loss did BB Australia suffer as a result, and are Danset / Miraldos / Tresblue / Price liable for equitable compensation? 15. What profit did Danset / Tresblue / Price make as a result of any breach of trust, and are they liable to account for that profit ? GENERALLY 16. Was Tresblue a bona fide purchaser for value without notice? 17. Did BB Australia fail to mitigate its loss? 1. By the time of final submissions, the first issue (breach of contract) and the sixth and seventh issues (misleading or deceptive conduct) were conceded. Danset and Mr and Mrs Miraldo acknowledged that all the allegations of breach, not merely those initially admitted, had been proved. Likewise, they acknowledged that the case of misleading or deceptive conduct, and the Miraldos' accessory liability for that conduct, had been proved. 2. Tresblue and Mr Price did not admit that all the allegations of breach of contract had been proved. However, they did not contest the proposition. Mr Darvall of Counsel, who appeared for them, conceded that the court could find that every conceded breach of contract had been proved. He was right to do so. The evidence, including but by no means limited to admissions made by Mr Miraldo in the course of cross-examination, is all one way. Relevant terms of the franchise agreement 1. The franchise agreement between BBA and Danset (and Mr and Mrs Miraldo as guarantors [1] ) was made on 30 October 2002. Its term was 10 years, expiring on 30 October 2012. There was an option for renewal for a further five years. 2. Clause 2 provided for the grant of the franchise and, by cl 2.2, that Danset would perform its obligations faithfully and honestly, and would do its best to promote and enhance the Blockbuster "Marks". Clause 2.4 provided that Danset could not transfer, assign, sublicense or otherwise deal with the franchise or the franchise agreement except as permitted by cl 15. 3. Clause 3.13 required Danset to maintain lawful possession of "the Site" (the O'Brien Street premises) and comply with its lease of those premises. It required, further, that Danset should give BBA a copy of the signed lease within 15 days of 30 October 2002. 4. Clause 13.4 required Danset, among other things, to report immediately to BBA "any information, events or developments which may have a significant or material adverse impact on the development and operation of the Store…". 5. Clauses 15.4 and following dealt with transfer of the franchise by Danset. I set out cls 15.4, 15.5 and (in part) 15.8: 15.4 FRANCHISEE must not enter into a FRANCHISEE Transfer without the prior written agreement of FRANCHISOR. 15.5 FRANCHISEE and each of the Principal Owners understand and acknowledge that the rights and duties created by this Agreement are personal to FRANCHISEE and its Owners and that FRANCHISOR has granted the rights hereunder to FRANCHISEE in reliance upon the individual or collective character, skill, aptitude, attitude, business ability and experience and financial capacity of FRANCHISEE and its Owners. Accordingly, no FRANCHISEE Transfer may be made or attempted to be made, without the prior written approval of FRANCHISOR. Any FRANCHISEE Transfer without such approval shall constitute a breach hereof and convey no rights to or interests in this Agreement, the Franchise, FRANCHISEE or the STORE or in the assets of FRANCHISEE or the STORE. … 15.8 FRANCHISOR will not unreasonably withhold its approval of a FRANCHISEE Transfer that meets the requirements of this Clause. At least all of the following conditions, must be met prior to, or concurrently with, the effective date of the Transfer unless compliance is waived in writing by FRANCHISOR: (a) FRANCHISEE and its Owners are not in breach of this Agreement; … (f) If the FRANCHISEE Transfer is of this Agreement or a Controlling Interest in FRANCHISEE Transfers which in the aggregate constitute the FRANCHISEE or is one of a series of FRANCHISEE transfers which in the aggregate constitute the FRANCHISEE Transfer of this Agreement or a Controlling Interest in FRANCHISEE: (i) the transferee must satisfy FRANCHISOR's business experience and aptitude criteria; (ii) transferee and the proposed FRANCHISEE Transfer must satisfy FRANCHISOR's financial criteria for the operation of the STORE in accordance with this Agreement; and (iii) neither the transferee nor its owners may be engaged in or intend to engage in a competitive Business; For the purposes of this sub-paragraph 15.8(f), FRANCHISOR's business experience criteria includes, but is not limited to, FRANCHISOR's prohibition on any transferee or its owners from owning, directly or indirectly, or engaging in, or intending to engage in, a Competitive Business and FRANCHISOR's requirement that transferee and its owners are able to fully comply with the terms and obligations of the then current form of standard franchise agreement, including such agreement's restrictive covenants; … (h) the transferee and its owners must agree, at FRANCHISOR's option, to execute FRANCHISOR's then current form of standard franchise agreement and such ancillary documents (including undertakings and guarantees) as are then customarily used by FRANCHISOR in the grant of franchises for BLOCKBUSTER Video Stores in the Country, modified as necessary to provide for the same Licence Fees required by this Agreement and a term equal to the remaining term of this Agreement; … (k) if the transferring Owner is not a party to this Agreement, the transferring Owner must execute an agreement containing the restrictive covenants in the form set out in clauses 18.10 to 18.13 of this Agreement; (l) the transferee and its owners must execute confidentiality and restraint agreements in the form set out in Annexure G or as required by FRANCHISOR; … 1. Clauses 15.15 and following gave BBA a right of first refusal in the event that Danset gave written notice of an offer to sell, and prescribed what was to be done, and how the right might be exercised, once such notice was given. I set out cls 15.15, 15.16 and 15.19: 15.15 If FRANCHISEE or any of its Owners shall at any time decide to sell an interest in this Agreement, the Franchise, the STORE, some or all of the assets of the STORE (other than inventory items in the ordinary course of business) or an Ownership Interest in FRANCHISEE, FRANCHISEE or its Owner(s) shall obtain a bona fide, arm's length, executed written offer, stating that it will not be withdrawn for a least 30 days, from a qualified, responsible, bona fide and fully disclosed purchaser. 15.16 FRANCHISEE and/or the transferring Owners shall provide to FRANCHISOR as soon as practicable: (i) a true and complete copy of the offer (and any proposed ancillary agreements); (ii) the terms of any financing arrangements; (iii) a statement of the registered and beneficial shareholdings in an offeror that is a company; (iv) a copy of the most current annual company return of an offer that is a company; (v) the names and addresses of the partners in an offeror that is a partnership; and (vi) a copy of the proposed disclosure as required by law. … 15.19 FRANCHISOR shall have the right, exercisable by written notice delivered to FRANCHISEE or the transferring Owner(s) within thirty (30) days from the date of receipt of all of the information requested by FRANCHISOR to evaluate the offer (including disclosure documents required to be provided to the transferee by law), to purchase the interest described in the offer for the price and on the terms and conditions contained in the offer. If FRANCHISEE agrees, FRANCHISOR may substitute cash, a cash equivalent, or marketable securities of equal value for any form of payment proposed in the offer. FRANCHISOR's credit shall be deemed equal to the credit of any proposed purchaser. FRANCHISOR shall have not less than sixty (60) days to prepare for closing. 1. Clauses 17.5 and following dealt with termination of the franchise by BBA in the event of breach. Cl 17.5 provided for termination if, Danset having breached the agreement, BBA gave notice to rectify and Danset did not comply with that notice. Cl 17.6 provided, so far as it is relevant: 17.6 A breach of this Agreement occurs if: FRANCHISEE fails to: (i) obtain Lawful Possession of the Site in the time provided in Section 3.7 of this Agreement; … (iv) maintain Lawful Possession of the Site during the Term of the Franchise; … (b) FRANCHISEE makes any unauthorised use or disclosure of or duplicates any copy of any Confidential Information, makes any unauthorised use of the Marks or Copyright Materials or use, duplicates, or discloses any portion of the Operating Manual or the Licensed Program or Alternate Software Program or any data generated by the use of the Licensed Program or Alternate Software Program including without limitation unauthorised use of bar coding procedures prescribed by FRANCHISOR or challenges the validity of the Marks or Copyright Materials or the rights of FRANCHISOR and its Affiliates in the Licensed Program or Alternate Software Program; … (f) FRANCHISEE makes an assignment or transfer in violation of this Agreement; 1. Clause 18.13 gave BBA the right to purchase the assets of the "Store" on termination of the franchise: 18.13 Upon termination of this Agreement by FRANCHISOR in accordance with its terms and conditions, upon termination of this Agreement by FRANCHISEE without cause, or upon expiration of this Agreement (without the grant of a Successor Franchise as now specifically described in Section 16), FRANCHISOR shall have the option, exercisable by giving written notice thereof within sixty (60) days from the date of such expiration or termination, to purchase from FRANCHISEE all the assets used in the STORE. Assets shall include, without limitation, leasehold improvements, equipment, furniture, fixtures, signs, inventory and the lease or sub-lease for this Site. FRANCHISOR shall have the unrestricted right to assign this option to purchase. 1. Clause 18.15 specified what the purchase price would be (and what it would not include): 18.15 The purchase price for the assets of the STORE shall be the fair market value, determined as of the date of termination or expiration of this Agreement in a manner consistent with reasonable depreciation of leasehold improvements owned by FRANCHISEE and the equipment, furniture, fixtures, signs and inventory of the STORE, provided that the purchase price shall not contain any factor or increment for any trademark, service mark or other commercial symbol used in connection with the operation of the STORE, goodwill or "going concern" value for the STORE or the data generated from the Licensed Program or Alternate Program and further provided that FRANCHISOR may exclude from the assets purchased hereunder any equipment, furniture, fixtures, signs and inventory that are not approved as meeting quality standards for BLOCKBUSTER Video Stores. The length of the remaining term of the lease or sublease for the Site of the STORE shall also be considered in determining the fair market value hereunder. 1. Clause 18.16 provided for expert determination if the parties could not agree on price. It is not necessary to set it out. 2. It is convenient to mention at this stage that Ms Rees of Senior Counsel, who appeared with Mr Herzfeld of Counsel for BBA, accepted that no right of first refusal under cl 15.15 had arisen. She was correct to do so, because there was never a "bona fide, arm's length, executed written offer, stating that it will not be withdrawn for at least 30 days, from a qualified, responsible, bona fide and fully disclosed purchaser" that was provided to BBA pursuant to cl 15.6. Although Ms Rees did not concede the point, it appears to be clear that Tresblue could never have been regarded as a "qualified… purchaser", because it was engaged in, and intended to continue to be engaged in, a "Competitive Business" (see cl 15.8(f)(iii)). The two businesses (Danset's and Tresblue's) were clearly competitive, both in the ordinary sense of that word and for the purposes of the defined term "Competitive Business". Second issue: option to purchase; right of first refusal 1. The pleaded case is that had Danset given BBA the benefit of its right of first refusal or option to purchase, BBA would have bought "the Assets" at a price that was less than their true value, and would have made profits from the continued operation of the O'Brien Street store (either as a company store or as a franchised business). Further, BBA claims "loss of value and goodwill to the Blockbuster brand", although there is no evidence directed specifically to this head of damage. 2. The expression "the Assets" is defined to mean "the equipment and inventory used in the [O'Brien Street] Store". The evidence of BBA's managing director Mr Uniacke was that had BBA been offered the right of first refusal or the option to purchase, it "would have purchased the store" [2] . However, his evidence, and for the most part the parties' submissions, considered the question in terms of the option to purchase the assets on termination of the franchise agreement. 3. In my view, it is unlikely that, had Danset obtained an offer from a purchaser who could have been approved by BBA to buy the franchise and the assets of the business for $280,000, BBA would have exercised its right of first refusal. Mr Uniacke did not really address this; his concern was to show that BBA would have bought "the Assets". Had BBA been offered and taken up its right of first refusal, it would have acquired those assets, but it would have been required to do so at the hypothetical price of $280,000. There is nothing in Mr Uniacke's evidence to suggest that BBA was prepared to do this, and there are two pieces of evidence which suggest the contrary. 4. First, in January 2011, Mr Miraldo asked BBA to notify "the franchise community" (which I take to mean other Blockbuster franchisees) that Danset was considering selling its store. The email reads as follows: Could you please forward this message to the franchise community: Blockbuster Bondi Beach will be placed on the market in the coming weeks. (After 29 years in the Video Rental Industry, the enthusiasm is waning and it's probably time that Maria and I pass on the baton). Blockbuster Bondi Beach is a smaller boutique style store, just under 100 sq metres, but don't let that fool you. It probably has one of the healthiest turnovers in Blockbuster on a sq metre by sq metre basis. Blockbuster Bondi Beach is mainly a rental store – in 2010 85% of the total turnover was rental. It is a very easy store to operate under management and it is a profitable store. If anyone in the franchise community is interested please contact us either by phone or email and we will provide more information. 1. It may be assumed that BBA did notify the franchise community of the opportunity that was offered. There is no evidence that any franchisee was interested in taking up the offer. Nor is there any evidence that BBA itself investigated the possibility that it might do so. In truth, I think, BBA's interest lay more in acquiring the assets of the store at whatever price it could negotiate if and when the franchise agreement expired. 2. The second piece of evidence is that on 21 March 2012, Mr Miraldo notified BBA that Danset was considering selling the O'Brien Street store for about $300,000. The letter inquired whether BBA was interested in buying at that price or had "any interest in exercising the right of first refusal as per our Franchise Agreement". BBA's response was to give "in principle consent to the transfer" subject to a number of conditions. The response was conspicuously silent on the topic of exercising the right of first refusal. There is nothing in Mr Uniacke's evidence to show that BBA gave any, let alone any serious, consideration to the proposal. 3. As I have indicated, the thrust of BBA's case as it was put at trial is that, upon expiry (without renewal) of the franchise agreement, it would have exercised its option under cl 18.13 to buy the assets that Danset used in the O'Brien Street store. Mr Uniacke said that thereafter, BBA would have sought to renew and extend the lease, and then do one of two things: 1. operate the shop as a company business; or 2. procure a new franchisee to take an assignment of the lease, and operate the shop as a franchised business. 1. For the reasons that follow, I do not accept this aspect of Mr Uniacke's evidence. In coming to that conclusion, I do not intend any criticism of his honesty. I think that this element of his evidence is heavily informed by hindsight analysis and perceptions of self-interest. In my view, the objective and contemporaneous evidence provides no support for it. It is tempting, although perhaps unfair to Mr Uniacke, to observe "of course, he would say that" (to echo the observations of Callinan J in Rosenberg v Percival [3] ; and note the observations of Gleeson CJ in the same case at [16]). I accept that the facts in Rosenberg were very different to the facts with which I am concerned; and the same may be said of other cases of high authority in which similar warnings have been given [4] . Nonetheless, the common sense underlying the warnings is, if I may say so with respect, sound; and common sense is a valuable tool to utilise in the analysis of evidence. 2. Mr Uniacke said in his first affidavit at para 23 that where a store was profitable and in a good location, his usual practice was to ask for the franchisee's "financials and a copy of the lease" before the franchise agreement expired. He did that, he said, to help him decide whether BBA would exercise its option under cl 18.13. 3. On 16 May 2012, almost three months after Danset sent BBA the letter of 21 March 2012 (see at [27] above), BBA wrote to Danset requiring the provision of, among other things, a copy of the current signed lease and detailed financial information relating to the operation of the store. 4. Mr Uniacke gave evidence at para 24 of BBA's "history of exercising its option to purchase the assets of the store". He referred to what he called "[s]ome more recent examples": specifically, stores at Turramurra, Ridgehaven, Blackwood, Norwood (the last three being in South Australia), Coffs Harbour and Concord. He referred also to occasions on which Video Ezy had exercised an equivalent option under its franchise agreements. BBA and Video Ezy were both owned by a company called Franchise Entertainment Group, and Mr Uniacke was the managing director of both companies as well as a "co-owner" of Franchise Entertainment Group. 5. Mr Uniacke said at para 25 that BBA would have exercised its option to purchase had it been given the chance to do so (and, for that matter, the right of first refusal had it been offered). It would have done so, he said, because in his view the store was "profitable" and "in a prime location". He said that when taking one or other of those courses, he would have caused BBA to exercise the three year option under the lease and to seek to negotiate a new lease for five years with an option for a further five years. 6. In my view, the contemporaneous evidence casts very severe doubt on those aspects of Mr Uniacke's evidence. More specifically, the evidence as to the six specific stores that he mentioned is inconsistent with what he said he would have done in respect of Danset's store. Further, evidence taken from BBA's own disclosure statements suggests that over the period in question, numerous stores closed, no new franchises were granted, and no company stores were opened. I shall turn to the detail in a moment. 7. I referred earlier to Danset's email to BBA of 24 January 2011 and letter to BBA of 21 March 2012 [5] . Neither of those proposals seems to have attracted any interest, either from other franchisees (in the case of the earlier proposal) or from BBA (in respect of either). The silence with which each of those proposals was received could be taken to suggest that the opportunity to purchase Danset's franchise and assets was not regarded as possessing any great commercial attraction. 8. I return to Mr Uniacke's evidence based on the six stores. That evidence does suggest that it was BBA's policy, upon termination of a franchise agreement, to exercise its option to purchase the assets of the franchisee used in conducting the store. The evidence does not, however, support the further inferences that had the purchase proceeded smoothly, BBA would have acted in one of the ways set out at [28] above. 9. As to each of the six stores, BBA did attempt to exercise its option to purchase. However, in none of them did BBA take steps to ensure that there would be a long term Blockbuster franchised (or company) business conducted from the site. In three cases, as Ms Rees submitted, that may have been the result of a dispute over the exercise of the option, and a consequential delay ranging from one to three years before BBA agreed with the franchisee for the purchase of the options. Those three stores were Turramurra (where the delay between purchase and exercise was about a year), Ridgehaven (three years) and Coffs Harbour (three years). 10. For the other three stores, the delays were more moderate: four months in the case of Blackwood and Norwood, and three months in the case of Concord. The delay, as to Concord, arose because there was a dispute as to the value of the assets and, hence, the need to proceed to expert determination. 11. In none of those six cases, however, did BBA operate the store for more than a short space of time. There is no evidence of any store having been opened on the Norwood site. At the Concord site, the store was reopened for the purpose of conducting a closing down sale. And for the Blackwood site, a store of sorts was opened, but only for a "short period of time" [6] . 12. If anything, the evidence as to those six stores supports the inference that, at the time each of them was closed, it was not BBA's practice to reopen with either a corporate store or a franchised store for a period of years. 13. BBA has the onus of proving, on the balance of probabilities, what would have happened had it exercised its option to purchase Danset's assets used in the conduct of the franchised business. BBA is the party with all the means of proof. Lord Mansfield's dictum in Blatch v Archer [7] is too well-known to be quoted, but is nonetheless apposite despite its notoriety. 14. It is safe to assume that BBA has put forward the best evidence it could muster as to its practice upon exercise of the option to purchase the assets. That evidence falls far short of proving, on the balance of probabilities, that BBA would have done so in this case had it not been deprived of the benefit of, and opportunity to exercise, the option. Nor is that aspect of Danset's case supported by the other evidence that was adduced. 15. First of all, Mr Uniacke said that Danset would have exercised the option because, in his view, Danset's franchised business was well located and was profitable. The evidence does not make good either of those propositions. Further, so far as the evidence goes (and I repeat that BBA is the party with all the means of proof), neither Mr Uniacke nor anyone else at BBA carried out any analysis in an attempt to test those propositions. 16. As to profitability: the financial records of Danset show that it had recorded a loss (including an EBIT loss) for each of the financial years 2009 to 2012. Mr Uniacke said that the loss in each year reflected two factors: 1. the wages bill was too high; and 2. the depreciation charge was too high. 1. As to wages, Mr Uniacke said that BBA's "benchmark" for its franchisees suggested that wages should run at between 15% and 18% of turnover. He referred to stores at Mildura, St Mary's, and Richmond, and produced some financial records relating to each of those franchises. There was no evidence as to the extent (if at all) that any of those stores was comparable to Danset's store. Nor was there any evidence as to the gross revenue that any of those stores achieved. Accordingly, there is no evidence of the percentage relationship between wages and turnover for any of those stores. 2. BBA's expert Ms Murone analysed Danset's financial performance for the financial years 2009 to 2012. In her analysis, she first reported actual wage (and related) expenses. Ms Murone noted that the total wages included "Director Remuneration", by way of "salaries & wages" and "superannuation" presumably paid to Mr and Mrs Miraldo. Ms Murone offered no comment on the amount of that remuneration. Ms Murone then analysed Danset's financial performance on the basis that those expenses should be 18% of turnover (her instruction was to assume 15% of turnover, but for reasons that need not be considered she chose 18%). 3. If one takes the actual wage expenses as summarised by Ms Murone, the comparisons are as follows (in round numbers): 1. FY09: actual wages were 25% of turnover; 2. FY10: actual wages were 25% of turnover; 3. FY11: actual wages were 27% of turnover; 4. FY12: actual wages were 25% of turnover. 1. Mr Miraldo said that wages could not have been reduced further without having an adverse impact on the revenues of the store and the safety of its staff. That evidence is inherently plausible, and it was unchallenged. I accept it. Wages did decline, year on year, from FY09 to FY12. Logic suggests that Mr and Mrs Miraldo would have sought to run the store as efficiently and leanly as possible, and the contrary was not put to Mr Miraldo. Certainly, they had the knowledge and experience to enable them to do so. 2. I should note that prior to the sale, Mr and Mrs Miraldo's son, Mr Daniel Miraldo, had been employed in the store. It was not put to Mr Miraldo that the wages bill had been distorted because of an abnormally high wage paid to Mr Daniel Miraldo. Nor, for that matter, was it put to him that payments to himself and Mrs Miraldo were excessive. 3. In my view, the actual wages paid over the years in question for the staff of the Bondi store provide the best indicator of what actual wages costs were. Some support for that conclusion can be drawn from industry figures. An IBISWorld Industry Report [8] showed that across the industry in the financial year 2012, wages were $164.7 million and revenues $759.2 million: that is to say, the former were (in round numbers) 22% of the latter. To the extent that it matters, the ratio was 22% in 2009, 23% in 2010 and 22% in 2011 (again in round numbers). Danset's percentage figures were a lot closer to the industry average than the BBA benchmark range of 15 to 18% was. 4. I conclude that BBA has failed to prove, on the balance of probabilities, that the O'Brien Street store could have been run efficiently and safely with a wages bill anywhere near the 15 to 18% benchmark figure on which BBA relied. Put conversely, I find that the actual wages paid were reasonable. Although it is not relevant, because I conclude for other reasons that BBA has not proved any loss, I do not think that it was appropriate for Ms Murone to base her calculations of lost profit on figures which reflected an assumed wage bill at 18% of turnover rather than the actual wages bill. 5. I turn to Mr Uniacke's proposition that Danset's depreciation figure was abnormally high for each of the years in question. A (non-binding) ruling by the Australian Taxation Office [9] suggests that "video tapes and games" that are hired out to consumers may be depreciated over their "life (years)" of "1/2". The ruling suggests that it is acceptable for businesses such as Danset (when it was a Blockbuster franchisee) to depreciate rental stock to zero over their six months' useful life. That is what it did. There was no evidence that this was improper or inappropriate. Further, and significantly, there was no evidence that other video store operators adopted some different rate of depreciation for their rental stock. 6. Looking at the matter objectively, there is no evidence apart from bald assertion to support the proposition that Danset's depreciation charge, for each of the years in question, was abnormally high. 7. It follows that the evidence has failed to make good one of Mr Uniacke's asserted reasons for saying that BBA would have exercised its option and opened another store (either itself or through a franchisee) on the site. 8. I turn to his other reason: namely, that the store was in a "prime" location. Again, there is no evidence of any analysis of location carried out by Mr Uniacke or by any other employee of BBA. There is no evidence of the attributes of the location that make it "prime", or desirable. And there is at least one feature of the evidence to suggest otherwise. 9. As I have noted, Tresblue's Civic Video store was located about 600 metres away from Danset's Blockbuster Video store. It could be thought that both served the same local market. The evidence from Mr Price and Mr Miraldo is clear that if the two had continued to operate, both would fail. That is the reason that Mr Price agreed that Tresblue would buy out Danset. In effect, he was buying (at least in the short term) a monopoly position in the local market. There is no reason to think that the ruinous effects of competition would have been any less damaging had BBA opened a new Blockbuster video store on the site, and operated it as a corporate store or sold it to a franchisee. 10. There is other evidence that is relevant to this issue. The documents tendered by BBA included numerous "Disclosure Statements", being (as I understand it) disclosures made by BBA from time to time to prospective franchisees. Mr Uniacke signed the disclosure statements. He said that he did so to indicate that they were accurate [10] . He agreed that the documents "accurately set out the position in relation to the change of stores" [11] . 11. The written closing submissions for Danset and Mr and Mrs Miraldo included the following table (I omit evidentiary references) showing the pattern of closures from November 2007 to December 2016: Date Stores (Australia) Stores Corporate stores (Australia) Corporate stores (NSW) (NSW) November 2007 339 106 23 0 (incl ACT) July 2008 327 102 21 0 (incl ACT) October 2009 311 87 14 2 (incl ACT) July 2010 282 76 9 2 (incl ACT) November 2011 251 68 7 2 (incl ACT) 25 July 2012 221 53 4 1 23 July 2013 181 46 4 1 28 February 2014 160 40 2 0 30 June 2014 143 38 2 0 31 March 2015 109 27 1 0 23 October 2015 85 21 0 0 30 June 2016 55 12 0 0 31 December 2016 47 10 0 0 1. It will be observed that the pattern of store closures was consistent and never reversed. It will be observed, further, that the number of corporate stores steadily declined over the period. So far as the documents go, the number of corporate stores never increased. Equally, the number of franchised stores steadily declined, and there does not appear to have been an increase in the number of such stores. 2. In case it be thought that I am erring in accepting Counsel's submissions rather than referring to the underlying evidence, I should note that in the course of final submissions, I said that where the submissions (for any party) set out tabular summaries of documentary evidence, or included arithmetical calculations, I would proceed on the basis that the summaries or the calculations were accurate unless any other party stated to the contrary. There was no submission from BBA that the summary of information set out in the table was inaccurate or incomplete. 3. By itself, the evidence summarised in that table suggests that: 1. BBA did not identify any new franchisees over the period; and 2. BBA did not open any new corporate stores over the period. 1. Of course, those inferences may not be correct. For example, it is entirely possible that notwithstanding the overall pattern of decline, new franchisees were identified or new stores were opened in some particular period, but do not show up in the figures because, overall, the number of closures for that period exceed the number of new franchisees or corporate stores that, hypothetically, were opened. 2. Nonetheless, the table is consistent with the view that I have expressed above. I should make it clear that I would have reached that view in any event, and that the table does no more than provide some further, although limited, support for that view. For the reasons I have just indicated, the data in the table, whilst on their face not consistent with BBA's case, cannot be regarded as, by themselves, capable of leading to the contrary conclusion. 3. The evidence falls far short of establishing that, had BBA exercised the option to purchase, it would have traded in the long term from the O'Brien Street site, or put in a franchisee who would do so. On the contrary, the evidence (and I include in this the conspicuous gaps to which I have referred) tells very strongly against that conclusion. Issue 3: loss 1. Having regard to my conclusions on the second issue, this does not arise. I accept that it is more likely than not that, had BBA been given the opportunity to do so, it would have exercised its option to buy the assets employed by Danset in the operation of the O'Brien Street store. However, it was required to pay fair market value for those assets (see cl 18.15 of the franchise agreement). There is no evidence that it could have resold them at a profit, or otherwise employed them in a manner that would have produced a profit or avoided a loss. Rather, as I have said, BBA's case was that it would have opened a new store on the site and employed the assets for the purposes of conducting that store, either itself or through a franchisee. For the reasons I have given, that aspect of BBA's case fails. 2. If it were necessary to attempt to assess loss of bargain damages, I would not accept the conclusions expressed by Ms Murone. First of all, her analysis depended on her assumption that wages other than those actually paid should have been used. 3. There is however a further problem. In assessing damages, Ms Murone sought to derive what she called an "Indicative Enterprise Value" for Danset's franchise business. To do that, she sought first of all to estimate future maintainable earnings. Of necessity, that analysis incorporated what I see to be her erroneous approach to the question of the appropriate amount of expense for wages. 4. Next, Ms Murone sought to apply a "multiple". That multiple reflected her understanding of "the implied revenue multiple for… goodwill" and "the implied EBIT multiple for goodwill", which she derived from her analysis of what she understood to be the sale prices for six BBA franchises between July 2009 and March 2010. The former multiple was deduced from the relationship between the goodwill paid for the franchised business and the earnings of that business for the previous 12 months. The latter was derived from the relationship between goodwill and EBIT. Ms Murone considered that the latter multiple was the appropriate one to use. 5. There is a fundamental problem with this part of Ms Murone's analysis. She was either wrongly instructed as to, or misunderstood, the dissection of the sale prices for the six stores in question. In essence, she assumed that the total amount paid was for goodwill. That was not correct in any case. Further, in one case, there was an express dissection of the purchase price between goodwill and assets, and the goodwill figure was very much less than the figure that Ms Murone had assumed (or deduced from the sales contract). 6. Ms Rees sought to overcome this problem in re-examination by asking Ms Murone to express her view on the EBIT multiple, relating to the business where there was an express allocation of the purchase price between assets and goodwill, and to calculate an enterprise value based on that. I rejected that evidence, and said I would give reasons. I now do so. 7. The fundamental problem is that the evidence in question was not properly the subject of re-examination in the way that Ms Rees sought to do. It was, rather, an attempt to patch up the deficiencies in this aspect of BBA's case in chief. It was not the defendants who were responsible for Ms Murone's being given the wrong instructions, or drawing the wrong inference from the sales contracts (as the case may be). The responsibility for that must be allocated to BBA or Ms Murone (as the case may be). The defendants were entitled to test her analysis on the basis of the assumptions she had been asked to make, and the material that she had been given. This they did. It does not follow, simply because their attack on this part of Ms Murone's analysis was well-founded and extremely damaging, that it could be repaired in re-examination in the way that Ms Rees sought to do. To permit that to happen would be fundamentally unfair to the defendants. 8. Further, as Ms Murone recognised, the data showed that "as a consequence of the industry downtown, the multiples were on a decline". I interpose to note that there was another problem with her analysis in this respect, because although she recognised the existence of a decline, the EBIT multiples (low and high) that she selected did not appear to reflect that decline. Putting that to one side and returning to the reasons for rejecting the evidence, it would not be appropriate, given Ms Murone's acceptance of the need somehow to reflect the decline, to permit BBA to rely on a reworked analysis based on one only of the six sets of data. In fairness, if the exercise were to be undertaken, it would be necessary for each of the sale prices to be dissected, for the relevant earnings and EBIT multiples to be deduced, and for some analysis to be made of whatever (if any) pattern emerged. 9. BBA did not attempt to do that. In my view, to permit BBA to rely on a reworked assessment of enterprise value based on one datum point only, and ignoring the evidence as to decline, would have been fundamentally unfair to the defendants. 10. In each case, the unfairness was in my view such as to be causative of considerable prejudice to the defendants. As I have said, they were entitled to fight the case that BBA had chosen to bring, not some incomplete alternative case that BBA cobbled up in the interval between the completion of cross-examination and the commencement of re-examination. Accordingly, in the exercise of the discretion given by s 135 of the Evidence Act 1995 (NSW), I rejected the evidence. That assumes, against what I think is the correct position, that this was a legitimate exercise in re-examination. If that assumption is incorrect, it should be noted that no application was made to re-open BBA's case, or for leave to adduce further evidence in chief. 11. There were other problems with this aspect of Ms Murone's analysis (including the one that I have referred to by the way at [72] above). The consequence of those problems is that I do not regard her assessment of indicative enterprise value as having any probative weight. Issue 4: enforcement expenses 1. This aspect of BBA's claim has an unhappy and unsatisfactory procedural history. Para 48 of the amended originating process [12] asserted that BBA "has incurred costs and expenses in enforcing the Franchise Agreement" or "in connection with the breaches of the Franchise Agreement" that had been pleaded. The particulars given are: Particulars will be provided prior to trial. 1. A similar claim is made against Mr and Mrs Miraldo pursuant to their guarantee, again with particulars to be provided prior to trial. 2. As against Danset, the relevant claim for relief was: Damages on account of costs and expenses, alternatively costs on an indemnity basis in accordance with the Franchisee Agreement, alternatively costs. 1. As against Mr and Mrs Miraldo, the relevant relief was similarly framed but referred to the other contractual documents that they signed. 2. This aspect of BBA's case was opened as a claim for damages. It relied (as against Danset) on cl 8.6 of the Franchise Agreement. However, there was no evidence of any demand for payment of any sum, pursuant to cl 8.6, at least before service of the originating process. The same may be said as between BBA and Mr and Mrs Miraldo. There was thus no proved (nor, for that matter, alleged) breach of the obligation to indemnify. 3. Compounding this, particulars were not provided prior to trial. They were, instead, "provided" (if that is the correct word to use) by the tender of a bundle of fee invoices on the second day of the hearing, together with a supporting table which did no more than describe them by date, number and amount, and set out the total charged and presumably paid. 4. Not surprisingly, Mr Pike objected to the tender. I admitted those documents to prove that BBA had paid some amount by way of enforcement expenses, but not for the purpose of proving that any particular invoice, or any particular component of any particular invoice, was a payment of a kind that might be caught by cl 8.6 of the Franchise Agreement. I ruled that if the question of quantification of enforcement expenses became relevant, it would be dealt with separately from and after the determination of all other issues in the proceedings, and that this might well be at BBA's risk as to costs. 5. The reason for taking that course was that the documents in question had not been given to Danset or Mr and Mrs Miraldo before trial, as promised. They had not been given to them in sufficient time to enable them to make any reasoned assessment of the amounts claimed or their relationship to the supposed breaches. 6. The fee invoices were hardly clear. Accepting for the moment that they might have been business records admissible as such to prove the truth of their contents (that is to say, assuming in favour of BBA that s 69(3) of the Evidence Act 1995 (NSW) has no application), they were nonetheless totally opaque in their subject matter and totally lacking in detail of the work to which they referred. They were addressed to Mr Uniacke in some cases and a Mr Howes (I think, an in-house lawyer) in others, and did refer to BBA. They referred also to Danset. However, the documents did no more than refer to "professional fees" and "expense recovery charge" and "GST", in each case with an amount given, and in some cases to fees paid to counsel or for disbursements of other kinds, again with amounts. 7. There was simply no way in which Danset or Mr and Mrs Miraldo could have assessed the amounts charged or their relationship to the dispute, even if they had been given the documents when they should have been (and I note that an order for discovery was made in the Supreme Court of Victoria on 6 November 2015), or even later than they should have been but still within sufficient time to enable some assessment to be made. 8. In the result, I propose to do no more than note that Danset does not dispute in principle its liability under cl 8.6 of the Franchise Agreement, and that Mr and Mrs Miraldo do not dispute in principle their equivalent liabilities under their guarantees and whatever other documents are thought to bear on this aspect of the case. The procedural path will therefore be to reserve for further consideration prayers for relief E, F and K set out in the amended originating process filed on 11 March 2016, and (in view of what I have said and have yet to say) order that otherwise, the amended originating process be dismissed against the first, second and third defendants. 9. There was a debate as to the proper construction of cl 8.6, including as to whether the obligation to indemnify extended to all costs (including all legal fees) incurred by BBA. BBA urged me to resolve that debate. I do not think that it is appropriate to do so, in the absence of some solid factual foundation. It is sufficient at this stage to observe that the obligation is to indemnify "from all Losses and Expenses incurred" in connection with the relevant matters. The expression "Losses and Expenses" is defined in cl 1.36 to include "reasonable lawyers' fees". Insofar as the debate is concerned with legal fees incurred by BBA, its entitlement to be indemnified is limited to "reasonable" fees. That would seem to indicate that they should have been reasonably incurred, and be reasonable in amount. 10. It is not I think profitable to speculate further upon the extent or content of the obligation to indemnify, or to give examples, possibly hypothetical or possibly real, of what might or might not fall within it. 11. In case it is not clear from what I have said already, I regard the conduct of this aspect of the litigation as unsatisfactory, and as falling short of the requirements imposed by s 56 of the Civil Procedure Act 2005 (NSW). Issues 6, 7 and 8: misleading or deceptive conduct 1. As I have said, it is common ground that Danset and Mr and Mrs Miraldo did engage in misleading or deceptive conduct, and that Mr and Mrs Miraldo were relevantly involved in Danset's misleading or deceptive conduct. It follows from what I have said as to the claim for damages for breach of contract that BBA has proved no loss "by" that conduct. Issues 9 and 10: inducing breach of contract 1. It is unnecessary to decide whether Tresblue or Mr Price induced Danset to breach its contract, with BBA. For the reasons I have given, BBA has failed to prove that it suffered any loss as a result of Danset's breaches. 2. In case the matter goes further, I shall set out in summary form the findings of fact that are relevant to the case of inducing breach of contract. In doing so, I shall refer only to Mr Price, but there can be no doubt that his knowledge must be imputed to, so as to be, the knowledge of Tresblue. Mr Darvall did not suggest otherwise. 3. Mr Price said that Mrs Miraldo had made an approach to him back in 2011. I accept that evidence. Mrs Miraldo, who could have given evidence to the contrary (and who had sworn an affidavit that was filed in the proceedings) was not called to give evidence, and no explanation was offered for her absence from the witness box. Mrs Miraldo was in fact present throughout almost all of the hearing, with the exception of Mr Miraldo's cross-examination (a factor which in itself might suggest that it was then intended to call her). 4. In March 2012, Mr Price made an approach to Mr and Mrs Miraldo as a result of which, over many months, the bargain was negotiated, made and completed. At the meeting, Mr Price said that in his view, if the two businesses remained in operation, they would both fail. He and Mr and Mrs Miraldo agreed that one would have to buy the other out. 5. Mr and Mrs Miraldo said that they were thinking of leaving the video rental business. Mr Price offered to buy Danset's business, but not the Blockbuster franchise, and nominated a purchase price of $215,000.00. Mr and Mrs Miraldo said that they wanted $300,000.00. Within a relatively short time thereafter, the parties settled on a price of $280,000. 6. Mr Price was an experienced video store operator, and was familiar with (although he said he had not read in detail) the terms of the Civic Video franchise agreement that he had executed, for Tresblue and other companies, on many occasions. He understood that if Danset sold its business (excluding the franchise) to him without notifying BBA, the effect would be to deprive BBA of rights under its franchise agreement with Danset. In fact, Mr Miraldo confirmed this to Mr Price, and in emphatic terms, well before contracts were exchanged. Mr Miraldo insisted that nothing should be done to put BBA on notice of the proposed sale, as otherwise there was a strong likelihood that BBA would seek injunctive relief to restrain the making or completion, as the case may be, of the agreement for sale. 7. Mr Price asked for a copy of the franchise agreement between BBA and Danset. He said that this was important to him. There is no reason to think that he would not have been given it, once contracts were exchanged. The likelihood is that he was given it. 8. Mr Price therefore had knowledge that the making and completion of the sale agreement between Danset and Tresblue would cause Danset to breach its contract with BBA, and would deprive BBA of rights that were otherwise available to it under its franchise agreement with Danset. Because Mr Price, as I find, was given a copy of the franchise agreement between BBA and Danset prior to completion, he had the means of knowledge (if he did not actually know) what were the rights that would be breached by the sale. 9. Mr Miraldo made it clear that the price that Mr Price would have to pay had to be sufficient to compensate Danset not just for the sale of the physical assets that were its property, but also for the risk that BBA would sue it. Danset nominated that price as $280,000. Mr Price agreed to pay it. 10. Mr Price was concerned that he and Tresblue might be liable for inducing a breach of the contract between Danset and BBA. He sought an indemnity in the contract of sale from Danset to Tresblue. Ultimately, a form of indemnity was negotiated and included, although it was not as wide as the indemnity that Mr Price initially had sought. 11. There can be no doubt, and I find, that Mr Price agreed to pay the price that Danset wanted, agreed that Tresblue should contract with Danset at that price, and caused Tresblue to complete the contract, knowing all the time that in doing so, he and Tresblue were causing Danset to breach its own contract with BBA, so as to deprive BBA of its rights under that contract. Whether or not Mr Price actually knew what BBA's rights were, he had, as I have said, the means of knowledge available to him at least before completion of the sale from Danset to Tresblue. Issue 11: trust 1. BBA's case was that the terms of the franchise agreement operated to create a trust over the assets of Danset's store in two ways: 1. pursuant to the right of first refusal granted by cl 15.19 (read in conjunction with, among others, cls 15.4, 15.15 and 15.16); and 2. upon termination of the franchise agreement, pursuant to the option to purchase the assets granted by cl 18.13. 1. BBA contended that those provisions of the franchise agreement were sufficient to constitute Danset a trustee of the assets, BBA being the beneficiary of that trust. It relied on what it said was the analogous case of contracts for the disposition of an interest in land. 2. Danset contended that the analogy of contracts for sale of land (or for the disposition of other interests in land) was irrelevant, and submitted that in any event it was inaccurate to talk of the vendor as being a trustee for the purchaser. Reference was made to the decision of the High Court in Tanwar Enterprises Pty Ltd v Cauchi [13] . In any event, Danset contended, the contract was an arm's length commercial bargain; it expressly excluded obligations of a fiduciary nature (cl 8.1); and damages were an adequate remedy. 3. I start by setting out the terms of cl 8.1: 8.1 It is understood and agreed by the parties hereto that this Agreement creates an arm's length commercial relationship and does not create and shall not be interpreted or construed as creating a fiduciary or agency, nor any similar relationship between them, that FRANCHISOR and FRANCHISEE are and shall be independent contractors, and that nothing in this Agreement is intended to make either party an agent, joint venturer, partner, or employee of the other nor any similar relationship for any purpose. 1. It is perhaps unnecessary to remind oneself that the relationship between trustee and beneficiary is the paradigm example of a fiduciary relationship. 2. There is no doubt, at the level of principle, that contractual and fiduciary obligations may co-exist. The point is illustrated by Scott v Davis [14] (principal and agent) and Breen v Williams [15] (partnership). Going back a little earlier in time, Mason J said in his dissenting judgment in Hospital Products Ltd v United States Surgical Corporation [16] : That contractual and fiduciary relationships may co-exist between the same parties has never been doubted. Indeed, the existence of a basic contractual relationship has in many situations provided the foundation for a fiduciary relationship. … In these situations it is the contractual foundation which is all-important because it is the contract that regulates the basic rights and liabilities of the parties. … The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction. 1. His Honour's analysis was in essence approved in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [17] . 2. The position was summarised by Barrett JA (with whom Meagher and Ward JJA agreed) in the Streetscape Projects (Australia) Pty Ltd v City of Sydney [18] as follows [19] : The contractual terms are paramount. A fiduciary duty cannot detract from or contradict them. The two types of obligation – contractual and fiduciary – will, in general, coexist only if and to the extent that the sanctions available for breach of contract (including implied terms) are insufficient to deal with some possibility of unconscionable conduct to which one party is exposed. 1. In the present case, the parties chose to regulate their commercial relationship by the terms of an extremely detailed written contract. That written contract expressly disavowed the existence of any "fiduciary" or "similar" relationship between the parties. But one of the parties – the one that propounded the form of contract that they signed – now asks the court to find that a fiduciary relationship existed. 2. Mr Herzfeld (who put the trust arguments on behalf of BBA) submitted that notwithstanding the decision of the High Court in Tanwar, it was appropriate to speak in terms of a vendor being a trustee for the purchaser. He referred what Jacobs J said in Chang v Registrar of Titles [20] , in a passage the last sentence of which was cited with apparent approval in Tanwar Enterprises [21] : It is true that a vendor at the stage of contract where the contract is enforceable by specific performance has at times been described as a trustee …; and if by that no more is meant than that the purchaser is regarded by equity as the beneficial owner of the estate of which the vendor is the legal owner then there is no difficulty in describing the vendor as a trustee. However, if by such a description it is sought to transpose into the law of vendor and purchaser the law governing the rights and duties of trustees, statutory or otherwise, considerable difficulties arise. The present case is an example of the confusion which can arise from giving this description to a party to a contract for the sale of land assumed to be capable of specific performance simply because he has the obligation under the contract to transfer property to the other party on completion of the contract and because equity regards the other as beneficial owner. Where there are rights outstanding on both sides, the description of the vendor as a trustee tends to conceal the essentially contractual relationship which, rather than the relationship of trustee and beneficiary, governs the rights and duties of the respective parties. 1. Mr Herzfeld submitted that it was not necessary that the contract should be susceptible of specific performance. It was enough, he submitted, if the purchaser's rights could be protected by some form of equitable relief such as the grant of an injunction. He referred to Butt's Land Law [22] at 154. The author there said (omitting citations): The remedy of specific performance can be seen as the condition precedent for the acquisition of a proprietary interest by the purchaser. Strictly, however, what is required is not so much the ability to obtain specific performance, properly so-called, but rather the ability to secure protection by any equitable remedy, including injunction. Only if equity would deny protection in this wider sense is the purchaser denied the status of beneficial owner. 1. It is not necessary to consider whether this statement is correct. 2. BBA is not in any sense a "purchaser" under a "contract" for the sale of any form of property. It had two specific rights: a right of preemption and an option to purchase. Each right was a contractual right, arising for exercise only in defined circumstances. In the words of Jacobs J in Chang, the relationship between BBA and Danset was essentially contractual. 3. It may very well be that an injunction would have been granted to restrain a threatened breach of those rights (for example, by entering into a contract of the very form that Danset and Tresblue made in this case). Whether or not that injunction, if granted, would represent the exercise of equitable or common law jurisdiction is no doubt a fascinating question. Again, however, it need not be decided. 4. There can be no doubt that equity, in its auxiliary jurisdiction, had power to restrain breach of express and implied negative covenants. In this case, it is certainly arguable that each of the rights upon which BBA relies carries within it an implied negative stipulation (see cases such as O'Keefe v Williams [23] ). Equally, the common law jurisdiction to restrain a threatened breach of contract undoubtedly continues: see s 66 of the Supreme Court Act 1970 (NSW) (and I should not be taken to suggest that s 66, in relation to restraining breaches of contract, is confined or restricted only to the common law jurisdiction to do so). 5. All that can be put to one side, because there is neither scope nor need to superimpose fiduciary obligations onto the contractual relationship for which the parties bargained. First, the contract itself says so. Second, this is not a case where, in principle, damages for breach are not an adequate remedy. My conclusion that BBA has not proved that it suffered any loss, through the deprivation of either contractual right, does not indicate otherwise. 6. If BBA had satisfied me, on the balance of probabilities, that (for example) it would have set up a company store and traded from it, then its damages would be either the loss of profits or the loss of the opportunity to make those profits. Likewise, if BBA had satisfied me, on the balance of probabilities, that it would have put another franchisee into the store. The very fact that BBA was able to model its damages indicates that damages would be an adequate remedy. Its problem was one of proof, not of principle. The fundamental assumptions on which the model was based were not proved. 7. Another obstacle standing in the way of the trust claim, insofar as it is based on the right of first refusal, is that the right never became exercisable. That is because the conditions prescribed in cls 15.15 and 15.16 were not satisfied. True it is that this was the result of Danset's breach of contract. However, because there was no right (and a fortiori no exercise of the right), there was never any contract for sale, arising out of cl 15.19, susceptible of analysis in terms of "vendor as trustee". 8. Again, the option to purchase was never exercised. Again, that reflects the fact that Danset's breach of contract deprived BBA of the opportunity to exercise the option. Again, however, the consequence is that there was never a contract for sale of the assets, coming into existence pursuant to the exercise of the option, that is susceptible of analysis in terms of "vendor as trustee". 9. I conclude that Danset did not hold the assets of the store on trust for BBA. 10. Accordingly, issues 12 to 15 do not arise for consideration. However, if they did, the following points should be noted: 1. as to issue 12 (breach by Danset), it is clear that if there were a trust, Danset breached its terms; 2. as to issue 13 (inducing breach of trust or Barnes v Addy [24] knowing assistance): * It is clear that Mr and Mrs Miraldo would have accessory liability; and * As to Tresblue and Mr Price, the relevant facts would be those that I have found above [25] in relation to inducing breach of contract; 1. as to issue 14 (loss or equitable compensation), in essence what I have said as to damages would apply; and 2. as to issue 15 (account of profits), the only separate question that arises is the extent (if at all) to which Tresblue profited as a result of any accessory liability. 1. As to the last point (account of profits by Tresblue), the expert evidence was somewhat confused. The confusion arose because the expert called by BBA, Ms Murone, revised her opinion and her revised report became available only shortly before the commencement of the hearing. 2. There were two disputed aspects of Ms Murone's quantification of the profits that Tresblue made after it bought the assets of Danset's store. First, she excluded depreciation. Secondly, she excluded consulting fees paid to Mr Price. I shall deal briefly with each. 3. As to the first point: I do not think that Ms Murone erred. The problem for her was to quantify the "before" and "after" financial positions on the same basis. Thus, depreciation should be included in either case or excluded in either case. BBA's supplementary submissions on this point (provided with leave shortly after the conclusion of the hearing) satisfy me that if depreciation had been included, the profits purportedly made would have been somewhat higher. In each case, the experts agreed, the "abnormal" depreciation, reflecting Mr Price's decision to cause Tresblue to write off the entire purchase price in FY12, should be excluded. 4. As to the second point (consulting fees paid to Mr Price), I am not satisfied that Ms Murone was correct to exclude them. Mr Price gave evidence of the services that he performed. There is no doubt, that those services were, or were capable of being, of value to Tresblue. Mr Price is a certified practising accountant as well as being an extremely experienced businessman in fields including, but by no means limited to, the operation of video rental businesses. It is clear that his astute management of Tresblue has contributed to the situation where it remains, on the face of things at least, viable. That stands in stark contrast to the problems besetting the industry overall, as portrayed in the IBISWorld report to which I have referred [26] . 5. Since Ms Murone's concern was with the principle of whether the fees should be included or excluded, and not with their quantification, it cannot be said that they were, as to their amount, unreasonable or excessive. I accept that Mr Price charged them to the extent that the businesses could afford to pay them, but that does not alter the point that he charged them for the provision of services that were, or were capable of being, of value to Tresblue. 6. In short, if it were required to assess the profits made by Tresblue, I would hold that: 1. Mr Murone's treatment of depreciation was correct; but 2. her treatment of consulting fees paid to Mr Price was not. Issues 16 and 17: bona fide purchase of the value without notice; mitigation of loss 1. It is unnecessary to consider these issues, and unprofitable to do so where the submissions, to put it neutrally, were perfunctory. Conclusion 1. I conclude that save for the question of indemnity for enforcement expenses, BBA's claim against Danset and Mr and Mrs Miraldo fails and should be dismissed. As against Tresblue and Mr Price, BBA's claim fails entirely. There is no reason why BBA should not pay Tresblue's and Mr Price's costs. 2. Because the proceedings have not been finalised as between BBA, Danset and Mr and Mrs Miraldo, it will be necessary to give those parties an opportunity to consider these reasons and decide what, if any, further steps are to be taken. 3. I make the following orders: 1. as between the plaintiff and the first, second and third defendants: 1. reserve for further consideration prayers for relief E, F and K in the amended originating process filed on 11 March 2016; 2. order that otherwise, the amended originating process be dismissed; and 3. reserve all questions of costs. 1. As between the plaintiff and the fourth and fifth defendants: order that the amended initiating process be dismissed with costs. 2. Stand proceedings over to 10:00am on 6 October 2017 before me for directions, but as between the plaintiff and the first, second and third defendants only. ********** Endnotes 1. There were also separate agreements made between BBA and Mr and Mrs Miraldo, but for present purposes nothing turns on them. 2. Affidavit sworn 26 July 2016, para 25. 3. (2001) 205 CLR 434 at [214]. 4. See, by way of example only, Gaudron J in Chappel v Hart (1998) 195 CLR 232 at [32] note (64). 5. See at [25], [27] above. 6. Mr Uniacke in cross-examination at T53.36-.47. 7. (1774) 1 Cowp 63; 98 ER 969. 8. Report Q9511, video Hire Outlets in Australia, March 2012. 9. TR 2016/1 and TR 2017/2. 10. T43.42-.45. 11. T46.39-.42. 12. The proceedings were commenced in the Supreme Court of Victoria and cross-vested to this court. 13. (2003) 217 CLR 315 at [53]. 14. (2000) 204 CLR 333; see Gummow J at [229]. 15. (1996) 186 CLR 71; see Gummow J at 132. 16. (1984) 156 CLR 41 at 97. 17. (2010) 241 CLR 1: see the discussion in the reasons of the court at [86] to [92]. 18. (2013) 92 ACSR 417. 19. At [100]. 20. (1976) 137 CLR 177. 21. The passage in his Honour's reasons appears at 137 CLR 177, 190; the citation in Tanwar appears at [53]. 22. 7th Edition by Brendan Edgeworth, Lawbook Co, 2017, [4.210]. 23. (1910) 11 CLR 171; see Griffiths CJ at 191, Isaacs J at 211. 24. (1874) 43 LJ Ch 513. 25. At [91] - [101]. 26. At [50] above. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 September 2017