case_text: Tropical Traders Ltd v Goonan [1964] HCA 20 ; (1964) 111 CLR 41 at 55 Kitto J said that the person with the choice might keep the question open '... so long as it did nothing to affirm the contract and so long as the [other party's] position was not prejudiced in consequence of the delay'. He said that when the vendor in that case told the purchaser that it would not rescind a contract for the sale of land before a particular date if the purchaser paid an additional sum for interest, costs and expenses, the vendor was doing no more than promising that it would not elect to rescind the contract before that date if the conditions were complied with. Kitto J said that in that case a grant of an extension of time was not an election to affirm but, rather, amounted to an announcement of an intention to refrain from electing either way until the money had been paid or the extended time for performance had elapsed: see too Champtaloup v Thomas [1976] 2 NSWLR 264 at 268C-269B per Glass JA; 273D-274D per Mahoney JA; Street CJ agreeing with both at 266: Hunter BNZ Finance v GC Maloney Pty Ltd (1988) 18 NSWLR 420 at 435C-436B per Giles J: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at 89-92 [356] - [364] per Finn J. And, as the judgment of the Exchequer Chamber written by Blackburn J (see Scarf 7 App Cas at 360) established, this principle applies to a party to a contract who discovers his entry into it was induced by the fraud of the other: Clough v London & North Western Railway Co (1871) LR 7 Ex 26 at 34-35. 22.2 Consideration Allphones accepted that, while a requirement to act in good faith was implied in many contracts, it said that was not necessarily so in every contract. As Finn J observed in GEC Marconi 128 FCR at 208-209 [920] it is not yet clear in Australian law whether a duty of good faith and fair dealing is implied as term of all contracts, or is an incident of particular classes of contract. I need not decide that here because I am not persuaded that Mr Donnellan was motivated by an extraneous purpose, or that he acted capriciously or otherwise than in good faith when Allphones was contemplating the exercise of its right to terminate in early July 2006, or when he caused the notice of intention to terminate to be given in late August 2006. I find that Mr Donnellan was genuinely concerned by the discovery of the fraud in which Hoy Mobile had been engaged. He was entitled to be so concerned. A party to a contract is entitled to exercise contractual rights conferred on him or her honestly. Rarely do people act from a single motive, particularly where they have been involved in a long-term relationship with the other party or parties. In a contractual context, relationships can give rise to a complex set of considerations which one party may apply to the other. Thus, in a contract for the sale of goods where time is of the essence, and one party defaults in timeous performance, the law merchant recognises that the innocent party has a right to terminate. And such rights exist in the Sale of Goods Act 1923 (NSW) and its analogues. Thus, when a vendor fails to deliver goods, or a purchaser fails to pay for them, on the due date, the innocent party is permitted to terminate without being subjected to an enquiry as to its motive. Often merchants terminate contracts when the other party defaults so as to take advantage of a substantive change in the market price for the goods that has occurred between the date of contract and the date on which default occurs. Indeed, the primary reason for termination at that time may be that the innocent party wants to get the benefit of the market change. In one sense, that motivation could be characterised as a purpose extraneous to the contract because it implies a disloyalty to the mutually co-operative relationship created by the contract. However, such a view would protect contract breakers from the consequences of their own disloyalty to the contractual obligation of which they were in breach.


case_outcome: referred to

case_title: Green v Sommerville (1979) 141 CLR 59

case_text: three of the justices (Mason CJ in dissent, with Brennan and Dawson JJ) expressed the obiter view that where both parties were in actual (as opposed to anticipatory) breach of a fundamental term, or otherwise evincing an intention not to be bound, neither could terminate. The three justices did not confine their expression of the operation of this principle to cases of mutual or dependent obligations. Rather, they expressed the principle as deriving from a general readiness and willingness of each party to perform his obligations at the relevant time. Earlier, in Green v Sommerville [1979] HCA 60 ; (1979) 141 CLR 594 at 609 Mason J (with whom Murphy and Aickin JJ agreed) recognised that '[a]n obligation may be essential, yet not interdependent with an obligation imposed on the other party to the contract ...'


case_text: Highmist Pty Ltd v Tricare Ltd [2005] QCA 357 at [61] - [62] , Keane JA (with whom Jerrard JA at [1] and Cullinane J at [66] agreed) expressed the obiter view that it did not make much commercial sense to say that where both parties had expressed a firm resolve not to perform the contract, the contract continues 'in existence in some legal limbo' for the reason that neither party is ready, willing and able to perform. His view is similar to that of Deane J in Foran 168 CLR at 438. Keane JA said that in such circumstances, the case could be characterised as one of termination by mutual consent, although he recognised that his was a tentative view and that the issue did not need to be resolved in order for him to decide the case: Highmist [2005] QCA 357 at [62] . Keane JA did not examine the authorities.


case_outcome: cited

case_text: this sum I will deduct $32,000, the amount which I have found fairly reflects the benefit obtained by Hoy Mobile over the period in which it was committing the fraud. That leaves a net sum of $43,169.75 in damages. Interest will need to be added to this sum at the pre-judgment rates of interest used by the Supreme Court of New South Wales: cf Hilditch Pty Ltd v Dorval Kaiun KK (No 2) [2007] FCA 2014 at [110] .


case_title: Horrocks v Lowe [1975] AC 135

case_text: Diplock made the telling observation in his classic speech in Horrocks v Lowe [1975] AC 135 at 150C-E that in ordinary life it is rare indeed for people to form their beliefs by a process of logical deduction from facts ascertained by rigorous search for all available evidence and a judicious assessment of its probative value. He pointed out that, in greater or less degree, according to their temperaments, training and intelligence, men and women are swayed by prejudice, rely on intuition instead of reasoning and leap to conclusions on inadequate evidence. People tend not to recognise the cogency of material which might cast doubt on the validity of the conclusions they reach. And, he said, that despite the imperfection of mental processes by which a belief is arrived at, it may still be 'honest', that is, a positive belief that the conclusion reached is true. He said this in the context of assessing whether a person may or may not have been malicious for the purpose of the law of qualified privilege. But it is an observation about human behaviour. What Lord Diplock said can be applied as well to the way in which people act in contractual relationships. As I have found, Mr Donnellan sought to give Hoy Mobile an opportunity to explain its conduct from 7 July 2006. He was the person within Allphones who made the decision issue the notice of intention to terminate. I am satisfied that he honestly believed that Allphones should terminate the franchise agreement because it was not in Allphones' interest to have a franchisee which had engaged in the fraud which Hoy Mobile had. The fraud was serious and, having seen and heard Mr Donnellan, I am satisfied he decided to terminate the franchise agreement because of the undesirability of having a relationship with Hoy Mobile as a party which had committed that fraud. No doubt other factors, including some irritation at the way Hoy Mobile was behaving, may have been a part of Mr Donnellan's thinking processes, but I am quite unpersuaded that he acted, and thus Allphones acted, otherwise that in good faith in exercising the power to terminate. I reject this ground of Hoy Mobile's case.


case_text: position is analogous to the situation in which parties to a contract enter into a course of negotiation which has the effect of one leading the other reasonably to suppose that the strict legal rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, pending the outcome of the negotiation. Here, Hoy Mobile's request of 10 July that Allphones hold a meeting on its terms, can be seen as such a suspension. In those circumstances equity would not allow the parties' strict legal rights to be enforced so as to deprive Allphones of a right to terminate the franchise agreement because it acted on Hoy Mobile's request to delay doing so: cp Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 at 448 per Lord Cairns LC (explaining the doctrine of equitable estoppel). Although no equitable estoppel was alleged here, a reasonable person in the position of the parties would have understood that nothing Allphones did after the exchange of emails on 10 July 2006 and until the meeting of 22 August 2006 amounted to an unequivocal election involving a choice between inconsistent rights.


case_text: Tropical Traders Ltd v Goonan [1964] HCA 20 ; (1964) 111 CLR 41 at 55 Kitto J said that the person with the choice might keep the question open '... so long as it did nothing to affirm the contract and so long as the [other party's] position was not prejudiced in consequence of the delay'. He said that when the vendor in that case told the purchaser that it would not rescind a contract for the sale of land before a particular date if the purchaser paid an additional sum for interest, costs and expenses, the vendor was doing no more than promising that it would not elect to rescind the contract before that date if the conditions were complied with. Kitto J said that in that case a grant of an extension of time was not an election to affirm but, rather, amounted to an announcement of an intention to refrain from electing either way until the money had been paid or the extended time for performance had elapsed: see too Champtaloup v Thomas [1976] 2 NSWLR 264 at 268C-269B per Glass JA; 273D-274D per Mahoney JA; Street CJ agreeing with both at 266: Hunter BNZ Finance v GC Maloney Pty Ltd (1988) 18 NSWLR 420 at 435C-436B per Giles J: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at 89-92 [356] - [364] per Finn J. And, as the judgment of the Exchequer Chamber written by Blackburn J (see Scarf 7 App Cas at 360) established, this principle applies to a party to a contract who discovers his entry into it was induced by the fraud of the other: Clough v London & North Western Railway Co (1871) LR 7 Ex 26 at 34-35. 22.2 Consideration


case_text: Finn and Conti JJ held that the analogue of s 51AC required the Court to focus primarily on the unconscionable conduct of the corporation and to determine whether that conduct was contrary to the norm of conscientious behaviour. They held that the conduct in that case insisted of a carefully formulated and systematic approach which clearly offended against basic notions of good conscience and fair play: National Exchange at 148 FCR at 143 [44]. Although their Honours were speaking of s 12CC of the ASIC Act , their remarks apply equally to the notion of 'unconscionable conduct' in its analogue, s 51AC: Cannon Australia Pty Ltd v Patton [2007] NSWCA 246 at [43] per Campbell JA, with whom Harrison J agreed. Campbell JA had referred ([2007] NSWCA 246 at [40]) to the earlier decision of a Full Court of this Court in Hurley v McDonald's Australia Ltd [1999] FCA 1728 ; (2000) ATPR 41-741 at [21] - [22] . There Heerey, Drummond and Emmett JJ said that for conduct to be regarded at an unconscionable, serious misconduct or something clearly unfair or unreasonable had to be demonstrated. They found that the term carried with it the meaning given by the Shorter Oxford English Dictionary, namely '... actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable', relying on Qantas Airways Ltd v Cameron [1996] FCA 1483 ; (1996) 66 FCR 246 at 262.


case_outcome: followed

case_text: Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) [1993] HCA 27 ; (1993) 182 CLR 26 at 41, Deane, Toohey, Gaudron and McHugh JJ said: 'The true nature of election is brought out in this sentence from the seminal work of Spencer Bower and Turner, The Law Relating to Estoppel by Representation (3rd ed (1977), p 313): 'It is of the essence of election that the party electing shall be "confronted" with two mutually exclusive courses of action between which he must, in fairness to the other party, make his choice.' Their Honours had pointed out that the consequences of an election may well be serious for the party electing and that, in particular, election involves the abandoning of a right that is available. Thus, they held that a party could only be held to have elected if he had so communicated his election to the other party in clear and unequivocal terms: Immer 182 CLR at 39. They noted that there was a distinction between the situation where a party to a contract, faced with the choice of terminating it or keeping it on foot, chooses to terminate as opposed to when the contract remains on foot. In the case of a termination, the party ordinarily will have acted in a way that leaves no doubt as to the choice made, which would be clearly inconsistent with the exercise of the right to keep the contract on foot, because it no longer exists: Immer 182 CLR at 41. Deane, Toohey, Gaudron and McHugh JJ emphasised that at the heart of election was the idea of a confrontation which, in turn, produced the necessity of the party confronted making a choice: Immer 182 CLR at 42. Mere awareness of a right to rescind or terminate or of facts giving rise to a right to rescind or terminate will not necessarily have the consequence that the party will be held to have elected to affirm the contract if he or she acts on the basis that the contract remains on foot. As Deane, Toohey, Gaudron and McHugh JJ noted ( Immer 182 CLR at 43): 'Such an implication is at odds with the notion of being confronted with the necessity of making a choice.' In the present case, Hoy Mobile did not identify when, in the period between Allphones learning of the transaction with Mr Quarmby in late May and giving its notice of intention to terminate in late August 2006, Allphones was required to make an election either to terminate the franchise agreement or abandon its right to do so. While in Mr Donnellan's email of 10 July 2006 Allphones had stated that it was relying on fraud, the precise nature of the fraud on which it was relying had not been revealed by it, despite requests through Hoy Mobile's solicitor, that it do so. Nor, had Hoy Mobile disclosed anything about the existence, nature or extent of its fraud to Allphones. Hoy Mobile, however, was acutely aware of the fraud it had committed and uniquely placed to understand its full implications. And, his Lordship said that where there is a right to elect '... the party is not bound to elect once; he may wait and think which way he will exercise his election, so long as he can do so without injuring other persons ...' ( Scarf 7 App Cas at 360, emphasis added). Lord Blackburn emphasised that election involved, first, the making of the choice between one of two inconsistent rights and, secondly, the notification or communication of that choice to the party against whom the rights existed in a way that affected that other party. Hence, in Immer 182 CLR at 43 Deane, Toohey, Gaudron and McHugh JJ referred to the party being '... confronted with the necessity of making a choice'. As at 9 June 2006, when Allphones demanded the return of an unamended RCTI agreement from Hoy Mobile, I am satisfied that it had knowledge of what happened in the sale to Mr Quarmby. However, I am not satisfied that at that time it had discovered or fully absorbed the implications of two recharge cards appearing on its point-of-sale records in connection with the payment of $199 for Mr Quarmby's phone. Nor am I satisfied that Allphones' asking for the complete RCTI agreement to be signed was inconsistent with Allphones keeping alive its right to terminate. After all, there was no provision in the franchise agreement which required Hoy Mobile to execute the RCTI agreement. Its execution was proffered by Allphones as a means of facilitating prompt payment of money which was payable once the requirements of the Goods and Services Tax (GST) legislation were satisfied. I am not satisfied that, at this time, Hoy Mobile had any belief that Allphones had made a choice to affirm the franchise agreement. At that time, Hoy Mobile was ignorant that Allphones had any awareness of its fraud. It did not believe that Allphones made an election at any time in June 2006. Indeed, Hoy Mobile was then complaining directly, and through its solicitor, that Allphones was refusing to recognise the existence of any franchise agreement. Hoy Mobile was hardly in a position to suggest that, in fairness to it, Allphones was confronted with the requirement to make a choice then and there: see Immer 182 CLR at 41. Nor, apart from ease of administration, and the obligation to pay Hoy Mobile more promptly, was there any identifiable 'benefit' accruing to Allphones from seeking execution of the RCTI agreement. I am of opinion that Allphones had insufficient knowledge by the time its receipt of the RCTI agreement on 15 June to find that it had elected not to terminate the franchise agreement by reason of Mr Hoy's fraudulent conduct. (b) Store refresh requirement By the time the store refresh letter was sent to all franchisees on or after 29 June 2006, Allphones was aware of skimming having occurred at Hoy Mobile through both Mr Quarmby's transaction and Mr Shepherd's revelations as to what had happened while he worked there. However, Allphones was still seeking legal advice as to its position. Mr Berner only interviewed Mr Quarmby on 30 June 2006, although I infer that the information Mr Quarmby had given to Mr Ilievski had been passed on to Allphones' solicitors by that time. And, by 30 June, Allphones' solicitors were proceeding on the basis that they were acting in anticipation of litigation as well as giving Allphones advice as to its position. I am satisfied that prior to Mr Donnellan sending his letter on 7 July 2006, Allphones had not communicated to Hoy Mobile that it had chosen between two mutually exclusive courses of action with which it had been confronted, at that time and between which, in fairness to Hoy Mobile, Allphones had to choose: Immer 182 CLR at 41. In addition, Mr and Mrs Hoy did not give evidence that they believed that Allphones had affirmed the franchise agreement existence prior to this time. To the contrary they perceived its actions as breaches of the franchise agreement, or denials of its existence. Once Mr Donnellan's letter of 7 July had been received by Hoy Mobile, it was clear to both parties that Allphones wished to discuss a serious matter. By the following Monday, 10 July, Allphones had communicated that it believed Hoy Mobile had committed a fraud. Mr Hoy was instantly aware, on receiving that news from his wife, that the fraud concerned the unlocking of phones. Mr Donnellan's evidence was that he wanted a meeting so that he could hear what Hoy Mobile had to say about the allegations. I accept his evidence that he wanted to give Hoy Mobile an opportunity to provide its response, if any, to the allegations which were being made by Allphones. However, Mr Hoy never attended a meeting with Allphones after 9 May 2006, when Mr Harkin had insulted and berated him during the quarterly review. I have some sympathy with Mr Hoy's reluctance to attend a further meeting after that experience. Allphones submitted that Mr Harkin's behaviour during this quarterly review was merely to be characterised as part of the rough and tumble of business dealings. I reject that submission. Of course, business dealings can be, and often are, robust exchanges. Mr Harkin did not offer any justification for his abusive conduct towards Mr Hoy on 9 May at the quarterly review. Objectively, there was no justification for it. He acted in a bullying, offensive and overbearing manner towards Mr Hoy. I reject the argument that such behaviour should be characterised as acceptable or normal in the relationship between franchisor and franchisee. Obviously, allowances must be made for different people and the way in which they react and interact. Having had the benefit of seeing both Mr Hoy and Mr Harkin in the witness box, I am satisfied that in a commercial negotiation and meeting, Mr Hoy was quite capable of looking after himself and his own interests. He was no 'wilting flower'. However, in his relationship with Mr Harkin, Mr Hoy was not in a particularly powerful position. To be abused and sworn at as Mr Hoy was, during the course of a business meeting, for no good reason, was not something which, in the ordinary course, anyone should have to face. Mr Harkin's behaviour was inappropriate. I do not draw any adverse inference against Mr Hoy for refusing to have a further meeting with Mr Harkin. Through neither party's fault, a meeting was unable to be arranged between 7 July and 22 August. During that period, Hoy Mobile wished the contract to remain on foot while Allphones had indicated that it was keeping its options open until Hoy Mobile had had an opportunity to explain its, prima facie, fraudulent conduct. A reasonable person in Hoy Mobile's position could not have understood Allphones' conduct at this point to amount to an affirmation of the franchise agreement. Both parties were still pursuing the course of holding a meeting for the purposes set out in Mr Donnellan's letter of 7 July. That course was being pursued with Hoy Mobile's full knowledge, and indeed at its request, through Mr Birch's email of 10 July to that effect. And, neither Mr nor Mrs Hoy gave evidence that they understood that Allphones had chosen to affirm during this period. Allphones was not making a choice of affirming the franchise agreement, while holding matters in abeyance pending the meeting at which Hoy Mobile could explain its position. Rather (as Kitto J observed was permissible in Goonan 111 CLR at 55) Allphones had said that it intended to refrain from electing until the meeting occurred. Nor, in fairness to Hoy Mobile, was Allphones required to make a choice before that meeting had occurred: Immer 182 CLR at 41. However, those situations are far removed from that presented here. Hoy Mobile asked Allphones not to terminate pending a meeting. It cannot now say that, because Allphones expressly acceded to its request on 10 July for a meeting, it affirmed the franchise agreement. At the heart of the principle of election, as Deane, Toohey, Gaudron and McHugh JJ showed in Immer 182 CLR at 41, is not only the confrontation of the elector with a choice, but also the requirement that when so confronted the elector '... must, in fairness to the other party, make his choice' (emphasis added). Having requested Allphones not to make the choice before Hoy Mobile could meet with it, Hoy Mobile cannot complain that, in fairness to it, Allphones should be held to have made a choice that neither party intended it to have made. Each party accepted that neither would be taken by the other as having unequivocally chosen between inconsistent rights until at least the time after the meeting had occurred. Fairness, in the sense referred to in Immer 182 CLR at 41, would be eschewed, not advanced, if Allphones' accommodation of Hoy Mobile's request not to terminate until a meeting occurred, were used to preclude it from terminating at or immediately after that meeting. I find that, in July and August 2006, Allphones was unaware that Mr Hoy had been committing the fraud beginning sometime early in 2004. All that Allphones knew at the time was what Mr Shepherd and Mr Quarmby had told it. There is no evidence that Allphones had any other knowledge of when, or the circumstances in which the fraud first commenced. Nor did Allphones have knowledge that the fraud continued after Mr Quarmby had purchased his phone, although I have no doubt it suspected that this had occurred. But suspicion is one thing, and knowledge another. Mr Hoy had made no, let alone full and frank, disclosure of what he was doing at any time prior to Allphones issuing the notice of intention to terminate. While Allphones may have suspected that more was involved than it knew, given the element of fairness inherent in the concept of election ( Immer 182 CLR at 41) Hoy Mobile's assertion of election by Allphones based on incomplete information and disclosure by Hoy Mobile, does not provide any occasion to find that Allphones elected to affirm the franchise agreement. So far as Hoy Mobile relied on matters occurring after 7 July 2006, I find that the lifting of the stock and commission holds were not unequivocal affirmations of the franchise agreement. Commissions had been earned prior to that time. It would be unjust to impute to Allphones an election, once for all to give up its right to terminate for Hoy Mobile's undoubted fraud, simply because, in ignorance of the full nature and extent of that fraud, it acceded to Hoy Mobile's request not to terminate until the 22 August meeting could occur. And, Hoy Mobile's argument that Allphones had delayed unreasonably, until 28 August, from issuing the notice of its intention to terminate is, in my view, without substance. Hoy Mobile had requested the delay. Through neither party's fault, the meeting could not be arranged earlier than 22 August. Any delay in the six days after that was inconsequential. Mr Harkin said Allphones would issue the notice. Hoy Mobile did not contend that anything occurred, after he said this and before 28 August, which amounted to an election by Allphones.


case_text: reasonable person in the position of the parties here would reject as inappropriate a construction of their franchise agreement that it had no territory at all. The task of construing 'N/A' as the description of the territory must be approached in the manner described by Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179 [40] ; applied in International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3 ; (2008) 242 ALR 47 at 63 [53] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ. That requires the Court to put to one side the subjective beliefs or understandings of the parties about the rights and liabilities that govern their contractual relations, and to concentrate on the principle of objectivity for the ascertainment and definition of those rights and liabilities. Their Honours said that what mattered was what each party, by words or conduct, would have led a reasonable person in the position of the other party to believe. They continued: 'References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreements. The meaning of the terms of the contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction ( Pacific Carriers Limited v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at 461-462 [22] .)'


case_outcome: applied

case_title: Jones v Dunkel (1959) 101 CLR 29

case_text: conversation that he denied was the one in which Mr Hoy had asserted that Mr Donnellan agreed to a 5 km radius territory. Mr Donnellan was then pressed about what he now claimed had occurred. He gave this evidence: 'Now, what do you say Mr Hoy said to you on this occasion in 2003 when he raised the subject of territory? Was it him who raised it or you who raised it? --- He raised it with Mark McClennan. I was walking past; asked how things were going, and he said, "What about territories?" I said, "We don't give them, mate."' I do not believe Mr Donnellan's evidence that such a conversation occurred. Mr Hoy was not cross-examined about any such conversation when he first gave evidence. I infer that this was because the conversation was first raised by Mr Donnellan in his cross-examination. When he was recalled at the end of the trial, Mr Hoy denied the conversation asserted by Mr Donnellan. Mr McClennan was available. He had a position as a consultant with Allphones, but was not called to give evidence. I infer that nothing Mr McClennan could have said would have assisted Allphones' case: Jones v Dunkel [1959] HCA 8 ; (1959) 101 CLR 298. Allphones contended, based on the assertions initially made, but later disavowed by Mr Donnellan, that at the time the franchise agreement with Hoy Mobile was entered into, the only territory which Allphones was prepared to grant was limited to the physical shop in which the franchise was conducted. I reject this argument. Such a result does not fit within the matrix of mutually known facts or the very terms of the franchise agreement itself. First, Mr Donnellan never told Mr Hoy, prior to signing the franchise agreement, words to the effect that the territory was the area of the shop lease. There is no evidence that Mr Hoy was informed to that effect prior to Hoy Mobile's entry into the franchise agreement.


case_text: Koompahtoo Local Aboriginal Land Council v Sanpine [2007] HCA 61 ; (2007) 241 ALR 88 at 101 [44] Gleeson CJ, Gummow, Heydon and Crennan JJ said that unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. They said: 'In contractual renunciation, actions may speak louder than words.' Their Honours held that it was important to classify whether the obligation with which there had been a failure to comply had been agreed by the contracting parties to be essential, or whether there had been a sufficiently serious breach of a non-essential term enlivening the right to terminate: Koompahtoo 241 ALR at 101 [47] and 102 [49]. They held that the interests of justice were promoted by limiting the right to rescind the contracts (i.e. terminate for breach) to instances of serious and substantial breaches of contract: Koompahtoo 241 ALR at 104 [52]. I am of opinion that the cumulative effects of Allphones' deliberate and secretive underpayments of commissions were of such seriousness that, had it wished to do so and been itself an innocent party, Hoy Mobile could have terminated the franchise agreement. 29.3 Entitlement to terminate: Interdependency and repudiation It was an essential term under the franchise agreement that the franchisee (Hoy Mobile) be paid the commissions to which it was entitled arising from its performance of its obligations. The evidence established that Allphones was not paying commissions earned by Hoy Mobile in full, and sometimes at all. Just as Hoy Mobile's conduct in relation to the fraud evinced an intention not to be bound, Allphones' conduct in respect of the short payment of the commission can be described as conduct which evinced an intention no longer to be bound by the franchise agreement or to fulfil it in a manner substantially inconsistent with Allphones' obligations: Koompahtoo 241 ALR at 100 [44] per Gleeson CJ, Gummow, Heydon and Crennan JJ applying; Laurinda 166 CLR at 634 per Mason CJ.


case_outcome: considered

case_title: Kyrwood v Drinkwater [2000] NSWCA 126

case_text: Kyrwood v Drinkwater [2000] NSWCA 126 at [154] Powell JA (with whom Meagher JA agreed at [1]; see also the dissenting view of Fitzgerald JA at [231]-[251]) said: 'In Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 it was held by this Court that, if non-compliance with a contractual obligation is to take away the defaulting party's right to terminate, there must be a direct causal relationship between the non-compliance and the failure to complete, the onus of proving which lies on the non-defaulting party, and there must be an absence of repudiation by the defaulting party prior to that time . The same approach was taken by this Court in Roadshow Entertainment Pty Ltd v CEL/Vision (ACN 053 006 269) Pty Ltd (1997) 42 NSWLR 462 at 479-480.'


case_text: is not necessary, for repudiation of a contract, that the repudiator make plain that he will never perform his contractual obligations at all, as Deane and Dawson JJ pointed out in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23 ; (1989) 166 CLR 623 at 658-659. There, Mason CJ said that there was a difference between evincing an intention to carry out a contract only if and when it suited the party to do so, and evincing an intention to carry it out as and when it suited the party to do it. He said that in the first case, the party intended not to carry the contract out at all, in the event that it did not suit him. Whereas in the second case, the party intended to carry out the contract, but only to carry it out as and when it suited him. Mason CJ said that it is easier to say of the first than the second case that a party has evinced an intention no longer to be bound by the contract, although ultimately the question whether a party is taken to have evinced such an intention is determined objectively: Laurinda 166 CLR at 634; see also 643 per Brennan J, and 666 per Gaudron J. It was an essential term under the franchise agreement that the franchisee (Hoy Mobile) be paid the commissions to which it was entitled arising from its performance of its obligations. The evidence established that Allphones was not paying commissions earned by Hoy Mobile in full, and sometimes at all. Just as Hoy Mobile's conduct in relation to the fraud evinced an intention not to be bound, Allphones' conduct in respect of the short payment of the commission can be described as conduct which evinced an intention no longer to be bound by the franchise agreement or to fulfil it in a manner substantially inconsistent with Allphones' obligations: Koompahtoo 241 ALR at 100 [44] per Gleeson CJ, Gummow, Heydon and Crennan JJ applying; Laurinda 166 CLR at 634 per Mason CJ.


case_text: one of the parties to a contract has committed a fraud in its performance, the fraudster cannot complain that he or she has been prejudiced by acts of the other party done without sufficient knowledge of his or her fraud. That is why the courts have always held that fraud fundamentally affects the way in which relations between parties are viewed. As Denning LJ said in Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712 (see also SZFDE v Minister for Immigration and Citizenship [2007] HCA 35 ; (2007) 237 ALR 64 at 68 [15] - [16] ): 'No court in this land will allow a person to keep an advantage which he has obtained by fraud. ... Fraud unravels everything.' Allphones argued that because Hoy Mobile had engaged in a fraud which fell within cl 9.3(viii) of the franchise agreement and which had continued for a considerable period, it should be allowed to terminate pursuant to its express contractual right. In Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712-713, Denning LJ referred to Master v Miller (1791) 4 TR 320 at 337-338; 1 Smith's LC, 13 th ed ,780, 799) where Buller J said: 'It is a common saying in our law books, that fraud vitiates every thing. I do not quarrel with the phrase, or mean in the smallest degree to impeach the various cases which have been founded on the proof of fraud. But we must recollect, that the principle which I have mentioned is always applied ad hominem . He who is guilty of a fraud shall never be permitted to avail himself of it; and if a contract founded in fraud be questioned between the parties to that contract, I agree, that as against the person who has committed the fraud, and who endeavours to avail himself of it, the contract shall be considered as null and void. ... Even as between the parties themselves we must not forget the figurative language of Lord Ch J Wilmot , who said [that]: "... the statute law is like a tyrant; where he comes he makes all void: but the common law is like a nursing father, and makes void only that part where the fault is, and preserves the rest."'


case_text: Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70 ; (2001) 210 CLR 181 at 188 [11] , Gleeson CJ, Gummow and Hayne JJ said: '[11] Interpretation of a written contract involves, as Lord Hoffmann has put it ( Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28 ; [1998] 1 WLR 896 at 912; [1997] UKHL 28 ; [1998] 1 All ER 98 at 114. See also the remarks of Mason J in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24 ; (1982) 149 CLR 337 at 350-352, and of Lord Bingham of Cornhill in Bank of Credit and Commerce International SA v Ali [2001] UKHL 8 ; [2002] 1 AC 251 at 259): "the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract." That knowledge may include matters of law, as in this case where the obtaining of intellectual property protection was of central importance to the commercial development of Mr Allen's ironing board (cf Bank of Credit and Commerce International SA v Ali [2001] UKHL 8 ; [2002] 1 AC 251 at 282, per Lord Clyde).'


case_text: McNamara v Consumer Trader and Tenancy Tribunal [2005] HCA 55 ; (2005) 221 CLR 646 at 661 [40] McHugh, Gummow and Heydon JJ discussed the construction of a section which had been re-enacted in the same words in new legislation. They departed from the construction of the earlier legislation in a previous decision of the High Court and said: 'It would be an error to treat what was said in construing one statute as necessarily controlling the construction of another; the judicial task in statutory construction differs from that in distilling the common law from past decisions (see Ogden Industries Pty Limited v Lucas [1970] AC 113 at 127; Brennan v Comcare (1994) 50 FCR 555 at 572.)' And, in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5 ; (2008) 242 ALR 383 at 391 [31] Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ applied McHugh J's comments in Marshall v Director-General, Department of Transport [2001] HCA 37 ; (2001) 205 CLR 603 , where he said (at 632-3 [62]): ' But that does not mean that the courts of Queensland, when construing the legislation of that State, should slavishly follow judicial decisions of the courts of another jurisdiction in respect of similar or even identical legislation. The duty of courts, when construing legislation, is to give effect to the purpose of the legislation. The primary guide to understanding that purpose is the natural and ordinary meaning of the words of the legislation. Judicial decisions on similar or identical legislation in other jurisdictions are guides to, but cannot control, the meaning of legislation in the court's jurisdiction. Judicial decisions are not substitutes for the text of legislation although, by reason of the doctrine of precedent and the hierarchical nature of our court system, particular courts may be bound to apply the decision of a particular court as to the meaning of legislation.' (emphasis added)


case_title: Master v Miller (1791) 4 TR 320

case_text: argued that because Hoy Mobile had engaged in a fraud which fell within cl 9.3(viii) of the franchise agreement and which had continued for a considerable period, it should be allowed to terminate pursuant to its express contractual right. In Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712-713, Denning LJ referred to Master v Miller (1791) 4 TR 320 at 337-338; 1 Smith's LC, 13 th ed ,780, 799) where Buller J said: 'It is a common saying in our law books, that fraud vitiates every thing. I do not quarrel with the phrase, or mean in the smallest degree to impeach the various cases which have been founded on the proof of fraud. But we must recollect, that the principle which I have mentioned is always applied ad hominem . He who is guilty of a fraud shall never be permitted to avail himself of it; and if a contract founded in fraud be questioned between the parties to that contract, I agree, that as against the person who has committed the fraud, and who endeavours to avail himself of it, the contract shall be considered as null and void. ... Even as between the parties themselves we must not forget the figurative language of Lord Ch J Wilmot , who said [that]: "... the statute law is like a tyrant; where he comes he makes all void: but the common law is like a nursing father, and makes void only that part where the fault is, and preserves the rest."'


case_title: Matthews v Smallwood [1910] 1 Ch 77

case_text: principle of election operates to hold a party to a position it has communicated to the other party as the choice that it has made between two inconsistent rights. Communication of the choice cannot occur in a factual vacuum. The circumstances and context of the communication affect how a reasonable person in the position of the other party would understand it. A landlord accepting rent ( Matthews v Smallwood [1910] 1 Ch 777 per Parker J) or a fire insurer, exercising rights to take possession of the insured's damaged premises ( Craine v Colonial Mutual Fire Insurance Co Ltd [1920] HCA 64 ; (1920) 28 CLR 305 per Knox CJ, Isaacs and Starke JJ) acting unilaterally, could not say that it was acting 'without prejudice'.


case_text: McNamara v Consumer Trader and Tenancy Tribunal [2005] HCA 55 ; (2005) 221 CLR 646 at 661 [40] McHugh, Gummow and Heydon JJ discussed the construction of a section which had been re-enacted in the same words in new legislation. They departed from the construction of the earlier legislation in a previous decision of the High Court and said: 'It would be an error to treat what was said in construing one statute as necessarily controlling the construction of another; the judicial task in statutory construction differs from that in distilling the common law from past decisions (see Ogden Industries Pty Limited v Lucas [1970] AC 113 at 127; Brennan v Comcare (1994) 50 FCR 555 at 572.)' And, in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5 ; (2008) 242 ALR 383 at 391 [31] Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ applied McHugh J's comments in Marshall v Director-General, Department of Transport [2001] HCA 37 ; (2001) 205 CLR 603 , where he said (at 632-3 [62]): ' But that does not mean that the courts of Queensland, when construing the legislation of that State, should slavishly follow judicial decisions of the courts of another jurisdiction in respect of similar or even identical legislation. The duty of courts, when construing legislation, is to give effect to the purpose of the legislation. The primary guide to understanding that purpose is the natural and ordinary meaning of the words of the legislation. Judicial decisions on similar or identical legislation in other jurisdictions are guides to, but cannot control, the meaning of legislation in the court's jurisdiction. Judicial decisions are not substitutes for the text of legislation although, by reason of the doctrine of precedent and the hierarchical nature of our court system, particular courts may be bound to apply the decision of a particular court as to the meaning of legislation.' (emphasis added) In my respectful opinion, although his Honour did not have the benefit of the reasoning in Baxter Health Care [2007] HCA 38 ; 237 ALR 512 , which was delivered subsequently to the reasons in Ketchell [2007] NSWCA 161 , the reasoning of Mason P is plainly wrong. In addition, Ketchell [2007] NSWCA 161 was decided on different legislation: see McNamara 221 CLR at 661 [40]; Walker Corporation 242 ALR at 391 [31]. I am of opinion that the non-compliance by Allphones with its obligations under cl 11 of the Code did not make the franchise agreement void. That non-compliance is a factor which, had Hoy Mobile wished to do so, could have been raised by it to seek relief under s 87 of the Act. It would defeat the evident purpose of the Code if Allphones were entitled to rely on its own breach of its obligation imposed under cl 11 to deny a franchisee with whom it had entered into a contract, the entitlement to enforce that contract against it or to seek a variation of it or relief from it under the Act. For these reasons I reject Allphones' argument that the franchise agreement is void.


case_text: also argued that cll 15 and 16 operated to prevent Hoy Mobile relying on any election, by Allphones to keep the franchise agreement on foot, which was not in writing. Because of my findings above it is not necessary to consider the application of R v Paulson [1921] 1 AC 271 at 282-283 to cll 15 and 16 on which Hoy Mobile relied. However, their Lordships indicated that the issue depends on the facts for they said, as Owen J pointed out in Owendale Pty Ltd v Anthony [1967] HCA 52 ; (1967) 117 CLR 539 at 610, that '[i]t may well be that many cases may occur to which the clause as to waiver would be applicable' before saying that, in that case, it was not: see too Owendale 117 CLR at 590 per Taylor J with whom Barwick CJ agreed on this issue at 569; per McTiernan J at 581; per Kitto J at 581-582. And, in any event, contractual provisions like cll 15 and 16 are strictly construed: Craine 28 CLR at 325-326; affirmed in Yorkshire Insurance Co Ltd v Craine [1922] 2 AC 541 at 546; (1922) 31 CLR 27 ; see too Melbourne Harbour Trust Commissioners v Hancock [1927] HCA 26 ; (1927) 39 CLR 570 at 584 per Knox CJ and Gavan Duffy J; 589 per Isaacs J; 590 per Rich J; and 594 per Starke J.


case_text: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 ; (2007) 230 CLR 89 at 151-152 [135] , Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said that intermediate appellate courts and trial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of Commonwealth legislation or uniform national legislation unless they are convinced that the interpretation is 'plainly wrong': see too Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15 ; (1993) 177 CLR 485 at 492 per Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ. And, where an intermediate appellate court holds itself free to depart from an earlier decision it should do so cautiously and only when compelled to the conclusion that the earlier decision is wrong: Nguyen v Nguyen [1990] HCA 9 ; (1990) 169 CLR 245 at 250 per Brennan J, at 269 per Dawson, Toohey and McHugh JJ and at 251 per Deane J agreeing.


case_text: their Honours' comments were obiter, since they had already acknowledged that that was not a case where the party attempting to rescind was in breach of a condition or had otherwise repudiated. And they said that they did not need to undertake a comprehensive analysis of the effect of a breach on a party's right to rescind: see Roadshow 42 NSWLR at 479F. They recognised that, although a party in breach of a non-essential term was not prevented from rescinding for a fundamental breach or a repudiation by the other party, there may be an exception where a causal relationship existed between the breaches of non-essential terms by the party attempting to rescind and the fundamental breach relied on: Roadshow 42 NSWLR at 479G-480B referring to Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613. When Gleeson CJ, Handley JA and Brownie AJA said in the passage, which I have quoted, that a party in breach of an essential but independent term may also rescind for fundamental breach, they relied on the decision of the English Court of Appeal in State Training Corporation of India Ltd v Golodetz Ltd [1989] 2 Lloyd's Rep 277. There, Kerr LJ (with whom Lloyd and Butler-Sloss LJJ agreed: Golodetz [1989] 2 Lloyd's Rep at 286) said that where both parties had obligations which had to be performed concurrently but neither was dependent upon the other: 'Since both obligations are (assumedly) in the nature of conditions, both parties had an equal right, so long as the other party's obligation remained unperformed, to treat the other party as having wrongfully repudiated.' In Kyrwood v Drinkwater [2000] NSWCA 126 at [154] Powell JA (with whom Meagher JA agreed at [1]; see also the dissenting view of Fitzgerald JA at [231]-[251]) said: 'In Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 it was held by this Court that, if non-compliance with a contractual obligation is to take away the defaulting party's right to terminate, there must be a direct causal relationship between the non-compliance and the failure to complete, the onus of proving which lies on the non-defaulting party, and there must be an absence of repudiation by the defaulting party prior to that time . The same approach was taken by this Court in Roadshow Entertainment Pty Ltd v CEL/Vision (ACN 053 006 269) Pty Ltd (1997) 42 NSWLR 462 at 479-480.'


case_title: Owendale Pty Ltd v Anthony [1967] HCA 52 ; (1967) 117 CLR 539


case_title: Paal Wilson & Co v Partenreedere Hannah Blumenthali [1983] 1 AC 854

case_text: common law, a party who brings an action for breach of contract must show that he is ready and willing to perform his part of the concurrent acts: Cohen & Co 24 CLR at 298 per Isaacs J. Where, at least in English law, both parties to a contract are in breach of a mutual obligation owed by each to the other, neither can rely upon the other's breach as giving him a right to terminate, following the decisions of the House of Lords in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981] AC 909 at 978-988A per Lord Diplock, with whom Lords Edmund-Davies and Russell of Killowen agreed; Paal Wilson & Co v Partenreedere Hannah Blumenthal [1983] 1 AC 854 at 908H-909F per Lord Brandon of Oakbrook with whom the other members of the House agreed in separate speeches. In Paal Wilson [1983] 1 AC at 915C-916D Lord Diplock discussed the entry of both parties to an executory contract into a 'new contract' which he styled 'the contract of abandonment'. He explained that in such a case, each party promises by words or conduct to release the other from further performances of obligations on its part which remain to be performed, including the obligation to pay damages. And in Australian law the parties to a contract can so conduct themselves that they can be seen to have mutually abandoned or abrogated the contract; for example where neither takes any steps to perform over a period: see Summers v The Commonwealth [1918] HCA 33 ; (1918) 25 CLR 144 at 151-152 per Isaacs J; DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12 ; (1978) 138 CLR 423 at 434 per Stephen Mason and Jacobs JJ; Foran 168 CLR at 422-423 per Brennan J.


case_text: is a danger in approaching commercial relationships with an overlay of equitable considerations. The relationship between the parties here arose in the contractual settings of the franchise agreement and the Code. Indeed, cl 12 of the franchise agreement expressly stated that the relationship between the parties was not one involving agency, partnership or joint venture. Nor does the Code create a fiduciary relationship between franchisor and franchisee. The necessity to identify the precise content of an alleged fiduciary relationship was emphasised by McHugh, Gummow, Hayne and Callinan in Pilmer v Duke Group Ltd (in liq) [2001] HCA 31 ; (2001) 207 CLR 165 at 198-199 [77] - [79] . Here, each party expected to earn profit by its own efforts. While it was in the joint interests of Allphones, and the franchisees, for Allphones to negotiate the best terms it could with carriers, the first question for consideration is what the terms of cll 7.3 and 7.4 require Allphones to do on their proper construction. If the contractual claims made by Hoy Mobile for the right to receive payments under one or other of those clauses in respect of the monies identified by it are correct, then it is not necessary to consider whether any fiduciary relationship existed. I propose to approach the problem in this way.


case_title: Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 768 [2003] HCA 10 ; , 196 ALR 257

case_text: am satisfied that Allphones was responsible for the diversion of calls from Hoy Mobile's territory of Eastgardens because of, first, the inappropriate programming by Zintel from March 2006 and, secondly, from October 2006 its own failure to correct what it knew was a problem. I am satisfied that Hoy Mobile lost the opportunity to make some sales from calls to the 138000 number during the period of the diversion. I am also satisfied that this loss had some value. Where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages: see Sellars v Adelaide Petroleum NL [1994] HCA 4 ; (1992) 179 CLR 332 at 349-350 per Mason CJ, Dawson, Toohey and Gaudron JJ. However, it is not possible to make any precise calculation of the value of this loss, which included payments under cll 7.3 and 7.4 and the ongoing right to receive MTAC. Doing the best I can, I find the value of this to be the loss of about 1% of the sales of the Randwick store made during the period of the diversion. That results in a past loss of about $900, but this amount excludes any MTAC which Hoy Mobile would have earned after March 2007 on those sales. Although there is some guesswork involved, I find the total loss of Hoy Mobile as a result of the diversion to be $1,500: see generally Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd [2003] HCA 10 ; (2003) 196 ALR 257 at [37] - [38] per Hayne J with whom Gleeson CJ, McHugh and Kirby JJ agreed: Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd [2007] FCAFC 40 ; (2007) 157 FCR 564 at 569-570 [35] - [36] per Black CJ and Jacobson J, at 581 [99]-[101] per myself.


case_text: Finn and Conti JJ held that the analogue of s 51AC required the Court to focus primarily on the unconscionable conduct of the corporation and to determine whether that conduct was contrary to the norm of conscientious behaviour. They held that the conduct in that case insisted of a carefully formulated and systematic approach which clearly offended against basic notions of good conscience and fair play: National Exchange at 148 FCR at 143 [44]. Although their Honours were speaking of s 12CC of the ASIC Act , their remarks apply equally to the notion of 'unconscionable conduct' in its analogue, s 51AC: Cannon Australia Pty Ltd v Patton [2007] NSWCA 246 at [43] per Campbell JA, with whom Harrison J agreed. Campbell JA had referred ([2007] NSWCA 246 at [40]) to the earlier decision of a Full Court of this Court in Hurley v McDonald's Australia Ltd [1999] FCA 1728 ; (2000) ATPR 41-741 at [21] - [22] . There Heerey, Drummond and Emmett JJ said that for conduct to be regarded at an unconscionable, serious misconduct or something clearly unfair or unreasonable had to be demonstrated. They found that the term carried with it the meaning given by the Shorter Oxford English Dictionary, namely '... actions showing no regard for conscience, or that are irreconcilable with what is right or reasonable', relying on Qantas Airways Ltd v Cameron [1996] FCA 1483 ; (1996) 66 FCR 246 at 262.


case_title: R v Burdett (1820) 4 B & Ald 95

case_text: is a balance of deductions from Hoy Mobile's commissions that comes to $3,581.49, which the experts agreed related to the credit charge fees, EFTPOS fees, IT fees, or late banking fees. However, they were unable to allocate that sum among the individual categories. In my opinion, it was for Allphones to justify its deductions. Hoy Mobile has established that Allphones made substantial deductions from commission amounts it was paid without a contractual basis. Mr Nicoll could have given evidence as to any basis for reducing the unallocated balance but did not. And, in their reports neither Mr Nicoll nor the two expert accountants could allocate the sums involved. Hoy Mobile has discharged any onus on it: Blatch v Archer [1774] EngR 2 ; (1774) 1 Cowp 63 at 64; [1774] EngR 2 ; 98 ER 969 at 970; Weissensteiner v The Queen [1993] HCA 65 ; (1993) 178 CLR 217 at 225 per Mason CJ, Deane and Dawson JJ and see too at 233 per Brennan and Toohey JJ; R v Burdett (1820) 4 B & Ald 95 at 161-162 per Abbott LCJ at 140 per Holroyd J; 106 ER 873 at 898 and 890. Since Allphones did not justify any portion of this balance as a fee payable by Hoy Mobile, the whole amount claimed by it should be paid by Allphones.. 25.5 Retention canvassing


case_title: R v Paulson [1921] 1 AC 271


case_text: the franchise agreement with Hoy Mobile distinguished between the franchised premises for Hoy Mobile, the shop, and the territory. It would be commercially absurd for Allphones to contract, as in cl 2, that it would not operate a franchised business in 'the Territory' where that territory was a leased shop of which its franchisee had exclusive possession: Radaich v Smith [1959] HCA 45 ; (1959) 101 CLR 209. So much was recognised by Mr Donnellan when he said in evidence: 'You can't go and open, I mean fundamental tenancy law, you can't go and open within the lease line of a lessee's premises. We didn't hold the lease.' 3.3 Findings regarding territory For the reasons I have given, I do not accept either Mr Hoy or Mr Donnellan's account of his conversation with the other concerning what the territory was to be. The remaining possibilities are that 'N/A' was literally the territory agreed between the parties, so that there was no territory at all; or that there was some other meaning of territory. Allphones argued that the agreement could work perfectly well without the specification of a territory. I reject that argument. A reasonable person in the position of the parties would have considered that the exclusive territory, to which cl 2 of the franchise agreement referred, was an essential term. In doing so, they would be mindful, both, that the China Lakes agreement had used a simple means of defining the territory by making it the suburb in which the franchised premises were, and that the Code required specification of, first, a territory, and secondly, whether the territory was exclusive, non-exclusive or limited to a particular site (Annexure 1 of the Code, cl 8.1). In that specification, the Code recognised that a 'particular site' was different to an exclusive territory.


case_text: CJ applied what Dixon CJ had said in Rawson v Hobbs [1961] HCA 72 ; (1961) 107 CLR 466 at 481 (see Foran 168 CLR at 405-406). Dixon CJ had said in Rawson 107 CLR at 481 (Windeyer J agreed at 107 CLR at 492): 'One must be very careful to see that nothing but a substantial incapacity or definitive resolve or decision against doing in the future what the contract requires is counted as an absence of readiness and willingness. On the other hand it is absurd to treat one party as tied to the performance of an executory contract although the other has neither the means nor intention of performing his part when his turn comes, simply because his incapacity to do so is not necessarily final or logically complete.' Brennan J ( Foran 168 CLR at 424) said: 'Where a party claims to be entitled to rescind an executory contract on account of the other party's repudiation (whether by way of anticipatory breach or incapacity), the first party must show not only the other's repudiation but his own readiness and willingness up to the time of rescission to perform his essential obligations under the contract: [ Rawson 107 CLR at 480-481] ... Since a party's right to rescind an executory contract for the other party's repudiation is limited to cases where the first party is ready and willing to perform, neither party is treated as without fault where both would be at fault were the contract to continue until the time for performance arrives .' (emphasis added) He too applied what Dixon CJ had said in Rawson 107 CLR at 481, see Foran 168 CLR at 425. When Brennan J referred to an entitlement to rescind, he used 'rescind' in the sense of one party electing to terminate for breach or repudiation by the other, as explained in Commissioner of Taxation v Reliance Carpet Co Pty Ltd [2008] HCA 22 at [2] per Gleeson CJ, Gummow, Heydon, Crennan and Kiefel JJ.


case_title: Roadshow Entertainment Pty Ltd v CAN 053 006 269 Pty Ltd (Receiver & Manager Appointed) (1997) 42 NSWLR 462

case_text: party was evincing loyalty to its contractual promises. In Roadshow Entertainment Pty Ltd v ACN 053 006 269 Pty Ltd (Receiver & Manager Appointed) (1997) 42 NSWLR 462 at 481B-C Gleeson CJ, Handley JA and Brownie AJA, in the Court of Appeal of the Supreme Court of New South Wales said: 'A party in breach of non-essential terms who has not repudiated may rescind for fundamental breach: see Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; State Trading Corporation of India Ltd v Golodetz Ltd [[1989] 2 Lloyd's Rep 277] (at 286-287). A party in breach of an essential but independent term may also rescind for fundamental breach: see State Trading Corporation of India Ltd v Golodetz Ltd (at 285-287); compare Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40 at 50-51. Roadshow , we consider, was not, by reason of its conduct, unable to terminate on the ground of CEL/Vision's repudiation.' However, their Honours' comments were obiter, since they had already acknowledged that that was not a case where the party attempting to rescind was in breach of a condition or had otherwise repudiated. And they said that they did not need to undertake a comprehensive analysis of the effect of a breach on a party's right to rescind: see Roadshow 42 NSWLR at 479F. They recognised that, although a party in breach of a non-essential term was not prevented from rescinding for a fundamental breach or a repudiation by the other party, there may be an exception where a causal relationship existed between the breaches of non-essential terms by the party attempting to rescind and the fundamental breach relied on: Roadshow 42 NSWLR at 479G-480B referring to Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613. When Gleeson CJ, Handley JA and Brownie AJA said in the passage, which I have quoted, that a party in breach of an essential but independent term may also rescind for fundamental breach, they relied on the decision of the English Court of Appeal in State Training Corporation of India Ltd v Golodetz Ltd [1989] 2 Lloyd's Rep 277. There, Kerr LJ (with whom Lloyd and Butler-Sloss LJJ agreed: Golodetz [1989] 2 Lloyd's Rep at 286) said that where both parties had obligations which had to be performed concurrently but neither was dependent upon the other: 'Since both obligations are (assumedly) in the nature of conditions, both parties had an equal right, so long as the other party's obligation remained unperformed, to treat the other party as having wrongfully repudiated.' In Kyrwood v Drinkwater [2000] NSWCA 126 at [154] Powell JA (with whom Meagher JA agreed at [1]; see also the dissenting view of Fitzgerald JA at [231]-[251]) said: 'In Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613 it was held by this Court that, if non-compliance with a contractual obligation is to take away the defaulting party's right to terminate, there must be a direct causal relationship between the non-compliance and the failure to complete, the onus of proving which lies on the non-defaulting party, and there must be an absence of repudiation by the defaulting party prior to that time . The same approach was taken by this Court in Roadshow Entertainment Pty Ltd v CEL/Vision (ACN 053 006 269) Pty Ltd (1997) 42 NSWLR 462 at 479-480.' In Emhill Pty Ltd v Bonsoc Pty Ltd (No 2) [2007] VSCA 108 at [68] - [69] Warren CJ, with whom Buchanan and Ashley JJA agreed said: ' [68] N C Seddon and M P Ellinghaus state in Chesire & Fifoot's Law of Contract (8th ed, 2002) [at 943]: A party need only be ready and willing to perform the contract in substance. A party who is in breach may nevertheless have the right to terminate, so long as the breach is not repudiatory or of an essential term or such as to deprive the other party of the substantial benefit of the contract. This is the view espoused by the learned judge below and supported by Roadshow Entertainment Pty Ltd v CEL Home Video Pty Ltd (1997) 42 NSWLR 462 at 470 480 [sic]. [69] The question then becomes whether Emhill had repudiated the contract, breached an essential term of the contract or deprived the other party of the substantial benefit of the contract.' (emphasis added) While the dicta of the Court of Appeal in Roadshow Entertainment 42 NSWLR at 481B-C are of great weight, I am of opinion that on analysis, they are inconsistent with the considered, albeit equally obiter dicta views of three of the justices: Foran 168 CLR at 405-408 per Mason CJ, 424, 427 per Brennan J and 452, 454 per Dawson J.


case_text: in Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 ; 76 ALJR 436 ; [2002] HCA 5 at [10] , Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ said: ' [10] In Codelfa , Mason J (with whose judgment Stephen J and Wilson J agreed) referred to authorities (In particular, speeches of Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381 at 1383-5; [1971] 3 All ER 237 at 239-41; L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2 ; [1974] AC 235 at 261; [1973] UKHL 2 ; [1973] 2 All ER 39 at 53; and Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995-7; [1976] 3 All ER 570 at 574-6) which indicated that, even in respect of agreements under seal, it is appropriate to have regard to more than internal linguistic considerations and to consider the circumstances with reference to which the words in question were used and, from those circumstances, to discern the objective which the parties had in view. In particular, an appreciation of the commercial purpose of a contract: ( Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989 at 995-6; [1976] 3 All ER 570 at 574) "... presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating." Such statements exemplify the point made by Brennan J in his judgment in Codelfa: ((1982) [1982] HCA 24 ; 149 CLR 337 at 401; [1982] HCA 24 ; 41 ALR 367 at 416) "The meaning of a written contract may be illuminated by evidence of facts to which the writing refers, for the symbols of language convey meaning according to the circumstances in which they are used."'


case_title: Scarf v Jardine (1882) 7 App Cas 345

case_text: his classic speech in Scarf v Jardine (1882) 7 App Cas 345 at 360-361 Lord Blackburn discussed the principles upon which the doctrine of election had developed. He said that where a person had an option to choose one or other of two inconsistent things, when once he or she had made his or her election, it cannot be retracted: Scarf 7 App Cas at 360. He emphasised that the election had to be communicated ( Scarf 7 App Cas at 361): '... to the other side in such a way as to lead the opposite party to believe that he has made that choice, he has completed his election and can go no further; and whether he intended it or not, if he has done an unequivocal act I mean an act which would be justifiable if he had elected one way and would not be justifiable if he had elected the other way the fact of his having done that unequivocal act to the knowledge of the person concerned is an election.' And, his Lordship said that where there is a right to elect '... the party is not bound to elect once; he may wait and think which way he will exercise his election, so long as he can do so without injuring other persons ...' ( Scarf 7 App Cas at 360, emphasis added). Lord Blackburn emphasised that election involved, first, the making of the choice between one of two inconsistent rights and, secondly, the notification or communication of that choice to the party against whom the rights existed in a way that affected that other party. Hence, in Immer 182 CLR at 43 Deane, Toohey, Gaudron and McHugh JJ referred to the party being '... confronted with the necessity of making a choice'. In Tropical Traders Ltd v Goonan [1964] HCA 20 ; (1964) 111 CLR 41 at 55 Kitto J said that the person with the choice might keep the question open '... so long as it did nothing to affirm the contract and so long as the [other party's] position was not prejudiced in consequence of the delay'. He said that when the vendor in that case told the purchaser that it would not rescind a contract for the sale of land before a particular date if the purchaser paid an additional sum for interest, costs and expenses, the vendor was doing no more than promising that it would not elect to rescind the contract before that date if the conditions were complied with. Kitto J said that in that case a grant of an extension of time was not an election to affirm but, rather, amounted to an announcement of an intention to refrain from electing either way until the money had been paid or the extended time for performance had elapsed: see too Champtaloup v Thomas [1976] 2 NSWLR 264 at 268C-269B per Glass JA; 273D-274D per Mahoney JA; Street CJ agreeing with both at 266: Hunter BNZ Finance v GC Maloney Pty Ltd (1988) 18 NSWLR 420 at 435C-436B per Giles J: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at 89-92 [356] - [364] per Finn J. And, as the judgment of the Exchequer Chamber written by Blackburn J (see Scarf 7 App Cas at 360) established, this principle applies to a party to a contract who discovers his entry into it was induced by the fraud of the other: Clough v London & North Western Railway Co (1871) LR 7 Ex 26 at 34-35. 22.2 Consideration


case_text: general, each party to a contract agrees, by implication, to do all that is necessary on its part to enable the other party to have the benefit of the contract: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51 ; (1979) 144 CLR 596 at 607 per Mason J applying what Griffith CJ had said in Butt v M'Donald (1896) 7 QLJ 68 at 70-71. A duty to co-operate is not always implied. Whether it will be is a question of construction based on an objective consideration of the whole of the terms of the contract: Secured Income 144 CLR at 607-608 per Mason J. Here, the work to refresh the Eastgardens store included the new Optus broadband display cabinet. Since Optus paid Allphones the money in order to achieve the installation of that work, it was necessary for Allphones, when exercising its contractual power to impose a reasonable charge for the work, to apply Optus' payment in reduction of the amount Hoy Mobile had to pay. I am of opinion that cll 4, 6.23 or 6.35 and the franchise agreement as a whole, entitled Allphones to charge Hoy Mobile for no more than the reasonable cost to it of the work required for the fit out. If Allphones received money from carriers to do some of the fit out or refresh work or to defray its cost, it could not use any contractual power to reimburse itself by charging its franchisee with a sum greater than the reasonable cost that Allphones had incurred. The powers in the franchise agreement, on which Allphones relied to impose and charge for the store refresh, did not authorise it to make a profit from Hoy Mobile by requiring it to effect the store refresh for the benefit of a carrier, like Optus, yet retaining co-op sums paid by the carrier to Allphones to defray the very cost of that fit out. These clauses entitled Allphones to act reasonably for the purpose of giving effect to them. They did not confer a power to act capriciously. Allphones led no evidence to justify the reasonableness of the round figure of $10,000 as the charge it sought to impose on the franchisees, including Hoy Mobile. Both parties had to co-operate to bring about the refresh. Hoy Mobile had to permit the shopfitters access to its store, and pay for the reasonable cost of the work. Allphones had to arrange for the work to be designed and carried out, as well as to fix a charge which was a reasonable reflection of the cost it incurred in respect of the refresh. It was not entitled to profit by use of its powers under the franchise agreement to impose a reasonable charge as cost of the work to be done.


case_title: Sellars v Adelaide Petroleum NL [1994] HCA 4 ; (1992) 179 CLR 332


case_text: party was evincing loyalty to its contractual promises. In Roadshow Entertainment Pty Ltd v ACN 053 006 269 Pty Ltd (Receiver & Manager Appointed) (1997) 42 NSWLR 462 at 481B-C Gleeson CJ, Handley JA and Brownie AJA, in the Court of Appeal of the Supreme Court of New South Wales said: 'A party in breach of non-essential terms who has not repudiated may rescind for fundamental breach: see Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26; State Trading Corporation of India Ltd v Golodetz Ltd [[1989] 2 Lloyd's Rep 277] (at 286-287). A party in breach of an essential but independent term may also rescind for fundamental breach: see State Trading Corporation of India Ltd v Golodetz Ltd (at 285-287); compare Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1992) 11 WAR 40 at 50-51. Roadshow , we consider, was not, by reason of its conduct, unable to terminate on the ground of CEL/Vision's repudiation.' However, their Honours' comments were obiter, since they had already acknowledged that that was not a case where the party attempting to rescind was in breach of a condition or had otherwise repudiated. And they said that they did not need to undertake a comprehensive analysis of the effect of a breach on a party's right to rescind: see Roadshow 42 NSWLR at 479F. They recognised that, although a party in breach of a non-essential term was not prevented from rescinding for a fundamental breach or a repudiation by the other party, there may be an exception where a causal relationship existed between the breaches of non-essential terms by the party attempting to rescind and the fundamental breach relied on: Roadshow 42 NSWLR at 479G-480B referring to Nina's Bar Bistro Pty Ltd v MBE Corporation (Sydney) Pty Ltd [1984] 3 NSWLR 613. When Gleeson CJ, Handley JA and Brownie AJA said in the passage, which I have quoted, that a party in breach of an essential but independent term may also rescind for fundamental breach, they relied on the decision of the English Court of Appeal in State Training Corporation of India Ltd v Golodetz Ltd [1989] 2 Lloyd's Rep 277. There, Kerr LJ (with whom Lloyd and Butler-Sloss LJJ agreed: Golodetz [1989] 2 Lloyd's Rep at 286) said that where both parties had obligations which had to be performed concurrently but neither was dependent upon the other: 'Since both obligations are (assumedly) in the nature of conditions, both parties had an equal right, so long as the other party's obligation remained unperformed, to treat the other party as having wrongfully repudiated.' However, what his Lordship said there appears to have been obiter dicta, for he pointed out that it did not matter which party was first to treat the other as having repudiated, since neither lost its right to claim damages for the breaches by the other, irrespective of which of them brought the contract to an end ( Golodetz [1989] 2 Lloyd's Rep at 287). Other parts of Kerr LJ's judgment have been disproved by the House of Lords: Vitol SA v Norelf Ltd (The Santa Clara) [1996] AC 800 at 812A-B.


case_text: LCJ's words are taken from his judgment in Collins v Baltern (1767) 2 Wils 347 at 351. They reflect a principle which still runs through the common law of identifying fault as an appropriate basis for the court exercising its power to grant or withhold relief. In Suttor v Gundowda Pty Ltd [1950] HCA 35 ; (1950) 81 CLR 418 at 441, Latham CJ, Williams and Fullagar JJ discussed a contractual power to avoid a contract in circumstances where the consent of a third party, there the treasurer of the Commonwealth of Australia, had not been obtained within a particular time. They said that in that case, the event in question could be brought about by the failure on the part of either party to take certain necessary steps, or it could be brought about without default by either party. They concluded that the latter situation applied in that case, but determined that the clause made the contract not void, but voidable saying: ' The question of who may avoid it depends on what happens. If one party has by his default brought about the happening of the event, the other party alone has the option of avoiding the contract . If the event has happened without default on either side, then either party may avoid the contract. But neither need do so, and, if one party having a right to avoid it does not clearly exercise that right the other party may enforce the contract against him.' (emphasis added) Their Honours applied this reasoning as an extension of the principle that no party, directly or indirectly, may take advantage of his own wrong. In essence, Allphones' behaviour in relation to the payment of commission amounted to it evincing an intention not to take seriously its obligations to pay MTSC in accordance with cll 7.3 and 7.4 the franchise agreement. Its conduct was that of a person who evinced an intention that he was prepared to carry out his part of the contract if and only when it suited him and, in the way that it suited him. That was a repudiatory breach which continued over virtually the whole time in which Hoy Mobile was in breach: see Carr v JA Berriman Pty Ltd [1953] HCA 31 ; (1953) 89 CLR 327 at 351-352 per Fullagar J with whom the rest of the Court agreed. A party to a contract cannot act with impunity in a way which amounts to a refusal to be bound. Allphones concealed its underpayment of commission by a continuing deceit. Its action in doing that month after month, evinced an intention not to adhere to its promise to pay commission in accordance with the provisions of cll 7.3 and 7.4. This is not a case of a bona fide mistake in interpretation. No bona fide interpretation of a contract could justify Allphones' electronic manipulation of material data to disguise the true position. Here, Allphones' cumulative failures for over two years to account to Hoy Mobile for all of the commissions Hoy Mobile had earned from activations generated by its conduct of the franchise business, evinced an intention by Allphones not to be bound by the franchise agreement itself. Rather, Allphones evinced an intention to carry out that contract as and when it pleased. Mr Donnellan's evidence indicated that, as the chief executive officer, he saw it as open to Allphones to determine how and in what way it would perform its obligations in relation to the sharing of commissions. The evidence satisfies me that Allphones in fact did choose which commissions earned through activations of mobile telephone services generated by the sales of Hoy Mobile and other franchises would be shared. It did this regardless of the common understanding of Allphones and Hoy Mobile that cl 7 operated, as I have found, to cover all earnings of commissions from sales to customers in the stores of carriers' plan products, however the carriers paid those commissions (i.e. directly to the stores or to Allphones).


case_text: one of the parties to a contract has committed a fraud in its performance, the fraudster cannot complain that he or she has been prejudiced by acts of the other party done without sufficient knowledge of his or her fraud. That is why the courts have always held that fraud fundamentally affects the way in which relations between parties are viewed. As Denning LJ said in Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712 (see also SZFDE v Minister for Immigration and Citizenship [2007] HCA 35 ; (2007) 237 ALR 64 at 68 [15] - [16] ): 'No court in this land will allow a person to keep an advantage which he has obtained by fraud. ... Fraud unravels everything.'


case_text: Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57 ; (2003) 217 CLR 315 at 324-325 [20] - [22] , Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ said that the word 'unconscionable' involved the concept of unconscientious conduct. They said that the conscience which equity considers for these purposes is a 'properly formed and instructed conscience', citing Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63 ; (2001) 208 CLR 199 at 227 [45] . The onus is on the party alleging that the other has engaged in unconscionable conduct, so as to prevent the latter's exercise of its contractual rights to terminate. In this respect, the Code specifically permitted termination without notice where a franchisee was fraudulent in connection with the operation of the franchise business (cl 23(f)). However, for reasons unexplained, Allphones instead issued a notice of intention to terminate the franchise agreement on seven days' notice, rather that pursuant to cl 9.3(viii) which permitted termination in the circumstances without notice. A consequence of termination under cl 10 of the franchise agreement would be the transfer, at Allphones' request, of the lease of the shop premises at Eastgardens (cl 10.1(x)). The equitable jurisdiction to prevent an unconscientious assertion of legal rights by one party under a contract against the other is usually exercised only where the circumstances include one of the special heads of that jurisdiction, namely: fraud, accident, mistake or surprise: Tanwar 217 CLR at 335 [58]. Where accident or mistake is not involved, it is usually necessary to point to some conduct of the party asserting the rights which in some significant way has caused the other party to be in the position of being confronted by that assertion. It is not necessary that the circumstances be exceptional before equity will intervene, but the party challenging the assertion of the rights must show why it would against conscience (unconscientious) for the other to proceed: Tanwar 217 CLR at 335 [58]-[60]. The statutory jurisdiction under sub-ss 51AC(1) and (2) of the Act has a broader reach than its equitable counterpart (see also s 51AA(2)). The non-exclusive range of matters to which the Court may have regard in sub-ss 51AC(3) or (4) suggest that the Parliament was concerned not to restrict the operation of the norm of conduct in sub-ss 51AC(1) and (2), simply to the focus which equity has on whether the corporation (as the party asserting the right) has caused the business consumer or small business supplier to be in the position where the corporation's right is available to be asserted. Thus, here, equity would consider whether Allphones had caused Hoy Mobile to be fraudulent in connection with the operation of the franchise agreement (cl 9.3(viii)). On the facts, I have found Mr Hoy alone was responsible for that fraudulent conduct of Hoy Mobile. So, equity would not find a nexus between Allphones' entitlement to terminate and the fraud in which Hoy Mobile had engaged. 33.2 Consideration


case_title: The Ophelia [1916] 2 AC 206

case_text: suggested that the benefit received by Mr Hoy may have been greater than he claimed. It pointed to the fact that Mr Hoy had destroyed the handwritten receipt books containing the records from which his profit could be calculated. Where a person deliberately destroys a document that, depending upon which its contents may have been, would have told strongly either for or against the person, the strongest possible assumption arises that if it had been produced, the document would have told against the person. This is so even if there was no intention to destroy evidence. The principle is that the person is in the position that they would have been in without the corroboration which might otherwise have been expected: Allen v Tobias [1958] HCA 13 ; (1958) 98 CLR 367 at 375 per Dixon CJ, McTiernan and Williams JJ, applying The Ophelia [1916] 2 AC 206 at 229-230.


case_text: reasonable person in the position of the parties here would reject as inappropriate a construction of their franchise agreement that it had no territory at all. The task of construing 'N/A' as the description of the territory must be approached in the manner described by Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 ; (2004) 219 CLR 165 at 179 [40] ; applied in International Air Transport Association v Ansett Australia Holdings Ltd [2008] HCA 3 ; (2008) 242 ALR 47 at 63 [53] per Gummow, Hayne, Heydon, Crennan and Kiefel JJ. That requires the Court to put to one side the subjective beliefs or understandings of the parties about the rights and liabilities that govern their contractual relations, and to concentrate on the principle of objectivity for the ascertainment and definition of those rights and liabilities. Their Honours said that what mattered was what each party, by words or conduct, would have led a reasonable person in the position of the other party to believe. They continued: 'References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreements. The meaning of the terms of the contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction ( Pacific Carriers Limited v BNP Paribas [2004] HCA 35 ; (2004) 218 CLR 451 at 461-462 [22] .)'


case_text: Tropical Traders Ltd v Goonan [1964] HCA 20 ; (1964) 111 CLR 41 at 55 Kitto J said that the person with the choice might keep the question open '... so long as it did nothing to affirm the contract and so long as the [other party's] position was not prejudiced in consequence of the delay'. He said that when the vendor in that case told the purchaser that it would not rescind a contract for the sale of land before a particular date if the purchaser paid an additional sum for interest, costs and expenses, the vendor was doing no more than promising that it would not elect to rescind the contract before that date if the conditions were complied with. Kitto J said that in that case a grant of an extension of time was not an election to affirm but, rather, amounted to an announcement of an intention to refrain from electing either way until the money had been paid or the extended time for performance had elapsed: see too Champtaloup v Thomas [1976] 2 NSWLR 264 at 268C-269B per Glass JA; 273D-274D per Mahoney JA; Street CJ agreeing with both at 266: Hunter BNZ Finance v GC Maloney Pty Ltd (1988) 18 NSWLR 420 at 435C-436B per Giles J: GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50 ; (2003) 128 FCR 1 at 89-92 [356] - [364] per Finn J. And, as the judgment of the Exchequer Chamber written by Blackburn J (see Scarf 7 App Cas at 360) established, this principle applies to a party to a contract who discovers his entry into it was induced by the fraud of the other: Clough v London & North Western Railway Co (1871) LR 7 Ex 26 at 34-35. 22.2 Consideration Through neither party's fault, a meeting was unable to be arranged between 7 July and 22 August. During that period, Hoy Mobile wished the contract to remain on foot while Allphones had indicated that it was keeping its options open until Hoy Mobile had had an opportunity to explain its, prima facie, fraudulent conduct. A reasonable person in Hoy Mobile's position could not have understood Allphones' conduct at this point to amount to an affirmation of the franchise agreement. Both parties were still pursuing the course of holding a meeting for the purposes set out in Mr Donnellan's letter of 7 July. That course was being pursued with Hoy Mobile's full knowledge, and indeed at its request, through Mr Birch's email of 10 July to that effect. And, neither Mr nor Mrs Hoy gave evidence that they understood that Allphones had chosen to affirm during this period. Allphones was not making a choice of affirming the franchise agreement, while holding matters in abeyance pending the meeting at which Hoy Mobile could explain its position. Rather (as Kitto J observed was permissible in Goonan 111 CLR at 55) Allphones had said that it intended to refrain from electing until the meeting occurred. Nor, in fairness to Hoy Mobile, was Allphones required to make a choice before that meeting had occurred: Immer 182 CLR at 41. Of course, there are limits to the ability of a party to a contract to act 'without prejudice' to the legal consequences of those acts in the particular relationship. Unlike a landlord accepting a payment of rent and thus electing to waive reliance upon any pre-existing breach, Allphones did not communicate an unequivocal intention that the franchise agreement remain on foot. Rather, at Hoy Mobile's request Allphones had agreed to postpone making an election until the meeting occurred: cp: Goonan 111 CLR at 55. In that context, a reasonable person in the position of the parties would have understood that Allphones was acting on the basis that it was acceding to Hoy Mobile's request to postpone making an election. It was not electing once for all by its conduct in offering and requiring performance pending the meeting to make a choice. Allphones, in the context in which the parties then found themselves, was not evincing by its actions an unequivocal choice to keep the franchise agreement on foot and not to terminate it. I find that both parties proceeded on the agreed footing that Allphones would refrain from terminating for fraud until the meeting, ultimately arranged for 22 August 2006, had occurred. Both parties knew that, in the interim, they had to carry out the normal incidents of their relationship under the franchise agreement.


case_text: process of construction is intended elucidate and give effect to what the parties by their words or actions objectively conveyed to one another was their agreement. Courts seek to avoid being the destroyers of bargains and should be reluctant to find agreements void for uncertainty. The process of construction will result in a meaning which the court decides is the proper construction of the contract. As Barwick CJ emphasised in Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd [1968] HCA 8 ; (1968) 118 CLR 429 at 436-437, in the search for the parties' intention, no narrow or pedantic approach is warranted, particularly in the case of commercial agreements. Unless parties have expressed themselves in such a way that their terms are so obscure or incapable of any definite or precise meaning so that the Court cannot attribute to them any particular contractual intention, the Court will find a meaning which an objective person in the position of the parties at the time they entered into the contract would have understood them to have intended: see also Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) [2000] HCA 25 ; (2000) 202 CLR 588 at 599 [15] per Gaudron, McHugh, Gummow and Hayne JJ; Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia ( CEPU ) v Australian Competition and Consumer Commission [2007] FCAFC 132 ; (2007) 162 FCR 466 at 510 [164] - [166] , 511 [171], 512 [174] per Weinberg and Bennett JJ and myself.


case_text: what his Lordship said there appears to have been obiter dicta, for he pointed out that it did not matter which party was first to treat the other as having repudiated, since neither lost its right to claim damages for the breaches by the other, irrespective of which of them brought the contract to an end ( Golodetz [1989] 2 Lloyd's Rep at 287). Other parts of Kerr LJ's judgment have been disproved by the House of Lords: Vitol SA v Norelf Ltd (The Santa Clara) [1996] AC 800 at 812A-B.


case_text: McNamara v Consumer Trader and Tenancy Tribunal [2005] HCA 55 ; (2005) 221 CLR 646 at 661 [40] McHugh, Gummow and Heydon JJ discussed the construction of a section which had been re-enacted in the same words in new legislation. They departed from the construction of the earlier legislation in a previous decision of the High Court and said: 'It would be an error to treat what was said in construing one statute as necessarily controlling the construction of another; the judicial task in statutory construction differs from that in distilling the common law from past decisions (see Ogden Industries Pty Limited v Lucas [1970] AC 113 at 127; Brennan v Comcare (1994) 50 FCR 555 at 572.)' And, in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5 ; (2008) 242 ALR 383 at 391 [31] Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ applied McHugh J's comments in Marshall v Director-General, Department of Transport [2001] HCA 37 ; (2001) 205 CLR 603 , where he said (at 632-3 [62]): ' But that does not mean that the courts of Queensland, when construing the legislation of that State, should slavishly follow judicial decisions of the courts of another jurisdiction in respect of similar or even identical legislation. The duty of courts, when construing legislation, is to give effect to the purpose of the legislation. The primary guide to understanding that purpose is the natural and ordinary meaning of the words of the legislation. Judicial decisions on similar or identical legislation in other jurisdictions are guides to, but cannot control, the meaning of legislation in the court's jurisdiction. Judicial decisions are not substitutes for the text of legislation although, by reason of the doctrine of precedent and the hierarchical nature of our court system, particular courts may be bound to apply the decision of a particular court as to the meaning of legislation.' (emphasis added) In my respectful opinion, although his Honour did not have the benefit of the reasoning in Baxter Health Care [2007] HCA 38 ; 237 ALR 512 , which was delivered subsequently to the reasons in Ketchell [2007] NSWCA 161 , the reasoning of Mason P is plainly wrong. In addition, Ketchell [2007] NSWCA 161 was decided on different legislation: see McNamara 221 CLR at 661 [40]; Walker Corporation 242 ALR at 391 [31]. I am of opinion that the non-compliance by Allphones with its obligations under cl 11 of the Code did not make the franchise agreement void. That non-compliance is a factor which, had Hoy Mobile wished to do so, could have been raised by it to seek relief under s 87 of the Act. It would defeat the evident purpose of the Code if Allphones were entitled to rely on its own breach of its obligation imposed under cl 11 to deny a franchisee with whom it had entered into a contract, the entitlement to enforce that contract against it or to seek a variation of it or relief from it under the Act. For these reasons I reject Allphones' argument that the franchise agreement is void.