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Federal Magistrates Court of Australia |
Last Updated: 30 April 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
ALLAN v FERNS INVESTMENT & ORS |
TRADE PRACTICES - Misleading and deceptive conduct - meaning of "up to five times" - representation concerning life of cooking oil subject to filtering system - franchise agreement - application dismissed. |
Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506; (1990) ATPR 40-994 Ricochet Pty Ltd & Anor v Equity Trustees Executor & Agency Co & Ors [1993] FCA 99; (1993) 113 ALR 30
Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (1999) FCA 1824
(23 December 1999)
Applicant: |
GRAHAM STANLEY ALLAN |
First Respondent: |
FERNS INVESTMENT PTY LTD |
Second Respondent: |
MEEHANS FRANCHISING PTY LTD |
Third Respondent: |
COLIN MICHAEL FERNS |
Fourth Respondent: |
CORNELIUS GREGORY MEEHAN |
Fifth Respondent: |
ASHLEY MORRIS |
Sixth Respondent |
OSWYNNE SALINS |
File No: |
MZ 314 of 2001 |
Delivered on:
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12 February 2002 |
Delivered at:
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Melbourne |
Hearing Date:
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4, 5, 6 & 7 December 2001 |
Judgment of:
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McInnis FM |
REPRESENTATION
Counsel for the Applicant:
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Mr P Bornstein |
Solicitors for the Applicant:
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Maddens Lawyers |
Counsel for the First to Fifth Respondents:
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Mr J Brett |
Solicitors for the First to Fifth Respondents:
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Boothby & Boothby |
Counsel for the Sixth Respondent:
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Mr N Kanarev |
Solicitors for the Sixth Respondent:
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Calleas Le Brun & Burke |
ORDERS
(1) The application be dismissed.
(2) The applicant shall pay the respondents' costs (save and except the fifth respondent) of the application to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules.
(3) There be no order for costs in relation to the fifth respondent.
Note: Settlement and entry of orders is dealt with in accordance with Order 36 of the Federal Court Rules.
FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MZ 314 of 2001
GRAHAM STANLEY ALLAN |
Applicant
And
FERNS INVESTMENT PTY LTD
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First Respondent
MEEHANS FRANCHISING PTY LTD
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Second Respondent
COLIN MICHAEL FERNS
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Third Respondent
CORNELIUS GREGORY MEEHAN
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Fourth Respondent
ASHLEY MORRIS
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Fifth Respondent
OSWYNNE SALINS
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Sixth Respondent
Introduction
1. This is an application by GRAHAM STANLEY ALLAN ("the applicant") who seeks declaratory relief and damages against the respondents.
2. The claim by the applicant relies upon alleged misrepresentations claimed to be misleading and deceptive conduct pursuant to s.52 of the Trade Practices Act 1974 ("the TP Act").
3. The allegations arise out of a franchise agreement between the applicant and FERNS INVESTMENT PTY LTD ("the first respondent") together with MEEHANS FRANCHISING PTY LTD ("the second respondent") ("the franchisors"). The franchisors were the licensees of an oil filtration disposal and sales service to catering establishments and carried on business in partnership under the name "FiltaFry".
4. FiltaFry is a United Kingdom based business which was established by the Filta Group Limited and the franchisors obtained an exclusive licence to conduct the FiltaFry business in Australia.
5. The applicant has made a claim against COLIN MICHAEL FERNS ("the third respondent") who was a director and officer of the first respondent. A further claim is made against GREGORY MEEHAN ("the fourth respondent") who it is claimed at all material times was an officer and director of the second respondent. The applicant further claimed against a Mr ASHLEY MORRIS ("the fifth respondent") who it was alleged at all material times was an employee and officer of the franchisors. The claim by the applicant against Mr OSWYNNE SALINS ("the sixth respondent") arises in circumstances where it is alleged that at all material times he was acting pursuant to a retainer from the franchisors to represent them and act as their agent in the promoting and selling of the FiltaFry business.
6. At the commencement of the hearing an application was made by Mr Brett for and on behalf of the fifth respondent that I should determine on the evidence that the claim against that fifth respondent should be dismissed as there is simply no cause of action and/or evidence which could constitute a cause of action against that party. The submission in relation to the fifth respondent was not strongly resisted and accordingly the Court will order that the claim by the applicant against the fifth respondent be dismissed. Costs were not sought in relation to that order and nor in the circumstances would it be appropriate to make a separate order in relation to costs of that respondent given that Mr Brett represents the first to fifth respondents whilst Mr Kanarev represents the sixth respondent.
7. The claim against the other respondents essentially arises out of representations which are said to have occurred prior to the execution of a franchise agreement on 9 July 1999. It is convenient to refer to the representations as being "the Filter representations" and "the Gardner Merchant representations".
8. The applicant claims that the representations were made by the franchisors in circumstances where it could be said that the applicant would have relied upon those representations, that the representations were untrue and constituted misleading and deceptive conduct as a result of which the applicant, having entered into the franchise agreement, suffered loss and damage.
9. It is common ground that the applicant is now a 34 year old man who, prior to entering into the franchise agreement, had been employed as a carpenter. He had no previous business experience with franchise agreements nor indeed on the material before me did he appear to have any or any significant business experience. He commenced the business by way of on-site training which had occurred over the period 11th, 12th, 13th, 16th and 17th August 1999. This had followed off-site training at a seminar which had occurred over the period 20-22 July 1999. There was some gap between off-site training and on-site training and it appears to be common ground that the first invoice prepared by the applicant in relation to the services he performed having obtained the benefit of the franchise agreement was an invoice dated 20 August 1999. It seems to be common ground that that would have been an invoice for work carried out a week earlier, that is around 13 August 1999. It is also common ground that the applicant ceased active involvement in the franchise business by the middle of November 1999 and on 19 November 1999 the franchisors sent to the applicant by registered post a letter giving notice of termination of the franchise. The document was also forwarded to the applicant by facsimile on 22 November 1999 and the termination was based upon what may be described in general terms as an abandonment of the franchise by the applicant. There is no issue taken in this case as to the question of whether the franchisors had a right to terminate the franchise agreement.
10. Around the time when the notice of termination was forwarded by registered mail to the applicant he had forwarded a facsimile message to the franchisors' office on 20 November 1999 wherein the applicant in his own handwriting stated, "To FiltaFry, due to breakdown I am not able to operate business, someone will let you know during week of my situation. Sorry for this. Graham Allan."
11. It is clear therefore from the brief background that the applicant, after commencing the franchise business, had only participated in that business for a period of approximately three months. The franchise agreement provides that the franchise fee is not payable during the first three months when it is expected that the business would be established.
12. It should also be added that in the present case the franchise business had only been operating in Australia for a very short time. It had not operated in the territory which had been allocated to the applicant, which included the Geelong region.
13. In brief terms, the applicant claims that as a result of the misleading and deceptive conduct he has suffered loss and damage and claimed the total sum of $120,420 as damages comprising a claim for the refund of the franchise fee of $47,500 less an amount refunded on termination of $11,264, making a total of $36,326. Part of the claim also involved loss on a sale of a motor vehicle, a differential trading loss and other additional sundry expenses.
The representations
14. It is useful to set out the representations as pleaded which are said to be relied upon by the applicant. As indicated earlier in this judgment the representations fall into two categories. The first is described in the statement of claim as "the Filter representation". The second is a representation referred to as "the Gardner Merchant representation".
15. The Filter representations, according to the statement of claim, arise out of the use of a filter in the FiltaFry process and are stated to be as follows:
a) The use of the Filter would normally extend the life of cooking oil by a factor of five;
b) The use of the Filter would extend the life of top quality oils by five times, medium quality oils by three times, and poor quality oils by twice;
c) The Filter increased the useful life of cooking oil to a much greater extent than any other filter available;
d) The Filter was so much more effective than any other filter available that it was unique and would be effectively without competition;
e) The use of the Filter would remove the dirty brown colour of used oil and return the oil to its clear state;
f) Independent scientific tests had been performed upon the Filter and concluded that with its use rapeseed oil was extended by 3 to 5 times and that in most cases the life of cooking oil was extended by up to 5 times;
g) The use of the Filter removed chemicals from the oil and thereby extends the life of the oil by up to 5 times its normal life;
h) The use of the Filter would "revive" the cooking oil so that it could be used for 5 times the normal period.
16. The FiltaFry representations are said to have occurred in writing by letter dated 8 June 1999 from the sixth respondent, said to be written for and on behalf of the franchisors to the applicant and further in a document headed "Independent Test House Report Summary" and a document entitled "Comparison between FiltaFry `filter purification machine' & other standard filter machines used by competitors". It is claimed further that the filter representations were made by the sixth respondent as agent for the franchisors during a telephone conversation in May 1999 and again at a meeting which had occurred at Molton Court Altona in late May or early June 1999 and further by recorded commentary on a videotape provided by the sixth respondent to the applicant and further comments made by the respondents at a seminar conducted by them on behalf of the franchisors at premises in Moorabbin. It is said by the applicant that the filter representations were false in that:
"(a),(b) theFilter did not extend the life of cooking oils by any more than twice its normal life;
(c) competing filter services did as well as the Filter and at a lower cost;
(d) the competitors used competing filters and were able to undercut the Applicant;
(e) use of the Filter does not remove the dirty brown colour of used oil nor return the oil to its clear state;
(f) there have been no independent tests done which produced the results the subject of the representation;
(g) use of the Filter does not remove chemicals from the cooking oils and they remain after filtration;
(h) use of the Filter does not repair, revive or overcome the breakdown of the oils through use."
17. The Gardner Merchant representation is alleged in the Statement of Claim to have arisen in circumstances where the franchisors had represented that they held a contract with a company known as Gardner Merchant and that the applicant would service that company under the franchise agreement. Gardner Merchant, it is agreed by the parties, is a major catering organisation and it further appears to be the case that at all material times it was the caterer for the Ford factory at Geelong and would constitute a potentially significant customer for the applicant in circumstances where Geelong was part of his territory. The representation concerning Gardner Merchant being a client is somewhat difficult to understand in circumstances where at the very least it is common ground that prior to the applicant commencing the franchise in the territory, including Geelong, that that area had not been serviced by the franchisors. As I understood the argument during the hearing, the applicant seemed to claim that if Gardner Merchant had been a customer of the franchisors in other areas, then it would be easy for him to sell the FiltaFry system to that caterer in the Geelong area. In any event it is said that the Gardner Merchant representation was made by the sixth respondent to the applicant at the Molton Court meeting.
18. In their defence the respondents, in addition to challenging some detail concerning the representations, have essentially argued before this Court that the representations set out in the documentary material are consistent with any oral representations made for and on their behalf and to the best of their knowledge and belief were true and correct. It is asserted by the respondents that the representations were accurate and they deny that any of the representations constitute misleading and deceptive conduct.
19. The hearing in this matter was conducted over four days and the applicant, in addition to giving evidence and providing statements on his own behalf, also called to give evidence Mr Lyndon Reid, Mr Charlie Torcasio, Mr Nicholas Slavin, Mr Tom Fitzgerald and in addition relied upon a witness statement of Delia Gray.
20. The respondents relied upon statements and evidence from Mr Gary Holman, Mr Cornelius Meehan, Mr Ben McGorgan, Mr Brendon Jeffrey, Mr Colin Ferns, Mr Ashley Morris, Ms Melinda Meehan and Mr Simon Sharp. The sixth respondent Mr Salins also gave evidence and relied upon his statement.
The applicant's evidence
21. The applicant in his statement claimed that he is a builder by trade and first became aware of the franchise in relation to the FiltaFry system when he saw an advertisement in a franchise magazine. According to the applicant he contacted FiltaFry by telephone in May 1999 and was then contacted by a representative who introduced himself as Mr Salins. The applicant had referred to payment for the franchise agreement and under cross-examination agreed that in fact of the $47,500 that was paid, a sum of $40,500 was paid on or about 10 August 1999. He also agreed that the seminar to which he had referred to in his statement of claim and in his statement was in fact conducted at the Edmond Barton College of TAFE in South Road, Moorabbin and not in St Kilda at a motel.
22. In his statement the applicant states that after meeting Mr Salins at Molton Court, Altona on a Monday that Mr Salins then gave a presentation about FiltaFry. He allegedly showed the applicant two sample bottles of oil and one was a dirty brown in colour and the other a cloudy yellow with all the traces of darkness gone, and that these were to represent before and after samples in relation to the use of the FiltaFry system. Importantly, he asserts in his statement and adopts in evidence that Mr Salins said, "We don't have any competition because no other machine in the world can do this." He further states at the same meeting that Mr Salins told him, "That is the reason we can get five times the life from the oil." The applicant claimed he was told by Mr Salins that the FiltaFry machine revives the oil and that it was possible to extend the usual cooking life of the oil by five times and otherwise indicated to the applicant that he could do well in the Geelong area particularly, given that there were a number of large factories and fast food outlets in that region. The applicant states that Mr Salins commented that "...a number of franchisees in the UK have become millionaires" and more significantly told him that he was lucky because FiltaFry "...had a company on the books named Gardner Merchant". The company according to the applicant was not known to him but he was told by Mr Salins that that company was a caterer which catered for the Ford Company in Geelong.
23. The applicant was shown a promotional video, which became an exhibit in the proceedings, which showed the FiltaFry machine pumping in dirty brown oil and pumping out clear yellow oil after the process had been completed. The applicant in his statement asserts that the video repeats the claim that the machine can increase the life of the oil by five times. The applicant indicates and it is not contested that Mr Salins showed him a disclosure statement and a promotional folder which had references to customers and in addition a colour chart entitled "Oil Filtration Guide". The applicant said that despite some initial reluctance Mr Salins allowed him to take the video which he retained and in his evidence indicated he had no intention of returning to the respondents as he thought he would need it for the purpose of any claim. It is not clear on the evidence when he drew that conclusion, though it should be noted in passing that it seems a little unusual that the applicant should retain the video and form the intention to retain it at such an early stage.
24. It is common ground that the applicant attended a training seminar at Moorabbin over a three-day period from 20-22 July 1999. At the training seminar a range of activities were undertaken by the participants including role-playing. The applicant agreed that during the course of role-playing, potential franchisees were required to endeavour to sell the product and that the process was recorded. For the purpose of the hearing a transcript of the tape recording was received in evidence. In the transcript reference was made to a competitor, namely "Vatman" and significantly during the role-playing the applicant playing the part of the vendor when confronted with the proposition that he could get six days, seven days out of the oil said, "Yeah but that's not guaranteed." During the course of his evidence the applicant was taken to a part of the transcript which he did not remember, though it is evident from the material that the conversation occurred, where two other participants in the role-playing, namely a potential franchisee and Mr Simon Sharp of the franchisors, had an exchange where the person playing the role of the seller said, "No, I can guarantee at least once a week", the purchaser said, "Guarantee" to which the seller replied "Yep". It is clear from the transcript of the role-playing session that at the end Mr Colin Ferns told the audience, including the applicant, that you should "never guarantee anything" and went on to say, "...because if you guarantee him and it doesn't work he'll hold you to it allright and if you know, you make it quite embarrassing."
25. After listening to the tape the applicant agreed under cross-examination that at that time he was aware that there was a competitor offering a filter oil cleaning service though he stated that he understood that the service offered by that competitor "wasn't as good". He also, when confronted with the issue of guarantees said,
"You can't actually guarantee what sort of life you're getting out of it because you haven't inspected the oil. You're only doing a sell to the original person. You haven't used the machine, you haven't ever looked at that oil. Basically you haven't even asked him what sort of oil he's been using."
26. He agreed in cross-examination that he was aware there was no guarantee nor expectation that every oil would be extended by a factor of five. In his evidence he stated,
"No, it depended on the type of oil that you used. If you use good oils in everything - you calibrate it and everything was right, perfect or round about perfect, you would get five times the life. The guarantee was if you made everything right, if you got the fries actually calibrated right, everything was clean, that you would get two times life out of any oil, and the reason why you wouldn't get - if you didn't succeed in getting any life out of the oil at all - it was because the people were actually burning the oil or they were doing something wrong with the oil, that you couldn't do it. So that's why you couldn't guarantee it. Other than that - yes, well you couldn't make any guarantees until you actually got everything right and you had actually filtered the oil."
27. In his statement the applicant made significant allegations concerning the conduct of representatives of the franchisors. He denied having any earlier conversation of an hour or two duration with Mr Meehan where it is claimed the applicant was advised to get independent advice and to thoroughly test the matters that were put to him.
28. In any event, a serious allegation arose in circumstances where the applicant suggests that he had attended the Britannia Hotel and on that occasion, according to the applicant, Ashley Morris and Simon Sharp were in attendance and that after a demonstration he came across Ashley "pouring the filtered oil (which was dark in colour) into a glass jar. Ashley was surprised and dropped the bottle which smashed. I asked Ashley what he was doing. Ashley turned red and became flustered and said words to the effect that `it was a mistake'." In his statement, the applicant goes on to say, "I believe that Ashley intended to mix the filtered oil in the bottle with new oil at a later time, so as to change its appearance and so that it could be passed off as a sample of the oil which was filtered by the machine."
29. The applicant in his statement then referred to the document entitled "Independent Tests" and noted the document referred to the life of oil as increased "in most cases ... by up to five times". (emphasis added) It seemed common ground that this expression has been used throughout the documentary material.
30. During his first week of the franchise, the applicant claims that Mr Simon Sharp of the franchisors assisted him in the Geelong region and that they attended various potential customers for the purposes of demonstrating the product. It was during the course of one of these demonstrations that the allegations against Mr Morris were made by the applicant. It is during this period that the applicant relies upon the written statement of Ms Gray who had been using the competitor Vatman but who indicated she was prepared to use FiltaFry at premises referred to as The Shell Club in Geelong. On a return visit Ms Gray allegedly told the applicant that the competitor doubles the life of the oil and doubted the claim allegedly made by Mr Sharp that the FiltaFry equipment could do better. It is alleged that there was a heated discussion between Ms Gray and Mr Sharp and further alleged by the applicant that over the next week or so other demonstrations occurred and that the filter did not change the oil colour on any occasion and did not last more than two times the normal life. The applicant claims he was then becoming concerned about the service not performing in the way that he'd believed it had been promoted. He claims this would have been around mid-September 1999. He claims he told Mr Sharp that "you only get two times the life and lucky if that" and that Mr Sharp replied "you worry too much, it'll be allright. It won't work at every job. We will get the jobs where it will work". According to the applicant, after filtering a total of approximately 250 to 300 vats, he found that at no time was the life of the oil extended by more than two times. In early November he telephoned Melinda Meehan and told her of the problems and according to the applicant he was subsequently advised by Mr Meehan that the best thing to do was to sell the business as no monies would be refunded, and that he insisted that the business should be kept operating.
31. According to the applicant, he had a conversation with Mr Salins, the sixth respondent, and told him that the business was "a shonk" and allegedly Mr Salins replied, "That's life, everybody lies." Further discussion about difficulties the applicant had in selling the product occurred and it is alleged Mr Salins asked, "Are you using the bottles?" to which the applicant replied, "No" and the applicant then alleges that Mr Salins uttered a profanity.
32. A further serious allegation is made by the applicant in his statement where he refers to Mr Morris telephoning him and advising him to find the "dirtiest brown oil that I could find, put that in the before-bottle and then get the after-bottle and fill it half-full of reasonably filtered oil and top up the rest with new oil and show these samples to potential customers." It is clear that those are serious allegations of conduct which may well be said to constitute fraudulent behaviour though not pleaded. It is appropriate for the Court in those circumstances to look carefully at the evidence in relation to that allegation and as with many other areas of conflict in evidence, the credit of witnesses becomes relevant.
33. The applicant otherwise confirmed the chronology of events concerning the notice of termination and cessation of the business.
34. During the course of cross examination the applicant admitted that he had forwarded a letter on or about 25 July 2001 to Mrs Meehan who is the wife of the fourth respondent. It is relevant to set out the questions and answers during the course of cross examination on that topic which was in part directed to the issue of whether the applicant had suffered from a "breakdown" and as I understood it in part directed towards the applicant's credit. I refer to the following evidence relating to extracts of the letter:
´Do you know what the initiation is on entering gaol, pack rape by the other prisoners. No virgins in gaol, according to some of my biker friends, and they should know; they've been there. But your husbands will probably be doing a few years for all the money they've stolen by ripping off a lot of people, you probably" - sorry - "you probably won't want them back. I'm surprised you can even stand living with such slime now. When they die, have them burnt. They are such scum there shouldn't be no remnants of them ever being on earth.' Is that what you said?---Yes, exactly.
You say you haven't had a breakdown?---No.
So sending faxes like that is your normal behaviour?---No, only to people that steal my money.
That wasn't to the person whom you're accusing of your money. That was to Mrs Meehan, wasn't it?---Yes, but it wasn't about her. It was about her husband. You would be angry too if someone stole your life savings.
I suggest to you that if this was your normal behaviour before you entered into the franchise then you had significant problems which may well have contributed to the breakdown of the franchise?---No, and the reason why I sent letters and faxes like that is because they were still advertising in a franchise magazine that they got by up to five times, and they were still ripping off other people, and they weren't going to stop, and you could say whatever you like to that, them sort of people - send it to their office - they would take no notice of it."
35. It is important to note that the documents produced in this application and accepted as being the relevant documents by the applicant in his evidence refer to the following statement, "FiltaFry service extends life of oil by up to five times." It is also noteworthy that in the documentary material there is a reference to competition as follows:
* "unaware of any competitor able to match our service"
* "at the lower end of the market exists the Vatman/Big Ben"
36. Also reference is made to a table comparing FiltaFry with its competitors where a claim is made that FiltaFry "filter-purifies down to 1-2 microns" whereas the competitors "STRAINS down to 15-30 microns".
37. Mr Lindon Reid called on behalf of the applicant gave evidence that he had been the head chef at a hotel in the applicant's territory and had agreed to use FiltaFry. He stated that Mr Morris of the franchisors in the company of the applicant had told him that the filtering system would extend the life of the oil by three or four times and hence agreed to use the service. In fact he found that the oil lasted about twice as long as it would normally last, but not more. In his evidence before the Court, Mr Reid said he may have made some financial saving but didn't think he was getting that much extra life out of the oil.
38. The applicant also relied upon the evidence of Mr Charlie Torcasio. Mr Torcasio had been a franchisee operating a FiltaFry franchise in the Dandenong area between August 1999 and October 2001. He undertook training together with the applicant and in his evidence indicated that the representations made during the training session referred to the possibility to extend the life of a cooking oil by "up to five times using the FiltaFry filtering system". He stated that during the course of his work as a franchisee he was unable to extend the life of any cooking oil by more than two times. He ceased the franchise in October 2001 because he felt the business was not generating enough revenue to cover expenses and that he made very little profit. Under cross-examination, Mr Torcasio denied that he did not get on well with his customers, though seemed to concede that he had failed since June 2000 to provide a return to FiltaFry in relation to his franchise. The return is required on a monthly basis to determine the progress of the franchise. He conceded that his gross income for the month of June 2000 was $6394.00 and over three months he averaged approximately $1,100 per week. There was some debate about whether that amount included the cost of oil and it was suggested that the period of time when he made a greater profit may have occurred when he was servicing the football stadium at Waverley Park. He agreed that he understood that the gross takings were expected to be approximately $1,600 a week. He agreed in cross-examination that he was made aware of competition to FiltaFry at the training seminar. He also agreed that he was advised to seek independent legal and accounting advice in relation to the franchise and indeed sought that advice.
39. An expert witness was called on behalf of the applicant, namely Dr Mocellin. He is a chemist who prepared a report in relation to the FiltaFry process and conducted laboratory tests following observations and the taking of samples from two venues which were identified as being venues serviced by Mr Torcasio. Dr Mocellin concluded that the FiltaFry equipment does not inhibit the production of acid which degrades oil or fat, nor does it retain the original cooking specification of the oil or fat, just as it does not continuously safeguard the desirable elements compounded within the actual oil or fat. Further, it does not extract contaminants and purify the oil. His test results did not confirm that the machine can increase the life of cooking oil by a factor of five.
40. During the course of cross-examination he agreed that he based his reports on identification of claims made by FiltaFry and in particular taken to a passage which reads, "The filter acts by taking out all the food debris which would otherwise cause the oil or fat to go dark and to begin to smoke. The filter cartridge uses by absorption and absorption in a continuous recycling process. The oil or fat molecules are forced to pass between the tight windings of the cartridge". He indicated in evidence that that passage, to his mind, said "that it inhibits the production of the acids". He agreed that a way of conducting the tests would be to take two vats of identical oil and cook the same items over a given period of time and monitor the free fatty acid component, perhaps daily or hourly. He agreed that you would not filter or otherwise treat one kettle, whilst you would filter the other one at whatever intervals you saw fit, and you might find that the untreated kettle reached 2 per cent free fatty acids after 3 days and if you found that the other kettle reached 2 per cent free fatty acids after 6 days then you could conclude assuming all your parameters had been maintained evenly that the process had been prolonged or delayed by a factor of two.
41. Mr Mocellin disagreed that a chef operating a kitchen would have a good idea of the life of the oil as that would be "purely subjective". Ultimately he did agree that an experienced chef or cook may be able to determine the life of oil given the experience with the nature of cooking, and demand. He agreed that the temperature of the oil is important and it is important further to ensure that the kettles containing the oil are calibrated, and it is important to take into account the quality of the oil that is used.
42. Mr Nicholas Slavin was called by the applicant to give evidence concerning the operation of a franchise and indicated that he sold the franchise in April 2001 at very little profit. He indicated that of his customers he was unable to find any customers that could extend the life of cooking oil by more than two times and had only one who was able to extend the life by two times.
43. Mr Fitzgerald was called to give accounting evidence in relation to the applicant's loss and damage and he agreed that he relied upon documentary material by way of income tax returns of the applicant in order to make the assessment of the loss and damage.
The respondent's evidence
44. The respondents through cross-examination of the applicant had produced by way of evidence the tape recording of the training session held from 19-21 July and in particular a transcript of that tape recording dated 20 July 1999.
45. Also produced was a letter post marked 25 July 2001 written by the applicant to Mrs Meehan the wife of the fourth respondent which as indicated earlier in this judgment the applicant acknowledged sending. It is sufficient to note that the letter was written just one month after the Court had listed the application for hearing and contained numerous remarks which could only be described as offensive and threatening.
The respondent's evidence
46. The first witness for the respondents was Mr Holman who had been interposed by consent. Mr Holman was a franchise operator for FiltaFry and both in his statement and evidence confirmed that he had a current turnover of between $1,300 and $1,400 per week which produced a net income of $600-$700 per week. He found that he was able to extend the life of the oil for customers by between two and three times and in some cases the life was extended more than three times in circumstances of ideal conditions of oil-type, cooking methods, temperature control and type of food (chips only). Although over two years of trading he indicated customers had been lost he regarded that as attributable to a change of chef or other factors and indicated that the customers were happy with the product. He agreed he was in the process of trying to sell the franchise, though denied that he was doing that due to the poor return.
47. Mr Meehan gave evidence consistent with the background which has already been set out in this judgment. He further added that at all times the services provided by FiltaFry on the basis that the effective life of oil may be extended up to five times. He insisted that the average is between two and three times. He confirmed that the franchisors used the services of the sixth respondent to identify suitable franchisees, and that he was aware that in May 1999 the applicant had discussions with Mr Salins who provided the applicant with a franchise disclosure statement. He said that during his initial discussions with the applicant he discussed that the new franchise would take some months to build to full potential and for that reason no franchise fees would be payable for the first three months. During the first week an experienced member of the FiltaFry partnership staff operates the business with the new franchisee. This occurred in relation to the applicant. He referred to the training session which occurred at the Edmond Barton Centre commencing 19 July 1999 and that at that training centre the applicant was taught how to operate the machine and to conduct the business generally. He was given a copy of the Oil Filtration Guide and Operation Manual and the applicant, along with other attendees at the seminar, were told that while the FiltaFry system was able to extend the life of the oil by up to five times, more commonly the experience was between two and three times. They were also told that in some cases FiltaFry was not able to extend the life of the oil at all. He confirmed that the attendees at the seminar were told that FiltaFry has competition, that the filtration process of the competition were inferior. He claimed that all of these representations were true. He referred to the role-playing of the attendees at the seminar to which I have already referred.
48. He denied strongly any suggestion that any representative of the respondent would interfere with sample bottles and indicated that to do so would in any event be counter-productive as a demonstration of that kind, if it showed an unrealistic outcome, would not be replicated by a new customer and he noted that customers are not in fact on any contract and the service is operated on a casual basis. One of the strong selling points he said of the business was to advise customers that there was no contractual obligation for an ongoing relationship.
49. He gave evidence that he had told the applicant about the major competitor and he should investigate the Geelong area to determine the potential customers.
50. Mr Meehan further confirmed that he told the applicant he need not proceed beyond the training course if he did not think he could succeed with it, or if the franchisors were not satisfied with his performance in the training course. That advice he said was given to all potential franchisees.
51. He confirmed the applicant commenced the franchise in mid-August 1999 and that Mr Simon Sharp attended with the applicant to assist him in conducting demonstrations. He indicated that on or about
11 November 1999 the applicant visited his office in Carnegie where he told Mr Meehan that he had concerns regarding the volume of business. Mr Meehan then said he told the applicant that he would assist with marketing and would guarantee a minimum net return of $500 a week till 31 December 1999 with no ongoing franchise fee until the gross revenue reached $1,000 per week. The position was to be reviewed on 31 December 1999. He claimed that the applicant agreed at that meeting that he would continue to operate the franchise and build his franchise business on that basis. On 16 November 1999 according to Mr Meehan, a telephone call was received at the franchisor's office from customers complaining that the applicant had not been seen and that the scheduled service appointments had not been kept. He otherwise confirmed the termination notice to the applicant by registered post on 19 November 1999.
52. Under cross-examination Mr Meehan when shown the letter written by the sixth respondent dated 8 June 1999 where reference is made to "up to five times" he asserted that it was a qualification which meant what it said. Mr Meehan was challenged about whether he had in fact met with the applicant at all several months prior to the discussion which had occurred between the applicant and the sixth respondent. He stressed that the meeting did occur and that he gave the applicant the warnings referred to in his statement about the nature of the business and the need to investigate the matter further. He confirmed that Gardner Merchant had in fact been a client at the time of discussions with the applicant though he conceded that Gardner Merchant was not a client in the Geelong area.
53. The respondents also called a Mr McGurgan who was a chef at a wine bar in the Geelong area. He gave evidence that he found the use of FiltaFry at least doubled the life of the oil and generally indicated that he was happy with the level of service.
54. Mr Jeffrey was called by the respondents who indicated that he had operated a franchise from his Ballarat residence and that he had approximately 30 customers with a gross earning of $1,150 per week. This produced, according to him, a net income of $550 per week. He confirmed that most of the customers were happy with the service and that he took over the franchise from the applicant. Under cross-examination he confirmed that he had difficulties travelling to Geelong to service the agreement and that he had minor loss on the side of the franchise which had occurred recently. However he indicated that he was unable to give the franchise the attention it deserves due to the difficulties of travelling from Ballarat to Geelong to conduct the business.
55. The third respondent, Colin Michael Ferns, gave evidence. He had been involved in the franchise business since about 1998 and had met the applicant at the training course in July 1999. He confirmed that he was aware that some arrangement had been made with the applicant to guarantee him a $500 per week net income until the end of the year.
56. Mr Greg Bateman, who was a chef, gave evidence that he had used the FiltaFry process and had previously used the services of a competitor. He estimated that The Tavern in which he works was saving approximately $100 per week as a result of the FiltaFry service and estimated the life of the oil has been extended between three and four times.
57. Mr Ashley Morris gave evidence and strongly denied the suggestions by the applicant that he had interfered with the samples. A breakage of a sample in the presence of the applicant occurred when he poured hot oil into a glass jar and he strongly denied that there was anything more sinister involved in that incident. He denied ever advising the applicant to change samples in order to gain business. In general terms he suggested that in any event doctoring of samples would be foolish as the resulting samples would create an unrealistic expectation which could then not be met after the demonstration. Customers of the applicant who he contacted after the applicant ceased conducting the franchise business were approached by Mr Morris and appeared to be happy with the service that was provided. A number of customers continued to be customers of the franchise.
58. Ms Melinda Meehan was called to give evidence in relation to receiving notice of termination by the applicant and to confirm what had occurred at the training course.
59. Mr Simon Sharp was called on behalf of the respondents and he also confirmed what had occurred at the training course and that he first met the applicant at that course. He asserted no guarantee was possible with the product because there are too many variables. He confirmed that he had accompanied the applicant when he commenced the franchise business and showed the applicant how to operate the business. He denied that he ever knew or thought that Gardner Merchant had been a customer or that it operated the catering business for the Ford factory in the Geelong area. He denied suggesting that the product was promoted on the basis of extending the life by five times and instead referred to video and other material which specifically referred to "up to five times". He also indicated that he thought the business of Mr Torcasio if properly conducted could have returned a more significant amount and that in his view, based on his experience, the franchisees should be able to generate a gross income of $1,600 per week.
60. The sixth respondent, who was separately represented, gave evidence that he had been at all material times the agent for the franchisors and in that capacity had met with the applicant on or about 3 June 1999 and that on that occasion provided him with material including the video to which reference has already been made. He gave clear evidence that he had a practice of running through a set routine with prospective franchisees and did the same with the applicant. He stressed that the system was promoted on the basis that it could extend the life of cooking oil by up to five times and that the average extension of oil life was in the order of two to three times. He denied suggesting there was a minimum income which could be generated by a FiltaFry franchise and confirmed that in accordance with franchising code of conduct the applicant was advised and encouraged to seek legal and financial advice. He relied in making the representations on material supplied to him by the franchisors. An acknowledgment of receipt of franchise agreement and professional adviser - legal/financial certification forms was received which showed that it had been signed by the applicant on 21 June 1999. This confirms the fact that advice was given to the applicant to seek his own financial and legal advice. He confirmed in his evidence that he had prepared a letter dated 8 June 1999 to the applicant which did refer to existing customers including "Gardner Merchant". The same letter refers to the suggestion that the service "extends the normal life of cooking oil by up to five times!"
Legal principles
61. The principles to be applied in relation to s 52 have been set out in a judgment of Hill J in Equity Access Pty Ltd v Westpac Banking Corporation [1989] FCA 506; (1990) ATPR 40-994 at 50, 950 as follows:
"1. For conduct to be misleading or deceptive the conduct must convey in all the circumstances of the case of misrepresentation ...
2. There will ... be no contravention ... unless error or misconception results from the conduct of the corporation and not from other circumstances for which the corporation is not responsible ...
3. Conduct will be likely to mislead or deceive if there is a `real or not remote chance or possibility' of misleading or deception regardless of whether it is more than 50% ... The question of whether conduct is misleading or deceptive or likely to mislead or deceive is an objective question which the court must determine for itself. Hence, evidence that persons in the relevant class have been mislead will, although admissible, not be determinative. In some cases, however, such evidence will be very persuasive ...
4. Conduct of a corporation causing mere confusion or uncertainty in the minds of the public ... is not necessarily coextensive with misleading or deceptive conduct ... Since actual deception need not be shown the court must consider whether a reasonably significant number of potential purchasers would be likely to be misled or deceived ...
5. ...
6. Section 52 is not confined to conduct which is intended to mislead or deceive ... and a corporation which acts honestly and reasonably may nonetheless engage in conduct that is likely to mislead or deceive ..."
62. The Full Court of the Federal Court in Ricochet Pty Ltd & Anor v Equity Trustees Executor & Agency Co & Ors [1993] FCA 99; (1993) 113 ALR 30 at page 36 stated:
"Ultimately the causative threshold beyond which liability attaches to a misrepresentation which is one of a number of factors inducing a decision that produces loss will be a question of judgment. This is a familiar process averted to in various related contexts by Mason CJ in March v E M Stramare Pty Ltd, supra, and in this Court in Elna Australia Pty Ltd v International Computers (Australia) Pty Ltd (No.2) [1987] FCA 230; (1987) 16 FCR 410 at 418-419 ... but the mere possibility that a misrepresentation might have induced a course of action by the representee can never itself attach liability under section 82 of the making of it."
Reasoning
63. The chronology of events in the present case indicates in clear terms to me that there had been representations made for and on behalf of the franchisors in relation to the FiltaFry system.
64. Those representations were clearly made in documentary material and were the subject of oral representation in the discussion between the sixth respondent and the applicant and during the course of the training session to which I have referred.
65. Issues of credit arose in the present case as to the precise terms of those representations and further, whether there indeed was any conversation that occurred at a much earlier stage between the applicant and Mr Meehan. The issue of credit also became significant in relation to allegations made by the applicant against some of the respondents and in particular the suggestion of tampering or interfering with samples and a specific incident involving Mr Morris which resulted in a jar being smashed.
66. Clearly it is important to then analyse the evidence in the light of credit issues and in circumstances where the credit of a witness may be in doubt, then it is proper in my view to seek some form of corroboration. In the absence of that corroboration and if the credit of a witness is doubted to the extent that it cannot be relied upon, then the evidence of that witness should be rejected.
67. In the present case I have had an opportunity of assessing the evidence of the applicant. I have formed the view that the applicant as a 34-year-old young man with no prior business experience who has a genuine feeling of grievance concerning the loss he incurred as a result of this unsuccessful business venture. It is significant however to note that the nature and extent of the representations have remained to a large extent consistent with the information received by the applicant in his initial discussion with the sixth respondent and at the training seminar to which I have referred. During the course of those meetings, in my view the facts demonstrate both in writing and the oral evidence before me, that the representations that were made concerning the product specifically referred to the product extending the use of the oil "up to five times". I am further satisfied that throughout the meetings between the applicant and the franchisors as described, he and other franchisees were told that the average is between two and three times.
68. On the evidence before me I am satisfied that representations were made of a similar kind to those referred to in the statement of claim and specifically those representations set out in Schedule 3 of the FiltaFry disclosure document, the letter dated 8 June 1999 from the sixth respondent, which was filed and forwarded on behalf of the franchisor to the applicant and in the document headed "Independent Test House Report Summary", a further document headed "Comparison between FiltaFry (filter purification machine) and other standard filter machines used by competitors". However the representations on a proper reading of that documentation were representations which suggested that FiltaFry service has no direct competition, that amongst its customers FiltaFry had - at least as at 8 June 1999 - Gardner Merchant as one of its catering businesses and that the FiltaFry process would extend the normal life of cooking oil by up to five times and not "by a factor of five".
69. In dealing with the representations as described, it is clear from my findings that I do not accept the applicant's assertion that representations were made that the FiltaFry system would extend the life of cooking oil by "a factor of five", nor do I accept that a representation was made that the filter would extend the life of top quality oils "by five times". I do accept that in the context of the oral discussions and written representations that in general terms it was represented that FiltaFry would increase the useful life of cooking oil to a much greater extent than any other filter available or competitors. It is further accepted that there was a representation - at least in the letter dated 8 June 1999 - that FiltaFry did not have any "direct competition".
70. Having heard evidence from current and former franchisees, it is clear in my view that the FiltaFry system can achieve an improvement in the life of cooking oil by up to five times. On average a fair conclusion would be that the system extends the life by approximately two to three times, though in exceptional circumstances may increase the life of cooking oil by closer to five times. In any event the claim made that it can increase the life of cooking oil by up to five times has been established, and to that extent it cannot be concluded in my view that that representation can be said to be untrue. It may be open to challenge by various experts and other witnesses called for and on behalf of the applicant, but overall I am satisfied having regard to the totality of the evidence called by both sides, that the claim that the FiltaFry system can achieve a result of extending the life of cooking oil by up to five times is a claim which in truth can be substantiated.
71. It is important to remember that the words "up to" should be interpreted in the normal manner. It should be stated that whilst the term may have led to some degree of confusion or perhaps even unrealistic expectations on the part of the applicant, it does not in my view constitute sufficient to lead this Court to make a finding that this constitutes a misleading and deceptive statement. The expression "up to" is frequently used in advertising and promotion of products. It means what it says. If words were used which conveyed the impression that there was a guaranteed minimum of five times the life of cooking oil, then the applicant's case would have been much stronger. In the present case however there was no representation of that kind. The words "up to five times" do not mean guaranteed five times but simply indicates a range from something above zero to five.
72. After the conclusion of the hearing and during the course of my research for this judgment I note that the Federal Court in the case of Eveready Australia Pty Ltd v Gillette Australia Pty Ltd (1999) FCA 1824 (23 December 1999) considered what is meant by the expression "up to". In that case the court had to consider an expression "up to four times longer" in a claim made relating to Duracell batteries. The applicant in that case was a competitor of Duracell and the complaint arose out of a number of television advertisements, a billboard advertisement and stickers attached to Duracell's battery packs. The claim was made that "Duracell lasts up to four times longer" and the court had to then consider what it meant by "up to four times longer" in the context of that decision. It is appropriate to set out the relevant extract from the court's reasoning in that case as follows:-
"What is the meaning of the words "up to four times longer"?
I think the words "up to" mean "extending to and attaining". I think they bear that meaning even without the soccer action on the television screen. It must be remembered, after all, that the advertisements are promoting a longevity advantage of Duracell batteries and the reference to "four times longer" is a claim made in that context. It would be reasonable for a viewer, who wished to buy AAA batteries for a portable dictating machine, to understand, on the basis of the words "lasts up to four times longer", that in choosing Duracell in preference to the Eveready Black he or she had a chance of acquiring a battery that lasted four times longer than the Eveready Black AAA battery. The action in the television commercials reinforces this message .Four goals, no less, are scored by the Duracell bunnies. Excitement builds up until the fourth goal is scored.
It will be recalled that the words "up to" are not spoken in the ten second commercial. This omission emphasises in the case of that commercial the claim that "four times longer" will be attained.
Senior counsel for Duracell submits:
´Up to' four times longer signifies in its ordinary meaning a range of superior durability and that in a not insignificant number of cases the durability approaches or exceeds four times.
I agree that "up to four times longer" indicates a range. But with respect I think that senior counsel's formulation does not adequately recognise the implicit claim that "four times longer" will in fact be attained. It may be exceeded but that is accidental. It may be attained in more than one instance but that is likewise accidental. Whatever the two things are that are being compared, no matter that the Duracell product may in some instances last less than four times longer than the other brand, it will last four times longer in at least one instance.
No doubt the words "up to" must be understood according to the context in which they are used. In some contexts, a limitation will be emphasised, as in the case of a grant of a licence to take something "up to" a specified quantity. In the present case, the context makes it clear that there can be no complaint by the consumer if the Duracell battery he or she buys last more than four times longer than the object of comparison. But I am of the view that the claimed comparative longevity is promised to be attained in at least one instance over a range."
73. That extract is consistent with the view that I have taken in the present case concerning the meaning of "up to". It should be stressed that the documentary material produced by the franchisors clearly used the expression "up to" and in most instances did not reduce the size of print where those words were used. Hence for the reasons given and applying the authority of the Federal Court in the Eveready case to which I have referred I conclude that there has not been any breach of s 52 of the TP Act in relation to the filter representations. I am satisfied that the Filtafry process at least has the capacity to extend the life of cooking oil by up to five times and that it otherwise has the capacity to be more effective than its competitors though of course it needs to be conceded that not all customers will be satisfied with the results or achieve the same outcome.
74. The Gardner Merchant representation on the material before me was certainly set out in the letter dated 8 June 1999. It does not appear specifically in any other documents and nor indeed is it suggested by the applicant that oral representations were made in relation to that matter. Indeed in the pleadings the applicant whilst referring to an oral representation does not in fact refer to the document to which I have referred. On the evidence before me I am satisfied there was no oral representation, but I do find that there was a representation made that Gardner Merchant at the time of the letter was a customer of the franchisors.
75. I further find however that that representation was true in the sense that Gardner Merchant was a client of the franchisors, albeit not in the State of Victoria.
76. It is inconceivable in my view that a representation could possibly be made that Gardner Merchant was a client for the purpose of the applicant's territory when all parties knew and understood that the applicant was to be the first franchise holder in the territory which included as its most significant district the city of Geelong.
77. In the circumstances therefore I am not satisfied that the representation made regarding Gardner Merchant was deceptive or misleading. It is the truth though limited by virtue of the fact that it was not then and indeed could not have been a customer in territory which was the subject of the franchise of the applicant. The applicant would have been aware of that fact and although it may be of assistance to know that a large caterer such as Gardner Merchant was a customer of new franchisors, this would not in my view have led to any reasonable person to take the view that accordingly that organisation would become, or be more likely to become, a customer of the applicant when he commenced a franchise. I do not accept that he would have relied upon that representation in the circumstances any more than the representations about other customers and in the circumstances note that it is common ground that the applicant was starting the franchise business from what is commonly referred to as "scratch" and that it was his responsibility to build up the business. It is for that reason that a three-month "grace" period was allowed in relation to the payment of the franchise fee.
78. I conclude in this matter that in the circumstances the applicant with his lack of specific business experience other than being a self-employed carpenter, combined with what I observe to be a person with limited communication and personal skills, would have had difficulty establishing a business of this kind in a new territory. The fact remains that although the revenue generated by the business was low, the applicant did not even persist long enough to make full use of the three-month period when the franchise fee was not payable. It was unrealistic in my view for him to expect a return which would indicate in some way with a degree of certainty the likely future earnings after only participating in the business for less than three months.
79. In making findings of fact concerning the representations, I have also had to consider whether the applicant had an earlier conversation with Mr Meehan, said to have occurred some months prior to the demonstration between the applicant and the sixth respondent. On balance, I am prepared to accept the evidence of Mr Meehan and prefer that evidence along with other witnesses for the respondent to the evidence of the applicant where there is an apparent conflict. I am not satisfied there is sufficient corroborative evidence which would support the applicant's version of events. In particular I find that there was an earlier meeting between Mr Meehan and the applicant and that during the course of that meeting the applicant was made aware of the fact that the FiltaFry system could achieve up to five time improvement in the usable life of oil under ideal conditions. I am further satisfied that he was told that he did not need to proceed beyond the training course if he did not think he could succeed with the franchise. This is consistent with other evidence given by the sixth respondent and in particular the acknowledgment form and disclosure material which were provided by the franchisors in discharge of their obligations.
80. Some insight into the applicant's demeanour and state of mind is found in the letter which he admitted writing to Mrs Meehan, the wife of the fourth respondent. The letter is clearly offensive and contains a number of what I regard as intimidating and threatening sentences. It is regrettable that the letter was written to the wife of a party to litigation, just one month after the Court had fixed a hearing date for the application. For the present purposes however it is sufficient that I draw a conclusion that in the circumstances the applicant had displayed a distinct lack of judgment and had become obsessed to the point where his grievance, whether based on a proper factual assessment or otherwise, tended to dominate his thinking to the point where he conducted himself in an irrational and improper manner. To quote just one extract from that letter, the applicant wrote,
"I am surprised you can even stand living with such slime now. When they die, have them burnt, they are such scum there should be no remnants of them ever being on earth and I hope there is a hell, because that's where they deserve to be, what arseholes they are, and that goes for anyone who is involved and associated with that arsehole group FiltaFry."
81. To send a letter containing that passage, together with other equally offensive and inflammatory statements, demonstrates that the applicant has indeed convinced himself that he has been wronged in a most extreme manner. I conclude that the letter further demonstrates a lack of insight into the matter which I am satisfied has at least in part influenced the applicant in his recollection of events and contributed to the unreliability of his evidence where that evidence is in conflict with the evidence of the respondent and in particular that of Mr Meehan and Morris. It is to be remembered however, despite some allegations in the pleadings, that this is not a case where fraud has been alleged. Nor could it be alleged on any of the material presently before me.
82. In the context of other allegations having regard to my general findings of credit, I also find to the extent that I am required, that there is no substance in the allegation and/or interpretation made by the applicant that there had been some wrongful interference with sample bottles by Mr Morris or anyone associated with the franchisors. On the material before me I conclude that whilst the conduct may have given rise to some suspicion on the part of the applicant, that in the circumstances even at that early stage he had misinterpreted the events and indeed has continued to misinterpret both the events and representations since that date. Whilst rejecting the applicant's version of those events, I think it is significant that he should draw on those events and refer to them in his statement. It again demonstrates his lack of insight and inability to objectively analyse the facts and surrounding circumstances of this application.
83. It is significant that the knowledge concerning Gardner Merchant was acquired by the applicant during his first week of operation and the incident concerning the dropping of the bottle which smashed with Mr Morris had occurred in the second week, yet the applicant continued without protest to participate in the franchise and it was only when he had reached a stage he could not believe he could make a success of the franchise that he decided to withdraw.
84. I am further satisfied that he did write a letter suggesting he had had a breakdown and having regard to his presentation before this Court and his conduct in the writing of the letter to Mrs Meehan to which I have referred, it seems to me that there has been a breakdown of a kind which is not necessary for me to determine, save and except that I am satisfied that the failure of the business was due to inability on the part of the applicant to attract sufficient customers and otherwise ensure an appropriate turnover which seems to have been achieved by other franchisees, albeit with varying degrees of success.
85. For the sake of completeness I should also indicate that I am satisfied that there was no misleading or deceptive conduct arising out of any suggestion that there was no direct competition. On the material before me I am satisfied that there was in fact no direct competition in the sense that "Vatman" and "Big Ben" did not have a similar system to that operated by FiltaFry and to that extent was not a direct competitor. It was made clear at the training session and in other material that indeed competitors did exist though not surprisingly it was asserted by the franchisors and those representing them that the competition was not able to achieve results the same standard as FiltaFry. Again this is not surprising in a competitive market where it is alleged that the major competitors do not use a similar system to that used by FiltaFry. I am satisfied that any claims suggested about there being no direct competition which appeared in the letter of 8 June 1999 from the sixth respondent to the applicant could not be capable of constituting misleading and deceptive conduct. The suggestion that there was not a direct competition has been established on the evidence before me.
86. It is therefore not necessary to embark upon a detailed analysis of the expert evidence in this case, as I do not believe that the representations were of a kind which would lead to reliance upon expert analysis to refute the suggestion of FiltaFry obtaining a result in all cases of up to five times the life of the cooking oil. I am satisfied on the lay evidence and practical experience from franchisees and customers of FiltaFry called by the respondents that the product was at least capable of extending the life by two to three times and on the odd occasion of up to five times. That is consistent in my view with the representation which I found were made by the franchisors in this matter.
87. Accordingly it is unnecessary for me to consider the issue of loss or damage, as I have found that in the circumstances the claim of misleading and deceptive conduct by the applicant against each and every one of the respondents should fail. That conclusion is appropriate having regard to my findings and the application of the relevant principles of law.
88. I propose making the following orders:-
(1) The application be dismissed.
(2) The applicant shall pay the respondents' costs (save and except the fifth respondent) of the application to be taxed in default of agreement pursuant to Order 62 of the Federal Court Rules.
(3) There be no order for costs in relation to the fifth respondent.
I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 12 February 2002
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