See You In Court!
CANBERRA, Australia (Blue MauMau) - Around 6 judgments a month are handed down by Australia’s High Court. Since 1905, only 154 High Court cases have even mentioned the word "franchis*" anywhere in the judgment. Of these, most relate to petroleum franchising [gas station dealerships], electoral issues and sometimes the word ‘franchise’ is mentioned purely incidentally. So, when special leave was granted on February 8, 2008 to a franchisor, Master Education Services Pty Limited to appeal to the High Court (Australia’s top court) from a decision of the New South Wales Court of Appeal (2007 NSWCA 161) favoring the franchisee on a matter as fundamental as perfect adherence with mandatory franchisor disclosure procedures, the Australian franchise community was bound to react.
Now that franchise practices have the additional gravitas of the courts coming in, reaction from franchisees has been a call for an additional federal parliamentary inquiry into the franchise industry.
The Franchise Council of Australia that has mainly franchisor members wants to fund the High Court appeal as the decision of the NSW Court of Appeal places an unwelcome burden on franchisors.
The question for the High Court to answer is whether Part IVB of the Trade Practices Act 1974 (Cth) (“the TPA”) was intended to exclude, and has the effect of excluding, the application of the common law doctrine of illegality in circumstances where an industry code, which has been prescribed under the TPA as an applicable industry code, has been contravened. Trade practices – Illegality – Where a franchise agreement has been entered into in breach of cl 11(1) of the Franchising Code of Conduct (“the Code”) and consequently in breach of s 51AD of the TPA – Whether such a franchise agreement is entirely illegal and unenforceable by reason of the application of the common law doctrine of illegality (and without an order to such effect pursuant to Part VI of the TPA).
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