Case: Watson v Foxman (1995) 49 NSWLR 315
Outcome: applied
Watson v Foxman (1995) 49 NSWLR 315 at 318-319 McLelland CJ in Eq said: 'Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously described as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act ), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not ... attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen [1940] HCA 20 ; (1940) 63 CLR 691 at 712. Considerations of the above kinds can pose serious difficulties of proof for a party relying upon spoken words as the foundation of a causes of action based on s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act ), in the absence of some reliable contemporaneous record or other satisfactory corroboration.' His Honour's observations as to the frailty of human memory are, of course, not to be taken as limited simply to cases invoking claims under the Trade Practices Act or its analogues. They are just as apposite in a case such as this where the question arises of what oral terms of the contract were agreed in the course of negotiations. The franchise agreement recited that Allphones had developed a system of doing business in association with its intellectual property and distinctive method and style for operating the franchised businesses. Clauses 1 and 2 of the franchise agreement provided that Allphones had granted Hoy Mobile the right, and the latter accepted, the obligation to operate a franchise business: 'Right to conduct franchise 1. ... within the Territory referred to in the Schedule hereto (hereafter called "the Territory") in accordance with the terms and conditions of this Agreement. Exclusivity The Franchisor must not itself operate or licence another to operate a Franchised Business in the Territory. The Franchisee must not canvass sales outside of the Territory.' The franchise agreement was to commence in August 2003 and run for a period of five years with an option to renew for a further term of five years (cl 3). Allphones was entitled to develop and change the system and intellectual property which it used in the conduct of its overall franchise business (cl 4). Hoy Mobile, among other obligations, agreed not to do or permit anything during the term of the franchise agreement or thereafter which might detract from Allphones' reputation or goodwill or be misleading or deceptive or otherwise cause confusion (cl 5.8). The franchise agreement provided that Allphones had sole and absolute discretions: Importantly, cl 6.5(ii) provided: 'Stock supplied by [Allphones] to [Hoy Mobile] in terms hereof is supplied on consignment, and at the cost of delivery of [Hoy Mobile], and shall at all times be subject to the control of Allphones Point-of-Sale and inventory computer system ...' (sic)