On 14th September, the New South Wales Supreme Court of Appeal handed down its decision in Joshan v Pizza Pan Group Pty Ltd  NSWCA 219, finding in favour of Jasbir and Ranjodh Joshan (who were represented and advised by Mark Gustavsson & Associates (‘MGA’)) and ordering that MGA’s legal costs be paid by the respondent, food and beverage company Pizza Pan Group Pty Ltd (‘Pizza Hut Australia’)
In ordering that the New South Wales proceedings be permanently stayed, the New South Wales Supreme Court of Appeal declared that South Australia is the ‘more appropriate jurisdiction’ for resolution on this dispute and have left the parties to commence proceedings in South Australia themselves, should they wish.
In the opinion of Mark Gustavsson, principal solicitor of law firm Mark Gustavsson & Associates, Pizza Hut’s claim has been “left in rubble.”
“Pizza Hut Australia is now left with no other, other than to pay our significant legal bill and recommence proceedings in South Australia” says Mr Gustavsson.
When asked whether he expects Pizza Hut Australia will in fact recommence proceedings in South Australia, Mr Gustavsson said, “we consider it unlikely. The New South Wales Court of Appeal highlighted the fundamental flaws in Pizza Hut’s legal claim against our clients – flaws which we have been telling Pizza Hut existed in their claim all along.”
“We expect Pizza Hut will cut their losses and walk away.”
In addition to staying the proceedings, the New South Wales Supreme Court of Appeal ordered Pizza Hut Australia to pay the MGA’s legal costs which MGA expects will be assessed at an amount between $100,000 and $150,000.
“It’s sweet karma” says Mr Gustavsson. “I hope this teaches Pizza Hut—and all franchisors—a lesson. If it doesn’t, we look forward to winning against them the next time we meet them in court.”
Pizza Hut Australia initially commenced proceedings against Ranjodh and Jasbir Joshan, claiming entitlement to approximately $350,000 in connection with alleged breaches of a franchise agreement and deed of guarantee signed by Randjodh and Jasbir Joshan.
Upon receiving advice from MGA, Ranjodh and Jasbir Joshan entered a defence, alleging that the business subject of the franchise was “not viable” – an argument which received a judicial nod of approval on appeal.
Ranjodh and Jasbir Joshan also entered a counterclaim against Pizza Hut Australia as well as master franchisor Pizza Hut Restaurants Asia Pte Ltd (‘Pizza Hut Singapore’), alleging the food and beverage franchise companies engaged in unconscionable conduct and made false or misleading representation in their dealings with Jasbir and Ranjodh Joshan, in breach of the Australian Consumer Law.”
MGA also advised Ranjodh and Jasbir Joshan to challenge the jurisdiction of the New South Wales District Court to hear the dispute, alleging that South Australia was the ‘more appropriate forum’ given a multitude of factors, including that the franchised business was based in South Australia.
While the District Court of New South Wales did not agree with this challenge at first instance, MGA’s arguments on jurisdiction were successful in the New South Wales Supreme Court of Appeal, resulting in the District Court’s decision being overturned and costs being awarded in favour of the Joshans.
In obtaining judgment, MGA were also successful in getting significant lines of District and Supreme Court authority disapproved which previously were seen as good law across the nation.
“By the work of the entire team at MGA, a significant line of unjust authority has been wiped from the common law, a decision which is very much a victory for justice.”
When asked how the Joshans were able to afford the legal costs of the appeal, Mr Gustavsson explained, “We ran the appeal pro bono. As officers of the court we did not want the client’s purse to prevent justice from being attained.”
“It did mean a lot of stress and sleepless nights, but if given the opportunity we would do it all again in a heartbeat.”
The New South Wales Supreme Court of Appeal was run by Mr Gustavsson, a 29 year old former Gold Coast nightclub bartender turned law firm principal and employer of 7, and Mr Nicholas Burnet, a junior solicitor who lead the appeal and who was admitted to practice only months prior to the appeal being heard.
What will happen next
When asked about what will happen next, Mark Gustavsson said “Pizza Hut will have to make a decision about whether it cuts its losses now or doubles down on its claim. Pizza Hut are already liable to pay us an amount which could exceed $100,000 – if they recommence proceedings, this amount will only increase.”
When asked about whether the Joshans’ intend to run their counterclaim regardless of whether Pizza Hut commence proceedings, Mr Gustavsson said “We are still seeking instructions” however he went on to say that it would not be out of the realm of possibility that the Joshans lodge their counterclaim against Pizza Hut Australia and its Singaporean counterpart as a primary claim.
“We intend to allege that what Pizza Hut are doing to their franchisees is wrong”, says Mr Gustavsson.
“We believe we have uncovered a grave unjustice here and are hopeful the ACCC take the same action against Pizza Hut Australia and Pizza Hut Singapore that they are currently taking against Retail Food Group and related entities in separate proceedings.”
“In the meantime, we intend to get our costs assessed. Pizza Hut Australia have put significant financial and emotional stress on the Joshans so we intend to claim our costs against them in the fullest extent allowable under the law.”
This case is ongoing.
The team at Mark Gustavsson & Associates are specialist corporate commercial and litigation lawyers and have particular interest in representing clients in competition and consumer protection matters on a pro bono basis.
If you are a franchisee and believe you have been treated unfairly by your franchisor, you can contact the Mark Gustavsson & Associates team for a no obligation chat to discuss your options.