This judgment concerns a limited retrial (heard by Peden J) of a franchising dispute, ordered by the Court of Appeal in Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd [2025] NSWCA 196 (Stem, Ball JJA, and Griffiths AJA) (Netdeen CA) and Netdeen Pty Ltd t/as GJ Gardner Homes v Lindfield NSW Pty Ltd (No 2) [2025]NSWCA218.
The background to the proceedings was set out by the Court of Appeal in Netdeen CA at [7]-[35]. According to Peden J (at [2]-[5]) the following was a sufficient summary of key facts:
“(1) Netdeen is and was the franchisor of GJ Gardner Homes (GJG).
(2) In 2014, Netdeen entered into a master franchise agreement (MFA) for New South Wales and the ACT with Lindfield as the master franchisee. Mr Matthew Hope was director of Lindfield and the “Specified Person” under the MFA and had particular responsibilities. Mr Hope was a director of Colour Capital Pty Ltd, which was the sole shareholder of Lindfield; he was also the director of the Western Australian master franchisee, and was a gym master franchisee and café franchisor.
(3) After Lindfield exercised its option to renew the MFA for another 10 years, on 20 July 2023, Netdeen’s board, made up of Messrs Gregory Gardner, Darren Wallis, and Trent Gardner, resolved not to renew the MFA, relying on clause 4.7. That clause required the board to form an “honest and reasonable opinion” that based on matters relating to Lindfield’s performance under the MFA, it was in the best interests of Lindfield’s sub-franchisees and Netdeen not to renew the MFA. Before the board was a lengthy report of Netdeen’s COO, Mr Christopher Thornton. On 24 July 2023, Netdeen informed Lindfield of the board’s decision. On 27 May 2024, Netdeen served on Lindfield a notice of termination of the MFA.
(4) Lindfield alleged that Netdeen’s refusal to renew was invalid because clause 4.7 was not satisfied, and it was entitled to damages for the lost opportunity of a renewed MFA.
(5) Other claims that Lindfield brought were resolved by the Court of Appeal.The two matters remitted for hearing before Peden J were:
(1) Whether Netdeen proved it complied with clause 4.7 of the MFA, on its construction found by the Court of Appeal in Netdeen CA; and
(2) What damages ought to be awarded if the non-renewal decision breached clause 4.7 of the MFA.
For the purposes of this hearing and based on the Court of Appeal’s orders in Netdeen CA:
(1) The proceedings were conducted on the basis of the respective parties’ cases, including pleadings, affidavit evidence, documentary tender, rulings on evidence, oral evidence and cross-examination as recorded in the transcript, and any concessions or admissions made by a party at or before the hearing;
(2) Netdeen did not exercise the leave granted to reopen its case and lead further evidence on the clause 4.7 issue; and
(3) Her honour was not bound by any findings by the original trial judge and must make findings of fact relevant to the two remitted issues.
Peden J held that:
(1) Netdeen satisfied the requirements of clause 4.7; and
(2) If that conclusion is erroneous, Lindfield would be entitled to damages of $13.4 million.
.jpg)
