Bank of Queensland franchisees back in court

Bernard Kellerman
An appeal by several former Bank of Queensland franchisees against a judgment against them in the Supreme Court of New South Wales, handed down almost a year ago to the day, is underway before three of the Court's most senior judges.

It is yet another step in a long-running series of cases arising from BoQ's failed attempts to expand into New South Wales using a branch franchising model that had proved successful in its home territory of Queensland. This model involves setting up businesses that became known as owner managed branches, or OMBs

The appeal stems from a decision last year in the NSW Supreme Court to dismiss claims made by 11 former OMBs against the bank over alleged misleading, deceptive and unconscionable conduct.

The current appeal - one that is expected to take four days - is being heard by Chief Justice Bathurst, President of the Court of Appeal Justice Beazley, and Justice Barrett.

This time, the former franchisees are alleging BoQ engaged in misrepresentation but are pushing for a retrial rather than compensation.

Yesterday, the bank's lawyers had their day in court, and spent most of their time running arguments as to exactly how the bank's NSW regional manager at the time, Garry Allsopp, had explained the deal to the owner managers, before they took on a bank-funded purchase of a new branch operation in an untested region.

For misrepresentation to have occurred, Allsopp would have had to take the step of telling the potential franchisees that they needed to write $4 million per month in loans, and that he believed they would be able to meet that target.

The bank's lawyer countered that Allsopp did no more than provide names and contact details of all other franchisees and invited potential owner managers to speak to existing OMBs as part of their own due diligence. The bank said that "from day one it was made clear" that no financial details of franchises would be made available.

The bank then stated that, despite this warning, most of the franchisees went ahead and opened a new business, or - in one case - did not close their doors, even when they were given access to other franchisees' numbers (once they had signed up) and realised theirs was not going to be a profitable business.

Further, BoQ's lawyer argued, "none, not one" of the OMB's approached BoQ to complain about the raw deal they had allegedly been sold, in some cases keeping quiet for a number of years.

The hearing continues today, with lawyers on both sides expecting it to run until tomorrow.