Trimuryani v Retail Food Group Limited

Trimuryani v Retail Food Group Limited [2024] FCA 1282 is a Federal Court decision approving the settlement of a representative proceeding about the Michel's Patisserie franchise system. The Court was not deciding whether the pleaded allegations were true. Its task was to decide whether the proposed settlement was fair and reasonable in the interests of group members as a whole.

The Court approved the settlement. It did so because the case was legally and factually complex, strongly contested, likely to be lengthy and expensive, and unlikely to continue if the litigation funder withdrew support. The settlement involved mutual releases. All approximately 311 group members received a broad release from the respondents in connection with the claims in the proceeding, and 166 group members also received significant releases from alleged debt claims.

For the remaining group members, the result was effectively a walk-away outcome with no monetary payment.

The proceeding was brought by Devi Trimuryani on behalf of herself and other group members connected with the Michel's Patisserie franchise during the relevant period from 15 October 2015 to 30 August 2019. The Court recorded that Michel's Patisserie System Pty Ltd was the franchisor of the Michel's Patisserie business, Michel's Leasing Pty Ltd leased and licensed premises to the applicant and group members for that business, and Retail Food Group Limited was the ultimate holding company of those entities.

The pleaded case was broad. In summary, the applicant alleged systemic unconscionable conduct under the Australian Consumer Law, especially around the implementation of "Franchise System Changes" involving a move from a fresh to a frozen business model.

She also alleged breaches of clause 6 of the Franchising Code of Conduct, including the implied duty to act in good faith and cooperate, alleged that certain franchise agreement terms were unfair under the Australian Consumer Law, particularly around nominated suppliers and transfer and termination provisions, and alleged misuse of marketing funds contrary to clause 31 of the Franchising Code.

The proceeding started on 18 October 2021 under Part IVA of the Federal Court of Australia Act 1976 (Cth). The applicant later filed an amended statement of claim on 13 December 2022. The respondents filed their defence on 28 July 2023, and the applicant filed a reply on 15 September 2023. On 4 December 2023, the applicant filed two points of claim, one for N.E. Coffee Pty Ltd and one for Vakil and Company Pty Ltd.

On 2 May 2024, the parties reached agreement on proposed settlement terms recorded in a deed of settlement and release. On 3 July 2024, the applicant filed an interlocutory application seeking Court approval of that settlement. The Court then made directions on 1 August 2024 for the notice process to group members ahead of the approval hearing.

The legal issue was whether the proposed settlement should be approved under section 33V of the Federal Court of Australia Act 1976 (Cth). In a class action setting, the Court does not simply ask whether the parties want to settle. It must decide whether the proposed compromise is fair and reasonable in the interests of group members considered as a whole, and also as between different members of the group.

The Court referred to established settlement approval principles. It noted that the Court assumes a protective role, must recognise that the interests of the parties before it may not fully align with the interests of all group members, and must decide whether the settlement falls within the range of reasonable outcomes rather than whether it is the best possible bargain that might have been achieved.

The Court approved the settlement and authorised the applicant, on behalf of group members, to enter into and give effect to the settlement deed. It ordered that the settlement would bind the applicant, the respondents and the group members.

It also dismissed the proceeding on the agreed release basis, made no order as to costs between the applicant and the respondents, vacated previous costs orders between them, and made a confidentiality order over certain confidential affidavit material and the confidential exhibit containing the settlement deed.

The dismissal orders reflected mutual releases. The applicant, on her own behalf and on behalf of group members, released the respondents and related persons from claims connected with or arising out of the dispute as defined in the settlement deed. In return, each respondent released the applicant and group members and related persons from claims connected with or arising out of the dispute and the alleged debts, again as defined in the settlement deed.

If you are a franchisee, this case shows that serious allegations about a franchise system do not automatically lead to a trial or damages judgment. Group litigation can become difficult when franchisees signed different agreements, received different disclosure documents, traded in different conditions and may have contributed to their own losses in different ways. Those differences can make common issues harder to establish and can increase the cost and complexity of proving causation and loss.

If you are a franchisor or operate a network model, the case is a reminder that major system changes can attract scrutiny under several legal frameworks at once. A single commercial decision may later be challenged as unconscionable conduct, a failure to act in good faith, an unfair contract term issue, or a marketing fund problem. Even where liability is denied, defending a broad franchise dispute can be expensive and time-consuming.

Although this judgment does not decide liability, it points to the kinds of records that become important in franchise disputes. For franchisors, that includes board or management records about major system changes, communications explaining the commercial reasons for those changes, records of consultation or support offered to franchisees, supplier nomination arrangements, marketing fund records, and the exact versions of franchise agreements and disclosure documents used across the network.

For franchisees, the practical records include signed franchise agreements, disclosure documents, correspondence about system changes, store performance data, invoices and supply records, marketing fund communications, notices of breach or default, and any documents showing alleged debts, offsets or reconciliations. If a dispute later becomes group litigation, these records can affect whether issues are truly common across the group and whether loss can be proved in a consistent way.

This page is based on the Federal Court of Australia judgment in Trimuryani v Retail Food Group Limited [2024] FCA 1282. The judgment records that orders approving settlement were made on 31 October 2024 and reasons were published on 7 November 2024.

The public reasons summarise the pleaded claims, the main defence issues, the notice and objection process, the broad structure of the settlement and the Court's reasons for approval. Some settlement material remained confidential, so the public reasons do not set out every detail of the settlement deed or every individual group member outcome.