Federal Court of Australia · [2026] FCA 1458
A RAMS franchise depended on authorised credit representative appointments to write home loans. The result was deliberately narrow.
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Practical takeaways
RAMS was entitled to take Westpac's concerns seriously. But it still had to exercise its own contractual powers in good faith. The Court found that it did not do so because it completed the process while an evidentiary gap identified by its own decision-maker remained unresolved.
The franchisees proved a real but limited lost commercial opportunity. The Court assessed the chance of a useful continuation at 12.5% and left the dollar value and final orders for later.
Fairfield was a RAMS mortgage broking franchise. It helped customers apply for RAMS-branded loans, but Westpac made the lending decision. RAMS held the credit licence for the broking activity and appointed Sech, Mr Lubarda and relevant loan writers as authorised credit representatives.
That structure meant revoking the representative appointments did more than remove a regulatory status. It took away the practical means of operating the franchise and opened the contractual route to termination.
Key points
Westpac reviewed Fairfield applications more intensively during 2022. It raised concerns about documents, borrower information, responsible lending, referrers and financial crime risk. The Court accepted that those concerns were genuine and commercially important.
When Westpac recommended revocation, RAMS' managing director asked for the material connecting the high-level concerns to Fairfield. Westpac said it had provided everything it considered able to share. RAMS then acted without resolving the gap or putting the accumulated concerns to the franchisees in a form they could answer.
Good faith did not let the Court replace RAMS' commercial judgment with its own. It required RAMS to genuinely exercise its power for a purpose consistent with the franchise bargain.
The five-year term did not guarantee five years of trading, but it was part of the context. Revocation had a grave and practically final effect. Once RAMS' decision-maker identified a material deficiency, completing the evaluation without resolving it or hearing a response lacked the required fidelity to the bargain.
Key points
A lawful process might still have ended in revocation. Westpac's concerns would not disappear, heightened review was likely to continue and the wider RAMS lending channel later closed to new applications.
The Court therefore valued the lost chance, not an assumed right to trade normally for the rest of the term. It fixed the chance of a commercially useful continuation at 12.5%. The financial value of that chance, final relief and costs remained to be worked out.
For a franchisor, licensee or other business managing a long-term commercial network, the decision file should make the legal and factual reasoning visible.
Key points
No. RAMS had broad powers to revoke the representative appointments and protect legitimate regulatory and commercial interests. The breach concerned how RAMS completed its own decision process after its decision-maker identified a material gap in the information. The Court did not decide that the franchise had to continue for the full five-year term.
No. The Court rejected a free-standing right to procedural fairness and did not insert a general show-cause clause into the contract. The absence of a response opportunity mattered because of this agreement, the five-year relationship, the practical finality of revocation and the unresolved issue identified by RAMS' own decision-maker.
Yes. Westpac was the lender, had specialist investigators and held information RAMS did not. The Court said RAMS could place substantial reliance on Westpac and did not need to reproduce its investigation. The problem was that RAMS still had to exercise its own power in good faith.
The Court found a real possibility that a meaningful response could have delayed or avoided immediate revocation for a commercially useful period. It kept the percentage low because Westpac's concerns were serious, heightened scrutiny was likely to continue, many applications were not progressing and the RAMS new-home-loan channel later closed. The 12.5% is applied to the value of the confined counterfactual opportunity, which was not quantified in this judgment.
No. The statutory unconscionability claim failed. The Court said the applicants did not come close to establishing the additional character of conduct contrary to conscience required for that claim. The successful finding was the narrower breach of good faith.
RAMS franchise process breached its good-faith obligations
The Federal Court found that RAMS breached good-faith obligations when it revoked the appointments needed for a mortgage broking franchise and pursued termination while a material information gap remained unresolved.