Agreements deemed franchises were void for non-registration under relevant statutes, constituting fraud due to misrepresentation of approvals.

Introduction

[1] In 2016 and 2017, each of the Plaintiffs was drawn to the 1st Defendant's Facebook page offering the opportunity to members of the public to run their own independent business. The nature of the business was owning and running a centre dedicated to conducting the 1st Defendant's Brain-Zone Full Brain IQ Program for young children ("the 1st Programme") that they were told had been approved by the Ministry of Education. After they each separately attended an Introductory Session, they each entered into a licensing agreement with the 1st Defendant ("the 1st Licensing Agreement") for the 1st Programme.

[2] A year or two after opening and running their centres on the 1st Programme, they each entered into a second Licensing Agreement with the 2nd Defendant ("the 2nd Licensing Agreement") to additionally conduct the 1st Defendant's Brain-Zone World Class Memory Program for older children ("the 2nd Programme"), also having been told that it had been approved by the Ministry of Education.

[3] Sometime in 2019, the Plaintiffs terminated the 1st Licensing Agreement and the 2nd Licensing Agreement (collectively, "the Agreements").

[4] Notwithstanding having terminated the Agreements, the Plaintiffs are by this action seeking to have the Agreements declared void, alleging, inter alia:

(i) That they are in reality Franchise Agreements, and are void for illegality for contravening the Franchise Act , 1998 ("the ");

(ii) That they are void for illegality for contravening ss 77 and/or 79 of the Education Act , 1996 ("the "); and

(iii) That they are void because the Defendants had induced each of them to enter into the Agreements by fraud, deceit, misrepresentation and/or undue influence.

[5] The relief they seek in relation to these successful challenges to the validity of the Agreements are compensation under s 66 of the Contracts Act , 1950 ("the "), and damages, interest and costs.

[6] The Defendants deny all of their claims, and contend that, even if the Agreements are void or voidable, the Plaintiffs are not entitled to recover any relief from them on the principle of in pari delicto.

[7] In addition, the 1st and 2nd Defendants counterclaim for declarations that the Agreements are valid, and for damages and other relief for alleged unlawful termination of the Agreements. They further counterclaim against the Plaintiffs for damages and other relief for infringement of the 1st Defendant's Brain-Zone trademark ("the 1st Defendant's Mark"), alleging that, after the termination of the Agreements, the Plaintiffs had each operated their own brain-development businesses using the 1st Defendant's Mark.

[8] Waiting in the wings dependant on the outcome of the Plaintiffs' claims against the Defendants is the Defendants' counterclaim against the legal firm of Messrs. Shahran Hashim and its three partners (collectively, "the Third Parties") for, inter alia, negligence in their advice and in the drafting of the Agreements.

[9] On 9 December 2020, the 6th and 7th Defendants successfully applied to strike out the Plaintiffs' claim against them. Thus, the trial proceeded against only the 1st to 5th Defendants.

The Issues

[10] The five issues to be considered and decided are:

(1) Whether the Agreements contravene the Franchise Act and are therefore void for illegality;

(2) Whether the Agreements contravene ss 77 and/or 79 of the Education Act and are therefore void for illegality;

(3) Whether the Agreements are void by fraud, deceit, misrepres