Afreda Pty Ltd v Caltex Oil (Australia) Pty Ltd

[1995] FCA 514

-4s

JUDGh4ENT No. .... m ........ ....

IN THE FEDERAL COURT OF AUSTRALIA 1

QUEENSLAND DISTRI	CT REGISTRY	)	No. QG 95 of 1994
GENERAL DIVISION	)

BETWEEN : AFREDA PTY LTD

Applicant

AND

Respondent

C O R M : Spender J

PLACE : Brisbane

DATE: 5 July 1995

MINUTES OF ORDER

THE COURT ORDERS THAT:

(1) In respect of the orders made 16 August 1994, the injunction contained in order number 3 of those orders be discharged at 4 pm on 14 July 1995 and that on and from that date the applicant be released from its undertaking numbered 1 in that order and that the orders numbered 1 and 2 of that order cease to be in force.

(2) the Third Further Amended Statement of Claim filed

2 June 1995 is struck out.

(3) the applicant pay to the respondent in the principal

proceedings the costs of 27 June 1995, and the costs

of today.

THE COURT DIRECTS THAT:

(1) within 21 days the respondent in the principal proceedings make discovery on oath of all documents relating to the supply including supply price of unleaded petrol and super petrol by or through the respondent, which includes subsidiaries, to Caltex Kippa-Ring between 6 March 1992 and 27 May 1993 and to National Northgate between 8 January 1994 and today's date. Those documents extend to those documents which are in the possession, custody or power of Caltex or which were once but are no longer in Caltex's possession, custody or power.

(1) liberty to apply on one day's notice.

(2) liberty to the applicant to further plead the statement of claim when it is in a position properly to do so.

N.GXk2:	Settlement and entry of orders is dealt with in
Order 36 of the F . -

g	)
QUEENSLAND DISWCT REGISTRY	) No. QG 95 of 1994
)

BETWEEN : WREDA PTY LTD .*

Applicant

AND

Respondent

CORm: Spender J

lX!ACJ3: Brisbane

DATE: 5 July 1995

REASONS FOR JUDGMENT

There are two notices of motion before the court, each of which has been the subject of submissions and has been adjourned on a number of jprevious occasions. The central motion in terms of its commercial and practical effect is that filed by Caltex Oil (Australia) Pty Ltd ('Caltexl) on 2 0 April

1995 which seeks, inter alia, the discharge of an injunction

which I granted on 16 August 1994 being the third order I made

on that day.

The notice of motion filed 2 0 April 1995 by Caltex sought extensive relief, namely:

1.  the applicant's further amended statement of claim filed on 28 March 1995 be struck out;

2.  the injunction granted in this action by the Honourable Justice Spender on 16 August 1994, being order no. 3 made on that date, be discharged;

3 . a1 ternati>ely to paragraphs l and 2 above, on or before 5.00pm on 5 May 1995 the applicant file and serve the further and better

particulars set out i n paragraph 4 hereof , f a i l ing which the further amended statement

out; o f claim f i led on 28 March 1995 be struck

4 .      a l ternat ively t o paragraphs 1 , 2 and 3 above,

on or before 5.OOpm on 5 May 1995 the	applicant f i l e and serve the following
further and	be t ter particulars:

( a ) precise de ta i l s o f the occasions on

price support including:	which the respondent fai led t o provide
( i ) the leve l o f price support

requested;

( i i)    the leve l o f price support required t o enable the applicant

se l l ing petroleum products t o i t s ' t o remain profi table whilst

customers at prices which were competitive with those o f fered by the appl icant 's competitors';

the prices at which the applicant

(iii)	was required t o se l l each
petroleum product i n order t o
remain 'competi t ive ' with the
applicant 's competitors;
( i v )	the i d e n t i t y o f the applicant's

competitors; and

( V )         the amount by which the applicant

suf fered l o s s by reason o f that which the respondent discriminated against the applicant as compared with other Caltex franchisees, including: loss o f support;

( b ) precise de ta i l s o f the occasions on

( i )      the dates o f each such occasion;

(ii) the other Caltex franchisees; (iii) t h e d e t a i l s o f t h e

discrimination, including the

nature and extent o f the

p r e f e r e n c e g iven by t h e respondent t o the other Caltex franchisee or franchisees; and

(c)	the particulars requested in paragraphs
2 , 3 , 4 , 5 and 8 o f the l e t t e r from the
respondent ' s s o l i c i t o r s t o t h e
applicant's s o l i c i t o r s dated 29 March

1995;

5.  alternatively to paragraphs 1 and 2 above,

the applicant comply with order no. 4 made by the Honourable Just ice Spender on 10 March

1995 on or before 5.00 pm on, 5 May 1995,

failing which the applicant 'S further amended statement of claim filed on 28 March 1995 be struck out;

6.  the applicant pay the respondent's costs of and incidental to both this application and to the hearing on 10 March 1995; and

7.  such further or other orders as this Honourable Court deem meet. "

In addition to that notice of motion, by notice of motion filed 24 May 1995, the applicant in the principal proceedings, Afreda Pty Ltd ('Afreda') sought particulars relating to the supply including supply price of unleaded petrol by or through Caltex to any of Afreda's competitors. The period sought in respect of that discovery covered, but was not limited to, supply to Caltex Kippa-Ring between 6 March 1992 and 27 May 1993 and to National Northgate between 8 January 1994 and 22 March 1995, the last date having a reference probably to the date of filing of the notice of motion.

As a reference to the "Third Further Amended Statement of Claim" might indicate, the principal proceedings have had a chequered history. I am conscious of the consequences to the applicant, and to Mr and Mrs Munro who are the principal shareholders, of the orders that I propose to make, but after anxious consideration, I will discharge the injunction of 16 August 1994 although there is a question, as to which I wish to hear counsel, as to the date from which that discharge should operate. My present view is that I should fix Friday week as that date.

4

Further, I will strike out the Third Further Amended Statement of Claim filed 2 June 1995, but I will permit the applicant to file a further statement of claim when it is in a position properly to do so. Further, while my attitude to the suitability of doing so has wavered, I will adopt the extraordinary course of ordering, prior to delivery of any further statement of claim, limited discovery by Caltex within a period which I foreshadow as 28 days, of the information sought in respect of Caltex Kippa-Ring and National Northgate only, and during the periods for Caltex Kippa-Ring of 6 March 1992 to 27 May 1993, and in respect of National Northgate, from 8 January 1994 to a date to be specified.

I want to state as succinctly as I can my reasons for reaching those conclusions.

Afreda operates a Caltex branded service station at Deagon. On 31 August 1992 Afreda and Caltex entered into a dealer agreement pursuant to which Afreda has since 1 September 1992 conducted and continues to conduct its business as a franchisee, with Caltex as franchisor, from the premises at 180 Braun Street, Deagon.

On 10 June 1994 Caltex served a notice of termination of franchise agreement on Afreda, pursuant to S. 16(3) of the petroleum Retail Marketina Franchise Act 1980. That notice of termination, the validity of which is disputed by the applicant, is an extensive document of some 25 pages

5

and covering some 14 grounds. The document purports to terminate the franchise agreement, and sought delivery up of the premises on or before Friday, 22 July 1994.

I do not set out this very extensive document in these reasons, but the nature of the grounds relied on by Caltex are not irrelevant to the conclusions which I have reached. I t is perhaps sufficient to say that from 1 November 1993, Afreda ceased paying anything under the dealer agreement until some orders that I made on 16 August 1994 to which I will refer in some detail.

At least until 22 July 1994 then, the applicant

Afreda was a franchisee and Caltex was a franchisor under the

Petroleum Retail Marketing Franchise Act 1980. Section 16 of

that Act is centrally relevant. I t provides:

" (1) A franchisor may terminate the franchise

agreement in accordance with the succeeding

provisions of this section, but not otherwise.

(2) A franchisor shall not terminate the

franchise agreement except on one or more of the

following grounds:

(a)	the franchisee is unable, by reason of physical or mental incapacity, to control the operation of the marketing premises;
(b)	the franchisee makes a fraudulent misrepresentation in connection with the operation of the marketing premises;
(c)	the franchisee performs an act, omits to perform an act, or makes a statement, where the act or omission, or the making of the statement:
(i) constitutes an offence punishable by imprisonment or, in the case of a

franchisee being a body corporate, by

a f i ne o f $500 or more; and

(ii) in the case of a franchisee being a natural person, tends t o show t h a t he i s dishonest or i s otherwise not o f good character;

( d )	i n connection w i t h the operation o f the marketing premises, the franchisee performs an ac t , omits t o perform an ac t , or makes a statement (other than an ac t , omission o r statement referred t o i n paragraph ( c ) ) , where the act or omission, or the making o f the statement, const i tu tes a serious contravention o f a provision o f any law;
(e)	the franchisee misrepresents the octane

rating o f , or w i l f u l l y adulterates, motor fuel supplied t o him under the franchise agreement ;

(f)	without the consent o f the franchisor, the franchisee w i l f u l l y passes o f f motor fuel supplied t o him by a person other than the franchisor or a related corporation a s being motor fuel supplied t o him by the franchisor or a related corporation;
( g )	the franchisee f a i l s t o operate the

marketing premises (otherwise than by reason o f an industrial dispute or an interruption, reduction or cessation o f the supply o f motor fuel or the compliance by the franchisee with an emergency l a w as defined by subsection l O ( 7 ) or w i t h a direction or order made under such a law):

(i) for a period exceeding 7 consecutive

days; or

( i i) for a l e s ser period or lesser

periods, where the fai lure t o operate the premises during that period o r those periods i s unreasonable, having regard t o the in teres t s o f the franchisor, the normal operation o f the premises and the reason for the fai lure;

( h ) the franchisee operates the marketing

premises i n a manner l i k e l y t o cause in jury

t o persons or property;

( j ) the franchise otherwise commits a breach o f

a provision o f the franchise agreement;

( j a ) the whole or a substantial p a r t o f the

marketing premises i s , or i s t o be , acquired by, or by a public authority o f , the Commonwealth, a State or the Northern Terri tory under a l a w relating t o the compulsory acquisition o f land;

( j b ) the sale o f motor fuel a t the marketing

premises i s prohibited by or under a l a w

re lat ing t o the use o f land;

( k ) the whole or a substantial p a r t o f the marketing premises i s destroyed, or i s damaged t o such an extent as t o render the operation o f the premises impracticable, except where the franchisor or a related corporation i s responsible for the destruction or damage.

3. The termination o f a franchise agreement by the franchisor shall be e f fec ted by the franchisor serving on the franchisee notice i n writing:

( a )	informing the franchisee that the agreement i s t o be terminated on a specif ied date, being a date tha t , subject t o subsection ( 8 ) , i s not earlier than 30 days a f t e r the day on which the notice i s served; and
(b )	se t t ing out f u l l particulars o f the ground or grounds, including a statement o f the fac t s relating t o each ground, upon which the termination i s based.

( 4 ) Where a franchisor serves notice on the franchisee under subsection (3) terminating the agreement, the franchisee may apply t o a court for an order declaring the notice t o have had, o r t o

have, no e f f e c t .

( 5 ) Where an application i s made under subsection

( 4 ) , the Court may, by order, e i ther:

( a )	declare the notice referred t o i n that subsection t o have had, or t o have, no e f f e c t ; or
( b )	declare that notice t o have terminated, or t o terminate, the agreement on the date speci f ied i n the notice or on such l a t e r date as i s specif ied i n the order;

and may, i n e i ther case, make such ancil lary or consequential orders as it thinks f i t , including orders direct ing the preparation and execution o f documents.

( 6 ) I n a n y p r o c e e d i n g s under s u b s e c t i o n ( 4 ) , the

c o u r t s h a l l n o t d e c l a r e t h e n o t i c e r e f e r r e d t o i n

t h a t s u b s e c t i o n t o h a v e t e r m i n a t e d , or t o t e r m i n a t e ,

t h e f r a n c h i s e agreement u n l e s s :

( a ) a ground s p e c i f i e d i n the n o t i c e i s

e s t a b l i s h e d b y the f r a n c h i s o r t o the

s a t i s f a c t i o n o f t h e c o u r t ; and

( b ) t h e c o u r t i s s a t i s f i e d t h a t the t e r m i n a t i o n

o f the agreemen t and a n y r e l a t e d agreemen t

or a g r e e m e n t s i s j u s t and e q u i t a b l e , h a v i n g

r e g a r d t o a l l t h e c i r c u m s t a n c e s .

( 7 ) Without l i m i t i n g the g e n e r a l i t y o f paragraph

( 6 ) ( b ) , t h e c i r c u m s t a n c e s r e f e r r e d t o i n t h a t

paragraph i n c l u d e the c o n d u c t o f t h e f r a n c h i s o r and

t h e f r a n c h i s e e a f t e r t h e t i m e when t h e f r a n c h i s o r

became aware o f t h e e x i s t e n c e o f the c i r c u m s t a n c e s ,

or t h e o c c u r r e n c e o f the e v e n t , c o n s t i t u t i n g the

ground r e f e r r e d t o i n paragraph ( 6 ) ( a ) .

The c u r i a l h i s t o r y of the p r e s e n t p r o c e e d i n g s i s

f a i r l y summarised i n a c h r o n o l o g y handed u p t o t h e court on 27

J u n e 1 9 9 5 b y c o u n s e l for C a l t e x . I i n c o r p o r a t e t h a t

c h r o n o l o g y i n these r e a s o n s :

v 07.05.85 A p p l i c a n t commences t o o p e r a t e .

31 .08 .92 D e a l e r agreement e n t e r e d i n t o .

01.09.92	A p p l i c a n t	commences	b u s i n e s s .
01.09.93	A p p l i c a n t	i n d e f a u l t

01.11.93 A p p l i c a n t c e a s e s p a y i n g a n y t h i n g

u n d e r d e a l e r agreement .

11.11.93 Demands on a p p l i c a n t and g u a r a n t o r s .

15.12.93 District C o u r t d e b t p r o c e e d i n g s

commenced b y C a l t e x .

10.06.94 C a l t e x i s s u e s n o t i c e o f t e r m i n a t i o n

u n d e r PRMF A c t s p e c i f y i n g t e r m i n a t i o n

o n 2 2 / 7 / 9 4 .

22.07.94	A p p l i c a n t	i s s u e s	Federa l	C o u r t
p r o c e e d i n g s .

Spender J orders that Caltex be enjoined from re-taking possession on certain undertakings.

Applicant f i l e s statement o f claim

(No. 1 ) - simply claiming r e l i e f

under S 1 6 ( 4 ) o f the Act.

Defence and cross-claim f i l e d .

Applicant f i l e s reply.

Spender J makes direct ions , orders security.

Amended	statement o f claim f i l e d	(No.
2 )
Amended	reply f i l e d .

Caltex f i l e s l i s t o f documents.

Cal tex ' s so l i c i to r s write complaining about lack o f particulari ty and about various matters o f pleading.

A p p l i c a n t ' s s o l i c i t o r s w r i t e

demanding discovery o f : ( a ) pricing arrangements between

Caltex and a l l other re ta i l

ou t l e t s within the relevant

market area;

(b )	documents	re	non-branded	C a l t e x
s i t e s .

Cal tex 's so l i c i to r s reply saying our

c l i en t was t o discover documents i n relation t o the price support system generally and i n relation t o the relevant area for the period from 1/3/92.

Caltex f i l e s defence and cross-claim

t o amended statement o f claim.

Applicant's	so l i c i to r s	say	response
i s evasive.

Spender J gives direct ions , including giving the applicant leave t o del iver

a further amended statement o f c l a i m

by 22/3/95.

Applicant delivers further amended statement o f claim (No. 3 ) but says replacement schedules w i l l short ly be delivered.

29.03.95 Cal tex ' s so l ic i tors write complaining

again about lack o f part iculari ty and

absence o f schedules.

30.03.95 Applicant ' S so l i c i tor s say they are

wi l l ing t o provide	particulars	and
schedules.

19.04.95 Caltex f i l e s notice o f motion seeking

s t r ik ing out o f pleading and

discharge o f injunction.

27.04.95 Spender J. gives d i rec t ions ,

including a direction that the applicant have leave t o re-plead or t o supply particulars.

11.05.95	Applicant delivers further amended
pleading (No. 4 ) .
16.05.95	A ~ v l i c a n t ' s so l ic i tors write re d>kcovery - demanding a response by
19.05.95.
24.05.95	Applicant ' S so l ic i tors f i l e not ice o f
motion re discovery.
26.05.95	Spender J. s t r i kes out p a r t s o f the statement o f claim, adjourns both motions, and orders the applicant t o pay costs o f 27/4/95 and 26/5/95.
02.06.95	Applicant delivers further statement
o f C l a i m (No. 5).
06.06.95	Spender J. makes d i r e c t i o n s permitting the applicant t o further amend or f i l e a fresh document no
l a t e r than 4.00 p.m. on 14/6/95.
14.06.95	No further documents received. "

I t w i l l be necessary t o f l e sh out some o f the

matters referred t o i n that chronology, but as tha t t e r s e record shows, there has been now f i v e attempts by the

applicant t o plead i t s case.

The orders tha t I made on 16 August 1 9 9 4 were as

follows -

"	UPON THE FOLLOWING UNDERTAKINGS BEING PROVIDED:
( 1 ) The applicant undertaking t o f u l f i l a l l o f

i t s future obligations t o the respondent

under the Dealer Agreement dated 31 A u g u s t

1992.

( 2 ) The applicant undertaking t o pay t o any

party adversely a f fec ted by the in t e r - locutory injunction or undertaking such compensation ( i f any) a s the Court th inks

j u s t , i n such manner a s the Court d i rec t s .

( 3 ) Mr Daran Munro undertaking t o pay t o any

party adversely a f f e c t e d by t h e interlocutory injunction or undertaking such compensation ( i f any) a s the Court th inks

j u s t , i n such manner a s the Court d i rec t s .

THE COURT ORDERS THAT:

1 .        By 4 .00pm on the first working day o f each month the applicant pay the sum o f $1,000.00

t o the respondent a t the o f f i c e o f i t s

s o l i c i t o r s , Corrs Chambers Westgarth o f

Level 2 1 , Comalco Place, 12 Creek S t ree t ,

Brisbane i n the State o f Queensland i n diminution o f the sum owing by the applicant t o the respondent.

2 .        By 4 .00pm on the f i r s t working day o f each month the applicant pay a sum by way o f in teres t calculated a t 9% per annum on the sum o f $100,000.00 t o the so l i c i to r s o f the respondent, Corrs Chambers Westgarth o f

Level 2 1 , Comalco Place, 12 Creek S t ree t ,

Brisbane i n the State o f Queensland, such sum t o be held by the respondent's

so l i c i to r s pending the determination o f the

principal proceedings.

3 .	On the undertakings o f f e r e d , pending the
hearing and determination o f t h i s

proceeding, the respondent whether by i t s e l f , i t s servants or agents or howsoever be restrained from taking any steps t o take possession o f the premises from which the applicant conducts i t s business a t 180 Braun

S t ree t , Deagon i n the State o f Queensland.
4 .	The c o s t s o f t h i sapp l i ca t ion be reserved. "

In addition t o those orders, I gave directions

including a direction seeking the Registrar t o set t h e matter

down for hearing. On 25 November 1994 I made further

direct ions , the e f f e c t o f which i f complied wi th , would be

that the t r i a l o f the principal proceedings would be l i s t e d

for the call-over o f matters early i n December 1994. I am

conscious o f the fac t that there were attempts i n December

1994 t o mediate a settlement i n the matter which were

unsuccessful.

On 10 March 1995 I said t o Mr Hoskin, t h e so l i c i tor

appearing for Afreda:

"	Well, do I gather from t h a t t h a t you do not know what your case i s a t the moment and you just hope
a case where other people i n the area got that i f you can get t h i s material you might have
discounts that you d i d not get? "

Mr Hoskin said:

" We say t h a t we know tha t , and that was the case. "

I said:

" Well , have you ident i f i ed the non-branded o u t l e t s

that you say received t h i s price support? "

And he said:

" I have not got instructions from our principals i n

Victoria i n relation t o tha t , but mention w a s made

o f two s i t e s . Unfortunately, I have--- "

And I interrupted him:

" I am not concerned about what i s mentioned between principals i n Victoria. In the pleadings i s there any suggestion that Caltex supplied discounts or price supports t o ou t le t s i n the market area, whatever that market area i s , namely, Kippa-Ring

and nominated non-branded o u t l e t s which t h e y

f a i l e d t o provide t o you a t Deagon? "

Mr Hoskin s a i d :

No, your Honour. I do n o t unders tand . My under-

s t a n d i n g i s t h a t t h a t i s n o t i n t h e p lead ing . "

Con t inu ing :

"	But t h a t i s what you want t o complain abou t , i s
i t? "

And Mr Hoskin s a i d :

" I t i s , your Honour. "

He a l s o , on page 5 o f t h e t r a n s c r i p t o f t h e

proceedings on 10 March t h i s year , acknowledged t h a t t h e

amended s t a t emen t o f c l a im , a s a t t h a t d a t e , d i d n o t i n c l u d e

p a r t i c u l a r s o f the a l l e g a t i o n s o f l o s s . In r e s p e c t o f t h a t

m a t t e r M r Hoskin s a i d :

" I s e e n o problem w i t h t h a t . "

Two days b e f o r e t h a t exchange the s o l i c i t o r s f o r

C a l t e x had w r i t t e n t o t h e p r inc ipa l s ' s o l i c i t o r s , McPherson

and K e l l y i n Dandenong, saying i n p a r t :

" Our c l i e n t h a s advised u s t h a t A f reda P t y Ltd h a s

f a i l e d t o pay t h e q u a r t e r l y f r a n c h i s e f e e f o r t h e

q u a r t e r end ing 31 December 1994. For your

i n f o r m a t i o n enclosed i s a copy o f a l e t t e r which

o u r c l i e n t s e n t t o Afreda P t y L t d on 16 January

1995. We reques t t h a t your c l i e n t s p l ease make a

payment o f $1,182.00 t o our c l i e n t immedia te ly .

T h i s should b e a t t ended t o p r i o r t o F r i d a y ' s

d i r e c t i o n s hear ing . "

Ultimately a Third Further Amended Statement o f

Claim was f i l e d on 2 June 1 9 9 5 . I t i s necessary t o set out

some part o f t ha t pleading i n some de ta i l .

. . .

5 ,	The Applicant by t h i s proceeding i s making application t o the Court pursuant t o sub- section 1 6 ( 4 ) o f the PRMFA for an Order declaring the Notice t o have had, or t o
have, no e f f e c t .
. . .
7 .	~t i s an implied term o f the Franchise
Agreement that the Franchisor w i l l not
engage i n conduct l i k e l y t o damage the
a b i l i t y o f the franchise t o operate the
franchise pro f i tab i l i t y .
8 .	The applicant says further that the
Franchise Agreement and an ear l ier s i m i l a r form o f the Franchise Agreements which previously had a f f e c t [ s i c ] between the parties were each intended t o operate i n conjunction w i t h a price support system provided, by the Respondent. Such system
being ei ther:
( a ) That l a i d out i n a document en t i t l ed 'Agreement by Dealer Calprice: Caltex

Price Assistance System' dated 23

March, 1987; or

(b) That which is described as 'Market Area

Pricing' ('MAP') a s introduced from 1

A p r i l , 1989 , whichever being applicable

being hereafter referred t o a s 'Price

Support Agreement'.

9 .        In relation t o the MAP system:

( a ) I t w a s term o f the price support that

support would be granted t o enable the

Applicant t o s e l l a t a p r o f i t ;

(b)	It was warranted and represented that
MAP system places the applicant

competitively i n the market place;

(c) It was warranted and represented that

MAP price i s the same for every dealer

within the area;

(d) It was warranted and represented hat

[ s i c ] no select ive or preferential support would be o f fered t o individual dealers.

Such r e p r e s e n t a t i o n s a s t h e y t h e y appear i n

w r i t i n g a r e c o n t a i n e d a n d / o r e v i d e n c e d i n

the p a p e r w r i t i n g e n t i t l e d ' The Cal tex

p r i c i n g s y s t e m ' .

1 0 . I n b r e a c h o f t h e MAP p r i c e s u p p o r t s y s t e m

a n d / o r a b r e a c h o f the i m p l i e d t e r m o f the

F r a n c h i s e Agreement a s r e f e r r e d t o i n

paragraph 6 above d u r i n g a p e r i o d o f t h e 8 t h

J a n u a r y , 1994 t o the p r e s e n t , t h e Respondent

b y i t s e l f a n d / o r i t s w h o l l y owned s u b s i d i a r y

h a s s u p p l i e d t h e ' N a t i o n a l s i t e ' i n

N o r t h g a t e a c o m p e t i t o r w i t h i n the A p p l i c a n t s

[ s ic] Market Price Area u n l e a d e d p e t r o l a t a

p r i c e c h e a p e r t h a n t h a t a t wh ich t h e

Responden t s o l d p e t r o l t o the A p p l i c a n t .

PARTICULARS

On the 2 8 t h o f J u n e , 1994 a t 2.40pm

a C a l t e x Tanker number TKl61 and

r e g i s t e r e d 607-EGG d e l i v e r e d a l o a d

o f f u e l t o t h e n a t i o n a l s i te a t

N o r t h g a t e . Throughout t h a t and the

f o l l o w i n g d a y t h e n a t i o n a l s i t e s o l d

u n l e a d e d p e t r o l t o i t s c u s t o m e r s a t

59.9 c e n t s p e r l i t re .

The A p p l i c a n t purchased from the

Responden t on the 2 8 t h o f J u n e , 1994

a l o a d o f f u e l and was charged 60.8

cents p e r l i t r e .

11. The Responden t i n s e l l i n g or a l l o w i n g s u c h

s a l e s t o the N o r t h g a t e s i te h a s d i r e c t l y

a s s i s t e d the A p p l i c a n t ' s c o m p e t i t i o n t o the

d e t r i m e n t o f t h e A p p l i c a n t i t s f r a n c h i s e e

a n d / o r c a u s i n g t h e A p p l i c a n t t o s u f f e r loss

and damage.

FURTHER

1 2 . Dur ing the per iod 2 4 t h March 1992 t o the

2 7 t h May 1992 the Responden t gave t h e C a l t e x

a t k i p p a - r i n g , a c o m p e t i t o r i n the

A p p l i c a n t ' s MAP a rea a s p e c i a l d e a l be tween

whereby the C a l t e x a t K i p p a - r i n g was

guaran teed a margin o f 2 .8 c e n t s p e r l i t r e

c a l c u l a t e d o n t h e r e t a i l p r i c e o f p e t r o l

s o l d	b y Cal t e x K ippa - r ing .
The A p p l i c a n t re l ies o n the
i n f o r m a t i o n p rov ided i n S c h e d u l e 'C '
a t t a c h e d h e r e t o .

13.  As a result the Applicant suffered loss and damage due to the fact the purchase price of petrol obtained by the Applicant from the Respondent wds greater than the purchase price of petrol supplied to the Caltex at Kippa-ring. "

There are two matters arising out of paragraph 8 of that version of the applicant's statement of claim which should be referred to, although, of course, no final determination of any question is appropriate prior to any final hearing. The first is the reference to the 'Caltex Price Assistance System'. That document, which is dated 23 March 1987, on its face, purports to provide a discretionary ex gratia scheme for making price concessions by Caltex in response to requests by a dealer. Its basis for relief is something which I have, at the moment, difficulty in appreciating.

The second matter referred to in paragraph 8 refers to an extract of a document which is exhibit DM3 to the affidavit of Mr Munro filed 22 July 1994. The left hand column of that single page document has the rubric 'The Caltex Pricing System' and in the first three paragraph describes that system, which it says is a central and completely transparent pricing policy. The third paragraph concludes with the statement:

" The Caltex pricing manager then assesses the situation and each day posts a wholesale price for each MAP area, which is designed

to position Caltex competitively in that

area. The MAP price is the same for every dealer in that area. No selective,

behind-the-scenes support is offered to individual dealers. The prices are posted on the electronic system so they are

complete1 y transparent. "

The matter that may be mentioned in respect of this is the question of who is a dealer to which that system relates. The application of that system, and in particular, whether it applies to retailers who are not franchisees of Caltex, is a matter that seems to me to be at least seriously arguable. It is the question of differential pricing which seems to be, as best I can presently understand it, at the core of the allegations by Afreda.

The contention by the applicant concerning the discharge of the injunction and the striking out of the statement of claim, but more particularly the former, is that there has not been shown sufficient change to warrant the discharge of the injunction.

I think it is fair to say that it is accepted that the statement of claim of 2 June 1995 is inadequate but it was submitted that professional financial advice was required before that could be satisfactorily particularised, and that the applicant, Afreda, should be permitted further opportunity to permit that to happen. I was informed that while it was said that professional advice was necessary before a particularised statement of claim might be able to be presented, no such attempts to secure that assistance had been effected as yet. Moreover, it was made plain on 6 June 1995

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that a further and final, if I can use that term without being sarcastic, opportunity was being provided to permit rectifi- cation of the statement of claim.

No such amendments of any kind were made to the third further amended statement of claim of 2 June prior to the listing of the motions and the hearing of submissions concerning them on 27 June 1995.

If the circumstances are such that it is the appropriate course to follow, an interlocutory injunction may be dissolved or varied at any time. A court will not dissolve or vary an interlocutory injunction unless it is satisfied that there are altered circumstances or the evidence is such as make the continuance of the interlocutory injunction inappropriate.

One feature touching that question is where there has not been a sufficient prosecution of the principal proceedings with due diligence. In this particular case, notwithstanding what appears to be the numerous and weighty grounds in the notice of termination delivered by Caltex, I enjoined Caltex from re-entering possession of the site at Deagon on 16 August 1994.

Directions were then, subsequently, made which had

the effect, if complied with, that the principal proceedings

could have been heard expeditiously and determined. The

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present position, now nearly 11 months later, and after a whole series of attempts to plead a proper statement of claim, is that the principal proceedings are not much further advanced. The first substantive amendment to the statement of claim was on 2 December 1994. It was further amended on 28 March 1995, 11 May 1995 and 2 June 1995. Even the most recent statement of claim, which was not amended pursuant to the invitation given on 6 June 1995, suffers from deficiencies which was candidly recognised by counsel for Afreda.

It is highly relevant that as of today no particulars of loss of damage are given, and moreover there is the concession that that cannot be done until the professional assistance is engaged, and that is a step which has not yet been undertaken.

Another important factor in my decision to discharge the injunction is that Caltex was enjoined by me on Afreda giving certain undertakings to the court, and abiding certain orders that I made. At the time when I granted the relief to Afreda against the re-entry of possession, I made it plain that the undertakings and orders required punctilious compliance.

There has, however, been breaches of those undertakings and orders. There has been, I am satisfied, a failure to pay the quarterly franchise fee of $1182 to which I have referred and there has been a failure to pay for fuel

2 0

deliveries by cash or bank cheque. So much is admitted by Mr Munro in his most recent affidavit. There has been a dishonour of a cheque in respect of a fuel delivery on 8 June

1 9 9 5 ; there has been a failure to accept full bulk tanker

loads, and of the nine payments due to be paid to the respondent's solicitors on the first of each month pursuant to the order that I made on 16 August, at least seven of those were paid late.

I am conscious that in many respects the breaches have been of only a few days, and that even in respect of the dishonoured cheque that matter has been rectified subsequently. And I am satisfied also that, on some earlier and other occasions, and with other franchisees, less than full bulk tanker loads have been accepted. Nonetheless, there are repeated instances of breaches of the undertakings which the court accepted as the price for enjoining Caltex from entering into possession.

A further factor which concerns me is that the dealer agreement, without renewal, expires on 31 August 1 9 9 5 . It is highly unlikely that Caltex would consent to any extension or renewal of that agreement. Section 17 of the petroleum Retail Marketina Franchise Act gives the franchisee some security of tenure. It specifies, as I have indicated, breaches of the franchise agreement as a matter relevant to the ground on which a franchisor can fail or refuse to renew. There is an admitted passing off of non Caltex fuel on 7 May

2 1

1994. Other acts of passing off are alleged but not admitted. Moreover, it appears clear that from paragraphs 28 to 44 of the defence and cross-claim of Caltex, and paragraph 18 of the amended reply and defence to the cross-claim which was filed on 2 December 1994, that a number of amounts required to be paid under the franchise agreement have not been paid. Those admitted failures relate to rental, improvement rent, base franchise fee, a quarterly franchise fee, and some petrol products.

There are, then, admitted breaches of the franchise agreement which permit the franchisor to fail or refuse to renew the franchise agreement. I recognise, of course, that the court's intervention may nonetheless be sought, but having regard to the nature and extent of the admitted breaches of the franchise agreement, it seems to me that those historical and undisputed facts are highly relevant in whether I should discharge the injunction.

The next matter in relation to the discharge of the injunction concerns my inability to understand what precisely Afreda is claiming as a result of Caltex's conduct. Their claim seems to be, in the pleadings thus far, that since 6 March 1992 Caltex has failed to provide sufficient price support as would enable the applicant to remain profitable and that as a result Afreda has suffered loss or damage. That claim is that Afreda is operating and continues to operate an unprofitable business.

2 2

As to the complaint in the pleading of a failure to provide such price support as would enable the applicant to remain profitable, there is, it seems to me, an important difference between trading profitably and not trading as profitably as one would like, or as one would lawfully be entitled to expect. The complaint of Afreda has been the former, although it was somewhat muddied by statements from the bar table on the last occasion, the 27 June 1995, by counsel for Afreda. This aspect highlights the very real embarrassment caused by the deficiencies in the applicant's pleading, particularly the continuing failure to plead loss or damage as the Federal Court rules require.

There is another small matter that has a relevance to that aspect and that is the fact that there was, it appears, a judgment obtained for approximately $9000.00 by the Commissioner of Taxation against the applicant in the Magistrates Court in May of this year.

Mr Munro, in his affidavit filed in court on 27 June 1995, speaks of the circumstances in relation to which the

cheque later dishonoured was presented, and in relation to personal cheques which were provided contrary to the orders that I made. It is true that those cheques were honoured on presentation, and that, as a consequence, Caltex received full payment in respect of the subject matter of each cheque, but that was not the terms on which Caltex was enjoined.

2 3

In respect of the partial tanker loads he says that:

. ..I have previously been supplied by the

Respondent with partial tanker loads of fuel, as have other Franchisees of the Respondent, and this has not caused the Respondent any problem. "

In relation to the judgment obtained by the commissioner of Taxation he says that he was not aware of this judgment until 26 June 1995.

He says that the first formal communication he recalled receiving in respect of that claim was a statutory demand dated 1 June 1995, as a consequence of which he contacted the Taxation Department and made an appointment to see an officer in respect of the demand.

If it be the case that Afreda is not trading profitably then it is obviously in everybody's interests that the matter be brought to an end and that Afreda be permitted to pursue its claim for damages which, in the circumstances, would seem to be clearly an adequate remedy.

If on the other hand the position is different to what has been thus far asserted, namely that there has been a failure to provide such price support as would enable Afreda to remain profitable, and that some other assertion is made concerning the nature of the trade that has not yet been pleaded, then it seems to me to be now, some 10 months or more after I made the orders, quite wrong and unfair to permit the

2 4

continuance of the injunction in the absence of any such

pleading.

I have had regard very much to the question of the balance of convenience, but I have had regard also to the factors to which I have referred, and in all the circumstances, as a matter of fairness and equity, it seems to me that I should discharge the injunction which I made on 16 August last year.

I will hear counsel as to the date from which that discharge should operate. I am minded to make it 4 pm on Friday week. As to the striking out of the statement of claim, I have already touched on the questions which were canvassed in more detail in the submissions by counsel for Caltex on 27 June 1995. It is admitted that there is a series of deficiencies in the present statement of claim, and in all the circumstances it seems to me that I should strike out the statement of claim and permit Afreda to re-plead a case when it is in a position properly to do so.

As to the notice of motion by Afreda, while it is unusual to make an order, I am minded in the present circumstances - notwithstanding that my opinion has fluctuated on this aspect of the matter - to make an order requiring Caltex, prior to the issue of any statement of claim by Afreda, to make discovery on oath of all documents that they have or once had in their custody, possession, or power,

25

relating to the supply, including to the supply price of unleaded petrol by or through Caltex, to either Caltex Kippa- Ring, between 6 March 1992 and 27 May 1993, and National Northgate, between 8 January 1994 and today's date.

At the moment the notice of motion seeks information only in respect of unleaded petrol, but I expect that that ought to include unleaded petrol and super petrol. For these reasons, I propose to make the orders I have indicated.

[After discussion with Counsel]

(1) In respect of the orders made 16 August 1994, I order that the injunction contained in order number 3 of those orders be discharged at 4 pm on 14 July and that on and from that date the applicant be released from its undertaking numbered 1 in that order and that the orders numbered l and 2 of that order cease to be in force.

(2) I direct that within 21 days the respondent in the principal proceedings make discovery on oath of all documents relating to the supply, including supply price, of unleaded petrol and super petrol by or through the respondent, which includes subsidiaries, to Caltex Kippa-Ring between 6 March 1992 and 27 May 1993 and to National Northgate between 8 January 1994 and today's date. Those documents extend to those documents which are in the possession, custody

26

or power of Caltex or which were once but are no

longer in Caltex's possession, custody or power.

(3) The court orders that the applicant pay to the

respondent in the principal proceedings the costs of

27 June 1995, and the costs of today.

I grant liberty to apply on one day's notice. The

third further amended statement of claim filed 2 June 1995 is struck out. I grant liberty to the applicant to further plead the statement of claim when it is in a position properly to do

80

I certify that this and the

prece'dinq pages are a true copy of the reasons for judgment herein of the Honourable Justice

J.E.J. Spender.	-
'C

Associate

Date: 5 July 1995

Counsel for the applicant:	Mr J. D. W. Linklater
instructed by:	Atherton & Company
Counsel for the respondent:	Mr P. A. Freeburn
instructed by:	Corrs Chambers Westqarth
Date of Hearing:	27 June 1995