Beckford Nominees Pty Ltd v The Shell Company of Australia Ltd

C A T C H W O R D S

ESTOPPEL - claim under statute - provision against contracting

out -

whether precludes reliance-on estoppel - claim that court given

jurisdiction by estoppel.

STATUTE - implication in.

Petroleum Retail Marketins Franchise Act, 1980	ss.3(1), 3(2), 7, 13,
14, 15, 17, 17A, 17B

Beckford

N o m m e e s Pty.

Ltd.

v. The Shell Company of Australia Llmlted

QLD G130 of 1986

PINCUS J.

BRISBANE

1 OCTOBER 1986

IN THE FEDERAL COURT OF AUSTRALIA

)

9UEENSLAND DISTRI-CCmGISTRY

)	QLD G130 of 1986

GENERAt DIVISION

BETWEEN:

BECKFORD NOMINEES PTY. LTD.

Applicant

AND: THE SHELL COMPANY OF AUSTRALIA LIMITED

I	Respondent
i
I
I I

1 MINUTES OF ORDER

I I I I

JUDGE MAKING ORDER:

PINCUS J.

DATE OF ORDER:

1 OCTOBER

1986

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:

1. The appllcation be dlsmlssed.

I --

The appllcant pay the respondent's costs of and incidental to the proceedings, to be taxed.

Settlement and entry

of orders 1 s dealt wlth In

Order 36 of the Federal Court

Rules.

, r k

>; Q

IN THE FEDERAL COURT OF AUSTRALIA

)	QLD G130 of 1986

9uEENSLAND DISTRICT REGISTRY

I	GENERAL DLVISlON	)
I I

BETWEEN:

BECKFORD NOMINEES PTY. LTD.

Applicant

AND: THE SHELL COMPANY OF AUSTRALIA LIMITED

Respondent

PINCUS J.

1 OCTOBm 1986

REASONS FOR JUCGMENT

Thls is an application

by the former lessee of

a servlce

station for an order having the effect

of extending Its lease,

which explred on 19

September

1986.

The

maln

basis

of the

1	i	__	application 1 s	that the respondent lessor promlsed to extend	the
i

lease or, to

put It a llttle

lower,

gave

the

applicant

understand that it would

s o .

1 s common ground that the lease

question

s a

"franchise agreement" within the definition in

s . 3 ( 1 )

the

Petroleum Retall Marketinq Franchise Act 1980, and that

the lessor

is a

"franchisor" within the meanlng of the Act. Section

17 of

the Act, subject to certain other provisions, makes it unlawful

for a franchisor to fail or refuse to renew

a franchise agreement,

except in certain circumstances which it is

not necessary to set

out here; for

it is also common ground that,

unless the operation

of the Act has been affected by the dealings between the parties,

there is no right to renewal under s.17 and

ss.17A and 17B which

relate to it. That point needs

some explanation.

I ,<

Subsections ( 2 ) and ( 3 ) of s.13

are as follows:

I	"(2) Subject to sub-section (61, the term of -

(a) a franchise

agreement

entered

into

otherwise than by way of

renewal, where

the

franchisee

has produced

the

franchisor,

before

entering

into

the

agreement, evldence reasonably sufficient

to show that he is a person with

prescribed experience; or

(b)

a franchlse agreement entered into by way

of renewal,

other

than

an agreement

referred to in sub-section

( 4 ) ,

shall be not less than

3 years.

( 3 )

The term of

a franchise agreement, other than

an agreement referred to In paragraph

(2)(a)

or an agreement

entered

into

way

renewal, shall be one year or

less, or 3 years

or more.

i	The	expression "person with prescrlbed experlence" in
!
I

subs.(2) 1 s deflned In subs.(12) of s.13 in such a way as

I I

admittedly to exclude the appllcant. In consequence, there was no requirement in the Act that the lease here In question (which was

entered Into otherwlse than by way of renewal) be for

a term of

not less than three years.

It was, on the contrary,

a franchise

agreement withln

s.13(3), one which was for one year or less.

Section 14 is as follows:

"Where an agreement

to which

sub-section 13(3)

applies is entered into for a term not exceeding

3 .

one year, sections

11, 11A, 12,

16, 17, 17A, 17B,

19 and

19A

not

apply in relation to that

agreement.

The sectlons made inapplicable by

s.14

include those

dealing with

the right of renewal (55.17, 17A and 17B).

Since the

agreement was one to

which subs.13(3)

applied, and was entered

into for a term of one

year, then 5.14 excluded the applicant from

the benefits of the statutory right of renewal.

was, however, the case

ultimately put forward on

behalf of the

applicant, although not

that lnltially put forward,

that statements made orally by and documents Issuing from agents

of the respondent operated by way of estoppel to preclude reliance

upon 5.14. There are legal

difficultles

about

the

argument,

discussed below, but it is	flrst necessary to deal	wlth the facts,
in some detail.

In August

1985 the applicant, by its agent Martin Van

Houtum, negotiated wlth the respondent C O take a lease of the slte

question,

which was then being operated by people called

Cassls.

The result of those negotlations was, It 1 s admitted, the

execution of the

lease

referred

above, under which the

appllcant had possession

of the site from 20 September 1985 to 19

September 1986.

There is

no consensus, however, as

to what was

said in the course of those negotiations about a renewal.

To put

the matter generally,

I am satlsfied that some assurance was given

to the applicant about

renewal and that the applicant would

never have agreed, as it

did, to pay

a substantial sum

for the

goodwill to the previous operator in the absence

such

assurance; precisely what the assurance was, however,	is hard to
determine.

The case was tried on affidavits filed

by each side, a

procedure which, as it seemed to

me, substantially shortened the

hearing.

In his first affidavit, Van Houtum said that

he was

advised by Miss Smith,

the agent of the respondent who negotiated

with him, that he would be offered

a renewal of the lease for

nine

years, provided that on

31 August

1986

he paid

a premium of

$45,000. That account of events made no reference to breaches on

the part of the applicant

which might prevent

a renewal, a subject

which was undoubtedly discussed.

further affldavlt, Van

Houtum s a d that Mlss Smlth said the respondent could not fail to

renew the

lease unless the applicant broke the law and that

all

the appllcant's rlghts, includlng the right

renewal, were

written down in the Act

- I.e. the Act referred to above.

Van Houtum

was cross-examlned on these affldavlts and

appeared to me to admit that

he knew at

the outset that

he dld not

have the necessary experience for the purposes

the Act. He

also sald that MISS Smith told him that

as a "non-prescribed

dealer" the first year would be provisional and

that if there were

no breaches

of the Act, a

renewal would be offered. Van Houtum

admitted that Miss Smith told him that

he would have no staizutory

right to renew under the Act, but also told me, inconsistently

with the evidence just mentioned, that

thought from what Miss

Smith told him that the Act gave him

a right of renewal.

Miss Smith has an altogether different recollection of these events from that of Van

Houtum, but I incline to the view

that the

latter's memory of them is more reliable.

I find that

Van Houtum was told that the applicant would be granted

a renewal,

but I am not satisfied that Miss Smith said that the Act gave the

applicant a

right of renewal.

The latter statement would, as I

find, have

been contrary

Mlss

Smith's understanding of the

operatlon

of the

Act, and

am confldent that she would not

deliberately have misled

Van Houtum on that sub~ect.

It is not clear precisely

in what terms the assurance of

renewal was given, but I find

it was, in substance, in terms of

the last sentence of the letter Exhiblt	"MH9"	dated 3 September
1985:

"In

the perlod of thls one year

lease, providing

that no serlous breaches

of Lease or Act Condltions

have

occurred,

21st

September,

1985, Shell

Company intend to offer

a nine year full lease term

to yourself.

That wording is Inconsistent

with the notlon put forward on behalf

of the respondent that all that was said was that the respondent

might, if it chose, grant a renewal.

Van Houtum commenced work

in the service station with

the previous operator in the flrst week of September

1985.

On 6

September 1985,

the respondent wrote to the appllcant recording

that the partles had agreed to payment of

a lease premium of

$45,000 to be made by

31 August 1986, "provided a lease renewal is

offered to you from 20 September 1986".

my view, the proviso

was inserted because of the possibility that

such a breach as

mentioned in the letter

of 3 September would prevent renewal.

In the afternoon of Friday, 19 September 1986, the

applicant paid the previous operator what was due under its

contract for goodwill, stock and equipment. After that,

MISS

Smith came to the site and

gave Van Houtum copies of the lease and

of a statement, Exhibit "MHl", which was supplied pursuant

to the

obllgations of the

respondent

under

5.15

the

Act.

said,

among other thlngs,

that

the rights

of the franchisee

In relation

to renewal

of the agreement are set out in

s.17 of the Act;

mentioned above, the respondent's case

1 s that

5.17

has nothlng

do wlth the matter, as s.14 makes It inappllcable.

The effect of

the respondent's having glven the appllcant the

s .15 statement is

dealt

wlth

below.

The applicant

took

possession

and

operated

the

service statlon, wlthout havlng any further contact with the

respondent whlch requlres mentlon, until

8 August

1986.

On that

day, Van Houtum met one Llora,

a representative of

the respondent,

who told h m that the respondent was "happy to offer the appllcant

a renewed lease provlded that

I pald the premlum

$45,000".

The

applicant decllned to pay the premium. On

18 August, one Trotter,

on behalf of the respondent, said it was then prepared to offer

renewed lease

on payment of $21,200 premium, in lieu of $45,000;

Van Houtum said he was

not happy with

the lower figure. On

August, Llora wrote to Van Houtum givlng further details of

the

offer of a renewal at $21,200; the letter said that the sum

had to

be paid by 30 September 1986, which was a

month after the agreed

last date

for payment of the $45,000.

The latter date was allowed to pass without payment

any sum.

On 2 September 1986, solicitors for the applicant, and

the

respondent, each wrote

letter bearing

that

date.

The

letters crossed.

The former said that solicitors acted on behalf of the

applicant and also

behalf

"the Shell Dealer Group

(an

affiliated

dlvislon

of the

Motor

Trades

Association

Queensland)". It is not clear what thelr retainer for thls group

had to

do with the matter.

The

solicitors' letter said, wlthout

explalnlnq why, that the respondent had no authority

to demand a

premium in respect of

the renewal and requlred that

a lease for a

perlod of nlne years commenclnq on

20 September 1986 be delivered,

falllnq which

the appllcant would "exercise Its rlqhts under the

provislons of s.17A(7) of the Act."

This 1 s a puzzllng

document. It is true

that

the

applicant's

case, as advanced

before

me,

has been

that

the

applicant has a right to renew under the Act, but that

1s said to

arise from the operation of the doctrlne

of estoppel by reason

the dealings between the parties

- a subject matter not mentioned,

or even hinted

at, in the letter.

The omlssion appears

to have

been deliberate; two days later, the solicitors delivered the

applicant's statement of claim in these proceedings alleging that

there was a current franchise agreement in existence subject to

the provisions of the Act and again makmg no mention of the

dealings between the parties or of estoppel.

It is possible that

the

letter

of 2 September

1986

was

written

under

the

misapprehension that the Act gave the applicant

right to

renewal - i.e. as if s.14 of the Act did not

exist.

The respondent's letter of the same date

( 2 September

19861 withdrew the offer of

August 1986 and by letter of

September 1986 the respondent demanded that the applicant give

possession on 19 September

1986

accordance with the lease,

which, of course,

contains no provision for renewal; hence these

proceedings. The applicant has remalned

possession

pursuance of an lnterlocutory undertaking given

by the respondent,

pending the determination	of the case.
Estoppel

Paragraph 8 A of

the amended statement

of claim filed on

17 September 1986 sets out

that tine respondent is estopped

from

relylng on

the provlsions of

5.14 of the Act. Counsel for the

respondent say that there is no legal possiblllty of an estoppel,

by reasons of the provisions of 5.7, which are dealt with below.

But, ignoring that difficulty, still there is no logical path to

the conclusion that the applicant was, or is entltled,

premium-free renewal, as demanded in its	solicitors' letter of 2
September.

If	the conversations and correspondence between the

parties created or

affected legal rights by estoppel, those rights

cannot have been more favourable

the applicant than

Van

.-.

9 .

Houtum's understanding of them.	In Thompson v. Palmer (1933) 49
C.L.R. 507 at p.547 Dixon J. said:

"The object of estoppel in pais is to prevent

unjust departure by one person from an assumption adopted by another as the basls of some act or omission which, unless the assumptlon be adhered

to, would operate to that other's detriment."

Here, the assumption said

have been adopted by the

applicant was that

he would be allowed another eight years. If the

assumption was adopted in such clrcumstances as

to make it unjust

for the respondent to depart from it, still it cannot be right

that the

respondent's legal position 1 s

worse than that assumed.

The respondent never told Van Houtum that

the applicant could have

the renewal for nothing; he entered lnto possesslon on the basls

that he would get a renewal for $45,000. As he found out more

about the

servlce station business, he formed

the idea that Miss

Smlth had glven him

wrong lmpresslon about the.premlum, In that

was led to belleve

it was a

standard requirement; in

fact,

have to pay a premium, or did not ordlnarlly have to pay so much.

thought Van Houtum, lessees In his posltion did not ordinarily an assertlon that Van Houtum was misled on that point. The best position to which success on the estoppel pleaded could lead the applicant to is entitlement to a renewal at $45,00C, but he was

offered that informally

and refused

it.

He was then offered a

renewal at $21,200 and indicated he would not pay the lesser sum.

Success on estoppel could not entitle the applicant

to a

further offer of renewal at

a premium of $45,000 and, indeed, the

10.

pleading does not seek that.

It says that the respondent

cannot

rely upon

s.14,

quoted above. There might be some scope

for

argument on that point if

were satisfied that the respondent

gave Van Houtum to understand the applicant would

be treated as

having

right of renewal under the Act; but

I am

not

satisfied.

In its form as delivered on 17 September 1986, the estoppel plea was based upon delivery of the

5.15

statement,

Exhibit

"1yH1".

was said that the applicant acted to its

detriment upon the representation of the respondent that

ss.17,

17A

and

17B applied

the applicant by paying the outgoing

operator, entering into the lease and expending moneys on getting

up and running the buslness.

The facts

are, however, that the

appllcant was already committed before

the

5.15

statement was

delivered; it

had executed the lease and paid for the business.

__	It is true that moneys were expended in running the business after delivery of the 5.15 statement, but they would have been expended

I	whether or not the appllcant recelved it.

way of

an amendment at

the hearing, the applicant

relied in addition

on an

estoppel based upon the respondent's

letter of 3 September 1985, referred

above,

saymg that

provided there vere no serious breaches "the Shell Company intend

to offer

a nine year

full lease term to yourself " .

But that

letter cannot lead the

applicant to

success on the 5.14 point.

The respondent could have made good the assurance contained

in the

letter without conceding that

the applicant had

any right

renewal under the Act.

For the reasons just explained, there appears to be no

factual

foundation

for the

alleged

estoppel.

Different

considerations would

have

arisen had the respondent refused to

carry out its promise to renew

the lease for

a premium of $45,000,

but it did not

so refuse; It was not a dispute on that point

which

led to the present

litigation, but rather, I think,

a mistaken

idea, reflected in the letter of

2 September 1986, that the Act

itself entltled the applicant to

a renewal.

Although doubtful of the

necessity of

doing s o , I have

decided that I should state my views on

a legal question which was

argued, referred to

above; that is whether the contracting out

provision, 5.7,

makes it impossible for the applicant to succeed

as to the pleaded estoppel. Subsections (1) and

( 2 ) of s . 7 are as

follows

"(l) This Act applles notwithstanding any agreement

the contrary and, in

particular,

but

wlthout limltlng

the

generality

the

foregolng,

a provision in any agreement

void to the

extent

that

it purports

exclude, limit or modify, or is otherwise

inconsistent wlth, the operatlon of a

provislon of thls Act

or any right or remedy

based on or arlsing out	of a provision of this
Act.

( 2 )

Nothing in this Act shall

taken to affect

the operation

of an

agreement to the extent

that the agreement is capable of operating

consistently with this Act."

There is nothing explicit in the Act about exclusion

its provisions by estoppel.

There is, however, authority in the

English Court of Appeal

for the proposition that,

if on the proper

construction of a

statute, protective provisions cannot be ousted

by agreement, the same result cannot be achieved by estoppel:

v. Holland C19847 1 W.L.R. 251 at p.261.

It had h e m held by

the House of Lords some years earlier, in Johnson v. Moreton

C198OJ A.C. 37, that provisions

the

English Aqricultural

Holdinqs Act 1948,

designed to protect certain tenants, could not

be excluded by agreement, although the Act did not

say so in so

many words. Partly, it seems,

on the basis of the theory that

the

more good English land produced the better (see p.68), the House

of Lords read the statute

as not permittlng contracting out

on the

relevant point.

In the Court of Appeal case, Keen v. Holland,

there was argued to

an estoppel against the same provisions by

convention, but the Court said the provlslons in question could

not be got around by that means either.

Questlons

thls

sort

are, as Johnson v. Moreton

illustrates, often approached. falrly broadly by looklng

at the

policy underlymg the statute

question

and

whether

the

provision is one intended

for the protectlon

of the public, or

sectlon of it; another example is Barllla v. James

C19643 81 W.N.

(Pt. l)(N.S.W.) 457.

That approach does not avail

the respondent

here; It

is alfficult to think of any pollcy of

protectlon of a

class

the community, or other public interest, which would

justlfy refusing to glve effect

an agreement excluding the

operatlon of

5.14 of the Act. If it suited the parties to deal

with each other on the basis that a s.13(3) franchlse agreement,

for one year or less, should be treated

as not caught by the

exclusory

provision

(s.141, what public

interest

could

infringed by

so doing?

13.

However,

approaching

the

matter

one

purely

construction

the

Act,

there

does

not

appear

any

satisfying answer to the respondent's contention. Subsections (1) and ( 2 ) of s.7, read together, prevent all contracting out of the

Act's provisions,

and that prevention catches contracting out

which would not seem to offend the policy of the Act equally

with

contracting out which would

so offend.

It would seem to be clear

that an express agreement between the applicant and the respondent that ss.17, 17A and 17B of the Act should apply to their franchise

agreement,

notwlthstandinq

s.14, would

have

been

void

purporting to exclude the operation of 5.14. I do not read s.7 as saying anything expllcitly about estoppel, but it is necessarily implicit in that provlsion that the same result cannot be achieved

by an estoppel. The members of the House of Lords in Johnson v. Moreton appeared to have been dlsinclmed to base thelr conclusion on an lmpllcation, but there may be a growlng tendency openly to

make necessary lmplications In

statutes, just as In contracts;

for

recent example, see the decision

the

Privy

Councll

Collector of Land Revenue South West District Penanq v. Kam Gin

C19861 1 W.L.R. 412.

It would be absurd to suppose that the

legislature meant to allow the

exclusion by estoppel of provisions

which cannot be excluded by express agreement.

This

conclusion

qams support

from

the

principle

mentioned in

& F.

Stone Lishtins and Radio Ltd.

v. Levitt

E19477

A.C.

209 at

p.216, that estoppel cannot give

court

jurisdlction which a

statute says it is not to have. Here,

s.14

denies this Court jurisdiction to make any order of the kind set

out in s.17A and what is so denied cannot, in	my opinion, be given
by estoppel.

14.

I therefore conclude,

as a matter of

law, that no

estoppel could prevent the respondent from relying upon the

provisions of 5.14,

even if a case of estoppel were otherwise made

out - as in my opinion it has not been.

Other Matters

i	i	Counsel	for the respondent, led by	Mr.	Cooper Q.C.,
I
I

raised other legal questions which have turned out to be of lesser

importance, and

not propose to deal with them.

necessary to make only three further observations.

The first is that, in my view, the

case as fought went

somewhat beyond that pleaded

by the applicant. As Mr. Cooper Q.C.

pointed out, even ln its final amended version, the statement of

claim relled upon documents only

for

an estoppel, whereas

the

evidence and argument relied also upon

the discuss~ons

referred to

l	-	above. Had	I been otherwise in favour	of	the applicant's case,
!

the

lack

reference

in the

applicant's

pleading

the

conversations relied

would not,

in my view,

have been

substantial obstacle in Its

path.

The

applicant also

rased

the legal question of the

effect of the deflnitlon

of "agreement" in s,3(1) of the Act, read

with s . 3 ( 2 ) which says, among other things, that

a reference to an

agreement is to be read as including

a reference to

a proposed

agreement.

It followed, as I understood the argument, that even

if the parties	here had really made no agreement, but merely
proposed to make	one, their rights must be dealt with as if their

proposal had actually produced

an agreement. While conceding that

other

circumstances

a Court

might

have

resolve

this

legislative conundrum, I think there appears to be

no occasion to

attempt to do

so here.

That

is so because there never was

proposal between the parties to agree to treat the applicant's

rights

as unaffected by

5.14

- i.e. to treat the applicant as

having a

statutory right of renewal. As

I have explained above,

the applicant gave evidence to	that effect, but I have rejected
it.

Lastly, it should

be mentioned that the applicant relied

in the

alternative upon the doctrine of Ramsden

v. Dvson C18667

L.R.

1 H.L.

129, and

the notlon that the respondent acted

dishonestly in standlng by while the applicant spent money in the

belief that he would

get a renewal of hls lease under the Act. In

truth, the thought the applicant would accept a renewal on payment to

respondent's state of mind was quite otherwlse: it

the

respondent

of $45,000,

the sum

agreed, and it was prepared to

satisfy the applicant's expectatlon.

In the result, the application must be dlsmissed with

costs.

Justlce

Plncus

c W

Associate

%--

Dated

1 4

'CN THE FDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

)	QLD G130 of 1986

!	GENERAL DIVISION	)
I

BETWEEN:

BECKFORD NOMINEES PTY. LTD.

Applicant

I	AND: THE SHELL COMF'ANY OF AUSTRALIA LIMITED

Respondent

CORRIGENDA

i	Amendment to the Reasons	for Judgment of Pincus J.	delivered 1
October 1986:
I

. Page 12, line 8, substitute "food" for "good";

. Page 15, paragraph

line 5 should read "belief that it would

l	get a renewal of its lease	...'I
I
l

i	Juliet Lyons

Associate to

Mr. Justice Pincus

2 October 1986

i i

[1986] FCA 666

10 Jan 1986