Caltex Oil (Australia) Pty Limited & Anor v S & M Motor REpairs Pty Limited

[1988] HCATrans 168

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No S37 of 1988

B e t w e e n -

CALTEX OIL (AUSTRALIA) PTY LIMITED

First Applicant

MAJIK MARKETS PTY LIMITED

Se~ond Applicant

and

S & M MOTOR REPAIRS PTY LIMITED

First Respondent

MICHAEL HAMID DOUAIHY

Second Respondent

SAMIR ELIAS DOUAIHY

Third Respondent

Application for special leave to

Caltex

appeal

MASON CJ

BRENNAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 AUGUST 1988, AT 4.33 PM

Copyright in the High Court of Australia

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MR K. HANDLEY, QC:  In this matter, if the Court pleases, I

appear for the applicants with my learned friend,

MR G.LINDSAY. (instructed by Moore and Bevins)

MR J. WALES:	May it please the Court, I appear for the second and third respondents. (instructed by
Peter R. Murphy & Co)

MR T. CASTLE:  May it please the Court, r· appear

for the first respondent, the company in l1qu1ctation.

(of Mallesons Stephen Jaques)

MASON CJ: 

Yes, Mr Handley.

MR HANDLEY: 

Your Honours, the respondents gave undertakings

to the supreme court they would not pass off as
Caltex petrol any petrol not supplied by the present

applicants which include, of course, Caltex and

a subsidiary fo Caltex.  The applicants moved the

equity division to have the respondents dealt with

for contempt arising from alleged breaches.

Mr Justice Bryson found that the respondents had

breached their undertakings and the Court of Appeal,

by a majority held that His Honour had·applied a

wrong test and allowed the appeal.  Now, there are

various places in the majority judgment which I

could take the Court to which indicate that

Their Honours on a number of occasions held that

Mr Justice Bryson had applied an inappropriate test.

The point is, in our submission,

is no dispute as to the primary facts. There is

a dispute as to the appropriate mixed question of fact and law which arose from those primary facts.

If Mr Justice Bryson applied a correct test the

appeal, in our submission, if granted would be allowed.

If the Court of Appeal were correct then the appeal

would fail. Your Honours, this is not an isolated

question arising on a single undertaking to the court. So far as the particular transaction is

concerned the matter arises against a backdrop of

federal legislation dating from 1980 and if I could

pass up some material. I wish to take the Court

to the PETROLEUM RETAIL MARKETING FRANCHISE ACT

which is the last of the references in the bundle -

and Act of the Parliament of 1980. One of the grounds

on which a franchisor, so described, alias oil company,

may terminate a franchise agreement which otherwise

continues for a period of nine years with successive

renewals is set out in section 16(2)(f):

Without the consent of the franchisor,the

franchisee wilfully passes off motor fuel

supplied to him by a person other than the

franchisor or a related corporation as

being motor fuel supplied to him by the franchisor

or a related corporation.

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Apart from that statutory background which applies,

of course, to every franchise-operated petrol station
in Australia the Court will be well aware of the

widespread nature of franchising in one form or

another in the current community apart from petrol,

various brands of fried chicken, hamburgers, pizzas,

mexican food or whatever.

There is also material, Your Honours, not yet before the Court as to the frequency with which

this matter has arisen, that is, passing-off of

foreign petrol in petrol pumps of a different oil

company has arisen in recent years, or months particularly,

involving various oil companies and I am able to

say, Your Honours, and I have showed my friend this

material, that the question of passing-off, not necessarily the same question, but the question

of passing-off through petrol pumps of one oil company the petrol of another with or without signs, generally without signs, is a matter of some frequency in

the industry at the moment and of some concern as

far as the applicants are concerned.

MASON CJ: Is there any difference between the petrol that

is produced by these various companies?

MR HANDLEY:	Your Honour, I am instructed that there would be by way of additives apart from the fact that
high octane petrol would have a certain octane rating
and other petrol would have a different octane rating.
MASON CJ:	But that is all reflected in the grades that there
are for sale.
MR HANDLEY:	Yes, Your Honour, but there are additives in the

various petrols but, Your Honour, ultimately, in

my submission, it does not matter. The question

is whether some members of the public wish to buy

Y petrol or Z petrol or whether the owners of the

petrol stations wish to persuade the public that

they should buy one petrol rather than the other.

MASON CJ:	I would have thought the question whether there
was any difference in the petrol that is produced
by the various oil companies enters into the question
whether members of the public do wish to buy the petrol produced by one company in preference to
that produced or sold by another company.
MR HANDLEY:	Yes. Well, Your Honour, I am not sure to what

extent this matter has been agitated in the courts

below but the national Parliament thought that

it was appropriate for a franchisor- for an oil company -to be able to obtain vacant possession

of a petrol station if the franchisee was guilty
of wilful passing-off of one brand of petrol as

and for another brand of petrol and, in our submission,

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that should be sufficient as far as this Court is

concerned because the same question would arise

between these parties, or between other parties,

if the matter arose in ejectment proceedings between

an oil company and a franchisee based upon alleged

wilful passing-off. It would not be open, in my

submission, in the light of the statute for the

franchisee to say it does not matter, it is the

same petrol. Even if that was the fact - this matter

was not raised as a defence, Your Honour, before

Mr Justice Bryson,apart from the fact that the

Techron petrol, which is also mentioned, does

apparently have some more unusual additives.

Your Honours, in our submission, the majority

of the Court of Appeal applied an incorrect legal

test of passing-off. We mention a couple of matters:

it is not necessary under the general law that

passing-off lead to a sale - that was decided by

the House of Lords in SPALDING V GAMAGE in 1915 -

or that the deception or confusion persists up to

the point of sale and Mr Justice Deane and
Mr Justice Fitzgerald, as he then was, in the

Federal Court indicated that that was,·as far as

they were concerned, an open question which might

have to be resolved in the context of passing-off

in the TACO BELL case to which I will take

Your Honours in a moment.

We also submit that the majority of the

Court of Appeal erred in ignoring, or devaluing practically to zero, the misrepresentations inherent

in the presence of the Caltex signs prominently

displayed on and near the service station, plainly

visible to passing motorists. We do have the

photographs here, Your Honours, that were before

Mr Justice Bryson in the Court of Appeal but I do

not think it is necessary to trouble Your Honours

with them on this question at the moment. In our

submission the misrepresentations in the signs were

a misrepresentation about the petrol available from

slightly novel, it was part of the get-up of that	the pumps and, in a sense, although this is perhaps
petrol. Although the get-up was on an unusually
large scale and further removed than usual from
the actual product - - -

BRENNAN J:	When you say "further removed than usual", has
there ever been a case in which get-up has been
removed from the product?
MR HANDLEY:	We would say that this is not a case where the

get-up has been removed from the product. I am only meaning that the physical distance between the get-up - I mean one buys a tube of toothpaste

and there is, perhaps, a cardboard carton and then

there is the actual aluminium tube and then inside

that is the toothpaste itself. Here part of the

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get-up, in our submission, of the petrol available

from the pumps are the signs visible on the

service station as a motorist drives along the

highway. He is buying the product in bulk, of course,

and not in any actual container other than - there

is two containers: one is the service station and

the other is the pump and that in point of legal

analysis it is appropriate to see the get-up of

the station as part of the get-up of the goods

themselves. I cannot say - - -

MASON CJ:	But we do not really need to get into this technicality,
do we?  I mean, as long as it is relevant to have
a look at what is at the station, the signs that
are at the station in terms of determining whether there has been a passing-off.

MR HANDLEY:  I accept that, Your Honour. I was only really

trying to perhaps over-labour the point that the

Court of Appeal seemed to have carried out a

dissection of the exercise and instead of looking
at the totality of the representations about the

quality of the petrol, including the get-up of the

station, they have just concentrated on what was

available when you actually arrived at the pump

and, in our submission, that was a legal error to

divide into two watertight compartments what, in

our submission, was a total situation with a clear

initial misrepresentation and then the question

becomes one of whether signs further on could possible

remove the initial misrepresentation. But apart

from that question which perhaps raises questions of fact

and degree, in our submission, there was a

passing-off here in the signs themselve~ without

more, once motorists were induced by those signs

to enter the service station.

MASON CJ: What does passing-off mean in this provision having

regard to the discussion in the Court of Appeal?

MR HANDLEY:  Your Honour, what the Court of Appeal said is that, and we accept part of what they have said -

in our submission, the contract between two of these

parties, one of the applicants and the respondents,

is not relevant in putting a meaning on the expression

passing-off and passing-off merely means a

misrepresentation as to the origin or quality of
the goods. It is just the ordinary general law

test uninfluenced by arycontractual matrix or nexus

between some of the parties which, in any event,

did not include Caltex. One of the matters which,

in our submission, reinforces our case that there

was a misrepresentation here amounting to a

passing-off through the signs alone on the station

was that there was no Caltex petrol available at

the pumps. Their misrepresentation in the signs,

in my submission, under ordinary circumstances -

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I exclude a Caltex strike which has gone on for

weeks which is a matter of public notoriety - there

is Caltex petrol available at this station. The

fact is there was none and that was, itself, in

our submission, a passing-0ff calculated or likely to

lead to foreign petrol in the pumps being passed

off to the public as and for Caltex petrol.

MASON CJ: Ordinarily,if the question arose whether the Court

should grant special leave to appeal in relation to a finding of a court below that something did not amount to misrepresentation or wilful

misrepresentation, it is difficult to see how the

Court would come to the conclusion that there was

a question of such general importance that special

leave ought to be granted.

MR HANDLEY:  I accept that, Your Honour, with the adjective

"ordinarily" and that is why I drew the Court's

attention first of all to the fact that the same

question arises under an Act of the Commonwealth

Parliament which the Court would know would be of

considerable practical importance across Australia

in the whole of the petrol retail industry. And,

secondly, I was able to inform the Court that this

question is alive and well involving other oil

companies as well as the applicant, Caltex, in

New South Wales at the moment.

MASON CJ: Alive and well although not being treated well.

MR HANDLEY:  Definitely, Your Honour. The wrong allergy test

has been applied.

BRENNAN J:  The problem remains however that the question of

passing-off or no passing-off falls for determination

according to the particular facts of each case,

does it not?

MR HANDLEY: It does not mean that there are not questions

of law, Your Honour - - -

BRENNAN J:  Of course not.

MR HANDLEY: - - - and I accept what Your Honour says completely

but that is the importance, in our submission, of

the fact that the Court of Appeal majority again

and again said His Honour applied the wrong test
and therP is no dispute as to any primary fact - I

mean, there is not even a quest ion about credi bi 1 i ty

invo din the case. I mean the Court of Appeal

said at one point that they agreed with - page 102

is not a bad example of what I am seeking to put -

line 4:

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Caltex

We agree with much of what His Honour said

and we accept that most motorists entering

a Caltex service station would believe they

were to be offered Caltex petrol, and that

it would be dispensed from pumps labelled

"Caltex".

And the difference, ultimately, is a difference,

in our submission, of law. I know that on one view

of the matter it is complicated by the Court of Appeal's construction of the undertaking in the light of the contract which although clearly erroneous,

we would submit, might not be seen as a special

leave point. But there are other matters here which,

in our submission, depend upon an erroneous view

of the general law of passing-off and, in particular, involve an artificial dissection of a total situation and, for example, the court has these motorists

arriving at the pumps with an open mind as to what
they are going to get, whereas they do not arrive
at the pumps with an open mind about what they are
going to receive. They come there with an existing

impression created by the signs that they are going

to get Caltex petrol. And the question· of whether

the signs can displace effectively an existing

misrepresentation is, in our submission, a matter

of some importance. Could I just - - -

BRENNAN J: Mr Handley, it is the fact, is it not,that the

undertaking was given in this case in respect of the sale of petrol from pumps in a station which had the large logos and so forth displayed?

MR HANDLEY:	Yes, Your Honour.
BRENNAN J:	And so, it was contemplated that non-Caltex petrol

would be sold from that petrol station and from

those pumps?

MR HANDLEY:  No, Your Honour, not from those pumps.

BRENNAN J:	From the petrol station only, you say.
MR HANDLEY:	From the petrol station only. But, Your Honour,

it is one thing to arrive at a petrol station and

see that there is a Shell bowser and a Caltex bowser

and then make your choice and you may alter your

initial choice. It is not an uncommon situation,

I gather, when you arrive in a hotel these days if you are offered more than one brand of beer.

But, it is another thing to drive into a Caltex

service station where there is no choice, unknown

to you, and all the petrol is non-Caltex petrol

and that, in our submission, is in itself a passing-

off and would be a breach of section 52. Can I,

very briefly, just take the Court to a couple of

passages in one or two authorities. From

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Meagher, Gummow and Lehane's book on passing-off

on equity but the chapter dealing with passing-off -

at page 845 there is a brief reference to

SPALDING V GAMAGE at the bottom of the page:

Thirdly, equity's grant of quia timet relief

..... was translated by Lord Parker in

SPALDING V GAMAGE (1915) 32 RPC 273 into a

formulation of a fully constituted legal

right so that although in the instant case

there had been advertising but no sales of

the footballs in question ..... the plaintiff
was entitled to an inquiry as to damages, the

cause of action being complete with the

representation. Hence it became true to say

after 1915, as had Lord Halsbury in 1896 that

even at law no man might represent his goods

as those of the plaintiff.

Now, in our submission, the reference in the Court

of Appeal to "sale" and the importance of "sale"
ignores the fact that passing-off can be complete

although there is no sale and it can be complete

before there is a sale. And here, in O"'Ur submission,

in view of the passing-off of the station, the

passing-off inherent in the signs, there was a

passing-off complete when the motorist diverted

into the petrol station prior to any sale taking

place. TACO BELL - - -

BRENNAN J:  Does not that prove too much, from your point of

view, Mr Handley?

MR HANDLEY:	No, Your Honour.
BRENNAN J:	Because if when he drove in he saw a 44 gallon

drum with Shell on the outside would that have

amounted to a breach of the undertaking?

MR HANDLEY:  No, Your Honour. The representation, in our

submission, is, "Caltex.petrol available here".

The fact that there is a Caltex sign up does

not say that only Caltex petrol is available but

it does constitute a representation that Caltex
petrol is available and Caltex petrol was not

available.

BRENNAN J:  But that is not passing-off, is it?

MR HANDLEY: In my submission it is, Your Honour. Passing-

off is that, "The petrol in here is or includes

Caltex petrol" and none of it was Caltex petrol.

Your Honours will have borne in mind that the signs on the pump said, "This petrol may or may not be

Caltex petrol". In our submission such a sign cannot

possibly negative an earlier misrepresentation in

the get-up of the station as to the brand origin

of the petrol available.

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In the majority judgment of the Full Federal Court in the TACO BELL case at page 199 there are

just a few lines, at lines 17 to 21, to which we

draw attention. It is in the context of the

Privy Council judgment in the CADBURY-SCHWEPPES

V PUB SQUASH case. Mr Justice Deane and

Mr Justice Fitzgerald said:

It is, in the circumstances, unnecessary

that we form or express any concluded view
on the question whether it is a principle of
the law of passing-off that deception must

continue, or be likely to continue, to the

"point of sale". As a matter of principle

and of logic, it is difficult to see why it

should be.

Well, the Court of Appeal, by a majorit½ has held	to the contrary and we submit that that.is, itself, a
matter of significance and warranting a solution
by a decision of this Court. Now, there are two
other headnotes to which we wish to draw attention
dealing with the effect of disclaimers. The first
is a decision given by Lord Widgery i~~he Queens
Bench Division but it is sufficient to take the
Court to the headnote. This is NORMAN V BENNETT, (1974) 1 WLR 1229, at line H:

for any such disclaimer to be effective, it

had to be as bold, precise and compelling as

the trade description itself, and had to be
as effectively brought to the notice of any

person to whom the goods might be supplied.

And in the Federal Court in a section 52 case where

passing-off was also in issue and found,

Mr Justice Wilcox in a case about SOUTH SEA BUBBLES -

T-shirts of some rock band - paragraph (b) of the

headnote - HUTCHENCE V SOUTH SEAS BUBBLE,

64 ALR 329:

There are occasions when the effect of

deceptive or misleading conduct ss 52 or 53

of the TRADE PRACTICES ACT may be neutralized

by an appropriate disclaimer, but such cases
are ·rare and confined to situations where the

court is satisfied (the onus resting on the
party relying on the disclaimer) that the

disclaimer is likely to be seen and understood

by all those (leaving aside isolated exceptions)

who would otherwise be misled.

And the next paragraph indicates a finding that

passing-off was complete. So, Your Honours, we

submit that the signs on the pumps were quite

insufficient to avoid passing-off and the Court

of Appeal was wrong to view those signs as if

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the motorist arriving at the pumps had no existing
misconceptions induced by the misrepresentations
in the get-up of the station and I have made the

point that the undertaking should not be construed

against the context of any contractual arrangements

as Caltex was a stranger to those arrangements.

(Continued on page 11)

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MR HANDLEY (continued): In our submission, nothing turns on

the fact that this application arises out of contempt

proceedings. In effect, that really indicates that

there is no question of fact involved here because,

of course, if there was any uncertainty about the facts,

having regard to the high onus of proof in contempt

matters, the applicants for relief in the nature of

contempt would have failed. The judge has found that we

succeeded and the Court of Appeal has reversed on

the basis that the judge misdirected himself in law

and, in our submission, because of the federal statute,

because of the frequency of franchising, and because

we claim to be in possession of material here which
we can make available to the Court, on affidavit and

letter form, this matter is one of some importance

in the industry at the moment and has been for some

time, this case warrants the grant of special leave.

If the Court pleases.

MASON CJ: Thank you, Mr Handley. Yes, Mr Wales.

MR WALES:  Thank you, Your Honour. There is a factor which

we would urge this Court in deciding this matter,
which is this, that - although it is not a fatal matter if

the matter is truly a matter of public interest.

The fact is that between the immediate parties to

these proceedings an appeal is wholly academic so far as questions of utility are concerned. I say

that because as Mr Castle is here to say the first

respondent has been wound up, it no longer has any

contractual relationship with Caltex or

Majik Markets, so that what was always put as being

the primary purpose of the contempt application,

that is, to ensure compliance with the undertaking

with the Court and not to punish, is now wholly

irrelevant.

So far as the second and third respondents are

concerned, His Honour found that although they were

parties to the contempt, their involvement was such

as to merit no punishment at all and are simply

ordered, with the first respondent, to bear the
costs of the contempt application.	So that if the
appeal	was allowed and was successful, the only

practical result between the parties would be to

reinstate afinding of contempt, one,against the

company in liquidation and, two, against the second

and third respondents who suffered no punishment

in any event, as a reason,;of their alleged contempt.

Now, so far as the merits of the application

itself are concerned, it is, with respect, not

correct to say that this matter involves general

questions of passing off. The matter was approached

by the Court of Appeal as a matter of construction
of an undertaking against the oackground of facts
not in dispute. The facts brought to account were
these: firstly, that there was then a contract

between the second applicant and the first respondent

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which permitted the first respondent to purchase up

to half of its petrol and distillate requirements

from Majik Markets. Secondly, that in the history

of the proceedings themselves there had been an
undertaking on the part of the first respondent not

at about line 23 where, in the judgment of the

to purchase fuel from anybody but Majik Markets.

majority, it is said that the appellant undertook:

to sell only petrol delivered to the premises
by or on behalf of the first respondent.

That undertaking was dissolved and replaced by the undertaking which was the subject of the contempt

proceedings. That form of words appears at page 81

of the appeal book and it was simply:

not to pass off as 'Caltex' petrol any

petrol not supplied to the defendant by

either of the plaintiffs.

So that the actual change of the form of the

undertakings contemplated a situation whereby the

respondent, the first respondent, would purchase its

fuel requirements, other than from Caltex or its

wholly-owned subsidiary, Majik Markets. Now,

whether the Court of Appeal be right or wrong in
the ultimate result on the question of construction,
there was nothing unremarkable, with respect, about

the process taken, that was to simply construe an

ambiguous phrase in the context of surrounding

circumstances.

Now, whether they performed that exercise, rightly

or wrongly, we submit correctly, but even if they

were wrong in doing so, they broke no canon of

construction and made no error of law, in our

respectful submission.

MASON CJ: Well, it is not so much a matter of interpretation,

is it? It is a matter of applying the words of

the undertaking and, if you like, in another context,
the words of the statute, to a variety of factual

situations and how you go about reaching a conclusion.

MR WALES:  I am not so sure that is the situation, with respect,

because what the Court of Appeal did was construe the
the undertaking in the light of the surrounding
circumstances, so it was treated as a matter of

construction in the light of the special facts of

this particular case. That is why it is not correct
to say that the application raises matters of

interest generally, to the industry. There are

assertions in the affidavit in support that there

are other proceedings involving the same issues,

but my friend does not suggest that they are anything

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but passing-off cases, nor does he suggest that
they are questions of construction of an undertaking

That what makes, in our submission, this case

particularly special and individual; that what we

are looking at in this case is an undertaking in

the context of certain facts. Now, whether there

was a breach of contract, whether there was a breach

of statute, whether there was the tort of passing-off

performed, were wholly irrelevant to the Court of

Appeal in this particular case.

Indeed, if Your Honour goes to page 90 of the application

book, the majority in the Court of Appeal expressly say - and this is in confonnity to a submission put by the applicants -

that passing- off in this undertaking does not ref er to the tort

of passing-off. At page 98 what they say is - - -

MR HANDLEY:  - - - that the eleme~ts that are removed are, not the

element of misrepresentation.

MR WALES:	At page 98 they indicate that::,~ _this is against line 25 -
they state that they have used t~e word:

..

"Misrepresent" as a synonym for "pass-off".

On the very last line of page 98, they commence the

sentence as follows:

Because we are not concerned with the

tort of passing-off reference to authority

is not strictly necessary.

And then go on to refer to REDDAWAY V BANHAM. So

that what they say in this particular case is that

the undertaking was one not to represent as Caltex
fuel not supplied by Caltex or its subsidiary.

Now, the Court of Appeal concede that there may be

a breach of the contract but not &.breach of the

undertaking. There may also be abreach of the
undertaking but not a passing-off because, designedly,
the wording of the undertaking was chosen to prevent the respondent from representing as Caltex, fuel not supplied by Caltex.

Now, it would be entirely possible for fuel from

a Caltex refinery, ,by means of a non-Caltex vendor,

to be supplied to the service station. Now, in that
situtation there could hardly be a passing-off because

the fuel would be, in fact, Caltex fuel; there would

be a breach of the undertaking because the fuel,

although Caltex, was, in fact, not supplied by the

applicants.

MASON CJ:	Yes.
MR WALES:	So that, in that context, we say that questionsof

the construction of the statute and referencesto the tort of passing-off really are quite immaterial. My

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friend sought to raise questions of the effect

of the get-up of the service station upon persons
who come in off the street having seen the sign.

However, the finding of contempt at first instance

was limited to two specific events. This appears

fran page 89 of the appeal book , against line 24,

the paragraph commencing:

We emphasi~e ..... the finding was restricted

to 15 and 29 January 1987. Those are the

dates when Ms Stanley and Mr Lee, the sales

representative of the first respondent, went

to the premises. Both purchased petrol -

and they were both, in effect Trap OLders. So that

for the purposes of this application, the contempt

application, there were only two transactions that

were relevant and they were both Trap Orders.

So questions of sales to other persons are simply, in

our submission, not material. Now, I hesitate to

do this at length, but if one goes to the draft

notice of appeal itself at page 105 of the appeal

book, one sees, in my respectful submission, that

there are no matters raised that warrant· special

leave. Ground (a) is, in our submission, immaterial,

given that only two acts were relied upon.

Ground (b) is simply a question of fact.

Ground (c) is a question of fact, and may I say

this about these questions of fact generally: it

would be impossible for this appeal to deal in a
general sense with questions of passing-off in the

effect of disclaimecrs, and the question of the

effect of the get-up of the service station. Each

case would depends upon its own specific facts and

the facts would differ in every case. All that

could bedealt with in this particular case would be
the facts of this case and it could not, in our
submission, possibly give rise to some general rule

about the effect of disclaimers on petrol pumps in

particular kinds of service station.

MASON CJ:  But the case could not give rise to the general

rule of law but, of course, it is possible that the case, would deal with it in such a way as to give general guidance to courts that were considering

like cases in the future.

MR WALES:  With great respect, it is difficult - it would be

impossible, for example to lay down some rule

that - - -

MASON CJ:  I concede that, but it would not giverise to a

general rule. That seems highly unlikely having

regard to the facts of the case and the way in which

it will turn on facts because, after all, the

issue is, was there a breach of an undertaking?

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Caltex

Was there a misrepresentation of the relevant kind?

What I am saying is, that the way in which the Court

approached the resolution of that question would set

a standard which other courts would probably profit

from and follow. That is all that could be said, I

should have thought.

MR WALES:  Yes. Well, it is certainly true that any decision on

the question of fact is of some assistance in a case
involving somewhat similar facts, and counsel seek
assiduously cases involving sets of facts similar to

the ones in the case which they are presently involved

in. But that, with respect, does not make it a

special leave point.

MASON CJ:  No, it is hard to make it a special leave point,

but there are some cases in which the Court does
grant special leave notwithstanding that the case is

not likely to generate a new principle of law, merely

because the fact situation is complicated and

frequently arises and therefore it may be of value

to courts in the system to see how the Court handles

that. · ·

MR WALES: Well, there is certainly no material, in our

submission, to suggest that the use of disclaimer

signs is a problem so prevalent that it would call for

this Court to treat this case in a particular fashion.

If I can revert to the grounds of appeal at page 106;

ground (d):

The Court of Appeal erred in finding that,

upon a proper construction of the ..... Agreement .....

the First Respondent was entitled to pass off

non-"Caltex" petrol -

et cetera and -

to deface ..... the equipment.

The answer is simply the Court of Appeal did not make

that finding. Indeed, the Court of Appeal said that

it may be very hard to sell non-"Caltex" fuel from

the service station and not breach the agreement,

but that was not relevant to the question of whether

the undertaking itself had been breached. As to (e) ,
the Court of Appeal did not hold we were entitled to

rely upon the franchise agreement; they simply
determined that the agreement was part of the factual

matrix to be taken into account in determining the meaning of the undertaking itself. The point that Caltex was not a party is, with respect, disingenuous

in the extreme. Majik Markets is a fully-owned

subsidiary of Caltex; there has never been a suggestion

that Caltex was not fully aware of the trading terms

between Majik Markets and the first respondent in this case. Grounds (f) and (g) are purely matters of fact.

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Caltex

(f) raises the construction point and the answer
is simply that the court was entitled to look into
the factual background including the proceedings
in which the undertaking was given and in (g)
the question of the reputation in "Techron" was

purely a question of fact. The Court of Appeal held

that the evidence that a sum of money had been spent

in Australia and that a number of brochures had been

published was not evidence that in Sydney a

reputation of Caltex attached to the name "Techron."

That was purely, in our submission, a question of

fact.

So that, in summary, what we are saying is that

the question in this case was not passing-off; it

was not the breach of a statute; it was not whether

the tort of passing-off had been effected; it was the question of whether an undertaking - what the

undertaking meant - and, secondly, whether it had

been breached. In that context, we say that there is

no special leave point involved. If we are wrong in
that, if the Court takes a different view,and if this
case is to be treated asa test case, what we say is

that we should be protected as to costs between the

parties, for reasons I l1B.ve given as it is of no practical

utility whatever to determine an appeal from the
Court of Appeal's judgment.

If this case is to be used as a vehicle for dealing with questions of general interest to the

industry, what we say is it should not be at our
expense and there should be an order for costs that

protects the second and third respondents in those

circumstances.

MASON CJ: Yes, thank you, Mr Wales.

MR HANDLEY:	I am instructed to submit to any order that the Court might put on us with regard to the costs of
the respondents.

MASON CJ:  I am not sure whether the solicitor for the first

respondent wants to say anything on this application.

MR HANDLEY:  I beg Your Honour's pardon. He had told me

something and I rather presumed but - - -

MASON CJ:  I take it you do not wish to address the Court,

Mr Castle?

MR CASTLE:  No, indeed not, Your Honour. Simpl~, my

instructions are to submit to whatever order the

Court makes, except as to costs, and seek leave to be excused from further attending after today.

MASON CJ: Yes. Yes, Mr Handley.

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Caltex

MR HANDLEY:  I do have instructions to submit to any order

that the Court wishes to impose as a condition
for granting special leave should the Court be

minded to grant special leave. The next point,

Your Honours: in my submission, the difference

between Mr Justice Bryson and the majority of the

Court of Appeal can be seen to be, in our submission,

matters of law, matters of principle. If this

Court took the view that the majority of the

Court of Appeal had erred, they would not have to

make any findings of fact and the Court would, in

my submission, be able to simply restore the findings

of Mr Justice Bryson.

MASON CJ: Mr Handley, am I right in thinking that there

really is not an issue between the parties as to what the undertaking means? The issues is as to

breach.

MR HANDLEY:  Yes, Your Honour. My friend did not read at page 91,

"the elements of a tort of passing-off'which are not
picked up in the undertaking'are the elements of

• d d II

reputation an amage.

MASON CJ: Yes, I noticed that. I heard your comment from

the bar table at the time your opponent was reading

the passage that he concentrated on.

MR HANDLEY:  Yes. But with regard to the element of

misrepresentation, that is the general law of tort
ingredient in the cause of action. There is no

difference and it was, apparently, either found or

accepted in the Court of Appeal, but certainly

found, that the misrepresentation which would lead
to a breach of the undertaking was the misrepresentation
which would ground, in an appropriate case, a finding
that there was a cause of action passing-off under

the general law.

MASON CJ:  Yes.

MR HANDLEY:  Your Honours, Mr Justice Fox has held in the

Federal Court - it was found by Mr Justice Bryson

that the petrol here was not Caltex petrol regardless

of who was the source of supply. A few lines,

Your Honours -the last three lines on page 17 of

the application book:

I find that the petrol the subject of the

sales to which I later refer was not Caltex

petrol and had not been supplied to the

first defendant by either of the plaintiffs.

And at the top of page 20 there was a conversation

between a Caltex employee as part of the T~ap Order,

and the service station attendant said it may or may

not be Caltex:

"Who cares?"

SlT17/7/VH	17	12/8/88
Caltex

The employee:

Went out and filled her petrol container with

petrol, for which she paid; this was later

examined by an Industrial Chemist with results

to which I have already referred.

So there matters of chemical analysis of this petrol

which enabled the trial judge to be satisfied that it

was not physically Caltex petrol. The other thing

is that in the context of the PETROLEUM RETAIL MARKETING

FRANCHISE ACT, section 16(2)(f} Mr Justice Fox has

held in O'BRIEN V SHELL in 1982 that, for the
purposes of that provision, Shell fuel was fuel
delivered by or on behalf of Shell and Your Honours

see that the words are:

wilfully passes off motor fuel supplied

to him by a person other than the
franchisor ..... as being motor fuel

supplied to him by the franchisor.

They are the matters we would put in reply. If

the Court pleases.

MASON CJ:  The Court will adjourn for a very short period of time

to consider the course it will take in this matter.

AT 5.21 PM SHORT ADJOURNMENT

UPON RESUMING AT 5. 29 PM:

MASON CJ: This case turns on the question whether there was

a breach of an undertaking which the first respondent,

now in liquidation, bound itself to observe in

the conduct of a petrol reseiler's business conducted

on particular premises. Those premises were constructed

with large Caltex signs and with Caltex pumps, yet

the undertaking col1Jtemplated that non-Caltex petrol

might be sold from those premises, provided the

respondent did not pass off that petrol as Caltex

petrol. To perform that undertaking, it would have

been necessary to avoid the effect of the larger signs, a step which the respondent contends that

it took by placing some signs on the pumps. Whether

the step taken was sufficient to discharge the

respondents' obligation is a question of fact.

If special leave to appeal from the respondents'

acquittal of contempt were granted, the issue would

be one of fact or degree. It is unlikely that any

general rule of law would be expounded by the Court

SlT17/8/VH	18	12/8/88
Caltex

in disposing of such an appeal. In these

circumstances and, having regard to the liquidation

of the first respondent, the case is not an

appropriate one in which to grant special leave

to appeal. The application is therefore refused.

MR WALES:	And an order for costs is sought.
V.tASON CJ:	You cannot - - -?
MR HANDLEY~	No, Your Honour.
MASON CJ:	The application is refused with costs.

AT- 5.32 PM THE MATTER-WAS ADJOURNED SINE DIE

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