Centenary Investments Pty Ltd v Total Australia Ltd B.H.C. Nominees (No. 49) Pty Ltd v Total Australia Ltd
[1982] FCA 192
•09 SEPTEMBER 1982
And: TOTAL AUSTRALIA LIMITED
No. G94 of l982
No. G95 of 1982
FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Bowen C.J.
Franki
Ellicott JJ.
BRISBANE
#DATE 9:9:1982
1. The Appeals in matters numbered G94 of 1982 and G95 of 1982 be dismissed with costs.
Although some difficult questions of law appear to be involved in this appeal, since the matter is one of urgency the Court considers it appropriate to deliver ex tempore judgment, and this judgment is the judgment of the Court in both appeals.
On 30 July l982 B.H.C. Nominees (No. 49) Pty. Limited ("BHC") commenced proceedings against Total Australia Limited ("Total") seeking orders against Total pursuant to section 2l of the Petroleum Retail Marketing Franchise Act l980 ("the Act"). The orders sought included an order requiring Total to supply motor fuel to it in respect of certain premises on the same terms as had applied to the supply of motor fuel to certain premises pursuant to arrangements in existence prior to l4 July l982. Compensation was also sought.
On 9 August l982 similar proceedings were commenced by Centenary Investments Pty. Limited ("Centenary") against Total seeking similar orders in respect of the supply of petrol to a number of premises in which Centenary was interested. In each application interlocutory relief was sought in the form of an order requiring Total to supply the fuel on those terms pending final determination of the proceedings.
The interlocutory applications in each case were finally dealt with by the learned trial Judge on l0 August l982. In each case His Honour dismissed the application for interlocutory relief and ordered the applicant to pay the costs of Total.
BHC and Centenary (the appellants) have appealed to this Court against His Honour's refusal of interlocutory relief. They seek an order from this Court against Total (the respondent) in substance in the terms sought from Fitzgerald J.
Section l0 of the Act provides:-
'(l) Where a franchise agreement contains provisions of a kind referred to in paragraph (c) of the definition of 'franchise agreement" in sub-section 3(l), the succeeding provisions of this section apply in relation to the agreement to the extent that those succeeding provisions are not inconsistent with the operation of an emergency law (including a direction or order given or made under such a law).
(2) The franchisor shall, during the term of the franchise agreement, supply to the franchisee at the marketing premises such quantity of motor fuel as is from time to time reasonably required by the franchisee for retail sale by him at the premises.
(3) ........ ........ ........ ........ ........ ......
(4) Sub-section (2) does not apply during any period in which _
(a) the franchisee fails or refuses to comply with a provision of the franchise agreement relating to payment with respect to motor fuel supplied or to be supplied in pursuance of that sub-section; or
(b) the franchisor is, by reason of a shortage of supplies, an industrial dispute or circumstances beyond its control, unable to supply motor fuel to the franchisee in accordance with that sub-section."
'Agreement' is defined in section 3(l) of the Act as follows:-
'Agreement' means any agreement, arrangement or understanding _
(a) whether formal or informal or partly formal and partly informal;
(b) whether written or oral or partly written and partly oral; and
(c) whether or not having legal or equitable force and whether or not based on legal or equitable rights."
'Franchise agreement' is defined in section 3(l) of the Act as follows:-
'Franchise agreement' means an agreement containing-
(a) provisions, whether express or implied, under or by virtue of which a corporation (in this Act referred to as the 'franchisor') authorises, permits or requires a person, being another party to the agreement (in this Act referred to as the 'franchisee'), to use, in connection with the retail sale of motor fuel by that person at the premises to which the agreement relates, a mark identifying, commonly associated with, or controlled by, that corporation or a related corporation;
(b) provisions, whether express or implied, under or by virtue of which a corporation (in this Act referred to as the 'franchisor') grants a right to, or otherwise authorises or permits, a person, being another party to the agreement (in this Act referred to as the 'franchisee'), to possess, occupy or use the premises to which the agreement relates in connection with the retail sale of motor fuel by that person at those premises; or
(c) provisions, whether express or implied, under or by virtue of which _
(i) a corporation (in this Act referred to as the 'franchisor') is entitled or required to supply motor fuel to a person, being another party to the agreement (in this Act referred to as the 'franchisee'), for retail sale by that person at the premises to which the agreement relates; or
(ii)a person (in this Act referred to as the 'franchisee') agrees with a corporation (in this Act referred to as the 'franchisor') to acquire motor fuel from another person (whether a party to the agreement or not) for retail sale by the first-mentioned person at the premises to which the agreement relates".
Section 6(l) of the Act is also relevant. It provides:-
'This Act does not apply in relation to a franchise agreement unless :-
(a) it contains provisions of the kinds referred to in paragraphs (a) and (b), and of the kind referred to in paragraph (c)(i) or (ii), of the definition of 'franchise agreement" in sub-section 3(l); or
(b) it is one of two or more franchise agreements that together contain provisions of the kinds referred to in paragraphs (a) and (b), and of the kind referred to in paragraph (c)(i) or (ii), of that definition, where _
(i) the franchisees in relation to those agreements are the same person or are connected with each other; and
(ii)the franchisors in relation to those agreements are the same corporation or are related to each other."
Jurisdiction is conferred on the Federal Court to deal with these applications by section 26 of the Act. Among the orders which the court is empowered to make under section 2l is an order directing the franchisor to comply with the requirements of a provision of the Act (section 2l(l)(b)) and ancillary or consequential orders (section 2l(l)(d)). Under section 2l(2) the court may make an interim order pending the determination of an application and by virtue of sub-section (4) that order may be made subject to such conditions as the court thinks fit.
The applications before the Court in these appeals seek orders requiring the respondent to comply with section l0(2) of the Act. On the facts of this case it is common ground that, in order to succeed, a prima facie case must appear that a relevant franchise agreement to which the Act applies falls within secton l0(l) and that the franchisee has not failed or refused to comply with the provisions of the franchise agreement relating to payment with respect to motor fuel supplied up to the time the applications were taken out in each matter (section l0(4)(a)). That last proposition is stated in that form without intending to indicate where the onus would lie.
It seems clear from the latter provisions that the obligation imposed on the franchisor to comply with section l0(2), that is, to supply motor fuel to the franchisee, is not imposed whilst such a failure or refusal exists. In such a case, therefore, it would not be possible to establish that the franchisor had failed to comply with the requirements of section l0(2) so as to entitle an applicant to an order under section 2l(l)(b).
The learned trial Judge rejected the application in each case on three grounds. First, he was not satisfied in either case that there existed a franchise agreement to which the Act applied. Secondly, even if such franchise agreements did exist, he was satisfied that there had been a persistent failure or refusal to make payment with respect to motor fuel supplied in accordance with the arrangements entered into between the parties. Thirdly, he indicated that, in exercising a discretion under section 2l(2) and (4) of the Act to grant interim relief, he would, in any event, decline to order supply by the respondent to either of the appellants, except on the basis offered by the respondent, that is, cash or bank cheque on delivery. This, of course, was not the basis upon which either of the appellants was seeking an order.
Senior counsel for Centenary submitted that the learned trial Judge should have given a statement of the primary facts which he found and his reasons in the judgment which he delivered. It was recognised that the matters were urgent and that an immediate decision had been sought, also that it was an interlocutory proceeding. In the result, counsel indicated that he was drawing the Court's attention to this in order to demonstrate the difficulty in which he was placed in arguing on the appeals that the Judge had erred in particular respects. He did not contend that the Court should hold there was error of law in relation to the statement of facts and giving of reasons, and did not ask for the matter to be sent back to the trial Judge, but asked this Court to deal with the appeals.
Leave was given to each party to tender some additional evidence on affidavit. The appellant tendered an affidavit dealing with an approach in chambers to the Judge asking him to deliver a more detailed judgment. This included a transcript of the proceedings before him. His Honour refused the request.
The appellant also tendered an affidavit verifying the full transcript of the original proceedings before His Honour. This included a transcript of the argument. This was originally reported but not transcribed, and did not appear in the appeal book.
The respondent also tendered two affidavits. It was shown that a provisional liquidator of Centenary had been appointed on 20 August l982 and that receivers and managers had been appointed over certain assets of Centenary on l2 August l982, and that Centenary had presented a petition for the winding up of BHC on 27 August l982.
For the appellants, three main arguments were put: First, that His Honour was in error in holding there was no franchise agreement. Secondly, that he was in error in holding that if there was a franchise agreement, there was persistent failure or refusal by Centenary to make payment with respect to motor fuel supplied in accordance with the arrangements between the parties so far as the credit arrangements were concerned. Thirdly, that His Honour was in error in imposing in his interim order the terms which he did for payment by bank cheque for supplies of petrol on the basis that undertakings as to damages would be worthless if it were later found that there were insufficient funds to pay for fuel supplied.
The learned trial Judge was, as has been said, dealing with the matter on an interlocutory basis. As such, the evidence is understandably less than complete, and one task of a Judge is to determine whether the applicant has made out a prima facie case. The evidence in these cases at the trial could well present a different picture after witnesses are called and examined. Trying to construe conflicting ambiguous statements in affidavits tendered by either side and to weigh them in the absence of witnesses is a somewhat sterile exercise.
An appeal in such circumstances has the added difficulty, that appeal courts are properly reluctant to interfere in the discretion exercised by a primary Judge dealing with interlocutory proceedings. See Adam Brown Male Fashions Pty. Ltd. v Philip Morris Inc. (l98l) 55 A.L.J.R. 548 at p.550, Superstar Australia Pty. Limited v Coonan and Denlay Pty. Limited (l98l) 3 A.T.P.R. Number 40-253 at p.43.272.
The first question for this Court is whether in each case His Honour was in error in holding there was not a franchise agreement. We incline to the view that a prima facie case was not made out that there was any franchise agreement with BHC in terms of paragraph (c) of the definition in section 3 of the Act, but that there was a prima facie case made out that there was a franchise agreement with Centenary in terms of that definition. However, we are not satisfied that it was shown that a prima facie case was made out that any franchise agreement existed to which the Act applied, having regard to the terms of section 6 of the Act.
The arguments presented do not convince us that it is reasonable to construe the word 'and' where it appears in section 6(l) as 'or'. The agreement relied on by Centenary is basically that of 27 August l98l. We do not think that this agreement satisfied the definition of franchise agreement in (b) of section 3.
As to the second question, we would not disagree with the decision of the learned trial Judge so far as Centencby is concerned. If there were such a franchise agreement, there was persistent failure or refusal to make payment with respect to motor fuel supplied in accordance with the arrangements entered into between the parties. We say this taking into account the careful argument addressed to us by counsel for Centenary regarding cancellation of three cheques each for $250,000 and the suggested effect of promisory estoppel.
Finally, we would not interfere with the interim order made by the learned trial Judge. It was common ground that, for the purposes of these appeals, the credit limit of Centenary was $2,000,000 at the end of May l982 and that by 30 June l982 its debt to Total was about $3.l/3 million. Certainly some negotiations were taking place concerning the credit limit.
Since 2 August l982 one delivery of petrol has been supplied by Total against a bank cheque. Total remains prepared to sell petrol to Centenary if paid by bank cheque upon delivery. There is no evidence that Centenary has reduced its debt to Total since mid-July.
In addition, this Court must take into account the additional evidence regarding the appointment of a provisional liquidator of Centenary. We consider it would be unreasonable and unacceptable, upon the balance of convenience, to order supply on credit at this stage. We dismiss the appeals with costs.
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