Em-Es Petroleum Pty Ltd v BP Australia Ltd

[1988] FCA 521

JUDGMENT NO. 52 I ./.8.8-

IN THE FEDERAL COURT	OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY	)	No. NG 1187 of 1988
)
GENERAL DIVISION	)

BETWEEN:  EM-ES PETROLEUM PTY

LIMITED and

JOE NADER

Applicants

AND :

- BP AUSTRALIA LIMITED

Respondent

CORN4 :	Davies J.
-	DATE :	7 September 1988
PLACE :	Sydney

REASONS FOR JUDGMENT

EX TEMPORE

I think I should express my views rather than reserve

them. It	is also appropriate that I should be very brief and not
deal with either the facts or	the law at any length. They are
not matters to be determined in these proceedings.	I recognise

that the factual material presently before the Court is only very

respect to the orders sought. The application arises out of an

limited material brought on an interlocutory application. I

recognise, also, that there has only been very brief discussion

of them.

I approach the matter on that footing, but I have

nevertheless come to a view as to what ought to be done with

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L. t

appeal from a judgment of M C Justice Sheppard, which was delivered on 15 August 1988. In that judgment hls Honour

concluded that the applicant, Em-Es Petroleum Pty Llrnlted, and

another applicant before him, were not franchisees for the

purposes of the Petroleum Retail Marketing Franchise Act 1980.

Hi6 Honour came to the view that the applicant, in particular,

did not demonstrate that the requirements of paragraph (a) of the

definition 'franchise agreement', in s.3 of the Act, had been

satisfied, that is to say, the provision with respect to a mark

or marks on the franchiscd premises.

The motion was first brought in the appeal and it was

sought to obtain orders maintaining the status quo between the

parties pending the determination of the appeal. The formal

order sought was not a stay, but orders by way of injunctions

restraining the respondent, BP Australia Limited, from going

ahead with certain actions which it had taken after delivery of

his Honour's judgment. Mr D.A. Staff QC, senior counsel for the

respondent, submitted that there was no jurisdiction for a single

judge of this Court to make orders of the type sought. He

submitted that the jurisdiction to make such orders vested in	a
Full Court of this Court by virtue of the provisions of s.25(1)

of the rederal Court of Australia Act.

I am of the view, however, that a single judge has

jurisdiction. The cases show, in my opinlon, that an applicatlon

of this type does not necessarily seek to exercise the appellate jurisdiction of the Court, but may rely upon the general power of the Court to make such orders as are appropriate, having regard

to issues which are before the Court. A single judge may

exercise the jurisdiction of the Court under 5.23 of the Federal

Court of Australia Act, and, in my view, these orders are sought under that provision.

I would add that, although the Act itself, and the

Rules, specifically confer upon a single judge a power to make an

order by way of stay of	a judgment, the subject of appeal, I
think that those provisions do not detract from the principle	I

have laid down, but indeed confirm that an order by way of stay, and orders by way of interlocutory injunctions maintaining the position pending an appeal, are orders which are appropriate to

be made by a single judge and not only by	a Full Court.
In the United Kingdom, that matter was discussed and the principle I have mentioned was enunciated by Megarry	J. in
Erinford Properties Limited v.	Cheshire County Council [l9741 Ch.

261.    In this Court, the principle has been applied and orders

have been made by Toohey J. in Bercove v. Hermes (No 2) 51 A.L.R.

105; by Pincus J. in Patton v. Minister for Defence 71 A.L.R.

637; by rrench J. in Tuncak and Others v. Minister for

Immigration and Ethnic Affairs, delivered 24 October 1987, in
matter No. VG 195 of 1987.	M r Staff has kindly referred to a
similar expression of view by Deane	J. in the Attorney-General

-	(UK) v. Heinemann Publishers Australia Pty Ltd 75	A.L.R. 461 at
p. 464.

Because the orderr do not arise solely out of the

appeal, MC R.W.R. Parker QC, senior counsel for the applicant,

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4.

has thought lt proper to bring his motion in the appeal, in

another proceeding in the Court, No. G343 of 1988, in which the

applicant sought an order for the renewal of the alleged

franchise agreement or agreements, and also in a new applicatron

- the number of which is not presently before me but	in respect
of which leave was given yesterday for the filing	- which seeks

to challenge by reason of the provisions of the Petroleum Retall Marketing Franchise Act the matters that have occurred since the

handing down of Sheppard J.'s judgment.

iii rS6pGCt -2:  6:: i G t i t Z S , the appeal kill

determine one issue and, therefore, the appeal will play a part; but with respect to the other issues, they are issues which are not presently within the appellate jurisdiction of the Court but

are still before the Court at first instance. Because of the

principle I have enunciated and because of that fact, I have no

doubt that there is jurisdiction to make the orders which are	now
sought.

I need not discuss at any length the princlples to be applied with reapect to applications such as this. The usual

authorities on the grant of an interlocutory injunction show that

there muat be a serious question to be tried and a balance of convenience for the granting of the order. Insofar as an order is sought pending the hearing of the appeal, rt has been sald that there ought to be strong or exceptlonal circumstances for

the making of an interlocutory order. It has also been said that

it is proper to make an order if the failure to grant a stay or

the failure to grant an interlocutory injunctlon restraining

action pending the appeal will render the appeal nugatory.

That was laid down many years ago in wllson v.

Church (No 2 ) (1898) 12 Ch.D. 454. More recently, the principle

has been applied by the Court of Appeal in New South Wales in

Jesasu Pty Ltd v. Minister for Mineral Resources and Anor, 11

N.S.W.L.R. 110. His Honour, Deane J., adverted to the matter in

Attorney General (UK) v. Heinemann, to which I have referred.

Insofar as the application raises a challenge to the

judgment of Sheppard J., it is proper that I should say that

nothing that has been submitted raises, in my mind, a doubt as
to his Honour’s judgment. Nevertheless, it is clear that the

Petroleum Retail Marketing Franchise Act is a difficult Act. The

interpretation and application of it is still a matter of some

uncertainty and debate and I accept that the appeal is a serious

and proper appeal.

Now, I can come to the matters in respect of which

relief is sought. I deal with them only briefly, as I have

mentioned, for it is inappropriate in applications such as this

to say anything which might prejudice the ongoing litigation
betwoon parties. The first matters to which	I turn are the
notices to quit given by	BP to the applicant to quit the
franchased premises as at	30 September next. These notices go to

the four sites which the appllcant occupies, in its allegation as

franchisee.

M C Staff has very properly proferred an undertaking

6.   I

that, on the payment of certain sums alleged to be Outstanding
and on the regular payment in advance of the rental due in
respect of the sites, the possession of the applicant will not be
disturbed until the delivery of judgment in the appeal. In my
view, such an undertaking is an appropriate one to give. ~t
seems to me that if BP were to take possession of the sites, the

subject matter of the appeal would be destroyed, the appeal would

become nugatory and it is within the ordinary principles that	a
step of that type ought to be stayed.	I think that either an
injunction should go or an undertaking should be given on	BP'S

p e r t . Ths precise tnrmr nf the undertaking miaht. I think, be

stood over for, say, one week so that the outstanding issue of

rates and taxes alleged to be payable by the applicant can be

resolved - and I presently have in mind that the matter might be

stood over until, say, next Wednesday at 9.30 for the parties to finalise the terms of the undertaking or the terms of any order which might be sought.

think, at the same time, that because of the problems that have arisen, there ought tc be an undertaking by by the

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applicant and i ts managing director, nr Saklaoui, personally that

all obligations under the leases will be met and an undertaking

to pay any damages caused by either the undertaking to be given

by BP or an order of the Court to that effect.

The second matter to which I turn is a direction given

by BP to the applicant, which is the proprietor of four service
stations, that the applicant should pay for its fuel, when
delivered, by bank cheque.

l .

This is not an easy matter to be resolved in proceedings

of this nature, and I do not wish to say any more about i t than that it seems to me on the evidence presently before the Court that the imposltlon of that obligation was premature; that the

applicant had not shown such neglect in its financial
responsibilities that it ought yet to be put under an obligation

to pay by bank cheque.

MC Staff this morning offered some proposals as to

payment by way of bank cheque, but having regard to the limited

information before me, it seems to me that the requirement to pay

by bank cheque would quite significantly interfere with the

running of the four stations and would have	a tendency indeed to
defeat the buriness.	I am inclined, therefore, to think that

there a s a serious argument that the imposition of the condition
is onerous, unreasonable and discriminatory, of the type that 1s
proscribed by 6 . 9 of the Act and in respect of which the Court

ought to make an order by way of injunction.

So, in renpect of that, I presently have in mind that

the Court should grant an injunction. And, at the same time,	I
think that both the applicant and MC Saklaoui personally should

undertake th8t no fuel will be purchased for which the applicant

is unable to pay; and that both the applicant and	M C Saklaoul
will separately undertake to make good to	BP any damage which
results from any of its cheques not belng met. Indeed,	i t should

be explained to PIr Saklaoui that it is intended that a breach of

the undertaking can be punished by the Court. So, it is a matter

that could have more than financial consequences.

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The final matter 1s the directlon the applicant received

from BP in late August reduclng by two cents the four cents
rebate previously received on the wholesale price of the fuel
dellvered to Lt. Notice was given by BP to the same effect to
all other franchisees, save a limited number who had entered lnto

a franchise agreement less than six months previously. BP

adopted the policy that in respect of the six monthly franchlsees
it would reduce the rebate more gradually over the slx month

period.

There was. t h e r e f o r e . nothin? discr'minatory in the

reduction of the rebate, though the applicant contends that it

seriously interferes with its business, it apparently in past

times having engaged to	a considerable degree in fuel
discounting.

To establish any right to the four cents rebate, the

applicant would have a long course to travel.

In the first instance, Mr Justice Sheppard has held that

it is not a franchisee.

In the second instance, the written argument which was

at least an important element in the franchise agreement
specifically provided that the four cents rebate could be the
subject of variatlon by BP upon notice being glven. So, there
was never any written agreement between the parties entrtling the
applicant to a continuation of a four cents rebate. That written
agreement, which contained the provisions for the four cents

rebate and the variation of it by notice, itself expired in

February of 1988 and I S the sub~ect of an application in this

Court for an order requiring its renewal. Renewal IS opposed and notice of the grounds upon which renewal is challenged was given prior to the expiration of that volume allowance agreement.

The application relies not only upon the expired written

agreement but upon the course of trading between the parties.

That again is a matter which is affected by the decision	of
Sheppard J..

And finally, I might say, though as I have indicated I

express no firm view on it, it does not presently appear to me that the four cents rebate is a matter in respect of which relief can be obtained by the applicant under the Petroleum Retail

Racketing Franchise Act.

That Act does not permit the Court to determine what is

a fair or reasonable price as between the parties; rather S. 20

provider that there shall not be discrimination by a franchisor

as between franchisees so that it precludes discrimination.

Section 9, sub-section (l), which is the section relaed upon by

MC Parker, senior counsel for the applicant, appears to me to deal with a different type of circumstance.

I note in particular that s . 9 A - which deals with

circumstances where payments by a franchisee have been increased
unreasonably - is not a section which deals with amounts payable
in respect of motor fuel or other stock in trade; and sub-section

10.   c

of s.10, which gives a power to the Court to fix the price of

fuel as between the franchlsor and franchisee, 1s speciflcally
llmited to a case where the franchlse agreement was in effect

before the coming into operatlon of the Act.

Now, those provisions leave me with the view that the

price of fuel is basically determined by the general course of

dealing by the franchisor and that the principal provlslon 1s

that there will be no discrlmination as between franchisees. ~f

that be the case, then not only would the Court not be able to

make an ncder requiring a f o u r cent rrhatr in t h e ~ C C E F R ? rr_sr,

but any such order would conflict with the provisions of 6 . 2 0 .

On this issue, my view is that there is not an issue to

be tried of sufficient seriousness to justify the making of an
order and there is no balance of convenience in favour of an

orde r .

I certify that this and the 9

preceding pages are a true copy of the Reasons for Judgment herein of the Honourable nr J u s t h Davies.

Associate: &
Date:	7 epte ber 1988

Counsel for thdapplicant: M C R.W.R. Parker

Hr M. Tubbs P.C.

Solrcitors for the applicant:	Stolanovlc 6 Davld
Counsel for the respondent:	Hr D.A. Staff P.C.
Hr H . F .  Holmcs
Solicitors for the respondent:	Clayton utz
Date of hearing:	7 September 1988