Fisher (Five Mile) Pty Ltd v Total Australia Ltd

[1982] FCA 69

Re: FISHER (FIVE MILE) PTY. LIMITED
And: TOTAL AUSTRALIA LIMITED and COUNCIL OF THE SHIRE OF GUNDAGAI
No. G45 of 1982
Petroleum Retail Marketing

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Morling J.

CATCHWORDS

Petroleum Retail Marketing - Lease of service station - lease of adjoining land - adjoining land required to be used for a picnic ground and cafe - facilities common to both sites - lessee in possession of both sites required to be the same person by freeholds owner - covenant not to instal equipment for sale of petrol (on the cafe/picnic site) - whether lease of cafe/picnic site is a franchise agreement - interlocutory relief - no prima facie case

Petroleum Retail Marketing Franchise Act 1980, s. 3(1), 6(1)

HEARING

SYDNEY

#DATE 28:4:1982

ORDER

1. The application is dismissed.

2. The applicant pay the respondents' costs of the application.

JUDGE1

As this matter is of considerable urgency I propose to give my decision immediately. I hope by so doing I do not do any injustice to Mr McDevitt's careful argument.

The Gundagai Shire Council is the proprietor of two parcels of land situated on the Hume Highway near Gundagai. The land is well known as the site of a small monument of a dog sitting on a tucker box. Situated on one of the parcels, lot A, is a building described in evidence as a kiosk. A photograph of it has been tendered and it gives the appearance of being a small cafe.

Also situated on lot A is a covered walkway that gives access to the adjoining lot B upon which is erected a service station. The service station, judging from the photographs in evidence, is of fairly conventional design. It consists of a small shop or office area with petrol pumps in front of it, the pumps being constructed under an overhanging awning or canopy.

From the somewhat sketchy evidence which is presently before me it would seem that motor vehicles approaching or leaving the petrol pumps on lot B would in all probability cross that part of lot A that is situated between the walkway and the highway frontage of the land. There is only one set of toilets and a single sullage system and water supply to service both lots. The toilets are on lot A but the principal water supply is on lot B and as I have said the buildings on the two lots are joined by a covered walkway. On lot B is a storeroom which is used for the purposes of the kiosk erected on lot A.

In 1961 the Council granted a lease for 25 years of lot B to Total Oil Products Australia Pty. Limited ("Total"). I shall hereafter refer to this lease as "the service station lease". Pursuant to that lease Total agreed to erect upon the demised land a service station and a brick cottage. The lease required Total to sub-let the demised premises - that is lot B - to such persons as may be the lessee from the Council of lot A.

It is clear from the clauses 4(a), (b) and (c) of the service station lease that it was always contemplated that whoever was the lessee of lot A would also be the sub-lessee from Total of lot B; and, conversely, that whoever was the sub-lessee from Total of lot B would also be the lessee from the Council of lot A. Those clauses are in the following terms:

"4. AND IT IS HEREBY AGREED AND DECLARED as follows:-

(a) That any lease hereafter during the term hereof granted by the Council in respect of Lot A shall contain a covenant by the Lessee of Lot A to the effect that a breach by that Lessee of any covenant contained in the sublease from the Company to that Lessee shall constitute a breach of covenant between that Lessee and the Council which will entitle the Council to re-enter and determine the lease and any sublease granted by the Company in respect of the demised premises shall contain a covenant by the sublessee to the effect that breach of any covenant or conditions in the lease from the Council to the Lessee of Lot A shall constitute a breach of covenant between the sublessee and the Company under the said sublease which would entitle the Company to re-enter and determine the sublease. Should the Lessee of Lot A commit a breach of his lease from the Council and as a result of such breach the Council shall re-enter Lot A or otherwise terminate the lease then in that event the Company shall forthwith terminate the then current sublease of the demised premises and shall thereafter take all steps reasonably necessary to regain possession of the demised premises. Should the sublessee of the demised premises commit a breach of his sublease from the Company and as a result of such breach the Company shall re-enter the demised land or otherwise terminate the sublease then in that event the Council shall forthwith terminate the then current lease of Lot A and shall thereafter take all steps reasonably necessary to regain possession of Lot "A".

(b) That the Council shall while the Company continues to remain the Lessee of the demised premises permit the service station erected thereon to be connected by a covered way with the kiosk erected on Lot A and to erect toilet blocks under the said covered way PROVIDED THAT the plans and specifications in respect thereof shall be approved by the Council and the painting and decoration thereof shall be approved by the said Council.

(c) That to the intent that the Lessee of Lot A will at all times during the term of the lease from the Council to the Company of the demised premises be the same person as the sublessee of the demised premises the Council will upon the expiration or earlier termination of any lease of Lot A and sub-lease of the demised premises make it a condition of any renewal of lease or new lease of Lot A that the proposed lessee must enter a sublease with the Company for the same term as that in respect of Lot A and containing the same conditions covenants and provisoes as shall be contained in the sublease to the first sublessee of the demised premises save as to the rent which shall be reserved in accordance with clause 3 (e) hereof. The Council shall not during the term of the said lease from the Council to the Company grant any lease in respect of Lot A unless the proposed lessee shall simultaneously execute a sublease with the Company in the terms abovementioned nor shall the Company grant a sublease in respect of the demised premises unless the proposed sublessee shall simultaneously execute a lease with the Council in respect of Lot A."

On 22 February 1980 the applicant executed a sub-lease of lot B from Total for a term expiring on 22 April 1982. It desires to renew that sub-lease but for reasons which I do not think I need now mention Total has declined to renew it. Accordingly the applicant has sought relief in this Court against Total under the provisions of the Petroleum Retail Marketing Franchise Act 1980. Those proceedings are still pending and interlocutory relief has been granted to the applicant restraining Total from granting a lease of lot B to any person or company other than the applicant and from otherwise taking action to terminate the subsisting sub-lease between the applicant and Total.

On 13 May 1980 the Council leased lot A to the applicant for a term expiring on 30 April 1982 - vide cl. 1 of that lease. It is convenient to refer to this lease as "the kiosk lease".

The kiosk lease recites that the Council is the owner of the land demised upon which they erected premises known as "The Tuckerbox". Clause 3 provides, in part, as follows: -

"3. The tenant shall:

(h) actively conduct on the leased premises the business of "The Tuckerbox" in the same, similar or improved manner as it has been carried on for some years and for such purposes keep the leased premises continuously open for business and adequately staffed on every day of the year except Christmas Day and Good Friday at least between the hours of 12 noon and 5 o'clock in the afternoon."

Clause 4 provides, in part, as follows:

"4. The Tenant shall not:

(b) carry on or permit to be carried on the leased premises any business, trading venture or occupation other than that of a cafe and picnic ground and sale of souvenirs.

(d) Deface or damage any part of the leased premises or permit installation of any fixtures, fittings or equipment relating to petrol or other fuel, and

(e) erect or permit to be erected any advertising signs or hoardings, or paint or write any matter on the leased premises, or any part thereof without the consent of the council previously obtained."

Clauses 10 and 11 provide as follows:

"10. The tenant as sub-lessee under the Total Oil Lease hereby covenants to observe and perform the covenants and conditions which it is liable to observe and perform as such sub-lessee and default of a tenant under that sub-lease shall be deemed default under this lease: "11. Insofar as the provisions of this lease are inconsistent with the Total Oil Lease then the provisions of that lease shall prevail."

The reference to the Total Oil Lease in clause 11 is a reference to the service station lease granted in 1961 by the Council to Total - vide clause 5(b) of the kiosk lease.

It appears from the evidence that the applicant has conducted the service station and the kiosk known as The Tuckerbox for about 13 years. It has conducted both the kiosk and the service station as separate parts of the one business.

On 9 March 1982 the Council served a notice to quit lot A on the applicant. The Council apparently desires to grant a lease of lot A to the Messrs Barton and it is clear that unless restrained by order of this Court it will act on the notice to quit, evict the applicant from lot A and grant a lease of it to the Messrs Barton.

In these circumstances the applicant has sought interlocutory relief from this Court restraining the Council from taking such action. As I have already said, the applicant's lease of lot A runs out on 30 April, which is two days hence, and therefore the matter is of considerable urgency.

It will be apparent from what I have so far said that it would be highly desirable for all the disputes concerning the applicant's right to continue in occupation of lots A and B should be heard and determined at the same time. This is particularly the case because the Council has now been added as a respondent to the proceedings by the applicant against Total.

However, the Council does not wish to suffer the delay which would be occasioned by linking these present proceedings with the proceedings being brought against Total and has opposed the granting of any interlocutory relief or the adjournment of the present proceedings pending the resolution of the dispute between the applicant and Total. I should say that, in those proceedings, additional relief is now claimed against the Council under the Trade Practices Act; but that is not a matter which concerns me in these proceedings today.

Accordingly, I must determine the present proceedings upon the ordinary principles applicable to the granting of interlocutory relief; that is to say, I must first determine whether the applicant has made out a prima facie case in the sense that if the evidence remains as it is, there is a probability that at the trial it will be held entitled to relief. I must also consider the question of the balance of convenience if I am of the view that the applicant has made out a prima facie case. See World Series Cricket v Parish (1977) 16 A.L.R. 181 at 186 per Bowen C.J.

The only basis of the applicant's claim is that the kiosk lease is a franchise agreement within the meaning of s.3 of the Petroleum Retail Marketing Franchise Act. The applicant concedes that, to obtain any assistance from that Act, it is necessary for it to show that the kiosk lease is an agreement containing provisions of the kind referred to in paragraphs (a) and (b), and either (c)(i) or (c)(ii) of the definition of "Franchise agreement" in s.3(1) of the Act. This concession is properly made because of the provisions of s.6(1) of the Act.

Section 3(1) defines a "franchise agreement" 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') authorizes, 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 authorizes 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;"

Mr McDevitt frankly conceded that the definition posed considerable difficulties for his case. However, he argued that, in applying the definition of a franchise agreement to the facts of this case, the words "the premises" where variously used in the definition should be taken as a reference to both lot A and lot B. He was driven to this argument because, unless it is correct, it is clear that he cannot bring the kiosk lease within the definition. For instance, paragraph (a) of the definition requires the agreement to contain "provisions, whether express or implied, under . . . which a corporation . . . authorizes, permits or requires a person being another party to the agreement . . . 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 . . . that corporation. . . ". Further, under paragraph (b) of the definition it is necessary that the agreement contain "provisions, whether express or implied, under . . . which a corporation . . . grants a right to, or otherwise authorizes . . . a person, being another party to the agreement . . . 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".

On no basis, in my opinion, could it be said that the Council authorised, expressly or by implication, the use by the applicant of lot A in connection with the retail sale of motor fuel by the applicant on lot A. There are several reasons for my holding this opinion. First, clause 4(d) of the kiosk lease prohibits the installation on lot A of any equipment relating to petrol or other fuel. Next, clause 4(d) of the lease specifically prohibits the applicant from carrying on any business "other than that of a cafe and picnic ground and sale of souvenirs". Further, as at the date of the grant of the kiosk lease of lot A, the Council had long since parted with the possession of lot B upon which the service station stands. The Council had granted a 25 year lease of that land to Total in 1961. Therefore, it is impossible to construe the kiosk lease, executed in 1980, as a grant by the Council of a right to the applicant to "possess, occupy or use" any part of lot B.

It is highly probable that it was contemplated by Total, the Council and the applicant that vehicles approaching or leaving the petrol pumps situated on lot B would in all probability pass and repass across that part of lot A situated between the covered walkway and the highway frontage of the land. But that is not to say that the agreement, i.e. the kiosk lease, was a lease or an agreement under which the Council granted the applicant the right to use the land "in connection with the retail sale of motor fuel . . . at those premises.

For that reason alone I am of the view that the applicant has not made out a prima facie case in the sense that, if the matter goes to trial, it is probable or indeed at all likely that it would be found entitled to relief. To the contrary, I am of the opinion that the applicant would almost certainly fail.

So far I have said nothing about another argument of which Mr McHugh gave notice, namely that the Council is not a trading corporation for the purposes of the Act. He relied upon the decision of the High Court in the St. George County Council Case 130 C.L.R. 533 for that proposition. That case was recently considered by a full bench of this court in State Superannuation Board of Victoria v Trade Practices Commission (Franki, Northrop and Ellicott JJ. 15 April 1982) but I do not find it necessary to consider that case for the purpose of deciding this application.

Had I been of the view that the applicant had made out a prima facie case I would have been of the view that the balance of convenience lay in favour of granting interlocutory relief. As I have already said, it seems to me to be very convenient that the resolution of this dispute (that is to say the dispute regarding the kiosk premises) should take place concurrently with the resolution of the dispute relating to the service station. However, in the light of the opinion I have formed of the applicant's prospects of success at the trial, the question of the balance of convenience does not arise. The application is dismissed with costs.