Jalpalm Pty Ltd v Hamilton Island Enterprises Pty Ltd

[1995] FCA 11

IN THE FEDERAL COURT OF AUSTRALIA )No. QG 198 of 1994
QUEENSLAND DISTRICT REGISTRY     )
GENERAL DIVISION                 )

BETWEEN:  JALPALM PTY. LTD.
                  (ACN 010 560 915)

Applicant

AND:     HAMILTON ISLAND ENTERPRISES PTY. LTD.
                  (ACN 009 946 909)

First Respondent

AND:JOHN PALMER

Second Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:         Drummond J
DATE OF ORDER:              16 January, 1995
WHERE MADE:                 Brisbane

THE COURT ORDERS THAT:

1. The application for leave to appeal is dismissed.

1. The applicant pay the respondents' costs of and incidental to the application for leave to appeal.

NOTE:     Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA )    No. QG 198 of 1994
QUEENSLAND DISTRICT REGISTRY     )
GENERAL DIVISION                 )

BETWEEN:  JALPALM PTY. LTD.
                  (ACN 010 560 915)

Applicant

AND:     HAMILTON ISLAND ENTERPRISES PTY. LTD.
                  (ACN 009 946 909)

First Respondent

AND:JOHN PALMER

Second Respondent

Coram:    Drummond J
Date:     16 January, 1995
Place:    Brisbane

REASONS FOR JUDGMENT

This is an application for leave to appeal an order of Kiefel J of 10 January, 1995 refusing an application for an interlocutory injunction restraining the first respondent from retaking the possession of premises on which the applicant conducts a pizza parlour business. 

The principles upon which leave to appeal an interlocutory order or judgment is granted are well settled.  In Jarrett v Seymour (1993) 46 F.C.R. 557 Lockhart and Beaumont JJ said at 559:

"The relevant considerations for the Court in considering whether leave to appeal should be granted are:

(a)whether in all the circumstances the judgment of the primary judge is attended by sufficient doubt to warrant it being reconsidered by the Full Court; and

(b)whether substantial injustice would result if leave were refused supposing the decision would be wrong."

It is trite to observe that both tests must be satisfied before leave to appeal can be granted.

A number of issues were canvassed before her Honour.  The applicant's case before me, however, is based upon what it says is the evidence showing that it accepted an offer by the first respondent made in about November 1993 to grant a new 5 year licence of the premises to it commencing on 1 January, 1995 and, in the alternative, on evidence showing that the first respondent is estopped from revoking this offer of late 1993, even if the applicant cannot make out a case of having effectively accepted the offer.

It is clear that in or about November 1993 the first respondent made an offer to grant a new licence to the applicant to commence on expiry, on 31 December, 1994, of its existing licence.  The first respondent called it an "irrevocable offer".  Kiefel J, however, said:

"Whilst expressed as irrevocable, there is no evidence of consideration in money given for the promise not to revoke, and no submissions were made as to how consideration was otherwise provided."

No attempt was made to point to any evidence throwing doubt on the correctness of this view expressed by her Honour.  Subject to the estoppel argument, the evidence shows, in my view, that her Honour was correct in declining to find that the offer was irrevocable.

The only evidence before her Honour that this offer of November 1993 was accepted by the applicant is that the applicant purported to do so by memorandum of 28 December, 1994.  Of this evidence her Honour, however, said:

"... the offer appears to have been revoked by letters of 11 July 1994 and a memorandum of 21 October 1994." 

The first of these documents which her Honour identified as operating to revoke the November 1993 offer of a new licence, i.e., the letter of 11 July, 1994, is a letter hand delivered, according to the evidence, by an officer of the first respondent to Ms. Evans, as a director of the applicant, at a meeting held about that time.  It contains, among other things, the following statement:

"Given the above matters we will not be renewing your licence at its expiry on 31 December 1994."

This appears, as her Honour said, to be a clear withdrawal of the offer of November 1993, which in turn appears to have always been revocable, notwithstanding the first respondent's contrary description of it.  It was, as her
Honour in my view correctly identified it, an effective revocation of the November 1993 offer before there was ever any attempt by the applicant to accept it.

It was submitted that Kiefel J was in error in concluding that this letter of 11 July, 1994 was effective to revoke the offer and reliance was placed on what Ms. Evans says in paragraph 22 of her affidavit filed 9 January, 1995:

"On 1 August 1994 I met with John Palmer and Bill Hogg.  At that meeting I was handed, in error, an unsigned letter dated 11 July 1994.  The letter required that Jalpalm remedy breaches of the licence agreement within 28 days and I was urged to find a suitable purchaser for the business."

It was further submitted that the respondents have never disputed what Ms. Evans has to say about the letter being handed to her in error.  Mr. Palmer, in paragraph 10 of his affidavit, deals with the incident in this way:

"In July 1994 when the Applicant commenced to fall into arrears with respect to payments due under the Licence Agreement the First Respondent wrote to the Applicant indicating that in the circumstances the Licence Agreement would not be renewed on its expiry on 31 December 1994."

Mr. Palmer then refers to and exhibits the letter of 11 July, 1994 to which I have referred.  There is no doubt that this letter of 11 July, 1994 was handed to and received by Ms. Evans at about that time.  All she says about the circumstances in which the letter was handed to and received by her was that it was all done "in error".  For her merely to assert that it was handed to her in error does not in my view amount to evidence anywhere near sufficient to throw any doubt on Kiefel J's conclusion that there was no arguable case that the offer was not effectively revoked in about July 1994.

The letter was physically accepted and retained by Ms. Evans without comment at least until she took the matter up in her affidavit of 9 January, 1995 in the context of this litigation.  What Ms. Evans has to say is merely an expression of opinion that calls out for explanation if any weight is to be added to that opinion.  Mr. Palmer unequivocally asserts that the first respondent gave the letter to the applicant as a revocation of the offer.  There is, as I say, no reason for doubting the correctness of her Honour's views as to the significance of the delivery of the letter of 11 July, 1994.

Counsel for the applicant pointed to certain difficulties in accepting the correctness of what her Honour had to say about there being, in any event, no effective acceptance by the applicant on 28 December, 1994, of the first respondent's November 1993 offer.  Her Honour said:

"That memorandum [i.e. the applicant's memorandum of 28 December, 1994] may not in any event constitute acceptance, given that it speaks only as to a future intention to exercise the option and not a present acceptance of it, and further speaks of a later communication [i.e. the first respondent's memorandum of 21 October, 1994] said to confirm the option offered, but which communication conditions the offer to payment of arrears by 31 December 1994, which condition was not fulfilled."

It was said that it was the first respondent who in its memorandum of 21 October, 1994 ineffectually sought to impose a new obligation on the applicant, viz., payment of arrears under the existing licence agreement, with respect to what the applicant had to do to effectively accept the offer of November 1993.  But since the original offer of November 1993 was revoked on or about 11 July, 1994, the first respondent's memorandum of 21 October, 1994 should probably be characterised as a new offer, which it was free to condition as it chose, as it did.  The applicant's letter of 28 December, 1994 was not an acceptance of that new offer since it did not accept the obligation to bring all arrears up to date, as was required by the memorandum of 21 October, 1994 as part of the new offer of a further licence.

As to the alternative argument that the first respondent was estopped from revoking its offer of November 1993, this argument was founded on the fact that in December 1993 or thereabouts, soon after the offer of November 1993 of the new five year term, the applicant, in reliance on that offer, bought a new business which it would not have committed itself to but for the first respondent making what it called its "irrevocable offer".  Kiefel J said of this estoppel argument:

"It is said that, in reliance upon the letter, the applicant entered into a further agreement to purchase another business.  That business has, however, traded reasonably well.  The applicant submitted, however, that the taking of additional commitments had led to it being over-extended financially.  Its present financial position (one which was reached before the further licence was to be given) is precarious.  How this state of affairs can be said to have followed from reliance upon the representation so as to constitute the necessary detriment, and how a court might then be inclined to grant not an award of damages but relief by way of an order for performance of the promise, was not however made apparent to me."

The applicant's argument before me was that it altered its position in reliance on the offer so as to give rise to an estoppel against the first respondent withdrawing the offer of November 1993 by committing itself to this second business.  But it was acknowledged that the new business has made a positive contribution to the applicant's overall financial position by cushioning the losses the applicant has suffered in the pizza operation, which it is carrying on at the first respondent's premises.

To act on a representation to one's advantage cannot, in my view, give rise to an estoppel against the representor altering the position it represented it would adopt and maintain.  To found an estoppel at law, detrimental reliance on the estopping conduct is required.  And nothing was pointed to which would make it inequitable for the first respondent to alter the position it adopted when it made the offer in late 1993 by withdrawing the offer:  so there can be no equitable estoppel against the first respondent doing that.

There is, in my opinion, no sufficient doubt about the correctness of her Honour's findings on all the critical matters which bear upon the question whether leave to appeal should be granted and the application for leave to appeal must be dismissed.

I should add that even if I could be satisfied as to the first limb of the test in Jarrett v Seymour, I would have difficulty in accepting that the applicant had met the second limb of the test by showing substantial injustice.  Two arguments were advanced:  firstly, it was said here that if the injunction is not granted and that decision is wrong, the applicant will suffer a substantial injustice because it will lose the opportunity to realise, by sale of the pizza parlour business, the goodwill of that business.  There is, however, in my view, no sufficient evidence before me that this business, which has long been making a loss, has any significant goodwill.  It was then argued that if the injunction is not granted and the applicant goes into liquidation, then it is unlikely that the liquidator will pursue the company's claim for damages against the first respondent, to which her Honour referred in her reasons.  But there are a number of answers to this argument.  There is no sufficient evidence to indicate that loss of possession of the premises will, in fact, be likely to cause the applicant to go into liquidation.  Nor is there any evidence showing that even if it were to retain the possession of the premises and thereby avoid liquidation it would still have the financial resources to prosecute the action for damages to a conclusion,
given the likelihood that it will be required to provide security for the respondent's costs.

The injunction granted by Kiefel J on 10 January, 1995 expressed to operate until 4.15 p.m. today or further earlier order which restrained the first respondent from taking possession or attempting to take possession of the premises previously occupied or presently occupied by the applicant is dissolved.

The application for leave to appeal is dismissed with costs.

I certify that this and the preceding
eight pages are a true copy of the
reasons for judgment herein of the
Honourable Justice Drummond.

Associate:

Date:        16 January, 1995

Counsel for the applicant:           Mr. M. Daubney

Solicitors for the applicant:        Watson Stokes

Templeton

Counsel for the respondents:         Mr. R. Derrington

Solicitors for the respondents:      Bain Gasteen

Date of Hearing:  16 January, 1995