Magic Australia P/L v Caltex Oil (Australia) P/L

[1989] FCA 233

NOT FOR DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY	) No. G1145 of 1988
1
GENERAL DIVISION	)

BETWEEN: MAGIC AUSTRALIA PTY

LIMITED

Applicant

AND :  CALTEX OIL (AUSTqALIA) PTY
LIMITED

Respondent

CORAM :	Davies J.
DATE :	9 May 1989

2 2 MAY 1989

PLACE:  Sydney

FEDtRAL COURT OF
AUSTRALIA

PHINCIP6L REGISTRY

REASONS FOR JUDGMENT

EX TEMPORE

This is an application for the adjournment of the

trial of these proceedings.

arson of a building which was part of or associated with the

The applicant, Magic Australia Pty Limited, is the franchisee, for the purposes of the Petroleum Retail

Marketing Franchise Act 1980 (Cth)(Itthe Act"), of a Caltex

service station on the Pacific Highway, Chatswood, which is
owned by the respondent, Caltex Oil (Australia) Pty Limited.
In May 1988, Mr Jake Sourian, the manager of the applicant's
business, was charged with a number of offences, including

Caltex service station.

On or about 20 June 1988 the respondent gave notice

terminating the applicant's lease of the premises and, in
accordance with s.16 of the Act, specified and gave
particulars of the grounds of termination on which it
relied. At least three of these grounds raised the
commission of a felony by Mr Sourian. Many other grounds
specified the commission by the applicant of certain lesser
offences. Four other grounds raised matters other than the
commission of offences.

On 29 July 1988, the applicant lodged with this Court an application under s.16(4) of the Act seeking a declaration that the notice of termination had or has no effect. Section 16(5) of the Act provides that:-

"Where an application is made under sub-section

(4), the Court may, by order, either -

(a)	declare the notice referred to in that sub-section to have had, or to have, no effect; or
(b)	declare that notice to have terminated, or to terminate, the agreement on the
date specified in the notice or on such later date as is specified in the order,

and may, in either case, make such ancillary
or consequential orders as it thinks fit,
including orders directing the preparation and

execution of documents."

Section 16(6) provides that:-

"In any proceedings under sub-section (4), the
court shall not declate the notice referred to
in that sub-section to have terminated, or to
terminate, the franchise agreement unless -

(a)	a ground specified in the notice is established by the franchisor to the satisfaction of the court; and
(b)	the court is satisfied that the termination of the agreement and any related agreement or agreements is just and equitable, having regard to all the circumstances."

These provisions permitted the respondent on 4 October 1988 to lodge a cross-claim seeking a declaration of termination and an order for possession.

On 29 July 1988, his Honour Mr Justice Burchett

made an interlocutory order that, until further order, the
respondent be restrained from taking any steps to evict the
applicant from the premises referred to in the application
and from taking any action that would interfere with the
free exercise of the rights of the applicant in the deed of
lease and supply agreement referred to in the application,
and further that the respondent promptly restore normal

supply in accordance with the supply agreement.

On 23 September 1988, Mr Justice Burchett gave

judgment on three issues which had been set aside for
separate determinations. On 14 December 1988, the legal
representatives of both parties joined in an application to
Mr Justice Burchett that a date be fixed for the hearing of
these proceedings. Subsequently, 8 May was fixed by Mr
Justice Sheppard as the commencing date for the hearing. ~t
the time of fixing that date, Mr Justice Sheppard refused to
adjourn the hearing but indicated that if the applicant
wished to pursue its application for adjournment application
should be made to the trial judge in chambers. No such

application was made in chambers.

On 8 May 1989, the commencing date, Mr B.T.

Stratton QC, with him Mr S.J. Stanton, appeared for the
applicant and applied to have the proceedings adjourned on
the ground that the committal proceedings involving Mr
Sourian were part heard and, after five days hearing in
April 1989, had been adjourned to 28 August 1989 and were
expected to take a further five days. Mr Stratton submitted
that it would be an infringement of the principle loosely
called the felonious tort principle to continue with the
proceedings-until the prosecution of Mr Sourian has been
completed. Mr Stratton submitted alternatively that the
Court should in its discretion adjourn the proceedings so as
to avoid a conflict between the civil and the criminal

proceedings.

The history and ambit of the so-called felonious

tort principle has been examined in Holdsworthls History of
English Law (Vol. 3, 2nd Ed., 1937) pp.331-333, by Watkin
Williams J. in Midland Insurance Company v. Smith and Anor
(1881) 6 QBD 561 and by Pape J. in Wonder Heat Pty Limited
v. Bishop [l9601 VR 489. The principle was accepted by the
Court of Appeal in Smith and Anor v. Selwyn [l9141 3 KB 98.
more recently, differing views as to the principle have been
stated by Hunt J. in Gypsy Fire v. Truth Newspapers Pty
Limited (1987) 9 NSWLR 382, by Roden J . in Caesar v. Sommer
[l9801 2 NSWLR 929, by Rogers J. in Westpac Banking
Corporation v. Halabi and Others (delivered 22 December
1987) and by Loveday J. in Australian Gaslight Company v.
Lowe (delivered 8 August 1988). These are but examples.

I need not opine whether the principle has any

current content having regard to the present structure of the criminal justice system in Australia and, if so, what that content is; but if the principle continues to have any

operation, it is one based upon public policy as explained

by Watkin Williams J. in Midland Insurance Company v . - p	Smith
cited above.	The earlier foundations for the principle have

long since disappeared.

This leads me to the point that there is no

principle of public policy that would prevent a landlord
from terminating a lease because of a lessee's criminal
behaviour when that behaviour is the subject of prosecution

by the appropriate authority, the Director of Public

would prevent a landlord from recovering possession of his	Prosecutions. There is no principle of public policy that	premises in such circumstances. It is worth noting that, in respect of franchised premises, s.16(2) of the Act recognises as a permissible ground for terminating a franchise agreement that the franchisee has committed an offence punishable by imprisonment or, in the case where the franchisee is the body corporate, by a fine of $500 or more.
Assuming that a "term of imprisonment" includes "penal servitude", then s.16 specifically contemplates a termination of a franchise agreement on the ground that a

felony has occurred, and contemplates the taking of
proceedings under the Act for a declaration as to the effect
of the notice of termination in that event. There is no
place under the Act for the application of any rigid
principle such as was given effect in Wonder Heat Pty
Limited v. Bishop or was adverted to in Gypsy Fire v. Truth
Newspapers Pty Limited, to mention only two of many eminent

authorities.

I should also mention that, on any view of the

principle, it would not apply to the position of the
applicant. The applicant has not been sued but rather has
initiated the proceedings and Mr Sourian supported the
application in an affidavit which has set out the substance
of his case. Moreover, by the time the notice of
termination had been given, criminal proceedings had been

commenced by the appropriate authority against Mr Sourian.

So there was no failure on the part of the respondent to

prosecute an alleged criminal.

I therefore turn to the issue of discretion. The

factors which might lead a court to adjourn civil
proceedings during the pendency of current criminal
proceedings were considered at length by Wilcox J. in

Cameronvs Unit Services Pty Limited v. Whelpton and

Associates Pty Limited and Anor (1984) 59 A.L.R. 754 and by

myself in Kirk and Others v. Commissioner of Australian
Federal Police (1988) 81 A.L.R. 321. I need not repeat what
was there said, except to mention again that in Pyneboard
Pty Limited v. Trade Practice Commission (1983) 152 C.L.R.
328 at p.340, Mason A.C.J., Wilson and Dawson JJ. described
the rule nemo tenetur seipsum accusare as a fundamental
bulwark of liberty.

Thus I take into account as an important factor the

fact that Mr Sourian is facing criminal charges and may not
wish to disclose in civil proceedings his defence to those

charges. I doubt that the hearing of these civil

proceedings would prejudice the hearing of the charges
against Mr Sourian in the sense the publicity would
prejudice potential jurors. That is a matter that can be
adequately dealt with by an order prohibiting the general
publication of the proceedings. Nevertheless, I recognise
that it is undesirabe, if it can be fairly avoided, that
civil proceedings should proceed in the middle of committal

proceedings. Witnesses who give evidence in the civil

proceedings may be called upon to give evidence at the

resumed hearing of the committal proceedings against Mr

Sourian. If they are examined and cross-examined in detail in this Court, the course of the committal proceedings could be affected to some extent. The recollection of the witnesses may be refreshed or altered or made suspect.

I think this is perhaps the point Mr Stojanovic was

attempting to make in paragraph 9 of his second affidavit
read this morning, when he incorrectly referred to
miscarriage of justice in the conduct of proceedings in this
Court. I think it is desirable, if it can reasonably be
achieved, that the events taking place in criminal
proceedings should continue without any interference at all
from concurrent civil proceedings.

I also take into account that it is often

undesirable to litigate in two courts the same issues even
on different onuses of proof. If Mr Sourian is committed

for trial, the applicant could be prepared to concede the

commission of an offence or offences in this Court. If Mr

Sourian is not committed, the respondent may not wish to pursue all the grounds in its notice of termination. The decision of the magistrate will not necessarily resolve this but could assist its resolution or encourage resolution of a part of the proceedings.

I take into account the fact that the applicant

commenced these proceedings and that the cross-claim raises

no novel or additional issues in the application. I take

into account also that Mr Sourian is alleged by the
respondent to be the heart and mind of the applicant, and
that Mr Sourian denies this. I take into account the fact
that the evidence tendered this morning suggests that Mr
Stojanovic, the solicitor for both Mr Sourian and the
respondent, has indicated orally in the course of the
interlocutory proceedings in this Court that it is unlikely
that Mr Sourian would be called to give evidence. Mr

Stojanovic no doubt made those comments at a time when he contemplated that these proceedings would go ahead.

I can say immediately that I would not adjourn this

matter until the final completion of the criminal
proceedings against Mr Sourian. The matter to which I am
effectively turning my attention is whether the proceedings
should be adjourned until the committal has been concluded.
It is therefore relevant that Mr Stojanovic has indicated
that, even after the conclusion of the committal
proceedings, Mr Sourian may not wish to give evidence in
this Court while proceedings are on foot against him.

I take into account that preparation has gone

forward to a stage where the respondent is ready for trial.

I take into account that the application for adjournment is

made at a very late stage, that an application to adjourn
was refused by Hr Justice Sheppard, and that the applicant
was advised that if application for adjournment were to be

made, it should be made to the trial judge in chambers. No

Honour Mr Justice Burchett on the motion of the applicant on	such application has been made. I take into account the interlocutory order of his
29 July 1988. The applicant has had the benefit of that order since July of last year and continues to have the benefit of it. The existence of that order is an important matter and even more important is the fact that during the continuation of the order the applicant has paid no sum to

the respondent by way of occupancy fee. I regard this as
practically a contempt of the Court. His Honour's order did
not specify that an occupancy fee be paid but it is clear
from its terms that his Honour had in mind that occupancy
would continue on the usual terms pending the trial of these

proceedings.

As was made clear in Hr Stojanovic's affidavit and

in his oral evidence given this morning, the applicant has
not been prepared to pay an occupancy fee but simply to pay
a sum by way of rent. This has caused the respondent not to
accept the sum, having regard to its contention that it had

terminated a lease franchise agreement.

In summary, therefore, I would not adjourn the case

until the criminal proceeding had been completed. Unless Mr Sourian were not committed for trial, that would not occur for more than 12 months. However, if the committal proceedings would be completed in August next there are quite strong grounds for adjourning the matter until after the conclusion of that hearing. The balancing point that	has persuaded me not to take that step is that, while the	interlocutory injunction has been on foot, the applicant has
had the benefit of it and has paid no occupancy fee during the period of its occupation. I do not think, in those circumstances, that it would be just to the respondent further to delay the hearing on this matter.

For these reasons, the application for an

adjournment is refused.

I certify that this and the 10

preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Davies.

Associate:	~ d e c e e
Date:	9 May 1989
Counsel for the applicant:	Mr B.T. Stratton QC with Mr S.J. Stanton
Solicitors for the applicant:	Stojanovrc & David
Counsel for the respondent:	Mr F.S. McAlary QC with Mr G.C. Lindsay
Solicitors for the respondent:	Moore & Bevans
Dates of hearing:	8 & 9 May 1989