Majik Markets Pty Ltd v Brake & Service Centre Drummoyne Pty Ltd

[1991] HCATrans 375

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'I

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IN THE HIGH COURT OF AUSTRALIA	•
Office of the Registry

Sydney NoS96 of 1991

B e t w e e n -

MAJIK MARKETS PTY LIMITED

Applicant

and

BRAKE & SERVICE CENTRE

DRUMMOYNE PTY LTD, RONALD

KENNETH SQUIRES and BETTY

EMILY SQUIRES

First Respondents

GAOCLA PTY LTD, STEPHEN THOMAS

NIHILL and BEVERLEY NIHILL

Second Respondents

ANTHONY PETER HASHAM

Third Respondent

DINGBA HOLDINGS PTY LTD, GUY RENE and CAROL LORRAINE RENE

Fourth Respondents

JOSEPH TORREBRUNO, ANITA
CONSTANTINO and MARIE

TORRE BRUNO

Majik 1 13/12/91

Fifth Respondents

HYSFITE PTY LTD, SAMUEL RODEN,

WILLIAM RODEN and MATILDA RODEN

Sixth Respondents

NABIL WAHBA

Seventh Respondent

EDWARDS AUTOMOTIVES PTY LTD,

KEVIN EDWARDS and CHERIE

EDWARDS

Eighth Respondents

THE INDUSTRIAL COMMISSION OF

NEW SOUTH WALES

Ninth Respondent

(Not Appearing)

Application for special leave

to appeal

MASON CJ
DEANE J

GAUDRON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 DECEMBER 1991, AT 10.51 AM

Copyright in the High Court of Australia

MR R.A. CONTI, QC:  Your Honours, I appear in this matter

with MR G.C. LINDSAY, for the applicant.

(instructed by Moore & Bevins)

MR J.W. SHAW, QC: If the Court pleases, I appear with

MR W.M. SCHULLER, for the first to sixth

respondents and for the eighth respondent.

(instructed by Camino Prassas & Clark)

MASON CJ:  Mr Conti, I should say before you begin, that the Registrar has been informed, firstly, by the State

Crown Solicitor, who appears for the Industrial

Commission of New South Wales, the ninth

respondent, that it will not be appearing at the
hearing and that it will submit to such orders as

the Court might make except as to costs; and,

secondly, he has been informed by the solicitors

for the eighth respondent that the eighth

respondent will not appear and will submit to such

orders as the Court may make except as to costs.

Mr Shaw, can you tell us for whom you appear?

MR SHAW:  Yes, Your Honour. I have got it correctly,

Your Honour: the first to sixth respondents.

DEANE J:  You said the eighth.

Majik 2 13/12/91

MR SHAW:	I did say the eighth.
DEANE J:	We have just heard that nobody is appearing for

the eighth.

MR SHAW:  Yes, I understand I am correct in saying it is the

eighth, Your Honour, and I had rather understood it

was the seventh respondent who settled the case or

was otherwise not opposed.

DEANE J:	Mr Wahba.
MR SHAW:	Yes.  Your Honour, I think I have got my clients

correctly.

MR SHAW: Yes, thank you, Mr Shaw. Yes, Mr Conti?

MR CONTI:  Your Honours, although you have already been

exposed to section 88F this morning and also to

Stevenson v Barham and to Caltex v Feenan,

nevertheless, may we pass you a folder which
contains the Petroleum Retail Marketing Franchise
Act which I will refer to for brevity as the
"Franchise Act", plus section 88F and the

interpretation provisions of the Act, Caltex and

Stevenson v Barham. There is no other legislation

or authorities to which we wish to take you.

MASON CJ:	Thank you.
MR CONTI:	Your Honours, I do find myself obliged to take you briefly to the Franchise Act. Unhappily, it
has got an apparently intimidating bulk but I will
not be taking you to material other than
essentially the provisions which deal with contract
review and then the power of the Federal Court to
grant injunctions and make orders.

Your Honours, I will not take you to the

definition of "franchise agreement" other than to

say that it is very broad in its scope and the word

"agreement" has the familiar sound now of
"agreement, arrangement, understanding" and that

sort of thing in the definition provisions.	If we
could start at section 8, which was one of the

sections which brought us undone before all members

of the court below and of also the court session,

and Your Honours will see that that particular

section, section 8, does contrast with the section

of the Consumer Credit legislation appearing at

page 72 of the application book which was the

subject of consideration of this Court in the

General Motors Acceptance Corporation case, because

section 8 adds the words:

to the extent that that law is capable of

operating concurrently with this Act.

Majik 3 13/12/91

Those words were not present in the federal

legislation which was thereunder consideration,

namely, the Trade Practices Act and its bearing

upon section 40 of the Consumer Credit Act of South

Australia.

If I could come back to section 8 directly.

Section 9 is very important to our case because it

provides that, as the heading indicates, the:

Franchisor not to impose impossible or

unreasonable obligations.

If impossible or unreasonable obligations are

imposed, then subsection (2) provides that the
obligation is void. If there are problems with
severability, then subsection (4) deals with the
matter, and then the Court has wide powers under

subsection (5) to vary the agreement according to

principles of justice and equity and to make

ancillary orders. Then follows a series of

sections which one would readily see impact upon

virtually every matter of importance that one would

see as peculiar to the retailing of petrol.

Section 9A provides that:

Payments by franchisee not to be increased

unreasonably -

and section 10(3) gives a role to the court where

there is a difficulty of supplying all franchisees,

presumably during times of industrial disputation,

and so there comes a question of ensuring a

reasonable proportion of supply.

Section 11 gives rights to assign, subject to

consent being withheld only in circumstances that

can be demonstrated to be reasonable and that, of

course, has enabled goodwill to build up in

relation to service station sites because of that

protection as to assignment.

Section 12 deals with the question of novation, adding an additional franchisee. Section 13 is complex if it is read with section

17B. As you will have noticed below, what it does

is, in effect, ensure that the franchisee has a

minimum term of nine years unless he comes in as an

assignee or a person who has novated. The

principal concept of the Act is to give nine years

security and one gets that either by an outright

lease of nine years or by a necessary series of
exercise of options for minimum periods of three

years.

In section 13(8) there is a role for the court

to determine rent in the particular circumstances

Majik 4 13/12/91

there prevailing, that is to say, where the
franchisee/franchisor relationship is built on a

sublease and the term of the head lease did not

carry for the full nine years but subsequently is

renewed and so you have to renew the sublease to

match them, a question comes of fixing the rent and

the court has a role there to play where there is

no agreement.

Your Honours, section 15 requires the

disclosure by the franchisor of a very considerable
amount of information with, of course, proper

penalties as to misrepresentation. I make that

observation because the great bulk of section 88F

cases usually relate to alleged misrepresentations

by the respondent, and here there is an obligation

to disclose what one might say is virtually

everything material one can imagine in relation to

the business.

Then section 16 gives a limited right to

terminate and the court enters that situation

ultimately in section 16(6) and will not make an

order for termination unless it is just and

equitable.

Section 17 deals with renewal. This, as I

indicated to you earlier, one can either grant the
minimum nine-year lease or one can grant leases for
successive periods of three years but it must be
for three years and therefore to entrench the nine
years one has, in effect, a compulsion to renew
unless one can make out circumstances that

ultimately, if there is any dispute about it, can

be dealt with by the court under section 17(6)

including the fixing of market value for rent and
for goods and services. Section 17A deals at
length with procedures in relation to those

matters.

I have already referred Your Honours to

section 17B which deals with the nine-year

entrenched clause. Section 20 deals with price

discrimination and it is in similar terms, to my

recollection, to its counterpart in the Trade

Practices Act which, I think, is section 49. It is price discrimination amongst franchisees.

Your Honours, then section 21 gives to the Federal Court the power to grant injunctions to deal with contraventions, attempted contraventions,

aiding and abetting, inducing, et cetera, and it is

not necessarily negative injunctions but mandatory

injunctions as well to ensure compliance with the

legislation.

Majik 13/12/91

Section 22 deals with compensation for breach of any provision of the Act or the regulations and so, in a sense, sections 21 and 22, the court's

powers there tend to stand not exclusively but by

way of contrast to the contract review powers we

have earlier looked at where the court can fix the

rent and decide whether there can be renewal or

not; deal with a number of those sort of monetary

and non-monetary matters by way, as it were, of

formation of the contract or formation of

provisions of it. Sections 21 and 22 deal
generally with damages and injunctions for breach

of the Act and the regulations.

Then lastly, Your Honours, the other section

upon which we have come undone thus far is

section 24. Section 24(1) provides:

Subject to this section -

and you need not be troubled about (2) and (3)

because (2) and (3) are only concerned to ensure

that there is no duplication of compensation -

this Act does not affect any right of action

or other remedy, whether civil or criminal, in

proceedings instituted otherwise than by

virtue of this Act.

Your Honours, before I say something about

section 24, can I just say this, that I do not

misfortune to consider this complex legislation thus far. It has been considered in the	think this legislation has - the Court has had the consideration, as is mentioned in the judgments
below and I need mention this as an illustration:
the Full Court held that the general law of New
South Wales as to surrender of leases, that is to
say surrenders that have taken place after the
expiration of the nine years, applied, the court
noted, in virtue of subsection (8). That was
obviously a law which was capable of operating
concurrently with the Act as it was a law relating
to surrenders and there is nothing in here about
surrenders once the nine years expire.

Mr Justice Toohey in Richards v Golden Fleece

which is referred to in the judgments found that

there was a legislative intention to deal

exclusively with termination of franchise

agreements by the section I pointed out to you as

we were travelling through rather quickly which was

section 16 - heading: Termination of franchise

agreements - and therefore it was not necessary for

the franchisor to comply with the Conveyancing Act

provisions as to giving notice of breach of

Majik 6 13/12/91

covenant before one could re-enter such as

section 129 of the Conveyancing Act.

So, the critical problem here for us was

whether it can be rightly said that the legislation

deals with review by franchisees. There is no provision here for franchisors to review although the checks and balances would arrive when the court

evinces by clear implication an intention to

legislate exclusive in the area of contract review.

comes to consider various matters. But in reality

the, if I could use the word "employee", is the

only person who seeks review under section 88F.	I
am unaware of any converse situation having yet
occurred.

This litigation which comes to you on a

statement of facts is the first time when a

franchisee has sought to invoke section 88F rather

than seek some relief under, for instance,

section 15 here dealing with misrepresentations.

MASON CJ:  What are the advantages to a franchisee of

seeking relief under 88F as compared with a federal

Act?

MR CONTI:	Your Honour, none that I can immediately discern but there could be great disadvantages to the
franchisor conversely and I suppose in that sense
it would be an advantage. For instance, he could
seek to get longer than the statutory nine years in
theory. It might sound a very tall result but
theoretically a franchisee could come to the court
and say, "Well, look, you've got your nine years as
a matter of national legislative intent but in New
South Wales I'm going to come and see if I can get
that taken out to 11 years", or something like
that. But I cannot think of any relief that could
not be obtained from the court that can be obtained
from 88F but, nevertheless, 88F is couched in very
wide terms and I suppose with the exercise of some ingenuity, one might be able to think of something
that could be done. Certainly, I am unaware of any
discussion of any difference in relief in any of the arguments below in the Court of Appeal or in the court session.
DEANE J:	Would there not be circumstances in which relief

against performance of a contract could be obtained

under section 88F when it could not be obtained

under this Act?

MR CONTI:  Your Honour, if one was seeking relief against

performance - and, Your Honour, of course that is

one of the jurisdictions that is expressly spelt out down there - it is hard to see why one would

Majik 7 13/12/91

need to go past section 9. In fact, section 9 is

really more extensive because section 9 seems to be

envisaging the circumstance that one does not test

impossibility or unreasonableness at the time of

execution of the agreement so much as looking at

the circumstance - well, I am not sure if I am

putting the submission entirely correctly. It

provides that an obligation:

that is likely to be impossible or

unreasonably onerous to perform at the time

when it is required to be performed.

On the other hand, one can imagine that although I

know it is said in - I know in a case I have sought
to do it myself for a motor vehicle franchisee,

that there was no reason why 88F should be

circumscribed in terms of relief of the kind

referred to in section 9(1) and it could extend out

to situations where, in the working out of things,

it becomes unreasonable or onerous, it is very

difficult to see how that can really be made to

hold on the basis of 88F.

Your Honours, Mr Lindsay tells me it is

section 16 provides for the franchisee to determine

that. We will just get the subsection for you.

Your Honours, there is a possibility, as I say, of

that difference being there but I am unaware of any

strong authority of the Industrial Commission to

say that one can have relief against further

performance of an agreement if the agreement was

fair and reasonable when it was entered into.

So, Your Honours, the matter comes down to

this, that the Court of Appeal took the view that

whilst there could be room for the operation of

section 109 - they did not decide this - depending

on the kind of order that might be made by the

Commission, there was no inconsistency, in effect, in relation to the grant of the jurisdictions and,

Your Honours, that is where we join issue. We

would respectfully submit that when one looks at

the complexity and the care that this has been put

together, it is not thinkable that the court would
have in mind that there should be, in addition,
contract review outside this complex scheme in one

State. This is, of course, national legislation.

Your Honours, it ultimately boils down to a

consideration of that legislation but we submit

that section 8 does not assist our opponents

because it clearly indicates that one can have

here, with respect - one clearly imports into section 8 the contrary concept or the reverse

concept that if the law is not capable of operating

concurrently, then that is the end of the matter

Majik 13/12/91

and our fundamental submission is that one looks at

this scheme,it was intended to deal exclusively,

and there is no room for concurrence.

GAUDRON J: Yes, but no room for concurrence in fact or by

reason of an assumed legislative intent?

MR CONTI:  An assumed legislative intent.

GAUDRON J: But it is precisely the assumed legislative

intent that section 8 and section 21 seems to

exclude.

MR CONTI: It begs the question. If we are correct in what

we say as to the scheme of the legislation and that

therefore contractual review, at least at the suit of the franchisee, is exclusively dealt with here, then section 8 cannot hurt us, subject to

section 24.

DEANE J: Except, Mr Conti, if there had been a section in

this Act which said, "In the case of any franchise

agreement involving physical labour, the person concerned can obtain relief if the agreement is harsh or unfair", it not only would not come as a

surprise but it would obviously add a valuable

basis for relief to what is here.

MR CONTI:  Yes. But, Your Honour, this legislation does

not - if there was such a section there, it would

be foreign to the scheme of this legislation
because what this legislation does is not, as it

were, create a series of contracts of service or

services. It is unlike the cases which are called

independent contractor cases but where it might be

said - and I will come to the use of the expression

"directly" in Stevenson v Barham in a moment where

we say is the point to be distinguished when we

come to the second leg of our argument - here is a

situation where there is a grant of an estate or

interest in land protected for nine years and there

is nothing in this material which compels the

franchisees, most of whom are proprietary

companies, to provide any labour. They have powers

of subletting and so on and they can employ people

and, of course, it is well known in the industry

that a lot of people have a number of these

franchises and have their own staff running them.

It would not be of any relevance, that kind of

statutory provision, if it was to be inserted.

DEANE J:  I do not see that that helps you, though, because

does that not lead to the conclusion that you

cannot see in this legislation, by reason of the

specific provisions, any intent to deprive rights

of relief in relation to such general types of

provision.

Majik	13/12/91
MR CONTI:	At the suit of a service station proprietor does

not form the definition of "franchisee", yes, but

once he is in this definition and the definition of

"franchisee" is complex and, of course, it gets in

related parties and all that sort of thing,

associates and so on, so that the legislation

cannot be avoided and one cannot contract out of

this legislation, so it is provided, I think, in

section 6 - when it gets to that situation, that is

the very point we say that one is dealing

specifically with this particular animal and 88F is

not going to apply.

Now, it is that circumstance, the franchisee

is so entrenched in his rights, that it is foreign

to the concept of a person, as it were, :::-~eking the kind of relief in the kind of capacity t: ,t we have

spoken about.

Your Honours, when one comes to section 24,

one has a shade of difference in the judgments
below. His Honour Mr Justice Kirby does not seem

create rights and obligations which is the other

to, as such, deal with the matter but

section upon which we have foundered below.

At page 93 of the application book at line 22

His Honour said:

In my opinion, s 88F, as such, is not

inconsistent with the Federal Act.

Section 88F does not, by its own operation,

create any rights or obligations.

His Honour is, in effect, saying - this is all by

reference to section 24. It does not:

create any rights or obligations. Its

function is to grant jurisdiction to the

involves, inter alia, two things: it may	Industrial Commission. That jurisdiction
categorise, as I have described it, a
particular arrangement as "unfair", "harsh or unconscionable" ..... it may declare void the
whole or part of such an arrangement and make an order -

and so on. Line 5:

It is only if and insofar as that power is exercised that rights or obligations arise by

virtue of s 88F.

That is where we have always parted conceptually.

We say there is a right: we are talking about jurisdictional right, the right to invoke the

Majik 10 13/12/91

jurisdiction, and we would seek to argue, if leave

was granted, at some length that the only possible

room for inconsistency is if and when an order is

made by the Commission.

Your Honour, in contrast to that approach,

Mr Justice Handley at page 109 said at line 8, and

we would respectfully agree:

Section 88F therefore creates substantive

rights -

and we submit that sections like section 9 of the

Franchise Act do likewise -

and since proceedings under the section

comprise a suit or action there is every

reason for concluding that it gives rise to
rights of action. But even if that is not so

the section clearly confers another "remedy"

on these applicants which is withins 24(1).

Sections 8 and 24 make it clear that the Australian Parliament did not intend "to express by its enactment completely

exhaustively or exclusively what shall be the

law governing the particular conduct or matter

to which its attention is directed" -

and that, as we say, is purely the matter of

contract review.

Your Honours, I have already spoken to you

about section 8. Section 24, Your Honours - and

assuming that Mr Justice Handley is correct, that

there are jurisdictional rights and obligations

created by section 24 which we would respectfully

agree, the question then arises - so the last

hurdle we have to overcome is how does one read

section 24(1) and, in our respectful submission, if

the argument thus far is correct, that section 24

apart and looking at the complexity of this

national scheme for regulation of the industry and,

in particular, contract review, if that argument be

correct, then, in our respectful submission, there

is an inherent qualification in section 24 by

virtue of the words "in proceedings instituted otherwise than by virtue of this Act" and that

whilst section 24 may be well directed to looking

at sections 21 and 22 which deal with injunctions

and damages generally - and one can see why there

could well be room for the operation of State law

when it comes to the generality of sections 21 and

22 - the particular court functions in the earlier

sections dealing with contract review, in our

submission, are peculiar in themselves and should

be regarded as unique and exclusive.

Majik 11 13/12/91

GAUDRON J: Is there contract review legislation in other

States? I do not mean section 88F legislation, I

mean contract review legislation.

MASON CJ: There is in Victoria, is there not?

MR CONTI:  I would be surprised if it is not now in all the

States.

GAUDRON J: And there would have been for some time, would

there not?

MR CONTI:	The contract review - I am speaking off the top of my head - I do not think applies to this
relationship of franchisor and franchisee. I
should have come with the answer to that but I am
almost certain that it does not, that it shows a
lot of business exception-type situations to the Contract Review Act is essentially looking at
domestic-type arrangements.

GAUDRON J: But I mean there is no reason for thinking that

a provision like section 24 is concerned only with

rights and remedies under the general law of

contract, leaving particular statutory remedies

aside?

MR CONTI:  As His Honour Mr Justice Handley said below,

tort, Trade Practices Act, where it is not - I
mean, what would one do if one comes - with the

Trade Practice Act, however, one looks at

section 20 which deals with price discrimination.

If there is a slight variation in section 20, then

to its counterpart in the Trade Practices Act, but

that is another point.

Your Honours, can we just say this, that

Mr Justice Kirby also saw the possible operation of

consistency when one got to the order stage below

and that is at page 76. So, all three members of

the court below, albeit two by a different route,

all see the possibility - they did not commit

themselves, it is obiter - to inconsistency arising

out of an order of the Industrial Commission on the

basis that the order of the Industrial Commission
would be arbitral in its character and would be in

the nature of subordinate legislation and therefore

a law of the State of New South Wales.

We put the situation antecedently to that. We

say it is not a case of waiting for the order to be

made, but is a case of the jurisdiction and

invoking the jurisdiction of the right to do so or the absence of right to do so. Mr Justice Handley

also saw problems and he discusses them in his

judgment at page 112 as to problems of concurrent

pursuit of remedies or having obtained one remedy

Majik 12 13/12/91

and then whether one can then later on pursue it.

So there are all sorts of problems when one gets down the line but we want to deal with the matter at the top of the line and where matters start.

Your Honours, that is the position we would

put in relation to the section 109 point and I must

emphasize, of course, that this is not just one oil

company but all the oil companies would obviously

be very interested in this one.

MASON CJ:  Mr Conti, assume your arguments have some basis

to them, why should we take the case on at this

stage? Obviously the court below considered that

there is the possibility of inconsistency in terms

of what may happen as a result of the determination

of the proceedings. Why should we not let the

proceedings continue and in the event that there is

inconsistency, deal with it when the proceedings

conclude? Your position would, of course, be still

open to argument in this Court.

MR CONTI:  Your Honour, that is true. The parties saw this

though as a way of saving a lot of money because

these cases tend to get a very protracted duration and also the fact is that the agreed facts put the

situation squarely. In effect, the agreed facts

are saying the contract arrangement or

understanding is the franchise agreement, so one

has the rights and obligations of the parties

defined by the document.

GAUDRON J: But if you want to put it like that, do you not

have to say something like "a contract which

conforms with the provisions of the Commonwealth

Act and which is susceptible of all the remedies

and rights conferred by that Act is one which the

Commonwealth Act necessarily, albeit by

implication, asserts to be other than harsh, unjust

or unfair", that is to say, there is a direct

conflict between harsh, unjust and unfair in 88 and

the implied assertion in the Commonwealth

legislation.

MR CONTI: Yes, Your Honour. We submit this legislation

sets its own dictionary, specifically tailored to

this industry, as what will be regarded as harsh,

unconscionable, et cetera, et cetera, and it deals

with all the centrepoints of importance to the

relationship.

Your Honours, the only other thing is this:

of course what we are concerned about is that the
entitlement to invoke the jurisdiction should be
determined, not that one waits and then sees

whether there is a conflict in the orders,

because then the expense is incurred and so on. We

Majik 13 13/12/91

are concerned with protecting the certainty of this

legislation in our dealings and the checks and

balances that have been introduced to this

legislation in this national scheme.

Your Honours, we then come to the 88F point.

Your Honours will have seen in the application for special leave that we said we would have to be

asking the Court to disregard the critical dicta in

Caltex v Feenan and may have to disregard - but I will endeavour to show you why you do not - what

the majority of this Court said in Stevenson v

Barham. Your Honours, can I just say this first of

all, that it is terribly important for us to

emphasize the nature of this independent contract.

It is unlike the Caltex v Feenan contract which was

a license - I only say this by way of preliminary

remark. This contract is so unlike Caltex v

Feenan, because that was not a franchise agreement.

Caltex v Feenan was litigated before this

legislation came in. It was a mere licence without

exclusive possession for a year; termed of 30 days

notice and so on but there is clearly a difference

in the security of tenure and so on.

The critical clause in this agreement, in so

far as it might be thought to introduce concepts of

personal employment or physical presence or

physical labour is a clause which is picked up at

page 87 of the application book which is called

5.7, line 5. This clause was particularly

emphasized in the court below when it was stated

that, "Your relationship satisfies the concept of

'directly' in Stevenson v Barham because your
purpose is, as it were, to have these people

working", and clause 5.7 provides:

The franchisee agrees -

and the franchisee is, of course, a corporation -

that the person or persons named in Part D of

the Schedule -

that happens to be a Mr and Mrs Squires who,

doubtless, are directors of the company -

importantly:

(or such other person or persons as from time

to time agreed by the company) shall devote

his or their full time personal attention and

effort to the conduct, operation and

management of the Business and at all times

whilst the premises are open for business, he

will maintain adequate personnel to facilitate

the checking-out and handling of orders,

including the dispensing of motor -

Majik 14 13/12/91

spirit and so on. So, you have got to have

personnel for that and you have got to devote your

full time, attention and effort to the business.

Now, Your Honours, I will come back to the

significance of that later but we submit it does
not carry the significance which is enough to

envelop my client in the majority test in Stevenson

v Barham. As I say, if I come back to that for a moment. If I could give you this illustration as

to where the decisions will take us logically

unless some line, albeit arbitrary, is ultimately

drawn. Almost every lease of office space in the

city would contain a covenant that the leasee shall

occupy the premises and use them for an office.

Now, they do not say, and Mr Smith's solicitor must

devote the whole of his time and attention, he

being the senior partner, does it make any real

difference? What the agreement leads directly to

is the demise of an interest in land. Here, also a

right to use industrial property in the nature of

trade marks. It is true - - -

GAUDRON J: But, Mr Conti, do you not have this difficulty:

there has been no evidence. It is still open to

the Commission, upon investigating the evidence, to
find that there are conditions or collateral
arrangements, even quite apart from what you find

within the four corners of the contract.

MR CONTI:  Your Honour, with respect, no, because the

parties have agreed - they have put forward only
one contract, arrangement or understanding, namely,

the written document. All of these relationships are now terminated. These particular actions are suing for misrepresentation and return of money.

So, the likelihood - on the statement of facts, our answer is, no, the rights and obligations now being

passed are defined by the contract which I have not troubled you to tender in evidence but the contract

obligation on the franchisee to acquire 50 per cent	does also provide Their Honours state - there is an
of its fuel requirements from the nominee of the franchisor. There is an entitlement, not an
obligation, on the franchisee to have all his
groceries and other convenient store products supplied by the franchisor scheme which is said to
have much better discounts and so on.

But apart from that, what does clause 5.7 do

other than simply say, "Look, you've got to take

responsibility in relation to this business" but it

is quite unlike a provision such as in Stevenson v

Barham where the man had to work on the farm with

his own cattle day in day out. There is no reason

why a person could not have several of these

particular agreements and devote his full time and

Majik 15 13/12/91

attention to the various sites. Obviously, that

cannot sleep and that sort of thing, it is	does not - full time and attention does not mean he
obviously a relative term - and provide the staff
to look after all of the other matters, checking
out and so on and so on. So, Your Honours, our
submission is 5.7 does not go the distance that is needed.

GAUDRON J: But, again, that assumes it must be some person

directly connected with the franchisee.

MR CONTI:  Subject to the rights of assignment under the Act which we have seen are very liberal in his favour.

GAUDRON J: There is nothing in section 88F that excludes a

contract which provides for work to be done albeit

that it is not done by the contracting parties.

MR CONTI:  It requires work to be performed and there is no

doubt about this jurisdiction has been held -
companies can invoke the jurisdiction and so on.

That it true.

GAUDRON J: Indeed, it has been applied, has it not, in the

case of contract teams in the Waterboard case?

MR CONTI: That is correct. But, Your Honour, "directly"

must connote the concept that one can - of course,

one is talking about performance of work. Of

course, the majority in Stevenson v Barham said it

has got to be performance of work for another and

that would be our preferred situation. So, it is

performance of work for another in the context of

the definition of "industry". That is why we want

to reargue Stevenson v Barham as a fall-back

position, if our submission on "directly" is not

upheld because we would respectfully submit that

Mr Justice Stephen and Mr Justice Aickin said, in

terms of the context, that the definition of

"industry" and all those definitions in the

statutory context, that it must be talking about

performing work for another in an employee sense

unless you are dealing with a sham or stratagem and

that is what it must be about.

But leaving that aside, the word "directly" is

the critical one while Stevenson v Barham still

stands as authority. If you could say that
clause 5.7 spelt out a contract of service or
services or the contract of provision of services,
in the understood expressions - the use of those

expressions - and they are wide expressions. As

Your Honours know, they have been looked at a

number of times in the Trade Practices Act because

of the contrast between a contract of service and

contract of services. One cannot say that

Majik 16 13/12/91

clause 5.7 is a contract of service or services and

if it is not a contract of services - - -

GAUDRON J: But section 88F does not talk about a contract

of service or contract of services.

MR CONTI:  No, but the word "directly" - - -

GAUDRON J: Section 88F does not talk about "directly"

either. Stevenson v Barham does. Section 88F

talks about whereby work is performed in any

industry.

MR CONTI:	Yes, that is right and the Court of Appeal below have said the legislation has got to be narrowed to
some extent, and they narrow it in the dichotomy of
preferring "consequence" to "fulfilment" and, in
our respectful submission, call it a gloss, call it
a qualification, whatever you like, in the joint
judgment of Your Honour and Mr Justice Jacobs, if
it is correct to put that qualification of
"directly" in then what this agreement leads
directly to is the grant of an interest in land
which will go for nine years even though it is only expressed for three, but by operation of the Act,
it is nine years; licensed to use industrial
property and the creation of an independent
businessman who puts in his own working capital and
acquires all his own assets. That is what directly
happens. Indirectly, he has got to comply with
clause 5.7 but that is not a contract of service or
services.

So, Your Honours, in our respectful

submission, we satisfy the Stevenson v Barham test.

If you are against us on that, we would seek leave

to be able to reargue the view of the minority.

And, Your Honours, in 16 years - we all know the

industrial scene has changed.

MASON CJ:

I do not think we are in a position to grant you

leave to reargue Stevenson v Barham.

MR CONTI:  No.

Well, that is what was troubling us when we came up - what does one do in that sort of

circumstance? Does one say one has to ask for

leave to reargue now or later?

MASON CJ:  I do not know that you even have to ask for leave

later, let alone now. But we just have to form a

judgment as to whether or not your argument

directed to showing that Stevenson v Barham is
correct has sufficient legs to justify the grant of

special leave to appeal.

MR CONTI:  Yes. Well, Your Honours, in the 16 years since

Stevenson v Barham was decided, of course, we are

Majik 17 13/12/91

entering new phases in industrial relations -

enterprise agreements and so on - and a fresh look
at the context of the Industrial Arbitration Act

and a discussion of the kind of material which was in Mr Justice Stephen's judgment at page 193 where

His Honour said, after referring to the definition:

Section 88f may then be seen to be

concerned with any contract in consequence of

which a person performs work for another - - -

MASON CJ:  I think we are familiar with what the minority

said in Stevenson v Barham.	You can take it that
we are.

MR CONTI:  Yes. So, that is the way we put the case. We

say we are within "directly". If we are not, we

would say that the concept of performing work in

the industry 16 years later now warrants a fresh

look and we would certainly say that in any event

the critical passage in Caltex v Feenan, which I am

sure you are now familiar with as a result of this

morning, should not be followed.

MASON CJ: Yes, thank you, Mr Conti. Mr Shaw?

MR SHAW:  If the Court pleases. We would submit that the

section 109 point is insufficiently arguable to

justify special leave to appeal. We have two

reasoned judgments in the intermediate courts, both
unanimously rejecting the argument and, of course,

as Mr Conti has said, essentially, on the basis of

the existence of sections 8 and 24 in the federal

statute. Your Honours, in our submission,

particularly if I could refer to the judgment of

Mr Justice Handley at pages 106 and 107 - now, of

course, reading it, His Honour sets out the text of

section 8 and at the foot of page 107 comes to the

conclusion that:

Section 8 is a declaration by the Commonwealth

Parliament that it does not intend its Act to

apply to the exclusion of State statute law

provided "that law is capable of operating

concurrently" with the Act.

In our submission, Your Honours, there is no

proper basis for thinking that section 88F or the

potential for an action under section 88F is not an

example of that State law operating concurrently

with the federal statute.

Your Honours, the remedies available under

section 88F are much broader and of a different

character to those available under the federal

statute. The State law, section 88F, erects a test

of the public interest. It directs attention to

Majik 18 13/12/91

award rates and conditions. It enables an attack

on the transaction on the basis of oral or informal

misrepresentations which may not amount to

contractual obligations within section 9 of the

federal Act. It provides a broad discretion in the

Industrial Commission to apply industrial criteria to the fairness or otherwise of the transaction

and, in our submission, there is a capacity for

both laws to operate concurrently within section 8.

GAUDRON J: But that assumes, does it not, that a contract

which complies in every respect with the

Commonwealth Act and which is attended with the

rights and remedies conferred by the Commonwealth

Act can be one that is harsh, unjust or unfair?

MR SHAW:  Yes, it does assume that, Your Honour. We would

submit that even if - - -

GAUDRON J: That is a strange way to approach the

legislation, is it not? It is clearly designed to

give certain rights which would make the position

of the franchisor or a franchisee vis-a-vis

themselves different from what might happen if it

were left to the general law.

MR SHAW:  Yes, Your Honour, the federal legislation is

certainly designed to facilitate certain quite

specific forms of action and rights but, in our

submission, sections 8 and 24 are indicators that

it is not intended to cover the field.

GAUDRON J:  But that still would not cover the field. What

I am putting to you is not a cover-the-field

situation at all because there is still plenty of

field for a State law to operate in in any event,

namely, in the general area of misrepresentation,

fraud, mistake, specific laws relating to the

formation of contracts, infants and so on. What I

have been suggesting to you is predicated on is a

necessary implication to be drawn from the

Commonwealth Act so that what you have is direct

inconsistency, not cover-the-field inconsistency.

MR SHAW: Yes, well, I accept, Your Honour, that that is a

critical issue and we deny, of course, that there

is any implication that what is not prohibited by

the federal statute is authorized. We submit that

the fact that the federal statute picks out

particular aspects of the franchise agreement to

allow them to be attacked does not mean that other
laws, whether civil laws or statutory law, are

excluded. We do say that the franchise can be

attacked under other legal bases or upon other

legal bases notwithstanding that there would be

nothing wrong with it if one simply looked at that

federal statute.

Majik 19 13/12/91

GAUDRON J:  It is not that it can be attacked on other

bases, but can be characterized as harsh, unjust or

unreasonable which is the condition for

jurisdiction, notwithstanding that it complies in

every respect with what the Commonwealth Act

requires and that it has the remedies which the

Commonwealth Act gives in an overall situation

intended to regulate the relationship of people in

a particular relationship.

MR SHAW:  Your Honour, we would submit that given the

specificity of the remedies under the federal Act,

it is readily imaginable that a judge or a tribunal

could say, "Well, although the information has been

provided pursuant to that particular section" or

"although there hasn't been a termination under

section 16, nevertheless that transaction, as it is

worked out in practice or having regard to the
public interest or having regard to relevant award

conditions, that is just unfair or unreasonable."

GAUDRON J: That, it seems to me, is a big step when the

Parliament of the Commonwealth has enacted all these provisions, presumably in a context

indicating its assessment that contracts of that

kind with those remedies are reasonable in that

particular situation.

MR SHAW:  Your Honour, in our submission, the answer to that

is in section 24(1) where the Parliament is saying,

"Look, we are not seeking to deprive you of any

other right of action that you might have in

respect of this franchise. We're only providing

remedies in quite a defined field and if you've got

another action, then subject to this section, this

Act does not take away your other remedies", and

Mr Conti has to say that there is an implied

qualification in that section. But there is an

express qualification which begins subsection (1): Subject to this section -

and the other two subsections provide for the

resolution of any dual remedies or compensatory

payments. But it is that section which is, in our

submission, a very clear indication of legislative

intention.

GAUDRON J: Well, you say that prevents any implication?

MR SHAW:  Yes, we do. It certainly detracts from the

argument that there is an implication.

Your Honours, as Mr Conti has indicated, the Court of Appeal accepted that there might be specific

conflicts depending upon the form of orders. One

assumes if the contract or franchise were varied by

the Industrial Commission, the Court of Appeal

Majik 20 13/12/91

thought that there was some potential for conflict

but, in our submission, that argument is premature.

That argument simply cannot be dealt with in the

absence of the orders, and there is no reasonable

basis to apprehend that the Commission would accede

its jurisdiction until it has gone through the task

of hearing the evidence and making the orders.

Your Honours, we would also say that although

a section 109 argument such as the present

technically raises a question which can be

described as arising under the Constitution, we

would submit that such questions are not of the

kind which involve major constitutional issues

appropriate for determination by this Court. The

essential question is one of statutory construction

rather than constitutional law. We do note in

passing that this Court declined an application by

the present respondents for removal to the Court

following judgment of the Industrial Commission and

prior to the hearing in the Court of Appeal.

Your Honours, we will just close on that limb

of the case by saying that there is no significant

constitutional principle which should attract

special leave in this Court.

Your Honours, the second argument, of course,

is whether the franchise agreement comes within the

limbs of section 88F.

MASON CJ:	We need not trouble you on that, Mr Shaw.
MR SHAW:	If the Court pleases. The Court then has our

submissions on the constitutional question.

MASON CJ: Yes, Mr Conti?

MR CONTI:  Can I just say two very short matters? First of

all, when one thinks about it, if there is not an

implied qualification in section 24, then there is

a conceptual collision between 8 and 24.

The other matter we want to say to you is this, if I may say so with respect, that the

discouraging feature of going back to get all the
evidence taken and then coming back here, of

course, is we then have to present the Court with a

vast volume of factual evidence and it comes very

discouraging to you to give us special leave to

decide the matters of principle. So, they are our

submissions in reply.

Majik	21	13/12/91
MASON CJ:	A very strong argument, Mr Conti.	The Court will

give its decision in this matter after the

adjournment.

AT 11.48 AM THE MATTER WAS ADJOURNED

UNTIL LATER THE SAME DAY

UPON RESUMING AT 1.52 PM:

MASON CJ:  Two grounds were argued in support of this

application for special leave to appeal. One

ground was that the Court of Appeal was wrong in

holding that the agreement fell within

section 88F(l) of the Industrial Arbitration Act

1940 (N.S.W.) We are not persuaded that the

conclusion reached by the Court of Appeal on this point upholding the conclusion earlier reached by the Industrial Commission was attended with

sufficient doubt to justify the grant of special

leave.

The other ground was that the Court of Appeal

was wrong in holding that there was no

inconsistency between the Petrol Retail Marketing

Franchise Act 1980 (Cth) and section 88F(l) of the

Industrial Arbitration Act such as to preclude an exercise of jurisdiction by the Commission in this

case. We are not persuaded that this point has

sufficient prospects of success to warrant the

grant of special leave to appeal at this stage of

the proceedings.

The application for special leave is therefore

refused.

MR LINDSAY:  If it please the Court. I may be constrained

because my opposition is not here, Your Honour, and

they would be the ones who would be seeking some

order as to costs.

MASON CJ:	You do not wish to oppose costs?
MR LINDSAY:	No.

MASON CJ: The application is refused with costs.

AT 1.53 PM THE MATTER WAS ADJOURNED SINE DIE

Majik 22 13/12/91