McPhillips, W.V. v Ampol Petroleum (Vic) Pty Ltd (No. 2)
[1990] FCA 161
•26 APRIL 1990
Re: WILLIAM McPHILLIPS; VALERIE McPHILLIPS and AMPOL PETROLEUM (VICTORIA) PTY
LTD
And: AMPOL PETROLEUM (VICTORIA) PTY. LTD.
No. VG 264 of 1989
FED No. 161
Petroleum Retail Marketing - Trade Practices
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Woodward J.(1)
CATCHWORDS
Petroleum Retail Marketing - meaning of 'renewal' - whether franchise agreement 'renewed' after holding over - whether aggregate of terms of franchise agreements should include holding over period.
Trade Practices - exercise of discretion to extend term of franchise agreements to cover period of successful action for misleading conduct and reasonable time to vacate premises.
Petroleum Retail Marketing Franchise Act 1980 ss 3, 13 and 16 Trade Practices Act 1974 s 87
Esso Australia Ltd v R T and M I Abela Pty Ltd (Full Court, unreported, 20 December 1989) followed.
HEARING
MELBOURNE
#DATE 26:4:1990
Counsel for the Applicants: J R Dixon
Solicitors for the Applicants: M J Gilbert and Co
Counsel for the Respondent: C M Maxwell
Solicitors for the Respondent: Blake Dawson Waldron
ORDER
The orders made by the Court on 23 February 1990 be vacated and in their place the following orders made:
A. It be declared that
(1) the respondent has contravened s 52 of the Trade Practices Act 1974 and the applicants are accordingly entitled to damages to be assessed;
(2) the franchise agreements entered into between the respondent and the applicants, which were expressed to terminate on 18 September 1989, be varied so as to terminate on 31 March 1990; and
(3) the said agreements shall be deemed to have had effect as so varied on and after 10 August 1987, the date on which the benefits of the said agreements were assigned to the applicants.
B. It be ordered that:
(1) the cross-claim be dismissed;
(2) the respondent pay the applicants' costs of the application to 23 February 1990;
(3) there be no order as to any costs incurred after 23 February 1990 and up to and including 4 April 1990;
(4) the further hearing of this application proceed before another judge of the Court and, to that end, a directions hearing be fixed for 1 June 1990;
(5) the applicants provide to the Respondent within 28 days of the date of this order full particulars of the loss and damage to which they claim to be entitled in accordance with the declaration made on 23 February 1990 and repeated this day;
(6) within 28 days of the date of this order, the parties exchange lists of discoverable documents in relation to the applicants' claim for damages;
(7) paragraph 1 of the order made on 27 February 1990 be discharged; and
(8) pursuant to order 52 r 15(1)(a)(iii), the time for filing and serving notice of appeal be fixed at 21 days after the making of the order of the Court in the question of damages.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
In this matter I delivered judgment on 23 February 1990. That judgment was in favour of the applicants on two issues, the first relating to s 52 of the Trade Practices Act 1974 and the second to s 13 of the Petroleum Retail Marketing Franchise Act 1980.
In deciding the issues which arose under the latter Act I relied in part on an unreported decision of Hill J which had been decided on 5 September 1989. When I prepared my decision in February 1990, I was unaware that a Full Court had allowed an appeal from that decision on 20 December 1989.
By notice of motion dated 28 February the respondent has applied to have the orders made on 23 February "recalled or alternatively vacated before those orders are entered" to enable me to consider the Full Court's reasons for judgment in the matter in question, Esso Australia Ltd v R T and M I Abela Pty Ltd (unreported).
On 27 February, before that notice of motion was issued, I heard the parties in chambers and ordered the applicant not to enter judgment in terms of the orders made on 23 February until further order. I also fixed a fresh directions hearing for 8 March and reserved costs.
On 8 March I fixed a date for hearing the notice of motion and ordered further that the time for appeal from my decision of 23 February should not begin to run until further order. I again reserved costs.
I have now heard argument from the respondent and, in spite of contrary arguments from counsel for the applicants, I am satisfied that the decision of the Full Court is directly in point and I am accordingly bound by it.
The points in issue were summarised in my judgment of 23 February when I said,
"There are two issues to be considered in
the present case. The first is whether there can be a 'renewal' of a franchise within the meaning of the Act, after one term has expired and there has been a holding over for some months, pursuant to the conditions of the earlier franchise agreement, before a fresh agreement is executed.
The second question is whether such a period of holding over, even if it does not break the chain of renewals, can be counted as part of aggregate terms amounting to "a period of more than six years and less than nine years" within the meaning of sub-section 13(4), above. See also s 17B(4)."
As to the first point I held that, at least so long as the holding over is in accordance with the conditions attaching to the first term, the second franchise agreement can properly be said to be a 'renewal' of the first within the meaning of the Act. This decision was, in my view, confirmed by the Full Court in Esso v Abela (above) when it said,
"..... the 1980 Act, as is indicated by sub-ss
3 (2) and (4), is so drawn that a franchise agreement may be a renewal of a franchise agreement which preceded it and came to an end before the renewal was granted. In our view, the 1981 Agreement operated, within the meaning of the legislation, as a renewal of the 1979 agreements."
Counsel for the applicants argued that the Full Court's decision depended on the fact that the later franchise agreement in that case contained a clause expressly cancelling the earlier agreement. It is true that that point was of some importance in that case, because otherwise there would have been two overlapping agreements.
In the present case there was a holding over period after 1 December 1980 during which a fresh agreement was signed. Counsel sought to rely on the fact that the holding over was expressed to be for periods of 14 days at a time, and the new agreement commenced in the course of a 14 day period without expressly terminating the holding over.
However I have no doubt that the making of the new agreement brought about a consensual termination of the holding over period and thus of the existing agreement. Thus sub-section 16(9) of the Act, which permits a franchisor to terminate a franchise agreement with the consent in writing of the franchisee, was satisfied.
There was thus a terminated agreement within the meaning of sub-section 3(2), which was immediately succeeded by a fresh agreement, the terms of which did not differ substantially from those of the earlier agreement. The Full Court held that this met the requirements of sub-section 3(4), as that sub-section stood in 1980, and constituted a renewal.
Turning then to the second issue now raised, the Full Court held that the 'terms' of the agreements to be aggregated for purposes of sub-section 13(4) of the Act include any holding over periods. I note that their Honours did not discuss the effect of sub-section 3(13) of the Act upon which I relied in reaching a contrary view. That sub-section reads,
"Unless the contrary intention appears,
references in this Act to the term of an agreement do not include references to any period of extension of the agreement by holding over or otherwise."
However, it cannot be thought that the provision was not present to their minds when their judgment was prepared. Hill J had relied upon it and, I am told, the point was fully argued before the Full Court.
I am unable to accept the applicants' submission that, because the Full Court expressed itself at the outset of its judgment as being particularly interested in the constitution of the Act as it stood before 1 January 1985, this in some way suggested that sub-section 3(13) which came into force on that date was seen as being irrelevant.
I believe I must give full weight and effect to the Full Court decision, because the period of holding over with which it was concerned raised exactly the same issue as was before me and which I have restated above.
The effect of this is that, were it not for an important matter I shall deal with shortly, the relevant franchise agreements would have expired on 18 September 1989 and the respondent would have been entitled to an order for possession as sought in its cross-claim. The respondent/cross-claimant now seeks judgment on its cross-claim, costs of its cross-claim and costs of the claim so far as it was concerned with issues arising under the Franchise Act. It also seeks an order for assessment of damages pursuant to an undertaking given to the Court on 5 October 1989, when mutual undertakings were exchanged in order to preserve the franchise in operation until the issues between the parties could be determined. The applicants' undertaking was,
"(1) that the Applicants pay to the Respondent
if it is adversely affected by the undertaking given by the Respondent in paragraph A above such compensation, if any, as the Court thinks just, in such manner as the Court directs;"
In order to recover such compensation, the respondent would need to show that it has lost more by a delayed sale of the subject property between 5 October and 31 March, when possession was presumably given in accordance with the Court's findings, than it gained from its nett receipts from the applicants during that time.
The other important matter I need to deal with is this. In preparing my reasons for judgment in February, and dealing with the Trade Practices Act issue, I had determined that, in view of the way in which the applicants had been misled, I should if necessary extend the period of the franchise agreements to the end of March 1990, pursuant to s 87 of the Trade Practices Act, in order to cover the period of their successful action and give them reasonable time (some five weeks) to vacate the premises.
Having reached the conclusion that they were entitled to remain in possession until the end of March under the terms of the Franchise Act, I dealt only with my reasons for not granting the applicants an extension of their franchise for a term of years, which they had sought. Nothing I said then was inconsistent with the view I then had, and to which I now revert, that the term of the franchise should be extended by the Court to 31 March 1990.
In the events that have happened, and in the exercise of my discretion, I propose to make an appropriate order to achieve that result. I am satisfied that, within the meaning of s 87(1) of the Trade Practices Act, the applicants have suffered loss or damage as a result of the respondent's contravention of s 52 and that the orders I propose will compensate the applicants in part for that loss or damage and will reduce the total loss or damage suffered by them.
I shall therefore make the following orders, including certain directions suggested by the parties, in place of those made on 23 February 1990:
A. It be declared that
(1) the respondent has contravened s 52 of the Trade Practices Act 1974 and the applicants are accordingly entitled to damages to be assessed;
(2) the franchise agreements entered into between the respondent and the applicants, which were expressed to terminate on 18 September 1989, be varied so as to terminate on 31 March 1990; and
(3) the said agreements shall be deemed to have had effect as so varied on and after 10 August 1987, the date on which the benefits of the said agreements were assigned to the applicants.
B. It be ordered that:
(1) the cross-claim be dismissed;
(2) the respondent pay the applicants' costs of the application to 23 February 1990;
(3) there be no order as to any costs incurred after 23 February 1990 and up to and including 4 April 1990.
(4) the further hearing of this application proceed before another judge of the Court and, to that end, a directions hearing be fixed for 1 June 1990;
(5) the applicants provide to the Respondent within 28 days of the date of this order full particulars of the loss and damage to which they claim to be entitled in accordance with the declaration made on 23 February 1990 and repeated this day;
(6) within 28 days of the date of this order, the parties exchange lists of discoverable documents in relation to the applicants' claim for damages.
(7) paragraph 1 of the order made on 27 February 1990 be discharged; and
(8) pursuant to order 52 r. 15(1)(a)(iii), the time for filing and serving notice of appeal be fixed at 21 days after the making of the order of the Court in the question of damages.
I have decided upon the above orders as to costs after weighing all the relevant factors in this case including the behaviour of the respective parties, the starkly contrasting means of the parties, the fact that this notice of motion was made necessary by reason of the Court's overlooking a relevant authority, the correctness of the respondent's submissions on the question of law involved, the importance of that question to the respondent, and the failure of the respondent to secure any significantly different result as a result of its notice of motion.
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