Mobil Oil Australia Ltd v Wellcome International Pty Ltd

[1998] FCA 205

MOBIL OIL AUSTRALIA LIMITED v LYNDEL NOMINEES PTY LIMITED
No. NG 344 of 1997
JTP HOLDINGS PTY LIMITED AND ROSEVILLE SELF SERVICE STATION PTY LIMITED v MOBIL OIL AUSTRALIA LIMITED
No. NG 365 of 1997
MOBIL OIL AUSTRALIA LIMITED v WELLCOME INTERNATIONAL PTY LIMITED AND W & J B THORPE PTY LIMITED
No. NG 366 of 1997
FED No. 205/98
Number of pages - 52
Courts and Judges - Contracts - Estoppel - Trade Practices - Practice and Procedure
(1998) 153 ALR 198

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

LOCKHART, LINDGREN AND TAMBERLIN JJ

Courts and Judges - Judges - application for disqualification of trial Judge - apprehended bias - whether reasonable apprehension that trial Judge might not bring unprejudiced mind to resolution of case.

R v Watson (1976) 136 CLR 248, applied

Livesy v New South Wales Bar Association (1983) 151 CLR 288, applied

SCI Operations Pty Limited v Trade Practices Commission (1984) 2 FCR 118, applied

Vakauta v Kelly (1989) 167 CLR 568, applied

Galea v Galea (1990) 19 NSWLR 263, applied

Kaycliff v Australian Broadcasting Tribunal (1989) 90 ALR 310, applied

Hassam Khadem v B A Barbour (1995) 38 ALD 299, applied

Contracts - offer and acceptance - whether speech at convention amounted to offer to give franchisees extended tenure in exchange for consistent achievement of certain standards - whether language of speech was that of present offer - unilateral contract - whether offer could be retracted once offeree commenced act of acceptance - whether purported act of acceptance was commenced in response to offer - whether specific performance available where promisee has been prevented by promisor from completing acts of acceptance.

Abbott v Lance (1860) Legge 1283, discussed

Veivers v Cordingly [1989] 2 Qd R 278, discussed

Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231, discussed

Errington v Errington [1952] 1 KB 290, discussed

Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424, applied

Colley v Overseas Exporters [1921] 3 KB 302, applied

Heyman v Darwin Ltd [1942] AC 356, applied

Plaimar Ltd v Walters Trading Company Ltd (1945) 72 CLR 304, applied

Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435, applied

City Motors (1933) Pty Ltd v Southern Area Super Service Pty Ltd (1961) 106 CLR 477, applied

Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97, applied

Hotham v East India Company (1787) 1 TR 639 (99 ER 1295), distinguished

Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235, distinguished

Foran v Wight (1989) 168 CLR 385, distinguished

Estoppel - promissory estoppel - whether representations amounted to promise - whether representations gave rise to expectation of a particular legal relationship or grant of an interest - whether representations sufficiently specific and unqualified - proportionality as between detriment and remedy - whether enforcement of promise proportionate to detriment.

Waltons Stores (Interstate) Ltd v Maher (1985) 164 CLR 387, considered

Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582, distinguished

Plimmer v The Mayor of Wellington (1884) LR 9 App Cas 699, distinguished

Commonwealth v Verwayen (1990) 170 CLR 394, discussed

Sledmore v Dalby (1996) 72 P & CR 196, discussed

Trade Practices - misleading or deceptive conduct - whether representation made - representation as to future conduct - whether respondent had reasonable grounds on which to make representation - whether applicants entitled to expectation loss.

Trade Practices Act 1974 (Cth) ss 51A, 52, 53, 82, 87

Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1, referred to

GIO Australia Ltd v Marks (1997) 70 FCR 551, referred to

Practice and Procedure - pleading - where contract found by trial Judge based on different offer from that pleaded by applicant - failure by both parties to cross-examine witnesses about offer not pleaded.

Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, applied

SYDNEY, 15-17 September 1997 (hearing), 13 March 1998 (decision)

#DATE 13:3:1998

Appearances

Counsel for the Appellants: Mr T F Bathurst QC, Mr G O'L Reynolds and Mr L V Gyles

Solicitors for the Appellants: Cowley Hearne

Counsel for the Respondents: Mr R W R Parker QC and Mr M O Tubbs

Solicitors for the Respondents: Stojanovic & David

NG 344 of 1997

THE COURT ORDERS THAT:

1. The appeal be allowed with costs.

   2. The orders made on 15 April 1997 in proceeding NG 835 of 1995 be set aside, and in lieu thereof, it be ordered that the application in that proceeding be dismissed and that the present respondent as applicant in that proceeding pay the costs of the respondent to that proceeding.

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

NG 365 of 1997

THE COURT ORDERS THAT:

1. The appeal be dismissed with costs.

   2. The appellants pay the costs of the respondent as respondent to proceeding NG 841 of 1995 in respect of the claims for relief made by them, JTP Holdings Pty Ltd and Roseville Self Service Station Pty Ltd, as applicants in that proceeding.

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

NG 366 of 1997

THE COURT ORDERS THAT:

1. The appeal be allowed with costs.

   2. Orders (1) and (2) made on 15 April 1997 in proceeding NG 841 of 1995 be set aside, and in that proceeding it be ordered that:

   (a) the claims for relief made by W & J B Thorpe Pty Limited and Wellcome International Pty Limited in that proceeding be dismissed;

   (b) the present respondents pay the costs of the respondent to that proceeding in respect of the claims for relief made by them, Wellcome International Pty Limited and W & J B Thorpe Pty Limited, as applicants in that proceeding; and

   (c) the applicants in that proceeding other than Lyndell Nominees Pty Limited, JTP Holdings Pty Limited, Roseville Self Serve Pty Limited, Wellcome International Pty Limited and W & J B Thorpe Pty Limited, and the respondent in that proceeding have liberty to apply in that proceeding as to the further disposition of the proceeding consistently with the Reasons for Judgment of the Full Court delivered on 13 March 1998.

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

LOCKHART, LINDGREN AND TAMBERLIN JJ

GENERAL INTRODUCTION

Three appeals have been heard together. In two of them, NG 344 of 1997 and NG 366 of 1997, the appellant, Mobil Oil Australia Limited ("Mobil"), appeals against judgments given in favour of franchisees of Mobil petrol service stations. In the third, NG 365 of 1997, two franchisees appeal against a judgment given against them in favour of Mobil. The judgments appealed from were given in two proceedings which were heard together: NG 835 of 1995 and NG 841 of 1995.

In NG 835 of 1995, on 15 April 1997, the trial Judge ordered that Mobil grant to the applicant in that proceeding, Lyndel Nominees Pty Limited ("Lyndel"), without charge, a franchise under the Petroleum Retail Marketing Franchise Act 1980 (Cth) ("the PRMF Act") in respect of the Mobil service station occupied by Lyndel at 1 Lonsdale Street, Braddon in the Australian Capital Territory, for a term of nine years commencing upon the expiration of Lyndel's current franchise in respect of that service station and otherwise on the same terms and conditions as those of the current franchise.

The other proceeding below, NG 841 of 1995, was procedurally complex. There were 154 applicants. Like Lyndel, they were franchisees in respect of Mobil service stations. The first named applicant was Mogap Pty Ltd but its claim against Mobil was not heard by the trial Judge and it is not a party to the appeals. There was an overlap of the facts underlying the claims of the 154 applicants (and, for that matter, the claim of Lyndel). His Honour directed that a trial in the first instance of the claims of four of the applicants be heard with Lyndel's application. The four applicants selected were W & J B Thorpe Pty Limited ("Thorpe"), Wellcome International Pty Limited ("Wellcome"), Roseville Self Service Station Pty Limited ("Roseville") and J T P Holdings Pty Limited ("JTP"). It was thought that the factual circumstances of the claims of Lyndel, Thorpe, Wellcome, Roseville and JTP would throw up the main factual permutations affecting the cases of all applicants (the 154 and Lyndel), and that resolution of the five claims would enable agreement to be reached as to the outcome of the others.

In NG 841 of 1995, Thorpe and Wellcome succeeded while Roseville and JTP failed. The orders that were made in favour of Thorpe and Wellcome were in terms identical to that made in favour of Lyndel, except for the identity of the service stations. His Honour ordered that the claims of Roseville and JTP be dismissed.

Mobil appeals in NG 344 of 1997 against the order made in favour of Lyndel in NG 835 of 1995, and in NG 366 of 1997 against the orders made in favour of Thorpe and Wellcome in NG 841 of 1995. JTP and Roseville appeal in NG 365 of 1997 against the dismissal of their claims in NG 841 of 1995. Notices of contention have been filed by Lyndel in NG 344 of 1997 and by Wellcome and Thorpe in NG 366 of 1997.

His Honour reserved liberty to apply on seven days' notice in relation to the implementation of the orders for the grant of the nine year franchises to Lyndel, Thorpe and Wellcome. As well, he reserved costs. On 5 September 1997, his Honour was asked to make costs orders in favour of the successful applicants but he declined to do so. Orders have been made in the proceedings below that until further order of a Judge or of the Full Court, Mobil comply with its obligations under the existing agreements with the franchisees on the basis that they comply with their own obligations under those agreements and undertake not to assert that the order amounts to circumstances that would entitle them to any right under the PRMF Act.

It is useful at this stage to note the identity of the principals of the five franchisees whose claims were dealt with by his Honour and particulars of their sites:

Franchisee	Principal/s	Site
Lyndel	Barry James Morris	1 Lonsdale Street, Braddon, ACT
Thorpe	Chris Phillip Scorgie	656-660 North East Road, Holden Hill, SA
Wellcome	Abraham Jevaherjian (Wellcome, a company owned by members of the Jevaherjian and Sarkis families, purchased in 1992)	Cnr Sailors Bay Road and Eastern Valley Way Northbridge, Sydney, NSW
Roseville	Domenic Fossano and his father	Cnr Pacific Highway and Boundary Street, Roseville, Sydney, NSW
JTP	Jeffrey Riddle and his two brothers	Cnr Burton and Windeyer Streets, Watson, ACT

INTRODUCTION TO BACKGROUND FACTS

The franchisees' claims originated in certain statements made by Mr Ken Stumbles, the then General Manager, Retail Marketing of Mobil, in the course of a breakfast address at a Convention held by Mobil for its Australian dealers in Los Angeles between 27 July and 2 August 1991 ("the Convention"). The franchisees complained that through Mr Stumbles' address and later events, Mobil assured them that if they "performed" to a certain level at their respective service stations, their tenure at their service stations would be renewed for various periods of time, depending upon the period over which they performed to that level.

Mobil had set standards by which the performance of Mobil service stations was to be assessed and was in fact assessed. It had a system of assessment called "Team-Pak" which comprised a list of numerous and detailed criteria against which the standard of presentation and operation of a service station was to be measured. Mobil also used a "Circle of Excellence" system of awards for franchisees who performed to a particularly high standard each calendar year under the Team Pak scheme. Franchisees who were admitted to the Circle of Excellence were rewarded by Mobil, commonly by the provision of a free overseas holiday.

What Mr Stumbles said in his presentation at the Convention was designed to create an even more elite group within the Circle of Excellence. In general terms, he referred to the grant of additional service station tenure at no cost to franchisees who attained a 90 per cent or better rating in the Annual Circle of Excellence judgings. It will be necessary later to consider the detail of what he said. For the present, however, it is useful to note that the franchisees' case was that two distinct promises, offers or representations were to be found in his address. The first was that for any year in which a dealer achieved 90 per cent or better in the Circle of Excellence judging, Mobil would give that dealer, at no cost to the dealer, one additional year's tenure following expiry of the dealer's current franchise (we will refer to this as "one-for-one"). The second was that if a dealer attained 90 per cent or better in Circle of Excellence judgings in all of the six calendar years following 1991 in which the Convention was held (1992, 1993, 1994, 1995, 1996 and 1997), Mobil would give that dealer, at no cost to the dealer, a franchise for a further nine years following expiry of the dealer's current franchise (we will refer to this as "nine-for-six").

The franchisees relied, not only on what Mr Stumbles said to those who attended the Convention, but also on certain aspects of Mobil's conduct after the Convention. That conduct was described in one way in the two statements of claim (a third statement of claim was filed in NG 841 of 1995 on behalf of Wellcome because of special circumstances affecting it - see below) and, correspondingly, in certain issues formulated by the trial Judge for the purposes of a separate hearing, and in a different way in his Honour's account of the evidence before him. The following summary of Mobil's post-Convention conduct relied on by the franchisees is based on his Honour's account of the evidence.

First, a month or two after the Convention, Mobil sent to franchisees a videotape of Convention highlights, including the relevant part of Mr Stumbles' address. That part was introduced by a commentator who said "Ken Stumbles announced a new concept to Mobil's own dealers". Mr Stumbles was then seen and heard on the video speaking the following part of his address:

"Now we've got a lot more work to do on this but the commitment that we're making to you today is that we will find a way to extend your tenure automatically no costs if you consistently achieve 90 per cent or better in Circle of Excellence judgings."

As will appear below, this extract from Mr Stumbles' address at the Convention assumed considerable importance in the case.

When Mr Stumbles said the word "automatically" a gold caption appeared on the screen reading:

"Tenure for performance Reward - high standards."

A Mobil dealer named Allen Upson appeared on the screen and said:

"The fact that they are looking at the possibility of extending people's franchises dependent upon achievement of 90% or more in standards, that's got to be appealing to every franchisee in Australia."

The second aspect of Mobil's post-Convention conduct on which franchisees relied is that the September 1991 issue of "Mobil Marketer", a magazine distributed by Mobil to its dealers and distributors, included, in a report on the Convention, an account of Mr Stumbles' address which contained the following words:

"Ken Stumbles, General Manager Retail, picked up the banner for Retail Marketing, and carried it forward, with the words 'Our objective is not to meet customer expectations, but to exceed them. We must be focused on the customer, and obsessed with quality.'

Ken then went on to outline an initiative to give his customers - that is, Mobil's dealers - extended tenure for continued high performance.

Dealer delegates responded enthusiastically to this, as he explained how Mobil were determined to reward excellence, and build a long-term relationship. He said, 'the commitment we're making to you today is that we will find a way to extend tenure, automatically, at no cost, for those dealers who consistently achieve 90% or better in Circle of Excellence judgings.'"

Thirdly and finally, in late 1991, Mobil arranged regional meetings of its dealers. One was held in Canberra, for example. Barry James Morris, the managing director of Lyndel, who had not attended the Convention in Los Angeles, attended that meeting. At the meeting, Tony Broome, a Mobil representative, screened a videotape record of Mr Stumbles' Convention address or of the relevant part of it. After the screening, Mr Broome said:

"You heard the speech. For every year you achieve 90% or better in Circle of Excellence you will receive an additional year's tenure."

David Browning, Mobil's Manager for the Australian Capital Territory, then handed out a brochure containing a tear-off slip. The brochure was entitled "Mobil Leading the Way. Toward the World Class Standard". Mr Broome said:

"David is handing out a brochure and if you want to get your extra tenure, there is a note that you will have to complete and sign, and then give it back to David."

Mr Morris ticked the boxes on the tear-off slip, completed details of Lyndel's site, signed the slip, and returned it to Mr Browning. The slip read:

"Yes, I'm ready to accept the challenge.

I accept the challenge to exceed 90% in Circle of Excellence judging and qualify for extra tenure.

I want to participate in the development of the World Class Standards.

I will use the new World Class Standards on my site.

Site Number ........ ........ ........ ........ ........ .. Site Name ........ ........ ........ ........ ........ ... Dealer Name........ ........ ........ ........ ........ . Signature ........ ........ ........ ........ ........ ..

Tear off and hand to your Territory Manager"

The events at Regional dealers' meetings held elsewhere conformed to a generally similar format.

The ways in which the respective applicants became aware of the content of Mr Stumbles' address varied as between them. Mr Scorgie of Thorpe and Mr Fosano of Roseville heard the address delivered "live" at the Convention. Others became aware of it subsequently. Mr Riddle of JTP saw "highlights" of the speech on the "Convention highlights" video. Apparently alone of the representatives of the five applicants, Mr Morris of Lyndel saw a video of the entire speech of Mr Stumbles. Wellcome occupied a special position. Wellcome pleaded that on or about 12 June 1992, Ostanone Pty Limited ("Ostanone"), as assignor, agreed to assign to Wellcome, all Ostanone's right title and interest which it had as franchisee of Mobil in the Mobil Northbridge site, and that on and from 30 June 1992, it (Wellcome) became franchisee in respect of that site. Wellcome's case was that it was induced to purchase upon certain representations made by Ostanone on behalf of Mobil, particulars of which were:

"That in or about February 1992 [Ostanone] stated in substance:

'[Mobil] says that if you (as franchisee) perform well, over 90% in the Circle of Excellence program on a yearly basis, each year you will not lose that year it will be added to your final franchise and if you maintain that level or standard over the 6 years at the end of the franchise you will get a 9 year franchise with no costs.'"

Apart from other defences, Mobil denied that any such statement was made by Ostanone on its behalf or with its knowledge or authority.

The franchisees pleaded claims based on promissory estoppel, breach of contract and contravention of ss 52 and 59 of the Trade Practices Act 1974 (Cth) ("the TP Act"). On the appeal reference was not made to s 59, and we need not refer to it further.

OUTLINE OF REASONING OF THE TRIAL JUDGE

The content of Mr Stumbles' address gave rise to certain questions which were common to the claims made by all franchisees. His Honour made orders directed to the separate determination of some of those questions. His formulation of them reflected the two statements of claim mentioned earlier. They pleaded the terms of Mr Stumbles' speech at the Convention "in or about July 1991" and two aspects of Mobil's post-Convention conduct. The first was that Mobil forwarded to dealers the brochure, video tape and tear-off slip in or about August 1991. The second was the publication of the "Mobil Marketer" in September 1991. Accordingly, neither the statements of claim nor the issues formulated by his Honour shortly to be noted, refer to meetings of dealers. Rather, they suggest that the brochure and tear-off slip accompanied the video tape forwarded directly to dealers shortly after the Convention. Nothing, however, will be found to turn on this particular discrepancy.

His Honour directed that the two proceedings be heard together

"to the extent of the determination of the following common questions of fact: (i) What representations or promises (if any) were made on behalf of the respondent to any of the applicants: (a) at the Los Angeles convention held in or about July 1991 ... ; (b) by the forwarding of a brochure, videotape or tear-off slip ... ; or (c) in the 'Mobil Marketeer' of September 1991 or thereabouts. (ii) Whether any of those representations and promises (if any) were capable of giving rise to a promissory estoppel or of constituting an offer capable of acceptance so as to constitute a binding contract or of constituting misleading and deceptive conduct if a particular applicant acted on that representation or promise in reliance upon it".

His Honour received evidence and heard argument on those issues on 31 January and 1 February 1996. He published Reasons for Judgment relating to them on 22 May 1996. He did not make orders at that time but expressed certain opinions. He thought that a sufficiently clear "nine-for-six" promise had been given by Mobil through Mr Stumbles' speech to activate the doctrine of promissory estoppel. He relied, in particular, on Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, the judgment of Priestley JA in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 (CA) esp at 610-614, and the judgment of the Full Court of this Court in S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637. He noted that whether the doctrine was in fact activated in relation to a particular franchisee depended on whether it had, to Mobil's knowledge, acted to its detriment in reliance on the promise, so as to make it unconscionable for Mobil to renege.

His Honour also thought that a claim based on s 52 of the TP Act, aided by s 51A of that Act, founded on the nine-for-six assurance, could not be ruled out.

He did not think, however, that a claim of a nine-for-six contract could succeed, because Mr Stumbles' speech did not contemplate a written acceptance of his challenge to exceed 90 per cent in Circle of Excellence judgings, and, in any event, the terms of the tear-off slip were inconsistent with the arising of a contract.

Finally, his Honour rejected the claim that Mobil had given any one-for-one assurance at all. Consequently, such an assurance was not available to support any of the three causes of action pleaded.

In his later Reasons for Judgment delivered on 15 April 1997, his Honour incorporated his earlier Reasons. He rejected the claims based on promissory estoppel and misleading and deceptive conduct. The promissory estoppel cases of Roseville and JTP failed because they had not been on the way to attaining a 90 per cent or better in all six years. In the case of Lyndel, Thorpe and Wellcome, the same claims failed because the degree of detriment suffered was so minor as not to make it necessary, in order to avoid Mobil's acting unconscionably, for the Court to require Mobil to adhere to an assumption that it would fulfil its promise.

The claims under s 52 of the TP Act failed because Mobil and Mr Stumbles had reasonable grounds for making the nine-for-six representation and because damages for disappointed expectations were not available under the section, and the franchisees were not interested in recovering reliance damages for consequential losses which were small and difficult to prove.

Notwithstanding his earlier expression of opinion, however, his Honour upheld the nine-for-six contractual claims of Lyndel, Wellcome and Thorpe. He explained that when delivering his earlier Reasons for Judgment, he had laboured under the misapprehension that the supposed contract propounded was that constituted by an offer made in Mr Stumbles' speech accepted by the completion and return of the tear-off slip, but that he had since come to recognise that the franchisees had in fact pleaded acceptance by the act of attainment of "90% or better" in Circle of Excellence judgings in the years 1992, 1993, 1994, 1995, 1996 and 1997. Considering that Mobil was not disadvantaged by his doing so, his Honour dealt with the contract claim as so understood. He treated the nine-for-six statement as constituting an offer capable of being accepted by that performance.

It is not in dispute that Mobil made it clear in the latter half of 1995 that it would not grant renewals free of charge in the terms of Mr Stumbles' statement. In fact Mobil ended Circle of Excellence judgings. It is also not in dispute that this deprived those franchisees who had consistently achieved 90 per cent or better in and since 1992 of the chance of doing so in the remainder of the six years. His Honour treated Mobil's action as a repudiation of a contract. If it was indeed a repudiation of contract, it is clear that the franchisees did not accept it.

Mobil submitted that even if it should be found that it had made a nine-for-six offer and made it impossible for franchisees to attain 90 per cent in the Circle of Excellence judgings in all six years, the fact remained that franchisees had not performed the whole of the act required to constitute acceptance of Mobil's offer (attainment of 90 per cent or better in all six years) and so were not entitled to specific performance in the form of an order that Mobil grant them nine-year franchises. His Honour rejected this submission. He held that in respect of franchisees who had embarked upon the performance which Mobil had stipulated as the act of acceptance of its offer, it was no longer open to Mobil to revoke the offer, and, further, that those franchisees who had attained 90 per cent or better down to the time of revocation were to be treated as if they had also attained 90 per cent or better in the remaining years.

Lyndel, Thorpe and Wellcome were in that position. Roseville and JTP, however, had already failed to attain 90 per cent or better in Circle of Excellence judgings in one or more years. In consequence, they were not able to show that but for Mobil's alleged repudiation, they could have performed the act of acceptance of Mobil's offer (attaining 90 per cent or better in all six years). Moreover, since his Honour held that the one-for-one offer had not been made, they were not entitled to one year's additional tenure for each year in which they had attained 90 per cent or better. Accordingly, their applications failed completely.

ISSUES ON APPEALS BY MOBIL

The following issues arise on the appeals by Mobil in NG 344 of 1997 and NG 366 of 1997 against the orders made that it grant nine-year franchises to Lyndel, Wellcome and Thorpe:

1. whether the trial Judge should have disqualified himself from hearing the three cases on the ground of ostensible bias;

   2. whether it was not open to the trial Judge to find the contract case which he in fact found in favour of Wellcome, on the ground that the case as found lay outside the pleadings;

   3. whether it was not open to his Honour to find that a contract came into existence because there was:

   (a) no offer made by Mobil capable of acceptance by performance;

   (b) no acceptance;

   (c) no consideration provided for the alleged promise;

   4. whether an order of specific performance by Mobil should not have been made;

   5. under notices of contention filed by Lyndel in NG 344 of 1997 and Wellcome and Thorpe in NG 366 of 1997, whether the trial Judge erred in failing to find that Lyndel, Wellcome and Thorpe had suffered a detriment sufficient to activate the doctrine of promissory estoppel and in failing to enquire into the proportionality between the relief claimed and the detriment found to have been suffered.

ISSUES ON APPEALS BY ROSEVILLE AND JTP

The following issues arise on the appeals by Roseville and JTP in NG 365 of 1997:

1. whether Mr Stumbles gave the one-for-one assurance;

   2. whether the trial Judge erred in his analysis of the principles of promissory estoppel, and, in particular, in his analysis of the significance in the present context of the concepts of "unconscionable conduct" and "detriment";

   3. whether the trial Judge erred in failing to hold that Roseville and JTP had proved that they had respectively suffered detriment for the purpose of activation of the doctrine of promissory estoppel;

   4. whether the trial Judge erred in failing to find that Mobil had contravened s 52 of the TP Act;

In its appeal, Roseville seeks declarations that it achieved 90 per cent or better in the Circle of Excellence judgings for 1992, 1994, and 1995; that it should be treated as having achieved such a score in 1996 and 1997; and that it is entitled to specific performance of the one-for-one promise. In its appeal, JTP seeks identical declarations, with the exception that the first is limited to the two years 1994 and 1995, rather than the three years 1992, 1994 and 1995.

In the appeal by Roseville and JTP, Mobil filed a notice contending that the trial Judge erred:

"(a) in finding that Mr Stumbles' representations were capable of giving rise to a promissory estoppel;

(b) in finding that the representations amounted to a 'firm' promise to grant an additional 9 years tenure to franchisees who achieved 90% in the Circle of Excellence judgings for the remaining 6 years of their current tenure;

(c) in finding inherent in the representations an obligation to keep the promise open and to maintain the Circle of Excellence program over a six year period;

(d) in finding that the representations were directed to all present and future Mobil franchisees;

(e) in finding that the representations were an existing, announced policy of Mobil;

(f) in finding that 'all territory managers were expected to tell their franchisees about the offer Mr Stumbles made in Los Angeles and to stimulate them to "accept the challenge" of scoring 90% in order to obtain extra tenure';

(g) in failing to find that the representations were preliminary in nature, were conditional upon Mobil being eventually able to find a way (if at all), and were too uncertain to contain an offer capable of being acted upon to found an estoppel;

(h) in failing to have sufficient regard to the formal nature of the contractual arrangements between the parties;

(i) in finding that the Appellants had relied to their detriment on the representations;

(j) in failing to find that the Appellants had been given due notice by June 1993 of the withdrawal of any representation which had been made;

(k) in failing to consider whether the Appellants had suffered any detriment in the period before notification of this withdrawal had been given;

(l) in failing to find that the Appellants would have been likely to achieve 90% in Circle of Excellence judgings irrespective of Mr Stumbles' representations in circumstances where:

(i) the Appellants had existing contractual obligations to comply with the Team Pak standards which formed the basis for the judging;

(ii) compliance with the standards made good business sense;

(iii) compliance with the standards was likely to lead to economic benefits for the Appellants;

(iv) high achievement in Circle of Excellence judgings had potential benefits for franchisees in future dealings with Mobil;

(v) incentive prizes were available for the highest achievers;

(m) in finding that Mobil had knowledge that the Appellants were acting to their detriment in reliance on the representations."

BACKGROUND FACTS IN MORE DETAIL

A videotape of Mr Stumbles' address and an agreed transcript of it were in evidence before the trial Judge. The address was punctuated by captions flashed onto a screen at the front of the room in which dealers were having breakfast. The captions were reproduced in the transcript at the points where they first appeared. The transcript of the entire address comprises fifteen pages. The trial Judge summarised it. We set out below his Honour's introduction and conclusion, but have included a little more of the speech than his Honour did, and have included the captions at the places where they occurred in the speech:

"Mr Stumbles commenced by describing difficulties in the Australian retail petroleum market. He spoke of reduction in industry volumes, Mobil's recent losses, and the number of recent Australian bankruptcies. He used some sporting analogies to make the point that the champion was the person who performed well under difficult conditions. He spoke about getting the basics right and dealt with them - locations, facilities, the Mobil team - and industry competition. He talked of achieving an international standard of excellence and what this required of dealers. He referred to independent assessment of standards, the need for training and merchandising techniques. Then he issued a challenge:

'I talked before about leadership and about world class standards. We could call them gold standards and we're inviting all dealers to participate in the development of standards that go beyond the norm that go beyond what our competition might think we're aiming at but go beyond anything in the industry. We want to develop a set of world class standards, the kind of operating standards that will exceed the customers expectations. Now this is not for everybody but for dealers out there who are right up there and who are making money and want to take it further this is a real challenge it won't be included in the Circle of Excellence judging but we invite you to take up that challenge. Now I ought to warn you you're going to have to be right up there already close to 100% for this exercise to be realistic but if you take up this challenge

CAPTION: Challenge Develop and implement world class Best Practices

and work with us to develop and implement these world class best practices you'll be supported by Mobil and those other dealers that come with you. You will be a world class leader you'll be a pioneer and you'll be rewarded by your customers. Now we'd aim to work through what kind of things this level of performance will involve

CAPTION: Gold Standards Team Pak Franchise Development Group through a Team Pak franchise development group which will work with you over the next 5 months to pull together input and efforts by dealers and the company.

It will be a kind of a leading edge that will help us develop our general standards. The aim is consistently excellent service at every customer interface and we need to establish measures of customer satisfaction and provide feedback to the network on what we learn which leads into the next major issue I want to comment today and that's tenure for performance. I said earlier that the customer will reward you when you provide better service. Now there are leaders out there in every kind of service based industry who are proving that, every day of the year there are many Mobil dealers out there who even in these difficult times are earning more because in their markets in their trading areas they are providing a superior level of service, and that assessments made not by us but by the only important judge at the end of the day the customer. The Circle of Excellence program sets out to reward our better dealers but we want to take it a step further. At Mobil we're committed totally to excellence in retailing. We're committed to our dealers because as I've said to you pretty often now, we don't deal with many customers first hand, the key to our business is how well we can work with our dealers to have your businesses deliver what the customer wants. This is a very tough market and we have our ups and downs. Lately we have been having a lot of downs but we want to work with dealers who are in it for the long term, because we're in it for the long term so we're working on a concept that will reward excellence and build that long term relationship. Now the end of the current 9 year franchise term may seem like its a long way off for most of you and it is.

CAPTION: Tenure for performance * A long term view * A long term relationship

If you came aboard at the end of 1988 then you've got just over 6 years to go but we're working on a way for our best dealers

CAPTION: Tenure for performance Secure extended tenure

to secure extended tenure and to be able to do that without any kind of fees or anything like that. Now there is still a lot of work to do on this idea so we haven't finalised how it's going to work and we're going to have to talk with your dealer council representatives about it as we finalise what we're planning to do. But let me give you a bit of an idea of what we have in mind. Where we started was to say

CAPTION: Basis for extention [sic] [caption displayed for 32 seconds] One extra year for each year at 90%

lets give each dealer who achieves a 90% or better rating in the Circle of Excellence judgings in a given year an additional year's tenure at no cost so let's say that at the end of 1991 you have 6 years left. If during the 1992 Circle of Excellence judgings you achieve 90% or better throughout then at the end of 1992 you would still have 6 years left, that is for achieving a 90% or better rating during 1992 we would give you an extra year.

CAPTION: PRMF Act Makes extension difficult to implement The problem is that the Franchise Act the PRMF Act which is supposed to be there to help you actually makes it very very difficult to do something like this. So we have more work to do and where we're at at the moment is that maybe the only way to do this is to say that if you achieve 90% each year for the next 6 years then we'll guarantee you another 9 years

CAPTION: 90% or better for 6 years [caption displayed for 17 seconds] Automatic 9 year renewal as of right, no fees just a renewal. Now we've got a lot more work to do on this but the commitment that we're making to you here today is that we will find a way to extend your tenure automatically no costs if you consistently achieve 90% or better in Circle of Excellence judgings. CAPTION: Tenure for performance * Reward high standards That will have its own rewards in terms of your business and its effect on the network on the performance of the whole network and it will also enable you to plan more effectively further ahead. Now it seems to follow logically from what I've just said that if we value and reward the efforts of the dealers who give it a go and get it right then we're going to have to look hard at those dealers who consistently fail to achieve an acceptable standard.

CAPTION: Tenure for performance * Reward high standards * Can't ignore poor performers

Now we haven't finalised our views on this aspect either but you can be sure of one thing and that is that we are going to follow through on it. It's just not fair to the rest of the team for some of us to continue on with poor appearance sloppy operation and no commitment to the standards. That kind of dealer is letting the rest of the team down and clearly doesn't value his or her membership. So when the time comes to use a football analogy I guess we might have to put them on the draft list. But lets move on, ...'

Mr Stumbles ... finished by dealing with other matters not presently relevant." (Wilcox J's emphasis)

We have referred earlier to the videotape of highlights of the Convention, the September 1991 issue of the "Mobil Marketer", and the holding of the regional meetings of dealers in late 1991. It will be recalled that only the short passage in the address emphasised above was recorded in the "highlights" videotape. The full "highlight" of Mr Stumbles' address on that videotape was as follows:

"Commentator: After declaring a commitment to excellence in customer service Ken Stumbles announces a new concept to Mobil's own dealers.

Stumbles: Now we have a lot more work to do on this. But the commitment that we are making to you here today is that we will find a way to extend your tenure automatically, no cost, if you consistently achieve 90% or better in Circle of Excellence judgings.

Commentator: We asked dealer Alan Upson for his reaction to the announcement.

Upson: The fact that they are looking at the possibility of extending people's franchises dependant on achievement of 90% or more in standards, that's got to be appealing to every franchisee in Australia."

It will be recalled that the same short passage from Mr Stumbles' address was the only part of it set out in the "Mobil Marketer". In that publication the passage was introduced by a description of the initiative as "extended tenure for high performance" and a reference to Mobil's determination "to reward excellence, and build a long term relationship".

In his Reasons for Judgment dated 15 April 1997, the trial Judge referred to affidavit evidence of Mr Stumbles as to circumstances touching his status and authority within Mobil, the preparation of his address and its delivery, and his lack of further involvement in the "tenure for performance" proposal after his return to Australia from Los Angeles (he was assigned to a major project within Mobil). His Honour went on to summarise the evidence of other officers of Mobil relating to the issue of the granting of renewal of tenure for performance. Those officers were Messrs Garth Symington, Stewart Cripps, Peter Sanguinetti and William Higgs. It does not seem necessary to canvass their evidence, at least at this stage. It should be noted, however, that dealers were "represented" vis-a-vis Mobil by a National Dealers' Advisory Council ("NDAC") and by State Dealers' Advisory Councils. Mr Higgs prepared a briefing note for six dealers and six Mobil officers attending a meeting of the NDAC on 8 June 1993. The note included this announcement:

"The reward of the free Tenure will be made for dealers achieving 90% or better in CofE [Circle of Excellence] for 1992-93 only, at this stage. The mechanism for reward will be via a pro-rata discount off Franchise fees upon dealers entering into a new Franchise i.e. on [sic] ninth discount off fees for each year of 90% or better on CofE.

The discount will be applied to the fee structure in place at the time of Franchise renewal and is available to lessee dealers only.

The future direction of this program will be finalised as part of the proposed Franchise review."

This announcement was included, in almost identical terms, in a Mobil newsletter sent to franchisees shortly after 8 June 1993. In the newsletter, the second paragraph was extended so as to say that the discount "is not transferable" and the last paragraph was made to read:

"The future direction of this program will be reviewed later in the year."

Mr Symington attended a State Dealers' Advisory Council meeting on 23 June 1993 at which, according to his affidavit, he said words to the following effect:

"There have been delays regarding the tenure decision due to legal problems with the PRMF Act. Mobil has received legal opinion that if 1 year additional tenure is offered, a new 9 year franchise would affectively [sic] have to be offered. Therefore, Mobil proposes to rewards [sic] dealers achieving 90% or better in the Circle of Excellence programme for 1992 and 1993 only at this stage. The mechanism for reward will be by a pro-rata discount of franchise fees upon dealers entering into a new franchise agreement. Affectively [sic] this will be a 1/9th discount of fees for each year of 90% or better in the Circle of Excellence programme."

Of this evidence of Mr Symington, his Honour said:

"There is no evidence that Mobil received legal advice to the effect of the second sentence in this passage. The advice that Mobil had received, although tentative, was to the contrary."

Although Mr Higgs remained Franchise Development Manager until May 1994, apparently he took no further action in connection with Mr Stumbles' statements, and the promised review "later in the year" did not occur.

Apparently the NDAC Executive did not protest about Mobil's decision but many franchisees were unhappy about it.

In early 1993 certain officers of Mobil were appointed to be members of a committee called the "Retail Business Venture Group". These included Mr Higgs. The group spent about eighteen months looking at all aspects of Mobil's retail operations. In about July or August 1994, according to Mr Higgs' recollection, the group decided to recommend a new franchise scheme under which a person would be given a franchise covering several service station sites. Apparently that recommendation was made and adopted. Mr Higgs said that implementation of it "began probably about October" in 1994. Implementation was still taking place when he gave evidence before the trial Judge in October 1996.

In late 1994, the NDAC Chairman, Mr Ron Roneberg, wrote to Mr Symington, and on 28 November 1994, Mr Symington wrote a letter in reply ("the Roneberg letter") which read:

"At the Los Angeles Convention in 1991, Mobil put forward the concept of one year's extended tenure for each year a dealer achieved a 90% or better C of E result. (We have subsequently confirmed that this is limited to two years).

This offer was made in good faith, but we did make it very clear at the time that the PRMFA severely hampered our ability to deliver the offer as an 'insert option', given that the PRMFA prescribes a minimum renewal offer of 3 + 3 + 3.

As a result we had determined to offer the renewal as a 'discount' off the full franchise fee that would likely have been payable to Mobil upon renewal of the franchise.

As you well know, and indeed as you make reference to in your letter, competitive market conditions have overtaken us and we are having to meet that competition by dramatically changing the basis upon which we will operate the network. The result of this change will mean fewer individual franchisees in the network.

That is a brief summary of events as we see them.

In response then, at the outset it must be said that we appreciate this situation would be causing some anxiety, however, we have not determined any hard and fast rules at this stage for surrendering or non-renewals of franchises and hence we cannot give definitive answers to your questions.

Suffice it to say we are conscious of the issues and are working to a tight timetable to try to come to some definitive resolutions."

Despite the contents of the last paragraph, no "definitive resolutions" were ever announced.

In January 1996, shortly after the commencement of the two proceedings below, Mobil announced, without giving reasons, abandonment of the Circle of Excellence awards. That abandonment made it impossible for franchisees to attain 90 per cent or better in Circle of Excellence judgings in 1996 and 1997, the last two of the six years referred to earlier.

His Honour gave an account of how Lyndel, Thorpe, Wellcome, Roseville and JTP became aware of the nine-for-six and one-for-one statements and of how they allegedly went about improving their performance in reliance on them. We will refer to the evidence in this respect later.

REASONING ON APPEALS

In due course, it will be necessary to reach conclusions in relation to the disposition of the appeals by Mobil and by Roseville and JTP. But because of an overlap of issues, we will address the issues on the appeals under the following headings:

1. Application for disqualification of the trial Judge.

   2. Contractual issues.

   3. Promissory estoppel issues.

   4. Misleading or deceptive conduct issues.

   5. Issues touching the special position of Wellcome.

1. Application for disqualification of the trial Judge

During the seventh day of the trial counsel for Mobil asked the trial Judge to disqualify himself in view of certain observations made by his Honour the previous day (21 October 1996). The application also relied on statements made by his Honour during the course of the trial on 15 October 1996 when his Honour said to counsel:

"HIS HONOUR: All right. Just before we do adjourn, Mr Gyles asked after lunch if the applicants could define what relief they are seeking. It is obviously desirable that that be done for the purposes of the progress of the case. I also gather from what was said that it would help if there were some discussion about exactly what terms the case might be settled on. I just wanted to make this observation. I suppose it is obvious to everybody, we have taken one day to deal with the evidence of one service station. There are another four in these preliminary cases but there are 120 odd still in the wings.

Unless some accommodation is reached between the various applicants and Mobil, it seems to be that both parties are committed to spending a huge amount of money in legal costs and it must be enormously disturbing to Mobil's goodwill - sorry, to their - it must be disturbing to their business to have executive time tied up in these proceedings which is going to go on for a long time unless there is some agreement. I would have thought it did not do much for their goodwill because we are talking here about, after all, the people who, by definition, are amongst their best dealers. They have all got over 90 per cent and whatever the legal position might be, to simply set out the facts of this case might not do a lot for the reputation of the company in the marketplace.

So, I will simply make those observations and really the time has come for there to be some very serious discussions in this case and I hope that they will be embarked on immediately and some decisions made before the costs go any further.

MR PARKER: Your Honour, I am sure that Mr Gyles and I can keep our hands on the tiller and for our own part we would certainly take up what your Honour said seriously."

On 18 October 1996 there was discussion between the trial Judge and counsel, and his Honour said to counsel for Mobil with reference to one of the issues in the case, "I have to say there was a deal of confusion going on in the ranks of Mobil all through this."

On 21 October 1996 when Mr Symington, General Manager, Pacific Islands for Mobil was being cross-examined by Mr Parker of Queen's Counsel, the following exchange occurred:

"HIS HONOUR: But, by this time we are talking about - you had already got the feedback that the peasants had accepted, is that what you are saying that you had already got feedback before July 6th that the dealers were happy?---No, what I was saying was that there was - the fact that we had addressed the issue and had come out with a decision that this is the way we were going to be handling it, had been broadly accepted by the group as being the way we were going to handle it."

The statements made by his Honour on 15 October 1996 and 21 October 1996 were relied upon by counsel for Mobil to found the submission that the trial Judge should have disqualified himself on the ground of apprehended bias. It was not suggested that his Honour was actually biased; indeed that suggestion was expressly eschewed by counsel for Mobil.

Counsel for Mobil submitted that in the light of these statements by his Honour a reasonable apprehension that the trial Judge might not bring an unprejudiced mind to the resolution of the case would be excited in the minds of the parties and in members of the public.

Before dealing with the submission it is necessary to refer to other passages in the transcript of the trial. Shortly before the application was made on 22 October 1996 by counsel for Mobil to the trial Judge to disqualify himself and at the commencement of the hearing that day, counsel for Mobil said to his Honour that he would like to raise with him the ramifications of what his Honour had said the previous day, the relevant passages having been recited above. Counsel said that he wanted to take it up with his Honour later, but did not particularly wish to interrupt the witness then under cross-examination. His Honour said:

"HIS HONOUR: Are you worried about the word 'peasants' Mr Gyles?

MR GYLES: Yes.

HIS HONOUR: Look, I am sorry about that. It was - I was just really treating it in a metaphorical statement. I did not mean it literally, obviously.

MR GYLES: Of course not, your Honour.

HIS HONOUR: Well, what do you want me to do about it?

MR GYLES: Well, your Honour, may I take some instructions, your Honour, about the situation?

HIS HONOUR: All right. Will we have Mr Higgs back in the witness box?

MR PARKER: Yes."

Later on 22 October the following exchange occurred between counsel for Mobil and his Honour:

"MR GYLES: Now, your Honour, we would point out our concern is that what was said yesterday to Mr Symington indicates, your Honour, a view about his position in relation to the dealer network which is quite critical to the case and that is, was there (a) proper communication with the dealer network; and (b) if your Honour is approached on the matter is there a serf-like or vassal-like relationship between licensed franchisor and franchisee then we are in a hopeless position. I mean, it really ---

HIS HONOUR: What is the proposition, Mr Gyles, that I started biased or I have become biased or what?

MR GYLES: No, your Honour.

HIS HONOUR: Well, what is the proposition?

MR GYLES: No, your Honour, that exhibits bias, that is all, your Honour, within the ---

HIS HONOUR: What it does is it exhibits the fact that as the case has gone on, and we are now in its seventh day, I have acquired some impressions about the case and I always thought when I was at the bar that it did not do any harm for the judge to give you some idea of what he was thinking and that is all I am doing.

MR GYLES: Yes, quite your Honour.

HIS HONOUR: I mean, if you want to know do I feel critical of aspects of Mobil's behaviour, I think I indicated as clearly as words could do so last week I did; I also said that I would keep an open mind about it until the evidence is completed and that is still my position.

MR GYLES: Your Honour, we did not complain about that then and I do not complain about that now nor about other matters, I have simply - nor, your Honour, would I ever submit or suggest to your Honour that judges and your Honour in particular should not express views; of course that is appropriate. I am bound, your Honour, to - the High Court tells us we are bound to raise these matters with the judge if there is any concern and I am doing so.

HIS HONOUR: So it is apprehended bias, is that the proposition?

MR GYLES: Yes, apprehended bias, your Honour.

HIS HONOUR: Thank you, Mr Gyles. I do not propose to disqualify myself; let us get on with the case."

The principles concerning the disqualification of a judge on the ground of apprehended bias are well established. The governing principle is that apprehended bias may be established if a fair minded observer might entertain apprehension of bias by the judge or prejudgment of the issues or the credibility of a material witness: R v Watson (1976) 136 CLR 248; Livesy v New South Wales Bar Association (1983) 151 CLR 288; SCI Operations Pty Limited v Trade Practices Commission (1984) 2 FCR 118 per Sweeney J at 138-141, Lockhart J at 157-158 and Sheppard J at 168-174; Vakauta v Kelly (1989) 167 CLR 568; Galea v Galea (1990) 19 NSWLR 263; Kaycliff v Australian Broadcasting Tribunal (1989) 90 ALR 310; Hassam Khadem v B A Barbour (1995) 38 ALD 299.

Having carefully read the relevant pages in the transcript of the trial, in our opinion this ground of appeal must fail. The trial Judge expressed concern at the fact that the case was a very large one involving substantial expenditure of money in legal costs. His Honour raised the possibility of the parties having serious discussions to resolve their differences. His Honour's later reference to "peasants" was, as he said, intended to be metaphorical and obviously not to be taken literally.

In our opinion in all the circumstances neither the parties nor the public could entertain any reasonable apprehension that the trial Judge might not have brought an impartial and unprejudiced mind to the resolution of the issues in the case. It could not be reasonably thought that his Honour had in some way predetermined the outcome of the case or any issue in it or formed an adverse view against any witness or against the prospects of success of Mobil or any other party.

This ground of appeal fails.

2. Contractual issues

Was there an offer of a promise to be accepted by the performance of an act of attaining 90 per cent or better in Circle of Excellence judgings?

GENERAL

The first contractual issue to arise is that of the legal effect, from the perspective of contract, of what Mr Stumbles said at the Convention. The lengthy passage from Mr Stumbles' Convention address must be construed in context. It was part of a speech whose purpose was to rouse, stimulate, encourage and challenge Mobil dealers at a Convention breakfast to perform better and whose tone might be described as that of "corporate enthusiasm".

The Team Pak and Circle of Excellence systems of assessment and rewards were already in place. A little before the passage in question, Mr Stumbles spoke of changes to be introduced as from January 1992. After referring to changes in the systems of training and merchandising, he spoke of changes to the Circle of Excellence system in the following passage:

"... we are going to make some changes in 1992 to the way we run the Circle of Excellence program. Firstly we will recognise at the celebratory dinner with plaques and badges for the top 35 sites. Secondly we will recognise and reward all sites who achieve scores over 95% and there will be a third tier of recognition for sites achieving over 90%. It's important to recognise the contribution and the efforts of individual dealers and individual sites but I think the most significant change will occur in how we assess and award the major prize. The big one. I don't know yet what that reward's going to be. This year it was free travel package to this convention plus time in San Francisco but next year we're going to make that major award on a territory basis. We are going to reward the best teams the whole territory will win the prize, based on the average score of all sites in the territory. Now in some country areas with lower site numbers we may need to combine two adjacent territories to get the numbers right. So in the winning territories the dealers and the territory managers will get the major reward based on the average unless you're below 80%. Even if the territory wins we're going to exclude from the award any site scoring below 80%. It's obvious really I don't know why we didn't do something like this earlier because we keep talking about team but we've only been rewarding individuals. Now we are still going to reward individuals but from now on we are going to have a major focus on the team and you will have all of the details of that before year end." (emphasis supplied)

What is significant for present purposes is that this passage addresses performance in calendar year 1992 and rewards to be made at the end of that year in respect of that performance.

By contrast, the later and lengthier passage which was set out earlier in these Reasons with which the case is concerned, relates to a reward to be made no earlier than upon expiry of the terms of the current franchises. Mr Stumbles referred to this as being "a long way off for most of [his audience]" and referred to those who "came aboard at the end of 1988" as having "just over six years to go". He was referring to the end of 1997. It is convenient to think of all franchisees as having initial terms of three years followed by two options of renewal of three years each - a total existing tenure of nine years.

According to the statements of claim, the franchise agreements of the applicants had expiry dates ranging from 31 October 1995 (in the case of Fahic Pty Ltd) to 19 December 1998 (in the case of Barbotine Pty Ltd). This might be thought to suggest that the numerous applicants below had, as at the time of the Convention in 1991, periods of from four years and three months to seven years and five months to run on their franchise agreements. But the position is not so straightforward because the dates given in the statements of claim do not allow for renewals. Allowing for renewals, the expiry dates of Lyndel, Thorpe, Wellcome, JTP and Roseville, for example, were as follows:

This passage occurs in a section of the Reasons for Judgment dealing with promissory estoppel. In the section dealing with breach of contract, his Honour does not return to the special position of Wellcome. However, his Honour's agreement with senior counsel for Mobil expressed at the beginning of the above passage that because Wellcome did not hold the franchise of "Mobil Northbridge" when Mr Stumbles made his speech at Los Angeles, there was no offer of a promise to Wellcome, makes it clear that he must have decided the claim of breach of contract in favour of Wellcome against Mobil on the basis of what he found Ms Davies had said to Mr Jevaherjian.

On the appeal, senior counsel for Wellcome does not disagree but submits that the course of the litigation below shows that the parties made part of the field of their forensic contest the issue on which his Honour must be taken to have found the contract as between Mobil and Wellcome. He refers, of course, to Mr Jevaherjian's affidavit and Ms Davies' affidavit in reply, of which I have already given an account.

The absence of cross-examination in relation to the conversation and of any submissions relating to it persuade us to the view that the parties did not make this issue a part of their contest for determination by his Honour. A contract made through a territory manager on the occasion of a Circle of Excellence judging on 3 August 1992 is a totally different contract from that pleaded. We do not think that it was open to his Honour to find against Mobil on this ground; cf Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279. We are not persuaded to the contrary view by the fact that the alleged conversation between Mr Jevaherjian and Ms Davies was dealt with in their affidavits: it is common for facts to be alleged and denied in affidavits and to pass into evidence without attention being given to the question of their relevance to any issue. In any event, the conversation was capable of being considered relevant to the question whether Mobil, through Mr Stumbles, had offered a nine-for-six promise.

CONCLUSION

In appeal NG 344 of 1997, the appeal should be allowed with costs, the orders made by Wilcox J in proceeding NG 835 of 1995 on 15 April 1997 should be set aside, and in lieu of those orders, there should be an order that the application in that proceeding be dismissed and that the applicant in that proceeding pay the costs of respondent to that proceeding.

In appeal NG 365 of 1997, the appeal should be dismissed with costs and the appellants should pay the respondent's costs below associated with the appellants' claims.

In appeal NG 366 of 1997, the appeal should be allowed with costs, the orders made by Wilcox J in proceeding NG 841 of 1995 on 15 April 1997 in favour of the respondents should be set aside, and in lieu of those orders, there should be an order that the application in that proceeding relating to the respondents' claims be dismissed and that the respondents pay the costs of the appellant as respondent to that proceeding relating to the present respondents' claims made in that proceeding.