Parnell Mogas P/L v Bishop & Bishop - [2005] SADC 56

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
PARNELL MOGAS P/L v BISHOP & BISHOP
Judgment of His Honour Judge Allan
30 May 2005
CONTRACTS
Agreement between parties as to operations of roadhouse - breach of contract - misleading or deceptive conduct - judgment, by consent, for plaintiff on claim - judgment for plaintiff on counterclaim.

PARNELL MOGAS P/L v BISHOP & BISHOP
[2005] SADC 56

This case is about the Mobil roadhouse at Orroroo.
The defendants operated the roadhouse pursuant to two agreements entered into between them and the plaintiff; one called an “Agreement for Sale and Purchase of Fuel and Petroleum Products (Commission Agent) (“the commission agreement”) and the other an Agreement for Loan of Equipment (“the loan agreement”).
The commission agreement was the agreement whereby the plaintiff provided the defendants with fuel for sale and set forth the conditions on which it did so. Relevantly, the agreement provided that the period of the agreement was three years, commencing 1 December 2000 and expiring 30 November 2003; that the defendants would receive a commission of 5.50 cents per litre including GST on petroleum products sold at the roadhouse; that the defendants would operate the roadhouse for the sale of petroleum products for a minimum of 12 hours per day, from 7.00 am to 7.00 pm, provided that the defendants could trade any hours outside the minimum hours they wished; that the defendants would pay a monthly licence fee of $1,000 and that the defendants would pay to the plaintiff an amount equal to the petroleum products sold by them less the agency commission.
The loan agreement was the agreement whereby the defendants operated the roadhouse outside the selling of fuel; the provision of meals and the like.
The defendants commenced to operate the roadhouse on 3 December 2000. They ceased to sell fuel from the roadhouse on 4 June 2003 and left the roadhouse not long thereafter.
There is no dispute that, as at 4 June 2003, the defendants owed the plaintiff for fuel with which they had been supplied and which they had sold; and that is the subject of the plaintiff’s claim in the action. There is no dispute that, as at 5 June 2003, the defendants owed the plaintiff $244.67 for fuel supplied and sold in March 2003, $26,686.17 for fuel supplied and sold in April 2003, $19,854.21 for fuel supplied and sold in May 2003 and $4,635.51 for fuel supplied between 29 May 2003 and 4 June 2003.
The commission agreement does not specify it, but it was agreed between the plaintiff and the defendants that the defendants would pay for the fuel, less their commission, within 30 days of them being invoiced for it.
At the outset of the trial, the parties announced that it was agreed that the defendants owed the plaintiff the sum of $40,720.28 for fuel supplied by the plaintiff to the defendants and sold by the defendants and that, by consent, the plaintiff should have judgment against the defendants for that amount. The trial was concerned with the defendants’ Counterclaim.
The Counterclaim contains a number of allegations and claims, but, as the trial developed, the defendants’ case came down to this: that, prior to entering into the agreements with the defendants, the plaintiff provided them with a calculation of estimated income and expenditure of the roadhouse based on actual income and expenditure for the period from July 1999 to June 2000; that the plaintiff represented to the defendants that they would be able to produce that income by operating the roadhouse for the minimum hours provided in the commission agreement; that the representations were made to induce the defendants to enter into the agreements; that the defendants acted on such representations in doing so; that the figures which were provided to them, as to income and expenditure were accurate, but that the representation that the income could be produced by opening the roadhouse only for the minimum number of hours was misleading or deceptive conduct; invoking the provisions of section 52 of the Trade Practices Act. The defendants, by the Counterclaim, seek damages in respect of such conduct, alleging, and it is not disputed, that the income of the roadhouse during the period which they operated it was less than the estimated income represented to them.
There is no dispute that the previous operator of the roadhouse opened it longer than the minimum hours specified in the agreement; and there also seems to be no dispute that, if the defendants had opened the roadhouse for longer than the minimum hours prescribed, their income would have been greater.
The defendants sometimes opened the roadhouse beyond the minimum hours required by the agreement, but not always. It did not suit them: apart from anything else, they had three school-aged children who required attention. It is also worth noting that, about six months after the defendants began to operate the roadhouse, a store within the township of Orroroo began to serve breakfast and this made inroads into the defendants’ early morning trade.
Not long after the defendants commenced to operate the roadhouse, it became apparent that it was not returning a profit; and this continued to be the case until not long before 4 June 2003. On two separate occasions, at the request of the defendants, and in order to assist them, the plaintiff reduced the licence fee payable pursuant to the commission agreement; initially, from $1,000 to $600 and, later, from $600 to $100. It was only after the second reduction that the business began to return a profit.
The defendants’ case, so far as the allegation of misleading or deceptive conduct is concerned, rests on the evidence of Mr Bishop. He said that, on 24 November 2000, in a conversation at the roadhouse with Mr Hicks, the marketing manager of the plaintiff, Mr Hicks said to him that, if the business was open for the minimum hours only, it would produce the estimated income represented to the defendants. Mr Hicks denied that he said that. Mrs Bishop said that Mr Hicks never used those words to her, and she gave no evidence that any other person on behalf of the plaintiff did so.
I prefer the evidence of Mr Hicks to that of Mr Bishop on this topic. I think it more reliable than that of Mr Bishop. I am not prepared to say that Mr Bishop deliberately misled me about the conversation; perhaps he misconstrued what was said to him and perhaps he told me what, with the benefit of hindsight, he would like Mr Hicks to have told him; but, whatever the position, I am satisfied that Mr Hicks did not say to Mr Bishop that the estimated income of the business as represented by the plaintiff to the defendants would be produced if the roadhouse was open for the minimum hours of 7.00 am to 7.00 pm or used words which could be interpreted in that way.
Paragraph 9 of the Counterclaim makes the allegation of misleading and deceptive conduct on the part of the plaintiff. Sub-paragraphs (f) and (g) thereof provide as follows:
“f. The plaintiff did not provide to the defendants the actual trading figures for the period from July 1999 to June 2000;
g.The plaintiff presented the estimated income and expenditure on the basis that the income could be earned from the minimum operating hours required in the agreement namely 7 am to 7 pm for 7 days a week.”
In paragraph 4 of the Defence to the Counterclaim, the plaintiff denies the allegations of misleading and deceptive conduct as alleged by the defendant in paragraph 9 of the counterclaim. Sub-paragraph (e) thereof provides as follows:
“e. The plaintiff admits the allegations in paragraphs (f) and (g) of the counterclaim.”
On the face of it, there is an inconsistency in the Defence to the Counterclaim as to the allegations of misleading and deceptive conduct; on the one hand denying such allegations while, on the other hand, appearing to admit the facts the subject of such allegation. The matter was raised during the course of the trial and the plaintiff indicated its preparedness to apply to amend to make the position clear; namely, that the allegations in paragraph 9(g) of the counterclaim were denied. I would have allowed such an application, but, such an amendment was deemed unnecessary because, from the outset of the trial, it was recognised that the dispute between the parties related to that issue and there was never any confusion that the plaintiff’s position was that it denied the allegations of misleading and deceptive conduct.
One other issue remained alive on the pleadings. In the Counterclaim, the defendants allege that the plaintiff took possession of the roadhouse and terminated the subject agreements without cause and without notice; an allegation denied by the plaintiff.
As I have mentioned, there is no dispute that, as at 4 June 2003, the defendants were in arrears with their payments for fuel supplied by the plaintiff to them and sold by them. On 30 May 2003, Mr Bishop had a conversation with Ms McMahon, the credit manager of the plaintiff. It was a telephone conversation. Ms McMahon was enquiring as to when the plaintiff could expect payment for fuel sold at the roadhouse. Ms McMahon said that the plaintiff would not be able to continue to supply fuel to the defendants if payment of the amount outstanding for fuel was not paid. Mr Bishop told her that the defendants could not pay and that he would shut the site down at the end of the month.
On 2 June 2003, Ms McMahon spoke to Mr Hicks. Subsequently, Mr Hicks spoke to Mr Bishop by telephone the same day. Mr Bishop told Mr Hicks that he, Mr Bishop, intended to close the business at the end of June. Mr Hicks asked Mr Bishop what he proposed as to payment of the monies outstanding. Mr Bishop did not give him a definite answer.
On 3 June 2003, Mr Hicks and Mr Bishop had another telephone conversation. Mr Bishop rang Mr Hicks. Mr Bishop told Mr Hicks that the defendants were organising a loan to pay the money due to the plaintiff, that they would pay $10,000 immediately and that they required time to pay the balance. Mr Hicks asked that the $10,000 be paid immediately and that he, Mr Hicks, would let Mr Bishop know if his proposal concerning payment of the balance was acceptable to the plaintiff.
On 4 June 2003, Mr Hicks went to the roadhouse. At the time he arrived, he was aware that the defendants had not paid the sum of $10,000. He spoke to Mr Bishop. He asked Mr Bishop why the $10,000 had not been paid. Mr Bishop said that they had been waiting to hear from him, Mr Hicks. Mr Hicks asked Mr Bishop if they would pay the balance owing and Mr Bishop said that they would not. Mr Hicks, with Mr Bishop’s assistance, then padlocked the pumps. Mr Bishop had said that the defendants intended to leave the roadhouse on 30 June 2003.
In making these findings as to the events of 30 May 2003, 2 June 2003, 3 June 2003 and 4 June 2003, I prefer the evidence of Ms McMahon and Mr Hicks to that of Mr Bishop on matters of conflict. Their evidence was much more convincing. I gained the impression that Mr Bishop was tailoring his evidence to best meet the interests of the defendants, as he perceived them. There was no agreement that the plaintiff would accept payment of the monies due to it by payment of $10,000 forthwith and the balance at a later date as trading continued.
So, the supply of fuel to the roadhouse came to an end in these circumstances; and, not long after, the defendants left the roadhouse. They had continued to operate for a while, but did not sell fuel.
On the facts I have found, the plaintiff did not take possession of the roadhouse and terminate the agreements with the defendants without cause and without notice as alleged. It is true that the plaintiff refused to continue to supply fuel, but it was an implied term of the agreement between the parties that, if the defendants were in breach of the terms of the agreement as to payment for the fuel supplied by the plaintiff and sold by them, the plaintiff was under no obligation to continue to supply fuel to the roadhouse.
All this means that the defendants’ counterclaim must fail: the factual basis for it does not exist.
It is not difficult to have some sympathy for the defendants. It might be that the decision to be involved in a business like a roadhouse in the country in the first place was wrong; it being notorious that, in order to make a profit out of such a business, it is necessary to work long hours and, more particularly, the hours when people want to make use of its facilities; and, in order to work those hours, the operator, whoever it might be, needs the flexibility to do so.
As I have said, the counterclaim raises other issues which were abandoned during the course of the trial; for example, a claim made pursuant to the Retail and Commercial Leases Act 1995. The defendants acknowledge that no compensable loss has been sustained as a result of those other issues.
So far as the plaintiff’s claim is concerned, by consent, there will be judgment for the plaintiff against the defendants in the sum of $40,720.28.
For the reasons which I have given, the defendants’ counterclaim is dismissed: there will be judgment for the plaintiff on the counterclaim.
I will hear the parties as to costs.