Rasomen Pty Limited (t/as Shell Fairview Park) v The Shell Company of Australia Ltd

[1995] FCA 1015

CATCHWORDS

INJUNCTIONS - interim injunction under s 21(3) of the Petroleum Retail Marketing Franchise Act 1980 (Cth) - whether serious issue to be tried between the parties - failure of evidence to raise serious question as to whether the applicant is a party to a franchise agreement - comments, in the statutory context, on the position of innocent third parties.

Petroleum Retail Marketing Franchise Act 1980 (Cth) ss 3, 6, 20A, 21 and 26

Chronopolous v Caltex Oil (Australia) Pty Ltd (1982) 45     ALR 481
Mobil Oil Australia Ltd v Brindle (1985) 9 FCR 17
Best v Caltex Oil (Australia) Pty Ltd (1989) 87 ALR 1
Castlemaine Tooheys Ltd and Others v The State of South     Australia (1986) 161 CLR 148
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337
Walton Stores (Interstate) Limited v Maher and Another (1988)    164 CLR 387
Austotel Pty Ltd and Another v Franklin's Selfserve Pty Ltd      (1989) 16 NSWLR 582
Silktone Pty Ltd v Devreal Capital Pty Ltd and Others (1990)     21 NSWLR 317

No SG 88 of 1995

RASOMEN PTY LIMITED (trading as Shell Fairview Park) v THE SHELL COMPANY OF AUSTRALIA LIMITED

Branson J
Adelaide
8 December 1995

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY  )    No SG 88 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:

RASOMEN PTY LIMITED (trading as Shell Fairview Park)

Applicant

- and -

THE SHELL COMPANY OF AUSTRALIA LIMITED

Respondent

MINUTES OF ORDER

CORAM:    Branson J
PLACE:    Adelaide
DATE:     8 December 1995

THE COURT ORDERS THAT:

1. The application pursuant to s21(3) of the Petroleum Retail Marketing Franchise Act 1980 (Cth) for an interim injunction is dismissed.

1. The applicant is to pay the costs of the respondent of such application.

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

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY  )    No SG 88 of 1995
  )
GENERAL DIVISION                 )

BETWEEN:

RASOMEN PTY LIMITED (trading as Shell Fairview Park)

Applicant

- and -

THE SHELL COMPANY OF AUSTRALIA LIMITED

Respondent

REASONS FOR DECISION

CORAM:    Branson J
PLACE:    Adelaide
DATE:     8 December 1995

INTRODUCTION

This is an application pursuant to s21(3) of the Petroleum Retail Marketing Franchise Act 1980 (Cth) ("the Act") for an interim injunction pending determination of an application under s21(1) of the Act.

By an application filed on 21 November 1995 the applicant claims injunctive relief pursuant to s21(1) of the Act. By the same application the applicant seeks additional relief, including a declaration that a franchise agreement pursuant to the Act was entered into between the applicant and the respondent in or about January 1988 and an order that such agreement be specifically performed. By a notice of motion,

also filed on 21 November 1995, the applicant seeks the interim relief here under consideration.  Such relief is sought in terms of paragraph 1 of the application.  Paragraph 1 of the application reads as follows:-

"1.An order that the Respondent's servants and agents be restrained pending the final determination of these proceedings from permitting, granting any servant, agent or person or company, possession or occupation of the service station described in the Schedule."

The schedule to the application identifies a service station at Lot 202 The Grove Way, Golden Grove, South Australia ("the Grove Way site").

STATUTORY BACKGROUND

The principal purposes of the Act "are to give security of tenure to retail operators of service stations, and a protection against price discrimination by corporations supplying motor fuel to them" (per Fox J in Chronopolous v Caltex Oil (Australia) Pty Ltd (1982) 45 ALR 481 at 484; see also Mobil Oil Australia Ltd v Brindle (1985) 9 FCR 17 per Burchett J at 24 and Best v Caltex Oil (Australia) Pty Ltd (1989) 87 ALR 1 per Jenkinson J at 9).

Section 21 of the Act provides as follows:-

"21.(1)Where, on the application of a party to a franchise agreement, a court is satisfied that a person has engaged, or is proposing to engage, in conduct that constitutes or would constitute:

(a)a contravention of a provision of this Act or the regulations;

(b)attempting to contravene such a provision;

(c)aiding, abetting, counselling or procuring a person to contravene such a provision;

(d)inducing, or attempting to induce, whether by threats, promises or otherwise, a person to contravene such a provision;

(e)being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or

(f)conspiring with others to contravene such a provision;

or conduct that otherwise defeats or prejudices, or is likely to defeat or prejudice, any right or remedy of or available to the applicant under this Act, the court may grant an injunction in such terms as the court determines to be appropriate.

(2)Without limiting the generality of subsection (1), the power to grant injunctions under that subsection includes the power to grant injunctions for the purpose of setting aside any instrument or disposition, but the court shall not grant such an injunction that would adversely affect the interests of a bona fide purchase or assignee or other bona fide person interested (not being the defendant or an associate of the defendant).

(3)Where in the opinion of the court it is desirable to do so, the court may grant an interim injunction pending determination of an application under subsection (1).

(4)The court may rescind or vary, or suspend the operation of, an injunction granted under subsection (1) or (3).

(5)The power of the court to grant an injunction restraining a person from engaging in conduct may be exercised:

(a)whether or not it appears to the court that the person intends to engage again, or to continue to engage, in conduct of that kind;

(b)whether or not the person has previously engaged in conduct of that kind; and

(c)whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person engages in conduct of that kind.

(6)The power of the court to grant an injunction requiring a person to do an act or thing may be exercised:

(a)whether or not it appears to the court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing;

(b)whether or not the person has previously refused or failed to do that act or thing; and

(c)whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person refuses or fails to do that act or thing.

(7)Without limiting the generality of subsection 3 (2), a reference in this section to a party to an agreement includes a reference to a person who has been a party to an agreement."

Section 3 of the Act contains the following definitions of "agreement" and "franchise agreement":-

'"agreement" means any agreement, arrangement or understanding:

(a)whether formal or informal or partly formal and partly informal;

(b)whether written or oral or partly written and partly oral; and

(c)whether or not having legal or equitable force and whether or not based on legal or equitable rights;

"franchise agreement" means an agreement (other than an agreement between bodies corporate that are related to each other) containing:

(a)provisions, whether express or implied, under or by virtue of which a corporation (in this Act referred to as the "franchisor") authorizes, permits or requires a person, being another party to the agreement (in this Act referred to as the "franchisee"), to use, in connection with the retail sale of motor fuel by that person at the premises to which the agreement relates, a mark identifying, commonly associated with, or controlled by, that corporation or a related corporation;

(b)provisions, whether express or implied, under or by virtue of which a corporation (in this Act referred to as the "franchisor") grants a right to, or otherwise authorizes or permits, a person, being another party to the agreement (in this Act referred to as the "franchisee"), to possess, occupy or use the premises to which the agreement relates in connection with the retail sale of motor fuel by that person at those premises; or

(c)provisions, whether express or implied, under or by virtue of which:

(i)a corporation (in this Act referred to as the "franchisor") is accustomed, entitled or required to supply motor fuel to a person, being another party to the agreement (in this Act referred to as the "franchisee"), for retail sale by that person at the premises to which the agreement relates; or

(ii)a person (in this Act referred to as the "franchisee") agrees with a corporation (in this Act referred to as the "franchisor") to acquire motor fuel from another person (whether a party to the agreement or not) for retail sale by the first-mentioned person at the premises to which the agreement relates." '

Section 21 of the Act is contained within Part IV of the Act. In Part IV, unless the contrary intention appears, "franchise agreement" means a franchise agreement in relation to which the Act applies (s20A of the Act). No such contrary intention appears in s21 of the Act. Consideration must therefore be
given to s6 of the Act. It was not suggested that in the circumstances of this case any provisions other than those contained in s6(1)(a) are relevant. Section 6(1)(a) is in the following terms:-

"(1)This Act does not apply in relation to a franchise agreement unless the agreement:

(a)contains provisions of the kinds referred to in paragraphs (a) and (b), and of the kind referred to in subparagraph (c) (i) or (ii), of the definition of "franchise agreement" in subsection 3(1); ..."

That is, as was pointed out by Jenkinson J, with whom the other members of the Full Court of this Court agreed, in Best v Caltex Oil (Australia) Pty Ltd at 2:-

"Although every franchise agreement in relation to which the Act applies is within the defined meaning of the expression, not every agreement which falls within the definition of "franchise agreement" is a franchise agreement in relation to which the Act applies."

PRINCIPLES GOVERNING GRANT OF INTERLOCUTORY RELIEF

The power of this Court to grant the interlocutory relief here sought is a statutory power (see ss21(3) and 26 of the Act). Nonetheless, in considering whether or not "it is desirable" to grant such relief, the Court will be guided by the general principles governing the grant of interlocutory injunctions.  In accordance with such general principles the applicants must show:-

(a)that there is a serious question to be tried;

(b)that they will suffer irreparable injury for which damages will not be an adequate compensation unless
an injunction is granted; and

(c)that the balance of convenience favours the granting of an injunction

(per Mason ACJ in Castlemaine Tooheys Ltd and Others v The State of South Australia (1986) 161 CLR 148 at 153). Paragraphs (b) and (c) above are often considered together on the basis that the balance of convenience will not favour the granting of an interlocutory injunction where an applicant could be adequately compensated for any threatened harm by an award of damages.

FACTUAL BACKGROUND

The applicant has since 1985 been the franchisee of the respondent with respect to a service station at Fairview Park in South Australia.

Late in 1987 there were discussions between Phillip James Reichstein ("Mr Reichstein"), a director of the applicant, and officers of the respondent on the topic of the applicant being granted a franchise at Golden Grove, an Adelaide suburb in close proximity to Fairview Park.  Mr Reichstein's evidence is that at that time an officer of the respondent confirmed earlier statements made by officers of the respondent that the applicant would be granted a franchise in the Golden Grove area for the first Shell service station in that area.  The evidence of Barry Taylor ("Mr Taylor"), at the relevant time one of the respondent's two senior area managers in South Australia, is as follows:-

"Prior to December 1987, there was the development of a new service station at Golden Grove in the air.  I recall a discussion with Mr Reichstein in which it was mentioned that if Shell were successful in obtaining the licence for this proposed new service station he would be the operator of it.  .... Mr Reichstein said to me that he wanted an additional outlet.  He said he was aware that a new site was proposed in Golden Grove and he told me that he wanted that site.  .... I do recall Mr Hendrickson [an officer of the respondent] saying that Rasomen would be granted the lease in the Golden Grove area for the first Shell service station.  However, the service station which I believe every one understood that we were talking about was the site that was then being proposed by the developer of Golden Grove, Delfin.  ....  Shell was unsuccessful in obtaining that site.  An outlet was in fact ultimately built on that site by another oil company." (emphasis in original)

In about January 1988 the applicant and the respondent were engaged in negotiations concerning rent payable in respect of the Fairview Park site.  By letter dated 22 January 1988 and signed by the respondent's then Retail Area Manager, Melos Sulicich ("Mr Sulicich"), the respondent wrote to the applicant setting out a basis for the payment of future rent with respect to the Fairview Park site.  The letter purported to confirm discussions on 18 January 1988 in which such basis was agreed.  A duplicate letter with provision for the agreement of the respondent to be noted and dated thereon was included with this letter.  Such agreement was noted on the duplicate letter on 11 February 1988.

The delay between 22 January and 11 February 1988 in noting such agreement is explained by Mr Reichstein as being related to the discussions concerning the Golden Grove site.  Mr Reichstein's evidence is that he would not sign the duplicate letter without written confirmation from the respondent that the applicant would be granted the franchise at Golden Grove and that he so advised Mr Sulicich by telephone.  The applicant then received a letter dated 28 January 1988 from the respondent, again signed by Mr Sulicich.  The letter is in the following terms:-

"Rasomen Pty Ltd
      323 Hancock Road
      FAIRVIEW PARK  SA  5126

Dear Sirs

We refer to our discussions with yourselves on 18th January 1988 and confirm our agreement with you regarding potential developments in the Golden Grove area.

It is likely that permission will be given to build a new service station in this area.  Should The Shell Company obtain the right to operate this service station, you will be given the first right of refusal to lease it, provided that you are still our lessee at Shell Fairview Park.

We will determine the conditions of the lease at the time, however we confirm that the site will be an Auto Care franchise.

Yours faithfully
     FOR THE SHELL COMPANY OF AUSTRALIA LIMITED

(signed)

MELOS SULICICH
     Retail Area Manager."

Following receipt of the above letter Mr Reichstein and Mrs Reichstein, also a director of the applicant, signed the duplicate copy of the letter of 22 January 1988.

It is not in dispute that the Grove Way site is the first service station site obtained by the respondent in the Golden
Grove area.

Affidavit evidence placed before the Court on behalf of the respondent indicates that in late 1987 and early 1988 only one service station site at Golden Grove was under present consideration.  There is no direct evidence before the Court as to the understanding of either Mr & Mrs Reichstein in this regard.  However, there is evidence of discussions between Mr and Mrs Reichstein and officers of the respondent to the effect that Mr & Mrs Reichstein wanted the proposed Golden Grove site.

No evidence was placed before me as to any dealings between the applicant and the respondent relevant to these proceedings between February 1988 and July 1995.  It appears from a letter dated 11 October 1995 sent by the applicant to the respondent that by letter dated 27 July 1995 Mr Reichstein wrote to the respondent asserting that the applicant had a right of refusal to lease the new Golden Grove site.  That letter was not placed in evidence.  It appears that it was not answered.

On a date which is not precisely established by the evidence, the respondent made an application to the Petroleum Products Retail Outlets Board (S.A.) ("the Board") for a licence authorizing retail sales of petroleum products from the Grove Way site, or, in the alternative, for the variation of an existing licence to allow such sales from those premises.  Upon the application coming on for consideration by the Board on 31 August 1995, the presiding member of the Board stated that the application had been advertised "something like a month ago".  It seems to be a reasonable inference that the application was made in about late July 1995, and that its advertisement provoked Mr Reichstein's letter to the respondent of 27 July 1995.

Mr Reichstein, on behalf of the applicant, appeared before the Board on the hearing of the respondent's application and supported it.  He gave evidence in support of the application on 1 September 1995.  At this time his letter of 27 July 1995 apparently remained unanswered.  The transcript of the hearing records the following submission of Mr Reichstein and the response thereto by Mr Bell, solicitor, who appeared for the respondent on the application to the Board:-

"A.My submission is very short.  I have only one real basis for it.  I am the franchisee at Shell Fairview Park on Hancock Road, situated within the prescribed 3-kilometre radius of the proposed new site at Golden Grove.  This therefore gives me the right of appearing before the Petroleum Products Retail Board regarding the matter, to either support or object to the new site being granted a licence.  My position on this matter is, I support the approval of a new licence being granted by the board.  The basis on which I do this is because primarily I will be the lessee at the new Shell Golden Grove site if the licence is granted.  As I have the first right of refusal to lease the site at Golden Grove in writing from Shell, I can furnish a copy of this letter to the board if need be.  This therefore minimises any effect on Shell Fairview Park, if any, the new site may have.  This is the basis why I support the site - licence being granted.  Thank you.

Q.Thanks, Mr Reichstein.  You have given evidence under oath that you have this letter.  The board is prepared to accept that.

MR BELL:If I could, I would just like for the record for it to be noted that I have no view to express as a representative of Shell on what Mr Reichstein has said.

PRESIDING MEMBER:   No, I understand that.

MR BELL:I won't be asking him any questions, just for the record.

PRESIDING MEMBER:   Fine.  Thank you."

After making the above submission Mr Reichstein was cross-examined by two counsel each of whom represented an objector to the grant of the respondent's application.  Each of such counsel cross-examined on the basis that, if the application were granted, Mr Reichstein would be the lessee of the Grove Way site.  The only intervention by Mr Bell during the course of such cross-examination occurred in the following passage:-

"Q.Right, okay.  How along ago was it that you realised that there might be a new site there.  When did you first hear about it.

A.When did I first think there might be a site in Golden Grove?

Q.Yes, a new one.

A.Well - a new one?  Well, Shell has been planning it for many years.  I can go back to 1988.

MR BELL:I just want to interrupt here if I can just to distinguish between what Mr Reichstein is saying on behalf of my client, Shell, and what he knows to be the case on his own behalf.  He has to his credit distinguished between innuendo and what happens.  I don't propose to object every time the word "Shell" is used, but I just would like it noted that my client is different to Mr Reichstein in terms of what he's saying.

MR SIMPSON:   We're not going to be putting anything to             the contrary, sir.

PRESIDING MEMBER

Q.I think the point Mr Bell makes is valid, though.  I think, Mr Reichstein, as a Shell operator obviously you have some knowledge of  - - -

A.Yes, though I'm not privy to that.

Q.But it could basically be predominantly hearsay anyhow.

A.That's right, sir.

Q.So I think if you're asked a question and the answer comes in the category of hearsay, well, then I think you should indicate that you're not in a position to give a definitive answer, and only respond positively to questions where they're basically clearly in your own area."

It appears that on 4 October 1995, following a recommendation to the appropriate Minister from the Board, an existing licence to sell motor fuel was varied to permit the respondent to make sales from the Grove Way site.

By letter dated 11 October 1995, the applicant requested the respondent to make a formal offer in writing to the applicant to lease the service station to be erected on the Grove Way site and to provide a memorandum of lease for execution.

On 18 October 1995 Brumar Services Pty Ltd ("Brumar") entered into an agreement with the respondent whereby Brumar, the respondent and certain guarantors of Brumar's performance, whom I take to be directors of Brumar, agreed that if the respondent were granted a lease of the Grove Way site for a terms of 5 years or more, Brumar, the respondent and the guarantors of Brumar would enter into a franchise agreement in the form annexed to the agreement.  The evidence before me does not establish that a lease of the Grove Way site has as yet been granted to the respondent.  I take it to be common ground, however, that such a lease for a term of 5 years or more either has or will be granted.

The respondent by letter dated 19 October 1995 replied to the applicant's letter of 11 October 1995.  It declined to make the offer sought and contended that the applicant had no rights with respect to the Grove Way site or any future developments in Golden Grove.  These proceedings followed.

ISSUES TO BE DETERMINED

The first issue to be determined is that of whether there is on the evidence before me a serious question to be tried raised by the application pursuant to s21(1) of the Act.

An application under s21(1) of the Act can only be brought by "a party to a franchise agreement". It is not disputed that the applicant is a party to a franchise agreement: it is a party to a franchise agreement with respect to the Fairview Park service station. However, the application in this matter seeks a declaration that a franchise agreement pursuant to the Act was entered into between the applicant and the respondent in or about January 1988 with respect to a Golden Grove site, now identified as the Grove Way site. The injunctive relief which it seeks pursuant to s21(1) of the Act relates to that site. Is there a serious question to be tried between the
parties that the applicant is a party to a franchise agreement as so asserted with respect to the Grove Way site?

The case for the applicant is put on two bases.  First, it is contended that the letter of 28 January 1988 resulted in a unilateral contract between the parties.  The details of this contention are set out below.  In the alternative, it is contended that, in or about December 1987 to January 1988, the respondent represented to the applicant that, upon the respondent obtaining the right to operate its first service station in the Golden Grove area, the respondent would grant to the applicant a franchise agreement in respect of that site, provided that the applicant continued until that time as a franchisee of the respondent at Fairview Park.  It is further contended that, in reliance on such representation, the applicant acted to its detriment in remaining as a franchisee at Fairview Park and in supporting the respondent's application for a licence to operate a service station at the Grove Way site.  In such circumstances, it is contended, the respondent is estopped from retreating from its implied promise to grant to the applicant the franchise agreement.

In my view, if the applicant is able to establish either the suggested unilateral contract, or that the respondent is estopped from retreating from an implied promise to grant to the applicant a franchise agreement with respect to the Grove Way site, an "agreement, arrangement or understanding" would arise between the parties which would amount to a franchise agreement to which the Act applies (see ss3, 6 and 20A of the Act). The real issue is whether a serious question is raised on the evidence before me as to the existence of such unilateral contract or the right of the applicant to rely upon the asserted promissory estoppel.

I turn first to consider the suggested unilateral contract.  This suggested contract is dependent upon the letter of 28 January 1988 being construed as an offer by the respondent to give to the applicant the first right of refusal to lease, as an Auto Care franchise, the first service station which the respondent may become entitled to operate in the Golden Grove area - provided that the applicant continues until that time as a franchisee of the respondent at Fairview Park.

The major difficulty in the way of accepting the submission that the letter of 28 January 1988 should be construed as an offer in the above terms is the language in which the letter is framed.  It speaks of a likelihood that permission will be given to build "a new service station" in the Golden Grove area.  The right of first refusal referred to in the letter is expressed to be referable to "this service station".  The plain meaning of the letter, in my view, is that the first right of refusal referred to therein is to be operative only if the respondent obtains the right to operate the new service station for which it is asserted to be likely that permission will be given.  It is common ground that the respondent did not obtain the right to operate that service station.  That right went to a competitor oil company.

If evidence of surrounding circumstances known to the parties, as opposed to evidence of the respective intentions of the parties, were admissible in this case in aid of the construction of the contract, I do not consider that the submission of the applicant would be advanced.  In my view, however, the language of the letter is not ambiguous or susceptible of more than one meaning.  I do not consider that evidence of surrounding circumstances is here admissible (Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337 per Mason J at 352).

In the circumstances I need not deal with the submission made on behalf of the respondent that the requirement of the letter of 28 January 1988 that "you are still our lessee at Shell Fairview Park" has not been satisfied in that, although the applicant has continued as a franchisee of the respondent at Fairview Park, it has not done so through until the present as a lessee of the respondent.

In my view, on the evidence before me, there is no serious question to be tried between the parties as to an alleged unilateral contractual arising from the letter of 28 January 1988.

I turn to consider the case of the applicant based on promissory estoppel.  The case was argued on the basis of the tests of promissory estoppel formulated by Brennan J in Walton Stores (Interstate) Limited v Maher and Another (1988) 164 CLR 387 at 428-9. There his Honour stated the law with respect to promissory estoppel as follows:-

"In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.  For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs."

As was pointed out by Priestley JA in Austotel Pty Ltd and Another v Franklin's Selfserve Pty Ltd (1989) 16 NSWLR 582 at 615-616 with respect to the above passage:-

"It may be that those tests do not represent the view of a majority of the court, but even if not, they are useful as a check; if the facts of the case do not measure up to those tests, it would be necessary to think thoroughly about why not."

In my view, it is doubtful whether there is a serious question to be tried as to the second of the tests propounded by Brennan J in the Walton Stores case.  The assumption or expectation upon which the applicant relies must, it seems, have arisen as a result of oral representations made by officers of the respondent earlier than 28 January 1988.  The evidence of Mr Reichstein is that in January 1988 he was not prepared to act on the basis of oral representations made by officers of the respondent, and required written confirmation of the respondent's position with respect to a franchise for the applicant at Golden Grove.  He sought and obtained the letter of 28 January, 1988.  Reliance, it seems, was placed on that letter and not on earlier conversations.  As mentioned above, the letter of 28 January 1988 is not, in my view, ambiguous.  It does not, I consider, contain the representation which is now contended for by the applicant.  However, for the reasons set out below, I need not form a final view as to whether the alleged oral representations, together with the letter of 28 January 1988, had the result that the respondent induced the applicant to adopt the assumption or expectation upon which the applicant relies.

The evidence before me falls short of establishing that, at any time earlier than July 1995, the respondent knew that the applicant was acting or abstaining from acting in reliance on an assumption or expectation that it would be granted the franchise to operate the first Shell service station at Golden Grove.  Although the statement of claim filed in this matter pleads that Mr Reichstein "... told representatives [of the respondent] of his understanding of the representation, offer or promise made to him in or about December 1987 or January 1988 ..." no evidence to this effect was placed before me.

For the purpose of this application for interlocutory relief, it must be assumed that the respondent first learned of the assumption of the applicant either upon receipt of Mr Reichstein's letter of 27 July 1995 or when Mr Reichstein gave evidence before the Board on 1 September 1995.  That is, about 7½ years after the date of its letter of 28 January 1988.  Nothing before me suggests that the respondent knew that Mr Reichstein was going to give evidence before the Board or that it intended him to do so (see the fourth of the tests propounded by Brennan J in the Walton Stores Case).

It could well be suggested that, following the giving by Mr Reichstein of his evidence to the Board, prudence on the part of the respondent required it to advise the applicant through Mr Reichstein, that the assumption which apparently underlay Mr Reichstein's evidence was misplaced.  Gaudron J pointed out in the Walton Stores Case at 462-463:-

"Where imprudence is "a proximate cause of the other party's adopting and acting upon the faith of the assumption" the justice of an estoppel is made out (emphasis added [by Gaudron J]).  ....  That test requires no knowledge as to the other's state of mind.  Nor does that test require that imprudence should have caused the assumption to be made.  It is sufficient that imprudence is "a proximate cause" of the assumption being adopted and acted upon."

However, the problem for the applicant is that there is no evidence before me which suggests that it, or its directors, adopted any assumption or took any action, or refrained from taking any action, as a consequence of the conduct of the respondent or its solicitor before the Board.  I do not think that it is a necessary inference in the circumstances from the evidence that is before me, that the conduct of Shell, or its representative, before the Board caused Mr Reichstein to adopt any particular assumption and subsequently to act upon that assumption.  Nor do I think that it is a necessary inference in the circumstances that, had Mr Reichstein been told that the assumption which apparently underlay his evidence to the Board was not shared by the respondent, he would have opposed the respondent's application to the Board, or withdrawn his support for it.  Mr Reichstein may well have formed the view that the most important thing for him in the circumstances was the obtaining of a situation in which the applicant might obtain rights with respect of the Grove Way site, and that such situation required a favourable outcome for Shell before the Board.

In my view on the evidence before me, there is no serious question to be tried between the parties with respect to the asserted promissory estoppel.  It follows that I am not satisfied that the evidence before me is sufficient to raise a serious question as to whether the applicant is a "party to a franchise agreement" within the meaning of s21(1) of the Act. Consequently the applicant has failed to demonstrate that there is a serious question to be tried between the parties on the application pursuant to s21(1) of the Act. The application for relief pursuant to s21(3) of the Act must therefore fail.

If a decision had been taken by the respondent, as at the date of the Board hearing, as to the intended franchisee of the Grove Way site, even if such decision were no more than one not to offer such franchise to the applicant, the respondent would, in my view, be open to criticism for not advising the Board in direct terms that Mr Reichstein's evidence was being given and received on a false basis.  I do not accept the submission put to me that the interventions of Mr Bell were sufficient to put the Board, or Mr Reichstein and the other objectors before the Board, on notice that Mr Reichstein's evidence was being given on a false basis.

I note that this application has been made on short notice and before discovery and inspection of documents.  The evidence at the final hearing of this matter may differ in significant ways from the evidence before me.  The conclusions which I have reached may not be the appropriate conclusions on that evidence.

It is strictly unnecessary for me to express a view on the question of whether, had I been satisfied that there was a serious issue to be tried between the parties on the application under s21(1) of the Act, I would have formed the opinion that it would be desirable to grant an interim injunction pending the determination of such application. I have here adopted the language of s21(3) of the Act.

Nonetheless, I record that, had I been required to make such a judgment, I would not have been satisfied that the balance of convenience favoured the making of such an injunction.  I will not rehearse each of the factors which would have lead me to that view.  However, I draw attention to the consideration of the New South Wales Court of Appeal in Silktone Pty Ltd v Devreal Capital Pty Ltd and Others (1990) 21 NSWLR 317 of the relevance in assessing the balance of convenience of the rights of innocent third parties, and to the limitation on the power to grant injunctions under s21(1) of the Act contained in s21(2) of the Act. The applicability of s21(2) in the circumstances of this case was not addressed in argument before me, and for this reason I express no view on it - other than to say that, at the least, it highlights the importance in the context of the Act, of the rights of innocent third parties.

The application pursuant to s21(3) of the Act is dismissed with costs.

I certify that this and the preceding     pages are a true copy of the Reasons for Decision of the Honourable Justice Branson.

Associate:

Dated:

Counsel for the Applicant         :    Mr R W R Parker QC
  with him
  Mr B J Tremaine and
  Mr A H Charlton

Solicitors for the Applicant      :    B J Tremaine

Counsel for the Respondent        :    Mr D J Bleby QC
  with him
  Mr S Wisking

Solicitors for the Respondent     :    Finlaysons

Hearing Date  :    4 December 1995