Rasomen Pty Ltd (T/as Shell Fairview Park) v The Shell Company of Australia Ltd
[1996] FCA 1094
•13 DECEMBER 1996
CATCHWORDS
Practice and Procedure- No case submission- Whether respondent is entitled to put submission of no case without being required to elect to call no evidence- Whether at discretion of trial judge
Practice and Procedure- No case submisson- Whether applicant failed to adduce any evidence as to essential elements of causes of action
Petroleum Retail Marketing Franchise Act 1980 (Cth)
Rasomen Pty Limited v The Shell Company of Australia Limited,
(Federal Court, Branson J, unreported 8 December 1995)
Residues Treatment & Trading Co. Ltd. and Anor v Southern Resources Ltd and Ors (1989) SASR 54
Protean (Holdings) Ltd v American Home Assurance Co [1985]
VR 187
Humphrey v Collier [1946] VLR 391
Jones v Peters [1948] VLR 331
Trade Practices Commission v George Weston Foods Ltd (No 2) (1980) 47 FLR 55
James v Australia and New Zealand Banking Group Ltd (1986)
64 ACR 347
Copper Industries Pty Ltd (in liquidation) v Hill (1975)
12 SASR 292
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337
RASOMEN PTY LIMITED
(trading as Shell Fairview Park) v
THE SHELL COMPANY OF AUSTRALIA LIMITED
No. SG 88 OF 1995
CORAM: BRANSON J
PLACE: ADELAIDE (by video link from Sydney).
DATE: 13 December 1996
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
CORAM: BRANSON J
PLACE: ADELAIDE (by video link from Sydney)
DATE: 13 December 1996
REASONS FOR JUDGMENT
THE APPLICATION:
The applicant is the franchisee of the respondent in respect of a Shell service station at Fairview Park in the State of South Australia ("the Fairview Park premises"). These proceedings concern another Shell service station, namely a service station at Lot 202, The Grove Way, Golden Grove in the State of South Australia ("the service station") which the respondent obtained the right to operate on or about 4 October 1995. By an application dated 21 November 1995 the applicant sought the following substantive relief:
"1.An order that the respondent's servants and agents be restrained pending the final determination of these proceedings from permitting, (sic) granting any servant,
agent or person or company, possession or occupation of the service station described in the schedule.
A declaration that a franchise agreement pursuant to the provision of the Petroleum Retail Marketing Franchise Act 1980 was entered into between the applicant and the respondent in or about January 1988.
An order that the agreement referred to in paragraph 2 be specifically performed and carried into execution.
An order that the respondent's servants and agents be
restrained from permitting or granting any servant, agent, person or company possession or occupation of the service station.
An order that the respondent, its servants and agents be restrained from denying the representations set forth in paragraph 13 of the statement of claim.
An order for damages.
An order that an enquiry be made to ascertain the amount of damages the applicant has sustained by reason of refusal of the respondent to perform the said Agreement mentioned and referred to in paragraph 2 hereof and/or to ascertain on conditions or otherwise the amount of equitable compensation the Applicant is entitled to."
The schedule to the application describes the service station.
The applicant's claim for interlocutory relief in these proceedings failed (Rasomen Pty Limited v The Shell Company of Australia Limited, Federal Court, Branson J, unreported 8 December 1995). Mr Parker QC, senior counsel for the applicant, indicated at the commencement of the hearing of this matter that the applicant pressed only its money claim for the profits that it has allegedly lost by reason of its not being able to run the service station.
By its statement of claim the applicant pleads its case in two ways. First it pleads a case in contract, and secondly, it pleads a promissory estoppel said to preclude the respondent from acting in a manner inconsistent with certain alleged representations.
Paragraph 2 of the statement of claim identifies the contract upon which the applicant relies. Paragraph 2 is in the following terms:
`2.In or about January 1988 it was agreed by and between the Applicant and Respondent that in consideration of the applicant continuing to operate... [the Fairview Park premises], then upon the Respondent obtaining the right to operate its first service station in the Golden Grove area, a suburb of Adelaide ("the service station"), the Respondent would grant the site to the Applicant as an "Auto Care Franchise" that is to say, a franchise, pursuant to the Act [i.e. the Petroleum Retail Marketing Franchise Act 1980], and subject to the provisions as to tenure and other matters regulated by the Act and thereupon determine other conditions of the said Agreement pursuant to the provision of section 9 of the said Act.
PARTICULARS
2.1At a meeting with respect to Fairview Park it was said by a representative of the Respondent that if the Respondent attained a licence to operate its first service station in the Golden Grove area, then the applicant would be granted the right to have the franchise for the said service station.
2.2On or about the 28 January 1988 the Respondent wrote to the Applicant in the following terms:
"Dear Sirs
We refer to our discussions with yourselves on 18 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, providing 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" '
It is not disputed that the applicant has remained and continues as the respondent's lessee at Shell Fairview Park.
Identical particulars to those set out above are relied upon to support the applicant's plea of promissory estoppel which is made by paragraph 13 of the statement of claim. Shorn of its particulars, paragraph 13 reads as follows:
"13.In or about December 1987 to January 1988, the Respondent represented, offered or promised, that upon the Respondent obtaining the right to operate its first service station in the Golden Grove Area a suburb of Adelaide ("the service station") the Respondent would grant the site to the applicant as an Auto Care Centre that is to say a franchise pursuant to the Act and subject to the provisions as to tenure and other matters regulated by the Act and thereupon determine other conditions of the said Agreement pursuant to the conditions of Section 9 of the said Act providing the Applicant was still the Franchisee at the [Fairview Park] premises."
By paragraph 16 of the statement of claim the applicant pleads as follows:
"16.The Applicant, acting in reliance upon the said Representations and assumptions acted to its detriment in that it remained as franchisee at the Fairview Park site and it supported the respondent's application for a licence to operate a service station in the Golden Grove area by attending the hearing of the licence application and giving evidence by its director in support".
The hearing having proceeded to the stage of the close of the applicant's case, an application was made on behalf of the respondent to have the application dismissed on the basis that there was no case for the respondent to answer.
Before determining whether or not to entertain the submission of no case to answer, I heard counsel on the issue of whether the respondent should be put to its election not to call evidence should the submission of no case to answer be entertained (Residues Treatment & Trading Co. Ltd. and Anor v Southern Resources Ltd and Ors (1989) 52 SASR 54 at 60).
Mr Bleby QC, leading counsel for the respondent, sought a ruling that the respondent was entitled to put the submission of no case to answer without being required to elect. He referred to the decision of Perry J in the Residues Treatment & Trading Case. In that case Perry J accepted as a correct statement of the law the dictum of Tadgell J, sitting in the Full Court of the Supreme Court of Victoria, in Protean (Holdings) Ltd (Receivers & Managers Appointed) and Ors v American Home Assurance Co [1985] VR 187 at 237:
"The judge is entitled, for reasons that seem appropriate to him, to decline out and out to entertain such a submission at the stage at which he is asked to do so ... Usually there would be three courses open to him, short of refusing altogether to entertain the submission, namely:-
He might decline to entertain the submission at that stage unless the moving party were to elect before making it not to call any evidence, either generally or on the issue on which the ruling was sought; or
He might allow the submission to be made without putting the moving party to any election at that stage but leaving, until he had heard it, the question whether or not he would rule on it without requiring an election to be made; and having heard the submission, and any answer to it by the respondent party, he could either rule on it or not, perhaps requiring an election to be made as a prerequisite to his doing so; or
He might indicate that he would both entertain the submission and rule on it without requiring an election to be made by the moving party."
I am similarly content to accept the above dictum as a correct statement of the law.
In this case I adopted the second of the courses identified by Tadgell J in the Protean (Holdings) Ltd Case. That is, I allowed the submission to be made, and answered, leaving for later decision the question of whether the respondent should be put to its election.
It is recognised to be generally undesirable for a judge to take a course which could result in his or her being obliged to review the same evidence twice, once at the close of the applicant's case and again after the close of the respondent's case (Protean (Holdings) Ltd Case at 238; Humphrey v Collier [1946] VLR 391 at 402; Jones v Peters [1948] VLR 331 at 333; Trade Practices Commission v George Weston Foods Ltd & Ors (No2) (1980) 43 FLR 55 at 57; James & Ors v Australia and New Zealand Banking Group Ltd & Ors (1986) 64 ALR 347 at 400). However, I accept that a trial judge does have a discretion not to require an election to be made where "adherence to the [general] rule would not serve the end of justice or convenience" (per Tadgell J in the Protean (Holdings) Ltd Case at 238; see also Copper Industries Pty Ltd (in liquidation) v Hill and Hill (1975) 12 SASR 292 at 297-295 and the Residues Treatment & Trading Case at 69).
In the Residues Treatment & Trading Case at 68 Perry J usefully identified four categories of case in which a submission of no case to answer might be made:
"1.Where no reference at all to the evidence is
required.
Where a reference to the evidence is required only to establish that there is an evidentiary hiatus or failure to adduce any evidence as to an essential element in the cause of action.
Where it is argued that on a consideration of the evidence adduced by the plaintiff taken at its highest from the plaintiff's point of view, the evidence could not support the causes of action pleaded.
The situation where it is contended that although there is some evidence to support the plaintiff's claim, it is so weak and unreliable that it should be dismissed without calling upon the defendant."
His Honour went on (at 69):
"As to category 1, this should normally be argued on the pleadings, preferably before the trial commences. No question of election arises in that situation. Likewise, consideration of a submission of no case to answer in category 2 should not involve an election.
As to categories 3 and 4, these situations should normally be met by the application of what I have referred to as the general rule that counsel should be called upon to elect."
As to the applicant's case as pleaded in contract, Mr Bleby's primary submission was that there was no evidence which supported a finding of a contract in the terms pleaded by paragraph 2 of the statement of claim. Mr Bleby further submitted that the alleged contract was by its asserted terms so vague as to be unenforceable. Such submissions, in my view, place this case, so far as the alleged contract is concerned, in the second category of situations in which a submission of no case to answer may be made identified by Perry J in the Residues Treatment & Trading Co Ltd Case. I
see no reason to put the respondent to an election to call no evidence as the price of such submissions being entertained.
So far as the applicant's case is pleaded on the basis of promissory estoppel, Mr Bleby similarly submitted that there was no evidence to support a finding of a representation, offer or promise in the terms pleaded in paragraph 13 of the statement of claim. He further submitted that there was no evidence that the applicant acted to its detriment in reliance on any representation, offer or promise of the respondent. Again, I see no reason to put the respondent to an election to call no evidence as the price of these submissions being entertained.
I turn to consider the evidence that has been led in this case.
Rosemary Jean Reichstein ("Mrs Reichstein") and Phillip James Reichstein ("Mr Reichstein") are both directors of the applicant. Each of them gave evidence of a dispute between the applicant and the respondent in late 1987 as to the rent to be payable in respect of the Fairview Park premises. As a consequence of the dispute concerning such rent, a meeting was arranged between Mr and Mrs Reichstein on the one hand and certain officers of the respondent on the other. The meeting was held on 22 December 1987 in an office at the Fairview Park premises. Mr and Mrs Reichstein arranged for the conversation which occurred at this meeting to be tape recorded. This was done without the knowledge of any officers of the respondent. Working from transcripts of the tape used to record the conversation, the parties have reached agreement on what was said at the meeting on 22 December 1987 and by whom.
The relevant portion of the conversation was initiated by Mr Reichstein. He raised an earlier discussion between himself and a representative of the respondent. It is agreed that Mr Reichstein said the following:
"One other point, if and when, now, this was discussed with Hoffman and he said yes I could have first go if and when you do build a new service station at Golden Grove, if you do happen to win the licence for that one. Do I still get first pop at that?"
After some discussion which is not of present relevance, Mr Reichstein went on -
"The concept was that one wouldn't hold its own if you get the licence, wouldn't hold its own for the first 12 months. The concept would be utilising the 2 workshops - everything all in one where they could go to either one".
An officer of the respondent, John Hendrickson ("Mr Hendrickson") replied:
"Makes sense. I knew we looked at an outlet in Golden Grove but I haven't given it much thought. But I don't have a problem with that."
Mr Reichstein stated:
"I first found out about it, even before Shell did and ... for Shell so ..."
Mr Hendrickson asked:
"There's nothing in the books though is there?"
Mr Reichstein asserted that there was, and another officer of the respondent stated:
"John Barker is still negotiating. The land will go up
for auction, there is no question about that, and I feel
.... there's no question about that".
This aspect of the conversation on 22 December 1987 concluded with Mr Hendrickson saying:
"I'd be happy to have an agreement drawn up if you like."
A further meeting took place between Mr and Mrs Reichstein and officers of the respondent on 18 January 1988. Mr and Mrs Reichstein had no notice of the meeting and there is no tape recording of what was said on that day. However, each of Mr and Mrs Reichstein gave evidence of what was said on that day. Mrs Reichstein gave evidence that Mr Reichstein, after indicating agreement to the proposed new rental payments, said, "Don't forget about my letter for Golden Grove", and that an officer of the respondent replied, "No, Milos will draft the letter and get onto it straight away." Mr Reichstein's evidence was that he said to an officer of the respondent on 18 January 1988 that he would agree to the new rent -
"Providing that you put everything in writing and include in that the letter about Golden Grove."
Crucial to both the plea of the breach of contract and the plea of a promissory estoppel is the letter of 28 January 1988 from the respondent to the applicant. The terms of the letter are set out above.
So far as the claim of breach of contract is concerned, evidence as to the subjective understanding and expectations of Mr and Mrs Reichstein is not admissible as an aid to the construction of the alleged contract (DTR Nominees Pty Ltd v Mona Homes Pty Ltd & Anor (1978) 138 CLR 423 at 429; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352). However, as Mason J made clear in the Codelfa Construction Case at 352:
"evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning."
His Honour stressed that evidence of surrounding circumstances is not admissible to contradict the language of the contract when it has a clear meaning. He pointed out that -
"[g]enerally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although ... if the facts are notorious knowledge of them will be presumed."
The applicant contends for a reading of the letter of 28 January 1988 which would give rise to a unilateral contract to the effect that if the respondent should at any time obtain the right to operate its first service station at Golden Grove, then, provided that the applicant was still the respondent's lessee at Fairview Park, the applicant would be given by the respondent the first right of refusal to lease such service station.
The respondent contends that the letter of 28 January 1988 can only be sensibly read as referring to a particular service station which would come into being on a specific site if, as was likely as at the date of the letter, permission to build a service station on such site were given. The respondent identified the present site of a BP service station at Golden Grove as the specific site to which the letter referred.
It is common ground that as at 28 January 1988 it was known to both parties that there was no service station in Golden Grove: petrol could be bought in Golden Grove at that time only from petrol bowsers outside a long established post-office. A composite current street plan of the north-eastern suburbs of Adelaide in the vicinity of Golden Grove was received into evidence. It shows the location of various service stations now in existence. Mrs Reichstein agreed that one of the marked locations is the site of a B.P. Service Station which has been open for "a few years" at the Golden Grove Community Centre. Correspondence between the parties placed in evidence on behalf of the applicant contains references to the site of a BP service station at Golden Grove.
Assuming for present purposes that the letter of 28 January 1988 is ambiguous as to the "new service station" referred to therein, the surrounding circumstances established by the evidence appear to me to support the construction of the letter for which the respondent contends. That is, nothing in the evidence of the surrounding circumstances, in my view, suggests in favour of an interpretation of the letter which would give the expression "a new service station in this area" the meaning of the "first service station in the Golden Grove area," on any site, which the respondent might obtain the right to operate.
In my view, when read as a whole, the letter of 28 January 1988 can only sensibly be understood as being intended to be operative should the respondent obtain the right to operate the particular service station in the Golden Grove area as to which the author of the letter saw permission to build as being likely. The letter refers to "a new service station" in the Golden Grove area. In going on to state, "Should the Shell Company obtain the right to operate this service station, you will be given the first right of refusal to lease it ...", the author of the letter makes it plain, in my view, not only that a particular service station is the subject of the letter, but also that the possibility exists that the respondent may not obtain the right to operate the service station the subject of the letter.
The construction of the letter of 28 January 1988 for which the applicant contends is not, in my view, a construction of the letter which is reasonably open having regard to the terms of the letter.
The conversation between Mr and Mrs Reichstein and officers of the respondent on 22 December 1987, which is acknowledged by both sides to have given rise to the letter of 28 January 1988, gives no support, in my view, to the construction of the letter for which the applicant contends. The relevant portion of the conversation commenced with Mr Reichstein referring to the respondent building a new service station at Golden Grove "if you do happen to win the licence for that one." He went on to speak of a "concept" that the new service station "wouldn't hold its own if you get the licence, wouldn't hold its own for the first twelve months." Such statement implies that consideration is being given to a particular "new service station" and not to the first service station that the respondent might obtain the right to operate in the Golden Grove area whenever, and in whatever circumstances, that might be. The reference by an officer of the respondent in the same conversation to the land going up for auction also suggests that consideration was being given to a particular site rather than the first site to become available to the respondent for the purpose of erecting a service station whenever and wherever such site should become available.
I accept the submission made on behalf of the respondent that there is no evidence to support a finding of a contract in the terms pleaded by the applicant in paragraph 2 of its statement of claim.
It is strictly unnecessary for me to give consideration to Mr Bleby's alternative argument that the alleged contract was by its asserted terms so vague as to be unenforceable. I indicate, that I would not have considered it appropriate to entertain a submission of no case to answer on that basis alone at the stage of the close of the applicant's case. There is some evidence before me of apparently standard form contracts between the respondent and its lessees, and some evidence that rental formulae were utilized by the respondent in determining the rents payable in respect of service stations owned by it. Matters of this kind are peculiarly within the knowledge of the respondent. I do not consider that it would have been appropriate to seek to weigh such evidence at the close of the applicant's case.
As is mentioned above, the plea of a promissory estoppel made by paragraph 13 of the statement of claim is supported by identical particulars to those pleaded in support of paragraph 2 of the statement of claim. The evidence called on behalf of the applicant in reliance on such particulars is analysed above. Such evidence, in my view, provides no basis for a finding that, within the time frame alleged, or at any time, the respondent -
"represented, offered or promised, that upon the Respondent obtaining the right to operate its first Service Station in the Golden Grove area ... the Respondent would grant the site to the applicant..." (emphasis added)
on the basis outlined by paragraph 13 of the statement of claim.
I accept the submission made on behalf of the respondent that there is no evidence to support a finding of the represention, offer or promise pleaded by the applicant as the basis of the promissory estoppel asserted by it.
It was further submitted on behalf of the respondent that there is no evidence that the applicant acted to its detriment in reliance on the represention, offer or promise pleaded by it. By paragraph 16 of the statement of claim the applicant has pleaded as matters of detriment, first, that it remained as franchisee of the Fairview Park premises, and secondly, that it supported the respondent's application for a licence to operate the service station.
No evidence was called on behalf of the applicant in an endeavour to establish that the applicant suffered a detriment by remaining as the franchisee of the Fairview Park premises after January 1988.
Evidence was received which established that Mr Reichstein appeared before the Petroleum Products Retail Outlets Board ("the Board") in support of the respondent's application for a licence in respect of the service station. He purported to do so as "the franchisee at Shell Fairview Park." In reality he
is to be regarded as having appeared before the Board as a director of the applicant. He indicated to the Board his support for the approval of a licence for the service station on the basis that he would be the lessee at the service station if the licence were granted. When questioned by a member of the Board about whether he believed that the service station would take business away from the Fairview Park premises, he replied:
"No, sir.I believe it would enhance the whole area really because, as Mr Higginbottom would know, he runs two sites close together and it gives him an edge in competition."
When pressed as to whether he thought the service station would affect the business at the Fairview Park premises, he replied:
"No, I don't believe so. It may - minimal. Who's to say? I have a fairly closed area where I am."
Under cross examination before the Board, Mr Reichstein spoke of the benefit of having two sites. When asked if that benefit would offset any downturn at the Fairview Park premises resulting from the opening of the service station, he replied:
"Well, why will there be a downturn at Fairview Park?...
As I said, I'm not a planner. I can't say that that's going to happen or not."
Mr Reichstein gave evidence before me that, if he had not believed that the applicant would be the lessee of the service station, he would have appeared before the Board to oppose the
approval of a licence in respect of the service station on the basis that the approval of such a licence would adversely affect business at the Fairview Park premises. He did not indicate how he could conscientiously have supported such contention having regard to the submission which he in fact did make to the Board. Nor is there any evidence before me as to the likely consequence of any opposition by him to the approval of the licence having regard to the totality of the material before the Board. Mr Reichstein's simple attendance before the Board cannot, in my view, be characterized as a detriment suffered by the applicant.
More importantly, no evidence was called in an endeavour to establish that the opening of the service station, whether over Mr Reichstein's objection or not, has in fact been detrimental to the applicant. The evidence before me establishes that in the period of time which has followed the opening of the service station, the applicant's turnover at the Fairview Park premises has increased. No attempt was made to compare this increased turnover with any projection of the likely turnover of the Fairview Park premises had a licence not been granted in respect of the service station.
I accept the submission made on behalf of the respondent that there is no evidence to support the applicant's pleading that it acted to its detriment in reliance upon the asserted representation, offer or promise of the respondent.
The application will be dismissed. I will hear counsel as to costs.
I certify that this and the preceding pages are a true copy of the reasons for judgment of the Honourable Justice Branson.
Associate:
Date:
Counsel for the applicant: Mr R W R Parker QC
with him Mr B J Tremaine
Solicitor for the applicant: B J Tremaine
Counsel for the respondent: Mr D J Bleby QC
with him
Mr D A Trim QC and Mr S Wisking
Solicitor for the respondent: Finlaysons
Hearing dates: 18 - 21 March 1996
and 25 - 28 November 1996
IN THE FEDERAL COURT OF AUSTRALIA )
NEW SOUTH WALES 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
CORAM: BRANSON J
PLACE: ADELAIDE (by video link from Sydney)
DATE: 13 December 1996
MINUTES OF ORDER
THE COURT ORDERS THAT:
The application is dismissed.
Note: Settlement and entry of orders is dealt with in Order 36
of the Federal Court Rules.
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