Richards, John Kent v Golden Fleece Petroleum Ltd

[1983] FCA 239

Re: JOHN KENT RICHARDS and DIANNA GRACE RICHARDS
And: GOLDEN FLEECE PETROLEUM LTD.
No. WAG13 of 1983
Petroleum Retail Marketing Franchise Act 1980

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.

CATCHWORDS

Petroleum Retail Marketing Franchise Act 1980 - notices of termination of lease agreement and reseller supply contract regarding service station - whether franchise agreement or franchise agreements under Act - delivery of fuel to applicants from source other than respondents - whether wilful adulteration or wilful passing off - meaning of "wilful" - whether termination of agreement just and equitable in all the circumstances - onus of proof - applicability of Property Law Act 1969-1973 (W.A.)

Petroleum Retail Marketing Franchise Act 1980 (Cth) ss. 3(1), 6(1) 16(2), 16(3), 16(4), 16(5), 16(6)

Property Law Act 1969-1973 (W.A.) s.81

HEARING

PERTH

#DATE 15:9:1983

ORDER

1. The court declares that the notices dated 15 March 1983 given by the respondent to the applicants have had no effect.

2. The respondent's cross-claim be dismissed.

3. The applicants pay the respondent's costs of the application and cross-claim to be taxed as one set of costs.

JUDGE1

The Petroleum Retail Marketing Franchise Act 1980 is described in its long title as "An Act relating to franchise agreements concerning the retail marketing of motor fuel". A principal aim of the Act, as Fox J. observed in J. & M. O'Brien Enterprises Pty. Ltd. v. Shell Company of Australia (1982) 45 ALR 81 at p.82, "is to give greater security of tenure to companies and individuals marketing motor fuel by retail".

The general scheme of the Act includes provision that a franchisor (as that term is defined) may terminate a franchise agreement (as that term is defined) in accordance with s.16, but not otherwise. Section 16(2) provides that a franchisor shall not terminate the franchise agreement except on one or more of the grounds therein prescribed. Sub-section (3) requires the termination of the franchise agreement by the franchisor to be effected by notice in writing and sub-s.(4) provides that in the case of such a notice, the franchisee (as that term is defined) may apply to the Federal Court "for an order declaring the notice to have had, or to have, no effect".

Section 16(5) provides that where an application is made under the preceding sub-section, the Court may either declare the notice to have had, or to have, no effect or declare the notice to have terminated, or to terminate the agreement.

This is an application under s.16(4), seeking a declaration that notices given by the respondent Golden Fleece Petroleum Ltd. ("Golden Fleece") to the applicants John Kent Richards and Dianna Grace Richards ("Mr. and Mrs. Richards") terminating a lease agreement and reseller supply contract were of no effect. Golden Fleece opposes the application and cross-claims for a declaration that the notices terminated the lease and reseller supply contract on 15 April 1983, the date of termination referred to in each notice.

The Act operates in relation to a franchise agreement, a term defined by s.3(1) to mean an agreement 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 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;"

Mr. and Mrs. Richards are the assignees of a lease from Golden Fleece to Allan Barry Stewart and Clair Veronica Stewart of service station premises at the corner of Grand Promenade and Alexander Drive, Dianella. The lease is for a term of 3 years from 1 October 1981 but, if a franchise agreement, is subject to the renewal provisions in the Act.

Mr. and Mrs. Richards are also the assignees from the Stewarts of a reseller supply contract made with Golden Fleece, also expressed to be for a term of 3 years from 1 October 1981, and also subject to the renewal provisions in the Act, if a franchise agreement.

In this respect, the only point of difference between the parties was whether there existed one franchise agreement, comprising the lease and reseller supply contract as assigned, or whether each of those transactions constituted a franchise agreement in its own right.

Although s.3(1) defines a franchise agreement in disjunctive terms, s.6(1) makes it clear that the Act has no application to such an agreement unless it contains provisions of the kinds referred to in paras. (a) and (b) and of the kind referred to in para. (c)(i) or (ii) of the definition, or it is one of two or more franchise agreements that together contain such provisions, where the franchisees and the franchisors are in each case the same person or connected with each other.

In my view, there were between Golden Fleece and the Stewarts two franchise agreements, to which the Act applied by reason of s.6(1). The effect of the assignment was that there were two franchise agreements between Golden Fleece and the Richards, to which the Act applied by reason of s.6(1). The matter is of no practical importance; although objection was taken to the efficacy of the notices of 15 March 1983, it was not submitted that there should have been one notice rather than two.

Golden Fleece purported to terminate each franchise agreement on the ground that on 2 March 1983, Mr. and Mrs. Richards obtained a delivery of fuel other than that supplied or marketed by Golden Fleece, caused or permitted the fuel to be delivered into storage facilities provided by Golden Fleece and containing that company's products, and proceeded to sell the mixture that resulted.

Golden Fleece contend that in so doing Mr. and Mrs. Richards wilfully adulterated motor fuel supplied to them under the franchise agreement and, without the consent of Golden Fleece, wilfully passed off that motor fuel as fuel supplied to them by Golden Fleece. Each of those allegations, if sustained, is a ground for termination of a franchise agreement under s.16(2) of the Act. Likewise each is a breach of the lease and reseller supply contract, though the relevant covenants are not in identical terms to the statute.

Mr. and Mrs. Richards dispute that they are in breach of any of the provisions of s.16(2) and accordingly there are questions of fact to be determined. They also rely upon sub-s.(6) of s.16 whereby, in any proceedings under sub-s.(4), the court shall not declare a notice to have terminated, or to terminate, a franchise agreement unless -

"(a) a ground specified in the notice is established by the franchisor to the satisfaction of the court; and
(b) the court is satisfied that the termination of the agreement and any related agreement or agreements is just and equitable, having regard to all the circumstances."

Questions have arisen as to the scope and operation of sub-s.(6); before dealing with those questions it is necessary to look at the facts.

It is common ground that on some occasions prior to 2 March 1983 Mr. and Mrs. Richards obtained supplies of Shell motor fuel from North Suburban Fuel Supply ("North Suburban"), that they did so without the consent or knowledge of Golden Fleece and that they sold the fuel from storage facilities on their premises, identified by name and logo in such a way as to lead consumers to believe they were buying Golden Fleece fuel. What is in issue is the number of occasions on which this took place and in particular whether fuel delivered by North Suburban to the Golden Fleece premises at the corner of Alexander Drive and Grand Promenade on 2 March 1983 was the result of an order placed by Mr. and Mrs. Richards. Each of these issues has an importance in itself and for the light that it may throw upon the other issue.

The question of fuel obtained from North Suburban before 2 March 1983 arose in this way. As part of its defence and cross-claim, Golden Fleece pleaded that, having regard to all the circumstances, it was just and quitable that the court should declare the notices of termination effective. One of the circumstances pleaded through further and better particulars was that prior to 2 March 1983 Mr. and Mrs. Richards had engaged in conduct of the kind pleaded against them in respect of 2 March 1983, viz. that they had wilfully adulterated motor fuel supplied to them by Golden Fleece and that, without the consent of Golden Fleece, they had sold and passed off or permitted to be sold and passed off as that company's products motor fuel supplied by someone other than the company. The applicants' reply and defence to cross-claim denied the paragraph of the defence pleading that it was just and equitable for the court to declare effective the notices of termination. However, as that pleading was filed before further and better particulars of defence and cross-claim were furnished, no significance can be attached to that denial.

Following an order for discovery of specific documents by the applicants and the administration of interrogatories to them, Mr. Richards deposed that on 3 occasions the applicants had ordered petrol from North Suburban. Those occasions were identified as 3 August, 21 October 1982 and 4 February 1983.

In the course of his examination-in-chief, Mr. Richards was asked whether he had been told by his solicitor of other dates on which North Suburban said it had delivered fuel to the Golden Fleece premises at Dianella and had been paid for that fuel. It appears that that information became available just before the hearing commenced, through a representative of North Suburban subpoenaed by the respondent to give evidence. Mr. Richards acknowledged the accuracy of the information furnished by North Suburban, as a result of which the applicants acknowledged ordering and receiving fuel on the following dates.

4 June 1982
16 June 1982
14 July 1982
3 August 1982
21 October 1982
1 January 1983
5 February 1983

Three of these occasions relate to the orders referred to in the applicants' answers to interrogatories. The difference between 4 February and 5 February 1983 is simply a difference between date of invoice and date of delivery. I put to one side for a moment the delivery on 2 March 1983 which, in the end, was challenged by the applicants only in that they denied having placed the order.

Mr. Richards sought to explain the discrepancy between the answers to interrogatories and information furnished by North Suburban on the ground that the only invoices he held were those for the three dates in question. I do not find this explanation particularly convincing as neither the interrogatory nor the answer was expressed in terms of invoices. The answer was an unqualified reference to the occasions on which fuel had been obtained from someone other than the respondent. Furthermore, even if Mr. Richards had been in some doubt as to the number and dates of other occasions on which he had obtained fuel from North Suburban, he could hardly have forgotten that there were such other occasions. There were at least 4 other occasions and the time span involved was little more than 12 months before the giving of evidence. At its best, from Mr. Richards' viewpoint, there was a lack of frankness on his part; at its worst the answer to interrogatory was untrue.

Golden Fleece presented evidence of an analytical nature, based on the applicants' daily control sheets recording fuel sold by them and the company's own records of deliveries made to the Dianella premises, with a view to showing that from time to time the company's deliveries fell so far short of the fuel Mr. and Mrs. Richards were selling as to give rise to an irresistible inference that they were obtaining fuel elsewhere. The applicants denied obtaining fuel from any source other than Golden Fleece and North Suburban and, so far as the latter was concerned, they denied any deliveries other than those to which I have referred.

While the respondent's analysis was persuasive, it is unnecessary to make an express finding on these matters and it is better not to do so in the uncertain state of the evidence. Certainly the analysis does not lead me to place much faith in Mr. Richards' testimony. To the extent that these matters bear on the question whether it is just and equitable that the termination notices should have effect, the court has clear evidence of a number of purchases to which the respondent gave no consent and of which it had no knowledge.

The circumstances surrounding the delivery of fuel on 2 March 1983 are curious in a number of respects.

I am satisfied from the evidence of John Charles Thorn, a representative of North Suburban, and from the records he produced, that on 28 February 1983 his firm received an order for 17,000 litres of super petrol for delivery to Golden Fleece Dianella. There was no evidence from North Suburban as to who placed that order or how it was placed except that it was probably by telephone. Mr. and Mrs. Richards each denied having ordered the fuel delivered on 2 March; it is apparent from their evidence that no one in their employ had authority to do so, nor was there any suggestion that such a person had done so.

Early on the morning of 2 March, Mr. Thorn delivered fuel to the Golden Fleece Service Station at Dianella. He customarily made his deliveries into what he described as the far eastern tank, a tank close to Grand Promenade and holding about 33,000 litres. In Mr. Thorn's experience, this tank generally was empty but on 2 March, having made a check dip, it was apparent that there was fuel in the tank and that it would not hold the quantity Mr. Thorn had been asked to deliver. He was able to put only 16,000 litres into the far eastern tank and he delivered the balance into another tank. About a week later the applicants received an invoice for the petrol; they have not paid it.

Digressing somewhat, there was during the period of the applicants' occupancy of the Dianella premises an industrial dispute between the Transport Workers Union of Australia and oil companies regarding the delivery of motor fuel by owner drivers. The union's complaint was based not so much on the use of non union labour but on the need for an equitable distribution of work throughout the oil industry. The union was opposed to the delivery of fuel by North Suburban, even though its drivers were members of the union. Mr. Richards said that in March he was concerned at the possibility of a black ban by the union on his service station if he obtained fuel from anyone other than Golden Fleece.

The delivery of 2 March was made known to Golden Fleece by Mr. O'Connor, the secretary of the Transport Workers Union or by someone in his organization to whom he reported the matter. As chance would have it, Mr. O'Connor lives less than a quarter of a mile from the Golden Fleece service station at Dianella and was wont to take walks early in the morning. Usually he took his walk at about 6 am but on the morning of 2 March 1983 he walked past the service station at about 4.30 am. He was walking at that unusual hour because he had an early morning meeting.

As Mr. O'Connor walked past the service station he saw a Shell tanker with its filling hose coupled and apparently discharging into the site. It was through Mr. O'Connor, directly or indirectly, that Golden Fleece learnt of the delivery.

There was no direct evidence that either Mr. or Mrs. Richards had placed the order with North Suburban on 28 February. And, as I have said, each positively denied placing the order. In his final address, Mr. French, counsel for the applicants, drew attention to the state of the applicants' fuel supply on 28 February and the absence of any need for more fuel, a fact that was said to be borne out by Mr. Thorn's experience, for the first time, of finding a tank that was not empty or at any rate not sufficiently empty to receive his delivery. Mr. French offered the hypothesis that someone, wishing to harm the applicants, placed the order. It should be made quite clear that no cross-examination was directed to Mr. O'Connor to suggest that he or anyone else in the union had been responsible. However Mr. Richards spoke of several threats he had received to put him out of business because of his discounting activities.

The hypothesis finds some support in the circumstances in which the fuel was delivered on 2 March but it is necessary to have regard to events later that day.

In the early afternoon of 2 March, Mr. Allison, marketing manager for Caltex Oil Australia Pty. Ltd. (Caltex acquired Golden Fleece as a subsidiary in 1981) and Mr. McAuliffe, marketing manager (country) for Golden Fleece, called on Mr. Richards at his home. Mr. Richards had been away from the service station for most of the preceding two days, having been caught up in a matter in the State Industrial Commission. Mr. Allison asked Mr. Richards if he knew anything of a delivery that morning by a Shell-branded tanker and Mr. Richards said that he did not. Mr. Allison asked Mr. Richards to ring his wife to check on the delivery but Mr. Richards declined to do so, saying that he wished to speak to her. The next morning Mr. Richards called on Mr. Allison and Mr. McAuliffe to say that his wife had not ordered the fuel and that neither of them had any knowledge of its delivery. According to Golden Fleece's records, at about 3.30 p.m. on 2 March Mr. Richards placed an order with the company for a delivery of fuel. His evidence was that he had done so early in the afternoon, the implication being that it was before the visit by Mr. Allison and Mr. McAuliffe. Having regard to Golden Fleece's records, it is more likely that the order was placed almost immediately after they had left his home.

Faced with the accusation, or implied accusation, from Mr. Allison and Mr. McAuliffe that he had ordered the fuel delivered on the morning of 2 March, and in view of his denial, one might have expected Mr. Richards to get in touch with North Suburban forthwith or at any rate telephone Mrs. Richards and, assuming that she had not placed the order, contact the firm to find out whether and by whom an order had been placed. Mr. Richards did not do so; at least he did not do so until after 5 pm that day by which time North Suburban had closed. It is true that Mr. Richards had some domestic duties that afternoon connected with his children. Nevertheless, the matter was of such importance, particularly as Mr. Allison had made it clear the matter was being placed in the hands of Golden Fleece's solicitors, that it is a matter for comment that he made no approach until so late in the day. It is true that at that stage North Suburban had not been identified as the supplier but it was the logical place to which to direct an enquiry.

Once again I find unsatisfactory Mr. Richards' account of his activities on 2 March 1983. If the onus lay on the applicants to satisfy the court that they did not place the order, they may not have discharged that onus. But the onus lies upon Golden Fleece to show that they did and, even on the balance of probabilities, I am not prepared to make that finding, in the light of the applicants' positive testimony that they did not place the order, the quantity of fuel in the tank on 2 March and the possibility that someone else might have ordered the petrol.

However, the notices terminating the lease and reseller supply contract do not depend upon the fact of delivery; they are based upon allegations of adulteration and passing off, with which I must now deal.

Although the respondent has not established that the delivery on 2 March 1983 was at the instance of the applicants, it did establish that there was such a delivery and that the fact of the delivery was made known to Mr. Richards at about 2.30 p.m. that day. Questions arise whether, in the circumstances, the applicants wilfully adulterated fuel supplied to them by the respondent and whether, without the respondent's consent, they wilfully passed off motor fuel supplied to them by North Suburban as being motor fuel supplied by Golden Fleece.

Counsel debated the meaning of the word "adulterate", in particular whether it implied the admixture of a product inferior to that to which it was added or at any rate so different as to falsify the character of the product being sold. It is unnecessary for me to resolve that issue just as it is unnecessary to determine the meaning of "wilfully" in para.(e) of s.16(2). There is no need to say any more about these two matters because, the respondent having failed to establish that the applicants ordered the fuel or that it was delivered with their consent, on no view of para.(e) can it be said that they wilfully adulterated fuel supplied to them by the respondent. So much was conceded by counsel for the respondent in the course of his final address.

But that does not dispose of the ground based upon para.(f) of s.16(2). Faced with the knowledge that there had been a delivery of Shell petrol on the morning of 2 March, Mr. and Mrs. Richards continued to sell petrol to their customers from bowsers and premises clearly identified by name and logo as containing Golden Fleece fuel. And they did so without the consent of Golden Fleece. There was a submission on behalf of the applicants that failure by Mr. Allison to direct or request Mr. Richards to alter the logo or make some disclaimer to the public constituted a consent to the passing off of the petrol as that of Golden Fleece. With respect, that is an unreal submission. The Shell petrol was in the tanks and Mr. Allison had every reason to believe that it was there as a result of an order placed by the applicants. The stand he took was that the company intended to place the matter in the hands of its solicitors, which is what it did. In no way, expressly or impliedly, did the company give its imprimatur to the sale of Shell petrol through a Golden Fleece service station.

The real question, so far as para.(f) is concerned, is whether, in selling the petrol delivered by North Suburban on the morning of 2 March, the applicants "wilfully" passed off that petrol as fuel supplied by Golden Fleece.

The use of the term "wilfully" in para.(f) produces some difficulties. The qualification appears in paras.(e) and (f) but not in any of the other paragraphs of sub-s.(2) of s.16. In some of those paragraphs the expression would be quite inappropriate but in others it might be thought to have the same role to perform as it does in paras.(e) and (f). For instance, para.(h) includes as a ground of termination that "the franchisee operates the marketing premises in a manner likely to cause injury to persons or property".

In the respondent's submission, wilfully means no more than deliberately or intentionally. In the applicants' submission, it implies something more and in particular carries with it the notion that what is done is not only intentional but is with a mind to the evil that will result.

The meaning of the term "wilfully" and its adjectival variant "wilful" has been explored at length and in depth by Professor J.A. Andrews in "Wilfulness, a lesson in ambiguity" published in Legal Studies, the Journal of The Society of Public Teachers of Law Vol. 1 No. 3. Professor Andrews points out at p.303:

"In ordinary parlance when conduct is described as 'wilful' we usually mean that it is done with a consciousness of the evil which is likely to result and we may often mean to imply that there is an intention to produce that evil".

While arguably the term has that connotation in some statutes creating criminal offences, the weight of authority has given it the sense of something that is done deliberately or intentionally. It is true that in civil law most of the authorities have been concerned with the expression "wilful" rather than "wilfully" which tends to be associated with statutory offences. And it might be asked why the legislature chose to qualify the passing off of motor fuel by the term "wilfully" yet not so qualify the operation of premises in a manner likely to cause injury unless it was to suggest something more than mere intention.

It is an interesting question and one that may call for a much closer examination at a later date. In the circumstances of this case it is unnecessary to pursue the examination any further because by early afternoon on 2 March Mr. and Mrs. Richards were aware that their tanks contained fuel that had not been supplied by Golden Fleece. Nevertheless they continued to sell that fuel under the banner of Golden Fleece, deliberately, intentionally and with the knowledge that what they were doing was passing off Shell petrol as that of Golden Fleece. Furthermore, in the light of the warning received from Mr. Allison that the matter was being placed in the hands of the company's solicitors, they were apprised of the likely consequences of what they were doing.

I am satisfied, therefore, that the applicants' conduct fell within para.(f) of s.16(2) and that the notices relying on that ground were properly given.

However that is not the end of the matter because, the applicants having invoked sub-s.(4), sub-s.(6) operates so that the court may not declare the notices effective unless the court is satisfied that termination is just and equitable, having regard to all the circumstances.

The first question that arises in regard to sub-s.(6) is whether it imposes an onus upon the franchisor or franchisee and if so the nature of that onus.

From the structure and language of s.16, it is apparent that the section is designed to protect a franchisee against termination of the franchise agreement. The section says nothing about other remedies the franchisor may have, for instance by way of damages or injunction, and does not seek to restrict them in any way. But a franchisor may not terminate the franchise agreement except in accordance with the section; may not terminate except on one or more of the prescribed grounds; and may only terminate by written notice setting out full particulars of the ground and a statement of facts, at the same time informing the franchisee that the agreement is to be terminated on a specified date, not earlier than 30 days after the day on which the notice is served.

Assuming a franchisor to have taken all those steps, the franchisee may apply to the court. He does so, not so much with the aim of obtaining relief against the consequences of the franchisor's action, but with a view to obtaining an order declaring the notice to have had, or to have, no effect. Where such an application is made, the court may declare the notice to have had, or to have, no effect or may declare that notice to have terminated, or to terminate, the agreement. When the matter comes before the court, sub-s.(6) operates as a positive prohibition against the court declaring a notice to have terminated, or to terminate, a franchise agreement unless a ground is established to the satisfaction of the court and the court is satisfied that termination is just and equitable.

In my view, "unless" operates as a clear restriction on the power of the court to declare an agreement terminated and it is a restriction that operates until the court is satisfied that a ground has been established and that termination is just and equitable. In those circumstances, I think the conclusion inevitable that it is incumbent upon the franchisor to satisfy the court as to the matters mentioned in paras. (a) and (b) of sub-s.(6). The use of the words "established . . . to the satisfaction of the court" in para.(a) and of the words "the court is satisfied" in para.(b) does not warrant the drawing of any distinction, in this respect, between the two paragraphs. The former is concerned with a factual matter which can be "established . . . to the satisfaction of the court". The latter requires the court to evaluate all the circumstances.

In dealing with the question what is meant by just and equitable, counsel referred to a number of authorities including some concerned with relief against forfeiture of a leasehold interest. There is a danger in drawing too close an analogy with those decisions or with any decisions concerned with relief against forfeiture of an interest. Section 16(6) of the Petroleum Retail Marketing Franchise Act does not empower the court to grant relief against forfeiture of the franchisee's interest in a franchise agreement. Rather, it precludes the forfeiture of that interest (more accurately, termination of the franchise agreement) unless the court is satisfied that it is just and equitable that this should take place. That is not to say that factors considered by courts to be relevant in cases of relief against forfeiture are not appropriate guides to what may be just and equitable under sub-s.(6). They may well be appropriate. The point is that a franchisee does not come to the court seeking relief against forfeiture; rather it is the franchisor who must persuade the court that termination of the franchise agreement is just and equitable.

Counsel for the applicants tendered, against the objection of counsel for the respondent, a bundle of material as an extrinsic aid to interpretation of the Petroleum Retail Marketing Franchise Act. This included the Minister's second reading speech on the bill which later became the Act, the report of the Royal Commission on Petroleum and other material including reports from Canada and the United States. I accepted the material on the basis that I would rule later as to its admissibility. The material was offered, not to resolve an ambiguity in any provision of the legislation, but rather as a guide to the policy of the Act.

In TCN Channel Nine Pty. Ltd. v. Australian Mutual Provident Society (1982) 42 ALR 496, a Full Court of this court (Bowen C.J., Lockhart and Ellicott JJ.) admitted the Hansard report of second reading speeches and an explanatory memorandum relating to the legislation there under consideration as evidence of the mischief to which the statute was directed. Counsel for the respondent criticized this decision as inconsistent with or, at any rate, not warranted by certain judgments of the High Court. I would regard myself as bound by the decision but in the event find it unnecessary to refer to the material tendered. It is apparent from a consideration of the legislation itself, as it was apparent to Fox J. in J. & M. O'Brien Enterprises Pty. Ltd. v. Shell Company of Australia, that the Act aims at giving security of tenure to retailers of motor fuel. The analysis of s.16, made earlier in these reasons, puts this beyond doubt.

Before I turn to factors bearing upon what is just and equitable in all the circumstances, there are two matters relevant to this consideration that should be mentioned. The first is in a sense an aspect of the policy of the Act. The legislation seeks to put franchisees in the position of independent operators, protecting them against termination of their agreements and giving them rights of renewal of those agreements. Franchisors and franchisees do not stand in the relationship of master and servant, principal and agent or in any fiduciary capacity that imposes rights and obligations apart from those which the parties have contracted, controlled as they are by the legislation.

The second matter arises in this way. I have expressed my dissatisfaction about parts of Mr. Richards' evidence. It is tempting to carry this dissatisfaction into a consideration of what is just and equitable but I think it would be wrong to do so. To the extent that I have doubts about some of that evidence, those doubts are reflected in the findings I have made. If I thought that any of Mr. Richards' evidence was deliberately false (and I do not say that), there are steps available. An assessment of the reliability of the evidence of a party to an application under sub-s.(4) of s.16 is material to an exercise of power under sub-s.(6) if that assessment throws some light upon other considerations which may properly be termed relevant to the notion of what is just and equitable. I do not think it would be right to determine an application by reference to the general impression made by an applicant. See Menard v. Horwood & Co. Ltd. (1922) 31 C.L.R. 20 at p.24, part of the judgment of Street C.J. in Eq. which was approved by the High Court.

It is apparent from the evidence of Mr. Allison that Golden Fleece has a firm, perhaps inflexible, policy of terminating franchise agreements in the event of adulteration of fuel or passing off. It is of some interest that the Petroleum Retailers Rights and Liabilities Act 1982 of Western Australia, which came into operation on 1 January 1983, gives a statutory right to a tenant who is a franchisee to use premises occupied by him to store or dispense motor fuel which he is lawfully able to purchase from a person other than the primary supplier, so long as the requirements of the Act are met. Those requirements include avoiding any mixture of motor fuels or anything that might be regarded as passing off. The applicants have not sought to make use of that legislation but it does offer means by which the rights of the parties to this litigation may be safeguarded for the future. The only loss the respondent appears to have suffered from the activities of the applicants is the profit it would have made on fuel supplied by North Suburban, had that fuel been supplied by it. That is a relevant consideration but the implications of the recent State legislation must be borne in mind. It is open to a franchisee, complying with the Act, to purchase fuel from someone other than the franchisor.

Some consumers have been mislead but there was no evidence that they suffered any detriment as a consequence.

In my view, the most important consideration, in terms of what is just and equitable, is that termination of the lease and reseller supply contract means that the applicants will lose entirely the benefit of the business they bought and have built up. In February 1982 they paid for the service station business the sum of $40,000 including plant and equipment, plus stock at valuation of some $9,000 and book debts approximating $7,000. They have purchased or leased a vehicle and specialised equipment for the better operation of the service station. There is no doubt that Mr. and Mrs. Richards have both worked very hard, have increased the turnover of the business and have built up a valuable asset. There was evidence from a business broker and consultant that the goodwill of the service station is worth between $90,000 and $119,000. That evidence was criticized but there is no doubt that the service station represents a very valuable asset, the benefit of which the applicants will certainly lose if the notices of termination are held effective. Furthermore they have secured loans for the purpose of buying plant and equipment through mortgages on their home and it is unlikely that they will be able to meet those obligations if they no longer have the service station.

On the other hand they have deceived Golden Fleece concerning their purchases from North Suburban and, it would appear, have been slow payers of their debts to Golden Fleece. The company, through Mr. Allison, expressed its concern that if it did not issue notices of termination in cases of adulteration and passing off, the practice would become widespread among retailers. It should be remembered that a notice of termination is not the only remedy available to a franchisor. He may seek, where appropriate, damages or an injunction or both. A breach of an injunction restraining adulteration of fuel or passing off would have serious consequences for a franchisee.

The consequences for the applicants, if the notices are allowed to take effect, are so catastrophic as to outweigh all other considerations. Not only has the respondent failed to satisfy me that termination of the agreements is just and equitable, but I am satisfied that termination would not be just and equitable and I therefore declare the notices of 15 March 1983 to have had no effect. Section 16(5) envisages a declaration that a notice has had or has no effect. Counsel will have an opportunity to speak to the appropriate order that should be made but it seems to me that the declaration suggested is the appropriate one.

There was a submission made on behalf of the applicants that the notice terminating the lease was ineffective, because it failed to comply with the provisions of s.81 of the Property Law Act 1969 of Western Australia. That section makes unenforceable a right of re-entry or forfeiture under a lease unless and until the lessor serves on the lessee a notice specifying the breach complained of; where the breach is capable of remedy, requires the lessee to remedy the breach; and in any case requires the lessee to make compensation in money for the breach. This point should have been pleaded. It was not but for completeness I shall deal with it.

The submission was that s.8 of the Petroleum Retail Marketing Franchise Act provides that the Act "is not intended to affect the operation of a law of a State or Territory to the extent that that law is capable of operating concurrently with this Act". It is enough for me to say that I agree with counsel for the respondent that s.16 of the Commonwealth Act deals with the termination of a franchise agreement so exhaustively as to leave no room for the operation of s.81 of the Property Law Act. Counsel for the applicants referred to the recent decision of Neaves J. in J. & M. O'Brien Enterprises Pty. Ltd. v. The Shell Company of Australia Ltd (1983) ATPR 40-356. But in that case the court was concerned with a situation in which Shell had failed to terminate a franchise agreement under the provisions of the Petroleum Petrol Marketing Franchise Act. Neaves J. considered that Shell could not then treat its notice as effective at law to determine the tenancy. I do not find anything in his Honour's reasons to suggest that a franchisor must comply, not only with s.16 of the Commonwealth Act, but with any State legislation relating to the termination of a leasehold interest.

There remains the question of costs. In my view, although the applicants have been successful in these proceedings in that the notices of termination have been held to have had no effect, they brought upon themselves the giving of the notices and the respondent's opposition to the relief sought. Mr. Richards' conduct on 2 March 1983, coupled with the fact of delivery by North Suburban earlier that day and earlier deliveries by that firm, inevitably lead to Golden Fleece concluding that the delivery on 2 March had been at the instance of the applicants. The applicants did little to disabuse the company of that belief. The unsatisfactory evidence of Mr. Richards regarding those prior deliveries no doubt hardened Golden Fleece in its resolve to resist the application under sub-s.(4) of s.16. Though unsuccessful, the company acted reasonably in issuing the notices and in opposing the application. It should therefore have its costs of the hearing.

There will be a declaration that the notices dated 15 March 1983 given by the respondent to the applicants have had no effect, an order that the cross-claim be dismissed and an order that the applicants pay the respondent's costs of the application and cross-claim, to be taxed as one set of costs.