Richards, John Kent v Golden Fleece Petroleum Ltd

[1983] FCA 424

424 06- \9%3 1 \ ' -

IN THE FEDERAL COURT 1

OF AUSTRALIA 1

WESTERN AUSTRALIA 1 No. WAG 13 of 1983

DISTRICT REGISTRY 1

GENERAL DIVISION 1

B E T W E E N :

JOHN KENT RICHARDS and

DIANNA GRACE RICHARDS

Applicants

and

GOLDEN FLEECE PETROLEUM LTD.

Respondent

and

GOLDEN FLEECE PETROLEUM LTD.

Cross-Claimant

and

JOHN KENT RICHARDS and

DIANNA GRACE RICHARDS

Cross-Respondents

CORAM: TOOHEY J.

29 June 1983

REASONS FOR JUDGMENT

The respondent seeks from the applicants further

discovery of and inspection of documents.

The applicants carry on the business of retailing

petroleum products and claim to be the holders of a

franchise agreement as that term is defined in the

Petroleum Retail Marketing and Franchise Act 1980,

being the assignees of a lease and reseller supply contract

from the respondent.

2.

By notices dated 15 March 1983 the respondent

terminated those agreements. It did so on the ground

that on 2 March 1983 the applicants obtained a delivery

of and sold petroleum products other than those supplied

or marketed by the respondent; that in consequence they

wilfully adulterated motor fuel supplied to them by the

respondent; and that in further consequence they sold or

permitted to be sold and passed off r permitted to be

passed off the motor fuel as fuel supplied by the respondent.

These acts, if established, constitute grounds for

termination of a franchise agreement by reason	of s.16(2)
of the Act.

The applicants deny these allegations and seek

declarations that the respondent's notices are of no effect.

Documents discovered by the applicants, include a

readings book for the period 27 October 1982 to 3 June 1983

and summary sheets for the period 1 March 1983 to 3 March

1983. In further and better particulars provided by the

respondent, it is alleged that prior to 2 March 1983 the

applicants engaged in conduct of the kind that led to the

giving of notices by the respondent. The applicants have

declined to give any discovery of documents relating to

that allegation which, it should be noted, is not in specific

terms but is pleaded by the respondent with reference to

s.16(6) (b) of the Act.

3 .

Sub-section ( 6 ) provides that in any proceedings in

which the holder of a franchise applies to the court for

an order declaring a notice of termination to have had or

to have no effect,

' l . . . the court shall not declare the

notice referred to in the sub-section

to have terminated, or to terminate,

the 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 circum-

stances It .

In the respondent's submission, information i the

readings book and summary sheets, coupled with the

applicants' refusal to give discovery o f documents relating

to the allegation of contravention prior to	2 March 1983,
are evidence of incomplete discovery.

The respondent argued that any documents indicating

that before 2 March 1983 the applicants might have engaged

in conduct in contravention of s.16 of the Act were

discoverable documents and for two reasons. First, it was

said, they related to the issue whether the applicants were

guilty of the contraventions which lead to the giving of

notices by the respondent. Second, it was argued that

4 .

s.l6(6)(b) casts upon the respondent the onus of satisfying

the court that the termination f the agreement is "just

and equitable" having regard to all the circumstances and

that this embraces prior contraventions of the Act even

though those contraventions may not have been know to the

respondent. Put another way, the respondent argued that

if there was a contravention of the Act on 2 March 1983

and it was an isolated occasion, for which there was perhaps

some justification, it might be difficult to persuade the

court that termination was just and equitable. On the other

hand, if there was a pattern of such conduct by the applicants,

the court would more readily conclude that termination	was
just and equitable.

As to the first ground, it is true that a document is

relevant and therefore discoverable so long as it relates

to a matter in question in the proceedings. And it has been

said that documents relate to a matter in question "if

they may fairly lead to a train of inquiry which would

help to establish the case of the party seeking discovery".

Windeyer J. in Temmler v. Knoll Laboratories (Australia)

Primarily the matter in issue in this application is

whether there was a contravention of s.16 of the Act by the

applicants on 2 March 1983. The fact that there may have

been a contravention prior thereto does n t of itself say

5.

anything about the probability that there was a contravention

on 2 March. Some reference was made during the course of

argument to evidence of similar facts but that is a concept

peculiarly applicable to the criminal law and	not, I think,
available in these proceedings.

But it is conceivable that a contravention on some

occasion earlier than 2 March 1983 might be relevant to

the contravention in question as throwing some light on the

probability that it occurred. If, for instance, the

applicants could be shown to have entered into an arrangement

with another oil company for the provision of fuel over a

period that included 2 March 1983, that would enhance the

probability that there was a contravention on the day in

question. No evidence has been offered	by the respondent
to support such a contention.

But I am of the opinion that any document evidencing

an earlier contravention is relevant to the question whether

in all the circumstances it is just and equitable that the

agreements be terminated. Sub-section (7) of s.16 reads :

"Without limiting the generality of paragraph (6) (b) , the circum- stances referred to in that

paragraph include the conduct

of the franchisor and the

franchisee after the time when

the franchisor became aware of

the existence of circumstances,

or the occurrence of the event,

constituting the ground referred

to in paragraph ( 6 ) (a) . I'

6 .

Nothing in that sub-section detracts from the generality of sub-s. ( 6 ) (b) and in my view, "all the circumstances" include circumstances preceding the contravention in question which throw light upon the

standard of the applicants' conduct on matters which,

in terms of s.16(2), may lead to the termination of a

franchise agreement.

The respondent accepted that if discovery should

reveal some contravention other than that upon which it

relies in the present proceedings, it would not be

appropriate for it, either in this application or in a

new application, to set up such a contravention as of

itself justifying termination of the agreements.

In my view the orders sought in the notice of motion

are justified and there will be orders accordingly.

I certify that this and the

five preceding pages are a true copy of the Reasons for Judgment herein of his Honour

Mr. Justice Toohey

Associate

Dated: 29 June 1983