Sagittarian Enterprises Pty Ltd v Ampol Ltd
[1987] FCA 216
•7 May 1987
TRADE PRACTICES - franchise agreements - Petroleum Retail
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Marketing Franchise Act - action by corporate franchlsee against franchlsor - agreement expressed to be with natural person - director of franchisee - doctrlne of undlsclosed principal - motion to strike out proceeding as frivolous and vexatious - motion dismissed.
Trade Practices Act 1974 s.82
Petroleum Retall Marketing Franchise Act 1980 s.22Bowstead on Agency 5th Ed. SAGITTARIAN ENTERPRISES PTY LTD AND RAYMOND ARTHUR WOOLLETT and
KAYE LORRAINE WOOLLETT V AMPOL LIMITED NO. WAG 9 OF 1986 FRENCH J. I i 7 May 1987 PERTH I ' I i
IN THE FEDERAL COURT 1 OF AUSTRALIA WESTERN AUSTRALIAN DISTRICT REGISTRY GENERAL DIVISION No. WAG 9 of 1986 B E T W E E N : SAGITTARIAN ENTERPRISES PTY LTD First Applicant
and
RAYMOND ARTHUR WOOLLETT and
KAYE LORRAINE WOOLLETT
Second Applicants
and
AMPOL LIMITED
Respondent
MINUTE OF ORDER
JUDGE MAKING ORDER: FRENCH J. DATE OF ORDER: 7 May 1987 WHERE MADE: PERTH THE COURT ORDERS THAT:
1. The respondent's motion is dismissed.
2. The respondent to pay the applicants' costs of the motion.
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Note: Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT 1 OF AUSTRALIA 1 WESTERN AUSTRALIAN 1 DISTRICT REGISTRY ) GENERAL DIVISION
) No. WAG 9 of 1986 B E T W E E N : SAGITTARIAN ENTERPRISES PTY LTD First Applicant
and
RAYMOND ARTHUR WOOLLETT and
KAYE LORRAINE WOOLLETT Second Applicants
and
AMPOL LIMITED
Respondent
CORAM : FRENCH J. 7 May 1987 REASONS FOR JUDGMENT
On 17 February 1986 Raymond Arthur Woollett commenced proceedings against Ampol Llmited, claiming compensation under s . 2 2 of the Petroleum Retail Marketing Franchise Act 1980 and alternatively damages under s.82 of the Trade Practices Act 1974.
By the statement of claim which accompanied that
appllcation Mr Woollett said he was the operator of a petrol service station in Dianella selling to the public, fuel and oil products produced by Ampol.
He alleged that he had a written agreement with Ampol
dated 29 July 1981 by whlch he was granted a licence to occupy the premises for a period of 3 years commencing 1 September 1981 for
I the purpose of conducting a commerclal service station using
Ampol's products. This agreement was formally entitled "Service
Station Franchise Licence Agreement" and was called in the pleadings "The Llcence Agreement".
He also had, he sald, a further written agreement made on the same day whereby Ampol would supply products to him for a period of 3 years from 1 September 1981. This was designated the "Supply Agreement".
A third written agreement, the Trade Mark Agreement,
also dated 29 July 1981 gave him the right to use Ampol trade
marks and logos for a period of 3 years from 1 September. The three agreements collectively are said to have
constituted a franchise agreement within the meaning of s.3(1) of the Petroleum Retail Marketing Franchise Act 1980. Section 15 of that Act requires that a corporation shall not enter into a franchise agreement unless not less than 3 days
i before the agreement is made, it has supplied to the franchisee a i written statement containing all information in the possession of 1
the franchisor relating to the operation or proposed operation of the premises and reasonably likely to influence the decision of the franchisee to enter into the agreement.
According to Woollett Ampol breached this provlslon by
alleged that Ampol falled to disclose that it held the marketing
premises on a lease due to expire on 31 August 1984.failing to provide him wlth the requisite statement. ne also In 1984 Ampol refused to renew the franchlse agreement, allegedly in breach of s.17(1) of the Petroleum Retail Marketlng Franchise Act.
This it was said to have done by its advice to Woollett that the agreement would expire on 30 August 1984.
The facts pleaded were also relied upon as showing
conduct which was misleading or deceptive or likely to mislead or decelve in contraventlon of s . 5 2 of the Trade Practices Act.
Woollett alleged that he was obliged to vacate the service station and thereby lost his business and suffered loss and damage.
By a motion filed 15 July 1986 he sought leave to loin
Sagittarian Enterprises Pty Ltd and Kaye Lorraine Woollett as co-applicants.
While preparing for discovery Woollett's solicitor
"became aware that the owner and operator of the service station
premises .... was in fact Sagittarian Enterprises Pty Ltd....".
The Woolletts, i t t u r n e d o u t , were directors and
e m p l o y e e s of t h e c o m p a n y t o w h i c h t h e y h a d t r a n s f e r r e d t h e
b u s i n e s s u p o n i t s i n c o r p o r a t i o n o n 2 5 Janua ry 1977 .
By an o r d e r made on 18 August 1986 Burchett J. d i r e c t e d
t h a t t h e company and Mrs Woollett b e j o i n e d a s a p p l i c a n t s and gave
them l eave t o amend t h e s t a t e m e n t o f c l a i m .
The amended s ta tement o f claim p l e a d s t h a t S a g i t t a r i a n
E n t e r p r i s e s P t y L t d , t h e f i r s t a p p l i c a n t , was owner and ope ra to r o f t h e p r e m i s e s . T h e Woolletts, t h e s e c o n d a p p l i c a n t s , were a t
all material times d i r e c t o r s of the company.
T h e p l e a now made i s t h a t t h e L i c e n c e , S u p p l y a n d
Trademark Agreemcnts were a l l made w i t h S a g i t t a r i a n E n t e r p r i s e s .
T h e same b r e a c h e s o f t h e P e t r o l e u m R e t a i l M a r k e t i n g
F r a n c h i s e A c t a n d T r a d e P r a c t i c e s Act are a l l e g e d . Also p l e a d e d
is t h e f a c t t h a t t h e company was o b l i g e d t o v a c a t e t h e premises.
A l l a p p l i c a n t s are sa id t o h a v e t h e r e b y s u f f e r e d loss and damage.
T h e p r o c e e d i n g s
r e s p o n d e n t
m o v e s
t h e
C o u r t ,
p u r s u a n t
t o
0 . 2 0
r . 2 ( 1 ) ,
t o d i s m i s s t h e g e n e r a l l y a n d i n t h e a l t e r n a t i v e to
d i s m i s s t h e claim f o r c o m p e n s a t i o n u n d e r s.22 of t h e P e t r o l e u m
R e t a i l e r s M a r k e t i n g F r a n c h i s e Act.
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5.
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A l t e r n a t i v e l y , i t s e e k s a n o rde r u n d e r 0.11 r . 1 6 t o
s t r i k e o u t c e r t a i n words i n pa ra .7 of t h e amended s t a t e m e n t o f
i
c la im and o t h e r w i s e seeks o rde r s fo r t h e p r o v i s i o n o f f u r t h e r
a n s w e r s t o c e r t a i n I n t e r r o g a t o r i e s .
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I n s u p p o r t o f t h e m o t i o n t h e r e was f i l e d a n a f f i d a v i t
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! sworn by Mr R.W. B e n z i e , t h e a d m i n i s t r a t i o n m a n a g e r of t h e i ! I r e s p o n d e n t .
T h a t a f f i d a v i t e x h i b i t e d t h e Licence, Supp ly and T rade
I Mark Agreements each of which was o n t h e face of it made between
I Mr Woollett and Ampol.
Mr B e n z i e r e f e r r e d t o a n s w e r s t o i n t e r r o g a t o r i e s s w o r n
o n 15 December 1986 where Mr Woollett h a d d e p o s e d t h a t h e s i g n e d
t h e o r i g i n a l of e a c h of t h e a g r e e m e n t s a s a g e n t f o r S a g i t t a r i a n
E n t e r p r i s e s P t y L t d .
A m p 0 1 Mr B e n z i e s s a i d , h a d b e e n p r e p a r e d t o g r a n t a
l i c e n c e t o occupy t o Mr Woollett " b u t n o t t o a n y o t h e r p e r s o n or
e n t i t y " .
! Ampol i n t e n d e d t o e n t e r i n t o t h e a g r e e m e n t w i t h M r
Woollett a n d d i d n o t know b e f o r e h a n d t h a t h e h a d I n t e n d e d t o
i e n t e r it o n b e h a l f o f S a g i t t a r i a n E n t e r p r i s e s P t y L t d . I 1 i I I ! I I
I n h i s a f f i d a v l t i n r e p l y , Woollett s a i d t h a t h e a n d h i s
w i f e f i rs t took o n t h e o p e r a t i o n of t h e s e r v i c e s t a t i o n i n A p r i l 1973.
I t was t h e p r a c t i c e o f Ampol t o h a v e a n n u a l l i c e n c e
a g r e e m e n t s .
I n F e b r u a r y 1 9 7 7 , a c c o r d i n g t o Woollett, t h e b u s i n e s s o f
t h e s e r v i c e s t a t i o n was t r a n s f e r r e d t o S a g i t t a r l a n E n t e r p r i s e s P t y
L t d . T h i s a c q u l s l t i o n was s a l d t o h a v e b e e n f i n a n c e d b y l o a n
f u n d s a d v a n c e d b y t h e Woolletts.
Ampol's area r e p r e s e n t a t i v e v i s i t e d t h e s e r v i c e s t a t i o n
i n J u n e 1 9 7 7 t o a r r a n g e f o r t h e s i g n i n g of t h e a n n u a l l i c e n c e ag reemen t .
This showed Raymond A r t h u r Woollett as licensee.
Paymen t s due unde r t he ag reemen t were made by cheque to
c o v e r t h e f i rs t i n s t a l m e n t a n d p r o m i s s o r y n o t e s t o c o v e r t h e
balance o f 11 i n s t a l m e n t s .
The cheque was s t a m p e d w i t h t h e w o r d s "for and on beha l f
I of S a g i t t a r i a n E n t e r p r i s e s P t y L t d . I
T h e c h e q u e a n d p r o m i s s o r y n o t e s r e q u i r e d t h e m o n e y s to
b e p a i d f r o m a bank accoun t a t t h e D i a n e l l a S h o p p i n g P l a z a b r a n c h of the then Bank of New South Wales in the name of Sogittnrian
Enterprises Pty Ltd.
Similar arrangements were made for payments due under
subsequent annual licence agreements up to 1981. On this basis there was, prior to the execution of the
1981 agreements, said to be a history of payments made in the name
of the company.
In his affidavit Mr Woollett said:-
"(a) the Respondent by its servants or agents Ron Taylor and/or Ross Bolton were for some time prior to the execution of the franchise agreements aware that the First Applicant was the operator of the service station premises. As from 1 February 1977 all payments to the Respondent in respect of either licence fees, fuel deposits, or trade mark fees, were paid either by a cheque from the First Applicant or by promissory notes drawn on the bank account of the First Applicant;
(b) the Respondent by its servants or agents was
accordingly aware for some time prior to the making of the franchise agreement the subject of these proceedings that the business was being operated by
the company ."
The first paragraph of the respondent's motion seeks an order that the proceeding be dismissed generally on the ground
that the amended statement of claim:- "(a) discloses no reasonable cause of action:
(b) is frivolous or vexatious: or
a.
(c) is an abuse of the process of the courL."
" A reasonable cause of action means a cause of
action with some chance of success when only the alleaations in the Dleading are
Drummond-Jackson v British Medical Association - considered" - (1970) 1 WLR 6 8 8 per Lord Pearson On this basis the statement of claim does disclose a
reasonable cause of action.
The respondent however by its affidavit evidence and by
exhibiting the agreements asserts that it is clear beyond doubt
I that there was no agreement between it and the first applicant, that the causes of action aepend upon the existence of such an agreement, and that the proceedlngs are thereby frivolous and vexatious or an abuse of process. It is plain that the written agreements on their face are made only between Raymond Arthur Woollett and Ampol Limited.
Counsel for Ampol referred to various clauses in the
Licence Agreement. These he said demonstrated a relationship of confidence between Mr Woollett and Ampol. This was not the type
of contract that Ampol would enter into with any person. ne submitted that the doctrine of undisclosed principal could not operate in respect of such a contract.
R e f e r r i n g t o a c o v e n a n t a g a l n s t a s s i g n m e n t i n t h e
Licence Agreement he went on t o c i t e Bowstead on Agency 5th E d . a t
p .321 where it is said:-
" I t seems r e a s o n a b l e t o assume.. . o n t h e a n a l o g y o f t h e a s s i g n m e n t r u l e , t h a t w h e r e t h e b e n e f i t o f a contract is n o t a s s i g n a b l e , o r l t s b u r d e n c o u l d n o t be v i c a r i o u s l y
u n d i s c l o s e d p e r f o r m e d , t h e p r i n c i p a l c a n n o t
i n t e r v e n e . . ."
Rel i ance was a l s o p laced o n t h e j u d g m e n t of t h e N e w
S o u t h Wales C o u r t o f A p p e a l i n Andrews v The Nominal Defendant
( 1 9 6 9 ) 70 S.R. ( N S W ) 4 1 9 a n d i n p a r t i c u l a r o n t h e passage i n t h e
judgment of Asprey J A a t 432 (Sugerman J A a g r e e i n g ) : -
" T h e d o c t r i n e of t h e u n d i s c l o s e d p r i n c i p a l h a s b e e n s t a t e d t o be "a p r i m l t i v e a n d h i g h l y restricted form of
as s ignmen t" (See Goodhar t and Hanson , 4 Cambridge Law
J o u r n a l 3 2 0 , 3 5 2 ) a n d i ts emergence i n t h e law a p p e a r s
t o have been due t o t h e i m p e r a t i v e s b u s i n e s s o f
c o n v e n i e n c e ( P o w e l l on Agency 2nd Ed . , pp .148 , 150 ,
1 5 1 - 1 5 2 ) . W h l l s t t h e r e are c e r t a i n d i f f e r e n c e s b e t w e e n
t h a t doctrine a n d a s s i g n m e n t i n t h e s tr ict s e n s e of t h e
term (see P o w e l l p p . 1 6 5 , 1 6 6 ) , i n my v i e w t h e two
c o n c e p t s a re s u f f l c i e n t l y a n a l o g o u s i n p r i n c i p l e t o l e a d
t o t h e c o n c l u s i o n t h a t a c o n t r a c t w h i c h is of s u c h a
n a t u r e t h a t it is i n c a p a b l e of a s s i g n m e n t e i t h e r , ( a )
b e c a u s e o f t h e p e r s o n a l c o n f i d e n c e i m p o s e d b y o n e of t h e p a r t i e s t o it i n t h e o t h e r , or (b) b e c a u s e t h e pa r t i e s t o i t h a v e a g r e e d s p e c i f i c a l l y t h a t i t s h a l l n o t be a s s i g n a b l e , s h o u l d b e h e l d t o b e o n e i n r e s p e c t of whlch
t h e r u l e a s t o t h e o p e r a t i o n t h e o f u n d i s c l o s e d
p r i n c i p a l c a n n o t o p e r a t e ( c f . P o w e l l ( s u p r a ) , p p . 1 5 8 , 1 6 6 ) ."
T h e a f f i d a v i t material i n d i c a t e s a n i s s u e a s to whethe r
t h e alleged p r i n c i p a l , i n t h i s case t h e company, was u n d i s c l o s e d .
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Further and to the extent that the principal In question
of the implication against its intervention in the contract may be
weakened.
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i is or may be a corporate alter ego for its "agent", the strength i I
i The power conferred on the Court to dispose summarily of
I I a proceeding by striking out the pleadings is one to be exercised I sparingly:-
"The test to be applied has been variously expressed; "so obviously untenable that it cannot possibly
succeed"; "manifestly groundless"; "so manifestly faultly that it does not admit an argument"; "discloses
a case which the Court is satisfied cannot succeed"; "under no possibility can there be a good cause of action": "be manifest that to allow them (the pleadings) ~ ~~ to stand would involve useless expense"." 1 General Steel Industries v Commissioner for Railways (NSW)
(1964) 112 CLR 125 at 129 per Barwlck CJ. See also= v Victorian Zailways Commissioners (1949) 78 CLR 62 at
91 per Dlxon J.
In my opinion there is shown on the materials a triable
question as to whether the principal was undisclosed. Further, ifthe case is one of an undisclosed principal, it is not so obvious
striking out the proceedings.
that it would be excluded from the agreement as to warrant That is not to say that the issue of agency will not
require pleading by way of reply.
The applicants may need to glve
consideration to that possibility.
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I I am not however prepared dispose to of the action I l
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I n the alternatlve the motion by para. 2 sccks an order
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that the claim for relief pursuant to s . 2 2 of the Petroleum Retail
Marketing Franchise Act be dismissed.
I n this regard the respondent in its outline of
submissions refers to sub-s.13(6) of the Act which provides:- "13(6) Where -
(a) a corporation proposes to enter, as
I franchisor, into a franchise agreement:
(b) the marketing premlses to which the proposed agreement relates are held by that corporatlon or a related corporation as lessee under a lease in respect of which the lessor is not a corporatlon related to the lessee; and
(c) the term of the proposed agreement would, but
f o r this sub-section, be required by
sub-section ( 2 1 , (3) or ( 4 ) to extend beyond the expiration of the term of the lease,
the term of the proposed agreement shall be a period expiring immediately before the expiration of the term of the lease." It is common ground on the pleadings that Amp01 held the
marketing premises as lessee only.
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i The statement of claim alleges that the expiry date of
the lease was 31 August 1984. The amended defence asserts it was
i ! 2 September 1984. i I I Whichever is the case, the effect of sub-s.13(6) is that the term of the franchise agreement was for a period expiring
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immediately before the expiration of the term of the lease.
T h e r e s p o n d e n t c o n t e n d s t h a t this b e i n g t h e case t h e
a p p l i c a n t s c a n h a v e s u f f e r e d n o l o s s o r d a m a g e b y r e a s o n of
A m p o l ' s f a i l u r e t o r e n e w t h e f r a n c h i s e a g r e e m e n t a n d t h e r e f o r e
have n o r i g h t t o compensa t ion unde r s . 22 of t h e A c t .
T h i s h o w e v e r i s n o t t h e o n l y b a s i s u p o n w h i c h t h a t
r e l i e f is c l a i m e d . S e c t i o n 22 o f t h e Act p r o v i d e s i n sub-s . (1):-
"Where a p a r t y t o a f r a n c h i s e a g r e e m e n t s u f f e r s l o s s or
damage by reason o f t h e o t h e r p a r t y t o t h e a g r e e m e n t
c o n t r a v e n i n g a p r o v i s i o n t h i s o f Act or t h e o f
r e g u l a t i o n s , t h a t o t h e r p a r t y is l i a b l e t o compensate
t h e f i r s t m e n t i o n e d p a r t y for t h e loss or damage."
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T h e f a l l u r e t o r e n e w t h e f r a n c h i s e a g r e e m e n t is n o t t h e
o n l y c o n t r a v e n t i o n a l l e g e d i n t h e a m e n d e d s t a t e m e n t of claim.
I t is also a l l e g e d t h a t t h e r e s p o n d e n t f a i l e d t o comply
w i t h s.15 o f t h e Act i n r e l a t ion to p r e c o n t r a c t u a l d i s c l o s u r e .
I n t h e c i r c u m s t a n c e s i t c a n n o t b e s a i d t h a t n o claim f o r
:
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I compensa t ion under s .22 would l i e .
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I n t h e a l t e r n a t i v e t h e r e s p o n d e n t a t t a c k s p a r a . 7 o f t h e
amended s t a t emen t o f claim which reads:-
" N e i t h e r i n J u l y 1 9 8 1 n o r a t any material time d i d t h e
R e s p o n d e n t d i s c l o s e t o t h e F i r s t A p p l i c a n t a s F r a n c h i s e e
or t o t h e S e c o n d A p p l i c a n t s t h a t t h e s e r v i c e s t a t i o n
' ! premises t h e s u b J e c t of t h e F r a n c h i s e A g r e e m e n t were
h e l d b y t h e R e s p o n d e n t u n d e r a Lease which was due t o
e x p i r e o n 3 1 s t A u g u s t 1 9 8 4 . "
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I 13. i I By its motion the respondent seeks to strike out the
words "or to the Second Appllcants" where they appear ~n that
paragraph.! I I The grounds upon which it is sought to strike the words i ! out are that they:- I i I
"(a) tend to cause preludice, embarrassment or delay in the proceedings; or
! (b) are otherwise an abuse of the process of the
Court."
The respondent contends that the obligatlon under s.15
I of the Act is to make disclcsure to the proposed franchisee. As I
the Woolletts are on the face of the statement of claim, not the
franchisee, a failure to make disclosure to them is not a materialfact.
On the basis however that the Woolletts are directors
-- -.--_ . - - and employees of the company disclosure to them would arguably
have constituted disclosure to the company.
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In my opinion no basis for striking out on this ground
---- 1-- ..
- .is shown and I decllne to accede to the motion in that regard. ,-
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A further order sought in the alternative in the
respondent's motion is that the first applicant by its officer the
I first named second applicant, give a further answer to
i I interrogatory number 3 2 . I ~ I I
. C . _ - i"-- ! - --- -- - I .
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14.
The questlon and answer in interrogatory 32 were as
follows:-
"(a) Look at paragraph 7 of the Amended Statement of Claim. Do the Applicants allege that had the Respondent disclosed to the First Applicant or the Second Applicants that the Respondent held the service station premises under a lease which was due to expire on 31 August 1984 the First Applicant
would not have entered into the franchise agreement referred to in paragraph 4 of the Amended Statement
of Claim?
If yes to (a), state precisely:-
(i) the other agreements the First Applicant and the Second Applicants would have entered into
I in lieu of the franchise agreement;
(ii) the other business undertakings in which the
First Applicant and the Second Applicants
would have become involved in lieu of the franchlse agreement. Answer
(a)
The Applicants do not allege this in paragraph 7 of the Amended Statement of Claim.
(b) (i) Not applicable.
( ii) Not applicable ."
my In opinion the interrogatory is plainly
inappropriate. Its form is that of a request for particulars. What the applicants allege in para. 7 is clear enough and it does not include the allegatlon proposed in interrogatory 32. In the circumstances I will make no order that they be required to answer that interrogatory.
15.
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For the same reasons I decline to m a k e the order sought
i in para.5 of the Notice of Motion.
I hereby certify that this and the
preceding fourteen (14) pages are a
true copy of the Reasons for Judgmentof hls Honour Mr Justice French.
Counsel
. for the Applicants: Mr C . Stokes
instructed by Warren McDonald French & Harrison
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. for the Respondent: Mr S.R. Paternitl
instructed by Parker & Parker
Date of Hearing: 27 March 1987 Date of Judgment: 7 May 1987
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