Tony J Boulos Pty Ltd v BP Australia Ltd
[1998] FCA 1232
•1 JULY 1998
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 589 of 1994
BETWEEN:
TONY J BOULOS PTY LIMITED
APPLICANTAND:
BP AUSTRALIA LIMITED
RESPONDENTJUDGE:
WHITLAM J
DATE OF ORDER:
1 JULY 1998
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
The respondent pay compensation to the applicant in the sum of $500.
The respondent pay to the applicant interest on that sum pursuant to s 51A of the Federal Court of Australia Act 1976.
The parties have liberty to apply in relation to the second order.
The applicant pay 85% of the respondent’s costs of the proceeding.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 589 of 1994
BETWEEN:
TONY J BOULOS PTY LIMITED
APPLICANTAND:
BP AUSTRALIA LIMITED
RESPONDENT
JUDGE:
WHITLAM J
DATE:
1 JULY 1998
PLACE:
SYDNEY
REASONS FOR JUDGMENT (EX TEMPORE)
This matter has been fixed today for the purpose of making appropriate orders to give effect to my reasons for judgment delivered on 9 June 1998 and to deal with the quantum of costs.
The form of the applicant’s preferred orders is set out in draft as follows:
“1.DECLARE that the different levels of rebate reflected in Exhibit A 125 constitute discrimination between the Applicant and the Franchisees of the service stations listed there, in terms of s.20(1) of the Petroleum Retail Marketing Franchise Act 1980 (“PRMFA”).
2.DECLARE that the fixing of a supported pump price does not constitute discrimination in terms of s.20(1) of the “PRMFA”.
3.DECLARE that the acts relied upon by the Applicant to constitute discrimination all fall within the provisions of s.20(2)(b)(ii) of the PRMFA (save for that act of discrimination which occurred on 27 February 1991 at BP Canterbury North pursuant to the Temporary Rent Relief Scheme) and accordingly the provisions of s.20(1) of the PRMFA do not apply to them.
4.ORDER that with respect to the act of discrimination which occurred on 27 February 1991 at BP Canterbury North pursuant to the Temporary Rent Relief Scheme the respondent pay the applicant the sum of $500.00 together with interest pursuant to the Federal Court Act.
5.ORDER that the causes of action of the Applicant against the respondent in promissory estoppel, collateral contract and s.48 of the Trade Practices Act be dismissed.”
The first question is whether the applicant is entitled to an order for $500 compensation. That order is sought on the basis of my finding that the respondent contravened s 20 of the Petroleum Retail Marketing Franchise Act 1980 (“the Act”) on 27 February 1991 by paying $500 to the BP Canterbury franchisee but not to the applicant for its BP Canterbury North franchise.
The respondent submits that s 20 merely prescribes a norm of conduct, not a cause of action. It argues the relevant cause of action is established by s 22(1) of the Act, which provides:
“22. (1) Where a party to a franchise agreement suffers loss or damage by reason of the other party to the agreement contravening a provision of this Act or of the regulations, that other party is liable to compensate the first-mentioned party for the loss or damage.
Thus the applicant has not only to show that the respondent contravened s 20 of the Act but also that it suffered loss or damage by reason of that contravention. The respondent suggested this construction to the applicant in a facsimile dated 26 June 1998.
The respondent supports its argument by saying that these provisions are analogous to ss 52 and 82 of the Trade Practices Act 1974. Section 52 does not establish a cause of action; like s 20 it merely prescribes a norm of conduct. However, a cause of action arises under s 82 when it is shown that contravening s 52 caused loss or damage. Thus, s 82 operates similarly to s 22(1).
I should say too that in Ampol Ltd v J & P Lawson (1993) 46 FCR 1 at 11 it was held by O’Loughlin J that resultant loss or damage had to be shown before a contravention of s 15 of the Act would be compensable under s 22(1). The other members of the Court agreed with that view.
The applicant submits that the respondent’s contravention of s 20 gives it a prima facie right to $500 compensation. However, authority and the words and structure of the Act are opposed to this view. I cannot accept it. The construction for which the respondent contends is clearly correct.
Applying this construction, the respondent says its contravention of s 20 does not establish that the applicant suffered loss or damage as required by s 22(1). To do this the applicant needs to show that the contravention disadvantaged its BP Canterbury North franchise, for instance by having a detrimental impact on trading. Again, I accept the respondent’s submission.
Nonetheless, I can comfortably infer from the evidence that the applicant would have been paid $500 for its BP Canterbury North franchise if the respondent had not contravened s 20 of the Act. Even without further evidence it is clear that the applicant has established the loss or damage required by s 22(1). Therefore, it is appropriate to order that the respondent pay the applicant $500 compensation.
Pursuant to s 51A of the Federal Court of Australia Act 1976, I also order that the respondent pay the applicant interest on that sum. I give the parties liberty to apply in relation to the amount of the interest that the respondent should pay.
Regarding the applicant’s remaining draft orders, I accept that they are a valiant effort to give effect to my reasons for judgment delivered last month. However, once damages have been determined such orders are unusual. The normal course is simply to order judgment for a money sum in the applicant’s favour. There is no reason to depart from that course in this case.
Under s 43(2) of the Federal Court of Australia Act 1976 the award of costs is in the Court’s discretion. Recently, in Oshlack v Richmond River Council (1998) 152 ALR 83, the High Court (including Brennan CJ and McHugh J who were in dissent) emphasised the breadth of that discretion. Of course, the discretion must be exercised judicially and that involves considering factors directly connected with the litigation: Oshlack at 94-5 per Gaudron and Gummow JJ; at 101 per McHugh J (with whom Brennan CJ was in general agreement); and at 120-1 per Kirby J.
The order that the respondent pay the applicant $500 compensation suggests that the applicant is the successful party in this litigation. However, the applicant realistically accepts that it has not won any sort of victory. Rather, the respondent is the successful party and submits that the costs order should reflect this.
The appropriate costs order in this case is also affected, to some extent, by the respondent’s pre-trial offers of compromise. The first, delivered on 31 May 1996, was for $50,000 plus 50% of the applicant’s taxed costs. The second, sent by facsimile on 26 July 1996, was for $250,000 plus the applicant’s costs taxed on a party and party basis. The respondent rejected both offers by telephone on 29 July 1996. Neither party says its case turns on a mechanical operation of Order 23 of the Federal Court Rules relating to such offers.
The applicant seizes on the fact that questions of liability and damages were heard separately; liability issues were agitated over the second half of 1996 whilst the question of damages has been argued before me today. The applicant contends that the respondent’s offers of compromise relate to damages, not liability. Therefore, it says, they were not offers to compromise the litigation on liability.
The problem with this is that all commercial litigation is concerned with money. Even though the question of damages was not agitated in 1996, plainly the proceeding was instituted for the purpose of obtaining damages. Indeed, the respondent informs me without contradiction that the amount sought was more than $2,000,000. The offers of compromise were, therefore, clearly to settle the whole proceeding and the distinction the applicant draws between liability and damages cannot realistically be sustained in the circumstances.
The applicant also draws attention to the conduct of the 1996 trial. There are two aspects to this: first, the way in which the issues on liability were divided up and second the way in which evidence was made available during that trial.
As to the first aspect, I think it is by no means simple to divide the issues on liability into discrimination under s 20(1) of the Act and the exception to that provision created by s 20(2)(b). The applicant suggests that the respondent’s extensive cross-examination of Mr Boulos went largely to whether the respondent had discriminated in terms of s 20(1); an issue on which I found against the respondent. However, a good deal of that cross-examination, and the respondent’s cross-examination of the applicant’s other witnesses, also went to whether the respondent’s conduct fell within the s 20(2)(b) exception. On that issue I found for the respondent.
Regarding the second aspect, the applicant singles out the supplementary witness statement of Donald George Smith, signed 2 September 1996 and accepted into evidence as exhibit R27 on 3 September 1996. That statement was first available to the applicant more than a month after the 1996 trial had commenced. The applicant says that the statement was critical to establishing that the respondent’s conduct fell within the s 20(2)(b) exception; had it been available earlier, the applicant asserts that it would have approached the dispute between the parties differently.
I would find that submission more compelling if there were any evidence that seeing the statement led the applicant to any appreciation of the frailties of its case and moved it towards some compromise with the respondent. There is, however, no evidence of that presumably because the statement had no such effect.
As I said earlier, the applicant is not the successful party in this litigation. Indeed, it would be possible to order that the applicant pay the respondent’s costs of the proceeding. This is the order that the respondent seeks.
However, I should also have regard to the fact that the respondent made payments to the applicant close to and during the 1996 trial. The first of these was a payment for $48,636.12 made on 26 June 1996. The second was made on 4 September 1996 for $9,518.36. As the respondent submits, the applicant’s case against the respondent would not have entitled it to those payments. Nonetheless, I think they were made as a consequence of the applicant commencing this litigation; thus, they may be taken into account in determining the appropriate costs order.
I am indebted to counsel for the realistic way in which they have approached what is not an easy question. Having regard to the way in which it may be necessary to tax costs in this matter, it is best simply to determine the percentage of the respondent’s costs that it is appropriate the applicant be ordered to pay. I order the applicant pay the respondent 85% of the respondent’s costs in the proceeding.
I certify the preceding six (6) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Whitlam
Associate:
Dated: 1 July 1998
Counsel for the applicant: R W R Parker QC and G R Waugh Solicitors for the applicant: Stojanovich Solicitors Counsel for the respondent: R M Smith Solicitors for the respondent: Clayton Utz Date of hearing: 1 July 1998 Date of judgment: 1 July 1998
0
0
0