Trans Petroleum (Australia) Pty Ltd v White Gum Petroleum Pty Ltd - [2012] WASCA 165

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: TRANS PETROLEUM (AUSTRALIA) PTY LTD -v- WHITE GUM PETROLEUM PTY LTD [2012] WASCA 165

CORAM: PULLIN JA
BUSS JA
MURPHY JA

HEARD: 10 FEBRUARY 2012

DELIVERED : 23 AUGUST 2012

FILE NO/S: CACV 67 of 2011

BETWEEN: TRANS PETROLEUM (AUSTRALIA) PTY LTD
Appellant
AND
WHITE GUM PETROLEUM PTY LTD
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :ALLANSON J
Citation  :TRANS PETROLEUM AUSTRALIA PTY LTD -v- WHITE GUM PETROLEUM PTY LTD [2011] WASC 150
File No  :CIV 2585 of 2010

Catchwords:

Contract - Fuel reselling agreement - Power to terminate agreement on notice and without cause - Whether power must be exercised in good faith

Industry codes - Trade Practices (Industry Codes - Oilcode) Regulations 2006 (Cth) - Proper construction of s 32(11) and s 32(12) of the Oilcode

Trial process - Trial counsel for a party expressly conceded or abandoned a point - Whether the point may be relied upon on appeal

Trade practices - Unconscionable conduct in business transactions - Whether the respondent's action in terminating the fuel reselling agreement without having invoked the dispute resolution procedure under s 44 of the Oilcode or the mediation procedure under the fuel reselling agreement was unconscionable within s 51AC(1) of the Trade Practices Act 1974 (Cth) (repealed)

Legislation:

Acts Interpretation Act 1901 (Cth), s 13(1)
Legislative Instruments Act 2003 (Cth), s 6, s 13(1)(a)
Trade Practices (Industry Codes - Oilcode) Regulations 2006 (Cth), reg 3, sch 1: s 5, s 32, s 44
Trade Practices Act 1974 (Cth), s 51AC, s 51AE (repealed)

Result:

Appeal dismissed

Category: A

Representation:

Counsel:

Appellant: Mr P J Mugliston
Respondent: Mr J A Thomson

Solicitors:

Appellant: Tang Legal
Respondent: Holborn Lenhoff Massey

Case(s) referred to in judgment(s):

Acton Real Estate Pty Ltd v Shemiran Pty Ltd [2011] WASCA 33
Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (No 2) [2000] FCA 2; (2000) 96 FCR 491
Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51
Australian Competition and Consumer Commission v Simply No‑Knead (Franchising) Pty Ltd [2000] FCA 1365; (2000) 104 FCR 253
Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226; (2005) 148 FCR 132
Banque Commerciale SA (in liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279
Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187; (2001) 69 NSWLR 558
Central Exchange Ltd v Anaconda Nickel Ltd [2002] WASCA 94; (2002) 26 WAR 33
Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23
Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298
Mackay v Dick (1881) 6 App Cas 251
Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; (2010) 15 BPR 28,563
Metwally v University of Wollongong [1985] HCA 28; (1985) 59 ALJR 481
Page v The Central Queensland University [2006] QCA 478
Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234
Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596
Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84
Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; (2010) 41 WAR 318
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Trans Petroleum Australia Pty Ltd v White Gum Petroleum Pty Ltd [2011] WASC 150
United Group Rail Services Ltd v Rail Corporation (NSW) [2009] NSWCA 177; (2009) 74 NSWLR 618
Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15
Water Board v Moustakis [1988] HCA 12; (1988) 180 CLR 491
Wenzel v Australian Stock Exchange Ltd [2002] FCAFC 400; (2002) 125 FCR 570
Western Australian Land Authority v Simto Pty Ltd (Unreported, WASCA, Library No 980560, 25 September 1998)
Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598

PULLIN JA: I agree with Buss JA.
BUSS JA: The appellant is the registered proprietor of land at 4 Ocean Street, Kwinana Beach (the Site) on which is located a service station and a convenience store.
The respondent, trading under the business name 'Peak', established a uniform system and process (the Peak system) for the operation of convenience store businesses from service station sites.
Pursuant to a written agreement made in or about February 2008 (the Lease Agreement), the appellant granted to the respondent a lease of the Site for a term of 10 years commencing on 29 March 2008.
By a written agreement made on or about 18 February 2008 (the Peak Fuel Re-Selling Agreement), the respondent granted to the appellant a non‑exclusive licence to operate a convenience store business from the Site using the Peak system and to sell, by retail from the Site, Peak's petroleum products on a consignment basis.
The Lease Agreement and the Peak Fuel Re‑Selling Agreement were executed contemporaneously.
On 6 August 2010, the respondent served on the appellant a written notice terminating the Peak Fuel Re-Selling Agreement.
The appellant then commenced proceedings in the Supreme Court against the respondent claiming a declaration that the notice of termination was 'void and of no effect' and an injunction prohibiting the respondent from acting or purporting to act on the notice. The respondent counterclaimed for a declaration that the notice of termination was 'valid and of full force and effect'.
The proceedings were tried before Allanson J. His Honour dismissed the appellant's claim and made the declaration sought in the counterclaim. See Trans Petroleum Australia Pty Ltd v White Gum Petroleum Pty Ltd [2011] WASC 150.
The appellant has appealed to this court against the trial judge's decision. The respondent has filed a notice of contention in which it asserts that his Honour's decision should be upheld on additional grounds.

Relevant facts and circumstances culminating in the service of the notice of termination

When the Lease Agreement and the Peak Fuel Re‑Selling Agreement were made, Mark Quackenbush was the sole shareholder of the respondent.
On or about 14 March 2008, Mr Quackenbush sold his issued share in the capital of the respondent to Gull Trading Pty Ltd.
At all material times, Gull Trading Pty Ltd has been one of a group of companies known as the Gull group.
As at the date on which Mr Quackenbush sold the share to Gull Trading Pty Ltd, the Gull group had an interest in 39 convenience stores located on service station sites. As at that date, 30 of these convenience stores were operated using Gull's uniform system and process (the Gull system) and nine were operated using the Peak system.
During October 2009, the Gull group decided to use the Gull system in relation to all convenience stores in which it had an interest and to phase out the Peak system.
By April 2010, the service station and convenience store operated by the appellant was the only business still using the Peak system.
At four meetings of representatives of the appellant and representatives of the respondent held between 23 October 2009 and 23 July 2010, the respondent sought to persuade the appellant to execute a standard form Gull franchise agreement, pursuant to which the appellant would be obliged to use the Gull system instead of the Peak system. The appellant refused.
As I have mentioned, on 6 August 2010, the respondent served on the appellant a written notice terminating the Peak Fuel Re‑Selling Agreement.

The maintenance of the status quo

After the notice of termination was served, the appellant applied to the Supreme Court for interlocutory relief restraining the respondent from acting on the notice. It was unnecessary for the court to make an order because the respondent agreed to maintain the status quo pending resolution of the proceedings. This position has been maintained pending the determination of this appeal.

Relevant provisions of the Lease Agreement

The relevant provisions of the Lease Agreement are as follows.
The lease is for a term of 10 years commencing on 29 March 2008.
The rent for the first year of the term is $252,000. The rent for the second year of the term is $260,820. See item 7 of the Schedule to the Lease Agreement. Thereafter, the rent is to be reviewed annually.
On 28 March in the years 2010, 2012, 2014 and 2016, the rent is to be increased by 3.5% per annum on the rent payable in the year immediately preceding the review date in question. See cl 3.1(b).
On 28 March in the years 2011, 2013, 2015 and 2017, the rent is to be reviewed, in essence, by agreement between the parties and, failing agreement, is to be the then current market rent as determined by an independent expert, subject to the proviso that in no event should the rent payable after the rent review date in question be less than the rent payable prior to that rent review date. See cl 3.1(a). However, cl 3.1(b) states that on each of these review dates, 'the rental increment shall range from [3.5%] to [7%]'. The relevant provision of cl 3.1(b) appears to qualify the proviso in cl 3.1(a), so that on each of the review dates in question the rent is to be increased by not less than 3.5% and not more than 7%.
Clause 3.9 of the Lease Agreement is concerned with the use of the Site. It imposes on the respondent, as lessee, the following covenant:
To use the Leased Premises [that is, the Site] solely for the purpose of conducting the business set out in the Schedule under the trading name or names set out in the Schedule and not without the prior consent in writing of the Lessor (which consent will not be unreasonably withheld) to use the Leased Premises for any other purpose.
Items 9 and 10 of the Schedule to the Lease Agreement read:
9.Use of Leased Premises
Service station and convenience store including without limitation retail sale of petrol and oil products, retail sale of beverages, food, confectionery, magazines and newspapers and other consumable products and any ancillary or associated uses.
10.Trading name of Lessee
'Peak Petroleum' or such other name as the Lessee may deem fit from time to time during the Term.
The Lease Agreement does not contain any reference to the Peak Fuel Re‑Selling Agreement.

Relevant provisions of the Peak Fuel Re‑Selling Agreement

The relevant provisions of the Peak Fuel Re‑Selling Agreement are as follows.
In the agreement, the appellant is referred to as 'the Retailer' and the respondent as 'Peak'.
Clause 1.5 contains numerous definitions. It provides that the following words and expressions have the following meanings, unless inconsistent with the context:
1.5.1Commencement Date means the date specified in the Schedule;
…
1.5.4Oil Code means the Trade Practices (Industry Codes - Oil Code [sic: Oilcode]) Regulation [sic: Regulations] 2005 [sic: 2006]
…
1.5.6Daily Fee means a daily fee equal to the percentage of gross sales by the Retailer as specified in the Schedule which Daily Fee shall be reviewed on an annual basis unless otherwise agreed to by Peak and the Retailer;
…
1.5.13Peak System means a uniform system and process established by Peak for the operation of a convenience store and service station;
1.5.14Peak Sites mean the convenience stores and the service station premises specified in the Schedule;
1.5.15Peak Petroleum License means the license granted by Peak to the Retailer to operate convenience stores and the retail sale of Peak's Petroleum Products from the Peak Sites using the Peak System;
…
1.5.17Peak's Petroleum Products means all petroleum and fuel products sold by the Retailer on a consignment basis from the Peak Sites upon the terms and conditions agreed to between Peak and the Retailer from time to time;
…
1.5.19gross sales as used in this Deed shall mean all the Retailer's gross takings (including any goods and services tax, value added tax or similar government levy or impost) from the sale of all Products from the Peak Sites whether in the form of cash credit or otherwise using the Peak System;
1.5.20Lease means any right that Peak has to occupy the Peak Sites or any leases or license entered into by Peak to occupy or possess the Peak Sites;
…
1.5.22Manual means the operations systems and the occupational safety manual or manuals as may be developed and prepared by Peak and as may be varied by Peak from time to time and loaned by Peak to the Retailer;
1.5.23Products means the retail goods products including lubricants and services sold and provided from the Peak Sites using the Peak System but specifically excluding Peaks Petroleum Products.
…
1.5.25Term means the term of this Deed as specified in Clause 4 [sic: clause 3].
In the schedule to the agreement:
(a)the 'Commencement Date' is specified as 1 August 2008;
(b)the 'Peak Sites' are confined to the Site;
(c)the 'Daily Fee' is defined to mean 'a fee equal to 10% of gross turnover (inclusive of GST) of all sales from the [Site] other than Peak's Petroleum Products'.
In cl 2, the respondent grants the appellant a non‑exclusive licence, as follows:
Peak grants to the Retailer a non‑exclusive licence to operate a business under the Peak Petroleum License using the Peak System from the Peak Sites upon the further terms and conditions of this Deed.
Clause 3 specifies the term or duration of the agreement. It reads:
The Term, unless terminated as provided for in clause 14 [sic: clause 13] of this Deed, shall continue from month to month with either party entitled to terminate this Deed upon two (2) months written notice to the other.
Clause 4 makes provision for certain fees and other amounts to be payable by the appellant to the respondent:
4.1The Retailer must pay and account to Peak:
4.1.1The Daily Fee on a daily basis in the manner directed by Peak from time to time.
4.1.2Proceeds from the sale of all Petroleum Products to be paid on a daily basis in the manner directed by Peak.
4.2The Daily Fee shall be reviewed annually on each anniversary of the Commencement Date by agreement between Peak and the Retailer.
4.3Peak and the Retailer shall negotiate in good faith in the review of the Daily Fee but in any event by no amount greater than twelve percent (12%) of gross sales.
Clause 6.1 imposes certain duties and obligations on the appellant. It provides, relevantly:
The Retailer acknowledges that Peak's uniform standardised design and decor of the Peak Sites and uniformity of equipment and layout and adherence to the Peak System and the Manual (if any) are also all essential to the successful operation of the Peak Franchise, as such the Retailer agrees with Peak as follows:
…
6.1.5To operate the Peak Franchise in accordance with the Manual as amended from time to time and in accordance with such standards, specification and procedures established by Peak from time to time.
…
6.1.8To comply with all directions given by Peak as to the Retailer's use and occupation of the Peak Sites.
…
6.1.26To otherwise carry out and comply with such directions and requirements as determined by Peak from time to time.
Clause 13 is concerned with default by the appellant and termination by the respondent. Clause 13 does not deal with default by the respondent or termination by the appellant. No other provision of the agreement is concerned with default by the respondent.
By cl 13.1, relevantly:
If:
13.1.1The Retailer fails to perform any obligation imposed upon the Retailer by this Deed (other than those referred to in Clause 13.3) and Peak has given fourteen (14) days notice to the Retailer that Peak proposes terminating this Deed due to the Retailer's breach and Peak has advised the Retailer what is required to be done to remedy the breach; and
13.1.2That breach is capable of rectification, it is not totally rectified within fourteen (14) days after Peak gives written notice of such breach to the Retailer,
Peak may then terminate this Deed by written notice to the Retailer.
Clause 13.3 confers a right on the respondent to terminate the agreement, by notice to the appellant, immediately upon the occurrence of any of certain specified events.
By cl 13.4, upon termination or expiration of the agreement, 'whether due to breach or due to effluxation [sic: effluxion] of time', the appellant must immediately, amongst other things, cease to operate the Peak Petroleum Licence or use or apply the Peak system.
By cl 13.6, upon 'termination of [sic: or] expiration of this Deed whether due to breach [or] effluxion of time', amongst other things, the appellant will not be entitled to 'any payment, repayment of [sic: or] compensation for any goodwill attaching to the Peak Petroleum Licence'.
Clause 14 is concerned with the mediation of disputes between the parties. By cl 14.2, if either party 'has a dispute with the other party' that party may, at any time, invoke the procedures under cl 14.3. Clause 14.3 provides:
14.3.1The complainant must tell the respondent in writing:
14.3.1.1the nature of the dispute; and
14.3.1.2what outcome the complainant wants; and
14.3.1.3what action the complainant thinks will settle the dispute.
14.3.2The parties should then try to agree about how to resolve the dispute.
14.3.3For mediation under this Deed:
14.3.3.1If either parties [sic] cannot agree under sub-clause 14.3.2 within 3 weeks, either party may refer the matter to a mediation; and
14.3.3.2If the parties cannot agree about who should be the mediator, either party may ask the mediation adviser to appoint a mediator.
14.3.4For mediation under this Deed, either party may ask the mediation adviser to appoint a mediator.
14.3.5The mediator may decide the time and place for mediation.
14.3.6The parties must attend the mediation and try to resolve the dispute.
14.3.7Each party shall be liable for their own legal costs and shall contribute equally to the costs of the mediator.
Clause 24 refers to the Oilcode contained in Schedule 1 to the Trade Practices (Industry Codes ‑ Oilcode) Regulations 2006 (Cth). Clause 24 states:
Peak and the Retailer must:
24.1act in accordance with the Oil Code;
24.2enter into such further agreements as Peak may be required to ensure compliance with the Oil Code; and
24.3In the event that this Deed is silent on any matter contained in the Oil Code then the Oil Code shall apply to this Deed to the extent of such silence.
24.4In the event of any inconsistency with the provisions of this Deed and the Oil Code then the Oil Code shall apply to this Deed to the extent of any inconsistency.
By cl 28, the respondent agrees to pay the appellant a commission for the sale by the appellant of Peak Petroleum Products. The respondent may set off the commission against amounts owing from time to time by the appellant to the respondent.
The Peak Fuel Re‑Selling Agreement does not contain any reference to the Lease Agreement. It is true that the general language of the definition of 'Lease' in cl 1.5.20 of the Peak Fuel Re‑Selling Agreement would include the Lease Agreement, but this definition is not used or mentioned in the substantive provisions of the Peak Fuel Re‑Selling Agreement.

The issues raised on the pleadings

The appellant pleaded in its statement of claim that the power of termination under cl 3 of the Peak Fuel Re‑Selling Agreement (properly construed) could only be exercised by the respondent:
(a)for a proper purpose;
(b)honestly; and
(c)not capriciously or arbitrarily.

Alternatively, the appellant pleaded that the power of termination under cl 3 (properly construed) could not be exercised by the respondent for the purpose of avoiding the express obligation under cl 4 (read with the definition of Daily Fee in the Schedule to the Peak Fuel Re‑Selling Agreement), being to negotiate in good faith in the annual review of the Daily Fee and not to increase the Daily Fee to an amount greater than 12% of gross turnover (inclusive of GST) of all sales from the Site other than Peak's Petroleum Products.
Alternatively, the appellant pleaded that this limitation on the exercise by the respondent of the power of termination under cl 3 (properly construed) was to be implied in fact.
The appellant alleged, in par 9 of its statement of claim, that the respondent, in breach of cl 4 (properly construed), 'attempted to insist on a new agreement which would result in [the appellant] paying a Daily Fee greater than 12% of gross turnover'.
The appellant then pleaded, in pars 10 and 11 of its statement of claim, that:
(a)after the breakdown of negotiations between the parties pursuant to cl 4, the respondent served on the appellant the notice of termination; and
(b)the notice of termination was served 'in breach of the limitations on the exercise of the power of termination', and in breach of the term that the power of termination could only be exercised by the respondent for a proper purpose, honestly, and not capriciously or arbitrarily.
Next, the appellant alleged, in the alternative, that the respondent's conduct in purporting to terminate the Peak Fuel Re‑Selling Agreement constituted 'unconscionable conduct', within s 51AC (now repealed) of the Trade Practices Act 1974 (Cth), in that the respondent:
(a)did not act in good faith in serving the notice of termination; and
(b)served the notice without having invoked the dispute resolution procedure provided for in the Oilcode.
The appellant also pleaded the respondent's failure to comply with the Oilcode as a particular of the allegation that the respondent served the notice of termination in breach of the limitation on the exercise by it of the power of termination under cl 3 (properly construed). However, at trial, counsel for the appellant informed the trial judge that the appellant relied on the Oilcode only in relation to whether the respondent's conduct was unconscionable.
The appellant did not plead in its statement of claim that it had suffered any loss or damage as a result of the respondent's alleged breach of cl 4 (properly construed). The appellant made no claim for damages. The relief claimed by the appellant was confined to a declaration that the notice of termination was 'void and of no effect', an injunction prohibiting the respondent from acting or purporting to act on the notice, and costs.
The respondent, in its defence, denied that cl 3 was limited in the manner contended by the appellant. Also, the respondent denied that it had breached the obligation under cl 4.3 to negotiate in good faith in the annual review of the Daily Fee.
The respondent asserted that it served the notice of termination as a result of 'the decision by the Gull group to move all the convenience stores in which Gull had an interest to the Gull system, and that maintaining one store only under the Peak system caused Gull a wide range of accounting, administrative, marketing, promotion, IT and other problems' [24]. The respondent denied that its conduct was unconscionable.

The findings of fact at trial

At trial, the facts were, with some minor reservations, agreed between the parties.
The trial judge set out the agreed facts in his reasons [28]:
Entry into Relevant Agreements
1.The plaintiff and the defendant entered the lease.
2.The plaintiff and the defendant entered the Peak Fuel Re-Selling Agreement.
Gull Acquisition and Last Remaining Peak Station
3.Gull Trading Pty Ltd acquired all of the shares in the defendant on or about 14 March 2008.
4.When Gull Trading Pty Ltd acquired the shares in the defendant, Gull Trading Pty Ltd already operated 27 service stations under the Gull brand.
5.When Gull Trading Pty Ltd acquired the shares in the defendant, the defendant then operated 13 service stations under the Peak brand.
6.Ten of those service stations were owned and operated by the defendant. Three of those service stations were owned and operated by an agent of the defendant as franchises.
7.The three franchise Peak service stations operated using a single computer and accounting system, which was different to the Gull computer and accounting system.
8.Between March 2008 and August 2010, the defendant changed all of the Peak service stations, apart from the plaintiff's service station, to operating under the Gull system.
Differences between Accounting Operations for Peak Model and Gull Model
9.In daily operations under the Peak Fuel Re-Selling Agreement up to 6 August 2010:
(a)where a customer purchased products at the plaintiff's service station using a credit card or by means of an electronic funds transfer, the customer's payment would not be transferred to the plaintiff, but instead would be transferred directly to the defendant or the defendant's agent;
(b)where a customer purchased products at the service station by means of cash, the cash would be collected by the plaintiff and remitted daily to the defendant;
(c)consequently, the defendant was required to perform an accounting reconciliation to determine the net amount due to it under the Peak Fuel Re-Selling Agreement.
10.In daily operations under the proposed Gull single site operation franchise deed:
(a)where a customer purchases products at the service station using cash, a credit card or by means of an electronic funds transfer, the customer's payment will be transferred to the plaintiff;
(b)the plaintiff, and not Gull, will perform an accounting reconciliation of the net amount due to Gull, and remit a single net amount to Gull on a daily basis.
11.As a consequence of these differences, the administration of the Peak Fuel Re-Selling Agreement compared to the administration of the proposed Gull single site operation deed required:
(a)more work to be performed by the defendant;
(b)an additional employee to be employed by the defendant.
Differences between Purchasing and Promotion Practices for Peak Model and Gull Model
12.Under the Peak Fuel Re-Selling Agreement the plaintiff:
(a)purchased its own stock and inventory for non-fuel products sold in the convenience store at the service station;
(b) and (c) were not agreed
13.Under the proposed Gull single site operation deed, Gull:
(a)would purchase stock and inventory for non-fuel products sold in the convenience store at the service station;
(b)would set the prices for such stock and inventory sold in the convenience store at the service station;
(c)would market such stock and inventory under the Gull brand.
Brand Significance of Peak and Gull
14.Fuel and non-fuel products sold by the plaintiff under the Peak Fuel Re-Selling Agreement are sold under the banner of the Peak brand.
15.Fuel and non-fuel products which would be sold by Gull under the proposed Gull single site operation deed would be sold under the banner of the Gull brand.
Although the plaintiff did not challenge this proposed finding, the evidence (not contested) was that up to 13 stations continued to trade under the Peak brand, while operating under the Gull system.
16.The plaintiff did not agree to paragraph 16
Different Parties
17.It was proposed by the defendant that it should not be a party to the Gull single site operation deed, but instead that Gull Trading Pty Ltd should be a party to that deed.
Different Rates
18.The fee rates proposed by the Gull single site operation deed were different to the equivalent rates in the Peak Fuel Re-selling Agreement.
19.The rates proposed in the Gull single site operation deed were the standard rates for Gull franchises.
Meetings to Request Entry into Gull Single Site Operation Deed
20.There were four meetings at which the defendant requested the plaintiff to transfer to a new model for operating its service station. These were on 23 October 2009, 1 February 2010, 16 March 2010 and 23 July 2010.
21.The first three meetings were attended by Wong and Polok on behalf of the plaintiff and Copestake on behalf of the defendant. The fourth meeting was also attended by Stone on behalf of the defendant.
22.At the first meeting, Copestake informed the plaintiff's representatives that the Gull group wished to replace the Peak Fuel Re-Selling Agreement with a standard Gull Franchise agreement. There was no discussion about the rates payable under the Gull Franchise Agreement and Copestake did not provide the plaintiff's representatives with a copy of the standard Gull Franchise Agreement.
23.At the second meeting, Copestake provided the plaintiff's representatives with the standard multi-site operation franchise deed, but the effect of this document was not discussed at the meeting as the plaintiff's representatives had not had an opportunity to go through it.
24.At the third meeting, Wong and Copestake discussed the franchise fee and forecourt management fee. Copestake told Wong that the franchise fee (ie the equivalent of the daily fee in the Peak Fuel Re‑Selling Agreement) would increase to 14-15% per cent and Wong said that he was not happy about this.
25.On 22 July 2010, the day prior to the fourth meeting, Copestake emailed to the plaintiff a proposed Gull single site operation deed and associated documents.
26.Given this email, it is unlikely that, but unnecessary to resolve whether, a draft version of the proposed Gull single site operation deed was provided at the third meeting. One reason why it is unnecessary to resolve this issue is because the proposed Gull single and multi-site site operation deeds are in materially identical terms. (Mr Wong, in evidence, said he was given a draft copy of the Gull single site operation deed at the third meeting).
27.At the fourth meeting, Stone said that negotiations for transferring to the Gull franchise agreement had gone on too long and that there was a need for finality. He also in effect said that he had prepared a termination notice to end the Peak Fuel Re-Selling Agreement but that he did not propose to use it immediately. The parties negotiated about the proposed fees under the proposed Gull single site operation deed.
28.There is no doubt that by the end of the fourth meeting the negotiations were reaching a stage of being exhausted. It is unnecessary to resolve two small factual issues, namely whether Stone said that all incentives would be withdrawn and whether the meeting was left on the basis that there would be a further meeting on 6 August 2010.
29.There was a further telephone call between Polok and Copestake on 4 August 2010, which confirmed that the parties were not prepared to move further from their negotiating positions.
Termination Notice
30.On 6 August 2010, the defendant issued a termination notice.
Reason for Proposed Gull Single Site Operation Deed and Termination Notice
31.The Group General Manager for the Gull group of companies, the Group's Chief Financial Officer and the Group's Retail Manager each subjectively believed that the plaintiff should enter the proposed Gull single site operation deed for the following reasons:
(a)Gull Trading Pty Ltd wished to operate the plaintiff's service station under the Gull model rather than the Peak model;
(b)the continued operation of the plaintiff's service station under the Peak Fuel Re-Selling Agreement caused the defendant extra work which would not occur if the Gull single site operation deed was implemented, due to the additional accounting reconciliations which were required and the need to employ an additional staff member.
32.These reasons were the motivating or dominant reasons for the defendant requesting the plaintiff to enter the single site operation deed with Gull Trading Pty Ltd.
33.These reasons were the motivating or dominant reasons for the defendant issuing the notice of termination of the Peak Fuel Re‑Selling Agreement on 6 August 2010.
34.Such findings are consistent with the following:
(a)the changes to all other Peak stations operated by the defendant, subsequent to being purchased into the Gull group;
(b)the administrative inconvenience of different accounting and computer systems;
(c)negotiations with the plaintiff commenced in October 2009, and it took until the third meeting until new fee rates were even discussed.
No Dispute Notice / Mediation
35.The plaintiff has never issued any dispute notice pursuant to cl 14 of the Peak Fuel Re-Selling Agreement or the Oilcode.
36.The plaintiff participated in a court-based mediation, and the defendant's group general manager, retail manager and franchise manager attended that mediation. (original emphasis)
The appellant submitted to his Honour that he should find two additional facts (neither of which was disputed by the respondent):
(a)the Site was the only service station in the Gull group where the licensee was also the lessor of the site; and
(b)the respondent did not ask the appellant to make changes to the system the appellant was using, other than to the point of sale system, to make it more closely conform to the Gull system.
The trial judge was satisfied that the issues between the parties could properly be determined on the basis of the agreed facts and the two additional facts advanced by the appellant. His Honour was also satisfied that those facts were 'properly … made on the evidence, subject to one qualification' [30]. The qualification was that the references to 'the defendant' in the agreed facts might, in many instances, 'be accurately replaced by a reference to either Gull, or the defendant and Gull' [30].

The trial judge's decision on the issues raised on the pleadings

The trial judge rejected the appellant's submission as to the proper construction of cl 3 of the Peak Fuel Re‑Selling Agreement [36] ‑ [44].
His Honour found, on the facts, that in any event the respondent acted reasonably and in good faith in serving the notice of termination [46] ‑ [48].
The trial judge did not accept the appellant's submission that 'a position of practical equivalence could be reached by directions under the existing agreement' [49]. This submission was based on the provisions of cl 6.1.5, cl 6.1.8 and cl 6.1.26 of the Peak Fuel Re‑Selling Agreement. His Honour said that the different term or duration of each agreement was 'an obvious example where the agreements were substantially different' [49]. He added that 'the intended scope of the power to give directions was not to permit [the respondent] to require [the appellant] to operate under a different system from that specified in the licence' [49].
His Honour was satisfied that the respondent's requirement that the appellant 'come under the Gull agreement' was neither unreasonable nor unfair [50].
The trial judge concluded that the requirements for the implication, on an ad hoc basis, of the relevant constraints were not satisfied. His Honour observed that the court 'should be cautious about implying a term which the parties have not agreed to in circumstances where the parties have expressly provided for termination for cause, but have chosen to express the term of the agreement as terminable on notice and without cause' [53].
His Honour then considered whether the respondent's conduct was unconscionable.
After referring to relevant provisions of the Peak Fuel Re‑Selling Agreement (notably, cl 14) and relevant provisions of the Oilcode (notably, pt 4), the trial judge said it was common ground that the parties did not use the mediation procedure under the agreement or the Oilcode.
His Honour found that, in the circumstances, the respondent did not act unconscionably in failing to activate the mediation procedure under the agreement or the Oilcode. The appellant chose not to give a notice of dispute or to seek mediation. Instead, the appellant had immediate recourse to the courts. The respondent's failure to activate the dispute resolution procedure, where the appellant did not seek any resolution of the dispute under the Oilcode, was not sufficient to constitute unconscionable conduct [64].
The trial judge made these findings:
Specifically, I find that the notice of termination was not issued for the purpose of either avoiding the obligation to negotiate on the daily fee, or to force the plaintiff to accept an agreement that was not capped at 12%. Gull did require the plaintiff to enter a Gull Franchise Agreement, but I am not satisfied that it did so for any reason other than the perceived (and, to an extent, real) disadvantage of having one business only conducted under a different system from the other businesses in which it had an interest. This purpose does not, in my opinion, involve misconduct or a degree of unfairness that can properly be described as unconscionable. In particular, it is not sufficient that the defendant could, by direction under the Peak Fuel Re-Selling Agreement, have achieved some greater degree of uniformity in the operation of the two systems and in that way could have mitigated the problems it faced [65].
Finally, his Honour commented that nothing else in the respondent's conduct attracted relief for unconscionable conduct [66].
Accordingly, the trial judge dismissed the appellant's claim and made the declaration sought on the counterclaim.

The grounds of appeal

The appellant relies on six grounds of appeal. They read:
Ground 1
1.1His Honour erred in law in failing to properly interpret section 32 of the Oilcode as it applied to the position the parties were in, and in particular failed to properly conclude that the parties do not fall within the provisions of s 32 (11) but are governed by s 32 (12) with the result that the purported termination notice was ineffective in law.
Ground 2
2.1His Honour erred in concluding that the parties had agreed to the proposed Agreed Findings [31]-[34] mentioned in his Judgment, which dealt with the issue of motivation on the part of the Respondent, when no such issue had been conceded by counsel for the Appellant, and the issue of motivation was hotly contested at trial. Having made this error of fact His Honour went on to make inferences which compounded his mistake and failed to properly consider the Respondent's evidence on the issue of fact when he should have done so. The result of the misapprehension was that the Judgment was flawed on a critical issue ‑ the bono [sic] fides of the Respondent and its motives.
Ground 3
3.1His Honour erred in fact by not finding that in terminating the Fuel Re‑selling Agreement, the Respondent acted with the purpose of avoiding the daily fee cap of 12%.
Ground 4
4.1His Honour erred in law in not giving any or any sufficient weight to the words in clause 4 of the contract 'shall negotiate in good faith' and erred in law in not finding such wording required the Respondent to negotiate effectively in good faith when negotiating on the issue of increase in rates payable to it regardless of when in the chain of negotiations such issue did arise.
4.2His Honour erred in law in failing to recognise that the wording in clause 3 was ambiguous in light of the entirety of the document and particularly in view of clause 4.
4.3His Honour erred in law in failing to resolve an ambiguity in meaning of clause 3 in light of the operation of clause 4 and to recognise that [there] were two constructions open and further failed to:
(a)address that issue at all; and
(b)did not turn his mind to a second construction of clause 3, which whilst it might not have been the most obvious at first glance, was the one that would have been just and reasonable, and which would result [in] the Respondent not having the power to terminate as it purported to do.
Ground 5
5.1In light of the provisions contained in the Oilcode and the Re‑Selling Agreement itself His Honour erred in law in not concluding that the Respondent should have issued a notice to mediate and was in breach of its obligation to negotiate fairly and within the ceiling set out in clause 4 when it issued the Termination Notice pursuant to clause 3 when what it should have done was to issue a notice to mediate pursuant to clause 14.3.
Ground 6
6.1His Honour erred in law in not finding that the Fuel Re-selling Agreement fell into a class of contract in which the law would imply a term to act in good faith, and by failing to so find His Honour erred in law. Further, His Honour should have found that such an obligation to act in good faith would not have altered the substance of the Fuel Re‑selling Agreement by providing a benefit which was not agreed, as the parties had agreed to the benefit of a fee cap of 12% and such a benefit was in line with the obligation to act in good faith.

The respondent's notice of contention

The respondent, in its amended notice of contention, asserts that the trial judge's decision should be upheld on additional grounds, namely, that:
1.on a proper construction of clause 3 of the Peak Fuel Re‑Selling Agreement, no requirement of good faith applies to limit the exercise of the self‑interested termination power contained in this clause;
2.a dispute between the parties which attracted the operation of s 44 of the Oilcode (being a code of conduct prescribed under s 51AE of the Trade Practices Act 1974 (Cth)) was only created after the respondent issued the termination notice on 6 August 2010.

The merits of appeal ground 1

Appeal ground 1 raises an issue, not taken at trial, as to the proper construction of s 32(11)(c) and s 32(12) of the Oilcode.
For the purposes of s 51AE (repealed) of the Trade Practices Act, the Oilcode was prescribed and was a mandatory code of conduct. See reg 3 of the Trade Practices (Industry Codes ‑ Oilcode) Regulations.
The respondent conceded on the appeal (correctly, in my opinion) that the Peak Fuel Re‑Selling Agreement was a 'fuel re‑selling agreement', within the meaning given in s 5 of the Oilcode.
The appellant is the 'retailer' and the respondent is the 'supplier' under the Oilcode.
The Peak Fuel Re‑Selling Agreement was made after the date of commencement of the Oilcode. It is therefore unnecessary to refer to s 32(1) ‑ s 32(3) of the Oilcode, which are concerned with fuel re‑selling agreements made before the date of commencement of the Oilcode.
The other provisions of s 32 read, relevantly:
Fuel re‑selling agreements entered into on or after the date of commencement of this code
(4)A fuel re‑selling agreement that is entered into on or after the date of commencement of this code must have a duration of at least 5 years, unless subsection (5) or (11) applies.
(5)A fuel re‑selling agreement that is entered into on or after the date of commencement of this code that requires the retailer to purchase fuel from the supplier or that gives the supplier an entitlement to sell fuel to the retailer, and that relates to a retail site owned or leased by the supplier, must have:
(a)a duration of at least 5 years; and
(b)a further duration, as extended by the exercise of 1 or more options to renew the agreement, of at least 4 years.
Renewal of fuel re‑selling agreements
(6)A supplier must not fail or refuse to renew a fuel re‑selling agreement mentioned in subsection (2) or (5) unless the supplier has decided that it will:
(a)lease the site on which the fuel re‑selling business is to be carried on for a purpose other than the retail sale of motor fuel; or
(b)dispose of the site on which the fuel re‑selling business is to be carried on; or
(c)operate the site on which the fuel re‑selling business is to be carried on for a purpose other than the retail sale of motor fuel.
…
(10)Part 4 applies to a dispute arising from:
(a)a failure by a supplier to renew a fuel re‑selling agreement; or
(b)a failure by a supplier and retailer to agree on terms and conditions to apply to a renewed fuel re‑selling agreement.
Circumstances in which a fuel re‑selling agreement may have a different duration
(11)A supplier and a prospective retailer may agree on a different duration for a fuel re‑selling agreement if:
(a)the site on which the fuel re‑selling business is carried on is leased under a lease that will expire:
(i)within 5 years after the agreement commences (for an agreement mentioned in subsection (4)); or
(ii)within 9 years after the agreement commences (for an agreement mentioned in subsection (5)); or
(b)the supplier has decided that, within 5 years after the agreement commences (for an agreement mentioned in subsection (4)), or within 9 years after the agreement commences (for an agreement mentioned in subsection (5)) it will:
(i)lease the site on which the fuel re‑selling business is to be carried on for a purpose other than the retail sale of motor fuel; or
(ii)dispose of the site on which the fuel re‑selling business is to be carried on; or
(iii)operate the site on which the fuel re‑selling business is to be carried on for a purpose other than the retail sale of motor fuel; or
(c)the total initial non‑refundable amount that the prospective retailer must pay, or agree to pay, to the supplier and any associates of the supplier, before commencing operations under a new or renewed fuel re‑selling agreement, would be less than $20 000, excluding any of the following amounts:
(i)payment for motor fuel at or below the usual wholesale price;
(ii)payment of the usual wholesale price of motor fuel taken on consignment;
(iii)payment at market value for the purchase or lease of real property, fixtures, equipment, services or supplies that are needed to operate under the fuel re‑selling agreement;
(iv)security deposits for fuel stocks, real property, fixtures, equipment, services or supplies provided by the supplier.
Note Paragraph (11) (c) allows for a flexible duration of an agreement where less than $20 000 is paid up‑front to the supplier (for example, for goodwill or as 'key money') as a condition of entering into the agreement.
(12)If:
(a)a supplier and a prospective retailer agree on a different duration for a fuel re‑selling agreement that is entered into on or after the date of commencement of this code; but
(b)the reason for the different duration does not comply with subsection (11);
the fuel re‑selling agreement is taken to have a duration of 5 years (for an agreement mentioned in subsection (4)) or 9 years (for an agreement mentioned in subsection (5)).
(13)If a supplier and a retailer agree to terminate a current fuel re‑selling agreement before the time at which it would otherwise expire, this section does not require the agreement to continue until that time.
(14)If a supplier and a retailer agree as described in subsection (13):
(a)the supplier and another retailer may enter a fuel re‑selling agreement (a temporary agreement) that has a duration of not more than 6 months; and
(b)a site cannot be the subject of consecutive temporary agreements; and
(c)on the expiry of the temporary agreement, the supplier must:
(i)offer the retailer a fuel re‑selling agreement that has a duration that complies with this section; or
(ii)comply with section 39.
The notes in the Oilcode (for example, the note to s 32(11)) are part of the Oilcode. See s 13(1) of the Acts Interpretation Act 1901 (Cth) read with s 6 and s 13(1)(a) of the Legislative Instruments Act 2003 (Cth) and s 51AE (now repealed) of the Trade Practices Act.
By s 32(4), a fuel re‑selling agreement must have a duration of at least five years, unless s 32(5) or s 32(11) applies.
By s 32(5), a fuel re‑selling agreement must have a duration of at least five years, with an option or options to renew for a further four years, where:
(a)the agreement requires the retailer to purchase fuel from the supplier or the agreement gives the supplier an entitlement to sell fuel to the retailer; and
(b)the agreement relates to a retail site owned or leased by the supplier.
Section 32(12) provides that where a supplier (in the present case, the respondent) and a prospective retailer (in the present case, the appellant) agree on a different duration for a fuel re‑selling agreement, but 'the reason for the different duration does not comply with [s 32(11)]', the agreement is taken to have a duration of five years (for an agreement mentioned in s 32(4)) or nine years (for an agreement mentioned in s 32(5)).
Section 32(11) sets out a number of disjunctive circumstances in which a supplier and a prospective retailer may agree on a different duration for a fuel re‑selling agreement. Section 32(11)(a) is concerned with an objective fact, namely, whether the site on which the fuel re‑selling business is carried on is leased under a lease and, if so, whether the lease will expire within the period stipulated in s 32(11)(a). Section 32(11)(b) relates to whether the supplier has made a decision as specified in s 32(11)(b). Section 32(11)(c) focuses on whether the prospective retailer must pay, or agree to pay, to the supplier and any associates of the supplier, before commencing operations under a new or renewed fuel re‑selling agreement, a total initial non‑refundable amount of less than $20,000, after excluding the amounts specified in s 32(11)(c).
The effect of s 32(12)(b) is that if none of the alternatives in s 32(11) applies or is satisfied, then the parties will have agreed on 'a different duration for a fuel re‑selling agreement' (within s 32(12)(a)) for a reason that does not comply with s 32(11). In other words, s 32(12)(b) states in substance that if the parties have agreed on a different duration, but none of pars (a), (b) or (c) of s 32(11) applies or is satisfied, then the reason for the different duration does not comply with s 32(11).
By s 32(11)(c), relevantly, a fuel supplier and a prospective retailer may agree on a different duration from that prescribed by s 32(4) or s 32(5) if the 'total initial non‑refundable amount' that the prospective retailer must pay, or agree to pay, etc would be less than $20,000.
The expression 'total initial non‑refundable amount' is not defined in the Oilcode or the Trade Practices Act. The expression does not appear elsewhere in the Oilcode. A similar expression, 'non‑refundable money', is, however, used in s 19(1) of the Oilcode.
Some guidance as to amounts which may fall within the concept of a 'total initial non‑refundable amount' in s 32(11)(c) is given by the note to that provision. It states that s 32(11)(c) allows for a flexible duration of an agreement where less than $20,000 'is paid up‑front to the supplier (for example, for goodwill or as 'key money') as a condition of entering into the agreement'. The term 'key money' is familiar in the context of relations between lessors and lessees. It describes an amount payable by a prospective lessee for the opportunity of obtaining a leasehold interest in the lessor's property.
In the appeal, counsel for the appellant conceded (correctly, in my opinion) that no amount was payable, paid or agreed to be paid by the appellant to the respondent or any associates of the respondent before commencing operations under the Peak Fuel Re‑Selling Agreement.
Counsel for the appellant advanced two arguments. First, he argued that the absence of any requirement or agreement to pay a 'non‑refundable amount … before commencing operations' under the Peak Fuel Re‑Selling Agreement was not sufficient to satisfy the provision in s 32(11)(c) that 'the total initial non‑refundable amount that the prospective retailer must pay, or agree to pay, to the supplier … before commencing operations … would be less than $20,000' (appeal ts 37). Secondly, he argued that s 32(12), read with s 32(11), requires the parties to state in their fuel re‑selling agreement the reason for the different duration of the agreement and, in the absence of such a statement, the agreement is taken to have a duration of five years (for an agreement mentioned in s 32(4)) or nine years (for an agreement mentioned in s 32(5)) (appeal ts 36, 45, 47).
The essence of counsel for the appellant's first argument was that there is a distinction between a requirement or an agreement to pay an amount less than $20,000, on the one hand, and an agreement to pay no amount or the absence of a requirement or an agreement to pay an amount, on the other. According to counsel, as the appellant and the respondent did not agree to pay an amount, they did not agree to pay a 'total initial non‑refundable amount' of less than $20,000 (emphasis added). On the construction of s 32(11)(c) contended for on behalf of the appellant, an 'amount' within s 32(11)(c) does not include no amount.
In my opinion, counsel for the appellant's first argument is without merit. Where a prospective retailer is not required to pay, and has not agreed to pay, to a supplier, or any associates of the supplier, any initial non‑refundable amount before commencing operations under a new or renewed fuel re‑selling agreement, the amount of the initial non‑refundable amount, within s 32(11)(c), may properly be described, as a matter of ordinary language, as the amount of zero. No reason is discernible from the apparent object or purpose of s 32, considered as a whole, for distinguishing, in the context of s 32(11)(c), between a requirement or an agreement to pay an initial non‑refundable amount of between $1 and $20,000, on the one hand, and the absence of a requirement or an agreement to pay an initial non‑refundable amount, on the other. No reason for drawing such a distinction exists within s 32 as a matter of linguistics, policy or logic.
The essence of counsel for the appellant's second argument was that the word 'reason', within the phrase 'the reason for the different duration does not comply with subsection (11)' in s 32(12)(b), indicates that some explicitness is necessary within the agreement (appeal ts 47).
In my opinion, counsel for the appellant's second argument is also without merit. This argument involves the implication of a substantive additional requirement in s 32(12). The existence of such a requirement is not mandated by the statutory text.
Further, the existence of such a requirement is inconsistent with the definition of 'fuel re‑selling agreement' in s 5. By s 5(1)(a), a fuel re‑selling agreement is an agreement:
that takes the form, in whole or part, of any of the following:
(i)a written agreement;
(ii)an oral agreement;
(iii)an implied agreement.
So, a fuel re‑selling agreement may take the form, in whole, of an implied agreement. The implication contended for by the appellant cannot be reconciled with the specific stipulation in s 5(1)(a) that a fuel re‑selling agreement may be wholly implied.
If it had been intended to include the alleged requirement in s 32(12), express provision could easily have been made for it. Section 32 is notable for the detail in, and the particularity of, its provisions.
Appeal ground 1 fails.

The merits of appeal ground 2

Appeal ground 2 alleges that the trial judge wrongly concluded that there was an agreement between the appellant and the respondent as to certain proposed findings of fact. Ground 2 also alleges that his Honour wrongly proceeded on the basis that the appellant had conceded that the respondent acted with bona fide motives.
During closing submissions at trial, the following exchange occurred between his Honour and counsel for the appellant (who was not counsel for the appellant on the appeal):
ALLANSON J:   Now, if I'm going to find that the power of termination in clause 3 of the [Peak Fuel Re‑Selling Agreement] was in some way invalidly exercised, there must be some basis upon which I find that. It appears that you no longer contend that it was exercised dishonestly or in bad faith.
HOLLER, MR:   Correct.
ALLANSON J:   You contend that it was exercised not for a proper purpose and that meaning effectively the same thing as capriciously or arbitrarily because it's not exercised for a purpose which is found within the contractual relations between the parties.
HOLLER, MR:   Yes because it could be achieved in the contract itself, yes (ts 209)
It is apparent from this passage that counsel for the appellant at the trial expressly conceded that he did not contend for a finding of bad faith or dishonesty. He abandoned the point.
An appellant is bound by the conduct of his or her case at trial. In Metwally v University of Wollongong [1985] HCA 28; (1985) 59 ALJR 481, Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ said:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so (483). (emphasis added)
See also Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1, 7 ‑ 8 (Gibbs CJ, Wilson, Brennan & Dawson JJ); Water Board v Moustakis [1988] HCA 12; (1988) 180 CLR 491, 497 (Mason CJ, Wilson, Brennan & Dawson JJ); Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598 [50] ‑ [52] (Gleeson CJ, McHugh & Gummow JJ).
The juridical basis of the principles enunciated by the High Court in these cases appears to derive, in part, from public policy considerations directed to ensuring finality in litigation and, in part, from the doctrine of estoppel by election in the conduct of litigation. However, to the extent that some aspects have their origin in estoppel by election, the relevant consideration is not that the other party is put in a worse position, but that he or she may have been put in a worse position. See Banque Commerciale SA (in liq) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 284 (Mason CJ & Gaudron J).
Where counsel for a party expressly concedes or abandons a point at trial, the principles to which I have referred in the context of advancing a new case on appeal, apply, with even stronger force, if the party seeks to agitate the point on appeal. This is especially the case where the point concerns an issue of fact or an issue of mixed fact and law. See Western Australian Land Authority v Simto Pty Ltd (Unreported, WASCA, Library No 980560, 25 September 1998), 28 (Malcolm CJ, Ipp & Wallwork JJ agreeing); Page v The Central Queensland University [2006] QCA 478 [12] ‑ [16] (Keane JA, Williams JA & White J agreeing).
In the present case, the express concession or abandonment by counsel for the appellant at the trial concerned an issue of fact. The appellant is bound by the conduct of its case at trial. There is no reason, in principle or fairness, to permit the appellant to resile on the appeal from its stance at first instance. Indeed, it would be contrary to principle and unfair to the respondent to permit the appellant to contest now a significant factual dispute that it was unwilling to litigate at the trial.
During closing submissions at the trial, counsel for the appellant made this submission to his Honour in relation to a number of the proposed findings of fact, including those set out in pars 31 ‑ 34 of the proposed findings:
HOLLER, MR: … Over the page, we don't quibble with 27, 28, 29 and 30. We don't make any comment on 31 through to 34 ‑ it's a matter for your Honour; 35 we agree with. If I can take instructions on 36, your Honour? … (ts 221).
It is apparent from this passage that counsel for the appellant at the trial merely informed the trial judge that pars 31 ‑ 34 contained matters to be dealt with by his Honour. Counsel neither agreed nor disagreed with them.
In the event, the trial judge positively formed the view that he could and should make the proposed findings of fact. His Honour said that the facts in question were 'properly … made on the evidence, subject to one qualification' [30]. The qualification is not material for present purposes. See [58] above. Later in his reasons, he noted:
I have already found that, on the facts, [the respondent] acted in good faith [61].
The proposed findings in pars 31 ‑ 34, which his Honour specifically made, related to the motivating or dominant reasons for the respondent requesting the appellant to enter the Gull single site operation deed, and for the respondent serving the notice of termination. The relevant findings were as follows:
(a)Gull Trading Pty Ltd wished to operate the service station under the Gull computer and accounting system rather than the Peak computer and accounting system; and
(b)the continued operation of the service station under the Peak Fuel Re‑Selling Agreement caused the respondent extra work (which would not occur if the Gull single site operation deed was implemented) due to the additional accounting reconciliations that were required and the need to employ an additional staff member.

None of the specific findings of fact made by his Honour, in terms of the proposed findings set out in pars 31 ‑ 34, is challenged in any of the grounds of appeal. The appellant merely alleges in ground 3 that his Honour erred by not making a finding that the respondent acted with the purpose of avoiding the Daily Fee cap of 12%.
The appellant, by failing to challenge the trial judge's specific findings of fact in its grounds of appeal, has ignored the circumstance that, at trial, two competing explanations were open and advanced in relation to the respondent's conduct. The appellant contended, in substance, that the explanation for the respondent serving the notice of termination was its desire to avoid the Daily Fee cap of 12%. On the other hand, the respondent contended, in substance, that the explanation for its serving the notice of termination was the administrative difficulty and extra cost of operating two different computer and accounting systems. His Honour preferred the respondent's explanation on this issue.
The notice of termination was signed by Errol Stone on behalf of the respondent. The notice was served under cover of a letter dated 6 August 2010 signed by Mr Stone and Darryl Copestake on behalf of the respondent. Mr Stone was the respondent's retail manager and Mr Copestake was its franchise manager. The respondent called them as witnesses at the trial.
Counsel for the appellant's cross‑examination of Mr Copestake was very brief. It comprised less than half a page of transcript (ts 147). Counsel did not put to Mr Copestake that the notice of termination was sent for the subjective purpose of avoiding the Daily Fee cap of 12%.
Counsel for the appellant's cross‑examination of Mr Stone was more extensive. However, the only cross‑examination relating to the alleged improper purpose was as follows:
I put it to you that the real objective about getting a signature on a bit of paper rather than just cooperating and telling the guys what to do to solve your problems was because you wanted to get away from that 12 per cent cap that Jimmy Wong said he's not going above ‑ he's going to the maximum but he's not going over it - and you said, 'Well, sign it or I'm terminating. I've got the notice here.' That's an accurate summary, isn't it?---No. The whole focus ‑ it wasn't until later in the stage we were talking about the actual percentages, the whole focus was to get them over to the common platform is [sic] all the other sites (ts 162 ‑ 163).
As I have mentioned, his Honour rejected the appellant's allegation of improper purpose and counsel for the appellant expressly abandoned the allegation of bad faith or dishonesty.
The respondent called Michael Mullins as a witness. At the material time, he was the general manager of fuels and, later, the general manager of Gull Petroleum. He was not cross‑examined in relation to the alleged improper purpose or the alleged bad faith or dishonesty.
The rule in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 was not raised by the appellant at trial or on appeal in relation to any witnesses not called by the respondent.
The factual foundation for the trial judge's finding that the respondent acted reasonably and in good faith, was as follows:
First, the meetings between the parties were conducted in circumstances where a new entity had acquired the businesses of Peak. They were not held to negotiate on the annual review of fees ‑ the question of fees did not arise until the plaintiff raised it at the third meeting: Agreed findings [20] ‑ [25]. The parties were negotiating whether and how the plaintiff would enter an agreement which would bring it into conformity with other businesses within the Gull Group, and which would require it to use the Gull system.
Second, the defendant relied on the practical difficulties and extra expense in conducting its business that arise from the differences between the two agreements, in requiring the plaintiff to come under the Gull system ‑ including the requirement for the equivalent of an extra employee: see Agreed Findings [9] ‑ [19], [31] ‑ [32].
Third, there were important differences between the Peak Fuel Re-Selling Agreement and the proposed Gull agreement, other than the level of daily fees:
1.The parties to the agreement are different, in that Gull Trading Pty Ltd and not the defendant is the contracting party.
2.The term of each agreement is different. The Gull agreement provides for a one year term. That term is not subject to earlier termination other than in the circumstances set out in cl 19 of that agreement ‑ in effect termination for cause, either after notice of a breach of the agreement, or immediate on the occurrence of certain defined events.
3.The Gull agreement provides for the franchisee to pay a goodwill fee to Gull on the transfer, sale or assignment of the business. There is no equivalent provision in the Peak Fuel Re-Selling Agreement.
4.There are detailed provisions for the payment of franchise fees and proceeds of sale of petroleum products in the Gull agreement which are not in the Peak Fuel Re-Selling Agreement;
5.Under the Gull Agreement the franchise fee (the equivalent of the daily fee under the Peak Agreement) is calculated under a formula set out in a schedule to the agreement and reviewed every two months [46] ‑ [48].
His Honour did not make the errors attributed to him in appeal ground 2.
In any event, the findings of fact in question were reasonably open to the trial judge and there is no basis for setting them aside.
Appeal ground 2 fails.

The merits of appeal ground 3

Appeal ground 3 alleges that the trial judge erred in fact by not finding that, in terminating the Peak Fuel Re‑Selling Agreement, the respondent acted with the purpose of avoiding the Daily Fee cap of 12%.
It is strictly unnecessary to determine appeal ground 3 in that, for the reasons I give in the course of considering appeal grounds 4 and 6, the respondent's right of termination under cl 3 of the Peak Fuel Re‑Selling Agreement is not limited in the manner asserted by the appellant.
Appeal ground 3 was, however, fully argued by the parties and I will therefore express my opinion on it.
As I have explained in the course of considering appeal ground 2, none of the specific findings of fact made by his Honour, in terms of the proposed findings set out in pars 31‑ 34, is challenged in any of the grounds of appeal. The appellant merely alleges in appeal ground 3 that his Honour erred by not making a finding that the respondent acted with the purpose of avoiding the Daily Fee cap of 12%.
Also, as I have said in considering appeal ground 2, the appellant, by failing to challenge the trial judge's specific findings of fact in its grounds of appeal, has ignored the circumstance that, at trial, two competing explanations were open and advanced in relation to the respondent's conduct in serving the notice of termination. His Honour preferred the respondent's explanation. In any event, despite the deficiencies in the grounds of appeal, it was reasonably open to his Honour to arrive at that conclusion. See my reasons at [108] ‑ [116] above, including the trial judge's finding at [46].
Counsel for the appellant's submission to the effect that the respondent could have achieved its purpose of avoiding the inconvenience and additional cost of administering two different computer and accounting systems, by directing the appellant under the Peak Fuel Re‑Selling Agreement to change from the Peak model to the Gull model, is misconceived.
As I have mentioned, counsel for the appellant relied, in support of this submission, upon cl 6.1.5, cl 6.1.8 and cl 6.1.26 of the Peak Fuel Re‑Selling Agreement. These provisions conferred on the respondent, in essence, power to give directions to the appellant (either directly or by amending relevant manuals) including directions as to the operation of the Peak franchise, and as to the use and occupation of the Site.
However, scrutiny of the Peak Fuel Re‑Selling Agreement as a whole indicates that a fundamental feature of the bargain embodied in the agreement was that Peak had established a uniform system and process for the operation of convenience store businesses from service station sites, and that the parties had agreed that the respondent would grant the appellant a licence to operate a convenience store business, from the service station at the Site, using that uniform system and process.
In my opinion, the powers conferred on the respondent under cl 6.1.5, cl 6.1.8 and cl 6.1.26 did not authorise the respondent to direct the appellant to adopt a new or different system or process which was fundamentally different from, or not recognisable as, the Peak system and process in existence when the agreement was made.
The Gull system was fundamentally different from, or not recognisable as, the Peak system. See pars 9 ‑ 15 of the proposed findings.
Further, as his Honour noted, 'a position of practical equivalence' could not be reached by directions under the Peak Fuel Re‑Selling Agreement. That agreement and the proposed Gull agreement were substantially different. An obvious example was the different term or duration of each agreement [49].
In any event, even if the respondent's purpose of avoiding the cost and inconvenience of two different systems might have been achieved differently (in particular, by a direction to the appellant under the Peak Fuel Re‑Selling Agreement to cease using the Peak system and commence using the Gull system), this does not, of itself, establish that the respondent did not genuinely have that purpose when it attempted to negotiate a new agreement with the appellant and when it served the notice of termination.
Appeal ground 3 fails.

The merits of appeal grounds 4 and 6: notice of contention ground 1

It is convenient to consider appeal grounds 4 and 6, and (to the extent necessary) notice of contention ground 1, together.
Appeal grounds 4 and 6 allege in effect that the trial judge erred in his construction of cl 3 of the Peak Fuel Re‑Selling Agreement. In substance, it is alleged that:
(a)cl 3 is ambiguous when read in the context of cl 4 and the agreement as a whole;
(b)the power of termination under cl 3 must be exercised in good faith;
(c)the requirement that the power of termination be exercised in good faith arises upon a proper construction of the agreement as a whole, alternatively is implied by law; and
(d)cl 3, properly construed, prohibited the respondent from terminating the agreement on two months' notice if its purpose in terminating was to avoid the Daily Fee cap of 12%.
The construction of a written agreement involves ascertaining what a reasonable person would have understood the parties to the agreement to mean. Consideration should ordinarily be given not only to the language of the agreement, but also to the surrounding circumstances known to the parties when the agreement was executed, and the apparent purpose and object of any transaction created by or evidenced in the agreement. See Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 [40] (Gleeson CJ, Gummow, Hayne, Callinan & Heydon JJ)
The words of a clause in a written agreement are to be given the most appropriate meaning which they can legitimately bear. See Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99, 109 (Gibbs J).
In my opinion, the trial judge was correct in rejecting the appellant's submissions as to the proper construction of cl 3 of the Peak Fuel Re‑Selling Agreement. My reasons are as follows.
First, the fundamental element of the transaction evidenced by the Peak Fuel Re‑Selling Agreement was the granting by the respondent to the appellant of a non‑exclusive licence to operate a convenience store business from the Site using Peak's uniform system and process and to sell by retail from the Site Peak's petroleum products on a consignment basis.
Recital B of the agreement records that the respondent has agreed to grant the appellant the licence 'for the term specified' in the agreement and 'subject further to the terms and conditions referred to' in the agreement. The 'term' or duration of the agreement is specified in cl 3.
By cl 2.1 of the agreement, the respondent granted the appellant the licence. The grant is expressed to be 'upon the further terms and conditions of this Deed'. Those further terms and conditions include the provisions of cl 3, which, as I have mentioned, specify the term or duration of the agreement.
The essence of cl 3 is that, unless the agreement (and the non‑exclusive licence) is terminated for cause under cl 13, the agreement (and the non‑exclusive licence) 'shall continue from month to month', with either the appellant or the respondent being entitled to terminate the agreement (and the non‑exclusive licence) upon two months' written notice to the other.
The language of cl 3, read with cl 2.1 and the other provisions of the agreement as a whole, is relevantly unconfined. Clause 3 confers on each of the appellant and the respondent a right to terminate the agreement and the non‑exclusive licence without cause. That is, either party is entitled, at any time, to terminate for any reason, notwithstanding that the other party is not in breach, upon two months' written notice.
Secondly, cl 3 is to be compared to and contrasted with cl 13. Clause 13 contains detailed provisions for the respondent to terminate in essence upon the appellant committing a serious breach of the agreement or upon the occurrence of any of certain specified events.
The parties agreed that each of them should have a right of termination without cause under cl 3 and the respondent should also have a right of termination for cause under cl 13.
Clause 13.4 and cl 13.6 expressly distinguish between 'termination' of the agreement 'due to breach', on the one hand, and 'expiration' of the agreement 'due to effluxion of time', on the other. The reference to termination for breach is to the provisions of cl 13.1, cl 13.2 and cl 13.3 and the reference to expiration due to effluxion of time is to the provisions of cl 3.
Clause 3 was not intended to replicate cl 13. There is no basis in the contractual language, or the apparent purpose or object of the transaction it creates or evidences, for concluding that cl 3 was intended to permit termination only for proper cause.
Thirdly, the agreement does not require any reasons to be given where a party exercises the right of termination under cl 3. This is consistent with the general and unfettered nature of the right of termination as conveyed by the language of its expression.
Fourthly, cl 3 is not ambiguous when read in the context of cl 4 and the agreement as a whole. Clause 4.2 provides for the Daily Fee to be reviewed annually by agreement between the appellant and the respondent. Clause 4.3 provides that the parties shall negotiate in good faith in the review of the Daily Fee. These provisions established a framework for the review of the Daily Fee during the subsistence of the agreement. Clause 4 does not qualify or derogate from the right of either party to terminate without cause under cl 3 or the right of the respondent to terminate for cause under cl 13.
Fifthly, although the Lease Agreement does not refer to the Peak Fuel Re‑Selling Agreement, and the Peak Fuel Re‑Selling Agreement does not refer to the Lease Agreement, both agreements were executed contemporaneously and they are components of a composite commercial transaction.
Where a commercial transaction is implemented by several contracts or documents, all of the contracts or documents may be read together for the purpose of ascertaining their proper construction and legal effect, at least where the contracts or documents are executed contemporaneously or within a short period. See EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23 [104] (Buss JA, Owen & Newnes JJA agreeing) and the authorities there cited.
Under the Lease Agreement, the appellant is the lessor and the respondent is the lessee of the Site for a term of 10 years. I have referred to the rent payable for the lease and the annual rent reviews. See [22] ‑ [24] above. It is readily understandable, from a commercial perspective, that a person in the position of the respondent as lessee, who is bound to pay rent for a term of 10 years with annual increases in the rent, would wish to reserve to itself a right to terminate the Peak Fuel Re‑Selling Agreement without cause if, for example, the respondent's financial rate of return on the transaction as a whole were to become uneconomic as a result of the limitation on increases in the Daily Fee payable by the appellant under the Peak Fuel Re‑Selling Agreement.
Sixthly, the Court of Appeal of New South Wales has decided in numerous cases that a duty of good faith, both in performing obligations and exercising rights, may by implication be imposed on the parties to a contract. See Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234, 263 ‑ 270; Alcatel Australia Ltd v Scarcella (1998) 44 NSWLR 349, 363 ‑ 369; Burger King Corporation v Hungry Jack's Pty Ltd [2001] NSWCA 187; (2001) 69 NSWLR 558 [186]; United Group Rail Services Ltd v Rail Corporation (NSW) [2009] NSWCA 177; (2009) 74 NSWLR 618 [58] ‑ [61]; Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service [2010] NSWCA 268; (2010) 15 BPR 28,563 [11] ‑ [12], [146] ‑ [147]; Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 [144].
However, the necessity for the implication of a duty of good faith in the context of commercial contracts, both in performing obligations and exercising rights, has not been accepted universally in Australia. See Service Station Association Ltd v Berg Bennett & Associates Pty Ltd (1993) 45 FCR 84, 91 ‑ 98; Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; (2002) 240 CLR 45 [40], [88], [156]; Central Exchange Ltd v Anaconda Nickel Ltd [2002] WASCA 94; (2002) 26 WAR 33 [21], [24], [55]; Wenzel v Australian Stock Exchange Ltd [2002] FCAFC 400; (2002) 125 FCR 570 [80] ‑ [81]; Strzelecki Holdings Pty Ltd v Cable Sands Pty Ltd [2010] WASCA 222; (2010) 41 WAR 318 [79] ‑ [80]; Acton Real Estate Pty Ltd v Shemiran Pty Ltd [2011] WASCA 33 [14].
I will assume, favourably to the appellant and solely for the purposes of considering the merits of appeal grounds 4 and 6, that the line of authority in New South Wales reflects the law in Australia; it is unnecessary, in this appeal, to decide the point.
As Bathurst CJ (Macfarlan & Meagher JJA agreeing) noted in CordonInvestments, the New South Wales decisions have emphasised that any implied duty to act in good faith does not require a party to a contract to act in the interests of the other party or to subordinate its own legitimate interests to those of the other party [144]. The duty does, however, require a party to a contract to have 'due regard' to the rights and interests of the other party [144].
An implied obligation of good faith, of the kind sanctioned in the New South Wales cases, does not extend to the imposition of obligations on the parties to a contract that are, in effect, inconsistent with the terms of their bargain. See Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15 [194] ‑ [208].
In my opinion, a duty of good faith, in exercising rights under cl 3 of the Peak Fuel Re‑Selling Agreement, should not by implication be imposed on the appellant and the respondent. The implication of such a duty would be inconsistent with the terms of the bargain agreed upon by the parties. As I have mentioned, the language of cl 3, read with cl 2.1 and the other provisions of the agreement as a whole, is relevantly unconfined. Clause 3 confers on each of the parties a right to terminate the agreement and the non‑exclusive licence without cause. Clause 3, read in context, contemplates that either party may, for any reason and without regard to the rights and interests of the other party, terminate upon two months' written notice.

Seventhly, the parties to a contract may be under an implied duty to cooperate in the performance of contractual obligations. See Mackay v Dick (1881) 6 App Cas 251, 263 (Lord Blackburn); Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979) 144 CLR 596, 607 ‑ 608 (Mason J); EDWF Holdings [105] ‑ [108]. However, this duty to cooperate does not rise above the promises made by the parties to the contract. See EDWF Holdings [109] and the cases there cited.
In the present case, cl 3 of the Peak Fuel Re‑Selling Agreement is not circumscribed by the provisions of cl 4 with respect to negotiations in good faith in the review of the Daily Fee. Rather, the parties have expressly qualified those provisions by conferring an express and unequivocal right on each of them to terminate for any reason upon two months' written notice.
Further, the appellant has failed to make out an essential foundation of fact to advance its submissions based on the proper construction of cl 3, read with cl 4, of the Peak Fuel Re‑Selling Agreement, namely, that when the respondent served the notice of termination the parties were engaged in negotiations under cl 4 in relation to an annual review of the Daily Fee.
Clause 4.2 of the Peak Fuel Re‑Selling Agreement provides that the Daily Fee shall be reviewed 'annually on each anniversary of the Commencement Date'. Clause 4.3 provides that the parties shall negotiate in good faith 'in the review' of the Daily Fee. The 'Commencement Date' specified in the Schedule is 1 August 2008.
It is apparent from pars 20 ‑ 30 of the proposed findings, and from his Honour's findings of fact, that during 2009 and 2010 there were four meetings at which the respondent requested the appellant to execute the Gull single site operation deed. These meetings occurred on 23 October 2009, 1 February 2010, 16 March 2010 and 23 July 2010. His Honour found, and it was reasonably open to him to find, that these meetings 'were not held to negotiate on the annual review of fees' [46]. The question of fees did not arise until the appellant raised it at the third meeting held on 16 March 2010 [46]. The appellant raised this question in the context of negotiations between the parties as to whether and, if so, how the appellant would enter an agreement which would bring it into conformity with other businesses using the Gull system [46].
In any event, it is apparent from proposed findings 27 ‑ 29 that by 4 August 2010 (being two days before the respondent served the notice of termination) the negotiations between the parties were in essence exhausted and that neither of them was prepared to compromise on its negotiating position.
It was in these circumstances that the respondent served the notice of termination.
Appeal grounds 4 and 6 fail.

The merits of appeal ground 5 and notice of contention ground 2

It is convenient to consider appeal ground 5, and (to the extent necessary) notice of contention ground 2, together.
The appellant contends in appeal ground 5 that the respondent was obliged under the Oilcode to issue a dispute resolution notice, further the respondent was obliged under the Peak Fuel Re‑Selling Agreement to issue a notice to mediate, before terminating the Peak Fuel Re‑Selling Agreement. It was alleged at the trial that the respondent's failure to issue such a notice or notices was unconscionable and contrary to s 51AC (now repealed) of the Trade Practices Act. See [50] ‑ [54] above.
By s 40(b) of the Oilcode, pt 4 of the Oilcode applies to 'a dispute arising between the parties to a fuel re‑selling agreement'.
Section 43 of the Oilcode is concerned with disputes about supply of a declared petroleum product. Section 44 contains a dispute resolution procedure in relation to disputes other than under s 43.
Section 44 of the Oilcode provides, relevantly:
(1)For a dispute to which section 43 does not apply, the parties must attempt to agree about how to resolve the dispute, unless the dispute resolution adviser is satisfied that there is no reason to attempt negotiation.
(2)If the parties attempt to agree about how to resolve the dispute:
(a)the parties may agree to refer the matter to a person to provide mediation or other assistance; or
(b)if the parties cannot agree to refer the matter:
(i)the parties must notify the dispute resolution adviser that they cannot agree; and
(ii)the dispute resolution adviser must appoint a person to provide mediation or other assistance within 7 days after the dispute resolution adviser has been notified.
(3)The person providing mediation or other assistance must decide:
(a)the time for providing the mediation or assistance; and
(b)a place in Australia for providing the mediation or assistance.
(4)The parties must try to resolve the dispute with the assistance of the person appointed under subparagraph (2) (b) (ii).
Clause 14.2 of the Peak Fuel Re‑Selling Agreement states that either party to the agreement who has a dispute with the other party 'may, at any time, use the procedures under [cl 14.3]'.
At the material time (6 August 2010), s 51AC(1) provided:
A corporation must not, in trade or commerce, in connection with:
(a)the supply or possible supply of goods or services to a person (other than a listed public company); or
(b)the acquisition or possible acquisition of goods or services from a person (other than a listed public company);
engage in conduct that is, in all the circumstances, unconscionable.
It is well‑established that the prohibition in s 51AC(1) is not to be constrained by reference to the circumstances in which the common law would grant relief in respect of unconscionable conduct. See Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (No 2) [2000] FCA 2; (2000) 96 FCR 491 [22] ‑ [25] (French J); Australian Securities and Investments Commission v National Exchange Pty Ltd [2005] FCAFC 226; (2005) 148 FCR 132 [30] (Tamberlin, Finn & Conti JJ). Also, it is well‑established that the statutory text must be given its natural and ordinary meaning. See Australian Competition and Consumer Commission v Simply No‑Knead (Franchising) Pty Ltd [2000] FCA 1365; (2000) 104 FCR 253 [30] ‑ [37] (Sundberg J); National Exchange [30].
In Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd [2003] HCA 18; (2003) 214 CLR 51, Gleeson CJ emphasised, however, that unconscionable conduct, in the context of s 51AA (now repealed) of the Trade Practices Act, requires more than merely taking advantage of a superior bargaining position. His Honour said:
Unconscientious exploitation of another's inability, or diminished ability, to conserve his or her own interests is not to be confused with taking advantage of a superior bargaining position. There may be cases where both elements are involved, but, in such cases, it is the first, not the second, element that is of legal consequence. It is neither the purpose nor the effect of s 51AA to treat people generally, when they deal with others in a stronger position, as though they were all expectant heirs in the nineteenth century, dealing with a usurer (cf Snell's Equity, 30th ed (2000), pp 621 ‑ 622) [14].
These observations are applicable, by analogy, to s 51AC(1).

In my opinion, the respondent did not act unconscionably in serving the notice of termination on the appellant, in circumstances where:
(a)The respondent was entitled under cl 3 of the agreement to serve the notice of termination.
(b)In any event, the trial judge found (and was entitled to find) on the facts that the respondent acted in good faith.
(c)Section 44(1) of the Oilcode imposed a joint obligation on the parties. After the respondent served the notice, the appellant did not itself seek to invoke or rely upon the dispute resolution procedure in the Oilcode or the agreement. It elected, instead, to commence proceedings immediately in the Supreme Court. In these proceedings, the appellant litigated the validity of the notice. The respondent did not commence any proceedings in the Supreme Court or elsewhere in relation to the notice of termination, but merely counterclaimed in the proceedings commenced and prosecuted by the appellant.
(d)Clause 14.2 of the agreement was permissive.
Appeal ground 5 fails.

Conclusion

I would dismiss the appeal.
MURPHY JA: I agree with Buss JA.