Vedam Enterprises Pty Ltd v Xpress Fuel Australia Pty Ltd

[2022] NSWSC 1756

Supreme Court

New South Wales

Medium Neutral Citation:

Vedam Enterprises Pty Ltd v Xpress Fuel Australia Pty Ltd [2022] NSWSC 1756

Hearing dates:

8 December 2022

Date of orders:

20 December 2022

Decision date:

19 December 2022

Jurisdiction:

Equity - Duty List

Before:

Henry J

Decision:

Interlocutory relief granted to the First to Thirteenth Plaintiffs on conditions. See [194]

Catchwords:

EQUITY – Equitable remedies – relief against forfeiture – leases - interlocutory injunctions to restrain termination of leases and possession of eight service station sites operated by different plaintiffs – whether serious questions to be tried that lessee plaintiffs entitled to relief against forfeiture - where asserted breaches relate to termination of exclusive fuel supply agreements with first defendant – where plaintiffs’ claim that fuel supply agreements terminated due to supply failures by first defendant – whether clauses relied on by landlords as giving rise to rights to forfeit and re-enter protect landlords interests – whether landlords will suffer loss from the breaches of leases – balance of convenience – adequacy of undertaking as to damages

Legislation Cited:

Competition and Consumer Act 2010 (Cth)

Conveyancing Act 1919 (NSW)

Jurisdiction of Courts (Cross-vesting) Acts of 1987

Property Law Act 1974 (Qld)

Uniform Civil Procedure Rules

Cases Cited:

Ace Property Pty Ltd v Australian Postal Corporation [2011] 1 Qd R 504; [2010] QCA 55

Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46

Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1

Bond v Gray [2013] NSWSC 1793

Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 194 FLR 322

First Netcom Pty Ltd v Telstra Operation Ltd (2000) 101 FCR 77; [2000] FCA 1269

Girchow Enterprises Pty Ltd v Ultimate Franchising Group Pty Ltd [2021] FCA 1579

IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440

Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533

New Dragon Investments Pty Ltd v Morgan & Banks Development Pty Ltd [2006] NSWSC 1139

Pioneer Gravels (Qld) Pty Ltd v T & T Mining Corporation Pty Ltd [1975] Qd R 151

Re Hi-Fi Sydney Pty Ltd (Administrator Appointed) [2015] NSWSC 1312

Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd & Anor [2022] VSC 467

Shiloh Spinners Ltd v Harding [1973] 1 All ER 90; [1973] 2 WLR 28

Smith Kline & French Laboratories (Australia) Ltd v Department of Community Services & Health (1989) 89 ALR 366

Suttor v Gundowda Pty Limited (1950) 81 CLR 418

Wynsix Hotels (Oxford St) Pty Ltd v Toomey (2004) 17 BPR 32, 633; [2004] NSWSC 236

Category:

Procedural rulings

Parties:

Vedam Enterprises Pty Ltd (First Plaintiff)
Abhiram Thati (Second Plaintiff)
Sri Vishnu Pty Ltd (Third Plaintiff)
Ram Harichand Prasad Lingamaneni (Fourth Plaintiff)
MRR Fuels Pty Ltd (Fifth Plaintiff)
Rajesh Marthala (Sixth Plaintiff)
Sri Lakshmi Srinivasa Fuels Pty Ltd (Seventh Plaintiff)
Vamsi Krishna Bala (Eighth Plaintiff)
SCNR Pty Ltd (Ninth Plaintiff)
Saini Damegunta (Tenth Plaintiff)
Sree Venkateshwara Investment Pty Ltd (Eleventh Plaintiff)
Vijay Jumar Peddi (Twelfth Plaintiff)
Ramesh Kumar Singham (Thirteenth Plaintiff)
Shobha Enterprises Pty Ltd (ACN 626 288 104) (Fourteenth Plaintiff)
Xpress Fuel Australia Pty Ltd (First Defendant)
Press Australia Pty Ltd (Second Defendant)
Maba Pty Ltd (Third Defendant)
Xpress Transport Solutions Pty Ltd (Fourth Defendant)
Xpress Fuel Retail Australia Pty Ltd (Fifth Defendant)
Raman Holdings (NSW) Pty Limited (Sixth Defendant)

Representation:

Counsel:
R D Turnbull (Plaintiffs)
B DeBuse and P Springthorpe (First to Fifth Defendants)

Solicitors:
Watson Webb (Plaintiffs)
Marsden Law Group (First to Fifth Defendants)

File Number(s):

2022/00356152

Publication restriction:

Nil

JUDGMENT

1. This is an application for interlocutory relief seeking to restrain the second, third, fourth and fifth defendants (Lessor Defendants) from terminating leases and taking possession of eight sites used by the first, third, fifth, seventh, eleventh and fourteenth plaintiffs (Lessee Plaintiffs) to conduct eight retail service station businesses in NSW, Queensland and Victoria.

2. The Lessee Plaintiffs, who are not related companies, each operate one service station from a leased site, save for the seventh plaintiff who operates service stations from two leased sites. Six of the service station sites are located in NSW (Albury, Coolac, Gunnedah, Gilgandra, Yass and Adelong), one is in Bundaberg, Queensland and the other is in Ararat, Victoria. In these reasons, I refer to the service stations by their locations.

3. The application arises in the context where the Lessee Plaintiffs purported to terminate exclusive trade and fuel supply agreements with the first and second defendants and are now acquiring fuel from third-party suppliers. In particular, the disputes concern whether, as a consequence, the Lessor Defendants are entitled to terminate seven of the service station leases for fundamental breach and rely on notices issued under s 129 of the Conveyancing Act 1919 (NSW) (Conveyancing Act) and the Queensland equivalent provision (Breach Notices) that assert rights to re-enter the sites within 14 days on the basis that the Lessee Plaintiffs’ breaches are not capable of remedy.

4. The Breach Notices led to the Plaintiffs commencing these proceedings by Summons filed on 25 November 2022 seeking urgent interlocutory and final relief.

5. The Lessee Plaintiffs contend that they are entitled to relief against forfeiture of the leases and other final relief as, amongst other reasons, the lease terms relied on by the Lessor Defendants as giving rise to rights to terminate are not necessary for the protection of their legitimate business interests. They say that interlocutory relief should be granted to enable them to continue to operate their service station businesses pending a final hearing, as the Lessor Defendants will be safeguarded by the payment of rent and compliance with the other lease terms.

6. In support of their application, the Plaintiffs rely on an affidavit of Alexander du Maurier affirmed 24 November 2022 and an affidavit of Matthew Sibley sworn 2 December 2022. Mr du Maurier and Mr Sibley are both solicitors in the employ of Watson Webb, the solicitor on the record for the Plaintiffs in these proceedings. They depose to matters on information or belief and instructions from the Plaintiffs.

7. The Lessor Defendants oppose the application for interlocutory relief. They submit that the Lessee Plaintiffs have not established there are serious questions to be tried and the balance of convenience and discretionary factors weigh against the grant of interlocutory relief. This is particularly as the first defendant is exposed to financial risk under agreements with a third-party fuel supplier and there are doubts as to the adequacy of the undertaking as to damages proffered by the Plaintiffs. The Lessor Defendants also submit that there is no basis for interlocutory relief to be granted in relation to the Ararat service station as it is a monthly tenancy, no exclusive fuel supply agreement was entered into and no notice has been issued under the Victorian equivalent of s 129 of the Conveyancing Act. They rely on an affidavit from Mark Bassal sworn 5 December 2022.

8. The parties also provided outlines of written submissions that were supplemented by oral submissions at the hearing and rely on proposals and undertakings proffered during and after the hearing, which I will come to. There was no cross-examination.

Factual background and summary of evidence

9. The following summary of factual matters is taken from the affidavits and documents relied on by the parties at the hearing.

10. Although many of the matters referred to below are not in dispute, the materials identify factual disputes which are not possible to resolve on this application, such as whether there were fuel supply failures by the first defendant. The parties’ evidence will also need to be tested at a final hearing, particularly that of the Plaintiffs in the context where it is given on information and belief and many aspects are uncorroborated by documents.

11. As already noted, each of the Lessee Plaintiffs operate one or two of the eight service stations from sites leased from the Lessor Defendants. While there are some common terms in the leases and similar agreements entered into by the parties, the evidence identifies some differences concerning the contractual arrangements, the trading relationships and financial position of the Plaintiffs that relate to the particular sites. For this reason, I start by giving an overview of the parties, the relevant agreements and key common terms. I then set out a summary of the key factual matters as they relate to each service station site and then summarise the evidence relating to the events that led to these proceedings.

The parties and overview of relevant agreements

12. The first defendant, Xpress Fuel Australia Pty Ltd (Xpress), and the Lessor Defendants (together the Defendants) are related companies. Mr Bassal is the sole director of the Defendants.

13. The Lessee Plaintiffs are the corporate entities that have leases of the service station sites from a Lessor Defendant. In most cases, the Lessee Plaintiffs also entered into other agreements relating to the service station businesses with one or more of the Defendants. The second, fourth, sixth, eighth, tenth, twelfth and thirteenth plaintiffs are directors of the Lessee Plaintiffs and guarantors of obligations imposed by the relevant agreements, which are described further below.

14. The Lessor Defendants acquired or leased the land on which service station businesses are conducted from about late 2017. Mr Bassal gives evidence that the Defendants have incurred costs associated with refurbishing each of the service stations (which I detail below), although he does not identify when those costs were incurred.

15. At all material times, the eight service stations have operated as Mobil branded service stations, save for Gilgandra which has and continues to operate as a BP branded service station.

16. Mr Bassal says that, in around November or December 2017, he requested the fourth plaintiff, Ram Lingamaneni, to identify and recommend operators who were willing to purchase and take over the operation of the Defendants’ service station businesses. In most cases, this led to three agreements being entered into by a corporate plaintiff and a director plaintiff, and one or more of the defendants.

17. First, a sale of business agreement was entered into by which a corporate plaintiff acquired the service station business from a Defendant for a price representing goodwill (Sale Agreement).

18. Second, a Licence to Trade and Supply Agreement was entered into by Xpress or the second defendant, Press Australia Pty Ltd (Press Australia), as the ‘Company’, a corporate plaintiff as the ‘Dealer’ and a director plaintiff as ‘Guarantor’ (Supply Agreement).

19. The Supply Agreements are in similar terms and relevantly provide that the Dealer (the Lessee Plaintiff) was to purchase all of its petroleum product requirements from the Company for resale at the service station and not to purchase such products from any other party unless with the prior written consent of the Company, acting in its sole discretion: cll 2.1(a) and (b). The Supply Agreements also provide that;

1. the Company is to supply the petroleum products within a reasonable time of receipt (cl 2.2 of the Albury, Adelong and Gunnedah Supply Agreements) or within three business days of the order (cl 2.2 of the Coolac, Bundaberg, Gilgandra and Yass Supply Agreements);

2. payment is to occur after the issue of an invoice: cl 2.4;

3. the Company is the owner of the underground storage tanks and facilities: cl 4.2(a);

4. the Company may require the Dealer to brand its operations from the service station to reflect a particular brand of petroleum products, in which case the Company may recover a fee from the Dealer: cl 6.3; and

5. the Dealer must comply with the terms of the Lease Agreement in relation to the service station site and all buildings improvements, lighting, electrical, fixtures and equipment and other articles of property are the property of the Company: cll 26.1 and 26.2.

20. Third, a lease or sub-lease of land owned or leased by one of the Lessor Defendants was granted to a corporate plaintiff and a director plaintiff as guarantor (Lease Agreement).

21. The Lease Agreements all provide that the ‘Permitted Use’ of the ‘Premises’ is ‘Petrol service station’ or ‘Petrol service station and convenience store’. They include common provisions, which relevantly include:

1. a clause dealing with the discretion vested in the Lessor Defendants in the following terms:

‘Subject always to any express provision to the contrary in this lease every discretion vested in the landlord:

(1)    Is absolute and uncontrolled: and

(2)    may be granted or refused for any reason; or

(3)    may be granted on such conditions as the Landlord thinks it.’

See cl 1.3 of the Adelong, Bundaberg, Coolac and Ararat Lease Agreements, cl 1.4 of the Gunnedah Lease Agreement, cl 2.3 of the Albury Lease Agreement.

2. a clause that provides that the parties “will negotiate in good faith pertaining to all fuel supply brand matters”: see cl 10.2(4) of the Coolac, Ararat and Bundaberg Lease Agreements;

3. a clause headed “Conduct of business” (Conduct of Business term) which provides as follows:

“Despite any other provision of this Lease, the Tenant must seek the prior written approval in respect of any branding of, and the supplier of fuel to, the Premises in the conduct of the Permitted Use (and any variations thereof), such consent to be at the Lessor Defendants’ sole discretion.”

See cl 10.2(3) of the Gunnedah, Gilgandra, Yass and Adelong Lease Agreements and cl 11.3(2) of the Albury Lease Agreement.

Or,

“Despite any other provision of this Lease, the Tenant must seek the prior written approval in respect of any branding of, and the supplier of fuel to, the Premises in the conduct of the Permitted Use (and any variations thereof), which will not be unreasonably refused provided that the proposed brand is a nationally recognised brand and a major international supplier of petroleum products within the Australian retail petroleum market”

Clause 10.2(3) of the Coolac, Bundaberg and Ararat Lease Agreements;

4. a clause headed “Definition of breach” (cl 19.3 or cl 20.3 in the Lease Agreements) which relevantly provides that the following matters are breaches of fundamental and essential terms of the Lease Agreement:

1. “(8) Use of Premises. If a Tenant uses the Premises for a purpose other than the Permitted Use”: see cl 19.3(8) or cl 20.3(8) of all Lease Agreements;

2. “(10) Breach of supply agreement. If the Supply Agreement between the Tenant and [Xpress Fuel] is terminated for any reason in respect of the Premises” (Termination (Supply Agreement) term): see cl 20.3(10) of the Albury Lease Agreement and cl 19.3(10) of the Gunnedah, Gilgandra, Yass and Adelong Lease Agreements; and

5. a clause headed “Forfeiture of Lease” which relevantly provides that if the Tenant breaches the Lease Agreement as defined in [cl 19.3 or cl 20.3] the Landlord may, at its option, determine the lease by re-entry (without giving any prior demand or notice unless such notice is required by law) or notice in writing to the Tenant: see cl 20.4(1)(a) and (b) of the Albury, Coolac, Bundaberg and Ararat Lease Agreements and cl 19.4(1)(a)and (b) of the Gunnedah, Gilgandra, Yass and Adelong Lease Agreements.

22. The table at Annexure A to these reasons identifies the parties to and key and common terms of each Lease Agreement (Exhibit F). Annexure A refers to Ararat’s Lease Agreement as the “Alleged lease” as there is a dispute as to whether Ararat is subject to a long-term equitable lease or a month-to-month tenancy.

23. In addition to the agreements between the Plaintiffs and the Defendants, Xpress is a party to agreements with Mobil Oil Australia Pty Ltd (Mobil) and BP Australia Pty Ltd (BP).

24. In relation to Mobil, Xpress is a party to a Brand Agreement dated 15 February 2017 (Brand Agreement), pursuant to which Xpress, as Licensee, is granted the right to use and sub-licence the use of Mobil’s Marks and associated marketing indicia for the purposes of Xpress’ business in the marketing and sale of petroleum products purchased from Mobil. That right is subject to the parties entering into a Site Agreement for any motor fuel facility at which Xpress or its permitted sub-licensee uses, sells or offers for sale petroleum products.

25. Xpress is also a party to Site Agreements with Mobil pursuant to which Xpress acquires fuel for resale from Albury, Coolac, Bundaberg, Gunnedah, Yass, Adelong and Ararat (Site Agreements). Each Site Agreement is for a 10-year term and relevantly provides that:

1. Mobil consents to Xpress sub-licencing uses of the Marks at the site for the purposes of the licensee’s business, including selling the Petroleum Products (cl 2);

2. in consideration of Xpress entering into each Site Agreement, Mobil shall pay “Site Conversion Assistance” to Xpress (cl 5(a));

3. Xpress represents and warrants to Mobil that a “Quota” of fuel will be purchased by Xpress from Mobil for use at each Site during the term of each Site Agreement (cl 6(a)); and

4. liquidated damages are payable for each litre of the Quota remaining unpurchased by Xpress from Mobil at the Termination Date (cl 6(c)).

Albury Service Station

26. On 18 April 2018, the third defendant, Maba Pty Ltd (Maba), acquired the Albury site. According to Mr Bassal, Maba and/or the Defendants have incurred $1,737,532.34 associated with refurbishing the Albury site.

27. On 26 April 2018, Xpress and Mobil entered into a Site Agreement in relation to Albury, under which the Quota is 5,200,000 litres per year, liquidated damages are payable at $.0011 Australian cents per litre (ACPL) and a site conversion fee of $550,000 was payable. Mr Bassal gives evidence that the site conversion assistance fee was paid by Mobil and has been used to fund the cost of installing Mobil signage and liveries at Albury.

28. On 27 October 2018, the Press Australia, as vendor, sold the Albury service station business to Samanyu Enterprises Pty Ltd (Samanyu) pursuant to a Sale Agreement for $400,000.

29. Also on 27 October 2018, Samanyu and the second plaintiff, Abrihim Thati, entered into a Supply Agreement with Xpress and a Lease Agreement with Maba (as lessor).

30. On 15 October 2019, the Lease and Supply Agreements were assigned to the first plaintiff, Vedam Enterprises Pty Ltd (Vedam), under a Deed of Assignment of Lease and License between Press Australia as Lessor, Xpress as Licensor, Samanyu as Assignor, Vedam as Assignee and Mr Thati as the Assignee’s Guarantor.

31. Between 15 October 2019 and late October 2022, Xpress supplied fuel to Vedam for resale at Albury pursuant to the Supply Agreement. According to Mr du Maurier’s evidence, during that period Vedam did not purchase fuel from any other supplier except on one occasion in April 2022, when Vedam experienced some fuel supply issues, sought consent from Xpress to purchase fuel elsewhere and received no reply.

32. The evidence discloses that Vedam raised concerns about the late delivery of fuel by Xpress in December 2021 and during September and October 2022, that the Albury service station was closed for five days in those months and Vedam also ran out of fuel on other occasions. According to Mr du Maurier’s evidence, Vedam closed the Albury service station for a total of 31 days on account of not having any fuel to sell in the period since about August 2022 and lost approximately $77,500 in revenue during the period it was closed. He also gives evidence that Vedam has not received fuel from Xpress since 25 October 2022, despite having ordered fuel on 26 October 2022.

26. Mr Sibley gives evidence that throughout the commercial relationship, Xpress has, on several occasions, delivered fuel to the Albury service station that was not supplied by Mobil, including from Viva, Shell and Puma.

27. The evidence also indicates that Vedam and Xpress have been in dispute about payment terms, with Xpress demanding pre-payment prior to delivery in November 2022, and that Xpress and Vedam both claim that the other owes money to the other in relation to the supply of fuel.

28. According to the evidence:

1. Vedam has paid up share capital of $10.00, had taxable income of $52,270 for the financial year ending 30 June 2022, has $86,977.38 in its business bank account, and has net assets and total equity of $65,833.92 as at 30 June 2022; and

2. Mr Thati’s taxable income for the financial year ending 30 June 2022 was $71,942, he has $54,084.68 in his personal bank account, he owns personal property to the value of $1,116,950 and is currently personally liable for loans amounting to $652,121.

Coolac Service Station

36. On or around 27 November 2018, Press Australia acquired the Coolac site. According to Mr Bassal, the Defendants have incurred around $6,000,000 in constructing a service station and doing associated works at the Coolac site.

37. On 29 October 2019, Xpress entered into a Site Agreement with Mobil in relation to the Coolac site, under which the Quota is 13,910,000 litres per year, liquidated damages are payable at $0.008 ACPL and a site conversion fee of $1,096,000 was payable. Mr Bassal gives evidence that the site conversion assistance fee has been paid by Mobil and was used to fund the cost of installing Mobil signage and liveries at Coolac.

38. In about January 2020, the third plaintiff, Sri Vishnu Fuels Pty Ltd (Sri Vishnu Fuels), and the fourth plaintiff, Mr Lingamaneni, as guarantor entered into:

1. a Sale Agreement with Press Australia, as vendor, to purchase the Coolac service station business for $700,000 plus GST;

2. a Lease Agreement with Press Australia as lessor; and

3. a Supply Agreement with Xpress.

39. From around January 2020 to 10 November 2022, Xpress supplied fuel to Sri Vishnu Fuels for sale at Coolac.

40. According to Mr du Maurier’s evidence, Sri Vishnu Fuels did not purchase fuel from any other supplier until September 2022 when issues started to emerge with the timeliness of Xpress’ delivery of fuel. He gives evidence that after a discussion and text messages with Mr Bassal on 14 September 2022, during which Mr Bassal suggested supply be obtained from “South West Fuels”, Sri Vishnu Fuels purchased fuel from South West Fuels approximately three to four times per week and from Tumut Fuel on three occasions. He also gives evidence that issues began to emerge about the timeliness of Xpress’ delivery of fuel from about November 2021, and that since September 2022, Xpress failed to confirm fuel deliveries within a reasonable period of time, did not deliver fuel as indicated on the confirmation of each order, sought payment for fuel purchase prior to confirmation of the delivery of fuel and withheld consent to purchase fuel from an alternative supplier.

41. Mr Sibley gives evidence that on several occasions, Xpress delivered fuel to Coolac and other service stations operated by Sri Vishnu Fuels that was not supplied by Mobil, including from Petrochina International, Viva Energy, Chevron and Park Fuels.

42. Mr Bassal denies that the discussion and text messages referred to at [40] were about the Coolac service station and says that they related to other sites. Mr Bassal also deposes that Sri Vishnu Fuels has failed to pay rent owed under the Coolac Lease Agreement in the amount of $165,193.95, relating to the period from 22 August 2022.

43. According to the evidence:

1. Sri Vishnu Fuels has paid up share capital of $100.00 and recorded sales of $14,729,746 in its Business Activity Statements for the three quarters ending 30 June 2022;

2. Mr Lingamaneni values Sri Vishnu Fuels’ assets at $2,460,000 (comprising of the business, goodwill, dry stock, wet stock and rental bond but no real property) and as being currently liable for loans amounting to $50,000; and   

3. Mr Lingamaneni’s taxable income for financial year ending 30 June 2022 was $89,742; he owns personal property (including motor vehicles) valued at $1,535,000 and has personal liabilities amounting to $1,068,695.

Bundaberg Service Station   

44. On or around 26 March 2019, Press Australia acquired the Bundaberg site. According to Mr Bassal, Press Australia and/or the Defendants have incurred $319,420.64 in respect of the refurbishment of the Bundaberg site.

45. On or around 11 April 2019, Xpress entered into a Site Agreement with Mobil, under which the Quota is 4,000,000 litres per year and liquidated damages are payable at $0.001 ACPL. Mr Bassal gives evidence that Mobil has paid the site conversion assistance fee, which was $404,000 and was used to fund the cost of installing Mobil signage and liveries at Bundaberg.

46. On or about 19 December 2019, the fifth plaintiff, MRR Fuels Pty Ltd (MRR Fuels) and the sixth plaintiff, Rajesh Marthala as guarantor, entered into:

1. a Sale Agreement with Press Australia, as vendor, to purchase the Bundaberg service station business for $240,000;

2. a Lease Agreement with Press Australia as lessor; and

3. a Supply Agreement with Press Australia.

47. From around December 2019 to 10 November 2022, Xpress supplied fuel to MRR Fuels for sale at Bundaberg pursuant to the Supply Agreement.

48. According to Mr du Maurier’s evidence, MRR Fuels did not purchase fuel from any other supplier until about 10 November 2022. He gives evidence that, from around January 2021, there were a few occasions once a month when fuel was not delivered on time and that since August 2022, there were delays in delivery. He says that MRR Fuels ceased trading to the public on several occasions for several days due to fuel supply issues and other issues, such as Xpress’ failure to consent to MRR Fuels purchasing fuel from a third-party supplier and that MRR Fuels closed the Bundaberg service station for a total of 25 days on account of not having any fuel to sell and lost approximately $200,000 in revenue, equating to approximately $30,000 in profit, for the period it was closed.

49. Mr du Maurier also gives evidence that MRR Fuels has not received fuel from Xpress since 25 October 2022, despite having ordered fuel on 26 October 2022, and that Xpress demanded pre-payment of fuel in late October 2022.

50. Mr Sibley gives evidence that, on several occasions, Xpress has delivered fuel to the Bundaberg service station that was not fuel supplied by Mobil.

51. According to the evidence:

1. MRR Fuels has paid up share capital of $50.00 and approximately $21,396.97 in its business bank account; and

2. Mr Marthala currently has $4,397.84 in his personal bank account, personal and real property to the value of $678,071.44, equity in Mobil Bundaberg of about $240,000, is personally liable for $269,784.08 and, as at 1 December 2022, had a net worth of $652,631.20.

Gunnedah Service Station

52. On or around 12 December 2017, Press Australia acquired the Gunnedah service station site. According to Mr Bassal, the Defendants have incurred $911,020 associated with the refurbishment of the Gunnedah site.

53. In around October 2017, Xpress entered into a Site Agreement with Mobil, under which the Quota is 3,200,000 litres per year and liquidated damages are payable at $0.0053 ACPL. Mr Bassal gives evidence that Mobil has paid the site conversion assistance fee of $168,000, which was used to fund the cost of installing Mobil signage and liveries.

54. On about 1 June 2018, the seventh plaintiff, Sri Lakshmi Srinivasa Fuels Pty Ltd (SLSF), and the eighth plaintiff, Vamsi Krishna Bala, as guarantor, entered into:

1. a Lease Agreement with Press Australia as lessor; and

2. a Supply Agreement with Xpress.

55. According to Mr du Maurier’s evidence, Mr Bala says that he executed a document similar to the Gilgandra Sale Agreement (referred to at [61] below) in relation to the Gunnedah service station business and that document is in the possession of Xpress. Mr Bassal does not give evidence about a Sale Agreement in relation to Gunnedah.

56. From the commencement of their relationship to about 10 November 2022, Xpress supplied fuel to SLSF for sale at Gunnedah pursuant to the Supply Agreement.

57. According to Mr du Maurier, SLSF did not purchase fuel from any other supplier until about 10 November 2022. He gives evidence that on occasions since the commencement of their relationship, Xpress has delivered the incorrect quantity or type of fuel (which was raised with Xpress in February 2021) and that fuel has run out, and since around October 2022, Xpress failed to confirm deliveries within a reasonable time of order and withheld its consent to SLSF purchasing fuel from a third-party supplier. He also gives evidence that the Gunnedah service station has been closed for a total of 90 days and that SLSF lost $720,000 in revenue for that period.

58. Mr Sibley gives evidence that throughout the commercial relationship, Xpress has, on several occasions, delivered fuel to the Gunnedah service station that was not supplied by Mobil, which included fuel from BP and Puma.

Gilgandra Service Station   

59. On or around 17 January 2018, the fourth defendant, Xpress Transport Solutions Pty Ltd (Xpress Transport), as sublessee, entered into a sublease with Ramen Holdings, as sublessor, in respect of the Gilgandra service station site. According to Mr Bassal, the Defendants have incurred $1,043,159 associated with the refurbishment of the Gilgandra site.

60. In or around 2018, Xpress Transport, as Dealer, entered into a “Go Green Agreement” with BP Australia Pty Ltd and Ocwen Energy Pty Ltd trading as Lowes Petroleum Service (BP Agreement). The BP Agreement provides that Xpress Transport is authorised to sell BP petroleum products at the Gilgandra site under the BP Marks (cl 1(a)); Xpress Transport agrees to sell only BP Motor Fuels at Gilgandra (cl 4.1); Xpress Transport will not dispense any non-BP Petroleum products under or in association with the BP Marks (cl 4.4(a)); and BP can terminate the agreement at any time after giving notice of termination if Xpress Transport breaches the BP Agreement and the defaults are not capable of rectification and are not rectified (cl 10.1).

61. On or about 5 April 2019, SLSF and Mr Bala as guarantor entered into:

1. a Sale Agreement with Xpress Transport, as vendor, to purchase the Gilgandra service station business for $250,000; and

2. a Supply Agreement with Xpress in respect of the Gilgandra Site.

62. On about 1 May 2019, SLSF, as sublessee, and Mr Bala as guarantor, entered into a Lease Agreement with Xpress Transport as sublessor.

63. From the commencement of their relationship to about 10 November 2022, Xpress supplied fuel to SLSF for sale at Gilgandra pursuant to the Supply Agreement.

64. According to Mr du Maurier, SLSF did not purchase fuel from any other supplier in relation to the Gilgandra service station until about 10 November 2022. He gives evidence that on occasions, since the commencement of their relationship, Xpress has delivered the incorrect quantity or type of fuel (which was raised with Xpress in February 2021) and that fuel has run out, and since around October 2022, Xpress has failed to confirm deliveries within a reasonable time of order and withheld its consent to SLSF purchasing fuel from a third-party supplier. He also gives evidence that the Gilgandra service station has been closed for a total of 60 days and that SLSF lost $1,170,000 in revenue for that period.

65. Mr Sibley gives evidence that throughout the commercial relationship, Xpress has, on several occasions, delivered fuel to the Gilgandra service station that was not supplied by BP, and included fuel from Puma and Caltex.

66. According to the evidence:

1. SLSF has paid up share capital of $120.00, had taxable or net income of $35,664 for the financial year ending 30 June 2021, approximately $1,640.19 in its business bank account and is liable for a loan for $350,000; and

2. Mr Bala’s taxable income in the last financial year was $89,548, he currently has $6,334.31 in his personal bank account, owns real property valued at approximately $800,000 and is personally liable for loans, including for mortgage, amounting to $554,000.

Yass Service Station       

67. On 10 September 2017, Press Australia, as lessee, entered into a lease with Hoa Sen Pty Ltd, as lessor, in relation to the Yass service station site. According to Mr Bassal, the Defendants have incurred $943,200.81 associated with the refurbishment of the Yass site.

68. On 28 December 2017, Xpress entered into a Site Agreement with Mobil, under which the Quota is 3,600,000 litres per year and liquidated damages are payable at $0.005 ACPL. Mr Bassal gives evidence that Mobil has paid the site conversion assistance fee of $190,000, which was used to fund the cost of installing Mobil signage and liveries.

69. On about 1 May 2019, the ninth plaintiff, SCNR Pty Ltd (SCNR), and the tenth plaintiff, Saini Damegunta as guarantor, entered into:

1. a Lease Agreement with Press Australia, as sublessor, and SCNR as sublessee; and

2. a Supply Agreement with Xpress.

70. From the commencement of their relationship to about 10 November 2022, Xpress supplied fuel to SCNR for sale at Yass pursuant to the Supply Agreement.

71. According to Mr du Maurier, SCNR did not purchase fuel from any other supplier until about 10 November 2022. He gives evidence that, since around August 2022, Xpress failed to confirm deliveries within a reasonable time of order, sought payment for fuel purchases as a condition precedent of delivery, attempted to or did direct debit SCNR’s bank accounts within seven days of having issued an invoice (and in some cases without having issued an invoice at all) and without SCNR having provided its consent and, on occasions, since the commencement of their relationship, Xpress has delivered the incorrect quantity or type of fuel. He also gives evidence that the Yass service station had no fuel for approximately 20 days since August 2022 and that SCNR lost $420,000 in revenue, which equates to approximately $24,000 in profit, for that period.

72. Mr Sibley gives evidence that throughout the commercial relationship, Xpress has, on several occasions, delivered fuel to the Yass service station that was not supplied by Mobil, and included fuel from Ampol and Park Fuels.

73. According to the evidence:

1. SCNR has paid up share capital of $100.00, had taxable net income of $38,776 for the 2021 financial year, $7,682.65 in its business bank account and is currently liable for $316,542.73 in business loans and overdrafts; and

2. Ms Damegunta’s taxable income in the last financial year was $52,810, she currently has $1,107.35 in her personal bank account and is personally liable for $23,065.62 for loans.

Adelong Service Station

74. On 1 November 2016, Press Australia, as lessee, entered into a lease in relation to the Adelong service station site with Kevin Purcell as lessor. According to Mr Bassal, the Defendants have incurred $815,687.53 associated with the refurbishment of the Adelong site.

75. On or around 3 July 2017, Xpress entered into a Site Agreement with Mobil, under which the Quota is 2,250,000 litres per year and liquidated damages are payable at $0.00506 ACPL. Mr Bassal gives evidence that Mobil has paid the site conversion assistance fee of $113,000, which was used to fund the cost of installing Mobil signage and liveries.

76. On or about 20 April 2018, Mayur Holdings Pty Ltd (Mayur Holdings) and Jayaram Sriharan as guarantor entered into a Supply Agreement with Xpress.

77. On or about 1 May 2018, Press Australia, as sublessor, entered into a Lease Agreement with Mayur Holdings, as sublessee, and Jayaram Sriharan, as guarantor in relation to the Adelong site.

78. On or about 25 November 2019, the Adelong Lease and Supply Agreements were assigned to the eleventh plaintiff, Sree Venkateshwara Investments Pty Ltd (SVI), under a Deed of Assignment of Supply Agreement with Xpress as the Company, Mayur Holdings as the Dealer, SVI as the Assignee, and the twelfth and thirteenth plaintiffs, Vijay Jumar Peddi and Ramesh Kumar Singam respectively, as Guarantors, and a Deed of Transfer of Sublease with Press Australia as the Sublessor, SVI as the New Subtenant and Mr Peddie and Mr Singam as the New Guarantors.

79. From the commencement of their relationship to about 10 November 2022, Xpress supplied fuel to SVI for sale at Adelong pursuant to the Supply Agreement.

80. According to Mr du Maurier’s evidence, SVI did not purchase fuel from any other supplier until about 10 November 2022. He gives evidence that, since around July 2022, Xpress failed to confirm deliveries within a reasonable time of order and direct debited SVI’s bank accounts within seven days of having issued an invoice and that, on occasions, since the commencement of their relationship, Xpress has delivered the incorrect quantity or type of fuel. He also gives evidence that the Adelong service station has been closed for a total of 12-15 days since August 2022 and that SVI lost $62,400 - $78,000 in revenue, which is approximately $18,720 - $23,400 in profit, for that period.

81. Mr Sibley gives evidence that on several occasions, Xpress delivered fuel to the Adelong service station that was not supplied by Mobil.

82. According to the evidence,

1. SVI has paid up share capital of $100.00, had net taxable income of $13,761 in the last financial year, currently has approximately $50,000 in its business bank account and is liable for loans amounting to $90,000;

2. Mr Singam’s taxable income was $28,158 in the last financial year ending 30 June 2021, he currently has $32,352.49 in his personal bank account and owns real property that is encumbered with a mortgage to the value of around $450,000; and

3. Mr Peddi’s taxable income was $32,282 in the last financial year, he currently has $914.42 in his personal bank account and owns real property that is encumbered with a mortgage to the value of around $550,000.

Ararat Service Station   

83. Press Australia is the registered proprietor of the Ararat service station site. Mr Bassal gives evidence that the Defendants have incurred $1,438,846.62 associated with refurbishing the Ararat site.

84. On 11 September 2018, Xpress entered into a Site Agreement with Mobil, under which the Quota is 3,500,000 litres per year and liquidated damages are payable at $0.009 ACPL. Mr Bassal gives evidence that Mobil has paid the site conversion assistance fee of $468,000, which was used to fund the cost of installing Mobil signage and liveries.

85. Unlike the other Plaintiffs, the fourteenth plaintiff, Shobha Enterprises Pty Ltd (Shobha Enterprises), has not entered into a Sale Agreement or a written Supply Agreement with Xpress in relation to Ararat.

86. On 25 June 2020, Shobha Enterprises received a proposed sublease for the Ararat service station between the fifth defendant, Xpress Fuel Retail Pty Ltd (Xpress Fuel Retail) as sublessor, Shobha Enterprises as sublessee and Vaibhav Reddy Donthiri (the director of Shobha Enterprises) as the guarantor (Ararat Sublease). The Ararat Sublease purported to but did not attach a Supply Agreement in relation to the Ararat service station site.

87. According to Mr du Maurier’s evidence, following receipt of the proposed Ararat Sublease, Mr Donthiri and Mr Bassal had a discussion in which Mr Donthiri said that he would not sign as the rent was too high.

88. On 16 July 2020, the then solicitors for Xpress Fuel Retail and Press Australia sent the proposed Ararat Sublease with a site plan, a landlord’s disclosure statement and other documents to Shobha Enterprises. On 22 July 2020 they sent an email asking when Shobha Enterprises would execute the documents.

89. Further communications were sent to Shobha Enterprises in July and August 2020 about the proposed Ararat Sublease. To date no sublease or Supply Agreement has been signed.

83. Mr du Maurier gives evidence that Shobha Enterprises did not sign the proposed Ararat sublease and other documents received on 16 July 2022, predominantly for the reason referred to at [87] above. Mr du Maurier also gives evidence of a discussion between Mr Bassal and Mr Donthiri, in which Mr Bassal said he would sell the business for $180,000 and rent would be $5,000 per month, to which Mr Donthiri said, “OK, when can I start?”

84. Mr Bassal says he does not recall speaking with Mr Donthiri to the effect set out at [87] and [90] above.

85. Shobha Enterprises commenced operating the Ararat service station in around July 2020 and Press Australia has, been directly debiting rent in the amount of $7,700 per month (plus GST).

86. From the time that Shobha Enterprises commenced operating the Ararat service station until about late October 2022, Xpress supplied fuel to Shobha Enterprises.

87. According to Mr du Maurier, Shobha Enterprises did not purchase fuel from any other supplier until about 10 November 2022. He gives evidence that, since around September 2022, Xpress failed to confirm deliveries within a reasonable time of order and, on several occasions since the commencement of their relationship, Xpress has delivered the incorrect quantity or type of fuel. He also gives evidence that the Ararat service station had no fuel for approximately 8-10 days since August 2022 and had to close the store for that reason in October 2022, which he notified Mr Bassal about, and that Shobha Enterprises lost about $100,000-$125,000 in revenue ($8,000 - $10,000 in profit) for the period it was closed.

88. Mr Sibley gives evidence that on several occasions, Xpress delivered fuel to the Ararat service station that was not supplied by Mobil, including from Shell.

89. The evidence indicates that:

1. Shobha Enterprises has paid up share capital of $10.00, taxable income of $1,786 in the 2021 financial year, currently has $30,000 in its business bank account and is liable for a business loan of $15,000; and

2. its director, Mr Donthiri had taxable income of $45,375 in the last financial year, currently has $50,000 in his personal bank account, personal assets (including motor vehicles) which he values at approximately $50,000 and estimates the value of the goodwill in Shobha Enterprises at approximately $50,000.

Events leading to these proceedings

97. On 10 November 2022, the Plaintiffs (by a letter from their solicitors) purported to terminate each of the Supply Agreements in relation to the eight service stations on the basis that Xpress had repudiated them. The letter stated that Plaintiffs accepted the repudiation and advised that the Plaintiffs would be conducting their respective service station businesses on that basis. In relation to Ararat, the letter noted that Shobha Enterprises had never signed a Supply Agreement and said that if it was asserted otherwise, Shobha Enterprises accepted the repudiation for the reasons set out.

98. The 10 November letter asserted that Xpress had breached the Supply Agreements on several occasions for the reasons set out in an earlier letter dated 27 October 2022 which referred to the following alleged breaches: demanding that the Plaintiffs pay for fuel upfront; excessively late delivery of fuel such that, on several occasions, the Plaintiffs have been left with no alternative but to close their businesses for several days; failing to exercise its discretion to permit the Plaintiffs to purchase fuel from alternative suppliers in good faith and/or reasonably; and failing to deliver fuel within ordinary trading hours. The letter also asserted that Xpress had engaged in conduct in false and misleading conduct in contravention of s 29(1)(a) of Sch 2 to the Competition and Consumer Act 2010 (Cth) (ACL) and in contravention of several clauses of Sch 1 of the Competition and Consumer (Industry Codes – Oil) Regulations 2010 (Cth).

99. On 16 November 2022, the Defendants (by a letter from their solicitors) rejected the allegations of breaches and repudiation of the Supply Agreements and asserted that the 10 November 2022 notice of termination demonstrated an intention to no longer be bound. The Defendants’ letter stated that Xpress accepted the repudiation and advised that they elected to terminate the Supply Agreements. The Defendants’ solicitors’ letter also asserted that as the Plaintiffs were no longer purchasing fuel from Xpress, it was to be inferred that they were purchasing fuel from alternative suppliers in breach of the Lease Agreements and enclosed the Breach Notices, that were issued pursuant to s 129 of the Conveyancing Act in respect of the Albury, Coolac, Gunnedah, Gilgandra, Adelong and Yass Lease Agreements, and under s 124 of the Property Law Act1974 (Qld) with respect to Bundaberg.

100. The Breach Notices:

1. in relation to the Albury, Adelong, Gunnedah and Gilgandra Lease Agreements, assert breaches of the Conduct of Business and Termination (Supply Agreement) terms, by failing to obtain approval as to the supplier of fuel and the terminating the Supply Agreements, which breaches were considered not capable of remedy;

2. in relation to the Yass and Bundaberg Lease Agreements, assert a breach of the Conduct of Business term, by failing to obtain approval as to the supplier of the fuel, which breaches were considered not capable of remedy;

3. in relation to the Coolac Lease Agreement, assert breaches of the Conduct of Business and Termination (Supply Agreement) terms by failing to obtain approval as to the supplier of fuel and the terminating the Supply Agreement, which breaches were considered not capable of remedy, and a breach of cl 3.1(1) by failing to pay rent (although it does not identify the amount of rent claimed to be outstanding); and

4. assert that the ‘lessor’ will be entitled to re-enter or forfeit the lease if the ‘lessee’ fails to comply with this notice within 14 days.

101. Mr Bassal gives evidence that Xpress makes relatively small profit on margins on the fuel it supplies and that it relies on high volume to make a profit. He also says that if Xpress is not obtaining funds from the sale of fuel it will impact Xpress’ ability to repay intercompany loans owed to Press Australia.

102. Mr Bassal also gives evidence that if the interlocutory relief is refused, he intends to re-enter the sites and commence operating, and that he anticipates it will take between 7 to 14 days to locate staff to operate the sites.

103. On 1 December 2022, the Defendants, by letter from their solicitors, indicated that they would be prepared to consider an interim regime to preserve the parties position pending a final hearing. The letter proposed a without admission regime that provided for a status quo in relation to possession of the relevant premise and for the Plaintiffs to purchase fuel from Xpress based on a satisfactory system for ordering and payment. The letter also gave notice that if interlocutory relief was obtained, the Defendants would ask the Court to require the Plaintiffs to keep and provide to Xpress records of fuel purchases, to undertake only to sell Mobil fuel from the premises and pay the equivalent of the rent due under the leases as an occupation fee.

These proceedings and the Plaintiffs’ claim for interlocutory relief

104. As already noted, the Plaintiffs commenced these proceedings on 25 November 2022. On 8 December 2022, I heard the Plaintiffs’ application for interlocutory relief sitting as the Equity Duty Judge.

105. On 29 November 2022, the Defendants (on behalf of themselves, their servants and agents) gave an undertaking to the Court on a without admissions and without prejudice basis that they would not take any steps to re-enter any of the premises up to and including 8 December 2022. At the hearing, they extended that undertaking until the determination of the application for interlocutory relief.

106. The final relief sought by the Plaintiffs is set out in their Amended Summons filed on 1 December 2022.

107. There are differences in the relief sought by each of the Plaintiffs as it applies to the particular service stations. However, in general terms, at a final hearing the Lessee Plaintiffs (other than in relation to Ararat) will seek declaratory relief in relation to the Supply Agreements to the effect that they were breached and repudiated by Xpress and Press Australia and validly terminated by the Plaintiffs, and declaratory and injunctive relief and orders in relation to the Lease Agreements, to the effect that the Lessor Defendants are not entitled to rely on the Conduct of Business and Termination (Supply Agreement) terms and the Breach Notices to terminate, re-enter or take possession. Amongst other things, the Plaintiffs seek orders in relation to the Lease Agreements as follows: the Termination (Supply Agreements) terms does not apply to a termination of the Supply Agreement for repudiation or breach by Xpress on Press Australia; Conduct of Business and Termination (Supply Agreement) terms are void as unfair conduct terms within the meaning of s 23 of Sch 2 to the ACL; the Breach Notices are invalid and of no effect and it would be unconscionable for the Lessor Defendants to forfeit the Lease Agreements, re-enter and take possession.

108. In relation to Ararat, Shobha Enterprises seeks declaratory and injunctive relief that the Ararat service station site is the subject of a lease on the terms set out in the draft Sublease sent on 16 July 2020, and that Press Australia is not entitled to terminate the Ararat Sublease or take possession of that site.

109. The Plaintiffs claim for interlocutory relief is set out in their Amended Summons filed on 1 December 2022 (at [5]) in the following terms:

(5)    Upon the giving of the usual undertaking as to damages, the Defendants, by themselves, their employees and agents be restrained, until further order of the Court, from:

(a)    terminating any Lease;

(b)    taking possession of any Premises; and

(c)    taking any steps to interfere with the quiet enjoyment of and possession of any Premises by any plaintiff.

110. At the hearing on 8 December 2022, the Plaintiff did not press their other claim for interlocutory relief seeking to restrain the Defendants from debiting funds from the Plaintiffs bank accounts (Amended Summons at [4]).

111. As Shobha Enterprises’ claim raises different considerations to the primary claims for final relief made by the other Lessee Plaintiffs, I deal with Shobha Enterprises claim for interlocutory relief in relation to Ararat separately. Accordingly, where I refer to the “Lessee Plaintiffs” in the “Serious question to be tried” and “Balance of convenience” sections, I am referring to the Lessee Plaintiffs of the seven service stations other than Ararat.

Legal principles

112. The applicable legal principles were not in dispute.

113. There are two main inquiries. The first is whether the Plaintiffs have made out a prima facie case or established that there is a serious question to be tried in the sense that there is a sufficient likelihood of success to justify the grant of relief to preserve the status quo, although this does not mean that they need to establish that it is more probable than not that they will succeed at trial. The second is whether the balance of convenience and related factors, such as whether damages are an adequate remedy for any injury which the Plaintiffs may suffer if the injunctions are not granted, warrant the grant of interlocutory relief. On that question, the Court considers the inconvenience and injury that would be suffered by the Plaintiffs if the injunctions were refused compares to the loss an inconvenience if they are granted: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 81-82; [2006] HCA 46 at [65]-[72] (Gummow and Hayne JJ) (ABC v O’Neill); Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622–3; [1968] HCA 1 (Beecham).

114. If a serious question to be tried has been demonstrated, the strength of the case for final relief may be relevant to the Court’s assessment of the balance of convenience. However, the extent to which it is necessary to consider the strength of the Plaintiffs’ case depends, in particular, upon the practical consequences likely to flow from the orders sought: ABC v O'Neill at 81-84; Beecham at 622; Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 (Kolback) at 536. In this case, it was not contended that the grant of interlocutory relief will, in a practical sense, determine the dispute between the parties.

115. As this is an interlocutory hearing and not a final hearing, it is not the Court’s function to conduct a preliminary trial to resolve conflicts between the parties’ evidence or to give or withhold interlocutory relief upon a forecast as to the ultimate result of the case: Beecham at 622. The purpose of an interim injunction is to preserve the status quo until the rights of the parties can be determined at a final hearing: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [11].

116. As to jurisdiction, I accept the Plaintiffs’ submission that this Court has jurisdiction to consider the claims for relief in relation to Bundaberg and Ararat, notwithstanding they are located out of New South Wales, by virtue of the Queensland and Victorian Jurisdiction of Courts (Cross-vesting) Acts of 1987, s 4(2) and s 4(3); Bond v Gray [2013] NSWSC 1793 at [6].

Serious question to be tried

117. The Plaintiffs rely on three claims for final relief which they contend amount to serious questions to be tried. These are their claims for relief against forfeiture, their claims that the Defendants are unable to rely on “their own wrongs” (of failing to supply fuel) to terminate and forfeit the Lease Agreements, which they say would also be unconscionable, contrary to ss 20 or 21 of sch 2 to the ACL, and claims in contract that are said to involve waiver, consent, an implied term and a construction argument of the Lease Agreements.

118. The main claim relied on by the Lessee Plaintiffs at the hearing is there claim for relief against forfeiture, which I deal with first.

119. The Plaintiffs submit that the Lessor Defendants do not have any demonstrable interest in the Supply Agreements with Xpress or Press Australia remaining on foot or the source of fuel. They say that the Lessor Defendants’ interests under the Lease Agreements are sufficiently protected so long as the rent continues to be paid, the premises are kept in good repair and the Lessee Plaintiffs continue to abide by their other obligations under their Lease. As was put, there is a serious question to be tried as to whether the Lessor Defendants can forfeit the Lease Agreements by relying on terms which do not benefit them and the breaches relied on do not cause the Lessor Defendants any loss. It was submitted that relief has been granted in similar circumstances, where the breaches relied on by the landlords had caused them no loss, referring to Pioneer Gravels (Qld) Pty Ltd v T & T Mining Corporation Pty Ltd [1975] Qd R 151 (Pioneer Gravels) and Re Hi-Fi Sydney.

120. The Plaintiffs submit that any claim by the Lessor Defendants to an interest in maintaining exclusive supply arrangements with Xpress (and presumably, Press Australia) is undermined and the Court should infer that such arrangements are not necessary for the protection of the Lessor Defendants’ legitimate business interests in circumstances where three of the Lease Agreements (Coolac, Bundaberg and Ararat) do not contain the Termination (Supply Agreement) terms and there is evidence that Mr Bassal, on behalf of Xpress, directed at least one Lessee Plaintiff to purchase fuel from a third party and refused to supply fuel to Lessee Plaintiffs even if payment was received in full before delivery.

121. The Plaintiffs also submit that relief against forfeiture should be granted in circumstances where the Lessor Defendants rely on the purchase of fuel from third parties and terminated the Supply Agreements in circumstances where they arose from the non-supply of fuel by Xpress.

122. Aligned with those submissions is the Plaintiffs’ claim that there is a serious question to be tried that it would be unconscionable for the Lessor Defendants to rely on the Conduct of Business and Termination (Supply Agreement) terms and enforce the Breach Notices and otherwise claim an entitlement to re-enter and take possession for breach of those terms. The Plaintiffs submit that, in determining whether the Breach Notices amount to unconscionable conduct, the Court will consider whether the Conduct of Business and Termination (Supply Agreement) terms are necessary to protect the legitimate interests of the Lessor Defendants. They argue that neither of these terms are necessary as the Lessor Defendants do not have any interest in the type of fuel sold from their premises and, as long as the rent is paid and the premises are kept in good repair, the Lessor Defendants interests are sufficiently protected.

123. No issue was raised by the Defendants that the Plaintiffs’ application for injunctive relief is in aid of an application for final relief against forfeiture, which relief is often only granted on a final basis: New Dragon Investments Pty Ltd v Morgan & Banks Development Pty Ltd [2006] NSWSC 1139 at [39]. Rather, the Defendants argue that the Plaintiffs have not established there is a serious question to be tried that final relief against forfeiture would be granted in the circumstances of this case.

124. The Lessor Defendants submit that the bargained-for benefits under the Lease Agreements are not just the rent payable by the Lessee Plaintiffs but the commercial objective of having Xpress sell the fuel that it is required to purchase from Mobil and BP to the Lessee Plaintiffs in each of the service stations that have been branded and fitted out by the Defendants. They submit that the terms of the Supply Agreements and the Lease Agreements operate together to protect that commercial objective, to the mutual gain of the Lessee Plaintiffs and the Defendants and that the benefits can only be secured to the Lessor Defendants by permitting them to forfeit the Lease Agreements if the Supply Agreements are terminated or the Plaintiff Lessees chose to cease to purchase fuel from Xpress, as they have done in this case.

125. The Lessor Defendants submit that the Conduct of Business terms, which give the Lessor Defendants control over the supplier of fuel to each Lessee, are also essential to protect their legitimate interests, noting that the only permission that has been given to date has been to acquire fuel on a continuing basis from Xpress.

126. They submit that as Xpress holds the licences to use the Marks of Mobil and BP, the Lessor Defendants have a legitimate interest in protecting the use of the branding at the service stations sites and that the site conversion assistance amounts paid by Mobil to Xpress were to ensure that the sites became Mobil branded service stations. It is submitted that in addition to having an interest in ensuring the continuous exclusive supply by Xpress as a Mobil fuel supplier, the terms of the Lease Agreements serve to protect the Lessor Defendants against claims for site conversion assistance and from being potentially liable to Xpress as a result of the use of the Marks.

127. The Defendants also submit that, irrespective of whether the Lessee Plaintiffs were legitimately entitled to terminate the Supply Agreements (which they deny), the breaches cannot now be remedied and their refusal to accept supply from Xpress comes in circumstances where the Lessor Defendants are likely to suffer significant damage if the Lease Agreements are not forfeited. Reference was made to the impact on the ability of Xpress to repay “intercompany loans” and it was contended that any damage to Xpress is damage to the Lessor Defendants.

128. The Court has power to grant relief against forfeiture for breach of a term other than for non-payment of rent, such as breaches of the Conduct of Business and Termination (Supply Agreement) terms, under statute or as part of the Court’s inherent jurisdiction. The Termination (Supply Agreement) term provides for forfeiture on the happening of a specified event, namely termination of the Supply Agreement which is deemed to be a breach of a fundamental term of the Albury, Gunnedah, Gilgandra, Yass and Adelong Lease Agreements, entitling the Lessor Defendants to terminate subject to giving any requisite notices. The Conduct of Business terms are positive covenants or promises that would also fall with s 129 of the Conveyancing Act and its Queensland equivalent: Conveyancing Act, s 129, Property Law Act, s 124; Re Hi-Fi Sydney Pty Ltd (Administrator Appointed) [2015] NSWSC 1312, at [21] – [25] (Re Hi-Fi Sydney).

117. In Shiloh Spinners Ltd v Harding [1973] 1 All ER 90; [1973] 2 WLR 28 (Shiloh Spinners) at 722-723, Lord Wilberforce explained that there were three situations where equity gives relief against forfeiture. First, where it is possible to state that the object of the transaction and the insertion of the right to forfeit is essentially to secure the payment of money. Secondly, where there has been fraud, accident, mistake or surprise (the traditional heads of equitable jurisdiction). Thirdly, in appropriate and limited cases for breach of covenant or condition where the primary object of a bargain is to secure a stated result which can be effectively obtained when the matter comes before the Court and where the forfeiture provision is security for the production of that result. His Honour observed that word “appropriate” involves consideration of the conduct of the applicant for relief, in particular whether their default was wilful, of the gravity of the breaches, and of the disparity between the value of the property of which forfeiture is claimed as compared with the damage caused by the breach.

118. In Ace Property Pty Ltd v Australian Postal Corporation [2011] 1 Qd R 504; [2010] QCA 55 at [163], Keane JA (as his Honour then was), summarised the considerations applicable on an application for relief against forfeiture, in a general context, as involving the conduct of the applicant for relief, including whether the default was inadvertent or wilful; the gravity of the breaches; the damage to the covenantee or lessor; the relative loss to the covenantor or lessee; and, the disparity between the value of the property forfeited and the damaged caused by the breach.

119. In Pioneer Gravels at 161, Hart J observed in relation to Lord Wilberforce’s third category in Shiloh Spinners:

But he also speaks of securing “a stated result” and of securing “the essentials of the bargain”. Clearly, he was thinking of cases in which the lessor had suffered some loss or damage, which could be put right. I think that a fortiori relief should be granted in a case where no loss or damage has been suffered, so that there is nothing to be put right.

132. In Re Hi-Fi Sydney, Brereton J (as His Honour then was) at [28], noted that the first and third of the Shiloh Spinners categories have as their essential touchstone that the forfeiture is a means of securing the bargain, and not of providing to the secured party benefits over and above what are necessary to achieve the end, not to impose on then party giving security a penalty or sanction over and above the primary purpose of the bargain. His Honour also noted (at [34]) the significance of a lessor not suffering any damage from the breach of lease in question.

133. These cases highlight that, when considering whether to grant final relief against forfeiture, the Court will look not only to the purpose of the clause(s) of the Lease Agreements that have been breached but also to the effect of the breaches on the lessor(s), as well as the impact on the lessee(s) if relief is not granted. They also make clear that the remedy is a discretionary one, that takes account of all the circumstances of the case.

134. In my view, there is force to the Lessor Defendants’ submission that the primary object of the Conduct of Business terms that have been breached was to secure a stated result, namely for the Lessor Defendants to have control over who was to supply fuel to the service stations and, in particular, to protect Xpress’ position as the exclusive supplier in the context of the Mobil Site Agreements. The Termination (Supply Agreement) terms were presumably included in some of the Lease Agreements by way of added security for that purpose.

135. However, having considered the parties’ submissions and evidence in this case, I am not persuaded by the Lessor Defendants’ submission that the Lessee Plaintiffs have not established there is a serious question to be tried as to whether relief against forfeiture will be available in this case.

136. In my view, it is seriously arguable that the Lessor Defendants (as distinct from Xpress as the supplier of fuel) will not suffer any direct loss or financial damage from the breaches of the Conduct of Business and Termination (Supply Agreement) terms they rely on as giving rise to their rights to forfeit, re-enter and take possession of the service station sites. This is particularly as the Lessee Plaintiffs will continue to pay rent, will comply with their other obligations under the Lease Agreements and, consistent with the statements made by counsel for the Lessee Plaintiffs at the hearing (and as confirmed by written undertakings dated 9 December 2022), will only sell Mobil or BP fuel and not interfere with any branded signage, marks or get-up in place at the service stations.

137. I am not persuaded by the Lessor Defendants’ submission that Press Australia is in a different position in relation to Bundaberg, given it is both the Lessor Defendant and the supplier. Press Australia is not the party to the Bundaberg Site Agreement. There are no details of the terms of the “intercompany loans” or the profit that Xpress expects to derive under the Supply Agreement, or any documents that support Mr Bassal’s assertions that Xpress’ ability to pay the intercompany loans will be impacted if interlocutory relief is granted. Nor do I find convincing the submission that the Court should conclude that any damage to Xpress is damage to the Lessor Defendants, given the Lessor Defendants are different corporate entities to the entity (Xpress) that is a party to the Site Agreements, and in the absence of evidence about the intercompany arrangements regarding, for example, the use of the marks and brands licenced to Xpress by Mobil and BP, what claims, if any, Xpress might make against the Lessor Defendants.

138. If the relief is not granted, the Lessee Plaintiffs, who have expended money to buy the service station businesses would likely lose the benefit of those expenditures, a significant though by no means determinative, consideration to whether final relief would be granted: Re Hi-Fi Sydney at [35], citing Wynsix Hotels (Oxford St) Pty Ltd v Toomey (2004) 17 BPR 32, 633; [2004] NSWSC 236 at [63] – [70]. To my mind, the disparity between the loss to the Lessee Plaintiffs compared to that of the Lessor Defendants is a factor that would weigh in favour of the Lessee Plaintiffs.

139. While the Lessor Defendants do not characterise the breaches of the Conduct of Business and Termination (Supply Agreement) terms by the Lessee Plaintiffs as ‘wilful acts’, they submitted that they went in with their eyes ‘wide open’, having made clear decisions to take a particular course in breach of the Lease Agreements to their commercial advantage. That may be so. However, the deliberate acts of the Lessee Plaintiffs of terminating the Supply Agreements and refusing to acquire fuel from Xpress arise in the context of complaints about fuel supply and other issues. The Lessee Plaintiffs decisions must be considered against the facts that tend to support in position that Xpress had breached its obligations under the Supply Agreements to supply fuel at all or in a timely manner.

140. Further, in the context where there is no evidence of a history of non-compliance by the Lessee Plaintiffs with the Conduct of Business terms, default in rental payments or a failure to comply with other obligations under the Lease Agreements, my view that it is arguable that the ‘breaches’ relied on do not damage the Lessor Defendants position as landlords, and having regard to the matters referred to at [120] above, I do not consider the grant of final relief against forfeiture to be as uncertain as the Defendants contend.

141. Accordingly, and taking account of all of the circumstances, I accept the Lessee Plaintiffs’ submission that there is a serious question to be tried that they will be entitled to relief against forfeiture in this case. This is particularly in circumstances where, in my view, it is seriously arguable that the object of the terms breached, namely to ensure a stream of income to support rent, can be satisfied by the Lessee Plaintiffs securing their source of fuel from other Mobil or BP suppliers, the service stations will continue to be operated under the Mobil and BP brands stations, there is no evidence to indicate that the Lessor Defendants will be exposed to any claims by Mobil or BP or any claim by Xpress, and there is evidence that supports the Lessee Plaintiffs’ position that Xpress had breached its obligations to supply fuel prior to their of the Supply Agreements.

142. As to this last point, I accept that there will be factual and legal debates at the final hearing as to whether the evidence is sufficient to establish that Xpress breached the Supply Agreements with each of the Lessee Plaintiffs and, if it had, whether those breaches (and other conduct) were sufficient to convey an intention by Xpress no longer to be bound or manifest an unwillingness or inability to render substantial performance such as to amount to repudiation of those agreements. While the Court does not need to decide the ultimate questions of whether each Lessee Plaintiff had a right of termination of then Supply Agreements, it is appropriate to record that the differences in Xpress’ obligations under cl 2.2 of the Supply Agreement (as described at [19(a)] above) and the quality of the evidence relied on by the Lessee Plaintiffs about those matters makes it difficult to conclude that each of them is in the same position and have all demonstrated a prima facie case of repudiatory breach by Xpress.

143. For that reason, and as the breaches relied on by the Lessor Defendants (at least in relation to the Termination (Supply Agreement) terms) cannot now be remedied, overall, I do not assess the Lessee Plaintiffs’ claims for final relief against forfeiture to be strong.

144. Similarly, I am not persuaded that the Lessee Plaintiffs claims for final relief that are premised on the contention that they each lawfully terminated the Supply Agreements for Xpress’ repudiation, namely that the Defendants cannot rely on their own wrong and unconscionable conduct, are more than arguable or give rise to strong prima facie cases for final relief. The principle referred to by the Lessee Plaintiffs that a party may not take advantage of its own wrong where a right accrued to it is a result of its own wrongful conduct (referring to Suttor v Gundowda Pty Limited (1950) 81 CLR 418 and Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 194 FLR 322) might be applicable but only to the extent the Lessee Plaintiffs can establish that they had lawful rights to terminate the Supply Agreements in the first place. It is also difficult to see anything unconscionable or unfair in the exercise of rights to terminate and forfeit the Lease Agreements if the Lessee Plaintiffs were not entitled to terminate the Supply Agreements and the Lessor Defendants establish (contrary to the contentions outlined above) that the Conduct of Business and Termination (Supply Agreement) terms are necessary for the protection of their legitimate business interests as landlords.

145. As I have concluded that the Lessee Plaintiffs have established there is a serious question to be tried, it is not necessary to consider the Lessee Plaintiffs contract claims in any detail. Suffice to say that I consider these to be the weakest claims and am not satisfied that the Lessee Plaintiffs have established there are serious questions to be tried in relation to them.

146. In particular, I am not persuaded by the submission that the evidence establishes there are serious questions to be tried that the Lessor Defendants waived compliance with the Conduct of Business and Termination (Supply Agreement) terms as a result of Xpress supplying non-Mobil and non-BP fuel to some of the Lessee Plaintiffs on occasions and encouraging Mr Lingamaneni to acquire fuel from South West Fuels (which evidence is also the subject of dispute). Nor am I persuaded that this amounted to consent on the part of the Lessor Defendants for the Lessee Plaintiffs to purchase fuel from third parties on an ongoing basis. Leaving to one side that the conduct relied on was that of Xpress and not conduct of the Lessor Defendants, the mere fact that consent may have been provided on one or more occasions does not, in my view, establish a prime facie case of waiver or consent as required by the terms of the Lease Agreements.

147. In my view, the Conduct of Business terms, particularly those that provide for the Lessor Defendants’ consent not to be unreasonably withheld, militate against the implication of the implied term proposed by the Lessee Plaintiffs. I am also unpersuaded by the Lessee Plaintiffs’ submission that they have established there is a serious question to be tried that the drafting of the Termination (Supply Agreement) term is ambiguous, by reference to the heading that refers to “Breach of Supply Agreement”, and there is a triable issue as to its proper construction.

148. Finally, I accept that there are serious questions to be tried that the Breach Notices in relation to Gilgandra and Albury are defective. As counsel for the Defendants accepts, appropriately in my view, these Breach Notices are not valid as they were not issued by the correct Lessor Defendants. At the hearing, counsel for the Lessor Defendants confirmed that Press Australia and Xpress Transport (the Lessor Defendants for those sites) would not seek to move on them, but also indicated that they intended to “do it again”, which I understand to mean that they intend to issue fresh notices (T54.1-33). Accordingly, I have proceeded on the basis that the Lessee Plaintiffs for those sites seek injunctive relief on a quia timet basis.

Balance of convenience and discretionary factors

149. The Plaintiffs submit that the balance of convenience is in their favour as the Lessor Defendants’ rights, qua landlords, will be protected pending final hearing in the context where the Lessee Plaintiffs will continue to pay rent and otherwise abide by the covenants under the Lease Agreements, will purchase fuel from Mobil and BP fuel suppliers and will not interfere with the Mobil and BP related Marks at the sites. The Plaintiffs submit that they would be irreparably harmed if interlocutory relief is not granted and they are removed from the service station premises as their businesses would crease to trade and any goodwill, for which they paid good consideration, would be destroyed. They also argue that they would lose their interest in land under the Lease (and Sublease) Agreements, for which damages are an inadequate remedy.

150. I accept the Plaintiffs’ submission that damages will not generally be regarded as an adequate remedy when the subject matter is an interest in land, such as for breach of an agreement to lease, because of the unique value which is ascribed to land: Rossi Recycling Pty Ltd v Buckland Valley Pty Ltd & Anor [2022] VSC 467, referring to IGA Distribution Pty Ltd v King & Taylor Pty Ltd [2002] VSC 440, per Nettle J (as his Honour then was) at [199]. I also note that no submission was advanced to the contrary.

151. That said, in my view, the risk that damages will be an inadequate remedy is not determinative at the interlocutory stage. It is just one of the matters to be considered in determining what course is best calculated to achieve justice in this case, in circumstances where the Lessee Plaintiffs’ entitlements to final relief are uncertain and bearing in mind the consequences of granting injunctions to which the Lessee Plaintiffs may ultimately be held not to be entitled, and the consequences to them of refusing the injunctions to support the relief to which they may ultimately be entitled: Kolback at 535.

152. On the balance of convenience and discretionary factors, the Lessor Defendants raised three matters, the first being that the Lessor Defendants and Xpress will suffer substantial damages if Mobil and BP were to terminate the licenses by which then leased properties are branded and ceased to supply fuel to either Xpress or the Lessee Plaintiffs, with the risk of substantial damages claimed by Mobil for breach of the Site Agreements.

153. I have already dealt with the concept of loss and damage to the Lessor Defendants (at [136] and [137] above). In my view, it is difficult to see what direct financial loss or damage they would suffer.

154. The financial exposure and risks to Xpress under the Site Agreements are matters that are relevant to take into account in considering whether to grant or refuse the injunctive relief. The undertaking as to damages extends not only to any damage suffered by the Lessors Defendants, as parties to the Lease Agreements, but also to other parties to the proceedings (namely Xpress) and to persons whose interests are or may be affected by the grant of interlocutory relief: Uniform Civil Procedure Rules, r 25.8; Smith Kline & French Laboratories (Australia) Ltd v Department of Community Services & Health (1989) 89 ALR 366 at 371 (Gummow J).

155. As to the risks to Xpress, I have referred to the terms of the Site Agreements above that provide for Quotas and liquidated damages. The Defendants calculate that Xpress is exposed to liquidated damages totalling $254,555 ^[1] per annum under the Site Agreements for failing to meet its Quotas and estimate that the total exposure is around $1,554,000 ^[2] for the remaining terms of the Site Agreements.

     1. This excludes liquidated damages in relation to the Ararat service station.

     2. This excludes liquidated damages in relation to the Ararat service station.

156. Mr Bassal gives evidence that Mobil’s Retail Sales Manager and its Retail Fuel Business Development Manager informed him they were concerned by the termination of the Supply Agreements by the tenants at Albury, Coolac, Bundaberg, Gunnedah, Adelong and Ararat, that Xpress may not be meeting its Quota at the various sites, and the fuel that is being sold from those sites may not be Mobil branded fuel. Mr Bassal deposed that his solicitor expected to hear from Mobil’s legal team “over the coming days” in respect of Mobil’s concerns and any actions they intended to take but there is no evidence of any further action or concerns on Mobil’s. I also note that that there was no mention of issues concerning the Mobil branding during Mr Bassal’s discussions with Mobil.

157. Based on that evidence, the likelihood of Mobil taking action to enforce its liquidated damages clauses in circumstances where Xpress may not meet its Quota is, at this stage, unknown. It also seems reasonable to expect that Mobil will not take any action if the fuel to be sold from the Albury, Coolac, Bundaberg, Gunnedah, Yass and Adelong sites pending a final hearing will be Mobil branded fuel and the Mobil branding at the sites will not be interfered with.

158. There is no evidence of what action (if any) BP may take against Xpress under the BP Agreement if interlocutory injunctions are granted. Unlike the Site Agreements, the BP Agreement contains no liquidated damages clause and is a shorter-term contract.

159. The second matter raised by the Lessor Defendants is the evidence which they submit shows that the undertakings as to damages proffered by the Lessee Plaintiffs are likely to be insufficient or even valueless.

160. Where a corporate entity or an individual offers an undertaking as to damages, in circumstances where there is a risk that damage may be caused by the grant of interlocutory injunctive relief, part of their case should include establishing that there is some prospect that they would have the capacity to perform that undertaking if called upon to do so.

161. The evidence relating to the financial position of the Plaintiffs (which is outlined above) indicates that they have modest taxable incomes, portions of their assets represent an estimate of the value of the businesses conducted from the leased sites, that most of the corporate and director plaintiffs have limited savings and cash in the bank, and that many of the assets referred to are of an illiquid nature. It is fair to say that the position of some of the Lessee Plaintiffs are better than others (for example, the financial position of the Coolac plaintiffs is considerably stronger than that of the Yass and Adelong plaintiffs). However, I accept the Lessor Defendants’ submissions that the financial position of the Plaintiffs is a cause for concern if, for example, they were ultimately required to meet a claim for the liquidated damages payable by Xpress under the Site Agreements, whether for one year or for the balance of the terms, or a claim for loss of profits by Xpress.

149. The third matter raised by the Lessor Defendants is that fuel is not being ordered and therefore not supplied as contemplated by the Supply and Lease Agreements entered into by all the Lessee Plaintiffs. Reference was made to the without admission proposal the Defendants invited from the Plaintiffs to recommence purchasing fuel from Xpress pending the determination of this dispute, which was not forthcoming.

150. At the hearing, the Defendants counsel confirmed that the Defendants would be willing to resolve the interlocutory dispute if the Lessee Plaintiffs undertook to only sell Mobil fuel bought from Xpress, save where Xpress did not confirm by the second business day of ordering or deliver by the third day, in which case the Plaintiffs could order from another Mobil fuel supplier. That offer was subject to the Plaintiffs giving the usual undertaking as to damages, the outstanding rent of $123,000 being paid in relation to Coolac, and on the basis that the Plaintiffs kept copies of invoices, bills of lading and delivery dockets, and agreed to payments terms for Xpress within 12 hours of delivery.

151. Counsel for the Plaintiffs indicated that he would get instructions on the Defendants’ proposal but submitted that it was an attempt to resurrect the Supply Agreements that all the parties accept have been terminated and forestall any action by Mobil, rather than responding to the Lessee Plaintiffs’ application for interlocutory relief in relation to the Lease Agreements. Plaintiffs’ counsel was unable to obtain instructions on the Defendants’ proposal by the end the end of the hearing, and so I directed the parties to update the Court by 4.00pm the next day as to whether an agreement had been reached on an interim regime to resolve the interlocutory application.

152. The following day, on 9 December 2022, my chambers received an email from the Plaintiffs’ solicitor advising that no agreement had been reached. The email separately attached signed undertakings proffered by the Plaintiffs to the Court that, until further order, each of the Plaintiffs that operated a Mobil-branded service station undertook to procure and sell, with respect to their service stations, to offer for sale to the public, only petroleum products produced or ultimately supplied by Mobil, and not to interfere with any Mobil-branded signage, branding, marks or get-up in place at their respective service stations. A similar undertaking was proffered by the seventh and eighth plaintiffs to procure and sell at the Gilgandra service station only petroleum products produced or ultimately supplied by BP Australia and not to interfere with any BP-branded signage, branding, marks or get-up in place at the Gilgandra service station site.

153. By an email received from their solicitors later that day, the Defendants objected to the offering of these undertakings. This was for the reasons that the undertakings were not given pursuant to any direction of the Court, were provided after the hearing had been concluded and without the Defendants’ approval.

154. I do not uphold the Defendants’ objection. In my view, it is appropriate for the Court to have regard to the written undertakings proffered by the Plaintiffs. This is particularly as they are consistent with statements made during the course of oral submissions to the effect that the Plaintiffs would conduct their business in a manner that reflects what the undertakings provide for (T26.31-42, T57.33). They are also proffered in the context where the Court had given time to the parties to continue to discuss whether an agreement could be reached about an interim regime and are seemingly responsive to the proposal put forward by the Defendants during the course of the hearing. In any event, they also reflect the conditions that I consider would go some way to mitigating risks to the Lessor Defendants if interlocutory relief is granted.

155. The Defendants also submit that, in assessing the balance of convenience, it is relevant that the Plaintiffs took a risk, of which they now complain, with their ‘eyes open’, and that their decision to take the risk of terminating the Supply Agreements weighs against then grant of interlocutory relief: Girchow Enterprises Pty Ltd v Ultimate Franchising Group Pty Ltd [2021] FCA 1579 at [27]; Beecham at 626. There is, in my view, some force to that submission. The Plaintiffs must have been aware that their actions in purporting to terminate the Supply Agreements and acquiring fuel from other suppliers would put them in breach of the Lease Agreements that the Lesser Defendants would seek to enforce their right to forfeit the Leases, and that the Plaintiffs would have to take urgent action and provide undertakings to support the grant of any interlocutory relief. However, I do not consider that factor to be of significant on the balance of convenience in view of the Plaintiffs claims regarding fuel supply and payment issues by Xpress.

156. In my view, the most significant issue on the question of the balance of convenience is that to refuse to grant interlocutory relief and allow the Lessor Defendants to act on their Breach Notices (and inevitably issue new ones in relation to Albury and Gilgandra) would result in them re-entering service station sites prior to trial, which will involve significant commercial, physical and financial consequences for the Lessee Plaintiffs that I do not consider to be a just and convenient short-to-medium term solution for any of the parties.

157. It is also difficult to see what real prejudice there would be to the Lessor Defendants from the grant of interlocutory relief, as such relief would have the effect of maintaining the status quo, in the sense that Xpress was not supplying fuel to the Lessee Plaintiffs before the proceedings were commenced. I am also persuaded that the risk to the Lessor Defendants should be mitigated by conditions on the grant of interlocutory relief that would require the Lessee Plaintiffs to procure and offer for sale only Mobil or BP branded petroleum products and not to interfere with any Mobil or BP branded signage, equipment and get-up in place at the service stations, thereby preserving the existing arrangements other than in relation to fuel supplied by Xpress. Further, the risks arising from the Plaintiffs financial position could also be managed by a condition relating to the provision of security.

158. The position in relation to Coolac is different as there is evidence that Sri Vishnu Fuels owes rent to Press Australia, the Lessor Defendant, and no evidence was adduced by Sri Vishnu Fuels disputing that claim. Its failure to pay rent is a factor that weighs against the exercise of the Court’s discretion, although any grant of injunctive relief could be made conditional on the outstanding rent being paid.

159. Weighing all of these matters, in my view, there is a greater risk of injury and prejudice to the Lessee Plaintiffs if interlocutory relief is not granted than to the Lessor Defendants if the interlocutory relief is refused. I am also satisfied that the discretionary factors raised by the Defendants do not warrant refusing to grant interlocutory relief in favour of some of the Plaintiffs.

Injunctive relief in relation to Ararat Service Station

173. In my view, the position in relation to Shobha Enterprises’ claims for interlocutory relief in relation to the “Ararat Sublease” is different to the claims by the other Plaintiffs. I am not satisfied that Shobha Enterprises has demonstrated that interlocutory relief in the terms sought should be granted in relation to the Ararat service station and decline to do so.

174. As the factual matters outlined above makes clear, Shobha Enterprises is not a party to a registered or written sublease in relation to Ararat and is not (and has not been) a party to an executed Supply Agreement with Xpress (or Press Australia), although it had obtained most of its fuel supplies from Xpress until late October this year. Based on the evidence on this application, it also appears that Shobha Enterprises had not entered into a Sale Agreement to purchase the Ararat service station business.

175. The Defendants’ submissions indicate that there is a dispute as to the basis on which Shobha Enterprises leases the Ararat premises. The Defendants do not accept that Shobha Enterprises holds the Ararat service station site under a long-term equitable lease on the terms of the draft sent on 16 July 2020 by Press Australia’s then solicitors (Amended Summons at [55]), but maintain that Shobha Enterprises is a tenant pursuant to a periodic tenancy from month-to-month, which arises by implication from the entry into occupation with the Lessor Defendant’s consent and the subsequent monthly payment and acceptance of rent and may be determined by notice to quit given by either party.

176. However, unlike the other Lessee Plaintiffs, Press Australia (nor any other Defendant) has issued a notice to quit or breach notice to Shobha Enterprises. Nor is there any evidence before the Court that Press Australia has taken any steps to issue a notice to quit or take possession of the Ararat service station, or that it intends to do so in the short to medium term.

177. In that context, I accept the Defendants’ submission that Shobha Enterprises’ claim for interlocutory relief that seeks to restrain Press Australia from terminating the Ararat Sublease or retaking possession of the Ararat service station, is premature. Put another way, I see no basis on which the Court could consider granting a quia timet injunction where there is an absence of evidence of any apprehended or threatened wrong. Shobha Enterprises’ position is also different to the position of the Albury or Gilgandra Lessee Plaintiffs, given that counsel for the Lessor Defendants confirmed that the Lessor Defendants intended to issue fresh notices under s 129 of the Conveyancing Act.

178. There are two other matters that are relevant to my decision to decline to grant interlocutory relief in relation to Ararat.

179. First, based on the evidence outlined above and the Plaintiffs’ submissions, I am not satisfied that Shobha Enterprises has demonstrated the existence of a serious question to be tried that it would be entitled to declaratory relief that it holds the Ararat service station premises on the terms of draft Sublease. As the Defendants’ submission contend, it is difficult to conclude there is a prima facie case for final relief where the evidence from Mr du Maurier (on information and belief) indicates that Mr Donthiri did not accept the terms of the Ararat Sublease primarily (but not only) for the reason that he considered the rent to be too high.

180. Second, the caveat lodged on behalf of Shobha Enterprises also refers, as the grounds of the claim, to a “Part performed oral agreement with the [Registered Proprietor]”, that was not identified by the Plaintiffs’ written and oral submissions. Nor were any submissions advanced that an equitable lease arose on the terms of the Ararat Sublease based on an oral agreement between the relevant parties.

181. It follows in my view, that Shobha Enterprises has not discharged its onus of establishing that there is a serious question to be tried that it would be entitled to final relief for a declaration that Press Australia, as landlord, is not entitled to terminate the Ararat Sublease or to possession of the Ararat Premises.

182. My decision to decline Shobha Enterprises’ application for interlocutory relief should not be taken as an indication that I have accept the Defendants’ contention that Shobha Enterprises is a month-to-month tenant. Rather, it reflects that the primary issues that were the subject of the submissions and debate at the hearing, relating to breach, termination and forfeiture, do not arise in respect of Shobha Enterprises and are not relevant to its claims for final relief, as articulated in the Amended Summons.

183. Finally, I should record that the Defendants’ written submissions contend that this Court is not a convenient forum to hear Shobha Enterprises’ claims and it has been wrongly joined as a Plaintiff. This issue was not addressed by the parties at the hearing and there is no application before me to transfer those proceedings to a Victorian Court. However, to my mind, there is some merit in the submission that there are unlikely to be common questions of fact and law in the claims made by Shobha Enterprises and the other plaintiffs in these proceedings.

Conclusion

184. In conclusion, I am satisfied that the Lessee Plaintiffs, other than Shobha Enterprises, have established there are serious questions to be tried that they will be entitled to final relief, although I do not consider their claims to be strong. I have also concluded that the balance of convenience weighs in favour of interlocutory relief being granted to the Lessee Plaintiffs, other than Shobha Enterprises. For these reasons, I have concluded that the Lessee Plaintiffs, other than Shobha Enterprises, should be granted interlocutory relief, although subject to conditions that will mitigate the risk of loss and damage to the Defendants and to deal with what I consider to be legitimate issues raised about the adequacy of the undertaking as to damages proffered by the Plaintiffs.

185. The conditions include accepting the written undertakings proffered by the Plaintiffs (excluding Shobha Enterprises) to only offer for sale to the public Mobil and BP petroleum products and not to interfere with any Mobil and BP-branded signage, branding, marks or get-up until further order.

186. The Plaintiffs have also proffered the ‘usual’ form of undertaking as to damages. The terms of such undertakings are matters for the discretionary judgment for the Court and their provision may be moulded so as to fit the circumstances of the case. That includes requiring, as a condition of the grant of interlocutory relief, some form of security to strengthen the undertaking to ensure the reality of adequate compensation, in the event that loss might result by reason of the grant of the injunctive relief: First Netcom Pty Ltd v Telstra Operation Ltd (2000) 101 FCR 77; [2000] FCA 1269 at 23-24.

187. I am persuaded that the interlocutory relief to be granted should be conditioned on the Plaintiffs fortifying their undertaking as to damages by providing security in the amount of $225,000. This condition is required, in my view, as the evidence of the Plaintiffs’ financial position raises real doubts as to their ability to adequately discharge any liability they may have to Xpress that may accrue under the undertakings pending the final hearing. The amount of $225,000 is based on the estimate of the loss which may result if Xpress fails to meet its Quotas for the Mobil service station sites (other than Ararat) and if Mobil was to enforce its rights for liquidated damages for one year. While accepting there is a question as to whether Mobil will seek to enforce its rights, based on the terms of the Site Agreements I am satisfied that there is a sufficient level of risk. I am also satisfied that it is sufficiently arguable that any loss to Xpress as a consequence of Mobil enforcing its rights would be a loss caused by the grant of the interlocutory relief.

188. The Plaintiffs can elect to comply with the security condition or decline to do so, but must accept the consequences of their election, namely that the interlocutory orders will dissolve if the security is not provided within 28 days.

189. It will be a matter for the Plaintiffs to determine amongst themselves how and in what individual amounts the security is to be provided if they so elect.

190. As to Coolac, on 19 December 2022, when I informed the parties of the Court’s decision, counsel for the Defendants advised that Press Australia no longer claimed that rent was outstanding by Sri Vishnu Fuels in relation to the Coolac Lease Agreements. Accordingly, I have not made the interlocutory relief conditional on payment of any rent by them.

191. The Lessee Plaintiffs will, however, be required to keep and maintain records of any fuel purchased by them, as such records may be relevant in the event that fail at a final hearing and are subject to a claim under their undertaking as to damages.

192. The parties are agreed that the proceedings should continue by way of pleadings and for the final hearing to be heard on an expedited basis, and I will make directions to that effect.

193. As to costs, given the outcomes, in my view, the costs of the application for interlocutory relief should be reserved and dealt with as part of the final outcome, and I will so order.

194. For these reasons, I make the following orders:

1. On the basis of the undertakings set out in [2] and [3] below and subject to the condition set out in [4] below, the Defendants, by themselves and agents be restrained, until further order of the Court from:

1. terminating any Lease;

2. retaking possession of any Premises; and

3. taking any step to interfere with the quiet enjoyment of possession of any Premises by any of the First to Thirteenth Plaintiffs.

2. The Court notes the written undertakings given to the Court dated 9 December 2022 (provided under cover of an email from their solicitor):

1. of the First to Sixth and the Ninth to Thirteenth Plaintiffs that:

1. until further order, each of the [First to Sixth and the Ninth to Thirteenth] Plaintiffs undertakes to procure and sell, with respect to their respective Premises (as defined in the Amended Summons filed on 1 December 2022), to offer for sale to the public, and sell, only petroleum products produced or ultimately supplied by Mobil Oil Australia Pty Ltd;

2. until further order, each of the [First to Sixth and the Ninth to Thirteenth] Plaintiffs undertakes, with respect to their respective Premises, not to interfere with any Mobil-branded signage, branding, marks or get-up in place of their respective Premises;

2. of the Seventh and Eighth Plaintiffs that:

1. until further order, each of the Seventh and Eighth Plaintiffs undertakes to procure and sell, with respect to the Gunnedah Premises (as defined in the Amended Summons filed on 1 December 2022) to offer for sale to the public, and sell, only petroleum products produced or ultimately supplied by Mobil Oil Australia Pty Ltd;

2. until further order, each of the Seventh and Eighth Plaintiffs undertakes, with respect to the Gunnedah Premises, not to interfere with any Mobil-branded signage, branding, marks or get-up in place of the Gunnedah Premises;

3. until further order, the Seventh and Eighth Plaintiffs undertakes to procure and sell with respect to the Gilgandra Premises (as defined in the Amended Summons filed on 1 December 2022) to offer for sale to the public, and sell, only petroleum products produced or ultimately supplied by BP Australia Pty Ltd;

4. until further order, each of the Seventh and Eighth Plaintiffs undertakes, with respect to the Gilgandra Premises, not to interfere with any BP-branded signage, branding, marks or get-up in place of the Gilgandra Premises;

3. The Court notes the First to Thirteenth Plaintiffs, through their counsel, give the usual undertakings as to damages.  

4. The interlocutory relief referred to in Order (1) is subject to the condition that, by no later than 16 January 2023, the First to Thirteenth Plaintiffs provide security to support their usual undertakings as to damages in the amount of $225,000 (excluding GST), which security is to be provided by way of payment of funds into Court, the provision of an unconditional guarantee from an Australia-owned bank (as recognised by the Australian Prudential Regulation Authority) in favour of the Principal Registrar of the Supreme Court of New South Wales (which security is to be held by the Principal Registrar of the Supreme Court of New South Wales) or in some other form as agreed between the parties.

5. Until further order of the Court, the First to Thirteenth Plaintiffs must keep and maintain records of all fuel they procure and sell at their respective Premises.

3. Refuse the Fourteenth Plaintiff’s application for interlocutory relief.

4. Direct that these proceedings continue by way of pleadings, with the Plaintiffs to file and serve their Statement of Claim by 2 February 2023.

5. List the proceedings for directions before the Expedition List Judge at 9.30 am, 3 February 2023, noting that the parties will need to make an application for expedition by notice of motion supported by affidavit in the usual way.

6. The costs of the Plaintiffs’ interlocutory application be reserved and dealt with as part of the final proceedings.

Definitions:

In these orders:

Lease means the Albury Lease, Coolac Lease, Bundaberg Lease, Gunnedah Lease, Gilgandra Sublease, Yass Sublease and Adelong Sublease, as defined in the Amended Summons filed on 1 December 2022.

Premises means the Albury Premises, Coolac Premises, Bundaberg Premises, Gunnedah Premises, Gilgandra Premises, Yass Premises and Adelong Premises, as defined in the Amended Summons filed on 1 December 2022.

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Endnotes

Decision last updated: 21 December 2022