[3° Attachment "C" IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) Nos. G261 of 1985 GENERAL DIVISION ) G354 of 1985 BETWEEN: Anjac Pty Limited Appellant AND: Caltex Oil (Australia) Pty Limited Respondent CORRIGENDA Amendment to the Reasons for Judgment of the Court delivered 20 December 1985: Page 3 line 23 for "$1,4000,000" substitute "$1,400,000". Gt enche ture Associate to Mr Justice Jackson DATE: agen Decer.he- (7 2S CATCHWORDS Petroleum Retail Marketing Franchise Act 1980 - renewal of franchise agreement - notice of decision not to renew - necessary particulars of grounds of decision not to renew -whether notice sufficient. Petroleum Retail Marketing Franchise Act 1980 - sections 17, 17A Scurr v. Brisbane City Council (1973) 133 C.L.R. 242 Serhan and Anor. v. Ampol Petroleum Ltd (1985) 58 A.L.R. 347. ANJAC PTY LIMITED AND ORS v. CALTEX OIL (AUSTRALTA) PTY LIMITED Nos. G 261 of 1985 G 354 of 1985 Jackson J. Sydney 20 December 1985 oe n . £ ay IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) Nos. G 261 of 1985 G 354 of 1985 GENERAL DIVISTON ) BETWEEN: ANJAC PTY LIMITED AND ORS. Applicant AND: CALTEX OIL (AUSTRALIA) PTY LIMITED Respondent MINUTE OF ORDERS JUDGE MAKING ORDERS: Jackson J. DATE OF ORDERS: 20 December 1985 WHERE MADE: Sydney THE COURT HEREBY ORDERS THAT: 1. Direct the respondent to renew the franchise agreement in terms consistent with Exhibits "A" and "B". 2. The respondent to pay the applicant's costs to be taxed. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA } NEW SOUTH WALES DISTRICT REGISTRY ) Nos. G 261 of 1985 GENERAL DIVISION ) G 354 of 1985 BETWEEN : ANTAC PTY LIMITED AND ORS. Applicant AND: CALTEX OIL (AUSTRALIA) PITY LIMITED Respondent CORAM Jackson, J. 20 December 1985 lw,ty co REASONS FOR JUDGMENT The respondent and the applicant in these matters are respectively the "franchisor" and the "franchisee", within the meaning of those terms in the Petroleum Retail Marketing Franchise Act 1980, in respect of "marketing premises", namely a service station situated at 70 Alexander Road, Crows Nest. The "franchise agreement" giving rise to that relationship is constituted by a deed of lease and an agreement for supply of petroleum products both of which were entered into on 10th September 1982. The term of the franchise agreement was to end on 31st July 1985 but by s.17A(5) of the Act the respondent was not entitled to refuse or fail to renew the franchise agreement unless by the date of expiry of the franchise agreement (as defined in s.17(2) - see s.17A(10)), it had served on the applicant a notice in writing of its decision not to renew the agreement, the contents of which notice complied with the requirements of s.17A(5). The grounds, and the only grounds, on which a franchisor may fail or refuse to renew a franchise agreement are stated in s.17(1) of the Act. One of such grounds is that contained in 5.17(1)(d)(ii) which is relevantly as follows:- "(l)...a franchisor shall not fail or refuse to renew the franchise agreement except on one or more of the following grounds: (da) the franchisor proposes, in good faith and in the normal course of business - (ii) to enter into an agreement, or negotiations for an agreement, (other than an agreement containing a provision having the effect of prohibiting the use of the marketing premises for the retail sale of motor fuel) to dispose of the whole of its interest in the marketing premises to a person other than an associate of the franchisor and not to acquire or re-acquire any interest in the premises". By a notice dated 3lst May 1985 the respondent notified the applicant that it had decided not to renew the franchise agreement. The notice, after so stating, continued:- "GROUND Caltex relies on the ground provided in sub-section 17(1)(d)(i) namely that it proposes in good faith and in the normal course of business to enter into an agreement (other than an agreement containing a provision having the effect of prohibiting the use of the marketing premises for the retail sale of motor fuel) to dispose of the whole of its interest in the marketing premises to a person other than an associate of Caltex and not to re-acquire an interest in the premises. FACTS 1. Caltex has obtained valuations from Paris and Porter Real Estate Pty. Limited, 64 Bronte Road, Bondi Junction in respect of the premises and has decided on the basis of the valuations received that it will sell the premises provided it is able to obtain a price for the premises which it considers sufficient. 2. Caltex has instructed the agents L.J. Hooker Limited to sell the premises. 3. Negotiations for sale of the premises have been conducted with Indopal Pty Ltd for a purchase price of ONE MILLION FOUR HUNDRED THOUSAND DOLLARS ($1,4000,000) (we request that you keep this information confidential). 4. If Caltex feels that the negotiations with Indopal Pty. Ltd. are not proceeding satisfactorily or that it is in its best interest to do so it will Auction the premises. 5. Caltex intends that the agreement for sale of the premises will be in the form of its standard contract for sale and the agreement will not have the effect of prohibiting the purchaser from selling motor fuel by retail or grant to Caltex any right to re-acquire any interest in the premises." The references in the notice to "particulars of the ground" and "the facts relating to the ground on which the decision 1s based" derive from s.17A(5) which requires that the notice of the decision not to renew the agreement be a notice:- "setting out full particulars of the ground or grounds, including a statement of the facts relating to the ground or each ground, on which the decision is based." The first question which arises in the case is whether the notice of 3lst May 1985 complies with the terms of s.17A(5). It is unnecessary, I think, to attempt to discuss in the abstract the meaning of the requirement of s.17A(5) to which I have referred. It is unlikely to have a constant meaning from case to case, its meaning instead depending in each instance upon the around or grounds of s.17(1) relied on. Compare the remarks of Stephen J. in Scurr v. Brisbane City Council (1973) 133 C.L.R. 242 at 254 and of McGregor J. in Serhan and Anor v. Ampol Petroleum Ltd (1985) 58 A.L.R. 347 at 360. Indeed, in relation to s.17(1)(d)(ii) itself the requirements of the notice under s.17A(5) may differ depending on the degree of precision with which a proposal referred to in the provision is formulated. In the present case the notice in terms did identify the ground upon which the decision was based. I should note in passing that I do not regard the incorrect reference to s.17(1)(d)(i) as preventing the notice from containing the "full particulars" required by s.17A(5). It also contained a statement of the basic facts required by the words of para(ii) of s.17(1)(d), namely that there was a proposal to enter into an agreement, or negotiations for an agreement, to dispose of the whole of the respondent's interest in the marketing premises, either by private sale to Indopal Pty Ltd for §1.4m, or by public auction. Where the notice appears to me defective, however, is that it sets out no facts which in my view could be regarded as "full particulars... including a statement of the facts" relating to that part of the ground stated in s.17(1)(d)(ii) which requires that the proposal to dispose of the interest be "in good faith and in the normal course of business". It is true to say that the notice asserts that that is so by using those words, but all that is said in elaboration of this 1s what is contained in paragraph 1 of the notice, namely that the respondent has received valuations in respect of the premises and, on the basis of the valuations, has decided to sell the premises provided that 1t receives a price which it considers sufficient. Before me, the respondent, in order to satisfy the onus on proof which it bore under see s.17A(7(b)) led evidence to show that its proposal was in good faith and in the normal course of business by demonstrating that it was an implementation of a divestment programme for disposing of service stations in respect of which the return to it from the sale of petroleum products was uneconomic or where the land value had become so high that it was worthwhile to sell the property. It is unnecessary to deal in detail with that evidence in the light of the views which I have formed wn other aspects of the case, but I fail to see why, those being the facts on which it was contended that the decision not to renew the lease was made, they might not have been stated in the notice given under s.17A(5) in a form which would satisfy the requirements of that provision. The sufficiency of the notice was also attacked on the ground that whilst paragraph 5 of the notice stated that:- "S, Caltex intends that the agreement for sale of the premises will not be in the form of its standard contract for sale..." the terms of the respondent's "standard contract for sale" were not included in the notice, nor was any precis or paraphrase of their effect. As I have said earlier, the degree of particularity required to comply with s.17A(5) will vary depending on the particular ground and upon the particular circumstances relied on as giving rise to that ground. In the case of s.17(1)(d)(ii) the proposal may be in terms which are relatively precise, or relatively diffuse. The proposal contemplated by the provision may result from an unsolicited offer made to the franchisor by a third party, or it may result from the decision of the franchisor to sell on the best terms it can obtain. What this means is that the content of the notice required by s.17A(5) will depend on the nature of the "proposal" in contemplation in a particular case and if the proposal is to sell the premises on relatively specific terms, the section requires "full particulars etc" of that proposal. In the present case, I regard the relevant "proposal" as having included the terms, whatever they may be, contemplated by the respondent's "standard contract for sale" and I do not regard the short statement to that effect in paragraph 5 of the notice as a sufficient compliance with s.17A(5). It follows from the views which I have expressed above that I am not satisfied that in terms of s.17A(7)(a) "the franchisor has served on the franchisee a notice in accordance with" s.17A(5) and, accordingly, I am required to make an order directing the franchisor to renew the franchise agreement. Some other questions raised in the case thus do not strictly arise, but it may be convenient if I express my views shortly upon one of them, and that is that I am satisfied that at the time when the notice pursuant to s.17A(5) was given the franchisor did propose, in good faith and in the normal course of business to enter into negotiations for an agreement in terms of $.17(1)(d)(ii) in a manner described in that notice and that such an agreement would have satisfied the requirements of s.17(1)(d)(ii). For the reasons I have stated I find that the notice of 3lst May 1985 was not in accordance with s.17A(5) of the Act and, in the exercise of the power conferred by s.17A(7) I make an order directing the respondent to renew the franchise agreement constituted by Exhibits A and B. Ul certify that the sight (8) preceding pages are a true and accurate copy of the Reasons for Judgment herein of his Honour Mr Justice Jackson eon SZ de Associate . Dated: