~ ae JUDGMENT No. AFB nnn CATCHWORDS TRADE AND COMMERCE - Petroleum retail marketing - applicability of Petroleum Retail Marketing Franchise Act 1980 - validity of notices of termination of leases or licences or franchise agreements and whether nature of agreements between parties that of principal and agent or franchisor and franchisee - whether breaches of agreements occurred - whether purported termination of agreements just and equitable having regard to all the circumstances. Petroleum Retail Marketing Franchise Act 1980: ss. 3, 16. J. SKOULOUDIS v. GEORGES JET GAS (AUST.) PTY. LIMITED TRADING AS FINA PETROLEUM G 315 of 1986 G 316 of 1986 LOCKHART J. 14 AUGUST 1987 MELBOURNE FEDE,-a, Co2uUA AUSTRALIA. OF PAY CrP, ReGistAat IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) IN THE BETWEEN: AND: FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) JUDGE MAKING ORDER: DATE OF ORDER: WHERE ORDER MADE: BETWEEN: AND: No. G 315 of 1986 J. SKOULOUDIS Applicant/Cross-Respondent GEORGES JET GAS (AUST.) PTY. LIMITED TRADING A FINA PETROLEUM Respondent/Cross-Claimant No. G 316 of 1986 J. SKOULOUDIS Applicant/Cross~Respondent GEORGES JET GAS (AUST.) PTY. LIMITED TRADING AS FINA PETROLEUM Respondent/Cross-Claimant LOCKHART J. 14 AUGUST 1987 MELBOURNE MINUTE OF ORDERS THE COURT ORDERS THAT: NOTE: The respondent bring in short minutes of order to give effect to these reasons for judgment; and The matter be adjourned to a date to be fixed. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. v ? IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 315 of 1986 BETWEEN: J. SKOULOUDIS Applicant/Cross-Respondent AND: GEORGES JET GAS _ (AUST.) PTY. LIMITED TRADING AS FINA PETROLEUM Respondent/Cross-Claimant IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) No. G 316 of 1986 BETWEEN: J. SKOULOUDIS Applicant/Cross-Respondent AND: GEORGES JET GAS (AUST.) PTY. LIMITED TRADING AS FINA PETROLEUM Respondent/Cross-Claimant 14 August 1987 REASONS FOR JUDGMENT LOCKHART J. Introduction These two proceedings, which were heard together by consent, concern the relationship of the applicant, Jim Skouloudis ("the applicant") and the respondent, Georges Jet Gas (Aust.) Pty. Limited, which trades as Fina Petroleum ("the respondent"). The parties are involved in the business of the retail marketing of petroleum with respect to two premises; one at Milperra, Sydney and the other at - *. 2. , Holbrook, New South Wales which are owned by the respondent and occupied by the applicant. Initially the relationship between the parties was based on trust; however, this later deteriorated. The confidence which each had for the other evaporated. This gave way to bitterness which has led to the present litigation. The arrangements between the parties with respect to the conduct of the service stations were not embodied in precise written agreements. Most terms were oral, although some terms were in writing and others implied. There is agreement upon some basic facts in the case, but sharp disagreement on critical facts. Each party essentially is at issue on most of the other's material allegations. As a result many of the issues turn on questions of credit. The primary source of this Court's jurisdiction with respect to these matters is the Petroleum Retail Marketing Franchise Act 1980 ("the Act") as the applicant asserts in each proceeding that he is a franchisee within the meaning of the Act and claims relief pursuant to s. 16 thereof. These proceedings were commenced by the applicant in this Court on 31 July 1986. Proceedings were commenced by the respondent in the Supreme Court of New South Wales on 20 August 1986 seeking ejectment of the applicant from the two premises, pursuant to two notices served on the applicant on 2 July 1986 one in respect of each of the premises. Each notice purported to terminate the applicant's right to occupy the premises and each required the applicant to vacate 3. the premises. The respondent issued additional notices to the applicant in August and September. After the hearing of this matter had commenced further notices were issued on 17 December 1986 and again on 18 December 1986. It is now plain that the last mentioned notices of 18 December 1986 are the notices upon which the respondent relies in so far as the relations between the parties are governed by the Act. The respondent relies upon the first notices served on 2 July 1986 if the Act does not apply. The applicant sought interlocutory relief from this Court. Those proceedings were heard by Burchett J. who, on 2 September 1986, made orders that pending the final determination of these proceedings or further order the respondent be restrained from continuing the ejectment proceedings in the Supreme Court and from instituting any further such proceedings in respect of either of the premises on the basis of the notices which had been given or in relation to matters in dispute in the proceedings in this Court. His Honour noted an undertaking given to this Court designed to ensure that all questions would be raised in these proceedings so that the matter of entitlement to possession of the premises as well as the question of the validity of the notices under the Act could be determined once and for all by this Court. The respondent asserts that the applicant was a tenant of the Premises and that each tenancy was terminated by the notices of termination served on 2 July 1986. In the alternative, the respondent asserts that, assuming there were franchise agreements in force, each agreement was terminated by the notices of termination served on 18 December 1986. The applicant challenges the validity of the notices and seéks declarations that they have no effect. The respondent cross-claims against the applicant to recover the rent which it says is due under the former tenancies. It also seeks to recover its loss and damage which is alleged to flow from the applicant's failure to give up possession of the premises upon the termination of the tenancies. In application No. G315 of 1986 which concerns the Milperra premises, the respondent also pleads in its cross-claim an alleged agreement between it and the applicant made in or about June 1984 which constituted the tenancy arrangement. The agreement provided that the applicant would sell petroleum fuel from those premises on terms which included the following: (a) the respondent would supply or arrange to supply the applicant with petroleum fuel; (b) the applicant would bank all proceeds of retail sales of petroleum fuel from the premises, less the applicant's commission, into a bank account of the respondent, namely, an account in its name with Westpac Bank, Lalor Branch, Victoria on the day of receipt or apply such proceeds in a manner as may be from time to time directed or authorised by the respondent; (c) the respondent would pay to the applicant commission, or, in the alternative, profit or a share of profit of 1.5 cents per litre on retail sales of petroleum fuel from the premises; . (d) (e) (£) (g) the said (a) (b) (c) 5. the applicant would obtain petroleum fuel only from the respondent or as directed by it; the applicant would sell the petroleum fuel at prices set by the respondent; the applicant would provide to the respondent all information, necessary to enable the making of a calculation of any commission to which the applicant was entitled, regarding any proceeds of sale of petroleum fuel to which the respondent was entitled and regarding the cost of purchases of petroleum fuel and other expenses to be borne by the respondent; and the applicant would refrain from making statements to any person which may have the effect of bringing the name of the respondent into disrepute in the petroleum fuel industry. The respondent alleges that the applicant breached each of terms of the agreement in that the applicant: failed or refused to sell petroleum fuel at prices set by the respondent; failed or refused to obtain petroleum fuel from suppliers as directed by the respondent; failed or refused to provide invoices in relation to the purchase of petroleum fuel for sale at the premises; (d) failed or refused to bank all retail takings from the sale of petroleum fuel into a bank account of the respondent on a daily basis; (e) alleged to various petroleum fuel supply agents that the respondent was not a fit and proper party with whom to conduct business and that it was unable to meet its financial obligations and that such suppliers should deal directly with the applicant; (f) drew or arranged to be drawn a cheque payable to the respondent dated 10 January 1985 in a sum of $589.50 which was dishonoured; and (9) failed or refused to give to the respondent the names of suppliers of petroleum fuel. The respondent alleges that it suffered loss and damage by reason of the said breaches. Alternatively, the respondent pleads that the said agreement between them constitutes a franchise agreement within the Act and that the agreement was terminated by the notice of termination of 18 December 1986. It also pleads, pursuant to para. 16(6)(b) of the Act, that it is just and equitable that the agreement be terminated. The respondent seeks in its cross-claim:- 7. a declaration that prior to 1 August 1986 the applicant occupied the premises pursuant to a monthly tenancy or, alternatively, a licence from the respondent; a declaration that the tenancy or licence has been duly determined, or, alternatively, a declaration that the notice of termination of 18 December 1986 effectively determined any franchise agreement; a declaration that the respondent is entitled to possession of the premises and an order for possession; a declaration that the terms of the agreement included not only the terms (a) to (g) above but also three other terms, namely, that the applicant is entitled to occupy the premises for the term of the agreement, that the applicant will pay rent to the respondent in the sum of $400 per week and that the agreement is determinable by either party upon one month's notice in writing; an order for account; damages; mesne profits; and costs. 8. In the respondent's defence and cross-claim in application No. G316 of 1986 which relates to the Holbrook premises, the respondent pleads substantially the same matters as it did in respect of the Milperra premises. There are, however, some terms of the alleged agreement between the parties which differ, namely, that the rate of the commission was to be 2 cents per litre of super and 1.5 cents per litre of diesel sold by retail from the premises and that the applicant would pay to the respondent the sum of $6,865.79 for stock on the premises. The same breaches are alleged although there is an additional breach of failing or refusing to pay an outstanding amount of $6,013.79 owing for stock after a deduction of $564.03 which was paid is made. Otherwise the pleadings are substantially the same with respect to both premises. The issues may be summarised as follows: 1. Whether the relationship between the parties answers the description of a franchise agreement as defined by sub-s. 3(1) of the Act; 2. A related question as to whether the retail sales by the applicant were made by him as servant or agent of the respondent with the consequence that if they were so0 made then there would be no relevant retail sale for the purposes of the definition of "franchise agreement" in the Act. "Franchise agreement" is defined in sub-s. 3(1) as follows: "' franchise agreement' means an agreement containing - (a) (b) (c) provisions, whether express or implied, under or by virtue of which a corporation (in this Act referred to as the 'franchisor' ) authorizes, permits or requires a person, being another party to the agreement (in this Act referred to as the 'franchisee') to use, in connection with the retail sale of motor fuel by that person at the premises to which the agreement relates, a mark identifying, commonly associated with, or controlled by, that corporation or a_ related corporation; provisions, whether express or implied, under or by virtue of which a corporation (in this Act referred to as the 'franchisor') grants a right to, or otherwise authorizes or permits, a person, being another party to the agreement (in this Act referred to as the 'franchisee'), to possess, occupy or use the premises to which the agreement relates in connection with the retail sale of motor fuel by that person at those premises; or provisions, whether express or implied, under or by virtue of which - (i) a corporation (in this Act referred to as the 'franchisor' ) is accustomed, entitled or required to supply motor fuel to a person, being another party to the agreement (in this Act referred to as the 'franchisee'), for retail sale by that person at the premises to which the agreement relates; or (ii) a person (in this Act referred to as the 'franchisee') agrees with a corporation (in this Act referred to as the 'franchisor') to acquire motor fuel from another person (whether a party to the agreement or not) for retail sale by the first-mentioned person at the premises to which the agreement relates." 10. Sub-section 3(5) provides: "A reference in this Act, except in sub-section 19(3), to retail sale by a person shall not be read as including retail sale by that person as servant Or agent of another person," Whether the notices of termination of 18 December 1986 effectively terminated the franchise agreements, they answer that description. In this respect s. 16 so far as relevant provides: "16(1) A franchisor may terminate the franchise agreement in accordance with the succeeding provisions of this section, but not otherwise. (2)(j) the franchisee otherwise commits a breach of a provision of the franchise agreement; (3) The termination of a franchise agreement by the franchisor shall be effected by the franchisor serving on the franchisee notice in writing - (a) informing the franchisee that the agreement is to be terminated on a specified date, being a date' that, subject to sub-section (8), is not earlier than 30 days after the day on which the notice is served; and (b) setting out full particulars of the ground or grounds, including a statement of the facts relating to each ground, upon which the termination is based. (4) Where a franchisor serves notice on the franchisee under sub-section (3) terminating the agreement, the franchisee may apply to a court for an order declaring the notice to have had, or to have, no effect. (5) Where an application is made under sub-section (4), the Court may, by order, either - (a) declare the notice referred to in that sub-section to have had, or to have, no effect; or assuming ll. (b) declare that notice to have terminated, or to terminate, the agreement on the date specified in the notice or on such later date as is specified in the order, and may, in either case, make such ancillary or consequential orders as it thinks fit, including orders directing the preparation and execution of documents. (6) In any proceedings under sub-section (4), the court shall not declare the notice referred to in that sub-section to have terminated, or to terminate, the franchise agreement unless - (a) a ground specified in the notice is established by the franchisor to the satisfaction of the court; and (b) the court is satisfied that the termination of the agreement and any related agreement or agreements is just and equitable, having regard to all the circumstances. (7) Without limiting the generality of paragraph (6)(b), the circumstances referred to in that paragraph include the conduct of the franchisor and the franchisee after the time when the franchisor became aware of the existence of the circumstances, or the occurrence of the event, constituting the ground referred to in paragraph (6)(a). 4. Whether any, and if so which notice, of the various notices effectively terminated the tenancies of the applicant. FINDINGS OF FACT Milperra Premises (G 315 of 1986) In March 1983 the applicant was employed as a truck driver by an associated company of the respondent, namely, John George Transport Pty. Limited. In late 1983 Mr. John George, the managing director of the respondent, decided to expand the operations of the respondent into New South Wales. He and the applicant discussed the question of 12. the respondent purchasing a Caltex Service Station freehold at Milperra (which became the Milperra premises) that was leased to Caltex. The applicant found the site and in due course it was purchased for $240,000 by the respondent. The site was not operating at the time. Arrangements were made to purchase from Caltex the underground petrol tanks on the site and the applicant was involved, to some extent, in the negotiations with Caltex. In November 1983 Mr. John George and the applicant had a conversation in which Mr. George asked the applicant if he knew anybody who was prepared to run the Milperra premises for the respondent. The applicant said that he would run it. Mr. George said that that was acceptable as he had found it. Mr. George also said that he could trust the applicant and knew that the applicant would run the site well as the applicant had done a good job for an associated company of the respondent. The terms and conditions then agreed upon were that rent of a moderate amount would be payable by the applicant to the respondent and the respondent would give the applicant "the right money" to run the site. It was also agreed that the applicant's payment for running the site would be by way of commission as the respondent's agent. In May 1984 Mr. John George and the applicant discussed again the remuneration of the applicant with respect to the Milperra premises. Mr. George told him that he would be employed as a commissioned agent and that the commission would be 1.5 cents per litre of motor spirit sold. 13. I am satisfied that there were several conversations at this time and subsequently with the applicant and Mr. John George in which Mr. George said words to the effect that all takings from the sales of motor fuel must be banked daily into the respondent's bank account and that the applicant's commission would be 1.5 cents per litre on all sales of motor fuel. In December 1983 Mr. Taxides, a fitter employed by the respondent, went to the Milperra premises and erected a sign bearing the name "Fina". A sticker bearing the same name was affixed to each of the dispensing pumps on the site. Mr. George had a conversation with the applicant in which Mr. George said that the respondent would supply the site's fuel from Canberra and Melbourne with its own trucks. In late June and early July 1984 the applicant spent about two weeks at the Milperra premises preparing for the opening of the service station. Plant and equipment were purchased and the shop was fitted with stock and accessories such as oil, spare parts, confectionery and soft drinks. Certain of the improvements were carried out at the expense of the respondent. In about June 1984 Mr. J.W. Rogers, a bookkeeper employed full time by the respondent, spoke to the applicant about the Milperra premises. He told the applicant that he would occupy the premises on a ""commission-lease arrangement" whereby he would act as_ the respondent's agent in the sale of petroleum products from the premises. Mr. Rogers spoke to the applicant again on 5 July 1984 and confirmed his occupation of the Milperra premises on that basis and, 14. " further, that the respondent would pay 1.5 cents per litre commission to the applicant on all sales of motor fuel other than diesel and that motor fuel would be sold at prices nominated by the respondent so that the respondent would receive 1.5 cents per litre also. Effectively, therefore, petrol was to be sold at 3 cents per litre above its purchase price. Mr. Rogers also told the applicant in substance the following: (a) that all takings from the sales of petroleum products must be banked daily by him into the respondent's bank account; (b) both opening and closing dips and readings of all tanks must be taken each day; (c) the applicant must give the respondent the opening dips, readings and prices of fuel each morning and also the banking total from the day before; (d) upon delivery of any fuel the applicant must check the meter readings and dip the tankers to ensure that the quantity delivered and the quantity received are correct; (e) that the dip figures from such deliveries should be written on the back of drivers' dockets; (f) that the purchase of oils and accessories are_ the responsibility of the applicant and any oils or accessories ordered by him would be charged to his account and reconciled at the end of each month; and 15. (g) that credit sales would be the responsibility of the applicant. Mr. Rogers on behalf of the respondent wrote a letter to the applicant dated 5 July 1984. This letter is one of the few pieces of contemporaneous written material directly bearing upon the initial terms of the arrangements between the parties. The letter must be set out in full and it reads: "Dear Jim [i.e. the applicant], Please take notice that the following must be adhered to daily and for each fuel delivery as per John Rogers telephone call of the 5th July, 1984. (1) Banking must be daily. (2) Dips of all tanks (opening and closing) (3) Ring Melbourne each morning with opening dips and day before banking total. (4) When deliveries are made on any fuel, you must have meter reading and dip the tankers to ensure quantity delivered and received are correct. (5) The dips figures to appear on the back of drivers dockets. AS you are now on a commission basis - then purchase of oils and accessories are your responsibility, therefore any oils or accessories ordered by you will be charged to your account by way of invoice and reconciled at month end. Yours faithfully, GEORGES JET GAS (AUST.) PTY. LTD., [Signed J.N. ROGERS) J. ROGERS, ACCOUNTANT. P.S. WHEN FUELLING ANY JOHN GEORGE TRANSPORT TRUCKS PLEASE USE THE GEORGES JET GAS ACCOUNT FORM AND SEND ORIGINAL TO ME AT THE END OF EACH MONTH." 16. The Milperra service station opened for business on 7 July 1984 and Mr. John George visited the site. It is standard business practice of the respondent each working day to get in touch with all its agents and obtain the meter readings on all petrol pumps, the sale price of all fuels and the amount of money banked the preceding day. The task is usually done by either the respondent's receptionist or Mr. Peter George or "Liz" George. The respondent therefore can determine how much money should have been taken by the operator, how much money should have been banked and whether or not the service station needs a delivery of fuel. The respondent does this with nearly all of its outlets and this procedure was applicable to the Milperra premises. Each service station operated by the respondent was given a banking number and in the case of the Milperra premises the number was 34. All deposits made by the applicant into the respondent's account appeared under this number in the bank statements received by the respondent from the Westpac Bank, Lalor Branch, Victoria. Consequently, the respondent could cross check the amount actually banked by the applicant with the amount that should have been banked. This was calculated from the information given by the applicant which should have been provided daily. The weekly reconciliations for each week of July, August and September 1984, the first three months of operation at Milperra, were made either by Mr. Rogers or Mr. Philippou, the business co-ordinator of the respondent. Mr. Philippou's duties as the business co-ordinator of the respondent include responsibility for fuel 17. purchases and sales, dealing with accounts of all creditors and co-ordinating the various departments of the respondent's activities. Since the third week of August 1984 he has been responsible for supervising the deliveries of petrol to and sales of petrol from the Fina Service Station at Milperra. On 13, 14 and 15 July 1984 Mr. Rogers spoke to the applicant by telephone about the readings, dips and prices at the Milperra premises. Mr. Rogers asked for the meter readings and the price on the petrol bowsers. This information was provided. Mr. Rogers then prepared reconciliation of fuel sales and money banked for _ the Milperra premises by calculating the difference between the previous readings and the new reading and, more importantly from_ the applicant's point of view, deducting the applicant's commission. Mr. Philippou spoke to the applicant in late August 1984 to obtain from him the necessary details to enable reconciliations to be made. The applicant gave Mr. Philippou the meter readings, the prices at point of sale and the dip readings. He also told Mr. Philippou about money that he had deposited to the respondent's bank account on 20, 21 and 22 August 1984. From that information Mr. Philippou calculated, amongst other things, the commission figure payable to the applicant based on the total litres sold multiplied by 1.5 cents per litre. He then checked the banking information he had been given against bank statements which he received on a daily basis from the respondent's bank to which the applicant deposited receipts. On 24 August 1964 Mr. Philippou telephoned the applicant and, after receiving various items of information about the sales of 18. petroleum products, told him that his commission on 124,811 litres was $1,872.17. The applicant asked how much he owed the respondent at that time. Mr. Philippou said $10,336.88, to which the applicant replied "all right". In August 1984 there was a fuel strike in Sydney and the volume of sales at the Milperra site increased substantially. Whether the increase was due to the effects of the strike or was the result of the usual increase in trade of a Fina service station following its opening is a matter on which the evidence differs. I do not, however, find it necessary to decide that question, but the fact is that the volume of sales did increase substantially. Mr. Rogers was instructed by Mr. John George to increase the rent payable by the applicant in view of the increase in sales of fuel and the subsequent receipt of additional commission by the applicant. By the end of August 1984 the rent was increased to the present sum of $400 per week. The strike had finished by the end of the first week of September 1984. The applicant asked Mr. Rogers for a reduction in rent because his turnover had decreased by about fifty percent since the end of the strike. Mr. Rogers said that the rent would not be reduced. He informed the applicant at that time that Mr. Philippou would be taking over the accounts for the premises. On a couple of occasions in October/November 1984 the debit balance owed by the applicant to the respondent was substantial and Mr. Philippou said to the applicant that he must reduce the balance. The applicant replied that it represented credit sales for which the debtors had not paid him. Mr. Philippou said: "You know that credit sales are your responsibility. If you give people credit you have to cover it." The applicant replied "all right". 19. Owing to the difficulties in transporting motor fuel to the applicant at the Milperra premises Mr. George decided to permit the applicant to obtain motor fuel supplies direct from suppliers in New South Wales or Canberra. He told the applicant that the respondent would provide him with a tanker to enable supplies direct from distributors to be obtained for the service station. He told the applicant that he was to pay for the fuel using either the cash from the till or a bank cheque drawn against the till proceeds. A copy of the invoice was then to be sent to the respondent. The applicant replied "all right". The respondent never authorised the applicant to pay for fuel with his personal cheque; nor did the respondent ever give permission to the applicant to purchase petrol on his own behalf. Mr. John George permitted the applicant to use two trucks from about mid 1985 to enable him to obtain deliveries of fuel more expeditiously from the respondent's suppliers. From October 1984 a fuel supplier, B.H. and A.S. Walker Pty. Limited ("Walkers") of which the principal is Mr. B.H. Walker, commenced supplying the applicant with fuel at the Milperra premises and continued to do this until 2 August 1985. Some other supplies were made thereafter by Walkers but I will refer to those in a different context later. In about December 1984 Mr. Rogers spoke to Mr. John George about the applicant's account and the fact that he owed the respondent over $30,000. Mr. George said to him that he was not to worry about this as Mr. Skouloudis would "come good". Mr. Rogers spoke to the applicant on a number of occasions around that time. Mr. Rogers told 20. " him that he owed the respondent a lot of money and pointed out that banking was not being done daily. Often during these discussions the applicant said that he would bank some money the next day. Mr. Rogers gave evidence, however, that "he never seemed to do this". Throughout the major period of the applicant's occupation of the Milperra premises money was owed by him to the respondent and at one stage the figure rose to over $50,000. As at 21 June 1985 the applicant owed the respondent the sum of $51,552.76. Mr. Philippou said to the applicant on that day that he must reduce this debt and the applicant said "OK, OK". There had been several conversations similar to that over the previous weeks as the amount owed by the applicant increased. After June 1985 the amount due to the respondent gradually decreased. There were many conversations between Mr. Philippou and the applicant about this time and until the middle of 1986. In these conversations Mr. Philippou said to the applicant that he was overstocking the premises. The applicant replied that he needed all the stock and could not work without it. Mr. Philippou insisted that he reduce it and the applicant agreed to do so. On several occasions Mr. Philippou said to Mr. Skouloudis that he was not supposed to pay for petrol with his own cheque and that, if it was necessary to obtain fuel from another supplier, he was to draw a bank cheque against the takings in the till. The applicant replied that the suppliers did not want to deal with the respondent. As a result he said that he had to give them his cheque to get the best price. Mr. Philippou said that the respondent had suppliers 21. "which dealt with it and that the applicant was to organise the deal with them. Mr. Philippou said that the respondent would pay for such sales. Notwithstanding these conversations the applicant continued to pay for fuel himself and subsequently sought reimbursement or a credit. In about January 1986 Mr. Philippou had a conversation with the applicant in which the applicant said that he wished to lease the service station at Milperra if he could get a lease for three years. The applicant also stated that he would buy the fuel from the respondent. The applicant anticipated that this would resolve the problems of commission and prices. Mr. Philippou said that he would have to talk to Mr. John George about it. He did this. In a conversation with the applicant, Mr. Philippou informed him that Mr. George had said that he would lease the station to the applicant for three years at a rent of $8,000 per month. However, the applicant said that was too much. In March or April 1986 Mr. Philippou said to the applicant that he must not obtain fuel from a particular fuel supplier trading as Monaro Fuel Supplies but that he was to obtain fuel from D.P. Kirk & Co. Pty. Ltd. ("Kirk"), another fuel supplier. Mr. Philipou said that the applicant should no longer pay with moneys from the t1i11 as the respondent would send the money by telegraphic transfer to Kirk. The applicant replied he would not do this as the supplier would only deal with him and not with the respondent. I am not satisfied that Kirk or any other fuel supplier refused to deal with the respondent. In the same conversation Mr. Philippou said to the applicant that he must bank the takings from the till into the respondent's bank account. The applicant replied that he would not do that. 22. The records maintained by the respondent show, that in April 19686 the applicant sold 650,824 litres of fuel from the Milperra premises, that the respondent had purchased the fuel for $271,744 and that the applicant had sold the fuel for $277,633. Commission payable to the applicant was calculated by the respondent at $9,341. The respondent made a loss in the operation of the Milperra premises for the month of over $3,000. In early May 1986 Mr. Rogers spoke to the applicant about the April account. He noted from the accounts prepared by Mr. Philippou that the applicant was making his 1.5 cents per litre commission on all sales of motor fuel, but that the respondent had made a loss. The applicant said that the prices in Sydney had been cut. Mr. Rogers said that the respondent should nevertheless be receiving a 1.5 cent per litre profit on all sales of motor fuel after taking into account the applicant's commission. Mr. Rogers also said: "if you make $9,000 we want to too ... if you make 1.5 we want 1.5 ... you can't sell fuel so that we make a loss". Mr. Philippou also spoke to the applicant at this time about the problen. In May 1986 Mr. Rogers acquainted Mr. John George of the further difficulties he was having with the applicant. Mr. Philippou had several conversations with the applicant, on instructions from Mr. John George, in which he told the applicant that his prices were too low, that he must make at least 3 cents per litre to break even and that he must put the prices up to at least a named figure. The applicant replied that everyone was selling the fuel at the same price and he had to match them. Mr. Philippou said 23. Mr. George's orders were that the applicant had to increase the prices. The applicant replied that he would not do that. Mr. Philippou said he must nevertheless put the prices up, to which the applicant said "no way". Notwithstanding these requests the applicant continually sold fuel at prices lower than those specified by Mr. Philippou. On or about 13 July 1986 Mr. Philippou had a conversation with the applicant in which, amongst other things, Mr. Philippou asked him from whom he had purchased super motor spirit in Brisbane and whether the levy had been paid. The applicant told him the levy had been paid. The levy is a reference to the State levy payable in New South Wales and Victoria on sales of motor fuel in those States by retailers such as the respondent on fuel purchased in Queensland which imposes no such levy. Mr. Philippou asked him for the name of the supplier. The applicant replied that he would not reveal the name. Mr. Philippou then asked the applicant to send the name of the supplier and a copy of the invoice to him. The applicant replied he would not do that. Since July 1986 the respondent has wished to sell _ the premises at Milperra. The respondent alleges that it is suffering damage each day that the applicant remains in the premises including large interest expenses incurred on borrowings to purchase the premises. Since 15 August 1986 the applicant has not requested delivery of fuel from the respondent. The respondent does not know from whom the applicant is purchasing its fuel to operate the Milperra premises 24, or the prices which the applicant is paying for the fuel or whether or not the applicant is paying State taxes applicable to any supplies of fuel or the prices for which he is selling the fuel or whether or not he is maintaining sufficient stocks of fuel to provide a proper service to customers. The respondent has therefore no way of calculating commission. The applicant is still selling fuel under the respondent's signs of "Fina". The applicant is taking and has been taking all moneys from the sale of the fuel at the premises. The applicant has not purchased petrol or other fuel from the respondent. The respondent has not forwarded invoices to the applicant for petrol. The documents forwarded to the applicant in respect of the supply of petrol were delivery dockets indicating the amount of fuel supplied but not specifying any price. During the period 1 July 1986 until 30 March 1987 the respondent received, without prejudice, moneys totalling $12,000 from the applicant on account of rent paid. The respondent has paid, as it has done throughout the applicant's operation of the Milperra premises, council rates, land tax and water rates together with interest on a bank overdraft secured by ten properties, including the Milperra premises, owned by the respondent. Taking all these matters into account the respondent has therefore suffered a loss of something a little over $4,000 during that period with respect to Milperra. The respondent received an offer to buy the Milperra premises in about March 1986 for $850,000. The site was originally purchased for $240,000 although the total cost of making the site operational was around $400,000. If the respondent wishes to sell the site the 25. proceeds of sale will be applied in reduction of the respondent's overdraft with its bankers. Mr. B.H. Walker swore an affidavit and was cross-examined. I said earlier that he is the principal of Walkers, Fuel Agents. It principally distributes for Caltex Oil (Aust.) Pty. Limited ("Caltex") by buying fuel from Caltex and distributing the fuel on Caltex''s behalf to its customers which include service stations, industrial accounts and wholesale accounts. Walkers also sells fuel to other service stations and various private companies. On about 9 August 1984 Mr. Walker and his son, David, visited the Milperra premises for the purpose of ascertaining from where the service station was obtaining its fuel. Mr. Walker spoke to the applicant who said that his service station was obtaining its fuel from Esso. Mr. Walker offered to supply fuel to the applicant. In about October 1984 the applicant telephoned Mr. Walker and said that he wished to be supplied with fuel. Mr. Walker said that he would supply him with fuel and asked him who was paying for the fuel and how it was intended to be paid. The applicant replied that Fina Petroleum would pay by transferring the required sum of money to the applicant's bank account. The applicant would then pay Walkers for the fuel as delivered. In about October 1984 Walkers commenced supplying' the applicant with fuel. It had been agreed orally between Mr. Walker and the applicant that the fuel was to be paid by cheque on delivery. The applicant paid for the fuel by personal cheque which was drawn on his own account. During the rest of October Walkers continued to supply 26. "the applicant with fuel. Each delivery was paid by personal cheque. Some of the applicant's cheques were subsequently dishonoured by his bank. After it came to Mr. Walker's attention that the cheques had been dishonoured, he telephoned the applicant and asked when he would pay for the fuel. The applicant said that Walkers had not been paid because Mr. John George had not transferred the required moneys. Mr. Walker, after telephoning Mr. George, visited the applicant at the Milperra premises. He said to the applicant that he had telephoned Mr. George who had said that the money for the fuel had been transferred to the applicant's account. The applicant was upset with Mr. Walker because he had spoken to Mr. George. The applicant said that he had problems, that somebody had taken money from his account and that he had to raise a personal loan. At that time the applicant owed Walkers $35,100.52. Arrangements were then made with the applicant's bank, Westpac at Revesby, for a loan to be paid directly by the bank to Walkers' account. The amount was subsequently paid. From December 1984 to August 1985 Walkers continued to supply the applicant with fuel for the Milperra premises. This fuel was paid for by the respondent. The applicant telephoned orders through to Walkers. Neither Mr. Walker nor his company would deliver fuel to the applicant unless they were certain that the respondent confirmed the order and paid for the fuel. This arrangement continued until 2 August 1985. 27. About May 1986 Mr. Philippou spoke to Mr. Walker and asked him if he would fill Fina Petroleum's petrol tankers which the respondent sent up from Melbourne. There was a shortage of fuel in Melbourne at that time. Mr. Walker said that he would do that and asked how the fuel was to be paid. Mr. Philippou replied that he would transfer the money from the respondent's account to J.K.S. Petroleum Pty. Ltd. and that J.K.S. Petroleum Pty. Ltd. would pay. Mr. Walker said that he would accept that method of payment so long as the applicant paid by bank cheque or by cash. J.K.S. Petroleum Pty. Ltd. is a company formed by the applicant. During April and May 1986 Walkers filled the respondent's tankers with fuel and the applicant issued a bank cheque in or about May 1986 in payment of the fuel; but payment on the bank cheque was stopped. Mr. Walker then telephoned Mr. Philippou and told him of this. Mr. Philippou assured him that the money had been transferred by the respondent to the applicant's account. Mr. Walker tried to get in touch with the applicant by telephone but he was unsuccessful and his calls were not returned. During mid May the applicant ordered from Walkers another load of fuel to be filled in a tanker and sent to Melbourne. On 12 May 1986 one of the respondent's tankers, driven by a driver whom Mr. Walker knew and who was called Sam, arrived at Walkers' depot to be filled with fuel. Mr Walker said to Sam that he would not load the tanker until the applicant had told him when his bank cheque was going to be cleared in payment of the previous deliveries. Sam then rang the applicant and at the end of that said to Mr. Walker that the applicant was going to bring the money round that day in payment of the previous deliveries. The applicant did not arrive at the depot that day and Mr. Walker again tried unsuccessfully 28. to contact him by telephone. Mr. Walker said to Sam that he would not load the truck with fuel and that he proposed to lock it up in his depot until the fuel was paid for or until he received some assurance of payment. After Sam apparently telephoned the applicant there was a telephone call from the applicant to Mr. Walker. Sam telephoned Mr. Philippou in Melbourne in the presence of Mr. Walker. Mr. Philippou then telephoned Mr. Walker and assured him that the _ previous deliveries of petrol would be paid for. The truck was then released by Mr. Walker. He made some more deliveries of fuel to the applicant in June and July and one delivery in October 1986. During the dealings between Walkers on the one hand and the applicant and the respondent on the other in 1984, 1985 and 1986 Mr. Walker understood that he was dealing with the respondent, that orders of fuel had to be confirmed by it before he would deliver, that payments for fuel were made directly by the respondent and that the respondent guaranteed payment for the fuel and would transfer the money to the applicant's bank account in Sydney. Walkers did not deal directly with the applicant from the time that cheques of the applicant were dishonoured except on odd occasions when deliveries were paid for in cash or by bank cheque. Holbrook Premises (G316 of 1986) I turn then to the facts in G316 of 1986 relating to the Holbrook premises. On or about 30 April 1986 the applicant took possession of the Holbrook premises. 29. Mr. John George allowed the applicant to take possession of the premises because, by April 1986, he believed that the applicant had reimbursed most of what was owed to the respondent. Mr. George thought that if a written contract was entered into concerning the premises then the arrangement between them would be more satisfactory. He said to the applicant that the terms of the arrangement would be substantially the same as at Milperra. These terms included the requirement that the applicant bank all proceeds from sales of motor fuel into the respondent's bank account daily and that the applicant's commission would be 2 cents per litre on sales of Super motor spirit and 1.5 cents per litre on sales of diesel fuel. The applicant said "all right". Mr. George allowed the applicant the use of a truck to supply the Holbrook premises with fuel. Mr. George told him that he did not require immediate payment for the stock at the premises which was valued at $6,865.79. The applicant took over the Holbrook premises on or about 30 April 1986 and he appointed Mr. C. Dessis to manage the site for him. At about the time the applicant commenced operating the Holbrook service station Mr. Philippou told him that he was to bank all proceeds of fuel sales in the respondent's account on a daily basis and that the respondent would reimburse him by telegraphic transfer for any fuel which the applicant paid for. The applicant agreed. Mr. Philippou asked the applicant for his account number which was subsequently given. Mr. Philippou knew at about that time that J.K.S. Petroleum Pty. Ltd. was a company controlled by the applicant. 30. Shortly after the applicant went into possession of the premises he telephoned Mr. John George at his home one night. He told Mr. George that he was very pleased with Holbrook and was doing well. He said that he was banking all the money: "no problems we're all square". The next day Mr. George checked the respondent's records and found that about $22,000 was owing to the respondent and that the applicant had never banked any moneys into the respondent's account. I find that, although the applicant did bank some of the proceeds he received from the sale of fuel to the respondent's account, he did not bank all of the proceeds into that account daily. In about May 1986 Mr. Philippou spoke to the applicant and asked him why he was not banking the takings into the respondent's account each day. The applicant replied he had never received any deposit book. Mr. Philippou said that although he had sent him one he would send another. Mr. Philippou then arranged for a further deposit book to be sent to the applicant. In about May 1986 Mr. Philippou arranged for Mr. Jim Cosma to send a commission licence agreement to the applicant. The applicant returned the agreement to Mr. Philippou as Mr. John George had not signed it. He told Mr. Philippou that he wauld not sign it until Mr. George had signed it. Mr. George then signed the agreement and it was returned to the applicant. The agreement has not since been returned to the respondent although it was subsequently tendered to the Court as an exhibit. On the occasion after the agreement had been returned by Mr. Philippou, the applicant telephoned Mr. Philippou and said that he had signed the documents before a Justice of the Peace. Later he said that he had signed the licence agreement in front of his solicitor. 31. On several occasions in June 1986 Mr. Philippou spoke to the applicant. Mr. Philippou said to the applicant that he knew he was supposed to bank the proceeds on a daily basis and that he must do this. The applicant said he did not have the money. On another occasion Mr. Philippou said to the applicant that Mr. John George was getting very upset and wanted the applicant to send in the money. The applicant replied that he would do this. Thereafter some deposits were made but I am satisfied that not all the proceeds of the sale of fuel from the Holbrook premises that were received by the applicant were in fact so deposited. Mr. Rogers got in touch with the applicant with respect to the Holbrook premises on about 26 June 1986. Mr. Rogers said to the applicant that he was a commissioned agent of the respondent selling fuel belonging to it and as a result he must bank the takings from the sale of fuel into the respondent's account every day. Mr. Rogers also said to the applicant on or about the same occasion that the applicant was in breach of the agreement because he was not banking the takings from the sale of motor fuel into the respondent's account on a daily basis. He said that in view of the applicant's actions the respondent could terminate the agreement unless the applicant followed instructions from the respondent and complied with the terms of the agreement. He also said to the applicant that if he failed to comply with the agreement and the respondent's directions a stocktake would be done to settle the account. Following that conversation Mr. Philippou told Mr. John George that the applicant refused to comply with the agreement and it was then resolved by the respondent to terminate the agreement and the applicant's operation of the Holbrook premises. 32. Mr. Jim Cosma who is the accounts' assistant for the respondent gave evidence. In that capacity he is responsible for the preparation of the monthly account reconciliations for the Holbrook premises. He has had this responsibility since the applicant's operation of the premises on or about 30 April 1986. On 30 April 1986 Mr. Cosma went to the premises at Holbrook to meet the applicant. He had been previously instructed by Mr. John George as to the terms of the applicant's operation of the premises. In the course of the conversation I am satisfied that Mr. Cosma said to the applicant words to the effect: (a) the applicant would act as an agent of the respondent in selling petroleum products on a commission of 2 cents per litre on all sales of Super motor spirit and 1.5 cents per litre on all sales of diesel; (b) all takings from the sale of petroleum products must be banked daily in the respondent's account; (c) the applicant must take both opening and closing dips and readings of all tanks each day; (d) the applicant must give the respondent the opening dips each morning and also inform the respondent of the total takings or banking from the day before; 33. (e) the applicant will purchase from the respondent all stock at the premises at that time to the value of $6,865.79; and (£) the applicant is permitted to use the equipment at the premises. Mr. Cosma said that at the beginning of every working day it was a standard business practice of the respondent to contact all of its agents and obtain the meter readings on all petrol pumps, the sale price of all fuels and the amount of money banked on the preceding day. The task was usually done by either the respondent's receptionist or Peter George or Liz George. In that way the respondent could determine how much money should have been taken by the operator, how much money should have been banked and whether or not the service station needed a delivery of fuel. The respondent did this for nearly all of its outlets and the procedure included the Holbrook premises. On 30 April 1986 Mr. Cosma went through all the stock at the premises at Holbrook with the applicant in preparation for the change in management. The applicant agreed to the valuation of that stock in the sum of $6,865.79. On the same day Mr. Cosma handed to _ the applicant a spare deposit book in relation to the respondent's account. The previous operator had left the old deposit book at the premises. The applicant was to use the old book first and then the new book in depositing, on a daily basis, takings from the sale of petroleum products into the respondent's Westpac bank account. The applicant agreed to do this. However, in May 1986 he had only made four deposits in the respondent's account. 34. In late May 1986 the applicant asked Mr. Cosma why he had sent the May statement to the service station at Holbrook. He told Mr. Cosma that the manager of the station had opened the envelope and looked at the statement. The applicant said that the accounts should, in future, be sent to him in Sydney. On 24 June 1986 Mr. Cosma went to the Holbrook premises to check the readings and dips and to prepare the monthly reconciliation. In June the applicant had not used the deposit books and had paid to the respondent $80,302.04 by telegraphic transfers on 2, 16 and 25 June. Mr. Cosma asked the applicant why he was not using the bank books. The applicant replied that he had sent money by telegraphic transfer which he considered just as satisfactory. Mr. Cosma said it was not satisfactory as he was required to bank the money daily. The applicant said that he would conduct matters as he had at Milperra and that it was no good for Mr. Cosma to come to Holbrook and check the books. Mr. Cosma said he would do what he was told by the Melbourne office. On 27 June 1986 Mr. Cosma went to the Holbrook premises with the intention of doing a final reconciliation of the account and to terminate the applicant's operation of the service station. He prepared a reconciliation of the account which showed that the applicant owed the respondent $12,582.57 which consisted of $6.280.81 plus the amount outstanding for stock. The manager of the premises, known to Mr. Cosma as Chris, telephoned the applicant who called the police and, after several telephone calls and the attendance of the police, Mr. Cosma left with the manager apparently still running the premises for the applicant. 35. Each month Mr. Cosma had sent to the applicant a typed statement of account showing the number of litres of petrol sold from the premises, the cash values of the sales, the banking that had taken place, the commission that the applicant was entitled to as well as miscellaneous items. The last statement of account dated 24 July 1986 was prepared by Mr. Cosma at the Holbrook premises on 23 July. The final balance showed that the applicant owed the respondent $7,428.30. During July 1986 the applicant banked the sum of $26,191.32 into the respondent's account either by deposits at the bank or by telegraphic transfer. Since 23 July 1986 the applicant has not given Mr. Cosma any information concerning the Holbrook premises. As a result Mr. Cosma has been unable to prepare any further statements. This completes the recitation of the basic facts. WITNESSES The applicant swore affidavits and was cross-examined. The respondent's witnesses were Mr. John George, Mr. Philippou, Mr. Rogers, Mr. Cosma and Mr. Walker all of whom swore affidavits and were cross-examined. There are marked contradictions between the evidence of the applicant on the one hand and the evidence of the respondent's witnesses on the other. Some of these contradictions are on matters of no consequence, but others are on matters of significance. I have had the benefit of seeing all the witnesses in the witness box. The impressions of them which I have formed are based not only on their 36. " demeanour in the witness box but also on the objective facts and the probabilities of the case. The documentary evidence of importance includes the letter written by Mr. Rogers and dated 5 July 1984 on behalf of the respondent to the applicant and the books and records kept by the parties, in particular the respondent, which consist of records of suppliers, invoices, cheque butts, day books, supply and delivery records, records of payment, bank deposit records, delivery dockets, invoices, balance sheets, profit and loss statements, reconciliation sheets and documents recording information received by the respondent and prepared by it in the ordinary course of its business in relation to the two premises in question. There are many conversations referred to in the evidence of the various witnesses. I have stated the facts as I have found them. Where the evidence of the applicant conflicts with the evidence of any of the witnesses called on behalf of the respondent I accept the evidence of the respondent's witnesses notwithstanding that there is a measure of inconsistency between the respondent's witnesses themselves on some matters. Were the relationships between the parties that of principal and agent or franchisor and franchisee? The applicant asserts that the relationships of the parties with respect to both premises are that of franchisor and franchisee within the meaning of the Act. The respondent claims that the relationships are that of principal and agent. The respondent paid for the fuel sold by the applicant from the Milperra and Holbrook premises. Until August 1984 the respondent continuously supplied the 37. Milperra premises. For some weeks in or about November 1984 the Milperra premises were supplied by Walkers and Dallas Oil Pty. Ltd. but the fuel was paid for by the respondent. The first occasion on which the applicant paid for fuel for the site was in mid November 1984. From early December 1984 until early February 1985 the respondent supplied the Milperra premises. Moneys were deposited or transmitted by the applicant to the respondent for fuel sold at the two sites. In my opinion the amounts deposited to the respondent's bank account by telegraphic transfer or by direct deposit or otherwise did not constitute payments for fuel in the sense that the applicant purchased the fuel from the respondent. They were payments made by the applicant to the respondent of what were in equity the respondent's moneys since the respondent generally paid for the fuel which was the subject of subsequent sales by the applicant on behalf of the respondent. The arrangements between the parties which form the basis of the relationship between them with respect to the Milperra premises were rather general in nature. It is a pity that the parties did not embody their understanding with respect to the Milperra premises in some formal agreement rather than leave it for the Court to work out subsequently the terms of the arrangements from conversations, documents and surrounding circumstances. Although the respondent purchased fuel for the Holbrook premises from J.K.S. Petroleum Pty. Limited, the payments for the fuel were made by the respondent. 38. I am satisfied that the terms of the arrangements from the inception of the operations by the applicant at the Milperra premises included terms that he would bank all retail proceeds to_ the respondent's account daily and that he would receive a commission of 1.5 cents per litre. Although the applicant asserts that this system was varied from time to time I do not accept his evidence. The applicant gave evidence that the initial system changed following a conversation he alleges he had with Mr. John George in early November 1984, I do not accept this in the light of all the evidence including the fact that the applicant gave conflicting versions of this conversation during his evidence. I am satisfied that the respondent did suffer the imposition of fuel tax fines and that the problems associated with this occurred, not in October or November 1984, but in February or March 1985. I find that neither Walkers nor Dallas Oil Pty. Ltd. refused to supply the respondent with fuel because of the problems associated with the impositions. The initial trading terms on which the respondent operated with those suppliers was cash on delivery. There is no substance in the applicant's argument that the respondent was unable to obtain or to pay for fuel supplies in 1984 or, indeed, in 1985. A great deal was made in evidence of the use of the word "commission". The applicant gave evidence that the word "commission" was not used between himself and any of the witnesses for the respondent when any relevant arrangement was made between them for either of the sites. He said that he spoke in the Greek language to Mr. John George and Mr. Philippou and used a Greek word which did not have as its corresponding English meaning the word "commission". Both 39. Mr. John George and Mr. Philippow gave evidence that they used the English word "commission" when speaking to the applicant. In fact the applicant in one of his affidavits in reply admitted that in his weekly conversation with Mr. Philippou the "commission" was discussed, but he asserts it was not discussed in any context relevant to the two sites. The letter of 5 July 1984 from Mr. Rogers to the applicant used the English word "commission" in a sense which denied the interpretation of events upon which the applicant relied. I reject the applicant's version of events relating to the word "commission" and I accept the evidence of Mr. John George and Mr. Philippou. The applicant sold the respondent's fuel from the two sites as its agent. The evidence as a whole supports this. I shall mention some of the evidence. The applicant gave evidence that he had no choice other than to sell the respondent's fuel and receive a commission. Mr. Walker gave evidence that the respondent guaranteed the applicant's obligations to Walkers for fuel purchases for the Milperra premises. The information provided by the applicant to the respondent until July 1986 was inconsistent with the notion of a person in business on his own account. Also, Mr. John George provided the applicant with a Fina truck for fuel deliveries. Mr. Philippou, on Mr. John George's instructions, gave directions as to prices, supplies and against overstocking which were generally agreed to, albeit reluctantly, by the applicant. The respondent maintained the pumps and the tanks on both sites. The applicant's preparation of his books was in the form directed by officers of the respondent and he fully understood the entries. 40. The fact that the applicant ran his own business in relation to the workshop and accessories has no effect on the commission/agency relationship for the sale of fuel. The expression "motor fuel" is defined by sub-s. 3(1) of the Act so that it does not include diesel fuel, workshop services, oils, confectionery etc. sold from the premises. Nor does the existence of credit sales operate against an agency relationship. The applicant was responsible for selling the respondent's fuel. If he chose to give credit that was his responsibility. This was clearly understood between the parties. The fuel sold from both sites was the property of the respondent. The applicant was authorised to convey the respondent's property in the fuel to third parties. There was no sale of the fuel by the respondent to the applicant. At times some fuel was paid for by the applicant. The applicant was authorised to sell the fuel he had purchased on behalf of the respondent and all proceeds of sale were payable to the respondent less an allowance for commission and the cost of the fuel. The applicant was reimbursed for all such purchases either from the cash out of the till which contained the proceeds of sale of the fuel or by the respondent crediting the cost of the fuel against amounts owed by the applicant to the respondent. In such a situation the applicant was entitled to a reimbursement as though a debt was due by the respondent. Considerations that point particularly to the existence of the relation of principal and agent between the respondent and the applicant include the following: 41. "(a) the applicant remained liable to pay the whole of the gross sale proceeds to the respondent irrespective of variations in the selling price of the fuel; and (b) the applicant was entitled to retain his commission at the agreed rate. As the retail sales of fuel were made by the applicant as agent for the respondent they were, by operation of sub-s. 3(5) of the Act, not retail sales which would have brought into existence a franchise agreement and the relationship of franchisor and franchisee. The relationship between the parties was that of principal and agent. The applicant acted as a commissioned agent and was outside the operation of the Act: see Mobil Oil Australia Ltd. v. Brindle (1985) 62 A.L.R. 89 per Fox J. at p. 93 and per Burchett J. at p. 96. The pricing of fuel was controlled by the respondent. Mr. Philippou on Mr. John George's instructions sought to exercise the right of setting prices. He told the applicant on several occasions to increase his prices. The applicant never complained that Mr. Philippou had no right to set prices. The applicant's only complaint was that he could not be competitive if he adopted the prices required by the respondent. On each occasion on which the applicant failed to move the price Mr. Philippou lowered the commission. The applicant complained but otherwise did nothing. 42. Something needs to be said about the Holbrook agreement. The document purporting to be the Holbrook agreement, was signed by both parties. On 27 June 1986 the applicant told Mr. Cosma that the agreement had been signed and "it's all official". In May 1986 Mr. Philippou had arranged for the forwarding of the document to the applicant for execution. The applicant returned the document saying he would not sign it until Mr. John George had signed it. After Mr. John George signed it Mr. Philippou returned it to the applicant. The applicant later told Mr. Philippou that he had signed it in front of a Justice of the Peace and on a later occasion in front of a solicitor. In my opinion the agreement had become effective upon execution by the applicant. The agreement in its terms establishes the relationship of principal and agent between the respondent and the applicant. It requires, inter alia, that all proceeds of fuel sales are received on trust and are to be deposited in the respondent's account (clause 19). The agreement also provides for termination on breach, inter alia, of the banking requirement (clause 19(b) and 37(a)). The agreement only grants a mere licence to the applicant to use the premises (clause 1). Even if I had reached the conclusion that the agreement was not effective and legally binding, it provides strong corroboration of the respondent's version of the discussions which led to the Holbrook arrangement and is inconsistent with the notion of the applicant buying his own fuel from the respondent. Prior to June 1985 the arrangement with respect to the Milperra premises was also clearly one of principal and agent. The relationship became more complicated thereafter for the reasons I have already mentioned although in substance the relationship did not change. After June 1985 the relationship of principal and agent, although it assumed a different form, still subsisted. 43. The applicant's case therefore fails. It remains to consider the respondent's cross-claims. The respondent asserts that the terms which I mentioned earlier were part of the agreements between the parties with respect to the two premises and that the applicant breached them with resultant loss or damage to the respondent. Alternatively, the respondent asserts that, if the Act applies to the relationship between the parties, the same terms were part of the franchise agreements. It further asserts that these terms were breached by the applicant with resultant loss or damage to the respondent and that in the circumstances it is just and equitable, pursuant to para. 16(6)(b) of the Act, that the agreements' be terminated. Termination of a franchise under the Act can only be given by notice which is expressed with sufficient particularity. The termination can only be in terms of that notice: Anjac Pty. Limited v. Caltex Oi] (Australia) Pty. Ltd. (1985) 69 A.L.R. 733. Whether breaches of the agreements between the parties have occurred? I turn to the terms of the agreement particularised in the notice of termination of 18 December 1986 with respect to the Milperra premises and to the four alleged breaches of it, namely, terms (b), (d), (e) and (f). Term (b) (which is in substance reproduced by me earlier in these reasons) is said to have been breached in that the applicant 44, * deposited part or all of the sale proceeds into an account of his own and that since 7 March 1986 until the date of the notice he has failed to pay proceeds of fuel sales into the respondent's bank account. Since September 1985 he has paid suppliers of petroleum fuel by cheque drawn on one of his accounts. Term (d) states that the applicant would obtain petroleum fuel only from the respondent or as directed by the respondent. It is said that this was breached as the applicant obtained petroleum fuel supplies for the premises from Monaro Fuel Supplies on certain specified dates in June 1986 despite Mr. Philippou orally directing in about March or April 1986, on behalf of the respondent, that the applicant was not to obtain petroleum fuel supplies for the premises from Monaro Fuel Supplies but was to obtain supplies from D.P. Kirk & Co. Pty. Limited. Term (e) states that the applicant would sell the petroleum fuel at prices set by the respondent. It is said in the notice of termination that Mr. Philippou orally directed the applicant to increase, as particularised in a table to the notice, the sale price of various grades of fuel. This is alleged to have been breached. However, no breach of this particular term is specified in the notice of termination. Term (f£) states that the applicant would provide to the respondent all information, necessary to enable the making of a calculation of any commission to which the applicant was entitled, regarding any proceeds of sale of petroleum fuel to which the respondent was entitled and regarding the cost of purchases of 45. "petroleum fuel and other expenses to be borne by the franchisor. All this was to be provided by the applicant to the respondent. It is said that Mr. Philippou on or about 13 July 1986 on behalf of the respondent orally requested from the applicant the name of the supplier of 84,500 litres purchased at 46.9 cents per litre and a copy of the invoice for that supply and that in breach of that term the applicant refused and has failed to provide the name of the supplier and a copy of the invoice. I am satisfied that the breaches as alleged in the notice of termination have been established with respect to term (b), (d) and (f£). Turning to the notice of termination with respect to the Holbrook premises. There are only two breaches asserted. The first term allegedly breached is a term that the applicant would bank all proceeds of retail sale of petroleum fuel from the premises less commission into a bank account of the respondent at the Westpac Bank, Lalor Branch on the day of receipt or apply the proceeds in the manner from time to time directed or authorised by the respondent. The breach is said to be that since April 1986 to date the applicant has paid all or part of the sale proceeds into an account of the applicant and has failed to pay into the account of the respondent the whole of the sale proceeds less the applicant's commission on the day of receipt. I find this ground has been established. The second term said to be breached is a term that the applicant would pay to the respondent the sum of $6,865.79 for stock on the premises. The breach asserted is that the applicant has paid 46. "the respondent only $564.03 and has failed to pay the outstanding balance of $6,013.79. This has not been established. There is evidence from the respondent's own books showing a calculation to the effect that the applicant owes the respondent the sum in question but I am not satisfied that the sum was discussed between the parties. Indeed, there is evidence that the relevant extracts from _ the respondent's books are calculations for information purposes only and not by way of demand or request for payment from the applicant. It was submitted on behalf of the applicant that the respondent had waived all or some of the alleged breaches of the franchise agreement between them. I am not satisfied that waiver has been established. Whether terminations are just and equitable? If I had concluded that the Act governed the relationship of the parties then, as I have found that the applicant committed breaches of the two agreements, it would have been necessary to determine, pursuant to para. 16(6)(b) of the Act, whether the Court was satisfied that the termination of the agreements was just and equitable having regard to all the circumstances. I accept that the applicant has played a considerable role in establishing the service station business at Milperra, but he has committed breaches of important terms of the agreement between himself and the respondent. If it had been necessary for me to consider the question raised by para. 16(6)(b) of the Act then I would have concluded that, in the case of the Milperra premises, it would be just 47. "and equitable to declare that the notice of termination served on 18 December 1986 with respect to those premises terminated the franchise agreement if it had existed. So far as the Holbrook premises are concerned I am satisfied that it would be just and equitable to declare that the notice of termination served on 18 December 1986 with respect to those premises terminated the franchise agreement if it had existed. CONCLUSION It follows that the applicant's challenge to the validity of the two notices fails. In my opinion the respondent succeeds in its contention that the applicant was a tenant of the Milperra premises and a licensee of the Holbrook premises, and that each was terminated by a notice of termination served on 2 July 1986. Those notices were effective to terminate the applicant's rights of occupancy notwithstanding that they were followed by subsequent notices. Although those lastmentioned notices were framed on the assumption that the Act may apply, as it does not apply, it leaves the initial notices intact. With respect to the respondent's cross-claims it is entitled to recover rent or loss and damage, if any, caused by the applicant's failure to give up possession of the premises upon the termination of the tenancy and licence. I propose to make no findings about these matters but to stand the two proceedings over so that my reasons may be considered by the parties, and, if any further evidence is or submissions are required with respect to these remaining questions, 48. "the matter may be relisted for consideration of the appropriate course to pursue. In its cross~claims the respondent also seeks various declarations and orders. In my opinion the respondent is entitled to, a declaration that, prior to 1 August 1986, the applicant occupied the Milperra premises pursuant to a tenancy and the Holbrook premises pursuant to a licence and a declaration that each right of occupancy has been duly determined. It is also entitled to a declaration that it is entitled to possession of the two premises and to an order for possession. The only order I shall make today is to direct the respondent to bring in short minutes of order to give effect to my reasons for judgment. When the matter is relisted, if no problems remain, then final orders can be made. However, failing this, I will determine the future course of the proceedings with respect to the outstanding matters. So far as costs are concerned, Thursday, 18 and Friday, 19 December were taken up substantially by the applications on behalf of the respondent to amend its defences and cross-claims and with the new notices of termination filed on the Thursday and then further notices on the Friday in substitution for the earlier notices. These two days of hearing were virtually thrown away by the conduct of the respondent and I think the proper order for costs is that the applicant's costs of those two days, including counsel's fees on a refresher basis, be paid by the respondent in any event and that those costs should also include the costs of and occasioned by amendments to the pleadings by the applicant subsequent to the giving of leave to the respondent granted on 18 December 1986 to file amended defences and cross-claims. - 49. Otherwise the applicant must pay the costs of the respondent of the two proceedings. I certify that this and the preceding forty-eight (48) pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice Lockhart. Dated: 14 August ,1987 Associate tn ' " Counsel and solicitors R.W.R. Parker Q.C. with R.K. Eassie for the applicant: instructed by Messrs. Stojanovic & David. Counsel and solicitors A.J.L. Bannon instructed by Messrs. for the respondent: Winneke Rofe Sinclair. Dates of Hearing: 15, 16, 17 & 18 December 1986 13, 14, 15 & 16 April 1987 46 5 May 1987 Date of Judgment: 14 August 1987