JUDGES. 2. 731 8E CATCHWORDS TRADE PRACTICES ~ Misleading conduct - Alleged representation by lessor of service station that freehold had been sold - Damage claimed to be suffered. NEGLIGENCE - Claim by lessee for cost of repairs to customers' motor vehicles by filling with distillate rather than petrol as a result of mistake in delivery by lessor's employee. PETROL RETAILING - Notice of termination of franchise by lessor by reason of defaults by franchisee - Validity of notice - Notice of non-renewal of franchise - Validity of notice - Whether it 1s "just and equitable" for franchisor not to renew franchise. Trade Practices Act 1974 s.52. Petroleum Retail Marketing Franchise Act 1980 ss.3, 16, 17, 17A. NSW G.230 of 1987 SID MARZ SERVICES PTY LIMITED v CALTEX OIL (AUSTRALIA) PTY LIMITED NSW G.476 of 1987 CALTEX OIL (AUSTRALIA) PTY LIMITED v SID MARZ SERVICES PTY LIMITED 7~y ye Py Wilcox J a ay aN Sydney pe a 11 December 1987 iP) - 7 twee 4 . ' ry rr? IN THE FEDERAL COURT OF AUSTRALIA ) ) NEW SOUTH WALES DISTRICT REGISTRY ) NSW G.230 of 1987 ) ) GENERAL DIVISION BETWEEN: SID MARZ SERVICES PTY LIMITED Applicant AND: CALTEX OIL (AUSTRALIA) PTY LIMITED Respondent AND: CALTEX OIL (AUSTRALIA) PTY LIMITED Cross-Claimant AND: SID MARZ SERVICES PTY LIMITED First Cross-Respondent PHAEON MARZOUK Second Cross-Respondent SAEED GIRGIS ABDOU MARZOUK Third Cross-Respondent CHRISTINE MARZOUK Fourth Cross-Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 17 DECEMBER 1987 MINUTES OF ORDER THE COURT ORDERS THAT: Note: Judgment be entered in favour of the applicant against the respondent in the sum of five thousand six hundred and ninety-eight dollars and thirty-five cents ($5,698.35). Judgment be entered in favour of the cross-claimant against the first, second, third and fourth cross-respondents in the sum of ninety-nine thousand nine hundred and eighty dollars and nineteen cents ($99,980.19). The amount payable pursuant to the judgment referred to in order 1 herein be set off against the amount payable pursuant to the judgment referred to in order 2 herein leaving a judgment debt of ninety-four thousand two hundred and eighty-one dollars and eighty-four cents ($94,281.84) due and payable by the first, second, third and fourth cross~-respondents to the cross-claimant. The applicant and the second, third and fourth cross-respondents pay to the respondent ninety percent (90%) of the respondent/cross-claimant's costs of the proceeding. 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 GENERAL DIVISION BETWEEN : AND: CORAM: WILCOX J PLACE: SYDNEY DATE: 17 DECEMBER 1987 ) ) ) NSW G.476 of 1987 ) ) CALTEX OIL (AUSTRALIA) PTY LIMITED Applicant SID MARZ SERVICES PTY LIMITED Respondent MINUTES OF ORDER THE COURT ORDERS THAT: l. The applicant be adjudged entitled to vacant possession of the land situate at 880 Hume Highway, Bass H111l in the State of New South Wales being the land comprised in Certificates of Title Volume 7151 Folio 100 and Volume 7106 Folio 132 together with all improvements thereon. 2. The applicant have leave to issue a writ of possession in respect of the land and improvements specified in order 1 herein. Note: Execution of the writ referred to in order 2 be stayed up to and including 20 December 1987. The respondent pay to the applicant ninety per cent (90%) of the applicant's costs of this proceeding. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. NSW G.476 of 1987 BETWEEN: CALTEX OIL (AUSTRALIA) PTY LIMITED Applicant AND: SID MARZ SERVICES PTY LIMITED Respondent CORAM: WILCOX J PLACE: SYDNEY DATE: 11 DECEMBER 1987 EXTEMPORE REASONS FOR JUDGMENT There are before the Court two matters, Nos.G.230 of 1987 and G.476 of 1987, which, by consent, have been heard together. In the first of these two matters the applicant is Sid Marz Services Pty Limited, a company controlled by Mr Saeed Marzouk. The respondent is Caltex Oil (Australia) Pty Limited, which is the owner of the freehold of certain land, at Hume Highway, Bass Hill, leased to Sid Marz Services for the purpose of the conduct of a service station. In the second proceeding the applicant is Caltex Oil and the respondent is Sid Marz Services. In the former of those two proceedings there is a claim made by Sid Marz Services which depends upon s.52 of the Trade Practices Act 1974 and in relation to which it is alleged that false representations were made on behalf of Caltex. There is a claim in negligence relating to the fact that a Caltex employee placed distillate in a petrol storage tank at the service station, causing certain customers' vehicles to be supplied with distillate rather than petrol, whereby damage was caused to those vehicles, which damage Sid Marz Services had to make good. The amount involved in that latter claim is $4,824. In that same proceeding a Cross-claim has been brought by Caltex against Sid Marz Services, and also against three persons who have guaranteed the obligations of that company pursuant to the lease and reseller agreement entered into between Caltex and Sid Marz Services. Those three persons are Mr Saeed Marzouk, his wife, Christine Marzouk, and his brother, Phaeon Marzouk. In the Cross-Claim, Caltex claims as against all four cross-respondents rent, at the rate of $3,750 per month, for the period from September 1986 until the present time, together with certain moneys said to be due in respect of the trading account between Caltex and Sid Marz Services. There was some dispute as to the amount payable on that account, but during the hearing the parties reached agreement that the relevant figure is $28,534.29. In the second proceeding, G.476 of 1987, Caltex claims possession of the premises upon the basis that 1t has validly terminated the leasehold interest of Sid Marz Services and is not obliged to renew the lease. This latter claim involves some questions under the Petroleum Retail Marketing Franchise Act 1980. I will deal with each of the issues to which I have referred in turn. The first question which arises 1s whether there is a good claim for damages by Sid Marz Services against Caltex under s.52 of the Trade Practices Act. The basis of the claim is a meeting which took place between Mr Marzouk, on behalf of Sid Marz Services, and Mr William Lyons and Mr Gary Nelson, on behalf of Caltex. There is a question as to the date of this meeting. Mr Marzouk says that 1t took place on 27 September 1985, whereas Mr Lyons and Mr Nelson put the date as being 22 October 1985. It is common ground that the meeting took place in the office of Mr Lyons at North Sydney and that the subject matter of the meeting was the possibility of the sale of the service station site and the relocation of Sid Marz Services. So far as the date is concerned, I think it is probable that Mr Marzouk is correct in fixing the date as being 27 September. My first reason for taking that view is that Mr Marzouk has a note in his diary of an appointment with Mr Nelson on that day, and no similar note in his diary against 22 October. Secondly, Mr Lyons' diary, which was produced during his evidence, also has a note of an appointment with Mr Marzouk on 27 September and no note of an appointment on 22 October. However, I would not dispose of the matter entirely on the basis of the diary notes, because it is possible that an appointment was made but, for some reason, the meeting was postponed. The more significant evidence on this matter is a diary note of the bank manager handling the account of Sid Marz Services which records a telephone conversation between himself and Mr Marzouk on Monday, 30 September. This diary note refers to a discussion which Mr Marzouk claimed to have had with Caltex representatives regarding the sale of the site and the possible relocation of his business. There is no reason to doubt the authenticity of the diary note, which is contained in the records of Westpac produced on subpoena. This note seems strongly to corroborate Mr Marzouk's evidence that there was a discussion with Caltex representatives on 27 September, It is inconsistent with the evidence of Mr Lyons and Mr Nelson that the first such discussion took place on 22 October. However, the significant aspect of the meeting is not the date upon which it took place, but the content of the conversation which ensued. According to Mr Marzouk, Mr Lyons told him that Caltex had sold the land which it leased to him for the purposes of the service station. It is this representation upon which he relies, and which he claims to be false. It is quite clear that Caltex had not in fact sold the land on that day, and indeed that it has not yet sold it. I mean by this, not only that it had not exchanged contracts for sale on 27 September 1985, but that it had not even reached a firm agreement with a purchaser for the sale of the land. [It appears that an offer had been received by Caltex prior to 27 September, but there is no evidence to suggest that the offer had been accepted. The only evidence on the matter is that the offer was left in abeyance pending a discussion with Mr Marzouk about a relocation of Sid Marz Services to a different service station. That relocation never occurred. Counsel for the applicant has pressed me to prefer Mr Marzouk's version of this conversation to that of Mr Lyons and Mr Nelson. He has correctly pointed out that his client's memory of the date seems to be more accurate than that of the other two gentlemen. He has pointed out that no note of the conversation has been produced in evidence, notwithstanding the fact that, according to Mr Nelson, Mr Lyons took some notes during the meeting. I give weight to these matters, but I find it extremely difficult to accept that Mr Marzouk was unequivocally told that the property had been sold. My first reason for being unable to accept that evidence is that I cannot see what advantage Mr Lyons would have seen in misinforming Mr Marzouk of the position. Apart altogether from the desirability of being honest and frank with a franchisee of the company, one would have thought that it would be contrary to the interests of Caltex to lead Mr Marzouk to believe that Caltex had already committed itself to a sale of the land leased to his company. For Mr Marzouk to have been so informed would have been to lead him to believe that he was in an extremely powerful bargaining position with Caltex in relation either to relocation to a different site or to being bought out by the payment of compensation moneys. There was no advantage to Mr Lyons in making an untrue statement that the property had been sold. Mr Lyons was the officer of Caltex handling the negotiations with the prospective purchaser and he must have known the true position. My second reason for rejecting Mr Marzouk's version of the conversation arises out of subsequent correspondence. On 25 October 1985 a letter composed by Mr Lyons, but despatched over the signature of Mr G J Cocks, the Manager, Retail Sales, New South Wales, of Caltex was sent to Mr Marzouk at his home. That letter refers to what was called "your recent discussions with our Messrs Nelson and Lyons" and goes on to outline what was called "the course of action we wish to adopt following 'the receipt by us of a third party offer to purchase the freehold of the subject sale". The writer of the letter then went on to state two preliminary matters, the first of which was as follows: "(a) that we have not yet accepted the said offer to purchase; we are at this stage, still considering an appropriate course of action." After those two prefatory statements, the letter referred to a proposal for which Mr marzouk's consent was sought "in the event that we did decide to accept the offer to purchase". The proposal dealt with relocation and the absorption by Caltex of various costs. This letter seems to me quite inconsistent with a position that there was already a firm agreement to sell the site, whether or not that agreement had been consumated by an exchange of contracts of sale. If Mr Marzouk had been told, on 27 September 1985, that there was already a firm agreement for sale, it seems to me that he would have been likely to have sustained surprise upon reading the letter of 25 October. However, there 1S no indication that there was any surprise. He took the letter to the solicitor then acting for him, Mr J A Peden, who replied on 31 October to Mr Cox. That letter refers to Mr Cox's letter of 25 October "regarding the possible sale of the freehold of the subject marketing premises". The letter then went on to set out certain terms for relocation and ended with a plea for a prompt resolution of the matter "so that further disruption to normal operations is alleviated". Finally, Mr Peden asked for prompt ddvice "of your company's intentions on sale of the freehold and relocation of our client's business", Mr Marzouk said in evidence that he had kept in close contact with Mr Peden and had discussed the matter with him between the date of the meeting with the Caltex officers and the receipt of the letter of 25 October and that he had a further discussion with him between the receipt of that letter and Mr Peden's letter of 31 October. If Mr Marzouk had been told that the property had been sold, and then received the letter of 25 October, it seems to me highly probable that he would have pointed out to Mr Peden that the letter was inconsistent with his previous information and that Mr Peden would have made some observation about that matter in his reply. On the contrary, Mr Peden seems to have accepted that the whole question was still open. Mr Marzouk was asked whether he discussed this inconsistency with Mr Peden. His reply was that Mr Peden thought the letter was not different in effect from his previous understanding. The combination of the two matters to which I have referred leads me to reject the evidence of Mr Marzouk that he was told on 27 September, or indeed at any other time, that the property had definitely been sold. There is no doubt that Mr Marzouk was told of negotiations for sale. He may well have formed the impression that a sale was extremely likely; as indeed it was -- on the evidence -- provided that a suitable alternative site could be found for Sid Marz Services. But I do not accept that Mr Marzouk was told that there had definitely been a sale. This finding is enough to dispose of the claim under s.52 of the Trade Practices Act; because this 1s the only false representation which, in the event, is relied upon by the applicant. Strictly, therefore, it 1s not necessary for me to deal with the matter of damages. However, I should perhaps indicate that I am not persuaded that the applicant suffered any damage as a result of what was said to Mr Marzouk at the meeting with Mr Lyons and Mr Nelson. I readily accept that the intimation of a possible sale was unsettling to Mr Marzouk and to the applicant. The applicant had gone into possession of the property very recently -- namely, on 1 September 1985 -- and it must have been disconcerting for Mr Marzouk to be told, only a few weeks later, that there was a possibility, even a probability, of his company having to 10. move. But, when one analyses the evidence as to what was done that would not otherwise have been done, or what was not done that would otherwise have been done, 1t is very difficult to see that there was any result, in terms of loss of profits, from the information being given. It is clear that Mr Marzouk had plans to promote the business. He had outlined these plans in a letter to Caltex dated 16 September. The major feature of his plans seems to have been the installation of a steam cleaning machine. This would have required the approval not only of Caltex, but also of Bankstown City Council, and there is no reason to believe that the steam cleaning machine could have been installed within the period during which Mr Marzouk was under any misapprehension as to the future of the business. On any view of the evidence, he realized, by the beginning of April 1986, that he was not likely to be relocated. I do not think that it would be safe to assume that the steam cleaning machine could have been installed by that date. There was no attempt made by Mr Marzouk to install the machine after 1] April 1986. Consequently, it is impossible to know whether the installation of a steam cleaning machine would have improved the profitability of the business or otherwise. Another proposal which was referred to by Mr Marzouk was the installation of a sign stating that full driveway service was available. This was apparently not pursued, even after the situation became clear. There was also a reference to having certain giveaway presents for customers. It may be ll. that the understanding which Mr Marzouk had caused him not to proceed with giveaways; but whether or not this would have improved profitability is a matter entirely of speculation. The site had a frontage to the Hume Highway and it is reasonable to suppose -- and indeed the evidence confirms this -~ that a major source of custom was from passing traffic. It is difficult to see that giveaways would have made much difference to that portion of the trade. What is clear is that the takings from petrol sales were very susceptible to the price charged. It appears that, in mid February 1986, Mr Marzouk decided to sell petrol at a price below that ruling 'at nearby service stations. The takings then improved quite significantly; March 1986 being the best month ever in terms of gross petrol sales. There is no information before the Court to indicate the profitability in that month, as compared with other months when Sid Maarz Services was not discounting. When asked in evidence why he ceased to discount at the end of March, Mr Marzouk gave the reason that he did not wish to upset his competitors in the area. It is abundantly clear, as counsel for the applicant has pointed out, that, after March 1986, the takings of the business fell away. The figure in April was much the same as the figure in September 1985; that is the first month during which the applicant was in possession of the service station site. But the May figure for petrol sales was about $10,000 below that of April, and June was down once again. Thereafter, there was a fairly steady drop until June 1987, when petrol sales ceased all together. 12. I confess that I am totally mystified as to why the petrol sales fell away so significantly after the end of April 1986. This has not been explained in the evidence. It may have had something to do with liquidity problems. It may have had something to do with a slackening of effort on behalf of those who were managing the service station, although Mr Marzouk has said that he continued to be at the service station for most of every day until June 1987. Whatever the reason might be, I cannot relate it to uncertainty about relocation because, as I have said, it is clear that this uncertainty was removed at the beginning of April 1986. In this situation, I would 'have had difficulty in holding that any damage had been sustained from the representation said to have been made by Mr Lyons had I found that the representation was in fact made, The claim under s.52 of the Trade Practices Act must fail. The claim for $4,824 in respect of the cost of repairing cars ought to succeed. It is conceded by Caltex that the tanker driver put diesel fuel , or distillate, in the underground petrol tank and that he was negligent in so doing. An explanation has been offered, but that does not change the situation. The evidence of Mr Marzouk was that some customers had distillate put in their cars by mistake and that this caused problems for them of varying degree. Not unnaturally, they complained to him and, quite properly, he felt obliged to take the cars into the workshop and to make good the damage. Job cards were kept showing the cost of these repairs, 13. calculated in the usual way including labour, materials and fuel to refill the petrol tanks. The total cost came to $4,824. The job cards were handed by Mr Marzouk to the Caltex area representative. He apparently took them to a relevant officer in head office and later returned them to Mr Marzouk, claiming that further information should be supplied. I can agree that, 1n some cases, the information is a little scanty; but in most cases I would have thought that 1t would be possible to determine the accuracy of the claim. Be that as it may, the only evidence before me is the evidence from Mr Marzouk that in fact the work claimed on each of the job cards was done and that this work was in rectification of problems caused by the mix up of fuel. Under those circumstances, the sum is recoverable. It follows that, in the claim by Sid Marz Services, there ought to be judgment for the applicant in the sum of $4,824. In relation to the cross-action, it is conceded that the sum of $28,534.29 1s payable in respect of the trading account. It is also conceded that no rent has been paid for the period commencing on 1 September 1986 and extending until the present time. Caltex claims rent. In the view that I take, the lease was effectively terminated on 30 September 1987 and I think that a payment, properly described as rent, should be awarded in respect of the period to that date. In relation to the period since that date, a similar amount should be awarded by way of mesne profits, the leasehold interest having terminated. There is no issue raised about 14. the validity of the guarantees. It follows that there should be judgment against all four cross~respondents in respect of these amounts. Interest is claimed under s.51A of the Federal Court of Australia Act 1976 and I think that interest ought to be allowed on the amounts recovered. As the amounts have accrued over a period, there would be some difficulty in calculating interest if interest was applied in respect of each item as it fell due. I think that the better course might be to calculate interest on the basis of three monthly rests as at the end of March, June, September and December each year. This will simplify the calculation, which I propose to invite counsel to undertake before formal orders are made. In relation to the claim for possession, which is made by Caltex in G.476 of 1987, the position is that the lease, which was taken by Sid Marz Services by way of assignment in 1985, expired on 28 February 1987. The lease contained a holding-over clause providing for termination on three months' notice. It also contained a clause permitting termination at any time during the currency of the lease on not less than 30 days' written notice of termination, inter alia, where there was a breach of a condition of the lease. In order to exercise that power, the lessor was obliged to set out particulars of the ground or grounds relied upon in its notice of termination. 15. In the present case the lessor served two notices of termination. The first of these was given on 26 June 1987. It purported to terminate the tenancy as at 30 September 1987. The apparent intention was to take advantage of the right, given in the holding-over clause, to termination on three months' notice. No default was referred to. The second notice was dated 27 August 1987. It also purported to determine the lease as from 30 September 1987 but, on this occasion, grounds were stated. They included non-payment of rent and the fact that Sid Marz Services had committed a breach of the franchise agreement in that it had not paid for petroleum products supplied to it by Caltex. Each of these grounds has been made out in the current proceedings. This second notice did not give three month's notice. But I think that Caltex was entitled to give notice of less than three months, provided that the notice was at least 30 days, where the notice specifies a breach of a condition of the lease; and that such a notice effectively terminates the tenancy 1f Caltex is able to make out that ground. These conditions have been fulfilled. Section 16 of the Petroleum Retail Marketing Franchise Act limits the power of a franchisor to terminate a franchise agreement. The term "franchise agreement" is defined by s.3 of that Act as including an agreement containing: "(b) provisions, whether express or implied, under or by virtue of which a corporation (...the ''franchisor') grants a right to, or otherwise authorizes or permits, a person, being another party to the agreement (...the 'franchisee'), to 16. 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 ..." The lease granted by Caltex, which was assigned to Sid Marz Services, was a "franchise agreement" within the meaning of that definition. Sid Marz Services continued to hold over under that lease after the expiration of the term and, consequently, the lease continued in operation as a franchise agreement. Section 16(1) provides that a franchisor may terminate a franchise agreement in accordance with the succeeding provisions of that section, but not otherwise. Section 16(2) prohibits the termination of a franchise agreement except on one or more of the grounds specified in that sub-section. These grounds include para.(j): "The franchisee otherwise commits a breach of a provision of the franchise agreement." Section 16(3) relevantly provides: "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 ... 15s 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 ... upon which the termination is based." These conditions were fulfilled by the notice of 27 August. 17. I take the view that, in order to effectively terminate the relationship of lessor and lessee, having regard to the terms of both the lease and the Petroleum Retail Marketing Franchise Act, Caltex had to serve a notice which gave the notice required under the lease and which also complied with the Act. It would not have been good enough to simply give a notice which answered the requirements of the lease, but not the Act, or vice versa. It follows that the first notice of termination, which answered the requirements of the lease, but not of the Act, was ineffective to determine the tenancy. But for the provision of the lease permitting a 30 day notice, in lieu of a three months' notice, where a breach was relied upon, 'the second notice would have been insufficient. However, because of that provision, the second notice did comply with the lease; and it also complied with s.16 of the Act. Section 16(4) gives to a franchisee who has received a notice under s.16(3) terminating the agreement the right to "apply to a court for an order declaring the notice to have had, or to have, no effect". Where such an application is made, the court has power so to declare. However no application along those lines has been made by Sid Marz Services. The other aspect of the matter relates to the operation of ss.17 and 17A of the Act in respect of renewal. In December 1986, Caltex wrote to Sid Marz Services offering renewal; but this offer was not accepted. A counter-offer 18. was made which was unacceptable to Caltex. Therefore, but for the operation of the Petroleum Retail Marketing Franchise Act, there would have been no question of an obligation to renew. However, s.17A(5) provides that, except in relation to cases dealt with in s.17A(4)(b), that is cases where there has been an offer to renew: "... a franchisor shall not refuse or fail to renew the franchise agreement unless it has served on the franchisee, before the date of expiry of the agreement, notice in writing of its decision not to renew the agreement, 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." Caltex served a notice in purported compliance with s.17A(5) on 6 June 1987. There were certain typographical errors which were corrected in a supplementary notice served on 1 July 1987. I think that it is clear that, read together, these notices answered the requirements of s.17A(5), subject to one matter. That matter is a point raised on behalf of the applicant: whether or not the notice was served "before the date of expiry of the agreement". It is argued on behalf of the applicant that the result of this requirement is that the notice should have been served before 28 February 1987, when the term of the lease expired. I am unable to accept that submission. The Petroleum Retail Marketing Franchise Act makes a distinction, ina number of places, between the term of a lease and the operation of an agreement. I think that the requirement of sub-s.(5) is directed, not to the expiration of the original leasehold term, but to the date when the agreement itself 19. would expire. Where there is a holding-over clause, the agreement may continue to operate, perhaps for a considerable time, after the expiration of the term. It cannot be said that the agreement has expired until the date when the holding-over clause ceases to have effect. In this case the holding-over clause, as is common ground, continued to have effect until 30 September 1987. Consequently, sub-s.(5) required that notice be served before that date. This was done. Notwithstanding the fact that a valid notice of non-renewal was served, it was open to Sid Marz Services, as franchisee, to apply to 'the Court for an order directing Caltex to renew the franchise agreement. Sid Marz Services took that course. Section 17A(7) provides that, excepting a case which is presently irrelevant: ",.. a court shall, on the application of a franchisee, make an order directing the franchisor to renew the franchise agreement unless-- (a) the franchisor has served on the franchisee a notice in accordance with sub-section (5); (b) a ground specified in the notice 1s established by the franchisor to the satisfaction of the court; and (c) except where a ground so established is a ground referred to in paragraph 17(1)(d), the court is satisfied that 1t 1s just and equitable, having regard to all the circumstances, for the agreement and any related agreement or agreements not to be renewed." 20. The requirements of paras.(a) and (b) are clearly satisfied. A question arises under para.(c) whether the Court ought, in all of the circumstances, to be satisfied that it is just and equitable for the agreement between Caltex and Sid Marz Services not to be renewed. On behalf of the applicant, counsel submits that the Court could not be so satisfied. He refers to evidence of the failure of Caltex to deliver petrol on a number of occasions. Mr Marzouk has itemised 11 occasions when, he says, petrol was either not delivered, was delivered later than a reasonable time after being ordered, or was short delivered. There has not been much investigation of these claims. In some cases, Caltex denies that the order was given. On other occasions I think that there would be a question as to whether the delivery was so late as to cause any legitimate complaint to arise. On other occasions, the delivery was less than the order; but I do not think that the short delivery was so significant as to be a legitimate cause of concern. Mr Marzouk gave evidence that there was a problem with water in the underground distillate tank, which contamination caused difficulties for some customers, and that there was delay by Caltex in investigating the problem. Upon investigation, the water was discovered and was pumped away. I do think that Mr Marzouk has a legitimate complaint about the time taken by Caltex to respond to, and solve, this problem, Apparently the matter dragged on for some two or three months. It 1s difficult to see why that should have been so. There was also the matter of the misplacement of the 21. distillate in the underground petrol tank, causing the damage to the motor vehicles to which I have already referred. But this seems to have been an isolated act of carelessness by a particular employee. However irritating it may have been to Mr Marzouk, I do not think that it says anything about Caltex's attitude towards him or towards the service station generally. There have undoubtedly been difficulties in the relationship between the parties and I do not think that the fault has all been on one side. However, the applicant has a major obstacle in resisting the claim that it is Just and equitable to permit Caltex not to renew the lease. That obstacle is the fact that, for a period extending over about 14 or 15 months, no rent has been paid. No explanation has been given for this omission and, when I asked counsel whether his client was prepared to give any undertaking that this money would be paid, he informed me that his client was not in a position to do so. A similar situation applies in regard to the trading account. It is true that, until today, the applicant was taking the attitude that less than the agreed sum of $28,534.29 was due. But it seems to me that, on any reasonable approach to the matter, it would have been clear that significant moneys were owing. There seems to have been insufficient effort to ascertain the amount of these moneys and to clear up the account. Moreover, no undertaking is offered in relation to the payment of the amount which 1s now conceded to be due. 22. It seems to me that it would be an intolerable position to force Caltex to grant a fresh lease to a lessee who 1S 1n such significant default, whose default has continued over such a lengthy time and who now makes no offer to remedy the default. The requirements of s.17A(7) are satisfied. Caltex is free not to renew the lease. It follows from the rejection of the arguments put by Sid Marz Services, in regard to renewal and non-renewal, that an order for the issue of a writ of possession ought to be made. I think that the appropriate course for me to take, having expressed my views on all of the matters litigated, is to stand over the matter until a convenient date next week. At that time, I will be in a position to make orders upon the basis of Short Minutes of Order, which I would invite counsel for Caltex to prepare and bring in on that occasion. He will no doubt discuss the draft with counsel for Sid Marz Services, in the hope that agreement can be reached as to the form of the orders. The orders should include a calculation of the appropriate amount of interest. I should have added that I think that Sid Marz Services is also entitled to interest on the amount that I have allowed of $4,824, calculated in the way that I have indicated. 23. I certify the twenty-two (22) preceding pages to be a true copy of the Reasons for Judgment of his Honour Justice Wilcox. Associate: Joowe fitiet Date: 16 Deceriber 1987 NSW G.230 of 1987 Counsel for the Applicant and Cross-Respondents: Mr I M Khan Solicitors for the Applicant and Cross-Respondents: Stojanovic & David Counsel for the Respondent and Cross-Claimant: Mr G C Lindsay Solicitors for the Respondent and Cross~-Claimant: Moore and Bevins NSW G.476 of 1987 Counsel for the Applicant: Mr G C Lindsay Solicitors for the Applicant: Moore and Bevins Counsel for the Respondent: Mr I M Khan Solicitors for the Respondent: Stojanovic & David Date(s) of hearing: 9, 10 and 11 December