avr ¢; LAWNLLED Dip'ttxlBULLON ONLY; NOT CONSIDERED SUITABLLI FOR REPORTING. YUDGMENT No. 7.7.7 OS. senaticoonsenter CATCHWORDS Franchise agreement for distribution of petroleum products - notice of termination by "prescribed corporation" - whether agreement excluded from Operation of Petroleum Retail Marketing Franchise Act 1980 by operation of s.6(1D) thereof - matters affecting compliance or substantial compliance with requirement that statement be lodged under s.1l Petroleum Retail Marketing Sites Act 1980 - relationship between Acts implementing legislative scheme and effect of amendments' to those Acts. Words and Phrases - "franchise agreement" - "prescribed corporation" - "related body corporate" - statement "in the appropriate form" - "diesel fuel site" ~ "without prejudice". Petroleum Retail Marketing Franchise Act 1980 (Cth) ss. 3, 6(1D). Petroleum Retail Marketing Sites Act 1980 (Cth) ss. 3, 7, 1l. No. VG 273 of 1985 CHENOA PTY. LTD. v. THE SHELL COMPANY OF AUSTRALIA LIMITED a Se oy LO Se 4 Ryan J. 10 MARCH 1988 BStCVeL Ge MELBOURNE CGSAlae pos <® w IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY No. VG 273 of 1985 wee ew GENERAL DIVISION Between: CHENOA PTY LIMITED (Applicant) And: THE SHELL COMPANY OF AUSTRALIA LIMITED (Respondent ) Coram: Ryan J. Date: 10 March 1988 Place: Melbourne REASONS FOR JUDGMENT Early in 1980 the applicant ("Chenoa") went into occupation of premises at 542 Footscray Road, West Melbourne, of which the respondent ("Shell") was the lessee pursuant to a lease dated 30 October 1979 from Melbourne Wholesale Fruit and Vegetable Market Trust. It appears that Mr J.A. Healy, who has at all material times been the principal executive officer of Chenoa, was the successful applicant sought by the following newspaper advertisement which had been inserted by Shell:- " "NEW DEVELOPMENT BUSINESS OPPORTUNITY We require an ambitious and experienced business person capable of operating and developing a large new transport terminal/retail business located in a prime area of Melbourne's inner western suburbs. The successful applicant will possess a thorough knowledge of the transport industry and previous large scale service station/transport terminal experience is a distinct advantage. Minimum Capital Requirement $35,000." From the time when Chenoa commenced operations at the site, motor spirit and diesel fuel were sold from "self-service" pumps which were open 24 hours a day on every day of the week. Customers filled the supply tanks of their vehicles at those pumps and then provided consideration, in one or other of the following ways, for the fuel taken. Some customers paid the console attendant in cash for fuel taken. Others drew cheques in favour of Chenoa, or signed an authority for their "Bankcard" accounts to be debited in favour of Chenoa for the price of the fuel. Other customers presented "Shell Cards", or otherwise satisfied the attendant that they had accounts with Shell, and caused those accounts to be debited with the amount of the purchase. Yet others who had opened accounts with Chenoa signed invoices bearing the "Shell" emblem and headed:- "sy "CHENOA PTY LTD incorporated in Victoria Trading as SHELL TRANSPORT TERMINAL 542 Footscray Rd., West Melbourne, 3011." The amounts of those sales "on Chenoa paper", as they were descrihed, were debited to the customers' accounts by Chenoa which looked to the customers for payment against monthly statements. From the outset Chenoa employed the console attendants and the staff of the restaurant which was conducted at the site. However, considerable assistance in the initial operation of the business and in setting up financial and sales accounting systems was given by a Mr Webb who was' then an area manager employed by Shell. Shell had also erected or painted its emblem and other "identifications" on the site and was responsible for maintaining the pumps and tanks in working order. On 11 September 1981 Shell and Chenoa executed an agreement as a "consignment distributor agreement", whereby Shell appointed Chenoa to be a distributor of Shell petroleum and other products from depot premises at 542 Footscray Road, West Melbourne. By cl. 5 of the consignment distributor agreement, it was provided: "S. The Distributor shall during the Term diligently and faithfully serve Shell as its agent and shall use his best endeavours to promote and extend the sale of Shell goods at and from the Distributor Depot and shall observe all lawful directions and instructions given to him by Shell relative to the Distributor Depot and the conduct of the Distributor Business and in the absence of any such directions or instructions in relation to any particular matter as to his duties hereunder will act in such manner as he reasonably considers to be most beneficial to Shell's interest. The Distributor shall protect Shell's Identifications in the conduct of the Distributor Business and shall not do anything that may prevent the sale of Shell goods or interfere with the development ef Shell's trade in the area serviced by the Distributor Depot." ("Shell's Identifications" were defined incl. 1 of the consignment distributor agreement to mean "the trademarks, brand names and colour schemes that Shell may now or hereafter at any time during the Term own or regularly employ in connection with goods manufactured and/or sold by Shell"). The consignment distributor agreement further provided that ali Shell goods delivered to the Distributor by Shell under the agreement should remain the property of Shell and should be delivered to third parties only in accordance with Shell's instructions and "only against payment in cash of the price thereof at the time of delivery unless otherwise instructed in writing by Sheil". However, by cl. 9c) of the consignment distributor agreement it was provided that "the Distributor may at his discretion purchase Shell goods from consignment stock and sell and deliver such goods to a customer on his own personal account provided that such goods are sold in the same condition as they are received by him on consignment from Shell... Any Shell goods purchased for such sales by the Distributor shall be charged by him to his goods account with Shell at Shell's current list price applicable to resellers at the time the Shell goods are removed from the consignment stock." Clause 23 of the consignment distributor agreement comprised the following stipulations in respect of commissions and allowances payable to Chenoa:- "23 (a) The commissions to be paid and allowances to be given to the Distributor by Shell are as set out in the Schedule, provided that in the event of: (i) the continued supply of Shell goods under this Agreement becoming uneconomical in the opinion of Shell due to compliance by Shell with any legislation, requirement, request or recommendation of any Government or body, authority or tribunal constituted by or under any law of Australia or of any State or Territory; or (ii) changes materially altering the basis upon which the commissions and allowances or any of them were originally agreed; then Shell shall be entitled to give to the Distributor notice requiring a review by both parties of the basis and rates of the then current commissions and allowances. Unless the parties agree upon appropriate amendments within 30 - days of the date of such notice, then either party may thereafter terminate this Agreement upon the expiration of 30 days notice of intention to terminate given to the other party." The term of the consignment distributor agreement was expressed in the schedule thereto to be for "a period commencing on the llth day of September 1981 and continuing for three years and thereafter until the expiration of not less than three months written notice of determination given by either party to the other". By notice dated 24 June 1985, Shell notified Chenoa as follows: "PETROLEUM RETAIL MARKETING FRANCHISE ACT 1980 NOTICE PURSUANT TO SECTION 6(1E) TO: CHENOA PTY. LTD PREMISES : SHELL FOOTSCRAY ROAD C.R.T. RELEVANT DAY: ist July, 1985 NOTICE IS GIVEN that The Shell Company of Australia Limited ("Shell") will operate the premises on and after the relevant day AND THAT the premises will, ina statement to be ladged under section 11 of the Petroleum Retail Marketing Sites Act 1980 not later than 30 days after the end of the month in which the relevant day occurs, be specified as a retail site operated by Shell." a The service of that notice prompted Mr J.A. Healy, as Secretary of Chenoa, to write the following letter dated 2 July 1985 (omitting formal parts) to Mr Richardson, the Retail Area Manager of Shell:- "I refer to your letter of 24th June, 1985 enclosing a Notice Pursuant to Section 6(1E) of the Petroleum Retail Marketing Franchise Act 1980 (Cth). My solicitors have advised me that a notice under section 6(1E) of that Act can only be given if the agreements under which Chenoa Pty. Ltd. is to operate are 'franchise agreements' within the meaning of that term as defined in section 3, and if a previous franchise agreement with Chenoa Pty. Ltd. is not required to be renewed under the Act. I have been advised that previous agreements entered into by Chenoa Pty. Ltd. and the Shell Company of Australia Limited are "franchise agreements" within the meaning of section 3, and that those agreements must be renewed for a further period of 3 years under section 17 of the Act. In the circumstances, Chenoa Pty. Ltd. regards the notice as null, void and of no effect." Notwithstanding that contention, on 29 August 1985 Shell gave written notice to Mr Healy and Mrs J.M. Healy, who were, apparently, the principal shareholders in Chenoa. Omitting formal parts, the notice was in the following terms:- "Pursuant to the Consignment Distributor Agreement dated the llth September, 1981 made between The Shell Company of Australia Limited ("Shell") of the one part and Chenoa Pty. Ltd. of the other ar" part, Shell hereby gives you notice of termination of the said Consignment Distributor Agreement to take effect on (three clear months from date of notice)." A covering letter of the same date addressed to Mr Healy, again omitting formal parts, made the following offer:- "Please find attached a letter of termination of your Consignment Distributor Agreement. We have stated previously that we would be prepared to make you an offer for the retention of your account trade at this outlet. We now make an offer of 0.75 cents per litre for the satisfactory retention of this trade, for a twelve month period following termination, paid in two six monthly payments. Please advise if you accept this offer." Then on 5 September 1985, Shell gave the following further notice to Mr and Mrs Healy, presumably because it doubted whether the earlier notice sufficiently specified the date on which the termination was to take effect: "Pursuant to the Consignment Distributor Agreement dated the llth September, 1981 made between The Shell Company of Australia Limited ("Shelli") of the one part and Chenoa Pty. Ltd. of the other part, Shell hereby gives you notice of termination of the said Consignment Distributor Agreement to take effect on 6th December 1985." On 5 December 1985, the applicant issued the application herein claiming: "1. An injunction, interlocutory and final, restraining the Respondent from taking possession of the premises referred to in the Statement of Claim. 2. An order under the Petroleum Retail Marketing Franchise Act 1980 (Cth) directing the Respondent to renew the Distributor Agreement referred to in the Statement of Claim on such terms and conditions as the Court thinks fit. 3. A declaration that the notice of the 24th June 1985 by the Respondent to the Applicant under Section 6(1E) of the Petroleum Retail Marketing Franchise Act 1980 (Cth) is void and of no effect." In order to understand the competing contentions of the parties, it is necessary to examine in detail certain provisions of the Petroleum Retail Marketing Franchise Act 1980 ("the Franchise Act") and the Petroleum Retail Marketing Sites Act 1980 ("the Sites Act") and the relationship between those two Acts. The Franchise Act in its original form was enacted as Act No. 139 of 1980 and was substantially amended by Act No. 122 of 1984. Section 3 of the Franchise Act now contains the following definition of "franchise agreement" :- ""franchise agreement' means an agreement containing-— (a) (b) (c) - 10 - 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; " - li - It was common ground between the parties that the consignment distributor agreement of September 1981 embodies a franchise agreement within that definition. However, Mr Shaw Q.C., who appeared with Mr J.E. Middleton for Shell, contended that s.6(1D) of the Franchise Act rendered that Act inapplicable to the consignment distributor agreement. That sub-section provides:- "(1D) Where- (a) premises were, ina statement lodged under section 11 of the Petroleum Retail Marketing Sites Act 1980 at any time before 1 September 1984, specified as being a retail site operated by a particular corporation; and (b) the premises have been operated as a retail site by the corporation or a related corporation ona day or days occurring during each of the following months, namely, September, October, November and December in the year 1984, then, in relation to any franchise agreement (whether entered into before, on or after 1 January 1985) in relation to which the premises are the marketing premises, this Act does not apply at any time before the end of the first month during which neither the corporation nor a related corporation operates the premises as a retail site." The Sites Act was originally enacted as Act No. 140 of 1980 and it, too, was substantially amended in 1984 by Act No 121 of that year. Section 10 of the Sites Act imposes restrictions on the extent to which prescribed corporations may operate retail sites by providing:- - 12 - "10. (1) A prescribed corporation may, subject to this section, operate a retail site during any month. (2) A prescribed oil company (not heing a member of a group of prescribed corporations) shall not operate, during a month, a number of retail sites exceeding the number of retail sites specified in the regulations in relation to that company in relation to that month. (3) A member of a group of prescribed corporations one of which is a prescribed oil company shall not operate a retail site during a month if the total number of retail sites (including that site) that would be operated during that month by the members of that group of corporations would exceed the number of retail sites specified in the regulations in relation to that prescribed oil company in relation to that month. (4) In ascertaining for the purposes of this section the number of retail sites operated during a particular month, any diesel fuel sites operated, or any sites temporarily operated, during that month shall be disregarded." "Retail site" is defined in s.3(1) of the Sites Act as meaning "premises at which motor fuel is sold by retail". Sub-sections (2) and (3) of s.3 of the Sites Act then provide: ""(2) For the purposes of this Act, motor fuel shall not be taken to be sold by retail at a retail site unless it is delivered at that site into the supply tanks of road vehicles by a metered pump. (3) For the purposes of this Act, motor fuel shall be taken to be sold at the time when it is delivered in pursuance of the contract of sale." - 13- Section 11 of the Sites Act to which reference is made in s.6(1D) of the Franchise Act was significantly amended by s.7 of Act No. 121 of 1984 which came into operation on 1 January 1985. Before those amendments, s.11 of the Sites Act was in the following form:- "11. (1) A prescribed corporation specified in the Schedule shall, within 30 days after the commencement of this Act, lodge with an authorized officer- (a) where that corporation, or a member or members of a group of prescribed corporations of which that corporation is a member, operated a retail site or retail sites on the day immediately preceding the commencing day - a statement in accordance with the appropriate form specifying, in respect of the operation on that day of each retail site by that corporation or by a member of that group of corporations (in this paragraph referred to as the 'relevant corporation'), the following matters: (i) the name of the relevant corporation; (ii) particulars of the situation of the site; (iii) whether the relevant corporation owned, or was a lessee or licensee in respect of, that site; (iv) whether motor fuel for road vehicles was sold at that site by or on behalf of the relevant corporation or by a person under an agreement referred to in sub-paragraph 7(1)(b)(ii); (v) whether that site was a diesel fuel site, a training site, a market research site or a _ site temporarily operated and, in the - 14 - case of a site temporarily operated, the circumstances by reason of which it was to he taken to be temporarily operated; or (b) where that corporation did not operate, or no member of a group of prescribed corporations of which that corporation is a member operated, a retail site on the day immediately preceding the commencing day - a statement in accordance with the appropriate form stating that fact. (2) Where a prescribed corporation specified in the Schedule, or a member of a group of prescribed corporations one of which is specified in the Schedule- (a) operates a retail site on a particular day after the commencement of this Act; and (Bb) did not operate that site on the immediately preceding day, the corporation so specified shall lodge with an authorized officer, within 30 days after that particular day, a statement in accordance with the appropriate form specifying, in respect of the operation on that particular day of that retail site by that corporation or by the member of that group of corporations, as the case may be, the matters referred to in sub-paragraphs (1) (adCi) to (v) (inclusive). (3) Where a prescribed corporation specified in the Schedule, or a member of a group of prescribed corporations one of which is specified in the Schedule, ceases to operate a retail site, the corporation so specified shall lodge with an authorized officer, within 30 days after the last day on which that corporation or the member of that group of corporations, as the case may he, operates that site, a statement in accordance with the appropriate form stating that fact. (4) Where, in respect of the operation by a prescribed corporation specified in the Schedule, or by a member of a group of prescribed corporations one of which is specified in the Schedule, of a retail site on a day (in this sub-section referred to as the 'subsequent day') after the day to which a statement lodged by the corporation under paragraph (1)(a) or sub-section ac - - 15 - or this sub-section relates, the matters specified in that statement would, if that statement related to the operation of that retail site on the subsequent day, he incorrect or insufficient, the corporation so specified shall, within 30 days after the end of the month in which the subsequent day occurs, lodge with an authorized officer a statement in accordance with the appropriate form specifying, in respect of the operation of that retail site on the subsequent day by that corporation, or by the member of that group of corporations, as the case may be, the matters referred to in sub-paragraphs (l)(a)(i) to (v) (inclusive). (5) A reference in a sub-section of this section to the appropriate form shall be read as a reference to such form as is prescribed for the purposes of that sub-section or, if no form is so prescribed, such form as the Minister approves for the purposes of that sub-section. (6) Where a statement is required by a provision of this section to be lodged within a particular period, the obligation to lodge that statement continues, notwithstanding that that period has expired, until that statement is lodged. (7) A person may- (a) inspect any statement lodged under a provision of this section; or (db) require a copy of, or extract from, any such statement to be given by an authorized officer, on payment for each inspection, or each copy or extract, of such amount (if any) as is prescribed. (8) A corporation shall not- (a) include in a statement lodged in purported compliance with a provision of this section any information that is false ina material particular; or (b) omit from any such statement any information that is required by this section to he included. -16- (9) For the purposes of this section, a corporation shall not be taken not to have Operated a retail site ona particular day by reason that motor fuel for road vehicles was not sold by retail at that site on that day if- (a) motor fuel for road vehicles was not sold by retail at that site on that day due to a shortage of supplies of motor fuel for retail sale at that site, an industrial dispute or circumstances beyond the control of the corporation; or (b) that day was not a business day and the corporation operated that site on the last preceding day that was a business day and on the next succeeding day that was a business day. (10) Sub-section 10(5) has effect in relation to the application of sub-paragraph (1l)(a)(v) of this section in like manner as it has effect in relation to the application of sub-section 10(4)." The definition of "prescribed corporation" as it originally appeared in s.3 of the Sites Act was:- ""prescribed corporation' means- (a) a corporation specified in the Schedule; (db) any other corporation that refines petroleum; or (c) a corporation that is an associate of a corporation referred to in paragraph (a) or (b);" Among the corporations specified in the Schedule to the Sites Act, which was repealed by s.12 of Act No. 121 of 1984, was "Shell Australia Limited". - 17 - After the Franchise Act and the Sites Act had come into force on 19 September 1980, the Acting First Assistant Secretary, Trade Practices and Consumer Affairs Division of the Department of Business and Consumer Affairs which was responsible for administering both Acts, on 15 October 1980 sent a telex message to the managing director or chief executive officer of each corporation named in the Schedule to the Sites Act. One addressee of that message was "Mr L.T. Froggatt, Chairman and Chief Executive Officer, Shell Australia Ltd, Melbourne". In the body of the telex message it was recited:- "The following text details the forms approved by the Minister pursuant to section 11 Petroleum Retail Marketing Sites Act 1980. Copies will follow by air express." Then followed a form of statement to the effect that neither the prescribed corporation nor any member of a group of prescribed corporations, of which the corporation making the return was a member, operated a retail site on the day immediately preceding 19 September 1980. The telex message then went on to indicate a form of statement to be used by prescribed corporations which did operate retail sites. That part of the message was in this form:- - 18 - "PETROLEUM RETAIL MARKETING SITES ACT 1980 STATEMENT AS TO OPERATION OF RETAIL SITE ON (DATE) NAME OF PRESCRIBED CORPORATION NAME OF RELEVANT CORPORATION SPECIFY WHETHER MOTOR FUEL FOR ROAD VEHICLES WAS SOLD AT THE SITE BY OR ON BEHALF OF THE RELEVANT CORPORATION OR BY A PERSON UNDER AN AGREEMENT REFERRED TO IN SUB-PARAGRAPH 7(1)(B)(II) OF THE ACT N.B. PARTICULARS OF SITUATION OF RETAIL SITE SPECIFY WHETHER THE SITE WAS A DIESEL FUEL SITE A TRAINING SITE, A MARKET RESEARCH SITE, OR A SITE TEMPORARILY OPERATED SPECIFY WHETHER THE RELEVANT CORPORATION OWNED, OR WAS A LESSEE OR LICENSEE IN RESPECT OF, THE SITE IN THE CASE OF A SITE TEMPORARILY OPERATED SPECIFY THE CIRCUMSTANCES BY REASON OF WHICH IT WAS TO BE TAKEN TO BE TAKEN TEMPORARILY OPERATED THIS FORM HAS BEEN BROKEN INTO SECTIONS ONLY FOR THE PURPOSE OF TELEXING. ACTUAL FORM SHOULD BE SET OUT IN COLUMNS ACROSS ONE PAGE." A third part of the telex message indicated a form of for use when a recipient of corporations of which operate a particular retail site. it was a member had return corporation or a member of a group ceased to -19 - In response to that telex message, Mr Duke, who was then Retail Planning and Investment Manager for Shell, which has at all material times been a wholly owned subsidiary of Shell Australia Limited, caused a computer printout to be produced in which details of sites were provided under the following headings: "DETAIL SITES AS PER CLAUSE 11(1)A OF THE PETROLEUM RETAIL MARKETING SITES ACT STATE NAME PARTICULARS LOCATION CATEGORY SECTION OF OF 7(1)(b) (ii)? SPECIALITY CORP SITE - NAME SITE? TEMPORARY OP. REASONS" In the pages of the printout related to Victoria the word "Shell" invariably appeared in the first column, while in the second and third columns there appeared, respectively, the designation of a particular service station and the suburb or town in which it was located, e.g. "Shell Ormond Self Serv, Ormond." In the column headed "category", establishments were designated either "leased" or "owned". Under the heading "SECTION 7(1)(b)(ii)?" the word "no" invariably appeared to indicate that the site was not one to which sub-paragraph (b)(ii) of s.7(1) of the original Sites Act applied. (In 1980 s.7 of the Sites Act was in the following terms:- - 20 - "7.(1) For the purposes of this Act, a retail site shall be taken to be operated by a prescribed corporation on a particular day if- (a) on that day, the corporation owns, or is a lessee or licensee in respect of, that site; and (b) on that day, motor fuel for road vehicles is, at that site- (i) sold by retail by or on behalf of the corporation; or (ii) gold by retail by a person under an agreement (not being a franchise agreement) to which the corporation is a party, where, under that agreement or any other agreement to which the corporation is a party, the corporation receives or is entitled to receive any payments in respect of that sale, other than payments in respect of the purchase of that motor fuel by that person from the corporation. (2) Paragraph (1)(b) does not apply in relation to a retail site if, in the ordinary course of business, more than 75% of the motor fuel sold by retail at that site is sold under a franchise agreement.") Except in respect of some establishments described in handwritten additions at the end of the Victorian section of the printout, and one entry for "Shell South Oakleigh", there were no entries in that section under the heading "Speciality Site". There were no entries at all in that section under the heading "Temporary Op. Reasons". At the end of the Victorian section, seven establishments were Listed in handwriting. The fourth of those entries read as follows:- pee -21- "Shell Footscray Footscray Leased No D/F. Transport Terminal : Mr Duke explained that entry as referring to "a retail site which I knew as the Footscray Road Transport Terminal located adjoining the wholesale market in Footscray Road - 542 Footscray Road, if I remember correctly". The entry "D/P", which appeared under the heading "Speciality Site" in respect of six of the seven sites added by hand to the Victorian section of the printout, was explained as signifying "diesel fuel". After the compilation of the computer printout and handwritten additions had been completed, a covering letter dated 17 October 1980 was prepared for the purpose of forwarding the information to Mr Bellamy, the signatory to the departmental telex message of 15 October 1980. That letter was under the letterhead of Shell and signed by Mr Duke as Planning and Investment Manager. Omitting formal parts, it was in the following terms:- "Re : Petroleum Retail Marketing Sites Act 1980 Pursuant to the provisions of Section 11 of the Petroleum Retail Marketing Sites Act 1980 and in accordance with your telex Customs Misc. 350 of 15th October 1980, we submit herewith statements containing details of retail sites operated by member companies of the Shell Group in Australia on the day immediately preceding 19th September 1980. The following explanatory and general comments should be read in conjunction with those statements:- (1) Since our Agent Dealers all occupy retail sites under Agreements falling within the (2) (3) - 22 - definition of 'franchise agreement' contained in Section 3(1) and since all sales of motor fuels made by them, by retail, at such sites are made under those Agreements (whether such sales are made on the Agent's own account or as agent of Shell), then we believe all such Agent Dealer operated sites fall within the exclusion of Section 7(2) of the Act and if we were to complete the Statement strictly in accordance with our interpretation of the Act we would exclude all such sites from our return. As a consequence, leaving aside the question of the possible inclusion of Distributor Agents, our return under such circumstances would detail only the one site which was operated by Company staff and which, incidentally, falls within the definition of a Diesel Fuel Site. We do not believe, however, that this was the intent of the Government. Following our recent discussions in Canberra with Mr. Bellamy we are more firmly of the view that the intent of the Government would have been achieved if Clause 7(2) had been amended to read as follows:- 'Paragraph (1)(b) does not apply in relation to a retail site if, in the ordinary course of business, not more than 25% of motor fuel sold by retail at that site is sold by or on behalf of the Corporation. ' Because of our belief regarding the intent of the Government we have, in an endeavour to assist the administrative process, completed our return as if the above suggested amendment had been incorporated. However, we do this on the basis that it is without prejudice to our position and rights under the Act as it presently stands. Turning now to Distributor Agents (i.e. that class of our Agents whose principal business is bulk supply to resellers, commercial/industrial customers and the agricultural market) and leaving aside the concerns we have previously expressed that earlier statements by Government regarding non application of the Act to 'country distributors who act as Agents' had clearly indicated to us that the Act would not apply to Distributor Agents at all, we are now left in the situation where, regardless of the (4) - 23 - Government's intent our interpretation of the Act places Distributor Agents in the same position as Agent Dealers. That is to say that while ail retail sales of motor fuel made by a Distributor Agent (whether on his own account or as agent for Shell) would he made pursuant to a 'franchise agreement' and thereby come within the exclusion of Section 7(2), af that section were amended in accordance with our suggestion, then many Distributor Agents would be caught by the Act. Distributor Agents operate retail facilities primarily to service larger accounts needs for product delivered into vehicles as an additional service to that requirement for product to be delivered to their premises. These transactions are carried out by the Distributor Agent both on his own accounts and on behalf of Shell. The definition and exception provided in the Act (Section 7) of sales made on a particular day cannot be applied toa site with such transaction fiuctuation as occurs at Distributor Agent premises and we have therefore assumed an average annual sales proportion. Based on this assumption the number of Distributor Agents now included in our 'without prejudice' return is 135. As we had not contemplated inclusion of this type of Agent at the time we previously advised you of numbers, we would now seek to have the numbers specified in both columns of the Schedule to the Act increased by that number so that they would then read 366 and 249 respectively. We believe such adjustments to be necessary since the continuation of the present method of servicing through the country distribution network is essential if we are to he able to carry out our current obligations and continue to satisfy the many customers including Commonwealth Government Departments who currently rely upon this segment of our marketing network. Further to the above comments which relate to the specific problems we have faced in complying with the requirement to produce and submit these statements we wish to again bring to your attention matters previously - 24 - raised and in this relation refer to our telex of 12th September 1980 wherein on pages 5 and 6 we sought to have amendments incorporated in the definitions of both 'market research site' and 'training site' and in addition sought to have the geographic limitation removed from Clause 10(4)(c). We would again draw your attention to the arguments contained in that earlier communication and particularly, in relation to market research sites, strongly commend our suggestions to you and through you to the Government since compliance with the Act as it currently stands could seriously inhibit our ability to engage in research projects many of which could potentially be of national benefit. We have expended considerable effort in our endeavours to comply both with the letter and the spirit of this legislation and although recognising the problems associated with the legislation at this particular time, do earnestly seek further consultation with you with the objective of removing areas of uncertainty and reducing the administrative costs associated with such compliance." The phrase "authorized officer" which has at all times appeared in s.11(1) of the Sites Act was originally defined in s.3 of that Act as meaning:- "(a) the Permanent Head of the Department administered by the Minister; or (b) an officer of that Department appointed by the Permanent Head of that Department by writing under his hand to be an authorized officer for the purposes of this Act;" Because no appointment in accordance with paragraph (b) of that definition had been notified to Shell by 17 October, the letter of that date reproduced above was not sent until - 25 - 20 October when it and the computer printout with additions were forwarded to Mr McMahon who, Shell was advised, had been appointed to be an authorized officer. The further covering letter dated 20 October 1980, again omitting formal parts, read:- "Having today been advised that you have been nominated as an authorised officer for the purposes of Section 11 of the Petroleum Retail Marketing Sites Act 1980, and in order to avoid further delay in the despatch of our initial statement required under that Act, we have taken the liberty of attaching hereto our original covering letter prepared for despatch to Mr. G.I. Bellamy. " That letter with enclosures was received by the Department on 22 October 1980. Section 11 of the Sites Act as it was enacted in 1980 appeared to impose on eéach prescribed corporation an obligation separately to notify an authorized officer, within 30 days, of each new retail site which it commenced to Operate, each retail site which it had operated on 18 September 1980 and subsequently ceased to operate, and each subsequent change in respect of a retail site which would render the original statement under s.11(1)(a) or s.11(2) in respect of that site incorrect or insufficient. However, it seems that officers of the Department administering the Sites Act agreed, after some negotiation, that changes in the status of particular sites could be collated ina single - 26 - monthly return to be submitted by each prescribed company in respect of the whole of the preceding month. The return was required to be submitted as soon as practicable after the end of the month. Pursuant to that arrangement Mr Duke wrote, again under the letterhead of Shell, to the Acting First Assistant Secretary of the Department on 13 February 1981 as follows: "Petroleum Retail Marketing Sites Act 1980 As required under the Act we attach hereto, in the prescribed form, details of changes from the commencement of the Act to date, in retail sites operated by Shell. We regret the delay in this submission but have arranged for regular monthly submissions in future." Enclosed with that letter were two sheets, the first of which, under the heading "SHELL AUSTRALIA LIMITED", reproduced the column headings which had been specified in the departmental telex message of 15 October 1980 and under those headings purported to give required information about four retail sites. Shell thereafter submitted monthly returns in accordance with the agreed practice, and from time to time advised the Department by letter of corrections which needed to be made to information contained in those returns and forwarded supplementary returns. In or about November 1982 the Attorney-General's Department apparently assumed responsibility for administration of the Sites Act. On 9 November 1982, Mr Wing of the Competition Policy Branch of that Department sent the following telex message to Mr Duke of Shell:- ~ 27 - "PETROLEUM RETAIL MARKETING SITES ACT I REFER TO OUR TELEPHONE CONVERSATION OF 8 NOVEMBER 1982. IN ANTICIPATION OF THE FORMAL TRANSFER OF RESPONSIBILITY FOR THE PETROLEUM RETAIL MARKETING SITES ACT FROM THE MINISTER FOR INDUSTRY AND COMMERCE TO THE ATTORNEY-GENERAL, AND HAVING REGARD TO THE EXPIRY OF THE ORIGINAL TWO-YEAR PHASING-IN PERIOD OF QUOTAS UNDER THE ACT, THIS DEPARTMENT HAS BEEN EXAMINING THE RETURNS LODGED BY ALL COMPANIES WITH THE DEPARTMENT OF INDUSTRY AND COMMERCE AND THE FORMER DEPARTMENT OF BUSINESS AND CONSUMER AFFAIRS. OUR INITIAL EXAMINATION HAS RAISED SOME QUERIES ABOUT CERTAIN ASPECTS OF SHELL'S RETURNS, IN PARTICULAR, WHETHER THERE HAS BEEN COMPLIANCE WITH SECTIONS 10 AND 11 OF THE SITES ACT. TO ASSIST IN CLARIFYING THE SITUATION I WOULD BE GRATEFUL IF WE COULD HAVE - IN RELATION TO EACH OF THE FOLLOWING 9 SITES IDENTIFIED AS HAVING CEASED TO BE COMPANY OPERATED, THE SITE NAME, THE DATE OF COMMENCEMENT OF OPERATION AND WHETHER THE SITE WAS OWNED OR LEASED: - ENMORE RD., ENMORE (NSW) ~ GAILEY RD., ST. LUCIA (QLD) - OXFORD ST., BULIMBA (QLD) - POLICE ST., NOBLE PARK (VIC) - MT. DANDENONG RD., CROYDON (VIC) - BURWOOD HWY., FERNTREE GULLY (VIC) - STIRLING HWY., CLAREMONT (WA) - CANNING HWY., MT. PLEASANT (WA) - WALTER RD., INGLEWOOD (WA) - IN RELATION TO EACH OF THE FOLLOWING 5 SITES IDENTIFIED AS BEING UNDER TEMPORARY OPERATION AT SOME STAGE, THE DATE ON WHICH 'TEMPORARY OPERATION COMMENCED AND CEASED AND THE GROUNDS ON WHICH THE SITE WAS TEMPORARILY OPERATED DURING THAT PERIOD: In reply to that message, Mr Duke, again on behalf - 28 - - PACIFIC HWY., SOUTH TWEED HEADS (NSW) - WATERDALE RD., IVANHOE (VIC) - KINGSWAY, SOUTH MELBOURNE (VIC) ~ FRANK ST., LABRADOR (QLD) - GREENHILL ST., BURNSIDE (SA), AND IN RELATION TO EACH OF THE FOLLOWING 5 SITES IDENTIFIED IN YOUR RETURN OF 17 OCTOBER 1980, THE CURRENT STATUS OF THESE SITES: - CHESTER PASS RD., ALBANY (WA) - SPENCER ST., BUNBURY (WA) - CARRINGTON ST., BYFORD (WA) - BARDIA AVE., SEAFORD (VIC) - GARDNER ST., KOO-WEE-RUP (VIC)." of Shell, wrote to Mr. Wing the following letter dated 18 November 1982:- "The following information is submitted in response to your telex of 9/11/82:- (a) (bh) Sites identified as having ceased to be company operated. All 9 of the sites listed were agent/dealer operated on the commencing day and, save for one inadvertent omission, were listed on our initial return of 17 October 1980. The omission was Mt. Dandenong Rd., Croydon which, due to a delay in the updating of our computer record had not been designated as an agent/dealer operated outlet when our return of 17/10/80 was printed. The specific detail requested in respect of each of the 9 sites is set out in Attachment (a) to this letter together with a note in respect of the earlier listing for each site. Sites identified as being under temporary operation at some stage. (c) - 29 - Each of the 5 sites queried warrants some specific comment in addition to the particulars requested by you and set out in Attachment (b). (i) (ii) (iii) (iv) (v) South Tweed Heads (NSW). Although originally intended to be temporarily operated changed circumstances led to the agent/dealer remaining in situ so that we now regard this as one of our quota sites. Ivanhoe (VIC). South Melbourne (VIC). Both these sites were operated pending finalisation of negotiations for the installation of new franchisees. Labrador (QLD). The intention at the commencement of Company operation (on 7/4/82) was to operate only temporarily. Following a change of plan negotiations for a tenancy were concluded and a franchisee was installed from 1/9/82. Burnside (SA). Following the departure from the site of the previous franchisee negotiations were commenced with the Head-Lessor for surrender of the Head-Lease. Pending finalisation of these negotiations we were obliged to retain on foot the licence under the S.A. Motor Fuel Distribution Act. This necessitated opening the outlet for business on 1/2 days each month. Sites (depots) identified in our return of 17th October 1980. Following telephone discussion with you subsequent to receipt of your telex we now understand that your query in respect of these 5 sites arises as a result of them having been listed on our return of 17/10/80 and (at least apparently) not being listed - 30 - on the statement of 18/8/81. Reference to the covering correspondence to those two listings will provide evidence of the confusion then existing as to interpretation, intent and terminology in respect of Distributor operated premises. Under such circumstances it is perhaps not surprising that some discrepancies have occurred. In addition we have had the situation where amendments necessary to permit the orderly continuation of commercial activity have been under consideration/discussion for some time and these may, of themselves, have created some confusion. The specific detail requested by you is set out in attachment (c). Please do not hesitate to contact us again should we be able to assist further." Annexed to that letter were three attachments, the first of which identified sites specified in the original Shell statement of 20 October 1980 under different names or locations and one site, at Croydon, omitted altogether from that statement. The second attachment, (b), gave further information about sites which had been indicated at some stage in a Shell return as being temporarily operated by the company, and attachment (c) gave more precise information about the five sites enquired after by the concluding paragraph of Mr Wing's telex message. In December 1982, the Attorney-General''s Department prepared, from returns lodged under s.11 of the Sites Act, a consolidated list of sites operated by those corporations specified in the schedule to the Act. A copy of that list was forwarded to the Australian Automobile Chamber of - 31 - Commerce and a copy of that part of it which detailed Shell's sites was sent to Shell. Among 38 Shell sites in Victoria described as "Quota sites", there was no reference to any premises in Footscray or West Melbourne, but in Part B of the list headed "Exempt sites" under the sub-heading "(iv) Diesel-fuel", among the Victorian sites, appeared the following entries:- "3) Footscray Terminal, Footscray 4) Sims St. Terminal, West Melbourne 5) West Melbourne Terminal, West Melbourne." A corresponding list containing the same entries under the "Diesel-fuel" sub-heading of the section comprising exempt sites was prepared and similarly distributed by the Department of Industry and Commerce in July 1983. The letter of 26 July 1983, by which a copy of that list was forwarded to Shell, contained the following passage:- "Further, as part of the Government's review of proposed amendments to the Petroleum Retail Marketing Legislation, announced on 18 May 1983, the Department is seeking certain information regarding volume through-puts of prescribed corporations' Sites Act sites. With regard to your Company, the information below is requested. As with all such requests, the information provided will be on a= strictly confidential basis. Request for information: A) Petroleum Retail Marketing Sites Act; For the 71 exempt-category diesel-fuel sites operated by Shell as at 6 July 1983 - 32 - the total volume litreage of motor fuel (as defined) sold by retail at each site during the month of June 1983, and of the total above, the volume proportion of retail sales of petrol fuel to diesel fuel." When a further Departmental consolidation was prepared in July 1985, Shell was shown as having only one exempt diesel-fuel site in Victoria and the list of 22 "Quota sites" in Victoria included:- "9. S42 Footscray Rd, Footscray" That change was preserved in another Departmental consolidation prepared from returns under the Sites Act to November 1985. On 28 February 1986, Shell provided to Dr Hagen, the Assistant Secretary, Commerce Branch, of the Department of Industry and Commerce, a list of sites which it had ceased to operate during January 1986, details under the headings specified in the departmental telex message of 15 October 1980 of sites which Shell had commenced to operate during that month, and a list of all sites, (presumably operated by Shell to which the Sites Act was said to apply), as at 1 January 1986. That list included, under the sub-heading "CRI's", the entry:- "Footscray Road Transport Terminal, 542 Footscray Road, Footscray." -~ 33 - By letter dated 14 March 1986, Mr Burrowes, the Retail Planning and Business Operations Manager for Shell, wrote to Dr Hagen as follows:- "PETROLEUM RETAIL MARKETING SITES ACT 1984 Following our January submission of site numbers we realised the format used was at variance with the requirements. Therefore, although absolute numbers have not changed, we have resubmitted our return. We have also included a Form 3 and Form 4 return although this is not necessarily required in January of each year." Among the attachments to that letter was a list headed:- "FORM 1 - VICTORIA COMMONWEALTH OF AUSTRALIA Petroleum Retail Marketing Sites Act 1980 STATEMENT IN RESPECT OF RETAIL SITE OPERATED DURING JANUARY 1986 Name of prescribed oil company: Shell Australia Limited" The list was then divided into six columns with headings in the form specified as Form 1 by Reg. 4A(1) of the Petroleum Retail Marketing Sites Regulations which was inserted by S.R. No. 6 of 1985. That form partly reproduced, with some differences, the headings stipulated in the departmental telex message of 15 October 1980. One of the entries in the list to which I have just referred was as follows:- "SCOA Footscray Rd Transport Terminal 542 Footscray Rd Footscray" - 34 - The notations under the third and fourth column headings in Form 1 in respect of that site were:- "Specify whether Specify whether motor the corporation fuel was sold by retail owned, or was a during the month at the site lessee or licensee by or on behalf of the in respect of the corporation or by a person site on any day under an agreement of the kind or days during to which sub-paragraph 7(1)(b)(ii) the month of the Act applies to which the corporation is a party Leased On behalf" There was no notation in respect of that site in the fifth column of Form 1 which required it to be specified whether, during the month, the site was a diesel fuel site or a site temporarily operated. It will be observed that the requirements respectively imposed by paragraphs (a) and (b) of s.6(1D) of the Franchise Act, as amended, are cumulative. Thus, even if the subject premises had validly been specified in a statement lodged under s.1l of the Sites Act at some time before 1 September 1984 as being a retail site operated by a particular corporation, they were not excluded from the operation of the Franchise Act unless they had been operated as a retail site by that corporation or a related corporation on at least one day during each of September, October, November and December 1984. By s.6(1F) of the Franchise Act, as amended, it is provided that:- - 35 - "Expressions used in sub-sections (1D), (1DA) and (1E) have the same respective meanings as in the Petroleum Retail Marketing Sites Act 1980, disregarding sub-section 7(3) of that Act." It therefore Sites Act, as becomes necessary to go to the provisions of the amended, Cother than s.7(3)1 to determine in what circumstances premises could be said to have been operated as a retail site in the last four months of 1984. Sub-sections (Ll) and (2) of s.7 of the Sites Act, as amended, provide as follows:- (1) For the purposes of this Act, a retail site shall, subject to sub-sections (2) and (3), be taken to be operated by a prescribed corpor (a) (b) (2) ation during a particular month if- on any day or days during that month, the corporation owns, or is a lessee or licensee in respect of, that site; and on that day or any of those days, motor fuel is, at that site- (1) sold by retail by or on behalf of the corporation; or (ii) sold by retail by a person (as servant or agent of another person) under an agreement to which the corporation is a party, where, under that agreement or any other agreement to which the corporation is a party, the corporation receives or is entitled to receive any payments in respect of any such sale or sales, other than payments in respect of the purchase of that motor fuel by that person from the corporation. Except for the purposes of paragraph 8(2)(b), a retail site shall not be taken to be operated during a particular month by @ prescribed corporation if the quantity of - 36 - motor fuel that was sold by retail at the site during that month- {a} by or on behalf of the corporation; or (b) by a person under an agreement referred to in sub-paragraph (1)(b)(ii), (otherwise than by way of exempt retail sales) was less than 30,000 litres or such other number of litres as is prescribed. "Motor fuel" is defined ins.3 of the Sites Act as meaning "any fuel to be used in propelling road vehicles, other than diesel fuel or liquefied gas". "Road vehicle", in turn, is defined by the same section as meaning "a vehicle designed solely or principally for transporting persons, goods or animals by road". Sub-sections (2) and (3) of s.3 of the Sites Act, which I have already quoted, indicate that a sale by retail is to be taken as occurring when motor fuel is delivered into the supply tank of a road vehicle by a metered pump. It is clear from the evidence that Shell was, throughout September, October, November and December 1984, the lessee from the Melbourne Wholesale Fruit and Vegetable Market Trust, pursuant toa lease dated 30 October 1979 as extended from 1 November 1984 of part of the premises described in the lease as "542 Footscray Road, Footscray". I am satisfied that the premises the subject of that lease are identical with the depot premises occupied by Chenoa and described in the consignment distributor agreement of I11 September 1981 as being at "542 Footscray Road, West Melbourne". > 37 - The evidence, particularly that of Mr Morris who has been the administrative manager of Chenoa since January 1983, disclosed that six "self-service" motor spirit pumps and six similar diesel fuel pumps were in operation at the subject Premises for 24 hours each day throughout the latter half of 19484. A table prepared by Mr Morris in respect of the months of September, October, November and December 1984 disclosed that the following volumes, in litres, of motor fuel and distillate, or diesel fuel, were sold from the Chenoa site during those months for cash, on "Shell paper" and on "Chenoa paper":- September Cash "Shell paper" "Chenoa paper" Motor Fuel 59,888 54,493 94,522 Diesel Fuel 149,651 253,242 428,427 October Motor Fuel 74,599 60,563 108,100 Diesel Fuel 191,145 264,088 497,429 November Motor Fuel 75,416 54,475 98,535 Diesel Fuel 185,465 240,767 509,735 December Motor Fuel 82,483 42,980 99,753 Diesel Fuel 176,894 226,306 456,122 It was admitted by Counsel, on behalf of Chenoa, that at all material times sales by Chenoa "on Shell paper" were made on behalf of Shell. Accordingly, the premises must be taken to 7 38 - have been operated by Shell as a retail site on a day or days during each of the months stipulated in s.6(1D) of the Franchise Act. It was submitted on behalf of Chenoa that the effect of the amendment of the Franchise Act which inserted S.6(1D) was to deprive some franchisees of rights of renewal of their franchises which they possessed before 1 January 1985. Accordingly, so it was argued, the Franchise Act as amended, and, in particular, s.6(1D) should receive the strictest construction. References were supplied to pronouncements by other judges of this Court to the effect that the intention of the Franchise Act is to give greater security of tenure to companies and individuals marketing motor fuel by retail and to protect them against price discrimination by their suppliers; see e.g. J & M O'Brien Enterprises Pty Ltd v Shell Company of Australia (1982) 45 A.L.R. 81 per Fox Jat 82, Chronopoulos v Caltex Oi] (Australia) Pty Ltd (1982) 45 A.L.R. 481 per Fox J at 484 and Mobil Oil Australia Ltd v Brian Brindle (1985) 62 A.L.R. 89 per Burchett J at 96. However, s.6(1D) makes clear that the Act 1s not, after 1 January 1985, to apply to franchise agreements in respect of premises having the characteristics described in the sub-section. Franchisees occupying those premises, accordingly, are intended no longer to have the protection which the Act is primarily intended to afford to sellers generally of motor fuel by retail. The task of construction ~ 39 - therefore is to determine, as narrowly as the language will permit, the characteristics by reference to which s.6(1D) is concerned to exempt premises from the protection generally conferred on retailers by the Franchise Act. Mr Parker Q.C. who appeared with Mr. Blackburn-Hart for Chenoa contended that the requirement in s.6(1D)(a) of the Franchise Act, as amended, for premises to have been specified as being a retail site in a statement lodged under s.1l of the Sites Act imports a further requirement for such specification to have been in accordance with, and permitted by, 8.11 of the Sites Act as originally enacted. It will be remembered that s.11(1) of the Sites Act as originally enacted made it necessary, where a prescribed corporation specified in the Schedule or a member or members of a group of prescribed corporations of which that prescribed corporation was a member, operated a retail site on 18 September 1980, to include that site ina statement under that sub-section. It is clear from the evidence that although no written agreement was then in existence between Chenoa and Shell, Chenoa was, in September 1980, in occupation of the site at 542 Footscray Road, West Melbourne. It is also clear that in that month Chenoa made sales of motor fuel of which roughly 57% were for cash, 29% were on "Shell paper" and 14% were on "Chenoa paper". - 40 - Mr Parker accepted, as I understood him, that the cumulative requirements of paragraphs (a) and (b) of s.7(1) of the Sites Act in its original form appeared at first sight to be satisfied on 18 September 1980 in that a prescribed corporation was the lessee of the site at 542 Footscray Road, West Melbourne, and motor fuel was sold from that site on behalf of the corporation. However, he contended that the site could not be taken to have been operated by Shell on 18 September 1980 because of the effect of s.7(2) of the Sites Act as originally enacted which provided that:- "Paragraph (1)(b) does not apply in relation to a retail site if, in the ordinary course of business, more than 75% of the motor fuel sold by retail at that site is sold under a franchise agreement." From that contention Mr Parker went on to argue that since at all material times "all the motor fuel, not part or some part but all was sold under a franchise agreement," s.7(2) had the effect of rendering s.7(1)(b) inapplicable and thus took away one of the two conditions which had to be satisfied before Shell could truly be taken to have operated the site on 18 September 1980. That argument depends, I consider, on the fallacious premise that if a franchise agreement can be shown to have existed in respect of a particular retail site, all sales at that site must be taken to have been made under the franchise - 4] - agreement. However, the definition of "franchise agreement" in the original Sites Act which was in terms identical with the definition of the same expression in the Franchise Act quoted above, required such an agreement to contain all of three discrete provisions each having a distinct contractual effect. In my view, it was only so much of the legal relations between a franchisor and a franchisee as embodied those three provisions which constituted a "franchise agreement". Support for this view is provided, first, by the fact that a "franchise agreement" is defined as one that "contains" each of the three categories of provisions. I regard the word "contains" there as being used in its ordinary English meaning and equivalent to ""comprises", rather than synonymous with "includes". That meaning is reinforced to some extent by paragraph (b) of the definition of "franchise agreement". In the second place, s.7(2) of the Sites Act as originally enacted expressly contemplated that motor fuel sold at a particular site might be apportionable between fuel sold "under a franchise agreement" and fuel not so sold. That contemplation would not be available if, once a franchise agreement had come into operation in respect of a particular site, it followed that all sales of motor fuel at that site were under that agreement. - 42 - As I have already noted, Shell was, on18 September 1980, a lessee of the site at 542 Footscray Road, West Melbourne, so the requirements of s.7(1)(a) of the Sites Act as enacted in 1980 were satisfied in respect of that site. Equally, the admission that at all material times sales by Chenoa "on Shell paper" were made on behalf of Shell entailed that one of the requirements of s.7(1)(b) of the Sites Act was satisfied, in that on 18 September 1980 motor fuel for road vehicles was, at the subject site, sold on behalf of Shell. Accordingly, the site was to be taken to be operated by Shell on 18 September 1980 unless it could be said, as at that day, that in the ordinary course of business more' than 75% of the motor fuel sold by retail at that site was sold under a franchise agreement. Consistently, with the view I have taken of the self-contained nature of a "franchise agreement" as defined, motor fuel could only be said to have been sold under such an agreement if, at least, it had been the subject of retail sale by the franchisee at a given site. That flows from paragraph (b) of the definition of "franchise agreement" which requires such an agreement to contain provisions under or by virtue of which the franchisor grants a right to or otherwise authorizes or permits the franchisee "to possess, occupy or use the retail site to which the agreement relates in connection with the retail sale of motor fuel by that person (the franchisee) at that site" (emphasis added). Thus motor fuel could only be said to have been sold at a particular site under a franchise agreement within - 43 - s.7(2) of the original Sites Act if it had been sold by the franchisee. Fuel sold at the site on behalf of the franchisor could not be said to have been sold "under a franchise agreement". In the light of the evidence that sales on "Shell paper" from the site at 542 Footscray Road, West Melbourne, in September 1980 were of the order of 29% of all sales made from that site, the applicant has not discharged the onus, which I consider it bears, of showing that as at 18 September 1980 in the ordinary course of business more than 75% of the motor fuel sold by retail at that site was sold under a franchise agreement. Accordingly, an obligation was imposed by s.11(1)(a) of the Sites Act to lodge a statement pursuant thereto in respect of the operation of the subject site. It was then argued, in the alternative, on behalf of Chenoa that, even if the premises at 542 Footscray Road, West Melbourne were capable of being the subject of a statement lodged pursuant to s.11(1)(a) of the original Sites Act, they were never properly included in a statement which complied with that paragraph. Accordingly, so it was argued, the premises were never, in a statement lodged under s.1l1 of the Sites Act, at any time before 1 September 1984, specified as being a retail site operated by a particular corporation so as to render the Franchise Act inapplicable to them by operation of s.6(1D) of that Act. L 44 - In seeking to make out that argument, counsel for Chenoa instanced a number of alleged deficiencies or irregularities in the statement constituted by the computer printout with additions furnished by Shell under cover of its letters of 17 and 20 October. It was that document, which was primarily identified by counsel for Shell as the statement lodged under s.1l1 of the Sites Act, containing the specification of the subject premises, which attracted the operation of s.6(1D) of the Franchise Act. In the first place, it was pointed out that the letter of 17 October 1980 stipulated that Shell had prepared its return on an assumption as to what was required to be included in it, which was justified only because Shell imputed to the legislature an intention not evinced by the actual language of the Sites Act. In conjunction with that stipulation, Shell's return was hedged about with the qualification that it had been completed "on the basis that it is without prejudice to our position and rights under the Act as it presently stands". In my view, a contention that a statutory return is being filed "without prejudice" to some asserted right of the party filing it, has no effect on the validity or otherwise of the return. The proper function of the claim that a communication is "without prejudice" is to enable a party to 7 45 - a dispute or negotiations to make, or respond to, an offer of compromise without the risk of his communication being relied on as an admission in litigation before a court. See e.g. Walker v Wilsher (1889) 23 Q.B.D. 335 per Lindley L.J. at 337 and Tomlin v Standard Telephones and Cables, Ltd., £19691 3 All E.R. 201. The qualification "without prejudice" has no legal effect where, as here, it is attached to a communication which contains no offer and is made by a person who is not in dispute or negotiations with the recipient. Thus, in Re Daintrey; Ex parte Holt £1893] 2 Q.B. 116 Vaughan Williams and Bruce JJ. observed, at 119:- "In our opinion the rule which excludes documents marked 'without prejudice' has no application unless some person is in dispute or negotiation with another, and terms are offered for the settlement of the dispute or negotiation, and it seems to us that the judge must necessarily be entitled to look at the document in order to determine whether the conditions, under which alone the rule applies, exist. The rule is a_ rule adopted to enable disputants without prejudice to engage in discussion for the purpose of arriving at terms of peace, and unless there is a dispute or negotiations and an offer the rule has no application. It seems to us that the judge must be entitled to look at the document to determine whether the document does contain an offer of terms. Moreover, we think that the rule has no application to a document which, in its nature, may prejudice the person to whom it is addressed. It may be that the words 'without prejudice' are intended to mean without prejudice to the writer if the offer is rejected; but, in our opinion, the writer is not entitled to make this reservation in respect of a document which, from its character, may prejudice the person to whom it is addressed if he should reject the offer, and for this reason also we think the judge is entitled to look at the document to determine its character." - 46 - Accordingly, I consider that the only effect of the qualification in the letter of 17 October 1980 which accompanied Shell's initial return was to put the departmental officials on notice as to certain contentions which Shell might choose to advance in the future about the proper interpretation of the Sites Act. Having elected to lodge a return, Shell must be taken to have intended that the return as lodged should be the document by which its compliance with the requirements of the Act should be judged. As indicated by Long Innes J., in another context in Haynes v Hirst (1927) 27 S.R. (N.S.W.) 480 at 489, the effect of that election cannot be removed merely because it was claimed to have been exercised without prejudice. It was next argued on behalf of the applicant that the initial return lodged on 20 October 1980 was not lodged by "a prescribed corporation" as required by s.11 of the Sites Act as originally enacted. "Prescribed corporation", it will be recalled, was defined by s.3 of that Act as meaning:- (a) a corporation specified in the Schedule; (Db) any other corporation that refines petroleum; or (c) a corporation that is an associate of a corporation referred to in paragraph (a) or (b);" - 47 - It was provided in turn by s.5(1) and (2): "(1) For the purposes of this Act, the following persons are associates of a person- (a) where the person is a body corporate - a related body corporate; (b) a body corporate whose directors are accustomed or under an obligation, whether formal or informal, to act in accordance with the directions, instructions or wishes of the person or, where the person is a body corporate, of the directors of the person; (c) a body corporate in accordance with the directions, instructions or wishes of which, or of the directors of which, the person is accustomed or under an obligation, whether formal or informal, to act; (d) a body corporate in which the person holds a substantial interest. (2) For the purposes of this section, a person shall be taken to hold aie substantial interest in a body corporate if the person, alone or together with any associate or associates of the person, is in a position to control not less than 15% of the voting power in the body corporate or holds interests in not less than 15% of the issued shares in the body corporate." The reference in 3.5(1)(a) to "a related body corporate" further requires reference to s.4(1) and (2) which stipulate that:- "(1) Where a body corporate- (a) is the holding company of another body corporate; (b) is a subsidiary of another body corporate; or - 48 - (c) is a subsidiary of the holding company of another body corporate, that first-mentioned body corporate and that other body corporate shall, for the purposes of this Act, be deemed to be related to each other. (2) For the purposes of this section, a body corporate shall, subject to sub-section (4), be deemed to be a subsidiary of another body corporate 1f- (a) that other body corporate- (i) controls the composition of the board of directors of the first-mentioned body corporate; (1i) is in a position to cast, or control the casting of, more than one-half of the maximum number of votes that might be cast at a general meeting of the first-mentioned body corporate; or (iii) holds more than one-half of the issued share capital of the first-mentioned body corporate (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); or (b) the first-mentioned body corporate is a subsidiary of any body corporate that is that other body corporate's subsidiary (including a body corporate that is that other body corporate's subsidiary by another application or other applications of this paragraph)." The relevant prescribed corporation specified in the Schedule to the Sites Act was "Shell Australia Limited". It is clear that The Shell Company of Australia Limited was not itself a prescribed corporation specified in the Schedule to the Sites Act. Nevertheless, it is trite law enshrined in ~ 49 - the maxim qui. facit per alium facit per se that a person, including a company, may do by means of an agent whatever he may do himself. Of course, there are exceptions, as where a statute requires a return to be signed by the principal or some specified signatory. However, there was nothing in the original Sites Act or in the appropriate form, presumably approved by the Minister, as embodied in the telex message of 15 October 1980, to require any signature at all on a return lodged under s.1l1 of that Act. Indeed, the actual lodging of a return by a prescribed corporation could only be effected by a living agent; (see e.g. Tesco Supermarkets Ltd. v Nattrass (£19723 A.C. 153 at 170). Allowing for that necessity, I can discern no reason in the language of the legislation or the nature of a prescribed corporation why a prescribed corporation specified in the Schedule to the Sites Act could not interpose between itself and the living agent who actually lodged the return, another agent, which might itself be a corporation, to which the collation of the return had been entrusted. The facts of the present case raise the very strong inference that the Shell Corporation of Australia Ltd was interposed as agent of Shell Australia Limited in just that way. In the first place, The Shell Company of Australia Limited has at all material times been a wholly-owned subsidiary of Shell Australia Limited, and has been the - 50 - operating company whose officers would be expected to have knowledge of the matters required to be included in a return lodged under s.1ll. (Shell Australia Limited, although it has directors and a secretary, does not directly employ any staff.) Secondly, Mr Froggatt (as he then was), to whom the departmental telex message of 15 October 1980 was addressed, was both Chairman of Directors and Chief Executive Officer of Shell Australia Limited and Chairman of Directors and Managing Director of the Shell Company of Australia Limited. Thirdly, the covering letters of 17 and 20 October 1980, with which the initial Shell return was lodged, were signed "B.G. Duke, Planning and Investment Manager, FOR THE SHELL COMPANY OF AUSTRALIA LIMITED". Mr Duke at that time was charged with performing duties on behalf of the Shell group of companies in Australia. As he saw it "the activities that are required to be conducted on behalf of (Shell Australia Limited) are conducted by staff in the main employed by the Shell Company of Australia Limited and that relationship and that performance of duties on behalf of other members of the group is common within the Shell Group in Australia". Against that factual background, I am led to conclude that the return lodged under cover of the letters of 17 and 20 October 1980, signed by Mr Duke, was lodged by Shell Australia Limited as contemplated by s.11 of the original Sites Act. ~ 51 - The next ground on which the applicant sought to challenge Shell's reliance on s.6(1D) of the Franchise Act was that the return in which the subject premises were first specified was lodged out of time. The time limit relied on was imposed by the introductory words of s.11(1) of the Sites Act as originally enacted, which provided that "A prescribed corporation specified in the Schedule shall, within 30 days after the commencement of this Act, lodge with an authorized officer - ... a statement in accordance with the appropriate form ...". Since the commencement of that Act was on 19 September 1980, each prescribed corporation specified in the Schedule was required to lodge a statement by 19 October 1980. Because the statement lodged by Shell was under cover of two letters, the later of which was dated 20 October 1980, the lodging was, at best, so it was argued, one day late. In my view the answer to this argument is provided by s.11(6) of the Sites Act as originally enacted which provided:- "(6) Where a statement is required by a provision of this section to be lodged within a particular period, the obligation to lodge that statement continues, notwithstanding that that period has expired, until that statement is lodged." That sub-section in terms does not create a new obligation arising after the time limit imposed by, for example, - §2 - s.11(1) has expired. Rather, it preserves the obligation created by s.11(1) itself. Accordingly, the lodging of a statement of the type contemplated by s.11(1), even if grossly out of time, is still done pursuant to s.11(1). If what I have just said be wrong, a requirement to lodge an admittedly late statement out of time must be found in s.11(6). On either view, the statement whenever lodged, is truly "lodged under section 11" of the Sites Act within the meaning of s.6(1D) of the Franchise Act as amended. Another ground on which it was argued that the document forwarded by Shell under cover of its letters of 17 and 20 October 1980 was not a statement lodged under s.11l of the Sites Act, was that it did not reproduce the column headings stipulated in the departmental telex message of 15 October. For example. the heading of the fourth column of the form stipulated by the telex message was "SPECIFY WHETHER MOTOR FUEL FOR ROAD VEHICLES WAS SOLD AT THE SITE BY OR ON BEHALF OF THE RELEVANT CORPORATION OR BY A PERSON UNDER AN AGREEMENT REFERRED TO IN SUB-PARAGRAPH 7(1)(B5)(II) OF THE ACT". The heading of the fourth column of the Shell return was much abbreviated to read "SECTION 7(1)(b)(ii)?" Doubt has been expressed as to whether it is fruitful to inquire whether a statutory provision, like that in s.11(1) requiring a statement to be "in the appropriate form", is mandatory or directory; see e.g. Tasker v Fullwood - 53 - C19787 1 N.S.W.L.R. 20 at 23. However, it syremains as necessary now as when Lord Penzance distilled the relevant principles in Howard v Bodington £18772 2 P.D. 203 at 211 to construe the statutory provision in its context having regard to the subject matter, the importance of the provision and the general object intended to be secured by the Act, and to decide whether it evinces an intention that failure strictly to comply with the provision should nullify acts done in purported discharge of some duty or exercise of some right imposed or conferred by the statute. Taking that approach to the requirement in s.11(1) of the Sites Act that a statement be in the appropriate form, I have formed the clear view that it was not intended that a failure to reproduce verbatim in the statement actually lodged, the headings in the appropriate form, should render the statement as lodged a nullity. As I discern it, the relevant object of the Sites Act was to obtain a statement of the number and identity of retail sites operated by each group of companies comprising a prescribed corporation named in the Schedule and its associated companies, at the commencement of the Sites Act, by reference to which it could be determined whether that group had, after the expiration of two years, reduced the number of its sites to, or below, the permitted maximum. It would not conduce to the attainment of that object if the initial return were rendered a nullity because of some discrepancy between its headings and those in \ 54 - the prescribed form. A similar approach was taken by the Privy Council in Vita Food Products, Inc. v Unus Shipping Co., Ltd. £19392 A.C. 277 at 292-295 to a statutory requirement that "a bill of lading shall contain an express statement that it is to have effect subject to the provisions of (The Hague Rules) as expressed in this Act". See also Samuel Montagu & Co. Ltd. v Swiss Air Transport Co. Ltd. C1966] 2 Q.B. 306 where Lord Denning M.R., at 314, said of a similar requirement as to an air consignment note, that it should not be given "so rigid an interpretation as to hamper the conduct of business. I do not interpret the article as meaning that the waybill must contain the statement verbatim. It is sufficient if it contains a statement to the like effect". I have also been influenced, in reaching the view which I have on this contention, by the consideration that the appropriate form and its headings (if any) were not set out in the Sites Act itself but were left by s.11(5) to he prescribed by regulations, or failing that, to be approved by the Minister; c.p. Woodward v Sarsons (1875) 10 L.R.C.P. 733 at 746-748. A similar approach entails the rejection of the next ground on which it was contended that the initial Shell return was not a "statement lodged under s.1l of the Sites - 55 ~ Act". That was that in the first column headed "NAME OF CORP", which corresponded with the column headed "NAME OF RELEVANT CORPORATION" in the departmental telex message, there appeared on the first sixteen pages of the return, including that on which the subject premises were specified, only the single word "Shell". On the remaining eight pages it seems that the words "The Shell Co. of Aust. Ltd" appeared in that column only once on each page beside the first site specified on that page. The use of the word "Shell" standing alone was explained by Mr Duke as resulting from his "understanding at the time that the requirement was for us to submit a return on behalf of the Shell group of companies, in other words, all members of the group". In my opinion, the fact that a statement contains ambiguities or fails to specify at all, or with sufficient precision, some matter stipulated ina form prescribed as contemplated by a statutory provision, does not prevent it from being a statement "lodged under" that provision. If the statement omits some material particular or falsely includes some matter, it may to that extent be invalid and so outside the statutory description. However, that is not this case. The same reasons justify the rejection of two other bases of the applicant's attack on the statement lodged under cover of the letters of 17 and 20 October 1980. In the first place it was contended that to provide the information sought by the departmental telex message to be inserted in the fourth column to be headed, "SPECIFY WHETHER THE RELEVANT CORPORATION OWNED, OR WAS A LESSEE OR LICENSEE IN RESPECT OF, THE SITE", by use of the single word "leased", created another ambiguity. That was said to arise from the possibility that "leased" might connote either that a relevant Shell company was the tenant of the site and "leased" it from some lessor, or that it was a landlord which "leased" the site to a tenant such as Chenoa. I consider that possible ambiguity to be excluded by the fact that the entry in the fourth column in respect of many other sites specified in the first Shell return is comprised by another single word "owned". That makes it clear that the fourth column of the return was filled up solely by reference to the legal relation in which the relevant Shell corporation stood to the site in question. Secondly, it was argued that in respect of the subject site the answer "no" to the question raised by the heading to the fifth column was also ambiguous. The heading to that column in the appropriate form was "SPECIFY WHETHER MOTOR FUEL FOR ROAD VEHICLES WAS SOLD AT THE SITE BY OR ON BEHALF OF THE RELEVANT CORPORATION OR BY A PERSON UNDER AN AGREEMENT REFERRED TO IN SUB-PARAGRAPH 7(1)(B)(II) OF THE ACT". The answer "no" to a requirement of that kind is capable, as Mr ald Parker contended, in certain contexts of importing a negative to each part of the question, and so, here, of indicating that fuel was not sold at the site either (i) by or on behalf of the relevant corporation, or (ii) by a person under an agreement referred to in g.7(1)(b) (ii). However, the language of s.7 of the Act suggests that the two forms of sale by retail of motor fuel at a given site envisaged by ss. 7(1)(b) (i) and (ii) were seen as being mutually exclusive. At all events, it was understood in that way by the compiler of the initial Shell return who adopted the abbreviated heading "SECTION 7(1)(b)(ii)?" to the fifth column and invariably answered "no". In other words, the view was taken that a retail site included in the statement as operated by a Shell corporation must be one at which motor fuel was sold by retail by or on behalf of the corporation if it were not one at which fuel was sold by retail by a person under an agreement of the kind described in s.7(1)(b)(ii). Understood in that way, the information supplied in the fifth column of the initial Shell return was not ambiguous. Even if, contrary to the conclusions just expressed, there had been an ambiguity, as Mr Parker argued, in the way in which Shell filled up either or both the fourth and fifth columns of its initial return, for the reasons which I have already indicated in respect of the first column, that would not be fatal to Shell's contention that the return was a statement lodged under s.11 of the Sites Act. "58 - Another attack on the sufficiency of the initial Shell return was directed to the statement that the subject Premises at 542 Footscray Road, West Melbourne, were a "diesel fuel site". It was pointed out that Mr Duke had stated in evidence that he was unable to recall specifically on what information he relied when he inserted "D/F" in the relevant column of the first return. By s.3(1) of the Sites Act as originally enacted "diesel fuel site" was defined to mean "a retail site the principal use of which is the sale by retail at the site of diesel fuel for trucks or omnibuses". The evidence disclosed that there were six pumps for diesel fuel and six for motor spirit at the subject site. It was also revealed that on each of 1, 15 and 30 September 1980 sales in litres of diesel fuel far exceeded those of motor spirit. I therefore draw the inference that on 18 September 1980 the principal use of the site was for the sale by retail of diesel fuel for trucks. Accordingly, the subject premises were correctly returned in Shell's initial statement under s.1l of the Sites Act as a diesel fuel site. However, even if the premises had been incorrectly characterized as a diesel fuel site JI consider that would not mean that their inclusion in a statement under s.11 of the Sites Act was a nullity for the purpose of the application of s.6(1D) of the Franchise Act as amended. - 59 - The final specific respect in which the applicant submitted that the return lodged by Shell under cover of its letters of 17 and 20 October 1980 was deficient was that it consisted of a photocopy of a computer printout and the handwritten additions made by Miss Hine and Mr Duke. Mr Parker pointed to the absence of any explanation by Shell for lodging a photocopy as confirming that "something in those days went wrong and that really no attention was given to preparing a proper return". Thus, the lodging of a photocopy was indicated as being another act of non-compliance with s.1l1 of the Sites Act which, although insignificant in itself, should encourage the Court to conclude that, in combination, the alleged shortcomings in the preparation and lodging of the initial Shell statement meant that there had not been substantial compliance with the section. I have been unable to find anything in the original Sites Act or in the appropriate form presumably approved pursuant to s.11(5) of that Act, which required that the return as lodged must not be a photocopy of a document originally compiled by computer, typewriter or handwriting or a combination of those means. Accordingly, there is nothing which permits a finding that the statement as lodged by Shell was not lodged under s.11 of the Sites Act as originally - 60 - enacted. For the reasons indicated, none of the matters to which the applicant pointed, operated either alone or in conjunction with any one or more of the others of those matters to exclude the conclusion that the subject premises were in a statement lodged under s.11 of the Sites Act at some time before 1 September 1984, specified as being a retail site operated by a particular corporation, within the meaning of s.6(1D) of the Franchise Act as amended. I am confirmed in this view by the recollection that s.6(1D) was enacted in 1984 after the administering departments had monitored the compliance with both the Sites Act and the Franchise Act by each of the major petroleum refining and distributing companies for the past four years. Had some deficiency in compliance by the Shell group of companies been regarded by the legislature as warranting a modification of s.6(1D) in its application to that group, it would have been a simple matter expressly to incorporate that modification in the legislation. Since I have already found that the subject premises were operated by Shell as a retail site ona day or days during each of September, October, November and December 1984, and since there is no evidence that in any subsequent month Shell or any related corporation ceased to operate the premises as a retail site, it follows that by virtue of s.6(1D) of the Franchise Act, that Act does not apply to any franchise agreement in relation to which the premises are the - 61 - marketing premises. Accordingly, the amended application must be dismissed. I shall hear Counsel on any directions which should be given for the filling and service of a Defence to Shell's Cross-Claim for possession of the subject premises, and for the hearing of that cross-claim. I certify that this and the sixty (60) preceding pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Ryan. - Associate: AT Y- Yanan Dated: /e Mfanat SIPS. Appearances Counsel for Chenoa Pty. Ltd. Solicitors for Chenoa Pty. Ltd. Counsel for Shell Company of Australia Limited Solicitors for The Shell Company of Australia Limited Dates of Hearing R.W. Parker Q.C. and P. Blackburn-Hart Stojanovic & David B.J. Shaw 9.C. and J.E. Middleton Arthur Robinson & Hedderwicks 16-195, 1987 4, 5 May, 23-25 March,