L E STEWART INVESTMENTS PTY LTD v MERCEDES-BENZ (NSW) PTY LTD SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MAHONEY, CLARKE and SHELLER JJA 18 December 1991, 14 February 1992 [1992] NSWCA 127 CONTRACT — CONSTRUCTION — CERTAINTY SATISFACTION Mahoney JA In this proceeding the plaintiff claims damages from the defendant for, as it alleges, a breach by the defendant of CL1.4 of the agreement made between them on | January 1987. The dealership agreement provided, by that clause, for the acceptance by, as I shall describe them, the Mercedes Benz interests of a dealer in place of the plaintiff. The plaintiff proposed for this purpose a Mr Politis or one of the companies controlled by Mr Politis. The Mercedes Benz interests decided not to accept Mr Politis or his company. It is upon that that the plaintiff bases its claim. The facts are detailed in the judgment of Clarke JA. I agree with his Honour's judgment. Two main issues were argued by Mr Jacobs QC for the plaintiff and by Mr Ellicott QC for the Mercedes Benz interests, namely: (1) whether CL1.4 imposes contractual obligations upon the Mercedes Benz interests; and (2) (if it does) whether those obligations were broken by them. On these matters I shall add some observations of my own. (1) The binding force of CL1.4: Mr Ellicott QC submitted that the terms of CL1.4 were so general in nature that no legally binding obligations were imposed by them. Reference was made to Thorby v Goldberg (1964) 112 CLR 597, Placer Development Limited v Commonwealth (1969) 121 CLR 353 and to Godecke v Kirwan (1973) 129 CLR 629, and to the considerations there discussed. Parties may, of course, stipulate in terms that the obligations undertaken by them are not to be legally binding obligations but are to bind, eg, in honour or otherwise. The parties in the present case have not specified in terms what their intention was and it is therefore necessary to infer from the terms of the agreement and the relevant surrounding circumstances what their intention in this regard was. In my opinion, it was the intention of the parties that CL1.4 give rise to legally binding obligations. This, of course, is not conclusive as to the nature of the obligations in this regard: the obligations which they have specified may be, for example, so vague or uncertain or otherwise such that the law cannot or will not give effect to them. But I do not think that appropriate content cannot be given to the obligations specified in CL1.4. Mr Ellicott's argument, though brief, was comprehensive in this regard. But, I think, the two matters to which mainly it was addressed were the fact that the obligations of the Mercedes Benz interests arose only if they were "satisfied" of the matters specified in the clause, and the use of the term "acceptable". 2 UNREPORTED JUDGMENTS If the parties intend the specified obligations to have legal effect, the courts have ordinarily found no difficulty in giving effect to that intention merely because the obligation turns upon the "satisfaction" or the like of one of the parties. The courts have distinguished between, inter alia, the mere fact of subjective satisfaction and satisfaction based upon relevant or reasonable grounds. But, having determined the meaning of the obligation in this regard, the courts of this State have, for many years past, given effect to it: see, eg, Hogan v Tumut Shire Council (1954) 54 SR (NSW) 284 and the cases there collected. The term "acceptable" raises problems of a somewhat different nature. The proposed dealer was to be granted a franchise if he was, inter alia, "acceptable" to the Mercedes Benz interests. There is no difficulty in deciding whether one person is acceptable to another: that other may determine the matter by so deciding, one way or the other. The more difficult question - and the one to which Mr Ellicott QC mainly referred - is whether, in deciding whether X is acceptable to him, Y is limited in the considerations to which he may have regard. And, I think, the main thrust of Mr Ellicott's argument in this regard was that the factors that may be taken into account are limited and that it is so difficult to determine which factors are or are not to be taken into account that the obligation is too vague to be enforced. I do not think this argument should be accepted. The use of "acceptable", in the context of the present agreement, does not indicate that the parties did not intend the obligations of the agreement to have legal effect. And, where the court is satisfied that it was the intention of the parties to create legally binding obligations, it can and will give effect to that intention unless the obstacles facing it are unsurmountable: see, eg, Upper Hunter County District Council v Australian Chilling and Freezing Co Limited (1968) 118 CLR 429 at 436-7, per Barwick CJ. Ido not think that in the present case there are insuperable obstacles in the way of giving legal effect to the present obligations. It is, I think, possible to envisage some matters which it would not be proper for the Mercedes Benz interests to rely upon in determining the acceptability of Mr Politis in the present case. A purely personal dispute between a member of Mr Politis' family and a member of the family of an executive of the Mercedes Benz interests might not be a basis of unacceptability. But I do not think that such difficulty as there may be in deciding what are or are not relevant matters for this purpose prevents effect being given to the clause. I come then to consider whether it should be inferred it was the intention of the parties that the clause have legal effect. I think that it was. The agreement contemplated that the plaintiff would make substantial expenditures for the purpose of complying with it and it would have been expected by the parties to the agreement that, when the plaintiff desired to withdraw from the business, he would be able to seek a recoupment of these expenditures and perhaps other benefits by obtaining payment from a purchaser of them. It would, I think, have been the contemplation of the parties that their relationships would operate in this way. But it was the thrust of Mr Ellicott's argument in this regard that whether the plaintiff could recoup moneys in this way lay purely in the discretion of the Mercedes Benz interests and so there was no obligation which could be enforced. I do not think that such a view should be accepted. UFRSTEWART INVESTMENTS PTY LTD v MERCEDES-BENZ (NSW) PTY LTD (Mahone9 JA) The nature of obligations the content of which lies purely in the discretion of one of the parties has been considered by the courts. But this is not such an obligation. What was to be done by the Mercedes Benz interests was conditioned by words, such as "satisfied" and "acceptable", to which they could have given or can give effect. The mischief to be dealt with by such a clause as CL1.4 is clear. The clause was intended to provide against the loss of the value of what had been acquired and/or developed by a dealer. I do not doubt that, in some business transactions, substantial sums may be expended in circumstances where recoupment and profit are dependent upon the goodwill of other parties. And I do not, by what I say, in any way impugn the goodwill of the Mercedes Benz interests. But in this case specific provision was made in the agreement by this clause to deal with the mischief to which I have referred. That provision was made in the context of other clauses clearly having a legal effect. Thus, the other obligations set out in S1 imposed legal obligations on the dealer to, eg, keep books, maintain working capital at the specified level, and provide the sale of Mercedes Benz products: see CL1.9, CL1.10, CL1.12. If it was intended that this clause was 'not to have such effect, it would, I think, have been expected that provision would have been made in terms in that regard. In the circumstances, I would infer that it was the intention of the parties that the clause have legally binding effect. (2) Did the Mercedes Benz interests breach their obligations? It was not in contest but that Mr Politis would sign the relevant dealership agreement or that he was not "acceptable" to the Mercedes Benz interests. The breach that was alleged arose essentially because, upon the claim of the plaintiff, either unacceptable factors were taken into account in determining the "acceptability" of Mr Politis or because the refusal to accept him was "unreasonable" within the meaning of the clause. The main thrust of the argument as to the first of these was, I think, that the Mercedes Benz interests had, in deciding that Mr Politis was unacceptable, taken into account wrong factors or factors which were not proper to be taken into account for this purpose. It has become established law that, in making discretionary judgments, a court or a quasi-judicial body is to take into account only relevant factors, may not take into account irrelevant factors, and will be in error if its decision is to the relevant extent affected by factors which are not relevant to it. House v The King (1936) 55 CLR 499 is an authority frequently cited in this regard. If the decision infringes these principles, it is void or may be set aside as voidable. Iam, as at resent advised, not satisfied that these principles apply to such a case as the present in the manner submitted by Mr Jacobs QC. I accept that, within CL1.4, there are some factors which are irrelevant to the determination of whether a person is acceptable or to the "reasonable" determination of the matter within the clause. If a refusal were based simply on such a factor, the determination and the consequent refusal to accept the person in question would be a breach of the clause. But, as at resent advised, I am not satisfied that, if for example, the refusal to accept a person was based upon reasons appropriate to be taken into account but, to some extent, also upon a reason which was not proper to be taken into account, the effect would be the same. The decision of a commercial matter between parties is, I think, not necessarily subject to the same kinds of considerations that 4 UNREPORTED JUDGMENTS are applicable in the judicial or the quasi-judicial sphere. This matter has not been the subject of argument in the present appeal and I therefore express no final opinion upon it. In the present case, as Brownie J indicated, the main reason advanced for the plaintiff was that the Mercedes Benz interests had found Mr Politis unacceptable because of his wide ranging dealership interests. They thought the situation was apt to occur in which customers having an interest in purchasing a Mercedes Benz vehicle in places outside the territory of the present dealership might be referred by Mr Politis or his interests, not to the dealer at the place where they were, but to the plaintiff's dealership in the Sutherland area. This was seen by the Mercedes Benz interests as being inconsistent with the kind of dealership arrangements which they desired to set up and encourage. I see nothing beyond the scope of the clause in this matter. It was, in my opinion, open to them to hold a person unacceptable because, having regard to his situation, that was a matter which might well occur. Other matters were referred to and these have been examined by Brownie J. I agree generally with what has been said by Clarke JA in this regard. I do not think that the Mercedes Benz interests were relevantly influenced by matters outside the scope of CL1.4. It was put by Mr Jacobs QC that the reason why the Mercedes Benz interests acted as they did was because they desired to reduce the number of their dealerships in the metropolitan area. The learned judge made no finding that this was the reason why they did what they did: I would infer from the terms of his judgment that he was of the view that that was not the reason why they did what they did. Having considered the matters to which Mr Jacobs QC has referred, I do not come to a different conclusion. I come now to the second matter, the suggestion that the Mercedes Benz interests did not act "reasonably" within the clause. I shall assume without so deciding that, as Mr Jacobs QC has submitted, the clause required reasonableness both in the manner of making the decision and the substance of the decision. It was objected that the manner in which the decision was made was unreasonable because, to put the matter compendiously, Mr Politis was not interviewed or personally questioned or otherwise investigated. This matter does not appear to have been the subject of submissions before the judge: at least, no reference is made to it in the submissions to which he referred. Mr Ellicott QC referred to the fact that previously, in relation to another dealership, there had been a consideration of Mr Politis' position. I do not think that, in a commercial context such as this, rules which might apply in a judicial or quasi-judicial context, have direct application. Personal hearings or representations are not essential. Assuming fairness in procedure is required, I am not satisfied that the procedure presently adopted would, in such a context, be seen as unfair. It was then argued that in the decision was unfair in substance because it had been based upon factors which should not have been taken into account. This argument was similar to that to which I have referred elsewhere. If a submission of this kind is to be dealt with in terms, it is necessary conceptually to consider first what are the principles by which reasonableness is to be determined; to determine what in fact was done in the instant case; and then to consider whether what was done was, within these principles, unreasonable. Mr Jacobs QC did not, I think, press that the considerations determining the reasonableness of a refusal to accept an assignee of a lease govern the present matter. It is, in my opinion, clear that the Mercedes Benz interests were entitled UF STEWART INVESTMENTS PTY LTD v MERCEDES-BENZ (NSW) PTY LTD (Clark6 JA) to take into account, to an appropriate extent, their own interests. I see nothing in the interests which, as Brownie J found, were taken into account to warrant the conclusion that the decision was relevantly unreasonable. Mr Jacobs QC made a number of submissions suggesting the reasons why the decision was made as it was. He advanced in this regard arguments generally to the effect of those to which I have referred. I think that those who were involved in the making of the decision of the Mercedes Benz interests discussed a number of different matters in the period prior to the actual making of the decision. What, in the end, were the matters which actually influenced their decision is difficult to determine with certainty. But it is, in my opinion, clear that they saw Mr Politis as a person not appropriate for the kind of dealership arrangements which they desired to have. It is, in my opinion, easy to see why the Mercedes Benz interests did not want a person wielding Mr Politis' economic power in the motor vehicle dealing industry within their dealership structure: their preference for, as it was described, family style dealerships to be passed from father to son or the like indicates, I think, their apprehension in this regard. As I have said, I think that the decision was influenced by a number of considerations. It is, I think, not necessary to go beyond what Clarke JA and Brownie J have dealt with. In the end, I am not satisfied that the decision was wrongly based. Before parting with the matter, it is proper to record that the decision that was made was not based upon any matter affecting Mr Politis' personal integrity or his capacity as a dealer in the automotive industry. The decision of this Court is not based upon any judgment detrimental to Mr Politis in that regard. For these reasons, I agree with the orders proposed by Clarke JA. Clarke JA Between 1971 and 1988 the appellant conducted a Mercedes-Benz dealership at Sutherland as well as dealerships in Toyota and Lotus vehicles. In about March of the latter year the appellant sold its interest in these businesses to a company known as Janside Pty Ltd ("Janside") which was effectively controlled by Mr Politis who had significant interests in a number of other dealerships in various parts of Australia. The respondent, who had granted the Mercedes-Benz dealership to the appellant, refused to enter into a dealership agreement with Janside as a consequence of which the appellant received a lesser consideration under the agreement for sale than it would have received if the three dealerships had effectively been transferred to Janside. Following the completion of the agreement for sale the appellant took proceedings against the respondent in which it sought a declaration that the respondent had breached the terms of the dealership agreement by unreasonably refusing to enter into a new dealer agreement with Janside. The proceedings were heard by Brownie J who found for the respondent and it is from this judgment that the appeal has been brought. The focal point of the appeal is CL1.4 of the agreement between the appellant and the respondent which is in the following terms: 1.4 This Agreement is personal to the Dealer and may not be assigned. If the Dealer wishes to sell or dispose of the business of the Dealer then the Distributor will not unreasonably refuse to enter into a new Dealer Agreement with the proposed purchaser if the Distributor is satisfied that such proposed purchaser will be able to comply with the terms and conditions of such agreement and is otherwise acceptable as a Mercedes-Benz Dealer." 6 UNREPORTED JUDGMENTS This contractual term specifically denies the dealer the right to assign its interests under the agreement. As I have previously indicated the respondent declined to enter into a new dealer agreement with Janside and the question which was raised in the proceedings was whether the respondent was in breach of contract in so declining. Brownie J held that it was not. His Honour observed that as the respondent had not at any stage suggested that Janside would not be able to comply with the terms and conditions of a new dealer agreement the issue was whether the respondent had unreasonably refused to enter into a new dealer agreement with Janside insofar as it had acted upon irrelevant and inappropriate considerations. Having defined the issues in those terms his Honour then made a number of findings of fact enumerating the considerations which influenced the respondent to decline to enter into an agreement with Janside. These findings were: First, Mr Politis, the man who effectively controlled Janside, had many other motor vehicle dealerships some of which were situated to close to existing Mercedes-Benz dealers and which were capable of being used, to the detriment of Mercedes-Benz dealers in specific territories, as a source of orders for Mercedes-Benz cars. The respondent perceived that if that occurred the strength of the Mercedes-Benz dealer network might be diminished generally and as a consequence the interests of the respondent detrimentally affected. Secondly, Janside did not fit into a pattern which the respondent thought desirable amongst its dealers; that is, family businesses, owning the land from which the dealership business was conducted. Thirdly, Mr Politis had a reputation for conducting dealership with high volume business and which gave substantial discounts off sale prices. This style of business was regarded by officers of the respondent as incompatible with the Mercedes-Benz image. The final consideration was that Mr Politis had an interest in a BMW dealership in Melbourne. Insofar as BMW and Mercedes-Benz marketed luxury vehicles in direct competition with each other it was considered undesirable to grant a Mercedes-Benz dealership to someone who already had an interest in a dealership marketing its rival's cars. Mr Jacobs QC, senior counsel for the appellant, submitted that upon the proper construction of CL1.4 the respondent could not reasonably refuse to enter into a new dealer agreement unless either it was not satisfied that the proposed purchaser would be able to comply with the terms and conditions of such agreement or the purchaser was otherwise unacceptable as a Mercedes-Benz dealer. Here there was no suggestion that the respondent was not satisfied that Janside would be able to comply with the terms and conditions of such an agreement. Accordingly, the respondent could only reasonably refuse to enter into the new agreement if Janside was not otherwise acceptable as a Mercedes-Benz dealer. In the submission of the appellant this alternative condition was directed at the character and personality of the proposed purchaser. To put it another way the personal qualities of the proposed purchaser viewed in the matrix of the terms of the dealership agreement were the only relevant considerations. In refining the last of these submissions counsel contended that subjective fears of the respondent were irrelevant and that it would be open to the respondent reasonably to refuse to enter into a new dealer agreement only if, objectively viewed, the proposed new dealer suffered from personal qualities which rendered it unacceptable as a Mercedes-Benz dealer. In developing his UF STEWART INVESTMENTS PTY LTD v MERCEDES-BENZ (NSW) PTY LTD (Clark@ JA) argument in favour of an objective test Mr Jacobs submitted that the second, and alternative, basis upon which the respondent could refuse to enter into a new dealer agreement was not qualified by the words "is satisfied" appearing earlier in CL1.4. In his submission those words only qualified the first of the two conditions appearing in CL1.4 viz. "will be able to comply with the terms and conditions of such agreement'. In support of these submissions counsel referred to the judgment of the Court of Appeal in Ontario in Greenberg v Meffert et al, (1985) 18 DLR (4th ed) 548, at 554. Iam unable to accept all of these submissions. In the first place it seems clear to me, as a matter of grammar, that the expression "'if the distributor is satisfied" qualifies both the following tests. Upon my reading of the clause it provides a three stage exercise: (1) The distributor decides whether it is satisfied that the proposed purchaser will be able to comply with the terms and conditions of the agreement. If it is not then it is entitled to decline to enter into a new dealer agreement with that proposed purchaser. (2) The second stage only arises if the distributor is satisfied as to the first and this requires the distributor to decide whether it is satisfied that the purchaser is otherwise (other than because of an inability to comply with the terms and conditions of the agreement) acceptable as a Mercedes-Benz dealer. If it is not satisfied of that fact then it is entitled to decline to enter into a new agreement. (3) Even if the proposed purchaser passes the first and second test it is still open to the distributor to refuse to enter into a new dealer agreement provided that its refusal is not unreasonable. In expressing the exercise in that way I am, I believe, adopting the same approach to construction as Brownie J adopted. On the other hand it seems to me that Brownie J directed attention to the third question - whether the refusal was unreasonable - whereas the considerations which led the respondent to refuse to enter into a new agreement with Janside seem to me to raise a question under the second alternative. Those factors which, on Brownie J's findings, influenced the respondent clearly show that it was not satisfied that Janside was acceptable as a Mercedes-Benz dealer. The question which is then raised is whether the respondent acted reasonably and honestly in coming to that conclusion, or, to put it in a slightly different way, whether the distributor acted capriciously or arbitrarily. (See the discussion by Mason J in Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd, 144 CLR 596, at 609; Minster Trust Ltd v Traps Tractors Ltd and Ors, (1954) 3 All ER 136, at 144-5.) It may be that, in expressing the test in this way I am imposing conditions upon the distributor's state of satisfaction which would not be implied from the language used by the contracting parties. It may be that it does not matter whether the decision is capricious or unreasonable so long as it is conceived in good faith. For instance, in Stadhard v Lee, (1863) 3 B and S 364, at 372; 122 ER 138, at 141, Cockburn CJ stated the relevant legal rule in these terms: "\.. the duty of a court in such cases is to ascertain and give effect to the intention of the parties as evidenced by the agreement; and though, where the language of the contract will admit of it, it should be presumed that the parties meant only what was reasonable, yet, if the terms are clear and unambiguous, the Court is bound to give effect to them without stopping to consider how far they may be reasonable or not." 8 UNREPORTED JUDGMENTS In that case, which was an action for work done, a replication by the workman that the employer's dissatisfaction was unreasonable, improper and capricious was held insufficient, no mala fides being alleged, and the contract being to do the work "to the entire satisfaction" of the employer. I have nonetheless decided to adopt the stricter test for the reason that, as Devlin J said in Minster Trust (supra): "The tendency in modern cases seems to be to require the dissatisfaction to be reasonable and because the imposition of the stricter test would, in any event, lead to the same result." I am unable to accept, however, the submission which was made by the appellant that in considering whether it was satisfied the distributor was restricted to a consideration of the character and personality of the proposed purchaser. That type of approach may be supported by a number of landlord and tenant cases but, as counsel for the appellant recognised, a case concerning continuing commercial relationships between the parties raises markedly different considerations. This seems to me to be clear and there is no need to dilate upon the distinction. One of the highly relevant considerations would be the possible effect of the grant of a new dealership to a particular person upon the distributor's business. If the distributor perceived that the grant would or might conceivably have a detrimental effect upon its business operations then it could not be said that it was either unreasonable or lacking in bona fides in declining to grant a new dealership to that person. Approaching the matter in the light of those considerations I do not think it can be said that the respondent acted in breach of the contractual obligations imposed upon it by CL1.4. The respondent granted dealerships to a limited number of dealers in respect of defined territories in the metropolitan and country areas. Although there was no prohibition against a dealer taking orders from a person who resided outside the stipulated territory the dealership agreement stipulated a primary territory for each dealer and contained a number of provisions dealing with situations which may arise where one dealer sold a vehicle to a person from another territory. For instance dealer performance, and thus qualification for bonuses, was gauged only upon sales to persons resident within the territory assigned to that dealer and specific arrangements were made in respect of the free servicing of vehicles sold by a dealer to a person from another territory. In the context of this agreement it seems clear to me that a perception that the grant of a dealership for a specified area to a particular person may act detrimentally to the interests of dealers in other territories would be quite reasonable. While it is unnecessary to descend to the detail of the facts the respondent was faced with a situation where Mr Politis had an interest in a great number of motor vehicle dealerships some of which were very large and were situated in close proximity to Mercedes-Benz dealers. For instance, Mr Politis had interests in City Ford which is situated in William Street, Sydney, very close to a Mercedes-Benz dealer and Chatswood Toyota which was also situated close to another dealer. In this context it does not seem to me to matter whether the respondent's fears were soundly based provided they were honestly held and, upon the test I earlier formulated, were based on reasonable grounds. If there was no basis for such fears then it would not be difficult to conclude that, quite apart from considerations of reasonableness, they were not honestly entertained. No question of that nature can arise in this case for there is evidence which supported his Honour's conclusion that the respondent's fears were not groundless. The evidence supporting that conclusion was most graphically given by Mr Politis in cross-examination when he agreed with the proposition that if Janside were UF STEWART INVESTMENTS PTY LTD v MERCEDES-BENZ (NSW) PTY LTD (Clarké JA) granted the Mercedes-Benz dealership at Sutherland he may well encourage the employees of his various companies to endeavour to pass business on to the Sutherland operation. Mr Jacobs submitted that, even if these views were correct, the evidence in the case did not support the conclusion that the considerations specified by Brownie J actually moved the respondent to deny the new agreement to Janside. In his submission the evidence supported the view that the sole, or at least the major, factor which moved the respondent was a desire to reduce the number of dealerships in the metropolitan area. Furthermore, he contended that this was not a matter that could properly be taken into account in determining whether a particular person was acceptable as a Mercedes-Benz dealer. I am prepared to assume that a desire to reduce the number of dealerships would not justify the refusal by the respondent to grant a new dealership but I am unable to accept the submission that the evidence discloses that this was the major factor influencing the respondent. According to Mr Dyer who was, in 1988, the General Sales Manager (NSW) of the respondent, when he addressed the meeting at which the decision to refuse to grant Janside a new dealership was made he said: "T am not in support of an application from Mr Politis. There are in my view problems for the Mercedes-Benz dealer network in being associated with the Politis Group. Mr Politis has a number of high-volume, discount-oriented franchises. It is conceivable that our vehicles could be delivered out of any of the Politis operations, some of which operate side-by-side with our Mercedes-Benz Dealerships. The application poses an unacceptable risk that the financial strength of our other Sydney Dealers be put at jeopardy, therefore the organisation 'as a whole'. If there is no flexibility by Laurie (Stewart) we will have to consider other options. It is a key zone and we must be represented there." Mr Dyer then went on to say that the only person to comment upon his statement was Stuart Groves, who was also a sales manager, who said words to the following effect: "T also believe that an association with Politis could present a number of problems and could harm the viability of our other long established dealers in the Sydney area." Earlier in his statement, which was admitted into evidence, Dyer had spoken of a conversation he had with Mr Groves and Mr Doug Ogden, another senior executive with the respondent, who were both present at the later meeting. He recalled saying words to the following effect: "T am not in favour of an application from Politis. His operation and extensive interests are not consistent with the nature of our business. He has a large volume Ford Dealership next door to Mercedes-Benz of Sydney in Crown Street and a similar sized Toyota operation 200 metres from Morrison Motors, our North Shore Mercedes-Benz Dealer. There is also his BMW Melbourne business which poses a further concern for marketing programmes and data-base confidentiality. There is a risk that staff in other Politis' dealership operations could order Mercedes vehicles for their customers and source them through Sutherland, resulting in direct competition with our own dealers. These Politis' operations are high-volume discounted operations, a fact seen in the content of their regular advertising campaigns. 10 UNREPORTED JUDGMENTS I am surprised that Stewart has left it until now to approach us. He has presented us with what appears to be a fait accompli. I'm also surprised that he has presented Politis as a buyer. Stewart has always been vocal at dealers' meetings about reducing the number of sales outlets and rejecting high-volume, discounted oriented sales. He would have known there'd be a strong possibility that the Politis group would not be acceptable for the network." In my opinion this evidence justifies his Honour's factual findings and his conclusion that the respondent's fears provided adequate justification for the decision that it took. For these reasons the appeal should be dismissed. I should, however, not conclude this judgment without noting that Mr Ellicott QC, senior counsel for the respondent, submitted that CL1.4 had no contractual effect. It was either an offer to treat or, alternatively, so vague and uncertain that the court would not regard it as giving rise to any contractual obligations. The same submissions were made to Brownie J who rejected them. I am inclined to the view that his Honour was correct in that decision but as it is unnecessary to form a concluded opinion on the question I do not propose to do so. The appeal should be dismissed with costs. Sheller JA I have had the advantage of reading the judgment prepared by ClarkeJA with which I agree. The appeal will be dismissed with costs. Counsel for Appellant - M JACOBS QC and D J HIGGS Solicitors for Appellant - HANNAFORD SMITH Counsel for Respondent - R J ELLICOTT QC and AH BOWNE Solicitors for Respondent - ALLEN ALLEN and HEMSLEY