Trade Practices - failure to disclose boundary of franchised premises - whether this amounted to s.15 of the Petroleum Marketing Franchise Act - whether disclosure required on assignment of franchise - whether franchise agreement avoided - whether loss suffered by reason of contravention of the Act - assessment of damages.

Petroleum Retail Marketing Franchise Act 1980 (Cth) - ss.15, 22

Sargent v. A.S.L. Developments Limited [1974] HCA 40; (1974) 131 CLR 634

Szep v. Blanken (1969) SASR 65

Introvigne v. Commonwealth of Australia [1980] FCA 107; (1980) 32 ALR 251

Enzed Holdings Ltd v. Wynthea Pty Ltd [1984] FCA 373; (1984-1985) 57 ALR 167

1. The appeal be allowed.

2. The orders made by the primary Judge be set aside.

3. Save for the order for costs of 3 June 1993, each party is to pay

its own costs of the appeal and in the Court below.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DAVIES J I have had an opportunity to read the reasons for judgment prepared by O'Loughlin J. I agree with his Honour's reasons but would add a few words of my own.

2. The proceedings before the learned trial Judge were ill conceived, albeit well intentioned. Compensation was sought under s.22 of the Petroleum Retail Marketing Franchise Act 1980 (Cth) which provides inter alia:-

"(1) Where a party to a franchise agreement suffers loss or

damage by reason of the other party to the agreement

contravening a provision of this Act or of the regulations,

that other party is liable to compensate the first-mentioned

party for the loss or damage.

(2) Where a franchisee avoids the franchise agreement under

sub-section 9(4) or 15(5), the franchisor is liable to pay

to the franchisee such amount of compensation as is

necessary to put the franchisee in the same position as the

franchisee would have been in if the agreement had not been

entered into."

Compensation was sought in respect of the fact that Ampol had not given notice to Mr and Mrs Lawson of the fact that Ampol's title to the land upon which the service station, the subject of their franchise, stood extended no more than 1.6 metres from the bowsers of the station, though the apron was greater in extent than that. As this fact made no difference to the practical operation of the service station, during the whole period from 6 June 1986 when Mr and Mrs Lawson and a Mr Lance McNamara took an assignment of the then franchise of the service station until 30 April 1991 when the second renewal of the franchise expired, there seems to have been no matter which called for the application of either sub-section (1) or (2) of s.22.

3. From a practical point of view, the business of the service station was not restricted by the limit to Ampol's title. It was put to the learned trial Judge that, because of the extent of Ampol's title, Mr and Mrs Lawson had lost the opportunity to assign an otherwise valuable franchise; but no expert evidence was called as to the value alleged to be lost and there was no acceptable evidence that any aspect of the title would have caused that result.

4. The damages as claimed seem to be based on the footing that Mr and Mrs Lawson had, by para. 22 of their statement of claim, avoided the franchise agreement acting under s.15(5) and that they were entitled under s.22(2) to be put in the same position as they would have been in if the agreement had not been entered into. On this basis, a claim was made for the moneys which had been paid as consideration for the assignment, for the moneys which Mr and Mrs Lawson had put into the business over the period of their trading and for the trading losses which they had incurred while in occupation. Again, much of this claim suffered from lack of proof, but I need not discuss that.

5. The case as pleaded and as conducted before the trial Judge did not include an allegation that Ampol had been in breach of s.15(1) of the Act when the franchise which was subsequently assigned was granted to a Mr Beames on 24 May 1985. If that allegation had been made, it would have been necessary for Mr and Mrs Lawson to prove what information had been supplied by Ampol to Mr Beames and that Mr Beames would not have entered into the franchise agreement if the information had been duly and correctly disclosed to him. See s.15(6)(b). A case such as that was not alleged or proved.

6. Rather, it was alleged that s.15 of the Act had required Ampol to make a disclosure to Mr and Mrs Lawson and to their then partner, Mr McNamara, when they took the assignment from Mr Beames in June 1986. However, it is clear that s.15(1) does not apply to an assignment. Section 15(10) specifically so provides. No doubt this flows from the policy of the Act that a franchisor shall not unreasonably withhold its consent to an assignment and, where its consent is unreasonably withheld, it shall be deemed to have granted consent. See s.11(3). So there was no breach of s.15 in respect of the assignment in 1986 and it was at that time that the capital sum was paid for goodwill by the Lawsons. The capital sum was paid to Mr Beames, not to Ampol.

7. There was a renewal of the franchise on 6 June 1988 and this was found by the trial Judge to have been the second and last available renewal. Counsel for Ampol conceded to the trial Judge that, for the purposes of the operation of s.15(4) in relation to that renewal, notice of the limit on the title had not previously been given by Ampol to Mr and Mrs Lawson or to Mr Beames.

8. That brings the matter to s.15(5) and (6) which provide:-

"(5) Where a franchisor enters into a franchise agreement

in contravention of sub-section (1), the agreement is

voidable at the instance of the franchisee.

(6) An agreement is not voidable under sub-section (5) by

reason of the failure by the franchisor to disclose, or the

false, misleading or incorrect statement by the franchisor

of, any information unless -

(a) the information was material to the operation, including the

profitability of the operation, of the marketing premises; and

(b) the franchisee would not have entered into the agreement if the

information had been duly and correctly disclosed to him."

I agree with O'Loughlin J that the information as to the extent of Ampol's title was information material to the operation of the service station and that it should have been disclosed. Accordingly, s.15(6)(a) was satisfied. But satisfaction of s.15(6)(b) falls into a different position.

9. The trial Judge accepted Mr Lawson's evidence that, had the information as to the title been disclosed to him, he would not have entered into the franchise agreement. However, Mr and Mrs Lawson did not walk away from the business during the currency of the franchise agreement to which they were entitled. And, as they had paid a substantial capital sum to Mr Beames on taking the assignment of the franchise and had put other moneys into the business, it seems to me to be highly unlikely that Mr and Mrs Lawson would have failed to take the renewal had they been informed that Ampol's title extended only 1.6 metres from the bowsers. After all, the limitation had no practical effect upon the operation of the business. I would read Mr Lawson's evidence as relating not to the period of time when he and Mrs Lawson took the renewal in 1988 but to the period of time when, in 1986, the assignment was taken from Mr Beames and the capital sum paid to him. Once that sum had been paid, Mr and Mrs Lawson would have regarded themselves as locked into the business.

10. Accordingly, I would hold that Mr and Mrs Lawson did not satisfy s.15(6)(b) and, therefore, that they were not entitled to avoid the franchise agreement under s.15(5).

11. If I were wrong in that view, I would nevertheless hold that Mr and Mrs Lawson did not avoid the franchise agreement under s.15(5). That sub-section confers a power of avoidance upon a franchisee, not upon a court. By their statement of claim, Mr and Mrs Lawson purported to avoid the franchise. Paragraph 22 of the statement of claim dated 15 December 1989 stated:-

"The Applicants charge and that fact is that the agreement

entered into on 6 of June 1988 is voidable at the instance

of the Applicant and is so hereby avoided."

But the fact remains that Mr and Mrs Lawson continued in occupation of the service station until the expiry date of the franchise agreement, 19 April 1991. They were presumably still in occupation when the trial commenced on 8 April 1991. In my opinion, Mr and Mrs Lawson did not avoid the franchise agreement.

12. If a person has knowledge of his right to avoid a contract and of facts which entitle him to take that step, the person must either affirm or avoid, though, as Mason J said in Sargent v. A.S.L. Developments Limited [1974] HCA 40; (1974) 131 CLR 634 at 656:-

"A person confronted with a choice between the exercise of

alternative and inconsistent rights is not bound to elect at

once. He may keep the question open, so long as he does not

affirm the contract or continuance of the estate and so long

as the delay does not cause prejudice to the other side. An

election takes place when the conduct of the party is such

that it would be justifiable only if an election had been

made one way or the other (Tropical Traders Ltd v. Goonan

[1964] HCA 20; (1964) 111 CLR 41."

By December 1989, Mr and Mrs Lawson both knew of the right conferred by s.15(5) of the Act to avoid and of the facts which founded the exercise of that right. Their decision to remain in possession as franchisees and their action in doing so was, in my opinion, an unequivocal affirmation of the agreement. Paragraph 22 of the statement of claim was not supported by the facts. Notwithstanding what the statement of claim said, Mr and Mrs Lawson continued in occupation of the business premises and continued to exercise their rights as franchisees.

13. It follows, in my opinion, that Mr and Mrs Lawson did not avoid the franchise agreement and therefore had no right to compensation under s.22(2) of the Act.

14. I should further add that, even if it were correct to say that Mr and Mrs Lawson avoided the 1988 agreement which was current at the time of the delivery of the statement of claim in December 1989, I would not hold that they avoided the earlier agreement which was assigned to them by Mr Beames in June 1986. Proof of any default on the part of Ampol extended no further than to proof of a default in June 1988 which, had it related to a disclosure such that, if made, Mr and Mrs Lawson would not have entered into the renewal in 1988, would have given rise to a right to avoid that renewal. But avoidance of the renewal would not allow the recovery of moneys paid to Mr Beames in 1986 or lost prior to the entry into of the renewal in June 1988.

15. I agree with the orders proposed by O'Loughlin J.

O'LOUGHLIN J This appeal is concerned with the provisions of the Petroleum Retail Marketing Franchise Act 1980 (Cth) ("the Act") and the application of the Act to the franchising of an Ampol petrol service station ("the service station") at Princes Highway, Bomaderry in the State of New South Wales. The respondents to the appeal, James Henry Lawson and his wife Pamela Joan Lawson (who were the applicants in the court below) had purchased the service station business in April 1986 with their former partners, Mr and Mrs McNamara, and taken an assignment of the franchising rights with respect to that business from a man named Beames.

2. On 6 June 1988, the appellant Ampol Ltd, the Lawsons, and the McNamaras entered into three agreements styled: "Service Station Franchise Licence Agreement", "Franchise Supply Agreement" and "Trade Mark Licence Agreement". The first of those agreements, the "Service Station Franchise Licence Agreement", identified the Lawsons and the McNamaras as the parties having the sole right to carry on "a service station, garage and motor fuel vending business" on the relevant premises for a term of three years commencing on 1 May 1988 and expiring on 30 April 1991. The second and third agreements, as their names imply, respectively gave the franchisees the right to sell the appellant's petroleum products for the same three year period and to use the word "Ampol" as a trade mark for a period of two years. It is not apparent why the term of the "Trade Mark" agreement should have been for a lesser period but, in the circumstances of the case, it does not appear that anything turned on this discrepancy.

3. The four partners continued to operate the service station business until 30 June 1988. On that date the McNamaras retired from the partnership and their interests were acquired by the Lawsons. Although their acquisition of the McNamara's interests was not supported by any documentary evidence, it is common ground that the Lawsons thereafter operated the service station business until their franchise from Ampol expired by effluxion of time on 30 April 1991; the Lawsons then left the premises.

4. The dispute between the Lawsons and Ampol that led to this litigation concerned the correct position of the petrol pumps in relation to the front boundary of the service station. The evidence established that the service station had a bituminous apron extending from the workshop to the Princes Highway. The "island" that constituted the petrol pumps was approximately parallel with the road and positioned so that its nearest line to the roadside guttering was about ten metres. On the assumption that this guttering was the boundary line of the service station and the highway, a distance of ten metres was more than sufficient for motor vehicles to approach the pumps on the side nearest to the highway.

5. The guttering, however, was not the boundary line: the boundary line was only 1.6 metres from the line of the "island" and that distance was insufficient for a motor vehicle to stand at the pumps for petrol without it encroaching on public land. This fact was only discovered by the Lawsons in October 1989 when they made enquiries of the main roads authority about the future of the service station site in response to an announcement that roadworks were due to commence for the widening of Princes Highway.

6. Relying on the failure of Ampol to disclose the position of the correct boundary as founding a cause of action, the Lawsons instituted proceedings against Ampol seeking relief pursuant to the provisions of the Act. In addition, they also claimed damages pursuant to the provisions of the Trade Practices Act 1974 (Cth) for misleading or deceptive conduct. As to this latter claim, the learned trial judge held that there was no evidence to suggest that Ampol's failure to disclose the true boundary was intentional. On that basis, he concluded that Ampol had not contravened the Trade Practices Act; that finding has not been challenged on appeal.

7. The learned trial judge found that Ampol knew the position of the correct boundary, that it had an obligation under the Act to inform the Lawsons of that fact, and that it had failed to meet its obligations. He found that the Lawsons had suffered damages as a result of this contravention which he quantified at $40,000. Ampol has appealed against the whole of the judgment.

8. The Act is intended to afford protection and security to operators of petrol service stations. It applies to the contractual relationships between petroleum corporations such as Ampol ("the franchisor") and a person ("the franchisee") under which the franchisor grants to the franchisee rights of possession, occupancy or use in respect of premises and rights to the use of a brand or mark commonly associated with the franchisor. The Act contemplates that the franchisor will either agree to supply petroleum products to the franchisee or require the franchisee to purchase them from another nominated person. As Mason CJ, Gaudron and McHugh JJ explained in Caltex Oil (Australia) Pty Ltd v Best and Another [1990] HCA 53; (1990) 170 CLR 516 at 525 the Act has the "statutory purpose of giving greater security to franchisees". Their Honours went on to identify the beneficial nature of the legislation, saying:

"In the case of a statute, the object of which is to protect

the interests of a class of persons who are at a

disadvantage in negotiating a contract on fair terms with a

class of corporations having superior bargaining power, the

courts must reject an interpretation which would allow the

statutory purpose to be circumvented." (525)

9. The first of the statutory rights or benefits to which reference should be made is the duration of a franchise agreement. By virtue of the combined effect of ss13, 17 and 17B of the Act, the term of a franchise agreement must be not less than three years and, subject always to due compliance with the provisions of the agreement and subject also to certain exempting provisions of the statute, a franchisee is entitled to look forward to two consecutive renewals each of three years. In other words, in the normal case, the Act contemplates that the original franchisee will be entitled to look forward to nine years occupancy and operation of a service station business and that a person who takes by way of assignment and becomes a franchisee will be entitled to the balance of that period of nine years.

10. The Act also requires the franchisor to disclose certain information to a franchisee before any franchise agreement is executed. Subsection 15(1) provides:

"A corporation shall not enter into a franchise agreement as

franchisor unless, not less than 3 business days before the

day on which the agreement is entered into, it has supplied

to the franchisee a statement in writing containing all

information in the possession of the franchisor and related

corporations, being information relating to the operation or

proposed operation of the marketing premises and reasonably

likely to influence the decision of the franchisee to enter

into the agreement."

11. Subsection 15(2) thereupon proceeds to nominate a variety of matters that are to be included in the written statement that the franchisor must give to a franchisee pursuant to subs15(1) but those matters are not exhaustive: see subs15(3) which provides:

"The express provisions of sub-section (2) are not intended

to imply a limitation of the generality of the description

in sub-section (1) of information to be contained in a

statement referred to in sub-section (1)."

12. If "a franchisor enters into a franchise agreement in contravention of subs(1), the agreement is voidable at the instance of the franchisee" so long as the contravention relates to information that is material to the operation, including the profitability of the operation, of the marketing premises and so long as the franchisee would not have entered into the agreement if the information had been duly and correctly disclosed to him: (subs15(5) and (6)). That right of avoidance is extended by subs15(11) to a person who becomes a party to a franchise agreement by way of assignment. On the other hand, subject to the provisions of subs15(4) to which reference will later be made, the franchisor is not required, on the occasion of such an assignment, to supply afresh to an assignee of the franchise the information already given to the original franchisee: see subs15(10):

"15.(10) This section does not require a franchisor to supply any

information to a person by reason only of his becoming a

franchisee in relation to the agreement by way of assignment or

novation."

13. It was submitted on behalf of the Lawsons that the duty to supply information that is contained in subs15(1) extends to a person who takes an assignment of a franchise as well as to one who receives a grant of a franchise. The language of subs15(1) and (10) make it quite clear that such a proposition must be rejected. Sub-section 22(2) of the Act provides:

"Where a franchisee avoids the franchise agreement ... the

franchisor is liable to pay to the franchisee such amount of

compensation as is necessary to put the franchisee in the same

position as the franchisee would have been in if the agreement had

not been entered into."

14. One of the questions that must be considered in this appeal is whether the respondents, as franchisees, lawfully avoided their franchise agreement. In paragraph 22 of their statement of claim they pleaded that:

"... the agreement entered into on 6 June 1988 is voidable

at the instance of (the Lawsons) and is so hereby avoided."

15. The statement of claim was filed in this court on 19 December 1989. Paragraph 22 of the statement of claim would therefore suggest that the relevant agreement was avoided as and from that date; yet the Lawsons continued in occupation of the service station and continued to operate the business until they vacated the premises on 30 April 1991, some sixteen months later.

16. The appellant argued, having regard to the language of subs15(1), that the position of the petrol pumps in relation to the correct boundary did not amount to "information relating to the operation or proposed operation of the marketing premises" nor was it information that would have been "reasonably likely to influence the decision of the franchisee to enter into the agreement". This proposition cannot possibly be correct. The successful operation of a petrol service station is substantially, if not wholly, dependent on the maximum utilisation of its petrol pumps. If those pumps are positioned in such a manner that there is apparent access to them from two directions and on both sides, they will be positioned for maximum use. But the operation of the premises will be dramatically reduced if customers can only stand their motor vehicles on the workshop side of the pumps to receive petrol.

17. Before considering the application of s15 of the Act to the agreement of 6 June 1988, it is first necessary to identify and classify that agreement. For Ampol it was argued that it was the second renewal of an agreement which presumably was granted to some unspecified person for an original term of three years from 1982 to 1985. There was documentary evidence to show that the Lawsons and their partners had taken an assignment from a man called Beames of the rights contained in a franchise agreement dated 24 May 1985. There was also documentary evidence of an agreement between Ampol and a Mr and Mrs Rogers of that date for a term of three years expiring on 30 April 1988. Presumably, Mr and Mrs Rogers had assigned their rights sometime after May 1985 but before April 1986 to Mr Beames. There was no documentary evidence, however, to support that presumption and there was no like evidence to support the oral evidence of employees of Ampol that the nine year period expired on 30 April 1991. Neither was there any such evidence to support the proposition that the three year agreement between Ampol and the Lawsons dated 6 June 1988 was the second of the two statutory renewal periods (covering the seventh to ninth years).

18. The Lawsons had faintly argued that the agreement of 6 June 1988 was an entirely new franchise agreement and that it was the commencement of a fresh statutory nine year period. The learned trial judge rejected that proposition. He said:

"Here, the original term and its renewals were three years

each. In 1986, Beames was into the first three year

renewal. On 6 June 1988, the Lawsons entered a franchise

agreement with Ampol (the second agreement). While the

first agreement had lapsed, the second agreement was treated

as the final permitted renewal of the first agreement,

apparently in accordance with section 17(5). The Lawsons

did not pay for the second agreement other than a trademark

fee."

(His Honour's reference to "the first agreement" was, as he explained, a reference to the documents of assignment that the Lawsons and the McNamaras had signed in 1986 and the reference to s17(5) should, so it seems, be a reference to s17B(5)).

19. There was sufficient evidence to justify his Honour's finding that the agreement of 6 June 1988 was the second renewal of an original three year term. Although it is not expressly identified as a renewal of an earlier agreement, the agreement contains annotations to clause 4, by way of instructions, which direct the draftsman how to fill in the blank spaces in the clause. One of those instructions refers to "a renewal of an existing agreement" thereby indicating that it was intended that the document could be used as an agreement by way of renewal. In addition, there was the oral evidence of Mr Shepherd and Mr Pateman, employees of Ampol, both of whom identified the agreement of 6 June 1988 as a renewal. Mr Pateman had prepared a report on the future of the service station and the effect that the proposed road widening might have upon it. In his report Mr Pateman suggested that one alternative might be to rebuild the site. In discussing that possibility he said:

"To do this, arrangements would have to be made with the

current franchisees as the present franchise agreements do

not expire until April 1991..."

20. In cross-examination Mr Pateman was asked about ExA14, the agreement of 6 June 1988.

"You delivered Mr Lawson, didn't you, a new franchise

agreement?... A renewal of a franchise agreement.

A renewal of a franchise agreement?... Yes.

I show you an exhibit A14. That's the franchise agreement

you referred to as a renewal that was given to Mr Lawson by

yourself, is it not in or about June 1988? ... That is

correct."

21. There were later discussions with Mr Lawson and representatives of Ampol in late 1988 in which Ampol suggested an entirely new franchise arrangement (which if accepted would have created a fresh nine year period with effect from April 1991). These discussions culminated with Ampol writing to Mr and Mrs Lawson on 3 March 1989 stating that its offer for the new franchising arrangements remained open until 31 March 1989. On the subject of tenure the letter said:

"As your franchise expires on 18th September, 1989, (sic)

your new franchise will run for three years plus the

unexpired portion of your existing franchise with two

further terms of three years each subject to the Franchise

Act. Therefore, as we intend to sign your new franchise on

1st April, 1989, your new franchise will extend from 1st

April 1989, until 18th September, 1992, with expected

renewals through to 18th September, 1998."

22. The reference to 18 September 1989 is not clear. Mr Shepherd referred to the letter of 3 March 1989 in his statement that was tendered in evidence but he made no mention of that date and although he was cross-examined at length, he was not asked to explain the discrepancy in the dates, nor was he challenged over his assertion that the agreement of 6 June 1988 was a renewal and not a fresh agreement.

23. A finding that the agreement of 6 June 1988 was an agreement by way of renewal does not mean that the provisions of s15 of the Act may be ignored. Although the Act does not require a franchisor to supply the same information in repetitive form on the occasion of each renewal, subs15(4) makes it clear that there is an obligation on the franchisor to disclose information where it differs in a material particular or where it relates to a matter concerning which no information had been supplied to the franchisee in accordance with the provisions of subs15(1) and (2). The terms of subs15(4) are as follows:

"In relation to a franchise agreement entered into by way of

renewal of an agreement that was entered into (whether by

way of renewal or otherwise) after the commencement of this

Act, sub-sections (1) and (2) shall not be taken to require

the disclosure of any information unless-

(a) it differs in a material particular or to a material extent

from the information supplied by the franchisor to the

franchisee in accordance with those sub-sections at the time

when the agreement to be renewed was entered into; or

(b) it relates to a matter concerning which, or a period in

relation to which, no information was supplied to the

franchisee in accordance with those sub-sections at that time."

24. It was conceded that Ampol had not previously made any disclosure to the Lawsons or to their predecessors in title about the correct boundary. There was, therefore, an obligation on Ampol in June 1988 to inform the Lawsons and the McNamaras of the correct location of the boundary. Its failure to do so amounted to a contravention of subs15(1) making the agreement voidable at the instance of the Lawsons. A voidable contract is one which is initially valid, but where one or more of the parties has a right of election to avoid or to continue and so validate it: Halsburys Laws of England (4th ed., 1974) Vol.9, para.207. The word "avoid" has many meanings but in the law it commonly means "to make void or of no effect": The Oxford English Dictionary (2nd ed., 1989); The Macquarie Dictionary (2nd ed., 1991). In Osborn's Concise Law Dictionary (7th ed., 1983) the word is defined in these terms:

"To make void. A person is said to avoid a contract when he

repudiates it and sets up, as a defence in a legal proceeding

taken to enforce it, some defect which prevents it from being

enforceable."

In Jowitt's Dictionary of English Law (2nd ed., 1977), the definition is further expanded:

"(T)o avoid a transaction is to make it void. A person is said to

avoid a contract by setting up, as a defence in a legal proceeding

taken to enforce it, some defect which renders it voidable, that

is, he avoids it by setting up that defence; similarly if he

brings an action to have a voidable contract, settlement, etc.,

declared void; or merely takes steps to repudiate the contract."

25. Each of these definitions encompasses the common theme: a voidable contract will remain a valid and an enforceable contract until the party who is so entitled does that which is necessary to make the contract "void or of no effect". A mere oral or written statement, unsupported by appropriate conduct, will be insufficient. For example, in Szep v Blanken (1969) SASR 65, the purchasers of a business had a statutory right to avoid the contract because of the vendor's failure to comply with a particular provision of an Act. Before the purchasers became aware of the contravention they completed the contract by paying the purchase price and entering into possession of the business. Subsequently they sought to avoid the contract but it was held that they had lost their opportunity to do so. After reviewing a series of cases on the subject, Bright J said:

"It follows from these cases that whatever may be the position if

the party who seeks to avoid the contract, after discovering his

legal right to do so, has done nothing adversely to the other

party, it is clear that he cannot exercise the right to avoid the

contract if he has in fact performed acts which are adverse to the

other party." (73)

Just as the purchasers lost their statutory right of avoidance in Szep v Blanken (supra) so, in the present case, the Lawsons must fail in their attempt to avoid their contract. The purported avoidance, notwithstanding the language of paragraph 22 of their statement of claim was rendered ineffectual by their continued occupancy of the service station. An act of avoidance would have required them, at or about the same time as the service of their statement of claim, to vacate the premises and give back possession to Ampol. Instead they continued in occupation and continued to carry on the business of a petrol service station until the expiry of the statutory nine year term on 30 April 1991. Such conduct can only be consistent with an affirmation by the Lawsons of the renewed franchise agreement notwithstanding their knowledge of Ampol's breach. The Lawsons were left with the remedy provided for in subs22(1) of the Act if, indeed, they could prove that they had suffered any loss or damage. That subsection provides:

"Where a party to a franchise agreement suffers loss or

damage by reason of the other party to the agreement

contravening a provision of this Act or of the regulations,

that other party is liable to compensate the first-mentioned

party for the loss or damage."

26. It is difficult to comprehend, in the circumstances of this case, how it could be said that the Lawsons have suffered any loss or damage "by reason of" Ampol contravening the provisions of subs15(1) and (4) of the Act. It was claimed that when the Lawsons learnt, in October 1989, about the position of the boundary, they were thereby prevented, in practical terms, from selling the service station business and its goodwill. That may be so but it did not stop them from carrying on their business, unhindered by the actual location of the front boundary until the expiry by effluxion of time, of their franchise agreement. The amount that the Lawsons might have expected to receive upon a sale of their business and its goodwill and upon an assignment of their franchise would equate, in terms of value, with what a purchaser would expect to receive by way of benefit from operating the business, unimpeded by boundary problems, for the unexpired term of the franchise agreement. In the present case, the Lawsons, notwithstanding Ampol's contravention of the Act, obtained full value from the franchise because they were able to operate their business until 30 April 1991 without being hampered by the boundary alignment; they did not suffer any loss.

27. The learned trial judge described the issue of damages as "the most troublesome and unsatisfactory aspect" of the case. He pointed out that the Lawsons had originally formulated their claim upon the basis that they sought the damages that had been occasioned by their inability to assign their franchise. As to this his Honour said:

"However, the failure to provide evidence of the value of

the interest and its component parts indicates that this

claim was not seriously pursued."

28. His Honour nevertheless remained satisfied that the Lawsons had suffered loss due to Ampol's failure to disclose the correct position of the boundary of the service station. He concluded his judgment with these words:

"As I do not find it possible to quantify that loss with any

degree of accuracy, I must therefore choose a global sum

that will best represent my assessment of the loss. I order

that Ampol pay the Lawsons the sum of $40,000 plus costs to

be assessed or taxed."

29. Ampol has strongly challenged this finding. First, it has argued that, on the pleadings, his Honour's assessment of a global figure for "the loss of a chance" was not open to him. But its principal argument was that the Lawsons had not, as a matter of fact, suffered any loss and that they were not entitled to any damages. The pleadings and the arguments have a confused history; it would seem that the Lawsons commenced their action in the belief that Ampol's contravention of the Act entitled them to avoid their contract of assignment with Mr Beames yet claim from Ampol the return of the moneys that had been paid by them to Mr Beames. Such a proposition is, of course, preposterous. The plain language of subss22(1) and (2) makes it clear that the statutory rights to compensation or damages flow from "a franchise agreement". Such an agreement may be the original three-year term or one or other of the two renewals, but it does not extend to a contract of assignment to which the petroleum corporation is not a party.

30. This confusion added unnecessarily to the difficulties that confronted the learned trial judge. He correctly rejected any proposition suggestive of an avoidance of any contract but, nevertheless, fell into error in attaching weight to the possibility that Ampol might have granted to the Lawsons an entirely new franchise in 1991, thereby creating, prospectively, a fresh nine year franchise. As to this his Honour said:

"There are of course other aspects of damages, such as

income foregone through remaining with the franchise for the

two year period rather than pursuing other income-earning

activities. However, this was not quantified and the

significant damages appear to be encompassed in the

difference between the price the Lawsons could have obtained

in selling the goodwill for the nine year period and the

price that they would have paid Ampol to obtain the extra

term less something for the possibility that Ampol would not

have granted the term."

31. However, as has already been pointed out, the Lawsons were given the opportunity in March 1989 (some six or seven months before they found out about the problem concerning the front boundary) to negotiate with Ampol for a new franchise. They failed to respond to Ampol's offer and that failure showed quite clearly that they were not then interested in a fresh franchise.

32. This was not, therefore, a case that justified an award of damages for the loss of a chance. As the learned trial judge has adopted an erroneous approach to the subject of damages, this Court is entitled to interfere: Introvigne v Commonwealth of Australia and Others [1980] FCA 107; (1980) 32 ALR 251 at 277-278. It is not enough for the Lawsons merely to show wrongful conduct on the part of Ampol; it is essential that they satisfy the Court that loss or damage has occurred: Enzed Holdings Ltd and Others v Wynthea Pty Ltd and Others [1984] FCA 373; (1984-1985) 57 ALR 167 at 183. They have failed to do this. The appeal should be allowed; the judgment in the court below should be set aside and in lieu thereof there should be judgment for the appellant, Ampol Ltd.

33. The appeal was conducted on the twin issues of liability and damages. Ampol, although ultimately the successful party, failed in its attempt to upset the finding of the learned trial judge that it had been guilty of a contravention of the Act. In those circumstances, but without interfering with the order for costs that was made by this court in Ampol's favour on 3 June 1993, it would be appropriate to order that each party pay its and their own costs on the appeal and in the court below.

WHITLAM J I also agree with the reasons for judgment of O'Loughlin J and with the orders proposed by his Honour.

2. Fatally for the Lawsons, as Davies J emphasizes, there was no evidence of "loss or damage" within the meaning of s 22(1) of the Petroleum Retail Marketing Franchise Act 1980. So far as s 22(2) is concerned, I do not think it is necessary to determine whether s 15(6)(b) was satisfied. Let it be assumed that the renewed agreement was voidable under s 15(5) at the instance of the Lawsons, they plainly did not avoid it for the reasons explained by both Davies J and O'Loughlin J. By December 1989 the Lawsons were confronted with the necessity of making a choice of the kind described in the joint judgment of Deane, Toohey, Gaudron and McHugh JJ in Immer (No. 145) Pty Ltd v. Uniting Church in Australia Property Trust (NSW) [1993] HCA 27; (1993) 67 ALJR 537 at 543-546. They must be held to have elected to abandon any right to avoid the agreement.