Supreme Court of the NT|1990-09-06|Before: Angel J

Calaby Pty Ltd v Ampol Pty Ltd [1990] NTSC 28; 71 NTR 1; 102 FLR 186 (6 September 1990)

COURT IN THE SUPREME COURT OF THE NORTHERN TERRITORY OF AUSTRALIA Angel J.(1) CWDS Assignment - Equitable assignment - Assignment of bilateral executory contract for consideration - whether effective - whether benefit and burden pass to assignee Contract - Mutual Mistake of Law as to character - not operative mistake Contract - Whether privity between equitable assignee and other contracting party Contract - equitable assignment thereof - Whether burden and benefit passes Contract - Benefit and Burden - Existence of principle Estoppel - Legal and equitable estoppel - Whether legal estoppel - No unequivocal misrepresentation of fact - No reliance

Whether equitable estoppel - Mistake of law as to character of contract - No reliance to knowledge of party sought to be estopped Statutory Interpretation - 'Franchise agreement' - 'Party to' Trade and Commerce - Petroleum Retail Marketing Franchise Act - Whether a franchise agreement entered into by way of renewal - Whether equitable assignee of franchise agreement 'a party to' a franchise agreement for purposes of Act - Petroleum Retail Marketing Franchise Act 1980 (Cth.) ss.3(1), (4), (8), (9), s.(1), s.(1), s., s., 17A, s.17B(4). Words and Phrases - 'Renewal' - 'Entered into by way of reneand' - Meaning Cases followed: Austotel Pty Ltd v Franklins Selfserve Pty Ltd Chronopoulos v Caltex Oil Australia Pty Ltd ; Curtis v Perth and Fremantle Bottle Exchange Co Ltd ; Esso Australia Pty Ltd v RT and MI Abela Pty Ltd ; Life Insurance Co of Australia Ltd v Phillips ; Moore v Collins ; Progressive Mailing House Pty Ltd v Tabali Pty Ltd ; Quadramain Pty Ltd v Sevastapol Investments Pty Ltd ; Richards v Golden Fleece Silovi Pty Ltd v Barbaro Cases discussed: GIO (NSW) v K.A. Reed ; Harry v Fidelity Nominees Pty Ltd Hume v Monro (No. 2) ; Nokes v Doncaster Amalgamated Collieries, Ltd Peacocke Land Company Ltd v Hamilton Milk Producers Co Ltd Performing Right Society Ltd v London Theatre of Varieties Ltd Tito v Waddell (No. 2) (1977) Ch 106 Tolhurst v Associated Portland Cement Manufacturers (1900) Ltd ; Warner Bros Records Inc v Rollgreen Ltd William Brandt's Sons and Co v Dunlop Rubber Co, Ltd Williams v Bosanquet (1819) 1 Brod and Bing 238; , Cases referred to: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd ; Arkansas Valley Smelting Co v Beldon Min Co ; Bell Bros Pty Ltd and Stewart v Sarich Bromley Park Garden Estates Ltd v Moss British Waggon Company v Lea Brooks v Burns Philp Trustee Co Ltd ; Bruce v Tyley ; Carter v Hyde ; Chan v Cresdon Pty Ltd ; Clem Smith Nominees Pty Ltd v Farrelly Coles KMA Ltd v Sword Nominees Pty Ltd Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd Halsall v Brizell Manks v Whiteley ; affd Marcovitch v Liverpool Victorian Friendly Society National Mutual Life Nominees Ltd v National Capital Development Commission Norman v Federal Commissioner of Taxation ; Olsson v Dyson ; Outer Suburban Property Ltd v Clarke ; Pordage v Cole (1607) 1 Wms Saund 319; Queensland Co-Operative Milling Association v Pamag Pty Ltd ; R v Crewkerne Licensing Justices Radaich v Smith ; Re Ward: Ex parte Official Trustee in Bankruptcy v Dabnas Pty Ltd ; Robbins v Federal Commissioner of Taxation (1972-73) 129 CLR 332 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd ; Shaw v Jeffrey ; (15 ER 162) Shepherd v Federal Commissioner of Taxation ; Trident Government Insurance Co Ltd v McNiece Bros Pty Ltd ; Tulk v Moxhay (1848) 2 Ph 774 Waltons Stores (Interstate) Ltd v Maher ; Walsh v Lonsdale HRNG DARWIN #DATE 6:9:1990 Counsel for the Plaintiff: P. Bracher Solicitor for the Plaintiff: Cridlands Counsel for the Defendant: A. Wyvill Solicitor for the Defendant: Mildrens ORDER The plaintiff is entitled to judgment. JUDGE1 This case involves questions as to the construction and operation of the (1980) (Cth) ("the Act") and the meaning and effect of 3 agreements in writing executed by the parties on 1 August 1987.

Agreement." Clause 14 of the Trade Mark Licence Agreement provides: "Subject to the parties rights at law it is hereby agreed that the User is not entitled or permitted to assign or novate any of the rights created hereunder except with Ampol's consent (such consent not to be unreasonably withheld)." Clause 2 of the Service Station Franchise Licence Agreement provides: "NO LEASE IMPLIED The rights hereby granted shall be by way of licence only and the Licensee shall not be entitled to exclusive possession of the said lands or the licensed buildings and facilities or any part thereof during the continuance of this Agreement which shall not be construed as a lease nor confer any tenancy whatsoever 5. The three 1987 agreements, notwithstanding the clauses that I have mentioned, comprise one transaction; they are to be read together and in light of each other in order to ascertain their true character; Manks v Whiteley (1912) 1 Ch 735 at 754; affd (1914) AC 132; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973-74) 7 SASR 268; (1975) AC 561. The principle to be applied is that referred to by Knight Bruce L.J. when delivering the judgment of the Privy Council in Shaw v Jeffrey [1860] EngR 888; (1860) 13 Moo P C 432 at 456, 457 (15 ER 162 at 171): "... when the same parties execute contemporaneously several instruments relating to different parts of the same transaction, all must be considered together; all must be examined in order to understand each; apparent inconsistencies are to be reconciled; and where there are real inconsistencies, the governing intention of the parties is still to be collected from a consideration of the language of all the instruments, and effect given to it." 6. The three agreements are integral parts of one transaction whereby the plaintiff was to conduct a service station business upon land owned by the defendant, reselling the defendant's petroleum products under the defendant's trade mark. Section 3(8) of the Act also requires the agreements to be read together. 7. The three agreements were conceded by the parties to constitute a "Franchise Agreement" for the purposes of the Act; the plaintiff as a party to those agreements was conceded to be "a franchisee" for the purposes of the Act and the defendant as a party to those agreements was conceded to be "a franchisor" for the purposes of the Act. I shall return to these concessions. The agreements expressly refer to the Act, see eg clauses 7 and 19 of the Franchise Supply Agreement. 8. The question was said by the parties to be, not whether the Act applies but how it applies. The question was said to be how the 1987 agreements are to be characterised for the purposes of the Act. The plaintiff says the agreements constitute an original or fresh or new Franchise Agreement to which certain statutory rights of renewal under the Act attach, because no prior legal relationship existed between the plaintiff and the defendant. The defendant, on the other hand, says the agreements are to be regarded as having been entered into by way of renewal. It was necessary, it was said, to explore a series of arrangements involving the plaintiff's predecessors extending back to some time in 1981 in order to reach this conclusion. 9. I say at once that the character of the 1987 agreements, that is as to whether they are original agreements or renewals for the purposes of the Act, is not apparent from the terms of the agreements themselves. They are agreements in writing and not merely written evidence of agreements; Outer Suburban Property Ltd v Clarke [1933] SAStRp 23; (1933) SASR 221 at 226. It was somewhat weakly submitted that resort might be had to certain directions contained on the printed form. Clause 2 of the Franchise Supply Agreement provides: "This Agreement shall be for a period of: Three (3) years *(a) Commencing on 1st August 1987 and expiring on *(b) 31 July 1990 *(c) * (Whichever is, in the circumstances, applicable -viz) (a) where there is a renewal of an existing agreement or the Purchaser is a "person with prescribed experience"

3 years; (b) where Ampol itself leases/licences site and remaining term of lease/licence to it is less than three (3) years; period to be inserted is remaining period of lease/licence or where it is a renewal of existing agreement and original term together with terms of previous renewals amount to at least six (6) years and less than nine (9) years - then period to be inserted is such period as will, together with all previous periods, total nine (9) years. (c) Where Purchaser is not a person with prescribed experience and agreement is not being

Even if one may have resort to directions contained in an instrument which of themselves do not form part of the agreement in order to ascertain the intention of the parties, at best direction (a) is ambiguous because of the disjunctive. I am not assisted in this regard by those directions even if it is proper to have resort to them.
As I have said, it is not apparent from the terms of the 1987 agreements themselves as to whether they are to be characterised as original or renewals for the purposes of the Act. Ex facie, they are self-contained agreements to which s.17 and s.17A of the Act apply. Prima facie the plaintiff is entitled to two 3 year statutory renewal terms, but that is not an end to the question. As is evident from s.17B(4) of the Act and the decision in Esso (Australia) Pty Ltd v RT and MI Abela Pty Ltd [1989] FCA 523; (1989) 91 ALR 476, I am bound to look outside the four walls of the agreements to the statutory milieu within which the agreements operate, that is, to the Act, and to the background to the agreements, not as an aid to their interpretation, but rather to ascertain whether there existed some prior relationship between the plaintiff and the defendant.
I say some prior relationship because it is at this point one arrives at the nub of this part of the case. That, generally speaking, there was a relationship between the plaintiff and the defendant before execution of the 1987 agreements is not in dispute. What is in dispute is not only the nature and effect of that relationship, but whether that relationship, in combination with the provisions of the Act, necessarily characterises the 1987 agreements as having been entered into by way of renewal. The latter matter is a question of statutory interpretation and before proceeding to what occurred during the period from mid-1984 to the time the 1987 agreements were executed, I turn to the Act.

The word "renewal" and the expression "entered into by way of renewal" are not defined by the Act. Some guidance is given by s.3(4) of the Act. There is no reason to suppose the word 'renewal' bears a meaning other than its ordinary meaning, save that it need not occur at the time of expiry of its predecessor; Esso v Abela, supra; cf R v Crewkerne Licensing Justices (1888) 21 QBD 85 at 87 per Lindley L.J. 14. Section 3(1) of the Act provides, inter alia, "In this Act, unless the contrary intention appears

"agreement" means any agreement, arrangement or

understanding - (a) whether formal or informal or partly formal and partly informal; (b) whether written or oral or partly written and partly oral; and (c) whether or not having legal or equitable force and whether or not based on legal or equitable rights; ... ... "franchise agreement" means an agreement (other than an agreement between bodies corporate that are related to each other) containing - (a) 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; (b) 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; (c) 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; ... "franchisee" means a party to a franchise agreement, being the person referred to as the franchisee in paragraph (a) or (b) or sub-paragraph

(c)(i) or (ii), as the case may be, of the definition of "franchise agreement"; "franchisor" means a party to a franchise agreement, being the corporation referred to as the franchisor in paragraph (a) or (b) or sub-paragraph (c)(i) or (ii), as the case may be, of the definition of "franchise agreement"; ..." 15. Section 3(4) of the Act provides: "For the purposes of this Act, where, at the expiration of a franchise agreement, the franchisee and the franchisor or, in circumstances described in sub-section 17B(2), another franchisor, enter into a new franchise agreement concerning the same subject matter, the new agreement shall be taken to be a renewal of the earlier agreement notwithstanding that the provisions of the new agreement may differ from those of the earlier agreement." 16. For decision, inter alia, is whether the plaintiff, before it executed the 1987 agreements, was a party to a franchise agreement, and as will appear, inter alia, whether it was a party to a franchise agreement between Mr and Mrs Kumnick, who are its present directors and shareholders, and the defendant. 17. I turn to what occurred between August 1984 and the execution of the 1987 agreements. On 1 August 1984, Mr and Mrs Kumnick and the defendant executed three agreements in writing respectively called: Franchise Supply Agreement, Service Station Franchise Licence Agreement and Trade Mark Licence Agreement. They are in similar terms to the 1987 agreements and appear to be the same standard forms used by the defendant. Each is for a term of 3 years commencing on 1 August 1984 and expiring on 31 July 1987. They contain provisions in the same terms I have previously set out for the 1987 agreements, and like the 1987 agreements they contain no express holding-over provisions. Both parties were agreed that these agreements constituted a franchise agreement between the Kumnicks and the defendant for the purposes of the Act. 18. As to clause 2 of the Service Station Franchise Licence agreement ("licence not lease"), counsel for the plaintiff did not submit that notwithstanding that provision, the agreement nevertheless comprised a lease rather than a licence. It was submitted that nothing turned on the distinction in the present case. Of course, one cannot put a label on a contract. Parties cannot, in the words of Isaacs J. in Curtis v Perth and Fremantle Bottle Exchange Co Ltd [1914] HCA 21; (1914) 18 CLR 17 at 25, "by a mere consensual label alter the inherent character of the relations they have actually called into existence." cf. Radaich v Smith [1959] HCA 45; (1959-60) 101 CLR 209. There have been many cases where the substance of the arrangement has been looked at to ascertain whether in the face of the express terms of a so-called licence, it is nonetheless in fact and as a matter of substance, a lease or agreement for lease; see the cases discussed by Butt at (1989) 63 ALJ 494. Having expressly been asked by counsel to accept the agreement as a licence and not as a lease or an agreement for lease, I do not propose to pursue the matter further, other than to say that, as a consequence, no question of privity of estate arises, and the rule in Tulk v Moxhay (1848) 2 Ph 774 (41 ER 1143) (see generally Clem Smith Nominees Pty Ltd v Farrelly (1979) 20 SASR 227 at 232, 238) and the rule in Walsh v Lonsdale (1882) 21 Ch D 9 (see Chronopoulos v Caltex Oil (Australia) Pty Ltd [1982] FCA 272; (1982) 45 ALR 481 at 489; Chan v Cresdon Pty Ltd [1989] HCA 63; (1989) 89 ALR 522) have no relevance. There is no suggestion that the Trade Mark Agreement was registered. 19. From 1 August 1984 until 30 June 1986, Mr and Mrs Kumnick ran the service station as a partnership pursuant to the terms of the 1984 agreements. On the advice of their accountant, the Kumnicks decided to have a company operate the service station. Arrangements were duly made; the plaintiff, then a "shelf" company was acquired, and the partnership business undertaking in respect of the service station was sold to the plaintiff as a going concern. Mr and Mrs Kumnick were the sole shareholders and directors of the plaintiff and the purchase price for the business was raised by way of shareholders' loan accounts. From 1 July 1986, the company operated the service station. The arrangements between the Kumnicks and the company are recorded in the minutes of directors' meeting dated 1 July 1986, signed by Mr Kumnick as chairman of directors of the plaintiff. The minutes state: "IT WAS RESOLVED the the company purchase the assets (with the exception of the Ford GT) and liabilities of the partnership of C.R. and L. KUMNICK Trading as AMPOL STUART PARK SERVICE STATION, the consideration being the value of the balance of the partners capital accounts as shown on the balance sheet of the partnership as at the 30th June 1986 plus an additional amount of $99,000.00 being GOODWILL. The Goodwill being determined as 25% of gross takings of the Car Wash and 22% (the average gross profit margin for the past 5 years) of the remainder of gross turnover for the year 1985/86 of AMPOL STUART PARK SERVICE STATION. The consideration is to be recorded as a libility (sic) of the company, and shown as unsecured loans from the Directors." 20. In the initial stages of the company's operations all of this was unknown to the defendant. The defendant supplied petroleum products to the service station site and they were resold by the plaintiff. The defendant continued to send invoices in respect of such supplies to the partnership. Since 30 June 1986, all invoices were paid by the plaintiff company. Some time in July 1986, Mr Kumnick had a conversation with a senior executive of the defendant, one Arthur, informing him of the arrangements. Mr Arthur did not object and the arrangement thereafter continued in the manner I have already described. 21. By a letter dated 27 May 1987, the defendant wrote to Mr and Mrs Kumnick in the following terms: "Re: Service Station Franchise Licence Agreement, Franchise Supply Agreement and Trade Mark Licence Agreement Dated First day of August 1984 - Ampol Stuart Park Service Station. Ampol Limited ("Ampol") by this notice given pursuant to section 17A(1) of the Petroleum Retail Marketing Franchise Act 1980 (as amended) hereby offers to renew the abovementioned agreements on their day of expiry. Ampol proposes, in good faith and in the normal course of business, that the agreements, as proposed to be renewed, contain the following provisions which differ from your present agreements:-

period of renewal to 18 September 1989
rental for period 1 August 1987 to 31 July 1988 of $960 per month. If you wish to accept Ampol's offer of renewal as referred to herein you must do so in writing within 30 days of the date of service of this notice." The letter was signed by the defendant's sales manager, the witness Thompson, who was in charge of the defendant's operations in the Northern Territory.

The plaintiff replied to this letter by letter dated 14 June 1987. It was signed by the Kumnicks as directors of the plaintiff. The full text of that letter is as follows: "We take this opportunity to accept Ampol's offer to renew the lease on the service station as laid out in your letter dated 27 May 1987."
Subsequent to the receipt of the plaintiff's letter of 14 June 1987, Mr Thompson had a conversation with Mr Kumnick about the plaintiff. The gist of the conversation, as can best be ascertained from the evidence of Mr Thompson and Mr Kumnick, was as to the role of the plaintiff in the running of the service station. Thompson enquired as to "who Calaby was". Kumnick informed him it was the company now running the service station, a company formed by himself and his wife on 1 July 1986. Mr Thompson reproached Mr Kumnick for not informing him earlier. Mr Kumnick's evidence-in-chief was that, "I think I told him that I told Mr Arthur, I'm not sure." In cross-examination on this point Mr Kumnick said, "I'm not sure if I named Mr Arthur, but recall saying that I had notified Ampol verbally."
Mr Thompson denied that Mr Kumnick had mentioned to him that he (Mr Kumnick) had informed anybody or Ampol of the existence of Calaby.
In this conversation, Mr Kumnick enquired as to why the renewal period mentioned in the defendant's letter was for a period of 2 years and not 3 years. Thompson made enquiries within the defendant's Adelaide office and subsequently phoned Kumnick and said the defendant would renew for 3 years.
Thompson had the 1987 agreements prepared in the name of the plaintiff and took them to Darwin. They were prepared with a 2 year term and Mr Kumnick drew this to Mr Thompson's attention. The term was changed to 3 years and the agreements were executed by the Kumnicks on behalf of the plaintiff. Thompson returned to Adelaide where the agreements were executed by the defendant.
Evidence was also given by Mr Thompson and Mr Kumnick as to conversations in which the renewal of the 1987 agreements was discussed. Mr Kumnick said that these conversations occurred after "the last lease agreement was signed". At this stage Mr Kumnick was thinking of selling the franchise agreement. Mr Kumnick said in his evidence that he asked Mr Thompson if there was ever going to be a problem in renewing the lease to the plaintiff. He says that he was always told "that there was no worries". Mr Kumnick had attempted to get something in writing from the defendant with regard to a further renewal of the 1987 agreement to help him attract a buyer. However Mr Thompson had always refused, saying it was against company policy.
Mr Thompson in his evidence said that this conversation occurred prior to the signing of the 1987 agreements. He did however admit to having a further conversation at a much later date along the same lines. He recalled that Mr Kumnick was concerned about his ability to offer for sale a business that was likely to be able to be carried on after the expiration of the current leases. He also recalled Mr Kumnick seeking something in writing to assure a potential customer. He recalled responding that this was not the company policy. However he stated he could not recall giving to Mr Kumnick an indication that in the ordinary course there would be no difficulties in the agreements being renewed. It remains uncertain as to whether such a conversation took place before the 1987 agreements were executed.

an assignment, to offer to surrender the whole or part of that interest to the franchisor. (3) Where a provision of a franchise agreement has the effect of prohibiting the franchisee from assigning the whole or part of his interest under the agreement without the consent of the franchisor, the franchisor shall not unreasonably withhold its consent and, where its consent is unreasonably withheld, it shall be deemed to have granted its consent. (4) Where a franchisor withholds consent to an assignment of the whole or part of the interest of the franchisee under a franchise agreement (being an agreement containing a provision referred to in sub-section (3)) and the proposed assignee is a person who is none of the following: (a) a person with prescribed experience; (b) a member of the franchisee's immediate family; (c) a company controlled by the franchisee, then, for the purposes of sub-section (3), the consent of the franchisor shall be deemed to be reasonably withheld. (5) Where a franchisee proposes to make an assignment of the whole of his interest under a franchise agreement (being an agreement containing a provision referred to in sub-section (3)) to a person who is neither a member of the franchisee's immediate family nor a company controlled by the franchisee, (in this sub-section and sub-section (5A) referred to as the proposed assignment), he shall serve on the franchisor a notice in writing setting out particulars of the proposed assignment and offering to do whichever of the following acts is required by the franchisor to be done, namely - (a) to terminate the franchise agreement for an amount of consideration equal to the consideration for the proposed assignment; or (b) to assign the whole of that interest to such person as the franchisor may nominate, on terms not less favourable to the person nominated than the terms of the proposed assignment. (5A) Within 30 days after the service on a franchisor of a notice under sub-section (5), the franchisor shall serve on the franchisee a notice in writing - (a) granting or withholding consent to the proposed assignment; (b) rejecting the offers made in the first-mentioned notice; (c) accepting the offer to terminate the franchise agreement; or

(d) nominating a person to whom the franchisee may assign his interest in the agreement, and if, at the expiration of that period of 30 days, the franchisor has not served such a notice, the franchisor shall be taken to grant consent to the proposed assignment. (6) Where, without the consent of the franchisor, a franchisee in relation to a franchise agreement (being an agreement containing a provision referred to in sub-section (3))- (a) makes an assignment of the whole of his interest under the agreement without first having served on the franchisor a notice under sub-section (5); or (b) after having served on the franchisor such a notice, makes an assignment of the whole of his interest under the agreement to a person other than a person nominated by the franchisor in accordance with sub-section (5A), consent of the franchisor shall be deemed to have been reasonably withheld. (7) For the purposes of sub-section (3), where a franchisor requires payment or other consideration for its consent to an assignment (other than payment of reasonable administrative and legal costs incurred in the giving of consent), the consent shall be deemed to be unreasonably withheld. (8) Nothing in this section shall be taken to limit the grounds upon which consent to an assignment may be reasonably withheld. (9) When a franchisee duly assigns the whole or part of his interest under a franchise agreement (whether or not the agreement contains a provision referred to in sub-section (3)), the agreement has effect, by force of this sub-section, as if the

franchisor, the franchisee and the assignee had agreed - (a) in the case of an assignment of the whole of that interest

to the immediate assignment to the assignee of all obligations imposed on the franchisee by the provisions of the agreement, other than obligations transferred by the assignment of that interest; or (b) in the case of an assignment of part of that interest - to the franchisee and the assignee immediately becoming jointly and severally bound by all those obligations, other than obligations transferred by the assignment of that interest. (10) Where - (a) a franchisee duly assigns to a person (in this sub-section referred to as the "assignee") the whole or part of his interest under a franchise agreement that is one of 2 or more related agreements (whether or not the franchise agreement contains a provision referred to in sub-section (3)); and (b) at or after the time when the assignment is made, the person who is the franchisee in relation to a related agreement (in this sub-section referred to as the "assignor") duly assigns the whole or part of his interest under that related agreement to the assignee, that related agreement has effect, by force of this sub-section, as if the corporation that is the franchisor in relation to that related agreement, the assignor and the assignee had agreed - (c) in the case of an assignment of the whole of the interest under that related agreement - to the immediate assignment to the assignee of all the obligations imposed on the assignor by the provisions of that related agreement; or (d) in the case of an assignment of part of the interest under that related agreement - to the assignor and the assignee immediately becoming jointly and severally bound by all those obligations. (11) Where, but for this sub-section, the whole or part of the interest of the franchisee under a franchise agreement would not be capable of assignment by reason of the agreement being a contract of a personal nature, the agreement has effect, by force of this sub-section, as if the franchisor had agreed, at all relevant times, that that interest, or that part of that interest, as the case may be, was capable of assignment. (12) Where an assignment of obligations under a

franchise agreement occurs by virtue of paragraph (9)(a) or (10)(c), then, for the purposes of sections 13, 15, 17, 17A and 17B, the franchise agreement as subsisting after the assignment shall not be taken, by reason of the assignment, to be a new agreement. (13) A reference in this section to obligations, in relation to the assignment of an interest under an agreement, does not include a reference to an obligation the time for the performance of which has arisen before the time when the assignment is made. (14) Nothing in this section shall be taken to affect the right of a franchisee - (a) to assign his interest under the franchise agreement by way of mortgage or charge; or (b) to grant, confer or sublet a lesser interest derived from his interest under the franchise agreement, or to affect the operation of a provision of the agreement of a kind referred to in sub-section (2) to the extent that it relates to such an assignment or grant." 32. In order to consider these submissions and before reaching a conclusion as to whether an equitable assignment occurred, it is desirable to discuss certain principles that are not always clearly stated in the authorities and in the books. I must say that I approach this discussion with some trepidation, not the least diminished by the following statement of Corbin in Cases On Contracts, (3rd ed), West Publishing Co, 1947 at 1117: "Very often neither the contracting parties nor the courts make a clear distinction between performance of a legal duty by a promisor and performance of a condition of the legal duty of another party. They may not even distinguish clearly between a contractor's Rights to performance by the other party and the Duties and Conditions to be performed by himself. In many cases a contractor makes an assignment of "the contract," perhaps intending thereby that the assignee shall not only have the right to payment, but also that the assignee shall in the assignor's place render the performances that were expected of the latter. Courts and writers will be found saying that "the contract" can or can not be assigned. Also, they sometimes have said that "Rights arising out of a contract can not be assigned if they are coupled with liabilities," seeming to indicate that no assignment can be effective as long as a contract is bilateral in its obligation. In some cases such statements lead to a bad decision; in other cases they merely constitute a confusing reason for a good decision." 33. One cannot help thinking that confusion has arisen by reason of a failure to appreciate a number of distinctions. Text books in dealing with assignments, commonly deal separately with the assignment of "the benefit" of contracts and the assignment of "the burden" of contracts. As Corbin has pointed out, it is sometimes said that rights arising out of a contract cannot be assigned if they are coupled with liabilities, see eg Pollock On Contracts, (4th ed), Stevens and Sons, 1885, at 425, referred to with approval in Arkansas Valley Smelting Co v Beldon Min Co [1888] USSC 175; (1888) 127 US 379. Modern Australian text books, eg. Greig and Davis, The Law of Contract, Law Book Company, 1987, at 1022; Lindgren Carter and Harland Contract Law in Australia, Butterworths, 1986 at (933); Cheshire and Fifoot, Law of Contract, (5th Aust ed), Butterworths, 1988 at (1750); Meagher Gummow and Lehane, Equity Doctrines and Remedies, (2nd ed), Butterworths, 1984 at (691), all say that the burden of a contract cannot be assigned, citing or referring to the following words of Sir Richard Henn Collins M.R. in Tolhurst v Associated Portland Cement Manufacturers (1900) Ltd (1902) 2 KB 660 at 668: "It is, I think, quite clear that neither at law nor in equity could the burden of a contract be shifted off the shoulders of a contractor on to those of another without the consent of the contractee. A debtor cannot relieve himself of his liability to his creditor by assigning the burden of the obligation to someone else; this can only be brought about by the consent of all three, and involves the release of the original debtor." But in my respectful view that is an incomplete statement of the law and apt to mislead if a distinction is not drawn between the assignment or purported assignment of an accrued contractual right, the assignment or purported assignment of an accrued contractual obligation, and the assignment or purported assignment of an executory bilateral contract. An executory bilateral contract is a bundle of rights and obligations and it is inappropriate, at least where those rights and obligations are mutually dependent, to separately speak of the assignment of rights and obligations. One is dealing in this context, and I am dealing in the present case, with a question of assignment of the 1984 agreements in so far as they remain executory. The distinction I have mentioned is referred to in Salmond and Williams On Contracts, Sweet and Maxwell, 1945 at 448, 449. 34. It seems to me that other matters have been confused in the submissions of the parties. Ordinarily when one is speaking of an assignment, or as to whether an executory bilateral contract or an accrued right or an accrued obligation thereunder is assignable, one is speaking of the ability of a party to that contract to unilaterally transfer the subject matter of the assignment without the consent of the other contracting party to a third party. Assignments were unknown at common law. Assignments were recognised in equity, and in equity, any informality would suffice, as Lord Macnaghten made plain in his well known speech in William Brandt's Sons and Co v Dunlop Rubber Co, Ltd (1905) AC 454 at 462. 35. Given an assignable subject matter, in order to effect an assignment in equity, even notice to the other contracting party is not required, let alone his consent. Notice, of course, affects priorities and for that reason notice is wise, but it is not essential; see generally Snell's Principles of Equity, (28th ed), Sweet and Maxwell, 1982 at 80, 81. All this of course assumes an ability to assign. Here we have contracts with assignment clauses whereby it may be implied that when the Kumnicks are referred to there may be added the words "and their permitted assigns". As the New Zealand Court of Appeal said in Peacocke Land Company Ltd v Hamilton Milk Producers Co Ltd (1963) NZLR 576 at 581: "A contract which is assignable only by consent is not (unless there is some provision against the unreasonable withholding of consent), in strict language, assignable at all ..." 36. In the context of the assignment of an executory bilateral contract, the statement of Lord Collins, to which I have referred above, in my respectful view, simply has no application. That this is so is apparent, I think, from the way the House of Lords dealt with the case on appeal, see (1903) AC 414. The House of Lords decision is a significant one. Although referred to in a number of High Court of Australia decisions, viz Bruce v Tyley [1916] HCA 34; (1915-16) 21 CLR 277; Carter v Hyde [1923] HCA 36; (1922-23) 33 CLR 115, Hume v Monro (No. 2) [1943] HCA 7; (1943) 67 CLR 461; Shepherd v Federal Commissioner of Taxation [1965] HCA 70; (1964-65) 113 CLR 385; Queensland Co-Operative Milling Association v Pamag Pty Ltd [1973] HCA 24; (1974-75) 133 CLR 260; Robbins v Federal Commissioner of Taxation (1972-73) 129 CLR 332, it has, so far as I have been able to discover, never received a detailed analysis, or at least any analysis binding on me. 37. Tolhurst is significant because the assignor, the Imperial Company, was treated as having ceased to exist, and remedies were nevertheless granted between Tolhurst and the Imperial Company's equitable assignee, the Associated company. 38. It was not a case of novation, that is, the substitution of an old contract by a new, nor was it a case of delegated performance, and indeed Lord Lindley's reference to the British Waggon Company v Lea (1879-80) 5 QBD 149, a case of vicarious performance, was unequivocally said by Viscount Simon L.C. in Nokes v Doncaster Amalgamated Collieries, Ltd. (1940) AC 1014 at 1020, to be not very much in point. Viscount Simon L.C. said in the latter case, that Lord Macnaghten in Tolhurst, supra, having construed the agreement as one between the named parties and their respective assigns (notwithstanding that assigns were not mentioned in the document), the validity of the transfer of "the benefit of" the contract from the original company to the new company became unchallengeable and that, as Lord Macnaghten insisted, once the true interpretation of the contract was settled, there was no other legal point to the case at all. 39. But, with respect, even this analysis is not completely satisfying. If "the benefit" of the contract alone was transferred to the Associated company, does it not follow that Tolhurst was contractually bound to supply chalk to the Associated company, but neither the Associated company nor anybody else was bound as a matter of contract to pay for it? Such a conclusion, I venture to suggest, is unknown to our jurisprudence. Under the original contract between the Imperial Company and Tolhurst, the obligation to supply chalk on the one hand and the obligation to pay for it on the other were interdependent obligations. They were "coupled", to use Pollock's expression previously referred to. Does this mean that principles of severance need to be resorted to? Does Pordage v Cole (1607) 1 Wms. Saund 319; (85 ER 449) (cf. Brooks v Burns Philp Trustee Co Ltd [1969] HCA 4; (1968-69) 121 CLR 432 at 443) need to enjoy a renewed vigour? 40. I think not. If obligations are unassignable and benefits coupled with obligations are unassignable as has been suggested, Tolhurst would have succeeded. The Imperial Company, the assignor, had ceased to exist. It was, in the words of Lord Macnaghten, "a mere name". Thus no contract was or could be on foot between Tolhurst and the Imperial Company. In my respectful view, the only explanation and the true explanation is that the Associated Company inherited the executory contract, that is, the whole bundle of rights and obligations, so as to become a party to it; that is, not only did the original contract remain on foot after the Imperial Company evaporated, but it extended to the Associated company, such extension being accomplished by virtue of the original contract being assignable in its terms, and an effective assignment in equity having occurred. In the words of Lord Lindley in Tolhurst, at 423: "The nature of the agreement and the time it was to last negative the idea that it was confined to the parties to it." That this is so and that there is a bilateral relationship between an equitable assignee and the other contracting party is recognised, I think, by Williams J. in Hume v Monro (No. 2), supra, when he said at 482: "It is no doubt the general rule that the assignor should be made a party to the suit, but it is clear that, where the assignor being a company has been dissolved, the court of equity can in a proper case specifically enforce a contract in its absence." and at 483: "If, therefore, the defendant company as the assignee of the contract with the second company brought a suit for specific performance against Hume, he would thereby become entitled to have the contract specifically enforced against the defendant company ..." 41. In the words of Sir Frederick Pollock in Pollock On Contracts (12th ed), Stevens and Sons, 1946 at 171, f.n. 173, the House of Lords decision in Tolhurst rested "only on the ground that the original contract was still in force and extended to assigns." This conclusion is analogous to a nominee contract construed in the fashion postulated by King C.J. in Harry v Fidelity Nominees Pty Ltd (1985-86) 41 SASR 458 at 460, and is supported by Williams v Bosanquet (1819) 1 Brod and Bing 238 at 263 [1819] EngR 467; (129 ER 714 at 723): "... and, even as to privity of contract, there is such privity also, for the contract of the lessor is with the lessee and his assigns, and the Defendants here are the assigns of the lessee ..." The latter statement is all the more significant for being made in contradistinction to privity of estate and at a time before the statutory provisions regarding assignments, that is, at a time when assignments were only recognised in equity. 42. Whatever qualification needs to be introduced to Lord Macnaghten's analysis in Brandt's as to the effect of the statutory provisions (here, s.70 of the Supreme Court Act) in the context of voluntary assignments (see per Windeyer J. in Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963-64) 109 CLR 9 at 28, 29), it still holds good, where, as here, consideration was given for the assignment: cf. Olsson v Dyson [1969] HCA 3; (1969-70) 120 CLR 365 at 386, per Windeyer J. 43. It appears then, that as a matter of principle, and binding authority to the contrary apart, an executory bilateral contract in its terms and by its nature assignable once equitably assigned for value, is enforceable between the assignee and the other contracting party, provided the performance of the obligations of the other contracting party is not rendered more onerous. This conclusion is not inconsistent with the related but different case of a contract between A and B for the benefit of C, such as Trident Government Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107, which has been said by Professor Finn to have dealt a mortal blow to the whole doctrine of privity: PD Finn "Commerce, The Common Law and Morality",(1989) [1989] MelbULawRw 5; 17 MULR 87 at 88. 44. If my conclusion be correct, before enquiring as to whether there is binding authority obliging me to hold otherwise, there are other areas of the law that require consideration. 45. In Warner Bros Records Inc v Rollgreen Ltd (1976) 1 QB 430, it was held that an equitable assignee of a debt had to give written notice to the debtor in order "to perfect" the title of the assignee, see per Lord Denning at 442, but compare the decision of Burt J. in Bell Bros Pty Ltd and Stewart v Sarich (1971) WAR 157, and the decision of Blackburn J. in National Mutual Life Nominees Ltd v National Capital Development Commission (1974-75) 6 ACTR 1, esp. at 7, 8. Also perplexing is the House of Lords decision in Performing Right Society Ltd v London Theatre of Varieties Ltd (1924) AC 1, where it was held that the plaintiffs, as equitable assignees, could not get injunctive relief without joining the legal owners of the copyright. The future Lord Maughan, counsel for the unsuccessful appellants, specifically relied on Tolhurst and Brandt's, (at 6), but their lordships, decorously ignoring Tolhurst, explained away Brandt's, by saying it was explicable on the ground the defendant had expressly disclaimed any wish to have the legal owner made a party, see at 14, 20, 31, 32 and 37. As is explained in Brandt's, the joinder of the assignor, either as co-plaintiff or co-defendant, is procedural and ordinarily employed to bind the assignor to the result - there may be some dispute about the assignment or about priorities between a number of equitable assignees. But where the assignment is undisputed, notice of the assignment has been given and the assignee is willing and able to complete, the other party to the contract is bound to complete with the assignee and not the assignor: Jones and Goodhart, Specific Performance, Butterworths, 1986 at 167. In these circumstances, in an action by the assignee, there seems no reason in principle or as a matter of procedure as to why the assignor should be joined, (and see Maitland, Equity, (2nd ed), Cambridge, 1936 at 145); and in any event, as I have endeavoured to explain at perhaps excessive length, Tolhurst simply cannot be explained on merely procedural grounds. 46. Of course, in the present case the 1984 agreement is not expressed to be between the Kumnicks and their assigns but rather the possibility of assignment is expressly dealt with in the assignment clauses I have already referred to. Section 11 of the Act and the presence of the assignment clauses meets the plaintiff's suggestion that the contracts are not assignable: Moore v Collins [1937] SAStRp 40; (1937) SASR 195 at 205 per Napier J.; Peacocke Land Co, supra, at 582. Is a purported assignment without the written consent of the nominated personnel of the defendant in compliance with the assignment clauses effective? This depends upon whether the assignment clauses are to be regarded as an absolute prohibition of assignment in the absence of the stipulated consent, whether they are conditions, the breach of which gives rise to the right to cancel the contracts (here not exercised by the defendant); or whether they are of some lesser character. I do not think that it matters in this case because as I have said, Ampol, through Mr Arthur, was orally informed of the arrangements and orally consented to them; see Butt Land Law (2nd ed), Law Book Company, 1988 at 269, Daventry Holdings Pty Ltd v Bacalakis Hotels Pty Ltd (1986) 1 Qd R 406, Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51; (1979-80) 144 CLR 596, Bromley Park Garden Estates Ltd v Moss (1982) 2 All ER 890. In so far as the waiver clause might be relied upon by the defendant it may be disregarded as itself having been waived: Marcovitch v The Liverpool Victorian Friendly Society (1912) 28 TLR 188. (CA) 47. Having said that in principle an executory bilateral contract may be transferred by way of equitable assignment for value so as to enable mutual enforcement between the equitable assignee and the other contracting party, there is a need to look to other authority. In Anson's Law of Contract, (26th ed), Oxford, 1984, at 406, there appears the following statement: "As a general rule, where the benefit of contract, involving mutual rights and obligations, is the subject of a valid assignment, the assignee does not acquire the assignor's contractual obligations. But the circumstances may be such as to show that the assignee

agreed to accept, not merely the rights, but also the obligations of the contract;...". For this the learned author cites the judgment of Megarry VC in Tito v Waddell (No. 2) (1977) Ch 106 at 290-307. 48. Now the reasoning in Tito v Waddell, supra, largely depended upon Halsall v Brizell (1957) Ch 169, and that chain of reasoning has been strongly, and in my respectful opinion, correctly criticised by the Full Court of Victoria in GIO (NSW) v K.A. Reed [1988] VicRp 75; (1988) VR 829. Anson's Law of Contract, supra, continues the passage at 406 as follows: "... alternatively the rights assigned may themselves be qualified or conditional, the condition being that certain restrictions be observed or certain obligations assumed. In such situations, an assignee who takes the benefit of the contract must also bear the burden." For this, the learned author cites the House of Lords decision in Tolhurst. 49. Here, then, we have Tolhurst explained on the principle of benefit and burden, a principle rejected by the Full Court of Victoria on the basis that the lack of privity between a contracting party and an equitable assignee cannot be circumvented by such reasoning. 50. I have already endeavoured to demonstrate that Tolhurst cannot be explained in terms of benefit and burden or as a mere matter of procedure. I respectfully agree with the Full Court of the Supreme Court of Victoria that there is no benefit and burden principle. On the other hand, I respectfully disagree that as a matter of principle, there is lack of privity between a contracting party and an equitable assignee. 51. In principle, in my respectful view, the decision of the House of Lords in Tolhurst, the common law's refusal to recognise assignments and the merely procedural nature of the statutory provisions regarding assignments lead to the conclusion that there is privity in the circumstances. 52. Were the matter res integra before me, I would hold that before the 1987 agreements were executed, as a consequence of the sale of the Kumnick's business as a going concern, including whatever rights they had under the 1984 franchise agreement to the plaintiff of which the defendant, via Mr Arthur, had been informed and in which it acquiesced, there was privity between plaintiff and defendant. However, I am of the opinion that I am bound to hold otherwise. 53. There is a long line of cases which hold that an equitable assignee of a lease is not liable to pay the rent or observe or perform the other covenants in the lease even though he has taken possession. Some of the cases are referred to in GIO (NSW) v K. A. Reed Services, supra, at 835. The High Court of Australia in Quadramain Pty Ltd v Sevastapol Investments Pty Ltd [1976] HCA 10; (1974-75) 133 CLR 390 at 403 per Gibbs J., at 405 per Stephen J., and at 406 per Mason J., approved that line of authority. 54. Unless there is some distinction between those cases and general contract cases, I am bound to hold that there was no privity between the plaintiff and the defendant before execution of the 1987 agreements. In Rollgreen, supra, Lord Denning agreed with Mr Drake, counsel for the appellant, that there was a distinction between the assignment of lease cases and general contract cases, see at 442B. On the other hand, Roskill L.J. disagreed and said there was no distinction in principle, see at 444D. I respectfully agree with Roskill L.J. that there is no distinction and I think that this is the case in Australia, is all the more to be emphasised since Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1984-85) 157 CLR 17. 55. I conclude therefore that as a matter of general law, notwithstanding the plaintiff's purchase of the service station business on 1 July 1986 as a going concern and running it thereafter until 30 June 1987, which events constituted an equitable assignment (cf Peacocke Land Co, supra, at 584), that there was no privity of contract between the plaintiff and the defendant. Compare the operation of the South Australian Torrens legislation dehors privity: Coles KMA Ltd v Sword Nominees Pty Ltd(1986) 44 SASR 120 at 121, 122 per Jacobs J. 56. There was no statutory assignment. There was no novation effected in mid-1986. The defendant never discharged the Kumnicks from liability under the 1984 agreements. That this was so is evidenced by the defendant still sending invoices to the Kumnicks for goods supplied. 57. I now ask myself whether the plaintiff was a party to the 1984 franchise agreement by virtue of the provisions of the Act. 58. The defendant relied on s.3(9)(c) of the Act in this regard, but before turning to that section, it is convenient to refer to a number of other sections of the Act. I have previously said that the parties were agreed that both the 1984 agreements and the 1987 agreements constituted franchise agreements for the purposes of the Act. This is true but not complete. Section 3(1) of the Act defines franchise agreement, franchisee and franchisor. I have already set out those definitions. 59. As was pointed out by Toohey J. in Richards v Golden Fleece (1983) 49 ALR 337, the disjunctive is used in the definition of franchise agreement. A franchise agreement is any agreement, as defined, containing provisions relating to: a) the use of a trade mark; or b) the use of premises in connection with the retail sale of motor fuel; or c)(i) the supply of motor fuel for retail sale; or (ii) the acquisition of motor fuel for retail sale. 60. Thus each of the 1984 agreements on its own is a franchise agreement. However, by reason of s.6(1), the Act (and in particular the renewal provisions, ss.17, 17A, 17B) only applies in relation to a franchise agreement or 2 or more franchise agreements which together contain provisions relating to the use of a trade mark and the use of premises in connection with the retail sale of motor fuel and the retail sale of motor fuel. 61. Section 3(9) provides: "In this Act - (a) a reference to an agreement shall be read as including a reference to a lease of, or a licence in respect of, premises, and shall be so read notwithstanding the express references in this Act to such leases or licences; (b) a reference to making or entering into an agreement, in relation to such a lease or licence, shall be read as a reference to granting or taking the lease or licence; and (c) a reference to a party to an agreement, in relation to such a lease or licence, shall be read as including a reference to any person bound by, or entitled to the benefit of, any provision contained in the lease or licence." 62. This is a perplexing section and like many other provisions of the Act, one can only divine its meaning with some difficulty. It uses the words "bound by or entitled to the benefit of, any provision contained in a lease or licence," and the draftsman appears to have had in mind not only a party to an agreement in the sense of a privy thereto, but someone such as an equitable assignee who may be entitled to the benefit of, though not strictly bound by that agreement. 63. A licence in respect of premises is, of itself, a franchise agreement, but not a franchise agreement to which the Act, and in particular the renewal provisions, applies. It is by no means clear to what s.3(9)(c) is directed. It does not say a reference to a party to an agreement (as defined) shall be read as including a reference to any person bound by or entitled to the benefit of any provision contained in the agreement. It does not say a reference to a party to a franchise agreement shall be read as including a reference to any person bound by or entitled to the benefit of any provision contained in the franchise agreement. One must have regard, of course, to the overall intention of the Act. Section 3(1) defines agreement in the manner previously indicated. It has a very wide application. 64. The plaintiff, operating the service station to the knowledge of and with the acquiesence of Ampol, was itself a franchisee as defined because the plaintiff was thereby constituted a person referred to as the franchisee in sub-paragraphs (a) and (b) and (c)(ii) of the definition of franchise agreement. Moreover, the franchise agreement between the plaintiff and the defendant is one to which, it would seem, the Act applies by virtue of s.6(1). Even though the equitable assignment is not effective to create privity between the plaintiff and the defendant, it nevertheless, by reason of the defendant's acquiescence therein, would seem to constitute a new franchise agreement to which the Act applies by virtue of s.6(1). 65. It seems the 1984 agreements between the partnership and the defendant and the franchise agreement between the plaintiff and the defendant which arose upon Ampol consenting to the use of the premises and trade mark and the retail sale of motor fuel by the plaintiff, constituted 2 series of franchise agreements, each series comprising a franchise agreement to which the Act applied. This result is consistent with the plaintiff's performance of its agreement with the defendant discharging, pro tanto, the partnership from its obligations under the 1984 agreements. As the New Zealand Court of Appeal said in Peacocke Land Co, supra, at 583, 584: "If there was an assignment ... then the second appellant remains bound; but he is entitled to say that performance by his assignee is equivalent to performance by himself and that he is relieved pro tanto." But I think this situation is inconsistent with s.7(1) of the Act and that I am bound, in the absence of the 1984 agreements being discharged, to hold that any such agreement between the plaintiff and defendant, before August 1987, is to be treated as void for the purposes of the Act. 66. I do not consider that by virtue of s.3(9)(c), the plaintiff was deemed a party to the 1984 agreements, that is, a franchise agreement to which the Act applied. The necessary consequence of this is that the 1987 agreements was not a renewal of the 1984 agreements between the partnership and the defendant. I think this conclusion is supported by s.11 of the Act. Section 11 deals with statutory assignments under s.70 of the Supreme Court Act. Section 11 spells out a number of consequences of an assignment of a franchise agreement. Significantly it expressly provides (s.11(12)) that an assigned franchise agreement is not to be regarded as a new agreement by reason of the assignment. That express provision, it seems to me, supports the conclusion that an equitable assignment consented to by a franchisor does not effect a new agreement for the purposes of s.17B(4). 67. Counsel for the defendant argued that the 1987 agreements were entered into by way of renewal because Mr Kumnick and Mr Thompson treated them as a renewal. He submitted that parties are free to contract as they wish and that having come to a "consensual arrangement" that the 1987 agreements were a renewal of the 1984 agreements, that was enough and the court should give effect to that arrangement. He particularly relied on the judgment of the Full Federal Court in Esso v Abela, supra. After referring to s.17 of the Act the court said at 487: "There was nothing in these provisions to exclude from characterisation as a renewal for the purposes of the legislation, steps taken consensually by the franchisor and franchisee." 68. I reject this argument. In Esso v Abela, the court held that the renewal procedure laid down in the Act was not mandatory and that the parties to a pre-existing agreement could informally enter into a new agreement by way of renewal of their pre-existing agreement. That it not the case here. The parties had changed. I think the argument is met in part by the passage in the judgment of Isaacs J. in Curtis v Perth and Fremantle Bottle Exchange Co Ltd, supra, to which I have already referred. Here, because the plaintiff never became a party to the 1984 agreements, the 1987 agreements, as a matter of law, could not constitute a renewal of those agreements. That being so, the matter is to be treated as a mutual mistake of law. The inherent character of the 1987 agreements, as a matter of law deducted from the Act under which they operated and the circumstances of their execution, subject to any question of estoppel, cannot be changed by agreement of the parties. 69. Seizing upon the word "voluntarily" in s.17B(4) of the Act, counsel for the defendant also argued that the 1987 agreements were entered into by the defendant under a sense of compulsion. This was so, he said, because the the plaintiff at the time had a right to require a renewal in its own name. Consensually bypassing s.70 of the Supreme Court Act, it was said, was no different to the parties in Esso v Abela, supra, consensually bypassing the renewal procedure under the Act. However the plaintiff at the time had no right under the Act to a renewal in its name - it simply was not a party to the 1984 agreements. Mr Thompson was not under any legal compulsion to do what he did. Having heard his evidence, I do not accept that he felt under any compulsion. In any event, any such thoughts were mistaken at law and inoperative, and Mr Kumnick was not responsible for such thoughts. There is no reason to suppose Mr Kumnick knew or ought to have known of such things. He was certainly not aware of what motivated the defendant's decision to execute the agreements. That decision was made in Adelaide. 70. The defendant finally argued that the plaintiff was estopped from denying the 1987 agreements were to be characterised as a renewal of the 1984 franchise agreement. Counsel for the defendant said he relied on both legal and equitable estoppel. 71. Hugging the coast at nisi prius, and assuming that legal and equitable estoppel have not yet merged into one principle, grounded in unconscionable conduct (see generally Parkinson, "Equitable Estoppel: Developments After Waltons Stores (Interstate) Ltd v Maher" (1990) 3 JCL 50 at 60 ff), I gratefully employ the propositions formulated by Priestly J.A. in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 at 472, as subsequently qualified in Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 at 610. His Honour's propositions from those 2 cases are as follows: 1) Common law and equitable estoppel are separate categories, although they have many ideas in common. 2) Common law estoppel operates upon a representation of existing fact, and when certain conditions are fulfilled, establishes a state of affairs by reference to which the legal relation between the parties is to be decided. This estoppel does not itself create a right against the party estopped. The right flows from the court's decision on the state of affairs established by the estoppel. 3) Equitable estoppel operates upon representations or promises as to future conduct, including promises about legal relations. When certain conditions are fulfilled, this kind of estoppel is itself an equity, a source of legal obligation. 4) Cases described as estoppel by encouragement, estoppel by acquiescence, proprietary estoppel and promissory estoppel are all species of equitable estoppel. 5) For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable. 6) Equitable estoppel may lead to the plaintiff acquiring an estate or interest in land, that is, in the common metaphor, it may be a sword. 7) The remedy granted to satisfy the equity (which either is the estoppel or created by it) will be what is necessary to prevent detriment resulting from the unconscionable conduct. 72. Here there can be no common law estoppel for there was no unequivocal representation by the plaintiff that there had been a statutory assignment. Indeed, Mr Thompson said in evidence he never thought there had been such an assignment. There was no written notice thereof to the defendant and no representation that there had been such a notice. This part of the defendant's case fails for want of any unequivocal representation on the part of the plaintiff and any reliance thereon by the defendant; cf. Chronopolous v Caltex Oil (Australia) Pty Ltd [1982] FCA 272; (1982-83) 45 ALR 481 at 488, 489. 73. Nor in my view is the plaintiff precluded in equity from asserting the 1987 agreements were not entered into by way of renewal of the 1984 agreements. There was never any creation or encouragement by the plaintiff in the defendant of an assumption that the 1987 agreements were by way of renewal only. There is no question that Mr Thompson made that assumption. But both Mr Kumnick and Mr Thompson were mistaken in this assumption and Mr Kumnick was not responsible for Mr Thompson's assumption any more than Mr Thompson was responsible for Mr Kumnick's assumption. Mr Thompson's assumption was independent of the plaintiff. 74. Prior to the execution of the 1987 agreements, a conversation took place between Mr Kumnick and Mr Thompson. I accept Mr Kumnick's account of this conversation. His account of the matters discussed is what one would expect on an occasion such as this. He is a relatively unsophisticated man and gave his evidence regardless of any consequences to his interests or that of the plaintiff. 75. I am satisfied that, notwithstanding Mr Thompson's evidence, the 1987 agreements were executed in the mistaken belief that they constituted a renewal but without regard to the legal consequence of such execution and in a state of confusion both on Mr Kumnick's part and Mr Thompson's part as to what was being effected. I think Mr Thompson, by the time he gave evidence, was wont to rationalise because by then he realised the significance of his evidence for the defendant's case. At the time the agreements were executed I am satisfied he simply did not address these things or that if he did, it was not as a consequence of anything the plaintiff said or did. Furthermore, there is nothing to suggest the plaintiff was or ought to have been aware that the defendant was relying on anything said or done by the plaintiff in this regard. The defendant, via Mr Thompson, was self-reliant in this regard. Moreover, what occurred was just as consistent with a novation as there having been a statutory assignment and there is nothing to suggest the plaintiff's present stance is unconscionable: Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387. The mutual mistake of Mr Kumnick and Mr Thompson that the 1987 agreements were by way of renewal of the 1984 agreements is not an operative mistake: Life Insurance Co of Australia Ltd v Phillips [1925] HCA 18; (1925) 36 CLR 60 at 80. 76. On the evidence before me, the plaintiff did nothing to give rise to a belief in the defendant, of which the plaintiff knew of or ought to have known either that there had been a statutory assignment from the Kumnicks to the plaintiff, or that the plaintiff was a party to the 1984 agreements, or that the 1987 agreements were to be regarded as renewals of the 1984 agreements. The defendant's resort to estoppel must fail, cf. Re Ward: Ex parte Official Trustee in Bankruptcy v Dabnas Pty Ltd [1984] FCA 230; (1984) 55 ALR 395 at 406. 77. In summary then, the plaintiff was neither at general law - nor by virtue of the provisions of the Act a party to the 1984 agreements prior to the execution of the 1987 agreements and it is not precluded by common law or equitable or any other estoppel from so asserting. The 1987 agreements were agreements entered into otherwise than by way of renewal for the purposes of the Act. The plaintiff is entitled to judgment. 78. I shall hear counsel as to the orders that should be made.

Retail Marketing Franchise Act 1980

Calaby Pty Ltd v Ampol Pty Ltd [1990] NTSC 28; 71 NTR 1; 102 FLR 186

At a glance

Court

Decision date

Before

Source

Judgment (9 paragraphs)

Calaby Pty Ltd v Ampol Pty Ltd [1990] NTSC 28; 71 NTR 1; 102 FLR 186 (6 September 1990)

Parties

Legislation Cited (2)

Cases Cited (23)