JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : ELECTPARK PTY LTD & ANOR -v- MINISTER OF FAIR TRADING & ANOR [1999] WASCA 286

Trade and commerce - Regulation of retail trading hours - Sunday trading - Appeal against decision denying appellants the right to trade on Sundays - Whether appellants' businesses are general retail shops - Meaning of "retail shop" - Appeal dismissed

Retail Trading Hours Act 1987, s 3(1), s 5(1), s 12(1)

Retail Trading Hours Exemption Order (No. 12) 1994, c 2(1)

Attorney General v Tynemouth Corporation (1900) 17 TLR 77

Culley & Ors v Harrison [1956] 2 QB 71

Edwards v Noble [1971] HCA 54; (1971) 125 CLR 296

Eldorado Ice Cream Co Ltd v Clark [1938] 1 KB 715

Graham v Lewis (1888) 22 QBD 1

Grandi & Anor v Milburn [1966] 2 QB 263

Pride of Derby and Derbyshire Angling Association Ltd v British Celanese Ltd [1953] Ch 149

Whiteley Muir & Zwanenberg Ltd v Kerr (1966) 39 ALJR 505 1 KENNEDY J: I have had the benefit of reading in draft the reasons to be published by Ipp J. For the reasons which his Honour gives, I am of the opinion that the relevant "place" in the definition of "retail shop" was the whole of the Harvey Norman complex. I would therefore dismiss the appeal.

2 IPP J: This appeal concerns the right of the appellants to conduct, on Sundays, their businesses of selling goods by retail.

3 Sunday trade is governed, generally, by the Retail Trading Hours Act 1987. Section 12(1) of the Act provides that, subject to the Act, a "general retail shop" shall be closed at various times including "on Sunday in each week". Section 5(1) of the Act stipulates, however, that the Minister for Fair Trading may, by order published in the Government Gazette, provide for exemptions from the Act "or such of the provisions of this Act as are specified in the Order". By cl 2(1) of the Retail Trading Hours Exemption Order (No. 12) 1994 ("the Order"), the Minister exempted general retail shops from s 12(1) of the Act, subject to certain criteria laid down in the Order. The appellants contend that at the relevant time their businesses were "general retail shops" within the meaning of the term under the Act and met the criteria contained in the Order. Hence, they argue, at the relevant time s 12(1) of the Act did not apply to their businesses and they were entitled to trade on Sundays.

4 The present dispute crystallised when the appellants requested the chief executive officer of the Ministry to issue certificates, pursuant to cl 2(1) of the Order, that their businesses were "exempt" general retail shops, that is, general retail shops exempted by the Order from the Sunday closing provisions contained in s 12(1) of the Act. The chief executive officer refused to issue such certificates. The appellants commenced proceedings against the respondent, claiming a declaration that the business operated by each of them was a general retail shop within the meaning of the Act. The learned trial Judge dismissed the appellants' claim, and they appeal from that dismissal.

5 It is common cause that if the businesses carried on by the appellants were "shops" within the meaning of the Act, then they were "general retail shops". The principal issue at the trial (and in argument during the appeal) was whether the businesses were "shops" that sell goods by retail.

6 The Order does not define "shop" (nor does it define a "general retail shop"), and the meaning of "shop" in the Order must be ascertained from the Act. This task is not straightforward. The legislation is not a model of clarity. Moreover, the difficulties in language are compounded by the fact that the manner in which the appellants carry on their businesses is unusual, and the various definitions contained in the Act do not cater expressly for the situation that arises. Before going to the various definitions in the Act, I shall give a brief description of the appellants' businesses and the means by which they are conducted, so that the particular problem that arises may be better appreciated. I shall later describe the appellants' modus operandi in greater detail, as that is crucial to the main issue in this appeal.

7 Each of the appellants is, effectively, a franchisee of Harvey Norman Holdings Ltd. This company is not a party to these proceedings. At the relevant time both the appellants' businesses were conducted within a building in Osborne Park. The building comprises three floors. The ground floor is operated by a separate business, unconnected with the Harvey Norman organisation. On the first floor, five Harvey Norman franchisees (who, at the time of the trial, included the two appellants) each sell a different category of goods. To enable this to occur, the first floor, in effect, is divided into five different divisions (which are described as "shops" in a plan of the floor that was tendered in evidence). Each franchisee operates a division. The bedding division sells beds and related products, the furniture division sells all types of furniture, the electrical division sells large electrical goods, the appliances division sells small appliances, and the computer division sells computers. The floor on which the franchisees trade is spacious, being 9,805 sq m in area. There is no effective physical demarcation between the areas in which the franchisees carry on their respective businesses. I shall refer to the entire building (save for that part occupied by the independent business on the ground floor) as the "Harvey Norman complex".

8 The first appellant is the franchisee and operator of the electrical division. Although at the time of the trial the second appellant was the franchisee and operator of the furniture franchise, it no longer trades in Western Australia. Accordingly, a declaration is sought only by the first appellant, but the second appellant seeks the costs of the trial (which were ordered to be paid to the respondent).

9 The second floor of the Harvey Norman complex contains an area set aside for administration. The Harvey Norman complex also contains an area set aside as a warehouse. The warehouse has within it two separate office spaces. One such office is used for the administration of the warehouse and the other for managing the delivery of goods to and from the warehouse.

10 A subsidiary of Harvey Norman Holdings Ltd is the tenant of the Harvey Norman complex. Each franchisee derives its right to trade within the complex from a series of agreements with Harvey Norman Holdings Ltd and companies controlled by it. Each franchisee has a licence "to use and occupy" one of the "shops" or divisions. Each such licence affords each franchisee a qualified right of occupation over the area allocated to it (designated on the plan to which I have referred as one of the five "shops").

11 In the circumstances outlined, the appellants contend that each division is a separate general retail shop as defined by the Act. The respondent on the other hand contends that the Harvey Norman complex constitutes one single general retail shop (as defined) and each division is merely a part of the one shop. It is against this background that regard has to be had to the relevant legislation.

12 The Act does not define a "shop". It does, by s 3(1), define a "retail shop" as follows:

"'Retail shop' means any place at, in, on or from which -

(b) goods are displayed, kept or sold for retail sale; or

(c) prescribed services are provided by way of retail sale."

"'Sell' includes barter, supply for profit, offer for sale, expose for sale, send forward or deliver for sale, cause or suffer or permit to be sold, and disposal or offer for disposal of goods under credit sale agreement or hire-purchase agreement."

"'Place' includes a building, stall, tent, vehicle, boat or vessel."

13 The definition of "retail shop" is "specific". That is, the definition provides that "'retail shop' means any place at, in, on or from which ... ". In such a case the definition is conclusive and exhaustive. The definition of "place" is "inclusive". The definition provides that "'place' includes a building, stall, tent, vehicle, boat or vessel."

14 The effect of an "inclusive" definition was explained by McInerney J in Sherritt Gordon Mines Ltd v Commissioner of Taxation [1977] VicRp 42; [1977] VR 342 at 353 as follows:

"The definition adds the meanings given in the definition clause to the natural meaning of the word. The added meaning is often one not otherwise within the natural meaning, so that the natural meaning of the word is to that extent amplified."

15 "Retail shop" is defined by reference to a "place". As the definition of "place" is only inclusive and not exhaustive, regard has to be had to the ordinary meaning of the term. According to the Macquarie Dictionary, one of the meanings of "place" is "a space or spot, set apart or used for a particular purpose: a place of worship." Applying this meaning (which appears to be appropriate), in the context of the definition of "retail shop", a "place" is a place set apart for the particular purpose of a retail shop, in the ordinary meaning of the latter term. On this basis, a retail shop means any place (including a building, stall, tent, vehicle, boat or vessel, and being a space or spot, set apart or used for the purpose of a retail shop - in the ordinary meaning of the term) at, in, on or from which goods are sold by way of retail sale, etc.

16 In my view, this is how the definition of "retail shop" is to be construed. In this way, an extended meaning is given to the ordinary meaning of "retail shop", and this appears to be the intent of the definition: cf Plummer v Needham (1954) 56 WALR 1. It also enables a sensible meaning to be given to "place": in particular it provides for an appropriate method of demarcating the "place" at which goods are sold by way of retail sale, etc. The importance of this is obvious. Unless some form of demarcation is incorporated in the definition, absurd results would follow. Take, for example, a small retail shop (as commonly understood) with one long counter running down each wall. Without some form of demarcating the "place" at which goods are sold by way of retail sale, each counter would be capable of being a "place", and hence a separate retail shop. That would indeed be absurd.

17 On the basis that I propose, the demarcation flows from defining the "place" as a space set apart or used for the purpose of a retail shop within the ordinary meaning of the term. This means that, say, a building, stall, tent, vehicle, boat or vessel that is used for the purpose of a retail shop, in common parlance, falls within the definition. That, it seems to me, is precisely the intention of the legislature. Significantly, therefore, the meaning of "shop" in common parlance has a part to play in the definition (cf Plummer v Needham at 10, per Walker J).

18 Accordingly, in determining whether each respective area in which each franchisee carries on its business is a "retail shop" within the meaning of s 3(1), it is necessary to determine whether the area in question is a place set apart for the particular purpose of a retail shop. This is a question of fact and degree.

19 The Harvey Norman complex is presented to the general public as being a single departmental store trading under the name "Harvey Norman". The name "Harvey Norman" is displayed prominently outside the building. Counsel for the appellants stated that apart from certain grilles that are lowered after shopping hours, the only demarcation between one division and another is "a line on a plan and on the floor". The staff in each division wear the same uniform which consists of a standard tie, navy blue polo shirt with the Harvey Norman insignia, and dark trousers or skirt. Each franchisee within the Harvey Norman complex uses the same kind of ticketing, usually with the "Harvey Norman" logo, for its goods.

20 When customers buy articles from a particular division they receive receipts which indicate the name of the particular franchisee who operates the division. Generally, however, the customer would not know that he or she was dealing with a separate franchisee or independent vendor. The customer would ordinarily believe that he or she was dealing with Harvey Norman as one entity. There is no indication, generally, within the store that the different departments are operated by separate entities. There is no attempt of significance to advise customers that within the Harvey Norman complex separate and independent franchisees are trading independently from each other. There is no attempt to distinguish by fittings, get-up, colours or display that one department is owned by one company and another by another company, and in a real sense they are not. Everything is done in order to merge the different departments so as to present to the public one store. Consistently with this policy, the individual franchisees do not advertise themselves as separate entities. They rely on advertisements for the Harvey Norman store in which the Harvey Norman complex is advertised as one single shop. In these advertisements no reference is made to franchisees.

21 Mr Hauville, a director and shareholder of the first appellant, was asked, "When customers come in to the Harvey Norman complex they have the appearance of walking in to one large shop?" He replied, "No doubt." Mr Hauville accepted that he regarded his business "as a department within the Harvey Norman complex [at Osborne Park]". Mr K Kosowski, the sole director of the second appellant, agreed that members of the public who walk in to the Osborne Park premises would think that it was one large shop, and indeed stated, "We would like them to think that." When asked, "It's specifically designed to appear as one large shop?" he replied, "It's designed to present a certain image, yes." He explained that the reason for that was that:

"[Consumers] feel more comfortable dealing with a corporate image, a large company. I think from the consumer point of view - I have been in retail for many, many years and I have found in my time that the consumer is a little bit hesitant to deal with small operations - not that there is anything wrong with that, but from the consumer's point of view there is a little bit of unease about it. So they would rather deal with a bit [sic] Myer or a David Jones or a Harvey Norman, and we intentionally try to create the impression - well, not the impression. I mean, it is Harvey Norman. That is our trading name, as such, and it's important for us for the customer to feel at ease shopping with a large corporate company."

22 Generally, goods from within each division need to be purchased from the cash register located within the division. In relation to the electrical and appliances divisions, however, two cash registers are located at an exit point and goods are processed at those registers without regard to whether they were purchased from the electrical division or the appliances division. Moreover, customers can purchase goods from more than one franchisee in the complex and pay overall with one cheque that is payable to "Harvey Norman". Generally, customers do not write cheques in favour of the owner of each franchise. As Mr Hauville said, "It's either to Harvey Norman or Harvey Norman Electrics, in my case." Customers can enter into one finance contract with the Harvey Norman entity that provides financial services whereby customers purchase goods from more than one franchisee.

23 As it was put by an inspector of the Ministry of Fair Trading:

"At a practical level, the Harvey Norman complex ... operate[s] in a very similar fashion to any large department store selling different types of goods in different departments, e.g. Myer. The only practical difference is that in the Harvey Norman complex goods have to be purchased at cash registers within each division. However, in my experience, the practice in most large department stores is that goods from a particular department are purchased at a counter within the department."

Indeed, counsel for the appellants accepted that there was no difference between the Harvey Norman complex and the set-up in any of the well-known department stores in Perth.

24 Through an administrative process, each franchisee receives the cash to which it is entitled from the overall payment made in respect of purchases from more than one franchisee. This distribution is provided as one of the administrative services rendered to each franchisee by Osborne Park Administrative Services Pty Ltd, a company controlled by Harvey Norman Holdings Ltd, which provides administrative and management services for the individual franchisees at the Harvey Norman complex. This company is itself located in that complex.

25 All cashiers who work in the different divisions are trained and supervised by an administration manager employed by Osborne Park Administrative Services Pty Ltd. The administration manager of Osborne Park Administrative Services Pty Ltd co-signs all cheques drawn by the franchisees on their bank accounts.

26 Osborne Park Administrative Services Pty Ltd provides other services to the franchisees. These include the operation of main switchboards, dealing with telephone calls, maintaining franchisee records systems, assessment and recording of profits, completion of paperwork and banking of daily takings for franchisees, providing acceptance services for moneys and securities, providing accounting services generally, collecting and processing workers' compensation claims, coordinating and managing building maintenance, cleaning and occupational health and safety matters, managing Harvey Norman Financial Services (which provides credit facilities to all franchisee customers), and managing Osborne Park Warehousing Services Pty Ltd.

27 Osborne Park Warehousing Services Pty Ltd holds retail stock for all franchisees and arranges customer deliveries and the processing of associated invoices through Osborne Park Administrative Services Pty Ltd. When a franchisee takes an order which requires delivery from the warehouse, arrangements are then made with the warehouse staff, who deliver the article concerned to the customer. In fact, the warehouse staff receive, store and deliver goods on behalf of each franchisee. The administrative staff process orders for the purchase and sale of goods and all associated documentation.

28 The running of the Harvey Norman complex is regulated by a detailed stores procedures manual which comprises more than 400 pages. This enables each division to be operated in a standard way. A franchisee cannot sell any products that are not approved by Harvey Norman Holdings. Control is exercised also over the buying of the franchisees. Harvey Norman Holdings controls, to a degree, the level of each franchisee's stock. Franchisees participate together in national buying committees whereby purchases of bulk sales are effected.

29 The system works by providing an integrated set of services; that is, retail, financial, storage, administration and management. All of that is designed to promote the sales of the individual franchisees within the Harvey Norman store, to the mutual benefit of the franchisees and Harvey Norman Holdings Ltd. Under the franchise agreement, Harvey Norman Holdings receives a management fee which works out to about 50 per cent of each franchisee's profit.

30 In summary, the Harvey Norman complex is conducted as a general retail shop by all the franchisees and administrative entities as one joint enterprise from which each, including Harvey Norman Holdings Ltd, takes out profits in various forms and amounts.

31 Counsel for the appellants submitted that the franchisees trade separately and individually, making their own profits out of their own businesses, utilising a common goodwill. According to counsel for the appellants, the demarcation of "place" occurs "to the extent that contractual licences can be drawn indicating the area that each shop-owner occupies". He submitted that no regard should be had to the outward appearance of the Harvey Norman complex as one single department store. In my opinion, there is no warrant under the Act for such an approach.

32 I have set out how the definition of retail store under the Act should, in my opinion, be construed. In my view, the facts I have outlined overwhelmingly indicate that the Harvey Norman complex is a building constituting a space, set apart for the purpose of a retail shop, in the ordinary meaning of the term, at, in, on or from which goods are sold by way of retail sale, etc. Accordingly, the Harvey Norman complex is a single (general) retail shop. It follows that the place within the Harvey Norman complex where each franchisee carries on its business is part of the single shop in question, and is not itself a general retail shop.

33 In my view, the learned trial Judge was entirely correct when he held that the individual divisions were not separate shops. I would therefore dismiss the appeal. It would be unnecessary and, in my opinion, undesirable to deal with the other points raised by the appellant. Once each division is not a shop, the appeal fails.

34 MURRAY J: I agree with Ipp J that the appeal should be dismissed. The issue with which his Honour deals is central to the appeal, as it was to the decision of Heenan J at first instance. The other questions argued could not of themselves resolve the matter without deciding whether or not the areas of floor suggested by the appellants were separate "shops" or whether they were merely parts of the shop comprised of the portion of the building leased by Harvey Norman Holdings Ltd. It is unnecessary therefore to discuss the other issues. I have nothing to add to the reasons of Ipp J.