Jerkins, Gregory Bruce & Anor v Caltex Oil (Australia) Pty Ltd [1981] FCA 202

1. An order pursuant to s.16(4) of the Petroleum Retail

Marketing Franchise Act 1980 (the Act) that the notice

dated 2ist day of August 1981 signed on behalf of the respondent and served on the applicants in relation to

the premises known as Ca]tex Auto Port, Lakes Entrance

2. In the alternative they seek an order pursuant to s.17(10) of the Act directing the respondent to renew the franchise agreement between the applicants and the

3. Ancilliary ©F consequential Orders as the Court deems fit, including interlocutory relief and an Order that the respondent, its servants and agents be restrained from taking any action in relation to the said notice pending the hearing and determination of

These proceedings relate to an agreement or agreements being franchise agreements within the meaning of the Act, made between the applicants, who are service station proprietors at Lakes Entrance in the State of Victoria and the Respondent a petroleum corporation which owns the marketing premises the subject of the said agreements. On 10 March 1977 the second named applicant and later the first named signed a franchise agreement with the respondent creating a licence in the applicants in those premises for a period of twelve months but subject, as provided by clause 3(a) of the agreement, to determination by the respondent at any time by thirty days notice in writing. By the said agreement the respondent

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"(a) to use in common with the Licensor its workmen servants and agents

(i) the licenced buildings described in Part B of the Schedule [thereto]

(ii) the licenced facilities more particularly described in Part C of the Schedule [thereto]

in Part A of the Schedule [thereto] for the purposes aforesaid."

By clause 7 it was provided that the licensees should

"...pay to the Licensor monthly in advance on the first day of each and every month a rental at the rate of $40 per month for the lease of the [goodwill of the business conducted on the premises ] ..."

"The Licensee shall pay to the Licensor for the Licence hereby granted a licence fee as follows:-

(a) the sum of $400 per month on the first day of each and every month, the first

payment if necessary to be a proportionate one, plus

(b) an additional sum on each succeeding quarter day in respect of petrol supplied in excess of [a gallonage not stated] ..."

The said agreement also contained the following provisions,

namely, clause 3(b) of the said agreement in the following terms:~

"(b) aif the Licensee shall continue to use the said buildings and facilities with consent

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of the Licensor after the said period of twelve (12) months he shall remain upon the same terms and conditions as are herein contained PROVIDED HOWEVER THAT the Licensor may at any time determine this Licence by giving 30 days notice in writing to the Licensee and that the Licensee may determine this Licence by giving to the Licensor not less than 3 months' notice in writing expiring at the end of any successive period of twelve months first referred to in this Clause."

"(c) the Licensor may determine the licence without notice in the event of non-payment of any debt owing by the Licensee to the Licensor and remaining unpaid for a period of seven (7) days after becoming due;"

"20. In the event of the Licensee conducting the said business for less than 77 hours in any week or for less than[ ] hours on any day (except Good Friday, Christmas Day or Anzac Day) or failing to conduct the said business on Christmas Day or Anzac Day during such hours as are from time to time permitted by law, or, in case of default by the Licensee in payment of any monies due hereunder or breach of any of the terms and conditions of this Licence, or if bankruptcy or insolvency proceedings are instituted against the Licensee, or if the Licensee makes any assignment to a trustee for creditors or commits any act of bankruptcy or if any judgement of any Court is given, or any attachment or garnishee proceedings or execution is levied or instituted against the Licensee, or if he shall be found guilty of any indictable offence, the Licensor may without notice immediately terminate this Licence."

premises as from 1977 onwards. In March 1980 the respondent

increased the monthly rent and licence fee from a total of $440 to $480. In early 1981 the respondent removed from the premises a large petrol tank of 26,000litres being part of the licensed facilities, thereby reducing the reserve capacity thereof. In July of 1981 the representative of the respondent informed the applicants that as from the month of May 1981 and thereforward the total monthly rent would be $530 in lieu of $480. He requested the applicants to instruct their bank to transfer that amount each month to the respondent. The applicants agreed to pay such increased rental and gave a cheque for $100 being the increase for May and June and gave instruction to the bank as required and thereby have paid and provided payment of such increased additional rent as from

"We give notice that you are in breach of the above mentioned licence agreement in the following respects:

(a) In breach of Clause 12, you have, without being licensed by us, made on or to the land referred to in that Clause an addition consisting of a four square pre fabricated building.

(b) In breach of Clause 10, you have used a licensed building, namely the dwelling house, for a purpose other than _ the operation of a Petrol Service Station Garage, in that you have placed a third party in occuption of the dwelling house and that third party is presently in occupation of it. .

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Hence, pursuant to Clause 3(a) and 3(b) of the above mentioned agreement, we HEREBY DETERMINE your licence and advise you of 30 days notice effective from the date below." It 1S in respect of this notice that the applicants seek

By notice of motion dated the 17th day of September

1981 the respondent seeks an order that the application herein be dismissed pursuant to Order 20 r.2(1) on the basis that the Court does not have jurisdiction to hear the application.

Herein I refer to the respondent company as the respondent although on this last mentioned motion it is the applicant. The parties seek, at this stage, that only this motion be

dealt with, together with any matters consequential thereon.

In respect of the claim for relief under s.16 the applicants must show that there was an agreement which was entered into on or after the date of the commencement of the

Act, namely, 19 September 1980. The only way the applicants

can do this is to show that there was an agreement by way of renewal arising out of the request for the increase in rent

for past and future months which occurred in July 1981, allied perhaps with the change in the licensed facilities following

In this connection the parties relied upon what was

Said by Dixon C.J. and Fullagar J. in Tallerman & Co. Pty.

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Ltd. v. Nathan's Merchandise (Victoria) Pty. Ltd. (1956) °8

C.L.R. 93 at p.112, where in respect of an agreement made

originally in Melbourne and varied in Sydney they said:-

"There 1S only one contract, and one would think it clear that that contract must, 1f it ever

becomes material to inguire where it was made, be regarded as made at the place where it was originally concluded. The variation affects the content of the obligation but not the obligation itself. The place where the parties assumed that obligation, and became bound to one another, is the place where their contract was really made."

But it 1s clear that when the inquiry is not where the

contract 1S made, but when the contract containing all of the

terms introduced by the variation was made, 1t would not seem necessarily inconsistent with the passage quoted that it should be said that the contract was entered into when the Parties entered into the terms which became binding upon them at the time of the variation and not before. The inquiry is a different one from that under consideration in Tallerman's

Case. Accordingly there could well be an issue as to whether

or not there was an agreement by way of renewal and, if so, whether it was made by way of variation of the original contract in July 1981, so that the terms of the actual contract which existed on 10 September 1981 contained some terms which were entered into in 1978 after the expiration of the first twelve months of the agreement and some terms which were entered into in July 1981.

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applicants then the applicants would be able to show that the licence under which they were holding on 10 September 1981 was a licence which was a franchise agreement which had been entered into subsequent to the commencement of the operation of the Act. In this connection, of course, the definition of renewal agreement in sub-section 4 of s.3 is relevant and also

the definition of agreement in sub-section 1 of s.3.

If there were such a new agreement by way of renewal the question would arise whether the notice of 21 August 1981 waS a notice of termination which, even if not a notice of termination under clause 20 of the relevant agreement, was nevertheless effective as a notice of termination under s.16 of the Act. If it were, then the remaining issue would be the question of whether the applicants were entitled to relief on

If there were no new agreement made in July 1981, no renewal of the agreement, then s.16 does not apply to the franchise agreement existing between the parties on 10 September 1981. But according to its terms s.17 does apply. It was said that s.17 does not operate where an agreement has been terminated and that this agreement was terminated. This was based on the notion that with respect to an agreement to which s.16 applies and which has been terminated pursuant to that section, and in respect of which relief under that

section had been refused, s.17 would not operate to require

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This 18 no doubt correct, but it is to be noted that determination pursuant to a notice of determination of a periodic licence or licence for an indefinite period subject to determination by notice of specified length 1s not one of

Section 16 does not provide for a notice on the ground of the nature of the notice to quit having been given. Yet agreements for periods for periodic licences, being necesSarily of uncertain duration but determinable on notice of some specified duration, and agreements for indefinite duration similarly determinable on notice, are permissible under the Act, for instance, by way of renewal - see s.13,

A licence for three years certain with provision for later determination thereafter on notice would comply with s.13 sub-section (1). Also, section 16 would apply to such an agreement. Accordingly, if determination by notice were regarded as termination within the meaning of s.16, such an agreement could never be brought to an end unless one of the particular circumstances specified in s.16 arose. That would be a completely unacceptable situation. It would be quite incompatible with the scheme of the Act and the apparent

objectives of the Act if such a licence agreement could only

If such an agreement 1S brought to an end by the specified notice, it is my view that the agreement has not been terminated within the meaning of that term in s.16, it has expired pursuant to its own terms. As an expired licence

agreement s.17 would operate upon it according to its terms.

In this case it would be open to the respondent to argue that the notice of 21 August did terminate the agreement for breach, so that it did not expire but was terminated according to 1ts own terms. If that were so, s.17 would not

This is arguable, but on the face of the notice of 21 August 1981 there is much to be said for the view that although the giving of it is said to have been induced by alleged breaches of the licence agreement which might have supported termination forthwith under clause 20 thereof, it was deliberately not given as a notice of termination under clause 20 but as a notice of determination under clause 3(b). That is a clause which provides for notice of determination

notice under clause 3(b), then in my view the licence

agreement was not terminated within the meaning of that term

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in s.16, but expired according to its own terms and s.17 would

There is a qualitative difference between termination under clause 20 which would take effect forthwith and determination of the licence under clause 3(b). In the one case the rights and obligations of the parties cease forthwith. In the other they continue until the licence expires at the end of the period of the notice. In a case like the present, continuation of the mutual obligations of the parties for 30 days was a matter of considerable practical

I feel no difficulty in adopting the view that an agreement in respect of which s.17 would otherwise operate on the expiration thereof is one on which it operates, not only if it expires by the expiration of a fixed term, but also where the term, being uncertain but determinable by specified notice, expires at the end of notice given according to the

To exclude from the benefits of s.17 a franchise agreement of such a nature that it 1s of uncertain duration

but determinable by a notice would seem to be supported by no reason which one can think of compatible with the scheme of the Act and, indeed, it would seem to be out of harmony with

It seems clear that s.17 would apply to an agreement for a fixed term which expired by perhaps even a few days - one day - after the commencement of the Act. That it should not apply to an agreement of uncertain duration determinable

on notice and, indeed, perhaps determinable on notice of quite

All these considerations raise questions of fact and law which according as they may be decided may go sufficiently un favour of the applicants to support a claim for relief

There 1S accordingly jurisdiction in the Court to entertain and deal with the issues so raised. The applicants allege facts which if they establish them will be sufficient

to entitle them to relief under one of those sections.