Mobil Oil Australia Ltd v Brian Brindle

Federal Court of Australia|1987-07-30|Before: French J

It is hereby declared that the supply and licence agreements between the first applicant and the respondent and the lease agreement between the second applicant and the respondent in respect of the premises

known as Ginger's Roadhouse terminated on 15 October

The respondent do on or before 13 August 1987 give to the second applicant vacant possession of the property situated at Great Northern Highway, Upper Swan and known as Ginger's Roadhouse being portion of Swan Location 1]

There be liberty to apply on the question of interest on

The respondent pay applicants' costs of the action.

Note: Settlement and entry of orders is dealt with in

WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION

No. WAG 102 of 1986 BETWEEN: GULL PETROLEUM (W.A.) PTY LTD First Applicant and RAMILO NOMINEES PTY LTD Second Applicant and SINBADS NIGHTCLUB PTY LTD Respondent CORAM: FRENCH J. 30 JULY 1987 REASONS FOR JUDGMENT

Ginger's Roadhouse is the name of a service station and

cafe located on the Great Northern Highway at Upper Swan.

It bears the livery and logo of Gull Petroleum (W.A.)

It has been operated as a Gull Service Station for more than 8 years. The land on which it stands is owned by Ramilo Nominees Pty Ltd ("Ramilo"), a company closely associated with

In November 1984 Ramilo leased the site to a new tenant,

At the same time Gull agreed orally to supply Sinbads

with petroleum products and to licence it to use the Gull logo on

The question whether the Supply Agreement embodied an

It is however common ground that these arrangements

amounted to a franchise agreement under the Petroleum Retail

Marketing Franchise Act 1980 ("the Franchise Act").

The parties have fallen out because, since April 1985, the overwhelming preponderance of motor fuel sold through the site

Gull has purported to terminate the franchise agreement and claims a declaration that it is at an end and damages for

breach of contract. Ramilo seeks possession under the lease.

Sinbads has cross-claimed for a declaration that the notices terminating the franchise agreement and the lease have had

The foregoing gives a broad overview of the case but as

will be seen below, the detail is considerably more convoluted.

Gull commenced business in Western Australia in 1976 as

In the 10 years that have followed, the number of service stations selling its products has grown to 35, 30 of which

The company uses three tankexs which each year deliver

some 50 million litres of motor fuel to its various outlets.

Gull service stations have a red, white and blue colour

The company's petroleum pxoducts are marketed undex the

A logo comprising a red ellipse containing the word "Gull" and a stylised silhouette of a bird in blue on a white field is used in association with the sale, supply, distribution

and marketing of the products in Western Australia.

It 1s not disputed that Gull has acquired a substantial reputation and goodwill, that the logo is well known in the State

and that it has become distinctive of Gull products.

The pxemises comprising Ginger's Roadhouse were leased

by Gull until 8 years ago when they were acquired by Ramilo.

They purchased all their petroleum product requixements

Towards the latter part of 1984 the xoadhouse ranked in

the top two ox three Gull outlets in terms of fuel sales.

In spite of this, and for reasons which are not material

for present puxposes, the Lambexts fell upon hard financial times.

Brunet required finance in order to effect the purchase and through a fixm called Citizen Finance, was put in touch with

two potential investors, William Sheehy and Lindsay Lee, the

As a xesult of Brunet's appkoach, Sheehy and Lee decided that Sinbads would purchase the business and that they would

They entered into a written agreement with Brunet dated

Undex that agreement Brunet would ultimately control the business by acquiring all the issued shares in Sinbads. For that he was to pay to Sheehy and Lee the sum of $140,000.00 in 13 weekly instalments of $400.00 commencing 16 November 1984, and

The shares were not to be transferred until payment in

"The roadhouse known as Gingex's Roadhouse (Gull) at Great Noxthern Highway, Upper Swan is to be operated by Joseph Peter Brunet with the company guaranteeing payment of fuel account and xent and rates and other terms of the lease with Gull Petroleum. Any violation of any clause or xequirement with Gull Petroleum will also cause immediate cancellation of this agreement and forfeiture of all funds paid to date."

By xeference to this document and the minutes of a meeting of Sinbads' dixectoxs held on 16 Octobex 1984, it seems

that what Sheehy and Lee contemplated was that Brunet would xun

the business, pay all the overheads and retain the profits, subject to his obligation to make instalment payments of the

Sinbads was to acquixe the business from the Lamberts for a puxchase price of $70,000.00. In addition there was a further sum of $20,000.00 which may have been for stock. Of the puxchase price 1t seems $30,000.00 was to be paid by Brunet dixect to Gull on 9 November and the sum of $40,000.00 to be paid by

The agreement with Brunet came aftex discussions between

Sheehy, Lee and Mr Michael Green, a dixector of Gull.

Green had been approached by the Lambexts towards the end of October 1984. They told him of their wish to sell the business and to use the proceeds of sale to pay out theix fuel debt to Gull. Gxeen asked to meet the prospective puxchasers. As

a xesult he had two meetings with Sheehy and Lee on 2 and 9

At these meetings they discussed the texms upon which Gull would deal with Sinbads if it were to buy the business from

It can be inferred from Green's status as a dixector of Ram1ilo and the nature of the association of that company with Gull that he represented both Gull and Ramilo at these discussions. Sheehy and Lee did not become aware of the separate existence of

Ramilo until Sinbads executed the lease of the premises.

The lease agreement executed by Ramilo and Sinbads was for a texm of 3 yeaxs commencing 9 Novembex 1984 at an annual

petroleum products to Sinbads on request. Sinbads however denies

that it agreed to purchase all of 1ts requirements from Gull.

It was also not in dispute that Gull would grant a licence to Sinbads to use 1ts logo or mark in relation to the sale of Gull products from the sexvice station during the term of the

Gull pleads an express oral agreement to that effect, while Sinbads says the grant is to be implied from the fact that the premises were let as a Gull sexvice station and by virtue of the prohibition in the lease against any intexfexence with the

properly be regarded as one ox two ox three sepaxate agreements

On balance the bettek view probably is that Sinbads entered into one agreement with Gull and anothex with Ramilo. So fax as the supply and licence agreements axe concexned, I consider it makes no difference in this case whether they be xegaxded as

On balance, the bettex view is that the paxties appxoached the mattex as one txKansaction yielding one tripartite

On the question of fuel purchases, Green clearly xemembered saying to Sheehy that Sinbads would have to agree to

buy petroleum products from Gull. In his affidavit evidence he

"I xemembex saying to Sheehy words to the effect that "you" (meaning Sinbads) will buy Gull petxoleum and Gull will supply into the site (meaning the sexvice station). You will operate the site as a Gull site. I xecall that Sheehy and Lee both agreed to that. They said "yes we agree" ox words to that effect."

Sheehy recalled lengthy discussions about the pxoposed

by Green that all of the fuel was to be purchased from

and Lee had discussed with Green delivery and payment

conceded that they expected that Brunet would acquire

denial of any discussion of puxchase requirements with Green.

Both xegaxded the question of fuel purchases as one for

Brunet. Lee conceded that he thought Brunet should buy his fuel

His evidence on this point seemed to tread a fine line.

It is illustxated by the following exchange in cross examination:-

"MR ARCHER: Did you know in February of 1985 that it was a xequixement of Gull that Mx Brunet buy his fuel - all his fuel from Gull? --- Well, we probably got advice that they were - I think we did get advice that he was not buying fuel from Gull and we became most upset because we thought he pxrobably should be buying fuel

In that letter it was said that Brunet had failed to perform

cextain covenants on his paxt undex the agreement of 15 November.

He was then refexxed to a letter, in substance a default

sent by Sheehy and himself to Brunet on 2 Febxruaxy 1985.

sale of products other than Gull through Gull pumps and bowsexs."

"You knew in February of 1985 when you wrote that letter that 1t was a xequixement of Gull that Mr Brunet buy all his fuel from Gull, did not you? --- Well it looks like it; that is the way it is woxded, but I would like to say that, you know, we wanted him to buy all the fuel from Gull, but only because we felt part of the Gull family, but we had no legal document. The only legal document we had was a lease, nothing else.

Regaxdless of the familial connection or othexwise, ox the pxesence ox absence of documents, you knew at the time you signed that letter that it was a requirement of Gull that Mr Brunet buy all his fuel from Gull Petroleum. Now, that is xight, is not 1t? --- Alxight;

And it was paxt of the agreement between you and Mx Sheehy of the one part, and Mx Brunet of the other paxt, xeached in Novembex 1984 that Mr Brunet would puxchase all his fuel fxom Gull was not it? --- Well we instructed him to do 1t; yes, from ourselves."

Nevertheless later in cross examination Lee denied ever

having discussed with Green a xequixement to puxchase all fuel

The default letter to Brunet does not in texrms xefex to any breach of a covenant to puxkchase only from Gull. The "requixements of Gull" referred to in the letter are identified, namely to pay cash for all fuel and not to sell pxoducts other

As to the lease agreement between Ramilo and Sinbads there 1S nothing in that which refers to any requixement to

They essentially maintained theix position and denied

any express discussion of a fuel purchase requixement with Green.

All three witnesses stxuck me on this point as witnesses

The difficulty of fact finding in such a case is exacerbated by the lapse of just ovex 2 years since the

I think it quite possible that nothing was' said expressly about a xequixrement for the puxchase of petroleum products fxrom Gull. But if nothing was said, then 1t was the

unspoken assumption on all sides that Sinbads would acquixe its

Green was not cross examined upon his vexsion of the

conversations with Sheehy and Lee in so far as they related to

His evidence is unchallenged except by the conflicting

At para.14 of his affidavit, he xemembexed the conversation quite cleaxly because Guli's interests in having a lessee operate the site was to make sure that it operated as an

Sheehy and Lee, according to Green, sought assuxances

that they would be able to get weekend supplies of fuel from Gull.

His testimony in this respect, which was on affidavit,

It is consistent with a desire on the paxt of Sheehy and Lee to ensure that, given Gull as their sole soukce of supply,

thexe would be no difficulties in that supply on weekends.

contemplate that he would be buying his fuel fxom Gull.

prepared to guaxantee fuel accounts for puxchases from sources of

In the event, I am of the view on the balance of probabilities, that it was an express texm of the agkeement or

agxeements that Sinbads would obtain all of its supplies fxom

In its defence Sinbads xaised the allegation that the parties agreed that pending his acquisition of the contxol of Sinbads, Brunet was to be pexmitted to operate the sexvice station on his own account, would xeceive supply of petroleum pxoducts fxom Gull and would be pexsonally liable to Gull for payment.

Accoxding to Green thexe was some discussion at his

meetings with Sheehy and Lee as to whether cheques would be

He was told that Brunet would manage the sexvice station

but that he could not sign cheques for the company.

In this regard he adopted the same position in relation to the acceptance of cheques from eithex Brunet or Sinbads. That 1s to say a bill of sale would be xrequixed ovex the assets of the

business in order to secure payment of the fuel accounts.

If Green was told, as 1t seems he was, that Brunet would be writing cheques on his own account, then it is difficult to see

how he could not have infexxed that Brunet would be running the

On the acquisition of the business from the Lambexts Brunet paid $30,000.00 to Gull, presumably in paxt satisfaction of

Aftex Brunet began to operate the sexvice station on 9 Novembex 1984, Gull accepted cheques dxawn by him, and I infer, on

Nevextheless I do not consider that Bxrunet's xole and the possible existence of a dixect contractual relationship

between him and Gull on an interim basis is critical to the

In the end the case 1s concerned with the contractual

It is however impoxtant to appreciate the approach to the1x company's contkactual obligations taken by Sheehy and Lee in

In his evidence in chief, Sheehy described Brunet as the

operator and xunnex of the xoadhouse. Sinbads was no more than an

"He oxganised the whole venture, actually found the

site, found the sale and we just financed it, and as a security Sinbads held the lease and we seen that as our

Brunet operated the sexvice station from 9 Novembex 1984

until Apxil ox May 1985 when he agreed to vacate the premises.

In December 1984 payment was stopped in xespect of three

It was probably late in January 1985 that Sheehy and Lee were told of Gull's dissatisfaction with the operation of the

On 2 February 1985 they wrote to Brunet alleging that he was in default of his agreement of 15 November 1984 and

i. Failure to pay instalments of the purchase price for the Sinbads' shaxes which had fallen due.

Failure to comply with Gull's requirements including cash payments for fuel supplied.

The lettex also complained that Brunet had been selling

products other than Gull fuel through Gull pumps and bowsers.

On 8 February Green sent a letter to Sinbads setting out

The failure to make full payment of the purchase price for the acquisition of the business from the Lambexts.

The puxchase of fuel supplies fxom sources other than Gull.

He demanded immediate rectification of these problems,

"you will recall that while negotiating the Lease we spoke of offering you the option of renewing the Lease for a further three (3) year period. This was conditional upon the business being operated in what we considered a satisfactory manner. In view of the manner in which the business 1s presently being operated, we hereby advise that this option of renewal of the lease has been revoked."

Sheehy, Lee and Sinbads commenced proceedings in the

Supreme Court against Brunet claiming, inter alia, possession of

In or about May 1985, in circumstances which were never

made clear, Brunet vacated the premises and Sheehy and Lee sold their shares in Sinbads to a company called Thorley Holdings Pty Ltd, one of whose directors was a Paul Miovetis, then the State

Prior to 30 May 1985 Miovetis became involved in Ginger's Roadhouse through an unspecified connection with a company known as Saki Corporation, which he claimed had some

The nature of that interest 1s obscure, but 1t appears that Brunet had been negotiating with Saki with a view to getting

out of his financial difficulties. Miovetis claimed to have lent Brunet money, but whether this was in his personal capacity or

During December 1984 and January 1985 he occasionally

The history of shareholding arrangements in Sinbads after the disposal of Sheehy and Lee's shares on 30 May 1985 is, as explained by Miovetis, well nigh unintelligible. As a witness

The share register of the company does not record any

The minutes show no record of any deliberations relating

to the sale of shares to Miovetis or associated interests prior to

A minute of a meeting of directors held on 30 June 1985 and signed by Miovetis records the resignation of Messrs. Lee and Sheehy and the appointment of himself and one Angelo Kasarkis as

"Resolved that the company be purchased by Paul Miovetis and Angelo Kasarkis with the arrangement of a bill of sale to William Sheehy and Lindsay Lee.

Resolved that trading operations be carried out via Thorley Holdings Pty Ltd trading as Ginger's Fuel

A further minute dated 1 July 1985 records the resignation of Angelo Kasarkis and the appointment of a Richard

A minute of 6 February 1986 records the tabling of a

transfer of five shares from Thorley Holdings Pty Ltd to Richard

Paul Diamond and a transfer of one share from the company to Linda

The minute also noted the "transfer" of the business name "Ginger's Fuel Supplies" from Thorley Holdings Pty Ltd to

examination he owned no shares in Sinbads after 6 February 1986

He resiled from this position when it was put to him

that he had to be a shareholder in order to be a director of the

Ultimately he produced two undated transfers to him of

the six shares in Sinbads. The transfers were signed by Richard

A draft annual return for 1985 showed Miovetis holding one share and Kasarkis holding five. The draft return for 1986

Regardless of the rather aimless paper shuffling in relation to the Sinbads shares, it 18 apparent that from 30 May

1985 until trial effective control of the company was exercised by

The terms on which he or Thorley Holdings Pty Ltd acquired the shares from Sheehy and Lee do not emerge with any

Sheehy gave evidence that he and Lee sold the shares in

Sinbads to Thorley Holdings and that the sale was "organised" by

Sheehy and Lee however retained a bill of sale over the stock and plant of the business as security for the repayment of

what Sheehy described as "the balance of the loan".

It seems, although it was not explained, that this was a reference to moneys advanced by Sheehy and Lee to Sinbads in

connection with the original purchase of the business from the

As already noted, by a minute dated 1 July 1985 there is recorded a resolution of the directors of Sinbads to appoint N.

Burgess as "manageress of Ginger''s on contract until 1987".

In or about June 1985 Mrs Noeleen Burgess heard from a friend that Ginger's Roadhouse had closed down. She approached Miovetis about the possibility of taking over the catering side of the business. Although her evidence does not indicate when this approach was made, it appears likely, as Miovetis says, that 1t

was in June 1985, Brunet having vacated the premises on 30 May.

Mrs Burgess told the Court that Miovetis was not interested in letting her operate the restaurant component alone. He wanted her to take over the running of the whole business. Miovetis on the other hand, said that their initial arrangement was that she would take over the catering side in conjunction with

Whatever the true position initially, it is clear that by the end of June Mrs Burgess was running the entire roadhouse

At that time she entered into an agreement with Sinbads the terms of which were recorded in a Deed of Covenant. An

unexecuted, unsigned and undated copy of the Deed was tendered in

evidence without objection. According to Miovetis a deed in the

On the face of the agreement Mrs Burgess was appointed by the company to manage the business of Ginger's Roadhouse from 21 June 1985 until the date of termination of the lease and in any

event for a term not exceeding 8 November 1987, the expiry day of

The deed contained a number of covenants to conduct the

It also provided for her to take over and assume liability for and pay for all stock, plant and equipment purchases and all expenses, costs and outgoings of any description incurred in the running and maintaining of the business as and from 21 June

She promised to pay to Sinbads the sum of $20,000.00 by 16 instalments of $1,000.00 per week beginning on 18 July 1985 and

An additional payment of $300.00 per week was to be made to Sinbads each week commencing on 18 July 1985 and thereafter

She was to be entitled to retain as "wages" the balance of the turnover of the business after deducting the expenses and

Sinbads or any other party were not to be her responsibility.

Mrs Burgess was to manage the business but take such directions from Sinbads, its servants or agents as might be

There was a confidentiality clause which provided:-

"9, This Deed shall be treated by both parties as strictly confidential and the neither Deed nor its contents shall not be disclosed by either party except to her her or its legal advisors or accountants and no cop1es thereof shall be taken." (sic)

At a glance

Court

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Judgment (651 paragraphs)

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Legislation Cited (1)

Cases Cited (3)

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