"HIS HONOUR: Are you worried about the word 'peasants' Mr Gyles?
MR GYLES: Yes.
HIS HONOUR: Look, I am sorry about that. It was - I was just really treating it in a metaphorical statement. I did not mean it literally, obviously.
MR GYLES: Of course not, your Honour.
HIS HONOUR: Well, what do you want me to do about it?
MR GYLES: Well, your Honour, may I take some instructions, your Honour, about the situation?
HIS HONOUR: All right. Will we have Mr Higgs back in the witness box?
MR PARKER:Yes."
Later on 22 October the following exchange occurred between counsel for Mobil and his Honour:
"MR GYLES: Now, your Honour, we would point out our concern is that what was said yesterday to Mr Symington indicates, your Honour, a view about his position in relation to the dealer network which is quite critical to the case and that is, was there (a) proper communication with the dealer network; and (b) if your Honour is approached on the matter is there a serf-like or vassal-like relationship between licensed franchisor and franchisee then we are in a hopeless position. I mean, it really ---
HIS HONOUR: What is the proposition, Mr Gyles, that I started biased or I have become biased or what?
MR GYLES: No, your Honour.
HIS HONOUR: Well, what is the proposition?
MR GYLES: No, your Honour, that exhibits bias, that is all, your Honour, within the ---
HIS HONOUR: What it does is it exhibits the fact that as the case has gone on, and we are now in its seventh day, I have acquired some impressions about the case and I always thought when I was at the bar that it did not do any harm for the judge to give you some idea of what he was thinking and that is all I am doing.
MR GYLES: Yes, quite your Honour.
HIS HONOUR: I mean, if you want to know do I feel critical of aspects of Mobil's behaviour, I think I indicated as clearly as words could do so last week I did; I also said that I would keep an open mind about it until the evidence is completed and that is still my position.
MR GYLES: Your Honour, we did not complain about that then and I do not complain about that now nor about other matters, I have simply - nor, your Honour, would I ever submit or suggest to your Honour that judges and your Honour in particular should not express views; of course that is appropriate. I am bound, your Honour, to - the High Court tells us we are bound to raise these matters with the judge if there is any concern and I am doing so.
HIS HONOUR: So it is apprehended bias, is that the proposition?
MR GYLES: Yes, apprehended bias, your Honour.
HIS HONOUR: Thank you, Mr Gyles. I do not propose to disqualify myself; let us get on with the case."
The principles concerning the disqualification of a judge on the ground of apprehended bias are well established. The governing principle is that apprehended bias may be established if a fair minded observer might entertain apprehension of bias by the judge or prejudgment of the issues or the credibility of a material witness: R v Watson (1976) 136 CLR 248; Livesy v New South Wales Bar Association (1983) 151 CLR 288; SCI Operations Pty Limited v Trade Practices Commission (1984) 2 FCR 118 per Sweeney J at 138-141, Lockhart J at 157-158 and Sheppard J at 168-174; Vakauta v Kelly (1989) 167 CLR 568; Galea v Galea (1990) 19 NSWLR 263; Kaycliff v Australian Broadcasting Tribunal (1989) 90 ALR 310; Hassam Khadem v B A Barbour (1995) 38 ALD 299.
Having carefully read the relevant pages in the transcript of the trial, in our opinion this ground of appeal must fail. The trial Judge expressed concern at the fact that the case was a very large one involving substantial expenditure of money in legal costs. His Honour raised the possibility of the parties having serious discussions to resolve their differences. His Honour's later reference to "peasants" was, as he said, intended to be metaphorical and obviously not to be taken literally.
In our opinion in all the circumstances neither the parties nor the public could entertain any reasonable apprehension that the trial Judge might not have brought an impartial and unprejudiced mind to the resolution of the issues in the case. It could not be reasonably thought that his Honour had in some way predetermined the outcome of the case or any issue in it or formed an adverse view against any witness or against the prospects of success of Mobil or any other party.
This ground of appeal fails.
2. Contractual issues
Was there an offer of a promise to be accepted by the performance of an act of attaining 90 per cent or better in Circle of Excellence judgings?
General
The first contractual issue to arise is that of the legal effect, from the perspective of contract, of what Mr Stumbles said at the Convention. The lengthy passage from Mr Stumbles' Convention address must be construed in context. It was part of a speech whose purpose was to rouse, stimulate, encourage and challenge Mobil dealers at a Convention breakfast to perform better and whose tone might be described as that of "corporate enthusiasm".
The Team Pak and Circle of Excellence systems of assessment and rewards were already in place. A little before the passage in question, Mr Stumbles spoke of changes to be introduced as from January 1992. After referring to changes in the systems of training and merchandising, he spoke of changes to the Circle of Excellence system in the following passage:
" ... we are going to make some changes in 1992 to the way we run the Circle of Excellence program. Firstly we will recognise at the celebratory dinner with plaques and badges for the top 35 sites. Secondly we will recognise and reward all sites who achieve scores over 95% and there will be a third tier of recognition for sites achieving over 90%. It's important to recognise the contribution and the efforts of individual dealers and individual sites but I think the most significant change will occur in how we assess and award the major prize. The big one. I don't know yet what that reward's going to be. This year it was free travel package to this convention plus time in San Francisco but next year we're going to make that major award on a territory basis. We are going to reward the best teams the whole territory will win the prize, based on the average score of all sites in the territory. Now in some country areas with lower site numbers we may need to combine two adjacent territories to get the numbers right. So in the winning territories the dealers and the territory managers will get the major reward based on the average unless you're below 80%. Even if the territory wins we're going to exclude from the award any site scoring below 80%. It's obvious really I don't know why we didn't do something like this earlier because we keep talking about team but we've only been rewarding individuals. Now we are still going to reward individuals but from now on we are going to have a major focus on the team and you will have all of the details of that before year end." (emphasis supplied)
What is significant for present purposes is that this passage addresses performance in calendar year 1992 and rewards to be made at the end of that year in respect of that performance.
By contrast, the later and lengthier passage which was set out earlier in these Reasons with which the case is concerned, relates to a reward to be made no earlier than upon expiry of the terms of the current franchises. Mr Stumbles referred to this as being "a long way off for most of [his audience]" and referred to those who "came aboard at the end of 1988" as having "just over six years to go". He was referring to the end of 1997. It is convenient to think of all franchisees as having initial terms of three years followed by two options of renewal of three years each - a total existing tenure of nine years.
According to the statements of claim, the franchise agreements of the applicants had expiry dates ranging from 31 October 1995 (in the case of Fahic Pty Ltd) to 19 December 1998 (in the case of Barbotine Pty Ltd). This might be thought to suggest that the numerous applicants below had, as at the time of the Convention in 1991, periods of from four years and three months to seven years and five months to run on their franchise agreements. But the position is not so straightforward because the dates given in the statements of claim do not allow for renewals. Allowing for renewals, the expiry dates of Lyndel, Thorpe, Wellcome, JTP and Roseville, for example, were as follows:
Lyndel 30 April 1999
Thorpe 31 December 1997
Wellcome 31 December 1999
JTP 31 December 1997
Roseville 30 November 1997
It is interesting to consider certain implications of the franchisees' one-for-one and nine-for-six cases. The one-for-one case would give all these franchisees a free renewal for one year many years hence, even if they attained 90 per cent only in 1992 and performed poorly in all the intervening years of their remaining tenure. The nine-for-six case raises more anomalies. According to that case, performance consistently in all of the next six years was necessary. Roseville did not have quite six calendar years remaining. Its Circle of Excellence judgings for 1997 may or may not have been completed by 30 November 1997. Others of the numerous applicants below may have had terms ending substantially earlier than 30 November 1997. For them it would be clear that the supposed nine-for-six offer offered nothing. Lyndel and Wellcome or its predecessor, on the other hand, would have earned a nine-year renewal free of charge by 31 December 1997 or, in the case of Wellcome, perhaps 31 December 1998, no matter that they performed poorly during the remaining year or two of their existing tenure - an invitation to "rest upon their laurels" in those years.
Apparently the supposed nine-for-six promise could be earned only once, by performance over "the next six years", that is, from 1992 to 1997; and could not be earned again during the nine year extension period. Unlike the nine-for-six promise, the one-for-one promise could continue to be "earned" during the period of any extension after the current period; earnings of the one-for-one extensions could yield an overall period of many years, certainly many more than the nine years that could be earned by virtue of the supposed nine-for-six promise. A franchisee might be better off not attaining 90 per cent or better for all of the next six years but doing so in five years only, "failing" in one year so as to preserve the possibility of earning, ad infinitum, the one year extensions.
The variety of the circumstances in which franchisees were placed and the anomalies and disparities in the ways in which the supposed promises could have effect, coupled with the fact that on any reckoning, they would not fall due for performance until quite some years hence, combine to suggest strongly that Mr Stumbles' speech should not readily be construed as a legally enforceable offer of a promise.
Against this background we approach the detail of the address. Consistently with what we have said above, there are numerous indications in the address that the system of reward by renewal of tenure of which Mr Stumbles spoke was in a developmental stage only. In the second sentence, Mr Stumbles said that Mobil was "inviting all dealers to participate in the development of ['world class' or 'gold'] standards"; in the third sentence, he said that Mobil wanted "to develop a set of world class standards"; in the fifth sentence he invited his hearers to "work with [Mobil] to develop and implement these world class best practices"; and, importantly, in the seventh sentence, he said:
"Now we'd aim to work through what kind of things this level of performance will involve through a Team Pak franchise development group which will work with you over the next 5 months to pull together input and efforts by dealers and the company".
The reference to "the next 5 months" is clearly a reference to the months August to December 1991, the period immediately prior to the arrival of 1992, the first of the six years in question.
Mr Stumbles then passed to "the next major issue" of his address, "tenure for performance". He used that expression and it appeared in a caption.
In its submissions, Mobil seeks to emphasise the following extracts from this part of Mr Stumbles address, as showing that was being spoken of was no more than an idea that was being developed:
(a) "we're working on a concept that will reward excellence and build that long term relationship";
(b) "we're working on a way for our best dealers to secure extended tenure and to be able to do that without any kind of fees or anything like that";
(c) "there is still a lot of work to do on this idea so we haven't finalised how it's going to work and we're going to have to talk with your dealer council representatives about it as we finalise what we're planning to do";
(d) "let me give you a bit of an idea of what we have in mind";
(e) "Where we started was to say let's give each dealer who achieves a 90% or better rating ...";
(f) "the problem is that the Franchise Act (the PRMF Act) ... makes it very very difficult to do something like this";
(g) "we have more work to do and where we're at at the moment is that maybe the only way to do this is to say that if you achieve 90% each year for the next 6 years then we'll guarantee you another 9 years as of right, no fees just a renewal";
(h) "Now we've got a lot more work to do on this";
(i) "we will find a way";
(j) "Now we haven't finalised our views on this aspect either".
The extracts quoted, particularly in the light of the matters to which we referred earlier, strongly indicate the tentative and preliminary nature of the scheme as outlined. We have come to the view that a proper construction of what Mr Stumbles said, paying due regard to the captions which appeared on the screen during the speech, was not in the nature of an offer of a promise of either the one-for-one or nine-for-six character.
One-for-one
The following is the relevant part of Mr Stumbles' address on which Roseville and JTP rely in their appeals:
"Now there is still a lot of work to do on this idea so we haven't finalised how it's going to work and we're going to have to talk with your dealer council representatives about it as we finalise what we're planning to do. But let me give you a bit of an idea of what we have in mind. Where we started was to say
CAPTION: Basis for extention [sic] [caption displayed for 32 seconds]
One extra year for each year at 90%
lets give each dealer who achieves a 90% or better rating in the Circle of Excellence judgings in a given year an additional year's tenure at no cost so let's say that at the end of 1991 you have 6 years left. If during the 1992 Circle of Excellence judgings you achieve 90% or better throughout then at the end of 1992 you would still have 6 years left, that is for achieving a 90% or better rating during 1992 we would give you an extra year.
CAPTION: PRMF Act
Makes extension difficult to implement
The problem is that the Franchise Act the PRMF Act which is supposed to be there to help you actually makes it very very difficult to do something like this. So we have more work to do and where we're at at the moment is that maybe the only way to do this is to say that if you achieve 90% each year for the next 6 years then we'll guarantee you another 9 years".
We think that the trial Judge was clearly correct in concluding that there was no offer of a one-for-one promise. Mr Stumbles made it clear that, rightly or wrongly, Mobil understood that the PRMF Act made it "very very difficult" to make a one-for-one offer and so he did not make one.
We do not accept the submission that his Honour failed to pay due regard to the caption, "Basis for extention [sic] One extra year for each year at 90%". He viewed the video of Mr Stumbles' speech including the background captions and referred to them in both of his judgments. We have also viewed the relevant part of the video recording of the address including the associated captions. They do not persuade us to think that an offer of a promise of one extra year for each year of attainment of 90 per cent or better in circle of Excellence judgings was being made. The captions, although significant, were no more than, and must have been understood to be no more than, eye-catching ways of directing the audience's attention to the "topics", "issues" or "subject matter" being discussed at the various stages in the course of the address. It would be perverse to seize upon a caption and to ignore what Mr Stumbles said on the subject matter of it. But even if one were to set at naught the spoken word, the franchisees' case of a one-for-one contract would still face the difficulty that the very next caption, "PRMF Act makes extension difficult to implement", suggests that Mobil was not offering "one extra year for each year at 90 per cent" as mentioned in the preceding caption. Whether Mobil was correct in blaming the PRMF Act for its non-implementation of a one-for-one scheme is irrelevant to the issue whether a one-for-one offer was made.
Both Mobil and the franchisees made submissions addressed to the parties' conduct extrinsic to the address itself. While we have reached the conclusion expressed above as a matter of construction we will mention three other matters to which reference was made.
First, the one-for-one part of the speech was not included in the video tape of the Convention highlights or in the September issue of the "Mobil Marketer". Accordingly, it was, so far as the evidence reveals, heard only by those who were in Mr Stumbles' audience at the Convention and by Mr Morris of Lyndel who saw a video screening of the entire speech. In particular, although Mr Fossano of Roseville heard it at the Convention, it was not heard by JTP's Mr Riddle who did not attend the Convention.
Secondly, if the reaction of one dealer to the speech is evidence of how it was reasonably to be understood, there is the evidence of the dealer Alan Upson recorded in the video of Convention highlights, who said:
"The fact that they are looking at the possibility of extending people's franchises dependant [sic] on achievement of 90% or more in standards, that's got to be appealing to every franchisee in Australia." [emphasis supplied]
Too much can be made of this: against it is to be set the evidence of the reactions of those franchisees who gave evidence before his Honour. The question of the proper construction and effect of Mr Stumbles' address is a question for the Court. On this question, as distinct from that of inducement, the evidence of the reaction of a few particular hearers is of little assistance.
Thirdly, the tear-off slip attached to the "Mobil Leading The Way" brochure which was later provided by Mobil to franchisees and completed and returned by some of them, shows that Mobil did not regard itself as having made the suggested one-for-one offer by means of Mr Stumbles' speech (incorporating, as it did, the element of acceptance by performance), and that the franchisees who read the slip could not, from the time of doing so, have understood that Mobil regarded itself as so bound. We say more of the tear-off slip below.
Nine-for-six
The trial Judge found an offer of a nine-for-six promise in the following passage:
"So we have more work to do and where we're at at the moment is that maybe the only way to do this is to say that if you achieve 90% each year for the next 6 years then well guarantee you another 9 years as of right, no fees just a renewal. Now we've got a lot more work to do on this but the commitment that we're making to you here today is that we will find a way to extend your tenure automatically no costs if you consistently achieve 90% or better in Circle of Excellence judgings." (emphasis supplied)
This passage follows immediately that in which Mr Stumbles said that the one-for-one proposal was made "very very difficult" by the PRMF Act and that Mobil had more work to do on the tenure for performance reward. In the first sentence set out above he says that the stage reached as at the time of the Convention was that "maybe" the only scheme consistent with the PRMF Act is a nine-for-six one.
The terms of the first sentence ("we have more work to do", "where we're at the moment", "maybe") are not those of a present offer. That the first sentence is not to be understood as representing a commitment by Mobil is also made clear by the second and emphasised sentence: that sentence marks a passing from a statement of what Mobil is not prepared to commit itself to, to the language of commitment. The passage set out above is in fact as consistent with a rejection of a nine-for-six scheme as it is with a countenancing of it.
The import of the second and emphasised sentence, read in the context of the problems previously outlined by Mr Stumbles, is that while Mobil could not promise an extension of tenure for any particular period, and, concomitantly, could not define the degree of "consistency" of attainment of 90 per cent or better in Circle of Excellence judgings to be achieved, it could and did assure franchisees that it would find some way to grant some extension automatically and without cost if a dealer achieved some degree of consistency of 90 per cent or better scores in those judgings. No doubt, the reference to "commitment" was taken seriously and was intended to be taken seriously. The sentence quoted came at the end of Mr Stumbles' references to the problems which had prevented Mobil from implementing a simple one-for-one plan. He must also have known of the unsatisfactorily discriminatory nature of the nine-for-six alternative. Yet he wished to finish on a positive, reassuring note. The best that he could fairly manage was the sentence in question. But in our respectful opinion, an offer of a promise to "find a way" to "extend [for an unspecified period]" a dealer's tenure if the dealer "consistently [over some undefined period]" achieved 90 per cent or better in Circle of Excellence judgings, is simply too vague and uncertain to be capable of giving rise to contractual obligation. Nor do we think that the sentence can be construed with that which immediately preceded it, to indicate that Mobil would grant a nine-for-six extension if it should conclude that this was the only lawful way to provide a reward of tenure for performance.
We have reached this conclusion as a matter of construction of Mr Stumbles' address and have taken into account the accompanying captions, including that reading,
"90% or better for 6 years
Automatic 9 year renewal."
We need not repeat what we said earlier about the role of the screened captions.
Certain circumstances extrinsic to Mr Stumbles' speech may be noted. First, the second and emphasised sentence set out above was the only passage from Mr Stumbles' speech which was communicated by means of the "Convention highlights" video and the September 1991 issue of the "Mobil Marketer". Accordingly, in respect of persons who did not attend the Convention (with the exception of Mr Morris of Lyndel who saw a screening of the entire address), it is quite impossible to construe what they heard and saw as an offer of a nine-for-six promise.
Further, we repeat what we said earlier about the reaction of dealer Alan Upson as recorded in the video tape of Convention highlights and about the significance of the tear-off slip.
The learned trial Judge emphasised that Mr Stumbles intended his speech to be taken seriously and acted upon, and that he was, for the purpose, the "mind" of Mobil. His Honour said of Mr Stumbles:
"He intended, and so Mobil intended, that his offer of tenure for performance would motivate franchisees to improve their businesses; and he believed this 'would in turn improve Mobil's business'."
Referring to the tear-off slip, his Honour said:
"Franchisees were asked to commit themselves in writing to 'accept the challenge to exceed 90% in Circle of Excellence judging and qualify for extra tenure.' This is the language of mutual commitment."
Notwithstanding Mr Stumbles' intention and the 'commitment' sought by means of the completion and return of the tear-off slip, in our respectful view, the problem remains for the franchisees' case in contract, that neither the terms of the speech nor those of the tear-off slip were sufficiently certain to give rise to a contract.
What we have said above addresses the question whether there was an offer of a one-for-one or nine-for-six promise to be accepted by performance of an act to be found in Mr Stumbles' speech. We will deal later with the separate question whether Mr Stumbles' address laid sufficient foundation to activate an estoppel or to support the claim under s 52 of the TP Act.
It will next be necessary to consider other contractual issues which would arise if, contrary to our conclusions expressed above, Mobil did, through Mr Stumbles' speech, offer the nine-for-six promise.
Revocation of offer
Mobil submits that even if Mr Stumbles' speech could be characterised as containing an offer of a nine-for six promise,
(a) Mobil revoked the offer before the earliest time when acceptance could have occurred (1997);
(b) the offer was not accepted because none of the five franchisees in question attained 90 per cent or better in Circle of Excellence judgings in all six years 1992, 1993, 1994, 1995, 1996 and 1997; and
(c) specific performance was not an available remedy in all the circumstances.
These submissions raise several issues relating to unilateral contracts.
A unilateral contract is one in which the act of acceptance of the offer is also an executed consideration for the promise offered. The act of acceptance called for by the offer, once completed by the offeree, leaves the contract executory only on the part of the offeror. A familiar illustration is the offer of a reward for the return of lost goods or for the provision of information. The supposed nine-for-six promise was the offer of a reward (nine years' free tenure) in return for an act (the attaining of 90 per cent or better in Circle of Excellence judgings over the six years 1992-1997).
A distinction must be recognised. In the case of some unilateral contracts, it may remain within the offeree's power unilaterally to complete the act of acceptance, and thereby to furnish the executed consideration sought, that is to say, without the necessity of cooperation by the offeror and even notwithstanding a purported revocation of the offer. An example is the furnishing of sought information by posting it in an envelope addressed in a particular way. There may also be a case (it is, perhaps, difficult to imagine one) in which the offeror may prevent the offeree from completing the act of acceptance, and thereby furnishing the executed consideration sought, yet the offer will be held not to have been revoked. In the present case, Mobil made it clear to its dealers that its supposed nine-for-six-offer was revoked. But, in addition, by terminating the system of Circle of Excellence judgings, it made it impossible for its dealers to complete the act of acceptance called for by that supposed offer. In the present section of these Reasons, we address only the question whether Mobil effectively revoked its supposed offer.
The learned trial Judge noted that there was some dispute between the parties as to when Mobil made it clear that it would not be bound by Mr Stumbles' promise. Mobil contended for an earlier date and the franchisees for a later one. The various contending times were
(a) June 1993 when Mobil informed the NDAC and later announced in its newsletter, that the "reward of free tenure" would be available only to franchisees achieving 90 per cent or better for 1992 and 1993 and that the mechanism for reward would be by discount of future franchise fees;
(b) November 1994 when Mr Symington wrote the Roneberg letter; and
(c) the latter half of 1995 when Mobil wrote its "offer letters".
The trial Judge thought it correct to say that Mobil did not make its intention clear prior to the writing of the "offer letters", by which time, his Honour observed, the Circle of Excellence judgings for 1995 must have reached an advanced stage.
It will be recalled that it was in January 1996 that Mobil announced, without giving reasons, the abandonment of the Circle of Excellence awards. The sequence of events, then, is that there was a purported revocation after which Mobil made it impossible for franchisees to complete the act of acceptance by attaining 90 per cent or better in Circle of Excellence judgings in the last two of the six years (1996 and 1997).
His Honour referred to discussions of the question whether an offeror of a promise for an act can effectively revoke the offer where performance of the act of acceptance has been embarked upon but not completed. He referred to Cheshire & Fifoot The Law of Contract (2nd Australian edition) at 137-139; Carter & Harland, Contract Law in Australia (3rd ed) at 67-69; Abbott v Lance (1860) Legge 1283; Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231; and Veivers v Cordingley [1989] 2 Qd R 278. He considered that the weight of authority was in favour of the proposition that,
" ... a person who makes an offer susceptible of acceptance by performance of an act, may not revoke that offer after the offeree has embarked upon performance of the act".
While his Honour thought that there was some difference in the authorities as to the proper juristic basis of this proposition and that "in a technical sense" he was not bound to follow the decisions to which he referred, he considered that he should follow them unless positively satisfied that they were wrong. He recorded that he was not so satisfied.
We would make several observations at the outset. It has been suggested to be unjust that an offeror should be at liberty to revoke the offer once performance of the act, which is at once the act of acceptance and the executed consideration, has commenced. This proposition is usually stated as if its truth were self evident and universal. We do not think that it is either.
(a) The respective positions of offeror and offeree vary greatly from the case of one unilateral contract to another. The following factors illustrate:
(i) The offeror may or may not know that the offeree has commenced performance;
(ii) The offeree may or may not have an understanding that the offeror is at liberty to revoke and that any incomplete performance of the act of acceptance by the offeree will be at his or her risk;
(iii) The notion of "commencement of performance of the act of acceptance" or "embarking upon the act of acceptance" is problematical and can lead to a result which is unjust to the offeror. By reference to the facts of the present case, could it be suggested that attainment of ninety per cent in the first year or even perfect operation of a service station for a day, a week or a month, albeit by reference to the offer, represents a commencement of attainment of ninety per cent in all six years so as immediately to bind Mobil not to revoke?
(iv) The act called for by the offer may be detrimental to the offeree, or of some benefit to the offeree as well as to the offeror, as in the present case;
(v) Although the offeree is not obliged to perform, or to continue performing, the act of acceptance and is at liberty to cease performing at any time, ex hypothesi, the offeror remains bound, perhaps over a lengthy period as in the present case, to keep its offer open for completion of the act of acceptance, without knowing whether the offeree will choose to complete or not to complete that act;
(vi) The circumstances of the particular case may or may not, by reference to conventional criteria, suggest that the parties intended that the offeror should not be at liberty to revoke once the offeree had performed the act of acceptance to some extent.
We do not accept that it is universally unjust that an offeror be at liberty to revoke once the offeree has "commenced" or "embarked upon" performance of an act which is both the sought act of acceptance of the offer and the sought executed consideration for the promise.
(b) A juristic basis which has been suggested to support the general proposition is that of an implied ancillary unilateral contract by which the offeror promises not to revoke once the offeree commences the act of acceptance of the principal offer. But even if such an ancillary contract should be implied in all cases, it is one thing to say that there is a contractually binding promise not to revoke and another thing to say that a purported revocation will be ineffective. The normal remedy for a revocation in breach of the ancillary contract would be an award of damages, the amount of which would be assessed, no doubt, by reference to the prospect that the act of acceptance would have been completed, and, by the same act, the offered promise duly "paid for". No doubt it might be possible for the offeree to seek specific relief in the form of an injunction restraining the offeror from revoking the offer and from preventing the offeree from providing the executed consideration. In the present case, the franchisees did not seek orders that Mobil maintain its Circle of Excellence judgings and that it not act upon or implement its purported revocation. Perhaps no-one thought of doing so. Perhaps the view was taken that an application for such relief would probably fail. We make no comment as to the prospects of success which any such application would have enjoyed.
(c) It seems that the general undifferentiated proposition could produce unintended and unjust results. Assume that X made a public offer of payment for the collection and supply of information of a kind described in the offer; that A, B and C embark upon collecting the information; and that A supplies it to X. According to the general proposition, X is bound not to revoke the offer made to B and C, notwithstanding the inutility of their subsequently supplying to X the information that A has already provided. It may be replied that the terms of the offer would include an implied qualification. But this very response bespeaks the inadequacy of a universal rule.
We turn next to the authorities which are said to support the general proposition. In Abbott v Lance (1860) Legge 1283, Lance stated to Abbott that he was willing to sell two stations and stock for a certain price on certain terms. Abbott was unwilling to purchase without inspecting. Inspection, which would involve travel to the properties, would take two months. The parties agreed that if Abbott should make, within that period, a bona fide offer to purchase at the price and on the terms agreed, but Lance should have sold to another party in the meanwhile, Lance would pay Ł100 to Abbott. Pursuant to the agreement, Abbott set out to inspect the stations which were about 500 miles away. When about half way there, he received a letter from Lance informing him that they had been sold. Abbott discontinued his journey and did not make an offer. The question for decision was whether Abbott was entitled to the sum of Ł100. The Court (Dickinson ACJ and Wise J) held that he was.
On any view, the case is an awkward one. It is reported in a mere three pages and the report contains internal inconsistencies. The Court itself said (at 1284):
"The agreement is certainly somewhat obscure and we have had some difficulty in coming to a conclusion as to the rights of the parties."
The Court described the contract as being in substance "an agreement by the defendant to keep the offer open two months, if the plaintiff will go and inspect the stations", yet as being also an agreement to sell to the plaintiff at an agreed price "unless previously sold". Similarly, their Honours referred to the defendant's promise to pay Ł100 as being dependent on his having previously sold to another, yet as being also dependent on the plaintiff's having made a bona fide offer to purchase.
The decision itself can be supported if the contract is conceived of as a promise to pay Ł100 as compensation for the plaintiff's having embarked upon his inspection trip and been deprived of the opportunity of making a bona fide offer within two months by the defendant's having previously sold to another. This view ignores the reference to a bona fide offer, but apparently this is exactly what their Honours did: they accepted that once the defendant had sold, he had made it impossible for the plaintiff to make a bona fide offer. It should be noted that the contract expressly reserved to the defendant the liberty to sell to another party subject to his paying Ł100 to the plaintiff.
In substance, the contract in Abbott v Lance was simply a promise to pay Ł100 as compensation for the plaintiff's time, trouble and expense in undertaking the inspection trip if the defendant should cause them to be wasted by selling to someone else, upon a condition that they would only be taken to have been wasted if the sale by the defendant occurred within two months and could be seen to have prevented the plaintiff from making, within that period, a bona fide offer to purchase.
The view of the case which we have advanced is consistent with the final, if characteristically tantalising, paragraph of the report (at 1285):
"The present case does not affect the general proposition that an offer may be retracted before acceptance, because we consider that the part performance of the journey constituted a sufficient consideration to give the plaintiff a right in the events that have happened."
Their Honours appear to be indicating here that they were treating the act of acceptance (and the executed consideration) as the undertaking of the trip, and, one presumes, non-abandonment of it down to the time of notification of the defendant's sale to another.
In Errington v Errington [1952] 1 KB 290 a father, wishing to provide a home for his son who had recently married, purchased a dwelling house. The father borrowed part of the purchase money from a building society to which he mortgaged the property. He promised his son and daughter-in-law that if they continued in occupation of the property and paid the instalments to the building society until the last one was paid, he would then transfer the property to them. When the father died, he left all his property to his widow. Until that time, the son and daughter-in-law had occupied the property and paid the instalments, but the son then left his wife and went to live with his widowed mother. The wife continued to occupy the house and to pay the instalments.
The mother unsuccessfully sought possession. What is important for present purposes is the following passage from the judgment of Denning LJ:
"It is to be noted that the couple never bound themselves to pay the instalments to the building society; and I see no reason why any such obligation should be implied. It is clear law that the court is not to imply a term unless it is necessary; and I do not see that it is necessary here. Ample content is given to the whole arrangement by holding that the father promised that the house should belong to the couple as soon as they paid off the mortgage. The parties did not discuss what was to happen if the couple failed to pay the instalments to the building society, but I should have thought it clear that, if they did fail to pay the instalments, the father would not be bound to transfer the house to them. The father's promise was a unilateral contract - a promise of the house in return for their act of paying the instalments. It could not be revoked by him once the couple entered on performance of the act, but it would cease to bind him if they left it incomplete and unperformed, which they have not done. If that was the position during the father's lifetime, so it must be after his death. If the daughter-in-law continues to pay all the building society instalments, the couple will be entitled to have the property transferred to them as soon as the mortgage is paid off; but if she does not do so, then the building society will claim the instalments from the father's estate and the estate will have to pay them. I cannot think that in those circumstances the estate would be bound to transfer the house to them, any more than the father himself would have been." (at 295 - emphasis supplied)
His Lordship does not indicate any juristic basis for the proposition that the father was not at liberty to revoke his offer "once the couple entered on performance of the act". Apparently payment of one instalment to the building society would satisfy this description.
In Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231, the plaintiff claimed that it had an agreement with the first defendant that the first defendant would exchange contracts for the sale of properties to the plaintiff if the plaintiff attended at its offices with a draft contract in terms agreed and a banker's draft for the amount of the deposit. The plaintiff alleged that it had performed, yet the defendant refused to exchange. The plaintiff claimed damages for breach of the oral agreement. The statement of claim was struck out on the basis that there was no note or memorandum satisfying s 40 (1) of the Law of Property Act 1925 (UK). An appeal was dismissed. In the Court of Appeal, Goff LJ said:
"Whilst I think the true view of a unilateral contract must in general be that the offeror is entitled to require full performance of the condition which he has imposed and short of that he is not bound, that must be subject to one important qualification, which stems from the fact that there must be an implied obligation on the part of the offeror not to prevent the condition becoming satisfied, which obligation it seems to me must arise as soon as the offeree starts to perform. Until then the offeror can revoke the whole thing, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer." (at 239)
Again, there is no exposition of the juristic basis for the general proposition stated.
In Veivers v Cordingley [1989] 2 Qd R 278, McPherson J appears to have applied the general proposition on the basis that Abbott v Lance was authority for it. The following is the relevant passage from his Honour's judgment:
"There can be no doubt that, ordinarily an offer can be withdrawn before acceptance. It may well be a different matter if, in the case of what is commonly called a 'unilateral contract', the promisee has already entered upon the act which, when completed, will constitute acceptance of the promise. The question has been much debated by text writers. The authorities in point are usefully collected in an article by Mr C. D. Gilbert in 46 A. L. J. 522, particularly at 525-526. The only decision directly in point is that of the Supreme Court of New South Wales in Abbott v. Lance (1860) 2 Legge 1283, which was a decision of the court in Banc comprising Dickinson A.C.J. and Wise J.
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It seems to me that the decision in Abbott v. Lance is authority for propositions that, although as a general rule an offer may be retracted before acceptance, yet, if it takes the form of an offer in exchange for the doing of an act or acts, then: (1) acceptance takes place when the offeree 'elects' to do the relevant act or acts; and (2) the offer becomes irrevocable once the act or acts, which will constitute consideration for the offer, have been partly performed. Applied to the present circumstances, the decision in Abbott v. Lance would carry judgment for the plaintiffs Veivers in this case. It is not, I consider, necessary here to decide whether or not a simple 'election' by the offeree is sufficient to constitute acceptance of the offer; or whether, as I would expect in the light of decisions since 1860, it is a further requirement that, before it can take effect, the election must be communicated or become known to the offeror. The evidence at trial makes it clear that ... Cordingley knew that Veivers was making active efforts to obtain Council approval for the subdivisional application and plan. In doing so he incurred expense in engaging solicitors to prosecute the first of the two appeals to the Local Government Court and instructing a surveyor to prepare the Franklin plan. It was only after much effort and expense had been incurred that Cordingley on and after 20 April 1983 purported to withdraw the offer ... . By then he was aware both that Veivers had elected to accept that offer or promise and that he had partly performed the act or acts which, when completed, would constitute the executed consideration for that promise. On the authority of Abbott v. Lance, I consider that it was then no longer open to Cordingley to retract his promise ..., and that he was bound to perform it by paying the sum of $200,000 if and when Veivers succeeded in obtaining approval from the Council."
It will be noted that (a) that his Honour treated the purported revocation as ineffective; (b) he accepted that, on the facts, it remained possible for Veivers unilaterally to complete the act of acceptance; and (c) he did not suggest that Veivers had become or would become entitled to be paid the sum of $200,000 until he had performed the whole of the act stipulated as the executed consideration.
For the reasons indicated earlier, we do not accept that there is a universal proposition that an offeror is not at liberty to revoke the offer once the offeree "commences" or "embarks upon" performance of the sought act of acceptance (being also the sought executed consideration for the offered promise). If and to the extent that any of the authorities to which we have referred say otherwise, we would respectfully disagree. In any event, even if it be assumed that an offeror has impliedly promised not to revoke in consideration of a commencement of performance of the act of acceptance, it would not follow that a purported revocation would be ineffective. On the contrary, in the absence of specific relief in respect of that promise, the offeror's revocation would be effective, although leaving the offeror liable in damages.
It should not be thought that the absence of a universal rule is unjust. In the circumstances of a particular case, it may be appropriate to find that the offeror has entered into an implied ancillary contract not to revoke, or that the offeror is estopped from falsifying an assumption, engendered by it, that the offeree will not be deprived of the chance of completing the act of acceptance.
We see no basis in the particular facts of the present case for concluding that Mobil should be taken to have offered to all those franchisees who would but commence or embark upon performing the prescribed act of acceptance of its principal offer (of a promise of nine-for-six), an ancillary promise not to revoke that offer. Several considerations support this view.
First, there is the problem of the meaning of "commencing" to attain not less than 90 per cent in Circle of Excellence judgings for all of the six calendar years 1992 to 1997. We referred, in a general context, to the nature of the problem earlier. In addition, there is a particular question arising from the nature of the specified act of acceptance in the present case: whether there can be a "commencement" only if at least one attainment of 90 per cent occurs. Perhaps, by reason of the nature of the act of acceptance (attaining 90 per cent or better in each of six successive years) mere "working towards" attaining that judging result counts for nothing in the present context. Mobil should not lightly be taken to have intended to be bound not to revoke its principal offer in favour of any franchisee who performed such an ill-defined act as "embarking upon" or "commencing" attainment of 90 per cent or better in Circle of Excellence judgings in the six years 1992-1997.
Second, while it is true that even part performance of the act of acceptance would be of some benefit to Mobil, it would not be only to the benefit of Mobil and to the detriment of the franchisee. Mobil was inviting franchisees to embark upon a course which would benefit both parties. In these circumstances, the case for holding Mobil bound by an implied promise not to revoke is the less strong.
Third, it is unlikely that Mobil meant to promise not, throughout the period 1992 to 1997, to revoke an offer of nine years' free tenure, to a franchisee which had already made the following promise to Mobil:
"(3) Adherence to Mobil Team Pak Standards
Dealer acknowledges that its adherence and the adherence of other Mobil dealers at all times to the Team Pak Standards, and to the policies and other requirements of the Team Pak Program is essential for the success, goodwill and reputation of the Mobil Dealer network and Mobil System and the Team Pak Program. Dealer therefore agrees to comply at all times during the life of this Agreement with the Team Pak Standards, as amended and updated from time to time. Likewise, Mobil agrees to comply with its part of those Team Pak Standards."
This standard provision of the Mobil Team Pak Agreement is in fact copied from subclause 4(3) of the Mobil Team Pak Agreements dated 18 May 1990 and 12 November 1993 between Mobil and Lyndel. Whatever its technical effect for the presence or absence of consideration, the existence of this contractual obligation suggests, on the assumption that franchisees attempted to comply with it, that "to commence to attain 90 per cent or better" would involve little or no actual detriment to franchisees - his Honour found that little or no detriment had been established (see later under "Promissory estoppel issues").
In our respectful opinion, the trial Judge erred in holding that Mobil was not at liberty to revoke its supposed offer of a nine-for-six promise, as made to those franchisees which had embarked upon the stipulated act of acceptance of that offer.
Offerees' intention to accept
The learned trial Judge referred to Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 for the proposition that, in order to establish a unilateral contract,
"It should be made to appear that the statement or announcement which is relied on as a promise was really offered as consideration for the doing of the act, and that the act was really done in consideration of a potential promise inherent in the statement or announcement". (at 456-457 - emphasis supplied)
The High Court gave the example of a case where A, in Sydney, says to B in Melbourne:
"I will pay you Ł1,000 on your arrival in Sydney"
and the next day B arrives in Sydney. The Court said that if only these facts were proved, no contract would be established since there might be no relation between A's statement and B's act; B may have intended to go to Sydney in any event. The Court observed that further facts might establish the necessary relationship; for example, that A had told B that it was important to him that B come to Sydney and that B had objected that this would entail financial loss to him.
Mobil submits that if a nine-for-six offer was made, none of the franchisees accepted it because, as a matter of probability, they would, in any event, have achieved ninety per cent or better in Circle of Excellence judgings in the post-Convention years in which they did achieve those results. The trial Judge noted that this submission was at its most persuasive in relation to Lyndel and Thorpe, since both of those companies had scored ninety per cent in the Circle of Excellence awards in 1990 and 1991. Why, it might be asked rhetorically, should it be inferred that their attainment of scores of ninety per cent or better in 1992, 1993, 1994 and 1995 were referable to the nine-for-six offer supposedly made in 1991?
The learned trial Judge analysed the evidence and found that it became more difficult to attain ninety per cent after Mr Stumbles' speech. Because of a change in the scoring system, loss of points was more costly after, than in and before, 1991. His Honour said:
"Having regard to the changed criteria for Circle of Excellence judgings, I do not think it is possible to treat the pre-1991 success of Lyndel and Thorpe as an indication of the result they would have achieved after 1991, in the absence of their positive reaction to Mr Stumbles' promise. The promise had a profound effect on Mr Morris and Mr Scorgie, both of whom understood the commercial importance of qualifying for a new nine-year franchise and set about doing so. The onus rests on Mobil to demonstrate that the relevant franchisees would have scored 90% in the years 1992 to 1996 anyway: see per McPherson J (with whom Andrews CJ agreed) in Veivers v Cordingley [1989] Qd R 278 at 291-292, citing The Crown v Clarke (1927) 20 CLR 227 at 244. It has not done so. To paraphrase the High Court in Australian Woollen Mills, I am not satisfied that B would have travelled to Sydney anyhow.
Although I appreciate the rarity of cases where a contract comes into existence as a result of performance of acts specified in a general offer, it seems to me this is such a case."
We see no reason to disturb the trial Judge's finding of fact that the scores of ninety per cent or better by Lyndel, Thorpe and Wellcome in all years down to the time when Mobil made further attainment of the score impossible, is something which they achieved in response to the supposed nine-for-six offer.
The stipulated executed consideration (and acceptance of the offer) was not furnished.
Three issues arise in connection with the furnishing of consideration.
(1) The first is that Mobil submitted to the trial Judge, and submits on the appeal, that the franchisees were already legally obliged to attain ninety per cent or better in Circle of Excellence judgings, because they were obliged, under the Team-Pak scheme, to do all the things which would have earned scores of 100 per cent. His Honour dealt with this submission shortly:
"But none of the franchisees was under an extant obligation to achieve any particular level of performance in the Circle of Excellence awards."
We deal below with the similar submission that in view of their existing contractual obligations, the attainment of 90 per cent or better in Circle of Excellence judgings could not constitute "detriment" for the purpose of the doctrine of promissory estoppel. Substantially for the reasons there set out, we are of the opinion that the franchisees' performance did not attract the rule that performance of an existing contractual obligation owed to the promisor cannot qualify as valuable consideration.
(2) Mobil submitted that the consideration provided must be referable to the promise, and that in the present case Lyndel, Thorpe and Wellcome would have achieved 90 per cent or better in the years in which they in fact did so, irrespective of Mobil's offered promise. We addressed this submission when dealing with Mobil's submission that the commencement of the act of acceptance was not referable to the offer, that is to say, done with an intention to accept the offer.
(3) Mobil submits that the franchisees were not entitled to nine years' additional tenure because they did not furnish the only consideration stipulated as the price of obtaining such tenure, namely, the attainment of ninety per cent or better in Circle of Excellence judgings over all six years, 1992-1997. We accept this submission and deal with it under the next side heading.
The award of specific performance in the absence of the stipulated executed consideration (and acceptance of the offer)
With respect, it was erroneous to treat Lyndel, Thorpe and Wellcome as having attained ninety per cent or better in all six years: they did not do so or even promise to do so. They had therefore not done or even promised to do the one and only act for the doing of which Mobil had offered its promise. Unlike, for example, payment of money, the attainment of 90 per cent or better in Circle of Excellence judgings over six years was something which they were not able unilaterally to tender. An order for specific performance of Mobil's supposed nine-for-six promise was, in the circumstances, not available in the absence of the actual furnishing of the agreed consideration for that promise: the attainment of 90 per cent or better in Circle of Excellence judgings in all of the years 1992 to 1997 (see Colly v Overseas Exporters [1921] 3 KB 302 at 310-311; Heyman v Darwin Ltd [1942] AC 356 at 371 (Lord MacMillan); Plaimar Ltd v Walters Trading Company Ltd (1945) 72 CLR 304 at 318; Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435 esp at 465-467 (Dixon J), 476-477 (Williams J); City Motors (1933) Pty Ltd v Southern Area Super Service Pty Ltd (1961) 106 CLR 477 and Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97 (FC) at 112 (Brooking J)).
The foregoing propositions hold good, even if it be correct that Mobil had impliedly promised not to revoke its offer. With respect, we think that, given the other conclusions of the trial Judge in favour of Lyndel, Thorpe and Wellcome, the appropriate course was for his Honour to make an award of damages for any loss and damage which Mobil's repudiation of the ancillary contract caused each of them to suffer. The amount of damages would have been based on the value of the lost opportunity of obtaining the additional nine years' tenure. The assessment would have had to allow for the possibility that the franchisee would not have continued to score 90 per cent or better in 1996 or 1997 or both, and so failed to "win" any additional tenure.
The franchisees did not seek an order compelling Mobil to continue with Circle of Excellence judgings promptly after the abandonment of those judgings was announced early in 1996, and they have not done so since. We make no comment as to whether Mobil's supposed implied promise to provide those judgings from 1992 to 1997 was a promise which, of its nature, would have been susceptible to an order for specific performance. The franchisees sought specific performance only of the principal promise, relevantly, to grant nine years' tenure. They were not entitled to that remedy in circumstances in which they had not furnished, and were not in a position to furnish, the consideration for it. Therefore, they were not entitled to the order which the learned trial Judge made that Mobil grant them a renewal for nine years.
Cases such as Hotham v East India Company (1787) 1 TR 639 (99 ER 1295) at 645 (ER 1298-1299), Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235 at 246-247 (Dixon CJ) and Foran v Wight (1989) 168 CLR 385 at 417-422 (Brennan J), referred to by the franchisees, are distinguishable on at least two grounds. First, in all of them contracts were on foot, whereas in the present case, the relevant contract had not been made because Mobil's supposed offer of a promise of nine years' free tenure had not been accepted (the supposed ancillary contract not to revoke the offer of the promise once there was a commencement of the act of acceptance is not the contract presently in question). The franchisees were at liberty not to complete the act of acceptance by ceasing to attain 90 per cent or better in Circle of Excellence judgings. It cannot even be assumed from the fact that Mobil made completion of the act of acceptance impossible that they would certainly have attained 90 per cent or better in the remaining years. Second, in none of them was the plaintiff simply deemed, contrary to the facts, to have provided the consideration for the promise sought to be enforced; rather the plaintiff was permitted to enforce a contract notwithstanding either non-fulfilment of a condition precedent or non-performance of a minor promise which the defendant-promisor was preventing from being fulfilled or performed, or fulfilment or performance of which would be a futility or had been dispensed with by the defendant's conduct.
3. Promissory estoppel issues
The estoppels asserted in the applications before the Court are alleged to have arisen from representations made in:
(i) The Stumbles' Convention speech;
(ii) The video tape of that speech;
(iii) The brochure entitled "Mobil Leading the Way";
(iv) The tear-off slip whereby the dealers "accept the challenge".
Effectively, these representations are sourced back to and based on the Convention speech of Mr Stumbles. If the representations by Mr Stumbles are found not to have been made then the claims, in so far as they are founded on estoppel, will not succeed.