Robert McGill Freier & Anor v Australian Postal Corporation

Background 1This is an application for an interlocutory injunction to restrain the defendant, Australia Post, from terminating an agreement by which the plaintiffs, Mr and Mrs Freier, operate the post office in Campbell Town in Tasmania. 2In March 2004, Mr and Mrs Freier bought the building at which the Campbell Town post office has operated since 1887and the business that the previous owners had carried on there. That business included the sale of stationery, gifts, toys and computer consumables, as well as providing advertising space on the front windows and space for a Telstra telephone exchange. At the same time, Mr and Mrs Freier entered into a licensed post office agreement dated 31 March 2004 with Australia Post (the LPO Agreement ) which enabled them to continue to operate the post office. 3Clause 7 of the LPO Agreement deals with the agreement's term. It provides: This Agreement shall commence on the date specified in item 3 of the Schedule and shall continue in force indefinitely or until either party terminates the Agreement in the manner provided in Clauses 20 and 22 hereof. 4Clause 22 deals with termination without cause. It provides: a) The Licensee may at any time terminate this Agreement without cause by giving Australia Post ninety (90) days prior written notice. b) Notwithstanding any other provision of this Agreement, Australia Post may at any time and without cause terminate this Agreement by giving the Licensee ninety (90) days notice that it intends to terminate the Agreement. Termination is effective upon the expiration of the ninety (90) days. c) If Australia Post terminates this Agreement pursuant to Clause 22b), Australia Post shall pay to the Licensee termination compensation calculated in accordance with Clause 22d) in full and final settlement of all entitlements of the Licensee arising from termination. Prior to or simultaneously with the receipt of the termination compensation payment the Licensee shall sign a release in a form satisfactory to Australia Post. d) Termination compensation payable pursuant to sub-Clause c) shall be an amount agreed between Australia Post and Licensee. However such amount shall not be less than an amount equal to the Business Revenue over the period of twelve (12) months prior to the date of termination nor greater than that amount multiplied by three (3). "Business Revenue" is defined in cl 1 to mean: ... the aggregate of the Fees and Commissions paid or payable to the Licensee by Australia Post and the Discounts received or receivable by the Licensee from Australia Post or (in the case of Complementary Products) the supplier, over a specified period. 5Following entry into the LPO Agreement, there were a number of disagreements between Australia Post and Mr and Mrs Freier. How serious those disputes were was a matter of some debate between the parties. That is not a debate that can or should be resolved on this application. However, it is relevant to observe that on 22 May 2011, Mr Freier addressed a letter to "Australia Post Employee (from 2004 to present)" in which he said: I am writing to advise you that due to over 5 years of neglect by Australia Post in relation to harassment (previous Mail Contractor, Peter Quail) and discrimination (Australia Post) against us, we will be taking action. This includes legal measures by presenting our substantial files (you probably have a few yourself) for scrutiny. I feel it is my moral obligations to advise you of the possible legal ramifications, hence this letter. Because of the ABC news story about Australia Post Bullying and because Australia Post probably will not or have not advised you even though they have known for months. You will be identified as one of fourteen Australia Post senior employees or management who failed in your duty to act in regards to these allegations. The letter goes on to identify the 14 employees and a number of other senior managers who are said to be responsible for the current position. It also states: This whole harmful mess can be avoided and you and your colleagues could possibly prevent having your personal details aired in court and/or the media. There really is no need for your family, friends, colleagues, neighbours, associates at the soccer or football club, Rotary or social media friends to read about you. 6Mr and Mrs Freier also distributed a circular to Campbell Town residents headed "FED UP WITH THE INEFFICIENT/INCORRECT MAIL DELIVERY IN CAMPBELL TOWN?" The circular identified a number of problems and made recommendations on what action residents could take in relation to them. 7On 21 July 2011, Australia Post wrote to Mr and Mrs Freier complaining about the notice and threatening to serve a notice of default in the event that certain conditions were not met. It is unclear what, if anything, happened then. However, on 4 November 2011 representatives of Australia Post met with Mr and Mrs Freier and at that time handed them a letter enclosing a document headed "Notice of Intention to Terminate a Licensed Post Office Agreement". The notice records the existence of the LPO Agreement and refers to the terms of cl 22. It then states: 4. Australia Post hereby, under the provisions of clause 22 (b) of the LPO Agreement, gives notice to You of Australia Post's intention to terminate the licence to operate the Campbell Town LPO, effective, in accordance with clause 22 (b), on expiration of 90 days from the date of service of a copy of this notice upon You, namely on the 1 st day of February 2012. 5. The basis of Australia Post's decision to exercise its rights in accordance with clause 22 of the LPO Agreement is our determination that, notwithstanding our efforts over many years to resolve issues with You, a satisfactory and constructive licensee and licensor relationship has not developed. 6. Under clause 22 (c) of the LPO Agreement it is provided that an agreed amount of termination compensation (calculated according to clause 22 (d)) shall be paid by Australia Post to the licensee arising from any termination under clause 22. Australia Post will provide details of its proposal for the amount of termination compensation to You in a separate letter. 8Subsequently, on 14 November 2011, Australia Post wrote to Mr and Mrs Freier offering termination compensation of $129,530 (exclusive of GST). The letter stated that Australia Post was prepared to reconsider the compensation offered if Mr and Mrs Freier provided information concerning the revenue and expenses of the post office. The letter also indicated that Australia Post was willing to engage in discussions through a mediator appointed by the Office of Franchise Mediation Advisor at Australia Post's expense. 9Macpherson + Kelley, the solicitors who at that time had been engaged by Mr and Mrs Freier, responded to Australia Post's offer on 16 December 2011. Although the letter is without prejudice, it was put into evidence by Mr and Mrs Freier and no objection was taken to their doing so by Australia Post. That letter explained that, as a consequence of termination of the franchise agreement, Mr and Mrs Freier would be deprived of revenue from the associated business conducted by them at the post office and that they had lost the opportunity of selling the post office business and associated business to a third party and faced difficulties in selling the property itself. Taking those matters into account, they made a counter-offer of $275,000. 10In the meantime, on or about 14 November 2011, Australia Post put out to tender the licence to operate the post office in Campbell Town. It received a number of responses to that tender including one from Mr Hendricks and one from IGA. Australia Post sought to enter into a licence agreement with Mr Hendricks on the basis that he would acquire the post office building and associated business from Mr and Mrs Freier. However, Mr Hendricks was unsuccessful in negotiating a contract to buy the property. It appears that Mr and Mrs Freier were not prepared to sell the property unless they could reach an agreement with Australia Post on the amount of compensation to be paid to them. As a consequence, on 13 January 2012, Mr Hendricks informed Australia Post that he did not have suitable premises at which to operate the post office and Australia Post decided to negotiate to award the licence to IGA. It appears from the evidence that those negotiations are at an advanced stage and that IGA has incurred some costs in fitting out its premises to operate a post office there. However, no licence agreement has yet been signed. 11Australia Post made a further offer to mediate the dispute on 25 November 2011 and took steps to arrange a mediation. 12Some time in January 2012, Mr and Mrs Freier engaged their current solicitors who wrote to Australia Post on 24 January 2012 disputing the validity of the termination notice and stating that "We accept that it is in both parties' interest to have the mediation as soon as possible". In response, Australia Post suggested the mediation take place on 6 February 2012. However, it received no response to that letter. 13It is against that background that the current application is to be determined. 14Mr Cheshire, who appeared for Mr and Mrs Freier, put the case for an interlocutory injunction on two grounds. First, he submitted that there was an arguable case - indeed, a strong case - that the notice of termination was invalid because it failed to give 90 days' notice. Second, he submitted that Mr and Mrs Freier had an arguable case that Australia Post had contravened s 22 (now s 21) of the Australian Consumer Law ( ACL ) and consequently they had an arguable case that they are entitled to relief under ACL s 232. 15In relation to the balance of convenience, Mr Cheshire submitted that, if an interlocutory injunction is not granted, Mr and Mrs Freier will have lost the opportunity to sell the post office building and business together.