Robert McGill Freier & Anor v Australian Postal Corporation

Termination notice 16Mr Cheshire submits that there is at least an arguable case that the termination notice is invalid because, although it purported to give 90 days' notice of termination, it did not do so because it was expressed to take effect on 1 February 2012. 17I do not accept that submission. 18The question whether the notice dated 4 November 2011 was effective is to be answered by asking whether a reasonable person in the position of Mr and Mrs Freier would understand by the notice that Australia Post was exercising its right under cl 22 of the LPO Agreement to terminate the agreement by giving 90 days' notice: see Al Jadeed TV v United Broadcasting International Pty Ltd [2011] FCA 983; 283 ALR 205 at [68]. If the answer to that question is in the affirmative, then the notice is effective to terminate the agreement after 90 days. Here, the notice was expressed to be a notice of intention to terminate. Clause 4 of the notice expressly states that Australia Post, in exercise of its rights under cl 22 b) of the LPO Agreement, gave notice of its intention to terminate the licence "effective, in accordance with cl 22 b), on expiration of 90 days from the date of service of a copy of this notice upon You". It is true that the notice goes on to identify that date as "the 1 st day of February 2012". However, the reference to 1 February 2012 appears to me to be no more than a misstatement of the effect of the notice. Properly construed, I do not think there is a reasonable argument that the notice was claiming an entitlement to terminate in fewer than 90 days. Rather, it wrongly identified when those 90 days expired. The reference to cl 22 b) and the reference to 90 days, in my opinion, makes that clear. 19Mr and Mrs Freier proceeded on the basis that the notice was effective. They began to advertise the building for lease on the basis that it was available "from 2 February 2012". Mr Freier wrote to Australia Post on 6 January 2012 in which he said: In view of our termination under Clause 22 of our Licensee Agreement and subsequently Clause 23 we will be complying as per the Agreement. We request Australia Post fulfil their obligations as well by collecting and removing all their property including reinstatement, e.g. making safe any electrical termination. However, in late January 2012 Mr and Mrs Freier changed solicitors to their current ones and those solicitors wrote to Australia Post on 30 January 2012 asserting that the 90 days did not expire until midnight on 3 February 2012 (although the correct position is that it expired on midnight on 2 February 2012). After some correspondence between the parties Australia Post, on 31 January 2012, agreed to treat the agreement as terminating at midnight on 3 January 2012. In doing so, it was seeking to give effect to the notice it had given. Having regard to these matters, I do not think that there is a serious question to be tried that Australia Post failed to give Mr and Mrs Freier 90 days' notice of termination of the agreement.

Section 22 of the Australian Consumer Law 20Section 22(1) of the ACL (which is now s 21) provides: A person must not, in trade or commerce, in connection with: (a) the supply or possible supply of goods or services to another person, (other than a listed public company); or (b) the acquisition or possible acquisition of goods or services from another person (other than a listed public company engage in conduct that is, in all the circumstances, unconscionable. 21In Australian Competition and Consumer Commission v Allphones Retail Pty Ltd (No 2) [2009] FCA 17; 253 ALR 324, Foster J relevantly said (at [113]) in discussing the meaning of the word "unconscionable" in the context of s 51AC of the Trade Practices Act 1974 (the predecessor provision to ACL s 22): (a) ... The meaning of unconscionable for the purposes of s 51AC is not limited to the meaning of the word according to established principles of common law and equity ... (b) The ordinary or dictionary meaning of unconscionable , which involves notions of serious misconduct or something which is clearly unfair or unreasonable, is picked up by the use of the word in s 51AC. When used in that section, the expression requires that the actions of the alleged contravenor show no regard for conscience, and be irreconcilable with what is right or reasonable. Inevitably the expression imports a pejorative moral judgment: per Heerey, Drummond and Emmett JJ in Hurley v McDonalds Australia Ltd ( 2000) 22 ATPR 41-741 (p 40,578) at [22] (p 40,585). This helpful articulation of the meaning of the word when used in s 51AC was followed by Selway J in ACCC v 4WD Systems Pty Ltd (2003) 59 IPR 435 at [183]-[185] (pp 487-488) and by Sundberg J in ACCC v Simply No-Knead Franchising Pty Ltd (2000) 104 FCR 253 at [30] (p 264); and (c) Normally, some moral fault or moral responsibility would be involved. This would not ordinarily be present if the critical actions are merely negligent. There would ordinarily need to be a deliberate (in the sense of intentional) act or at least a reckless act: per Selway J in ACCC v 4WD Systems Pty Ltd (2003) 59 IPR 435 at [185] (p 488). 22Mr Cheshire submitted that it was arguable that the termination in this case was unconscionable because the reason given for the termination - namely, that "notwithstanding our efforts over many years to resolve issues with You, a satisfactory and constructive licensee and licensor relationship has not developed" - was not supported by the evidence. The evidence suggested that, although there may have been disputes between the parties, the fact was that Mr and Mrs Freier had operated the post office for a period of 8 years without any real difficulties and, in those circumstances, it was submitted that it was difficult to see how it could be asserted that a relationship had not developed. 23I do not accept this submission. The right conferred by clause 22 must be understood in the context of the agreement. Under clause 7, the agreement was for an indefinite period of time. Both parties were given a right to terminate it on notice. Australia Post was obliged to pay compensation in the event that it exercised that right. It was not suggested that Australia Post engaged in any unconscionable conduct at the time the parties entered into the agreement. It is difficult to see how the right itself could be regarded as unconscionable in the context of an agreement for an indefinite term and in a context where it provided for Australia Post to pay compensation on termination. There is no suggestion that Australia Post acted unreasonably in seeking to determine the amount of that compensation. It made what appears to be a reasonable offer to pay compensation. More importantly, it made it clear that it was prepared to reconsider its offer and, on a number of occasions, it offered to engage the services of a mediator at its own expense. 24The only complaint is that Australia Post gave a reason for termination that it is said was not plausible. However, I do not accept that that there is a reasonable argument that that conduct was unconscionable in the context of this case. Australia Post was entitled to terminate the agreement for any reason; and, for the reasons I have given, I do not think that it is arguable that the exercise of that right was unconscionable in the sense described by Foster J. Australia Post gave a reason because it was required to do so by clause 22 of the Franchising Code of Conduct. That code is an "applicable industry code" for the purposes of ACL s 22, since it is declared by the Trade Practices (Industry Codes - Franchising) Regulations 1998 reg 3 to be a mandatory code under s 51AE of the Australian Competition and Consumer Act 2010: see s 51ACA. The failure to comply with an applicable industry code is one matter the court may take into account in determining whether conduct is unconscionable: ACL, s 22(3)(g). However, where the agreement is for an indefinite term and permits termination for any reason and provides for the payment of compensation in the event of termination, I doubt that the mere failure to give an accurate reason for termination is unconscionable. In any event, a fair reading of the reason given by Australia Post is that Australia Post was terminating the agreement because of the poor relationship between it and Mr and Mrs Freier. Having regard to the letter and circular sent by Mr and Mrs Freier, I do not think that it is reasonably arguable that that reason was not the real reason that Australia Post decided to exercise its rights under cl 22.

Discretionary factors 25Even if I am wrong in the conclusions I have reached, in my opinion, the court should not, in the exercise of its discretion, grant an injunction in this case. 26I say that for two reasons. 27First, in my opinion, Mr and Mrs Freier have delayed excessively in seeking an injunction. They proceeded on the basis that the termination notice was effective and permitted Australia Post to do so. Australia Post went to the trouble and expense of putting a new contract to operate the Campbell Town post office out to tender. It originally proposed to award the tender to a person who was willing to acquire the post office building so as to assist Mr and Mrs Freier to sell the building. When that sale fell through, it entered into negotiations with IGA. Although it appears that Australia Post has not entered into a contract with IGA, the evidence suggests that IGA has taken some steps to alter its premises so as to accommodate the post office. It is only after all that happened, and 3 days before the termination was to take effect, that Mr and Mrs Freier sought an injunction to restrain the Post Office from terminating the agreement. 28Secondly, in my opinion, the balance of convenience is not in favour of granting an injunction. It is clear that Mr and Mrs Freier wish to sell the business and building. The issue for them is whether they achieve an adequate price and are adequately compensated by Australia Post. It seems to me that there are no particular difficulties in determining the value of the building and business assuming that the LPO Agreement was in place compared to their value if that agreement is terminated, although that may need to be the subject of expert evidence. On the other hand, if an injunction is granted, but Mr and Mrs Freier ultimately fail, it is likely to be difficult to assess Australia Post's loss. There is a risk that Australia Post will lose the benefit of entering into a franchise agreement with IGA and it is unclear whether it will find another franchisee who is acceptable. I also accept that there is a risk that Australia Post's reputation could be damaged if Mr and Mrs Freier continue to operate the post office pending the resolution of the dispute. They are clearly dissatisfied with Australia Post's conduct and, in those circumstances, they are unlikely to promote its business in a positive way. Those damages would be difficult to quantify.

Orders 29The plaintiffs' application for interlocutory relief should be dismissed. The costs of the application should be the defendant's costs in the cause. 30I will hear the parties on what ancillary orders and directions should be made.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 February 2012