FEDERAL COURT OF AUSTRALIA

 

 

COURTS AND JUDGES - Judges - application for disqualification of trial Judge - apprehended bias - whether reasonable apprehension that trial Judge might not bring unprejudiced mind to resolution of case.

R v Watson (1976) 136 CLR 248, applied

Livesy v New South Wales Bar Association (1983) 151 CLR 288, applied

SCI Operations Pty Limited v Trade Practices Commission (1984) 2 FCR 118, applied

Vakauta v Kelly (1989) 167 CLR 568, applied

Galea v Galea (1990) 19 NSWLR 263, applied

Kaycliff v Australian Broadcasting Tribunal (1989) 90 ALR 310, applied

Hassam Khadem v B A Barbour (1995) 38 ALD 299, applied

CONTRACTS - offer and acceptance - whether speech at convention amounted to offer to give franchisees extended tenure in exchange for consistent achievement of certain standards - whether language of speech was that of present offer - unilateral contract - whether offer could be retracted once offeree commenced act of acceptance - whether purported act of acceptance was commenced in response to offer - whether specific performance available where promisee has been prevented by promisor from completing acts of acceptance.

Abbott v Lance (1860) Legge 1283, discussed

Veivers v Cordingly [1989] 2 Qd R 278, discussed

Daulia Ltd v Four Millbank Nominees Ltd [1978] 1 Ch 231, discussed

Errington v Errington [1952] 1 KB 290, discussed

Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424, applied

Colley v Overseas Exporters [1921] 3 KB 302, applied

Heyman v Darwin Ltd [1942] AC 356, applied

Plaimar Ltd v Walters Trading Company Ltd (1945) 72 CLR 304, applied

Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435, applied

City Motors (1933) Pty Ltd v Southern Area Super Service Pty Ltd (1961) 106 CLR 477, applied

Bolwell Fibreglass Pty Ltd v Foley [1984] VR 97, applied

Hotham v East India Company (1787) 1 TR 639 (99 ER 1295), distinguished

Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1954) 90 CLR 235, distinguished

Foran v Wight (1989) 168 CLR 385, distinguished

ESTOPPEL - promissory estoppel - whether representations amounted to promise - whether representations gave rise to expectation of a particular legal relationship or grant of an interest - whether representations sufficiently specific and unqualified - proportionality as between detriment and remedy - whether enforcement of promise proportionate to detriment.

Waltons Stores (Interstate) Ltd v Maher (1985) 164 CLR 387, considered

Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582, distinguished

Plimmer v The Mayor of Wellington (1884) LR 9 App Cas 699, distinguished

Commonwealth v Verwayen (1990) 170 CLR 394, discussed

Sledmore v Dalby (1996) 72 P & CR 196, discussed

TRADE PRACTICES - misleading or deceptive conduct - whether representation made - representation as to future conduct - whether respondent had reasonable grounds on which to make representation - whether applicants entitled to expectation loss. 

Trade Practices Act 1974 (Cth) ss 51A, 52, 53, 82, 87

 

Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1, referred to

GIO Australia Ltd v Marks (1997) 70 FCR 551, referred to

PRACTICE AND PROCEDURE - pleading - where contract found by trial Judge based on different offer from that pleaded by applicant - failure by both parties to cross-examine witnesses about offer not pleaded.

Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279, applied

 

 

 

 

 

 

 

MOBIL OIL AUSTRALIA LIMITED v LYNDEL NOMINEES PTY LIMITED

NG 344 OF 1997

 

JTP HOLDINGS PTY LIMITED and ROSEVILLE SELF SERVICE STATION PTY LIMITED v MOBIL OIL AUSTRALIA LIMITED

ng 365 of 1997

 

MOBIL OIL AUSTRALIA LIMITED v wellcome international pty limited and w & j b thorpe pty limited

ng 366 of 1997

 

 

 

 

 

LOCKHART, LINDGREN, TAMBERLIN JJ

SYDNEY

13 MARCH 1998

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 344 of 1997

 

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	MOBIL OIL AUSTRALIA LIMITED AppELLANT
AND:	LYNDEL NOMINEES PTY LIMITED Respondent

 

JUDGES:	LOCKHART, LINDGREN, TAMBERLIN JJ
DATE OF ORDER:	13 March 1998
WHERE MADE:	SYDNEY

 

 

THE COURT ORDERS THAT:

1.         The appeal be allowed with costs.

2.         The orders made on 15 April 1997 in proceeding NG 835 of 1995 be set aside, and in lieu thereof, it be ordered that the application in that proceeding be dismissed and that the present respondent as applicant in that proceeding pay the costs of the respondent to that proceeding.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 365 of 1997

 

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

 

between:	jtp holdings pty limited and ROSEVILLE SELF SERVICE STATION PTY LIMITED APPELLANTS
AND:	MOBIL OIL AUSTRALIA LIMITED respondent

 

JUDGES:	LOCKHART, LINDGREN, TAMBERLIN JJ
DATE OF ORDER:	13 March 1998
WHERE MADE:	SYDNEY

 

 

THE COURT ORDERS THAT:

 

 

1.         The appeal be dismissed with costs.

2.         The appellants pay the costs of the respondent as respondent to proceeding NG 841 of 1995 in respect of the claims for relief made by them, JTP Holdings Pty Ltd and Roseville Self Service Station Pty Ltd, as applicants in that proceeding.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 366 of 1997

 

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

 

BETWEEN:	MOBIL OIL AUSTRALIA LIMITED APPELLANT
AND:	WELLCOME INTERNATIONAL PTY LIMITED and W & j b THORPE PTY LIMITED RESPONDENTS

 

 

JUDGES:	LOCKHART, LINDGREN, TAMBERLIN JJ
DATE OF ORDER:	13 March 1998
WHERE MADE:	SYDNEY

 

THE COURT ORDERS THAT:

 

1.         The appeal be allowed with costs.

2.         Orders (1) and (2) made on 15 April 1997 in proceeding NG 841 of 1995 be set aside, and in that proceeding it be ordered that:

            (a)        the claims for relief made by W & J B Thorpe Pty Limited and Wellcome International Pty Limited in that proceeding be dismissed;

            (b)        the present respondents pay the costs of the respondent to that proceeding in respect of the claims for relief made by them, Wellcome International Pty Limited and W & J B Thorpe Pty Limited, as applicants in that proceeding; and

            (c)        the applicants in that proceeding other than Lyndell Nominees Pty Limited, JTP Holdings Pty Limited, Roseville Self Serve Pty Limited, Wellcome International Pty Limited and W & J B Thorpe Pty Limited, and the respondent in that proceeding have liberty to apply in that proceeding as to the further disposition of the proceeding consistently with the Reasons for Judgment of the Full Court delivered on 13 March 1998.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY

 

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

 

		NG 344 of 1997
BETWEEN:		MOBIL OIL AUSTRALIA LIMITED AppELLANT
AND:		LYNDEL NOMINEES PTY LIMITED Respondent
		NG 365 of 1997
between:		jtp holdings pty limited and ROSEVILLE SELF SERVICE STATION PTY LIMITED APPELLANTS
AND		MOBIL OIL AUSTRALIA LIMITED respondent
		NG 366 of 1997
BETWEEN:		MOBIL OIL AUSTRALIA LIMITED APPELLANT
AND:		WELLCOME INTERNATIONAL PTY LIMITED and W & j b THORPE PTY LIMITED RESPONDENTS

 

JUDGES:	LOCKHART, LINDGREN, TAMBERLIN JJ
DATE:	13 March 1998
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE COURT:

 

GENERAL INTRODUCTION

Three appeals have been heard together. In two of them, NG 344 of 1997 and NG 366 of 1997, the appellant, Mobil Oil Australia Limited (“Mobil”), appeals against judgments given in favour of franchisees of Mobil petrol service stations. In the third, NG 365 of 1997, two franchisees appeal against a judgment given against them in favour of Mobil. The judgments appealed from were given in two proceedings which were heard together: NG 835 of 1995 and NG 841 of 1995.

In NG 835 of 1995, on 15 April 1997, the trial Judge ordered that Mobil grant to the applicant in that proceeding, Lyndel Nominees Pty Limited (“Lyndel”), without charge, a franchise under the Petroleum Retail Marketing Franchise Act 1980 (Cth) (“the PRMF Act”) in respect of the Mobil service station occupied by Lyndel at 1 Lonsdale Street, Braddon in the Australian Capital Territory, for a term of nine years commencing upon the expiration of Lyndel’s current franchise in respect of that service station and otherwise on the same terms and conditions as those of the current franchise.

The other proceeding below, NG 841 of 1995, was procedurally complex. There were 154 applicants. Like Lyndel, they were franchisees in respect of Mobil service stations. The first named applicant was Mogap Pty Ltd but its claim against Mobil was not heard by the trial Judge and it is not a party to the appeals. There was an overlap of the facts underlying the claims of the 154 applicants (and, for that matter, the claim of Lyndel). His Honour directed that a trial in the first instance of the claims of four of the applicants be heard with Lyndel’s application. The four applicants selected were W & J B Thorpe Pty Limited (“Thorpe”), Wellcome International Pty Limited (“Wellcome”), Roseville Self Service Station Pty Limited (“Roseville”) and J T P Holdings Pty Limited (“JTP”). It was thought that the factual circumstances of the claims of Lyndel, Thorpe, Wellcome, Roseville and JTP would throw up the main factual permutations affecting the cases of all applicants (the 154 and Lyndel), and that resolution of the five claims would enable agreement to be reached as to the outcome of the others.

In NG 841 of 1995, Thorpe and Wellcome succeeded while Roseville and JTP failed. The orders that were made in favour of Thorpe and Wellcome were in terms identical to that made in favour of Lyndel, except for the identity of the service stations. His Honour ordered that the claims of Roseville and JTP be dismissed.

Mobil appeals in NG 344 of 1997 against the order made in favour of Lyndel in NG 835 of 1995, and in NG 366 of 1997 against the orders made in favour of Thorpe and Wellcome in NG 841 of 1995. JTP and Roseville appeal in NG 365 of 1997 against the dismissal of their claims in NG 841 of 1995. Notices of contention have been filed by Lyndel in NG 344 of 1997 and by Wellcome and Thorpe in NG 366 of 1997.

His Honour reserved liberty to apply on seven days’ notice in relation to the implementation of the orders for the grant of the nine year franchises to Lyndel, Thorpe and Wellcome.  As well, he reserved costs. On 5 September 1997, his Honour was asked to make costs orders in favour of the successful applicants but he declined to do so. Orders have been made in the proceedings below that until further order of a Judge or of the Full Court, Mobil comply with its obligations under the existing agreements with the franchisees on the basis that they comply with their own obligations under those agreements and undertake not to assert that the order amounts to circumstances that would entitle them to any right under the PRMF Act.

It is useful at this stage to note the identity of the principals of the five franchisees whose claims were dealt with by his Honour and particulars of their sites:

Franchisee	Principal/s	Site
Lyndel	Barry James Morris	1 Lonsdale Street, Braddon, ACT
Thorpe	Chris Phillip Scorgie	656-660 North East Road, Holden Hill, SA
Wellcome	Abraham Jevaherjian (Wellcome, a company owned by members of the Jevaherjian and Sarkis families, purchased in 1992)	Cnr Sailors Bay Road and Eastern Valley Way Northbridge, Sydney, NSW
Roseville	Domenic Fossano and his father	Cnr Pacific Highway and Boundary Street, Roseville, Sydney, NSW
JTP	Jeffrey Riddle and his two brothers	Cnr Burton and Windeyer Streets, Watson, ACT

INTRODUCTION TO BACKGROUND FACTS

The franchisees’ claims originated in certain statements made by Mr Ken Stumbles, the then General Manager, Retail Marketing of Mobil, in the course of a breakfast address at a Convention held by Mobil for its Australian dealers in Los Angeles between 27 July and 2 August 1991 (“the Convention”). The franchisees complained that through Mr Stumbles’ address and later events, Mobil assured them that if they “performed” to a certain level at their respective service stations, their tenure at their service stations would be renewed for various periods of time, depending upon the period over which they performed to that level.

Mobil had set standards by which the performance of Mobil service stations was to be assessed and was in fact assessed. It had a system of assessment called “Team-Pak” which comprised a list of numerous and detailed criteria against which the standard of presentation and operation of a service station was to be measured. Mobil also used a “Circle of Excellence” system of awards for franchisees who performed to a particularly high standard each calendar year under the Team Pak scheme. Franchisees who were admitted to the Circle of Excellence were rewarded by Mobil, commonly by the provision of a free overseas holiday.

What Mr Stumbles said in his presentation at the Convention was designed to create an even more elite group within the Circle of Excellence. In general terms, he referred to the grant of additional service station tenure at no cost to franchisees who attained a 90 per cent or better rating in the Annual Circle of Excellence judgings. It will be necessary later to consider the detail of what he said. For the present, however, it is useful to note that the franchisees’ case was that two distinct promises, offers or representations were to be found in his address. The first was that for any year in which a dealer achieved 90 per cent or better in the Circle of Excellence judging, Mobil would give that dealer, at no cost to the dealer, one additional year’s tenure following expiry of the dealer’s current franchise (we will refer to this as “one-for-one”). The second was that if a dealer attained 90 per cent or better in Circle of Excellence judgings in all of the six calendar years following 1991 in which the Convention was held (1992, 1993, 1994, 1995, 1996 and 1997), Mobil would give that dealer, at no cost to the dealer, a franchise for a further nine years following expiry of the dealer’s current franchise (we will refer to this as “nine-for-six”).

The franchisees relied, not only on what Mr Stumbles said to those who attended the Convention, but also on certain aspects of Mobil’s conduct after the Convention.  That conduct was described in one way in the two statements of claim (a third statement of claim was filed in NG 841 of 1995 on behalf of Wellcome because of special circumstances affecting it - see below) and, correspondingly, in certain issues formulated by the trial Judge for the purposes of a separate hearing, and in a different way in his Honour’s account of the evidence before him. The following summary of Mobil’s post-Convention conduct relied on by the franchisees is based on his Honour’s account of the evidence.

First, a month or two after the Convention, Mobil sent to franchisees a videotape of Convention highlights, including the relevant part of Mr Stumbles’ address. That part was introduced by a commentator who said “Ken Stumbles announced a new concept to Mobil’s own dealers”. Mr Stumbles was then seen and heard on the video speaking the following part of his address:

“Now we’ve got a lot more work to do on this but the commitment that we’re making to you today is that we will find a way to extend your tenure automatically no costs if you consistently achieve 90 per cent or better in Circle of Excellence judgings.”

As will appear below, this extract from Mr Stumbles’ address at the Convention assumed considerable importance in the case.

When Mr Stumbles said the word “automatically” a gold caption appeared on the screen reading:

“Tenure for performance

Reward - high standards.”

A Mobil dealer named Allen Upson appeared on the screen and said:

“The fact that they are looking at the possibility of extending people’s franchises dependent upon achievement of 90% or more in standards, that’s got to be appealing to every franchisee in Australia.”

The second aspect of Mobil’s post-Convention conduct on which franchisees relied is that the September 1991 issue of “Mobil Marketer”, a magazine distributed by Mobil to its dealers and distributors, included, in a report on the Convention, an account of Mr Stumbles’ address which contained the following words:

“Ken Stumbles, General Manager Retail, picked up the banner for Retail Marketing, and carried it forward, with the words ‘Our objective is not to meet customer expectations, but to exceed them. We must be focused on the customer, and obsessed with quality.’

Ken then went on to outline an initiative to give his customers - that is, Mobil’s dealers - extended tenure for continued high performance.

Dealer delegates responded enthusiastically to this, as he explained how Mobil were determined to reward excellence, and build a long-term relationship. He said, ‘the commitment we’re making to you today is that we will find a way to extend tenure, automatically, at no cost, for those dealers who consistently achieve 90% or better in Circle of Excellence judgings.’”

Thirdly and finally, in late 1991, Mobil arranged regional meetings of its dealers. One was held in Canberra, for example. Barry James Morris, the managing director of Lyndel, who had not attended the Convention in Los Angeles, attended that meeting. At the meeting, Tony Broome, a Mobil representative, screened a videotape record of Mr Stumbles’ Convention address or of the relevant part of it. After the screening, Mr Broome said:

“You heard the speech. For every year you achieve 90% or better in Circle of Excellence you will receive an additional year’s tenure.”

David Browning, Mobil’s Manager for the Australian Capital Territory, then handed out a brochure containing a tear-off slip. The brochure was entitled “Mobil Leading the Way. Toward the World Class Standard”. Mr Broome said:

“David is handing out a brochure and if you want to get your extra tenure, there is a note that you will have to complete and sign, and then give it back to David.”

Mr Morris ticked the boxes on the tear-off slip, completed details of Lyndel’s site, signed the slip, and returned it to Mr Browning. The slip read:

“Yes, I’m ready to accept the challenge.

         I accept the challenge to exceed 90% in Circle of Excellence judging and qualify for extra tenure.

         I want to participate in the development of the World Class Standards.

         I will use the new World Class Standards on my site.

            Site Number ..........................................

            Site Name   ...........................................

            Dealer Name.........................................

            Signature    ..........................................

            Tear off and hand to your Territory Manager”

The events at Regional dealers’ meetings held elsewhere conformed to a generally similar format.

The ways in which the respective applicants became aware of the content of Mr Stumbles’ address varied as between them. Mr Scorgie of Thorpe and Mr Fosano of Roseville heard the address delivered “live” at the Convention. Others became aware of it subsequently. Mr Riddle of JTP saw “highlights” of the speech on the “Convention highlights” video. Apparently alone of the representatives of the five applicants, Mr Morris of Lyndel saw a video of the entire speech of Mr Stumbles. Wellcome occupied a special position. Wellcome pleaded that on or about 12 June 1992, Ostanone Pty Limited (“Ostanone”), as assignor, agreed to assign to Wellcome, all Ostanone’s right title and interest which it had as franchisee of Mobil in the Mobil Northbridge site, and that on and from 30 June 1992, it (Wellcome) became franchisee in respect of that site. Wellcome’s case was that it was induced to purchase upon certain representations made by Ostanone on behalf of Mobil, particulars of which were:

“That in or about February 1992 [Ostanone] stated in substance:

            ‘[Mobil] says that if you(as franchisee) perform well, over 90% in the Circle of Excellence program on a yearly basis, each year you will not lose that year it will be added to your final franchise and if you maintain that level or standard over the 6 years at the end of the franchise you will get a 9 year franchise with no costs.’”

Apart from other defences, Mobil denied that any such statement was made by Ostanone on its behalf or with its knowledge or authority.

The franchisees pleaded claims based on promissory estoppel, breach of contract and contravention of ss 52 and 59 of the Trade Practices Act 1974(Cth) (“the TP Act”). On the appeal reference was not made to s 59, and we need not refer to it further.

OUTLINE OF REASONING OF THE TRIAL JUDGE

The content of Mr Stumbles’ address gave rise to certain questions which were common to the claims made by all franchisees. His Honour made orders directed to the separate determination of some of those questions. His formulation of them reflected the two statements of claim mentioned earlier. They pleaded the terms of Mr Stumbles’ speech at the Convention “in or about July 1991” and two aspects of Mobil’s post-Convention conduct. The first was that Mobil forwarded to dealers the brochure, video tape and tear-off slip in or about August 1991. The second was the publication of the “Mobil Marketer” in September 1991. Accordingly, neither the statements of claim nor the issues formulated by his Honour shortly to be noted, refer to meetings of dealers. Rather, they suggest that the brochure and tear-off slip accompanied the video tape forwarded directly to dealers shortly after the Convention. Nothing, however, will be found to turn on this particular discrepancy.

His Honour directed that the two proceedings be heard together

            “to the extent of the determination of the following common questions of fact:

(i)        What representations or promises (if any) were made on behalf of the respondent to any of the applicants:

            (a)        at the Los Angeles convention held in or about July 1991 ... ;

            (b)        by the forwarding of a brochure, videotape or tear-off slip ... ; or

            (c)        in the ‘Mobil Marketeer’ of September 1991 or thereabouts.

(ii)       Whether any of those representations and promises (if any) were capable of giving rise to a promissory estoppel or of constituting an offer capable of acceptance so as to constitute a binding contract or of constituting misleading and deceptive conduct if a particular applicant acted on that representation or promise in reliance upon it”.

His Honour received evidence and heard argument on those issues on 31 January and 1 February 1996. He published Reasons for Judgment relating to them on 22 May 1996. He did not make orders at that time but expressed certain opinions. He thought that a sufficiently clear “nine-for-six” promise had been given by Mobil through Mr Stumbles’ speech to activate the doctrine of promissory estoppel. He relied, in particular, on Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387, the judgment of Priestley JA in Austotel Pty Ltd v Franklins Selfserve Pty Ltd  (1989) 16 NSWLR 582 (CA) esp at 610-614, and the judgment of the Full Court of this Court in S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637. He noted that whether the doctrine was in fact activated in relation to a particular franchisee depended on whether it had, to Mobil’s knowledge, acted to its detriment in reliance on the promise, so as to make it unconscionable for Mobil to renege.

His Honour also thought that a claim based on s 52 of the TP Act, aided by s 51A of that Act, founded on the nine-for-six assurance, could not be ruled out.

He did not think, however, that a claim of a nine-for-six contract could succeed, because Mr Stumbles’ speech did not contemplate a written acceptance of his challenge to exceed 90 per cent in Circle of Excellence judgings, and, in any event, the terms of the tear-off slip were inconsistent with the arising of a contract.

Finally, his Honour rejected the claim that Mobil had given any one-for-one assurance at all. Consequently, such an assurance was not available to support any of the three causes of action pleaded.

In his later Reasons for Judgment delivered on 15 April 1997, his Honour incorporated his earlier Reasons. He rejected the claims based on promissory estoppel and misleading and deceptive conduct. The promissory estoppel cases of Roseville and JTP failed because they had not been on the way to attaining a 90 per cent or better in all six years. In the case of Lyndel, Thorpe and Wellcome, the same claims failed because the degree of detriment suffered was so minor as not to make it necessary, in order to avoid Mobil’s acting unconscionably, for the Court to require Mobil to adhere to an assumption that it would fulfil its promise.

The claims under s 52 of the TP Act failed because Mobil and Mr Stumbles had reasonable grounds for making the nine-for-six representation and because damages for disappointed expectations were not available under the section, and the franchisees were not interested in recovering reliance damages for consequential losses which were small and difficult to prove.

Notwithstanding his earlier expression of opinion, however, his Honour upheld the nine-for-six contractual claims of Lyndel, Wellcome and Thorpe. He explained that when delivering his earlier Reasons for Judgment, he had laboured under the misapprehension that the supposed contract propounded was that constituted by an offer made in Mr Stumbles’ speech accepted by the completion and return of the tear-off slip, but that he had since come to recognise that the franchisees had in fact pleaded acceptance by the act of attainment of “90% or better” in Circle of Excellence judgings in the years 1992, 1993, 1994, 1995, 1996 and 1997. Considering that Mobil was not disadvantaged by his doing so, his Honour dealt with the contract claim as so understood. He treated the nine-for-six statement as constituting an offer capable of being accepted by that performance.

It is not in dispute that Mobil made it clear in the latter half of 1995 that it would not grant renewals free of charge in the terms of Mr Stumbles’ statement. In fact Mobil ended Circle of Excellence judgings. It is also not in dispute that this deprived those franchisees who had consistently achieved 90 per cent or better in and since 1992 of the chance of doing so in the remainder of the six years. His Honour treated Mobil’s action as a repudiation of a contract. If it was indeed a repudiation of contract, it is clear that the franchisees did not accept it.

Mobil submitted that even if it should be found that it had made a nine-for-six offer and made it impossible for franchisees to attain 90 per cent in the Circle of Excellence judgings in all six years, the fact remained that franchisees had not performed the whole of the act required to constitute acceptance of Mobil’s offer (attainment of 90 per cent or better in all six years) and so were not entitled to specific performance in the form of an order that Mobil grant them nine-year franchises. His Honour rejected this submission. He held that in respect of franchisees who had embarked upon the performance which Mobil had stipulated as the act of acceptance of its offer, it was no longer open to Mobil to revoke the offer, and, further, that those franchisees who had attained 90 per cent or better down to the time of revocation were to be treated as if they had also attained 90 per cent or better in the remaining years.

Lyndel, Thorpe and Wellcome were in that position. Roseville and JTP, however, had already failed to attain 90 per cent or better in Circle of Excellence judgings in one or more years. In consequence, they were not able to show that but for Mobil’s alleged repudiation, they could have performed the act of acceptance of Mobil’s offer (attaining 90 per cent or better in all six years). Moreover, since his Honour held that the one-for-one offer had not been made, they were not entitled to one year’s additional tenure for each year in which they had attained 90 per cent or better. Accordingly, their applications failed completely.

ISSUES ON APPEALS BY MOBIL

The following issues arise on the appeals by Mobil in NG 344 of 1997 and NG 366 of 1997 against the orders made that it grant nine-year franchises to Lyndel, Wellcome and Thorpe:

1.         whether the trial Judge should have disqualified himself from hearing the three cases on the ground of ostensible bias;

2.         whether it was not open to the trial Judge to find the contract case which he in fact found in favour of Wellcome, on the ground that the case as found lay outside the pleadings;

3.         whether it was not open to his Honour to find that a contract came into existence because there was:

            (a)        no offer made by Mobil capable of acceptance by performance;

            (b)        no acceptance;

            (c)        no consideration provided for the alleged promise;

4.         whether an order of specific performance by Mobil should not have been made;

5.         under notices of contention filed by Lyndel in NG 344 of 1997 and Wellcome and Thorpe in NG 366 of 1997, whether the trial Judge erred in failing to find that Lyndel, Wellcome and Thorpe had suffered a detriment sufficient to activate the doctrine of promissory estoppel and in failing to enquire into the proportionality between the relief claimed and the detriment found to have been suffered.

ISSUES ON APPEALS BY ROSEVILLE AND JTP

The following issues arise on the appeals by Roseville and JTP in NG 365 of 1997:

1.         whether Mr Stumbles gave the one-for-one assurance;

2.         whether the trial Judge erred in his analysis of the principles of promissory estoppel, and, in particular, in his analysis of the significance in the present context of the concepts of “unconscionable conduct” and “detriment”;

3.         whether the trial Judge erred in failing to hold that Roseville and JTP had proved that they had respectively suffered detriment for the purpose of activation of the doctrine of promissory estoppel;

4.         whether the trial Judge erred in failing to find that Mobil had contravened s 52 of the TP Act;

In its appeal, Roseville seeks declarations that it achieved 90 per cent or better in the Circle of Excellence judgings for 1992, 1994, and 1995; that it should be treated as having achieved such a score in 1996 and 1997; and that it is entitled to specific performance of the one-for-one promise. In its appeal, JTP seeks identical declarations, with the exception that the first is limited to the two years 1994 and 1995, rather than the three years 1992, 1994 and 1995.

In the appeal by Roseville and JTP, Mobil filed a notice contending that the trial Judge erred:

“(a)     in finding that Mr Stumbles’ representations were capable of giving rise to a promissory estoppel;

(b)       in finding that the representations amounted to a ‘firm’ promise to grant an additional 9 years tenure to franchisees who achieved 90% in the Circle of Excellence judgings for the remaining 6 years of their current tenure;

(c)        in finding inherent in the representations an obligation to keep the promise open and to maintain the Circle of Excellence program over a six year period;

(d)       in finding that the representations were directed to all present and future Mobil franchisees;

(e)        in finding that the representations were an existing, announced policy of Mobil;

(f)        in finding that ‘all territory managers were expected to tell their franchisees about the offer Mr Stumbles made in Los Angeles and to stimulate them to “accept the challenge” of scoring 90% in order to obtain extra tenure’;

(g)       in failing to find that the representations were preliminary in nature, were conditional upon Mobil being eventually able to find a way (if at all), and were too uncertain to contain an offer capable of being acted upon to found an estoppel;

(h)       in failing to have sufficient regard to the formal nature of the contractual arrangements between the parties;

(i)        in finding that the Appellants had relied to their detriment on the representations;

(j)        in failing to find that the Appellants had been given due notice by June 1993 of the withdrawal of any representation which had been made;

(k)       in failing to consider whether the Appellants had suffered any detriment in the period before notification of this withdrawal had been given;

(l)        in failing to find that the Appellants would have been likely to achieve 90% in Circle of Excellence judgings irrespective of Mr Stumbles’ representations in circumstances where:

            (i)         the Appellants had existing contractual obligations to comply with the Team Pak standards which formed the basis for the judging;

            (ii)        compliance with the standards made good business sense;

            (iii)       compliance with the standards was likely to lead to economic benefits for the Appellants;

            (iv)       high achievement in Circle of Excellence judgings had potential benefits for franchisees in future dealings with Mobil;

            (v)        incentive prizes were available for the highest achievers;

(m)       in finding that Mobil had knowledge that the Appellants were acting to their detriment in reliance on the representations.”

BACKGROUND FACTS IN MORE DETAIL

A videotape of Mr Stumbles’ address and an agreed transcript of it were in evidence before the trial Judge. The address was punctuated by captions flashed onto a screen at the front of the room in which dealers were having breakfast. The captions were reproduced in the transcript at the points where they first appeared. The transcript of the entire address comprises fifteen pages. The trial Judge summarised it. We set out below his Honour’s introduction and conclusion, but have included a little more of the speech than his Honour did, and have included the captions at the places where they occurred in the speech:

“Mr Stumbles commenced by describing difficulties in the Australian retail petroleum market.  He spoke of reduction in industry volumes, Mobil’s recent losses, and the number of recent Australian bankruptcies.  He used some sporting analogies to make the point that the champion was the person who performed well under difficult conditions.  He spoke about getting the basics right and dealt with them -  locations, facilities, the Mobil team - and industry competition.  He talked of achieving an international standard of excellence and what this required of dealers.  He referred to independent assessment of standards, the need for training and merchandising techniques.  Then he issued a challenge:

 

            ‘I talked before about leadership and about world class standards.  We could call them gold standards and we’re inviting all dealers to participate in the development of standards that go beyond the norm that go beyond what our competition might think we’re aiming at but go beyond anything in the industry.  We want to develop a set of world class standards, the kind of operating standards that will exceed the customers expectations.  Now this is not for everybody but for dealers out there who are right up there and who are making money and want to take it further this is a real challenge it won’t be included in the Circle of Excellence judging but we invite you to take up that challenge. Now I ought to warn you you’re going to have to be right up there already close to 100% for this exercise to be realistic but if you take up this challenge

 

CAPTION:      Challenge

                        Develop and implement world class Best Practices

 

            and work with us to develop and implement these world class best practices you’ll be supported by Mobil and those other dealers that come with you.  You will be a world class leader you’ll be a pioneer and you’ll be rewarded by your customers.  Now we’d aim to work through what kind of things this level of performance will involve

 

 

CAPTION:      Gold Standards

                        Team Pak Franchise Development Group

 

            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.

 

            It will be a kind of a leading edge that will help us develop our general standards.  The aim is consistently excellent service at every customer interface and we need to establish measures of customer satisfaction and provide feedback to the network on what we learn which leads into the next major issue I want to comment today and that’s tenure for performance.  I said earlier that the customer will reward you when you provide better service.  Now there are leaders out there in every kind of service based industry who are proving that, every day of the year there are many Mobil dealers out there who even in these difficult times are earning more because in their markets in their trading areas they are providing a superior level of service, and that assessments made not by us but by the only important judge at the end of the day the customer.  The Circle of Excellence program sets out to reward our better dealers but we want to take it a step further.  At Mobil we’re committed totally to excellence in retailing.  We’re committed to our dealers because as I’ve said to you pretty often now, we don’t deal with many customers first hand, the key to our business is how well we can work with our dealers to have your businesses deliver what the customer wants.  This is a very tough market and we have our ups and downs.  Lately we have been having a lot of downs but we want to work with dealers who are in it for the long term, because we’re in it for the long term so we’re working on a concept that will reward excellence and build that long term relationship.  Now the end of the current 9 year franchise term may seem like its a long way off for most of you and it is. 

 

CAPTION:      Tenure for performance

·      A long term view

·      A long term relationship

 

            If you came aboard at the end of 1988 then you’ve got just over 6 years to go but we’re working on a way for our best dealers

 

CAPTION:      Tenure for performance

                        Secure extended tenure

 

            to secure extended tenure and to be able to do that without any kind of fees or anything like that.  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

 

CAPTION:      90% or better for 6 years [caption displayed for 17 seconds]

                        Automatic 9 year renewal

 

            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.

 

CAPTION:      Tenure for performance

·      Reward high standards

 

            That will have its own rewards in terms of your business and its effect on the network on the performance of the whole network and it will also enable you to plan more effectively further ahead. Now it seems to follow logically from what I’ve just said that if we value and reward the efforts of the dealers who give it a go and get it right then we’re going to have to look hard at those dealers who consistently fail to achieve an acceptable standard.

 

CAPTION:      Tenure for performance

·                    Reward high standards

·                    Can’t ignore poor performers

 

            Now we haven’t finalised our views on this aspect either but you can be sure of one thing and that is that we are going to follow through on it. It’s just not fair to the rest of the team for some of us to continue on with poor appearance sloppy operation and no commitment to the standards. That kind of dealer is letting the rest of the team down and clearly doesn’t value his or her membership. So when the time comes to use a football analogy I guess we might have to put them on the draft list. But lets move on, ...’

Mr Stumbles ... finished by dealing with other matters not presently relevant.” (Wilcox J’s emphasis)

We have referred earlier to the videotape of highlights of the Convention, the September 1991 issue of the “Mobil Marketer”, and the holding of the regional meetings of dealers in late 1991. It will be recalled that only the short passage in the address emphasised above was recorded in the “highlights” videotape. The full “highlight” of Mr Stumbles’ address on that videotape was as follows:

            “Commentator:          After declaring a commitment to excellence in customer service Ken Stumbles announces a new concept to Mobil’s own dealers.

 

            Stumbles:                    Now we have a lot more work to do on this. But the commitment that we are making to you here today is that we will find a way to extend your tenure automatically, no cost, if you consistently achieve 90% or better in Circle of Excellence judgings.

 

            Commentator:                        We asked dealer Alan Upson for his reaction to the announcement.

 

            Upson:                                    The fact that they are looking at the possibility of extending people’s franchises dependant on achievement of 90% or more in standards, that’s got to be appealing to every franchisee in Australia.”

It will be recalled that the same short passage from Mr Stumbles’ address was the only part of it set out in the “Mobil Marketer”. In that publication the passage was introduced by a description of the initiative as “extended tenure for high performance” and a reference to Mobil’s determination “to reward excellence, and build a long term relationship”.

In his Reasons for Judgment dated 15 April 1997, the trial Judge referred to affidavit evidence of Mr Stumbles as to circumstances touching his status and authority within Mobil, the preparation of his address and its delivery, and his lack of further involvement in the “tenure for performance” proposal after his return to Australia from Los Angeles (he was assigned to a major project within Mobil). His Honour went on to summarise the evidence of other officers of Mobil relating to the issue of the granting of renewal of tenure for performance. Those officers were Messrs Garth Symington, Stewart Cripps, Peter Sanguinetti and William Higgs. It does not seem necessary to canvass their evidence, at least at this stage. It should be noted, however, that dealers were “represented” vis-a-vis Mobil by a National Dealers’ Advisory Council (“NDAC”) and by State Dealers’ Advisory Councils. Mr Higgs prepared a briefing note for six dealers and six Mobil officers attending a meeting of the NDAC on 8 June 1993. The note included this announcement:

“The reward of the free Tenure will be made for dealers achieving 90% or better in CofE [Circle of Excellence] for 1992-93 only, at this stage.  The mechanism for reward will be via a pro-rata discount off Franchise fees upon dealers entering into a new Franchise i.e. on [sic] ninth discount off fees for each year of 90% or better on CofE.

The discount will be applied to the fee structure in place at the time of Franchise renewal and is available to lessee dealers only.

The future direction of this program will be finalised as part of the proposed Franchise review.”

This announcement was included, in almost identical terms, in a Mobil newsletter sent to franchisees shortly after 8 June 1993. In the newsletter, the second paragraph was extended so as to say that the discount “is not transferable” and the last paragraph was made to read:

“The future direction of this program will be reviewed later in the year.”

Mr Symington attended a State Dealers’ Advisory Council meeting on 23 June 1993 at which, according to his affidavit, he said words to the following effect:

“There have been delays regarding the tenure decision due to legal problems with the PRMF Act.  Mobil has received legal opinion that if 1 year additional tenure is offered, a new 9 year franchise would affectively [sic] have to be offered.  Therefore, Mobil proposes to rewards [sic] dealers achieving 90% or better in the Circle of Excellence programme for 1992 and 1993 only at this stage.  The mechanism for reward will be by a pro-rata discount of franchise fees upon dealers entering into a new franchise agreement.  Affectively [sic] this will be a 1/9th discount of fees for each year of 90% or better in the Circle of Excellence programme.”

Of this evidence of Mr Symington, his Honour said:

“There is no evidence that Mobil received legal advice to the effect of the second sentence in this passage.  The advice that Mobil had received, although tentative, was to the contrary.”

Although Mr Higgs remained Franchise Development Manager until May 1994, apparently he took no further action in connection with Mr Stumbles’ statements, and the promised review “later in the year” did not occur.

Apparently the NDAC Executive did not protest about Mobil’s decision but many franchisees were unhappy about it.

In early 1993 certain officers of Mobil were appointed to be members of a committee called the “Retail Business Venture Group”. These included Mr Higgs. The group spent about eighteen months looking at all aspects of Mobil’s retail operations. In about July or August 1994, according to Mr Higgs’ recollection, the group decided to recommend a new franchise scheme under which a person would be given a franchise covering several service station sites. Apparently that recommendation was made and adopted. Mr Higgs said that implementation of it “began probably about October” in 1994. Implementation was still taking place when he gave evidence before the trial Judge in October 1996.

In late 1994, the NDAC Chairman, Mr Ron Roneberg, wrote to Mr Symington, and on 28 November 1994, Mr Symington wrote a letter in reply (“the Roneberg letter”) which read:

“At the Los Angeles Convention in 1991, Mobil put forward the concept of one year’s extended tenure for each year a dealer achieved a 90% or better C of E result.  (We have subsequently confirmed that this is limited to two years).

This offer was made in good faith, but we did make it very clear at the time that the PRMFA severely hampered our ability to deliver the offer as an ‘insert option’, given that the PRMFA prescribes a minimum renewal offer of 3 + 3 + 3.

As a result we had determined to offer the renewal as a ‘discount’ off the full franchise fee that would likely have been payable to Mobil upon renewal of the franchise.

As you well know, and indeed as you make reference to in your letter, competitive market conditions have overtaken us and we are having to meet that competition by dramatically changing the basis upon which we will operate the network.  The result of this change will mean fewer individual franchisees in the network.

That is a brief summary of events as we see them.

In response then, at the outset it must be said that we appreciate this situation would be causing some anxiety, however, we have not determined any hard and fast rules at this stage for surrendering or non-renewals of franchises and hence we cannot give definitive answers to your questions.

Suffice it to say we are conscious of the issues and are working to a tight timetable to try to come to some definitive resolutions.”

Despite the contents of the last paragraph, no “definitive resolutions” were ever announced.

In January 1996, shortly after the commencement of the two proceedings below, Mobil announced, without giving reasons, abandonment of the Circle of Excellence awards. That abandonment made it impossible for franchisees to attain 90 per cent or better in Circle of Excellence judgings in 1996 and 1997, the last two of the six years referred to earlier.

His Honour gave an account of how Lyndel, Thorpe, Wellcome, Roseville and JTP became aware of the nine-for-six and one-for-one statements and of how they allegedly went about improving their performance in reliance on them. We will refer to the evidence in this respect later.

REASONING ON APPEALS

In due course, it will be necessary to reach conclusions in relation to the disposition of the appeals by Mobil and by Roseville and JTP. But because of an overlap of issues, we will address the issues on the appeals under the following headings:

1.         Application for disqualification of the trial Judge.

2.         Contractual issues.

3.         Promissory estoppel issues.

4.         Misleading or deceptive conduct issues.

5.         Issues touching the special position of Wellcome.

1.         Application for disqualification of the trial Judge

During the seventh day of the trial counsel for Mobil asked the trial Judge to disqualify himself in view of certain observations made by his Honour the previous day (21 October 1996).  The application also relied on statements made by his Honour during the course of the trial on 15 October 1996 when his Honour said to counsel:

“HIS HONOUR:         All right.  Just before we do adjourn, Mr Gyles asked after lunch if the applicants could define what relief they are seeking.  It is obviously desirable that that be done for the purposes of the progress of the case.  I also gather from what was said that it would help if there were some discussion about exactly what terms the case might be settled on.  I just wanted to make this observation.  I suppose it is obvious to everybody, we have taken one day to deal with the evidence of one service station.  There are another four in these preliminary cases but there are 120 odd still in the wings.

Unless some accommodation is reached between the various applicants and Mobil, it seems to be that both parties are committed to spending a huge amount of money in legal costs and it must be enormously disturbing to Mobil’s goodwill - sorry, to their - it must be disturbing to their business to have executive time tied up in these proceedings which is going to go on for a long time unless there is some agreement.  I would have thought it did not do much for their goodwill because we are talking here about, after all, the people who, by definition, are amongst their best dealers.  They have all got over 90 per cent and whatever the legal position might be, to simply set out the facts of this case might not do a lot for the reputation of the company in the marketplace.

So, I will simply make those observations and really the time has come for there to be some very serious discussions in this case and I hope that they will be embarked on immediately and some decisions made before the costs go any further.

MR PARKER:             Your Honour, I am sure that Mr Gyles and I can keep our hands on the tiller and for our own part we would certainly take up what your Honour said seriously.”

 

On 18 October 1996 there was discussion between the trial Judge and counsel, and his Honour said to counsel for Mobil with reference to one of the issues in the case, “I have to say there was a deal of confusion going on in the ranks of Mobil all through this.”

 

On 21 October 1996 when Mr Symington, General Manager, Pacific Islands for Mobil was being cross-examined by Mr Parker of Queen’s Counsel, the following exchange occurred:

“HIS HONOUR:         But, by this time we are talking about - you had already got the feedback that the peasants had accepted, is that what you are saying that you had already got feedback before July 6th that the dealers were happy?---No, what I was saying was that there was - the fact that we had addressed the issue and had come out with a decision that this is the way we were going to be handling it, had been broadly accepted by the group as being the way we were going to handle it.”

The statements made by his Honour on 15 October 1996 and 21 October 1996 were relied upon by counsel for Mobil to found the submission that the trial Judge should have disqualified himself on the ground of apprehended bias.  It was not suggested that his Honour was actually biased; indeed that suggestion was expressly eschewed by counsel for Mobil.

Counsel for Mobil submitted that in the light of these statements by his Honour a reasonable apprehension that the trial Judge might not bring an unprejudiced mind to the resolution of the case would be excited in the minds of the parties and in members of the public.

Before dealing with the submission it is necessary to refer to other passages in the transcript of the trial.  Shortly before the application was made on 22 October 1996 by counsel for Mobil to the trial Judge to disqualify himself and at the commencement of the hearing that day, counsel for Mobil said to his Honour that he would like to raise with him the ramifications of what his Honour had said the previous day, the relevant passages having been recited above.  Counsel said that he wanted to take it up with his Honour later, but did not particularly wish to interrupt the witness then under cross-examination.  His Honour said:

“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 £100 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 £100. 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 £100 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 £100 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 £100 to the plaintiff.

In substance, the contract in Abbott v Lance was simply a promise to pay £100 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.

........................................................................................................................

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 £1,000 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.

Approach of the trial judge

The approach taken by the trial judge in relation to promissory estoppel can be summarised as follows.

First, his Honour referred to the decisions in Waltons Stores (Interstate) Ltd v Maher (1985) 164 CLR 387; Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 and S & E Promotions Pty Ltd v Tobin Brothers Pty Ltd (1994) 122 ALR 637.  His Honour then confirmed his earlier conclusion that:

“...any applicant who can establish that Mr Stumbles’ statement caused it to assume an extension or renewal of the franchise, and that it acted on that assumption to its detriment with Mobil’s knowledge, is entitled to a ruling that Mobil is estopped from refusing the assumed extension or renewal.  Without being exhaustive, an example of detriment would be the expenditure of money by a franchisee on the improvement or promotion of a service station beyond what could be recouped during the term of the existing franchise agreement.”

Second, his Honour adhered to his earlier conclusion that there was no uncertainty or ambiguity about Mr Stumbles’ statement to the effect that:

“... if you achieve 90% each year for the next six years then we’ll guarantee you another nine years as of right, no fees just a renewal.”

Third, his Honour rejected argument that this was not a firm promise. He considered that the reference to the nine-for-six proposal was cast in promissory language and must have meant, and been understood to mean, that Mobil promised that upon achievement of 90 per cent each year for the following six years the franchise would be renewed for nine years without charge.

Fourth, his Honour confirmed his earlier conclusion that there was no promise such as would found a promissory estoppel to the effect that franchisees would receive a one year extension for each year they achieved a 90 per cent rating in the Circle of Excellence award.  Essentially, his Honour’s reasons for this view were the tentative context in which the one-for-one statement was made.  His Honour referred to the expression “a bit of an idea of what we have in mind” and the statement that the PRMF Act “makes it very very difficult to do something like this”.  He also considered, but did not decide, that an extension of one year would probably amount to a renewal, with the consequence that the PRMF Act required a minimum renewal of three years.  He concluded that the one-for-one statement was not intended to be, nor would it have been understood as, a representation which would give rise to an equitable estoppel.

Fifth, he concluded that the estoppel claims of Roseville and JTP, in particular, failed because there was (a) no one-for-one promise, and (b) the requirement of the nine-for-six promise had not been satisfied in relation to those franchisees.  This was because the 90 per cent standard had not been achieved successively over each of the ensuing years.  In contrast, the other three franchisees had obtained 90 per cent in all ensuing years when Mobil terminated the scheme.

Sixth, his Honour found that the franchisees incurred costs they would not otherwise have incurred because they assumed Mobil would grant the nine-for-six tenure.  However, while his Honour considered that notwithstanding it was probable that some comparatively small cost detriment had been sustained by Lyndel, Thorpe and Wellcome, he was not satisfied that the total detriment suffered by any of them exceeded the value of the “reward” promised. Therefore, the franchisees’ promissory estoppel case failed.  He pointed out that Mr Morris of Lyndel spoke of Mobil approved products costing “a few dollars more” and he noted that Mr Scorgie of Thorpe had provided some examples of items where Thorpe suffered detriment from adhering to central ordering.  His Honour also took into account that the individual amounts referred to must be seen in the light of the number of items purchased over a four year period.  The effect of his Honour’s finding was that there was no “net detriment” after taking into account the “rewards” offered by Mobil.  It then followed that the relief sought by those three applicants, namely the 9 for 6 grant of tenure, was not in any sense proportionate to any detriment suffered.

Accordingly, his Honour concluded that the promissory estoppel claims of the five franchisees must be rejected.

 

General principles

The principles on which remedies based on equitable estoppel, including promissory estoppel, are available are by no means clear or precise.  This is reflected in the substantial developments in the case law, particularly over the past two decades, and in the extensive range of discussions and articles on this topic over that period.  The relief is broadly grounded in the notion of unconscionability, but the ways in which the principles are applied to specific circumstances have been the subject of differing formulations.  This area of equity is still in the process of development and extension.

So far as the present case is concerned, the authorities referred to by his Honour provide helpful guidance.

The first of these is Waltons. In that caseBrennan J, speaking of “equitable estoppel” in the context of negotiations for a lease, where terms had been agreed but no formal exchange had been effected, formulated a number of considerations to be taken into account in determining whether an equitable estoppel is made out.  He outlined those considerations as follows (at 428-9):

“In my opinion, to establish an equitable estoppel, it is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff’s action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise.”

Mason CJ, Wilson, Brennan and Deane JJ held that, notwithstanding that there had been no formal exchange of documents, Waltons was estopped from denying that it was bound, because, knowing the owner was exposing himself to detriment by acting on the basis of a false assumption, it was unconscionable to encourage him, by inaction, in the course that he had adopted.  Deane J (at 449) saw no reason, as a matter of underlying rationale, why representations or assumptions about future conduct should be excluded from the reach of estoppel either in law or equity.  His Honour also observed that the distinction between a representation or assumption of existing fact or one of future action or inaction had always sat “uncomfortably” with the general notions of “good conscience and fair dealing which underlay common law, as well as equitable doctrines of estoppel by conduct”.

In Austotel, a decision discussed by the trial Judge in some detail in his preliminary reasons in this case, Priestley JA considered the line of authority in relation to estoppel, which had developed from the Privy Council decision in Plimmer v The Mayor of Wellington (1884) LR 9 App Cas 699.  Although, in the final result, Priestley JA dissented, his distillation of the relevant principles was accepted as “cogent” by a Full Court of this Court in S & E Promotions Pty Ltd (at 653). He considered that Plimmer was:

“ ... a clear example, where a plaintiff, despite being unable to point to some agreement which, although unenforceable, contains precise terms describing what he expected from the defendant, has nevertheless been held to be entitled to equitable relief which may be of a proprietary kind.” (at 604)

He then formulated the relevant proposition as to equitable estoppel in the following terms (at 610):

“For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable.”  (emphasis supplied)

 

In this passage, Priestley JA extended the proposition which he had adopted in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 by inserting the words “or an interest granted to the plaintiff”.

Specifically, in relation to the comments of Priestley JA in Austotel, Wilcox J said:

“Moreover, as I have said, the statement of principle of Priestley JA at 610 - which does not require agreement on all the terms of the arrangement - was endorsed by a Full Court of this Court in S & E Promotions.  Accordingly, I should not reject the claim of promissory estoppel on the ground that Mr Stumbles left uncertain (if he did) the duration of the promised franchise extension.”

In Commonwealth of Australia v Verwayen (1990) 170 CLR 394, the High Court considered and applied Waltons.  In that case the Court was primarily concerned with the relationship of the extent of the relief sought to the degree that detriment might be sustained. The Court there made it clear that the principles of estoppel may apply to hold a representor to statements or conduct leading to an assumption on the part of the representee relating to a matter of fact or law.  The principles were held to apply in circumstances where it would be unconscionable for a representor to depart from the representation without redressing or removing the loss or detriment which would otherwise be occasioned.  Mason CJ and Deane J expressed the view that there was a single doctrine of estoppel but the other members of the Court did not express a final view on this point.  The estoppel in Verwayen arose from statements by the Commonwealth as to its policy in relation to claims arising out of a collision between Australian naval vessels. These were to the effect that its policy was not to contest liability or to plead a limitation defence.  There was a subsequent change in policy.  The Court held, by majority, that the Commonwealth should be held to its position as represented.  The Court discussed in some detail the question of the nature and extent of the relief appropriate to redress the detriment.

The representations

In our view, for the purpose of determining the estoppel submission, it does not matter whether the formulation of Brennan J in Waltons or thatof Priestley JA in Austotel is applied. While the difference may, in particular cases, lead to different results, in the present case it does not.  On either approach, it is a necessary element of the principle that the defendant has created or encouraged an assumption that “a particular legal relationship” or “an interest” would arise or be granted by the respondent if certain things are done or not done by the applicant in reliance thereon and that it is contrary to good conscience for the defendant to depart from the assumption.

In order to determine the appeal on the estoppel issue, it is necessary to consider whether the statements as to the one-for-one and nine-for-six proposals were sufficiently unqualified, firm and specific so as to induce an assumption that “a particular legal relationship” would be established or an “interest” would be granted.

One-for-One

The first task is to consider the reasonable construction which could be placed on the one-for-one references in the Convention speech of Mr Stumbles.

Shortly before the relevant statements were made during the speech, there were broad and general statements, namely: “we’re working on a way”; “still a lot of work to do on this idea”; “we’re going to have to talk with your dealer council representatives”; and “we haven’t finalised how it is going to work.”   Mr Stumbles then offers to give dealers “a bit of an idea of what we have in mind”.  The caption, “Basis for extention [sic] - One extra year ...” is displayed for approximately thirty-two seconds, whilst Mr Stumbles explains that this is “where we started”.  Immediately after this reference to one-for-one, the next caption signals that there is an implementation problem due to the PRMF Act.  The speech also refers to this legal problem.  Mr Stumbles then turns to “where we’re at the moment [sic]”, referring to the then “present thinking” which was that “maybe the only way to do this” is by the nine-for-six proposal.  This is immediately qualified by the statement that there is a lot more work to do.  Thereafter follows a commitment to find a way to extend tenure unconditionally if there is consistent achievement of 90 per cent or better.  The commitment is not in terms expressed to be to grant a nine-for-six entitlement.

The framework in which the statements were made was tentative in nature.  Although not a critical matter, it is not without significance that the statements were made to dealers in the course of a thirty minute speech, in a mixed social and business context at a breakfast session of a dealers’ convention for 1200 delegates.  The overall tenor of the speech was motivational and exhortatory.  Its purpose was to inspire dealers to greater leadership and to accept “the challenge”.  The former President of the United States and the Mayor of Los Angeles were guest speakers.

In substance the sequence of what occurred was that after some qualified and introductory remarks, the way in which a proposal of tenure for achievement might be granted was outlined.  One possible starting point, namely one-for-one, was raised but then immediately a strong intimation was made by Mr Stumbles that it was not viable because of legal problems.  At that stage the one-for-one suggestion was put aside in the speech.  There was no mention of this proposal in the video.

Several references to continued or consistent achievement and a long-term relationship occur during the speech and in subsequent documents.  This language indicates that the ultimate purpose was to achieve a continuous improved level of performance over a number of years.  The incentive scheme was not intended to operate in a fragmentary or discrete manner.  The emphasis on consistent achievement is contrary to suggestions of a one year ad hoc achievement, by itself, being appropriate for reward. This would be the case if the one-for-one proposal as expressed were to be implemented.  The intention was clearly to attain a sustained level of performance, year in year out, and not for simply one or two years.  The proposal was tenure for substantial, consistent and continuous performance.  The claim of one-for-one in the form asserted by the applicants is not consistent with this purpose.  For example, on the one-for-one scheme it was suggested that it would be possible for an applicant to achieve the 90 per cent level in years 1 and 3 but in the other years to fail dramatically and still be entitled to a renewal for a cumulative period of two years, notwithstanding that there may have been very unsatisfactory performance in the other years.  Such a result would lack consistency and would not achieve Mobil’s purpose in establishing the incentive scheme which was to reward its “best dealers” who are “in it for the long term”.  It is unlikely that the company intended to make a commitment in this form.

Accordingly, we are not persuaded that any error of law has been shown in relation to his Honour’s dismissal of the promissory estoppel submissions in so far as they relate to the one-for-one proposal.

Nine-for-Six

The nine-for-six proposal was raised by Mr Stumbles as a “may be” alternative to the one-for-one proposal, which the PRMF Act was said to have made “very, very difficult” to operate.  There was a reference to a “lot more work” in relation to the nine-for-six proposal.  This is not simply a case of “fine tuning” as the franchisees suggest.  The difficulty for the applicants is not that the promise is not fully spelt out but rather that there was no promise made at all as to the nine-for-six proposal.  The immediately ensuing commitment mentioned after reference to the nine-for-six statement was to the implementation of a process directed towards finding a way of somehow extending tenure for an indefinite period automatically and without costs if there was a consistent achievement of 90 per cent over an unspecified period.

In our view, such a generalised commitment to find a way to implement an appropriate tenure for achievement scheme cannot, in the present context, give rise to an expectation of either a “particular legal relationship” coming into existence or the grant of an identifiable “interest”, to use the language of Waltons and of Plimmer.  The essential elements and details of the legal relationship are lacking as are any specific details relating to the duration or terms of any extension or renewal or of the period over which the franchisees would qualify.  Nor can such an indeterminate possibility be regarded as an expression of an intent that any particular incentive scheme will be formulated or implemented.  No provision is made as to any objective or subjective criteria or to any person or entity by reference to which, or by whom, the nature, extent, duration or terms of any grant can be rendered reasonably certain.  The substantial disparity in terms and in effect between the one-for-one proposal and the nine-for-six proposal mentioned by Mr Stumbles, itself highlights the range of widely varying alternatives which might result from subsequent elaboration of the scheme.

The “less precise” approach identified in Plimmer by Priestley JA does not, in our view, support a submission that there is “sufficient” certainty in the “promise” or “encouragement” with respect to the “finding a way” commitment, to attract the operation of the doctrine of equitable estoppel.  The lack of  information as to the contents of the proposal is too pronounced.  In particular, there is a lack of information as to the period of qualifying performance and the duration, and extent of the interest to be granted.

The decisions which apply the Plimmer approach are cases which involve expenditures made on the property of another person, or alternatively, involve an injustice arising from the taking of advantage of such expenditure by the defendant.  Where there has been such expenditure it will often be possible to identify, with reasonable certainty, the amount or value of the expenditure or the value of work done on the property in question, so that some reasonably precise determination can be made as to what relief is called for in order to redress or remove the detriment.  Plimmer itself provides a clear example.  In that case the plaintiff had been encouraged to expend money to provide a jetty at the request of the defendant.

For the above reasons, we consider that his Honour erred in law in concluding that the statements or conduct of Mobil were sufficiently specific and unqualified to attract the application of equitable estoppel in relation to the nine-for-six proposal.

 

The July 1993 Newsletter

On 6 July 1993 Mr Symington, the then General Manager of Fuel Sales for Mobil, sent a Circular and Newsletter to all Team-Pak dealers.  The Newsletter was intended to improve communications between dealers and the company.  The Newsletter referred to the Circle Of Excellence tenure scheme as follows:

“C of E / Tenure

The reward of free tenure will be made to dealers achieving 90% or better on C of E for 1992/93 only at this stage. The mechanism for this reward will be via a pro-rata discount of Franchise fees upon dealers entering into new Franchise i.e. (one) year free of fees for each year of 90% or better on C of E in 1992-1993

The discount will be applied to the fee structure in place at the time of Franchise renewal, is available to lessee dealers only and is not transferable.

The future direction of this program will be reviewed later in the year.”  (emphasis supplied)

In his reasons for judgment Wilcox J was critical of the evidence given by Mr Symington.  His Honour considered that the proposal set out in the Newsletter was a pale reflection of what he considered to be the original proposal, namely a nine for six offer.  He described the foreshadowed variation as a “travesty”.

The submission was made that the conduct of Mobil in relation to the sending out of the Newsletter was unconscionable on the basis that the statements concerning the Circle of Excellence Scheme were misleading because they did not make it clear that the original proposal was “effectively” terminated.

In our view, the distribution of the Circular together with the Newsletter cannot properly be described as unconscionable conduct.  It is apparent on the face of the Newsletter that the statements as to the future were tentative because they contained the expression “at this stage” and they informed dealers that Mobil intended to review the future direction of the program later in the year.

 

Detriment

His Honour found that there was some additional cost to Lyndel, Thorpe and Wellcome in their setting out to achieve the 90 per cent standard, but concluded that this was comparatively small and was not sufficient, when considered in the light of the “rewards” offered by Mobil, to justify a finding that it exceeded the reward offered.  Nor could it justify the relief sought, namely a nine-for-six extension, because such relief is disproportionate to the detriment.

The principles of equitable estoppel are directed to redress the detriment which a party might otherwise sustain as a result of the departure from an assumption on which the plaintiffs acted with encouragement from the defendant.  It is intended to relieve against the detriment suffered and not to make good an  expectation.

This “minimum equity” aspect of equitable estoppel was discussed in considerable detail by the High Court in Verwayen at 413, 429, 442-3, 461, 487 and 501. In discussing the purpose and extent of estoppel, Mason CJ said (at 413):

“A central element of that doctrine is that there must be a proportionality between the remedy and the detriment which is its purpose to avoid.  It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption.”

Brennan J, speaking of equitable estoppel, said (at 429):

“The remedy is to effect what Scarman LJ called the ‘minimum equity to do justice .... The remedy is not designed to enforce the promise although, in some situations ... the minimum equity will not be satisfied by anything short of enforcing the promise.”

Deane J, in addressing the same subject, said (at 442):

“.... equitable relief must be moulded to do justice between the parties and to prevent a doctrine based on good conscience from being made an instrument of injustice or oppression. That being so, it should be accepted that the prima facie entitlement to relief based on the assumed state of affairs must, ... be qualified if it appears that that relief would exceed what could be justified by the requirements of conscientious conduct and would be unjust to the estopped party.”

Gaudron J agreed with the remarks of Mason CJ in relation to proportionality.

McHugh J said (at 501):

“... because the equitable doctrines create rights, they preclude the party estopped from denying the assumption of fact (or law) only as long as the equitable right exists.  Once the detriment has ceased or been paid for, there is nothing unconscionable in a party insisting on reverting to his or her former relationship with the other party and enforcing his or her strict legal rights.”

A similar approach is favoured by Meagher, Gummow & Lehane in Equity Doctrines & Remedies (3rd edn, 1992) at pars 1723-26 inclusive.

McHugh J in Verwayen also referred to the principle that in moulding its decree the Court, as a court of conscience, goes no further than is necessary to prevent unconscionable conduct and that a court of equity will only require the promise or expectation to be fulfilled if that is the only way in which the equity can be satisfied. This approach was recently applied by the English Court of Appeal in Sledmore v Dalby (1996) 72 P & CR 196 (at 208-9); see also Andrew Robertson, “Satisfying the Minimum Equity: Equitable Estoppel Remedies after Verwayen” (1996) 20 MULR 805.

Sledmore is a pertinent decision.  In that case, the defendant, Mr Dalby, who was the son-in-law of the owners, occupied a house with his wife over a number of years. He paid outgoings and carried out substantial improvements to the house over a three year period. Mr Dalby was encouraged to carry out these improvements by his father-in-law.  The father-in-law, Mr Sledmore, had stated that he intended to transfer the house to his daughter and Mr Dalby.  This was known to his wife, Mrs Sledmore, who was the appellant.  The Court of Appeal considered that the extent of the detriment claimed by Mr Dalby had been removed by the passage of time because his continued occupation of the house rent-free for over 18 years had redressed or removed the equity arising from his expenditure.  In reaching this conclusion the Court took into account the fact that his current use of the house was minimal and that it was also appropriate to weigh the pressing need of the appellant, Mrs Sledmore, for the house. Roch LJ (with whom Butler-Sloss LJ agreed) said (at 204-205):

“... it is no longer inequitable to allow the expectation created in the respondent’s mind by Mr Sledmore’s oral statements and by his encouragement of the respondent to carry out the improvements to the house which were carried out between 1976 and 1979 to be defeated.  The respondent has lived rent free in this accommodation for over 18 years. During that time the insurance of the property has been paid for by the Sledmore family and the property has been re-roofed at their expense.  The use made by the respondent of the house at the time of the trial was minimal and it is clear that there was accommodation for him elsewhere.  He is ... in employment ... and therefore capable of paying for his accommodation....

On the other hand, the evidence indicates that the appellant is vulnerable in that she is liable to lose her present accommodation and that she has a pressing need for the house which is her property...

I would allow this appeal and make an order for possession in the appellant’s favour on the basis that the minimum equity to do justice to the respondent on the facts of this case was an equity which has now expired.” (emphasis supplied)

This approach is similar to that of McHugh J in Verwayen above.  Hobhouse LJ referred to and applied the principles adopted by Mason CJ in Verwayen in relation to the need for proportionality.  His Lordship concluded that the end result must be a just one having regard to the assumption made by the party asserting the estoppel and the detriment which he has experienced.

The present case

In his judgment in the present case, although he considered there was some evidence of additional cost, the trial Judge concluded that the nine-for-six relief claimed was not an available remedy to make good the detriment which the applicants suffered when considered against the “rewards” offered by Mobil.

Mobil submits that the franchisees were already committed to comply 100 per cent with the Team Pak requirements and that therefore, any attempt to achieve 90 per cent could not constitute detriment. Indeed, acquiescence by Mobil in attainment of only 90 per cent represented, according to the submission, a relaxation of an existing obligation, rather than an imposition. We do not accept the submission.  It is apparent, from a practical, commercial point of view, that the incentive scheme was based on Mobil’s acceptance that 90 per cent compliance would represent an achievement over and above what was presently being obtained and accepted as adequate. Uncontradicted evidence given by dealers was that special efforts were made to achieve more than what would otherwise have been accepted by Mobil as a sufficient performance.

We now turn to the detriment case advanced by the five individual franchisees.

Lyndel

The detriment claimed to have been suffered by Lyndel as a result of the implementation of the nine-for-six proposal included additional work, expense and loss of income.

Lyndel’s case was that it increased the levels of staff after the August 1991 speech in order to attract the extension of tenure.  In addition, it claimed to have paid additional wages, to the extent of $14,000 per annum, to meet and maintain the standards required by the Circle of Excellence proposal.  Mr Morris retained the services of his retired father to assist him to achieve the ninety per cent score.  There were also said to be expenses incurred and time spent on staff training and the provision of staff uniforms.  There were extra attendants at the premises necessary to meet random inspections by “mystery buyers” calling at the behest of Mobil.  There were also said to be extra additional costs incurred in advertising, marketing and other promotion efforts.  Losses were said to arise from discounting.  There were further costs and losses in respect of Lyndel’s preferring Mobil products over those of competitors, of dealing with additional constraints due to a requirement to buy through a central ordering body and in complying with Mobil’s requirements as to a credit card system.  A further matter was the losses from theft which were said to have arisen from Mobil’s requirement that oils be displayed outside in prominent view.

Mobil’s response to these claims is that they are, in their totality, relatively minor and not proportionate to the remedy of an automatic nine-for-six extension at no cost.  Many of the matters raised were simply sound and desirable business practices.  They were inherently likely to, and did in fact, lead to increased turnover, sales and profitability.  For instance, cleanliness, uniforms, random inspections, staff training, performance reports, advertising and promotion, are all processes calculated to enhance the viability of the operator’s business and profitability.  Although there was no detailed or specific evidence as to amounts, Lyndel referred to increases in staff levels.  However, there was evidence that there was no overall increase after the August 1991 speech, nor was there evidence of any material impact on profitability.  As his Honour pointed out, Mr Morris spoke of Mobil approved products costing a “few more dollars”.

In our view there is force in the submissions that much of the expenditure and efforts were of a nature which might reasonably be expected to lead to increased profitability and efficiency in day to day operations.  The additional efforts and expenditures on the part of Lyndel were not directed to capital improvements to the premises which would enure to the benefit of Mobil in a proprietary sense.  In that respect they are different from the benefits which, but for the relief sought, would accrue in a Plimmer sense, where expenditure was incurred on the land of another which would increase its value.

Against the detriment outlined above, his Honour took into account the offer by Mobil to pay the sum of $32,209 compensation by way of reward in respect of the 1992 and 1993 years in which the 90 per cent Circle of Excellence level had been achieved by Lyndel. The question of the degree of detriment, is of course, one of fact which cannot be precisely spelt out. Having considered the evidence concerning Lyndel and the submissions made in relation to that evidence, we consider that it was open to his Honour to conclude that the detriment was not proportionate to the grant of the nine year extension.

 

Thorpe

In the case of Thorpe, Mr Scorgie took additional steps and efforts after August 1991 which he had not previously considered cost effective. He referred to staff uniforms and training.  He agreed that the measures were desirable but he had not considered them necessary.  He referred to the stringent standards of cleanliness, appearance, and maintenance required by Mobil under the Circle of Excellence.

Mr Scorgie also referred to the expenditure and time spent in a car care program but agreed that this was not part of the Circle of Excellence scheme.  He referred to the security problem with oils displayed outside.  He agreed that this was a requirement under existing arrangements and was a common practice.

Mr Scorgie calculated a loss of about $27,000 said to arise from a request not to have products competitive with Mobil sold from the premises. However, this was a pre-existing requirement and there was some evidence that Thorpe had ceased selling many of the competitive products prior to the August 1991 speech.  His Honour pointed out that the additional amounts paid as a result of the Mobil central ordering program were comparatively small, although they had to be multiplied by the number of items purchased over many years.

In April 1995 a franchise arrangement was entered into with Pizza Hut up to the period April 2000 on the assumption by Thorpe that the franchise would continue up to that time.  However, this did not appear to give rise to any substantial detriment because there was evidence that the Pizza Hut franchisee, Pepsico, would terminate it on termination of the franchise agreement and that Mobil had agreed to indemnify Thorpe against any liability to Pepsico.

Again, many of Thorpe’s efforts and expenditures were directed to improvement of sales and profitability and the evidence does not indicate that the expenditures and efforts did not achieve these goals.  There must also be taken into account the sum of $27,141 offered by Mobil in respect of the achievement of 90 per cent in 1992 and 1993. 

To a large extent our above comments with respect to Lyndel are pertinent to the circumstances of Thorpe. In our view, there was sufficient evidence on which it was open to his Honour to reach a conclusion that any detriment or loss to Thorpe was small and, when considered in the light of the reward, lacked proportionality to the relief sought.

 

Wellcome

Mr Jevaherjian referred to his efforts in the maintenance of gardens and lawns.  He also referred to purchasing uniforms, keeping the station attractive, and a training levy.  These were matters which ought to have been attended to irrespective of the Circle of Excellence program.

Wellcome was offered $16,880 in response to its compliance with the Circle of Excellence standards for the years 1992 and 1993.  The state of the evidence left it open, in our view, for his Honour to conclude that to confer a nine-for-six entitlement, when considered in association with the reward, would be disproportionate to any detriment which Wellcome had demonstrated.

JTP and Roseville

JTP did not achieve 90 per cent success in the Circle of Excellence for 1992 or 1993.  Mr Riddle conceded that the amounts expended on Circle of Excellence were small and that his performance improved in the period.  He referred to painting of the showroom floor but this was not a Circle of Excellence requirement. The allegations of material detriment in relation to JTP follow similar lines to the claims discussed above in relation to the other applicants.

As regards Roseville, the assertions were substantially similar to the foregoing in relation to random inspections, training, reporting, judging, staff performance and cleanliness. In August 1995 Roseville received an offer from Mobil to buy out the franchise.  The offer included $12,210 for achieving 90 per cent over a one year period in the Circle of Excellence awards.

In our view the same reasoning applies in relation to these applicants as to Lyndel, Thorpe and Wellcome and we conclude that no error of law has been established in relation to these claims.

 

Conclusion

On the estoppel claim we conclude:

 

1.         There was no one-for-one assurance or promise which activated the principles of estoppel.

2.         There was no nine-for-six assurance or promise which activated the principles of estoppel.

3.         The general commitment to “find a way” was not certain enough to ground anestoppel.

4.         The trial Judge did not err in concluding that there was no detriment which could attract the application of estoppel.

5.         The applicants have not made out any estoppel case against Mobil.

 

4.         Misleading or deceptive conduct issues

The pleadings of the appellant dealers as to misleading and deceptive conduct are in substance the same.  The specific allegations are contravention of ss 52, 53 and 59(2) of the TP Act when read in conjunction with s 51A of that Act.

The specific representations pleaded are based on the statements made at the Los Angeles Convention in July 1991; the forwarding of the tear-off slip in August 1991; the circulation of the “Mobil Marketer” in September 1991; and Mobil’s silence since the Convention in not informing the dealers that the offer made at the Convention was “incorrect”.

In the particulars given of each alleged representation there is a concluding phrase to the effect that the representation was made in circumstances where Mobil:

“... [had] resolved to the contrary and to determine the interests of the applicants.”

 

The idea conveyed by this phrase is expressed slightly differently in the various paragraphs.

It is, of course, not sufficient to establish that a representation was made as to a future event and that a contrary decision was made some time afterwards.  If it is established by the respondents that at the time a representation was made there were reasonable grounds for making it, it cannot be described as “misleading” or “deceptive”.

In relation to the suggestion of a one-for-one representation, his Honour found that this representation had not been made.  We agree with that conclusion.

We also think that for the reasons given earlier, the nine-for-six statement, given its qualified nature and the context in which it was made, could not reasonably be said to be misleading.

In dealing with this aspect of the case, Wilcox J first noted that the representations relied on related to a future matter, namely, the prospective conduct of Mobil in providing a reward.  Accordingly, it followed in his Honour’s view from s 51A of the TP Actthat the onus lay on Mobil to establish that it had reasonable grounds on which to make the representation.  His Honour was satisfied that Mr Stumbles, and therefore Mobil, had reasonable grounds for making the only representation which he found to have been made, namely that:

“.... maybe the only way to do this is to say that if you achieve 90%  each year for the next six years then we’ll guarantee you another nine years as of right, no fees, just a renewal.”

His Honour found that in relation to the subsequent commitment to “find a way”, Mr Stumbles and Mobil genuinely intended to do this and therefore it could not be said there was any misleading conduct in relation to the then present intentions of Mr Stumbles or Mobil.

Nothing has been advanced in argument which would warrant the setting aside or variation of his Honour’s conclusions on the evidence in this respect.

In relation to the suggestion that there was misleading conduct resulting from silence which encouraged the applicants to believe that the representation was still operative by July 1995, we consider that Mobil made it clear prior to July 1995 that it was proposed to vary the Convention proposal substantially.

During the course of argument the dealers contended that the Newsletter sent out by Mr Symington under cover of his Circular to dealers of 6 July 1993 was misleading and deceptive because it indicated that the original offer remained on foot, when in fact the scheme had been altered, in important respects, so as to bear little resemblance to the original proposal.  It is said that Mobil ought to have disclosed its real intentions at that time, but failed to do so, thereby giving rise to misleading conduct by its silence.

On a fair reading of the relevant section of the Newsletter, this argument cannot be sustained.  The Newsletter expressly sets out the tentative proposals of Mobil in relation to a foreshadowed modification of the scheme, namely that the reward was to be a financial reward in the form of a discount of franchise fees rather than a grant of tenure.  The Newsletter made it clear that the proposal was tentative and was subject to subsequent review.

In view of this we do not consider that it can be suggested that Mobil engaged in misleading or deceptive conduct in failing to inform the dealers earlier of the departure from the original tenure idea.

One other matter, referred to in argument, arose from the cross-examination of Mr Symington in relation to a minute of a meeting of the Queensland  Dealer Advisory Council on 8 June 1993 on the subject of “extended tenure”. Mr Symington was asked as follows in relation to an assertion by him, recorded in the minute, that “Mobil stands by the statement made by Mr Ken Stumbles at the LA Convention”:

“Q       Looking back at it now, do you agree with me that that was totally misleading?

A         Yes, I think it could have been put differently.”

The minute goes on, however, to refer to the proposed change to the proposal, in that it was intended that there should be a review which would be by way of discounting franchise fees rather than the grant of tenure.  While there is some elision in language from the original “reward” by grant of tenure, to a “reward” of a monetary nature, we do not consider that the franchisees have made out any case of misleading conduct in relation to the minute because the change in Mobil’s approach is clearly indicated on the face of the minute.

Loss

In addition to his finding that there had been no misleading or deceptive conduct, his Honour further determined that, even if there had been, the dealers were not entitled to obtain the relief claimed by them because they were entitled to recover compensation for consequential loss only under ss 82 and 87 of the Trade Practices Act.  His Honour referred to Gates v City Mutual Life Assurance Society Limited (1986) 160 CLR 1 and GIO Australia Ltd v Marks (1997) 70 FCR 551. They sought specific performance or alternatively compensation for loss of the additional tenure which they said they had been promised.  This was “expectation loss”.

Special leave to appeal to the High Court has been granted from the decision of the Full Court of this Court in GIO, but the appeal has not yet been heard.  In light of this, and because the damages question was not fully argued before us, and also because it is not necessary for us to determine the damages issue in this case, we do not express any conclusion on his Honour’s observations on this point.

5.         Issues touching the special position of Wellcome

In “the Mogap proceeding”, NG 841 of 1995, a special pleading was filed on behalf of Wellcome, because of the special position of that franchisee. By Wellcome’s amended statement of claim it was pleaded that on or about 12 June 1992, Ostanone agreed to assign to Wellcome all its (Ostanone’s) right title and interest which it had as franchisee of Mobil in premises at the corner of Sailors Bay Road and Eastern Valley Way, Northbridge, known as “Mobil Northbridge”, and that on and from 30 June 1992, Wellcome became a franchisee of Mobil. Paragraph 3 of that amended statement of claim pleaded that Wellcome was induced to enter into the agreement with Ostanone upon certain representations, offers or promises made by Ostanone on behalf of Mobil in or about February 1992, to this effect:

“[Mobil] says that if you (as franchisee) perform well, over 90%  in the Circle of Excellence program on a yearly basis, each year you will not lose that year it will be added to your final franchise and if you maintain that level or standard over the 6 years at the end of the franchise you will get a 9 year franchise with no costs.”

 

In par 13, Wellcome pleaded that it “accepted the offer made by [Mobil] to exceed 90% in the Circle of Excellence judgings and qualify for extra tenure”.

In its amended defence to Wellcome’s amended statement of claim, Mobil denied that the alleged representations, offers or promises were made by Ostanone on behalf of Mobil or with the knowledge or authority of Mobil.

The case of Wellcome as pleaded, was not expressly dealt with by the trial Judge. On the evidence before his Honour, Mobil’s amended defence must have succeeded and his Honour seems to have accepted that this was so.

Wellcome’s case was supported by a lengthy affidavit by Abraham Jevaherjian sworn 29 August 1996. Mr Jevaherjian was a director of Wellcome. Its other directors were his wife and members of the Sarkis family. He deposed as to negotiations which he conducted with Phillip Lee of Ostanone. Wellcome’s purchase from Ostanone was completed on 30 June 1992 and Wellcome commenced to trade on and from 1 July 1992. Subsequently, on or about 3 August 1992, Wellcome had its first inspection and judging under the Circle of Excellence programme. According to Mr Jevaherjian’s affidavit, the inspection and judging were completed by the then territory manager for Mobil, Ms Leanne Davies. Mr Jevaherjian stated that he had a conversation with Ms Davies in which she said:

“If you achieve 90 per cent or better, you will get an extra year’s tenure, and if you get 6 years, you will get a new franchise free.”

 

Mr Jevaherjian was not cross-examined on the alleged conversation.

 

Ms Davies, in an affidavit sworn 2 October 1996, stated that she did not recall having such a conversation with Mr Jevaherjian. She added:

“When I commenced as the Northern Region territory manager for Mobil I was aware of Mobil’s tenure for performance concept but I had not been personally briefed on any details of that concept. I therefore do not believe that I would have referred to specific or precise details of the proposal as stated in paragraph 30 of the Jevaherjian affidavit.”

 

Ms Davies was not cross-examined.

The learned trial Judge referred to the evidence of Mr Jevaherjian and Ms Davies and accepted the account given by Mr Jevaherjian.

On the appeal, senior counsel for Mobil suggests that the reason why, on the trial, senior counsel appearing for Wellcome did not cross-examine Ms Davies and senior counsel appearing for Mobil did not cross-examine Mr Jevaherjian, in relation to the conversation, is that the conversation did not relate to any pleaded issue. As noted earlier, the only representation pleaded by Wellcome was that allegedly made by Ostanone on Mobil’s behalf.

The relevant part of his Honour’s judgment is the following:

“I have noted the fact that Wellcome did not hold the franchise of the Northbridge service station when Mr Stumbles made his speech at Los Angeles. Counsel for Mobil placed some emphasis on this, arguing that it follows that no promise was made to Wellcome. If the evidence stopped there, I would agree. But I have found that, after Wellcome acquired the business, the territory manager, Ms Davies, told Mr Jevaherjian, inter alia, that he would get a new franchise for free if he achieved 90% or better in each of six years. Mr Stumbles made his promise in relation to all franchised sites. Its application was confined by its terms; but not by the identity of the recipients. It applied generally, being available to all franchisees, present or future, who were able to score 90% in each of the next six years’ Circle of Excellence judgings. Mr Stumbles would have known that not all franchisees were in attendance at the Convention; no doubt that is one explanation for the follow-up action by territory managers. Their job was to spread the word. That was what Ms Davies was doing when she spoke to Mr Jevaherjian. I accept that, as a territory manager, Ms Davies would not have had authority to make policy or bind Mobil to a new obligation. But she was not doing that when she spoke to Mr Jevaherjian. She was merely telling him about an existing, announced policy and making clear it applied to his company. All territory managers were expected to tell their franchisees about the offer Mr Stumbles made in Los Angeles and to stimulate them to ‘accept the challenge’ of scoring 90% in order to obtain extra tenure. Ms Davies was merely performing this duty.”

 

This passage occurs in a section of the Reasons for Judgment dealing with promissory estoppel. In the section dealing with breach of contract, his Honour does not return to the special position of Wellcome. However, his Honour’s agreement with senior counsel for Mobil expressed at the beginning of the above passage that because Wellcome did not hold the franchise of “Mobil Northbridge” when Mr Stumbles made his speech at Los Angeles, there was no offer of a promise to Wellcome, makes it clear that he must have decided the claim of breach of contract in favour of Wellcome against Mobil on the basis of what he found Ms Davies had said to Mr Jevaherjian.

On the appeal, senior counsel for Wellcome does not disagree but submits that the course of the litigation below shows that the parties made part of the field of their forensic contest the issue on which his Honour must be taken to have found the contract as between Mobil and Wellcome. He refers, of course, to Mr Jevaherjian’s affidavit and Ms Davies’ affidavit in reply, of which I have already given an account.

The absence of cross-examination in relation to the conversation and of any submissions relating to it persuade us to the view that the parties did not make this issue a part of their contest for determination by his Honour. A contract made through a territory manager on the occasion of a Circle of Excellence judging on 3 August 1992 is a totally different contract from that pleaded. We do not think that it was open to his Honour to find against Mobil on this ground; cf Banque Commerciale SA en liquidation v Akhil Holdings Ltd (1990) 169 CLR 279. We are not persuaded to the contrary view by the fact that the alleged conversation between Mr Jevaherjian and Ms Davies was dealt with in their affidavits: it is common for facts to be alleged and denied in affidavits and to pass into evidence without attention being given to the question of their relevance to any issue. In any event, the conversation was capable of being considered relevant to the question whether Mobil, through Mr Stumbles, had offered a nine-for-six promise.

 

CONCLUSION

In appeal NG 344 of 1997, the appeal should be allowed with costs, the orders made by Wilcox J in proceeding NG 835 of 1995 on 15 April 1997 should be set aside, and in lieu of those orders, there should be an order that the application in that proceeding be dismissed and that the applicant in that proceeding pay the costs of respondent to that proceeding.

In appeal NG 365 of 1997, the appeal should be dismissed with costs and the appellants should pay the respondent’s costs below associated with the appellants’ claims.

In appeal NG 366 of 1997, the appeal should be allowed with costs, the orders made by Wilcox J in proceeding NG 841 of 1995 on 15 April 1997 in favour of the respondents should be set aside, and in lieu of those orders, there should be an order that the application in that proceeding relating to the respondents’ claims be dismissed and that the respondents pay the costs of the appellant as respondent to that proceeding relating to the present respondents’ claims made in that proceeding.

 

 

 

I certify that this and the preceding seventy-one (72) pages are a true copy of the Reasons for Judgment herein of the Court

Associate:

Dated:                          13 March 1998

Counsel for the Appellants:	Mr T F Bathurst QC, Mr G O’L Reynolds and Mr L V Gyles
Solicitors for the Appellants:	Cowley Hearne
Counsel for the Respondents:	Mr R W R Parker QC and Mr M O Tubbs
Solicitors for the Respondents:	Stojanovic & David
Date of Hearing:	15, 16, 17 September 1997
Date of Judgment:	13 March 1998