FEDERAL COURT OF AUSTRALIA

Gull Petroleum (WA) Ltd v Tah Land Pty Ltd [2001] FCA 1531

PRACTICE AND PROCEDURE – application for preliminary discovery under Order 15A rule 6 of the Federal Court Rules – whether reasonable cause to believe that applicant may have right to obtain relief – whether applicant had made all reasonable inquiries.

Federal Court Rules Order 15A rule 6

Attorney-General v Blake [2000] 3 WLR 625 distinguished

Hospitality Group Ltd v Australian Rugby Union Ltd (2001) ATPR 41-831 referred to

Chappel v Hart (1998) 195 CLR 232 referred to

Sellars v Adelaide Petroleum NL (1994) 179 CLR 297 referred to

Gore v Montague Mining Pty Ltd [2000] FCA 1214 referred to

Hall v Foong (1995) 65 SASR 281 referred to

Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215 followed

GULL PETROLEUM (WA) LTD v TAH LAND PTY LTD, WOOLWORTHS (WA)

PTY LTD, COLLIERS JARDINE (WA) PTY LIMITED and KEN PATTERSON

ARCHITECTS

W 201 of 2001

CARR J

31 OCTOBER 2001

PERTH

THE COURT ORDERS THAT:

1.         The application be dismissed.

2.         The applicant pay the respondents’ costs.

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

REASONS FOR JUDGMENT

introduction

1                     This is an application for preliminary discovery under Order 15A rule 6 of the Federal Court Rules.  Subject to certain conditions, that rule enables an applicant to obtain preliminary discovery of documents from a person in respect of whom there is reasonable cause to believe that the applicant has or may have the right to obtain relief in this Court.

factual background

2                     The applicant has at all material times conducted a service station on part of land owned by the first respondent (“Tah Land”) and known as the Kingsway City Shopping Centre.  It does so by virtue of a lease which is not in evidence other than as a schedule to an agreement for lease.  The agreement for lease was undated, but stamped on 21 November 1997.  This case was conducted on the basis that the lease as so scheduled was the document which governed, or was the source of, any rights or obligations of the applicant and the first respondent.  I shall refer to it as “the Lease”.  The term granted pursuant to the Lease was 15 years commencing on 1 December 1997. 

3                     By clause (c) of the additional covenants in the Lease, Tah Land granted to the applicant a first right of refusal to lease further premises situated at the Kingsway City Shopping Centre.  The relevant parts of clause (c) were as follows:

“(c)      First Right of Refusal to Further Premises

            (1)     In the event that the Lessor at any time prior to the expiration of the Term or any extensions or renewal thereof wishes to lease the whole of any part of the Land with a frontage to Hepburn Avenue as a service station site or any other service station site situated on the Land (other than the Premises) then the Lessor shall give to the Lessee notice in writing (“Leasing Notice”) of its intention in that behalf and which notice shall contain details of that portion of the Land which the Lessor wishes to let for the above purpose (“First Refusal Premises”) and the other terms and conditions upon which the Lessor wishes to lease.

            (2)     The Lessee shall have the option (to be exercised by notice in writing to the Lessor at any time within twenty-one (21) days (“First Refusal Period”) after the date of service of the Leasing Notice on the Lessee) of leasing the First Refusal Premises upon the same terms and conditions as are contained in the Leasing Notice. 

            (3)     In the event that the Lessee does not exercise the option referred to in paragraph (2) the Lessor shall be at liberty to lease the First Refusal Premises to such person firm or corporation upon such terms and conditions which are the same as or may differ from those set out in the Leasing Notice provided that in the event of such terms and conditions being more favourable to a Lessee the Lessor shall not enter into a lease of the premises described in the Leasing Notice without first giving to the Lessee a further leasing notice (“Further Leasing Notice”) setting out the more favourable terms to a lessee and upon receipt of the Further Leasing Notice the Lessee shall have the same option as set out in paragraph (2) to lease the First Refusal Premises on the same terms and conditions as are set out in the Further Leasing Notice.

            . . .

            (5)     In the event of a dispute between the Lessor and the Lessee as to this Additional Covenant (c) subparagraphs (1) to (4) inclusive then such dispute shall be referred to an umpire in accordance with Clause 14.4.3.”

4                     By a notice dated 15 March 2000 (“the Gull Leasing Notice”) the third respondent (which carries on business as a real estate agent), on behalf of Tah Land, sent to the applicant an offer for it to take a lease of further premises situated on the land (“the Further Premises”).

5                     It is not necessary to set out here the full contents of that notice.  However, I shall set out below the particular provisions in the Gull Leasing Notice upon which the applicant to some extent relies.

6                     Special Condition (1) was in these terms:

“The Lessee must provide plans of the proposed Service Station for approval by the Lessor in its absolute discretion not later than seven (7) days from acceptance of this leasing notice by the Lessee or such longer period (if any) as the Lessor may agree in its absolute discretion.”

7                     Another condition in the Gull Leasing Notice was as follows:

“This agreement is conditional upon the Lessee obtaining Planning Approval and providing the Lessor with a copy thereof within thirty (30) days from any approval by the Lessor under Special Condition 1, and obtaining a Building Licence and providing the Lessor with a copy thereof within fourteen (14) days thereafter.  The Lessor shall obtain WAPC [a reference to the Western Australian Planning Commission] approval to the proposed lease at the Lessee’s cost.  The Lessor may extend these dates in its absolute discretion.”

8                     I interpolate to note that, by a combination of those terms and clause (c)(2), and subject to the Lessor not agreeing to extend the timetable, this meant that:

·          the applicant had 21 days from the service of the Gull Leasing Notice in which to exercise its option of leasing the Further Premises;

·          it had 7 days from any such acceptance in which to submit plans of the proposed service station to the Lessor for approval;

·          it had 30 days from that approval to obtain Planning Approval (and provide Tah Land with a copy of that document) and a further 14 days thereafter to obtain a Building Licence and provide a copy of that document to Tah Land.

9                     The undisputed evidence is that the applicant made no contact with either Tah Land, or its agent the third respondent until about 31 March 2000 when it made two telephone calls.  The substance of those telephone calls is set out later in these reasons. 

10                  On 4 April 2000 the applicant’s solicitors wrote to the third respondent claiming that the Gull Leasing Notice was invalid for various reasons.  The reasons included an assertion that the notice did not contain sufficient details of the portion of the land which Tah Land wished to let for the purposes of service station premises.  That was said to be because all that had been provided to the applicant was a diagram, not to scale, which identified the proposed portion of the land with a “dot” and did not provide a precise location, precise boundaries or precise dimensions. 

11                  The applicant and Tah Land referred the question whether the Gull Leasing Notice was a valid notice for the purposes of clause (c) to an umpire in accordance with paragraph (5) set out above.  The umpire was Mr John Chaney (now Mr John Chaney SC).  On 31 May 2000 Mr Chaney found that the Gull Leasing Notice was not invalid, either by reason of uncertainty, or by reason that it constituted a breach of any implied term of the Lease. 

12                  Tah Land took the view that if the operation of the Gull Leasing Notice had been suspended by the applicant’s solicitor’s letter of 4 April 2000, requiring the matter to be referred to the umpire, for a period until the determination of that dispute, that meant that the applicant had one day left after Mr Chaney’s decision in which to accept Tah Land’s offer.  It did not concede that there had been such a suspension.

13                  On 6 June 2000 Tah Land’s solicitors wrote to the applicant’s solicitors expressing the view that the 21 day period had then lapsed “on any reasonable view” and that their client was now free to make or accept an offer on no more favourable terms “with any third party”.

14                  In an affidavit, filed by the applicant in support of its application, and sworn by its National Sales Manager Mr Mario Said, there is the following piece of evidence:

“The applicant notwithstanding the Umpire’s decision formed the view that it could not enter into any lease with the first respondent due to the vague nature of the description of the Further Premises and the size and area of the Further Premises being insufficient particularly as Gull would not have adequate tanker access on the area of the Further Premises.”

15                  The evidence shows that the second respondent or its parent company has had commercial interests in the Kingsway City Shopping Centre for the past four years.  As a matter of convenience I shall refer to the second respondent and any related company as “Woolworths”.  The case was fought on the basis that there was no point in distinguishing between the various Woolworths companies.  Woolworths had entered into long leases with Tah Land pursuant to which it operated a supermarket, a liquor store and a “Big W” discount store, all at the Kingsway City Shopping Centre.

16                  The evidence also shows that since July 1997 Woolworths has been interested in conducting a “Woolworths Plus Petrol” service station at that shopping centre.  Negotiations to that end, in 1997 and 1998, did not achieve that result. 

17                  However, the negotiations resumed in or about January 2000 when Woolworths instructed its architect, the fourth respondent Mr Paterson (wrongly shown as Patterson in the application), to prepare preliminary drawings.  Woolworths submitted those preliminary drawings to Tah Land together with a formal offer to lease the Further Premises as a petrol service station.

18                  Tah Land, through its agent the third respondent, then told Woolworths that it would “trigger” the applicant’s first right of refusal option and let Woolworths know in due course how the applicant responded.  It would seem reasonable to infer, and I do, that this statement took place shortly before service of the Gull Leasing Notice. 

19                  Tah Land, again through its agent the third respondent, later informed Woolworths that the applicant had been served with a leasing notice, had failed to take up the right to lease the Further Premises and that, on taking advice from its solicitor, Tah Land was now in a position to negotiate a lease of the Further Premises with Woolworths.

20                  Mr Paterson then retained a number of experts to assist him and conferred with the City of Wanneroo with a view to anticipating any difficulties which might arise when a formal application for town planning approval was submitted. 

21                  On 12 December 2000 Mr Paterson provided preliminary plans to the City of Wanneroo for the proposed service station.  On 21 December 2000 he submitted further preliminary plans to the City of Wanneroo for comment.

22                  On 9 January 2001, the third respondent, as agent for Tah Land, sent a letter addressed to Woolworths Supermarket W.A. Office.  That letter contained an offer to lease what was described as “A site area of up to approximately 1,050 square metres” on the land.  This was the same description of the proposed leased premises which was contained in the Gull Leasing Notice.  I shall refer to the notice of 9 January 2001 as “the Woolworths Leasing Notice”.  The Woolworths Leasing Notice was accompanied by a copy of the same plan that was attached to the Gull Leasing Notice with the Further Premises being identified in the same way by a dot at the same point on the plan.

23                  On 11 January 2001, by letter of that date, the second respondent, Woolworths (WA) Pty Ltd, accepted the offer contained in the Woolworths Leasing Notice.

24                  On or about 12 January 2001 Mr Paterson, acting on behalf of Tah Land and Woolworths lodged with the City of Wanneroo a formal application for approval to commence development of a service station on the Further Premises.  That approval was granted on 9 February 2001, a building licence was issued on 22 February 2001, the service station was completed in June, and trading started there on or about 20 June 2001.  The application in this matter was filed on 29 May 2001. 

25                  In his affidavit filed with the application Mr Said “submits” that plans and specifications for the new service station had in fact been drawn and lodged with the City of Wanneroo in December 2000 and that Tah Land had provided site details and specifications for the further premises to Woolworths before it sent the Woolworths Leasing Notice.  Mr Said’s affidavit was, of course, sworn before Woolworths filed its affidavits which confirmed his evidence on those points.

26                  Mr Said swears that he has been advised by the applicant’s solicitors, and believes, that the applicant may have rights against the respondents (or some of them) based upon possible contraventions of ss 52, 51AA, 51AC of the Trade Practices Act 1974 (Cth) (“the Act”) or for breach of contract relating to the conduct of the respondents in relation to the Further Premises.  By way of giving particulars, he swore as follows:

“In particular it seems the respondents or some of them acting in combination have defeated the applicants (sic) rights of first refusal by giving the second respondent a lease of the Further Premises different from or more favourable than those offered to the applicant.  The applicant is presently unable on the advice of counsel, in possession (sic) of sufficient information that is reasonably necessary to enable it to decide whether to commence a proceeding.  On the present understanding of the applicant that information falls into two categories.  The first relates to communications between the various respondents as to all terms and conditions of the lease between the first and second respondents and the question of financial benefits passing between the first and second respondents related to the lease of the Further Premises.”

27                  Annexed to Mr Said’s affidavit are copies of letters which, on 24 April 2001, the applicant’s solicitors sent to Tah Land’s solicitors and to each of the other respondents.  In its letter to Tah Land’s solicitors, the applicant’s solicitors recited the history of the matter and then said this:

“It is also apparent from enquiries made by Gull that the plans submitted by Woolworths were for a site area of 1100 square metres plus a further 300 square metres of easement to allow for tanker access to the site for the further premises.

Our client is therefore firmly of the view that their right of first refusal in terms of the lease has been breached in that the proposed further leased premises have been offered to Woolworths on terms more favourable than the offer contained in the leasing notice to Gull of 15 March 2000.  Gull has come to that conclusion based on the fact that Woolworths were provided with dimensions and specifications which were not made available to Gull which were provided by Woolworths to the City of Wanneroo on 12 December 2000.  Woolworths were thereafter provided additional time to prepare its plans for the proposed service station on the further premises site.  Woolworths were able to submit their plans to the City of Wanneroo for consideration prior to receiving the letter offering the proposed lease of the further premises dated 9 January 2001 by Colliers Jardine acting on behalf of Tahland.  Tahland provided the additional information to Woolworths as to site dimensions and Woolworths had more time to prepare critical documentation for the further premises with provision of some additional 300 square metres being made available to Woolworths and thus Woolworths have been placed in a more favourable position to that of Gull.

Gull therefore has potential claims against Tahland not only for breach of contract but also has a cause of action against Tahland based upon alleged contravention of Section 52 and Section 51AC of the Trade Practices Act and a further right to damages resulting for (sic) a breach of its fiduciary duty in equity.

Gull therefore has reasonable grounds to think that he (sic) has been wronged but is presently unsure of precisely its cause of action to which it may be entitled.  In the circumstances our client has instructed that we are to approach the Federal Court under Order 15A of the Federal Court Rules for preliminary discovery against Tahland, Woolworths Colliers Jardine and the City of Wanneroo.

Our client seeks that Tahland makes available, by way of preliminary discovery, copies of all correspondence, minutes of meetings, notes, memoranda, plans, documents, file notes in relation to the leasing of the further premises to Woolworths (“the documents”).  Similar letters are being addressed to Colliers Jardine, Woolworths and to the City of Wanneroo.  Should your client not be forthcoming in providing and making available, by way of discovery, the documents within expiry of 5 days of this letter an application will be made to the Federal Court pursuant to Rule 15A without further notice and at your client’s cost.  A copy of this letter will be relied upon in support of the application.”

The application 

28                  In its application the applicant seeks an order that each of the respondents give discovery and inspection of all documents including any electronically stored information falling into the following categories:

“(a)     the lease agreement entered into by the first respondent with the second respondent at some time in January 2001 or February 2001 for the lease of further premises situated at the Kingsway City Shopping Centre;

 (b)      any correspondence between the respondents between the dates of 1 January 2000 to 31 April 2001 dealing with or related to the lease agreement or the development of the land; and

 (c)       copies of any minutes or file notes or place and specifications [presumably a reference to plans and specifications] that are or were used with respect to the lease agreement and/or an application for approval to develop the service station site on the respondents (sic) land.”

29                  The applicant seeks this discovery in the form of a list verified by affidavit.  In respect of documents stored on computer, the applicant seeks an order that the respondents each provide a hard copy print-out together with the same information on computer disk.  It also seeks an order that it and its experts be entitled to have access to any computer containing such documents so that it may ascertain “… whether there are any documents which have been deleted or removed electronically but which are retrievable and to retrieve the same.”

the regulatory framework

30                  Order 15A rule 6 of the Federal Court Rules is in the following terms:

“RULE 6  DISCOVERY FROM PROSPECTIVE RESPONDENT

6.      Where –

         (a)     there is reasonable cause to believe that the applicant has or may have the right to obtain relief in the Court from a person whose description has been ascertained;

         (b)     after making all reasonable inquiries, the applicant has not sufficient information to enable a decision to be made whether to commence a proceeding in the Court to obtain that relief; and

         (c)     there is reasonable cause to believe that that person has or is likely to have or has had or is likely to have had possession of any document relating to the question whether the applicant has the right to obtain the relief and that inspection of the document by the applicant would assist in making the decision –

the Court may order that that person shall make discovery to the applicant of any document of the kind described in paragraph (c).”

a preliminary observation

31                  It may be trite, but in my view useful in this particular case, to note that for the applicant to succeed in this application for preliminary discovery, it must show reasonable cause to believe either that there may have been a contravention or contraventions of the Act which may entitle it to damages or another remedial order, or a breach of contract on the first respondent’s part which may entitle it to damages or other relief (the applicant did not press its claims of breach of fiduciary duty).  There is also the question of any illegal or wrongful involvement on the part of the other three respondents.  Order 15 rule 6 expressly focuses on “the right to obtain relief”, but eschewing momentarily the use of the term “cause of action”, I think that a useful starting point is to look at what rights the applicant claims may have been infringed, what wrong does it say may have been done to it, and is there reasonable cause to believe that to be the case? 

32                  I must say that I had considerable difficulty in understanding precisely what were the applicant’s specific complaints.  I understood fully that it was concerned that the lease of the Further Premises had fallen into the hands of a competitor who had been given a more leisurely opportunity to consider the proposal.  There was also the matter of tanker access.  But the key questions, as I see them, are:

·          is there reasonable cause to believe that the applicant’s rights, whether statutory or otherwise, (treating, perhaps loosely, contravention of the Act as an infringement of its rights) may have been infringed? and if so,

·          is there reasonable cause to believe the applicant may have the right to obtain relief?

33                  At trial it emerged that the relief which the applicant sought was damages for loss of opportunity.  The second question above thus becomes slightly narrower, namely has the applicant shown that by reason of such infringement as may have occurred it may have suffered some loss of a commercial opportunity which was of more than negligible value?  I now turn to the applicant’s submissions on these points.

the applicant’s submissions

34                  The applicant contended that there was reasonable cause to believe that it may have the right to obtain relief from the respondents.  In its written submissions, its complaints against the respondents were, as I understand them, as follows:

·          that the first respondent negotiated the terms of the Lease to Woolworths, including the detail of the leased area and how it could be used, well before issuing the Woolworths Leasing Notice on 10 January 2001, and that this was an opportunity not provided to the applicant;

·          the plans lodged with the City of Wanneroo for consideration on 12 December 2000 and 10 January 2001 (with final plans having been lodged on 12 January 2001 for approval) disclosed an area for the lease of the Further Premises that appeared to be greater than and differently configured from that which had been offered to the applicant;

·          at the very least, so the applicant submitted, there was cause to presume that Woolworths, in dealing with Tah Land, had an advantage which the applicant did not have;

·          the applicant claimed that the first respondent had thereby engaged in misleading or deceptive conduct contrary to s 52 of the Act or unconscionable conduct within ss 51AA or 51AC in all of which conduct the other respondents were knowingly concerned; 

·          the first respondent had acted in breach of its obligations under clause (c) and the other respondents had “assisted in the breach of the agreement”.

35                  At the hearing of this application, I asked Mr P G Clifford, counsel for the applicant, to tell me precisely what conduct by the first respondent the applicant contended amounted to misleading or deceptive conduct.  Mr Clifford told me that the relevant conduct was:

“The representation that the applicant would be given an equal opportunity to lease the Further Premises.”

36                  He later explained that that representation was contained in clause (c).  The applicant contended that clause (c) contained an implied representation that it would have “an equal negotiating opportunity” which, as events turned out, it did not get with respect to time, the area and the location of the Further Premises.  The applicant submitted that that implied representation was one of the representations that induced it to enter into “that contract” (it is clear from the context that this was a reference to the Lease).

37                  It became apparent during the course of submissions made by counsel for the applicant that the applicant was relying upon the fact (so it asserted) that it had not been given an equal opportunity to lease the Further Premises, as demonstrating reasonable cause to believe that it may have the right to obtain relief for contravention by the first respondent of s 52 of the Act.  As Mr Clifford said:

“That did not happen and they are the essential facts upon which the application is made.”

38                  I was told that the applicant would contend that Tah Land did not have reasonable grounds for making the representation at the time when it was made, that is in December 1997.  The applicant proposed to rely on s 51A of the Act, which relevantly provides that where a corporation makes a representation with respect to any future matter and the corporation does not have reasonable grounds for making the representation, the representation shall be taken to be misleading unless it adduces evidence to the contrary. 

39                  In relation to the applicant’s proposed claim for breach of contract, I asked Mr Clifford what were the more favourable terms or conditions which had been offered to Woolworths compared to those which were offered to the applicant i.e. what were the terms and conditions more favourable to Woolworths which the first respondent should have set out in a “Further Leasing Notice” which it should have (on the applicant’s case) served on the applicant before leasing the Further Premises to Woolworths.

40                  Counsel’s response was as follows:

“The opportunity to have an extended time in which to prepare the information for the plan and layout of the service station, to obtain plans for the development and construction of the service station and the same detailed knowledge of the lease area, the lease location and the proposed tanker easement.”

41                  In his address in reply, Mr Clifford elaborated somewhat by explaining that the applicant’s case in contract, “at its highest”, would be for breach of an implied term of the lease.  I was told that the implied term was:

“That [the applicant as Lessee] would have the opportunity to have an extended time to obtain plans for the development and construction of the service station and the same detailed knowledge of the lease area, the lease location and the proposed tanker easement as [any other proposed lessee].”

42                  The applicant’s case was that in January 2001 the applicant was not given the opportunity to lease the Further Premises on the same terms and conditions as were offered to Woolworths.

43                  Mr Clifford explained that the applicant had suffered loss because it did not get the opportunity to lease the Further Premises as its second service station at the Kingsway City Shopping Centre and make profits by capturing more of the market than it already had.

44                  When I put to Mr Clifford that there was no evidence from the applicant that if it had been given that opportunity, it would have exercised the option to take the lease of the Further Premises, he said that the applicant did not have to give that evidence.  If the breach had occurred, so he submitted, the applicant was entitled to elect the relief which it would pursue, namely, damages and if there is evidence of a loss of an opportunity, then the applicant should have preliminary discovery.

45                  The applicant submitted (in the latter part of its written submissions) that in relation to the breach of contract it would be entitled to “a common law account of profit” and that, as it had no knowledge of the “extra profits” being earned by one or more of the respondents, it should have discovery of “… such documents that may go to damages as will assist it in making a sensible decision to commence a proceeding.”

the first respondent’s contentions

46                  The first respondent submitted that, in relation to the proposed claim under s 52 of the Act, the applicant had not identified any conduct on its part which was said to amount to misleading or deceptive conduct. 

47                  Furthermore, the first respondent relied upon two affidavits.  The first was sworn by Mr Raymond Jin Wen Tan, General Manager of the first respondent.  Mr Tan swore that in March 2000 he instructed the third respondent to forward the Gull Leasing Notice to the applicant.  Mr Tan also swore that even though that notice was served on 15 March 2000, he received no contact or correspondence at all from the applicant until on or about 31 March 2000.  I set out below paragraphs 4 and 5 of Mr Tan’s affidavit:

“4.On or about that date, Mario Said rang me and we had a conversation about the Leasing Notice.  He said words to the effect:

      “Are you negotiating with someone?”

      I said words to the effect:

      “No comment.  If you want more information, speak to Margaret Langson.”

      He said words to the effect:

      “You know that we are not really making money at our existing service station.  Another site on Hepburn Avenue will not stack up.  If I give you a licence to use part of our lease on the existing site for the car wash, will you withdraw on the Leasing Notice?”  (Some months previously, the Applicant and First Respondent had been negotiating for the First Respondent to use part of the leased area of the Applicant at its existing service station to have access to an adjoining site for a car wash.  The negotiations had concluded with the parties unable to reach agreement on the terms).

      I said:

      “No”.

      He then said words to the effect:

      “What if I give you access over our site to the car wash and promote your car wash without any commission?” (The reason the negotiations referred to above had foundered previously was that the Applicant had been asking for a commission to promote the car wash at its service station which we considered to be too high).

5.   I said no to his offer.  I told him that Margaret Langson would be the best person to speak to about the matter.”

48                  The second affidavit was sworn by Ms Margaret Ann Langson, a director of the third respondent, who is the Retail Manager of the Kingsway City Shopping Centre.  Paragraphs 2 to 5 and part of paragraph 6 of Ms Langson’s affidavit were as follows:

“2.       On or about 31 March 2000, I received a phone call from Mario Said on his mobile phone.  He said words to the effect:

            “I have just spoken to Raymond.  I believe Raymond has been in discussions with another party.”

            I said that I was sure that Raymond had been in discussions with another party, but I had not been a party to those discussions.

3.         Mario then said words to the effect:

            “Our site has not been going well.  We are not making a profit.  If I had been involved in the original negotiations, I wouldn’t have entered into the deal.  We are not doing well enough to sustain two sites.  There is no way we could make it work.”

            I said words to the effect:

            “Look, Mario.  The terms are there.  It is up to you whether you wish to proceed or not.”

4.         He then said that he didn’t think the time-frames in the Leasing Notice were realistic.  I told him that if he didn’t like the time-frames, he could write to point that out or ask for extensions of time.

5.         He then said words to the effect:

            “Raymond is a very clever businessman, but I am cleverer than him.  I know he has been talking to Woolworths and he hasn’t heard the end of it.”

6.         The Third Respondent did not receive any further correspondence from the Applicant until their solicitor’s letter dated 4 April 2000, a copy of which is annexed hereto and marked “MAL1”.  We received no request for clarification of any matters contained in the Leasing Notice, nor did we receive any requests for an extension of time in relation to any of the time-frames set-out in the Leasing Notice.  We received no request for information in relation to the Leasing Notice. …”

49                  The applicant did not avail itself of the opportunity (provided for by directions made on 15 June 2001) to file and serve any answering affidavits.

50                  The first respondent relied upon the affidavits of Mr Jan and Ms Langam as containing uncontradicted evidence that the applicant did not exercise its right of first refusal because it could not sustain two service station sites at the Kingsway City Shopping Centre.  Accordingly, it was not possible, so the first respondent submitted, to discern from the evidence or the applicant’s submissions how it might be entitled to any relief for contravention of s 52 of the Act.

51                  In relation to s 51AA, the first respondent submitted that there was no evidence that the applicant was in a position of special disadvantage.  It was a well-known major petrol retailer of many years standing.

52                  In relation to s 51AC of the Act, the first respondent contended that it appeared that the applicant’s complaint was that more information was provided to Woolworths than to it.  In the circumstances that the applicant never asked for any information, and did not wish to lease the Further Premises in any event, such conduct could not reasonably be described as unconscionable.  Furthermore, the price payable for the services to be supplied (the lease of the premises) was $96,500.00 per annum over 21 years, well in excess of the maximum stipulated by s 51AC(10) as precluding the operation of that section. 

53                  Finally, the first respondent submitted that uncontradicted evidence of Mr Tan and Ms Langson was to the effect that the applicant would never have leased the Further Premises in any event, because it could not sustain two sites in close vicinity, as it had not made sufficient profits out of the first site.  This, so the first respondent submitted, “severed” any claim for damages under ss 52, 51AA or 51AC.

54                  In relation to the alleged breach of contract, the first respondent said that the applicant’s allegation appeared to be that Woolworths had been allowed tanker access to the Further Premises whereas the applicant had not been advised that tanker access would be available.  The first respondent submitted that the provision of more information was not a “term” of the contract embodied in the Lease.

third respondent’s contentions

55                  The third respondent adopted the submissions of the first respondent.  It added a further submission to the effect that at no relevant time had the applicant stated that it had a claim against the third respondent.  Accordingly, so the third respondent submitted, an application for preliminary discovery against it amounted to an abuse of process. 

the second and fourth respondents’ contentions

56                  It is not necessary for me to set out all of the detail of the second and fourth respondents’ contentions.

57                  In summary, they were as follows.  First, that the evidence did not show that there was reasonable cause to believe that the applicant may have any right to obtain relief in relation to the alleged contraventions of the Act, and, in particular, that either of the second or fourth respondents were persons involved in any such contravention.  There was no evidence or knowledge on the part of the second or the fourth respondents of what they described as “the presently unarticulated elements of contravention (52, 51AA or 51AC) of the Act …”

58                  The second and fourth respondents described the applicant’s claim for relief against them in respect of the alleged breach of contract as being “misconceived”.  The second and fourth respondents relied upon an affidavit sworn by Mr Stephen Charles Vernall, Woolworths’ Assistant Project Manager, and the further affidavit of the fourth respondent, Woolworths’ architect, showing no relevant involvement with any such alleged contravention.

my reasoning

59                  The threshold test under Order 15A rule 6(a) is set at quite a low level, i.e. (at its lowest level), reasonable cause to believe that the applicant may have the right to obtain relief.  The authorities show that this is an objective test. 

60                  In relation to the claim based upon a contravention of s 52 of the Act, I do not think that there is any real prospect of the applicant being able to establish that clause (c) contained an implied representation that the applicant would have what it described as “an equal negotiating opportunity”.  The equal negotiating opportunity was said to include an opportunity to have a similar extended time as that given to Woolworths in which to prepare plans for the development and construction of the service station, an equal opportunity to have the same detailed knowledge of the lease area, the lease location and the proposed tanker easement. 

61                  In my view, the only representations conveyed by clause (c) were that the first respondent had, in or about November 1997, the then present intention to comply with, and would in the future comply with, the express obligations contained in clause (c) during the term of the Lease.

62                  Clause (c) imposes no restriction which would prevent Tah Land from entering into a lease after the applicant had failed to exercise its option of first refusal, provided that the lease itself did not contain terms or conditions more favourable than those previously offered to the applicant.  In those circumstances it seems to me to be very unlikely indeed that a Court would imply into clause (c) a representation to the applicant that Tah Land would be under any other restriction in its further negotiations with a third party. 

63                  The matter can be tested another way.  Suppose that Tah Land had been negotiating with a prospective third party lessee for, say, three months and, having reached an agreement in principle, gave a Leasing Notice to the applicant.  It is, as I say, extremely unlikely indeed that a Court would imply into clause (c) a representation that the applicant would have the same three months of negotiation before having to decide whether to take a lease of the Further Premises.  Such an implied representation sits very uneasily with a provision which gives the applicant 21 days in which to decide whether to exercise its option to take a lease of further premises.

64                  Even accepting that the threshold test under Order 15A rule 6(a) is set at quite a low level, I do not consider that the applicant has demonstrated that it has reasonable cause to believe it may obtain relief for contravention by the first respondent of s 52 of the Act.  In those circumstances, it is not necessary to consider any possible accessorial liability on the part of the second, third or fourth respondents.

65                  I accept the submissions of the first and third respondents to the effect that there is no reasonable cause to believe that the applicant may obtain relief on the basis that the first respondent has contravened s 51AA.  That is because it has not been demonstrated, in my opinion, that the applicant was in a position of special disadvantage vis-a-vis the first respondent.  There was no evidence of this at all.  This is a key ingredient of the contravention.

66                  In relation to s 51AC, it seems to me that the statutory limit of $1 million would preclude reliance upon that section.  That limit has fairly recently (but long after the conduct complained about) been increased.  Furthermore, on the evidence before the Court to date, I do not think that there is reasonable cause to believe that the applicant may make out a case of conduct which was, in all the circumstances unconscionable within the meaning of s 51AC.

67                  Finally, in relation to the possible contraventions of each of these three sections, there is the uncontradicted evidence of Mr Tan and Ms Langson which strongly suggests that the applicant had no intention of taking a lease of the Further Premises.  I refer to paragraph 4 of Mr Tan’s affidavit where he deposed that Mr Said said words to the effect:

“You know that we are not really making money at our existing service station.  Another site on Hepburn Avenue will not stack up.”

68                  In paragraph 4 of Ms Langson’s affidavit Ms Langson swore that Mr Said said words to this effect:

“Our site has not been going well.  We are not making a profit.  If I had been involved in the original negotiations, I wouldn’t have entered into the deal.  We are not doing well enough to sustain two sites.  There is no way we could make it work.”

69                  There is no suggestion that the applicant has suffered loss in the conduct of its service station business as a consequence of Woolworths having started trading at the Further Premises on or about 20 June 2001.  The applicant had the opportunity, under the directions orders made on 15 June 2001, to file an affidavit on that subject (and any other relevant subject) by 20 July 2001.  It did not do so.  In any event that was not the basis upon which the applicant was seeking damages.  It is clear from the submissions made at trial that the applicant was seeking damages on the basis of loss, which it contended it had sustained, by reason of not having had the opportunity to lease the Further Premises as its second service station, had it been given a “Further Leasing Notice” in January 2001.

70                  The applicant did not put any evidence before the Court to suggest that its intentions with regard to accepting such an opportunity had changed between March 2000 and January 2001. 

71                  In those circumstances, even if there had been reasonable cause to believe that the first respondent had contravened one or more of the sections of the Act upon which the applicant proposes to rely, it is difficult to see how it might make out any case for damages.

72                  In relation to the claim based upon the contention that there was to be implied into the Lease, in relation to the obligations of the first respondent expressed in clause (c), a term to the effect set out in paragraph 41 above, I do not think that it has been shown that there is any reasonable possibility of such a term being implied. 

73                  First, in my opinion, it is not necessary to imply the term proposed in order to give business efficacy to the contract.  The contract (i.e. the Lease) is effective without it.  The first respondent’s obligations are, in my view, quite clear.  It may conduct whatever negotiations it chooses with any parties, over any period of time, with a view to leasing the Further Land.  However, before entering into any such lease it must give a “Leasing Notice”.  If it gives such a notice and the lessee does not exercise the option to take up the lease on the terms and conditions in the Leasing Notice, then it may proceed to lease the premises to a third party on terms not more favourable than those contained in that Leasing Notice.  Furthermore, as an alternative, the lessor is free to negotiate with any other party for the grant of a lease of the Further Premises.  But it must not enter into a lease of the Further Premises upon terms and conditions which are more favourable to a lessee than those previously offered to the applicant, without serving upon the lessee a “Further Leasing Notice”. 

74                  The applicant complained that Tah Land had negotiated the terms of the Lease to Woolworths, including the detail of the leased area and how it could be used, well before issuing Woolworths Leasing Notice of 10 January 2001.  It complained that this opportunity was not provided to the applicant.

75                  In my view, that submission overlooks the precise and express content of Tah Land’s obligations under clause (c).  As I have said, in summary, Tah Land’s relevant obligation was not to enter into a lease of the Further Premises on terms and conditions more favourable to a lessee than those set out in the Gull Leasing Notice, without first giving to the applicant a further leasing notice setting out those more favourable terms.

76                  Nor do I think that the implied term suggested by the applicant is so obvious that “it goes without saying”.  It is one thing to confer a right of first refusal and make it effective by denying the right later to grant a lease on more favourable conditions unless a further notice is given.  It is, in my opinion, quite another thing to stipulate that if there are any negotiations for such a lease, conducted with third parties, the applicant is to have all the negotiating opportunities which were extended, in this case, to Woolworths and which the applicant claims were denied to it.  This leads to another problem with the proposed implication.  In my view, it is too unclear in its expression.  Even the term “an equal negotiating opportunity” is very vague. 

77                  Furthermore, there is the problem of causation, a matter which I raised with Mr Clifford in the course of his reply. 

78                  As I have mentioned above, in the context of alleged contraventions of the Act, it is quite clear that as at March 2000 the applicant was not interested in taking a lease of the Further Premises.  The reason for this was financial and unrelated to any problem of tanker access.  If that position had changed between March 2000 and January 2001 then, as I have mentioned above, the applicant has had its opportunity to put on an affidavit to say what it would have done had a Further Leasing Notice been served upon it which, on its case, was one which complied with clause (c).  It has chosen not to do so, and in those circumstances there is no evidence before the Court from the applicant as to what it would have done if served with (on its case) a proper notice.  There is thus no evidence that any alleged breach on the first respondent’s part of clause (c), whether of any term said to be implied in that clause or of any express term, has caused the applicant the loss of a commercial opportunity which was of more than negligible value.  See Chappel v Hart (1998) 195 CLR 232 at 238, 243-244, 255, 268-269 and 281-282; Sellars v Adelaide Petroleum NL (1994) 179 CLR 297 at 340 and 364, Gore v Montague Mining Pty Ltd [2000] FCA 1214 at [34] and Hall v Foong (1995) 65 SASR 281 at 301.

79                  In my view, this is yet another stumbling block in the applicant’s path towards establishing that it may have a right to relief for breach of contract.  In my opinion, the circumstances of this case are, in that respect, quite similar to those in Glowatzky v Insultech Group Pty Ltd (1997) 39 IPR 215.  At 224 Branson J said this:

“I consider that the uncertainty which exists as to a number of the elements of the envisaged cause of action in this case compounds for the purposes of O 15A, r6.  In other words, while uncertainty as to only one element of a cause of action might be compatible with the “reasonable cause to believe” required by the paragraph, uncertainty as to a number of such elements may be sufficient to undermine the reasonableness of the cause to believe.”

80                  I agree respectfully with that view.  In this case, each of the deficiencies to which I have referred above (and this applies both to the claims under the Act and also the contract claim) on their own would undermine the reasonableness of the cause to believe.  But when they are taken cumulatively the undermining is, in my view, put beyond serious doubt.

81                  The applicant has not put its case in contract on the basis that the first respondent has acted in breach of clause (c) other than in respect of a breach of the term which it said should be implied.  

82                  However, there was a suggestion of such breach in relation to the area of land and the first respondent’s willingness to provide an access road for tankers to drive on to the Further Premises.  

83                  In both the Gull Leasing Notice and the Woolworths Leasing Notice the area of the proposed Further Premises was described as “… up to approximately 1,050 square metres”.  The annual rental was not to decrease if the site area was less than 1,050 square metres.  I was told from the bar table that when one looks at the plans lodged by the first and second respondents with the City of Wanneroo the area “appears to be 1150 square metres”.  The figure stated in the applicant’s solicitors’ letter dated 24 April 2001 to the first respondent’s solicitors (after Mr Said had seen those plans) was 1100 square metres. 

84                  As to the provision of tanker access to the Further Premises, there is no evidence at this stage to suggest that the applicant, had it exercised its option, would have been denied such access. 

85                  In my view, the applicant has not put before the Court sufficient evidence to constitute reasonable cause to believe that the first respondent may have breached clause (c).

86                  Whether the first respondent has acted in breach of clause (c) would be ascertainable by comparing the terms and conditions offered in the Gull Leasing Notice with the formal lease granted to Woolworths.  If it were contended that that document (the lease to Woolworths) did not include all the terms and conditions of such lease, then it might be necessary to look at other documents containing any further terms and conditions.  This raises, in my opinion, the question whether the applicant has made all reasonable inquiries in that regard.

87                  The evidence shows that under the Agreement for Lease stamped on 21 November 1997 and made between Tah Land as Lessor and the applicant as Lessee it was proposed that the Lease would be registered at the Land Titles Office in Perth.  Under the Agreement for Lease (clause 4.5) the Lessee assumed an obligation to arrange such registration.  The registration referred to is registration of the Lease, not simply registration of a caveat. 

88                  It seems to me to be quite possible that Tah Land used a similar agreement for lease in its arrangements with Woolworths.  The term was for a period of 21 years with an option to extend for a further 10 years.  A prudent lessee, in those circumstances, would, in my view, be quite likely to seek the protection obtained from registration of the lease as against the claims of subsequent registered interests, particularly those of any subsequent mortgagee.

89                  The applicant’s evidence is silent about whether it has caused any search to be made at the Land Titles Office before lodging this application.  

90                  In my view, that would have been the very first inquiry to be made i.e. to see whether there was a copy of the lease between Tah Land and Woolworths registered at the Land Titles Office.

91                  Accordingly, not only has the applicant failed, in my opinion, to show reasonable cause to believe that it may have the right to obtain relief in this Court for breach of contract, but it has not shown that it has made all reasonable inquiries.

92                  Another major problem with the applicant’s case in relation to the contract claim arises out of the uncontradicted evidence of Mr Tan and Ms Langson that the applicant was not interested in taking a lease of a further service station site at the Kingsway City Shopping Centre.  In those circumstances it would not appear to have suffered loss even if it does make good its assertion that the lease to Woolworths was on conditions more favourable than those previously offered to it. 

93                  In its written submissions the applicant argued that it had “… no knowledge of the damage that is being suffered by reason of the extra profits being incurred by one or more of the respondents flowing from the breach”.  In those circumstances, the applicant contended that it would be entitled to a common law account of profits – citing Attorney-General v Blake [2000] 3 WLR 625.

94                  The applicant has adduced no evidence that it has suffered any loss.  There is no suggestion that it is seeking nominal damages. 

95                  In my view, it would be highly unlikely that in the circumstances of this case the applicant would be held to be entitled to an account of profits.  Attorney-General v Blake was a very special case concerning remedies available to the Crown for Mr Blake’s breach of an undertaking of confidentiality in relation to his service in the Secret Intelligence Service.  Mr Blake’s publication in book form of his memoirs was closely akin to a breach of fiduciary duty.  As I say, it was an exceptional case, where the normal remedies of damages and the like were inadequate compensation for breach of contract.  It was that which caused the House of Lords to rule that the just response to Mr Blake’s breach was that an account of profits be ordered and that the Attorney-General be paid an amount equal to whatever was owed by the publishers to the defendant.  The present case is very far removed from circumstances in Attorney-General v Blake.

96                  Accordingly, the applicant’s submission that it is entitled to discovery of such documents that may go to damages as will assist it in making a sensible decision to commence a proceeding falls away.  See also Hospitality Group Ltd v Australian Rugby Union Ltd (2001) ATPR 41-831 at [155] to [161]. 

97                  In those circumstances it is not necessary to consider whether sufficient evidence has been adduced that the second, third or fourth respondents may have knowingly induced any alleged breach of contract by the first respondent. 

Conclusion

98                  For the foregoing reasons the application will be dismissed with costs.  Each of the respondents sought an order for indemnity costs.

99                  I have considered the respective submissions made by the parties in relation to the question whether indemnity costs should be ordered.

100               In particular I have considered the evidence that the respondents, from a very early stage, put the applicant on notice that they did not consider it had any basis for obtaining preliminary discovery and, if they were proved to be right, would seek an indemnity costs order.  I have also considered the circumstance that, in my view, it did not become apparent until trial precisely how the applicant was putting its case for relief. 

101               Although I acknowledge that this case is very close to the line, I do not think that the applicant’s case was so unarguable, or that its conduct has been such, that an order for indemnity costs should be made against it.  Costs will be ordered on a party and party basis.

A/g Associate:

Dated:              31 October 2001