EG FuelCo (Australia) Ltd v Ampol Australia Petroleum Pty Ltd

1. [1]

   The defendant/cross-claimant, Ampol Australia Petroleum Pty Ltd, seeks an interlocutory mandatory injunction requiring the plaintiff/cross-defendant, EG FuelCo (Australia) Ltd, to allow it access to 87 of EG’s 540 “Caltex” branded retail service stations throughout Australia for the purpose of permitting Ampol to “rebadge” those service stations as “Ampol” service stations.

The events leading to this application

1. [2]

   Chevron Global Energy Inc (a company incorporated under the laws of the State of Delaware) is the owner of the “Caltex” and “Vortex” trademarks and get-up (the “Caltex Marks”).

2. [3]

   By a Trade Mark Licence Agreement (referred to by the parties as the “TMLA”) dated 28 May 2015, Chevron granted Ampol [1] the exclusive licence to use the Caltex Marks in Australia.

3. [4]

   Ampol supplies fuel to approximately 1,900 Caltex branded retail service stations across Australia. Those sites are operated by Ampol and other licensed retailers including, since April 2019, EG.

4. [5]

   EG operates some 540 retail service stations across Australia that were formerly operated by Woolworths Group Ltd.

5. [6]

   Ampol supplies fuel to EG pursuant to a Fuel Supply Agreement dated 5 July 2018. The Fuel Supply Agreement was originally made between Caltex and Woolworths but has now been novated by Woolworths to EG. Pursuant to the Fuel Supply Agreement, EG must purchase all fuel of a particular type from Ampol during the term of the Fuel Supply Agreement. That term expires on 31 July 2033.

6. [7]

   EG’s entitlement to use the Caltex Marks derives from a further agreement being a Trade Mark Licence Deed made on 1 August 2018 between Caltex and Woolworths and now novated by Woolworths to EG. The parties referred to that document as the “TMLD”.

7. [8]

   The Caltex Marks feature on the “Main Identity Sign” of the service stations as well as on the station canopy, petrol bowsers and the like.

8. [9]

   By the TMLD, Ampol granted Woolworths, and now grants EG a non-exclusive licence to use the Caltex Marks for the “Term”, defined to mean the same term as the Fuel Supply Agreement; that is, until 31 July 2033.

9. [10]

   The Fuel Supply Agreement imposes on EG an obligation to display the “Trade Marks” as referred to in the TMLD.

10. [11]

    At the relevant time, Chevron was entitled to terminate the TMLA, and thus Ampol’s licence to use the Caltex Marks, without cause on six months’ notice.

11. [12]

    Chevron did so on 20 December 2019, with effect on 30 June 2020.

12. [13]

    The result is that, by reason of “Work-out provisions” in the TMLA:

13. [14]

    In those circumstances, Ampol wishes to rebrand the 1,900 sites to which it supplies fuel, including the 540 sites operated by EG, as “Ampol” sites and to substitute Ampol Trademarks and get-up (the “Ampol Marks”) for the Caltex Marks.

14. [15]

    Ampol informed EG of that decision immediately after Chevron gave notice terminating the TMLA. Evidently, Ampol also informed its other sublicensees of Chevron’s decision and has in fact rebranded some 400 non-EG sites from “Caltex” to “Ampol” since then.

15. [16]

    Ampol contends it is entitled to compel EG to rebrand its service stations using the Ampol Marks by reason of cl 8.1 of the TMLD which, relevantly, is in the following terms:

16. [17]

    In September 2020, Ampol notified EG that the Ampol Marks were to be added to the Trade Marks specified in the TMLD and that it wished to enter EG sites to rebrand them with the Ampol Marks.

17. [18]

    Since then, Ampol and EG have engaged in extensive correspondence about the matter in the course of which Ampol has informed EG that it estimates that the task of rebranding EG’s 540 service stations will take some nine months and that it wished to commence that task in July 2021.

18. [19]

    In the meantime, on 17 December 2020, EG commenced these proceedings.

19. [20]

    EG alleges that:

20. [21]

    EG seeks orders under ss 237 and 243 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law declaring the Fuel Supply Agreement and the TMLD void and damages for breach of the warranty under cl 11 of the TMLD.

21. [22]

    On 4 February 2021, Ampol filed a Cross-Summons seeking orders enforcing cl 8.1 of the TMLD, in particular, orders that:

22. [23]

    On 22 June 2021, Ampol wrote to EG stating that 24 EG sites “have been scheduled for rebranding works from Monday 5 July 2021” and attaching details of the “Scope Summary” of “scheduled works” that Ampol intended to perform at each of those sites to replace the Caltex Marks with the Ampol Marks.

23. [24]

    Ampol and EG have been unable to agree on the terms upon which Ampol should enter EG sites in accordance with cl 8.1 of the TMLD.

24. [25]

    On 2 July 2021, EG wrote to Ampol:

25. [26]

    One of the areas of dispute between Ampol and EG is the extent to which Ampol and EG should coordinate Ampol’s proposed rebranding of the EG sites by substituting the Ampol Marks for the Caltex Marks, with EG’s own program of rebranding its sites to substitute EG branding for Woolworths branding. EG has already performed its own rebranding at some 70 of its sites.

Notice of Motion

1. [27]

   It is in these circumstances that by Notice of Motion filed on 13 July 2021, Ampol seeks an interlocutory and mandatory injunction requiring EG to allow Ampol access to the EG sites for the purpose of removing the Caltex Marks and substituting the Ampol Marks.

2. [28]

   I heard argument on that motion on 21 and 22 July 2021.

3. [29]

   As amended at the hearing, the particular order sought by Ampol is:

4. [30]

   The motion nominates 74 sites across Australia.

5. [31]

   The undertakings offered are:

6. [32]

   As can be seen the interlocutory relief sought by Ampol is in effect that sought, on a final basis, in its Cross-Summons.

7. [33]

   At my suggestion, Ampol and EG agreed to mediate their differences concerning the interlocutory relief sought by Ampol, and generally. The parties agreed that I should defer publishing these reasons until the mediation took place.

8. [34]

   The mediation took place on 4 August 2021 but was not successful.

Interlocutory mandatory injunctions

1. [35]

   It is common ground that the “test” for the granting of a mandatory interlocutory injunction is the same as for a prohibitory injunction: has the plaintiff made out a prima facie case, and thus established there is a serious question to be tried, and does the balance of convenience favour injunctive relief. These are related, not independent questions. [2]

2. [36]

   However:

3. [37]

   Interlocutory mandatory injunctions are rare because:

4. [38]

   It has also been observed that:

5. [39]

   The latter observations are particularly apposite here. Ampol does not seek to compel EG to “revert to a course of conduct pursued before the occurrence of the acts or omissions that provoked the litigation” but, rather, seeks to compel EG to “embark upon a fresh course of conduct”.

6. [40]

   Ampol accepts that, were relief granted, it would in a practical sense determine the substance of the issue, at least in relation to the sites the subject of this application.

Serious question to be tried

1. [41]

   EG accepts that:

2. [42]

   That is, EG accepts that there is a serious question to be tried that Ampol is entitled under cl 8.1 of the TMLD to require EG to rebadge its sites with the Ampol Marks.

3. [43]

   Ampol submitted that not only was there a serious question to be tried that it would succeed in showing an entitlement under cl 8.1 of the TMLD to compel EG to rebadge its sites with the Ampol Marks but that, on the proper construction of cl 8.1, it was virtually beyond argument that Ampol would succeed.

4. [44]

   Indeed, Ampol invited me to decide, on this application, the proper construction of cl 8.1 and referred to Rees J’s useful summary in MP Water v Veolia Water Australia of the circumstances in which the court will embark on the proper construction of a contract in the course of an interlocutory application. [6]

5. [45]

   I do not see Ampol’s case in relation to the proper construction of cl 8.1 as being as clear as was submitted on its behalf before me. I accept the submissions made of behalf of EG that the proper construction of cl 8.1 “will be a live question at trial”.

6. [46]

   I am not prepared to express any view about the proper construction of cl 8.1 on this application. There are, or may be, questions of context that cannot be properly explored on this application concerning the proper characterisation of the relationship between the TMLA and the TMLD and the implications of that relationship for the critical words occurring in the chapeau of cl 8.1.

7. [47]

   I am especially disinclined to embark on this course in circumstances where EG accepts that there is a serious question to be tried as to whether Ampol’s preferred construction is correct.

Balance of convenience/adequacy of damages as a remedy

1. [48]

   On an application such as this, a vital consideration is the risk of making a “wrong” decision at this interlocutory stage. The risk here is of granting an injunction in circumstances were Ampol ultimately fails or refusing an injunction where Ampol ultimately succeeds.

2. [49]

   It is thus appropriate to “steer the course which appears to ‘carry the lower risk of injustice’”. [7]

3. [50]

   A relevant matter is when these proceedings are likely to be heard and determined.

4. [51]

   A complication is that EG has foreshadowed an application to amend its pleadings to add a claim under Pt IV of the Competition and Consumer Act and to have the proceedings transferred to the Federal Court of Australia by reason of such a claim being a “special federal matter” for the purposes of s 6 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW). That application has not been determined and will not be determined before 13 August 2021.

5. [52]

   Argument before me proceeded on the basis that the earliest likely hearing date for the matter, whether it were to remain here or be transferred to the Federal Court, would be mid-2022 with judgment unlikely before August 2022.

6. [53]

   Another relevant matter is that Ampol’s entitlement to use the Caltex Marks will expire on 31 December 2022. The evidence before me is that, adopting the current schedules of work, it will take Ampol around nine months to rebrand all the EG sites.

7. [54]

   Another, and related matter is, whether the injunction should be refused for the reason that damages would be an adequate remedy for any detriment suffered by Ampol. If established, this would provide an independent basis to refuse relief. But it is relevant to the particular matters that arise in this case when considering the balance of convenience generally and the particular question of what course carries the lower risk of injustice.

8. [55]

   A final matter is, as I have set out above, the orders sought by Ampol do not seek to preserve the status quo; that the EG stations display the Caltex Marks. Rather, the orders seek materially to alter the status quo pending the trial. Indeed, as I have said, acceding to Ampol’s application would in effect give it the relief it is seeking in its Cross-Summons.

9. [56]

   In those circumstances, it is necessary to look at the consequences if an order is not granted or granted and consider the prejudice to:

10. [57]

    At the moment, the EG sites remain badged as Caltex sites and display the Caltex Marks.

11. [58]

    The evidence from Ampol is that, if the injunction is not granted, there will be an “increased risk that the rebranding will not be able to be completed within nine months and…therefore may not be branded prior to the expiry of the Work-out Period under the TMLA at the end of 2022”.

12. [59]

    The parties may be able to agree upon a basis on which the rebranding can occur. They have not so far. On behalf of EG it was submitted that I should not infer the rebranding would not commence before the hearing and should infer that discussions will continue. However, the mediation that I suggested was not successful. That does not bode well for future cooperation. It appears to me safer to assume that no agreement will be reached and that, if I do not grant the injunction, Ampol will be unable to commence rebranding EG sites unless and until it achieves success at trial.

13. [60]

    As a decision in these proceedings is unlikely before August next year, it follows that if I do not grant the injunction and Ampol is successful at trial, Ampol will not be able to commence rebranding the EG sites until then. This means Ampol will not be able to complete rebranding before it loses the right to use the Caltex Marks under the TMLA on 31 December 2022. In that event, it will be in breach of its obligations to Chevron under the TMLA.

14. [61]

    As Chevron will by then be seeking to establish its own “Caltex” outlets in Australia, Chevron may seek to restrain Ampol from continuing to use the Caltex Marks and seek damages from Ampol. If that were to occur, Ampol could cross-claim against EG. There is no suggestion that EG could not meet any such cross-claim.

15. [62]

    If Ampol is unable to complete the rebranding of the EG sites by 31 December 2022, there may be confusion in the market place. This is because, for some time, some EG service stations will remain branded with Caltex Marks, at the same time as Chevron is starting to rebrand its “Puma” retail fuel stations with Caltex Marks.

16. [63]

    Ampol currently provides customers with “Caltex Star Cards”. Evidently there are some 1,000,000 of such cards in circulation. These are now being reissued as Ampol cards. In these circumstances, it was submitted for Ampol that cardholders “will not know whether their card operates at a Caltex branded service station or not.” That may be so, although, this is unlikely to be prejudicial to Ampol as holders of Ampol cards, if confused, are likely to use those cards at an Ampol badged site.

17. [64]

    Ampol also contends that, if no injunction is granted, and it is ultimately successful, these circumstances will have delayed Ampol’s ability to build reputational awareness of consumers in relation to the Ampol Brand. Ampol will no doubt wish to entice “Caltex customers” to continue to purchase fuel from Ampol outlets. As was submitted on behalf of Ampol, it may well be difficult for Ampol to prove what damage it has suffered by reason of the delay in rollout of the Ampol Marks. The matter is likely to be more nuanced than simply looking at the pattern of Ampol’s revenue streams over the relevant period.

18. [65]

    Ampol also points to the likely “risks of further delays and increased contractor mobilisation costs incurred by Ampol”. However, any damage thereby suffered is likely able to be demonstrated and thus be amendable to a claim for damages.

19. [66]

    The result of a grant of injunction would be that the Caltex Marks from the 74 EG sites which are subject to this application will have been removed and replaced with Ampol Marks.

20. [67]

    It may be well that the granting of an injunction in relation to these sites will determine, as a practical matter, what happens in relation to EG’s remaining sites and that all other sites may be rebadged with the Ampol Marks by March or April 2022.

21. [68]

    This will obviously cause disruption to EG. Each rebranding exercise is likely to take five days. The works will physically obstruct various areas of the service stations, which will need to be cordoned off while the works are done. Ampol accepts that “it is inevitable” that there will be “some disruption to customers” although Ampol contends it will “minimise the extent of that disruption” and offers the undertakings that I have set out above.

22. [69]

    It seems inevitable that EG’s business will be disrupted, its customers inconvenienced, and revenue will be lost.

23. [70]

    As was submitted on behalf of EG:

24. [71]

    Just as Ampol may have difficulty proving what damage it would suffer by the delay in achieving “reputational awareness” for the “Ampol brands”, it seems likely that EG will also have difficulty proving what damage it has suffered as a result of this kind of customer confusion.

25. [72]

    The rebranding of the EG sites with the Ampol Marks is also likely to interfere with EG’s own rebranding program whereby certain of the “Woolworths brands and colour schemes” are replaced at EG sites with the EG brand. Again, it may well be difficult for EG to show what damage it has thereby suffered.

Overall

1. [73]

   As this discussion shows, some hardship, perhaps not compensable by an order for damages will be visited on Ampol or EG whether or not I make the orders sought by Ampol.

2. [74]

   I find the matter to be very evenly balanced. Overall, I find the decisive consideration to be the form of the orders that Ampol seeks.

The form of orders

1. [75]

   An injunction should specify clearly what the party to whom it is directed should do or not do.

2. [76]

   Thus:

3. [77]

   The proposed order does not specify what, as a matter of fact, EG must do or not do.

4. [78]

   Ampol seeks an order that EG “take all steps necessary” to allow Ampol to “access” the 74 sites “for the purpose of permitting [Ampol] to effect changes” to “remove” the Caltex Marks and “add” the Ampol Marks.

5. [79]

   As I have said, Ampol estimates the task will take five days at each site.

6. [80]

   At the hearing of the motion, Ampol withdrew its application for an order that EG “cooperate” with Ampol to implement the rebadging Ampol proposes, but the practical necessity for EG to “cooperate” is inevitable as the purpose for which Ampol seeks access to EG’s sites is to make a large number of physical changes to the sites.

7. [81]

   The correspondence and discussions between Ampol and EG during July show that there are numerous areas where disagreements could arise, including:

8. [82]

   Questions are likely to arise as to whether Ampol has a unilateral right to decide which of the numerous Ampol Marks go at what location at the EG sites. Questions are also likely to arise as to the extent to which EG’s obligation under cl 8.1 of the TMLD to “cooperate” with Ampol in “implementing an addition, modification or deletion” of the Caltex Marks means that Ampol’s wishes must prevail. The very detailed “Scope Summary” of “scheduled works” circulated by Ampol on 22 June 2021 [9] suggests that Ampol has a clear vision as to how it sees the rebadging occurring. But questions are likely to arise as to what EG lawfully can do to promote its interests as to the manner in which the re-badging occurs.

9. [83]

   One matter to which EG points is that the works will require individuals to work at heights while EG staff and customers are moving about the site. EG may well have legal responsibilities to employees, contractors and customers on its sites. Difficult questions may arise as to how those responsibilities would interact with EG’s obligations to comply with the very generally worded order Ampol proposes.

10. [84]

    It appears to me to be inevitable that disagreements will arise. There is a very real prospect of the Court having to supervise, perhaps on a site by site basis, the implementation of the orders Ampol proposes.

11. [85]

    Of course, were Ampol finally to prevail, it would then be entitled to orders to enforce its rights under the TMLD. But that would be in a very different context and it is by no means clear to me that, even then, Ampol would be entitled to orders in the general terms now proposed.

12. [86]

    I find these matters to tip the balance in favour of refusing to make the injunction for which Ampol contends.

Conclusion

1. [87]

   I decline to grant the interlocutory mandatory injunction sought by Ampol.

2. [88]

   The defendant/cross-claimant’s Amended Notice of Motion filed in Court on 21 July 2021 is dismissed with costs.