Berndon Investments Pty Ltd v Fitzroy Island (SA) Pty Ltd

[1983] FCA 261

Re: BERNDON INVESTMENTS PTY LIMITED
And: FITZROY ISLAND (S.A.) PTY LIMITED (1983) 74 FLR 467
No. Qld G66 of 1983
Practice and Procedure

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Fitzgerald J.(1)

CATCHWORDS

Practice and Procedure - interlocutory injunction to restrain the respondent until the trial of the action from deterring or preventing the applicant from having access to the jetty on a resort island for the purpose of disembarking and embarking its fare-paying passengers - applicant and respondent competitors in a market - whether control which the respondent is asserted to have with respect to the island jetty and resort could be characterized as control of a market within s.46(1)(a) and (c) of the Trade Practices Act - whether a serious question to be tried - balance of convenience.

Trade Practices Act, s.46

Trade Practices - Monopolisation - Respondent controlling access to jetty on resort island - Applicant in business of transporting farepaying passengers to and from island - Whether respondent in a position substantially to control a market - Whether transport to and from island is a separate market - Interlocutory injunction - Balance of convenience - Trade Practices Act 1974 (Cth), ss 46(1)(a) and (c).

Practice and Procedure - Interlocutory injunction - Monopolisation - Respondent sought to be restrained from deterring or preventing applicant from competing in market - Whether market exists as alleged - Whether prima facie case established - Balance of convenience - Trade Practices Act 1974 (Cth), ss 46(1)(a) and (c).

HEADNOTE

The applicant and the respondent both conducted day cruises from Cairns to and from nearby islands and other locations in or near the Barrier Reef. One of the cruises conducted by the applicant originated at Cairns, and involved stops at Fitzroy Island and Green Island, and terminated at Cairns. Passengers would disembark at these islands and enjoy the facilities there. The respondent conducted the only tourist resort on Fitzroy Island, and it controlled the only jetty on the island, having constructed the jetty on Crown land under licence. In August 1983 the respondent sought to impose certain conditions on the applicant's continued use of the jetty for the disembarkation and collection of passengers, including charging the applicant a fee of $5 per passenger.

The applicant commenced proceedings against the respondent claiming damages and injunctive relief, alleging a contravention of s. 46 of the Trade Practices Act 1974 (Cth). Broadly, s. 46(1) prohibits a corporation that is "in a position substantially to control a market" from taking advantage of that position for the purpose of, inter alia, eliminating or substantially damaging a competitor in that market or from deterring or preventing a person from engaging in competitive conduct in that market. The applicant sought an interlocutory injunction to restrain the respondent, pending the trial of the action, from deterring or preventing the applicant from having access to the jetty at Fitzroy Island by, inter alia, demanding payment of the jetty fees. In its application, the applicant described the relevant market as the "market for transporting persons by boat, ship or other sea-going vessels from the City of Cairns or Green Island to Fitzroy Island and back in the State of Queensland."

Held: (1) To succeed, the applicant for an interlocutory injunction must show (a) that there is a serious question to be tried as to whether, inter alia, the respondent is in a position to substantially control a market and that, by the conduct complained of, the respondent has taken advantage of the power for the purpose described in s. 46(1), and (b) that the balance of convenience lies in the applicant's favour. Australian Coarse Grain Pool Pty Ltd v. Barley Marketing Board (Qld) (1983) 57 ALJR 425, applied.

(2) The applicant has failed to produce sufficient evidence to permit a conclusion that there exists a separate identifiable market for transporting persons by sea from Cairns or Green Island to Fitzroy Island as alleged. Even assuming that there is a separate market for trips originating and terminating in Cairns or nearby islands, it is insufficient, in the absence of detailed evidence, for the applicant simply to assert that there is a separate market in relation to Fitzroy Island.

(3) The applicant has failed to show a sufficient balance of convenience in its favour because (a) the trial can be held in the reasonably near future, and (b) the respondent has the capacity to pay any damages to which the applicant may be entitled whereas the applicant's capacity to pay damages to the respondent is less certain.

HEARING

Brisbane, 1983, August 30; September 5-6. #DATE 6:9:1983

APPLICATION.

Application for an interlocutory injunction to restrain the respondent from deterring or preventing the applicant from using a jetty controlled by the respondent said to be in contravention of s. 46 of the Trade Practices Act 1974 (Cth).

R. G. Bain, for the applicant.

I. D. F. Callinan Q.C. and M. J. White, for the respondent.

Cur. adv. vult.

Solicitors for the applicant: Macdonnells.

Solicitors for the respondent: I. C. Millyard.

F.P.C.

ORDER

1. The interlocutory injunction is refused.

2. The applicant file and serve an amended statement of claim on or before 20 September 1983.

3. The respondent file and serve an amended defence on or before 4 October 1983.

4. The applicant have leave to file and serve a reply on or before 11 October 1983.

5. The further hearing of the application for directions be adjourned to 9.15a.m. on Tuesday 18 October 1983.

6. The applicant to pay to the respondent the costs of the proceedings on 5 and 6 September 1983.

7. The costs of the proceedings on 30 August 1983 be costs in the cause.

Orders accordingly.

JUDGE1

The business of each of the applicant and the respondent includes day cruises from Cairns to and from nearby islands and other locations in or near the Barrier Reef, and the hire of equipment, including snorkelling equipment, to cruise passengers. From about September 1982 to the end of July 1983, one of the cruises conducted by the applicant, using a vessel which it owns now named the M:V: "Green Islander", included both Fitzroy Island and Green Island, with equal time spent at each. The applicant's vessel would leave Cairns and call at Fitzroy Island in the morning when the passengers would disembark. Then, at about 12.30pm, the applicant's vessel would again call at Fitzroy Island and collect the passengers and take them to Green Island. The passengers would not lunch at Fitzroy Island. Later the passengers would be taken back to Cairns.

Part of the respondent's business also consists of day trips from Cairns to Fitzroy Island, Green Island and return.

Since about April this year, the applicant and the respondent were the only operators of such day trips to both Fitzroy Island and Green Island. It is sufficiently established for the present interlocutory purposes that such trips constituted a significant part of the business of each.

The respondent conducts the only tourist resort on Fitzroy Island, which is a coastal island near the Great Barrier Reef off Cairns. It is not necessary for present purposes to distinguish between the respondent and its related corporations. There are other islands close to Cairns which it has not yet been shown are not broadly comparable to Fitzroy Island in the attractions which they possess, including Double Island and Michaelmas Cay, neither of which has a resort upon it, and Green Island, upon which there is a resort conducted by a stranger to this litigation.

The respondent has constructed a jetty under licence on Crown land, including the sea-bed, near its resort on Fitzroy Island. The seaward end of the jetty extends beyond low water mark and the landward end, which is above high water mark, terminates on or near an esplanade which is also Crown land located alongside the respondent's resort. There is evidence upon which it is appropriate for me to act for present purposes that the use of the jetty is important, although perhaps not strictly essential, to a business of conducting tours to Fitzroy Island and landing passengers there, whether to go to the respondent's resort or otherwise to experience the island's attractions.

These proceedings have been conducted to date on the basis that the respondent is able to control access to and use of the jetty and its resort on Fitzroy Island.

By letter dated 25 June 1983, the respondent wrote to the applicant as follows: "Dear Sirs,

Further to our letters of 24th September, 1982 (copy enclosed) and 20th March, 1983, I wish to advise the following.

Permission was given to your company by The Fitzroy Island Trust subject to certain conditions that could be terminated or varied if the Trust considered the arrangement of your Two Island Cruise detrimental to our operation. One month's notice was required according to our original letter, which means the following applies as from 1st August.

1. Berthing times to come alongside our private jetty at Fitzroy Island between 9.45 am and 10.00 am to put down passengers and to pick up same between 1.00 pm and 1.15 pm. These are the only times your vessel can use the jetty.

2. A jetty fee of $5.00 per person (adult or child) will apply for all passengers arriving on Fitzroy Island, payable within 7 days of each month.

3. All passengers travelling on your vessels will be advised that lunch is to be partaken on Fitzroy Island. You will not sell inclusive tickets to your passengers and all tours carried will be sold a lunch in our restaurant - tours luncheons $7.00 nett per person. Restaurant open to the public $8.00 adults, $4.00 children.

4. Your passengers cannot bring ashore Hire Gear, i.e. only personal snorkelling equipment to be carried by your guests.

5. We will give you permission to sell our Glass-bottom boat rides and pay you 15 per cent commission for this privilege - times 10.30 am, 11.30 am and 12.30 pm. We will issue you with tickets for same - you may not pre-sell Glass-bottom boat rides on Green Island.

The foregoing arrangement may be terminated or varied at any time by The Fitzroy Island Trust if they consider that it is detrimental to the total operation. One month's notice will be given of any intended variation.

If you accept the conditions, please notify the Trust, in writing, by 7th July 1983.

If we do not receive your acceptance by that date we will know that you will no longer be bringing customers to Fitzroy Island and will be discontinuing the Two Island Cruise.

Yours faithfully,

(Sgd) G. Wales

THE FITZROY ISLAND TRUST"

It is unnecessary to refer in detail to other communications exchanged between the parties. It is not in dispute that the applicant did not accept the terms of the offer contained in the letter dated 25 June 1983 and that the respondent accordingly refuses to permit the applicant to disembark passengers from its vessel at the Fitzroy Island jetty in order to use that jetty to go ashore at Fitzroy Island. The applicant no longer conducts day tours both to Fitzroy Island and to Green Island, although it continues to conduct tours to Green Island.

The applicant took no step prior to 31 July 1983 when its previous "rights" in respect of the Fitzroy Island jetty disappeared. However, some weeks later, on 25 August 1983, the applicant commenced these proceedings against the respondent claiming injunctive relief and damages, alleging a contravention of section 46 of the Trade Practices Act 1974 ("the Act"). According to the applicant, its loss is the diminution in revenue which it is receiving by reason of not conducting day tours to or including Fitzroy Island, notwithstanding as I have stated that it is able to conduct other tours, including tours to Green Island. The evidence suggests that the current months constitute the height of the relevant tourist season.

Presently before me is an application by the applicant for an interlocutory injunction to restrain the respondent until the trial of the action from deterring or preventing the applicant from having access to the jetty at Fitzroy Island for the purpose of disembarking and embarking its fare-paying passengers.

According to the recent statement of Gibbs C.J. in Australian Coarse Grain Pool Pty Ltd v. Barley Marketing Board (Qld) (1983) 57 A.L.J.R. 425; (1983) A.L.M.D. 1944, it is necessary for the applicant to establish at least that there is a serious question to be tried. If that is established, then whether or not an interlocutory injunction should be granted depends upon the balance of convenience.

The applicant relies upon paras. 46(1)(a) and (c) of the Act which provide, so far as presently material:

"A corporation that is in a position substantially to control a market for . . . services shall not take advantage of the power in relation to that market that it has by virtue of being in that position for the purpose of -

(a) eliminating or substantially damaging a person, being a competitor in that market or in any other market of the corporation or of a body corporate related to the corporation;

(b) . . . or

(c) deterring or preventing a person from engaging in competitive conduct in that market or any other market.

(See also sub-sections (2) and (4) of s.46.)

By sub-s. 4(1) of the Act, unless the contrary intention appears -

"'Services' includes any rights (including rights in relation to, and interest in, real or personal property), benefits, privileges or facilities that are, or are to be, provided granted or conferred in trade or commerce, and without limiting the generality of the foregoing, includes the rights, benefits, privileges, or facilities that are, or are to be provided, granted or conferred under - (a) a contract for or in relation to -

(i) . . .

(ii) the provision of, or of the use of enjoyment of facilities for, amusement, entertainment, recreation or instruction; or

. . ."

Section 4E of the Act provides:

"For the purposes of this Act, "market" means a market in Australia and, when used in relation to . . . services, includes a market for those . . . services and other . . . services that are substitutable for, or otherwise competitive with, the firstmentioned . . . services."

By sub-s. 4F(b) a person is deemed to have engaged or to engage in conduct for a particular purpose if that purpose was one of the purposes and was a substantial purpose.

It is sufficiently established for present purposes that the applicant and the respondent are and at all material times were competitors in a market in Australia within the meaning of the Act. It would also be appropriate for present purposes to conclude that the applicant has established that there is a serious question to be tried as to whether or not a substantial purpose of the conduct of the respondent was either to eliminate or substantially damage the applicant or to deter or prevent the applicant from engaging in competitive conduct.

As the evidence stands, and considering the interlocutory nature of the present application, the conditions set out in the letter of 25 June 1983 from the respondent to the applicant, apart from condition 2, can safely be ignored. I do not think that it is seriously asserted for the applicant that, if it cannot succeed by reference to condition 2, it can otherwise succeed. Some of the other conditions, for example, concerning timing of jetty use and the condition with respect to the lunches, may go more to the applicant's convenience than to its competitiveness although no doubt the two are not entirely discrete, and it may be accepted for the moment that some of the other conditions, if implemented, would diminish the attraction of the applicant's tours.

Be that as it may, the issue is sufficiently raised for present purposes that the demanded payment will either make the applicant's day tours to Fitzroy Island and Green Island unprofitable if the charge is not passed on to passengers, and uncompetitive if it is. I do not mean by those comments to suggest that the respondent's insistence upon a charge of $5 per passenger for the use of the jetty or for access to the resorts may not bear a quite different complexion when investigated more fully at the trial. There may well be other aspects of the charge to be considered including the cost to the respondent of constructing, operating, and maintaining the jetty and the resort. Whatever may be the situation at the trial, this is not however the occasion for a cost benefit analysis in respect of the position of either party.

In addition to what has thus far been mentioned, in order to succeed the applicant must also show that there is a serious question to be tried concerning its allegation that the respondent is in a position to substantially control a market and that, by the conduct complained of, the respondent has taken advantage of that power in relation to that market for the above described purposes or one of them. In the application, the market is described as the "market for transporting persons by boat, ship or other sea-going vessels from the City of Cairns or Green Island to Fitzroy Island and back in the State of Queensland".

In the submissions before me counsel for the applicant also founded upon the proposition that trips to, or including Fitzroy Island, constituted a separate market.

It is by no means clear to me that the control which the respondent is asserted to have with respect to the Fitzroy Island jetty and resort could properly be characterized as control of such a market, if one exists, but it is unnecessary to pursue that question.

Even assuming in favour of the applicant that trips commencing and terminating in Cairns or nearby locations ought to be considered a separate market, in my opinion there is wholly insufficient evidence, including details of the various islands and resorts accessible from Cairns or other nearby commencing points, and the various businesses conducted, tours offered, services provided, charges made, etc. to permit a conclusion that there is a still further separate sub-market relating to or including Fitzroy Island and, in effect, centred upon tours to that island.

It is inappropriate to say more, particularly since I am likely to be the trial judge. I have an open mind as to what may emerge. The evidence at this point is understandably less than complete and the evidence at the trial could well present a different picture after additional witnesses are called and examined. I can only decide the present application by reference to the evidence as it now stands. For immediate purposes, I have generally assumed in favour of the applicant that the material relied on by it is correct and have not resolved any disputed question of credibility.

It is possible to formulate hypothetically a number of possible markets which might theoretically be controlled by the respondent, given that its control of the jetty and the resort at Fitzroy Island is properly to be considered market control. It does not follow that there is in fact any market which the respondent does control, and it is insufficient for the applicant simply to assert, without sufficiently detailed proof to permit a conclusion to be formed otherwise than by speculation, that there is a separate market related to Fitzroy Island. Such a conclusion, even at a prima facie level, would not be warranted in the absence of considerable evidence concerning at least the various locations to which day trips are or might be able to be taken from Cairns and the various businesses which do in fact operate such trips with details, including details of prices etc.

Evidence that conduct has both an anti-competitive purpose and effect does not of itself attract the operation of s.46 of the Act, even if the result is to eliminate a competitor from the market. Section 46 only operates when the conduct is performed by a corporation that is in a position substantially to control a market in the exercise of that power.

The inadequacy of the evidence to support the applicant's case that there is a market which the respondent is substantially in a position to control, and that the respondent has taken advantage of that power, is emphasized by the difficulty which exists in the absence of suitable detail in formulating an injunction in appropriate terms to restrain the conduct alleged to constitute a contravention of sub-s. 46(1).

The assumption which underlies the applicant's case is that the respondent has the right to control the jetty and the resort on Fitzroy Island, subject at least to the Act. The applicant accepted and still does not deny, as I understand submissions made on its behalf, the right of the respondent to control the jetty and resort and to impose appropriate terms on those seeking to use them. No doubt, in an appropriate case, the Court could fix terms as a condition of the injunction, but I do not feel that the material in this case is sufficient to permit that to be done.

Nor, subject to one possible qualification, does the applicant show any sufficient balance of convenience in its favour. The trial can be held in the reasonably near future. If it is correct in its assertions, it may well have an entitlement to damages under s.82 of the Act. The respondent on the evidence has the capacity to pay any such damages.

There will be no greater and possibly considerably less difficulty in quantifying the applicant's damages under s.82, if it is entitled to damages, then there would be in quantifying the respondent's damages under an undertaking from the applicant, and the applicant's financial capacity to pay seems less certain than that of the respondent.

The one matter of concern which I have felt is that the respondent may not have the asserted right to control access to the jetty and the resort on Fitzroy Island and that the applicant may have no cause of action for damages even if it can obtain an injunction for the future at the trial on some other basis. However, in the end I have attached little weight to that consideration. The applicant presently places its claim on no basis other than s.46 of the Act, and indeed, itself asserts as a foundation for that claim that the respondent does have the necessary control. For the reasons I have given therefore the interlocutory injunction is refused.