Cool & Sons Pty Ltd trading as Wagga Windscreen Service v O'Brien Glass Industries Ltd

[1981] FCA 99

Re: COOL AND SONS PTY LTD trading as WAGGA WINDSCREEN SERVICE
And: O'BRIEN GLASS INDUSTRIES LIMITED
No. G52 of 1979
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Keely J.

CATCHWORDS

Trade practices - injunctions - exclusive dealing - discriminating between purchasers in relation to discount - attempting to induce person to enter into arrangement with respect to prices - resale price maintenance - substantially lessening competition - meaning of "substantially" - whether "supply of goods" includes supplying and fitting of windscreens - damages - loss of profit - claim for general damages - Trade Practices Act 1974 ss.45, 46, 47, 48, 49, 96(1) & (3), 98(1)(c)

HEARING

MELBOURNE

#DATE 13:7:1981

ORDER

1. Judgment be entered for the applicant in the sum of $4,670.00.

2. The respondent pay the applicant's costs of this action which, in the absence of agreement, shall be taxed.

3. The further hearing be adjourned to a date to be fixed.

JUDGE1

At all material times the applicant and the respondent have been duly incorporated companies, the applicant carrying on the business of fitting windscreens under the business name of Wagga Windscreen Service, and the respondent carrying on the businesses, inter alia, of supplying windscreens on a wholesale basis and of fitting windscreens.

The applicant seeks damages under s.82 of the Trade Practices Act 1974 (the Act) and injunctions under s.80 restraining the respondent from engaging in conduct that would constitute a contravention of various provisions of Part IV of the Act. The injunctions sought in the amended statement of claim are that the respondent:

(a) "be restrained from engaging in the practice of exclusive dealing in respect of the supply of windscreens contrary to s.47 . . . ",

(b) "cease discriminating against the applicant contrary to . . . s.49",

(c) "be restrained from attempting to induce the applicant to enter into an arrangement or understanding with respect to the prices of windscreens contrary to s.45",

(d) "be restrained from engaging in the practice of resale price maintenance in respect of windscreens contrary to s.48", and

(e) "cease taking advantage of its position substantially to control a market in breach of s.46".

In the written final address of the applicant it was said that:

"There is some overlapping between the different sub-sections of the Trade Practices Act. In particular, in the present case, it is alleged that the same conduct of the respondent constitutes both exclusive dealing contrary to Section 47 of the Act and price discrimination contrary to Section 49 of the Act. In other words, the giving of a substantial discount on certain conditions can be price discrimination and also, constitute exclusive dealing contrary to Section 47. Indeed, in the applicant's submission, it is the combination of the large systematic discounts and the exclusive dealing condition which greatly increases the adverse anti-competitive effects in the present case."

Mr Masterman Q.C., who appeared with Mr J. W. Adams for the applicant, said at the conclusion of his oral final address:

". . . we see the critical aspects of the case to be, firstly, giving of a substantial discount on exclusive dealing terms as being the central part of the case, and another way of looking at that is the price discrimination, the discount being of such a magnitude . . . and on such a systematic scale as to have a substantial effect on competition and to satisfy 49 as well as 47."

Mr McComas, who appeared for the respondent, and Mr Masterman both asked that the form of any injunctions should be the subject of further addresses at a later date.

As to the exclusive dealing branch of the case, the applicant contended that since the beginning of 1978 the respondent has given or offered to give a discount in relation to the supply by it of windscreens to resellers and fitters of windscreens in the Wagga district on the condition that the person to whom the respondent offered to supply the windscreens would not except to a limited extent acquire windscreens from a competitor of the respondent.

Section 47 of the Act includes the following provisions:

"(1) Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing.

(2) A corporation engages in the practice of exclusive dealing if the corporation -

(a) supplies, or offers to supply, goods or services;

(b) supplies, or offers to supply, goods or services at a particular price; or

(c) gives or allows, or offers to give or allow, a discount, allowance, rebate or credit in relation to the supply or proposed supply of goods or services by the corporation,

on the condition that the person to whom the corporation supplies, or offers or proposes to supply, the goods or services or, if that person is a body corporate, a body corporate related to that body corporate -

(d) will not, or will not except to a limited extent, acquire goods or services, or goods or services of a particular kind or description, directly or indirectly from a competitor of the corporation or from a competitor of a body corporate related to the corporation;

(e) will not, or will not except to a limited extent, re-supply goods, or goods of a particular kind or description, acquired directly or indirectly from a competitor of the corporation or from a competitor of a body corporate related to the corporation; or

(f) in the case where the corporation supplies or would supply goods, will not re-supply the goods to any person, or will not, or will not except to a limited extent, re-supply the goods -

(i) to particular persons or classes of persons or to persons other than particular persons or classes of persons; or

(ii) in particular places or classes of places or in places other than particular places or classes of places.

. . ."

The respondent estimated that as a manufacturer of windscreens, its market share, based upon manufacturing capacity, was 17 per cent - there being two manufacturers whose share was larger, being estimated at 40 per cent and 20 per cent respectively. As a wholesale supplier of windscreens in New South Wales, the respondent had the largest share, estimated at 30-40 per cent, with the two nearest competitors being 30-35 per cent and 15-20 per cent respectively. The respondent said that its wholesale sales from Wagga were the largest, with its nearest competitor estimated by Mr Duncan to be 5-15 per cent less than the respondent. The applicant and the respondent were the two main fitters of windscreens in Wagga and the surrounding area within a 50 mile radius.

Evidence was led by both parties as to various conversations between representatives of the applicant and the respondent. On all the evidence I am unable to find on what precise dates those conversations, with one exception, took place but nothing turns upon the precise dates. The first conversation that is material occurred about Christmas 1977 or early in January 1978 (the Christmas 1977 conversation). There were also conversations in August 1978, in December 1978 and on 11 April 1979. Another conversation took place about the middle of April 1979 (the mid-April 1979 conversation) and there was a conversation stated to have been in either April or May 1979 (the April or May 1979 conversation).

A large volume of evidence was led by both parties, the greater part of which was either expressly directed to the content of the conversations or was evidence as to matters related directly to those conversations, given under cross examination designed to cast doubts upon either the recollection or the veracity of the witness. I accept Mr McComas' submission that the matters complained of are all of considerable gravity and accordingly should be determined in accordance with the principles set out in Briginshaw v. Briginshaw (1938) 60 C.L.R. 336 where Dixon J, at pp.361-363, said:

"The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. . . . The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters 'reasonable satisfaction' should not be produced by inexact proofs, indefinite testimony, or indirect inferences. . . . It means that the nature of the issue necessarily affects the process by which reasonable satisfaction is attained. . . . weight is given to the presumption of innocence and exactness of proof is expected."

I have considered the objections made by Mr McComas to two exhibits - referred to in his written final address. I have decided to uphold those objections and accordingly have not had regard to those exhibits.

There was a fundamental conflict of evidence as to the content of the conversations which can not be resolved by attributing the differences in the evidence given on behalf of the two parties to faulty recollection or to a misunderstanding at the time as to what had been said. In many cases, such as those in respect of a motor collision which occurred two or three years before, very different accounts of an event may be given without anyone seeking to deliberately mislead the court. In this case there has been such an attempt to mislead the court and I have not found it difficult to decide which witnesses were seeking to present to the court a false account of those conversations. Because of the length of the evidence, it will be necessary in these reasons for judgment to consider in some detail the evidence given as to those conversations.

The oral evidence was heard in December 1980 and it is not surprising that witnesses called by both parties had considerable difficulty in remembering the detail of precisely what was said in various conversations, the earliest of which had taken place three years before, and the last of which occurred over 18 months before the evidence was given. At all material times Mr Raymond Cool (sometimes referred to in the evidence of other witnesses as Bert Cool) was a director of the applicant. One of his brothers, Mr Sydney Cool, was an employee of the applicant and another brother, Mr Peter Cool, the manager of Bob Beeker Motors Pty Limited, was neither a director nor an employee of the applicant. Mr Peter Cool gave his evidence firmly, clearly and without any memory lapses and I have no hesitation in accepting his evidence. Both Mr Sydney Cool and Mr Raymond Cool gave answers at times which could not be accepted as being accurate. Mr Sydney Cool had considerable difficulty in remembering details on a number of matters. Having considered their evidence carefully, including their answers under cross examination by Mr McComas, I am quite satisfied that, despite the difficulty of remembering accurately the detail of conversations so long past, Messrs Sydney and Raymond Cool each was a witness of truth who gave evidence to the best of his recollection. There were discrepancies between their respective accounts of the details of the conversations, but a clear picture emerged as to the substance of those conversations.

Mr Duncan, the marketing director of the respondent, who has been responsible for Windscreens O'Brien, described as a division of the respondent, since April 1975 and is responsible for the framing of the respondent's marketing policies, also had difficulty with his memory on some matters and said: "I find it difficult to distinguish between 1978 and 1979" conversations although he added that his recollection of the salient points put to him was very good. Mr Goff, the regional supervisor for the respondent's operations regarding windscreens in Wagga also gave evidence. He had played the most active role of the respondent's employees in the dealings between the respondent and the applicant during the material period. Some of the incorrect answers by Messrs Duncan and Goff were doubtless due to the difficulty of remembering details. However, I was forced to the conclusion that on a number of occasions Mr Duncan and Mr Goff each made statements in evidence which were untrue to his knowledge. In reaching that conclusion I have been partly influenced by the demeanour of each whilst giving evidence both under cross examination and in evidence in chief.

Mr Hards, a regional manager of the respondent, whose responsibility in respect of windscreens included Wagga and other towns, said frankly that he recalled "basically nothing from the conversation" in early 1978 at which Messrs Duncan, Goff, Sydney Cool and Raymond Cool were present. However, under cross examination he lacked frankness at times and gave a number of plainly evasive answers when asked whether certain remarks he had made to Mr Sydney Cool were intended "to get him to increase his prices" as a wholesaler.

Messrs Raymond, Sydney and Peter Cool in giving their evidence did not cause me to doubt that they were honestly trying to state, to the best of their respective recollections, what was said during the various conversations - although they did not always succeed. Mr Sydney Cool made an unfavourable impression in his manner of giving evidence, partly because of a tendency to commence answering a question before the question was completed and partly because he became "indignant" (to use his own word) whilst under cross examination. However, I consider he was a truthful witness. Mr Peter Cool gave his evidence in an impressive manner and I accept his evidence as being both truthful and accurate.

I turn now to the evidence as to the conversations. The Christmas 1977 conversation took place at the applicant's premises at Edwards Street, Wagga and was between Mr Raymond Cool, Mr Sydney Cool and Mr Doug Goff, then the Wagga branch manager of the respondent - a position he held from January 1978 until November 1979. I accept Mr Raymond Cool's evidence that Mr Goff offered to give the applicant a discount of 50 per cent - the same as that given by the applicant's then supplier, Gundagai Windscreen Service Pty Ltd - as well as better "availability" of windscreens. The offer was conditional upon the applicant buying its windscreens from the respondent rather than "from his competitors" - a statement which I find meant, and was understood as meaning, that the applicant was required to buy most of its windscreens from the respondent. Messrs Sydney and Raymond Cool agreed that the applicant would purchase most of its windscreens from the respondent and the applicant received from the respondent a discount of 50 per cent from January to August 1978. I reject as untrue Mr Goff's evidence denying that he asked that the majority of the applicant's purchases should be from the respondent. I also reject as untrue his answer that the volume of proposed purchases from the respondent that he suggested to the applicant (as being necessary in order to obtain a discount of 50 per cent) "represented in my opinion round 15 to 20 per cent of their business". That answer may be compared with the respondent's answer to interrogatory C.15(b) - which I set out later - as to the applicant in August 1978 being given a lower discount as being "in the category relating to persons who do not buy the bulk of their supplies from the Respondent".

The August 1978 conversation also took place at the Edwards Street premises and was between Messrs Sydney and Raymond Cool and Mr Goff, who told them that their discount was to be reduced from 50 per cent to 40 per cent. On the evidence I am not satisfied as to what reason was given by Mr Goff for the reduction.

The December 1978 conversation was between the same three persons. I accept the evidence of Mr Raymond Cool and Mr Sydney Cool that Mr Goff said he was willing to increase the discount allowed by the respondent to the applicant from 40 per cent to 50 per cent on its purchases of windscreens from the respondent if the applicant painted out the word "discount" on its "windscreen discount" sign and also stopped advertising on radio, television and in the newspapers that it gave discounts on windscreens. The applicant had been extensively advertising its discount prices on radio, television and in the newspapers and I accept that Mr Goff said in this conversation "that the general public . . . was getting to expect to buy their windscreens at 50 per cent off". The applicant agreed to do so and approximately two weeks later painted out the word "discount". Before it had done so Mr Goff in early January 1979 had spoken to Mr Sydney Cool and commented that the discount sign "had not been painted out as he had requested". It also brought most of its "prices up to about the recommended retail price of O'Brien's". I reject as untrue Mr Goff's evidence in chief and in cross examination where it differs from the evidence of Messrs Raymond and Sydney Cool as to the substance of the December 1978 conversation.

I accept the evidence of Mr Peter Cool, that in the conversation on 11 April 1979, Mr Bruce, the assistant manager of the respondent's office at Wagga, told him and Mr Raymond Cool that the applicant's discount had been reduced from 50 per cent to 40 per cent partly because the applicant was not purchasing sufficient quantities of windscreens from the respondent. Asked why the respondent now required the applicant to pay cash, Mr Bruce said:

"All the discounting is a matter for head office, it is not wholly my affair; I am only under directive from head office."

I reject the evidence of Mr Goff as to the manner in which he notified Mr Sydney Cool of the reduction in the discount rate and later spoke to Mr Raymond Cool.

I accept the evidence of Mr Peter Cool that in the mid-April 1979 telephone conversation Mr Duncan asked him:

". . . were my brothers, Raymond James and Sidney Paul Cool acquiring windscreens from any other glass supplier. He specifically mentioned Bradley Bros and Guardian Glass. I advised him I understood they were doing so when necessary. He said in that case O'Briens were not the major supplier of glass to R.J. Cool, and I said was that the only problem. He said yes. I asked him would the 50 per cent discount be restored if they did purchase from O'Briens, if the windscreens were purchased exclusively from O'Briens, and he said yes. I told him that if O'Briens were not able to supply a particular screen and that particular screen had to be purchased elsewhere, would that violate any agreement made in regard to this 50 per cent discount. He said no, not if they checked with O'Briens first. If O'Briens indicated they were not able to supply the particular screen, in that case the screen could be purchased elsewhere without affecting any agreement."

I also accept his evidence in cross examination that he had a number of telephone conversations with Mr Duncan in April 1979:

". . . on each occasion the same matters were basically in context referred to again. Each time Mr Duncan's point was that Cools would have to supply their glass to the public at the same price as O'Briens and, further, that O'Briens should be their major supplier unless in any instance where O'Briens could not supply that particular glass."

Asked in cross examination "What did you understand Mr Duncan to mean by that, that O'Briens would have to be the major supplier?" he replied:

"That they should purchase from O'Briens and not from Guardian Glass. He had mentioned that R.J. Cool was still acquiring glass from Bradley Bros and Guardian Glass. He said, 'We cannot permit a discount whilst we are not the major supplier'."

I reject as untrue Mr Duncan's denials as to the terms of those conversations including his evidence in each of the following passages:

"Did your conversation with Mr Peter Cool ever deal with the question of prices to the public generally of windscreens?--Not to the public, no.

To the trade?---No, the only material we discussed was their buying terms and creditworthiness in relation to purchases of windscreens from us.

Did you ever say to Mr Peter Cool words to the following effect, that it was a condition of retaining the 50 per cent discount that the applicant raise their prices for supplying windscreens to members of the public and for fitting the same to the level charged by the respondent in Wagga?---Emphatically no.

Did you ever inform Mr P.J. Cool that the applicant would regain the 50 per cent discount if it purchased windscreens exclusively from the respondent?---No."

Mr Duncan's answers under cross examination by Mr Masterman were quite evasive as to the mid-April 1979 conversation. Mr Duncan suffered badly from lack of memory during the cross examination, saying on a number of occasions "I have no recollection", "I do not recall" and "I do not recollect". In my view some of those answers were given in an endeavour to avoid having to answer the question. An extract from the transcript illustrates Mr Duncan's evasiveness in cross examination:

"I put it to you again - and I am sure you have answered this already - at that stage you were well aware the Cools were discounting? ---I was aware of their activity in the fitting business.

And the fact that they were selling at discounts at and prior to the date of that conversation? ---At that time it had not become the subject of a big issue between us.

No, but you were aware?---I was aware they were fitting windscreens. I truthfully could not say more than that.

Did you not tell us this morning you were aware they were discounting?---The major part of their discounting occurred much later.

Yes, but they had built up the business which you told us was equal to yours in Wagga?---In later times it was, yes.

I am suggesting in January 1978 - at that stage their business was bigger than yours, and by virtue of discounting. Do you deny that?--- That was not a consideration. I did not make the comparison or draw any inferences from it.

But you were aware of it, were you not, from discussions with Mr Gough (sic) before you had the conversation?---Yes."

The last answer may be compared with the answer to the third question. Mr Duncan was also quite evasive in other parts of his evidence under cross examination and he gave other answers which, because of his demeanour and the inherent improbability of the answers, could not be accepted as being true; for example his evidence that he told Mr Sydney Cool "that if he wished to discount or not discount that was entirely his decision". For the same reasons I am quite unable to believe his evidence as to his purpose in going to Wagga:

"Really, I felt what I was going to be doing, in fact, was being a kind of judge or some kind of a means of bringing the parties to an agreement to which I would then have been a witness."

As to the April/May 1979 conversation between Mr Sydney Cool and Mr Duncan, I accept the former's evidence that the "substance was back to the same topic again, discounting, and Mr Duncan confirmed that we would not be able to stay on 50 per cent while we kept discounting, . . . ". Mr Duncan's evidence as to this conversation included the following:

". . . There was some general discussion about the state of discounting in the market and it was generally accepted that this was the situation which was causing problems for us, . . . "

Before leaving the oral evidence I wish to refer briefly to three other witnesses called by the respondent. Mr R. W. Belling was a director of Jerita Pty Limited, a company trading as Auto Panel Repairs in Wagga. Windscreen fitting "is a smaller part of that business". In his evidence in chief Mr Belling described the applicant's "competitive tactics" as being "a little bit unethical". He also said:

"Then Windscreens O'Brien offered us a bigger discount if we bought solely from them and we did so for the reason of the bigger discount and also for the fact that they offered they would go and get your windscreen at any time of the day or night."

I have quoted the passage from the transcript (at p.613), which is supported by my note of his evidence, that the respondent "offered discount if we bought solely from them". Asked in cross examination whether he had used "some such expression" as "if solely bought from them" Mr Belling said "I do not recollect. I do not think I did". Later in his evidence he said:

"The conversation was - I cannot recollect word for word or anything - if we bought $1000 worth of windscreens from Windscreens O'Briens, we got the 50 per cent discount and to keep the $1000 (sic) we had to buy all their glass or whatever glass we could from them to make up the $1000."

Another witness called on behalf of the respondent was Mr M. S. Giunco, who has carried on a panel beating, spray painting and windscreen fitting business in Wagga as Guinco and Lyne Smash Repairs since early 1978. He said that Mr Goff had given him a discount of "50 per cent to combat Cools" and ever since then he has made all his purchases of windscreens from the respondent. He said that there was "no love lost" between him and the Cools whom he blamed for the fact that he was "in pretty desperate straits" because of the discount "war". He denied that he had been waiting his "chance to get back on them". Because he gave evasive answers on a number of matters and because of his demeanour in general, I am not prepared to accept his evidence of certain conversations with Mr Sydney Cool and Mr Raymond (Bert) Cool. I formed that opinion of his evidence before he admitted at the end of his cross examination by Mr Masterman, that he had given a false answer during his evidence on the question of whether he had refreshed his recollection by reading a statement before giving his evidence. By way of contrast, Mr A. K. Scott, the managing director of Bradley Bros Limited, who gave evidence under a subpoena issued at the instance of the respondent, was obviously a truthful witness. The applicant in its written address made it clear that it was not attacking his probity. However, his evidence did not relate to any of the conversations with which I have been dealing.

The respondent's answers to interrogatories received in evidence included the following:

"(Question C3) Has the Respondent at any time during the years 1978, 1979 and up to March 1980 introduced or maintained a system or policy whereby purchasers who were, or are in the business of fitting or otherwise trading in windscreens, receive different prices, discounts or other trading terms:

(Answer) Over a long period a basic policy has evolved whereby Purchasers receive terms in general reflecting their worth from time to time to the Respondent as a regular purchaser of its goods.

(Question C4) Has such a system or policy been used by or referred to by the Wagga Establishment of the Respondent?

(Answer) The policy referred to in C3 above has been used and referred to by the Wagga establishment.

(Question C5) If the answer to interrogatory C4. is yes:

(a) On what date(s) was such a system or policy introduced

(Answer) As the policy has evolved over time it is impossible to state the dates upon which such policy was introduced.

(b) Did it, or any of them, establish categories?

(Answer) Yes

(c) What were these categories?

(Answer) The categories are not precise but generally could be said to be:

(i) Volume buyers who purchase case quantities of a single type of windscreen. (A)

(ii) Smaller but regular buyers buying predominantly most of their windscreens from the Respondent. (B)

(iii) Purchasers who buy at irregular intervals and buy the bulk of their supplies of windscreens from another supplier, only using the Respondent as a convenience when necessary. (C)

(d) Which of the purchasers referred to in interrogatory C3 but within 50 miles of the City of Wagga Wagga were in each respective category?

(Answer) The categories of the relevant purchasers are set out below in Schedule B hereto using the code set out in square brackets against the relevant category in (c) above.
. . . "

It is not necessary to reproduce here Schedule B which, using code to preserve the anonymity of the purchasers, set out the classification of each purchaser as A, B or C in accordance with answer C5(c) above.

"(Question C13(g)) In the Respondent's view, did each purchaser comply with the criteria applicable to the category in which it was first placed at the time at which it was placed therein?

(Answer) The Applicant complied with the category only if the promises made by them were fulfilled when it became clear that these promises were not to be fulfilled their category needed to be changed (sic).

(Question C15)

(a) In or about August 1978 did the Respondent grant to the Applicant a discount lower than that which the Respondent had granted to the Applicant in the preceding two months?

(Answer) Yes

(b) If the answer to interrogatory C15(a) is yes, why did the Respondent grant such lower discount to the Applicant?

(Answer) On or about August 1978 the Applicant announced its intention to purchase the bulk of its requirements from a competitor and accordingly the number of windscreens which it was likely to purchase from the Respondent dropped dramatically as a result of which the Applicant was placed in the category relating to persons who do not buy the bulk of their supplies from the Respondent.

(c) In or about April 1979 did the Respondent grant to the Applicant a discount lower than that which the Respondent had granted to the Applicant in February and March 1979.

(Answer) Yes

(d) If the answer to interrogatory C15(c) is yes, why did the Respondent grant such lower discount to the Applicant?

(Answer) In January 1979 the Applicant complained about its reduction in discount and was advised that if it were to purchase more windscreens from the Respondent the discount of 50% would be reinstated and reviewed after three months. It promised to increase its purchases and accordingly the 50% discount was reinstated. On or about April 1979 it became clear to the Respondent that despite the promises of the Applicant, Applicant was still not purchasing the bulk of its requirements from the Respondent and was using the Respondent purely as a convenience supplier. Accordingly the Applicant was advised that it would receive the reduced discount which had applied in August 1978.

(Question C16) In respect of each of the occasions on or about March of 1978 and on or about January, 1979, why was the Applicant offered a discount of 50%?

(Answer) The answer to this interrogatory is set out in the answer to interrogatory C15.

(Question C17) What value and quantity of purchases would the Applicant be required to make from the Respondent to qualify for:
. . .
(d) Items (i) and (ii) above?

(Answer) If the Applicant makes a substantial majority of its purchases from the Respondent and his credit rating is such as to satisfy the Respondent's credit department it will qualify for items (a) and (b)" (i.e. (a) 'at 50% discount from the respondent's Wagga establishment' and (b) '30 days' credit from the respondent's Wagga establishment')."

Having regard to the length of the quotations from the above answers to interrogatories, it is perhaps desirable to draw attention to certain passages in them which are of particular significance in the context of the oral evidence given on behalf of the respondent:

. "smaller but regular buyers buying predominantly most of their windscreens from the Respondent" (C.5(c)(ii))
. "as a result . . . the Applicant was placed in the category relating to persons who do not buy the bulk of their supplies from the Respondent" (C.15(b))
. "it became clear to the Respondent that despite the promises of the Applicant, Applicant was still not purchasing the bulk of its requirements from the Respondent" (C.15(d)) . "If the Applicant makes a substantial majority of its purchases from the Respondent and . . . it will qualify for" a 50% discount and 30 days' credit (C.17(d)).

In passing it may be noted that, as part of the respondent's case, Mr Leslie Lazarus, an alternate director of the respondent, who had sworn an affidavit verifying the answers to certain interrogatories, was called to give evidence. Having referred to a number of errors in Schedule B to those answers and, having given a corrected list of figures said to result from a re-examination of the books by Mr Goff and Mr Wells (the respondent's solicitor), he gave the following evidence:

"MR McCOMAS: Are there any other parts of the answers to interrogatories which you wish to comment on?---Not that I am aware of."

In cross examination he said the figures "were the only matters that Mr Wells and Mr Goff pointed out (to him) as inaccurate".

In his evidence in chief Mr Duncan gave the following evidence:

"And what would your policy be with regard to a customer who purchased only portions of his requirements from you company?---It would depend on the portion, but we would be likely to treat that customer as a 40 per cent account."

Elsewhere in his evidence Mr Duncan conceded that the "fact that O'Briens were not the major supplier of glass to Cools was a relevant matter to the determination of the discount". Mr Goff, in cross examination as to a retailer receiving a 50 per cent discount, gave the following evidence:

"If he bought half of his windscreens from you and half from Bradley Brothers, would he be entitled to 50 per cent?---No, I may reduce the discount."

Mr Goff in his evidence in chief referred to a number of retailers who had continued to receive a discount of 50 per cent from the respondent although their purchases had fallen below the figure of $1,000 per month - the figure on which Mr Goff placed reliance. Mr Masterman pointed out in his written final address that Mr Goff had repeatedly - both in chief and in cross examination - made comments such as:

"He buys all his windscreens from us . . . . . . at least he bought every windscreen from us . . . Because he is buying all his windscreens from us . . . Yes, they were giving us what they could . . . Because he purchases all his windscreens from us and . . . "

Asked in cross examination for an explanation why a retailer received a discount of 45 per cent from the respondent although it had only purchased 36 windscreens during 1978, Mr Goff said:

"Well that would have been their total purchases of windscreens I would say. I doubt very much if they would have bought anywhere else."

As to another retailer receiving 45 per cent discount he said "They are buying all their windscreens from us". On the general question of whether retailers agreed to buy all their windscreens from the respondent Mr Goff conceded "Yes, customers agreed to buy all the windscreens from us".

Mr McComas in his oral final address made a careful examination of the transcript of parts of Mr Goff's evidence in an endeavour to explain those portions of Mr Goff's evidence relied upon in the applicant's written final address to which I have just referred. In that address it was contended (p.12) that the applicant alleged "a general and systematic practice of exclusive dealing" of which the offer "to the applicant of a discount of 50% on an exclusive dealing condition" is but a part. On the whole of the evidence, to some of which I have referred, I find that the respondent had a general practice of giving and offering to give to retailers discounts of 45 per cent or 50 per cent in relation to the supply of windscreens on the condition that each such retailer would purchase all or the substantial majority of its purchases of windscreens from the respondent (cf. answer to interrogatory C.17(d)). I have made that finding without regard to the provisions of to s.47(13)(a) of the Act.

I also accept the applicant's submission (p.20) that the respondent's practice of exclusive dealing had the purpose of substantially lessening competition by making it substantially more difficult for other wholesalers of windscreens to sell windscreens to retailers with whom the respondent had reached agreement on the additional discount, i.e. 45 per cent or 50 per cent discount. In this connection s.47(10) of the Act provides:

"(10) Sub-section (1) does not apply to the practice of exclusive dealing constituted by a corporation engaging in conduct of a kind referred to in sub-section (2),(3),(4) or (5) or paragraph (8)(a) or (b) or (9)(a), (b) or (c) unless -

(a) the engaging by the corporation in that conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition; or

(b) the engaging by the corporation in that conduct, and the engaging by the corporation, or by a body corporate related to the corporation, in other conduct of the same or a similar kind, together have or are likely to have the effect of substantially lessening competition."

Section 4G of the Act provides:

"For the purposes of this Act, references to the lessening of competition shall be read as including references to preventing or hindering competition."

The applicant submitted that the words "substantially lessening competition" in s.47(10) included "a lessening of competition that is in the circumstances real or of substance and not insubstantial or minimal". The word "substantial" has been described as a "word of no fixed meaning" and "an unsatisfactory medium for conveying the idea of some ascertainable proportion of the whole" - see Terry's Motors Ltd v. Rinder (1948) S.A.S.R. 167 at p.180 per Mayo J. Its meaning must depend to a large extent on its context. In the context of s.47(10) in my opinion the word "substantially" is not intended to convey the idea of some proportion of the whole of the actual or potential competition in the relevant market (see s.47(13)(b) of the Act). However, although not required by s.47(10) to be some proportion of the whole, it is nonetheless required to be a "substantial" lessening in the sense that the lessening of competition in the circumstances of the case under consideration must not be insubstantial or nominal. It must be capable of being fairly described as a lessening of competition that is real or of substance as distinct from a lessening that is insubstantial, insignificant or minimal, cp. Tillmann's Butcheries Pty Ltd v. Australian Meat Industry Employees' Union and others (1979) 27 A.L.R. 367 at p.374-5 per Bowen C.J. and at p.382 per Deane J.

In reaching the conclusion that the respondent's practice of exclusive dealing had the purpose of substantially lessening competition I have accepted the submission in the applicant's written final address. Having regard to that conclusion it is not necessary for me to decide whether the respondent's conduct has or is likely to have the effect of substantially lessening competition but I also accept the submission in the applicant's written final address that the respondent's conduct is likely to have that effect.

Accordingly, I have come to the conclusion that the applicant has established that the respondent has engaged in the practice of exclusive dealing within the meaning of s.47 of the Act and I propose to grant an injunction in respect of the conduct.

The applicant also contends that the respondent's conduct is in contravention of s.49(1)(a), (b) and (c) and claims both damages and an injunction that the respondent "cease discriminating against the applicant contrary to the terms of" s.49. Section 49(1)(a), (b) and (c) provides as follows:

"(1) A corporation shall not, in trade or commerce, discriminate between purchasers of goods of like grade and quality in relation to -

(a) the prices charged for the goods;

(b) any discounts, allowances, rebates or credits given or allowed in relation to the supply of the goods;

(c) the provision of services in respect of the goods; or
. . .
if the discrimination is of such magnitude or is of such a recurring or systematic character that it has or is likely to have the effect of substantially lessening competition in a market for goods, being a market in which the corporation supplies, or those persons supply, goods."

On the evidence I find that the respondent has discriminated between purchasers of windscreens of like quality and grade in relation to discounts given or allowed in relation to the supply of those windscreens and that the discrimination has been of such magnitude and of such a recurring and systematic character that it has had and is likely to have the effect of substantially lessening competition in a market for windscreens, being a market in which the purchasers (the resellers) supply those windscreens. It was agreed between the parties that the Wagga retail market included Wagga and the area within 50 miles of it.

Mr Masterman pointed out that the respondent had failed to plead either of the defences set out in s.49(2). Section 49(2) provides:

"(2) Sub-section (1) does not apply in relation to a discrimination if -

(a) the discrimination makes only reasonable allowance for differences in the cost or likely cost of manufacture, distribution, sale or delivery resulting from the differing places to which, methods by which or quantities in which the goods are supplied to the purchasers; or

(b) the discrimination is constituted by the doing of an act in good faith to meet a price or benefit offered by a competitor of the supplier."

Mr McComas submitted that the failure to plead the defences:

"does not and cannot deny the respondent the opportunity to say . . . that the competitive state of the windscreen fitting business in Wagga is what is in issue in this case and reasons which prompted the respondent through its local manager to act as he did are very much reasons for consideration in determining allegedly purposive conduct directed to proscribed acts according in this case to section 47 of the Trade Practices Act."

He then, in a thoroughly researched and well presented submission, endeavoured to persuade the court that passages in Mr Goff's evidence showed that the reasons which motivated Mr Goff were the need to "all in good faith to meet a price or benefit offered by a competitor" of the respondent. On his own evidence I do not believe Mr Goff acted in good faith to meet a price of a competitor - despite his evidence that certain purchasers could get the same discount elsewhere. On all the evidence I am satisfied that the discrimination by the respondent was not "constituted by the doing of an act in good faith to meet a price or benefit offered by a competitor of" the respondent.

Mr McComas in his submission pointed out that s.49 applies only where the discrimination has or is likely to have the effect of substantially lessening competition in a market. I accept his submission that:

"Whilst Section 4C of the Act expands the expression 'supply of goods' to include a 'supply . . . of goods together with other property or services, or both', it does not expand the meaning of the word 'goods' which has its own expansive definition in Section 4."

He contended that "the business of the Applicant is essentially one of performing a service, and that the Wagga fitting market is a market for services and not for goods" (p.32). I do not regard the decision of the U.S. Court of Appeals in Hudson Valley Asbestos Corp. v. Tougher Heating & Plumbing Co. Inc. and others reported in (CCH) 1975-1 Trade Cases at 60,125 as supporting his submission because in my view it turns upon the particular definition in the statute. I have considered the cases on the sale of goods cited by Mr McComas, namely, Sydney Hydraulic & General Engineering Co. v. Blackwood (1908) 8 S.R. (N.S.W.) 10; Brooks Robinson Pty Ltd v. Rothfield (1951) V.L.R. 495 and Aristoc Industries Pty Ltd v. R.A. Wenham (Builders) Pty Ltd (1965) N.S.W.R. 581. I have also considered the decision in Deta Nominees Pty Ltd v. Viscount Plastic Products Pty Ltd (1979) V.R. 167 where Fullagar J. reviews at some length a number of the earlier cases. Notwithstanding that the windscreens sold by resellers to motorists would normally be fitted by the reseller, in my opinion that activity falls within the words in s.49(1): "being a market in which . . . those persons supply goods".

In my opinion the applicant has established its claim that the conduct of the respondent contravenes s.49 of the Act and an injunction should be granted.

The applicant also seeks an injunction restraining the respondent from engaging in the practice of resale price maintenance in respect of windscreens contrary to s.48 of the Act. Section 48 provides that:

"A corporation or other person shall not engage in the practice of resale price maintenance."

In its written final address the applicant stated that it relied primarily upon paragraphs 24, 24A and 25 of its amended statement of claim which read as follows:

"24. As from April 1979 the respondent in supplying windscreens to the applicant treated and continues to treat the applicant less favourably than certain other persons to whom the respondent supplied and continues to supply windscreens in the Wagga district in that the respondent gave and allowed the applicant and continues to offer to give and allow the applicant a discount of only 40% whereas the applicant gave or allowed and continues to give and allow the said other persons a discount in excess of 40%.
. . .
24A. The respondent engaged in the conduct referred to in paragraph 24 for the reason that the applicant has sold and was likely to continue to sell windscreens to the public in the Wagga area at prices less than the respective prices specified by the respondent as the price below which the said windscreens were not to be sold.
. . .
25. In April 1979 the respondent attempted to induce the applicant not to sell windscreens supplied by the respondent to the applicant to members of the public in the Wagga area at a price less than the respective prices specified by the respondent as the price below which he said windscreens were not to be sold.

. . . "

In relation to those claims the applicant relied upon s.98(1)(c), s.96(1), s.96(3)(d)(ii) and s.96(3)(b) of the Act respectively which provide:

"SEC. 98 . . .

(1) For the purposes of paragraph 96(3) (d) or (e), the supplier shall be deemed to withhold the supply of goods to another person if -

. . .

(c) in supplying goods to the other person, the supplier treats that person less favourably, whether in respect of time, method or place of delivery or otherwise, than the supplier treats other persons to whom the supplier supplies the same or similar goods; or

. . . "

"SEC. 96 . . .

(1) Subject to this Part, a corporation (in this section called 'the supplier') engages in the practice of resale price maintenance if the corporation does an act referred to in any of the paragraphs of sub-section (3).

. . .

(3) The acts referred to in sub-sections (1) and (2) are the following:-

. . .

(b) the supplier inducing, or attempting to induce, a second person not to sell, at a price less than a price specified by the supplier, goods supplied to the second person by the supplier or by a third person who, directly or indirectly, has obtained the goods from the supplier;

. . .

(d) the supplier withholding the supply of goods to a second person for the reason that the second person -

. . .

(ii) has sold, or is likely to sell, goods supplied to him by the supplier, or goods supplied to him by a third person who, directly or indirectly, has obtained the goods from the supplier, at a price less than a price specified by the supplier as the price below which the goods are not to be sold;

. . . "

Mr McComas submitted that the applicant had not made out its claim for injunctions in respect of resale price maintenance and supported his submission by a careful and detailed review of the evidence, together with citation of decided cases. I have considered those matters in weighing the evidence and I have already set out at some length my conclusions as to that evidence. For reasons which there appear, I reject the respondent's contention "that the applicant has not shown that there is any withholding of supply for the reason that the applicant sold or was likely to sell goods below any price specified by the respondent . . . ". The respondent also submitted that s.48 deals only with resale price maintenance in respect of goods and not services. I have already rejected the argument put by Mr McComas as to the meaning of the word "goods" in s.49(1) of the Act. I take the same view as to the meaning of the word "goods" in s.96(3)(d) and s.96(3)(b). I consider that the applicant has established its claim that the respondent has engaged in the practice of resale price maintenance and an injunction should be granted.

The applicant also seeks an injunction restraining the respondent "from attempting to induce the applicant to enter into an arrangement or understanding with respect to the prices of windscreens contrary to s.45". I have already said that I accept the evidence of Mr Peter Cool that the respondent tried to induce the applicant "to supply their glass to the public at the same price as O'Briens" and I have rejected Mr Duncan's denial of that evidence. I accept the submissions in Mr McComas' written final address that such an attempt to induce the applicant was not a contravention of s.45. However, he conceded, rightly in my view, that the court has power to grant an injunction restraining the respondent from such an attempt. Having found that the attempt has been made, I consider it is appropriate in all the circumstances of this case to grant an injunction.

As to the applicant's claim for an order that the respondent cease taking advantage of its position substantially to control a market in breach of s.46, Mr Masterman said that the applicant did not seek any such injunction if it succeeded on exclusive dealing and price discrimination.

The applicant has claimed damages under s.82(1) of the Act which provides:

"(1) A person who suffers loss or damage by conduct of another person that was done in contravention of a provision of Part IV or V may recover the amount of the loss or damage by action against that other person or against any person involved in the contravention."

The question of damages was given very little attention by the applicant both in evidence and in address. Its written final address (prepared during a period of seven weeks) gave virtually no attention to the subject. When the hearing of oral submissions resumed it added without objection two pages to its written address, but the overall treatment of the subject of damages remained extremely scanty. The full text of the applicant's written submission on damages (as supplemented) was as follows:

"DAMAGES

1. The applicant's case for damages is based essentially on its claim that the respondent engaged in the practice of exclusive dealing contrary to the Trade Practices Act. The applicant also relies alternatively on contraventions of Sections 49 and 46. The applicant's case is that it suffered damage as a result of the contravention. The damages claimed are of two types:-

(a) loss of profits

(b) general damages.

2. The evidence on damages is primarily that given by Mr. R. J. Cool at pages 237 middle and 241, photocopies of which pages are annexed and marked with the letter 'A'. The applicant submits that the claim for damages is conservatively stated and amply made out.

3. The applicant's specific claim for loss of profits is as follows:

(a) The applicant has suffered loss of profit on two windscreens per week on average because of lower discounts offered by the respondent to other fitters (p. 212, p. 219). Loss approximately $15-$20 per windscreen (p. 241)

Loss 15 or 20 x 3 = $45 - $60 per week

September 1978 to January 1979 (inclusive)

21 weeks = $945 - $1,260.

May 1979 to February 1981

91 weeks = $4,095 - $5,460

Total $5,040 - $6,720 and continuing.

(b) The applicant has been required to pay a late opening fee of $10.00 rather than $5.00 (page 240).

4. The primary basis of the claim to general damages is that the giving of a higher discount to the respondent's other competitors, and in particular Guinco & Lyne debilitated the competitive position of the applicant. It is obvious that when another discounter is able to purchase the same windscreens from the respondent at a 20% cheaper price, competition between the applicant and the discounter in respect of windscreens obtainable only from O'Briens is heavily weighted in favour of the preferred discounter. Thus a primary competitive weapon utilised by the applicant in its business was blunted by the respondent's exclusive dealing discounts. The evidence is clear that since the latter half of 1979 price competition in the retail market has been less severe and also as illustrated by Exhibit LL Cools share of the market vis-a-vis the respondent has diminished. A central feature of the damages case is that the applicant's price cutting strategy has been impaired and its ability to attract business from other competitors as a result of this strategy has also been impaired. In addition, the applicant's entry into the wholesaling field was impeded by the combination of the respondents exclusive dealing practices and the agreement Exhibit GG, particularly Clause 10.0.1".

As to the specific claim for loss of profit (arising from a loss of sales) quoted in 3(a) above, I accept the lower of the two figures given by Mr Raymond Cool of $15 "fair average profit" per windscreen. That figure should be multiplied by two (not three as set out in 3(a) above of the applicant's written submission) because the number of occasions on which the applicant suffered "loss of profit . . . because of lower discounts offered by the respondent to other fitters" was estimated by Mr Raymond Cool to be "about two a week on average". Applying the figure of $15 on two windscreens per week to the calculations in 3(a) above the result is $3,360 up to the end of February 1981. Bringing these figures forward to 10 July 1981 results in a further nineteen weeks at $30 per week (being two windscreens x $15) which amounts to a further $570 - and a total for this item of $3,930.

Mr Masterman also suggested an amount of $610 being a "loss" of $10 per windscreen purchased by the applicant from the respondent during the two periods when the respondent was allowing the applicant a discount of 40 per cent instead of 50 per cent. The figure of $10 "loss" advanced by Mr Masterman was an average figure based upon an assumed windscreen price of $100. Mr McComas did not criticize the figure of $10 but the multiplier should have been 59 instead of 61 - being the number of windscreens purchased, according to the evidence, by the applicant from the respondent during the two periods - up to the end of January 1980. Accordingly, I allow $590 in respect of this item.

Under paragraph 3(b) the applicant also claimed an amount of $5 (being the opening fee of $10 charged to the applicant less the "normal" fee of $5) per windscreen sold to it by the respondent after hours during the two periods referred to above. The total number of windscreens sold was 59 but it appeared to be common ground that approximately one half of the sales occurred after hours and thus the opening fee was incurred. On that basis I allow a sum of $150 for that item making a total of $4,670.

On all of the evidence as to the applicant's wholesaling operations, including in particular evidence elicited by Mr McComas in cross examination, I am not satisfied on the balance of probabilities that the applicant suffered any damage in respect of its "entry into the wholesaling field" and accordingly I allow no damages as to that aspect.

I have already set out above the full text of the applicant's written submission as to general damages (paragraph 4). In oral address Mr Masterman conceded "that there are problems in putting a figure on what is set out in paragraph 4, monetary compensation for 4".

In Mallett v. McMonagle (1970) A.C. 166 at p.176 Lord Diplock said:

"The role of the court in making an assessment of damages which depends upon its view as to what will be and what would have been is to be contrasted with its ordinary function in civil actions of determining what was. In determining what did happen in the past a court decides on the balance of probabilities. Anything that is more probable than not it treats as certain. But in assessing damages which depend upon its view as to what will happen in the future or would have happened in the future if something had not happened in the past, the court must make an estimate as to what are the chances that a particular thing will or would have happened and reflect those chances, whether they are more or less than even, in the amount of damages which it awards."

In Ansett Transport Industries (Operations) Pty Ltd v. Halton, Interstate Parcel Express Co. (Aust.) Pty Ltd and Air Express Ltd (1979) 25 A.L.R. 639 at p.669 Aickin J. said:

"It has long been settled that the difficulty of ascertaining the amount of damages does not warrant their denial. This was established at least by the time of the decision in Chaplin v Hicks (1911) 2 KB 786; (1911-13) All ER Rep 224 and I see no reason why this rule should not apply in this jurisdiction. On the other hand the ascertainment of damage is not an exercise in imagination. It is therefore necessary to examine the material in order to see what assumptions are involved and, in so far as they are not justifiable, to see whether adjustments can be made which would enable a reasonable approximation to be obtained."

In the present case, having examined the evidence as a whole including the exhibits and in particular those referred to by Mr Masterman, I am not satisfied that the applicant has suffered any general damage.

Accordingly, there will be judgment for the applicant for $4,670. The respondent is to pay the applicant's costs which, in the absence of agreement, shall be taxed.

As stated earlier, the parties both asked that the form of any injunctions should be the subject of further addresses after the delivery of these reasons. The further hearing will accordingly be adjourned to a date to be fixed. The parties are directed that they shall, at least 10 days before such date, serve on each other and file in the Registry a document setting out:

(a) the form of injunction which that party submits is appropriate having regard to these reasons for judgment;

(b) the reasons to be advanced in support of that submission, including full references to those passages in -

(i) the transcript;
(ii) the exhibits;
(iii) these reasons for judgment -
which are relied upon by that party.