Monroe Topple & Associates Pty Ltd v Institute of Chartered Accountants in Australia - [2001] FCA 1056

FEDERAL COURT OF AUSTRALIA
Monroe Topple & Associates Pty Ltd v The Institute of Chartered Accountants in Australia [2001] FCA 1056
TRADE PRACTICES – applicant in business of providing support services to candidates undertaking studies for their “Professional Year” in order to qualify to apply to become members of respondent and to practice as “chartered accountants” – respondent incorporated by Royal Charter – respondent is only body which can authorise use of designation “chartered accountant” or acronym “CA” – respondent also sells support materials in competition with applicant and other entities – for enrolment fee in Professional Year modules, candidate automatically receives certain information about module, but candidate has option of buying or not buying respondent’s support materials – respondent replaces Professional Year Program with “CA Program” – for an increased enrolment fee, candidate is now provided automatically with module support materials as well as information about module – applicant complains that candidates in CA Program will not now buy any support material other than those provided by respondent upon payment of module enrolment fee – whether respondent performed its education and training function “in trade or commerce” – whether there was a “CA certification market”– whether there was a “certification market” – whether respondent had “substantial market power” in either of those markets – whether respondent took advantage of market power for anti-competitive purpose contrary to s 46 of Trade Practices Act 1974 (Cth) (“Act”) – whether respondent engaged in practice of exclusive dealing by imposing condition that candidates not acquire support materials from other suppliers in contravention of s 47 of Act – whether respondent entered into anti-competitive agreement or arrangement in contravention of s 45 of Act – whether respondent engaged in unconscionable conduct in contravention of s 51AC of Act – whether conduct can be unconscionable within s 51AC when neither party to the supply or acquisition complains and it is an unrelated third party against whom the unconscionable conduct is allegedly directed
WORDS AND PHRASES – “services” – “in trade or commerce” – “market” – “market power” – “substantial degree of power in a market” – “purpose” – “take advantage of”
Trade Practices Act 1974 (Cth), Part IV, ss 45, 46, 47; Part IVA, s 51AC
Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 applied
Plimer v Roberts (1997) 80 FCR 303 distinguished
Queensland Wire Industries Pty Ltd v Broken Hill Pty Co Ltd (1989) 167 CLR 177 applied
Re Queensland Co-operative Milling Association Ltd (1976) 25 FLR 169 followed
Australian Competition & Consumer Commission v Boral Ltd (2001) ATPR 41-803 cited
Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (t/as Auto Fashions Australia) (2001) 178 ALR 253 applied
Top Performance Motors Pty Ltd v Ira Berk (Queensland) Pty Ltd (1975) 24 FLR 286 followed
Kadkhudayan v W D & H O Wills (Australia) Limited [2001] FCA 645 cited
Warman International Ltd v Envirotech Australia Pty Ltd (1986) 11 FCR 478 followed
Eastern Express Pty Ltd v General Newspapers Pty Ltd (1992) 35 FCR 43 cited
ASX Operations Pty Ltd v Pont Data Australia Pty Ltd (No 1) (1990) 27 FCR 460 cited
Dandy Power Equipment Pty Ltd v Mercury Marine Pty Ltd (1982) 64 FLR 238 cited
Blomley v Ryan (1956) 99 CLR 362 cited
Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 cited
Hatfield v Health Insurance Commission (1987) 15 FCR 487 cited
Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 cited
Burswood Management Ltd v Attorney-General (Cth) (1990) 23 FCR 144 cited
Claremont Petroleum NL v Cummings (1992) 110 ALR 239 cited
Minister for Immigration & Multicultural Affairs v Mohammad (2000) 101 FCR 434 cited
Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 cited
Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253 cited
Cameron v Qantas Airways Ltd (1995) 55 FCR 147 cited
Qantas Airways Ltd v Cameron (1996) 66 FCR 246 cited
Hurley v McDonald’s Australia Ltd (2000) ATPR 41-741 cited
MONROE TOPPLE & ASSOCIATES PTY LIMITED v THE INSTITUTE OF CHARTERED ACCOUNTANTS IN AUSTRALIA
N 826 OF 2000
LINDGREN J
6 AUGUST 2001
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 826 OF 2000

BETWEEN:

MONROE TOPPLE & ASSOCIATES PTY LIMITED
APPLICANT

AND:

THE INSTITUTE OF CHARTERED ACCOUNTANTS IN AUSTRALIA
RESPONDENT

JUDGE:

LINDGREN J

DATE OF ORDER:

6 AUGUST 2001

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.        The application be dismissed.
2.        The applicant pay the respondent’s costs.
Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 826 OF 2000

BETWEEN:

MONROE TOPPLE & ASSOCIATES PTY LIMITED
APPLICANT

AND:

THE INSTITUTE OF CHARTERED ACCOUNTANTS IN AUSTRALIA
RESPONDENT

JUDGE:

LINDGREN J

DATE:

6 AUGUST 2001

PLACE:

SYDNEY

REASONS FOR JUDGMENT
INTRODUCTION

The applicant (“MTA”) carries on a business of, to use the words of its further amended statement of claim (“the Pleading”):
“selling training materials to, and conducting training lectures at a post graduate level to assist, candidates undertaking studies to become certified as chartered accountants.”
That is MTA’s only business. The respondent (“ICAA”), is a body corporate constituted by Royal Charter which admits as members of it, with the right to use the appellation “chartered accountant” (and the acronym “CA”), persons who, already possessing an appropriate academic qualification, satisfy requirements stipulated by ICAA which are directed more specifically to competence to practise. For this purpose, ICAA sets the syllabus for practical studies, prescribes the method of assessment of the candidates’ performance, examines or otherwise assesses their attainment, and admits successful candidates to membership.
MTA complains that, in circumstances to be recounted, ICAA has engaged in certain conduct in a market, in which MTA competes, for the supply of “support services” to candidates undertaking studies for the purpose mentioned, which is prohibited by various provisions of Part IV of the Trade Practices Act 1974 (Cth) (“the Act”), and which has also constituted unconscionable conduct prohibited by s 51AC within Part IVA of the Act.
MTA seeks declaratory and injunctory relief as well as damages.
OUTLINE OF BACKGROUND FACTS
ICAA was incorporated by Royal Charter granted on 19 June 1928. There have been Supplemental Royal Charters. The most recent one in evidence was issued on 23 August 2000. As well, ICAA has By-Laws and Regulations.
I was informed that in Australia there is no statutory restriction on practising as an accountant. However, the “badge” of membership of a professional accounting body is important in the accounting services market. The two major associations in Australia which provide that badge are ICAA and CPA Australia, which was formerly known as the Australian Society of Certified Practising Accountants (“the Society”). There are, however, others, including the National Tax and Accountants Association and the National Institute of Accountants. Members of ICAA and of the Society can be viewed as engaged in three principal areas of practice: as employees of “the Big Five” (formerly “the Big Six”) firms of chartered accountants, “second tier” firms and myriad small firms. The Big Five are PricewaterhouseCoopers, Ernst & Young, Deloitte Touche Tohmatsu (“Deloittes”), Arthur Andersen and KPMG (“the Big Six” included the two firms, Price Waterhouse and Coopers & Lybrand, prior to their merger into PricewaterhouseCoopers in 1998). ICAA has some 35,000 members and the Society some 90,000-100,000.
Membership of ICAA requires an approved university degree or other academic qualification, completion of ICAA’s Professional Year Program (“PY Program”) or (from 2001) CA Program, and three years’ full-time (or equivalent part-time) practical experience mentored by a chartered accountant in a work environment approved by ICAA (I address only “normal” admissions and ignore persons possessing overseas qualifications and other “special cases”). Accordingly, satisfactory completion of the PY Program or (from 2001) CA Program, is a necessary, but not a sufficient, condition of admission to membership. Upon applying to become a member of ICAA, a person must pay a prescribed application fee, as well as the initial membership subscription. Article 16 of the Charter provides that a member of ICAA may designate himself as a “Chartered Accountant” and may use after his name the acronym “CA”. By-law 32(a) provides for ICAA to issue a certificate of membership. The form of certificate of membership in use certifies that the person named in it was admitted to membership of ICAA on the date specified in the certificate “and is entitled to use the initials CA”. It is not disputed that only ICAA can permit the use of the designation “chartered accountant” or the letters “CA” and that it would be entitled to restrain an unauthorised person from using them. ICAA’s “admission to membership” and “certification” functions assume importance in the present case.
ICAA introduced the Professional Year (“PY”) in 1972. By means of the PY, ICAA formalised its position as to the skills to be attained between the tertiary academic stage and practice as a “chartered accountant”. Despite its name, the PY was not completed in a year: ordinarily the required number of PY modules would be completed over a period of one and a half years within a three year period of mandatory supervision by a chartered accountant. Until 2000, those modules were Accounting 1, Accounting 2, Taxation, Ethics and one of a range of “electives” which were in the nature of “advanced” studies. The first three have been referred to as “core technical modules”, and Ethics, a “core non-technical module”. A candidate did not enrol in the PY as such: enrolment was in the individual modules. Assessment in the modules in the PY Program was heavily weighted towards examination. In fact, 85 per cent of candidates’ marks was attributed to examination and 15 per cent to performance in “workshops”. The prerequisites and requirements of the PY Program (like those of the recently introduced CA Program) were set out in Regulations made by ICAA.
The nature and extent of what ICAA provided in respect of PY modules changed over the years. By the time of the recent replacement of the PY Program by the new CA Program it comprised:
(a)a module booklet, provided on enrolment, which included the syllabus, recommended reference material, information on the module and a number of exercises and problems to be completed by the candidate;
(b)face to face workshops by ICAA; and
(c)assessment.
Some State branches of ICAA provided a modicum of further assistance to candidates. For example, a State branch might arrange for particular members to give lectures with their areas of expertise. But the assistance was uneven between the States. In the mid to late 1980s and early 1990s, some of the larger firms, particularly some of the Big Six, developed more or less elaborate materials to assist their employees who were candidates in the PY Program, and, at least in some instances, for sale to such candidates generally. “PY support” became an important “recruitment tool”, that is, a means of attracting the best university graduates to become employees. Smaller firms were not in a position to offer this benefit. By 1995 KPMG, for example, had developed PY support materials which it not only provided as an employment benefit to its own employees, but also sold to other PY candidates. Another firm of chartered accountants which followed this course was Pannell Kerr Forster. The Queensland University of Technology (“QUT”) supplied PY support services to Coopers & Lybrand for the benefit of PY candidates employed by that firm.
The provision of PY support services was seen by graduates applying for employment as a valuable adjunct to other forms of remuneration that were being provided by prospective employers. That is, it assumed some importance that a firm of chartered accountants be in a position, in one way or another, to provide, or arrange for the provision of, PY support services for accounting graduates wishing to obtain employment with them.
ICAA determined on the syllabus and identified those competencies, possession of which a candidate was expected to demonstrate in an examination. As well, ICAA prescribed reading lists and tasks to be undertaken by candidates in connection with workshops which were designed to focus the candidate’s attention on the material to be learned for the purpose of the examination. ICAA did not, however, provide “comprehensive” support services of the kind provided by the likes of KPMG, Pannell Kerr Foster and QUT. Those support services were by way explanations, elaborations and stand-alone expositions, of the technical subjects.
The evidence suggests that ICAA thought the module booklet, workshops and the source and reference materials to which candidates were referred were sufficient to permit them to master the PY modules. According to the evidence, “one of [ICAA’s] primary educational philosophies [was] to develop in Candidates the ability to identify and solve problems [and to require] Candidates to learn how to search for information, distil the important aspects of that information and then use it appropriately”. ICAA saw rote learning, the provision of “the correct answers” for candidates to learn, and general “spoonfeeding” as antithetical to its educational philosophy. But a conflict between that philosophy and market forces explains, at least partly, the recent developments which have given rise to this proceeding.
In late 1993 and early 1994, Barry Stanley Topple, who had been active in providing training for accountants seeking admission to the Institute of Chartered Accountants in England and Wales, took steps towards commencing a similar business in Australia. Professor Gary Monroe of Western Australia was already supplying training to PY candidates in that State. Mr Topple met Professor Monroe in November 1993. Mr Topple made several visits to Australia and immigrated to this country in April 1994. He became associated with Professor Monroe in MTA. Mr Topple had observed that PY candidates were obtaining support services from the Big Six or from other service providers including Professor Monroe, Hall Chadwick and Pannell Kerr Forster. He spoke to the Big Six about what he could offer their employees. Arthur Andersen, Deloittes and Price Waterhouse engaged MTA to provide support services to PY candidates employed by them. KPMG continued to provide such services to its own employees. In 1995 Ernst & Young also became a client of MTA. Coopers & Lybrand, however, used the services of QUT.
In the result, MTA was providing PY support services to the candidates employed by four of the Big Six. It also provided those services to non-Big Six candidates. I am satisfied that MTA provided PY support services to a substantial number and proportion of the candidates enrolled in modules in the PY Program.
ICAA commenced to sell support material to students in 1995, in competition with, inter alia, MTA. In particular, it developed “Technical Guides” which included solutions to the workshop problems that had been set in the same module in previous years (ICAA used to provide solutions to workshop leaders, but not to students). By the time of the recent events, which have given rise to this litigation and which are referred to below, ICAA was issuing to candidates, upon their enrolling in a PY module and paying the associated enrolment fee, a “module workbook”, and separately offering for sale to them, through its bookshop, the support material mentioned.
From 2001, the PY Program has been superseded by a “CA Program”. As appears in the chronological account of events below, this change resulted from a PY Review Task Force Report of December 1995 and subsequent work and deliberation within ICAA. In several ways the CA Program does not sit comfortably with the provision of support services by MTA. In particular:
·    for an unidentified and unidentifiable part of the module enrolment fee, the candidate now receives substantial (ICAA describes them as “comprehensive”) support materials from ICAA itself, that is, the candidate cannot elect not to receive ICAA’s CA support materials and to take, for example, MTA’s instead;
·    there is much less emphasis on examination as a method of assessment and much more emphasis on the candidate’s responses to workshop and other exercises set by ICAA;
·    exercises given in ICAA’s workshops and questions it sets in the examinations are linked to the ICAA module materials.
In their written submissions, counsel for MTA outline the case their client seeks to make as follows:
“11.In 1998 the respondent resolved to combine into one package the printed materials that had previously been distributed and priced separately. The two bodies of material then existing were, first, the materials in ... the module workbook, comprising the course description, textbooks lists, workshop problems and other useful or general information concerning the course, and second, the Technical Guide, Exam[ination] Guide and a User[’]s Guide. Further, notwithstanding the Modules remained the same size, duration and method of presentation (with changes of name) the price of the aggregate was determined to be the same as the existing price of enrolment only.
12.This decision was in fact implemented for the first time in 2000 in the ‘Capstone’ module, a transitional module from the PY to the CA Program.
13.This decision was further implemented in 2001 by the introduction of the ‘FRA’ (Financial Reporting and Assurance) module, ... the first technical module of the new CA Program.
14.The materials supplied to students by the respondent as part of the Candidate Learning Package (‘CLP’) at no additional cost to the enrolment fee now include not only the material being the course description, examination description, ‘workshop’ (now ‘focus groups’) problems and two assignments (the assessment material) but also the technical material, the mastery of which is to be assessed.
15.This latter material was that which was previously contained in the Technical Guides of the respondent. The content of the Technical Guide was the equivalent (although briefer) of the material produced by the applicant, other accounting firms and other suppliers of technical material to students for examination.
16.A comparison of the CLP for the FRA module of the CA Program with previous PY Technical Guides produced by the respondent is contained at Annexure A to these submissions. [I discuss this comparison later.]
17.It is the conduct of the respondent in ‘bundling’ the technical material with the course description material, assignments and ‘focus group’ problems, and the supply of the bundle on enrolment in consideration of the enrolment cost that the applicant complains of in the proceedings.
18.The applicant contends that both the market for the supply of technical or instructional material (i.e. that which is to be studied, as distinct from that which deals with methods of assessment, assessment tasks and the like) and its own business is wholly or substantially compromised by the conduct of the respondent in bundling material and supplying them:
a.as an unseverable part of the enrolment package; and
b.at no separate price or cost.
19.The applicant contends that the conduct contravenes the Trade Practices Act in various respects more particularly set out below.”
THE PLEADING

The following is what the Pleading alleges. In fact, however, there is no substantial controversy as to the facts: the dispute is as to their legal significance.
General
There are several markets which, the Pleading asserts, form part of the factual background to the proceeding. They include, but are not limited to, an “accounting services market”, a “certification market” and a “CA certification market”.
The “accounting services market” is defined as a market in Australia for the supply of accounting services by professionally qualified and recognised persons styled generally “accountants” and, in particular, accountants certified by, and described as members of, particular professional bodies, including the members of ICAA, who are known and described as “chartered accountants”, and the members of the Society, which are the principal participants in the certification market (6-9 – numerals in bold are references to paragraphs of the Pleading). ICAA admits the existence of the accounting services market.
The “certification market” is defined as:
“a market for the provision of the services comprising examination, and certification or admission into membership of learned societies of persons wishing to provide accounting services as members of, and using the name and style of the learned societies,¼.” (8)
The “CA certification market” is defined more narrowly as:
“a market for the supply of the service of the certification and admission to membership of the [ICAA] of persons as chartered accountants.” (10)
Paragraph 11 of the Pleading is as follows:
“Within Australia, at all material times, certification as, and the capacity of a member of [ICAA] to describe him or herself as, a chartered accountant, in the market for accounting services or otherwise, lawfully may be supplied by, and only by, [ICAA] by reason of [its] Royal Charter¼and convention.”
(Accordingly, the CA certification market is a sub-market of the certification market.)
As a result of the foregoing, ICAA has “substantial market power in the CA certification market and in the certification market”. As “particulars” the Pleading states that there is no close substitute in Australia for certification as a chartered accountant, which is a service supplied by ICAA alone, and a person’s capacity to participate in the accounting services market is determined or substantially influenced by his or her certification by, and membership of, a professional body such as ICAA (12).
ICAA and the Society, as part of the certification process, conduct examinations and other forms of assessment of the competence and learning of candidates for membership of them (13), and there has developed:
“a market for the education and training of accountants in general and candidates for admission to membership of learned societies and [ICAA] in particular” (“the training market”). (14)
At all material times MTA has carried on business in the training market as a trainer and educator of candidates for membership of ICAA (15). To become certified by ICAA as a “chartered accountant” a candidate must satisfy it that he or she has sufficient skills and competence in areas of accounting practice (“modules”) specified by ICAA (16). ICAA alone decides on the method of assessment of a person seeking membership of ICAA and certification as a chartered accountant (17, 18).
At all material times until 2000, the process by which ICAA determined the competence of, and, if appropriate, certified, persons as chartered accountants, was the PY Program (19). Until 1999 the modules in the PY Program were Ethics, Accounting 1, Accounting 2, Taxation and one of several elective modules, but, as a transitional measure, in and from 2000 the elective modules have been consolidated into a compulsory module called the “Capstone module” (20, 21).
In and from 2001, ICAA is introducing a new education program in substitution for the PY Program, called the “CA Program” (22). (The Capstone module will disappear after full implementation of the CA Program.)
ICAA has charged a fee to PY candidates on a “per module” basis in return for which a candidate was entitled to receive written material limited to a course outline and explanatory materials, to attend, participate in, and be assessed in respect of, workshops conducted by ICAA, and to sit for, and be assessed in respect of, examinations also conducted by ICAA (23, 24). Importantly, prior to the introduction of the transitional Capstone module in 2000, candidates did not receive in return for the enrolment fee, “module course materials or other training support” (“support services”) (25). On the contrary, where ICAA did produce support services, it sold them to candidates at a price separate from the module enrolment fee (26). (Part of MTA’s case is that ICAA has now “bundled” support materials produced by it into the mandatory enrolment process and fee.)
There was, within the training market:
“a market for providing support services to candidates undertaking studies to become certified as a chartered accountant” (“the CA support market”). (27)
(Accordingly, the CA support market is a sub-market of the training market.) From about 1994 there have been several participants as suppliers in the CA support market, including MTA (28). Until about 1994 ICAA participated in the support market and offered support services to candidates, then ceased doing so, then re-entered that market in late 1995, from which time it has been in competition with, inter alia, MTA (29, 30). From about 1994 the support services provided by participants in the CA support market have included written materials for use in private study which cover the syllabus set by ICAA for each module, examination guides and face to face teaching (31). Until 2000, in which year the sole exception was the Capstone module, all the participants in the CA support market have charged a fee for providing support services (32). As part of its participation in the support market, MTA entered into arrangements with several accounting firms to provide support services to their employees for payment by the firms, and has also contracted to supply support services to candidates directly (33). Since about 1994 MTA has had contractual arrangements with Arthur Andersen, Deloittes, Ernst & Young and Price Waterhouse (now merged into PricewaterhouseCoopers) for the provision of support services, including written course training materials and face to face teaching, and three of those firms, Arthur Andersen, Deloittes and Price Waterhouse, entered into three-year contracts with MTA in 1994 which were renewed in 1997 and which expired in 1999 (34).
During 1999 and 2000 ICAA published the following statements:
“(a)a new program called the CA Program will replace the PY program;
(b)the CA Program will begin in 2001, with enrolments into the first “preliminary module” commencing towards the end of 2000;
(c)in 2000 there would be a transitional module called the Capstone introduced to replace the elective modules in the PY Program. The Capstone module would be a case-based integrative module;
(d)the fee for the first Capstone module would be higher than for the other modules as the study material would be supplied at no extra cost and would be much more comprehensive and would make unnecessary any separate support material;
(e)the new CA Program will have five modules, the Preliminary, three Technical modules and a Final Integrative Module;
(f)the compulsory fee for each module in the new CA Program would include a comprehensive package of support materials;
(g)the materials included in the fee charged for each module in the new CA Program would reduce the need for additional materials other than the normal reference materials.” (35) (my emphasis)
In and from February 2000 (the enrolment date for the first offering of the Capstone module) ICAA has implemented, and it continues to implement, the actions foreshadowed in the statements referred to in subpars 35(c) and 35(d) of the Pleading (set out in [29] above) in relation to the Capstone module (35A). In and from February 2001 (the enrolment date for the first offering of a technical module in the CA Program) ICAA has implemented, and it continues to implement, the actions foreshadowed in the statements referred to in subpars 35(f) and 35(g) of the Pleading (set out in [29] above) in relation to the CA Program (35B).
(Paragraphs 1-35B of the Pleading, summarised above, plead facts which are the background to the following pleading of particular “causes of action” under the Act.)
Section 46 – taking advantage of market power
MTA’s case under s 46 (in Pt IV) of the Act is pleaded in pars 36-45 along the following lines.
ICAA is the sole provider of certification in the CA certification market and its conduct in that market is not constrained by the conduct of competitors, potential competitors or potential candidates in that market (36, 37). Accordingly, ICAA has substantial power in both the CA certification market and the certification market (38). ICAA’s conduct described in subpars 35(c)-(g) and pars 35A and 35B of the Pleading (see [29] and [30] above):
“does not and will not permit the supply of the services of enrolment, examination and certification to be separately priced or unbundled from the supply of support services.” (39)
Further, the pricing of support services by ICAA as so described is:
“predatory in that such services are ostensibly supplied at no cost to candidates so that the price is below the separate cost of production and delivery of the support services.” (40)
Accordingly, the purpose, or a substantial purpose, of ICAA’s described conduct in the CA certification market has been to eliminate or to damage substantially its competitors in the CA support market, or to deter or prevent persons from engaging in competitive conduct in the CA support market, or to do both (41). By engaging in that conduct, ICAA has taken, continues to take, and is likely to continue to take, advantage of its substantial degree of power in the CA certification market or the certification market (or both), for the purposes described in par 41 of the Pleading (42) and has contravened s 46 of the Act (43) and engaged in conduct of a kind referred to in par 80(1)(a) of the Act (44). (Paragraph 80(1)(a) empowers the Court to grant an appropriate injunction on the application of any person where the Court is satisfied that a person has engaged or is proposing to engage in conduct that constitutes or would constitute a contravention of a provision of, inter alia, Pt IV or Pt IVA of the Act.)
In consequence of ICAA’s described conduct, MTA has suffered and continues to suffer loss and damage. In particular, clients of MTA, including Arthur Andersen, Deloittes and PricewaterhouseCoopers, have declined to renew their contracts with MTA (45).
Section 47 – exclusive dealing
MTA’s case based on s 47 (in Pt IV) of the Act is pleaded in pars 46-57 of the Pleading along the following lines.
ICAA has supplied in the CA certification market and the certification market services of examination and assessment for a fee to persons seeking certification as a chartered accountant (47). In 2000 in relation to the Capstone module (part of the PY Program) ICAA has done so on the condition that candidates undertaking that module must acquire, in addition to the examination and assessment services, support services, including written course materials, from ICAA (48). In and from 2001 in relation to all modules forming part of the CA Program, ICAA has done so and will continue to do so on that condition (49).
Paragraph 50 is as follows:
“By reason of the unilateral and compulsory supply by the respondent of support material at no separate or apparent cost to the candidates for assessment and its representations to such candidates as set out in sub-paragraphs 35(d), (f) and (g) and paragraphs 35A and 35B above [see [29] and [30]], the purpose and effect of the conduct of the respondent is that it is a condition of the acquisition of the said support materials on the said terms from the respondent that the candidate will not, or will not except to a limited extent, acquire support material from other suppliers of support materials.”
Accordingly, ICAA has supplied, and is proposing to supply, services on condition that the acquirer will not, or will not except to a limited extent, acquire support services from a competitor of ICAA (51), and has engaged, and proposes to continue to engage, in the practice of exclusive dealing (52).
MTA and ICAA have supplied, and continue to supply, services in the CA support market and ICAA’s conduct has the purpose, or has or is likely to have the effect, of substantially lessening competition in the CA support market (53, 54).
Accordingly, ICAA has contravened s 47 of the Act and has engaged in conduct of a kind referred to in par 80(1)(a) of the Act (55, 56).
As a result, MTA has suffered loss and damage of the kind referred to in par 45 of the Pleading (see [35]) (57).
Section 45 – contract or arrangement substantially lessening competition
The Pleading pleads contravention of s 45 (in Pt IV) of the Act in pars 58-71 along the following lines.
In 2000, ICAA has made, and it intends to continue making, a contract or arrangement with each candidate who undertakes or proposes to undertake the Capstone module (60) and has given effect to, and intends to continue giving effect to, that contract or arrangement (61). The contractual arrangements with all candidates are in identical, or substantially identical, terms (62) and provide that a person undertaking the Capstone module:
“will be supplied with and must acquire, in consideration of the compulsory fee paid to the respondent to undertake that module, support services, including written module course materials, from the respondent at no separate price or cost and may not elect not to receive those services and not to pay so much of the fee as properly relates to the supply of those services.” (63)
ICAA’s described conduct has the purpose, or would have or be likely to have the effect, of substantially lessening competition in the CA support market in the following ways:
“(a)foreclosing entry of new competitors into the CA support market;
(b)preventing price competition or any effective competition in the market for the supply of training materials and support services in the CA support market as between the respondent and the applicant and as between other suppliers and the respondent;
(c)foreclosing or substantially inhibiting prospects of sales by existing participants in the CA support market;
(d)destroying or substantially damaging the business of each participant, other than the respondent, in the CA support market.” (64)
In and from 2001 ICAA has made and intends to continue making a contract or arrangement with each person undertaking a module in the CA Program (65) and has given effect to, and intends to continue giving effect to, such a contract or arrangement (65A). The contracts or arrangements with the candidates undertaking modules in the CA Program are, and will continue to be, in identical, or substantially identical, terms (66) and contain and will continue to contain a provision similar to that relating to the Capstone module in the PY Program referred to above (67). ICAA’s conduct in this respect has the purpose, or would have or be likely to have the effect, of substantially lessening competition in the CA support market in the ways particularised above in respect of ICAA’s conduct in respect of the Capstone module (68). Accordingly, ICAA has contravened s 45 of the Act and has engaged in conduct of a kind referred to in par 80(1)(a) of the Act (69, 70).
As a result, MTA has suffered loss and damage of the kind referred to in par 45 of the Pleading (see [35] above) (71).
Section 51AC – unconscionable dealing
Finally, MTA pleads contravention of s 51AC (in Pt IVA) of the Act in pars 72-78 of the Pleading along the following lines.
During 2000 ICAA has supplied, and intends to continue to supply, in trade or commerce, the following services in relation to the Capstone module to each candidate for admission to membership of ICAA:
“(a)examinations and other forms of assessment of the competence and learning of each candidate; and
(b)upon passing the Capstone module (being the final integrative module) and satisfying the respondent that the candidate has shown sufficient skill and competence to be certified as a chartered accountant, certification and admission to membership of the respondent.” (73)
In consideration of the fees paid and to be paid by candidates, ICAA has supplied and intends to continue to supply, in trade or commerce, written course materials in respect of the Capstone module, and has represented that no other support services are required or desirable for students to acquire (74). Accordingly, in connection with the supply or possible supply of the services mentioned, ICAA has engaged in conduct that is, in all circumstances, unconscionable in the following respects:
“(a)candidates are actively persuaded, by the representation, and economically induced or precluded, by pricing, from acquiring the support services of the applicant or any other participants in the CA support market, other than the respondent;
(b)candidates, as a matter of practical reality, are required to use the support services of the respondent, regardless of the quality of those services to the exclusion of any competitor's services;
(c)the applicant, as a matter of practical reality, is foreclosed from effecting any, or any but an insignificant number of, sales of its Capstone module course materials because the support services supplied to candidates by the respondent are:
(i)supplied on a compulsory basis;
(ii)acquired by candidates on an involuntary basis;
(iii)supplied on the basis that no separate price is charged or nominated for them;
(iv)supplied effectively without charge, whereas there is a substantial charge for support services supplied by the respondent in respect of other modules;
(v)physically included within other materials supplied by the respondent, being core and explanatory materials, which are essential to candidates in that they contain information about the module and instructions to candidates;
(vi)supplied in circumstances where the respondent has stated that its support services are superior to the support services produced by others in the CA support market, notwithstanding that the support services of the respondent substantially embody the approach utilised by the applicant in the materials which have been produced, developed and enhanced by the applicant, to the knowledge of the respondent;
(vii)supplied in circumstances where the respondent has stated that no other support materials are required by candidates for examination;
(viii)supplied in a manner which precludes the applicant from entering into competition with the respondent in relation to module course materials available for sale by the applicant; and
(ix)supplied in circumstances where that transaction and any sale of module course materials by the applicant are, and are intended by the respondent to be and are likely in fact to be, mutually exclusive.
(d)the purpose, or to the knowledge of the respondent the effect, of the conduct of the respondent, is, or includes, the destruction of the business of the applicant and any other participants in the CA support market;
(e)the purpose, or to the knowledge of the respondent the effect, of the conduct of the respondent, is, or includes, the appropriation to the respondent of the whole or a substantial part of the business of the applicant without purchase or compensation and without any discussion with the applicant;
(f)the conduct of the respondent constitutes unfair competition, in that the respondent, with market power in the CA certification market, has used that market power to destroy or substantially weaken its competitors in the CA support market, including the applicant.
(g)the conduct of the respondent towards the applicant at the time the applicant commenced providing support services, and subsequently to that time, provided an inducement to the applicant to continue providing those services and gave the applicant a legitimate expectation that the respondent would not act so as to prevent the applicant from providing support services and engaging in competition with the respondent if the respondent chose to provide support services.” (75)

Paragraphs 76-78 plead unconscionable conduct in and from 2001 in relation to the modules in the CA Program, in terms similar to those set out above in relation to the offering of the Capstone module as part of the PY Program in 2000.
LEGISLATION
The following are the relevant provisions of the Act, set out in the sequence in which they are referred to in the Pleading:
Section 46 – misuse of market power
“(1)A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of:
(a)eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market;
(b)preventing the entry of a person into that or any other market; or
(c)deterring or preventing a person from engaging in competitive conduct in that or any other market.
(1A) ¼
(2) ¼
(3)In determining for the purposes of this section the degree of power that a body corporate ... has ... in a market, the Court shall have regard to the extent to which the conduct of the body corporate ... in that market is constrained by the conduct of:
(a)competitors, or potential competitors, of the body corporate ... in that market; or
(b)persons to whom or from whom the body corporate ... supplies or acquires goods or services in that market.
(4)In this section:
(a)a reference to power is a reference to market power;
(b)a reference to a market is a reference to a market for goods or services; and
(c)a reference to power in relation to, or to conduct in, a market is a reference to power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market.
. . .”
The case has been argued on the basis that the various markets propounded are markets for services. Section 4 of the Act defines “services” as follows:
“services includes any rights (including rights in relation to, and interests 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)the performance of work (including work of a professional nature), whether with or without the supply of goods;
(ii)the provision of, or the use or enjoyment of facilities for, ... instruction; or
(iii)¼
¼
but does not include rights or benefits being the supply of goods or the performance of work under a contract of service.”
Section 4E of the Act provides, relevantly, as follows:
“For the purposes of this Act, unless the contrary intention appears, market means a market in Australia and, when used in relation to any… services, includes a market for those… services and other… services that are substitutable for, or otherwise competitive with, the first-mentioned… services.”
Section 4F of the Act provides, relevantly, as follows:
“(1) For the purposes of this Act:
(a)...
(b)a person shall be deemed to have engaged or to engage in conduct for a particular purpose ... if:
(i)the person engaged or engages in the conduct for purposes that included or include that purpose ... ; and
(ii)that purpose ... was or is a substantial purpose ... .”
Section 47 – exclusive dealing
“(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,… services;
¼
on the condition that the person to whom the corporation supplies, or offers or proposes to supply, the … services …:
(d)will not, or will not except to a limited extent, acquire… services, or… services of a particular kind or description, directly or indirectly from a competitor of the corporation ¼
. . .”
The definition of “services” in s 4 of the Act was noted in [52] above. Subsection 47(10) provides, relevantly, as follows:
“Subsection (1) does not apply to the practice of exclusive dealing constituted by a corporation engaging in conduct of a kind referred to in subsection (2) ... 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;...”
Subsection 47(13) defines certain terms used in s 47. Subparagraphs 47(13)(a) and (b) provide relevantly as follows:
“In this section:
(a)a reference to a condition shall be read as a reference to any condition, whether direct or indirect and whether having legal or equitable force or not, and includes a reference to a condition the existence or nature of which is ascertainable only by inference from the conduct of persons or from other relevant circumstances;
(b)a reference to competition, in relation to conduct to which a provision of this section ... applies, shall be read as a reference to competition in any market in which:
(i)the corporation engaging in the conduct ... ;
. . .
supplies ... or is likely to supply ... services or would, but for the conduct, supply ... , or be likely to supply ... services; ...”
The definition of “market” in s 4E of the Act was noted at [53] above. The relevant parts of s 4F of the Act were noted at [54] above.
Section 45 – contracts, arrangements or understandings that restrict dealings or affect competition
“(1) ¼
(2)A corporation shall not:
(a)make a contract or arrangement, or arrive at an understanding, if:
(i). . .
(ii)a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or
(b)give effect to a provision of a contract, arrangement or understanding, ... , if that provision:
(i). . .
(ii)has the purpose, or has or is likely to have the effect, of substantially lessening competition.
(3)For the purposes of this section ... competition, in relation to a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, means competition in any market in which a corporation that is a party to the contract, arrangement or understanding or would be a party to the proposed contract, arrangement or understanding, ... , supplies ..., or is likely to supply ..., … services or would, but for the provision, supply ..., or be likely to supply ..., … services.
(4)For the purposes of the application of this section in relation to a particular corporation, a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding shall be deemed to have or to be likely to have the effect of substantially lessening competition if that provision and any one or more of the following provisions, namely:
(a) ...
(b)the provisions of any other contract, arrangement or understanding or proposed contract, arrangement or understanding to which the corporation ... is or would be a party;
together have or are likely to have that effect.”
The definition of “market” in s 4E of the Act was noted at [53] above.
Section 4F of the Act provides, relevantly, as follows:
“(1) For the purposes of this Act:
(a)a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, ..., shall be deemed to have had, or to have, a particular purpose if:
(i)the provision was included in the contract, arrangement or understanding or is to be included in the proposed contract, arrangement or understanding, ..., as the case may be, for that purpose or for purposes that included or include that purpose; and
(ii)that purpose was or is a substantial purpose; and
(b)...”
Section 51AC – unconscionable conduct in business transactions
“(1)A corporation must not, in trade or commerce, in connection with:
(a)the supply or possible supply of… services to a person ... ; or
(b)¼ ;
engage in conduct that is, in all the circumstances, unconscionable.
. . .”
CHRONOLOGICAL SEQUENCE OF EVENTS
It is convenient now to review, in chronological sequence, developments in and after 1994.
On 5 January 1994 Mr Topple met with Gillian Witten Cappelletto, the ICAA’s “Director, Education” (Ms Cappelletto held that position from 1990 to 2000 – she had been ICAA’s “National Education Manager” from 1987 to 1990, and has been its “General Manager, Professional Education” since 2000). (Mr Topple had first met Ms Cappelletto in August 1993). Mr Topple had already (in November/December 1993) spoken with Price Waterhouse, Deloittes, Ernst & Young and Arthur Andersen. (MTA commenced servicing Price Waterhouse, Deloittes and Arthur Andersen in July 1994 and Ernst & Young a year later, in July 1995.) Mr Topple told Ms Cappelletto that he was going to provide study materials to the firms for their employed PY candidates, and, in the case of some of the firms, lectures as well. Ms Cappelletto told Mr Topple that ICAA was considering ceasing to supply “Aspects to Consider” kits to candidates and that some State branches of ICAA had decided to discontinue the workshops they had been conducting.
In November 1994 the National Education Committee (“NEC”) of ICAA recommended to the ICAA’s Executive Committee that:
“1.      The ICAA:
(i)issues a strong formal statement that technical courses offered as PY support, while useful for some candidates, are not essential to pass the PY. This is because the PY syllabus and module material are developed to enable candidates to appropriately prepare for the assessment requirements of the module.
(ii)reinforces this statement by not directly providing technical support courses in any State.
2.State branches continue to offer PY support in the form of:
·    co-ordination of study groups
·    counselling of candidates
·    co-ordination of Aspects to Consider Kits
·    sales of past examination papers.”
The document which conveyed that recommendation was one from Ms Cappelletto and contained the following statement of the background to the recommendation:
“Since the commencement of the PY there have been a wide variety of courses offered.
The intensity of PY support increased in the late 80s when the Big 6 firms used PY support as a very valuable recruitment tool. The support intensified in the various firms and candidates were enticed to firms according to the amount of support provided to pass the PY. This created a reaction from small firms recruiting graduates who believed they were being disadvantaged because they were not receiving the same support as those in the Big 6.
In order to achieve an equitable environment for all candidates the Institute in most States started to provide PY support and the current support varies from State to State.
Over time in some States the offer of support courses had become quite demanding on staff time and Institute resources and in order to keep costs down sponsorship has been sought. In most cases the prices charged to candidates do not reflect the true cost, as indirect overheads are generally not allocated. This matter has received considerable attention during 1994 for a number of reasons:
1.Candidates receive information on PY support in module packs and in a number of States this has meant that information on sponsors has been included in module packs. Sponsorship generally has been by accounting recruiters and this has attracted the attention of the Big 6 who see provision of this material to all candidates as being the ICAA encouraging candidates to consider career moves.
2.The demand on staff time has caused concern about the priorities of the ICAA where it can be seen that less time is available for servicing mainstream PY candidates.
3.Comments from members about the cost of the PY, as the true cost is not just the Institute fee but also the PY support fee. Some years ago the Institute fees were seen as the only real costs of the PY with firms choosing to offer PY support. The mind set of candidates has changed in recent years to the extent that many believe that PY support is absolutely necessary to pass the PY and therefore they are putting pressure on their employers to provide it.
4.The number of private providers who have now come into the market. In particular Monroe Topple & Associates have been very active and other providers include Queensland University of Technology, Pannell Kerr Forster and Hall Chadwick. A number of the Big 6 are now using private providers for PY support. From a marketing point of view it is in the private providers’ best interests for candidates to believe that they cannot pass without having PY support.
5.The financial viability in some States has come into question to the extent that it is not seen as appropriate for mainstream PY candidates/members to be sponsoring the PY support courses.
Input from the State Committees responsible for PY support was also requested for the preparation of the report to the National Education Committee. The recommendations of this report are consistent with the views of the majority of the States.
If the above recommendation is accepted appropriate information would be provided to assist members in supporting the formal statement.”
Ms Cappelletto agreed that the NEC’s recommendation was essentially that ICAA not provide PY support but that the State branches provide co-ordination, counselling and the sale of past examination papers. She also said that, as at November 1994 and prior to that time, the States had provided a variety of haphazard and very low level PY support. She said she did not think the State branches were in competition with the private providers of support services because what the two were providing was so different. She said:
“If you look at what the States were doing, a lot of it was counselling of candidates, co-ordinating an ‘Aspects to Consider Kit’, which was past exam papers, not really in competition because it was so different.”
On 28 November 1994 ICAA’s Executive Committee considered the report from the Director, Education. The minutes of its deliberations include the following:
“With regard to the recommendation that the Institute issue a strong formal statement that technical courses offered as PY Support, while useful for some candidates, are not essential to pass the PY, Executive Committee indicated that before it would support the recommendation it would require further information, for example research on how many of 100 candidates availed themselves of PY Support courses.
Executive Committee agreed that States should withdraw the provision of PY Support courses where commercial courses were offered. However, in remote locations where such commercial courses were not available States would provide such Support.
State branches should also continue to offer PY Support in the form of co-ordination of study groups, counselling of candidates, co-ordination of Aspects to Consider Kits, sales of past examination papers.” (my emphasis)
ICAA administered a “PY Support Telephone Questionnaire” to PY candidates. Ms Cappelletto said this arose from the Executive Committee’s call for “further information” and the fact that members of ICAA had approached her and others at ICAA stating that they would like ICAA to be involved in the PY Support “market”. In January 1995 Ms Cappelletto wrote a further report to the Executive Committee reporting on the results of the survey. The document stated that approximately 60 per cent of candidates worked for the Big Six and second tier firms (in oral testimony, Ms Cappelletto said that the 60 per cent worked for “about the top 20 firms”, and that about 50 per cent worked for the Big Six) and undertook internal PY support offered by their employers, while the remaining 40 per cent of candidates were “the market for PY support”. In oral testimony, she said that approaches had been made to ICAA on behalf of the 40 per cent asking it to provide PY support. According to Ms Cappelletto’s report, there were at least four external providers who could capture the balance of the market (the 40 per cent) and that strong marketing by at least one of the four, MTA, would “no doubt increase demand”. The document contained a limited analysis of the success rates for candidates undertaking only the limited PY support provided by the ICAA State branches. The report noted that the Western Australian branch did not provide technical PY support because of “the well-established courses offered by Professor Garry Monroe which [became] MTA”.
According to the report, the “two most popular providers of support” were ICAA and MTA. The report recorded that as MTA had commenced providing PY support nationally only as recently as 1994 for Accounting 1 (MTA’s first offering had been in respect of Accounting 1 in July of that year), Ms Cappelletto believed that its “market share [would] increase substantially”. The report expressed again the concern that many candidates saw PY support as “being beneficial in reducing the research required to undertake a module”. In oral testimony Ms Cappelletto explained that the PY support material provided by ICAA was designed to require candidates to research text books, Accounting Standards and legislation. That is, the candidate was required to go to primary source documents and was not provided with the relevant extracts from them in the materials provided by ICAA.
The report concluded by setting out the “major concerns that arose from the survey” as follows:
“1.The mind-set of candidates which has developed regarding the necessity of PY Support.
2.The concerns expressed by candidates where ICAA PY Support has already discontinued.
3.The desire of candidates to use PY Support to reduce research and problem solving components of the PY.
4.The impact of additional educational costs on the long term viability of the PY.”
In oral testimony Ms Cappelletto elaborated on those “major concerns”. For example, she said that one concern was that ICAA was not, as external providers of PY support were, encouraging candidates to start studying early, and another was that candidates wanted the “short cuts” provided by support materials as a substitute for researching primary source documents.
In early 1995 ICAA included in material issued by it statements that while PY technical support might assist some candidates, it was not regarded by ICAA as essential for candidates to pass the PY Program.
March 1995 marked the beginning of a change in policy direction for ICAA. In a report dated 30 March 1995, Ms Cappelletto recommended to the NEC that ICAA produce PY support material as three separate books as follows:
·    PY – A User’s Guide
·    PY – A Technical Guide
·    PY – An Examination Guide
commencing with the Accounting 1 module for 1995. The report contained extracts from the minutes of the last preceding meeting of the NEC as follows:
“There was considerable discussion on the provision of PY support and the following points were raised.
·There is a mind set amongst PY candidates that it is essential for the PY.
·Concern that candidates are using PY support as a substitute for research.
·The provision of PY support has a large influence on the total cost of the PY to firms/candidates and could impact on the long term viability of the PY.
·Candidates in country areas could be disadvantaged if PY support is not provided.
·City candidates have more access to courses.
·The cost of the courses of external providers is high.
·If the ICAA enhanced the Group Leaders Technical Guidance Notes for modules and sold them subsequent to the module this would provide candidates with support material at a reasonable cost.
·If the ICAA enters this market it could have the beneficial effect of influencing the costs of the courses offered by the external providers.
·It would be of assistance to candidates if more source and research information is provided in the module booklets.
·The concern that provision of ICAA material could impose an additional cost on the Big 6 if their candidates considered this material vital.
It was agreed that:
i.specific references would be provided in the module booklet to assist candidates with research.
ii.the issue of packaging previous modules for sale through the Bookshop should be further investigated. The Divisional Director, Education would prepare a proposal to be submitted to the next meeting which would include the costs of this venture.
iii.states could continue to provide financially viable technical support courses for the time being.
The Divisional Director, Education reported that Mr Barry Topple from Monroe Topple & Associates had requested more information from the ICAA to assist him in the preparation of course material. He required more access to and feedback from Syllabus and Examination Sub-Committees.
IT WAS RESOLVED that this kind of information would not be given to Monroe Topple & Associates and the Divisional Director, Education was requested to advise Mr Topple that he would receive no more information than was freely available to other trainers.”
The report from Ms Cappelletto to the NEC stated:
“The rationale for providing the support material as recommended includes:
1.The belief that there should be an alternative provider in the market as there is some risk that one of the current providers [no doubt a reference to MTA] will longer term achieve a monopoly. It appears that this provider has a plan to not only monopolise, but also extend the operation to bring it closer to the current situation in the UK with training colleges [a situation with which Mr Topple was very familiar].
2.There is concern about the cost of the PY and the possibility of firms not encouraging graduates to undertake the program. Our support could be provided at a much cheaper price than other external providers.
Executive Committee are keen for us to provide support in the form of the previous year’s module enhanced for sale to candidates. I believe they will want to make a decision in the near future and I would not want this to occur before further input from the NEC. Unfortunately to delay until our next meeting in May would make it impractical for us to have support material for July, and such a delay would provide an opportunity for consolidation of the PY support problem in the market place.”
The report suggested a three-part package of PY support material as follows:
·    PY – A User’s Guide (a brief guide to the PY which would not be specific to any particular module, would be about 12 pages in length and would be “an outline of how to approach the PY and achieve success”)
·    PY – A Technical Guide: Accounting 1 (specific to the Accounting 1 module and drawn from the previous year’s Accounting 1 module, re-organised to a topic by topic structure, with cross-referencing where necessary, each topic having a short introduction and specific references to texts (including page numbers), Accounting Standards, and legislative provisions, followed by questions from the previous year and answers drawn from the Group Leaders’ Technical Guidance Notes, enhanced for use by candidates)
·    PY – An Examination Guide: Accounting 1 (about 40 pages in length, a full guide to the examination, including tips on preparation as well as previous examination questions, with a topic by topic structure and suggested answers together with general comments, including appropriate extracts from the examiner’s comments – the Examination Guide would, in effect, replace the current “Aspects to Consider Kits” which State branches were “desperate to hand back to National Office”)

The report noted that the author of the Accounting 1 material for 1994 had offered to prepare the three books for $10,000. The report recommended that the three books sell for the following prices:
·    PY – A User’s Guide $15
·    PY – A Technical Guide $80
·    PY – An Examination Guide $20
(The “Aspects to Consider Kit” had been selling for $6 to $20, depending on the State in question).
The report concluded:
“It is believed that we will still take the position that PY Support is not essential to all candidates, but can be of assistance to some. Providing this package is a service to the candidates and firms.”
Apparently the recommendation which finally went to the Executive Committee of ICAA from the NEC and which was approved was that as from Accounting 1 in 1995, ICAA produce PY support material in the form of three separate books being PY – A User’s Guide, PY – A Technical Guide and PY – An Examination Guide. As noted earlier, the Technical Guides contained material related to the module workshops.
For each core technical module, that is, for each core module except Ethics, ICAA began to sell the Technical Guide and the Examination Guide through its bookshop. Ms Cappelletto states in her affidavit:
“This was mainly in response to members’ requests that the Institute provide more structured support and also as a result of the Institute wishing to standardise its support nationally.”
Ms Cappelletto’s testimony, however, was that it was a misconception to think that PY support was necessary in order to complete satisfactorily a PY module. She said she thought a misconception to that effect had spread throughout the profession, including among small firms and their staff, from the recruitment practices of the Big Six in the mid to late 1980s. She thought that candidates had come to rely on PY support, some of which she described as “spoon feeding”, as a substitute for identification and location of primary source materials.
The decision of ICAA to enter the PY support market provoked protests from the existing participants in that market. For example, on 11 May 1995 Hall Chadwick wrote to Ms Cappelletto as follows:
“We note the reasons given by you as being relevant to this decision, such as the needs of smaller practitioners, the costs of PY Support, the ICAA’s concerns about one of the major external providers of PY Support and, fundamentally, concerns about future membership of the ICAA if the costs of the PY (in total) are seen to outweigh the benefits.
Whilst we understand these reasons, we nevertheless do not accept that they constitute justification, whether wholly or in part, for the ICAA competing directly with its own members, in the form of the partners of this Firm. We would have expected non-competition with members to be a core value of the ICAA. We are dismayed that this appears not to be the case and we are further dismayed that the partners of Hall Chadwick, as well as any other members of the ICAA involved in PY Support, were not approached to assess their views on this matter prior to the decision being taken.
For your information, over the past 18 months Hall Chadwick have committed substantial resources to the development of its PY Support program, not least of which has been the recruitment of a dedicated professional to run the program, the upgrade of our training facilities to accommodate the growing number of candidates registering for our program, the complete revision and improvement of our core module manuals and sessions, the commencement of preparation of manuals for the advanced modules and the enhanced marketing of our program including additional advertising in Charter. The PY Support program is a significant element of our longer-term Education Strategy and there are sufficient obstacles confronting this Firm in its achievement of this objective without having to add direct competition from our own professional body.
...
The ICAA is contradicting its own advice to candidates, that PY Support is not essential to their success, by institutionalising the delivery of the support that, by the ICAA’s own statements, the candidates don’t really need. We would suggest that the ICAA’s advice would be far more convincing if they did not provide support.
...
In summary, we are of the view that the ICAA should abide by its earlier decision to withdraw from PY Support. If such a decision is irrevocable, then we would argue most strenuously that the ICAA provide ‘guidance’ manuals only (comprising past workshop and examination material) and refrain from providing ‘support’ in the manner in which the market is currently providing.”
On 17 May 1995 QUT wrote to Ms Cappelletto seeking clarification in relation to the nature of ICAA’s proposed PY support materials and offering QUT’s assistance in that respect. The letter stated that the impact of the availability of ICAA’s support materials on QUT’s own program was uncertain and would depend on the form that ICAA’s materials would take, as to which further information was sought.
On 31 May 1995 Hall Chadwick wrote again to Ms Cappelletto in support of that firm’s delivering a comprehensive PY support program on behalf of ICAA. The letter asserted that ICAA’s decision “could see the monopolisation of the PY support market”.
It seems then that both Hall Chadwick and QUT were quick to see that competition from ICAA would have adverse implications for their activities.
In July 1995, ICAA introduced its first PY support materials.
On 1 August 1995 ICAA (Ms Cappelletto) wrote to Barry Topple of MTA, Paul Mentzalis of Hall Chadwick and Peter Best of QUT, a letter which stated that ICAA’s first offer of PY support materials was in respect of Accounting 1 and that those materials were being sold through ICAA’s bookshop. Each of the three letters contained the following paragraphs:
“We have entered the market with some degree of uncertainty and I appreciate the impact that we may have on your materials. We have however, made our decision based on members’ requests and have done so only after careful consideration. At this stage, we do not intend to provide any face to face delivery to support the written materials.
Materials we are using for support have been drawn from previous modules and therefore, there has been limited outsourcing. We have had offers from three of the current providers of PY Support to assist us in the provision of our materials, but at this time, due to the nature of our support, have made the decision not to accept any of these offers.”
(The first sentence in the second paragraph was a reference to the fact that the Technical Guides were based on the “answers [to the questions set for workshops for the module in question in previous years] drawn from the [workshop] Group Leaders’ Technical Guidance Notes … enhanced for use by candidates”.)
In December 1995, a “PY Review Task Force” presented its Report to the Executive Committee. According to the Report, the Executive Committee of ICAA had requested the Task Force to undertake “a broad review” of the PY. Overall, the Task Force concluded that the PY had many strengths reflected by the very high level of satisfaction which candidates and members of ICAA had with it. Accordingly, the Report recommended that any changes to the PY format be limited to “fine tuning rather than radical change”. It recommended that the NEC be requested to monitor, inter alia, “PY support by external providers and the impact on the firms and the PY”. In connection with this recommendation, the Report stated as follows:
“PY Support has been an issue much discussed in the last 12 months and has a big impact on the total cost of the PY to firms. It is recognised that PY Support was initially developed by firms to assist candidates with the PY but also to create recruitment advantages. Over time, the perception that PY Support is necessary has grown and the long term impact of the additional cost is of concern. The entry of the ICAA into the PY Support market at a relatively low cost is endorsed and further work by the National Education Committee to ease the burden of PY Support would be positive.
Cost of the PY will have an impact on demand and the ICAA is able to control the direct cost of modules and the number of modules. It has some impact on the time taken by candidates to prepare modules but virtually no impact on a number of other costs (eg internal support programmes, study leave).”
The Report also recommended that the “National Careers Marketing Committee” of ICAA be requested to ensure that it “promotes the PY qualification and the CA designation” and “increases the ICAA presence on campus as a way of continuing to attract the best students to chartered accounting and thus to the PY”. Other measures were recommended for adoption as ways of promoting “chartered accountancy as a career”. In support, the Report stated:
“Overall, promotion of the PY and CA designation is seen as a very important aspect. The ICAA currently achieves very high quality members because the PY attracts the best quality graduates who then undertake the PY. Some of our competitive edge would be lost if we were to no longer attract the best graduates.” (my emphasis)
This passage is one illustration of ICAA’s perception that it was in competition with the Society for the best university graduates and for preferred status in the thinking of the public generally and of prospective clients in particular. Annexed to the PY Review Task Force Report was, inter alia, a table headed “PY/CPA Fact Sheet” which compared the PY introduced in 1972 and a training program which the Society had introduced in 1986. For example, whereas 52 weeks’ with a chartered accountant was required prior to enrolment in the PY, the Society did not impose any similar pre-requisite. Whereas in the case of the Society, assessment was entirely by multiple choice examinations, in the case of the PY assessment was described, in effect, as follows:

Participation in workshops 15%

Examination – extended answers
Examination – multiple choice

65%)

20%)

85%

The PY Review Task Force clearly saw ICAA as being in competition with the Society. This is not surprising in view of the competition between members of the two organisations in the accounting services market.

Finally, the cost to candidates of the PY was stated to be at that time (December 1995) as follows:

Technical module $610 x 4
Ethics module

$2,440
$265
--------
$2,705

Application fee for membership
of ICAA
$400
-------
$3,105
=====

From February 1996 to July 1996 meetings were held between representatives of ICAA and of the Big Six to discuss issues arising out of the PY Review Task Force Report. ICAA provided a background paper for the Managing Partners of the Big Six. The background paper referred to the PY Review Task Force and to research by Chant Link & Associates, commissioned by ICAA, which had shown a high level of member and candidate satisfaction with the PY. However, the background paper proposed two major changes. The first was that it was proposed to trial “Computer Based Training” provided by ICAA in the Ethics module in 1996, with a view to its being introduced with the Accounting 1 module in March 1997, then progressively into the other modules during 1997/1998. (Computer based training was in fact introduced into the Ethics module in May 1996.) The second was the proposed provision by ICAA of PY support in the form of the User’s Guide, Technical Guide and Examination Guide, all of which could, according to the background paper, be supplemented by seminars if required. The background paper stated the following “Advantages” which the proposed changes offered to the Big Six:
“1.Overall saving for firms. Currently most of the Big 6 are providing PY Support with different cost structures in each firm. The ICAA provision of this material in the module folder is very cost effective as the costs would be spread over the full complement of candidates. For Tax 1996 the total enrolment is 2695.
2.The introduction of interactive Computer Based Training which would apply to a number of topics in each module, means that candidates, when working through exercises, receive automatic feedback including explanations. This could not only save candidates substantial time working through materials but also will make workshops more productive as group leaders would be able to focus on issues rather than achieving a ‘correct’ answer.
3.Currently, there are a number of PY Support providers in the market and many candidates are photocopying everything that is available. This is expensive for firms in terms of photocopying and also for some candidates as it adds to the time spent on the module (sometimes in a non productive way) and often increases the level of anxiety.
This structure would give the Big 6 the opportunity to discontinue the current PY support. Although the ICAA would increase the module cost by approximately $120, this would include the cost of the support and Computer Based Training and would represent a substantial saving compared to the current PY support costs. If additional optional seminars were required, a fee would need to be determined for this service.” (my emphasis)
The meetings prompted responses. On 14 June 1996, for example, Susan Henry of Deloittes sent an internal e-mail to Ian Blair of Deloittes in relation to a meeting she had had with Stephen Harrison, Executive Director of ICAA, stating, inter alia, as follows:
“Ian, from my meeting with Stephen I understand that the Institute is looking to capture the lucrative market for outsourced PY support. The impetus comes from a push by small firms who say they can’t afford the sort of support provided by the Big 6 and the ICAA wanting a piece of the pie so to speak. The only caveat being the Institute don’t want to compete with the other external providers, they want to provide the service on a monopoly basis and need a commitment that all Big 6 firms will agree to this.
To achieve the above the Institute will bundle up its support service with enrolment in each PY module and argue they can’t be unbundled and sold as separate services. Thus they will become the external provider of PY support for all PY participants.
At present we use the services of Monroe Topple and by all accounts are very happy. The cost is about $500 per person per module (which is significantly less than what it would cost to provide the service in-house) and our pass rates have improved significantly in the three years we have been using them. For our money our people receive course material and 6 days of lectures.
At present 4 firms use Monroe Topple, 1 Queensland Institute of Technology and 1 runs PY in-house.
My view is that if the Institute can provide a quality, cost effective service and we can maintain our pass rates, I don’t see any problem using them. I do however, think their product should speak for itself and compete on the market with other providers.
I hope this helps and will be interested in the outcome of your meeting.” (my emphasis)
(Ms Henry’s “understanding” summarises the case MTA seeks to make in this proceeding.)
On 20 June 1996 John Harkness of KPMG told Stephen Harrison he would be “happy to see the Institute compete in the marketplace with [KPMG’s] PY support material, but would … be unhappy if [ICAA] were to mandate the costs of the PY support in the overall cost of the PY”.
Stephen Harrison made the following notes of his meeting with John Harvey of Price Waterhouse on 3 July 1996:
“The are quite happy for the Institute to sell PY material but they would not be happy if this was done in a monopolistic situation. They would wish to see the Institute compete in the marketplace. In making this comment he added an interesting suggestion that if the use of computer based teaching was built into the PY support material, its costs could be built into the price and would give us a competitive edge in the marketplace. Certainly [Price Waterhouse] would be very interested in the development of computer based teaching for the PY.
One of the other comments he made was that [Price Waterhouse] particularly enjoy dealing direct with Barry Topple. John made his comment in the context of having just said that his staff believe that dealing with the Institute is akin to dealing with the Public Service. If we are to go out and compete more actively in the marketplace we will need to consider how we provide effective customer relations, particularly by phone.” (my emphasis)
On 7 August 1996 MTA wrote to Stephen Harrison a letter which included the following:
“It has come to our attention that the Institute has advised a number of parties that it intends to require all PY candidates to purchase its preparation materials when they enrol in a module and that it will do so by including the cost of such materials in the cost of the module which will be appropriately increased. Consequently, when a PY candidate enrols in a module, he or she or his or her employer will be forced to pay an additional amount on top of that currently payable which is referrable to the provision of your preparation materials.
We are concerned that your proposal will have significant and detrimental impact on the ability of our organisation to compete with you in the market for preparation materials. It is our view, and we understand also yours, that by requiring that a candidate pay for your materials and by increasing the cost of a module the candidate or his or her employer will almost certainly not be likely to purchase our preparation materials, notwithstanding that they are significantly different from yours.
We have sought and obtained legal advice on this matter and have been advised that if you proceed with its implementation it would constitute a restrictive trade practice in contravention of one or more provisions of Part IV of the Trade Practices Act 1974 and that it may otherwise also wrongly impinge upon our rights. I would hope that you may have failed to consider this aspect and that it is not your intention to wrongly infringe the provisions of the Act and our rights.
We have no objection to competition on its merits in the marketplace but cannot accept behaviour such as that proposed by you, which can only improperly affect the interests of all parties who are in the market of providing preparation materials.
We must therefore ask that you do not proceed with your proposal any further and that you give us your unconditional written undertaking to this effect.
If you fail to give us your written undertaking not to proceed by 16 August 1996 we advise that we will seek to protect our rights in such manner as we are advised without further reference to you.
It goes without saying that it is not our wish for matters to come to this and that we encourage open and vigorous competition. I therefore invite you to discuss the matters raised in this letter with the writer as a matter of urgency with a view to amicably resolving them and without the need for resort to costly legal proceedings.” (my emphasis)
ICAA replied on 22 August 1996 advising Mr Topple that it was not the current intention of ICAA to include the printed PY support material within the existing PY module material. The meaning of this assurance is not clear to me, as apparently it was not to Mr Topple. On 28 August 1996 Mr Topple replied as follows:
“Thank you for your facsimile letter of 22 August 1996 from which we note that ‘it is not the current intention of the Institute to include the printed PY support material within the existing PY module material’. We understand this to mean that you do not intend to engage in the conduct about which we expressed concerns in our letter of 7 August 1996.
We thank you for your prompt advice regarding your intentions in this matter which, as previously advised, is of great concern to us.
While your letter is a brief statement of your position, we have taken it to mean that:
·    the Institute will not seek to increase the charge for its PY materials or otherwise take any action which would mean that the purchase of those materials became compulsory
·    the Institute will notify MTA immediately if there is any change from the position outlined in your letter of 22 August 1996
·    no change in policy is envisaged in the foreseeable future.
I should be grateful if you would confirm in writing that our understanding of the Institute’s position is correct. On receipt of such confirmation we will instruct our lawyers not to commence action as originally proposed.”

The relief sought in subpar (1)(v) is obviously inappropriate and I put it to one side. There are several problems associated with the relief MTA seeks. Subparagraphs (i) to (iv) seek “unbundling”. They seek a severing out of the entire “module course study materials”. But MTA itself does not, or could not reasonably, contend that ICAA was not entitled to require a candidate, upon enrolment in the Capstone module of the PY Program or any module of the CA Program, to buy newly created materials. Its attack is on the alleged replication of material which was contained in the ICAA’s former PY support materials. Accordingly, on its own case, MTA is not entitled to the remedy as formulated in its application.
Severing out newly created material from material which was in ICAA’s former PY support materials is impracticable. Even in the sections which contain chapters or parts of chapters from the former Technical Guides, there is re-writing, addition and insertion.
I would not make any order which would have the effect of dividing up ICAA’s CA support materials which ICAA characterises as “comprehensive”, based on sound educational theory and the product of extensive deliberation and consultation.
Finally, the relief sought does not constrain ICAA as to the price at which it is to be at liberty to sell the unbundled materials. In the absence of such a constraint, ICAA could continue to charge a module enrolment fee of $730 and supply the materials to the enrolling candidate free of charge, or it could reduce the enrolment fee a little and offer the materials to the candidate at a price equal to the amount of the reduction. There is no reason why ICAA should be compelled to price its materials at a level which is inconsistent with its non-profit making character. It seems that any unbundling remedy consistent with that character will not achieve MTA’s purpose. The problem for MTA is that ICAA is at liberty to supply comprehensive materials to candidates without seeking to make a profit from doing so. I presume that candidates would choose to buy materials produced by ICAA on that basis in any event, whether or not some would also choose to buy supplementary materials from an external provider.
Exclusive dealing – s 47
As a result of ICAA’s answering issues 11 and 12 “yes”, it is common ground that ICAA supplies a service of “examination and assessment for a fee to persons seeking certification as a chartered accountant” and that the services ICAA supplies include:
“... enrolling, providing learning resources and learning activities, assessing candidates and determining whether applicants for membership have satisfied the criteria for membership in pursuance of ICAA’s objective under its Charter?”
According to the statement of issues, the following questions require resolution by me:
“13.Has ICAA, if it supplies the “services of examination and assessment” in the CA certification market, required that candidates must acquire support services from ICAA as a condition of supplying the services of examination and assessment in the CA support market?
14.Is it a condition of the acquisition of support services by a candidate that such candidate will not, or will not except to a limited extent, acquire support services from other suppliers of support materials, by reason of:
·    there being no separate cost to the candidates of ICAA’s support services; or
·    the published statements?
15.      If so, is the supply by ICAA of its support services
·    for the purpose; or
·    likely to have the effect
of substantially lessening competition in the CA support market?”
Assuming, contrary to my conclusion reached earlier, that there is a CA certification market, I would answer these questions as follows:
13. Yes
14. No
15.Does not arise.
Just as the parties, in respect of the claim under s 47, relied on their submissions in respect of the claim under s 46, so I rely on the reasons which I gave in relation to that claim, for deciding:
·that there is no CA certification market;
·that the PY support market came to an end with the PY and a new CA support market has come into being;
·that ICAA did not act for any of the anti- competitive purposes mentioned; and
·that relief should not be granted.
In submissions, MTA relied on subs 47(3) as well as subs 47(2) of the Act but clearly this was a slip: the Pleading does not allege, and the evidence does not suggest, an actual refusal by ICAA to supply CA support services for the reason that the intending acquirer has acquired, or has not agreed not to acquire, such services from a competitor of ICAA.
In their submissions, both parties appear to have treated the “purpose” referred to in subs 47(10) as subjective. It is questionable whether they were correct to do so: cf Dandy Power Equipment Pty Ltd v Mercury Marine Pty Ltd (1982) 64 FLR 238 at 276-277. Either way, my answers to the questions are the same.
In relation to subs 47(2), it is plainly not a condition of the contract between ICAA and candidates enrolling for a module in the CA Program that a candidate will not acquire CA support services other than those supplied by ICAA itself as part of the consideration for which the enrolment fee is paid. Notwithstanding the broad definition of “condition” in para 47(13)(a) of the Act, noted at [56] earlier, the form of exclusive dealing referred to in subs 47(2) is not established merely by the circumstance that a likely consequence of a corporation’s supply of services is that the acquirer will not acquire substitutable services from its competitors.
It is noteworthy that s 47 does not catch a supply on condition that the acquirer acquire other goods or services from the same supplier. Accordingly, it is not within the section that ICAA insists, as a condition of its supplying the service of examination and assessment, that the candidate acquire CA support services from ICAA. In any event, if it be an appropriate description of the enrolment process to say that ICAA supplies and offers to supply the services of examination and assessment in modules in the CA Program on condition that the candidate acquire CA support materials from ICAA, its doing so is not for the purpose, and is not likely to have the effect, of substantially lessening competition in the CA support market (strictly so called). That market is not one in which there existed any competition able to be lessened. The recent creation of the CA Program has apparently created such a market, if a limited one. The prohibited practice of exclusive dealing is not established by the circumstance that ICAA has not made possible the development of a new market for support services as extensive as the former PY support market (KPMG, a competitor in the former PY support market, has not entered the new CA support market and Mr Topple said that MTA’s sales were down two thirds on what they had been at the same time the previous year in the former PY support market).
Contract or arrangements substantially lessening competition – s 45
The parties’ statement of agreed issues includes the following:
“17.Is it a provision of each contract between ICAA and each candidate that each such candidate will be supplied with and must acquire, in consideration of the fee paid to ICAA, the relevant services at no separate price or cost, and may not elect not to receive those services and not to pay so much of the fee as properly relates to the supply of those services?
18.If each such contract does contain such a term, does that contract (alone or together with any other contracts entered into by candidates enrolling in that module) have the purpose, or be likely to have the effect, of substantially lessening competition in the CA support market?”
I answer these questions:
17. Yes
18. No.
The “purpose” referred to in s 45 is subjective: ASX Operations at 474-477.
Again, just as the parties in respect of the claim under s 45 relied on their submissions in respect of the claims under ss 46 and 47, so I rely on the reasons I gave in relation to those claims and, in particular, the reasons I gave:
·for deciding that the PY support market came to an end with the PY and a new CA support market has come into being;
·for deciding that there was no purpose or effect or likely effect of a substantial lessening of competition in a market in which ICAA supplied services; and
·for deciding that relief should not be granted.
Unconscionable dealing
According to the parties’ statement of agreed issues, the following questions arise:
“20.Has ICAA supplied support services to candidates in return for the enrolment fee and represented to candidates that no other support services are required or are desirable in connection with the:
· the Capstone Module;
· the CA Program?
21.Was the purpose or effect of the supply of the relevant services the destruction of the business of the applicant and any other participants in the CA support market?
22.Did the supply of the support services by ICAA have the purpose or effect (to the knowledge of ICAA) of the appropriation to ICAA of the whole or substantial part of the business of the applicant without purchase or compensation and without any discussion with the applicant?
23.Did any (and what) conduct of ICAA in or about 1994 or thereafter provide inducements to the applicant to continue to provide support services to candidates?
24.If the answers to all or any of paragraphs 20, 21, 22 [and] 23 … is in the affirmative, is the conduct of ICAA in all the circumstances unconscionable for the purposes of s 51AC of the Act?”
I answer these questions as follows:
20. (as to both the Capstone module and the CA Program)
As to “required”, ICAA has represented to candidates that it does not require them to acquire other support services and that it is not necessary for them to do so in order to complete a module satisfactorily.
As to “desirable” – No.
21.                  As to “purpose” – No.
As to “effect” – No.
22.                  No.
23.MTA assessed the then market in Australia for its services and took into account what ICAA was and was not doing and proposing to do and not to do. But ICAA did not “provide inducements to” MTA in the sense of “seek to persuade” MTA.
24.                  No.
ICAA submits that s 51AC has no application to a case such as the present one in which there is no relevant transaction between the respondent corporation and a person:
·against whom its allegedly unconscionable conduct is directed; and
·who does not suffer from any “special disadvantage” or “special disability” for the purposes of the general law concept of unconscionable dealing (cf Blomley v Ryan (1956) 99 CLR 362 at 385-386 per McTiernan J, 405 per Fullagar J, 428-430 per Kitto J; Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 459 per Gibbs CJ, 461-462 per Mason J, 474-475 per Deane J).
Whether there is scope for the section to apply depends on whether the corporation’s supposedly unconscionable conduct directed to the third party is engaged in “in connection with” the supply or possible supply of the goods or services to a person to which par 51AC(1)(a) refers (for convenience, I will not refer, in the following discussion, to the acquisition of goods or services by a corporation from a person to whom par 51AC(1)(b) refers, or to the supply or acquisition of goods or services by a person to or from a corporation to which subs 51AC(2) refers, although the discussion is relevant to those provisions also).
Such expressions “in connection with”, “in relation to”, “relating to” and “in respect of”, while potentially broad, bear a meaning dictated by legislative context, purpose or object: cf Hatfield v Health Insurance Commission (1987) 15 FCR 487 (Davies J) at 491; Our Town FM Pty Ltd v Australian Broadcasting Tribunal (1987) 16 FCR 465 (Wilcox J) at 479-480; Burswood Management Ltd v Attorney-General (Cth) (1990) 23 FCR 144 (FC) at 146 per Lockhart, Wilcox and Hill JJ; Claremont Petroleum NL v Cummings (1992) 110 ALR 239 (FCA/Wilcox J) at 280; Minister for Immigration & Multicultural Affairs v Mohammad (2000) 101 FCR 434 (FC) at 443-444 per Burchett J.
In my opinion, several considerations establish that s 51AC has no potential application in the circumstances of the present case.
First, subs 51AC(3) contemplates that the only parties to be considered are a “supplier” and a “business consumer” and that the matters to which the Court may have regard for the purpose of determining whether the supplier has engaged in unconscionable conduct in connection with the supply will all be matters operating as between it and a business consumer. The admittedly non-exhaustive list of such matters in that subsection is as follows:
“(a)the relative strengths of the bargaining positions of the supplier and the business consumer; and
(b)whether, as a result of conduct engaged in by the supplier, the business consumer was required to comply with conditions that were not reasonably necessary for the protection of the legitimate interests of the supplier; and
(c)whether the business consumer was able to understand any documents relating to the supply or possible supply of the goods or services; and
(d)whether any undue influence or pressure was exerted on, or any unfair tactics were used against, the business consumer or a person acting on behalf of the business consumer by the supplier or a person acting on behalf of the supplier in relation to the supply or possible supply of the goods or services; and
(e)the amount for which, and the circumstances under which, the business consumer could have acquired identical or equivalent goods or services from a person other than the supplier; and
(f)the extent to which the supplier’s conduct towards the business consumer was consistent with the supplier’s conduct in similar transactions between the supplier and other like business consumers; and
(g)the requirements of any applicable industry code; and
(h)the requirements of any other industry code, if the business consumer acted on the reasonable belief that the supplier would comply with that code; and
(i)the extent to which the supplier unreasonably failed to disclose to the business consumer:
(i)any intended conduct of the supplier that might affect the interests of the business consumer; and
(ii)any risks to the business consumer arising from the supplier’s intended conduct (being risks that the supplier should have foreseen would not be apparent to the business consumer); and
(j)the extent to which the supplier was willing to negotiate the terms and conditions of any contract for supply of the goods or services with the business consumer; and
(k)the extent to which the supplier and the business consumer acted in good faith.”
While the opening words of subs 51AC(3) make it clear that the list is not intended to be exhaustive, effect can be given to this disclaimer by the Court’s having regard to other matters which similarly have an effect as between the supplier and the business consumer.
Secondly, the “purpose or object underlying” the provision is to protect the “business consumer” (or “small business supplier” in the case of pars 51AC(1)(b) or (2)(b)), and the words “in connection with” must be given a construction that would promote that purpose or object (cf Acts Interpretation Act1901 (Cth) s 15AA). That the purpose of s 51AC is as stated is clear from the terms of s 51AC itself and from its legislative background. That background is recounted by French J in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd (No 2) (2000) 96 FCR 491 (“Berbatis”) at 494-496 and by Philip Tucker in “Too Much Concern Too Soon? Rationalising the Elements of Section 51AC of the Trade Practices Act” (2001) 17 JCL 120. The following are aspects of it of present relevance.
A prohibition of unconscionable conduct first appeared in the Act in the form of s 52A which was introduced by the Trade Practices Revision Act 1986 (Cth) (No 17 of 1986). The section prohibited corporations from engaging in unconscionable conduct in trade or commerce, in connection with the supply or possible supply of goods or services of a kind ordinarily acquired for personal, domestic or household use or consumption. The notion of “unconscionable” conduct was not defined, but, like the present s 51AC, the section included a non-exhaustive list of matters to which the Court was authorised to have regard for the purpose of determining whether a corporation had contravened the provision. The section called the acquirer of the goods or services a “consumer” and the non-exhaustive list of matters to which the section authorised the Court to have regard was a list of matters pertinent only to the relationship and dealings as between the corporation and the consumer. Similarly, the Explanatory Memorandum which accompanied the Bill for the Act stated (at par 79) that the section was intended to implement a recommendation in the Report of the Trade Practices Act Review Committee (the “Swanson Committee”) of August 1976 that unconscionable conduct be prohibited “to give the Act a greater ability to deal with the general disparity of bargaining power between buyers and sellers”. The Explanatory Memorandum noted, however, that at that stage the prohibition was being “limited to unconscionable conduct in relation to consumer-type transactions” (also at par 79). In the Second Reading Speech on the Bill, the then Attorney-General, the Hon Lionel Bowen MP, stated of the proposed s 52A:
“The section is directed at conduct which, while it may not be misleading or deceptive, is nevertheless clearly unfair or unreasonable. For example, a corporation which attempted to take advantage of a buyer’s obvious lack of understanding of a transaction might fall foul of this section. The new provisions will supplement existing provisions of Part V and strengthen the protection afforded to consumers against unscrupulous trading practices.”
(Parl Debs, HR, 19 March 1986, at 1627)
In sum, s 52A was intended to protect consumers in their dealings with corporations.
In 1992, Part IVA, comprising ss 51AA and 51AB, was introduced by the Trade Practices Legislation Amendment Act 1992 (Cth) (No 222 of 1992). Section 52A became s 51AB and a new subsection not of present relevance was added to it. The new s 51AA prohibited a corporation from, in trade or commerce, engaging in conduct that was unconscionable within the meaning of the unwritten law, from time to time, of the States and Territories. The section was not limited by reference to a connection with a supply of goods or services to a consumer or in any other respect. There is not, and could not be, any suggestion in the present case that MTA is in a position to rely on s 51AA.
In 1998, Pt IVA was amended by the introduction of s 51AC on which MTA relies. The amending Act was the Trade Practices Amendment (Fair Trading) Act 1998 (Cth) (No 36 of 1998).
The nature of s 51AC has been described earlier. It was enacted in response to a report entitled “Finding a Balance – Towards Fair Trading in Australia” of the House of Representatives Standing Committee on Industry, Science and Technology, to which the Government had responded by a document entitled “New Deal: Fair Deal – Giving Small Business a Fair Go”. In the Second Reading Speech on the Bill for the amending Act, the Hon Peter Reith MP, Minister for Workplace Relations and Small Business, stated as follows:
“This bill will provide a new substantive legal remedy for small business against unconscionable conduct in the Trade Practices Act. The government has accepted the principle that small business people are entitled to a legal protection against unconscionable conduct which is comparable to that accorded to consumers. This is an approach which has been recommended by a parliamentary committee to previous governments, but not acted upon.
Accordingly, the government will mirror for small business consumers, in a new section of the Trade Practices Act, the legal rights available to consumers in section 51AB, and incorporate a range of additional matters, set out in recommendation 6.1 of the committee’s report, in order to ensure that the new provision achieves its purpose of protecting small businesses. Existing consumer protections will not be affected by the new provision.
Business conduct which is unconscionable, having regard to the enumerated factors, will be prohibited by the act and give rise to a broad range of remedies under the act. This new provision will extend the common law doctrine of unconscionability expressed in the existing section 51AA of the act.
The bill uses the expression ‘unconscionable conduct’ in order to build on the existing body of case law which has worked well in relation to consumer protection provisions of the act and which will provide greater certainty to small businesses in assessing their legal rights and remedies. As this is a new provision targeted to small business, the new provision will be limited to transactions which do not exceed $1 million. Publicly listed companies cannot instigate action under this new provision.” (Parl Debs, HR, 30 September 1997, at 8800-8801.)
Clearly, the purpose or object of s 51AC was to protect small businesses in their dealings with “big business”.

Both the context internal to s 51AC and the legislative history to which I have referred, teach that the expression “in connection with” in s 51AC requires that the conduct impugned “accompany”, “go with” or “be involved in” the supply of the goods or services, and that it is not sufficient that, as alleged in the present case, such a supply be the occasion of unconscionable conduct of the supplier directed to an unrelated third party with which the supplier has no dealings at all. (MTA would have been no better placed in the present respect if it had relied on s 51AB – perhaps the more obvious choice, in that the services supplied by ICAA to candidates were of a kind ordinarily acquired for “personal … use or consumption”.)
Against the possibility that I am wrong in this conclusion, I will consider the position on the assumption that s 51AC does have a potential application in the circumstances of this case.
The Act does not define “unconscionability” for the purposes of s 51AC. It has been accepted that s 51AC, unlike s 51AA, invokes a notion of unconscionability which is not limited by reference to the general law doctrine: Berbatis at 503; Australian Competition and Consumer Commission v Simply No-Knead (Franchising) Pty Ltd (2000) 104 FCR 253 (Sundberg J) at [31]-[37]. The broader scope of the concept in s 51AC does not, of course, detract from the conclusion I reached in [260] above.
It has been said that “serious misconduct, something clearly unfair or unreasonable, must be demonstrated” (Cameron v Qantas Airways Ltd (1995) 55 FCR 147 at 179 per Beaumont J) and on appeal in the same case, that the conduct in question must satisfy the Shorter Oxford English Dictionary definition, “[s]howing no regard for conscience; irreconcilable with what is right or reasonable” (Qantas Airways Ltd v Cameron (1996) 66 FCR 246 at 262 per Davies J) and that the notion imports “a pejorative moral judgment” (ibid at 283-284 per Lindgren J, with whom Lehane J agreed). These passages were recently cited with approval by a Full Court of this Court differently constituted in Hurley v McDonald’s Australia Ltd (2000) ATPR 41-741 at [22].
ICAA has changed the training requirements which persons seeking admission to membership of it must satisfy. It has done so for the purpose of maintaining or raising the standards of its members and of the associated designation “chartered accountant” or “CA”. The changes may have had the effect of disappointing the expectations of those who had developed businesses of selling PY support services but this falls short of unconscionable conduct. MTA does not submit that ICAA engaged in unconscionable conduct vis-a-vis candidates (or their employers). I accept that ICAA acted in what it perceived to be an amalgam of their interests and the interests of the existing and future members of ICAA and their present and future clients. ICAA may have been misguided, but it has not engaged in unconscionable conduct.
CONCLUSION
For the above reasons, the application will be dismissed with costs.

I certify that the preceding two hundred and sixty-five (265) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lindgren.
Associate:
Dated: 6 August 2001

Counsel for the Applicant: Mr N Cotman SC and Mr P Renehan

Solicitors for the Applicant: Larbalestier & Co

Counsel for the Respondent: Mr B Coles QC and Mr P Walsh

Solicitors for the Respondent: Church & Grace

Dates of Hearing: 12, 13, 15, 16 March, 11 April 2001

Date of Judgment: 6 August 2001

Technical module $610 x 4 Ethics module	$2,440 $265 -------- $2,705
Application fee for membership of ICAA	$400 ------- $3,105 =====

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 826 OF 2000

BETWEEN:	MONROE TOPPLE & ASSOCIATES PTY LIMITED APPLICANT
AND:	THE INSTITUTE OF CHARTERED ACCOUNTANTS IN AUSTRALIA RESPONDENT
JUDGE:	LINDGREN J
DATE OF ORDER:	6 AUGUST 2001
WHERE MADE:	SYDNEY

JUDGE:	LINDGREN J
DATE:	6 AUGUST 2001
PLACE:	SYDNEY

Counsel for the Applicant:	Mr N Cotman SC and Mr P Renehan
Solicitors for the Applicant:	Larbalestier & Co
Counsel for the Respondent:	Mr B Coles QC and Mr P Walsh
Solicitors for the Respondent:	Church & Grace
Dates of Hearing:	12, 13, 15, 16 March, 11 April 2001
Date of Judgment:	6 August 2001