Thomson Australian Holdings Pty Ltd v Trade Practices Commission

[1981] HCA 48

HIGH COURT OF AUSTRALIA

Gibbs C.J., Stephen, Mason, Murphy and Wilson JJ.

THOMSON AUSTRALIAN HOLDINGS PTY. LTD. v. TRADE PRACTICES COMMISSION

(1981) 148 CLR 150

11 September 1981

Practice

Practice—Federal Court of Australia—Trade practices—Injunctions—Consent orders including undertakings about future conduct—Undertaking extending beyond court's power to restrain conduct by injunction—Trade Practices Act 1974 (Cth), ss. 45, 45A, 80, 86—Federal Court of Australia Act 1976 (Cth), ss. 22, 23.

Decisions

1981, September 11.
The following written judgments were delivered: -
GIBBS C.J., STEPHEN, MASON AND WILSON JJ. On 5 December 1975 the Trade Practices Commission commenced an action in the Australian Industrial Court (later transferred into the Federal Court) against 109 defendants, the first 107 defendants being corporations, seeking the recovery of pecuniary penalties and injunctions. All the corporate defendants were trading corporations and retailers of liquor from premises in New South Wales. The last two defendants were respectively the President and the Chief Executive Officer of the Australian Hotels Association (New South Wales Branch) ("the A.H.A."). The Commission alleged that the corporate defendants and other retailers of liquor from hotel premises in New South Wales were parties to an arrangement or understanding whereby they recommend to each other the prices at which liquor may be sold to the public from licensed premises. The Commission alleged that it was part of the arrangement or understanding that such prices be formulated or approved by executive officers of the A.H.A., and that such prices be circulated to each of the parties by executive officers of the A.H.A., that the arrangement or understanding was in restraint of trade or commerce and that each of the defendants had given effect to the arrangement or understanding. The Commission then pleaded alternative versions of the arrangement or understanding the details of which are unimportant. The Commission then alleged that the corporate defendants had conspired with others to contravene s. 45 of the Trade Practices Act 1974. An injunction was sought against each of the corporate defendants restraining it "from giving effect to the said arrangements and the said understandings and from conspiring with others to give effect to the said arrangements and the said understandings". (at p155)

2. Section 45 of the Trade Practices Act 1974, the provision dealing with arrangements and understandings in restraint of trade, was repealed by Act No. 81 of 1977. That Act replaced the old s. 45 by new provisions, ss. 45, 45A, 45B and 45C, which came into operation on 1 July 1977. The old s. 45 was in Pt IV of the Act; the new provisions are in the same Part. After a challenge to the validity of the old s. 45 by some of the defendants was overruled by the Federal Court (1977) 14 ALR 623 , consent orders were made against the 101st defendant, Travelcare Pty. Ltd. (at p155)

3. Five of the defendants (Nos. 16, 17, 18, 19 and 104) then signed terms of settlement, consenting to orders and agreeing to give undertakings to the Court. At this stage the appellant applied for leave to intervene in the proceedings on the ground that it would be adversely affected by the proposed orders and undertakings. Leave was granted and the appellant was added as the 110th defendant (1978) 18 ALR 17 . (at p155)

4. According to the evidence, the appellant is engaged throughout Australia in the publication of business and trade press magazines, including directories and price guides. Since March 1976 the appellant has published a price guide known as Thomson's Liquor Guide which was supplied to some 2,795 subscribers, including a number of the defendants in the action, who paid an annual subscription for that service. The appellant included in the Guide price lists for spirits, wines and beer. Late in the year 1975, by arrangement with the A.H.A., the appellant purchased the publishing rights in connexion with a publication formerly produced by the A.H.A. and entitled Retailers' Guide to Recommended Prices for Spirits, Wines and Beers. The appellant later became aware that the Commission was entering into terms of settlement with some of the defendants. (at p155)

5. The terms of settlement provided for the giving by each of the five defendants of undertakings to the Court in similar terms and for the making against each defendant of consent orders, again in similar terms. The nature of the undertakings and the consent orders is sufficiently illustrated if we set out that part of the terms of settlement which relates to the undertaking given by the 16th defendant, Cadea (No. 5) Pty. Ltd., and the consent orders to be made against it. They are in these terms:
"Cadea (No. 5) Pty. Limited, the 16th Defendant in these proceedings, hereby undertakes to the Court that it will promptly -
(a) notify the A.H.A. in writing that the 16th Defendant, its servants and agents, do not wish to receive any further A.H.A. circulars, price lists or guides containing prices or recommended prices for liquor and request the A.H.A. in writing not to send any further such circulars, price lists or guides to the 16th Defendant, its servants or agents; and (b) notify the publishers of Thomson's Liquor Guide in writing that the 16th Defendant, its servants and agents, do not wish to receive any further issues of Thomson's Liquor Guide and request the publishers of Thomson's Liquor Guide in writing not to send any further issues of Thomson's Liquor Guide to the 16th Defendant, its servants, or agents. AND HEREBY FURTHER CONSENTS to the making of an order by this Honourable Court in the following terms: - THIS COURT BOTH BY CONSENT ORDER that the 16th Defendant, by itself, its servants and agents, be restrained from - (a) formulating, approving or recommending prices for liquor as being the prices at which liquor is recommended to be sold to the public from licensed hotel premises or being a party to the formulation, approval or recommendation of such prices; (b) circulating prices for liquor as being the prices at which liquor is recommended to be sold to the public from licensed hotel premises or being a party to the circulation of such prices; (c) receiving price lists or guides containing prices or recommended prices for liquor (other than price lists or guides received directly from a supplier of liquor containing prices or recommended prices in respect only of liquor supplied by that supplier), or acting on such price lists or guides; (d) engaging in conduct of a like kind to, or conduct to the like effect of, the conduct described in paragraphs (a), (b) or (c) above, or being a party to such conduct. PROVIDED THAT in the event that the 16th Defendant receives an unsolicited price list or guide falling within paragraph (c) above, the receipt of such price list or guide shall not be a breach of this injunction provided that the 16th Defendant - (i) forthwith notifies the Trade Practices Commission in writing of the receipt of the price list or guide; and (ii) takes all reasonable steps to prevent the receipt of further price lists or guides from the same source."

6. The appellant opposed the acceptance of the undertakings and the making of the consent orders. The grounds on which the appellant put its opposition before Franki J. at first instance differed from the ground taken subsequently before the Federal Court and this Court. The appellant submitted to Franki J.: (1) that there was no power to grant injunctive relief in respect of any breach of s. 45 taking place before that section was repealed as from 1 July 1977; (2) that s. 80 does not permit the Court to grant an injunction in respect of acts no longer proscribed by the law; (3) that the pleadings did not allege a breach of the new s. 45; and (4) that the Court should not grant an injunction, even by consent, unless the relevant matters referred to in s. 80 were established either by evidence or admissions. (at p157)

7. Franki J. rejected these submissions. He went on to say:

"I consider that when the Court is asked by consent of the parties to a settlement to implement terms of that settlement it should not raise unnecessary difficulties about pleadings and, for example, require an amendment provided that the Court is satisfied that any consent orders it makes, or consent undertakings it accepts, are not inappropriate and are within jurisdiction. Section 80, both before and after amendment, allowed the Court to grant an injunction restraining a person from engaging in conduct which constitutes or would constitute a contravention of a provision of Pt IV. The amending Act introduced provisions which, inter alia, gave the Court power to grant an injunction restraining a person from engaging in conduct of a particular kind, being for example conduct in contravention of a provision of Pt IV, if it is satisfied that the person has engaged in conduct of that kind whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind."

The Commission had relied substantially upon s. 45 (2) (b) (ii) of the Trade Practices Act, as amended. The appellant had argued that there was no allegation in the pleadings that a provision of the arrangement or understanding had the purpose, or had or was likely to have the effect, of substantially lessening competition and that this was the essential element in the conduct proscribed by s. 45 (2) (b) (ii).

8. Franki J. responded to this argument by saying:
"I do not think it is the function of the Court to impede a settlement between parties legally represented and presumably well able to understand and evaluate the desirability of agreeing to a settlement, nor do I think it the function of the Court to refuse to give effect to terms of settlement by refusing to make orders or to accept undertakings where those orders or undertakings are within the Court's jurisdiction to make and accept and are otherwise unobjectionable. As I have said I consider that I am entitled to treat the terms of settlement, not being subject to any restriction, as supplying any necessary admissions as between the parties to the settlement."

9. Finally his Honour concluded that, even though the effect of accepting the undertakings and making the orders might seriously affect the appellant's business, this was not a sufficient reason for refusing to grant relief which was appropriate. His Honour accepted the undertakings and made the consent orders sought except the order set out in par. (d). He considered that par. (d) was too uncertain. (at p158)

10. The appellant then appealed to the Full Court of the Federal Court. The Full Court (Northrop, Deane and Fisher JJ.) held that the appeal ought to be allowed so far as it related to the injunctions set out in pars. (a), (b) and (c) of the consent orders and costs, but that the undertakings should be allowed to stand (1979) 40 FLR 257; 27 ALR 551 . (at p158)

11. The appellant's principal point now is that the Court had no power to accept the undertakings because the power to accept undertakings is necessarily confined to the limits which attach to the Court's power to grant injunctions. It is convenient to deal with this point in association with the Commission's cross-appeal which seeks to have the consent orders made by the primary judge restored because, so the Commission submits, the Court's power to grant injunctions is far more extensive than the Federal Court held it to be. (at p158)

12. The appellant objects to the competency of the Commission's cross-appeal. The Commission replies to this objection by saying that it brings its cross-appeal as of right under O. 70, r. 13 of the High Court Rules and that, alternatively, it seeks special leave to appeal. The appellant submits that O. 70, r. 13 has no application to appeals from the Federal Court of Australia, these appeals, it submits, being exclusively governed by s. 33 of the Federal Court of Australia Act 1976. It is unnecessary to enter upon a discussion of this argument as we decided, having regard to the importance of the question which the Commission desired to raise, to grant special leave to appeal. (at p158)

13. The Full Court of the Federal Court thought that the Court's power to grant injunctions was necessarily limited by s. 80 of the Trade Practices Act. Section 80 (1) enables the Court to

"grant an injunction restraining a person from engaging in conduct that constitutes or would constitute - (d) a contravention of a provision of Part IV or V; (e) attempting to contravene such a provision; (f) aiding, abetting, counselling or procuring a person to contravene such a provision; (g) inducing, or attempting to induce, a person, whether by threats, promises or otherwise, to contravene such a provision; (h) being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of such a provision; or (j) conspiring with others to contravene such a provision."

Of these paragraphs, par. (d) alone is relevant to the question which now arises.

14. Although it has been accepted by the Federal Court both at first instance and on appeal that any rights, privileges, obligations or liabilities existing prior to 1 July 1977 were not effected by the amendments coming into operation on that date (see s. 8 (c) and (e) of the Acts Interpretation Act 1901, as amended), there was no ground for granting an injunction to restrain future conduct unless that conduct was proscribed by the Act in its amended form. Consequently, the consent orders are to be justified, if at all, on the ground that they prohibit conduct which amounts to a contravention of the new s. 45 (2). (at p159)

15. That sub-section provides:
"A corporation shall not -
(a) make a contract or arrangement, or arrive at an understanding, if - (i) the proposed contract, arrangement or understanding contains an exclusionary provision; or (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, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision - (i) is an exclusionary provision; or (ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition." The word "competition" is defined by s. 45 (3) but it is unnecessary to set out the definition. The expression "give effect to" is given an extended definition by s. 4 (1), but again there is no need to set it out. However, we should refer to s. 45A which provides, inter alia, that a provision which has the purpose or has or is likely to have the effect of fixing, controlling or maintaining the price for goods supplied or to be supplied by a party to an arrangement or understanding shall be deemed, for the purpose of s. 45, to have the purpose, or to have or to be likely to have the effect, of substantially lessening competition.

16. Deane and Fisher JJ. rightly observed in their joint judgment (1979) 40 FLR, at p 271;27 ALR, at p 564 :
"While no amendment was made to the statement of claim to bring about an allegation, in precise terms, of breach of the provisions of the new s. 45, it requires no great ingenuity to perceive the likelihood that the facts alleged by the statement of claim to constitute a breach of the old s. 45 would, if established, constitute a breach of the new s. 45 (2)(a) and (b)."

17. What the appellant disputes is that s. 80 authorizes in this case the grant of an injunction which is not limited to the contraventions of s. 45. The appellant's submission on this point was upheld by the Full Court of the Federal Court which thought that the limitations contained in s. 45 (2)(b)(ii) must necessarily be reflected in the injunction. As the orders stand they extend to prohibiting actions which do not fall within s. 45 (2)(b)(ii) because they are not limited to restraining the defendants from making an arrangement or arriving at an understanding or giving effect to a provision of an arrangement or understanding which has the essential purpose or effect of substantially lessening competition. As we understand the Commission's case, it does not contest this claim. (at p160)

18. The Commission's case is that the power to grant injunctions is not limited to s. 80. It is extended by ss. 22 and 23 of the Federal Court of Australia Act. These two sections provide:

"22. The Court shall, in every matter before the Court, grant, either absolutely or on such terms and conditions as the Court thinks just, all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him in the matter, so that, as far as possible, all matters in controversy between the parties may be completely and finally determined and all multiplicity of proceedings concerning any of those matters avoided. 23. The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate."

In substance the Commission's case is that the two sections arm the Federal Court with general powers to grant relief by way of injunction and that s. 80 of the Trade Practices Act is designed to provide for the application of this general power to particular situations, notably situations in which it might have been doubted that the general power was available for one reason or another. The Commission's argument, if correct, would lead to the conclusion that there is no limitation on the Court's power to grant injunctions under the Trade Practices Act and that the exercise of the power is qualified only by the principles of general law governing the grant of injunctions and by discretionary considerations.

19. The Federal Court of Australia Act sets up the Federal Court and arms it with certain powers, e.g. ss. 22 and 23. But generally speaking, and apart from s. 32, the Act does not invest the Court with jurisdiction. It leaves it to the Parliament to do so by other statutes (s. 19). This the Parliament has done by other statutes, such as the Trade Practices Act. When a specific statute which invests the Court with jurisdiction in matters of a particular class does so in such a way as to limit the power of the Court to grant relief of a particular kind, there is no basis for transcending that limitation by recourse to the general provisions of the Federal Court of Australia Act. (at p161)

20. The provisions of that Act, correctly understood, do not empower the Court to grant injunctions restraining, or relating to, contraventions of the Trade Practices Act in situations falling outside the boundaries drawn by s. 80 of that Act. Section 22 of the Federal Court of Australia Act is a "Judicature Act" provision, designed to ensure that the Court can grant relief which is appropriate to both legal and equitable claims and to avoid multiplicity of proceedings. Its effect is to enable the Court to dispose of all rights, legal and equitable, in the one action, so far as that is possible - see, for example, The James Westoll (1905) P 47 ; McGowan v. Middleton (1883) 11 QBD 464, at p 468 ; Searle v. Choat (1884) 25 Ch D 723, at p 727 . See now Philip Morris Inc. v. Adam P. Brown Male Fashions Pty. Ltd. (1981) 148 CLR 170 . It does not confer authority to grant an injunction in circumstances where a plaintiff has no case for relief by way of injunction under the general law or by statute. So also with s.23; it arms the Court with power to make all kinds or orders and to issue all kinds of writs as may be appropriate, but it does not provide authority for granting an injunction where there is otherwise no case for injunctive relief. (at p161)

21. The Commission rightly emphasizes that, in general, a distinction is to be made between the jurisdiction of a court to hear and determine a matter and the power of that court to grant relief of a particular kind. It says that the relevant grant of jurisdiction to the Federal Court is to be found, not in s. 80 of the Trade Practices Act, but in s. 86, and that once it is perceived that the grant of jurisdiction flows from s. 86, it becomes apparent that there is attracted to the exercise of the jurisdiction thereby granted all the powers to grant relief contained in both the Trade Practices Act and the Federal Court of Australia Act. Thus, it is said, since the court is seised of jurisdiction, because, for example, the action is one for the recovery of penalties, the court has power to grant an injunction which does not conform to s. 80. This is to assume, wrongly as it transpires, that in this case the grant of jurisdiction is quite independent of the grant of power to grant relief. (at p162)

22. Section 86 is not a self-contained grant of jurisdiction; it operates by reference to proceedings for which provision is made elsewhere in Pt VI, proceedings which are described in terms of the particular relief which the court is empowered to grant. Section 86 conferred jurisdiction on the Court in the present case because the proceeding was one instituted by the Commission for the recovery of a pecuniary penalty which the Court was authorized to impose by s. 76 (see s. 77(1)) and because the proceeding was one in which the Commission was applying for an injunction which the Court was authorized to grant by s. 80. Section 86 therefore grants a jurisdiction which is specifically linked and limited to proceedings for relief sought under Pt VI, for ss. 76, 77 and 80 are all contained in that Part. The section does not set out to give the Court jurisdiction to hear and determine proceedings for any other relief; it does not, for example, confer jurisdiction in proceedings for relief under the Federal Court of Australia Act. (at p162)

23. A final answer to the Commission's argument on this point is that s. 80 proceeds upon the footing that it constitutes the Federal Court's exclusive charter to grant injunctions restraining, or relating to, contraventions of the Trade Practices Act. In various sub-sections of s. 80 references are made to injunctions granted "under" the section or a particular sub-section and to applications for injunctions "granted" under the section or a sub-section - see subs. (1A), (4) (a) and (b), (5) (a) and (b) and (6). Section 80 makes special provision in several respects for the grant of injunctions under the section - see sub-ss. (4),(5) and (6). It is scarcely to be supposed that the Parliament intended to draw a distinction in these respects between two classes of injunctions, one class of injunctions granted under s. 80 and another class granted under ss. 22 or 23 of the Federal Court of Australia Act. The inference is irresistible that Parliament looked upon s. 80 as a complete and comprehensive statement of the circumstances in which injunctions might be granted in respect of relief sought under the Trade Practices Act. (at p162)

24. Some endeavour was made to invoke by analogy the principle applied in constitutional cases, that once the jurisdiction of a court is attracted by a bona fide claim to relief, even though that claim may be defeated, the court is "clothed with full authority essential for the complete adjudication of the matter" - R. v. Bevan; Ex parte Elias and Gordon (1942) 66 CLR 452, at p 465 , per Starke J., see also, per Williams J. (1942) 66 CLR, at p 484 ; Hopper v. Egg and Egg Pulp Marketing Board (Vict.) (1939) 61 CLR 665, at pp 673-674 ; and Carter v. Egg and Egg Pulp Marketing Board (Vict.) (1942) 66 CLR 557, at pp 580,586-587,594,601-602 . This principle has no application here, where the source of the Commission's difficulty is an absence of authority in the Court to grant relief of the kind sought in the circumstances already outlined. (at p163)

25. The parties by consent cannot confer power upon the Court to make orders which the Court lacks power to make. As we have seen, the relevant jurisdiction of the Court in relation to the granting of an injunction is limited to the hearing and determination of actions in which application is made for the making of orders under s. 80 (1) restraining a person from engaging in conduct of a specified kind. The orders made (which were the orders sought) restrain the defendants from engaging in conduct that does not necessarily constitute a contravention of Pt IV. The paragraphs are not limited to restraining the defendants from making an arrangement or arriving at an understanding or giving effect to an arrangement or understanding where the arrangement or understanding has the purpose or would have or be likely to have the effect of substantially lessening competition or restraining the defendants from engaging in conduct giving effect to such a provision. The orders therefore lack the essential feature which distinguishes conduct amounting to a contravention of Pt IV from conduct which does not amount to such a contravention. (at p163)

26. We would dismiss the cross appeal on the ground that the Federal Court lacked jurisdiction or power to make the consent orders. However, we should not wish it to be thought that it was necessary for the appellant to show an absence of jurisdiction or power in order to succeed. The appellant as a party to the proceedings is entitled to argue that any order made by the Court should conform to legal principle. In the ordinary case where a third party in the appellant's situation is not a party to the proceedings the Court will be justified in making consent orders, if it has jurisdiction and power so to do and the orders are such as to be capable of enforcement. Even in such a case the Court would be justified in refusing to make the orders if they do not conform to legal principle. And in a case such as the present when the third party has been joined in the proceedings, the Court should consider and decide whether the orders sought conform to principle. In deciding whether consent orders sought are in conformity with legal principle the Court is entitled to treat the defendants' consent as involving an admission of all facts necessary or appropriate to the granting of the relief sought. (at p164)

27. It is not necessary to consider the question whether, on the assumption that there was power to make them, the orders were correctly made. Nevertheless we should make some comment on the suggestion that, if the Federal Court had power to make the orders, it should have taken into account as a reason for declining to make an order the damage which would be occasioned to the appellant's business. The appellant is bound to accept any damage to its business which is consequential upon the enforcement by the Commission against the defendants of the provisions of the Trade Practices Act so long as that damage does not constitute an infringement of the appellant's legal rights, if any. As it has not been suggested that the appellant possesses any relevant legal rights against the defendants it is necessarily bound to sustain such damage as may be caused to it by any agreement made between the Commission and the defendants whereby the defendants agree not to accept the appellant's Liquor Guide. There is no legal basis on which the appellant can prevent the defendants from exercising their freedom of action in such a way as will entail business loss of the kind in question to the appellant. (at p164)

28. This brings us to a consideration of the appellant's challenge to the acceptance by the Court of the undertakings proffered by the defendants. The power to accept and to enforce an undertaking is, as Deane and Fisher JJ. observed, "an invariable attribute of a superior court whose proceedings are protected by rules relating to contempt of court and is inherent in the grant of jurisdiction to grant injunctive relief". An undertaking to the court is given in lieu of an injunction and, if broken, is treated as the equivalent of an order for the purpose of enforcement; it may therefore be enforced in the same manner as an injunction - Milburn v. Newton Colliery Ltd (1908) 52 Sol Jo 317 ; London and Birmingham Railway Co. v. Grand Junction Canal Co. (1835) 1 Ry &Can Cas 224, at p 241 ; In re National Federated Electrical Association's Agreement (1961) LR 2 RP 447, at p 452 ; Biba Ltd. v. Stratford Investments Ltd. (1973) Ch 281, at pp 285-287 .

29. As an undertaking is given in lieu of an injunction and is enforceable in like manner, the principles which govern the grant of an injunction by a court must guide it in deciding whether it should accept an undertaking. Limitations which affect the court's jurisdiction or power to grant a final injunction must be observed in the acceptance of an undertaking when it is offered as a substitute for a final injunction. The court cannot escape such limitations by the expedient of accepting an undertaking in lieu of an injunction. The court cannot put itself in the position of enforcing conduct which it has no capacity to command or compel. No doubt the Federal Court has power to accept an undertaking at an interlocutory stage when the undertaking is reasonably related to the orderly procedure of the Court or to the subject matter of the litigation, as Deane and Fisher JJ. observed, even though it is not in a form which falls within s. 80. But, with great respect to their Honours, this does not justify the conclusion that the Court has power to accept an undertaking by way of final disposition of the case when the Court lacks power to make a final order in that form and the effect of the undertaking is to restrain conduct which the Court has no power to restrain. (at p165)

30. In general the court must, in deciding whether it will accept from a defendant an undertaking to which the plaintiff takes no exception, be guided by the principles which apply to the making of a consent injunction, principles which we have already discussed. As in the case of a consent order, there is no reason for thinking that the court should as a matter of discretion refuse to accept an undertaking merely because it will cause damage to a third party who is a defendant, if it involves no infringement of that party's rights, and it is within power, capable of enforcement and in conformity with legal principle. (at p165)

31. In the end we are unable to distinguish the undertakings and the consent orders. As the Court lacked capacity to enforce the undertakings, they should not have been accepted. (at p165)

32. Nothing we have said is to be taken as throwing doubt on the practice of the courts in accepting undertakings to publish an apology in defamation cases and in accepting undertakings by a defendant to pay a particular account as a basis for assessing damages. In each of these two instances what the defendant undertakes to do is clearly relevant to the court's function in assessing damages - the publication of an apology mitigates damages and the payment of an account has a similar effect. (at p166)

33. We would allow the appeal, dismiss the cross appeal and remit the matter to the Federal Court. (at p166)

MURPHY J. Section 80 of the Trade Practices Act 1974 ("the Act") states exhaustively the circumstances in which the Federal Court may grant injunctions restraining contraventions of the Act. The specification in s. 80 excludes resort to the general injunction powers in ss. 22 or 23 of the Federal Court of Australia Act 1976. Section 80 read with s. 45 (2) of the Act authorizes injunctions restraining persons from making an arrangement or arriving at an understanding that has the purpose, or would have or be likely to have the effect, of substantially lessening competition or restraining persons from engaging in conduct giving effect to such an arrangement or understanding. The alleged arrangement or understanding related to price fixing, and s. 45A elaborates that certain provisions of arrangements or understandings in relation to prices, shall be deemed to have the purpose of or have or be likely to have the effect of substantially lessening competition. (at p166)

2. The consent orders made by the primary judge, Franki J. were not expressed to be limited to restraining conduct in the terms of s. 45 (2). Also the undertakings accepted by Franki J. were not limited to refraining from such conduct. The Full Court of the Federal Court held that the consent orders (but not the undertakings) must be so limited. I do not accept that the orders must be so limited. It is generally undersirable for an injunction to be expressed in general terms. An injunction should state the specific acts which are forbidden (and if possible what acts are not forbidden) with as much certainty and clarity as possible (Iberian Trust Ltd. v. Founders Trust and Investment Co. Ltd. (1932) 2 KB 87, at p 95 ; P.A. Thomas and Co. v. Mould (1968) 2 QB 913 ; Wilson &Whitworth Ltd. v. Express &Independent Newspapers Ltd. (1969) 1 WLR 197; (1969) 1 A11 ER 294 ; Philadelphia Dairy Products v. Quaker City Ice Cream Co. (1932) 84 ALR 466 ; Resler v. North Eastern Motor Freight, Inc. (1964) 388 P 2d 255 ; City of Wichita Falls v. Jensen (Tex. Civ. App) (1949) 221 SW 2d 1015 ). The same applies to undertakings. (at p166)

3. If the matter had been fully heard and determined the Court might have held that the specific conduct (restrained in the order by consent) was or would be conduct which contravened s. 45 (2) and therefore might have made the order in the same terms. Franki J. correctly treated the parties enjoined as having made all necessary admissions, that is, that the circumstances justified the making of the injunctions and the acceptance of the undertakings. There is force in the statements by Franki J. (set out in the reasons of the majority in this Court). In general courts should not go behind settlements arrived at by parties. There are exceptions for example where parties are glossing over some illegality. Also, of course, courts cannot make orders outside jurisdiction. Consent does not confer jurisdiction, but the Federal Court as a court of superior jurisdiction is presumed to act within jurisdiction (Scott v. Bennett (1871) LR 5 HL 234 ; Peacock v. Bell (1667) 1 Wms Saund 69 (85 ER 81) ; R. v. St. Edmunsbury and Ipswich Diocese (Chancellor); Ex parte White (1947) 2 A11 ER 170, at p 172 ; see also Philip Morris Inc. v. Adam P. Brown Male Fashions Pty. Ltd. (1981) 148 CLR 170 ) and every circumstance essential to the validity of its orders is presumed. It has not been proved that in the circumstances of the case the specific orders fall outside the scope of conduct prohibited by s. 45 (2). (at p167)

4. The appellant here contends, in accordance with the reasoning of the Full Court of the Federal Court, that the orders were not authorized unless limited to restraining the defendants from making an arrangement or arriving at an understanding where the arrangment or understanding has the purpose or would have or be likely to have the effect of substantially lessening competition or restraining the defendants from engaging in conduct giving effect to such an arrangement or understanding. But this would be to order the defendants in effect "do not do X where to do so would be a contravention of s. 45 (2) of the Act". Any such order would offend the rule against vagueness and uncertainty of injunctions. The purpose of bringing proceedings is to establish that specific conduct would be a breach of s. 45 (2) (that is according to the applicable civil standard, it would probably be a breach) and to have it enjoined. It would be an unsatisfactory if not absurd conclusion of such proceedings for a court to enjoin specific conduct only in circumstances where it would breach s. 45 (2). The injunction proceedings would prove nothing. Corporations and others to whom s. 45 (2) applies are bound not only to refrain from the specific conduct where to do so would breach the sub-section, but from any conduct which would breach it. Presumably the issue of whether or not the specific conduct was a breach of s. 45 (2) would wait to be determined by proceedings for breach of the injunction. (at p168)

5. The problem inherent in making specific orders, not limited in terms to the limits of the statute or other law under which a court makes its order, is, as the appellant claims, the possibility that in the existing circumstances the order may restrain conduct some of which is permissible by that law, or that circumstances may change (or the law may change) so that some or all of the conduct may be permissible. That is a general problem and is met by the rule that permanent as well as interlocutory injunctions may be dissolved or varied. Application for dissolution may, if appropriate, be made by a third party affected by the order Cretanor Maritime Co. Ltd. v. Irish Marine Management Ltd. (1978) 1 WLR 966; (1978) 3 A11 ER 164 . (at p168)

6. The order may be regarded as restraining specific conduct (which if carried out may or may not be a breach of s. 45 (2)) because it has been admitted that it probably (although not certainly) would be a breach. So regarded, it was properly made. If it were shown that the specific conduct could not be a breach of s. 45 (2) then the order should be set aside. But here the appellant has not demonstrated that any conduct restrained by the order necessarily falls outside s. 45 (2).

Undertakings (at p168)

7. The Federal Court held that a court may accept a party's undertaking "where the content of the undertaking is reasonably related to the orderly procedure of the court or to the subject matter of the litigation", even if the court could not have ordered the party in the terms of the undertaking. Such undertakings are common (in final dispositions as well as at interlocutory stages) and a breach is punishable as a contempt of court. One very common example is the acceptance in a defamation action of a defendant's undertaking to publish a subsequent apology, although the court has no power to order such publication. Another is the acceptance in personal injury cases of undertakings to pay outstanding accounts. The acceptance of such undertakings is reasonably related to the subject matter of the litigation. The power to accept undertakings in terms not limited to those which the court has common law or statutory power to make orders, is an inherent or common law incident of non-federal judicial power. A similar inherent power or common law of federal judicial power should be recognized (cf. Taylor v. Taylor (1979) 143 CLR 1 ). No authority was cited for the proposition that a court's power to accept an undertaking is limited to the terms in which it could issue an injunction or other order. I find it unsatisfactory to recognize such a power in relation to interlocutory stages, but not in relation to the final disposition of a case. It would inhibit parties in arriving at settlements, and often require an otherwise unnecessary judicial investigation of the facts and the law to ensure that the court is keeping within the limits of its power. (at p169)

8. The Federal Court's approach was that whether or not the undertakings were beyond what it could have ordered directly, it had power to accept the undertakings if they were "plainly and reasonably related to the matter before the Court". This approach was correct, and the Federal Court was correct in holding that the undertakings in question were plainly and reasonably related to the matter before the Court. (at p169)

9. My conclusion is that the consent orders (including the acceptance of the undertakings) made by Franki J. should not have been disturbed. (at p169)

10. The appeal should be dismissed. The cross appeal should be allowed. (at p169)

Orders

Grant the first respondent special leave to cross appeal.

Appeal allowed.

Cross appeal dismissed.

Order of the Federal Court of Australia set aside and in lieu thereof order as follows:
"1. Appeal allowed.
2. Order of Franki J. set aside, and in lieu thereof order that the undertakings offer ed on behalf of the sixteenth, seventeenth, eighteenth, nineteenth and one hundred and fourth defendants be not accepted by the court and that the injunctions sought against those defendants be refused and that the plaintiff pay to the one hundred and tenth defendant its costs of the proceedings. 3. Order that the first respondent pay the appellant's costs of the appeal."

Order that the first respondent pay to the appellant its costs of the appeal and cross appeal.