Trade Practices Commission v Axive Pty Ltd

COURT OF AUS-

UTH W-

IS-

No. NG953 of 1993

BETWEEN: p

Applicant

M D

First Respondent

CORAM I	Sheppard J
PLACE :	Sydney

DATE

15 December 1994

lK@-&mU~onour: These proceedings were commenced on 3 December

1993. On that day the Court granted the Commission leave to eerve short notice of an application for an interlocutory injunction for 8 December 1993. On 8 December 1993 the Court by consent ordered that, until further order, the respondents be restrained from directly or indirectly implementing, observing, performing or otherwise giving effect to the contract, arrangement or understanding specified in particulars to paras 7 and 8 of the statement of claim. The transaction referred to was alleged to have been entered into at a meeting which took place on 8 October 1993 at the Sydney Markets Industries Club. It was said to have been confirmed at a meeting held at the Epping RSL Club on 9 November 1993. It was alleged that the respondents, other than the eighteenth

and nineteenth respondents, agreed that, as from 8 October 1993, there would be a minimum price at which they would sell ice being a base price of $1.00 for a 3.5 kilogram bag, $1.50 for a 5 kilogram bag and $3.00 for a 10 kilogram bag. It was alleged that the eighteenth and nineteenth respondents agreed that the minimum price would apply from 9 November 1993. The arrangement was to apply to "all new sites".

There are twenty respondents. They are all companies or persons, or employees of companies, engaged in the manufacture and sale of bulk and packaged ice. The particular activity in question is the distribution of ice in plastic bags to retail outlets, usually motor service stations and bottle shops. Frequently, particularly in the case of service stations, the supplier places at the retail outlet a refrigeration cabinet to which ice is from time to time delivered. In some cases it is said to be delivered "on consignment", but whether this is done or not, the distributor receives an agreed price per bag from the operator of the retail outlet. The price charged the customer, i.e. the consumer, is a matter for the operator of that outlet. It is no concern of the distributor. The evidence does not deal with the matter directly, but it seems unlikely that reductions in the price charged outlets for ice supplied to them would usually be passed on to the consumer.

A further matter to be noted is that packaged ice is sold at outlets whose principal business is the selling of other commodities, e.g. petrol or liquor. Customers of service

stations or bottle shops would, in many cases, be attracted to particular service stations or bottle shops because of discounted petrol or liquor. On the other hand, the availability of ice on the premises is more likely to be regarded as a convenience. It seems unlikely that many people would go searching for the cheapest ice in their district.

Many of the ice manufacturers in the State were, at the relevant time, members, of an association known as the Ice Manufacturers' Association of New South Wales ("the Association"). Some were also members of an Australia-wide organisation known as the Packaged Ice Association of Australia.

z h e m

of 8 October 1991

On 8 October 1993 a meeting of the Association was held at the Sydney Market Industries Club. In attendance were each of the respondents or, representatives of the respondents, other than the eighteenth and nineteenth respondents. It is common ground that, at the meeting, a contract arrangement or understanding was made which was to the effect that there would be minimum prices charged by those in attendance for sales of bagged ice to "new sites". The meeting set minimum prices for the different sizes of bags in use in the industry as alleged in the statement of claim. It is also common ground that the contract, arrangement or understanding was in contravention of 6.45 of the Trade Practices Act 1974 ("the Act") in that it had the purpose or effect or was or would be

likely to have the effect of lessening competition by reason of the operation of s.45A of the Act. It is also common ground that the eighteenth and nineteenth respondents became implicated in the agreement at the further meeting held on 9 November 1993.

-	m
At various hearings of the matter during the first half of 1994, numbers of the respondents gave undertakings to the Court having the effect of permanently restraining them from implementing the agreement. Subject to the approval of the

. . v m&Miu

Court (c£

Limited

(1981) 37 ALR 256 at 258-g), penalties for the breaches of 6.45 of the Act which had been committed were agreed upon. In each case, where this was done, the Court approved the penalties proposed to it and made other orders, including orders for costs, thus disposing of the proceedings against numbers of the respondents.

The proceedings, however, are still on foot in relation to the first respondent (to which I shall refer as "Axive") ,

the second respondent, Mr Haydon, who is the manager of Axive, the seventh respondent (to which I shall refer as "Abbco"), the seventh respondent, Mr Scott who is a director of Abbco, the twelfth respondent, Kr Jeffree (to whom I shall refer as "Lidconbe Ice"), the fifteenth respondent (to whom I shall refer as "Mr Tite") and the twentieth respondent, Mrs Tite.

Mrs Tite was added as a respondent by order made on 22 April

1994.

There is also the eleventh respondent but he, like many of the other respondents, has reached an agreement with the Commission so that it remains only to make appropriate orders to give effect to that agreement which I am satisfied should be approved.

This judgment concerns the disposal of the proceedings against Axive and Mr Haydon, Abbco and Mr Scott and Mr Jeffree, and the Titee. On 28 July 1994 these respondents withdrew their defences. The principal question to be decided is what penalties should be imposed for the breaches of the Act which have occurred. In the case of Abbco and Mr Scott and Mr Jeffree, there is also the question whether a permanent injunction should be granted against them.

et for Packaaed Ice

Because of differences in the factual situations relating to these three groups of respondents, it is necessary to consider each group separately. Before I do so, I should say something of the market for packaged ice. The evidence establishes that there are a number of geographic markets, the principal of which is the market for metropolitan Sydney. Another is the market for Newcastle and the surrounding area. There are other markets in a variety of country centres or districts. It would be unlikely, because of the nature of the

product and the costs of transportation, for participants in any one market to be in competition with any participant in any other market. The Sydney market consists of five major participants. These are a company described in the evidence a6 "Bells" (Bells Pure Ice Pty Limited), Arctic Ice, which was the thirteenth respondent, a company known as Piegerts Ice Work6 Pty Limited ("Fiegerts"), Abbco and Lidcombe Ice. Because of Mr Scottls and Mr Jeffree's participation in both organisations, Abbco and Lidcombe Ice tend to operate together.

At the relevant time each of these except Bells was a member of the Association. The evidence suggests that Bells, Fiegerts and Arctic Ice were each larger than Abbco/Lidcombe. Fiegerts was not joined as a respondent because

Mr A.T. Fiegert was its managing director. He informed the

Commission of the agreement made on 8 October 1993 and has been called as a witness by the Commission in its case.

Neither Axive nor the Tites operate in the Sydney market. Axive operates in Newcastle. Its manager, Mr Haydon, is the president of the Association and was chairman of the meeting held on 8 October 1993. Mr Tite carries on business from Tahmoor near Picton south-west of Sydney. Although he sells to some outlets in the outer metropolitan area, his business is principally in country areas to the west and south of Sydney. Mrs Tite was the Association's secretary. She was

present at the meeting held on 8 October 1993 in that

capacity.

The agreement made on 8 October 1993 was said to have been triggered by a "price war" amongst several of the Sydney manufacturers. It seems to have been restricted to the Sydney market. Neither Axive nor Tite was affected by it. Neither was in competition with any of the parties to it, nor were they in competition with each other. It follows that neither had anything to gain from the agreement. It did not touch the markets in which they operate. The evidence discloses that Bells operates in the Newcastle market and is thus one of Axive's competitors. But Bells is not a member of the Association and was not a party to the agreement.

Against that background, I come to the particular facts relating to each of the three groups of respondents. In each case the parties had agreed on a statement of facts which forme the nucleus of the material to be considered. I begin with the case involving Axive and Kt Haydon.

Case aa-t

h i v e

Axive carries on business under the name, "Newcastle Ice and Cold Storage". It operates from premises in Kotara, a Newcastle suburb. Mr Haydon is its manager. Mr Haydon received a notice of the meeting to be held on 8 October 1993. The notice was dated 26 September 1993 and signed by Mrs Tite as secretary of the Association. Early in October, he

received a number of documents from Ken Smith, the President of the Packaged Ice Association. As mentioned,

Mr Haydon was chairman of the meeting held on 8 October 1993.

In the words of the agreed statement of facts he "led the diecussions".

Paragraphs 6-12 inclusive " of the agreed statement of facts are ae follows:

"6. At the meeting referred to in paragraph 5 hereof [i.e. the meeting held on 8 October 19931, a contract, arrangement or understanding was made or arrived at which was to the effect that there would be minimum prices charged by those in attendance for sales of bagged ice to 'new sites', and the meeting set those minimum prices for the different sizes of bags in use in the industry.

7. The contract, arrangement or understanding referred to in paragraph 6 hereof, as entered into by or on behalf of the corporations then represented which were in competition with each other (including the First Respondent), was in contravention of Section 45 of the Trade Practices Act ('the Act'), in that it had the purpose or effect or was or would be likely to have the effect of lessening competition by reason of Section 45A(1) of the Act.

8. The Second Respondent entered into the contract, arrangement or understanding referred to in paragraph 6 hereof, on behalf of the First Respondent.

9. By engaging in the conduct referred to in paragraph 8 hereof, the Second Respondent aided or abetted or counselled or procured or induced or attempted to induce or was, directly or indirectly, knowingly concerned in, or party to, the contravention of the Act referred to in paragraph 7 hereof, which conduct constitutes conduct of the kind referred

to in Sections 76(l)(c), (d) and (e) and

80(l)(c), (d) and (e) of the Act.

10. The First and Second Respondents were repreeented before the Court in these proceedings on 8 December 1993, and connented to the injunction ordered againet it and him on that day.

11. The First and Second Respondents entered undertakings in the Court on 17 December 1993, replacing the injunction ordered on 8 December 1993, and "further undertaking to advertise in the Newcastle Herald and the Service Station Association Journal, and to eend a notice to each of the customers of the First Respondent within seven (7) days, advising of the proceedings brought by the Applicant.

12. Pursuant to the undertakings given to the Court, advertisements were placed on behalf of the First Respondent in the Newcastle Herald on 23 December 1993, and notices were sent to the customers of the First Respondent."

The evidence to which I have referred establishes that the statement made in para 7 of the agreed statement of facts to the effect that the corporations which entered into the agreement were in competition with each other requires qualification.

It remains to note that the gross turnover of Axive's business for the 1992-93 financial year was $490,000. Of this 20 per cent was attributable to its cold storage business. Axive employs four full-time employees and also casual staff as needed during peak periods.

In addition to the statement of facts, reference was made

by counsel for the Commission to certain paragraphs of an

affidavit of Mr Fiegert sworn on 2 December 1993. He also relied on the affidavit of Mr P.A. Shevtzoff sworn on 14 April

1994. Mr Haydon swore two af fidavits, one on 4 February 1994 and the other on 30 November 1994. He was cross-examined by counael for the Commission. Neither Piegert nor Mr Shevtzoff was cross-examined.

In his affidavit, Mr Fiegert said that he was the managing director and owner of Fiegerts. Its main business involves manufacturing and wholesaling block and party ice. He said that party ice was a general term used to describe ice made in small pieces. He said that the main companies involved in ice manufacturing in the greater Sydney area were Abbco, Lidcornbe, Bells, Arctic and Fiegerts. He said that he customarily represents Fiegerts at meetings of the Association. He has been its Treasurer since 1982. A copy of the Association's constitution was annexed to his affidavit. It is not necessary to refer to any part of the constitution.

Mr Fiegert said that, in the period from 1 September 1993 to 8 October 1993, Fiegerts lost approximately 20 of its then customers. He thought that this was an unusually large number to lose in such a short time. He spoke to representatives of these customers but did not give evidence of what was said in these conversations. However, he referred to the period in question as the "price war". He said that during this period Fiegerts responded by lowering its prices to match or undercut prices being offered by Abbco and Lidcombe. He gave details

of the prices that were charged and said that price reductions were required in order to retain the number of customers and to win cumtomers from competitors.

Mr Fiegert gave an account of the meeting of 8 October 1993. He said that Mr Haydon announced that the purpose of the meeting was to agree on a .base price. Mr Fiegert said that he asked whether this was legal. Mr Haydon said that when "they" (meaning the Packaged Ice Association) agreed to set their base prices, one of the ice companies took its own solicitor to the meeting. Mr Haydon said that the solicitor assured the meeting that they were not breaking the law because it was called a base price. This was not illegal. He added that, if they called it a minimum price, that would have been illegal. Mr Fiegert said, "I don't know." Another person at the meeting said that he had spoken to the Commission and that they had said that setting a base price was not illegal.

Mr Fiegert said that for the next ten or fifteen minutes the meeting broke up into several different conversations. It was called to order by Mr Haydon. Mr Haydon said, "We are going to try to agree to set a base price for 3.5 kilo bags,

5 kilo bags and 10 kilo bags. We will get everyone to say

what they think is a fair price and we will start with you. What do you consider a fair price for a 3.5 kilo bag?".

Mr Haydon was addressing Mr Fiegert who said "$1.15". This,

Mr Haydon said, was Piegerts' normal wholesale price before

the price war. Each person at the table gave a price in turn. The lowest was 80c and the highest $1.20. A discussion began to decide the base price. The only speakers whose conversation Mr Fiegert could remember were Mr Tite and a man called Ross, whose surname he did not know. He thought he was associated with Arctic Ice. Mr Tite said that he could not charge $1.00 at Goulburn because one of the local hotels was charging 60c a bag. The man known as Ross said that 60c or $1.00 would not matter in Goulburn. He also said that his company was 2Oc dearer than the Tites in Goulburn and it did not make any difference to it. Eventually Mr Haydon said, "We'll have a show of hands for $1.00." Mr Fiegert said that all members raised their hands. He said that he raised his. The meeting went on to discuss 5 kilo bags and 10 kilo bags. Eventually it was agreed that the price for these would be $1.50 and $3.00 respectively.

Mr Fiegert then said, "If a big customer wants a quote on bulk orders I should be able to quote cheaper prices." He said that many of the people at the meeting disagreed with what he had said. The following conversation took place between him and Mr Jeffree.

*"Mr* Jeffree said:	'Everyone's agreed to the base price. If you don't, the price war is back on.'
I said:	'Even a 'one offf bulk order?'
Mr Jeffree said:	'You've agreed to the base price, that's what you've got to quote or the price war is back on.'

I said:

'If we all quote a dollar, the customers will go to the closest supplier. Where's the competition in

that7

Mr Scott said:

'If you want to get bigger, buy another ice company. DO you want this . . . fight to continue? Because if you do, we are quite prepared to carry on and hit you harder.'

I said:

'1'11 go along with it."'

Mr Fiegert said that Mr Scott then said that, if he found out that "you've quoted" under the base price, "the price war is back on". As I understand Mr Fiegert's evidence Mr Scott was addressing the meeting generally when he used the expression "you've".

According to Mr Fiegert, Mr Haydon said, "Does everyone agree with the base prices?". Some people said "yes". Some did not speak. According to Mr Fiegert no one disagreed.

Mr Haydon suggested another meeting in a month to see if

everyone was "going along with the rules". He announced that the next meeting would be held on 9 November 1993. Minutes of the meeting were to be sent to everyone and the next meeting would be notified.

The next meeting was held at the Epping RSL Club on 9 November 1993. Mr Fiegert said that somebody asked, "How legal is what we're doing?". He could not remember who asked the question. Mr Dawes who was the eight<-~th respondent said that it was "very illegal". He added, "You can't even talk together about prices. What we are doing is very illegal."

Mr Fiegert said that there was no discussion of Mr Dawes'

remarks and the meeting continued. Eventually Mr Fiegert said that his company would not be able to grow with the threat of Abbco and Lidcombe Ice doing more damage to it. Mr Scott of Abbco said, "If you do not agree to the base price, the price war will be back on and we'll be going after your customers."

Mr Shevtzoff is an investigating officer in the Sydney office of the Commission. He attended the meeting on 9 November 1993 at the Epping RSL Club. Naturally he did not identify himself. I do not find it necessary to refer to the detail of the account of the meeting which he gave. He was not cross-examined and I accept his evidence. I mention, however, the conversation recounted in para 11 of his affidavit which was as follows:

"At about this stage of the conversation two men arrived together. I observed that one of them was wearing overalls on which a penguin was embroidered. The logo used by Arctic Ice Pty Ltd incorporates a penguin.

Mr Haydon said: 'Hi Rose. Peter. We're talking

about how the agreement is going.

I'll fill you in later.'

Mrs Tite said:

'What I am uncertain about is just

how legal all this is?'

Mr Dawes said:

'It is a price fix, it is illegal. I had dealings with Trade Practices a couple of times, over petrol and you can't agree on prices, can't even talk prices. What we are doing is just not on.'

Mr Scott said:

'It's collusion.'"

I do not refer to the detail of Mr: Haydon's affidavits but I have taken them generally into account in arriving at my conclusion. I mention some of the matters that are dealt with but the account I give is by no means exhaustive. In his affidavit of 4 February 1994, Mr Haydon gave an account of the history of Axive. He mentioned the number of employees it had

and the fact that, from time . to time, it employed casual

employees. He said that its customers were within the geographical area as far south as Budgewoi at the northern end of the Tuggerah Lakes, as far north as Muswellbrook, as far north-east as the Karuah River, which opens into Port Stephens, and as far west as Cessnock. He said that his competitors included Bells, who sold in the Newcastle area. They were not members of the Association nor did they attend the meetings. Additionally, there were Lees Ice, which was located in Toronto, and Smithee's Ice which was situated at Kurri Kurri. NO person representing those companies was present at the meetings.

Mr Haydon said that he is the President of the Aesociation. He has held the position since 1991. He said that, on or about 1 September 1993, he had become aware of a dispute in Sydney between three manufacturers of ice, Piegerts, Abbco and Lidcombe. He said that he was aware that those persons had been attempting to entice customers away from each other by reducing their respective prices for ice. The dispute was concerned only with those persons and he was not aware of any other supplier being involved in the dispute.

He said the dispute did not affect his business because those persons did not supply ice in the area in which he operated.

On 20 September 1993 he attended a meeting of the Aesociation which was held at Forster. Mrs Tite took the minutes. The Sydney problem was discussed. I do not refer to the detail of that discussioq which is recounted in his affidavit. Mr Haydon said that on 26 September 1993, a meeting of the Association was called for 8 October. He said that he had no involvement in the organisation of the meeting. The first time he became aware of it was when he received a letter signed by Mzrs Tite dated 26 September 1993. The meeting was said to be called for "any Ice Manufacturer who is concerned about the wholesale pricing and distribution of Ice in the state of NSW.' Mrs Tite added that the ice industry was becoming very unstable and "we need to get together to help stabilize our Ice Industry."

Mr Haydon then referred to the documents he had received from Mr Smith of the Packaged Ice Association which he described as the "Australian Association of Ice Manufacturers".

Mr Haydon said that he attended the meeting on 8 October 1993. Minutes were taken by Mrs Tite. A copy of the minutes is annexed to his affidavit. He gave an account of the meeting to which I do not refer in detail. It is not materially different from that given by Mr Fiegert. Mr Haydon

said that he did not understand the term "new sites" to which

the base price was intended to apply.

Mr Haydon said that the meeting did not "prevent" the

dispute between Mr Fiegert, Mr Scott and Mr Jef free. He said

that each of those persons continued to undercut the

"equilibrium price of ice" in the Sydney area.

Mr Haydon referred to the meeting of 9 November 1993. He described what there occurred. Again it is unnecessary to refer to the detail of his evidence. Finally, Mr Haydon said that he had read Mr Fiegert's affidavit. He dealt with it paragraph by paragraph. Some of what Mr Fiegert said he did not recall but the bulk of what Mr Fiegert had said was agreed by Mr naydon to be correct.

In his affidavit of 30 November 1994, Mr Haydon said that, following discussions between his solicitors and the eolicitors for the Commission, he gave an undertaking in the form contained in a document entitled "Short Minutes of Order" dated 17 December 1993. The undertaking required Axive, at its own expense, within 7 days of 17 December 1993 to send to each of its existing customers a notice in terms of that annexed to the Short Minutes. Approximately 190 of these letters were sent out. The undertaking also required Axive to publish in the Newcastle Herald within 7 days of 17 December 1993 an announcement in the terms of another annexure to the Short Minutes. The advertisement was inserted. Axive was

also required to publish a statement in the Service Station Association Journal. Through an oversight he failed to do thin. His affidavit explains the circumstances. I accept the explanation.

Paragraph 8 of Mr Haydon's affidavit is as follows:

"At no time during the course of the meeting on 8 October 1993 did I appreciate that any unlawful arrangement or agreement was being entered into or that the meeting was unlawful and in breach of the Trade Practices Act. On or about 20 September 1993 I attended a meeting of the Ice Manufacturersv Association, at which time I had a conversation with Mr Ken Smith. The conversation was as follows:

He said: 'At the meeting of ice manufacturers in Queensland held recently, I took my solicitor to the meeting. She told me that setting a suggested base price was not illegal.'

By reason of the conversation I had with Mr Ken Smith, I did not believe that the meeting on

8 October 1993 was unlawful. As a consequence I

said the words attributed to me in paragraph 21 of

Mr Fiegert's Affidavit sworn 2 December 1993 other

than the words, "We are here to agree on a base

price' ."

Paragraph 9 of Mr Haydon's affidavit says:

"The meeting on 8 October 1993 was called by reason of a price cutting war that had commenced between three or four ice manufacturers in the Sydney metropolitan area. Other than the three or four ice manufacturers involved in the price cutting war, there were no other manufacturers who were affected by the dispute. Neither Axive nor myself were affected by the dispute, as Axive did not compete in the Sydney metropolitan area. In relation to this matter, I refer to paragraph 3 of my Affidavit sworn 4 February 1994. As neither Axive nor myself were to be affected by any agreement made on 8 October 1993, I had little interest in the outcome. Axive,

both before and after the meeting on 8 October 1993, continued to sell its ice at a price which was independent of any dispute in the Sydney metropolitan area. As the dispute was very localirred and only involved four or five ice manufacturere, I was not concerned with the outcome of the meeting. After the 8 October 1993 meeting price cutting continued and the dispute involving approximately five ice manufacturers in the Sydney metropolitan area continued as before. The meeting of 9 November 1993 did not confirm the meeting of 8 October 1993 as the meeting on 8 October 1993 was not a formal meeting of. the Ice Manufacturers' Aseociation."

Mr Haydon said that, since the commencement of the

proceedings, he had lost a number of customers. Particulars

of these were given.

He said that h i v e was a trustee of the John Haydon Family Trust. The beneficiaries of the trust are his wife, his daughter, Mr Haydon himself, and a company, Alphamag Pty Ltd. Mr Haydon and his wife are the sole shareholders of this company. Annexed to Mr Haydon's affidavits are financial statements for the period ending 30 June 1993. The accounts for the period ending 30 June 1994 had not been prepared at the time he swore the affidavit. The company made an operating profit of $71,000 for the year ended 30 June 1993. The company's total income was $354,000. Amongst the expenses is an item for wages amounting to $110,000. Counsel for Axive and Mr Haydon agreed that some of this amount would represent wages paid to Mr Haydon. I was not informed of the amount of these wages. On 31 October 1994 the company's account was overdrawn by $75,000. Mr Haydon said that the overdraft limit was $60,000.

Mr Haydon said that in May 1994 he had instructed his

solicitors to endeavour to settle the matter with the

Commission. He continued:

"I have at all times in my personal capacity, and as

director for Axive, attempted to co-operate with the Commission in relation to the contravention as evidenced by the undertaking given by me on

17 December 1993. Since the commencelnent of these

proceedings, I have been approached by a number of ice manufacturers in my capacity as President of the New South Wales Ice Manufacturers' Association. From time to time I have been asked for my advice in relation to certain methods of practice and I have advised those persons to approach the Trade Practices Commission for assistance and advice. I have also instructed my employees in relation to pricing policies and other matters which I now understand to be unlawful by reason of the Trade Practices Act. I have now become more concerned with ensuring the ice manufacturing industry does not offend against the Trade Practices Act and related legislation and, as a consequence, as President of the New South Wales Ice Manufacturerse Association, I am attempting to arrange for representatives of the Trade Practices Commission to attend the Annual General Meeting of that Association to speak on topics relating to pricing, joint ventures and trade practices generally."

et Abbco and Lidcombe Ice

That completes the account of the evidence relevant to the case brought against Axive and Mr Haydon. I turn next to the case brought against Abbco, Mr Scott and Lidcombe Ice, otherwise Mr Jeffree. Again there is an agreed statement of facts, I refer to the principal matters dealt within it.

Mr Scott is the manager of Abbco and a partner with Mr Jeffree

in Lidcombe Ice. M r Jeffree is a partner with Mr Scott in

Lidcombe Ice. He manages the partnership business. He is also a director of Abbco.

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The statement of facts refers to the meeting held on 8 October 1993. In the circumstances it is unnecessary to refer to the detail of the account given of it. It does not differ in substance from that given in the Axive statement of facts and in the evidence given in relation to the Axive matter. Reference is then made to compliance with the Court's

orders made on 8 December 1994. . The orders were consented to.

Reference is also made to the fact that the respondents in question withdrew their defences to the proceedings on 28 July 1994.

Counsel for the Commission relied again on Mr Fiegert's affidavit. He did not rely on all the paragraphs relied upon in the Axive case but the substance of what Mr Fiegert said in relation to the meeting is relied upon and is as I have earlier recounted it.

Counsel for the Commission also relied upon the affidavit of Mr P.A. Skaf sworn 31 October 1994. I do not regard the affidavit as helpful in the determination of the questions of penalty which I have to consider. The affidavit describes an assault by Mr Scott on Mr Skaf in Byron Bay on the evening of 20 July 1994. The assault was denied by Scott in his affidavit. The matter was not the subject of any extensive investigation during the hearing. I am unable to say whether the assault was committed or not. I do not regard it as material to attempt to determine that question and I do not.

Counsel for the sixth, seventh and twelfth respondents relied upon Mr Scottt's

affidavit sworn on 30 November 1994.

The affidavit deals entirely with the assault alleged by Mr Skaf. In para 12 of the affidavit he denied assaulting Mr Skaf. The affidavit is not of relevance to any other ques t ion.

The financial accounts of Abbco and Lidcombe Ice are in evidence. The exhibit in which they are contained is a confidential exhibit so that I cannot mention figures in an open judgment. They show that in the year ended 30 June 1994 Lidcombe Ice made a not insubstantial loss and that Abbco for the same period made a profit which was not insubstantial having regard to the evidence of profitability of others in this industry. It should be noted that, in relation to both sets of accounts, amounts attributed to wages included wages paid to Mr Scott, in the case of Abbco, and Mr Jeffree in the case of Lidcombe Ice.

t the Titea

That completes the account of the material relevant to the cases brought against the sixth, seventh and twelfth respondents. I turn to the material relevant to the cases brought against the fifteenth and twentieth respondents, Mr and Mrs Tite. The statement of facts reveals that the customers of the business, which was carried on under the name Tites Refrigeration, were to be found in the western region of the greater Sydney Metropolitan Area, including the Blue

2 3

Mountains, and in the Southern Highlands. Mrs Tite was secretary of the Association from 1991 to 1993. In that capacity, she attended meetings of the Association, took minutes of its meetings and sent them to members, and, so it would appear in the case of the meeting held on 8 October 1993, to others. Mrs Tite is not a partner in Tites Refrigeration.

At a meeting of the Association held in Forster on 20 September 1993, Mr Tite raised the question of the "price war then under way in the industry". He suggested a special meeting to discuss it. Mrs Tite sent out notices dated 26 September 1993 to ice manufacturers throughout the State whether or not they were members of the Association. I have already referred to this. In late September and early October 1993 Mr and Mrs Tite made telephone calls to some of the ice manufacturers to whom the notices had been sent asking if they were going to attend the meeting and encouraging them to attend. Mr and Mrs Tite were present at the meeting held on

8 October 1993. Mrs Tite took the minutes of the meeting and

later forwarded them to those who had attended. A copy of the

minutes is annexed to the statement of facts.

The statement of facts in paragraph 7 says that, at the meeting, a contract, arrangement or understanding was made or arrived at which was to the effect that there would be minimum prices charged by those in attendance for sales of bagged ice to "new sites". The meeting set those minimum prices for the

2 4

different sizes of bags in use in the industry. It was agreed that the contract, arrangement or understanding was in breach of 66.45 of the Act. It was also agreed that Mr and Mrs Tite had entered into the contract, arrangement or understanding referred to. I must confess that I have the greatest difficulty in understanding how Mrs Tite could have entered into it. She does not carry on business as an ice manufacturer, nor is she an employee of any such business. I assume that the statement that she was in breach must have been based on the fact that, because of her activities as secretary of the Association, she was a person involved in the breach.

The statement of facts further says that, by engaging in the conduct referred to, Mr and Mrs Tite aided or abetted or counselled or procured or induced or attempted to induce or were, directly or indirectly, knowingly concerned in, or parties to, the contravention of the Act referred to in 88.76 and 80 of the Act.

The gross turnover of the business carried on by Mr Tite in the 1992-93 year was said to be $216,000. The business has no full-time employees except Mr Tite himself. Further staff are employed on a casual basis as needed.

Again counsel for the Commission relied upon certain

paragraphs of Mr Fiegert's affidavit. I do not need to refer

to these again. I should mention, however, that the

paragraphs relied upon in relation to the Tites were not as numerous as those relied upon in relation to the case brought against the other respondents. I have not quite understood why this is so. Nothing turns on it.

and W e Tite each swore an affidavit on 5 December

1994.

In his affidavit Mr Tite said:

"On or about the 26th September, 1993 I tried in good faith to get the Ice Manufacturers of New South Wales, namely a very few city based Ice Manufacturers, who were bickering and squabbling about prices and sites to come together to try and sort out their differences. This was at the suggestion of Ken Smith who was involved with the far North Cost of New South Wales, Brisbane and Queensland Ice Manufacturers. That meeting was held at the Sydney Flemington Markets Industries Club on 8th October, 1993 and of course was a meeting of Ice Manufacturers discussing the situation which necessarily included a discussion about the prices of bags of ice.

I was involved in organising the meeting with the belief in fair play for all and was doing this to assist all Ice Manufacturers in the very small Ice Manufacturing Industry of New South Wales. I did not know at the time that price fixing was illegal

per me.

I now of course know this to be the case.

I did not attend the subsequent meeting of Ice Manufacturers which took place at the Epping RSL on 9 November, 1993 and I have not attended any subsequent meetings of the Ice Manufacturers whatsoever. I have not spoken to any other Ice Manufacturers at all since the 8th October, 1993. I will not be attending any meetings of Ice Manufacturers in the future where price fixing or any other illegal activity is or may be discusse3."

Mr Tite did not implement any price fixing agreement and gave an account of the prices charged for ice by his firm. He said that his firm did not derive any benefit whatever from the meeting of 8 October 1993 or the subsequent meeting held on 9 November 1993.

Mr Tite said that his business was a small family run businees. It commenced operations on 16 September 1964. It has never employed more than four people on a casual basis at any one time. It has never had any full-time employees. At the time he swore his affidavit, there was one casual employee engaged in driving a truck. Mr Tite said that the majority of his customers were small, comprising garages, corner shops and liquor stores. He said that his business had suffered financially over the last ten years. Financial statements for the business for the years ending 30 June 1993 and 1994 are annexed to his affidavit. The net income for the year ended 30 June 1993 was $174. This increased for the year ended 30 June 1994 to $34,000. Mr Tite said that the financial viability of the business had been extremely tenuous before that year. He said that he would have great difficulty in paying a large monetary penalty. He said that the proceedings had caused him an enormous amount of stress and anxiety which had affected his ability to conduct the business profitably. He emphasised the fact that his wife, Mrs Tite, was not a partner in the business nor did she play any part in it. Mr Tite's partner is his sister. She was originally joined as

a respondent but the proceedings against her were discontinued

on 22 April 1994.

Mr Tite has been treated by a psychologist, Mr Rodriguez, whose report is annexed to his affidavit. There was no objection to the report and no request to cross-examine

Mr Rodriguez. I propose to refez; to part of it. It should be

mentioned that the report was on the letterhead of another psychologist, Mr Woods. This was not explained in evidence nor commented on by counsel. Nothing therefore turns on it.

The report is dated 2 December 1994. It refers to a report of a neurologist, Dr D.G. Milder, dated 25 October 1994. Additionally, Mr Rodriguez was provided with some of the affidavits filed in this case, the rules of the Aesociation, the notice of 26 September 1993 convening the meeting of 8 October 1993 and some other material to which it is unnecessary to refer.

In the history given to Mr Rodriguez, Mr Tite explained that in approximately September and October 1993, he began to experience a very stressful and "highly traumatic situation".

Mr Tite referred to the meeting of 8 October 1993 which he

said was held in "a very unfriendly and indeed confrontational atmosphere, due to the opposing extremely antagonistic views of some members who attended the meeting." Mr Tite said that the situation had also caused Mrs Tite to be extremely anxious, worried and depressed.

In September 1993 ~r Tite began to experience blindness in his right eye. The onset of the condition was sudden and developed into what he estimated to be an 80 per cent loss of vision. He was examined at the Sydney Eye Hospital. He was informed that his partial blindness was caused by "constriction of the veins reaching the eye". He was told that his condition was permanent and might deteriorate further. He has been told that the blindness may spread to the left eye. He is undergoing treatment consisting primarily

of medication, special diet and physical exercise to prevent

the spread of the condition. Dr Milder had expressed the opinion in his report that stress may have been a pre- disposing factor in Mr Tite's condition.

Mr Rodriguez said that Mr Tite presented in a very anxious, upset and worried emotional state. He said that Mc Tite was fearful of "the repercussions that his work situation and eye condition are having on his lifestyle, personal health and in particular, his wife's health". Since September/October 1993 he hae been experiencing difficulties in sleeping, "stress/emotional agitation" and bouts of depression.

Mr Rodriguez opinion was as follows:

"Mr Tite reported a history of (approximately)

thirty (30) years of succes:ful and personally fulfilling small business practices as a proprietor and manager of an ice manufacturing company. In

September/October, 1993, Mr

Tite was involved in a

trade practices dispute, and as a result, he now

feels that the future of his company is at risk. Further, he has developed symptoms which are consistent with an acute anxiety reaction manifesting in bouts of severe depression. Unfortunately, one cannot rule out the possibility that his distressed emotional state will result in even further loss of his already limited eyesight. Certainly, Mr Tite feels that the upset and stress associated with the Trade practices dispute has been the major contributing factor in the loss of sight in his left eye.

Based on my assessment of. Mr Tite, which included administration of a relevant personality profile, I am of the opinion that Mr Tite is, as a result of the trade practices dispute and (possibly associated) problems with his vision, currently suffering from an acute anxiety reaction manifesting in bouts of severe depression. I am also of the opinion that Mr Tite is at risk of developing an emotional illness which may (potentially) result in his developing disorganised mental processes."

Mr Rodriguez made certain recommendations including

treatment by stress management therapy and treatment for

Mr Tite's anxiety and depression.

In her affidavit Mrs Tite said that her sole duties as secretary of the Association were to take minutes of meetings and to send copies of those minutes to the members of the Association. She said that she did not know that price fixing was illegal. She did not know what it was. Before and during her time as secretary of the Association her principal occupation was that of a housewife. Mrs Tite has no income of her own. She said that Mr Tite had been under "enormous stress" since the Commission's action against "his business" began. She did not mention anything about her own health.

3 0

Mr Tite was cross-examined. Mrs Tite was not. I do not find it necessary to refer to the cross-examination. I accept, without reservation, the entirety of the evidence given by the two witnesses.

The principles which guide me in determining penalties in matters of this kind are well-known. I do not propose to refer to them in any detail. A number of cases were referred to in the course of argument. The principal of these was

. .

tices Commlsslon

v J=SB Limited (1991) ATPR para 41-

076, a decision of French J.

His Honour there set out (at 52,

152-3) a number of criteria which guide one in the imposition

of a penalty. Some of these come from 8.76 of the Act itself. Others include the size of the company which has committed the infringement, the degree of its market power, evidenced by market share and ease of entry, deliberateness and extent of the violation and the degree of co-operation with enforcement authorities. In relation to the latter criterion, I think it should be said that, in accordance with ordinary sentencing principles which, in my view apply notwithstanding that this is not a criminal prosecution, it would not be right to punish for failure to co-operate. Broadly speaking the penalty will be the same whether there is co-operation or not. What the Court may do, however, in appropriate cases is to discount the penalty it would otherwise have imposed if it considers that the respondent's conduct has been co-operative and helpful and has shown remorse for what has occurred. Whether the Court

discounts the penalty it would otherwise have imposed will depend upon the facts and circumstances of each particular c a m . I refer particularly to the judgment of the Full Court

of the Supreme Court of South Australia in

v shannon

(1979) 21 SASR 442 per King C J at 452-3.

Shannon'e case was

applied by a Full Court of this Court in B v Hu&~.n (1985) 63

ALR 257; see particularly at 274.

Other cases to which I have had regard include m

. .

v e

O ~ e a o n s

Ptv Llmlted

(1905)

ATPR para 40-639 and

ade Practices Commissio~ v JJ and YE

Rueeell (1991) ATPR para 41-090.

Earlier I mentioned the fact that numbers of the respondents had reached agreements with the Trade Practices Commission resulting in the disposal of the proceedings against them. In each of these cases penalties suggested in short minutes of order were imposed after I had considered the agreed facts of the cases involving those respondents. An analysis of the penalties which were imposed discloses that they ranged from $500 to $5,500. The lower penalties were imposed on individuals and the larger ones on corporations.

In m v The Oueen (1984) 154 CLR 606 Gibbs CJ, after

referring to s.668E of the Criminal Code (Q), said (at 609-

610) :

"The same or similar words appear in the statutes of the other Australian States, and they are wide

enough to empower the court in its discretion to reduce a sentence not in itself manifestly excessive in order to avoid a marked disparity with a sentence imposed on a CO-offender. It may be said that the very existence of the disparity reveals that an error must have been committed, but I would prefer frankly to acknowledge that the reason why the court interferes in such a case is that it considers that the disparity is such as to give rise to a justifiable sense of grievance, or in other words to give the appearance that justice has not been done."

Mason J (a8 he then was) said (at 610-11):

"Just as consistency in punishment---a reflection of the notion of equal justice---is a fundamental element in any rational and fair system of criminal justice, so inconsistency in punishment, because it is regarded as a badge of unfairness and unequal treatment under the law, is calculated to lead to an erosion of public confidence in the integrity of the administration of justice. It is for this reason that the avoidance and elimination of unjustifiable discrepancy in sentencing is a matter of abiding importance to the administration of justice and to the community. And it is against this background that the present application for special leave to appeal---one which reveals an exceptionally glaring example of discrepancy in punishment---has to be considered."

Dawson J said (at 623):

"There is no rule of law which requires CO-offenders to be given the same sentence for the same offence even if no distinction can be drawn between them. Obviously where the circumstances of each offender or of his involvement in the offence are different then different sentences may be called for. But justice should be even-handed and it has come to be recognized both here and in England that any difference between the sentences imposed upon co- offenders for the same offence ought not be such as to give rise to a justifiable sense of grievance on the part of the offender with the heavier sentence or to give the appearance that justice has not been

done:.

. ."

Wilson J agreed (at 616) in the judgments of Gibbs CJ and Dawson J. Reference may also be made to B v

(1986)

42 SASR 580 per King CJ at 582-583 and to	v The Queen
(1991) 33 FCR 536.

I see no reason why the principles stated by their Honours in &wePa case are not applicable to the circumstances of a case for the recovery of civil penalties. Counsel for the Commission resisted this proposition, principally as I understood his original submissions and his later written ones, because the respondents now under consideration did not reach agreement with the Commission on the amounts of the penalties to be imposed and because of conduct on their part during the first half of 1994 which indicated that the cases were to be contested. But the fact is that eventually they did withdraw their defences and they had earlier consented to interlocutory relief. As mentioned earlier, it would not be right to say that a party who elects to take the Court's view of the appropriate penalty rather than one proposed by a prosecutor is to be placed at a disadvantage. This would amount to the substitution of the prosecutor's decision on penalty for that of the Court.

Counsel for the Commission also submitted that there had to be taken into account differences in the circumstances of the various respondents. I agree, of course, that that is so. Nevertheless, I think I should bear generally in mind the range of penalties which have already been imposed.

3 4

Notwithstanding that they have been imposed, in a sense by consent, they were imposed after a consideration of the facts of each of the cases. The Court thought the penalties appropriate. They were all within a range. At the time they were imposed, they seemed to me to be appropriate. I am still of that opinion. Indeed, I would say that the amount of them reflects a commonsense and practical appreciation by the Commiesion of what was called for in these cases.

I must bear in mind the fact that the legislature takes a very serious view of conduct such as has been engaged in by the reapondents in this case. Parliament's intention is revealed by the amount of the penalties provided for which are $10 million in the case of a breach by a corporation and $500,000 in the case of a breach by an individual. The

penalties were substantially increased in 1992 by the m

nt Act 1992. In the course of his second reading speech, the then Attorney-General said that the deterrent value of the existing penalties no longer reflected the seriousness with which the Government and the community viewed corporate misbehaviour. Reference was made to judicial comment in the Federal Court where it was said that one could only suspect that the penalties had not been taken very seriously. Their deterrent effect had been insufficient, it appeared, to counter-balance the profit apparently derived from protecting recommended prices against the effect of competition; see Hansard (H of R), 3 November 1992, at 2407. It may be noted that the Attorney-General also

3 5

said that, where compliance is achieved efficiently and effectively by other means, the need to increase penalties was not apparent. That explained why no increases were made to the penalties for breaches of ss.45D and 45E of the Act in the form in which they were then in force.

The Attorney-General also referred to the fact that it had proved efficient in some cases for the Co~mission to avoid prolonged litigation by accepting undertakings from businesses to cease particular conduct or to take action which would lessen the otherwise undesirable effects of their conduct. The approach had been used in appropriate cases for several years and had avoided considerable cost to both the Commission and the businesses concerned.

In each of the case8 earlier dealt with there was filed an agreed statement of facts for the purpose of giving the Court an account of the relevant matters to be taken into account in the assessment of a penalty. Of the cases earlier dealt with that concerning the thirteenth respondent, Arctic Ice, and its manager, Mr Clements, is the most serious. It was disposed of on 28 July last when a penalty of $5,500 was imposed upon Arctic Ice and a penalty of $500 was imposed upon

Mr Clements. Paragraph 4 of the agreed statement of facts

filed in the Arctic Ice matter said that Mr Clements discussed the notice of meeting with a director of Arctic Ice. He was "given permission" to attend the meeting, but was instructed

not to make any commitment on behalf of his employer. Mr Clements attended the meeting held on 8 October 1993 where, as is said in para 6 of the agreed statement of facts, an understanding was arrived at which was to the effect that there would be minimum prices charged by those in attendance for sales of bagged ice to new sites. The meeting set those minimum prices for the different sizes of bags in use in the industry. Mr Clements was said to have entered into the understanding on behalf of Arctic Ice. Paragraph 10 of the statement of facts says that Arctic Ice and Mr Clements, after the meeting, did not consider themselves legally bound by any contract, arrangement or understanding. Obviously one reason for that being objectively the case was the illegality of the agreement. But that is not what was in their minds. Like

Mr Fiegert, they decided to renege on the agreement the moment

it was made. Paragraph 11 of the statement of facts said that Arctic Ice and Mr Clements did not put the understanding into effect.

Arctic Ice and Mr Clements gave undertakings to the Court on 10 December 1993 which had the effect of permanently restraining them from implementing the agreement and obliged them to advertise in the Sydney Morning Herald and the Service Stations Association Journal and to send a notice to each of the customers of Arctic Ice advising of the proceedings brought by the Commission. These obligations were carried out. The matter against the two respondents was finally disposed of on 28 July 1994 when the penalties earlier

3 7

mentioned were imposed by agreement, subject of course to the Court's approval, of the Commission and Arctic Ice and Mr Clements.

Obviously, there are differences in the factual situations of the cases brought against Abbco and Lidcombe Ice, Axive and the Tites. Each case must be decided in the light of its own facts but, because of the dicta to which I have referred in &,owe'L case, I think the penalties I should impose upon the respondents whose cases are now under consideration ought to be set with the penalties already imposed in mind. If the conduct of the respondents yet to be dealt with is more heinous than that, for instance, of Arctic Ice and Mr Clements, then obviously a penalty greater that $5,500 is called for. If that is not the case, or if there

are other relevant circumstances to be taken into account, then the penalties may be less. I am of this view because both the parties and the Court considered the penalties earlier imposed as appropriate in all the circumstances of the cases in respect of which they were set. On the other hand, the earlier penalties provide no more than guidance. They have no conclusive effect; they are simply a factor relevant to be taken into account.

me Penalties to be Im~osed

Counsel for the Commission submitted that there was here

involved a "nasty direct price fix". I suppose everything is

relative. If the evidence is looked at baldly, there is no

doubt something to be said for counsel's description. On the other hand I think that this case reveals a high degree of ignorance, naivety and stupidity on the part of the various participants. I do not wish to sound unkind to them. No doubt they are very successful in the businesses which they run. But the sad fact is that the whole exercise and the participation of the parties in it has more of the hallmarks

of the pathetic than of wickedness.

One thing that stands out is that there was nothing secretive about the conduct of any of the respondents in what they did. Krs Tite sent out notices of a meeting, not only to members of the Aesociation, but also to other ice manufacturers. In telephone conversations with a number of them she and her husband encouraged them to come to the meeting. When the meeting was over, she prepared minutes of the meeting and circulated the minutes widely. The industry was well aware of what had occurred. The same course was taken in respect of the second meeting held on 9 November 1993. Thus none of the parties was acting as if there was anything wrong. That was so despite the fact that some persons attending the meeting were concerned about the legality of what was being done. There were reassuring statements made, again out of ignorance rather than anything else. Reliance was placed upon what was said to have been stated by Mr Smith to M r Haydon and upon a statement made by another person present about what had been said to him by the Commission. Obviously, all this was wrong. There was a

3 9

suggestion in the evidence by Mr Haydon that what was really said was that there was nothing wrong with agreeing upon a recommended price rather than a base price. The preponderance of the evidence is against that having been said, but it seems to me that that too would probably have involved a breach of the Act.

The agreement was, of course, doomed even as the various persons left the meeting held on 8 October. One reason for thie was that Bells, the largest player in the market, was not present. It was never a party to the arrangement. Unless it had been, there was no chance that the agreement could be implemented. Secondly, on the basis of what was said in relation to the Arctic matter, Arctic did not intend to be bound by the agreement either. It took the same view as Piegerts. The appearance of agreement was given. In this respect it is difficult to distinguish between the conduct of Fiegerts and Arctic Ice. They appeared to take the same view and to have adopted the same course. The only difference is that Mr Fiegert informed and Mr Clements did not.

There was no evidence that any of the participants received any benefit from the agreement whatever. It does not appear ever to have been implemented except, perhaps, to the extent that some circulars went out from Abbco/Lidcombe Ice advising of the prices. It could not benefit either Axive or the Tites. They were not in the relevant geographic market and they were not in competition with anyone in the Sydney

market except Bells and then only in the case of Axive. Bells was not at either meeting nor a member of the Association. Thus this is not a case in which a corporation made profits out of the implementation of an arrangement necessitating the taking into account of that profit in the fixing of the penalty as was mentioned in the second reading speech earlier referred to.

Each of the businesses in question is in a comparatively small way. None is outstandingly successful. That is particularly so of the Tite business.

Mrs Tite was little more than an arnanuensis. She was the secretary, but only in the sense of keeping minutes of meetings and sending notices and copies of minutes to members and others. Mr Tite was concerned, misguidedly as it turns out, to endeavour to bring a degree of stability to the ice industry in an area where he perceived instability. That also was Mr Haydon's object. He was President of the Association and was concerned about this matter in that capacity. I accept his evidence that he did not know that what he was doing was wrong. Since Mr Haydon found out that the conduct was illegal, he has taken a number of steps to atone for his misunderstanding. These are set out in para 15 of his affidavit of 30 November 1994 which I have earlier quoted. I accept his evidence in this respect.

4 1

Each of the respondents consented to interlocutory

injunctive relief when the matter was in the list on

8 December 1993. Eventually all respondents, except Abbco and

Lidcombe Ice, agreed to undertakings having the effect of permanently restraining them from implementing the arrangement. Aa I understood their counsel, the only reason Abbco and Lidcombe Ice resist the making of a permanent injunction is because the matter has become hypothetical. It is no longer alive. They have no intention of implementing the arrangement. Nobody else can; the reality is that it cannot be implemented unless there are at least two parties to it.

Abbco and Lidcombe Ice are the only respondents who stood to gain from the arrangement. Amongst the larger players in the Sydney market, only Abbco and Lidcombe Ice had any intention of implementing the agreement. Bells was not involved; Arctic did not intend to keep to it; nor did Piegerts. It seems to me that Piegerts and Abbco were the two companies who were most involved in the price war. It is quite conceivable that the matter, in the end, became a contest between Mr Scott and Mr Fiegert and no one else. Mr Fiegert brought the matter to a head by informing the Commission of what had occurred and taking Mr Skaf with him to the second meeting.

Counsel for the Commission submitted that the respondents

whose cases are now under consideration had not co-operated

4 2

with the Commission. It is true to say, I think, that they have not co-operated with the Commission to the extent that some other respondents have. But they did consent to interlocutory relief and, on 28 July 1994, they did withdraw their defences. As earlier said, it cannot be unco-operative in any relevant sense for a party in their position to say that it prefers not to agree with the Commiesion on the amount of the penalty to be imposed and wishes to have the Court determine what the penalty will be. That is all they have done. By not agreeing they run the risk of incurring greater costs than would otherwise have been the case. That is something that will take care of itself in the order for costs which the Court will make.

In all the circumstances, I have come to the conclusion that there should be imposed upon Axive a penalty of $2,500 and upon Mr Haydon a penalty of $750. I take a more serious view of the case involving Abbco and Lidcombe Ice. Abbco is a corporation; Lidcombe Ice is not. I think the appropriate penalties are $7,500 and $4,000 respectively. A penalty of $1,500 will be imposed upon Mr Scott.

I have real difficulty in reaching a conclusion as to what should be done in the case of the Tites. Nominal penalties may be unusual in this area of the law. Nevertheless, there is not, in my opinion, any but a nominal penalty appropriate in Mrs Tite's case. The penalty to be imposed upon her will be $10. Normally I would not consider

imposing a nominal penalty on a person who had engaged in the conduct engaged in by Mr Tite, notwithstanding that he believed what he was doing to be lawful and helpful. But I need to take into account the state of his health, particularly his partial blindness which I make clear was caused independently of these proceedings. I am satisfied, however, that the proceedings have been extremely streesful for him. The depressive neurosis that he has was caused by a combination of the atate of his health and concern about these proceedings. Both and he and Mrs Tite will have a not insubstantial liability for their own costs of the proceedings. Additionally, they will have to pay a proportion of the Commission's costs. Mr Tite's business is marginal; the state of his health further jeopardises its viability.

In all the circumstances I consider it appropriate to impose upon him the same penalty as is to be imposed on his wife, namely, a penalty of $10.

I should add to what I have said that in each case I am satisfied that none of the respondents will ever offend again. Each has had a bitter lesson. All have learnt from their experience. I have taken that matter generally into account in reaching my conclusions.

Two matters remain to be considered. The first is the

injunction sought against Abbco, Lidcqnbe Ice and Mr Scott. I

appreciate that the exercise is hypothetical but I think it

appropriate for an injunction to be ordered simply to mark the illegality of the arrangement which was entered into. Accordingly, I propose to make an order in terms of that proposed to me by counsel for the Commission.

The respondents must pay the Commission's costs of the proceedings against them. But the Commission, subject to the qualification which I shall mention, should have only one set of costs in respect of the hearing of the matter on 6 and

7 December 1994. The qualification relates to work which

relates solely to the cases brought against particular respondents. I instance the preparation of the statements of facts and the need to give consideration to affidavits filed in the cases of the respective respondents.

I do not propose now to make formal orders. I propose to give the parties and their legal advisers an opportunity of considering what I have said. When the matter is next in the list, counsel for the Commission is to bring in short minutes of order to give effect to my conclusions.

I certify that this and the 43 preceding pages are a

true copy of the reasons for judgment herein of the

Honourable Justice Sheppard.

Assoc iate

pClblr41~k

Dated 15 December 1994

Couneel for the

Applicant:	D.J. Hammerschlag
Solicitore for the
Applicant:	Australian Government Solicitor
Counsel for the First and
Second Respondents:	S.T. White
Solicitore for the First
and Second Respondents:	Thomae Mitchell Partners
Counsel for the Sixth,
Seventh and Twelfth
Reapondents :	A.A. Ransom
Solicitors for the Sixth,
Seventh and Twelfth
Respondents:	Ledlin Partners
Solicitor for Fifteenth and
Twentieth Respondents:	R.C. Pontello of Messrs Marsdens
Dates of Hearing:	6 and 7 December 1994
Place of Hearing:	Sydney
Date of Judgment:	15 December 1994

[1994] FCA 983

15 Dec 1994