Trade Practices Commission v Golden Fleece Petroleum Ltd

[1984] FCA 335

” h

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CATCmORDS i

335

Trade Practices - resale price maintenance - absence of credible evidence to substantiate claim.

Trade Practices Act 1974 s s . 4 8 , 76, 96

I

BADE PRACTICES COMMISSION v. GOLDEN FLEECE PFPROLEJJM LTD.,

CALTEX OIL (AUSTRALIA) PTY.LTD.

and CALTFX AUSTRALIA LTD.

V. No. G 29 of 1983

Northrop J.

Melbourne

15 October 1984

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NOT CONSIDERED APPROPRIATE FOR FURTHER DISTRIBUTION

-L !

IN THE FEDERAL COURT OF AUSTRALIA	1
)

VICTORIA DISTRICT	REGISTRY	1 V. No. G.29 of 1983
)

DIVISION	GENERAL	1
BETWEEN:

TRADE PRACTICES COMMISSION Applicant

and

GOLDEN FLEECE PETROLEUM LTD., CALTEX OIL (AUSTRALIA) PTY. LTD. and CALTEX

I AUSTRALIA LTD.

Respondents

CORAM:	Northrop J.
m:	15 October 1984

PLACE: Melbourne

ORDER

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THE COURT ORDERS THAT:

1. The Application be dismissed.

2. The Applicant pay the Respondents costs.

I

IN THE FEDERAL COURT OF AUSTRALIA	) )
VICTORIA DISTRICT REGISTRY	) V. No. G.29 of 1983
)

DIVISION	GENERAL	)
BETWEEN:

TRRDE PRACTICES COMMISSION Applicant

and

GOLDEN FLEECE PFPROLEUM LTD. , CALTEX

OIL (AUSTRALIA) PTY. LTD. and CALTEX

AUSTRALIA LTD.

Respondents

CORAM:	Northrop J.
m:	15 October 1984

PLACE	:	Melbourne
REASONS FOR JUDGMENT

The rade Practices Commission (“the

Commission”) is seeking the imposition of a pecuniary

penalty against each of Golden Fleece Petroleum Ltd.

(“Golden Fleece”), and Caltex Oil (Australia) Pty. Ltd.

(“Caltex“) in respect of contraventions of the Trade Practices Act 1974 (“the Act“). In order to understand the application it is desirable initially to set out a

summary of constitute the contraventions the facts which the Commission claims

of the Act.

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Golden Fleece and Caltex are each corporations

unde'r the Act. Between 1 May 1981 and 31 July 1981,

Golden Fleece, as part of its business, supplied throughout Australia

I

petroleum products.,-.including super

grade motor spirit. On 1 May 1981, Caltex acquired all

the issued shares in the capital of Golden Fleece, but

until 31 July 1981 Golden Fleece and Caltex were in

competition with each other with respect to the

marketing of super grade motor spirit throughout

I

Melbourne. From 1 August 1981, Caltex took over control of the marketing of super grade motor spirit previously conducted by Golden Fleece.

At all material times Kenneth O'Brien was an

employee of Golden Fleece. Until 31 July 1981, he

occupied the position of Area Manager and operated in

the western suburbs of Melbourne. From 1 August 1981,

while still being employed by Golden Fleece, he was seconded to the data processing area. At all relevant

times John Armitage was an employee of	Golden Fleece.
Until 31 July 1981, he occupied the	position of

Commercial Sales Manager, Melbourne. That fact was

specifically admitted, but as appears later, Armitage was exercising the powers of Marketing Manager,

Wholesale, Vibtoria. : - From:..l August ;1981,' .while. still ----- . _ a --

i

being employed by *-.Golden Fleece,. he occupied the ,_ . ..

position of Engineer, Technical Services. At all

relevant times M . Collins was an employee of.Golden

Fleece. Until 31 July 1981, he occupied the position of

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Country Sales Manager. From 1 August 1981, while still

being employed by Golden Fleece, he occupied the

position of Area Manager. At all material times, Mervyn

Moroney was an employee of Caltex. Until 31 July 1981,

he occupied the position of State Manager (Victoria). On 18 June 1981, an announcement was made by Caltex and

Golden Fleece that from 1 August 1981, Moroney would

occupy the position of State Manager (Victoria) for

Caltex and of State Manager (Victoria) for Golden

Fleece. From 1 August 1981, he was State Manager for

both Golden Fleece and Caltex with authority to act on

behalf of each. It is not necessary to determine which

company employed him.

At

carried on business under the name "Thistle Petroleum".

It is not necessary to determine whether Cullen carried

on that business on his own or jointly with his wife.

Amongst other things, Cullen carried on the business of

all relevant times Ronald Albert Cullen

selling super grade motor spirit at a petrol service

station at 56 Inkerman Street, St. Kilda. Between the

period commencing shortly before 21 July 1981, and ending shortly after 27 August 1981, Golden Fleece supplied and sold super grade motor spirit to Cullen.

The Commission claims that on or about

Tuesday, 21 July 1981, Golden Fleece, by its servant

O'Brien, made known to Cullen that Golden Fleece would

not supply super grade motor spirit to Cullen unless he

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agreed to sell that motor spirit at a price not less

than that specified by Golden Fleece, or alternatively attempted to induce Cullen not to sell at price less

than the price .specif ied--by Golden 1 ,Fleec ;- -super !grade

motor spirit supplied to him by Golden Fleece. The

Commission claims that in doing that Golden Fleece engaged in the practice of resale price maintenance contrary to s.48 of the Act. The Commission relied upon

sub-section 96(1) and paragraphs 96(3)(a1 and (bf of the

Act. Hereinafter this claim is called "the first

charge".

The Commission claims that on or about Monday,

27 July 1981, Golden Fleece, by its servant Armitage,

made known to Cullen that Golden Fleece would not supply

super grade motor spirit to Cullen unless he agreed to

sell that motor spirit at a price not less than that

specified by Golden Fleece, or alternatively attempted

to induce Cullen not to sell at a price less than the

price specified by Golden Fleece, super grade motor

spirit supplied to him by Golden Fleece. The Commission

I.

claims that in doing that Golden Fleece engaged in the

practice of resale price maintenance contrary to the

same provisions of the Act. Hereinafter, this claim is

called "the second charge"-: - -.- . - - .- l

The Commission claims that on or about

Thursday, 30 July 1981; Golden Fleece- by' its servant -

1 ,

Armitage attempted to induce Cullen not to sell, at a	!
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/

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price less than that specified by Golden Fleece, super

grade motor spirit supplied to him by Golden Fleece.

The Commission claims that in doing that Golden Fleece

engaged in the practice of resale price maintenance

contrary to the same provisions of the Act. Hereinafter

this claim is called "the third charge".

The Commission claimed further that on or

about 27 August 1981 Golden Fleece committed a further

breach of the Act, but after the whole of the evidence

had been given, counsel for the Commission announced

that he Accordingly, no Commission did not press this charge.

reference need be made to the evidence

relating to it.

The Commission claims that on each of the

occasions of the three charges alleged against Golden

Fleece, Caltex, contrary to paragraphs 76(l)(c), (d) or

(e) of the Act, engaged in conduct which, for present

purposes, can be described as aiding or abetting or

being knowingly concerned in each of the three charges

alleged against Golden Fleece. In support of its claim

against Caltex, the Commission relies upon the

acquisition by Caltex of all the issued shares in Golden

Fleece, a memorandum dated 17 July 1981 from J. M.

Cocks, the Director, Marketing, of Caltex, and what occurred at a meeting held on or about 27 July 1981 between Moroney, Armitage and Peter Jarvis, then the Victorian Retail Sales Manager of Golden Fleece.

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When the action came on for hearing, the

Commission discontinued its claim against Caltex

Australia Ltd.---an& 7 30 8 %he action r . proceeded.,,,against.,.,,,. I y ~ l : - .

Golden Fleece and Caltex only.

I

Section 48 of the Act, which is within Part IV

of the Act, provides that corporation shall not engage

in the practice of resale price maintenance. Section 96

specifies acts which constitute the practice of

resale price relevant for present purposes are set out: maintenance. The provisions of s.96

"96. (1) Subject to this Part, a

corporation (in this section

called "the supplier") engages

in the practice of resale price

maintenance if that corporation

does an act referred to in any

of the paragraphs	of sub-section
( 3 ) .

....

(3) The acts referred to in

sub-sections (1) and ( 2 ) are the

following:

(a) the supplier making it known to

a second person that the

supplier will not supply goods

to the second person unless the

second person agrees not to sell

those goods at a price less than

a price specified by the

. .

supplier; L . - . ,

(b) the supplier inducing, or

attempting to induce, a second

person not to sell, at a price

less than a price specified by

the supp1ier;goods supplied to - -

the second person by the

supplier.. . "

l

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The Commission, pursuant to s.77 of the Act,

is seeking the recovery of pecuniary penalties under

s.76. Under 5.76 the Court, if satisfied that a

corporation has contravened or attempted to contravene a

provision of Part IV of the Act, may order the

corporation to pay to the Commonwealth a pecuniary

I penalty not exceeding $ 2 5 0 , 0 0 0 . 0 0 in respect of each act

by the corporation to which the section applies.

The main evidence relied upon by the

Commission in respect of its claims was given by Cullen. evidence given by Cullen was that on Tuesday 21 July

1981 during a conversation between O'Brien and Cullen at

Cullen's service station, O'Brien said to Cullen words

to the effect "the 7th floor has said bring up your

prices or else you wont get deliveries". The reference

to the "7th floor" was a reference to the 7th floor of

the building at 500 Collins Street, Melbourne, where the

executives of Golden Fleece and Caltex had their

offices. In his evidence O'Brien denied that he had

said words to that effect.

respect substance of the evidence given by Cullen was that on o the second charge, the

With

Monday 27 July 1981 during a conversation between

Armitage and Cullen at a McDonalds Restaurant near

Cullen's service station, Armitage said words to the

effect "bring your prices up or the trucks will never

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get here. The excuse will be that the trucks had broken

down, the wheels fell off or no drivers". The reference

to the "trucks" was a reference to the tankers which

delivered super grade motor spirit fronr.Golden -Fleece 'to -

Cullen's service station. In his evidence, Armitage

denied that he had said words to that effect.

I

With respect the o third charge, the

substance of the evidence given by Cullen was that on

Thursday 30 July 1981 during a conversation between

Armitage and Cullen on the 7th floor, 500 Collins

Street, Melbourne, Armitage handed Cullen a letter from

Golden Fleece to Cullen and confirmed the contents of

the letter in substance saying that Golden Fleece would

I

supply and sell super grade motor spirit to Cullen at	a
price not less than 36.13 cents per litre. That price

was approximately 1.43 cents per litre more than the I

price at which he was selling motor spirit. In

addition, it was said by Armitage that Cullen would not

be entitled to any discount on his purchase of super

grade motor spirit from Golden Fleece. Cullen gave

evidence that he handed the letter back to Armitage.

The letter was not produced in evidence. In his

evidence Armitage denied the existence of the letter,

denied having*-handed b..anydebter- - to Cullen .+and .denied,..

receiving any letter from Cullen. He denied also that

he had said words to the effect alleged by Cullen.

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From this summary it is apparent that the

acceptance of the evidence given by Cullen with respect

to the three charges is crucial if the charges are to be

sustained. At the hearing of the application counsel

for the respondents attacked the credibility of Cullen

in cross examination. Many matters were raised which

went to the issue of Cullen’s credibility but were not

directly relevant to any issue raised by the

application. In addition, Cullen was cross examined on many matters directly relevant to the facts in issue.

After seeing and hearing Cullen in the witness box I

have formed the opinion that his evidence is completely

unreliable and should not accepted be unless

corroborated by the evidence of other witnesses or other

factors.

It is not necessary to refer in detail to all the evidence given by Cullen, O’Brien, Armitage and

Collins. Mr. Collins gave evidence with respect to the

contravention of the Act alleged to have occurred on or

about 27 August 1981. Nor is it necessary to make a

detailed reference to all the material put to Cullen

during his cross examination. In giving his evidence

Cullen presented as a fast talking person who had no

regard to the truth of what he said. He gave the

impression that he was prepared to engage in sharp

business practices not only with regard to his business

dealings with Golden Fleece but also with regard to

business dealings with other persons. Not only did he

..

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present as being completely unscrupulous in his

commercial activities but in some instances he has acted

in a dishonest manner. One example of his unscrupulous

conduct is given.' 'In order -to obtain -his -contract- wi h - .-.-

Golden Fleece, Cullen negotiated with Golden Fleece on the basis that he planned to purchase super grade motor spirit for the purpose of reselling to retailers. The

price for the motor spirit was arrived at on that basis. I

Cullen then set up his own retail outlet, being Cullen's

service station, and in so doing was able to determine

his retail price on the basis that his purchase price

!

had been arrived at on the basis that he would resell

the motor spirit to retailers and not directly to the

public. One example of his dishonest conduct is given.

Shortly before his commercial dealings with Golden

Fleece ended, by deliberate action Cullen extended the

amount of his credit with Golden Fleece far beyond the

limit which had been agreed. He disputed a small part of the amount claimed by Golden Fleece but refused to

pay to Golden Fleece the amount which was not in

dispute. Upon being sued for the debt he reached a

compromise by which he was to pay the debt by

instalments. He paid one instalment only and has failed

to pay any further instalments. He used the credit so

obtained from .Coldan- Fleece rf or the purpose .of f : inancing -. . -

another venture in the retail selling of motor spirit

and in subsequent legal proceedings arising out of that

venture he gave evidence that he had obtained that

credit by way of a loan for the purpose of entering into

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the venture. He was dogmatic and refused to admit that

he could be wrong even when demonstrably he had to be

wr ong . He gave evidence of telephone conversations

which he had conducted at Cullen's service station at	a
time when the telephone was not connected. He is	a

bankrupt but in his statement of affairs refused to

admit debts which he owed and which demonstrably he knew

he owed. He was prepared to make reckless allegations which on further examination proved,to be groundless.

In many instances he gave evidence which contradicted

evidence he had given previously.

In the absence of other material, the Court is

not prepared to accept as true the substance of the

evidence given by Cullen in relation to the three

charges.

This finding, however, does not conclude the matter and it becomes necessary to consider the other

contentions made on behalf of the Commission.

The terms of the agreement between Golden Fleece and Cullen are contained a letter dated 26 May

1981 and signed by Armitage as Marketing Manager,

Wholesale. It was sent by Golden Fleece to Cullen and signed by Cullen together with the terms set out in a

"Conditions of Tender" attached to the letter. Under the agreement Golden Fleece was to supply to Cullen "Super Motor Spirit and Distillate within the Melbourne

I

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Metropolitan Free Delivery Area estimated at

approximately 1,000 K.L. of Super Motor Spirit and 800

K.L. of Distillate per month”. As indicated earlier at the time the agreement was entered .into it . was - - I - - ,

anticipated by Armitage and Cullen that Cullen would

I

resell the motor spirit and distillate so purchased to

third persons retailing the motor spirit and distillate

to the public. The letter

then continued:

“The prices offered	as at today’s
date are:-

Super Motor Spirit 31.53 c per

litre; that is a discount of	4.4 C
per litre off our list price of

35.93 c per litre. Duty Paid

Distillate 31.41 c per litre; that

is a discount of 4.9 c per litre off

our list price of 36.31 c per litre.

These prices are subject to

variation in accordance with the

Conditions the on out set

attachment. Fur hermore, b th

supply and the discounts are offered

on a calander month basis, subject

to review at any time.

As agreed, you will be required to

lodge securities amounting to the

value of one week’s purchases.

Payment will fall due seven days

from the date of delivery and

deliveries will be restricted to the

value of securities lodged.

The price offered:is -based -.on	full _.
tanker drops within the Melbourne

Metropolitan Free Delivery Area-with

-

a minimum of 10,000 litres per

individual delivery. Should you

require deliveries into country

areas, then the appropriate Freight

Differentials at -the point of

delivery would apply.”

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One of the terms in the attached "Conditions

of Tender" related to the method to be adopted before

the price of the motor spirit could be increased and the method by which the agreement could be terminated.

I

The evidence relating to the conversations

between Cullen and Armitage on 30 July 1981 included

possible price increases and the termination of the

agreement. A more detailed reference to that evidence

is given later in these reasons. After the completion

of those conversations, Golden Fleece set in motion the

procedures purporting to be in compliance with the term

relating to price increases and the termination of the

agreement. Eventually by an agreement in writing Golden

Fleece and Cullen agreed to terminate the agreement as

from 30 September 1981. During the whole of the period

Golden Fleece supplied motor spirit to Cullen pursuant to the agreement, Cullen was given the benefit of the discount of 4 .4 cents per litre off the list price as

set out in the letter.

A Caltex service station was situated close to

Cullen's service station at St. Kilda. Other service

stations selling other brands of motor spirit were

situated close by. Mr. Cullen began selling super grade

motor spirit under the name Golden Fleece from his

service station at a price substantially lower than the price at which motor spirit was sold from the Caltex

service station. The person conducting the Caltex

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service station complained to Cullen about the cut

prices at which Cullen was selling motor spirit. He

made similar complaints to officers of Caltex.

Prior to 1 May 1981 Golden Fleece and Caltex

were in competition but as from that day Caltex became

the master of Golden Fleece. As was to be expected some

time was to elapse before Caltex reorganised the

existing structures within Golden Fleece. That

reorganisation took effect from 1 August 1981. Until

then Golden Fleece continued to supply super grade motor

spirit to Cullen pursuant to the terms of the agreement

as set out in the letter of 26 May 1981. Although

Caltex had agreement had been taken over Golden Fleece before that

entered into, to all outward

appearances Golden Fleece and Caltex were in competition

and thereafter remained in competition. In fact during

all relevant times, Golden Fleece appeared to conduct

its business in the same manner	as it had done before	1
May 1981.

I

For some time prior to mid July 1981, Caltex

had been concerned to improve its earnings. A

confidential internal instruct-ion dated 17- July -1981

signed by J.M. v.Cocksr the Director - Marketing, Caltex, -

Head Office, was forwarded to State Managers, -including

I

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Moroney. The instruction stated that it dealt with the

subject of "Financial Forecast". The first paragraph	of
the instruction is set out:

"Over the past	3 months we have
communicated with	you on a number of

occasions outlining the need to

improve our earnings. Additional to our confidential letter to y u dated 24th April RSS:YT, it has now been necessary to take further action,

and we have detailed this by type of

trade as listed below:-"

The instruction then dealt with the retail

trade and required the withdrawal of price assistance to

company controlled stations and greater supervision with

respect to dealer owned stations. If Cullen had been

purchasing his motor spirit from Caltex, that part of

the instruction would not have had application to him

directly since he was not a normal retailer within the

understanding of the industry. The second part of the

instruction was headed "Wholesale". That part of the

instruction would not have applied to Cullen since that

part related to persons who purchased large quantities

of motor spirit for use in their own operations. The

final part of the instruction was headed "Direct

Purchase Distributors". If Cullen had been purchasing

his motor spirit from Caltex, he would have come within

this category since his agreement would have been on the

basis that he was purchasing motor spirit for

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distribution to retailers. The part of the instruction

contained un er Distributors" is set out: the heading "Direct Purchase

"Direct Purchase Distributors :

Basically our plan is to live within the level of rebates and sales as at 31st May, 1981. This, of course,

will need some corrective action to

I	be taken in certain areas and we set
out the guidelines which you are to
adopt :-
I	. Temporary price assistance to any distributor is to be no greater

than the level of assistance in

I

existence at 31st May, 1981.

. All existing price assistance

authorities will now expire	on
31st July, 1981.

. The level of DP rebates, as

reflected in May 1981 MCR I1

HOfDIST.6 (Year to Date), are to

be maintained for remainder of

year.

. another supplier, all temporary

Should any distributor change to

price assistance be to is

cancelled (i.e., r vert to

original DP rebate).

. It will be necessary to monitor

closely the purchases of those

distributors combined wi h

gasoline and distillate purchases in excess of 4,000 kl per annum, and to enable consistent reporting

a pro forma is attached and is to

be forwarded fortnightly. This

information will have to be

compiled from ,supply.goint, records 124: . : . L I . ..=

which, it is appreciated, will

cause some inconveni-nce .-lL --.-.-.. -- .--.--

In the context of the instruction the word

"rebates" has the same meaning as "discount" appearing

in the Golden Fleece letter of 26 May 1981. In the

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industry the words "rebate" and "discount" have the same

meaning and describe the amount of money between a list

price and the actual price at which the product is sold

and purchased.

Mr. Moroney. in his capacity as State

Manager, Caltex, received that instruction in all

probability on Tuesday, 21 July 1981. At that time

Peter Janes Jarvis was employed by Golden Fleece as

State Manager, Victoria. He had held that office since

1 May 1981. Between August 1976 and 1 May 1981 he had

held the position in Golden Fleece of Retail Manager, Victoria. That position was on an equal level to the

position of Marketing Manager, Wholesale, held by

Armitage. Between 1 May 1981 and the end of July 1981

Jarvis was superior to Armitage. In mid June 1981 it

was made known that Moroney was to be appointed State

Manager, Victoria, of Golden Fleece with effect on 1

August 1981. As indicated earlier Moroney continued to hold the office of State Manager, Victoria, of Caltex.

There had been	a dispute between Golden Fleece and
Jarvis relating	to the period for which he had been

appointed State Manager, Victoria, of Golden Fleece. He left his employment with Golden Fleece late in August

1981.

Mr. Moroney and Jarvis first met shortly

before l May 1981. From about the middle of June there

was daily contact between Moroney and Jarvis. I am

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satisfied that before 30 July 1981 Moroney knew of the

I ,'

problems arising from the Cullen agreement with Golden -.

Fleece and the fact that Cullen was selling motor spirit

from his service station at price less than the price

being charged at the nearby Caltex service station.- At -

the very least he had acquired that knowledge as part of

his briefing prior to entering into the position of State Manager, Victoria, for Golden Fleece. In all

probability he had heard of the problem also from

I

officers in Caltex.

I accept Jarvis basically as a witness of

truth giving evidence to the best of his recollection. ' <

Although he was and still is in dispute with Golden

Fleece concerning his own position, the existence of

that dispute does not detract from his honesty in giving

evidence that may be adverse to Golden Fleece in these

!

proceedings. Mr. Jarvis knew of the Caltex instruction

before 29 July 1981. He received a copy of the

instruction from the secretary of Moroney in all

probability on Wednesday,	29 July 1981. Mr. Jarvis says
that about 28 July 1981	Moroney asked him to attend a

meeting at his, Moroney's, office. Messrs. Moroney,

Armitage and Jarvis attended that meeting. Mr. Jarvis

said that Moroney in substance said that he was

!

cthe .selling price., being- displayed ..at Cullen's service station and mentioned the instruction _ _ - I

concerned at

he had received from Head Office. Moroney showed the

instruction to Armitage and Jarvis. In his evidence

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Jarvis said that he suggested the answer was simple,

"give Cullen thirty days notice to withdraw the rebate".

That suggestion was directed to the implementation of

the term empowering Golden Fleece to vary the price and

if need be to terminate the agreement by adopting the

methods set out in the terms of the "Conditions of

Tender" attached to the letter of 26 May 1981. Mr.

Jarvis in evidence said that Armitage agreed with that course but Moroney said the situation could not be left

as it was for another thirty days. Mr. Jarvis in

evidence said that Moroney directed Armitage to

negotiate with Cullen to "up the selling price, the

displayed selling price" being the price specified on

the board placed at Cullen's service station notifying

I .

to the passing public the price at which super grade

motor spirit was being sold. No	time was mentioned by
which Armitage was to do this.

Counsel for the Commission, recognising the

difficulty of relying upon the uncorroborated evidence

of Cullen, contended that the evidence of Jarvis should

be accepted and that the evidence gave credence to the

evidence given by Cullen. Counsel contended that this

evidence should not be limited to the second and third

charge but had equal application to the first charge.

Counsel contended that on the whole of the evidence the

Court should find that the meeting between Moroney, I

Jarvis and Armitage occurred on Monday, 27 July and that

later on that same day and pursuant to the instruction

I ,.

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given by Moroney, Armitage had the meeting with Cullen

at the McDonalds Restaurant. On this hypothesis it was

contended there were strong grounds for finding that

Cullen's evidence of what occurred at that meeting

should be counsel relied upon the evidence of Jarvis to support the charge of aiding and abetting alleged against Caltex. Counsel, while contending that the civil onus accepted as being correct. In addition

of proof applied, did not dispute that in the

application of that onus the Court should have regard to

the gravity of the issues raised; generally see Peter

Williamson Pty. Ltd. v. Capital Motors Ltd. (1982) 41

A.L.R. 613 per Franki J. at pp.619-20 and the cases

referred to therein. Accordingly it is necessary to

look at the evidence of the witnesses being officers of

Golden Fleece and Caltex and determine this issue of

fact applying the appropriate test	as	to the onus of
proof required.

The terms of the agreement of 26 May 1981,

"the Golden Fleece agreement", were negotiated by

Armitage and Cullen. Until the end of July, O'Brien, in

his position as Area Manager, was responsible to

Armitage. He was instrumental m king in the

! *

arrangements tn enable ... Cullen .and.Armitage to. carry out . - I

the negotiatidns- but-kook no part in those :negotiations. .- -.- . !

After the Golden Fleece agreement had been entered into	I
O'Brien was responsible for collecting cheques from

Cullen in payment for the motor spirit purchased by

i

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Cullen from Golden Fleece. For this purpose he attended

Cullen's service station approximately twice a week

during the period June and July. I accept the evidence

of O'Brien that there was no telephone at Cullen's

service station and that in order to contact Cullen

O'Brien used to telephone Cullen early in the morning

while Cullen was still at home. O'Brien did not know

that Cullen planned to operate his own retail site until

after the agreement had been signed. Previously he had

warned Cullen of problems involved in drivers being

employees of Golden Fleece and being members of the

Transport Workers Union delivering motor spirit to pumps

which were not marked with a Golden Fleece sign. At

some stage Cullen discussed with O'Brien the possibility

of Cullen supplying petrol to large users of motor

I spirit but nothing came of this.

The first charge relates to conversations

between Cullen and O'Brien which took place on Tu sday,

21 July. I accept O'Brien's evidence of what occurred

during those conversations. O'Brien had gone to

Cullen's service station to collect a cheque from

Cullen. In a conversation Cullen mentioned to O'Brien

that he was being harassed by other retailers of motor

spirit in the area including the retailer supplying

motor spirit from the adjoining Caltex station. Mr. O'Brien replied that was only to be expected having

regard to the price at which Cullen was selling motor

spirit. I accept O'Brien's denial that he said anything

__ - 22 -

to Cullen to the effect of the words alleged in the

first charge. On 21 July some officers of Caltex may

have been concerned at the actions of Cullen but there

is no evidence to suggest that Caltex was in any way

involved with O'Brien in the conversations O'Brien had

with Cullen on that day. The evidence given by Jarvis

does not assist the Commission in this regard. It

follows that the Commission has failed to prove the

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charge alleged to have occurred on 21 July 1981.

The second charge relates to events which

occurred during conversations between Armitage and

Cullen which took place on Monday, 27 July. Cullen says

that the meeting took place in the afternoon presumably

after the meeting between Moroney, Armitage and Jarvis.

Jarvis said that the meeting occurred "within one day of

27 July". I have already said that from a consideration

of the whole of the evidence given by Jarvis in all

probability the meeting occurred, according to him, on

28 July. From a consideration of the evidence of

Moroney and Armitage a meeting took place between

Moroney, Armitage and Jarvis certainly after 27 July and

in all probability on 30 July. In all the circumstances

I find that the meeting between Armitage and Cullen took

place before the meeting between Moroney, Jarvis and

Armitage.

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Mr. Armitage was aware of the problems arising from the fact that Cullen was selling motor spirit at a

price substantially less than the price charged at the

nearby Caltex service station. On Friday, 24 July 1981 _ .

a Bruce Dunsmore, the Assistant Manager in charge of

marketing for Caltex, Victoria, rang Armitage and told

him of his concern about the situation developing at

Inkerman Street, St. Kilda where the long standing

retailer of Caltex petrol was very upset because Cullen

was selling Golden Fleece petrol at such a low price.

In that conversation Armitage told Dunsmore that he

would keep an eye on the situation. Thereafter Armitage

directed O'Brien to keep him advised of the situation.

On Monday, 27 July Armitage asked O'Brien to

arrange a meeting between Armitage and Cullen. O'Brien

told Armitage that Cullen would be at his service

station at lunchtime between l.OOp.m. and 1.30p.m..

When Armitage arrived at Cullen's service station Cullen

was not there but arrived a short time later. Armitage

had had lunch but agreed with Cullen to go to a nearby

McDonalds Restaurant for a discussion. The meeting

lasted almost Armitage concerning what was said at that meeting. one hour. I accept the evidence of

Armitage commented to Cullen o the fact that Cullen had

entered the retail sector and expressed his surprise

that he, Cullen, had gone into a risky situation rather

than supplying motor spirit and distillate to retailers

where the risk was small. Armitage referred to the

- 24 -

trouble arising between Cullen and the operator of the

Caltex service station. Armitage told Cullen that he

was receiving his petrol at a very good price and should

!

not sell at such a cheap price compared with the Caltex service station. Cullen told Armitage that in reality

he was competing with two other adjoining service

stations selling Shell and Amp01 motor spirit

respectively which were selling at a lower price than

that charged at the Caltex service station. Cullen said

also that in any event the Caltex service station was

different in nature to Cullen's service station in that

the operator did repairs and had a lot of account

customers. Armitage said he accepted the situation.

There was a discussion about the uncertainty of the

motor spirit market generally in which the retail price of motor spirit was fluctuating rapidly and Cullen said

he would be looking at the market and adjusting his

prices accordingly. Armitage told Cullen that he,

Armitage, would be leaving the marketing side at the end of the month and that after that Golden Fleece marketing

would be directly controlled by Caltex. Armitage also

told Cullen that over time there could be a rationalisation in the industry. Armitage also drew to

the attention of Cullen that he, Cullen, was not

purchasing any distillate. Armitage denied having said anything to the effect of the words alleged by Cullen which form the basis of the second charge.

- 25 -

On the findings these conversations took place before the meeting between Moroney, Jarvis and Armitage. Even if the evidence of Jarvis is accepted, nothing that occurred at that meeting could be relevant to give

credence to the evidence given by Cullen. Further Cullen does not say that Armitage made reference to "up	, '
the selling price, the displayed selling price" at Cullen's service station. It follows that the Commission has failed to prove the charge alleged to

have occurred on 27 July 1981.

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The third charge remains to be considered. Mr. Armitage says that on Wednesday, 29 July 1981 Jarvis, who then was his superior, instructed him to tell Cullen that in line with the Golden Fleece

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agreement, Golden Fleece would cease to deal with Cullen

as from the end of the month. Mr. Jarvis had given his evidence before Armitage gave his evidence and Jarvis was not cross examined on whether he had instructed Armitage to do this. Likewise Jarvis was not cross examined as to whether he had given any such instruction to Armitage after he had received the Caltex instruction from Moroney's secretary namely on Thursday, 29 July. Acting on that instruction Armitage requested O'Brien to

arrange for Cullen to go to Armitage's office. Time was

short. Armitage believed that the Golden Fleece agreement could be terminated at the end of a month, in this case at the end of July. On 1 August Armitage was moving to a different position within the Golden Fleece

- 26 -

structure. Mr. O'Brien gave evidence that on Thursday

24 July 1981, at the request of Armitage, he asked

Cullen to call in to see Armitage. In fact 24 July 1981

was a Friday. O'Brien was in error saying that he did

this on that day. Cullen says that Armitage rang him on office. At that time Cullen's service station was not

connected to the telephone. In all probability O'Brien

made the arrangement with Cullen sometime on Wednesday

In any event Cullen attended Armitage's substance of Cullen's evidence is that when Cullen arrived Armitage handed him a letter and said "this is office on the morning of Thursday, 30 July. The

29 July 1981.

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not my doing". Cullen opened the letter and read it.

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He then abused Armitage and other officers of Golden

Fleece and Caltex. He said that in substance the letter

stated that as from midnight on 30 July 1981 the selling

price of super motor spirit sold by Golden Fleece to

Cullen would be rising to 36.13 cents a litre being the

then wholesale ist price. After some further

conversation in which Armitage said he and Jarvis were

having a meeting later in the morning, Cullen handed the

letter to Armitage and left the office.

In his evidence Armitage said that at the

meeting with Cullen on Thursday, 30 July he told Cullen

that in line with the Golden Fleece agreement Golden

Fleece would be terminating supply as from the end of

the month. In giving his evidence Armitage was slightly

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- 27 -

evasive with regard to the letter. He did not

specifically deny its existence, at the most he said he

could not recall such a letter. From my assessment of

the character of Cullen and his propensity to look after

his own interests, I find it is most unlikely that if he

had received the letter which on its face appeared to be

in breach of the Golden Fleece agreement and which

breach would have had a devastating effect on his

business, he would not have handed the letter back to

Armitage. In all probability he would have kept the

letter for publicity purposes as a weapon to use against

Golden Fleece. On all the evidence I am not satisfied

Cullen. Armitage said that Cullen told him that if	that Armitage handed a letter to Cullen as claimed by that he, Cullen, was not going to accept that situation
and would seek advice. Cullen then left. Mr. Armitage
says that he told Jarvis the result of the conversation
with Cullen conversation but again no suggestion of any such

was put to Jarvis by way of cross

examination.

Mr. Armitage says that in the afternoon of

Thursday, 30 July O'Brien rang him and told him that

Cullen had termination because under the terms of the Golden Fleece said he did not have to accept the

agreement he thirty day clause was enforceable.

Thereafter Armitage spoke to Jarvis who arranged a

meeting with Moroney, Armitage and himself. At that

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-. - 28 -

meeting Moroney said that it looked like Golden Fleece

was stuck with the thirty days and instructed that the

required notice be given. Thereafter the procedures set

out in the Golden Fleece agreement were commenced by Golden Fleece.

Mr. Moroney gave evidence. He said that in

the months of June and July 1981 he was preparing to

take over the office of State Manager, Victoria, for

Golden Fleece. He had ealings with Jarvis and

Armitage. Sometime during June or July he became aware of Golden Fleece's association with Cullen although he

says he knew of the situation under the trade name

Thistle Petroleum. He had never met Cullen. He can

recall a meeting with Jarvis and Armitage concerning

I

Cullen and the Golden Fleece agreement. It was a brief

discussion regarding the action to be taken by Golden

Fleece in renegotiating the terms of the agreement as to

price. He initiated the procedures provided for in the agreement. He said the meeting took place very shortly before the knew of the letter of 30 July. That letter

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letter possibly on 28 or 29 July. He denied that he

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instructed Armitage to try to get Cullen to increase his

selling price. He denied that he made any reference to

a displayed selling price. He cannot recall discussing

the Caltex instruction at that meeting.

. <

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- 29 -

There are some unsatisfactory aspects of the evidence given by each of Moroney and Armitage but I

accept their evidence as to what occurred at the meeting

between Moroney, Jarvis and Armitage. I accept that

I Jarvis received a copy of the Caltex instruction on 29

July 1981 but it is difficult to see the relevance of that instruction with respect to existing agreements

involving Golden Fleece only. The probabilities support

the evidence of Moroney and Armitage. I find that in

this respect, Jarvis was mistaken as to what occurred at

the meeting. At that time he was the State Manager,

Victoria, for Golden Fleece. He considered he had been

wrongly treated by Golden Fleece in not being able to

continue to hold that position after 1 August 1981.

There was no reason why he should accept that Moroney had the authority to speak as State Manager, Golden

Fleece in July. As from 1 August Armitage was moving to another area in his employment with Golden Fleece.

Although there may have been practical reasons	why
Armitage should have regard to Moroney at that time

being his de facto superior in the hierarchical

structure of Golden Fleece, Jarvis was still his

superior. The meeting was more in the nature of a

briefing arrangement to keep Moroney informed but it was

Jarvis who made the final decision. Jarvis knew of the

terms of the Golden Fleece agreement. The decision

coincides with what Jarvis says was his advice namely to

comply with the terms of the Golden Fleece agreement.

The letter of 30 July was the first step in following

I	. v -
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- 30 -

the procedures prescribed by that agreement. In any event neither Cullen nor Armitage say that on 30 July

1981 Armitage said to Cullen words to the effect that

Cullen should "up the selling price, the displayed

selling price" at Cullen's service station. Further I

accept Armitage's evidence of what occurred at the

meeting between Armitage and Cullen on 30 July 1981.

It follows that the Commission has failed to prove the charge alleged to have occurred on	30 July
1981.

In these circumstances it is not necessary to

consider the many other legal matters raised by counsel

in their final submissions including the nature of an

attempt under paragraph (b) of sub-section 96(3) of the

Act. In any event, even on the evidence of Cullen, it

is difficult to see how a contravention of paragraphs

(a) or (b) of subsection 96(3) could have occurred

since Golden Fleece did not make known to Cullen a

specified price. No specified price for resale was

mentioned nor is it possible to arrive at a "price

specified by the suppliers" by the application of the principles discussed in cases such as Trade Practices Commission v. Mobil Oil Australia Ltd., Federal Court of

Australia, Toohey J., unreported, 20 August 1964 and the

cases referred to therein.

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- 31 -

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For the reasons given the application in so

far as it seeks the imposition of a penalty against

Golden Fleece should be dismissed. For the same reasons

I

the application in so far as it seeks the imposition of

a penalty against Caltex should be dismissed.

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