Trade Practices Commission v J.W. Bryant Pty Ltd

[1978] FCA 45

CATCHWORDS

Trade Practices - Conduct in restraint of trade - Injunctlon -

Pecuniary penalties.

Trade Practices Act 1974, ss.45, 76, 77 and 80

TRADE PRACTICES COMMISSION	'I. J. W. BRYANT PTY. LIMITFD & ORS.
Coram : Franki J.
23 June 1978
Sydney

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i!u!&coluRs-:	l	i
t.  -eh dmfendeat be reatrained f r o m giving effect to

' er u n d o n t ~ d l a p alleged in pangrrphs l 9 and 23

of the -.tatemeat of claim.

2. Each d & w t - b. reatmind f r o m making a contract

or ammgIoent or fro8 entering into an underatanding

batwe- ibe l f md my other farm produce agent or

agmnts @ore m& contract arrangement o r understanding , .

c&* a provision in or to the ef fect of that

in w p h m 19 md 23 of the Statament of

C u i . or f r a &v* effect to any auch provision.

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betwoan it8ol.f and any other farm produce

agmt or agate *re	nu& contract arrangement
or uuderatmding contain8 a provision	which ha8
, tho p u r p a ~	or h a m or in l ike ly to have the

effect of fixing controlling o r maintaining

or providing for tho fixing controlling or

mhintalnlng of, the price for, o r a discount,

..	allowaaae, rebate or credit in relation to rervioem rupp1i.d or to be supplied to growers
oi fu=b produce by the defendant or any other
ram produce agmt o r agent8 or f r o m giving
&fact W any arch provision.
4.	Tho defonQmta pay the plaintiff’e costa of
there prooeadingr.
5.	Faoh defendant pay a pecuniary penalty o f
$25uo .b The C o ~ o m e a l t h .

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I N THE FEDERAL COURT OF AUSTRALTA )

NEW SOUTH WALES DISTRICT REGISTRY No. G41 of 1977

GENERAL DIVISION I

BETWEEN : TRADE PPJCTICES CO;.E7ISSION

AND :  J. W. BRYANT FTY. LTibIITED

AND ORS.

REASONS FOR JUM;MENT:  FRANK1 J.

DELIVERED:  23 June 1978

On 24 June 1977 t h e Trade Practices Commission commenced

! proceedings by way of statement of claim against the elght

defendants a l leging a breach of s.45 of the Trade Practices Act,

1974 ("the Act") and claiming a pecuniary penalty, an injunction

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and cos ts .

The matter ult imately proceeded on the bas l s o f a

statement of agreed facts slgned by counsel together with three

a f f i d a v i t s f i l e d on behalf of the defendants. Some weeks p r l o r

to the hear ing the defendants offered undertakings i n r e l a t i o n

1 t o future conduct. A t a l l re levant t imes each defendant has

l been a t rading corporat ion carrying on bus iness as a farm produce

agent from premises si tuated	a t the Sydney markets,	which	were
formerly a t Haymarket,	and	a r e now loca ted a t Flemington.	Each

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, defendant a t a l l re levant t imes was a member of an unincorporated

assoc ia t ion known as The New South Wales Chamber of F r u i t and

Vegetables Industries ("the Chamber"). This assoc ia t ion was,

i n t e r a l l a , an asspciation of farm, orchard o r garden produce

agents , merchants o r d i s t r ibu tors .

Paragraph 19 of the statement of claim alleged :

"On or about 8 Ju ly 1975 the defendants

and each of them and o ther members of the

Chamber made an arrangement whereby they

agreed that	members o f t h e Chamber would
the rea f t e r l evy	farm produce growers

with charges f o r t h e s o r t l n g and s tacking

of farm produce (heremafter called

'por te rage charges ' ) in respec t o f

farm produce dellvered t o the SydLey

Markets i n the s a id S t a t e . "

It was fur ther a l leged tha t the a r rangement was i n r e s t r a i n t

of t rade o r commerce, that each of the defendants gave e f f e c t

t o t h e sald arrangement by levying farm produce growers wlth

porterage charges In respect of farm produce dellvered t o the

Sydney markets and t h a t i n o r about August 1975 each defend5nt

gave e f fec t to the a l leged a r rangement by reques tmg those

members of t h e Chamber t h a t were not levying farm produce

growers with porterage charges in respect of farm produce

de l ivered to the Sydney markets t o r e s i g n t h e i r membershlp

of the Chamber. S imi la r a l lega t ions were pleaded i n r e s p e c t

of a similar al leged understanding of the same da te .

Defences were f i l e d by a l l defendants In Apri l 1978.

I n t h e meantime the Trade Practices Act had been s i g n i f l c a n t l y

amended by amendments which took e f f e c t from 1 Ju ly 1977 but

it was no t a rgued t ha t t h i s a f f ec t ed t he pos i t i on . The only

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matters which were argued before me were whether any penalties I

should be imposed under ss.76 and 77 of t h e Act and i f so of

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what amount, and whether t h e r e l i e f t o which the defendants I

ag reed t he p l a ln t l f f was entit led should be by way of injunction i

or under tak ings in the same terms.

The case proceeded upon t h e b a s i s t h a t it was conceded

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by the defendants that they had contravened s.45 of the Act.

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Aff idavi t s were f i l e d by th ree members of the Councll

of the Chamber seeking to explain the events . No cross-

examination took place on t h e s e a f f i d a v i t s and each deponent

swore that in February 1974	members	of the	Chamber met	t h e
then	New	South	Wales	Minis ter for Agricul ture seeking an

i n c r e a s e i n t h e r a t e o f commission provided f o r farm produce

agents under the Farm Produce Agents Act, 1926 (N.S.W.). The

evidence was t h a t t h e M i n i s t e r t h e r e informed t h e members of

t h e Chamber who attended him tha t they should exhaust a l l

avenues available to	them	under	t h a t	Act	t o c o l l e c t c o s t s
from growers before he	would	consider	recommending	a	r i s e i n

commission and t h a t i n h i s view porterage charges pald by

agents to ou ts ide o rganisa t ions	f o r	r ece iv ing , so r t ing	and
stacking produce which arrived	a t the	markets outside	the

hours of an agent ' s s taff , were Ifout of pocket expensesll

properly payable by t h e " P ~ C l P ~ " wi th in S . 15 of the Farm

Produce Agents Act, 1926 (N.S.W.). It was said by t h e

deponents that an extraordinary general meeting o f the members

of the Chamber was c a l l e d f o r 8 Ju ly 1975 !I. . . t o inf i rm the

members of the Minister's view". That meeting agreed by a

majority to levy growers with porterage charges. The Council

of the Chamber on t h e same day composed two d r a f t l e t t e r s

fo r cons ide ra t ion by t h e Chamber's s o l i c i t o r s , one f o r i n t e r -

s t a t e growers and t h e o t h e r f o r New South Wales growers t o

be sent by members of the Chamber t o growers on whose behalf

they acted. According to the minutes of t h i s meetmg the

l e t t e r s "...Were t o be looked a t by t h e Chamber s o l l c i t o r

so tha t t hey would i n no way contravene the Act1!. It is

c l e a r that the Act there re fe r red to was the Farm Produce

Agents	Act,	1926	(N.S.W.).	It was put by counsel f o r t h e
defendants that the contravent ion	of	the Trade	Practices	Act

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had ar i sen ou t o f the focus ing o f a t t e n t l o n on the S t a t e

Act. He submitted that everybody was concerned with

problems under the State Act and in effect that a t tent lon

was not given to the Trade Practlces Act.

When the in te rv lew with the Minister took place

i n February 1974 the Trade Practices Act under which these

proceedings are brought had not been passed a s it was

a s sen ted t o on 24 August 1974 and d id not come in to ope ra t~ .o r~

until l October 1974. One m i g h t have thought that by 8

Ju ly 1975 s u f f i c i e n t would have been known o f t h e Trade P r sc t l ccs

- Act by members of the Council of the Chamber f o r some consider-

a t ion to have been given to it. On 8 July 1975 a d l rec tor o f

each of the first s ix defendants was a member of the Councll

and	a	d i r e c t o r	o f	each of the defendants attended the meetlng
of	8	Ju ly	1975 and voted	in favour o f the re levant reso lu t lon .

Subsequently, a memorandum dated 30 Ju ly 1975 was forwarded

1 by the Pres ident o f the Chamber t o each of I ts members, and

i n p a r t , it reminded them that the deduction of the amow-t

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paid to porterage companies for sor t lng and s tacking should

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take e f f e c t a s from 1 August 1975 i f tha t was not a l ready

being done.

Four members were asked to a t t end a meeting of the

Council of the Chamber held on 12 August 1975 to exp la in

why they were not deduct ing the charges for sor t lng and

s t ackmg. Le t t e r s da t ed 22 August 1975 were sen t by t h e

President of the Chamber t o f i v e members, inc luding the

! four previously mentioned, in the following terms :

"It i s with deep r e g r e t t ha t Council has

to a sk you to t ende r your resignation

from The N.S.M.	Chamber of F r u i t and
Vegetables Industries under Rule	8 ( b )

wi th in four teen (14) days o f rece lp t o f

this l e t t e r " .

On 22 April 1976 an extraordinary general meeting of

t h e Chamber r e so lved t o r e f r a in from any blanket porterage

charge and to only levy pa-terage charges that were ac tua l ly

p a i d t o c o n t r a c t o r s i n r e s p e c t of both New South Wales and

i n t e r s t a t e produce arriving out of market hours.

I n December 1976 t h e Commission was advlsed by the

I President of the Chamber by l e t t e r d a t e d 1 4 December 1976

t h a t on 29 Ju ly 1976 an extraordinary general meeting of

members of	the	Chamber,	i n t e r a l i a , had rescinded the
Chamber's	resolut ion of	8	July 1975, in respect of porterage

charges. No member of t h e Chamber t o whom t h e l e t t e r o f

22 August 1975 was sent was expelled from the Chamber nor

d id any such member reslgn.

The President of the Chamber sought to explain re levant

e v e n t s i n t h e l e t t e r o f 1 4 December 1976, which appears to

I have been sent in response to a notice under s.155 o f t h e

Trade Practices Act. The l e t t e r a l l e g e s , i n t e r a l i a , t ha t

l the reso lu t ion of 8 Ju ly 1975 ll...was never intended to be

mre t han an acknowledgement by each o f them a r r i v e d a t

through independent conclusion, that economic circumstances

then warranted their passing porterage charges on t o growers

and	that	the seemingly conscious parallel behaviour	by	members
i n r e l a t i o n t o	t h i s matter was	fu l ly expla lnable	by	ordinary
commercial considerations and not	as	a	r e s u l t o f a c t i n g	t o

a common plan". I f ind it d l f f i c u l t t o a c c e p t t h i s explanatlon

and i n any event no argument i s presented to me t h a t what t o o k

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place was not an agreement o r arrangement within s.45 of the

Trade Practices Act. The l e t t e r , however, contlnued, “If

there has been an infringement of the Act, it arose out of

t h e Chamber‘s naivety and f a i lu re t o adequa te ly acquamt

i t s e l f w l th t he imp l i ca t ions of the Trade Practices

l e g l s l a t i o n “ . An assurance was a l s o g i v e n i n t h e l e t t e r

t h a t t h e Chamber was then doing a l l it could to educate i t s

members as to the operat ion of the Trade Pract ices Act and

t h a t it would s t r i v e t o e n s u r e i n so f a r a s It was ab le

t h a t t h e a c t l v i t i u s o f i t s members d i d no t i n f r inge o r

attempt to circumvent the provlsions o f t h e l e g l s l a t i o n .

Sect ion 76(1) o f t h e Act provides tha t i f the Court

i s s a t i s f i e d t h a t a pe r son , i n t e r a l i a , has contravened a

provis ion of Par t I V of t h e Act :

“...the Court	may	order the person to pay
t o t h e	Commonwealth	such pecunlary penalty
(not exceeding	$50,000 In the case of	a

person not being a body corpora te , o r

I $250,000 i n t h e c a s e o f a body corporate ,

i n respect of each act o r omlssion b t h e

person to which t h i s s e c t l o n a p p l i e s 7 a s

I the Court determines to be approprlate

hav ing r ega rd t o a l l r e l evan t ma t t e r s i n -

c luding the nature	and	extent of the
a c t o r omlssion and of any	l o s s o r damage

suf fered as a r e s u l t o f t h e a c t o r

omission,the circumstances in which t h e

a c t	o r	omission took place and whether
the person has previously been	found	by

the Court	i n proceedings under this Par t
t o have engaged	i n any similar conduct.I’

It was common ground t h a t no defendant had previously

been involved i n proceedings before the Court in re la t ion

t o t h e Act. I t was a l leged on behalf o f the defendants tha t

no l o s s o r damage had been suf fered as a r e su l t o f any relevant

a c t o r omission,	but	I	am	not sa t i sYied tha t ,	a t l e a s t i n	some
cases , the reso lu t ion	of	8	Ju ly	1975	may	not have had the

e f f e c t of causing growers to pay porterage charges whlch othcr-

wise might have been absorbed by an agent. I Proceed upon the

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bas i s , which is not d i sputed , tha t the reso lu t ion of 8 Ju ly

1975 constituted an arrangement o r understandmg contrary

t o s.45 of t h e Act and t h a t i n a n undetermmed number o f

cases that arrangement was g iven e f f ec t t o by the l evymg

of porterage charges. No argument was presented to me

concerning the scope of	the	words	"ac t o r omission"	i n
s .76(1) .

For reasons se t ou t m my judgment o f 8 June 1978

i n Trade Practices	Commission v . Ml l re i s	Pty.	L i n t e d I	do
not cons ider , bear ing in	mind	the l imi t ed na tu re	of	the

matters f o r my determination, tha t t he re i s any need f o r

amendment to the p leadings due to the Act being amended i n

1977. The p la in t iyf seeks inpnct lons aga lns t each defendant

in the fo l lowing te rms :

1. An in junc t ion res t ra in ing the defendant from glving

effect to the arrangement o r understanding alleged

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i n paragraphs 19 and 23 of the statement o f claim.

2. An in junc t ion res t ra in ing the defendant from maklng

a cont rac t o r arrangement o r from en te r lng mto an

understanding between i t s e l f and any other farm

produce agent or agents where such contract arrangement

or understanding contains a p rov i s ion i n o r t o t h e

e f f e c t of tha t a l leged In paragraphs 19 and 23 of the

statement of claim	o r	f rom	g i v i n g e f f e c t t o	any such
provislon.

3. An in junc t ion res t ra in lng the defendant f rom mablng

a cont rac t o r arrangement o r from enter ing ln to an

understatldlng between i t s e l f and any other farm produce

agent o r agents where such contract arrangegent o r

understanding contains a provis ion which has the

purpose or	has	o r 1s l i k e l y t o	have	the	e f f e c t Of
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f ix ing con t ro l l i ng o r mamta inmg o r providing

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f o r t h e f l x i n g c o n t r o l l i n g o r maintalnmg o f ,

t he p r i c e f o r , o r a discount, allowance,

r e b a t e o r c r e d l t I n r e l a t i o n t o s e r v l c e s

supplied or to be supplied to growers of

farm produce by the defendant or any other

farm produce agent o r agents o r f rom giving

e f f e c t t o	any such prouislon.
The	defendants offered undertaklngs in these terms

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but they d ld not wish to argue the questlon of whether, In vlew

of the cont inued requests for an injunct ion by t h e p l a i n t l f f ,

undertakings should be accepted in l ieu of an injunction. The

p l a in t i f f p re s sed fo r i n junc t lons and I think it i s reasonable

t o grant injunct ions in the agreed terms ra ther than t o t ake

undertaklngs in s imilar terms, having in	mind	the provis ions
of	s .80(4) of the Act	as amended and tha t when the defences

were f i l e d I n A p r i l 1978 no undertaking was formally offcred

in t he de fences .

I cons ider tha t the form of the injunct ions sought ,

and no t opposed by the defendants , except for the proffer of

undertakings	m	l i e u t h e r e o f ,	i s	a p p r o p r l a t e i n a l l t h e
circumstances.

Consequently, I grant injunct ions against each

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of the defendants in the terms sought and prevlously set out

i n t h i s judgment. I fu r the r o rde r , by consent , that the

defendants pay the plaint i f f ' s costs of these proceedings.

To re turn to the ques t lon of pena l ty , I consider

t h i s is an appropr ia te case to o rder payment of a penal ty .

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The resolut ion of 8 Ju ly 1975 was passed some n ine months

a f t e r t h e r e l e v a n t Act came ln to force and the explanat ion

which has been offered that a t that t ime persons concerned

were focus lng t he i r a t t en t ion on the p rovis ions o f t h e

Farm Produce Agents Act, 1926 (N.S.W) should be borne i n

mind but i t i s not an adequate answer. I a l s o b e a r i n mind

the f ac t t ha t t he r e so lu t ion o f 8 Ju ly 1975 was rcsclnded

on 29 Ju ly 1976 and t h a t i n t h e l e t t e r o f 14 December 1976

the President of the Chamber, on behalf of the members o f

l the Chamber, assured the Trade Practices Commisslon t h a t t h e

Chamber would s t r i v e t o e n s u r e so far a s it was a b l e t h a t

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t h e a c t i v i t i e s o f	i t s	members	d l d	not infringe the Trade
Practlces	Act.	However,	I f e e l i t necessary to	lmpose

something	other	than	a nominal	penalty.	The	l eg i s l a tu re has
seen	f l t t o f i x	a	very subs tan t ia l	maximum	pena l ty fo r	a

contravention of Part I V of t h e Act. Whilst s.76 requl res

the Court to have regard to a very wlde range of matters ln

deciding whether to order that a penal ty be paid t o t h e

Commonwealth, and i f a penal ty i s t o be o rde red , i n f l x lng

t h e amount of it, never the less I conslder that the legislature

has evidenced the intention that any contraventlon of a

provis ion	o f	P a r t	I V of the Act	1 s not	t o be regarded l lghtly.
No	submissions have been	made	t h a t t h e r e	i s	any material

before me tha t d i f f e r lng pena l t i e s shou ld be imposed on the

defendants.

In a l l the circumstances and consldering a l l t h e

matters which s.76 d i r e c t s me to cons lde r , I regard a pena l ty

of $2500 i n respect of each defendant as appropr ia te and I

l order each defendant to pay a pecuniary penalty of $2500

t o t h e Commonwealth.

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