Trade Practices Commission v TNT Management Pty Ltd

Re: TRADE PRACTICES COMMISSION
And: T.N.T. MANAGEMENT PTY. LIMITED; BRAMBLES HOLDINGS LIMITED; MAYNE NICKLESS
LIMITED; YOUNGS TRANSPORT PTY. LIMITED; ANSETT TRANSPORT INDUSTRIES
(OPERATIONS) PTY. LIMITED; EXPRESS FREIGHT PTY. LIMITED; ASSOCIATED STEAMSHIPS
PTY. LIMITED; ESLEA HOLDINGS LIMITED, formerly Ipec Holdings Limited and
ROADSWIFT TRANSPORT PTY. LIMITED, formerly Interstate Parcel Express Co. Pty.
Limited
No. G44 of 1978
Trade Practices - Evidence - Statutes
(1985) 58 ALR 423, (1985) 6 FCR 1

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Franki J.(1)

CATCHWORDS

Trade Practices - Agreement or understanding by carrier of goods not to deal with broker or consultant - Whether agreement or understanding made - Whether within restraint of trade and commerce provisions before 1 July 1977 - Whether agreement or understanding given effect to before or after 1 July 1977 - Exclusionary provision - Substantial lessening of competition in a market - The role of economic evidence - Whether Trade Practices Commission can commence action after 1 July 1977 for contravention before that Act.

Trade Practices Act 1974 - s. 45.

Trade Practices Amendment Act 1977 - ss. 8, 25.

Trade Practices - Restrictive trade practices - Restraint of trade - Conduct substantially lessening competition - Market - Arrangement or understanding - Effect on competition - Giving effect to antecedent arrangement or understanding - Trade Practices Act 1974 (Cth), ss 45(2), (3), (4), 84(2).

Trade Practices - Exclusionary provisions - "Particular persons" - Trade Practices Act 1974 (Cth), s 4D.

Trade Practices - Conduct of employee "on behalf of" corporation - Meaning and validity of statutory provision deeming conduct engaged in by corporation - Trade Practices Act 1974 (Cth), s 84(2).

Evidence - Admissions - Who may make - Agents and servants - Admissions as to past events - Trade Practices Act 1974 (Cth), s 84(2).

Statutes - Interpretation - Construction of penal statutes - Ambiguity - Trade Practices Act (Cth), s 45(4).

HEADNOTE

Held: (1) A contract, arrangement or understanding could properly be described as in restraint of trade and commerce for the purpose of the Act prior to 1 July 1977 only if the contract were in restraint of trade according to the common law rules and, in addition, satisfied the test provided in s 45(4) (as it then stood).

Quadramain Pty Ltd v. Sevastapol Investments Pty Ltd (1976) 133 CLR 390, considered.

TPC v. Allied Mills Industries Pty Ltd (No 4) (1981) 60 FLR 1; 3 ATPR 40-237; Hollywood Premiere Sales Pty Ltd v. Faberge (Aust) Pty Ltd (1976) 28 FLR 167; TPC v. Email Ltd (1980) 43 FLR 383; 3 ATPR 40-172, not followed.

(2) The words "is likely to have" in s 45(4) (as it stood prior to July 1977) in connection with the words "significant effect on competition" meant that the probability must be something not very far short of "more probably than not", except in unusual circumstances.

Tillmanns Butcheries Pty Ltd v. Australian Meat Industry Employees' Union (1979) 42 FLR 331; (1979) 2 ATPR 40-138, approved.

(3) The minutes of a meeting of freight carriers, in which it was noted that "previous experience showed that it was better for the client and (carrier) to deal direct" rather than through transport brokerage agencies, evidenced an understanding entered into by the persons present not to deal other than directly with a client.

FCT v. Lutovi Investments Pty Ltd (1978) 140 CLR 434; Commissioner of Taxation v. Cooper Brookes (Wollongong) Pty Ltd (1979) 41 FLR 277; L Grollo & Co Pty Ltd v. Nu-Statt Decorating Pty Ltd (1978) 34 FLR 81; 2 ATPR 40-086, per Smithers J at 89; Morphett Arms Hotel Pty Ltd v. TPC (1980) 3 ATPR 40-157; TPC v. Email Ltd (1980) 43 FLR 383 per Lockhart J at 395-397, applied.

(4) The arrangement or understanding between the defendants, which carried on business as freight carriers, not to acquire the services of a certain transport broking company did not have, nor was it likely to have, a significant effect on competition between the defendants to acquire those services, because there was no demand by any relevant defendant to acquire those services and it was unlikely that there would be any competition between the relevant defendants to acquire them.

(5) The competition between the defendants did not change during the period following the entry into the arrangement or understanding, and therefore the allegation that before 1 July 1977 effect was given to an arrangement or understanding in contravention of s 45(2)(b) (as it then stood) had not been established.

(6) The allegations that after 1 July 1977 the defendants gave effect to an arrangement or understanding in contravention of s 45(2)(b), as amended from 1 July 1977, in relation to the broking services said to be offered by the same transport broking company, had not been established, because the company ceased to operate as a broker before that date.

(7) The purpose referred to in s 4D(1)(b) is objective.

(8) An arrangement not to deal with a class or category of persons is not an arrangement not to deal with "particular persons" and is therefore not within s 4D.

(9) The Trade Practices Commission constituted by the 1974 amendments was entitled to take and pursue proceedings for breach of the 1974 Act, notwithstanding the terms of the Trade Practices Amendment Act 1977 (No 81 of 1977).

TPC v. Milreis (1978) 32 FLR 234, followed.

(10) Section 84(2) did not extend to admissions made by a servant as to past events.

TPC v. Nicholas Enterprises Pty Ltd (1978) 40 FLR 83; (1979) 2 ATPR 40-126 at 18,345 per Fisher J at 94, followed.

(11) Conduct engaged in by a servant of a company may have been "on behalf of" the company, within the meaning of s 84(2), notwithstanding that such conduct was not specifically authorised by the company or may even have been prohibited by it.

Re Ross; Ex parte Attorney-General for Northern Territory (1980) 54 ALJR 145 at 149, referred to.

(12) Officers of a company may have authority to make admissions about past events by virtue of their general authority or having been deputed to answer inquiries of a particular nature.

Fraser Henleins Pty Ltd v. Cody (1945) 70 CLR 100, followed.

TPC v. Allied Mills Industries Pty Ltd (No 3) (1981) 55 FLR 174, per Sheppard J at 178; TPC v. Queensland Aggregates Pty Ltd (No 3) (1982) 61 FLR 52; 4 ATPR 40-297 at 43,693 & 43,696 per Morling J at 58-59 and 63, referred to.

(13) Where an agent, acting in the ordinary course of his employment, makes a statement which contains an admission which is strictly part of the res gestae, the statement may be admitted in evidence against the principal.

NSW Country Press Co-Operative Co Ltd v. Stewart (1911) 12 CLR 481 per Griffith CJ at 491-492; Fraser Henleins Pty Ltd v. Cody (1945) 70 CLR 101 per Latham CJ at 113 and Williams J at 134; Ex parte Gerard & Co Pty Ltd; Re Craig (1944) 44 SR (NSW) 370 at 377; Barrett v. Steel Products Distributing Co Pty Ltd (1962) NSWR 981 per Walsh J at 986; Victorian Railways Commissioners v. Lord (1968) 2 NSWR 327 per Wallace P at 334 and Walker JA at 338, followed.

(14) Section 84(2) is within the constitutional power of the Commonwealth Parliament.

Fencott v. Muller (1983) 57 ALJR 317 per Gibbs CJ at 320-321, followed.

Actors and Announcers Equity Association of Australia v. Fontana Films Pty Ltd (1982) 150 CLR 169, distinguished.

(15) If the language of the Act after the ordinary rules of construction have been applied remains ambiguous or doubtful, it is appropriate to remove or resolve that ambiguity or doubt in favour of a defendant, at least, where the proceedings are for a penalty.

TPC v. Legion Cabs (Trading) Co-operative Society Ltd (1978) 35 FLR 372, followed.

Beckwith v. The Queen (1976) 135 CLR 569 per Gibbs J at 576, applied.

(16) Observations on the meaning of "market" in s 45(3) and on the role of economic evidence in assessing the likely effect of an arrangement or understanding on competition in a market.

HEARING

Sydney, 1983, June 28; 1984, November 12; 1985, February 12. #DATE 12:2:1985
TRIAL OF ACTION

Proceedings for recovery of pecuniary penalties and injunctions in respect of contraventions of Pt IV of the Trade Practices Act 1974.

K Mason QC, B W Rayment QC and S D Robb, for the plaintiff.

T R H Cole QC, P R Capelin QC, L D S Waddy and G Farrell, for the first, fifth and seventh defendants.

D E Horton QC, C A Sweeney and D Ryan, for the second defendant.

R P Meagher QC and N A Cotman, for the third defendant.

R D Giles QC, for the sixth defendant.

T M Jucovic, for the eighth and ninth defendants.

Cur adv vult

Solicitor for the plaintiff: Australian Government Solicitor.

Solicitors for the first, third, fifth and seventh defendants: Dawson Waldron.

Solicitors for the second defendant: Freehill, Hollingdale & Page.

Solicitors for the sixth, eighth and ninth defendants: Allen Allen & Hemsley.

FPC

ORDER

The proceedings be dismissed.
The question of costs is reserved.

Orders accordingly

JUDGE1

On 25 May 1978 a Statement of Claim was filed by the Trade Practices Commission ("the Commission") in this matter. There are nine defendants, namely:

First Defendant : T.N.T. Management Pty. Limited

("T.N.T.")

Second Defendant : Brambles Holdings Limited

("Brambles")

Third Defendant : Mayne Nickless Limited ("Mayne

Nickless")

Fourth Defendant : Youngs Transport Pty. Limited

("Youngs")

Fifth Defendant : Ansett Transport Industries

(Operations) Pty. Limited ("Ansett")

Sixth Defendant : Express Freight Pty. Limited

("Express Freight")

Seventh Defendant : Associated Steamships Pty.

Limited ("A.S.P.")

Eighth Defendant : Eslea Holdings Limited,

formerly Ipec Holdings Limited ("Ipec")

Ninth defendant : Roadswift Transport Pty.

Limited, formerly Interstate Parcel Express Co. Pty. Limited ("Interstate PARCEL")

INDEX TO JUDGMENT

Part 1 PRELIMINARY

(A) General

(B) Proceedings commenced by Tradestock in 1976

Part 2 WAS ANY ARRANGEMENT MADE OR UNDERSTANDING ENTERED

INTO AT THE NATIONAL FREIGHT FORWARDERS' ASSOCIATION MEETING HELD ON 12 FEBRUARY 1976?

(A) The minutes of the meeting of 12 February 1976

(i) General

(ii) Were the relevant defendants members of the National Freight Forwarders' Association?

(iii)The relationship of persons attending the meeting to the relevant defendant and their ability to commit it

(B) Oral evidence of what took place at the meeting of 12 February 1976

(C) Admissions

(D) Circumstantial evidence

(i) Motive

(a) Rejection by the Trade Practices Commission of the National Freight Forwarders' application for authorisation to continue its price fixing role

(b) Client disadvantage, the effect of intermediaries and the defendants' perception of this

(c) The actual and perceived impact of Tradestock

(d) The defendants' awareness of any ineffectiveness of individual action by a defendant

(ii) Inference of concert from any parallel changes in behaviour of the defendants

(E) The requirements for making an arrangement or entering into an understanding

(F) conclusion

Part 3 WAS ANY ARRANGEMENT MADE OR UNDERSTANDING ENTERED

INTO AT THE NATIONAL FREIGHT FORWARDERS' ASSOCIATION MEETING HELD ON 20 MAY 1976?

(A) The minutes of the meeting of 20 May 1976

(i) General

(ii) Were the relevant defendants members of the National Freight Forwarders' Association?

(iii)The relationship of persons attending the meeting to the relevant defendant and their ability to commit it

(B) Oral evidence of what took place at the meeting of 20 May 1976

(C) Admissions

(D) Circumstantial evidence

(E) Conclusion

Part 4 WAS ANY ARRANGEMENT MADE OR UNDERSTANDING ENTERED

INTO AT THE NATIONAL FREIGHT FORWARDERS' ASSOCIATION MEETING HELD ON 4 AUGUST 1976?

(A) The minutes of the meeting of 4 August 1976

(B) Oral evidence of what took place at the meeting of 4 August 1976

(C) Admissions

(D) Circumstantial evidence

(E) Conclusion

Part 5 ADMISSIONS IN RELATION TO THE THREE NATIONAL

FREIGHT FORWARDERS' ASSOCIATION MEETINGS

Part 6 THE CONSTRUCTION OF S.45(2)(a) PRIOR TO 1 JULY

1977

Part 7 DID ANY RESTRAINT IN THE ARRANGEMENT MADE OR THE

UNDERSTANDING ENTERED INTO AT ANY OF THE MEETINGS HAVE OR WAS IT LIKELY TO HAVE A SIGNIFICANT EFFECT ON COMPETITION BETWEEN THE DEFENDANTS?

(A) General

(B) The four periods of operations of Tradestock

(i) The consulting period

(ii) The commission period

(iii)The freight forwarding period

(iv) The period when Tradestock would not deal with the defendants

(C) The degree of competition between the defendants

(D) The submission in relation to any broker market

(E) Conclusion

Part 8 WAS EFFECT GIVEN TO ANY OF THE THREE ARRANGEMENTS

OR UNDERSTANDINGS AND THE CONSTRUCTION OF S.45(2)(b) BEFORE 1 JULY 1977?

(A) The construction of s.45(2)(b) before 1 July 1977

(B) General

Part 9 WAS EFFECT GIVEN TO ANY OF THE THREE ARRANGEMENTS

OR UNDERSTANDINGS AND THE CONSTRUCTION OF S.45(2)(b) and (3) AFTER 1 JULY 1977?

(A) The construction of s.45(2)(b) and (3)

(B) The issue of substantially lessening competition in any market

(i) General

(ii) Economic evidence

(a) General

(b) Economic evidence based on assumed facts

(c) The role of economic evidence

(d) The meaning of "competition" in s.45(2)(b)(ii) and (3)

(C) Services for the transportation of goods in Australia

Part 10 MISCELLANEOUS

(A) The amended defences

(B) The effect of the Trade Practices Amendment Act (1977) upon the proceedings

(C) What instructions, if any, did officers of the defendants receive about Tradestock?

(D) Would the defendants deal with transport consultants who did not seek commission?

(E) The Tripodi principle

(F) Certain evidentiary principles

(G) Undertakings

Part 11 SUMMARY OF CONCLUSIONS AND THE ORDERS

PART 1

PRELIMINARY

(A) General

The proceedings were brought by the Commission pursuant to s.77 of the Trade Practices Act 1974 ("the Act") for the recovery of pecuniary penalties referred to in s.76 of the Act and pursuant to s.80 of the Act for the grant of injunctions.
The defendants carried on freight forwarding activities. The first three defendants appear to be as large or larger than any other freight forwarders in Australia. In general, the defendants offered to carry goods to all or most States, often by a variety of means, for example, road, rail or air.
Tradestock Pty. Limited ("Tradestock") was incorporated in 1975 and commenced shortly thereafter to carry on what can be described broadly as the business of transport consultants seeking a fee from the client for its advice. Later its business changed to one in which it sought its remuneration by way of commission from the freight forwarder with whom it placed its business. In the early stages of its history Tradestock operated under the name T.I.C. Management Consultants. A Mr Frewen, who was in the witness box for 49 days, was the managing director of Tradestock and a Mr Stock, who played a significant part in the operations of Tradestock, was a director.
In substance, it is alleged by the Commission that the defendants were parties to one or more of three arrangements or understandings, each in breach of s.45(2)(a) of the Act. It is alleged that arrangements were made or understandings were entered into by various defendants that they would not negotiate with, furnish quotations to, enter into contracts with, or otherwise deal with Tradestock, or any other agent and/or broker, in respect of the carrying or forwarding of freight, or the arranging for the carrying or forwarding of freight, proposed or sought by Tradestock or any other agent and/or broker, for or on behalf of persons seeking the services of such defendants or any of them for the carrying or forwarding of freight or the arranging for the carrying or forwarding of freight through Tradestock or any other agent and/or broker. It is alleged that the arrangements were made or the understandings entered into at meetings held on 12 February, 20 May, and 4 August 1976 of a body called the National Freight Forwarders' Association. ("N.F.F.A.")
The precise nature of the allegations will be dealt with more fully later. It is also alleged that the arrangements or understandings were given effect to in breach of s.45(2)(b) of the Act. The Act was amended in a way which falls for consideration by Act No. 81 of 1977 which came into operation on 1 July 1977.
The case was fought with extreme determination. Interlocutory proceedings occupied some 60 days before a single Judge of this Court and some 20 separate judgments were given in respect of these interlocutory applications. Five appeals were brought to the Full Court of this Court from certain of these judgments. Three applications were made for special leave to appeal to the High Court from the judgments of the Full Court. Of these one was refused, one apparently was not proceeded with and the third was granted although the appeal was unsuccessful. No appeal was brought by the Commission. At the time these interlocutory appeals were instituted, an appeal lay as a right to the Full Court but the Federal Court of Australia Act 1976 has been amended since by adding a s.24(1A) which provides that an appeal should not be brought from an interlocutory judgment unless the Court or Judge gives leave to appeal.

When these proceedings were instituted, this Court was operating under Statutory Rules 20 and 220 of 1977. These rules, in substance, applied the rules of the High Court. An interlocutory application was made by the second defendant that the matter proceed under the Federal Court Rules, which came into operation on 1 August 1979 (Statutory Rules 140 of 1979). This application was made pursuant to order 64 rule (1) of those rules. All defendants other than the second defendant opposed the application arguing that the proceedings were of a quasi-criminal nature and they anticipated suffering some disadvantage if the order was made. On 8 May 1981 I decided that, because of the nature of the proceedings, I would not change the rules under which the proceedings were to be heard.
Although I suggested on a number of occasions that use should be made of the provision in order 31 of the High Court Rules for a summons for directions, neither the plaintiff nor any defendant accepted my suggestion. This was unfortunate because I feel that, had some of the problems received attention as a result of a summons for directions, at least some reduction in the hearing time could have been expected.
The evidence occupied 173 days and the addresses 32 days. In addition, the parties gave me certain written submissions. The submissions for the Commission extended over about 700 pages, those for the first defendant over about 1400, those for the second defendant over about 800, those for the third defendant over about 500, those for the sixth defendant over about 200, those for the seventh defendant over about 15, and those for the eighth and ninth defendants over about 50. In addition, the first defendant sought to tender a further 600 pages in relation to facts which two expert economists had been asked to assume. I declined to accept this further material upon the basis that the mere obligation to read or to decide whether or not to read such a mass of material in addition to the material already tendered by the first defendant was an unreasonable burden to impose on a Judge. Thereafter, senior counsel for the first defendant provided me with a list of page references to the transcript in relation to the assumed facts which apparently had been dealt with in the last mentioned 600 pages.
Every point which could possibly be raised concerning the admissibility of evidence appears to me to have been taken and I provided some 40 rulings on the admissibility of evidence during the hearing. The majority of these were in writing, copies of which were given to the parties. Some of these rulings have now been published ((1984) A.T.P.R. 40-483 at pp.45,531 to 45,586). Four senior counsel and seven junior counsel were in Court most of the time and from time to time other counsel appeared. 105 witnesses were called. The interlocutory applications extended over more than 2000 pages of transcript and the hearing over 16,000 pages. In addition, about 1000 exhibits were tendered.
Extensive amendments were allowed without serious opposition, to the defences after the hearing had proceeded for about 70 days. On the 203rd day of the hearing the Commission sought to amend para. 32 of its Statement of Claim but I rejected the application.
It is hardly an exaggeration to say, in general, that every possible argument that the ingenuity of counsel could devise was put to me.
It will be seen from the extent of the evidence and submissions that it would be ridiculous to do other than deal with the evidence and submissions which have been made in what I regard as a practical way. If I have not directed attention to any particular evidence it is because I regard it as of minor importance. Likewise, if I have not dealt with a particular submission, it is because I do not regard it as being of overall significance. I have adopted the practice of referring to submissions by defendants generally without identifying the particular defendant, except where necessary, because, in general, the defendants adopted the submissions of those who addressed before them. In some instances reference will be made to a corporation by a short name and not by its full name.
The first issue for determination is whether the arrangements or any of them were made or the understandings or any of them were entered into by the defendants in contravention of s.45(2)(a) and (4) of the Act.
The next issue is whether any arrangement or understanding proved to have been made or entered into was given effect to before 1 July 1977 in breach of s.45(2)(b) or after 1 July 1977 in breach of s.45(2)(b)(i) or (ii) of the Act which was amended with effect from 1 July 1977.

(B) Proceedings commenced by Tradestock in 1976
It is desirable to refer at this stage to proceedings commenced by Tradestock in 1976. On 17 December 1976 proceedings seeking, inter alia, damages were started in the Victorian Registry of this Court by Tradestock against a number of companies including certain of the defendants in the present proceedings.
On 2 May 1977 Smithers J. gave judgment in an application by certain defendants in that action for an order that the proceedings be stayed pending provision by the plaintiff for security for costs of the defendants making the application. An order was granted staying the action against the applicants until security for costs was provided was granted. (Tradestock Pty. Ltd. v. T.N.T. Management Pty. Ltd. (1977) 30 FLR 343; (1977) 1 ATPR 40-046).
On 27 January 1978 Smithers J. gave judgment on an application by Tradestock, which had been unable to provide the security for costs required by the stay granted on 2 May 1977, in which it sought a removal of the stay based on fresh evidence ((1978) 32 F.L.R. 420; (1978) 1 A.T.P.R. 40-056). The fresh evidence included minutes of N.F.F.A. meetings of 4 March 1969, 12 February 1976, 20 May 1976, and 4 August 1976 and evidence of telephone conversations including conversations of 26 July 1976 by Frewen or Stock of Tradestock with a Mr Gardiner identified in the judgment as of Interstate Parcels Express Co. Pty. Limited, a telephone conversation with a Mr Shortell identified as of T.N.T. Management Pty. Ltd. and a third telephone conversation with a Mr Wilkins identified as of Youngs Transport Pty. Limited. His Honour ultimately removed the stay in relation to all but certain defendants.
In deciding the case now before me in which the evidence is undoubtedly much more extensive than that before Smithers J., I have had the benefit of his Honour's judgments which were referred to quite extensively by various parties. Inevitably, because of the difference in the material before me to that before Smithers J. and in the arguments presented, differences in the conclusions reached must be expected.

PART 2

WAS ANY ARRANGEMENT MADE OR UNDERSTANDING ENTERED INTO AT THE

NATIONAL FREIGHT FORWARDERS' ASSOCIATION MEETING HELD ON 12

FEBRUARY 1976?

Para. 21(1) of the Statement of Claim is as follows:

"21.(1) On or about 12 February 1976 the first, second, third, fourth and fifth-named Defendants and each of them made an arrangement and/or entered into an understanding whereby they and each of them agreed and/or decided:-

(a) that such Defendants and each of them would not negotiate with, furnish quotations to, enter into contracts with, or otherwise deal with, T.I.C. Management Consultants or any other agent and/or broker, in respect of the carrying or forwarding of freight, or the arranging for the carrying or forwarding of freight, proposed or sought by T.I.C. Management Consultants or any other agent and/or broker for or on behalf of persons seeking the services of such Defendants or any of them for the carrying or forwarding of freight or the arranging for the carrying or forwarding of freight through T.I.C. Management Consultants or any other agent and/or broker; and/or

(b) that such Defendants and each of them would only negotiate with, furnish quotations to, enter into contracts with, or otherwise deal with, persons seeking the services of such Defendants or any of them for the carrying or forwarding of freight or the arranging for the carrying or forwarding of freight, direct, and would not negotiate with, furnish quotations to, enter into contracts with, or otherwise deal with, such persons or any of them through T.I.C. Management Consultants or any other agent and/or broker."

Para. 21(2) sets out item 11 of the minutes of 12 February 1976 (infra).
The choice of the words "and each of them" in the Statement of Claim is, in my opinion, for more abundant caution so that the Commission would not fail if the allegation is only established against certain of the defendants referred to in the relevant paragraph.
The Commission relied upon:

(A) The minutes of the meeting and their confirmation at

a subsequent meeting.

(B) Oral evidence of witnesses who were called of what took

place at the meeting.

(C) Admissions of the making of the arrangement or entering

into the understanding.

(D) Circumstantial evidence -

(i) Motive

(a) Rejection of the N.F.F.A. application for authorisation to continue its price fixing role.

(b) Client disadvantage, the effect of intermediaries and the defendants' perception of this.

(c) The actual and perceived impact of Tradestock.

(d) The awareness of ineffectiveness of individual action.

(ii)Inference of concert from parallel changes in behaviour.

It was also submitted by the Commission that the principles in Tripodi v. The Queen (1961) 104 CLR 1 were applicable and a number of other principles supported an inference that the arrangements were made or the undertakings were entered into.
In addition to the persons recorded in the minutes, a Mr W.A. Levitt, now working with the Department of Motor Transport, attended. In 1976 and for many years previously, Levitt as the executive director of a road transport federation of which the N.F.F.A. was a division had prepared the minutes of the meetings of the N.F.F.A.. Of those who attended the meeting of 12 February 1976 the Commission called only Levitt. The first defendant called a Mr Prebble, the third defendant a Mr Uniacke and a Mr Price and the fifth defendant a Mr Wise. No explanation was provided for the absence of any of the other persons attending the meeting.

(A) The minutes of the meeting of 12 February 1976

(i) General
The relevant parts of the minutes of the meeting of 12 February 1976, which were admitted on one basis or another, are:

"NATIONAL FREIGHT FORWARDERS' ASSOCIATION Minutes of the Meeting held in the Boardroom, Wynyard House, Sydney, at 10.30 a.m. on Thursday, 12th February 1976.

PRESENT:

Chairman - Mr G.C. Uniacke

Mr J. Wise - Ansett Freight Express Mr J. Linfoot - Brambles Long Distance Transport.

Mr M.G. Davies ) - Mayne Nickless Ltd. Mr J. Price )

Mr R.E. Heasman )

Mr J. Gouldstone) - T.N.T./Altrans Ltd. Mr T. Prebble )

Mr N. O'Brien - Youngs Transport

APOLOGIES:

A.U.T. Holdings Ltd.

I.P.E.C. Australia Ltd.

Tradex Transport.

The Chairman welcomed Members to this the first Meeting of the New Year and reminded Members that it had long been customary for the Chairman to maintain an impartial role and the organisation he represented to nominate a person to represent the Company. The Chairman advised that Mr. M.G. Davies would be the Mayne Nickless representative.

...

11. T.I.C. MANAGEMENT CONSULTANTS.

It was noted that the above Organisation had made approaches to several Transport Companies for quotes for freight movement for various other organisations.

Similar 'Transport Brokerage Agencies' had appeared in the Industry at various times in the past and previous experience showed that it was better for the Client and Operator to deal direct."

The minutes were confirmed at the meeting of 23 March 1976 at which the first five defendants, inter alia, were represented.
I consider that the minutes are the best evidence of what took place. There was extensive argument about whether the minutes were admissible. There was a considerable amount of evidence concerning the weight to be given to what was recorded in the minutes. A Mr Shortell, a director of T.N.T., said in relation to an event in December 1974, "If it is in the minutes I presume it did take place ... if it is in the minutes I presume it is a true record". A Mr Prebble, who about 1975 became the Australian General Manager of T.N.T. Transport System, said that, apart from entries concerning Tradestock in the minutes of the February and May meetings, he could not recollect any specific incidents of inaccuracy that particularly worried or concerned him and that he did not intend to suggest that the minutes were normally inaccurate. Mr Redpath, the chairman of Mayne Nickless, who was also chairman of the N.F.F.A. for several years before 1971, said of certain of the minutes in 1979, "I have no reason to think these minutes are not an accurate record".
I dealt with the admissibility of the minutes in rulings I gave on 14 and 23 November 1983 and, so far as concerns the minutes of the February meeting, I admitted those against all the five defendants on the following grounds:

(a) Against all persons as business records to the extent to which they contained statements of fact ("the business record ground"); and

(b) Against each defendant that was a member of the N.F.F.A. by virtue of the chairman's signature at the succeeding meeting of the minutes as a true record of the previous meeting ("the membership ground"); and

(c) Against each defendant present at a subsequent meeting at which the minutes of the prior meeting were confirmed whether or not the defendant was represented at the earlier meeting and whether or not the defendant is shown to be a member of the N.F.F.A. ("the confirmation ground").

There is evidence which I accept that the minutes of the February meeting were confirmed at a meeting on 23 March 1976 at which Heasman, Linfoot, a Mr Robinson, Uniacke, M.G. Davies, N. O'Brien and Wise attended. I am also satisfied that there is some evidence that the minutes were circulated and received by the defendants.
Evidence was given by Levitt about the manner in which he prepared the minutes. He said that during the currency of the meeting he would take notes of the decisions reached, agreements made or consensus arrived at and that he normally translated his notes into something more formal (meaning the minutes) and sent a copy to the chairman seeking his approval and thereafter he would duplicate the minutes and send a copy to each member. He said it was his practice to record every matter that was discussed at the meeting. He said, "I thought that the correct way to keep the minutes was to record the resolutions, rather than the reasons, or the synopsis". He also agreed that he did not draw a distinction between things that were resolved on the one hand and things that were discussed or agreed and that he did not note verbal statements made by any particular person. He also said that meetings were quite informal. He said that minutes which he prepared and recorded in the minute book were, to the best of his knowledge and belief, correct, that at no time had anybody indicated to him that the minutes in the year 1976 were not a correct record and that he could never recall anyone seeking to correct any minute during the time he prepared them. He said that if anything in the minutes was in brackets that indicated that it happened not during but after the meeting. He said that it was not the practice to count votes at a meeting but normally the chairman asked if anybody disagreed with whatever was the subject of the vote.
I will next consider the following matters:

. Whether the relevant defendants were members of the

N.F.F.A.

. The relationship of the persons attending the meeting

and the relevant defendant.

. Whether the persons attending the meeting were able

to commit the relevant defendants.

(ii) Were the relevant defendants members of the National Freight Forwarders' Association?

Exhibits KD and KN are the rules of N.F.F.A. adopted in 1973. KD was admitted against the first, fifth, seventh, eighth and ninth defendants and I am satisfied that KN was established to be the rules of the N.F.F.A. at that date. There is no suggestion that there was any relevant alteration in the rules between the date of adoption and 1976. Rule 3(b) provides:

"The following Companies together with subsidiaries under their control shall at the establishment of the Association be members:"

The following names appear, inter alia, in the list of members:

Ansett Freight Express

A.U.T. Holdings Limited

Brambles Holdings Limited

Ipec Australia Limited

Mayne Nickless Limited

Thomas Nationwide Transport Limited

Youngs Transport Agency.

Rule 5 is entitled "representation" and provides:

"Each member shall appoint a representative who will be the Chief Executive of the Company or an appointee who will be authorised to speak for and to commit his Company."

The First Defendant:

Membership was admitted on the pleadings. In addition, I am satisfied that this was so because the first defendant was a wholly owned subsidiary of Thomas Nationwide Transport Limited.
It is also relevant to note that there is evidence that the first defendant received circulars from the N.F.F.A. and minutes of its meetings.

The Second Defendant:

Although strenuous efforts were made to object to questions directed to establishing that the second defendant was a member, the rules show it was a foundation member in 1973 and I accept from that that it was a member in 1978. In addition, at one stage of the addresses, senior counsel for the second defendant offered a concession, namely that he was prepared to admit that the Commission had proved that Brambles Holdings was a member of the N.F.F.A. at the relevant times if some admission was made by the Commission about the number of subsidiaries of certain defendants. This further admission was not forthcoming so the offer lapsed.
I am satisfied that the second defendant was a member.

The Third Defendant:

Mayne Nickless Limited was named as a foundation member in the 1973 rules and, although not admitted in the pleadings, membership was subsequently conceded by senior counsel for the third defendant. I am satisfied that it was a member.

The Fourth Defendant:

Membership was admitted in the pleadings. However, some question arises because apparently the fourth defendant was not incorporated until 1 March 1976.

The rules show Youngs Transport Agency as a foundation member. The business name Youngs Transport Agency was owned by two individuals named Wilkins and Beasley between 17 July 1973 and 2 March 1976. The fourth defendant took over the business formerly conducted by Wilkins and Beasley and continued to conduct it as Youngs Transport Agency with no change in operations until it was taken over by the third defendant as from 21 February 1977.
Because of the admission in the pleadings I treat it as being a member for the purposes of the proceedings against it, but membership has not been proved so far as that issue may affect any other defendant.

The Fifth Defendant:

Membership was not admitted in the pleadings but Ansett Freight Express was an original member and this was the business name of the defendant in 1973 and thereafter. I am satisfied it was a member.

(iii) The relationship of persons attending the meeting to the relevant defendant and their ability to commit it.

The First Defendant:

Heasman held the position of Executive Director, T.N.T. Transport System Freight Division, and was Prebble's immediate superior and immediately below Shortell. On 7 January 1975 he signed a letter to the Trade Practices Commission on behalf of T.N.T. as Executive Director, General Freight Services.
Prebble, as I have said, was the Australian General Manager of T.N.T. Transport System at the relevant time.

The Second Defendant:

Brambles' counsel adopted the policy of raising and arguing every question of law and objecting to and, so far as I would allow, arguing the admissibility of every question remotely concerning the second defendant.
It chose to call no witness other than a lady, Marilyn Sloane. She said that in 1974 she had been employed with Brambles Sea Cargo which she said was one of the divisions of Brambles Holdings. However, there seemed to be some doubt whether this was the position in 1976.
"Brambles" and "Brambles Long Distance Transport" had both been registered for years before 1976 as business names of the second defendant. These registrations continued at all relevant times. In 1981 Linfoot signed an application for the registration of the business name Brambles Long Distance Transport as General Manager of the second defendant. Linfoot had attended N.F.F.A. meetings in 1974 and 1975 and and it seems to me a reasonable inference that N.F.F.A. circulars had been sent to an organisation called Brambles Long Distance Transport.
A Mr Ian Wood had had business relationships with Linfoot. They were clearly employed in the same organisation. Linfoot was superior to Wood. Wood first met Linfoot at Linfoot's office in Acacia Ridge, Brisbane, in 1973. That office had the name "Brambles Long Distance Transport, Acacia Ridge" outside it and it was the largest in the building. Wood attended a conference with Linfoot and a Mr Williams in Brisbane at which various job positions were discussed. From about the middle of 1974 onwards Wood said he met Linfoot approximately once every two months. He said that Linfoot had an office at Nudgee Road, Brisbane, in a building which bore the notation outside "Brambles Transport and Plant Hire Division" or very similar words. From time to time he got instructions from Linfoot at Goldfields House, Sydney, which bore outside the notation "Brambles Industries Limited", together with the words "Head Office" or "Registered Office". It appears that in July 1974 Linfoot was working with a firm which he described as G.W. Chaplin and Company, a division of Brambles Holdings Limited.

The Third Defendant:

Uniacke had acted as the chairman of meetings of the N.F.F.A. and a representative of Mayne Nickless where need arose for a number of years prior to 1976 and was a very senior executive. He said that he was the chief representative of Mayne Nickless for the N.F.F.A. M.G. Davies and John Price also attended the meetings. Davies was a senior executive and when Uniacke went to New Zealand in 1976 he handed over his representative role to Davies.

The Fourth Defendant:

There is not much evidence in relation to N. O'Brien but, because of the admission in the pleadings, the name Young Transport Agency appearing as a foundation member in the N.F.F.A. rules and O'Brien's name appearing in the minutes with Young Transport against it, I am satisfied of his authority to speak for and commit the fourth defendant but only as against the fourth defendant.

The Fifth Defendant:

Wise was General Manager of Ansett Freight Express in 1976 and responsible for all its operations. He attended the N.F.F.A. meetings at least during 1974, 1975 and 1976.
It was suggested by the second defendant that, since it had not been shown that the persons attending the meeting were specifically authorised to make any arrangement or enter into any understanding, they could not bind the companies whom they represented. The second defendant did not shrink from the submission that, if a board of directors passed a resolution and circulated it to the senior executives, to the effect that under no account must any breach of the Trade Practices Act take place, the company would be adequately protected and could not be in breach of the Act for any conduct of an employee. One has only to state this proposition to realise that it must be rejected immediately. However, because of the extensive argument that was presented on this issue, I do not feel that course is open to me.
I deal with several authorities elsewhere on the question of the capacity of a servant or agent to bind a company. Fraser Henleins Pty. Ltd. v. Cody (1945) 70 CLR 101 is a good example. That case went even further than is necessary for the determination of whether the persons attending the meeting had sufficient authority to bind the relevant defendants because it dealt with an admission by the manager of a company who had the general authority to act in and in relation to the business of the company. It was said by Latham C.J. at p.113 that, since he was the manager of the whole business of the company, "if he could not bind the company by an admission, no one else could do so". I will deal further with the question of admissions.
The Commission also relied on s.84(2) of the Act. This section provides:

"Any conduct engaged in on behalf of a body corporate by a director, agent or servant of the body corporate or by any other person at the direction or with the consent or agreement (whether express or implied) of a director, agent or servant of the body corporate shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate."

This section has been considered on a number of occasions, most recently by Toohey J. in T.P.C. v. Mobil Oil Australia Ltd. (1984) ATPR 40-482 at p 45,520. It was also discussed by Toohey J. in T.P.C. v, Tubemakers of Australia Ltd. (1983) 5 A.T.P.R. 40-358 at pp.44,326-44,328 where an analysis of the earlier cases was made and reference was made to the judgment of Morling J. in T.P.C. v. Queensland Aggregates Pty. Ltd. (1982) 61 FLR 52 at p 66; (1982) 4 ATPR 40-297 at p 43,698 where his Honour said that it "... appears to disclose a legislative intention to extend, rather than limit, the liability of corporatiions for the actions of others". It seems clear that s.84(2) is not intended to be an exhaustive statement of corporate responsibility under the Act.
It would not be possible, in my opinion, to conclude that each person I have mentioned was present at the meeting other than as a servant of the relevant defendant or that his conduct was other than clearly engaged in on behalf of that defendant. I note the definition of "conduct" in s.4(1) at the relevant time provided that when it was used as a noun, it included "... making a contract or arrangement or entering into an understanding". It seems to me that it is unnecessary to labour what was said in Re Ross Ex. P. A-G for the Northern Territory (1979) 54 ALJR 145 at 149 in the judgment of Stephen, Mason, Murphy and Aickin JJ. where they said at p 149, in relation to the phrase "on behalf of", that:

"Context will always determine to which of the many possible relationships the phrase 'on behalf of' is in a particular case being applied".

I consider it would be hard to imagine a more clear case where what was done at a meeting was done on behalf of the defendant which I have held the relevant person was representing.

The second defendant also raised the question of the constitutional validity of s.84(2) and referred to Actors and Announcers Equity Association of Australia v. Fontana Films Pty. Ltd. (1982) 150 CLR 169 and to Fencott v. Muller (1983) 57 ALJR 317. The first of these cases seems to me to have dealt with the question of whether s.45D(5) was a law relating to trade unions or to corporations. I can see a great deal of difference between legislation making a trade union responsible for the act of a member or officer of it for certain of his conduct, and legislation making a company liable for an act done on its behalf by a servant when the corporation power in the Constitution is under consideration. In any event in Fencott v. Muller, supra, although in a joint judgment, Murphy, Mason, Brennan and Deane JJ at p.328 and Dawson J. at p.336 said that it was unnecessary to consider the validity of the section because the case could be determined without regard to it, Gibbs C.J. at pp.320-321 held that s.84(2) was within constitutional power.
I propose to pay regard to the concluded view expressed by Gibbs C.J. and treat the section as within constitutional power.
I consider it to be impossible to come to any conclusion other than that Heasman and Prebble were authorised to speak on behalf of and to commit the first defendant at the meeting and likewise Linfoot the second defendant, Uniacke and M.G. Davies the third defendant, O'Brien the fourth defendant and Wise the fifth defendant. I also consider it to have been established that each was properly attending the meeting on behalf of the relevant defendants.

(B) Oral evidence of what took place at the meeting of 12 February 1976
About seven years elapsed after the meeting took place before the oral evidence of witnesses was given.
Of those witnesses who were called, Prebble, who was the Australian Manager of T.N.T. Transport System in 1975, said that he was asked by Heasman to attend the meeting. Prebble said that he was not keen to do this because he felt most of these meetings were a waste of time. Nevertheless, he purported to give a fairly detailed description of a number of events at the meeting. He conceded that some few days before he gave evidence he had refreshed his recollection from a document which included a list of persons who were present. He conceded that the document which he used to refresh his recollection included copies of the minutes both of February and of May but he said that he only saw that part relating to names. He said that after he attended the meeting he forgot all about it until he was told about two years thereafter that he had been at the meeting and that he then "put my thinking cap on". At that time he was informed that the proceedings had been commenced by the Commission and he realised that he was at some personal risk. He also said that when he was first asked about the February meeting he did not recollect having any involvement with T.I.C. However, he then said that his recollection of the February meeting was vivid.
I am not prepared to place any significant reliance on Prebble's evidence which I consider is a reconstruction of events. However, this is not a finding that his evidence was deliberately false.
However, I will deal with what Prebble said. It was broadly as follows:

He recollected Levitt taking notes. He did not know who T.I.C. was but a man sitting on the opposite side of the table said they were a firm of freight brokers and when he asked who paid them a man said they were paid by "the carrier or the customer or both". Prebble said "If they come near me I will chuck the schedule at them". By this, he said that he meant he would quote schedule rates. He said he was concerned about the rate of commission. This was the first time he had been told of a request for commission. There was a lot of side talk at the meeting. The subject of T.I.C. "just threw up". The remarks were not always directed to the chair. Uniacke was chairman and the others he remembered who attended were Levitt, Wise, Linfoot, Davies, Heasman and Gouldstone. He did not recall O'Brien or Price. Somebody said "What are we going to do about T.I.C.". Prebble said he did not recall anything said by any person present as to the manner in which he or his company would act in relation to brokers or consultants.
Wise said that in the 1970's he represented Ansett Freight Express in relation to the N.F.F.A. meetings. He said that he did not have any actual recollection of the meeting of 12 February 1976, that he was very hazy about the thing and "I did not recall anything at all until I saw those minutes". In my opinion, this clearly and honestly sets out this witness' position and I do not place any reliance on his recollection of anything that was said. At best, Wise's evidence in relation to the meeting can only be regarded as a reconstruction.
R.J. Price said he attended the meeting and he remembered Uniacke, Davies and Wise being present. He said that, in the 1970's, he had not been asked to recall what took place at the meeting and that he did not prepare a proof of evidence nor had a proof been prepared for him. He was asked by counsel, "I have shown you a certain document in my chambers but apart from that document can you tell from your unaided recollection when that meeting was?" Answer: "Not specifically". He was also asked "Now, again, try and put out of your mind what you read in the document. Can you remember what anybody said about anything at that meeting?" Answer: "No".
Uniacke was asked in relation to the meeting, "Have you any recollection of who said what at that meeting?" Answer: "None whatsoever". I consider that Uniacke gave no evidence of any significance in relation to this meeting.
Levitt said that he recalled a meeting at which there was discussion concerning Tradestock or T.I.C. He said, "I remember them mainly because I had been given copies of the three meetings at which the matter arose and from those minutes I am basing my memory". He was asked whether looking at the minute book, he was able to recollect who was present at those meetings and he replied that he could not. What evidence he could give about the meetings was really no more than reading from the minute book. He said, when asked whether the question of T.I.C. was on the agenda or not, that he really could not trust his memory that much. He was asked, "Are you able to recollect the substance of what any specific person said at that meeting?" Answer: "Not of any specific person. I can generalise on what happened at the meeting". I consider that what he said about his recollection of the meeting was no more than a reconstruction of what appeared in the minutes.
I regard Levitt as a witness who was somewhat ready to agree with questions put in cross-examination. He was certainly not unfavourably disposed to the defendants. I think his evidence must be looked at against his statement that he could really do no more than read the minutes from the minute book.
I do not regard the oral evidence as being of any real significance.

(C) Admissions
I will set out the general principles which apply to admissions by an officer of a company.
The Commission argued that admissions could be made based upon the following propositions:

(i) The principle that certain officers of a company had

authority to make admissions about past events by virtue of their general authority or having been deputed to answer enquiries of a particular nature.

(ii) The principle that, where an agent in the course of

performing the business which was entrusted to him, made a statement which contains an admission constituting part of the res gestae, then that admission goes in against the principal.

(iii)Section 84(2) of the Act.

Proposition (i)

I agree with this proposition. This is supported by Fraser Henleins Pty. Ltd. v. Cody, supra, at pp 113 and 134-135. At p 134 Williams J. said:

"But there are some agents who derive from their employment an implied authority of a sufficiently wide nature to make their admissions admissible against the principal even with respect to past transactions, provided that, at the time the admissions are made, they are still in the employment of their principal. This is because their employment is such that they must be presumed to have authority to give information with respect to such transactions, so that it is given in the course of an act they are authorized to do."

See also T.PC v. Allied Mills Industries Pty. Ltd. (1981) 55 FLR 174, Sheppard J., at p 178 and T.P.C. v. Queensland Aggregates Pty. Ltd. supra, Morling J., at pp 58-59 and 63; pp 43,693 and 43,696.

Proposition (ii)

This proposition has to be limited to a situation where the admission is strictly part of the res gestae. Consider, for example, a case where a bald headed man is seeking to make a purchase from a department store. If the shop assistant, who has implied authority to deal with the customer, has instructions not to deal with bald headed men, in my opinion a statement by the shop assistant to a customer, as a reason for refusing to deal with the customer, that he would not serve him because the store keeper did not serve bald headed men would be admissible. A further statement by the shop assistant that bald headed men have never been served by his employer in this shop would not be admissible. It is necessary to draw a distinction between the authority to make representations which are in the ordinary course of the servant's employment and the authority to make admissions about past events.

See generally:

N.S.W. Country Press Co-Operative Co. Ltd. v. Stewart (1911) 12 CLR 481, Griffith C.J., at pp 491-492;

Fraser Henleins Pty. Ltd. v. Cody, supra, Latham C.J. at p 113 and Williams J. at p 134 in the passage I have already cited.

Ex parte Gerard & Co. Pty. Ltd.; Re Craig (1944) 44 SR 370 at 377, where the authority of one Lipman to make admissions was considered. He was a director of a company with no special authority to make admissions but he also managed its cellar business. Jordan C.J. at p.377 said:

"The most, therefore, that could be implied against the company was that Lipman had authority to make such admissions about the liquor part of its business as were incidental to the carrying on of that part of its business in the ordinary way."

Barrett v. Steel Products Distributing Co. Pty. Ltd. (1962) NSWR 981, Walsh J. at p 986.

Victorian Railways Commissioners v. Lord (1968) 2 NSWR 327, Wallace P. at p 334 and Walsh J.A. at p 338.

Bowstead on Agency, 14th Ed., Article 105.

Proposition (iii)

I agree with what Fisher J. said in T.P.C. v. Nicholas Enterprises Pty. Ltd. (1978) 40 FLR 83 at p 94; (1979) 2 A.T.P.R. 40-126 at p.18,345 that s.84(2) of the Act did not extend to admissions. It extends to conduct and conduct when used as a noun was defined in s.4(1) as including "doing, refusing to do, or refraining from doing, any act, including making a contract or arrangement or entering into an understanding". However, I do not think this takes the matter any further than does proposition (ii) and I consider that an admission as to past events is not admissible against a corporation under s.84(2) of the Act.

No admission is relied on by the Commission prior to a conversation which took place between Shortell, Heasman, Frewen, Locke and Stock on 10 March 1976. I deal with admissions in relation to the three arrangements or understandings in Part 5.

(D) Circumstantial evidence
The Commission relied upon a number of matters of circumstantial evidence in support of proof of the making of the arrangements or entering into the understandings. I propose to deal with these arguments only briefly because I consider that the making of the arrangement and entering into the understanding of 12 February 1976 is clearly established without reference to any question of circumstantial evidence.
The Commission referred to The King and the Attorney- General of the Commonwealth v. The Associated Northern Collieries (1912) 14 CLR 387 at pp 400-401 (Isaacs J.).
I will deal with the questions of circumstancial evidence under the various headings advanced by the Commission.

(i) Motive

(a) Rejection by the Trade Practices Commission of the National Freight Forwarders' application for authorisation to continue its price fixing role

The evidence shows that, prior to the Act coming into force in 1974, the N.F.F.A. had operated a system called the "Blue Book" system. This was a system implemented by the N.F.F.A., before the Act was passed, which, according to some defendants' witnesses, was a method of introducing some measure of price fixing in the industry. I find that it did have some stabilising effect on the industry and provided a list of recommended rates for particular types of carriage on particular routes. However, the evidence shows that, in practice, very frequently, indeed maybe more frequently than not, lower rates were charged by members of the N.F.F.A. Redpath said that the "price scheduling" function of the N.F.F.A. was of paramount importance.
When the Act came into operation on 1 October 1974, an N.F.F.A. meeting was called on 10 December 1974. At that meeting it was moved by Shortell and seconded by Wilkins and agreed that the N.F.F.A. would approach the Commission with a view to obtaining common freight schedules on all services.
On l7 December 1974 an Application for Authorisation was submitted to the Commission signed by Heasman. At the N.F.F.A. meeting on 15 April 1975 Heasman recapitulated the situation with regard to the N.F.F.A. submission and on 7 May 1975 the N.F.F.A. delivered a submission to the Commission pointing out the importance of stability in the industry in relation to the interest of particular carriers. Shortell agreed that the major activity of the N.F.F.A. was rate fixing when that was legal. The N.F.F.A. was advised by the Commission in July 1975 that its application for authorisation had been refused.

(b) Client disadvantage, the effect of intermediaries and defendants' perception of this
It was alleged that the "search cost" and the inability of some smaller people to effectively deal with carriers themselves was a relevant factor. Whilst this argument may have a measure of attractiveness in relation to consultants paid by the client, I am not attracted by it in relation to the situation of a broker requiring payment from the carrier. It is also quite clear from the major effort made by Tradestock to obtain clients who would pay a consulting fee that certainly the clients did not see any advantage through using Tradestock on that basis.

(c) The actual and perceived impact of Tradestock
The Commission submitted there was evidence that senior representatives of the defendants believed that, apart from commission, Tradestock's activities "complicated" the relationship between forwarder and client and lowered rates through playing off one carrier against another. It referred to the evidence of Shortell, Wise, Prebble, Redpath and a Mr Bennett, the State Manager of a T.N.T. division in Queensland.
In 1974 Shortell was the Group General Manager of T.N.T. Australia and as such he was responsible for all operations of the T.N.T. Group in Australia. He remained in that position until 1983.
Shortell said he first heard of Tradestock about mid-1976 and, although he had known of transport brokers in Canada, he had not heard of them in Australia. He regarded Tradestock as of "absolutely minor importance". He said he had no prior dealings in Australia with brokers or consultants personally nor was he consciously aware of their existence before Tradestock.
He said that in 1976 he had a view as to what brokers might do. A summary of the problems he saw with brokers is that they could introduce a wider range of carriers to clients; could offer bargaining skills; could advise of actual rates being charged; could assist in resisting increases; could shop around for quotes; could try to get the cheapest rates and force rates down; more than one broker might come in; brokers create a third party in the field. I will deal with this question elsewhere but Shortell gave evidence of the competitive way in which T.N.T. sought clients.
He said that, "T.N.T. took the decision not to pay commission to brokers". He said he communicated with the executive directors and gave instructions not to have any dealings with a broker who sought commission from the carrier. He also said these instructions had never been withdrawn. Shortell perceived the possibility that T.N.T.'s rates might be forced down.
Wise, who was the General Manager of the total operations of Ansett Freight Express from 1973 until 1982, had some experience in the late 1960's with a Mr Nossbaum. He had approached Wise with a list of clients for some of whom Ansett was already carrying and he had sought commission. Wise said that he refused to pay the commission feeling that Nossbaum's activities would result in the lowering of the company's remuneration not only because of a reduction in freight costs to the client but also the obligation to pay Nossbaum commission. Since that date, so far as Wise was aware, he said that Ansett Freight Express had never paid commission.
Wise was cross-examined extensively on this evidence but, in substance, he did not deviate to any significant extent. He said that in 1976 he had the same view and he had the impression that Tradestock posed only a small risk. He conceded that he wished to keep brokers out of the industry generally. He pointed out that many clients were what he described as "priced very close to cost" and he said:

"Well, as soon as he started mentioning he was in business to make a commission or to sell our clients, if you like, my first objection to the fact was that I do not believe that there is enough margin in the industry for a third person to be in it. I was sort of shocked at the fact he was another element trying to come into the industry to take something out of it. We are lessening our profit, I suppose would be the best way of describing it to you, or margin."

He also said that he thought intermediaries tended to destabilise the relationship between the carrier and the client. He said that all his "management life" he had been of the view that any sort of commission was unacceptable to him.
It appears that Wise's objection was to paying commission. He agreed that he did not want to deal with brokers and he alone decided not to deal with Tradestock. It is clear that Wise had a view extending back for many years before 1976 and that he was dealing, in substance, with a situation where commission was demanded.
In 1975 Prebble was the Australian General Manager of what was then called "T.N.T. Transport Systems". It encompassed the general freight arm of T.N.T.'s operations within Australia and New Zealand but did not include the overnight companies.
Prebble said that he had not heard of brokers in the transport industry prior to 1976 but that he had had experience with certain consultants paid by the client. He thought these were about four in number. He said that, at least prior to the meeting in February 1976, he had had no objection to dealing with such consultants and that he would have had no objection to dealing with Tradestock prior to the meeting on a consultancy basis but, "I would not have paid commission, that was my only objection". He said that he was reluctant to quote the particulars to someone unless he knew who his client was and unless he knew who was carrying for that client and preferably the price that was being paid. One of the reasons for this was that he had to bear in mind the possibility of starting a price war. This was particularly so if the consultant was acting for an existing client of T.N.T. He said he also appreciated the risk that the consultant might take the client to one of his competitors.
When Prebble left the meeting of 12 February 1976 he said he had the general view that he would be happy to deal with anyone provided he did not have to pay commission. Prebble said he would have been prepared to quote Tradestock had they mentioned a rate of commission that was acceptable.
Redpath is now Chairman of Mayne Nickless and between 1971 and 1982 he held the position of Managing Director. He said that he had heard of freight brokers for overseas shipping but that he was not aware of any other brokers. He had in mind the margin for interstate carriage of goods and said that he did not think the broker was likely to succeed. He did not think that at any time there was evidence of much impact of brokers on the market place and that he would not have expected anybody like Tradestock to survive very long. He thought it was a logical conclusion that a broker or middle man could have the effect of depressing rates which were earned by the freight forwarders where there was a market price which had to be shared with the broker.
Bennett has been the State Manager of T.N.T. Roadfast in Queensland since July 1981. For two or three years prior to March 1976, he was the Sales Manager in South Australia for Comet, a section of T.N.T., and between March 1976 and June 1977 he was Victorian Manager for North Queensland Express, also a section of T.N.T.
In early March he received a telephone call from Stock who said he was setting up what he described as a transport broking business. Bennett subsequently met Stock and Frewen at a hotel in Melbourne. Frewen said that he was in the freight broking business and that he hoped to introduce the broking element into the transport industry and that would mean that the transport companies would need less, if any, sales force and the money thus saved could be used to pay for the brokerage. Bennett said that he thought the idea was very unusual and that he could not see the transport companies abrogating their sales function and allowing a third party to gain control of the allocation of the business to whatever transport company they felt like giving it to. Bennett also said at the meeting that there was nothing to stop the transport company ultimately dealing in future direct with the customer and cutting out the middle man. He agreed that the sales staff was one of the means whereby a transport company retained some control of the allocation of business in the market.
The actual and perceived impact of Tradestock is certainly a matter for consideration and is relevant in relation to the question of motive. There is no doubt that several experienced executives of certain of the defendants perceived a significant problem with the introduction of intermediaries in the dealing between the defendant and clients. However, I think that the main objection was to paying commission and I am not satisfied that any objection, at least prior to the meeting of 12 February 1976, has been shown to have existed in relation to intermediaries not seeking to be paid a commission by the freight forwarder.

(d) The defendants' awareness of any ineffectiveness of individual action by a defendant
The evidence does not support this submission apart from some support which may be derived from the fact that Tradestock's activities were dealt with at three meetings.

(ii) Inference of concert from any parallel changes in behaviour

of the defendants

A full examination of this issue would involve a substantial addition to the length of this judgment. I do not consider this would be justified in view of my clear finding of the arrangements or understandings.
I now proceed to consider what is involved in making an arrangement or entering into an understanding.

(E) The requirements for making an arrangement or entering into an understanding
In my opinion it is very difficult to attempt to set out satisfactorily the requirements which establish whether or not an arrangement has been entered into or an understanding reached. There is a lot to be said for a view that it is unwise to attempt to place a precise limitation on the meaning of these words. Their meaning has been considered in a number of cases arising under the Act of which the following are examples:

T.P.C. v. Tubemakers Ltd., supra, at pp 44,323-4 (Toohey J.) T.P.C. v. Allied Mills Industries Pty. Ltd., (1981) 60 FLR 1 at p 1243; (1981) 3 ATPR 40-237 at pp 43,151-2 (Sheppard J.) T.P.C. v. Nicholas Enterprises Pty. Ltd., supra, at pp 87-90; pp 18,341-3 (Fisher J.), and the appeal therefrom to the Full Court of this Court reported in (1980) 3 ATPR 40-157 at p.42,234 (Bowen C.J., Brennan and Deane JJ.) T.P.C. v. Email Ltd. (1980) 43 FLR 383 at p 397; (1980) 3 ATPR 40-172 at p 42,377 (Lockhart J.) L. Grollo & Co. Pty. Ltd. v. Nu-Statt Decorating Pty. Ltd. (1978) 34 FLR 81 at p 89; (1978) 2 ATPR 40-086 at p 17,842 (Smithers J.).
Section 45(2) prohibits a corporation from making an arrangement or entering into an understanding in restraint of trade. Some sections of the Income Tax Assessment Act 1936, particularly s.44(2D)(b), s.80B(5)(b) and s.260 contain somewhat similar words.
Section 44(2D)(b) was considered in Federal Commissioner of Taxation v. Lutovi Investments Pty. Ltd. (1978) 140 CLR 434. The law being applied was the Income Tax Assessment Act as it existed in 1971-72.
Section 44(2D)(b) dealt with:

The issue of shares "in pursuance of, or as part of an agreement or arrangement, whether oral or in writing

...

entered into

...

that had the purpose, or purposes ...

of enabling

..." .

Section 45(2)(a) of the Act does not include the words "purpose" or "enabling" but adds the word "understanding".
Section 80B(5) dealt, inter alia, with:

A "contract, agreement or arrangement" entered into

...

for the purpose or for purposes that include ...".

Section 260 dealt with:

A "contract, agreement, or arrangement made or entered into, orally or in writing ...

so far as it has or purports to have the purpose or effect of

...".

The joint judgment in Lutovi of Gibbs (as he then was) and Mason JJ., with which Murphy J. agreed, allowed the appeal but Stephen and Aickin JJ. expressed a contrary view. At p.443 Gibbs and Mason JJ. said in relation to s.44(2D)(b):

"The arrangement postulated by this sub-section is one to which there are two or more parties. The sub-section speaks of an 'agreement or arrangement' which is 'oral or in writing' and which has been 'entered into'. Both characteristics point to an arrangement which is bilateral or multilateral. The words are similar to those contained in s.80B(5) though that sub-section also contains a reference to 'contract' as well as to 'agreement or arrangement'. They are also similar to the language of s.260, though there the words 'made or entered into' appear. And it has been decided that an arrangement in order to fall within s.260 must be between two or more persons (Newton v. Federal Commissioner of Taxation (1958) 98 CLR 1 at p 7; (1958) AC 450 at p 465)."

Their Honours continued that the arrangement could be one implied or inferred from the circumstances and that the words "oral or written" were words of extension and not of limitation. At p.444 the joint judgment continued:

"In the context of s.260 an arrangement is something less than a binding contract or agreement, something in the nature of an understanding which may not be enforceable at law (Newton v. Federal Commissioner of Taxation). A similar view has been taken of an arrangement falling within s.80B(5) (see K. Porter & Co. Pty. Ltd. v. Federal Commissioner of Taxation (1974) 1 NSWLR 536 at pp 542-544; Federal Commissioner of Taxation v. Students World (Australia) Pty. Ltd. (1978) 138 CLR 251). It is, however, necessary that an arrangement should be consensual, and that there should be some adoption of it. But in our view it is not essential that the parties are committed to it or are bound to support it. An arrangement may be informal as well as unenforceable and the parties may be free to withdraw from it or to act inconsistently with it, notwithstanding their adoption of it."

Stephen J. at p.451 said:

"In seeking an 'arrangement' in the present case, and there can here be no question of an 'agreement', the meaning that has been given to that term in other sections of the Act, in quite different contexts, is no sure guide."

Section 260 had been considered previously by the Privy Council in Newton v. Federal Commissioner of Taxation (1958) 98 CLR 1 at pp 7-9. At p 7 the Privy Council advised:

"Their Lordships are of opinion that the word 'arrangement' is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons - a plan arranged between them which may not be enforceable at law."

Leaving aside any possible difference between "arrangement" and "understanding", it is clear I am not required to consider the purpose of any arrangement.
The meaning of the word "arrangement" in s.80B(5)(b) was considered after the judgment in Lutovi in Federal Commissioner of Taxation v. Cooper Brookes (Wollongong) Pty. Ltd. (1979) 41 FLR 277. The main judgment is that of Fisher J. but Brennan and Deane JJ. at p.280 agreed with Fisher J. At p.301 Fisher J. cited the passage of the joint judgment in Lutovi which I have last set out and said:

"As to the term 'arrangement' in s.80B(5)(b) both parties referred without dissent to the reasoning of Mahoney J. in Federal Commissioner of Taxation v. K. Porter & Co. Pty. Ltd. ((1974) 22 FLR 344) cited in the preceding quotation from the Lutovi case. There his Honour discussed the possibility that an arrangement may follow from express statements or actual representations. He went on: 'In the absence of such a statement or actual representation, the element of commitment to the course of conduct may be inferred or implied from the dealings between the parties'. This, I think, is the manner in which the drawing of an inference or an arrangement is open in the present case."

It seems that judicial consideration of these words has tended to equate "arrangement" with "understanding". The case before me also proceeded upon the basis that no distinction was to be drawn. I will proceed upon this basis although I would not necessarily reject a proposition that the requirements for entering into an understanding may be somewhat different and more easily satisfied than the requirements for making an arrangement. Having all these considerations in mind, I will deal with certain cases decided under the Act.

It is the possibilities of such substitution which set the limits upon a firm's ability to 'give less and charge more'. Accordingly, in determining the outer boundaries of the market we ask a quite simple but fundamental question: If the firm were to 'give less and charge more' would there be, to put the matter colloquially, much of a reaction? And if so, from whom? In the language of economics the question is this: From which products and which activities could we expect a relatively high demand or supply response to price change, i.e. a relatively high cross- elasticity of demand or cross-elasticity of supply?

The distinction between markets and sub-markets can be merely one of degree. Sub-markets are the more narrowly defined, typically registering some discontinuity in substitution possibilities. Where the defining feature of a market is the existence of close substitutes (whether in demand or supply), the defining feature of a sub-market is the existence of still closer and more immediate substitutes. Sub-markets may be especially useful in registering the short-run effects of change; but they may be misleading if used uncritically to assess long run competitive effects.

The indicia of sub-markets listed in the American case Brown Shoe Co. Inc., v. U.S.

(1962) 370 US 294 at p 325 are suggestive:

'The boundaries of such a submarket may be determined by examining such practical indicia as industry or public recognition of the submarket as a separate economic entity, the product's peculiar characteristics and uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes, and specialized vendors'.

But although it may be helpful to refer to such a list, it does not follow that it is exhaustive, nor that an area or product must meet all or a large number of these tests to be classified as a sub-market. And indeed the precise content to be given to such phrases as 'the product's peculiar characteristics and uses', 'unique production facilities', 'distinct prices' depends upon more fundamental economic ideas."

The Tribunal then looked at the question of the geographic extent of relevant markets and the question of sub-markets. I have some doubt about the correct way to approach sub-markets but, on balance, I think it is correct to say that the word "market" in s.45(3) should be read as referring to a relevant market rather than a relevant sub-market although it may be very helpful to examine the degree of competition in a particular sub-market and then apply the conclusion to a consideration of the position in the whole market.
In Re Tooth & Co. Ltd. and Tooheys Ltd. (1979) 39 FLR at pp 34-43; (1979) 2 ATPR 40-113 at pp 18,193 to 18,199, the Tribunal, Keely J. presiding, considered the problem of ascertaining the relevant market in regard to the sale of beer. It considered whether beer was a distinct product market within the broader alcohol beverage market. Indeed, submissions were made to it but rejected on one hand that the product dimension of the market was that of a leisure centre and on the other that bulk and packaged beer were in separate markets. At p.41; p.18,198 the Tribunal said:

"However, we have concluded that bulk and packaged beer properly belong within the one market, with the better treatment to regard bulk beer as falling within a significant sub-market which repays close study."

However, the Tribunal also said at p.38; p.18,196:

"The market should comprehend the maximum range of business activities and the widest geographic area within which, if given a sufficient economic incentive, buyers can switch to a substantial extent from one source of supply to another and sellers can switch to a substantial extent from one production plan to another."

In G. & M. Stephens Cartage Contractors Pty. Ltd. (1977) 1 A.T.P.R. 17,445 at p.17,460 the Tribunal, Deane J. presiding, said:

"The identification of relevant markets must be the essential first step in the assessment both of present competition in existing circumstances and likely competition in postulated future circumstances. Competition is an active process rather than a passive situation. Nevertheless, the existence and extent of competition or likely competition between those competing within a market will depend, to a large extent, upon the distinctive, albeit evolving, structure of that market (see, generally, Re: Queensland Co-operative Milling Association Limited

(1976) A.T.P.R. 40-012)."

The Tribunal at p.17,462 considered the question of sub-markets.

In Trade Practices Commission v. Ansett Transport Industries (Operations) Pty. Ltd. (1978) 32 FLR 305; (1978) 2 A.T.P.R. 40-071, Northrop J. in a judgment referred to by the Full Court in Outboard Marine v. Hecar, supra, held that the relevant market in relation to rental cars was the Australia-wide market. At p 311; pp 17,708-17,709, Northrop J. set out with approval most of the passage which I have cited from the Queensland Co-operative Milling Association Ltd. decision. His Honour also approved a passage of a Tribunal presided over by himself in Re Howard Smith Industries Pty. Ltd. (1977) 28 FLR 385; (1977) 1 ATPR 40-023 where the question of the market for tug boats fell for consideration. In that decision the Tribunal said at p.396; p.17,337:

"It is our opinion that there is an Australia-wide market for towage services, which is directly relevant to the questions we have to decide in this application. Given this view, it will be apparent that each port is regarded by us as a sub-market, in which the towage services provided by the two operators (if there is more than one) are very close substitutes for one another."

At pp.396-397; p.17,338 the Tribunal, in considering the nature of competition, said:

"In discussing the nature and extent of competition that now exists in the provision of towage services by large harbour tugs, it is necessary to distinguish between competition in a single port (the sub-market) and competition Australia-wide (the market as a whole). The structure of these markets is different, and this has an important bearing on the degree of competition which can be expected."

The view which I have expressed concerning the way one deals with sub-markets accords with this view.

In general, in looking at competition in a market, it seems to me one must first examine the market by using the tests of substitution and substitutability both on the demand and supply side. This may require some consideration of the structure of the market and also of relevant features of the market.
The parties paid a great deal of attention to the question of the relevant market. For example, senior counsel for the first defendant provided 36 pages of written submissions under the title "The Definition of the Market", 187 pages under the title "Principles of Market Identification and Definition", 15 pages under the title "The Process of Competition", and more than 300 pages of analysis of the market in various districts including within it, for example, a 99 page analysis of the market in the Brisbane district. The whole of this analysis was described as a "Microscopic Study of the Market". In addition, the first defendant sought to have me receive the 600 pages of material to which I have already referred relating to the assumed facts in Ex. 606. The plaintiff also dealt extensively with the question of market as did the other defendants. In particular, the third defendant provided some 100 pages of submissions dealing with the economic evidence, the law and evidence relevant to market and competition.
I have cited certain decisions of the Tribunal because, although not binding on me, they illustrate a general uniformity of approach to the question of the identification of the relevant market. I accept that the appropriate market will at least embrace the maximum range of business activities and the widest geographical area within which, if given a sufficient economic incentive, the test of substitutability will be satisfied.
I find the relevant market in relation to consideration of the position after 1 July 1977 is not as narrow as that chosen by the Commission. I think it is wider than the national freight forwarding market but somewhat less than that relied upon by the defendants.
The defendants submitted that the provision of transportation of all goods in Australia is within the same market and an operator of one truck carrying, for example, soil around Perth and an operator of one tanker wagon moving liquids in and around Cairns are in the one market. This submission depended very largely upon the view embraced by Associate Professor Parry that one could link activities together by some sort of a chain thereby putting them in the same market by applying the tests of substitutability between the operator in Perth and other operators until one reached the operator in Cairns. In other words, one could link the carrier in Perth with a carrier perhaps somewhere adjacent to Perth and link that carrier to one in South Australia and so on until one got to the carrier in Cairns. It was submitted that this could be done even though the equipment used differed as much as, for example, a vehicle suitable for carting furniture or blue metal and a vehicle suitable for carrying liquid fuel. In addition, it was submitted that the question of the size of the carrier did not matter in establishing such a link. No economic writing was cited in support of this view.
I consider that acceptance of a principle of linking of this kind does not satisfy the test of substitutability. In my opinion, substitutability must be tested in relation to, for example, the carrier in Perth in relation to the carrier in Darwin and not with the addition of an indeterminate number of carriers somewhere in between to satisfy the test of substitutability.
Some consideration must also be given to barriers to entry.
Professor Kolsen referred to natural barriers, for example, any natural monopoly scale of the activity, for example, railways in New South Wales, and an absolute barrier, for example, a situation where, for example, a television licence was required before a business could be commenced. Dr. Norman referred to natural barriers to entry and discussed economies of scale. He also discussed barriers to mobility which he said were an impediment to movement within a market. Associate Professor Parry discussed barriers to entry in some detail. He referred, inter alia, to economies of scale in relation to the cost disadvantage that the potential entrant would have in relation to a firm already in the market and to the magnitude of absolute capital requirements.
I consider that the evidence concerning companies starting up and growing into large organisations as did T.N.T., often in a fairly short time, shows that any barriers to entry are not of great importance in the industry under consideration.

(C) Services for the transportation of goods in Australia
I have already dealt separately with the question of the methods by which the defendants sought to obtain work and their relevance to competition before 1 July 1977. I find that this aspect of the defendants' activities did not change in any appreciable way after 1 July 1977.
The evidence in relation to the availability of services providing for the transportation of goods in Australia fell into a number of categories which I will outline.

. Evidence from persons including certain experienced officers of certain defendants about the nature of the defendants' activities.

. Evidence from officers of a number of corporations who sought and used transport services for goods.

. Evidence to be gleaned from the Yellow Pages of the telephone directories. It was agreed, in substance, that those entries were evidence of the services which firms were offering to perform and that they were capable of providing and did provide these services.

. Evidence to be gleaned from a publication, the name of which varied to some extent between certain States but can be broadly described as "Who Goes Where". This publication was not unlike that of the Yellow Pages to which a person requiring transport could make reference in an endeavour to ascertain what transport was available in various areas. It was only admitted as evidence of what carriers advertised that they did.

It is not practicable to deal in detail with the evidence concerning the position with regard to the availability of services for the transportation of goods in Australia. However, I have reached a number of firm conclusions from the evidence. They are:

. That there is a vast number of persons each carrying

on a business of transporting goods in Australia.

. These persons range from the owner/driver of one truck

to operators of hundreds of trucks and include railways, airways and big and little firms.

. All sizes of carriers exist between the two extremes

of size.

. Some operators only operate in particular areas, for

example, around a capital city or for example, in North Queensland, in a country town or on a particular route or routes, for example between Sydney and Brisbane. However, some operators are prepared to arrange for goods to be carried outside the areas in which they normally operate by people who are, in substance, sub-contractors. Even the defendants used a large number of sub-contractors who owned one or more trucks sometimes painted in the colours of a defendant or in some instances they used quite independent sub-contractors.

. Some operators are what might be called specialist

operators, for example, an operator may deal only in the transportion of liquid fuel, or of refrigerated cargo or of furniture, or of very heavy large loads, or of soil. Examples were given of the transport of almost every conceivable type of goods. Some of the equipment required is of a very specialised nature which, contrary to some of the submissions put to me, I am satisfied was not in any commercial way capable of being used for anything other than the purpose for which it was designed.

. The position is not static; some small firms grow to

large firms, others remain of the same size. Some small firms get absorbed by larger firms. Some firms go out of business. The industry seems an easy one in which to start business. A single truck can often be obtained under a leasing arrangement. Certainly a number of carriers, including the first defendant, had built up very large organisations from a humble start. My impression is that the first defendant is the largest freight forwarder in Australia and probably the second and third defendants are the next largest. However, other large firms exist. Several, about which there was evidence, used over 100 trucks of their own or of sub-contractors.

. The barriers to entry in respect of the relevant market

are not substantial.

A Mr Backman, who is now an Executive Director of Linfox Transport Group, was employed by Mayne Nickless between 1973 and 1978. From 1968 until 1973 he was employed by Blakistons Limited, which he described as a local carrier specialising in heavy industry carrying, for example, steel and aluminium ingots. It owned a total fleet in Australia of 300 vehicles of which about 100 or 120 were in Sydney. He described Linfox as a firm which had been in existence for 27 years and specialised in satisfying the distribution requirements of various companies and in particular taking over a fleet of company trucks with the driving staff and thereafter performing that company's distribution requirements. In 1983 Linfox had approximately 900 vehicles and about 1200 employees. It was unusual in that its drivers were employees and not sub-contractors and it owned its own vehicles.
A Mr Sartori gave evidence about Sartori's Transport, a company which had been used by Tradestock during the commission period. He said that that business had been commenced by his father some thirty or so years ago apparently with one truck. It was a carrier specialising in operations between Melbourne and Brisbane. It had depots in Melbourne, Sydney and Brisbane. It employed about thirty persons including a salesman and owned a number of trucks. It also used a number of sub-contractors, perhaps 12 or 15. In 1975 it arranged for the pick-up of interstate freight in Sydney, Melbourne and Brisbane and also the distribution of that freight at its destination. In 1976 its turnover was $2,000,000 per year which had grown to about $5,000,000 per year. Although it specialised in transport from Melbourne to Brisbane, it would not necessarily refuse other work. Sartori said that he had seen a great number of carriers start up with one truck and sometimes grow to own other trucks and in instances the carrier had developed a fleet of trucks. Sartoris at various times had used several of the defendants as sub-contractors. It provided both general road express and a 24-hour service.
A Mr Girdwood, now retired, had been a director of a company which conducted Chalmers Transport. Tradestock had had dealings with Chalmers Transport. Girdwood had been in the transport industry from 1963 until he retired in 1982. In 1963 Chalmers had approximately 40 vehicles and was engaged mostly in local transport in the Melbourne region. In the early 1970's it moved into interstate road transport. In 1979 its work consisted of about an equal amount of local and interstate transport work. It performed rather specialised work in that it was engaged mainly in dealing with heavy loads and it had only about forty or fifty customers, who might be described as loyal customers. Although they fell within this category, Chalmers had to adjust its rates from time to time when a customer had been offered a lower rate by a carrier who appeared to be able to perform the work satisfactorily.
A Mr Clements gave evidence about a business which he had started about 1970 from nothing other than $500 which he had saved. He was experienced in the industry. He built the business up until it had a turnover of $500,000 when he sold the goodwill and the trucks.
A Mr Gibbins, who left T.N.T. in 1974 aged 27 years to start his own business, called F.C.L. Transport, gave evidence. He saw an opportunity to start a business for what he called full container loads of cargo to be carried by the railways. He said he had no money but he had obtained a personal loan of $4,000 from a bank. He also had no equipment, no clients and no staff and used the office of a friend of his. He established a business carrying full container loads anywhere in Australia by rail. In Perth he had an agent, Skippers Transport, which was the largest local carrier in Perth and which had over 100 vehicles and which dealt with his local distribution there. He opened a depot in Sydney at the Sydney Haulage Terminal. Gibbons said his business now had a turnover of $8,000,000 per annum and that he added a margin for profit to his costs dependent very largely upon the rate the railways charged.

The Sydney Haulage Terminal was of a type which seemed to exist in other capital cities and evidence was given about it by a Mr James, its Managing Director. It was opened in 1955 on an area of about 30 acres on which a number of different sheds had been erected which were rented to carriers wishing to use them. It also contained service facilities such as those of tyre repairers, panel beaters, tarpaulin repairers, a licensed restaurant, a public weighbridge and sleeping accommodation for about twenty people. Some sheds were shared by groups of carriers and the terminal provided a point to which persons wanting goods taken to various areas could go and see, and, I think, very often find, a carrier who was prepared to perform the required transportation. Conversely, the terminal provided a place where carriers could set up a depot thereby obtaining a point at which to advertise their businesses and conduct any necessary loading and unloading activities and make use of the many other facilities the terminal provided. Terminals of this type were especially useful to small operators early in their business life.
The possession of specialised vehicles was not limited to small operators.
A Mr Doig, who was the General Manager of Alltrans Bulk Division, a division of T.N.T., described some specialised vehicles of that Division. These included what was called pneumatic vehicles of which they had about 40, trucks for the cartage of brick, trucks which were described as walk on floor bodies and a vehicle which was described as a tip over axle trailer.
A Mr Baxter, who since 1980 had been the Manager of T.N.T. Bulk Division at Kempsey, gave evidence of a variety of vehicles which included floor trailers apparently used for the cartage of sawdust, vehicles described as low loaders and others described as step deck trailers and semi tippers.

PART 10

MISCELLANEOUS

(A) The amended defences

A number of amendments to the defences of the defendants were allowed on terms offered by the Commission and without opposition. The amendments were first sought about 70 days after the hearing commenced and about five years after the proceedings had been instituted. Brambles' amendments were the most extensive, taking up over 36 pages. Other defendants pleaded defences which were fairly similar although not embracing certain of the more exotic defences pleaded by Brambles. The substance of a number of the defences was that the transactions being offered by Tradestock were illegal in one way or another.
In some cases reliance was placed upon s.47 of the Act which prohibited certain exclusive dealings, and in others, upon ss.45, 45D or 46. Another defence rested on the shipping provision in Part 10 of the Act and yet another upon s.61 dealing with pyramid selling. Lastly, reliance was placed on some sections of the Secret Commissions Acts of various States.
The second defendant argued these defences in detail and also submitted many pages of written submissions upon them. Other defendants relied mainly on the second defendant's submissions so far as they were relevant to their own client's defences. Although the defences were pleaded in relation to the whole of the Statement of Claim, I consider that it could hardly be argued that any of them were relevant in any realistic way to the making of the arrangements or understandings which had been pleaded.
In view of the findings I have made on the question of competition, I have no need to consider any of these defences and it is better that I do not deal with them. It is sufficient to say that a great deal of imaginative thought must have gone into many of them and I can well understand that at least some may not have been devised until the case had proceeded for some considerable time. A reasonable chance of establishing them was not immediately evident to me. However, it is fair to say that many of them did highlight the complexity of the Act.

(B) The effect of the Trade Practices Amendment Act (1977)

upon the proceedings

A defence based upon the effect of the Trade

Practices Amendment Act 1977 (No. 81 of 1977) ("the amending

Act") was relied on by a number of defendants.

It was developed in detail by Brambles both orally and in 15 pages of written submissions. I will use certain abbreviations in relation only to this defence.
It raised for consideration the amendments made to the Act by the amending Act which was operative from 1 July 1977.
Section 8 of the amending Act repealed s.7 of the Trade Practices Act 1974 ("the principal Act") under which the Trade Practices Commission had been constituted. Section 8 of the amending Act enacted sub-s.s. 2, 3, 4 and 5 which were not introduced as amendments to the principal Act.
Section 8(3) and (4) of the amending Act provides:

"(3) Where, immediately before the commencement of this section, the Commission established by the Principal Act was a party to or intervener in a proceeding in a court, the Trade Practices Commission established by the Principal Act as amended by this Act shall be deemed to be substituted for the first-mentioned Commission as a party to or intervener in that proceeding.

(4) The power of the Trade Practices Commission established by the Principal Act as amended by this Act to institute any proceeding in the Court extends to the institution of a proceeding in respect of conduct engaged in before the commencement of this Act."

The effect of s.8(3) is to deem the Trade Practices Commission constituted as a result of the amendments ("the new Commission") to be substituted for the Commission constituted under the original Act ("the old Commission") in any proceedings instituted before the introduction of the amending Act. The old Commission was to "cease to exist" under s.6A which was introduced into the Act by the amending Act. Section 8(4) empowers the Commission to institute proceedings in the Federal Court including proceedings for conduct engaged in before the commencement of the amending Act.
In T.P.C. v. Milreis (1978) 32 FLR 234 at pp 239-240; (1978) 2 ATPR 40-073 at pp 17, 743-17,744 I considered whether in 1978 the Court had power to grant an injunction based on an action commenced in 1975 under the Act before amendment. I held that the Court had such a power upon the ground that a right had been accrued and that right was preserved by s.8(c) of the Acts Interpretation Act 1901 and that s.8(3) of the amending Act proceeded upon the basis that existing proceedings would continue after the amending Act came into force and no contrary intention within s.8 of the Acts Interpretation Act was indicated. An appeal was heard by the Full Court of this Court (1979) 40 F.L.R. 257; (1979) 2 A.T.P.R. 40-133. At p.272; p.18,439 Deane and Fisher JJ. in a joint judgment agreed with my conclusions on this point. An appeal to the High Court (1981) 55 A.L.J.R. 614 did not involve a consideration of this question.
Milreis, supra, was based upon the acceptance of the following propositions:

(1) Section 8(c) of the Acts Interpretation Act applied to preserve an accrued right of the Commission based on a contravention of s.45 of the Trade Practices Act 1974.

(2) Section 8(3) of the amending Act, which substituted the new Commission, applied.

(3) The Commission's power to continue to seek relief depended both on the existence of the Trade Practices Act 1974 before the amending Act and s.8 of the Acts Interpretation Act.

The basis of the second defendant's argument was that the amending Act repealed ss.7 and 45 of the principal Act and therefore, those sections of the principal Act are obliterated as completely as if they had never been passed.
A distinction was drawn between proceedings instituted by the new Commission under sections of the old Act which had not been repealed and those instituted under sections that had been repealed. The argument proceeded that s.8 of the Acts Interpretation Act concluded that the words "...any legal proceeding...may be instituted...and any penalty...may be imposed as if the repealing Act had not been passed". It was then submitted that the new Commission, the plaintiff in the present case, depended for its existence upon the repealing Act.
Because I have found that no breach of the old Act has been established it becomes strictly unnecessary for me to consider this argument. Since the argument goes to the validity of the whole proceedings I consider that I should express my opinion upon it. I would follow the reasoning of the Full Court in Milreis, supra, which, in my opinion, would deny the validity of the second defendant's argument.

(C) What instructions, if any, did officers of the

defendants receive about Tradestock?

Some defendants called officers who gave evidence that they had never been instructed not to deal with brokers or consultants. This evidence extended to the question of the absence of any instructions not to deal with Tradestock in particular. I have already said that I do not regard instructions to officers as relevant in relation to giving effect to an arrangement or understanding.
The evidence from certain officers of even a number of sections of a large corporation is hardly sufficient to establish that it was not a party to an arrangement or understanding of refusing to deal with transport brokers when considered against the evidence of what took place at the three meetings of the N.F.F.A. This is particularly true where the provisions of the Act may reasonably be expected to have been in the minds of senior officers of the defendants.

(D) Would the defendants deal with transport consultants who

did not seek commission?

Because of my other findings, this question does not arise. It would be a task of considerable magnitude to deal with it. However, I will touch upon the question. There is certainly no evidence of any significance that any defendant paid a commission at any time to any intermediary. There was some evidence of the position with customs agents where in some instances a commission would appear to have been paid.
The Commission submitted that the question under consideration was relevant at least because of its allegation that the defendants had changed their behaviour towards Tradestock co-incident with the defendants' involvement in a relevant meeting.
Mayne Nickless and, to a lesser extent, T.N.T. called detailed evidence relevant to this question. Brambles, a party to all three arrangements, chose not to deal with it.
Both Mayne Nickless and T.N.T. called a considerable amount of evidence dealing with two transport consultants, T.F. Hendersons and Associates Pty. Ltd.. and Freight Brokers International Pty. Ltd. This evidence showed that no commission was involved and that a number of dealings had taken place between certain defendants during the last two or three years and both these companies when they were acting for clients and placing contracts on a client's behalf.

(E) The Tripodi Principle
The Commission relied upon the principles expressed by the High Court in Tripodi v. The Queen (1961) 104 CLR 1 and R. v. Ernst (1984) VR 593.
I did not find it necessary to deal with those principles because I was satisfied to reach my decision without regard to them.

(F) Certain Evidentiary Principles
I do not find it necessary to deal specifically with the following principles which received some attention and were raised by the Commission.

(i) The failure to call various witnesses.

(ii) Browne v Dunn (1894) 6 R 67.

(iii) The so called "Scintilla Principle".

(iv) The alleged suppression of documents and witnesses,

lies and false issues as probative of guilt.

(G) Undertakings

Certain undertakings were offered more than once by Mayne Nickless and certain other defendants, apparently with the hope of eliminating any argument about the form of any injunctions.
However, it was common ground that the Court had no power to grant other than an interim injunction without a finding of a contravention of the Act. No defendant was prepared to admit contravention.

PART 11

SUMMARY OF CONCLUSIONS AND THE ORDERS

I find that the Commission has established its case to the extent that it has proved the arrangements or understandings alleged except the allegation that the eighth and ninth defendants were parties to the arrangement or understanding made at the meeting of 4 August 1976. However, no arrangement or understanding proved was proscribed by the provisions of the Act because the requirement in s.45 of it being in restraint of trade or commerce was not satisfied. The Commission has failed to establish any giving effect to any proscribed arrangement or understanding. The result is that the Commission has not succeeded.
I will allow the parties to address me on the question of costs but I am only prepared to hear short submissions. I will now fix a date for hearing any such submissions. I propose to allow about a week between today and the date I fix.
The Order of the Court is:

(a) The proceedings be dismissed, and

(b) The question of costs is reserved.

[1985] FCA 19

12 FEBRUARY 1985