Trade Practices Commission v Tubemakers of Australia Ltd

[1983] FCA 99

Re: TRADE PRACTICES COMMISSION
And: TUBEMAKERS OF AUSTRALIA LIMITED; STEEL SUPPLIES (AUST) PTY. LIMITED and
BARRY NEIL BINT (1983) 76 FLR 455
No. WA G39 of 1982
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
Toohey J.(1)

CATCHWORDS

Trade Practices - restrictive trade practices - arrangement or understanding restricting dealings or affecting competition - attempt to control and to induce others to control discounts on steel products - nature of arrangement or understanding - capacity in which servants of corporations acted - features of an attempt - relevance of intention - corporate liability under Trade Practices Act 1974.

Trade Practices Act 1974, ss.45(2)(a), 76(1)(b), 76(1)(d), 84(1) and (2).

Trade Practices - Restrictive trade practices - Arrangement or understanding having effect of lessening competition - Attempting or inducing others to attempt to enter into such arrangement or understanding - Elements of attempt - Capacity in which servants of corporations acted - Corporate liability for acts of servants - Whether statute extends common law principles - Relevance of intention - Trade Practices Act 1974 (Cth), ss. 45(2)(a), 76(1)(b), 76(1)(d), 84(1) and (2).

HEADNOTE

The first respondent was the parent company of the second respondent (the subsidiary company). Both companies carried on business in Western Australia as steel merchants. The third respondent was the regional manager of the parent company's western merchandising division, a position which carried overall responsibility for the group's marketing activities in Western Australia. He was also a director of the subsidiary company but its day to day activities were under the control of its own manager. Concerned at the declining profitability of the group's operations and of the steel industry generally, the third respondent convened a meeting of several steel merchants at which both he and the manager of the subsidiary company were present. At that meeting discussion took place on the desirability of reducing the current level of discounts being offered in the industry so as to improve profit margins. The third respondent urged that some agreement be reached on discounts because it was impossible to continue operating at current prices. The manager of the second respondent announced that his company's next price list would involve a significant reduction in discounts. The Trade Practices Commission sought orders under s. 76(1)(b) and (d) of the Trade Practices Act 1974 that the respondents pay pecuniary penalties provided by the subsection. It alleged that the first respondent, by reason of the actions of its regional manager and the manager of the second respondent, had attempted to contravene or had attempted to induce others to contravene s. 45 (2)(a) of the Act, and alleging that the second respondent, by reason of the actions of same two persons, had also made similar attempts. Orders were also sought against the third respondent alleging that his actions constituted an attempt by him to induce the second respondent (the subsidiary company) to contravene s. 45(2)(a). The Commission in reliance upon s. 84(2) claimed that the conduct of the third respondent and the manager of the second respondent was conduct for which the two companies should be held liable. The respondents argued, inter alia, that there was no expectation that other steel merchants would follow suit in reducing discounts, and that an expectation of achieving the intended purpose is an essential element of an attempt to contravene s. 45(2)(a).

Held: (1) In an application under s. 76(1) alleging an attempted contravention of s. 45, it is necessary to show that the person involved had the relevant intention, that is, that he acted with the purpose of bringing about a result - in this case an arrangement or understanding that had the purpose or would have or be likely to have the effect of substantially lessening competition. However, it is not necessary that there be an expectation in the mind of the person that his object will be achieved.

(2) Section 84(2) does not impute to a corporation the element of intention which may be in the mind of the person referred to in the subsection. Where, as here, intention is a necessary ingredient of the conduct alleged to have been engaged in by the corporation (that is the attempted contravention of s. 45) the intention of the corporation must be established in accordance with common law principles.

(3) In so far as a corporation is deemed by s. 84(2) to have engaged in conduct which one of its representatives has engaged in, the subsection extends the principles of corporate responsibility expressed in Tesco Supermarkets Ltd v. Nattrass (1972) AC 153, but much will depend on the nature and scope of the authority of the representative concerned. Therefore, where intention is not an essential ingredient of the conduct alleged to have been engaged in by a corporation, the corporation may be held liable either in accordance with the principles in the Tesco case or by the application of s. 84(2).

Tesco Supermarkets Ltd v. Nattrass (1972) AC 153; Lennard's Carrying Co. Ltd v. Asiatic Petroleum Co. Ltd (1915) AC 705; Trade Practices Commission v. Queensland Aggregate Pty Ltd (1982) 61 FLR 52, referred to.

(4) The directing mind and will of the first respondent (the parent company) in relation to the conduct complained of was for all intents and purposes the regional manager (the third respondent) and therefore his attempted contravention of s. 45 is conduct for which the first respondent (as well as he) is liable. The directing mind and will of the second respondent (the subsidiary company) was its manager and therefore his attempted contravention of s. 45 is conduct for which the second respondent is liable.

Tesco Supermarkets Ltd v. Nattrass (1972) AC 153, applied.

HEARING

Perth, 1983, May 20. #DATE 20:5:1983

APPLICATION.

Application by the Trade Practices Commission under s. 76(1) of the Trade Practices Act 1974 alleging that the respondents had attempted to contravene, or had attempted to induce others to contravene, a provision of Pt IV of the Act, and seeking orders that the respondents pay pecuniary penalties.

E. M. Franklyn Q.C. and C.J. Carr, for the applicant.

D. K. Malcolm Q.C. and N. W. McKerracher, for the respondents.

Cur. adv. vult.

Solicitor for the applicant: B. J. O'Donovan, Commonwealth Crown Solicitor.

Solicitors for the respondent: Robinson Cox & Co.
F.P.

ORDER

1. The first respondent attempted to contravene s.45(2)(a) of the Trade Practices Act 1974, attempted to induce the second respondent to contravene s.45(2)(a) of the Act and attempted to induce other steel merchants to contravene s.45(2)(a) of the Act in the manner and on the occasions alleged in the statement of claim.

2. The second respondent attempted to contravene s.45(2)(a) of the Act and attempted to induce other steel merchants to contravene s.45(2)(a) of the Act in the manner and on the occasions alleged in the statement of claim.

3. The third respondent attempted to induce the second respondent to contravene s.45(2)(a) of the Act in the manner and on the occasions alleged in the statement of claim.

4. The question of the penalties to be paid by the respondents to the Commonwealth and the question of other relief sought by the applicant be adjourned to a date to be fixed.

Orders accordingly.

JUDGE1

INTRODUCTION

Part IV of the Trade Practices Act 1974 is concerned with restrictive trade practices. Within that part, s.45 relates to contracts, arrangements or understandings restricting dealings or affecting competition.

Section 45(2)(a) provides that a corporation shall not make a contract or arrangement or arrive at an understanding, if

"(ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition".

The term "competition" is defined in sub-s.(3) of s.45; other sub-sections spell out the notion of substantially lessening competition, partly by way of deeming provisions and partly by excluding certain types of conduct from the notion.

Part VI of the Act is concerned with enforcement and remedies. Within that part, s.76 empowers the court to impose substantial penalties if satisfied that, inter alia, a person has attempted to contravene a provision of Part IV (s.76(1)(b)) or has induced, or attempted to induce, a person, whether by threats or promises or otherwise, to contravene such a provision (s.76(1)(d)).

The applicant, the Trade Practices Commission ("the Commission"), alleges that the first respondent, Tubemakers of Australia Limited ("Tubemakers"), attempted to contravene s.45(2)(a) of the Act by engaging in conduct particularised in the statement of claim. The Commission also alleges that Tubemakers attempted to induce others to contravene that provision by engaging in conduct also specified in the statement of claim. In each case the Commission relies upon s.84(2) of the Act to hold Tubemakers responsible for the conduct of others. That sub-section reads:

"(2) 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".

The Commission further alleges that the second respondent, Steel Supplies (Aust.) Pty Limited ("Steel Supplies"), attempted to contravene s.45(2)(a) of the Act and attempted to induce others to do likewise by conduct which, in each case, is particularised in the statement of claim.

Lastly the Commission alleges that the third respondent, Barry Neil Bint ("Mr. Bint"), attempted to induce Steel Supplies to contravene s.45(2)(a) of the Act by engaging in conduct specified in the statement of claim.

THE BACKGROUND

Much turns upon the relationship of the respondents, one to another, upon various events that took place and upon the sequence in which they occurred. Before turning to these matters, it is necessary to say something of the background against which the respondents were operating at the relevant times.

About much of this background there was no dispute. What follows in this paragraph are facts admitted in the pleadings and therefore common ground. Tubemakers was incorporated in South Australia and it has at all material times carried on business as a supplier of steel products, as a steel merchant, in Western Australia. Steel Supplies was incorporated in Western Australia. It has at all material times carried on business as a supplier of steel products, as a steel merchant, in this State. It is and was at all material times a subsidiary of Tubemakers and it has been conducted as part of the western merchandising division of Tubemakers. Mr. Bint was at all material times regional manager, western merchandising division, of Tubemakers. Mr. Bint's precise role and the capacity in which he acted were matters very much at the forefront of the hearing of this application and I shall say something of them later in these reasons.

There are a number of steel merchants in Western Australia. They compete in the supply, by way of sale, of steel products. The steel merchants with which this application is concerned, including Tubemakers and Steel Supplies, belong to the West Australian branch of the Institute of Steel Service Centres of Australia, usually known as ISSCA.

TUBEMAKERS

At this point it is convenient to return to Tubemakers and say something more of its structure and of those who comprise its directorate. Tubemakers was formed in 1946 as a holding company to consolidate the Australian interests of certain Australian and British companies. It became a public company in 1969. Tubemakers' directory describes it as "Australia's largest tube manufacturer and steel merchant". Its name is descriptive of its principal though not its only activity. The company's board of directors includes Mr. J.M. Griggs, its managing director. It has a number of executive general managers including Mr. A.B. Daniels who is in charge of merchandising divisions. There are four merchandising divisions, created on a geographical basis. Western Australia lies within the western merchandising division.

A "position description" tendered in evidence describes the managing director as the company's chief executive and as the person who "directs the activities of the Company toward the accomplishment of approved objectives". His duties include the following :

"3. Directs, coordinates and controls the Company's line operations and staff activities in carrying out approved plans to meet established objectives".

Tubemakers also has an executive committee, the basic function of which is described in a document tendered in evidence in these terms :

"Serves in an advisory capacity to the Managing Director in matters affecting the overall development and operation of the business; reviews major elements of long-range plans, operating results, capital projects, and personnel policies and programmes; serves as a body with which the Managing Director consults before making decisions on certain matters, as delegated by the Board of Directors; and assists the Managing Director in coordinating the activities of top management".

The executive committee comprises several persons, chosen it would appear by virtue of their office. Mr. Griggs is chairman of the committee and Mr. Daniels is a member.

The role of the executive general manager of merchandising divisions is to plan and control the activities of those divisions. It is his responsibility to ensure orderly and profitable development of the current merchandising "strand" of activities, to ensure achievement of current budgets, to develop a sound basis for longer term growth and profitability and to exercise a number of other responsibilities related to the profitable merchandising of Tubemakers' products.

STEEL SUPPLIES

As already mentioned, Steel Supplies is part of the western merchandising division of Tubemakers. It is a subsidiary of Tubemakers and, although not the only supplier of Tubemakers' products in Western Australia, it is the principal supplier. It also supplies steel products other than in tubular form. At the relevant time the manager of Steel Supplies was Mr. N.C. Achterberg. In evidence Mr. Achterberg spoke of himself as being employed by Tubemakers rather than by Steel Supplies. But that, I think, was a reference to the circumstances of his original engagement. It does not detract from the fact that he was the manager of Steel Supplies. Mr. Achterberg had a staff of about 120 persons including managers the number of whom varied from time to time but was usually seven.

Tubemakers' West Australian office is in South Perth; Steel Supplies' principal office is at Spearwood.

Mr. Achterberg's immediate superior was Mr. Bint. In their dealings with each other Mr. Bint acted as and was addressed by Mr. Achterberg as the regional manager of Tubemakers, not as an officer of Steel Supplies. However, Mr. Bint was also a director of Steel Supplies.

Mr. Achterberg described his job as "to manage the staff and the assets of the business in such a way as to produce the profit and protect the assets of the company". The matter of pricing policy, he said, was essentially his responsibility unless removed by directive from his superiors or in discussion with them. He reported frequently to Mr. Bint and policy decisions were usually given to him by Mr. Bint.

Prices for Steel Supplies' products were set in this way. The overriding consideration was profitability of the company. In the general run of business Steel Supplies' managers set prices for those segments of the market or those products they were handling. If any unusual transaction was contemplated a manager would consult with Mr. Achterberg and if he thought it necessary he would consult with Mr. Bint. He described himself as having the authority to set prices subject to broad policy rules laid down by Mr. Bint. There was no policy of Steel Supplies limiting discounting arrangements.

THE COMMERCIAL CONTEXT

The Commission's case against the respondents is that they breached s.45 of the Trade Practices Act by attempting to bring about an arrangement or understanding with other steel merchants whereby the discounts allowed by merchants to purchasers of steel products would be controlled. The events giving rise to that allegation took place in July 1982, in particular at a meeting of ISSCA held on 29 July.

Whether all steel merchants operating in Western Australia belong to ISSCA did not emerge but the impression given by the evidence was that most do. A list of the companies represented at the meeting on 29 July 1982 gives a fair indication of the range of membership. Those companies were Metro Industries Ltd., Union Steel Company Pty. Ltd., Blyth Green Jourdain (Trading) Pty. Ltd., The ANI Corporation Limited, McPherson's Limited, William Adams & Company Limited as well as Tubemakers and Steel Supplies.

At the time Steel Supplies had the largest individual share of the steel market and it was described by Mr. Achterberg as "the market leader in many respects". The steel supply business is a competitive one and in July 1982 the competition between steel merchants was strong and the level of profitability low. Mr. Achterberg explained that by reasons of its share of the market and its capacity to hold on to stocks, any action taken by Steel Supplies in relation to the price of its products would have important implications for other merchants. He commented :

"I believe our price list was recognised as the basic price list and if we moved our percentage mark-up upwards the rest of the market would follow us".

If, for instance, Steel Supplies decided to increase its prices and a merchant failed to follow suit, he ran the risk that Steel Supplies might, in Mr. Achterberg's words "attack each of his customers and offer a much greater discount at a smaller level of proportionate loss". Steel Supplies' size enabled it to weather events more readily than other merchants.

The merchants mentioned as having attended the meeting of 29 July all held BHP franchises enabling them to purchase steel directly from BHP. Correspondingly they were restricted in their ability to purchase steel from sources outside Australia. There were other merchants who imported steel from outside Australia but Mr. Achterberg did not think they accounted for more than 20% of the market. According to him Steel Supplies had 30% of the market but he explained that he was talking about the share of BHP products. He pointed out that Tubemakers was the dominant company in tubular products.

In July 1982 the steel market in Western Australia was depressed. That market is heavily dependent on large construction projects (such as the north-west shelf) which had fallen away and, according to Mr. Achterberg, showed signs of falling away even further. The level of imported steel had risen so that the members of ISSCA were vulnerable both in terms of reduced demand and increased competition. The result was that discounting was pursued by merchants. Mr. Achterberg gave by way of example that in December 1981 it would have been unusual to offer a discount of more than $80 a tonne whereas in July 1982 a tonnage discount of $130 was not exceptional. Stock levels were rising due to reduced demand; this in turn increased the operating costs of merchants.

In the first half of 1982 Steel Supplies' stocks were increasing above budget level and the company's sales were declining below a budget which had already been. reduced to take into account an expected decline in the market. In Mr. Achterberg's words, "profits were falling dramatically". To increase profitability he decided to reduce the discounts being offered and so increase the margin of profit on steel being sold. That step failed because the company's competitors took advantage of the higher prices being offered by Steel Supplies. As a result Steel Supplies embarked on a policy of gaining business wherever it could at the prevailing price. This it did by attempting to price at a lower level than its competitors by offering higher discounts. This move was criticised by the other steel merchants. That was the situation when, early in July 1982, Mr. Achterberg went on holidays. It was on his return that events took place leading to these proceedings.

EVENTS OF JULY 1982

Mr. Achterberg returned home from leave on 24 July. He found waiting for him a document dated 20 July bearing the initials BNB/IP. These were the initials of Mr. Bint and Mr. Bint's secretary respectively. Mr. Bint did not give evidence but it was acknowledged by all respondents that he had prepared the document and the accompanying hand written slip which contained these words :

"Nick, a 'meeting' may be held on Thursday 29.7.82. I would like to get together with you & Lou Monday pm at my office to talk about things".

The reference to "Lou" was to Mr. L.S. Symes, the manager of Tubemakers Supply Centres, another of Tubemakers' outlets in Western Australia.

The document was headed "Notes on Steel Distribution". It began by identifying the components of the business "we are involved in" as buying, stocking, servicing and selling at a margin. It then commented on the first three of these components in a way to indicate that none offered any scope for improving the situation. As to the last component - margin - the document pointed out that increases in volume were "not on" so that it was only in margins "that we can look for some improvement in our performance". The document noted that margins had fallen away for many reasons but principally because of competition; that reduced volume had made distributors aware of the need to improve margins; that head offices were applying pressure to lift the quality of business; that BGJ/Steel Stocks (the name under which Blyth, Green Jourdain (Trading) Pty. Ltd. operated) had joined the "traditional" ranks and that Steel Supplies' major share of the market made the idea of margin improvements attractive "if we are going to be 'protected'".

As the court did not hear from Mr. Bint, the significance of the references to "we" and "our" must be determined in the light of the entire evidence.

The document then continued in these terms :

"An earlier attempt by Steel Supplies to limit discounts to 10% is again being canvassed.
Major distributors are prepared to cooperate on ceiling discounts to major customers.
This will facilitate defence of an account by the principal supplier".

The document concluded with a suggestion as to appropriate rates of discount to be offered on various types of accounts, to be in operation by 1 September 1982.

Mr. Achterberg explained that "traditional ranks" was a reference to those holding BHP franchises and that "defence of an account" was a reference to retaining a customers' business.

Mr. Achterberg returned to work on Monday 26 July. He received a telephone call from Mr. Bint as a result of which he went to the latter's office the following day.

As already mentioned, Mr. Bint did not give evidence. It may be that for tactical reasons he did not wish to do so and that the other respondents did not wish to call him. The fact is that he was able to testify and indeed was present during the hearing. His failure to give evidence creates some presumption in favour of the reliability of Mr. Achterberg's testimony, at least in relation to those matters where Mr. Bint might have been heard to deny that testimony. But in any event I am satisfied that what Mr. Achterberg told the court of that meeting was in substance correct.

I should say that Mr. Achterberg's attitude towards Steel Supplies and Tubemakers was, in some respects, a curious one. He remained the manager of the former company until October 1982. But even while employed by it he set about trying to attract business for himself from customers of the company and he was paving the way for his retirement from Steel Supplies, in part with a view to entering into competition with it. His approaches to the Commission, to which I shall refer later, might have been laudable. But it does seem that he was motivated primarily by a wish to injure Steel Supplies and to protect his own position. Despite these considerations I accept him, on factual matters, as a witness of truth.

At the meeting on 27 July Mr. Bint discussed with Mr. Achterberg the low profitability of Steel Supplies and steps that might be taken to improve that situation. Mr. Bint expressed the view that other steel merchants were in a frame of mind that would permit Steel Supplies to lift its margins in concert with them, that if Steel Supplies as leader were to make a positive move in that direction, "the others would be more inclined to follow that time than they ever had in the past". Mr. Achterberg disagreed with this approach, his experience being that to lift margins would place Steel Supplies to some extent at the mercy of its competitors. Mr. Bint concluded the discussion by saying that Steel Supplies had to take whatever steps were open to it to lift margins and that these steps were to be the subject of a meeting with the other merchants in the near future. Mr. Bint asked Mr. Achterberg to be present at a meeting with him and Mr. Symes the following day. At the meeting on 27 July Mr. Achterberg was already aware that there would be a meeting of ISSCA on Thursday 29 July. I accept his evidence that Mr. Bint left him with "a clear understanding" that he was to attend that meeting.

The meeting on 28 July covered much the same ground as the Tuesday meeting. Mr. Bint informed Mr. Achterberg and Mr. Symes that he (Bint) had been told recently by Mr. Daniels, the executive general manager of merchandising divisions, that it was urgently necessary to improve the profitability of Steel Supplies and that if the company's managers were unwilling to take the necessary steps to achieve this Tubemakers would find other managers to do it. Like Mr. Bint, Mr. Symes did not give evidence. According to Mr. Achterberg Mr. Symes expressed doubts about a suggestion made by Mr. Bint that an attempt be made to obtain the agreement of other merchants to a reduction in discount levels. Mr. Symes regarded such an agreement as "too blatant" as customers would know there had been some such agreement. Symes favoured phasing in such an arrangement over a period of 6 months. Bint made the point that there was no time in which to adjust the pricing policy and that immediate profitability was required. According to Achterberg, he expressed reservations about the legality of what was being suggested by Bint to which the latter replied: "Let us put aside the legality for the moment".

THE ISSCA MEETING

A meeting of ISSCA took place on Thursday 29 July as arranged. It was not an ordinary monthly meeting. It was specially called by telephone. It was attended by representatives of all those companies usually present at meetings of ISSCA, save for Elders Metals Limited whose representative was on leave. Those present were Mr. R. Watson on behalf of Metro Industries Ltd., Mr. G. Horsley on behalf of Union Steel Co. Pty. Ltd., Mr. J. Curly on behalf of Blyth Green Jourdain (Trading) Pty. Ltd., Mr. M. Foster on behalf of ANI Corporation Ltd., Mr. J. Staples on behalf of McPherson's Limited, Mr. J. Towns on behalf of William Adams & Co. Ltd., together with Mr. Symes representing Tubemakers, Mr. Achterberg representing Steel Supplies and Mr. Bint who, it seems, was there because of his involvement with both those companies.

The Commission called Mr. Achterberg and Mr. Towns to speak as to what occurred at the meeting. The respondents called no witnesses on this matter though Mr. Bint and Mr. Symes were both available.

I am satisfied that what look place at the meeting was substantially as follows. It was chaired by Mr. Watson of Metro Industries Ltd. There was a secretary of ISSCA but he was not present. Mr. Watson pointed out that it was not a formal meeting and no minutes would be taken. He stated that the object of the meeting was to consider methods of improving the profitability of the steel business in Western Australia. Discussion was initiated by Mr. Foster of The ANI Corporation Limited trading as Steelmark. Mr. Foster emphasised the depressed state of the steel business, saying that if other merchants were not willing to take the steps necessary to improve profitability his company would fail in which event he would make sure that he would take other steel merchants with him. Mr. Foster suggested a level of discounts comparable to those contained in the document prepared by Mr. Bint and given to Mr. Achterberg on his return from leave. No reference was made to the document itself, but one category of discounts it contained was 10% on "defended accounts". The suggestion was not accepted by those present, at least in part because of the difficulty of defining what a "defended account" was. Mr. Achterberg pointed out that the structure of the steel market in Western Australia was such that what might be a major purchase from one merchant could be regarded as an insignificant purchase from another. Mr. Towns commented that the difficulty was not so much one of price in absolute terms as of difference in prices. If all customers tendering on a particular job were given the same price, no merchant would be at a disadvantage. Mr. Symes again expressed the view that a gradual phasing in of an increased price would be a better way of handling the situation than a sudden increase.

Mr. Bint told the meeting that he had to leave early but said that in his view and in the view of his company (Tubemakers) it was a matter of urgency that greater profit be extracted from the steel business. He said that he would support whatever initiative was undertaken to improve profitability.

Thereafter Mr. Achterberg told the meeting that it was his intention "to limit discounts offered by Steel Supplies to its customers to a level of 12% or $80 per tonne, that I intended to increase my mark up on the basic list price of the steel by a further 2 per cent at the next BHP price rise and also that I would apply my processing price list strictly in accordance with the published list". The "published list" was a price list published by Steel Supplies from time to time. After some discussion Mr. Achterberg told the meeting that he would be applying the new discounts both in percentage and dollar terms and that the "new policy of Steel Supplies" would be effective from 1 August. Mr. Achterberg told the court that he made this proposal to the meeting because :

"I believed at that time that I had been instructed to take some positive step to improve the profit in the business. The reason I couched the proposal was that I attempted to make it appear not to be a proposal but a unilateral declaration that would be followed by other merchants".

He told the meeting that he would take very strong action in pricing terms if any other merchant "moved in" on his customers. He believed that Steel Supplies' market strength was such that other merchants would follow the lead he was taking. It was I suppose what would be described in political jargon as a unilateral initiative with multilateral intentions.

At the end of the meeting, as everyone was leaving, Mr. Curly of Blyth Green Jourdain (Trading) Pty. Ltd. said that he believed that certain managers were not totally in control of their staff and he hoped that they would be able to prevent their sales staff from exceeding the limits of the policy that had been set. Mr. Foster expressed the view that the action Steel Supplies intended taking was something that should be supported. Mr. Watson wound up the meeting by saying that the policy expounded by Mr. Achterberg was a reasonable one. He asked if there was any disagreement with it and no one answered.

The meeting concluded on the basis that those present would meet one week later to review progress.

In cross-examination Mr. Achterberg agreed that in his belief it was totally impossible that the merchants would reach an agreement or arrangement or understanding that they should act together to lift prices. But in his words "

"I was under the impression that if I did not make some effort to improve the profitability I would not be in a position to attempt it in the future".

Presumably this was a reference to Mr. Daniels' comments, passed on by Mr. Bint at the meeting on 28 July, that if managers were unwilling to take the necessary steps to improve profitability Tubemakers would find others to do so.

Mr. Achterberg added that he had no doubt that the suggestion would fail and that he quite deliberately formulated it as a unilateral announcement. He had no expectation that the other steel merchants present would follow Steel Supplies' lead and limit their discounts in the same way.

Later in cross-examination he qualified that answer somewhat by saying of the merchants at the meeting :

"I had made a statement to them of my intention. I could not be assured that they would not act in accordance with the intention behind that statement. It was not impossible they they would act. I thought it was most unlikely".

Mr. Towns, who was present under subpoena, gave evidence that between May and August 1982 he was the acting manager in Western Australia of William Adams & Co. Ltd. He had been seconded to that position temporarily from his usual position of marketing manager Australia for the company, a position to which he later returned.

Mr. Towns attended 3 monthly meetings of ISSCA held in Perth, one in May, one in June and one in July 1982. These meetings were held on a fixed date and advice was given of them in writing. Before 26 July he had also attended 2 special meetings, each of which had been convened by a telephone call in the course of which he was told the purpose of the meeting. On or about 26 July Mr. Watson rang him to tell him of a meeting to be held on 29 July. Mr. Watson did not mention the purpose of that meeting.

Mr. Towns' recollection of that occasion was in the main consistent with that of Mr. Achterberg. Mr. Watson opened the meeting by referring to the absence of the representative of Elders Metals Ltd. and then went on : "Something has to be done about profitability. Has any one any suggestions". Mr. Watson then spoke at some length about the lack of profitability in the industry. He pointed out that previous attempts at discounts had not lasted, adding that the maximum discount should be 10% and that he would go along with this again.

Mr. Achterberg then spoke and said that at the next BHP increase his list price would be cost plus 39% instead of cost plus 37%, that his maximum discount would be $80 to major customers and $40 to the others. He said $80 or 12% would be his discount. There followed some discussion about discounts and Mr. Bint said that agreement should be reached on a discount because it was impossible to operate at current prices. In cross-examination Mr. Towns confirmed this as his recollection of what Bint had said and I accept that evidence. Mr. Bint then left.

Thereafter there was discussion about an invitation to tender given to steel merchants in regard to a specific project. Various merchants spoke, indicating the discounts they had or were prepared to offer in regard to that project. The meeting ended on the note that there would be a further meeting in a fortnight's time. Mr. Towns said that he did not attend that meeting because it "would have been an illegal meeting . . . because discounts, minimum prices would have been discussed".

In cross-examination Mr. Towns was asked about some notes he made of the meeting after it had concluded. They included these comments :

"Bint, Symes, Achterberg, Foster, Horsley, Watson, Staples, Curly (no Foster) Watson, Foster & Achterberg made the running with all talking about profitability problems & need to reduce discounts (they must be joking]) Foster wants 10% max & Achterberg believes $80 for major & $40 on rest. A. going + 39, @ next increase instead of 37% . . . Bint left meeting after A had his say and Bint seems v.keen to limit discounts, so does Watson & Foster, but could not see this crew agreeing on time of day".

Mr. Towns confirmed that this was his opinion. However, cross-examined about Mr. Achterberg's evidence of his belief that it was totally impossible that any agreement would be reached on limiting discounts, Mr. Towns replied: "Not totally impossible". But he did not believe there was any practical possibility of agreement on limitation of discounts. Later Mr. Towns agreed that he thought the whole discussion was a bit of a charade or a sham. Nevertheless, he would not go so far as to say it meant nothing at all. In his words :

"There was an attempt made to institute a course of action which I believed to be ludicrous and I concluded that some of the others at that meeting would feel the same way, hence my comment".

But he did think that Mr. Achterberg took it seriously as did Mr. Foster and Mr. Symes. He also rejected an intimation that he did not take seriously Mr. Achterberg's suggestion on maximum discounts.

What is one to make of the meeting of 29 July 1982? I am satisfied that it was held at the instance of Mr. Bint whose approach to Mr. Achterberg and to the meeting was influenced by the warning to him of the urgent need to improve Steel Supplies' profitability, with a rider that if managers were unwilling to take steps to achieve this position Tubemakers would find others to do so. The warning was given at a meeting in Sydney on 23 July and was given by Mr. Griggs rather than Mr. Daniels though both men were present. In saying that I do not suggest that Mr. Griggs or Mr. Daniels knew that the meeting was to be held. I accept their evidence that they did not. But what was said persuaded Mr. Bint that something had to be done and the meeting was the result.

I am also satisfied, having regard to Mr. Bint's memorandum of 20 July 1982 and Mr. Achterberg's account of the conversations that he had with Bint on 27 and 28 July, that Mr. Bint expressed the view that some agreement on discounts was possible if Steel Supplies gave the lead. Mr. Bint asked Mr. Achterberg to attend the meeting where the question of an agreement on discounts was to be discussed.

At the meeting Mr. Bint did not play a dominant role, saying little more than that he would support whatever initiative was undertaken to improve profitability and that agreement should be reached on a discount because it was impossible to operate at current prices. It was Mr. Achterberg who made the running and he did so with a statement as to what Steel Supplies' list price would be after the next BHP price increase and what the company's maximum discounts would be. Mr. Achterberg agreed that in making this statement he was not acting in accordance with any specific instruction from Mr. Bint. It was, I suppose, natural that at the meeting the statement should come from Achterberg rather than Bint for it was he who was the manager of Steel Supplies. Mr. Achterberg may have gone further than Mr. Bint intended but I am satisfied that what he said at the meeting was consistent with the discussions that had taken place on the two preceding days.

Later on 29 July Mr. Achterberg met Mr. Bint at a restaurant where a function was being held for a retiring officer of Steel Supplies. Bint asked Achterberg about the outcome of the meeting and was told by him: ". . . we had agreed on a 12 per cent and $80 maximum discount".

EVENTS FOLLOWING THE ISSCA MEETING

Troubled by the implications of what had taken place at the meeting of the 26 July, Mr. Achterberg telephoned the Commission where he attended the following day.

The day after the meeting Mr. Achterberg also wrote a letter to Mr. Bint expressing his concern at "the agreement reached in that meeting". The concern in part related to the commercial implications of what had taken place but also to a view expressed by Mr. Achterberg to Mr. Bint before the meeting "that our collective actions are illegal". This was a reference to the operation of the Trade Practices Act. The letter was, I think written in self-exculpation but there is no reason to doubt that its contents reflected Mr. Achterberg's understanding of what had occurred.

The rest of the story can be told fairly quickly. The ISSCA meeting, scheduled to take place a week after 29 July 1982, did not eventuate. Mr. Daniels learned of the 29 July meeting on 3 or 4 August as a result of a telephone call from Mr. McPharlin, the general manager of William Adams Metals. Mr. Daniels immediately rang Mr. Bint but was not able to contact him until the following day when he was told of the meeting. Mr. Daniels was told by Mr. Bint that the question of prices had been discussed; thereafter Mr. Daniels spoke by phone to Mr. Achterberg. Mr. Achterberg expressed his concern at what had happened at the meeting and its implications for the Trade Practices Commission. Mr. Daniels then consulted Tubemakers' solicitor and as a result wrote a letter dated 9 August 1982 to those merchants who had attended the meeting. The letter was in these terms :

"It has come to my attention that one of the issues discussed at the above meeting was industry profitability and pricing.
On reflection, our executives who attended are uncomfortable in that such a discussion might have implied an unlawful understanding or agreement in the minds of one or more persons attending that meeting.
Please be advised that no Tubemakers employee at that meeting had any authority to enter into an agreement or understanding on Tubemakers' behalf and the company does not regard itself as a party to any such agreement or understanding that might have been implied at the meeting". The reference to "our executives" is presumably to Bint and Symes although Mr. Daniels was not asked whether this was so. No such letter was written by or on behalf of Steel Supplies.

Mr. Bint became alarmed at the turn events had taken and on 13 September 1982 he wrote to Mr. Daniels tendering his resignation. The letter included this passage :

"I find it difficult to rationalise how I could have allowed circumstances to develop whereby I may have contravened the Trade Practices Act and at the same time implicated the Company. Perhaps it is symptomatic of the difficulties I have had making a success of the position of Regional Manager".

As I understand the situation, Mr. Bint was, at the time of the hearing, still an employee of Tubemakers. The company had taken no action on his letter, pending the outcome of these proceedings.

THE CASE PLEADED AGAINST THE RESPONDENTS

The Commission's case against the respondents, as pleaded in the statement of claim and amplified in particulars, is along these lines. It is said by way of factual allegation that on or about 20 July 1982 Mr. Bint, acting on behalf of Tubemakers, delivered to Mr. Achterberg as manager of Steel Supplies the memorandum dated 20 July 1982 to which reference has been made. It is then said that on or about 27 and 28 July 1982 Mr. Bint, still acting on behalf of Tubemakers, orally instructed Mr. Achterberg to attend the meeting of steel merchants to be held on 29 July and to make an arrangement or arrive at an understanding with those merchants whereby discounts would be controlled.

It is further said that at that meeting Mr. Achterberg, acting pursuant to the instructions he had been given by Mr. Bint, proposed an arrangement or an understanding to the merchants for the control of discounts. The proposal is particularised as a statement by Mr. Achterberg that Steel Supplies would forthwith apply a maximum discount on the price of its steel products of 12% or $80 a tonne and that, following the next rise in the cost of steel supplied by BHP, Steel Supplies would increase its price by 2% more than that percentage increase. That statement is said to have been made with the intention of bringing about an arrangement or arriving at an understanding, having regard to the position of Steel Supplies as market leader and its capacity successfully to undercut competitors; and after lengthy discussions between those present at the meeting as to the low profitability and declining demand in the steel market in Western Australia and the need to increase prices; and after consideration and rejection as impractical of a discount controlling proposal along the lines of the memorandum. It is also said that, following the statement by Mr. Achterberg, he went on to say that Steel Supplies would take retaliatory action if any steel merchant "moved in" on Steel Supplies' larger customers following the company's proposed change to its pricing policy.

It is further alleged that Mr. Bint attended the meeting and, on behalf of Tubemakers, stated to those present that agreement should be reached as to the discounts to be allowed as it was not possible to operate at current prices.

With the definition of "competition" in s.45(3) in mind, the statement of claim pleads that the material provisions of the proposed arrangement or understanding had the purpose or had or were likely to have the effect, of fixing, controlling or maintaining, or providing for the fixing, controlling or maintaining of, the price for, or a discount, allowance, rebate or credit in relation to, steel products supplied or to be supplied by the steel merchants or some of them.

The Commission alleges against Tubemakers that it attempted to contravene s.45(2)(a) by reason of the actions of Bint in delivering the memorandum to Achterberg, in instructing him to attend the meeting and in what Bint himself said at the meeting. It is alleged that by reason of s.84(2) Achterberg's attendance at the meeting and the proposal made by him was conduct for which Tubemakers is responsible.

It is further alleged against Tubemakers that it attempted to induce other steel merchants to contravene s.45(2)(a), by reason both of Bint's attendance at the meeting and the statements he made and, pursuant to s.84(2), Achterberg's attendance at that meeting and the proposal he made.

Against Steel Supplies it is alleged that there was an attempt to contravene s.45(2)(a) by reason of Achterberg's attendance at the meeting and the proposal he made, and by reason of the attendance by Bint, a director of Steel Supplies, at the meeting and the statement he made to that meeting. It is alleged that Steel Supplies attempted to induce other steel merchants to contravene s.45(2)(a) by reason of Achterberg's attendance at the meeting and the proposal he made, and by Bint's attendance at the meeting and the statement he made.

Against Mr. Bint the allegation is that he attempted to induce Steel Supplies to contravene s.45(2)(a) by delivering the memorandum to Mr. Achterberg, by instructing him to attend the meeting and by himself attending the meeting and making the statement that agreement should be reached as to the discounts to be allowed.

As already mentioned in these reasons, the various acts and conduct referred to are said to amount to an attempt to contravene a provision of Part IV of the Trade Practices Act or to amount to an inducement or an attempt to induce a person to contravene such a provision.

THE CAPACITY IN WHICH BINT ACTED

The Commission attributes to Mr. Bint two capacities in respect of his conduct in this matter. One characterizes him as a servant or agent of Tubemakers in delivering the memorandum of 20 July 1982 to Mr. Achterberg and instructing him to attend the meeting (paras. 6 and 7 of the statement of claim) and in himself attending the meeting and speaking (para. 9 of the statement of claim). The other characterises him as attending the meeting and speaking in his capacity as a director of Steel Supplies, that company being held responsible for his actions in doing so (para. 15 of the statement of claim). These are not pleaded as alternatives.

The respondents answer that Mr. Bint cannot be said to have attended the meeting in more than one capacity. In their submission, "throughout Bint wore his Tubemakers hat . . . " . They argue that his connection with Steel Supplies was no more than a nominal or formal one as a director of that company.

In general the evidence suggests that Mr. Bint's connection with Steel Supplies was more than nominal or formal. Steel Supplies was a subsidiary of Tubemakers and Mr. Achterberg clearly recognized an overriding authority in Mr. Bint so far as the operations of Steel Supplies were concerned, even if that authority was exercised infrequently. But I am satisfied that when Bint delivered the memorandum to Achterberg, spoke to him on 27 and 28 July and spoke at the meeting on 29 July he did so as the representative of Tubemakers. He was regional manager, western merchandising division, of that company. Its business was not identical with that of Steel Supplies. It was a company represented in its own right at ISSCA meetings. I am also satisfied that when Bint spoke at the meeting on 29 July he was understood by those present to be speaking as Tubemakers' representative. It was Achterberg who was seen as the representative of Steel Supplies, his usual role at those meetings.

In reaching these conclusions I do not seek to foreclose other questions that arise regarding Bint's authority to do and say what he did. Nor am I concerned at this stage with the operaion of s.84(2) of the Trade Practices Act. I do no more than identify the capacity in which Mr. Bint acted and spoke.

THE CAPACITY IN WHICH ACHTERBERG ACTED

The Commission relies upon s.84(2) of the Act to hold Tubemakers responsible for the actions of Mr. Achterberg. It does this by pleading that he acted at the direction or with the consent or agreement, whether express or implied, of Mr. Bint who was a servant of Tubemakers. The allegation implies that Achterberg was not himself a servant or agent of Tubemakers but someone who could only be brought in, so far as Tubemakers are concerned, by the operation of s.84(2).

As mentioned earlier, Mr. Achterberg seems to have thought of himself as engaged by Tubemakers, even though manager of Steel Supplies. In final addresses counsel for the Commission submitted that in attending the meeting and saying what he did Achterberg was acting "on behalf of his employer, in fact both employers one might say, because he was employed in two capacities".

But the statement of claim does not assert Mr. Achterberg to have been a servant or agent of Tubemakers, nor do the defences. And the hearing was conducted on the basis that if Achterberg's actions could be brought home to Steel Supplies it was because he was a servant of that company and that if they could be brought home to Tubemakers it was because of s.84(2) of the Act.

Again I am concerned at this stage to do no more than identify the capacity in which Mr. Achterberg acted and spoke.

This identification has particular consequences for para.15 of the statement of claim which pleads that Tubemakers attempted to induce Steel Supplies to contravene s.45(2)(a) of the Act. In the respondents' submission the "directing mind and will" of Steel Supplies was not Achterberg but Tubemakers' board of directors, its managing director and perhaps its executive committee. The point of this submission was that Achterberg lacked the authority to respond on behalf of Steel Supplies to an inducement from Tubemakers through Bint. Mr. Malcolm Q.C. put it this way :

"You cannot induce a corporation to follow a course of action by persuading somebody who is not the brains or mind of a corporation to do something".

I do not accept the submission. Leaving aside the question of Achterberg's authority to do something unlawful, he was in a very real sense the manager of Steel Supplies. He managed the affairs of the company including the setting of prices for its products and the discounts it would offer. Whether the Commission has made good para. 15 of the statement of claim is another thing. But I do not accept that it has failed to do so because Achterberg lacked authority to respond on behalf of Steel Supplies to persuasion by Bint on behalf of Tubemakers.

The operation of s.84(2) of the Act in regard to Tubemakers and Achterberg is discussed later in these reasons.

AN ARRANGEMENT OR UNDERSTANDING?

In essence the case against the respondents is that they were involved in an attempt to bring about among ISSCA members an arrangement or understanding to control discounts. It is not the Commission's case that an arrangement was made or an understanding reached.

The terms 'arrangement' and 'understanding' are not defined in the Trade Practices Act. A number of decisions tend to treat them as synonomous, as something less than a binding contract or agreement. Newton v. Federal Commissioner of Taxation (1958) 98 C.L.R. 1 at p.7; Top Performance Motors Pty. Limited v. Ira Berk (Queensland) Pty. Limited (1975) ATPR 40-004 at p.17,116; Trade Practices Commission v. Nicholas Enterprises Pty. Ltd. (1979) ATPR 40-126 at p.18,342 and Trade Practices Commission v. Email Ltd. (1980) ATPR 40-172 at p.42,370.

In Morphett Arms Hotel Pty. Limited v. Trade Practices Commission (1980) ATPR 40-157 the Full Court of the Federal Court upheld a decision of Fisher J. that there had been an 'understanding' in contravention of provisions of the Trade Practices Act. In doing so Bowen C.J., delivering the judgment of the court, said at p.42,234:

"Fisher J. reached the conclusion it is a necessary ingredient of such an 'understanding' that there be an element of mutual commitment between two or more persons in the sense that each must have accepted an obligation of the other or others. As at present advised, it seems to me that one could have an understanding between two or more persons restricted to the conduct which one of them will pursue insofar as the other party or parties to the understanding are concerned".

Commenting on this passage in the Email Ltd. case, Lockhart J. said at p.42,377:

"For my part I find it difficult to envisage circumstances where there would be an understanding involving a commitment by one party without some commitment by the other party".

That aspect is one on which I need not comment. The arrangement or understanding which it is alleged the respondents attempted to bring about was one in which mutual obligations would be assumed, in relation to discounts to be offered on the sale of steel products. Such an arrangement or understanding was one in which there would be communication between those involved, the raising of an expectation each in the mind of the other and the acceptance of mutual obligations, something more than a mere hope as to what might be done.

It is true that the particulars pleaded in para. 8 of the statement of claim are in the main of action proposed to be taken unilaterally by Steel Supplies. But that is because the Commission alleges no more than an attempt by Tubemakers and Steel Supplies to contravene s.45(2)(a) of the Act and an attempt to induce others to do so. Whether there was such an attempt still remains to be answered. I say no more at this point than that the 'arrangement' or 'understanding' pleaded by the Commission is one which if made or reached would answer the meaning of those expressions in the Trade Practices Act.

THE FEATURES OF AN ATTEMPT

Section 76 of the Trade Practices Act makes liable for the pecuniary penalties provided therein, not only a person who has contravened a provision of Part IV, but one who has attempted to do so and one who has induced or attempted to induce another to do so. In its terms the section draws no distinction between these categories of conduct.

The respondents mounted their attack on the allegation of attempt in a carefully formulated submission which I set out verbatim :

"For a statement which is relied upon to found an allegation of an attempt to contravene or an attempt to induce another to contravene, it must be a statement of a kind which, first, carries within its terms the potentiality of a basis for an arrangement or an understanding and, second, it made with the requisite intention that an arrangement or understanding be in fact arrived at and in the expectation that an arrangement or understanding will result from it".

In the respondents' submission each of those elements is missing in the present case. Before turning to that part of the argument it is necessary to deal with the respondents' formulation of the principles to be applied.

I have no difficulty with the proposition that a statement relied upon to found an allegation of attempt must carry within its terms the potential for an arrangement or an understanding. A statement made quite unilaterally of intention to do something or to refrain from doing something, with no suggestion express or implied that others might act in the same way, is hard to visualise as an attempt to make an arrangement or arrive at an understanding for the control of discounts on the sale of steel products. But I cannot accept so readily the other characteristics referred to in Mr. Malcolm's formulation.

The question of intention is something to be dealt with later in these reasons. But it is, I think, introducing an unnecessary and unwarranted element into the notion of attempt to suggest that there must be an expectation, as in the present case, that an arrangement or understanding will result. It may be that counsel was not submitting that expectation was an element additional to that of intention, rather that expectation was an aspect of intention. But in either case its introduction is both unnecessary and confusing. If intention is an essential ingredient of attempt under the Trade Practices Act and the necessary intention has been demonstrated, why should there be an expectation that an arrangement or understanding will result? As Professor Howard points out in Australian Criminal Law 2nd Ed. 300 :

"Conviction of attempt is not precluded by reason only of the fact that what D is attempting is under the circumstances impossible, but the meaning of 'impossible' in this context is far from clear".

If a person may be convicted of attempting to commit an offence though achievement of the offence is in the circumstances not possible, I see no reason why there must be an expectation in the mind of the person charged that he will achieve his object as well as having the intention to achieve it. If, on the other hand, no intention is necessary for an attempt to contravene s.45(2) of the Trade Practices Act, there can be no justification for demanding an expectation that the conduct prescribed will result.

Putting to one side the question of intention, the following definition given in Archbold's Pleading Evidence & Practice 36th Ed. para.4104 is apposite :

". . . the actus reus necessary to constitute an attempt is complete if the prisoner does an act which is a step towards the commission of the specific crime, which is immediately and not merely remotely connected with the commission of it, and the doing of which cannot reasonably be regarded as having any other purpose than the commission of the specific crime".

ATTEMPT AND INTENTION

Counsel for the respondents conceded that s.45(2) of the Act "contains an absolute prohibition on the conduct in question". That concession was rightly made. Although s.45 is within Part IV of the Act, so that the reasoning that lead the Full Court of this court in Darwin Bakery Pty. Ltd. v. Sully (1981) ATPR 40-230 to conclude that mens rea was not an element in an offence against s.53 of the Act is not directly applicable, the prohibitions in Part IV are absolute and not dependent upon establishing mens rea on the part of the offender.

Nevertheless, in the respondents' submission, when s.76 requires the court to be satisfied that there has been an attempt to contravene a provision of Part IV, the principle of the common law that an attempt involves the formation of an intention to achieve a result is equally applicable. And, runs the argument, when the person said to have attempted to contravene a provision of Part IV is a corporation, the attribution of a mental state to that corporation must be determined in accordance with the principles laid down by the House of Lords in Tesco Supermarkets Ltd. v. Nattrass (1972) AC 153.

There are several steps in this argument and they need to be taken one at a time. In ordinary parlance, to say that a person has attempted to do something means that he has acted with the purpose of bringing about that which he is said to have attempted. Questions may arise as to what precisely must be proved to establish attempt to commit an offence but the principle that proof of intent is necessary is well established. R v. Mohan (1975) 2 ALL ER 193.

When it is sought to hold a corporation responsible for the actions of its officers, the respondents submitted, the appropriate test is not to ask whether the officer was acting in the course of his employment. Rather the court should apply the principles inherent in the Tesco case. The respondents acknowledged that the immediate question for the court in that case was whether the appellant had taken all reasonable precautions and exercised all due diligence to avoid the commission of an offence under the Trade Descriptions Act 1968 of England. Nevertheless, they said, in arriving at a decision on that question the members of the House of Lords enunciated certain principles which make clear the basis on which corporations are held criminally responsible for the acts of their servants or agents.

In my view the judgments in Tesco establish these propositions. A corporation must act through living persons but the person who acts is not speaking or acting for the company. He is acting as the company and the mind which directs his acts is the mind of the company. The question is not one of vicarious liability. In the words of Viscount Haldane L.C. in Lennard's Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd. (1915) AC 705 at p.713 :

". . . a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation".

Some persons in a company (directors and managers for instance) are sufficiently senior to represent the directing mind and will of the company and to control what it does. Others may be simply subordinates and will not act as the company unless the directors have delegated some part of their functions of management, giving to the delegate full discretion to act independently of instructions.

While the criminal liability of a corporation may now be regarded as depending upon whether the acts in question were carried out by persons representing the directing mind and will of the company rather than upon tests related to conduct in the course of employment, the important question for the purpose of these proceedings is whether such a test is appropriate for s.76 of the Trade Practices Act. It is to that question I now turn. CORPORATE LIABILITY UNDER THE TRADE PRACTICES ACT

There are a number of sections of the Trade Practices Act that deem something done by a person acting on behalf of a corporation to have been done by the corporation itself. Some of these provisions have been discussed in Commissioner of Trade Practices v. Caltex Oil (Australia) Pty. Ltd. (1974) ATPR 40-000 and Trade Practices Commission v. Bata Shoe Co. of Australia Pty. Ltd. (1980) ATPR 40-161. But those decisions do not answer the particular questions arising in these proceedings.

The section on which most argument turned was s.84, in particular sub-s.(2). Section 84 is within Part VI - Enforcement and Remedies. Sub-section (1) provides that where, in respect of any conduct engaged in by a body corporate to which a provision of Part V - Consumer Protection applies, it is necessary to establish the intention of the body corporate, it is sufficient to show that a servant or agent of the body corporate by whom the conduct was engaged in had that intention. Sub-section (1) is not directly relevant in the present case which is concerned with conduct to which Part IV applies. But it is of some importance in that, where intention is involved, it imposes a different test to that inherent in Tesco. That was the view taken by Bowen C.J. in Universal Telecasters (Qld.) Ltd. v. Guthrie (1978) ATPR 40-062 at p.17,637 although his Honour was not obliged to consider the respect in which s.84(1) had altered the position. Sub-section (1) does not require that the intention be that of someone possessing the directing mind and will of the corporation. It is 'sufficient' if that person be a servant or agent, though that is not to say that questions of authority may not arise.

However it is sub-s.(2) with which I am concerned. It is set out early in these reasons. In Universal Telecasters Bowen C.J. regarded that sub-section also as altering the position as it was discussed in Tesco; but again it was unnecessary for his Honour to pursue the point.

In the present proceedings counsel suggested that the court should look at the law as it stood before the Trade Practices Act (in the applicant's submission, on the basis of traditional concepts of agency; in the respondents' submission, having regard to the organic theory) and then consider whether the Trade Practices Act had made any difference to that law.

Such an approach is not always an appropriate way of approaching a novel piece of legislation as is the Trade Practices Act. Such legislation may contain ambiguities, it may leave gaps, it may use expressions that make it appropriate to resort to previous law. But if it is clear in its terms and is intended to be exclusive, there is no warrant for reading into it notions and concepts borrowed from earlier decisions.

In my view s.84(2) is not intended to be an exhaustive statement of corporate responsibilty under the Trade Practices Act. It deems certain conduct "to have been engaged in also by the body corporate" (emphasis added) so that that conduct by the director, agent, servant or owner person becomes as well conduct by the body corporate. It does not seek to make a corporation vicariously responsible; consistently with the theory expressed in Lennards Carrying Co. Ltd. and Tesco, conduct of those persons is conduct of the corporation.

I agree with the opinion expressed by Morling J. in Trade Practices Commission v. Queensland Aggregate Pty. Ltd. (1982) 44 ALR 391 at p.404 that s.84(2) "is not expressed to take effect to the exclusion of the common law" and that it "appears to disclose a legislative intention to extend, rather than limit, the liability of corporations for the actions of others". I would however read that last comment in the light of what is said in the preceding paragraph of these reasons.

Morling J. found it unnecessary to deal with a submission by the respondents that the phrase "on behalf of a body corporate" in s.84(2) necessarily implies benefit to the body corporate. His Honour commented at p.405:

"However, it is at least arguable that in some contexts 'on behalf of' means no more than 'for' or 'as agent for'".

In NSW Mutual Real Estate Fund Ltd. v. Brookhouse (1979) ATPR 40-104 at p.18,052 Franki J. thought that the words may not lend themselves to any general statement and that the answer to a question whether conduct was engaged in on behalf of a body corporate must depend upon the circumstances of the particular case. He added:

"It is difficult to think that the legislature intended s.84(2) to apply to a wholly unauthorised statement, made by a bystander with the implied consent of a servant of a corporation conducting retail stores who was employed only as a truck driver".

It is unnecessary to attempt an exhaustive statement of the meaning and operation of s.84(2) of the Act. However, some propositions may be advanced with reasonable confidence. To treat the phrase as implying benefit to the body corporate is to place an unwarranted restriction on the words used and is to ignore the general context of s.84 which otherwise shows an intention to extend the liability of corporations. In Re Ross (1980) 54 ALJR 145 at p.149 Stephen, Mason, Murphy and Aicken JJ. stressed the many possible relationships to which the words "on behalf of" may be applied, saying of the expression:

". . . it may be used in conjunction with a wide range of relationships, all however in some way concerned with the standing of one person as auxiliary to or representative of another person or thing".

And the words "do not necessarily imply that the transaction was with the actual authority of the person represented" (Otzen v. Beabout (1947) 75 CLR 116 at p.122).

Sub-section (2) of s.84 is concerned with the conduct of persons representing a body corporate and of others acting at the direction or with the consent or agreement of those persons. It makes that conduct the conduct of the body corporate. The terminology of s.84(2), the reference to conduct by "a director, agent or servant . . . or by any other person at the direction or with the consent or agreement . . . of a director, agent or servant . . . " is not the terminology of Tesco with its directing mind and will. It is more the conventional language of agency.

In my view s.84(2) is an extension of the principles expressed in Tesco and, where proceedings are brought under Part IV of the Trade Practices Act, a corporation may be held liable either in accordance with the principles in Tesco or by the application of s.84(2). In the latter case questions of the nature and scope of the authority of the representative will arise. The answers will depend upon the particular circumstances. And this is so although proceedings under Part IV are not criminal proceedings.

Counsel for the respondents submitted that where intention is an ingredient of conduct, said to be in contravention of the Trade Practices Act, s.84(2) has nothing to say. Counsel contrasted that sub-section with sub-s.(1) which deals expressly with the need to establish the intention of a body corporate in relation to Part V of the Act and in those circumstances makes it 'sufficient' to show that a servant or agent of the body corporate had the relevant intention. Sub-section (2) speaks only of 'conduct'.

Section 4(2) deals with various expressions used in the Act. Paragraph (a) reads a reference to engaging in conduct as a reference to

". . . doing or refusing to do any act, including the making of, or the giving effect to a provision of, a contract or arrangement, the arriving at, or the giving effect to a provision of, an understanding or the requiring of the giving of, or the giving of, a covenant".

Counsel for the Commission argued that intention is an aspect of conduct to which sub-s.(2) is applicable, notwithstanding the specific reference to intention in sub-s.(1).

There is some force in this argument but it fails to explain the presence of sub-s.(1) and it gives a wider meaning to the notion of conduct than the definition in s.4 allows. In my opinion sub-s.(2) is not concerned with a state of mind such as intention. Where that is a necessary ingredient of the conduct alleged, the responsibility of a body corporate under the Act (apart of course from proceedings to which Part V relates) must be determined in accordance with common law principles. Although conduct in contravention of Part V does not attract criminal liability, it does involve serious pecuniary penalities. In those circumstances it is appropriate to apply the test inherent in the Tesco case.

CORPORATE LIABILITY - TUBEMAKERS

If Mr. Bint's conduct evidenced an intention to bring about a contravention of s.45 of the Trade Practices Act, that was conduct for which Tubemakers must accept responsibility. That conclusion does not depend upon s.84(2) of the Act. If I am wrong in the view I have taken of the place of intention in that sub-section; the same conclusion is reached by its application.

Mr. Bint was regional manager, western merchandising division, of Tubemakers. Tubemakers' own organization chart places him within 'Top Management'. The company's directory deals with the merchandising divisions in these words:

"Merchandising is divided geographically into four divisions, each of which is responsible for the operations in its region".

Thereafter Mr. Bint is shown as regional manager of the western merchandising division. True he was subject to the direction of Mr. Daniels but, subject to that direction, he was responsible for the operations of the company in Western Australia.

Exhibit 21, a draft position summary for the position of regional manager, western merchandising division, was accepted by the respondents as a fair description of the position. It describes the basic purpose of the position in these terms:

"Plans and controls the activities of the division, and implements strategies in a manner that will achieve agreed levels of return and growth".

The emphasis in the document is on profitable development of divisional activities and the effective achievement of operating targets.

Mr. Griggs agreed that Tubemakers' price lists in the various states were fixed by the regional managers in conjunction with Mr. Daniels. Mr. Daniels said:

"I would regard it as my duty and right to agree on pricing policy frameworks".

But in regard to discounting policy, he acknowledged:

"The manager would have relative freedom to act in the market-place to quote discounts that would win him business".

There was no suggestion in the evidence of Mr. Griggs or Mr. Daniels that the memorandum of 20 July 1982 covered matters outside the scope of Mr. Bint's authority. I am satisfied that in delivering the memorandum to Mr. Achterberg, in speaking to him on 27 and 28 July and in speaking to the meeting on 29 July, Mr. Bint was for all relevant purposes the directing mind and will of Tubemakers.

As well he was a servant of that company and, in the events that took place, he was acting with the ostensible authority of Tubemakers.

Tubemakers is responsible for Mr. Achterberg's conduct, only in terms of s.84(2). Achterberg's actions at the meeting of 29 July 1982 were at the direction of Bint or at any rate with his consent. That consent was in my opinion express; if not it was certainly implied. But Achterberg was not the directing mind and will of Tubemakers and in so far as intention is an essential element of what is alleged against that company, it is not responsible for Achterberg.

CORPORATE LIABILITY - STEEL SUPPLIES

If at the meeting of 29 July 1982 the conduct of Mr. Achterberg evidenced an intention to bring about a contravention of s.45 of the Trade Practices Act, that was conduct for which Steel Supplies is responsible.

It was Achterberg who relevantly was the directing mind and will of Steel Supplies. Asked about the autonomy of that company's manager, Mr. Griggs replied:

"We try and give our managers . . . reasonable autonomy . . . they are responsible for the running of the business . . . I would see that they would be responsible for setting the price levels, discounts - if I can use it that way - to be used in the day to day orders as they come in".

In cross-examination Mr. Griggs agreed that Steel Supplies' pricing was in reality determined by Mr. Achterberg in consultation with his managers, and it was those managers who determined discounts subject to Achterberg's approval.

Although Mr. Bint had an overriding control of decisions made by Mr. Achterberg on matters of discounting, he was not and did not purport to be the directing mind and will of Steel Supplies at the meeting of 29 July. He was there in his capacity as regional manager of Tubemakers.

Whatever construction is placed on s.84(2), it will not operate to make Steel Supplies responsible for Bint. It cannot be said that he was a person acting at the direction, or with the consent of Achterberg. It was Bint who initiated the events that took place and, in speaking at the meeting of 29 July, he did so on behalf of Tubemakers. He was not speaking at the direction of Achterberg nor in any relevant sense with his consent.

Counsel for the respondents sought to draw a distinction between the fixing of discounts to be allowed on a day to day basis in transactions between Steel Supplies and individual purchasers and the negotiation of an agreement with other suppliers which would limit or control the amount of discount to be allowed. In drawing that distinction and arguing that the latter was outside the scope of authority, counsel relied upon an implied term in Achterberg's contract of employment :

". . . that he should not engage in any unlawful activity on the part of the company nor should he act on any instruction believed by him to be unlawful which was given to him".

In my view the distinction cannot be maintained. It may be assumed to be an implied term in every contact of employment that the servant or agent will not act unlawfully. And that will have consequences between employer and employee. Yet unlawful conduct has not been held inevitably to be outside the scope of employment.

On the contrary, if a servant or agent has authority to enter into transactions of the sort in question, it is no answer for a principal to say that in the particular circumstances the servant or agent acted wrongfully. Australian Brokerage Ltd. v. Australia and New Zealand Banking Corporation Ltd. (1934) 52 CLR 430 at pp.451-452. When the organic theory of corporate responsibility is to be applied there is, I think, even less room for the operation of the distinction.

BINT'S LIABILITY

The respondents submitted that s.76 of the Act is ancillary to s.45 and should be read, so far as an individual is concerned, as limited to the extended operation of the Act given by s.6(2). Counsel submitted that a contravention of s.45 may only be committed by a corporation and that there was no attempt by Tubemakers or Steel Supplies to contravene the Act.

The case against Mr. Bint is that he attempted to induce Steel Supplies to contravene s.45(2)(a), conduct which if substantiated would bring him within para.(d) of s.76(1). There was no attack upon the constitutional validity of s.76 so that the only question, so far as Mr. Bint is concerned, is whether the allegation was sustained.

WAS THERE AN ATTEMPT TO CONTRAVENE S.45?

I accept, as already indicated, that there was no attempt to contravene s.45 unless those involved had the relevant intention, that is that they acted with the purpose of bringing about a result - in this case an arrangement or understanding that had the purpose or would have or be likely to have the effect of substantially lessening competition. The respondents did not contend that an arrangement or understanding whereby the discounts to be offered by steel merchants would be controlled was not a contravention of s.45(2).

The respondents argued that the conduct of Achterberg went no further than an unilateral statement of what Steel Supplies intended to do. In their submission the publication of a price list by Steel Supplies, even with the addition of a statement of the discounts the company was prepared to allow, could not be seen as an attempt to arrive at an arrangement or understanding about prices. They agreed that objective circumstances from which inferences might be drawn could properly be taken into account but said this must be weighed against the subjective intention of the persons whose conduct was the subject of inquiry.

With much of this submission there can be no argument. But it is by no means the entire picture. There can be no doubt that the meeting of 29 July 1982 was called for a special purpose. It was called on the initiative of Mr. Bint in a situation where competition between steel merchants, in particular the so called aggressive conduct of Steel Supplies, was a matter of concern to the merchants. While neither Mr. Daniels nor Mr. Griggs knew in advance of the meeting, I think that Mr. Griggs' remarks to Mr. Bint, relayed to Mr. Achterberg, were the catalyst for what happened thereafter.

Mr. Bint's memorandum to Mr. Achterberg emphasised that profitability lay in the improvement of margins and that margins had fallen away because of competition. It was not a document intended only for consumption by Achterberg. At the meeting between Bint and Achterberg on 27 July and at the meeting between Bint, Achterberg and Symes on 28 July Bint stressed that steps taken by Steel Supplies were likely to be followed by other merchants. And it is clear that these statements were made in the context that a meeting of merchants was to take place on 29 July. The conclusion is, I think, inevitable that Mr. Bint spoke in terms of what the meeting of 29 July was to be told. That is confirmed by what he said at that meeting, including the statement recalled by Mr. Towns that agreement should be reached on discounts because it was impossible to operate at current prices. The letter Mr. Bint wrote to Mr. Daniels on 13 September 1982 lends support to the proposition that Bint was seeking agreement on discounts even if later realised that he may have gone too far.

I am satisfied that by his conduct Mr. Bint attempted to bring about an arrangement or understanding the purpose or likely effect of which was substantially to lessen competition. That was conduct for which Tubemakers and Mr. Bint must accept responsibility.

I am also satisfied that by his memorandum to Mr. Achterberg, and the discussions he had with him thereafter, Mr. Bint attempted to induce Steel Supplies through Mr. Achterberg to bring about such an arrangement or understanding. That is conduct for which Tubemakers and Mr. Bint must accept responsibility.

I am further satisfied that by his statements at the meeting of 29 July Mr. Bint attempted to induce the merchants present to reach an understanding or make an arrangement that discounts would be controlled. That is conduct for which he and Tubemakers must accept responsibility.

As to Mr. Achterberg, whatever doubts he had about the likelihood of the other merchants acting on his statements at the meeting of 29 July, he did not make those statements as "full of sound and fury, signifying nothing". He was, in my view, seeking to give effect to the need for agreement stressed by Mr. Bint at the earlier meetings. He may indeed have gone further than Mr. Bint had expected him to go. And undoubtedly he had misgivings immediately after the meeting. But I am satisfied that in speaking as he did he attempted to bring about an understanding or agreement whereby discounts would be controlled and that he attempted to induce other steel merchants to do likewise. That was conduct for which Steel Supplies must accept responsibility.

CONCLUSIONS

The conclusions I reach are as follows :
1. That the first respondent attempted to contravene s.45(2)(a) of the Trade Practices Act, attempted to induce the second respondent to contravene s.45(2)(a) of the Act and attempted to induce other steel merchants to contravene s.45(2)(a) of the Act as alleged in the statement of claim.
2. That the second respondent attempted to contravene s.45(2)(a) of the Act and attempted to induce other steel merchants to contravene s.45(2)(a) of the Act as alleged in the statement of claim.
3. That the third respondent attempted to induce the second respondent to contravene s.45(2)(a) of the Act as alleged in the statement of claim.
The question of the penalties to be paid by the respondents to the Commonwealth and the question of other relief sought by the applicant will be adjourned to a date to be fixed.