Traztand Pty Ltd v Bousfield, Ron

[1984] FCA 290

Re: TRAZTAND PTY. LTD.
And: RON BOUSFIELD, RICHARD HYDE and WILLIAM KAYES
N.S.W. No. G 301 of 1984
(1984) ATPR para 40 - 484
Trade Practices

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.

CATCHWORDS

Trade Practices - Insurer inducing State Rail Authority to breach an agreement with a repairer.

Practice and procedure - interlocutory injunction - applicable tests.

Trade Practices Act 1974 s.45D

HEARING

SYDNEY

#DATE 5:9:1984

ORDER

Upon the Applicant by Counsel giving an undertaking to pay to any party adversely affected by the interlocutory injunction such compensation (if any) as the Court thinks just, in such manner as the Court directs.

THE COURT ORDERS THAT:

1. Until the hearing and final determination of this application or until further order:

(a) the Respondents and each of them be restrained from

engaging in conduct that hinders or prevents the State Rail Authority of New South Wales from having its motor vehicles repaired by the Applicant

(b) the Respondents and each of them discontinue and

withdraw all directions and requests made by each of them to the State Rail Authority of New Wales that it should not have its motor vehicles repaired by the Applicant

(c) the Respondents and each of them be restrained from

inducing or attempting to induce the State Rail Authority of New South Wales to cease from having its motor vehicles repaired by the Applicant.

2. Liberty to apply.

3. Costs of the motion reserved.

JUDGE1

I propose to make some form of interlocutory order and keeping in mind that this is an interlocutory application only, it is undesirable that I should express any final and concluded views on the matter. Nevertheless it is necessary that I say something as to the reasons why I propose to make the orders. In so doing I will take into account some of the matters which I have expressly stated in the course of submissions and of which I have been satisfied one way or the other.

1. The applicant is a corporation within the meaning of the Trade Practices Act 1974 and it carries on the business of a motor vehicle repairer under the name Westfield Auto Body Repairs at 20-22 Tangerine Street, Villawood, a suburb of Sydney. As part of its business it has an arrangement with the State Rail Authority of New South Wales in respect of repairs to motor vehicles owned by that authority and which have been damaged. The arrangement is one of which the Court has not much detail but it appears that the arrangement is one where the authority delivers damaged motor vehicles to the applicant for repair. The repairs are paid for eventually by the Government Insurance Office of New South Wales, an insurer which insures the majority of motor vehicles in the State of New South Wales.

2. The practice has been operating for quite some time, and the arrangement that an unspecified number of vehicles would be delivered averaging in the past at about three vehicles per week is to continue for some time into the future.The quotations for the work or accounts for the work were not processed normally by the State Rail Authority but were sent to the Government Insurance Office and paid by that office to the applicant.

3. In May 1984 a vehicle owned by a Mr. Belmonte had been damaged in a motor car accident and the repairs were carried out by the applicant, apparently pursuant to a contract between the applicant and the Government Insurance Office, whereby a quotation had been given by the applicant, accepted by the Government Insurance Office, and repairs carried out. Part of the work which should have been carried out was the provision and installation of a new axle on that vehicle. That new axle was not in fact installed into the motor vehicle and it was delivered to Mr. Belmonte without that work having been completed. I do not find it necessary to go into details as to how this came about. It is sufficient to say that there is conflicting evidence concerning it in the various affidavits. In any event, some time after that, while the vehicle was being driven, the wheel came off or the axle came out and another accident occured.

4. The Government Insurance Office adopts a practice of what is called suspending motor vehicle repairers. Whether this is a correct description of what occurs or not is immaterial. The effect of it is that if the Government Insurance Office considers a repairer has not done repairs properly or sends back cars, including cases where cars have been returned in an unsafe condition, it places that repairer on what can be described as a black list which is circulated among people within the Government Insurance Office. The effect of the black list or suspension is that the Government Insurance Office will not accept quotes from those repairers on that list for various periods of time, the time of the suspension being set out in the list which is circulated.

5. As a result of what had occured with Mr. Belmonte a number of employees of the Government Insurance Office gave effect to that policy of the Government Insurance Office. The three respondents to the present application, Mr. Bousfield, Mr. Hyde and Mr. Kayes, were three of those persons so involved. Details of what occured are set out in various affidavits filed on behalf of the applicant, namely the affidavit of Mr. Mittiga who is the managing director of the applicant, the affidavit of Mr. Best who is an insurance clerk employed by the State Rail Authority, the affidavits sworn by each of the respondents and the affidavit sworn by Mr. Ison, who is the chief manager of the domestic insurance division of the Government Insurance Office of New South Wales. Of the three respondents Mr. Bousfield holds the position of chief loss assessor for the Government Insurance Office of New South Wales. Mr. Hyde holds the position of senior motor vehicle loss assessor for the Parramatta region of that insurer and Mr. Kayes holds the position of acting motor vehicle manager for the Government Insurance Office. There is some conflict in the material and in the oral evidence given by those deponents but for present purposes I do not need to go into any detail as to those conflicts. It is sufficient to say that arising out of the actions taken by those three respondents a letter was written to the State Rail Authority, signed by Mr. Kayes as acting motor vehicle manager and written on the recommendation of Mr. Bousfield, as follows, and I quote:
   
   

"Re Westfield Auto Body Repairs.

Reference is made to recent discussion regarding the above motor vehicle repair firm.

The GIO is not prepared to accept quotations from this firm until further notice.

A list of Recommended Repairers has been attached as requested by you."

1. The various conversations referred to in that letter were in substance (and I summarize the effect of them) that the people who spoke to the State Rail Authority officers said that they would no longer agree to enter into contracts with the applicant, the effect of which was that the State Rail Authority would no longer send its damaged motor vehicles to the applicant, thereby depriving the applicant of the steady source of repair work which had been carried on in the previous months. As a result of that action it is quite clear that the applicant has suffered substantial loss or damage.

2. Under these circumstances the applicant brings proceedings pursuant to sub-section (1) section 45D of the Trade Practices Act 1974. The relevant provisions are as follows:
   
   

"Subject to this section, a person shall not, in concert with a second person, engage in conduct that hinders or prevents ... the acquisition of ... services by a third person from a fourth person ... where ...

(a)...

(ii)the conduct is engaged in for the purpose, and would have or be likely to have the effect, of causing-

(A) substantial loss or damage to the business of the fourth person;

..."

1. Reference is made also to sub-section (2) of section 45D which provides in substance that for the purposes of this section a person shall be deemed to engage in conduct for a purpose mentioned in that sub-section if he engages in that conduct for purposes that include that purpose.

2. Counsel for the respondents has argued on four main grounds that a case has not been made out and that no interlocutory injunctions should be granted. In considering this matter I propose to adopt the test referred to by the Chief Justice of the High Court in The Australian Coarse Grain Pool case (1982) 57 A.L.J.R. 425 which to some extent departed from the earlier test referred to in the Beecham case (1968) 118 C.L.R. 618 and adopted the less onerous test which has been receiving acceptance in England and for this purpose, to inquire whether there is a serious question to be tried. That is sufficient for the first step in deciding whether an interlocutory injunction should be granted; and secondly, if such a serious question does exist, the question of convenience.

3. In this regard I propose to adopt an approach which has been adopted in the Supreme Court of Victoria and which I have applied in a number of cases in the Federal Court of Australia. The relevant passage appears in a judgment of the Full Court of the Supreme Court of Victoria in the case of Magna Alloys and Research Pty. Limited v. Coffey (1981) VR 23 at page 28. In that case the Victorian Supreme Court applied the first test as laid down in the Beecham case and to that extent there is departure from the present case where the more recent views of the Chief Justice are to be applied, but in this regard in a combined judgment the Full Court said:
   
   

'In Slater Walker Superannuation Pty. Ltd. v. Great Boulder Gold Mines Ltd.(1979) VR 107, in considering a similar problem Lush, J. said, at (1979) V.R. p.110: "The weight to be given to the various considerations shown by the authorities to be relevant will vary from case to case. All the authorities say in one way or another that the plaintiff must show he has a chance of success before he will be granted an interlocutory injunction. The authorities refer to the use of the injunction for the purpose of maintaining the status quo or maintaining a state of affairs which is on the balance of convenience appropriate to be maintained until the trial. They refer to avoiding irreparable harm to the plaintiff. There will be situations in which the plaintiff cannot expect to be granted an injunction unless he can show that he can prove positively the existence of his rights and the infringement of them. There will be other situations in which though the plaintiff's proof of his rights or the infringement of them is not strong, an injunction may be granted because to withhold it would do the plaintiff irreparable harm, while to grant it would not greatly injure the defendant. The possible variety of situations is unlimited." '

1. It is in the light of these general principles that I now consider the application of the law to the facts. Here the first question is whether the respondents have engaged in concert in conduct that hinders or prevents the acquisition of goods or services by a third person from a fourth person. In this sense, the fourth person is the applicant, the third person is the State Rail Authority, and the first and second persons incorporate all the respondents and each of them.

2. Under the general policy provisions of the motor vehicle insurance policy terms there is a proviso to the effect that the Government Insurance Office:
   
   

"... may at its option as far as circumstances permit and in reasonably sufficient manner repair reinstate or replace the vehicle or parts thereof or in respect of all claims arising out of any one event pay the amount of the loss or damage not exceeding ..."

certain specified provisions. There is also another condition of the terms to the effect:

1. "3. The insured shall not authorize the
   

repair of the damaged vehicle without the consent of the Office."

1. Counsel for the respondents has argued that the proviso gives an option to the office either to enter into a contract with the repairer to effect repairs or to reimburse an insurer who has undertaken the repairs at his own expense, provided always that the amounts involved are no greater than that would be otherwise payable. It is argued that the insurance company or the insurance office has a discretion and that it is quite entitled to refuse to enter into contracts with particular repairers. In my opinion that is not an issue which needs to be decided at this time, and in this regard the matter is not pressed in relation to other insured persons who are referred to in the material before the court.

2. In the present case more than that has been done. There has been active conduct by the respondents directed to the State Rail Authority in substance saying, no more jobs to this particular repairer. In my opinion each of the respondents has engaged in conduct in concert within the meaning of the first paragraph of section 45D. The fact that they are all employees of the Government Insurance Office, which is not a respondent to the decision, is immaterial. They, as individuals, are persons who engaged in that conduct.

3. Likewise for the present purposes I am not satisfied that the Government Insurance Office or its employees are entitled to the shield of the Crown so as to be outside the provisions of the Trade Practices Act, and I will deal later with the question of impossibility of compliance, which is the other argument put in relation to this matter.

4. The next requirement is that this conduct has been entered into or engaged in for the purpose and would have or be likely to have the effect of causing substantial loss or damage. The use of the word "purpose" in this context does give rise to difficulties. These were adverted to in Nauru Local Government Council v. Australian Shipping Officers Association (1978) 27 ALR 535 at pages 544 to 545. The matter is also discussed by Deane, J., then a member of the Federal Court of Australia, in Tillmanns Butcheries Pty. Limited v. Australasian Meat Industry Employees@ Union (1979) 27 ALR 367 at pages 382 to 383.

5. The difficulty in the present case is whether the conduct was entered into for the purpose of causing substantial loss or damage to the applicant. It is argued very strongly that here the purpose was to ensure a high standard of work being performed by motor repairers and that because of the policy which has been adopted by the insurance office there has been a marked improvement in the standard of repair work being carried out over the past few years and that the sole purpose for engaging in this conduct was to maintain that high standard of repair work.

6. That may well be right, but I am not satisfied and in fact I should go the other way that I am satisfied that there is an arguable case on the material before the Court that a purpose of this conduct was to cause substantial loss or damage to the business of the applicant.

7. The whole of the conduct entered into, and in substance the whole of the policy, seems to be for the purpose or at least have as a purpose, the inflicting of punishment or penalties on persons, repairers, who have not carried out work satisfactorily. This is illustrated amongst other things by a period of suspension and the placing of repairers on a black list which is often for a specified time. In other cases it may be unspecified, but the mere fact of specifying a period has all the hallmarks of being a penalty or a punishment for something which has been done.

8. For the purposes of interlocutory proceedings and applying tests already referred to, I am satisfied that the applicant has an arguable case and on the material can establish a purpose within the meaning of section 45D(1)(b)(i). There is a serious question to be tried.

9. It is also argued on behalf of the respondents that any injunctions made were impossible to comply with because the respondents were not persons who could re-order, as it were, that the insurance office enter into new contracts. This is the impossibility of compliance argument which was referred to earlier.

10. From material before the Court I am satisfied, in the requisite sense, that the three respondents are the ones who imposed the restrictions on the State Rail Authority in regard to its arrangement with the applicant. I am satisfied also that they can remove those restrictions. Whether this would affect the Government Insurance Office in entering into other types of contracts with the applicant may need to be determined in other proceedings or pursuant to any liberty to apply which the order will include. But for present purposes it seems to me there can be no reason why orders cannot be made in a form similar to paragraphs 1, 2 and 5 of the draft orders handed in on behalf of the applicant earlier today.

11. They are officers or employees of the respondent and they have engaged in conduct. What is to be restrained is a continuation of that conduct and to place the parties back in the position they were in before the conduct was engaged in. I see no difficulty in giving effect to the orders to be made by the persons against whom those orders are to be made.

12. Counsel for the applicant has indicated that he is prepared to give the normal or usual undertakings as to damages, and subject to that undertaking being given I will make orders as follows:
    
    

(1) that the respondents and each of them be restrained from engaging in conduct that hinders or prevents the State Rail Authority of New South Wales from having its motor vehicles repaired by the applicant;

(2) that the respondents and each of them discontinue and withdraw all directions and requests made by each of them to the State Rail Authority of New South Wales that should not have its motor vehicles repaired by the applicant;

(3) that the respondents and each of them be restrained from inducing or attempting induce the State Rail Authority of New South Wales to cease from having its motor vehicles

repaired by the applicant.

1. Those orders are to remain in operation until the hearing and determination of the application or until further order, and there will be liberty to apply.