46]7) Tou Yes -\ FEDERAL COURT OF REGISTRY co" Li - Trade Practices - Giving effect to arrangement or understanding in restraint of trade - Whether act done in relation tc remuneration of employees or by an vorganization of employees - Whether making arrangement or eutering into understanding is an "act" - When act msfield Pty. Limited v. Leviand Motor Corsoration of dustralia Limited No. G 40 cf 1977 Q 3 fe) Sree Bowen C.J., Northrop wid Meane JJ. Fepey YUL IN THE FEDERAL COURT OF AUSTRALIA C AUS COUR : Alig NEW SOUTH WALES DISTRICT REGISTRY ) No. G 40 € 197 Petr < GENERAL DIVISION SL ON APPEAL FROM a single Judge of the Federal Court of Australia BETWEEN: AUSFIELD PTY. LIMITED Appellant AND: LEYLAND MOTOR ~CORPORATI LON OF SANT AUSTRALIA Lik Responden= hem ee CORAM: BOWEN C.3., NORTHROP AND DEANE ¢ 22nd July, 1977 JUDGMENT BOWEN C.J.: This matter is urgent. For that reason we have not taken the time to consider our reascns in detaii and tc formulate them in writing, as otherwise we might have done. We propose to give oral judgment. Ausfield Pty. Limited, the appellant, brought proceedings against Leyland Motor Corporation ef Australia Limited, the respondent, seeking an injunction under s.€0 of the Trade Practices Act 1974, The relief sought was directed towards restraining the respondent trom giving effect to an arrangement or understanding between the respcendent and The Federated Storemen and Packers Unicon of Australia which was to the effect that the respondent would refrain from supplying the 2opellant with automotive parts and accessories. Additionai relief was sought in the nature of an injunction based on s.46 of the Trade Practices Act relating to monopolisation but this aspect of the case has net been argued on this appeal. The matter, which was commenced on 23rd June 1977, was heard by Franki J. on 29th June 1977. His Honour refused the injunctions sought and dismissed the proceedings. It is against his Honour's decision that this appeal is brought. The facts are set out in the reasons for judgment of the learned trial Judge. 1 shall not recapitulate them. His findings of fact were not challenged. I should, however, add that two further facts were agreed between the parties in © by the course of the appeal and were admitted by the Court. These were that no inembers of The Federated Storemen end Packers Union were employed by the respondent and that the conduct described the in the affidavits filed in the oroceedings, including t Mm re bh. < 1?) be refusal by the respondent to < parts and accessories to the appellant, has continued up to the vresent time and is continuing. Evidence was given before the learned trial Judge of a "deal" between the respondent and The Federated Storemen and Packers Union or those acting in its name whereby the union would lift a ban which it had placed upon the delivery of automotive parts and accessories to the respondent, if the respondent would cease to supply its parts and accessories to the appellant. The learned trial Judge found that this constituted an arrangement or understanding and assumed for the purposes of his judgment without deciding that it was in restraint of trade within the meaning of s.45(2) of the Act and that in giving effect to it the respondent acted in contravention of s.45(2)(b) unless saved by the operation of s.51(2)(a). His Honour went on to hold that the making of that arrangemer.t or the entering into that understanding was within the terms of 5.51(2)(a} because it was an act done by the union in relation to the remuneration of employees. The consequence of this holding was that he considered the act of making the arrangement or entering into the understanding should be disregarded for all purposes. His Honour expressed the matter in the following way:- "Since I am not to have regard to this act, I consider that it has not been established that the respondent made an arrangement or entered into an understanding in contravention of s.45(2)(a). It requires the act of two parties to make an arrangement or enter inte an understanding. I also consider that the provisions of 5 .L5(2)(b) are not epplicable because in view cf the provisions of s.51(2)(a) it has not been established that there was any arrangement cr andertaking to which the respondent was prohibited from giving effect and no conduct which has constituted or would constitute a contravention of s.45(2)(b) has been established. It is therefore unnecessary to consider whether any understanding cr arrangement was in restraint of trade or commerce." i should mention that it appears from the evidence oO before his Honour that the arrangement or understanding was in pestraint of trade or comnerce within s.45(2)(b) and was not excluded by the provisions of s.45(4). I so conclude. Returning to the argument on the appeal, Counsel for the appellant submitted that the learned trial dudge was in error in his application of s.51(2)(a}. While conceding that the union was motivated by the desire to sirengthen its claim against the appellant for increased remuneration for those of its members who were employed by the appellant, and that an economic consequence of the respondent's giving effect to the arrangement or understanding would be to stre:.gthen the hand of the union in its negotiations with the appellant, Counsel argued that this relationship to remuneration of employecs wes not the kind of relationship contemplated by s.51(2)(a). Tie argued that the motives of the union were irrelevant and the economic consequences were an end result only and not such a direct relationship as was referred to by the terms of s.51(2)(a). He referred to In Re Scottish Daily Newspaper Societies Agreement (1956) L.R. 7 R.P.C. 379 at pp.399-400, un "sI to United Mine Workers of America v. Pennineton 381 L.8. 6 RO at pp.661, 663, 668 and to Meat Cutters Union v. Jewel Tea Co. 38% U.S. 676 at pp.687-688. It is to be noted that the learned trial Judge was not referred to any of these authorities. In my view the argunent advanced for the appellant on this aspect of the matter in the light cf these authorities is correct. The necessary relationship does not exist which would bring tnis case within the first part of s.51(2)(a). However, s.51(2)(a) in its latter part refers aiso te any act done by an organisation of employees not being an act done in the course of the carrying on of e business of the employer of those employees or of a business of that organisation. Even if the making of the arrangement or the entering into the understanding would not have the necessary direct relation to remuneration of employees, it would appear to be an act of an organisation of emplovees within the latter part of s.51(2)(a). There is a more fundamental objecticn to the appliéation of s.51(2)(a). When this section refers to "any act done", the words appear to nme to be inappropriate to refer to the complex operation of making a contract cr arrangement or entering into an understanding. These may be brought about by oral communication, by writing or by conduct or by a combination cf these. One might have expected something more than a reference to "any act dons" to refer to that situation. That this was in the mind of the draftsman is suggested by the definition of "conduct" in s.4(1) of the Act. This is as follows: "tConduct' when used as a noun includes doing, refusing to do or refraining from doing any act, including making a contract, or arrangement or entering into an understanding." Had it been in mind that the phrase "any act" was apt to include the making of a contract or arrangement or the entering intc an understanding, it would appear to have been unnecessary to have added the last part of the cefinition of "conduct". Regarding the matter another way. had it been intended to cover that situation it could readily have been done in s.51(2)(a) by using the word "conduct". As the matter stands, itappears to me that the words "any act done" in s.51(2)(a) are inapt to cover the making of the arrangement or entering into the understanding of which evidence has been given in this case. The appellant alsc submitted that the approach £ the learned trial Judge in applying s.51(2)(a), which is fe) flected in the above quotation from his judgment, was incorrect. o His Honour, having held that the act of the union in making an arrangement or entering into an understanding had to be disregarded, concluded that it had to be treated es if the arrangement or understanding had not been reached at all. The appellant contested this approach. Having regard to the history and the terms of s.51(2)(a), it appears to me to be directed to giving pretection to a union against the application of the Trede Practices Act in the circumstances stated. It is not directed to protecting those who deal with the union in those situations. If the protection does extend to parties dealing with unions in those situations, this would appear to be an unintended consequencs and one which, indeed, in the light of the American authorities, could lead to an abuse of agreements with unions, cutting down the effectiveness of the Act. It is important to notice that the secticn does not require the Court to deem the act not to have heen done. All the section requires is that in determining whether a contravention has occurred, regard wili not be had to the act in question. It appears to me that this wording relates to the situation where the particular act is directly involved in the contravention which has to be determined. Where it is a aifferent act which is under consideration in determining whether a contravention has occurred and the act of the union is merely an essential ingredient in the proof, or a step which requires to be proved, to shew that some other act is a contravention, it does net apocar to me that the Court is obliged not to have regard to the existe nee of any arrangement or understanding which has resulted from that particular act but which is not directly and immediately in question as a contravention, In the resuit I have reached the conclusion that the appeal should be upheld. I shculd mention, however, that sincs tne matter was heard by the Jearned trial Judge on 29th June substantial amendments have been made to the Trade Practices Act. These amendments came into force on 1st July 1977. Had the amendments been such that the appellant would not on the facts proved in this case have been entitled to relief under the Act as amended, a serious question would have arisen whetner the Court should, as a matter of discretion, grant the injunction sought Tnis matter has not been fully argued before us, but some reference has been made to it. Having regard to the provisions of the amending Act to which our attention has heen drawn, I am of the opinion that the pesition of the appellant would not be weaker than it was under the old Act. In these circumstences I propose that the orders of the Court should be in terms of the orders set forth in paragraphs 71, 2 and 5 ot thie ncevtice of appeal, subject to this qualification, that the references to "contract" in paragraph 2 should be deleted. NORTHROP J.: I agree with the orders proposed by the Chief Judge for the reasons he has expressed and I have nothing further to add. BOWEN C.J.: I have indicated the orders which I propose. Those will be the orders in accordance with the majority view. I give an opportunity to representatives to address the Court upen them, if they wish to do so. I do not know whether the appellant is pressing for an order for costs as asked in paragraph 5. TIney would normally follow the event. MR. JOHNSTON: We do seek an order for costs. BOWEN Cod .: i will read the orders which the Court now makes. The orders will be: 1. <Appeal allowed, judgment and crder appealed from set aside. 2. That the respondent be restrained from giving effect to an arrangement or understanding between the respondent and The Federated Storemen and Packers Union of Australia which arrangement or understanding is to the effect that therespondent will refrain from supplying the appellant with automotive parts and accessories required by the appeliant to enable it to carry on business as a distributor of automotive parts and accessories for the complete range of motcr vehicles manufactured by British Leyland Limited of the United Kingdom or assembled in Australia for or by the respondent and in either case distriluted by the respondent in Australia with the exception of those parts and accessories for heavy duty commercial vehicles and buses contrary to the practice of the respondent prior to 9th June 1977 and contrery to the provisions of s.45 of the Trade Practices Act 1974. 3. That the respondent pay the costs of the appellant of this appeal and of the proceedings before the trial Judge. AT 10.50 A.M. THE COURT ADJOURNED SINE DIE. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) EY RECEIVED tA Z pi: ) No. G-40 of 1977 AUSFIELD PTY. LiMITlLD . F D ra es E : te EER. count oF 4 BETWEEN: LIA |2 Z o REASONS FOR _JUDGM Appellant LEYLAND MCTOR CORPORATION OF AUSTRALIA TIMT PED Respondent ont tN ak DEANE J The evidence before the learned trial Judge established that the respondent's continuing refusal to supply automotive parts and accessories to the appellant was in pursuance of an arrangement between the respondent and The Federated Storemen and Packers' Union of Australia to which I shall refer as "the Union" In essence that arrangement was that tne union would lift a ban on its mewbers handling the respondent's gocds at the Chuliora Container Depot and that the respondent would refrain from suppl. ing automotive parts and accessories to the appeilant. That arzangement was an arrangement in restraint of trade. The respondent's refusal to supply parts and accessories to the appellant, which, we were informed on the hearing of the appeal, continues, was and is a continuing giving effect to that aurrange- ment or understanding in restraint cf trade. On the cviderce it is clear that the effect of the respondent's refusal to supplv, upon competition between the appellant and itself, is significant While I am in general agreement with the approach adopted by the learned trial Judge to the operation and effect of s.51(2) (a) of the Trade Practices Act, 1974 in the form in which it existed at relevant times up to lst July, 1977, I am ti) ment not, aS at present advised, persuaded that either the arranges in restraint of trade between the respondent ard the union or the action of the union in becoming or remaining a party to that arrangement, can properly be categorized as an act done "in relat to" the remuneration, conditions of emmloyment, hours of work or working conditions of employees within tne provisions of s.51(2) It is true that the indirect objective which the union sought to achieve by entering into the arrangement and procuring a refusal by the respondent to supply the appellant was to bring pressure upon the appellant to agree to increased remuneration and improved conditions of employment for the union members who are employees of the appellant. As at present advised however, I am of the view that an act cannct be said to be done in relatic to the remuneration or conditions of work ofr employees for the purposes of s.51(2) (a) wniess the relevant relationship is direct and immediate. The deing by the Union of the acts involved in becoming and remaining a party to the arrangement, or giving effect to it, did not, in my present view, have any direct or immediate relationship with the remuneration or conditions of wor of employees. It is, however, unnecessary for me to express any concluded view on this question for the reason that I have reache the conclusion that the learned trial Judge's view that, in deciding whether there had becn a contravention of s.45(2), ne should not have regard to the acts of the Union or of those actir in its name in making the relevant arrangement, was, in any event correct. His Honour was in my view obliged to disregard those ac by reason of the express reguirement of s.51(2) (a) (in the form i which it existed up until ist July, 1977) that, in determining whether a contravention of s.45 had been committed, regard shoulc not be had to any act done by an organisation of employees ctner than an act Gone in the course of the carrying on of a husiness of that organisation. The evidence clearly indicates that the Union is ar organisation Gf employees. Such an organisation can only act. through its officers or other persons acting on its behalf. The relevant acts of the Unicn, or of its New South Wales branch, or ? Matter to establish the relevant arrangement certainly involved such concerted activity. In essence, the relevant acts were the act of the Union in proposing that it would permit its members to handle the respondent's goods provided that the respondent refrai ed from supplying parts and accessories to the appellant and the act of the respondent in accepting that proposal. The whole point of the evidence establishing those acts was to establish a contravention of s.45(2). Section 51(2) (a) precluded, in the determination of whether such a contravention had been committed, regard oeing had to any relevant acts of the Union. I agree with the conclusion of the learned trial Judge that, unless regar is had to relevant acts of the Union, the evidence does not estab lish any actual or threatened contravention of s.45(2). I am conscicus that the view that, in the determination of whether a contravention of any provision of Part IV other than s.48 (now s.45D and s.48) has been committed, s. 51(2) (a) reouizre ignoring any act of the specitied type regardless of whether the act itself constitutes the alleged contravention or whether the act was done by the alleged contravener, involves giving a wide operation to s.51(2) (a). That wide operation of s.51(2) (a) necessarily follows, in my view, from the clear words used and I can find nothing in the context of those words or in the genera policy of the Act which justifies giving them other than their fuli effect. Indeed, when it is appreciated that a Union will ordinarily not be a corporation for the purposes of the Trade Practices Act and will therefore not be capable of itself contra- vening these provisions of Part IV in respect of an alleged conti vention of which s. 51(2} (a) is relevant, the view that the Girec to disregard an act cf an oryanisatiion of employees was only applicable when the alleged contravention was by the organisation 4. itself would deprive the directive of much of its content. The requirement that, in the specified circumstances, regard be not had to the act of an orgnisation of employees was removed from s.51(2) (a) by the amendments which became effective on lst July last. As at present advised, I am inclined to agree with the views of the Chief Judge and my brother Northrop that the admitted actions of the respondent since Ist July; 1977 constitute a continuing breach of the provisions cf s.45 of the Trade Practices Act. The views which I have formed on anterior matters however prevent that question arising for direct decisior by me in the present matter which was dealt with by the learned trial Judge, at the request of both parties, cn the basis of the he neard it. Sir a law in the form in which it existed at the tim the matter was not argued from the respondent's sida before us and may well arise for direct decision in subsequent preceadings against the Union or its officers who were not parties to tha present matter, I refrain from forming or expressing any conclude view on it at this stage. I would dismiss the appeal with costs. Lalo' ma cre FRAL COURT CF AL ON HE PE NEW, SQUTH, MALES, ..... DT GENERAL... esse eee DIVISION ON_APPEAL FROM a single Judge of the Federal Ccu: or Australia Ho. G .40.. of 1977 ee ed z C 14, "ye is) i Oo BETWEEN oo: ANS Serer sree eacrae ee ee ee ee ee ee ee ey LEYLAND MOTOR CORPORATION OF rere eres ie re AUSTRALIA LIMITED eee ee one ree eee sereceersereestore AND cele doce esse RESVONGGIT. wee ceee NG ORDER : ROWEN, C.J., NORTHROP AND DEANE JJ. ATE OF CRDER : 22nd July, 1977 : WHERE MADE : Sydney ' THE COURT ORDERS THAT: Vere ia ite) sTALe side, 1.Appeal allowed, judgment and order appealed from set a 2.That the respondent be restrained from giving effect to an arrarg or understanding between the respondent anc The Federated Storemen Packers Union of Austrailia which arrengene) t or uncerstanding is <0 effect that the respondent will refr ng ppellan with automotive parts and acc essories e ne a to it fe carry on business ag @ distritutor of ive 2 sories fcr the complete range of mctor veni } Leyland Limited of the United Kingdom or as by the respondent and in either case distrivated py the re Australia with the exception ct those perts and accessories for hr _ duty commercial vehicles and buses contrary to the practice of t respond. ent prior te 9th Tune 1977 and contrary to the provision the Trade Practices Act i375. : 3.Shat tre resnsndert? way Taé Cosi, of tne appellant cf this' e 7 the pro ecuings: before the trial Judge. — Date entered: ZO Sd