wlan areetcnty am ame erat 05 r atantantinse ahh preareante Liveneineatbt® terres Bere etal ben, CATCHWORDS Trade practices - resale price maintenance - attempting to induce dealer not to sell at prices less than those specified - withholding of supplies of goods - procuring associated company to withhold supplies - review of penalty and injunction by appellate court -— Trade Practices Act 1974 ss.48, 96(1), (3), 98(1). Pye Industries Sales Pty. Limited v. Trade Practices Commission G. No. 157 of 1978. Coram: Smithers, J.B. Sweeney and Northrop JJ. 17 August 1979 Sydney + Yr nee + 2 FEDERAL COURT OF AUSTRALIA ) «IN TH ) NEW SOUTH WALES DISTRICT REGISTRY No. G. 157 of 1978 GENERAL DIVISION BETWEEN: PYE INDUSTRIES SALES PTY. LIMITED Appellant AND: TRADE PRACTICES COMMISSION Respondent ORDER JUDGES MAKING ORDER: Smithers, J.B. Sweeney and Northrop JJ. DATE OF ORDER: 17 August 1979 WHERE MADE: Sydney The Court orders that: 1. 3. The injunction granted on 29 November 1978 be discharged. Otherwise the appeal be dismissed. The appellant pay to the respondent one half of its costs of and incidental to this appeal. te ee re ne ne ee pre ner ents enn na me penn: a *IN THE FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY No. G. 157 of 1978 GENERAL DIVISION BETWEEN: PYE INDUSTRIES SALES PTY. " LIMITED Appellant AND: TRADE PRACTICES COMMISSION Respondent Coram: Smithers, J.B. Sweeney and Northrop JJ. 17 August 1979 RA enenieeminesaghneere AAAEO LSA? rend Sy anette mmnlene . re etna nT Ct SNS ESOS rit aD SN OOS UOT OO ENTE S aw ts FOO UD ETON SCOR SIT Onny DOT x7 we LU STuSVIRLET Pied PP OSOTE nN Seaur TESS On Un UNE DOE SOW Ye UOEO TD SOenN peer er trewen REASONS FOR JUDGMENT The appellant appeals against a judgment delivered on 29 November 1978 under which it was ordered to pay a pecuniary penalty of $120,000 to the Commonwealth and was restrained from engaging in the practice of resale price maintenance in relation to the marketing of television receivers under the trade name "Pye" and was ordered to pay certain costs to the respondent. The penalty was imposed in respect of certain contraventions of s.48 of the Trade Practices Act 1974 (the Act) constituted by conduct defined in s.96 of that Act. It was found by the learned Judge that in May 1976 the appellant by its servant and agent, one Daniels, attempted to induce The Coin Operated T.V. Company (Coin Operated) not to sell at prices less than those specified by him in writing. Coin Operated was the name under which one Mrs. Janice Collins carried on the business as hirer and vendor of television receivers at Koolewong near Woy Woy in New South Wales. The business was managed by her husband, Ronald Arthur Collins, who until 1971 was an undischarged bankrupt. It is referred to herein as Coin Operated and where pronouns are convenient the neuter form is used for reference to the business. It is desirable that by way of background there should be stated the relationship of various other persons referred to. Pye Industries Limited appears to be the controlling company of a group of other companies including the appellant and Pye Finance Limited, The appellant Pye Industries Sales Pty. Limited was a company engaged in the sale and servicing of television sets. Pye Finance Australia Limited was a member of the Pye group concerned with the bailment of television receivers. It supplied sets to certainoperators such as Coin Operated which in its turn hired the sets to customers and also on occasion sold sets to the customers to whom they had been hired. In these Reasons for Judgment the activities of various executive members and other employees of the various companies are discussed. It is convenient to state the names and capacities of these employees at this stage. They are:- Ray DANIELS, the sales representative for Pye Sales for the CentralCoast and Newcastle Districts of New South Wales. Lang WILLOCK, the sales manager for Pye Sales in New South Wales. Mark HOLLAND, the New South Wales Manager for Pye Finance. Ronald TAYLOR, the credit manager in New South Wales for Pye Finance, Phillip LOWN, an employee in the office of Pye Finance. B.C. HUGHES, the General Manager of Pye Finance. 3. R. RAMSAY, the Secretary of Pye Industries Limited. | Graeme EDWARDS, a Pye Finance territory representative and previously the credit manager of Pye Finance. Trevor KIRK, the Secretary of Pye Sales and of Pye Finance. Hereafter Pye Industries Sales Pty. Limited is referred to as Pye Sales and Pye Finance Australia Limited is referred to as Pye Finance. ' It was found also by the learned Judge that in and after May 1976 supplies of television receivers were withheld from Coin Operated by the appellant, and, at the instigation of the appellant were also withheld by Pye Finance. The learned Judge found that the sets ' were withheld by the appellant and that the appellant instigated the action by Pye Finance for the reason that if supplies of television sets were made available to Coin Operated it was likely that Coin Operated would sell the same at prices less than those specified to it by the appellant and would advertise the same for sale at prices less than such specified prices. In the hearing of this appeal Mr. Staff Q.C., senior counsel for the appellant,did not seek to challenge the first of the findings set out above nor that for the reason stated certain supplies were withheld by the appellant. He did not challenge the finding that supplies had been withheld by Pye Finance. He said, however, there was no evidence that it did so at the instigation of the appellant or that it did so for the reasons set out in the second finding above. He contended that on the evidence it ought to have been accepted that the conduct engaged in by Pye Finance was engaged in for ordinary commercial reasons only and independently of the appellant. The general thrust of Mr. Staff's submissions was that the contravention of the Act by the appellant itself was of short duration, of relatively minor significance, and did not involve instigation of Pye Finance to take any action to withhold supplies from Coin Operated. He contended that the penalty imposed was in any event out of proportion to the contravention as found by the learned Judge. If the findings of the learned Judge were modified in accordance with the submissions made by him in this appeal it was submitted that the contravention which the appellant had committed was much less serious than. that which the learned Judge had understood it to be and that for that reason also the penalty imposed was much more than that which was appropriate. From the point of view of the appropriateness of the penalty it is of importance to determine whether on the evidence the conclusion ought to be drawn that the appellant sought the co- operation of Pye Finance in withholding supplies on the ground that Coin Operated sold or was likely to sell Pye television sets at prices below those specified by the appellant or to advertise such sets for sale below such prices. It is clear that simultaneous action by the two companies in the matter of withholding supplies was likely to be considerably more effective than action by the appellant alone. The admitted contravention of s.48 of the Act committed by the appellant was clearly a serious contravention. When it discovered that Coin Operated was advertising in the local newspapers circulating in the Gosford-Newcastle area offering wy oa = eee seamed aqme oe a pane ites ne eeeahinetnenns Gin mmbmeg emma iimetneiey « ? ete hes ne mt ee le le lt eet Pye television receivers at prices less than what were called the "go" prices and that dealers of Pye products in the area were disturbed by Coin Operated's conduct in this respect Daniels took unequivocal action to persuade Coin Operated to refrain from selling or advertising below the "go" prices. The "go" prices were those at which dealers in the relevant area were offering Pye television receivers for prompt sale, He telephoned Collins and urged him to conform to these price levels, He said the other dealers were "driving him mad", On 12 May 1976 he called on Collins, informed him that he was causing great trouble, that he and the dealers were trying to stabilize prices, that Collins was upsetting it all, and ant- agonising their dealers. Daniels told Collins that the prices he was charging were 50.00 too low. He wrote out for Collins a list of the "go" prices. He told Collins that if he conformed generous credit would be extended to him to enable him to extend the quantity of Pye colour television sets he held for sale and the range of goods for sale. But Collins was not to be persuaded to comply with the price policy urged by Daniels. It appears that Daniels reported to one Willock, probably in late April or early May the difficulties being caused by the selling prices and advertisements of Coin Operated. On 26 May 1976 he recommended to Willock that supplies to Coin Operated be terminated. Factual Outline The business of Coin Operated commenced operations in 1961. Its operations comprised hiring out to its customers television sets which it held on bailment, pois ae a nya me sales of television receivers, television repairs, maintenance and aerial installation. From 1963 Coin Operated obtained all its television sets from either the appellant or Pye Finance. Sets ohtained from the appellant were resold, Sets obtained from Pye Finance were obtained on bailment and primarily for hire to customers. But Coin Operated was authorised to sell bailment sets obtained from Pye Finance on being "paid out" in respect thereof. From 1963 to the end of 1974 business between Collins and Pye Finance and the appellant was on a small scale. There was a period in about 1967-1973 when Coin Operated had financial difficulties and when considerable delays occurred in payment of its debts. These difficulties were overcome in the course of trading and by early 1975 at least the Collins account was regarded by the appellant and Pye Finance as a good account. It appears that during the sixteen months prior to May 1976 some one hundred and ten sets had been obtained on bailment from Pye Finance. Thirty of these had been "paid out" and sold and eighty were in the hands of hirers from Collins. The average rate of acquisitions of television sets from Pye Finance during those sixteen months was thus about seven sets per month. Purchases of sets from the appellant Jjuring the same period totalled less than a dozen. These sets had been purchased singly save that on one occasion two sets were ordered and delivered. In November 1974 a formal "account application form" was submitted to Pye Finance signed by R.A. Collins seeking allocation of bailment supplies of colour television receivers. Pye Finance showed some reluctance to supply colour television sets to Coin Operated. Prior to November 1974 Coin Operated had received only black and white television receivers for bailment. Between 150-200 such receivers were on bailment to Coin Operated. However, on 20 November 1974 Coin Operated wrote to the then Credit Manager of Pye Finance seeking reconsideration of his application for the supply of "much needed colour sets" on bailment. In his application Collins discussed his past financial difficulties but indicated that they had been overcome and the financial position of Coin Operated was satisfactory. As a result Coin Operated was accepted as a dealer to receive bailment supplies of colour television receivers and from the end of 1974 until May 1976 colour television sets were supplied to Coin Operated on bailment terms. In the middle of 1975 the directors of Pye Finance "established"limits of authority to place colour television sets with dealers. They resolved as follows:- "Limits of authority The following limits of authority to place CTV sets were established:- with dealers: (a) Existing dealers 1. Up to 50 sets may be placed with bailment retailer by the P.I.L. Branch Manager without reference to Management. 2. All placements of over 50 sets and up to 200 must be referred to the General Manager for - . approval without reference to the Board of Directors. re ee RAEN etme Metts oom ember Skee At A ese genMh nee ener een 3. All placements of over 200 sets must be referred to the Board of Directors for approval. (b) New dealers All applications for new accounts (together with credit checks) must be referred to the General Manager for approval who in turn must refer to the Board of Directors applications for more than 200 sets. It was also decided that the list of accounts and limits should be reviewed six monthly coinciding with an examination of a statement of net worth of the account guarantors." On 31 July 1975 Mr. B. C. Hughes, the General Manager of Pye Finance issued an instruction to Branch Managers to advise him as to the current set limit for each dealer: and informed Branch Managers that limits should have been set on the basis that:- "i) ii) iii) To 25 sets - normal credit assessment or on basis of past monochrome Bailment history - written assessment filed for reference, 26 to 49 sets - written assessment by branch manager indicating:- ability to pay asset security integrity business management expertise previous trading results 50 to 199 sets - this as we know requires General Management approval and should be supported by branch manager's detailed assessment, balance sheet etc. for past two years, personal guarantees of directors where companies are concerned and credit bureau status report." On 21 January 1976 a memorandum was sent by Mr, Hughes to Mr. Holland, the New South Wales Branch Manager of Pye Finance reminding him of the instruction of 31 July 1975 and instructing him that he was required to forward copies of all set limits, applications for limits in excess of twenty-five and copies of all limits established for new customers. In January 1976 Pye Finance commissioned Amba Credit Services Pty. Ltd. to supply to it a confidential report on Coin Operated. The enquires made revealed that Coin Operated's firm name had ceased to be registered in 1961 because of non-renewal but that Collins was then taking steps to revive its registration. It was revealed that the residence of Mr. & Mrs. Collins at Koolewong near Woy Woy in New South Wales together with associated workshop was valued at about $70,000 and was unencumbered. It does not appear that the instructions of the Board and Mr. Hughes were strictly observed, Sets above limits were supplied on bailment in re a tA Sat erp me AE aN ae See numerous cases, It does appear that in January 1976 stocks had become plentiful and Pye Finance proposed a revision of for an upward revision of their limits. Pye Finance estimated for its own purposes what limits might be appropriate for various dealers. Coin Operated had some sixty sets on bailment at that time. The estimate of an appropriate limit for Coin Operated was one hundred and fifty colour sets. Coin Operated did not make formal application for an increased credit limits and circularised dealers seeking applications Limit but continued to order sets on bailment. By April 4 10. it had received and had hired out more than seventy sets. On 29 March 1976 one R.G. Taylof joined the staff of Pye Finance as credit manager. He was responsible for reviewing and assessing credit limits, assessing credit for extending limits and associated activities. He was responsible to the New South Wales Manager of Pye Finance. He found that at least a quarter uf the dealers were over their prescribed limits. On 18 March 1976 Coin Operated applied in writing to the appellant for an unspecified credit limit in respect of sets which it might purchase from the appellant. In this application Pye Finance was referred to as a referee and the es Ty and ta TERR URE Yep Aen ete Ne form carries an endorsement by Pye Sales indicating that it was infor med that so far as Pye Finance was concerned,as from December 1974 Coin Operated was a good account with returns to Pye Finance of $1208 per month for colour sets and $126 per month for monochrome sets. Introduction of Reduced Price Selling Campaign In April 1976 Coin Operated commenced a sales campaign implemented by advertisements in local news- papers stating in substance that because of its low overhead expenses its prices for colour television receivers were substantially below those available elsewhere. It was as a result of this campaign that Daniels telephoned Collins in early May and visited him on 12 May 1976 endeavouring to persuade him not to sell or advertise below the "go" prices i : | | | | 11. obtaining generally in the area. In early May 1976 Holland told Taylor that he had been informed by the appellant that Collins had been selling sets not supplied by it. Thereupon Holland and Taylor arranged for Lown, a member of the staff to call on Coin Operated and make an "audit", A few days before 13 May 1976 Lown requested Collins to arrange accommodation for him and on 13 May Lown arrived in Koolewong. He carried out his audit during the next two days and after con- siderable investigation he concluded that Coin Operated's conduct had been satisfactory and Pye Finance's bailment sets on hire to Coin Operated were located where they should be in the proper course of business. By writing dated 14 May he returned what must be regarded as a good report on the business of Coin Operated. However, under the heading "Sales" he reported as follows:- "Sales Ron. Collins states that they have recently commenced a sale programme for colour receivers, When questioned about the prices relative to local dealers he replied that he was able to undercut by approximately $50.00 per model because he has minimum overheads and is prepared to make a maximum profit of $100.00 per set. He is aware of representations made by local dealers to Pye but contends that if they cannot compete then they should be prepared to suffer the consequences as he was forced to do several years ago. Location List Check A physical check of location of sets on hire proved to be satisfactory. - " The Location of 47 of the sets were verified as per the location list supplied and this was compared to the stock cards, eo oe ee No discrepancies were evident although it was moted that six sets had been sold in the /preceding week for which we have now been paid out. Four sets were held in stock, one requiring repair by Pye Service under seven day factory warranty. We were unable to verify locations of 24 sets as the hirers were not in when called upon, Summary The attitude of Mr. & Mrs. Collins to the inspection was of complete co-operation although they appear disturbed at Pye's reaction to their sale programme." While Lown was at Koolewong on 14 May he produced to Collins for signature a Pye Finance bailment credit application form. The form was completed by Collins and stated that Coin Operated's requirements of Pye Colour television sets were 30 sets per month. "Extent of credit required" was stated to be $150,000.00. Deliveries Withheld A few days after 14 May Coin Operated ordered four sets from Pye Finance and a few days later ordered a further five sets. Normally sets would be delivered about two days after being ordered. But on 21 May the sets ordered not having arrived Collins rang Taylor. Taylor said he would do nothing at the moment as he was awaiting the auditor's report. After a further telephone conversation with Taylor of an inconclusive nature on the next day Collins rang Holland. A conversation the relevant part of which is set out in full hereafter took place. He asked Holland what had happened to his supplies. Holland explained that non-delivery was related to his price-cutting sales campaign. ft nnmenpe re Petraes iattllgem Semin tae te yteceeee nat ie ben Me ot stent Mmvepenene li Neem eE Arent niin Ait Ayah hater bine woolen ametaltheoe The sets did not arrive but py letter dated 28 May Coin Operated was informed by Taylor that to increase the colour television ! bailment credit limit of Coin Operated to the proposed figure of two hundred,security was required. He wrote:-— "To increase this to the proposed figure of 200 television receivers we would require lodgment of a personal guarantee by both yourself and your wife supported by a security, of a value in the vicinity of $40,000.00. To this end we suggest a second mortgage on the property at 9 Couche Crescent would be acceptable and on receipt of your agreement of this proposal we will instruct our Solicitor to begin , preparation of the necessary documents, As previously advised we are unable to extend to you further credit facilities beyond your present credit limit until necessary securities are obtained." On 28 May Coin Operated ordered from the appellant in writing five colour television sets, one in walnut the others in teak. At the time of order Collins had ascertained that these sets were in stock. On 2nd, 3rd and 4th June Collins rang the appellant's office enquiring for deliveries. Each time he was informed that the order was being processed. These sets were not delivered until 10 June by which time Coin Operated's customers had been lost and Coin Operated rejected them. Coin Operated ordered four more sets from the appellant. Of these two were received about 20 June. The balance were never received, The sets ordered on 28 May were not delavered before 10 June because the Pye Sales Manager, Willock deliberately held them back waiting to see if Coin Operated a eee en eet render ata pe pn 14. would abandon its price cutting sales campaign. They were delivered on 70 June because Kirk, the Secretary both of the appellant and Pye Finance intervened. He had become aware of a letter of complaint by Coin Operated to the Trade Practices Commission dated 8 June which had caused him apprehension that a contravention of the resale Price Maintenance provisions of the Trade Practices Act had occurred, From then on the actions and attitude of both companies were determined by Kirk. His first action was to direct that four of the sets ordered on 28 May be delivered forthwith. His second was to write to Coin Operated advising that all Pye companies were strict in the observance of the provisions of the Trade Practices Act, that the delay in deliveries was not for any reason relating to the retail prices at which Coin Operated sold. He added "In this case your order was filled, subject to available stock, within a reasonable time (ten days) of receipt of that order". Somewhat gratuitously and out of logical connection with the rest of his letter he concluded "May I remind you however that we always reserve the right to refuse to supply any of our customers should we have cause and sound commercial reasons to do so", On 17 June Kirk wrote to Coin Operated on behalf of Pye Finance concerning the complaint by Coin Operated to the Trade Practices Commission, He denied that Pye Finance treated Coin Operated unfairly "because we have stopped supplying you with television receivers until you provide us with security to the value of $40,000", He denied that Pye Finance had committed any costravention of the Trade Practices Act. He wrote:-— seen eee ee 15. "Our request for security for an account as large as yours, currently 79 receivers with a contingent maximum liability of $57,759.50, is normal business practice in our Company. Consequently I confirm that without adequate security being put forward by you, we will not supply further quantities of television receivers under our bailment agreement," ¢ From the remarks of Kirk to Daniels referred to below it is clear that Kirk regarded the contents of his letter as expressing a sound legal and commercial reason for withholding supplies. In those same remarks Kirk intimated that he was sure of his grounds in relation to Pye Finance but not with regard to Pye Sales and until he was sure of such grounds decisive action in relation to Coin Operated was delayed. By 29 June Kirk had become aware of the credit limit of $1000 which Pye Sales had placed upon Coin Operated in November 1974. He wrote as of that day, "You will recall our telephone conversation earlier today when we discussed your recent order for 4 x 26A2T 62 em. colour television receivers, I have established that the balance owing by you to us is approximately $11 and not#1366 as mentioned over the phone. You expressed some surprise when I mentioned a credit limit of $1000. Attached is a copy of a letter we sent ' to you on or about 2 December 1974. Because your current balance with us is negligible we are prepared to supply two only of the recievers you have ordered as the debt created by them will exceed your limit of $1000. As soon as your account is paid in full the remaining two you have ordered will be supplied." we cee a et at etn Sennett naan ut hetanitatenallan enmndinrt ni emris Gremmet Rind atten perenne But Collins had reacted to what he considered undue pressure f | : being applied to him both by Pye Sales and Pye Finance and in late June obtained finance from ESANDA, paid out Pye Finance and for practical purposes ceased to trade either with Pye Finance or the appellant. Contraventions of the Trade Practices Act Section 48 found in Part IV and ss. 96(1), 96(3)(b) and (a) and 98 found in Part VIII are particularly relevant. They are in the following terms:- "s,48 A corporation or other person shall not engage in the practice of resale price maintenance. s.96 (1) Subject to this Part, a corporation ee. Engages in the practice of resale price maintenance if that corporation does an act referred to in any of the paragraphs of sub-section (3). (2) ... (3) The acts referred to in sub-sections (1) and (2) are the following:- . (a) ... (b) the supplier inducing, or attempting to induce, a second person not to sell at a price less than the price specified by the supplier, goods supplied to the second person by the supplier or by a third person who, directly or indirectly, has obtained the goods from the supplier. (c) ... (d) the supplier withholding the supply of goods to a second person for the reason that the second person - (i) has not agreed as mentioned in para. (a); or (ii) has sold, or is likely to sell, goods supplied to him by the supplier, or goods supplied to him by a third person who, directly or indirectly, has obtained the goods from the supplier, at a price less than a price specified by the supplier as the price below which the goods are not to be sold. S097 wee s.98 (1) For the purposes of paragraphs 96(3) (d) or (e), the supplier shall be deemed to withhold the supply of goods to another person if- (a) the supplier refuses or fails to supply those goods to, or as requested by, the other person; (b) the supplier refuses to supply those goods except on terms that are disadvantageous to the other person; (c) in supplying goods to the other person, the supplier treats that person less favourably, whether in respect of time, method or place of delivery or otherwise, than the supplier treats other persons to whom the supplier supplies the same or similar goods; or (d) the supplier causes or procures a person to withhold the supply of goods to the other person as mentioned in paragraph (a), (b) or (c) of this sub-section." The conduct of Pye Sales which the learned Judge found to have been in contravention of the provisions of the Trade Practices Act was in substance the following: (a) the conduct of Daniels in early May particularly on 10 May in endeavouring to persuade Coin Operated to cease selling Pye colour television sets at prices less than those called the "go" prices specified by him and to cease advertising such sets at prices less than such"go"prices; (b) the conduct of Willock in withholding delivery of at least four available sets ordered by Coin Operated on 28 May during the period from receipt of the order unts1l 10 June and the subsequent withholding for practical purposes of sets ordered on or -fter 31 Mav: ere et we et rareeeneeriandis Caan 2 18. (c) the refusal of the appellant Pye Sales on 29 June 1976 to supply television sets to Coin Gperated save within a credit limit of #1000; / (d) the conduct of Pye Sales through Willock or another staff member of the appellant whereby the appellant procured Pye Finance to take action in aid of the appellant in its campaign to persuade Coin Operate to refrain from selling and advertising television sets below the "go" prices (see s.98(1)(d)) For present purposes the measure of this misconduct on the part of the appellant in this last mentioned respect is to be found in the steps taken by Pye Finance in response to the instigation of the appellant which were themselves conduct committed in contravention of the provisions of the Trade Practices Act as it applied to Pye Finance. The steps so taken by Pye Finance in contravention of the Act were constituted by:- (i) delay in delivering nine sets ordered by Coin Operated between about 17 May and 28 May; and (ii) the refusal on 28 May 1976 to supply any television sets unless Mr. & Mrs. Collins provided security by a mortgage of their residence to secure $40,000.00 and certain personal guarantees. SITS 19. Provide Security or no Supplies Mr. Staff, pointed out that the security which Coin Operated was asked to provide by Pye Finance. was well within the capacity of Coin Operated to give. The sum of $40,000 to be secured by the mortgage was the value of about sixty sets only, the mortgage would have carried interest only in respect of bailmnt fees unpaid or sets lost or damaged through the fault of Coin Operated and the proposed mortgage and guarantees would involve Mr, and Mrs. Collins in obligations no greater than Mrs, Collins would incur in any event in the course of trading. But the security demanded was certainly - comprehensive. It extended to and substantially tied up in favour of Pye Finance the only real asset of Mr, and Mrs. Collins. After sixteen years of trading with Pye Finance without security and building up their business to the stage of being a"good account", the sudden demand for the mortgage and the guarantees could hardly have been regarded by them as other than a draconian disciplinary measure arising out of the endeavours of the appellant and in which Mr. Holland had joined, that they desist from their price cutting campaign. But Mr. Staff argued that Mr. and Mrs. Collins could have given the mortgage and the guarantee, and that if they had, then supplies up to say two hundred sets or at any rate a relatively large quantity would have been practically assured to them. And it was said that the offer to increase supplies on the giving of security, which might well be given, was inconsistent with an intention to withhold supplies to Coin Operated on grounds of price cutting. We doubt if Mr. and Mrs, Collins would have regarded it as so inconsistent. By giving such security they would have lost all capacity for independent action. Their credit rating with the appellant might well have suffered. On 28 May when the offer was made they had experienced withholding of stocks by Pye Finance and they knew from Holland why they had been withheld. A few days after 28 May they experienced the withholding of supplies from the appellant and evasive replies to enquiries about those supplies. They would have considered and rightly considered they could not expect frank treatment from the Pye organization. In view of the withholding of supplies by Pye Finance for reasons explained by Holland we do not think that the possibility that Coin Operated might have given the security and so have acquired an ostensible assurance of supplies supports in reality the view that the demand for the security was merely a commercial measure. It is to be noted that although Pye Finance described the demand as normal commercial practice at that stage there was only one of the 140 bailment dealers of Pye Finance from whom security of some kind had been obtained. This is the more significant in that of the ten dealers whose accounts were under review in January 1976 with a view to their supplies being increased, exhibit 18 shows that although the potential of Coin Operated was assessed at 150 sets, the potential of the others was 200 or more, reaching as high as 500. Yet as at May 1976 ae eater en ee ce ere ete ey . 21. no security had been obtained from these, or at least from all of these save one if it were that the one dealer who had given security in May 1976 was included in those referred to in exhibit 18. Indeed so far was it not normal practice to require security that even in October 1978 at the time of the trial, of the 140 bailment dealers of Pye Finance there were only four who had given security, and two of those were witnesses Mr. Daniels and Mr. Edwards who had at that time become bailment dealers themselves. Of course the security was sought ostensibly because Coin Operated had exceeded the original Jimit of 50 sets. But on the evidence this limit had never been observed by Pye Finance or Coin Operated and it would be more than surprising that of the total number of dealers most had not similarly exceeded the company's limits as expressed in the Head Office resolutions and minutes. And in view of the desire of the company to increase the stocks in the hands of the dealers in early 1976, the recently confirmed satisfactory performance of Coin Operated as a bailment dealer, and the invitation to that dealer, through Lown, to seek an increase in supplies it is inherently improbable that the company would have pre-emptorily cut off supplies in default of immediate compliance with a demand for a mortgage and guarantees had there not been in the situation some factor other than mere commercial procedure. On the probabilities the demand for security is to be seen as a step in the campaign to terminate the cut price activities of Coin Operated and satisfy the other dealers. This was certainly how Kirk saw and used it, If Coin Operated refused to give the security it received no supplies. If it gave the security it would be much more amenable to pressure. tte 22. In the circumstances the pre-emptory intention and demand of 28 May cannot be regarded as an exercise genuinely inspired by commercial considerations alone. It is explained, if regard is had to the desire of the appellant and Pye Finance to discipline Coin Operated in relation to its price policy. It is to be noted also that pursuant to the instruction from Mr. Hughes to Holland of 21 January 1976 it was not for Mr. Taylor or even Mr. Holland to decide what was to be done about Coin Operated's application for increased supplies of 14 May 1975. It should have been referred to Mr. Hughes. Either it was so referred and the Court was left to speculate about the reasons for Mr. Hughes approving the cutting off of supplies unless security were given, or it was not so referred because Holland and Taylor had a good reason for not referring it. Procurement or Instigation of Pye Finance by the Appellant In relation to the assessment of the penalty to be imposed on the appellant the finding that the steps taken by Pye Finance were procured or instigated by the appellant was clearly important. Mr. Staff contended that this finding was not supported by evidence. He said that there - was no clear indication or finding in the judgment as to what specific acts of the appellant were regarded as those by which the appellant procured or instigated the relevant action, However, the learned Judge found that there was a .— tin, 23. desire on the part of both companies that Coin Operated should conform to'the"go"prices, that on 14 May Lown, whose duty was to Pye Finance, had questioned Collins about his prices, and that Lown's visit was inspired at least in part by the complaints of other dealers. It is involved in these findings that the appellant had at least notified Pye Finance of complaints and the reason for them and the evidence would certainly support this. But Mr, Staff submitted that despite this the conduct of Pye Finance was fully explicable by reference to ordinary commercial considerations and that there was no valid reason to think otherwise. He urged that so far as Taylor was concerned the steps taken by him were to be seen merely as the natural reaction of a new credit manager to the directives of the Board of Directors and his own general manager, It was put that in a situation in which Corn Operated had already been supplied with twenty-nine sets above its credit allotment and was requesting a large increase in that allotment nothing sinister was to be seen in requiring appropriate security. Similarly in a situation where an increase in supplies was contemplated but there was information giving rise to a fear that Coin Operated had been selling sets im- properly there was nothing sinister to be seen in the instigation of an audit of Coin Operated's affairs, and specially was this the case in relation to a dealer like Coin Operated whcese financial record in earlier years was quite bad. ee senerereeney meetin fee Tee |e ewes reer Poe er 24, The critical question is not so much whether Taylor's conduct was explicable by reference to commercial consider- ations but whether the evidence shows that the conduct of Pye Finance is not to be explained in that way. It is to be observed that throughout the affair from early April until well into June 1976 the senior executive of Pye Finance was Holland, the New South Wales Manager. What occurred in these matters occurred by his decision. It was he who had received from Willock or some other of the appellant's staff the knowledge which led to the decision that Lown should carry out the audit in early May. The evidence does not disclose precisely what it was that Willock or the other representative of the appellant had said to Holland, put it was information which led Holland to believe that it appeared that Collins had been selling sets of Pye Finance without properly accounting for them. According to Taylor it was towards the end of April or early May that Taylor, Holland and Lown had a discussion, Taylor said:~ "It came about by Mr. Holland claiming that he had been informed by Pye Sales that Collins had been selling sets and they were not supplying them. We checked our records, which showed there had been no purchases of Pye sets in that particular recent period. On top of that we had not completed our review, With that information - we brought forward the limited review and arranged for Phillip Lown to call for a week or two during that period to verify the location of our sets that were sti1l1 in his possession, and also to obtain information previously requested to effect the review, together with the new application in relation to the asset and liabilities stated in the balance sheets." oh re ranteRp tL enteritis te ntteinen ys eealpiii en ph eine date 25. If Collins were selling sets then unless they had been supplied by the appellant they must have been bailment sets supplied by Pye Finance. The only reason for anybody thinking that Coin Operated might be selling sets not supplied by the appellant would be by inference from the price-—cutting advertisements published by Coin Operated and from the knowledge that Coin Operated's purchases from Pye Sales had been small in number. Taylor's evidence that by 10 May, Holland knew from the appellant that Coin Operated was selling sets not supplied by the appellant indicates that Willock knew of Coin Operated's campaign on 10 May and communicated it to Holland. It indicates also that Holland's response was very prompt. Taylor's evidence was that it was his belief Holland's information had come from Willock who was "the most logical contact". If Willock told Holland that Coin Operated was selling sets which were not supplied by the appellant it is more than probable that he told him how it was that he, Willock, had come to that conclusion. Accordingly it is a reasonable inference that by 10 May Holland knew that Coin Operated was price-cutting and no doubt knew of Willock's anxiety about the probable effect of a Coin Operated's campaign and that Daniels had been harried by dealers from some time in April. Daniels' first telephone conversation with Collins was on 10 May. His visit to Collins was on 12 May. If Holland had heard from Willock by 10 May that Coin Operated was selling sets not supplied by the appellant then it would seem that Willock must have known by that date of the pric-cutting campaign. On the evidence the inference must be drawn that that knowledge must have been obtained from Daniels. It is far from improbable that Daniels would have ° 26. informed Willock by phone or otherwise, at least of the fact that Collins was advertising cut prices and of the complaints of the other — dealers and then or soon after of his telephone conversation with Collins certainly not later than 10 May. It is therefore a reasonable inference that the decision to send Lown to audit Collins! sets or at least to bring forward an audit of Collins' sets was made by Holland when he had information suggesting that Collins was selling bailment sets and that he was undercutting prices and advertising cut prices. However, by 15 May 1976 Pye Finance and presumably Holland knew that Collins was not selling bailment sets and that his business was in order. But Holland also knew that Collins was selling some sets at cut prices and was advertising such prices extensively. It appears that not later than 17 May Collins ordered nine sets from Pye Finance for bailment.' From 10 May until 24 May Holland was on leave. Before going on leave he had given instructions that any orders from Collins be referred to him or Taylor. On learning of the order of 17 May Taylor gave instructions that it be not complied with. On 17 May Willock called at Pye Finance seeking Holland. As Holland was away he spoke to Taylor and asked him what action Pye Finance was taking about the supply of colour television sets to Collins. Theoretically it was not Willock's business what Pye Finance was doing about that matter, but it is clear that Willock believed it probable that Holland would have taken some action in that respect. paket beckett fatten Pat pt nt Sete tte path e 27. The inference is that Holland and Willock had previously discussed the possible holding up of supplies to Collins or at least that Willock knew that one of his staff had explained the Collins' price-cutting conduct and possible irregular sales of Coin Operated and expected action by Pye Finance in relation thereto. The conduct of Coin Operated was of interest to both Willock and Holland in two respects. It suggested irregular sales of bailment sets by Coin Operated and it constituted price-cutting activity embarrassing both to Willock and Holland in relation to their relationship with the other dealers. It is clear that Holland was keenly interested in the latter aspect of the matter, Collins not having received the sets ordered on 17 May, telephoned Taylor on 21 May and asked why. He was told that Pye Finance had not completed its financial review of Coin Operated's situation and that in any event. he was waiting for Holland to come back. On this Collins decided to ring Holland. He succeeded in reaching Holland and according to the evidence of Collins the following conversation ensued:-— "What did you say to him?--~ I said, 'Mark, what has happpened to my supplies?" I knew him quite well, he had called at my place a few times. Frsaid, 'I am up in Newcastle now and there is all hell to pay. Four of the Gosford retailers are complaining you are undercutting them and it looks like we can 'do' 200 colours a month on the central coast unless we can keep them happy.' He went on to say, 'I should not tell you this but they are going down to Sydney tomorrow, all of them, to see our sales department and quite frankly my advice to you is you better get yourself down there too'. I said, 'Thank you very much Mark' and put the phone down" en emt ne ne cena etre nee emer Spnrnentnreniiptes = > 28. { In our opinion this conversation is of critical importance in this appeal. It discloses that it was no surprise to Holland to know that Coin Operated had not received its supplies. In a burst of candour Holland told Collins why, namely that it was because Collins was under-—cutting and had seriously upset the other dealers and was endangering Pye Finance's and the appellant's business in the area. His statement to Collins that there was to be a meeting of the dealers with the sales department in Sydney and that his frank "advice" to Collins that "You had better get yourself down there too" can only be inter-— preted as an indication that what was happening to Coin Operated's supplies would continue to happen to them unless ittook steps satisfactory to all the other dealers. In substance Holland was saying in an aggressive and threatening way that because of Coin Operated's price-cutting activities there was only one way out for Coin Operated, namely, to cease those activities. The evidence of this conversation was given on 3 October. The evidence called by the appellant concluded on 11 October. But Holland was not called and no explanation for that was offered. Neither was Willock called as a witness. And yet on this question of co-operation between Pye Finance and the appellant in relation to what if anything was to be done about Coin Operated's conduct they were the people whose communications were vital. In view of the unexplained silence of Holland the Court may accept the evidence of Collins concerning the conversation without hesitation. It is to be noted that according to Edwards there was considerable co-operation between Pye Finance and the appellant and that if the appellant was having trouble with a dealer who was failing to pay or doing something else contrary to his agreement it was common practice for the appellant to report the matter to Pye Finance and for Pye Finance to stop further supplies to that dealer. It would therefore require little action on the part of the appellant to call Pye Finance into action against a dealer whose conduct like that of Coin Operated was thought to be seriously contrary to the interests of the appellant and the Pye organization generally. It is reasonable to infer from all this that Willock or some member of his staff informed Holland of the conduct of Goin Operated before 10 May, that that information was given either with a request that Pye Finance withhold supplies or, knowing that Pye Finance would co-operate to "discipline" the dealer, intending that Pye Finance would do so, that at least Willock knew of and approved this course of action, that Holland responded and gave the necessary instructions to Taylor. It is consistent with the evidence that when Holland decided to institute the audit forthwith he and Taylor did regard it as possible that Coin Operated might have been selling bailment sets irregularly. But it is clear from ~ 30. what Holland said to Collins on 21 May that, so far as he was concerned, whatever the result of Lown's audit, supplies were being and apparently were to be withheld until Coin Operated ceased its cut-price activities. Holland made no reference to credit review or security requirements. Between 18 May and 26 May Coin Operated continued its cut-price advertising. Its largest, most expensive and explicit advertisement appeared on 26 May. The letter from Taylor advising Coin Operated that there would be no supplies until the mortgage and guarantees were given was dated 28 May. The fact that the audit and the withholding of supplies took place at the time when the appellant was disturbed about Goin Operated's conduct and on the threshold of itself withholding supplies from Coin Operated is said to be merely coincidental. But it must be remembered that the man whose decision in all these matters was critical was Taylor's aperior, the New South Wales manager, Holland. If one really wishes to know why it was that these steps were taken by Pye Finance against Coin Operated it would be necessary to ask Holland. The obvious source of information was Holland but Holland was not called as a witness. In the light of Holland's statement to Collins it is impossible to doubt that the taking of steps against Collins by Pye Finance was more than a coincidence and was part of a course of conduct designed to induce Collins to ae eee te ae oe give up his price cutting activities, | It is also significant that Willock the appellant's own senior executive who controlled the withholding of supplies by Pye Sales and who on 17 May enquired what Pye Finance was doing about supplies to Collins was not called to explain the relationship between the appellant and Pye Finance in the matter of the withholding of supplies by Pye Finance. Of the senior ranks only Mr. Kirk was called. Kirk was secretary of both the appellant and Pye Finance. It is clear however, that he exercised managerial authority in certain respects and certainly as from 10 June in the matter of controlling deliveries to Coin Operated. It is clear that from the time when the appellant and Pye Finance knew that Collins had complained to the Trade Practices Commission about the withholding of supplies Kirk took pa ee elite eR EA a hcp Nnhr a elias bls i Ate tal pin mda Lhe le Ri ages | eben etl pt ep nd mt ny et pape charge of the conduct of both Pye Finance and Pye Sales. Collins had written to Mr. J. Carmichael, Managing Director of Pye Industries! Limited on 8 June putting his position. The Managing Director was away. The secretary of Pye Industries, one i Ramsay had taken the responsibility of answering letter of 8 June to the Managing Director, On 9 June he advised Collins | that after the matters raised had been investigated "I will arrange to contact you as quickly as possible as soon as I have abtained sufficient information to reply". But Ramsay did not reply. It appears that by 10 June the letter to Carmichael had been handed to Kirk. Collins was advised 32. py Kirk to "address any further correspondence on the matter to me direct". The appellant was a subsidiary company of Pye Industries Limited. It is important therefore to ascertain what was Kirk's conception of the policy to be adopted by Pye Finance and Pye Sales in the situation which had arisen. It was to him that superior authority had assigned this responsibility. As stated above, on 10 June Kirk directed that four of the sets ordered by Collins from Pye Sales on 28 May be delivered. On that same day he wrote on behalf of Pye Sales to Collins : advising him, untruthfully, that the delay in delivery was not connected with his price-cutting activities and that he was free to sell at any price he saw fit, adding however that Pye Sales "always reserves the right to refuse supply to any of our customers should we have cause and sound commercial reasons to do so", By 17 June Kirk wrote on behalf of Pye Finance to Collins that for an account as large as Collins', currently 79 receivers with a contingent maximum liability of $57,759.50, it is normal business practice of the company to require security and advised that until adequate security was forthcoming from Collins there would be no further supplies from Pye Finance. It could not really be said that the demand for security required of Coin Operated was in accordance with normal business practice. ate Tt was on 17 June that Kirk had an interview with Daniels. Daniels explained that the dealers in his area were upset that Collins was undercutting prices and adver- tising that he would sell at lower prices than others. Kirk explained to Daniels, in substance, that all that the company could do at the moment was to control supplies by treating Collins as a customer without privilege whose orders would be placed in the line. Kirk instructed Daniels that he should explain to the dealers that the company was doing all it could to relieve their situation but the provisions of the Trade Practices Act restricted its freedom of action. Kirk also told Daniels to explain that the company was "in a bit of a cleft stick currently" and that the situation was in the hands of the company's lawyers and that "we are as a matter of prudence continuing to supply him with his reasonable requirements until we get a direction from our solicitors." He advised Daniels to tell the dealers that "we are working on it as quickly as we possibly can. I think that is the message", and that the important message was that Daniels get it across to his retailers that "we have got to do this initially, because we don't want to breach the Act, until we are sure of grounds and that we appreciate their problem", He advised Daniels "we don't like it either and you can tell them that Head Office doesn't like it. Head office is the same as you, they're right behind you, and that we are going to do everything we can to sort the matter out", Finally Kirk advised Daniels:- et ee poner ewer open tnte Aeee ty a ig oeree rem nh 34, "..4 all I am prepared to do with Collins ig say this is Company policy if he places an order and we will process it the same way we process another client who doesn't have a privileged status with us as far as Pye Finance is concerned. I have written a letter, I have not got a copy to show you, but in that letter I have said to him that it is normal businessfor Pye Finance apart from sticking f- to the Act and all the other things I have already said in that letter which I repeated, I said it is business, normal business practice for Pye Finance to get security for a set holding of that size and that we are not going to supply him with any more sets until he' gives us a mortgage. So £ hold fast on Pye Finance because I have grounds to do so. I have not got the grounds here yet. Well I'm not sure of my grounds and until I'm sure." In all this Kirk discloses his and the appellant's policy is to cut off Collins' supplies to bring to an end Coin Operated's price -cutting conduct when such action could appear to be taken for sound commercial reasons. His policy was based on the assumption that to withhold supplies for anapparently sound commercial reason would not offend the Trade Practices Act although the real reason for invoking the so-called sound commercial reason was to enforce an aspect of resale price maintenance as defined in and proscribed by the Act. What is of importance for this case is that Kirk disclosed that for the purpose of aiding the other Gealers and ensuring that Coin Operated did not sell below specified prices or advertise that it would sell below specified prices he would seek some commercial excuse which would ostensibly justify cutting off supplies from Coin Operated and that he would act on that. When onor about 29 June he discovered the appellant's credit limit of $1000 he grasped what appeared to be an apportunity and insisted on its substantial RO ER NOTRE OREY TY 2 aren tented Fy ratrnerr re r % 35. observance. Such' conduct would of course offend against the Act. In Kirk's statements one finds that he asserts that this conduct had the support of Head Office. To decide to withhold supplies for a purpose offensive to the Trade Practices Act and to seek ostensibly justifiable grounds to take such action so as to mask the real purpose of the action taken is particularly reprehensible conduct. And yet that is what Kirk stated was the policy of both Pye Finance and Pye Sales. It was a policy expressed by Kirk as the group's representative, apparently appointed by Ramsay, the Secretary of Pye Industries Limited. Accordingly it seems that the attitude adopted by Kirk was the attitude of both Pye Finance and the appellant at the highest levels. The pre-emptory refusal of supplies to Coin Operated on and from 20 May until 28 May, and the demand for security as a condition of further supplies were thus the policy of Head Office. Thus is disclosed an unsatisfactory attitude to the observance of the requirements of the Trade Practices Act. It fell to Kirk to attempt to mislead Coin Operated as to the reasons for withdrawal of its supplies and to use a scheme whereby for ostensible but contrived commercial reasons supplies might be withheld for the purposes of effectuating unlawful resale price maintenance. ee oe 1 ene ee ereerey A eee Conclusions as to Contraventions / It is necessary to return to the specific contra- ventions of the Act referred to above under that heading. { Each of the contraventions referred to in paragraphs (a) ; (b), (c) and (d) were in our opinion established by the evidence, Each were in ouropinion correctly found by the learned ~ ' i Judge to have been committed. The contravention in paragraph (a) was straight forward. It was supported by the sales manager and according to Kirk the policy of Daniels was approved by the highest Pye authority. It was disapproved so far as it was a breach of the Act, but the policy behind it was supported so far as it could be by legal action based on ostensible commercial justification. Quie a serious contravention and attitude is disclosed. The contravention referred to in para.(b) was an extension and implementation of that in para.(a). The contravention referred to in para. (c) involved the withholding of two of the four sets ordered on 31 May. To have supplied them would have exceeded the credit limit of $1000. But the withholding had significance deeper than that. It involved an intimation to Coin Operated that goods ordered in excess of the limit would not be delivered. Accordingly it was conduct proscribed by s.48 in conjunction with s.96 (3)(a) of the Trade Practices Act. rebadged noon pe anil pen nih mh ny nb nt taahneefagentamhietlepentieth Aen ttf ti hin em mete eialitinnennietenn The contravention referred to in para.(d) was most serious, It was engaged in because without the assistance pene ered ay Ae, 37. of Pye Finance, Coin Operated could have conducted sales of T.V. sets at cut! prices to a material extent and have continued to evoke the wrath of the other dealers in the relevant area much to the embarrassment of the appellant and possibly to its considerable loss. The appellant knew it Could expect the assistance of Pye Finance, invokedit and received it in ample measure, Indeed it was the action of Pye Finance which caused Coin Operated to change the fundamental nature of its business and to cease substantially to do any future business of hiring television sets from Pye Finance and indeed from buying them from Pye Sales. the Amount of the Penalty It is clear that the appeal Court does not have an unfettered discretion in relation to the penalty imposed by the learned Judge under s.76 of the Act..See Kovac v. R.(1977) 15 A.L.R. 637. The principles which limit the exercise by an appellate court of its jurisdiction with respect to a discretionary power were expressed in R. v. Tait (1979) 24 A.L.R. 473 at p.476. "Those principles vere expressed in Harris v. R. (1954) 90 C.L.R. 652, which was followed by this Court in Kovac v. R.(1977) 15 A.L.R. 637, and which contains a citation from Cranssen v. The King (1936) 55 C.L.R. 499 at pp. 519, 520: ',..the appeal is from a discretionary act of the court responsible for the sentence. The jurisdiction to revise such a discretion must be exercised in accordance with recognized principles. It is not enough that the members of the court would themselves have imposed a less or different sentence, or that tiey think the sentence over- he he 38. severe, There must be some reason for regarding the discretion confided to the court of first instance as improperly exercised, This may appear from the circumstances which that court has taken into account, They may include some considerations which ought not to have affected the discretion, or may exclude others which ought to have done so. The court may have mistaken or been misied as to the facts, or an error of law may have been made. Effect may have been given to views or opinions which are extreme or Misguided. But it is not necessary that some definite or specific error should be assigned. The nature of the sentence itself, when considered { in relation to the offence and the circumstances of the case, may be such as to afford convincing j evidence that in some way the exercise of the discretion has been unsound. In short, the principles which guide courts of appeal in dealing with matters resting in the discretion of the - court of first instance restrain the intervention of this court to cases where the sentence appears unreasonable, or has not been fixed in the due and proper exercise of the court's authority.' ee ween een B seatrenete arenes An appellate court does not interfere with the sentence imposed merely because it is of the view that that sentence is insufficient or excessive. It t interferes only if it be shown that the sentencing judge was in error in acting on a wrong principle ; or in misunderstanding or in wrongly | assessing some salient feature of the evidence. The error may appear in what the sentencing gudge said in the proceedings, or the sentence itself may 2 be so excessive or inadequate as to manifest such error, (See generally, Skinner v. R. (1913) 16 C.L.R. 336 at pp.339-340; R. v. Whithers (1925) i 25 S.R. (it.S awe) 382 at p.394; Whittaker v. R. (1928) 41 C.L.R. 230 at_p.249; Griffiths v. R. (1977) 15 A.L.LR. 1 at pp.15-17)." rere Mr, Staff said that the learned Judge had acted upon considerations which ought not to have affected his discretion. Some of these are discussed above. In ouropinion it does not appear the submission is justified. It is ouropinion that no error in substance in the meme oe findings or reasoning by which the learned Judge assessed the penalty has been revealed, It remains to consider whether from the mere cive of the nenolty imnaced it ts 39. i to be inferred that his Honour adopted an extreme or mis- guided view of the quality of the contraventions of the Act which were committed. In ouropinion the answer is in the negative, It was put by Mr. Staff that his Honour's finding that but for the action of the appellant Coin Operated would have received up to 120 sets on existing terms and that the appellant would have allowed credit for at least five sets at any one time in the future could not be just-— ified. It is indeed a fair inference that in directing his mind according to s.76 of the Act, to the possible loss suffered in 1976 by Coin Operated his Honour did act by reference to this finding. Looking at the probabilities it would seem that but for considerations of price cutting it was likely that with the availability of stocks in 1976 supplies to Coin Operated would have substantially increased. As far back as January 1976 Pye Finance itself contemplated Coin Operated's supplies rising from about 60 to 150 sets. So far as the appellant is concerned it had forgotten that there was a specified credit limit in respect of Coin Operated fixed as far back as 1974 subject to monthly review. But for Mr, Kirk's researches for reasons to support the cutting off of supplies the appellant would not have known that there was any credit limit. Accordingly looking at the matter as one of probability Coin Operated's account re wee re eens - eae oa tee 40. having been checked by Pye Finance and found to be in order it is quite likely that Coin Operated's credit would have been extended considerably beyond the $1000 and might well have been extended to five sets. Accordingly the learned Judge's finding is not shown to be erroneous. So far as it played a part in the amount of the penalty it did so appropriately. It is a relevant factor that this exercise in resale price maintenance was carried out in respect of a dealer whose stock-in-trade was for practical purposes all obtained from the party applying the pressure. It was not a case of applying resale price maintenance pressure in relation to dealers whose business did not depend entirely upon the good will of the person applying the pressure, There is a vast difference between applying pressure in respect of one item of a strong trader's large business and applying pressure to a small weak trader in respect of his only class of stock. The Trade Practices Act is intended to protect not only the public but also those traders who desire to adopt competitive prices. In this case the organization exhibited total wee qwrre ye disregard of the public interest and an attitude quite callous in relation to one of its old customers. It took action without any regard to its financial survival. Cutting off its supplies might well have meant that it would go out of business. The whole exercise constituted what may be fairly described as one of quite brutal force by a large and powerful organization against a weak and vulnerable firm carried out in support of a system of a stabilized level of retail prices over a large area of New South Wales itself in conflict at least with the spirit of the Trade Practices Act. It so happened that Coin Operated was able to survive by putting all its assets into the hands of ESANDA. But the organization was not to know that it would be able to do this. But by the steps that it took the organization succeeded in preventing Coin Operated selling television sets, other than those already in its possession, at prices below the 'go"'prices and was thus enabled to preserve its reputation with its dealers as one ready and able to protect their established price structure and what is equally important to demonstrate the peril of any dealer who might have been tempted to adopt prices below the level generally obtaining. This is the very kind of development which the Act is designed to prevent, The organization and Mr. Kirk in particular were well aware of the provisions of the Trade Practices Act, 42, It was said in Trade Practices Commission v. Stihl Chain Saws (Aust) Pty, Ltd.(1978) A.T.P.R. 17,882 at p.17,896 as to the principles applicable to s.76:- "The penalty should constitute a real punishment proportionate to the deliberation with which the defendant contravened the provisions of the Act. It should be sufficiently high to have a deterrent quality and it should be kept in mind that the Act operates in a commercial environment where deterrence of those minded to contravene its provisions is not likely to be achieved by penalties which are not realistic, It should reflect the will of Parliament that the commercial standards laid down in the Act must be observed, but not be so high as to be oppressive." ghee ahpnees meni ramieee bte m ane nan Pa omy ke ny creatine oe oa ge ' cf also Trade Practices Commission v. Madad Pty. Ltd. (1979) A.T.P.R. 40-105 and Trade Practices Commission v. Malleys Limited (judgment of Lockhart J. 13 July 1979) The circumstance that the relevant events occurred over a relatively short period of time, that they involved a relatively small quantity of trading stock, that Coin Operated was at all times in a relatively small way of business are of course matters to which regard is to be had, But these considerations operate in two ways. It is the policy and the intendment of the statute that the individual in his weakness is to be protected against the strong. The critical element in the appellant's conduct was its willingness to use its strength and that of its associated company against the weak in contravention of the Act in the interests of itself and of its associateicompany and to support a retail price level adopted by dealers acting expressly or impliedly in common, Accordingly it is ourview that from the point of view of substance the findings of the learned Judge were sound and as indicated above, would acco.d withourown. The penalty seme Mate artrh meine Litter ow ett levi satay eee 43, may well be described as heavy but the circumstances are such that it is hot to be seen as so heavy as to suggest in itself the application of an erroneous judgment of fact or an error of law. I see no reason to doubt that it was arrived at after a proper consideration of all relevant matters. There remains the question of the injunction granted by the learned Judge, in rather wide terms, restraining the appellant from the practice of resale price maintenance in relation to the marketing of television receivers under the trade name "Pye", It was urged by the appellant that, whether or not it was entitled to relief in respect of the amount of the penalty, the circumstances were such that the imposition of an injunction was inappropriate and the injunction should be discharged by this Court. The appellant relied in particular upon the circum-— stances that since the events giving rise to the imposition of the penalty there had been a complete change of personnel in the Board of Directors of the parent company whose responsibility is to a different commercial group and of a change in the majority of the responsible officers of Pye Finance and Pye Sales. pee ee ne 1 Peed aed nate Timbdnee altel ten etekigey = pm Ppt AeA tenet eee pe a nent the 2} f the Honou 2 tree convo aa 1@rein of S33 « * "xs thes thos and the fordy Ae, . 3 une 2t >, eas Dn > 1. a nee ce dT Jucvived Sm thers, T: B.Sucsnay and Nor Mvrop Ree T poe It was submitted that having regard to all that has occurred including the imposition of a heavy fine it would be a reasonable view that the likelihood of a repetition of the class of conduct which constituted the contraventions of the Act is insufficient to require the granting of an injunction under s.80(1) of the Act. Reliance was also placed on the passage of time since the contraventions giving rise to the penalty imposed on the appellant and there is no evidence of any repetition of proscribed conduct. It is our view that the court should accept and act upon these submissions, Accordingly the order of the Court is that:- ne CL \ Aan a) the injunction granted on 29 November 1978 be discharged; Tins Associat low uw otherwise the appeal be dismissed; the appellant pay to the respondent one half of its costs of and incidental to this appeal. vated: /7 Avgusk 'q1g ° Te ne Se eer