« IN THE FEDERAL COURT OF AUSTRALIA } NEW_SOUTH WALES DISTRICT REGISTRY N.S.W. No. G9 of 1977 GENERAL DIVISION ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: S.W.B. FAMILY CREDIT UNION LTD. Appellant (First Defendant) and PARRAMATTA TOURIST SERVICES PTY. LIMITED Respondent (Plaintiff) CATCHWORDS Trade practices -— exclusive dealing - offer by credit union to credit account of member with rebate if member made booking through particular travel agent -—- whether crediting of rebate provision of "services" ~— whether offer by credit union to provide rebate made on condition that member "will" deal with travel agent - Trade Practices Act 1974 s.4, s.47(6). IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N.S.W. No. G9 of 1977 GENERAL DIVISION ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: S.W.B. FAMILY CREDIT UNION LTD. Appellant (First Defendant) and PARRAMATTA TOURIST SERVICES PTY. LIMITED Respondent (Plaintiff) ORDER JUDGES: Smithers, Northrop, Sheppard, JJ. DATE OF ORDER: 31 October 1980 WHERE MADE: Sydney THE COURT ORDERS THAT: 1. The appeal be allowed with costs. 2. The orders made on 27 February 1979 be discharged and in lieu thereof the proceedings be dismissed with costs. 3. The cross appeal be dismissed with costs. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY G No. 9 of 1979 GENERAL DIVISION BETWEEN: S.W.B. FAMILY CREDIT UNION LIMITED Appellant AND: PARRAMATTA TOURIST SERVICES PTY. LIMITED Respondent Coram: Smithers, Northrop and Sheppard JJ. ° St October 1980 REASONS FOR JUDGMENT SMITHERS J.: This is an appeal by S.W.B. Family Credit Union Ltd. the first~named defendant in the proceedings below and a cross appeal by the respondent Parramatta Tourist Services Pty. Limited, the plaintiff in those proceedings, against a decision of Franki J. restraining the appellant, (a) from offering in trade or commerce to collect and distribute by any means monies for a member of it on the condition that that member will acquire travel agent's services from Australian Credit Services Corporation Limited and, (b) from offering in trade or commerce to supply services to any member on the condition that that member will acquire travel agents' services directly or indirectly from another person in contravention of the provisions of sub-sections 47(1) and (6) of the Trade Practices Act 1974. The second named defendant in the proceedings was a corporation named Australian Credit Services Corporation Limited, trading as Alliance Travel Service (Alliance). That defendant 1s also an appellant against an order which was made against it at the trial but that appeal has not yet been heard. The relevant facts are shortly stated and are not in dispute. The appellant, S.W.B. Family Credit Union Ltd. is a Credit Union incorporated pursuant to the Co-operation Act 1923 of New South Wales (c.f. Credit Union Act 1969). In accordance with its Memorandum and Articles of Association it 1S a non-profit organization. The Union, amongst other things provides loans to its members. It also endeavours to provide other benefits to 1ts members, particularly such as may be based on the market power each member gains by being associated with a large group acting co-operatively. All members have savings accounts with the Union. Prior to the events in respect of which the proceedings herein were brought, Alliance, a travel agent, proposed to the appellant that for $100 it should purchase a number of shares in Australian Credit Services Corporation Limited and thereby become "an association member" of Alliance whereupon it would become entitled to receive from Alliance four per centum of the amount paid by any member of the appellant in the purchase through Alliance of an overseas air travel ticket. This proposal was accepted. The appellant expended $100 in obtaining shares in Australian Credit services Corporation Limited and became entitled to receive the amount of four per centum of overseas air fares paid by its members for overseas air travel arranged by them through the agency of Alliance. It was at all times contemplated by the Appellant that the sums received by 1t pursuant to this arrangement should be credited to the account of the member who had paid the fare in respect of which this "rebate" as it was called, was received. By resolution dated 17th February 1976 the directors of the appellant decided that the rebates received by 1t 1n respect of purchases of air travel tickets through the agency of Alliance Travel by its members should be passed on to the members from whose purchases the rebates had arisen. The mechanics of the arrangement were that the appellant's member would buy his travel ticket for overseas travel through Alliance and approximately one month after he had departed from Australia Alliance would forward a cheque for four per centum of the purchase price of his fare to the appellant and the appellant would then credit the amount thereof to the account of the member who had made the purchase of the air fare. The appellant made known to its members the benefit available to them by reason of the arrangement outlined above. One instance of its so doing was to include in a publication called "S.W.B. Family News" in its issue of June 1976 an intimation in the following terms:- "ALLIANCE TRAVEL SERVICE The introduction of this service for members in April of this year proved to be very successful. As many members would now be aware, Alliance Travel offers a very comprehensive range of services as a Travel Agency. One of the major benefits which 15s passed on to members by your Credit Union is an additional rebate of 4% of the cost of their trip. This rebate 1s credited to members' Savings accounts after they have departed on their trip. The rebate applies to: - All forms of air travel except domestic flights...." Intimations to similar effect were included in numerous of such publications. It would appear that members acted in response to such intimations, and purchased air travel tickets through Alliance which duly paid to the appellant amounts equal to four per centum of the amounts of fares paid by members of the appellant in respect of overseas travel, and that the appellant duly credited the accounts of the members concerned with the amounts received by 1t from Alliance. It 1s clear also that the various intimations referred to above constituted offers by the appellant to its members that it would accept and process the sum received by it as four per centum of the fare paid by any member for an overseas air ticket through Alliance Travel and would credit that amount to the account of the member concerned and that such offer was capable of acceptance by any member by his purchasing an overseas airfare ticket through Alliance travel. There can be no doubt that any member who responded to the appellant's intimation as above had an enforceable right to receive, by way of credit to his account with the appellant, the amount of the rebate received by the appellant. The respondent, Parramatta Tourist Services Pty. Limited applied to this Court pursuant to s.80 of the Trade Practices Act 1974 {the Act) for injunctions restraining the appellant, in effect, from offering to 1ts members the benefits mentioned in the intimations above referred to or making those benefits available. It appears from the Statement of Claim that the grounds on which such relief was sought were, that in amplementing the offer to their members the appellant supplied services to those members on condition "that those members acquire" services of a particular kind from another person in contravention of the provisions of s.47(1) as elucidated in s.47(6) of the Act, and in offering to supply to its members services, namely the obtaining of cheap air fares on condition "that such members acquire" all or part of their requirements of travel agency services from Alliance the appellant acted in contravention of s.47(1) of the Act as elucidated in s. 47(6). Sub-sections 47(1) and (6) of the Act provide that :- "{1) Subject to this section, a corporation shall not, in trade or commerce, engage aun the practice of exclusive dealing. (6) A corporation also engages in the practice of exclusive dealing if the corporation —- (a) supplies, or offers to supply, goods or services; (b) supplies, or offers to supply, goods or services at a particular price; or (c) gives or allows, or offers to give or allow, a discount, allowance, rebate or credit in relation to the supply or proposed supply of goods or services by the corporation, on condition that the person to whom the corporation supplies or offers or proposes to supply the goods or services, or, if that person 1s a body corporate, a body corporate related to that body corporate will acquire goods or services of a particular kind or description directly or indirectly from another person not being a body corporate related to the corporation." This sub-section has been subsequently amended by Act No. 206 of 1978 which deletes the words in italics, however, the effect of this amendment does not materially alter the provision in relation to the matters under consideration in this case. No relief was granted by the learned Judge in respect of the allegation that the appellant had supplied services on the proscribed condition, and there is no suggestion that the respondent was entitled to any such relief. In his reasons for granting the injunctions restraining the appellant from offering services to its members on condition that they acquire services from Alliance the learned Judge found:- (a) that collecting and distributing the rebate of four per centum of the cost of air fares paid by a member of the appellant to Alliance and crediting the amount thereof to the credit of the member's account was a "Service" within the meaning of that word in s.47(6) of the Act. (b) that the offer of the appellant to supply this service to members who purchased their overseas air travel tickets through the agency of Alliance was an offer to supply that service "on the condition" within the meaning of those words in s.47(6) of the Act. (c) that the terms of the condition were that the member "will acguire" services of a particular kind or description from another person within the meaning of those words in s.47{6) of the Act. With respect to the first of those findings the learned Judge referred to the definition of services in s.4(1) of the Act, in particular that portion of the definition expressed as follows, namely "In this Act unless the contrary intention appears ... services includes any rights, ... benefits, privileges or facilities that are, or are, to be provided, granted or conferred in trade or commerce ..." His Honour took the view that the provision of facilities for the collection of rebates by the appellant and the allocation to the account of a member concerned was the supply of a service within the meaning of s.47(6) as it were, at least, the supply of a benefit or privilege to him. In this appeal 1t was contended that the expression "service" 1n s.47(6) was never intended to apply to procedures of the kind which the appellant offered to operate for its members who bought air travel tickets from Alliance. The contention was made in broad terms that the arrangement between the appellant and a member who responded to the offer made by the appellant ought to be characterised in some way as an internal domestic arrangement between the appellant and its members which resulted in the handling by the appellant of the money received by the appellant so that 1t found its way to being a credit in the member's account, but not having the character of a "service" rendered by the appellant to its members. This argument was difficult for counsel to formulate in precise terms and it 18S easy to understand why. The intimation by the appellant to its members makes it clear that Alliance will provide a range of services for members of the appellant and that one of the major benefits is a rebate of four per centum on the cost of a member's overseas air travel and that this benefit will be passed on to members by the appellant. It 1S implied in this intimation that the rebate will be paid by Alliance to the appellant and it is clear that 10. the appellant undertakes to accept the amount of the rebate, "process" it, and place it to the credit of the member's account, or in other words pay the money to the member. Clearly the appellant regards this as a service which it is wise to render in the course of its business. It must be a benefit to a member that the appellant would accept the rebate money from Alliance and ensure that the member received the benefit thereof in his account. And although the intimation 1s publicised as expressed in colloguial language reflecting a kind of family atmosphere between the appellant and its members there can be no doubt that it 1s put forward as a business proposition intended to create legal relations between the appellant and any member who acted upon it. The intimation invites action by the appellant's members on a business basis and a member responding to the invitation could clearly enforce the promise to pass on the benefit. This would appear to be in line with the view which commended itself to the learned trial Judge. On behalf of the appellant it was also contended that the offer contained in the intimation was not made on the condition specified in s.47(6). It was said, in this connection that the critical words of s.47(6) are "will acguire". It was said that from those words 1t 1s to be seen that 1t 1s only when a transaction involving a supply or offer of supply to a person on the proscribed condition 1s performed, or intended to be performed, in such a way that the ll. supply or contemplated supply will precede the acquisition by that person of the goods and services that 1t satisfies the requirements of s.47(6). In other words the expression "will acquire" has a temporal significance. It is to be observed that in the Statement of Claim the allegation made against the appellant is that it supplied and offered to supply services to its members on the condition that such members "acquire" services from Alliance. It is to be noted that either because of some sensitivity in relation to the last mentioned argument, or otherwise, the pleader chose to proceed on the basis that the word "will" could be ignored. But clearly 1t cannot. The learned judge said of this aspect of the problem:- The third question raises the isssue whether the words "will acquire" services of a particular kind imposes any temporal test which 1s not' satisfied. Whilst there may be some problem with the words "will acguire"™ if one merely considers the supply of the services by the collection, distribution and crediting of the rebates to the traveller which, of course, does not take place until after the traveller has acquired the services of the travel agent, Alliance, the section can best be read against the facts of the Credit Union offering to supply the services in relation to the rebate on condition that the traveller wlll acguire the travel services from Alliance. Read against these facts, the section, in my opinion, covers' the conduct of the Credit Union and I am satisfied that the Credit Union is in breach of it." And yet there 1S something unsatisfying in the notion 12. that the conduct involving an actual supply of services by, for instance, A to B on the condition that B will acquire services from C 1s unlawful only if the supply by A to B precedes the acquisition by B of the services from C, whereas if what A has done 1s to offer to supply services to B on the condition that B acguires services from C, his conduct 1s unlawful whether the offer provided that A was to supply services to B before or after B acquired the services from C. And to my mind there would be something artificial in a temporal test of this kind either in relation to the supply of services on the proscribed condition or an offer so to supply services. It appears to me that adoption of the temporal test may proceed from an erroneous construction of the provisions of s. 47(6). It may be observed that in a statute of cognate nature where a temporal concept was clearly contemplated by the legislature the form of the relevant statute was such that the concept clearly appeared. Thus s.7A(1l) (a) of the Australian Industries Preservation Act 1906 states:- "Any person who, in violation to trade or commerce ... in respect of dealing with any goods or services ... gives, offers or promises to any other person any rebate ... upon the condition ... that the latter person (a) deals, or has dealt or will deal or intends to deal exclusively with any person ... 13. 1s guilty of an offence." The contrast between the form adopted in this section and that adopted in s.47(6) of the Act is clear. In Re Ku-ring-gai Co-operative Building Society (No.12) Ltd. (1978) 36 F.L.R. 134 The Federal Court considered whether the practice of the Society to require a member thereof who borrowed money from it on mortgage of property to insure the property in the joint names of the Society and the borrower with a nominated insurer constituted exclusive dealing within the meaning of s.47(6) of the Act. It was argued that the condition or requirement that the borrower so insure was not imposed by the Society but was to be found in its rules and that this circumstance distinguished it from the kind of condition referred to in s.47(6). It was pointed out by Deane J. at p. 167 that:- "The practice of exclusive dealing does not necessarily involve the amposition of any condition. It involves supply upon a condition. The condition may well have been suggested by the recipient of supply. It may have been imposed by some third party. It may arise,by implication, from all the circumstances in which the goods or services were supplied. Even if the relevant condition upon which a loan was made was that contained in 14. the rules of the [Society] a loan by [1t] to one of its members would, if that condition were applicable to it, be, for the purposes of s.47 of the Act, a supply of services upon that condition. The section does not look to the origin of the condition upon which there 1S a supply of services. The section looks to the supply of services upon that condition." Accordingly for the purposes of s.47 the essential question in relation to services supplied is whether they are supplied upon the condition, whatever its origin, that the person to whom they are supplied "will acquire" relevant services from another person. But the condition must be one which applies to the transaction in accordance with which the supply takes place. And it would seem equally clear that the terms of the condition must be that the person to whom the services are supplied will acquire relevant services from another, and prima facie at least, oblige that person so to acquire such services. Section 47(6) enacts that exclusive dealing has occurred where a corporation (A) supplies services to a person (B) on condition that that person will acguire particular services from another person (C). The act of exclusive dealing 1s complete at the moment of supply provided that the act of supply 1s performed on the condition, arising either as a term agreed upon by A and B, or applicable to that transaction by reason of external circumstances, that B "will acquire" the contemplated services from C. Such external circumstances might exist where 15. the condition was "imposed" by some third party as contemplated un the remarks of Deane J. set out above. But in any event the act of exclusive dealing is complete when the condition that the recipient of the services supplied will acquire the relevant services from another has application to the transaction of supply and the supply takes place. It is clear that the act of exclusive dealing contemplated by the section is the supply of services by A to B in circumstances such that it 18 a correct assessment of the facts, as at the moment of supply, to say that the act of supply has been performed pursuant to a transaction the terms of which include some sort of arrangement as between A and B to which of course B 1S a party which gives to the supply the character of being made on the condition that B will acquire the services from C, or to which some external factor is applicable which gives that character to the supply. A supply in other circumstances might be a supply on the hope or even on the expectation that B would acquire the services from C, but it could not be a supply "on the condition" that B will acquire such services. It 1s useful in the first instance to consider the sub-section as though it contained no reference to making offers. In that case, for present purposes, the specified conduct will be committed where A supplies services to B on the condition that B will acquire services from C. And one asks what 1s involved in this. It seems clear that the condition would normally arise only where the supply by A to B 1s part of 16. a transaction in which B has undertaken to A that he will acquire services from C. If one imagines a case 1n which A and B have agreed that A is to supply services for which B 1S to pay the price and the agreement contains no condition that B 1s to acquire services from C, then, if A supplies the services clearly the conduct specified in s.47(6) has not been committed. If, where such an agreement has been made, A notifies B, before or after A supplies the services to B pursuant to the agreement between them that he is supplying the services to B on condition that B acquires services from C that notification is ineffective to alter the terms of the contract or to impose the condition. The terms of the transaction between A and B have been determined by agreement and A cannot unilaterally introduce a new term or condition. However, 1f£, in circumstances where there is no such concluded agreement A offers services to B intimating to B that they will be supplied on the condition that B will acquire services from C and B accepts the services as supplied by A he thereby "accepts" the condition. Then clearly A has supplied the services on the proscribed condition. And just as clearly 1t 18 a case in which B has committed himself contractually to acquire the relevant services from C. Unless in some such way B has committed himself to acquire services from C there 18 no way Save where the condition is imposed by a third party in which a transaction can come into existence pursuant to which A can effectuate a supply of services to B on the condition that B wiil acquire services from C. And even where the condition is imposed by a third party 1t 18 still a 17. condition that the recipient of the services supplied will acquire relevant services from another and therefore one which imposes an obligation on the recipient so to do. The very concept of one person supplying services to another on condition that the other will do something presumes the existence of a transaction one of the terms of which is that the person supplied with the services promises to do that thing. For the purposes of the sub-section 1t would matter not that the commitment or obligation was unenforceable, whether it was given formally or informally, was express or implied, or in any form of arrangement or understanding. Provided the parties understood one another the condition would arise and be a condition for the purposes of the sub-section. See s.47(13) (a) which 18 in the following terms:- "(13) In this section - (a) a reference to a condition shall be read as a reference to any condition, whether direct or indirect and whether having legal or equitable force or not, and includes a reference to a condition the existence or nature of which 1s ascertainable only by inference from the conduct of persons or from other relevant circumstances; 18. Once it is seen that in relation to a case of actually supplying services that the conduct specified in s.47(6) 1s committed when and only when B has made some kind of commitment Or incurred an obligation to acquire services from C, then the true significance of the expression "will acquire" is apparent. What 1s indeed contemplated by the sub-section 1s a case in which B undertakes that he will acquire services from C. In that case the services are supplied to him on the condition that he will acquire services from C. In those circumstances one has passed away from the notion that the expression "will acquire" has a temporal significance. It has a real significance closely touching restrictive trade practices. Once B has given an undertaking or acquired an obligation to acquire services of a particular kind or description from another person, trade has been restricted. B is restricted in his choice of supplier in acquiring those services. But unless in some way expressly or by implication he has accepted or has become subject to such a restriction then trade is not restricted. And it is to be observed that s.47 of the Act is in Part IV thereof which 1s headed "Restrictive Trade Practices". But of course s.47(6) is concerned not only with a supply upon the proscribed condition but also with offers to supply on the proscribed condition. In relation to the provisions of the sub-section concerning the making of offers on the proscribed condition a nice question of construction arises. It 1s possible to construe the terms of the sub-section on the basis that the - 19. expression "will acquire" does have a temporal construction. If 1t does then the sub-section 1s to be construed as specifying a situation in which A offers to supply services to B conditionally on B acquiring services from C at some time after the making of the offer. If this is the correct construction of the sub-section then the conduct specified therein as exclusive dealing is committed as soon as the offer 1s made regardless of whether B accepts the offer or performs the condition or not and what 1s more important, regardless of whether for instance A's offer is to supply services on condition that B undertakes to acquire services from C or on the condition that B does acguire services from C. If this be the correct construction then the word "will" has no function to perform. It could be replaced by "does" but that would add nothing to the meaning. But in the discussion above concerning the case where the conduct specified in the sub-section 1S committed by services actually being supplied it has become apparent that the word "will" does have significance. It expresses the part played by B 1n the giving of his commitment or undertaking that he will acquire the services from C. And as has been seen it 1s that which imports trade restriction to the contemplated situation. It 1S a natural sequel to this that the word "will" 1s to perform the same function of substance in relation to the conduct which the sub-section specifies to be excluSive dealing arising 20. out of an offer. It will perform this function if on its proper construction the sub-section refers to an offer to supply services on condition that the person to whom the offer is made undertakes to acquire particular services from another person. And 1£ it is so construed it brings the substance of unlawful conduct arising out of an offer into harmony with that of conduct arising out of an actual supply. In one case the specified conduct 1s conduct which does not restrict trade. In the other the offer 1S to do business on terms which if accepted would result in a restriction on trade. What 1s struck at is an offer, the framework of which is, "I offer to supply services to you on condition that you undertake to acquire services from another", The framework of the appellant's offer in this case was "We offer to supply services to you if you do acauire services from another", True it is that by acquiring the services the member accepted the offer made in this latter form but the offer which he accepted was not one, acceptance of which, ever involved him in undertaking that he would acquire the services from another. The offer actually made could not be accepted by the member saying, "I will acquire the services you indicate from the person indicated." It could only be accepted in the manner specified, namely by the offeree actually acquiring services from the person indicated. In connection with the problem of construction 1t appears to me to be sound to regard the proscribed condition of a supply 21. or proffered supply as a condition that the person receiving the supply or receiving the offer of supply shall undertake to acquire particular services from another person. In my opinion it 1s almost inevitable that the section should be construed similarly 1n relation to the circumstances where what 1s involved is an offer in relation to a transaction of actual supply. To do so does no violence to the language and gives significance to the word "will" in the expression "will acquire". It lays a foundation of relevance to conduct which is forbidden by s.47(1) in accordance with the objective of Part IV of the Act. It has in it no touch of artificiality. I am of the opinion that the sub-section should be so construed. On the facts of this case the offer made by the appellant was not made on the condition that any of its members should undertake to acquire services from Alliance. It merely promised them a benefit if they did. This is not a contravention of s.47. It will be seen that the foregoing observations proceed on the basis that the provisions of s.47(6) relate to a situation in which the relevant supply or offer to supply services is made on the condition that the person supplied or to be supplied will acquire services directly or indirectly from a designated person. The section does not expressly so specify. It is possible that Parliament intended to proscribe conduct constituting a supply of goods or services on the condition merely that the person supplied would acquire 22. Particular goods or services from somebody, but nobody in particular. Such a provision would be aimed at preventing the promotion, by a supplier of goods or services, of the acguisition by the recipient thereof of particular goods or services generally in the market by stipulating that the supply of the goods or services made by him was conditional on the recipient so acquiring such goods or services. A provision proscribing the supplying of goods or services on condition that the recipient will acquire particular goods or services from a particular person is aimed at prevention of arrangements promoting the purchase of particular goods and services exclusively from a designated particular supplier. Whether Parliament intended to proscribe both or only one of such courses of conduct is a question of construction of the statute. On this guestion the words "directly or indirectly" where they appear in s.47(6) immediately before the expression "from another party" play an important part.In relation to the concept of acquiring goods or services from an unidentified random source these words serve no purpose, and from a logical point of view they are not only inapt, but do not fit. On the other hand they are quite appropriate and have a useful purpose to perform in the concept of acquiring goods or services from an identified source. It is my opinion therefore that the section 1s certainly aimed at prevention of arrangements promoting the acquisition of particular goods and services exclusively from a particular and designated person, and operates according to the construction 23. thereof set forth above in these reasons. In the result I consider one 1s led without equivocation to the conclusion that an offer to supply services on condition that the offeree will acquire services directly or indirectly from a designated person is conduct specified in s.47(6) only where the offer 1s to supply such services on the condition that the offeree undertakes or otherwise incurs an obligation to acquire the goods or services. Accordingly the appeal should be allowed, the cross appeal dismissed, the order set aside, and the respondent should pay the costs of and incidental to this appeal in the proceedings below. eee ae, a : i i }. eert-'y that this and the twawly he { bi-ea. oft 7. 22 @ trae copy of tre | PDenari ed 7 a. awat nerean of bis Honour t - ' PYr. oc Lt Spt aes : IN THE FEDERAL COURT OF AUSTRALIA N.S.W No. G 9 of 1977 ) ) NEW SOUTH WALES DISTRICT REGISTRY ) ) ) GENERAL DIVISION ON APPEAL FROM THE FEDERAL CCURT OF AUSTRALIA BETWEEN: S.W.B. FAMILY CREDIT UNION LTD. Appellant (First Defendant) and PARRAMATTA TOURIST SERVICES PTY. LIMITED Respondent (Plaintiff) NORTHROP J. REASONS FOR JUDGMENT 31 OCTCBER 1980. This 1S an appeal from a judgment of the Federal Court constituted by a single judge brought as of right under s.24 Federal Court of Australia Act 1976 as amended. The respondent to the appeal, Parramatta Tourist Services Pty. Limited, hereinafter called "Parramatta", carries on the business of a travel agency and obtained orders against the appellant, S.W.B. Family Credit Union Ltd., hereinafter called "the Credit Union", and Australian Credit Services Corporation Ltd., trading as the Alliance Travel Service, hereinafter called "Alliance", as follows: "1. That S.W.B. Family Credit Union Limited be restrained by itself, its servants or agents from offering in trade or commerce to collect and distribute by any means moneys for a member of it on the condition that that member will acquire travel agents' services from Australian Credit Services Corporation Limited. 2. That S.W.B. Family Credit Union Limited be restrained by itself, its servants or agents from offering in trade or commerce to supply services to any member on the condition that that member will acquire travel agents' services directly or indirectly from another person in contravention of the provisions of sub-sections 47 (1) and (6) of the Act. 3. That Australian Credit Services Corporation Limited be restrained by itself, its servants or agents from engaging in conduct that constitutes aiding, abetting or counselling S.W.B. Family Credit Union Limited, in trade or commerce, offering to collect and distribute by any means moneys for a member on the condition that that member will acquire travel agents' services from Australian Credit Services Corporation Limited. 4. That Australian Credit Services Corporation Limited be restrained by itself, 1ts servants or agents from engaging in conduct that constitutes being in any way directly or indirectly, knowingly concerned in or a party to S.W.B. Family Credit Union Limited offering i1n trade or commerce to collect and distribute by any means moneys for a member on the condition that that member will acquire travel agents' services from Australian Credit Services Corporation Limited. 5. That the respondent pay the applicant's costs including any reserved costs." The Credit Union appeals from the whole of the judgment. The Credit Union is incorporated under the provisions of the Credit Union Act 1969 (N.S.W.) as amended, and is a corporation under s.47 Trade Practices Act 1974 as amended, hereinafter called "the Act". The Credit Union 1s typical of credit unions generally which have been described by Mason J. in R. v. Marshall Ex parte: Federated Clerks Union of Australia (1975) 132 C.L.R. 595 at p.604 as follows: "A credit union 1s a group of natural persons united by some common bond - whether it be the area in which they live, the place where they work, the religion to which they subscribe or some other characteristic - who agree to save regularly to give and to lend their savings to One another at a low rate of interest. In Australia credit unions are incorporated as co-operative or credit societies under the legislation in force in the various States, e.g. the Credit Union Act, 1969 (N.S.W.), as amended, the Co-operation Act 1958 (Vict.), as amended." The Credit Union, together with other credit unions, 1s an associate member of Alliance, which carries on business as a travel agency. One of the activities carried on by each of Parramatta and Alliance 1s the organizing of overseas trips on behalf of persons in Australia. As part of this activity Parramatta and Alliance receive payments from their clients for the purpose of paying for the costs of the trip about to he undertaken, and from the monies so received retain commission for their own benefit. An arrangement has been entered into between Alliance and the Credit Union under which Alliance has agreed with the Credit Union that where a member of the Credit Union obtains certain travel services from Alliance and pays Alliance the full amount of money for the travels about to be undertaken, Alliance will pay to the Credit Union a commission rebate representing 4% of the total travel cost to the member, the commission rebate to be paid after the member has entered upon his travels. The commmission rebate is part of the commission allowed to Alliance by the airlines, the shipping companies and other bodies with whom the travel was undertaken. Under the arrangement the Credit Union is free to pass on the whole or a part of the commission rebate so received by it to the member who had paid Alliance for the travel services provided. The Credit Union has resolved that the whole of the commission rebate received by it from Alliance be passed on to its member who had paid Alliance for the travel services undertaken by crediting to that member's savings account with the Credit Union the amount of commission rebate so received. As part of the arrangement the Credit Union acts as a promotional medium for Alliance and directs all enauiries from its members concerning travel to Alliance. The payment of the commission rebate to the Credit Union 1s said to be in consideration of the promotion by the Credit Union of the services provided by Alliance. Pursuant to the arrangement the Credit Union promoted Alliance to its members with particular reference to the benefit that would be received by a member of the Credit Union who made use of the services provided by Alliance. An 1llustration of the promotion can be seen from the following information appearing in the publication "S.W.B. Family News" issued by the Credit Union. In the March 1976 issue a full page advertisement appeared depicting a new service for members to be provided by Alliance in which Alliance is described as "YOUR CREDIT UNION'S AGENCY". Some extracts from the advert- 1sement are set out: "The formation of Alliance Travel 1s the direct result of a number of Credit Unions and Co-operatives getting together to provide a service for their members. Our own Credit Union is a co-owner of Alliance Travel. Alliance Travel can arrange the many types of travel service that travellers and tourists require, including Air, Sea, Land, Road, Rail, Drive Yourself Cars, Package Tours, Accommodation and Insurance." "The Credit Union can make loan facilities available to those members who wish to arrange finance for travel. Members will be required to have proof of membership with the Credit Union when enguiring at Alliance Travel, and we therefore Suggest that your membership card. be available. On many forms of travel, special discounts are available. These discounts will be passed on to the Credit Union for transfer to the member - the members current savings account will be credited with the discount." In the June 1976 issue the following paragraph appeared: ALLIANCE TRAVEL SERVICE The introduction of this service for members in April of this year proved to be very successful. As many members would now be aware, Alliance Travel offers a very comprehensive range of services as a Travel Agency. One of the major benefits which is passed on to members by your Credit Union is an additional rebate of 4% of the cost of their trip. This rebate is credited to members' Savings accounts after they have departed on their trip. The rebate applies to: - All forms of air travel except domestic flights. - Package holiday tours both overseas and on the domestic scene including costs of air fares and all accommodation. - Cruises arranged by all of the major shipping lines. - Holiday accommodation both overseas and in Australia booked through Alliance. ALLIANCE TRAVEL can arrange all forms of travel both in Australia and overseas at a direct cost saving to members of S.W.B. Family Credit Union Limited - WHY NOT GIVE THEM A CALL - 212 4331 or 212 4108." Parramatta commenced proceedings in the Federal Court seeking injunctions under s.80 of the Act claiming that the Credit Union and Alliance were each engaging in conduct which constituted and constitutes a contravention of s.47(1) of the Act. That sub-section provides as follows: "47.(1) Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing." Sub-sections (2) - (9) inclusive of s.47 describe conduct which constitutes the practice of exclusive dealing, but in order to constitute a contravention of s.47(1) that conduct must be conduct by a corporation in trade or commerce. Sub-section (6) as presently in force is as follows: "(6) A corporation also engages in the practice of exclusive dealing if the corporation - (a) supplies, or offers to supply, goods or services; (b) supplies, or offers to supply, goods or services at a particular price; or (c) gives or allows, or offers to qive or allow, a discount, allowance, rebate or credit in relation to the supply or proposed supply of goods or services by the corporation, on the condition that the person to whom the corporation supplies or offers or proposes to supply the goods or services or, if that person is a body corporate, a body corporate related to that body corporate will acquire goods or services of a particular kind or description directly or andirectly from another person." The amendment to the sub-section made by s.9 Trade Practices Act 1978 and which came into operation on 6 December 1978 can be ignored for present purposes. Sub-sections (10) - (12) anclusive limit the application of sub-section (1) with respect to the practice of exclusive dealing constituted by a corporation engaging in conduct of a kind referred to in some of the earlier sub-sections, but does not affect conduct of the kind referred to in sub-section (6). Sub-section (13)(a) 1S as follows: "(13) In this section - (a) a reference to a condition shall be read as a reference to any condition, whether direct or indirect and whether having legal or eguitable force or not, and includes a reference to a condition the existence or nature of which is ascertainable only by inference from the conduct of persons or from other relevant circumstances;" Parramatta claims that the Credit Union, by engaging un the conduct described, engaged in the practice of exclusive dealing under s.47(6)(a) of the Act. By adapting the words contained in s.47(6) 1t was said that the Credit Union supplies or offers to supply services being the collecting, distributing Or crediting to the account of a member of the Credit Union the commission rebate on the cost of travel which the Credit Union receives from Alliance on the condition that that member of the Credit Union will acguire services being travel agency services from Alliance. In support of the contention reference was made to s.4(1) of the Act which provides that in the Act, unless the contrary intention appears, the word "acauire": "ancludes - (a) wee (b) in relation to services - accept;" the word "services": "includes any rights (including rights in relation to, and interests in, real or _ personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce, and without limiting the generality of the foregoing, includes the rights, benefits, privileges or facilities that are, or are to be, (a) (b) (c) (d) provided, granted or conferred under - a contract for or in relation to - (1) the performance of work (1ncluding work of a professsional nature), whether with or without the supply of goods; (1i) the provision of, or of the use or enjoyment of facilities for, amusement, entertainment, recreation or instruction; or (i121) the conferring of rights, benefits or privileges for which remuneration 1S payable in the form of a royalty, tribute, levy or similar exaction; a contract of insurance; a contract between a banker and a customer of the banker entered into in the course of the carrying on by the banker of the business of banking; or any contract for or in relation to the lending of moneys, but does not include rights or benefits being the supply of goods or the performance of work under a contract of service;" - 10 - and the word "supply": "when used as a verb, includes - (a) eee (b) in relation to services - provide, grant or confer, -and, when used as a noun, has a corresponding meaning ..." Likewise, under s.4C, unless the contrary intention appears: "(b) a reference to the supply or acauisition of goods or services incluées a reference to agreeing to supply or acauire goods or services;" Applying those provisions of the Act 1t was contended that the Credit Union engaged in the practice of exclusive dealing by supplying or offering to supply the service of collecting, distributing, and crediting the account of its member on the condition that the member would acquire his travel services from Alliance. In my opinion, the conduct of the Credit Union is to be analyzed in the following manner. The Credit Union notifies 1ts members that Alliance 1S prepared to provide a financial benefit being the commission rebate comprising the amount of 4% of the cost paid by members to Alliance for certain travel services organized by Alliance for members of the Credit Union. -ll- The financial benefit is to be received by the member under a procedure by which Alliance pays the amount of that benefit to the Credit Union after the member has entered upon his travels and the Credit Union credits that amount to the account of the member with the Credit Union. -For the purposes of this appeal I am prepared to accept that the conduct of the Credit Union qua its activities with the account of the member constitutes services within the meaning of the word "Services" in s.47(6) of the Act. For the purposes of this appeal I am prepared to accept that the Credit Union supplies those services to 1ts members within the meaning of the word "supplies" in s.47(6) of the Act. For the purposes of this appeal I am prepared to accept that the Credit Union has offered to supply those services to its members. For the purposes of this appeal I am prepared to accept that the conduct of the Credit Union 1s conduct engaged in in trade or commerce. Nevertheless I am not prepared to hold that the conduct of the Credit Union constitutes the practice of exclusive dealing under s.47(6) of the Act. The Full Court was not referred to the rules of the Credit Union and no debate took place concerning the nature of the Credit Union and its relationship with its members. Nevertheless, 1t can be anferred that under its rules the Credit Union supplies services to i1ts members including the keeping of the accounts of its members, the crediting of -12- those accounts with monies due to its members, the lending of monies to its members and, generally speaking, the supplying of financial services to its members. The particular services which are said to be relevant to the present appeal are merely part of the wider range of services provided by the Credit Union to its members. Although those particular services are provided by the Credit Union to members who, as members, pay Alliance for travel services and enter upon their travels, in my opinion it cannot be said that the Credit Union has supplied or has offered to supply those services on the condition that the member will acquire those travel services from Alliance. In one sense it can be said that the acquisition of and payment for the travel services by a member from Alliance is a condition precedent to the supply by the Credit Union to its member of the particular service specified, but that does not mean that the Credit Union supplies or offers to supply those particular services on condition that the member will acquire his travel services from Alliance. It does not matter whether the condition is legally binding or not, see s.47(13)(a) of the Act, but in my opinion the condition must have some attributes of compulsion and futurity. This can be expressed in the form "If we do this, you will (must) do that". A condition in the nature of an obligation must be imposed upon the person dealing with the corporation. The condition to be complied with by that person Must result from something done or to be done by the corporation imposing the condition. -13- The Act relates to trade practices and Part 1V 1s headed "Restrictive Trade Practices". Section 47, which 1s within Part 1V, proscribes the practice of exclusive dealing. The purpose of the section is to proscribe conduct which creates a restrictive trade practice which may affect adversely persons competing with the favoured person. This is illustrated by the Kur-ring-ga1 Co-operative Building Society Case (1978-1979) 36 F.L.R. 134 and Trade Practices Commission Vv. Legion Cabs (Trading) Co-operative Society Ltd. (1978-1979) 35 F.L.R. 372. In the former case the building society required members to whom it lent monies on the security of an interest in real estate to insure that interest with a person nominated or approved by the society. In the second case, the co-operative society required members who received the benefit of radio services provided by it to purchase petrol and o1l from designated service stations. In each case the requirement by the societies imposed an obligation upon the persons to whom they supplied a service to acquire goods or services from other persons designated or approved by the society and to the exclusion of persons carrying on similar businesses to those designated or approved by the society. In each case the arrangement was in the form "If the society does this (supplies the service or offers to supply the service) then you will (must) do that (acquire services from a nominated insurer or acquire goods from nominated service stations)". In each case - 14 - the requirement can be said to be a condition which has attributes of compulsion and futurity. In each case persons competing with the nominated insurer or the nominated service station were affected adversely since the person upon whom the obligation was imposed was not free to acquire services or goods from them. In the present case, the alleged condition or obligation has neither of the attributes of compulsion or futurity. Persons competing with Alliance are not affected adversely in the requisite sense. A member of the Credit Union desirous of acquiring travel services is free to deal with any person engaging in the travel agency business. He 1S not required to perform a series of acts over an extended period. He is not reguired by a condition or obligation to acquire the services of Alliance and Alliance only. If he does acquire the services of Alliance he need not disclose his membership of the Credit Union. If he does acquire the services of Alliance and discloses that he 1s a member of the Credit Union, then upon him paying the full costs of the travel services, and upon him entering on his travels, Alliance is required under its arrangement with the Credit Union to make a commission rebate to the Credit Union and the Credit Union then supplies its services to the member. This arrangement is in the form "If you do that we will (must) do this". No condition in the nature of an obligation 1S imposed upon the person dealing with the corporation. At no time is that person under any -15- obligation to perform or observe the alleged condition. Any obligation that may arise 1s imposed upon the corporation. This conduct does not come within the conduct described by s.47(6) of the Act. It 1S not to be analyzed in the same form as in the society cases. For the reasons already given the cross appeal by Parramatta must fail. I would allow the appeal by the Credit Union, set aside the orders made on 27 February 1979, dismiss the application by Parramatta and order that Parramatta pay the costs of the appeal and of the proceedings in the court below. I would dismiss the appeal by Parramatta with costs. I certify that ths and the (oon 7reV preceding pages are a true copy of the Reasons for Judgment here of the Honourable Mr. Justice yona7Rc 7? ao 7 yo (LU Fake Aggociate Dated: YO" BER 1980 IN THE FEDERAL COURT CF ecrenmal NEw SOUTH WALES DISTRICT REGISTRY No. G 9 of 1977 GENER-L DIVISION ON AFPSsL FROM A SINGLE JUDGE OF THE FebDskaLl COURT UF AUSTR..LIA S.W.B. FAMILY CREDIT UNION LTD. Appellant PaRRsaMATT4A TOURIST SERVICES PTY. LIMITED Respondent CORAM: Smithers, Northrop and Sheppard JJ. SHEPPARD J 31 Ockbion lage REASONS FUR JUDGMENT In this matter I have had the advantage of reading the guegments of Smithers and Northrop JJ. The facts of the matter are there set out and it is unnecessary for me to refer t them again. The only matter I would emphasise is that the payment made by Alliance to the appellant wken a member of the appellant commenced travel booked through Alliance was a pay- ment for the appellant's sole use ana benefit. It was not paid to it as agent or trustee for the member. In fact it decided to pay the whole amount of the rebate to the member concerned but it was not bound to do so. Indeed it was suggested by alliance that it might care to pay 3 per cent rather than 4 per cent, retaining 1 per cent for adminis- trative expenses. The point I stress is that it would have been open to the appellant to retain the entire 4 per cent if it had decided to do so. Thus, the real benefit which tne member obtained from the appellant, if he made his travel arrangements with Alliance, was a payment of money. That is the substance of the matter. True it is that the money came to him from Alliance through the appellant and was 1n a sense a proportion of the moneys he had paid Alliance for the cost of his travel. But in truth and substance the arrangement between the member and the appellant was, "If you the member make your travel arrangements through Alliance and pay them the cost thereof, I, the credit union, will, upon the commencevent of your journey, pay into your account with the credit union 4 per cent of the costs you have incurred", Fut more shortly, the arrangement was that in return for the member making his travel arrangements with Alliance, it would pay him money once his journey had commenced. The benefit found by the learned trial jgudse was said to be, ".... tne vrovision of facilities for the collection of rebates by the Credit Union and the allocation by it pursuant to the resolution of its directors and the crediting of the emount so allocated to the account of the relevant treveller....". To my mind, although what his Honour has said 1s undoubtedly true, couching it in the language he has masks the real nature of the benefit which was afforded. The benefit was the payment of money - nothing more and nothing less. The fact that it was paid pursuant to a resolution of the appellant's directors and credited to the account of the member are but details of how it came about that the money was or was tc be credited to tne account of the mer.ber concerned. The question then is, whether an arrangement, tne sub- stance of which is, "If you will deal with Alliance, I will pay you money", 1s within s.47(6) of the Act. It was not suggested that it was within any paragravh of the sub-sectzon other than peregraph (a). Nor was 1t suggested tnat whet was supplied or offered to be supplied was soods. wnat the respondent must say then (and it does say it) is that the appellant was in breach of tne section beceuse it offerec to supply services (money) on the condition that the merber would (will) acauire travel services from another person (Alliance). The first question is whether the appellant, within the meaning of the provision, offered to provide anv services for the member. The expression "services" is widely defined in s.4. The definition is not an exhaustive one. Relevantly it provides that, in the absence of a contrary intention, the expression "services" includes "any rizhts ...., benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce ....". Apart from the definition one would not readily conclude 3. that a payment of noney fell within the meanins of the word "services", The term is used in contradistinction to the word "soods" (which is also widely defined) but not so as to include money, certainly when used in tne sense of currency. If money were intended by tne oraftsmen to be embraced within the expression "goods or services" ina provision such as s.47(6) one would have erypected it to have been referred to expressly or to be found plainly included in one of the definitions, perhaps the definition of "goods" rather than "services", It was the submission of counsel for the resnondent that it was plainly included in the definition of "services" by reason of the use therein of tho and "facilities" word "benefits"/, Section 47(6) should, so he submitted, de read as providing that a corporation (tne appellant) envages in the practice of exclusive dealing 1f it offers to sunoly a benefit (the payment of money) on the condition thet the person (the member) to whom the appellant offers to supply the money will acquire travel services from anotner person (Alliance). AS a matter of ordinary language an offer to pay money is undoubtedly an offer to supnly or provide a benefit. But the cuestion remains whether the nrovision under consideration was intended to he so understood. In order to reach a conclusion it is necessary to have regard to the whole of s.47(6). Parazraph (6)(bo) thereof contemplates the supply of goods or services at a nerticuler price; paragraph(6)(c) the siving or allowing of a discount, allowance, rebate or credit in relation to tne suoply of goods or services. The expressions "price", "discount", "allowance", "rebate" and "credit" involve the payment or crediting of money, the incurring of an obligation to make a payment or afford a credit of money, or tne supply of goods or services at a price lower than that normally or usually charged. Their use in paragraphs (b) and (c) of the sub- section as the consideration for the supply of the goods and services there referred to would not suggest that they themselves were intended by the draftsman of the legislation also to ke capable of being "goods or services" within the meaning of its provisions. Otherwise the two paragraphs could involve notions of the supply of money at a particular price or the giving or allowing of a discount or rebate in respect of the supply of money. I do not say that there might not be cases where the legislature would wish to provide for such a situation. The question is whether the words it has used in the provision under consideration have that effect, I have referred to the fact that the term money would not usually fall within the expressions "goods" and "services", That puts paid, in my opinion, to any suggestion that the word falls within the ordinary meaning of those expressions. That is a question which must be separately considered because the definitions are inclusive rather than exhaustive. Notwith- standing the use of the word "benefit" in the definition of "services", I am also of opinion that in the context of the sub-section read as a whole the definition does not include as a benefit within the meaning of its terms a payment of money. I wish to make two things clear. Firstly, this case is plainly distinguishable from re Ku-ring-gai Co-operative Building Society (No.12) Limited (1978) 36 F.L.R. 134, There the Building Society certainly provided money on con- dition that the member would insure with a particular insurance company. But the money was paid as part of a transaction pursuant to which the Society provided financial accommodation to a member who wished to borrow money from it. Here the essence of the transaction, as I have earlier emphasised, was to offer to pay money if the member booked his travel through Alliance and embarked upon his journey. No more was involved than the payment of money. Secondly, the only provision which I have considered is s.47(6) of the Act. I express no view in relation to any other provision of the Act. In particular I am not to be taken as deciding that a payment of money can never be a benefit for the purposes of the definition of "services" in s.4 of the Act. The view I have formed makes it unnecessary for me to deal with the point upon which my brothers consider the appellant should succeed. But the matter was extensively argued and I should express my own view about it. In my opinion the learned trial judge was correct in the conclusion to which he came. The unlawful conduct (assuming contrary to my opinion that "services" were provided by the respondent) 6. was the making by the appellant of the offer to pay money once the member had embarked on his journey. The offer was conditional upon his dealing with Alliance and paying it the cost of his travel. It is true that at the time of the making of the offer or offers, the members were in no way bound to deal with Alliance and that any dealing they might have must necessarily have been in the future. But it is the offer to provide services which in this case was relied upon as unlawful. In my opinion the word "will" does not have the signif- icance contended for by the appellant. The section makes it unlawful to supply goods or services or to offer to supply them on condition that the person acquiring them will deal with another. If the conduct relied upon as unlawful is an offer, the fact that the person to whom it is made is at that stage in no way bound to accept it or to deal with the other person is immaterial. The word "will" does not in my opinion require that he be bound. Its presence in the sub-section is explained upon the basis that the draftsman thought it appropriate to use the future tense after the words "on condition that". It has no greater significance when there is an actual sugply of goods or services as distinct from an offer to supply then. But in such a case the parties will, by reason of the supply as distinct from the offer, be in contract. It will be for that reason and not because of the inclusion in the sub-section of the word "will" that the person supplied will be bound to deal with the other person. 7. It was not the primary case of the respondent that it was the actual provision of any services which was unlawful. However, it did additionally rely upon the provision of services as well as the offer to provide them. The learned judge found against the respondent in relation to that matter, matiie ie subject of the cross-appeal. In that respect also I agree with the learned trial judge. I do so because the benefit afforded the member (the crediting of the money to his account) was not to be, and was not in fact, provided until after the member had made firm arrangements with Alliance and embarked upon his journey. Thus the services, if services there be, could not have been provided on condition that the member would (will) deal with Alliance. I would, accordingly, dismiss the cross-appeal. Before concluding, I should say that there was no sub- mission made to the learned trial judge nor to us that the benefit said to have been provided here was not provided, granted or conferred in trade or commerce, That has nothing to do with the question of whether the appellant is a financial corporation. I would think that it is. But the question remains whether the benefit (the payment) was provided in trade or commerce, I have reservations whether it was. I hold those views notwithstanding what was said in re Ku-ring-gai Co-operative Building Society (No.12) Limited (supra). However, the matter was not the subject of any submission or argument. It would be wrong for me ~ to express any concluded view about it and I do not. For the reasons given I would allow the appeal, dismiss the cross-appeal, discharge the orders made by the learned trial judge, dismiss the application and order the respondent to pay the costs of the appeal and of the proceedings below. 9. cre a, orcetuing icortsly {i cS BS < sys 19° 3 ~ft Y te ebaet eastaIS 19 Kane tiugeanpof ba Honour. d jesagione pothole . \- Mr Jusie3 Skeorard es Se s\n Azs2ciate