wa i) ; JUDGMENT NO. smsd dS 84 CATCHWORDS Trade Practices - resale price maintenance - absence of credible evidence to substantiate claim. Trade Practices Act 1974 ss.48, 76, 96 TRADE PRACTICES COMMISSION v. GOLDEN FLEECE PETROLEUM LTD. , CALTEX OIL (AUSTRALIA) PTY.LID. and CALTEX AUSTRALIA LTD. V. No. G 29 of 1983 Northrop J. Melbourne 15 October 1984 NOT CONSIDERED APPROPRIATE FOR FURTHER DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA ) ) VICTORIA DISTRICT REGISTRY ) V. No. G.29 of 1983 } GENERAL DIVISION ) BETWEEN : TRADE PRACTICES COMMISSION Applicant and GOLDEN FLEECE PETROLEUM LID., CALTEX OIL (AUSTRALIA) PTY. LTD. and CALTEX AUSTRALIA LTD. Respondents CORAM: Northrop J. DATE: 15 October 1984 PLACE: MeLbourne ORDER THE COURT ORDERS THAT: i. The Application be dismissed. 2. The Applicant pay the Respondents costs. IN THE FEDERAL COURT OF AUSTRALIA )} ) VICTORIA DISTRICT REGISTRY ) V. No. G.29 of 1983 ) GENERAL DIVISION ) BETWEEN: TRADE PRACTICES COMMISSION Applicant and GOLDEN FLEECE PETROLEUM LTD., CALTEX OIL (AUSTRALIA) PTY. LTD. and CALTEX AUSTRALIA LTD. Respondents CORAM: Northrop J. DATE: 15 October 1984 PLACE: Melbourne REASONS FOR JUDGMENT The Trade Practices Commission ("the Commission") is seeking the imposition of a pecuniary penalty against each of Golden Fleece Petroleum Ltd. ("Golden Fleece"), and Caltex Oil (Australia) Pty. Ltd. ("Caltex") in respect of contraventions of the Trade Practices Act 1974 ("the Act"). In order to understand the application it is desirable initially to set outa summary of the facts which the Commission claims constitute the contraventions of the Act. Golden Fleece and Caltex are each corporations under the Act. Between 1 May 1981 and 31 July 1981, Golden Fleece, as part of its business, supplied throughout Australia petroleum products,..including super grade motor spirit. On 1 May 1981, Caltex acquired ail the issued shares in the capital of Golden Fleece, but until 31 July 1981 Golden Fleece and Caltex were in competition with each other with respect to the marketing of super grade motor spirit throughout Melbourne. From 1 August 1981, Caltex took over control of the marketing of super grade motor spirit previously conducted by Golden Fleece. At all material times Kenneth O'Brien was an employee of Golden Fleece. Until 31 July 1981, he occupied the position of Area Manager and operated in the western suburbs of Melbourne. From 1 August 1981, while still being employed by Golden Fleece, he was seconded to the data processing area. At all relevant times John Armitage was an employee of Golden Fleece. Until 31 duly 1981, he occupied the position of Commercial Sales Manager, Melbourne. That fact was specifically admitted, but as appears later, Armitage was exercising the powers of Marketing Manager, Wholesale, Victoria. :- From.',.1 August 1981, 'while. still being employed by -~-Golden Fleece,- he occupied the position of Engineer, Technical Services. At all relevant times Max. Collins was an employee of, Golden Fleece. Until 31 duly 1981, he occupied the position of Country Sales Manager. From 1 August 1981, while still being employed by Golden Fleece, he occupied the position of Area Manager. At all material times, Mervyn Moroney was an employee of Caltex. Until 31 July 1981, he occupied the position of State Manager (Victoria). On 18 June 1981, an announcement was made by Caltex and Golden Fleece that from 1 August 1981, Moroney would occupy the position of State Manager (Victoria) for Caltex and of State Manager (Victoria) for Golden Fleece. From 1 August 1981, he was State Manager for both Golden Fleece and Caltex with authority to act on behalf of each. It is not necessary to determine which company employed him. At all relevant times Ronald Albert Cullen carried on business under the name "Thistle Petroleum". It is not necessary to determine whether Cullen carried on that business on his own or jointly with his wife. Amongst other things, Cullen carried on the business of selling super grade motor spirit at a petrol service station at 56 Inkerman Street, St. Kilda. Between the period commencing shortly before 21 July 1981, and ending shortly after 27 August 1981, Golden Fleece supplied and sold super grade motor spirit to Cullen. The Commission claims that on or about Tuesday, 21 July 1981, Golden Fleece, by its servant O'Brien, made known to Cullen that Golden Fleece would not supply super grade motor spirit to Cullen unless he agreed to sell that motor spirit at a price not less than that specified by Golden Fleece, or alternatively attempted to induce Cullen not to sell at a price less than the price specified--by Golden : Fleece; super 'grade motor spirit supplied to him by Golden Fleece. The Commission claims that in doing that Golden Fleece engaged in the practice of resale price maintenance contrary to s.48 of the Act. The Commission relied upon sub-section 96(1) and paragraphs 96(3)}(a) and (b) of the Act. Hereinafter this claim is called "the first charge". The Commission claims that on or about Monday, 27 July 1981, Golden Fleece, by its servant Armitage, made known to Cullen that Golden Fleece would not supply super grade motor spirit to Cullen unless he agreed to sell that motor spirit at a price not less' than that specified by Golden Fleece, or alternatively attempted to induce Cullen not to sell at a price less than the price specified by Golden Fleece, super grade motor spirit supplied to him by Golden Fleece. The Commission claims that in doing that Golden Fleece engaged in the practice of resale price maintenance contrary to the same provisions of the Act. Hereinafter, this claim is calied "the second charge". --~~- -- - The Commission claims that on or about Thursday, 30 July 1981, Golden Fleece' by its servant Armitage attempted to induce Cullen not to sell, ata price less than that specified by Golden Fleece, super grade motor spirit supplied to him by Golden Fleece. The Commission claims that in doing that Golden Fleece engaged in the practice of resale price maintenance contrary to the same provisions of the Act. Hereinafter this claim is called "the third charge". The Commission claimed further that on or about 27 August 1981 Golden Fleece committed a further breach of the Act, but after the whole of the evidence had been given, counsel for the Commission announced that the Commission did not press this charge. Accordingly, no reference need be made to the evidence relating to it. The Commission claims that on each of the occasions of the three charges alleged against Golden Fleece, Caltex, contrary to paragraphs 76(1){(c), (d) or (e) of the Act, engaged im conduct which, for present purposes, can be described as aiding or abetting or being knowingly concerned in each of the three charges alleged against Golden Fleece. In support of its claim against Caltex, the Commission relies upon the acquisition by Caltex of all the issued shares in Golden Fleece, a memorandum dated 17 July 1981 from J. M. Cocks, the Director, Marketing, of Caltex, and what occurred at a meeting held on or about 27 July 1981 between Moroney, Armitage and Peter Jarvis, then the Victorian Retail Sales Manager of Golden Fleece. When the action came on for hearing, the Commission discontinued its claim against Caltex Australia Ltd-s---and'*-so:-the action ~ proceeded against Golden Fleece and Caitex only. Section 48 of the Act, which is within Part IV of the Act, provides that a corporation shall not engage in the practice of resale price maintenance. Section 96 specifies acts which constitute the practice of resale price maintenance. The provisions of s.96 relevant for present purposes are set out: "96. (1) Subject to this Part, a corporation (in this section called "the supplier") 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). (3) The acts referred to in sub-sections (1) and (2) are the following: (a) the supplier making it known to a second person that the supplier will not supply goods to the second person unless the second person agrees not to sell those goods at a price less than a price specified by the supplier; sop tes (b) the supplier inducing, or attempting to induce, a second person not to sell, at a price less than a price specified by the supplier, 'goods supplied to "- the second person by the supplier..." vaseper cad The Commission, pursuant to 5.77 of the Act, is seeking the recovery of pecuniary penalties under 5.76. Under s.76 the Court, if satisfied that a corporation has contravened or attempted to contravene a provision of Part IV of the Act, may order the corporation to pay to the Commonwealth a pecuniary penalty not exceeding $250,000.00 in respect of each act by the corporation to which the section applies. The main evidence relied upon by the Commission in respect of its claims was given by Culien. With respect to the first charge the substance of the evidence given by Cullen was that on Tuesday 21 July 1981 during a conversation between O'Brien and Cullen at Cullen's service station, O'Brien said to Cullen words to the effect "the 7th floor has said bring up your prices or else you wont get deliveries". The reference to the "7th floor" was a reference to the 7th floor of the building at 500 Collins Street, Melbourne, where the executives of Golden Fleece and Caltex had their offices. In his evidence O'Brien denied that he had said words to that effect. With respect to the second charge, the substance of the evidence given by Culien was that on Monday 27 July 1981 during a conversation between Armitage and Cullen at a McDonalds Restaurant near Cullen's service station, Armitage said words to the effect "bring your prices up or the trucks will never get here. The excuse will be that the trucks had broken down, the wheels fell off or no drivers". The reference to the "trucks" was a reference to the tankers which delivered super grade 'motor spirit from Golden Fleece 'to - Cullen's service station. In his evidence, Armitage denied that he had said words to that effect. With respect to the third charge, the substance of the evidence given by Cullen was that on Thursday 30 July 1981 during a conversation between Armitage and Cullen on the 7th floor, 500 Collins Street, Melbourne, Armitage handed Cullen a letter from Golden Fleece to Cullen and confirmed the contents of the letter in substance saying that Golden Fleece would supply and sell super grade motor spirit to Cullen at a price not less than 36.13 cents per litre. That price was approximately 1.43 cents per litre more than the price at which he was selling motor spirit. in addition, it was said by Armitage that Cullen would not be entitled to any discount on his purchase of super grade motor spirit from Golden Fleece. Cullen gave evidence that he handed the letter back to Armitage. The letter was not produced in evidence. In his evidence Armitage denied the existence of the letter, denied having handed »any-letter-- to Gullen -.and denied: receiving any letter from Cullen. He denied also that he had said words to the effect alleged by Cullen. From this summary it is apparent that the acceptance of the evidence given by Culien with respect to the three charges is crucial if the charges are to be sustained. At the hearing of the application counsel for the respondents attacked the credibility of Cullen in cross examination. Many matters were raised which went to the issue of Cullen's credibility but were not directly relevant to any issue raised by the application. In addition, Cullen was cross examined on Many matters directiy relevant to the facts in issue. After seeing and hearing Cullen in the witness box I have formed the opinion that his evidence is completely unreliable and should not be accepted unless corroborated by the evidence of other witnesses or other factors. It is not necessary to refer in detail to all the evidence given by Cullen, O'Brien, Armitage and Collins. Mr. Collins gave evidence with respect to the contravention of the Act alleged to have occurred on or about 27 August 1981. Nor is it necessary to make a detailed reference to ail the material put to Cullen during his cross examination. In giving his evidence Cullen presented as a fast talking person who had no regard to the truth of what he said. He gave the impression that he was prepared to engage in sharp business practices not only with regard to his business dealings with Golden Fleece but also with regard to business dealings with other persons. Not only did he - 10 - present as being completely unscrupulous in his commercial activities but in some instances he has acted in a dishonest manner. One example of his unscrupulous conduct is given.' 'In order -to obtain 'his 'contract with - Golden Fleece, Cullen negotiated with Golden Fleece on the basis that he planned to purchase super grade motor spirit for the purpose of reselling to retailers. The price for the motor spirit was arrived at on that basis. Cullen then set up his own retail outlet, being Cullen's service station, and in so doing was able to determine his retail price on the basis that his purchase price had been arrived at on the basis that he would resell the motor spirit to retailers and not directly to the public. One example of his dishonest conduct is given. Shortly before his commercial dealings with Golden Fleece ended, by deliberate action Cullen extended the amount of his credit with Golden Fleece far beyond the limit which had been agreed. He disputed a small part of the amount claimed by Golden Fleece but refused to pay to Golden Fleece the amount which was not in dispute. Upon being sued for the debt he reached a compromise by which he was to pay the debt by instalments. He paid one instalment only and has failed to pay any further instalments. He used the credit so obtained from Golden Fleece for the purpose .of. financing another venture in the retail selling of motor spirit and in subsequent legal proceedings arising out of that venture he gave evidence that he had obtained that credit by way of a loan for the purpose of entering into -ll1l- the venture. He was dogmatic and refused to admit that he could be wrong even when demonstrably he had to be wrong. He gave evidence of telephone conversations which he had conducted at Cullen's service station at a time when the telephone was not connected. He isa bankrupt but in his statement of affairs refused to admit debts which he owed and which demonstrably he knew he owed. He was prepared to make reckless allegations which on further examination proved-to be groundless. In many instances he gave evidence which contradicted evidence he had given previously. In the absence of other material, the Court is not prepared to accept as true the substance of the evidence given by Cullen in relation to the three charges. This finding, however, does not conclude the matter and it becomes necessary to consider the other contentions made on behalf of the Commission. The terms of the agreement between Golden Fleece and Cullen are contained in a letter dated 26 May 1981 and signed by Armitage as Marketing Manager, Wholesale. It was sent by Golden Fleece to Cullen and signed by Cullen together with the terms set out ina "Conditions of Tender" attached to the letter. Under the agreement Golden Fleece was to supply to Cullen "Super Motor Spirit and Distillate within the Melbourne -12- Metropolitan Free Delivery Area estimated at approximately 1,000 K.L. of Super Motor Spirit and 800 K.L. of Distillate per month". As indicated earlier at the time the agreement was entered into it . was anticipated by Armitage and Cullen that Cullen would resell the motor spirit and distillate so purchased to third persons retailing the motor spirit and distillate to the public. The letter then continued: "The prices offered as at today's date are:- Super Motor Spirit 31.53 c per litre; that is a discount of 4.4 c per litre off our list price of 35.93 c per litre. Duty Paid Distillate 31.41 c per litre; that is a discount of 4.9 c per litre off our list price of 36.31 c per litre. These prices are subject to variation in accordance with the Conditions set out on the attachment. Furthermore, both supply and the discounts are offered on a calander month basis, subject to review at any time. As agreed, you will be required to lodge securities amounting to the value of one week's purchases. Payment will fall due seven days from the date of delivery and deliveries will be restricted to the value of securities lodged. The price offered :is -based --on full .-- tanker drops within the Melbourne Metropolitan Free Delivery Area with a minimum of 10,000 litres per - individual delivery. Should you require deliveries into country areas, then the appropriate Freight Differentials at the point of delivery would apply." -~13- One of the terms in the attached "Conditions of Tender" related to the method to be adopted before the price of the motor spirit could be increased and the method by which the agreement could be terminated. The evidence relating to the conversations between Cullen and Armitage on 30 July 1981 included possible price increases and the termination of the agreement. A more detailed reference to that evidence is given later in these reasons. After the completion of those conversations, Golden Fleece set in motion the procedures purporting to be in compliance with the term relating to price increases and the termination of the agreement. Eventually by an agreement in writing Golden Fleece and Cullen agreed to terminate the agreement as from 30 September 1981. During the whole of the period Golden Fleece supplied motor spirit to Cullen pursuant to the agreement, Cullen was given the benefit of the discount of 4.4 cents per litre off the list price as set out in the letter. A Caltex service station was situated close to Cullen's service station at St. Kilda. Other service stations selling other brands of motor spirit were situated close by. Mr. Cullen began selling super grade motor spirit under the name Golden Fleece from his service station at a price substantially lower than the price at which motor spirit was sold from the Caltex service station. The person conducting the Caltex - 14 - service station complained to Cullen about the cut prices at which Cullen was selling motor spirit. He made similar complaints to officers of Caltex. Prior to 1 May 1981 Golden Fleece and Caltex were in competition but as from that day Caltex became the master of Golden Fleece. As was to be expected some time was to elapse before Caltex reorganised the existing structures within Golden Fleece. That reorganisation took effect from 1 August 1981. Until then Golden Fleece continued to supply super grade motor spirit to Cullen pursuant to the terms of the agreement as set out in the letter of 26 May 1981. Although Caltex had taken over Golden Fleece before that agreement had been entered into, to all outward appearances Golden Fleece and Caltex were in competition and thereafter remained in competition. In fact during all relevant times, Golden Fleece appeared to conduct its business in the same manner as it had done before 1 May 1981. For some time prior to mid July 1981, Caltex had been concerned to improve its earnings. A confidential internal instruction. dated 17 July - 1981 signed by J.M. :.Gocks, the Director - Marketing, Caltex,~ Head Office, was forwarded to State Managers, -including -~ 15 - Moroney. The instruction stated that it dealt with the subject of "Financial Forecast". The first paragraph of the instruction is set out: "Over the past 3 months we have communicated with you on a number of occasions outiining the need to improve our earnings. Additional to our confidential letter to you dated 24th April RSS:¥T, it has now been necessary to take further action, and we have detailed this by type of trade as Listed below:-" ¢ The instruction then dealt with the retail trade and required the withdrawal of price assistance to company controlled stations and greater supervision with respect to dealer owned stations. If Cullen had been purchasing his motor spirit from Caltex, that part of the instruction would not have had application to him directly since he was not a normal retailer within the understanding of the industry. The second part of the instruction was headed "Wholesale". That part of the instruction would not have applied to Cullen since that part related to persons who purchased large quantities of motor spirit for use in their own operations. The final part of the instruction was headed "Direct Purchase Distributors". If Cullen had been purchasing his motor spirit from Caltex, he would have come within this category since his agreement would have been on the basis that he was purchasing motor spirit for distribution to retailers. contained - 16 - under the heading "Direct Distributors" is set out: "rebates" "Direct Purchase Distributors : Basically our plan is to live within the level of rebates and sales as at 3lst May, 1981. This, of course, will need some corrective action to be taken in certain areas and we set out the guidelines which you are to adopt :- . Temporary price assistance to any distributor is to be no greater than the level of assistance in existence at 3ist May, 1981. - All existing price assistance authorities will now expire on 31st July, 1981. . The level of DP rebates, as reflected in May 1981 MCR II HO/DIST.6 (Year to Date), are to be maintained for remainder of year. »- Should any distributor change to another supplier, all temporary price assistance is to be cancelled {i.e., revert to original DP rebate). - It will be necessary to monitor closely the purchases of those distributors with combined gasoline and distillate purchases in excess of 4,000 kl per annun, and to enable consistent reporting a pro forma is attached and is to be forwarded fortnightly. This information will have to be compiled from supply..point. records which, it is appreciated, will The part of the instruction Purchase cause some inconvenience." ------- -- ------ In the context of the instruction has the same meaning as "discount" in the Golden Fleece letter of 26 May 1981. the word appearing In the - 17 - industry the words "rebate" and "discount" have the same meaning and describe the amount of money between a list price and the actual price at which the product is sold and purchased. Mr. Moroney, in his capacity as State Manager, Caltex, received that instruction in all probability on Tuesday, 21 July 1981. At that time Peter James Jarvis was employed by Golden Fleece as State Manager, Victoria. He had held that office since 1 May 1981. Between August 1976 and 1 May 1981 he had held the position in Golden Fleece of Retail Manager, Victoria. That position was on an equal level to the position of Marketing Manager, Wholesale, held by Armitage. Between 1 May 1981 and the end of July 1981 Jarvis was superior to Armitage. In mid June 1981 it was made known that Moroney was to be appointed State Manager, Victoria, of Golden Fleece with effect onl August 1981. As indicated earlier Moroney continued to hold the office of State Manager, Victoria, of Caltex. There had been a dispute between Golden Fleece and Jarvis relating to the period for which he had been appointed State Manager, Victoria, of Golden Fleece. He left his employment with Golden Fleece late in August 1981. Mr. Moroney and Jarvis first met shortly before 1 May 1981. From about the middle of June there was daily contact between Moroney and Jarvis. I am - 18 - satisfied that before 30 July 1981 Moroney knew of the Problems arising from the Cullen agreement with Golden Fleece and the fact that Cullen was selling motor spirit from his service station at a price less than the price being charged at the nearby Caltex service station.- At the very least he had acquired that knowledge as part of his briefing prior to entering into the position of State Manager, Victoria, for Golden Fleece. In all probability he had heard of the problem also from officers in Caltex. I accept Jarvis basically as a witness of truth giving evidence to the best of his recollection. Although he was and still is in dispute with Golden Fleece concerning his own position, the existence of that dispute does not detract from his honesty in giving evidence that may be adverse to Golden Fleece in these proceedings. Mr. Jarvis knew of the Caltex instruction before 29 duly 1981. He received a copy of the instruction from the secretary of Moroney in all probability on Wednesday, 29 July 1981. Mr. Jarvis says that about 28 July 1981 Moroney asked him to attend a meeting at his, Moroney's, office. Messrs. Moroney, Armitage and Jarvis attended that meeting. Mr. Jarvis said that Moroney in substance said that he was concerned at :the:.seliing price: being displayed ..at Cullen's service station and mentioned the instruction he had received from Head Office. Moroney showed the instruction to Armitage and Jarvis. In his evidence - 19 - darvis said that he suggested the answer was simple, "give Cullen thirty days notice to withdraw the rebate". That suggestion was directed to the implementation of the term empowering Golden Fleece to vary the price and if need be to terminate the agreement by adopting the methods set out in the terms of the "Conditions of Tender" attached to the letter of 26 May 1981. Mr. Jarvis in evidence said that Armitage agreed with that course but Moroney said the situation could not be left as it was for another thirty days. Mr. Jarvis in evidence said that Moroney directed Armitage to negotiate with Cullen to "up the selling price, the displayed selling price" being the price specified on the board placed at Cullen's service station notifying to the passing public the price at which super grade motor spirit was being sold. No time was mentioned by which Armitage was to do this. Counsel for the Commission, recognising the difficulty of relying upon the uncorroborated evidence of Cullen, contended that the evidence of Jarvis should be accepted and that the evidence gave credence to the evidence given by Cullen. Counsel contended that this evidence should not be limited to the second and third charge but had equal application to the first charge. Counsel contended that on the whole of the evidence the Court should find that the meeting between Moroney, Jarvis and Armitage occurred on Monday, 27 July and that later on that same day and pursuant to the instruction - 20 - given by Moroney, Armitage had the meeting with Cullen at the McDonalds Restaurant. On this hypothesis it was contended there were strong grounds for finding that Cullen's evidence of what occurred at that meeting should be accepted as being correct. In addition counsel relied upon the evidence of Jarvis to support the charge of aiding and abetting alleged against Caltex. Counsel, while contending that the civil onus of proof applied, did not dispute that in the application of that onus the Court should have regard to the gravity of the issues raised; generally see Peter Williamson Pty. Ltd. v. Capital Motors Ltd. (1982) 41 A.L.R. 613 per Franki J. at pp.619-20 and the cases referred to therein. Accordingly it is necessary to look at the evidence of the witnesses being officers of Golden Fleece and Caltex and determine this issue of fact applying the appropriate test as to the onus of proof required. The terms of the agreement of 26 May 1981, "the Golden Fleece agreement", were negotiated by Armitage and Cullen. Until the end of July, O'Brien, in his position as Area Manager, was responsible to Armitage. He was instrumental in making the arrangements to enable ..Cullen and. Armitage to.carry out the negotiations: but- took no part in those -negotiations. After the Golden Fleece agreement had been entered into O'Brien was responsible for collecting cheques from Cullen in payment for the motor spirit purchased by -21- Cullen from Golden Fleece. For this purpose he attended Cullen's service station approximately twice a week during the period June and July. I accept the evidence of O'Brien that there was no telephone at Cullen's service station and that in order to contact Cullen O'Brien used to telephone Cullen early in the morning while Cullen was still at home. O'Brien did not know that Culien planned to operate his own retail site until after the agreement had been signed. Previously he had warned Cullen of problems involved in drivers being employees of Golden Fleece and being members of the Transport Workers Union delivering motor spirit to pumps which were not marked with a Golden Fleece sign. At some stage Cullen discussed with O'Brien the possibility of Cullen supplying petrol to large users of motor spirit but nothing came of this. The first charge relates to conversations between Cullen and O'Brien which took place on Tuesday, 21 July. I accept O'Brien's evidence of what occurred during those conversations. O'Brien had gone to Cullen's service station to collect a cheque from Cullen. In a conversation Cullen mentioned to O'Brien that he was being harassed by other retailers of motor spirit in the area including the retailer supplying motor spirit from the adjoining Caltex station. Mr. O'Brien replied that was only to be expected having regard to the price at which Cullen was selling motor spirit. I accept O'Brien's denial that he said anything - 22 - to Cullen to the effect of the words alleged in the first charge. On 21 July some officers of Caltex may have been concerned at the actions of Cullen but there is no evidence to suggest that Caltex was in any way involved with O'Brien in the conversations O'Brien had with Cullen on that day. The evidence given by Jarvis does not assist the Commission in this regard. It follows that the Commission has failed to prove the charge alleged to have occurred on 21 July 1981. The second charge relates to events which occurred during conversations between Armitage and Cullen which took place on Monday, 27 July. Cullen says that the meeting took place in the afternoon presumably after the meeting between Moroney, Armitage and Jarvis. Jarvis said that the meeting occurred "within one day of 27 July". I have already said that from a consideration of the whole of the evidence given by Jarvis in all probability the meeting occurred, according to him, on 28 July. From a consideration of the evidence of Moroney and Armitage a meeting took place between Moroney, Armitage and Jarvis certainly after 27 July and in all probability on 30 July. In all the circumstances I find that the meeting between Armitage and Cullen took Place before the meeting between Moroney, Jarvis and Armitage. - 23 - Mr. Armitage was aware of the problems arising from the fact that Cullen was selling motor spirit ata price substantially less than the price charged at the nearby Caltex service station. On Friday, 24 July 1981 a Bruce Dunsmore, the Assistant Manager in charge of marketing for Caltex, Victoria, rang Armitage and told him of his concern about the situation developing at Inkerman Street, St. Kilda where the long standing retailer of Caltex petrol was very upset because Cullen was selling Golden Fleece petrol at such a low price. In that conversation Armitage told Dunsmore that he would keep an eye on the situation. Thereafter Armitage directed O'Brien to keep him advised of the situation. On Monday, 27 July Armitage asked O'Brien to arrange a meeting between Armitage and Cullen. O'Brien told Armitage that Cullen would be at his service station at lunchtime between 1.00p.m. and 1.30p.m.. When Armitage arrived at Cullen's service station Cullen was not there but arrived a short time later. Armitage had had lunch but agreed with Cullen to go to a nearby McDonalds Restaurant for a discussion. The meeting lasted almost one hour. I accept the evidence of Armitage concerning what was said at that meeting. Armitage commented to Cullen on the fact that Cullen had entered the retail sector and expressed his surprise that he, Cullen, had gone into a risky situation rather than supplying motor spirit and distillate to retailers where the risk was small. Armitage referred to the - 24 - trouble arising between Cullen and the operator of the Caltex service station. Armitage told Cullen that he was receiving his petrol at a very good price and should not sell at such a cheap price compared with the Caltex service station. Cullen told Armitage that in reality he was competing with two other adjoining service stations selling Shell and Ampol motor spirit respectively which were selling at a lower price than that charged at the Caltex service station. Cullen said also that in any event the Caltex service station was different in nature to Cullen's service station in that the operator did repairs and had a lot of account customers. Armitage said he accepted the situation. There was a discussion about the uncertainty of the motor spirit market generally in which the retail price of motor spirit was fluctuating rapidly and Cullen said he would be looking at the market and adjusting his prices accordingly. Armitage told Cullen that he, Armitage, would be leaving the marketing side at the end of the month and that after that Golden Fleece marketing would be directly controlled by Caltex. Armitage also told Cullen that over time there could be a rationalisation in the industry. Armitage also drew to the attention of Cullen that he, Cullen, was not purchasing any distillate. Armitage denied having said anything to the effect of the words alleged by Cullen which form the basis of the second charge. - 25 - On the findings these conversations took place before the meeting between Moroney, Jarvis and Armitage. Even if the evidence of Jarvis is accepted, nothing that occurred at that meeting could be relevant to give credence to the evidence given by Cullen. Further Cullen does not say that Armitage made reference to "up the selling price, the displayed selling price" at Cullen's service station. It follows that the Commission has failed to prove the charge alleged to have occurred on 27 July 1981. The third charge remains to be considered. Mr. Armitage says that on Wednesday, 29 July 1981 Jarvis, who then was his superior, instructed him to tell Cullen that in line with the Golden Fleece agreement, Golden Fleece would cease to deal with Cullen as from the end of the month. Mr. Jarvis had given his evidence before Armitage gave his evidence and Jarvis was not cross examined on whether he had instructed Armitage todo this. Likewise Jarvis was not cross examined as to whether he had given any such instruction to Armitage after he had received the Caltex instruction from Moroney's secretary namely on Thursday, 29 July. Acting on that instruction Armitage requested O'Brien to arrange for Cullen to go to Armitage's office. Time was short. Armitage believed that the Golden Fleece agreement could be terminated at the end of a month, in this case at the end of July. On 1 August Armitage was moving to a different position within the Golden Fleece - 26 - structure. Mr. O'Brien gave evidence that on Thursday 24 duly 1981, at the request of Armitage, he asked Cullen to cail in to see Armitage. In fact 24 July 1981 was a Friday. O'Brien was in error saying that he did this on that day. Cullen says that Armitage rang him on Wednesday 29 July asking him to come into Armitage's office. At that time Cullen's service station was not connected to the telephone. In all probability O'Brien made the arrangement with Cullen sometime on Wednesday 29 July 1981. In any event Cullen attended Armitage's office on the morning of Thursday, 30 July. The substance of Cullen's evidence is that when Cullen arrived Armitage handed hima letter and said "this is not my doing". Cullen opened the letter and read it. He then abused Armitage and other officers of Golden Fleece and Caltex. He said that in substance the letter stated that as from midnight on 30 July 1981 the selling price of super motor spirit sold by Golden Fleece to Cullen would be rising to 36.13 cents a litre being the then wholesale list price. After some further conversation in which Armitage said he and Jarvis were having a meeting later in the morning, Cullen handed the letter to Armitage and left the office. In his evidence Armitage said that at the meeting with Cullen on Thursday, 30 July he told Cullen that inline with the Golden Fleece agreement Golden Fleece would be terminating supply as from the end of the month. In giving his evidence Armitage was slightly - 27 - evasive with regard to the letter. He did not specifically deny its existence, at the most he said he could not recall such a letter. From my assessment of the character of Cullen and his propensity to look after his own interests, I find it is most unlikely that if he had received the letter which on its face appeared to be in breach of the Golden Fleece agreement and which breach would have had a devastating effect on his business, he would not have handed the letter back to Armitage. In all probability he would have kept the letter for publicity purposes as a weapon to use against Golden Fleece. On all the evidence I am not satisfied that Armitage handed a letter to Cullen as claimed by Cullen. Armitage said that Cullen told him that if Golden Fleece ceased supply it would shut him down and that he, Cullen, was not going to accept that situation and would seek advice. Cullen then left. Mr. Armitage says that he told Jarvis the result of the conversation with Cullen but again no suggestion of any such conversation was put to Jarvis by way of cross examination. Mr. Armitage says that in the afternoon of Thursday, 30 July O'Brien rang him and told him that Cullen had said he did not have to accept the termination because under the terms of the Golden Fleece agreement the thirty day clause was enforceable. Thereafter Armitage spoke to Jarvis who arranged a meeting with Moroney, Armitage and himself. At that - 28 - meeting Moroney said that it looked like Golden Fleece was stuck with the thirty days and instructed that the required notice be given. Thereafter the procedures set out in the Golden Fleece agreement were commenced by Golden Fleece. Mr. Moroney gave evidence. He said that in the months of June and July 1981 he was preparing to take over the office of State Manager, Victoria, for Golden Fleece. He had dealings with Jarvis and Armitage. Sometime during June or July he became aware of Golden Fleece's association with Cullen although he says he knew of the situation under the trade name Thistle Petroleum. He had never met Cullen. He can recall a meeting with Jarvis and Armitage concerning Cullen and the Golden Fleece agreement. It was a brief discussion regarding the action to be taken by Golden Fleece in renegotiating the terms of the agreement as to price. He knew of the letter of 30 July. That letter initiated the procedures provided for in the agreement. He said the meeting took place very shortly before the letter possibly on 28 or 29 July. He denied that he instructed Armitage to try to get Cullen to increase his selling price. He denied that he made any reference to a displayed selling price. He cannot recall discussing the Caltex instruction at that meeting. - 29 - There are some unsatisfactory aspects of the evidence given by each of Moroney and Armitage but I accept their evidence as to what occurred at the meeting between Moroney, Jarvis and Armitage. I accept that Jarvis received a copy of the Caltex instruction on 29 duly 1981 but it is difficult to see the relevance of that instruction with respect to existing agreements involving Golden Fleece only. The probabilities support the evidence of Moroney and Armitage. I find that in this respect, Jarvis was mistaken as to what occurred at the meeting. At that time he was the State Manager, Victoria, for Golden Fleece. He considered he had been wrongly treated by Golden Fleece in not being able to continue to hold that position after 1 August 1981. There was no reason why he should accept that Moroney had the authority to speak as State Manager, Golden Fleece in July. As from 1 August Armitage was moving to another area in his employment with Golden Fleece. Although there may have been practical reasons why Armitage should have regard to Moroney at that time being his de facto superior in the hierarchical structure of Golden Fleece, Jarvis was still his superior. The meeting was more in the nature of a briefing arrangement to keep Moroney informed but it was Jarvis who made the final decision. Jarvis knew of the terms of the Golden Fleece agreement. The decision coincides with what Jarvis says was his advice namely to comply with the terms of the Golden Fleece agreement. The letter of 30 July was the first step in following - 30 - the procedures prescribed by that agreement. In any event neither Cullen nor Armitage say that on 30 July 1981 Armitage said to Cullen words to the effect that Cullen should "up the selling price, the displayed selling price" at Cullen's service station. Further I accept Armitage's evidence of what occurred at the meeting between Armitage and Cullen on 30 July 1981. It follows that the Commission has failed to prove the charge alleged to have occurred on 30 July 1981. In these circumstances it is not necessary to consider the many other legal matters raised by counsel in their final submissions including the nature of an attempt under paragraph (b) of sub-section 96(3) of the Act. In any event, even on the evidence of Cullen, it is difficult to see how a contravention of paragraphs (a) or (b) of sub-section 96(3) could have occurred since Golden Fleece did not make known to Cullen a specified price. No specified price for resale was mentioned nor is it possible to arrive ata "price specified by the suppliers" by the application of the Principles discussed in cases such as Trade Practices Commission v. Mobil Oi] Australia Ltd., Federal Court of Australia, Toohey J., unreported, 20 August 1984 and the cases referred to therein. ~ 31 - For the reasons given the application in so far as it seeks the imposition of a penalty against Golden Fleece should be dismissed. For the same reasons the application in so far as it seeks the imposition of a penalty against Caltex should be dismissed. t V7 certify that this and the THIRTY (Zo) | preceding pages are a true copy of the | Reasons for Judgment herein of the Honourable Mr. Justice NOK7HROP f | Associate "Reve how F I Dated: 5 OC Taber 1GSY. Pons aa —