*.2235 ATCHWORDS Trade practices (restrictive) - taking advantage of market power to keep out new entrant to market - taking advantage of market power to deter or prevent competition in market - personal applicant a former employee of respondent - applicant desirous of entering market in competition with respondent - respondent receives information of premises proposed to be leased hy applicant - respondent endeavours to take lease of premises itself - whether respondent taking advantage of market power for purpose of keeping applicant out of maarket or deterring or preventing competition in market. Trade Practices Act 1974, ss. 4F, 46 and 84 JOHN NEAL WILLIAMS and ANOR. v. PAPERSAVE PTY LIMITED No. G189 of 1987 Coram: Sheppard J. Date : 19 May 1987 Place: Sydney N EW SO ENERAL IO io Ro) & ro Ke Bd (o) laa (ws) tis L COURT USTR. WALES DIS CT REGISTRY No. G189 of 1987 ~ ewww IVISTON BETWEEN: JOHN NEAL WILLIAMS and ANOR Applicant AND PAPERSAVE PTY LIMITED Respondent SHEPPARD J. SYDNEY 19 MAY 1987 MINUTES OF ORDER THE COURT ORDERS THAT: - l. 2. The interlocutory injunction granted herein be dissolved. The parties be released from all undertakings given by them to the Court. The application be dismissed. The applicants pay the respondent's casts of the application. Settlement and entry of orders 15 dealt with in Order 36 of the Federal Court Rules. N QURT_OF IA NEW S WAL: TR GISTRY No. G189 of 1987 GENERAL DIVISION ed BETWEEN: JOHN NEAL WILLIAMS and ANOR. Applicant BAPERSAVE PTY LIMITED Pespondent CORAM: SHEPPARD J. DATE : 19 MAY 1987 REASONS FOR JUDGMENT HIS HONOUR: This is the final hearing of an application for a permanent injunction to restrain the respondent from committing breaches of s. 46 of the Trade Practices Act 1974 ("the Act") which are alleged against it. The proceedings were commenced only on 4 May 1987. Originally interlocutory relief was sought, but the nature of the case is such that the subject matter of the proceedings, a proposed lease of premises in Camperdown, would be likely to be lost if the parties were to await a final determination of the issues between them for very long. In those circumstances they agreed to turn the hearing of the interlocutory application into a final hearing. I directed that the matter should proceed without pleadings and on affidavit evidence supplemented by oral evidence. The hearing took place in broken Section 46 of the the Act, so far as it is relevant, follows:- periods on 6, 8 and 12 May 1987. "46 (1) A corporation that has a substantial degree of power in a market shall not take advantage of that power for the purpose of- (a) eliminating or substantially damaging a competitor of the corporation or of a body corporate that is related to the corporation in that or any other market; {b) preventing the entry of a_ person into that or any other market; or (c) deterring or preventing a person from engaging in competitive conduct in that or any other market. (3) In determining for the purposes of this section the degree of power that a body corporate or bodies corporate has or have in a market, the Court shall have regard to the extent to which the conduct of the body corporate or of any of those bodies corporate in that market is constrained by the conduct of - (a) competitors, or potential competitors, of the body corporate or of any of those bodies corporate in that market; or (b) persons to whom or from whom the hody corporate or any of those bodies corporate supplies or acquires goods or services in that market. (4) In this section- (a) a reference to power is a reference to market power; (b) a reference to amarket is a reference to a market for goods or services; and (c) a reference to power in relation to, or to conduct in, a market is a reference fo power, or to conduct, in that market either as a supplier or as an acquirer of goods or services in that market. (7) Without in any way limiting the manner in which the purpose of a person may is as be established for the purposes of any other provision of this Act, a corporation may be taken to have taken advantage of its power for a purpose referred to in sub-section (1) notwithstanding that after all the evidence has been considered the existence of that purpose is ascertainable only by inference from the conduct of the corporation or of any other person or from other relevant circumstances". The section in its present form is comparatively new: see the Trade Practices Revision Act 1986. Also relevant is s. 4F which provides in para. (bd) that, for the purposes of the Act, a person shall be deemed to have engaged in conduct for a particular purpose if the person engaged or engages in the conduct for purposes which included or include that purpose and that purpose was or is a substantial purpose. In order to prove their case the applicants relied on some of the provisions of s. 84 of the Act. So far as is it relevant. that section is as follows:- "84 (1) Where. in a proceeding under this Part in respect of conduct engaged in bya body corporate, being conduct in relation to which section 46 or Part V applies, it is necessary to establish the state of mind of the body corporate, it is sufficient to show that a director, servant or agent of the body corporate, being a director, servant or agent by whom the conduct was engaged in within the scope of the person's actual or apparent authority, had that state of mind. (2) Any conduct engaged in on behalf of a body corporate- (a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate. (5) A reference in this section to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person's reasons for the person's intention, opinion, belief or purpose". The facts of the matter are as follows. The respondent, for some years, has carried on the business of engaging in some of the steps necessary for the recycling of waste paper. A principal activity which it carries on is the recovery of waste computer printout paper. Because of the nature of the type on it, it may be used in the manufacture of a higher quality paper - notepaper is an example - than is the case with paper on which there is conventional typewriting. The respondent has arrangements with various undertakings, mainly in the central business district of Sydney, to allow it to remove their used computer printout paper. Sometimes the paper contains information which is regarded by the user as confidential. Usually for no charge, the respondent provides a service which ensures the shredding of such paper. The respondent has at all relevant times carried on business 1n premises known as Wharves or Piers 8/9 Walsh Bay. The premises are no longer used as wharves. It is the building in the area between the two wharves which the respondent occupies. It does not use the whole of it for the purposes of its business, part of it being let to a company for car parking. Nevertheless, the area it uses is extensive. The parties were not at one as to the area actually used, the respondent saying that the area was no more than 25,000 square feet and the applicants that it was about 100,000 square feet. I am umable on the state of the evidence to resolve the issue that arises on this matter, but I do not regard it as necessary to do so. At Walsh Bay the paper which has been collected is shredded as necessary. The shredded paper and also much of the unshredded paper, is packed into containers which are taken away by motor trucks for eventual shipment to places outside Australia, usually the Philippines, where the manufacturing process takes place. Some of the unshredded paper is treated at Walsh Bay for re-use. Until the end of April, the first applicant, Mr. Williams, was employed by the respondent as Sales Manager or Director. His principal task was to seek out sources of supply of waste computer paper and to procure contracts from companies and other undertakings which were prepared to deal with the respondent. Mr. Williams was engaged in this employment for a period of about five years. There is some evidence that for part of the period he was a director of the respondent. In evidence 1s a letter dated 7 December 1985 addressed to the respondent's secretary in which he said that he consented to act as a director. There is also a letter dated 1 March 1987 in which he tendered his resignation as director. There is no evidence of his having been appointed a director. He was not notified of any directors' meetings and he did not attend any such meetings. I do not think the matter is critical, but Ido not consider the evidence establishes that he was ever in fact appointed a director of the respondent. There is evidence which I accept that the management of the respondent regarded the premises at Walsh Bay as unsatisfactory for the respondent's needs and had done so for some time. The prime reason for this dissatisfaction was that the building was insecure for the purpose of housing confidential documents which might not be shredded for a period after their arrival. Furthermore, the Maritime Services Board, which is the lessor of the premises, wrote to the respondent on 29 May 1986 informing it that the Minister for Public Works and Ports had called for registration of interest by developers interested in redeveloping the Walsh Bay wharves for commercial offices, residential and cultural uses. The letter said that the Board was unable to give the respondent any indication of whether it would be able to remain in its premises, but said that it would keep the respondent informed of progress from time to time. Apparently no more was heard from the Board down to the time of the hearing. One of the directors of the respondent is Mr. J.N. Bird. He said that the shares in the respondent were held by a holding company, Imperial Holdings Limited, of which he was also a director. Imperial Holdings Limited was formerly known as Imperial Minerals Limited. The shares ain the respondent were acquired in February 1986. In September 1986 the holding company itself was taken over by a group of which Mr. Bird is a member. On 15 February 1986 the respondent had entered into an agreement ("the consulting agreement") with a company, Jon F. Hall (Australia) Pty Limited and one of its directors, Mr. Jon Hall. The agreement referred to an agreement for sale between Jon F. Hall Pty Limited and a number of other persons, including Mr. Hall, as vendors, and the respondent as purchaser. Pursuant to the agreement the respondent purchased from the vendors "the reusable listing service conducted by Encore Paper Security Pty Limited (Australia)". The consulting agreement provided that Mr. Hall's company would provide his services as a consultant to the respondent for a period of 12 months from 15 February 1986. The company, through Mr. Hall, was to be responsible for production control, marketing and sales development relating to the listing service which the respondent would conduct. The agreement was not renewed or extended, but it came to anend on 28 February 1987 rather than 15 February 1987. The re-usable listing service which is referred to is a service connected with that part of the respondent's activities which enables it to treat used computer paper so that it may be re-used. Perhaps because of the change of ownership which had come about in 1986, or perhaps for other reasons, both Mr. Williams and Mr. Hall began to contemplate leaving the respondent and setting up business on their own account in competition with it. In the result Mr. Hall did not pursue his ideas in this regard, but Mr. Williams has. He resigned from the service of the respondent at the end of April. Before doing so, he took steps to procure premises, buy or lease equipment and engage staff. It is common ground between Mr. Bird and Mr. Williams that eariler this year Mr. Bird asked Mr. Williams to keep his eye out for premises that would be suitable for the respondent's business. Mr. Williams said, and I accept his evidence in this respect, that this was not a very clear assignment. He was not to engage a real estate agent. Furthermore, he was uncertain of the area which the respondent would require because of doubts about plans it had whether to extend or restrict its operations. There had been some talk of it going into the collection of other types of waste paper. For these reasons, so Mr. Williams said. he did little to find alternative premises for the respondent. Mr. Williams' plans to go out on his own hegan to take concrete form in February 1987. He learnt of the availability of the premises known as 3/5 - 11 Pyrmont Bridge Road, Camperdown. These were available for lease through an estate agent, Kelly & Sons Real Estate of Newtown. The agent seen by Mr. Williams was a Mr. Altas. According to Mr. Williams' evidence, he first visited the premises in February 1987 and determined that they were suitable for the needs of the business he was contemplating commencing. He said that he did not regard them as at all suitable for the respondent's needs because they were too small. The area of the premises was about 15,000 square feet. There is no substantial issue about that matter and J find that the premises did occupy this approximate area. On the first occasion that he met Mr. Altas Mr. Williams gave him his business card which showed his name, his title as sales manager or director and the name of the respondent. He did not tell Mr. Altas that he required the premises for his own use. In this respect Mr. Williams' evidence coincides with that of Mr. Altas who was then under the impression that the premises were required for the respondent's use. Mr. Williams said that he visited the premises a second time late in February or early in March. He was accompanied by Mr. Hall. Mr. Altas was also present. Mr. Williams is adamant that he informed Mr. Altas on this occasion that the premises were not for the respondent but for Mr. Williams personally. He told him that the lease would be taken in the name of a company and that the name of it would be told Mr. Altas at a later time. Mr. Altas denies that he was told that the premises were for anyone other than the respondent. But he said that Mr. Williams indicated in a telephone conversation that the lessee might not be the respondent but rather one of its associated companies. His evidence of what Mr. Williams said about the lessor was, "... and then he told me, he said, it is difficult, it is big company. Maybe not Papersave, another company. I say, 0.K., I take it along that way". On 2 March 1987, Mr. Altas prepared a document which was headed, "Lease Advice Notice". It showed the name of the lessor, which was a company, Kentor Investments Pty Limited, and the lessee, which was, "JOHN WILLIAMS (CO T.B.A.)". It is agreed that the abbreviation "T.B.A." stands for "to be advised". The notice then specified the address of the premises, the name and address of the lessor, the name and address of its solicitors, the name and address of the lessee (which was written similarly to the way it had been written earlier) and the name and address of the lessee's solicitors. The rent to be charged was said to be $6,666 per calendar month payable on the sixth day of each month. The date for occupation was said to be 6 April 1987. The form concluded with a reference to the outgoings and the amount 10. of the agent's fee. Prior to Mr. Altas filling out the lease advice notice, Messrs. Coombes Lucas & Co.. the solicitors for the lessor, Kentor Investments Pty Limited, wrote to Mr. Williams. The letter was dated 23 February 1987 and was addressed to "The Manager, John Williams & Paper Save Pty Limited" at 1 Brennan Street, Alexandria. The Alexandria address is not the address of the respondent nor of Mr. Williams. Furthermore, that address was not shown on the lease advice notice. The address shown thereon was 6A Birtley Place, Elizabeth Bay, which is Mr. Williams' residential address. The address 1 Brennan Street, Alexandria, was the subject of some puzzlement by counsel during the argument. However, after reserving my decision, I consulted the telephone directory which shows that the entry prior to that relating to the respondent is an entry relating to a company, Paper Sales Pty Limited. Its address is 1 Brennan Street, Alexandria. I mention this because counsel for the applicants relied on an apparent difficulty Mr. Altas' has with the English language as a reason why he may have been confused about the identity of the lessee. It was said that the probabilities were that he had not understood Mr. Williams when he told him that the transaction was his own and was not being entered into on behalf of the respondent. The mistake in the address was attributed to Mr. Altas and relied on as an indication of his confusion. It is convenient to say now that I reject this speculation. It is clearly wrong. The more appropriate inference is that the mistake as to the address was 11. made in the solicitor's office when the telephone book was consulted for the purpose of finding out what the address was. I am reinforced in this conclusion by the fact that Mr. Altas' form came into existence after the letter containing the wrong address and clearly specified Mr. Williams' home address. My conclusion in this regard does not mean that it must follow that I accept Mr. Altas' evidence that he was not told that the Camperdown premises were required for Mr. Williams' personal occupation. That is an important issue to which I shall go when I have reviewed the entirety of the evidence. At this point, however, I note that the use by Mr. Altas of Mr. Williams' personal address is consistent more with an understanding that the premises were required for Mr. Williams' own use rather than for the use of the respondent. There are other aspects of both Mr. Williams' and Mr. Altas' evidence to which I need to refer, but before doing so it is convenient to refer to some of Mr. Bird's evidence. Mr. Bird said that it was either in December 1986 or January 1987 that he first requested Mr. Williams to keep an eye out for other premises. He told him, so he said, that the Walsh Bay premises were not suitable for the long term needs of the respondent. He said that he had a further discussion about this matter late in February or early in March 1987 when he again asked Mr. Williams if he had seen any premises, "as he was travelling around, keeping his eye out for something and reporting back". Mr. Williams said that he would do so. He told him that he had not seen anything up to that time. Another similar conversation took Place late in March or early in April. Mr. Williams' answer then 12. was, "No, not really". Mr. Bird said this conversation took place in the presence of a Mr. Ryan who was the General Manager (Finance) of Imperial Holdings Limited and Mrs. Barbara Braham, who was the Operations Manager of the respondent. Mrs. Braham uses the name Singer in relation to her employment. Mr. Bird said that he had been to the premises at Camperdown. He first visited them on 28 April 1987 in company with Mr. Johnson, who is the General Manager of the respondent, and Mr. Hall. Mr. Bird said that Mr. Hall was neither an employee nor a director of the respondent at the time of the visit. He did not have any other person with him. He said that no payments had been made to Mr. Hall after the end of February 1987 except payments inthe middle of March which represented the final payment under Mr. Hall's agreement. Mr. Bird was asked to explain Mr. Hall's presence at the Camperdown premises on 28 April 1987. He said that he had spoken to Mr. Hall on the telephone and arranged to meet him at a coffee lounge. At the meeting, which took place on 28 April 1987, Mr. Hall asked Mr. Bird whether he knew that Mr. Williams was resigning. Mr. Bird said that he did. Mr. Bird's evidence continued: - "I said, 'He was looking for property for us' and he said 'Yes, I know' and I said, 'Well, have you seen any good property, have you seen any suitable property?' His answer was that he had seen one in the company of Mr. Williams in Camperdown. I said to hin, 'Would you mind showing me where it was?' because by this stage it was obvious Mr. Williams was going and I wanted to press the issue of another location". 13. Mr. Bird said that he asked Mr. Hall whether he could take him to the premises. Mr. Hall took him there. This was the reason why Mr. Hall was present at Mr. Bird's first visit. Mr. Bird said that at that time he had no idea that the Camperdown premises were premises Mr. Williams was planning to lease. Mr. Williams was asked why he rang Mr. Hall when he became aware Mr. Williams was planning to leave. He said that he did not ring him for that reason but because 'some equipment needed repair and the repairs were not proceeding as they should have been. Mr. Bird's question about premises arose incidentally to other matters which were being discussed between them. In the course of Mr. Bird's cross-examination, he was asked a number of questions about the detail of his conversation with Mr. Hall and Mr. Altas. Mr. Bird said that at the time Mr. Hall told him about the premises he did not appreciate that Mr. Williams was planning to lease them himself. He learnt of that matter when he spoke to Mr. Altas during the afternoon of the day of his meeting with Mr. Hall. Mr. Bird was pressed about his reasons for ringing Mr. Hall. He maintained that his reason was that some equipment in need of repair was taking too long to be put in order and he thought Mr. Hall could help because of his knowledge of the equipment. Mr. Bird said that his telephone call to Mr. Hali had nothing to do either with Mr. Williams resigning or the respondent's need for new premises. There were also questions asked Mr. Bird concerning his reasons for asking Mr. Hall at all about a suitable property. He 14. had not asked him about this matter on any previous occasion. He said he did so because Mr. Hall had an understanding of the paper industry and he did "move around". At their meeting in the coffee lounge the two discussed Mr. Williams' resignation and his proposal to set up business on his own account. Mr. Bird knew about this, Mr. Hall had not been sure whether he did. He said that Mr. Williams had been planning the venture for a long time and had been out looking at premises. Tt was then, so Mr. Bird said, that he asked Mr. Hall whether he himself had seen any premises and that Mr. Hall told him of the Camperdown premises. Mr. Hall said the premises were suitable but did not know whether they were still available, it being six or eight weeks since he had been there. Mr. Hall told Mr. Bird that he had seen the premises in company with Mr. Williams. He resisted a suggestion that the information given him by Mr. Hall led him to believe that Mr. Williams intended to take the premises for himself. This was despite the fact that both knew at the time of their conversation that Mr. Williams was going out on his own and had seen the premises many weeks before. During the visit to the premises the question of a lease being taken by the respondent was discussed with Mr. Altas. Mr. Bird, so he said, indicated to Mr. Altas that both he and Mr. Hall were from the respondent. He also said that he was from Imperial Holdings Limited to which Mr. Altas responded, "Oh, that is the public company that has sort of been holding up the signing of the lease". Mr. Bird said that he would not know whether this was so but made it clear that he had only very 15. recently learnt of the property. He also said, "We would like the opportunity to continue this discussion because the building has considerable appeal to us". Mr. Bird said that he made the decision to take a lease of the Camperdown premises the following day. He took sole responsibility for it but consulted some of his colleagues about it. Those he consulted included the respondent's General Manager, Mr. Johnson, who is stationed in Brisbane, the respondent's solicitor, Mr. Hall and two other directors of Imperial Holdings Limited, Messrs. Spence and Gatiss. He was asked questions concerning the detail of his discussions but it is unnecessary to refer further to this part of his evidence. It may be noted at this point that Mr. Johnson, Mr. Hall, Mr. Spence and Mr. Gattis did not give evidence. An important part of Mr. Bird's cross-examination consisted of questions asked him concerning his, and thus the respondent's, purpose in deciding to take a lease of the Camperdown premises. His evidence in this respect was in part as follows:- "Did the fact that Mr. Williams was planning fo take a lease of these premises play any part in your decision to seek a lease yourself? ---No. None whatsoever? ---If so, an extremely minor component. But of course, you were aware, were not you, that if you got a lease of these premises Williams would not be able to obtain a lease? ~--Yes. And that that would slow him down somewhat? 16. ---Yes. And that was avery desirable result from your point of view, was not it? ~--Yes. And yet you say that the fact is that consequence played only the most minor part in your deliberations? ---Correct. Did you discuss that consideration [the effect on Mr. Williams' plans} with Jon Hall? ---Yes. Why did you do that? ~--In general conversation amongst deliberations with the general manager. I mean it is obvious that there is an additional consequence by any of us gaining access to the building, but it will have an effect on somebody else as well. That is not the intention but if that happens to be a by-product. So much the better? ---Yes. -.do you now remember whether you discussed with any of the others whom you consulted about this decision the fact that one consequence would be that Williams would be frozen out of the property? ---No, that was assumed, I think, by all people that were involved in it. It is so obvious that it goes without saying, is it? ---It would appear so. I mean only one person can lease a property so I think it is a natural assumption. Bmw we ew eee mew wwe ewe He ee meme nee eee eanneer ere nnne Your understanding was when you were having these conversations with all these people that this consideration that I have been asking you about was so obvious it was not necessary to mention; is that right? ---I am not saying that. I said that it would have been mentioned undoubtedly, it was not something that needed to be highlighted. I think it is quite obvious what that effect would be. Do you say that it was mentioned to these various people? ---It would have definitely been mentioned to some. Mr. Bird Williams that is premises. 17. Sm eee reer a ere meer eee eee eeseeeresevreervreeeesseana Your understanding when you spoke to these various people was that they would not have known that Williams was planning to lease the premises; is that not right? ---The majority would not have until told by myself. And you told them as part of your deliberations and consultations with them? ---Yes, because of the ramifications of Paper Save's name in the negotiations involving Mr. Williams. Did you then discuss with him what effect your taking a lease of those premises would have on Williams? ---It would have been discussed. And you expected that effect to be profound; did not you? ---I did not - I do not have an understanding of just how profound the effect will be. You hoped that it would be profound: did not you? ---Not necessarily. You hoped that the effect on Mr. Williams of your taking a lease of these premises would be profound; did not you? ---Would slow him down if that is profound. You hoped that it would slow him down a lot; did not you? ---Business - if you have got market share to protect. Did you hope that it would slow him downa lot or did not you? ---I expected it would slow him down. A lot? ---I did not know; I had no idea how long it would be". said that he considered that it was clear that Mr. had looked at the premises for the respondent because what Mr. Altas told him when he first met him at the 18. Mr. Bird was asked a number of questions concerning the respondent's need for the Camperdown premises and their suitability. He was asked particularly what made the need so urgent that he made a decision, more or less on the spot, without asking either Mr. Altas or any other estate agent to look for premises for the respondent. It will be recalled that in his conversations with Mr. Williams he said that he did not wish Mr. Williams to consult any real estate agent but simply to keep an eye out for premises himself. Mr. Bird's answers to these questions were inconclusive. That concludes the account of the relevant parts of Mr. Bird's evidence. I should next refer to further evidence given by Mr. Altas. I. do so only for the purpose of emphasizing that Mr. Altas was at all times adamant that Mr. Williams had looked at the premises, not for himself, but for the respondent and that the uncertainty as to the name of the proposed lessee, was due to the possibility that the lease might be taken in the name of another company associated with the respondent. Mr. Altas corroborated Mr. Bird's evidence in relation to the discussion at the Camperdown premises at which Mr. Hall was present by saying that he told Mr. Bird that Mr. Williams had told him that the premises were for the respondent and not for Mr. Williams personally. In the course of recounting the evidence led on behalf of the applicants I did not refer to evidence given by a Mr. Eastaway of a conversation he claims to have had with Mr. Hall. Mr. Eastaway said that on 30 April 1987 he was employed by the respondent as a 19. salesman. On that day he had a convesation with Mr. Hall at the respondent's premises to the following effect:- "He said: 'T am now working as a consultant to Papersave Pty Limited. Are you going to join John Williams?' I said: 'No, I am going on holidays and I don't know what I am doing'. He said: 'Do you know that John Williams is going out on his own?' I said: 'Yes.' He said: 'Well, he won't succeed because we are going to cut him off in every way possible.' He then said: 'The premises that John was moving into we have now got.' He further said: 'He will then probably still go out and try and make a go of it, but we will make sure that it won't run as well as he thought it would". Mr. Eastaway's evidence was contained in an affidavit. When counsel for the applicants sought to read the affidavit the account of the conversation was objected tc. Counsel for the applicants submitted that the conversation was admissible pursuant to the provisions of s. 84 of the Act which I have earlier set out. I took the view, on the then state of the evidence, that the case was not at that point within s. 84 and I rejected the evidence. In the course of his evidence Mr. Altas, who was called out of sequence by counsel for the applicants, revealed that Mr. Hall had been present with Mr. Bird at the Camperdown premises. To my mind this tipped the balance in favour of the admissibility of Mr. Eastaway's evidence and I decided to admit it. T say at once that I do not' regard the question of the admissibility of the evidence as being without difficulty, but the admission of it undoubtedly led to the calling of Mr. Bird. In the absence of Mr. Eastaway's evidence, 20. it seems unlikely that the applicants could have made out a case. Be that as it may, I do not think that Mr. Eastaway's evidence of what Mr. Hall said to him is of importance in the resolution of the issues between the parties. That is because Mr. Bird is the director of the respondent who has the closest knowledge of the matter. It is to his evidence that one needs to refer when considering whether or not the applicants have established that the respondent had the requisite purpose. Furthermore, it 15 clear from Mr. Bird's evidence that Mr. Hall did not himself play any part inthe making of the respandent's decision ta take a lease of the premises. Mr. Bird alone made that decision. I should, however, add two further matters to what I have said about Mr. Eastaway's evidence. He was not cross-examined. It follows that I should accept his account of what Mr. Hall said to him. Then Mr. Hall, as I have mentioned, was not called as a witness. It was suggested in argument that he was a witness whom the respondent might reasonably have been expected to call so that his absence from the witness box should lead me more readily to accept the applicants' case and draw the inferences upon which that case depends. I do not accept that submission. I accept Mr. Bird's evidence that Mr. Hall has no longer any connection with the company except occasionally as a consultant, for example, in relation to machinery in need of repair. He certainly took no part in the decision to lease the premises other than to tell Mr. Bird about their availability and, apparently, express the view that they were suitable for the respondent's needs. 21. The remaining evidence concerns evidence of the market and the respondent's share of that market. The market need not be defined geographically but is probably the market for the collection and treatment of waste computer paper in the inner Sydney metropolitan area. Mr. Williams said in his affidavit that the competitors in the market were companies which he described as TNT, Brambles, Lombous and the respondent. He said that im the period of his employment as sales manager of the respondent he was able to observe that the respondent was by far the largest operator in the market. He said the respondent's share of it was 60 per cent, that of TNT and Brambles combined, 15 per cent and that of Lombous, 25 per cent. His evidence in this respect was given without objection. In the course of his evidence Mr. Bird attempted to deal with this evidence, but it became clear that he did not have the close knowledge of the market which Mr. Williams had. He did say that there were other companies in the market as well, namely, companies he described as APM and APPM. I do not regard so much of his evidence as was admitted as tending to establish that the respondent had only a small share of the market. I think it is significant that no objection was taken to Mr. Williams' evidence of the companies in the market and their market shares. I confess that when no objection was made to this evidence, I thought it was because there was no real issue about the matter. If an objection had been taken, there may have been a question as to the admissibility of the evidence, especially bearing in mind the bald way in which it was led. If such an objection had been upheld, it would have been open to the applicants to lead more 22. detailed evidence from Mr. Williams or to rely on other evidence, perhaps documentary evidence subpoenaed from the respondent and the other companies in the market. My conclusion is that the evidence as it has been led establishes that the respondent does have approximately 60 per cent of the relevant market. I find that that gives the respondent a substantial degree of power in the market within the meaning of that expression in s. 46 of the Act. The first matter to be resolved is to determine what evidence IT accept and what findings I should make. In approaching the resolution of the issues in this case I should bear in mind that the infringement of s. 46 may expose the infringer to liability for a penalty; s. 76. The allegations which the applicants make are therefore allegations of some gravity and, in determining whether I am satisfied that they have been established, I should bear that matter in mind. Another preliminary matter I should mention is that, in the passages quoted from his evidence in which he was asked about his Purpose in deciding to take a lease of the Camperdown premises, Mr. Bird denied that it was any of his purposes to take the lease in order to prevent Mr. Williams from obtaining a lease of the premises and thus to hinder him in his attempt to enter the market. Apart from what was said by Mr. Hall to Mr. Eastaway, there is no direct evidence of Mr. Bird's purpose in deciding to take a lease, he himself having denied that that was his purpose or one of his purposes. For reasons earlier given, I do not 23. think that Mr. Eastaway's evidence can play any part in the resolution of the question whether the applicants have established that a purpose of the respondent was to prevent the entry of Mr. Williams into the market or to deter or prevent him from engaging in competitive conduct in that market. In many cases the denial by a witness of a particular state of facts will not, if disbelieved, provide evidence of the existence of that state of farts. But there are some circumstances in which that will not be so. The problem is discussed in a number of cases and texts. For present purposes it is enough to refer to the judgment of Gibbs J. (as he was) in Steinberg v. Commissioner of Taxation (1975) 134 C.L.R. 640. His Honour said (p. 694):- "The fact that a witness is disbelieved does not prove the opposite of what he asserted: Scott Fell v. Lloyd (1911) 13 C.L.R. 230, at p. 241, Hobbs v. Tinling (C.T.) & Co. Ltd. C1929] 2 K.B. 1, at p. 21. It has sometimes been said that where the story of a witness is disbelieved, the result is simply that there is no evidence on the subject (Jack v. Smail (1906) 2 C.L.R. 684, at p. 698; Malzy v. Eichholz £1916] 2 K.B. 308, at p. 321; Ex parte Bear; Re Jones (1945) 46 S.R. (N.S.W.) 126, at p. 128), but although this is no doubt true in many cases it is not correct as a universal proposition. There may be circumstances in which an inference can he drawn from the fact that the witness has told a false story, for example, that the truth would be harmful to him: and it is no doubt for this reason that false statements by an accused person may sometimes be regarded as corroboration of other evidence given ina criminal case: Eade v. The King (1924) 34 C.L.R. 154, at p. 158; Tripodi v. The Queen (1961) 104 C.L.R. 1. Moreover, if the truth Must lie between two alternative states of fact, disbelief in evidence that one of the state of facts exists may support the existence of the alternative state of facts: Lee _v. Russell £19613 W.A.R. 103, at p. 109". 24. Th WY GPinlon this is a case where the dishelief of Mr. Bird's evidence as to his purposes would entitle the Court to draw an inference that he did have as one of his purposes the prevention of Mr. Williams' entry into the market or the deterrence or prevention of his engaging in competition therein. The provisions of s. 4F which I have earlier set out are such that it is sufficient if the alleged conduct is engaged in for purposes which include a purpose that would make the conduct unlawful and that purpose is a substantial purpose. I have reached the conclusion that I should not accept Mr. Bird's evidence that he decided to take a lease of the Camperdown premises for purposes wholly unconnected with Mr. Williams' projected entry into the market. I do not find his evidence on this matter convincing. I have set out the most important parts of it. Having given it due consideration, I have reached the conclusion that the evidence lacks frankness and is, to a degree, evasive. This view does not stem from any matter associated with Mr. Bird's demeamour in the witness box. He gave his evidence impressively. It has been my consideration of his evidence after reading it when the transcript became available that has led me to say what I have. My view of Mr. Bird as a witness is not the only matter bearing upon the credibility of his evidence. What he has said needs to be weighed against the background of what had been done (or not done) by the respondent to find other accommodation down to the time of his becoming aware of the Camperdown premises. Notwithstanding the letter that had been written by the Maritime 25. Services Board on 29 May 1986, the fact is that the respondent had taken scarcely any concrete steps towards finding new premises until after Mr. Bird became aware that Mr. Williams intended to go into business in competition with the respondent. The enquiries which Mr. Bird made about the availability generally of suitable alternative accommodation were meagre. The fact that he was not prepared to entrust his problem to any estate agent is difficult to understand if there were pressing necessity for other premises. Whatever the difference between the size of the premises at Walsh Bay and that of those at Camperdown may be, it is clear that the premises at Walsh Bay are substantially larger than those at Camperdown. It is true that Mr. Bird said that he would not have moved the whole operation into the Camperdown premises, but would have broken it up. But the fact remains that his decision was made on the spur of the moment and confirmed overnight after his discussions with the general manager, two other directors and Mr. Hall. It seems unlikely to me that he would have proceeded so precipitately if it had not been for an added factor, namely, Mr. Williams' projected entry into the market. Then I have taken into account the absence from the witness box of persons who might have been expected to depose to their' view of the urgency of the respondent moving to new premises and the suitability of the Camperdown premises for the respondent's needs. Mr. Bird was the only witness called. I would have thought that Mr. Johnson, notwithstanding that he is based in Queensland, and Messrs. Spence and Gattis, would have been ablé to give relevant evidence about these matters. No explanation 26. for their not being called as witnesses was provided. In those circumstances I should infer that nothing that they might have said would have assisted the respondent's case. I make it clear that I do not include in this discussion the evidence of Mr. Hall. I consider that he was a witness available to be called by either party. All the matters I have mentioned, when viewed together, persuade me that Mr. Bird's evidence of his reasons for wishing to take a lease of the Camperdown premises should be rejected. I do not go so far as to find that the respondent will not be able to use the premises, if it secures a lease of them, for the purposes of its business. But I think that it is clear that, if Mr. Bird had not thought that Mr. Williams' plans to commence business would be thwarted or badly delayed if Mr. Williams were unable to make use of the premises, he, Mr. Bird, would not have taken the precipitate interest in them which he did. A substantial purpose of his doing so was to frustrate Mr. Williams' entry into the market. The next issue of fact upon which I should make a finding is whether Mr. Bird's evidence that he thought, even after his discussion with Mr. Altas, that Mr. Williams had looked at the premises, not on his own behalf, but on behalf of the respondent is correct. The matter developed over a comparatively short period. At the time he discussed the matter with Mr. Hall in the coffee lounge Mr. Bird was aware, as was Mr. Hall, that Mr. Williams intended to go into business in competition with the respondent. He learnt of the Camperdown premises during that 27. G@iscussion and also that Mr. Hall, inthe company of Mr. Williams, had visited the premises some six or eight weeks beforehand. And Mr. Bird knew that Mr. Williams had made no mention of the premises to him or to anybody else in the employ of the respondent. In those circumstances I find it difficult to believe that a business man of Mr. Bird's obvious capacity did not at once conclude that it was to be from the Camperdown premises that Mr. Williams' new venture was to operate. The matter does not end there. Mr. Bird was told by Mr. Altas, so he said, that Mr. Williams had said to Mr. Altas that the premises were for the respondent. He had mentioned nothing about any personal requirement of his own. Mr. Williams denied this. He agreed that he did not say anything about his own requirements when he first saw Mr. Altas, but he said that, during their second discussion, he did make it clear that the premises were for himself. Mr. Altas'' evidence is to the contrary. I have decided I should accept Mr. Williams' evidence about this matter and reject that of Mr. Altas. I do so principally because I regard the Lease Advice Notice completed hy Mr. Altas on 2 March 1987 as consistent with Mr. Williams' account of the evidence rather than that of Mr. Altas. I have already mentioned the principal matter which leads me to this conclusion. Mr. Williams' name is given as the lessee followed by his private address. If Mr. Altas' understanding had been as he said it was, he would have used the name of the respondent and its address which he had on Mr. Williams' card. The use of Mr. Williams' name followed by the indication that the lease would be taken in the name of a company to be advised is more consistent 28. with the company being a company controlled by Mr. Williams than a company controlled by the respondent. If the position had been as Mr. Altas had said it was, the lessee's mame would have been filled in as that of the respondent even though followed by reference to Mr. Williams and the fact that the lease would be taken in the name of a company other than the respondent. I therefore accept Mr. Williams' evidence that he did tell Mr. Altas that he required the lease for his own purposes. This does not mean that Mr. Altas may not have misled Mr. Bird when he visited the premises at the end of April. He may have had reasons which suggested to him that he should tell Mr. Bird that at all times Mr. Williams had indicated that it was the respondent which required the premises. I think, however, that this is unlikely. I think the better view is that Mr. Bird, Mr. Hall and Mr. Altas discussed the matter on Mr. Bird's first visit to the premises on the basis that it was known that the premises had been selected by Mr. Williams for the purposes of the business he was to commence and not for the purposes of the respondent. In summary then, I find that at all material times Mr. Bird knew that Mr. Williams required the premises for the purposes of establishing a business which would be run in competition with the business of the respondent and decided to take a lease of the premises for purposes which included the purpose of either preventing the entry of Mr. Williams into the market or deterring or preventing him from engaging in competitive conduct in the market. 29. Those findings do not, however, conclude the matter. There will be no breach of 8. 46 unless it be established that a corporation having a substantial degree of power in a market takes advantage of that power for one of the offending purposes. T have already held that the respondent had a substantial degree of power in the market. But the question is whether the applicants have established that the respondent has taken advantage of that power for one or more of the specified purposes. The conduct in which I have found the respondent to have engaged could as easily have been committed by a company having little market power. A company with say, 5 per cent of the market, itself endeavouring to gain a toehold, might have just as much interest as the respondent in keeping a potential competitor out. If the company engaged in conduct similar to that engaged in by the respondent here, there could be no breach of the section. On the assumptions I have made, its preventing the new entrant from taking the lease would be just as detrimental to the new entrant's chances of commencing business. But the company would have achieved its objective without taking advantage of market power; ex hypothesi it had no such market power to exert. Counsel for the respondent submitted that, in deciding to take the lease, the respondent was doing no more than making an advantageous commercial decision by taking a lease which would help it maintain its market share. The manner in which it went about achieving this object had nothing to do with any resort by it to its market power. The section was said not to be directed at conduct of this kind, but at conduct in which a corporation 30. was able to engage because, and only because, of its power in the market place. Examples of the application of the section were provided by pricing policy designed to keep a potential entrant to the market out or other anti-competitive conduct of that kind. The conduct here did not fall into that category. I should mention at this point two matters which may be thought to be of indirect relevance. The lessor of the premises has offered the same terms to the respondent as it offered to Mr. Williams. These include a rent free period of six months and the making of a contribution towards the cost of partitions to create office space in the premises. The rental and the term of the Jease offered both Mr. Williams and the respondent are identical. Thus, this is not a case where a corporation has endeavoured to induce a lessor to give it a lease by offering terms and conditions more advantageous to the lessor than those proposed by the other party. Apparently, although this is not completely clear, the lessor is attracted to the respondent only because it believes that it is likely to offer a sounder financial prospect. The other matter is that the lessor has not given evidence and has not said that it will not grant a lease to Mr. Williams. On the other hand, unless the respondent be restrained fram entering into a lease of the premises, it is for the lessor to decide with whom it will do business. The expression, "shall not take advantage of the power in relation to that market that it has ... for the purpose of ..." is not new. The same language was used ins. 46 before it was 31. amended in 1986. Nevertheless, there is little authority on the meaning and effect of the words. They were considered in Victorian Eqq Marketing Board v. Parkwood Eqqs Pty Limited (1978) 20 A.L.R. 129, per Bowen C.J. at p. 139; Trade Practices Commission v. C.S.B.P. & Farmers Limited (1980) A.T.P.R. 40-151, per Fisher J. at pp. 42,165-7 and Od Transport Pty Limited v. Western Australian Government Railways Commission (1987) A.T.P.R. 40-761 per French J. at p. 48,249. The latter case was an application for interlocutory relief decided in relation to the present form of the section. The words were referred to in an Explanatory Memorandum circulated to members of Parliament at the time the Trade Practices Revision Bill 1986 was being debated. Paragraphs 49 and 50 (pp. 13-14) of the Memorandum are as follows:- "49 The term take advantage in this context indicates that the corporation is able, by reason of its market power, to engage more readily or effectively in conduct directed to one or other of the objectives in paragraphs (a), (b) and (c). It is better able, by reason of its market power, to engage in that conduct. Its market power gives it leverage which it is able to exploit and this power is deployed so as to 'take advantage of' the relative weakness of other participants or potential participants in the market. Whether this is so ina particular case is a matter to be inferred from all the circumstances. 50 Likewise, the reference to purpose in this context indicates that the conduct of the corporation, by which it takes advantage of its market power, must be directed to impairing competition ina market in one of the ways set out in paras. (a), (b) and (c)". I have not found what was said in the abovementioned 32. authorities and the Explanatory Memorandum of assistance in resolving the present problem. That is because the statements there made are directed to different factual situations, or are concerned with different aspects of the words in question, from those which arise for consideration here. The problem was raised with counsel for the applicants during the early stages of the hearing. Counsel put the matter in two ways. Firstly, it was said that the respondent, having a substantial degree of power in the relevant market, had used the economic power which it had to produce an effect upon the market which was to prevent Mr. Williams from commencing business. It was said that it was the economic power which the respondent had which permitted it to do what it was attempting to do. Secondly, it was said that, where the economic power, that is to say, "the bank balance", comes from activity in the market, the position was clearer. In such a case the use of that economic power to prevent an entrant gaining a foothold was, in fact, "a _ use of power derived qua market operator". In his final submissions counsel for the applicants summarized his contentions by saying that the respondent was taking advantage of its market power because it was exercising economic power derived from its activities in the market. Because the way counsel for the applicants would put his case in relation to this matter was foreshadowed to counsel for the respondent before the respondent's case commenced, I should infer that the moneys to be paid by the respondent for the rent due under any lease of the premises will derive from moneys which it 33. has earnt in the course of carrying on business in the market. I should also infer that it is its financial success in the market place, and thus its financial stability, which has probably induced the lessor to prefer to do business with the respondent rather than Mr. Williams. I have found the problem which this case poses by no means free from difficulty. I would have preferred to have hada little more time in which to consider it perhaps with the aid of more substantial research than I have been able to undertake in the time available. Time has not permitted that course because the subject matter of the litigation may easily be lost at any moment. If a third party evinces interest in the premises, it seems probable that the lessor will deal with it and leave the parties to these proceedings to look for other premises. It is therefore important that there be a decision quickly. The case is not one where interlocutory relief would really have been of much use to either party. Having given the matter due consideration, I have reached the conclusion that the applicants have not demonstrated that the respondent is taking advantage of its power in the market for any of the purposes which are proscribed. It has the purposes which are specified in paras. (1)(b) and (c) of the subsection, but the evidence does not establish that it is taking advantage of its power in the market to achieve either of them. Rather, it took advantage of information which it obtained from Mr. Hall that the premises which Mr. Williams intended using for his business had probably not been secured by him and were thus available on the 34, market for lease. The respondent did not take advantage of its market power; it took advantage of the information given it by Mr. Hall and made the most of the opportunity which it then had. In the result the application must fail. Before I conclude I should mention one further argument relied upon by counsel for the respondent. It was that, in the exercise of my discretion, I should refuse injunctive relief because the applicants did not come to the Court "with clean hands". The particular matters relied upon were:- "(a) As an employee of the respondent, Mr. Williams owed to the respondent a duty of fidelity. He had been specifically instructed to go out and look for premises on behalf of the respondent and, rather than doing that, went out during working hours looking for premises for himself, (b) Having been a director of the company he was in a fiduciary position in relation to it and should not have placed himself in a position of seeking to further his own ends in breach of his fiduciary duty, (c) In seeking to cloak himself with the respondent's commercial and financial standing so as to induce the lessor to offer to grant to him a lease he was acting contrary to Section 229(4) of the Companies Code 1981 (N.S.W.) which forbids an officer or employee of a corporation from making improper use of his position so as to gain an advantage for himself or to cause detriment to the corporation". In the circumstances it is unnecessary for me to deal with this submission. But I say in relation to para (a) of the matters relied on that I reject the submission that Mr. Williams looked for premises for himself during working hours. That is 35. mot in accordance with the evidence. It is clear that his position enabled him to take time off as necessary to attend to his personal affairs. The only other matter I wish to mention in connection with the submission is that, if it had arisen for consideration, it would have been necessary to determine whether, if there were an absence of "clean hands", the public interest nevertheless would have required the grant of relief. The orders I make are that the application be dismissed and that the applicant pay the respondent's costs of it. | certify mnat this and the 34 preceding pages are a true copy of the reasons for Judgment herein of The Honourable Mr Justice Sheppard. / ol. , /. "- Associate uaa 17 HAY 1987 Counsel for the applicant: C.A. Sweeney Solicitors for the applicant: J.C. Behm & Associates Counsel for the respondent: C. Hosking Solicitors for the respondent: McCaw Johnson Dates of hearing: 6, 8 and 12 May 1987