JUDGMENT No. 690/877. CATCHWORODS TRADE PRACTICES - contract arrangement_--or <= understanding containing exclusionary provision - giving effect to exclusionary provision - rules of association - whether contrary to s.45 unlawful restraint to trade INJUNCTION - interlocutory - balance of convenience consideration of question of law on interlocutory application Trade Practices Act 1974 ss.4D, 45. NEVILLE THOMAS McCARTHY & ORS. V. AUSTRALIAN ROUGH RIDERS ASSOCIATION INCORPORATED & ANOR. QLD. NO.G167 OF 1987 SPENDER J. BRISBANE 3 NOVEMBER, 1987. Mee a ae, Ss rpm ST TTY wee ep ae owe IN THE FEDERAL COURT OF AUSTRALIA ) ) QUEENSLAND DISTRICT REGISTRY ) QLD. G167 of 1987 ) ) GENERAL DIVISION BETWEEN : NEVILLE THOMAS McCARTHY and VERNON LAWRENCE McVICAR and TERENCE O'NEILL and GRAHAM BORGHERO : - Applicants AND: AUSTRALIAN ROUGH RIDERS ASSOCIATION INCORPORATED First Respondent AND: BILOELA RODEO ASSOCIATION INC. Second Respondent MINUTE OF ORDER JUDGE MAKING ORDER: SPENDER J. DATE OF ORDER: 4 NOVEMBER 1987 WHERE MADE: BRISBANE THE COURT ORDERS THAT: Upon each of the applicants giving the usual undertaking as to damages, IT IS ORDERED that: 1. Until the trial of this action or further earlier order, the first and second respondents be restrained: (a) from doing any act intended to give effect to or enforce, or having the effect of giving effect to or enforcing - pote ee iz fa) (i) the first sentence of bylaw 13.1 of its bylaws; (il) the last sentence of bylaw 13.2 thereof; (iii) bylaw 29.1.3 thereof; Civ) every resolution of its Board of Directors passed in respect of the applicants at Mt. Isa on 7th August 1987; (b) from representing to any person that any of.- - _ the applicants has forfeited any points or has fewer such points than the number to which he is entitled without regard to the said resolution or bylaws; {c) from doing or permitting any act for the enforcement or recovery of the fines referred to in the said resolutions. The first respondent forthwith notify the promoter of the National Finals Rodeo of the entry in that rodeo of those of the applicants entitled to compete therein, and do all acts and things within its power to enable the applicants to compete therein. In determining such entitlement, the first respondent disregard the purported forfeiture of points of the applicants pursuant to the said resolutions or the last sentence of bylaw 13.2. The moneys held in trust by Messrs. Cannan and Petersen to abide the order of the court in this action be paid out to the respective applicants in connection with whom such moneys were paid to that firm. Until the trial of this action, each of the applicants keep an account of all moneys paid to him pursuant to paragraph 4 and also of all further prize moneys received by him from competition in any rodeo conducted by an affiliate of, or otherwise under the auspices of, the first respondent. Costs of the Interlocutory Application be reserved. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. a eee epee - wa , Mereenpase = IN THE FEDERAL COURT OF AUSTRALIA ) } QUEENSLAND DISTRICT REGISTRY ) QLD. G167 of 1987 ) GENERAL DIVISION ) BETWEEN : NEVILLE THOMAS McCARTHY and VERNON LAWRENCE McVICAR- and TERENCE O'NEILL and GRAHAM BORGHERO Applicants AND: AUSTRALIAN ROUGH RIDERS ASSOCTATION INCORPORATED First Respondent AND: BILQELA RODEO ASSOCIATION INC. Second Respondent SPENDER J. BRISBANE 3 NOVEMBER 1987 REASONS FOR JUDGMENT The applicants are members of the Australian Rough Riders Association Incorporated and are seeking, on an interlocutory application, to restrain 1t from enforcing or giving effect to one of the rules of that Association, Rule 13.1, which provides:- "Unaffiliated rodeos: No full member of the Australian Rough Riders Association Inc., financial or not, shall compete at any unaffiliated rodeo. The executive council may at its descretion (sic) suspend any full member for wo ye ee nae ne age ype ee eet ey Ww breaches of the rules of the Association. Such fines for contesting at unaffiliated rodeo to be a maximum of $200.00 for the first offence, but otherwise to be at the discretion of the council. Fines to be paid into the office of the Association at Warwick before a member competes again." The applicants complain that this provision is an exclusionary provision contrary to s.45 of the Trade Practices Act 1974, and also constitutes unlawful restraint of trade. Each of the applicants is a professional rough rider and the operation of the rule has the effect of Limiting the number of rodeos at which they can compete. The effect of the rule is that professional rough riders, if they choose to belong ta the Australian Rough Riders Inc., are prevented from competing in rodeos which are held under the auspices of organisations other than the Australian Rough Riders Association Inc., in particular the South East Queensland Rodeo Riders Asseciation and the Australian Bushman's Campdraft and Rodeo Association. Neither the South East Queensland Rodeo Riders Association nor the Australian Bushman's Campdraft and Rodeo Association has a rule similar to Rule 12.1. The Australian Rough Riders Association was incorporated under the provisions of the Association Incorporations Act, 1929-1935 (S.A.) on 19 February 1953 and in the following year changed its name to Australian Rough Riders Association Incorporated (The "A.R.R.A." or "the Association"). Ty ees ills alerts olan Liter tela alien Celie een eee oR ERO . wt . fr toed oe : Ce re es ee eee' 1 yh es ete tye According to Mr. Barry Masters, its Secretary and General Manager, the Association was established in 1944 to represent the interests of professional rodeo riders and cowboys in relation to the conduct of rodeos in Australia. __One of the - purposes of its formation was to achieve uniformity as to riding rules in each of the standard events, and minimum standards as to equipment to be used in rodeos and the preparation of arena surfaces. It is necessary to refer to some of the by-laws and viding rules of the A.R.R.A. The aims and objects of the Association include:- "To provide unity between riders and those conducting rodeos. To assist committees in promoting competitive rodeas. To unite all Australian riders into one unified body of competitors. To acquire property of every description both real and personal and to purchase, lease or by other means obtain real estate for the benefit and enjoyment of the Association. To promote and maintain the good name and reputation of the Association and the members thereort." The affairs of the Association are managed by a Council. As to membership, the by-lavs provide :- "Membership in the Association is a privilege not a vight, application for which shall be made on forms and by fees and procedures prescribed from time to time by the Association. Membership or application therefore may be terminated or rejected by the Association for cause detrimental to the interest of the Association policies, objectives and harmonious relationship of its members, as determined by the Association. Termination or application rejection proceedings under this paragraph shall be conducted in accordance with the Articles of Association." - fe Rule 11.1 provides:- ee b "Members shall receive a card bearing members (sic) number, name and date of the year of issue. The card shall remain the property of the council. No member shall be allowed to ride at any affiliated rodeos without being in possession of such membership card and producing it on demand...." Suspension or cancellation of membership competition and/or the Association is dealt with in Rule which provides:- "13.1. Unaffiliated rodeos: No full member of the Australian Rough Riders Association Inc., financial or not, shall compete at any unaffiliated rodeo. The executive council may at its descretion (sic) suspend any full member for breaches of the rules of the Association. Such fines for contesting at unaffiliated rodeo to be a maximum of $200.00 for the first offence, but otherwise to be at the discretion of the council. Fines to be paid into the office of the Association at Warwick before a member competes again. 13.2. A Rules Infractions Committee consisting of the two Vice-Presidents and the Stock Contractors Representative will look unto all complaints regarding rule book violations by members and report their recommendations at the Board of Directors meeting next held following the receipt of the complaint by A.R-.R.A. Head Office. Riding at an unaffiliated rodeo, rider loses all points gained. 13.3. Suspended or unfinancial members should not be able to participate in a rodeo in any-way (sic) and should not be allowed to be around the chutes and adjacent area. 13.4. The Association shall be responsible for and shall maintain at all times the good name of the Association and the good conduct of members of the Association at all times." As to complaints:- "13.5.1. Should any complaint be made to- the Council of the Association as to the good name of the Association and/or conduct of the Association and/of members of the Association, then the y a ae > ae ee ee y or council shall have power to investigate such complaints and the secretary of the Association shall make a report of any investigation to the Council. 13.5.2. Any member who is subject of a complaint shall be notified in writing by the secretary of the complaint and advised as to the place, date - and time for the hearing of such complaint. -The member shall have the opportunity to be heard at the Council Meeting called to hear such a complaint and such member shall be entitled to present his case either orally or in writing -or both. 13.5.3. The date for hearing any complaint shall be at the meeting of the Council next convened after the making of such complaint, or such later date as the Council shall, in its absolute discretion, decide. 13.5.4. The Council shall have the full power to hear and determine the complaint on the appointed date whether the member be present or not and shall have power to impose any fine, penalty, suspension and/or cancellation of membership as the Council in its absolute discretion deems fit." oe eon so That there is a robust approach to the maintenance of the good name of the Association by the Association appears from some of the rules dealing with fighting: Fighting 14.1 Any member of the A.R.R.A. Inc., whether contesting or not, who is involved in a fight in or about a rodeo venue will be fined. 14.1.1. The minimum fine of $20.00 will apply automatically even if the member 15 not at fault. A $190.00 fine will apply 1f the member provokes the incident. 14.1.2 For being involved in a fight during the period one (1) week before, or one week after a rodeo, a fine of $20.00 will automatically apply." (my emphasis) Those who conduct rodeos under the auspices of Association pay affiliation fees. Rule 19.1 provides:- the wen eee we ay eet = "For every rodeo promoted, the committee or organising body responsible for its organising shall pay to the Association such affiliation fees as may be fixed by the council from time to time." The by-laws contain a scale of affiliation fees, and provide that the affiliation fee must be paid before any publicity is given indicating that the rodeo is being held under the auspices of the Association. Further, any person, committee or society which promotes, convenes or conducts any equestrian events- in affiliation with the Australian Rough Riders Association, is required to pay to the Provident Fund of the Association a levy at a rate to be determined by the council of the Association from time to time. to be forwarded within seven days of the completion of the rodeo. The Council 1s empowered to establish a Provident Fund, and the by-laws provide that money paid as levies to the Provident Fund shall be used only to provide benefits for injured contéstants, judges who are financial members of the Association, official pick-up men and approved bullfighter/clowns, whether Association members or not. The amount to be paid on a claim on the Provident Fund is determined by the Council of the Association; all claims have to be made within fourteen days of the day of injury. As to the general conduct of rodeos, Rule 26.1 provides that "all rodeos must appear in at least one issue of the Rodeo pany cpoaes oe rt re mens ce pce eee 7. News". Rule 26.2 provides that "the A.R.R.A. does not organise rodeos, but they will give every assistance voluntarily to any promoter or committee that 1s anxious to run under the auspices of the A.R.R.A. ... Where a new promoter is desirous of personal assistance, the A.R.R.A. will arrange that a Director or some other authorised person give expert advice and guidance". The by-laws define detailed conditions that must be fulfilled by an affiliated rodeo before it can be approved as an Australian Championship Points Award Rodeo. They also make provision for a National Finals Rodeo. Rule 32.1 185 an important rule. It provides:- "Membership cards will be issued to all financial members for that year. This card MUST BE PRODUCED when contestant pays his entry fee. No promoter of an affiliated rodeo shall allow any rider to compete unless such contestant is in possession of a card that is current for that year." By Rule 32.6, the contestant waives all claims against the promoter for injury to himself, his helpers, or his animals, or damage to his property whilst he is in the arena. The entry fees for rodeos range from §10.00 to $100.00 plus levies, but the fee is to be approved by the Board of Directors of the Association. There are detailed rules as to the way in which prize money is to be split over various events. All judges and flagmen are required by the rules to be "A.R.R.A. financial panel judges in good standing". Rule 37.12 provides "Judges cannot officiate at rodeos not affiliated with the BN SR TO re RS ere ote Pa ' . 8. A.R.R.A. (inc.)". Similarly, in relation to stock contractors, Rule 40.3 provides:- "No A.R.R.A. Rodeo will use contract stock other . than stock supplied by an approved A.R.R.A.Stock Contractor as from lst August, 1983. (Committees are still allowed to use local stock where contract stock is not used or unavailable.) The by-laws contain rules directed to the humane treatment of livestock involved in rodeos. There are detailed rules as to the various rodeo events. Mr. Masters says that the public interest and the interests of the members of the A.R.R.A. have been enhanced by the establishment of the A.R.R.A., in that the by-laws have set a minimum standard of personal conduct for 1ts members enforced by disciplinary proceedings, including fines and suspensions by the Board of the A-R.R.A.. Its formulation of minimum standards for equipment to be used at affiliated events andin the arena preparation required has contributed to the safety of the animals, the participants and spectators at rodeos conducted in affiliation with the Association. The Association has established a unified set of rules and, as a consequence, a nationwide consistency has been achieved and, further, a nationwide competition has resulted. It has established a benevolent fund from which payments are made to members injured while competing at affiliated events. It has set judging standards and, in its review of applicants for-the affiliation of --- rodeos, exercises a supervisory role over "undesirable" or ms - oe na "insolvent" promoters conducting rodeos. In recent times, Mr. Masters says that the A.R.R.A. has organised with a firm of insurance brokers, a fixed form of insurance cover ta he available to committees and sponsors affiliated with the - - A.R.R.A., thus obviating difficulties which earlier had heen experienced by persons conducting rodeos in arranging appropriate insurance cover. The A.R.R.A. has been engaged in discussions leading to the passing of legislation in New South Wales for the protection and safety of all animals used in rodeo events. The A.R.R.A. does not itself conduct or hold itself responsible for the conduct of any affiliated event. In exchange for a sponsor or committee paying an affiliation fee, the date of the proposed event is advertised in the A.R.R.A's magazine ("Rodeo News"). Members of the Association are not obliged to compete at any particular affiliated event during the year. It appears from Mr. Masters' affidavit that there are approximately 878 members of the A.R.R.A., made up of 26 junior members, 105 non-competing members, 434 permit members and 313 open members. Membership fees for the current financial year will total approz.$68,000.00. The A.R.R.A. publishes the "Rodeo News", but the costs of production exceed the advertising revenue in the magazine. It performs an important function in advising members of the dates of rodeos which are conducted in affiliation with the A.R.R.A. The A.R.R.A. is a non-profit organisation; in the year ending 30 June 1986, it had a surplus of approximately $22,000.00, which was retained by it for its future use. = nee . 10. It seems that there have been a number of unsuccessful attempts by members of the A.R.R.A. to alter the rule prohibiting members of the A.R.R.A. competing at non-affiliated rodeos. Each of the applicants is a professional rodeo contestant. Mr. McCarthy is a very successful one. In addition to his prize money won at rodeos, he derives income from schools and tuition for rodeo riders, training and selling rodeo horses, and from a rodeo which he runs in conjunction with his wife ata rodeo complex on his property. Mr. McVicar derives his income solely from contesting rodeos. Mr. O'Neill and Mr. Borghero have been professional rodeo contestants since 1975, but they have other sources of income unconnected with rodeos. The South East Queensland Rodeo Raiders Association and the Australian Bushman's Campdraft and Rodeo Association are organisations similar to the A.R.R.A. According to Mr. McCarthy, approximately 120 local radeo committees are affiliated with the A.R.R.A., 60 with S.E.Q.R.R.A. (several of which are also affiliated with the A.R.R.A.), and 200 affiliated with the A.B.C.R.A. (several of which are also affiliated with the A.R.R.A.). As earlier indicated, riders in the A.R.R.A. affiliated rodeos are eligible for annual event and all-round championship points based on their points earned in rodeos listed in the A.R.R.A. calendar. sees tp ' re. t wt re toe a cn canes ep geenpee gee na te ll. Each of the applicants is well qualified by way of results and each of them desires to compete at the National Finals Rodeo scheduled to be held on 6, 7 and 8 November 1987 at Brisbane. ae The Biloela Rodeo Assoctation Inc. was incorporated in Queensland under the Associations Incorporation Act 1981 (Q1d.) on 19 February 1987. It is a rodeo affiliated with the A.R-.R.A. and conducts the Biloela Radeo. That was held on 5 September 1987. While the evidence is sparse, I infer it derives revenue from membership subscriptions, entrance fees to the rodeo, bar takings, food sales, sponsorship, interest on investments, and incurs expenses in conducting the rodeo, including prize money and insurance as well as paying rental for use of the showgrounds. A local rodeo such as Biloela is obliged under the by-laws of the A.R.R.A. to maintain facilities to the standard set out inthe by-laws, and by Rule 22.1, no promoter of an affiliated rodeo may allow a rider to compete unless that contestant is in possession of a card that 1s current for that year. Rule 32.4 importantly provides that "suspended members and unfinancial members shail not participate in any way whatsoever in any activity connected with an affiliated rodeo". Early in 1987, Mr. McCarthy caused proceedings to be commenced in the District Court of Queensland, claiming from the A.R.R.A. prize money to which he claims to be entitled, from the A.R.R.A. in respect of a "World Rodeo" in 1982. The defence of seg acerger wate sae on eo acre, ne 12. A.R.R.A. denies that it in any way conducted that rodeo or is in any way indebted to Mr. McCarthy in respect of any such prize money. In June 1987, the applicants became members of the S.E.Q.R.R.A. and A.B.C.R.A., and took part in_rodeos affiliated with those organisations for the purpose of increasing their uncome. By letter of 24 July 1987, Mr. Masters, on behalf of the A.R.R-A. wrote to Mr. McCarthy informing him that the Council proposed to review his membership of the Association at Mount Isa on 7 August 1987 and invited him to be present at that meeting. The letter expressed concern about "your recent conduct and/or statements encouraging other members to breach certain of the rules of the Association, its policies, its objectives and the harmonious relationship of its members" and indicated that, if the Council determined that his membership should be terminated, the Mt. Isa committee would be notified accordingly. Similar letters were sent to the other applicants. Solicitors for the applicants sought particulars of the nature of the allegations, and on 6 August 1987, solicitors for the A.R.R.A. indicated that the conduct alleged against the applicants was "the breach by these members of the rule contained in clause 13.1 of the constitution by riding at unaffiliated rodeos" and "statements made by these members (Mr. McCarthy in particular) to other members (especially the younger members) encouraging them to also breach the rule contained in clause 13.1 by riding at unaffiliated events." - - see er te pe = ee . yt . ors uy Soe tr rege cee . we ate ' My ob 13. In addition, it was said that Mr. McCarthy's conduct in taking proceedings against the Association for the recovery of prize money alleged to be owing to him by the Association arising out of the failed "World Cup" event was also- to be taken -into account. Mr. McCarthy and Mr. McVicar attended the meeting in Mt. Isa on 7 August 1987, at which submissions were made by a solicitor on their behalf. The Board of Directors resolved that a fine of $3,000.00 be imposed, to be paid before again participating in A.R.R.A. affiliated rodeos; a twelve month good behaviour bond be imposed; any behaviour or action detrimental to the interests of the A.R.R.A., 1ts policies, its objectives, and the harmonious relationship of its members during the period of the good behaviour bond may incur a fine, suspension and/or a review of membership at the Board's discretion; and all applicants' points in standings to date be forfeited. On that day, solicitors for Mr. McCarthy and Mr. McVicar gave notice of appeal, complaining that the penalty was manifestly excessive; that the Council had no power or authority to place the offenders on a good behaviour bond, that there had been a denial of natural justice and further, "in the case of Neville McCarthy, the Council acted improperly in that it considered matters which are the province of a Court of Law, namely action for the recovery of monies associated with the World Cup Rodeo". 23 tf vee ee Soca see op cocereggrae st oe ae 14. Mr. McCarthy drew a cheque to the A.R.R.A. for $6,000.00 on behalf of himseif and Mr. McVicar, and competed at the rodeo in Mt. Isa on 8 August 1987. He thereafter stopped payment on the cheque. Prior to the Biloela Rodeo in early September, the Rodeo Secretary received an urgent notice signed by Mr. Masters, advising that the four applicants were ineligible to compete until further notice and indicating that the rodeo secretaries would be contacted when these members were again eligible to compete. Similar notices were sent to all rodeo secretaries of affiliated rodeos. The evidence shows that at least the Darwin Rodeo Association and the Taroom Rodeo Association, as well as the Biloela Rodeo Association Inc., would comply with the advice of Mr. Masters. It was said on behalf of the applicants that, in the absence of the grant of interlocutory relief by this Court, the applicants would, as a consequence of their exclusion from competing in A.R.R.A. affiliated events, lose prize money and other income. Their projected winnings from the S.E.Q.R.R.A. and A.B.C.R.A. affiliated rodeos would be approximately half that at present. Mr. McCarthy further says that, unless the rodeos he conducts are affiliated with the A.R.R.A., the effect of r.13.1 is that the majority of the best contestants in Australia will be precluded from competing at those rodeos with the resulting loss of public patronage and, unless he can advertise in the "Rodeo News" he would lose potential public patronage for the rodeos he conducts and potential students for his rodeo school. Ao pew toe. mee me pm ener ee rae sore ; apt te rt re re wee 15. On this interlocutory application, I am concerned whether there is a serious question to be tried and, if so, where the balance of convenience lies. There are a number of matters raised, including whether either' the A.R.R.A. or the - Biloela---- Rodeo Association Inc. is a trading corporation. In this particular case, there is little dispute about the basic facts, and the question is primarily a question -of the legal characterisation of those facts. In Cohen v. Peko-Wallsend Ltd. (1986) 61 A.L.J.R. 57 at p.59, the High Court held that although it is not the duty of the Court on an interlocutory application to decide questions of law, it 1s desirable for the Court to do so if the question 13 susceptible of resolution without further evidence and the urgency of the matter does not render impracticable to give proper consideration to the question. it In P.R.D. La Costa Management Pty.ttd. v. The Proprietors "Beachpoint" Puilding Units Plan No. 3149 £19851 2 Qd.R. Ryan J., in a judgment with which Campbell C.J. and Williams agreed, referred to the well-known statement of Lord Diplock American Cyanamid v. Ethicon Ltd. (£19757 A.C. 396 at namely: - "It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend, nor to decide difficult questions of law which call for detailed argument and mature considerations." Ryan J. then at p.229 said:- "It does not follow from this that, when the facts are not in dispute, a court should decline to decide questions of law, even if they involve some 227, ad. in 407, 2 ee meee eee ' tf 16. complexity, particularly if refusal to give a decision may cause substantial hardship to one of the parties... If a Judge comes to a conclusion, on hearing an application for an interlocutory injunction, that a question of law upon which the applicant's right to relief depends must be determined against him, it will in my opinion be a proper exercise of his discretion to dismiss the application. The issue before a court of appeal will then be whether his decision on the question of law was right." This seems to me to be a case where, if I was of the opinion that, on the material presently available, Rule 13.1 constitutes an unlawful restraint of trade, or a contravention of the Act, 1t would be a sound exercise of discretion to grant the relief sought; if I were of the contrary view, then my discretion should be exercised the other way. The question on which side the balance of convenience falls is, in this case, fundamentally determined by a consideration of the legal questions in issue. In the context of the facts set out above, I turn to the submissions of the parties. At the outset it should be pointed out that I have not had the benefit of pleadings: perhaps as a consequence of that, the respective possible bases of liability under the Trade Practices Act have been very leanly argued; at least they have not been analysed in the respective cases of the parties with that degree of rigour or scruple appropriate to this complex area of the law. That is a significant disadvantage, as a reading of the - judgment of Toohey Jd. in Hughes v. Western Australian Ronee ene pact re gc i7. Cricket Association (Inc.) (1969) A.L.R. 660 will indicate. In that case, Toohey J., having noted that the effect of s.86 is to confer upon the Federal Court jurisdiction to hear and determine not only claims arising under the Trade Practices Act 1974 but also other claims, federal or non-federal, arising out of the same matter or controversy, did not accept that it was sufficient for the Court to exercise jurisdiction that there be an arguable case that one of the respondents was a trading corporation, and held that the existence of a trading corporation was essential, relying on the observations of Gibbs J. in R. v. The Judges. of the Federal Court of Australia; Ex parte The-Western Australian National Football Leaque (Incorporated) 143 C.L.R. 190 at 234; (1979) 23 A.L.R. 439 ('Adamson'). The applicants expressly do not concede the correctness of this conclusion, but did not invite me to depart from the decision of Toohey gd. in that respect, and I do not. The applicants submitted that both the A.R.R.A. and the Biloela Rodeo Association Inc. were trading corporations. Toohey J. in Hughes at 671 summarised the relevant principles:- "(1) The mere fact that a corporation trades does not mean that it is a trading corporation: R. v. Federal Court of Australia; Ex parte W.A. National Football "League (1979) 23 A.L.R. 439; 143 C.L.R-. 190 at 219, 234 (Adamson). (2) The purpose of incorporation, propounded in St. George County Council, is no longer a valid test. The test is one of the current activities of the corporation: Adamson and State- Superannuation Board v. Trade Practices Commission (1982) 44 A.L.R. 1; 57 A.L.J.R. 89 a 96 (State Superannuation Board). ey ser os Vem san ser ~— a [elias ear taceeer ak teetiahed anal 2 OL 18. (3) But the current activities test is not the sole criterion for determining whether a corporation 1s a trading corporation. Thus where a corporation has not begun to trade, its character may be found in its constitution. Even when there are current activities, the corporation's constitution is not completely irrelevant: Fencott v. Muller (1983) 46 A.L.R. 41; - 152 C.L.R. 570 at 602. (4) Views as to the necessary extent of trading activity have varied. It must be a substantial corporate activity (Barwick C.J. in Adamson (143 _ C.L.R. at p.208); the trading activities must form a sufficiently significant proportion of the corporation's overall activities (Mason J. in Adamson at p. 233, with Jacobs J. concurring at p, 237); the trading activities should not be insubstantial (Murphy J. ain Adamson at p. 239); the corporation must carry on trading activities on a significant scale (Mason, Murphy and Deane JJ. 1m State Superannuation Board (57 A.L.J.R. at p.96; Deane J. in Commonwealth v. Tasmania (1983) . 46 A.L.R. 625 at 833). (5) An incorporated sporting body can be a trading corporation if its activities meet the required test (Adamson). (6) In particular, incorporation under a statute such as the Associations Incorporation Act does not prevent a corporate body from being a trading corporation uf its activities warrant that description (Adamson at p.232). (7) Trading denotes the activity of providing, for reward, goods or services: Re Ku-ring-gai Co-operative Building Society (No.12) Ltd. (1978) 22 A.L.R. 621 at 624-5; St. George County Council (130 C.L.R. at 569-70); Bevanere Pty.Ltd. v. Lubidineuse (1985) 59 A.L.R. 334; 7 F.C.R. 325 at 330-1. (8) The Trade Practices Act itself draws a distinction between trading corporations and financial corporations; nevertheless the two classes are not mutually exclusive: State Superannuation Board (57 A.L.J.R.) at p.96." It was then submitted for the applicants that there were a number of claims under the Trade Practices Act involving a trading corporation in a relevant way. Three markets were identified. First, a market in Australia in which rodeo riders compete; secondly, a market in which district committees and/or promoters compete with each other in Australia for the services ps Tn a ee i" , tO ¥ ay oe ee aeenaialadinaditendinssinrialenaman wera meemenanatices ite eee Boe ote aan Z rr - h e 19. of riders; and thirdly, a market in which associations such ag the A.R.R.A. compete, first for affiliations and secondly for members. It was then submitted that there is a bona fide claim made by the applicants pursuant to s.47(6). Section 47(1) provides that "Subject to this section, a corporation shall not, in trade or commerce, engage in the practice of exclusive dealing". Section 47(6) relevantiy provides that a corporation engages in the practice of exclusive dealing, if the corporation supplies or offers to supply...services...on the condition that the person to whom the corporation supplies or offers to supply...the services vill acquire...services of a particular kind or description directly or indirectly from another person. It was said that the A.R.R.A. was the corporation vhich supplied services, namely assistance to its affiliated rodeo organising bodies, on the condition that those bodies would acquire services of a particular kind, namely the services provided by the rodeo riders, from another person, namely a member of the Association. In my _ opinion, any requirement that an affiliated rodeo would permit only members of the A.R.R.A. to compete is not a condition that that rodeo would acquire services of a particular kind from another person. Any acquisition was from a class of persons. Next it was asserted that the conduct in question constituted a contravention of both limbs of s.45(2). Section 45(2) provides:~ LOTR gs cg er wr eS . a 20. "A corporation shall not ~- (a) make a contract or arrangement, or arrive at an understanding, if - (i) the proposed contract, arrangement or understanding contains an exclusionary provision; or (ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or (b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision - (i) is an exclusionary provision; or (11) has the purpose, or has or is likely to have the effect, of substantially lessening competition". It was submitted that there was an arrangement or understanding between the A.R-R.A. and the Biloela Rodeo Association Inc. and other non-parties, whether incorporated or unincorporated, not to engage persons who were not members of the A.R.R.A.. It was said that the effect of this arrangement or understanding was to lessen the competition between riders; secondly, to lessen competition between promoting organisations for the services of those riders. It was next submitted that the stripping of points under rule 13.2 was the giving of effect toa contract arrangement or understanding between the A.R.R.A. and the members of the A.R.R.A. which restricts competition between members of the A.R.R.A. in final events. It was next submitted that the giving effect to the arrangement or understanding between the A.R.R-A. and the local moots ee reas sey 21. rodeo entities was the giving "of effect to an- exclusionary provision contrary to s.45(2)(b)(i). It is said that the various affiliated rodeo associations are competitive with each other. On some occastons, events are held on the same day and, further, riders have a choice as to which affiliated rodeo they ride at. Finally, it was submitted that, in relation to the competition said to exist between the A.R.R.A. and the other rodeo associations, the effect of the arrangement or understanding concerning rule 13.1 is to. lessen competition between organisations, which are competing for affiliations and for members. That the provisions of the Trade Practices Act in these various respects pose real difficulties is not to be doubted. The position adopted by the applicants, however, was expressed in this way:- "We do not propose to get involved in analysing the Act in relation to each claim at this point and the reason for that is that it 128s much simpler from our point of view simply to say to your Honour that what you have here is a plain bald-faced restraint of trade. There can be no doubt about that. The only question to be raised is: Is the restraint of trade one which under the general law can be justified?" For the respondents it was submitted that there was no serious question to be tried, either with respect to claims which were made under the Trade Practices Act 1974 nor in relation to the general law. It was accepted by senior counsel for the respondents, and in my opinion properly so, that the effect~- of- rule 13.1 is to exclude the whole of the rodeo world other than wee ete oe ee ee vee we rT ae hoo. " er. 22. members of the A.R.R.A. from participating in affiliated rodeos and preventing members of the A.R.R.A. from participating in unaffiliated rodeos. Notwithstanding this characterisation, it was said that it was not an exclusionary provision within the meaning of s.4D(1)(b) of the Trade Practices Act 1974. Section 4D(1) relevantly provides:- "A provision of a contract arrangement or understanding...shall be taken to be an exclusionary provision for the purposes of this Act if - (a) the contract or arrangement was made, or the understanding was arrived at...between persons any two or more of whom are competitive with each other; and (b) the provision has the purpose of preventing, restricting or limiting - (i) the supply of...services ta, or the acquisition of...services from, particular persons or classes of persons; by all or any of the parties to the contract, arrangement or understanding..." Relevantly, the question in the circumstances of this case, 1s Whether there 1s a provision in an understanding or arrangement, between competitors, which has the purpose of preventing, restricting, or limiting the acquisition of services by all of those competitors from particular persons or classes of persons. For the submission of the respondents that, notwithstanding the effect of rule 13.1 as earlier accepted, that - provision was not an exclusionary provision as defined by oe reat Sone eee ees eee ae oe te na en ier oper 23. s.4D(b)(i), reliance was placed on the observations of Gray J. in Bullock v. The Federated Furnishing Trades Society of Australasia 7 A.T.P.R. 40-505, particularly at p.46,040; and on appeal (5 F.C.R. 464) per Smithers J. at p.468, Woodward J. (with whom - Sweeney J. concurred) at p.473-4; T.P.C. v. T.N.T. Management Pty.Ltd. 58 A.L.R. 423 at 500, and in Hughes's Case (1986) 69 A.L.R. 660 per Toohey J. at p.691. All of those cases were concerned with the section as it stood before the addition of the words "classes of persons" inserted by Act No.17 of 1986. The amendment is significant, particularly in the light of the observation by Franki J. in T.P.C. v. T.N.T. Management Pty.Ltd. (supra) at p.500, where he noted that s.47, the exclusive dealing section of the Act, drewa distinction between "particular persons" and "classes of persons". I am satisfied that, as a consequence of rule 13.1, the determination of the Council of the A.R.R.A., and the notice to all rodeo secretaries of affiliated rodeos, there was in existence an arrangement or understanding between affiliated rodeos, to which arrangement or understanding the A.R.R.A. was a party, that the applicants were to be denied access to competition at affiliated rodeos. There was in fact a broader understanding or arrangement, namely that non members of the A.R.R.A. (which would include suspended members) would be denied entry to competition at affiliated rodeos. I am further satisfied that the affiliated rodeos. "are competitive with each other", amongst other things, for the services of rodeo riders, 24, notwithstanding their geographical separation, and the fact that temporally they clash but infrequently. The services provided by a rodeo rider are the services of an entertainer; the reward is the prizemoney he earns from the performance. mtorr It follows, in my opinion, that such an arrangement or understanding has the purpose of preventing the acquisition of services from a class of persons, namely those persons who are not members of the A.R.R.A. I am satisfied that giving effect to rule 13.1 involves a contravention of s.45(2)(b)(1) of the Act. "Services" is given an extended meaning in s.4(1) of the Act, which for the present case relevantly provides:- ""?' Services' includes any rights..-benefits, privileges or facilities that are, or are to be, provided...or conferred 1n trade or commerce, and without limiting the generality of the foregoing, includes the rights, benefits, privileges or facilities that are, or are to be, provided, granted or conferred under - (a) a contract for or in relation to - (1) the performance of work... but does not include rights or benefits being...the performance of work under a contract of service." In Adamson v. West Perth Football Club Inc. (1979) 39 F.L.R. 199, Northrop gv. at p.228 concluded that a professional footballer, was employed under a contract of service, and as a consequence the club did not come within s.45(3) of the Act. a a pt mney : cede tty , 25. In this case, there is no contract of service between a rough rider and a local organising committee, and in my opinion, having regard to the definition above of 'services' the local organising rodeo acquires the 'services' of the rough rider. -The services acquired include his participation in the particular event and thereby the provision of entertainment to the spectators at the rodeo. These services are provided by the rodeo rider in exchange for the prize money he earns. The observations of Toohey J. in Hughes (supra) at p.692 are relevant. His Honour concluded that Hughes was not employed under a contract of service: there was no obligation on Hughes to play in any particular match, nor was there any provision from which the right of control might be inferred. His Honour concluded:- "The applicant's services to the club to which he belongs fall within para.(a)(1) of the defination of 'services' in s.4(1). The applicant derives income from the playing of sport and from activities connected with his playing...In this respect the services he provides are services in trade or commerce." His Honour, later on that same page, observed:- "Once it is found that there is a contract, arrangement or understanding, any provision having the purpose of preventing, restricting or limiting the acquisition of the services of particular sports persons by any club will be an exclusionary provision." The meaning of a trading or financial corporation has been considered by the High Court in a number of recent cases, including R. v. The Judges of the Federal Court of Australia; Ex ones se ae eee ne wo t . 26. parte Western Australian National _ Football League Incorporated (1979) 143 C.L.R. 190; Actors & Announcers Equity Association of Australia v. Fontana Films Pty.Ltd. (1982) 150 C.L.R. 169; State Superannuation Board v. Trade Practices Commission (1982) 150 C.L.R. 282; Fencott v. Muller (1983) 152 C.L.R. 570; Commonwealth of Australia v. State of Tasmania (1983) 158 C.L.R. 1. Applying the principles summarized by Toohey J. in Hughes, in my opinion the Biloela Rodeo Association Inc. is a trading corporation. Biloela Rodeo Association Inc., while its activities are not on a large scale, engages in activities that are of a trading character. The Balance Sheets of that corporation are exhibited, and it appears that the primary function of the corporation is the provision of entertainment to the public in return for entrance fees as well as the provision of bar facilities and food. The prize money for the contestants 1s funded by the nomination fees of the contestants and prize money secured from sponsors. The A.R.R.A., on the other hand, in my opinion is not a trading corporation. Adopting the test of Mason J. in Adamson 143 C.L.R. at p.233, it is not "a corporation whose trading activities form a sufficiently significant proportion of its overall activities as to merit uts description as a trading corporation". The activities of a trading kind undertaken by the A.R.R.A. are to be contrasted with the extensive trading activities of the W.A. Football League referred to by Mason J. in Adamson 143 C.L.R. at 234. In particular, the A.R.R.A. does not arrange rodeos, it has no gate receipts, the evidence does not - waa wee yor "roe Samat Ren ye r- vo eet ean cog te e o> cs on . Ieee oe sy -<- nw Sag ers a aoe wet a ~ a ay t At ror as - 27. suggest any T.V. rights, any rental or any catering or bar activities. Such trading activities as the advertising in and the publishing of "Rodeo News" results in no net income and is in my view strictly ancillary to the more general objectives of the ~. Association as set out in the by-laws. Next, in my opinion, the only relevant market for the purpose of s.45(3) is the market in which affiliated rodeo entities compete. No corporation has been shown to be involved as a competitor ina market consisting of rodeo riders, and no trading corporation has been shown to compete in a market involving competition between A.R.R.A., the 5.E.Q.R.R.A., and the A.C.B.R.A.; and, even if there were, there is clearly no relevant contract, arrangement, or understanding between any competitors in that market. Tam, however, satisfied for the purposes of this interlocutory application that a trading corporation, Biloela Rodeo Association Inc., is a party to an arrangement or understanding which contains an exclusionary provision, within the meaning of s.4D(1)(b)(i), contrary to s.45(2)(a)(i), and isa party which has given effect to a provision of an arrangement or understanding, namely rule 13.1, which provision is an exclusionary provision within the meaning of s.4D(1)(b)(i), contrary to s.45(2)(b)(i). I am satisfied that the Biloela Rodeo Association Inc. is a competitor 1n a market for the acquisition of the services of rough riders, competing with other local rodeo entities who conduct rodeos in affiliation with the-A.R.R.A.. - mar om i => "ee ces Sec ge eee et pee ee 28. With those entities it has an arrangement or understanding to give effect to r.13.1. As to whether giving effect to that provision "has the purpose or has or is likely to have the effect of substantially lessening competition", for the purposes of 45(2)(a)(ii) and 45(2)(b) (ii), the question is whether competition between rodeos that compete for the services of rough riders is lessened by their agreeing between themselves not to engage rough riders who do not belong to the A.R-.R.A.. Toohey J. in Hughes v. W.A. Cricket (supra), said at 698:- "The applicant has established a market in which the services of cricketers are sought by clubs in circumstances involving a financial incentive. But I do not accept that the understanding reached at the meeting on 4 November 1985 had the purpose, or had or was likely to have the effect, of substantially lessening competition within s.45(2)(a) (ii). The amendment to rule 2:38:1 excluded the applicant from playing for any club. It may be that the absence of outstanding players from district cricket lessens spectator interest aun that cricket. But I am not persuaded that their absence lessens competition between the clubs, for all clubs are deprived of access to their services." It might thus be suggested that the local rodeos which pay affiliation fees to the A.R.R.A. are each deprived, by the arrangement or understanding giving effect to rule 13.1, from securing the services of rough riders who are not members of A.R.R.A. and, since all such rodeos are deprived of access to the services of those non-members, there is no lessening of competition. For myself, I have some difficulty in accepting the correctness of this conclusion. It is arguable that there has a en a a wee . > : . " - . le 4, : =: hoebs of wae oye see oe Taye n oo. stat ee cer ap coe 29. been a reduction in the extent of competition for the best rodeo riders. If competitors agree that they will not compete as_ to, for example, price but will compete vigorously in all other respects, it is difficult to reject the conclusion that such an. agreement would substantially lessen competition between them. However, in the light of my conclusion as to 45(2)(a)(i) and 45(2)(b)(i), it is umnecessary to express a concluded view on this aspect. There are therefore claims under the Trade Practices Act 1974 which, if the evidence remains the same, would, in my view, succeed on a final hearing. I am also of the view that a strong prima facie case has been established in respect of unlawful restraint of trade under the general law. The applicants are members of the A.R.R.A.. In my opinion they can be heard to say that a rule of the A.R.R.A. is void as being in restraint of trade. A similar conclusion was reached by Toohey J. 1n Hughes v. W.A. Cricket at p.701, and he there refers to a number of authorities to show that, even in the case where a person is not a member of an association, he is not precluded from obtaining relief where the rules of that association place an unjustifiable restraint on the income-earning activities of that person. A fortiori where he is a member. In this case it is for the applicants to show that rule 13.1 is in restraint of trade. If that is shown, it is then for the respondents to establish circumstances which show that the Aldi oes Sana ee een ion a ea ro ' 2 7 ue! pote ee a ree ee atop ee mower, ya wa cee eee on restraint of trade affords na more than adequate protection to the interests of the respondents. Here IT am clearly of the view that the rule _is an unlawful restraint of trade. It is unlimited, both temporsily and geographically. It was argued for the respondents that, since in the absence of becoming a member of the A.B.R.A. none of the applicants had any right to participate in any of the affiliated rodeos, the restraint of trade doctrine could not apply to them on becoming members of the A.R.R.A. It was submitted that the restraint of trade doctrines only operates where the impugned restraint has the effect of cutting down a liberty which the trader would have enjoyed but for the restraint. Support was sought from Esso Petroleum Co,Ltd. v. Harper's Garage (Stourport) Ltd. (19638) A.7. 269, particularly at p.298 per Lord Peid and per Lord Morris at 309. That case, however, drew a distinction between the ordinary negative covenants preventing the use of a particular site for trading of all kinds or of a particular kind, and covenants which also obliges a person to act ina particular Way. If the proposition of the respondents were correct, no contract containing an unreasonable restraint of trade could be impugned, because in every case the purchaser was acquiring a business the rights to which he did not previously have. ore, eneees pee ae om Sos pre pc ce ern nt ei me eee nee 31. In wy view, it was not established that the restraint affords no more than adequate protection to the interests of the respondents. Indeed, no serious effort in that direction was attempted. - wee te On the material presently before me, my opinion is that, giving effect to rule 13.1 anvolves a contravention of para. 45(2)(b)(i) of the Trade Practices Act 1974, and further is an unlawful restraint of trade. Consistent with that view, I ought to grant interlocutory relief. JI will hear the parties as to the terms of the orders I should make. I. certify that this and the 30 preceding pages are a true copy of the Reasons for Judgment of Justice Spend Associate 3 November 1987 Counsel for the Applicant: Mr. Freyberg Q.C. with Mr. Redmond instructed by Francis & McGregor. Counsel for the Respondents: Mr. Byrne Q.C. with Mr. Morris instructed by Cannan & Peterson Date of hearing: 7.10.87. fee ee eee