——-# JUSOMINT Mo. 147 7e8_ = Trade Practices - Secondary boycott - Concerted conduct likely to prevent supply of services - concerted conduct likely to cause substantial loss and damage to business. Trade Practices Act 1974 - 5.45D(1)(b)(i) INDEPENDENT CEMENT & LIME Pry. LTD. v. AUSTRALIAN CEMENT LIMITED, JW. P. af E No. VG127 of 1988 . Jenkinson J. Melbourne 19 April, 1988 OF AU: I ) VICTORIA DISTRICT REGISTRY ) No. VG127 of 1988 GENERAL DIVISION ) BETWEEN: I Cc LI pry. LTD. Applicant AND: AUSTRALIAN _____CEMENT LIMITED, J.W. LAURIE, MAX PB. te S DRYSDALE Respondents CORAM: Jenkinson J. PLACE: Melbourne DATE: 19 April, 1988 REASONS FOR JUDGMENT Application for interlocutory injunctions. The applicant has entered into a contract to import cement from Japan and is in the process of constructing and modifying buildings on land at 750 Lorimer Street Port Melbourne for storing the cement. The applicant is also engaged in laying an underground pipe for the conveyance of the cement from berthed ships to that land. In September 1987 a company which trades under the name "Camillo" (and to which I will refer by that name) contracted with the applicant to carry out some of the construction work on the land. On 15 October the respondent Drysdale, who describes himself as "the Manager - Victoria, Sales and Distribution" of the respondent Australian Cement Ltd. (ACL) called on a director of Camillo at Camillo''s office in Port Melbourne. The director, Luciano Crema, has deposed that Drysdale Said that the project at 750 Lorimer Street Port Melbourne for the storage of imported cement should not go ahead "because it would involve the loss of thousands of jobs", that Camillo should cease to perform its contract for work on that land and that Camillo would be reimbursed by ACL for any monetary losses which it might suffer by reason of its ceasing to perform the contract. Mr. Drysdale has deposed that he did say that if Camillo "suffered any commercial loss it would be reimbursed by ACL", but that he did not say that Camillo should cease performing the contract. According to Mr. Drysdale he pointed out to Mr. Crema that there might be "industrial action" on the Lorimer Street land and at other sites where Camillo was carrying out work if Camillo were to perform the contract and "suggested that Mr. Crema should use his commercial judgment as to the ramifications for his business of incurring such industrial action." It was common ground that ACL manufactures cement in Australia and is in various lawful ways advocating the taking by government of steps designed to prevent the importation of cement on terms which would result in competition, between the vendors of imported cement and the producers of locally manufactured cement, of a kind which would he unfair to the latter. The terms on which ACL contends that the applicant will import cement are likely to have sucha result, according to ACL. Mr. Drysdale denied that his visit to Mr. Crema was made "as the result of any instruction from any person in ACL." He did not deny that he was authorised by ACL to make the statement he made about reimbursement. 3. There is, as I find, a serious question to be tried as to whether the statement about reimbursement was conduct by Mr. Drysdale, done in concert with ACL, that was likely to prevent the supply by Camillo to the applicant of the services for which their contract provided, and conduct done for the purpose, and likely to have the effect, of causing substantial loss and damage to the applicant's business. There is a serious case to be tried of an attempt to achieve the prevention of such a supply in circumstances in which the prevention would have constituted a contravention of 5.45D(1)(b)(i) of the Trade Practices Act 1974 by Mr. Drysdale in which ACL was knowingly concerned. Mr. Strahan Q.C., who appeared with Mr. Maxwell for the respondents, submitted that, as the work Camillo contracted to do is not far from completion and Camillo has affirmed, by Mr. Crema, its intention to complete the work, no need is shown for injunctive prohibition of conduct contravening 5.45D in relation to the performance of that contract. It was submitted also that the lapse of time between Mr. Drysdale's approach to Mr. Crema and the institution of the present proceeding on 7 April 1988 should be weighed against enjoining that conduct. But the participation of ACL in the conduct was not so probably to be inferred in October 1987 as it later became by reason of other circumstances. The possible consequences for the applicant of delay in the completion of the contract works include its inability to perform its contract for purchase of the cement, rescission of the purchase contract by the vendor on that ground and a substantially higher price for cement purchased under any other contract which might then be negotiated. The last consequence could render the 4. proposed business of importing cement unprofitable. The risk of sO grave a possible consequence of conduct contravening s.45D justifies interlocutory injunctive relief, in my opinion. The respondent Parker is the quarry manager of the quarry conducted by ACL at Geelong. James Joseph Frith, an engineer in the employment of a company engaged in supervision of the work on the Lorimer Street land, has deposed that on 30 March 1988 an employee of Hanson Sykes Pumps Pty. Ltd. announced to him the latter company's intention to withdraw from performance of its contract with the applicant for dewatering the excavation in which the pipe for conveyance of cement is being laid, and gave him as the reason for the withdrawal a threat to that employee by Mr. Parker that unless Hanson Sykes Pumps Pty. Ltd. withdrew from work on the Lorimer Street land its contract for dewatering the Geelong quarry of which Mr. Parker was manager would be "at risk". The employee of Hanson Sykes Pumps Pty. Ltd., Sjaak Eyssens, has deposed that the threat of which he received information from Mr. Parker and which he communicated to Mr. Frith was the threat of industrial action by trade unions, not any a threat by or on behalf of ACL. The evidence of Mr. Parker confirms that of Mr. Eyssens. When the narratives of those two persons and Mr. Frith are compared there are disclosed, as I find, serious questions to be tried as to what Mr. Parker said to Mr. Eyssens and as to what Mr. Eyssens said to Mr. Frith, and a serious question to be tried as to whether Mr. Parker engaged, in concert with ACL, in conduct contravening s.45D(1)(b)(i) of the Trade Practices Act 1974. Mr. Strahan submitted that no justification for interlocutory injunctive relief was shown in respect of the supply of the services of Hanson Sykes Pumps Pty. Ltd. to the applicant because the General Manager of that company was sworn to have declared that the company will complete the performance of the contract. Having regard to the gravity of the possible consequences of withdrawal of those services, I consider that in all the circumstances the grant of interlocutory relief 15 appropriate. The respondent John William Laurie is the Chief General Manager of ACL. If ACL has been knowingly concerned in the conduct I have discussed, the inference is, I think, justified that Mr. Laurie was himself knowingly concerned also. The orders to be made will be directed to him also. Mr. Laurie wrote, in late November 1987, a letter to several Japanese companies, any one of which he thought might be contracting with the applicant for the sale of cement. One of his letters hit the mark. This letter, to Mitsubishi Mining & Cement Co. Ltd., a vendor of cement to the applicant, is in these terms: "I attach a copy of my letter to all employees of 24th November, 1987. It is self-explanatory. We are extremely concerned about this trade in imports, which it now is being said by the Directors of Independent Cement & Lime Pty. Ltd. is emanating from Japan, and we think from one of the big five. You should be aware that this threat is being opposed by every Australian cement company and all the politicians in the Federal electorates in which there are cement companies processing Australian raw materials. We believe the only basis on which this trade can take place is unfair and means that a party is taking a considerable margin between 6. the export price plus freight to Australia and the domestic price of cement in Melbourne, probably with a separate company structure in Hong Kong or Singapore. You should know that our Company, and the other large Australian cement company operating in the Victorian and NSW market, together with the concerned employees and unions, intend to take every possible step to ensure this import does not happen. I will be glad for any comments you may wish to make as to whether your Company is involved in this matter or not." The "letter to all employees" is a long statement of reasons why governgents and citizens of this country should discourage what the applicant is proposing in respect of the importation of cement. If the despatch of the letter be assumed to be conduct likely, and intended by the sender, to prevent the supply of cement by Mitsubishi Mining & Cement Co. Ltd. to the applicant, and conduct likely to have the effect, if supply were prevented, of causing substantial loss to the applicant's business, yet TI doubt whether causing that loss was a subjective purpose of Mr. Laurie in sending the letter. The prevention of the supply from abroad of cement to the applicant for re-sale in this country at a cost to the applicant of the amount per unit weight or volume which Mr. Laurie believed the applicant would incur was the object which all the actions alleged by the applicant to he attempts to contravene s.45D were designed to achieve, it might be inferred. But, whereas the conduct already discussed in relation to Camillo and in relation to Hanson Sykes Pumps Pty. Ltd. may have been engaged in for the purpose, inter alia, of causing substantial damage to the applicant's business and of diminishing thereby the applicant's financial capacity, and the applicant's directors' resolve, to obtain the supply of the cement, the despatch of the letter, as it seems tome, had for its purpose merely that ultimate object of preventing the supply. I am for that reason not prepared to find in respect of the despatch of the letter a serious question of attempted contravention of the section to he tried. Nor doI find in the terms of the letter an attempt to procure breach of contract for supply of cement. The letter can be fairly understood, as I think, as an invitation to abstain from making, rather than an invitation to breach, such contracts. An ex parte order had been made by me on 7 April 1988 upon the following undertaking and in the following terms: "Upon the Applicant undertaking by its Counsel that it will pay to any of the Respondents who or which is adversely affected by any of the following Injunctive Orders such compensation, if any, as the Court thinks just in such manner as the Court thinks fit THE COURT ORDERS THAT: 1. Until further Order the Respondent Australian Cement Limited be restrained whether by itself, its servants or agents or otherwise howsoever from engaging in concert with any other person in conduct that is likely or intended or calculated to hinder or prevent - (a) (i) the supply of building or construction services by the Company which carries on business in Victoria under the name Camillo to the Applicant; (ii) the supply of building or construction services or services ancillary hereto to the Applicant; 8. (iii) the supply or servicing of dewatering systems or pumps by Hanson Sykes Pumps Pty. Ltd. to the applicant - at or about the Applicant's premises at 750 Lorimer Street, Port Melbourne in the State of Victoria; or (b) the supply of cement by Sumitomo Corporation to the Applicant. 2. Until further Order each of the Respondents, J.W. Laurie, Max Parker and Chris Drysdale, be restrained from engaging in concert with any other person in conduct that is likely or intended or calculated to hinder or prevent - (a) (i) the supply of building or construction services by the Company which carries on business in Victoria under the name Camillo to the Applicant; (ii) the supply of building or construction services or services ancillary thereto the Applicant; (iii) the supply or servicing of dewatering systems or pumps by Hanson Sykes Pumps Pty. Ltd. to the Applicant - at or about the Applicant's premises at 750 Lorimer Street, Port Melbourne in the said State; or {b) the supply of cement by Sumitomo Corporation to the Applicant." So much of those orders as is specified in BSub-paragraphs 1(b) and 2(b) will be discharged. Upon the usual undertaking as to damages by the applicant there will be an order otherwise in the terms of the ex parte order, which will be 9. expressed to be until the hearing and determination of the proceeding or further order. I certify that this and the 8 preceding pages are a true copy of the Reasons for Judgment herein of the Honourable Mr. Justice Jenkinson. Associate Dated: 19 April, 1988 Counsel for the Applicant : Mr. P. Costello Solicitors for the Applicant 3 Corrs Pavey Whiting & Byrne Counsel for the Respondents 3 Mr. J. Strachan Q.C. and Mr. C. Maxwell Solicitors for the Respondents Blake Dawson Waldron Date of Hearing : 15 April, 1988