eveceeees: JUDGMENT No. wmlt Qn DH CATCHWORDS TRADE PRACTICES ACT - s. 52 - ambit of the expression "in trade or commerce" where corporation was incorporated under the Associations Incorporation Act 1984 (NSW) and was involved in the organization of sporting activities which were themselves carried on by separate entities for profit - circumstances in which an interlocutory mandatory injunction was appropriate. Trade Practices Act 1974, s. 52 Morton v. Black (1988) 83 ALR 182 Concrete Constructions (N.S.W.) Pty. Limited v. Nelson (1990) 169 CLR 594 Tobacco Institute of Australia Limited v. Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1 Sun Earth Homes Pty Ltd v. Australian Broadcasting Corporation (1990) 98 ALR 101 Australian Beauty Trade Suppliers Ltd v. Conference & Exhibition Organisers Pty Ltd (1991) 99 ALR 474 Locabail International Finance Ltd v. Agroexport [1986] 1 WLR 657 v. _IN RICKET FEDERATION OF NEW SOUTH WALES INCORPORATED NG 676 of 1994 RECEIVED Burchett J. 18 OCT 1994 Sydney FEDERAL COURT OF 14 October 1994 AUSTRALIA PRINCIPAL REGISTRY IN_THE FEDERAL COURT OF AUSTRALIA ) ) W R T ) NG 676 of 1994 ) GENERAL DIVISION ) BETWEEN: MICHAEL GRAHAM LOWE First Applicant INES -HUGH IE IN d VICK TER Second Applicants AND: IND ICKET FED NEW SQUTH WALES INCORPORATED Respondent CORAM: Burchett J. PLACE: Sydney DATE : 14 October 1994 D F_ THE RT THE COURT ORDERS THAT: 1. Upon the usual undertaking as to damages and until further order the respondent admit to membership and retain in membership the second applicants and forthwith rearrange the current netball competition so as to admit to the competition as from Saturday 22 October 1994 all the teams related to the applicants referred to in annexure A to the affidavit of Julieanne Jones-Hughes sworn 7 October 1994, on an equal basis with all other teams in the competition. 2. Liberty to apply is given to both sides to vary the order on 24 hours notice. 3. The costs of this application be the applicants' costs in the cause. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. Ww. TRY NG 676 of 1994 wwe ew BETWEEN: I LOWE First Applicant AN -HUGHE LT and V P. R Second Applicants AND: N R_CR T_F. I F_NEW TH W, RATED Respondent CORAM: Burchett J. PLACE: Sydney DATE : 14 October 1994 FOR D N This is an application for an interlocutory injunction in an action brought in reliance upon (inter alia) s. 52 of the Trade Practices Act 1974. The respondent is a corporation incorporated under the Associations Incorporation Act 1984 (NSW). It organizes representative indoor sporting contests between various sports centres at which indoor cricket and netball are played. Those who own the centres are members of the corporation, and they enter teams which are permitted to play in its competitions. They also receive the benefit of at least two contracts into which it has entered with major suppliers of drinks and icecreams, supplied at significant discounts. It is not entirely clear, on the evidence, whether the discount is 2. shared between players, centres, and the corporation or not. But Plainly both the centres and the corporation receive some benefits indirectly from the satisfaction of the requirements of individual players. The supply contracts in question have been entered into by the corporation. The corporation holds out that membership brings other benefits in discounts in relation to sports travel, apparel and equipment. Membership fees are paid to it. The centres themselves of course are run for profit by their owners, and income is received from their operation in various ways. Membership of the corporation is of obvious importance to the owner of a sports centre, apart from any question of access to discounted goods and services, because of its organization of and control over competitions between centres, through which access may be had to state and national championships. Apart from the earning of prestige through participation in competitions, a centre benefits from the influx of players from other centres when home games are being played. The first applicant has been the manager of indoor cricket centres for several years. He and the other applicants decided to set up a new centre some months ago, and began to look for an appropriate location. They found premises at 107-109 Newton Road, Wetherill Park, but were concerned that this address was only some three to five kilometres from an established indoor cricket centre known as Wetherill Park Indoor Cricket Centre, managed by a Mr Warren Jones. It was plainly desirable, in this 3. circumstance, for the applicants to confirm that there would be no difficulty about membership of the corporation in respect of such a centre before becoming committed to substantial expense. (I should at this point interpolate that all findings of fact in this judgment are made on the usual basis applicable to interlocutory findings, and are not intended to involve final conclusions.) Mr Lowe, the first applicant, telephoned the executive director of the respondent, Mr Mark Brogan, putting the difficulty to him directly: "I have found a property to lease but it is three to five kilometres from the Wetherill Park Centre - could Warren Jones cause me problems with us being accepted into the Federation?" The reply was: "Warren can jump up and down as much as he likes. You can set up around the corner, there is no limitation to the territory." After making further enquiries concerning the cost of refurbishment of the premises, Mr Lowe telephoned Mr Brogan again, on a date shortly prior to 15 August 1994, specifying the distance from the existing centre more precisely, and asked: "Will there be any problems with the Federation?" Mr Brogan replied: "No." Following the second conversation, a lease was executed involving the incurring of a substantial rent, and a substantial sum was expended in relation to the conversion of the premises for the proposed use. The new centre opened on 22 August 1994, under the name "Hot Shots Indoor Sports". An application was made almost immediately to become a member of the respondent. In the meantime, another of the applicants, Miss Jones- Hughes, had attended meetings held under the auspices of the 4. respondent concerned with the making of arrangements for the summer netball competitions. The responsible representative of the respondent at these meetings was a Mr Goodridge, who is the Chief Executive of the Indoor Netball Association, a subcommittee of the respondent. As I understand the evidence of Miss Jones- Hughes, who was not cross-examined, the discussions proceeded on the basis that the "Hot Shots" teams were expected to be in the competition, and the subcommittee produced a competition draw showing as participants nine teams from the proposed new centre, a copy of which was given to Miss Jones-Hughes. However, on 12 September 1994 Mr Brogan wrote on behalf of the respondent to the applicant Julie Hammond a letter confirming oral advice given to Mr Lowe on 9 September 1994 that a committee of the respondent had "considered your application for membership and decided to defer finalisation of that application until 9 March 1995". The only hint at a reason expressed in the letter was the following: "In considering your application the Committee sought to ensure competition and membership stability and the financial viability of the Federation and its members. " On 9 September Mr Brogan had telephoned Mr Lowe to tell him "we are going to put your application on hold until March 1995". He declined in that conversation to give a reason, and although he said that "at no time did I tell you that you would be accepted", he did not respond to Mr Lowe's angry retort: "That's a lie. You 5. told us that there should not be any problems with our application on any grounds". The applicants now seek an interlocutory order requiring the respondent to admit their teams to the netball competition, which has only just commenced. I should add that almost up to the very lodgment of the application there were continued negotiations with the subcommittee controlling the netball competition, and it was only at the last minute that a decision to admit the applicants into that competition was finally overturned. Counsel for the respondent opposes the application, contending that a serious question to be tried has not been shown, and further that the balance of convenience does not favour the applicants. His arguments raised a number of issues. In the first place, I should say that I think a serious question, in the relevant sense, has been shown on the issues of misleading conduct within the meaning of s. 52 of the Trade Practices Act; reliance on that conduct; and the incurring of significant loss. In my opinion, the unqualified statements made by Mr Brogan in answer to queries clearly directed to the matter which was vital to the applicants - whether they could safely incur substantial expenditure on the basis that they would be admitted to membership - were capable of conveying, and did convey, the misleading message that there were no problems and that membership would be granted. In the light of fuller 6. evidence and cross-examination, this may be confirmed or may be refuted; but on the material before me it is certainly raised as a serious question to be tried. There has been no suggestion that some supervening event threw up a new problem in the short interval between Mr Lowe's conversations with Mr Brogan and the deferral of the application. The most significant thing that happened during that interval was the incurring of substantial liabilities by the applicants. But counsel for the respondent argues that any misleading conduct upon its part was not "in trade or commerce". It was, of course, conduct of a corporation, and furthermore the statements were made by telephone, but to fall within the terms of s. 52 it is necessary that the conduct relied upon occurred in trade or commerce. As I pointed out in Morton v. Black (1988) 83 ALR 182 at 186, in the decisions "a very wide ambit has been given to the expression 'in trade or commerce'". In Concrete j W. ty. ited v. Nelson (1990) 169 CLR 594 at 604, Mason C.J., Deane, Dawson and Gaudron JJ. said: "What the section is concerned with is the conduct of a corporation towards persons, be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character. eee In some areas, the dividing line between what is and what is not conduct 'in trade or commerce' may be less clear and may require the identification of what imports a trading or commercial character to an activity which is not, without more, of that character." (Emphasis added.) In the same case (at 613) Toohey J. said: 7. "The present appeal proceeded on the assumption, tacit if not express, that the conduct said to have been misleading or deceptive must have been conduct in the trade or commerce of the appellant. No doubt, in most cases the focus will be on the nature of the defendant's business but the section is not so limited. It does not, in terms, refer to the trade or commerce of the particular corporation. eae The position of the expression 'in trade or commerce' in s. 52(1), and indeed in other sections in Pt V, Div. 1, suggests that it is trade or commerce in general terms with which the statute is concerned. In my view, s. 52(1) is aimed at conduct in which a corporation engages when that conduct takes place in a situation which fairly answers the description 'in trade or commerce'." Both these passages provide support for the applicants' contention that the conduct here in question was engaged in "in trade or commerce". The respondent did enter into some commercial arrangements. Even if it did so only as representing the commercial interests of others, its members, and not in the course of its own trade or commerce, the conduct took place in a situation which fairly answered the description "in trade or commerce". It took place in relation to the admission of a new party to a network of commercial enterprises set up to provide facilities for sporting activities and the promotion of sporting competitions for reward to those providing the facilities and concerned in the promotion or conduct of the competitions. An analogous view was taken by all three Judges in the Full Court in trali imited v. a ons Inc (1992) 38 FCR 1, and especially by Foster J. at 24-25 and Hill J. at 43-44. See also div. tralian eadcasti orati (1990) 98 ALR 101 at 111-112, and Australian Beauty Trade v. c xhibition nisers P t (1991) 99 ALR 474 at 478 where Morling, Wilcox and Hill JJ. said of another corporation which had urged that it did not itself engage in trade: "The appellant engages in the exhibition for the ultimate purpose of promoting the sale of its members' products." Taking the view that it could quite properly be considered as a corporation "which exists solely because of the significant trading activities of its members and for the purpose of assisting monitoring and regulating those activities and entering into arrangements on behalf of its members for the purpose of advancing their trade", the court considered that it was not only engaging in conduct in trade or commerce, but was actually a trading corporation. Counsel further urged upon me that damages would be an adequate remedy, and that the case was not one in which an injunction would have been granted upon equitable principles. It is not necessary for me to decide this question, although I am not to be taken to be acceding to the proposition, since I think the wide powers conferred by the Trade Practices Act clearly include the power to grant injunctive relief. In the circumstances of this case, I do not think that damages would be a convenient remedy. They would be extremely difficult to assess. The fact is that the activities of the subcommittee concerned with organizing the netball competition, right up until 9. a very recent time, show that there is unlikely to be a real difficulty in including the applicants' teams, whereas a great deal of personal inconvenience is likely to be suffered by their players in the absence of a grant of injunctive relief, and the inconvenience of the players is likely to lead to a loss of goodwill and custom for the applicants which it would be hard or even impossible accurately to measure. The respondent also relied on the proposition, for which abai tio j ce Ltd v. Agroexport [1986] 1 WLR 657 at 664 was cited as authority, that the court should be reluctant to grant a mandatory interlocutory injunction. As Mustill L.J. there said: "Such an application should be approached with caution and the relief granted only in a clear case." As a general proposition, I accept that. However, I have come to the conclusion that the present case does clearly require the intervention of the court and that the appropriate relief is a mandatory interlocutory order. I have already adverted to the consideration that the order will only secure what the respondent's own subcommittee, charged with organizing the netball competition, thought appropriate a little more than a week ago. While the nature of the injunction is mandatory, no evidence or suggestion has been put before me to indicate that it would have any particularly serious effect upon the activities of the respondent. Having considered the situation from all angles, I am satisfied the balance of convenience strongly favours the applicants. Although a mandatory order will have the effect of making them members, it will not do so finally, since 10. the order is interlocutory, and if they fail at the hearing of the action, they can be ordered to resign their membership. Doubtless for this reason, no issue was raised about that aspect of the relief sought. I have found it unnecessary to consider the alternative grounds upon which the applicants sought relief. Those grounds were raised under s. 42 of the Fair Trading Act 1987 (NSW) and s. 45 of the Trade Practices Act. For these reasons, I granted an interlocutory order requiring the respondent to admit the applicants and rearrange the current netball competition so as to allow their teams to play as from Saturday 22 October 1994. I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Burchett. Associate: Pride O xed Date: 14 October 1994 Counsel for the Applicants: Mr D.M. Flaherty Solicitor for the Applicants: Mr Michael Parasyn Counsel for the Respondent: Mr G. O'L. Reynolds Solicitors for the Respondent: Messrs Corrs Chambers Westgarth Date of hearing: 12 October 1994