FEDERAL COURT OF AUSTRALIA Lee v Aerial Taxi Cabs Co-operative Society Ltd [2000] FCA 157 RESTRAINT OF TRADE – whether the necessity for the applicant to subject himself to the respondent's disciplinary procedures affords no more than adequate protection to the interests of the respondent – whether restraint is against public interest – whether damages available Workplace Relations Act 1996 (Cth) Heydon The Restraint of Trade Doctrine 2nd ed. 1999 Buckley v Tutty (1971) 125 CLR 353 cited Adamson v New South Wales Rugby League (1991) 31 FCR 242 applied ROBERT ANDREW LEE v AERIAL TAXI CABS CO-OPERATIVE SOCIETY LIMITED t/as CANBERRA CABS A 70 of 1999 GYLES J SYDNEY (HEARD IN CANBERRA) 25 FEBRUARY 2000 IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A 70 OF 1999 BETWEEN: ROBERT ANDREW LEE APPLICANT AND: AERIAL TAXI CABS CO-OPERATIVE SOCIETY LIMITED t/as CANBERRA CABS RESPONDENT JUDGE: GYLES DATE OF ORDER: 25 FEBRUARY 2000 WHERE MADE: SYDNEY (HEARD IN CANBERRA) THE COURT ORDERS THAT: 1. The applicant's claim under the Workplace Relations Act 1996 (Cth) is dismissed. 2. The applicant's claim for breach of contract is dismissed. 3. The applicant's claim based upon common law restraint of trade is stood over until Friday, 24 March 2000, at 9.30am for the making of a declaration. 4. The respondent is to pay one-half of the applicant's costs of the proceedings. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY A 70 OF 1999 BETWEEN: ROBERT ANDREW LEE APPLICANT AND: AERIAL TAXI CABS CO-OPERATIVE SOCIETY LIMITED t/as CANBERRA CABS RESPONDENT JUDGE: GYLES DATE: 25 FEBRUARY 2000 PLACE: SYDNEY (HEARD IN CANBERRA) REASONS FOR JUDGMENT 1 On 10 December 1999 I stood this matter over to a date to be fixed and published reasons for that order, which dealt with the claim by the applicant under the Workplace Relations Act 1996 (Cth) and breach of contract, but left outstanding some issues in relation to the claim that the contract was an invalid restraint of trade at common law ([1999] FCA 1727). Reasonableness of restraint 2 I concluded that, on the material and submissions before me, the respondent had failed to justify the restraint as being no more than was necessary to protect the reasonable interests of the respondent. For the reasons outlined, I afforded the respondent the opportunity of further addressing that point by evidence and submission. The respondent has availed itself of that opportunity. It has tendered evidence of two sporting bodies which have a disciplinary system without the involvement of those that are the subject of the discipline. I have received further written and oral submissions from each party. 3 Mr AJ Sullivan QC (who, with Mr J Harris, appeared for the respondent) submitted that he was aware of no case in which a restraint of this kind had been held invalid on the basis outlined by me. None were cited on behalf of the applicant, and none are referred to in Heydon The Restraint of Trade Doctrine, 2nd ed. 1999. Mr Sullivan QC claimed that there were many organisations which had existed for a very long time that had disciplinary powers over non-members, but that there was no evidence of any of them giving the non-members any part in the disciplinary proceedings. I do not conclude that there are no such bodies. The submission is a reasonable foundation for judicial caution, but does not grapple with the principle involved. After all, no taxation without representation has a long and honourable history. 4 It was also submitted that there was no evidence of the system working any actual discrimination against bailees as compared with owner/drivers, and that it was inherently unlikely that there would be any discrimination because the matters being dealt with were matters which affected a driver as a driver, rather than in the capacity as either owner or bailee. These submissions are correct, with the qualification that Ms Keys for the applicant put that there are By-laws which are not strictly operational – for example, 40(c), which provides that a driver shall not act in a manner that brings the respondent into disrepute, and 7, which obliges drivers to wear uniforms of particular design. 5 Mr Sullivan then examined some of the consequences of involving bailees in the disciplinary system. He pointed to the difficulties of selecting the person or persons to be involved. The bailees are a shifting population, each carrying on an independent business. Mr Sullivan strongly pressed the argument that it would be inappropriate and disruptive of the system to inject into it persons who would be seen, and would see themselves, as representing a particular class of driver. It would tend to create conflict where none exists, and where there is no occasion for it to exist. There would also be a tendency for a person, or persons, acting in this role to prefer the interests of bailees to those of the respondent in its dealings with customers and the performance of its agreement with the ACT Government. 6 Ms Keys did not accept, on behalf of the applicant, that the system was working well – indeed, the applicant complains about the way it has affected him. I do not think that I can draw any general conclusions as to how the system is working qua bailees. It would be extraordinarily difficult to test such a hypothesis. I certainly have no basis for doing so. She puts that the involvement of bailees in the disciplinary system would not create conflict or cause tension, but would rather recognise the reality that conflict and tension exist at the moment, so far as bailees are concerned. It was submitted that bailees are treated as if they are employees, without the safeguards and rights which employees have. 7 In paragraph 48 of my previous reasons I referred to the fact that fines which are imposed are paid to the respondent as part of its general funds. This was not a separate head of invalidity raised on the pleadings. Ms Keys accepts that this is so and puts it forward only as being an instance of the respects in which the disciplinary system discriminates against bailees. If this is so at all, it is of fairly slight impact in the overall scheme of things. 8 Mr Sullivan submitted that the approach that was reflected in paragraph 51 of my previous reasons is sufficient to cover the situation. If any real evidence of discrimination emerges due to the absence of bailee representation in the disciplinary system, that will be the time to address the issue. The applicant contends that the issue has been raised by his complaints, and that the deficiency, having been exposed, ought to be ruled upon. 9 It was submitted for the respondent, as it had been at the earlier hearing, that the composition of the Appeal Committee is effectively the answer to the complaints by the applicant. Whilst this is a powerful point, the absence of any bailee from administration of the system may have effects which are subtle and which may not be either perceived or corrected on appeal. In any event, running an appeal would inevitably involve the bailee in costs and expenses of one sort or another. In dealing with a different, but related, point, the High Court in Buckley v Tutty (1971) 125 CLR 353 at 379 said: "a player is completely in the hands of the committee; he has no right to require it to decide in a particular way, or in accordance with any suggested principle, and it cannot be assumed that the decisions of the committee will always and necessarily ensure that the restraint imposed by the rules is no more than a court would consider reasonable." 10 I must confess that my mind has fluctuated as to the result, as I can see merit in the submissions on either side. In the end, however, I remain unsatisfied that the respondent cannot have a satisfactory complaints and disciplinary system if there is any involvement of bailees in the administration of it. Therefore it has not carried the onus of establishing that the restraints, in their present form, do not go beyond what is reasonably necessary for its protection. If, as the decision in Adamson v New South Wales Rugby League (1991) 31 FCR 242 suggests, it is legitimate to have regard to the interests of the bailees, then my conclusion would be strengthened. 11 As I indicated in my earlier reasons, it is not for the Court to become involved in proposing or approving methods of curing the problem. I should say, however, that, as I indicated during the hearing, I was not persuaded that it is necessary to have any bailee involvement in the making of the disciplinary rules. My concern lies with the administration of them. Furthermore, considerable leeway would need to be given to the respondent to address the defect I have found. It, rather than a court, is aware of the practical difficulties and ramifications of any solution. It is not implicit in these reasons that the respondent is called upon to engage in bargaining with the applicant, or with others, as to the manner in which the By-laws might be amended. Public interest 12 The public interest identified on behalf of the applicant was the interference with the right to livelihood which the restraint effects. I held in my previous reasons that the general nature of the restraint was a reasonable protection of the interests of the respondent. Mr Sullivan submits that, in the circumstances of the case, the prevailing public interest is that of the travelling public who are advantaged by having an efficiently and courteously run taxi co-operative. Mr Sullivan also submits that it is not sensible to approach the question of restraint of livelihood on the basis that bailees are the equivalent of a profession or calling which requires significant qualifications and experience. He puts that most people who can drive a motor vehicle and are familiar with the Australian Capital Territory could become a taxi driving bailee. 13 I am not satisfied that the interests of bailees should prevail over the interests of the members of the public who wish to use taxis. I do not consider that the applicant has carried the onus which it bears on this point. Conclusion 14 I will formally dispose of the claims based upon the Workplace Relations Act and breach of contract. I propose to declare that those By-laws which relate to the discipline system are invalid. Mr Sullivan has asked that I not make any formal declaration for a period of 28 days. I will accede to that request and stand the matter over to Friday, 24 March 2000, at 9.30am for the purpose of making the foreshadowed declaration. Subject to any submissions in the meantime as to detail, the declaration will be in the following terms: "That By-laws 18 to 24 (inclusive) of the By-laws of the respondent are invalid." The parties need not, but may, appear. If required, a video link will be arranged. Taking into account the course of the proceedings, and the submissions of the parties, I propose to order that the respondent pay one-half of the applicant's costs of the proceedings. 15 I indicated in my previous reasons that, as then advised, I did not propose to make any further orders even if I were to decide that the disciplinary provisions were invalid. I remain of that view. That which was transacted without the point being taken should not be disturbed, at least by order of the Court. Ms Keys submitted that I should order damages in favour of the applicant. I agree with Mr Sullivan's submission that there was no appropriate cause of action. Even if the applicant were relevantly a party to a contract, invalidity does not amount to breach for which damages might be awarded, either at common law or in equity. There is no tort involved (Heydon (supra) at 222-3; Adamson v New South Wales Rugby League (supra at 288). I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 25 February 2000 Counsel for the Applicant: Ms J Keys Counsel for the Respondent: Mr AJ Sullivan QC and Mr J Harris Solicitor for the Respondent: Chamberlains Law Firm Date of Hearing: 18 February 2000 Date of Judgment: 25 February 2000