FEDERAL COURT OF AUSTRALIA Lee v Aerial Taxi Cabs Co-Operative Society Ltd [2001] FCA 1686 TING SHING LEE v AERIAL TAXI CABS CO-OPERATIVE SOCIETY LTD A7 of 2001 MADGWICK J 8 OCTOBER 2001 CANBERRA IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY A7 of 2001 DISTRICT REGISTRY BETWEEN: TING SHING LEE APPLICANT AND: AERIAL TAXI CABS CO-OPERATIVE SOCIETY LTD RESPONDENT JUDGE: MADGWICK J DATE OF ORDER: 8 OCTOBER 2001 WHERE MADE: CANBERRA THE COURT ORDERS THAT: 1. The application be dismissed. 2. The respondent pay, subject to any previous costs orders, the applicant's costs up to and including 16 June 2001. IN THE FEDERAL COURT OF AUSTRALIA AUSTRALIAN CAPITAL TERRITORY A7 of 2001 DISTRICT REGISTRY BETWEEN: TING SHING LEE APPLICANT AND: AERIAL TAXI CABS CO-OPERATIVE SOCIETY LTD RESPONDENT JUDGE: MADGWICK J DATE: 8 OCTOBER 2001 PLACE: CANBERRA REASONS FOR JUDGMENT (revised from transcript) HIS HONOUR: 1 In this case, the applicant sued the respondent for alleged breaches of the Trade Practices Act 1974 (Cth) ("the Act"), in particular ss 45 and 47(6). Section 47(6) may be put aside because some question arises as to whether the conduct of the respondent would fall within it. However, there seems to be little doubt that the respondent was in breach of s 45(2)(b)(ii) as amplified by s 45A. 2 Section 45(2)(b)(ii) relevantly provides that "A corporation shall not: give effect to a provision of a contract, arrangement or understanding, ... if that provision: … (ii) has the purpose, or has or is likely to have the effect, of substantially lessening competition." Section 45A(i) relevantly provides: "Without limiting the generality of section 45 a provision of a contract arrangement or understanding, ... shall be deemed for the purposes of that section to have the purpose ... of substantially lessening competition if the provision has the purpose … of fixing, controlling or maintaining or providing for the fixing, controlling or maintaining of, the price for, … goods or services ... to be supplied or acquired by the parties to the contract, arrangement or understanding … in competition with each other." Background 3 The applicant is a taxi operator and was a taxi owner/driver in relation to the taxis he operated in the Australian Capital Territory and a member of the respondent. The respondent is a registered co-operative society, composed of owners and operators of taxi cabs, which provides radio network and booking services for its members. 4 An issue arose about better dealing with driver safety in taxi cabs. The respondent investigated means of securing, in all the taxi cabs with which it was associated, the installation of cameras that would: provide a useful number of images of the occupants of taxi cabs in emergency situations; allow for the storage of those images; and ensure that the images were captured, regardless of the capacity of the driver to initiate the recording of the visual images. 5 The respondent by its servants and agents narrowed its search to three sizeable companies that provide this kind of equipment and eventually determined that, though none would perfectly harmonise with the existing radio and computerised equipment in the taxi cabs, the camera systems offered by Sigtec Navigation Pty Ltd ("Sigtec") appeared to be the best. The respondent somewhat peremptorily advised its members, including the applicant, that the Sigtec product had been chosen and that the installation of in-car safety cameras would be compulsory. 6 Members and operators were offered three options. Firstly they could use a "master lease arrangement", which the respondent had brokered through its banker, at a cost in the order of $55 per month. Secondly, operators could rent or lease direct from Sigtec for $75 per month. Thirdly they could purchase. If effected through the respondent the cost per camera would have been about $2,400; if orders were placed direct with Sigtec the cost would have been in the order of $2,500. The costs of fitting the cameras were additional. 7 One gathers that this original announcement in January 2001 was not met with universal and unalloyed joy, because on 9 February 2001 the respondent felt constrained to say that, "as a result of the less than complete response to the camera financing options" which it had required to be completed by 2 February 2001, its board had decided to adopt some further measures. In the event that operators did not sign a lease, pay the respondent the cost of a camera or enter into arrangements directly with Sigtec and lodge a copy of documentary evidence of those arrangements with the respondent by 23 February 2001 the respondent would itself enter into a purchase order for the equipment from Sigtec on the operator's behalf and then deduct the cost of the arrangement in full from monies collected on behalf of the operator by the respondent. 8 A member of the respondent, Mr Wassell, who operated about 30 taxi cabs, protested at what he called the "unilateral edict" and sought in effect further latitude concerning the type of camera to be used and the financial arrangements that might be entered into by operators to provide cameras. The respondent answered his approach in a somewhat unconciliatory fashion. The applicant also wrote in similar vein on 22 February 2001 threatening legal action, as a matter of urgency. 9 On 26 February 2001, Ms Keys of counsel, instructed by the applicant, as a matter of courtesy, notified the solicitors for the respondent of an intended urgent application for interlocutory relief. In consequence of this and in the course of that day, the respondent offered to the applicant an undertaking that he personally would not be required to install cameras, no deduction would be made from monies due to him nor would any equipment be ordered on his behalf. That evening there was an information meeting for owners and operators and a number of people raised similar concerns to that of the applicant and they were offered much the same treatment. 10 It is clear that the applicant was supported by other operators, not only Mr Wassell, and he and his legal adviser elected nevertheless to proceed with an action for an injunction under s 80 of the Act which can be brought by "any person" and an action for compensation for alleged loss and damage occasioned "by" the respondent's conduct. The conduct specified was the issue of the notice of 23 February 2001. 11 Events did not stand still thereafter. The respondent approached the Australian Competition and Consumer Commission ("ACCC") for authorisation of its conduct. The ACCC at first acceded to this application and then, one assumes after some vigorous prodding from those advising the applicant, reversed its position. On 5 June 2001, the respondent issued another circular to members, this time indicating that the board was making camera installation "optional" and that "those operators who elect to proceed with camera installation will be contacted and [their] position will be confirmed." 12 The respondent was still, however, no doubt through considerations of commercial good faith, advising the installation of a Sigtec camera for anybody who wanted to install a camera at all. 13 For reasons that I will shortly indicate, that should have been the end of the proceedings. However, the matter was listed for further directions before the Court on 15 June 2001 and arrangements were made for the filing of an amended defence. The amended defence indicated that the installation of security cameras had been made optional and that: "Accordingly, neither the applicant nor any other taxi owner is required to install security cameras as previously requested." 14 By circular of 3 September 2001 the respondent advised its members that it had abandoned entirely the option of installation of cameras to be used in association with the existing computerised radio communications between taxi cabs and the respondent's base. Instead, there was to be investigated (and likely provided by way of a joint venture between the respondent and its Sydney counterpart, a completely commercially distinct organisation) a more modern, purpose-designed "all in one" system which would upgrade communications between taxi cabs and the base allowing for the installation of state of the art cameras as part of this. All of this would be provided for a comparatively modest cost and certainly without any increase in the existing fees paid by owners and operators. 15 At that point, it was clear beyond any argument that no injunction of any kind was required and that, if there had been any loss or damage to the applicant, as he claimed, it would then cease. Nevertheless, the case limped on because the parties could not agree on terms of settlement. I was asked to deal with issues of compensation for loss and damage, and costs. Consideration 16 The case for loss was that the applicant, in addition to being a taxi operator, had for some years been an importer and exporter of various kinds of goods. In late 1999, with the installation of cameras in Canberra taxis in the wind, he purchased a small number of video cameras with a view to installing them. In 2000, he purchased some more, about another dozen. The cameras cost him about $30 each. After his threat of legal action and the institution of these proceedings by him on 26 February 2001, he sought authorisation for the installation in his cabs of the cameras that he had bought. A demonstration of such cameras by him to the board of the respondent was arranged for a date in March 2001. The board members were less than impressed. There were a number of criticisms which appear reasonable. The cameras needed some distinct action by the taxi driver to operate them. They recorded their images on a video loop, so if the loop were running it would simply be overwritten by fresh images when the played portion began again. The controlling mechanism was thought not to be heat secure. There were other criticisms, none of them on their face unreasonable and none answered by the evidence before me. 17 In a discussion between members of the respondent's board and the applicant, it was agreed that he could if he wished install some more cameras in addition to the single cab, in order to attempt again to persuade the board of the satisfactory nature of his cameras. In the end, the applicant did not do that. A possible explanation for this is that he had read between the lines and concluded that, so committed were the board members to the Sigtec cameras, that it would be a pointless waste of time despite their encouragement to try again. However, he did not say that in his evidence and other explanations are possible. 18 Originally the applicant had thought that it would be very cheap to install the cameras, indeed he thought he would be able to do it himself. As it turned out, it cost $900 for a qualified person to install a single camera. 19 The claim for loss was put in two ways. First, it was said that the applicant lost outright his investment in the 15 cameras that he bought, being a sum in the order of $400, and in addition lost the value of the installation of the camera that was installed. The difficulty about this is that there is no evidence that the cameras that have not been installed cannot be re-sold for at least what the applicant paid for them, nor is there any evidence that the camera as installed is useless. Indeed, the applicant's claims to the board of the respondent were that it was not useless. So it cannot be said that he has received nothing of value for the installation costs he incurred. If some part of these costs has been wasted, I could not hazard a guess as to what it was. It is however a small amount which is insignificant. I am not satisfied that there was any cognisable loss on that account. 20 Secondly, it was claimed that the applicant thought that he might be able to supply either the respondent's members as a whole or a significant number of them with the kinds of cameras that he had purchased. One can only say that his efforts to do this before February 2001 were markedly lacking in energy for a man whose business interests would suggest that he is a person capable of very considerable energy. Likewise his inactivity in that regard since March 2001 is equally unimpressive. I am not satisfied that he lost any real chance to make a profit in the way claimed, nor am I satisfied that he lost any opportunity which had any real commercial value. 21 Until 5 June or perhaps 3 September 2001, the applicant nevertheless might, as a member of the public, have maintained his application for an injunction under s 80 of the Act. It is of course not fatal to an application for that statutory remedy that there is no risk that the person who has contravened the Act intends to do so again, or that there is no danger of any substantial damage to any person if that should occur. The applicant was perfectly entitled to maintain the action for the benefit of his co-members of the respondent if he chose. However, had the matter come on for hearing on 6 June 2001, it is exceptionally unlikely that his application would have succeeded because, as a practical matter, the aspects of freedom of choice of equipment and freedom to make individual financial arrangements had already been conceded by the circular of 5 June 2001. If one had, so far as the respondent was thereafter concerned, no obligation to install a Sigtec camera, or any camera, one could install no camera, the Sigtec camera or some other camera, all by way of one's own negotiation and commercial choices. Indeed, if one wished after inquiry to install the Sigtec camera via the respondent, there is nothing to indicate that that option too, would not have been available. Therefore, as a practical matter, perfect choice in the market thereupon existed, although there might have been theoretical cavils. Therefore, there was no case for an injunction from that point in time. 22 Also, as a matter of theoretical cavil, it may be that the applicant should have realised this on the evening of 26 February 2001, when he attended the meeting held by the respondent and those who spoke up were offered a similar undertaking to that which he had won as a result of the imminent threat of the institution of legal proceedings. However, even if his concerns should have been lulled for a time, the action of the respondent in going to the ACCC would have revived legitimate concerns, and in the circumstances, I do not think that he behaved unreasonably in continuing to maintain his action. 23 It seems to me that the applicant had, up to 5 June 2001, a probability of success with at least part of the proceedings that he had brought, and insofar as he might partially fail, that partial failure would not have resulted in costs being ordered against him. One might say that, technically, it was only with the amendment of the defence on 18 July 2001, that the applicant was assured of his position and had finally achieved what he had set out to achieve in the proceedings. However, taking a practical approach, in my opinion the better course would be to terminate the respondent's liability to pay the applicant's costs as at 16 June 2001, that being the day after the matter was listed for directions. Presumably the attendance of his counsel for directions before the Court on 15 June would have meant that some significant amount of costs was incurred by him. 24 The question then arises who should bear the costs after that time until the conclusion of these proceedings. I view this matter broadly. Both sides are at fault, in my opinion, for not co-operating properly to bring the matter to a sensible and fair conclusion. Furthermore, the respondent remained technically in breach of the Act which provides far-reaching and well known restrictions, intended to be in the public interest on commercial conduct. That breach of the law is enough, in my opinion, to disentitle the respondent from an order for costs against the applicant. On the other hand, I see no reason at all why the applicant should have his costs against the respondent thereafter. Therefore, after 16 June 2001 the parties should be left to bear their own costs. Disposition 25 The orders will be that the proceedings will be dismissed and, subject to any existing costs order in the respondent's favour as to interlocutory proceedings, it is to pay the costs of the applicant incurred up to and including 16 June 2001. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick. Associate: Dated: 6 December 2001 Counsel for the Applicant: J Keys Solicitor for the Applicant: Higgins Solicitors Counsel for the Respondent: J Harris Solicitor for the Respondent: Chamberlains Law Firm Date of Hearing: 8 October 2001 Date of Judgment: 8 October 2001