Federal Court of Australia|1977-07-22|Before: Northrop J, Deane J

Ausfield Pty Ltd v Leyland Motor Corporation of Australia Ltd [1977] FCA 6; (1977) 31 FLR 477 (22 July 1977)

AUSFIELD PTY. LTD. v. LEYLAND MOTOR CORPORATION OF AUSTRALIA LTD. (1977) 31

Trade Practices - Giving effect to arrangement or understanding in restraint of trade - Whether act done in relation to remuneration of employees or by an organization - Whether making arrangement or entering into understanding is an "act" - When act is to be disregarded - Trade Practices Act 1974, ss. 45 (2), (2) (a), . The appellant had sought injunctions under of the before a single judge of the court. The injunctions were refused and the appellant appealed to a Full Bench of the court. The injunctive relief sought on appeal was directed towards restraining the respondent from giving effect to an arrangement or understanding between the respondent and the Federated Storemen and Packers Union of Australia ("the union").

The appellant is a distributor of parts and accessories supplied to it by the respondent. Some of its employees were members of the union, but none of the employees of the respondent was a member of the union. Evidence was given before the trial judge of a "deal" between the union, or those acting in its name, whereby the union would lift a ban which it had placed upon the delivery of automotive parts and accessories to the respondent, if the respondent would cease to supply its parts and accessories to the appellant. The trial judge held that as the arrangement or understanding was within the terms of s. 51 (2) (a) (namely, an act done by the union in relation to the remuneration of employees), the question of whether it was in restraint of trade under s. 45 did not arise.

Section 51 (2) (a) provided (before 1st July, 1977) for certain exceptions which were to apply in determining whether a contravention of Pt IV of the Act had been committed, in the following terms: "(2) In determining whether a contravention of a provision of this Part other than section 48 has been committed, regard shall not be had - (a) to any act done, or to any provision of a contract, in relation to the remuneration, conditions of employment, hours of work or working conditions of employees, or to any act done by employees or by an organization of employees not being an act done in the course of the carrying on of a business of the employer of those employees or of a business of that organization."

Section 45 (before 1st July, 1977) prohibited, inter alia, an arrangement in restraint of trade (s. 45 (2) (a)) or giving effect to an arrangement to the extent that it is a restraint of trade (s. 45 (2) (b)).

Held, by Bowen C.J. and Northrop J. (Deane J. dissenting): (1) Section 51 (2) (a) does not, in the circumstances of this case, provide an exception to the provisions of s. 45.

(2) The necessary relationship between the arrangement or understanding and the claim of the union for increased remuneration was not such as would bring the case within the first part of s. 51 (2) (a).

(3) The term "any act done" in the latter part of s. 51 (2) (a) is inappropriate to the complex operation of making a contract or arrangement or entering into an understanding. The making of an arrangement is defined, by s. 4 (1), as "conduct". The failure to refer to "conduct" in s. 51 (2) suggests that the words "any act done" are inapt to cover the making of the arrangement or entering into the understanding in this particular case.

(4) Section 51 (2) (a) gives protection to a union against the application of the Trade Practices Act in the circumstances stated. It is not directed to protecting those who deal with the union in those situations. Section 51 (2) (a) does not operate in such a way as to require the court to deem the act not to have been done.

(6) Had the amendments which came into force on 1st July, 1977, been such that the appellant would not, on the facts proved in this case, have been entitled to relief under the Act as so amended, the question of whether the court should, as a matter of discretion, grant the injunctions sought would arise. However, having regard to the amendments, the position of the appellent would not have been weakened.

Per Deane J. - The trial judge's view that, in deciding whether there had been a contravention of s. 45 (2), he should not have regard to the acts of the union or of those acting in its name in making the relevant arrangement, was correct. Section 51 (2) (a) (in the form in which it existed up until 1st July, 1977) required that the acts of the union or of those acting in its name be disregarded.

The appellant had sought injunctions under s. 80 of the Trade Practices Act 1974. The injunctions were refused and the appellant appealed to a Full Bench of the court. The injunctive relief sought on appeal was directed towards restraining the respondent from giving effect to an arrangement or understanding between the respondent and the Federated Storemen and Packers Union of Australia.

A. M. Gleeson Q.C. and I. L. Johnston, for the appellant.

Solicitors for the appellant: Dunhill, Morgan & Macready.

BOWEN C.J. This matter is urgent. For that reason we have not taken the time to consider our reasons in detail and to formulate them in writing, as otherwise we might have done. We propose to give oral judgment. (at p478)

2. Ausfield Pty. Ltd., the appellant, brought proceedings against Leyland Motor Corporation of Australia Ltd., the respondent, seeking an injunction under s. 80 of the Trade Practices Act 1974. The relief sought was directed towards restraining the respondent from giving effect to an arrangement or understanding between the respondent and the Federated Storemen and Packers Union of Australia which was to the effect that the respondent would refrain from supplying the appellant with automotive parts and accessories. Additional relief was sought in the nature of an injunction based on s. 46 of the Trade Practices Act relating to monopolization but this aspect of the case has not been argued on this appeal. (at p479)

3. The matter, which was commenced on 23rd June, 1977, was heard by Franki J. on 29th June, 1977. His Honour refused the injunctions sought and dismissed the proceedings. It is against his Honour's decision that this appeal is brought. (at p479)

4. The facts are set out in the reasons for judgment of the learned trial judge (Ausfield Pty. Ltd. v. Leyland Motor Corporation of Australia (No. 1) (1977) 14 ALR 449 ). I shall not recapitulate them. His findings of fact were not challenged. I should, however, add that two further facts were agreed between the parties in the course of the appeal and were admitted in evidence by the court. These were that no members of the Federated Storemen and Packers Union were employed by the respondent and that the conduct described in the affidavits filed in the proceedings, including the refusal by the respondent to deliver parts and accessories to the appellant, has continued up to the present time and is continuing. (at p479)

5. Evidence was given before the learned trial judge of a "deal" between the respondent and the Federated Storemen and Packers Union or those acting in its name whereby the union would lift a ban which it had placed upon the delivery of automotive parts and accessories to the respondent if the respondent would cease to supply its parts and accessories to the appellant. The learned trial judge found that this constituted an arrangement or understanding and assumed for the purposes of his judgment without deciding that it was in restraint of trade within the meaning of s. 45 (2) of the Act and that in giving effect to it the respondent acted in contravention of s. 45 (2) (b) unless saved by the operation of s. 51 (2) (a). His Honour went on to hold that the making of that arrangement or the entering into that understanding was within the terms of s. 51 (2) (a) because it was an act done by the union in relation to the remuneration of employees. (at p479)

6. The consequence of this holding was that he considered the act of making the arrangement or entering into the understanding should be disregarded for all purposes. His Honour expressed the matter in the following way: "Since I am not to have regard to this act, I consider that it has not been established that the respondent made an arrangement or entered into an understanding in contravention of s. 45 (2) (a). It requires the act of two parties to make an arrangement or enter into an understanding. I also consider that the provisions of s. 45 (2) (b) are not applicable because in view of the provisions of s. 51 (2) (a) it has not been established that there was any arrangement or undertaking to which the respondent was prohibited from giving effect and no conduct which has constituted or would constitute a contravention of s. 45 (2) (b) has been established. It is therefore unnecessary to consider whether any understanding or arrangement was in restraint of trade or commerce" (1977) 14 ALR, at p 455 . (at p480)

7. I should mention that it appears from the evidence before his Honour that the arrangement or understanding was in restraint of trade or commerce within s. 45 (2) (b) and was not excluded by the provisions of s. 45 (4). I so conclude. (at p480)

8. Returning to the argument on the appeal, counsel for the appellant submitted that the learned trial judge was in error in his application of s. 51 (2) (a). While conceding that the union was motivated by the desire to strengthen its claim against the appellant for increased remuneration for those of its members who were employed by the appellant, and that an economic consequence of the respondent's giving effect to the arrangement or understanding would be to strengthen the hand of the union in its negotiations with the appellant, counsel argued that this relationship to remuneration of employees was not the kind of relationship contemplated by s. 51 (2) (a). He argued that the motives of the union were irrelevant and the economic consequences were an end result only and not such a direct relationship as was referred to by the terms of s. 51 (2) (a). He referred to Re Scottish Daily Newspaper Societies Agreement (1956) LR 7 RP 379, at pp 399-400 , to United Mine Workers of America v. Pennington [1965] USSC 132; (1965) 381 US 657, at pp 661, 663, 668 , and to Local Union No. 189, Amalgamated Meat Cutters & Butcher Workmen of North America, AFL-CIO v. Jewel Tea Co. Inc. (1965) 381 US 676, at pp 687-688 . (at p480)

9. It is to be noted that the learned trial judge was not referred to any of these authorities. In my view the argument advanced for the appellant on this aspect of the matter in the light of these authorities is correct. The necessary relationship does not exist which would bring this case within the first part of s. 51 (2) (a). (at p480)

10. However, s.51 (2) (a) in its latter part refers also to any act done by an organization of employees not being an act done in the course of the carrying on of a business of the employer of those employees or of a business of that organization. Even if the making of the arrangement or the entering into the understanding would not have the necessary direct relation to remuneration of employees, it would appear to be an act of an organization of employees within the latter part of s. 51 (2) (a). (at p480)

11. There is a more fundamental objection to the application of s. 51 (2) (a). When this section refers to "any act done", the words appear to me to be inappropriate to refer to the complex operation of making a contract or arrangement or entering into an understanding. These may be brought about by oral communication, by writing or by conduct or by a combination of these. One might have expected something more than a reference to "any act done" to refer to that situation. That this was in the mind of the draftsman is suggested by the definition of "conduct" in s. 4(1) of the Act. This is as follows: "'Conduct' when used as a noun includes doing, refusing to do or refraining from doing any act, including making a contract, or arrangement or entering into an understanding." (at p481)

12. Had it been in mind that the phrase "any act" was apt to include the making of a contract or arrangement or the entering into an understanding, it would appear to have been unnecessary to have added the last part of the definition of "conduct". Regarding the matter another way, had it been intended to cover that situation it could readily have been done in s. 51 (2) (a) by using the word "conduct". As the matter stands, it appears to me that the words "any act done" in s. 51 (2) (a) are inapt to cover the making of the arrangement or entering into the understanding of which evidence has been given in this case. (at p481)

13. The appellant also submitted that the approach of the learned trial judge in applying s. 51 (2) (a), which is reflected in the above quotation from his judgment, was incorrect. His Honour, having held that the act of the union in making an arrangement or entering into an understanding had to be disregarded, concluded that it had to be treated as if the arrangement or understanding had not been reached at all. The appellant contested this approach. (at p481)

14. Having regard to the history and the terms of s. 51 (2) (a), it appears to me to be directed to giving protection to a union against the application of the Trade Practices Act in the circumstances stated. It is not directed to protecting those who deal with the union in those situations. If the protection does extend to parties dealing with unions in those situations, this would appear to be an unintended consequence and one which, indeed, in the light of the American authorities, could lead to an abuse of agreements with unions, cutting down the effectiveness of the Act. (at p481)

15. It is important to notice that the section does not require the court to deem the act not to have been done. All the section requires is that in determining whether a contravention has occurred, regard will not be had to the act in question. It appears to me that this wording relates to the situation where the particular act is directly involved in the contravention which has to be determined. Where it is a different act which is under consideration in determining whether a contravention has occurred and the act of the union is merely an essential ingredient in the proof, or a step which requires to be proved, to show that some other act is a contravention, it does not appear to me that the court is obliged not to have regard to the existence of any arrangement or understanding which has resulted from that particular act but which is not directly and immediately in question as a contravention. (at p482)

16. In the result I have reached the conclusion that the appeal should be upheld. I should mention, however, that since the matter was heard by the learned trial judge on 29th June substantial amendments have been made to the Trade Practices Act. These amendments came into force on 1st July, 1977. Had the amendements been such that the appellant would not on the facts proved in this case have been entitled to relief under the Act as amended, a serious question would have arisen whether the court should, as a matter of discretion, grant the injunction sought. This matter has not been fully argued before us, but some reference has been made to it. Having regard to the provisions of the amending Act to which our attention has been drawn, I am of the opinion that the position of the appellant would not be weaker than it was under the old Act. (at p482)

17. In these circumstances I propose that the orders of the court should be in terms of the orders set forth in pars. 1,2 and 5 of the notice of appeal, subject to this qualification, that the references to "contract" in par. 2 should be deleted. (at p482)

18. The orders will be: (1) Appeal allowed, judgment and order appealed from set aside. (2) The respondent be restrained from giving effect to an arrangement or understanding between the respondent and the Federated Storemen and Packers Union of Australia which arrangement or understanding is to the effect that the respondent will refrain from supplying the appellant with automotive parts and accessories required by the appellant to enable it to carry on business as a distributor of automotive parts and accessories for the complete range of motor vehicles manufactured by British Leyland Ltd. of the United Kingdom or assembled in Australia for or by the respondent and in either case distributed by the respondent in Australia with the exception of those parts and accessories for heavy duty commercial vehicles and buses contrary to the practice of the respondent prior to 9th June, 1977, and contrary to the provisions of s.45 of the Trade Practices Act 1974. (3) The respondent pay the costs of the appellant of this appeal and of the proceedings before the trial judge. (at p482)

NORTHROP J. I agree with the orders proposed by the Chief Judge for the reasons he has expressed and I have nothing further to add. (at p482)

DEANE J. The evidence before the learned trial judge established that the respondent's continuing refusal to supply automotive parts and accessories to the appellant was in pursuance of an arrangement between the respondent and the Federated Storemen and Packers Union of Australia to which I shall refer as "the union". In essence that arrangement was that the union would lift a ban on its members handling the respondent's goods at the Chullora Container Depot and that the respondent would refrain from supplying automotive parts and accessories to the appellant. That arrangement was an arrangement in restraint of trade. The respondent's refusal to supply parts and accessories to the appellant, which, we were informed on the hearing of the appeal, continues, was and is a continuing giving effect to that arrangement or understanding in restraint of trade. On the evidence it is clear that the effect of the respondent's refusal to supply, upon competition between the appellant and itself, is significant. (at p483)

2. While I am in general agreement with the approach adopted by the learned trial judge to the operation and effect of s. 51 (2) (a) of the Trade Practices Act 1974 in the form in which it existed at relevant times up to 1st July, 1977, I am not, as at present advised, persuaded that either the arrangement in restraint of trade between the respondent and the union or the action of the union in becoming or remaining a party to that arrangement, can properly be categorized as an act done "in relation to" the remuneration, conditions of employment, hours of work or working conditions of employees within the provisions of s. 51 (2) (a). (at p483)

3. It is true that the indirect objective which the union sought to achieve by entering into the arrangement and procuring a refusal by the respondent to supply the appellant was to bring pressure upon the appellant to agree to increased remuneration and imporved conditions of employment for the union members who are employees of the appellant. As at present advised however, I am of the view that an act cannot be said to be done in relation to the remuneration or conditions of work of employees for the purposes of s. 51 (2) (a) unless the relevant relationship is direct and immediate. The doing by the union of the acts involved in becoming and remaining a party to the arrangement, or giving effect to it, did not, in my present view, have any direct or immediate relationship with the remuneration or conditions of work of employees. It is, however, unnecessary for me to express any concluded view on this question for the reason that I have reached the conclusion that the learned trial judge's view that, in deciding whether there had been a contravention of s. 45 (2), he should not have regard to the acts of the union or of those acting in its name in making the relevant arrangement, was, in any event, correct. His Honour was in my view obliged to disregard those acts by reason of the express requirement of s. 51 (2) (a) (in the form in which it existed up until 1st July, 1977) that, in determining whether a contravention of s. 45 had been committed, regard should not be had to any act done by an organization of employees other than an act done in the course of the carrying on of a business of that organization. (at p484)

4. The evidence clearly indicates that the union is an organization of employees. Such an organization can only act through its officers or other persons acting on its behalf. The relevant acts of the union, or of its New South Wales branch, or of those acting in its name, were acts done by an organization of employees other than in the course of carrying on a business of the organization. Regard could not properly be had to such acts in determining whether a contravention of s. 45 had been committed. (at p484)

5. The whole basis of the appellant's claim for relief against the respondent was the assertion that the respondent's conduct constituted a contravention of s. 45 (2) of the Trade Practices Act. In these circumstances, the essential question to be determined was whether a contravention of s. 45 (2) had been committed and was continuing. (at p484)

6. It was an essential ingredient of any contravention of the provisions of s. 45 (2) of the Act (in the form in which they existed up until 1st July, 1977) that a contract or arrangement be made or an understanding be entered into in restraint of trade or commerce. The making of such a contract or arrangement or the entry into such an understanding, by a corporation, itself constituted the contravention of s. 45 (2) (a). The existence of such a contract, arrangement or understanding was an essential ingredient of a contravention of s. 45 (2) (b) for the reason that unless it were established that such a contract, arrangement or understanding existed it would be impossible to find that a particular act or course of conduct constituted giving effect to such a contract, arrangement or understanding. (at p484)

7. It is, in my view, necessary to the making of a contract or arrangement or the reaching of an understanding for the purposes of s. 45 (2) that there be concerted activity of more than one entity. The actions of which evidence was led in the present matter to establish the relevant arrangement certainly involved such concerted activity. In essence, the relevant acts were the act of the union in proposing that it would permit its members to handle the respondent's goods provided that the respondent refrained from supplying parts and accessories to the appellant and the act of the respondent in accepting that proposal. The whole point of the evidence establishing those acts was to establish a contravention of s. 45 (2). Section 51 (2) (a) precluded, in the determination of whether such a contravention had been committed, regard being had to any relevant acts of the union. I agree with the conclusion of the learned trial judge that, unless regard is had to relevant acts of the union, the evidence does not establish any actual or threatened contravention of s. 45 (2). (at p484)

8. I am conscious that the view that, in the determination of whether a contravention of any provision of Pt IV other than s. 48 (now s. 45D and s. 48) has been committed, s. 51 (2) (a) requires ignoring any act of the specified type regardless of whether the act itself constitutes the alleged contravention or whether the act was done by the alleged contravener and involves giving a wide operation to s. 51 (2) (a). That wide operation of s. 51 (2) (a) necessarily follows, in my view, from the clear words used and I can find nothing in the context of those words or in the general policy of the Act which justifies giving them other than their full effect. Indeed, when it is appreciated that a union will ordinarily not be a corporation for the purposes of the Trade Practices Act and will therefore not be capable of itself contravening those provisions of Pt IV in respect of an alleged contravention of which s. 51 (2) (a) is relevant, the view that the directive to disregard an act of an organization of employees was only applicable when the alleged contravention was by the organization itself would deprive the directive of much of its content. (at p485)

9. The requirement that, in the specified circumstances, regard be not had to the act of an organization of employees was removed from s. 51 (2) (a) by the amendments which became effective on 1st July last. As at present advised, I am inclined to agree with the views of the Chief Judge and my brother Northrop that the admitted actions of the respondent since 1st July, 1977, constitute a continuing breach of the provisions of s. 45 of the Trade Practices Act. The views which I have formed on anterior matters however prevent that question arising for direct decision by me in the present matter which was dealt with by the learned trial judge, at the request of both parties, on the basis of the law in the form in which it existed at the time he heard it. Since the matter was not argued from the respondent's side before us and may well arise for direct decision in subsequent proceedings against the union or its officers who were not parties to the present matter, I refrain from forming or expressing any concluded view on it at this stage. (at p485)

10. I would dismiss the appeal with costs. (at p485)

Ausfield Pty Ltd v Leyland Motor Corporation of Australia Ltd [1977] FCA 6;

At a glance

Court

Decision date

Before

Source

Judgment (44 paragraphs)

Ausfield Pty Ltd v Leyland Motor Corporation of Australia Ltd [1977] FCA 6; (1977) 31 FLR 477 (22 July 1977)

Parties

Legislation Cited (4)

Cases Cited (3)