Bullock, G.F. & Ors Federated Furnishing Trades Society of Australasia & Ors [1985] FCA 258

Federal Court of Australia|1985-02-11|Before: Woodward JJ, Smithers J

Trade Practices - interim injunction - principles to be applied.

Trade Practices - s.45 - contract arrangement or understanding containing an exclusionary provision - contract arrangement or understanding having the purpose or the effect of substantially lessening competition ~ s.45F - contract arrangement or understanding affecting the acquisition of services - a provision included in a contract arrangement or understanding for a particular purpose.

Garry Francis Bullock & Ors. v. The Federated Furnishing

VICTORIA DISTRICT REGISTRY ) VG NO. 309 OF 1984 ) )

BETWEEN: GARRY FRANCIS BULLOCK, JOHN SKILBECK AND GRAHAM JAMES HARKNESS

AND: THE FEDERATED FURNISHING TRADES SOCIETY OF AUSTRALASIA, L. KYRIACOU, A. FINDLAY, R. SHUGG, ALVONNE NOMINEES PTY. LTD. (Trading as A.F. CARPET DISTRIBUTORS), COLONY CARPETS PTY. LITD., R.G. CARPET AGENCIES PTY. LTD., CARPET

WHOLESALERS (VIC.) PTY. LTD., OTTO FLOORS PTY. LTD., V.E.

MACKEY & CO. PTY. LTD. JASON CARPETS COMMERCIAL PTY. LITD., AND GURIAN PTY. LTD. (Trading as MYER TEALE)

CORAM: Smithers, Sweeney and Woodward Jo. DATE: 11 February 1985

Smithers J.: I have had the opportunity of reading the reasons of my brother Woodward for his decision in this matter. I agree with them but would add the following

So far as 5.45(2)(a)(i) of the Trade Practices Act 1974

(the Act) is concerned the critical question is whether the agreement in question contains an exclusionary provision. That depends upon whether the agreement was made between persons any two or more of whom are competitive with each other, and whether that provision was included in the agreement for the purpose of preventing the acquisition of services from particular persons in particular circumstances or on

It is true to say of the written agreements between each of the corporate respondents and the Union that the relevant clause lacks precision and that so far as it binds the corporate respondents it binds them in respect of all persons who might be engaged by them in the future to lay carpets and does not in terms designate any particular persons. It is part of the case for the appellants that the execution of the agreements of each of the corporate respondents with the Union proceeded, by way of implementation of an overall agreement between those corporate respondents, who are in competition with each other, that each should execute the same on the basis that all of them did so. There is certainly good reason to believe that this was so. And his Honour accepted that on

His Honour found that the Union was not a party to that overall agreement. But the appellants submit that the evidence gives rise to the inference that the Union and its

servants or agents induced and procured that agreement or were

at least knowingly concerned therein. in my view it is certainly seriously arguable that the evidence does support such an inference. There is no doubt that the Union was the initiating party in the whole campaign and that the achievement of the common agreement between itself and each of the corporate respondents all binding themselves in the same

Accordingly the provisions of s.4F(a) of the Act are

(a) a provision of a contract, arrangement or understanding or of a proposed contract, arrangement or understanding, or a covenant or of a proposed covenant, shall be deemed to have had, or to have, a particular purpose if

(i) the provision was included in the contract, arrangement or under-

standing, or is to be included in the proposed contract, arrange-

ment or understanding, or the covenant was required to be given or the proposed covenant is to be required to be given, as the case May be, for that purpose or for purposes that included or include

that purpose; and (ii) that purpose was or is a_sub- stantial purpose; ... "

It was necessary to enguire therefore not 50 much what were the words of the relevant provision in the agreements but whether, whatever the nature of the provision, it was included in the "agreement for the purpose of preventing the acquisition

circumstances or on particular conditions. In other words was the provision included in the agreements for the purpose of preventing the corporate respondents from acquiring carpet laying services from the persons from whom they customarily acquired them or could have been expected to acquire them but for the agreement in circumstances where those persons offered

their services as contractors rather than as employees.

If this question is asked there is good reason to conclude that the answer in all probability would be that the provision was included in the agreement for that purpose and that that purpose was a substantial purpose. It is a compelling view of the facts that the purpose of the Union in including that provision in the agreements was specifically to exclude the particular carpet layers referred to from having their services acquired by the corporate respondents. And the corporate respondents having been persuaded to enter into the particular agreements to achieve that purpose, and inferentially to implement the overall agreement, itis a reasonable inference they were parties to the inclusion of the

There was good reason therefore to hold either that prima facie or on the basis that there was a serious question to be tried the relevant provision in the overall agreement in question constituted an exclusionary provision. The learned Judge -did not approach the matter in this way. He took the view that inasmuch as the provision excluded all carpet layers

other than members of the Union it could not be regarded, in

any sense as excluding particular carpet layers. But if the provision did in fact exclude all carpet layers and that provision was included by the parties for the purpose, inter alia, of excluding the particular carpet layers referred to above then that was one of its purposes. On the facts as they stand at present it would be a reasonable inference that it was included for that purpose and that the purpose was a

substantial purpose. The first and prancipal targets of the

agreement were the particular carpet layers referred to above.

Although the Union might not be a trading or financial corporation, participation by it in the overail agreement would by virtue of s.75B of the Act render the Union and its servants and agents who were knowingly concerned therein as persons who were involved ina contravention of the Act. There is of course good reason to believe that the Union by itself and its servants and agents did so participate. Its adherence to, and the stated reasons for its adherence to, all the agreements between itself and the corporate respondents is

So far as s.45E is concerned the appellants contended that s.45E was designed to protect, in this case, contractor carpet layers from whom carpet suppliers and workshops were accustomed to acquire services from the effects of an agreement by such suppliers and workshops with a Union by

which they are prevented from acquiring or continuing to

The section provides that a person being accustomed to acquire services from a second person (a contractor carpet layer) shall not make a contract with a Union if that contract

contains a provision that has the purpose of preventing the person from acquiring or continuing to acquire services from the second person at all or on conditions as to the terms on which such services might be supplied: see s.45E(1)(b). of course there might be more than one contractor carpet layer from whom the person concerned was accustomed to acquire services and no doubt in s.45E the "second person", would

Again, the problem is one of fact. What was the purpose of the inclusion in the relevant agreements of the provision which requires the person to engage as carpet layers in the future only carpet layers who worked as employees. Section 4F(1) is again applicable. The critical enquiry is whether the purpose for which the provision was included in the contracts was to prevent the person from acquiring or continuing to acquire from the carpet layers from whom they customarily acquired the same subject to a condition as to the terms on which those services might be supplied. The learned Judge approached the question however, by reference to the terms of the provision rather than by reference to the purpose

for which it was included. If regard is had to that purpose

it would be difficult not to infer from the facts that the provision was included for the immediate purpose of excluding the carpet layers from whom theretofor the corporate respondents customarily acquired services as carpet layers in the capacity of independent contractors or sub-contractors from further engagement by those respondents unless those

carpet layers performed the same in the capacity of employees.

Therefore the case for the appellants so far as it was based on s.45E exhibited good prospects of success. Once the purpose was identified the carpet layers who were excluded from engagement except subject to the condition referred to were immediately identifiable and were, of course, at all times known to the corporate respondents. On the case for the

appellants so0 made the provisions of s.45E(2) and (7) have no

The case for the appellant was also -put forward on the ground that" the agreements between the corporate respondents and the Union constitutes an unlawful restraint of trade. I

Having regard to the above it is clear that his Honour's findings as to the degree to which it was required to establish its prospects of success and his reasons for dismissing the application for a continuation of the injunction $0 far as it was based on s.45E and s.45(2) were subject to error and cause injustice to the appellants whose

livelihood is threatened. In my view the appellant's case

shows serious questions to be tried and indeed establishes

) ) VICTORIA DISTRICT REGISTRY ) NO VG 309 of 1984 ) GENERAL DIVISION )

Court Australia. Between: GARRY FRANCIS BULLOCK and ORS Appellants

THE FEDERATED FURNISHING TRADE SOCIETY OF AUSTRALASIA and ORS Respondents

Coram: Smithers, Sweeney & Woodward JJ. Place: Melbourne

I have had the advantage of reading the reasons for

judgment of my brother Woodward, and I agree with them.

I certify that this and the preceding page are a true copy of the reasons for judgment herein of the Honourable Mr Justice

CARPET WHOLESALERS (VIC.) PTY. LTD., OTTO FLOORS PTY. LTD.,

V.E. MACKEY & CO. PTY. LTD. JASON CARPETS COMMERCIAL PTY. LTD.,

This is an appeal, by leave, from a decision of a single

judge of the Court who dissolved an interim injunction and

dismissed an application for interlocutory injunctions. Before

this Court can interfere in such a case, it must be satisfied, first, that the decision of the learned trial judge has been vitiated by an error of principle and, secondly, that there would be a substantial injustice to one of the parties if the order were not reversed or varied, see Adam P. Brown Male Fashions Pty. Ltd. v Philip Morris Inc. (1981) 148 CLR 170 at 177. Although this approach to such cases is well understood, it is helpful to bear

in mind also the High Court's observation in the same passage that

the circumstances of different cases are infinitely various.

The present case is an unusual one of its type because the learned trial judge decided the matter on the view which he took of the law applicable to largely undisputed facts; and having found that the applicants had not made out a prima facie case, and had no real prospects of ultimate success in the action, he dismissed the claim without considering the balance of convenience in the grant of interlocutory relief. In these circumstances it could hardly be said that his Honour exercised any discretion, and it would thus be easier for an appellate court

to intervene if it took a different view of the law.

The facts of the case can be stated quite simply for present purposes. There are some 1500 carpet-layers in the State of Victoria, of whom some 800 work in Melbourne. About 15% of them are employed by retail sellers of carpets or other companies engaged in the provision of carpets; the remaining 85% are

self-employed, working as single independent contractors or, on

some larger contracts, as a group known as a 'workroom' who

respondent ('the FFTSA'), a union which has embarked upon a

campaign to put -the independent contractors out of business.

Senior counsel for the FFTSA and the second, third and fourth

respondents, who are union officers, frankly told the Court in the course of his argument that what the FFTSA "wanted to do is have no sub-contractors .... It wants to achieve the result that there

The FFTSA has sought to achieve this result by using its industrial power to force carpet suppliers to sign agreements to the general effect that they would not give any work to independent contractors but, instead, would employ their own labour. The undisputed evidence was that at least 16 of the carpet suppliers engaged on substantial carpet-laying projects, had been forced to sign such contracts because the FFTSA had placed black bans on their work until they did so. Again counsel for the FFTSA respondents (who are the only respondents against whom injunctions are sought) frankly described these contracts as unenforceable because they were not entered into voluntarily. He also categorized them as meaningless and unclear. Indeed he invited this Court to refuse injunctions relating to these contracts because the contracts themselves are really irrelevant. He said "..... it is the industrial power of the union which is the thing that bites. It is not the agreements or arrangements seeeeee Now whether a supplier agrees to enter into the agreement

or not, we can, and we have, prevented a sub-contractor engaged by

a supplier from entering on to the site ..... we have a position to bring sites to a stop if conditions do not accord with the sort

It was in the face of this situation which has developed

in recent weeks that the applicants, self-employed carpet-layers, fearing for their livelihood, sought injunctive relief. They were granted ex parte interim injunctions by Jenkinson J on 31 October 1984. After hearing argument on behalf of the respondents, his Honour continued injunctions on 5 November. Then on 26 November, after a hearing which involved the presentation of extensive affidavit material on behalf of the applicants, Gray J dissolved the existing injunctions and refused the application for interlocutory relief. No evidence was adduced by the respondents and they did not seek to cross-examine any of the deponents of the affidavits tendered by the applicants. His Honour was therefore

not called upon to decide any disputed questions of fact.

The first question which arises in this case is what test should be applied in determining whether interlocutory relief

Gray J adopted the language used in one paragraph of the

judgment of the High Court in Beecham Group Ltd v Bristol

Laboratories Pty Ltd (1968) 118 CLR 618 at 622 and spoke of "first looking to see whether a prima facie case has been made out, in the sense that, if the evidence remains as it is, there is a probability. that at the trial the applicant will be held entitled

to relief". Elsewhere he said "I cannot accept that injunctions

are to be granted simply on the raising of an issue, which may be

In my view these two passages, read together, indicate

that his Honour took too restrictive a view of the proper test to be applied. Until the High Court rules authoritatively on this matter there is nothing to be gained by adding to the many words that have already been written on this point in the last two or three years. I am content to adopt the relevant passage from a

recent judgment of a Full Court of this Court in Epitoma v AMIEU

(1984) 54 ALR 730 AT 734. I am, with respect, unable to agree with Gray J who, in declining to follow that decision, said that the point under consideration "seems to have been assumed, rather

"In an application for an interlocutory injunction, the court must inquire first whether there is a serious question to be tried (see Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 46 ALR 398; 57 ALJR 425; Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 52 ALR 651; 58 ALJR 283, per Brennan J at 284). In the Barley case, Gibbs CJ said (57 ALJR at 425) that he inclined to the view taken by the House of Lords in American Cyanamid v Ethicon Ltd [1975] Ac 396 rather than to some of those expressed obiter in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; (1968) ALR 469. It would seem that the Chief Justice had in mind the following statement of principle in the opinion of Lord Diplock, concurred in by the other members of the House, in American Cyanamid (at p 407): "The use of such expressions as 'a probability,' 'a prima facie case,' or 'a strong prima facie case' in the context of the exercise of a discretionary power to grant an interlocutory injunction leads to confusion as to the object sought to be achieved by this form of

temporary relief. The court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, 'that there is a

practical considerations underlying this approach: "It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the Claims of either party may ultimately depend, nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of requiring an undertaking as to damages upon the grant of an interlocutory injunction was that 'it aided the court in doing that which was its great object, viz abstaining from expressing any opinion upon the merits of the case until the hearing': Wakefield v Duke of Buccleugh (1865) 12 LT 628 at 629. So unless the material available to the court

at the hearing of the application for an interlocutory injunction fails to disclose that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought" (cf Dimbleby & Sons Ltd v National Union of Journalists [1984] 1 WLR 427; Appleton Papers Inc v Tomasetti Paper Pty Ltd (1983) 50 ALR 428; [1983] 3 NSWLR 208 at 214-5)."

The only point I would wish to add for myself is that, when it becomes necessary to consider the balance of convenience, it is, I believe, quite proper to continue to bear in mind the apparent strength of the applicants" case; the two legs of the test need not be considered in isolation from each other. Thus an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even. A more doubtful claim (which nevertheless raises 'a serious question to be tried') may still attract interlocutory relief if there is a marked balance of convenience in favour of it. This view received support from the High Court in Beecham's case at the page cited

I turn then to consider whether the application in the

present case raises a serious question to be tried. In my view it

raises several such questions. The first is whether the admitted conduct of the respondents represents a breach of s.45(2) of the

Trade Practices Act 1974 ('the Act'). That sub-section provides,

(a) make a contract or arrangement, or arrive at an understanding, if -

(i) the proposed contract, arrangement or understanding contains an exclusionary provision; or

(ii) a provision of the proposed contract, arrangement or understanding has the purpose, or would have or be likely to have the effect, of substantially lessening competition; or

(b) give effect to a provision of a contract, arrangement or understanding, whether the contract or arrangement was made, or the understanding was arrived at, before or after the commencement of this section, if that provision -

have the effect, of substantially lessening competition."

An 'exclusionary provision' is, for present purposes,

"4D.(1) A provision of a contract, arrangement or understanding, or of a proposed contract, arrangement or understanding, shall be taken to be an exclusionary provision for the purposes of this Act if -

(a) the contract or arrangement was made, or the understanding was arrived at, or the proposed contract or arrangement is to be made, or the proposed understanding is to be arrived at, between persons any two or more of whom are competitive with each other; and

(b) the provision has the purpose of preventing, restricting or limiting -

(i) the supply of goods or services to, or the acquisition of goods or services from, particular persons; or

(ii) the supply of goods or services to, or the acquisition of goods or services

from, particular persons in particular circumstances or on particular conditions, by all or any of the parties to the contract, arrangement or understanding or of the

proposed parties to the proposed contract, arrangement or understanding or, if a party or

proposed party is a body corporate, by a body corporate that is related to the body corporate."

These provisions apply generally to corporations and not

merely to trade unions. They seek to protect consumers of

goods or services from exclusionary provisions or substantial

In considering these provisions, Gray J said, "Section 4D(1)(b)(i) and (11) make reference to the preventing, restricting or limiting the acquisition of services from "particular persons". In my view, none of the agreements relevant to this proceeding would fall within the definition of "exclusionary provision" in s.4D. The reason for this is that in each case the agreement intends to exclude all carpet-layers and not particular persons from operating otherwise than in accordance with its terms. In my view, s.4D is plainly designed to apply to provisions which exclude particular persons in the sense of persons whose identity is known or can be ascertained. It is not directed towards the exclusion of the entirety of the available body of persons who could conceivably be called upon to perform or supply the relevant services."

It is unnecessary and undesirable that any concluded view on the meaning of these sections should be reached for the purposes of this application. It is sufficient to say that, in my view, it is clearly arguable that 'self-employed carpet-layers' or

at least 'the self-employed carpet-layers who have in the past

been employed by the carpet suppliers who have been forced to sign

the FFTSA agreement' are particular persons within the meaning of the Act. It is arguable that particular persons may be identified

by general description, or as members of a designated class,

In the same way it is arguable, on the material before the Court, that the companies which signed the agreements with the FFTSA were doing so as part of an overall arrangement between themselves that they would stick together in bowing to industrial force and accepting the increased costs involved. It is further arguable that this overall arrangement was the direct and intended result of the threats of the FFTSA to individual companies and that the organization and its officers had therefore

(a) conspired with others to effect -" the contravention of s.45(2) of the Act, as alleged in the

statement of claim in this case, thus bringing them within the

The fact that there is a serious question to be tried pursuant to s.45(2)(a)(i) of the Act, is sufficient to satisfy the first leg of the test for interlocutory relief. It is therefore not necessary to consider in any detail the alternative claims of the applicants pursuant to s.45(2)(a)(ii), 5.45E and the common law doctrine of restraint of trade, but in my view each of these claims does, though in differing degrees, raise a serious question

I would only wish to add that, in particular, I believe the view which Gray J took of the applicability of s.45E to the present facts could be open to serious debate at the trial. s.45E prohibits an acquirer of services (such as carpet-laying) from making an arrangement with a union which would hinder its acquisition of such services from a person from whom it has been

"An examination of s.45E as a whole makes it clear the section is directed to agreements which exclude second persons whose identity is known or is capable of being ascertained. The purpose of any of the agreements entered into by the Union and, indeed, if there is an overall exclusion agreement, of that agreement, is not to exclude from the supply of services persons who have been accustomed

to supply those services. Rather, it is to exclude everybody unless the services are supplied on

A contrary argument might suggest that the true effect and intent of the FFTSA's arrangements was, in each case, to exclude from the supply of carpet-laying services all those persons who had been accustomed to provide them (who could of

So far as the balance of convenience is concerned, it seems that the present structure of the carpet-laying industry has been in existence for many years. Hundreds of carpet-layers have come to depend on it for their livelihood. If the FFTSA's

campaign to force carpet suppliers to break existing arrangements

and to prevent self-employed carpet-layers from fulfilling their

contracts continues, it will in the short term deprive those carpet-layers of some or all of their income and, in the longer term, drive some or all of them, and possibly a number of carpet suppliers also, out of business. It is difficult to see any harm or inconvenience to the FFTSA if it is called upon to defer its

campaign for a few months until the action can be heard.

parties, and those of the carpet-buying public, the balance of

For the reasons I have given, it is my opinion that the learned trial judge made an error of principle in deciding that, because of the view which he took of the relevant law, the applicants had not established that there was a serious question to be tried in the present case. Because the balance of convenience is tilted heavily in favour of the applicants, they would suffer a substantial injustice if his Honour's decision were

The orders of the Court made on 17 December 1984 are directed primarily to the contracts which the FFTSA has chosen as the instruments of its campaign against the applicants and other self-employed carpet-layers. They are also expressed more widely in order to enjoin the conduct indulged in by the respondents in support of its campaign, so that the present arrangement of the industry may be maintained until the Court can deal with the

I certify that the preceding eleven (11) pages are a true copy of the reasons for judgment herein of the Honourable Mr

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